FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission Registrant; State of Incorporation; I.R.S Employer
File Number Address; and Telephone Number Identification No.
1-5324 NORTHEAST UTILITIES 04-2147929
(a Massachusetts voluntary assocation)
174 BRUSH HILL AVENUE
WEST SPRINGFIELD, MASSACHUSETTS 01090-2010
Telephone: (413) 785-5871
0-11419 THE CONNECTICUT LIGHT AND POWER COMPANY 06-0303850
(a Connecticut corporation)
SELDEN STREET
BERLIN, CONNECTICUT 06037-1616
Telephone: (860) 665-5000
1-6392 PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE 02-0181050
(a New Hampshire corporation)
1000 ELM STREET
MANCHESTER, NEW HAMPSHIRE 03105-0330
Telephone: (603) 669-4000
0-7624 WESTERN MASSACHUSETTS ELECTRIC COMPANY 04-1961130
(a Massachusetts corporation)
174 BRUSH HILL AVENUE
WEST SPRINGFIELD, MASSACHUSETTS 01090-2010
Telephone: (413) 785-5871
33-43508 NORTH ATLANTIC ENERGY CORPORATION 06-1339460
(a New Hampshire corporation)
1000 ELM STREET
MANCHESTER, NEW HAMPSHIRE 03105-0330
Telephone: (603) 669-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Registrant Title of Each Class on Which Registered
NORTHEAST UTILITIES Common Shares,$5.00 par New York Stock Exchange,Inc.
value
THE CONNECTICUT LIGHT 9.3% Cumulative Monthly New York Stock Exchange,Inc.
AND POWER COMPANY Income Preferred
Securities Series A(1)
(1)Issued by CL&P Capital, L.P., a wholly owned subsidiary of The Connecticut
Light and Power Company ("CL&P"), and guaranteed by CL&P.
Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of Each Class
NORTHEAST UTILITIES Common Share Warrants, no par value,
exercisable at $24 per share
THE CONNECTICUT LIGHT AND Preferred Stock, par value $50.00 per share,
POWER COMPANY issuable in series, of which the
following series are outstanding:
$1.90 Series of 1947 4.96% Series of 1958
$2.00 Series of 1947 4.50% Series of 1963
$2.04 Series of 1949 5.28% Series of 1967
$2.20 Series of 1949 6.56% Series of 1968
3.90% Series of 1949 $3.24 Series G of 1968
$2.06 Series E of 1954 7.23% Series of 1992
$2.09 Series F of 1955 5.30% Series of 1993
4.50% Series of 1956
PUBLIC SERVICE COMPANY Preferred Stock, par value $25.00 per share,
OF NEW HAMPSHIRE issuable in series, of which the following series
are outstanding:
10.60% Series A of 1991
WESTERN MASSACHUSETTS Preferred Stock, par value $100.00 per share,
ELECTRIC COMPANY issuable in series, of which the following series
is outstanding:
7.72% Series B of 1971
Class A Preferred Stock, par value $25.00 per share,
issuable in series, of which the following series
are outstanding:
7.60% Series of 1987
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of NORTHEAST UTILITIES' Common Share, $5.00 Par
Value, held by nonaffiliates, was $1,410,859,795 based on a closing sales price
of $10.37 per share for the 136,052,050 common shares outstanding on February
28, 1997. NORTHEAST UTILITIES holds all of the 12,222,930 shares, 1,000
shares, 1,072,471 shares and 1,000 shares of the outstanding common stock of
THE CONNECTICUT LIGHT AND POWER COMPANY, PUBLIC SERVICE COMPANY OF NEW
HAMPSHIRE, WESTERN MASSACHUSETTS ELECTRIC COMPANY, and NORTH ATLANTIC ENERGY
CORPORATION, respectively.
Documents Incorporated by Reference:
Part of Form 10-K
into Which Document
Description is Incorporated
Portions of Annual Reports to Shareholders of the following
companies for the year ended December 31, 1996:
Northeast Utilities Part II
The Connecticut Light and Power Company Part II
Public Service Company of New Hampshire Part II
Western Massachusetts Electric Company Part II
North Atlantic Energy Corporation Part II
Portions of the Northeast Utilities Proxy Statement Part III
dated April 30, 1997.
GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or acronyms
that are found throughout this report:
COMPANIES
NU ........................... Northeast Utilities
CL&P.......................... The Connecticut Light and Power Company
Charter Oak or COE............ Charter Oak Energy, Inc.
WMECO......................... Western Massachusetts Electric Company
HWP............................Holyoke Water Power Company
NUSCO or the Service Company.. Northeast Utilities Service Company
NNECO......................... Northeast Nuclear Energy Company
NAEC.......................... North Atlantic Energy Corporation
NAESCO or North Atlantic...... North Atlantic Energy Service Corporation
PSNH.......................... Public Service Company of New Hampshire
RRR........................... The Rocky River Realty Company
Energy Partners............... NUSCO Energy Partners, Inc.
Mode 1........................ Mode 1 Communications, Inc.
HEC........................... HEC Inc.
Quinnehtuk.................... The Quinnehtuk Company
the System.................... The Northeast Utilities System
CYAPC......................... Connecticut Yankee Atomic Power Company
MYAPC......................... Maine Yankee Atomic Power Company
VYNPC......................... Vermont Yankee Nuclear Power Corporation
YAEC.......................... Yankee Atomic Electric Company
the Yankee Companies.......... CYAPC, MYAPC, VYNPC, and YAEC
GENERATING UNITS
Millstone 1................... Millstone Unit No. 1, a 660-MW nuclear
generating unit completed in 1970
Millstone 2................... Millstone Unit No. 2, an 870-MW nuclear electric
generating unit completed in 1975
Millstone 3................... Millstone Unit No. 3, a 1,154-MW nuclear
electric generating unit completed in 1986
Seabrook or Seabrook 1........ Seabrook Unit No. 1, a 1,148-MW nuclear electric
generating unit completed in 1986. Seabrook 1
went into service in 1990.
REGULATORS
DOE........................... U.S. Department of Energy
DPU........................... Massachusetts Department of Public Utilities
DPUC.......................... Connecticut Department of Public Utility
Control
MDEP.......................... Massachusetts Department of Environmental
Protection
CDEP.......................... Connecticut Department of Environmental
Protection
EPA........................... U.S. Environmental Protection Agency
FERC.......................... Federal Energy Regulatory Commission
NHDES......................... New Hampshire Department of Environmental
Services
NHPUC......................... New Hampshire Public Utilities Commission
NRC........................... Nuclear Regulatory Commission
SEC........................... Securities and Exchange Commission
OTHER
1935 Act...................... Public Utility Holding Company Act of 1935
CAAA.......................... Clean Air Act Amendments of 1990
DSM........................... Demand-Side Management
Energy Act.................... Energy Policy Act of 1992
EWG........................... Exempt wholesale generator
EAC........................... Energy Adjustment Clause (CL&P)
FAC........................... Fuel Adjustment Clause (CL&P)
FPPAC......................... Fuel and purchased power adjustment clause
(PSNH)
FUCO.......................... Foreign utility company
GUAC.......................... Generation Utilization Adjustment Clause
(CL&P)
IRM........................... Integrated resource management
kWh........................... Kilowatt-hour
MW............................ Megawatt
NBFT.......................... Niantic Bay Fuel Trust, lessor of nuclear fuel
used by CL&P and WMECO
NEPOOL........................ New England Power Pool
NUGs.......................... Nonutility generators
NUG&T......................... Northeast Utilities Generation and
Transmission Agreement
QF............................ Qualifying facility
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
NORTH ATLANTIC ENERGY CORPORATION
1996 Form 10-K Annual Report
Table of Contents
PART I
Page
Item 1. Business............................................... 1
The Northeast Utilities System.............................. 1
Forward-Looking Statements.................................. 2
Overview of Nuclear Matters and Related
Financial Matters......................................... 2
Competition and Cost Recovery............................... 5
Rates....................................................... 6
Connecticut Retail Rates............................... 6
New Hampshire Retail Rates............................. 9
Massachusetts Retail Rates............................. 14
Resource Plans.............................................. 16
Construction........................................... 16
Future Needs........................................... 17
Financing Program........................................... 18
1996 Financings........................................ 18
1997 Financing Requirements............................ 19
1997 Financing Plans................................... 20
Financing Limitations.................................. 21
Electric Operations......................................... 25
Distribution and Load.................................. 25
Regional and System Coordination....................... 28
Transmission Access and FERC Regulatory Changes........ 29
Fossil Fuels........................................... 29
Nuclear Generation..................................... 30
Nuclear Plant Performance and Regulatory Oversight..... 31
Decommissioning........................................ 38
Energy Related Businesses................................... 40
Private Power Development.............................. 40
Energy Management Services............................. 41
Telecommunications..................................... 41
Energy Products and Services........................... 42
Other Regulatory and Environmental Matters.................. 42
Environmental Regulation............................... 42
Electric and Magnetic Fields........................... 50
FERC Hydro Project Licensing................................ 51
Employees................................................... 52
Item 2. Properties............................................. 53
Item 3. Legal Proceedings...................................... 58
Item 4. Submission of Matters to a Vote of Security Holders.... 63
PART II
Item 5. Market for Registrants' Common Equity and Related
Shareholder Matters.................................... 64
Item 6. Selected Financial Data................................ 65
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 65
Item 8. Financial Statements and Supplementary Data............ 65
Item 9. Changes in Disagreements with Accountants on
Accounting and Financial Disclosure.................... 66
PART III
Item 10. Directors and Executive Officers of the Registrants.... 67
Item 11. Executive Compensation................................. 72
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................. 83
Item 13. Certain Relationships and Related Transactions......... 85
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.................................... 86
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
WESTERN MASSACHUSETTS ELECTRIC COMPANY
NORTH ATLANTIC ENERGY CORPORATION
PART I
ITEM 1. BUSINESS
THE NORTHEAST UTILITIES SYSTEM
Northeast Utilities (NU) is the parent of a number of companies comprising
the Northeast Utilities system (the System) and is not itself an operating
company. The System furnishes franchised retail electric service in
Connecticut, New Hampshire and western Massachusetts through four of NU's wholly
owned subsidiaries (The Connecticut Light and Power Company [CL&P], Public
Service Company of New Hampshire [PSNH], Western Massachusetts Electric Company
[WMECO] and Holyoke Water Power Company [HWP]). In addition to their franchised
retail electric service, CL&P, PSNH, WMECO and HWP (including its wholly owned
subsidiary, Holyoke Power and Electric Company) (the System companies) together
furnish wholesale electric service to various municipalities and other utilities
and, on a pilot basis pursuant to state regulatory experiments, provide off-
system retail electric service. The System serves about 30 percent of New
England's electric needs and is one of the 20 largest electric utility systems
in the country as measured by revenues.
North Atlantic Energy Corporation (NAEC) is a special-purpose operating
subsidiary of NU that owns a 35.98 percent interest in the Seabrook nuclear
generating facility (Seabrook) in Seabrook, New Hampshire and sells its share of
the capacity and output from Seabrook to PSNH under two life-of-unit, full-cost
recovery contracts.
Several wholly owned subsidiaries of NU provide support services for the
System companies and, in some cases, for other New England utilities. Northeast
Utilities Service Company (NUSCO) provides centralized accounting,
administrative, information resources, engineering, financial, legal,
operational, planning, purchasing and other services to the System companies.
North Atlantic Energy Service Corporation (NAESCO) has operational
responsibility for Seabrook. Northeast Nuclear Energy Company (NNECO) acts as
agent for the System companies and other New England utilities in operating the
Millstone nuclear generating facilities (Millstone) in Waterford, Connecticut.
Three other subsidiaries construct, acquire or lease some of the property and
facilities used by the System companies.
NU has four subsidiaries, Charter Oak Energy, Inc. (Charter Oak), HEC Inc.
(HEC), Mode 1 Communications, Inc. (Mode 1) and NUSCO Energy Partners,
Inc.(Energy Partners), which engage, either directly or indirectly through
subsidiaries, in a variety of energy-related activities. Charter Oak develops
and invests in nonutility generation as permitted under the Public Utility
Regulatory Policy Act (collectively, NUGs) and in exempt wholesale generators
and foreign utility companies as permitted under the Energy Policy Act of 1992
(Energy Act). HEC provides energy management services, both for the System's
commercial, industrial and institutional electric customers and for others.
Mode 1 and NUSCO Energy were formed in 1996 to develop and invest in
telecommunications and energy-related activities, respectively. See "Energy-
Related Businesses."
The System traditionally has been regulated in virtually all aspects of its
business by various federal and state agencies, including the Securities and
Exchange Commission (SEC), the Federal Energy Regulatory Commission (FERC), the
Nuclear Regulatory Commission (NRC)and various state and/or local regulatory
authorities with jurisdiction over the service areas in which each company
operates. In recent years, there has been significant activity at both the
legislative and regulatory level, particularly in New England, to change the
nature of regulation of the industry. For more information regarding recent
restructuring initiatives, see "Competition and Cost Recovery," "Rates," and
"Electric Operations."
FORWARD-LOOKING STATEMENTS
NU and its subsidiaries occasionally make forward-looking statements,
within the meaning of the Securities Exchange Act of 1934, as amended, such as
forecasts and projections of expected future performance or statements of their
plans and objectives. These forward-looking statements may be contained in
filings with the SEC, letters to shareholders, press releases and oral
statements. Although such forward-looking statements have been based on
reasonable assumptions, there is no assurance that the expected results will be
achieved, and actual results could differ materially from these statements. Some
of the factors that could cause actual results to differ materially include, but
are not limited to: governmental and regulatory actions and initiatives; the
impact of deregulation and increased competition in the industry; generating
plant performance; weather conditions; fuel prices and availability; general
economic conditions, including the effects of inflation; technological changes;
and uncertainties involved with foreign investments. These and other factors
are discussed in SEC filings made by NU, CL&P, WMECO, PSNH and NAEC from time to
time, including this report.
OVERVIEW OF NUCLEAR AND RELATED FINANCIAL MATTERS
On January 29, 1996, Millstone was placed on the NRC's watch list as a
Category 2 facility. As set forth below, CL&P and WMECO have significant
financial and capacity interests in Millstone. Facilities in Category 2 have
been identified by the NRC as having weaknesses that warrant increased attention
until the licensee, NNECO, demonstrates a period of improved performance.
Millstone was subsequently reclassified as a Category 3 facility, which requires
NNECO to receive formal NRC commissioners' approval to restart any of the units.
Millstone 1, 2 and 3 have been out of service since November 4, 1995, February
21, 1996 and March 30, 1996, respectively. Following these decisions, the System
faced in 1996, and continues to face, some of the most severe regulatory
scrutiny and financial challenges in the history of the United States nuclear
industry, including numerous civil lawsuits and criminal investigations. See,
"Item 3. Legal Proceedings."
Millstone 1, a 660-MW boiling water reactor, and Millstone 2, an 870-MW
pressurized water reactor, are each owned 81 percent by CL&P and 19 percent by
WMECO. Millstone 3, a 1154-MW pressurized water reactor, is jointly owned by
CL&P (52.93 percent), WMECO (12.24 percent), PSNH (2.85 percent) and other New
England utilities.
The System has initiated a number of changes in the management of its
nuclear program to address the problems at Millstone. In April 1996, the NU
Board of Trustees (NU Board) announced the formation of a special committee of
the NU Board to provide high-level oversight of the safety and effectiveness of
NU's nuclear operations and the progress toward resolving open NRC issues and
employee, community, and customer concerns. The committee consists exclusively
of outside trustees. It is chaired by E. Gail de Planque, who is a former NRC
commissioner. In light of substantial NU Board activities associated with the
current nuclear situation, the NU Board elected Elizabeth T. Kennan in 1996 as
Lead Trustee to facilitate the extensive, ongoing communications and activities
between the NU Board and management.
In response to various internal reports and other reviews that focused on
nuclear management as a fundamental cause for the decline in the performance of
Millstone, the NU Board elected Bruce D. Kenyon as President - Nuclear Group of
NU, in September 1996. Following this appointment, management unveiled a
reorganization of NU senior nuclear management that is intended to establish
direct accountability for performance at each of the nuclear power units that
the System operates. The new management team, including executives loaned from
unaffiliated utility companies with excellent nuclear programs, has focused in
the near-term on the recovery efforts of Millstone and improving nuclear
oversight and the System's employee concerns program. In January 1997, Neil S.
Carns was elected to the position of Senior Vice President and Chief Nuclear
Officer of NNECO to oversee the operations of Millstone. Both Mr. Kenyon and
Mr. Carns have extensive experience at other utilities with reputations for
excellent nuclear operations.
The new nuclear management team has developed comprehensive plans for
restarting each of the Millstone units. Each unit's recovery team is working
towards restart of its respective unit on a parallel basis with the other two
units. Management estimates that one of the units will be ready for restart in
the third quarter of 1997, with the second and third units being ready for
restart in the fourth quarter of 1997 and the first quarter of 1998,
respectively. Management hopes to have at least one unit operating in the
second half of 1997.
However, before and following notification to the NRC that a unit is ready
to resume operations, management expects that the NRC staff will conduct
extensive reviews and inspections, and before such notification, independent
corrective action verification teams also will inspect each unit. The System
also will need to comply with an NRC order regarding the development of a
comprehensive employee concerns program, which will need to be reviewed by an
independent third-party. Furthermore, because of the length of the outages,
management cannot estimate the time it will take for the units to resume full
power after NRC approval to restart.
For more information regarding specific regulatory actions related to NU's
nuclear units and the December 4, 1996 decision of the board of directors of
Connecticut Yankee Atomic Power Company (CYAPC) to retire the Connecticut Yankee
nuclear unit (CY) from commercial operation, see "Electric Operations--Nuclear
Generation." For information regarding actions taken to meet System capacity
needs caused by the Millstone outages, See "Electric Operations--Distribution
and Load."
As a result of the extended Millstone outages, the System companies have
incurred and will continue to bear substantial costs at least until the three
Millstone units have been restarted. Most of the costs are being borne by CL&P
and WMECO, which have the greatest investment share of the Millstone units.
Although PSNH did incur additional costs related to the outage, these costs were
somewhat mitigated by its increased sales of electricity from Seabrook and
fossil generation. In 1996, System companies expensed a total of approximately
$403 million Millstone-related non-fuel operation and maintenance costs, which
included among other costs $116 million for non-fuel incremental O&M costs
related to the Millstone outages ($93 million for CL&P, $21 million for WMECO
and $2 million for PSNH) and $63 million reserved for future Millstone
incremental O&M costs ($50 million for CL&P, $12 million for WMECO and $1
million for PSNH). O&M costs for Millstone in 1997 are estimated to be $386
million. O&M costs have been, and will continue to be, absorbed through the
System companies' current rates.
The System companies also expensed approximately $260 million for
replacement-power costs in 1996 ($216 million for CL&P, $41 million for WMECO
and $3 million for PSNH). Management expects that monthly replacement-power
costs for the System companies will average approximately $35 million ($30
million for CL&P and $5 million for WMECO) in 1997 while all three Millstone
units remain out of service. The System expensed a significant portion of its
1996 replacement power costs related to the nuclear outages and it is continuing
to expense 1997 replacement power costs.
Although the System companies are not precluded from seeking rate
recoveries of these costs in the future, management has committed not to seek
recovery of the portion of these costs attributable to the failure to meet
industry standards in operating Millstone. In light of that commitment, and in
recognition of the NRC's watch list designation of Millstone and that numerous
internal and external reports have been critical of the operation of Millstone,
management believes that CL&P and WMECO will not seek rate recovery of a
substantial portion of such costs. Management currently does not intend to
request any such recoveries until after the Millstone units begin returning to
service, so it is unlikely that any additional revenues from any permitted
recovery of these costs will be available while the units are out of service to
contribute to funding the recovery efforts.
The System has arranged a variety of borrowing facilities to fund its cash
requirements, including the nuclear recovery efforts. See "Financing Program---
1996 Financings." The length of the Millstone outages and the high costs of the
recovery efforts have weakened NU's, CL&P's and WMECO's 1996 earnings, balance
sheets and cash flows, and they continue to have adverse impacts on these
companies' financial conditions. Management believes that the borrowing
facilities that are currently in place provide System companies with adequate
access to the funds needed to bring the Millstone units back to service if those
units begin operating close to the currently envisioned schedules and if the
other assumptions on which management has based its planning do not
substantially change. For the System companies to access the entire amounts of
contractually committed borrowing capacity, some waivers or modifications of the
borrowing terms have been obtained and others might be required. See "Financing
Program---Financing Limitations."
If the return to service of one or more Millstone units is delayed
substantially, or if the needed waivers or modifications are not forthcoming on
reasonable terms, or if the System encounters additional significant costs or
other significant deviations from management's current assumptions the currently
available borrowing facilities could be insufficient to meet all of the System's
cash requirements, and some facilities could become unavailable because of
difficulties in meeting borrowing conditions. In those circumstances,
management would take actions to reduce costs and cash outflows and would
attempt to take actions to arrange additional sources of funds. The
availability of such sources would be dependent on general market conditions and
the System's credit and financial condition at the time.
COMPETITION AND COST RECOVERY
Competition in the energy industry continues to grow as a result of
legislative and regulatory action, technological advances, relatively high
electric rates in certain regions of the country, including New England, surplus
generating capacity and the increased availability of natural gas. These
competitive pressures are particularly strong in the System's service
territories, where legislators and regulatory agencies have been at the
forefront of the restructuring movement.
A major risk of competition for the System is "strandable investments."
These are expenditures that have been made by utilities in the past to meet
their public service obligations, with the expectation that they would be
recovered from customers in the future. However, under certain circumstances
these costs might not be recoverable from customers in a fully competitive
electric utility industry. The System is particularly vulnerable to strandable
investments because of: (i) the System's relatively high investment in nuclear
generating capacity, which had a high initial cost to build; (ii) state-mandated
purchased-power arrangements priced above market; (iii) significant regulatory
assets, which are those costs (including purchased-power costs) that have been
deferred by state regulators for future collection from customers and (iv) costs
incurred and assets created in connection with the bankruptcy reorganization of
PSNH in 1990 and NU's 1992 acquisition of PSNH.
As of December 31, 1996, the System's net investment in nuclear generating
capacity, excluding its investment in certain regional nuclear companies, was
$3.6 billion, and in its regulatory assets was approximately $2.2 billion. The
System expects to recover substantially all of its nuclear investment and its
regulatory assets from customers. The System is currently collecting its
nuclear investment through depreciation charges approved by its various state
utility regulators. See "Depreciation" in the notes to NU's financial
statements. Unless amortization levels are changed from currently scheduled
rates, the System's regulatory assets are expected to be substantially decreased
in the next five years. Although the System companies continue to operate
predominantly in state-approved franchise territories under traditional cost-of-
service regulation, various restructuring initiatives in the System's service
territories, particularly recent actions taken by the New Hampshire Public
Utility Commission (NHPUC), have created uncertainty with respect to future
rates and the recovery of strandable investments.
In 1995 regulators in Connecticut concluded that electric utilities should
be allowed a reasonable opportunity to recover strandable investments. Various
electric utility restructuring legislative proposals have been, and others will
be, introduced in the Connecticut State Legislature in 1997. On December 30,
1996, the Massachusetts Department of Public Utilities (DPU) issued its Model
Rules on Restructuring (Model Rules). The Model Rules indicate that utilities
will have a reasonable opportunity to recover strandable investments incurred on
or before August 16, 1995, which will be collected through a Stranded Cost
Access Charge. The Massachusetts General Court also has established a
legislative task force to review restructuring during the 1997 legislative
session.
On February 28, 1997, NHPUC issued its orders related to restructuring the
state's electric utility industry and setting interim stranded cost charges for
PSNH pursuant to legislation enacted in New Hampshire in 1996. In the orders,
the NHPUC announced a departure from cost-based ratemaking and instead adopted a
market-priced approach to stranded cost recovery. On March 10, 1997, NU, NAEC,
PSNH and NUSCO received a temporary restraining order from the United States
District Court for the District of Rhode Island, which stayed the NHPUC's
February 28, 1997 orders to the extent they established a rate setting
methodology that is not designed to recover PNSH's costs of providing service
and would require PSNH to write off any regulatory assets. If this stay or
another appropriate court action does not remain in effect, this methodology
will require PSNH to remove from its balance sheet for the quarter ending March
31, 1997 substantially all of its regulatory assets. The amount of that
potential write-off is currently estimated at over $400 million, after taxes.
For more information regarding this decision and other restructuring
initiatives, see "Rates;" for more information regarding the effect of the
February 28, 1997 decision on PSNH and NAEC's financings, see "Financing
Program---Financing Limitations."
Notwithstanding these legislative and regulatory initiatives, the System
has developed, and is continuing to develop, a number of marketing initiatives
to retain and continue to serve its existing customers. In particular, System
companies have been devoting increasing attention in recent years to negotiating
long-term power supply arrangements with certain large commercial and industrial
retail customers. Approximately 12 percent of the System's commercial and
industrial retail revenues were under negotiated rate agreements at the end of
1996. In 1996, those negotiated rate reductions amounted to approximately $39
million in annual revenues, up from $35 million in 1995. CL&P accounted for
approximately $19 million of the 1996 rate reductions, PSNH for $12.5 million,
WMECO for $6 million and HWP for $1.5 million. The average term of these
agreements is approximately 5.8 years.
The System has expanded its Retail Marketing organization to provide value-
added solutions to its customers. The System devoted significantly more
resources to its retail marketing efforts in 1996 than in prior years. In
particular, NUSCO hired approximately 170 new employees as part of its retail
sales organization. The new employees will allow the System to have more direct
contact with customers in order to develop tailor-made solutions for customers'
energy needs. In addition, the System companies, as well as other NU
subsidiaries, received orders from the SEC and FERC in 1996 that increased their
flexibility to market and broker electricity, gas, oil and other forms of energy
throughout the United States and to provide various services related thereto.
RATES
CONNECTICUT RETAIL RATES
GENERAL
Approximately 63% of System revenues are derived from CL&P, and 56% of the
book value of the System's electric utility assets are owned by CL&P.
CL&P's retail rates are subject to the jurisdiction of the Connecticut
Department of Public Utility Control (DPUC). Connecticut law provides that
revised rates may not be put into effect without the prior approval of the DPUC.
Connecticut law also authorizes the DPUC to order a rate reduction under certain
circumstances before holding a full-scale rate proceeding. The DPUC is further
required to review a utility's rates every four years if there has not been a
rate proceeding during such period. The DPUC is expected to begin such a review
in the second half of 1997. Based on recently enacted legislation, if the DPUC
approves performance-based incentives for a particular company, the DPUC will
include in such an order periodic monitoring and review of the company's
performance in lieu of the four year review.
On July 1, 1996, the DPUC approved a settlement agreement (Settlement) that
had been jointly submitted to the DPUC by CL&P, the Connecticut Office of
Consumer Counsel (OCC) and the independent Prosecutorial Division of the DPUC.
The Settlement provides that CL&P's base rates will be frozen until at least
December 31, 1997. The Settlement provides that during the rate freeze, CL&P's
target return on equity (ROE) will be 10.7 percent, but the Settlement does not
alter CL&P's allowed ROE of 11.7 percent. One-third of earnings above the
target ROE will be refunded to customers. The Settlement also accelerated the
amortization of CL&P's regulatory assets ($73 million in 1996 and $54 to $68
million in 1997). As of December 31, 1996, CL&P's regulatory assets totaled
approximately $1.4 billion.
The Settlement terminated all outstanding litigation pending as of March
31, 1996 among the parties that potentially could affect CL&P's rates. Such
litigation included appeals by CL&P and the OCC from CL&P's 1993 rate case
decision, appeals from the DPUC's decisions concerning the 1992-1993 and 1993-
1994 fuel-recovery periods, nuclear operating prudence review proceedings
pending at the time of the settlement, and OCC's appeal from the DPUC guidelines
adopted in 1995 allowing additional flexibility in negotiating special rates
with electric customers. In exchange, CL&P agreed not to seek recovery from its
customers of approximately $115 million in uncollected nuclear costs incurred
before March 31, 1996.
The Settlement does not affect issues to be addressed by the DPUC in future
restructuring proceedings and the recovery of costs related to the ongoing
Millstone outages. For information regarding the prudence proceeding related to
nuclear operations for the period March 31, 1996 to June 30, 1996, See "Rates---
CL&P Adjustment Clauses and Prudence."
ELECTRIC INDUSTRY RESTRUCTURING IN CONNECTICUT
Pursuant to legislation introduced in 1995, a legislative task force was
created to consider electric industry restructuring in Connecticut. The final
report of the task force was issued on December 18, 1996. Although the members
of the task force did not come to a consensus on restructuring, the report
included several recommendations on legislation, including, among other things,
legislation to enable securitization of strandable investments; reduction of tax
burdens incorporated in electric rates; reduction of rate impacts of government-
mandated contracts with NUGs; and elimination of obsolete regulation. After
considering the report of the task force, the legislative members of the task
force submitted their own proposal on restructuring to the members of the
legislative Energy and Technology Committee. Their proposal includes two
alternatives: one for a retail competition pilot program available to 10 percent
of the load in each rate class by January 1, 1998; and a second for full retail
competition beginning January 1, 1998 unless CL&P had effected 10 percent retail
rate reductions for all rate classes by that date. This proposal, among others,
is being considered in developing restructuring legislation in 1997.
CL&P ADJUSTMENT CLAUSES AND PRUDENCE
On October 8, 1996, the DPUC issued its final order establishing an Energy
Adjustment Clause (EAC) in place of CL&P's existing Fuel Adjustment Clause and
Generation Utilization Adjustment Clause (GUAC). The EAC took effect on January
1, 1997. The EAC is designed to reconcile and adjust every six months the
difference between actual fuel costs and the fuel revenue collected through base
rates. The EAC includes an incentive mechanism that disallows recovery of the
first $9 million in fuel costs that exceeds base levels and permits CL&P to
retain the first $9 million in fuel cost savings. The EAC also designates a 60
percent nuclear capacity factor floor. When the six-month nuclear capacity
factor falls below 60 percent, related energy costs are deferred to the
subsequent EAC period for consideration for recovery. Finally, the costs to
serve nonfirm wholesale transactions will continue to be removed from the
calculation of fuel costs at actual marginal cost.
On December 31, 1996, the DPUC issued a decision approving CL&P's request
to recover $25 million, excluding replacement power costs (see below), through
the GUAC for the period April 1 - August 31, 1996. The $25 million will be
recovered over a twelve-month period beginning January 1, 1997. The fuel costs
for the period September 1, 1996 through December 31, 1996, excluding
replacement power costs for the current nuclear outages at Millstone, are
expected to be filed with the DPUC in March 1997. Management does not expect a
significant dollar request for the period.
Despite an earlier procedural order indicating that prudence hearings on
the current nuclear outages at Millstone would take place after the nuclear
plants return to service, on January 15, 1997, the DPUC notified CL&P that it
will be conducting its prudence review of nuclear cost recovery issues in
multiple phases. The first phase, covering the period April 1 through June 30,
1996, has already begun. CL&P will not be permitted to collect any replacement
power costs associated with the current nuclear outages prior to the completion
of the DPUC's prudence reviews. Management believes that CL&P will not seek
rate recovery of a substantial portion of such costs.
In connection with an ongoing management audit of CL&P, including matters
related to the NRC watch list designation, the two consulting firms hired by the
DPUC to review such matters issued reports in December 1996 that were highly
critical of NU's management of its nuclear program. The results of these reports
could bear on any future DPUC review of the prudence of the System's nuclear-
related costs. In a separate proceeding, the DPUC ordered CL&P to submit
studies by July 1, 1997 that analyze the economic benefits from the continued
operation of Millstone 1 and 2. The DPUC stated that these studies were
necessary in light of the uncertainty regarding restart dates of the units and
the costs associated with returning these units to operation.
In May 1996, the Connecticut state legislature enacted legislation to
create the Nuclear Energy Advisory Council (NEAC), a volunteer group of fourteen
members. The NEAC was charged with conducting a broad review of safety and
operations of the System's four Connecticut nuclear units and to advise the
Governor, the legislature and affected municipalities on these issues. The NEAC
issued its first report on February 7, 1997, which provided a wide-range of
preliminary recommendations, including legislation and additional public
hearings related to nuclear spent fuel, federal congressional hearings, review
by the Connecticut Attorney General of the NRC's oversight of the System's
nuclear operations and the requirement for a state nuclear plant resident
inspector. These recommendations are similar to various legislative proposals
currently pending at the state legislature related to nuclear oversight,
operations and cost recovery. Management cannot predict the ultimate effect of
this report or such proposed legislation.
DEMAND-SIDE MANAGEMENT
CL&P provides demand side management (DSM) programs for its residential,
commercial and industrial customers. CL&P is allowed to recover DSM costs in
excess of costs reflected in base rates over periods ranging from approximately
four to ten years.
On April 9, 1996, the DPUC issued an order approving CL&P's budget of $37.1
million for 1996 DSM expenditures, which will be recovered over a 2.43 year
amortization period. In November 1996, CL&P filed its 1996-1997 DSM programs
and budgets with the DPUC. CL&P proposed a budget level of $36 million for 1997
DSM expenditures. CL&P's unrecovered DSM costs at December 31, 1996, excluding
carrying costs, which are collected currently, were approximately $90 million.
NEW HAMPSHIRE RETAIL RATES
GENERAL
Approximately 24% of System revenues are derived from PSNH, and 17% of the
book value of the System's electric utility assets are owned by PSNH.
PSNH's Rate Agreement with the state of New Hampshire (State) provided for
seven base rate increases of 5.5 percent per year beginning in 1990 and a
comprehensive fuel and purchased power adjustment clause (FPPAC). The final
base rate increase went into effect on June 1, 1996. The Rate Agreement
provides that PSNH's rates will be subject to traditional rate regulation after
the fixed rate period expires on May 31, 1997, but that the FPPAC will continue
through May 31, 2000. Although the FPPAC continues for an additional 3 years
beyond the end of the fixed rate period, there is uncertainty regarding how it
will function after May 31, 1997. Given the completion of the fixed rate
period, and the uncertainty surrounding the FPPAC, management expects that PSNH
will file a rate case with the NHPUC in May 1997. For more information
regarding other cost recovery matters related to the Rate Agreement, see
"Unamortized PSNH Acquisition Costs."
ELECTRIC INDUSTRY RESTRUCTURING IN NEW HAMPSHIRE
Pilot Program
The NHPUC initiated a two-year retail-wheeling pilot program (Program) in
mid-1996. The Program included up to three percent of PSNH's retail customers
(approximately 12,000 customers). On April 24, 1996, the NHPUC approved the
terms for PSNH's participation in the Program. Under this plan, PSNH provides a
10-percent incentive credit off its traditional rates to customers who
participate in the program and will be allowed to recover all of its costs above
an assumed market price of power. CL&P, through either affiliated companies or
marketing divisions, also is participating in the Program. In early 1997, PSNH
transferred its interest in PSNH Energy, a competitive supplier in the New
Hampshire retail electric competition pilot program, to Energy Partners, but
PSNH continues to sell power to Energy Partners at wholesale.
Based upon its preliminary analysis of the Program, PSNH, with its current
relatively high cost rate structure, could lose a substantial portion of its
current market share if New Hampshire was open to wide-scale retail competition.
PSNH could mitigate this loss somewhat by securing new off-franchise customers,
although it already serves 70% of available customers in New Hampshire. To
offset the risk of a substantial decrease in revenues, the System is actively
developing marketing initiatives to retain existing customers and attract new
off-franchise customers should full-scale competition be introduced in New
Hampshire according to the proposed schedule. The critical factor regarding
significant losses for PSNH related to electric utility restructuring, however,
is the issue of the recovery of strandable investments. For more information,
see "Competition and Cost Recovery" and "Energy-Related Businesses--Energy
Products and Services."
NHPUC Restructuring Plan
On May 21, 1996, legislation became effective in New Hampshire requiring
the NHPUC to issue a final restructuring plan no later than February 28, 1997.
Electric utilities must submit compliance filings by June 30, 1997. The
legislation directed the NHPUC to implement full retail competition by January
1, 1998 or at the earliest date determined to be in the public interest by the
NHPUC, but not later than July 1, 1998.
On February 28, 1997, in accordance with this legislation, the NHPUC issued
its orders related to restructuring the state's electric utility industry and
setting interim stranded cost charges for PSNH.
In the orders, the NHPUC announced a departure from cost-based ratemaking
and instead adopted the market-priced approach to stranded cost recovery
advocated by the NHPUC's consultants, LaCapra Associates. Accordingly, unless
the orders are stayed or modified, PSNH will be required to discontinue
accounting under Financial Accounting Standard No. 71, ACCOUNTING FOR THE
EFFECTS OF CERTAIN TYPES OF REGULATION (FAS 71) and have to remove from its
balance sheet as early as the quarter ending March 31, 1997 substantially all of
its regulatory assets. The amount of that potential write-off is currently
estimated at over $400 million, after taxes. However, PSNH does not believe
that under the orders it would be required to recognize any additional loss
resulting from the impairment of the value of its other long-lived assets under
the provisions of FAS 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND LONG-LIVED ASSETS TO BE DISPOSED OF. See, "Unamortized PSNH Acquisition
Costs" and "Seabrook Power Contracts" below.
The orders also contain rulings on numerous other issues that would, if put
into effect, have a substantial effect on the operations of PSNH. Included
among these rulings are an assertion that the 1989 Rate Agreement by and between
NU and the State of New Hampshire, which was an integral part of NU's
acquisition of PSNH in 1992, is not binding on the State; the requirement that
PSNH divest within two years following the initiation of competition all of its
owned-generation and all of its wholesale power purchase contracts (including
its contract with NAEC for Seabrook output); a prohibition on the remaining
distribution company and its affiliates from engaging in retail marketing or
load aggregation services; and a mandate for the filing of tariffs with the FERC
for the provision of unbundled retail transmission service.
On March 3, 1997, PSNH, NU, NAEC and NUSCO filed for a temporary
restraining order, preliminary and permanent injunctive relief and for a
declaratory judgment in the United States District Court for New Hampshire. The
case was subsequently transferred to Rhode Island. On March 10, 1997, the court
issued a temporary restraining order, which stayed the NHPUC's February 28, 1997
orders to the extent they established a rate setting methodology that is not
designed to recover PSNH's costs of providing service and would require PSNH to
write off any regulatory assets under FAS 71. An evidentiary hearing regarding
the System plaintiffs' request for a preliminary injunction prohibiting the
NHPUC from taking any action to implement the restructuring orders and the
restructuring statute as construed and applied in the orders will be held in the
same court on March 20, 1997.
If this stay or another appropriate court action does not remain in effect,
the write-off triggered by the decision would result in defaults which, if not
waived or renegotiated, would give investors and lenders the right to accelerate
the repayment of approximately $686 million of PSNH indebtedness and $515
million of NAEC indebtedness. These circumstances could force PSNH and NAEC to
seek bankruptcy protection under Chapter 11 of the bankruptcy laws. PSNH also
intends to pursue claims for damages in State court in New Hampshire for
abrogation of the 1989 Rate Agreement. The damage claims will be in the
hundreds of millions of dollars.
Freedom Energy Proceedings
In 1994, Freedom Energy Company, LLC (Freedom), filed a petition with the
NHPUC for permission to operate as a retail electric utility selling to large
industrial customers in New Hampshire, including customers of PSNH. PSNH
intervened in Freedom's proceeding, arguing that Freedom could not sell
electricity to PSNH customers because PSNH had an exclusive franchise. In June
1995, the NHPUC determined that electric utility franchises in New Hampshire
need not be exclusive as a matter of law. PSNH appealed this decision to the
New Hampshire Supreme Court, which affirmed on May 13, 1996, holding that the
NHPUC can alter existing exclusive franchise orders if it is determined to be in
the public good to do so. The Supreme Court expressly indicated, however, that
its decision does not address whether any such alteration of the franchise would
require compensation to the utility.
The remaining issues related to the Freedom proceedings, including whether
Freedom has qualifications to operate a public utility, are still pending at the
NHPUC. In the Spring of 1997, the NHPUC intends to hold hearings to investigate
Freedom's financial, managerial and operational abilities to be deemed a
utility. Freedom's petition is opposed by other parties seeking to be
participants in a restructured, competitive electric industry. A related FERC
proceeding is still pending.
FPPAC AND PRUDENCE
The FPPAC provides for the recovery or refund by PSNH, for the ten-year
period beginning on May 16, 1991, of the difference between its actual prudent
energy and purchased power costs and the estimated amounts of such costs
included in base rates established by the Rate Agreement. The FPPAC amount is
calculated for a six-month period based on forecasted data and is reconciled to
actual data in subsequent FPPAC billing periods.
On June 3, 1996, the NHPUC ordered PSNH to refund $41.5 million, which
amount includes $5 million of interest, related to NUG costs which had been
previously collected through the FPPAC. The refund, which will be made by
crediting customer bills through May 31, 1997, was implemented on June 1, 1996.
When actual fuel and purchased power costs are less than the estimated costs in
base rates, PSNH is permitted to retain revenues to offset previously deferred
charges, including the $41.5 million refund. By this method PSNH will have
fully recovered the $41.5 million by May 1, 1997.
On December 3, 1996, the NHPUC approved PSNH's FPPAC rate for December 1,
1996 through May 31, 1997, representing an overall rate decrease of 1.0 percent.
NUGs
The costs associated with purchases by PSNH from certain NUGs at prices
above the level assumed in rates are deferred and recovered through the FPPAC
over ten years. As of December 31, 1996, NUG deferrals totaled approximately
$211 million.
Under the Rate Agreement, PSNH and the State have an obligation to use
their best efforts to renegotiate burdensome purchased power arrangements with
13 specified hydroelectric and wood-burning NUGs that were selling their output
to PSNH under long-term NHPUC rate orders. If approved, PSNH will exchange
near-term cash payments for partial relief from high-cost purchased power
20
obligations to the NUGs, with such payments and an associated return on the
unamortized portion being recoverable from customers in a future amortization
period.
Seven of these orders have been successfully renegotiated, and PSNH has
reached agreements, subject to NHPUC approval, with the six remaining wood-fired
NUGs. The six agreements could result in net savings of approximately $440
million to PSNH's customers over a period of 20 years in exchange for upfront
payments of approximately $250 million recoverable in future charges to
customers.
In early 1996, the NHPUC began a proceeding to decide whether to approve
these settlement agreements. Despite a determination by the New Hampshire
Attorney General finding that PSNH had used its best efforts to renegotiate the
13 agreements, on March 11, 1996, the NHPUC decided to open a docket, which is
ongoing, to independently review that issue.
In January 1997, the NHPUC issued an order approving one of the six NUG
settlements. However, the order expressly indicates that PSNH is not assured of
recovering all of the payments the company must make pursuant to the agreement.
In addition, the order required PSNH and the NUG owner to contribute an
undisclosed amount to create a fund designed to mitigate the impact of the
buydown agreement on the wood-fuel industry. On February 14, 1997, PSNH filed a
response with the NHPUC stating that the uncertainties of recovery stated in the
order made it impossible to finance the upfront payments for the agreement.
UNAMORTIZED PSNH ACQUISITION COSTS
The Rate Agreement also provides for the recovery by PSNH through rates of
unamortized PSNH acquisition costs, which is the aggregate value placed by
PSNH's reorganization plan on PSNH's assets in excess of the net book value of
its non-Seabrook assets and the value assigned to Seabrook. The unrecovered
balance of PSNH acquisition costs at December 31, 1996 was approximately $491.7
million. In accordance with the Rate Agreement, approximately $82.0 million of
this amount will be recovered through rates by June 1, 1998, and the remaining
amount, approximately $409.7 million, will be recovered through rates by 2011.
PSNH earns a return each year on the unamortized portion of the costs. This
amount will not be deemed "impaired" by the NHPUC's February 28, 1997
restructuring decision within the meaning of FAS 121. For more information
regarding PSNH's recovery of these costs, see "Unamortized PSNH Acquisition
Costs" in the notes to NU's financial statements and "Unamortized Acquisition
Costs" in the notes to PSNH's financial statements.
SEABROOK POWER CONTRACTS
PSNH and NAEC have entered into two power contracts that collectively
obligate PSNH to purchase NAEC's 35.98 percent ownership of the capacity and
output of Seabrook for the term of Seabrook's NRC operating license and to pay
NAEC's "cost of service" during this period, whether or not Seabrook continues
to operate. NAEC's cost of service includes all of its prudently incurred
Seabrook-related costs, including O&M expenses, cost of fuel, depreciation of
NAEC's recoverable investment in Seabrook and a phased-in return on that
investment. The payments by PSNH to NAEC under these contracts constitute
purchased power costs for purposes of the FPPAC and are recovered from PSNH
customers under the Rate Agreement. Decommissioning costs are separately
collected by PSNH in its base rates. See "Rates--New Hampshire Retail Rates--
General" and--"FPPAC and Prudence" for information relating to the Rate
Agreement. At December 31, 1996, NAEC's net utility plant investment, including
fuel, in Seabrook was approximately $692 million.
If Seabrook were retired before the expiration of its NRC operating license
term, NAEC would continue to be entitled under the contracts to recover its
remaining Seabrook investment and a return on that investment and its other
Seabrook-related costs over a 39-year period, less the period during which
Seabrook has operated.
The contracts provide that NAEC's return on its "allowed investment" in
Seabrook (its investment in working capital, fuel, capital additions after the
date of commercial operation and a portion of the initial investment) is
calculated based on NAEC's actual capitalization over the term of the contracts,
its actual debt and preferred equity costs and a common equity cost of 12.53
percent for the first ten years of the contracts, and thereafter at an equity
rate of return to be fixed in a filing with FERC. The portion of the initial
investment, which is included in the allowed investment, has increased annually
since May 1991 and reached 100 percent on May 31, 1996.
NAEC is entitled to earn a deferred return on the portion of the initial
investment not yet phased into rates. At December 31, 1996, the amount of this
deferred return was $185.1 million In addition, NAEC's utility plant includes
$84.1 million of deferred return (including taxes) that was transferred as part
of the Seabrook assets to NAEC on the acquisition date. The deferred return,
including the portion transferred to NAEC, will be recovered with carrying
charges beginning December 1, 1997, and will be fully recovered by May 2001.
For additional information regarding the contracts, see "Deferred Costs-Nuclear
Plants" in the notes to PSNH's financial statements.
MASSACHUSETTS RETAIL RATES
GENERAL
Approximately 11% of System revenues are derived from WMECO, and 11% of the
book value of the System's electric utility assets are owned by WMECO.
WMECO's retail rates are subject to the jurisdiction of the Massachusetts
Department of Public Utilities (DPU). The rates charged under HWP's contracts
with its industrial customers are not subject to the ratemaking jurisdiction of
any state or federal regulatory agency.
On April 30, 1996, the DPU approved a settlement which was proposed by
WMECO and the Massachusetts Attorney General (the Agreement). The Agreement
will continue, through February 1998, a 2.4-percent rate reduction instituted in
June 1994. The Agreement terminates pending reviews of WMECO's generating plant
performance and any potential reviews associated with Millstone 2's 1994-1995
extended outage. The Agreement also accelerates its amortization of strandable
generation assets by approximately $6 million in 1996 and $10 million in 1997.
ELECTRIC INDUSTRY RESTRUCTURING IN MASSACHUSETTS
On December 30, 1996, the DPU issued the Model Rules, which supplemented an
earlier set of draft rules issued on May 1, 1996. The Model Rules and
accompanying order endorsed January 1, 1998 as the date for full customer choice
of energy suppliers in Massachusetts. In addition, the Model Rules provide that
utilities will have a reasonable opportunity to recover strandable investments
and for the functional unbundling of a utility's distribution, transmission,
generation and marketing functions. The Model Rules also addressed many of the
other issues, including the future structure of the electric utility industry,
that were addressed in the DPU's May 1 explanatory statement. The Model Rules,
however, require a number of statutory changes to be enacted in order to
implement these rules. The Massachusetts legislature has given no formal
indication as to whether it will enact the statutory changes requested by the
DPU. It is unclear at this time how the DPU will proceed if the requested
statutory changes are not enacted.
The DPU also issued regulations establishing standards of conduct governing
the relationship between electric company distribution companies and their
competitive affiliates, which include all affiliates that "engage in the selling
or marketing of natural gas, electricity, or related services on a competitive
basis, including, but not limited to, natural gas or electric supply or
capacity, and demand-side management." Among other restrictions and reporting
requirements, the rules provide a number of restrictions on the flow of
information between a distribution company and its competitive affiliates,
provide that much of the information that is shared between a distribution
company and its competitive affiliate must be provided to non-affiliates, and
provide for physical separation between employees of a distribution company and
its competitive affiliate. The System is currently developing and implementing
procedures to comply with this order.
In addition to the proposed rules set forth above, the DPU also ordered
each electric company, including WMECO, to develop revenue-neutral rates
unbundled into at least generation, transmission and distribution components.
WMECO filed its proposed unbundled rates with the DPU on March 3, 1997. The DPU
has stated that Massachusetts electric utilities should be prepared to begin
sending unbundled bills to Massachusetts customers by June 1997 and that all
customers should be in receipt of unbundled bills by the end of August 1997.
On February 28, 1997, the DPU approved a settlement agreement involving an
unaffiliated electric company, Massachusetts Electric Company (MECO), which is
intended to meet the restructuring objectives of the DPU. This proposal calls
for full-retail choice by January 1, 1998 or a later date when customers of
other Massachusetts electric companies have the opportunity to choose their
energy supplier. Under the settlement, MECO's generating affiliate will divest
itself of its generation assets and MECO will collect strandable investments
through a nonbypassable access charge on customers' bills. The settlement,
however, provides that further DPU approval is required before retail access is
triggered and acknowledges that the legislature can alter the settlement through
subsequent restructuring legislation. Two other Massachusetts electric
companies have indicated that they have reach similar agreements in principal
with the Attorney General, but have not yet filed such agreement. WMECO
currently does not have any plans to divest itself of generation assets in
connection with a restructuring plan.
WMECO FUEL ADJUSTMENT CLAUSE AND GENERATING UNIT OPERATING PERFORMANCE
In Massachusetts, all fuel costs are collected on a current basis by means
of a forecasted quarterly fuel clause. The DPU must hold public hearings before
permitting adjustments in WMECO's retail fuel adjustment clause. In addition to
energy costs, the fuel adjustment clause includes capacity and transmission
charges and credits that result from short-term transactions with other
utilities and from certain FERC-approved contracts among the System operating
companies.
Massachusetts law establishes an annual performance program related to fuel
procurement and use and requires the DPU to review generating unit performance
and related fuel costs. Fuel clause revenues collected in Massachusetts are
subject to potential refund, pending the DPU's examination of the actual
performance of WMECO's generating units. The DPU has found that possession of a
minority ownership interest in a generating plant does not relieve a company of
its responsibilities for the prudent operation of that plant. For information
regarding WMECO's ownership interests in nuclear generating units, see "Electric
Operations--Nuclear Generation."
On February 28, 1997, the DPU approved a settlement agreement between
WMECO and the Massachusetts Attorney General to maintain WMECO's FAC at its
August 1996 level through August 1997. The settlement also provides that
WMECO will not seek carrying charges on any deferred fuel costs incurred as
a result of maintaining the FAC at the agreed-upon level. In accepting the
settlement, the DPU deferred any inquiry into WMECO's fuel expenses, including
replacement power fuel expenses related to the current Millstone outages.
Management believes that WMECO will not seek rate recovery of a substantial
portion of such costs.
DEMAND-SIDE MANAGEMENT
In 1992, the DPU established a conservation charge (CC) to be included in
WMECO's customers' bills. The CC includes incremental DSM program costs above
or below base rate recovery levels, lost fixed-cost recovery adjustments and the
provision for a DSM incentive mechanism.
In August and November 1995, the DPU issued decisions limiting WMECO's
recovery of lost base revenues in calendar year 1996 to those revenues lost due
to implementation of conservation-related costs in the most recent three-year
period. The DPU decision reduced 1996 revenues by approximately $5.5 million.
On January 17, 1996, the DPU approved a two-year settlement proposal that
resolves WMECO's DSM-related proceedings before the DPU. The settlement
resolves: (i) DSM budget levels for 1996 and 1997 (at $12.4 million and $11.9
million, respectively); (ii) the CC for each rate class for 1996 and 1997; and
(iii) energy savings associated with past DSM activity. The Agreement,
modifies, in part, the above-referenced DSM decisions. The Agreement shifted $8
million once included in the CC as lost base revenues into base rates.
On March 3, the DPU approved WMECO's proposed conservation charges for the
period March 1, 1997 - February 28, 1998. These new charges are now being
included on customers' bills. In addition, the DPU approved WMECO's estimates
of energy savings from its DSM programs.
RESOURCE PLANS
CONSTRUCTION
The System's construction program in the period 1997 through 2001 is
estimated as follows:
1997* 1998 1999 2000 2001
(Millions)
CL&P $165 $180 $164 $163 $170
PSNH 35 46 49 37 39
WMECO 37 42 31 28 31
NAEC 9 7 6 6 6
OTHER 34 15 14 16 14
TOTAL $280 $290 $264 $250 $260
* The 1997 data include costs of approximately $20 million related to upgrading
the System's transmission facilities to meet capacity needs caused by the
extended Millstone outages. See, "Electric Operations--Distribution and Load."
The construction program data shown above include all anticipated capital
costs necessary for committed projects and for those reasonably expected to
become committed, regardless of whether the need for the project arises from
environmental compliance, nuclear safety, reliability requirements or other
causes. The construction program's main focus is maintaining and upgrading the
existing transmission and distribution system and nuclear and fossil-generating
facilities.
The construction program data shown above generally include the anticipated
capital costs necessary for fossil generating units to operate at least until
their scheduled retirement dates. Whether a unit will be operated beyond its
scheduled retirement date, be deactivated or be retired on or before its
scheduled retirement date is regularly evaluated in light of the System's needs
for resources at the time, the cost and availability of alternatives and the
costs and benefits of operating the unit compared with the costs and benefits of
retiring the unit. Retirement of certain of the units could, in turn, require
substantial compensating expenditures for other parts of the System's bulk power
supply system. Those compensating capital expenditures have not been fully
identified or evaluated and are not included in the table.
FUTURE NEEDS
The System periodically updates its long-range resource needs through its
integrated demand and supply planning process. While the System does not
foresee the need for any new major generating facilities at least until 2010, it
has reactivated some older facilities and leased additional facilities in 1996
to supplement its capacity requirements due to the extended Millstone outages.
The System's long-term plans rely, in part, on certain DSM programs. These
System company sponsored measures, including installations to date, are
projected to lower the System summer peak load in 2010 by 703 MW and lower the
winter peak load as of January 1, 2011 by 482 MW. See "Rates" for information
about rate treatment of DSM costs.
In addition, System companies have long-term arrangements to purchase the
output from certain NUGs under federal and state laws, regulations and orders
mandating such purchases. NUGs supplied 660.4 MW of firm capacity in 1996. The
System companies do not expect to purchase additional capacity from NUGs for the
foreseeable future. See "Rates--New Hampshire Retail Rates--NUGs" for
information concerning PSNH's efforts to renegotiate its agreements with wood-
burning NUGs and "CL&P Cogeneration Costs" in the notes to NU's financial
statements and "Cogeneration Costs" in the notes to CL&P's financial statements
for information regarding CL&P's termination of one of its purchased-power
agreements.
The System's need for new resources may be affected by premature
retirements of existing generating units, regulatory approval of the continued
operation of certain fossil fuel units past scheduled retirement dates, and the
possible deactivation of plants resulting from environmental compliance costs,
licensing decisions and other regulatory matters. The System's need for new
resources also may be substantially affected by restructuring of the electric
industry. For more information regarding restructuring, see "Rates".
FINANCING PROGRAM
1996 FINANCINGS
On April 30, 1996, PSNH extended and increased its $125 million revolving-
credit agreement to $225 million. A portion of the facility in the amount of
$100 million will expire April 29, 1997 and the remaining $125 million will
expire on April 30, 1999. PSNH used the facility in part to finance the
repayment at maturity of PSNH's $172.5 million of Series A First Mortgage Bonds
on May 16, 1996.
On May 21, 1996, the Connecticut Development Authority issued $62 million
of tax-exempt pollution control revenue bonds. Concurrent with that issuance,
the proceeds of the bonds were loaned to CL&P for the reimbursement of a portion
of CL&P's share of the previously incurred costs of financing, acquiring,
constructing, and installing pollution control, sewage, and solid waste disposal
facilities at Millstone 3. The bonds were issued with an initial variable
interest rate of 3.7 percent per annum. The bonds will mature on May 1, 2031 and
may bear, at CL&P's discretion, a variable or fixed interest rate, which may not
exceed 12 percent. The bonds were originally backed by a five-year letter of
credit, which was secured by a second mortgage on CL&P's interest in Millstone
1. On January 23, 1997, the letter of credit was replaced with an insurance
facility and a standby bond purchase agreement. The second mortgage was replaced
with the issuance of $62 million of First and Refunding Mortgage Bonds, 1996
Series B, bearing the same interest rate as the underlying bonds. As of
February 28, 1997, the bonds bore an interest rate of 3.3 percent per annum.
On June 21, 1996, CL&P entered into an operating lease agreement for CL&P
to acquire the use of four turbine generators having an installed cost of
approximately $70 million. The initial lease term is for a five-year period.
The lease agreement provides for five consecutive renewal options under which
CL&P may lease the turbines for five additional twelve-month terms. The rental
payments are based on a 30 day floating interest rate plus 1 percent. The
interest rate averaged 6.42 percent during 1996. Upon termination of the lease
agreement, ownership of the turbines will remain with the lessor, unless CL&P
exercises its purchase option.
On June 25, 1996, CL&P issued $160 million of First and Refunding Mortgage
Bonds, 1996 Series A. The 1996 Series A Bonds bear interest at an annual rate
of 7.875%, and will mature on June 1, 2001. The net proceeds from the issuance
and sale of the 1996 Series A Bonds, plus funds from other sources, are intended
to be used to repay approximately $193.3 million in principal amount of CL&P's
Series UU bonds, due April 1, 1997. Before maturity of the Series UU bonds, CL&P
has used a portion of the net proceeds to reduce short-term borrowing
requirements.
On July 11, 1996, CL&P entered into an agreement to sell up to $200 million
of fractional undivided percentage interests in eligible accounts receivable
with limited recourse. The agreement provides for a loss reserve pursuant to
which additional customer receivables are allocated to the purchaser on an
interim basis, to protect against bad debt. To the extent actual loss
experience of the pool receivables exceeds the loss reserve, the purchaser
absorbs the excess. For receivables sold, CL&P has retained collection and
servicing responsibilities as agent for the purchaser.
On September 13, 1996, WMECO entered into an agreement to sell fractional
undivided percentage receivable interests in WMECO's eligible billed and
unbilled accounts receivable. The amount of receivables sold at any one time
will not exceed $40 million plus limited reserves for losses. To the extent
actual loss experience of the pool receivables exceeds the loss reserves, the
purchaser will absorb the excess. WMECO has retained collection and servicing
responsibilities as agent for the purchaser.
In order to comply with new accounting requirements, effective January 1,
1997, the CL&P receivables agreement and the WMECO receivables agreement are
being restructured. The WMECO receivables agreement will terminate if it is not
restructured and if certain regulatory approvals are not obtained before April
1, 1997, unless extended by mutual agreement.
On November 21, 1996, NU, CL&P and WMECO entered into a new three-year
revolving credit agreement (the New Credit Agreement) with a group of banks.
Under the New Credit Agreement, NU is able to borrow on a revolving basis up to
$150 million, CL&P is able to borrow approximately $313 million, and WMECO will
be able to borrow up to $150 million, subject to a total borrowing limit of
approximately $313 million for all three borrowers. The New Credit Agreement
replaces a like amount of borrowing availability under earlier revolving credit
agreements (Old Credit Agreements). Approximately $56 million is still
available under the Old Credit Agreement. For information regarding amendments
to this agreement and issues related to its financial covenants, see "Financing
Limitations," below.
Total System debt, including short-term and capitalized leased obligations,
was $4.15 billion as of December 31, 1996, compared with $4.25 billion as of
December 31, 1995 and $4.54 billion as of December 31, 1994. For more
information regarding System financing, see "Notes to Consolidated Statements of
Capitalization" in NU's financial statements and "Short-Term Debt" in the notes
to CL&P's, PSNH's, WMECO's and NAEC's financial statements and "Item 7.
Management Discussion and Analysis of Financial Condition and Results of
Operations."
1997 FINANCING REQUIREMENTS
The System's aggregate capital requirements for 1997, exclusive of
requirements under the Niantic Bay Fuel Trust (NBFT) and a one percent sinking
and improvement fund for CL&P and WMECO, are approximately as follows:
CL&P PSNH WMECO NAEC Other System
(Millions)
Construction $165 $ 35 $ 37 $ 9 $ 34 $280
Nuclear Fuel 5 - 1 15 - 21
Maturities 204 - 15 - - 219
Cash Sinking funds - 25 - 20 56 101
Total $374 $ 60 $ 53 $44 $90 $621
For further information on NBFT and the System's financing of its nuclear
fuel requirements, see "Leases" in the notes to NU's, CL&P's and WMECO's
financial statements. For further information on the System's 1997 and five-
year financing requirements, see "Notes to Consolidated Statements of
Capitalization" in NU's financial statements, "Long-Term Debt" in the notes to
CL&P's, PSNH's and WMECO's financial statements and "Item 7. Management
Discussion and Analysis of Financial Condition and Results of Operations."
1997 FINANCING PLANS
The System companies generally propose to finance their 1997 requirements
through internally generated funds and short-term borrowings. WMECO also
proposes to issue up to approximately $60 million of first mortgage bonds, and
CL&P is evaluating the issue and sale of up to $200 million of first mortgage
bonds. CL&P and WMECO also propose to sell receivables to finance a portion of
their 1997 requirements. For more information regarding the issuance of
additional CL&P and WMECO first mortgage bonds as collateral for the New Credit
Agreement, see "Financing Limitations," below.
In April 1995, NU began issuing NU common shares to fund its Dividend
Reinvestment Plan (DRP). The total amount financed through the DRP in 1996 was
approximately $10.5 million. NU stopped issuing new shares to fund the DRP in
March 1996 and has been funding, and expects to continue through 1997 to fund,
the DRP by purchasing shares in the open market.
On October 8, 1996, Moody's Investors Service (Moody's) downgraded the
senior securities of NU, CL&P, WMECO and NBFT for the second time in 1996.
Standard & Poor's Ratings Group (S&P) downgraded the senior securities of NU,
CL&P and NBFT on October 11, 1996. On March 3, 1997, Moody's and S&P further
downgraded its ratings on NU, PSNH and NAEC in response to the NHPUC decision
described above under "Rates--New Hampshire Retail Rates--Electric Industry
Restructuring." S&P's and Moody's have both announced that all System securities
are being reviewed for further downgrades.
On January 28, 1997, the NU Board declared a 25 cent dividend on each
outstanding commons share payable on March 31, 1997. In light of the
seriousness of the NHPUC's February 28th restructuring orders and the extent of
the Millstone outages, management will recommend that the NU Board consider
suspending the NU dividend. If a dividend suspension were to occur, that would
conserve about $140 million annually of additional funds, compared with the
current dividend of 25 cents. For more information regarding restructuring, see
"Rates" and regarding restrictions on NU and certain System companies' ability
to pay dividends, see "Financing Limitations," below.
FINANCING LIMITATIONS
Many of the System companies' charters and borrowing facilities contain
financial limitations (as discussed more fully below) that must be satisfied
before borrowings can be made and for outstanding borrowings to remain
outstanding. To date, CL&P, PSNH, WMECO and NAEC have satisfied all financial
covenants required under their respective borrowing facilities, but NU needed
and obtained a limited waiver of an interest coverage covenant that had to be
satisfied for NU to borrow under the New Credit Agreement.
NU, CL&P and WMECO are currently maintaining their access to the New Credit
Agreement under a written arrangement which expires March 28, 1997, unless
extended by mutual consent, under which (i) NU agreed not to borrow more than
$27 million against the facility for a period of time, and (ii) NU agreed to
enter into an interim written arrangement whereby NU, CL&P and WMECO will seek
regulatory approval for certain amendments in order to maintain access to the
New Credit Agreement through its maturity date. It is anticipated that these
amendments will include (i) CL&P and WMECO providing lenders first mortgage
bonds as collateral for specified periods and subject to specified terms for
releasing the collateral, (ii) revised financial covenants that are consistent
with NU's, CL&P's and WMECO's current financial forecasts and (iii) an upfront
payment to the lenders in order to maintain commitments under the New Credit
Agreement.
The amounts of short-term borrowings that may be incurred by NU, CL&P,
PSNH, WMECO, HWP and NAEC are subject to periodic approval by the SEC under the
1935 Act. The following table shows the amount of short-term borrowings
authorized by the SEC for each company as of January 1, 1997 and the net amounts
of outstanding short-term debt and cash investments of those companies at the
end of 1996 and as of February 28, 1997:
Maximum Authorized Short-Term Debt Outstanding
Short-Term Debt and (Cash Investments)*
12/31/96 2/28/97
(Millions)
NU.................. $ 150 $ 33 $ ( 62)
CL&P ............... 375 (109) ( 16)
PSNH ............... 225** ( 18) 12
WMECO............... 150 47 74
HWP................. 5 ( 9) ( 9)
NAEC................ 50 3 26
Total $( 53) $ 25
* These columns includes borrowings of or cash investments by various System
companies from NU and other System companies. Total System short-term
indebtedness to unaffiliated lenders was $39 million at December 31, 1996 and
$93 million at February 28, 1997.
** This limit was approved by the NHPUC and will decrease to $125 million
effective May 14, 1997.
The supplemental indentures under which NU issued $175 million in
principal amount of 8.58 percent amortizing notes in December 1991 and $75
million in principal amount of 8.38 percent amortizing notes in March 1992
contain restrictions on dispositions of certain System companies' stock,
limitations of liens on NU assets and restrictions on distributions on and
acquisitions of NU stock. Under these provisions, neither NU, CL&P, PSNH nor
WMECO may dispose of voting stock of CL&P, PSNH or WMECO other than to NU or
another System company, except that CL&P may sell voting stock for cash to
third persons if so ordered by a regulatory agency so long as the amount sold is
not more than 19 percent of CL&P's voting stock after the sale. The
restrictions also generally prohibit NU from pledging voting stock of CL&P,
PSNH or WMECO or granting liens on its other assets in amounts greater than
five percent of the total common equity of NU. As of December 31, 1996, no NU
debt was secured by liens on NU assets. Finally, NU may not declare or make
distributions on its capital stock, acquire its capital stock (or rights
thereto), or permit a System company to do the same, at times when there is an
event of default under the supplemental indentures under which the amortizing
notes were issued.
The charters of CL&P and WMECO contain preferred stock provisions
restricting the amount of unsecured debt those companies may incur. As of
December 31, 1996, CL&P's and WMECO's charters permit CL&P and WMECO to incur an
additional $524 million and $78 million, respectively, of unsecured debt.
In connection with NU's acquisition of PSNH, the DPUC imposed certain
financial conditions intended to prevent NU from relying on CL&P resources if
the PSNH acquisition strained NU's financial condition. The principal
conditions provided for a DPUC review if CL&P's common equity falls to 36
percent or below, require NU to obtain DPUC approval to secure NU financings
with CL&P stock or assets and obligate NU to use its best efforts to sell CL&P
preferred or common stock to the public if NU cannot meet CL&P's need for equity
capital. If, at any time, CL&P projects that its common equity ratio as of the
end of the next fiscal quarter will be below 36% or plans to take any action
that will result or can reasonably be expected to result in reducing the above
ratio below 36% then CL&P is required to notify the DPUC in writing at least 45
days before such action is taken or event is anticipated to occur. The DPUC may
conduct a proceeding after its receipt of CL&P's notice. At December 31, 1996,
CL&P's common equity ratio was 36.6 percent. CL&P does not expect to meet this
condition as of June 30, 1997 and will notify the DPUC in accordance with the
foregoing requirement.
While not directly restricting the amount of short-term debt that CL&P,
WMECO, Rocky River Realty (RRR), NNECO and NU may incur, the revolving credit
agreements to which CL&P, WMECO, HWP, RRR, NNECO and NU are parties provide that
the lenders are not required to make additional loans, and that the maturity of
indebtedness can be accelerated, if NU (on a consolidated basis) does not meet a
common equity ratio test that requires, in effect, that NU's consolidated common
equity (as defined) be at least 30 percent in any quarter. At December 31,
1996, NU's common equity ratio was 34.6 percent.
Under the New Credit Agreement, NU is prohibited from incurring additional
debt unless it is able to demonstrate, on a pro forma basis for the prior
quarter and going forward, that its equity ratio (as defined) will be at least
30 percent of total capitalization (as defined) through December 31, 1996, 31
percent through December 31, 1997 and 32 percent thereafter. In addition, NU
must demonstrate that its ratio of operating income to interest expense will be
at least 1.25 to 1 through December 31, 1996, 1.50 to 1 through June 30, 1997,
2.25 to 1 through December 31, 1997 and 3.25 to 1 thereafter. At December 31,
1996, NU's common equity ratio was 34.4 percent and its operating income to
interest expense ratio was 0.87 to 1. As discussed above, NU has received a
waiver of these covenants through March 28, 1997. NU is also prohibited from
incurring additional debt in excess of CL&P, WMECO, PSNH and NAEC's aggregate
dividend paying ability. See below, for information regarding limitations on
dividend payments.
Additionally, under the New Credit Agreement, CL&P and WMECO are prohibited
from incurring additional debt unless they are able to demonstrate, on a pro
forma basis for the prior quarter and going forward, that their equity ratios
will be at least 32 percent of their total capitalizations through December 31,
1996, 33 percent through December 31, 1997 and 34 percent thereafter. At
December 31, 1996, CL&P'S and WMECO's common equity ratios were 36.6 percent and
40.6 percent. Beginning in the first quarter of 1997, CL&P must demonstrate
that its ratio of operating income to interest expense will be at least 3.00 to
1 through June 30, 1997 and 4.50 to 1 thereafter. WMECO also must demonstrate
that its ratio of operating income to interest expense will be at least 1.50 to
1 through June 30, 1997, 2.25 to 1 through December 31, 1997 and 2.50 to 1
thereafter. CL&P and WMECO are not expected to meet the requirements for either
of these covenants during 1997 and as discussed more fully above, will seek
waivers of these covenants.
PSNH and NAEC are parties to a variety of financing agreements providing
that the credit thereunder can be terminated or accelerated if they do not
maintain specified minimum ratios of common equity to capitalization (as defined
in each agreement). For PSNH, the minimum common equity ratio in a letter of
credit agreement and in a revolving credit agreement is not less than 28.5
percent through June 30, 1997 and 30 percent thereafter. At December 31, 1996,
PSNH's common equity ratio was 42.4 percent. For NAEC, the minimum common
equity ratio in a term loan agreement is 25 percent; at December 31, 1996,
NAEC's common equity ratio was 29.4 percent.
In addition, PSNH's revolving credit agreement requires that for PSNH to
obtain and maintain borrowings thereunder, it must demonstrate that its ratio of
operating income to interest expense will be at least 1.75 to 1 at the end of
each fiscal quarter for the remaining term of the agreement. The NAEC term loan
agreement requires a ratio of adjusted net income to interest expense of 1.35 to
1 through December 31, 1997 and 1.50 to 1 thereafter. For the 12-month periods
ended December 31, 1996 the corresponding ratios for PSNH were 3.59 to 1 and
1.75 to 1, respectively.
In addition, PSNH and NAEC are parties to a variety of financing agreements
providing in effect that the credit thereunder can be terminated or accelerated
if there are actions taken, either by PSNH or NAEC or by the State of New
Hampshire, that deprive PSNH and/or NAEC of the benefits of the Rate Agreement
and/or the Seabrook Power Contracts.
If the February 28, 1997 orders of the NHPUC described above under "Rates--
New Hampshire Retail Rates--Electric Industry Restructuring in New Hampshire"
become effective, they would, unless waived by the respective lenders, result in
(i) write-offs that would cause PSNH's common equity to fall below the
contractual minimums, (ii) reductions in income that would cause PSNH's income
to fall below the contractual minimums, (iii) potential violation of the
contractual provisions with respect to actions depriving PSNH and NAEC of the
benefits of the Rate Agreement and (iv) the potential for cross defaults to
other PSNH and NAEC financing documents. Substantially all of PSNH's and NAEC's
debt obligations ($686 million of PSNH debt and $515 million of NAEC debt) would
be affected. For these actions to be avoided, management believes that it is
essential that the March 10, 1997 temporary restraining order issued by a
federal court judge (see the "Rates" section described above) be extended and
made applicable to the foregoing issues.
The indentures securing the outstanding first mortgage bonds of CL&P, PSNH,
WMECO and NAEC provide that additional bonds may not be issued, except for
certain refunding purposes, unless earnings (as defined in each indenture and
before income taxes, and, in the case of PSNH, without deducting the
amortization of PSNH's regulatory asset) are at least twice the pro forma annual
interest charges on outstanding bonds and certain prior lien obligations and the
bonds to be issued. CL&P and WMECO's 1996 earnings do not permit them to meet
those earnings coverage tests, but as of March 31, 1997, CL&P and WMECO would be
able to issue up to $236 million and $153 million of additional first mortgage
bonds, respectively, on the basis of previously issued but refunded bonds,
without having to meet the earnings coverage test. After the $193 million of
CL&P series UU bonds are retired on April 1, 1997, the amount issuable by CL&P
will increase by that amount.
The preferred stock provisions of CL&P's, PSNH's and WMECO's charters also
prohibit the issuance of additional preferred stock (except for refinancing
purposes) unless income before interest charges (as defined and after income
taxes and depreciation) is at least 1.5 times the pro forma annual interest
charges on indebtedness and the annual dividend requirements on preferred stock
that will be outstanding after the additional stock is issued. CL&P and WMECO
are currently unable to issue additional preferred stock under these provisions.
SEC rules under the 1935 Act require that dividends on NU's shares be based
on the amounts of dividends received from subsidiaries, not on the
undistributed retained earnings of subsidiaries. At the current indicated
annual dividend of $1.00 per share, NU's aggregate annual dividends on common
shares outstanding at December 31, 1996, including unallocated shares held by
the Employee Stock Option Plan, would be approximately $136 million.
The supplemental indentures under which CL&P's and WMECO's first mortgage
bonds and the indenture under which PSNH's first mortgage bonds have been issued
limit the amount of cash dividends and other distributions these subsidiaries
can make to NU out of their retained earnings. As of December 31, 1996, CL&P
had $11.3 million, WMECO had $75.5 million and PSNH had $174.6 million of
unrestricted retained earnings. CL&P is not expected to be able to declare any
dividends under these provision in 1997. The indenture under which NAEC's Series
A Bonds have been issued also limits the amount of cash dividends or
distributions NAEC can make to NU to retained earnings plus $10 million. At
December 31, 1996, approximately $31.6 million was available to be paid under
this provision.
PSNH's revolving credit agreement prohibits it from declaring or paying any
cash dividends or distributions on any of its capital stock, except for
dividends on the preferred stock, unless minimum interest coverage and common
equity ratio tests are satisfied. PSNH's preferred stock provisions also limit
the amount of cash dividends and other distributions PSNH can make to NU if
after taking the dividend or other distribution into account, PSNH's common
stock equity is less than 25 percent of total capitalization. At December 31,
1996, approximately $172.8 million was available to be paid under these
provisions. If NAEC could not meet the common equity covenant referred to
above, it would also be unable to pay common dividends. At December 31, 1996,
$63.7 million was available to be paid under this provision.
Certain subsidiaries of NU have established a system for pooling System
resources (Money Pool) to provide a more effective use of the cash resources of
the System and to reduce outside short-term borrowings. NUSCO administers the
Money Pool as agent for the participating companies. Short-term borrowing needs
of the participating companies (except NU) are first met with available funds of
other member companies, including funds borrowed by NU from third parties. NU
may lend to, but not borrow from, the Money Pool. Investing and borrowing
subsidiaries receive or pay interest based on the average daily Federal Funds
rate, except that borrowings based on loans from NU bear interest at NU's cost.
Funds may be withdrawn or repaid to the Money Pool at any time without prior
notice.
RRR is the obligor under financing arrangements for office facilities at
the System's Berlin (Connecticut) headquarters. Under those financing
arrangements, the holders of notes for $38 million would be entitled to request
the repurchase of the notes if any major subsidiary (as defined) of NU has debt
ratings below investment grade as of any year-end during the term of the
financing. The notes are secured by real estate leases between RRR and NUSCO,
which provide for the acceleration of rent equal to RRR's note obligations if
RRR is unable to pay, and NU has guaranteed the notes. PSNH and NAEC, whose debt
ratings were below investment grade at year end, will become major subsidiaries
of NU as of the end of 1996, based on the financial statements incorporated in
this report. Accordingly, under the terms of the RRR financing arrangements,
the holders have 30 days in which to elect to require RRR to repurchase the
notes at par. If a noteholder makes such an election, RRR will have the option
to refinance the note(s) with an institutional investor (as defined) within
approximately 150 days of receipt of the notice of the event. If RRR is unable
or unwilling to refinance the note(s) it is required to repurchase the note(s)
within approximately 90 days of receipt of the notice. This notice will be given
within three days after the filing date of this report. RRR is engaged in
discussions with the noteholders about this issue.
ELECTRIC OPERATIONS
DISTRIBUTION AND LOAD
The System companies own and operate a fully integrated electric utility
business. The System companies' retail electric service territories cover
approximately 11,335 square miles (4,400 in CL&P's service area, 5,445 in PSNH's
service area and 1,490 in WMECO's service area) and have an estimated total
population of approximately 4 million (2.5 million in Connecticut, 963,000 in
New Hampshire and 582,000 in Massachusetts). The companies furnish retail
electric franchise service in 149, 198 and 59 cities and towns in Connecticut,
New Hampshire and Massachusetts, respectively. In December 1996 CL&P furnished
retail electric franchise service to approximately 1.1 million customers in
Connecticut, PSNH provided retail electric service to approximately 400,000
customers in New Hampshire and WMECO served approximately 195,000 retail
electric franchise customers in Massachusetts. HWP serves 33 retail customers
in Holyoke, Massachusetts.
The following table shows the sources of 1996 electric revenues based on
categories of customers:
CL&P PSNH** WMECO NAEC Total System
Residential................ 42% 30% 38% - 40%
Commercial................. 35 25 32 - 33
Industrial................. 13 16 19 - 16
Wholesale*................. 8 27 7 100% 9
Other...................... 2 2 4 - 2
Total...................... 100% 100% 100% 100% 100%
* Includes capacity sales.
** Excludes sales related to the New Hampshire Pilot Program.
NAEC's 1996 electric revenues were derived entirely from sales to PSNH
under the Seabrook power contracts. See "Rates--New Hampshire Retail Rates---
Seabrook Power Contracts" for a discussion of the contracts.
Through December 31, 1996, the all-time peak demand on the System was 6,358
MW, which occurred on August 2, 1995. At the time of the peak, the System's
generating capacity, including capacity purchases, was 8035 MW.
System energy requirements were met in 1996 and 1995 as set forth below:
Source 1996 1995
Nuclear .................................... 28% 52%
Oil ........................................ 12 4
Coal ....................................... 11 10
Hydroelectric .............................. 5 3
Natural gas ................................ 3 5
NUGs ....................................... 13 13
Purchased-power............................. 28 13
100% 100%
The actual changes in retail KWh sales for the last two years and the
forecasted sales growth estimates for the ten-year period 1996 through 2006, in
each case exclusive of wholesale revenues and New Hampshire pilot program sales,
for the system, CL&P, PSNH and WMECO are set forth below:
1996 over 1995 over Forecast 1996-2006
1995 1994 Compound Rate of Growth
System......... 1.6% (.1)% 1.2%
CL&P........... 1.8% (.3)% 1.1%
PSNH........... .4% .4 % 1.7%
WMECO.......... 2.7% (.1)% 0.4%
Retail electric sales rose by 1.6 percent in 1996 compared to 1995,
primarily due to moderate growth in the residential and commercial classes.
Residential sales were up 2.0 percent in 1996 and commercial sales were up 2.3
percent. Industrial sales were essentially flat. Weather has had a minimal
effect on 1996 growth rates because the increase in winter heating requirements
due to abnormally cold winter weather was offset by the decrease in summer
cooling requirements due to a relatively cool summer. Retail sales at CL&P and
WMECO increased by 1.8 percent and 2.7 percent, respectively. However, PSNH
retail sales increased by only 0.4 percent, partly due to the New Hampshire
Pilot Program.
In spite of further defense and insurance curtailments, moderate growth is
forecasted to resume over the next ten years. The forecasted annual growth rate
of one percent is significantly below historic rates due to a general slow down
of economic growth in the region and, in part, because of forecasted savings
from System-sponsored DSM programs that are designed to minimize operating
expenses for System customers and reduce their demand for electricity. The
forecasted ten-year annual growth rate of System sales would be approximately
1.7 percent if the System did not pursue DSM programs at the forecasted levels.
See "Rates" for information about rate treatment of DSM costs.
The System also acts as both a buyer and a seller of electricity in the
highly competitive wholesale electricity market in the Northeastern United
States (Northeast). Although revenues from long-term contracts have been
declining, as a result of new contracts entered into in recent years, the
System's wholesale revenues of $300 million in 1996 were comparable to 1995 and
are expected to be constant in 1997. The System's most important wholesale
market at this time remains New England. Of the $300 million in total 1996
wholesale revenues, approximately $280 million came from sales to investor-
owned, cooperative and municipal utilities in New England.
With the System's generating capacity of 8034 MW as of January 1, 1997
(including the net of capacity sales to and purchases from other utilities, and
approximately 660 MW of capacity purchased from NUGs under existing contracts),
the System expects to meet reliably its projected annual peak load growth of 1.6
percent until at least the year 2010 without adding new capacity.
The System companies operate and dispatch their generation as provided in
the NEPOOL Agreement. In 1996, the peak demand on the NEPOOL system was 19,507
MW in August, which was 992 MW below the 1995 peak load of 20,499 MW in July of
that year. NEPOOL has projected that there will be an increase in demand in
1997 and estimates that the summer 1997 peak load could reach 21,390 MW.
Management expects that the System and NEPOOL will have sufficient capacity
to meet peak load demands for New England even if Millstone, the Maine Yankee
nuclear unit (MY) and the 300 MW Long Island Cable are not operational at any
time during the 1997 summer season, so long as the remaining generating units
and transmission systems in Connecticut and the New England region have normal
operability. If high levels of unplanned outages in New England were to occur,
or if any of the System's transmission lines used to import power from other
states were unavailable, at times of peak load demand, NU and the other New
England utilities may have to resort to operating procedures designed to reduce
load. The System spent approximately $60 million in 1996 to reduce the risk of
unplanned outages and expects to spend $47 million in 1997. Most of the money
budgeted for 1997 will be used to improve the System's network of transmission
lines to increase imports into Connecticut and for lease payments for additional
capacity.
REGIONAL AND SYSTEM COORDINATION
The System companies and most other New England utilities are parties to an
agreement (NEPOOL Agreement), which coordinates the planning and operation of
the region's generation and transmission facilities. System transmission lines
form part of the New England transmission system linking System generating
plants with one another and with the facilities of other utilities in the
Northeast and Canada. The generating facilities of all NEPOOL participants are
dispatched as a single system through the New England Power Exchange, a central
dispatch facility. The NEPOOL Agreement provides for a determination of the
generating capacity responsibilities of participants and certain transmission
rights and responsibilities. NEPOOL's objectives are to assure that the bulk
power supply of New England and adjoining areas conforms to proper standards of
reliability, to attain maximum practical economy in the bulk power supply system
consistent with such reliability standards and to provide for equitable sharing
of the resulting benefits and costs.
Pursuant to the NEPOOL Agreement, if a participant is unable to meet its
capacity responsibility obligations, the participant is required to pay a
penalty. In the event that none of the Millstone units are returned to service
by November 1, 1997, the System companies could be required to pay a penalty
under the NEPOOL Agreement of approximately $10 million per month. This number
would decrease as each unit is returned to service. Management, however,
expects to meet its capacity responsibility even if the Millstone units do not
return to service as currently scheduled through purchased power contracts with
other utilities and/or reactivating System fossil generating units and thus
avoid the penalty. The costs of these alternative plans cannot be estimated at
this time.
A restated and revised NEPOOL Agreement, providing for pool-wide open
access transmission tariff and a proposal for the creation of an Independent
System Operator (ISO), became effective on March 1, 1997. Under these new
arrangements: (1) the ISO, a non-profit corporation, whose board of directors
and staff will not be controlled by or affiliated with market participants, will
ensure the reliability of the NEPOOL transmission system, administer the NEPOOL
tariff and oversee the efficient and competitive functioning of the regional
power market; (2) The NEPOOL tariff will provide for non-discriminatory open-
access to the regional transmission network at one rate regardless of
transmitting distance for all transactions; and (3) The new NEPOOL Agreement
will establish a broader governance structure for NEPOOL and develop a more
open, competitive market structure.
There are two agreements that determine the manner in which costs and
savings are allocated among the System companies. Under an agreement among
CL&P, WMECO and HWP (Initial System Companies) pool their electric production
costs and the costs of their principal transmission facilities (NUG&T).
Pursuant to the merger agreement between NU and PSNH, the Initial System
Companies and PSNH entered into a ten-year sharing agreement (Sharing
Agreement), expiring in June 2002, that provides, among other things, for the
allocation of the capability responsibility savings and energy expense savings
resulting from a single-system dispatch through NEPOOL.
TRANSMISSION ACCESS AND FERC REGULATORY CHANGES
On April 24, 1996, FERC issued its final open access rule (the Rule) to
promote competition in the electric industry. The Rule will require, among
other things, all public utilities that own, control or operate facilities used
for transmitting electric energy in interstate commerce to file an open-access,
non-discriminatory transmission tariff and to take transmission service for
their own new wholesale sales and purchases under the open-access tariffs. The
Rule also requires public utilities to develop and maintain a same-time
information system that will give existing and potential transmission users the
same access to transmission information that the public utility enjoys, and
requires public utilities to separate transmission from generation marketing
functions and communications. The Rule also supports full recovery of
legitimate, prudent and verifiable wholesale strandable investments. On
February 26, 1997, FERC reaffirmed the Rule with a few minor clarifications.
On July 8, 1996, NU refiled its transmission tariffs to conform with the
minimum terms and conditions set forth in the Rule. On December 31, 1996, NU
filed amendments to its transmission tariff and several other compliance filings
to meet the Rule's year-end requirements, including standards of conduct
ensuring that transmission and wholesale generation personnel function
independently. As of January 3, 1997, NU operates pursuant to the requirements
of the standards of conduct and participates in a NEPOOL-wide Open Access Same-
Time Information System, which provides transmission customers with electronic
access to information on available capacity, tariffs and other information. On
January 22, 1997, NU refiled its transmission tariff to account for certain
transmission services that would be provided by NEPOOL under the new NEPOOL
Agreement (discussed above), which was filed on December 31, 1996.
In 1996, the System companies collected approximately $45 million in
incremental transmission revenues from other electric utility generators.
FOSSIL FUELS
In 1996, 12 percent and 11 percent of the System's generation was oil and
coal-derived, respectively. The System's residual oil-fired generation stations
used approximately 7.8 million barrels of oil in 1996. The System obtained the
majority of its oil requirements in 1996 through contracts with several large,
independent oil companies. Those contracts allow for some spot purchases when
market conditions warrant. Spot purchases represented approximately 15 percent
of the System's fuel oil purchases in 1996. The contracts expire annually or
biennially. The System currently does not anticipate any difficulties in
obtaining necessary fuel oil supplies on economic terms.
The System has nine generating stations, aggregating approximately 3,280
MW, which can fully or partially burn either residual oil or natural gas/coal,
as economics, environmental concerns or other factors dictate. CL&P plans to
convert two of the four units at its oil-fired Middletown Station in Connecticut
comprising approximately 350 MW of capacity to a dual-fuel generating facility
in the spring of 1997. CL&P, PSNH and WMECO have contracts with the local gas
distribution companies where the dual-fuel generating units are located, under
which natural gas is made available by those companies on an interruptible
basis. In addition, gas for CL&P'S Devon and Montville generating stations is
being purchased directly from producers and brokers on an interruptible basis
and transported through the interstate pipeline system and the local gas
distribution company. The System expects that interruptible natural gas will
continue to be available for its dual-fuel electric generating units on economic
terms and will continue to economically supplement fuel oil requirements.
The System companies obtain their coal through long-term supply contracts
and spot market purchases. The System companies currently have an adequate
supply of coal. Because of changes in federal and state air quality
requirements, the System may be required to use lower sulfur coal in its plants
in the future. See "Other Regulatory and Environmental Matters--Environmental
Regulation---ir Quality Requirements."
NUCLEAR GENERATION
GENERAL
Certain System companies have ownership interests in four operating nuclear
units, Millstone 1, 2 and 3 and Seabrook 1, and equity interests in four
regional nuclear companies (the Yankee Companies) that separately own CY, Maine
Yankee (MY), Vermont Yankee (VY) and Yankee Rowe. System companies operate the
three Millstone units and Seabrook 1. Yankee Rowe was permanently removed from
service in 1992, and CY was permanently removed from service on December 4,
1996. The System companies will have responsibility for administering the
decommissioning of CY.
CL&P and WMECO own 100 percent of Millstone 1 and 2 as tenants in common.
Their respective ownership interests in each unit are 81 percent and 19 percent.
CL&P, PSNH and WMECO have agreements with other New England utilities
covering their joint ownership as tenants in common of Millstone 3. CL&P's
ownership interest in the unit is 52.93 percent, PSNH's ownership interest in
the unit is 2.85 percent and WMECO's interest is 12.24 percent. NAEC and CL&P
have 35.98 percent and 4.06 percent ownership interests, respectively, in
Seabrook. The Millstone 3 and Seabrook joint ownership agreements provide for
pro-rata sharing by the owners of each unit of the construction and operating
costs, the electrical output and the associated transmission costs. CL&P and
WMECO, through NNECO as agent, operate Millstone 3 at cost, and without profit,
under a sharing agreement that obligates them to utilize good utility operating
practice and requires the joint owners to share the risk of employee negligence
and other risks pro rata in accordance with their ownership shares. The sharing
agreement provides that CL&P and WMECO would only be liable for damages to the
non-NU owners for a deliberate breach of the agreement pursuant to authorized
corporate action.
CL&P, PSNH, WMECO and other New England electric utilities are the
stockholders of the Yankee companies. Each Yankee company owns a single nuclear
generating unit. The stockholder-sponsors of each Yankee company are
responsible for proportional shares of the operating costs of the respective
Yankee company and are entitled to proportional shares of the electrical output.
The relative rights and obligations with respect to the Yankee companies are
approximately proportional to the stockholders' percentage stock holdings, but
vary slightly to reflect arrangements under which nonstockholder electric
utilities have contractual rights to some of the output of particular units. The
Yankee companies and CL&P's, PSNH's and WMECO's stock ownership percentages in
the Yankee companies are set forth below:
CL&P PSNH WMECO System
Connecticut Yankee Atomic
Power Company (CYAPC) ...... 34.5% 5.0% 9.5% 49.0%
Maine Yankee Atomic Power
Company (MYAPC) ............ 12.0% 5.0% 3.0% 20.0%
Vermont Yankee Nuclear
Power Corporation (VYNPC)... 9.5% 4.0% 2.5% 16.0%
Yankee Atomic Electric
Company (YAEC) ............ 24.5% 7.0% 7.0% 38.5%
CL&P, PSNH and WMECO are obligated to provide their percentages of any
additional equity capital necessary for the Yankee companies, but do not expect
to need to contribute additional equity capital in the future. CL&P, PSNH and
WMECO believe that the two remaining operating plants, MY and VY, could require
additional external financing in the next several years to finance construction
expenditures, nuclear fuel and for other purposes. Although the ways in which
MYAPC and VYAPC would attempt to finance these expenditures, if they are needed,
have not been determined, CL&P, PSNH and WMECO could be asked to provide further
direct or indirect financial support for these companies. For information
regarding additional capital requirements at MY and related watch list costs,
see "Electric Operations--Nuclear Generation--Nuclear Plant Performance and
Regulatory Oversight."
The operators of Millstone 1, 2 and 3, MY, VY and Seabrook 1 hold full
power operating licenses from the NRC. As holders of licenses to operate
nuclear reactors, CL&P, WMECO, NAESCO, NNECO and the Yankee companies are
subject to the jurisdiction of the NRC. The NRC has broad jurisdiction over the
design, construction and operation of nuclear generating stations, including
matters of public health and safety, financial qualifications, antitrust
considerations and environmental impact. The NRC issues 40-year initial
operating licenses to nuclear units and NRC regulations permit renewal of
licenses for an additional 20-year period.
The NRC also regularly conducts generic reviews of technical and other
issues, a number of which may affect the nuclear plants in which System
companies have interests. The cost of complying with any new requirements that
may result from these reviews cannot be estimated at this time, but such costs
could be substantial. For more information regarding recent actions taken by
the NRC with respect to the System's nuclear units, see "Electric Operations---
Nuclear Generation--Nuclear Plant Performance and Regulatory Oversight."
NUCLEAR PLANT PERFORMANCE AND REGULATORY OVERSIGHT
MILLSTONE UNITS
Millstone 1, 2 and 3 are located in Waterford, Connecticut and have license
expirations of October 6, 2010, July 31, 2015 and November 25, 2025,
respectively and are currently out of service. These units are presently on the
NRC's watch list as Category 3 plants, the lowest such category. Plants in this
category are required to receive formal NRC commissioners' approval to resume
operations.
Millstone 1 began a planned refueling and maintenance outage on November 4,
1995. Millstone 2 was shut down on February 21, 1996 as a result of an
engineering evaluation that determined that some valves could be inoperable in
certain emergency scenarios. On March 30, 1996, Millstone 3, was shut down by
NNECO following an engineering evaluation which determined that four safety-
related valves would not be able to perform their design function during certain
postulated events.
Each of these outages has been extended in order to respond to various NRC
requests to describe actions taken, including the resolution of specific
technical issues and to ensure that future operation of the units will be
conducted in accordance with the terms and conditions of their operating
licenses, NRC regulations and their Updated Final Safety Analysis Report. The
System also must demonstrate that it maintains an effective corrective action
program for Millstone, as required by NRC regulations, to identify and resolve
conditions that are adverse to safety or quality. For more information
regarding nuclear management changes and costs related to the outages, see
"Overview of Nuclear Matters and Related Financial Matters."
Based upon management's current plans, it is estimated that one of the
units will be ready for restart in the third quarter of 1997 with the second and
third units being ready for restart in the fourth quarter of 1997 and the first
quarter of 1998, respectively. Millstone 1 presently has the most aggressive
schedule, but there are no assurances it will be the first unit to restart.
Prior to and following notification to the NRC that the units are ready to
resume operations, management expects that the NRC staff will conduct extensive
reviews and inspections, and prior to such notification, independent corrective
action verification teams (as discussed more fully below) also will inspect each
unit. The System also will need to comply with an NRC order regarding the
development of a comprehensive employee concerns program, which will need to be
reviewed by an independent third-party (as discussed more fully below). The
units will not be allowed to restart without an affirmative vote of the NRC
commissioners following completion of these reviews and inspections. Management
cannot estimate when the NRC will allow any of the units to restart, but hopes
to have at least one unit operating in the second half of 1997. Furthermore,
because of the length of the outages, management cannot estimate the time it
will take for the units to resume full power after NRC approval to restart.
On August 14, 1996, the NRC issued an order confirming NNECO's agreement to
conduct an Independent Corrective Action Verification Program (ICAVP) prior to
the restart of each of the Millstone units. The order requires that an
independent, third party team, whose appointment is subject to NRC approval,
verify the results of the corrective actions taken to resolve identified design
and configuration management issues. NNECO has submitted to the NRC its
selection of an ICAVP contractor for each of the units. The NRC is evaluating
NNECO's selection.
In the Fall of 1996, the NRC established a Special Projects Office to
oversee inspection and licensing activities at Millstone. The Special Projects
Office is responsible for (1) licensing and inspection activities at Millstone;
(2) oversight of the independent corrective action verification program; (3)
oversight of NU's corrective actions related to safety issues involving employee
concerns; and (4) inspections necessary to implement NRC oversight of the
plants' restart activities.
On December 4 and 5, 1996, the NRC conducted enforcement conferences
regarding numerous apparent regulatory violations at Millstone and CY that were
discovered during routine and special inspections at the units during 1996. It
is likely that these proceedings will result in the issuance of Notices of
Violations and the imposition of significant civil penalties for each of the
units. For more information regarding the current status of CY, see "Yankee
Units-Connecticut Yankee" below.
In addition to the various technical and design basis issues at Millstone,
the NRC continues to focus on the System's response to employee concerns at the
units. On October 24, 1996, the NRC issued an order that requires NNECO to
devise and implement a comprehensive plan for handling safety concerns raised by
Millstone employees and for assuring an environment free from retaliation and
discrimination. The NRC also ordered NNECO to contract for an independent third
party to oversee this comprehensive plan. The members of the independent third-
party organization must not have had any direct previous involvement with
activities at Millstone and must be approved by the NRC. Oversight by the
third-party group will continue until NNECO demonstrates, by performance, that
the conditions leading to this order have been corrected. NNECO has submitted
to the NRC its comprehensive employee concerns plan and its selection of the
third-party oversight organization, which are currently being reviewed by the
NRC.
On March 7, 1997, the NRC issued a letter to NNECO confirming NNECO's
commitment to evaluate and correct problems identified within its licensed
operator training programs at Millstone and CY. Management has already taken
certain steps to address the NRC's concerns in this area and is committed to
making additional significant improvements in its training program. Management
is evaluating this situation, but currently does not believe that the NRC's
action will have a material impact on its plans for restarting the Millstone
units.
For information regarding replacement power costs and incremental nuclear
O&M costs associated with the extended Millstone outages, see "Overview of
Nuclear Matters and Related Financial Matters." For information regarding the
recoverability of these costs, see "Rates." For information regarding the 1996
nuclear workforce reduction, see "Employees." For information regarding criminal
investigations by the NRC's Office of Investigations (OI) and the Office of the
U. S. Attorney for the District of Connecticut related to various matters at
Millstone and CY; two citizens petitions related to NU's nuclear operations; and
potential joint owner litigation related to the extended outages, see "Item 3.
Legal Proceedings."
SEABROOK
Seabrook 1, a 1148-MW pressurized-water reactor, has a license expiration
date of October 17, 2026. The Seabrook operating license expires 40 years from
the date of issuance of authorization to load fuel, which was about three and
one-half years before Seabrook's full-power operating license was issued. The
System will determine at the appropriate time whether to seek recapture of some
or all of this period from the NRC and thus add up to an additional three and
one-half years to the operating term for Seabrook. In 1996, Seabrook operated
at a capacity factor of 96.5 percent. The unit expects to begin a 49-day
planned refueling and maintenance outage on May 10, 1997.
On October 9, 1996, the NRC issued a request for information concerning all
nuclear plants in the United States, except the three Millstone units and CY,
which had previously received such requests. Such information will be used to
verify that these facilities are being operated and maintained in accordance
with NRC regulations and the unit's specific licenses. The NRC has indicated
that the information will be used to determine whether future inspection or
enforcement activities are warranted for any plant. NAESCO has submitted its
response to the NRC's request with respect to Seabrook. Seabrook's operations
have not been restricted by the request. The NRC's April 1996 comprehensive
review found Seabrook to be a well-operated facility without any major safety
issues or weaknesses and noted that it would reduce its future inspections in a
number of areas as a result of its findings.
YANKEE UNITS
CONNECTICUT YANKEE
CY, a 582-MW pressurized-water reactor, has a license expiration date of
June 29, 2007. On July 22, 1996 CY began an unscheduled outage as a
precautionary measure to evaluate the plant's service water system, which
provides cooling water to certain critical plant components. On August 8, 1996,
after evaluating certain other pending technical and regulatory issues, CY's
management decided to delay the restart of the unit and to begin a scheduled
September refueling outage. The refueling outage was accelerated in order to
allow time to resolve the pending issues.
On December 4, 1996, the board of directors of CYAPC voted unanimously to
retire CY. The decision to shut down CY was based on economic analyses that
showed that shutting down the unit prematurely and incurring replacement power
costs could produce potential savings to its purchasers compared to the costs of
operating it over the remaining period of the unit's operating license. These
analyses indicated that this shutdown decision could produce savings in excess
of $130 million on a net present value basis. These analyses did not consider
the costs of addressing concerns about CY's design and licensing basis raised by
the NRC this past summer similar to those raised at Millstone. If these costs
had been considered, the economic analyses would have favored shutdown by an
even greater margin. CYAPC has undertaken a number of regulatory filings
intended to implement the decommissioning. For more information regarding CYAPC
revised decommissioning estimate that was submitted to FERC in December 1996,
See "Decommissioning" below.
Based upon FERC regulatory precedent, CYAPC believes it will be allowed to
continue to collect from its power purchasers, including CL&P, WMECO and PSNH,
CYAPC's decommissioning costs, the owners' unrecovered investments in CYAPC, and
other costs associated with the permanent closure of the plant over the
remaining period of its NRC operating license. Management in turn expects that
CL&P, WMECO and PSNH will continue to be allowed to recover such FERC-approved
costs from their customers.
The preliminary estimate of the sum of future payments for the closing,
decommissioning and recovery of the remaining investment in CY is approximately
$762.8 million. The System's share of these remaining estimated costs is
approximately $374 million.
As confirmed by the NRC on March 4, 1997, CYAPC has agreed to undertake
various steps to resolve deficiencies and weaknesses in the radiation protection
program at CY. Management does not believe that this undertaking will have a
material adverse effect on the System companies or CYAPC.
MAINE YANKEE
MY, a 870-MW pressurized-water reactor, has a license expiration date of
October 21, 2008. MY's operating license expires 40 years from the date of
issuance of the construction permit, which was about four years before MY's
full-power operating license was issued. At the appropriate time, MYAPC will
determine whether to seek recapture of this construction period from the NRC and
add it to the term of the MY operating license. In 1996, MY operated at a
capacity factor of 65.5 percent.
By order issued on January 3, 1996, the NRC suspended MY's authority to
operate at full power and limited MY to operating at 90 percent power pending
the NRC's review and approval of a computer code application used at MY. The
plant was taken out of service on December 5, 1996 after finding that certain
cables did not have the proper separation required by the plant's design and
licensing basis to protect them during accident conditions. MYAPC has agreed
not to restart the plant until it completes a number of actions required by the
NRC and prior to receiving NRC approval.
On January 29, 1997, the NRC announced that MY had been placed on the NRC's
watch list as a Category 2 plant. Plants in this category have been identified
as having weaknesses that warrant increased NRC attention until the licensee
demonstrates a period of improved performance. The NRC cited a number of
deficiencies in the engineering design to support operations at MY, which were
identified by an independent safety assessment team during the latter half of
1996. Although MY has developed a plan and initiated steps to correct the
problems, including entering into an agreement with Entergy Corporation to
acquire outside management expertise in the operation of the facility, the NRC
indicated that increased agency attention was still needed.
The System cannot estimate when MY will return to service and expects that
there will be substantial costs associated with the NRC's actions that cannot be
accurately estimated at this time.
VERMONT YANKEE
VY, a 514-MW boiling water reactor, has a license expiration date of March
21, 2012. In 1996, VY operated at a capacity factor of 81.4 percent. VY had a
57-day planned refueling outage during 1996 that ended on November 1, 1996. The
unit expects to begin a 56-day planned refueling and maintenance outage on
September 28, 1998.
YANKEE ROWE
In 1992, YAEC's owners voted to shut down Yankee Rowe permanently based on
an economic evaluation of the cost of a proposed safety review, the reduced
demand for electricity in New England, the price of alternative energy sources
and uncertainty about certain regulatory requirements. The power contracts
between CL&P, PSNH, WMECO, and other owners, and YAEC permit YAEC to recover
from each its proportional share of the Yankee Rowe shutdown and decommissioning
costs. For more information regarding the decommissioning of Yankee Rowe, see
"Decommissioning," below.
NUCLEAR INSURANCE
The NRC requires nuclear plant licensees to maintain a minimum of $1.06
billion in nuclear property and decontamination insurance coverage. The NRC
requires that proceeds from the policy following an accident that exceed $100
million will first be applied to pay expenses. The insurance carried by the
licensees of the Millstone units, Seabrook 1, CY, MY and VY meets the NRC's
requirements. YAEC has obtained an exemption for Yankee Rowe from the $1.06
billion requirement and currently carries $25 million of insurance that
otherwise meets the requirements of the rule. CYAPC expects to seek a similar
exemption for CY in 1997. For more information regarding nuclear insurance, see
"Commitments and Contingencies--Nuclear Insurance Contingencies" in the notes to
NU's, CL&P's, PSNH's, WMECO's and NAEC's financial statements.
NUCLEAR FUEL
The supply of nuclear fuel for the System's existing units requires the
procurement of uranium concentrates, followed by the conversion, enrichment and
fabrication of the uranium into fuel assemblies suitable for use in the System's
units. The majority of the System companies' uranium enrichment services
requirements is provided under a long-term contract with the United States
Enrichment Corporation (USEC), a wholly owned United States government
corporation. The majority of Seabrook's uranium enrichment services
requirements is furnished through a Russian trading company. The System expects
that uranium concentrates and related services for the units operated by the
System and for the other units in which the System companies are participating,
that are not covered by existing contracts, will be available for the
foreseeable future on reasonable terms and prices.
In August 1995, NAESCO filed a complaint in the United States Court of
Federal Claims challenging the propriety of the prices charged by the USEC for
uranium enrichment services procured for Seabrook Station in 1993. The
complaint is an appeal of the final decision rendered by the USEC contracting
officer denying NAESCO's claims, which range from $2.5 to $5.8 million, and will
likely be considered along with similar complaints that are pending before the
court on behalf of 13 other utilities. The NAESCO complaint has been suspended
pending the outcome of an appeal in another proceeding involving a similar
complaint.
As a result of the Energy Act, the United States commercial nuclear power
industry is required to pay the United States Department of Energy (DOE),
through a special assessment for the costs of the decontamination and
decommissioning of uranium enrichment plants owned by the United States
government, no more than $150 million per annum for 15 years beginning in 1993.
Each domestic nuclear utility's payment is based on its pro rata share of all
enrichment services received by the United States commercial nuclear power
industry from the United States government through October 1992. Each year, the
DOE adjusts the annual assessment using the Consumer Price Index. The Energy
Act provides that the assessments are to be treated as reasonable and necessary
current costs of fuel, which costs shall be fully recoverable in rates in all
jurisdictions. The System's total share of the estimated assessment was
approximately $62.8 million. Management believes that the DOE assessments
against CL&P, WMECO, PSNH and NAEC will be recoverable in future rates.
Accordingly, each of these companies has recognized these costs as a regulatory
asset, with a corresponding obligation on its balance sheet.
In June 1995, the United States Court of Federal Claims held that, as
applied to YAEC, the Uranium Enrichment Decontamination and Decommissioning Fund
is an unlawful add-on to the bargained-for contract price for enriched uranium.
As a result, the federal government must refund the approximately $3.0 million
that YAEC has paid into the fund since its inception. NU is evaluating the
applicability of this decision to the $21 million that the System companies have
already paid into the fund, and whether this alters the System companies'
obligation to pay such special assessments in the future. The decision as to
YAEC has been appealed by the federal government.
Nuclear fuel costs associated with nuclear plant operations include amounts
for disposal of nuclear waste. The System companies include in their nuclear
fuel expense spent fuel disposal costs accepted by the DPUC, NHPUC and DPU in
rate case or fuel adjustment decisions. Spent fuel disposal costs also are
reflected in FERC-approved wholesale charges.
HIGH-LEVEL RADIOACTIVE WASTE
The Nuclear Waste Policy Act of 1982 (NWPA) provides that the federal
government is responsible for the permanent disposal of spent nuclear reactor
fuel and high-level waste. As required by the NWPA, electric utilities
generating spent nuclear fuel (SNF) and high-level waste are obligated to pay
fees into a fund which would be used to cover the cost of siting, constructing,
developing and operating a permanent disposal facility for this waste. The
System companies have been paying for such services for fuel burned starting in
April 1983 on a quarterly basis since July 1983. The DPUC, NHPUC and DPU permit
the fee to be recovered through rates.
In return for payment of the fees prescribed by the NWPA, the federal
government is to take title to and dispose of the utilities' high-level wastes
and spent nuclear fuel. The NWPA provides that a disposal facility be
operational and for the DOE to accept nuclear waste for permanent disposal in
1998. On March 3, 1997 CYAPCO, NAESCO and NUSCO intervened as parties in a
lawsuit brought in the U.S. Court of Appeals for the District of Columbia
Circuit by 35 nuclear utilities in late January, seeking additional action based
on the DOE's assertion that it expects to be unable to begin acceptance of spent
nuclear fuel for disposal by January 31, 1998. Among other requests for relief,
the lawsuit requests that utilities be relieved of their contractual obligation
with DOE to pay fees into the Nuclear Waste Fund and be authorized to place such
fee payments into escrow "unless and until" DOE begins accepting spent fuel for
disposal. The DOE's current estimate for an available site is 2010.
Until the federal government begins accepting nuclear waste for disposal,
operating nuclear generating plants will need to retain high-level waste and
spent fuel onsite or make some other provisions for their storage. With the
addition of new storage racks, storage facilities for Millstone 3 is expected to
be adequate for the projected life of the unit. With the implementation of
currently planned modifications, the storage facilities for Millstone 1 and 2
are expected to be adequate (maintaining the capacity to accommodate a full-core
discharge from the reactor) until 2003 and 2004, respectively. Fuel
consolidation, which has been licensed for Millstone 2, could provide adequate
storage capability for the projected lives of Millstone 1 and 2. Adequate
storage capacity exists to accommodate all of the SNF at CY. In addition, other
licensed technologies, such as dry storage casks or on-site transfers, are being
considered to accommodate spent fuel storage requirements. With the current
installation of new racks in its existing spent fuel pool, Seabrook is expected
to have spent fuel storage capacity until at least 2010.
MYAPC believes it has adequate storage capacity through MY's current
licensed operating life. The storage capacity of the spent fuel pool at VY is
expected to be reached in 2005 and the available capacity of the pool is
expected to be able to accommodate full-core removal until 2001.
Because the Yankee Rowe plant was permanently shut down in February 1992,
YAEC is considering the construction of a temporary facility to store the spent
nuclear fuel produced by the Yankee Rowe plant over its operating lifetime until
that fuel is removed by the DOE.
LOW-LEVEL RADIOACTIVE WASTE
The System currently has contracts to dispose its low-level radioactive
waste (LLRW) at two privately operated facilities in Clive, Utah and in
Barnwell, South Carolina. Because access to LLRW disposal may be lost at any
time, the System has plans that will allow for onsite storage of LLRW for at
least five years. Neither Connecticut nor New Hampshire have developed
alternatives to out-of-state disposal of LLRW to date. Both Maine and Vermont
are in the process of implementing an agreement with Texas to provide access to
a LLRW disposal facility that is to be developed in that state. All three
states plan to form a LLRW compact that is currently awaiting approval by
Congress.
DECOMMISSIONING
Based upon the System's most recent comprehensive site-specific updates of
the decommissioning costs for each of the three Millstone units and for
Seabrook, the recommended decommissioning method continues to be immediate and
complete dismantlement of those units at their retirement. The table below sets
forth the estimated Millstone and Seabrook decommissioning costs for the System
companies. The estimates are based on the latest site studies, escalated to
December 31, 1996 dollars.
CL&P PSNH WMECO NAEC System
(Millions)
Millstone 1 $316.0 $ - $ 74.1 $ - $ 390.1
Millstone 2 279.0 - 65.5 - 344.5
Millstone 3 244.9 13.2 56.6 - 314.7
Seabrook 18.3 - - 162.1 180.4
Total $858.2 $ 13.2 $196.2 $162.1 $1,229.7
As of December 31, 1996, the System recorded balances (at market) in its
external decommissioning trust funds as follows:
CL&P PSNH WMECO NAEC System
(Millions)
Millstone 1 $141.1 $ - $ 40.0 $ - $ 181.1
Millstone 2 92.5 - 27.0 - 119.5
Millstone 3 61.2 3.2 16.6 - 81.0
Seabrook 2.2 - - 19.7 21.9
Total $297.0 $ 3.2 $ 83.6 $ 19.7 $ 403.5
In 1986, the DPUC approved the establishment of separate external trusts
for the currently tax-deductible portions of decommissioning expense accruals
for Millstone 1 and 2 and for all expense accruals for Millstone 3. The DPUC
has authorized CL&P to collect its current decommissioning estimate for the
three Millstone units from customers. This estimate includes an approximate 16
percent contingency factor for the decommissioning cost of each unit.
WMECO has established independent trusts to hold all decommissioning
expense collections from customers. The DPU has authorized WMECO to collect its
current decommissioning estimate for the three Millstone units.
New Hampshire enacted a law in 1981 requiring the creation of a state-
managed fund to finance decommissioning of any units in that state. NAEC's
costs for decommissioning are billed by it to PSNH and recovered by PSNH under
the Rate Agreement. Under the Rate Agreement, PSNH is entitled to a base rate
increase to recover increased decommissioning costs. In its recent restructuring
orders, the NHPUC determined that PSNH would be allowed to recover
decommissioning costs through stranded cost charges. See "Rates--New Hampshire
Retail Rates" for further information on the Rate Agreement and restructuring.
The decommissioning cost estimates for the System nuclear units are
reviewed and updated regularly to reflect inflation and changes in
decommissioning requirements and technology. Changes in requirements or
technology, or adoption of a decommissioning method other than immediate
dismantlement, could change these estimates. CL&P, PSNH and WMECO attempt to
recover sufficient amounts through their allowed rates to cover their expected
decommissioning costs. Only the portion of currently estimated total
decommissioning costs that has been accepted by regulatory agencies is reflected
in rates of the System companies. Based on present estimates, and assuming its
nuclear units operate to the end of their respective license periods, the System
expects that the decommissioning trust funds will be substantially funded when
those expenditures have to be made.
CYAPC, YAEC, VYNPC and MYAPC are all collecting revenues for
decommissioning from their power purchasers. The table below sets forth the
System companies' estimated share of decommissioning costs of the Yankee units.
The estimates are based on the latest site studies, escalated to December 31,
1996 dollars. For information on the equity ownership of the System companies
in each of the Yankee units, see "Electric Operations--Nuclear Generation--
General."
CL&P PSNH WMECO System
(Millions)
VY $ 34.8 $ 14.6 $ 9.1 $ 58.5
Yankee Rowe* 42.5 12.1 12.1 66.7
CY* 263.2 38.1 72.5 373.8
MY 44.3 18.5 11.1 73.9
Total $384.8 $ 83.3 $104.8 $572.9
* As discussed more fully below, the costs shown include all remaining
decommissioning costs and other closing costs associated with the early
retirement of Yankee Rowe and CY as of December 31, 1996.
As of December 31, 1996, the System's share of the external decommissioning
trust fund balances (at market), which have been recorded on the books of the
Yankee Companies, is as follows:
CL&P PSNH WMECO System
(Millions)
VY $ 15.1 $ 6.4 $ 4.0 $ 25.5
Yankee Rowe 29.4 8.4 8.4 46.2
CY 70.6 10.2 19.4 100.2
MY 19.6 8.2 4.9 32.7
Total $134.7 $33.2 $36.7 $204.6
Effective January 1996, YAEC began billing its sponsors, including CL&P,
WMECO and PSNH, amounts based on a revised estimate approved by the FERC that
assumes decommissioning by the year 2000. This revised estimate was based on
continued access to the Barnwell, South Carolina, low-level radioactive waste
facility, changes in assumptions about earnings on decommissioning trust
investments, and changes in other decommissioning cost assumptions.
CYAPC accrues decommissioning costs on the basis of immediate dismantlement
at retirement. In late December 1996, CYAPC made a filing with FERC to amend
the wholesale power contracts between the owners of the facility, and revise
decommissioning cost estimates and other cost estimates for the facility. The
amendments clarify the owners' entitlement to full recovery of sunk costs and
the ongoing costs of maintaining the plant in accordance with NRC rules until
decommissioning begins, and ensures that decommissioning will continue to be
funded through June 2007, the full license term, despite the unit's earlier
shutdown. On February 26, 1997, FERC approved a draft order setting for hearing
the prudence of the decision to close CY. FERC will determine the prudence of
CYAPC's decision to retire the plant before it finally determines the justness
and reasonableness of CY's proposed amended power contract rates.
For more information regarding nuclear decommissioning, see "Nuclear
Decommissioning" in the notes to NU's, CL&P's, PSNH's, WMECO's and NAEC's
financial statements.
ENERGY-RELATED BUSINESSES
PRIVATE POWER DEVELOPMENT
The System participates as a developer and investor in domestic and
international private power projects through its subsidiary, Charter Oak.
Management currently does not permit Charter Oak to invest in facilities which
are located within the System service territory or sell electric output to any
of the System electric utility companies. Charter Oak is investing primarily in
projects outside of the United States.
Charter Oak owns, through wholly owned special-purpose subsidiaries, a 10
percent equity interest in a 220-MW natural gas-fired combined-cycle
cogeneration QF in Texas, a 56-MW interest in a 1,875-MW natural gas-fired
cogeneration facility in the United Kingdom, a 33 percent equity interest in a
114-MW natural gas-fired project in Argentina, a 20-MW wind-power project in
Costa Rica and an 83 percent interest in a 168 MW natural gas fired project in
Argentina.
Charter Oak is currently participating in the development of other projects
in Latin America and the Pacific Rim. Specifically, Charter Oak is engaged in
financing a 200-MW coal fired project in Inner Mongolia in the Peoples Republic
of China and in developing a 30-MW wind-power project in New Zealand and a 100-
MW natural gas fired project in Argentina. Charter Oak will own 50-MW, 15-MW and
51-MW interests in these respective projects.
Although Charter Oak has no full-time employees, 15 NUSCO employees are
dedicated to Charter Oak activities on a full-time basis. Other NUSCO employees
provide services as required. NU's Board of Trustees has authorized investments
up to $200 million in Charter Oak through December 31, 1998. NU's total
investment in Charter Oak was approximately $87 million as of December 31, 1996.
ENERGY MANAGEMENT SERVICES
In 1990, NU organized a subsidiary corporation, HEC, to acquire
substantially all of the assets and personnel of a nonaffiliated energy
management services company. In general, HEC contracts to reduce its customers'
energy costs and/or conserve energy and other resources. HEC also provides DSM
consulting services to utilities and others. HEC's energy management and
consulting services have primarily been directed to the commercial, industrial
and institutional markets and utilities in New England and New York. NU's
aggregate equity investment in HEC was approximately $4 million as of December
31, 1996.
TELECOMMUNICATIONS
In 1996, NU organized a telecommunications subsidiary, Mode 1. On May 30,
1996, the Federal Communications Commission approved Mode 1's application to
become an "exempt telecommunications company." The order will allow NU to
participate in a wide range of telecommunications activities both within and
outside New England. Mode 1 has filed to obtain a state-wide certificate of
public convenience and necessity in Connecticut and expects to make additional
state regulatory filings in 1997 for approval to engage in various
telecommunications activities. The System companies also may seek approval to
transfer certain of their telecommunications facilities and equipment to Mode 1
in 1997.
Mode 1 has acquired a 9.9 percent interest in FiveCom LLC (FiveCom) for
approximately $1.3 million and a 40 percent interest in NECOM LLC (NECOM) for
$5.3 million. FiveCom owns the remaining 60 percent interest in NECOM. NECOM is
constructing a 310 mile fiber optic communications system placed on the System's
transmission facilities. NU's total investment in Mode 1 was approximately $6.8
million as of December 31, 1996. NU expects to invest up to approximately $20
million in Mode 1 in 1997 for telecommunications activities, including the
construction and purchase of additional facilities as well as the development of
new business opportunities.
ENERGY PRODUCTS AND SERVICES
NU also organized another subsidiary, Energy Partners, in 1996. In late
1996, PSNH transferred its interest in PSNH Energy, a competitive supplier in
the New Hampshire retail electric competition pilot program, to Energy Partners.
See "Rates--New Hampshire Retail Rates--Electric Industry Restructuring in New
Hampshire". This subsidiary will be a vehicle for participation in other retail
pilot competition programs and open-access retail electric markets in the
Northeast and other areas of the country as appropriate. In addition, Energy
Partners is in the process of developing energy-related products and services in
order to enhance its core electric service and customer relationships. Energy
Partners has taken steps to establish strategic alliances with other companies
in various energy-related fields including fuel supply and management, power
quality, energy efficiency and load management services.
OTHER REGULATORY AND ENVIRONMENTAL MATTERS
ENVIRONMENTAL REGULATION
GENERAL
The System and its subsidiaries are subject to federal, state and local
regulations with respect to water quality, air quality, toxic substances,
hazardous waste and other environmental matters. Similarly, the System's major
generation and transmission facilities may not be constructed or significantly
modified without a review by the applicable state agency of the environmental
impact of the proposed construction or modification. Compliance with
environmental laws and regulations, particularly air and water pollution control
requirements, may limit operations or require substantial investments in new
equipment at existing facilities. See "Resource Plans" for a discussion of the
System's construction plans.
SURFACE WATER QUALITY REQUIREMENTS
The federal Clean Water Act (CWA) requires every "point source" discharger
of pollutants into navigable waters to obtain a National Pollutant Discharge
Elimination System (NPDES) permit from the United States Environmental
Protection Agency (EPA) or state environmental agency specifying the allowable
quantity and characteristics of its effluent. System facilities have all
required NPDES permits in effect. Compliance with NPDES and state water
discharge permits has necessitated substantial expenditures and may require
further expenditures because of additional requirements that could be imposed in
the future. For information regarding ongoing criminal investigations by the
Office of the U. S. Attorney for the District of Connecticut related to
allegations that there were some violations of certain facilities' NPDES
permits, see "Item 3. Legal Proceedings."
In October 1995, the Connecticut Department of Environmental Protection
(CDEP) issued a consent order to CL&P and the Long Island Lighting Company
(LILCO) requiring those companies to address leaks of dielectric fluids from the
Long Island cable, which is jointly owned by CL&P and LILCO. This cable enables
CL&P to interchange up to 300 MW of capacity with LILCO. In May 1996, the
consent order was modified to address issues relating to a leak, which occurred
in January, 1996. The modified order requires CL&P and LILCO to study and
propose alternatives for the prevention, detection and mitigation of leaks from
the cable and to evaluate the ecological effects of leaks on the environment.
Alternatives to be studied include cable replacement and alternative dielectric
fluids. These studies are ongoing. The System will incur additional costs to
meet the requirements of the order and to meet any subsequent CDEP requirements
that may result from these studies. These costs, as well as the long-term
future and cost-effectiveness of the cable operation subsequent to any
additional CDEP requirements, cannot be estimated at this time.
The United States Attorney's Office in New Haven, Connecticut has
commenced an investigation and issued subpoenas to CL&P, NU, NUSCO, CONVEX and
LILCO seeking documents relating to operation and maintenance of the cable and
the most recent leaks from the cable described above. The government has not
revealed the scope of its investigation, so management cannot evaluate the
likelihood of a criminal proceeding being initiated at this time. However,
management is aware of nothing that would suggest that any System company,
officer or employee has engaged in conduct that would warrant a criminal
proceeding. For information regarding a lawsuit related to discharges from the
cable, see "Item 3. Legal Proceedings."
Merrimack Station's NPDES permit requires site work to isolate adjacent
wetlands from the station's wastewater system. Plans have been approved by the
New Hampshire Department of Environmental Services (NHDES). PSNH will submit the
permit application to begin construction in early 1997. The Merrimack permit
also requires PSNH to perform further biological studies because significant
numbers of migratory fish are being restored to lower reaches of the Merrimack
River. These studies have been completed and results have been reported to the
EPA. The findings from these studies indicate that Merrimack Station's once-
through cooling system does not interfere with the establishment of a balanced
aquatic community. However, if the agencies determine that interference exists,
PSNH could be required to construct a partially enclosed cooling water system
for Merrimack Station. The amount of capital expenditures relating to the
foregoing cannot be determined at this time. However, if such expenditures were
required, they would likely be substantial and/or a reduction of Merrimack
Station's net generation capability could result.
The ultimate cost impact of the CWA and state water quality regulations on
the System cannot be estimated because of uncertainties such as the impact of
changes to the effluent guidelines or water quality standards. Additional
modifications, in some cases extensive and involving substantial cost, may
ultimately be required for some or all of the System's generating facilities.
The Federal Oil Pollution Act of 1990 (OPA 90) sets out the requirements
for facility response plans and periodic inspections of spill response equipment
at facilities that can cause substantial harm to the environment by discharging
oil or hazardous substances into the navigable waters of the United States and
onto adjoining shorelines. The System Companies are currently in compliance
with the requirements of OPA 90.
OPA 90 includes limits on the liability that may be imposed on persons
deemed responsible for release of oil. The limits do not apply to oil spills
caused by negligence or violation of laws or regulations. OPA 90 also does not
preempt state laws regarding liability for oil spills. In general, the laws of
the states in which the System owns facilities and through which the System
transports oil could be interpreted to impose strict liability for the cost of
remediating releases of oil and for damages caused by releases. The System
currently carries general liability insurance in the total amount of $100
million per occurrence for oil spills.
AIR QUALITY REQUIREMENTS
The Clean Air Act Amendments of 1990 (CAAA) impose stringent requirements
on emissions of sulfur dioxide (SO2) and nitrogen oxide (NOX) for the purpose of
controlling acid rain and ground level ozone. In addition, the CAAA address the
control of toxic air pollutants. Installation of continuous emissions monitors
(CEMs) and expanded permitting provisions also are included.
Existing and future federal and state air quality regulations, including
recently proposed standards, could hinder or possibly preclude the construction
of new, or the modification of existing, fossil units in the System's service
area and could raise the capital and operating cost of existing units. The
ultimate cost impact of these requirements on the System cannot be estimated
because of uncertainties about how EPA and the states will implement various
requirements of the CAAA.
Nitrogen Oxide. Title I of the CAAA identifies NOX emissions as a
precursor of ambient ozone. Connecticut, Massachusetts and New Hampshire, as
well as other Northeastern states, currently exceed the ambient air quality
standard for ozone. Pursuant to the CAAA, states exceeding the ozone standard
must implement plans to address ozone nonattainment. All three states have
issued final regulations to implement Phase I reduction requirements and the
System has met these requirements. Compliance with Phase I requirements has cost
the System a total of approximately $41 million: $10 million for CL&P, $27
million for PSNH, $1 million for WMECO and $3 million for HWP. Compliance has
been achieved using a combination of currently available technology, combustion
efficiency improvements and emissions trading. Compliance costs for Phase II,
effective in 1999, are expected to result in an additional cost of approximately
$5 million for CL&P, but are not expected to be material for PSNH, WMECO and
HWP.
Sulfur Dioxide. The CAAA mandates reductions in SO2 emissions to
control acid rain. These reductions are to occur in two phases. First, certain
high SO2 emitting plants were required to reduce their emissions beginning in
1995. All Phase I units have been allocated SO2 allowances for the period 1995-
1999. These allowances are freely tradable. One allowance entitles a source to
emit one ton of SO2. No unit may emit more SO2 than the amount for which it has
allowances. The only System units subject to the Phase I reduction requirements
are PSNH's Merrimack Units 1 and 2. Newington Station in New Hampshire and Mt.
Tom Station in Massachusetts are conditional Phase I units, which means that the
System can decide to include these plants as Phase I units during any year and
obtain allowances for that year. The System included these plants as Phase I
units in 1996.
On January 1, 2000, the start of Phase II, a nationwide cap of 8.9 million
tons per year of utility SO2 emissions will be imposed and existing units will
be granted allowances to emit SO2. Most of the System companies' allocated
allowances will substantially exceed their expected SO2 emissions for 2000 and
subsequent years, except for PSNH, which expects to purchase additional SO2
allowances.
New Hampshire and Massachusetts have each instituted acid rain control laws
that limit SO2 emissions. The System is meeting the new SO2 limitations by
using natural gas and/or lower sulfur coal in its plants. Under the existing
fuel adjustment clauses in Connecticut, New Hampshire and Massachusetts, the
System should be able to recover the additional fuel costs of compliance with
the CAAA and state laws from its customers. For more information regarding a
prudence hearing in New Hampshire on costs associated with PSNH's capital
expenditures to comply with Phase I reduction requirements, see "Rates--New
Hampshire Retail Rates--FPPAC and Prudence."
Management does not believe that the acid rain provisions of the CAAA will
have a significant impact on the System's overall costs or rates due to the very
strict limits on SO2 emissions already imposed by Connecticut, New Hampshire and
Massachusetts. In addition, management believes that Title IV of the CAAA (acid
rain) requirements for NOX limitations will not have a significant impact on
System costs due to the more stringent NOX limitations resulting from Title I of
the CAAA discussed above.
EPA, Connecticut, New Hampshire and Massachusetts regulations also include
other air quality standards, emission standards and monitoring and testing and
reporting requirements that apply to the System's generating stations. They
require new or modified fossil fuel-fired electric generating units to operate
within stringent emission limits. The System could incur additional costs to
meet these requirements, which costs cannot be estimated at this time.
Air Toxics. Title III of the CAAA directed EPA to study air toxics and
mercury emissions from fossil fired steam electric generation units to determine
if they should be regulated. EPA exempted these plants from the hazardous air
pollutant program pending completion of the studies, expected in 1997 or 1998.
Should EPA determine that such generating plants' emissions must be controlled
to the same extent as emissions from other sources under Title III, the System
could be required to make substantial capital expenditures to upgrade or replace
pollution control equipment, but the amount of these expenditures cannot be
readily estimated.
TOXIC SUBSTANCES AND HAZARDOUS WASTE REGULATIONS
PCBs. Under the federal Toxic Substances Control Act of 1976 (TSCA), EPA
has issued regulations that control the use and disposal of polychlorinated
biphenyls (PCBs). PCBs had been widely used as insulating fluids in many
electric utility transformers and capacitors before TSCA prohibited any further
manufacture of such PCB equipment. System companies have taken numerous steps
to comply with these regulations and have incurred increased costs for disposal
of used fluids and equipment that are subject to the regulations.
In general, the System sends fluids with concentrations of PCBs equal to or
higher than 500 ppm to an unaffiliated company to dispose of using approved
methods. Electrical capacitors that contain PCB fluid are sent off-site to
dispose of through burning in high temperature incinerators approved by EPA.
The System disposes of solid wastes containing PCBs in secure chemical waste
landfills.
Asbestos. Federal, Connecticut, New Hampshire and Massachusetts asbestos
regulations have required the System to expend significant sums in the past on
removal of asbestos, including measures to protect the health of workers and the
general public and to properly dispose of asbestos wastes. Asbestos removal
costs for the System are not expected to be material in 1997.
RCRA. Under the federal Resource Conservation and Recovery Act of 1976, as
amended (RCRA), the generation, transportation, treatment, storage and disposal
of hazardous wastes are subject to EPA regulations. Connecticut, New Hampshire
and Massachusetts have adopted state regulations that parallel RCRA regulations
but in some cases are more stringent. The procedures by which System companies
handle, store, treat and dispose of hazardous wastes are regularly revised,
where necessary, to comply with these regulations.
Hazardous Waste Liability. As many other industrial companies have done in
the past, System companies disposed of residues from operations by depositing or
burying such materials on-site or disposing of them at off-site landfills or
facilities. Typical materials disposed of include coal gasification waste, fuel
oils, gasoline and other hazardous materials that might contain PCBs. It has
since been determined that deposited or buried wastes, under certain
circumstances, could cause groundwater contamination or create other
environmental risks. The System has recorded a liability for what it believes
is, based upon currently available information, its estimated environmental
remediation costs for waste disposal sites for which the System companies expect
to bear legal liability, and continues to evaluate the environmental impact of
its former disposal practices. Under federal and state law, government agencies
and private parties can attempt to impose liability on System companies for such
past disposal. As of December 31, 1996, the liability recorded by the System
for its estimated environmental remediation costs for known sites needing
remediation including those sites described below, exclusive of recoveries from
insurance or third parties, was approximately $13 million. These costs could be
significantly higher if alternative remedies become necessary.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, commonly known as Superfund, EPA has the
authority to cleanup or order cleanup of hazardous waste sites and to impose the
cleanup costs on parties deemed responsible for the hazardous waste activities
on the sites. Responsible parties include the current owner of a site, past
owners of a site at the time of waste disposal, waste transporters and waste
generators. It is EPA's position that all responsible parties are jointly and
severally liable, so that any single responsible party can be required to pay
the entire costs of cleaning up the site. As a practical matter, however, the
costs of cleanup are usually allocated by agreement of the parties, or by the
courts on an equitable basis among the parties deemed responsible, and several
federal appellate court decisions have rejected EPA's position on strict joint
and several liability. Superfund also contains provisions that require System
companies to report releases of specified quantities of hazardous materials and
require notification of known hazardous waste disposal sites. System companies
are in compliance with these reporting and notification requirements.
The System currently is involved in two Superfund sites in Connecticut, one
in Kentucky, one in New Jersey and two in New Hampshire. The level of study of
each site and the information about the waste contributed to the site by the
System and other parties differs from site to site. Where reliable information
is available that permits the System to make a reasonable estimate of the
expected total costs of remedial action and/or the System's likely share of
remediation costs for a particular site, those cost estimates are provided
below. All cost estimates were made in accordance with generally accepted
accounting principles where remediation costs were probable and reasonably
estimable. Any estimated costs disclosed for cleaning up the sites discussed
below were determined without consideration of possible recoveries from third
parties, including insurance recoveries. Where the System has not accrued a
liability, the costs either were not material or there was insufficient
information to accurately assess the System's exposure.
At two Connecticut sites, the Beacon Heights and Laurel Park landfills, the
major parties formed coalitions and joined as defendants a number of other
parties including "Northeast Utilities (Connecticut Light and Power)" (NU
[CL&P]). Litigation on both sites was consolidated in a single case in the
federal district court. In 1993, the coalitions' claims against a number of
defendants including NU (CL&P) were dismissed. In 1994, the Beacon Heights
Coalition indicated that they would not pursue NU (CL&P) as a defendant. As a
result, CL&P does not expect to incur cleanup costs for the Beacon Heights site.
Meanwhile, the coalitions appealed the 1993 federal district court dismissal,
which was overturned. A petition for rehearing was filed and it is unlikely the
district court will take further action until the petition is resolved. In any
event, CL&P's liability at the Laurel Park site is expected to be minimal
because of the non-hazardous nature and small volume of the materials that were
sent there.
The System had sent a substantial volume of LLRW from Millstone 1,
Millstone 2 and CY to the Maxey Flats nuclear waste disposal site in Fleming
County, Kentucky. On April 18, 1996, the U.S. District Court for the Eastern
District of Kentucky approved a consent decree between EPA and members of the
Maxey Flats PRP Steering Committee, including System companies, and several
federal government agencies, including DOE and the Department of Defense as well
as the Commonwealth of Kentucky. The System has recorded a liability for future
remediation costs for this site based on its share of ultimate remediation costs
under the tentative agreement. The System's liability at the site has been
assessed at slightly over $1 million.
PSNH has committed in the aggregate approximately $300,000 to its share of
the clean up of two municipal landfill Superfund sites in Dover and North
Hampton, New Hampshire. Some additional costs may be incurred at these sites,
but they are not expected to be significant.
CL&P, as successor to The Hartford Electric Light Company (HELCO), has been
named as one of over 100 defendants in a cost recovery action filed in the
federal district court in New Jersey. Plaintiffs have not disclosed the amount
of the recovery they are seeking and, due to the nature of HELCO's limited
dealings with the plaintiffs, CL&P believes its liability is minimal.
As discussed below, in addition to the remediation efforts for the above-
mentioned Superfund sites, the System has been named as a PRP and is monitoring
developments in connection with several state environmental actions.
In 1987, CDEP published a list of 567 hazardous waste disposal sites in
Connecticut. The System owns two sites on this list. The System has spent
approximately $2.7 million, as of December 31, 1996, completing investigations
and limited remediation at these sites. Both sites were formerly used by CL&P
predecessor companies for the manufacture of coal gas (also known as town gas
sites) from the late 1800s to the 1950s. This process resulted in the
production of coal tar and creosote residues and other byproducts, which, when
not sold for other industrial or commercial uses, were frequently deposited on
or near the production facilities. Site investigations have been completed at
these sites and discussions with state regulators are in progress to address the
need and extent of remediation necessary to protect public health and the
environment.
One of the sites is a 25.8-acre site located in the south end of Stamford,
Connecticut. Site investigations have located coal tar deposits covering
approximately 5.5 acres and having a volume of approximately 45,000 cubic yards.
A final risk assessment report for the site was completed in January 1994. The
System is currently considering redevelopment of the site in cooperation with
the local municipality as part of the State of Connecticut's Urban Sites
Program. Several remedial options have been evaluated to remediate the site, if
necessary to accommodate redevelopment. The estimated cost of remediation and
institutional controls range from $5 to $8 million.
The second site is a 3.5-acre former coal gasification facility that
currently serves as an active substation in Rockville, Connecticut. Site
investigations have located creosote and other polyaromatic hydrocarbon
contaminants that may require remediation. Several options are being evaluated
to remediate the site, if necessary. Meetings with the CDEP and local officials
will take place in 1997. CL&P will present a long-term plan for the site.
As part of the 1989 divestiture of CL&P's gas business, site investigations
were performed for properties that were transferred to Yankee Gas Services
Company (Yankee Gas). CL&P agreed to accept liability for any required cleanup
for the three sites it retained. These three sites include Stamford and
Rockville (discussed above) and Torrington, Connecticut. At the Torrington
site, investigations have been completed and the cost of any remediation, if
necessary, is not expected to be material. CL&P and Yankee Gas also share a
site in Winsted, Connecticut and any liability for required cleanup there. CL&P
and Yankee Gas will share the costs of cleanup of sites formerly used in CL&P's
gas business but not currently owned by either of them.
PSNH contacted NHDES in December 1993 concerning possible coal tar
contamination in Laconia, New Hampshire in Lake Opechee and the Winnipesaukee
River near an area where PSNH and a second PRP formerly owned and operated a
coal gasification plant from the late 1800's to the 1950's. A comprehensive site
investigation was completed in December 1996. This study has shown that
byproducts from the operation of the former manufactured gas plant are present
in groundwater, subsurface soil and in the sediments of the adjacent
Winnipesaukee River. Remediation estimates range from $3 to $4 million.
Discussions with the NHDES will take place early in 1997 to determine the extent
of remediation necessary. An interim cost sharing agreement with a second PRP
wherein this PRP contributed 25% to the cost of the site investigations has
ended. PSNH will enter into negotiations to reassess future cost allocation.
A second coal gasification facility formerly owned and operated by a
predecessor company to PSNH is located in Keene, New Hampshire. The NHDES has
been notified of the presence of coal tar contamination and further site
investigations were completed in 1996. The NHDES has requested additional
studies to be completed in 1997. PSNH also will inform a second PRP who
formerly owned and operated the gas facility of site conditions. Additional New
Hampshire sites include several former manufactured gasification facilities, an
inactive ash landfill located at Dover Point and a municipal landfill in
Peterborough. Historic reviews of these sites are ongoing. Studies are ongoing
at the Dover Point site and plans to further determine if metals are migrating
from the site to the adjacent Piscataqua River are being developed. These
results will be discussed with the NHDES in 1997 to determine the scope of these
investigations. PSNH's liability at these sites cannot be estimated at this
time.
In Massachusetts, System companies have been designated by the
Massachusetts Department of Environmental Protection (MDEP) as PRPs for twelve
sites under MDEP's hazardous waste and spill remediation program. At two sites,
the System may incur remediation costs that may be material to HWP depending on
the remediation requirements. At one site, HWP has been identified by MDEP as
one of three PRPs in a coal tar site in Holyoke, Massachusetts. HWP owned and
operated the Holyoke Gas Works from 1859 to 1902. The site is located on the
east side of Holyoke, adjacent to the Connecticut River and immediately
downstream of HWP's Hadley Falls Station. MDEP has designated both the land and
river deposit areas as priority waste disposal sites. Due to the presence of
tar patches in the vicinity of the spawning habitat of the shortnose sturgeon---
an endangered species--the National Oceanographic and Atmospheric Administration
(NOAA) and National Marine Fisheries Service have taken an active role in
overseeing site activities. Both MDEP and NOAA have notified the PRPs of the
need to remove tar deposits from the river. During 1996, HWP conducted a pilot
project to assess the feasibility and costs of tar removal. Results of this
project are currently being evaluated. To date, HWP has spent approximately $1
million for river studies and construction costs related to the site. The total
estimated costs for remediation of tar patches in the river range from $2 to $3
million. Discussions of the results of the pilot study will be presented to the
MADEP in early 1997.
The second site is a former manufactured gas plant facility in Easthampton,
Massachusetts. WMECO predecessor companies owned and operated the Easthampton
Gas Works from 1864 to 1924. Previous investigations have identified coal tar
deposits on the land portion of the site. During fall, 1996, WMECO conducted
additional investigative work in an adjacent pond. The results of this work are
currently being analyzed. A report will be submitted to the MDEP in 1997 which
will better define the extent of coal tar deposits in the pond. To date, WMECO
has spent approximately $200,000 dollars for investigative work. The total
estimated remediation costs for the site are estimated to range from $1 to $4.6
million.
In the past, the System has received other claims from government agencies
and third parties for the cost of remediating sites not currently owned by the
System but affected by past System disposal activities and may receive more such
claims in the future. The System expects that the costs of resolving claims for
remediating sites about which it has been notified will not be material, but
cannot estimate the costs with respect to sites about which it has not been
notified.
ELECTRIC AND MAGNETIC FIELDS
In recent years, published reports have discussed the possibility of
adverse health effects from electric and magnetic fields (EMF) associated with
electric transmission and distribution facilities and appliances and wiring in
buildings and homes. Most researchers, as well as numerous scientific review
panels considering all significant EMF epidemiological and laboratory research
to date, agree that current information remains inconclusive, inconsistent and
insufficient for risk assessment of EMF exposures. Most recently, a review
issued in October 1996 by the U.S. National Academy of Sciences concluded "that
the current body of evidence does not show that exposure to these fields
presents a human-health hazard." Based on this information management does not
believe that a causal relationship between EMF exposure and adverse health
effects has been established or that significant capital expenditures are
appropriate to minimize unsubstantiated risks. NU is closely monitoring
research and government policy developments.
The System supports further research into the subject and is voluntarily
participating in the funding of the ongoing National EMF Research and Public
Information Dissemination Program. If further investigation were to demonstrate
that the present electricity delivery system is contributing to increased risk
of cancer or other health problems, the industry could be faced with the
difficult problem of delivering reliable electric service in a cost-effective
manner while managing EMF exposures. In addition, if the courts were to
conclude that individuals have been harmed and that utilities are liable for
damages, the potential monetary exposure for all utilities, including the System
companies, could be enormous. Without definitive scientific evidence of a
causal relationship between EMF and health effects, and without reliable
information about the kinds of changes in utilities' transmission and
distribution systems that might be needed to address the problem, if one is
found, no estimates of the cost impacts of remedial actions and liability awards
are available.
The Connecticut Interagency EMF Task Force (Task Force) last provided a
report to the state legislature in January 1995. The Task Force advocated a
policy of "voluntary exposure control," which involves providing people with
information to enable them to make individual decisions about EMF exposure.
Neither the Task Force, nor any Connecticut state agency, has recommended
changes to the existing electrical supply system. The Task Force is required to
provide another report to the legislature by 1998. The Connecticut Siting
Council (Siting Council) previously adopted a set of EMF "Best Management
Practices," which are now considered in the justification, siting and design of
new or modified transmission lines and substations. In 1996, the Siting Council
concluded a generic proceeding in which it conducted a comparative life-cycle
cost analysis of overhead and underground transmission lines, pursuant to a law
that was adopted in 1994 in part due to public EMF concerns. This proceeding is
expected to be referenced in future comparisons of overhead and underground
alternatives to proposed transmission line projects.
EMF has become increasingly important as a factor in facility siting
decisions in many states, and local EMF concerns occasionally make the news when
utilities propose new or changed facilities. In prior years, various bills
involving EMF were introduced in the Massachusetts and Connecticut legislatures
with no action taken. No such bills were introduced in either state in 1996.
CL&P has been the focus of media reports since 1990 charging that EMF
associated with a substation and related distribution lines in Guilford,
Connecticut are linked with various cancers and other illnesses in several
nearby residents. See "Item 3. Legal Proceedings", for information about two
suits brought by plaintiffs who now or formerly lived near that substation.
FERC HYDRO PROJECT LICENSING
Federal Power Act licenses may be issued for hydroelectric projects for
terms of 30 to 50 years as determined by FERC. Upon the expiration of a
license, any hydroelectric project so licensed is subject to reissuance by FERC
to the existing licensee or to others upon payment to the licensee of the lesser
of fair value or the net investment in the project plus severance damages less
certain amounts earned by the licensee in excess of a reasonable rate of return.
The System companies hold FERC licenses for 19 hydroelectric projects
aggregating approximately 1,375 MW of capacity, located in Connecticut,
Massachusetts and New Hampshire. Four of the System licenses expired on
December 31, 1993 (WMECO's Gardners Falls project and PSNH's Ayers Island, Smith
and Gorham projects). On August 1, 1994, FERC issued new 30-year licenses to
PSNH for the continued operation of the Smith and Gorham projects. Rehearing
requests on these new licenses were filed with FERC by several intervenors and
were subsequently denied in 1996. On April 29, 1996, FERC issued a new 40 year
license to PSNH for continued operation or the Ayers Island Project. FERC has
issued an annual license allowing the Gardners Falls project to continue
operations pending completion of the relicensing process. The Final
Environmental Impact Statement for the Gardners Falls Project indicated that
minimum flow requirements, downstream fish passage facilities and recreational
enhancements are needed at the project and were recommended as conditions of a
new license.
The license for HWP's Holyoke Project expires in late 1999. The
relicensing process for this project began in 1994. In November 1995, the
Holyoke Gas and Electric Department initiated the process of applying to FERC
for the license on the Holyoke Project in competition with HWP. Absent
significant differences in the competing license applications, the Federal Power
Act gives a preference to an existing licensee for the new license. License
applications must be filed with FERC by August 1997.
CL&P's FERC licenses for operation of the Falls Village and Housatonic
Hydro Projects expire in 2001. The relicensing process was initiated in August
of 1996 with the issuance of a Notice of Intent (NOI) to the FERC indicating the
intention of CL&P to relicense both projects. An Initial Consultation Document
(ICD) was issued to consulting agencies in September 1996 and two public
meetings were held in early November 1996 to discuss relicensing issues. CL&P is
awaiting the submittal of resource agency comments.
FERC has issued a notice indicating that it has authority to order project
licensees to decommission projects that are no longer economic to operate. FERC
has not required any such project decommissioning to date. The potential costs
of decommissioning a project, however, could be substantial. It is likely that
this FERC decision will be appealed if, and when, they attempt to exercise this
authority.
EMPLOYEES
As of December 31, 1996, the System companies had 8,842 full and part-time
employees on their payrolls, of which 2,194 were employed by CL&P, 1,279 by
PSNH, 497 by WMECO, 92 by HWP, 1,274 by NNECO, 2,692 by NUSCO and 814 by NAESCO.
NU, NAEC, Charter Oak, Mode 1 and Energy Partners have no employees.
In 1995 and early 1996, the System implemented a program to reduce the
nuclear organization's total workforce by approximately 220 employees, which
included both early retirements and involuntary terminations. The pretax cost
of the program was approximately $8.7 million. For information regarding the
criminal investigations by the NRC's Office of Investigations and the Office of
the U. S. Attorney for the District of Connecticut related to this workforce
reduction, see "Item 3. Legal Proceedings."
In December 1996, the System announced a voluntary separation program
affecting approximately 1100 employees. Eligible employees must decide whether
to elect the program by March 11, 1997, and the separations will be effected
between April 1, 1997 and March 1, 1998. The estimated cost of the program is
approximately $7 million.
Approximately 2200 employees of CL&P, PSNH, WMECO, NAESCO and HWP are
covered by 11 union agreements, which expire between October 1, 1997 and May 31,
1999.
ITEM 2. Properties
The physical properties of the System are owned or leased by subsidiaries
of NU. CL&P's principal plants and other properties are located either on land
which is owned in fee or on land, as to which CL&P owns perpetual occupancy
rights adequate to exclude all parties except possibly state and federal
governments, which has been reclaimed and filled pursuant to permits issued by
the United States Army Corps of Engineers. The principal properties of PSNH
are held by it in fee. In addition, PSNH leases space in an office building
under a 30-year lease expiring in 2002. WMECO's principal plants and a major
portion of its other properties are owned in fee, although one hydroelectric
plant is leased. NAEC owns a 35.98 percent interest in Seabrook 1 and
approximately 560 acres of exclusion area land located around the unit. In
addition, CL&P, PSNH, and WMECO have certain substation equipment, data
processing equipment, nuclear fuel, gas turbines, nuclear control room
simulators, vehicles, and office space that are leased. With few exceptions,
the System companies' lines are located on or under streets or highways, or on
properties either owned or leased, or in which the company has appropriate
rights, easements, or permits from the owners.
CL&P's properties are subject to the lien of its first mortgage indenture.
PSNH's properties are subject to the lien of its first mortgage indenture. In
addition, any PSNH outstanding revolving credit agreement borrowings are
secured by a second lien, junior to the lien of the first mortgage indenture,
on PSNH's property located in New Hampshire. WMECO's properties are subject to
the lien of its first mortgage indenture. NAEC's First Mortgage Bonds are
secured by a lien on the Seabrook 1 interest described above, and all rights of
NAEC under the Seabrook Power Contracts. In addition, CL&P's and WMECO's
interests in Millstone 1 are subject to second liens for the benefit of lenders
under agreements related to pollution control revenue bonds. Various of these
properties are also subject to minor encumbrances which do not substantially
impair the usefulness of the properties to the owning company.
The System companies' and NAEC's properties are well maintained and are in
good operating condition.
Transmission and Distribution System
At December 31, 1996, the System companies owned 103 transmission and 416
distribution substations that had an aggregate transformer capacity of
25,200,069 kilovoltamperes (kVa) and 9,127,367 kVa, respectively; 3,057 circuit
miles of overhead transmission lines ranging from 69 kilovolt (kV) to 345 kV,
and 192 cable miles of underground transmission lines ranging from 69 kV to 138
kV; 32,649 pole miles of overhead and 1,958 conduit bank miles of underground
distribution lines; and 398,452 line transformers in service with an aggregate
capacity of 16,472,221 kVa.
Electric Generating Plants
As of December 31, 1996, the electric generating plants of the System
companies and NAEC, and the System companies' entitlements in the generating
plants of the two operating Yankee regional nuclear generating companies were as
follows (See "Item 1. Business - Electric Operations, Nuclear Generation" for
information on ownership and operating results for the year.):
Claimed
Year Capability*
Owner Plant Name (Location) Type Installed (kilowatts)
CL&P Millstone (Waterford, CT)
Unit 1 Nuclear 1970 524,637
Unit 2 Nuclear 1975 708,345
Unit 3 Nuclear 1986 606,453
Seabrook (Seabrook, NH) Nuclear 1990 47,175
ME Yankee (Wiscasset, ME) Nuclear 1972 94,832
VT Yankee (Vernon, VT) Nuclear 1972 45,353
Total Nuclear-Steam Plants (6 units) 2,026,795
Total Fossil-Steam Plants (10 units) 1954-73 1,877,370
Total Hydro-Conventional (25 units) 1903-55 98,970
Total Hydro-Pumped Storage (7 units) 1928-73 905,150
Total Internal Combustion (20 units) 1966-96 567,940
Total CL&P Generating Plant (68 units) 5,476,225
PSNH Millstone (Waterford, CT)
Unit 3 Nuclear 1986 32,624
ME Yankee (Wiscasset, ME) Nuclear 1972 39,514
VT Yankee (Vernon, VT) Nuclear 1972 19,068
Total Nuclear-Steam Plants (3 units) 91,206
Total Fossil-Steam Plants (7 units) 1952-78 1,004,088
Total Hydro-Conventional (20 units) 1917-83 69,060
Total Internal Combustion (5 units) 1968-70 108,450
Total PSNH Generating Plant (35 units) 1,272,804
WMECO Millstone (Waterford, CT)
Unit 1 Nuclear 1970 123,063
Unit 2 Nuclear 1975 166,155
Unit 3 Nuclear 1986 140,216
ME Yankee (Wiscasset, ME) Nuclear 1972 23,708
VT Yankee (Vernon, VT) Nuclear 1972 11,948
Total Nuclear-Steam Plants (5 units) 465,090
Total Fossil-Steam Plants (1 unit) 1957 107,000
Total Hydro-Conventional (27 units) 1904-34 110,910**
Total Hydro-Pumped Storage (4 units) 1972-73 205,200
Total Internal Combustion (3 units) 1968-69 60,500
Total WMECO Generating Plant (40 units) 948,700
NAEC Seabrook (Seabrook, NH) Nuclear 1990 418,111
HWP Mt. Tom (Holyoke, MA) Fossil-Steam 1960 147,000
Total Hydro-Conventional (15 units) 1905-83 43,560
Total HWP Generating Plant (16 units) 190,560
NU Millstone (Waterford, CT)
System Unit 1 Nuclear 1970 647,700
Unit 2 Nuclear 1975 874,500
Unit 3 Nuclear 1986 779,239
Seabrook (Seabrook, NH) Nuclear 1990 465,286
ME Yankee (Wiscasset, ME) Nuclear 1972 158,054
VT Yankee (Vernon, CT) Nuclear 1972 76,369
Total Nuclear-Steam Plants (6 units) 3,001,202
Total Fossil-Steam Plants (19 units) 1952-78 3,135,458
Total Hydro-Conventional (87 units) 1903-83 322,500
Total Hydro-Pumped Storage (7 units) 1928-73 1,110,350
Total Internal Combustion (28 units) 1966-96 736,890
Total NU System Generating Plant
Including Regional Yankees (147 units) 8,306,400
Excluding Regional Yankees (145 units) 8,071,977
*Claimed capability represents winter ratings as of December 31, 1996.
**Total Hydro-Conventional capability includes the Cobble Mtn. plant's
33,960 kW which is leased from the City of Springfield, MA.
Franchises
NU's operating subsidiaries hold numerous franchises in the territories
served by them. For more information regarding recent judicial, regulatory and
legislative decisions and initiatives that may affect the terms under which the
System companies provide electric service in their franchised territories, see
"Connecticut Retail Rates - Electric Industry Restructuring in Connecticut;"
"New Hampshire Retail Rates - Electric Industry Restructuring in New Hampshire;"
and "Massachusetts Retail Rates - Electric Industry Restructuring in
Massachusetts," and "Item 3. Legal Proceedings."
CL&P. Subject to the power of alteration, amendment or repeal by the
General Assembly of Connecticut and subject to certain approvals, permits and
consents of public authority and others prescribed by statute, CL&P has, subject
to certain exceptions not deemed material, valid franchises free from burdensome
restrictions to sell electricity in the respective areas in which it is now
supplying such service.
In addition to the right to sell electricity as set forth above, the
franchises of CL&P include, among others, rights and powers to manufacture,
generate, purchase, transmit and distribute electricity, to sell electricity at
wholesale to other utility companies and municipalities and to erect and
maintain certain facilities on public highways and grounds, all subject to such
consents and approvals of public authority and others as may be required by law.
The franchises of CL&P include the power of eminent domain.
PSNH. Subject to the power of alteration, amendment or repeal by the
General Court (legislature) of the State of New Hampshire and subject to certain
approvals, permits and consents of public authority and others prescribed by
statute, PSNH has, subject to certain exceptions not deemed material, valid
franchises free from burdensome restrictions to sell electricity in the
respective areas in which it is now supplying such service.
In addition to the right to sell electricity as set forth above, the
franchises of PSNH include, among others, rights and powers to manufacture,
generate, purchase, transmit and distribute electricity, to sell electricity at
wholesale to other utility companies and municipalities and to erect and
maintain certain facilities on certain public highways and grounds, all subject
to such consents and approvals of public authority and others as may be required
by law. The franchises of PSNH include the power of eminent domain.
NNECO. Subject to the power of alteration, amendment or repeal by the
General Assembly of Connecticut and subject to certain approvals, permits and
consents of public authority and others prescribed by statute, NNECO has a valid
franchise free from burdensome restrictions to sell electricity to utility
companies doing an electric business in Connecticut and other states.
In addition to the right to sell electricity as set forth above, the
franchise of NNECO includes, among others, rights and powers to manufacture,
generate and transmit electricity, and to erect and maintain facilities on
certain public highways and grounds, all subject to such consents and approvals
of public authority and others as may be required by law.
WMECO. WMECO is authorized by its charter to conduct its electric business
in the territories served by it, and has locations in the public highways for
transmission and distribution lines. Such locations are granted pursuant to the
laws of Massachusetts by the Department of Public Works of Massachusetts or
local municipal authorities and are of unlimited duration, but the rights
thereby granted are not vested. Such locations are for specific lines only,
and, for extensions of lines in public highways, further similar locations must
be obtained from the Department of Public Works of Massachusetts or the local
municipal authorities. In addition, WMECO has been granted easements for its
lines in the Massachusetts Turnpike by the Massachusetts Turnpike Authority.
HWP and Holyoke Power and Electric Company (HP&E). HWP, and its wholly
owned subsidiary HP&E, are authorized by their charters to conduct their
businesses in the territories served by them. HWP's electric business is
subject to the restriction that sales be made by written contract in amounts of
not less than 100 horsepower, except for municipal customers in the counties of
Hampden or Hampshire, Massachusetts and except for customers who occupy property
in which HWP has a financial interest, by ownership or purchase money mortgage.
HWP also has certain dam and canal and related rights, all subject to such
consents and approvals of public authorities and others as may be required by
law. The two companies have locations in the public highways for their
transmission and distribution lines. Such locations are granted pursuant to the
laws of Massachusetts by the Department of Public Works of Massachusetts or
local municipal authorities and are of unlimited duration, but the rights
thereby granted are not vested. Such locations are for specific lines only and,
for extensions of lines in public highways, further similar locations must be
obtained from the Department of Public Works of Massachusetts or the local
municipal authorities. The two companies have no other utility franchises.
NAEC. NAEC is authorized by the NHPUC to own and operate its interest in
Seabrook 1.
ITEM 3 - LEGAL PROCEEDINGS
1. Litigation Relating to Electric and Magnetic Fields
NU and CL&P are currently involved in two lawsuits alleging physical and
emotional damages from exposure to "electromagnetic radiation" generated by the
defendants. Management believes that the allegations that EMF caused or
contributed to the plaintiffs' illnesses are not supported by scientific
evidence. One of these cases has been resolved in NU and CL&P's favor at the
trial level, but it has been appealed and is now pending at the Connecticut
Supreme Court.
2. Southeastern Connecticut Regional Resources Recovery Authority (SCRRRA) -
Application of the Municipal Rate
This matter involves three separate disputes over the rates that apply to
CL&P's purchases of the generation of the SCRRRA project in Preston,
Connecticut. A favorable ruling on all of these matters could result in savings
to CL&P customers of approximately $20 million over the terms of the agreement
with the SCRRRA. FERC has ruled in CL&P's favor in one of these matters, but
this decision has been appealed to the United States D. C. Circuit Court of
Appeals. A final ruling in this decision in favor of CL&P would also resolve
the second dispute. A Connecticut Superior Court, however, has ruled in favor
of the SCRRRA in the final dispute. CL&P has appealed this decision to the
Connecticut Appellate Court.
3. Connecticut DPUC - CL&P's Petition for Declaratory Ruling Regarding
Proposed Retail Sales of Electricity by Texas-Ohio Power, Inc. (TOP)
On August 3, 1995, CL&P filed a petition for declaratory rulings with the
DPUC to determine whether TOP, which built a small cogeneration plant in
Manchester, Connecticut, can sell electricity from the facility to two CL&P
retail customers in Manchester. On December 6, 1995, the DPUC ruled that,
because TOP's project would not use the public streets, it did not require
specific legislative authorization to make retail sales of electricity. In
February 1997 the Hartford Superior Court upheld the DPUC's decision. CL&P
plans to appeal the decision to the Connecticut Appellate Court.
4. New Hampshire Office of Consumer Advocate and the Campaign for
Ratepayers Rights Case
Two petitions are currently pending at the New Hampshire Supreme Court,
alleging that all of PSNH's special contracts are void and constitute a breach
of the Rate Agreement by PSNH, thereby estopping PSNH from claiming benefits
under the Rate Agreement. The case has been briefed and oral argument is not
expected before the summer of 1997. While NU believes these petitions should
be denied, it cannot predict the outcome of this proceeding or its ultimate
effect on the System.
5. Tax Litigation
In 1991, the Town of Haddam performed a town-wide revaluation of the CY
property in that town. Based on the report of the engineering firm hired by the
town to perform the revaluation, Haddam determined that the full fair-market
value of the property, as of October 1, 1991, was $840 million. At that time,
CY's net-book value was $245 million. On September 5, 1996, a Connecticut court
ruled that Haddam had over-assessed CY at three and a half times its proper
assessment. The decision set the plant's fair market value at $235 million. CY
estimates that the town owes it approximately $16.2 million in refunds,
including accrued interest, for taxes that were overpaid from July 31, 1992
through July 31, 1996. The Town may defer an appeal of the court's decision
until all matters, including the deferred claim on the 1995 tax assessment, are
resolved. The parties are currently involved in settlement discussions.
6. Long Island Cable - Citizen's Suit
On April 4, 1996, a citizen's suit against Long Island Lighting Company
(LILCO), a non-affiliate of NU, CL&P (collectively, the "Companies") and NUSCO
was filed in Federal District Court in Connecticut. The suit alleges the
Companies are in violation of the Federal Clean Water Act because they are
maintaining an unpermitted discharge of pollutants from the Long Island Cable
and claims the pollutants are an imminent danger to the environment and public
health. The suit asks the Court, among other things, to enjoin further
operation of the Long Island Cable without a permit and to impose a civil
penalty of $25,000 for each violation.
7. Shareholder Litigation
Shareholder Demand Letter: On April 10, 1996, NU received a letter from a
representative of a shareholder demanding that it commence legal action against
NU's CEO, Bernard M. Fox, and certain unnamed officers and directors with regard
to operations at Millstone Station. On April 23, 1996, the NU Board created a
special committee to, among other responsibilities, conduct an independent
review and investigation of the allegations contained in the letter and make
recommendations as to how the NU Board should respond to the letter. This
investigation is ongoing.
Derivative Actions: NU has been served with seven civil complaints naming
as defendants certain current and former trustees and officers seeking to
recover unspecified damages for alleged losses purportedly arising out of NU's
operations at Millstone.
Shareholder Securities Class Actions: NU has been served with four class
actions based on various Federal and state securities laws and common law
theories alleging misrepresentations and omissions in public disclosures related
to the System's nuclear situation. These complaints represent classes of
plaintiffs who purchased or otherwise acquired NU common stock during periods
ranging from November 1993 to April 1996. NU believes that all of these class
actions are without merit and intends to vigorously defend in all such actions.
8. Connecticut Municipal Electric Energy Cooperative (CMEEC) Dispute
This matter involves a dispute with CMEEC over its obligations under its
Millstone Units 1 & 2 contract with CL&P, under which CMEEC has a 3.49 percent
life-of-unit interest in each of the units. CMEEC and CL&P have been negotiating
since May 1996 over issues related to Millstone Units 1 & 2. Since October
1996, CMEEC has failed to make payment on its obligations of approximately $1.6
million per month, claiming that CL&P materially breached its contractual
obligations, and requesting arbitration of the issues. CL&P has denied the
allegations and requested payment.
9. Millstone 3 - Potential Joint Owner Litigation
This matter involves claims that the non-NU owners of Millstone 3 could
potentially bring against the NU System companies for the costs associated with
the current extended outage of this facility.
The non-NU owners of Millstone 3 have been paying their monthly shares of
the cost of that unit since it went out of service in March 1996, but have
reserved their rights to contest whether the NU System companies have any
responsibility for the additional costs the non-NU owners have borne as a result
of the extended outage. No formal claims have been made, but it is possible
that some or all of the non-NU owners will assert liability on the part of the
NU System companies. CL&P and WMECO, through NNECO as agent, operate Millstone
3 at cost, and without profit, under a Sharing Agreement that obligates them to
utilize good utility operating practices and requires the joint owners to share
the risk of employee negligence and other risks pro-rata in accordance with
their ownership shares. The Sharing Agreement also provides that CL&P and WMECO
would only be liable for damages to the non-NU owners for a deliberate breach of
the agreement pursuant to authorized corporate action. The non-NU owners have
retained a team of technical and regulatory experts to review and monitor
activities at Millstone 3. As representatives of Millstone 3 joint owners, NU
is cooperating fully with the team.
10. NRC - Section 2.206 Petitions
Spent Fuel Pool Off-Load Practices 2.206 Petition: In August 1995, a
petition was filed with the NRC under Section 2.206 of the NRC's regulations by
the organization We the People and a NUSCO employee. The petitioners maintained
that NU's historic practice of off-loading the full reactor core at Millstone 1
resulted in spent fuel pool heat loads in excess of the pool's NRC-approved
cooling capability, and asserted that the practice was a knowing and willful
violation of NRC requirements. The petitioners also filed a supplemental
petition concerning refueling practices at Millstone 2 and 3 and Seabrook
Station.
On December 26, 1996, the Acting Director of the Office of Nuclear Reactor
Regulation issued a partial decision granting, in part, the petition. The
decision, which is limited to the NRC staff's technical review of the issues
raised by petitioners, concluded that the design of the spent fuel pool and
related system at Millstone 1 was adequate,and that the full core offload
practices at that unit, Millstone 3 and Seabrook were safe. The petitioners'
assertions regarding Millstone 2 were not substantiated. The Director further
concluded that the regulatory actions taken by the NRC to date regarding the
three Millstone units, including the imposition of an Independent Corrective
Action Verification Program prior to restart, were broader than the actions
requested by petitioners and thus constituted a partial grant of petitioners'
request. Issues of wrongdoing raised in the petition remain under consideration
by the NRC staff, and will not be addressed until after the U.S. Attorney has
concluded its investigation of the spent fuel pool issues and decided whether to
commence criminal proceedings. See paragraph 11 below.
Other 2.206 Petitions: Two additional petitions under Section 2.206 have
been filed with the NRC requesting various actions be taken with respect to the
operating licenses for Millstone Units 1, 2 and 3 and CY, including revocation
and suspension, and other enforcement action due to alleged mismanagement of the
units and violations of NRC regulations that petitioners allege have jeopardized
public health and safety. While management believes that the NRC is already
addressing a number of issues raised in these petitions, it cannot predict the
ultimate outcome of these petitions.
11. NRC Office of Investigations and U.S. Attorney Investigations and
Related Matters
The NRC's Office of Investigations (OI) has been examining various matters
at Millstone and CY, including but not limited to procedural and technical
compliance matters and employee concerns. One of these matters has been
referred, and others may be referred, to the Office of the U.S. Attorney for the
District of Connecticut (U.S. Attorney) for possible criminal prosecution. The
referred matter concerns full core off-load procedures and related matters at
Millstone (see item 10 above). The U.S. Attorney is also reviewing possible
criminal violations arising out of certain of NNECO's other activities at
Millstone and CY, including the 1996 nuclear workforce reduction and its
licensed operator training programs.
The U.S. Attorney, together with the U.S. EPA and the Connecticut Attorney
General, is also investigating possible criminal violations of federal
environmental laws at certain NU facilities, including Millstone. NU has been
informed by the government that it is a target of the investigation, but that no
one in senior management is either a target or a subject of the investigation.
Management does not believe that any System company or officer has engaged
in conduct that would warrant a federal criminal prosecution. NU intends to
fully cooperate with the OI and the U.S. Attorney in their ongoing
investigations.
12. Other Legal Proceedings
The following sections of Item 1. "Business" discuss additional legal
proceedings: See "Overview of Nuclear Matters and Related Financial Matters"
for information regarding NRC watch list issues; "Rates" for information about
CL&P's rate and fuel clause adjustment clause proceedings, various state
restructuring proceedings and civil lawsuits related thereto and NHPUC
proceedings involving Freedom Energy Company and PSNH's franchise rights;
"Electric Operations--Transmission Access and FERC Regulatory Changes" for
information about proceedings relating to power and transmission issues;
"Electric Operations--Nuclear Generation" and "Electric Operations-Nuclear Plant
Performance and Regulatory Oversight" for information related to nuclear plant
performance, nuclear fuel enrichment pricing, high-level and low-level
radioactive waste disposal, decommissioning matters and NRC regulation; "Other
Regulatory and Environmental Matters" for information about proceedings
involving surface water and air quality, toxic substances and hazardous waste,
electric and magnetic fields, licensing of hydroelectric projects, and other
matters.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No Event that would be described in response to this item occurred
with respect to NU, WMECO, PSNH, or NAEC.
In a written Consent in Lieu of a Meeting of Common Shareholders of
CL&P ("Consent") dated December 18, 1996, shareholders voted to amend CL&P's
Restated Certificate of Incorporation to include the following language
regarding the indemnification of directors, officers, employees, and agents:
RESOLVED, that Section IX of the Part Two of Article IV of the
Restated Certificate of Incorporation of the Company is hereby amended to read
as follows:
SECTION IX
IMMUNITY AND INDEMNIFICATION OF DIRECTORS, OFFICERS, AND AGENTS
No director, officer or agent of the Company shall be held personally
responsible for any action in good faith through subsequently adjudged to be in
violation of these Sections.
Effective January 1, 1997, the Company shall indemnify and advance
expenses to an individual made a party to a proceeding because he/she is or was
a Director of the Company under Section 33-771 of the Connecticut General
Statutes, Revision of 1958, as amended. The Company shall also indemnify and
advance expenses under Sections 33-770 to 33-778, inclusive, of the Connecticut
General Statutes, to any officer, employee or agent of the company who is not a
director to the same extent as provided to a director.
The vote to amend the Restated Certificate of Incorporation was
12,222,930 shares in favor, representing 100 percent of the issued
and outstanding shares of common stock of CL&P.
PART II
Item 5. Market for the Registrants' Common Equity and Related
Shareholder Matters
NU. The common shares of NU are listed on the New York Stock Exchange. The
ticket symbol is "NU," although it is frequently presented as "Noeast Util"
and/or "NE Util" in various financial publications. The high and low sales
prices for the past two years, by quarters, are shown below.
Year Quarter High Low
1996 First $25 1/4 19
Second 20 1/4 11 7/8
Third 13 3/8 11 1/2
Fourth 13 1/2 9 1/2
1995 First $24 1/4 21
Second 23 7/8 21 3/8
Third 24 1/2 22
Fourth 25 3/8 23 1/2
As of January 31, 1997, there were 114,818 common shareholders of record
of NU. As of the same date, there were a total of 135,051,939 common shares
issued, including 7,540,802 million unallocated ESOP shares held in the ESOP
trust.
NU declared and paid quarterly dividends of $0.44 per share during all of
1995 and for the first two quarters of 1996. On July 23, 1996, the Board of
Trustees reduced dividends to $0.25 per share for the third quarter. The fourth
quarter dividend was also declared and paid at the $0.25 per share level. On
January 28, 1997, the Board of Trustees declared a dividend of $0.25 per share,
payable on March 31, 1997 to holders of record on March 1, 1996. The
declaration of future dividends may vary depending on capital requirements and
income as well as financial and other conditions existing at the time.
Information with respect to dividend restrictions for NU and its
subsidiaries is contained in Item 1. Business under the caption "Financing
Program - Financing Limitations" and in Note (b) to the "Consolidated Statements
of Common Shareholders' Equity" on page 25 of NU's 1996 Annual Report to
Shareholders, which information is incorporated herein by reference.
CL&P, PSNH, WMECO, and NAEC. The information required by this item is not
applicable because the common stock of CL&P, PSNH, WMECO, and NAEC is held
solely by NU.
Item 6. Selected Financial Data
NU. Reference is made to information under the heading "Selected
Consolidated Financial Data" contained on page 45 of NU's 1996 Annual Report to
Shareholders, which information is incorporated herein by reference.
CL&P. Reference is made to information under the heading "Selected
Financial Data" contained on page 50 of CL&P's 1996 Annual Report, which
information is incorporated herein by reference.
PSNH. Reference is made to information under the heading "Selected
Financial Data" contained on pages 49 and 50 of PSNH's 1996 Annual Report, which
information is incorporated herein by reference.
WMECO. Reference is made to information under the heading "Selected
Financial Data" contained on page 45 of WMECO's 1996 Annual Report, which
information is incorporated herein by reference.
NAEC. Reference is made to information under the heading "Selected
Financial Data" contained on page 32 of NAEC's 1996 Annual Report, which
information is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
NU. Reference is made to information under the heading "Management's
Discussion and Analysis" contained on pages 11 through 19 in NU's 1996 Annual
Report to Shareholders, which information is incorporated herein by reference.
CL&P. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 38 through 49 in CL&P's 1996 Annual Report, which information
is incorporated herein by reference.
PSNH. Reference is made to information under the heading
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained on pages 39 through 48 in PSNH's 1996
Annual Report, which information is incorporated herein by reference.
WMECO. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 34 through 44 in WMECO's 1996 Annual Report, which
information is incorporated herein by reference.
NAEC. Reference is made to information under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained on pages 25 through 31 in NAEC's 1996 Annual Report, which information
is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
NU. Reference is made to information under the headings "Company Report,"
"Report of Independent Public Accountants," "Consolidated Statements of Income,"
"Consolidated Statements of Cash Flows," "Consolidated Statements of Income
Taxes," "Consolidated Balance Sheets," "Consolidated Statements of
Capitalization," "Consolidated Statements of Common Shareholders' Equity,"
"Notes to Consolidated Financial Statements," and "Consolidated Statements of
Quarterly Financial Data" contained on pages 20 through 44 in NU's 1996 Annual
Report to Shareholders, which information is incorporated herein by reference.
CL&P. Reference is made to information under the headings "Consolidated
Balance Sheets," "Consolidated Statements of Income," "Consolidated Statements
of Cash Flows," "Consolidated Statements of Common Stockholder's Equity," "Notes
to Consolidated Financial Statements," "Report of Independent Public
Accountants," and "Statements of Quarterly Financial Data" contained on pages 2
through 37 and page 50 in CL&P's 1996 Annual Report, which information is
incorporated herein by reference.
PSNH. Reference is made to information under the headings "Balance
Sheets," "Statements of Income," "Statements of Cash Flows," "Statements of
Common Equity," "Notes to Financial Statements," "Report of Independent Public
Accountants," "Independent Auditors' Report," and "Statements of Quarterly
Financial Data" contained on pages 2 through 38 and page 51 in PSNH's 1996
Annual Report, which information is incorporated herein by reference.
WMECO. Reference is made to information under the headings "Balance
Sheets," "Statements of Income," "Statements of Cash Flows," "Statements of
Common Stockholder's Equity," "Notes to Financial Statements," "Report of
Independent Public Accountants," and "Statements of Quarterly Financial Data"
contained on pages 2 through 33 and page 45 in WMECO's 1996 Annual Report, which
information is incorporated herein by reference.
NAEC. Reference is made to information under the headings "Balance Sheet,"
"Statement of Income," "Statement of Cash Flows," "Statement of Common
Stockholder's Equity," "Notes to Financial Statements," "Report of Independent
Public Accountants," and "Statement of Quarterly Financial Data" contained on
pages 2 through 24 and page 32 in NAEC's 1996 Annual Report which information is
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
No event that would be described in response to this item has occurred with
respect to NU, CL&P, PSNH, WMECO, or NAEC.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
NU.
In addition to the information provided below concerning the executive
officers of NU, incorporated herein by reference is the information contained in
the sections "Proxy Statement", "Committee Composition and Responsibility",
"Common Stock Ownership of Certain Beneficial Owners", "Common Stock Ownership
of Management", "Compensation of Trustees", "Summary Compensation Table",
"Section 16 Compliance", "Pension Benefits", and "Report on Executive
Compensation" of the definitive proxy statement for solicitation of proxies by
NU's Board of Trustees, dated April 30, 1997, which will be filed with the
Commission pursuant to Rule 14a-6 under the Securities Exchange Act of 1934 (the
Act).
First First
Positions Elected Elected
Name Held an Officer a Trustee
John H. Forsgren EVP, CFO 02/01/96 -
Bernard M. Fox CHB, P, CEO, T 05/01/83 05/20/86
William T. Frain, Jr. OTH - -
Cheryl W. Grise OTH 06/01/91 -
Barry Ilberman OTH 02/01/89 -
Bruce D. Kenyon P 09/03/96 -
Francis L. Kinney OTH 04/24/74 -
Hugh C. MacKenzie P 07/01/88 -
John J. Roman VP, CONT 04/01/92 -
Robert P. Wax SVP, SEC, GC 08/01/92 -
CL&P.
First First
Positions Elected Elected
Name Held an Officer a Director
Robert G. Abair D - 01/01/89
John H. Forsgren EVP, CFO, D 02/01/96 06/10/96
Bernard M. Fox CH, D 05/15/81 05/01/83
William T. Frain, Jr. D - 02/01/94
Cheryl W. Grise SVP, CAO, D 06/01/91 01/01/94
Barry Ilberman VP 02/01/89 -
John B. Keane VP, TR, D 08/01/92 08/01/92
Bruce D. Kenyon P, D 09/03/96 09/03/96
Francis L. Kinney SVP 04/24/74 -
Hugh C. MacKenzie P, D 07/01/88 06/06/90
John J. Roman VP, CONT 04/01/92 -
Robert P. Wax SVP, SEC, GC 08/01/92 -
PSNH.
First First
Positions Elected Elected
Name Held an Officer a Director
John C. Collins D - 10/19/92
John H. Forsgren EVP, CFO, D 02/01/96 08/05/96
Bernard M. Fox CH, CEO, D 06/05/92 06/05/92
William T. Frain, Jr. P, COO, D 03/18/71 02/01/94
Cheryl W. Grise D 02/06/95
Barry Ilberman VP 07/01/94 -
Bruce D. Kenyon P 09/03/96 -
Gerald Letendre D - 10/19/92
Hugh C. MacKenzie D - 02/01/94
Jane E. Newman D - 10/19/92
John J. Roman VP, CONT 04/01/92 -
Robert P. Wax SVP,SEC,GC 08/01/92 02/01/93
WMECO.
First First
Positions Elected Elected
Name Held an Officer a Director
Robert G. Abair VP, CAO, D 09/06/88 01/01/89
John H. Forsgren EVP, CFO, D 02/01/96 06/10/96
Bernard M. Fox C, D 05/15/81 05/01/83
William T. Frain, Jr. D - 02/01/94
Cheryl W. Grise SVP, D 06/01/91 01/01/94
Barry Ilberman VP 02/01/89 -
John B. Keane VP, TR, D 08/01/92 08/01/92
Bruce D. Kenyon P, D 09/03/96 09/03/96
Francis L. Kinney SVP 04/24/74 -
Hugh C. MacKenzie P, D 07/01/88 06/06/90
John J. Roman VP, CONT 04/01/92 -
Robert P. Wax SVP, SEC, AC, GC 08/01/92 -
NAEC.
First First
Positions Elected Elected
Name Held an Officer a Director
Ted C. Feigenbaum EVP, CNO, D 10/21/91 10/16/91
John H. Forsgren EVP, CFO 02/01/96 -
Bernard M. Fox C, CEO, D 10/21/91 10/16/91
William T. Frain, Jr. D - 02/01/94
Cheryl W. Grise SVP, CAO, D 10/21/91 01/01/94
Barry Ilberman VP 01/29/92 -
Francis L. Kinney SVP 10/21/91 -
John B. Keane VP, TR, D 08/01/92 08/01/92
Bruce D. Kenyon P, D 09/03/96 09/03/96
Hugh C. MacKenzie D - 01/01/94
John J. Roman VP, CONT 04/01/92 -
Robert P. Wax SVP, SEC, GC 08/01/92 -
Key:
AC - Assistant Clerk
CAO - Chief Administrative Officer EVP - Executive Vice President
CEO - Chief Executive Officer GC - General Counsel
CFO - Chief Financial Officer OTH - Executive Officer of NU
system
CH - Chairman P - President
CHB - Chairman of the Board SEC - Secretary
CNO - Chief Nuclear Officer SVP - Senior Vice President
COO - Chief Operating Officer T - Trustee
CONT - Controller TR - Treasurer
D - Director VP - Vice President
Name Age Business Experience During Past 5 Years
Robert G. Abair (1) 58 Elected Vice President and Chief
Administrative Officer of WMECO in 1988.
John C. Collins (2) 52 Executive Vice President, Lahey Clinic,
since 1995. Previously Chief Executive
Officer, The Hitchcock Clinic, Dartmouth -
Hitchcock Medical Center from 1977 to 1995.
Ted C. Feigenbaum (3) 46 Elected Executive Vice President and Chief
Nuclear Officer of NAEC February, 1996;
previously Senior Vice President of NAEC
since 1991; Senior Vice President and Chief
Nuclear Officer of PSNH June, 1992 to August,
1992; President and Chief Executive Officer -
New Hampshire Yankee Division of PSNH October,
1990 to June, 1992 and Chief Nuclear
Production Officer of PSNH January, 1990
to June, 1992.
John H. Forsgren (4) 50 Elected Executive Vice President and Chief
Financial Officer of NU, CL&P, PSNH, WMECO
and NAEC February, 1996; previously Managing
Director of Chase Manhattan Bank since 1995;
and Senior Vice President-Chief Financial
Officer of Euro Disney, The Walt Disney
Company.
Bernard M. Fox (5) 54 Elected Chairman of the Board, President
and Chief Executive Officer of NU, Chairman
of CL&P, PSNH, WMECO and NAEC, and Chief
Executive Officer of PSNH and NAEC in 1995;
previously Vice Chairman of CL&P and WMECO,
and Vice Chairman and Chief Executive Officer
of NAEC since 1994; Chief Executive Officer
of NU, CL&P, PSNH, WMECO and NAEC in 1993;
President and Chief Operating Officer of NU,
CL&P and WMECO in 1990 and NAEC since 1991;
Vice Chairman of PSNH since 1992.
William T. Frain, Jr.(6) 55 Elected President and Chief Operating Officer
of PSNH in 1994; previously Senior Vice
President of PSNH since 1992.
Cheryl W. Grise 44 Elected Senior Vice President and Chief
Administrative Officer of CL&P, PSNH and
NAEC, and Senior Vice President of WMECO
in 1995; previously Senior Vice
resident-Human Resources and Administrative
Services of CL&P,WMECO and NAEC since 1994;
Vice President-Human Resources of NAEC since
1992.
Barry Ilberman (7) 47 Elected Vice President-Corporate and
Environmental Affairs of CL&P, PSNH, WMECO and
NAEC, in 1994; previously Vice President-
Corporate Planning of CL&P, WMECO since 1992.
John B. Keane (8) 50 Elected Vice President and Treasurer of NU,
CL&P, PSNH, WMECO and NAEC in 1993;
previously Vice President, Secretary and
General Counsel-Corporate of NU, CL&P and
WMECO since 1992; Vice President, Assistant
Secretary and General Counsel-Corporate of
PSNH and NAEC, Vice President, Secretary and
General Counsel-Corporate of NU and CL&P,
and Vice President, Secretary,Assistant
Clerk and General Counsel-Corporate of
WMECO since 1992.
Bruce D. Kenyon (9) 54 President and Chief Executive Officer of NAEC
and President-Nuclear Group of CL&P,PSNH and
WMECO since 1996; previously President and
Chief Operating Officer of South Carolina
Electric and Gas Company from 1990.
Francis L. Kinney (10) 64 Elected Senior Vice President-Governmental
Affairs of CL&P, WMECO and NAEC in 1994;
previously Vice President-Public Affairs of
NAEC since 1992.
Gerald Letendre 56 President, Diamond Casting & Machine Co.,
Inc. since 1972.
Hugh C. MacKenzie (11) 54 Elected President-Retail Business Group of
NU February, 1996 and President of CL&P and
WMECO in 1994; previously Senior Vice
President-Customer Service Operations of
CL&P and WMECO since 1990.
Jane E. Newman (12) 51 Executive Vice President and Director, Exeter
Trust Company since 1995. Previously
President, Coastal Broadcasting Corporation
since 1992.
John J. Roman 43 Elected Vice President and Controller of NU,
CL&P, PSNH, WMECO and NAEC in 1995;
previously Assistant Controller of CL&P,
PSNH, WMECO and NAEC since 1992.
Robert P. Wax 48 Elected Senior Vice President, Secretary and
General Counsel of NU, CL&P, PSNH, NAEC and
WMECO in 1997. Previously elected Vice
President, Secretary and General Counsel of
PSNH and NAEC in 1994; elected Vice
President, Secretary and General Counsel of
NU and CL&P and Vice President, Secretary,
Assistant Clerk and General Counsel of WMECO
in 1993; previously Vice President, Assistant
Secretary and General Counsel of PSNH and
NAEC since 1993; previously Vice President
and General Counsel-Regulatory of NU, CL&P,
PSNH, WMECO and NAEC since 1992.
(1) Member-Advisory Committee, Bank of Boston Springfield/Pioneer Valley.
(2) Director of Fleet Bank - New Hampshire and Hamden Assurance Company
Limited.
(3) Director of Connecticut Yankee Atomic Power Company and Maine Yankee
Atomic Power Company.
(4) Director of Connecticut Yankee Atomic Power Company.
(5) Director of The Institute of Living, the Institute of Nuclear Power
Operations, the Connecticut Business and Industry Association, Fleet
Financial Group, Inc., CIGNA Corporation, Connecticut Yankee Atomic Power
Company, Edison Electric Institute, Hartford Hospital, The Dexter
Corporation, a Trustee of Mount Holyoke College and The Hartford Courant
Foundation and a Fellow and Founder of the American Leadership Forum.
(6) Director of the Business and Industry Association of New Hampshire, the
Greater Manchester Chamber of Commerce; Trustee of Optima Health, Inc.
and Saint Anselm College.
(7) Director of Connecticut Yankee Atomic Power Company.
(8) Director of Maine Yankee Atomic Power Company, Vermont Yankee Nuclear
Power Corporation, Yankee Atomic Electric Company and Connecticut Yankee
Atomic Power Company, Member - Advisory Committee, Fleet Bank
Connecticut.
(9) Trustee of Columbia College and Director of Connecticut Yankee Atomic
Power Company.
(10) Director of Mid-Conn Bank.
(11) Director of Connecticut Yankee Atomic Power Company.
(12) Director of Exeter Trust Company, Perini Corporation, NYNEX
Telecommunications and Consumers Water Company.
There are no family relationships between any director or executive officer
and any other director or executive officer of NU, CL&P, PSNH, WMECO or NAEC.
ITEM 11. EXECUTIVE COMPENSATION
NU.
Incorporated herein by reference is the information contained in the
sections "Summary Compensation Table", "Pension Benefits", and "Report on
Executive Compensation" of the definitive proxy statement for solicitation of
proxies by NU, dated April 30, 1997, which will be filed with the Commission
pursuant to Rule 14a-6 under the Act.
SUMMARY COMPENSATION TABLE
CL&P, PSNH, WMECO and NAEC
The following table presents the cash and non-cash compensation received by the
CEO and the next four highest paid executive officers of the System, and by two
retired executive officers who would have been among the five highest paid
executive officers but for their retirement, in accordance with rules of the
Securities and Exchange Commission (SEC):
<TABLE>
Annual Compensation Long Term Compensation
Awards
<CAPTION>
Payouts
Options/ Long
Re- Stock Term All
Other stricted Appreci- Incentive Other
Annual Stock ation Program Compen-
Name and Salary Compensa- Awards Rights Payouts sation ($)
Principal Position Year ($) Bonus($) tion ($) ($) (#) ($) (Note 1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard M. Fox 1996 551,300 None None None None 65,420 7,500
(Note 2) 1995 551,300 246,168 None None None 130,165 7,350
1994 544,459 308,896 None None None 115,771 4,500
Bruce D. Kenyon 1996 144,231 400,000 None 499,762 None None None
(Note 2) (Note 3)
1995 None None None None None None None
1994 None None None None None None None
John H. Forsgren 1996 305,577 None 62,390 80,380 None None None
(Note 2) (Note 4) (Note 4)
1995 None None None None None None None
1994 None None None None None None None
Hugh C. MacKenzie 1996 264,904 None None None None 19,834 7,500
(Note 2) 1995 247,665 128,841 None None None 46,789 7,350
1994 245,832 113,416 None None None 40,449 4,500
Ted C. Feigenbaum 1996 248,858 (Note 5) None None None 14,770 7,222
(Note 2) 1995 185,300 126,002 None None None None 5,553
1994 183,331 47,739 None None None None 4,500
Robert E. Busch 1996 300,385 None None None None 26,747 2,637,500
Formerly President- (Note 6)
Energy Resources Group 1995 350,000 147,708 None None None 63,100 7,350
of NU, CL&P, WMECO and 1994 346,122 173,366 None None None 44,073 4,500
PSNH and formerly
President of NAEC (Note 6)
</TABLE>
Notes:
1. "All Other Compensation" consists of employer matching
contributions under the Northeast Utilities Service Company
401(k) Plan, generally available to all eligible employees. It
also includes, in the case of Mr. Busch, certain payments made
to him pursuant to the terms of his separation agreement with
Northeast Utilities Service Company (see Note 6).
2. See "Item 10. Directors and Executive Officers of the
Registrants" for information on the directorships and officer
positions held by each active individual named in the summary
compensation table with each of the registrants.
3. The restricted stock will vest when Millstone Station is
removed from the Nuclear Regulatory Commission's "watch list",
provided that this occurs within three years of Mr. Kenyon's
commencement of employment and the SRLP and INPO ratings of
Seabrook Station have not materially changed from their 1996
levels. Dividends accruing on these shares are reinvested in
additional shares subject to the same restrictions. At the end
of 1996, Mr. Kenyon owned 39,585 restricted shares with a
market value of $519,555, plus a $9,896 dividend that was
reinvested into an additional 740 restricted shares on January
2, 1997.
4. The "other annual compensation" consists of tax payments on a
restricted stock award. The restricted stock will vest on
January 1, 1999. Dividends accruing on these shares are
reinvested in additional shares subject to the same
restrictions. At the end of 1996, Mr. Forsgren owned 5,305
restricted shares with a market value of $69,621, plus a $1,326
dividend that was reinvested into an additional 99 restricted
shares on January 2, 1997.
5. Awards under the 1996 short term incentive program of the
Northeast Utilities Executive Incentive Plan have not yet been
made. Based on preliminary estimates of corporate performance,
no short term awards will be made.
6. Mr. Busch left the Company during 1996. Pursuant to his
separation agreement with Northeast Utilities Service Company,
Mr. Busch received cash payments of $880,000 during 1996 and
$220,000 during 1997, a supplemental retirement benefit with a
present value of $1,400,000, continued medical coverage for
himself and his family with a present value of $100,000 and
career planning with a value of $30,000. See Employment
Contracts and Termination of Employment Arrangements, below.
REPORT ON EXECUTIVE COMPENSATION
[Note: The Committee on Organization, Compensation and Board Affairs of the
Board of Trustees of Northeast Utilities is the administrator of executive
compensation for the executives of the registrants with authority to establish
and interpret the terms of the registrants' executive salary and incentive
programs and to make payment of awards.]
The Committee on Organization, Compensation and Board Affairs of the Board
of Trustees is the administrator of executive compensation for the executives of
the Northeast Utilities system (the Company) with authority to establish and
interpret the terms of the Company's executive salary and incentive programs and
to make payment of awards.
Compensation Strategy: The Company's executive compensation goals for
1996 were to provide a competitive compensation package to enable the Company to
attract and retain key executives and to align executive interests with those of
Northeast Utilities' shareholders and with Company performance. The 1996
compensation of the Company's executives was comprised primarily of base salary,
annual incentive awards and long-term incentive awards.
To achieve the compensation goal of providing a competitive package, the
Committee draws upon information from a variety of sources, including
compensation consultants, utility and general industry surveys, and other
publicly-available information, including proxy statements. In 1996, the
Company's comparison groups for purposes of executive compensation continued to
consist of a consultant's database of over 600 industrial and more than 50
electric and gas utilities, as well as a smaller group of ten electric utilities
whose operating characteristics were substantially similar to those of the
Company in terms of generation mix, revenues and customer size. Seven of the
ten companies are included in the Standard & Poor's (S&P) Electric Companies
Index, which is the Index used in the share performance chart shown in Northeast
Utilities' proxy statement.
Base Salary: The target level for the base salary of each executive
reflects the median base salary level for that position within the market
comparison groups. The Committee periodically adjusts the level of base salary
to reflect considerations such as changes in responsibility, market sensitivity,
individual performance and internal equity. Any portion of base salary in
excess of the salary range upper limit (the going rate) is paid in a lump sum,
and is not counted as base salary in determining future salary increases. The
Committee sets base salary ranges for most Company officers and sets the annual
base salary for each such officer except for the Chief Executive Officer (CEO),
whose base salary is set by the Board of Trustees following a recommendation by
the Committee. During 1996, the Committee approved a 2.75 percent increase in
the 1996 base salary range structure over 1995. Because 1996 base salary levels
were generally within targeted pay levels of the comparison group, only certain
officers received 1996 base salary adjustments.
Incentive Pay: Incentive awards for the executive officers are made in
accordance with the Company's Executive Incentive Plan (the Plan). Under the
Plan during 1996, the Committee established a one-year short-term program and a
three-year long-term program with target awards (expressed as a percentage of
going rate) commensurate with incentive awards for the position within the
comparison groups.
The programs calculate payouts based on actual Company performance against
target goals with respect to two equally-weighted corporate measures. Each
measure has a threshold performance limit (under which no amount is awarded) and
an upper limit (which will yield the maximum payout of twice the target amount).
The corporate performance measures for the 1996 short-term incentive program
were 1996 earnings per share and Company operations and maintenance budget. The
corporate performance measures for the 1996-1998 long-term incentive program
were total shareholder return and cost of service (COS) over the three-year
period. The total shareholder return goal will be met at target if the total
return on a Northeast Utilities common share for the performance period equals
the return on the S&P Electric Companies Index for the same period. The COS
goal will be met at target if the Company's average COS changes by the same
percentage as the COS average of an 18 utility company comparison group. Awards
under the 1996 short-term program, if any, will be made in cash in the Spring of
1997 and, under the 1996-1998 long-term program, awards will be made in
Northeast Utilities common shares in the Spring of 1999.
For 1996, target awards for participants in the short-term program ranged
from 25 percent to 35 percent, and for participants in the long-term program
from 15 percent to 45 percent, of the going rate for their positions. Awards
under the short-term program can vary from those determined solely by corporate
performance depending on individual achievement of a set of assigned goals
established for the performance year. These assigned goals vary as appropriate
from officer to officer and include employee safety; service reliability;
nuclear operations; economic development; operating, maintenance and capital
expenditure levels; environmental initiatives; and generating unit capacity and
availability.
During 1996, the Committee determined that establishing a Stock Price
Recovery Program for certain senior officers, including the CEO, was in the best
interest of the Company and its shareholders. The purpose of this program is to
focus key officers on achieving fundamental business goals relative to the
challenges of nuclear operations and industry restructuring, with a net effect
of advancing shareholder interests with regard to share price recovery. In
connection with the commencement of this new incentive program, the Committee
terminated the participation of these officers in the 1996 short-term program
and the 1996-1998 long-term program and resolved that these officers would not
participate in other incentive programs that begin in 1997 or 1998. Awards
under the Stock Price Recovery Incentive Program will be based on appreciation
of the price of Northeast Utilities common shares between December 31, 1996 and
December 31, 1998 against a targeted share price goal, indexed to reflect the
relative performance of a Northeast Utilities common share compared to the
performance of the S&P Electric Companies Index during the same period. The
target award of each participant is equal to the value of the 1996, 1997, and
1998 short-term and long-term incentive programs at target, assuming that there
had been no changes in the 1997 and 1998 program target payout opportunities for
these executives. There are no individual performance goals in the program.
Awards under the program are made in restricted stock units and stock
appreciation rights (SARs). The SARs are exercisable from January 1, 1999
through December 31, 2001.
At the same time, the Committee modified the short and long-term program
design for officers not participating in the Stock Price Recovery Incentive
Program to recognize the importance of retaining key executive talent and to
help assure the officers' continuing dedication to their duties to the Company
and its shareholders. Consistent with these views, the Committee established
for 1997 a short-term program that calculates payouts based on performance
against goals that vary by division and a 1997-1999 long-term program that
measures corporate performance solely on total shareholder return exceeding the
S&P Electric Companies Index return for the same period by a specified
percentage.
Also during 1996, the Committee made awards under the 1993-1995 long-term
incentive program. Awards, in Northeast Utilities common shares, were based on
the Company's relative ranking against a group of electric utilities with
respect to shareholder return and COS. Achievement of goals was less than
target and resulted in awards that were 69.1 percent of target.
CEO Pay: Despite a base salary that is below the median market level for
the position, the Committee did not increase Mr. Fox's base salary in 1996
because of company performance.
Annual Incentive Bonus. In 1996, the Committee established a program
governing the payment of the 25-percent holdback of Mr. Fox's award under the
1995 short-term program. Under this program, the holdback will be forfeited
unless nuclear goals with respect to removal from the watch list and improvement
in the area of employee concerns are fulfilled within a specified time period,
as determined by the Board with the assistance of the Nuclear Committee of the
Board.
Long-Term Incentive Award. During 1996, Mr. Fox was granted 4,108
Northeast Utilities common shares in conformance with the provisions of the
1993-1995 program whose payouts were based on the Company's performance under
COS and shareholder return measures as described above.
The Committee does not believe it is necessary to make any changes in the
Company's executive compensation programs at this time in response to the
deductibility cap placed on executive salaries by Section 162(m) of the Internal
Revenue Code. The Committee believes that the executive compensation programs
appropriately balance shareholder and customer interests. It continues to
evaluate options for dealing with the issues raised by Section 162 (m).
Dated: January 28, 1997
Respectfully submitted,
Elizabeth T. Kennan, Chairman
William J. Pape II, Vice Chairman
John F. Curley
Cotton Mather Cleveland
Gaynor N. Kelley
Robert E. Patricelli
PENSION BENEFITS
The following table shows the estimated annual retirement benefits payable
to an executive officer of the registrants upon retirement, assuming that
retirement occurs at age 65 and that the officer is at that time not only
eligible for a pension benefit under the Northeast Utilities Service Company
Retirement Plan (the Retirement Plan) but also eligible for the make-whole
benefit and the target benefit under the Supplemental Executive Retirement Plan
for Officers of Northeast Utilities System Companies (the Supplemental Plan).
The Supplemental Plan is a non-qualified pension plan providing supplemental
retirement income to system officers. The make-whole benefit under the
Supplemental Plan, available to all officers, makes up for benefits lost through
application of certain tax code limitations on the benefits that may be provided
under the Retirement Plan, and includes as "compensation" awards under the
Executive Incentive Compensation Program and the Executive Incentive Plan and
deferred compensation (as earned). The target benefit further supplements these
benefits and is available to officers at the Senior Vice President level and
higher who are selected by the Board of Trustees of Northeast Utilities to
participate in the target benefit and who remain in the employ of Northeast
Utilities companies until at least age 60 (unless the Board of Trustees sets an
earlier age). Each of the executive officers of Northeast Utilities named in
the Summary Compensation Table is currently eligible for a target benefit,
except Mr. Kenyon, whose Employment Agreement provides a specially calculated
retirement benefit, based on his previous arrangement with South Carolina
Electric and Gas. If Mr. Kenyon retires with at least three but less than five
years of service with the Company, he will be deemed to have five years of
service. In addition, if Mr. Kenyon retires with at least three years of
service with the Company, he will receive a lump sum payment of $500,000.
The benefits presented below are based on a straight life annuity
beginning at age 65 and do not take into account any reduction for joint and
survivorship annuity payments.
ANNUAL TARGET BENEFIT
FINAL AVERAGE
COMPENSATION YEARS OF CREDITED SERVICE
15 20 25 30 35
$200,000 $72,000 $96,000 $120,000 $120,000 $120,000
250,000 90,000 120,000 150,000 150,000 150,000
300,000 108,000 144,000 180,000 180,000 180,000
350,000 126,000 168,000 210,000 210,000 210,000
400,000 144,000 192,000 240,000 240,000 240,000
450,000 162,000 216,000 270,000 270,000 270,000
500,000 180,000 240,000 300,000 300,000 300,000
600,000 216,000 288,000 360,000 360,000 360,000
700,000 252,000 336,000 420,000 420,000 420,000
800,000 288,000 384,000 480,000 480,000 480,000
900,000 324,000 432,000 540,000 540,000 540,000
1,000,000 360,000 480,000 600,000 600,000 600,000
1,100,000 396,000 528,000 660,000 660,000 660,000
1,200,000 432,000 576,000 720,000 720,000 720,000
Final average compensation for purposes of calculating the target benefit
is the highest average annual compensation of the participant during any 36
consecutive months compensation was earned. Compensation taken into account
under the target benefit described above includes salary, bonus, restricted
stock awards, and long-term incentive payouts shown in the Summary Compensation
Table, but does not include employer matching contributions under the 401(k)
Plan. In the event that an officer's employment terminates because of
disability, the retirement benefits shown above would be offset by the amount of
any disability benefits payable to the recipient that are attributable to
contributions made by Northeast Utilities and its subsidiaries under long term
disability plans and policies.
As of December 31, 1996, the five executive officers named in the Summary
Compensation Table had the following years of credited service for retirement
compensation purposes: Mr. Fox - 32, Mr. Kenyon - 0, Mr. Forsgren - 0, Mr.
MacKenzie - 31, and Mr. Feigenbaum 10. Assuming that retirement were to occur
at age 65 for these officers, retirement would occur with 43, 11, 15, 41 and 29
years of credited service, respectively. Mr. Fox has announced that he will
retire in the second half of 1997.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Officer Agreements
Northeast Utilities Service Company (NUSCO) has entered into employment
agreements (the Officer Agreements) with each of the named executive officers
(except for Mr. Fox - see separate description below) and certain other
executive officers and directors of the registrants. The Officer Agreements are
also binding on Northeast Utilities and on each majority-owned subsidiary of
Northeast Utilities with at least fifty employees on its direct payroll.
Each Officer Agreement obligates the officer to perform such duties as may be
directed by the NUSCO Board of Directors or the Northeast Utilities Board of
Trustees, protect the Company's confidential information, and refrain, while
employed by the Company and for a period of time thereafter, from competing with
the Company in a specified geographic area. Each Officer Agreement provides
that the officer's base salary will not be reduced below certain levels without
the consent of the officer, that the officer will participate in specified
benefits under the Supplemental Executive Retirement Plan (see Pension Benefits,
above), in the applicable divisional officer executive incentive programs or the
Stock Price Recovery Program, as the case may be, under the Executive Incentive
Plan (see Report on Executive Compensation, above), and, beginning on January 1,
1999, if the employment term has not ended, in each short-term and long-term
incentive compensation program established by the Company for such senior level
executives generally, at an incentive opportunity level not less than that in
effect for the officer as of January 1, 1996 (or January 1, 1997 for certain
officers).
Each Officer Agreement provides for automatic one-year extensions of the
employment term unless at least six months' notice of non-renewal is given by
either party. The employment term may also be ended by the Company for "cause",
as defined, at any time (in which case no target benefit, if any, shall be due
the officer under the Supplemental Executive Retirement Plan), or by the officer
on thirty days' prior written notice for any reason. Absent "cause", the
Company may remove the officer from his or her position on sixty days' prior
written notice, but in the event the officer is so removed and signs a release
of all claims against the Company, the officer will receive one or two years'
base salary and annual incentive payments, specified employee welfare and
pension benefits, and vesting of stock appreciation rights, options and
restricted stock.
Under the terms of an Officer Agreement, upon any termination of employment of
the officer within two years following a change in control, as defined, if the
officer signs a release of all claims against the Company the officer will be
entitled to certain payments including two or three times base salary and annual
incentive payments, specified employee welfare and pension benefits, and vesting
of stock appreciation rights, options and restricted stock. Certain of the
change in control provisions may be modified by the Board of Trustees prior to a
change in control, on at least two years' notice to the affected officer(s).
Besides the terms described above, Mr. Forsgren's Officer Agreement provides for
a starting salary of $350,000 per year and a $100,000 restricted stock grant.
Mr. Feigenbaum's Officer Agreement provides for a starting salary of $250,000
per year. Mr. Kenyon's Officer Agreement provides for an initial starting
salary of at $500,000 per year, a $500,000 restricted stock grant and a $400,000
cash signing bonus (See Summary Compensation Table, above). Mr. Kenyon's
Officer Agreement also provides for a special retirement benefit (described
above in Pension Benefits) instead of a target benefit and a make-whole benefit
under the Supplemental Plan, and a special short term incentive compensation
program in lieu of a portion of the Stock Price Recovery Program. Under this
incentive program Mr. Kenyon will be eligible to receive a payment up to 100
percent of base salary depending on his fulfillment of certain incentive goals
for each of the years ending August 31, 1997 and August 31, 1998, and for the 16
month period ending December 31, 1999.
Transition and Retirement Agreement
In 1992, Northeast Utilities entered into an agreement with Mr. Fox (the "1992
Agreement") to provide for an orderly chief executive officer succession. The
agreement states that if Mr. Fox is terminated without cause, he will be
entitled to two years' base pay; specified employee welfare benefits; a
supplemental retirement benefit equal to the difference between the target
benefit he would be entitled to receive if he had reached the age of 55 on the
termination date and the actual target benefit to which he is entitled as of the
termination date; and a target benefit under the Supplemental Executive
Retirement Plan, notwithstanding that he might not have reached age 60 on the
termination date and notwithstanding other forfeiture provisions of that plan.
In January, 1997, Northeast Utilities entered into a Transition and Retirement
Agreement (the "Transition Agreement") with Mr. Fox to reflect his election to
retire on the later of August 1, 1997 and the date his successor is elected.
The Transition Agreement is intended to supersede the 1992 Agreement at the time
of Mr. Fox's retirement. The Transition Agreement obligates Mr. Fox to maintain
the confidentiality of Company information during his employment and following
his retirement, and not to compete with the Company for certain periods of time
in specified geographic areas.
The Transition Agreement provides that Mr. Fox will be engaged as a consultant
to the Board of Trustees of Northeast Utilities for 24 months following his
retirement, with a fee of $500,000 for the first 12 months and $300,000 for the
second 12 months, payable in full notwithstanding Mr. Fox's death or disability
during such period or the occurrence of a change in control, as defined. The
Transition Agreement also provides that Mr. Fox will be entitled to a target
benefit under the Supplemental Executive Retirement Plan (actuarially reduced,
if applicable, to reflect payments beginning prior to age 57), and for vesting
of all stock appreciation rights granted to him in the Stock Price Recovery
Program. All payments and benefits under the Transition Agreement are
conditioned on Mr. Fox signing a release of claims against the Company "and all
related parties" with respect to matters arising out of his employment with the
Company, and the Company releasing Mr. Fox from all civil liability which may
arise from his being or having been a Trustee or officer of Northeast Utilities
and its subsidiaries, except for any liability which has been or may be asserted
against Mr. Fox by the Company as the result of an investigation conducted upon
the demand of a shareholder or by a shareholder on behalf of the Company. Both
the 1992 Agreement and the Transition Agreement are binding on each majority-
owned subsidiary of Northeast Utilities with at least fifty employees on its
direct payroll.
Separation Agreement
NUSCO entered into a Separation Agreement with Mr. Busch in August 1996 in
connection with the termination of Mr. Busch's employment. The agreement
provided for a severance payment of two times annual compensation, and specified
supplemental employee welfare and pension benefits. It provides for
confidentiality restrictions on Mr. Busch and a two year non-competition period
in specified geographic locations. It includes a release by Mr. Busch of claims
against the Company and a release by the Company of claims against Mr. Busch,
except such as might be brought as the result of an investigation conducted upon
the demand of a shareholder or on behalf of the Company by shareholders.
NUSCO's obligations under this agreement are binding on each majority-owned
subsidiary of Northeast Utilities with at least fifty employees on its direct
payroll.
The descriptions of the various agreements set forth above are for purpose of
disclosure in accordance with the proxy and other disclosure rules of the SEC
and shall not be controlling on any party; the actual terms of the agreements
themselves determine the rights and obligations of the parties.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
NU.
Incorporated herein by reference is the information contained in the
sections "Common Stock Ownership of Certain Beneficial Owners", "Common Stock
Ownership of Management", "Compensation of Trustees", "Summary Compensation
Table", "Pension Benefits", and "Report on Executive Compensation" of the
definitive proxy statement for solicitation of proxies by NU, dated April 30,
1997 which will be filed with the Commission pursuant to Rule 14a-6 under the
Act.
CL&P, PSNH, WMECO AND NAEC.
NU owns 100% of the outstanding common stock of registrants CL&P, PSNH,
WMECO and NAEC. As of February 25, 1997, the Directors of CL&P, PSNH, WMECO and
NAEC beneficially owned the number of shares of each class of equity securities
of NU listed below. No equity securities of CL&P, PSNH, WMECO or NAEC are owned
by the Directors and Executive Officers of CL&P, PSNH, WMECO and NAEC.
CL&P, PSNH, WMECO, and NAEC DIRECTORS AND EXECUTIVE OFFICERS
Amount and
Nature of
Title Of Name of Beneficial Percent of
Class Beneficial Owner Ownership (1) Class (2)
NU Common Robert G. Abair(3) 7,761
NU Common John C. Collins(4) 0
NU Common Ted C. Feigenbaum(5) 1,917
NU Common John H. Forsgren(6) 5,404
NU Common Bernard M. Fox(7) 27,532
NU Common William T. Frain, Jr.(8) 2,726
NU Common Cheryl W. Grise(9) 4,553
NU Common Barry Ilberman(10) 8,124
NU Common John B. Keane(11) 2,971
NU Common Bruce D. Kenyon(12) 41,075
NU Common Francis L. Kinney(13) 4,949
NU Common Gerald Letendre(4) 0
NU Common Hugh C. MacKenzie(14) 9,962
NU Common Jane E. Newman(4) 0
NU Common Robert P. Wax(15) 3,815
Amount beneficially owned by Directors and Executive Officers
as a group - CL&P 118,872 shares (11 persons)
- PSNH 103,191 shares ( 8 persons)
- WMECO 118,872 shares (11 persons)
- NAEC 113,028 shares (11 persons)
(1) Unless otherwise noted, each Director and Executive Officer of CL&P,
PSNH, WMECO and NAEC has sole voting and investment power with respect
to the listed shares.
(2) As of February 25, 1997 there were 136,052,050 common shares of NU
outstanding. The percentage of such shares beneficially owned by any
Director or Executive Officer, or by all Directors and Executive
Officers of CL&P, PSNH, WMECO and NAEC as a group, does not exceed one
percent.
(3) Mr. Abair is a Director of CL&P and WMECO.
(4) Messrs. Collins, Letendre and Ms. Newman are Directors of PSNH.
(5) Mr. Feigenbaum is a Director and Executive Officer of NAEC.
(6) Mr. Forsgren is a Director and Executive Officer of CL&P, WMECO and
PSNH and an Executive Officer of NAEC. Mr. Forsgren's shares are
restricted. See Note 3 of the Summary Compensation Table.
(7) Mr. Fox is a Director and Executive Officer of CL&P, PSNH, WMECO and
NAEC. Mr. Fox shares voting and investment power with his wife for
5,745 of these shares. In addition, Mr. Fox's wife has sole voting and
investment power for 140 shares as to which Mr. Fox disclaims
beneficial ownership.
(8) Mr. Frain is a Director of CL&P, PSNH, WMECO and NAEC and an Executive
Officer of PSNH.
(9) Mrs. Grise is a Director of CL&P, PSNH, WMECO and NAEC and an Executive
Officer of CL&P, WMECO and NAEC.
(10) Mr. Ilberman is an Executive Officer of CL&P, PSNH, WMECO and NAEC.
Mr. Ilberman shares voting and investment power with his wife for 319
of these shares and voting and investment power with his mother for
1,277 of these shares.
(11) Mr. Keane is a Director of CL&P, WMECO and NAEC.
(12) Mr. Kenyon is a Director and Executive Officer of CL&P, NAEC and WMECO
and an Executive Officer of PSNH. 40,325 of Mr. Kenyon's shares are
restricted. See Note 2 of the Summary Compensation Table.
(13) Mr. Kinney is an Executive Officer of CL&P, WMECO and NAEC. Mr. Kinney
shares voting and investment power with his wife for 2,243 of these
shares.
(14) Mr. MacKenzie is a Director of CL&P, PSNH, WMECO and NAEC and an
Executive Officer of CL&P and WMECO. Mr. MacKenzie shares voting and
investment power with his wife for 1,584 of these shares.
(15) Mr. Wax is an Executive Officer of CL&P, PSNH, WMECO and NAEC.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NU.
Incorporated herein by reference is the information contained in the
section "Certain Relationships and Related Transactions" of the definitive proxy
statement for solicitation of proxies by NU's Board of Trustees, dated April 30,
1997, which will be filed with the Commission pursuant to Rule 14a-6 under the
Act.
CL&P, PSNH, WMECO AND NAEC.
No relationships or transactions that would be described in response to
this item exist now or existed during 1996 with respect to CL&P, PSNH, WMECO and
NAEC.
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) 1. Financial Statements:
The Report of Independent Public Accountants and financial
statements of NU, CL&P, PSNH, WMECO, and NAEC are hereby incorporated
by reference and made a part of this report (see "Item 8. Financial
Statements and Supplementary Data").
Report of Independent Public Accountants S-1
Consent of Independent Public Accountants S-3
2. Schedules:
Financial Statement Schedules for NU (Parent),
NU and Subsidiaries, CL&P and Subsidiaries,
PSNH and WMECO are listed in the Index to
Financial Statement Schedules S-4
3. Exhibits Index E-1
(b) Reports on Form 8-K:
NU, CL&P, PSNH, and WMECO filed Form 8-Ks dated November 25,1996 with
the SEC on December 19, 1996. This 8-K filing disclosed that:
*NNECO informed the NRC of its comprehensive plan for restarting
the Millstone units.
*The Board of Directors of CYAPCO voted unanimously to retire the
CY power plant.
*The NRC conducted enforcement conferences at Millstone and CY.
*One of the two outside consulting firms retained by the DPUC to
audit the NU system's nuclear operations issued its final report.
*The Citizens Awareness Network filed a petition with the NRC
requesting that the NRC suspend or revoke NNECO's license to
operate Millstone.
*The non-NU owners of Millstone 3 have reserved their rights to
contest whether the NU system companies have any responsibility
for the additional costs borne by the non-NU owners as a result
of the current outage of the unit.
*CMEEC has advised CL&P that it was terminating its contract to
receive approximately 3.51 percent of each of Millstone 1 and 2's
capacity and energy for cause due to the extended outages.
*NU system companies expect to have sufficient capacity, assuming
expected system load and expected operations of system
facilities, to meet peak demands in their service areas through
the winter of 1996-1997 and the summer of 1997.
*NU and certain present and former officers and employees of the
company were served with a purported class action lawsuit filed
on behalf of certain shareholders.
*Storm Bernice is expected to cost NU about $20-$30 million. After
payment of a $10 million deductible, up to $15 million of
insurance is available to cover restoration costs.
NU, PSNH, and NAEC filed Form 8-Ks dated January 17, 1997 with the
SEC on January 17, 1997. This filing disclosed the testimony of NU's
chief financial officer before the NHPUC regarding the potential
impact of a stranded cost methodology that the NHPUC was considering.
NU and CL&P filed Form 8-Ks dated January 20, 1997 with the SEC on
January 21, 1997. This filing disclosed a preliminary earnings
outlook for NU.
NU, CL&P, PSNH, WMECO, and NAEC filed Form 8-Ks dated February 20,
1997 with the SEC on February 24, 1997. This filing disclosed that
the Chairman and Chief Executive Officer had announced his intention
to retire.
NU, CL&P, PSNH, WMECO, and NAEC filed Form 8-Ks dated February 28,
1997 with the SEC on March 3, 1997. This filing disclosed the NHPUC's
issuance of a decision regarding the restructuring of New Hampshire's
electric utility industry.
NORTHEAST UTILITIES
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
NORTHEAST UTILITIES
(Registrant)
Date: March 21, 1997 By /s/Bernard M. Fox
Bernard M. Fox
Chairman of the Board,
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
March 21, 1997 A Trustee, Chairman /s/Bernard M. Fox
of the Board, Bernard M. Fox
President and
Chief Executive Officer
March 21, 1997 Executive Vice /s/John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
March 21, 1997 Vice President and /s/John J. Roman
Controller John J. Roman
Trustee
Cotton Mather Cleveland
Trustee
John F. Curley
March 21, 1997 Trustee /s/E. Gail de Planque
E. Gail de Planque
Trustee
Gaynor N. Kelley
March 21, 1997 Trustee /s/Elizabeth T. Kennan
Elizabeth T. Kennan
March 21, 1997 Trustee /s/William J. Pape II
William J. Pape II
Trustee
Robert E. Patricelli
March 21, 1997 Trustee /s/Norman C. Rasmussen
Norman C. Rasmussen
March 21, 1997 Trustee /s/John F. Swope
John F. Swope
March 21, 1997 Trustee /s/John F. Turner
John F. Turner
THE CONNECTICUT LIGHT AND POWER COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE CONNECTICUT LIGHT AND POWER COMPANY
(Registrant)
March 21, 1997 By /s/Bernard M. Fox
Bernard M. Fox
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
March 21, 1997 Chairman and /s/Bernard M. Fox
a Director Bernard M. Fox
March 21, 1997 President and /s/Hugh C. MacKenzie
a Director Hugh C. MacKenzie
March 21, 1997 Executive Vice /s/John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
and a Director
March 21, 1997 Vice President and /s/John J. Roman
Controller John J. Roman
March 21, 1997 Director /s/Robert G. Abair
Robert G. Abair
March 21, 1997 Director /s/William T. Frain, Jr.
William T. Frain, Jr.
March 21, 1997 Director /s/Cheryl W. Grise
Cheryl W. Grise
March 21, 1997 Director /s/John B. Keane
John B. Keane
March 21, 1997 Director /s/Bruce D. Kenyon
Bruce D. Kenyon
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
(Registrant)
Date: March 21, 1997 By /s/Bernard M. Fox
Bernard M. Fox
Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
March 21, 1997 Chairman, Chief /s/Bernard M. Fox
Executive Officer Bernard M. Fox
and a Director
March 21, 1997 President, Chief /s/William T. Frain, Jr.
Operating Officer William T. Frain, Jr.
and a Director
March 21, 1997 Executive Vice /s/John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
and a Director
March 21, 1997 Vice President and /s/John J. Roman
Controller John J. Roman
March 21, 1997 Director /s/John C. Collins
John C. Collins
March 21, 1997 Director /s/Cheryl W. Grise
Cheryl W. Grise
March 21, 1997 Director /s/Gerald Letendre
Gerald Letendre
March 21, 1997 Director /s/Hugh C. MacKenzie
Hugh C. MacKenzie
March 21, 1997 Director /s/Jane E. Newman
Jane E. Newman
WESTERN MASSACHUSETTS ELECTRIC COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
(Registrant)
March 21, 1997 By /s/Bernard M. Fox
Bernard M. Fox
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
March 21, 1997 Chairman and /s/Bernard M. Fox
a Director Bernard M. Fox
March 21, 1997 President and /s/Hugh C. MacKenzie
a Director Hugh C. MacKenzie
March 21, 1997 Executive Vice /s/John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
and a Director
March 21, 1997 Vice President and /s/John J. Roman
Controller John J. Roman
March 21, 1997 Director /s/Robert G. Abair
Robert G. Abair
March 21, 1997 Director /s/William T. Frain,Jr
William T. Frain,Jr
March 21, 1997 Director /s/Cheryl W. Grise
Cheryl W. Grise
March 21, 1997 Director /s/John B. Keane
John B. Keane
March 21, 1997 Director /s/Bruce D. Kenyon
Bruce D. Kenyon
NORTH ATLANTIC ENERGY CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NORTH ATLANTIC ENERGY CORPORATION
(Registrant)
March 21, 1997 By /s/Bernard M. Fox
Bernard M. Fox
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Title Signature
March 21, 1997 Chairman, Chief /s/Bernard M. Fox
Executive Officer Bernard M. Fox
and a Director
March 21, 1997 President, Chief /s/Bruce D. Kenyon
Executive Officer Bruce D. Kenyon
and a Director
March 21, 1997 Executive Vice /s/John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
March 21, 1997 Vice President and /s/John J. Roman
Controller John J. Roman
March 21, 1997 Director /s/Ted C. Feigenbaum
Ted C. Feigenbaum
March 21, 1997 Director /s/William T. Frain,Jr.
William T. Frain,Jr.
March 21, 1997 Director /2/Cheryl W. Grise
Cheryl W. Grise
March 21, 1997 Director /s/John B. Keane
John B. Keane
March 21, 1997 Director /s/Hugh C. MacKenzie
Hugh C. MacKenzie
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited in accordance with generally accepted auditing standards, the
financial statements included in Northeast Utilities' annual report to
shareholders, and The Connecticut Light and Power Company's and Western
Massachusetts Electric Company's annual reports, incorporated by reference in
this Form 10-K and have issued our reports thereon dated February 21, 1997
(except with respect to the matter discussed in the "Subsequent Event" footnote
of Northeast Utilities' annual report to shareholders, as to which the date is
March 10, 1997). Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedules listed in the
accompanying index are the responsibility of the companies' management and are,
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audit of
he basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 21, 1997
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited in accordance with generally accepted auditing standards, the
financial statements included in North Atlantic Energy Corporation's and Public
Service Company of New Hampshire's annual reports, incorporated by reference in
this Form 10-K and have issued our reports thereon dated February 21, 1997
(except with respect to the matter discussed in the "Subsequent Event" footnote,
as to which the date is March 10, 1997). Our reports included an explanatory
paragraph regarding the existence of conditions which raise substantial doubt
about the companies' abilities to continue as going concerns. Our audit was
made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The schedules listed in the accompanying index are the
responsibility of the companies' management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 21, 1997
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our reports included or incorporated by reference in this Form
10-K, into previously filed Registration Statement No. 33-55279 of The
Connecticut Light and Power Company, No. 33-56537 of CL&P Capital, LP, No. 33-
51185 of Western Massachusetts Electric Company, and No. 33-34622, No. 33-44814,
No. 33-63023, and No. 33-40156 of Northeast Utilities.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
March 20, 1997
INDEX TO FINANCIAL STATEMENTS SCHEDULES
Schedule Page
I. Financial Information of Registrant:
Northeast Utilities (Parent) Balance
Sheets 1996 and 1995 S-5
Northeast Utilities (Parent) Statements
of Income 1996, 1995, and 1994 S-6
Northeast Utilities (Parent) Statements
of Cash Flows 1996, 1995, and 1994 S-7
II. Valuation and Qualifying Accounts and Reserves
1996, 1995, and 1994:
Northeast Utilities and Subsidiaries S-8 - S-10
The Connecticut Light and Power Company S-11 - S-13
Public Service Company of New Hampshire S-14 - S-16
Western Massachusetts Electric Company S-17 - S-19
All other schedules of the companies' for which provision is made in the
applicable regulations of the Securities and Exchange Commission are not
required under the related instructions or are not applicable, and therefore
have been omitted.
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
AT DECEMBER 31, 1996 AND 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
- ------
Other Property and Investments:
Investments in subsidiary companies, at
equity............................................... $2,506,254 $2,701,866
Investments in transmission companies, at equity...... 21,186 23,557
Other, at cost........................................ 413 250
----------- -----------
2,527,853 2,725,673
----------- -----------
Current Assets:
Cash.................................................. 10 18
Notes receivable from affiliated companies............ 5,475 9,675
Notes and accounts receivable......................... 813 0
Receivables from affiliated companies................. 7,106 607
Prepayments........................................... 224 138
----------- -----------
13,628 10,438
----------- -----------
Deferred Charges:
Accumulated deferred income taxes..................... 5,293 6,984
Unamortized debt expense.............................. 524 11
Other................................................. 46 122
----------- -----------
5,863 7,117
----------- -----------
Total Assets..................................... $2,547,344 $2,743,228
=========== ===========
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common Shareholders' Equity:
Common shares, $5 par value--Authorized
225,000,000 shares; 136,051,938 shares issued and
128,444,373 shares outstanding in 1996 and
135,611,166 shares issued and
127,050,647 outstanding in 1995..................... $ 680,260 $ 678,056
Capital surplus, paid in.............................. 940,446 936,308
Deferred benefit plan--employee stock ownership plan.. (176,091) (198,152)
Retained earnings..................................... 832,520 1,007,340
----------- -----------
Total common shareholders' equity................... 2,277,135 2,423,552
Long-term debt........................................ 194,000 210,000
----------- -----------
Total capitalization................................ 2,471,135 2,633,552
----------- -----------
Current Liabilities:
Notes payable to banks................................ 38,750 57,500
Long-term debt and preferred stock--current portion... 16,000 14,000
Accounts payable...................................... 15,504 18,213
Accounts payable to affiliated companies.............. 600 1,074
Accrued taxes......................................... 2,158 6,539
Accrued interest...................................... 2,602 2,864
Dividend reinvestment plan............................ 0 8,995
Other................................................. 2 2
----------- -----------
75,616 109,187
----------- -----------
Other Deferred Credits.................................. 593 489
----------- -----------
Total Capitalization and Liabilities $2,547,344 $2,743,228
=========== ===========
</TABLE>
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Thousands of Dollars Except Share Information)
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Operating Revenues............... $ - $ - $ -
------------- ------------- -------------
Operating Expenses:
Other.......................... 8,920 14,267 13,114
Federal income taxes........... (10,390) (8,585) (10,736)
------------- ------------- -------------
Total operating expenses...... (1,470) 5,682 2,378
------------- ------------- -------------
Operating Income (Loss).......... 1,470 (5,682) (2,378)
------------- ------------- -------------
Other Income:
Equity in earnings of
subsidiaries.................. 18,272 310,025 309,769
Equity in earnings of
transmission companies........ 3,306 3,561 3,418
Other, net..................... 368 329 679
------------- ------------- -------------
Other income, net............ 21,946 313,915 313,866
------------- ------------- -------------
Income before interest
charges..................... 23,416 308,233 311,488
------------- ------------- -------------
Interest Charges 21,585 25,799 24,614
------------- ------------- -------------
Earnings for Common Shares $ 1,831 $ 282,434 $ 286,874
============= ============= =============
Earnings Per Common Share........ $ 0.01 $ 2.24 $ 2.30
============= ============= =============
Common Shares Outstanding
(average)....................... 127,960,382 126,083,645 124,678,192
============= ============= =============
</TABLE>
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, 1994
(Thousands of Dollars)
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Operating Activities:
Net income $ 1,831 $ 282,434 $ 286,874
Adjustments to reconcile to net cash
from operating activities:
Equity in earnings of subsidiary companies (18,272) (310,025) (309,769)
Cash dividends received from subsidiary companies 247,101 272,350 201,403
Deferred income taxes 3,868 772 (1,890)
Other sources of cash 17,961 6,916 3,007
Other uses of cash (3,065) (528) (169)
Changes in working capital:
Receivables (7,312) 1,991 30,525
Accounts payable (3,183) 15,381 (43,601)
Other working capital (excludes cash) (13,724) 7,396 7,615
-------------- -------------- --------------
Net cash flows from operating activities 225,205 276,687 173,995
-------------- -------------- --------------
Financing Activities:
Issuance of common shares 10,622 47,218 14,551
Net (decrease) increase in short-term debt (18,750) (46,500) 31,500
Reacquisitions and retirements of long-term debt (14,000) (12,000) (9,000)
Cash dividends on common shares (176,276) (221,701) (219,317)
-------------- -------------- --------------
Net cash flows used for financing activities (198,404) (232,983) (182,266)
-------------- -------------- --------------
Investment Activities:
NU System Money Pool 4,200 (7,700) 17,650
Investment in subsidiaries (33,217) (38,963) (10,912)
Other investment activities, net 2,208 2,935 1,503
-------------- -------------- --------------
Net cash flows (used for) from investments (26,809) (43,728) 8,241
-------------- -------------- --------------
Net decrease in cash for the period (8) (24) (30)
Cash - beginning of period 18 42 72
-------------- -------------- --------------
Cash - end of period $ 10 $ 18 $ 42
============== ============== ==============
Supplemental Cash Flow Information
Cash paid during the year for:
Interest, net of amounts capitalized $ 21,770 $ 26,430 $ 24,235
============== ============== ==============
Income taxes (refund) $ (7,700) $ (8,418) $ (16,786)
============== ============== ==============
</TABLE>
<TABLE>
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1996
(Thousands of Dollars)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance atCharged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 14,379 $ 21,761 $ - $ 19,078 (a) $ 17,062
========= ========= ========= ========== ==========
Asset valuation reserves $ 10,266 $ $ - $ 10,266 $ 0
========= ========= ========= ========== ==========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 38,409 $ 8,397 $ - $ 10,546 (b) $ 36,260
========= ========= ========= ========== ==========
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1995
(Thousands of Dollars)
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 16,826 $ 18,010 $ - $ 20,458 (a)$ 14,378
========= ========= ========= ========= =========
Asset valuation reserves $ 8,684 $ 1,582 $ - $ - $ 10,266
========= ========= ========= ========= =========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 34,721 $ 11,475 $ - $ 7,787 (b)$ 38,409
========= ========= ========= ========= =========
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1994
(Thousands of Dollars)
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 14,629 $ 23,194 $ - $ 20,997 (a) $ 16,826
========= ========= ========= ========= =========
Asset valuation reserves $ 797 $ 7,887 $ - $ -(b) $ 8,684
========= ========= ========= ========= =========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 28,286 $ 13,150 $ - $ 6,715 (c) $ 34,721
========= ========= ========= ========= =========
(a) Amounts written off, net of recoveries.
(b) Principally the reduction in the carrying amounts of assets.
(c) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1996
(Thousands of Dollars)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance atCharged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 10,567 $ 15,704 $ - $ 13,030 (a) $ 13,241
========= ========= ========= ========== ==========
Asset valuation reserves $ 10,266 $ -$ - $ 10,266 $ 0
========= ========= ========= ========== ==========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 19,874 $ 5,709 $ - $ 6,704 (b) $ 18,879
========= ========= ========= ========== ==========
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1995
(Thousands of Dollars)
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 12,778 $ 12,722 $ - $ 14,933 (a)$ 10,567
========= ========= ========= ========= =========
Asset valuation reserves $ 8,684 $ 1,582 $ - $ - $ 10,266
========= ========= ========= ========= =========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 19,529 $ 5,633 $ - $ 5,288 (b)$ 19,874
========= ========= ========= ========= =========
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1994
(Thousands of Dollars)
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 10,816 $ 17,177 $ - $ 15,215 (a) $ 12,778
========= ========= ========= ========= =========
Asset valuation reserves $ 797 $ 7,887 $ - $ (b) $ 8,684
========= ========= ========= ========= =========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 14,905 $ 9,924 $ - $ 5,300 (c) $ 19,529
========= ========= ========= ========= =========
(a) Amounts written off, net of recoveries.
(b) Principally the reduction in the carrying amounts of assets.
(c) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1996
(Thousands of Dollars)
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance atCharged to other Balance
beginning costs and accounts- Deductions- at end
Description of period(expenses describe describe of period
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,582 $ 2,906 $ - $ 2,788 (a) $ 1,700
========= ========= ========= ========== ==========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 8,142 1,040 $ - $ 1,917 (b) $ 7,265
========= ========= ========= ========== ==========
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1995
(Thousands of Dollars)
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 12,778 $ 12,722 $ - $ 14,933 (a)$ 10,567
========= ========= ========= ========= =========
Asset valuation reserves $ 8,684 $ 1,582 $ - $ - $ 10,266
========= ========= ========= ========= =========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 19,529 $ 5,633 $ - $ 5,288 (b)$ 19,874
========= ========= ========= ========= =========
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1994
(Thousands of Dollars)
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 10,816 $ 17,177 $ - $ 15,215 (a) $ 12,778
========= ========= ========= ========= =========
Asset valuation reserves $ 797 $ 7,887 $ - $ (b) $ 8,684
========= ========= ========= ========= =========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 14,905 $ 9,924 $ - $ 5,300 (c) $ 19,529
========= ========= ========= ========= =========
(a) Amounts written off, net of recoveries.
(b) Principally the reduction in the carrying amounts of assets.
(c) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
WESTERN MASSACHUSETTS ELECTRIC COMPANY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1996
(Thousands of Dollars)
<CAPTION>
- -------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance atCharged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,230 $ 3,097 $ - $ 3,206 (a) $ 2,121
========= ========= ========= ========== ==========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 5,144 $ 1,222 $ - $ 791 (b) $ 5,575
========= ========= ========= ========== ==========
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
WESTERN MASSACHUSETTS ELECTRIC COMPANY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1995
(Thousands of Dollars)
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 2,032 $ 2,836 $ - $ 2,638 (a)$ 2,230
========= ========= ========= ========= =========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 4,674 $ 1,340 $ - $ 870 (b)$ 5,144
========= ========= ========= ========= =========
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
<TABLE>
WESTERN MASSACHUSETTS ELECTRIC COMPANY SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1994
(Thousands of Dollars)
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
--------------------
(1) (2)
Charged to
Balance at Charged to other Balance
beginning costs and accounts- Deductions- at end
Description of period expenses describe describe of period
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
Reserves for uncollectible accounts $ 1,997 $ 3,017 $ - $ 2,982 (a) $ 2,032
========= ========= ========= ========= =========
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 3,842 $ 1,473 $ - $ 641 (b) $ 4,674
========= ========= ========= ========= =========
(a) Amounts written off, net of recoveries.
(b) Principally payments for environmental remediation, various injuries and damages, employee
medical expenses, and expenses in connection therewith.
</TABLE>
EXHIBIT INDEX
Each document described below is incorporated by reference to the files of
the Securities and Exchange Commission, unless the reference to the document is
marked as follows:
* - Filed with the 1996 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1996 NU Form 10-K, File No. 1-5324 into
the 1996 Annual Reports on Form 10-K for CL&P, PSNH, WMECO and NAEC.
# - Filed with the 1996 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1996 NU Form 10-K, File No. 1-5324 into
the 1996 Annual Report on Form 10-K for CL&P.
@ - Filed with the 1996 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1996 NU Form 10-K, File No. 1-5324 into
the 1996 Annual Report on Form 10-K for PSNH.
** - Filed with the 1996 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1996 NU Form 10-K, File No. 1-5324 into
the 1996 Annual Report on Form 10-K for WMECO.
## - Filed with the 1996 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1996 Form 10-K, File No. 1-5324 into the
1996 Annual Report on Form 10-K for NAEC.
Exhibit
Number Description
3. Articles of Incorporation and By-Laws
3.1 Northeast Utilities
3.1.1 Declaration of Trust of NU, as amended
through May 24, 1988. (Exhibit 3.1.1, 1988 NU Form 10-K,
File No. 1-5324)
3.2 The Connecticut Light and Power Company
3.2.1 Certificate of Incorporation of CL&P, restated to March 22,
1994. (Exhibit 3.2.1, 1993 NU Form 10-K, File No. 1-5324)
# 3.2.2 Certificate of Amendment to Certificate of Incorporation of
CL&P, dated December 26, 1996.
# 3.2.3 By-laws of CL&P, as amended to January 1, 1997.
3.3 Public Service Company of New Hampshire
3.3.1 Articles of Incorporation, as amended to May 16, 1991.
(Exhibit 3.3.1, 1993 NU Form 10-K, File No. 1-5324)
3.3.2 By-laws of PSNH, as amended to November 1, 1993. (Exhibit
3.3.2, 1993 NU Form 10-K, File No. 1-5324)
3.4 Western Massachusetts Electric Company
3.4.1 Articles of Organization of WMECO, restated to February 23,
1995. (Exhibit 3.4.1, 1994 NU Form 10-K, File No. 1-5324)
3.4.2 By-laws of WMECO, as amended to February 13, 1995. (Exhibit
3.4.2, 1994 NU Form 10-K, File No. 1-5324)
3.5 North Atlantic Energy Corporation
3.5.1 Articles of Incorporation of NAEC dated September 20, 1991.
(Exhibit 3.5.1, 1993 NU Form 10-K, File No. 1-5324)
3.5.2 Articles of Amendment dated October 16, 1991 and June 2,
1992 to Articles of Incorporation of NAEC. (Exhibit 3.5.2,
1993 NU Form 10-K, File No. 1-5324)
3.5.3 By-laws of NAEC, as amended to November 8, 1993. (Exhibit
3.5.3, 1993 NU Form 10-K, File No. 1-5324)
4 Instruments defining the rights of security holders, including indentures
4.1 Northeast Utilities
4.1.1 Indenture dated as of December 1, 1991 between Northeast
Utilities and IBJ Schroder Bank & Trust Company, with
respect to the issuance of Debt Securities. (Exhibit 4.1.1,
1991 NU Form 10-K, File No. 1-5324)
4.1.2 First Supplemental Indenture dated as of December 1, 1991
between Northeast Utilities and IBJ Schroder Bank & Trust
Company, with respect to the issuance of Series A Notes.
(Exhibit 4.1.2, 1991 NU Form 10-K, File No. 1-5324)
4.1.3 Second Supplemental Indenture dated as of March 1, 1992
between Northeast Utilities and IBJ Schroder Bank & Trust
Company with respect to the issuance of 8.38% Amortizing
Notes. (Exhibit 4.1.3, 1992 NU Form 10-K, File No. 1-5324)
4.1.4 Warrant Agreement dated as of June 5, 1992 between
Northeast Utilities and the Service Company. (Exhibit
4.1.4, 1992 NU Form 10-K, File No. 1-5324)
4.1.4.1 Additional Warrant Agent Agreement dated as of
June 5, 1992 between Northeast Utilities and State
Street Bank and Trust Company. (Exhibit 4.1.4.1,
1992 NU Form 10-K, File No. 1-5324)
4.1.4.2 Exchange and Disbursing Agent Agreement dated as
of June 5, 1992 among Northeast Utilities, Public
Service Company of New Hampshire and State Street
Bank and Trust Company. (Exhibit 4.1.4.2, 1992
NU Form 10-K, File No. 1-5324)
4.1.5 Credit Agreements among CL&P, NU, WMECO, NUSCO (as Agent)
and 3 Commercial Banks dated December 3, 1992 (Three-Year
Facility). (Exhibit C.2.38, 1992 NU Form U5S, File No. 30-
246)
4.1.6 Credit Agreements among CL&P, WMECO, NU, Holyoke Water Power
Company, RRR, NNECO and NUSCO (as Agent) and 1 commercial
banks dated December 3, 1992 (Three-Year Facility).
(Exhibit C.2.39, 1992 NU Form U5S, File No. 30-246)
4.1.7 Credit Agreement among NU, CL&P and WMECO and several
commercial banks, dated as of November 21, 1996. (Exhibit
No. B.1, File No. 70-8875)
4.2 The Connecticut Light and Power Company
4.2.1 Indenture of Mortgage and Deed of Trust between CL&P and
Bankers Trust Company, Trustee, dated as of May 1, 1921.
(Composite including all twenty-four amendments to May 1,
1967.) (Exhibit 4.1.1, 1989 NU Form 10-K, File No. 1-5324)
Supplemental Indentures to the Composite May 1, 1921
Indenture of Mortgage and Deed of Trust between
CL&P and Bankers Trust Company, dated as of:
4.2.2 April 1, 1967. (Exhibit 4.16, File No. 2-60806)
4.2.3 January 1, 1968. (Exhibit 4.18, File No. 2-60806)
4.2.4 December 1, 1969. (Exhibit 4.20, File No. 2-60806)
4.2.5 June 30, 1982. (Exhibit 4.33, File No. 2-79235)
4.2.6 December 1, 1989. (Exhibit 4.1.26, 1989 NU Form
10-K, File No. 1-5324)
4.2.7 April 1, 1992. (Exhibit 4.30, File No. 33-59430)
4.2.8 July 1, 1992. (Exhibit 4.31, File No. 33-59430)
4.2.9 July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.2.10 July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.2.11 December 1, 1993. (Exhibit 4.2.14, 1993 NU Form 10-K,
File No. 1-5324)
4.2.12 February 1, 1994. (Exhibit 4.2.15, 1993 NU Form 10-K,
File No. 1-5324)
4.2.13 February 1, 1994. (Exhibit 4.2.16, 1993 NU Form 10-K,
File No. 1-5324)
4.2.14 June 1, 1994. (Exhibit 4.2.15, 1994 NU Form 10-K,
File No. 1-5324)
4.2.15 October 1, 1994. (Exhibit 4.2.16, 1994 NU Form 10-K,
File No. 1-5324)
# 4.2.16 June 1, 1996.
# 4.2.17 January 1, 1997.
4.2.18 Financing Agreement between Industrial Development Authority
of the State of New Hampshire and CL&P (Pollution Control
Bonds, 1986 Series) dated as of December 1, 1986. (Exhibit
C.1.47, 1986 NU Form U5S, File No. 30-246)
4.2.18.1 Letter of Credit and Reimbursement Agreement
(Pollution Control Bonds, 1986 Series) dated as of
August 1, 1994. (Exhibit 1 (Execution Copy),
File No. 70-7320)
4.2.19 Financing Agreement between Industrial Development Authority
of the State of New Hampshire and CL&P (Pollution Control
Bonds, 1988 Series) dated as of October 1, 1988. (Exhibit
C.1.55, 1988 NU Form U5S, File No. 30-246)
4.2.19.1 Letter of Credit (Pollution Control Bonds,
1988 Series) dated October 27, 1988.
(Exhibit 4.2.17.1, 1995 NU Form 10-K,
File No. 1-5324)
4.2.19.2 Reimbursement and Security Agreement
(Pollution Control Bonds, 1988 Series)
dated as of October 1, 1988.
(Exhibit 4.2.17.2, 1995 NU form 10-K,
File No. 1-5324)
4.2.20 Financing Agreement between Industrial Development Authority
of the State of New Hampshire and CL&P (Pollution Control
Bonds) dated as of December 1, 1989. (Exhibit C.1.39, 1989
NU Form U5S, File No. 30-246)
4.2.21 Loan and Trust Agreement among Business Finance Authority
of the State of New Hampshire, CL&P and the Trustee
(Pollution Control Bonds, 1992 Series A) dated as of
December 1, 1992.(Exhibit C.2.33, 1992 NU Form U5S, File No.
30-246)
4.2.21.1 Letter of Credit and Reimbursement Agreement
(Pollution Control Bonds, 1992 Series A)
dated as of December 1, 1992. (Exhibit
4.2.19.1, 1995 NU Form 10-K, File No.
1-5324)
4.2.22 Loan Agreement between Connecticut Development Authority
and CL&P (Pollution Control Bonds - Series A, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit 4.2.21,
1993 NU Form 10-K, File No. 1-5324)
4.2.22.1 Letter of Credit and Reimbursement Agreement
(Pollution Control Bonds - Series A, Tax
Exempt Refunding) dated as of September 1,
1993. (Exhibit 4.2.23, 1993 NU Form 10-K,
File No. 1-5324)
4.2.23 Loan Agreement between Connecticut Development Authority and
CL&P (Pollution Control Bonds - Series B, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit 4.2.22,
1993 NU Form 10-K, File No. 1-5324)
4.2.23.1 Letter of Credit and Reimbursement Agreement
(Pollution Control Bonds - Series B, Tax
Exempt Refunding) dated as of September 1,
1993. (Exhibit 4.2.24, 1993 NU Form 10-K,
File No. 1-5324)
# 4.2.24 Amended and Restated Loan Agreement between Connecticut
Development Authority and CL&P (Pollution Control Revenue
Bond - 1996A Series) dated as of May 1, 1996 and Amended and
Restated as of January 1, 1997.
# 4.2.24.1 Amended and Restated Indenture of Trust
between Connecticut Development Authority
and the Trustee (CL&P Pollution Control
Revenue Bond-1996A Series), dated as of
May 1, 1996 and Amended and Restated as of
January 1, 1997.
# 4.2.24.2 Standby Bond Purchase Agreement among CL&P,
Societe Generale, New York Branch and the
Trustee, dated January 23, 1997.
# 4.2.24.3 AMBAC Municipal Bond Insurance Policy issued
by the Connecticut Development Authority
(CL&P Pollution Control Revenue Bond-1996A
Series), effective January 23, 1997.
4.2.25 Amended and Restated Limited Partnership Agreement (CL&P
Capital, L.P.) among CL&P, NUSCO, and the persons who became
limited partners of CL&P Capital, L.P. in accordance with
the provisions thereof dated as of January 23, 1995 (MIPS).
(Exhibit A.1 (Execution Copy), File No. 70-8451)
4.2.26 Indenture between CL&P and Bankers Trust Company, Trustee
(Series A Subordinated Debentures), dated as of January 1,
1995 (MIPS). (Exhibit B.1 (Execution Copy), File No. 70-
8451)
4.2.27 Payment and Guaranty Agreement of CL&P dated as of January
23, 1995 (MIPS). (Exhibit B.3 (Execution Copy), File No.
70-8451)
4.3 Public Service Company of New Hampshire
4.3.1 First Mortgage Indenture dated as of August 15, 1978
between PSNH and First Fidelity Bank, National Association,
New Jersey, Trustee, (Composite including all amendments to
May 16, 1991). (Exhibit 4.4.1, 1992 NU Form 10-K, File No.
1-5324)
4.3.1.1 Tenth Supplemental Indenture dated as of May 1,
1991 between PSNH and First Fidelity Bank,
National Association. (Exhibit 4.1, PSNH
Current Report on Form 8-K dated February 10,
1992, File No. 1-6392).
@ 4.3.2 Amended and Restated Revolving Credit Agreement, dated as of
April 1, 1996.
4.3.3 Series A (Tax Exempt New Issue) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.2, PSNH
Current Report on Form 8-K dated February 10, 1992, File No.
1-6392)
4.3.4 Series B (Tax Exempt Refunding) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.3, PSNH
Current Report on Form 8-K dated February 10, 1992, File No.
1-6392)
4.3.5 Series C (Tax Exempt Refunding) PCRB Loan and Trust
Agreement dated as of May 1, 1991. (Exhibit 4.4, PSNH
Current Report on Form 8-K dated February 10, 1992, File No.
1-6392)
4.3.6 Series D (Taxable New Issue) PCRB Loan and Trust Agreement
dated as of May 1, 1991. (Exhibit 4.5, PSNH Current Report
on Form 8-K dated February 10, 1992, File No. 1-6392)
4.3.6.1 First Supplement to Series D (Tax Exempt
Refunding Issue) PCRB Loan and Trust Agreement
dated as of December 1, 1992. (Exhibit 4.4.5.1,
1992 NU Form 10-K, File No. 1-5324)
4.3.6.2 Second Series D (May 1, 1991 Taxable New Issue and
December 1, 1992 Tax Exempt Refunding Issue) PCRB
Letter of Credit and Reimbursement Agreement dated
as of May 1, 1995 (Exhibit B.4, Execution Copy,
File No. 70-8036)
4.3.7 Series E (Taxable New Issue) PCRB Loan and Trust Agreement
dated as of May 1, 1991. (Exhibit 4.6, PSNH Current Report
on Form 8-K dated February 10, 1992, File No. 1-6392)
4.3.7.1 First Supplement to Series E (Tax Exempt
Refunding Issue) PCRB Loan and Trust Agreement
dated as of December 1, 1993. (Exhibit 4.3.8.1,
1993 NU Form 10-K, File No. 1-5324)
4.3.7.2 Second Series E (May 1, 1991 Taxable New Issue and
December 1, 1993 Tax Exempt Refunding Issue) PCRB
Letter of Credit and Reimbursement Agreement dated
as of May 1, 1995. (Exhibit B.5, Execution Copy,
File No. 70-8036)
4.4 Western Massachusetts Electric Company
4.4.1 First Mortgage Indenture and Deed of Trust between WMECO
and Old Colony Trust Company, Trustee, dated as of August
1, 1954. (Exhibit 4.4.1, 1993 NU Form 10-K, File No. 1-
5324)
Supplemental Indentures thereto dated as of:
4.4.2 March 1, 1967. (Exhibit 2.5, File No. 2-68808)
4.4.3 September 1, 1990. (Exhibit 4.3.15, 1990 NU Form 10-K,
File No. 1-5324.)
4.4.4 December 1, 1992. (Exhibit 4.15, File No. 33-55772)
4.4.5 January 1, 1993. (Exhibit 4.5.13, 1992 NU Form 10-K,
File No. 1-5324)
4.4.6 March 1, 1994. (Exhibit 4.4.11, 1993 NU Form 10-K,
File No. 1-5324)
4.4.7 March 1, 1994. (Exhibit 4.4.12, 1993 NU Form 10-K,
File No. 1-5324)
4.4.8 Loan Agreement between Connecticut Development Authority and
WMECO, (Pollution Control Bonds - Series A, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit 4.4.13,
1993 NU Form 10-K, File No. 1-5324)
4.4.8.1 Letter of Credit and Reimbursement Agreement
(Pollution Control Bonds - Series A, Tax Exempt
Refunding) dated as of September 1, 1993.
(Exhibit 4.4.14, 1993 NU Form 10-K, File No. 1-
5324)
4.5 North Atlantic Energy Corporation
4.5.1 First Mortgage Indenture and Deed of Trust between NAEC and
United States Trust Company of New York, Trustee, dated as
of June 1, 1992. (Exhibit 4.6.1, 1992 NU Form 10-K, File
No. 1-5324)
4.5.2 Term Credit Agreement dated as of November 9, 1995.
(Exhibit 4.5.2, 1995 NU Form 10-K, File No. 1-5324)
10 Material Contracts
10.1 Stockholder Agreement dated as of July 1, 1964 among the stockholders
of Connecticut Yankee Atomic Power Company (CYAPC). (Exhibit 10.1,
1994 NU Form 10-K, File No. 1-5324)
10.2 Form of Power Contract dated as of July 1, 1964 between CYAPC and each
of CL&P, HELCO, PSNH and WMECO. (Exhibit 10.2, 1994 NU Form 10-K,
File No. 1-5324)
10.2.1 Form of Additional Power Contract dated as of April 30,
1984, between CYAPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.2.1, 1994 NU Form 10-K, File No. 1-5324)
10.2.2 Form of 1987 Supplementary Power Contract dated as of April
1, 1987, between CYAPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.2.6, 1987 NU Form 10-K, File No. 1-5324)
10.3 Capital Funds Agreement dated as of September 1, 1964 between CYAPC
and CL&P, HELCO, PSNH and WMECO. (Exhibit 10.3, 1994 NU Form 10-K,
File No. 1-5324)
10.4 Stockholder Agreement dated December 10, 1958 between Yankee Atomic
Electric Company (YAEC) and CL&P, HELCO, PSNH and WMECO. (Exhibit
10.4, 1993 NU Form 10-K, File No. 1-5324)
10.5 Form of Amendment No. 3, dated as of April 1, 1985, to Power Contract
between YAEC and each of CL&P, PSNH and WMECO, including a composite
restatement of original Power Contract dated June 30, 1959 and
Amendment No. 1 dated April 1, 1975 and Amendment No. 2 dated October
1, 1980. (Exhibit 10.5, 1988 NU Form 10-K, File No. 1-5324.)
10.5.1 Form of Amendment No. 4 to Power Contract, dated May 6,
1988, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.1, 1989 NU Form 10-K, File No. 1-5324)
10.5.2 Form of Amendment No. 5 to Power Contract, dated June 26,
1989, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.2, 1989 NU Form 10-K, File No. 1-5324)
10.5.3 Form of Amendment No. 6 to Power Contract, dated
July 1,1989, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.3, 1989 NU Form 10-K, File No. 1-5324)
10.5.4 Form of Amendment No. 7 to Power Contract, dated February
1, 1992, between YAEC and each of CL&P, PSNH and WMECO.
(Exhibit 10.5.4, 1993 NU Form 10-K, File No. 1-5324)
10.6 Stockholder Agreement dated as of May 20, 1968 among stockholders of
MYAPC. (Exhibit 4.15, File No. 2-30018)
10.7 Form of Power Contract dated as of May 20,1968 between MYAPC and each
of CL&P, HELCO, PSNH and WMECO. (Exhibit 4.14, File No. 2-30018)
10.7.1 Form of Amendment No. 1 to Power Contract dated as of March
1, 1983 between MYAPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.7.1, 1993 NU Form 10-K, File No. 1-5324)
10.7.2 Form of Amendment No. 2 to Power Contract dated as of
January 1, 1984 between MYAPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.7.2, 1993 NU Form 10-K, File No. 1-
5324)
10.7.3 Form of Amendment No. 3 to Power Contract dated as of
October 1, 1984 between MYAPC and each of CL&P, PSNH and
WMECO. (Exhibit No. 10.7.3, 1994 NU Form 10-K, File No. 1-
5324)
10.7.4 Form of Additional Power Contract dated as of February 1,
1984 between MYAPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.7.4, 1993 NU Form 10-K, File No. 1-5324)
10.8 Capital Funds Agreement dated as of May 20, 1968 between Maine Yankee
Atomic Power Company (MYAPC) and CL&P, PSNH, HELCO and WMECO.
(Exhibit 4.13, File No. 2-30018)
10.8.1 Amendment No. 1 to Capital Funds Agreement, dated as of
August 1, 1985, between MYAPC, CL&P, PSNH and WMECO.
(Exhibit No. 10.8.1, 1994 NU Form 10-K, File No. 1-5324)
10.9 Sponsor Agreement dated as of August 1, 1968 among the sponsors of
VYNPC. (Exhibit 4.16, File No. 2-30285)
10.10 Form of Power Contract dated as of February 1, 1968 between VYNPC
and each of CL&P, HELCO, PSNH and WMECO. (Exhibit 4.18, File No.
2-30018)
10.10.1 Form of Amendment to Power Contract dated as of June 1, 1972
between VYNPC and each of CL&P, HELCO, PSNH and WMECO.
(Exhibit 5.22, File No. 2-47038)
10.10.2 Form of Second Amendment to Power Contract dated as of
April 15, 1983 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.2, 1993 NU Form 10-K, File No. 1-
5324)
10.10.3 Form of Third Amendment to Power Contract dated as of April
24, 1985 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit No. 10.10.3, 1994 NU Form 10-K, File No. 1-5324)
* 10.10.4 Form of Fourth Amendment to Power Contract dated as of
June 1, 1985 between VYNPC and each of CL&P, PSNH and
WMECO.
10.10.5 Form of Fifth Amendment to Power Contract dated as of May 6,
1988 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.10.5, 1990 NU Form 10-K, File No. 1-5324)
10.10.6 Form of Sixth Amendment to Power Contract dated as of May
6, 1988 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.10.6, 1990 NU Form 10-K, File No. 1-5324)
10.10.7 Form of Seventh Amendment to Power Contract dated as of June
15, 1989 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.10.7, 1990 NU Form 10-K, File No. 1-5324)
10.10.8 Form of Eighth Amendment to Power Contract dated as of
December 1, 1989 between VYNPC and each of CL&P, PSNH and
WMECO. (Exhibit 10.10.8, 1990 NU Form 10-K, File No. 1-
5324)
10.10.9 Form of Additional Power Contract dated as of February 1,
1984 between VYNPC and each of CL&P, PSNH and WMECO.
(Exhibit 10.10.9, 1993 NU Form 10-K, File No. 1-5324)
10.11 Capital Funds Agreement dated as of February 1, 1968 between Vermont
Yankee Nuclear Power Corporation (VYNPC) and CL&P, HELCO, PSNH and
WMECO. (Exhibit 4.16, File No. 2-30018)
10.11.1 Form of First Amendment to Capital Funds Agreement dated as
of March 12, 1968 between VYNPC and CL&P, HELCO, PSNH and
WMECO. (Exhibit 4.17, File No. 2-30018)
10.11.2 Form of Second Amendment to Capital Funds Agreement dated
as of September 1, 1993 between VYNPC and CL&P, HELCO, PSNH
and WMECO. (Exhibit 10.11.2, 1993 NU Form 10-K, File No. 1-
5324)
10.12 Amended and Restated Millstone Plant Agreement dated as of December
1, 1984 by and among CL&P, WMECO and Northeast Nuclear Energy Company
(NNECO). (Exhibit 10.12, 1994 NU Form 10-K, File No. 1-5324)
10.13 Sharing Agreement dated as of September 1, 1973 with respect to 1979
Connecticut nuclear generating unit (Millstone 3). (Exhibit 6.43,
File No. 2-50142)
10.13.1 Amendment dated August 1, 1974 to Sharing Agreement - 1979
Connecticut Nuclear Unit. (Exhibit 5.45, File No. 2-52392)
10.13.2 Amendment dated December 15, 1975 to Sharing Agreement -
1979 Connecticut Nuclear Unit. (Exhibit 7.47, File No. 2-
60806)
10.13.3 Amendment dated April 1, 1986 to Sharing Agreement - 1979
Connecticut Nuclear Unit. (Exhibit 10.17.3, 1990 NU Form
10-K, File No. 1-5324)
10.14 Agreement dated July 19, 1990, among NAESCO and Seabrook Joint owners
with respect to operation of Seabrook. (Exhibit 10.53, 1990 NU Form
10-K, File No. 1-5324)
10.15 Sharing Agreement between CL&P, WMECO, HP&E, HWP and PSNH dated as of
June 1, 1992. (Exhibit 10.17, 1992 NU Form 10-K, File No. 1-5324)
10.16 Rate Agreement by and between NUSCO, on behalf of NU, and the
Governor of the State of New Hampshire and the New Hampshire Attorney
General dated as of November 22, 1989. (Exhibit 10.44, 1989 NU Form
10-K, File No. 1-5324)
10.16.1 First Amendment to Rate Agreement dated as of December 5,
1989. (Exhibit 10.16.1, 1995 NU Form 10-K, File No. 1-5324)
10.16.2 Second Amendment to Rate Agreement dated as of December 12,
1989. (Exhibit 10.16.2, 1995 NU Form 10-K, File No. 1-5324)
10.16.3 Third Amendment to Rate Agreement dated as of December 3,
1993. (Exhibit 10.16.3, 1995 NU Form 10-K, File No. 1-5324)
10.16.4 Fourth Amendment to Rate Agreement dated as of September 21,
1994. (Exhibit 10.16.4, 1995 NU Form 10-K, File No. 1-5324)
10.16.5 Fifth Amendment to Rate Agreement dated as of September 9,
1994. (Exhibit 10.16.5, 1995 NU Form 10-K, File No. 1-5324)
10.17 Form of Seabrook Power Contract between PSNH and NAEC, as amended and
restated. (Exhibit 10.45, NU 1992 Form 10-K, File No. 1-5324)
10.18 Agreement (composite) for joint ownership, construction and operation
of New Hampshire nuclear unit, as amended through the November 1,
1990 twenty-third amendment. (Exhibit No. 10.17, 1994 NU Form 10-K,
File No. 1-5324)
10.18.1 Memorandum of Understanding dated November 7, 1988 between
PSNH and Massachusetts Municipal Wholesale Electric Company
(Exhibit 10.17, PSNH 1989 Form 10-K, File No. 1-6392)
10.18.2 Agreement of Settlement among Joint Owners dated as of
January 13, 1989. (Exhibit 10.13.21, 1988 NU Form 10-K,
File No. 1-5324)
10.18.2.1 Supplement to Settlement Agreement, dated as
of February 7, 1989, between PSNH and
Central Maine Power Company.
(Exhibit 10.18.1, PSNH 1989
Form 10-K, File No. 1-6392)
10.19 Amended and Restated Agreement for Seabrook Project Disbursing Agent
dated as of November 1, 1990. (Exhibit 10.4.7, File No. 33-35312)
10.19.1 Form of First Amendment to Exhibit 10.19. (Exhibit 10.4.8,
File No. 33-35312)
10.19.2 Form (Composite) of Second Amendment to Exhibit 10.19.
(Exhibit 10.18.2, 1993 NU Form 10-K, File No. 1-5324)
10.20 Agreement dated November 1,1974 for Joint Ownership, Construction and
Operation of William F. Wyman Unit No. 4 among PSNH, Central Maine
Power Company and other utilities. (Exhibit 5.16 , File No. 2-52900)
10.20.1 Amendment to Exhibit 10.20 dated June 30, 1975. (Exhibit
5.48, File No. 2-55458)
10.20.2 Amendment to Exhibit 10.20 dated as of August 16, 1976.
(Exhibit 5.19, File No. 2-58251)
10.20.3 Amendment to Exhibit 10.20 dated as of December 31, 1978.
(Exhibit 5.10.3, File No. 2-64294)
10.21 Form of Service Contract dated as of July 1, 1966 between each of NU,
CL&P and WMECO and the Service Company. (Exhibit 10.20, 1993 NU Form
10-K, File No. 1-5324)
10.21.1 Service Contract dated as of June 5, 1992 between PSNH and
the Service Company. (Exhibit 10.12.4, 1992 NU Form 10-K,
File No. 1-5324)
10.21.2 Service Contract dated as of June 5, 1992 between NAEC and
the Service Company. (Exhibit 10.12.5, 1992 NU Form 10-K,
File No. 1-5324)
10.21.3 Form of Annual Renewal of Service Contract. (Exhibit
10.20.3, 1993 NU Form 10-K, File No. 1-5324)
10.22 Memorandum of Understanding between CL&P, HELCO, HP&E, HWP and WMECO
dated as of June 1, 1970 with respect to pooling of generation and
transmission. (Exhibit 13.32, File No. 2-38177)
10.22.1 Amendment to Memorandum of Understanding between CL&P,
HELCO, HP&E, HWP and WMECO dated as of February 2, 1982 with
respect to pooling of generation and transmission. (Exhibit
10.21.1, 1993 NU Form 10-K, File No. 1-5324)
10.22.2 Amendment to Memorandum of Understanding between CL&P,
HELCO, HP&E, HWP and WMECO dated as of January 1, 1984 with
respect to pooling of generation and transmission. (Exhibit
10.21.2, 1994 NU Form 10-K, File No. 1-5324)
10.23 New England Power Pool Agreement effective as of November 1, 1971, as
amended to December 1, 1996. (Exhibit 10.15, 1988 NU Form 10-K, File
No. 1-5324.)
10.23.1 Twenty-sixth Amendment to Exhibit 10.23 dated as of March
15, 1989. (Exhibit 10.15.1, 1990 NU Form 10-K, File No. 1-
5324)
10.23.2 Twenty-seventh Amendment to Exhibit 10.23 dated as of
October 1, 1990. (Exhibit 10.15.2, 1991 NU Form 10-K, File
No. 1-5324)
10.23.3 Twenty-eighth Amendment to Exhibit 10.23 dated as of
September 15, 1992. (Exhibit 10.18.3, 1992 NU Form 10-K,
File No. 1-5324)
10.23.4 Twenty-ninth Amendment to Exhibit 10.23 dated as of May 1,
1993. (Exhibit 10.22.4, 1993 NU Form 10-K, File No. 1-5324)
10.23.5 Thirty-second Amendment (Amendments 30 and 31 were
withdrawn) to Exhibit 10.23 dated as of September 1, 1995.
(Exhibit 10.23.5, 1995 NU Form 10-K, File No. 1-5324)
* 10.23.6 Thirty-third Amendment to Exhibit 10.23 dated as of December
31, 1996 and Form of Interim Independent System Operator
(ISO) Agreement.
10.24 Agreements among New England Utilities with respect to the Hydro-
Quebec interconnection projects. (See Exhibits 10(u) and 10(v);
10(w), 10(x), and 10(y), 1990 and 1988, respectively, Form 10-K of New
England Electric System, File No. 1-3446.)
10.25 Trust Agreement dated February 11, 1992, between State Street Bank and
Trust Company of Connecticut, as Trustor, and Bankers Trust Company,
as Trustee, and CL&P and WMECO, with respect to NBFT. (Exhibit 10.23,
1991 NU Form 10-K, File No. 1-5324)
10.25.1 Nuclear Fuel Lease Agreement dated as of February 11, 1992,
between Bankers Trust Company, Trustee, as Lessor, and CL&P
and WMECO, as Lessees. (Exhibit 10.23.1, 1991 NU Form 10-K,
File No. 1-5324)
10.26 Simulator Financing Lease Agreement, dated as of February 1, 1985, by
and between ComPlan and NNECO. (Exhibit 10.25, 1994 NU Form 10-K,
File No. 1-5324)
10.27 Simulator Financing Lease Agreement, dated as of May 2, 1985, by and
between The Prudential Insurance Company of America and NNECO.
(Exhibit No. 10.26, 1994 NU Form 10-K, File No. 1-5324)
10.28 Lease dated as of April 14, 1992 between The Rocky River Realty
Company (RRR) and Northeast Utilities Service Company (NUSCO) with
respect to the Berlin, Connecticut headquarters (office lease).
(Exhibit 10.29, 1992 NU Form 10-K, File No. 1-5324)
10.28.1 Lease dated as of April 14, 1992 between RRR and NUSCO with
respect to the Berlin, Connecticut headquarters (project
lease). (Exhibit 10.29.1, 1992 NU Form 10-K, File No. 1-
5324)
10.29 Millstone Technical Building Note Agreement dated as of December 21,
1993 between, by and between The Prudential Insurance Company of
America and NNECO. (Exhibit 10.28, 1993 NU Form 10-K, File No. 1-
5324)
10.30 Lease and Agreement, dated as of December 15, 1988, by and between
WMECO and Bank of New England, N.A., with BNE Realty Leasing
Corporation of North Carolina. (Exhibit 10.63, 1988 NU Form 10-K,
File No. 1-5324.)
10.31 Note Agreement dated April 14, 1992, by and between The Rocky River
Realty Company (RRR) and Purchasers named therein (Connecticut General
Life Insurance Company, Life Insurance Company of North America, INA
Life Insurance Company of New York, Life Insurance Company of
Georgia), with respect to RRR's sale of $15 million of guaranteed
senior secured notes due 2007 and $28 million of guaranteed senior
secured notes due 2017. (Exhibit 10.52, 1992 NU Form 10-K, File No.
1-5324)
10.31.1 Note Guaranty dated April 14, 1992 by Northeast Utilities
pursuant to Note Agreement dated April 14, 1992 between RRR
and Note Purchasers, for the benefit of The Connecticut
National Bank as Trustee, the Purchasers and the owners of
the notes. (Exhibit 10.52.1, 1992 NU Form 10-K, File No. 1-
5324)
10.31.2 Assignment of Leases, Rents and Profits, Security Agreement
and Negative Pledge, dated as of April 14, 1992 among RRR,
NUSCO and The Connecticut National Bank as Trustee, securing
notes sold by RRR pursuant to April 14, 1992 Note Agreement.
(Exhibit 10.52.2, 1992 NU Form 10-K, File No. 1-5324)
* 10.32 Master Trust Agreement dated as of September 2, 1986 between CL&P and
WMECO and Colonial Bank as Trustee, with respect to reserve funds for
Millstone 1 decommissioning costs.
10.32.1 Notice of Appointment of Mellon Bank, N.A. as Successor
Trustee, dated November 20, 1990, and Acceptance of
Appointment. (Exhibit 10.41.1, 1992 NU Form 10-K, File No.
1-5324)
* 10.33 Master Trust Agreement dated as of September 2, 1986 between CL&P and
WMECO and Colonial Bank as Trustee, with respect to reserve funds for
Millstone 2 decommissioning costs.
10.33.1 Notice of Appointment of Mellon Bank, N.A. as Successor
Trustee, dated November 20, 1990, and Acceptance of
Appointment. (Exhibit 10.42.1, 1992 NU Form 10-K, File No.
1-5324)
* 10.34 Master Trust Agreement dated as of April 23, 1986 between CL&P and
WMECO and Colonial Bank as Trustee, with respect to reserve funds for
Millstone 3 decommissioning costs.
10.34.1 Notice of Appointment of Mellon Bank, N.A. as Successor
Trustee, dated November 20, 1990, and Acceptance of
Appointment. (Exhibit 10.43.1, 1992 NU Form 10-K, File No.
1-5324)
10.35 NU Executive Incentive Plan, effective as of January 1, 1991.
(Exhibit 10.44, NU 1991 Form 10-K, File No. 1-5324)
10.36 Supplemental Executive Retirement Plan for Officers of NU System
Companies, Amended and Restated effective as of January 1, 1992.
(Exhibit 10.45.1, NU Form 10-Q for the Quarter Ended June 30, 1992,
File No. 1-5324)
10.36.1 Amendment 1 to Exhibit 10.36, effective as of August 1,
1993. (Exhibit 10.35.1, 1993 NU Form 10-K, File No. 1-5324)
10.36.2 Amendment 2 to Exhibit 10.36, effective as of January 1,
1994. (Exhibit 10.35.2, 1993 NU Form 10-K, File No. 1-5324)
10.36.3 Amendment 3 to Exhibit 10.36, effective as of January 1,
1996. (Exhibit 10.36.3, 1995 NU Form 10-K, File No. 1-5324)
10.37 Loan Agreement dated as of December 2, 1991, by and between NU and
Mellon Bank, N.A., as Trustee, with respect to NU's loan of $175
million to an ESOP Trust. (Exhibit 10.46, NU 1991 Form 10-K, File No.
1-5324)
10.37.1 First Amendment to Exhibit 10.37 dated February 7, 1992.
(Exhibit 10.36.1, 1993 NU Form 10-K, File No. 1-5324)
10.37.2 Loan Agreement dated as of March 19, 1992 by and between NU
and Mellon Bank, N.A., as Trustee, with respect to NU's loan
of $75 million to the ESOP Trust. (Exhibit 10.49.1, 1992 NU
Form 10-K, File No. 1-5324)
10.37.3 Second Amendment to Exhibit 10.37 dated April 9, 1992.
(Exhibit 10.36.3, 1993 NU Form 10-K, File No. 1-5324)
10.38 Employment Agreement with Bernard M. Fox. (Exhibit 10.48, NU Form
10-Q for the Quarter Ended June 30, 1992, File No. 1-5324)
* 10.39 Transition and Retirement Agreement with Bernard M. Fox.
* 10.40 Employment Agreement with Bruce M. Kenyon.
* 10.41 Employment Agreement with John H. Forsgren.
* 10.42 Employment Agreement with Hugh C. MacKenzie.
* 10.43 Employment Agreement with Ted C. Feigenbaum.
10.44 Employment Agreement with Robert E. Busch. (Exhibit 10, NU Form 10-Q
for the Quarter Ended September 30, 1996, File No. 1-5324)
10.45 Northeast Utilities Deferred Compensation Plan for Trustees, Amended
and Restated December 13, 1994. (Exhibit 10.39, 1995 NU Form 10-K,
File No. 1-5324)
10.46 Deferred Compensation Plan for Officers of Northeast Utilities System
Companies adopted September 23, 1986. (Exhibit 10.40, 1995 NU Form
10-K, File No. 1-5324)
10.47 Reciprocal Support Agreement Among NNECO, NAESCO, CYAPC, YAEC and
NUSCO dated January 1, 1996. (Exhibit 10.41, 1995 NU Form 10K, File
No. 1-5324)
* 10.48 Receivables Purchase and Sale Agreement (CL&P), dated as of July
11, 1996.
* 10.49 Receivables Purchase and Sale Agreement (WMECO), dated as of
September 11, 1996 and First Amendment dated as of January 15,
1997.
* 10.50 Master Lease Agreement between General Electric Capital Corporation
and CL&P, dated as of June 21, 1996.
13 Annual Report to Security Holders (Each of the Annual Reports is filed
only with the Form 10-K of that respective registrant.)
* 13.1 Portions of the Annual Report to Shareholders of NU (pages 11 -
46) that have been incorporated by reference into this Form 10-K.
13.2 Annual Report of CL&P.
13.3 Annual Report of WMECO.
13.4 Annual Report of PSNH.
13.5 Annual Report of NAEC.
*21 Subsidiaries of the Registrant.
27 Financial Data Schedules (Each Financial Data Schedule is filed only with
the Form 10-K of that respective registrant.)
27.1 Financial Data Schedule of NU.
27.2 Financial Data Schedule of CL&P.
27.3 Financial Data Schedule of WMECO.
27.4 Financial Data Schedule of PSNH.
27.5 Financial Data Schedule of NAEC.
Exhibit 3.2.2
CERTIFICATE AMENDING OR RESTATING CERTIFICATE OF INCORPORATION
61-38 Rev. 9/90
Stock Corporation
STATE OF CONNECTICUT
SECRETARY OF THE STATE
30 TRINITY STREET
HARTFORD, CT 06106
1. Name of Corporation (Please enter name within lines)
The Connecticut Light and Power Company
2. The Certificate of Incorporation is: (Check one)
X A. Amended only, pursuant to Conn., Gen. Stat. Section 33-360
B. Amended only, to cancel authorized shares (state number of shares to be
canceled, the class, the series, if any, and the par value, P.A. 90-107.)
C. Restated only, pursuant to Conn. Gen. Stat. Section 33-362(a)
D. Amended and restated, pursuant to Conn. Gen. Stat. Section
33-362(c).
E. Restated and superseded pursuant to Conn. Gen. Stat. Section
33-362(d).
Set forth here the resolution of amendment and/or restatement. Use an 8 1/2
x 11 attached sheet if more space is needed. Conn. Gen. Stat. Section 1-9.
See Attachment A.
(If 2A or 2B is checked, go to 5 & 6 to complete this certificate. If 2C or
2D is checked, complete 3A or 3B. If 2E is checked, complete 4.)
3. (Check one)
A. This certificate purports merely to restate but not to change the
provisions of the original Certificate of Incorporation as supplemented and
amended to date, and the provisions of this Restated Certificate of
Incorporation (If 3A is checked, go to 5 & 6 to complete this certificate.)
B. This Restated Certificate of Incorporation shall give effect to the
amendment(s) and purports to restate all those provisions now in effect not
being amended by such new amendment(s). (If 3B is checked, check 4, if true,
and go to 5 & 6 to complete this Certificate.)
4. (Check, if true)
This restated Certificate of Incorporation was adopted by the greatest
vote which would have been required to amend any provision of the Certificate
of Incorporation as in effect before such vote and supersedes such
Certificate of Incorporation.
5. The manner of adopting the resolution was as follows: (Check one A, or
B, or C)
X A. By the board of directors and shareholders, pursuant to Conn.
Gen. Stat. Section 33-360.
Vote of Shareholders: (Check (i) or (ii), and check (iii) if
applicable.)
(i) X No shares are required to be voted as a class; the
shareholder's vote was as follows:
Vote Required for Adoption 8,148,620 Vote Favoring Adoption
12,222,930
(ii) There are shares of more than one class entitled to vote as a
class. The designation of each class required for adoption of the resolution
and the vote of each class in favor of adoption were as follows:
(Use an 8 1/2 x 11 attached sheet if more space is needed. Conn.
Gen. Stat. Section 1-9.)
(iii) Check here if the corporation has 100 or more recordholders,
as defined in Conn. Gen. Stat. Section 33-311a(a).
B. By the board of directors acting alone, pursuant to Conn. Gen. Stat.
Section 33-360(b)(2) or 33-362(a).
The number of affirmative votes required to adopt such resolution is:
The number of directors' votes in favor of the resolution was:
We hereby declare, under the penalties of false statement, that the
statements made in the foregoing certificate are true:
(Print or Type)
Name of President/Vice President
John B. Keane
Signature
/s/John B. Keane
(Print or Type)
Name of Secretary/Assistant Secretary
Mark A. Joyse
Signature
/s/Mark A. Joyse
C. The corporation does not have any shareholders. The resolution was
adopted by vote of at least two-thirds of the incorporators before the
organization meeting of the corporation, and approved in writing by all
subscribers for shares of the corporation. If there are not subscribers,
state NONE below.
We (at least two-thirds of the incorporators) hereby declare, under the
penalties of false statement, that the statements made in the foregoing
certificate are true.
Signed Incorporator Signed Subscriber
Signed Incorporator Signed Subscriber
Signed Incorporator Signed Subscriber
(Use an 8 1/2 x 11 attached sheet if more space is needed. Conn. Gen. Stat.
Section 1-9)
6. Dated at Berlin, Connecticut this 26th of December, 1996
Rec, CC, GS: (Type or Print)
/s/ Tracy A. DeCredico
Northeast Utilities Service Company
107 Selden Street
Berlin, CT 06037
Please provide filer's name and complete address for mailing receipt
ATTACHMENT A
(The Connecticut Light and Power Company)
RESOLVED, that Section IX of Part Two of Article IV of the Restated
Certificate of Incorporation of the Company is hereby amended to read as
follows:
SECTION IX
IMMUNITY AND INDEMNIFICATION OF DIRECTORS OFFICERS AND AGENTS
No director, officer or agent of the Company shall be held
personally responsible for any action taken in good faith though subsequently
adjudged to be in violation of these Sections.
Effective January 1, 1997, the Company shall indemnify and advance
expenses to an individual made a party to a proceeding because he/she is or
was a Director of the Company under Section 33-771 of the Connecticut General
Statutes, Revision of 1958, as amended. The Company shall also indemnify and
advance expenses under Sections 33-770 to 33-778, inclusive, of the
Connecticut General Statutes, to any officer, employee or agent of the
company who is not a director to the same extent as provided to a director.
BY-LAWS Exhibit 3.2.3
THE CONNECTICUT LIGHT AND POWER COMPANY
Amended
January 18, 1961
April 15, 1964
July 1, 1966
March 1, 1982
January 1, 1997
THE CONNECTICUT LIGHT AND POWER COMPANY
BY-LAWS
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Meetings of the shareholders may be held at any place in the
State of Connecticut fixed by the Board of Directors.
Section 2. The Annual Meeting of Shareholders for the election of
Directors and the transaction of such other business as may properly be
brought before the meeting shall be held in March, April, May, June or July
in each year on the day and at the hour designated by the Board of Directors.
Section 3. Notice of all meetings of shareholders, stating the day,
hour and place thereof, shall be given by a written or printed notice,
delivered or sent by mail, at least ten days but not more than fifty days
prior to the meeting, to each shareholder of record on the books of the
Company and entitled to vote at such meeting, at the address appearing on
such books, unless such shareholder shall waive notice or be in attendance at
the meeting. Notice of a special meeting of shareholders shall state also
the general purpose or purposes of such meeting and no business other than
that of which notice has been so given shall be transacted at such meeting.
Section 4. At all meetings of shareholders each share of stock entitled
to vote, and represented in person or by proxy, shall be entitled to one
vote.
Section 5. The Board of Directors may fix a date as the record date for
the purpose of determining shareholders entitled to notice of and to vote at
any meeting of shareholders or any adjournment thereof, such date in any case
to be not earlier than the date such action is taken by the Board of
Directors and not more than seventy days and not less than ten days
immediately preceding the date of such meeting. In such case only such
shareholders or their legal representatives as shall be shareholders on the
record date so fixed shall be entitled to such notice and to vote at such
meeting or any adjournment thereof, notwithstanding the transfer of any
shares of stock on the books of the Company after any such record date so
fixed.
ARTICLE II
DIRECTORS
Section 1. The business, property and affairs of the Company shall be
managed by a Board of not less than three nor more than sixteen Directors.
Within these limits, the number of positions on the Board of Directors for
any year shall be the number fixed by resolution of the shareholders or of
the Board of Directors, or, in the absence of such a resolution, shall be the
number of Directors elected at the preceding Annual Meeting of Shareholders.
The Directors so elected shall continue in office until their successors have
been elected and qualified.
Section 2. The Board of Directors shall have power to fill vacancies
that may occur in the Board, or any other office, by death, resignation or
otherwise, by a majority vote of the remaining members of the Board, and the
person so chosen shall hold the office until the next Annual Meeting and
until his successor shall be elected and qualified.
Section 3. The Board of Directors shall have power to employ such and
so many agents and factors or employees as the interests of the Company may
require, and to fix the compensation and define the duties of all of the
officers, agents, factors and employees of the Company. All the officers,
agents, factors and employees of the Company shall be subject to the order of
said Board, shall hold their offices at the pleasure of said Board, and may
be removed at any time by said Board at its discretion.
Section 4. The Board of Directors shall have power to fix from time to
time the compensation of the Directors and the method of payment thereof.
ARTICLE III
MEETINGS OF DIRECTORS
Section 1. A regular meeting of the Board of Directors shall, if a
quorum is present, be held without notice immediately after the adjournment
of the Annual Meeting of stockholders, or as soon thereafter as convenient,
for the purpose of organization. At such organization meeting or at any
subsequent meeting, the Directors shall elect the officers of the Company
provided for in Article IV of these By-Laws, who shall hold their offices
(subject to the provisions of Section 3, Article II, of these By-Laws) for
the ensuing year, or until the next such organization meeting and until their
successors are chosen and qualified.
Section 2. All other regular meetings of the Board of Directors may be
held at such time and place within or without the State of Connecticut as
said Board may determine.
Section 3. Special meetings of the Board of Directors may be held at
any place within or without the State of Connecticut upon call by the
Chairman or, if the Chairman shall be absent or unable to perform the duties
of his office, the President, or by the Secretary upon written request of
five or more Directors.
Section 4. Oral, written or printed notice of a special meeting of the
Board of Directors shall be given to each Director personally, or by
telephone, mail or telegraph, at least two days prior to the meeting unless
each Director shall, in writing or by telegraph, waive such notice or be in
attendance at such meeting.
Section 5. One-third of the directorships as fixed in accordance with
Article II, Section 1 of these By-Laws shall constitute a quorum, except that
no quorum shall consist of less than two Directors. A less number than a
quorum may adjourn from time to time until a quorum is present. In the event
of such an adjournment, notice of the adjourned meeting shall be given to all
Directors.
Section 6. Except as otherwise provided by these By-Laws, all questions
shall be decided by vote of a majority of the Directors present at any
meeting of the Board at which a quorum is present. The yeas and nays on any
question shall be taken and recorded on the minutes at the request of any
Directors.
ARTICLE IV
OFFICERS
Section 1. The officers of this Company shall consist of a President,
one or more Vice Presidents, a Secretary, a Treasurer, and, at the discretion
of the Board of Directors, a Chairman, and the Board of Directors may elect
one or more Assistant Secretaries, one or more Assistant Treasurers, and such
other officers as they may deem advisable. The President and Chairman shall
be Directors.
Section 2. The same person shall not hold the offices of both President
and Secretary and no officer shall execute, acknowledge or verify any
instrument in more than one capacity.
Section 3. The officers of the Company shall be elected by the Board of
Directors as provided in Section 1, Article III of these By-Laws.
ARTICLE V
CHAIRMAN AND PRESIDENT
Section 1. The Chairman, if such office shall be filled by the
Directors, shall, when present, preside at all meetings of said Board and of
the stockholders. He shall have such other authority and shall perform such
additional duties as may be assigned to him from time to time by the Board of
Directors.
Section 2. The President shall be the chief executive officer of the
Company and shall be responsible for the general supervision, direction and
control of the business and affairs of the Company. If the Chairman shall be
absent or unable to perform the duties of his office, or if the office of
Chairman shall not have been filled by the Directors, the President shall
preside at meetings of the Board of Directors and of the stockholders. He
shall have such other authority and shall perform such additional duties as
may be assigned to him from time to time by the Board of Directors.
ARTICLE VI
VICE PRESIDENTS
Section 1. The Vice Presidents shall have such powers and duties as may
be assigned to them from time to time by the Board of Directors or the
President. One of such Vice Presidents may be designated by said Board as
Executive Vice President and, if so designated, shall exercise the powers and
perform the duties of the President in the absence of the President or if the
President is unable to perform the duties of his office. The Board of
Directors may also designate one or more of such Vice Presidents as Senior
Vice Presidents.
ARTICLE VII
SECRETARY
Section 1. The Secretary shall keep the minutes of all meetings of the
stockholders and of the Board of Directors. He shall give notice of all
meetings of the stockholders and of said Board. He shall record all votes
taken at such meetings. He shall be custodian of all contracts, leases,
assignments, deeds and other instruments in writing and documents not
properly belonging to the office of the Treasurer, and shall perform such
additional duties as may be assigned to him from time to time by the Board of
Directors, the Chairman, the President or by law.
Section 2. He shall have the custody of the Corporate Seal of the
Company and shall affix the same to all instruments requiring a seal except
as otherwise provided in these By-Laws.
ARTICLE VIII
ASSISTANT SECRETARY
Section 1. An Assistant Secretary shall perform the duties of the
Secretary if the Secretary shall be absent or unable to perform the duties of
his office. An Assistant Secretary shall perform such additional duties as
may be assigned to him from time to time by the Board of Directors, the
Chairman, the President or the Secretary.
ARTICLE IX
TREASURER
Section 1. The Treasurer shall have charge of all receipts and
disbursements of the Company, and shall be the custodian of the Company's
funds. He shall have full authority to receive and give receipts for all
moneys due and payable to the Company from any source whatever, and give full
discharge for the same, and to endorse checks, drafts and warrants in its
name and on its behalf. He shall sign all checks, notes, drafts and similar
instruments, except as otherwise provided for by the Board of Directors.
Section 2. He shall perform such additional duties as may be assigned
to him from time to time by the Board of Directors, the Chairman, the
President or by law.
ARTICLE X
ASSISTANT TREASURER
Section 1. An Assistant Treasurer shall perform the duties of the
Treasurer if the Treasurer shall be absent or unable to perform the duties of
his office. An Assistant Treasurer shall perform such additional duties as
may be assigned to him from time to time by the Board of Directors, the
Chairman, the President or the Treasurer.
ARTICLE XI
COMMITTEES
Section 1. The Board of Directors, by the affirmative vote of Directors
holding a majority of the number of directorships (as fixed for the current
year in accordance with Article II, Section 1, of these By-Laws), may appoint
such committees as it may deem proper, and may delegate to such committees
any of the powers possessed by said Board. A majority of any committee shall
have the power to act. Committees shall keep full records of their
proceedings, and shall report the same to the next regular meeting of said
Board, or when called upon by said Board.
ARTICLE XII
STOCK CERTIFICATES
Section 1. All stock certificates, Common and Preferred, may bear the
facsimile signatures of the President or a Vice President and the Treasurer
or an Assistant Treasurer and a facsimile seal of the Company, or may be
signed by the President or a Vice President and the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, and may be sealed by
any one of such officers.
ARTICLE XIII
CORPORATE SEAL
Section 1. The Corporate Seal of the Company shall be circular in form,
with the name of the Company inscribed thereon.
ARTICLE XIV
AMENDMENTS
Section 1. These By-Laws may be altered, amended, added to or repealed
at any meeting of stockholders, or of the Board of Directors, provided the
notice of such meeting states that such action is to be proposed. Such
action by the stockholders shall require the affirmative vote of the holders
of a majority of the voting power of shares entitled to vote thereon. Such
action by the Board of Directors shall require the affirmative vote of
Directors holding a majority of the number of directorships (as fixed for the
current year in accordance with Article II, Section 1 of these By-Laws).
This Section 1 of Article XV may be amended only at a meeting of
stockholders.
Exhibit 4.2.16
SUPPLEMENTAL INDENTURE
Dated as of June 1, 1996
TO
Indenture of Mortgage and Deed of Trust
Dated as of May 1, 1921
THE CONNECTICUT LIGHT AND POWER COMPANY
TO
BANKERS TRUST COMPANY, Trustee
1996 Series A Bonds, Due June 1, 2001
THE CONNECTICUT LIGHT AND POWER COMPANY
Supplemental Indenture, Dated as of June 1, 1996
Table of Contents
Page
Parties 1
Recitals 1
Granting Clauses 2
Habendum 2
Grant in Trust 3
ARTICLE 1. FORM AND PROVISIONS OF BONDS OF 1996 SERIES A
SECTION 1.01. Designation; Amount 3
SECTION 1.02. Form of Bonds of 1996 Series A 3
SECTION 1.03. Provisions of Bonds of 1996 Series A; Interest
Accrual 3
SECTION 1.04. Transfer and Exchange of Bonds of 1996
Series A 4
SECTION 1.05. Sinking and Improvement Fund 5
ARTICLE 2. REDEMPTION OF BONDS OF 1996 SERIES A 5
ARTICLE 3. MISCELLANEOUS
SECTION 3.01. Benefits of Supplemental Indenture and
Bonds of 1996 Series A 6
SECTION 3.02. Effect of Table of Contents and
Headings 6
SECTION 3.03. Counterparts 7
TESTIMONIUM 8
SIGNATURES 8
ACKNOWLEDGMENTS 9
SCHEDULE A - Form of Bond of 1996 Series A, Form of Trustee's
Certificate
SCHEDULE B - Property Subject to the Lien of the Mortgage
SUPPLEMENTAL INDENTURE, dated as of the first day of June,
1996, between THE CONNECTICUT LIGHT AND POWER COMPANY, a
corporation organized and existing under the laws of the State of
Connecticut (hereinafter called "Company"), and BANKERS TRUST
COMPANY, a corporation organized and existing under the laws of
the State of New York (hereinafter called "Trustee").
WHEREAS, the Company heretofore duly executed, acknowledged
and delivered to the Trustee a certain Indenture of Mortgage and
Deed of Trust dated as of May 1, 1921, and sixty-three
Supplemental Indentures thereto dated respectively as of May 1,
1921, February 1, 1924, July 1, 1926, June 20, 1928, June 1,
1932, July 1, 1932, July 1, 1935, September 1, 1936, October 20,
1936, December 1, 1936, December 1, 1938, August 31, 1944,
September 1, 1944, May 1, 1945, October 1, 1945, November 1,
1949, December 1, 1952, December 1, 1955, January 1, 1958,
February 1, 1960, April 1, 1961, September 1, 1963, April 1,
1967, May 1, 1967, January 1, 1968, October 1, 1968, December 1,
1969, January 1, 1970, October 1, 1970, December 1, 1971, August
1, 1972, April 1, 1973, March 1, 1974, February 1, 1975,
September 1, 1975, May 1, 1977, March 1, 1978, September 1, 1980,
October 1, 1981, June 30, 1982, October 1, 1982, July 1, 1983,
January 1, 1984, October 1, 1985, September 1, 1986, April 1,
1987, October 1, 1987, November 1, 1987, April 1, 1988, November
1, 1988, June 1, 1989, September 1, 1989, December 1, 1989, April
1, 1992, July 1, 1992, October 1, 1992, July 1, 1993, July 1,
1993, December 1, 1993, February 1, 1994, February 1, 1994, June
1, 1994 and October 1, 1994 (said Indenture of Mortgage and Deed
of Trust (i) as heretofore amended, being hereinafter generally
called the "Mortgage Indenture," and (ii) together with said
Supplemental Indentures thereto, being hereinafter generally
called the "Mortgage"), all of which have been duly recorded as
required by law, for the purpose of securing its First and
Refunding Mortgage Bonds (of which $1,292,288,000) aggregate
principal amount are outstanding at the date of this Supplemental
Indenture) in an unlimited amount, issued and to be issued for
the purposes and in the manner therein provided, of which
Mortgage this Supplemental Indenture is intended to be made a
part, as fully as if therein recited at length;
WHEREAS, the Company by appropriate and sufficient corporate
action in conformity with the provisions of the Mortgage has duly
determined to create a further series of bonds under the Mortgage
to be designated "First and Refunding Mortgage 7-7/8% Bonds, 1996
Series A" (hereinafter generally referred to as the "bonds of
1996 Series A"), to consist of fully registered bonds containing
terms and provisions duly fixed and determined by the Board of
Directors of the Company and expressed in this Supplemental
Indenture, such fully registered bonds and the Trustee's
certificate of its authentication thereof to be substantially in
the forms thereof respectively set forth in Schedule A appended
hereto and made a part hereof; and
WHEREAS, the execution and delivery of this Supplemental
Indenture and the issue of not in excess of One Hundred Sixty
Million Dollars ($160,000,000) in aggregate principal amount of
bonds of 1996 Series A and other necessary actions have been duly
authorized by the Board of Directors of the Company; and
WHEREAS, the Company proposes to execute and deliver this
Supplemental Indenture to provide for the issue of the bonds of
1996 Series A and to confirm the lien of the Mortgage on the
property referred to below, all as permitted by Section 14.01 of
the Mortgage Indenture; and
WHEREAS, all acts and things necessary to constitute this
Supplemental Indenture a valid, binding and legal instrument and
to make the bonds of 1996 Series A, when executed by the Company
and authenticated by the Trustee valid, binding and legal
obligations of the Company have been authorized and performed;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE OF MORTGAGE AND
DEED OF TRUST WITNESSETH:
That in order to secure the payment of the principal of and
interest on all bonds issued and to be issued under the Mortgage,
according to their tenor and effect, and according to the terms
of the Mortgage and this Supplemental Indenture, and to secure
the performance of the covenants and obligations in said bonds
and in the Mortgage and this Supplemental Indenture respectively
contained, and for the better assuring and confirming unto the
Trustee, its successor or successors and its or their assigns,
upon the trusts and for the purposes expressed in the Mortgage
and this Supplemental Indenture, all and singular the
hereditaments, premises, estates and property of the Company
thereby conveyed or assigned or intended so to be, or which the
Company may thereafter have become bound to convey or assign to
the Trustee, as security for said bonds (except such
hereditaments, premises, estates and property as shall have been
disposed of or released or withdrawn from the lien of the
Mortgage and this Supplemental Indenture, in accordance with the
provisions thereof and subject to alterations, modifications and
changes in said hereditaments, premises, estates and property as
permitted under the provisions thereof), the Company, for and in
consideration of the premises and the sum of One Dollar ($1.00)
to it in hand paid by the Trustee, the receipt whereof is hereby
acknowledged, and of other valuable considerations, has granted,
bargained, sold, assigned, mortgaged, pledged, transferred, set
over, aliened, enfeoffed, released, conveyed and confirmed, and
by these presents does grant, bargain, sell, assign, mortgage,
pledge, transfer, set over, alien, enfeoff, release, convey and
confirm unto said Bankers Trust Company, as Trustee, and its
successor or successors in the trusts created by the Mortgage and
this Supplemental Indenture, and its and their assigns, all of
said hereditaments, premises, estates and property (except and
subject as aforesaid), as fully as though described at length
herein, including, without limitation of the foregoing, the
property, rights and privileges of the Company described or
referred to in Schedule B hereto.
Together with all plants, buildings, structures,
improvements and machinery located upon said real estate or any
portion thereof, and all rights, privileges and easements of
every kind and nature appurtenant thereto, and all and singular
the tenements, hereditaments and appurtenances belonging to the
real estate or any part thereof described or referred to in
Schedule B or intended so to be, or in any wise appertaining
thereto, and the reversions, remainders, rents, issues and
profits thereof, and also all the estate, right, title, interest,
property, possession, claim and demand whatsoever, as well in law
as in equity, of the Company, of, in and to the same and any and
every part thereof, with the appurtenances; except and subject as
aforesaid.
TO HAVE AND TO HOLD all and singular the property, rights
and privileges hereby granted or mentioned or intended so to be,
together with all and singular the reversions, remainders, rents,
revenues, income, issues and profits, privileges and
appurtenances, now or hereafter belonging or in any way
appertaining thereto, unto the Trustee and its successor or
successors in the trust created by the Mortgage and this
Supplemental Indenture, and its and their assigns, forever, and
with like effect as if the above described property, rights and
privileges had been specifically described at length in the
Mortgage and this Supplemental Indenture.
Subject, however, to permitted liens, as defined in the
Mortgage Indenture.
IN TRUST, NEVERTHELESS, upon the terms and trusts of the
Mortgage and this Supplemental Indenture for those who shall hold
the bonds and coupons issued and to be issued thereunder, or any
of them, without preference, priority or distinction as to lien
of any of said bonds and coupons over any others thereof by
reason of priority in the time of the issue or negotiation
thereof, or otherwise howsoever, subject, however, to the
provisions in reference to extended, transferred or pledged
coupons and claims for interest set forth in the Mortgage and
this Supplemental Indenture (and subject to any sinking fund that
may heretofore have been or hereafter be created for the benefit
of any particular series).
And it is hereby covenanted that all such bonds of 1996
Series A are to be issued, authenticated and delivered, and that
the mortgaged premises are to be held by the Trustee, upon and
subject to the trusts, covenants, provisions and conditions and
for the uses and purposes set forth in the Mortgage and this
Supplemental Indenture and upon and subject to the further
covenants, provisions and conditions and for the uses and
purposes hereinafter set forth, as follows, to wit:
ARTICLE 1.
FORM AND PROVISIONS OF BONDS OF 1996 SERIES A
SECTION 1.01. Designation; Amount. The bonds of 1996 Series
A shall be designated "First and Refunding Mortgage 7-7/8% Bonds,
1996 Series A" and, subject to Section 2.08 of the Mortgage
Indenture, shall not exceed One Hundred Sixty Million Dollars
($160,000,000) in aggregate principal amount at any one time
outstanding. The initial issue of the bonds of 1996 Series A may
be effected upon compliance with the applicable provisions of the
Mortgage Indenture.
SECTION 1.02. Form of Bonds of 1996 Series A. The bonds of
1996 Series A shall be issued only in fully registered form without
coupons in denominations of One Thousand Dollars ($1,000) and
multiples thereof.
The bonds of 1996 Series A and the certificate of the Trustee
upon said bonds shall be substantially in the forms thereof
respectively set forth in Schedule A appended hereto.
SECTION 1.03. Provisions of Bonds of 1996 Series A; Interest
Accrual. The bonds of 1996 Series A shall mature on June 1, 2001
and shall bear interest, payable semiannually on the first days of
June and December of each year, commencing December 1, 1996, at the
rate specified in their title, until the Company's obligation in
respect of the principal thereof shall be discharged; and shall be
payable both as to principal and interest at the office or agency
of the Company in the Borough of Manhattan, New York, New York, in
any coin or currency of the United States of America which at the
time of payment is legal tender for the payment of public and
private debts. The interest on the bonds of 1996 Series A, whether
in temporary or definitive form, shall be payable without
presentation of such bonds; and only to or upon the written order
of the registered holders thereof of record at the applicable
record date. The bonds of 1996 Series A shall be callable for
redemption in whole or in part according to the terms and
provisions herein in Article 2.
Each bond of 1996 Series A shall be dated as of June 1, 1996
and shall bear interest on the principal amount thereof from the
interest payment date next preceding the date of authentication
thereof by the Trustee to which interest has been paid on the bonds
of 1996 Series A, or if the date of authentication thereof is prior
to November 16, 1996, then from the date of original issuance, or
if the date of authentication thereof be an interest payment date
to which interest is being paid or a date between the record date
for any such interest payment date and such interest payment date,
then from such interest payment date.
The person in whose name any bond of 1996 Series A is
registered at the close of business on any record date (as
hereinafter defined) with respect to any interest payment date
shall be entitled to receive the interest payable on such interest
payment date notwithstanding the cancellation of such bond upon any
registration of transfer or exchange thereof subsequent to the
record date and prior to such interest payment date, except that if
and to the extent the Company shall default in the payment of the
interest due on such interest payment date, then such defaulted
interest shall be paid to the person in whose name such bond is
registered on a subsequent record date for the payment of defaulted
interest if one shall have been established as hereinafter provided
and otherwise on the date of payment of such defaulted interest.
A subsequent record date may be established by the Company by
notice mailed to the owners of bonds of 1996 Series A not less than
ten (10) days preceding such record date, which record date shall
not be more than thirty (30) days prior to the subsequent interest
payment date. The term "record date" as used in this Section with
respect to any regular interest payment (i.e., June 1 or December
1) shall mean the May 15 or November 15, as the case may be, next
preceding such interest payment date, or if such May 15 or November
15 shall be a legal holiday or a day on which banking institutions
in the Borough of Manhattan, New York, New York are authorized by
law to close, the next preceding day which shall not be a legal
holiday or a day on which such institutions are so authorized to
close.
SECTION 1.04. Transfer and Exchange of Bonds of 1996 Series
A. The bonds of 1996 Series A may be surrendered for registration
of transfer as provided in Section 2.06 of the Mortgage Indenture
at the office or agency of the Company in the Borough of Manhattan,
New York, New York, and may be surrendered at said office for
exchange for a like aggregate principal amount of bonds of 1996
Series A of other authorized denominations. Notwithstanding the
provisions of Section 2.06 of the Mortgage Indenture, no charge,
except for taxes or other governmental charges, shall be made by
the Company for any registration of transfer of bonds of 1996
Series A or for the exchange of any bonds of 1996 Series A for such
bonds of other authorized denominations.
SECTION 1.05. Sinking and Improvement Fund. Each holder of
a bond of 1996 Series A, solely by virtue of its acquisition
thereof, shall have and be deemed to have consented, without the
need for any further action or consent by such holder, to any and
all amendments to the Mortgage Indenture which are intended to
eliminate or modify in any manner the requirements of the sinking
and improvement fund as provided for in Section 6.14 thereof.
ARTICLE 2.
REDEMPTION OF BONDS OF 1996 SERIES A.
The bonds of 1996 Series A shall be redeemable as a whole at
any time or in part from time to time in accordance with the
provisions of the Mortgage and upon not less than thirty (30) days'
prior notice given by mail as provided in the Mortgage (which
notice may state that it is subject to the receipt of the
redemption moneys by the Trustee on or before the date fixed for
redemption and which notice shall be of no effect unless such
moneys are so received on or before such date), either at the
option of the Company, or for the purpose of any applicable
provision of the Mortgage, at a redemption price equal to the
greater of (i) 100% of their principal amount, and (ii) the sum of
the present values of the remaining scheduled payments of principal
and interest thereon discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Yield, plus in each case accrued
interest to the date of redemption (the "Redemption Date").
"Treasury Yield" means, with respect to any Redemption Date,
the rate per annum equal to the semiannual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
redemption date.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker having a
maturity comparable to the remaining term of the bonds of 1996
Series A that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues
of corporate debt securities of comparable maturity to the
remaining term of the bonds of 1996 Series A. "Independent
Investment Banker" means Morgan Stanley & Co. Incorporated or, if
such firm is unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national
standing to be selected by the Company and appointed by the
Trustee.
"Comparable Treasury Price" means, with respect to any
Redemption Date (i) the average of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) on the third business day preceding such
Redemption Date, as set forth in the daily statistical release (or
any successor release) published by the Federal Reserve Bank of New
York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities," or (ii) if such release (or any successor
release) is not published or does not contain such prices on such
business day (A) the average of the Reference Treasury Dealer
Quotations for such Redemption Date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if the
Trustee obtains fewer than four Reference Treasury Dealer
Quotations, the average of all such Quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such Redemption Date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co.
Incorporated, Goldman, Sachs & Co. and another Primary Treasury
Dealer (as defined herein) at the option of the Company, provided,
however, that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
ARTICLE 3.
MISCELLANEOUS.
SECTION 3.01. Benefits of Supplemental Indenture and Bonds of
1996 Series A. Nothing in this Supplemental Indenture, or in the
bonds of 1996 Series A, expressed or implied, is intended to or
shall be construed to give to any person or corporation other than
the Company, the Trustee and the holders of the bonds and interest
obligations secured by the Mortgage and this Supplemental
Indenture, any legal or equitable right, remedy or claim under or
in respect of this Supplemental Indenture or of any covenant,
condition or provision herein contained. All the covenants,
conditions and provisions hereof are and shall be for the sole and
exclusive benefit of the Company, the Trustee and the holders of
the bonds and interest obligations secured by the Mortgage and
this Supplemental Indenture.
SECTION 3.02. Effect of Table of Contents and Headings. The
table of contents and the description headings of the several
Articles and Sections of this Supplemental Indenture are inserted
for convenience of reference only and are not to be taken to be any
part of this Supplemental Indenture or to control or affect the
meaning, construction or effect of the same.
SECTION 3.03. Counterparts. For the purpose of facilitating
the recording hereof, this Supplemental Indenture may be executed
in any number of counterparts, each of which shall be and shall be
taken to be an original and all collectively but one instrument.
IN WITNESS WHEREOF, The Connecticut Light and Power Company
has caused these presents to be executed by a Vice President and
its corporate seal to be hereunto affixed, duly attested by an
Assistant Secretary, and Bankers Trust Company has caused these
presents to be executed by an Assistant Vice President and its
corporate seal to be hereunto affixed, duly attested by an
Assistant Treasurer, as of the day and year first above written.
THE CONNECTICUT LIGHT AND POWER COMPANY
Attest:
By: /s/Theresa H. Allsop
Assistant Secretary
/s/John B. Keane
Name: John B. Keane
Title: Vice President and Treasurer
(SEAL)
Signed, sealed and delivered in the presence of:
/s/Shelley Peters
/s/Tracy A. DeCredico
BANKERS TRUST COMPANY
Attest:
By: /s/Shafiq Jadavji
Assistant Treasurer
/s/Scott F. Thiel
Name: Scott F. Thiel
Title: Assistant Vice President
(SEAL)
Signed, sealed and delivered in the presence of:
/s/J. Theriault
/s/Gina Evangelista
STATE OF CONNECTICUT )
) ss.: Berlin
COUNTY OF HARTFORD )
On this 20th day of June 1996, before me, Deborah A. Tawrel, the
undersigned officer, personally appeared, John B. Keane and Theresa A.
Allsop, who acknowledged themselves to be Vice President and Treasurer and
Assistant Secretary, respectively, of THE CONNECTICUT LIGHT AND POWER
COMPANY, a corporation, and that they, as such Vice President and Treasurer
and such Assistant Secretary, being authorized so to do, executed the
foregoing instrument for the purpose therein contained, by signing the name
of the corporation by themselves as Vice President and Treasurer
and Assistant Secretary, and as their free act and deed.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/Deborah A. Tawrel
Notary Public
My commission expires December 31, 2000
(SEAL)
STATE OF NEW YORK )
) ss.: New York
COUNTY OF NEW YORK )
On this 20th day of June, 1996, before me, Sharon V. Alston, the
undersigned officer, personally appeared Scott F. Thiel and Shafiq Jadavji,
who acknowledged themselves to be an Assistant Vice President and an
Assistant Treasurer, respectively, of BANKERS TRUST COMPANY, a corporation,
and that they, as such Assistant Vice President such Assistant Treasurer,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by themselves as
Assistant Vice President and Assistant Treasurer, and as their free
act and deed.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/Sharon V. Alston
Notary Public
My commission expires 5/7/98
(SEAL)
SCHEDULE A
[FORM OF BOND OF 1996 SERIES A]
No. $
THE CONNECTICUT LIGHT AND POWER COMPANY
Incorporated under the Laws of the State of Connecticut
FIRST AND REFUNDING MORTGAGE 7-7/8% BOND, 1996 SERIES A
PRINCIPAL DUE JUNE 1, 2001
FOR VALUE RECEIVED, THE CONNECTICUT LIGHT AND POWER COMPANY,
a corporation organized and existing under the laws of the State of
Connecticut (hereinafter called the Company), hereby promises to
pay to , or registered assigns, the principal
sum of dollars, on the first day of June, 2001
and to pay interest on said sum, semiannually on the first days of
June and December in each year, commencing December 1, 1996, until
the Company's obligation with respect to said principal sum shall
be discharged, at the rate per annum specified in the title of this
bond from the interest payment date next preceding the date of
authentication hereof to which interest has been paid on the bonds
of this series, or if the date of authentication hereof is prior to
November 16, 1996, then from the date of original issuance, or if
the date of authentication hereof is an interest payment date to
which interest is being paid or a date between the record date for
any such interest payment date and such interest payment date, then
from such interest payment date. Both principal and interest shall
be payable at the office or agency of the Company in the Borough of
Manhattan, New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender
for the payment of public and private debts.
Each installment of interest hereon (other than overdue
interest) shall be payable to the person who shall be the
registered owner of this bond at the close of business on the
record date, which shall be the May 15 or November 15, as the case
may be, next preceding the interest payment date, or, if such May
15 or November 15 shall be a legal holiday or a day on which
banking institutions in the Borough of Manhattan, New York, New
York, are authorized by law to close, the next preceding day which
shall not be a legal holiday or a day on which such institutions
are so authorized to close.
Reference is hereby made to the further provisions of this
bond set forth on the reverse hereof, including without limitation
provisions in regard to the call and redemption and the
registration of transfer and exchangeability of this bond, and such
further provisions shall for all purposes have the same effect as
though fully set forth in this place.
This bond shall not become or be valid or obligatory until the
certificate of authentication hereon shall have been signed by
Bankers Trust Company (hereinafter with its successors as defined
in the Mortgage hereinafter referred to, generally called the
Trustee), or by such a successor.
IN WITNESS WHEREOF, The Connecticut Light and Power Company
has caused this bond to be executed in its corporate name and on
its behalf by its President by his signature or a facsimile
thereof, and its corporate seal to be affixed or imprinted hereon
and attested by the manual or facsimile signature of its Secretary.
Dated as of June 1, 1996.
THE CONNECTICUT LIGHT AND POWER COMPANY
By: /s/
Name:
Title: President
Attest:
/s/
Name:
Title: Secretary
[FORM OF TRUSTEE'S CERTIFICATE]
Bankers Trust Company hereby certifies that this bond is one
of the bonds described in the within mentioned Mortgage.
BANKERS TRUST COMPANY, TRUSTEE
By: /s/
Name:
Title: Authorized Officer
[FORM OF BOND]
[REVERSE]
THE CONNECTICUT LIGHT AND POWER COMPANY
FIRST AND REFUNDING MORTGAGE 7-7/8% BOND, 1996 SERIES A
This bond is one of an issue of bonds of the Company, of an
unlimited authorized amount of coupon bonds or registered bonds
without coupons, or both, known as its First and Refunding Mortgage
Bonds, all issued or to be issued in one or more series, and is one
of a series of said bonds limited in principal amount to One
Hundred Sixty Million Dollars ($160,000,000), consisting only of
registered bonds without coupons and designated "First and
Refunding Mortgage 7-7/8% Bonds, 1996 Series A," all of which bonds
are issued or are to be issued under, and equally and ratably
secured by, a certain Indenture of Mortgage and Deed and Trust
dated as of May 1, 1921, and by sixty-four Supplemental Indentures
dated respectively as of May 1, 1921, February 1, 1924, July 1,
1926, June 20, 1928, June 1, 1932, July 1, 1932, July 1, 1935,
September 1, 1936, October 20, 1936, December 1, 1936, December 1,
1938, August 31, 1944, September 1, 1944, May 1, 1945, October 1,
1945, November 1, 1949, December 1, 1952, December 1, 1955, January
1, 1958, February 1, 1960, April 1, 1961, September 1, 1963, April
1, 1967, May 1, 1967, January 1, 1968, October 1, 1968, December 1,
1969, January 1, 1970, October 1, 1970, December 1, 1971, August 1,
1972, April 1, 1973, March 1, 1974, February 1, 1975, September 1,
1975, May 1, 1977, March 1, 1978, September 1, 1980, October 1,
1981, June 30, 1982, October 1, 1982, July 1, 1983, January 1,
1984, October 1, 1985, September 1, 1986, April 1, 1987, October 1,
1987, November 1, 1987, April 1, 1988, November 1, 1988, June 1,
1989, September 1, 1989, December 1, 1989, April 1, 1992, July 1,
1992, October 1, 1992, July 1, 1993, July 1, 1993, December 1,
1993, February 1, 1994, February 1, 1994, June 1, 1994, October 1,
1994 and June 1, 1996 (said Indenture of Mortgage and Deed of Trust
and Supplemental Indentures being collectively referred to herein
as the "Mortgage"), all executed by the Company to Bankers Trust
Company, as Trustee, all as provided in the Mortgage to which
reference is made for a statement of the property mortgaged and
pledged, the nature and extent of the security, the rights of the
holders of the bonds in respect thereof and the terms and
conditions upon which the bonds may be issued and are secured; but
neither the foregoing reference to the Mortgage nor any provision
of this bond or of the Mortgage shall affect or impair the
obligation of the Company, which is absolute, unconditional and
unalterable, to pay at the maturities herein provided the principal
of and interest on this bond as herein provided. The principal of
this bond may be declared or may become due on the conditions, in
the manner and at the time set forth in the Mortgage, upon the
happening of an event of default as in the Mortgage provided.
This bond is transferable by the registered holder hereof in
person or by attorney upon surrender hereof at the office or agency
of the Company in the Borough of Manhattan, New York, New York,
together with a written instrument of transfer in approved form,
signed by the holder, and a new bond or bonds of this series for a
like principal amount in authorized denominations will be issued in
exchange, all as provided in the Mortgage. Prior to due
presentment for registration of transfer of this bond the Company
and the Trustee may deem and treat the registered owner hereof as
the absolute owner hereof, whether or not this bond be overdue, for
the purpose of receiving payment and for all other purposes, and
neither the Company nor the Trustee shall be affected by any notice
to the contrary.
This bond is exchangeable at the option of the registered
holder hereof upon surrender hereof, at the office or agency of the
Company in the Borough of Manhattan, New York, New York, for an
equal principal amount of bonds of this series of other authorized
denominations, in the manner and on the terms provided in the
Mortgage.
Bonds of this series are to be issued initially under a
book-entry only system and, except as hereinafter provided,
registered in the name of The Depository Trust Company, New York,
New York ("DTC") or its nominee, which shall be considered to be
the holder of all bonds of this series for all purposes of the
Mortgage, including, without limitation, payment by the Company of
principal of and interest on such bonds of this series and receipt
of notices and exercise of rights of holders of such bonds of this
series. There shall be a single bond of this series which shall be
immobilized in the custody of DTC with the owners of book-entry
interests in bonds of this series ("Book-Entry Interests") having
no right to receive bonds of this series in the form of physical
securities or certificates. Ownership of Book-Entry Interests
shall be shown by book-entry on the system maintained and operated
by DTC, its participants (the "Participants") and certain persons
acting through the Participants. Transfers of ownership of
Book-Entry Interests are to be made only by DTC and the
Participants by that book-entry system, the Company and the Trustee
having no responsibility therefor so long as bonds of this series
are registered in the name of DTC or its nominee. DTC is to
maintain records of positions of Participants in bonds of this
series, and the Participants and persons acting through
Participants are to maintain records of the purchasers and owners
of Book-Entry Interests. If DTC or its nominee determines not to
continue to act as a depository for the bonds of this series in
connection with a book-entry only system, another depository, if
available, may act instead and the single bond of this series will
be transferred into the name of such other depository or its
nominee, in which case the above provisions will continue to apply
to the new depository. If the book-entry only system for bonds of
this series is discontinued for any reason, upon surrender and
cancellation of the single bond of this series registered in the
name of the then depository or its nominee, new registered bonds of
this series will be issued in authorized denominations to the
holders of Book-Entry Interests in principal amounts coinciding
with the amounts of Book-Entry Interests shown on the book-entry
system immediately prior to the discontinuance thereof. Neither
the Trustee nor the Company shall be responsible for the accuracy
of the interests shown on that system.
The bonds of this series are subject to redemption prior to
maturity as a whole at any time or in part from time to time in
accordance with the provisions of the Mortgage, upon not less than
thirty (30) days' prior notice (which notice may be made subject to
the deposit of redemption moneys with the Trustee before the date
fixed for redemption) given by mail as provided in the Mortgage,
either at the option of the Company, or for the purposes of any
applicable provision of the Mortgage at a redemption price equal to
the greater of (i) 100% of their principal amount, and (ii) the sum
of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption
on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Yield, plus in each case accrued
interest to the date of redemption (the "Redemption Date").
"Treasury Yield" means, with respect to any Redemption Date,
the rate per annum equal to the semiannual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
redemption date.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker having a
maturity comparable to the remaining term of the bonds of this
series that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues
of corporate debt securities of comparable maturity to the
remaining term of the bonds of this series. "Independent
Investment Banker" means Morgan Stanley & Co. Incorporated or, if
such firm is unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national
standing to be selected by the Company and appointed by the
Trustee.
"Comparable Treasury Price" means, with respect to any
Redemption Date, (i) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third business day
preceding such Redemption Date, as set forth in the daily
statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30
p.m. Quotations for U.S. Government Securities," or (ii) if such
release (or any successor release) is not published or does not
contain such prices on such business day (A) the average of the
Reference Treasury Dealer Quotations for such Redemption Date,
after excluding the highest and lowest such Reference Treasury
Dealer Quotations, or (B) if the Trustee obtains fewer than four
Reference Treasury Dealer Quotations, the average of all such
Quotations. "Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any Redemption Date,
the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as
a percentage of its principal amount) quoted in writing to the
Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third
business day preceding such Redemption Date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co.
Incorporated, Goldman, Sachs & Co. and another Primary Treasury
Dealer (as defined herein) at the option of the Company, provided,
however, that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer.
The Mortgage provides that the Company and the Trustee, with
consent of the holders of not less than 66-_% in aggregate
principal amount of the bonds at the time outstanding which would
be affected by the action proposed to be taken, may by supplemental
indenture add any provisions to or change or eliminate any of the
provisions of the Mortgage or modify the rights of the holders of
the bonds and coupons issued thereunder; provided, however, that
without the consent of the holder hereof no such supplemental
indenture shall affect the terms of payment of the principal of or
interest or premium on this bond, or reduce the aforesaid
percentage of the bonds the holders of which are required to
consent to such a supplemental indenture, or permit the creation by
the Company of any mortgage or pledge or lien in the nature thereof
ranking prior to or equal with the lien of the Mortgage or deprive
the holder hereof of the lien of the Mortgage on any of the
property which is subject to the lien thereof.
As set forth in the Supplemental Indenture establishing the
terms and series of the bonds of this series, each holder of this
bond, solely by virtue of its acquisition thereof, shall have and
be deemed to have consented, without the need for any further
action or consent by such holder, to any and all amendments to the
Mortgage which are intended to eliminate or modify in any manner
the requirements of the sinking and improvement fund as set forth
in Section 6.14 of the Mortgage.
No recourse shall be had for the payment of the principal of
or the interest on this bond, or any part thereof, or for any claim
based thereon or otherwise in respect thereof, to any incorporator,
or any past, present or future stockholder, officer or director of
the Company, either directly or indirectly, by virtue of any
statute or by enforcement of any assessment or otherwise, and any
and all liability of the said incorporators, stockholders, officers
or directors of the Company in respect to this bond is hereby
expressly waived and released by every holder hereof.
SCHEDULE B
TOWN OF ANDOVER
All of the following described rights, privileges and
easements situated in the Town of Andover, County of Tolland and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(1) Bigelow Brook Homes, Inc. October 4, 1994 61 1101
(2) Jodi M. Conway July 6, 1995 63 334
(3) Crossen Builders, Inc. October 17, 1995 64 21
TOWN OF AVON
All of the following described rights, privileges and
easements situated in the Town of Avon, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(4) Avon Park Properties June 24, 1994 298 24
(5) Avon Marketplace Limited August 9, 1994 299 787*
Partnership
(6) Orchard Farms Development, September 15, 1994 300 74
Inc.
(7) Felicia K. Castellani December 27, 1994 303 383
(8) Village Developers December 23, 1994 303 37
(9) Gorman Construction Co., April 11, 1995 306 275
Inc.
(10) Presidential Development July 10, 1995 309 47
Corporation
(11) First National June 23, 1995 310 19
Supermarkets, Inc.
(12) Avonridge, Incorporated June 26, 1995 309 622
(13) Sunset of Avon LLC October 11, 1995 312 103
(14) Presidential Development September 22, 1995 313 793
Corporation
(15) Andrew W. Mason Associates, October 16 1995 313 640
Inc.
(16) Avon Residential Properties, December 20, 1995 314 669
Inc.
(17) E G Development Corporation February 22, 1996 316 335
(18) Raymond H. Hanelius et al April 19, 1996 318 388
* Inter Alia - Simsbury
TOWN OF BARKHAMSTED
All of the following described rights, privileges and
easements situated in the Town of Barkhamsted, County of Litchfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(19) Irving A. Hart et al May 22, 1995 97 194
(20) Stanley Slater, Jr. et al May 9, 1995 97 229
TOWN OF BEACON FALLS
All of the following described rights, privileges and
easements situated in the Town of Beacon Falls, County of New Haven
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(21) Thomas A. Skiparis et al December 19, 1995 97 593
(22) Richard T. Jurzynski, January 5, 1996 97 908
managing member of Equity
Builders, L.L.C.
TOWN OF BERLIN
All of the following described rights, privileges and
easements situated in the Town of Berlin, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(23) William C. Kilpatrick December 8, 1994 367 350
(24) Richard Cotrona et al August 11, 1994 367 906
(25) Edward Zukowski et al April 19, 1995 370 861
(26) Farr Building Co., Inc. September 8, 1994 372 537
(27) John P. Mitchell et al June 29, 1989 295 921
(28) Rocky Hill Enterprises, Inc. November 15, 1995 376 986
TOWN OF BETHEL
All of the following described rights, privileges and
easements situated in the Town of Bethel, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(29) Marcelle M. Hall January 19, 1996 600 46
TOWN OF BETHLEHEM
All of the following described rights, privileges and
easements situated in the Town of Bethlehem, County of Litchfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(30) ABE Construction, Inc. July 6, 1995 171 84
(31) Terrence J. Ballou December 18, 1995 174 2
TOWN OF BLOOMFIELD
All of the following described rights, privileges and
easements situated in the Town of Bloomfield, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(32) Tolland Enterprises March 20, 1995 656 218
(33) Affiliated Health Systems of May 26, 1995 661 322*
Connecticut
(34) Gethsemane Missionary Baptist May 30, 1995 661 319
Church, Inc.
(35) Deer Meadow of Bloomfield March 24, 1992 552 296
Limited Partnership
(36) Culbro Land Resources, Inc. July 18, 1989 462 207
* Inter Alia - Hartford
TOWN OF BOLTON
All of the following described rights, privileges and
easements situated in the Town of Bolton, County of Tolland and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(37) Lawrence F. Fiano et al August 24, 1995 85 890
(38) The Aldrich Company, LLC September 15, 1995 86 11
et al
(39) Donald W. Fish et al September 12, 1994 84 5*
(40) Donald W. Fish et al November 9, 1995 86 439
Inter Alia - Glastonbury
TOWN OF BRANFORD
All of the following described rights, privileges and
easements situated in the Town of Branford, County of New Haven and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(41) Raymond J. Cappello April 7, 1995 586 446
(42) Edmund L. Pantani, Trustee August 10, 1995 593 282
(43) Property Development October 2, 1995 596 309
Unlimited, Inc.
(44) B. Pantani & Sons Builders, August 3, 1994 575 929
Inc.
(45) C.A.B.L.E. Development, October 26, 1987 442 1009
Incorporated
(46) J.J. Russo & Son March 25, 1993 546 816
Construction, Inc.
(47) Stony Creek Conservation August 27, 1993 556 77
Limited Partnership
(48) M & E Construction, Inc. November 22, 1993 561 412
(49) J.J. Russo & Son March 25, 1993 546 819
Construction, Inc.
(50) Concept Home Developers, September 23, 1992 533 426
Incorporated
(51) William Uresky et al June 7, 1993 553 917
(52) The Branford Partnership August 27, 1993 555 1055
(53) State of Connecticut February 23, 1995 603 633
TOWN OF BRIDGEWATER
All of the following described rights, privileges and
easements situated in the Town of Bridgewater, County of Litchfield
and State of Connecticut, more particularly described in the
following deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(54) Carl Eric Vikstrom et al June 19, 1995 42 760*
* Inter Alia - New Milford
TOWN OF BRISTOL
All of the following described rights, privileges and
easements situated in the Town of Bristol, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(55) Allen Dionne et al October 14, 1994 1141 329
(56) Bernard A. Martin et al January 24, 1995 1147 958
(57) B & N Partners January 24, 1995 1147 960
(58) Reiff Family Limited February 27, 1995 1151 345
Partnership
(59) Reiff Family Limited July 26, 1993 1096 256
Partnership
(60) Reiff Family Limited March 10, 1995 1152 681
Partnership
(61) Reiff Family Limited November 4, 1994 1153 947
Partnership
(62) Reiff Family Limited August 31, 1993 1109 355*
Partnership
(63) David T. MacDonald et al June 2, 1995 1156 780
(64) Bruce Development May 22, 1995 1156 778
Corporation, Inc.
(65) City of Bristol January 16, 1985 790 33
(66) Tilcon Minerals, Inc. May 2, 1985 811 23
(67) Reiff Family Limited December 12, 1995 1175 863
Partnership
* Inter Alia - Plymouth
TOWN OF BROOKFIELD
All of the following described rights, privileges and
easements situated in the Town of Brookfield, County of Fairfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(68) N. E. Development Corporation August 23, 1989 227 483
(69) Marvin M. Shiller November 9, 1989 229 70
TOWN OF BROOKLYN
All of the following described rights, privileges and
easements situated in the Town of Brooklyn, County of Windham and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(70) Guy LaHaie et al February 23, 1995 158 98
(71) Scott E. Mlyniec et al August 24, 1995 162 262
(72) Paul R. Lehto August 21, 1995 162 227
(73) Paul J. Harrington et al October 17, 1995 169 115
TOWN OF CANTERBURY
All of the following described rights, privileges and
easements situated in the Town of Canterbury, County of Windham and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(74) Gregory E. Engel et al July 12, 1994 100 2
(75) Henry F. Miller October 20, 1994 100 989
(76) Frederick C. Green et al March 11, 1996 103 367
TOWN OF CANTON
All of the following described rights, privileges and
easements situated in the Town of Canton, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(77) Elenor C. Smith July 26, 1994 202 223
(78) Frank J. Mairano June 27, 1994 202 182
Associates, Inc.
(79) Judith F. Mereschuk June 30, 1994 202 186
(80) Steven C. Stang et al June 12, 1995 207 209
(81) Michael A. Rembock June 14, 1995 206 475
TOWN OF CHAPLIN
All of the following described rights, privileges and
easements situated in the Town of Chaplin, County of Windham and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(82) Gustav A. Birkmanis et al September 20, 1994 58 643
TOWN OF CHESHIRE
All of the following described rights, privileges and
easements situated in the Town of Cheshire, County of New Haven and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(83) Brodach-Briarcliffe, Inc. July 20, 1994 1068 281
(84) Robert J. Greene September 27, 1994 1076 350
Construction, Inc.
(85) Dime Savings Bank of August 25, 1992 931 178
Wallingford et al
(86) Waller Development Corp. October 21, 1994 1084 234
(87) Dime Savings Bank of December 20, 1994 1087 228
Wallingford et al
(88) James A. Fazzone et al March 24, 1995 1097 112
(89) Carotenuto Excavating, L.L.C. July 26, 1995 1115 257
(90) The Advocate Community, Inc. August 2, 1995 1119 64*
(91) Brodach Bickerton LLC August 29, 1995 1122 247
(92) Industrial Avenue, L.L.C. July 15, 1995 1113 306
(93) J. Murray Development January 5, 1996 1141 78
Limited Partnership
(94) Surburban Builders, Inc. December 8, 1995 1141 56
(95) Stemer Development, LLC April 23, 1996 1159 91
* Inter Alia - Meriden
TOWN OF CHESTER
All of the following described rights, privileges and
easements situated in the Town of Chester, County of Middlesex and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(96) Terrence S. Mulcahey et al March 30, 1993 81 499
(97) Edward A. Martorelli et al November 22, 1993 83 674
(98) Raymond A. Manierre et al September 22, 1993 83 6
TOWN OF CLINTON
All of the following described rights, privileges and
easements situated in the Town of Clinton, County of Middlesex and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(99) Jeffrey A. Corrone et al August 7, 1995 240 114
(100) Elizabeth S. Young et al August 30, 1995 241 855
(101) Lione Enterprises October 5, 1994 234 493
(102) Thomas F. Smith October 4, 1994 234 194
(103) Park Partners Limited December 19, 1995 242 781
Partnership
(104) Park Partners Limited December 19, 1995 242 779
Partnership
(105) Richard W. Wilson et al December 11, 1995 242 715
(106) Rosenbaum & Associates June 28, 1993 223 781
(107) William T. Esposito July 12, 1993 224 335
TOWN OF COLCHESTER
All of the following described rights, privileges and
easements situated in the Town of Colchester, County of New London
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(108) Pearl Epstein May 8, 1995 381 226
(109) Peter S. Armando September 12, 1995 389 319
(110) Donald A. Demar December 9, 1994 373 261
(111) Flom Realty and November 3, 1994 371 300
Construction, Inc.
(112) Anthony P. Skut et al December 17, 1994 373 277
(113) Rodney J. Goldberg June 24, 1993 332 119
(114) Alex Getzoff et al June 16, 1993 333 125
(115) K.C. Starwood, LLC et al October 31, 1994 372 26
(116) Bruce Donald Grayson May 12, 1993 328 253
(117) Richard M. Martin et al September 1, 1994 366 354
(118) Frank G. Freeman et al January 9, 1994 357 186
(119) Anthony P. Skut February 8, 1994 351 338
(120) Stephen M. Fedus July 13, 1993 333 324
(121) Robert E. L. Johnson, Jr. August 3, 1993 335 130
et al
(122) Akjaj Corporation January 12, 1994 350 121
(123) Town of Colchester December 23, 1993 347 191
(124) Daniel J. Guire September 29, 1993 340 352
TOWN OF COLEBROOK
All of the following described rights, privileges and
easements situated in the Town of Colebrook, County of Litchfield
and State of Connecticut, more particularly described in the
following deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(125) Yitzchok Mitnick, Trustee July 17, 1995 58 57
et al
TOWN OF COLUMBIA
All of the following described rights, privileges and
easements situated in the Town of Columbia, County of Tolland and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(126) Heritage Associates July 13, 1995 106 82
TOWN OF COVENTRY
All of the following described rights, privileges and
easements situated in the Town of Coventry, County of Tolland and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(127) Paxton Development Group August 3, 1994 524 236
Limited Partnership
(128) R. Homes, Inc. August 8, 1994 526 237
(129) Clarence F. LaChapelle, Jr. November 13, 1990 430 037
et al
(130) Bradley J. Daar November 29, 1994 532 290
(131) Edward J. Mangine et al January 19, 1995 536 179
(132) John Van Epps April 7, 1995 538 71
(133) Country Way Development, May 24, 1995 540 202
Inc.
(134) John Olender Corporation November 6, 1995 551 90
TOWN OF CROMWELL
All of the following described rights, privileges and
easements situated in the Town of Cromwell, County of Middlesex and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(135) Michael Hintz March 14, 1994 555 189
(136) Bartram Realty Co., Inc. April 28, 1994 560 122
(137) Sebethe Associates May 20, 1993 523 72
(138) McDonald's Corporation October 13, 1993 540 150
TOWN OF DANBURY
All of the following described rights, privileges and
easements situated in the Town of Danbury, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(139) Pelham Products, Inc. April 3, 1989 918 1
(140) Donald A. Taylor, Jr., October 12, 1995 1130 684
Trustee
(141) Construction Consultants, January 11, 1996 1139 356
LLC
(142) Nelson G. Moore et al March 22, 1996 1144 697
(143) City of Danbury September 27, 1995 1130 706
(144) General Mills Restaurants, July 13, 1995 1130 709
Inc.
TOWN OF DARIEN
All of the following described rights, privileges and
easements situated in the Town of Darien, County of Fairfield and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(145) Frederick W. Byxbee, Trustee October 14, 1994 753 122
TOWN OF DEEP RIVER
All of the following described rights, privileges and
easements situated in the Town of Deep River, County of Middlesex
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(146) Shailer Farms LLC March 20, 1995 139 29
(147) Architect's Hill, LLC July 28, 1995 139 945
(148) John L. Mahoney et al October 18, 1995 141 132
(149) Gary William Mislick November 9, 1994 138 247
(150) Plattwood Industrial Park November 21, 1994 138 299
L.L.C.
(151) Ted Zito November 1, 1994 138 154
(152) Raymond Hayes et al August 25, 1994 137 634
(153) Richard A. Hashagen October 12, 1993 134 126
(154) Essex Savings Bank August 24, 1993 133 562
(155) T.A.F. Associates February 10, 1992 128 19
TOWN OF DURHAM
All of the following described rights, privileges and
easements situated in the Town of Durham, County of Middlesex and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(156) Henry Albert Berten et al August 9, 1994 143 372
(157) Richard A. Lintz et al February 2, 1995 145 374
(158) Richard M. Souza March 30, 1995 145 697
(159) Nicholas Jay Sunday et al April 10, 1995 145 775
(160) Roger B. Newton et al May 11, 1995 146 85
(161) Kelly Battista September 19, 1995 147 555
(162) John F. Defilippo et al January 18, 1995 144 1097
(163) Sattler Building Company, June 21, 1994 142 760
Inc.
(164) The Town of Durham June 18, 1993 137 585
(165) Marianne C. Corona et al October 4, 1994 143 996
(166) Waller Development Corp. July 19, 1993 138 895
(167) Boris Martinovic et al July 21 1993 138 900
(168) James H. Clementel June 16, 1994 142 836
(169) Cuomo Construction, Inc. October 5, 1994 144 242
(170) Cuomo Construction, Inc. October 26, 1994 144 243
(171) Frank C. Magnotta October 28, 1994 144 244
TOWN OF EASTFORD
All of the following described rights, privileges and
easements situated in the Town of Eastford, County of Windham and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(172) Estate of Herbert E. Green July 6, 1994 35 268
(173) Richard Stapp et al August 25, 1995 36 297
TOWN OF EAST GRANBY
All of the following described rights, privileges and
easements situated in the Town of East Granby, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(174) Kathleen M. Ouellette et al July 12, 1994 104 608
(175) Raymond J. Carnelli November 13, 1995 108 362
TOWN OF EAST HADDAM
All of the following described rights, privileges and
easements situated in the Town of East Haddam, County of Middlesex
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(176) Donald J. Angersola May 10, 1994 361 93
(177) Theodore Peck Associates December 23, 1994 370 158
(178) Ralph Gometz February 22, 1995 372 143
(179) Ronald W. Quinn et al May 16, 1995 375 92
(180) Zito Builders, Inc. May 3, 1995 375 36
(181) Zito Builders, Inc. May 3, 1995 375 34
(182) Frank Schwarz et al July 3, 1995 379 42
(183) Ralph Gometz August 29, 1995 381 62
(184) William Wayne Rand et al August 30, 1995 381 64
(185) Laurel Woods Development May 13, 1993 341 154
Corp.
(186) Richard M. Lagace et al September 2, 1992 327 332
(187) Sally R. Hungerford September 25, 1992 329 98
(188) Ted Zito March 19, 1993 339 267
(189) Robert Casner September 12, 1994 366 82
(190) Fernand A. Tremblay September 20, 1994 366 158
(191) Myron R. Bernstein November 3, 1994 368 77
(192) Gary J. Sikorski et al November 6, 1995 384 187
TOWN OF EAST HAMPTON
All of the following described rights, privileges and
easements situated in the Town of East Hampton, County of Middlesex
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(193) Rand Construction, Inc. April 12, 1995 274 37
(194) Michael R. Gosselin et al January 19, 1995 273 276
(195) William J. Moran, III July 24, 1995 275 919
(196) Earl H. Wicklund April 25, 1995 274 428
(197) Farmers & Mechanics Bank December 21, 1994 272 693
(198) Richard M. Aroian et al October 6, 1994 271 86
(199) Donald A. Gaudreau et al September 14, 1994 270 639
(200) Antonio Rossini et al May 17, 1993 258 910
(201) Thomas P. Cadden November 8, 1995 278 983
(202) Austin J. McGuigan October 23, 1995 278 985
(203) John Dart et al June 30, 1993 260 568
(204) Estate of Frederick C. July 2, 1993 260 566
Hallberg et al
TOWN OF EAST HARTFORD
All of the following described rights, privileges and
easements situated in the Town of East Hartford, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(205) Commerce Center Association, January 6, 1994 1522 150
Inc.
(206) Commerce Center One Limited January 6, 1994 1522 152
Partnership
(207) Town of East Hartford November 29, 1993 1522 154
(208) Albert P. Handel, Jr. et al April 28, 1992 1386 81
(209) East Hartford Community October 6, 1995 1588 210
Health Care, Inc.
(210) John Hancock Mutual Life December 22, 1994 1590 34
Insurance Company
(211) Apostol Laskee, Trustee May 11, 1995 1568 188
(212) Friendly Ice Cream May 12, 1995 1670 141
Corporation
TOWN OF EAST LYME
All of the following described rights, privileges and
easements situated in the Town of East Lyme, County of New London
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(213) T.M.K. Associates June 1, 1992 377 363
(214) Envirotest Systems Corp. February 15, 1995 387 607
(215) Claire M. Roy et al October 17, 1985 216 1117
(216) Michael Nazarko et al October 11, 1985 216 1119
(217) Kirk J. Nassetta et al October 10, 1985 216 1121
(218) Barry Brindle et al October 10, 1985 216 1123
(219) Shirley B. Love et al October 10, 1985 216 1125
(220) Richard D. Love et al October 10, 1985 216 1127
(221) E. J. Arsenault, Inc. September 2, 1975 159 650
(222) T.M.K. Associates May 23, 1995 391 296
(223) Muriel A. Soluri May 6, 1993 352 22
(224) John Bialowans, Jr. et al April 21, 1993 350 527
(225) Laurel Woods Development August 26, 1993 358 263
Corp.
(226) James M. Capodiece et al February 1, 1993 346 483
(227) Kenneth D. Silvestri March 18, 1994 372 355
TOWN OF EAST WINDSOR
All of the following described rights, privileges and
easements situated in the Town of East Windsor, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(228) HLM Incorporated June 13, 1994 180 409
(229) Oakwood Developers, LLC June 30, 1995 184 885
(230) Carl Nelson Construction, September 20, 1995 185 827
Inc. et al
(231) Adelbert L. Hallisey May 2, 1996 189 530
TOWN OF ELLINGTON
All of the following described rights, privileges and
easements situated in the Town of Ellington, County of Tolland and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(232) Michael D. Varney et al October 4, 1994 212 438
(233) Thomas M. Orszulak et al October 21, 1994 212 680
(234) Kenneth J. Boynton et al January 20, 1995 214 552
(235) Jean L. Burns et al January 27, 1995 214 588
(236) Ronald Petrucelli, Sr. March 7, 1995 215 62
(237) Savage Builders, Inc. April 17, 1995 215 786
(238) Dean Hyde April 15, 1995 215 782
(239) Sylvain Y. Fauteux et al September 25, 1995 219 61
(240) T&M Building Co., Inc. July 14, 1995 218 676
(241) Scott L. Luginbuhl et al July 11, 1995 217 881
&
July 26, 1995
(242) Stephen D. Williams General September 29, 1995 219 356
Construction Company
(243) Abbottville, Inc. January 26, 1996 221 871
(244) Crystal Ball L.L.C. February 16, 1996 222 401
TOWN OF ENFIELD
All of the following described rights, privileges and
easements situated in the Town of Enfield, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(245) Enfield Shopping Associates May 26, 1994 889 192
(246) Leaska Construction Co. October 10, 1994 892 14
(247) Richard W. Leno II et al May 25, 1995 924 345
(248) GFG Realty LLC July 14, 1995 932 145
(249) Frances A. Antonacci July 14, 1995 932 147
(250) Christine A. Alaimo, Trustee September 25, 1995 944 255
(251) 55 Hazard Avenue Associates January 17, 1996 963 93
LLC
(252) The H.I.O. Trust, Inc., January 3, 1996 964 99
Trustee
TOWN OF ESSEX
All of the following described rights, privileges and
easements situated in the Town of Essex, County of Middlesex and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(253) Opportunity One April 13, 1995 154 587
(254) Opportunity One January 16, 1996 158 741
(255) Pamela J. Zagurski et al November 22, 1993 154 595
(256) Bushy Hill Real Estate, Inc. February 6, 1992 136 346
(257) Woodwin Development January 31 1992 136 348
Corporation
(258) Merz, Inc. February 28, 1996 159 458
TOWN OF FARMINGTON
All of the following described rights, privileges and
easements situated in the Town of Farmington, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(259) Albert Francini August 26, 1994 488 416
(260) ReJean Carrier August 16, 1994 487 456*
(261) Richard S. Kucia et al September 16, 1994 489 705
(262) Cornerstone Village L.L.C. October 18, 1994 490 744
(263) J.F.C. Endeavors, Inc. January 3, 1995 493 921
(264) Creative Communities Realty, February 24, 1995 495 780
Inc.
(265) F Club, L.L.C. March 27, 1995 497 158
(266) George J. Marcello et al March 7, 1995 496 264
(267) Centennial Inns, Inc. March 26, 1990 409 980
(268) George J. Marcello et al December 17, 1991 433 660
(269) Paul DiTommaso et al September 15, 1995 504 813
(270) Andre J. Gauvin et al March 13, 1996 513 239
(271) Calvin S. Margison et al March 8, 1996 513 318
* Inter Alia - Plainville
TOWN OF FRANKLIN
All of the following described rights, privileges and
easements situated in the Town of Franklin, County of New London
and State of Connecticut, more particularly described in the
following deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(272) Gail L. Whitney June 14, 1995 49 608
TOWN OF GLASTONBURY
All of the following described rights, privileges and
easements situated in the Town of Glastonbury, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(273) Co-Op Initiatives, Inc. March 23, 1994 868 235
(274) Frank S. Raffa et al July 8, 1986 324 739
(275) The Aloha Hall Buck July 24, 1995 953 327
Family Trust
(276) Tyler Realty Corp. April 28, 1995 937 203
(277) Brookview Development April 28, 1995 937 207
Company, Inc.
(278) James F. Ripper, Trustee April 26, 1995 937 211
(279) Anna Accaputo August 11, 1995 955 260
(280) Town of Glastonbury October 6, 1995 966 258
(281) Concept Builders of October 10, 1995 966 260
Glastonbury, Inc.
(282) David F. Sherwood, October 10, 1995 966 310
Trustee et al
(283) Scott William Dufford June 15, 1994 879 223
(284) Peter Jay Alter, Trustee September 26, 1995 966 196
(285) Leonard Jacobs, Trustee November 16, 1994 910 107
(286) Repoli Builders, Inc. November 2, 1994 909 137
(287) Sugar Hill Builders, Inc. May 13, 1993 773 266
(288) Creative Communities April 19, 1993 763 329
Realty, Inc.
(289) Edward J. Kamis, Jr. et al October 27, 1993 819 240
(290) Jon A. Casella et al August 26, 1993 805 242
(291) Louis P. Longo et al July 29, 1993 801 273
(292) Kingswood Estates, Inc. August 5, 1994 899 238
(293) Kingswood Estates, Inc. August 5, 1994 899 240
(294) Donald W. Fish et al October 20, 1994 906 69*
(295) Jacques and Son Land December 29, 1995 982 117
Development, Inc.
(296) Judith B. Landers March 22, 1996 998 14
* Inter Alia - Bolton
TOWN OF GRANBY
All of the following described rights, privileges and
easements situated in the Town of Granby, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(297) Mannarino Builders, Inc. August 18, 1994 198 409
(298) First Bank of West Hartford August 22, 1994 198 411
(299) RAPSPAR Enterprises, Ltd. October 28, 1994 199 759
(300) Michael B. Guarco October 31, 1995 205 574
(301) Ice Pond Association, Inc. February 14, 1996 207 363
TOWN OF GREENWICH
All of the following described rights, privileges and
easements situated in the Town of Greenwich, County of Fairfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(302) LRPD Partners July 12, 1989 1955 130
(303) Christine S. Coats June 26, 1995 2683 223
(304) Larry Feinberg et al June 30, 1995 2683 225
(305) Estate of Horst Von Hennig May 31, 1995 2661 231
(306) Estate of Horst Von Henning May 27, 1995 2661 232
(307) Estate of Horst Von Hennig May 26, 1995 2661 233
(308) Diane Orlando August 11, 1995 2689 36
(309) Rose A. Rinaldi November 8, 1995 2731 308
(310) Suzanne L. Kremheller et al December 5, 1995 2737 340
TOWN OF GRISWOLD
All of the following described rights, privileges and
easements situated in the Town of Griswold, County of New London
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(311) Marcel L. Dagenais et al July 27, 1994 160 397
(312) Charles L. Marks, Trustee June 10, 1994 160 400
(313) Joseph J. Siner December 6, 1994 162 451
(314) Harry A. Hansen, Jr. May 2, 1994 158 181
(315) Theodore Gasparino et al January 17, 1995 163 413
(316) Pine Trace, Inc. October 4, 1995 167 745
(317) Michael A. Roman September 18, 1995 167 531
(318) Gail L. Whitney et al October 28, 1994 161 905
(319) Stephen F. Burr et al May 16, 1995 168 5
TOWN OF GROTON
All of the following described rights, privileges and
easements situated in the Town of Groton, County of New London and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(320) Stanton Farms L.L.C. November 3, 1994 598 319
(321) Braebourne Estates LLC April 10, 1995 607 178
(322) Watrous Properties Limited December 7, 1992 558 709
Partnership
(323) Leeward Realty Holding Corp. August 20, 1993 573 720
(324) Leeward Realty Holding Corp. August 20, 1993 573 718
(325) David K. Winchester October 27, 1992 556 960
(326) Deerfield-At-Mystic Limited February 9, 1996 619 939
Partnership
TOWN OF GUILFORD
All of the following described rights, privileges and
easements situated in the Town of Guilford, County of New Haven and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(327) Page Realty Corporation August 19, 1994 441 644
(328) RCK Builders, Inc. May 13, 1994 437 124
(329) E. Scott Conover et al August 9, 1994 441 304
(330) A. G. Russo Construction, March 11, 1994 434 245
Inc.
(331) Betty J. Morton March 25, 1995 446 812
(332) Laurel Hollow Associates October 18, 1994 446 141
of Guilford, Inc.
(333) EDON, LLC August 11, 1995 451 259
(334) Peter J. Moleske et al July 28, 1995 450 771
(335) William G. Lillis et al April 28, 1995 447 640
(336) William S. Bailey, Sr. et al April 25, 1995 447 255
(337) M & E Construction, Inc. August 3, 1995 450 1064
(338) Joann N. McMurray et al April 10, 1995 447 108
(339) Angelo Moscato June 9, 1995 450 125
(340) Allen B. Jacobs et al September 7, 1995 452 420
(341) Elizabeth L. Orcutt, August 18, 1995 453 626
Executrix et al
(342) Kenneth Gamerman et al June 27, 1994 438 801
(343) Archie Bailey et al August 18, 1995 451 591
(344) William L. Yule et al December 26, 1994 444 761
(345) Jeffrey A. Hocking September 29, 1994 442 50
(346) Christopher Spencer Foote September 2, 1994 441 473
(347) RCK Builders, Inc. September 28, 1994 442 77
(348) Gaetano Troiano et al December 7, 1995 455 864
(349) Brian S. Ferris et al December 29, 1995 456 453
(350) Richard B. McCurdy et al March 24, 1994 435 204
(351) Fox Hill Association, Inc. June 7, 1993 425 458
(352) RCK Builders, Inc. May 20, 1993 419 276
(353) Jeffey Hocking et al January 4, 1993 412 834
(354) RCK Builders, Inc. August 14, 1992 405 771
(355) Ronald W. Ferris et al March 2, 1993 415 969
(356) Angelo Moscato et al March 23, 1993 415 1014
(357) James F. Kohn et al March 23, 1993 416 495
(358) Laurel Hollow Associates March 31, 1993 420 33
of Guilford, Inc.
(359) Estate of Ruby M. Orcutt January 14, 1994 435 834
et al
(360) Neighborhood Builders, Inc. June 11, 1993 420 1080
(361) Christopher McManus December 29, 1992 412 847
Building, Inc.
(362) Kevin J. Kenny July 27, 1993 423 1071
(363) RCK Builders, Inc. January 29, 1993 413 1065
(364) Long Hill Farms, Ltd. et al July 7, 1994 438 1053
(365) John J. Johnson et al January 2, 1995 457 986
(366) Ferris Builders, Inc. December 29, 1995 457 397
(367) Dudley A. Harrison et al March 13, 1996 458 659
TOWN OF HADDAM
All of the following described rights, privileges and
easements situated in the Town of Haddam, County of Middlesex and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(368) Sy P. Soobitsky et al March 28, 1995 201 574
(369) Alexander Belau et al April 22, 1995 201 957
(370) Donald J. Guire January 24, 1995 200 871
(371) Lorraine J. Bouffard et al July 24, 1994 199 369
(372) William T. Supple et al July 24, 1994 199 361
(373) The Estate of Barbara M. Lee July 24, 1994 199 363
(374) Charles E. Piper August 25, 1994 199 365
(375) Susan Lilley et al July 24, 1994 199 367
(376) Maria F. Bellemare et al July 24, 1994 199 371
(377) Vincent D'Acri July 3, 1994 198 645
(378) E. William Weeks et al September 16, 1993 193 949
(379) Walkley Heights Associates November 18, 1993 195 211
(380) Charles H. Upham et al November 22, 1993 195 213
(381) Zupan Building Contractors, August 29, 1994 201 156
Inc.
(382) John J. Oktavec et al December 26, 1995 205 567
TOWN OF HARTFORD
All of the following described rights, privileges and
easements situated in the Town of Hartford, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(383) Capitol Region Education August 11, 1994 3506 267
Council
(384) Stacy Realty Co., Inc. August 4, 1994 3506 109
(385) North Hartford Development November 1, 1993 3530 334
Corporation et al
(386) Affiliated Health Systems of May 26, 1995 3592 34
Connecticut, Inc.
(387) Gerald N. Sciarra February 27, 1989 2911 7
(388) State of Connecticut August 8, 1995 3627 92
(389) State of Connecticut September 8, 1995 3631 12
(390) Heublein, Inc. March 11, 1996 3676 164*
* Inter Alia - West Hartford
TOWN OF HARTLAND
All of the following described rights, privileges and
easements situated in the Town of Hartland, County of Hartford and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(391) Designing Eden, LLC August 31, 1995 59 200
TOWN OF HEBRON
All of the following described rights, privileges and
easements situated in the Town of Hebron, County of Tolland and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(392) David P. Caron et al July 27, 1994 167 610
(393) Rossetto Builders, Inc. January 23, 1995 169 1041
et al
(394) Mountain View Estates April 19, 1995 170 915
(395) Sentinal Woods Associates April 19, 1995 170 980
LLC
(396) Tall Oaks Associates et al April 25, 1992 152 634
(397) Gentry Associates August 24, 1992 153 650
(398) Peter Patrocinio June 6, 1994 166 482
(399) R.A.M. Associates, Inc. November 28, 1994 169 137
(400) Walter C. Hentschel et al September 13, 1994 168 72
(401) Harry J. Lavoie, Jr. et al June 29, 1994 167 29
&
June 30, 1994
(402) McCorrison-D.W. Fish Realty, September 24, 1993 162 48
Inc.
TOWN OF KENT
All of the following described rights, privileges and
easements situated in the Town of Kent, County of Litchfield and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(403) Manhattan Mortgage April 8, 1996 109 784
Corporation
TOWN OF KILLINGLY
All of the following described rights, privileges and
easements situated in the Town of Killingly, County of Windham and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(404) R.F. Daddario & Sons, Inc. August 24, 1994 614 21
(405) Darlene A. Gallerani September 8, 1994 614 23
(406) Jack A. Gallup et al August 20, 1994 614 25
(407) Brenda L. House August 20, 1994 614 27
(408) Caroline Howard August 20, 1994 614 29
(409) Richard E. Mulvey, Jr. et al October 17, 1994 615 237
(410) Stephen T. DeVillez et al August 25, 1995 639 55
(411) R. F. Daddario Builders, September 7, 1995 641 155
L.L.C.
TOWN OF KILLINGWORTH
All of the following described rights, privileges and
easements situated in the Town of Killingworth, County of Middlesex
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(412) Sally W. Echlin August 28, 1995 134 512
(413) Bantel Development June 12, 1995 133 370
Corporation
(414) Raymond Papandrea December 23, 1994 131 701
(415) Steven W. Parsons June 21, 1993 123 515
(416) Ronald G. Adams, II et al March 26, 1993 122 189
(417) Cynthia J. Falvey et al April 5, 1993 122 205
(418) Christine Mary Geyer January 21, 1993 121 254
(419) LaFata Land Development March 9, 1992 115 687
Corp.
TOWN OF LEBANON
All of the following described rights, privileges and
easements situated in the Town of Lebanon, County of New London and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(420) Christopher Jordan November 29, 1994 160 825
TOWN OF LEDYARD
All of the following described rights, privileges and
easements situated in the Town of Ledyard, County of New London and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(421) Walter A. Dziengiel et al May 16, 1994 242 631
(422) David R. Santacroce et al March 17, 1995 249 497
(423) Joanne D. Spruance et al June 15, 1995 251 339
(424) Stan Steinberg, Trustee of April 11, 1995 250 73
ITC Investments, Inc. Profit
Sharing Trust
(425) Marie E. Burton May 11, 1995 250 845
(426) Robert S. Iliff, Jr. et al May 14, 1993 229 897
(427) Gales Ferry Associates et al June 28, 1993 231 339
(428) Lorraine M. Burton et al November 15, 1990 212 654
(429) Alan L. Burton et al November 15, 1990 212 656
TOWN OF LYME
All of the following described rights, privileges and
easements situated in the Town of Lyme, County of New London and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(430) The State Street Mortgage June 24, 1994 98 161
Company
(431) James O'Connell June 20, 1994 98 166
(432) Essex Savings Bank June 17, 1993 94 943
(433) Wilt Built Homes, Inc. April 19, 1993 94 691
TOWN OF MADISON
All of the following described rights, privileges and
easements situated in the Town of Madison, County of New Haven and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(434) Strathmore Farms Development April 4, 1994 609 206
Corporation
(435) Jean M. Thompson February 10, 1994 606 139
(436) Peter Smith Building Company May 24, 1995 659 302
(437) Richard A. Gentile August 24, 1995 671 23
(438) Crossroads Associates, LLC September 12, 1995 671 330
(439) Indigo Woods, L.L.C. October 20, 1995 677 202
(440) Robert H. Hausman et al January 24, 1995 646 242
(441) Coastline Construction Corp. October 21, 1994 640 177
(442) Nordic Builders Ltd. November 2, 1994 637 154
(443) George P. Koch, Jr. et al October 18, 1994 635 309
(444) Venuti Associates November 2, 1994 638 258
(445) Joseph S. Milano November 11, 1994 639 14
(446) Paul W. Chittenden September 30, 1994 635 230
(447) Suburban Builders, Inc. November 8, 1995 680 301
(448) Donn Vernon Dobson et al September 14, 1994 632 147
(449) Robert W. Scott et al April 28, 1993 554 194
(450) Frederick J. Kelly June 8, 1993 559 187
(451) Diane S. Padelli et al August 23, 1993 573 114
(452) PVA Limited Partnership June 9, 1994 620 135
(453) Fairfax Homes, Inc. April 23, 1993 551 37
(454) The Orchard of Madison July 21, 1994 626 278
Limited Partnership
TOWN OF MANCHESTER
All of the following described rights, privileges and
easements situated in the Town of Manchester, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(455) Adrian Realty Trust July 27, 1995 1768 115
(456) Sielev Associates July 31, 1995 1768 117
(457) Michael Bugnacki June 8, 1995 1759 17
(458) Richard F. Dukett et al June 8, 1989 1335 159
(459) Marshall C. Taylor June 22, 1989 1335 161
(460) Manchester Gardens May 31, 1991 1454 170
Condominium Association, Inc.
(461) SBM, Ltd. October 25, 1995 1784 85
TOWN OF MANSFIELD
All of the following described rights, privileges and
easements situated in the Town of Mansfield, County of Tolland and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(462) Beaudoin Construction Co., November 5, 1993 351 445
Inc.
(463) Vinton E. White et al September 19, 1994 335 209
(464) Roger E. Perfetto September 1, 1995 366 137
TOWN OF MARLBOROUGH
All of the following described rights, privileges and
easements situated in the Town of Marlborough, County of Hartford
and State of Connecticut, more particularly described in the
following deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(465) James R. Celio December 2, 1994 109 492
TOWN OF MERIDEN
All of the following described rights, privileges and
easements situated in the Town of Meriden, County of New Haven and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(466) The Advocate Community, Inc. August 2, 1995 2120 59*
(467) St. Mary's Roman Catholic October 12, 1993 1974 119
Church Corporation
(468) The Miller Company September 25, 1995 2134 63
(469) Q.V. Limited Partnership January 8, 1993 1914 10
* Inter Alia - Cheshire
TOWN OF MIDDLEBURY
All of the following described rights, privileges and
easements situated in the Town of Middlebury, County of New Haven
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(470) Carl Griffith August 10, 1977 80 395
(471) Raymond A. Caruso October 12, 1995 142 179
(472) Mark K. Zielke October 16, 1995 143 423
(473) Thomas M. Preston et al February 28, 1996 144 599
TOWN OF MIDDLEFIELD
All of the following described rights, privileges and
easements situated in the Town of Middlefield, County of Middlesex
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(474) Howard L. Carlson et al May 11, 1994 84 357
(475) David B. Yager et al November 5, 1994 85 988
(476) Marguerite Dicostanzo July 2, 1993 81 220
(477) Chestnut Hill Corporation August 31, 1993 81 907
(478) Cheryl Ann Pizzo November 30, 1995 91 109
(479) Town of Middlefield April 18, 1996 92 176
TOWN OF MIDDLETOWN
All of the following described rights, privileges and
easements situated in the Town of Middletown, County of Middlesex
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(480) Westridge Association, Inc. July 18, 1995 1075 128
(481) The Bysiewicz Corporation January 30, 1995 1071 265
(482) John Greco June 15, 1994 1047 229
(483) Lisa Passanesi June 19, 1995 1074 313
(484) Tuttle Road Associates November 18, 1994 1059 336
(485) John S. Ott et al June 22, 1993 1014 424
(486) The Bysiewicz Corporation June 14, 1993 1013 593
(487) Richard M. Lagace et al October 7, 1994 1056 43
(488) B & P Development October 8, 1993 1024 635
(489) Sebastian C. Mazzotta November 12, 1993 1028 27
(490) Miles Homes, Inc. October 25, 1995 1082 579
(491) Yvon Beaudoin Builder, Inc. October 20 1995 1082 659
TOWN OF MONROE
All of the following described rights, privileges and
easements situated in the Town of Monroe, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(492) Home Building Construction, September 13, 1995 677 141
Company, Inc.
(493) MGM Associates March 1, 1996 694 65
TOWN OF MONTVILLE
All of the following described rights, privileges and
easements situated in the Town of Montville, County of New London
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(494) Leo J. Archambault et al March 23, 1994 267 461
(495) Roger L. Phillips et al April 7, 1994 266 791
(496) Robert Daly June 6, 1986 175 281
(497) Steven J. Coit et al July 30, 1994 271 759
(498) Brian P. McNamara et al December 21, 1995 284 395
(499) Alejo F. Ortega et al December 23, 1992 250 52
(500) Albert H. Hary et al May 2, 1994 267 631
(501) F and T Industries, Inc. July 1, 1993 256 635
(502) J & S Realty Group, Inc. January 23, 1992 239 893
(503) Robert J. Day January 6, 1995 274 823
TOWN OF NAUGATUCK
All of the following described rights, privileges and
easements situated in the Town of Naugatuck, County of New Haven
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(504) Bridge Shopping Center July 13, 1995 416 84
Limited Liability Company
(505) James P. Warren, Jr. May 15, 1995 414 231
(506) City Hill Associates, Inc. June 19, 1995 413 820
(507) Joan M. Corsino et al February 5, 1996 424 309
(508) City Hill Associates, Inc. January 25, 1996 424 243
(509) Joan M. Corsino et al March 8, 1996 426 576
TOWN OF NEW BRITAIN
All of the following described rights, privileges and
easements situated in the Town of New Britain, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(510) The City of New Britain March 21, 1995 1197 608
(511) Coppermine Estates, Inc. May 23, 1995 1201 122
(512) Tomasso Brothers, Inc. July 12, 1995 1202 320
(513) New Britain General Hospital October 12, 1995 1209 230
TOWN OF NEW CANAAN
All of the following described rights, privileges and
easements situated in the Town of New Canaan, County of Fairfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(514) Stately Homes, LLC September 27, 1995 445 444
(515) Building and Land January 31, 1996 450 734
Technology Corp.
TOWN OF NEW FAIRFIELD
All of the following described rights, privileges and
easements situated in the Town of New Fairfield, County of
Fairfield and State of Connecticut, more particularly described in
the following deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(516) Mangold Investment August 31, 1995 254 753
Partners I
TOWN OF NEW HARTFORD
All of the following described rights, privileges and
easements situated in the Town of New Hartford, County of
Litchfield and State of Connecticut, more particularly described in
the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(517) Monument Realty, Inc. November 17, 1995 163 125
(518) Gerald E. Poley et al November 27, 1995 164 83
TOWN OF NEW LONDON
All of the following described rights, privileges and
easements situated in the Town of New London, County of New London
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(519) Louis A. Gencarelli, Sr. September 5, 1989 761 320
(520) Classic Modular Homes, Inc. September 25, 1989 761 317
TOWN OF NEW MILFORD
All of the following described rights, privileges and
easements situated in the Town of New Milford, County of Litchfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(521) Craftsmen Land Development June 24, 1987 374 48
Company, Inc.
(522) Carl Eric Vikstrom et al June 19, 1995 518 60*
(523) Karl J. Kusen et al July 6, 1995 518 52
(524) Wayden Builders, Inc. June 13, 1995 516 842
(525) Alan J. Graham March 3, 1995 510 982
(526) Crossbrook Developers, LLC October 6, 1995 524 522
(527) Jane Gregory et al October 13, 1995 524 694
(528) D & D Lillis Developers, LLC October 6, 1995 525 750
(529) Fountain Motel Pension Plan October 20, 1995 525 147
(530) Robert J. Guendelsberger July 11, 1989 410 519
(531) Jane M. Rothe et al April 13, 1995 528 308
(532) G. C. Foundations, Inc. November 28, 1995 528 310
(533) Park Lane-Crossbrook November 14, 1995 528 472
Associates, LLC et al
(534) Florida Hill Road February 16, 1996 531 1
Corporation et al
(535) Rose-Wein, L.L.C. March 8, 1996 532 675
* Inter Alia - Bridgewater
TOWN OF NEWINGTON
All of the following described rights, privileges and
easements situated in the Town of Newington, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(536) Roswell Associates, Inc. November 3, 1994 1009 199
(537) Webster Hills LLC September 21, 1995 1048 183
TOWN OF NEWTON
All of the following described rights, privileges and
easements situated in the Town of Newton, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(538) M & E Land Group August 17, 1995 517 852
(539) Bennetts Farm Associates September 5, 1995 518 743
(540) Walnut Tree Developers, Inc. September 4, 1995 520 422
(541) Loan Oak Development, Inc. October 10, 1995 520 601
(542) Terhaar Builders, L.L.C. September 7, 1995 519 498
(543) Danziger Development, Inc. November 17, 1995 522 859
(544) H. Tom Parsons November 16, 1995 522 636
(545) Loan Oak Development, Inc. December 1, 1995 523 258
(546) High Meadow Farm Associates March 4, 1996 530 199
(547) M & E Land Group January 2, 1996 525 558
(548) Constance Wong et al December 28, 1995 525 549
TOWN OF NORTH STONINGTON
All of the following described rights, privileges and
easements situated in the Town of North Stonington, County of New
London and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(549) Mary McCabe et al September 27, 1994 103 599
(550) Gray Lawn, Corp. September 14, 1990 84 956
(551) Tracey D. Duell August 9, 1994 102 851
(552) B & D Associates June 14, 1994 102 198
(553) Wm. Duer Corp. August 16, 1995 107 46
(554) Lois S. Tefft et al September 21, 1994 103 284
(555) Development Associates, Inc. April 2, 1993 96 172
TOWN OF NORWALK
All of the following described rights, privileges and
easements situated in the Town of Norwalk, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(556) William S. Donnelly et al April 6, 1995 3060 97
&
April 12, 1995
(557) Getner Farms Associates, October 24, 1995 3137 121
Inc.
(558) Tartaglia Limited September 29, 1995 3137 11
Partnership
TOWN OF OLD LYME
All of the following described rights, privileges and
easements situated in the Town of Old Lyme, County of New London
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(559) Michael E. Patterson et al August 2, 1994 98 504
(560) Edmund H. Wolcott et al August 30, 1995 227 373
(561) John E. Pfeiffer et al May 22, 1995 225 875
(562) Andrew Pfeiffer May 22, 1995 225 877
(563) Jean Adair McCulloch et al May 22, 1995 225 879
(564) Kenneth G. Boyer et al December 9, 1994 223 866
(565) Beaver Brook Associates March 21, 1990 190 107
(566) John F. Coyne September 4, 1989 193 620
(567) Roberta Y. Davis September 4, 1989 193 618
(568) Herbert J. Gorneault September 4, 1989 193 622
(569) Jeffrey W. Navin September 4, 1989 193 616
(570) John O'Reilly September 4, 1989 193 625
(571) David W. Lane et al December 15, 1994 223 616
(572) Peter A. Lapolla et al August 24, 1994 222 100
(573) Laurel Heights II Limited December 28, 1994 223 974
Partnership
(574) James J. McQuade et al May 13, 1993 212 528
(575) Stratton N. McKillop April 30, 1993 212 530
(576) David W. Dangremond et al April 30, 1996 231 547
TOWN OF OLD SAYBROOK
All of the following described rights, privileges and
easements situated in the Town of Old Saybrook, County of Middlesex
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(577) Blue Point, Inc. February 7, 1995 323 596
(578) Dennis P. Breslin October 25, 1995 330 390
(579) William H. Hull et al August 10, 1993 309 761
(580) Blue Point, Inc. et al November 17, 1995 331 941
(581) Lookout Hill Development April 19, 1994 317 292
Corporation
TOWN OF OXFORD
All of the following described rights, privileges and
easements situated in the Town of Oxford, County of New Haven and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(582) Randy D. Crump May 31, 1978 90 501
(583) Randy D. Crump May 31, 1978 90 504
(584) Towantic Associates, L.L.C. August 4, 1995 183 347
(585) Golden Engineering, Inc. March 27, 1996 187 652
et al
(586) Gary William Hylinski et al April 2, 1996 187 747
TOWN OF PLAINFIELD
All of the following described rights, privileges and
easements situated in the Town of Plainfield, County of Windham and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(587) Charles W. Corson, Jr. et al November 10, 1994 225 341
(588) Dow Road Associates, Inc. June 19, 1995 228 163
(589) Andrew W. Devolve et al November 20, 1995 231 698
(590) Alfred Larry Daigneault January 24, 1996 232 731
TOWN OF PLAINVILLE
All of the following described rights, privileges and
easements situated in the Town of Plainville, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(591) ReJean Carrier et al August 16, 1994 313 1178*
(592) Tomlinson Associates October 2, 1986 240 777
Limited Partnership
(593) Manafort Family Limited January 6, 1995 317 480
Partnership
(594) Richard D. Jones, Trustee December 29, 1994 317 482
(595) Ledge Hill, Inc. March 13, 1995 318 643
* Inter Alia - Farmington
TOWN OF PLYMOUTH
All of the following described rights, privileges and
easements situated in the Town of Plymouth, County of Litchfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(596) Fall Mountain Associates August 19, 1993 248 702*
(597) Norman Martin May 16, 1995 251 691
(598) Timothy Bobroske Company, August 29, 1995 252 612
Incorporated
(599) Cyril R. Pelletier et al August 31, 1995 252 593
(600) Daniel F. LaVallee et al August 29, 1994 246 1026
(601) Daniel F. LaVallee et al September 30, 1993 253 332
(602) Daniel F. LaVallee et al September 30, 1993 253 336
(603) Michael J. Dilger October 14, 1993 253 338
* Inter Alia - Bristol
TOWN OF POMFRET
All of the following described rights, privileges and
easements situated in the Town of Pomfret, County of Windham and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(604) Carol B. Rogerson September 30, 1994 117 190
(605) John L. Hartshorn et al May 12, 1995 123 7
TOWN OF PORTLAND
All of the following described rights, privileges and
easements situated in the Town of Portland, County of Middlesex and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(606) Theodore S. Miazga et al December 8, 1993 302 265
TOWN OF PORTLAND
All of the following described pieces or parcels of land
with any improvements thereon situated in the Town of Portland,
County of Middlesex and State of Connecticut, more particularly
described in the following deed, viz:
(607) A certain piece or parcel of land shown as "Parcel
B," lying northerly of and adjoining the intersection of Middle
Haddam Road and Breezy Corners Road, the southwesterly corner of
which is located about 290 feet northeasterly of said intersection
in the Town of Portland, County of Middlesex, State of Connecticut
and more particularly described in the deed of Kevin T. Nixon,
Trustee to the Company dated November 27, 1995 and recorded in
Volume 302, Page 147 of the Portland Land Records, to which deed
reference is hereby made.
TOWN OF PRESTON
All of the following described rights, privileges and
easements situated in the Town of Preston, County of New London and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(608) Nancy A. Cartell May 9, 1994 105 566
(609) Roger L. Hatch March 30, 1994 105 568
(610) Bruce Morris October 18, 1995 109 275
(611) Randolph F. Stolz et al September 29, 1994 106 490
TOWN OF PROSPECT
All of the following described rights, privileges and
easements situated in the Town of Prospect, County of New Haven and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(612) Roger C. Drew et al December 1, 1994 251 210
(613) Frank Mazzella September 11, 1995 263 137
(614) Anne M. Rogers et al August 30, 1995 262 312
(615) Robinmark Development July 10, 1995 260 190
Group, LLC
TOWN OF PUTNAM
All of the following described rights, privileges and
easements situated in the Town of Putnam, County of Windham and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(616) Sharon L. Belliveau et al June 16, 1995 276 240
(617) John Peckham et al November 15, 1995 283 41
TOWN OF REDDING
All of the following described rights, privileges and
easements situated in the Town of Redding, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(618) Peter R. Kolf et al December 14, 1995 198 3
(619) Costa Stergue, Trustee November 9, 1995 197 650
(620) Eugene S. Boughton et al April 27, 1995 193 522
(621) Real-Vest Corporation February 26, 1996 199 643
TOWN OF RIDGEFIELD
All of the following described rights, privileges and
easements situated in the Town of Ridgefield, County of Fairfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(622) Michael J. Autuori et al June 10, 1994 494 1012
(623) Michael D. Azzara et al August 3, 1995 513 130
(624) Jules Eppoliti et al July 24, 1995 511 982
(625) Lawrence Leary August 2, 1995 512 599
(626) Saint Stephen's Church August 11, 1995 515 230
(627) DiAcri Builders, Inc. February 23, 1995 505 837
(628) Reed L. Whipple March 1, 1995 505 759
(629) Bertram H. Ison October 18, 1995 517 189
(630) Robert J. Vredenburgh et al October 17, 1995 517 243
(631) Stasio, Inc. December 6, 1995 520 186
(632) Francis X. Houser, Jr. et al December 26, 1995 519 931
(633) Peter H. Wyden December 8, 1995 519 178
(634) Level Acre Farm, LLC March 13, 1996 523 841
TOWN OF ROCKY HILL
All of the following described rights, privileges and
easements situated in the Town of Rocky Hill, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(635) F & S Associates August 24, 1994 283 200
(636) Trinity Knoll Development January 9, 1995 288 374
Co.
(637) LGM/BT Rocky Hill Limited January 19, 1995 288 451
Partnership
(638) Ramblewood, Incorporated May 5, 1995 290 696
(639) Trinity Ridge Associates March 23, 1995 289 137
Limited Partnership
(640) Robert Dillon September 14, 1995 294 854
(641) Robert Chiulli September 15 ,1995 294 862
TOWN OF SALEM
All of the following described rights, privileges and
easements situated in the Town of Salem, County of New London and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(642) Roger L. Phillips et al May 2, 1995 93 553
(643) Denbar Associates, Inc. August 18, 1995 95 329
et al
(644) Thomas P. Banks et al December 6, 1994 91 559
(645) David McNaughton et al November 9, 1994 91 354
(646) Charles A. Savalle et al September 26, 1994 91 110
(647) Richard D. Martin et al September 9, 1994 91 51
TOWN OF SEYMOUR
All of the following described rights, privileges and
easements situated in the Town of Seymour, County of New Haven and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(648) Saturno P. Francini October 25, 1995 222 394
(649) George M. Zrelak et al February 21, 1996 224 779
TOWN OF SHERMAN
All of the following described rights, privileges and
easements situated in the Town of Sherman, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(650) Peter Gadiel June 2, 1995 76 504
(651) Highland Limited Partnership September 12, 1995 77 7
(652) Anthony V. Hapanowich January 12, 1995 75 758
(653) John S. Shull et al May 8, 1989 59 581
(654) R. Richard Brescia November 15, 1989 60 840
TOWN OF SIMSBURY
All of the following described rights, privileges and
easements situated in the Town of Simsbury, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(655) Wendy J. Borawski August 2, 1994 433 559
(656) Ensign-Bickford Realty July 26, 1994 433 68
Corporation
(657) Avon Marketplace Limited August 9, 1994 434 1198*
Partnership
(658) C.G.R. Developers, Inc. November 21, 1994 437 1266
(659) Avonridge, Incorporated November 28, 1994 438 34
(660) Avonridge, Incorporated November 28, 1994 438 36
(661) JSH Building, Inc. February 8, 1995 440 705
(662) Joylin Development June 1, 1995 443 196
Company, LLC
(663) Colbert Building & June 27, 1995 443 1194
Development Company, L.L.C.
(664) Simsbury Turnpike Realty May 23, 1995 444 932
Company
(665) C.G.R. Developers, Inc. December 14, 1995 451 645
(666) Frederick A. McNutt et al February 8, 1996 452 712
(667) Craig Meyer Development April 15, 1996 455 164
Corporation
(668) Jean A. Maletta et al April 11, 1996 455 919
* Inter Alia - Avon
TOWN OF SOMERS
All of the following described rights, privileges and
easements situated in the Town of Somers, County of Tolland and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(669) Robert A. Urso May 3, 1995 164 451
(670) Daniel Sirois, Thomas W. November 2, 1994 166 796
Pethigal and Associates
(671) GDS Development Corp. October 12, 1995 166 798
TOWN OF SOUTH WINDSOR
All of the following described rights, privileges and
easements situated in the Town of South Windsor, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(672) Clark Realty, Inc. August 3, 1994 805 278
(673) RSK-KELLCO, Inc. September 16, 1994 812 269
(674) Charing Road Limited December 8, 1994 824 204
Partnership
(675) Kenneth Boynton, Trustee June 30, 1995 850 80
et al
(676) Anthony P. Dworak, III April 17, 1995 839 248
(677) B & M Enterprises, Inc. September 28, 1995 860 53
(678) RSK-KELLCO, Inc. July 31, 1995 852 247
(679) The LaCava Construction October 23, 1995 863 109
Company
(680) Dart Hill Realty, Inc. December 15, 1995 871 120
TOWN OF SOUTHBURY
All of the following described rights, privileges and
easements situated in the Town of Southbury, County of New Haven
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(681) Hemlock Ridge Estates, Inc. August 23, 1995 300 233
(682) Joseph Visconti et al October 31, 1995 302 24
(683) Bryan J. Slattery November 14, 1995 302 772
(684) Fred D'Amico November 14, 1995 302 1062
(685) Daniel N. Crewe September 28, 1995 301 705
(686) Susan D. Saponaro December 13, 1995 303 826
(687) Robert W. Major, Jr. et al April 19, 1995 295 1195
(688) Lewis J. Finch March 20, 1996 306 144
TOWN OF SOUTHINGTON
All of the following described rights, privileges and
easements situated in the Town of Southington, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(689) M. Stewart Ramsay et al September 2, 1994 605 739
(690) LePage Homes, Inc. November 22, 1994 612 532
(691) Milo & Denorfia Construction March 16, 1995 617 160
Co., Inc.
(692) Milo & Denorfia Construction April 21, 1995 619 254
Co., Inc.
(693) Nutmeg Builders & November 14, 1995 633 252
Developers, Inc.
(694) Alison Wight August 24, 1993 590 149
(695) James L. Berg et al August 24, 1993 590 151
&
November 5, 1993
(696) Craig C. Fournier et al September 23, 1993 577 227
(697) Farmingberry Development November 10, 1993 580 712
Corp.
TOWN OF SPRAGUE
All of the following described rights, privileges and
easements situated in the Town of Sprague, County of New London and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(698) Stanley E. Wildermuth et al February 13, 1996 51 575
TOWN OF STAFFORD
All of the following described rights, privileges and
easements situated in the Town of Stafford, County of Tolland and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(699) Hugh J. McQuaid et al June 20, 1994 320 141
(700) Joseph F. Sawicki July 7, 1994 320 292
(701) Nicholas P. Hine et al August 31, 1995 332 182
(702) Gerald A. Brothers, Jr. November 9, 1995 332 497
TOWN OF STAMFORD
All of the following described rights, privileges and
easements situated in the Town of Stamford, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(703) North Meadow LLC July 6, 1995 4434 99
(704) Mirella Pollifrone Harrison June 30, 1995 4435 303
(705) 18 Development Company October 18, 1995 4487 91
(706) Pleasant Development March 17, 1989 3400 303
Associates
(707) Susan H. Ball September 28, 1989 3497 15
(708) Anthony S. Pagano, Jr. September 18, 1995 4518 320
et al
TOWN OF STERLING
All of the following described rights, privileges and
easements situated in the Town of Sterling, County of Windham and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(709) Jacquelyn L. Van Auken March 29, 1995 72 160
(710) Sterling Plumbing & Heating, February 23, 1996 73 847
Inc.
TOWN OF STONINGTON
All of the following described rights, privileges and
easements situated in the Town of Stonington, County of New London
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(711) Robert W. Ackley et al July 1, 1994 371 824
(712) Altas Paving Company, Inc. February 17, 1995 377 1052
et al
(713) Paul Ciccone March 20, 1995 379 31
(714) McQuade's Mystic L.L.C. April 26, 1995 381 253
(715) Perry K. Lorenz et al September 8, 1995 383 952
(716) Steven Crook et al August 30, 1995 383 548
(717) Susan Schultz et al April 13, 1995 379 525
(718) Judith G. du Pont April 21, 1993 354 887
(719) Jon C. Wardman et al February 16, 1994 367 53
(720) Kent Development Corporation September 7, 1988 303 805
TOWN OF SUFFIELD
All of the following described rights, privileges and
easements situated in the Town of Suffield, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(721) Elzear Roy February 24, 1995 259 376
(722) Susan B. Turner November 4 1994 258 559
(723) David Berto et al September 19, 1995 262 888
(724) Lewis S. Cannon et al October 25, 1995 263 612
(725) Ronald W. Carlson et al October 25, 1995 263 609
(726) Thomas J. Toomey et al February 9, 1996 265 803
TOWN OF THOMASTON
All of the following described rights, privileges and
easements situated in the Town of Thomaston, County of Litchfield
and State of Connecticut, more particularly described in the
following deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(727) Michael E. Martone et al March 1, 1996 167 824
TOWN OF THOMPSON
All of the following described rights, privileges and
easements situated in the Town of Thompson, County of Windham and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(728) Stephen K. Morse et al February 14, 1995 327 47
TOWN OF TOLLAND
All of the following described rights, privileges and
easements situated in the Town of Tolland, County of Tolland and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(729) Crossen Builders, Inc. July 21, 1994 493 261
(730) Lee & Lamont Realty July 27, 1994 494 231
(731) Alan D. Williams et al December 28, 1994 503 322
(732) Tavco Associates January 6, 1995 505 68
(733) Willowcreek, LLC May 30, 1995 511 338
(734) Westwood Park Inc. July 13, 1995 516 313
(735) Capstone Builders, Inc. November 16, 1995 525 283
(736) Donald W. Fish February 14, 1996 528 222
(737) Tavco Associates et al March 14, 1996 530 335
TOWN OF TORRINGTON
All of the following described rights, privileges and
easements situated in the Town of Torrington, County of Litchfield
and State of Connecticut, more particularly described in the
following deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(738) Greenbriar Woods August 21, 1995 621 636
Subdivision LLC
TOWN OF VERNON
All of the following described rights, privileges and
easements situated in the Town of Vernon, County of Tolland and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(739) J & R Developers June 16, 1994 993 20
(740) The LaCava Construction April 6, 1995 1015 223
Company
TOWN OF VOLUNTOWN
All of the following described rights, privileges and
easements situated in the Town of Voluntown, County of New London
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(741) Brian A. Schaen October 24, 1994 62 878
(742) John H. Wood, Jr. December 15, 1995 64 346
(743) Joseph J. Siner August 12, 1992 59 609
TOWN OF WASHINGTON
All of the following described rights, privileges and
easements situated in the Town of Washington, County of Litchfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(744) Stephen W. Kinkade et al October 10, 1995 131 295
(745) Tamara M. Sachs et al December 4, 1989 113 362
TOWN OF WATERFORD
All of the following described rights, privileges and
easements situated in the Town of Waterford, County of New London
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(746) Brian Andrew Krauth et al May 24, 1994 433 389
(747) Jordan Commons, Inc. March 7, 1995 441 693
(748) William E. Strong et al November 18, 1994 438 1115
(749) Ralph Stanton Lewis February 4, 1993 415 220
(750) Ronald G. Malone et al February 26, 1993 415 222
TOWN OF WATERTOWN
All of the following described rights, privileges and
easements situated in the Town of Watertown, County of Litchfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(751) Joel P. Nelson August 29, 1995 789 56
(752) Angelo P. Tedesco October 6, 1995 798 282
(753) Angelo P. Tedesco November 21, 1995 798 284
(754) P & D Associates of November 27, 1995 799 146
Watertown L.L.C.
(755) Joan R. Pope November 16, 1995 799 148
(756) Donald P. Cullen et al November 10, 1995 799 150
(757) Carolyn M. Classey et al November 17, 1995 799 151
(758) Daniel Rubbo October 27, 1995 799 153
TOWN OF WEST HARTFORD
All of the following described rights, privileges and
easements situated in the Town of West Hartford, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(759) Klemore, Incorporated et al February 27, 1995 1995 128
(756) Spice Glen Association, Inc. December 23, 1991 1633 31
(761) Heublein, Inc. March 11, 1996 2083 169*
(762) Mannarino Builders, Inc. September 21, 1992 1724 75
* Inter Alia - Hartford
TOWN OF WESTBROOK
All of the following described rights, privileges and
easements situated in the Town of Westbrook, County of Middlesex
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(763) Toby Hill Associates January 18, 1995 168 250
(764) John J. Palermo et al May 31, 1995 170 42
(765) William H. Hull, Jr. et al December 28, 1993 161 194
(766) R.R. Westbrook, Inc. October 31, 1995 173 987
TOWN OF WESTON
All of the following described rights, privileges and
easements situated in the Town of Weston, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(767) Samuel Bell, Jr. September 21, 1995 232 787
(768) Nordic Builders October 3, 1995 233 738
TOWN OF WESTPORT
All of the following described rights, privileges and
easements situated in the Town of Westport, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(769) Frederick J. Canevari July 26, 1995 1422 321
(770) Jay Sherwood et al January 12, 1996 1234 233
TOWN OF WETHERSFIELD
All of the following described rights, privileges and
easements situated in the Town of Wethersfield, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(771) Town of Wethersfield August 25, 1994 578 241
(772) Premier Building & June 27, 1995 591 431
Development, Inc.
(773) The Town of Wethersfield July 5, 1995 592 379
(774) Daniel P. Gagnon July 10, 1995 592 381
(775) RAN DEV LLC et al July 27, 1995 594 432
(776) Spruce Street Associates, August 29, 1995 595 1
LLC
(777) Premier Building & September 19, 1995 595 691
Development, Inc.
(778) Jeffrey B. Harris September 19, 1995 595 693
(779) Capitol Region Education October 27, 1995 597 620
Council
(780) Mangiafico Development October 26, 1995 597 618
Corporation
(781) The LaCava Construction October 30, 1995 598 276
Company
(782) Roswell Associates, Inc. January 31, 1996 606 316
TOWN OF WILLINGTON
All of the following described rights, privileges and
easements situated in the Town of Willington, County of Tolland and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(783) Stanley E. Golab Builders, July 28, 1995 124 293
Inc.
TOWN OF WILTON
All of the following described rights, privileges and
easements situated in the Town of Wilton, County of Fairfield and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(784) David A. Keene October 13, 1995 965 151
(785) Cannon Trails October 20, 1995 966 224
Development, L.L.C.
(786) Emilio Tomas et al December 31, 1995 974 326
(787) Cannon Trails Development, February 28, 1996 983 176
L.L.C. et al
TOWN OF WINDHAM
All of the following described rights, privileges and
easements situated in the Town of Windham, County of Windham and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(788) DeSiato Sand & Gravel, Corp. November 23, 1994 454 34
(789) Jeffrey P. Ossen August 7, 1995 473 274
(790) Thomas J. Crossen, Jr. February 8, 1996 486 203
TOWN OF WINDSOR
All of the following described rights, privileges and
easements situated in the Town of Windsor, County of Hartford and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(791) Winterwood Development, November 17, 1994 1028 261
L.L.C.
(792) Raylin Homes, LLC March 24, 1995 1042 252
(793) Somerset Development April 11, 1995 1042 247
Corporation
(794) Kmart Corporation June 25, 1995 1050 84
(795) Winterwood Development, April 26, 1995 1044 63
L.L.C.
(796) Culbro Land Resources, Inc. July 13, 1989 753 120
(797) Culbro Homes II, Inc. February 6, 1990 779 185
TOWN OF WINDSOR LOCKS
All of the following described rights, privileges and
easements situated in the Town of Windsor Locks, County of Hartford
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(798) Gaylord Meadows LLC December 7, 1994 226 92
(799) Denis Carrigan et al July 18, 1995 229 845
(800) 167 Spring Street, LLC April 13, 1995 228 105
(801) Michael Norwood et al July 21, 1995 229 843
(802) Preli Farm LLC December 11, 1995 232 318
TOWN OF WOLCOTT
All of the following described rights, privileges and
easements situated in the Town of Wolcott, County of New Haven and
State of Connecticut, more particularly described in the following
deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(803) Michael Cortigiano August 7, 1995 226 903
(804) Brook Garden Enterprises, June 20, 1995 225 980
Inc.
(805) Eric Strachan, Inc. October 18, 1995 228 326
(806) Hamilton Development Corp. October 10, 1995 228 542
TOWN OF WOODBURY
All of the following described rights, privileges and
easements situated in the Town of Woodbury, County of Litchfield
and State of Connecticut, more particularly described in the
following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(807) Lawrence T. Pezzullo et al June 29, 1995 209 301
(808) Garwin D. Hardisty et al December 23, 1994 205 865
(809) Walter F. Weber et al January 31, 1996 212 689
(810) Old Fair Grounds, LLC December 18, 1995 211 1007
TOWN OF WOODSTOCK
All of the following described rights, privileges and
easements situated in the Town of Woodstock, County of Windham and
State of Connecticut, more particularly described in the following
deed, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
(811) Phyllis W. Guerrier September 18, 1995 260 149
Exhibit 4.2.17
SUPPLEMENTAL INDENTURE
Dated as of January 1, 1997
To
Indenture of Mortgage and Deed of Trust
Dated as of May 1, 1921
THE CONNECTICUT LIGHT AND POWER COMPANY
TO
BANKERS TRUST COMPANY, Trustee
1996 Series B Bonds, Due May 1, 2031
THE CONNECTICUT LIGHT AND POWER COMPANY
Supplemental Indenture, Dated as of January 1, 1997
TABLE OF CONTENTS
Page
Parties 1
Recitals 1
Granting Clause 3
Habendum 4
Grant in Trust 4
ARTICLE 1. FORM AND PROVISIONS OF BONDS OF 1996 SERIES B
SECTION 1.01. Designation; Amount 4
SECTION 1.02. Form of Bonds of 1996 Series B 4
SECTION 1.03. Provisions of Bonds of 1996 Series B;
Interest Accrual; Effect of Payment on PCR Bonds 5
SECTION 1.04. Transfer and Exchange of Bonds of 1996
Series B; PCR Bond Trustee as Registered Holder:
Restriction on Transfer of Bonds of 1996 Series B 6
SECTION 1.05. Sinking and Improvement Fund 7
ARTICLE 2. REDEMPTION OF BONDS OF 1996 SERIES B
SECTION 2.01. Redemption Upon Redemption of PCR Bonds 7
SECTION 2.02. Source of Funds for Redemptions 7
ARTICLE 3.
MISCELLANEOUS
SECTION 3.01. Benefits of Supplemental Indenture and
Bonds of 1996 Series B 8
SECTION 3.02. Effect of Table of Contents and Headings 8
SECTION 3.03. Counterparts 8
SECTION 3.04. Payment Due on Holidays 8
TESTIMONIUM 9
SIGNATURES 9
ACKNOWLEDGMENTS 10
SCHEDULE A - Form of Bond of 1996 Series B, Form of Trustee's
Certificate
SCHEDULE B - Property Subject to the Lien of the Mortgage
SUPPLEMENTAL INDENTURE, dated as of the first day of January,
1997, between THE CONNECTICUT LIGHT AND POWER COMPANY, a
corporation organized and existing under the laws of the State of
Connecticut (hereinafter called the "Company"), and BANKERS TRUST
COMPANY, a corporation organized and existing under the laws of
the State of New York (hereinafter called the "Trustee").
WHEREAS, the Company heretofore duly executed, acknowledged
and delivered to the Trustee a certain Indenture of Mortgage and
Deed of Trust dated as of May 1, 1921, and sixty-four
Supplemental Indentures thereto dated respectively as of May 1,
1921, February 1, 1924, July 1, 1926, June 20, 1928, June 1,
1932, July 1, 1932, July 1, 1935, September 1, 1936, October 20,
1936, December 1, 1936, December 1, 1938, August 31, 1944,
September 1, 1944, May 1, 1945, October 1, 1945, November 1,
1949, December 1, 1952, December 1, 1955, January 1, 1958,
February 1, 1960, April 1, 1961, September 1, 1963, April 1,
1967, May 1, 1967, January 1, 1968, October 1, 1968, December 1,
1969, January 1, 1970, October 1, 1970, December 1, 1971, August
1, 1972, April 1, 1973, March 1, 1974, February 1, 1975,
September 1, 1975, May 1, 1977, March 1, 1978, September 1, 1980,
October 1, 1981, June 30, 1982, October 1, 1982, July 1, 1983,
January 1, 1984, October 1, 1985, September 1, 1986, April 1,
1987, October 1, 1987, November 1, 1987, April 1, 1988, November
1, 1988, June 1, 1989, September 1, 1989 , December 1, 1989,
April 1, 1992, July 1, 1992, October 1, 1992, July 1, 1993, July
1, 1993, December 1, 1993, February 1, 1994, February 1, 1994,
June 1, 1994, October 1, 1994 and June 1, 1996 (said Indenture of
Mortgage and Deed of Trust (i) as heretofore amended, being
hereinafter generally called the "Mortgage Indenture," and (ii)
together with said Supplemental Indentures thereto, being
hereinafter generally called the "Mortgage"), all of which have
been duly recorded as required by law, for the purpose of
securing its First and Refunding Mortgage Bonds (of which
$1,452,288,000 aggregate principal amount are outstanding at the
date of this Supplemental Indenture) in an unlimited amount,
issued and to be issued for the purposes and in the manner
therein provided, of which Mortgage this Supplemental Indenture
is intended to be made a part, as fully as if therein recited at
length;
WHEREAS, pursuant to an Indenture of Trust dated as of May
1, 1996 and amended and restated as of January 1, 1997 (herein
called the "PCR Bond Indenture"), by and between the Connecticut
Development Authority (herein called the "Authority") and Fleet
National Bank, as trustee (herein called the "PCR Bond Trustee"),
the Authority has issued $62,000,000 in principal amount of its
Pollution Control Revenue Bonds (The Connecticut Light and Power
Company Project) Series 1996A (herein called the "PCR Bonds");
WHEREAS, pursuant to a Loan Agreement dated as of May 1,
1996 and amended and restated as of January 1, 1997 (herein
called the "PCR Bond Loan Agreement"), by and between the
Authority and the Company, the Authority has loaned the proceeds
from the sale of the PCR Bonds to the Company to assist the
Company in financing its portion of the cost of acquiring,
constructing and installing certain pollution control and/or
sewage or solid waste disposal facilities at the Millstone 3
nuclear electric generating plant located in Waterford,
Connecticut, in which facilities the Company owns a 52.933%
undivided interest;
WHEREAS, the PCR Bonds are special obligations of the
Authority, payable solely out of the revenues and other receipts,
funds and moneys derived by the Authority under the PCR Bond Loan
Agreement or the PCR Bond Indenture and from any amounts
otherwise available under the PCR Bond Indenture for the payment
of the PCR Bonds, which revenues and other receipts, funds,
moneys and amounts are, pursuant to the PCR Bond Indenture,
pledged by the Authority to the PCR Bond Trustee as security for
the PCR Bonds and which revenues and other receipts, funds,
moneys and amounts include loan payments required to be made by
the Company to the PCR Bond Trustee for the account of the
Authority pursuant to the PCR Bond Loan Agreement in amounts
equal to the amounts payable with respect to the PCR Bonds;
WHEREAS, in consideration of the loan provided by the
Authority under the PCR Bond Loan Agreement, and pursuant to the
provisions of the PCR Bond Loan Agreement and the PCR Bond
Indenture, each as amended and restated, the Company has agreed
to issue, and by appropriate and sufficient corporate action in
conformity with the provisions of the Mortgage has duly
determined to create, to evidence and secure the Company's
obligation under the PCR Bond Loan Agreement to make loan
payments as aforesaid and to provide security for the PCR Bonds,
a further series of bonds under the Mortgage to be designated
"First and Refunding Mortgage Bonds, 1996 Series B" (hereinafter
generally referred to as the "bonds of 1996 Series B"), to
consist of fully registered bonds containing terms and provisions
duly fixed and determined by the Board of Directors of the
Company and expressed in this Supplemental Indenture, including
terms and provisions with respect to maturity, interest payment,
interest rate and redemption corresponding to those of the PCR
Bonds, such fully registered bonds and the Trustee's certificate
of its authentication thereof to be substantially in the forms
thereof respectively set forth in Schedule A appended hereto and
made a part hereof;
WHEREAS, the execution and delivery of this Supplemental
Indenture and the issue of not exceeding Sixty-Two Million
Dollars ($62,000,000) in aggregate principal amount of bonds of
1996 Series B and other necessary actions have been duly
authorized by the Board of Directors of the Company;
WHEREAS, the Company proposes to execute and deliver this
Supplemental Indenture to provide for the issue of the bonds of
1996 Series B and to confirm the lien of the Mortgage on the
property referred to below, all as permitted by Section 14.01 of
the Mortgage Indenture; and
WHEREAS, all acts and things necessary to constitute this
Supplemental Indenture a valid, binding and legal instrument and
to make the bonds of 1996 Series B when executed by the Company
and authenticated by the Trustee valid, binding and legal
obligations of the Company have been authorized and performed;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE OF MORTGAGE AND
DEED OF TRUST WITNESSETH:
That in order to secure the payment of the principal of and
interest on all bonds issued and to be issued under the Mortgage,
according to their tenor and effect, and according to the terms
of the Mortgage and this Supplemental Indenture, and to secure
the performance of the covenants and obligations in said bonds
and in the Mortgage and this Supplemental Indenture respectively
contained, and for the better assuring and confirming unto the
Trustee, its successor or successors and its or their assigns,
upon the trusts and for the purposes expressed in the Mortgage
and this Supplemental Indenture, all and singular the
hereditaments, premises, estates and property of the Company
thereby conveyed or assigned or intended so to be, or which the
Company may thereafter have become bound to convey or assign to
the Trustee, as security for said bonds (except such
hereditaments, premises, estates and property as shall have been
disposed of or released or withdrawn from the lien of the
Mortgage and this Supplemental Indenture, in accordance with the
provisions thereof and subject to alterations, modifications and
changes in said hereditaments, premises, estates and property as
permitted under the provisions thereof), the Company, for and in
consideration of the premises and the sum of One Dollar ($1.00)
to it in hand paid by the Trustee, the receipt whereof is hereby
acknowledged, and of other valuable considerations, has granted,
bargained, sold, assigned, mortgaged, pledged, transferred, set
over, aliened, enfeoffed, released, conveyed and confirmed, and
by these presents does grant, bargain, sell, assign, mortgage,
pledge, transfer, set over, alien, enfeoff, release, convey and
confirm unto said Bankers Trust Company, as Trustee, and its
successor or successors in the trust created by the Mortgage and
this Supplemental Indenture, and its and their assigns, all of
said hereditaments, premises, estates and property (except and
subject as aforesaid), as fully as though described at length
herein, including, without limitation of the foregoing, the
property, rights and privileges of the Company described or
referred to in Schedule B hereto. Together with all plants,
buildings, structures, improvements and machinery located upon
said real estate or any portion thereof, and all rights,
privileges and easements of every kind and nature appurtenant
thereto, and all and singular the tenements, hereditaments and
appurtenances belonging to the real estate or any part thereof
described or referred to in Schedule B or intended so to be, or
in any wise appertaining thereto, and the reversions, remainders,
rents, issues and profits thereof, and also all the estate,
right, title, interest, property, possession, claim and demand
whatsoever, as well in law as in equity, of the Company, of, in
and to the same and any and every part thereof, with the
appurtenances; except and subject as aforesaid.
TO HAVE AND TO HOLD all and singular the property, rights
and privileges hereby granted or mentioned or intended so to be,
together with all and singular the reversions, remainders, rents,
revenues, income, issues and profits, privileges and
appurtenances, now or hereafter belonging or in any way
appertaining thereto, unto the Trustee and its successor or
successors in the trust created by the Mortgage and this
Supplemental Indenture, and its and their assigns, forever, and
with like effect as if the above described property, rights and
privileges had been specifically described at length in the
Mortgage and this Supplemental Indenture.
Subject, however, to permitted liens, as defined in the
Mortgage Indenture.
IN TRUST, NEVERTHELESS, upon the terms and trusts of the
Mortgage and this Supplemental Indenture for those who shall hold
the bonds and coupons issued and to be issued thereunder, or any
of them, without preference, priority or distinction as to lien
of any of said bonds and coupons over any others thereof by
reason of priority in the time of the issue or negotiation
thereof, or otherwise howsoever, subject, however, to the
provisions in reference to extended, transferred or pledged
coupons and claims for interest set forth in the Mortgage and
this Supplemental Indenture (and subject to any sinking fund that
may heretofore have been or hereafter be created for the benefit
of any particular series).
And it is hereby covenanted that all such bonds of 1996
Series B are to be issued, authenticated and delivered, and that
the mortgaged premises are to be held by the Trustee, upon and
subject to the trusts, covenants, provisions and conditions and
for the uses and purposes set forth in the Mortgage and this
Supplemental Indenture and upon and subject to the further
covenants, provisions and conditions and for the uses and
purposes hereinafter set forth, as follows, to wit:
ARTICLE 1.
FORM AND PROVISIONS OF BONDS OF 1996 SERIES B
SECTION 1.01. Designation; Amount. The bonds of 1996
Series B shall be designated "First and Refunding Mortgage Bonds,
1996 Series B" and, subject to Section 2.08 of the Mortgage
Indenture, shall not exceed Sixty-Two Million Dollars
($62,000,000) in aggregate principal amount at any one time
outstanding. The initial issue of the bonds of 1996 Series B may
be effected upon compliance with the applicable provisions of the
Mortgage Indenture.
SECTION 1.02. Form of Bonds of 1996 Series B. The bonds of
1996 Series B shall be issued only in fully registered form
without coupons in denominations of One Thousand Dollars ($1,000)
and multiples thereof.
The bonds of 1996 Series B and the certificate of the
Trustee upon said bonds shall be substantially in the forms
thereof respectively set forth in Schedule A appended hereto.
SECTION 1.03. Provisions of Bonds of 1996 Series B;
Interest Accrual; Effect of Payment on PCR Bonds. The bonds of
1996 Series B shall mature on May 1, 2031 and shall bear
interest, payable on the interest payment dates applicable from
time to time to the PCR Bonds (each such interest payment date so
applicable to the PCR Bonds, being an interest payment date
applicable to the bonds of 1996 Series B), until the Company's
obligation in respect of the principal thereof shall be
discharged, in amounts equal to the interest payments due on the
PCR Bonds on such interest payment dates applicable to the bonds
of 1996 Series B; and shall be payable both as to principal and
interest at the office or agency of the Company in the Borough of
Manhattan, New York, New York, in any coin or currency of the
United States of America which at the time of payment is legal
tender for the payment of public and private debts. The interest
on the bonds of 1996 Series B, whether in temporary or definitive
form, shall be payable without presentation of such bonds; and
only to or upon the written order of the registered holders
thereof of record at the applicable record date. If, pursuant to
the PCR Bond Loan Agreement or the PCR Bond Indenture, all or any
portion of the principal of the PCR Bonds shall become or be
declared immediately due and payable, a like principal amount of
the bonds of 1996 Series B, together with all accrued interest
thereon, shall without notice or demand of any kind, become
immediately due and payable. In addition, the bonds of 1996
Series B shall be callable for redemption in whole or in part
according to the terms and provisions provided herein in Article
2.
Anything in the Mortgage, this Supplemental Indenture or any
bond of 1996 Series B to the contrary notwithstanding, the bonds
of 1996 Series B shall be deemed paid, and all obligations of the
Company to pay at the times provided herein the principal of,
premium, if any, and interest on the bonds of 1996 Series B shall
be satisfied and discharged, when and to the extent that the
principal of and premium, if any, and interest on the PCR Bonds
shall have been paid or deemed paid as provided in the PCR Bond
Indenture.
Each bond of 1996 Series B shall be dated as of January 2,
1997 and shall bear interest on the principal amount thereof from
the interest payment date next preceding the date of
authentication thereof by the Trustee to which interest has been
paid on the bonds of 1996 Series B, or if the date of
authentication thereof is on or prior to the record date (as
hereinafter defined) with respect to the first interest payment
date then from January 2, 1997, or if the date of authentication
thereof be an interest payment date to which interest is being
paid or a date between the record date for any such interest
payment date and such interest payment date, then from such
interest payment date.
The person in whose name any bond of 1996 Series B is
registered at the close of business on any record date (as
hereinafter defined) with respect to any interest payment date
shall be entitled to receive the interest payable on such
interest payment date notwithstanding the cancellation of such
bond upon any registration of transfer or exchange thereof
subsequent to the record date and prior to such interest payment
date, except that if and to the extent the Company shall default
in the payment of the interest due on such interest payment date,
then such defaulted interest shall be paid to the person in whose
name such bond is registered on a subsequent record date for the
payment of defaulted interest if one shall have been established
as hereinafter provided and otherwise on the date of payment of
such defaulted interest. A subsequent record date may be
established by the Company by notice mailed to the owners of the
bonds of 1996 Series B not less than ten (10) days preceding such
record date, which record date shall not be more than thirty (30)
days prior to the subsequent interest payment date. The term
"record date" as used in this Section with respect to any regular
interest payment date shall mean the day next preceding such
interest payment date, or if such day shall not be a Business Day
(as hereinafter defined), the next preceding day which shall be a
Business Day. For purposes of this Supplemental Indenture,
"Business Day" means any day (i) that is not a Saturday or
Sunday, (ii) that is a day on which banks are not required or
authorized to close in New York, New York and Hartford,
Connecticut, (iii) that is a day on which banking institutions in
all of the cities in which the principal offices of the PCR Bond
Trustee, the Trustee and the Paying Agent (as defined in the PCR
Bond Indenture) and, if applicable, the Remarketing Agent and the
Bank (each as defined in the PCR Bond Indenture) are located and
are not required or authorized to remain closed, and (iv) that is
a day on which the New York Stock Exchange, Inc. is not closed.
SECTION 1.04. Transfer and Exchange of Bonds of 1996 Series
B; PCR Bond Trustee as Registered Holder: Restriction on Transfer
of Bonds of 1996 Series B. The bonds of 1996 Series B may be
surrendered for registration of transfer as provided in Section
2.06 of the Mortgage Indenture at the office or agency of the
Company in the Borough of Manhattan, New York, New York, and may
be surrendered at said office for exchange for a like aggregate
principal amount of bonds of 1996 Series B of other authorized
denominations. Notwithstanding the provisions of Section 2.06 of
the Mortgage Indenture, no charge, except for taxes or other
governmental charges, shall be made by the Company for any
registration of transfer of bonds of 1996 Series B or for the
exchange of any bonds of 1996 Series B for such bonds of other
authorized denominations.
The bonds of 1996 Series B shall be issued to and registered
in the name of the PCR Bond Trustee and, anything in the
Mortgage, this Supplemental Indenture or any bond of 1996 Series
B to the contrary notwithstanding, the bonds of 1996 Series B
shall not be sold, assigned, pledged or transferred, except to
effect the transfer to any successor trustee under the PCR Bond
Indenture.
SECTION 1.05. Sinking and Improvement Fund. Each holder of
a bond of 1996 Series B, solely by virtue of its acquisition
thereof, shall have and be deemed to have consented, without the
need for any further action or consent by such holder, to any and
all amendments to the Mortgage Indenture which are intended to
eliminate or modify in any manner the requirements of the sinking
and improvement fund as provided for in Section 6.14 thereof.
ARTICLE 2.
REDEMPTION OF BONDS OF 1996 SERIES B
SECTION 2.01. Redemption Upon Redemption of PCR Bonds. In
the event that the PCR Bonds are to be redeemed as a whole or in
part on any date as provided in Article VI of the PCR Bond
Indenture, a like principal amount of the bonds of 1996 Series B
shall be redeemed on such date, at a redemption price equal to
the redemption price at which the PCR Bonds are to be so
redeemed, as set forth in such Article VI, stated as a percentage
of the principal amount of the bonds of 1996 Series B to be so
redeemed, together in every case with accrued and unpaid interest
thereon to the date fixed for redemption. The bonds of 1996
Series B shall be redeemed as aforesaid in accordance with the
provisions of the Mortgage and upon not less than thirty (30)
days' prior notice given by mail as provided in the Mortgage;
provided, that the Company shall be deemed to have satisfied such
notice requirement by delivering to the PCR Bond Trustee, at the
time and in the manner specified in the PCR Bond Indenture and
the PCR Bond Loan Agreement, the notice and/or certificate
required pursuant to the PCR Bond Indenture and the PCR Bond Loan
Agreement to be delivered in connection with the redemption of
the PCR Bonds. The Company shall deliver a copy of such notice
and/or certificate to the Trustee at the time of such delivery to
the PCR Bond Trustee. Upon presentation to the Trustee for
payment of any bond of 1996 Series B to be redeemed as aforesaid,
the Trustee shall redeem and fully pay such bond or the portion
thereof to be redeemed.
SECTION 2.02. Source of Funds for Redemptions. Redemptions
of bonds of 1996 Series B pursuant to the foregoing provisions of
this Article 2 may be made with moneys deposited with or received
by the Trustee pursuant to the Mortgage Indenture and/or with any
other moneys available to the Company for such purpose.
ARTICLE 3.
MISCELLANEOUS
SECTION 3.01. Benefits of Supplemental Indenture and Bonds
of 1996 Series B. Nothing in this Supplemental Indenture, or in
the bonds of 1996 Series B, expressed or implied, is intended or
shall be construed to give to any person or corporation other
than the Company, the Trustee and the holders of the bonds and
interest obligations secured by the Mortgage and this
Supplemental Indenture, any legal or equitable right, remedy or
claim under or in respect of this Supplemental Indenture or of
any covenant, condition or provision herein contained. All the
covenants, conditions and provisions hereof are and shall be for
the sole and exclusive benefit of the Company, the Trustee and
the holders of the bonds and interest obligations secured by the
Mortgage and this Supplemental Indenture.
SECTION 3.02. Effect of Table of Contents and Headings. The
table of contents and the descriptive headings of the several
Articles and Sections of this Supplemental Indenture are inserted
for convenience of reference only and are not to be taken to be
any part of this Supplemental Indenture or to control or affect
the meaning, construction or effect of the same.
SECTION 3.03. Counterparts. For the purpose of
facilitating the recording hereof, this Supplemental Indenture
may be executed in any number of counterparts, each of which
shall be and shall be taken to be an original and all
collectively but one instrument.
SECTION 3.04. Payment Due on Holidays. If the date for
making any payment or the last date for performance of any act or
the exercise of any right, as provided in this Supplemental
Indenture, is not a Business Day, such payment may be made or act
performed or right exercised on the next succeeding Business Day
unless otherwise provided herein, with the same force and effect
as if done on the nominal date provided in this Supplemental
Indenture.
IN WITNESS WHEREOF, The Connecticut Light and Power Company
has caused these presents to be executed by a Vice President and
its corporate seal to be hereunto affixed, duly attested by an
Assistant Secretary, and Bankers Trust Company has caused these
presents to be executed by an Assistant Vice President and its
corporate seal to be hereunto affixed, duly attested by an
Assistant Treasurer, as of the day and year first above written.
THE CONNECTICUT LIGHT AND POWER COMPANY
Attest:
By /s/
Name: Mark A. Joyse
Title: Assistant Secretary
/s/
Name: John B. Keane
Title: Vice President and Treasurer
(SEAL)
Signed, sealed and delivered in the presence of:
BANKERS TRUST COMPANY
Attest:
By /s/
Name: Shafiq Jadavji
Title: Assistant Treasurer
/s/
Name: Scott F. Thiel
Title: Assistant Vice President
(SEAL)
Signed, sealed and delivered in the presence of:
STATE OF CONNECTICUT )
)ss: BERLIN
COUNTY OF HARTFORD )
On this 14th day of January, 1997, before me, Deborah A.
Tawrel, the undersigned officer, personally appeared JOHN B.
KEANE and MARK A. JOYSE, who acknowledged themselves to be Vice
President and Treasurer and Assistant Secretary, respectively, of
THE CONNECTICUT LIGHT AND POWER COMPANY, a corporation, and that
they, as such Vice President and Treasurer and such Assistant
Secretary, being authorized so to do, executed the foregoing
instrument for the purpose therein contained, by signing the name
of the corporation by themselves as Vice President and Treasurer
and Assistant Secretary, and as their free act and deed.
IN WITNESS WHEREOF, I hereunto set my hand and official
seal.
/s/
Deborah A. Tawrel
Notary Public
My commission expires:
STATE OF NEW YORK )
) ss: NEW YORK
COUNTY OF NEW YORK )
On this 15th day of January, 1997, before me, Sharon V.
Alston, the undersigned officer, personally appeared SCOTT F.
THIEL and SHAFIQ JADAVJI, who acknowledged themselves to be an
Assistant Vice President and an Assistant Treasurer,
respectively, of BANKERS TRUST COMPANY, a corporation, and that
they, as such Assistant Vice President and such Assistant
Treasurer, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the
name of the corporation by themselves as Assistant Vice President
and Assistant Treasurer, and as their free act and deed.
IN WITNESS WHEREOF, I hereunto set my hand and official
seal.
/s/
Sharon V. Alston
Notary Public
My Commission Expires: May 7, 1998
SCHEDULE A
(FORM OF BONDS OF 1996 SERIES B)
No. $
THE CONNECTICUT LIGHT AND POWER COMPANY
Incorporated under the Laws of the State of Connecticut
FIRST AND REFUNDING MORTGAGE BOND, 1996 SERIES B
PRINCIPAL DUE MAY 1, 2031
FOR VALUE RECEIVED, THE CONNECTICUT LIGHT AND POWER COMPANY,
a corporation organized and existing under the laws of the State
of Connecticut (hereinafter called the Company) hereby promises
to pay to, or registered assigns, the principal
sum of dollars, on the first
day of May, 2031 and to pay interest on said sum on the interest
payment dates applicable from time to time to the PCR Bonds (as
defined on the reverse hereof) (each such interest payment date
so applicable to such PCR Bonds being an interest payment date
applicable to this Bond), until the Company's obligation with
respect to said principal sum shall be discharged, in amounts
equal to the interest payments due on such PCR Bonds (whether or
not such interest payments have been or will be paid or deemed
paid as provided in the PCR Bond Loan Agreement and PCR Bond
Indenture (each as defined on the reverse hereof)) on such
interest payment dates applicable to this Bond. This Bond shall
bear interest as aforesaid from the interest payment date next
preceding the date of authentication hereof to which interest has
been paid on the bonds of this series, or if the date of
authentication hereof is on or prior to the record date with
respect to the first interest payment date then from January 2,
1997, or if the date of authentication hereof is an interest
payment date to which interest is being paid or a date between
the record date for any such interest payment date and such
interest payment date, then from such interest payment date. Both
principal and interest shall be payable at the office or agency
of the Company in the Borough of Manhattan, New York, New York,
in such coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and
private debts.
Each installment of interest hereon (other than overdue
interest) shall be payable to the person who shall be the
registered owner of this bond at the close of business on the
record date, which shall be the day next preceding such interest
payment date, or if such day shall not be a Business Day (as
defined on the reverse hereof), the next preceding day which is a
Business Day.
Reference is hereby made to the further provisions of this
Bond set forth on the reverse hereof, including without
limitation provisions in regard to the call and redemption and
the registration of transfer and exchangeability of this bond,
and such further provisions shall for all purposes have the same
effect as though fully set forth in this place.
This bond shall not become or be valid or obligatory until
the certificate of authentication hereon shall have been signed
by Bankers Trust Company (hereinafter with its successors as
defined in the Mortgage (as defined on the reverse hereof),
generally called the Trustee), or by such a successor.
IN WITNESS WHEREOF, The Connecticut Light and Power Company
has caused this bond to be executed in its corporate name and on
its behalf by its Vice President by his signature or a facsimile
thereof, and its corporate seal to be affixed or imprinted hereon
and attested by the manual or facsimile signature of its
Assistant Secretary.
Dated as of January 2, 1997.
THE CONNECTICUT LIGHT AND POWER COMPANY
By /s/
Name:
Title: Vice President
Attest:
/s/
Name:
Title: Assistant Secretary
[FORM OF TRUSTEE'S CERTIFICATE]
Bankers Trust Company hereby certifies that this bond is one
of the bonds described in the within mentioned Mortgage.
BANKERS TRUST COMPANY, TRUSTEE
By /s/
Name:
Title: Authorized Officer
[FORM OF BOND]
[REVERSE]
THE CONNECTICUT LIGHT AND POWER COMPANY
FIRST AND REFUNDING MORTGAGE BOND, 1996 SERIES B
This bond is one of an issue of bonds of the Company, of an
unlimited authorized amount of coupon bonds or registered bonds
without coupons, or both, known as its First and Refunding
Mortgage Bonds, all issued or to be issued in one or more series,
and is one of a series of said bonds limited in principal amount
to Sixty-Two Million Dollars ($62,000,000), consisting only of
registered bonds without coupons and designated "First and
Refunding Mortgage Bonds, 1996 Series B," all of which bonds are
issued or are to be issued under, and equally and ratably secured
by, a certain Indenture of Mortgage and Deed of Trust dated as of
May 1, 1921, and by sixty-five Supplemental Indentures dated
respectively as of May 1, 1921, February 1, 1924, July 1, 1926,
June 20, 1928, June 1, 1932, July 1, 1932, July 1, 1935,
September 1, 1936, October 20, 1936, December 1, 1936, December
1, 1938, August 31, 1944, September 1, 1944, May 1, 1945, October
1, 1945, November 1, 1949, December 1, 1952, December 1, 1955,
January 1, 1958, February 1, 1960, April 1, 1961, September 1,
1963, April 1, 1967, May 1, 1967, January 1, 1968, October 1,
1968, December 1, 1969, January 1, 1970, October 1, 1970,
December 1, 1971, August 1, 1972, April 1, 1973, March 1, 1974,
February 1, 1975, September 1, 1975, May 1, 1977, March 1, 1978,
September 1, 1980, October 1, 1981, June 30, 1982, October 1,
1982, July 1, 1983, January 1, 1984, October 1, 1985, September
1, 1986, April 1, 1987, October 1, 1987, November 1, 1987, April
1, 1988, November 1, 1988, June 1, 1989, September 1, 1989,
December 1, 1989, April 1, 1992, July 1, 1992, October 1, 1992,
July 1, 1993, July 1, 1993, December 1, 1993, February 1, 1994,
February 1, 1994, June 1, 1994, October 1, 1994, June 1, 1996 and
January 1, 1997 (said Indenture of Mortgage and Deed of Trust and
Supplemental Indentures being collectively referred to herein as
the "Mortgage"), all executed by the Company to Bankers Trust
Company, as Trustee, all as provided in the Mortgage to which
reference is made for a statement of the property mortgaged and
pledged, the nature and extent of the security, the rights of the
holders of the bonds in respect thereof and the terms and
conditions upon which the bonds may be issued and are secured;
but neither the foregoing reference to the Mortgage nor any
provision of this bond or of the Mortgage (other than the last
sentence of the next paragraph and Section 1.03 of the
aforementioned Supplemental Indenture dated as of January 1,
1997) shall affect or impair the obligation of the Company, which
is absolute, unconditional and unalterable, to pay at the
maturities herein provided the principal of and interest on this
bond as herein provided. The principal of this bond may be
declared or may become due on the conditions, in the manner and
at the time set forth in the Mortgage, upon the happening of an
event of default as in the Mortgage provided.
This bond, together with all other bonds of this series, if
any, is issued to evidence and secure the Company's obligation
under a Loan Agreement dated as of May 1, 1996 and amended and
restated as of January 1, 1997 (herein called the "PCR Bond Loan
Agreement"), by and between The Connecticut Development Authority
(herein called the "Authority") and the Company, to make loan
payments as described below and to provide security for the
Pollution Control Revenue Bonds (The Connecticut Light and Power
Company Project) Series 1996A (the "PCR Bonds") issued by the
Authority in a principal amount of $62,000,000 pursuant to an
Indenture of Trust dated as of May 1, 1996 and amended and
restated as of January 1, 1997 (herein called the "PCR Bond
Indenture"), by and between the Authority and Fleet National
Bank, as trustee (herein called the "PCR Bond Trustee").
Pursuant to the PCR Bond Loan Agreement, the Authority, on the
date of original issue, loaned the proceeds from the sale of the
PCR Bonds to the Company to assist the Company in financing its
portion of the cost of acquiring, constructing and installing
certain pollution control and/or sewage or solid waste disposal
facilities at the Millstone 3 nuclear electric generating plant
located in Waterford, Connecticut, in which facilities the
Company owned, on the date of original issue, a 52.933% undivided
interest. Anything in the Mortgage or any bond of this series to
the contrary notwithstanding, the bonds of this series shall be
deemed paid, and all obligations of the Company to pay at the
times provided herein the principal of and premium, if any, and
interest on the bonds of this series shall be satisfied and
discharged, when and to the extent that the principal of and
premium, if any, and interest on the PCR Bonds shall have been
paid or deemed paid as provided in the PCR Bond Indenture.
The PCR Bonds are special obligations of the Authority,
payable solely out of the revenues and other receipts, funds and
moneys derived by the Authority under the PCR Bond Loan Agreement
or the PCR Bond Indenture and from any amounts otherwise
available under the PCR Bond Indenture for the payment of the PCR
Bonds. Such revenues and other receipts, funds, moneys and
amounts have been, pursuant to the PCR Bond Indenture, pledged by
the Authority to the PCR Bond Trustee as security for the PCR
Bonds and include loan payments required to be made by the
Company to the PCR Bond Trustee for the account of the Authority
pursuant to the PCR Bond Loan Agreement in amounts equal to the
amounts payable with respect to the PCR Bonds. This bond,
together with all other bonds of this series, if any, has terms
and provisions with respect to maturity, interest payment,
interest rate and redemption corresponding to those of the PCR
Bonds. This bond, together with all other bonds of this series,
if any, has been issued to and registered in the name of the PCR
Bond Trustee and, anything in the Mortgage or any bond of this
series to the contrary notwithstanding, the bonds of this series
shall not be sold, assigned, pledged or transferred, except to
effect the transfer to any successor trustee under the PCR Bond
Indenture.
This bond is transferable by the registered holder hereof in
person or by attorney upon surrender hereof at the office or
agency of the Company in the Borough of Manhattan, New York, New
York, together with a written instrument of transfer in approved
form, signed by the holder, and a new bond or bonds of this
series for a like principal amount in authorized denominations
will be issued in exchange, all as provided in the Mortgage.
Prior to due presentment for registration of transfer of this
bond the Company and the Trustee may deem and treat the
registered owner hereof as the absolute owner hereof, whether or
not this bond be overdue, for the purpose of receiving payment
and for all other purposes, and neither the Company nor the
Trustee shall be affected by any notice to the contrary.
This bond is exchangeable at the option of the registered
holder hereof upon surrender hereof, at the office or agency of
the Company in the Borough of Manhattan, New York, New York, for
an equal principal amount of bonds of this series of other
authorized denominations, in the manner and on the terms provided
in the Mortgage.
In the event that the PCR Bonds are to be redeemed as a
whole or in part on any date as provided in the PCR Bond
Indenture, a like principal amount of the bonds of this series
shall be redeemed on such date, at a redemption price equal to
the redemption price at which the PCR Bonds are to be so
redeemed, as set forth in the PCR Bond Indenture, stated as a
percentage of the principal amount of the bonds of this series to
be so redeemed, together in every case with accrued and unpaid
interest thereon to the date fixed for redemption. The bonds of
this series shall be redeemed as aforesaid in accordance with the
provisions of the Mortgage and upon not less than thirty (30)
days' prior notice given by mail as provided in the Mortgage;
provided, that the Company shall be deemed to have satisfied such
notice requirement by delivering to the PCR Bond Trustee, at the
time and in the manner specified in the PCR Bond Indenture and
the PCR Bond Loan Agreement, the notice and/or certificate
required pursuant to the PCR Bond Indenture and the PCR Bond Loan
Agreement to be delivered in connection with the redemption of
the PCR Bonds. The Company shall present a copy of such notice
and/or certificate to the Trustee at the time of such delivery to
the PCR Bond Trustee. Upon presentation to the Trustee for
payment of any bond of this series to be redeemed as aforesaid,
the Trustee shall redeem and fully pay such bond or the portion
thereof to be redeemed.
Redemptions of bonds of this series as aforesaid may be made
with moneys deposited with or received by the Trustee pursuant to
the Mortgage and/or with any other moneys available to the
Company for such purpose.
The Mortgage provides that the Company and the Trustee, with
consent of the holders of not less than 66 2/3% in aggregate
principal amount of the bonds at the time outstanding which would
be affected by the action proposed to be taken, may by
supplemental indenture add any provisions to or change or
eliminate any of the provisions of the Mortgage or modify the
rights of the holders of the bonds and coupons issued thereunder;
provided, however, that without the consent of the holder hereof
no such supplemental indenture shall affect the terms of payment
of the principal of or interest or premium on this bond, or
reduce the aforesaid percentage of the bonds the holders of which
are required to consent to such a supplemental indenture, or
permit the creation by the Company of any mortgage or pledge or
lien in the nature thereof ranking prior to or equal with the
lien of the Mortgage or deprive the holder hereof of the lien of
the Mortgage on any of the property which is subject to the lien
thereof.
As set forth in the Supplemental Indenture establishing the
terms and series of the bonds of this series, each holder of this
bond, solely by virtue of its acquisition thereof, shall have and
be deemed to have consented, without the need for any further
action or consent by such holder, to any and all amendments to
the Mortgage which are intended to eliminate or modify in any
manner the requirements of the sinking and improvement fund as
set forth in Section 6.14 of the Mortgage.
If the date for making any payment or the last date for
performance of any act or the exercise of any right, as provided
in the Supplemental Indenture establishing the terms and series
of the bonds of this series, is not a Business Day, such payment
may be made or act performed or right exercised on the next
succeeding Business Day unless otherwise provided herein, with
the same force and effect as if done on the nominal date provided
in the Supplemental Indenture establishing the terms and series
of the bonds of this series. For purposes hereof, "Business Day"
means any day (i) that is not a Saturday or Sunday, (ii) that is
a day on which banks are not required or authorized to close in
New York, New York and Hartford, Connecticut, (iii) that is a day
on which banking institutions in all of the cities in which the
principal offices of the PCR Bond Trustee, the Trustee and the
Paying Agent (as defined in the PCR Bond Indenture) and, if
applicable, the Remarketing Agent and the Bank (each as defined
in the PCR Bond Indenture) are located and are not required or
authorized to remain closed, and (iv) that is a day on which the
New York Stock Exchange, Inc. is not closed.
No recourse shall be had for the payment of the principal of or
the interest on this bond, or any part thereof, or for any claim
based thereon or otherwise in respect thereof, to any
incorporator or any past, present or future stockholder, officer
or director of the Company, either directly or indirectly, by
virtue of any statute or by enforcement of any assessment or
otherwise, and any and all liability of the said incorporators,
stockholders, officers or directors of the Company in respect to
this bond is hereby expressly waived and released by every holder
hereof.
PROPERTY SUBJECT TO THE LIEN OF THE MORTGAGE IN CONNECTICUT
TOWN OF ANDOVER
ALL of the following described rights, privileges and easements situated
in the Town of Andover, County of Tolland and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(1) Valdis Vinkels, Trustee May 10, 1996 65 345
(2) Stanley Farms, LLC.
et al May 29, 1996 65 483
(3) The Andover Building August 5, 1996 65 866
Corporation
(4) Valdis Vinkels September 12, 1996 66 28
TOWN OF ASHFORD
ALL of the following described rights, privileges and easements
situated in the Town of Ashford, County of Windham and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(5) David L. Sibiga, Sr.
et al May 31, 1996 108 990
(6) Patrick DesRocher et al June 19, 1996 109 319
TOWN OF AVON
ALL of the following described rights, privileges and easements
situated in the Town of Avon, County of Hartford and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(7) The Lakeview
Association, June 6, 1996 323 192
Incorporated
(8) Robert Peacock et al April 24, 1996 323 194
(9) FW/AB Associates,
L.L.C. May 6, 1996 319 20
TOWN OF BERLIN
ALL of the following described rights, privileges and easements
situated in the Town of Berlin, County of Hartford and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(10) Redcoat Home
Builders, Inc. March 26, 1996 380 286
TOWN OF BETHEL
ALL of the following described rights, privileges and easements
situated in the Town of Bethel, County of Fairfield and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(11) Berkshire Industrial May 15, 1995 591 88
Corporation
(12) CIBC Inc. June 19, 1995 591 99
(13) Duracell, Inc. June 5, 1995 591 102
TOWN OF BRANFORD
ALL of the following described rights, privileges and easements
situated in the Town of Branford, County of New Haven and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(14) Arnold T. Peterson
et al April 18, 1996 605 818
(15) Carol G. Meglio August 7, 1996 612 467
(16) The Zalia Group September 6, 1995 600 81
TOWN OF BROOKLYN
ALL of the following described rights, privileges and easements
situated in the Town of Brooklyn, County of Windham and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(17) George Pearce June 26, 1996 173 29
TOWN OF CANTON
ALL of the following described rights, privileges and easements
situated in the Town of Canton, County of Hartford and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(18) Gary R. Phelps et al August 2, 1996 215 18
(19) Frank J. Mairano October 10, 1996 216 482
TOWN OF CHAPLIN
ALL of the following described rights, privileges and easements
situated in the Town of Chaplin, County of Windham and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(20) Daniel J. Ouimette September 5, 1996 62 37
(21) Donald P. Desautels
et al October 23, 1996 62 259
TOWN OF CHESHIRE
ALL of the following described rights, privileges and easements
situated in the Town of Cheshire, County of New Haven and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(22) Brookville Equity Corp. May 8, 1996 1159 345
(23) Robert Greene
Construction, February 21, 1996 1147 80
Inc.
(24) Edward Bowan et al May 16, 1996 1160 12
(25) Heritage Hills, Inc. June 18, 1996 1165 86
(26) Waller Development
Corp. May 13, 1996 1172 135
(27) Heritage Hills, Inc. August 29, 1996 1176 201
TOWN OF CLINTON
ALL of the following described rights, privileges and easements
situated in the Town of Clinton, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(28) Spencer Court
Associates, August 22, 1996 247 1020
LLC
(29) Founders Associates June 5, 1985 145 992
(30) Doris F. Simoneau,
Trustee November 5, 1996 249 276
TOWN OF COLCHESTER
ALL of the following described rights, privileges and easements
situated in the Town of Colchester, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(31) Richard D. Martin May 15, 1996 404 337
(32) Frank B. Adams et al July 10, 1996 408 338
(33) Bryan F. Johnson June 9, 1996 407 102
(34) Scott M. Bailey et al July 29, 1996 411 44
(35) LaTerra Construction,
Inc. September 20, 1996 414 34
(36) Vincent Vespa, Jr.
et al October 25, 1996 418 105
TOWN OF COLUMBIA
ALL of the following described rights, privileges and easements
situated in the Town of Columbia, County of Tolland and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(37) Jeffrey B. Smith October 15, 1996 110 468
TOWN OF COVENTRY
ALL of the following described rights, privileges and easements
situated in the Town of Coventry, County of Tolland and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(38) Michael S. Block June 7, 1996 563 321
TOWN OF DEEP RIVER
ALL of the following described rights, privileges and easements
situated in the Town of Deep River, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(39) Mark Paul Rayner et al October 15, 1996 143 901
TOWN OF DURHAM
ALL of the following described rights, privileges and easements
situated in the Town of Durham, County of Middlesex and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(40) Susan T. Mellon November 28, 1977 89 1110
(41) Susan T. Mellon October 27, 1977 89 988
(42) PHS Development
Corp. November 19, 1981 95 300
(43) William W. Lawson, Jr. August 31, 1977 89 797
(44) Ahearn Builders of July 19, 1996 150 365
Wallingford, LLC
(45) Cuomo Construction,
Inc. November 19, 1997 151 605
(46) Joan C. Wells et al December 10, 1996 151 835
TOWN OF EAST GRANBY
ALL of the following described rights, privileges and easements
situated in the Town of East Granby, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(47) Steven Bednaz et al September 12, 1996 111 210
TOWN OF EAST HADDAM
ALL of the following described rights, privileges and easements
situated in the Town of East Haddam, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(48) Richard M. Lagace
et al May 17, 1996 392 328
(49) William C. Baron et al May 14, 1996 392 229
(50) Scott W. Jezek et al October 22, 1996 399 231
(51) Fernand A.
Tremblay, Jr. October 2, 1996 399 64
(52) State of Connecticut October 21, 1990 300 279
TOWN OF EAST LYME
ALL of the following described rights, privileges and easements
situated in the Town of East Lyme, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(53) Chapman Farms, LLC March 21, 1996 405 222
TOWN OF EAST WINDSOR
ALL of the following described rights, privileges and easements
situated in the Town of East Windsor, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(54) National Amusements,
Inc. April 22, 1996 189 493
(55) Ronald Petrucelli October 11, 1996 192 888
TOWN OF EASTFORD
ALL of the following described rights, privileges and easements
situated in the Town of Eastford, County of Windham and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(56) Eric J. Whittenburg
et al August 20, 1996 37 257
(57) Thomas A. Lynch et al September 16, 1996 37 327
TOWN OF ELLINGTON
ALL of the following described rights, privileges and easements
situated in the Town of Ellington, County of Tolland and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(58) Birche Associates,
L.L.C. July 10, 1996 225 643
(59) Wilhelm A. Frederich
et al July 24, 1996 226 504
(60) Autumn Chase LLC October 22, 1996 227 600
TOWN OF ENFIELD
ALL of the following described rights, privileges and easements
situated in the Town of Enfield, County of Hartford and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(61) Somerset Development June 26, 1996 995 35
Corporation
TOWN OF ESSEX
ALL of the following described rights, privileges and easements
situated in the Town of Essex, County of Middlesex and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(62) Jean Clark May 23, 1996 160 1109
(63) Donald Schumacher
et al May 23, 1996 160 1111
TOWN OF FARMINGTON
ALL of the following described rights, privileges and easements
situated in the Town of Farmington, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(64) Cornerstone Village,
L.L.C. July 10, 1996 521 296
(65) Northstar Properties,
LLC October 30, 1996 527 747
(66) Town of Farmington October 29, 1996 527 745
TOWN OF FRANKLIN
ALL of the following described rights, privileges and easements
situated in the Town of Franklin, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(67) William R. Stender, III July 16, 1996 51 375
TOWN OF GLASTONBURY
ALL of the following described rights, privileges and easements
situated in the Town of Glastonbury, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(68) Zella D. Ferrando July 17, 1996 1022 52
(69) GJLM Builders, LLC June 13, 1996 1018 33
(70) Antonio Modugno
et al July 9, 1996 1019 114
(71) T&M Homes, L.L.C.
et al August 21, 1996 1030 58
(72) Milestone Development
LLC September 11, 1996 1037 213
(73) Edward Draghi et al October 15, 1996 1041 240
(74) Rita Alice Anagnos August 13, 1996 1043 219
(75) Cove Landing
Associates July 16, 1996 1038 167
L.L.C.
TOWN OF GRANBY
ALL of the following described rights, privileges and easements
situated in the Town of Granby, County of Hartford and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(76) Halmar, Incorporated October 28, 1996 211 841
TOWN OF GREENWICH
ALL of the following described rights, privileges and easements
situated in the Town of Greenwich, County of Fairfield and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(77) Fareri Associates, L.P. November 14, 1995 2728 174
(78) Anthony H. Klettner
et al November 16, 1995 2738 137
&
November 25, 1995
TOWN OF GRISWOLD
ALL of the following described rights, privileges and easements
situated in the Town of Griswold, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(79) Arlene M. Veloce June 26, 1996 173 561
TOWN OF GROTON
ALL of the following described rights, privileges and easements
situated in the Town of Groton, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(80) Mystic Landing, LLC August 8, 1996 631 701
TOWN OF GUILFORD
ALL of the following described rights, privileges and easements
situated in the Town of Guilford, County of New Haven and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(81) Estate of Robert S.
Orcutt et all April 23, 1996 460 1068
(82) Joseph J. Russo et al March 29, 1996 461 127
(83) Estate of William M. June 7, 1996 462 667
Orcutt et al
(84) D & M Building
Company, May 31, 1996 462 254
Inc.
(85) Ferris Builders, Inc. July 11, 1996 463 882
(86) Christopher McManus July 3, 1996 463 738
Building, Inc.
(87) Rebecca Chasse July 5, 1996 463 576
(88) Town of Guilford March 18, 1996 462 81
(89) Allen B. Jacobs et al July 22, 1996 463 1040
(90) Anderson-Wilcox Corp. September 13, 1996 466 182
(91) Dorothy A. Amore September 17, 1996 466 184
(92) BKS of Guilford, LLC September 16, 1996 466 418
(93) Frank Prifitera et al October 2, 1996 468 155
TOWN OF HADDAM
ALL of the following described rights, privileges and easements
situated in the Town of Haddam, County of Middlesex and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(94) Louis W. D'Amico et al September 9, 1996 208 890
TOWN OF HARTFORD
ALL of the following described rights, privileges and easements
situated in the Town of Hartford, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(95) St. Monica's
Development December 4, 1995 3649 115
Corporation
(96) St. Monica's
Development April 30, 1996 3693 276
Corporation
(97) Tuscan Brotherhood January 31, 1985 2302 182
Homes II, Inc.
(98) Aetna Life Insurance February 16, 1989 2896 225
Company et al
TOWN OF HEBRON
ALL of the following described rights, privileges and easements
situated in the Town of Hebron, County of Tolland and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(99) Chestnut Hollow, LLC
et al June 13, 1996 177 358
(100) Milton J. Burton, Jr.
et al July 18, 1996 178 997
&
July 25, 1996
(101) Deborah J. Paradis
et al September 11, 1996 179 360
TOWN OF KILLINGLY
ALL of the following described rights, privileges and easements
situated in the Town of Killingly, County of Windham and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(102) Fred R. Oppert et al October 1, 1996 666 15
TOWN OF KILLINGWORTH
ALL of the following described rights, privileges and easements
situated in the Town of Killingworth, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(103) Michael I. Reznik
et al May 7, 1996 137 748
TOWN OF LEBANON
ALL of the following described rights, privileges and easements
situated in the Town of Lebanon, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(104) Donald Demar September 16, 1996 167 603
(105) Donald Demar September 16, 1996 167 606
(106) Donald Demar September 16, 1996 167 609
TOWN OF LEDYARD
ALL of the following described rights, privileges and easements
situated in the Town of Ledyard, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(107) Robert F. Gregory,
Trustee June 20, 1996 260 485
(108) Cyr Construction, Inc.
et al July 15, 1996 262 634
(109) Crossen Builders, Inc. October 25, 1996 264 245
(110) Reginald G. Neto, Jr.
et al November 4, 1996 264 414
TOWN OF LISBON
ALL of the following described rights, privileges and easements
situated in the Town of Lisbon, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(111) Lawrence W. Ellison
et al September 3, 1996 79 621
TOWN OF MANSFIELD
ALL of the following described rights, privileges and easements
situated in the Town of Mansfield, County of Tolland and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(115) John J. Shea, III et al August 20, 1996 377 87
(116) Dolores S. Smith September 24, 1996 379 222
TOWN OF MADISON
ALL of the following described rights, privileges and easements
situated in the Town of Madison, County of New Haven and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(112) M. Kalfus Building and February 13, 1996 705 156
Design Corp.
(113) Peter C. Smith et al April 23, 1996 708 35
(114) Crossroads Associates,
LLC August 2, 1996 711 67
TOWN OF MARLBOROUGH
ALL of the following described rights, privileges and easements
situated in the Town of Marlborough, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(117) Marlborough Town Line
LLC July 9, 1996 115 59
(118) Guy R. Turgeon August 8, 1996 115 243
(119) Dino A. Ferrari et al July 24, 1996 115 2
(120) West Hollow
Associates June 7, 1996 115 363
(121) Jewett City
Savings Bank October 4, 1996 115 1049
TOWN OF MERIDEN
ALL of the following described rights, privileges and easements
situated in the Town of Meriden, County of New Haven and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(122) Walbro Automotive August 16, 1996 2201 313
Corporation
(123) City of Meriden August 9, 1996 2200 185
TOWN OF MIDDLEBURY
ALL of the following described rights, privileges and easements
situated in the Town of Middlebury, County of New Haven and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(124) David P. Brickley et al July 18, 1995 141 613
TOWN OF MIDDLEFIELD
ALL of the following described rights, privileges and easements
situated in the Town of Middlefield, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(125) Zygo Corporation November 3, 1977 45 882
(126) Harvey Waller April 13, 1982 50 755
(127) Eleanor K. Kokoszka November 15, 1996 96 352
TOWN OF MIDDLETOWN
ALL of the following described rights, privileges and easements
situated in the Town of Middletown, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(128) City of Middletown March 24, 1980 570 57
(129) John F. Reynolds, III March 19, 1982 616 76
(130) Hill Development
Corporation May 22, 1985 746 222
(131) Stephen J. Channey July 2, 1996 1103 96
TOWN OF MONTVILLE
ALL of the following described rights, privileges and easements
situated in the Town of Montville, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(132) Leo J. Archambault
et al April 9, 1996 288 527
(133) Thomas E. Phillips
et al September 10, 1987 197 58
(134) Anna C. Kononchik September 10, 1987 197 56
(135) Joseph Wayne Riella November 10, 1987 197 53
(136) Randy Paul Blais September 16, 1987 197 60
(137) Albert C. Eichelberg
et al May 23, 1988 201 455
(138) A.E.S. Thames, Inc. July 31, 1989 215 327
(139) James J. Gorton November 1, 1996 292 714
TOWN OF NEWINGTON
ALL of the following described rights, privileges and easements
situated in the Town of Newington, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(140) AJ&S Associates III
Limited April 23, 1993 934 280
Partnership
TOWN OF NEWTOWN
ALL of the following described rights, privileges and easements
situated in the Town of Newtown, County of Fairfield and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(141) Donald D. Nowacki et al September 6, 1995 522 762
TOWN OF NORTH STONINGTON
ALL of the following described rights, privileges and easements
situated in the Town of North Stonington, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(142) Ray G. Jones October 25, 1995 109 762
(143) Charles G. Ryon October 24, 1995 109 764
(144) David R. Gray, Jr. January 16, 1996 109 766
(145) Donald A. Jones et al November 1, 1995 109 768
(146) Eugene P. Tillinghast
et al October 27, 1995 109 770
(147) Hugo Wilms, Jr. et al November 2, 1995 109 772
(148) Anna N. Coit October 24, 1995 109 774
(149) Joseph Janeiro October 4, 1996 111 809
TOWN OF OLD LYME
ALL of the following described rights, privileges and easements
situated in the Town of Old Lyme, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(150) Shoreline Affordable Housing,January 27, 1996 230330
Inc.
(151) Alvin Kus et al January 16, 1996 230 332
(152) David Eklund et al February 3, 1996 230 334
(153) The Hallock Realty
Company September 13, 1996 234 254
TOWN OF OLD SAYBROOK
ALL of the following described rights, privileges and easements
situated in the Town of Old Saybrook, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(154) Ralph Gometz June 21, 1996 336 361
TOWN OF OXFORD
ALL of the following described rights, privileges and easements
situated in the Town of Oxford, County of New Haven and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(155) Richard S. Eckstrom
et al September 11, 1995 183 958
TOWN OF PLAINFIELD
ALL of the following described rights, privileges and easements
situated in the Town of Plainfield, County of Windham and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(156) John M. Cholewa et al July 2, 1996 235 1247
(157) Dow Road Associates,
Inc. July 2, 1996 235 1248
(158) Dow Road Associates,
Inc. June 27, 1996 235 1258
(159) Cathie L. Demers et al October 16, 1996 238 286
TOWN OF PLYMOUTH
ALL of the following described rights, privileges and easements
situated in the Town of Plymouth, County of Litchfield and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(160) Daniel F. Lavallee
et al September 30, 1993 253 336
(161) Michael J. Dilger October 14, 1993 253 338
(162) Daniel F. Lavallee
et al September 5, 1995 253 341
TOWN OF POMFRET
ALL of the following described rights, privileges and easements
situated in the Town of Pomfret, County of Windham and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(163) Eric H. Johnson et al October 3, 1996 131 165
TOWN OF PORTLAND
ALL of the following described rights, privileges and easements
situated in the Town of Portland, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(164) Joseph Eisenstein November 6, 1976 113 180
(165) William C. Lee July 9, 1980 136 202
(166) Richard D. McGinley July 17, 1980 136 204
(167) B.F.W. Realty, Inc. July 8, 1980 136 204A
(168) Thaddeus P. Bysiewicz January 20, 1983 150 122
(169) Thaddeus P. Bysiewicz January 20, 1983 150 120
TOWN OF PRESTON
ALL of the following described rights, privileges and easements
situated in the Town of Preston, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(170) Napoleon Vanase
et al June 13, 1996 110 755
TOWN OF PROSPECT
ALL of the following described rights, privileges and easements
situated in the Town of Prospect, County of New Haven and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(171) V. C. Construction,
Inc. May 26, 1995 258 347
TOWN OF ROCKY HILL
ALL of the following described rights, privileges and easements
situated in the Town of Rocky Hill, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(172) Town of Rocky Hill May 21, 1996 302 212
(173) Amelia Zariphes Reilly
et al June 6, 1996 302 668
(174) Philip Ireland February 26, 1986 167 798
(175) Equimark Development March 31, 1986 168 305
Corporation
(176) Tedwin Farms LLC July 9, 1996 304 667
(177) Brimfield Associates,
L.L.C. August 2, 1996 305 961
TOWN OF SALEM
ALL of the following described rights, privileges and easements
situated in the Town of Salem, County of New London and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(178) Denbar Associates,
Inc. May 22, 1996 99 268
(179) Darlene M. Garthwait
et al October 24, 1996 101 562
TOWN OF SIMSBURY
ALL of the following described rights, privileges and easements
situated in the Town of Simsbury, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(180) Town of Simsbury April 29, 1996 455 455
(181) Richard E. Ostop July 5, 1996 458 678
(182) RFLP, Inc. October 8, 1996 462 366
(183) Presidential
Development August 19, 1996 460 136
Corporation
(184) Latimer Farms, Inc. November 1, 1996 463 332
TOWN OF SOMERS
ALL of the following described rights, privileges and easements
situated in the Town of Somers, County of Tolland and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(185) Gregory McDonald
et al November 25, 1996 172 851
TOWN OF SOUTH WINDSOR
ALL of the following described rights, privileges and easements
situated in the Town of South Windsor, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(186) J.M.J. Construction
Company, September 4, 1996 912 109
Incorporated
(187) Chase Associates, Inc. December 2, 1996 924 79
TOWN OF SOUTHBURY
ALL of the following described rights, privileges and easements
situated in the Town of Southbury, County of New Haven and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(188) Charles Slapin et al March 6, 1996 305 449
TOWN OF SOUTHINGTON
ALL of the following described rights, privileges and easements
situated in the Town of Southington, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(189) Kastner & Calvanese
Inc. July 11, 1996 653 77
(190) Stockverd, LLC August 8, 1996 651 837
(191) Milo & Denorfia
Construction September 24, 1996 654 914
Co., Inc.
(192) Nathaniel Florian September 24, 1996 654 916
TOWN OF STAFFORD
ALL of the following described rights, privileges and easements
situated in the Town of Stafford, County of Tolland and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(193) McDonald's Real Estate May 23, 1996 337 431
Company
TOWN OF STONINGTON
ALL of the following described rights, privileges and easements
situated
in the Town of Stonington, County of New London and State of Connecticut,
more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(194) William D. Dittman
et al May 17, 1996 391 952
(195) Peggy Ackley October 12, 1995 387 323
(196) W. Ronald O'Keefe November 18, 1996 397 1028
TOWN OF UNION
ALL of the following described rights, privileges and easements
situated in the Town of Union, County of Tolland and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(197) J. & W. Company, Inc. August 19, 1996 39 295
TOWN OF WEST HARTFORD
ALL of the following described rights, privileges and easements
situated in the Town of West Hartford, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(198) West Hartford Place July 17, 1996 2117 9
Condominium Owners'
Association, Inc.
TOWN OF WESTBROOK
ALL of the following described rights, privileges and easements
situated in the Town of Westbrook, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(199) Beatrice Breck July 2, 1996 177 99
(200) Robert L. Day et al July 22, 1996 177 430
TOWN OF WESTON
ALL of the following described rights, privileges and easements
situated in the Town of Weston, County of Fairfield and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(201) Michael Vranos et al December 26, 1995 234 1008
&
January 1, 1996
(202) Grey Fox Associates,
LLC April 13, 1995 228 362
(203) Grey Fox Associates,
LLC April 13, 1995 228 366
TOWN OF WETHERSFIELD
ALL of the following described rights, privileges and easements
situated in the Town of Wethersfield, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(204) Paul Randazzo and
Sons, Inc. January 21, 1986 364 115
TOWN OF WINDHAM
ALL of the following described rights, privileges and easements
situated in the Town of Windham, County of Windham and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(205) John T. Asselin August 12, 1996 497 116
TOWN OF WINDSOR
ALL of the following described rights, privileges and easements
situated in the Town of Windsor, County of Hartford and State of Connecticut,
more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(206) Thomas P. DeFranzo
et al May 14, 1996 1087 370
(207) Thomas M. Burke May 31, 1996 1087 373
(208) Garry J. Foster et al May 28, 1996 1087 375
(209) Anthony M. Spadafora June 6, 1996 1087 377
(210) Raylin Homes, LLC November 7, 1996 1102 178
TOWN OF WINDSOR LOCKS
ALL of the following described rights, privileges and easements
situated in the Town of Windsor Locks, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(211) Ridgewood Development
LLC June 18, 1996 236 403
TOWN OF WOLCOTT
ALL of the following described rights, privileges and easements
situated in the Town of Wolcott, County of New Haven and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(212) Paul R. Cossette et al December 18, 1995 229 795
TOWN OF WOODBURY
ALL of the following described rights, privileges and easements
situated in the Town of Woodbury, County of Litchfield and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(213) Mark Picton June 8, 1995 209 63
(214) A&B Real Estate
Development, February 23, 1995 207 532
LLC
TOWN OF WOODSTOCK
ALL of the following described rights, privileges and easements
situated in the Town of Woodstock, County of Windham and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME PAGE
(215) Jerron C. Hill et al August 12, 1996 268 250
(216) H. Douglas Porter October 16, 1996 270 352
(217) Salvatore C. Nilo et al November 7, 1996 270 413
Exhibit 4.2.24
CONNECTICUT DEVELOPMENT AUTHORITY
and
THE CONNECTICUT LIGHT AND POWER COMPANY
AMENDED AND RESTATED LOAN AGREEMENT
Dated as of May 1, 1996
and
Amended and Restated
as of January 1, 1997
Connecticut Development Authority
$62,000,000 Pollution Control Revenue Bond
(The Connecticut Light and Power Company
Project - 1996A Series)
TABLE OF CONTENTS
Page
PREAMBLE 1
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions 4
Section 1.2. Interpretation 10
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations by the Authority 11
Section 2.2 Limitation of Control by Borrower 13
Section 2.3. Representations by the Borrower 13
ARTICLE III
THE LOAN
Section 3.1. Loan Clauses 15
Section 3.2. Other Amounts Payable 16
Section 3.3. Manner of Payment 17
Section 3.4. Obligation Unconditional 17
Section 3.5. Security Clauses 17
Section 3.6. Issuance of Bonds 17
Section 3.7. Issuance, Delivery and Surrender of
Mortgage Bonds 18
Section 3.8. Redemption of Mortgage Bonds 18
Section 3.9. Effective Date and Term 18
Section 3.10. Borrower's Purchase of Bonds 18
Section 3.11. Standby Bond Purchase Agreement 19
Section 3.12. Substitution or Replacement of
Standby Bond Purchase Agreement 19
Section 3.13. Securities Laws 21
Section 3.14. New York Paying Agent 21
ARTICLE IV
THE PROJECT
Section 4.1. Completion of the Project 21
Section 4.2. No Warranty Regarding Condition,
Suitability or Cost of Project 21
Section 4.3. Taxes 21
Section 4.4. Insurance 22
Section 4.5. Compliance with Law 22
Section 4.6. Maintenance and Repair 22
ARTICLE V
CODEMNATION
DAMAGE AND DESTRUCTION
Section 5.1. No Abatement of Payments Hereunder 23
Section 5.2. Project Disposition Upon Condemnation,
Damage or Destruction 23
Section 5.3. Application of Net Proceeds of
Insurance or Condemnation 23
ARTICLE VI
COVENANTS
Section 6.1. The Borrower to Maintain its Corporate
Existence; Conditions under which
Exceptions Permitted 23
Section 6.2. Indemnification, Payment of Expenses,
and Advances 24
Section 6.3. Incorporation of Tax Regulatory
Agreement; Payments Upon Taxability 26
Section 6.4. Covenant as to Project Use 27
Section 6.5. Further Assurances and Corrective
Instruments 28
Section 6.6. Covenant by Borrower as to Compliance
with Indenture 28
Section 6.7. Assignment of Agreement or Mortgage
Bonds 28
Section 6.8. Inspection 28
Section 6.9. Default Notification 29
Section 6.10. Covenant Against Discrimination 29
Section 6.11. Authority Costs and Expenses 29
Section 6.12. Bond Insurer Notice Provisions 29
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default 30
Section 7.2. Remedies on Default 31
Section 7.3 Remedies Upon Project Use Default 32
Section 7.4. No Duty to Mitigate Damages 32
Section 7.5. Remedies Cumulative 32
ARTICLE VIII
PREPAYMENT PROVISIONS
Section 8.1. Optional Prepayment 33
Section 8.2. Notice by the Borrower of Optional
Prepayment 34
Section 8.3. Mandatory Prepayment on Taxability 35
Section 8.4. Mandatory Prepayment Upon Occurrence
of Certain Events 35
Section 8.5. Mandatory Prepayment Pursuant to
Standby Bond Purchase Agreement 35
ARTICLE IX
GENERAL
Section 9.1. Indenture 35
Section 9.2. Benefit of and Enforcement by
Bondholders 35
Section 9.3. Force Majeure 35
Section 9.4. Amendments 36
Section 9.5. Notices 36
Section 9.6. Prior Agreements Superseded 36
Section 9.7. Execution of Counterparts 37
Section 9.8. Time 37
THIS AMENDED AND RESTATED LOAN AGREEMENT, made and dated as of January
1, 1997, amending and restating that certain Loan Agreement made and dated as
of May 1, 1996 (the "Original Loan Agreement") (the Original Loan Agreement
as amended and restated hereby is hereinafter referred to as the "Loan
Agreement"), each by and between the Connecticut Development Authority, a
body corporate and politic constituting a public instrumentality and
political subdivision of the State of Connecticut, and The Connecticut Light
and Power Company, a corporation organized and existing under the laws of the
State of Connecticut,
WITNESSETH THAT:
WHEREAS, the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-1a through 32-23xx, as amended (the "Act"), declares
that there is a continuing need in the State (1) for economic development and
activity to provide and maintain employment and tax revenues and to control,
abate and prevent pollution to protect the public health and safety and (2)
for assistance to public service businesses providing transportation and
utility services in the State, and that the availability of financial
assistance and suitable facilities are important inducements to industrial
and commercial enterprises to remain or locate in the State and to provide
industrial, recreation, urban and public service projects; and
WHEREAS, the Act provides that (1) the term "project" as used therein
means any facility, plant, works, system, building, structure, utility,
fixture or other real property improvement located in the State, and the land
on which it is located or which is reasonably necessary in connection
therewith, which is of a nature or which is to be used or occupied by any
person for purposes which would constitute it as an economic development
project, recreation project, urban project, public service project or health
care project, and any real property improvement reasonably related thereto,
and (2) a project may also include or consist exclusively of machinery,
equipment or fixtures; and
WHEREAS, the Act defines economic development project to include "any
project which is to be used or occupied by any person for . . . (2)
controlling, abating, preventing or disposing land, water, air or other
environmental pollution . . . or (3) the conservation of energy or the
utilization of cogeneration technology or solar, wind, hydro, biomass or
other renewable sources to produce energy for any industrial or commercial
application"; and
WHEREAS, the Act provides that the Authority shall have power to
determine the location and character of, and extend credit or make loans to
any person for the planning, designing, acquiring, improving and equipping
of, a project which may be secured by loan, lease or sale agreements,
contracts and other instruments, upon such terms and conditions as the
Authority shall determine to be reasonable, to require the inclusion in any
contract, loan agreement or other instrument of such provisions for the
construction, use, operation, maintenance and financing of the project as the
Authority may deem necessary or desirable, to issue its bonds for such
purposes, subject to the approval of the Treasurer of the State, and, as
security for the payment of the principal or redemption price, if any, of and
interest on any such bonds, to pledge or assign such a loan, lease or sale
agreement and the revenues and receipts derived by the Authority from such a
project; and
WHEREAS, The Connecticut Light and Power Company (the "Borrower")
currently owns certain undivided interests in existing facilities within
certain municipalities in the State and, by resolution adopted in furtherance
of the purposes of the Act, the Authority has accepted the application of the
Borrower for assistance in the financing of facilities for the control,
abatement or prevention of environmental pollution deriving from the
operation of certain nuclear electric generating facilities (the "Project");
and
WHEREAS, the Authority has by a resolution adopted April 17, 1996
authorized the issuance of $62,000,000 principal amount of its Pollution
Control Revenue Bonds (The Connecticut Light and Power Company Project -
1996A Series) (the "Bonds") for the purpose of providing funds for the
financing of construction of and additions to the pollution control and
sewage and solid waste disposal facilities of the Borrower; and
WHEREAS, pursuant to such resolution, the Bonds were secured by an
Indenture of Trust, dated as of May 1, 1996 (the "Original Indenture"), by
and between the Authority and Fleet National Bank, as trustee; and
WHEREAS, concurrently with the execution of the Original Indenture, the
Authority and the Borrower entered into the Original Loan Agreement,
providing for a loan by the Authority to the Borrower in an amount equal to
the principal and amount of the Bonds; and
WHEREAS, in order to support the payment of the Bonds, the Borrower,
concurrently with the execution of the Original Indenture, arranged for the
delivery to the Paying Agent (as hereinafter defined) of an irrevocable
Letter of Credit, dated the date of the delivery of the Bonds, issued by
Canadian Imperial Bank of Commerce, New York Agency, for the account of the
Borrower in favor of the Paying Agent as beneficiary on behalf of the owners
of the Bonds; and
WHEREAS, the Borrower and Canadian Imperial Bank of Commerce, New York
Agency, entered into a Letter of Credit and Reimbursement Agreement dated as
of May 1, 1996, obligating the Borrower, inter alia, to repay all amounts
drawn under the Letter of Credit; and
WHEREAS, the Connecticut Department of Public Utility Control approved
the issuance of the Note (as such term is defined in the Original Indenture);
and
WHEREAS, on May 21, 1996, the Authority issued the Bonds under and in
accordance with the provisions of the Original Indenture; and
WHEREAS, the Bonds are special obligations of the Authority, payable
solely out of the revenues and other receipts, funds or monies derived by the
Authority under this Agreement or the Indenture (as hereinafter defined) and
from any amounts otherwise available under the Indenture for the payment of
the Bonds; and
WHEREAS, all federal and State agencies having jurisdiction in the
premises have certified that the portion of the Project that constitutes
pollution control facilities, as designed, is in furtherance of the purpose
of controlling, abating or preventing pollution at the Plant; and
WHEREAS, the Borrower has determined to replace the Letter of Credit (as
such term is defined in the Original Indenture) with a substitute Credit
Facility (as such term is defined in the Original Indenture) consisting of
credit support in the form of a bond insurance policy to be issued by AMBAC
Indemnity Corporation (the "Bond Insurer") and liquidity support in the form
of a standby bond purchase agreement, by and between the Borrower and Societe
Generale, New York Branch, and to make certain other modifications to the
Original Indenture in connection therewith; and
WHEREAS, in order to further secure the Bonds, the Borrower has
determined to issue its 1996 Series B First Mortgage Bonds due May 1, 2031
(the "Mortgage Bonds") pursuant to that certain Indenture of Mortgage and
Deed of Trust dated as of May 1, 1921, between the Borrower and Bankers Trust
Company, as Trustee, as heretofore amended and supplemented and as
hereinafter amended or supplemented in accordance with the provisions thereof
(the "Mortgage"); and
WHEREAS, the Borrower acknowledges that the Authority is providing
financing for the project in furtherance of the Authority's corporate
purposes under the Act, that the accomplishment of these purposes is
dependent upon the compliance of the Borrower with its covenants contained in
this Agreement, that the Authority has a resulting beneficial interest in the
Project, and that the Borrower's use of and interest in the Project as
provided hereby are in furtherance of the discharge of a public purpose; and
WHEREAS, the Connecticut Department of Public Utility Control has
approved the substitution of the Credit Facility and the issuance of the
Mortgage Bonds; and
WHEREAS, the Authority, at the request of the Borrower, has determined
to amend and restate the Original Loan Agreement in order to provide for the
amendments, modifications and other changes necessary to effectuate the
replacement of the Letter of Credit and the issuance by the Borrower of the
Mortgage Bonds and such other actions to be taken in connection therewith;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, covenants and agreements herein set forth, the Authority and
the Borrower, each binding itself, it successors and assigns, do mutually
promise, covenant and agree as follows (provided that in the performance of
the agreements of the Authority herein contained, any obligation it may incur
for the payment of money shall not be an obligation, debt or liability of the
State or any municipality thereof and neither the State nor any municipality
thereof shall be liable on any obligation so incurred, but any such
obligation shall be payable solely out of the revenues or other receipts,
funds or monies to be derived by the Authority under this Agreement or the
Indenture and from any amounts otherwise available under the Indenture for
the payment of the Bonds):
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions. For the purposes of this Agreement, the
following words and terms shall have the respective meanings set forth as
follows, and any capitalized word or term used but not defined herein is used
as defined in the Indenture:
"Act" means the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-la through 32-23xx, as amended.
"Agreement" means this Amended and Restated Loan Agreement and any
amendments and supplements hereto.
"Alternate Liquidity Facility" means a standby bond purchase agreement
or other liquidity device issued in accordance with Section 3.12 hereof.
"Authority" means the Connecticut Development Authority, a body
corporate and politic constituting a public instrumentality and political
subdivision of the State of Connecticut duly organized and existing under the
laws of the State, and any body, board, authority, agency or other political
subdivision or instrumentality of the State which shall hereafter succeed to
the powers, duties and functions thereof.
"Authorized Representative" means, in the case of the Authority, the
Chairman or Vice Chairman, the President, the Executive Vice President or any
Senior Vice President or any Vice President thereof and, in the case of the
Borrower, the Chairman, Vice Chairman, President, any Vice President, Chief
Financial Officer, Treasurer, Assistant Treasurer, Secretary or Assistant
Secretary thereof and, when used with reference to the performance of any
act, the discharge of any duty or the execution of any certificate or other
document, any officer, employee or other person authorized to perform such
act, discharge such duty or execute such certificate or other document.
"Bank" means any bank or banks designated from time to time as a "Bank"
under the Standby Bond Purchase Agreement, except that if one or more
Alternate Liquidity Facilities are in effect, such term means any entity or
entities obligated to make payments under each Alternate Liquidity Facility.
"Beneficial Owner" shall have the meaning specified in Section 2.3(F) of
the Indenture. If any person claims to the Trustee to be a Beneficial Owner,
for purposes of Section 2.4(C) of the Indenture, such person shall prove such
claim to the satisfaction of the Trustee with such documentation and
signature guaranties as the Trustee may request.
"Bonds" means the $62,000,000 Pollution Control Revenue Bonds (The
Connecticut Light and Power Company Project - 1996A Series) authorized and
issued pursuant to Section 2.3 of the Indenture.
"Bond Counsel" means Whitman Breed Abbott & Morgan or such other
nationally recognized bond counsel selected by the Authority and reasonably
satisfactory to the Borrower and the Trustee.
"Bond Insurer" shall mean AMBAC Indemnity Corporation, a Wisconsin-
domiciled stock insurance company.
"Borrower" means (i) The Connecticut Light and Power Company, a
corporation organized and existing under the laws of the State of
Connecticut, and its successors and assigns and (ii) any surviving resulting
or transferee corporation as provided in Section 6.1 hereof.
"Business Day" means any day (i) that is not a Saturday or Sunday, (ii)
that is a day on which banks located in Hartford, Connecticut and New York,
New York are not required or authorized to remain closed, (iii) that is a day
on which banking institutions in all of the cities in which the principal
offices of the Trustee, the Mortgage Trustee and the Paying Agent and, if
applicable, the Remarketing Agent and the Bank are located and are not
required or authorized to remain closed and (iv) that is a day on which the
New York Stock Exchange, Inc. is not closed.
"Code" means the Internal Revenue Code of 1986, as amended and
regulations promulgated thereunder.
"Conversion Date" means the date on which a new Mode becomes effective
with respect to a Bond, and with respect to a Bond in the Multiannual Mode,
the date on which a new Rate Period becomes effective.
"Debt Service Fund" means the special trust fund so designated,
established pursuant to Section 5.1 of the Indenture.
"Disclosure Documents" shall mean the Borrower's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, the Borrower's Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 1996, June 30,
1996 and September 30, 1996 and the Borrower's Current Reports on Form 8-K
dated January 31, 1996, March 30, 1996, April 15, 1996, June 6, 1996, June
18, 1996, June 28, 1996, July 22, 1996, August 19, 1996, November 25, 1996
and January 20, 1997.
"DTC" or "The Depository Trust Company" shall mean the limited-purpose
trust company organized under the laws of the State of New York which shall
act as securities depository for the Bonds, and any successor thereto.
"Determination of Taxability" means (1) a published revenue ruling by
the Internal Revenue Service and an opinion of Bond Counsel, unless the
Borrower timely requests the Authority to proceed in accordance with Section
6.3(H) of this Agreement and proceedings pursuant to such section are
continuing, (2)(a)(i) a private ruling specifically applicable to the Bonds
or (ii) the receipt by any Bondowner of a notice of assessment and demand for
payment from the Internal Revenue Service and (b)(i) the expiration of the
appeal period provided therein if no appeal is taken or (ii) if an appeal is
taken, a final unappealable decision by a court of competent jurisdiction;
provided that in the case of an event described in clause (2) that the
Authority or the Bondowner, as the case may be, has given the Borrower and
the Trustee prompt written notice of any application for such a private
ruling or, as the case may be, any proposed assertion of taxability by the
Internal Revenue Service and, if the Borrower agrees to pay all expenses in
connection therewith, permits the Borrower to contest such action, either
directly or in the name of the registered owner, through any level of appeal
determined by the Borrower, or (3) the admission in writing by the Borrower,
in the case of clause (1), (2) and (3) to the effect that the interest on the
Bonds is includable in the gross income for federal income tax purposes
(other than for purposes of any alternative minimum tax, environmental tax or
foreign branch profits tax) of an owner or former owner thereof, other than
for a period during which such owner or former owner is or was a "Substantial
User" of the Project or a "Related Person" as such terms are defined in the
Code. For purposes of this definition, the term owner or Bondowner means the
Beneficial Owner of the Bonds so long as the Book-Entry Only System (as
defined in Section 2.3(F) of the Indenture) is in effect.
"Event of Default" means an Event of Default as defined in Section 7.1
hereof.
"Financing Documents" means this Agreement, the Tax Regulatory Agreement
and the Mortgage Bonds.
"Indenture" means the Amended and Restated Indenture of Trust, of even
date herewith, by and between the Authority and the Trustee, together with
all indentures supplemental thereto made and entered into in accordance
therewith.
"Insurance Policy" shall mean the municipal bond insurance policy issued
by the Bond Insurer insuring the payment, when due, of the principal of and
interest on the Bonds as provided therein.
"Interest Payment Date" shall mean each date on which interest is
payable on the Bonds as provided in the forms of the Bonds.
"Moody's" means Moody's Investors Services, Inc., a corporation
organized and existing under the laws of the State of Delaware, its
successors and their assigns, and if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating
agency, "Moody's" shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Authority, at the direction of the
Borrower, by notice to the Trustee and the Borrower.
"Mortgage" means the Indenture of Mortgage and Deed of Trust dated as of
May 1, 1921, between the Borrower and the Mortgage Trustee, as heretofore
amended and supplemented and as hereafter amended or supplemented in
accordance with the provisions thereof.
"Mortgage Bonds" means the 1996 Series B First Mortgage Bonds issued by
the Borrower and delivered to the Trustee pursuant to Section 3.7 hereof and
the Mortgage to secure the Borrower's obligation to make the loan payments
and to make payments in respect of the Purchase Price, if applicable, of the
Bonds.
"Mortgage Indentures" means (i) the Mortgage, (ii) that certain First
Mortgage Indenture and Deed of Trust dated as of January 1, 1958, by and
between The Hartford Electric Light Company (which merged with and into the
Borrower as of June 30, 1982) and Old Colony Trust Company (which merged into
First National Bank of Boston by merger effective January 4, 1971), as
trustee, as amended and supplemented, and (iii) any other mortgage indenture
which may hereafter be created so long as such mortgage indenture covers the
property pledged under the indentures named in (i) and (ii) above or
otherwise covers substantially all of the property of the Borrower.
"Mortgage Trustee" means Bankers Trust Company or any successor as the
trustee under the Mortgage.
"Net Proceeds" when used with respect to any insurance or condemnation
award, means the gross proceeds from such award less all expenses (including
attorney's fees and expenses and any extraordinary expenses) incurred in the
collection thereof.
"1954 Code" means the Internal Revenue Code of 1954, as amended, as in
effect on August 1, 1986.
"Outstanding", when used with reference to a Bond or Bonds, as of any
particular date, means all Bonds which have been authenticated and delivered
under the Indenture, except:
(1) any Bonds cancelled by the Trustee because of payment or
redemption prior to maturity or surrendered to the Trustee for
cancellation;
(2) any Bond (or portion of a Bond) paid or redeemed or for the
payment or redemption of which there has been separately set aside and
held in the Debt Service Fund either:
(a) monies in an amount sufficient to effect payment of the
principal or applicable Redemption Price thereof, together with
accrued interest on such Bond to the payment or redemption date,
which payment or redemption date shall be specified in irrevocable
instructions given to the Trustee to apply such monies to such
payment on the date so specified; or
(b) obligations of the kind described in subsection 12.1(A)
of the Indenture in such principal amounts, of such maturities,
bearing such interest and otherwise having such terms and
qualifications as shall be necessary to provide monies in an amount
sufficient to effect payment of the principal or applicable
Redemption Price of such Bond, together with accrued interest on
such Bond to the payment or redemption date, which payment or
redemption date shall be specified in irrevocable instructions
given to the Trustee to apply such obligations to such payment on
the date so specified; or
(c) any combination of (a) and (b) above;
(3) Bonds deemed tendered for purchase and not delivered to the
Paying Agent on the Purchase Date, provided sufficient funds for payment
of the Purchase Price are on deposit with the Paying Agent;
(4) Bonds in exchange for or in lieu of which other Bonds shall
have been authenticated and delivered under Article III of the
Indenture; and
(5) any Bond deemed to have been paid as provided in subsection
12.1 of the Indenture.
"Paying Agent" means any paying agent for the Bonds appointed pursuant
to Section 9.10 of the Indenture (and may include the Trustee), and its
successor or successors and any other corporation which may at any time be
substituted in its place in accordance with the Indenture.
"Permitted Encumbrances" mean, as of any particular date, (i) the lien
of the Mortgage Indentures, (ii) liens and encumbrances permitted by the
Mortgage Indentures, (iii) liens for taxes not yet due and payable, (iv) any
lien created by this Agreement and the Indenture, (v) utility, access and
other easements and rights-of-way, that will not interfere with or impair the
value or use of the Project as herein provided, (vi) any mechanic's,
laborer's, materialman's, supplier's or vendor's lien or right in respect
thereof if payment is not yet due and payable and for which statutory lien
rights exist, and (vii) such minor defects, irregularities, easements, and,
rights-of-way (including agreements with any railroad the purpose of which is
to service the railroad siding) as normally exist with respect to property
similar in character to the Project and which do not materially impair the
value or use of the property affected thereby for the purpose for which it
was acquired hereunder.
"Plant" means the Millstone 3 nuclear electric generating plant in
Waterford, Connecticut, at which plant the Project is located.
"Principal User" means any principal user of the Project within the
meaning of Section 144(a)(2)(B) of the Code, or 103(b)(6)(B) of the 1954
Code, as applicable, including without limitation any person who is a
greater-than-10-percent-owner (or if none, the person(s) who holds the
largest ownership interest in the Project), lessee or user of more than 10%
of the Project measured either by occupiable space or fair rental value under
any formal or informal agreement or, under the particular facts and
circumstances, anyone who is a principal customer of the Project. The term
"principal customer" means any person, who purchases output of the Project
under a contract if the percentage of output taken or to be taken by such
person, multiplied by a fraction the numerator of which is the term of such
contract and the denominator of which is the economic life of the Project,
exceeds 10%. In the case of a person who purchases output of an electric or
thermal energy, gas, water or other similar facility, such person is a
principal customer if the total output purchased by such person during any
one-year period beginning with the date the facility is placed in service is
more than 10 percent of the facility's output during each such period.
Co-owners or co-lessees who are shareholders in a corporation or who are
collectively treated as a partnership subject to subchapter K under section
761(a) of the Code are not treated as Principal Users merely by reason of
their ownership of corporate or partnership interests.
"Project" includes the Project Equipment more fully described in
Appendix A.
"Redemption Price" means, when used with respect to a Bond or a portion
thereof, the principal amount of such Bond or portion thereof plus the
applicable premium, if any, payable upon redemption thereof pursuant to the
Indenture.
"Related Person" means, with respect to any Principal User, a person
which is a related person (as defined in Section 144(a)(3) of the Code, or
Section 103(b)(6)(B) of the 1954 Code, as applicable, and by reference to
Sections 267, 707(b) and 1563(a) of the Code, except that 50% is to be
substituted for 80% in Section 1563(a)).
"Sharing Agreement" means the Sharing Agreement - 1979 Connecticut
Nuclear Unit dated as of September 1, 1973, among the Borrower and the other
participants from time to time in ownership of the Millstone 3 nuclear
electric generating plant in Waterford, Connecticut, pertaining to the
ownership, construction and operation of Millstone 3, as such agreement has
been or may be amended from time to time.
"S&P" means Standard & Poor's Corporation, a corporation organized and
existing under the laws of the State of New York, its successors and their
assigns and, if such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, "S&P" shall be
deemed to refer to any other nationally recognized securities rating agency
designated by the Trustee at the direction of the Borrower.
"Standby Bond Purchase Agreement" means, initially, the Standby Bond
Purchase Agreement dated January 23, 1997, and any extensions thereof, among
the Borrower, the Trustee and Societe Generale, New York Branch, as amended
and supplemented, and thereafter upon the issuance of an Alternate Liquidity
Facility, such term shall mean such Alternate Liquidity Facility.
"State" means the State of Connecticut.
"Substantial User" means any substantial user of the Project within the
meaning of Section 147(a) of the Code or Section 103(b)(13) of the 1954 Code,
as applicable.
"Supplemental Indenture" means any indenture supplemental to the
Indenture or amendatory of the Indenture, adopted by the Authority in
accordance with Article X of the Indenture.
"Tax Incidence Date" means the date as of which interest on the Bonds
becomes or became includable in the gross income of the recipient thereof
(other than the Borrower or another Substantial User or Related Person) for
federal income tax purposes for any cause, as determined by a Determination
of Taxability.
"Tax Regulatory Agreement" means the Tax Regulatory Agreement, dated as
of the date of initial issuance and delivery of the Bonds, among the
Authority, the Borrower and the Trustee, and any amendments and supplements
thereto.
"Term", when used with reference to this Agreement, means the term of
this Agreement determined as provided in Article III hereof.
"Trustee" means Fleet National Bank, and its successor or successors
hereafter appointed in the manner provided in the Indenture.
Section 1.2. Interpretation. In this Agreement:
(1) The terms "hereby", "hereof", "hereto", "herein", "hereunder"
and any similar terms, as used in this Agreement, refer to this
Agreement, and the term "hereafter" means after, and the term
"heretofore" means before, the date of this Agreement.
(2) Words of the masculine gender mean and include correlative
words of the feminine and neuter genders and words importing the
singular number mean and include the plural number and vice versa.
(3) Words importing persons include firms, associations,
partnerships (including limited partnerships), trusts, corporations and
other legal entities, including public bodies, as well as natural
persons.
(4) Any headings preceding the texts of the several Articles and
Sections of this Agreement, and any table of contents appended to copies
hereof, shall be solely for convenience of reference and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
(5) Nothing contained in this Agreement shall be construed to
cause the Borrower to become the agent for the Authority or the Trustee
for any purpose whatsoever, nor shall the Authority or the Trustee be
responsible for any shortage, discrepancy, damage, loss or destruction
of any part of the Project wherever located or for whatever cause.
(6) All approvals, consents and acceptances required to be given
or made by any person or party hereunder shall be at the sole discretion
of the party whose approval, consent or acceptance is required.
(7) All notices to be given hereunder shall be given in writing
within a reasonable time unless otherwise specifically provided.
(8) This Agreement shall be governed by and construed in
accordance with the applicable laws of the State.
(9) If any provision of this Agreement shall be ruled invalid by
any court of competent jurisdiction, the invalidity of such provision
shall not affect any of the remaining provisions hereof.
(10) From and after the date upon which there is no Standby Bond
Purchase Agreement or Alternate Liquidity Facility in effect, upon
receipt by the Trustee of a certificate from the Bank stating that all
amounts payable to the Bank under the Standby Bond Purchase Agreement or
Alternate Liquidity Facility, as the case may be, have been paid in
full, all references to the Bank, the Standby Bond Purchase Agreement or
Alternate Liquidity Facility, as the case may be, in this Agreement, the
Mortgage Bonds, the Indenture, and the Bonds shall be ineffective.
(11) All references herein to the consent or approval of the Bank
shall only be of effect hereunder to the extent that the Standby Bond
Purchase Agreement or Alternate Liquidity Facility is in full force and
effect and the Bank is not in default thereunder.
(12) All references herein to the consent or approval of the Bond
Insurer shall only be of effect hereunder to the extent that the
Insurance Policy is in full force and effect and the Bond Insurer is not
in default thereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations by the Authority. The Authority
represents and warrants that:
(1) It is a body corporate and politic constituting a public
instrumentality and political subdivision of the State, duly organized
and existing under the laws of the State including the Act. The
Authority is authorized to issue the Bonds in accordance with the Act
and to use the proceeds thereof to finance the Project.
(2) The Authority has complied with the provisions of the Act and
has full power and authority pursuant to the Act to consummate all
transactions contemplated by the Bonds, the Indenture and the Financing
Documents.
(3) By resolution duly adopted by the Authority and still in full
force and effect, the Authority has authorized the execution, delivery
and due performance of the Bonds, the Indenture and the Financing
Documents, and the taking of any and all action as may be required on
the part of the Authority to carry out, give effect to and consummate
the transactions contemplated by this Agreement and the Indenture, and
all approvals necessary in connection with the foregoing have been
received.
(4) The Bonds have been duly authorized, executed, authenticated,
issued and delivered, constitute valid and binding special obligations
of the Authority payable solely from revenues or other receipts, funds
or monies pledged therefor under the Indenture and from any amounts
otherwise available under the Indenture, and are entitled to the benefit
of the Indenture. Neither the State nor any municipality thereof is
obligated to pay the Bonds or the interest thereon. Neither the faith
and credit nor the taxing power of the State nor any municipality
thereof is pledged for the payment of the principal, and premium, if
any, of and interest on the Bonds.
(5) The execution and delivery of the Bonds, the Indenture and
the Financing Documents and compliance with the provisions thereof, will
not conflict with or constitute on the part of the Authority a violation
of, breach of or default under its by-laws or any statute, indenture,
mortgage, deed of trust, note agreement or other agreement or instrument
to which the Authority is a party or by which the Authority is bound,
or, to the knowledge of the Authority, any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Authority or any of its activities or properties, and all consents,
approvals, authorizations and orders of governmental or regulatory
authorities which are required for the consummation by the Authority of
the transactions contemplated thereby have been obtained.
(6) Subject to the provisions of this Agreement and the Indenture,
the Authority will apply the proceeds of the Bonds to the purposes
specified in the Indenture and the Financing Documents.
(7) There is no action, suit, proceeding or investigation at law
or in equity before or by any court, public board or body pending or
threatened against or affecting the Authority, or to the best knowledge
of the Authority, any basis therefor, wherein an unfavorable decision,
ruling or finding would adversely affect the transactions contemplated
hereby or by the Indenture, or which, in any way, would adversely affect
the validity of the Bonds, or the validity of or enforceability of the
Indenture or the Financing Documents, or any agreement or instrument to
which the Authority is a party and which is used or contemplated for use
in consummation of the transactions contemplated hereby and by the
Indenture.
(8) It has not made any commitment or taken any action which will
result in a valid claim for any finders or similar fees or commitments
in respect of the transactions contemplated by this Agreement.
(9) The representations of the Authority set forth in the Tax
Regulatory Agreement are by this reference incorporated in this
Agreement as though fully set forth herein.
Section 2.2 Limitation of Control by Borrower. Pursuant to the Sharing
Agreement, the Borrower is the owner of a 52.933% undivided interest in the
Millstone 3 nuclear electric generating plant in Waterford, Connecticut, at
which the Project is located. The Sharing Agreement designates the Borrower
as one of two lead participants and, together with such other lead
participant, the Borrower has sole responsibility for operation and
maintenance of Millstone 3, subject to the provisions of the Sharing
Agreement. Every obligation of the Borrower hereunder with respect to the
Project (other than the continuing obligation of the Borrower to pay, at the
times and in the amounts set forth herein, its loan obligation pursuant to
this Agreement) is subject to and limited by the provisions of such Sharing
Agreement. The Borrower agrees, however, subject to the representations set
forth in this Section, to exercise all rights granted to it pursuant to the
Sharing Agreement and its rights as to matters otherwise within the
Borrower's control, and to take all reasonable actions in the prudent
exercise of business judgment, to cause the covenants of the Borrower
contained in this Agreement to be performed to the full extent of the
Borrower's ability during the Term of this Agreement.
Section 2.3. Representations by the Borrower. The Borrower represents
and warrants that:
(1) The Borrower has been duly incorporated and validly exists as
a corporation in good standing under the laws of the State of
Connecticut, is not in violation of any provision of its certificate of
incorporation or its by-laws, has corporate power to enter into and
perform the Financing Documents, and by proper corporate action has duly
authorized the execution and delivery of the Financing Documents.
(2) The Financing Documents constitute valid and legally binding
obligations of the Borrower, enforceable in accordance with their
respective terms, except to the extent that such enforceability may be
limited by bankruptcy or insolvency or other laws affecting creditors'
rights generally or by general principles of equity.
(3) Neither the execution and delivery of the Financing Documents,
the consummation of the transactions contemplated thereby, nor the
fulfillment by the Borrower of or compliance by the Borrower with the
terms and conditions thereof is prevented or limited by or conflicts
with or results in a breach of, or default under the terms, conditions
or provisions of any contractual or other restriction of the Borrower,
evidence of its indebtedness or agreement or instrument of whatever
nature to which the Borrower is now a party or by which it is bound, or
constitutes a default under any of the foregoing. No event has occurred
and no condition exists which, upon the execution and delivery of any
Financing Documents, constitutes an Event of Default hereunder or an
event of default thereunder or, but for the lapse of time or the giving
of notice, would constitute an Event of Default hereunder or an event of
default thereunder.
(4) There is no action or proceeding pending or, to the knowledge
of the Borrower, threatened against the Borrower before any court,
administrative agency or arbitration board that will materially and
adversely affect the ability of the Borrower to perform its obligations
under the Financing Documents except as disclosed in the Disclosure
Documents; and all authorizations, consents and approvals of
governmental bodies or agencies required in connection with the
execution and delivery of the Financing Documents and in connection with
the performance of the Borrower's obligations hereunder or thereunder
have been obtained.
(5) The execution, delivery and performance of the Financing
Documents and any other instrument delivered by the Borrower pursuant to
the terms hereof or thereof are within the corporate powers of the
Borrower and have been duly authorized and approved by the board of
directors of the Borrower and are not in contravention of law or of the
Borrower's certificate of incorporation or by-laws, as amended to date,
or of any undertaking or agreement to which the Borrower is a party or
by which it is bound.
(6) The Borrower represents that it has not made any commitment or
taken any action which will result in a valid claim for any finders' or
similar fees or commitments in respect of the transactions described in
this Agreement other than the fees to various parties to the
transactions contemplated hereby which have been heretofore paid or
provided.
(7) The Project is included within the definition of a "project"
in the Act, and its estimated cost is equal to or in excess of
$61,300,000. The Borrower intends the Project to be and continue to be
an authorized project under the Act during the Term of this Agreement.
(8) All amounts shown in Schedule D of the Tax Regulatory
Agreement are eligible costs of a project financed by bonds issued by
the Authority under the Act, and may be financed by amounts in the
Project Fund under the Indenture. None of the proceeds of the Bonds
will be used directly or indirectly as working capital or to finance
inventory.
(9) The Project is in compliance with all applicable federal,
State and local laws and ordinances (including rules and regulations)
relating to zoning, building, safety and environmental quality the
non-compliance with which would materially adversely affect the
performance by the Borrower of any of its obligations hereunder.
(10) Except as described in the Disclosure Documents, the Borrower
has obtained all necessary material approvals from any and all
governmental agencies requisite to the Project, and has also obtained
all material occupancy permits and authorizations from appropriate
authorities authorizing the occupancy and use of the Project for the
purposes contemplated hereby. The Borrower further represents and
warrants that it has completed the Project in accordance with all
material federal, State and local laws, ordinances and regulations
applicable thereto.
(11) The availability of financial assistance from the Authority as
provided herein and in the Indenture has induced the Borrower to locate
the Project in the State. The Borrower does not presently intend to
lease the Project.
(12) The Borrower will not take or omit to take any action which
action or omission will in any way cause the proceeds of the Bonds to be
applied in a manner contrary to that provided in the Indenture and the
Financing Documents as in force from time to time.
(13) The Borrower has not taken and will not take any action and
knows of no action that any other person, firm or corporation has taken
or intends to take, which would cause interest on the Bonds to be
includable in the gross income of the recipients thereof for federal
income tax purposes. The representations, certifications and statements
of reasonable expectation made by the Borrower in the Tax Regulatory
Agreement and relating to Project description, composite issues, bond
maturity and average asset economic life, use of Bond proceeds,
arbitrage and related matters are hereby incorporated by this reference
as though fully set forth herein.
(14) The Borrower has good and marketable or good and merchantable
title to the Project subject only to Permitted Encumbrances and to
irregularities or defects in title which may exist which do not
materially impair the use of such properties in the Borrower's business.
ARTICLE III
THE LOAN
Section 3.1. Loan Clauses. (A) Subject to the conditions and in
accordance with the terms of this Agreement, the Authority agrees to make a
loan to the Borrower from the proceeds of the Bonds in the amount of
$62,000,000 and the Borrower agrees to borrow such amount from the Authority.
(B) The loan shall be made at the time of delivery of the Bonds
and receipt of payment therefor by the Authority against receipt by the
Authority of the Note (as such term is defined in the Original Loan
Agreement) duly executed and delivered to evidence the pecuniary indebtedness
of the Borrower hereunder. As and for the loan the Authority shall apply the
proceeds of the Bonds as provided in the Indenture on the terms and
conditions therein prescribed.
(C) The Borrower shall make payments in immediately available
funds to the Trustee for deposit in the Debt Service Fund no later than 10:00
A.M. on the date on which such payment of principal (including principal
called for redemption) of, premium, if any, or interest on Bonds shall become
due in an amount equal to the payment then coming due on such Bonds less the
amounts, if any, then held in the Debt Service Fund and available to pay the
same. The Borrower may make payments to the Debt Service Fund earlier than
required by this section, but such payments shall not affect the accrual of
interest. In addition, the Borrower shall pay to the Trustee, as and when
the same shall become due, all other amounts due under the Financing
Documents, together with interest thereon at the then applicable rate as set
forth herein in Section 6.2(G). The Borrower shall have the option to prepay
its loan obligation in whole or in part at the times and in the manner
provided in Article VIII hereof.
(D) The payments to be made under Section 3.1(C) shall be
appropriately adjusted to reflect the date of issue of Bonds, accrued
interest deposited in the Debt Service Fund, if any, and any purchase or
redemption of Bonds so that there will be available on each payment date the
amount necessary to pay the interest and principal due or coming due on the
Bonds and so that accrued interest will be applied to the installments of
interest to which it is applicable.
(E) At any time when any principal of the Bonds is overdue, the
Borrower shall also have a continuing obligation to pay to the Trustee for
deposit in the Debt Service Fund an amount equal to interest on the overdue
principal but the installment payments required under this section shall not
otherwise bear interest. Redemption premiums shall not bear interest.
(F) In the event the Borrower should fail to make any of the
payments required under the foregoing provisions of this Section 3.1, the
item or installment so in default shall continue as an obligation of the
Borrower until the amount in default shall have been fully paid, and the
Borrower agrees to pay or cause to be paid the same with interest thereon at
the rate determined in accordance with Article II of the Indenture until paid
in accordance herewith and with the Indenture.
Section 3.2. Other Amounts Payable. (A) The Borrower hereby further
expressly agrees to pay to the Trustee as and when the same shall become due,
(i) an amount equal to the initial and annual fees of the Trustee for the
ordinary services of the Trustee rendered and its ordinary expenses incurred
under the Indenture, including fees and expenses as Paying Agent and the fees
and expenses of Trustee's counsel, including fees and expenses as registrar
and in connection with preparation and delivery of new Bonds upon exchanges
or transfers, (ii) the reasonable fees and expenses of the Trustee and any
Paying Agents on the Bonds for acting as paying agents as provided in the
Indenture, including fees and expenses of the Paying Agent as registrar and
in connection with the preparation of new Bonds upon exchanges, transfers or
redemptions, (iii) the reasonable fees and expenses of the Bank and the
Remarketing Agent for the performance of their duties as provided in the
Indenture, including the reasonable fees of their counsel and other expenses
the Remarketing Agent may incur in providing for accurate offering documents
in connection therewith, (iv) the reasonable fees and charges of the Trustee
for extraordinary services rendered by it and extraordinary expenses incurred
by it under the Indenture, including reasonable counsel fees and expenses,
and (v) fees and expenses of Bond Counsel and the Authority for any future
action requested of either.
(B) For so long as the Bonds remain Outstanding, the Borrower also
agrees to pay directly to the Authority on each anniversary date of the date
of issuance of the Bonds a fee equal to one-sixteenth (1/16) of 1% of the
outstanding principal amount of the Bonds, such fee to be payable, without
notice, demand or invoice of any kind, at the Authority's address as set
forth herein or at such other address and to the attention of such other
person, or to such account, as the Authority may stipulate by written notice
to the Borrower.
(C) The Borrower also agrees to pay all amounts payable by it
under the Financing Documents at the time and in the manner therein provided.
(D) The Borrower also agrees to pay all Rebate Amounts (and
penalties, if any) due to the United States of America pursuant to Section
148 of the Code.
Section 3.3. Manner of Payment. The payments provided for in Section
3.1 hereof shall be made by any reasonable method providing immediately
available funds at the time and place of payment directly to the Trustee for
the account of the Authority and shall be deposited in the Debt Service Fund.
The additional payments provided for in Section 3.2 shall be made in the same
manner directly to the entitled party or to the Trustee for its own use or
disbursement to the Paying Agent, as the case may be.
Section 3.4. Obligation Unconditional. The obligations of the
Borrower under the Financing Documents shall be absolute and unconditional,
irrespective of any defense or any rights of setoff, recoupment or
counterclaim it might otherwise have against the Authority or the Trustee.
The Borrower will not suspend or discontinue any such payment or terminate
this Agreement (other than in the manner provided for hereunder) for any
cause, including, without limiting the generality of the foregoing, any acts
or circumstances that may constitute failure of consideration, failure of
title, or commercial frustration of purpose, or any damage to or destruction
of the Project, or the taking by eminent domain of title to or the right of
temporary use of all or any part of the Project, or any change in the tax or
other laws of the United States, the State or any political subdivision of
either thereof, or any failure of the Authority or the Trustee to perform and
observe any agreement or covenant, whether expressed or implied, or any duty,
liability or obligation arising out of or connected with the Financing
Documents.
Section 3.5. Security Clauses. The Authority hereby notifies the
Borrower and the Borrower acknowledges that, among other things, the
Borrower's loan payments and all of the Authority's right, title and interest
under the Financing Documents to which it is a party (except its rights under
Section 6.2 hereof) are being concurrently with the execution and delivery
hereof endorsed, pledged and assigned without recourse by the Authority to
the Trustee as security for the Bonds as provided in the Indenture.
Section 3.6. Issuance of Bonds. The Authority has concurrently with
the execution and delivery of the Original Loan Agreement sold and delivered
the Bonds under and pursuant to a resolution adopted by the Authority on
April 17, 1996, authorizing their issuance under and pursuant to the
Indenture. The proceeds of sale of the Bonds shall be applied as provided in
Articles IV and V of the Indenture.
Section 3.7. Issuance, Delivery and Surrender of Mortgage Bonds. In
order to provide the benefit of a first mortgage lien to secure the
obligation of the Borrower to make the loan payments and Purchase Price
payments with respect to the Bonds, concurrently with the execution hereof,
the Borrower shall issue and deliver to the Trustee the Mortgage Bonds. The
Mortgage Bonds shall be issued in an aggregate principal amount equal to the
aggregate principal amount of the Bonds issued and delivered by the
Authority, have the same final maturity date as the Bonds and shall bear
interest at a rate equal to the rate of the Bonds. Upon payment of the
principal of and premium, if any, on any of the Bonds and payment of all
accrued interest in connection therewith, whether at maturity or prior to
maturity by redemption or otherwise, or upon provision for the payment
thereof having been made in accordance with Section 12.1 of the Indenture,
Mortgage Bonds in an aggregate principal amount equal to the aggregate
principal amount of the Bonds so paid, or for the payment of which such
provision has been made, shall be deemed fully paid and the obligations of
the Borrower thereunder terminated as provided in the Mortgage and shall be
surrendered by the Trustee to the Mortgage Trustee for cancellation. The
Trustee shall promptly notify the Mortgage Trustee by telephone, confirmed in
writing, of any such payment on the Bonds. In accordance with the terms
thereof, the Mortgage Bonds shall be issued to and registered in the name of
the Trustee and shall not be sold, assigned, pledged or transferred, except
to effect transfer to any successor Trustee under the Indenture.
Section 3.8. Redemption of Mortgage Bonds. The Borrower covenants
that it will not redeem Mortgage Bonds pursuant to the Mortgage, and it will
not take such action as will result in the Mortgage Trustee or the Borrower
being under any obligation to redeem any Mortgage Bonds, except as may be
permitted by this Agreement and the Indenture.
Section 3.9. Effective Date and Term. (A) This Agreement shall become
effective upon its execution and delivery by the parties hereto, shall remain
in full force from such date and, subject to the provisions hereof (including
particularly Articles VII and VIII), shall expire on such date as the
Indenture shall be discharged and satisfied in accordance with the provisions
of subsection 12.1(A) thereof. The Borrower's obligations under Sections 6.2
and 6.3 hereof, however, shall survive the expiration of this Agreement.
(B) Within 60 days of such expiration the Authority shall deliver
to the Borrower any documents and take or cause the Trustee, at the
Borrower's expense, to take any such reasonable actions as may be necessary
to effect the cancellation, release and satisfaction of the Indenture and the
Financing Documents.
Section 3.10. Borrower's Purchase of Bonds. Pursuant to Section 5.8(F)
of the Indenture, if the amount received by the Paying Agent from demands
made under the Standby Bond Purchase Agreement and deposited with the Paying
Agent, together with all other amounts (including remarketing proceeds)
received by the Paying Agent for the purchase of Bonds supported by a Standby
Bond Purchase Agreement and tendered pursuant to Section 2.3(G)(1)(c) or (d),
2.3(G)(2)(c) or 2.3(G)(3)(c) or (d) of the Indenture, is not sufficient to
pay the Purchase Price of such Bonds on the Purchase Date, the Paying Agent
shall before 3:30 P.M. on such Purchase Date, notify the Borrower, the
Remarketing Agent and the Trustee of such deficiency by telephone promptly
confirmed in writing. The Borrower shall pay to the Paying Agent in
immediately available funds by 4:00 P.M. on the Purchase Date an amount equal
to the Purchase Price of such Bonds less the amount, if any, available to pay
the Purchase Price in accordance with Section 9.18 of the Indenture from the
proceeds of the remarketing of such Bonds or from demands made under a
Standby Bond Purchase Agreement, as reported by the Paying Agent. Bonds so
purchased with moneys furnished by the Borrower shall be Borrower Bonds.
Section 3.11. Standby Bond Purchase Agreement. The Borrower has
arranged, concurrently with the execution hereof, for the delivery of the
Standby Bond Purchase Agreement having an initial term expiring 364 days from
the date of delivery, and providing for the Paying Agent to be entitled to
demand on or prior to the Stated Expiration Date (as defined therein), an
amount that is not less than the sum of that portion of the purchase price
corresponding to principal of the Outstanding Bonds and that portion of the
purchase price corresponding to interest on such Bonds. If at any time the
Borrower shall obtain actual knowledge that the senior unsecured short-term
debt of the issuer of the Standby Bond Purchase Agreement is rated below "A-
1" by S&P or "P-1" by Moody's, then the Borrower shall, within 120 days of
obtaining such actual knowledge, arrange for the delivery of an Alternate
Liquidity Facility satisfying the requirements of Section 3.12(B) hereof.
Section 3.12. Substitution or Replacement of Standby Bond Purchase
Agreement. (A) Upon satisfaction of the requirements set forth in, and
subject to the requirements of, this Section 3.12, the Borrower may provide
for an Alternate Liquidity Facility or replace a Standby Bond Purchase
Agreement or Alternate Liquidity Facility then in effect with an Alternate
Liquidity Facility. The approval by the Borrower of an assignment of all or
a part of a Bank's commitment under the Standby Bond Purchase Agreement or an
Alternate Liquidity Facility shall be deemed the replacement of the Standby
Bond Purchase Agreement or an Alternate Liquidity Facility, as the case may
be, for the purposes of this Section 3.12. In no event, however, shall the
Standby Bond Purchase Agreement being replaced be terminated or released
until (1) the Borrower has given not less than forty-five (45) days' written
notice to the Trustee, the Paying Agent and the Remarketing Agent, and the
Paying Agent has received the proceeds of all outstanding demands on the
Standby Bond Purchase Agreement being replaced, and (2) if any Bonds
supported by the Standby Bond Purchase Agreement being replaced are in the
Daily Mode or the Weekly Mode, until the Paying Agent has given not less than
thirty (30) days' written notice of the termination or release of the Standby
Bond Purchase Agreement to owners of such Bonds in the Daily Mode or the
Weekly Mode and (3) if any of the Bonds supported by the Standby Bond
Purchase Agreement being replaced are in the Flexible Mode, earlier than on
the second Business Day after an Effective Date for all such Bonds supported
by the Standby Bond Purchase Agreement. If a notice of mandatory tender for
purchase required by the Form of the Daily Mode Bond or the Weekly Mode Bond
is given as a result of the substitution of an Alternate Liquidity Facility
for an existing Standby Bond Purchase Agreement which causes a withdrawal,
suspension or reduction in the rating of the Bonds by either Moody's or S&P,
then the Trustee shall not accept an Alternate Liquidity Facility during the
period between the giving of such notice and the Purchase Date.
Prior to the provision of an Alternate Liquidity Facility or the
replacement of any Standby Bond Purchase Agreement, the Borrower shall have
delivered to the Trustee and the Paying Agent: (i) an opinion of counsel for
the issuer of the Alternate Liquidity Facility to the effect that it
constitutes a legal, valid and binding obligation of the issuer enforceable
in accordance with its terms; (ii) an opinion of Bond Counsel, counsel for
the issuer of the Alternate Liquidity Facility, counsel for the Borrower or
counsel for the Trustee to the effect that the Alternate Liquidity Facility
meets the requirements of this Section 3.12; and (iii) a certificate of the
Bank that all amounts due under the Standby Bond Purchase Agreement have been
paid and that the Borrower has fulfilled all its obligations arising out of
such agreement.
(B) Notwithstanding anything to the contrary contained herein,
each Alternate Liquidity Facility must:
(i) be on terms no less favorable to the Borrower than the Standby
Bond Purchase Agreement, in the case of a substitution or replacement
thereof, and entitle the Paying Agent to draw upon or demand payment and
receive in immediately available funds an amount equal to the sum of the
principal amount of Bonds supported by the Alternate Liquidity Facility,
any premium applicable thereto, and forty-five (45) days' accrued
interest at the Maximum Interest Rate on the principal amount of Bonds
then outstanding in the Daily Mode, the Flexible Mode or the Weekly
Mode;
(ii) provide for a term which may not expire in less than 360 days
and which may not expire or be terminated prior to the fifth Business
Day after the mandatory tender for purchase as provided in Section
2.3(G)(1)(d), 2.3(G)(2)(c) or 2.3(G)(3)(d) of the Indenture;
(iii) support all Bonds in the same Mode; and
(iv) be the obligation of an issuer whose senior unsecured short-
term debt is rated at least "A-1" by S&P and "P-1" by Moody's.
(C) At its option, the Borrower may at any time terminate the
Standby Bond Purchase Agreement for all or part of the Bonds without making
provision for an Alternate Liquidity Facility, provided that (1) the Borrower
has given not less than forty-five (45) days' written notice to the Trustee,
the Paying Agent and the Remarketing Agent, and the Paying Agent has received
the proceeds of all outstanding demands on the Standby Bond Purchase
Agreement being terminated, and (2) if any Bonds supported by the Standby
Bond Purchase Agreement being terminated are in the Daily Mode or the Weekly
Mode, the Paying Agent has given not less than thirty (30) days' written
notice of the termination of the Standby Bond Purchase Agreement to owners of
such Bonds in the Daily Mode or the Weekly Mode and (3) if any of the Bonds
supported by the Standby Bond Purchase Agreement being replaced are in the
Flexible Mode, the Standby Bond Purchase Agreement shall in no event be
terminated earlier than on the second Business Day after an Effective Date
for all such Bonds supported by the Standby Bond Purchase Agreement.
Prior to the termination of any Standby Bond Purchase Agreement pursuant
to the provisions of this Section 3.12(C), the Borrower shall have delivered
to the Trustee and the Paying Agent the written consent from the Bond Insurer
to such termination of the Standby Bond Purchase Agreement.
Section 3.13. Securities Laws. In any remarketing of Bonds under this
Agreement, the Borrower shall at all times comply with applicable federal and
state securities laws.
Section 3.14. New York Paying Agent. The Borrower agrees that if at
any time it becomes necessary or desirable to have a Paying Agent capable of
performing in New York, New York, it shall remove Fleet National Bank as
Paying Agent and a successor shall be appointed pursuant to Section 9.11 of
the Indenture.
ARTICLE IV
THE PROJECT
Section 4.1. Completion of the Project. (A) The Borrower represents
and warrants that the Project has been completed.
(B) The Borrower affirms that it shall bear all of the costs and
expenses in connection with the preparation of the Financing Documents and
the Indenture, the preparation and delivery of any legal instruments and
documents necessary in connection therewith and their filing and recording,
if required, and all taxes and charges payable in connection with any of the
foregoing. Such costs and all other costs of the Project shall be paid by
the Borrower or from the Project Fund in the manner and to the extent
provided in the Indenture.
Section 4.2. No Warranty Regarding Condition, Suitability or Cost of
Project. Neither the Authority, nor the Trustee, nor any Bondholder makes
any warranty, either expressed or implied, as to the Project or its condition
or that it will be suitable for the Borrower's purposes or needs, or that the
insurance required hereunder will be adequate to protect the Borrower's
business or interest, or that the proceeds of the Bonds will be sufficient to
finance the Project.
Section 4.3. Taxes. (A) The Borrower will pay when due all material
(1) taxes, assessments, water rates and sewer use or rental charges, (2)
payments in lieu thereof which may be required by law, and (3) governmental
charges and impositions of any kind whatsoever which may now or hereafter be
lawfully assessed or levied upon the Project or any part thereof, or upon the
rents, issues, or profits thereof, whether directly or indirectly. With
respect to special assessments or other governmental charges that may
lawfully be paid in installments over a period of years, the Borrower shall
be obligated to pay only such installments as are required to be paid during
the Term.
(B) The Borrower may, at its expense and in its own name, in good
faith contest any such taxes, assessments and other charges and payments in
lieu of taxes including assessments and, in the event of such contest, may
permit the taxes, assessments or other charges or payments in lieu of taxes,
including assessments so contested to remain unpaid, provided prior written
notice thereof has been given to the Trustee and reserves to the extent
required by the Reimbursement Agreement are maintained, during the period of
such contest and any appeal therefrom. Nothing herein shall preclude the
Borrower, at its expense and in its own name and behalf, from applying for
any tax exemption allowed by the federal government, the State or any
political or taxing subdivision thereof under any existing or future
provision of law which grants or may grant such tax exemption.
Section 4.4. Insurance. (A) The Borrower shall insure the Project
against loss or damage by fire, flood, lightning, windstorm, vandalism and
malicious mischief and other hazards, casualties, contingencies and extended
coverage risks in such amounts and in such manner as is required by
applicable federal or state law and shall pay when due the premiums thereon.
(B) The Borrower further agrees that it will at all times carry
public liability insurance with respect to the Project to the extent required
by applicable federal or state law.
(C) As an alternative to the hazard insurance and public liability
insurance requirements of subsections (A) or (B) above the Borrower may
self-insure against hazard or public liability risks.
(D) The insurance coverage required by this Section may be
effected under overall blanket or excess coverage policies of the Borrower or
any affiliate and may be carried with any insurer other than an unauthorized
insurer under the Connecticut Unauthorized Insurers Act. The Borrower shall
furnish evidence satisfactory to the Authority or the Trustee, promptly upon
the request of either, that the required insurance coverage is valid and in
force.
Section 4.5. Compliance with Law. The Borrower will observe and
comply with all material laws, regulations, ordinances, rules, and orders
(including without limitation those relating to zoning, land use,
environmental protection, air, water and land pollution, wetlands, health,
equal opportunity, minimum wages, worker's compensation and employment
practices) of any federal, state, municipal or other governmental authority
relating to the Project except during any period during which the Borrower at
its expense and in its name shall be in good faith contesting its obligation
to comply therewith.
Section 4.6. Maintenance and Repair. At its own expense, the Borrower
will keep and maintain or cause the Project to be kept and maintained in
accordance with sound utility operating practice and in good condition,
working order and repair, will not commit or suffer any waste thereon, and
will make all material repairs and replacements thereto which may be required
in connection therewith. Nothing in this Section 4.6 shall (1) apply to any
portion of the Project beyond its useful or economic life or (2) apply to the
use and disposition by the Borrower of any part of the Project in the
ordinary course of its business.
ARTICLE V
CONDEMNATION
DAMAGE AND DESTRUCTION
Section 5.1. No Abatement of Payments Hereunder. If the Project shall
be damaged or either partially or totally destroyed, or if title to or the
temporary use of the whole or any part thereof shall be taken or condemned by
a competent authority for any public use or purpose, there shall be no
abatement or reduction in the amounts payable by the Borrower hereunder and
the Borrower shall continue to be obligated to make such payments. In any
such case the Borrower shall promptly give written notice thereof to the
Authority and the Trustee.
Section 5.2. Project Disposition Upon Condemnation, Damage or
Destruction. In the event of any such condemnation, damage or destruction
the Borrower shall:
(1) Comply with the applicable provisions of the Mortgage
Indentures and the Sharing Agreement concerning the repair,
reconstruction or restoration of the Project or give notice to the
Authority and the Trustee of its decision not to so comply; and/or
(2) If and as permitted by Section 8.1 hereof, exercise its option
to prepay its loan obligation in full.
Section 5.3. Application of Net Proceeds of Insurance or Condemnation.
The Net Proceeds from any insurance or condemnation award with respect to the
Project shall be applied as provided in the Mortgage Indentures, or, in the
event that the Mortgage Indentures have been discharged or are no longer in
effect, shall be applied at the direction of the Borrower with the approval
of the Authority.
ARTICLE VI
COVENANTS
Section 6.1. The Borrower to Maintain its Corporate Existence;
Conditions under which Exceptions Permitted. (A) The Borrower covenants and
agrees that, during the Term of this Agreement it will maintain its corporate
existence, will continue to be a corporation either organized under the laws
of or duly qualified to do business as a foreign corporation in the State and
in all jurisdictions necessary in the operation of its business, will not
dissolve or otherwise dispose of all or substantially all of its assets and
will not consolidate with or merge into another corporation or permit one or
more other corporations to consolidate with or merge into it.
(B) The Borrower may, however, without violating the agreements
contained in this Section, consolidate with or merge into another corporation
or permit one or more other corporations to consolidate with or merge into
it, or sell or otherwise transfer to another corporation all or substantially
all of its assets as an entity and thereafter liquidate or dissolve, if (a)
the Borrower is the surviving, resulting or transferee corporation, as the
case may be, or (b) in the event the Borrower is not the surviving, resulting
or transferee corporation, as the case may be, such corporation (i) is a
solvent corporation either organized under the laws of or duly qualified to
do business as a foreign corporation subject to service of process in the
State and (ii) assumes in writing all of the obligations of the Borrower
herein, and under the Mortgage Bonds.
Section 6.2. Indemnification, Payment of Expenses, and Advances. (A)
The Borrower agrees to protect, defend and hold harmless the Trustee, the
Paying Agent, the Authority, the State, agencies of the State and the
members, servants, agents, officers, employees and directors of the Trustee,
the Paying Agent, the Authority or the State (the "Indemnified Parties"),
from any claim, demand, suit, action or other proceeding and any liabilities,
costs, and expenses whatsoever by any person or entity whatsoever, arising or
purportedly arising from or in connection with the Financing Documents, the
Indenture, the Bonds, or the transactions contemplated thereby or actions
taken thereunder by any person (including without limitation the filing of
any information, form or statement with the Internal Revenue Service), except
for any wilful and material misrepresentation, wilful misconduct or gross
negligence on the part of the Indemnified Parties and except for any bad
faith on the part of any Indemnified Party other than the Authority.
The Borrower agrees to indemnify and hold harmless any Indemnified Party
against any and all claims, demands, suits, actions or other proceedings and
all liabilities, costs and expenses whatsoever caused by any untrue statement
or misleading statement or alleged untrue statement or alleged misleading
statement of a material fact contained in the written information provided by
the Borrower in connection with the issuance of the Bonds or incorporated by
reference therein or caused by any omission or alleged omission from such
information of any material fact required to be stated therein or necessary
in order to make the statements made therein in the light of the
circumstances under which they were made, not misleading.
(B) The Authority and the Trustee shall not be liable for any
damage or injury to the persons or property of the Borrower or its members,
directors, officers, agents, servants or employees, or any other person who
may be about the Project due to any act or omission of any person other than
the Authority or the Trustee or their respective members, directors,
officers, agents, servants and employees.
(C) The Borrower releases each Indemnified Party from, agrees that
no Indemnified Party shall be liable for, and agrees to hold each Indemnified
Party harmless against, any attorney fees and expenses, expenses or damages
incurred because of any investigation, review or lawsuit commenced by the
Trustee or the Authority in good faith with respect to the Financing
Documents, the Indenture, the Bonds and the Project Realty and the Project
Equipment, and the Authority or the Trustee shall promptly give written
notice to the Borrower with respect thereto.
(D) All covenants, stipulations, promises, agreements and
obligations of the Authority and the Trustee contained herein shall be deemed
to be the covenants, stipulations, promises, agreements and obligations of
the Authority and the Trustee and not of any member, director, officer or
employee of the Authority or the Trustee in its individual capacity, and no
recourse shall be had for the payment of the Bonds or for any claim based
thereon or hereunder against any member, director, officer or employee of the
Authority or the Trustee or any natural person executing the Bonds.
(E) In case any action shall be brought against one or more of the
Indemnified Parties based upon any of the above and in respect of which
indemnity may be sought against the Borrower, such Indemnified Party shall
promptly notify the Borrower in writing, enclosing a copy of all papers
served, but the omission so to notify the Borrower of any such action shall
not relieve it of any liability which it may have to any Indemnified Party
otherwise than under this Section 6.2. In case any such action shall be
brought against any Indemnified Party and it shall notify the Borrower of the
commencement thereof, the Borrower shall be entitled to participate in and,
to the extent that it shall wish, to assume the defense thereof with counsel
satisfactory to such Indemnified Party, and after notice from the Borrower to
such Indemnified Party of the Borrower's election so to assume the defense
thereof, the Borrower shall not be liable to such Indemnified Party for any
subsequent legal or other expenses attributable to such defense, except as
set forth below, other than reasonable costs of investigation subsequently
incurred by such Indemnified Party in connection with the defense thereof.
The Indemnified Party shall have the right to employ its own counsel in any
such action, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the employment of counsel by
such Indemnified Party has been authorized by the Borrower; (ii) the
Indemnified Party shall have reasonably concluded that there may be a
conflict of interest between the Borrower and the Indemnified Party in the
conduct of the defense of such action (in which case the Borrower shall not
have the right to direct the defense of such action on behalf of the
Indemnified Party); or (iii) the Borrower shall not in fact have employed
counsel reasonably satisfactory to the Indemnified Party to assume defense of
such action; provided, however, that Borrower shall not be responsible for
the fees and expenses of more than one such law firm unless an Indemnified
Party shall have reasonably concluded that there may be a conflict of
interest between such Indemnified Party and any other Indemnified Party
requiring the use of separate counsel, or Borrower has not employed counsel
which is satisfactory to each Indemnified Party. The Borrower shall not be
liable for any settlement of any action or claim effected without its
consent.
(F) The Borrower also agrees to pay all reasonable or necessary
out-of-pocket expenses of the Authority in connection with the issuance of
the Bonds, the administration of the Financing Documents and the enforcement
of its rights thereunder.
(G) In the event the Borrower fails to pay any amount or perform
any act under the Financing Documents, the Trustee or the Authority may pay
the amount or perform the act, in which event the costs, disbursements,
expenses and reasonable counsel fees and expenses thereof, together with
interest thereon from the date the expense is paid or incurred at the prime
interest rate generally prevailing among banks in the State on the date of
the advance plus 1% shall be an additional obligation hereunder payable upon
demand by the Authority or the Trustee.
(H) Any obligation of the Borrower to the Authority under this
Section shall be separate from and independent of the other obligations of
the Borrower hereunder, and may be enforced directly by the Authority against
the Borrower irrespective of any action taken by or on behalf of the owners
of the Bonds.
(I) The obligations of the Borrower under this section,
notwithstanding any other provisions contained in the Financing Documents,
shall survive the termination of this Agreement and shall be recourse to the
Borrower, and for the enforcement thereof any Indemnified Party shall have
recourse to the general credit of the Borrower.
Section 6.3. Incorporation of Tax Regulatory Agreement; Payments Upon
Taxability. (A) For purpose of this Section, the term owner means the
Beneficial Owner of the Bonds so long as the Book-Entry System is in effect.
(B) The representations, warranties, covenants and statements of
expectation of the Borrower set forth in the Tax Regulatory Agreement are by
this reference incorporated in this Agreement as though fully set forth
herein.
(C) If any owner of the Bonds receives from the Internal Revenue
Service a notice of assessment and demand for payment with respect to
interest on any Bond (except a notice and demand based upon the assertion
that the owner of the Bonds is a Substantial User or Related Person), an
appeal may be taken by the owner of the Bonds at the option of the Borrower.
Without limiting the generality of the foregoing, the Borrower shall have the
right to direct the Trustee to direct the owner of the Bonds to take such
appeal or not to take such appeal. In either case all expenses of the appeal
including reasonable counsel fees and expenses shall be paid by the Borrower,
and the owner of the Bonds and the Borrower shall cooperate and consult with
each other in all matters pertaining to any such appeal, except that no owner
of the Bonds shall be required to disclose or furnish any non-publicly
disclosed information, including, without limitation, financial information
and tax returns.
(D) Not later than 90 days following a Determination of
Taxability, the Borrower shall pay to the Trustee an amount sufficient, when
added to the amount then in the Debt Service Fund and available for such
purpose, to retire and redeem all Bonds then Outstanding, in accordance with
Section 2.4 of the Indenture.
(E) The obligation of the Borrower to make the payments provided
for in this Section shall be absolute and unconditional, and the failure of
the Authority or the Trustee to execute or deliver or cause to be executed or
delivered any documents or to take any action required under this Agreement
or otherwise shall not relieve the Borrower of its obligation under this
Section. Notwithstanding any other provision of this Agreement or the
Indenture, the Borrower's obligations under this Section shall survive the
termination of this Agreement and the Indenture.
(F) [Reserved].
(G) The occurrence of a Determination of Taxability shall not be
an Event of Default hereunder but shall require only the performance of the
obligations of the Borrower stated in this Section, the breach of which shall
constitute an Event of Default as provided in Section 7.1 hereof.
(H) At any time after the issuance of the Bonds, the Authority
shall, upon (1) the release of a published Revenue Ruling by the Internal
Revenue Service and the receipt by the Authority of an opinion of Bond
Counsel to the effect that such ruling may adversely affect the exclusion of
interest on the Bonds from gross income for federal income tax purposes, and
(2) receipt from the Borrower, within 30 days after the Authority has mailed
copies of such ruling and such opinion to the Borrower, of a written request
to proceed in accordance with this Section, proceed to apply for and use its
best efforts to obtain a ruling from the Internal Revenue Service, pursuant
to Revenue Procedure 96-16 or any other procedures subsequently established
by the Internal Revenue Service, as to the qualification or continued
qualification of interest on the Bonds for exclusion from gross income for
federal income tax purposes. The Authority and the Borrower shall cooperate
and consult with each other in all matters pertaining to such ruling request.
All expenses of the Authority in connection with such application including
reasonable counsel fees shall be paid by the Borrower.
Section 6.4. Covenant as to Project Use. (A) The Borrower agrees that
it shall promptly notify the Authority and the Trustee upon the occurrence of
any of the following events, in each case, whether as a result of a
determination by the Borrower, the Connecticut Department of Public Utility
Control or the United States Nuclear Regulatory Commission or its successors,
(1) Abandonment of a substantial portion of the Project at
any one time or in the aggregate;
(2) Any disposition of all or any part of the Borrower's
ownership interest in the Project other than (i) to a
company which is part of Northeast Utilities, (ii) in
connection with a merger, consolidation, or sale of
assets permitted by Section 6.1(B) hereof, (iii) in
connection with any form of financing (including without
limitation the grant of a mortgage or security interest
or sale in connection with a sale and lease back) by the
Borrower, (iv) in any case in which the remaining
aggregate ownership interest of Northeast Utilities is
greater than 50 percent, (v) of any portion of the
Project beyond its useful or economic life, or (vi) in
the ordinary course of the Borrower's business. For
purposes of this paragraph, "Northeast Utilities" means
Northeast Utilities, its subsidiaries (whether direct or
indirect) and their successors and assigns; or
(3) Any determination, following damage or destruction of all
or substantially all of the Project, not to repair,
reconstruct, relocate or replace the Project.
(B) In the event that the Authority receives notice from the
Borrower of the occurrence of any event described in subsection (A) of this
Section 6.4, the Borrower agrees that the Authority may, not later than one
year after the receipt of such notice from the Borrower, declare that payment
of all amounts due under the Financing Documents shall be accelerated by
notice to the Borrower and the Trustee stating that such amounts are due and
payable by the Borrower in full on a date selected by the Borrower and set
forth in a notice to the Trustee and the Authority, which date shall be not
later than three years from the date of mailing of the Authority's
acceleration notice to the Borrower.
(C) Any failure of the Borrower to comply with the provisions
of this Section shall be subject to the provisions of Section 7.3 hereof.
Section 6.5. Further Assurances and Corrective Instruments. The
Authority and the Borrower agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as may reasonably be
required for correcting any inadequate or incorrect description of the
Project Realty or Project Equipment or for carrying out the intention of or
facilitating the performance of this Agreement.
Section 6.6. Covenant by Borrower as to Compliance with Indenture.
The Borrower covenants and agrees that it will comply with the provisions of
the Indenture with respect to the Borrower and that the Trustee and the
Bondholders shall have the power and authority provided in the Indenture.
The Borrower further agrees to aid in the furnishing to the Authority or the
Trustee of opinions that may be required under the Indenture. The Borrower
covenants and agrees that the Trustee shall be entitled to and shall have all
the rights, including the right to enforce against the Borrower the
provisions of the Financing Documents, pertaining to the Trustee
notwithstanding the fact that the Trustee is not a party to the Financing
Documents.
Section 6.7. Assignment of Agreement or Mortgage Bonds. (A) The
Borrower may not assign its rights, interests or obligations hereunder or
under the Mortgage Bonds except as may be permitted pursuant to Section
6.1(B) hereof.
(B) The Authority agrees that it will not assign or transfer any
of the Financing Documents or the revenues and other receipts, funds and
monies to be received thereunder during the Term except to the Trustee as
provided in this Agreement and the Indenture.
Section 6.8. Inspection. The Authority, the Trustee and their duly
authorized agents shall have (1) the right at all reasonable times to enter
upon and to examine and inspect the Project and (2) such rights of access
thereto as may be reasonably necessary for the proper maintenance and repair
thereof in the event of failure by the Borrower to perform its obligations
under this Agreement, subject, in each case, to all applicable laws, rules,
regulations, orders and guidelines. The Authority and the Trustee shall also
be permitted, at all reasonable times, to examine the books and records of
the Borrower with respect to the Project.
Section 6.9. Default Notification. Within seven (7) days after
becoming aware of any condition or event which constitutes, or with the
giving of notice or the passage of time would constitute, an Event of Default
or an "Event of Default" under Section 8.1 of the Indenture, the Borrower
shall deliver to the Authority, the Bank, if any, the Remarketing Agent, the
Paying Agent and the Trustee a notice stating the existence and nature
thereof and specifying the corrective steps, if any, the Borrower is taking
with respect thereto.
Section 6.10. Covenant Against Discrimination. (A) The Borrower in the
performance of this Agreement will not discriminate or permit discrimination
against any person or group of persons on the grounds of race, color,
religion, national origin, age, sex, sexual orientation, marital status,
physical or learning disability, political beliefs, mental retardation or
history of mental disorder in any manner prohibited by the laws of the United
States or of the State.
(B) The Borrower will comply with the provisions of the resolution
adopted by the Authority on June 14, 1977, as amended, and the policy of the
Authority implemented pursuant thereto concerning the promotion of equal
employment opportunity through affirmative action plans. The resolution
requires that all borrowers receiving financial assistance from the Authority
adopt and implement an affirmative action plan prior to the closing of the
loan. The plan shall be updated annually as long as the Bonds remain
Outstanding.
Section 6.11. Authority Costs and Expenses. The Authority agrees that
it shall in all instances act in good faith in incurring costs, expenses and
legal fees in connection with the transactions contemplated by this Agreement
and the Indenture.
Section 6.12. Bond Insurer Notice Provisions. (A) While the Insurance
Policy is in effect, the Borrower shall furnish to the Bond Insurer (the
attention of the Surveillance Department, unless otherwise indicated):
(a) as soon as practicable after the filing thereof, a copy of each of
the Borrower's Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, and Current Reports on Form 8-K filed with the
Securities and Exchange Commission; and
(b) such additional information it may reasonable request.
(B) The Borrower will permit the Bond Insurer to discuss the affairs,
finances and accounts of the Borrower or any information the Bond Insurer may
reasonably request regarding the security for the Bonds with appropriate
officers of the Borrower. The Borrower will, subject to the provisions of
applicable law, permit the Bond Insurer to have access to the Project and
have access to and to make copies of all books and records relating to the
Bonds at any reasonable time.
(C) The Bond Insurer shall have the right to direct an accounting at
the Borrower's expense, and the Borrower's failure to comply with such
direction within thirty (30) days after receipt of written notice of the
direction from the Bond Insurer shall be deemed a default hereunder;
provided, however, that if compliance cannot occur within such period, then
such period will be extended so long as compliance is begun within such
period and diligently pursued, but only if such extension would not
materially adversely affect the interests of any registered owner of the
Bonds.
(D) To the extent that the Borrower enters into a continuing disclosure
agreement with respect to the Bonds, the Bond Insurer shall be included as
party to be notified.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default. Any one or more of the following
shall constitute an "Event of Default" hereunder:
(1) Any material representation or warranty made by the Borrower
in the Financing Documents or any certificate, statement, data or
information furnished in writing to the Authority or the Trustee by the
Borrower in connection with the closing of the initial issue of the
Bonds or included by the Borrower in its application to the Authority
for assistance proves at any time to have been incorrect when made in
any material respect.
(2) Failure by the Borrower to pay any amount that has become due
and payable with respect to the Bonds or any other amount due and
payable pursuant to the Financing Documents and the continuance of such
failure for more than five Business Days.
(3) Failure by the Borrower to comply with the default
notification provisions of Section 6.9 hereof.
(4) The occurrence of an "Event of Default" under Section 8.1(A)
of the Indenture (other than an occurrence under Section 8.1(A)(2)(a)).
(5) Failure by the Borrower to observe or perform any covenant,
condition or agreement hereunder or under the Financing Documents
(except those referred to above) and (a) continuance of such failure for
a period of sixty days after receipt by the Borrower of written notice
specifying the nature of such failure or (b) if by reason of the nature
of such failure the same cannot be remedied within the sixty day period,
the Borrower fails to proceed with reasonable diligence after receipt of
the notice to cure the failure.
(6) The Borrower shall (a) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian or the like of itself or
of its property, (b) admit in writing its inability to pay its debts
generally as they become due, (c) make a general assignment for the
benefit of creditors, (d) be adjudicated a bankrupt or insolvent, or (e)
commence a voluntary case under the Federal bankruptcy laws of the
United States of America or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief or
seeking to take advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding; or corporate action
shall be taken by it for the purpose of effecting any of the foregoing;
or if without the application, approval or consent of the Borrower, a
proceeding shall be instituted in any court of competent jurisdiction,
seeking in respect of the Borrower an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator or custodian or the like of the Borrower
or of all or any substantial part of its assets, or other like relief in
respect thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Borrower in good faith, the same
shall continue undismissed, or pending and unstayed, for any period of
90 consecutive days.
Section 7.2. Remedies on Default. (A) Whenever any Event of Default
shall have occurred, the Trustee, or the Authority where so provided herein,
may take any one or more of the following actions:
(1) The Trustee, as and to the extent provided in Article VIII of
the Indenture, may cause all amounts payable under the Financing
Documents to be immediately due and payable without notice or demand of
any kind, whereupon the same shall become immediately due and payable.
(2) The Authority, without the consent of the Trustee or any
Bondholder, may proceed to enforce the obligations of the Borrower to
the Authority under this Agreement.
(3) The Trustee may take whatever action at law or in equity it
may have to collect the amounts then due and thereafter to become due,
or to enforce the performance or observance of the obligations,
agreements, and covenants of the Borrower under the Financing Documents.
(B) In the event that any Event of Default or any proceeding taken
by the Authority (or by the Trustee on behalf of the Authority) thereon shall
be waived or determined adversely to the Authority, then the Event of Default
shall be annulled and the Authority and the Borrower shall be restored to
their former rights hereunder, but no such waiver or determination shall
extend to any subsequent or other default or impair any right consequent
thereon.
Section 7.3 Remedies Upon Project Use Default. (A) If the Borrower
shall fail to notify the Authority of the occurrence of any event set forth
in Section 6.4(A) hereof within 60 days of the determination thereof as
provided in Section 6.4(A), the Authority may, not later than one year after
obtaining knowledge of such determination and so long as such failure is
continuing, send a notice to the Trustee and the Borrower calling for the
acceleration of all of the Borrower's obligations under the Financing
Documents and for the redemption of all of the Bonds Outstanding. Any such
notice (i) shall set forth in reasonable detail the event giving rise to the
Borrower's obligation under Section 6.4(A), (ii) shall be accompanied by such
evidence thereof as shall be acceptable to the Trustee, and (iii) shall
specify the dates upon which (a) notice of redemption of the Bonds is to be
given by the Trustee (which shall not be less than 180 days from the date of
the notice being given to the Trustee by the Authority) and (b) the date
redemption of Bonds is to occur (which shall be a date at least thirty days
after notice of redemption is to be given by the Trustee).
(B) If, after receipt of notice from the Authority as
provided in Section 6.4(B), the Borrower shall fail to select a date for
redemption of all Outstanding Bonds, the Authority may, not earlier than 60
days prior to the date which is three years after the date notice was mailed
to the Borrower as provided in Section 6.4(B), send a notice to the Trustee
and the Borrower calling for the redemption of all of the Bonds then
Outstanding. Any such notice shall specify the date that notice of
redemption is to be given by the Trustee and the date that such redemption is
to occur.
(C) On or before the redemption date specified by the Trustee
in its notice of redemption pursuant to this Section, the Borrower shall pay,
as a final loan payment hereunder, a sum sufficient, together with other
funds on deposit with the Trustee and available for such purpose, to redeem
all Bonds then Outstanding under the Indenture at 100% of the principal
amount thereof plus accrued interest to the redemption date. The Borrower
shall also pay or provide for all reasonable and necessary fees of the
Trustee and any Paying Agent accrued and to accrue through the date of
redemption of the Bonds and all other amounts due or to become due under the
Financing Documents.
Section 7.4. No Duty to Mitigate Damages. Unless otherwise required
by law, neither the Authority, the Trustee nor any Bondholder shall be
obligated to do any act whatsoever or exercise any diligence whatsoever to
mitigate the damages to the Borrower if an Event of Default shall occur.
Section 7.5. Remedies Cumulative. No remedy herein conferred upon or
reserved to the Authority or the Trustee is intended to be exclusive of any
other available remedy or remedies but each and every such remedy shall be
cumulative and shall be in addition to every remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute.
Delay or omission to exercise any right or power accruing upon any default or
failure by the Authority or the Trustee to insist upon the strict performance
of any of the covenants and agreements herein set forth or to exercise any
rights or remedies upon default by the Borrower hereunder shall not impair
any such right or power or be considered or taken as a waiver or
relinquishment for the future of the right to insist upon and to enforce, by
injunction or other appropriate legal or equitable remedy, strict compliance
by the Borrower with all of the covenants and conditions hereof, or of the
right to exercise any such rights or remedies, if such default by the
Borrower be continued or repeated.
ARTICLE VIII
PREPAYMENT PROVISIONS
Section 8.1. Optional Prepayment. (A) The Borrower shall have, and is
hereby granted, the option to prepay its loan obligation and to cause the
corresponding optional redemption of the Bonds pursuant to Section 2.4(A) of
the Indenture at such times, in such amounts, and with such premium, if any,
for such optional redemption as set forth in the forms of the Bonds, by
delivering a written notice to the Trustee in accordance with Section 8.2
hereof, with a copy to the Authority, setting forth the amount to be
prepaid, the amount of Bonds requested to be redeemed as a result of such
prepayment, and the date on which such Bonds are to be redeemed. Such
prepayment must be sufficient to provide monies for the payment of interest
and Redemption Price in accordance with the terms of the Bonds requested to
be redeemed with such prepayment and all other amounts then due under the
Financing Documents. In the event of any complete prepayment of its loan
obligation, the Borrower shall, at the time of such prepayment, also pay or
provide for the payment of all reasonable or necessary fees and expenses of
the Authority, the Trustee and the Paying Agent accrued and to accrue through
the final payment of all the Bonds. Any such prepayments shall be applied to
the redemption of Bonds in the manner provided in Section 2.4(A) of the
Indenture, and credited against payments due hereunder in the same manner.
(B) The Borrower shall have, and is hereby granted, the option to
prepay its loan obligation in full at any time without premium if any of the
following events shall have occurred, as evidenced in each case by the filing
with the Trustee of a certificate of an Authorized Representative of the
Borrower to the effect that one of such events has occurred and is
continuing, and describing the same:
(1) Damage or destruction to the Plant or the Project to such
extent that in the opinion of the Borrower (expressed in a resolution
adopted by the Board of Directors of the Borrower (a "Board
Resolution")) and of an architect or engineer acceptable to the Borrower
(who may be an employee of the Borrower), both filed with the Authority
and the Trustee, (a) the Plant or the Project, as the case may be,
cannot be reasonably repaired, rebuilt, or restored within a period of
six (6) months to their condition immediately preceding such damage or
destruction, or (b) normal operations are thereby prevented from being
carried on at the Plant for a period of not less than six (6) months.
(2) Loss of title to or use of a substantial part of the Plant or
the Project as a result of the exercise of the power of eminent domain
which, in the opinion of the Borrower (expressed in a Board Resolution)
and of an architect or engineer acceptable to the Borrower (who may be
an employee of the Borrower), both filed with the Authority and the
Trustee, prevents or is likely to prevent normal operations from being
carried on at the Plant for a period of not less than six (6) months.
(3) A substantial part of the Plant or the Project shall become
obsolete in the opinion of the Borrower (expressed in a Board
Resolution).
(4) A change in the Constitution of the State of Connecticut or of
the United States of America or legislative or executive action (whether
local, state, or federal) or a final decree, judgment or order of any
court or administrative body (whether local, state, or federal) that
causes this Agreement to become void or unenforceable or impossible of
performance in accordance with the intent and purpose of the parties as
expressed herein or, imposes unreasonable burdens or excessive
liabilities upon the Borrower with respect to the Plant or the Project
or the operation thereof.
(5) The operation of the Plant or the Project shall have been
enjoined or shall otherwise have been prohibited by any order, decree,
rule or regulation of any court or of any local, state, or federal
regulatory body, administrative agency or other governmental body for a
period of not less than six (6) months.
(6) Changes which the Borrower cannot reasonably control in the
economic availability of fuel, materials, supplies, labor, equipment, or
other properties or things necessary for the efficient operation of the
Plant or the Project shall have occurred which, in the judgment of the
Borrower (expressed in a Board Resolution), render the continued
operation of the Plant uneconomical.
In any such case the final loan payment shall be a sum sufficient, together
with other funds deposited with Trustee and available for such purpose, to
redeem all Bonds then outstanding under the Indenture at the redemption price
of 100% of the principal amount thereof plus accrued interest to the
redemption date or dates and all other amounts then due under the Financing
Documents, and the Borrower shall also pay or provide for all reasonable or
necessary fees and expenses of the Trustee and Paying Agent and the
Remarketing Agent accrued and to accrue through final payment for the Bonds.
The Borrower shall deliver a written notice to the Trustee, with a copy to
the Authority, requesting the redemption of the Bonds under the Indenture,
which notice shall have attached thereto the applicable certificate of the
Authorized Representative of the Borrower. The Borrower's right to so
request the redemption of the Bonds upon the occurrence of any single event
listed in this Section 8.1(B) shall expire six (6) months, and any such
redemption shall occur within nine (9) months, after such event occurs.
Section 8.2. Notice by the Borrower of Optional Prepayment. The
Borrower shall exercise its option to prepay its loan obligation pursuant to
Section 8.1(A) or (B) by giving written notice signed by an Authorized
Representative of the Borrower to the Trustee, the Authority, the Paying
Agent, and the Remarketing Agent at least five (5) days before the prepayment
date if Bonds to be redeemed with the amounts to prepaid pursuant to the
Indenture are then in the Flexible Mode, and forty-five (45) days before the
prepayment date if Bonds to be redeemed with the amounts so prepaid pursuant
to the Indenture are then in any other Mode.
Section 8.3. Mandatory Prepayment on Taxability. The Borrower shall
pay or cause the prepayment of its loan obligation following a Determination
of Taxability in the manner provided in Section 6.3 of this Agreement.
Section 8.4. Mandatory Prepayment Upon Occurrence of Certain Events.
The Borrower shall pay or cause the prepayment of its loan obligation, prior
to the maturity of the Bonds, on a date selected by the Borrower, which date
shall be not later than three years after the date of mailing to the Borrower
of notice from the Authority of the Authority's election to accelerate the
Borrower's loan obligation hereunder as provided in Sections 6.4 and 7.3
hereof.
Section 8.5. Mandatory Prepayment Pursuant to Standby Bond Purchase
Agreement. The Borrower shall pay or cause the prepayment of its loan
obligation in accordance with the mandatory amortization provisions relating
to Bank Bonds (as such term is defined in the Standby Bond Purchase
Agreement) contained in the Standby Bond Purchase Agreement.
ARTICLE IX
GENERAL
Section 9.1. Indenture. (A) Monies received from the sale of the Bonds
and all loan payments made by the Borrower and all other monies received by
the Authority or the Trustee under the Financing Documents shall be applied
solely and exclusively in the manner and for the purposes expressed and
specified in the Indenture and in the Bonds and as provided in this
Agreement.
(B) The Borrower shall have and may exercise all the rights,
powers and authority given the Borrower in the Indenture and in the Bonds,
and the Indenture and the Bonds shall not be modified, altered or amended in
any manner which adversely affects such rights, powers and authority or
otherwise adversely affects the Borrower without the prior written consent of
the Borrower.
Section 9.2. Benefit of and Enforcement by Bondholders. The Authority
and the Borrower agree that this Agreement is executed in part to induce the
purchase by others of the Bonds and for the further securing of the Bonds,
and accordingly that all covenants and agreements on the part of the
Authority and the Borrower as to the amounts payable with respect to the
Bonds hereunder are hereby declared to be for the benefit of the holders from
time to time of the Bonds and may be enforced as provided in the Indenture on
behalf of the Bondholders by the Trustee.
Section 9.3. Force Majeure. In case by reason of force majeure the
Borrower shall be rendered unable wholly or in part to carry out its
obligations under this Agreement, then except as otherwise expressly provided
in this Agreement, if the Borrower shall give notice and full particulars of
such force majeure in writing to the Authority within a reasonable time after
occurrence of the event or cause relied on, the obligations of the Borrower,
other than its obligation to make the payments required under the terms
hereof or of the Mortgage Bonds, so far as they are affected by such force
majeure, shall be suspended during the continuance of the inability then
claimed which shall include a reasonable time for the removal of the effect
thereof, but for no longer period, and the Borrower shall endeavor to remove
or overcome such inability with all reasonable dispatch. The term "force
majeure", as employed herein, means acts of God, strikes, lockouts or other
industrial disturbances, acts of the public enemy, orders of any kind of the
Government of the United States, of the State or any civil or military
authority, insurrections, riots, epidemics, landslides, lightning,
earthquakes, volcanoes, fires, hurricanes, tornadoes, storms, floods,
washouts, droughts, arrests, restraining of government and people, civil
disturbances, explosions, partial or entire failure of utilities, shortages
of labor, material, supplies or transportation, or any other similar or
different cause not reasonably within the control of the party claiming such
inability. It is understood and agreed that the settlement of existing or
impending strikes, lockouts or other industrial disturbances shall be
entirely within the discretion of the Borrower and that the above
requirements that any force majeure shall be reasonably beyond the control of
the Borrower and shall be remedied with all reasonable dispatch shall be
deemed to be fulfilled even though such existing or impending strikes,
lockouts and other industrial disturbances may not be settled and could have
been settled by acceding to the demands of the opposing person or persons.
Section 9.4. Amendments. This Agreement may be amended only with the
concurring written consent of the Trustee and, if required by the Indenture,
of the owners of the Bonds given in accordance with the provisions of the
Indenture.
Section 9.5. Notices. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed
given when delivered or when mailed by registered or certified mail, postage
prepaid, addressed as follows: if to the Authority, at 845 Brook Street,
Rocky Hill, Connecticut 06067, Attention: Program Manager - Loan
Administration; if to the Borrower, c/o Northeast Utilities Service Company
at 107 Selden Street, Berlin, Connecticut 06037, Attention: Assistant
Treasurer; if to the Remarketing Agent, Goldman, Sachs & Co., 85 Broad
Street, New York, New York 10004, Attention: Municipal Bond Department; if to
the Paying Agent, Fleet National Bank, 777 Main Street, Hartford, Connecticut
06115, Attention: Corporate Trust Department; and if to the Trustee, Fleet
National Bank, 777 Main Street, Hartford, Connecticut 06115, Attention:
Corporate Trust Department. A duplicate copy of each notice, certificate or
other communication given hereunder by either the Authority or the Borrower
to the other shall also be given to the Trustee. The Authority, the
Borrower, the Remarketing Agent, the Paying Agent and the Trustee may, by
notice given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
Section 9.6. Prior Agreements Superseded. This Agreement, together
with all agreements executed by the parties concurrently herewith or in
conjunction with the sale of the Bonds, shall completely and fully supersede
all other prior understandings or agreements, both written and oral, between
the Authority and the Borrower relating to the lending of money and the
Project, including those contained in any commitment letter executed in
anticipation of the issuance of the Bonds.
Section 9.7. Execution of Counterparts. This Agreement may be
executed simultaneously in several counterparts each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 9.8. Time. All references to times of day in this Agreement
are references to New York City time.
IN WITNESS WHEREOF, the Authority has caused this Agreement to be
executed in its corporate name by a duly Authorized Representative, and the
Borrower has caused this Agreement to be executed in its corporate name by
its duly authorized officer all as of the date first above written.
Connecticut Development Authority
By
Name: /s/Antone C. Botelho, III
Authorized Representative
The Connecticut Light and
Power Company
By
Name: /s/David R. McHale
Title: Assistant Treasurer-Finance
APPENDIX A
DESCRIPTION OF PROJECT EQUIPMENT
I. POLLUTION CONTROL FACILITIES
(a) Condensate Polishing Demineralizer Resin Regeneration System
(b) Water Treating Resin Regeneration System
(c) Boron Recycle Facility
(d) Liquid Waste Management System
(e) Gaseous Waste Degasification System
(f) Gaseous Waste (HVAC) System
(g) Oil Separators
II. SEWAGE DISPOSAL FACILITIES
(a) Sanitary Waste System
III. SOLID WASTE FACILITIES
(a) Screen Wash and Disposal System
(b) Radioactive Solid Waste System
(c) Spent Fuel Facility
Exhibit 4.2.24.1
CONNECTICUT DEVELOPMENT AUTHORITY
to
FLEET NATIONAL BANK
As Trustee
AMENDED AND RESTATED INDENTURE OF TRUST
Dated as of May 1, 1996
and
Amended and Restated
as of January 1, 1997
Connecticut Development Authority
$62,000,000 Pollution Control Revenue Bonds
(The Connecticut Light and Power Company Project - 1996A
Series)
TABLE OF CONTENTS
Page
Parties, Preambles and Form of Bonds 1
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions 73
Section 1.2. Interpretation 81
ARTICLE II
AUTHORIZATION, TERMS AND ISSUANCE OF BONDS
Section 2.1. Authorization for Indenture 83
Section 2.2. Authorization and Obligation of Bonds; the
Mortgage Bonds 83
Section 2.3. Issuance and Terms of the Bonds 84
Section 2.4. Redemption of Bonds 97
Section 2.5. Execution and Authentication of Bonds 100
Section 2.6. Delivery of Bonds 101
ARTICLE III
GENERAL TERMS AND PROVISIONS OF BONDS
Section 3.1. Date of Bonds 101
Section 3.2. Form and Denominations 101
Section 3.3. Legends 101
Section 3.4. Medium of Payment 102
Section 3.5. Bond Details 102
Section 3.6. Interchangeability, Transfer and
Registry 102
Section 3.7. Bonds Mutilated, Destroyed, Stolen or
Lost 103
Section 3.8. Cancellation and Destruction of Bonds 103
Section 3.9. Requirements With Respect To Transfers 103
ARTICLE IV
APPLICATION OF BOND PROCEEDS
Section 4.1. Accrued Interest 104
Section 4.2. Bond Proceeds and Premium 104
ARTICLE V
CUSTODY AND INVESTMENT OF FUNDS
Section 5.1. Creation of Funds 104
Section 5.2. Project Fund 104
Section 5.3. Debt Service Fund 106
Section 5.4. Rebate Fund 106
Section 5.5. Investment of Funds 107
Section 5.6. Non-presentment of Bonds 107
Section 5.7. Application of Moneys 108
Section 5.8. Payment of Debt Service; Application;
Borrower Bonds 108
ARTICLE VI
REDEMPTION OF BONDS
Section 6.1. Privilege of Redemption and Redemption
Price 110
Section 6.2. Selection of Bonds to be Redeemed 110
Section 6.3. Notice of Redemption 110
Section 6.4. Payment of Redeemed Bonds 111
Section 6.5. Cancellation of Redeemed Bonds 111
ARTICLE VII
PARTICULAR COVENANTS
Section 7.1. No Pecuniary Liability on Authority or
Officers. 111
Section 7.2. Payment of Principal, Redemption Price, if
any, and Interest 112
Section 7.3. Performance of Covenants 112
Section 7.4. Further Assurances 112
Section 7.5. Inspection of Project Books 112
Section 7.6. Rights under Financing Documents 113
Section 7.7. Creation of Liens, Indebtedness 113
Section 7.8. Recording and Filing 113
ARTICLE VIII
REMEDIES OF BONDHOLDERS
Section 8.1. Events of Default; Acceleration of Due
Dates 113
Section 8.2. Enforcement of Remedies 114
Section 8.3. Application of Revenues and Other Monies
After Default 115
Section 8.4. Actions by Trustee 116
Section 8.5. [Reserved] 116
Section 8.6. Majority Bondholders Control
Proceedings 116
Section 8.7. Individual Bondholder Action
Restricted 117
Section 8.8. Effect of Discontinuance of
Proceedings 117
Section 8.9. Remedies Not Exclusive 117
Section 8.10. Delay or Omission Upon Default 118
Section 8.11. Notice of Default 118
Section 8.12. Waivers of Default 118
ARTICLE IX
TRUSTEE AND PAYING AGENTS
Section 9.1. Appointment and Acceptance of Duties 119
Section 9.2. Indemnity 119
Section 9.3. Responsibilities of Trustee 119
Section 9.4. Compensation 121
Section 9.5. Evidence on Which Trustee May Act 121
Section 9.6. Evidence of Signatures of Owners of the Bonds
and Ownership of Bonds 122
Section 9.7. Trustee, any Paying Agent, the Bank, and the
Remarketing Agent May Deal in Bonds and With
Borrower 123
Section 9.8. Resignation or Removal of Trustee 123
Section 9.9. Successor Trustee 123
Section 9.10. Appointment and Responsibilities of Paying
Agent 125
Section 9.11. Resignation or Removal of Paying Agent;
Successors 127
Section 9.12. Monies Held for Particular Bonds 128
Section 9.13. Continuation Statements 128
Section 9.14. Obligation to Report Defaults 128
Section 9.15. Payments Due on non-Business Day 128
Section 9.16. Appointment of Co-Trustee 128
Section 9.17. Remarketing Agent 129
Section 9.18. Purchase of Bonds Tendered 131
Section 9.19. Remarketing of Bonds Tendered 133
Section 9.20. [Reserved] 134
Section 9.21. Reduction of Standby Bond Purchase Agreement
on Change in Mode; Release of Standby Bond
Purchase Agreement upon Conversion to
Multiannual or Fixed Rate Mode 134
Section 9.22. Project Description 134
ARTICLE X
AMENDMENTS OF INDENTURE
Section 10.1. Limitation on Modifications 135
Section 10.2. Supplemental Indentures Without Consent of
Owners of the Bonds 135
Section 10.3. Supplemental Indentures With Consent of
Owners of the Bonds 136
Section 10.4. Supplemental Indenture Part of the
Indenture 138
Section 10.5. Supplemental Indentures Affecting Rights of
the Bank, the Paying Agent or the Remarketing
Agent 138
ARTICLE XI
AMENDMENTS OF FINANCING DOCUMENTS
Section 11.1. Rights of Borrower 138
Section 11.2. Amendments of Financing Documents Not
Requiring Consent of Owners of the Bonds 138
Section 11.3. Amendments of Financing Documents Requiring
Consent of Owners of the Bonds 138
Section 11.4. Consent of Bond Insurer in Addition to
Bondholder Consent 139
ARTICLE XII
DISCHARGE OF INDENTURE
Section 12.1. Defeasance 139
ARTICLE XIII
PROVISIONS RELATING TO BOND INSURANCE
Section 13.1. Notice of Certain Redemptions 141
Section 13.2. Notice of Default; Notices of Claims Under
Insurance Policy 141
Section 13.3. Deemed Holder for Default and Remedies 142
Section 13.4. Supplemental Indentures and Amendments to
Agreement 142
Section 13.5. Successor Trustee 142
Section 13.6. Bond Insurer as Party in Interest 143
Section 13.7. Access to the Register 143
Section 13.8. Notices to Bond Insurer 143
Section 13.9. Termination of Special Insurance
Requirements 143
Section 13.10.Confirmation of Application of Term
"Outstanding" to Bonds Paid by Bond Insurer;
Recordation of Rights of Subrogation in
Registration Books 143
Section 13.11.Bond Insurer as Third Party Beneficiary 144
Section 13.12.Definitions for Purposes of Article XIII 144
ARTICLE XIV
GENERAL PROVISIONS
Section 14.1. Notices 144
Section 14.2. Covenant Against Discrimination 145
Section 14.3. Parties Interested Herein 145
Section 14.4. Effective Date; Counterparts 145
Section 14.5. Date for Identification Purposes Only 146
Section 14.6. Time 146
APPENDIX A - REQUISITION
APPENDIX B - DTC LETTER OF REPRESENTATIONS
THIS AMENDED AND RESTATED INDENTURE OF TRUST, made and
dated as of January 1, 1997, amending and restating that
certain Indenture of Trust made and dated as of May 1, 1996
as heretofore supplemented and amended by a Supplemental
Indenture dated as of May 1, 1996 (the "Original Indenture")
(the Original Indenture as amended and restated hereby is
hereinafter referred to as the "Indenture"), each by and
between the Connecticut Development Authority, a body
corporate and politic constituting a public instrumentality
and political subdivision of the State of Connecticut, and
Fleet National Bank, a national banking association
organized, existing and authorized to accept and execute
trusts of the character herein set out under and by virtue
of the laws of the United States, with its principal office
located in Hartford, Connecticut, as Trustee,
WITNESSETH THAT:
WHEREAS, the State Commerce Act, constituting
Connecticut General Statutes, Sections 32-1a through
32-23xx, as amended (the "Act"), declares that there is a
continuing need in the State (1) for economic development
and activity to provide and maintain employment and tax
revenues and to control, abate and prevent pollution to
protect the public health and safety and (2) for assistance
to public service businesses providing transportation and
utility services in the State, and that the availability of
financial assistance and suitable facilities are important
inducements to industrial and commercial enterprises to
remain or locate in the State and to provide industrial,
recreation, urban and public service projects; and
WHEREAS, the Act provides that (1) the term "project"
as used therein means any facility, plant, works, system,
building, structure, utility, fixture or other real property
improvement located in the State, and the land on which it
is located or which is reasonably necessary in connection
therewith, which is of a nature or which is to be used or
occupied by any person for purposes which would constitute
it as an economic development project, recreation project,
urban project, public service project or health care
project, and any real property improvement reasonably
related thereto, and (2) a project may also include or
consist exclusively of machinery, equipment or fixtures; and
WHEREAS, the Act defines economic development project
to include "any project which is to be used or occupied by
any person for . . . (2) controlling, abating, preventing or
disposing land, water, air or other environmental
pollution . . . or (3) the conservation of energy or the
utilization of cogeneration technology or solar, wind,
hydro, biomass or other renewable sources to produce energy
for any industrial or commercial application"; and
WHEREAS, the Act provides that the Authority shall have
power to determine the location and character of, and extend
credit or make loans to any person for the planning,
designing, acquiring, improving and equipping of, a project
which may be secured by loan, lease or sale agreements,
contracts and other instruments, upon such terms and
conditions as the Authority shall determine to be
reasonable, to require the inclusion in any contract, loan
agreement or other instrument of such provisions for the
construction, use, operation, maintenance and financing of
the project as the Authority may deem necessary or
desirable, to issue its bonds for such purposes, subject to
the approval of the Treasurer of the State, and, as security
for the payment of the principal or redemption price, if
any, of and interest on any such bonds, to pledge or assign
such a loan, lease or sale agreement and the revenues and
receipts derived by the Authority from such a project; and
WHEREAS, The Connecticut Light and Power Company (the
"Borrower") currently owns certain undivided interests in
existing facilities within certain municipalities in the
State and, by resolution adopted in furtherance of the
purposes of the Act, the Authority has accepted the
application of the Borrower for assistance in the financing
of facilities for the control, abatement or prevention of
environmental pollution deriving from the operation of
certain nuclear electric generating facilities (the
"Project"); and
WHEREAS, the Authority has by a resolution adopted
April 17, 1996 authorized the issuance of $62,000,000
principal amount of its Pollution Control Revenue Bonds (The
Connecticut Light and Power Company Project - 1996A Series)
(the "Bonds") for the purpose of providing funds for the
financing of construction of and additions to the pollution
control and sewage and solid waste disposal facilities of
the Borrower; and
WHEREAS, the Authority determined that the issuance,
sale and delivery of the Bonds, as hereinafter provided, was
needed to finance the cost of the Project, including
necessary expenses incidental thereto, and concurrently with
the execution of the Original Indenture the Authority and
the Borrower entered into a Loan Agreement dated as of May
1, 1996, providing for a loan by the Authority to the
Borrower for such purpose in an amount equal to the
principal amount of the Bonds; and
WHEREAS, in order to further support the payment of the
Bonds, the Borrower, concurrently with the execution of the
Original Indenture, arranged for the delivery to the Paying
Agent (as hereinafter defined) of an irrevocable Letter of
Credit, dated the date of the delivery of the Bonds, issued
by Canadian Imperial Bank of Commerce, New York Agency, for
the account of the Borrower in favor of the Paying Agent as
beneficiary on behalf of the owners of the Bonds; and
WHEREAS, the Borrower and Canadian Imperial Bank of
Commerce, New York Agency, entered into a Letter of Credit
and Reimbursement Agreement dated as of May 1, 1996,
obligating the Borrower, inter alia, to repay all amounts
drawn under the Letter of Credit; and
WHEREAS, the Connecticut Department of Public Utility
Control approved the issuance of the Note (as such term is
defined in the Original Indenture); and
WHEREAS, on May 21, 1996, the Authority issued the
Bonds under and in accordance with the provisions of the
Original Indenture; and
WHEREAS, the Bonds are special obligations of the
Authority, payable solely out of the revenues and other
receipts, funds or monies derived by the Authority under the
Agreement or the Indenture and from any amounts otherwise
available under this Indenture for the payment of the Bonds;
and
WHEREAS, all federal and State agencies having
jurisdiction in the premises have certified that the portion
of the Project that constitutes pollution control
facilities, as designed, is in furtherance of the purpose of
controlling, abating or preventing pollution at the Plant;
and
WHEREAS, the Borrower has determined to replace the
Letter of Credit (as such term is defined in the Original
Indenture) with a substitute Credit Facility (as such term
is defined in the Original Indenture) consisting of credit
support in the form of a bond insurance policy to be issued
by AMBAC Indemnity Corporation (the "Bond Insurer") and
liquidity support in the form of a standby bond purchase
agreement, by and between the Borrower and Societe Generale,
New York Branch, and to make certain other modifications to
the Original Indenture in connection therewith; and
WHEREAS, in order to further secure the Bonds, the
Borrower has determined to issue its 1996 Series B First
Mortgage Bonds due May 1, 2031 (the "Mortgage Bonds")
pursuant to that certain Indenture of Mortgage and Deed of
Trust dated as of May 1, 1921, between the Borrower and
Bankers Trust Company, as Trustee, as heretofore amended and
supplemented and as hereafter amended or supplemented in
accordance with the provisions thereof (the "Mortgage"); and
WHEREAS, the Connecticut Department of Public Utility
Control has approved the issuance of the Mortgage Bonds; and
WHEREAS, the Authority, at the request of the Borrower,
has determined to amend and restate the Original Indenture
in order to provide for the amendments, modifications and
other changes necessary to effectuate the replacement of the
Letter of Credit and the issuance by the Borrower of the
Mortgage Bonds and such other actions to be taken in
connection therewith; and
WHEREAS, the Bonds are to be issued as fully registered
bonds and such Bonds and the Trustee's certificate of
authentication to be endorsed thereon shall be in
substantially the following form, with appropriate
variations, omissions and insertions as permitted or
required by this Indenture, to wit:
The Bonds shall be issued in substantially the
following forms for the respective various Modes:
(FORM OF DAILY BOND)
$ No. R-
ANY BONDOWNER WHO FAILS TO DELIVER A BOND FOR PURCHASE
AT THE TIMES AND AT THE PLACE REQUIRED HEREIN SHALL
HAVE NO FURTHER RIGHTS HEREUNDER EXCEPT THE RIGHT TO
RECEIVE THE PURCHASE PRICE HEREOF UPON PRESENTATION AND
SURRENDER OF THIS BOND TO THE PAYING AGENT AS DESCRIBED
HEREIN, AND SHALL HOLD THIS BOND AS AGENT FOR THE
PAYING AGENT.
NEITHER THE STATE OF CONNECTICUT NOR ANY MUNICIPALITY
THEREOF IS OBLIGATED TO PAY, AND NEITHER THE FAITH AND
CREDIT NOR TAXING POWER OF THE STATE OF CONNECTICUT NOR
ANY MUNICIPALITY THEREOF IS PLEDGED TO THE PAYMENT OF,
THE PRINCIPAL, PREMIUM, IF ANY, OF OR INTEREST ON THIS
BOND.
Municipal Bond Insurance Policy No. _____________ (the
"Policy") with respect to payments due for principal of
and interest on this Bond has been issued by AMBAC
Indemnity Corporation ("AMBAC Indemnity"). The Policy
has been delivered to the United States Trust Company
of New York, New York, New York, as the Insurance
Trustee under said Policy and will be held by such
Insurance Trustee or any successor insurance trustee.
The Policy is on file and available for inspection at
the principal office of the Insurance Trustee and a
copy thereof may be secured from AMBAC Indemnity or the
Insurance Trustee. All payments required to be made
under the Policy shall be made in accordance with the
provisions thereof. The owner of this Bond
acknowledges and consents to the subrogation rights of
AMBAC Indemnity as more fully set forth in the Policy.
Connecticut Development Authority
Pollution Control Revenue Bond
(The Connecticut Light and Power Company Project -
1996A Series)
DATE OF THIS BOND:
(Date as of which Bonds of this series were initially
issued)
MATURITY DATE: May 1, 2031
INTEREST PAYMENT DATES:
(i) the first Business Day of each calendar month, and (ii)
the Maturity Date
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CUSIP NUMBER:
MODE: Daily
CONNECTICUT DEVELOPMENT AUTHORITY (the "Authority"), a
body corporate and politic constituting a public
instrumentality and political subdivision of the State of
Connecticut (the "State"), for value received, hereby
promises to pay to the REGISTERED OWNER or registered
assigns, on the MATURITY DATE, solely from the sources and
in the manner hereinafter provided, upon presentation and
surrender hereof, in lawful money of the United States of
America, the PRINCIPAL AMOUNT and in like manner to pay
interest on the unpaid principal balance thereof, until the
Authority's obligation with respect to the payment of such
sum shall be discharged. Interest shall be payable from the
most recent INTEREST PAYMENT DATE, as defined below, to
which interest has been paid or duly provided for or, if no
interest has been paid, from the DATE OF THIS BOND until
paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the Weekly,
Flexible, Multiannual or Fixed Rate Mode as provided below,
this bond shall bear interest at the Daily Rate. The Daily
Rate for this bond shall be the rate of interest determined
by the Remarketing Agent designated as provided in the
Indenture (herein, with its successors, the "Remarketing
Agent"), for each Rate Period, as defined below, to be the
lowest rate which in its judgment, on the basis of
prevailing financial market conditions, would permit the
sale of the Bonds (as defined below) in the Daily Mode at
par plus accrued interest on and as of the Effective Date,
as defined below, but not in excess of the Maximum Interest
Rate. If this bond is converted to the Weekly, Flexible,
Multiannual or Fixed Rate Mode it shall bear interest at the
Weekly, Flexible, Multiannual or Fixed Rate, as the case may
be, as defined in the Indenture. The Remarketing Agent
shall determine the initial Daily Rate on or before the date
of issue in or of conversion to the Daily Mode, which rate
shall remain in effect as provided in the Indenture.
Thereafter, the Remarketing Agent shall redetermine the
Daily Rate for each Rate Period as provided below. The
amount of interest due on any INTEREST PAYMENT DATE shall be
the amount of unpaid interest accrued on this bond through
the day preceding such INTEREST PAYMENT DATE.
Payment of Principal and Interest. While this bond is
in the Daily Mode, the principal of this bond is payable
when due by wire or bank transfer of immediately available
funds within the continental United States to the REGISTERED
OWNER hereof but only upon presentation and surrender of
this bond at the office of Fleet National Bank, 777 Main
Street, Hartford, Connecticut 06115, as Paying Agent (with
its successors in such capacity, the "Paying Agent").
Interest on this bond while in the Daily Mode is payable in
immediately available funds by wire or bank transfer within
the continental United States from the Paying Agent to the
REGISTERED OWNER, determined as of the close of business on
the applicable record date at its address shown on the
registration books maintained by the Paying Agent. The
Purchase Price (as defined below) of Bonds tendered for
purchase shall be paid as provided below.
The record date for payment of interest while this bond
is in the Daily Mode is the Business Day preceding the date
on which interest is to be paid. With respect to overdue
interest or interest payable on redemption of this bond
other than on an INTEREST PAYMENT DATE or interest on any
overdue amount, the Trustee may establish a special record
date. The special record date may be not more than thirty
(30) days before the date set for payment. The Paying Agent
will mail notice of a special record date to the Bondowners
at least ten (10) days before the special record date. The
Paying Agent will promptly certify to the Authority, the
Trustee and the Remarketing Agent that it has mailed such
notice to all Bondowners, and such certificate will be
conclusive evidence that notice was given in the manner
required hereby.
Authorization and Purpose. This bond is one of an
authorized issue of Bonds of the Authority in the aggregate
principal amount of $62,000,000 designated: Pollution
Control Revenue Bonds (The Connecticut Light and Power
Company Project - 1996A Series) (the "Bonds") which are
issued for the purpose of financing certain capital projects
for the benefit of The Connecticut Light and Power Company
(the "Borrower"), a corporation organized and existing under
the laws of the State of Connecticut and paying necessary
expenses incidental thereto. The project consists of certain
capital projects, including additions to the pollution
control and sewage and solid waste disposal facilities of
the Borrower (the "Project"). The Bonds are issued pursuant
to the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-1a through 32-23xx, as amended, a
resolution adopted by the Authority on April 17, 1996 and an
Indenture of Trust dated as of May 1, 1996 (which Indenture
as from time to time amended and supplemented is herein
referred to as the "Indenture"), duly executed and delivered
by the Authority to the Trustee, and are equally and ratably
secured by and entitled to the protection of the Indenture,
which is on file in the office of the Trustee.
Pledge and Security. Pursuant to the Indenture, the
Authority has assigned to the Trustee all of its right,
title and interest in and to a Loan Agreement (which Loan
Agreement as from time to time amended and supplemented is
herein referred to as the "Agreement") dated as of May 1,
1996 between the Authority and the Borrower, and the
Mortgage Bonds (as hereinafter defined) (except for certain
enforcement and indemnification rights which are reserved in
the Indenture), including all rights to receive loan
payments sufficient to pay the principal of, premium, if
any, and interest and all other amounts due on the Bonds as
the same become due, to be made by the Borrower pursuant to
the Agreement. The Agreement sets forth the terms and
conditions under which the Authority will provide for
financing of the Project and under which the Borrower will
use and occupy the Project and make loan payments to the
Authority in such amounts as are necessary to pay the
principal of, premium, if any, and interest on the Bonds.
To secure such loan payments and the Borrower's obligation
to make payments in respect of the Purchase Price (as
defined below) of this bond, the Borrower has issued and
delivered to the Trustee its 1996 Series B First Mortgage
Bonds (the "Mortgage Bonds") issued under the Indenture of
Mortgage and Deed of Trust dated as of May 1, 1921, as
amended and supplemented, between the Borrower and Bankers
Trust Company, as Mortgage Trustee (as amended and
supplemented from time to time, the "Mortgage") bearing
interest at a rate of interest equal to the interest rate
applicable to the Bonds and in an aggregate principal amount
equal to the principal amount of, and with the same maturity
date as, the Bonds. As provided in the Indenture, payments
of principal of the Mortgage Bonds shall, upon receipt by
the Trustee, be deemed to constitute payments in
corresponding amounts by the Borrower in respect of the
Bonds. Reference is hereby made to the Indenture for the
definition of any capitalized word or term used but not
defined herein and for a description of the property
pledged, assigned and otherwise available for the payment of
the Bonds, the provisions, among others, with respect to the
nature and extent of the security, the rights, duties and
obligations of the Authority, the Trustee and the owners of
the Bonds, and the terms upon which the Bonds are issued and
secured, and the holders of the Bonds are deemed to assent
to the provisions of the Indenture by the acceptance of this
bond.
Standby Bond Purchase Agreement. The Purchase Price
(as defined below) of this bond is payable from moneys
demanded by the Paying Agent under a standby bond purchase
agreement (together with any extensions, amendments and
renewals thereof, the "Standby Bond Purchase Agreement")
provided by the Bank (as defined in the Indenture) with an
initial available commitment of $__________ for the payment
of the Purchase Price. The Standby Bond Purchase Agreement
initially expires on January 21, 1998 but may be terminated
earlier upon the occurrence of certain events set forth in
the Agreement, the Indenture and the Standby Bond Purchase
Agreement or extended as provided in the Standby Bond
Purchase Agreement. The Borrower may substitute for the
Standby Bond Purchase Agreement in whole or in part, one or
more new liquidity facilities (each an "Alternate Liquidity
Facility") as provided in the Indenture, the Agreement and
the Standby Bond Purchase Agreement. Unless the Standby
Bond Purchase Agreement is extended or renewed or an
Alternate Liquidity Facility is provided in accordance with
the Agreement, the Bonds will become subject to mandatory
purchase as described below.
Event of Default. In case any Event of Default occurs
and is continuing, the principal amount of this bond
together with accrued interest may become or be declared
immediately due and payable in the manner and with the
effect as provided in the Indenture.
Definitions. The following terms are defined as
follows:
"Business Day" means any day (i) that is not a Saturday
or Sunday, (ii) that is a day on which banks are not
required or authorized to close in New York, New York and
Hartford, Connecticut, (iii) that is a day on which banking
institutions in all of the cities in which the principal
offices of the Trustee, the Mortgage Trustee and the Paying
Agent and, if applicable, the Remarketing Agent and the Bank
are located and are not required or authorized to remain
closed, and (iv) that is a day on which the New York Stock
Exchange, Inc. is not closed.
"Effective Date" means, with respect to a Bond in the
Daily, Flexible, Weekly and Multiannual Modes, the date on
which a new Rate Period for that Bond takes effect.
"Mode" means the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily
Mode, Flexible Mode, the Weekly Mode, the Multiannual Mode
and the Fixed Rate Mode.
"Purchase Date" means, while this bond is in the Daily
Mode, the date on which this bond shall be required to be
purchased pursuant to a mandatory or optional tender in
accordance with the provisions hereof.
"Rate Period" or "Period" means, when used with respect
to any particular rate of interest for a Bond in the Daily,
Flexible, Weekly or Multiannual Mode, the period during
which such rate of interest determined for such Bond will
remain in effect as described herein. While this bond is in
the Daily Mode, a new interest rate shall take effect on the
date such Mode takes effect and on each Business Day
thereafter.
Conversion. At the option of the Borrower, and upon
certain conditions provided for in the Indenture described
below, all or a portion of the Bonds (a) may be converted or
reconverted from time to time to or from the Daily Mode,
during which interest on the Bonds will be determined on
each Business Day; (b) may be converted or reconverted from
time to time to or from the Weekly Mode or Multiannual Mode,
which means that the Rate Period is, respectively, one week
or one year or any multiple of one year, (c) may be
converted or reconverted from time to time to or from the
Flexible Mode, and will have Rate Periods of from one to 270
days as provided herein, or (d) may be converted to the
Fixed Rate Mode; provided, however, that in the Multiannual
Mode the first rate period occurring after conversion to
such Mode may be shorter than the applicable multiple of one
year as provided in the Indenture.
While this bond is in the Daily Mode, conversions to
any other Mode may take place only on the first Business Day
of any calendar month upon thirty (30) days' prior written
notice from the Paying Agent to the REGISTERED OWNER of this
bond. Conversion of this bond to another Mode shall be
subject to certain conditions set forth in the Indenture.
In the event that the conditions for a proposed conversion
to a new Mode are not met (i) such new Mode shall not take
effect on the proposed conversion date, notwithstanding any
prior notice to the Bondowners of such conversion, (ii) this
bond shall automatically convert to the Flexible Mode with a
Rate Period of one day, and (iii) this bond shall be subject
to mandatory tender for purchase as provided below. In no
event shall the failure of this bond to be converted to
another Mode be deemed to be a Default or an Event of
Default under the Indenture as long as the Purchase Price
(as defined below) is made available on the failed
conversion date to owners of all Bonds that were to have
been converted.
Interest While in Daily Mode. When this Bond is in the
Daily Mode, the Daily Rate in effect for each Rate Period,
(the "Effective Rate" for such Period) shall be determined
by the Remarketing Agent, not later than 10:15 A.M. on the
first Business Day of each Rate Period and provided to the
Paying Agent by the Remarketing Agent, by telephone promptly
confirmed in writing, by 1:00 P.M. on that same day;
provided that no notice need be given if the Daily Rate in
effect for the previous Rate Period is to be the Daily Rate
for such Rate Period. In the event that the Remarketing
Agent fails to make such determination or fails to announce
the Effective Rate as required with respect to any Bonds in
the Daily Mode, or if for any reason such manner of
determination shall be determined to be invalid or
unenforceable, the interest rate then in effect for the
Bonds that accrue interest at Daily Rates will remain in
effect from day to day until the Paying Agent is notified of
a new Daily Rate determined by the Remarketing Agent.
Notwithstanding anything in this bond or in the Indenture to
the contrary, during the time that this bond is a Bank Bond,
it shall bear interest at the Bank Rate. While this bond is
in the Daily Mode, Bondowners may ascertain the Effective
Rate at any time by contacting the Paying Agent or the
Remarketing Agent.
Each determination and redetermination of the Daily
Rate shall be conclusive and binding on the Authority, the
Trustee, the Paying Agent, the Bank, the Borrower and the
Bondowners.
While this bond is in the Daily Mode, interest shall be
computed on the basis of a 365 or 366-day year, as
appropriate and actual days elapsed. From and after the
date on which this bond becomes due, any unpaid principal
will bear interest at the then effective interest rate until
paid or duly provided for.
Purchase of Bonds. While this bond is in the Daily
Mode, the REGISTERED OWNER shall have the right to tender
this bond for purchase in multiples of $100,000 at a price
(the "Purchase Price") equal to 100% of the principal amount
thereof, plus accrued interest, if any, to the Purchase
Date, upon compliance with the conditions described below,
provided that if the Purchase Date is an INTEREST PAYMENT
DATE, accrued interest shall be paid separately, and not as
part of the Purchase Price on such date. In order to
exercise the right to tender, the REGISTERED OWNER must
deliver to the Paying Agent an irrevocable written or
telephone notice (promptly confirmed by telecopier) of
tender substantially in the form of the Bondowner's Election
Notice set forth hereon or in such other form as is
satisfactory to the Paying Agent. While this bond is in the
Daily Mode, it may be tendered for purchase at a Purchase
Price payable on any Business Day upon delivery of such
Bondowner's Election Notice to the Paying Agent not later
than 10:45 A.M. on the Purchase Date. If the REGISTERED
OWNER of this bond has elected to require purchase as
provided above, the REGISTERED OWNER shall be deemed, by
such election, to have agreed irrevocably to sell this bond
to any purchaser determined in accordance with the
provisions of the Indenture on the date fixed for purchase
at the Purchase Price.
Tender of this bond will not be effective and this bond
will not be purchased if at the time fixed for purchase an
acceleration of the maturity of the Bonds shall have
occurred and not have been annulled in accordance with the
Indenture. Notice of tender of this bond is irrevocable.
All notices of tender of Bonds shall be made to the Paying
Agent at Fleet National Bank, 777 Main Street, Hartford,
Connecticut 06115, Attention: Corporate Trust Operations
CT/MO/0224, or such other address specified in writing by
the Paying Agent to the Bondowners. All deliveries of
tendered Bonds, including deliveries of Bonds subject to
mandatory tender, shall be made to the Paying Agent at Fleet
National Bank, 777 Main Street, Hartford, Connecticut 06115,
Attention: Corporate Trust Operations CT/MO/0224 or such
other address specified in writing by the Paying Agent to
the Bondowners.
This bond is subject to mandatory tender for purchase
at the Purchase Price (i) on the date of conversion or
proposed conversion from one Mode to another Mode, (ii) on
the effective date of an Alternate Liquidity Facility unless
the Trustee receives verbal notice from Moody's (to be
followed by written confirmation at the time of
substitution) (if this bond is rated by Moody's) and written
notice from S&P (if this bond is rated by S&P) that such
substitution will not result in a withdrawal or reduction
(excluding a withdrawal or reduction resulting from a change
in Modes) of the rating of this bond and (iii) on a date
that is not more than fifteen (15) or less than ten (10)
days prior to the expiration or termination of the Standby
Bond Purchase Agreement or Alternate Liquidity Facility then
in effect other than upon conversion to a new Mode. Notice
of mandatory tender shall be given or caused to be given by
the Trustee in writing to the REGISTERED OWNER at least
thirty (30) days prior to the mandatory Purchase Date. THE
OWNER OF THIS BOND, BY ACCEPTANCE HEREOF, AGREES TO SELL AND
SURRENDER THIS BOND AT SUCH PRICE TO ANY PURCHASER
DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF THE
INDENTURE IN THE EVENT OF SUCH MANDATORY TENDER AND, ON SUCH
PURCHASE DATE, TO SURRENDER THIS BOND TO THE PAYING AGENT
FOR PAYMENT OF THE PURCHASE PRICE. From and after the
Purchase Date, no further interest on this bond shall be
payable to the REGISTERED OWNER, provided that there are
sufficient funds available on the Effective Date to pay the
Purchase Price.
The Purchase Price of this bond shall be paid to the
REGISTERED OWNER by the Paying Agent on the Delivery Date,
which shall be the Purchase Date or any subsequent Business
Day on which this bond is delivered to the Paying Agent.
The Purchase Price of this bond shall be paid only upon
surrender of this bond to the Paying Agent as provided
herein. From and after the Purchase Date, no further
interest on this bond shall be payable to the REGISTERED
OWNER who gave notice of tender for purchase, provided that
there are sufficient funds available on the Purchase Date to
pay the Purchase Price. The Purchase Price of Bonds
tendered for purchase is payable for Bonds in the Daily Mode
by wire or bank transfer within the continental United
States in immediately available funds from the Paying Agent
to the REGISTERED OWNER at its address shown on the
registration books maintained by the Paying Agent. If on
any date this bond is subject to mandatory tender for
purchase or is required to be purchased at the election of
the REGISTERED OWNER, payment of the Purchase Price of this
bond to such owner shall be made on the Purchase Date if
presentation and surrender of this bond is made prior to
1:00 P.M., New York City time, on the Purchase Date or on
such later Business Day upon which presentation and
surrender of this bond is made prior to 1:00 P.M., New York
City time.
Mandatory Taxability Redemption. In the event of a
Determination of Taxability, the Bonds shall be redeemed on
a day selected by the Borrower that is not more than 90 days
after the occurrence of such Determination of Taxability as
provided in the Indenture, at the Redemption Price equal to
100% of the principal amount thereof plus accrued interest
to the date of redemption. Redemption under this paragraph
shall be in whole unless not less than forty-five (45) days
prior to the redemption date the Borrower delivers to the
Trustee an opinion of Bond Counsel reasonably satisfactory
to the Trustee to the effect that a redemption of less than
all of the Bonds will preserve the tax-exempt status of
interest on the remaining Bonds outstanding subsequent to
such redemption.
General Optional Redemption. Bonds in the Daily Mode
are subject to redemption in whole or in part at the option
of the Authority, which option shall be exercised at the
direction of the Borrower, on any INTEREST PAYMENT DATE at a
redemption price of par plus accrued interest.
Redemption at the Option of the Authority Upon
Occurrence of Certain Events. In the event that a
substantial portion of the Project is abandoned at any one
time or in the aggregate, or in the event of any disposition
of all or any part of the Borrower's ownership interest in
the Project (other than as permitted by the Agreement) or in
the event that the Plant is not repaired, reconstructed,
relocated, or replaced following damage or destruction of
all or substantially all of such Plant, in each case, as
determined in accordance with the Agreement, the Bonds are
subject to redemption, at the option of the Authority, (i)
on a date selected by the Borrower, which date shall occur
not later than three years from the date of the Authority's
exercise of its option to so redeem, or (ii) on a date
selected by the Authority which date shall occur not less
than 210 days from the date of the Authority's exercise of
its option to so redeem, should the Borrower fail to give
notice of such events as required in the Agreement, at a
redemption price equal to 100% of the principal amount
thereof plus accrued interest to the redemption date.
Mandatory Redemption of Bank Bonds. Bank Bonds are
subject to mandatory redemption on such dates and in such
amounts as provided in the Standby Bond Purchase Agreement.
If less than all of the Outstanding Bonds are to be
called for redemption, the Bonds (or portions thereof) to be
redeemed shall be selected as provided in the Indenture with
Bonds in the Daily Mode being redeemed in units of $100,000.
In the event this bond is selected for redemption,
notice (which notice may state that it is subject to the
receipt of the redemption moneys by the Trustee on or before
the date fixed for redemption and which notice shall be of
no effect unless such moneys are so received on or before
such date) will be mailed no more than forty-five (45) days
nor less than thirty (30) days prior to the redemption date
to the REGISTERED OWNER at its address shown on the
registration books maintained by the Paying Agent. Failure
to mail notice to the owner of any other Bond or any defect
in the notice to such an owner shall not affect the
redemption of this bond.
If this bond is of a denomination in excess of one
hundred thousand dollars ($100,000), portions of the
principal amount in the amount of one hundred thousand
dollars ($100,000) or any multiple thereof may be redeemed.
If less than all of the principal amount is to be redeemed,
upon surrender of this bond to the Paying Agent, there will
be issued to the REGISTERED OWNER, without charge, a new
Bond or Bonds, at the option of the REGISTERED OWNER, for
the unredeemed principal amount.
Notice of redemption having been duly mailed, this
bond, or the portion called for redemption, will become due
and payable on the redemption date at the applicable
redemption price and, monies for the redemption having been
deposited with the Paying Agent, from and after the date
fixed for redemption, interest on this bond (or such
portion) will no longer accrue.
IN CERTAIN CIRCUMSTANCES SET OUT HEREIN, THIS BOND (OR
PORTION HEREOF) IS SUBJECT TO PURCHASE OR REDEMPTION, IN
EACH CASE UPON NOTICE TO OR FROM THE OWNER HEREOF AS OF A
DATE PRIOR TO SUCH PURCHASE OR REDEMPTION. IN EACH SUCH
EVENT AND UPON DEPOSIT OF THE PURCHASE OR REDEMPTION PRICE
WITH THE PAYING AGENT ON THE PURCHASE OR REDEMPTION DATE, AS
THE CASE MAY BE, THIS BOND (OR PORTION HEREOF) SHALL CEASE
TO BE OUTSTANDING UNDER THE INDENTURE, INTEREST HEREON SHALL
CEASE TO ACCRUE AS OF THE PURCHASE OR REDEMPTION DATE, AND
THE REGISTERED OWNER HEREOF SHALL BE ENTITLED ONLY TO
RECEIVE THE PURCHASE OR REDEMPTION PRICE SO DEPOSITED WITH
THE PAYING AGENT UPON SURRENDER OF THIS CERTIFICATE TO THE
PAYING AGENT.
Transfer of Bonds. This bond is transferable by the
REGISTERED OWNER, in person or by its attorney duly
authorized in writing, at the office of the Paying Agent,
upon surrender of this bond to the Paying Agent for
cancellation. Upon the transfer, a new Bond or Bonds in
authorized denominations of the same aggregate principal
amount will be issued to the transferee at the same office.
No transfer will be effective unless represented by such
surrender and reissue. This bond may also be exchanged at
the office of the Paying Agent for a new Bond or Bonds in
authorized denominations of the same aggregate principal
amount without transfer to a new registered owner.
Exchanges and transfers will be without expense to the owner
except for applicable taxes or other governmental charges,
if any. The Paying Agent will not be required to make an
exchange or transfer of this bond (except in connection with
any optional or mandatory tender of this bond) (i) if this
bond (or any portion thereof) has been selected for
redemption or (ii) during the fifteen (15) days preceding
any date fixed for selection for redemption if this bond (or
any portion thereof) is eligible to be selected for
redemption.
Amendment of Indenture. The Indenture permits, with
certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations
of the Authority and the rights of the owners of the Bonds
at any time by the Authority with the consent of the Bank,
AMBAC Indemnity and of the owners of not less than 66 2/3%
in aggregate principal amount of each series of the Bonds at
the time outstanding thereunder. Any such consent shall be
conclusive and binding upon each such owner and upon all
future owners of each Bond and of any such Bond issued upon
the transfer thereof, whether or not notation of such
consent is made thereon. The Indenture also permits the
amendment thereof by the Authority with the consent of the
Bank and AMBAC Indemnity, but without the consent of the
owners of the Bonds for certain specified purposes.
Limitation on Bondholder Enforcement Rights. The owner
of this bond shall have no right to enforce the provisions
of the Indenture, to institute action to enforce the
provisions and covenants thereof or to institute, appear in
or defend any suit or other proceedings with respect
thereto, except as provided in the Indenture.
Special Obligations of the Authority. This bond and
the issue of which it forms a part are special obligations
of the Authority, payable solely out of the revenues or
other receipts, funds or monies of the Authority pledged
under the Indenture and from any amounts otherwise available
under the Indenture for the payment of the Bonds. Neither
the State nor any municipality thereof shall be obligated to
pay the principal or redemption price, if any, of or
interest on this bond and neither the faith and credit nor
taxing power of the State or any municipality thereof is
pledged to such payment. The Bonds do not now and shall
never constitute a debt or liability of the State or any
municipality thereof or bonds issued or guaranteed by either
of them within the meaning of any constitutional or
statutory limitation.
Estoppel Clause. This bond is issued pursuant to and
in full compliance with the Constitution and laws of the
State. It is hereby certified, recited and declared that
all acts, conditions and things required to exist, happen
and be performed precedent to and in the issuance of this
bond do exist, have happened and have been performed in due
time, form and manner as required by law and that the
issuance of this bond and of the issue of which it forms a
part, together with all other obligations of the Authority,
do not exceed or violate any constitutional or statutory
limitation.
No Personal Liability. Neither the officers, directors
or employees of the Authority or the Trustee nor any person
executing this bond shall be liable personally or be subject
to any personal liability or accountability by reason of the
issuance hereof.
Authentication. This bond shall not be valid or become
obligatory for any purpose or be entitled to any security or
benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee
[or the Paying Agent].
Authorized Denomination. The Bonds are issuable only
in fully registered form and while in the Daily Mode shall
be in denominations of $100,000 or any multiple thereof.
Persons Deemed Owners. The Authority, the Trustee, the
Paying Agent and the Borrower may treat the REGISTERED OWNER
as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
IN WITNESS WHEREOF, the CONNECTICUT DEVELOPMENT
AUTHORITY has caused this Bond to be executed in its name by
the manual or facsimile signature of its Authorized
Representative.
Connecticut Development Authority
By /s/
Authorized Representative
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds of the issue described in
the within mentioned Indenture.
Date of Registration:
Fleet National Bank,
Trustee
By /s/ [, or
Authorized Signature
Fleet National Bank,
Paying Agent
By /s/
Authorized Signature]
(FORM OF ASSIGNMENT)
ASSIGNMENT
FOR VALUE RECEIVED the undersigned sells, assigns and
transfers unto
the within Bond and does hereby irrevocably constitute and
appoint
Attorney-in-Fact to transfer such Bond on the books kept for
the registration thereof, with full power of substitution in
the premises.
Dated:
/s/
NOTICE: The signature to
this assignment must
correspond with the name
as it appears on the face
of the within Bond in
every particular.
In the presence of:
/s/
Name of State or National
Bank or member of National
Association of Securities
Dealers
/s/
Authorized Officer
NOTE: Assignment form should
state both the name and
address of the assignee
in the space provided.
The following abbreviations, when used in the
inscription on the face of this bond, shall be construed as
though they were written out in full according to applicable
law.
TEN COM - as tenants in common
UNIF GIFT MIN ACT
TEN ENT - as tenants by the entirety Custodian
JT TEN - as joint tenants with rights (Cust)
(Minor)
of survivorship and not as
tenants in common
Act
(State)
Additional abbreviations may also be used though not set
forth in the list above.
The following is the Bondowner's Election Notice
described herein:
BONDOWNERS ELECTION NOTICE
Connecticut Development Authority
Pollution Control Revenue Bonds
(The Connecticut Light and Power Company
Project - 1996A Series)
Principal Principal Amount Bond Purchase
Amount CUSIP Tendered for Purchase Numbers Date
The undersigned hereby certifies that it is the
registered owner of the Bonds described above (the "Tendered
Bonds"), all of which are in the Daily Mode, and hereby
agrees that the delivery of this instrument of transfer to
the Paying Agent constitutes an irrevocable offer to sell
the Tendered Bonds to the Borrower or its designee on the
Purchase Date, at a purchase price equal to the unpaid
principal balance thereof plus accrued and unpaid interest
thereon to the Purchase Date (the "Purchase Price"). The
undersigned acknowledges and agrees that this election
notice is irrevocable and that the undersigned will have no
further rights with respect to the Tendered Bonds except
payment, upon presentation and surrender of the Tendered
Bonds, of the Purchase Price by payment by wire or bank
transfer within the continental United States from the
Paying Agent to the undersigned at its address as shown on
the registration books of the Paying Agent (i) on the
Purchase Date if the Tendered Bonds shall have been
surrendered to the Paying Agent prior to 1:00 P.M., New York
City time, on the Purchase Date or (ii) on any Delivery Date
subsequent to the Purchase Date on which Tendered Bonds are
delivered to the Paying Agent by 1:00 P.M., New York City
time, provided that for so long as the Bonds are in the
Book-Entry Only System, physical surrender of the Bonds to
the Paying Agent shall not be required and the Bonds shall
be tendered pursuant to the procedures described in the
Indenture referred to below.
Except as otherwise indicated herein and unless the
context otherwise requires, the terms used herein shall have
the meanings set forth in the Indenture dated as of May 1,
1996, as amended and restated as of January 1, 1997,
relating to the Bonds.
Date:
Signature(s)
/s/
/s/
Street City State Zip
IMPORTANT: The above signature(s) must correspond with
the name(s) as set forth on the face of the Tendered Bond(s)
with respect to which this Bondowner's Election Notice is
being delivered without any change whatsoever. If this
notice is signed by a person other than the registered owner
of any Tendered Bond(s), the Tendered Bond(s) must be either
endorsed on the Assignment appearing on each Bond or
accompanied by appropriate bond powers, in each case signed
exactly as the name or names of the registered owner or
owners appear on the bond register. The method of
presenting this notice to the Paying Agent is the choice of
the person making such presentation. If it is made by mail,
it should be by registered mail with return receipt
requested.
(END OF FORM OF DAILY BOND)
(FORM OF FLEXIBLE BOND)
$ No. R-
ANY BONDOWNER WHO FAILS TO DELIVER A BOND FOR PURCHASE
AT THE TIMES AND AT THE PLACE REQUIRED HEREIN SHALL
HAVE NO FURTHER RIGHTS HEREUNDER EXCEPT THE RIGHT TO
RECEIVE THE PURCHASE PRICE HEREOF UPON PRESENTATION AND
SURRENDER OF THIS BOND TO THE PAYING AGENT AS DESCRIBED
HEREIN, AND SHALL HOLD THIS BOND AS AGENT FOR THE
PAYING AGENT.
NEITHER THE STATE OF CONNECTICUT NOR ANY MUNICIPALITY
THEREOF IS OBLIGATED TO PAY, AND NEITHER THE FAITH AND
CREDIT NOR TAXING POWER OF THE STATE OF CONNECTICUT NOR
ANY MUNICIPALITY THEREOF IS PLEDGED TO THE PAYMENT OF,
THE PRINCIPAL, PREMIUM, IF ANY, OF OR INTEREST ON THIS
BOND.
Municipal Bond Insurance Policy No. ______________ (the
"Policy") with respect to payments due for principal of
and interest on this Bond has been issued by AMBAC
Indemnity Corporation ("AMBAC Indemnity"). The Policy
has been delivered to the United States Trust Company
of New York, New York, New York, as the Insurance
Trustee under said Policy and will be held by such
Insurance Trustee or any successor insurance trustee.
The Policy is on file and available for inspection at
the principal office of the Insurance Trustee and a
copy thereof may be secured from AMBAC Indemnity or the
Insurance Trustee. All payments required to be made
under the Policy shall be made in accordance with the
provisions thereof. The owner of this Bond
acknowledges and consents to the subrogation rights of
AMBAC Indemnity as more fully set forth in the Policy.
Connecticut Development Authority
Pollution Control Revenue Bond
(The Connecticut Light and Power Company Project -
1996A Series)
DATE OF THIS BOND:
(Date as of which Bonds of this series were initially
issued)
MATURITY DATE: May 1, 2031
INTEREST DUE:
(on the Next Purchase Date)
INTEREST RATE: %
(to the Next Purchase Date)
NEXT PURCHASE DATE:
COMMENCEMENT DATE OF RATE PERIOD:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CUSIP NUMBER:
MODE: Flexible
CONNECTICUT DEVELOPMENT AUTHORITY (the "Authority"), a
body corporate and politic constituting a public
instrumentality and political subdivision of the State of
Connecticut (the "State"), for value received, hereby
promises to pay to the REGISTERED OWNER or registered
assigns, on the MATURITY DATE, solely from the sources and
in the manner hereinafter provided, upon presentation and
surrender hereof, in lawful money of the United States of
America the PRINCIPAL AMOUNT and in like manner to pay
interest on the unpaid principal balance thereof, until the
Authority's obligation with respect to the payment of such
sum shall be discharged. Interest shall be payable from the
most recent Interest Payment Date, as defined below, to
which interest has been paid or duly provided for or, if no
interest has been paid, from the DATE OF THIS BOND, until
paid in full, at the rates set forth below, payable on each
Interest Payment Date. So long as this bond is in the
Flexible Mode, interest shall be due on this bond on each
Purchase Date (as defined below) and on the MATURITY DATE,
and when this bond is in any other Mode interest shall be
due on the dates (the "Interest Payment Dates") provided in
the Indenture (as defined below). Until conversion to the
Daily, Weekly, Multiannual or Fixed Rate Mode as provided
below, this bond shall bear interest at the Flexible Rate.
The Flexible Rate for this bond shall be the rate of
interest determined by the Remarketing Agent designated as
provided in the Indenture (herein, with its successors, the
"Remarketing Agent"), for each Rate Period, as defined
below, to be the lowest rate which in its judgment, on the
basis of prevailing financial market conditions, is
necessary on and as of the Effective Date, as defined below,
to remarket each Bond having such Rate Period in a secondary
market transaction at a price equal to the principal amount
thereof, but not in excess of the Maximum Interest Rate. If
this bond is converted to the Daily, Weekly, Multiannual or
Fixed Rate Mode it shall bear interest at the Daily, Weekly,
Multiannual or Fixed Rate, as the case may be, as defined in
the Indenture. The Remarketing Agent shall determine the
initial Flexible Rate on or before the date of issue in or
of conversion to the Flexible Mode, which rate shall remain
in effect as provided in the Indenture. Thereafter, the
Remarketing Agent shall redetermine the Flexible Rate for
each Rate Period as provided below. The amount of interest
due on any Interest Payment Date shall be the amount of
unpaid interest accrued on this bond through the day
preceding such Interest Payment Date or, if such Interest
Payment Date is not a Business Day, through the day
preceding the first Business Day succeeding such Interest
Payment Date.
Payment of Principal and Interest. While this bond is
in the Flexible Mode, the principal of and interest on this
bond due on the MATURITY DATE are payable when due by wire
or bank transfer of immediately available funds within the
continental United States to the REGISTERED OWNER hereof but
only upon presentation and surrender of this bond at the
offices of Fleet National Bank, 777 Main Street, Hartford,
Connecticut 06115, as Paying Agent (with its successors in
such capacity, the "Paying Agent"). While this bond is in
the Flexible Mode, the Purchase Price of this bond (which
includes accrued interest to the Purchase Date) tendered for
purchase is payable by wire or bank transfer within the
continental United States from the Paying Agent to the
REGISTERED OWNER determined as of the close of business on
the applicable record date at its address shown on the
registration books maintained by the Paying Agent. The
record date for the payment of interest while this bond is
in the Flexible Mode is the Business Day preceding the
Purchase Date. Payment of the Purchase Price of this bond
to such owner shall be made on the Purchase Date if
presentation and surrender of this bond is made prior to
11:00 A.M., New York City time, on the Purchase Date or on
such later Business Day upon which presentation and
surrender of this bond is made prior to 11:00 A.M., New York
City time. The Purchase Price of this bond shall be paid in
immediately available funds. Overdue interest on this bond,
or interest on overdue principal while in the Flexible Mode
is payable in immediately available funds by wire or bank
transfer within the continental United States from the
Paying Agent to the REGISTERED OWNER, determined as of the
close of business on the applicable special record date as
determined by the Trustee, at its address as shown on the
registration books maintained by the Paying Agent. The
special record date may be not more than thirty (30) days
before the date set for payment. The Paying Agent will mail
notice of a special record date to the Bondowners at least
ten (10) days before the special record date. The Paying
Agent will promptly certify to the Authority, the Trustee
and the Remarketing Agent that it has mailed such notice to
all Bondowners, and such certificate will be conclusive
evidence that notice was given in the manner required
hereby.
Authorization and Purpose. This bond is one of an
authorized issue of Bonds of the Authority in the aggregate
principal amount of $62,000,000 designated: Pollution
Control Revenue Bonds (The Connecticut Light and Power
Company Project - 1996A Series) (the "Bonds") which are
issued for the purpose of financing certain capital projects
for the benefit of The Connecticut Light and Power Company
(the "Borrower"), a corporation organized and existing under
the laws of the State of Connecticut and paying necessary
expenses incidental thereto. The project consists of certain
capital projects, including additions to the pollution
control and sewage and solid waste disposal facilities of
the Borrower (the "Project"). The Bonds are issued pursuant
to the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-1a through 32-23xx, as amended, a
resolution adopted by the Authority on April 17, 1996 and an
Indenture of Trust dated as of May 1, 1996 (which Indenture
as from time to time amended and supplemented is herein
referred to as the "Indenture"), duly executed and delivered
by the Authority to the Trustee, and are equally and ratably
secured by and entitled to the protection of the Indenture,
which is on file in the office of the Trustee.
Pledge and Security. Pursuant to the Indenture, the
Authority has assigned to the Trustee all of its right,
title and interest in and to a Loan Agreement (which Loan
Agreement as from time to time amended and supplemented is
herein referred to as the "Agreement") dated as of May 1,
1996 between the Authority and the Borrower, and the
Mortgage Bonds (as hereinafter defined) (except for certain
enforcement and indemnification rights which are reserved in
the Indenture), including all rights to receive loan
payments sufficient to pay the principal of, premium, if
any, and interest and all other amounts due on the Bonds as
the same become due, to be made by the Borrower pursuant to
the Agreement. The Agreement sets forth the terms and
conditions under which the Authority will provide for
financing of the Project and under which the Borrower will
use and occupy the Project and make loan payments to the
Authority in such amounts as are necessary to pay the
principal of, premium, if any, and interest on the Bonds.
To secure loan payments and the Borrower's obligation to
make payments in respect of the Purchase Price (as defined
below) of this bond, the Borrower has issued and delivered
to the Trustee its 1996 Series B First Mortgage Bonds (the
"Mortgage Bonds") issued under the Indenture of Mortgage and
Deed of Trust dated as of May 1, 1921, as amended and
supplemented, between the Borrower and Bankers Trust
Company, as Mortgage Trustee (as amended and supplemented
from time to time, the "Mortgage") bearing interest at a
rate of interest equal to the interest rate applicable to
the Bonds and in an aggregate principal amount equal to the
principal amount of, and with the same maturity date as, the
Bonds. As provided in the Indenture, payments of principal
of the Mortgage Bonds shall, upon receipt by the Trustee, be
deemed to constitute payments in corresponding amounts by
the Borrower in respect of the Bonds. Reference is hereby
made to the Indenture for the definition of any capitalized
word or term used but not defined herein and for a
description of the property pledged, assigned and otherwise
available for the payment of the Bonds, the provisions,
among others, with respect to the nature and extent of the
security, the rights, duties and obligations of the
Authority, the Trustee and the owners of the Bonds, and the
terms upon which the Bonds are issued and secured, and the
holders of the Bonds are deemed to assent to the provisions
of the Indenture by the acceptance of this bond.
Standby Bond Purchase Agreement. The Purchase Price
(as defined below) of this bond is payable from moneys
demanded by the Paying Agent under a standby bond purchase
agreement (together with any extensions, amendments and
renewals thereof, the "Standby Bond Purchase Agreement")
provided by the Bank (as defined in the Indenture) with an
initial available commitment of $__________ for the payment
of the Purchase Price. The Standby Bond Purchase Agreement
initially expires on January 21, 1998 but may be terminated
earlier upon the occurrence of certain events set forth in
the Agreement, the Indenture and the Standby Bond Purchase
Agreement or extended as provided in the Standby Bond
Purchase Agreement. The Borrower may substitute for the
Standby Bond Purchase Agreement in whole or in part, one or
more new liquidity facilities (each an "Alternate Liquidity
Facility") as provided in the Indenture, the Agreement and
the Standby Bond Purchase Agreement. Unless the Standby
Bond Purchase Agreement is extended or renewed or an
Alternate Liquidity Facility is provided in accordance with
the Agreement, the Bonds will become subject to mandatory
purchase as described below.
Definitions: The following terms are defined as
follows:
"Business Day" means any day (i) that is not a Saturday
or Sunday, (ii) that is a day on which banks are not
required or authorized to close in New York, New York and
Hartford, Connecticut, (iii) that is a day on which banking
institutions in all of the cities in which the principal
offices of the Trustee, the Mortgage Trustee and the Paying
Agent and, if applicable, the Remarketing Agent and the Bank
are located and are not required or authorized to remain
closed and (iv) that is a day on which the New York Stock
Exchange, Inc. is not closed.
"Effective Date" means, with respect to a Bond in the
Daily, Flexible, Weekly and Multiannual Modes, the date on
which a new Rate Period for that Bond takes effect.
"Mode" means the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily
Mode, Flexible Mode, the Weekly Mode, the Multiannual Mode
and the Fixed Rate Mode.
"Purchase Date" means, while this bond is in the
Flexible Mode, the date on which this bond shall be required
to be purchased pursuant to a mandatory tender in accordance
with the provisions hereof.
"Rate Period" or "Period" means, when used with respect
to any particular rate of interest for a Bond in the Daily,
Flexible, Weekly or Multiannual Mode, the period during
which such rate of interest determined for such Bond will
remain in effect as described herein.
Conversion. At the option of the Borrower, and upon
certain conditions provided for in the Indenture described
below, all or a portion of the Bonds (a) may be converted or
reconverted from time to time to or from the Daily Mode,
during which interest on the Bonds will be determined on
each Business Day; (b) may be converted or reconverted from
time to time to or from the Weekly Mode or Multiannual Mode,
which means that the Rate Period is, respectively, one week
or one year or any multiple of one year; (c) may be
converted or reconverted from time to time to or from the
Flexible Mode, and will have Rate Periods of from one to 270
days as provided herein, or (d) may be converted to the
Fixed Rate Mode; provided, however, that in the Multiannual
Mode the first rate period occurring after conversion to
such Mode may be shorter than the applicable multiple of one
year as provided in the Indenture. While this bond is in
the Flexible Mode, a new interest rate shall take effect on
the date such Mode takes effect, and on the Effective Date
of the next Flexible Rate Period, as defined herein,
applicable to this bond.
While this bond is in the Flexible Mode, conversions to
any other Mode may take place only on an Effective Date.
Conversion of this bond to another Mode shall be subject to
certain conditions set forth in the Indenture. In the event
that the conditions for a proposed conversion to a new Mode
are not met (i) such new Mode shall not take effect on the
proposed conversion date, notwithstanding any prior notice
to the Bondowners of such conversion and (ii) this bond
shall remain in the Flexible Mode with a Rate Period of one
day. In no event shall the failure of this bond to be
converted to another Mode be deemed to be a Default or an
Event of Default under the Indenture as long as the Purchase
Price (as defined below) is made available on the failed
conversion date to owners of all Bonds that were to have
been converted.
Interest While in Flexible Mode. While Bonds bear
interest at Flexible Rates, the interest rate for each
particular Bond in the Flexible Mode will be determined by
the Remarketing Agent and will remain in effect from and
including the Effective Date of the Rate Period selected for
that Bond by the Remarketing Agent through the last date
thereof. While the Bonds are in the Flexible Mode, Bonds
may have successive Rate Periods of any duration up to 270
days each and ending on a Business Day and any Bond may bear
interest at a rate and for a period different from any other
Bond. Notwithstanding anything in this bond or in the
Indenture to the contrary, during the time that this bond is
a Bank Bond, it shall bear interest at the Bank Rate.
In the event that the Remarketing Agent no longer
determines, or fails to determine when required, any Rate
Period or any Flexible Rate for any Bonds, or if for any
reason such manner of determination shall be determined to
be invalid or unenforceable, the Rate Period for any such
Bond shall be deemed to be a Flexible Rate Period with a
duration of one day and the Flexible Rate shall be
determined as provided in the Indenture.
While this bond is in the Flexible Mode it is subject
to mandatory tender for purchase on each applicable
Effective Date at a price (the "Purchase Price") of par plus
accrued interest to the Effective Date. THE OWNER OF THIS
BOND, BY ACCEPTANCE HEREOF, AGREES TO SELL AND SURRENDER
THIS BOND IN ACCORDANCE WITH THE PROVISIONS OF THE INDENTURE
AND, ON THE PURCHASE DATE, TO SURRENDER THIS BOND TO THE
PAYING AGENT FOR PAYMENT OF THE PURCHASE PRICE. UPON
DEPOSIT OF THE PURCHASE PRICE WITH THE PAYING AGENT ON THE
PURCHASE DATE, THIS BOND SHALL BE DEEMED TENDERED FOR
PURCHASE AND SHALL CEASE TO BE OUTSTANDING UNDER THE
INDENTURE, INTEREST HEREON SHALL CEASE TO ACCRUE AS OF THE
PURCHASE DATE, AND THE REGISTERED OWNER HEREOF SHALL BE
ENTITLED ONLY TO RECEIVE THE PURCHASE PRICE SO DEPOSITED
WITH THE PAYING AGENT UPON SURRENDER OF THIS CERTIFICATE TO
THE PAYING AGENT. The Purchase Price shall be paid on the
Delivery Date, which shall be the Effective Date or any
subsequent Business Day on which this bond is delivered to
the Paying Agent. The Purchase Price of this bond shall be
paid only upon surrender of this bond to the Paying Agent as
provided herein. From and after the Effective Date, no
further interest shall be payable to the REGISTERED OWNER
during the preceding Rate Period, provided that there are
sufficient funds available on the Effective Date to pay the
Purchase Price.
Each determination and redetermination of the Flexible
Rate shall be conclusive and binding on the Authority, the
Trustee, the Paying Agent, the Bank, the Borrower and the
Bondowners.
While this bond is in the Flexible Mode, interest shall
be computed on the basis of actual days elapsed divided by
365 or 366, as appropriate. From and after the date on
which this bond becomes due, any unpaid principal will bear
interest at the then effective interest rate until paid or
duly provided for.
Mandatory Taxability Redemption. In the event of a
Determination of Taxability, the Bonds shall be redeemed on
a day selected by the Borrower that is not more than 90 days
after the occurrence of such Determination of Taxability as
provided in the Indenture, at the Redemption Price equal to
100% of the principal amount thereof plus accrued interest
to the date of redemption. Redemption under this paragraph
shall be in whole unless not less than forty-five (45) days
prior to the redemption date the Borrower delivers to the
Trustee an opinion of Bond Counsel reasonably satisfactory
to the Trustee to the effect that a redemption of less than
all of the Bonds will preserve the tax-exempt status of
interest on the remaining Bonds outstanding subsequent to
such redemption. Any Bond in the Flexible Mode that has a
Purchase Date prior to the redemption date shall be redeemed
on that Purchase Date.
Redemption at the Option of the Authority Upon
Occurrence of Certain Events. In the event that a
substantial portion of the Project is abandoned at any one
time or in the aggregate, or in the event of any disposition
of all or any part of the Borrower's ownership interest in
the Project (other than as permitted by the Agreement) or in
the event that the Plant is not repaired, reconstructed,
relocated, or replaced following damage or destruction of
all or substantially all of such Plant, in each case, as
determined in accordance with the Agreement, the Bonds are
subject to redemption, at the option of the Authority, (i)
on a date selected by the Borrower, which date shall occur
not later than three years from the date of the Authority's
exercise of its option to so redeem, or (ii) on a date
selected by the Authority which date shall occur not less
than 210 days from the date of the Authority's exercise of
its option to so redeem, should the Borrower fail to give
notice of such events as required in the Agreement, at a
redemption price equal to 100% of the principal amount
thereof plus accrued interest to the redemption date.
Mandatory Redemption of Bank Bonds. Bank Bonds are
subject to mandatory redemption on such dates and in such
amounts as provided in the Standby Bond Purchase Agreement.
Notice of Redemption. Notice of redemption of this
bond (which notice may state that it is subject to the
receipt of the redemption moneys by the Trustee on or before
the date fixed for redemption and which notice shall be of
no effect unless such moneys are so received on or before
such date) will be given by first class mail, postage
prepaid, not more than forty-five (45) nor less than thirty
(30) days prior to the redemption date to the REGISTERED
OWNER at its registered address; provided, however, in the
event of a Determination of Taxability, no notice shall be
given to the owner of any Bond in the Flexible Mode that has
a Purchase Date prior to the Redemption Date. Failure to
mail notice to the owner of any other Bond or any defect in
the notice to such other owner shall not affect the
redemption of this bond.
Transfer of Bonds. This bond is transferable by the
REGISTERED OWNER, in person or by its attorney duly
authorized in writing, at the office of the Paying Agent,
upon surrender of this bond to the Paying Agent for
cancellation. Upon the transfer, a new Bond or Bonds in
authorized denominations of the same aggregate principal
amount will be issued to the transferee at the same office.
No transfer will be effective unless represented by such
surrender and reissue. This bond may also be exchanged at
the office of the Paying Agent for a new Bond or Bonds in
authorized denominations of the same aggregate principal
amount without transfer to a new registered owner.
Exchanges and transfers will be without expense to the owner
except for applicable taxes or other governmental charges,
if any.
Amendment of Indenture. The Indenture permits, with
certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations
of the Authority and the rights of the owners of the Bonds
at any time by the Authority with the consent of the Bank,
AMBAC Indemnity and of the owners of not less than 66 2/3%
in aggregate principal amount of the Bonds at the time
outstanding thereunder. Any such consent shall be
conclusive and binding upon each such owner and upon all
future owners of each Bond and of any such Bond issued upon
the transfer thereof, whether or not notation of such
consent is made thereon. The Indenture also permits the
amendment thereof by the Authority with the consent of the
Bank and AMBAC Indemnity, but without the consent of the
owners of the Bonds for certain specified purposes.
Limitation on Bondholder Enforcement Rights. The owner
of this bond shall have no right to enforce the provisions
of the Indenture, to institute action to enforce the
provisions and covenants thereof or to institute, appear in
or defend any suit or other proceedings with respect
thereto, except as provided in the Indenture.
Special Obligations of the Authority. This bond and
the issue of which it forms a part are special obligations
of the Authority, payable solely out of the revenues or
other receipts, funds or monies of the Authority pledged
under the Indenture and from any amounts otherwise available
under the Indenture for the payment of the Bonds. Neither
the State nor any municipality thereof shall be obligated to
pay the principal or redemption price, if any, of or
interest on this bond and neither the faith and credit nor
taxing power of the State or any municipality thereof is
pledged to such payment. The Bonds do not now and shall
never constitute a debt or liability of the State or any
municipality thereof or bonds issued or guaranteed by either
of them within the meaning of any constitutional or
statutory limitation.
Estoppel Clause. This bond is issued pursuant to and
in full compliance with the Constitution and laws of the
State. It is hereby certified, recited and declared that
all acts, conditions and things required to exist, happen
and be performed precedent to and in the issuance of this
bond do exist, have happened and have been performed in due
time, form and manner as required by law and that the
issuance of this bond and of the issue of which it forms a
part, together with all other obligations of the Authority,
do not exceed or violate any constitutional or statutory
limitation.
No Personal Liability. Neither the officers, directors
or employees of the Authority or the Trustee nor any person
executing this bond shall be liable personally or be subject
to any personal liability or accountability by reason of the
issuance hereof.
Authentication. This bond shall not be valid or become
obligatory for any purpose or be entitled to any security or
benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee
[or the Paying Agent].
Authorized Denomination. The Bonds are issuable only
in fully registered form and while in the Flexible Mode
shall be in denominations of $100,000 or any multiple of
$1,000 in excess of $100,000.
Persons Deemed Owners. The Authority, the Trustee, the
Paying Agent and the Borrower may treat the REGISTERED OWNER
as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
IN WITNESS WHEREOF, the CONNECTICUT DEVELOPMENT
AUTHORITY has caused this Bond to be executed in its name by
the manual or facsimile signature of its Authorized
Representative.
Connecticut Development
Authority
By /s/
Authorized Representative
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds of the issue described in
the within mentioned Indenture.
Fleet National Bank,
Trustee
Date of Registration:
By /s/ [, or
Authorized Signature
Fleet National Bank,
Paying Agent
By /s/
Authorized Signature]
(FORM OF ASSIGNMENT)
ASSIGNMENT
FOR VALUE RECEIVED the undersigned sells, assigns and
transfers unto
the within Bond and does hereby irrevocably constitute and
appoint
Attorney-in-Fact to transfer such Bond on the books kept for
the registration thereof, with full power of substitution in
the premises.
Dated:
/s/
NOTICE: The signature to
this assignment must
correspond with the name
as it appears on the face
of the within Bond in
every particular.
In the presence of:
/s/
Name of State or National
Bank or member of National
Association of Securities
Dealers
/s/
Authorized Officer
NOTE: Assignment form should
state both the name and
address of the assignee
in the space provided.
The following abbreviations, when used in the
inscription on the face of this bond, shall be construed as
though they were written out in full according to applicable
law.
TEN COM - as tenants in common
UNIF GIFT MIN ACT
TEN ENT - as tenants by the entirety Custodian
JT TEN - as joint tenants with rights (Cust)
(Minor)
of survivorship and not as
tenants in common
Act
(State)
Additional abbreviations may also be used though not set
forth in the list above.
(END OF FORM OF FLEXIBLE BOND)
(FORM OF WEEKLY BOND)
$ No. R-
ANY BONDOWNER WHO FAILS TO DELIVER A BOND FOR PURCHASE
AT THE TIMES AND AT THE PLACE REQUIRED HEREIN SHALL
HAVE NO FURTHER RIGHTS HEREUNDER EXCEPT THE RIGHT TO
RECEIVE THE PURCHASE PRICE HEREOF UPON PRESENTATION AND
SURRENDER OF THIS BOND TO THE PAYING AGENT AS DESCRIBED
HEREIN, AND SHALL HOLD THIS BOND AS AGENT FOR THE
PAYING AGENT.
NEITHER THE STATE OF CONNECTICUT NOR ANY MUNICIPALITY
THEREOF IS OBLIGATED TO PAY, AND NEITHER THE FAITH AND
CREDIT NOR TAXING POWER OF THE STATE OF CONNECTICUT NOR
ANY MUNICIPALITY THEREOF IS PLEDGED TO THE PAYMENT OF,
THE PRINCIPAL, PREMIUM, IF ANY, OF OR INTEREST ON THIS
BOND.
Municipal Bond Insurance Policy No. ______________ (the
"Policy") with respect to payments due for principal of
and interest on this Bond has been issued by AMBAC
Indemnity Corporation ("AMBAC Indemnity"). The Policy
has been delivered to the United States Trust Company
of New York, New York, New York, as the Insurance
Trustee under said Policy and will be held by such
Insurance Trustee or any successor insurance trustee.
The Policy is on file and available for inspection at
the principal office of the Insurance Trustee and a
copy thereof may be secured from AMBAC Indemnity or the
Insurance Trustee. All payments required to be made
under the Policy shall be made in accordance with the
provisions thereof. The owner of this Bond
acknowledges and consents to the subrogation rights of
AMBAC Indemnity as more fully set forth in the Policy.
Connecticut Development Authority
Pollution Control Revenue Bond
(The Connecticut Light and Power Company Project -
1996A Series)
DATE OF THIS BOND:
(Date as of which Bonds of this series were initially
issued)
MATURITY DATE: May 1, 2031
INTEREST PAYMENT DATES:
(i) the first Business Day of each calendar month, and (ii)
the Maturity Date
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CUSIP NUMBER:
MODE: Weekly
CONNECTICUT DEVELOPMENT AUTHORITY (the "Authority"), a
body corporate and politic constituting a public
instrumentality and political subdivision of the State of
Connecticut (the "State"), for value received, hereby
promises to pay to the REGISTERED OWNER or registered
assigns, on the MATURITY DATE, solely from the sources and
in the manner hereinafter provided, upon presentation and
surrender hereof, in lawful money of the United States of
America, the PRINCIPAL AMOUNT and in like manner to pay
interest on the unpaid principal balance thereof, until the
Authority's obligation with respect to the payment of such
sum shall be discharged. Interest shall be payable from the
most recent INTEREST PAYMENT DATE, as defined below, to
which interest has been paid or duly provided for or, if no
interest has been paid, from the DATE OF THIS BOND until
paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the Daily,
Flexible, Multiannual or Fixed Rate Mode as provided below,
this bond shall bear interest at the Weekly Rate. The
Weekly Rate for this bond shall be the rate of interest
determined by the Remarketing Agent designated as provided
in the Indenture (herein, with its successors, the
"Remarketing Agent"), for each Rate Period, as defined
below, to be the lowest rate which in its judgment, on the
basis of prevailing financial market conditions, would
permit the sale of the Bonds (as defined below) in the
Weekly Mode at par plus accrued interest on and as of the
Effective Date, as defined below, but not in excess of the
Maximum Interest Rate. If this bond is converted to the
Daily, Flexible, Multiannual or Fixed Rate Mode it shall
bear interest at the Daily, Flexible, Multiannual or Fixed
Rate, as the case may be, as defined in the Indenture. The
Remarketing Agent shall determine the initial Weekly Rate on
or before the date of issue in or of conversion to the
Weekly Mode, which rate shall remain in effect as provided
in the Indenture. Thereafter, the Remarketing Agent shall
redetermine the Weekly Rate for each Rate Period as provided
below. The amount of interest due on any INTEREST PAYMENT
DATE shall be the amount of unpaid interest accrued on this
bond through the day preceding such INTEREST PAYMENT DATE.
Payment of Principal and Interest. While this bond is
in the Weekly Mode, the principal of this bond is payable
when due by wire or bank transfer of immediately available
funds within the continental United States to the REGISTERED
OWNER hereof but only upon presentation and surrender of
this bond at the office of Fleet National Bank, 777 Main
Street, Hartford, Connecticut 06115, as Paying Agent (with
its successors in such capacity, the "Paying Agent").
Interest on this bond while in the Weekly Mode is payable in
immediately available funds by wire or bank transfer within
the continental United States from the Paying Agent to the
REGISTERED OWNER, determined as of the close of business on
the applicable record date at its address shown on the
registration books maintained by the Paying Agent. The
Purchase Price (as defined below) of Bonds tendered for
purchase shall be paid as provided below.
The record date for payment of interest while this bond
is in the Weekly Mode is the Business Day preceding the date
on which interest is to be paid. With respect to overdue
interest or interest payable on redemption of this bond
other than on an INTEREST PAYMENT DATE or interest on any
overdue amount, the Trustee may establish a special record
date. The special record date may be not more than thirty
(30) days before the date set for payment. The Paying Agent
will mail notice of a special record date to the Bondowners
at least ten (10) days before the special record date. The
Paying Agent will promptly certify to the Authority, the
Trustee and the Remarketing Agent that it has mailed such
notice to all Bondowners, and such certificate will be
conclusive evidence that notice was given in the manner
required hereby.
Authorization and Purpose. This bond is one of an
authorized issue of Bonds of the Authority in the aggregate
principal amount of $62,000,000 designated: Pollution
Control Revenue Bonds (The Connecticut Light and Power
Company Project - 1996A Series) (the "Bonds") which are
issued for the purpose of financing certain capital projects
for the benefit of The Connecticut Light and Power Company
(the "Borrower"), a corporation organized and existing under
the laws of the State of Connecticut and paying necessary
expenses incidental thereto. The project consists of certain
capital projects, including additions to the pollution
control and sewage and solid waste disposal facilities of
the Borrower (the "Project"). The Bonds are issued pursuant
to the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-1a through 32-23xx, as amended, a
resolution adopted by the Authority on April 17, 1996 and an
Indenture of Trust dated as of May 1, 1996 (which Indenture
as from time to time amended and supplemented is herein
referred to as the "Indenture"), duly executed and delivered
by the Authority to the Trustee, and are equally and ratably
secured by and entitled to the protection of the Indenture,
which is on file in the office of the Trustee.
Pledge and Security. Pursuant to the Indenture, the
Authority has assigned to the Trustee all of its right,
title and interest in and to a Loan Agreement (which Loan
Agreement as from time to time amended and supplemented is
herein referred to as the "Agreement") dated as of May 1,
1996 between the Authority and the Borrower, and the
Mortgage Bonds (as hereinafter defined) (except for certain
enforcement and indemnification rights which are reserved in
the Indenture), including all rights to receive loan
payments sufficient to pay the principal of, premium, if
any, and interest and all other amounts due on the Bonds as
the same become due, to be made by the Borrower pursuant to
the Agreement. The Agreement sets forth the terms and
conditions under which the Authority will provide for
financing of the Project and under which the Borrower will
use and occupy the Project and make loan payments to the
Authority in such amounts as are necessary to pay the
principal of, premium, if any, and interest on the Bonds.
To secure such loan payments and the Borrower's obligation
to make payments in respect of the Purchase Price (as
defined below) of this bond, the Borrower has issued and
delivered to the Trustee its 1996 Series B First Mortgage
Bonds (the "Mortgage Bonds") issued under the Indenture of
Mortgage and Deed of Trust dated as of May 1, 1921, as
amended and supplemented, between the Borrower and Bankers
Trust Company, as Mortgage Trustee (as amended and
supplemented from time to time, the "Mortgage") bearing
interest at a rate of interest equal to the interest rate
applicable to the Bonds and in an aggregate principal amount
equal to the principal amount of, and with the same maturity
date as, the Bonds. As provided in the Indenture, payments
of principal of the Mortgage Bonds shall, upon receipt by
the Trustee, be deemed to constitute payments in
corresponding amounts by the Borrower in respect of the
Bonds. Reference is hereby made to the Indenture for the
definition of any capitalized word or term used but not
defined herein and for a description of the property
pledged, assigned and otherwise available for the payment of
the Bonds, the provisions, among others, with respect to the
nature and extent of the security, the rights, duties and
obligations of the Authority, the Trustee and the owners of
the Bonds, and the terms upon which the Bonds are issued and
secured, and the holders of the Bonds are deemed to assent
to the provisions of the Indenture by the acceptance of this
bond.
Standby Bond Purchase Agreement. The Purchase Price
(as defined below) of this bond is payable from moneys
demanded by the Paying Agent under a standby bond purchase
agreement (together with any extensions, amendments and
renewals thereof, the "Standby Bond Purchase Agreement")
provided by the Bank (as defined in the Indenture) with an
initial available commitment of $__________ for the payment
of the Purchase Price. The Standby Bond Purchase Agreement
initially expires on January 21, 1998 but may be terminated
earlier upon the occurrence of certain events set forth in
the Agreement, the Indenture and the Standby Bond Purchase
Agreement or extended as provided in the Standby Bond
Purchase Agreement. The Borrower may substitute for the
Standby Bond Purchase Agreement in whole or in part, one or
more new liquidity facilities (each an "Alternate Liquidity
Facility") as provided in the Indenture, the Agreement and
the Standby Bond Purchase Agreement. Unless the Standby
Bond Purchase Agreement is extended or renewed or an
Alternate Liquidity Facility is provided in accordance with
the Agreement, the Bonds will become subject to mandatory
purchase as described below.
Event of Default. In case any Event of Default occurs
and is continuing, the principal amount of this bond
together with accrued interest may become or be declared
immediately due and payable in the manner and with the
effect as provided in the Indenture.
Definitions. The following terms are defined as
follows:
"Business Day" means any day (i) that is not a Saturday
or Sunday, (ii) that is a day on which banks are not
required or authorized to close in New York, New York and
Hartford, Connecticut, (iii) that is a day on which banking
institutions in all of the cities in which the principal
offices of the Trustee, the Mortgage Trustee and the Paying
Agent and, if applicable, the Remarketing Agent and the Bank
are located and are not required or authorized to remain
closed and (iv) that is a day on which the New York Stock
Exchange, Inc. is not closed.
"Effective Date" means, with respect to a Bond in the
Daily, Flexible, Weekly and Multiannual Modes, the date on
which a new Rate Period for that Bond takes effect.
"Mode" means the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily
Mode, Flexible Mode, the Weekly Mode, the Multiannual Mode
and the Fixed Rate Mode.
"Purchase Date" means, while this bond is in the Weekly
Mode, the date on which this bond shall be required to be
purchased pursuant to a mandatory or optional tender in
accordance with the provisions hereof.
"Rate Period" or "Period" means, when used with respect
to any particular rate of interest for a Bond in the Daily,
Flexible, Weekly or Multiannual Mode, the period during
which such rate of interest determined for such Bond will
remain in effect as described herein. While this bond is in
the Weekly Mode, a new interest rate shall take effect on
the date such Mode takes effect and thereafter on each
Thursday.
Conversion. At the option of the Borrower, and upon
certain conditions provided for in the Indenture described
below, all or a portion of the Bonds (a) may be converted or
reconverted from time to time to or from the Daily Mode,
during which interest on the Bonds will be determined on
each Business Day; (b) may be converted or reconverted from
time to time to or from the Weekly Mode or Multiannual Mode,
which means that the Rate Period is, respectively, one week
or one year or any multiple of one year, (c) may be
converted or reconverted from time to time to or from the
Flexible Mode, and will have Rate Periods of from one to 270
days as provided herein, or (d) may be converted to the
Fixed Rate Mode; provided, however, that in the Multiannual
Mode the first rate period occurring after conversion to
such Mode may be shorter than the applicable multiple of one
year as provided in the Indenture.
While this bond is in the Weekly Mode, conversions to
any other Mode may take place only on the first Business Day
of any calendar month upon thirty (30) days' prior written
notice from the Paying Agent to the REGISTERED OWNER of this
bond. Conversion of this bond to another Mode shall be
subject to certain conditions set forth in the Indenture.
In the event that the conditions for a proposed conversion
to a new Mode are not met (i) such new Mode shall not take
effect on the proposed conversion date, notwithstanding any
prior notice to the Bondowners of such conversion, (ii) this
bond shall automatically convert to the Flexible Mode with a
Rate Period of one day, and (iii) this bond shall be subject
to mandatory tender for purchase as provided below. In no
event shall the failure of this bond to be converted to
another Mode be deemed to be a Default or an Event of
Default under the Indenture as long as the Purchase Price
(as defined below) is made available on the failed
conversion date to owners of all Bonds that were to have
been converted.
Interest While in Weekly Mode. When this Bond is in
the Weekly Mode, the Weekly Rate in effect for each Rate
Period, (the "Effective Rate" for such Period) shall be
determined by the Remarketing Agent, not later than 10:15
A.M., New York City time, on the Effective Date. In the
event that the Remarketing Agent fails to make such
determination or fails to announce the Effective Rate as
required with respect to any Bonds in the Weekly Mode, or if
for any reason such manner of determination shall be
determined to be invalid or unenforceable, the Rate Period
for any such Bond shall be deemed to be the Weekly Rate in
effect on the date preceding such date. Notwithstanding
anything in this bond or in the Indenture to the contrary,
during the time that this bond is a Bank Bond, it shall bear
interest at the Bank Rate. The Remarketing Agent shall
announce the Effective Rate by telephone to the Paying Agent
on the date of determination thereof, and shall promptly
confirm such notice in writing. While this bond is in the
Weekly Mode, Bondowners may ascertain the Effective Rate at
any time by contacting the Paying Agent or the Remarketing
Agent.
Each determination and redetermination of the Weekly
Rate shall be conclusive and binding on the Authority, the
Trustee, the Paying Agent, the Bank, the Borrower and the
Bondowners.
While this bond is in the Weekly Mode, interest shall
be computed on the basis of a 365 or 366-day year, as
appropriate and actual days elapsed. From and after the
date on which this bond becomes due, any unpaid principal
will bear interest at the then effective interest rate until
paid or duly provided for.
Purchase of Bonds. While this bond is in the Weekly
Mode, the REGISTERED OWNER shall have the right to tender
this bond for purchase in multiples of $100,000 at a price
(the "Purchase Price") equal to 100% of the principal amount
thereof, plus accrued interest, if any, to the Purchase
Date, upon compliance with the conditions described below,
provided that if the Purchase Date is an INTEREST PAYMENT
DATE, accrued interest shall be paid separately, and not as
part of the Purchase Price on such date. In order to
exercise the right to tender, the REGISTERED OWNER must
deliver to the Paying Agent a written irrevocable notice of
tender substantially in the form of the Bondowner's Election
Notice set forth hereon or in such other form as is
satisfactory to the Paying Agent. While this bond is in the
Weekly Mode, it will be purchased on the Business Day
specified in such Bondowner's Election Notice, provided such
date is at least seven calendar days after receipt by the
Paying Agent of such notice. If the REGISTERED OWNER of
this bond has elected to require purchase as provided above,
the REGISTERED OWNER shall be deemed, by such election, to
have agreed irrevocably to sell this bond to any purchaser
determined in accordance with the provisions of the
Indenture on the date fixed for purchase at the Purchase
Price.
Tender of this bond will not be effective and this bond
will not be purchased if at the time fixed for purchase an
acceleration of the maturity of the Bonds shall have
occurred and not have been annulled in accordance with the
Indenture. Notice of tender of this bond is irrevocable.
All notices of tender of Bonds shall be made to the Paying
Agent at Fleet National Bank, 777 Main Street, Hartford,
Connecticut 06115, Attention: Corporate Trust Operations
CT/MO/0224, or such other address specified in writing by
the Paying Agent to the Bondowners. All deliveries of
tendered Bonds, including deliveries of Bonds subject to
mandatory tender, shall be made to the Paying Agent at Fleet
National Bank, 777 Main Street, Hartford, Connecticut 06115,
Attention: Corporate Trust Department, or such other
address specified in writing by the Paying Agent to the
Bondowners.
This bond is subject to mandatory tender for purchase
at the Purchase Price (i) on the date of conversion or
proposed conversion from one Mode to another Mode, (ii) on
the effective date of an Alternate Liquidity Facility unless
the Trustee receives verbal notice from Moody's (to be
followed by written confirmation at the time of
substitution) (if this bond is rated by Moody's) and written
notice from S&P (if this bond is rated by S&P) that such
substitution will not result in a withdrawal or reduction
(excluding a withdrawal or reduction resulting from a change
in Modes) of the rating of this bond and (iii) on a date
that is not more than fifteen (15) or less than ten (10)
days prior to the expiration or termination of the Standby
Bond Purchase Agreement or Alternate Liquidity Facility then
in effect other than upon conversion to a new Mode. Notice
of mandatory tender shall be given or caused to be given by
the Trustee in writing to the REGISTERED OWNER at least
thirty (30) days prior to the mandatory Purchase Date. THE
OWNER OF THIS BOND, BY ACCEPTANCE HEREOF, AGREES TO SELL AND
SURRENDER THIS BOND AT SUCH PRICE TO ANY PURCHASER
DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF THE
INDENTURE IN THE EVENT OF SUCH MANDATORY TENDER AND, ON SUCH
PURCHASE DATE, TO SURRENDER THIS BOND TO THE PAYING AGENT
FOR PAYMENT OF THE PURCHASE PRICE. From and after the
Purchase Date, no further interest on this bond shall be
payable to the REGISTERED OWNER, provided that there are
sufficient funds available on the Effective Date to pay the
Purchase Price.
The Purchase Price of this bond shall be paid to the
REGISTERED OWNER by the Paying Agent on the Delivery Date,
which shall be the Purchase Date or any subsequent Business
Day on which this bond is delivered to the Paying Agent.
The Purchase Price of this bond shall be paid only upon
surrender of this bond to the Paying Agent as provided
herein. From and after the Purchase Date, no further
interest on this bond shall be payable to the REGISTERED
OWNER who gave notice of tender for purchase, provided that
there are sufficient funds available on the Purchase Date to
pay the Purchase Price. The Purchase Price of Bonds
tendered for purchase is payable for Bonds in the Weekly
Mode by wire or bank transfer within the continental United
States in immediately available funds from the Paying Agent
to the REGISTERED OWNER at its address shown on the
registration books maintained by the Paying Agent. If on
any date this bond is subject to mandatory tender for
purchase or is required to be purchased at the election of
the REGISTERED OWNER, payment of the Purchase Price of this
bond to such owner shall be made on the Purchase Date if
presentation and surrender of this bond is made prior to
11:00 A.M., New York City time, on the Purchase Date or on
such later Business Day upon which presentation and
surrender of this bond is made prior to 11:00 A.M., New York
City time.
Mandatory Taxability Redemption. In the event of a
Determination of Taxability, the Bonds shall be redeemed on
a day selected by the Borrower that is not more than 90 days
after the occurrence of such Determination of Taxability as
provided in the Indenture, at the Redemption Price equal to
100% of the principal amount thereof plus accrued interest
to the date of redemption. Redemption under this paragraph
shall be in whole unless not less than forty-five (45) days
prior to the redemption date the Borrower delivers to the
Trustee an opinion of Bond Counsel reasonably satisfactory
to the Trustee to the effect that a redemption of less than
all of the Bonds will preserve the tax-exempt status of
interest on the remaining Bonds outstanding subsequent to
such redemption.
General Optional Redemption. Bonds in the Weekly Mode
are subject to redemption in whole or in part at the option
of the Authority, which option shall be exercised at the
direction of the Borrower, on any INTEREST PAYMENT DATE at a
redemption price of par plus accrued interest.
Redemption at the Option of the Authority Upon
Occurrence of Certain Events. In the event that a
substantial portion of the Project is abandoned at any one
time or in the aggregate, or in the event of any disposition
of all or any part of the Borrower's ownership interest in
the Project (other than as permitted by the Agreement) or in
the event that the Plant is not repaired, reconstructed,
relocated, or replaced following damage or destruction of
all or substantially all of such Plant, in each case, as
determined in accordance with the Agreement, the Bonds are
subject to redemption, at the option of the Authority, (i)
on a date selected by the Borrower, which date shall occur
not later than three years from the date of the Authority's
exercise of its option to so redeem, or (ii) on a date
selected by the Authority which date shall occur not less
than 210 days from the date of the Authority's exercise of
its option to so redeem, should the Borrower fail to give
notice of such events as required in the Agreement, at a
redemption price equal to 100% of the principal amount
thereof plus accrued interest to the redemption date.
Mandatory Redemption of Bank Bonds. Bank Bonds are
subject to mandatory redemption on such dates and in such
amounts as provided in the Standby Bond Purchase Agreement.
If less than all of the Outstanding Bonds are to be
called for redemption, the Bonds (or portions thereof) to be
redeemed shall be selected as provided in the Indenture with
Bonds in the Weekly Mode being redeemed in units of
$100,000.
In the event this bond is selected for redemption,
notice (which notice may state that it is subject to the
receipt of the redemption moneys by the Trustee on or before
the date fixed for redemption and which notice shall be of
no effect unless such moneys are so received on or before
such date) will be mailed no more than forty-five (45) days
nor less than thirty (30) days prior to the redemption date
to the REGISTERED OWNER at its address shown on the
registration books maintained by the Paying Agent. Failure
to mail notice to the owner of any other Bond or any defect
in the notice to such an owner shall not affect the
redemption of this bond.
If this bond is of a denomination in excess of one
hundred thousand dollars ($100,000), portions of the
principal amount in the amount of one hundred thousand
dollars ($100,000) or any multiple thereof may be redeemed.
If less than all of the principal amount is to be redeemed,
upon surrender of this bond to the Paying Agent, there will
be issued to the REGISTERED OWNER, without charge, a new
Bond or Bonds, at the option of the REGISTERED OWNER, for
the unredeemed principal amount.
Notice of redemption having been duly mailed, this
bond, or the portion called for redemption, will become due
and payable on the redemption date at the applicable
redemption price and, monies for the redemption having been
deposited with the Paying Agent, from and after the date
fixed for redemption, interest on this bond (or such
portion) will no longer accrue.
IN CERTAIN CIRCUMSTANCES SET OUT HEREIN, THIS BOND (OR
PORTION HEREOF) IS SUBJECT TO PURCHASE OR REDEMPTION, IN
EACH CASE UPON NOTICE TO OR FROM THE OWNER HEREOF AS OF A
DATE PRIOR TO SUCH PURCHASE OR REDEMPTION. IN EACH SUCH
EVENT AND UPON DEPOSIT OF THE PURCHASE OR REDEMPTION PRICE
WITH THE PAYING AGENT ON THE PURCHASE OR REDEMPTION DATE, AS
THE CASE MAY BE, THIS BOND (OR PORTION HEREOF) SHALL CEASE
TO BE OUTSTANDING UNDER THE INDENTURE, INTEREST HEREON SHALL
CEASE TO ACCRUE AS OF THE PURCHASE OR REDEMPTION DATE, AND
THE REGISTERED OWNER HEREOF SHALL BE ENTITLED ONLY TO
RECEIVE THE PURCHASE OR REDEMPTION PRICE SO DEPOSITED WITH
THE PAYING AGENT UPON SURRENDER OF THIS CERTIFICATE TO THE
PAYING AGENT.
Transfer of Bonds. This bond is transferable by the
REGISTERED OWNER, in person or by its attorney duly
authorized in writing, at the office of the Paying Agent,
upon surrender of this bond to the Paying Agent for
cancellation. Upon the transfer, a new Bond or Bonds in
authorized denominations of the same aggregate principal
amount will be issued to the transferee at the same office.
No transfer will be effective unless represented by such
surrender and reissue. This bond may also be exchanged at
the office of the Paying Agent for a new Bond or Bonds in
authorized denominations of the same aggregate principal
amount without transfer to a new registered owner.
Exchanges and transfers will be without expense to the owner
except for applicable taxes or other governmental charges,
if any. The Paying Agent will not be required to make an
exchange or transfer of this bond (except in connection with
any optional or mandatory tender of this bond) (i) if this
bond (or any portion thereof) has been selected for
redemption or (ii) during the fifteen (15) days preceding
any date fixed for selection for redemption if this bond (or
any portion thereof) is eligible to be selected for
redemption.
Amendment of Indenture. The Indenture permits, with
certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations
of the Authority and the rights of the owners of the Bonds
at any time by the Authority with the consent of the Bank,
AMBAC Indemnity and of the owners of not less than 66 2/3%
in aggregate principal amount of each series of the Bonds at
the time outstanding thereunder. Any such consent shall be
conclusive and binding upon each such owner and upon all
future owners of each Bond and of any such Bond issued upon
the transfer thereof, whether or not notation of such
consent is made thereon. The Indenture also permits the
amendment thereof by the Authority with the consent of the
Bank and AMBAC Indemnity, but without the consent of the
owners of the Bonds for certain specified purposes.
Limitation on Bondholder Enforcement Rights. The owner
of this bond shall have no right to enforce the provisions
of the Indenture, to institute action to enforce the
provisions and covenants thereof or to institute, appear in
or defend any suit or other proceedings with respect
thereto, except as provided in the Indenture.
Special Obligations of the Authority. This bond and
the issue of which it forms a part are special obligations
of the Authority, payable solely out of the revenues or
other receipts, funds or monies of the Authority pledged
under the Indenture and from any amounts otherwise available
under the Indenture for the payment of the Bonds. Neither
the State nor any municipality thereof shall be obligated to
pay the principal or redemption price, if any, of or
interest on this bond and neither the faith and credit nor
taxing power of the State or any municipality thereof is
pledged to such payment. The Bonds do not now and shall
never constitute a debt or liability of the State or any
municipality thereof or bonds issued or guaranteed by either
of them within the meaning of any constitutional or
statutory limitation.
Estoppel Clause. This bond is issued pursuant to and
in full compliance with the Constitution and laws of the
State. It is hereby certified, recited and declared that
all acts, conditions and things required to exist, happen
and be performed precedent to and in the issuance of this
bond do exist, have happened and have been performed in due
time, form and manner as required by law and that the
issuance of this bond and of the issue of which it forms a
part, together with all other obligations of the Authority,
do not exceed or violate any constitutional or statutory
limitation.
No Personal Liability. Neither the officers, directors
or employees of the Authority or the Trustee nor any person
executing this bond shall be liable personally or be subject
to any personal liability or accountability by reason of the
issuance hereof.
Authentication. This bond shall not be valid or become
obligatory for any purpose or be entitled to any security or
benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee
[or the Paying Agent].
Authorized Denomination. The Bonds are issuable only
in fully registered form and while in the Weekly Mode shall
be in denominations of $100,000 or any multiple thereof.
Persons Deemed Owners. The Authority, the Trustee, the
Paying Agent and the Borrower may treat the REGISTERED OWNER
as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
IN WITNESS WHEREOF, the CONNECTICUT DEVELOPMENT
AUTHORITY has caused this Bond to be executed in its name by
the manual or facsimile signature of its Authorized
Representative.
Connecticut Development
Authority
By /s/
Authorized Representative
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds of the issue described in
the within mentioned Indenture.
Date of Registration:
Fleet National Bank,
Trustee
By /s/ [, or
Authorized Signature
Fleet National Bank,
Paying Agent
By /s/
Authorized Signature]
(FORM OF ASSIGNMENT)
ASSIGNMENT
FOR VALUE RECEIVED the undersigned sells, assigns and
transfers unto
the within Bond and does hereby irrevocably constitute and
appoint
Attorney-in-Fact to transfer such Bond on the books kept for
the registration thereof, with full power of substitution in
the premises.
Dated:
/s/
NOTICE: The signature to
this assignment must
correspond with the name
as it appears on the face
of the within Bond in
every particular.
In the presence of:
/s/
Name of State or National
Bank or member of National
Association of Securities
Dealers
/s/
Authorized Officer
NOTE: Assignment form should
state both the name and
address of the assignee
in the space provided.
The following abbreviations, when used in the
inscription on the face of this bond, shall be construed as
though they were written out in full according to applicable
law.
TEN COM - as tenants in common
UNIF GIFT MIN ACT
TEN ENT - as tenants by the entirety Custodian
JT TEN - as joint tenants with rights (Cust)
(Minor)
of survivorship and not as
tenants in common
Act
(State)
Additional abbreviations may also be used though not set
forth in the list above.
The following is the Bondowner's Election Notice
described herein:
BONDOWNERS ELECTION NOTICE
Connecticut Development Authority
Pollution Control Revenue Bonds
(The Connecticut Light and Power Company
Project - 1996A Series)
Principal Principal Amount Bond Purchase
Amount CUSIP Tendered for Purchase Numbers Date
The undersigned hereby certifies that it is the
registered owner of the Bonds described above (the "Tendered
Bonds"), all of which are in the Weekly Mode, and hereby
agrees that the delivery of this instrument of transfer to
the Paying Agent constitutes an irrevocable offer to sell
the Tendered Bonds to the Borrower or its designee on the
Purchase Date, which shall be a Business Day at least seven
(7) calendar days following delivery of this instrument, at
a purchase price equal to the unpaid principal balance
thereof plus accrued and unpaid interest thereon to the
Purchase Date (the "Purchase Price"). The undersigned
acknowledges and agrees that this election notice is
irrevocable and that the undersigned will have no further
rights with respect to the Tendered Bonds except payment,
upon presentation and surrender of the Tendered Bonds, of
the Purchase Price by payment by wire or bank transfer
within the continental United States from the Paying Agent
to the undersigned at its address as shown on the
registration books of the Paying Agent (i) on the Purchase
Date if the Tendered Bonds shall have been surrendered to
the Paying Agent prior to 11:00 A.M., New York City time, on
the Purchase Date or (ii) on any Delivery Date subsequent to
the Purchase Date on which Tendered Bonds are delivered to
the Paying Agent by 11:00 A.M., New York City time, provided
that for so long as the Bonds are in the Book-Entry Only
System, physical surrender of the Bonds to the Paying Agent
shall not be required and the Bonds shall be tendered
pursuant to the procedures described in the Indenture
referred to below.
Except as otherwise indicated herein and unless the
context otherwise requires, the terms used herein shall have
the meanings set forth in the Indenture dated as of May 1,
1996, as amended and restated as of January 1, 1997,
relating to the Bonds.
Date:
Signature(s)
/s/
/s/
/s/
Street City State Zip
IMPORTANT: The above signature(s) must correspond with
the name(s) as set forth on the face of the Tendered Bond(s)
with respect to which this Bondowner's Election Notice is
being delivered without any change whatsoever. If this
notice is signed by a person other than the registered owner
of any Tendered Bond(s), the Tendered Bond(s) must be either
endorsed on the Assignment appearing on each Bond or
accompanied by appropriate bond powers, in each case signed
exactly as the name or names of the registered owner or
owners appear on the bond register. The method of
presenting this notice to the Paying Agent is the choice of
the person making such presentation. If it is made by mail,
it should be by registered mail with return receipt
requested.
(END OF FORM OF WEEKLY BOND)
(FORM OF MULTIANNUAL BOND)
$ No. R-
ANY BONDOWNER WHO FAILS TO DELIVER A BOND FOR PURCHASE
AT THE TIMES AND AT THE PLACE REQUIRED HEREIN SHALL
HAVE NO FURTHER RIGHTS HEREUNDER EXCEPT THE RIGHT TO
RECEIVE THE PURCHASE PRICE HEREOF UPON PRESENTATION AND
SURRENDER OF THIS BOND TO THE PAYING AGENT AS DESCRIBED
HEREIN, AND SHALL HOLD THIS BOND AS AGENT FOR THE
PAYING AGENT.
NEITHER THE STATE OF CONNECTICUT NOR ANY MUNICIPALITY
THEREOF IS OBLIGATED TO PAY, AND NEITHER THE FAITH AND
CREDIT NOR TAXING POWER OF THE STATE OF CONNECTICUT NOR
ANY MUNICIPALITY THEREOF IS PLEDGED TO THE PAYMENT OF,
THE PRINCIPAL, PREMIUM, IF ANY, OF OR INTEREST ON THIS
BOND.
Municipal Bond Insurance Policy No. _____________ (the
"Policy") with respect to payments due for principal of
and interest on this Bond has been issued by AMBAC
Indemnity Corporation ("AMBAC Indemnity"). The Policy
has been delivered to the United States Trust Company
of New York, New York, New York, as the Insurance
Trustee under said Policy and will be held by such
Insurance Trustee or any successor insurance trustee.
The Policy is on file and available for inspection at
the principal office of the Insurance Trustee and a
copy thereof may be secured from AMBAC Indemnity or the
Insurance Trustee. All payments required to be made
under the Policy shall be made in accordance with the
provisions thereof. The owner of this Bond
acknowledges and consents to the subrogation rights of
AMBAC Indemnity as more fully set forth in the Policy.
Connecticut Development Authority
Pollution Control Revenue Bond
(The Connecticut Light and Power Company Project -
1996A Series)
DATE OF THIS BOND:
(Date as of which Bonds of this series were initially
issued)
MATURITY DATE: May 1, 2031
INTEREST RATE:
(To Next Purchase Date)
NEXT PURCHASE DATE:
INTEREST PAYMENT DATES:
(i) the first day of the sixth full calendar month after
the Mode takes effect and the first day of
each sixth calendar month thereafter, and (ii) the
Maturity Date
COMMENCEMENT DATE OF RATE PERIOD:
CURRENT EFFECTIVE DATE:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CUSIP NUMBER:
MODE: Multiannual
CONNECTICUT DEVELOPMENT AUTHORITY (the "Authority"), a
body corporate and politic constituting a public
instrumentality and political subdivision of the State of
Connecticut (the "State"), for value received, hereby
promises to pay to the REGISTERED OWNER or registered
assigns, on the MATURITY DATE, solely from the sources and
in the manner hereinafter provided, upon presentation and
surrender hereof, in lawful money of the United States of
America, the PRINCIPAL AMOUNT and in like manner to pay
interest on the unpaid principal balance thereof, until the
Authority's obligation with respect to the payment of such
sum shall be discharged. Interest shall be payable from the
most recent INTEREST PAYMENT DATE, as defined below, to
which interest has been paid or duly provided for or, if no
interest has been paid, from the DATE OF THIS BOND until
paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the Daily,
Flexible, Weekly or Fixed Rate Mode as provided below, this
bond shall bear interest at the Multiannual Rate. The
Multiannual Rate shall be the rate of interest determined by
the Remarketing Agent designated as provided in the
Indenture (herein, with its successors, the "Remarketing
Agent"), for each Rate Period, as defined below, to be the
lowest rate which in its judgment, on the basis of
prevailing financial market conditions, would permit the
sale of the Bonds (as defined below) with the same Rate
Period at par plus accrued interest on and as of the
Effective Date, as defined below. If this bond is converted
to the Daily, Flexible, Weekly or Fixed Rate Mode it shall
bear interest at the Daily, Flexible, Weekly or Fixed Rate,
as the case may be, as defined in the Indenture. The
Remarketing Agent shall determine the initial Multiannual
Rate on or before the date of issue in or of conversion to
the Multiannual Mode, which rate shall remain in effect as
provided in the Indenture. Thereafter, the Remarketing
Agent shall redetermine the Multiannual Rate for each Rate
Period as provided below. If any payment, redemption or
maturity date for principal, premium or interest shall not
be a Business Day, then the payment thereof may be made on
the next succeeding Business Day with the same force and
effect as if made on the specified payment date and no
interest shall accrue for the period after the specified
payment date.
Payment of Principal and Interest. While this bond is
in the Multiannual Mode, the principal of and premium, if
any, on this bond are payable when due by wire or bank
transfer in immediately available funds to the REGISTERED
OWNER hereof but only upon presentation and surrender of
this bond at the office of Fleet National Bank, 777 Main
Street, Hartford, Connecticut 06115, as Paying Agent (with
its successors in such capacity, the "Paying Agent").
Interest on this bond while in the Multiannual Mode, is
payable by check or draft in immediately available funds,
mailed on the applicable payment date by the Paying Agent to
the REGISTERED OWNER determined as of the close of business
on the applicable record date, at its address as shown on
the registration books. The Purchase Price (as defined
below) of Bonds tendered for purchase shall be paid as
provided below.
The record date for payment of interest while this bond
is in the Multiannual Mode is the fifteenth day of the month
immediately preceding the date on which interest is to be
paid, provided that with respect to overdue interest or
interest payable on redemption of this bond other than on an
INTEREST PAYMENT DATE or interest on any overdue amount, the
Trustee may establish a special record date. The special
record date may be not more than thirty (30) days before the
date set for payment. The Paying Agent will mail notice of
a special record date to the Bondowners at least ten (10)
days before the special record date. The Paying Agent will
promptly certify to the Authority, the Trustee and the
Remarketing Agent that it has mailed such notice to all
Bondowners, and such certificate will be conclusive evidence
that notice was given in the manner required hereby.
Authorization and Purpose. This bond is one of an
authorized issue of Bonds of the Authority in the aggregate
principal amount of $62,000,000 designated: Pollution
Control Revenue Bonds (The Connecticut Light and Power
Company Project - 1996A Series) (the "Bonds") which are
issued for the purpose of financing certain capital projects
for the benefit of The Connecticut Light and Power Company
(the "Borrower"), a corporation organized and existing under
the laws of the State of Connecticut and paying necessary
expenses incidental thereto. The project consists of certain
capital projects, including additions to the pollution
control and sewage and solid waste disposal facilities of
the Borrower (the "Project"). The Bonds are issued pursuant
to the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-1a through 32-23xx, as amended, a
resolution adopted by the Authority on April 17, 1996 and an
Indenture of Trust dated as of May 1, 1996 (which Indenture
as from time to time amended and supplemented is herein
referred to as the "Indenture"), duly executed and delivered
by the Authority to the Trustee, and are equally and ratably
secured by and entitled to the protection of the Indenture,
which is on file in the office of the Trustee.
Pledge and Security. Pursuant to the Indenture, the
Authority has assigned to the Trustee all of its right,
title and interest in and to a Loan Agreement (which Loan
Agreement as from time to time amended and supplemented is
herein referred to as the "Agreement") dated as of May 1,
1996 between the Authority and the Borrower, and the
Mortgage Bonds (as hereinafter defined) (except for certain
enforcement and indemnification rights which are reserved in
the Indenture), including all rights to receive loan
payments sufficient to pay the principal of, premium, if
any, of and interest and all other amounts due on the Bonds
as the same become due, to be made by the Borrower pursuant
to the Agreement. The Agreement sets forth the terms and
conditions under which the Authority will provide for
financing of the Project and under which the Borrower will
use and occupy the Project and make loan payments to the
Authority in such amounts as are necessary to pay the
principal of, premium, if any, and interest on the Bonds.
To secure such loan payments and the Borrower's obligation
to make payments in respect of the Purchase Price (as
defined below) of this bond, the Borrower has issued and
delivered to the Trustee its 1996 Series B First Mortgage
Bonds (the "Mortgage Bonds") issued under the Indenture of
Mortgage and Deed of Trust dated as of May 1, 1921, as
amended and supplemented, between the Borrower and Bankers
Trust Company, as Mortgage Trustee (as amended and
supplemented from time to time, the "Mortgage") bearing
interest at a rate of interest equal to the interest rate
applicable to the Bonds and in an aggregate principal amount
equal to the principal amount of, and with the same maturity
date as, the Bonds. As provided in the Indenture, payments
of principal of the Mortgage Bonds shall, upon receipt by
the Trustee, be deemed to constitute payments in
corresponding amounts by the Borrower in respect of the
Bonds. Reference is hereby made to the Indenture for the
definition of any capitalized word or term used but not
defined herein and for a description of the property
pledged, assigned and otherwise available for the payment of
the Bonds, the provisions, among others, with respect to the
nature and extent of the security, the rights, duties and
obligations of the Authority, the Trustee and the owners of
the Bonds, and the terms upon which the Bonds are issued and
secured, and the holders of the Bonds are deemed to assent
to the provisions of the Indenture by the acceptance of this
bond.
Event of Default: In case any Event of Default occurs
and is continuing, the principal amount of this bond
together with accrued interest may become or be declared
immediately due and payable in the manner and with the
effect as provided in the Indenture.
Definitions. The following terms are defined as
follows:
"Business Day" means any day (i) that is not a Saturday
or Sunday, (ii) that is a day on which banks are not
required or authorized to close in New York, New York and
Hartford, Connecticut, (iii) that is a day on which banking
institutions in all of the cities in which the principal
offices of the Trustee, the Mortgage Trustee and the Paying
Agent and, if applicable, the Remarketing Agent are located
and are not required or authorized to remain closed and (iv)
that is a day on which the New York Stock Exchange, Inc. is
not closed.
"Effective Date" means, with respect to a Bond in the
Daily, Flexible, Weekly and Multiannual Modes, the date on
which a new Rate Period for that Bond takes effect.
"Mode" means the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily
Mode, the Flexible Mode, the Weekly Mode, the Multiannual
Mode and the Fixed Rate Mode.
"Purchase Date" means, while this bond is in the
Multiannual Mode, the date on which this bond shall be
required to be purchased pursuant to a mandatory tender in
accordance with the provisions hereof.
"Rate Period" or "Period" means, when used with respect
to any particular rate of interest for a Bond in the Daily,
Flexible, Weekly or Multiannual Mode, the period during
which such rate of interest determined for such Bond will
remain in effect as described herein.
Conversion. At the option of the Borrower, and upon
certain conditions provided for in the Indenture described
below, all or a portion of the Bonds (a) may be converted or
reconverted from time to time to or from the Daily Mode,
during which interest on the Bonds will be determined on
each Business Day; (b) may be converted or reconverted from
time to time to or from the Weekly Mode or Multiannual Mode,
which means that the Rate Period is, respectively, one week
or one year or any multiple of one year, (c) may be
converted or reconverted from time to time to or from the
Flexible Mode, and will have Rate Periods of from one to 270
days as provided herein, or (d) may be converted to the
Fixed Rate Mode; provided, however, that in the Multiannual
Mode the first rate period occurring after conversion to
such Mode may be shorter or longer than the applicable
multiple of one year as provided in the Indenture. While
this bond is in the Multiannual Mode, a new interest rate
shall take effect on the date such Mode takes effect and
thereafter on the INTEREST PAYMENT DATE ending the Rate
Period designated by the Borrower.
While this bond is in the Multiannual Mode, conversions
to any other Mode, or conversions to new Rate Periods of the
same or different lengths while in the Multiannual Mode, may
take place only on a date which would have been an Effective
Date for this bond (or if conversion is to the Daily,
Flexible or Weekly Mode and such day is not a Business Day,
the first Business Day thereafter), or on any applicable
general optional redemption date provided that the then
holder of this bond is paid the appropriate redemption
price. Conversion of this bond to another Mode or to a new
Rate Period in the Multiannual Mode of the same or different
length, shall be subject to certain conditions set forth in
the Indenture. In the event that the conditions for a
proposed conversion to a new Mode, or to a new Rate Period
in the Multiannual Mode of the same or different length are
not met (i) such new Mode or Rate Period shall not take
effect on the proposed conversion date, notwithstanding any
prior notice to the Bondowners of such conversion and (ii)
this bond shall automatically convert to the Flexible Mode
with a Rate Period of one day. In no event shall the
failure of this bond to be converted to another Mode or Rate
Period be deemed to be a Default or an Event of Default
under the Indenture as long as the Purchase Price (as
defined below) is made available on the failed conversion
date to owners of all Bonds that were to have been
converted.
Interest While in Multiannual Mode. When this bond is
in any Multiannual Mode, the Multiannual Rate in effect for
each Rate Period (the "Effective Rate" for such Period)
shall be determined not later than two (2) Business Days
prior to the Effective Date. If the Remarketing Agent fails
to make such determination or fails to announce the
Effective Rate as required with respect to any Bonds in the
Multiannual Mode, or if for any reason such manner of
determination shall be determined to be invalid or
unenforceable, the rate to take effect on any Effective Date
shall be automatically converted to the Flexible Mode with a
Rate Period of one day. The Remarketing Agent shall
announce the Effective Rate by telephone to the Paying Agent
on the date of determination thereof, and shall promptly
confirm such notice in writing.
Each determination and redetermination of the
Multiannual Rate shall be conclusive and binding on the
Authority, the Trustee, the Paying Agent, the Borrower and
the Bondowners.
While this bond is in the Multiannual Mode, interest
shall be computed on the basis of a 360-day year consisting
of twelve 30-day months. From and after the date on which
this bond becomes due, any unpaid principal will bear
interest at the then effective interest rate until paid or
duly provided for.
Purchase of Bonds. While this bond is in the
Multiannual Mode, this bond is subject to mandatory tender
for purchase at a price (the "Purchase Price") equal to 100%
of the principal amount thereof, plus accrued interest, if
any, on each Effective Date. THE OWNER OF THIS BOND, BY
ACCEPTANCE HEREOF, AGREES TO SELL AND SURRENDER THIS BOND IN
ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT AND, ON THE
PURCHASE DATE, TO SURRENDER THIS BOND TO THE PAYING AGENT
FOR PAYMENT OF THE PURCHASE PRICE. UPON DEPOSIT OF THE
PURCHASE PRICE WITH THE PAYING AGENT ON THE PURCHASE DATE,
THIS BOND SHALL BE DEEMED TENDERED FOR PURCHASE AND SHALL
CEASE TO BE OUTSTANDING UNDER THE AGREEMENT, INTEREST HEREON
SHALL CEASE TO ACCRUE AS OF THE PURCHASE DATE, AND THE
REGISTERED OWNER HEREOF SHALL BE ENTITLED ONLY TO RECEIVE
THE PURCHASE PRICE SO DEPOSITED WITH THE PAYING AGENT UPON
SURRENDER OF THIS CERTIFICATE TO THE PAYING AGENT. All
deliveries of tendered Bonds shall be made to the Paying
Agent at Fleet National Bank, 777 Main Street, Hartford,
Connecticut 06115, Attention Corporate Trust Operations
CT/MO/0224, or such other address specified in writing by
the Paying Agent to the Bondowners.
Notwithstanding the foregoing, in the event that the
Rate Period to take effect on the Effective Date for Bonds
in the Multiannual Mode is to be of the same duration as the
Rate Period ending on the day prior to said Effective Date
for such Bonds, such Bonds need not be tendered by the owner
thereof if such owner shall have given irrevocable written
or telephone notice (promptly confirmed in writing by
telecopier), not less than 10 Business Days' prior to said
Effective Date to the Paying Agent of its election not to
tender ("Notice of Election to Retain Bonds") the Bonds for
purchase. Notices of Election to Retain Bonds received
after 2:00 P.M. on any Business Day shall be deemed to be
received on the next succeeding Business Day. A Notice of
Election to Retain Bonds shall be in the form attached
hereto and must specify the amount of Bonds to be retained,
which amount may represent the principal amount of such
Owner's Bonds in whole or in part, which amount shall be in
an authorized denomination. Prior to the close of business
on the 10th Business Day preceding the Effective Date, the
Paying Agent shall notify the Remarketing Agent of the
Notices of Election to Retain Bonds received by the Paying
Agent in proper form and timely fashion and the aggregate
amount of Bonds that are to be retained upon the Effective
Date pursuant to such Notices of Election to Retain Bonds.
The Paying Agent's determination of whether or not a Notice
of Election to Retain Bonds has been properly completed and
delivered in compliance with the requirements set forth
herein shall be binding on the Bondowner submitting the
notice.
The Purchase Price of this bond shall be paid to the
REGISTERED OWNER by the Paying Agent on the Delivery Date,
which shall be the Purchase Date or any subsequent Business
Day on which this bond is delivered to the Paying Agent.
The Purchase Price of this bond shall be paid only upon
surrender of this bond to the Paying Agent as provided
herein. From and after the Purchase Date, no further
interest on this bond shall be payable to the REGISTERED
OWNER provided that there are sufficient funds available on
the Purchase Date to pay the Purchase Price. The Purchase
Price of Bonds is payable for Bonds in the Multiannual Mode
by wire of bank transfer in immediately available funds from
the Paying Agent to the REGISTERED OWNER at its address
shown on the registration books maintained by the Paying
Agent. If on any date this bond is subject to mandatory
tender for purchase, payment of the Purchase Price of this
bond to such owner shall be made on the Purchase Date if
presentation and surrender of this bond is made prior to
11:00 A.M., New York City time, on the Purchase Date or on
such later Business Day upon which presentation and
surrender of this bond is made prior to 11:00 A.M., New York
City time.
Mandatory Taxability Redemption. In the event of a
Determination of Taxability, the Bonds shall be redeemed on
a day selected by the Borrower that is more than 90 days
after the occurrence of such Determination of Taxability as
provided in the Indenture, at the Redemption Price equal to
100% of the principal amount thereof plus accrued interest
to the date of redemption. Redemption under this paragraph
shall be in whole unless not less than forty-five (45) days
prior to the redemption date the Borrower delivers to the
Trustee an opinion of Bond Counsel reasonably satisfactory
to the Trustee to the effect that a redemption of less than
all of the Bonds will preserve the tax-exempt status of
interest on the remaining Bonds outstanding subsequent to
such redemption. Any Bond in the Multiannual Mode that has
a Purchase Date prior to the redemption date established for
that Bond pursuant to the preceding sentence shall be
redeemed on that Purchase Date.
General Optional Redemption. In the Multiannual Mode
and after the expiration of the applicable No Call Period
(measured from the COMMENCEMENT DATE OF RATE PERIOD) set
forth in the following schedule, the Bonds shall be subject
to redemption at the option of the Authority which shall be
exercised at the direction of the Borrower in whole or in
part at any time at the following redemption prices
expressed as a percentage of the principal amount redeemed,
plus interest accrued to the redemption date:
Length of
Multiannual Redemption
Rate Period No Call Period Price
Greater than 15 years 10 years 102%, declining by
1/2% on each
succeeding
anniversary
of the end of the
no call period until
reaching 100% and
thereafter at 100%
Greater than 10, but 8 years 101 1/2%, declining
not greater than by 1/2% on each
15 years succeeding anniversary
of the end of the no
call period until
reaching 100% and
thereafter at 100%
Greater than 5, but 5 years 101%, declining by
not greater than 10 1/2% on the next
years anniversary of the end
of the no call period
and thereafter at 100%
5 years or less Bonds not subject
to optional
redemption until
commencement of
next Rate Period.
Extraordinary Optional Redemption. In addition, at the
option of the Authority, which option shall be exercised
upon the direction of and the giving of notice by the
Borrower of its intention to prepay amounts due under the
Agreement, the Bonds are subject to redemption prior to
maturity as a whole at any time at a Redemption Price equal
to 100% of the principal amount thereof plus accrued
interest to the date of redemption, if any one or more of
the events of casualty to or condemnation of the Project or
the Plant, change in law, or other events described in the
Agreement shall have occurred, as evidenced in each case by
the filing of a certificate of an Authorized Representative
of the Borrower. The Borrower's right to direct the
redemption of the Bonds in the Multiannual Mode upon the
occurrence of any event as set forth in the Agreement shall
expire six (6) months, and any such redemption shall occur
within nine (9) months, after such event occurs.
Redemption at the Option of the Authority Upon
Occurrence of Certain Events. In the event that a
substantial portion of the Project is abandoned at any one
time or in the aggregate, or in the event of any disposition
of all or any part of the Borrower's ownership interest in
the Project (other than as permitted by the Agreement) or in
the event that the Plant is not repaired, reconstructed,
relocated, or replaced following damage or destruction of
all or substantially all of such Plant, in each case, as
determined in accordance with the Agreement, the Bonds are
subject to redemption, at the option of the Authority, (i)
on a date selected by the Borrower, which date shall occur
not later than three years from the date of the Authority's
exercise of its option to so redeem, or (ii) on a date
selected by the Authority which date shall occur not less
than 210 days from the date of the Authority's exercise of
its option to so redeem, should the Borrower fail to give
notice of such events as required in the Agreement, at a
redemption price equal to 100% of the principal amount
thereof plus accrued interest to the redemption date.
If less than all of the Outstanding Bonds are to be
called for redemption, the Bonds (or portions thereof) to be
redeemed shall be selected as provided in the Indenture with
Bonds in the Multiannual Mode being redeemed in units of
$5,000.
In the event this bond is selected for redemption,
notice (which notice may state that it is subject to the
receipt of the redemption moneys by the Trustee on or before
the date fixed for redemption and which notice shall be of
no effect unless such moneys are so received on or before
such date) will be mailed no more than forty-five (45) days
nor less than thirty (30) days prior to the redemption date
to the REGISTERED OWNER at its address shown on the
registration books maintained by the Paying Agent; provided,
however, in the event of a Determination of Taxability, no
notice shall be given to the owner of any Bond in the
Multiannual Mode that has a Purchase Date prior to the
Redemption Date. Failure to mail notice to the owner of any
other Bond or any defect in the notice to such an owner
shall not affect the redemption of this bond.
If this bond is of a denomination in excess of five
thousand dollars ($5,000), portions of the principal amount
in the amount of five thousand dollars ($5,000) or any
multiple thereof may be redeemed. If less than all of the
principal amount is to be redeemed, upon surrender of this
bond to the Paying Agent, there will be issued to the
REGISTERED OWNER, without charge, a new Bond or Bonds, at
the option of the REGISTERED OWNER, for the unredeemed
principal amount.
Notice of redemption having been duly mailed, this
bond, or the portion called for redemption, will become due
and payable on the redemption date at the applicable
redemption price and, moneys for the redemption having been
deposited with the Paying Agent, from and after the date
fixed for redemption, interest on this bond (or such
portion) will no longer accrue.
IN CERTAIN CIRCUMSTANCES SET OUT HEREIN, THIS BOND (OR
PORTION HEREOF) IS SUBJECT TO PURCHASE OR REDEMPTION. IN
EACH SUCH EVENT AND UPON DEPOSIT OF THE PURCHASE OR
REDEMPTION PRICE WITH THE PAYING AGENT ON THE PURCHASE OR
REDEMPTION DATE, AS THE CASE MAY BE, THIS BOND (OR PORTION
HEREOF) SHALL CEASE TO BE DEEMED TO BE OUTSTANDING UNDER THE
INDENTURE, INTEREST HEREON SHALL CEASE TO ACCRUE AS OF THE
PURCHASE OR REDEMPTION DATE, AND THE REGISTERED OWNER HEREOF
SHALL BE ENTITLED ONLY TO RECEIVE THE PURCHASE OR REDEMPTION
PRICE SO DEPOSITED WITH THE PAYING AGENT ONLY UPON SURRENDER
OF THIS CERTIFICATE TO THE PAYING AGENT.
Transfer of Bonds. This bond is transferable by the
REGISTERED OWNER, in person or by its attorney duly
authorized in writing, at the office of the Paying Agent,
upon surrender of this bond to the Paying Agent for
cancellation. Upon the transfer, a new Bond or Bonds in
authorized denominations of the same aggregate principal
amount will be issued to the transferee at the same office.
No transfer will be effective unless represented by such
surrender and reissue. This bond may also be exchanged at
the office of the Paying Agent for a new Bond or Bonds in
authorized denominations of the same aggregate principal
amount without transfer to a new registered owner.
Exchanges and transfers will be without expense to the owner
except for applicable taxes or other governmental charges,
if any. The Paying Agent will not be required to make an
exchange or transfer of this bond (except in connection with
any optional or mandatory tender of this bond) (i) if this
bond (or any portion thereof) has been selected for
redemption or (ii) during the fifteen (15) days preceding
any date fixed for selection for redemption if this bond (or
any portion thereof) is eligible to be selected for
redemption.
Amendment of Indenture. The Indenture permits, with
certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations
of the Authority and the rights of the owners of the Bonds
at any time by the Authority with the consent of AMBAC
Indemnity and of the owners of not less than 66 2/3% in
aggregate principal amount of each series of the Bonds at
the time outstanding thereunder. Any such consent shall be
conclusive and binding upon each such owner and upon all
future owners of each Bond and of any such Bond issued upon
the transfer thereof, whether or not notation of such
consent is made thereon. The Indenture also permits the
amendment thereof by the Authority with the consent of AMBAC
Indemnity, but without the consent of the owners of the
Bonds for certain specified purposes.
Limitation on Bondholder Enforcement Rights. The owner
of this bond shall have no right to enforce the provisions
of the Indenture, to institute action to enforce the
provisions and covenants thereof or to institute, appear in
or defend any suit or other proceedings with respect
thereto, except as provided in the Indenture.
Special Obligations of the Authority. This bond and
the issue of which it forms a part are special obligations
of the Authority, payable solely out of the revenues or
other receipts, funds or moneys of the Authority pledged
under the Indenture and from any amounts otherwise available
under the Indenture for the payment of the Bonds. Neither
the State nor any municipality thereof shall be obligated to
pay the principal or redemption price, if any, of or
interest on this bond and neither the faith and credit nor
taxing power of the State or any municipality thereof is
pledged to such payment. The Bonds do not now and shall
never constitute a debt or liability of the State or any
municipality thereof or bonds issued or guaranteed by either
of them within the meaning of any constitutional or
statutory limitation.
Estoppel Clause. This bond is issued pursuant to and
in full compliance with the Constitution and laws of the
State. It is hereby certified, recited and declared that
all acts, conditions and things required to exist, happen
and be performed precedent to and in the issuance of this
bond do exist, have happened and have been performed in due
time, form and manner as required by law and that the
issuance of this bond and of the issue of which it forms a
part, together with all other obligations of the Authority,
do not exceed or violate any constitutional or statutory
limitation.
No Personal Liability. Neither the officers, directors
or employees of the Authority or the Trustee nor any person
executing this bond shall be liable personally or be subject
to any personal liability or accountability by reason of the
issuance hereof.
Authentication. This bond shall not be valid or become
obligatory for any purpose or be entitled to any security or
benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee
[or the Paying Agent].
Authorized Denomination. The Bonds are issuable only
in fully registered form and while in the Multiannual Mode
shall be in denominations of $5,000 or any multiple thereof.
Persons Deemed Owners. The Authority, the Trustee, the
Paying Agent and the Borrower may treat the REGISTERED OWNER
as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
IN WITNESS WHEREOF, the CONNECTICUT DEVELOPMENT
AUTHORITY has caused this Bond to be executed in its name by
the manual or facsimile signature of its Authorized
Representative.
Connecticut Development
Authority
By/s/
Authorized Representative
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds of the issue described in
the within mentioned Indenture.
Date of Registration:
Fleet National Bank,
Trustee
By /s/ [,or
Authorized Signature
Fleet National Bank,
Paying Agent
By /s/
Authorized Signature]
(FORM OF ASSIGNMENT)
ASSIGNMENT
FOR VALUE RECEIVED the undersigned sells, assigns and
transfers unto
the within Bond and does hereby irrevocably constitute and
appoint
Attorney-in-Fact to transfer such Bond on the books kept for
the registration thereof, with full power of substitution in
the premises.
Dated:
/s/
NOTICE: The signature to
this assignment must
correspond with the name
as it appears on the face
of the within Bond in
every particular.
In the presence of:
/s/
Name of State or National
Bank or member of National
Association of Securities
Dealers
/s/
Authorized Officer
NOTE: Assignment form should
state both the name and
address of the assignee
in the space provided.
The following abbreviations, when used in the
inscription on the face of this bond, shall be construed as
though they were written out in full according to applicable
law.
TEN COM - as tenants in common
UNIF GIFT MIN ACT
TEN ENT - as tenants by the entirety Custodian
JT TEN - as joint tenants with rights (Cust)
(Minor)
of survivorship and not as
tenants in common
Act
(State)
Additional abbreviations may also be used though not set
forth in the list above.
NOTICE OF ELECTION TO RETAIN BONDS
Connecticut Development Authority
Pollution Control Revenue Bonds
(The Connecticut Light and Power Company Project - 1996A
Series)
In the event that the Rate Period following the Effective
Date for the Bonds described below is to be of the same
duration as the Rate Period ending on the day prior to said
Effective Date, the undersigned registered owner of the bonds
described below (the "Retained Bonds") does hereby irrevocably
elect to retain the Retained Bonds which have become the
subject of mandatory tender for purchase on the Effective Date
to Fleet National Bank, Hartford, Connecticut, or its
successor as Paying Agent (the "Paying Agent") with respect to
the $62,000,000 Connecticut Development Authority Pollution
Control Revenue Bonds (The Connecticut Light and Power Company
Project - 1996A Series ) (the "Bonds").
Retained Bonds
Retained Face Amount
Principal Amount of Bonds Owned Bond Numbers CUSIP
Numbers
$ $
Dated:
Signature(s) of Registered
Owner(s) of Retained Bonds
/s/
/s/
Street City State
Zip
Area Code Telephone
Number
Signature Guaranteed Federal Taxpayer
Identification Number
/s/
IMPORTANT: (A) This Notice, duly and properly
executed, must be received by the Paying Agent no later than
2 P.M., New York City time, on the fifth (5th) day preceding
the Effective Date in order to be effective. If this Notice
is received after 2 P.M., New York City time, on a Business
Day, it shall be deemed to be received on the next
succeeding Business Day.
(B) The above signature(s) must correspond with the
name(s) as set forth on the face of the tendered bond(s)
with respect to which this Bondholder's Election Notice is
being delivered without any change whatsoever; and must bear
a signature guarantee by a bank or broker member of a
principal securities exchange. The method of presenting
this notice and bond(s) to the Paying Agent is at the risk
of the person making such presentation. If made by mail,
registered mail is recommended.
(END OF FORM OF MULTIANNUAL BOND)
(FORM OF FIXED RATE BOND)
$ No. R-
NEITHER THE STATE OF CONNECTICUT NOR ANY MUNICIPALITY
THEREOF IS OBLIGATED TO PAY, AND NEITHER THE FAITH AND
CREDIT NOR TAXING POWER OF THE STATE OF CONNECTICUT NOR
ANY MUNICIPALITY THEREOF IS PLEDGED TO THE PAYMENT OF,
THE PRINCIPAL, PREMIUM, IF ANY, OF OR INTEREST ON THIS
BOND.
Municipal Bond Insurance Policy No. ______________ (the
"Policy") with respect to payments due for principal of
and interest on this Bond has been issued by AMBAC
Indemnity Corporation ("AMBAC Indemnity"). The Policy
has been delivered to the United States Trust Company
of New York, New York, New York, as the Insurance
Trustee under said Policy and will be held by such
Insurance Trustee or any successor insurance trustee.
The Policy is on file and available for inspection at
the principal office of the Insurance Trustee and a
copy thereof may be secured from AMBAC Indemnity or the
Insurance Trustee. All payments required to be made
under the Policy shall be made in accordance with the
provisions thereof. The owner of this Bond
acknowledges and consents to the subrogation rights of
AMBAC Indemnity as more fully set forth in the Policy.
Connecticut Development Authority
Pollution Control Revenue Bond
(The Connecticut Light and Power Company Project -
1996A Series)
DATE OF THIS BOND:
(Date as of which Bonds of this Series were initially
issued)
MATURITY DATE: May 1, 2031
INTEREST PAYMENT DATES: May 1, and November 1, (but not
before , )
INTEREST RATE:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CUSIP NUMBER:
MODE: Fixed
CONNECTICUT DEVELOPMENT AUTHORITY (the "Authority"), a
body corporate and politic constituting a public
instrumentality and political subdivision of the State of
Connecticut (the "State"), for value received, hereby
promises to pay to the REGISTERED OWNER or registered
assigns, on the MATURITY DATE, solely from the sources and
in the manner hereinafter provided, upon presentation and
surrender hereof, in lawful money of the United States of
America, the PRINCIPAL AMOUNT and in like manner to pay
interest on the unpaid principal balance thereof until the
Authority's obligation with respect to the payment of such
sum shall be discharged. Interest shall be payable
(computed on the basis of a 360-day year consisting of
twelve 30-day months) from the most recent INTEREST PAYMENT
DATE, as defined below, to which interest has been paid or
duly provided for or, if no interest has been paid, from the
DATE OF THIS BOND at the INTEREST RATE per annum, payable
semi-annually on the INTEREST PAYMENT DATES until the date
on which this bond becomes due, whether at maturity or by
acceleration or redemption. From and after that date, any
unpaid principal will bear interest at the same rate until
paid or duly provided for.
Payment of Principal and Interest. The principal and
premium if any, of this Bond is payable in immediately
available funds to the REGISTERED OWNER hereof but only upon
presentation and surrender of this bond at the office of
Fleet National Bank, 777 Main Street, Hartford, Connecticut
06115, as Paying Agent (with its successors, the "Paying
Agent"). Interest is payable by wire or bank transfer in
immediately available funds mailed by the Paying Agent to
the REGISTERED OWNER of this bond (or of one or more
predecessor or successor Bonds (as defined below)),
determined as of the close of business on the applicable
record date, at its address as shown on the registration
books maintained by the Paying Agent. If any payment,
redemption or maturity date for principal, premium or
interest shall not be a Business Day, then the payment
thereof may be made on the next succeeding Business Day with
the same force and effect as if made on the specified
payment date and no interest shall accrue for the period
after the specified payment date.
The record date for payment of interest is the
fifteenth day of the month preceding the date on which the
interest is to be paid, provided that, with respect to
overdue interest or interest payable on redemption of this
bond other than on an INTEREST PAYMENT DATE or interest on
any overdue amount, the Trustee (as defined below) may
establish a special record date. The special record date
may be not more than thirty (30) days before the date set
for payment. The Paying Agent will mail notice of a special
record date to the registered owners of the Bonds (the
"Bondowners") at least ten (10) days before the special
record date. The Paying Agent will promptly certify to the
Authority and the Trustee that it has mailed such notice to
all Bondowners, and such certificate will be conclusive
evidence that such notice was given in the manner required
hereby.
Authorization and Purpose. This bond is one of an
authorized issue of Bonds of the Authority in the aggregate
principal amount of $62,000,000 designated: Pollution
Control Revenue Bonds (The Connecticut Light and Power
Company Project - 1996A Series) (the "Bonds") which are
issued for the purpose of financing certain capital projects
for the benefit of The Connecticut Light and Power Company
(the "Borrower"), a corporation organized and existing under
the laws of the State of Connecticut and paying necessary
expenses incidental thereto. The project consists of certain
capital projects, including additions to the pollution
control and sewage and solid waste disposal facilities of
the Borrower (the "Project"). The Bonds are issued pursuant
to the State Commerce Act, constituting Connecticut General
Statutes, Sections 32-1a through 32-23xx, as amended, a
resolution adopted by the Authority on April 17, 1996 and an
Indenture of Trust dated as of May 1, 1996 (which Indenture
as from time to time amended and supplemented is herein
referred to as the "Indenture"), duly executed and delivered
by the Authority to the Trustee, and are equally and ratably
secured by and entitled to the protection of the Indenture,
which is on file in the office of the Trustee.
Pledge and Security. Pursuant to the Indenture, the
Authority has assigned to the Trustee all of its right,
title and interest in and to a Loan Agreement (which Loan
Agreement as from time to time amended and supplemented is
herein referred to as the "Agreement") dated as of May 1,
1996 between the Authority and the Borrower, and the
Mortgage Bonds (as hereinafter defined) (except for certain
enforcement and indemnification rights which are reserved in
the Indenture), including all rights to receive loan
payments sufficient to pay the principal of, premium, if
any, of and interest and all other amounts due on the Bonds
as the same become due, to be made by the Borrower pursuant
to the Agreement. The Agreement sets forth the terms and
conditions under which the Authority will provide for
financing of the Project and under which the Borrower will
use and occupy the Project and make loan payments to the
Authority in such amounts as are necessary to pay the
principal of, premium, if any, and interest on the Bonds.
To secure such loan payments, the Borrower has issued and
delivered to the Trustee its 1996 Series B First Mortgage
Bonds (the "Mortgage Bonds") issued under the Indenture of
Mortgage and Deed of Trust dated as of May 1, 1921, as
amended and supplemented, between the Borrower and Bankers
Trust Company, as Mortgage Trustee (as amended and
supplemented from time to time, the "Mortgage") bearing
interest at a rate of interest equal to the interest rate
applicable to the Bonds and in an aggregate principal amount
equal to the principal amount of, and with the same maturity
date as, the Bonds. As provided in the Indenture, payments
of principal of the Mortgage Bonds shall, upon receipt by
the Trustee, be deemed to constitute payments in
corresponding amounts by the Borrower in respect of the
Bonds. Reference is hereby made to the Indenture for the
definition of any capitalized word or term used but not
defined herein and for a description of the property
pledged, assigned and otherwise available for the payment of
the Bonds, the provisions, among others, with respect to the
nature and extent of the security, the rights, duties and
obligations of the Authority, the Trustee and the owners of
the Bonds, and the terms upon which the Bonds are issued and
secured, and the holders of the Bonds are deemed to assent
to the provisions of the Indenture by the acceptance of this
bond.
Event of Default. In case any Event of Default occurs
and is continuing, the principal amount of this bond
together with accrued interest may be declared due and
payable in the manner and with the effect provided in the
Indenture.
General Optional Redemption. The Bonds are subject to
redemption pursuant to the Indenture at the option of the
Authority, which option shall be exercised at the direction
of the Borrower, as a whole or in part at any time, at the
following prices expressed in percentage of their principal
amount, plus accrued interest to the redemption date:
Period During Which Redeemed Redemption Price
%
[This table shall be completed based on redemption
schedule established for this bond in the Multiannual Mode
assuming it had a Rate Period ending on the Maturity Date.]
Extraordinary Optional Redemption. In addition, at the
option of the Authority, which option shall be exercised
upon the direction of and the giving of notice by the
Borrower of its intention to prepay amounts due under the
Agreement, the Bonds are subject to redemption prior to
maturity as a whole at any time at a Redemption Price equal
to 100% of the principal amount thereof plus accrued
interest to the date of redemption, if any one or more of
the events of casualty to or condemnation of the Project or
the Plant, change in law, or other events described in the
Agreement shall have occurred, as evidenced in each case by
the filing of a certificate of an Authorized Representative
of the Borrower. The Borrower's right to direct the
redemption of the Bonds in the Fixed Rate Mode upon the
occurrence of any event as set forth in the Agreement shall
expire six (6) months, and any such redemption shall occur
within nine (9) months, after such event occurs.
Mandatory Taxability Redemption. In the event of a
Determination of Taxability, the Bonds shall be redeemed on
a day selected by the Borrower that is not more than 90 days
after the occurrence of such Determination of Taxability as
provided in the Indenture, at the Redemption Price equal to
100% of the principal amount thereof plus accrued interest
to the date of redemption. Redemption under this paragraph
shall be in whole unless not less than forty-five (45) days
prior to the redemption date the Borrower delivers to the
Trustee an opinion of Bond Counsel reasonably satisfactory
to the Trustee to the effect that a redemption of less than
all of the Bonds will preserve the tax-exempt status of
interest on the remaining Bonds outstanding subsequent to
such redemption.
Redemption at the Option of the Authority Upon
Occurrence of Certain Events. In the event that a
substantial portion of the Project is abandoned at any one
time or in the aggregate, or in the event of any disposition
of all or any part of the Borrower's ownership interest in
the Project (other than as permitted by the Agreement) or in
the event that the Plant is not repaired, reconstructed,
relocated, or replaced following damage or destruction of
all or substantially all of such Plant, in each case, as
determined in accordance with the Agreement, the Bonds are
subject to redemption, at the option of the Authority, (i)
on a date selected by the Borrower, which date shall occur
not later than three years from the date of the Authority's
exercise of its option to so redeem, or (ii) on a date
selected by the Authority which date shall occur not less
than 210 days from the date of the Authority's exercise of
its option to so redeem, should the Borrower fail to give
notice of such events as required in the Agreement, at a
redemption price equal to 100% of the principal amount
thereof plus accrued interest to the redemption date.
If less than all of the Outstanding Bonds are to be
called for redemption, the Bonds (or portions thereof) to be
redeemed shall be selected as provided in the Indenture.
In the event this bond is selected for redemption,
notice (which notice may state that it is subject to the
receipt of the redemption moneys by the Trustee on or before
the date fixed for redemption and which notice shall be of
no effect unless such moneys are so received on or before
such date) will be mailed no more than forty-five (45) days
nor less than thirty (30) days prior to the redemption date
to the REGISTERED OWNER at its address shown on the
registration books maintained by the Paying Agent. Failure
to mail notice to the owner of any other Bond or any defect
in the notice to such an owner shall not affect the
redemption of this bond.
If this bond is of a denomination in excess of five
thousand dollars ($5,000), portions of the principal amount
in the amount of five thousand dollars ($5,000) or any
multiple thereof may be redeemed. If less than all of the
principal amount is to be redeemed, upon surrender of this
bond to the Paying Agent, there will be issued to the
REGISTERED OWNER, without charge, a new Bond or Bonds, at
the option of the REGISTERED OWNER, for the unredeemed
principal amount.
Notice of redemption having been duly mailed, this
bond, or the portion called for redemption, will become due
and payable on the redemption date at the applicable
redemption price and, moneys for the redemption having been
deposited with the Paying Agent, from and after the date
fixed for redemption, interest on this bond (or such
portion) will no longer accrue.
Transfer of Bonds. This bond is transferable by the
REGISTERED OWNER, in person or by its attorney duly
authorized in writing, at the office of the Paying Agent,
upon surrender of this bond to the Paying Agent for
cancellation. Upon the transfer, a new Bond or Bonds in
authorized denominations of the same aggregate principal
amount will be issued to the transferee at the same office.
No transfer will be effective unless represented by such
surrender and reissue. This bond may also be exchanged at
the office of the Paying Agent for a new Bond or Bonds in
authorized denominations of the same aggregate principal
amount without transfer to a new registered owner.
Exchanges and transfers will be without expense to the owner
except for applicable taxes or other governmental charges,
if any. The Paying Agent will not be required to make an
exchange or transfer of this bond during the fifteen (15)
days preceding any date fixed for selection for redemption
if this bond (or any portion thereof) is eligible to be
selected for redemption.
Amendment of Indenture. The Indenture permits, with
certain exceptions as therein provided, the amendment
thereof and the modification of the rights and obligations
of the Authority and the rights of the owners of the Bonds
at any time by the Authority with the consent of AMBAC
Indemnity and of the owners of not less than 66 2/3% in
aggregate principal amount of each series of the Bonds at
the time outstanding thereunder. Any such consent shall be
conclusive and binding upon each such owner and upon all
future owners of each Bond and of any such Bond issued upon
the transfer thereof, whether or not notation of such
consent is made thereon. The Indenture also permits the
amendment thereof by the Authority with the consent of AMBAC
Indemnity, but without the consent of the owners of the
Bonds for certain specified purposes.
Limitation on Bondholder Enforcement Rights. The owner
of this bond shall have no right to enforce the provisions
of the Indenture, to institute action to enforce the
provisions and covenants thereof or to institute, appear in
or defend any suit or other proceedings with respect
thereto, except as provided in the Indenture.
Special Obligations of the Authority. This bond and
the issue of which it forms a part are special obligations
of the Authority, payable solely out of the revenues or
other receipts, funds or moneys of the Authority pledged
under the Indenture and from any amounts otherwise available
under the Indenture for the payment of the Bonds. Neither
the State nor any municipality thereof shall be obligated to
pay the principal or redemption price, if any, of or
interest on this bond and neither the faith and credit nor
taxing power of the State or any municipality thereof is
pledged to such payment. The Bonds do not now and shall
never constitute a debt or liability of the State or any
municipality thereof or bonds issued or guaranteed by either
of them within the meaning of any constitutional or
statutory limitation.
Estoppel Clause. This bond is issued pursuant to and
in full compliance with the Constitution and laws of the
State. It is hereby certified, recited and declared that
all acts, conditions and things required to exist, happen
and be performed precedent to and in the issuance of this
bond do exist, have happened and have been performed in due
time, form and manner as required by law and that the
issuance of this bond and of the issue of which it forms a
part, together with all other obligations of the Authority,
do not exceed or violate any constitutional or statutory
limitation.
No Personal Liability. Neither the officers, directors
or employees of the Authority or the Trustee nor any person
executing this bond shall be liable personally or be subject
to any personal liability or accountability by reason of the
issuance hereof.
Authentication. This bond shall not be valid or become
obligatory for any purpose or be entitled to any security or
benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee
[or the Paying Agent].
Authorized Denomination. The Bonds are issuable only
in fully registered form in denominations of $5,000 or any
multiple thereof.
Persons Deemed Owners. The Authority, the Trustee, the
Paying Agent and the Borrower may treat the REGISTERED OWNER
as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
IN WITNESS WHEREOF, the CONNECTICUT DEVELOPMENT
AUTHORITY has caused this Bond to be executed in its name by
the manual or facsimile signature of its Authorized
Representative.
Connecticut Development Authority
By /s/
Authorized Representative
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds of the issue described in
the within mentioned Indenture.
Date of Registration:
Fleet National Bank,
Trustee
By /s/ [,or
Authorized Signature
Fleet National Bank,
Paying Agent
By /s/
Authorized Signature]
(FORM OF ASSIGNMENT)
ASSIGNMENT
FOR VALUE RECEIVED the undersigned sells, assigns and
transfers unto
the within Bond and does hereby irrevocably constitute and
appoint
Attorney-in-Fact to transfer such Bond on the books kept for
the registration thereof, with full power of substitution in
the premises.
Dated:
/s/
NOTICE: The signature to
this assignment must
correspond with the name
as it appears on the face
of the within Bond in
every particular.
In the presence of:
/s/
Name of State or National
Bank or member of National
Association of Securities
Dealers
/s/
Authorized Officer
NOTE: Assignment form should
state both the name and
address of the assignee
in the space provided.
The following abbreviations, when used in the
inscription on the face of this bond, shall be construed as
though they were written out in full according to applicable
law.
TEN COM - as tenants in common UNIF GIFT MIN ACT
TEN ENT - as tenants by the entirety Custodian
JT TEN - as joint tenants with rights (Cust)
(Minor)
of survivorship and not as
tenants in common
Act
(State)
Additional abbreviations may also be used though not set
forth in the list above.
(END OF FORM OF FIXED RATE BOND) NOW,
THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS:
GRANTING CLAUSES
That the Authority in consideration of the premises and
the acceptance by the Trustee of the trusts hereby created
and of the purchase and acceptance of the Bonds by the
holders and owners thereof, and of the sum of One Dollar,
lawful money of the United States of America, to it duly
paid by the Trustee at or before the execution and delivery
of these presents, and for other good and valuable
consideration, the receipt of which is hereby acknowledged,
and in order to secure the payment of the principal of,
premium, if any, and interest on the Bonds according to
their tenor and effect and all other amounts due in
connection therewith and the performance and observance by
the Authority of all the covenants expressed or implied
herein and in the Bonds, does hereby grant, bargain, sell,
convey, pledge and assign unto, and grant a security
interest in and to the Trustee, and unto its respective
successors in trust, and to their respective assigns,
forever, for the securing of the performance of the
obligations of the Authority hereinafter set forth, the
following:
I.
The Financing Documents (except to the extent to which
any such document provides for the indemnification or the
payment of expenses of the Authority, rights of the
Authority to inspect the Project, receive notices and grant
approvals) including all extensions and renewals of the term
thereof, if any, together with all right, title and interest
of the Authority therein, including, but without limiting
the generality of the foregoing, the present and continuing
right to claim, collect and receive any of the moneys,
income, revenues, issues, profits and other amounts payable
or receivable thereunder, to bring actions and proceedings
thereunder or for the enforcement thereof, and to do any and
all things which the Authority is or may become entitled to
do under the Agreement and the Mortgage Bonds but reserving,
however, to the Authority rights of the Authority under
Section 6.2, 6.4 and 7.4 of the Agreement upon the
conditions therein set forth;
II.
All Funds (except the Rebate Fund) and moneys therein;
and
III.
All moneys and securities from time to time held by the
Trustee or the Paying Agent under the terms of this
Indenture (except moneys and securities in the Rebate Fund)
and any and all other real or personal property of every
name and nature concurrently herewith or from time to time
hereafter by delivery or by writing of any nature conveyed,
mortgaged, pledged, assigned or transferred as and for
additional security hereunder by the Authority or by anyone
in its behalf, or with its written consent, to the Trustee
or the Paying Agent, which is hereby authorized to receive
any and all such property at any and all times and to hold
and apply the same subject to the terms hereof;
TO HAVE AND TO HOLD all and singular the trust estate,
whether now owned or hereafter acquired, unto the Trustee
and its respective successors and assigns in trust forever
to its and their own proper use and behoof but:
IN TRUST NEVERTHELESS, upon the terms and trusts herein
set forth for the equal and proportionate benefit, security
and protection of all present and future holders and owners
of the Bonds from time to time issued and to be issued under
and secured by this Indenture without privilege, priority or
distinction as to the lien or otherwise of any of the Bonds
over any of the other Bonds;
PROVIDED, HOWEVER, that if the Authority, its
successors or assigns, shall well and truly pay, or cause to
be paid, the principal of, premium, if any, and interest on,
the Bonds due or to become due thereon, and all other
amounts due thereunder, at the times and in the manner
mentioned in the Bonds according to their tenor, and shall
cause the payments to be made on the Bonds as required under
Article VII hereof, or shall provide, as permitted hereby,
for the payment thereof by depositing with the Trustee the
entire amount due or to become due thereon, and shall well
and truly keep, perform and observe all the covenants and
conditions pursuant to the terms of this Indenture to be
kept, performed and observed by it, and shall pay or cause
to be paid to the Trustee all sums of money due or to become
due to it in accordance with the terms and provisions of the
Agreement, the Mortgage Bonds and this Indenture, then upon
the final payment thereof this Indenture and the rights
hereby granted shall cease, determine and be void; otherwise
this Indenture to be and remain in full force and effect.
THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is
expressly declared, that all Bonds issued and secured
hereunder are to be issued, authenticated and delivered and
all of the property, rights and interests, including,
without limitation the loan payments and other amounts
hereby assigned and pledged are to be dealt with and
disposed of under, upon and subject to the terms,
conditions, stipulations, covenants, agreements, trusts,
uses and purposes as hereinafter expressed, and the
Authority has agreed and covenanted, and does hereby agree
and covenant with the Trustee and with the respective
holders and owners of the Bonds as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions. As used in this Indenture:
"Act" means the State Commerce Act, constituting
Connecticut General Statutes, Sections 32-la through
32-23xx, as amended.
"Agreement" means the Amended and Restated Loan
Agreement of even date herewith between the Authority and
the Borrower, and any amendments and supplements thereto.
"Alternate Liquidity Facility" means a standby bond
purchase agreement or other liquidity device issued in
accordance with Section 3.12 of the Agreement.
"Authority" means the Connecticut Development
Authority, a body corporate and politic constituting a
public instrumentality and political subdivision of the
State of Connecticut duly organized and existing under the
laws of the State, and any body, board, authority, agency or
other political subdivision or instrumentality of the State
which shall hereafter succeed to the powers, duties and
functions thereof.
"Authorized Investments" means United States government
obligations; obligations of the following federal agencies:
Export-Import Bank, Farm Credit System Financial Assistance
Corporation, Rural Economic Community Development
Administration (formerly the Farmers Home Administration),
General Services Administration, U.S. Maritime
Administration, Small Business Administration, Government
National Mortgage Association, U.S. Department of Housing &
Urban Development and Federal Housing Administration, which
obligations represent the full faith and credit of the U.S.
government; commercial paper maturing in not more than 270
days after the date of purchase and having ratings of "P-1"
by Moody's and "A-1+" by S&P; savings accounts with banks or
savings and loan associations the accounts of which are
fully insured by the Federal Deposit Insurance Corp.
("FDIC"); bankers acceptances with domestic commercial banks
which have a rating on their short-term certificates of
deposit on the date of purchase of "A-1" or "A-1+" by S&P
and "P-1" by Moody's and maturing no more than 360 days
after the date of purchase; certificates of deposit of the
Trustee fully insured by the FDIC (but only to the extent
such certificates of deposit do not exceed 10% of the
amounts held in all funds and accounts hereunder); bonds or
other obligations of any state of the United States of
America or of any agency, instrumentality or local
governmental unit of any such state which are not callable
at the option of the obligor prior to maturity or as to
which irrevocable instructions have been given by the
obligor to call on the date specified in the notice and
which are rated, based on an irrevocable escrow account or
fund, in the highest rating category of S&P and Moody's; and
money market funds rated "AAAm" or "AAAm-G" or better by S&P
and registered under the Investment Company Act of 1940
(U.S.C. 809.1 et. seq.) as it may be amended from time to
time, the portfolio of which is limited to Federal
Securities.
"Authorized Representative" means, in the case of the
Authority, the Chairman or Vice Chairman, the President, the
Executive Vice President or any Senior Vice President or any
Vice President thereof and, in the case of the Borrower, the
Chairman, Vice Chairman, President, any Vice President,
Chief Financial Officer, Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary thereof and, when used with
reference to the performance of any act, the discharge of
any duty or the execution of any certificate or other
document, any officer, employee or other person authorized
to perform such act, discharge such duty or execute such
certificate or other document.
"Bank" means any bank or banks designated from time to
time as a "Bank" under the Standby Bond Purchase Agreement,
except that if one or more Alternate Liquidity Facilities
are in effect, such term means any entity or entities
obligated to make payments under each Alternate Liquidity
Facility.
"Bank Bonds" shall have the meaning set forth in
Section 2.3(G)(9) hereof.
"Bank Rate" shall, at any date of determination, have
the meaning ascribed thereto in the Standby Bond Purchase
Agreement in effect on such date; provided, however, that
such rate shall in no event exceed the Maximum Interest
Rate.
"Beneficial Owner" shall have the meaning specified in
Section 2.3(F) hereof. If any person claims to the Trustee
to be a Beneficial Owner, for purposes of Sections 2.4(C),
such person shall prove such claim to the satisfaction of
the Trustee with such documentation and signature guaranties
as the Trustee may request.
"Bonds" means the $62,000,000 Pollution Control Revenue
Bonds (The Connecticut Light and Power Company Project -
1996A Series) authorized and issued pursuant to Section 2.3
hereof.
"Bond Counsel" means Whitman Breed Abbott & Morgan or
such other nationally recognized bond counsel selected by
the Authority and reasonably satisfactory to the Borrower
and Trustee.
"Bond Insurer" shall mean AMBAC Indemnity Corporation,
a Wisconsin-domiciled stock insurance company and any
successor entity thereto or hereunder.
"Bondholder," "holder" or "owner" or words of similar
import when used with reference to Bonds, shall unless
otherwise specified, mean any person who shall be the
registered owner of any Outstanding Bond.
"Borrower" means (i) The Connecticut Light and Power
Company, a corporation organized and existing under the laws
of the State of Connecticut, and its successors and assigns
and (ii) any surviving, resulting or transferee corporation
as provided in Section 6.1 of the Agreement.
"Borrower Bonds" means any Bond registered to the
Borrower pursuant to Section 9.19(A) hereof.
"Business Day" means any day (i) that is not a Saturday
or Sunday, (ii) that is a day on which banks located in
Hartford, Connecticut and New York, New York are not
required or authorized to remain closed, (iii) that is a day
on which banking institutions in all of the cities in which
the principal offices of the Trustee, the Mortgage Trustee
and the Paying Agent and, if applicable, the Remarketing
Agent and the Bank are located and are not required or
authorized to remain closed and (iv) that is a day on which
the New York Stock Exchange, Inc. is not closed.
"Cede & Co." means the nominee for The Depository Trust
Company (DTC), who shall act as securities depository for
the Bonds.
"Code" means the Internal Revenue Code of 1986, as
amended, and regulations promulgated thereunder.
"Conversion Date" means the date on which a new Mode
becomes effective with respect to a Bond, and with respect
to a Bond in the Multiannual Mode, the date on which a new
Rate Period becomes effective.
"Daily Mode" has the meaning set forth in the form of
Daily Bonds.
"Daily Rate" means the rate of interest that is set on
Bonds while they are in the Daily Mode.
"Delivery Date" means, with respect to a Bond tendered
for purchase, the Purchase Date or any subsequent Business
Day on which such Bond is delivered to the Paying Agent as
provided in the forms of Daily, Flexible, Weekly and
Multiannual Bonds.
"Debt Service Fund" means the special trust fund so
designated, established pursuant to Section 5.1 hereof.
"Default" means any event or condition which will, with
the lapse of time, or the giving of notice, or both, becomes
an Event of Default.
"DTC" or "The Depository Trust Company" shall mean the
limited-purpose trust company organized under the laws of
the State of New York which shall act as securities
depository for the Bonds, and any successor thereto.
"Determination of Taxability" means (1) a published
revenue ruling by the Internal Revenue Service and an
opinion of Bond Counsel, unless the Borrower timely requests
the Authority to proceed in accordance with Section 6.3(H)
of the Agreement and proceedings pursuant to such section
are continuing, (2)(a)(i) a private ruling specifically
applicable to the Bonds or (ii) the receipt by any Bondowner
of a notice of assessment and demand for payment from the
Internal Revenue Service and (b)(i) the expiration of the
appeal period provided therein if no appeal is taken or (ii)
if an appeal is taken, a final unappealable decision by a
court of competent jurisdiction; provided that in the case
of an event described in clause (2) that the Authority or
the Bondowner, as the case may be, has given the Borrower
and the Trustee prompt written notice of any application for
such a private ruling or, as the case may be, any proposed
assertion of taxability by the Internal Revenue Service and,
if the Borrower agrees to pay all expenses in connection
therewith, permits the Borrower to contest such action,
either directly or in the name of the registered owner,
through any level of appeal determined by the Borrower, or
(3) the admission in writing by the Borrower, in the case of
clauses (1), (2) and (3), to the effect that the interest on
the Bonds is includable in the gross income for federal
income tax purposes (other than for purposes of alternative
minimum tax, environmental tax or foreign branch profits
tax) of an owner or former owner thereof, other than for a
period during which such owner or former owner is or was a
"substantial user" of the Project or a "related person" as
such terms are defined in the Code. For purposes of this
definition only, the term owner or Bondowner means the
Beneficial Owner of the Bonds so long as the Book-Entry Only
System (as defined in Section 2.3(F) hereof) is in effect.
"Effective Date" means, with respect to a Bond in the
Daily, Flexible, Weekly and Multiannual Modes, the date on
which a new Rate Period for that Bond takes effect.
"Eligible Funds" means (1) monies on deposit in trust
with the Trustee for a period of at least 123 days prior to
and during which no petition in bankruptcy or similar
insolvency proceeding has been filed by or against the
Borrower or the Authority or is pending (unless such
petition shall have been dismissed and such dismissal shall
be final and not subject to appeal), which monies may be
invested solely in Authorized Investments, (2) proceeds of
the issuance of refunding bonds (including proceeds from the
investment thereof) accompanied, at the time of application,
by an opinion of nationally recognized counsel experienced
in bankruptcy matters selected by the Borrower and
satisfactory to the Authority, the Trustee, Moody's (if the
Bonds are then rated by Moody's) and S&P (if the Bonds are
then rated by S&P) to the effect that the application of
such amounts to the payment of the Bonds would not
constitute a voidable preference under Section 547 of the
United States Bankruptcy Code in the event the Authority or
the Borrower were to become debtors under the United States
Bankruptcy Code, and (3) any other amounts which if applied
to the payment of the Bonds would not, in the opinion of
nationally recognized counsel experienced in bankruptcy
matters selected by the Borrower and satisfactory to the
Authority, the Trustee, Moody's (if the Bonds are then rated
by Moody's) and S&P (if the Bonds are then rated by S&P),
constitute a voidable preference under Section 547 of the
United States Bankruptcy Code in the event the Authority or
the Borrower were to become debtors under the United States
Bankruptcy Code.
"Event of Bankruptcy" means the filing of a petition in
bankruptcy or the commencement of a proceeding under the
United States Bankruptcy Code or any other applicable law
concerning insolvency, reorganization or bankruptcy by or
against the Authority, the Borrower, any affiliates thereof,
or any guarantor of the Bonds (other than the Bank), as
debtor.
"Event of Default" has the meaning given such term in
Section 8.1 hereof.
"Federal Securities" means any direct obligations of
(including obligations issued or held in book-entry form on
the books of) the Department of the Treasury of the United
States of America whose full and timely payment is
unconditionally guaranteed by the United States government.
"Financing Documents" means the Agreement, the Tax
Regulatory Agreement and the Mortgage Bonds.
"Fixed Rate" means a rate of interest on a Bond that is
fixed for the remaining term of the Bond.
"Fixed Rate Conversion Date" means with respect to a
Bond, the date upon which the Fixed Rate first becomes
effective for the Bond.
"Fixed Rate Mode" has the meaning set forth in the form
of Fixed Rate Bonds.
"Flexible Mode" has the meaning set forth in the form
of Flexible Bonds.
"Flexible Rate" means a rate of interest set by the
Remarketing Agent for periods of from one to 270 days.
"Indenture" means this Indenture as from time to time
amended or supplemented by Supplemental Indentures in
accordance with Article X hereof.
"Insurance Policy" shall mean the municipal bond
insurance policy issued by the Bond Insurer insuring the
payment, when due, of the principal of and interest on the
Bonds as provided therein.
"Interest Payment Date" shall mean each date on which
interest is payable on the Bonds as provided in the forms of
the Bonds.
"Maximum Interest Rate" means the maximum interest rate
on Bonds in the Daily, Flexible and Weekly Modes, which rate
is initially 12% per annum for the Bonds. The Maximum
Interest Rate for any Bond may be increased at any time and
decreased on any Effective Date for Bonds in the Flexible
Mode or on any Conversion Date for Bonds in the Daily Mode
or Weekly Mode by the Borrower, with the prior written
approval of the Bank, the Bond Insurer and each rating
agency then rating the Bonds, upon filing with the Authority
and the Trustee a certificate stating the new Maximum
Interest Rate. There may be more than one Maximum Interest
Rate in effect from time to time, but there shall not be
more than one Maximum Interest Rate for each Mode. In no
event shall any increase in or change in, or addition of, an
additional Maximum Interest Rate be permitted to cause the
amount entitled to be demanded under the Standby Bond
Purchase Agreement to be less than the minimum required
amount specified in Section 3.12(B)(i) of the Agreement. In
no event shall the Maximum Interest Rate be increased or
decreased or an additional Maximum Interest Rate be added
unless the Trustee has received an opinion of Bond Counsel
reasonably satisfactory to it to the effect that such change
in the Maximum Interest Rate will not cause interest on the
Bonds to be included in gross income of the owners thereof
for federal income tax purposes. Notwithstanding the
foregoing, the Maximum Interest Rate with respect to Bank
Bonds shall, subject to the approval of the Bond Insurer,
have the meaning set forth in the Standby Bond Purchase
Agreement then in effect with respect to the Bonds.
"Mode" means the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily
Mode, Flexible Mode, the Weekly Mode, the Multiannual Mode
and the Fixed Rate Mode.
"Moody's" means Moody's Investors Service, Inc., a
corporation organized and existing under the laws of the
State of Delaware, its successors and their assigns, and if
such corporation shall be dissolved or liquidated or shall
no longer perform the functions of a securities rating
agency, "Moody's" shall be deemed to refer to any other
nationally recognized securities rating agency designated by
the Authority, at the direction of the Borrower, by notice
to the Trustee and the Borrower.
"Mortgage" means the Indenture of Mortgage and Deed of
Trust dated as of May 1, 1921, between the Borrower and the
Mortgage Trustee, as heretofore amended and supplemented and
as hereafter amended or supplemented in accordance with the
provisions thereof.
"Mortgage Bonds" means the 1996 Series B First Mortgage
Bonds issued by the Borrower and delivered to the Trustee
pursuant to Section 3.7 of the Agreement and the Mortgage to
secure the Borrower's obligation to make the loan payments
and to make payments in respect of the Purchase Price, if
applicable, of the Bonds.
"Mortgage Trustee" means Bankers Trust Company or any
successor as the trustee under the Mortgage.
"Multiannual Mode" means the Mode in which the interest
rate on the Bonds is fixed for periods of one year or
multiples thereof designated by the Borrower as described in
the form of Multiannual Bonds.
"Multiannual Rate" means the rate of interest that is
set on Bonds while they are in the Multiannual Mode.
"Outstanding", when used with reference to a Bond or
Bonds, as of any particular date, means all Bonds which have
been authenticated and delivered hereunder, except:
(1) Any Bonds cancelled by the Trustee because of
payment or redemption prior to maturity or
surrendered to the Trustee for cancellation;
(2) any Bond (or portion of a Bond) paid or redeemed
or for the payment or redemption of which there
has been separately set aside and held in the Debt
Service Fund either:
(a) moneys in an amount sufficient to effect
payment of the principal or applicable
Redemption Price thereof, together with
accrued interest on such Bond to the payment
or redemption date, which payment or
redemption date shall be, specified in
irrevocable instructions given to the Trustee
to apply such moneys to such payment on the
date so specified; or
(b) obligations of the kind described in
subsection 12.1(A) hereof in such principal
amounts, of such maturities, bearing such
interest and otherwise having such terms and
qualifications as shall be necessary to
provide moneys in an amount sufficient to
effect payment of the principal or applicable
Redemption Price of such Bond, together with
accrued interest on such Bond to the payment
or redemption date, which payment or
redemption date shall be specified in
irrevocable instructions given to the Trustee
to apply such obligations to such payment on
the date so specified; or
(c) any combination of (a) and (b) above;
(3) Bonds deemed tendered for purchase and not
delivered to the Paying Agent on the Purchase
Date, provided sufficient funds for payment of the
Purchase Price are on deposit with the Paying
Agent;
(4) Bonds in exchange for or in lieu of which other
Bonds shall have been authenticated and delivered
under Article III hereof; and
(5) any Bond deemed to have been paid as provided in
Section 12.1 hereof.
"Participant" shall have the meaning set forth in
Section 2.3(F) hereof.
"Paying Agent" means any paying agent for the Bonds
appointed pursuant to Section 9.10 hereof (and may include
the Trustee), and its successor or successors and any other
corporation which may at any time be substituted in its
place in accordance herewith.
"Plant" means the Millstone 3 nuclear electric
generating plant in Waterford, Connecticut, at which plant
the Project is located.
"Project" means the Borrower's interest in the realty
and other interests in the real property, and in all
personal property, goods, leasehold improvements, machinery,
equipment, furnishings, furniture, fixtures, tools and
attachments wherever located and whether now owned or
hereafter acquired, acquired or financed in whole or in part
with the proceeds of the Bonds, and any additions and
accessions thereto, substitutions therefor and replacements,
improvements, extensions and restorations thereof, described
in Appendix A to the Agreement, as amended from time to time
in accordance with the Agreement.
"Project Costs" means all costs and expenses of the
Project for which the Trustee is permitted to make payment
as provided in Section 5.2 hereof.
"Project Fund" means the special trust fund so
designated, established pursuant to Section 5.1 hereof.
"Purchase Date" means, while the Bonds are in a Daily,
Flexible, Weekly or Multiannual Mode, the date on which
Bonds shall be required to be purchased pursuant to a
mandatory or optional tender in accordance with the
provisions in the forms of Daily, Flexible, Weekly and
Multiannual Rate Bonds.
"Purchase Price" shall have the meaning set forth in
the forms of Daily, Flexible, Weekly and Multiannual Rate
Bonds.
"Rate Period" or "Period" means, when used with respect
to any particular rate of interest for a Bond in the Daily,
Flexible, Weekly or Multiannual Mode, the period during
which such rate of interest determined for such Bond will
remain in effect as described herein.
"Rebate Fund" means the special trust fund so
designated, established pursuant to Section 5.1 hereof.
"Redemption Price" means, when used with respect to a
Bond or a portion thereof, the principal amount of such Bond
or portion thereof plus the applicable premium, if any,
payable upon redemption thereof pursuant to this Indenture.
"Remarketing Agent" means Goldman, Sachs & Co. and any
successor remarketing agent appointed from time to time
pursuant to Section 9.17 hereof.
"Representation Letter" has the meaning given such term
in Section 2.3(F) hereof.
"S&P" means Standard & Poor's Ratings Group, a
corporation organized and existing under the laws of the
State of New York, its successors and their assigns, and, if
such corporation shall be dissolved or liquidated or shall
no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other
nationally recognized securities rating agency designated by
the Authority, at the direction of the Borrower, by notice
to the Trustee and the Borrower.
"Standby Bond Purchase Agreement" means, initially, the
Standby Bond Purchase Agreement dated January 23, 1997, and
any extensions thereof, among the Borrower, the Trustee and
Societe Generale, New York Branch, as amended and
supplemented, and thereafter upon the issuance of an
Alternate Liquidity Facility, such term shall mean such
Alternate Liquidity Facility.
"State" means the State of Connecticut.
"Supplemental Indenture" means any indenture
supplemental hereto or amendatory hereof, adopted by the
Authority in accordance with Article X hereof.
"Tax Incidence Date" means the date as of which
interest on the Bonds becomes or became includable in the
gross income of the recipient thereof (other than the
Borrower or another substantial user or related person) for
federal income tax purposes for any cause, as determined by
a Determination of Taxability.
"Tax Regulatory Agreement" means the Tax Regulatory
Agreement, dated as of the date of initial issuance and
delivery of the Bonds, among the Authority, the Borrower and
the Trustee, and any amendments and supplements thereto.
"Tendered Bond" means any Bond tendered or deemed
tendered for purchase pursuant to Section 2.3(G)(1)(c) or
(d), 2(c), 3(c) or (d) or 4(c) hereof.
"Term", when used with reference to the Agreement,
means the term of the Agreement determined as provided in
Article III thereof.
"Trustee" means Fleet National Bank, Hartford,
Connecticut, and its successor or successors hereafter
appointed in the manner provided in this Indenture.
"Weekly Mode" has the meaning set forth in the form of
Weekly Bonds.
"Weekly Rate" means the rate of interest that is set on
Bonds while they are in the Weekly Mode.
Section 1.2. Interpretation. (A) In this Indenture:
(1) Any capitalized word or term used but
not defined herein shall have the meaning ascribed
to such word or term in the Agreement or the Tax
Regulatory Agreement, as the case may be.
(2) The terms "hereby", "hereof", "hereto",
"herein", "hereunder" and any similar terms, as
used in this Indenture, refer to this Indenture,
and the term "hereafter" means after, and the term
"heretofore" means before, the date of execution
of this Indenture.
(3) Words of the masculine gender mean and
include correlative words of the feminine and
neuter genders and words importing the singular
number mean and include the plural number and vice
versa.
(4) Words importing persons include firms,
associations, partnerships (including limited
partnerships), trusts, corporations and other
legal entities, including public bodies, as well
as natural persons.
(5) Any headings preceding the texts of the
several Articles and Sections of this Indenture,
and any table of contents appended to copies
hereof, shall be solely for convenience of
reference and shall not constitute a part of this
Indenture, nor shall they affect its meaning,
construction or effect.
(6) All approvals, consents and acceptances
required to be given or made by any person or
party hereunder shall be at the sole discretion of
the party whose approval, consent or acceptance is
required.
(7) This Indenture shall be governed by and
construed in accordance with the applicable laws
of the State.
(B) Whenever the Authority is named or referred
to, it shall be deemed to include its successors and assigns
whether so expressed or not. All of the covenants,
stipulations, obligations, and agreements by or on behalf
of, and other provisions for the benefit of, the Authority
contained in this Indenture shall bind and inure to the
benefit of such successors and assigns and shall bind and
inure to the benefit of any officer, board, commission,
authority, agency or instrumentality to whom or to which
there shall be transferred by or in accordance with law any
right, power or duty of the Authority, or of its successors
or assigns, the possession of which is necessary or
appropriate in order to comply with any such covenants,
stipulations, obligations, agreements or other provisions
hereof.
(C) If any one or more of the covenants or
agreements provided herein on the part of the Authority, the
Trustee or any Paying Agent to be performed should be
contrary to law, then such covenant or covenants or
agreement or agreements, shall be deemed separable from the
remaining covenants and agreements hereof, and shall in no
way affect the validity of the other provisions of this
Indenture or of the Bonds.
(D) From and after the date upon which there is
no Standby Bond Purchase Agreement or Alternate Liquidity
Facility in effect, upon receipt by the Trustee of a
certificate from the Bank stating that all amounts payable
to the Bank under the Standby Bond Purchase Agreement or
Alternate Liquidity Facility, as the case may be, have been
paid in full, all references to the Bank, the Standby Bond
Purchase Agreement or Alternate Liquidity Facility, as the
case may be, in the Agreement, the Mortgage Bonds, this
Indenture, and the Bonds shall be ineffective.
(E) All approvals, consents and actions of the
Trustee under the Indenture, the Bonds and the Financing
Documents may be given or withheld or taken or not taken in
accordance with the direction of the owners of not less than
51% of the principal amount of the Outstanding Bonds (other
than Borrower Bonds).
(F) If the Paying Agent shall be removed and the
duties and obligations of such Paying Agent discharged
pursuant to Section 9.10 hereof, then each and every such
duty and obligation to be performed by such Paying Agent set
forth herein and in the Financing Documents shall be
performed to the same extent and in the same manner by the
Trustee, and each and every reference herein and in the
Financing Documents to the Paying Agent shall refer to and
shall be deemed to refer to the Trustee unless a successor
Paying Agent shall have been appointed.
(G) For purposes hereof the Trustee shall not be
deemed to have knowledge or actual knowledge of any fact or
the occurrence of any event unless and until an officer of
the Trustee's corporate trust department has written notice
thereof.
(H) All references herein to the consent or
approval of the Bank shall only be of effect hereunder to
the extent that the Standby Bond Purchase Agreement or
Alternate Liquidity Facility is in full force and effect and
the Bank is not in default thereunder.
(I) All references herein to the consent or
approval of the Bond Insurer shall only be of effect
hereunder to the extent that the Insurance Policy is in full
force and effect and the Bond Insurer is not in default
thereunder.
ARTICLE II
AUTHORIZATION, TERMS AND ISSUANCE OF BONDS
Section 2.1. Authorization for Indenture. This
Indenture is made and entered into by virtue of and pursuant
to the provisions of the Act. The Authority has ascertained
and hereby determines and declares that the execution and
delivery of this Indenture is necessary to carry out the
powers and duties expressly provided by the Act, that each
and every act, matter, thing or course of conduct as to
which provision is made herein is necessary or convenient in
order to carry out and effectuate the purposes of the
Authority in accordance with the Act and to carry out powers
expressly given thereby, and that each and every covenant or
agreement herein contained and made is necessary, useful or
convenient in order to better secure the Bonds and
necessary, useful or convenient to carry out and effectuate
its corporate purposes under the Act.
Section 2.2. Authorization and Obligation of Bonds;
the Mortgage Bonds. (A) Bonds of the Authority issued
hereunder, each to be entitled Pollution Control Revenue
Bonds (The Connecticut Light and Power Company Project -
1996A Series), shall be subject to the terms, conditions and
limitations established herein. No Bonds may be
authenticated and delivered except in accordance with this
Article. The Authority may, by adoption of a Supplemental
Indenture pursuant to the provisions of Section 10.2 hereof,
confer upon the Bonds issued hereunder such additional
designations as may be necessary or desirable for purposes
of identification consistent with this Indenture; provided,
however, that all Bonds so additionally designated shall
continue to be and remain Bonds for all purposes of this
Indenture, equally entitled to the benefit of the pledge and
lien created hereby. The Borrower has agreed pursuant to
the Agreement that concurrently with the issuance and
delivery of the Bonds by the Authority it will issue the
Mortgage Bonds to the Trustee to secure its obligations
under the Agreement to provide loan payments and to make
payments in respect of the Purchase Price of the Bonds. In
accordance with the terms thereof, the Mortgage Bonds shall
be issued to and registered in the name of the Trustee and
shall not be sold, assigned, pledged or transferred, except
to effect transfer to any successor Trustee hereunder.
Payments of principal of, premium, if any, and interest on
the Mortgage Bonds shall upon receipt by the Trustee be
deemed to constitute payments of corresponding amounts by
the Borrower in respect of the Bonds pursuant to Section
3.1(C) of the Agreement. The Trustee shall hold the
Mortgage Bonds for the benefit of the holders of the Bonds.
(B) All Bonds shall be entitled to the benefit of
the continuing pledge and lien created by this Indenture to
secure the full and final payment of the principal or
Redemption Price, if any, thereof and the interest thereon
and all other amounts due under the Financing Documents.
The Bonds shall be special obligations of the Authority,
payable solely out of the revenues or other receipts, funds
or moneys pledged therefor pursuant to this Indenture and
from any amounts otherwise available under this Indenture
for the payment of the Bonds. Neither the State nor any
municipality thereof shall be obligated to pay the principal
or Redemption Price, if any, of or the interest on the Bonds
and neither the faith and credit nor the taxing power of the
State or any municipality thereof is pledged to pay such
principal, Redemption Price or interest. The Bonds shall
never constitute a debt or liability of the State or any
municipality thereof or bonds issued or guaranteed by the
State or any municipality thereof within the meaning of any
constitutional or statutory limitation.
Section 2.3. Issuance and Terms of the Bonds. (A)
There shall be issued under and secured by this Indenture a
series of Bonds to be designated Pollution Control Revenue
Bonds (The Connecticut Light and Power Company Project -
1996A Series) in the principal amount of $62,000,000. The
Bonds shall be issuable in fully registered form without
coupons and shall be dated as provided in Section 3.1
hereof.
(B) The Bonds shall mature on May 1, 2031 and
bear interest at the rate or rates determined as provided in
this Section 2.3. The interest on Bonds until they come due
shall be payable on the interest payment dates applicable to
the Mode the Bonds are in from time to time. Interest on
overdue principal of any Bond shall bear interest at the
rate last established for that Bond before the principal
became overdue until duly paid or provided for. All of the
Bonds shall be initially in the Weekly Mode.
(C) While in the Daily Mode, Flexible Mode and
Weekly Mode, interest on the Bonds shall be computed on the
basis of actual days elapsed, divided by 365 or 366, as
appropriate. While in the Multiannual Mode and Fixed Rate
Mode, interest on the Bonds shall be computed on the basis
of a 360-day year consisting of twelve (12) 30-day months.
(D) The Bonds shall be numbered from one upward
in consecutive numerical order. Bonds issued in exchange
shall be numbered in such manner as the Trustee and the
Paying Agent in their discretion shall determine.
(E) The principal or Redemption Price, if any, of
the Bonds in the Daily Mode, Flexible Mode and Weekly Mode
as they respectively become due shall be payable by wire or
bank transfer of immediately available funds, and the
principal or Redemption Price, if any, of Bonds in the
Multiannual Mode and Fixed Rate Mode are payable in
immediately available funds, within the continental United
States to the registered owners thereof upon presentation
and surrender of the Bonds as set forth in the forms of
Bonds. Interest and the Purchase Price of the Bonds shall
be payable as set forth in the forms of Bonds.
(F) Book-Entry Only System for the Bonds:
(1) Notwithstanding any provision herein to the
contrary, the provisions of this Section 2.3(F) and the
Representation Letter (as defined below) shall apply with
respect to any Bond registered to Cede & Co. or any other
nominee of The Depository Trust Company ("DTC"), New York,
New York, while the Book-Entry Only System (meaning the
system of registration described in paragraph (2) of this
Section 2.3(F)) is in effect. The Rules applicable to DTC
and its Participants are on file with the Securities and
Exchange Commission. The Book-Entry Only System shall be in
effect for any Mode or Rate Period within the Multiannual
Mode if so specified by the Borrower prior to conversion to
that Mode or Rate Period, subject to the provisions below
concerning termination of the Book-Entry Only System. Until
it revokes such specification in its discretion, the
Borrower hereby specifies that the Book-Entry Only System
shall be in effect while the Bonds are in Daily, Weekly,
Multiannual and Fixed Rate Modes.
(2) The Bonds in or to be in the Book-Entry Only
System shall be issued in the form of one or more
authenticated fully registered Bonds for each separate Mode
or Rate Period in substantially the forms provided for in
this Indenture. Any legend required to be on the Bonds by
DTC may be added by the Trustee or Paying Agent. On the
date of original delivery thereof or date of conversion of
the Bonds to a Mode or Rate Period in which the Book-Entry
Only System is in effect, as applicable, the Bonds shall be
registered in the registry books of the Paying Agent in the
name of Cede & Co., as nominee of The Depository Trust
Company as agent for the Authority in maintaining the
Book-Entry Only System.
WITH RESPECT TO BONDS REGISTERED IN THE REGISTRY
BOOKS KEPT BY THE PAYING AGENT IN THE NAME OF CEDE & CO., AS
NOMINEE OF DTC, THE AUTHORITY, THE PAYING AGENT, THE
BORROWER, THE REMARKETING AGENT AND THE TRUSTEE SHALL HAVE
NO RESPONSIBILITY OR OBLIGATION TO ANY PARTICIPANT (WHICH
MEANS SECURITIES BROKERS AND DEALERS, BANKS, TRUST
COMPANIES, CLEARING CORPORATIONS AND VARIOUS OTHER ENTITIES,
SOME OF WHOM OR THEIR REPRESENTATIVES OWN DTC) OR TO ANY
BENEFICIAL OWNER (WHICH MEANS, WHEN USED WITH REFERENCE TO
THE BOOK-ENTRY ONLY SYSTEM, THE PERSON WHO IS CONSIDERED THE
BENEFICIAL OWNER OF THE BONDS PURSUANT TO THE ARRANGEMENTS
FOR BOOK ENTRY DETERMINATION OF OWNERSHIP APPLICABLE TO DTC)
WITH RESPECT TO THE FOLLOWING: (A) THE ACCURACY OF THE
RECORDS OF DTC, CEDE & CO. OR ANY PARTICIPANT WITH RESPECT
TO ANY OWNERSHIP INTEREST IN THE BONDS, (B) THE DELIVERY TO
OR FROM ANY PARTICIPANT, ANY BENEFICIAL OWNER OR ANY OTHER
PERSON, OTHER THAN DTC, OF ANY NOTICE WITH RESPECT TO THE
OTHER PERSON, OTHER THAN DTC, OF ANY NOTICE WITH RESPECT TO
THE BONDS, INCLUDING ANY NOTICE OF REDEMPTION OR TENDER
(WHETHER MANDATORY OR OPTIONAL), OR (C) THE PAYMENT TO ANY
PARTICIPANT, ANY BENEFICIAL OWNER OR ANY OTHER PERSON, OTHER
THAN DTC, OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OR
PREMIUM, IF ANY, OR INTEREST ON THE BONDS.
The Paying Agent shall pay all principal of and
premium, if any, and interest on the Bonds only to or upon
the order of DTC, and all such payments shall be valid and
effective fully to satisfy and discharge the Authority's
obligations with respect to the principal of and premium, if
any, and interest on Bonds to the extent of the sum or sums
so paid. No person other than DTC shall be entitled to
receive an authenticated Bond evidencing the obligation of
the Authority to make payments of principal and premium, if
any, and interest pursuant to this Indenture. Upon delivery
by DTC to the Paying Agent of written notice to the effect
that DTC has determined to substitute a new nominee in place
of Cede & Co., the words "Cede & Co." in this Indenture
shall refer to such new nominee of DTC.
The Authority, the Borrower, the Trustee and the
Paying Agent shall be entitled to treat the registered owner
of a Bond (initially, DTC or its nominee) as the absolute
owner thereof for all purposes of the Indenture and any
applicable laws, notwithstanding any notice to the contrary
received by any of them. So long as all Bonds are
registered in the name of DTC or its nominee or any
qualified successor, the Borrower and the Paying Agent shall
cooperate with DTC or its nominee or any qualified successor
in effecting payment of the principal of, redemption
premium, if any, and interest on the Bonds by arranging for
payment in such manner that funds for such payments are
properly identified and are made to DTC when due.
(3) Upon receipt by the Trustee or the Paying
Agent of written notice from DTC to the effect that DTC is
unable or unwilling to discharge its responsibilities, the
Authority shall issue and the Paying Agent shall transfer
and exchange Bonds as requested by DTC in appropriate
amounts and in authorized denominations, and whenever DTC
requests the Authority, the Paying Agent and the Trustee to
do so, the Trustee, the Paying Agent and the Authority will,
at the expense of the Borrower, cooperate with DTC in taking
appropriate action after reasonable notice (A) to arrange
for a substitute bond depository willing and able upon
reasonable and customary terms to maintain custody of the
Bonds or (B) to make available for transfer and exchange
Bonds registered in whatever name or names and in whatever
authorized denominations as DTC shall designate.
(4) In the event the Borrower determines that the
Beneficial Owners should be able to obtain Bond
certificates, the Borrower may so notify DTC, the Paying
Agent and the Trustee, whereupon DTC will notify the
Participants of the availability through DTC of Bond
certificates. In such event, the Authority shall issue and
the Paying Agent shall transfer and exchange Bond
certificates as requested by DTC in appropriate amounts and
in authorized denominations. Whenever DTC requests the
Paying Agent to do so, the Paying Agent will cooperate with
DTC in taking appropriate action after reasonable notice to
make available for transfer and exchange Bonds registered in
whatever name or names and in whatever authorized
denominations as DTC shall designate.
(5) Notwithstanding any other provisions of this
Indenture to the contrary, so long as any Bond is registered
in the name of Cede & Co., as nominee of DTC, all payments
with respect to the principal of, Purchase Price, premium,
if any, and interest on such Bond and all notices with
respect to such Bond shall be made and given, respectively,
to DTC as provided in the Letter of Representation (the
"Representation Letter"), the form of which is included as
Appendix B attached to this Indenture. The form of such
Representation Letter may be modified in a manner consistent
with the provisions of this Indenture upon conversion or
reconversion of the Bonds to a Mode or Rate Period in which
the Book-Entry Only System is in effect.
(6) Notwithstanding any provision in Section
2.3(G)(6) or Section 2.4 to the contrary, so long as any of
the Bonds outstanding are held in the Book-Entry Only
System, if less than all of such Bonds are to be converted
or redeemed upon any conversion or redemption of Bonds
hereunder, the particular Bonds or portions of Bonds to be
converted or redeemed shall be selected by DTC in such
manner as DTC may determine.
(7) So long as the Book-Entry Only System is in
effect, a Beneficial Owner who elects to have its Bonds
purchased or tendered pursuant to the Indenture shall effect
delivery by causing a Participant to transfer the Beneficial
Owner's interest in the Bonds pursuant to the Book-Entry
Only System. The requirement for physical delivery of Bonds
in connection with a demand for purchase or a mandatory
purchase will be deemed satisfied when the ownership rights
in the Bonds are transferred in accordance with the
Book-Entry Only System.
(8) So long as the Book-Entry Only System is in
effect, the Remarketing Agent shall communicate to DTC
information concerning the purchasers of Tendered Bonds as
may be necessary or appropriate, and, notwithstanding any
provision in the Representation Letter to the contrary, the
Remarketing Agent shall continue to remit to the Paying
Agent interest rate determination information pursuant to
the terms of this Indenture.
Notwithstanding any provision herein to the contrary,
the Trustee and the Paying Agent may comply with the
provisions of the Letter of Representation or similar
document required by DTC or any successor securities
depository in order to maintain the Book-Entry Only System
for the Bonds.
(G) The Bonds shall bear interest as follows:
(1) Daily Mode.
(a) Determination of Daily Rates. The
Remarketing Agent shall determine the Daily Rate as provided
in the form of Daily Bonds and shall notify the Paying Agent
thereof electronically or by telephone not later than 1:00
P.M. on the date so determined, and if by telephone,
promptly confirmed in writing; provided that no notice need
be given if the Daily Rate in effect for the previous Rate
Period is to be the Daily Rate for such Rate Period. The
Paying Agent shall give written notice of the Daily Rate to
the Trustee, the Bank, and the Borrower. Each determination
and redetermination of the Daily Rate shall be conclusive
and binding on the Authority, the Trustee, the Paying Agent,
the Bank, the Borrower and the Bondowners.
(b) Conversions from Daily Mode. The Bonds
in the Daily Mode or any portion of such Bonds may be
converted on the first Business Day of any calendar month at
the election of the Borrower from the Daily Mode to a
Weekly, Multiannual, Flexible, or Fixed Rate Mode, as
provided in the form of Daily Bonds, so long as no Default
hereunder exists as certified to the Trustee by an
Authorized Representative of the Borrower; provided,
however, that the prior written consent of the Authority
shall be required in connection with any conversion of the
Bonds, in whole or in part, from the Daily Mode to either
the Multiannual Mode or the Fixed Rate Mode. Any Bonds to
be converted to the Weekly or Flexible Mode shall be
supported by a Standby Bond Purchase Agreement, except in
the case of a failed optional conversion which causes the
Bonds to automatically convert to the Flexible Mode with a
one day Rate Period. Any Bonds to be converted to the
Multiannual or Fixed Rate Modes shall not be supported by a
Standby Bond Purchase Agreement. If Bonds are to be
converted to the Flexible or Weekly Mode, no such conversion
shall be effective unless the Borrower shall have delivered
to the Paying Agent by 11:00 A.M. on the Conversion Date a
Standby Bond Purchase Agreement in the minimum required face
amount for the applicable Mode as provided in Section 3.12
of the Agreement and with an expiration date not earlier
than one year from the Conversion Date. Written notice of a
conversion of Bonds from the Daily Mode shall be given by
the Borrower to the Authority, the Trustee, the Bank, the
Paying Agent, the Remarketing Agent, Moody's and S&P not
fewer than forty-five (45) nor more than sixty (60) days
prior to the proposed Conversion Date, which date shall be
specified by the Borrower in such notice. Notice of a
conversion of Bonds from the Daily Mode and the mandatory
tender of Bonds for purchase on such Conversion Date shall
be given to the owners of such Bonds as provided in Section
2.3(G)(1)(d)(ii) hereof and the form of Daily Bonds.
Conversions to the Fixed Rate Mode shall also be governed by
subsection 2.3(G)(5) hereof.
Notwithstanding the foregoing, if the
preconditions to conversion to another Mode established by
the preceding paragraph are not met by 11:00 A.M. on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee and the Remarketing Agent, and the Bonds shall be
subject to mandatory tender as provided in Section
2.3(G)(1)(d)(ii) hereof. In such event, the Paying Agent
shall by 1:00 P.M. on the proposed Conversion Date take such
action as is specified by the Standby Bond Purchase
Agreement to provide immediately available funds by 3:00
P.M. on the proposed Conversion Date in an amount which is
sufficient to pay the Purchase Price on such date on all
Bonds that were to have been converted. In no event shall
the failure of Bonds to be converted to another Mode for any
reason be, in and of itself, deemed to be a Default or Event
of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made
available as provided above.
(c) Bondowners' Option to Tender Bonds in
Daily Mode. Bonds in the Daily Mode are subject to tender,
at the election of the owner thereof, in the manner and
subject to the limitations described in the form of Daily
Bonds. The owners of Tendered Bonds shall receive on the
Delivery Date 100% of the principal amount of the Tendered
Bonds plus accrued interest to the Purchase Date, provided
that if the Purchase Date is an Interest Payment Date,
accrued interest shall be paid separately, and not as part
of the Purchase Price on such date. The purchase of
Tendered Bonds shall not extinguish the debt represented by
such Bonds which shall remain Outstanding and unpaid under
this Indenture.
The Paying Agent shall accept all Tendered
Bonds properly tendered to it for purchase as provided in
the form of Daily Bonds and in this Section 2.3(G)(1)(c), or
for so long as the Bonds are in the Book-Entry Only System,
as provided in Section 2.3(F); provided, however, that the
Paying Agent shall not accept any Tendered Bonds and the
Purchase Price therefor shall not be paid if at the time of
tender or on the Purchase Date the principal of the Bonds
shall have been accelerated pursuant to Section 8.1 hereof
and such acceleration shall not have been annulled.
The Bondowner's Election Notice delivered to
the Paying Agent as provided in the form of Daily Bonds on
the Purchase Date of Tendered Bonds shall be in
substantially the form provided in the form of Daily Bond or
such other form as the Paying Agent may accept.
Immediately upon receipt of notice of a
tender of Bonds under this section, the Paying Agent shall
notify the Remarketing Agent, the Borrower, the Bank and the
Trustee by telephone promptly confirmed in writing of the
amount of Tendered Bonds and the specified Purchase Date.
(d) Events Requiring Mandatory Tender of
Daily Bonds.
(i) Expiration of Standby Bond Purchase
Agreement Without Substitution or Replacement; Substitution
of Standby Bond Purchase Agreement. The Bonds in the Daily
Mode are subject to mandatory tender for purchase as
provided in the form of Daily Bonds in connection with the
expiration or termination of the Standby Bond Purchase
Agreement (other than in connection with the conversion to a
new Mode) or in connection with the substitution of a
Standby Bond Purchase Agreement, unless the Trustee receives
verbal notice from Moody's (to be followed by written
confirmation at the time of substitution), if the Bonds are
then rated by Moody's, and written notice from S&P, if the
Bonds are then rated by S&P, that such substitution will not
result in a reduction or withdrawal (excluding a withdrawal
or reduction resulting from a change in Modes) of the
ratings on the Bonds. At least forty (40) days prior to the
mandatory tender date, the Trustee shall give notice to the
Paying Agent as to whether or not it has received the
notices described in the immediately preceding sentence from
Moody's and S&P, and if the Trustee has not received such
notices or if the Standby Bond Purchase Agreement is
expiring or terminating without substitution or replacement,
the Paying Agent shall give notice to the Bondowners of
mandatory tender of the Bonds pursuant to this Section
2.3(G)(1)(d)(i) at least thirty (30) days prior the
mandatory tender date.
(ii) Change in Mode. In the event that Bonds
in the Daily Mode are converted to another Mode, such Bonds
are subject to mandatory tender for purchase upon not less
than thirty (30) days' prior written notice from the Paying
Agent to the Bondowners as provided in the form of Daily
Bonds, which notice shall state that the Bonds are subject
to mandatory tender for purchase.
(2) Flexible Mode.
(a) Determination of Flexible Rates. The
Remarketing Agent shall determine the Flexible Rate as
provided in the form of Flexible Bonds and shall notify the
Paying Agent thereof electronically or by telephone not
later than 1:00 P.M. on the Effective Date, and if by
telephone, promptly confirmed in writing. The Paying Agent
shall give written notice of the Flexible Rate to the
Trustee, the Bank and the Borrower. Each determination and
redetermination of the Flexible Rate shall be conclusive and
binding on the Authority, the Trustee, the Paying Agent, the
Bank, the Borrower and the Bondowners. If the Remarketing
Agent fails for any reason to determine the Flexible Rate or
Rate Period for any Bond while in the Flexible Mode
(including any failure to determine the Flexible Rate upon a
failed conversion), or if for any reason such manner of
determination shall be determined to be invalid or
unenforceable, that Bond shall be deemed to be in a Rate
Period of one day and the Flexible Rate shall be equal to
100% of the Prime Commercial Paper A-1/P-1 (30 days) rate
shown in the table captioned "Short-Term Tax-Exempt Yields"
in the edition of The Bond Buyer published on the day on
which such rate is determined or, if such rate is not
published on that day, the most recent publication of such
rate.
In determining the Flexible Rate and
remarketing Bonds in the Flexible Mode, there shall not be
offered (1) Rate Periods greater than the maximum number of
days of interest coverage under the Standby Bond Purchase
Agreement at the Maximum Interest Rate less eight (8) days
or extending beyond the expiration or termination date of
the Standby Bond Purchase Agreement, if any, less eight (8)
days, or (2) Rate Periods applicable to Bonds to be
converted extending beyond the day preceding any scheduled
conversion of the Bonds to another Mode or the final
maturity of the Bonds. In connection with the determination
of the Flexible Rate and the remarketing of Bonds in the
Flexible Mode, the Paying Agent shall follow any written
directions of an Authorized Representative of the Borrower,
provided such instructions are not inconsistent with the
preceding clauses (1) and (2), as to the Rate Periods to be
made available. The Borrower, the Trustee, the Paying Agent
and the Remarketing Agent shall cooperate to ensure
compliance with this requirement.
(b) Conversions from the Flexible Mode. The
Bonds in the Flexible Mode, or any portion of such Bonds,
may be converted at the election of the Borrower from the
Flexible Mode to the Daily, Weekly, Multiannual or Fixed
Rate Mode as provided in the form of the Flexible Bonds, so
long as no Default hereunder exists as certified to the
Trustee by an Authorized Representative of the Borrower;
provided, however, that the prior written consent of the
Authority shall be required in connection with any
conversion of the Bonds, in whole or in part, from the
Flexible Mode to either the Multiannual Mode or the Fixed
Rate Mode. Any Bonds to be converted to the Daily or Weekly
Mode shall be supported by a Standby Bond Purchase
Agreement. Any Bonds to be converted to the Multiannual or
Fixed Rate Modes shall not be supported by a Standby Bond
Purchase Agreement. If Bonds are to be converted to the
Daily or Weekly Mode, no such conversion shall be effective
unless the Borrower shall have delivered to the Paying Agent
by 11:00 A.M. on the Conversion Date a Standby Bond Purchase
Agreement in the minimum required face amount for the
applicable Mode as provided in Section 3.12 of the
Agreement, and with an expiration date not earlier than one
year from the Conversion Date. Written notice of a
conversion from the Flexible Mode shall be given by the
Borrower to the Authority, the Trustee, the Paying Agent,
the Bank, the Remarketing Agent, Moody's and S&P not fewer
than thirty (30) nor more than sixty (60) days before the
Conversion Date, which date shall be specified by the
Borrower in such notice and shall not be earlier than the
day following the expiration of the Rate Period with the
longest remaining term then in effect for the Bonds to be
converted. Prior to the proposed Conversion Date, the
Remarketing Agent shall not offer Rate Periods for the Bonds
to be converted extending beyond the proposed Conversion
Date. Conversions to the Fixed Rate Mode shall also be
governed by subsection 2.3(G)(5).
Notwithstanding the foregoing, if the
preconditions to conversion to a new Mode established by the
preceding paragraph are not met by 11:00 A.M. on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee and the Remarketing Agent. In such event, the
Paying Agent shall by 1:00 P.M. on the proposed Conversion
Date take such action as is specified by the Standby Bond
Purchase Agreement to provide immediately available funds by
3:00 P.M. on the proposed Conversion Date in an amount which
is sufficient to pay the Purchase Price on such date of all
Bonds that were to have been converted. In no event shall
the failure of Bonds to be converted to another Mode for any
reason be deemed to be, in and of itself, a Default or Event
of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made
available as provided above.
(c) Mandatory Tender for Purchase. On each
Effective Date, Bonds in the Flexible Mode are subject to
mandatory tender for purchase as provided in the form of
Flexible Bonds.
(3) Weekly Mode.
(a) Determination of Weekly Rates. The
Remarketing Agent shall determine the Weekly Rate as
provided in the form of Weekly Bonds and shall notify the
Paying Agent thereof electronically or by telephone not
later than 4:00 P.M. on the Business Day preceding the
Effective Date, and if by telephone, promptly confirmed in
writing. The Paying Agent shall give written notice of the
Weekly Rate to the Trustee, the Bank, and the Borrower.
Each determination and redetermination of the Weekly Rate
shall be conclusive and binding on the Authority, the
Trustee, the Paying Agent, the Bank, the Borrower and the
Bondowners.
(b) Conversions from Weekly Mode. The Bonds
in the Weekly Mode or any portion of such Bonds may be
converted on the first Business Day of any calendar month at
the election of the Borrower from the Weekly Mode to a
Daily, Multiannual, Flexible, or Fixed Rate Mode, as
provided in the form of Weekly Bonds, so long as no Default
hereunder exists as certified to the Trustee by an
Authorized Representative of the Borrower; provided,
however, that the prior written consent of the Authority
shall be required in connection with any conversion of the
Bonds, in whole or in part, from the Weekly Mode to either
the Multiannual Mode or the Fixed Rate Mode. Any Bonds to
be converted to the Daily or Flexible Mode shall be
supported by a Standby Bond Purchase Agreement, except in
the case of a failed optional conversion which causes the
Bonds to automatically convert to the Flexible Mode with a
one day Rate Period. Any Bonds to be converted to the
Multiannual or Fixed Rate Modes shall not be supported by a
Standby Bond Purchase Agreement. If Bonds are to be
converted to the Daily or Flexible Mode, no such conversion
shall be effective unless the Borrower shall have delivered
to the Paying Agent by 11:00 A.M. on the Conversion Date a
Standby Bond Purchase Agreement in the minimum required face
amount for the applicable Mode as provided in Section 3.12
of the Agreement and with an expiration date not earlier
than one year from the Conversion Date. Written notice of a
conversion of Bonds from the Weekly Mode shall be given by
the Borrower to the Authority, the Trustee, the Bank, the
Paying Agent, the Remarketing Agent, Moody's and S&P not
fewer than forty-five (45) nor more than sixty (60) days
prior to the proposed Conversion Date, which date shall be
specified by the Borrower in such notice. Notice of a
conversion of Bonds from the Weekly Mode and the mandatory
tender of Bonds for purchase on such Conversion Date shall
be given to the owners of such Bonds as provided in Section
2.3(G)(3)(d)(ii) hereof and the form of Weekly Bonds.
Conversions to the Fixed Rate Mode shall also be governed by
subsection 2.3(G)(5) hereof.
Notwithstanding the foregoing, if the
preconditions to conversion to another Mode established by
the preceding paragraph are not met by 11:00 A.M. on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee and the Remarketing Agent, and the Bonds shall be
subject to mandatory tender as provided in Section
2.3(G)(3)(d)(ii) hereof. In such event, the Paying Agent
shall by 12:30 P.M. on the proposed Conversion Date take
such action as is specified by the Standby Bond Purchase
Agreement to provide immediately available funds by 3:00
P.M. on the proposed Conversion Date in an amount which is
sufficient to pay the Purchase Price on such date on all
Bonds that were to have been converted. In no event shall
the failure of Bonds to be converted to another Mode for any
reason be, in and of itself, deemed to be a Default or Event
of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made
available as provided above.
(c) Bondowners' Option to Tender Bonds in
Weekly Mode. Bonds in the Weekly Mode are subject to
tender, at the election of the owner thereof, in the manner
and subject to the limitations described in the form of
Weekly Bonds. The owners of Tendered Bonds shall receive on
the Delivery Date 100% of the principal amount of the
Tendered Bonds plus accrued interest to the Purchase Date,
provided that if the Purchase Date is an Interest Payment
Date, accrued interest shall be paid separately, and not as
part of the Purchase Price on such date. The purchase of
Tendered Bonds shall not extinguish the debt represented by
such Bonds which shall remain Outstanding and unpaid under
this Indenture.
The Paying Agent shall accept all Tendered
Bonds properly tendered to it for purchase as provided in
the form of Weekly Bonds and in this Section 2.3(G)(3)(c),
or for so long as the Bonds are in the Book-Entry Only
System, as provided in Section 2.3(F); provided, however,
that the Paying Agent shall not accept any Tendered Bonds
and the Purchase Price therefor shall not be paid if at the
time of tender or on the Purchase Date the principal of the
Bonds shall have been accelerated pursuant to Section 8.1
hereof and such acceleration shall not have been annulled.
The Bondowner's Election Notice delivered to
the Paying Agent as provided in the form of Weekly Bonds
prior to the Purchase Date of Tendered Bonds shall be in
substantially the form provided in the form of Weekly Bond
or such other form as the Paying Agent may accept.
As soon as practicable after receiving notice
of a tender of Bonds under this section, the Paying Agent
shall notify the Remarketing Agent, the Borrower, the Bank
and the Trustee by telephone promptly confirmed in writing
of the amount of Tendered Bonds and the specified Purchase
Date.
(d) Events Requiring Mandatory Tender of
Weekly Bonds.
(i) Expiration of Standby Bond Purchase
Agreement Without Substitution or Replacement; Substitution
of Standby Bond Purchase Agreement. The Bonds in the Weekly
Mode are subject to mandatory tender for purchase as
provided in the form of Weekly Bonds in connection with the
expiration or termination of the Standby Bond Purchase
Agreement (other than in connection with the conversion to a
new Mode) or in connection with the substitution of a
Standby Bond Purchase Agreement, unless the Trustee receives
verbal notice from Moody's (to be followed by written
confirmation at the time of substitution), if the Bonds are
then rated by Moody's, and written notice from S&P, if the
Bonds are then rated by S&P, that such substitution will not
result in a reduction or withdrawal (excluding a withdrawal
or reduction resulting from a change in Modes) of the
ratings on the Bonds. At least forty (40) days prior to the
mandatory tender date, the Trustee shall give notice to the
Paying Agent as to whether or not it has received the
notices described in the immediately preceding sentence from
Moody's and S&P, and if the Trustee has not received such
notices or if the Standby Bond Purchase Agreement is
expiring or terminating without substitution or replacement,
the Paying Agent shall give notice to the Bondowners of
mandatory tender of the Bonds pursuant to this Section
2.3(G)(3)(d)(i) at least thirty (30) days prior the
mandatory tender date.
(ii) Change in Mode. In the event that Bonds
in the Weekly Mode are converted to another Mode, such Bonds
are subject to mandatory tender for purchase upon not less
than thirty (30) days' prior written notice from the Paying
Agent to the Bondowners as provided in the form of Weekly
Bonds, which notice shall state that the Bonds are subject
to mandatory tender for purchase.
(4) Multiannual Mode.
(a) Determination of Multiannual Rate. The
Remarketing Agent shall determine the Multiannual Rate as
provided in the form of Multiannual Bonds and shall notify
the Paying Agent thereof electronically or by telephone not
later than 2:00 P.M. two (2) Business Days preceding the
Effective Date, and if by telephone, promptly confirmed in
writing. The Paying Agent shall give written notice of the
Multiannual Rate to the Trustee, the Bank, and the Borrower.
Each determination and redetermination of the Multiannual
Rate shall be conclusive and binding on the Authority, the
Trustee, the Paying Agent, the Bank, the Borrower and the
Bondowners.
(b) Conversions from Multiannual Mode and Changes
of Rate Period. The Bonds in the Multiannual Mode or any
portion of such Bonds may be converted on any Effective
Date, or on any applicable general optional redemption date
provided that the then holder of such Bonds is paid the
appropriate redemption price, at the election of the
Borrower, from the Multiannual Mode to the Daily, Weekly,
Flexible or Fixed Rate Mode and may be converted within the
Multiannual Mode to a new Rate Period with the same or a
different length as provided in the form of Multiannual
Bonds so long as no Default hereunder exists as certified to
the Trustee by an Authorized Representative of the Borrower.
Any Bonds in or to be converted to the Daily, Weekly or
Flexible Mode shall be supported by a Standby Bond Purchase
Agreement, except in the case of a failed optional
conversion which causes the Bonds to automatically convert
to the Flexible Mode with a one day Rate Period. Any Bonds
to be converted to the Fixed Rate Mode shall not be
supported by a Standby Bond Purchase Agreement. If Bonds
are to be converted to the Daily, Flexible or Weekly Mode,
no such conversion shall be effective unless the Borrower
shall have delivered to the Paying Agent by 11:00 A.M. on
the Conversion Date a Standby Bond Purchase Agreement in the
minimum required face amount for the applicable Mode as
provided in Section 3.12 of the Agreement and with an
expiration date not earlier than one year from the
Conversion Date. Written notice of a change in Mode or Rate
Period within the Multiannual Mode shall be given by the
Borrower to the Authority, the Trustee, the Paying Agent,
the Remarketing Agent, Moody's and S&P (and if Bonds
affected thereby are in the Book-Entry Only System, to DTC)
not fewer than thirty (30) nor more than sixty (60) days
prior to the proposed Conversion Date. Conversion to the
Fixed Rate Mode shall also be governed by Section 2.3(G)(5).
Notwithstanding the foregoing, if the
preconditions to conversion to another Mode or a new Rate
Period within the Multiannual Mode established by the
preceding paragraph are not met by 11:00 A.M. on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee and the Remarketing Agent. The Borrower shall by
1:00 P.M. on the proposed Conversion Date deliver to the
Paying Agent sufficient funds to pay the Purchase Price. In
no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of
itself, a Default or Event of Default under this Indenture,
so long as the Purchase Price of all Bonds required to be
purchased is made available as provided above.
(c) Mandatory Tender for Purchase. On each
Effective Date, Bonds in the Multiannual Mode are subject to
mandatory tender for purchase as provided in the form of
Multiannual Bonds. Notwithstanding the foregoing, in the
event that the Rate Period to take effect on the Effective
Date for Bonds in the Multiannual Mode is to be of the same
duration as the Rate Period ending on the day prior to said
Effective Date for such Bonds, such Bonds need not be
tendered by the owner thereof if such owner shall have given
irrevocable written or telephone notice (promptly confirmed
by telecopier), not less than 10 Business Days' prior to
said Effective Date to the Paying Agent of its election not
to tender ("Notice of Election to Retain Bonds") the Bonds
for purchase. Notices of Election to Retain Bonds received
after 2:00 P.M. on any Business Day shall be deemed to be
received on the next succeeding Business Day. A Notice of
Election to Retain Bonds shall be in the form provided in
the form of Multiannual Bonds and must specify the amount of
Bonds to be retained, which amount may represent the
principal amount of such Owner's Bonds in whole or in part,
which amount shall be in an authorized denomination. Prior
to the close of business on the 10th Business Day preceding
the Effective Date, the Paying Agent shall notify the
Remarketing Agent of the Notices of Election to Retain Bonds
received by the Paying Agent in proper form and timely
fashion and the aggregate amount of Bonds that are to be
retained upon the Effective Date pursuant to such Notices of
Election to Retain Bonds. The Paying Agent's determination
of whether or not a Notice of Election to Retain Bonds has
been properly completed and delivered in compliance with the
requirements set forth herein shall be binding on the
Bondowner submitting the notice.
(5) Conversion to Fixed Rate Mode. The interest
rate on any portion of the Bonds may be converted by the
Borrower to the Fixed Rate as provided in the form of the
Daily, Flexible, Weekly and Multiannual Bonds, Sections
2.3(G)(1), (2), (3) and (4) and this Section 2.3(G)(5);
provided, however, that the prior written consent of the
Authority shall be required in connection with any
conversion of the Bonds, in whole or in part, from either
the Daily, Weekly or Flexible Modes to the Fixed Rate Mode.
Upon receipt of the notice of conversion to the Fixed Rate
Mode from the Borrower, the Remarketing Agent shall
determine the Fixed Rate not later than 2:00 P.M. two (2)
Business Days before the Conversion Date. The Fixed Rate
shall be the lowest rate which in the judgment of the
Remarketing Agent, on the basis of prevailing financial
market conditions, would permit the sale of the Bonds being
so converted at par plus accrued interest as of the
Effective Date on the basis of their terms as converted.
On the date of determination thereof, the
Remarketing Agent shall notify the Paying Agent, the
Borrower and the Trustee by telephone, confirmed in writing,
of the Fixed Rate. The Trustee shall promptly notify the
Authority in writing of the Fixed Rate. The determination
of the Fixed Rate shall be conclusive and binding on the
Authority, the Trustee, the Paying Agent, the Borrower and
the Bondowners. The Fixed Rate shall become effective on
the Fixed Rate Conversion Date and shall remain in effect
for the remaining term of the Bonds.
Notwithstanding the foregoing, if the
preconditions to conversion to the Fixed Rate Mode
established by this Section 2.3(G)(5) are not met by 11:00
A.M. on the Conversion Date, the Paying Agent shall
immediately notify the Trustee by telephone, promptly
confirmed in writing. Upon such notice, the Trustee shall
deem the proposed conversion to have failed and shall
proceed as such under Section 2.3(G)(1)(b), (2)(b), (3)(b)
or (4)(b), whichever is applicable.
(6) Partial Conversion
(a) General. The Bonds may be converted in whole
or in part to the Daily Mode, the Flexible Mode, the Weekly
Mode, any Rate Period in the Multiannual Mode or the Fixed
Rate Mode upon compliance with the conditions set forth in
this Indenture. In the event the Bonds are in (or are to be
converted to) more than one Mode, the provisions of this
Indenture relating to Bonds in a particular Mode (or to be
converted to a particular Mode) shall apply only to the
Bonds in (or to be converted to) such Mode and, where
necessary or appropriate, any reference in this Indenture to
the Bonds shall be construed to mean the Bonds in (or to be
converted to) such Mode and any reference to Standby Bond
Purchase Agreement or Bank shall be construed to mean the
Standby Bond Purchase Agreement supporting the Bonds in (or
to be converted to) such Mode and the Bank providing that
Standby Bond Purchase Agreement.
(b) Selection. In the event of any partial
conversion of the Bonds to a new Mode, the Bonds to be
converted shall be selected by the Paying Agent from Bonds
in the Mode selected by the Borrower. The particular Bonds
(or portions thereof) to be converted shall be selected by
the Paying Agent from all the Bonds in the Mode (or in the
case of Bonds in the Multiannual Mode, the Rate Period) from
which Bonds are to be converted. The principal amount of
Bonds to be converted shall be determined so that all of the
Bonds shall be in the denominations required under Section
3.2 hereof for the particular Modes. Bonds (or portions
thereof) in the Daily or Weekly Mode shall be selected by
lot and the selection of the Bonds to be converted shall
occur prior to the date notice of mandatory tender is sent
by the Paying Agent pursuant to Section 2.3(G)(1)(d) or
Section 2.3(G)(3)(d), as applicable.
(c) Amendment. Provisions of this Indenture may
be amended to permit or facilitate partial conversions of
the Bonds without Bondowner consent in accordance with
Section 10.2 hereof.
(7) Interest on Overdue Principal. Any overdue
principal of any Bond shall bear interest after its maturity
or acceleration at the last interest rate in effect on that
Bond. Whenever a Bond is deemed to be in the Flexible Mode
with a Rate Period of one day under the terms of this
Indenture (as a result of a failure by the Remarketing Agent
to determine a Flexible Rate or Rate Period, or if such
determination is determined to be invalid or unenforceable)
it shall not be necessary for the Trustee or the Paying
Agent to authenticate and deliver a new Bond certificate to
evidence such Flexible Mode Bond with a one day Rate Period,
but such Mode and Rate Period shall be reflected in the
records of the Paying Agent.
(8) Conditions Precedent to Alternate Interest
Rate Period. Subject to the provisions set forth in this
Section 2.3, a change to a new Mode for any Bonds shall not
take place unless the Borrower shall deliver, or cause to be
delivered, to the Trustee, the Paying Agent, the Bank, the
Authority and the Remarketing Agent on the Effective Date of
the alternate Mode an opinion of Bond Counsel. If such
opinion of Bond Counsel is not received on the proposed
Effective Date of such alternate Mode, then all such Bonds
shall be purchased on such date as provided in this
Indenture and all such Bonds shall continue to be subject to
the current Mode. The opinion of Bond Counsel shall state
that the action proposed to be taken is authorized or
permitted by the Indenture and the Act and will not
adversely affect the exclusion of interest on the Bonds from
gross income for purposes of federal income taxation under
Section 103 of the Code. Delivery of such an opinion of
Bond Counsel will also be required as a condition precedent
to an adjustment from one Rate Period in the Flexible Mode
to a Rate Period of a different duration from the prior Rate
Period within the Flexible Mode, or from one Rate Period in
the Multiannual Mode to a Rate Period of a different
duration than the prior Rate Period within the Multiannual
Mode, on the Effective Date of such new Flexible Rate or
Multiannual Rate Period. Notwithstanding the foregoing, the
requirement of delivery of such Bond Counsel opinion shall
be waived upon delivery of an opinion of Bond Counsel to the
effect that changes in Modes (other than a change to a Fixed
Rate Mode), adjustments from one Rate Period in the Flexible
Mode to a Rate Period of a different duration within the
Flexible Mode or adjustments from one Rate Period in the
Multiannual Mode to a Rate Period of a different duration
within the Multiannual Mode, as appropriate, no longer
require delivery of such aforesaid opinion of Bond Counsel.
(9) Bank Bonds. Bonds purchased with moneys
provided under the Standby Bond Purchase Agreement shall be
acquired for the benefit of the Bank, and the Bank shall be
the beneficial owner of such Bonds. Such Bonds shall
constitute "Bank Bonds" and shall be held by the Paying
Agent as agent for the Bank unless and until (A) the Paying
Agent has received a certificate from the Bank authorizing
the release of such Bank Bonds and stating that the
commitment of the Bank to purchase Bonds has been increased
to cover the principal of and interest to the extent
required hereunder and under the Agreement on the Bank Bonds
to be released or (B) such Bank Bonds are transferred to the
Borrower and subsequently cancelled. Pending transfer to a
purchaser (including, but not limited to, the Borrower),
Bank Bonds are not transferable or deliverable to any party
except the Bank. The Remarketing Agent shall continue to
use its best efforts to arrange for the sale of any Bank
Bonds at a price equal to the principal amount thereof plus
accrued interest. The Bank shall be entitled to receive all
payments of principal of and interest on Bank Bonds,
including interest accrued at the Bank Rate for the period
during which such Bank Bonds are held by the Bank. The Bank
shall release Bank Bonds upon payment to the Bank of all
amounts due and owing to the Bank.
Notwithstanding anything to the contrary in this
paragraph, if and for so long as the Bonds are to be held
under the book entry only system in accordance with Section
2.3(F), the registration requirements under this Section
2.3(G)(9) shall be deemed satisfied if Bank Bonds are (1)
registered in the name of DTC or its nominee in accordance
with Section 2.3(F) hereof; (2) credited on the books of DTC
to the account of the Paying Agent (or its nominee); and (3)
further credited on the books of the Trustee (or such
nominee) to the account of the Bank (or its designee).
(10) Bank Rate. Notwithstanding anything in the
Bonds or in this Indenture to the contrary, Bank Bonds shall
accrue interest at the Bank Rate from and including the date
such Bonds are purchased with moneys provided by the Standby
Bond Purchase Agreement until (but not including) the day
such Bank Bonds are remarketed pursuant to Section 9.19 and
delivered to the purchasers thereof or purchased by the
Borrower or the day the principal of such Bank Bonds is paid
at maturity or upon acceleration or upon redemption.
Section 2.4. Redemption of Bonds. (A) General
Optional Redemption. The Bonds are redeemable as provided
in each form of Bond prior to maturity at the option of the
Authority in accordance with the written direction of the
Borrower to the Authority and the Trustee of its intention
to prepay amounts due under the Agreement pursuant to
Section 8.1(A) thereof. Such redemption of Bonds, other
than Bonds in the Flexible Mode, shall be in accordance with
the terms of the Bonds (provided that, if less than all the
Bonds Outstanding shall be called for redemption, the
Borrower shall designate (to the extent not otherwise
prohibited) the amount of Bonds and Mode to be redeemed, and
if less than all of the Bonds Outstanding in any Mode shall
be called for redemption, Bonds to be so redeemed in any
Mode shall be selected by the Paying Agent by lot or in any
customary manner of selection as determined by the Paying
Agent) at the redemption prices plus accrued interest to the
redemption date as described in the forms of Bonds. For
purposes of this Section, references to the term Mode shall
be deemed to include different Rate Periods within the
Multiannual Mode. Redemption of Bonds in the Flexible Mode
pursuant to this Section shall be only on an Effective Date
for the Bonds to be redeemed at the then applicable Purchase
Price for such Bonds.
(B) Extraordinary Optional Redemption. In
addition, at the option of the Authority, which option shall
be exercised upon the giving of notice by the Borrower of
its intention to prepay amounts due under the Agreement
pursuant to Section 8.1(B) thereof, the Outstanding Bonds in
the Multiannual or Fixed Rate Modes shall be subject to
redemption prior to maturity as a whole at any time at the
redemption price of 100% of the principal amount thereof
plus accrued interest to the date of redemption, if (i) any
one or more of the events of casualty to or condemnation of
the Project or the Plant, change in law, or other events
specified in Section 8.1(B) of the Agreement shall have
occurred, as evidenced in each case by the filing with the
Trustee of a certificate of an Authorized Representative of
the Borrower, (ii) all Bonds in the Daily Mode or Weekly
Mode are to be redeemed pursuant to Section 2.4(A) on or
before such extraordinary optional redemption date and (iii)
all Bonds in the Flexible Mode are to be redeemed pursuant
to Section 2.4(A) on or before the later of (A) the first
Effective Date for such Bonds after notice of the
extraordinary optional prepayment pursuant to Section 8.1(B)
of the Agreement is given by the Borrower or (B) such
extraordinary optional redemption date. The Borrower's
right to direct the redemption of the Bonds in the
Multiannual or Fixed Rate Mode upon the occurrence of any
event as set forth in the Agreement shall expire six (6)
months, and any such redemption shall occur within nine (9)
months, after such event occurs.
(C) Mandatory Taxability Redemption. In the
event of a Determination of Taxability, the Bonds shall be
redeemed in the manner and as provided in this Indenture, at
the redemption price equal to 100% of the principal amount
thereof plus accrued interest to the date of redemption
following the Determination of Taxability with respect to
such Bond on the redemption date(s) specified in the form of
Bond of the mode then in effect. In the case of any
redemption pursuant to this subsection, the Authority or the
Borrower shall deliver to the Trustee a certificate of an
Authorized Representative specifying the event giving rise
to such inclusion in the gross income of the recipient
thereof and the dates which are the Tax Incidence Date and
the date of the Determination of Taxability. Such
certificate shall be delivered at least ten days before
notice of redemption is required to be given.
(D) Redemption at the Option of the Authority
Upon Occurrence of Certain Events. In the event that a
substantial portion of the Project is abandoned at any one
time or in the aggregate, or in the event of any disposition
of all or any part of the Borrower's ownership interest in
the Project (other than as permitted by the Agreement) or in
the event that the Plant is not repaired, reconstructed,
relocated, or replaced following damage or destruction of
all or substantially all of such Plant, in each case, as
determined in accordance with Section 6.4(A) of the
Agreement, the Bonds are subject to redemption, at the
option of the Authority pursuant to Section 6.4 or 7.3 of
the Agreement, which option shall be exercised upon the
giving of notice by the Authority to the Borrower and the
Trustee of the Authority's election to accelerate the loan
obligation of the Borrower pursuant to the Agreement, (1) on
a date selected by the Borrower, which date shall occur not
later than three years from the date of mailing to the
Borrower of the Authority's notice of election to so redeem,
or (2) on a date selected by the Authority which date shall
occur not less than 210 days from the date of mailing to the
Borrower of the Authority's notice of election to so redeem
should the Borrower fail to give notice under Section 6.4 of
the Agreement, at a Redemption Price equal to 100% of the
principal amount thereof, plus accrued interest to the
redemption date.
(E) Upon any redemption of Bonds there shall also
be due and payable, concurrently with the payment of the
Redemption Price, interest accrued on the Bonds and all
other amounts then due under the Financing Documents.
(F) Redemption of Bonds permitted or required by
this Article II shall be made as follows, and the Trustee
shall give the notice of redemption referred to in Section
6.3 hereof in respect of each such redemption:
(1) Redemption shall be made pursuant to the
general optional redemption provisions of Section
2.4(A) in such principal amounts as the Borrower shall
request in a written notice to the Trustee in
accordance with Section 8.2 of the Agreement. Any
redemption of Bonds pursuant to Section 2.4(A) hereof,
while the Bonds are in the Daily, Weekly or Flexible
Modes, shall be made solely with Eligible Funds and any
notice of such redemption shall indicate that it is
conditioned upon there being on deposit with the
Trustee on the redemption date Eligible Funds
sufficient to pay the redemption price of Bonds to be
so redeemed together with accrued interest thereon.
(2) Redemption shall be made pursuant to the
extraordinary optional redemption provisions of Section
2.4(B) at such date or dates as the Borrower shall
request in a written notice to the Authority and
Trustee in accordance with Section 8.2 of the
Agreement, to which shall be attached the certificate
referred to in Section 8.1(B) thereof. Any redemption
of Bonds pursuant to Section 2.4(B) hereof, while the
Bonds are in the Daily, Weekly or Flexible Modes, shall
be made solely with Eligible Funds and any notice of
such redemption shall indicate that it is conditioned
upon there being on deposit with the Trustee on the
redemption date Eligible Funds sufficient to pay the
redemption price of Bonds to be so redeemed together
with accrued interest thereon.
(3) Redemption shall be made pursuant to the
Mandatory Taxability redemption provisions of Section
2.4(C) at the earliest possible date following receipt
of the certificate prescribed in Section 2.4(C) hereof
and of the payments made by the Borrower prescribed in
Section 6.3 of the Agreement, without the necessity of
any instructions or further act of the Authority or the
Borrower.
(4) Redemption shall be made pursuant to the
occurrence of certain events in accordance with the
redemption provisions of Section 2.4(D) on such date as
the Borrower shall request in a written notice to the
Trustee in accordance with Section 6.4 of the Agreement
or shall be made as provided in Section 7.3 of the
Agreement. Any redemption of Bonds pursuant to
Section 2.4(D) hereof, while the Bonds are in the
Daily, Weekly or Flexible Modes, shall be made solely
with Eligible Funds and any notice of such redemption
shall indicate that it is conditioned upon there being
on deposit with the Trustee on the redemption date
Eligible Funds sufficient to pay the redemption price
of Bonds to be so redeemed together with accrued
interest thereon.
(G) Mandatory Redemption of Bank Bonds.
(i) Bank Bonds shall be subject to mandatory
redemption or, at the option of the Borrower, purchase
by the Borrower, at the times and in the amounts
provided therefor in the Standby Bond Purchase
Agreement. This mandatory redemption provision does
not relieve the Remarketing Agent of its obligation to
continue its efforts to remarket Bank Bonds that have
not been redeemed. For purposes of determining which
Bank Bonds have been remarketed on any date, it is
assumed that they have been remarketed on a pro rata
basis. If at any time, Bank Bonds are subject to
mandatory redemption under both this Section 2.4(G)(i)
and Section 2.4(G)(ii), Section 2.4(G)(ii) shall govern
the redemption of the Bank Bonds.
(ii) If the Trustee receives notice from the Bank
that an "event of termination" (as defined or used in
the Standby Bond Purchase Agreement) has occurred under
the Standby Bond Purchase Agreement, all Bank Bonds
shall be redeemed or, at the option of the Borrower,
purchased immediately upon receipt of such notice at a
price equal to the principal amount thereof plus
accrued and unpaid interest thereon, including interest
accrued at the Bank Rate, to the redemption date;
except that the Bank Bonds are not required to be
redeemed or purchased if the Trustee has received
notice prior to such proposed redemption or purchase
date, as the case may be, from the Bank that (i) the
event of termination has been waived by the Bank; (ii)
the event of termination has been cured; or (iii) an
insurance policy provided by an additional or
replacement bond insurer would result in a long-term
rating on the Bonds by S&P and Moody's of AAA and Aaa,
respectively (or their equivalent rating).
(iii) No further authorization from the
Authority or the Borrower shall be required to effect
any redemption or purchase of Bank Bonds pursuant to
Sections 2.4(G)(i) or 2.4(G)(ii). The Trustee shall
promptly provide a copy of any notice received under
Section 2.4(G)(ii), and shall provide notice of
redemption or purchase under Sections 2.4(G)(i) or
2.4(G)(ii) on the date thereof, to the Bank, the
Authority, the Paying Agent, the Remarketing Agent, the
Bond Insurer and the Borrower. No further notice of
redemption is required in connection with the
redemption of Bank Bonds under this Section 2.4(G).
Section 2.5. Execution and Authentication of Bonds.
(A) After their authorization as provided in this Article,
Bonds may be executed by or on behalf of the Authority and
delivered to the Trustee or the Paying Agent for
authentication. Each Bond shall be executed in the name of
the Authority by the manual or facsimile signature of any
one or more Authorized Representatives of the Authority.
(B) In case any officer who shall have signed any
of the Bonds shall cease to be such officer before the Bonds
so signed shall have been authenticated and delivered by the
Trustee or the Paying Agent, such Bonds may nevertheless be
authenticated and delivered as herein provided as if the
person who so signed such Bonds had not ceased to be such
officer. Any Bond may be signed on behalf of the Authority
by any person who, on the date of such act, shall hold the
proper office, notwithstanding that at the date of such Bond
such person may not have held such office.
(C) The Bonds shall each bear thereon a
certificate of authentication, in the form set forth in the
recitals to this Indenture, executed manually by the Trustee
or the Paying Agent. Only such Bonds as shall bear thereon
such certificate of authentication shall be entitled to any
right or benefit under this Indenture and no Bond shall be
valid or obligatory for any purpose until such certificate
of authentication shall have been duly executed by the
Trustee or the Paying Agent. Such certificate of the
Trustee or the Paying Agent upon any Bond executed on behalf
of the Authority shall be conclusive evidence that the Bond
so authenticated has been duly authenticated and delivered
under this Indenture and that the holder thereof is entitled
to the benefits hereof.
Section 2.6. Delivery of Bonds. The Bonds shall be
executed in the form and manner set forth herein and shall
be deposited with the Trustee and thereupon shall be
authenticated by the Trustee or the Paying Agent. Upon
payment to the Trustee of the proceeds of sale thereof, such
Bonds shall be delivered by the Trustee or the Paying Agent
to or upon the order of the purchasers thereof, but only
upon receipt by the Trustee of:
(1) A certified copy of the Authority's
resolution authorizing the issuance of the Bonds and,
the execution and delivery of this Indenture and the
Financing Documents;
(2) Original executed counterparts of the
Financing Documents other than the Mortgage Bonds, and
the originally executed Mortgage Bonds;
(3) The originally executed Standby Bond Purchase
Agreement and Insurance Policy;
(4) A request and authorization to the Trustee or
the Paying Agent on behalf of the Authority to
authenticate and deliver the Bonds to the purchasers
therein identified upon payment to the Trustee, for the
account of the Authority, of a sum specified in such
request and authorization, plus any accrued interest on
the Bonds to the date of such delivery. The proceeds
of such payment shall be paid over to the Trustee and
deposited in the Debt Service Fund and the Project Fund
pursuant to Article IV hereof; and
(5) A written opinion by Bond Counsel to the
effect that the issuance of such Bonds has been duly
authorized and that all conditions precedent to the
delivery thereof set forth in this Indenture have been
fulfilled.
ARTICLE III
GENERAL TERMS AND PROVISIONS OF BONDS
Section 3.1. Date of Bonds. The Bonds shall be dated
and bear interest from the date of original delivery
thereof.
Section 3.2. Form and Denominations. Bonds shall be
issued in fully registered form, without coupons, in
denominations of $100,000 or any multiple of $1,000 in
excess of $100,000 in the Flexible Mode, $5,000 or any
multiple thereof in the Fixed Rate Mode and Multiannual Mode
and $100,000 or any multiple thereof in the Daily Mode and
Weekly Mode. Subject to the provisions of Section 3.3
hereof, the Bonds shall be in substantially the form set
forth in the recitals to this Indenture, with such
variations, omissions and insertions as are permitted or
required by this Indenture.
Section 3.3. Legends. Each Bond shall contain on the
face thereof a statement to the effect that neither the
State nor any municipality thereof shall be obligated to pay
the principal of the Bond or interest thereon and neither
the faith and credit nor taxing power of the State or any
municipality thereof is pledged to such payment. The Bonds
may, in addition, contain or have endorsed thereon such
provisions, specifications and descriptive words not
inconsistent with the provisions of this Indenture as may be
necessary or desirable to comply with custom or otherwise as
may be determined by the Authority prior to the delivery
thereof.
Section 3.4. Medium of Payment. The principal or
Redemption Price, if any, of and interest on the Bonds shall
be payable in any coin or currency of the United States of
America which, on the respective dates of payment thereof,
is legal tender for the payment of public and private debts.
Such payment may be made as provided in Section 2.3 hereof.
Section 3.5. Bond Details. Subject to the provisions
hereof, the Bonds shall be dated, shall mature in such years
and such amounts, shall bear interest at such rate or rates
per annum, shall be subject to redemption on such terms and
conditions and shall be payable as to principal or
Redemption Price, if any, and interest at such place or
places as shall be specified in this Indenture.
Section 3.6. Interchangeability, Transfer and
Registry. (A) Each Bond shall be transferable only upon
compliance with the restrictions on transfer set forth on
such Bond and only upon the books of the Authority, which
shall be kept for the purpose at the principal office of the
Paying Agent, by the registered owner thereof in person or
by his attorney duly authorized in writing, upon
presentation thereof together with a written instrument of
transfer satisfactory to the Paying Agent duly executed by
the registered owner or his duly authorized attorney. Upon
the transfer of any Bond, the Paying Agent shall prepare and
issue in the name of the transferee one or more new Bonds in
authorized denominations of the same aggregate principal
amount as the surrendered Bond. Exchanges and transfers
will be without expense to the owner except for applicable
taxes or other governmental charges, if any.
(B) Any Bond, upon surrender thereof at the
office of the Paying Agent with a written instrument of
transfer satisfactory to the Paying Agent, duly executed by
the registered owner or his attorney duly authorized in
writing, may be exchanged at the office of the Paying Agent
for a new Bond or Bonds in authorized denominations of the
same aggregate principal amount without transfer to a new
registered owner. No transfer will be effective unless
represented by such surrender and reissue.
(C) Except as otherwise specifically provided
herein, the Authority, the Borrower, the Trustee, and any
Paying Agent may deem and treat the person in whose name any
Bond shall be registered as the absolute owner of such Bond,
whether such Bond shall be overdue or not, for the purpose
of receiving payment of, or on account of, the principal and
Redemption Price, if any, of and interest on such Bond and
for all other purposes, and all payments made to any such
registered owner or upon his order shall be valid and
effectual to satisfy and discharge the liability upon such
Bond to the extent of the sum or sums so paid, and neither
the Authority, the Trustee nor any Paying Agent, nor any
agent of the foregoing, shall be affected by any notice to
the contrary.
(D) The Paying Agent shall not be required to
exchange or transfer (a) any Bond during the fifteen (15)
day period preceding the date fixed for selection of Bonds
for redemption, or (b) any Bonds selected, called or being
called for redemption in whole or in part except, in the
case of any Bond to be redeemed in part, the portion thereof
not so to be redeemed.
Section 3.7. Bonds Mutilated, Destroyed, Stolen or
Lost. In case any Bond shall become mutilated or be
destroyed, stolen or lost, the Authority shall execute and
thereupon the Trustee or the Paying Agent shall authenticate
and deliver, a new Bond of like series, maturity and
principal amount as the Bond so mutilated, destroyed, stolen
or lost, in exchange and substitution for such mutilated
Bond, upon surrender and cancellation of such mutilated Bond
or in lieu of and substitution for the Bond destroyed,
stolen or lost, upon filing with the Trustee of evidence
satisfactory to the Authority, the Trustee and the Paying
Agent that such Bond has been destroyed, stolen or lost and
proof of ownership thereof, and upon furnishing the
Authority, the Trustee and the Paying Agent with indemnity
satisfactory to them and complying with such other
reasonable requirements as the Authority and the Trustee and
the Paying Agent may prescribe and paying such expenses as
the Authority, the Trustee and the Paying Agent may incur.
All Bonds so surrendered to the Trustee shall be cancelled
by it. Any such new Bonds issued pursuant to this Section
in substitution for Bonds alleged to be destroyed, stolen or
lost shall constitute original additional contractual
obligations on the part of the Authority, whether or not the
Bonds so alleged to be destroyed, stolen or lost be at any
time enforceable by anyone, and shall be equally secured by
and entitled to equal and proportionate benefits with all
other Bonds issued hereunder in any moneys or securities
held by the Authority, the Trustee or the Paying Agent for
the benefit of the owners of the Bonds.
Section 3.8. Cancellation and Destruction of Bonds.
All Bonds paid or redeemed in full, either at or before
maturity, shall be delivered to the Paying Agent when such
payment or redemption is made, and such Bonds together with
all Bonds purchased by the Paying Agent, together with all
Bonds surrendered in any exchange or transfers, shall
thereupon be promptly cancelled. All Bonds acquired and
owned by the Borrower and delivered to the Paying Agent for
cancellation shall be deemed paid and shall be promptly
cancelled. Bonds so cancelled shall be cremated or
otherwise destroyed by the Paying Agent, who shall execute a
certificate of cremation or destruction in duplicate under
signature of one of its authorized officers describing the
Bonds so cremated or otherwise destroyed, and one executed
certificate shall be filed with the Authority and the other
executed certificate shall be retained by the Paying Agent.
The Paying Agent shall provide written notice to Moody's, if
the Bonds are then rated by Moody's and to S&P, if the Bonds
are then rated by S&P, of the final payment or redemption of
any of the Bonds, either at or before maturity, upon
cancellation of any such Bonds.
Section 3.9. Requirements With Respect To Transfers.
In all cases in which the privilege of transferring Bonds is
exercised, the Authority shall execute and the Trustee or
the Paying Agent shall authenticate and deliver Bonds in
accordance with the provisions of this Indenture. All Bonds
surrendered in any such transfer shall forthwith be
cancelled by the Trustee or the Paying Agent. For every
such transfer of Bonds, the Authority, the Trustee or the
Paying Agent may, as a condition precedent to the privilege
of making such transfer, make a charge sufficient to
reimburse it for any tax, fee or other governmental charge
required to be paid with respect to such transfer and may
charge a sum sufficient to pay the cost of preparing and
delivering each new Bond issued upon such transfer, which
sum or sums shall be paid by the person requesting such
transfer.
ARTICLE IV
APPLICATION OF BOND PROCEEDS
Section 4.1. Accrued Interest. Simultaneously with
the delivery of any Bonds by the Trustee, the amount
received as accrued interest thereon, if any, shall be
deposited in the Debt Service Fund.
Section 4.2. Bond Proceeds and Premium. The proceeds
of sale and delivery of any Bonds, together with any premium
received on account of the sale thereof (but excluding any
accrued interest), shall simultaneously with the delivery
thereof by the Trustee be deposited in the Project Fund.
ARTICLE V
CUSTODY AND INVESTMENT OF FUNDS
Section 5.1. Creation of Funds. (A) The Authority
hereby establishes and creates the following special trust
Funds:
(1) Project Fund
(2) Debt Service Fund
(3) Rebate Fund
(B) The Rebate Fund shall be held by the Trustee
free and clear of any lien, charge or pledge created by this
Indenture. All of the Funds created hereunder shall be held
by the Trustee, including one or more depositories in trust
for the Trustee. All moneys and investments deposited with
the Trustee or any Paying Agent shall be held in trust and
applied only in accordance with this Indenture and shall be
trust funds for the purposes of this Indenture. All monies
received by the Remarketing Agent in accordance with the
provisions of this Indenture and any remarketing agreement
entered into by the Remarketing Agent, the Borrower and the
Authority shall be immediately transferred on the date of
receipt by the Remarketing Agent to the Paying Agent.
Section 5.2. Project Fund. (A) There shall be
deposited in the Project Fund any and all amounts required
to be deposited therein pursuant to Section 4.2 hereof or
otherwise required to be deposited therein pursuant to the
Agreement or this Indenture.
(B) Provided no event of default has occurred,
the Trustee shall apply the amounts in the Project Fund, at
the direction of the Borrower, to pay the costs of the
Project and the issuance of the Bonds including, but not
limited to:
(1) The costs of title insurance, surveys, legal
fees and recording and other closing expenses;
(2) Obligations incurred for labor and materials;
(3) All costs of contract bonds and of insurance
of all kinds that may be required or necessary during
the course of construction of the Project;
(4) All costs of engineering services, including
the costs of test borings, surveys, estimates, plans
and specifications and preliminary investigation
therefor and for supervising construction, as well as
for the performance of all other duties required by or
consequent upon the proper construction of, and
alterations, additions and improvements to, the
Project;
(5) All expenses incurred in connection with the
issuance, execution and sale of the Bonds, including
compensation and expenses of the Trustee, legal,
accounting and consulting expenses and fees, costs of
printing and engraving, and recording and filing fees;
(6) All costs which the Borrower shall be
required to pay, under the terms of any contract or
contracts, for the acquisition, construction,
installation or equipping of the Project, including any
amounts required to reimburse the Borrower for advances
made for any of the above items or for any other costs
incurred and for work done which are properly
chargeable to the Project; and
(7) Any other costs and expenses relating to the
Project.
(C) The Trustee is hereby authorized and directed to
issue its checks or to effect wire transfers for each
disbursement from the Project Fund (excepting any fees and
expenses payable to the Trustee as to which no further
authority is required) upon a requisition submitted to the
Trustee and signed by an Authorized Representative of the
Borrower in substantially the form attached hereto as
Appendix A. Such requisition shall state with respect to
each payment to be made: (1) the requisition number, (2)
the name and address of the person, firm or corporation to
whom payment is due, or to whom a reimbursable advance, if
any, has been made, (3) the amount to be paid, (4) that each
obligation mentioned therein has been properly incurred
within the provisions of the Agreement, is a proper charge
against the Project Fund, is unpaid or unreimbursed, and has
not been the basis of any previous withdrawal, (5) that the
requisition and the use of proceeds set forth therein are
consistent in all material respects with the Tax Regulatory
Agreement, and (6) that 95% or more of the amount
requisitioned is to be applied to costs (a) paid or incurred
prior to August 15, 1993, (b) for the acquisition,
construction or reconstruction of land or property of a
character subject to the allowance for depreciation provided
in Section 167 of the Internal Revenue Code of 1986, as
amended, and (c) which are chargeable to the capital account
of the Project or would be so chargeable either with an
election by the Borrower or but for the election of the
Borrower to deduct the amount of the item.
(D) In making any such payment from the Project Fund
the Trustee may rely on such requisitions and proof
delivered to it and the Trustee shall be relieved of all
liability with respect to making such payments in accordance
with the foregoing.
(E) The Trustee shall hold in the Project Fund an
amount equal to 5% of the net proceeds of the Bonds until
the Trustee has received, with respect to the Bonds, a
certified statement of Project Costs together with the
Borrower's certificate to the effect that Project Costs in
an amount equal to 95% or more of the Proceeds of the Bonds
(as defined in the Tax Regulatory Agreement) have been paid
or incurred for the acquisition, construction or
reconstruction of land or depreciable property under the
Code and have been or could be capitalized by the Borrower
for federal income tax purposes. Such documents may be
delivered upon issuance of the Bonds and may anticipate the
use of the final amounts to be requisitioned permitted by
this subsection 5.2(E). Upon the receipt of such documents,
the Trustee shall apply the balance in the Project Fund to
or at the direction of the Borrower in accordance with such
documents.
Section 5.3. Debt Service Fund. (A) Purpose. The
moneys in the Debt Service Fund and any investments held as
part of such Fund shall be held in trust and, except as
otherwise provided in this Indenture, shall be applied by
the Trustee solely to pay the Purchase Price or the
principal of, premium, if any, and interest on, the Bonds.
When moneys in the Debt Service Fund are to be applied to
the payment of the Bonds, the Trustee shall transfer such
moneys to the Paying Agent on the payment date therefor.
Proceeds of demands under a Standby Bond Purchase Agreement
shall not be deposited in the Debt Service Fund, but shall
be held by the Paying Agent in trust pursuant to Section
5.8(D) and applied as provided in this Indenture.
(B) Excess in Debt Service Fund. If at any time the
amount of funds in the Debt Service Fund exceeds the amount
necessary to pay the principal of, premium, if any, and
interest on the Bonds in full and all amounts owing or to be
owing under the Agreement to the Authority, the Trustee and
the Paying Agent, then the Trustee shall apply such excess
first to the Bank, in fulfillment of any obligations owed to
it under the Standby Bond Purchase Agreement, as certified
by the Bank, and second, if any balance remains, to the
Borrower.
Section 5.4. Rebate Fund. (A) There shall be credited
to the Rebate Fund all amounts required to be credited
thereto from interest earnings or net gain on disposition of
investments pursuant to this Article V.
(B) On the first Business Day following each
Computation Period (as defined in the Tax Regulatory
Agreement), upon direction in writing from the Borrower,
pursuant to the Tax Regulatory Agreement, the Trustee shall
withdraw from the Funds and deposit to the Rebate Fund an
amount such that the amount held in the Rebate Fund after
such deposit is equal to the Rebate Amount (as defined in
the Tax Regulatory Agreement) calculated as of the last day
of the Computation Period; provided, however, that the
Trustee may transfer monies from any Fund only to the extent
such transfer does not result in an Event of Default
hereunder. In the event of any deficiency, the balance
required shall be provided by the Borrower pursuant to
Section 8.3 of the Tax Regulatory Agreement. Computations
of the amounts on deposit in each Fund and of the Rebate
Amount shall be furnished to the Trustee by the Borrower in
accordance with Section 8.3 of the Tax Regulatory Agreement.
Any amounts on deposit in the Rebate Fund in excess of the
Rebate Amount shall be deposited to the Debt Service Fund.
(C) The Trustee, upon receipt of written
instructions from an Authorized Representative of the
Borrower in accordance with Section 8.3 of the Tax
Regulatory Agreement, shall pay to the United States out of
amounts in the Rebate Fund (1) not later than 30 days after
the end of each five-year period following the date of
issuance of the Bonds of each series, an amount such that,
together with amounts previously paid, the total amount paid
to the United States is equal to 90% of the Rebate Amount
calculated as of the end of the most recent Computation
Period, and (2) not later than 30 days after the date on
which all of the Bonds of any series have been paid or
redeemed, 100% of the Rebate Amount as of the end of the
final Computation Period.
(D) In transferring any funds to the Rebate Fund and
making any payments to the United States from the Rebate
Fund, the Trustee may rely on the written directions and
computations provided it by the Borrower and the Trustee
shall be relieved of all liability with respect to the
making of such transfers and payments in accordance with the
foregoing.
Section 5.5. Investment of Funds. (A) Except as
otherwise provided in this Indenture, amounts in the Funds
held hereunder shall, if and to the extent then permitted by
law, be invested in Authorized Investments. Investments
authorized under this Section shall be made by the Trustee
at the written request of an Authorized Representative of
the Borrower, and may be made by the Trustee through its own
bond department. Any investment hereunder shall be made in
accordance with the Tax Regulatory Agreement, including
particularly the terms and conditions of Article VII thereof
relating to arbitrage. Such investments shall mature in
such amounts and at such times as may be necessary to
provide funds when needed to make payments from such Funds,
and any such investments shall, subject to the provisions
hereof, at all times be deemed to be a part of the Fund,
from which the investment was made.
(B) The income or interest earned and gains
realized in excess of losses suffered by any Fund held
hereunder from the date of delivery of the Bonds shall be
credited to the Debt Service Fund (except income or interest
earned and gains realized in excess of losses suffered by
the Rebate Fund, which shall be credited to the Rebate
Fund).
(C) Prior to each Interest Payment Date on the
Bonds, the Trustee shall notify the Borrower of the amount
of any net investment income or gain received and collected
subsequent to the preceding interest payment date and the
amount then available in the Debt Service Fund.
Section 5.6. Non-presentment of Bonds. In the event
any Bond shall not be presented for payment when the
remaining principal thereof becomes due, either at final
maturity, or at the date fixed for redemption thereof, or
otherwise, and funds sufficient to pay any such Bond shall
have been made available to the Trustee for the benefit of
the holder or holders thereof, all liability of the
Authority to the holder thereof for the payment of such Bond
shall forthwith cease, determine and be completely
discharged, and thereupon it shall be the duty of the
Trustee to hold such funds, without liability for interest
thereon, for the benefit of the holder of such Bond, who
shall thereafter be restricted exclusively to such funds,
for any claim of whatever nature on his part under this
Indenture or on, or with respect to, such Bond. Such funds
shall be invested in overnight Federal Securities at the
direction of the Borrower for the account of the Borrower or
shall otherwise remain uninvested. Funds remaining with the
Trustee as above and unclaimed for six years shall be paid
to the Borrower.
Section 5.7. Application of Moneys. If, in addition
to moneys derived under the Standby Bond Purchase Agreement,
available moneys in the Debt Service Fund are not sufficient
on any day to pay all principal, premium, if any, and
interest on the Outstanding Bonds then due or overdue, such
moneys shall, after payment (from funds other than moneys in
the Debt Service Fund derived from the Mortgage Bonds or
from the proceeds of the Insurance Policy received in
accordance with Article XIII hereof), of all amounts owing
to the Trustee and the Authority under the Agreement be
applied first to the payment of interest, including interest
on overdue principal, in the order in which the same became
due (pro rata with respect to interest which became due at
the same time) and second to the payment of principal and
redemption premiums, if any, without regard to the order in
which the same became due in each case pro rata among
Bondowners; provided, however, that amounts derived under
the Standby Bond Purchase Agreement shall be applied
exclusively to the purchase of Bonds supported by the
Standby Bond Purchase Agreement. In the event there exist
Borrower Bonds on the date of any application of moneys
under this section, moneys otherwise to be paid to the
Borrower pursuant to this Section shall be applied (subject
to Section 5.8(C)) as follows: first, pro rata to all
Bondowners other than the Borrower, second, if any balance
remains, to the Bank in fulfillment of any obligations owed
to it under the Standby Bond Purchase Agreement, and third,
if any further balance remains, to the Borrower in respect
of any Borrower Bonds. Whenever moneys are to be applied
pursuant to this Section, such moneys shall be applied at
such times, and from time to time, as the Trustee in its
discretion shall determine, having due regard to the amount
of such moneys becoming available for such application and
the likelihood of additional moneys becoming available for
such application in the future. Whenever the Trustee shall
exercise such discretion it shall fix the date (which shall
be the first day of a month unless the Trustee shall deem
another date more suitable) upon which such application is
to be made, and upon such date interest on the amounts of
principal paid on such date shall cease to accrue. Whenever
overdue interest is to be paid on the Bonds, the Trustee may
establish a special record date as provided in the forms of
Bonds. The Trustee shall promptly notify the Paying Agent
of any special record date and give such other notice as it
may deem appropriate of the fixing of any such date and
special record date. When interest or a portion of the
principal is to be paid on an overdue Bond, the Trustee or
the Paying Agent may require presentation of the Bond for
endorsement of the payment. Prior to any payment to be made
to the Bank pursuant to clause second of the sixth preceding
sentence, the Trustee may require a certificate from the
Bank as to amounts due under the Standby Bond Purchase
Agreement, and the Trustee may rely conclusively thereon.
Section 5.8. Payment of Debt Service; Application;
Borrower Bonds. (A) Debt Service. The Trustee shall
immediately deposit any funds received from the Borrower
pursuant to Section 3.1(c) of the Agreement or the Mortgage
Bonds in the Debt Service Fund. Upon telephonic request by
the Paying Agent, promptly confirmed in writing and made on
or before 11:00 A.M. on a date when payment of principal,
premium, if any, or interest is due on the Bonds, the
Trustee shall disburse funds from the Debt Service Fund to
the Paying Agent for the payment of principal, premium, if
any, and interest payable on the Bonds as provided in
Section 5.3(A) hereof. For purposes of the immediately
preceding sentence, interest on the Bonds shall include the
component of any Purchase Price of Bonds in the Daily Mode
and the Flexible Mode representing interest on the Bonds.
(B) Tenders for Purchase. Demand for payment
under the Standby Bond Purchase Agreement for the purchase
of Bonds tendered for mandatory purchase pursuant to Section
2.3(G)(1)(d), 2.3(G)(2)(c), or 2.3(G)(3)(d) or for Bonds
tendered for purchase at the Bondowner's election pursuant
to Section 2.3(G)(1)(c) or 2.3(G)(3)(c) shall be made
pursuant to Section 9.18(A) hereof.
(C) Failed Conversion. Whenever there is a
failed conversion from the Daily, Flexible or Weekly Mode,
the Paying Agent shall demand payment under the Standby Bond
Purchase Agreement as provided in Section 2.3(G)(1)(b), 2.3
(G)(2)(b) or 2.3(G)(3)(b), as appropriate.
(D) Use of Standby Bond Purchase Agreement. All
amounts received by the Paying Agent under any Standby Bond
Purchase Agreement shall be held in a fund separate and
apart from all other amounts held by the Paying Agent, shall
remain uninvested and shall be used solely to pay the
Purchase Price on the Bonds for which the Standby Bond
Purchase Agreement is available. Purchase Price of Borrower
Bonds, Bank Bonds and Bonds not supported by a Standby Bond
Purchase Agreement shall not be paid from amounts made
available under a Standby Bond Purchase Agreement.
(E) [Reserved].
(F) Borrower's Purchase of Bonds. If the amount
received by the Paying Agent from demands made under the
Standby Bond Purchase Agreement, together with all other
amounts (including remarketing proceeds) received by the
Paying Agent for the purchase of Bonds supported by the
Standby Bond Purchase Agreement and tendered pursuant to
Section 2.3(G)(1)(c) or (d), 2.3(G)(2)(c) or 2.3(G)(3)(c) or
(d), is not sufficient to pay the Purchase Price of such
Bonds on the Purchase Date, the Paying Agent shall before
3:30 P.M. on such Purchase Date, notify the Borrower, the
Remarketing Agent and the Trustee of such deficiency by
telephone promptly confirmed in writing. Pursuant to
Section 3.10 of the Agreement, and only after a failure by
the Bank to honor a demand for payment under the Standby
Bond Purchase Agreement made in strict compliance with the
requirements of the Standby Bond Purchase Agreement, the
Borrower shall pay to the Paying Agent in immediately
available funds by 4:00 P.M. on the Purchase Date an amount
equal to the Purchase Price of such Bonds less the amount,
if any, available to pay the Purchase Price in accordance
with Section 9.18 from the proceeds of the remarketing of
such Bonds or from demands made under a Standby Bond
Purchase Agreement, as reported by the Paying Agent. Bonds
so purchased with moneys furnished by the Borrower shall be
Borrower Bonds.
ARTICLE VI
REDEMPTION OF BONDS
Section 6.1. Privilege of Redemption and Redemption
Price. Bonds or portions thereof subject to redemption
prior to maturity shall be redeemable, upon mailed notice as
provided in this Article, at the times, at the Redemption
Prices and upon such terms, in addition to and consistent
with the terms contained in this Article, as shall be
specified in Section 2.4 hereof and in such Bonds.
Section 6.2. Selection of Bonds to be Redeemed. In
the event of redemption of less than all the Outstanding
Bonds in each Mode, the Trustee shall assign to each such
Outstanding Bond a distinctive number for each $5,000 in
principal amount thereof, and shall select by lot, using
such method of selection as it shall deem proper in its
discretion, from the numbers assigned to such Bonds as many
numbers as, at $5,000 for each number, shall equal the
principal amount of such Bonds to be redeemed. The Bonds to
be redeemed shall be Bonds to which are assigned numbers so
selected, but only so much of the principal amount of such
Bond of a denomination of more than $5,000 shall be redeemed
as shall equal $5,000 for each number assigned to it and so
selected. Notwithstanding anything herein to the contrary,
Bank Bonds shall be redeemed prior to the redemption of any
other Bonds. For purposes of this Section, Bonds or
portions of Bonds which have theretofore been selected by
lot for redemption shall not be deemed Outstanding.
Notwithstanding the foregoing provisions of this Section
6.2, so long as the Bonds are in the Book-Entry Only System,
when Bonds are called, allocation shall be made by DTC or
any successor securities depository and not by the Authority
or the Trustee.
Section 6.3. Notice of Redemption. When Bonds are to
be redeemed, the Paying Agent shall give notice (which
notice may state that it is subject to the receipt of the
redemption moneys by the Trustee on or before the date fixed
for redemption and which notice shall be of no effect unless
such moneys are so received on or before such date) to the
Bondowners in the name of the Authority, which notice shall
identify the Bonds to be redeemed, state the date fixed for
redemption and specify the office of the Paying Agent at
which such Bonds will be redeemed. The notice shall further
state that on such date there shall become due and payable
upon each Bond to be redeemed the redemption price thereof,
together with interest accrued to the redemption date, and
that moneys therefor having been deposited with the Paying
Agent, from and after such date, interest thereon shall
cease to accrue and that the Bonds or portions thereof
called for redemption shall cease to be entitled to any
benefit under this Indenture except the right to receive
payment of the redemption price. The Paying Agent shall
mail the redemption notice the number of days prior to the
date fixed for redemption provided in the forms of Bond for
the Mode the Bonds are in, to the registered owners of any
Bonds which are to be redeemed, at their addresses shown on
the registration books maintained by the Paying Agent.
Failure to mail notice to a particular Bondowner, or any
defect in the notice to such Bondowner, shall not affect the
redemption of any other Bond. No notice shall be given of
redemption of Bonds in the Flexible Mode, except for such
redemption pursuant to Section 2.4(C) or (D) as and when
provided in the form of Flexible Bond.
Section 6.4. Payment of Redeemed Bonds. (A) Notice
having been given in the manner provided in Section 6.3
hereof, the Bonds or portions thereof so called for
redemption shall become due and payable on the redemption
dates so designated at the Redemption Price, plus interest
accrued to the redemption date and all other amounts then
due under the Financing Documents. If, on the redemption
date, monies for the redemption of all the Bonds or portions
thereof to be redeemed, together with interest to the
redemption date, and all other amounts then due under the
Financing Documents, shall be held by the Paying Agent so as
to be available therefor on such date and if notice of
redemption shall have been given as aforesaid, then, from
and after the redemption date, interest on the Bonds or
portions thereof so called for redemption shall cease to
accrue and become payable. If such monies shall not be so
available on the redemption date, such Bonds or portions
thereof shall continue to bear interest until paid at the
same rate as they would have borne had they not been called
for redemption.
(B) Payment of the Redemption Price together with
interest and all other amounts then due to the Bondholders
under the Financing Documents shall be made to or upon the
order of the registered owner, only upon presentation of the
Bond for cancellation or notation as provided in Section 6.5
hereof.
Section 6.5. Cancellation of Redeemed Bonds. (A) All
Bonds redeemed in full under the provisions of this Article
shall forthwith be cancelled and destroyed by the Trustee
and a certificate of destruction furnished to the Authority,
and no Bonds shall be executed, authenticated, issued or
delivered in exchange or substitution therefor or for or in
respect of any paid portion of a fully registered Bond. In
the event that a portion only of a Bond shall be so called
for redemption, then, at the option of the registered owner
thereof if such owner is a securities depository, such Bond
may be either submitted to the Trustee for notation thereon
of the payment of the portion of the principal thereof
called for redemption or surrendered for redemption. If so
surrendered, one or more new Bonds shall be issued for the
unredeemed portion hereof.
(B) If there shall be drawn for redemption less
than all of a Bond, the Authority shall execute and the
Trustee shall authenticate and deliver, upon the surrender
of such Bond, without charge to the owner thereof, for the
unredeemed balance of the principal amount of the Bond so
surrendered, Bonds of like series and maturity in any of the
authorized denominations.
ARTICLE VII
PARTICULAR COVENANTS
Section 7.1. No Pecuniary Liability on Authority or
Officers. (A) No covenant or agreement contained in this
Indenture or in the Bonds or any obligations herein or
therein imposed upon the Authority or the breach thereof,
shall constitute or give rise to a charge upon its general
credit, or impose upon the Authority a pecuniary liability
except as set forth herein. In making the agreements,
provisions and covenants set forth in this Indenture, the
Authority has not obligated itself except with respect to
the Project and the application of the revenues derived in
connection therewith as hereinabove provided.
(B) All covenants, stipulations, promises,
agreements and obligations of the Authority contained herein
shall be deemed to be covenants, stipulations, promises,
agreements and obligations of the Authority and not of any
member, officer, agent or employee thereof in his individual
capacity. No recourse shall be had for the payment of the
principal or Redemption Price, if any, of or interest on the
Bonds, for the performance of any obligation hereunder, or
for any claim based thereon or hereunder against any such
member, officer, agent or employee or against any natural
person executing the Bonds. No such member, officer, agent,
employee or natural person is or shall become personally
liable for any such payment, performance or other claim, and
in no event shall any monetary or deficiency judgment be
sought or secured against any such member, officer, agent,
employee or other natural person.
Section 7.2. Payment of Principal, Redemption Price,
if any, and Interest. The Authority covenants that it will
promptly pay, solely from the revenues or other monies
derived in connection with the Project or otherwise
available hereunder, the principal or Redemption Price, if
any, of and interest on every Bond issued under this
Indenture, together with all other amounts due under the
Financing Documents, at the place, on the dates and in the
manner provided herein and in the Bonds according to the
true intent and meaning thereof.
Section 7.3. Performance of Covenants. The Authority
covenants that it will faithfully perform at all times any
and all covenants, undertakings, stipulations and provisions
contained in this Indenture, in any and every Bond executed,
authenticated and delivered hereunder and in all of its
proceedings pertaining thereto. The Authority covenants
that it is duly authorized under the Constitution and laws
of the State, including particularly and without limitation
the Act, to issue the Bonds authorized hereby and to execute
this Indenture, to create, accept and assign the liens in
the property described herein and created hereby, to grant
the security interest herein provided, to assign the
Financing Documents and to pledge the revenues and other
amounts hereby pledged in the manner and to the extent
herein set forth; that all action on its part for the
issuance of the Bonds and the execution and delivery of this
Indenture has been duly and effectively taken, and that the
Bonds in the hands of the holders and owners thereof are and
will be valid and enforceable obligations according to their
terms and the terms of this Indenture, except to the extent
that such enforceability may be limited by bankruptcy or
insolvency or other laws affecting creditors' rights
generally or by general principles of equity.
Section 7.4. Further Assurances. The Authority and
the Trustee each covenants that it will do, execute,
acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, such indentures supplemental
hereto and such further acts, instruments and transfers as
the other may reasonably require for the better assuring,
transferring, conveying, pledging, assigning and confirming
unto the Trustee all and singular the property and rights
assigned hereby and the amounts pledged hereby to the
payment of the principal or Redemption Price, if any, of and
interest on the Bonds and all other amounts due under the
Financing Documents.
Section 7.5. Inspection of Project Books. The
Authority covenants and agrees that all books and documents
in its possession relating to the Project and the revenues
derived from the Project shall at all times be open to
inspection by such accountants or other agencies as the
Trustee may from time to time designate.
Section 7.6. Rights under Financing Documents. The
Financing Documents, originals or duly executed counterparts
of which have been filed with the Trustee, set forth the
covenants and obligations of the Authority and the Borrower,
including provisions that subsequent to the issuance of
Bonds and prior to their payment in full or provision for
payment thereof in accordance with the provisions hereof the
Financing Documents may not be effectively amended, changed,
modified, altered or terminated without the written consents
provided for therein, and reference is hereby made to the
same for a detailed statement of the covenants and
obligations of the Borrower thereunder. Subject to the
provisions of Article IX hereof, the Trustee agrees to
enforce all covenants and obligations of the Borrower under
the Financing Documents and it is agreed that the Trustee
may and is hereby granted the right to enforce all rights of
the Authority and all obligations of the Borrower under and
pursuant to the Financing Documents. Nothing in this
Section shall permit any reduction in the payments required
to be made by the Borrower under or pursuant to the
Financing Documents or any alteration in the terms of
payment thereof. All covenants and agreements on the part
of the Authority shall, except as otherwise specifically
provided herein, be for the benefit of the holders from time
to time of the Bonds and may be enforced in the manner
provided by Article VIII hereof on behalf of such holders by
the Trustee.
Section 7.7. Creation of Liens, Indebtedness. The
Authority shall not create or suffer to be created any lien
or charge upon or pledge of the revenues and other income
from or in connection with the Project, except the lien,
charge and pledge created by this Indenture and the Bonds.
The Authority shall not incur any indebtedness or issue any
evidence of indebtedness, other than the Bonds herein
authorized, secured by a lien on or pledge of such revenues
and income.
Section 7.8. Recording and Filing. The Authority
covenants that it will cause the Financing Documents, this
Indenture and all supplements thereto and hereto, as well as
such other security agreements, financing statements, and
other instruments as may be required from time to time to be
kept, to be recorded and filed in such manner and in such
places as may be required by law in order to fully preserve
and protect the security of the holders and owners of the
Bonds and the rights of the Trustee hereunder.
ARTICLE VIII
REMEDIES OF BONDHOLDERS
Section 8.1. Events of Default; Acceleration of Due
Dates. (A) Each of the following events is hereby defined
as and shall constitute an "Event of Default":
(1) Failure to duly and punctually pay when due
(a) the interest on any Bond, (b) any installment of
the principal or Redemption Price of any Bond, whether
at the stated maturity thereof by acceleration, or upon
proceedings for redemption thereof, or (c) the Purchase
Price of any Bond (including any Bank Bonds required to
be purchased pursuant to a Standby Bond Purchase
Agreement), provided, that it shall not be an Event of
Default if interest (other than interest due at
maturity, by acceleration, or upon redemption, or
interest included in the Purchase Price) on any Bond in
the Fixed Rate Mode or in the Multiannual Mode with an
original Rate Period of not less than five years is
paid within five days after it becomes due.
(2) (a) Failure to perform or observe any other
of the covenants, agreements or conditions on the part
of the Authority in this Indenture or in the Bonds
contained and not otherwise a default hereunder and the
continuance thereof for a period of thirty days after
written notice given by the Trustee or by the owners of
not less than twenty-five percent (25%) of the
principal amount of Bonds then Outstanding (other than
Borrower Bonds), or (b) the occurrence of an "event of
default" under any of the Financing Documents other
than under Section 7.1(6) of the Agreement.
(3) The occurrence of an "event of default"
under Section 7.1(6) of the Agreement.
(4) The occurrence of any Event of Default as
defined in the Mortgage.
(B) Acceleration. If (1) an Event of Default
described in Sections 8.1(A)(1), (2) or (3) occurs and is
continuing, or (2) an Event of Default described in Section
8.1(A)(4) occurs and is continuing, and provided that the
Mortgage Bonds have become immediately due and payable in
accordance with the terms of the Mortgage, then, in either
event, the Trustee may, with the written consent of the Bond
Insurer and the Bank, and shall, at the written direction of
the Bond Insurer, the Bank or the Bondowners of at least 25%
in principal amount of the Bonds Outstanding (other than
Borrower Bonds), by written notice to the Bond Insurer, the
Borrower, the Authority, the Paying Agent, and the
Remarketing Agent, declare immediately due and payable the
principal of the Outstanding Bonds (including Borrower
Bonds) and the accrued interest thereon, whereupon the same
shall become immediately due and payable without any further
action or notice. If at any time after such acceleration
and before any judgment or decree for the payment of moneys
with respect thereto has been entered all amounts payable to
the Authority and the Trustee hereunder and on Bonds subject
to acceleration under this Section 8.1(B) (except principal
of and interest on the Bonds which are due solely by reason
of such acceleration) shall have been paid or provided for
by deposit with the Trustee and all existing Defaults shall
have been cured or waived, then the Bondowners representing
a majority in principal amount of the Bonds subject to
acceleration under this Section 8.1(B) (other than Borrower
Bonds) may annul such acceleration and its consequences by
written notice to the Authority, the Trustee and the
Borrower. Such annulment shall be binding upon the
Authority, the Trustee and all of the Bondowners, but no
such annulment shall extend to or affect any subsequent
Default or impair any right or remedy consequent thereto.
Section 8.2. Enforcement of Remedies. (A) Upon the
happening and continuance of any Event of Default, then and
in every case, but subject to the provisions of Section 9.2
hereof, the Trustee, may proceed, and upon the written
request of the owners of not less than 51% in principal
amount of the Bonds Outstanding (other than Borrower Bonds),
shall proceed, to protect and enforce its rights and the
rights of the Bondholders under the Act, the Bonds, the
Financing Documents, the Insurance Policy, the Standby Bond
Purchase Agreement and this Indenture, and under any
agreement executed in connection with the foregoing,
forthwith by such suits, actions or special proceedings in
equity or at law, or by proceedings in the office of any
board or officer having jurisdiction, whether for the
specific performance of any covenant or agreement contained
in this Indenture or the Financing Documents or in aid of
the execution of any power granted therein or in the Act or
for the enforcement of any legal or equitable rights or
remedies as the Trustee, being advised by counsel, shall
deem most effectual to protect and enforce such rights or to
perform any of its duties under this Indenture.
(B) In the enforcement of any right or remedy
under this Indenture, the Financing Documents, the Insurance
Policy, the Standby Bond Purchase Agreement or under the
Act, the Trustee shall be entitled to sue for, enforce
payment on and receive any or all amounts then or during any
Default becoming, and any time remaining, due from the
Authority for principal, Redemption Price, interest or
otherwise under any of the provisions of the Financing
Documents, this Indenture or of the Bonds, and unpaid, with
interest on overdue payments at the applicable rate or rates
of interest specified in the Bonds, together with any and
all costs and expenses of collection and of all proceedings
under the Financing Documents, this Indenture and under the
Bonds, without prejudice to any other right or remedy of the
Trustee or of the Bondholders, and to recover and enforce
judgment or decree against the Authority, but solely as
provided in the Financing Documents, this Indenture, the
Insurance Policy, the Standby Bond Purchase Agreement and in
the Bonds, for any portion of such amounts remaining unpaid,
with interest, costs, and expenses, and to collect in any
manner provided by law, the monies adjudged or decreed to be
payable.
(C) Regardless of the happening of an Event of
Default, the Trustee, if requested in writing by the owners
of not less than 51% in principal amount of the Bonds then
Outstanding (other than Borrower Bonds) and furnished with
reasonable security and indemnity, shall institute and
maintain such suits and proceedings as it may be advised
shall be necessary or expedient to prevent any impairment of
the security under this Indenture by any acts which may be
unlawful or in violation of the Indenture or of any
resolution authorizing Bonds, and such suits and proceedings
as the Trustee may be advised shall be necessary or
expedient to preserve or protect its interests and the
interests of the Bondholders; but no such request shall be
otherwise than in accordance with the provisions of law and
of the Indenture or be unduly prejudicial to the interests
of the holders of Bonds not making such request.
(D) Anything in this Indenture to the contrary
notwithstanding, upon the occurrence and continuance of an
Event of Default as defined herein, the Bond Insurer shall
be entitled to control and direct the enforcement of all
rights and remedies granted to the Bondholders or the
Trustee for the benefit of the Bondholders under this
Indenture, including, without limitation: (i) the right to
accelerate the principal of the Bonds as described in this
Indenture; and (ii) the right to annul any declaration of
acceleration, and the Bond Insurer shall also be entitled to
approve in writing all waivers of Events of Default.
Section 8.3. Application of Revenues and Other Monies
After Default. (A) After the occurrence of an Event of
Default, any funds pledged as security hereunder and any
other moneys received by the Trustee (other than amounts
irrevocably set aside to pay particular Bonds) shall be
applied to amounts due under Section 3.1 of the Agreement
(without regard to any grace periods), which amounts shall
be applied in the order specified in Section 5.7 hereof.
(B) Whenever monies are to be applied pursuant to the
provisions of this Section, such monies shall be applied at
such times, and from time to time, as the Trustee shall
determine, having due regard to the amount of such monies
available for application and the likelihood of additional
monies becoming available for such application in the
future. Whenever the Trustee shall apply such funds, it
shall fix the date upon which such application shall be
made. The Trustee shall give such notice as it may deem
appropriate of the deposit with it of any such monies and of
the fixing of any such date, and shall not be required to
make payment to the owner of any Bonds until such Bonds
shall be presented to the Trustee for appropriate
endorsement or for cancellation if fully paid.
Section 8.4. Actions by Trustee. The Trustee may
enforce the provisions of this Indenture by appropriate
legal proceedings for the specific performance of any
covenant, obligation or agreement contained herein whether
or not a Default or an Event of Default exists, or for the
enforcement of any other appropriate legal or equitable
remedy, and may recover damages caused by any breach by the
Borrower of the provisions of the Agreement, including, but
not limited to, (to the extent the Agreement may lawfully
provide) court costs, reasonable attorney's fees and other
costs and expenses incurred in enforcing the obligations of
the Borrower to it under the Agreement which it has not
assigned to the Trustee. All rights under this Indenture
and the Bonds may be enforced by the Trustee without the
possession of any Bonds or the production thereof at the
trial or other proceedings relative thereto, and any
proceeding instituted by the Trustee shall be brought in its
name for the ratable benefit of the Bondowners.
Section 8.5. [Reserved].
Section 8.6. Majority Bondholders Control Proceedings.
(A) Subject to Sections 8.1(B) and 8.12, the holders of at
least 51% in aggregate principal amount of Bonds then
Outstanding (other than Borrower Bonds) shall have the
right, at any time, by an instrument or instruments in
writing executed and delivered to the Trustee, to direct the
method and place of conducting all proceedings to be taken
in connection with the enforcement of the terms and
conditions of the Indenture, or for any other proceedings
hereunder; but such direction shall not be otherwise than in
accordance with the provisions of law and of the Indenture.
(B) Bondholders representing a majority in
principal amount of the Outstanding Bonds shall have the
right, at any time, by written notice to the Trustee and the
offering of indemnity as provided in Section 9.2, to direct
the Trustee, as holder of all of the Mortgage Bonds, to
exercise the rights available to it as holder of such bonds
under the Mortgage, including, without limitation, as to
rendering notice to the Mortgage Trustee of the occurrence
of a default thereunder, the institution of any suit, action
or proceeding to enforce payments on the Mortgage Bonds
which were not paid when due or other proceeding in respect
of the Mortgage which the Trustee, as holder of the Mortgage
Bonds, is entitled to institute, and as to the time, place
and method of any such proceeding for any remedy available
to the Trustee, as holder of the Mortgage Bonds, subject,
however, to compliance with the applicable provisions of the
Mortgage.
Section 8.7. Individual Bondholder Action Restricted.
(A) No owner of the Bonds shall have any right to institute
any suit, action or proceeding at law or in equity for the
enforcement of any provision of this Indenture or the
execution of any trust under this Indenture or for any
remedy under this Indenture, unless such owners shall have
previously given to the Trustee written notice of the
happening of an Event of Default, as provided in this
Article, and the owners of at least 51% in principal amount
of the Bonds then Outstanding (other than Borrower Bonds)
shall have filed a written request with the Trustee, and
shall have offered it reasonable opportunity, either to
exercise the powers granted in this Indenture or by the Act
or by the laws of the State or to institute such action,
suit or proceeding in its own name, and unless such owners
shall have offered to the Trustee adequate security and
indemnity against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee shall have
refused to comply with such request for a period of sixty
days after receipt by it of such notice, request and offer
of indemnity, it being understood and intended that no owner
of any Bond shall have any right in any manner whatever by
his or their action to affect, disturb or prejudice the
pledge created by the Indenture, or to enforce any right
under the Indenture, except in the manner herein provided;
and that all proceedings at law or in equity to enforce any
provision of the Indenture shall be instituted, had and
maintained in the manner provided in the Indenture and for
the equal benefit of all owners of the Outstanding Bonds.
No owner of any of the Bonds shall have any direct
right to demand payment under the Standby Bond Purchase
Agreement. No owner of any of the Bonds shall have any
right to institute any suit, action or proceeding at equity
or at law to enforce a demand for payment under the Standby
Bond Purchase Agreement.
(B) Nothing herein or in the Bonds contained
shall affect or impair the right of any owner of the Bonds
to payment of the principal or Redemption Price, if any, of
and interest on any Bond or other amounts due under the
Financing Documents at and after the maturity thereof, or
the obligation of the Authority to pay the principal or
Redemption Price, if applicable, of and interest on each of
the Bonds or other amounts due under the Financing Documents
to the respective owners thereof at the time, place, from
the source and in the manner herein and in such Bonds
expressed.
Section 8.8. Effect of Discontinuance of Proceedings.
In case any proceeding taken by the Trustee on account of
any Event of Default shall have been dismissed, discontinued
or abandoned for any reason, or shall have been determined
adversely, then and in every such case the Authority, the
Trustee, and the owners of the Bonds shall be restored,
respectively, to their former positions and rights
hereunder, and all rights, remedies, powers and duties of
the Trustee shall continue as though no such proceedings had
been taken.
Section 8.9. Remedies Not Exclusive. No remedy by the
terms of this Indenture conferred upon or reserved to the
Trustee or to the owners of the Bonds is intended to be
exclusive of any other remedy, and each and every such
remedy shall be cumulative and shall be in addition to any
other remedy given hereunder or now or hereafter existing at
law or in equity or by statute.
Section 8.10. Delay or Omission Upon Default. No
delay or omission of the Trustee or of the owners of any
Bond to exercise any right or power arising upon any Event
of Default shall impair any right or power or shall be
construed to be a waiver of any such default or any
acquiescence therein; and every power and remedy given by
this Article to the Trustee and the owner of any Bond and
the Bank, respectively, may be exercised from time to time
and as often as may be deemed expedient by the Trustee or by
the owner of the Bonds.
Section 8.11. Notice of Default. The Trustee shall
promptly mail, to each owner of the Bonds, written notice of
the occurrence of any Event of Default of which it has
actual knowledge. Actual knowledge means the actual
knowledge of an officer in the Trustee's corporate trust
department. The Trustee shall not, however, be subject to
any liability to any owner of the Bonds by reason of its
failure to mail any notice required by this Section.
Section 8.12. Waivers of Default. At any time before
an acceleration pursuant to Section 8.1(B), the Trustee may
waive a Default (other than a Default in the payment of the
Purchase Price, principal of, premium, if any, or interest
on the Bonds) and its consequences with respect to Bonds
subject to acceleration pursuant to Section 8.1(B), by
written notice to the Borrower, and in the absence of
inconsistent instructions from Bondowners pursuant to
Section 8.6 shall do so upon written instruction of the
owners of at least twenty-five per cent (25%) in principal
amount of such Bonds Outstanding (other than Borrower
Bonds). No waiver under this section shall affect the right
of the Trustee or the Authority to enforce the payment of
any amounts owing to it. The Trustee shall not waive any
Event of Default under Section 8.1(A)(1).
Any cure or waiver of any "Default" under the Mortgage
and a rescission and annulment of its consequences shall
constitute a cure or waiver of the corresponding Event of
Default under Section 8.1(A)(4) and a rescission and
annulment of the consequences thereof, and the Trustee, upon
receiving notice thereof, shall give written notice of such
cure or waiver, rescission or annulment to the Authority and
the Borrower, and shall give notice thereof by mail to all
Bondholders; but no such cure or waiver, rescission and
annulment shall extend to or affect any subsequent Event of
Default or impair any right or remedy consequent thereon.
ARTICLE IX
TRUSTEE AND PAYING AGENTS
Section 9.1. Appointment and Acceptance of Duties.
Fleet National Bank, Hartford, Connecticut, is hereby
appointed as Trustee. The Trustee shall signify its
acceptances of the duties and obligations of the Trustee by
executing this Indenture. All provisions of this Article
shall be construed as extending to and including all the
rights, duties and obligations imposed upon the Trustee
under the Agreement and the other Financing Documents as
fully for all intents and purposes as if this Article were
contained in the Agreement and the other Financing
Documents.
Section 9.2. Indemnity. Except with respect to the
Trustee's mandatory duties with respect to acceleration of
the Bonds pursuant to Section 8.1 hereof, demanding payment
under the Standby Bond Purchase Agreement or the Insurance
Policy, and paying or causing to be paid in accordance with
this Indenture, the principal, Redemption Price, if any, and
interest, on the Bonds, the Trustee shall be under no
obligation to institute any suit, or to take any remedial
proceeding under this Indenture, or to enter any appearance
in or in any way defend any suit in which it may be made
defendant, or to take any steps in the execution of the
trusts hereby created or in the enforcement of any rights
and powers hereunder, until it shall be indemnified and
provided with adequate security to its satisfaction against
any and all reasonable costs and expenses, outlays, and
counsel fees and other disbursements, and against all
liability not due to its wilful misconduct, gross negligence
or bad faith.
The Trustee shall be indemnified for and held harmless
against any loss, liability or expense incurred without
gross negligence or bad faith on its part arising out of or
in connection with the acceptance or administration of this
trust, including the costs and expenses of defending itself
against any claim or liability in connection with the
exercise or performance of any of its powers or duties
hereunder. No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing
that payment of such funds or adequate indemnity against
such risk or liability is not assured to it.
Section 9.3. Responsibilities of Trustee. (A) The
Trustee shall have no responsibility in respect of the
validity or sufficiency of this Indenture or the security
provided hereunder or the due execution hereof by the
Authority, or in respect of the title or the value of the
Project, or in respect of the validity of any Bonds
authenticated and delivered by the Trustee in accordance
with this Indenture or to see to the recording or filing of
the Indenture or any financing statement (except the filing
of continuation statements as provided in Section 9.13
hereof) or any other document or instrument whatsoever. The
recitals, statements and representations contained herein
and in the Bonds shall be taken and construed as made by and
on the part of the Authority and not by the Trustee, and it
does not assume any responsibility for the correctness of
the same; except that the Trustee shall be responsible for
its representation contained in its certificate on the
Bonds. The obligation hereunder to pay or reimburse the
Trustee for expenses, advances, reimbursements and to
indemnify and hold harmless the Trustee pursuant to Section
9.2 shall constitute additional indebtedness hereunder and
shall survive the satisfaction and discharge of all
obligations under this Indenture.
(B) The Trustee shall not be liable or
responsible because of the failure of the Authority to
perform any act required of it by the Indenture or the
Financing Documents or because of the loss of any monies
arising through the insolvency or the act or default or
omission of any depositary other than itself in which such
monies shall have been deposited. The Trustee shall not be
responsible for the application of any of the proceeds of
the Bonds or any other monies deposited with it and paid
out, invested, withdrawn or transferred in accordance
herewith or for any loss resulting from any such investment.
The Trustee shall not be liable in connection with the
performance of its duties hereunder except for its own
wilful misconduct, gross negligence or bad faith. The
immunities and exemptions from liability of the Trustee
shall extend to its directors, officers, employees and
agents.
(C) The Trustee, prior to the occurrence of an
Event of Default and subsequent to an Event of Default that
has been cured, undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture.
In case an Event of Default has occurred of which the
Trustee has actual knowledge (as defined in Section 8.11
hereinabove) and which has not been cured the Trustee,
subject to Section 9.2 hereof, shall exercise such of the
rights and powers vested in it hereby and use the same
degree of care and skill in their exercise, as a prudent
person would exercise under the circumstances in the conduct
of his own affairs.
(D) The Trustee shall in all instances act in
good faith in incurring costs, expenses and legal fees in
connection with the transactions contemplated by this
Indenture and the Agreement.
(E) The Trustee shall not be liable or
responsible for the failure of the Borrower to effect or
maintain insurance on the Project as provided in the
Financing Documents nor shall it be responsible for any loss
by reason of want or insufficiency in insurance or by reason
of the failure of any insurer in which the insurance is
carried to pay the full amount of any loss against which it
may have insured the Authority, the Borrower, the Trustee or
any other person.
(F) Except as required (i) to effect an
assignment to a successor Trustee or (ii) to effect an
exchange, in compliance with applicable law in connection
with a bankruptcy reorganization, insolvency, or similar
proceeding involving the Borrower or (iii) to effect the
exchange of any Mortgage Bonds upon payment of a portion of
any Mortgage Bonds, the Trustee shall not sell, assign, or
transfer Mortgage Bonds held by it, and the Trustee shall at
all times maintain physical possession of each of the
Mortgage Bonds until the same is paid or deemed to have been
paid as provided in this Indenture and the Mortgage Bonds
and the Trustee is authorized to enter into an agreement
with the Borrower to such effect, including a consent to the
issuance of stop transfer instructions to the Mortgage
Trustee. No liability shall attach to the Trustee for any
action taken by it in good faith in reliance upon such
instructions.
(G) Voting of Mortgage Bonds. The Trustee shall,
as the holder of the Mortgage Bonds, attend such meeting or
meetings of bondholders under the Mortgage or, at its
option, deliver its proxy in connection therewith, as relate
to matters with respect to which it is entitled to vote or
consent. So long as no Event of Default hereunder shall
have occurred and be continuing, either at any such meeting
or meetings, or otherwise when the consent of the holders of
the Borrower's mortgage bonds issued under the Mortgage is
sought without a meeting, the Trustee shall vote as the
holder of the Mortgage Bonds, or shall consent with respect
thereto with respect to any amendment to or modification of
the Mortgage, all Mortgage Bonds then held by it,
proportionately with what the Trustee reasonably believes
will be the vote or consent of the holders of all other
mortgage bonds of the Borrower then outstanding under the
Mortgage, the holders of which shall vote or consent;
provided, however, that the Trustee shall not vote as such
holder in favor of, or give its consent to, any amendment or
modification of the Mortgage which (i) is correlative to any
amendment or modification of this Indenture which would
require the consent of Bondholders, without the prior
consent and approval, obtained in the manner prescribed in
Section 10.3 of this Indenture, of Bondholders which would
be required under said Section 10.3 for such correlative
amendment or modification of this Indenture or (ii) which
would adversely affect the interest of the Bank, without the
prior written consent and approval of the Bank.
Any action taken by the Trustee in accordance with
the provisions of this Section 9.3(G) shall be binding upon
the Authority and the Bondholders.
(H) Surrender of Mortgage Bonds. The Trustee
shall surrender Mortgage Bonds to the Mortgage Trustee in
accordance with provisions of Section 3.7 of the Agreement.
(I) Payment on Mortgage Bonds. In the event that
a payment on the Mortgage Bonds shall have become due and
payable and shall not have been fully paid, the Trustee
shall forthwith give notice thereof to the Mortgage Trustee
specifying the amount of funds required to make such
payment. The Trustee shall incur no liability for failure
to give any such notice and such failure shall have no
effect on the obligation of the Borrower on the Mortgage
Bonds or on the rights of the Trustee, the Bondholders or of
the Bank.
(J) Notification to Bank of Modification of
Insurance Policy. The Trustee shall not consent to the
surrender, cancellation, termination, amendment or
modification of the Insurance Policy unless permitted by
this Indenture and unless the written consent thereto of
each Bank is received by the Trustee prior thereto. The
Trustee shall promptly provide written notice to each Bank
of any proposed surrender, cancellation, termination,
amendment or modification of the Insurance Policy of which
it has knowledge.
Section 9.4. Compensation. The Trustee and Paying
Agents shall be entitled to receive and collect from the
Borrower as provided in the Financing Documents payment for
reasonable fees for services rendered hereunder and all
advances, counsel fees and expenses and other expenses
reasonably and necessarily made or incurred by the Trustee
or Paying Agents in connection therewith. The Trustee and
the Paying Agent shall have no lien upon any funds or other
property held hereunder by the Trustee.
Section 9.5. Evidence on Which Trustee May Act. (A) In
case at any time it shall be necessary or desirable for the
Trustee to make any investigation concerning any fact
preparatory to taking or not taking any action, or doing or
not doing anything, as such Trustee, and in any case in
which this Indenture or the Financing Documents provides for
permitting or taking any action, it may rely upon any
certificate required or permitted to be filed with it under
the provisions hereof or of the Financing Documents, and any
such certificate shall be evidence of such fact or protect
it in any action that it may or may not take, or in respect
of anything it may or may not do, in good faith, by reason
of the supposed existence of such fact.
(B) The Trustee shall be protected and shall
incur no liability in acting or proceeding, or in not acting
or not proceeding, in good faith, reasonably and in
accordance with the terms of this Indenture, the Standby
Bond Purchase Agreement or the Financing Documents, upon any
resolution, order, notice, request, consent, waiver,
certificate, statement, affidavit, requisition, bond or
other paper or document which it shall in good faith
reasonably believe to be genuine and to have been adopted or
signed by the proper board or person, or to have been
prepared and furnished pursuant to any of the provisions of
this Indenture or the Financing Documents, or upon the
written opinion of any attorney (who may be an attorney for
the Authority or the Borrower), engineer, appraiser, or
accountant reasonably believed by the Trustee to be
qualified in relation to the subject matter. The Trustee is
not required to investigate the qualifications of any such
expert.
Section 9.6. Evidence of Signatures of Owners of the
Bonds and Ownership of Bonds. (A) Any request, consent,
revocation of consent or other instrument which this
Indenture may require or permit to be signed and executed by
the owners of the Bonds may be in one or more instruments of
similar tenor, and shall be signed or executed by such
owners of the Bonds in person or by their attorneys
appointed in writing. Proof of (i) the execution of any
such instrument, or of any instrument appointing any such
attorney, or (ii) the holding by any person of the Bonds
shall be sufficient for any purpose of this Indenture
(except as otherwise herein expressly provided) if made in
the following manner, or in any other manner satisfactory to
the Trustee, which may nevertheless in its discretion
require further or other proof in cases where it deems the
same desirable:
(1) The fact and date of the execution by any
owner of the Bonds or his attorney of such instruments
may be proved by a guarantee of the signature thereon
by an officer of a bank or trust company or by the
certificate of any notary public or other officer
authorized to take acknowledgments of deeds, that the
person signing such request or other instrument
acknowledged to him the execution thereof, or by an
affidavit of a witness of such execution, duly sworn to
before such notary public or other officer. Where such
execution is by an officer of a corporation or a member
of a partnership, on behalf of such corporation,
association or partnership, such signature guarantee,
certificate or affidavit shall be accompanied by
sufficient proof of his authority.
(2) The ownership of registered Bonds and the
amount, numbers and other identification, and date of
owning the same shall be proved by the registry books.
(B) Except as otherwise provided in Section 10.3
hereof with respect to revocation of a consent, any request
or consent by the owner of any Bond shall bind all future
owners of such Bond in respect of anything done or suffered
to be done by the Authority or the Trustee or any Paying
Agent in accordance therewith.
Section 9.7. Trustee, any Paying Agent, the Bank, and
the Remarketing Agent May Deal in Bonds and With Borrower.
Any national banking association, bank or trust company
acting as a Trustee, or Paying Agent, and its directors,
officers, employees or agents, the Remarketing Agent and the
Bank may in good faith buy, sell, own, hold and deal in any
of the Bonds and may join in any action which any owner of
the Bonds may be entitled to take and may otherwise deal
with the Borrower with like effect as if such association,
bank or trust company were not such Trustee, Paying Agent,
Bank, or Remarketing Agent. The Trustee, any Paying Agent,
or the Remarketing Agent, in its individual capacity, either
as principal or agent, may also engage in or be interested
in any financial or other transaction with the Authority or
the Borrower, and may act as depository, trustee or agent
for any committee or body of Bondowners secured hereby or
other obligations of the Authority as freely as if it did
not act in any capacity hereunder.
Section 9.8. Resignation or Removal of Trustee. (A)
The Trustee may resign and thereby become discharged from
the trusts created under this Indenture by notice in writing
to be given to the Authority and by notice mailed, postage
prepaid to the owners of the Bonds not less than sixty days
before such resignation is to take effect, but such
resignation shall not take effect until the appointment of a
successor Trustee pursuant to Section 9.9 hereof and such
successor Trustee shall accept such trust.
(B) The Trustee may be removed at any time thirty
(30) days after an instrument or concurrent instruments in
writing, is filed with the Trustee and signed by the owners
of not less than a majority in principal amount of the Bonds
then Outstanding or their attorneys-in-fact duly authorized,
but such removal shall not take effect until the appointment
of a successor Trustee pursuant to Section 9.9 hereof and
such successor Trustee shall accept such trust. The Trustee
shall promptly give notice of such filing or request to the
Authority.
Section 9.9. Successor Trustee. (A) If at any time
the Trustee shall resign, or shall be removed, be dissolved
or otherwise become incapable of acting or shall be adjudged
a bankrupt or insolvent, or if a receiver, liquidator or
conservator thereof, or of its property, shall be appointed,
or if any public officer shall take charge or control of the
Trustee or of its property or affairs, the position of
Trustee shall thereupon become vacant. If the position of
Trustee shall become vacant for any of the foregoing reasons
or for any other reason, the Authority shall appoint a
successor Trustee to fill such vacancy. If the Authority
fails to act prior to the date of resignation of any Trustee
or within fifteen days after the position of Trustee becomes
vacant, the Trustee may appoint a temporary successor
Trustee. The Authority may thereafter appoint a successor
Trustee to succeed such temporary Trustee. Within
forty-five (45) days after such appointment, the Authority
or the successor Trustee shall cause notice of such
appointment to be mailed, postage prepaid, to all owners of
the Bonds.
(B) At any time within one year after such
vacancy shall have occurred, the owners of a majority in
principal amount of the Bonds then Outstanding, by an
instrument or concurrent instruments in writing, signed by
such owners of the Bonds or their attorneys-in-fact
thereunto duly authorized and filed with the Authority, may
appoint a successor Trustee, which shall, immediately and
without further act, supersede any Trustee theretofore
appointed. If no appointment of a successor Trustee shall
be made pursuant to the foregoing provisions of this
Section, the owner of any Bond then Outstanding or any
retiring Trustee may apply to any court of competent
jurisdiction to appoint a successor Trustee. Such court may
thereupon, after such notice, if any, as such court may deem
proper and prescribe, appoint a successor Trustee.
(C) Any Trustee appointed under this Section
shall be a national banking association or a bank or trust
company duly organized under the laws of the State or under
the laws of any state of the United States authorized to
exercise corporate trust powers. At the time of its
appointment, any successor Trustee shall have a capital
stock and surplus aggregating not less than $75,000,000,
shall be acceptable to the Bond Insurer and (if the Bonds
are then rated by Moody's) be rated not less than Baa3 or
P-3 (or a substantially equivalent rating) by Moody's or
otherwise be acceptable to Moody's.
(D) Every successor Trustee shall execute,
acknowledge and deliver to its predecessor, and also to the
Authority, an instrument in writing accepting such
appointment, and thereupon such successor Trustee, without
any further act, deed, or conveyance, shall become fully
vested with all monies, estates, properties, rights,
immunities, powers and trusts, and subject to all the duties
and obligations of its predecessor, with like effect as if
originally named as such Trustee; but such predecessor
shall, nevertheless, on the written request of its successor
or of the Authority, and upon payment of the compensation,
expenses, charges and other disbursements of such
predecessor which are due and payable pursuant to Section
9.4 hereof, execute and deliver an instrument transferring
to such successor Trustee all the estate, properties,
rights, immunities, powers and trusts of such predecessor,
except any indemnification rights. Every predecessor
Trustee shall also deliver all property and monies held by
it under the Indenture to its successor. Should any
instrument in writing from the Authority be required by any
successor Trustee for more fully and certainly vesting in
such Trustee, the estate, properties, rights, immunities,
powers and trusts vested or intended to be vested in the
predecessor Trustee any such instrument in writing shall, on
request, be executed, acknowledged and delivered by the
Authority. Any successor Trustee shall promptly notify the
Paying Agents of its appointment as Trustee.
(E) Any company into which the Trustee may be
merged or converted or with which it may be consolidated or
any company resulting from any merger, conversion or
consolidation to which it shall be a party or any company to
which the Trustee may sell or transfer all or substantially
all of its corporate trust business, provided such company
shall be a national banking association or a bank or trust
company duly organized under the laws of any state of the
United States, shall have a capital stock and surplus
aggregating not less than $50,000,000, shall (if the Bonds
are then rated by Moody's) be rated not less than Baa3 or
P-3 (or a substantially equivalent rating) by Moody's or
otherwise be acceptable to Moody's and shall be authorized
by law to perform all the duties imposed upon it by the
Indenture, shall be the successor to such Trustee, both in
its capacity as Trustee and in its capacity as Paying Agent
if the Trustee is serving as Paying Agent, without the
execution or filing of any paper or the performance of any
further act.
(F) Any Trustee which becomes incapable of acting
as Trustee shall pay over, assign and deliver to its
successor any monies, funds or investments held by it in the
manner provided in Section 9.9(D) and shall render an
accounting to the Authority.
(G) Notwithstanding any other provision of this
Indenture to the contrary, no removal, resignation or
termination of the Trustee shall take effect until a
successor, acceptable to the Bond Insurer, shall be
appointed.
Section 9.10. Appointment and Responsibilities of
Paying Agent. The initial Paying Agent shall be Fleet
National Bank, Hartford, Connecticut. The Paying Agent
shall be entitled to the advice of counsel (who may be
counsel for any party) and shall not be liable for any
action taken in good faith in reliance on such advice. The
Paying Agent may rely conclusively on any telephone or
written notice, certificate or other document furnished to
it under this Indenture and reasonably believed by it to be
genuine. The Paying Agent shall not be liable for any
action taken or omitted to be taken by it in good faith and
reasonably believed by it to be within the discretion or
power conferred upon it, or taken by it pursuant to any
direction or instruction by which it is governed under this
Indenture or omitted to be taken by it by reason of the lack
of direction or instruction required for such action, or be
responsible for the consequences of any error of judgment
reasonably made by it. When any payment or other action by
the Paying Agent is called for by this Indenture, it may
defer such action pending receipt of such evidence, if any,
as it may reasonably require in support thereof. A
permissive right or power to act shall not be construed as a
requirement to act. The Paying Agent shall not in any event
be liable for the application or misapplication of funds, or
for other acts or defaults, by any person, firm or
corporation except by their respective directors, officers,
agents and employees. No recourse shall be had by the
Borrower, the Authority, the Trustee or any Bondowner for
any claim based upon the bad faith, fraud or deceit of such
person. For the purposes of this Indenture matters shall
not be considered to be known to the Paying Agent unless
they are known to an officer in its corporate trust
division. The Paying Agent shall not require
indemnification either (i) prior to making a demand under
the Standby Bond Purchase Agreement pursuant to Section
5.8(B), (ii) prior to notifying the Bond Insurer of the
occurrence of an Event of Default pursuant to Section 13.2,
or (iii) prior to making any payment when due of principal,
premium or interest on any Bond to be made by the Paying
Agent to any Bondowner, except and unless such drawing or
payment is prohibited by or violates applicable law or any
outstanding or pending court or governmental order or
decree.
The Paying Agent shall act as such and as Bond
registrar and transfer agent. The Paying Agent, which may
act by means of agents, shall signify its acceptance of the
duties and obligations imposed upon it hereunder by its
written instrument of acceptance under which the Paying
Agent will agree to:
(1) hold all sums delivered to it by the Trustee
for the payment of principal of, premium, if any, and
interest on the Bonds uninvested in trust for the
benefit of the Bondowners until such sums shall be paid
to the Bondowners or otherwise disposed of as herein
provided;
(2) subject to Section 2.3(F), hold all Bonds
tendered to it hereunder in trust for the benefit of
the respective Bondowners until moneys representing the
Purchase Price of such Bonds shall have been delivered
to or for the account of or to the order of such
Bondowners;
(3) hold all moneys delivered to it hereunder for
the purchase of Bonds (including amounts made available
under the Standby Bond Purchase Agreement and amounts
received from the Borrower) in trust uninvested for the
benefit of the Person that shall have so delivered such
moneys until the Bonds purchased with such moneys shall
have been delivered to or for the account of such
Person;
(4) subject to Section 2.3(F), hold all Bank
Bonds in trust for the benefit of the Bank until such
Bank Bonds have been remarketed by the Remarketing
Agent and the commitment of the Bank to purchase Bonds
under the Standby Bond Purchase Agreement has been
increased as required by Section 2.3(G)(9) hereof,
purchased by the Borrower, or redeemed and pay to the
Bank, in accordance with the Standby Bond Purchase
Agreement, moneys tendered to it upon a remarketing of
Bonds secured by a Standby Bond Purchase Agreement, to
the extent that the Purchase Price of such Bonds was
paid from moneys drawn under the Standby Bond Purchase
Agreement;
(5) subject to Section 2.3(F), hold all Borrower
Bonds in trust for the benefit of the Borrower until
such Borrower Bonds have been remarketed by the
Remarketing Agent, redeemed, or cancelled;
(6) keep such books and records as shall be
consistent with industry practice and make such books
and records, including the books of registration for
the Bonds, available for inspection by the parties
hereto and the Remarketing Agent at all reasonable
times;
(7) promptly report to the Trustee all
authentications of Bonds transferred, exchanged or
remarketed and any information received by it
concerning the names and addresses of Bondowners;
(8) give all notices required of it in this
Indenture at the times and in the manner required by
this Indenture and send to the Remarketing Agent copies
of all such notices;
(9) execute and deliver the Representation Letter
and cooperate with The Depository Trust Company (or any
successor depository), the Bank, the Borrower, and the
Remarketing Agent in connection with the transfer,
remarketing and payment of Tendered Bonds; and
(10) take all other actions and perform all other
duties and obligations as may be required of it as
Paying Agent under this Indenture.
In addition, in its instrument of acceptance the Paying
Agent shall assign to the Trustee all of its rights to
enforce payment under the Standby Bond Purchase Agreement
after the occurrence of an Event of Default.
Section 9.11. Resignation or Removal of Paying Agent;
Successors. (A) Any Paying Agent may at any time resign and
be discharged of the duties and obligations created by the
Indenture by giving at least sixty days' written notice to
the Authority, the Trustee, the Borrower, the Remarketing
Agent and the Bank. Any successor Paying Agent shall be
appointed by the Authority, at the direction of the
Borrower, with the approval of the Trustee, the Bank and the
Remarketing Agent and shall be a bank or trust company duly
organized under the laws of any state of the United States
or a national banking association, having a capital stock
and surplus aggregating at least $50,000,000 and be at the
time of appointment rated at least Baa3 or P-3 (or a
substantially equivalent rating) by Moody's or otherwise be
acceptable to Moody's, shall be registered as a transfer
agent with the Securities and Exchange Commission, shall
have the power to authenticate bonds pursuant to the Act,
and unless the Bonds are in Book-Entry Only System, shall be
capable of performing, in its own name, or through an agent,
the duties prescribed for it herein in New York, New York,
and willing and able to accept the office on reasonable and
customary terms and authorized by law to perform all the
duties imposed upon it by this Indenture. The Paying Agent
may be removed at any time by the Authority at the direction
of the Borrower by a written instrument filed with the
Trustee, the Remarketing Agent, the Bank and the Paying
Agent. The Paying Agent may, but need not be, the same
person as the Trustee.
(B) If the position of Paying Agent shall become
vacant for any reason, or if any bankruptcy, insolvency or
similar proceeding shall be commenced by or against the
Paying Agent, the Authority shall appoint a successor Paying
Agent designated by the Borrower and approved in writing by
the Bond Insurer to fill the vacancy. A written acceptance
of office shall be filed by the successor Paying Agent. The
Trustee shall give notice of the appointment of a successor
Paying Agent in writing to each Bondowner. The Trustee will
promptly certify to the Borrower that it has mailed such
notice to all Bondowners, and such certificate will be
conclusive evidence that such notice was given in the manner
required hereby.
(C) In the event of the resignation or removal of
the Paying Agent, the Paying Agent shall pay over, assign,
transfer and deliver the Standby Bond Purchase Agreement and
any moneys and Bonds, including Bank Bonds and
unauthenticated Bonds, held by it and the books of registry
maintained by it in such capacity to its successor. No
resignation or removal of the Paying Agent shall be
effective until a successor has been appointed and has
accepted its appointment, has accepted its duties hereunder
and has met any requirements under the Standby Bond Purchase
Agreement to become entitled to exercise the rights
thereunder of the Paying Agent for the Bonds supported by
the Standby Bond Purchase Agreement.
(D) Successors. Any corporation, association,
partnership or firm which succeeds to the business of the
Paying Agent as a whole or substantially as a whole, whether
by sale, merger, consolidation or otherwise, shall thereby
become vested with all the property, rights and powers of
the Paying Agent under this Indenture and shall be subject
to all the duties and obligations of the Paying Agent under
this Indenture.
The Paying Agent shall send or cause to be sent notice
to Bondowners of a change of address for the delivery of
Bonds or notice or the payment of principal or purchase
price of Bonds.
Section 9.12. Monies Held for Particular Bonds. The
amounts held by the Trustee or Paying Agents for the payment
of the interest, principal or Redemption Price due on any
date with respect to particular Bonds, on and after such
date and pending such payment, shall be set aside on its
books and held in trust by it for the owners of the Bonds
entitled thereto. Such funds shall be invested in Federal
Securities at the direction of the Borrower for the account
of the Borrower or shall otherwise remain uninvested.
Section 9.13. Continuation Statements. The Trustee
shall cause all continuation statements necessary to
preserve and protect the security interest of the Trustee in
the collateral pledged by the Authority in the granting
clauses hereof to be filed in the applicable State offices
so as to continue the perfected status thereof pursuant to
the Uniform Commercial Code of the State.
Section 9.14. Obligation to Report Defaults. Upon an
officer in the Trustee's corporate trust department becoming
aware of any condition or event which constitutes, or with
the giving of notice or the passage of time would
constitute, an event of default under the Financing
Documents or this Indenture, the Trustee shall deliver to
the Authority a written notice stating the existence thereof
and the action it proposes to take with respect thereto.
Becoming aware means the actual knowledge of an officer in
the Trustee's corporate trust department.
Section 9.15. Payments Due on non-Business Day. In
any case where the date of maturity of interest on or
principal of the Bonds or the date fixed for redemption of
any Bonds shall, in the city of payment, be a day other than
a Business Day, then payment of such amount shall be made as
provided in the forms of the Bonds.
Section 9.16. Appointment of Co-Trustee. (A) It is
the purpose of this Indenture that there shall be no
violation of any law of any jurisdiction denying or
restricting the right of banking corporations or
associations to transact business as trustee in such
jurisdiction. It is recognized that in case of litigation
under this Indenture or the Agreement, and in particular in
case of the enforcement of either on default, or in case the
Trustee deems that by reason of any present or future law of
any jurisdiction it may not exercise any of the powers,
rights or remedies herein granted to the Trustee or hold
title to the properties, in trust, as herein granted, or
take any other action which may be desirable or necessary in
connection therewith, it may be necessary that the Trustee
appoint an additional individual or institution as a
separate trustee or Co-Trustee. The following provisions of
this Section are adapted to these ends.
(B) In the event that the Trustee appoints an
additional individual or institution as a separate trustee
or Co-Trustee, each and every remedy, power, right, claim,
demand, cause of action, immunity, estate, title, interest
and lien expressed or intended by this Indenture to be
exercised by or vested in or conveyed to the Trustee with
respect thereto shall be exercisable by and vest in such
separate trustee or Co-Trustee but only to the extent
necessary to enable such separate trustee or Co-Trustee to
exercise such powers, rights and remedies, and every
covenant and obligation necessary to the exercise thereof by
such separate trustee or Co-Trustee shall run to and be
enforceable by either of them.
(C) Should any instrument in writing from the
Authority be required by the separate trustee or Co-Trustee
so appointed by the Trustee for more fully and certainly
vesting in and confirming to him or it such properties,
rights, powers, trusts, duties and obligations, any and all
such instruments in writing shall, on request, be executed,
acknowledged and delivered by the Authority. In case any
separate trustee or Co-Trustee, or a successor to either,
shall die, become incapable of acting, resign or be removed,
all the estates, properties, rights, powers, trusts, duties
and obligations of such separate trustee or Co-Trustee, so
far as permitted by law, shall vest in and be exercised by
the Trustee until the appointment of a new trustee or
successor to such separate trustee or Co-Trustee.
(D) Any Co-Trustee appointed under this Section
shall have outstanding securities rated at least Baa3 or P-3
(or a substantially equivalent rating) by Moody's or shall
otherwise be acceptable to Moody's.
Section 9.17. Remarketing Agent. (A) Qualifications.
The Authority shall, with the approval of the Borrower,
appoint one or more Remarketing Agents for the Bonds, when
the Bonds are in the Daily, Flexible, Weekly or Multiannual
Mode, subject to the conditions set forth herein. If more
than one Remarketing Agent is appointed by the Authority,
the Authority may, with the approval of the Borrower,
designate which Bonds each Remarketing Agent will be
responsible for remarketing and performing the other duties
and obligations imposed upon it hereunder. The Remarketing
Agent shall designate to the Trustee its principal office
and signify its acceptance of the duties and obligations
imposed upon it hereunder by a written instrument of
acceptance delivered to the Authority, the Trustee and the
Borrower. The Remarketing Agent shall be authorized by law
to perform all the duties imposed upon it by this Indenture
and shall have a capitalization of at least $10,000,000 or
have a line of credit with a commercial bank in the amount
of at least $15,000,000 and (x) outstanding securities rated
at least Baa3 or P-3 (or a substantially equivalent rating)
by Moody's unless the Borrower received written confirmation
from Moody's that such a requirement is not then necessary
to the maintenance of any then existing Moody's rating on
the Bonds or (y) otherwise be acceptable to Moody's.
(B) Responsibilities. The Remarketing Agent,
which may act by means of agents, shall signify its
acceptance of the duties and obligations imposed upon it
hereunder by a written agreement with the Borrower under
which the Remarketing Agent will agree, among other things,
to:
(1) determine the Daily, Flexible, Weekly,
Multiannual or Fixed Rate pursuant to and in accordance
with Section 2.3(G)(1)(a), (2)(a), (3)(a), 4(a) or (5)
and the forms of Daily, Flexible, Weekly, Multiannual
and Fixed Rate Bonds;
(2) give all notices to the Trustee and Paying
Agent regarding the determination of interest rates on
the Bonds and regarding Tendered Bonds as are required
of the Remarketing Agent in this Indenture;
(3) hold all moneys received hereunder from the
remarketing of Tendered Bonds for the benefit of the
person or entity which shall have delivered such moneys
until the Remarketing Agent shall have transferred such
moneys to the Paying Agent as provided in this
Indenture;
(4) keep such books and records with respect to
its duties as Remarketing Agent as shall be consistent
with prudent industry practice and make such books and
records available for inspection by the parties hereto
and the Paying Agent at all reasonable times;
(5) use its best efforts to remarket Bonds in
accordance with this Indenture and any remarketing
agreement entered into by the Remarketing Agent, the
Borrower and the Authority; and
(6) execute and deliver the Representation
Letter.
The Remarketing Agent may enter into custodial
agreements with one or more banking or similar institutions
for the deposit and holding of the Bonds in order to
facilitate the tendering and remarketing of Bonds as
provided in this Indenture, provided, however, that in no
event shall the Authority, the Trustee or the Paying Agent
be responsible or held liable for any action taken or not
taken under any such custodial agreement and in no way shall
any such custodial agreement relieve or otherwise alter the
obligations and responsibilities of the Remarketing Agent
set forth in this Indenture.
(C) Removal or Resignation of Remarketing Agent;
Successors. The Remarketing Agent may at any time resign
and be discharged of the duties and obligations created by
this Indenture by giving at least 30 days' notice to the
Authority, the Borrower, the Bank, the Paying Agent and the
Trustee, or at any time, effective immediately, if the
Remarketing Agent gives notice to the Borrower and the
Trustee that the Borrower has failed to supply the
Remarketing Agent with such documents and other information
as the Remarketing Agent deems necessary to be delivered to
purchasers in connection with the sale of Bonds in the
secondary market. The Remarketing Agent may be removed at
any time and a successor Remarketing Agent may be appointed,
whether to fill a vacancy caused by resignation or removal,
by the Authority at the written direction of the Borrower,
by a written instrument filed with the Remarketing Agent,
the Bank, the Paying Agent and the Trustee. Within 20 days
of receipt of such filing, the Authority shall confirm in
writing to the Borrower, the successor Remarketing Agent,
the Bank, the Paying Agent and the Trustee that appointment
of the successor Remarketing Agent has been approved. If
the Authority does not approve the appointment of the
successor Remarketing Agent designated by the Borrower, it
shall so notify the Borrower and the Borrower shall request
the appointment of an alternative successor Remarketing
Agent in accordance with the provisions hereof, which
appointment shall either be approved by the Authority or
shall automatically take effect on the last day of the
20-day period referred to above; provided that all actions
taken by the successor Remarketing Agent during such 20-day
period shall be fully effective as if the appointment of the
Remarketing Agent had been approved by the Authority.
In the event that the Remarketing Agent shall
resign or be removed, or be dissolved, or if the property or
affairs of the Remarketing Agent shall be taken under the
control of any state or federal court or administrative body
because of bankruptcy or insolvency, or for any other
reason, a successor Remarketing Agent shall be appointed in
accordance with the procedure set forth in Section (A) with
regard to appointment of a successor Remarketing Agent upon
removal of the Remarketing Agent.
Any corporation, association, partnership or firm
which succeeds to the business of the Remarketing Agent as a
whole or substantially as a whole, whether by sale, merger,
consolidation or otherwise, shall thereby become vested with
all the property, rights and powers of the Remarketing Agent
under this Indenture and shall be subject to all the duties
and obligations of the Remarketing Agent under this
Indenture. In the event that the Remarketing Agent shall
resign or be removed, or be dissolved, or if the property or
affairs of the Remarketing Agent shall be taken under the
control of any state or federal court or administrative body
because of bankruptcy or insolvency, or for any other
reason, and a successor shall not have been appointed within
thirty (30) days, the Trustee shall apply to a court of
competent jurisdiction for such appointment. The Trustee
shall give written notice to the Bondowners of any removal
or resignation of the Remarketing Agent. No resignation or
removal of the Remarketing Agent shall be effective until a
successor has been appointed and accepted its appointment.
Section 9.18. Purchase of Bonds Tendered. (A) Notice.
The Remarketing Agent shall give notice to the Paying Agent
electronically or by telephone, and if by telephone,
promptly confirmed in writing, specifying the principal
amount of Tendered Bonds as to which the Remarketing Agent
has found purchasers, the amounts the Remarketing Agent has
received for the purchase of Tendered Bonds, and any
deficiency in amounts available to pay the Purchase Price of
Tendered Bonds at or before (A) 12:30 P.M. on each Purchase
Date for Tendered Bonds that are in the Daily or Flexible
Mode, (B) 12:00 noon on each Purchase Date for Tendered
Bonds that are in the Weekly Mode, or (C) 2:00 P.M. two (2)
Business Days before the Purchase Date for Tendered Bonds
that are in the Multiannual or Fixed Rate Mode.
Notwithstanding the instructions to the Paying Agent set
forth in Section 9.18(B) concerning the amount to be
demanded under the Standby Bond Purchase Agreement, if the
Paying Agent has not received a notice from the Remarketing
Agent by the appropriate time specified in the immediately
preceding sentence, the Paying Agent shall take the actions
specified by the Standby Bond Purchase Agreement to obtain
immediately available funds in an amount sufficient to
purchase all the Bonds supported by a Standby Bond Purchase
Agreement to be tendered on the Purchase Date. The
Remarketing Agent shall give written notice to the Paying
Agent of the names, addresses and taxpayer identification
numbers of the purchasers and the number and denominations
of Bonds to be delivered to each purchaser, and in the case
of Bonds that are to be in the Flexible or Multiannual Mode,
the current rate and the next scheduled Purchase Date of
each such Bond successfully remarketed at or before (A)
12:30 P.M. on each Purchase Date for Tendered Bonds that are
in the Daily, Flexible or Weekly Mode, or (B) 2:00 P.M. two
(2) Business Days before the Purchase Date for Tendered
Bonds that are in the Multiannual or Fixed Rate Mode. As
soon as practicable after the remarketing of any Bank Bond,
the Remarketing Agent shall give electronic notice to the
Trustee, the Paying Agent, the Bank and the Borrower,
specifying the principal amount of Bank Bonds which were
remarketed.
(B) Sources of Payments. If the Tendered Bonds
are supported by a Standby Bond Purchase Agreement, the
Paying Agent shall take the action specified by the Standby
Bond Purchase Agreement to obtain an amount necessary to
purchase the Tendered Bonds for which the Remarketing Agent
has not received the Purchase Price not later than (A) 1:00
P.M. on the Purchase Date for Tendered Bonds that are in the
Daily or Flexible Mode, (B) 12:30 P.M. on the Purchase Date
for Tendered Bonds that are in the Weekly Mode, or (C) 4:00
P.M. one (1) Business Day before the Purchase Date for
Tendered Bonds that are in any other Mode. In determining
the amount necessary to purchase such Tendered Bonds, the
Paying Agent shall take into account any amounts on deposit
in the Debt Service Fund pursuant to Section 5.8(A) to pay
interest on such Bonds on the Tender Date. If the Tendered
Bonds are not supported by a Standby Bond Purchase
Agreement, the Paying Agent shall not later than (A) 1:30
P.M. on the Purchase Date for Tendered Bonds that are in the
Daily, Flexible or Weekly Mode, or (B) 4:00 P.M. one (1)
Business Day before the Purchase Date for Tendered Bonds
that are in any other Mode, notify the Borrower of the
amount necessary to purchase the Tendered Bonds for which
the Remarketing Agent has not received the Purchase Price,
and the Borrower shall pay the Paying Agent such amount not
later than (A) 3:30 P.M. on the Purchase Date in the case of
Tendered Bonds that are in the Daily, Flexible or Weekly
Mode, or (B) 10:00 A.M. on the Purchase Date in the case of
Tendered Bonds that are in any other Mode. The Remarketing
Agent shall deliver to the Paying Agent all amounts received
by the Remarketing Agent as proceeds of the remarketing of
Bonds at or before (A) the close of business on the Purchase
Date for Tendered Bonds that are in the Daily, Flexible or
Weekly Mode, or (B) 2:00 P.M. on the Purchase Date for
Tendered Bonds that are in the Multiannual or Fixed Rate
Mode. If the Bonds are supported by a Standby Bond Purchase
Agreement and the Remarketing Agent does not deliver to the
Paying Agent proceeds of remarketing sufficient, together
with amounts previously received under the Standby Bond
Purchase Agreement, to pay in full the Purchase Price of all
Bonds due on the Purchase Date, the Bonds for which such
proceeds shall not have been delivered shall not be
considered to have been remarketed for purposes of this
Indenture and after purchase under the Standby Bond Purchase
Agreement shall be deemed Bank Bonds and the proposed
purchaser of such Bonds shall not be deemed to be the owner
of such Bonds, and the Paying Agent shall make an additional
demand under the Standby Bond Purchase Agreement in
accordance with the terms thereof and thereafter the
Borrower shall be liable for the shortfall. Any proceeds of
remarketing being held pending receipt of sufficient funds
to pay in full the Purchase Price of all Bonds due on the
Purchase Date shall be invested in Federal Securities at the
direction of the Borrower or shall otherwise remain
uninvested. Any amounts disbursed by the Bank on any
Purchase Date to pay the Purchase Price of unremarketed
Bonds which are not used for such purpose shall be
immediately repaid to the Bank in immediately available
funds.
(C) Payments by the Paying Agent. At or before
the close of business on the Delivery Date and upon receipt
by the Paying Agent of the Purchase Price of the Tendered
Bonds that are delivered to it, the Paying Agent shall pay
the Purchase Price of the Bonds to the registered owners
thereof as provided in the applicable form of Bonds. The
Paying Agent shall apply in order, first, moneys paid to it
by the Remarketing Agent or by new purchasers of the Bonds
tendered as proceeds of the remarketing of such Bonds by the
Remarketing Agent, second, but only with respect to Bonds
supported by the Standby Bond Purchase Agreement, moneys
derived from demands on the Standby Bond Purchase Agreement
for the purpose of purchasing Tendered Bonds (including
amounts derived from demands on the Standby Bond Purchase
Agreement to pay accrued interest on the Tendered Bonds),
and third, moneys paid to it by the Borrower. If sufficient
funds are not available for the purchase of all Bonds
tendered on any Delivery Date, no purchase shall be
consummated.
(D) Commencement of New Mode or Rate Period.
Whenever Bonds in the Flexible or Multiannual Mode are
subject to mandatory tender for purchase on an Effective
Date, the new Rate Period for the Bonds (including a new
Rate Period in a new Mode) shall commence immediately upon
the Bonds becoming subject to mandatory tender for purchase.
Section 9.19. Remarketing of Bonds Tendered. (A)
General. While the Bonds are in the Daily, Flexible, Weekly
or Multiannual Mode, the Remarketing Agent shall solicit
offers to purchase and use its best efforts to find a
purchaser for Tendered Bonds, Bank Bonds and Borrower Bonds,
provided that Bonds supported by a Standby Bond Purchase
Agreement shall not be remarketed to the Authority, the
Borrower or "insiders" of either of them as that term is
defined in the United States Bankruptcy Code. Any such
purchase shall be made by payment of the Purchase Price in
immediately available funds to the Paying Agent at the time
specified in Section 9.18(B). The Purchase Price shall be
equal to the principal amount to be purchased together with
the interest accrued on such principal amount to the
Purchase Date. By (i) 2:15 P.M., in the case of Bonds that
are in the Daily or Flexible Mode, or (ii) 2:00 P.M., in the
case of Bonds that are in any other Mode, on the Purchase
Date, Bonds remarketed under this section shall be made
available by the Paying Agent to the purchasers thereof (in
the case of Bonds in the Flexible Mode, delivered by the
Paying Agent to the Remarketing Agent) and shall be
registered in the manner directed by the recipient thereof,
provided that such Bonds shall not be delivered unless and
until the Paying Agent has received the Purchase Price
therefor, except that Bonds in the Flexible Mode may be
delivered against a window receipt guaranteeing same day
payment in immediately available funds. Bonds not
remarketed shall be held by the Paying Agent. Bank Bonds
shall not be released unless and until the Bank has been
paid principal of and interest accrued on such Bonds at the
Bank Rate.
Bonds the Purchase Price of which is paid for with
funds provided by the Borrower pursuant to Section 5.8(F) or
9.18(B) shall be registered in the name of the Borrower by
the Paying Agent and shall be "Borrower Bonds". Borrower
Bonds shall be held by the Paying Agent for the account of
the Borrower until transferred pursuant to this Section or
canceled pursuant to instructions of the Borrower. Borrower
Bonds shall be registered as such on the books and records
maintained by the Paying Agent for registration of Bonds,
but the Paying Agent shall not be required to authenticate
or deliver Borrower Bonds. Any Borrower Bonds that remain
unsold for a period of ninety (90) days (or such longer
period as may be approved in an opinion of Bond Counsel
reasonably acceptable to the Trustee) shall be automatically
deemed canceled. Upon receipt by the Paying Agent of notice
from the Remarketing Agent that a purchaser has been found
for Bank Bonds or Borrower Bonds held by the Paying Agent,
the Paying Agent shall register and deliver such Bonds to
such purchaser (at which time such Bonds shall cease to be
Bank Bonds or Borrower Bonds) upon receipt by the Paying
Agent of the Purchase Price of such Bonds. The Paying Agent
shall give notice to the Bank if and to the extent that the
Paying Agent has received the proceeds of remarketing of any
Bank Bonds promptly upon the receipt thereof. The Paying
Agent shall immediately notify (subsequently confirmed in
writing) the Remarketing Agent whenever (i) it is prohibited
from registering and delivering Bonds pursuant to this
Indenture and (ii) if the Paying Agent has been so
prohibited, upon the restoration of its power hereunder to
register and deliver Bonds. Bank Bonds shall be delivered
to and held by the Paying Agent as custodian for the Bank
and shall not be subsequently transferred or assigned by the
Bank except as provided in this Section and clause (4) of
Section 9.10(A) hereof. No Bonds that are automatically
converted to a Flexible Mode with a one day Rate Period
after failure of an optional conversion from one Mode to
another (or from one Rate Period to another in the
Multiannual Mode) shall be remarketed until the Paying Agent
notifies the Remarketing Agent (promptly confirmed in
writing) that such Bonds are supported by a Standby Bond
Purchase Agreement meeting the requirements of Section
3.12(B) of the Agreement. If the Bonds are then rated by
Moody's, any Bonds that have been defeased pursuant to
Section 12.1 shall not be remarketed unless the Remarketing
Agent receives written confirmation from Moody's that such
remarketing will not adversely affect the rating on the
Bonds.
(B) Remarketing of Bonds in the Daily or Weekly
Mode Between Notice and Redemption or Conversion Date. No
Bonds in the Daily or Weekly Mode scheduled to be redeemed
or converted to a different Mode may be remarketed under
Section 9.19(A) after receipt by the Remarketing Agent of
notice of redemption or conversion of such Bonds to a
specified Mode from the Borrower unless the Remarketing
Agent, on or before the redemption date or Purchase Date,
gives notice to the purchaser that the Bonds will be
redeemed or converted, and such purchaser will be required
to surrender its Bonds for payment on the applicable
redemption date or to tender its Bonds for mandatory
purchase on the applicable Conversion Date, as the case may
be.
Section 9.20. [Reserved].
Section 9.21. Reduction of Standby Bond Purchase
Agreement on Change in Mode; Release of Standby Bond
Purchase Agreement upon Conversion to Multiannual or Fixed
Rate Mode. If Bonds are converted from one Mode to another
Mode for which the Paying Agent is required to be entitled
to demand funds under the Standby Bond Purchase Agreement
for a reduced number of days' interest, as described in
Section 3.12(B)(i) of the Agreement, the Paying Agent, upon
the prior written approval of each rating agency then rating
the Bonds, may reduce the amount available under the Standby
Bond Purchase Agreement upon such conversion in accordance
with the Standby Bond Purchase Agreement.
If Bonds are converted to the Multiannual or Fixed Rate
Mode, the Paying Agent shall reduce (or if all the Bonds are
so converted, release) the Standby Bond Purchase Agreement
upon such conversion so that the Standby Bond Purchase
Agreement, if any, in effect satisfies the requirements
described in Section 3.12(B)(i) of the Agreement.
In no event shall any reduction in or release of the
Standby Bond Purchase Agreement pursuant to this Section
9.21 take effect until five (5) Business Days after the
conversion.
Section 9.22. Project Description. The Trustee shall
maintain in current form as an Appendix to the Agreement a
list of the property constituting the Project and, on the
basis of the descriptions furnished by the Borrower pursuant
to the Agreement, shall amend the list in writing to reflect
changes in the Project.
ARTICLE X
AMENDMENTS OF INDENTURE
Section 10.1. Limitation on Modifications. This
Indenture shall not be modified or amended in any respect
except as provided in and in accordance with and subject to
the provisions of this Article.
Section 10.2. Supplemental Indentures Without Consent
of Owners of the Bonds. (A) The Authority may, from time to
time and at any time, adopt Supplemental Indentures without
notice to or consent of the owners of the Bonds for any of
the following purposes:
(1) To cure any formal defect, omission or
ambiguity in this Indenture or in any description of
property subject to the lien hereof, if such action is
not adverse to the interests of the owners of the
Bonds.
(2) To grant to or confer upon the Trustee for
the benefit of the owners of the Bonds any additional
rights, remedies, powers, authority or security which
may lawfully be granted or conferred and which are not
contrary to or inconsistent with this Indenture as
theretofore in effect.
(3) To add to the covenants and agreements of the
Authority in this Indenture other covenants and
agreements to be observed by the Authority which are
not contrary to or inconsistent with this Indenture as
theretofore in effect.
(4) To add to the limitations and restrictions in
this Indenture other limitations and restrictions to be
observed by the Authority which are not contrary to or
inconsistent with this Indenture as theretofore in
effect.
(5) To confirm, as further assurance, any pledge
under, and the subjection to any lien or pledge created
or to be created by, this Indenture, of the properties
of the Project, or revenues or other income from or in
connection with the Project or of any other monies,
securities or funds, or to subject to the lien or
pledge of this Indenture additional revenues,
properties or collateral.
(6) To qualify this Indenture under the Trust
Indenture Act of 1939, as amended, or corresponding
provisions of federal laws from time to time in effect.
(7) Effective upon any Conversion Date to a new
Mode, to make any amendment affecting only such Bonds
as converted.
(8) To add provisions relating to the partial
conversion of Bonds to a new Mode which do not impair
the security for the outstanding Bonds.
(9) To enable the Authority and the Borrower to
receive or maintain a rating on the Bonds from S&P or
Moody's provided such changes qualify under (10)
hereof.
(10) To make any other changes which do not
materially adversely affect the interest of owners of
the Bonds, as evidenced to the Trustee by an opinion of
Bond Counsel.
(11) Effective upon any Conversion Date to a
Multiannual Mode or a Fixed Rate Mode, to amend the
redemption price of such Bonds as converted.
(12) Effective upon any Conversion Date, to
provide for a Standby Bond Purchase Agreement, or to
amend or omit the requirements of a Standby Bond
Purchase Agreement, affecting only such Bonds as
converted.
(13) To provide that the Book-Entry Only System
shall be in effect while the Bonds are in the Flexible
Mode.
Notwithstanding any other provision of this
Indenture, in determining whether the rights of the owners
of the Bonds will be adversely affected by any action taken
pursuant to the terms and provisions of this Indenture, the
Trustee shall consider the effect on the owners as if there
was no Insurance Policy.
(B) Before the Authority shall adopt any
Supplemental Indenture pursuant to this Section, there shall
have been filed with the Trustee an opinion of Bond Counsel
satisfactory to the Trustee stating that such Supplemental
Indenture is authorized or permitted by this Indenture and
the Act, complies with the terms of the Indenture, and that
upon enactment it will be valid and binding upon the
Authority in accordance with its terms. In addition, with
respect to clauses 7, 11 and 12 above, such Bond Counsel
opinion shall also state that such Supplemental Indenture
will not adversely affect the exclusion of interest on the
Bonds from gross income for purposes of federal income
taxation under Section 103 of the Code.
Section 10.3. Supplemental Indentures With Consent of
Owners of the Bonds. (A) Subject to the terms and
provisions contained in this Article, the owners of not less
than 66-2/3% in aggregate principal amount of the Bonds
(other than Borrower Bonds) then Outstanding (or in the
event that the proposed change does not affect all owners of
Bonds, the owners of not less than 66-2/3% of the Bonds
(other than Borrower Bonds) so affected) shall have the
right from time to time, to consent to and approve the
adoption by the Authority of any Supplemental Indenture as
shall be deemed necessary or desirable by the Authority for
the purpose of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or
provisions contained herein. Nothing herein contained shall
permit, or be construed as permitting, without the consent
of all of the owners of the Bonds affected thereby (i) a
change in the terms of redemption or maturity of the
principal of or the interest on any Outstanding Bond, or a
reduction in the principal amount or redemption price of any
Outstanding Bond or the rate of interest thereon, without
the consent of the owner of such Bond and the Bank, (ii) the
creation of a lien upon or pledge of revenues or other
income from or in connection with the Project other than the
lien or pledge created by this Indenture, (iii) a preference
or priority of any Bond or Bonds over any other Bond or
Bonds, or (iv) a reduction in the aggregate principal amount
of the Bonds required for consent to such Supplemental
Indenture.
(B) If at any time the Authority shall determine
to adopt any Supplemental Indenture for any of the purposes
of this Section, it shall cause notice of the proposed
Supplemental Indenture to be mailed, postage prepaid, to all
owners of the Bonds and the Bank. Such notice shall briefly
set forth the nature of the proposed Supplemental Indenture,
and shall state that a copy thereof is on file at the
offices of the Trustee for inspection by all owners of the
Bonds and the Bank.
(C) Within one year after the date of such
notice, the Authority may adopt such Supplemental Indenture
in substantially the form described in such notice only if
there shall have first been filed with the Authority (i) the
written consents of the Bank and the owners of not less than
66-2/3% in aggregate principal amount of the Bonds then
Outstanding so affected (other than Borrower Bonds) and (ii)
an opinion of counsel satisfactory to the Trustee stating
that such Supplemental Indenture is authorized or permitted
by this Indenture and complies with its terms, and that upon
adoption it will be valid and binding upon the Authority in
accordance with its terms. Each valid consent shall be
effective only if accompanied by proof of the owning, at the
date of such consent, of the Bonds with respect to which
such consent is given. A certificate or certificates by the
Trustee that it has examined such proof and that such proof
is sufficient in accordance with this Indenture shall be
conclusive that the consents have been given by the owners
of the Bonds described in such certificate or certificates.
Any such consent shall be binding upon the owner of the
Bonds giving such consent and upon any subsequent owner of
such Bonds and of any Bonds issued in exchange therefor
(whether or not such subsequent owner thereof has notice
thereof), unless such consent is revoked in writing by the
owner of such Bonds giving such consent or a subsequent
owner thereof by filing such revocation with the Trustee
prior to the adoption of such Supplemental Indenture.
(D) If the owners of not less than the percentage
of Bonds required by this Section and the Bank shall have
consented to and approved the execution thereof as herein
provided, no owner of any Bond shall have any right to
object to the enactment of such Supplemental Indenture, or
to object to any of the terms and provisions contained
therein or the operation thereof, or in any manner to
question the propriety of the adoption thereof, or to enjoin
or restrain the Authority from adopting the same or from
taking any action pursuant to the provisions thereof.
(E) Upon the adoption of any Supplemental
Indenture pursuant to the provisions of this Section, this
Indenture shall be deemed to be modified and amended in
accordance therewith, and the respective rights, duties and
obligations under this Indenture of the Authority, the
Trustee, the Paying Agent and all owners of Bonds then
Outstanding shall thereafter be determined, exercised and
enforced under this Indenture, subject in all respects to
such modifications and amendments.
Section 10.4. Supplemental Indenture Part of the
Indenture. Any Supplemental Indenture adopted in accordance
with the provisions of this Article shall thereafter form a
part of this Indenture and all the terms and conditions
contained in any such Supplemental Indenture as to any
provisions authorized to be contained therein shall be
deemed to be part of the terms and conditions of this
Indenture for any and all purposes. The Trustee shall
execute any Supplemental Indenture adopted in accordance
with the provisions of Sections 10.2 or 10.3 hereof;
provided, however, that the Trustee may, but shall not be
obligated to, enter into any such instrument which adversely
affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Section 10.5. Supplemental Indentures Affecting Rights
of the Bank, the Paying Agent or the Remarketing Agent. No
Supplemental Indenture may be adopted without the prior
written consent of the Bank, so long as there is a Standby
Bond Purchase Agreement, and, in the event that the
Supplemental Indenture affects any rights, powers, liability
or obligation of the Paying Agent or the Remarketing Agent
the prior written consent of the Paying Agent or the
Remarketing Agent, respectively, shall be obtained.
ARTICLE XI
AMENDMENTS OF FINANCING DOCUMENTS
Section 11.1. Rights of Borrower. Anything herein to
the contrary notwithstanding, any Supplemental Indenture
under Article X hereof which affects in any manner any
rights, powers, authority, duties or obligations of the
Borrower under the Financing Documents or of any subsequent
user of the Project or requires a revision of the Financing
Documents, the Standby Bond Purchase Agreement or subsequent
agreement with respect to the Project shall not become
effective unless and until the Borrower or such subsequent
user, as the case may be, shall have given its written
consent signed by its duly Authorized Representative to such
Supplemental Indenture.
Section 11.2. Amendments of Financing Documents Not
Requiring Consent of Owners of the Bonds. The Authority and
the Trustee may, with the consent of the Bank so long as the
Standby Bond Purchase Agreement is in effect, without the
consent of or notice to the owners of the Bonds, consent to
any amendment, change or modification of the Financing
Documents for the purpose of (i) curing any ambiguity or
formal defect therein or which, in the judgment of the
Trustee is not materially to the prejudice of the Trustee or
the owners of the Bonds or (ii) to make any other changes
which do not materially adversely affect the interests of
the owners of the Bonds, as evidenced to the Trustee by an
opinion of counsel. The Trustee shall have no liability to
any owner of the Bonds or any other person for any action
taken by it in good faith pursuant to this Section.
Section 11.3. Amendments of Financing Documents
Requiring Consent of Owners of the Bonds. Except as
provided in Section 11.2 hereof, the Authority and the
Trustee shall not consent to any amendment, change or
modification of the Financing Documents, including the
substitution of an assignee for the Borrower and the release
of the Borrower from the obligations of the Financing
Documents, without mailing of notice and the written
approval or consent of the Bank so long as the Standby Bond
Purchase Agreement is in effect and the owners of not less
than 66-2/3% in aggregate principal amount of the Bonds at
the time Outstanding (other than Borrower Bonds) and so
affected given and procured as in Section 10.3 hereof
provided. If at any time the Borrower or a subsequent user
of the Project shall request the consent of the Trustee to
any such proposed amendment, change or modification, the
Trustee shall cause notice of such proposed amendment,
change or modification to be mailed in the same manner as is
provided in Article X hereof with respect to Supplemental
Indentures. Such notice shall briefly set forth the nature
of such proposed amendment, change or modification and shall
state that copies of the instrument embodying the same are
on file at the principal office of the Trustee for
inspection by all owners of the Bonds.
Section 11.4. Consent of Bond Insurer in Addition to
Bondholder Consent. Unless otherwise provided herein, the
Bond Insurer's consent shall be required in addition to
Bondholder consent, when required for the following
purposes: (i) execution and delivery of any Supplemental
Indenture or any amendment, supplement or change to or
modification of the Agreement; (ii) removal of the Trustee
or Paying Agent and selection and appointment of any
successor trustee or paying agent; and (iii) initiation or
approval of any action not described in (i) or (ii) above
which requires Bondholder consent.
ARTICLE XII
DISCHARGE OF INDENTURE
Section 12.1. Defeasance. (A) When there are in the
Debt Service Fund sufficient funds, or non-callable and
non-prepayable Federal Securities in such principal amounts,
bearing interest at such rates and with such maturities
(including, with respect to any Bonds in the Weekly Mode,
maturities no greater than seven (7) days to fund the
payment of Purchase Price) as will provide, without
reinvestment, sufficient funds to pay the Purchase Price,
principal of, premium, if any, and interest on the Bonds in
full as and when such amounts become due, and when all the
rights hereunder of the Authority and the Trustee have been
provided for (1) the Bondowners will cease to be entitled to
any right, benefit or security under this Indenture except
the right to receive payment of the funds deposited and held
for payment and other rights set forth below or which by
their nature cannot be satisfied prior to or simultaneously
with termination of the lien hereof, (2) the security
interests created by this Indenture (except in such funds
and investments) shall terminate, and (3) the Authority and
the Trustee shall execute and deliver such instruments as
may be necessary to discharge the lien and security
interests created hereunder; provided, however, that (a) if
any such Bonds are to be redeemed prior to the maturity
thereof, such Bonds shall have been duly called for
redemption or irrevocable instructions for such a call shall
have been given to the Trustee and (b) either the Trustee
shall have received written confirmation from Moody's, if
the Bonds are then rated by Moody's, and from S&P, if the
Bonds are then rated by S&P, that the defeasance will not
result in the withdrawal or reduction of its rating on the
Bonds, or, if none of the Bonds to be defeased are in the
Daily or Weekly Mode, the Bonds are to be redeemed on or
before the next Purchase Date. Upon such defeasance, the
funds and investments required to pay or redeem the Bonds in
full shall be irrevocably set aside for that purpose. If at
the time established for defeasance the Bonds are then rated
by Moody's, a mathematical verification that the
requirements set forth in this Section have been satisfied
prepared by a firm of independent public accountants who are
recognized on a nationwide basis for skill in the
preparation of such verifications and selected by the
Borrower shall be provided to the Trustee and to Moody's;
provided, however, that Moody's may waive such verification
after notification by the Borrower of the terms of any such
defeasance. The Trustee shall cause to be mailed to all
Bondowners within fifteen (15) days of the conditions of
this section being met in the manner herein specified for
redemption of Bonds a notice stating that such conditions
have been met and that the lien of this Indenture has been
discharged, and, if the Bonds are to be redeemed prior to
maturity, specifying the date of redemption and the
redemption price. Any funds or property held by the Trustee
for payment of the Bonds under this section and not required
for such payment shall (unless there is an Event of Default
hereunder, in which case they shall be applied as provided
in Section 8.4 hereof, after satisfaction of all the rights
of the Authority and the Trustee, and payment of the rebate,
if any, due to the United States under Section IRC 148(f) of
the Code, and upon such indemnification, if any, as the
Authority or the Trustee may reasonably require, be
distributed to the Borrower. If Bonds are not presented for
final payment when due and moneys are available in the hands
of the Trustee therefor, the Trustee shall, without
liability for interest thereon, continue to hold the moneys
held for that purpose subject to Section 5.6, and interest
shall cease to accrue on the principal amount represented
thereby.
When there are in the Debt Service Fund funds or
securities as described in the preceding paragraph as are
sufficient to pay the Purchase Price, principal of, premium,
if any, and interest on, some but not all of the Bonds in
full as and when such amounts become due and the other
conditions in the preceding paragraph have been met with
respect to such Bonds, the particular Bonds (or portions
thereof) for which such provision for payment shall have
been considered made shall be selected by lot by the Trustee
and thereupon the Trustee and the Authority shall take
similar action to release the security interests created by
this Indenture in respect of such Bonds (except in such
funds or securities and investments thereon), subject
however to compliance with the applicable conditions set
forth in the provisos above.
Notwithstanding the foregoing, those provisions
relating to the maturity of Bonds, interest payments and
dates thereof, the tender of Bonds for purchase and the
Trustee's remedies with respect thereto, and provisions
relating to exchange, transfer and registration of Bonds,
replacement and cancellation of Bonds, the holding of moneys
in trust and the duties of the Trustee in connection with
all of the foregoing and the fees, expenses and indemnities
of the Trustee and the Authority, shall remain in full force
and effect and shall be binding upon the Trustee, the
Authority, the Borrower and the Bondowners notwithstanding
the release and discharge of this Indenture until the Bonds
have been actually paid in full.
Notwithstanding anything herein to the contrary, if
moneys or Federal Securities have been deposited or set
aside with the Trustee pursuant to the provisions of this
Section and the principal of, premium, if any, and interest
on the Bonds shall not, in fact, been actually paid in full,
no amendment to the provisions of this Section will be made
without the consent of the owner of each of the Bonds
affected thereby.
(B) The Authority hereby covenants that no
deposit will knowingly be made or accepted under this
Article and no use knowingly made of any such deposit
referred to in Section 12.1(A) which would cause the Bonds
to be treated as "arbitrage bonds" within the meaning of
Section 148 of the Code.
ARTICLE XIII
PROVISIONS RELATING TO BOND INSURANCE
Section 13.1. Notice of Certain Redemptions. The
Paying Agent shall notify the Bond Insurer in the manner
required by Section 13.8 of any redemption of Bonds pursuant
to the provisions of this Indenture.
Section 13.2. Notice of Default; Notices of Claims
Under Insurance Policy.
(a) The Paying Agent shall give the Bond Insurer
Immediate Notice of any Event of Default with respect to the
Bonds set forth in Section 8.1(A)(1) of which the Trustee
has knowledge. The Paying Agent shall also give the Bond
Insurer Immediate Notice if the Paying Agent has been
notified by the Borrower by the Business Day prior to any
payment date referenced in Section 8.1(A)(1) that the
Borrower does not intend to make a payment due on any such
payment date. Such notice shall specify the amount of the
anticipated deficiency, the Bonds to which such deficiency
is applicable and whether such Bonds will be deficient as to
principal or interest or both. The Paying Agent shall give
the Bond Insurer notice of an Event of Default under
Sections 8.1(A)(2), 8.1(A)(3) and 8.1(A)(4) within 30 days
after any Responsible Officer has knowledge of an Event of
Default under Sections 8.1(A)(2), 8.1(A)(3) and 8.1(A)(4).
(b) The Paying Agent shall, at the time it provides
notice to the Bond Insurer under either of the first two
sentences of Section 13.2(a), notify registered owners of
Bonds, and in the case of Bank Bonds the Bank, entitled to
receive the payment of principal or interest thereon from
the Bond Insurer (i) as to the fact of such entitlement;
(ii) that the Bond Insurer will remit to them all or a part
of the interest payments next coming due upon proof of
entitlement of holders of Bonds to interest payments and
delivery to the Insurance Trustee, in form satisfactory to
the Insurance Trustee, of an appropriate assignment of the
registered owner's right to payment; (iii) that should they
be entitled to receive full payment of principal from the
Bond Insurer, they must surrender their Bonds (along with an
appropriate instrument of assignment in form satisfactory to
the Insurance Trustee to permit ownership of such Bonds to
be registered in the name of the Bond Insurer) for payment
to the Insurance Trustee, and not the Trustee; and (iv) that
should they be entitled to receive partial payment of
principal from the Bond Insurer, they must surrender their
Bonds for payment thereon first to the Paying Agent, who
shall note on such Bonds the portion of the principal paid
by the Trustee and then, along with the appropriate
instrument of assignment in form satisfactory to the
Insurance Trustee, to the Insurance Trustee, which will then
pay the unpaid portion of principal.
(c) In the event that a Responsible Officer of the
Paying Agent has notice that any payment of principal of or
interest on a Bond which has become due for payment and
which is made to a holder of a Bond by or on behalf of the
Authority has been deemed a preferential transfer and
theretofore recovered from its registered owner pursuant to
the United States Bankruptcy Code by a trustee in bankruptcy
in accordance with a final, nonappealable order of a court
having competent jurisdiction, the Paying Agent shall, at
the time the Bond Insurer is notified that the Paying Agent
does not have sufficient funds to pay principal of or
interest on the Bonds when such payments become due, notify
all registered owners that in the event that any registered
owner's payment is so recovered, such registered owner will
be entitled to payment from the Bond Insurer to the extent
of such recovery if sufficient funds are not otherwise
available, and the Paying Agent shall furnish to the Bond
Insurer its records evidencing the payments of principal of
and interest on the Bonds which have been made by the Paying
Agent and subsequently recovered from registered owners and
the dates on which such payments were made. Notwithstanding
anything to the contrary contained in this Indenture, the
obligation of the Paying Agent to make claims under the
Policy relating to any Bonds with respect to which the
payment of principal of and/or interest has been deemed a
preferential transfer and consequently recovered from its
registered holder as described above shall survive the
discharge of this Indenture.
Section 13.3. Deemed Holder for Default and Remedies.
For all purposes of Article VIII of this Indenture other
than Section 8.1(B), the Bond Insurer shall be deemed to be
the sole holder of the Bonds. Notwithstanding Section
8.1(B), without the written consent of the Bond Insurer, (a)
upon the occurrence of an Event of Default, the principal of
the Bonds then outstanding and interest thereon shall not
become immediately due and payable and (b) the Trustee may
not waive a Default or annul a declaration that the
principal of the Bonds and interest thereon are immediately
due and payable.
Section 13.4. Supplemental Indentures and Amendments
to Agreement. Anything in this Indenture to the contrary
notwithstanding, no consent or approval of any holder of
Bonds to any Supplemental Indenture pursuant to Section 10.3
of the Indenture or to any amendment of the Agreement
pursuant to Section 9.4 thereof shall become effective
without the written consent of the Bond Insurer. In the
case of any Supplemental Indenture or any amendment to the
Agreement requiring the consent of holders of Bonds, at
least 15 Business Days prior to executing such proposed
Supplemental Indenture or any amendment to the Agreement,
the Trustee shall give notice of such execution together
with a copy of such Supplemental Indenture or any amendment
to the Agreement to the Bond Insurer and to Moody's, if the
Bonds are rated by such at the time, S&P, if the Bonds are
rated by such at the time. The Trustee shall give notice to
the Bond Insurer of any Supplemental Indenture or amendment
to the Agreement not requiring the consent of Bondholders.
Any provision of this Indenture expressly recognizing or
granting rights in or to the Bond Insurer may not be amended
in any manner which affects the rights of the Bond Insurer
hereunder without the prior written consent of the Bond
Insurer.
Section 13.5. Successor Trustee. The Trustee shall
give written notice of its resignation, in accordance with
Section 9.8, to the Bond Insurer at the same time such
notice is given to the Authority. The Authority shall give
notice to the Bond Insurer of its removal of the Trustee and
of its appointment of a successor Trustee in the event of a
resignation or removal of the Trustee, all in accordance
with Section 13.8. The Bond Insurer shall be treated as the
sole holder of Bonds for purposes of approving any successor
Trustee.
Section 13.6. Bond Insurer as Party in Interest. The
Bond Insurer shall be included as a party in interest with
respect to the Bonds and as a party entitled to (a) notify
the Trustee of the occurrence of an Event of Default, and
(b) request the Trustee to intervene in judicial proceedings
that affect the Bonds or the security therefor. The Trustee
shall be required to accept notice of an Event of Default
from the Bond Insurer as the sole holder of the Bonds.
Section 13.7. Access to the Register. Upon the
occurrence of an Event of Default which would require the
Bond Insurer to make payments of principal of or interest on
the Bonds in accordance with the Insurance Policy, the
Trustee shall provide access to the books kept for the
registration of transfer of Bonds and all records relating
to the funds and accounts maintained under this Indenture to
the Bond Insurer, the Insurance Trustee or other designee of
the Bond Insurer, and shall make arrangements with the
Insurance Trustee (i) to mail checks or drafts to the
registered owners of Bonds entitled to receive full or
partial interest payments from the Bond Insurer and (ii) to
pay principal upon Bonds surrendered to the Insurance
Trustee by the registered owners of Bonds entitled to
receive full or partial principal payments from the Bond
Insurer.
Section 13.8. Notices to Bond Insurer. For so long as
the Insurance Policy is in effect, the Trustee shall furnish
to the Bond Insurer a copy of any notice to be given to the
registered owners of the Bonds, including without
limitation, notice of any redemption or defeasance of Bonds
and any certificates rendered pursuant hereto relating to
the security for the Bonds. All notices, consents or other
communications required or permitted to be given to the Bond
Insurer under the Indenture shall be deemed sufficiently
given if given in writing, mailed by registered or certified
mail, postage prepaid and addressed as follows: AMBAC
Indemnity Corporation, One State Street Plaza, 17th Floor,
New York, New York 10004, Attention: Surveillance
Department. The Bond Insurer may from time to time give
notice in writing to all parties to this Indenture
designating a different address or addresses for notice
hereunder.
Section 13.9. Termination of Special Insurance
Requirements. The provisions of this Article shall apply
only so long as the Bond Insurer is not in default under the
Insurance Policy.
Section 13.10. Confirmation of Application of Term
"Outstanding" to Bonds Paid by Bond Insurer; Recordation of
Rights of Subrogation in Registration Books.
(a) Notwithstanding anything herein to the contrary,
in the event that the principal and/or interest due on the
Bonds shall be paid by the Bond Insurer pursuant to the
Insurance Policy, the Bonds (i) shall continue to be
outstanding within the meaning of the Indenture for all
purposes; (ii) shall not be considered defeased, otherwise
satisfied or paid by the Authority; and (iii) the assignment
and pledge of the Indenture and all covenants, agreements
and other obligations of the Authority and the Borrower to
the registered owners shall continue to exist and shall run
to the benefit of the Bond Insurer, and the Bond Insurer
shall be subrogated to the rights of such registered owners
to the extent of each such payment.
(b) To assist the Trustee in allocating available
moneys held under the Indenture, (i) in the case of
subrogation as to claims for past due interest, the Trustee
shall note the Bond Insurer's rights as subrogee on the
registration books of the Authority maintained by the
Trustee upon receipt from the Bond Insurer of proof of the
payment of interest thereon to the registered owners of the
Bonds, and (ii) in the case of subrogation as to claims for
past due principal, the Trustee shall note the Bond
Insurer's rights as subrogee on the registration books of
the Authority maintained by the Trustee upon surrender of
the Bonds by the registered owners thereof together with
proof of the payment of principal thereof.
Section 13.11. Bond Insurer as Third Party
Beneficiary. To the extent that this Indenture confers upon
or gives or grants to the Bond Insurer any right, remedy or
claim under or by reason of this Indenture, the Bond Insurer
is hereby explicitly recognized as being a third-party
beneficiary hereunder and may enforce any such right, remedy
or claim conferred, given or granted hereunder.
Section 13.12. Definitions for Purposes of Article
XIII. For purposes of this Article the following terms
shall have the following meanings:
(a) "Immediate Notice" shall mean telephonic or
facsimile notice, promptly followed by written notice by
registered or certified mail to such address as the
addressee shall have directed in writing; provided, however,
that telephonic or facsimile notice shall be effective
notwithstanding any failure to receive such written notice.
(b) "Insurance Trustee" shall mean United States Trust
Company of New York, or its successor, as Insurance Trustee
under the Insurance Policy.
(c) "Responsible Officer" shall mean an officer of the
Trustee assigned to the Trustee's corporate trust
department, including, without limitation, any Vice
President, any Assistant Vice President, any Trust Officer,
or any other officer performing functions similar to those
performed by the persons who at the time shall be such
officers and also means any other officer of the Trustee to
whom any corporate trust matter is referred because of his
knowledge of and familiarity with the particular subject.
ARTICLE XIV
GENERAL PROVISIONS
Section 14.1. Notices. Any notice, request, demand,
communication or other paper shall be sufficiently given and
shall be deemed given when delivered or mailed by registered
or certified mail, return receipt requested, postage
prepaid, or sent by telegram, addressed as follows: if to
the Authority, at 845 Brook Street, Rocky Hill, Connecticut
06067, Attention: Program Manager - Loan Administration; if
to the Borrower, c/o Northeast Utilities Service Company at
107 Selden Street, Berlin, Connecticut 06037, Attention:
Assistant Treasurer; if to the Trustee, at Fleet National
Bank, 777 Main Street, Hartford, Connecticut 06115,
Attention: Corporate Trust Department; if to the Bank, at
Societe Generale, New York Branch, 1221 Avenue of the
Americas, New York, New York 10020, Attention: Gordon R.
Eadon; if to the Paying Agent, at Fleet National Bank, 777
Main Street, Hartford, Connecticut 06115, Attention:
Corporate Trust Department; and if to the Remarketing Agent,
at 85 Broad Street, New York, New York 10004, Attention:
Municipal Finance Department. A duplicate copy of each
notice required to be given hereunder by the Trustee to
either the Authority, the Borrower, the Bank, the
Remarketing Agent, the Paying Agent, and each Bondowner,
shall also be given to the other. Any notice party may
designate any further or different addresses to which
subsequent notices, certificates or other communications
shall be sent.
All notices sent to Bondowners by the Borrower, Trustee
or Paying Agent shall simultaneously be sent by registered
or certified mail, postage prepaid, to Moody's, S&P, at
least two (2) national information services that publish or
disseminate notices of redemption of obligations such as the
Bonds, such as S&P's Called Bond Service and Kenney
Information Systems Notification Service, and all registered
securities depositories that are registered owners of the
Bonds, provided that the failure to give such notice shall
not affect the validity of any notice given to the
Bondowners. The selection of the national information
services to receive any notice or any change in the Trustee,
Paying Agent or Remarketing Agent shall be at the sole
discretion of the Trustee or the Paying Agent, as the case
may be.
Notice of any proposed amendment of this Indenture, any
Financing Document, the Insurance Policy or the Standby Bond
Purchase Agreement, or any material change to any
remarketing agreement entered into by the Remarketing Agent,
the Borrower and the Authority, or any change in the
Trustee, Paying Agent or Remarketing Agent, or of any
conversion from either the Daily, Flexible or Weekly Modes
to a Multiannual or Fixed Rate Mode shall be sent by the
Borrower to Moody's and S&P.
Notice hereunder may be waived prospectively or
retrospectively by the person entitled to the notice, but no
waiver shall affect any notice requirement as to other
persons.
Section 14.2. Covenant Against Discrimination. The
Trustee agrees and warrants that in the performance of this
Indenture it will not discriminate against any person or
group of persons on the grounds of race, color, religion,
national origin, age, sex, sexual orientation, marital
status, physical or mental disability, political beliefs,
mental retardation, or history of mental disorder in any
manner prohibited by the laws of the United States or of the
State.
Section 14.3. Parties Interested Herein. Except as
otherwise specifically provided herein, nothing in this
Indenture expressed or implied is intended or shall be
construed to confer upon, or to give to, any person or
entity, other than the Authority, the Trustee, the Borrower,
the Paying Agent, the Remarketing Agent, the Bond Insurer,
the Bank and the registered owners of the Bonds, any right,
remedy or claim under or by reason of this Indenture or any
covenant, condition or stipulation hereof, and all
covenants, stipulations, promises and agreements in this
Indenture contained by and on behalf of the Authority shall
be for the sole and exclusive benefit of the Authority, the
Trustee, the Borrower, the Paying Agent, the Remarketing
Agent, the Bond Insurer, the Bank and the registered owners
of the Bonds.
Section 14.4. Effective Date; Counterparts. This
Indenture shall become effective on delivery. It may be
simultaneously executed in several counterparts, each of
which shall be an original and all of which shall constitute
but one and the same instrument.
Section 14.5. Date for Identification Purposes Only.
The date of this Indenture shall be for identification
purposes only and shall not be construed to imply that this
Indenture was executed on such date.
Section 14.6. Time. All references to times of day in
this Indenture are references to New York City time.
IN WITNESS WHEREOF, the Connecticut Development
Authority has caused these presents to be signed in its name
and behalf by an Authorized Representative, and to evidence
its acceptance of the trusts hereby created, Fleet National
Bank, has caused these presents to be signed in its name and
behalf by its duly authorized officer, as of the date first
above written.
Connecticut Development Authority
By
Name:/s/ Antone C. Botelho, III
Authorized Representative
Fleet National Bank
By /s/Kathy A. Larimore
Assistant Vice President
APPENDIX A TO INDENTURE
[DATE]
Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Dear :
REQUISITION
The Connecticut Light and Power Company (the "Borrower")
hereby requests Fleet National Bank, as trustee under the
Indenture of Trust, dated as of May 1, 1996, as amended and
restated as of January 1, 1997, between Fleet National Bank
and the Connecticut Development Authority (the "Indenture")
to withdraw $ from the Project Fund established
under the Indenture for purposes permitted by Section 5.2
thereof. In connection with this withdrawal, the Borrower
states as follows:
1. The number of this requisition is No. .
2. Payments aggregating $ are due to the
following persons in the following amounts for
expenditures incurred in connection with the Project:
Person Amount Item
Attached hereto are invoices evidencing each such amount due
and the person to whom such amount is payable.
3. Payment is due to the Borrower in the total amount of $
in reimbursement for amounts paid by the
Borrower in connection with the Project:
Amount Item
4. Each amount set forth in paragraphs 2 and 3 hereof has
been properly paid or incurred within the provisions of
the Agreement and the Indenture, is a proper charge
against the Project Fund, is unpaid or unreimbursed,
and has not been the basis for any previous withdrawal.
5. This requisition and the use of proceeds set forth
herein are consistent in all material respects with the
Tax Regulatory Agreement with respect to the Bonds.
6. Ninety-five percent or more of the amount requisitioned
is to be applied to costs (a) paid or incurred for the
Project after the date which is 60 days prior to the
adoption of the Authority's inducement resolution, (b)
for the acquisition, construction or reconstruction of
land or property of a character subject to the
allowance for depreciation provided in Section 167 of
the Internal Revenue Code of 1986, as amended, and (c)
which are chargeable to the capital account of the
Project or would be so chargeable either with an
election by the Borrower or but for the election of the
Borrower to deduct the amount of the item.
Capitalized terms used in this requisition are used as
defined in the Indenture.
I am an Authorized Representative of the Borrower under the
Agreement.
The Connecticut Light and Power
Company
By: /s/
Name:
Title:
APPENDIX B TO INDENTURE
DTC LETTER OF REPRESENTATIONS
Exhibit 4.2.24.2
STANDBY BOND PURCHASE AGREEMENT
dated January 23, 1997
among
The Connecticut Light and Power Company
Societe Generale, New York Branch
and
Fleet National Bank, as Trustee
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND RULES OF CONSTRUCTION 2
SECTION 1.1 Definitions 2
SECTION 1.2 Rules of Construction 10
ARTICLE 2 THE COMMITMENT 11
SECTION 2.1 Commitment to Purchase Bonds 11
SECTION 2.2 Method of Purchasing 11
SECTION 2.3 Reduction of Commitment; Termination 12
SECTION 2.4 Sale of Bank Bonds; Amortization of Bank Bonds 13
SECTION 2.5 Commitment Fees 14
SECTION 2.6 Request for Extension of Stated Expiration Date14
ARTICLE 3 THE BANK RATE 15
SECTION 3.1 Applicable Interest Rate; Other Interest Provisions
15
SECTION 3.2 Place of Payment, Etc 16
SECTION 3.3 Taxes 17
SECTION 3.4 Increased Costs; Funding Losses 17
SECTION 3.5 Basis for Determining Interest Rate Inadequate or Unfair
18
SECTION 3.6 Illegality 19
ARTICLE 4 CONDITIONS PRECEDENT 19
SECTION 4.1 Conditions Precedent to Effectiveness of this Agreement
19
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 22
SECTION 5.1 Organization 22
SECTION 5.2 Authorization 22
SECTION 5.3 Enforceability 22
SECTION 5.4 Approvals 22
SECTION 5.5 Financial Information 22
SECTION 5.6 Litigation 23
SECTION 5.7 No Misrepresentations 23
SECTION 5.8 Environmental Matters 23
SECTION 5.9 Investment Company Act 24
SECTION 5.10 Public Utility 24
ARTICLE 6 AFFIRMATIVE COVENANTS 25
SECTION 6.1 Financial Statements 25
SECTION 6.2 Certificates; Other Information 25
SECTION 6.3 Payment of Obligations 26
SECTION 6.4 Conduct of Business and Maintenance of Existence; Merger
26
SECTION 6.5 Maintenance of Property; Insurance 27
SECTION 6.6 Inspection; Books and Records; Discussions 27
SECTION 6.7 Notices 27
SECTION 6.8 Indemnity 28
ARTICLE 7 NEGATIVE COVENANTS 29
SECTION 7.1 Amendment of Any Related Document 29
ARTICLE 8 EVENTS OF DEFAULT; EVENTS OF TERMINATION 29
SECTION 8.1 Events of Default; Events of Termination 29
SECTION 8.2 Remedies 31
ARTICLE 9 MISCELLANEOUS 32
SECTION 9.1 Set-off; Limitation on Set-off 32
SECTION 9.2 Obligations Absolute 33
SECTION 9.3 Liability of the Bank 34
SECTION 9.4 Confidentiality 34
SECTION 9.5 Costs, Expenses and Stamp Taxes 35
SECTION 9.6 Participants 35
SECTION 9.7 Extension of Maturity 36
SECTION 9.8 Successors and Assigns 36
SECTION 9.9 Modification or Waiver of this Agreement 36
SECTION 9.10 No Waiver of Rights by the Bank; Cumulative Rights
36
SECTION 9.11 Severability 36
SECTION 9.12 Notices 36
SECTION 9.13 Governing Law 37
SECTION 9.14 Counterparts 37
Schedules
Schedule 5.5 Material Adverse Change
Schedule 5.8 Environmental Matters
Exhibits
Exhibit A Notice of Bank Purchase (Liquidity Purchase)
Exhibit B Notice of Bank Purchase (Mandatory Purchase)
Exhibit C Certificate of Event of Termination
STANDBY BOND PURCHASE AGREEMENT
STANDBY BOND PURCHASE AGREEMENT, dated January 23, 1997 (this
"Agreement"), among THE CONNECTICUT LIGHT AND POWER COMPANY, a corporation
organized and existing under the laws of the State of Connecticut (the
"Company"), SOCIETE GENERALE, a banking corporation organized under the laws
of France, acting through its New York Branch (the "Bank"), and FLEET
NATIONAL BANK, a national banking association, as trustee under the Indenture
referred to below (including any successor trustee, the "Trustee").
W I T N E S S E T H:
WHEREAS, the Connecticut Development Authority, a body corporate
and politic, constituting a public instrumentality and a political
subdivision of the State of Connecticut (the "Authority"), has issued and
sold, pursuant to the Resolution (as defined below), $62,000,000 in aggregate
principal amount of its Pollution Control Revenue Bonds (The Connecticut
Light and Power Company Project -- 1996A Series) (the "Bonds"), pursuant to
the Original Indenture (as defined below), between the Authority and the
Trustee, as authorized pursuant to the Act (as defined below);
WHEREAS, concurrently with the execution of the Original Indenture
and the issuance of the Bonds pursuant thereto, the Company caused to be
delivered to the Trustee a letter of credit (the "Letter of Credit") issued
by Canadian Imperial Bank of Commerce, New York Agency;
WHEREAS, pursuant to an amendment and restatement of the Original
Indenture, the Company has determined to replace the Letter of Credit with an
Insurance Policy (as defined below) to be issued by the Bond Insurer (as
defined below) and a liquidity facility;
WHEREAS, the payment of the principal of and interest on the Bonds
(including Bank Bonds, as hereinafter defined) is to be insured by an
Insurance Policy (as defined below) to be issued by the Bond Insurer (as
defined below), in favor of the holders of the Bonds (including the Bank);
and
WHEREAS, the Company has requested the Bank to provide a liquidity
facility in support of the Company's obligations with respect to (a) the
portion of the Purchase Price (as defined below) corresponding to principal
of, and (b) the portion of the Purchase Price corresponding to interest on,
the Bonds delivered to the Paying Agent (as defined below);
WHEREAS, the Bank is willing to provide such liquidity facility on
the terms and conditions herein contained;
NOW, THEREFORE, in consideration of the premises herein contained,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.1 Definitions. For purposes of this Agreement, the
terms set forth in this Article have the following meanings:
"Act" means the State Commerce Act, constituting Connecticut
General Statutes, Sections 32-1a through 32-23xx, as amended.
"Alternate Liquidity Facility" has the meaning ascribed to that
term in the Indenture.
"AMBAC Adverse Change" means the downgrading of the Bond Insurer's
claims-paying ability rating below an "A" by S&P or Moody's.
"Amortization Period" has the meaning ascribed to that term in
Section 2.4(c) hereof.
"Applicable LIBOR" means, at any time, LIBOR plus the Applicable
Margin.
"Applicable Margin" means, for any day, the percentage set forth
below in the column below such term and in the row corresponding to the
"Level" status in existence on such day:
Applicable Margin
Level 1 0.40%
Level 2 0.45%
Level 3 0.50%
Level 4 0.70%
Level 5 0.95%
Level 6 1.250%
"Authority" has the meaning assigned to that term in the recitals
to this Agreement.
"Authorized Officer" means (a) with respect to the Company, the
President, any Vice President, the Treasurer or Assistant Treasurer of the
Company, or (b) with respect to the Trustee or the Paying Agent, any Senior
Vice President, Vice President, Assistant Vice President, Senior Trust
Officer, Trust Officer or Assistant Trust Officer or any equivalent officer.
"Available Commitment" means on any day the sum of the Available
Principal Commitment and the Available Interest Commitment on such day.
"Available Interest Commitment" initially means $918,000
(calculated on the basis of an assumed rate of 12% per annum for 45 days on
the initial Available Principal Commitment) and thereafter means such amount
adjusted from time to time as follows: (a) downward by an amount that bears
the same proportion to such amount as the amount of any reduction in the
Available Principal Commitment pursuant to this definition bears to the
Available Principal Commitment prior to such reduction; and (b) upward by an
amount that bears the same proportion to such amount as the amount of any
increase in the Available Principal Commitment pursuant to clause (c) of the
definition of "Available Principal Commitment" bears to the Available
Principal Commitment prior to such increase; provided that after giving
effect to such adjustment the Available Interest Commitment shall never
exceed Nine Hundred Eighteen Thousand Dollars ($918,000). Any adjustments
pursuant to clauses (a) and (b) above shall occur simultaneously with the
event requiring such adjustment.
"Available Principal Commitment" initially means Sixty-Two Million
Dollars ($62,000,000) and thereafter means such amount adjusted from time to
time as follows: (a) downward by the amount of any reduction of the
Available Principal Commitment pursuant to Section 2.3 hereof; (b) downward
by the principal amount of any Bonds purchased by the Bank pursuant to
Section 2.2 hereof; and (c) upward by the principal amount of any Bonds
theretofore purchased by the Bank pursuant to Section 2.2 hereof, which are
resold by a Bank Bondholder pursuant to Section 2.4(a) or (b) hereof. The
Available Principal Commitment shall never exceed Sixty-Two Million Dollars
($62,000,000). Any adjustments pursuant to clauses (a), (b) and (c) above
shall occur simultaneously with the event requiring such adjustment.
"Bank" has the meaning set forth in the introductory paragraph.
"Bank Bondholder" means the Bank (but only in its capacity as owner
of Bank Bonds pursuant to this Agreement) and any other Person to whom the
Bank has sold Bank Bonds pursuant to Section 2.4(a) hereof.
"Bank Bonds" means each Bond purchased with funds provided by the
Bank hereunder, until such Bonds are remarketed in accordance with the
Indenture and Section 2.4(a) hereof or sold to the Company or its designee in
accordance with Section 2.4(b) hereof.
"Bank Purchase Date" means a Business Day during the Bank Purchase
Period on which the Bank is required to purchase Tendered Bonds pursuant to
Section 2.2 hereof.
"Bank Purchase Period" means the period from the date hereof to and
including the earliest of (a) the Stated Expiration Date then in effect, (b)
the close of business on the fifth Business Day following the Conversion Date
on which all of the Bonds shall have been converted to a Fixed Rate or a
Multiannual Rate (provided, however, that if less than all of the Bonds
shall have been converted to a Fixed Rate or Multiannual Rate, the Bank's
Available Commitment shall extend only to those Bonds not bearing interest at
the Fixed Rate or the Multiannual Rate), (c) the fifth Business Day following
the mandatory tender for purchase in connection with a Substitution Date, or
(d) the Purchase Termination Date
"Bank Rate" means the interest rate(s) applicable from time to time
on the Bank Bonds as determined in accordance with Section 3.1 of this
Agreement.
"Base Rate" means, at any time, a rate per annum equal to the
higher of (a) the Prime Rate in effect at such time or (b) the Federal Funds
Effective Rate in effect at such time plus the Applicable Margin.
"Bond Insurer" means AMBAC Indemnity Corporation, a Wisconsin-
domiciled stock insurance company.
"Bonds" has the meaning assigned to that term in the recitals to
this Agreement and shall include, unless the context otherwise requires, all
Bank Bonds.
"Business Day" means any day (i) on which banks in New York City
and the city in which the corporate trust office of the Trustee is located
are not required or authorized to remain closed and (ii) on which The New
York Stock Exchange is not closed.
"Claim" has the meaning set forth in Section 6.9.
"Closing Date" means the date on which the liquidity facility
provided by this Agreement shall have become effective.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA.
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, industrial substance or
waste, petroleum or petroleum-derived substance or waste, or any constituent
of any such substance or waste, including any such substance regulated under
any Environmental Law.
"Debt" means (a) indebtedness for borrowed money or for the
deferred purchase price of property or services, where such deferred purchase
price is, or should be, in accordance with GAAP, recorded as indebtedness,
(b) obligations as lessee under leases which are or should be, in accordance
with GAAP, recorded as capital leases and (c) obligations under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a credit against
loss in respect of, indebtedness or obligations of others of the kinds
referred to in clause (a) or (b) above.
"Defaulted Interest" means accrued interest payable on a Bond which
was not paid when due under the terms of the Indenture.
"Deferred Interest" has the meaning assigned to that term in
Section 3.1(c) of this Agreement.
"Deferred Interest Fee Amount" has the meaning assigned to that
term in Section 3.1(c) of this Agreement.
"Differential Interest Amount" means, with respect to any Bank
Bond, the excess of (a) interest which has accrued on such Bank Bond at the
Bank Rate, as determined in accordance with Section 3.1 hereof, up to but
excluding the Business Day on which such Bank Bond is sold pursuant to
Section 2.4, less (b) the interest accrued on such Bank Bond received by the
Bank Bondholder as part of the Sale Price.
"Dollars", "US$", "$" and "U.S. Dollars" mean the lawful currency
of the United States of America.
"Environmental Laws" means any and all Federal, national, state,
provincial, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees or requirements of any Governmental Authority
relating to pollution or protection of the environment, including without
limitation, laws relating to the Release or threatened Release of
Contaminants, into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the presence, manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Contaminants,
which such laws include, without limitation, the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. Section 9601
et seq.; the Superfund Amendment and Reauthorization Act of 1986, as amended,
Public Law 99-499, 100 Stat. 1613; the Emergency Planning and Community Right
to Know Act, as amended, 42 U.S.C. Section 1101 et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq..;
the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.;
the Surface Mining Control and Reclamation Act, as amended, 30 U.S.C.
Section 1201 et seq.; the Clean Water Act, as amended, (including the Federal
Water Pollution Control Act, as amended), 33 U.S.C. Section 1251 et seq.; the
Clean Air Act, as amended, 42, U.S.C. Section 7401 et seq.; the Safe Drinking
Water Act, as amended, 42 U.S.C. 300 et seq.; the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 1802 et seq.; the Federal
Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C. Section 136
et seq.; any regulation promulgated under the foregoing; and any similar
state or local statute or ordinance; and all substitutions therefor.
"Environmental Liabilities and Costs" means all liabilities,
obligations, responsibilities, obligations to conduct Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages,
costs and expenses (including, without limitation, all reasonable fees,
disbursements and expenses of counsel, expert and consulting fees and costs
of investigations and feasibility studies), fines, penalties, and monetary
sanctions, interest, direct or indirect, known or unknown, absolute or
contingent, past, present or future, resulting from any claim or demand, by
any Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, including any Environmental Law,
arising from on-site environmental, health or safety conditions, or the
Release or threatened Release of a Contaminant into the environment, as a
result of past, present or future operations of the Company or any previous
owners or lessees of any properties.
"Environmental Lien" shall mean any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Euro-Dollar Business Day" means any Business Day on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London, England.
"Event of Default" has the meaning set forth in Section 8.1.
"Event of Termination" has the meaning set forth in Section 8.1.
"Federal Funds Effective Rate" means, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Bank from three Federal funds brokers of recognized standing selected by it.
"Final Deferred Interest Fee Amount" has the meaning set forth in
Section 3.1(c).
"First Mortgage Bonds" has the meaning ascribed to that term in the
Indenture.
"Fixed Rate Conversion Date" has the meaning ascribed to that term
in the Indenture.
"GAAP" means generally accepted accounting principles, as applied
to a regulated utility, as in effect from time to time.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Substance" means any toxic, caustic or otherwise
hazardous substance, including, without limitation, petroleum, its
derivatives, by-products and other hydrocarbons, whether or not regulated
under Federal, State or local environmental statutes, ordinances, rules,
regulations, or orders.
"Indenture" means the Indenture of Trust, dated as of May 1, 1996,
as amended and restated as of January 1, 1997, between the Authority and the
Trustee, as amended or supplemented from time to time.
"Insolvent" means with respect to any Multiemployer Plan, the
condition that such plan is insolvent within the meaning of such term as used
in Section 4241 of ERISA.
"Insurance Policy" has the meaning ascribed to that term in the
Indenture.
"Interest Component" has the meaning set forth in Section 2.1.
"Interest Payment Date" means the last day of each Interest Period
and, in the case of an Interest Period with respect to a Bank Rate based on
LIBOR of more than three months' duration, each day that would have been the
Interest Payment Date had successive Interest Periods of three months been
applicable.
"Interest Period" means (a) with respect to a Bank Rate based on
LIBOR, the period commencing on the date such Bank Rate becomes effective and
ending on the date one, two, three or six months thereafter, as the Company
may select; provided that (i) any Interest Period which would otherwise end
on a day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such Interest Period shall end
on the next preceding Euro-Dollar Business Day; (ii) any Interest Period
which begins on the last Euro-Dollar Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to clause (iii)
below, end on the last Euro-Dollar Business Day of the calendar month at the
end of such Interest Period; (iii) any Interest Period which would otherwise
end after the Stated Expiration Date shall end on the Stated Expiration Date;
and (iv) no Interest Period selected by the Company during the Amortization
Period shall end on a date subsequent to the next amortization date during
the Amortization Period; and (b) with respect to a Bank Rate based on the
Base Rate, the period commencing on the date such Bank Rate becomes effective
and ending on the last Business Day of the calendar quarter in which such
Rate becomes effective; provided that any Interest Period which would
otherwise end after the Stated Expiration Date shall end on the Stated
Expiration Date.
"Level" means, for any day, the highest applicable level set forth
below based on the applicable ratings of the Company's senior unsecured
long-term debt with S&P:
S&P Rating
Level 1 A- or above
Level 2 BBB+
Level 3 BBB
Level 4 BBB-
Level 5 BB+
Level 6 Below BB+
"LIBOR" means for any Interest Period, the rate per annum
(calculated on the basis of a year of 360 days for the actual number of days
elapsed) at which deposits are offered to the Bank in the London interbank
market at approximately 11:00 A.M., London time, on the third full Euro-
Dollar Business Day preceding the first day of such Interest Period in an
amount substantially equal to the principal amount of the Bank Bonds and with
a maturity comparable to such Interest Period.
"Lien" means collectively any mortgage, pledge, title retention
agreement, lien, claim, charge or other encumbrance or security interest.
"Loan Agreement" means the Loan Agreement, dated as of May 1, 1996,
as amended and restated as of December 1, 1996, between the Authority and the
Company, as amended, supplemented or otherwise modified from time to time.
"Mandatory Purchase Date" means each date on which Bonds are
required to be purchased pursuant to the Indenture.
"Maximum Interest Rate" means the lesser of (i) 18% per annum, or
(b) the maximum rate of interest on the relevant obligation permitted by
applicable law.
"Moody's" has the meaning ascribed to that term in the Indenture.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Notice of Bank Purchase" means in the case of a purchase of Bonds
by the Bank pursuant to the Indenture, a notice in the form of Exhibit A or
Exhibit B, as applicable, attached hereto and incorporated herein by this
reference.
"NU" means Northeast Utilities, an unincorporated voluntary
business association organized under the laws of the Commonwealth of
Massachusetts.
"Original Indenture" means the Indenture of Trust, dated as of May
1, 1996, between the Authority and the Trustee.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person" means any natural person, corporation, firm, association,
limited liability company, government, governmental agency or other entity,
whether acting in an individual or fiduciary capacity.
"Plan" means, at any particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Prime Rate" means the rate of interest established and announced
by the Bank in New York, New York from time to time as its prime or base
rate. The Bank's prime rate or base rate is determined from time to time as
a means of pricing United States Dollar credit extensions to some United
States based customers and is neither directly fixed to any external rate of
interest or index nor necessarily the lowest rate of interest charged by the
Bank at any given time for any particular class of customer or credit
extensions.
"Purchase Price" with respect to any Bond or portion thereof on a
Bank Purchase Date therefor, has the meaning ascribed to that term in the
Indenture.
"Purchase Termination Date" has the meaning set forth in Section
8.2(a)(v).
"Related Documents" means, collectively, the Resolution, the Loan
Agreement, the First Mortgage Bonds, the Indenture, the Bonds, the Insurance
Policy, the Remarketing Agreement, the Tax Regulatory Agreement and the
Reoffering Circular.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, disbursal, leeching or migration
into the indoor or outdoor environment or into or out of any property owned
by the Company or any of its Subsidiaries including the movement of Con-
taminants through or in the air, soil, surface water, ground water or
property.
"Remarketing Agent" has the meaning ascribed to that term in the
Indenture.
"Remarketing Agreement" has the meaning ascribed to that term in
the Indenture.
"Remedial Action" means all actions required to (a) clean up,
remove, treat or in any other way adjust Contaminants in the indoor or
outdoor environment; (b) prevent the Release or threat of Release or minimize
the further Release of Contaminants so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment; or (c) perform pre-remedial studies and investigations and post-
remedial monitoring and care.
"Reoffering Circular" means the Reoffering Circular of the Company,
dated January 20, 1997, including, without limitation, documents incorporated
therein by reference, used in connection with the reoffering of the Bonds,
and any supplement thereto used with respect to the Bonds.
"Reorganization" means with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of such term
as used in Section 4241 of ERISA.
"Resolution" means, collectively, the resolution adopted April 17,
1996, by the Authority, with respect to the offer and sale of the Bonds, and
the resolution adopted December 18, 1996, by the Authority, with respect to
the replacement of the Letter of Credit with the Insurance Policy and this
Agreement.
"Sale Price" has the meaning set forth in Section 2.4(a).
"S&P" has the meaning ascribed to that term in the Indenture.
"Stated Expiration Date" means the later of (i) January 21, 1998,
or, if such day is not a Business Day, the next preceding Business Day, and
(ii) the last day of any extension of such date pursuant to Section 2.6 or,
if such day is not a Business Day, the next preceding Business Day.
"Substitution Date" means the effective date of an Alternate
Liquidity Facility.
"Tax Regulatory Agreement" has the meaning ascribed to that term in
the Indenture.
"Taxes" has the meaning set forth in Section 3.3.
"Tendered Bonds" means, as of any date, Bonds which are tendered or
deemed tendered for purchase pursuant to the Indenture.
"Trustee" has the meaning set forth in the introductory paragraph
of this Agreement.
SECTION 1.2 Rules of Construction. In this Agreement, the
following rules of construction and interpretation shall apply:
(a) The terms "herein", "hereof", "hereto", "hereinabove",
"hereinbelow", "hereunder", and words of similar import, refer to this
Agreement as a whole and not to any particular section, subsection,
paragraph, clause or other subdivision hereof, unless otherwise specifically
stated.
(b) Any headings preceding the text of any article or section of
this Agreement, and any table of contents and marginal notes appended hereto,
shall be solely for convenience of reference and shall neither constitute a
part of this Agreement nor affect its meaning, construction or effect.
(c) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP, consistently applied, except as otherwise
stated herein.
(d) In this Agreement, in the computation of a period of time from
a specified date to a later specified date, the word "from" shall mean "from
and including" and the words "to" and "until" each shall mean "to but
excluding".
(e) Unless otherwise indicated, all references herein to
particular articles or sections are references to articles or sections of
this Agreement.
(f) All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Indenture.
ARTICLE 2
THE COMMITMENT
SECTION 2.1. Commitment to Purchase Bonds. The Bank agrees, on
the terms and conditions contained in this Agreement, to purchase the
Tendered Bonds for its own account from time to time during the Bank Purchase
Period at the Purchase Price. The aggregate principal amount of all Bonds
purchased on any Bank Purchase Date shall not exceed the Available Principal
Commitment (calculated without giving effect to any purchase of Bonds by the
Bank on such date) on such date. The aggregate amount of the Purchase Price
comprised of interest on the Bonds (the "Interest Component") purchased on
any Bank Purchase Date shall equal the actual aggregate amount of interest
accrued on each such Bond to but excluding such Bank Purchase Date, and not
to exceed the Available Interest Commitment on such Bank Purchase Date. Any
Bonds so purchased shall thereupon constitute Bank Bonds and shall, from the
date of such purchase and while they are Bank Bonds, bear interest at the
Bank Rate and have other characteristics of Bank Bonds as set forth herein
and to the extent not in conflict herewith, in the Indenture.
SECTION 2.2 Method of Purchasing. Pursuant to Section 9.18 of the
Indenture, the Paying Agent will give notice to the Bank as follows if Bonds
are to be purchased by the Bank. If by 12:30 p.m. (New York City time) (1:00
p.m. if the Bonds are in the Daily Mode or Flexible Mode) on any Business Day
during the applicable Bank Purchase Period, the Bank receives written Notice
of Bank Purchase from the Paying Agent, the Bank will, so long as the Bank
Purchase Period shall not have expired, transfer not later than 3:00 p.m.
(New York City time) on the Bank Purchase Date to the Paying Agent, in funds
to be available as specified in such Notice of Bank Purchase, an amount equal
to the aggregate Purchase Price of such Bonds. The Bank shall not have any
responsibility for, or incur any liability in respect of, any act, or any
failure to act, by the Paying Agent which results in the failure of the
Paying Agent (a) to credit the appropriate account with funds made available
by the Bank pursuant to this Section or (b) to effect the purchase for the
account of the Bank of Bonds with such funds pursuant to this Section. The
Bank shall use its own funds to purchase Bonds. The Bonds purchased with
amounts made available hereunder shall be registered in the name of the Bank
and shall be held as Bank Bonds in trust by the Paying Agent for the benefit
of the Bank as provided in the Indenture, but upon the written request of the
Bank shall be promptly delivered by the Paying Agent to the Bank. Amounts
made available hereunder which are not so used to purchase Bonds will be
returned to the Bank no later than 4:30 p.m. (New York City time).
SECTION 2.3 Reduction of Commitment; Termination.
(a) Mandatory Reduction of Commitment. Upon any redemption,
repayment or other payment pursuant to the Indenture (including, without
limitation, defeasance of the Bonds pursuant to Section 12.1 of the
Indenture) of all or any portion of the principal amount of the Bonds (other
than Bank Bonds) so that such Bonds shall cease to be "Outstanding" (as
defined in the Indenture) under the Indenture, the aggregate Available
Principal Commitment of the Bank shall automatically be reduced by the
principal amount of such Bonds so redeemed, repaid or otherwise deemed paid,
and the Available Interest Commitment shall also be simultaneously reduced as
provided in the definition thereof in Section 1.1 hereof.
(b) Voluntary Termination or Reduction of Commitment. In the
event that (i) the Bank shall fail to purchase Tendered Bonds when required
under the terms and conditions of this Agreement, or (ii) bankruptcy,
insolvency, receivership, liquidation or other similar proceedings are
instituted by or against the Bank, or (iii) the Company shall have delivered
to the Bank a certificate to the effect that the Company has identified a
financial institution other than the Bank which will furnish an Alternate
Liquidity Facility; then the Company may, at any time thereafter, terminate
the Available Commitment in whole by giving the Bank not less than thirty
Business Days' notice in writing to such effect; provided that (A) in the
case of a termination following an event described in clause (i) or clause
(ii) of this sentence, the Company may terminate the Available Commitment
immediately by giving the Bank notice in writing to such effect; and (B) in
the case of clause (iii), the Company may terminate the Available Commitment
only if (1) the provider of an Alternate Liquidity Facility shall agree, in a
manner reasonably acceptable to the Bank, to purchase on the Substitution
Date any Bank Bonds, not otherwise remarketed, held by or on behalf of the
Bank or a Bank Bondholder at a purchase price equal to the principal amount
of such Bank Bonds plus accrued interest (including Deferred Interest)
thereon at the Bank Rate to the date of purchase of such Bank Bonds, and (2)
at the date of such purchase, the Company and/or such provider shall pay all
other amounts owing to the Bank hereunder (including accrued and unpaid
Differential Interest Amount and interest thereon).
(c) Termination. The Available Commitment shall automatically
terminate on the last day of the Bank Purchase Period.
SECTION 2.4 Sale of Bank Bonds; Amortization of Bank Bonds.
(a) Sales by Remarketing Agent. The Bank, and each other Bank
Bondholder, by its acceptance of a Bank Bond, hereby authorize the
Remarketing Agent pursuant to Section 9.19 of the Indenture to sell Bank
Bonds purchased by the Bank pursuant to Section 2.2 above on behalf of the
Bank or such Bank Bondholder at a price equal to the principal amount thereof
plus unpaid accrued interest thereon to but excluding the date such Bank
Bonds are to be sold pursuant to this Section 2.4(a) at the interest rate to
be borne by the Bonds after such sale or, if less, the Bank Rate (the "Sale
Price"); provided, that neither the Bank nor any other Bank Bondholder shall
have any obligation to deliver the Bank Bonds as directed by the Remarketing
Agent or sell such Bank Bonds unless the Company has paid or has duly
provided for (through the Insurance Policy or otherwise) the payment of the
Differential Interest Amount to the Bank or such other Bank Bondholder. Any
sale of a Bank Bond pursuant to this Section 2.4(a) shall be without recourse
to the seller and without representation or warranty of any kind. The Bank
agrees to deliver and, by its acceptance of a Bank Bond, each other Bank
Bondholder agrees to deliver (but only upon receipt by the Bank or such other
Bank Bondholder of U.S. Dollars in the amount of the Sale Price), to the
Paying Agent each Bank Bond sold by it pursuant to this Section 2.4(a),
including, without limitation, Bank Bonds which are deemed to have been
delivered in accordance with the provisions of the Indenture. After any sale
of Bank Bonds by the Remarketing Agent pursuant to this Section 2.4(a) and
payment to the Bank or the Bank Bondholder of the principal and interest
accrued on such Bank Bonds (including interest accrued at the Bank Rate),
such Bank Bonds so sold shall, from such sale date, cease to bear interest at
the Bank Rate and shall thereafter bear interest at a rate determined in
accordance with the Indenture.
(b) Repurchase by the Company of Bank Bonds. Upon the request of
the Company, the Bank or the Bank Bondholder shall sell the Bank Bonds (or
portions thereof) to the Company or its designee at a price equal to the
principal amount of the Bank Bonds plus accrued but unpaid interest thereon,
calculated at the Bank Rate. Upon receipt of the purchase price therefor,
the Bank shall execute and deliver to the Company, or its designee, as the
case may be, such instruments of assignment, and/or take such other action as
shall be reasonably necessary to cause such Bank Bonds to be registered in
the name of the Company or its designee, as the case may be, subject in each
case to the terms and conditions of the Indenture.
(c) Amortization of Bank Bonds. So long as no Event of
Termination shall have occurred and be continuing and so long as no Alternate
Liquidity Facility shall have become effective (with respect to which the
provider of such Alternate Liquidity Facility shall have purchased all Bank
Bonds then held by the Bank at a price equal to principal plus accrued
interest (including interest accrued at the Bank Rate)), then, upon (A) the
occurrence of an Event of Default or (B) the expiration of the Bank Purchase
Period, the Company shall amortize the Bank Bonds, and shall provide for the
Bank Bonds to be amortized pursuant to the Insurance Policy, over a five-year
period (the "Amortization Period"), in equal semi-annual installments,
commencing six months after the occurrence of such Event of Default or the
end of such Bank Purchase Period, as the case may be; provided, however, that
if the Bank Purchase Period shall have terminated because the Purchase
Termination Date shall have occurred, then this paragraph (c) shall not apply
and the remedies set forth in Section 8.2(a) shall apply. During such
Amortization Period, interest shall continue to accrue on the Bank Bonds at
the Bank Rate. Notwithstanding the foregoing, upon the occurrence of an
Event of Termination (even if such Event of Termination occurs during such
Amortization Period), the Bank shall tender the Bank Bonds to the Company for
immediate purchase, and the Company shall so purchase such Bank Bonds and any
additional Tendered Bonds purchased by the Bank during the remainder of the
Bank Purchase Period.
SECTION 2.5 Commitment Fees. The Company shall pay to the Bank a
commitment fee with respect to the average daily amount of the Available
Commitment at a rate per annum equal to the following:
Level 1 0.09%
Level 2 0.0125%
Level 3 0.15%
Level 4 0.175%
Level 5 0.25%
Level 6 0.40%
Such commitment fee shall be calculated on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed from the effective date of
this Agreement through and including the last day of the Bank Purchase
Period. Such commitment fee shall be payable in immediately available funds,
quarterly in arrears, on March 31, June 30, September 30 and December 31 (or,
if such day is not a Business Day, the next preceding Business Day) of each
year, with the first payment being due on March 31, 1997, with respect to the
period or portion thereof ending on such fee payment date, and on the last
day of the Bank Purchase Period or, if earlier, the date on which the
Available Commitment is terminated or reduced to zero. After the occurrence
of an Event of Termination and prior to the Purchase Termination Date, the
Available Commitment shall not be deemed to have been reduced during the
period by reason of such Event of Termination.
SECTION 2.6 Request for Extension of Stated Expiration Date. No
earlier than five months and no later than three months prior to the then
applicable Stated Expiration Date, the Company may request that the Bank
extend the Stated Expiration Date for an additional 364-day period. If the
Company shall make such a request, the Bank shall, within thirty (30) days of
receipt of such request, notify the Company, the Trustee and the Bond Insurer
in writing whether or not the Bank consents to such request and, if the Bank
does so consent, the conditions of such consent (including conditions
relating to commissions payable, legal documentation and the consent of the
Trustee). If the Bank shall not so notify the Company, the Authority, the
Trustee and the Bond Insurer, the Bank shall be deemed not to have consented
to such request. The Company acknowledges and agrees that the Bank has sole
discretion in deciding whether or not to extend the Stated Expiration Date.
The Bank agrees, upon satisfaction of all of its conditions for extension
(including, without limitation, the payment of any renewal fees and the costs
and expenses of effecting the extension of the Stated Expiration Date), to
issue its extension, either in the form of an amendment hereto or in the form
of a new agreement, at least 30 days prior to the then applicable Stated
Expiration Date.
ARTICLE 3
THE BANK RATE
SECTION 3.1 Applicable Interest Rate; Other Interest Provisions.
(a) Bank Rate. Any Bond purchased by the Bank pursuant to this
Agreement shall thereupon become a Bank Bond and shall bear interest at the
Bank Rate for the period commencing from the date that the Bank shall have
purchased such Bond and continuing until such Bond is paid in full or
remarketed in accordance with the Indenture and Section 2.4(a) hereof or
purchased by the Company in accordance with Section 2.4(b) hereof. The "Bank
Rate" for any Bank Bond shall be a rate per annum equal to the Base Rate,
unless and until the Company provides the Bank three Euro-Dollar Business
Days' prior notice (i) that it elects to have such Bank Bonds bear interest
at Applicable LIBOR, and (ii) of the Interest Period applicable thereto, in
which case such Bank Bonds shall bear interest based at Applicable LIBOR for
the Interest Period requested by the Company; provided that the Bank Rate
shall be subject to adjustment as hereinafter specified in paragraph (b) or
(c) below and subject to the limitations set forth in Sections 3.3, 3.4, 3.5
and 3.6; and provided, further, that at least three Euro-Dollar Business Days
prior to the end of any Interest Period, if the Company has not requested a
continuation of or change in such Interest Period, or fails to elect an
Interest Period, the Bank Bonds, upon the expiration of the then current
Interest Period, shall bear interest at the Base Rate until such time as the
Company has provided proper notice of an election pursuant to this Section
3.1(a). Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if an Event of Termination shall have occurred and be continuing,
the Company may not elect Applicable LIBOR as the Bank Rate. The Bond
Insurer shall, pursuant to the Insurance Policy, guarantee the payment of
interest on the Bank Bonds at the Bank Rate. All accrued interest on Bank
Bonds shall be payable on each Interest Payment Date.
(b) Overdue Rate. If any obligation of the Company under this
Agreement (including, without limitation, the Company's obligations pursuant
to Sections 2.4(b)or 2.4(c)) is not paid when due (whether by acceleration,
redemption or otherwise), such overdue principal payment or other obligation
shall bear interest from the date such principal amount or other obligation,
as the case may be, was due until paid in full (after as well as before
judgment) at a rate per annum (computed on the basis of a year of 360 days
and actual days elapsed) equal to the Base Rate from time to time in effect
plus 2%, such interest to be payable on demand.
(c) Deferred Interest. For any period during which Bank Bonds are
outstanding and as to each Interest Period, in the event that the amount of
interest which would be payable on the Bank Bonds (calculated at the Bank
Rate for such Interest Period, or in the case of the payment of the
Differential Interest Amount, if any, on a Bank Bond, for the period from the
date of the most recent Interest Payment Date through but not including the
date on which such Bank Bond is remarketed) exceeds the Maximum Interest
Rate, the amount of such excess shall not be payable on the Interest Payment
Date for such Interest Period as interest on such Bank Bonds but shall be
deferred ("Deferred Interest"). Deferred Interest shall be allocated among
the Bank Bonds outstanding on such Interest Payment Date based upon the
principal amount thereof and the length of time such Bank Bonds were
outstanding during the Interest Period related to such Interest Payment Date.
Deferred Interest arising on any Interest Payment Date (i) shall, to the
extent permitted by law, bear interest (compounded quarterly on the last day
of each succeeding March, June, September and December) at a rate per annum
equal to the Base Rate plus 2% (computed on the basis of a year of 360 days
and actual days elapsed) until paid in full and (ii) shall become payable,
together with interest thereon, to the extent permitted by law, on the next
succeeding Interest Payment Date or Dates to the extent the interest
(including Deferred Interest and, to the extent permitted by law, interest on
Deferred Interest) payable on the Bank Bonds (if any) for the Interest Period
ending on such Interest Payment Date does not exceed the Maximum Interest
Rate. All amounts of interest payable on a Bond which is a Bank Bond,
including without limitation, Deferred Interest (and interest thereon, to the
extent permitted by law), for so long as such Bond shall remain a Bank Bond,
shall constitute interest on such Bond and shall be insured by the Insurance
Policy. To the extent Deferred Interest (or, to the extent permitted by law,
any interest thereon) shall be unpaid with respect to Bank Bonds, and such
Bonds shall be redeemed or remarketed or purchased by the Company or shall
otherwise cease to be Bank Bonds, such unpaid Deferred Interest (including,
to the extent permitted by law, any unpaid interest thereon) shall be
converted into a fee payable to the Bank (herein, the "Deferred Interest Fee
Amount") and shall bear interest at a rate per annum equal to the Base Rate
plus 2% (computed as aforesaid), compounded quarterly on the last day of each
succeeding March, June, September and December; provided, however, that on
the last Interest Payment Date or, if earlier, the date of the occurrence of
an Event of Termination, a fee equal to the entire remaining Deferred
Interest Fee Amount (the "Final Deferred Interest Fee Amount") shall be paid
by the Company to the Bank and any Bank Bondholders. The Bank and any Bank
Bondholder, by acceptance of the Bank Bonds, acknowledge that payment of any
Deferred Interest Fee Amount and any interest thereon (including the Final
Deferred Interest Fee Amount and any interest thereon) are not insured under
the terms of the Insurance Policy.
(d) Payment of Interest. On each Interest Payment Date, the
Company shall pay or cause to be paid to the Bank all interest then accrued
and unpaid on the Bank Bonds, including, without limitation, any unpaid
Differential Interest Amount.
SECTION 3.2 Place of Payment, Etc. All payments to the Bank
hereunder shall be made without set-off or counterclaim in lawful currency of
the United States and in immediately available funds at the Bank's office and
in accordance with the instructions specified opposite the Bank's name on the
signature page of this Agreement, or by such other method as the Bank may
specify in writing, after (a) 3:00 p.m., New York City time, on the due date
thereof if the Bank or the Trustee has informed the Company of such amount on
or before 12:00 noon on such day or (b) if the Bank or the Trustee notifies
the Company of such amount after 12:00 noon, New York City time, on any day,
12:00 noon, New York City time, on the Business Day immediately following the
date of such notice.
SECTION 3.3 Taxes. All payments to the Bank hereunder shall be
made free and clear of any and all present and future taxes, levies, imports,
duties, deductions, withholdings, fees, liabilities and similar charges
("Taxes"), unless any Taxes are required by law to be withheld or deducted.
If, as a result of any change in applicable law or regulations or in the
interpretation thereof by any governmental authority charged with the
administration thereof, or the introduction of any law or regulation, any
Taxes are required to be withheld or deducted from any amount payable to the
Bank hereunder, the amount payable will be increased to the amount which,
after deduction from such increased amount of all Taxes required to be
withheld or deducted therefrom, will yield to the Bank the amount stated to
be payable hereunder. The Company shall pay any such increases in amounts
payable hereunder to the extent such amounts are not paid by the Bond
Insurer. Notwithstanding the foregoing, the Company shall not be required to
pay any increased amounts pursuant to this Section 3.3 on account of
(a) Taxes measured by or based upon the overall net income of the Bank or (b)
United States withholding taxes that would not have been imposed but for the
failure of the Bank to be entitled to the benefits of the income tax treaty
between the United States and France or to deliver Form 1001, Form 4224, or
any similar form reasonably requested by the Company. The Bank shall give
notice to the Company of the imposition of any Taxes, provided any failure to
give such notice shall not relieve the Company of its obligations under this
Section 3.3. The Company will execute and deliver to the Bank at its request
such further instruments as may be necessary or desirable to give full force
and effect to any such increase. The Company will, upon the request of the
Bank, provide the Bank with evidence satisfactory to it of the payment of any
Taxes. If any Taxes required to be borne by the Company pursuant to this
Section 3.3 are paid by the Bank, the Company will, upon demand of the Bank,
reimburse the Bank for such payments, together with any interest, penalties
and expenses in connection therewith.
SECTION 3.4 Increased Costs; Funding Losses.
(a) Increased Costs. If any change, announced after the date
hereof, in applicable law, regulation, rule or directive, or any
interpretation thereof (including any request, guideline or policy, and
including, without limitation, Regulation D promulgated by the Board of
Governors of the Federal Reserve System as from time to time in effect) by
any authority charged with the administration or interpretation thereof:
(i) subjects the Bank to any tax with respect to this
Agreement on any amount paid or to be paid hereunder (other than any tax
excluded from indemnification pursuant to Section 3.3);
(ii) changes the basis of taxation of payments to the Bank of
any amounts payable hereunder (other than with respect to any tax
excluded from indemnification pursuant to Section 3.3);
(iii) imposes, modifies or deems applicable any reserve,
capital adequacy or deposit requirements against any assets held by,
deposits with or for the account of, or loans made or letters of credit
issued by, the Bank; or
(iv) imposes on the Bank any other condition affecting this
Agreement;
and the result of any of the foregoing is to increase the cost to the Bank of
maintaining this Agreement, or to reduce the amount of any payment (whether
of principal, interest or otherwise) receivable by the Bank hereunder,
including, without limitation, a reduction of the return to the Bank in
respect of these transactions calculated as a percentage of its assets or
equity, or any increase in cost resulting therefrom, or to require the Bank
to make any payment on or calculated by reference to the gross amount of any
sum received by it, in each case by an amount which the Bank in its sole
judgment reasonably deems material, then and in any such case:
(i) the Bank shall promptly notify the Company in writing of
such event;
(ii) the Bank shall promptly deliver to the Company a
certificate describing such event in reasonable detail together with the
date thereof, the amount of such increased cost or reduction or payment
and the way in which such amount has been calculated; and
(iii) the Company shall pay to the Bank, within thirty
(30) days after delivery of the certificate referred to in subsection
(ii) hereinabove, such an amount or amounts as will compensate the Bank
for such additional cost, reduction or payment for so long as the same
shall remain in effect.
(b) Funding Losses. If the Company makes any payment of
principal with respect to any advance (it being understood that the purchase
by the Bank of Bonds pursuant to this Agreement constitutes an advance for
purposes of this Section 3.4(b)) bearing interest based on LIBOR on any day
other than the last day of the Interest Period applicable thereto, or if any
Bank Bond bearing interest at a Bank Rate equal to Applicable LIBOR, is
remarketed or purchased prior to the end of the Interest Period applicable to
such Bank Bond, the Company shall reimburse the Bank on demand for any loss
(other than loss of the Applicable Margin) incurred by it in obtaining,
liquidating or re-employing deposits or other funding from third parties (and
any incidental costs relating thereto).
(c) Certificate. The certificate of the Bank, signed by an
officer of the Bank, as to additional amounts payable pursuant to this
Section 3.4 delivered to the Company shall be conclusive evidence of such
amounts absent manifest error. The benefit of this Section 3.4 shall be
available to the Bank regardless of any possible contention of invalidity or
inapplicability of any law, regulation, condition, directive or
interpretation.
SECTION 3.5 Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period with respect
to any advance bearing interest based on LIBOR (it being understood that the
purchase by the Bank of Bonds pursuant to this Agreement constitutes an
advance for purposes of this Section 3.5) (a) the Bank determines that
deposits in Dollars (in the applicable amounts) are not being offered in the
relevant market for such Interest Period or (b) LIBOR will not adequately and
fairly reflect the cost to the Bank of funding the advance hereunder for such
Interest Period, the Bank shall forthwith give notice thereof to the Company,
whereupon until the Bank notifies the Company that the circumstances giving
rise to such suspension no longer exist, the Base Rate shall replace LIBOR
for purposes of interest rate determinations hereunder for such Interest
Period (and all references herein to Applicable LIBOR for such purposes
shall, unless the context otherwise requires, be deemed to be references to
the Base Rate).
SECTION 3.6 Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank (including any applicable
lending office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for the Bank (including any applicable lending
office) to make, maintain or fund any advance (it being understood that the
purchase by the Bank of Bonds pursuant to this Agreement constitutes an
advance for purposes of this Section 3.6) bearing interest based on LIBOR,
the Bank shall forthwith give notice thereof to the Company, whereupon until
the Bank notifies the Company that the circumstances giving rise to such
suspension no longer exist, the obligation of the Bank to fund at LIBOR and
the right of the Company to request LIBOR shall be suspended. Before giving
any notice to the Company pursuant to this Section, the Bank shall designate
a different lending office if such designation will avoid the need for giving
such notice and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. If the Bank shall determine that it may not
lawfully continue to maintain and fund any outstanding LIBOR advance to
maturity and shall so specify in such notice, the Company shall elect that
such advance bear interest based on the Base Rate in a principal amount equal
to the principal amount of such affected LIBOR advance for an Interest Period
coincident with the remaining term of the Interest Period applicable to such
affected LIBOR advance.
ARTICLE 4
CONDITIONS PRECEDENT
SECTION 4.1 Conditions Precedent to Effectiveness of this
Agreement. The Bank's obligation to enter into and perform its obligations
under this Agreement is subject to the fulfillment, to the satisfaction of
the Bank and its counsel, of each of the following conditions as of the date
of this Agreement:
(a) The Act; the Resolution. Neither the Act nor the Resolution
shall have been revoked or rescinded, or modified or amended in any material
respect adverse to the interests of the Bank or the holders of the Bonds.
(b) Executed Documents. The Bank shall have received an executed
copy of this Agreement and executed or certified copies of each of the
Related Documents (other than the Bonds and the First Mortgage Bonds, of
which the Bank shall have received specimens thereof).
(c) Replacement of the Letter of Credit. All conditions contained
in the Original Indenture and the Loan Agreement for the replacement of the
Letter of Credit shall have been satisfied.
(d) The Insurance Policy. The Insurance Policy shall be effective
and shall provide for (i) the payment of interest on the Bank Bonds at the
Bank Rate and (ii) amortization of the Bank Bonds in equal semi-annual
installments during the Amortization Period. The Insurance Policy shall be
in substantially the form of Appendix E to the Reoffering Circular, shall
have been issued to the Trustee and shall provide that after the Bank has
purchased Tendered Bonds in accordance with the Indenture, the Bond Insurer
shall make scheduled payments of principal of and shall pay interest on Bank
Bonds at the Bank Rate and shall also provide for the amortization of Bank
Bonds during the Amortization Period.
(e) Certificate. The Bank shall have received a certificate from
the Company, dated the date of this Agreement and duly executed by an
Authorized Officer, stating that on and as of the date thereof, except as
otherwise disclosed to the Bank as of the date of this Agreement:
(i) the Company has obtained all consents, permits, licenses
and approvals of, has made all registrations and declarations with, and
has taken all other actions with respect to, governmental authorities
required under law to be obtained, made or taken by the Company, to
authorize the issuance and sale of the Bonds, the replacement of the
Letter of Credit, and the execution, delivery and performance of this
Agreement and the Related Documents to which the Company is a party and
the consummation of the transactions contemplated thereby, and all of
the foregoing remain in full force and effect;
(ii) to the best knowledge of the Authorized Officer executing
the certificate, no Event of Default or event which, with the giving of
notice or the passage of time or both would constitute an Event of
Default, has occurred or would occur after giving effect to the issuance
of the Bonds or this Agreement;
(iii) all representations and warranties of the Company
set forth in this Agreement and the Related Documents to which the
Company is a party are true and correct in all material respects, except
to the extent that any such representation or warranty relates solely to
a prior date;
(iv) the Company is not in default of its obligations under
this Agreement or any of the Related Documents to which it is a party;
(v) except for any pending or threatened action, suit,
investigation or proceeding disclosed in the Reoffering Circular or
otherwise disclosed to the Bank in writing prior to the date hereof (as
to which certification is not being made), there is no action, suit,
investigation or proceeding pending or, to the best knowledge of the
Authorized Officer executing the certificate, threatened (A) in
connection with the Bonds, the replacement of the Letter of Credit or
this Agreement or any of the other transactions contemplated by this
Agreement or the Related Documents, or (B) against or affecting the Com-
pany, the result of which is reasonably likely to have a materially
adverse effect on the business, financial condition or operations of the
Company or the ability of the Company to perform or observe any of its
duties, liabilities or obligations under this Agreement or any of the
Related Documents.
(f) Proceedings and Certifications. The Bank shall have received
a copy, certified by an Authorized Officer, of all proceedings taken by the
Company authorizing the transactions hereunder and contemplated hereby,
including, without limitation, the execution and delivery of this Agreement
and all other documents and agreements contemplated hereby, together with
such other certifications as to matters of fact as shall reasonably be
requested by the Bank or its counsel.
(g) Incumbency Certificate. The Bank shall have received a
certificate of the Secretary or Assistant Secretary of the Company certifying
the names and true signatures of the officials of the Company authorized to
sign this Agreement and the other documents to be delivered by the Company
hereunder, and shall also cover such other matters incident to the
transactions contemplated by this Agreement as the Bank or its counsel may
request.
(h) Opinion of Company Counsel. The Bank shall have received an
opinion addressed to it of Day, Berry & Howard, counsel to the Company, dated
the Closing Date, in form and substance satisfactory to the Bank and its
counsel.
(i) Opinion of Bond Counsel. The Bank shall have received the
Bond Counsel's opinion, addressed to it from Whitman Breed Abbott & Morgan,
as Bond Counsel.
(j) Opinion of Bond Insurer's Counsel. The Bank shall have
received the opinion of counsel to the Bond Insurer, dated the date of this
Agreement, in form and substance satisfactory to the Bank and its counsel.
(k) Reoffering Circular. The Bank shall have received the
Reoffering Circular with respect to the Bonds.
(l) Other Documents, Etc. The Bank shall have received such other
documents, certificates, and opinions as the Bank or its counsel may
reasonably request, including, without limitation, organizational documents
of the Authority, the Company, and the Bond Insurer, and all matters relating
to this Agreement and the Bonds shall be satisfactory to the Bank.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Bank to enter into and perform its
obligations under this Agreement, the Company hereby represents and warrants
solely to the Bank as follows:
SECTION 5.1 Organization. The Company is duly organized, validly
existing and in good standing under the laws of the State of Connecticut, and
has all requisite corporate power and authority to own or lease its
properties and to conduct its business as now conducted and as proposed to be
conducted, and is duly qualified and authorized to engage in business as a
public utility in the State of Connecticut.
SECTION 5.2 Authorization. The execution, delivery and
performance by the Company of this Agreement and the Related Documents to
which it is a party are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and (a) do not contravene,
violate or breach: (i) any law, regulation, order of any court or other
agency of government, or contractual restriction binding on or affecting the
Company or its properties; (ii) the Certificate of Incorporation or By-laws
of the Company; or (iii) any indenture, mortgage, loan agreement or other
contract or instrument to which the Company is a party or by which it or its
assets are bound; and (b) do not result in or require the creation of any
Lien (except as provided in or contemplated by this Agreement or the Related
Documents) upon or with respect to any of the Company's properties.
SECTION 5.3 Enforceability. This Agreement is, and the Related
Documents to which the Company is a party are, legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity
or at law).
SECTION 5.4 Approvals. No authorization of, approval or other
action by, and no notice to or filing with, any Governmental Authority is re-
quired for the due execution, delivery and performance by the Company of this
Agreement or any Related Document, except those which have been, or will be
simultaneously with the execution hereof, duly obtained or made and are in
full force and effect.
SECTION 5.5 Financial Information. (i) The audited balance sheet
of the Company as at December 31, 1995, and the audited statements of income
and cash flows of the Company for the fiscal year then ended as set forth in
the Company's Annual Report on Form 10-K for such fiscal year and (ii) the
unaudited balance sheet of the Company as at September 30, 1996 and the
unaudited statements of income and cash flows of the Account Party for the
nine-month period then ended as set forth in the Company's Quarterly Report
on Form 10-Q for the period then ended, fairly present in all material
respects the financial condition and results of operations of the Company at
and for the respective periods ended on such dates, and have been prepared in
accordance with generally accepted accounting principles consistently
applied. Since December 31, 1995, there has been no material adverse change
in the financial condition, operations, properties or prospects of the
Company and its Subsidiaries, if any, taken as a whole, except to the extent,
if any, described in the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1996 or in the Company's Current Reports on Form
8-K, dated January 31, 1996, March 30, 1996 and April 15, 1996, June 6, 1996,
June 18, 1996, June 28, 1996, July 22, 1996, August 19, 1996, November 25,
1996 and January 20, 1997, or in Schedule 5.5 hereto.
SECTION 5.6 Litigation. Except for any pending or threatened
action, suit, investigation or proceeding as disclosed in the Reoffering
Circular or otherwise disclosed to the Bank in writing prior to the date
hereof (as to which no representation or warranty is being made), there is no
action, suit or proceeding (or to the best knowledge of the Company,
investigation) pending or, to the best knowledge of the Company, threatened
(a) in connection with this Agreement or any of the transactions contemplated
by this Agreement or the Related Documents, or (b) against or affecting the
Company, the result of which is reasonably likely to have a materially
adverse effect on the business, financial condition or operations of the
Company or the ability of the Company to perform or observe any of its
duties, liabilities or obligations under any of this Agreement or any of the
Related Documents.
SECTION 5.7 No Misrepresentations. Except for information
contained in the Reoffering Circular describing the Bank, the Authority, the
Bond Insurer or The Depository Trust Company, as to which no representation
or warranty is made, (a) the Reoffering Circular as of its issue date was,
and any supplement or amendment thereto will be, accurate in all material
respects for the purposes for which their use is or shall be authorized, and
(b) the Reoffering Circular as of its issue date did not, and any such
supplement or amendment will not, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements made
therein, in the light of the circumstances under which they are or were made,
not misleading.
SECTION 5.8 Environmental Matters. Except as disclosed or for
matters identified on Schedule 5.8 or in the Reoffering Circular (as to which
no representation or warranty is made):
(a) The operations of the Company comply in all respects with all
applicable Environmental Laws concerning environmental health and safety
except where the failure to comply would not have a material adverse effect
on the financial condition of the Company;
(b) The Company has obtained or made timely application for all
environmental, health and safety permits necessary for its operation. All
such permits previously obtained are in effect or timely application for
renewal thereof is pending, and no action to revoke the same is pending and
the period to appeal such permits have expired, and the Company is in
compliance with all terms and conditions of such permits except where the
failure to comply would not have a material adverse effect on the financial
condition of the Company;
(c) With respect to property currently or formerly owned or
operated by it, the Company is not (at the time of ownership or operation)
subject to any outstanding written notice or order from, or agreement with,
any governmental authority or other Person in respect to which the Company
(i) is required to take any Remedial Action which would or might reasonably
be expected to have a material adverse effect individually or in the ag-
gregate on the business, operations, prospects, assets or financial condition
of the Company or (ii) would be reasonably likely to be required to incur any
Environmental Liabilities and Costs arising from the Release or threatened
Release of a Contaminant into the environment that would or might reasonably
be expected to result in a material adverse effect on the business,
operations, prospects, assets or financial condition of the Company;
(d) The Company has not received written notification pursuant to
Environmental Laws that any of its current or past operations, or any by-
product thereof, is related to or subject to any investigation by any
governmental authority evaluating whether any Remedial Action is needed to
respond to a Release or threatened Release of a Contaminant into the
environment, which investigation is reasonably likely to lead to the Company
having to take Remedial Action, or having to incur Environmental Liabilities
and Costs, in each case which would have a material adverse effect on the
business, operations, prospects, assets or financial condition of the
Company; and
(e) The Company has not filed any notice under any applicable
Environmental Law reporting a Release of a Contaminant into the environment
which is reasonably likely to lead to any Governmental Authority or any other
Person having to take Remedial Action or having to incur Environmental
Liabilities and Costs, which would have a material adverse effect on the
business, operations, prospects, assets or financial condition of the
Company.
SECTION 5.9 Investment Company Act. The Company is not an
"investment company", or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended.
SECTION 5.10 Public Utility. All outstanding shares of capital
stock having ordinary voting power for the election of directors of the
Company have been validly issued, are fully paid and nonassessable, and are
owned beneficially by NU, free and clear of any Lien. NU is a "holding
company" (as defined in the Public Utility Holding Company Act of 1935, as
amended (the "1935 Act")). Except for the post-closing filing on Form U-6B-2
required to be made with the Securities and Exchange Commission pursuant to
the 1935 Act, the Company is not required to obtain any consents or make any
filings pursuant to the 1935 Act in order to execute, deliver and perform
this Agreement or any of the Related Documents to which it is a party.
SECTION 5.11 All Other Representations and Warranties Accurate.
All representations and warranties made by the Company in any of the Related
Documents are true and complete in all material respects.
ARTICLE 6
AFFIRMATIVE COVENANTS
So long as this Agreement is in effect, and until all amounts
payable under any of this Agreement or the Bank Bonds are indefeasibly paid
in full, the Company agrees, solely for the benefit of the Bank, that it will
perform and observe the covenants set forth below:
SECTION 6.1 Financial Statements. The Company will furnish to the
Bank:
(a) as soon as available and in any event within 105 days after
the end of each fiscal year of the Company, a copy of the Company's report on
Form 10-K submitted to the Securities and Exchange Commission with respect to
such fiscal year, or, if the Company ceases to be required to submit such
report, a copy of the annual audit report for such year for the Company
including therein a consolidated balance sheet of the Company as of the end
of such fiscal year and consolidated statements of income and retained
earnings and of cash flows of the Company for such fiscal year, all in
reasonable detail and certified by (i) a nationally-recognized independent
public accountant and (ii) by the Chief Financial Officer, Treasurer,
Assistant Treasurer or Comptroller of the Company as having been prepared in
accordance with generally accepted accounting principles consistent with
those applied in the preparation of the financial statements referred to in
Section 5.5; and
(b) as soon as available and in any event within 60 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Company, a copy of the Company's Quarterly Report on Form 10-Q submitted to
the Securities and Exchange Commission with respect to such quarter, or if
the Company ceases to be required to submit such report, a consolidated
balance sheet of the Company as of the end of such fiscal quarter and
consolidated statements of income and retained earnings and of cash flows of
the Company for the period commencing at the end of the previous fiscal year
and ending with the end of such fiscal quarter, all in reasonable detail and
duly certified (subject to year-end audit adjustments) by the Chief Financial
Officer, Treasurer, Assistant Treasurer or Comptroller of the Company as
having been prepared in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in Section 5.
SECTION 6.2 Certificates; Other Information. The Company will
furnish to the Bank:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a) above, a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Event of Default or event which with notice or lapse of time or both
would become an Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 6.1(a) and (b), a certificate of an Authorized
Officer stating that, to the best of such officer's knowledge, the Company
during such period has in all material respects observed or performed all of
its covenants and other agreements, and satisfied every condition, contained
in this Agreement and the Related Documents to be observed, performed or
satisfied by it, and that such officer has obtained no knowledge of any Event
of Default or event which with notice or lapse of time or both would become
an Event of Default, in each case except as specified in such certificate;
(c) promptly after the filing thereof, copies of each prospectus
(excluding any prospectus contained in any Form S-8), and Current Report on
Form 8-K, if any, which the Company files with, the Securities and Exchange
Commission or any governmental authority which may be substituted therefor;
and
(d) promptly, such additional financial and other information as
the Bank may from time to time reasonably request.
SECTION 6.3 Payment of Obligations. The Company shall pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all taxes, assessments and governmental
charges or levies imposed on it or its income, profits or revenues or any of
its properties, except when the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of the
Company.
SECTION 6.4 Conduct of Business and Maintenance of Existence;
Merger.
(a) The Company shall continue to engage in business as a public
utility under the laws of the State of Connecticut and preserve, renew and
keep in full force and effect its corporate existence and take all reasonable
action to maintain all rights, licenses, approvals, privileges and franchises
necessary or desirable in the normal conduct of its business, except as
otherwise permitted by Sections 6.4(b) and 6.5; comply with all of its
contractual obligations and all applicable laws except to the extent that
failure to comply therewith would not, in the aggregate, have a material
adverse effect on the business, operations, property or financial or other
condition of the Company.
(b) Nothing contained in this Agreement shall prevent any lawful
consolidation or merger of the Company with or into any other corporation or
corporations lawfully authorized to acquire and operate the properties of the
Company, or a series of consolidations or mergers, in which the Company or
its successor or successors shall be a party, or any sale of all or
substantially all of the properties of the Company as an entirety to a
corporation lawfully authorized to acquire and operate the same; provided
that, upon any such consolidation, merger of the Company into another
corporation or sale, the corporation formed by such consolidation, or into
which such merger may be made, or making such purchase shall execute and
deliver to the Bank an instrument, in form and substance reasonably
satisfactory to the Bank, whereby such corporation shall effectively assume
the due and punctual payment of any amounts due hereunder and the due and
punctual performance and observance of all covenants and agreements to be
performed by the Company pursuant to this Agreement; and provided, further,
that immediately after such consolidation, merger or sale no Event of Default
shall have occurred and be continuing; and, thereupon, such corporation shall
succeed to and be substituted for the Company hereunder with the same effect
as if such successor corporation had been named herein.
(c) Every such successor corporation shall possess, and may
exercise, from time to time, each and every right and power hereunder of the
Company, in its name or otherwise; and any act, proceeding, resolution or
certificate by any of the terms of this Agreement, required or provided to be
done, taken and performed or made, executed or verified by any board or
officer of the Company shall and may be done, taken and performed or made,
executed or verified with like force and effect by the corresponding board or
officer of any such successor corporation.
(d) If consolidation, merger or sale or other transfer is made as
permitted by this Section, the provisions of this Section shall continue in
full force and effect and no further consolidation, merger or sale or other
transfer shall be made except in compliance with the provisions of this
Section 6.4.
SECTION 6.5 Maintenance of Property; Insurance. The Company shall
keep all property useful and necessary in its business in good working order
and condition, except where the failure to do so would not have a material
adverse effect on the business, operations, property or financial or other
condition of the Company; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts
and against at least such risks as are usually insured against in the same
general area by companies engaged in the same or a similar business; and fur-
nish to the Bank, upon written request, full information as to the insurance
carried.
SECTION 6.6 Inspection; Books and Records; Discussions. The
Company shall keep proper books of records and account in conformity with
GAAP and all applicable laws in which entries shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of the Bank to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired, and to discuss the
business, operations, properties and financial and other condition of the
Company with officers and employees of the Company and with its independent
certified public accountants; provided that the foregoing shall not require
the Company to waive any attorney-client privilege or violate any
confidentiality agreements to which it is a party.
SECTION 6.7 Notices. The Company shall give notice to the Bank
promptly after the Company has knowledge:
(a) of the occurrence of any Event of Default or event which with
notice or lapse of time or both would become an Event of Default;
(b) of the following events, as soon as possible and in any event
within 30 days after the Company knows or has reason to know thereof: (i)
the occurrence or expected occurrence of any Reportable Event with respect to
any Plan, or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings
or the taking of any other action by the PBGC or the Company or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal
from, or the termination, Reorganization or Insolvency of, any Plan; and
(c) of any notices received from the Bond Insurer.
Each notice pursuant to this section shall be accompanied by a statement of
an Authorized Officer setting forth details of the occurrence referred to
therein and stating what action the Company proposes to take with respect
thereto, it being understood and agreed that timely delivery of the financial
statements and reports required by Section 6.2(c) will fulfill the notice
requirements of this Section 6.7 with respect to the information contained in
such financial statements and reports.
SECTION 6.8 Indemnity.
(a) The Company will indemnify, defend and hold harmless the Bank,
its officers, directors, employees and agents, from and against all damages,
losses, liabilities, penalties, judgments, costs or expenses which may be
incurred as a result of any claims, suits, actions, investigations or other
proceedings (each, a "Claim") which may be threatened or instituted against
any such indemnified person by any third party by reason of or in connection
with (i) any violation or alleged violation by the Company of any
Environmental Law, (ii) the presence, handling, use, transportation or dispo-
sal by the Company, or allegation thereof, of Hazardous Substances, (iii) the
imposition of Environmental Liabilities and Costs on the Company or (iv) the
operation of the Company other than by the Bank or the Bank's designee.
(b) To the extent permitted by law, the Company will indemnify,
defend and hold harmless the Bank, its officers, directors, employees and
agents, from and against all damages, losses, liabilities or reasonable costs
or expenses which may be incurred as a result of any Claim (other than any
Claim with respect to Taxes) which may be threatened or instituted against
any such indemnified person by any third party by reason of or in connection
with the negotiation, execution, delivery, performance or transfer of, or
payment or failure to pay under, this Agreement or the Related Documents, or
in connection with the issuance and sale of the Bonds or the use of the
proceeds from the sale of the Bonds, including those Claims resulting from
any misstatement in or omission from the Reoffering Circular (except one
resulting from information supplied by the Bank or in sections dealing with
the Bank) or the use of the proceeds of any purchase of Bonds by the Bank
hereunder; provided that the Company shall not have any liability or
obligation to any such indemnified person to the extent that any such damage,
loss, liability, cost or expense results from such indemnified person's, or
the Bank's, gross negligence or willful misconduct.
ARTICLE 7
NEGATIVE COVENANTS
So long as this Agreement is in effect, and until all amounts
payable under this Agreement and the Bank Bonds are indefeasibly paid in
full, the Company agrees, solely for the benefit of the Bank, that unless the
Bank shall otherwise consent in writing:
SECTION 7.1 Amendment of Any Related Document. The Company shall
not enter into or consent to any amendment, modification or termination of
any Related Document, except (a) as may be required to comply with applicable
law, (b) as necessary to obtain a credit rating on the Bonds by S&P, Moody's
or any other rating agency then rating the Bonds, or (c) for amendments that
would not affect the rights and obligations of the Bank under such Related
Document. With respect to any amendment to any Related Document of the type
described in clause (a), (b) or (c) of the preceding sentence, the Bank
hereby agrees that it shall cooperate with the Company in delivering its
consent which may nevertheless be required under such Related Document.
ARTICLE 8
EVENTS OF DEFAULT; EVENTS OF TERMINATION
SECTION 8.1 Events of Default; Events of Termination.
(a) The occurrence of any of the following events shall constitute
an "Event of Default":
(i) The Company shall not (A) purchase any Bank Bonds when
required by this Agreement, (B) pay principal of or accrued interest on
any Bank Bond, when due, or (C) pay any other amount payable by the
Company to the Bank hereunder within two days of the applicable due date
thereof;
(ii) Any representation or warranty of the Company made in, or
deemed to have been made by the Company pursuant to, this Agreement or
any of the Related Documents to which the Company is a party, or by any
of its officials in any certificate, agreement, instrument or statement
contemplated by or made or delivered pursuant to or in connection
herewith or therewith (including, without limitation, the Reoffering
Circular), shall prove to have been incorrect in any material respect
when made or when deemed made;
(iii) Any "Event of Default" under the Indenture or any
"event of default" under the Loan Agreement shall have occurred and be
continuing;
(iv) The Company shall fail to perform or observe any covenant
or agreement set forth in Article 7;
(v) The Company shall fail to perform or observe any other
term, covenant or agreement (other than one described in any other
paragraph of this Section 8.1) contained in this Agreement or the
Related Documents on its part to be performed or observed, and any such
failure shall remain unremedied for thirty (30) days after written
notice thereof shall have been given to the Company by the Bank;
(vi) Any default or similar event shall occur under any
document evidencing indebtedness having an aggregate principal amount in
excess of $10,000,000 to which the Company is a party, the effect of
which is to permit the holder or holders of such indebtedness, or a
trustee or agent on behalf of such holder or holders, to cause any such
indebtedness to become due prior to its stated maturity, or any such
indebtedness shall be declared to be due and payable prior to its stated
maturity or shall not be paid when due;
(vii) The Company shall make a general assignment for the
benefit of creditors, file a petition in bankruptcy, be unable generally
to pay its debts as they become due, or be adjudicated insolvent or
bankrupt or there shall be entered any order or decree granting relief
in any voluntary or involuntary case commenced by or against the Company
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or the Company shall petition or apply to any court
or administrative body for the appointment of any receiver, trustee,
liquidator, assignee, custodian, sequestrator (or other similar
official) of the Company or of any substantial part of the Company's
properties, or shall commence any proceeding in a court of law for a
reorganization, readjustment of debt, dissolution, liquidation,
assignment or other similar procedure under the laws or statutes of any
jurisdiction, whether now or hereafter in effect, or there shall be
commenced against the Company any such proceeding in a court of law
which remains undismissed or not discharged, vacated or stayed within
ninety (90) days after commencement, or the Company by any act shall
indicate its consent to, approval of or acquiescence in any of the fore-
going or take any action for the purpose of effecting any of the
foregoing; or
(viii) The Company shall commence proceedings seeking to
limit its liability under this Agreement or the Bank Bonds.
(b) The occurrence of any of the following events shall constitute
an "Event of Termination":
(i) The Bond Insurer shall fail to pay: (A) principal of or
accrued interest on the Bonds, including, without limitation, accrued
interest at the Bank Rate on the Bank Bonds, when, as and in the amounts
required under the Insurance Policy, or (B) any amounts required to
amortize the Bank Bonds pursuant to Section 2.4(c);
(ii) Unless earlier replaced with an alternate insurance
policy in lieu of the Insurance Policy issued by a Bond Insurer
acceptable to the Bank, (A) the Insurance Policy for any reason ceases
to be in full force and effect or is declared by a court of competent
jurisdiction to be null and void, or (B) the Bond Insurer denies that it
has any further liability under the terms of the Insurance Policy;
(iii) Unless replaced with a Bond Insurer acceptable to
the Bank, a proceeding is instituted in a court having jurisdiction in
the premises seeking an order for relief, rehabilitation,
reorganization, conservation, liquidation or dissolution in respect to
the Bond Insurer or for any substantial part of the Bond Insurer's
property under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or other
similar official) and such proceeding is not terminated for a period of
thirty (30) consecutive days or such court enters any order granting the
relief sought in such proceeding or the Bond Insurer shall institute or
take any corporate action for the purpose of instituting any such
proceeding; or the Bond Insurer shall become insolvent or unable to pay
its debts as they mature or claims under any of its insurance policies
as such claims are made, shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law or shall consent to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee,
custodian or sequestrator (or other similar official) of the Bond
Insurer or for any substantial part of its property, or shall make a
general assignment for the benefit of creditors, or shall fail generally
to pay its debts or claims as they become due, or shall take any
corporate action in furtherance of any of the foregoing; or
(iv) An AMBAC Adverse Change shall have occurred.
SECTION 8.2 Remedies.
(a) Upon the occurrence of an Event of Termination and so long as
such Event of Termination is continuing:
(i) the Bank may tender the Bank Bonds to the Company for
immediate repurchase;
(ii) the Bank may, upon notice to the Company (except that no
notice shall be required upon the occurrence of an Event of Termination
specified in Section 8.1(b)(ii) or (iii)), declare all accrued sums
payable to the Bank by the Company hereunder to be immediately due and
payable, whereupon the same shall become immediately due and payable,
without demand, presentment, protest or further notice of any kind, all
of which are expressly waived;
(iii) the Bank may pursue any remedy available to it as a
Bondholder under the Indenture;
(iv) the Bank may pursue any other remedy available to the
Bank under this Agreement or the Related Documents, at law or in equity;
and/or
(v) notify the Trustee, by delivery of a certificate in the
form of Exhibit C hereto (a "Certificate of Event of Termination") that
such Event of Termination has occurred and is continuing, and that the
Bank's obligations hereunder to purchase Tendered Bonds shall terminate
on the first Business Day following the forty-fifth day (the "Purchase
Termination Date") after the Trustee shall have received such
Certificate of Event of Termination. The Trustee hereby agrees to take
all necessary action under the Indenture to notify the holders of the
bonds of the Purchase Termination Date.
(b) Upon the occurrence and during the continuance of an Event of
Default, so long as no Event of Termination shall have occurred, (i) the
Company shall, or shall cause, the Bank Bonds to be amortized in accordance
with Section 2.4(c), or (ii) the Bank may pursue any remedies against the
Company available to it as a Bondholder under the Indenture or under this
Agreement or the Related Documents at law or in equity, including, without
limitation, seeking the specific performance by the Company of its
obligations hereunder.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Set-off; Limitation on Set-off.
(a) In addition to any rights now or hereafter granted under
applicable law (including, but not limited to, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, to
the fullest extent permitted under applicable law, during the continuance of
any Event of Default the Bank is hereby authorized at any time and from time
to time, without notice to the Company or to any other person or entity, any
such notice being hereby expressly waived, to set-off and to appropriate and
apply any and all deposits (general or special) by the Bank, and any other
indebtedness at any time held or owing by the Bank, to or for the credit or
the account of the Company against and on account of the accrued obligations
and liabilities of the Company to the Bank hereunder, irrespective of whether
or not the Bank shall have made any demand hereunder.
(b) Anything in paragraph (a) above to the contrary
notwithstanding but without modifying any other provision of this Agreement,
the Bank waives any right referred to in paragraph (a) above, and any other
right which it may have at law or otherwise to set-off and apply such de-
posits or indebtedness referred to in paragraph (a) above, if there shall be
a purchase by the Bank of Tendered Bonds pursuant to Section 2.2 hereof
hereunder during the pendency of any proceeding by or against the Company
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property; provided that
such waiver shall terminate and be of no force and effect when and to the
extent that both (i) the exercise of any such right would not result in the
Bank's being released, prevented or restrained from or delayed in fulfilling
the Bank's obligations hereunder and (ii) the absence of such waiver would
not result in the lowering or withdrawal by S&P, if the Bonds are rated by
S&P, of its rating of the Bonds.
(c) The Bank agrees promptly to notify the Company after the
exercise of any set-off and application referred to in paragraph (a),
provided that the failure to give such notice shall not affect the validity
of such set-off and application.
SECTION 9.2 Obligations Absolute. The obligations of the Company
under this Agreement shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms hereof under all cir-
cumstances whatsoever (provided that such circumstances shall not constitute
willful misconduct or gross negligence of the Bank) conforming to (g) below,
including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of this Agreement, the
Bonds, the Related Documents or any other agreement or instrument relating
thereto;
(b) any amendment or waiver of, extension of the Stated Expiration
Date of, increase in the Available Commitment of or consent to departure
from, this Agreement in conformity with the provisions of this Agreement;
(c) any amendment or waiver of, or consent to departure from the
Related Documents or any other agreement or instrument relating thereto
(other than this Agreement);
(d) the existence of any claim, set-off, defense or other right
which the Company may have at any time against the Trustee, any beneficiary
or any transferee of advances made by the Bank hereunder (or any persons or
entities for whom the Trustee, any such beneficiary or any such transferee
may be acting), the Paying Agent, the Bank (other than the defense of payment
to the Bank, or other performance, in accordance with the terms of this
Agreement), or any other person or entity, whether in connection with this
Agreement, any related agreement or instrument or any unrelated transaction,
agreement or instrument;
(e) any statement or any other document presented hereunder
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect whatsoever;
provided that any payment by the Bank in connection therewith shall not have
constituted gross negligence or willful misconduct of the Bank;
(f) payment by the Bank hereunder against presentation of a
demand, draft(f) or certificate which does not comply with the terms hereof;
provided that such payment shall not have constituted gross negligence or
willful misconduct of the Bank;
(g) the exercise or non-exercise by the Bank of any rights or
remedies it may have under or pursuant to this Agreement or the Related
Documents; and
(h) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, provided that such other circumstance or
happening shall not constitute willful misconduct or gross negligence of the
Bank.
SECTION 9.3 Liability of the Bank.
(a) The Company assumes all risks of the acts or omissions of the
Trustee, the Paying Agent and the Remarketing Agent and any transferee
beneficiary hereof with respect to their use of the proceeds hereof.
Neither the Bank nor any of its officers, directors, employees or agents
shall be liable or responsible for (i) the use which may be made of the
proceeds hereof or for any acts or omissions of the Trustee, the Paying
Agent, the Remarketing Agent or any transferee in connection therewith, (ii)
the validity, sufficiency or genuineness of documents, or of any endorse-
ment(s) thereon, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, fraudulent or forged, (iii) payment by
the Bank against presentation of documents which do not comply with the terms
hereof, including failure of any documents to bear any reference or adequate
reference to this Agreement, or (iv) any other circumstances whatsoever in
making or failing to make payment hereunder, except only that the Company
shall have a claim against the Bank, and the Bank shall be liable to the
Company, to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Company which the Company proves were
caused by the Bank's willful misconduct or gross negligence in determining
whether documents presented hereunder comply with the terms of this
Agreement. In furtherance and not in limitation of the foregoing, the Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
(b) The Bank may receive, accept and pay any demands or other
documents and instruments (otherwise in order) signed by or issued to the
receiver, trustee in bankruptcy or custodian of anyone named herein as the
person by whom drafts, demands and other documents and instruments are to be
made or issued.
(c) The Bank shall not have any liability to the Company for, and
the Company hereby waives any right to object to, payment made hereunder
against a demand containing non-substantive variations in punctuation,
capitalization, spelling or similar matters. The determination whether a
demand has been made before the expiration hereof and whether a demand is in
proper and sufficient form for compliance herewith shall be made by the Bank
in its sole discretion, which determination shall be conclusive and binding
upon the Company; provided that such determination shall not have constituted
gross negligence or willful misconduct of the Bank.
SECTION 9.4 Confidentiality. The Bank acknowledges that certain of
the information to be furnished to it pursuant to this Agreement may be non-
public information. The Bank hereby agrees that it will keep all non-public
information to be furnished to it pursuant hereto confidential in accordance
with its normal banking procedures and, will make no disclosure to any other
Person of such information until the same shall have become public, except
(a) in connection with the enforcement or protection of the Bank's interests,
rights or remedies under this Agreement or any of the Related Documents, (b)
pursuant to subpoena or similar process, (c) to bank examiners and other
governmental authorities, (d) to independent auditors or counsel, (e) to any
parent or affiliate of the Bank, or (f) to any participant or proposed
participant pursuant to Section 9.6 hereof who has agreed to be bound by the
provisions of this Section 9.4.
SECTION 9.5 Costs, Expenses and Stamp Taxes.
(a) All costs and expenses paid or incurred by the Bank
(including, without limitation, reasonable attorneys' fees and disbursements,
but excluding overhead and other internal costs of the Bank) in connection
with the negotiation, preparation, review, execution and delivery of this
Agreement and the Related Documents shall be paid by the Company. The
Company agrees to pay on demand all costs and expenses paid or incurred by
the Bank, if any, in connection with the amendment or enforcement of this
Agreement and the Related Documents, and the protection of the rights of the
Bank hereunder and thereunder (including reasonable counsel fees and
disbursements but excluding overhead and other internal costs of the Bank).
(b) The Company shall pay all stamp and other similar taxes and
fees payable by the Bank in connection with the preparation, execution,
delivery, filing and recording of this Agreement and any other documents
contemplated hereby and agrees to save the Bank harmless from and against all
liabilities with respect to or resulting from any delay in paying or omission
to pay such taxes and fees.
SECTION 9.6 Participants. The Bank shall have the right to grant
participations from time to time (to be evidenced by one or more
participation agreements or certificates of participation) in this Agreement
to one or more other banking institutions; provided that (a) the Bank's
obligations to the Company under this Agreement shall remain unchanged,
(b) the Bank shall remain solely responsible to the Company for the
performance of such obligations, (c) the Company shall continue to deal
solely and directly with the Bank in connection with the Bank's rights and
obligations under this Agreement, and (d) the participant shall have agreed
to be bound by the provisions of Section 9.4 hereof. Each banking institu-
tion purchasing such a participation shall in the discretion of the Bank have
all rights of the Bank hereunder to the extent of the participation
purchased; provided that (i) no participant shall be entitled to receive
payment hereunder of any amount greater than the amount which would have been
payable to the Bank if the Bank had not sold a participation to such
participant, (ii) if and when the consent of the Bank shall be required
hereunder, the consent of such participant(s) shall not be required, (iii)
the Company shall not be required to provide notice or furnish information
hereunder to any such participant, and (iv) no participant shall be entitled
to the rights of the Bank to exercise remedies under Article VIII hereof.
Notwithstanding the foregoing, the Bank shall not be entitled to receive
payment of any amount under Article III hereof greater than the amount which
would have been payable to the Bank if the Bank had not sold a participation
to any participant.
SECTION 9.7 Extension of Maturity. If any payment to the Bank
would become due and payable other than on a Business Day, such payment shall
instead become due on the next preceding Business Day and, as applicable,
interest shall be payable in accordance with this Agreement up to the date
payment is actually made at the rate specified herein.
SECTION 9.8 Successors and Assigns. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by the Company, the
Bank and the Trustee and their respective successors and assigns.
Notwithstanding anything contained herein to the contrary, (a) the rights and
duties of the Company hereunder may not be assigned or transferred, except in
compliance with Section 6.4 or with the prior written consent of the Bank and
(b) the rights and duties of the Trustee hereunder may not be assigned except
with the prior written consent of the Bank.
SECTION 9.9 Modification or Waiver of this Agreement. This
Agreement is intended by the parties hereto as a final expression of their
agreement with respect to the subject matter hereof, and is intended as a
complete and exclusive statement of the terms and conditions of that agree-
ment. No modification or waiver of any provision of this Agreement
(including this Section 9.9) shall be effective unless the same shall be in
writing and signed by the Bank and the Company and the Trustee. Any
modification or waiver referred to in this Section 9.9 shall be effective
only in the specific instance and for the specific purpose for which given.
No notice to or demand on the Company in any case shall entitle the Company
to any other or further notice or demand in the same, similar or other
circumstances.
SECTION 9.10 No Waiver of Rights by the Bank; Cumulative Rights.
No course of dealing or failure or delay on the part of the Bank in
exercising any rights, power or privilege hereunder will operate as a waiver
of such right and no single or partial exercise of any right shall preclude
any other or further exercise or the exercise of any right, power or
privilege. The rights of the Bank under this Agreement are cumulative and
not exclusive of any rights or remedies which the Bank would otherwise have.
SECTION 9.11 Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall negotiate in good faith to replace any
invalid, illegal or unenforceable provision with a valid provision, which, to
the extent possible, will preserve the economic effect of the invalid,
illegal or unenforceable provisions.
SECTION 9.12 Notices. All notices and communications hereunder
shall be given by hand delivery, with a receipt being obtained therefor, by
United States certified or registered mail, or by telegram, telex or by other
telecommunication device capable of creating written record of such notice
and its receipt. To the extent that any telecommunication notice is
permitted hereunder, the parties hereto shall provide appropriate telex and,
to the extent available, facsimile numbers. Notices and communications
hereunder shall be effective when received and shall be sent to the following
addresses (or to such other address(es)) of which either party hereto shall
notify the other party in accordance herewith):
If to the Bank, Societe Generale
to: New York Branch
1221 Avenue of the Americas
New York, New York 10020
Attention: Gordon R. Eadon
with a copy to: Christy & Viener
620 Fifth Avenue
New York, New York 10020
Attention: Steven R. Berger, Esq.
If to the Company, The Connecticut Light and Power Company
to: c/o Northeast Utilities Service Company
107 Selden Street
Berlin, Connecticut 06037
Attention: Assistant Treasurer
If to the Trustee: Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Department
SECTION 9.13 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York.
SECTION 9.14 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original but both or
all of which, when taken together, shall constitute but one document, and
shall become effective when copies hereof which, when taken together, bear
the signatures of each of the parties hereto shall be delivered to the
Company and the Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto
authorized as of the date first written above.
THE CONNECTICUT LIGHT AND POWER COMPANY
By: /s/David R. McHale
Assistant Treasurer--Finance
Payment Instructions:
SOCIETE GENERALE, New York Branch
Societe Generale
New York
ABA No. 026004226
Re: The Connecticut Light and Power Company
By: /s/Gordon R. Eadon
Vice President
FLEET NATIONAL BANK, as Trustee
By: /s/Kathy A. Larimore
Assistant Vice President
SCHEDULE 5.5
Material Adverse Change
None.
SCHEDULE 5.8
Environmental Matters
None.
NOTICE OF BANK PURCHASE
(Liquidity Purchase)
The undersigned, a duly authorized officer of FLEET NATIONAL BANK,
as paying agent (the "Paying Agent"), hereby certifies to Societe Generale,
New York Branch (the "Bank"), in accordance with the Standby Bond Purchase
Agreement (the "Standby Bond Purchase Agreement"), dated January 23, 1997,
among The Connecticut Light and Power Company, a corporation organized and
existing and qualified to do business as a public utility under the laws of
the State of Connecticut (the "Company") the Bank and the Trustee (all
capitalized terms herein having the meanings ascribed thereto in the Standby
Bond Purchase Agreement), that:
1. Notice of tender of Bonds for purchase pursuant to Section
9.18 of the Indenture has been received.
2. Insufficient moneys are available for such purchase pursuant
to Section 9.18(B) of the Indenture.
3. ____(a) The total principal amount of the Bonds (or portions
thereof) for which there is not sufficient moneys referred to above is
$____________, which amount does not exceed the Available Principal
Commitment.
____(b) Accrued, but unpaid, interest on such Bonds (or
portions thereof)(other than Defaulted Interest), computed in accordance with
the terms of the Bonds and the Indenture, as of the date of delivery hereof
to the Bank is $____________, which amount does not exceed the Available
Interest Commitment.(1)
4. The Bonds referred to above are hereby tendered to the Bank
for purchase pursuant to the Standby Bond Purchase Agreement on the date
hereof for an aggregate purchase price of $_______________,(2) which amount
does not exceed the Available Commitment.
5. Subject to Section 2.3(f) of the Indenture, upon completion of
purchase, the Paying Agent will cause the Trustee to (a) register such Bonds,
or if a Bond for which notice of tender for purchase pursuant to Section 9.18
of the Indenture has been given is not delivered, to issue a new Bond in
replacement of the undelivered Bond, in the name of the Bank or if directed
in writing by the Bank its nominee or designee on the Bond Register, and (b)
promptly deliver, or cause to be delivered, in a manner consistent with
Section 2.3(G)(9) of the Indenture, such Bonds to the Paying Agent (to be
held by the Paying Agent in trust for the benefit of the Bank) or as the Bank
may otherwise direct in writing in accordance with the Standby Bond Purchase
Agreement.
6. The Bank Purchase Date is ______________, 19__ and the wire
instructions for payment of the Purchase Price are as follows: [insert
payment instructions].
(1) If the Bonds are to be purchased on an interest payment date therefore,
this amount will exclude the interest payable on such date. If the exclusion
results in no interest, delete (b).
(2) Insert the sum of principal and accrued interest shown in pargraphs 3(a)
and (b).
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _______ day of ____________, 199_.
/s/
as Paying Agent
By: /s/
Title:
NOTICE OF BANK PURCHASE
(Mandatory Purchase)
The undersigned, a duly authorized officer of FLEET NATIONAL BANK,
as paying agent (the "Paying Agent"), hereby certifies to Societe Generale,
New York Branch (the "Bank"), in accordance with the Standby Bond Purchase
Agreement (the "Bond Purchase Agreement"), dated January 23, 1997, among The
Connecticut Light and Power Company, a corporation organized and existing and
qualified to do business as a public utility under the laws of the State of
Connecticut (the "Company"), the Bank and the Trustee (all capitalized terms
herein having the meanings ascribed thereto in the Standby Bond Purchase
Agreement), that:
1. Bonds (or portions thereof) have been tendered or deemed
tendered for mandatory purchase pursuant to Section 9.18 of the Indenture in
connection with the occurrence of [a Proposed Conversion Date] [the Stated
Expiration Date] [a default tender pursuant to the Bank's notice of
termination dated _________________].
2. Insufficient moneys are available for such purchase pursuant
to Section 9.18(B) of the Indenture.
3. ______(a) The total principal amount of the Bonds referred to
above is $_________, which amount does not exceed the Available Principal
Commitment.
______(b) Accrued, but unpaid interest on such Bonds(other
than Defaulted Interest), computed in accordance with the terms of the Bonds
and the Indenture, as of the date of delivery hereof to the Bank is
$___________, which amount does not exceed the Available Interest
Commitment.(1)
4. The Bonds referred to above are being delivered to the Bank
for purchase pursuant to the Standby Bond Purchase Agreement on the date
hereof for an aggregate purchase price of $_________(2) which amount does not
exceed the Available Commitment.
5. Subject to Section 2.3(f) of the Indenture upon completion of
purchase, the Paying Agent will cause the Trustee to (a) register such Bonds
or, if a Bond subject to mandatory purchase pursuant to Section 9.18 of the
Indenture is not delivered, to issue a new Bond in replacement of the
undelivered Bond, in the name of the Bank or if directed in writing by the
Bank its nominee or designee on the Bond Register, and (b) promptly deliver,
or cause to be delivered, in a manner consistent with Section 2.3(G)(9) of
the Indenture, such Bonds to the Paying Agent (to be held by the Paying Agent
in trust for the benefit of the Bank) or as the Bank may otherwise direct in
writing in accordance with the Standby Bond Purchase Agreement.
6. The Bank Purchase Date is ________, 199_ and the wire
instructions for payment of the Purchase Price are as follows: [insert
payment instructions].
(1) If the Bonds are to be purchased on an interest payment date therefor,
this amount will exclude the interest payable on such date. If the exclusion
results in no interest, delete (b).
(2) Insert the sum of principal and accrued interest shown in pargraphs 3(a)
and (b).
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ______ day of ___________, 199_.
as Paying Agent
By:
Title:
EXHIBIT C
CERTIFICATE OF EVENT OF TERMINATION
Date:
___________________, as Trustee
[address]
Re: Standby Bond Purchase Agreement, dated January 23, 1997, among The
Connecticut Light and Power Company, Societe Generale, New York
Branch, and Fleet National Bank, as trustee (the "Standby Bond
Purchase Agreement")
Societe Generale, acting through its New York Branch (the "Bank")
hereby certifies to __________________, as Trustee, with respect to the
Standby Bond Purchase Agreement as follows:
1. Capitalized terms not otherwise defined herein shall have the
same respective meanings as in the Standby Bond Purchase Agreement.
2. One or more of the following event(s) has occurred and is
continuing:
(i) The Bond Insurer has failed to pay: (A) principal of
or accrued interest on the Bonds, including, without limitation, accrued
interest at the Bank Rate on the Bank Bonds, or (B) an amount required
to amortize the Bank Bonds pursuant to Section 2.4(c) of the Standby
Bond Purchase Agreement, when, as and in the amounts required under the
Insurance Policy.
(ii) the Insurance Policy has not been replaced with an
insurance policy issued by a Bond Insurer acceptable to the Bank, and
(A) either the Insurance Policy for any reason has ceased to be in full
force and effect or has been declared by a court of competent
jurisdiction to be null and void, or (B) the Bond Insurer has denied
that it has any further liability under the terms of the Insurance
Policy;
(iii) the Bond Insurer has not been replaced with a
bond insurer acceptable to the Bank, and a proceeding has been
instituted in a court having jurisdiction in the premises seeking an
order for relief, rehabilitation, reorganization, conservation,
liquidation or dissolution in respect to the Bond Insurer or for any
substantial part of the Bond Insurer's property under any applicable
bankruptcy, insolvency or other similar law now in effect, or for the
appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or other similar official), and such proceeding has not
been terminated for a period of thirty (30) consecutive days or such
court has entered an order granting the relief sought in such proceeding
or the Bond Insurer has instituted or taken corporate action for the
purpose of instituting any such proceeding; or the Bond Insurer has
become insolvent or unable to pay its debts as they mature or claims
under any of its insurance policies as such claims are made, has
commenced a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, has consented to the
entry of an order for relief in an involuntary case under any such law
or has consented to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian or sequestrator (or
other similar official) of the Bond Insurer or for any substantial part
of its property, or has made a general assignment for the benefit of
creditors, or has failed generally to pay its debts or claims as they
become due, or has taken corporate action in furtherance of any of the
foregoing; or
(iv) an AMBAC Adverse Change has occurred.
3. Accordingly, the Bank hereby notifies the Trustee that the
Bank's obligations under the Standby Bond Purchase Agreement to purchase
Tendered Bonds shall terminate on the first Business Day following the forty-
fifth day after the Trustee shall have received this Certificate of Event of
Termination and requests that the Trustee take the actions required to be
taken to notify the holders of the bonds under the Amended and Restated
Indenture of Trust, dated as of May 1, 1996, and Amended and Restated as of
January 1, 1997 (as amended, supplemented or modified from time to time, the
"Indenture"), between the Connecticut Development Authority and the Trustee,
that such Event of Termination has occurred and of the Purchase Termination
Date.
SOCIETE GENERALE, New York Branch
By
Exhibit 4.2.24.3
AMBAC Municipal Bond Insurance Policy
AMBAC Indemnity Corporation
c/o CT Corporation Systems
44 East Mifflin St., Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza, New York, NY 10004
Telephone: (212) 668-0340
Issuer: CONNECTICUT DEVELOPMENT AUTHORITY
Policy Number: 13587BE
Bonds: $62,000,000 Pollution Control Revenue Bonds
(The Connecticut Light and Power Company
Project - 1996A Series) dated May 21, 1996
and maturing on May 1, 2031. The Trustee is
Fleet National Bank, Hartford, Connecticut.
Premium: $3,747,355.78
AMBAC Indemnity Corporation (AMBAC) A Wisconsin Stock Insurance Company
in consideration of the payment of the premium and subject to the terms of
this Policy, hereby agrees to pay to the United States Trust Company of New
York, as trustee, or its successor (the "Insurance Trustee"), for the benefit
of Bondholders, that portion of the principal of and interest on the above-
described debt obligations (the "Bonds") which shall become Due for Payment
but shall be unpaid by reason of Nonpayment by the Issuer.
AMBAC will make such payments to the Insurance Trustee within one (1)
business day following notification to AMBAC of Nonpayment. Upon a
Bondholder's presentation and surrender to the Insurance Trustee of such
unpaid Bonds or appurentant coupons, uncanceled and in bearer form and free
of any adverse claim, the Insurance Trustee will disburse to the Bondholder
the face amount of principal and interest which is then Due for Payment but
is unpaid. Upon such disbursement, AMBAC shall become the owner of the
surrendered Bonds and coupons and shall be fully subrogated to all of the
Bondholder's rights to payment.
In cases where the Bonds are issuable only in a form whereby principal is
payable to registered Bondholders or their assigns, the Issurance Trustee
shall disburse principal to a Bondholder as aforesaid only upon presentation
and surrender to the Insurance Trustee of the unpaid Bond, uncanceled and
free of any adverse claim, together with an instrument of assignment, in form
satisfactory to the Insurance Trustee, duly executed by the Bondholder or
such Bondholder's duly authorized representative, so as to permit ownership
of such Bond to be registered in the name of AMBAC or its nominee. In cases
where the Bonds are issuable only in a form whereby interest is payable to
registered Bondholders or their assigns, the Issurance Trustee shall disburse
interest to a Bondholder as aforesaid only upon presentation to the Insurance
Trustee of proof that the claimant is the person entitled to the payment of
interest on the Bond and upon presentation to the Insurance Trustee of proof
that the claimant is the person entitled to the payment of interest on the
Bond and delivery to the Insurance Trustee of an instrument of assignment, in
form satisfactory to the Insurance Trustee, duly executed by the claimant
Bondholder or such Bondholder's duly authorized representative, transferring
to AMBAC all rights under such Bond to receive the interest in respect of
which the insurance disbursement was made. AMBAC shall be subrogated to all
the Bondholders' rights to payment on registered Bonds to the extent of the
insurance disbursements so made.
In the event the trustee or paying agent for the Bonds has notice that any
payment of principal of or interest on a Bond which has become Due for
Payment and which is made to a Bondholder by or one behalf of the Issuer of
the Bonds has been deemed a preferential transfer and theretofore recovered
from its registered owner pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court of competent
jurisdiction, such registered owner will be entitled to payment from AMBAC to
the extent of such recovery if sufficient funds are not otherwise available.
As used herein, the term "Bondholder" means any person other than the Issuer
who, at the time of Nonpayment, is the owner of a Bond or of a coupon
appertaining to a Bond. As used herein, "Due for Payment," when referring to
the principal of Bonds, is when the stated maturity date or a mandatory
redemption date for the application of a required sinking fund installment
has been reached and does not refer to any earlier date on which payment is
due by reason of call for redemption (other than by application of required
sinking fund installments), acceleration or other advancement of maturity;
and, when referring to interest on the Bonds, is when the stated date for
payment of interest has been reached. As used herein, "Nonpayment" means the
failure of the Issuer to have provided sufficient funds to the paying agent
for payment in full of all principal of and interest on the Bond which are
Due for Payment.
This Policy is noncancelable. The premium on this Policy is not refundable
for any reason, including payment of the Bonds prior to maturity. This
Policy does not insure against loss of any prepayment or other acceleration
payment which at any time may become due in respect of any Bond, other than
at the sole option of AMBAC, nor against any risk other than Nonpayment.
In witness whereof, AMBAC has caused this Policy to be affixed with a
facsimile of its corporate seal and to be signed by its duly authorized
officers in facsimile to become effective as its original seal and signatures
and binding upon AMBAC by virtue of the countersignature of its duly
authorized representative.
/s/ P. Lassiter
President
AMBAC INDEMNITY CORPORATION CORPORATE SEAL WISCONSIN
/s/ Stephen S. Cooke
Secretary
/s/ Eileen T. Kerchoff
Authorized Representative
/s/ Cynthia Chaney
Authorized Officer
Effective Date: January 23, 1997
UNITED STATES TRUST COMPANY OF NEW YORK acknowledges that it has agreed to
perform the duties of Insurance Trustee under this Policy.
<PAGE>
AMBAC
AMBAC Indemnity Corporation
c/o CT Corporation Systems
44 East Mifflin St., Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza, New York, NY 10004
Telephone: (212) 668-0340
Endorsement
Policy issued to: CONNECTICUT DEVELOPMENT AUTHORITY
Attached to and forming part of
POLICY NO. 13587BE
Effective Date of Endorsement:
January 23, 1997
The Policy to which this endorsement is attached and of which it forms a part
is hereby amended to provide that the payment by AMBAC to the Insurance
Trustee, for the benefit of the Bondholders, of the principal of an interest
on the Bonds which shall become Due for Payment but which are unpaid by
reason of Nonpayment by the Issuer shall include any scheduled interest
payment and required mandatory redemption of Bank Bonds pursuant to Section
2.4(G)(i) of the Amended and Restated Indenture of Trust between the Issuer
and Fleet National Bank, as trustee, dated as of May 1, 1996 and Amended and
Restated as of January 1, 1997, related to the Bonds and the Standby Bond
Purchase Agreement.
Nothing herein contained shall be held to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated.
In Witness Whereof, AMBAC has caused this Endorsement to be affixed with a
facsimile of its corporate seal and to be signed by its duly authorized
officers in facsimile to become effective as its original seal and signatures
and binding upon AMBAC by virtue of the countersignature of its duly
authorized representative.
AMBAC Indemnity Corporation.
/s/ P. Lassiter
President
AMBAC INDEMNITY CORPORATION CORPORATE SEAL WISCONSIN
/s/ Stephen S. Cooke
Secretary
/s/ Eileen T. Kerchoff
Authorized Representative
<PAGE>
AMBAC
AMBAC Indemnity Corporation
c/o CT Corporation Systems
44 East Mifflin St., Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza, New York, NY 10004
Telephone: (212) 668-0340
Endorsement
Policy issued to: CONNECTICUT DEVELOPMENT AUTHORITY
Attached to and forming part of
POLICY NO. 13587BE
Effective Date of Endorsement:
January 23, 1997
Notwithstanding the terms and provisions contained in this Policy, it is
further understood that the term "Due for Payment" shall also mean, when
referring to the principal of and interest on a Bond, any date on which the
Bonds shall have been duly called for special mandatory redemption as a
result of a final determination by a court of competent jurisdiction or an
administrative agency that interest paid or payable on the Bonds to other
than a substantial user or a related person is or was includable in the gross
income of the owner thereof for federal income tax purposes under the United
States Internal Revenue Code of 1986, as amended, pursuant to Section 2.4(C)
of the Amended and Restated Indenture of Trust between the Issuer and Fleet
National Bank, as trustee, dated as of May 1, 1996 and Amended and Restated
as of January 1, 1997 securing the Bonds.
Nothing herein contained shall be held to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated.
In Witness Whereof, AMBAC has caused this Endorsement to be affixed with a
facsimile of its corporate seal and to be signed by its duly authorized
officers in facsimile to become effective as its original seal and signatures
and binding upon AMBAC by virtue of the countersignature of its duly
authorized representative.
AMBAC Indemnity Corporation.
/s/ P. Lassiter
President
AMBAC INDEMNITY CORPORATION CORPORATE SEAL WISCONSIN
/s/ Stephen S. Cooke
Secretary
/s/ Eileen T. Kerchoff
Authorized Representative
<PAGE>
AMBAC
AMBAC Indemnity Corporation
c/o CT Corporation Systems
44 East Mifflin St., Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza, New York, NY 10004
Telephone: (212) 668-0340
Endorsement
Policy issued to: CONNECTICUT DEVELOPMENT AUTHORITY
Attached to and forming part of
POLICY NO. 13587BE
Effective Date of Endorsement:
January 23, 1997
In the event that AMBAC Indemnity Corporation were to become insolvent, any
claims arising under the Policy would be excluded from coverage by the
Connecticut Insurance Guaranty Association.
Nothing herein contained shall be held to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated.
In Witness Whereof, AMBAC has caused this Endorsement to be affixed with a
facsimile of its corporate seal and to be signed by its duly authorized
officers in facsimile to become effective as its original seal and signatures
and binding upon AMBAC by virtue of the countersignature of its duly
authorized representative.
AMBAC Indemnity Corporation.
/s/ P. Lassiter
President
AMBAC INDEMNITY CORPORATION CORPORATE SEAL WISCONSIN
/s/ Stephen S. Cooke
Secretary
/s/ Eileen T. Kerchoff
Authorized Representative
Exhibit 4.3.2
CONFORMED COPY
U.S. $125,000,000
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of April 1, 1996
Among
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
as Borrower
THE BANKS NAMED HEREIN
as Banks
and
CHEMICAL BANK
as Administrative Agent
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS 1
1.01. Certain Defined Terms 1
1.02. Computation of Time Periods 20
1.03. Accounting Terms 20
1.04. Computations of Outstandings 20
ARTICLE II
COMMITMENTS 20
2.01. The Commitments 20
2.02. Fees 21
2.03. Reduction of the Commitments 21
2.04. Extension of the Termination Date 22
ARTICLE III
CONTRACT AND COMPETITIVE ADVANCES 22
3.01. Contract Advances 22
3.02. Terms Relating to the Making of Contract Advances23
3.03. (a) Competitive Advances 23
3.04. Making of Advances 29
3.05. Repayment of Advances 30
3.06. Interest 30
3.07. Existing Revolving Credit Agreement 32
ARTICLE IV
PAYMENTS 32
4.01. Payments and Computations 32
4.02. Prepayments 34
4.03. Yield Protection 34
4.04. Sharing of Payments, Etc. 38
4.05. Taxes 39
ARTICLE V
CONDITIONS PRECEDENT 41
5.01. Conditions Precedent to Effectiveness 41
5.02. Conditions Precedent to Certain Contract Advances and
All Competitive Advances 45
5.03. Conditions Precedent to Other Contract Advances 46
5.04. Reliance on Certificates 47
ARTICLE VI
REPRESENTATIONS AND WARRANTIES 47
6.01. Representations and Warranties of the Borrower 47
ARTICLE VII
COVENANTS OF THE BORROWER 51
7.01. Affirmative Covenants 51
7.02. Negative Covenants 53
7.03. Reporting Obligations 57
ARTICLE VIII
DEFAULTS 62
8.01. Events of Default 62
8.02. Remedies Upon Events of Default 65
ARTICLE IX
THE ADMINISTRATIVE AGENT 66
9.01. Authorization and Action 66
9.02. Administrative Agent's Reliance, Etc. 66
9.03. Chemical and Affiliates 67
9.04. Lender Credit Decision 67
9.05. Indemnification 67
9.06. Successor Administrative Agent 68
ARTICLE X
MISCELLANEOUS 69
10.01. Amendments, Etc 69
10.02. Notices, Etc 69
10.03. No Waiver of Remedies 70
10.04. Costs, Expenses and Indemnification 70
10.05. Right of Set-off 71
10.06. Binding Effect 72
10.07. Assignments and Participation 72
10.08. Confidentiality 76
10.09. Certain Authorizations and Consent 77
10.10. Waiver of Jury Trial 78
10.11. Governing Law 78
10.12. Relation of the Parties; No Beneficiary 78
10.13. Execution in Counterparts 78
SCHEDULE
Schedule I - Applicable Lending Offices
EXHIBITS
Exhibit 1.01A - Form of Competitive Note
Exhibit 1.01B - Form of Contract Note
Exhibit 1.01C - Form of Collateral Agency Agreement
Exhibit 1.01D - Form of PSNH Mortgage Amendment
Exhibit 1.01E - Form of PSNH Mortgage Assignment
Exhibit 3.01A - Form of Notice of Contract Borrowing
Exhibit 3.04A-1 - Form of Competitive Bid Request
(Eurodollar Competitive Advance)
Exhibit 3.04A-2 - Form of Confirmation of Competitive Borrowing
(Fixed Rate Competitive Advance)
Exhibit 3.04B - Form of Notice of Competitive Bid Request
(Eurodollar Competitive Advance)
Exhibit 3.04C-1 - Form of Competitive Bid
(Eurodollar Competitive Advance)
Exhibit 3.04C-2 - Form of Confirmation of Competitive Bid
(Fixed Rate Competitive Advance)
Exhibit 3.04D - Form of Competitive Bid Letter
Exhibit 5.01A - Form of Opinion of Jeffrey C. Miller, Assistant
General Counsel to Northeast Utilities
Service Company
Exhibit 5.01B - Form of Opinion of Robert A. Bersak, Assistant
General Counsel to the Borrower
Exhibit 5.01C - Form of Opinion of Sulloway & Hollis,
special New Hampshire counsel to
the Borrower
Exhibit 5.01D - Form of Opinion of Drummond Woodsum
& MacMahon, special Maine
counsel to the Borrower
Exhibit 5.01E - Form of Opinion of Zuccaro, Willis & Bent,
special Vermont counsel to the Borrower
Exhibit 5.01F - Form of Opinion of King & Spalding,
counsel to the Administrative Agent
Exhibit 10.07 - Form of Lender Assignment
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of April 1, 1996
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this Agreement) is
made by and among:
(i) Public Service Company of New Hampshire, a corporation duly
organized and validly existing under the laws of the State of New
Hampshire (the "Borrower"),
(ii) The financial institutions (the "Banks") listed on the signature
pages hereof and the other Lenders (as hereinafter defined) from
time to time party hereto, and
(iii) Chemical Bank ("Chemical"), as Administrative Agent for the
Lenders hereunder.
PRELIMINARY STATEMENT
The Borrower, certain lenders parties thereto and Chemical as
administrative agent thereunder, previously entered into the Existing
Revolving Credit Agreement (as hereinafter defined). The Borrower, the Banks
and the Administrative Agent now desire to amend and restate the Existing
Revolving Credit Agreement by entering into this Agreement, and, as well, to
enter into the Other Loan Documents (as hereinafter defined). Now therefore,
the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be
applicable to the singular and plural forms of the terms defined):
"Advance" means a Contract Advance or a Competitive Advance (each
of which shall be a "Class" of Advance).
"Administrative Agent" means Chemical or any successor thereto as
provided herein.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all
directors and officers of such Person), controlled by, or under direct
or indirect common control with such Person. A Person shall be deemed
to control another entity if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of such entity, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement for Capacity Transfer" means the Agreement for Capacity
Transfer, dated as of December 1, 1989, between The Connecticut Light
and Power Company and the Borrower as amended by the First Amendment to
Agreement for Capacity Transfer, dated as of May 1, 1992, which provides
for capacity transfers from the Borrower to The Connecticut Light and
Power Company.
"Alternate Base Rate" means, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/8 of 1%) equal to the greater of:
(a) the Prime Rate in effect on such day; and
(b) the Federal Funds Rate in effect on such day plus 1/2 of
1% per annum.
For purposes hereof, the term "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by Chemical as
its prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective on the date such change is
publicly announced. If the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it
is unable to ascertain the Federal Funds Rate for any reason, including
the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms thereof, the
Alternate Base Rate shall be determined without regard to clause (b) of
the first sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Rate
shall be effective on the effective date of such change in the Prime
Rate or the Federal Funds Rate, respectively.
"Applicable Facility Fee Rate" means, for any day, the percentage
per annum set forth below in effect on such day, determined on the basis
of the Applicable Rating Level:
Rating Rating Rating Rating
Level I Level II Level III Level IV
Applicable 0.20% 0.25% 0.375% 0.50%
Faciity Fee Rate
Any change in the Applicable Facility Fee Rate caused by a change in the
Applicable Rating Level shall take effect at the time such change in the
Applicable Rating Level shall occur.
"Applicable Lending Office" means, with respect to each Lender:
(i) in the case of any Contract Advance, (A) such Lender's
"Eurodollar Lending Office" in the case of a Eurodollar Rate
Advance, or (B) such Lender's "Domestic Lending Office" in the case
of a Base Rate Advance, in each case as specified opposite such
Lender's name on Schedule I hereto or in the Lender Assignment
pursuant to which it became a Lender; or
(ii) in the case of any Competitive Advance, the office or
affiliate of such Lender identified as the Applicable Lending
Office in such Lender's Competitive Bid tendered pursuant to
Section 3.03 hereof; or
(iii) in each case, such other office or affiliate of such
Lender as such Lender may from time to time specify in writing to
the Borrower and the Administrative Agent.
"Applicable Margin" means, for any day for any outstanding Contract
Advance, the percentage per annum set forth below in effect on such day,
determined on the basis of the Applicable Rating Level:
Type of Rating Rating Rating Rating
Advance Level I Level II Level III Level IV
Eurodollar 0.55% 0.75% 0.875% 1.25%
Rate
Base Rate 0.00% 0.00% 0.00% 0.00%
Any change in the Applicable Margin caused by a change in the Applicable
Rating Level shall take effect at the time such change in the Applicable
Rating Level shall occur.
"Applicable Rate" means:
(i) in the case of each Eurodollar Rate Advance comprising
part of the same Borrowing, a rate per annum during each Interest
Period equal at all times to the sum of the Eurodollar Rate for
such Interest Period plus the Applicable Margin in effect from time
to time during such Interest Period;
(ii) in the case of each Base Rate Advance, a rate per annum
equal at all times to the sum of the Alternate Base Rate in effect
from time to time plus the Applicable Margin in effect from time to
time;
(iii) in the case of each Eurodollar Competitive Advance,
a rate per annum during the Interest Period therefor, equal at all
times to the sum of the Eurodollar Rate for such Interest Period
plus or minus, as the case may be, the Competitive Margin in effect
during such Interest Period; and
(iv) in the case of each Fixed Rate Competitive Advance, at a
rate per annum during the Interest Period therefor, equal at all
times to the rate specified by such Lender in its Competitive Bid
and accepted by the Borrower for such Competitive Advance in
accordance with Section 3.03(b)(iv) hereof.
"Applicable Rating Level" shall be determined at any time and from
time to time on the basis of the long-term ratings of S&P and Moody's
applicable at such time to the Borrower's First Mortgage Bonds not
entitled to external credit support (or other senior secured debt
securities not entitled to external credit support if no First Mortgage
Bonds are then outstanding) in accordance with the following:
Rating Rating Rating Rating
Level I Level II Level III Level IV
BBB- or higher BB+ and Ba1 BB and Ba2 BB- or Ba3 or
and Baa3 or below (all
higher other cases)
In the event of a split rating, the lower of the two ratings shall
control. The Applicable Rating Level shall be redetermined as and when
any change in the ratings used in the determination thereof shall be
announced by S&P or Moody's, as the case may be.
"Available Commitment" means, for each Lender, the unused portion
of such Lender's Commitment (which shall be equal to the excess, if any,
of such Lender's Commitment over such Lender's Contract Advances
outstanding), less such Lender's Percentage of the aggregate amount of
Competitive Advances outstanding. "Available Commitments" shall refer
to the aggregate of the Lenders' Available Commitments hereunder.
"Base Rate Advance" means a Contract Advance in respect of which
the Borrower has selected in accordance with Article III hereof, or this
Agreement provides for, interest to be computed on the basis of the
Alternate Base Rate.
"Borrowing" means a Contract Borrowing or Competitive Borrowing
(each of which shall be a "Class" of Borrowing).
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and, if the applicable
Business Day relates to any Eurodollar Rate Advances or Eurodollar
Competitive Advances, on which dealings are carried on in the London
interbank market.
"CSI" means Chemical Securities Inc.
"Class" has the meaning assigned to such term (i) in the definition
of "Advance" when used in such context and (ii) in the definition of
"Borrowing" when used in such context.
"Closing" means the fulfilment of each of the conditions precedent
enumerated in Section 5.01 hereof to the satisfaction of the Lenders,
the Administrative Agent and the Borrower. All transactions
contemplated by the Closing shall take place on or prior to May 15,
1996, at the offices of King & Spalding, 120 West 45th Street, New York,
New York 10036, at 10:00 a.m. (New York City time), or such other place
and time as the parties hereto may mutually agree (the "Closing Date").
"Collateral" means all of the collateral in which liens, mortgages
or security interests are purported to be granted by any or all of the
Security Documents.
"Collateral Agency Agreement" means an Amended and Restated
Collateral Agency Agreement in substantially the form of Exhibit 1.01C
hereto, as the same may be amended, supplemented or otherwise modified
from time to time.
"Collateral Agent" means Chemical or any successor thereto as
provided in the Collateral Agency Agreement.
"Commitment" means, for each Lender, the aggregate amount set forth
opposite such Lender's name on the signature pages hereof or, if such
Lender has entered into one or more Lender Assignments, set forth for
such Lender in the Register maintained by the Administrative Agent
pursuant to Section 10.07(c), in each such case as such amount may be
reduced from time to time pursuant to Section 2.03 hereof.
"Commitments" shall refer to the aggregate of the Lenders' Commitments
hereunder.
"Common Equity" means, at any date, an amount equal to the sum of
the aggregate of the par value of, or stated capital represented by, the
outstanding shares of common stock of the Borrower and the surplus,
paid-in, earned and other, if any, of the Borrower.
"Competitive Advance" means an advance by a Lender to the Borrower
as part of a Competitive Borrowing and refers to a Fixed Rate
Competitive Advance or a Eurodollar Competitive Advance (each of which
shall be a "Type" of Competitive Advance).
"Competitive Bid" means an offer by a Lender to make a Competitive
Advance under the competitive bidding procedure described in
Section 3.03(b).
"Competitive Bid Rate" means, as to any Competitive Bid made by a
Lender pursuant to Section 3.03(b)(iv), (i) in the case of a Eurodollar
Competitive Advance, the Competitive Margin and (ii) in the case of a
Fixed Rate Competitive Advance, the fixed rate of interest offered by
such Lender making such Competitive Bid.
"Competitive Bid Letter" means a letter in the form of
Exhibit 3.03D hereto.
"Competitive Bid Request" means a request made by the Borrower
pursuant to Section 3.03(b)(i) in the form of Exhibit 3.03A-1 hereto.
"Competitive Borrowing" means a borrowing consisting of one or more
Competitive Advances of the same Type and Interest Period made on the
same day by each of the Lenders whose Competitive Bid to make one or
more Competitive Advances as part of such Borrowing has been accepted by
the Borrower under the competitive bidding procedure described in
Section 3.03(b). A Competitive Borrowing may be referred to herein as
being a "Type" of Competitive Borrowing, corresponding to the Type of
Competitive Advances comprising such Borrowing.
"Competitive Margin" means, with respect to any Eurodollar
Competitive Advance, the percentage per annum (expressed in the form of
a decimal to no more than four decimal places) to be added to or
subtracted from the Eurodollar Rate in order to determine the interest
rate applicable to such Advance, as specified in the Competitive Bid
relating to such Advance.
"Competitive Note" means a promissory note of the Borrower payable
to the order of a Lender, in substantially the form of Exhibit 1.01A
hereto, evidencing the indebtedness of the Borrower to such Lender from
time to time resulting from Competitive Advances made by such Lender.
"Confidential Information" has the meaning assigned to that term in
Section 10.08.
"Contract Advance" means an advance by a Lender to the Borrower
pursuant to Section 3.01 hereof and refers to a Eurodollar Rate Advance
or a Base Rate Advance (each of which shall be a "Type" of Contract
Advance). For purposes of this Agreement, all Contract Advances of a
Lender (or portions thereof) of the same Type and Interest Period made
on the same day shall be deemed to be a single Advance by such Lender
until repaid.
"Contract Borrowing" means a borrowing consisting of Contract
Advances of the same Type and Interest Period made on the same day by
the Lenders, ratably in accordance with their respective Commitments. A
Contract Borrowing may be referred to herein as being a "Type" of
Contract Borrowing, corresponding to the Type of Contract Advances
comprising such Borrowing. For purposes of this Agreement, all Contract
Advances of the same Type and Interest Period made on the same day shall
be deemed a single Contract Borrowing hereunder until repaid.
"Contract Note" means a promissory note of the Borrower payable to
the order of a Lender, in substantially the form of Exhibit 1.01B
hereto, evidencing the aggregate indebtedness of the Borrower to such
Lender resulting from the Contract Advances made by such Lender.
"Debt" means, for any Person, without duplication, (i) indebtedness
of such Person for borrowed money, (ii) obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations of such Person to pay the deferred purchase price of
property or services, (iv) obligations of such Person as lessee under
leases which shall have been or should be, in accordance with generally
accepted accounting principles, recorded as capital leases (but
excluding the Unit Contract), (v) obligations (contingent or otherwise)
of such Person under reimbursement or similar agreements with respect to
the issuance of letters of credit, (vi) net obligations (contingent or
otherwise) of such Person under interest rate swap, "cap", "collar" or
other hedging agreements, (vii) obligations of such person to pay rent
or other amounts under leases entered into in connection with sale and
leaseback transactions involving assets of such Person being sold in
connection therewith, (viii) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) through (vii), above, and (ix) liabilities in
respect of unfunded vested benefits under ERISA Plans.
"Debt Limit" means the limitation on the incurrence of short-term
debt applicable to the Borrower in effect from time to time either in
accordance with applicable law or a waiver thereof granted by competent
governmental authority, including without limitation, the New Hampshire
Public Utilities Commission.
"Disclosure Documents" means the Information Memorandum, the
Borrower's 1995 Annual Report, the Borrower's Annual Report on Form 10-K
for the year ended December 31, 1995, and any Current Report on Form 8-K
of the Borrower filed by the Borrower with the Securities and Exchange
Commission after January 31, 1996, and furnished to the Banks prior to
the execution and delivery of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means, with respect to any Person, any trade or
business (whether or not incorporated) which is a "commonly controlled
entity" of the Borrower within the meaning of the regulations under
Section 414 of the Internal Revenue Code of 1986, as amended from time
to time.
"ERISA Multiemployer Plan" means a "multiemployer plan" subject to
Title IV of ERISA.
"ERISA Plan" means an employee benefit plan (other than a ERISA
Multiemployer Plan) maintained for employees of the Borrower or any
ERISA Affiliate and covered by Title IV of ERISA.
"ERISA Plan Termination Event" means (i) a Reportable Event
described in Section 4043 of ERISA and the regulations issued thereunder
(other than a Reportable Event not subject to the provision for 30-day
notice to the PBGC under such regulations) with respect to an ERISA Plan
or an ERISA Multiemployer Plan, or (ii) the withdrawal of the Borrower
or any of its ERISA Affiliates from an ERISA Plan or an ERISA
Multiemployer Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the filing
of a notice of intent to terminate an ERISA Plan or an ERISA
Multiemployer Plan or the treatment of an ERISA Plan or an ERISA
Multiemployer Plan under Section 4041 of ERISA, or (iv) the institution
of proceedings to terminate an ERISA Plan or an ERISA Multiemployer Plan
by the PBGC, or (v) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any ERISA Plan or ERISA
Multiemployer Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"Eurodollar Competitive Advance" means a Competitive Advance in
respect of which the Borrower has selected in accordance with
Section 3.03 hereof, and this Agreement provides, interest to be
computed on the basis of the Eurodollar Rate.
"Eurodollar Rate" means, for each Interest Period for each
Eurodollar Rate Advance or Eurodollar Competitive Advance comprising
part of the same Borrowing, an interest rate per annum equal to the
average (rounded upward to the nearest whole multiple of 1/100 of 1% per
annum, if such average is not such a multiple) of the rates per annum at
which deposits in U.S. dollars are offered by the principal office of
each of the Reference Banks in London, England to prime banks in the
London interbank market at 11:00 a.m. (London time) two Business Days
before the first day of such Interest Period in an amount of $1,000,000
and for a period equal to such Interest Period. The Eurodollar Rate for
the Interest Period for each Eurodollar Rate Advance comprising part of
the same Borrowing shall be determined by the Administrative Agent on
the basis of applicable rates furnished to and received by the
Administrative Agent from the Reference Banks two Business Days before
the first day of such Interest Period, subject, however, to the
provisions of Sections 3.06(d) and 4.03(g).
"Eurodollar Rate Advance" means a Contract Advance in respect of
which the Borrower has selected in accordance with Article III hereof,
and this Agreement provides for, interest to be computed on the basis of
the Eurodollar Rate.
"Eurodollar Reserve Percentage" of any Lender for each Interest
Period for each Eurodollar Rate Advance means the reserve percentage
applicable during such Interest Period (or if more than one such
percentage shall be so applicable, the daily average of such percentages
for those days in such Interest Period during which any such percentage
shall be so applicable) under Regulation D or other regulations issued
from time to time by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement, without benefit of or credit for
proration, exemptions or offsets) for such Lender with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 8.01.
"Existing Collateral Agency Agreement" means the Collateral Agency
Agreement, dated as of May 1, 1991, among the Borrower, Bankers Trust
Company, as Collateral Agent, Citibank, N.A., as Term Agent, Chemical,
as Revolving Agent, and certain other holders of secured claims referred
to herein.
"Existing Revolving Credit Agreement" means the Revolving Credit
Agreement, dated as of May 1, 1991, among the Borrower, Bankers Trust
Company, Chemical and Citibank, N.A. as Co-Agents and Chemical, as
Administrative Agent, and the lenders from time to time party thereto,
as amended by the First Amendment to the Revolving Credit Agreement,
dated as of May 11, 1994, among the parties to the Revolving Credit
Agreement.
"Facility" means the facility made available to the Borrower by
each of the Lenders under Sections 2.01(a), 3.01 and 3.03 to request,
prepay and repay Advances in connection with each Lender's Commitment.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers,
as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Fee Letter" means the Fee Letter, dated as of February 15, 1996,
among the Borrower, NUSCO, Chemical and CSI.
"First Mortgage Bond Amount" means $950,000,000.
"First Mortgage Bonds" means first mortgage bonds in the maximum
aggregate principal amount of up to the First Mortgage Bond Amount
issued or to be issued by the Borrower and secured, directly or
indirectly, collectively or severally, by one or more first-priority
liens on all or part of the Indenture Assets pursuant to the First
Mortgage Indenture or another indenture in form and substance
satisfactory to the Majority Lenders. For purposes hereof, all or part
of the First Mortgage Bonds may be issued as collateral for pollution
control revenue bonds or industrial revenue bonds, whether taxable or
tax exempt, issued by the Borrower or by a governmental authority at the
Borrower's request (any such pollution control revenue bonds or
industrial revenue bonds being included, without duplication as to the
principal amount of First Mortgage Bonds securing the same, within the
definition hereunder of "First Mortgage Bonds").
"First Mortgage Indenture" means the General and Refunding Mortgage
Indenture, between the Borrower and New England Merchants National Bank,
as trustee and to which First Fidelity Bank, National Association, New
Jersey, is successor trustee, dated as of August 15, 1978, as amended
and supplemented through the date hereof, as the same may hereafter be
amended, supplemented or modified from time to time.
"Fixed Rate Competitive Advance" means a Competitive Advance in
respect of which the Borrower has selected in accordance with
Section 3.03(b)(iv) hereof, and this Agreement provides, interest to be
computed on the basis of a fixed percentage rate per annum (expressed in
the form of a decimal to no more than four decimal places) specified by
the Lender making such Advance in its Competitive Bid.
"Governmental Approval" means any authorization, consent, approval,
license, permit, certificate, exemption of, or filing or registration
with, any governmental authority or other legal or regulatory body,
required in connection with any of (i) the execution, delivery or
performance of the Rate Agreement, any Loan Document or any Significant
Contract, (ii) the grant and perfection of any security interest, lien
or mortgage contemplated by the Security Documents, or (iii) the nature
of the Borrower's business as conducted or the nature of the property
owned or leased by it. For purposes of this Agreement, Chapter 362-C of
the Revised Statutes Annotated of New Hampshire, as in effect on the
date hereof, shall be deemed to be a Governmental Approval.
"Hazardous Substance" means any waste, substance or material
identified as hazardous, dangerous or toxic by any office, agency,
department, commission, board, bureau or instrumentality of the United
States of America or of the State or locality in which the same is
located having or exercising jurisdiction over such waste, substance or
material.
"Indemnified Person" has the meaning assigned to that term in
Section 10.04(b) hereof.
"Indenture Assets" means fixed assets of the Borrower (including
related Governmental Approvals and regulatory assets, but excluding the
Seabrook Interests) which from time to time are subject to the first-
priority lien under the First Mortgage Indenture.
"Information Memorandum" means the Confidential Information
Memorandum, dated February 1996, regarding the Borrower and NU, as
distributed to the Administrative Agent and the Lenders, including all
schedules and attachments thereto.
"Interest Expense" means, for any period, the aggregate amount of
any interest on Debt (including long-term and short-term Debt).
'Interest Period" has the meaning assigned to that term in
Section 3.06(a) hereof.
"Lender Assignment" means an assignment and agreement entered into
by a Lender and an assignee, and accepted by the Administrative Agent,
in substantially the form of Exhibit 10.07 hereto.
"Lenders" means the financial institutions listed on the signature
pages hereof, and each assignee that shall become a party hereto
pursuant to Section 10.07.
"Lien" has the meaning assigned to that term in Section 7.02(a)
hereof.
"Loan Documents" means this Agreement, the Notes and the Security
Documents (as each may be amended, supplemented or otherwise modified
from time to time).
"Major Electric Generating Plants" means the following generating
stations of the Borrower: the Merrimack generating station located in
Bow, New Hampshire; the Newington generating station located in
Newington, New Hampshire; the Schiller generating station located in
Portsmouth, New Hampshire; the White Lake combustion turbine located in
Tamworth, New Hampshire; the Millstone Unit No. 3 generating station
located in Waterford, Connecticut, and the Wyman Unit No. 4 generating
station located in Yarmouth, Maine.
"Majority Lenders" means on any date of determination, Lenders who,
collectively, on such date (i) hold at least 66-2/3% of the then
aggregate unpaid principal amount of the Advances owing to the Lenders
and (ii) have Percentages in the aggregate of at least 66-2/3%.
Determination of those Lenders satisfying the criteria specified above
for action by the Majority Lenders shall be made by the Administrative
Agent and shall be conclusive and binding on all parties absent manifest
error.
"Merger" means (i) the merger on June 5, 1992 of NU Acquisition
Corp., a wholly owned subsidiary of NU, with and into the Borrower and
(ii) the transfer on the same date by the Borrower, as so merged, to
NAEC of the Seabrook Interests in accordance with the Rate Agreement.
"Moody's" means Moody's Investors Services, Inc. or any successor
thereto.
"NAEC" means North Atlantic Energy Corporation, a corporation
wholly owned by NU which acquired the Seabrook Interests from the
Borrower on June 5, 1992.
"Note" means a Contract Note or a Competitive Note, as each may be
amended, supplemented or otherwise modified from time to time.
"Notice of Contract Borrowing" has the meaning assigned to that
term in Section 3.01 hereof.
"NU" means Northeast Utilities, an unincorporated voluntary
business association organized under the laws of the Commonwealth of
Massachusetts.
"NUSCO" means Northeast Utilities Service Company, a Connecticut
corporation and a wholly owned subsidiary of NU.
"Operating Income" means, for any period, the Borrower's operating
income for such period, adjusted as follows:
(i) increased by the amount of income taxes (including New
Hampshire Business Profits Tax and other comparable taxes) paid by
the Borrower during such period, if and to the extent deducted in
the computation of the Borrower's operating income for such period;
and
(ii) increased by the amount of any depreciation deducted by
the Borrower during such period; and
(iii) increased by the amount of any amortization of
acquisition adjustment deducted by the Borrower during such period;
and
(iv) decreased by the amount of any capital expenditures paid
by the Borrower during such period.
"Other Loan Documents" means the 364-Day Revolving Credit
Agreement, dated as of April 1, 1996 among the Borrower, the lenders
from time to time parties thereto and Chemical, as administrative agent
thereunder, together with the other "Loan Documents" referred to
therein.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor entity) established under ERISA.
"Percentage" means, in respect of any Lender on any date of
determination, the percentage obtained by dividing such Lender's
Commitment on such day by the total of the Commitments on such day, and
multiplying the quotient so obtained by 100%.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"PSNH Mortgage" means the Mortgage, Assignment, Security Agreement
and Financing Statement, dated as of May 1, 1991, by the Borrower to
Bankers Trust Company, as assigned pursuant to the PSNH Mortgage
Assignment, and as amended by PSNH Mortgage Amendment, as the same may
be further amended, supplemented or otherwise modified from time to
time.
"PSNH Mortgage Amendment" means the First Amendment to the PSNH
Mortgage, dated on or about the Closing Date, by the Borrower and the
Collateral Agent, in substantially the form of Exhibit 1.01D hereto.
"PSNH Mortgage Assignment" means the Replacement of Collateral
Agent, together with Assignment by Mortgagee, Assignee and Secured
Party, dated on or about the Closing Date, among Bankers Trust Company,
as former Collateral Agent, Chemical, as successor Collateral Agent, and
the Borrower.
"Rate Agreement" means the Agreement dated as of November 22, 1989,
as amended by the First Amendment to Rate Agreement dated as of December
5, 1989, the Second Amendment to Rate Agreement dated as of December 12,
1989, the Third Amendment to Rate Agreement dated as of December 28,
1993, the Fourth Amendment to Rate Agreement dated as of September 21,
1994 and the Fifth Amendment to Rate Agreement dated as of September 9,
1994, among NUSCO, the Governor and Attorney General of the State of New
Hampshire and adopted by the Borrower as of July 10, 1990 (excluding the
Unit Contract appended as Exhibit A thereto subsequent to the
effectiveness of such contract).
"Recipient" has the meaning assigned to that term in Section 10.08
hereof.
"Reference Banks" means Chemical, Citibank, N.A. and Bank of
America National Trust and Savings Association.
"Register" has the meaning specified in Section 10.07(c).
"S&P" means Standard and Poor's Ratings Group or any successor
thereto.
"Seabrook" means the nuclear-fueled, steam-electric generating
plant at a site located in Seabrook, New Hampshire, and the real
property interests and other fixed assets of such plant.
"Seabrook Interests" means all right, title and interest of the
Borrower, prior to the Merger, in and to the fixed assets of Seabrook,
nuclear fuel relating to Seabrook and Governmental Approvals relating
thereto, including the undeveloped land adjacent to Seabrook and
described as the "Adjacent Property" in Schedule D to the PSNH Mortgage.
"Secured Party" has the meaning assigned to that term in the
Collateral Agency Agreement.
"Security Documents" means the PSNH Mortgage and the Collateral
Agency Agreement (as the same may be amended, supplemented or otherwise
modified from time to time).
"Series D Reimbursement Agreement" means (a) the Second Series D
Letter of Credit and Reimbursement Agreement, dated as of May 1, 1995,
among the Borrower, Barclays Bank PLC, New York Branch, and the
Participating Banks named therein relating to: (i) the Industrial
Development Authority of the State of New Hampshire Pollution Control
Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Taxable Series D), (ii) Business Finance Authority of the State of New
Hampshire Pollution Control Refunding Revenue Bonds (Public Service
Company of New Hampshire Project - 1992 Tax Exempt Series D) and (iii)
any other series of "Tax-Exempt Refunding Bonds" issued from time to
time in respect of the foregoing, as such agreement may from time to
time be amended, modified or supplemented, and (b) any similar agreement
entered into in respect of letters of credit or other credit enhancement
facilities issued in support of any of the foregoing.
"Series E Reimbursement Agreement" means (a) the Second Series E
Letter of Credit and Reimbursement Agreement, dated as of May 1, 1995,
among the Borrower, Swiss Bank Corporation, New York Branch, and the
Participating Banks named therein relating to: (i) the Industrial
Development Authority of the State of New Hampshire Pollution Control
Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Taxable Series E), (ii) Business Finance Authority of the State of New
Hampshire Pollution Control Refunding Revenue Bonds (Public Service
Company of New Hampshire Project - 1993 Tax-Exempt Series E) and (iii)
any other series of "Tax-Exempt Refunding Bonds" issued from time to
time in respect of the foregoing, as such agreement may from time to
time be amended, modified or supplemented, and (b) any similar agreement
entered into in respect of letters of credit or other credit enhancement
facilities issued in support of any of the foregoing.
"Sharing Agreement" means the Sharing Agreement, dated as of June
1, 1992, among The Connecticut Light and Power Company, Western
Massachusetts Electric Company, Holyoke Water Power Company, Holyoke
Power and Electric Company, the Borrower and NUSCO.
"Significant Contracts" means the following contracts, in each case
as the same may be amended, modified or supplemented from time to time
in accordance with this Agreement:
(i) the Agreement for Capacity Transfer;
(ii) the Sharing Agreement;
(iii) the Tax Allocation Agreement; and
(iv) the Unit Contract.
"Tax Allocation Agreement" means the Tax Allocation Agreement dated
as of January 1, 1990 among NU and the members of the consolidated group
of which NU is the common parent, including, without limitation, the
Borrower.
"Termination Date" means the earlier to occur of (i) April 30,
1999, or such later date to which the Termination Date shall be extended
in accordance with Section 2.04, (i) May 15, 1996, if the Closing Date
shall not have occurred on or prior to such date, (ii)the date of
termination or reduction in whole of the Commitments pursuant to Section
2.03 or 8.02 or (iii) the date of acceleration of all amounts payable
hereunder and under the Notes pursuant to Section 8.02.
"Total Capitalization" means, as of any day, the aggregate of all
amounts that would, in accordance with generally accepted accounting
principles applied on a basis consistent with the standards referred to
in Section 1.03 hereof, appear on the balance sheet of the Borrower as
of such day as the sum of (i) the principal amount of all long-term Debt
of the Borrower on such day, (ii) the par value of, or stated capital
represented by, the outstanding shares of all classes of common and
preferred shares of the Borrower on such day, (iii) the surplus of the
Borrower, paid-in, earned and other, if any, on such day and (iv) the
unpaid principal amount of all short-term Debt of the Borrower on such
day.
"Type" has the meaning assigned to such term (i) in the definition
of "Contract Advance" when used in the such context and (ii) in the
definition of "Contract Borrowing" when used in such context.
"Unit Contract" means the Unit Contract, dated as of June 5, 1992,
between the Borrower and NAEC.
"Unmatured Default" means the occurrence and continuance of an
event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default.
SECTION 1.02 Computation of Time Periods. In the computation of
periods of time under this Agreement any period of a specified number of days
or months shall be computed by including the first day or month occurring
during such period and excluding the last such day or month. In the case of
a period of time "from" a specified date "to" or "until" a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding".
SECTION 1.03 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles applied on a basis consistent with the application
employed in the preparation of the financial projections referred to in
Section 5.01 hereof.
SECTION 1.04 Computations of Outstandings. Whenever reference is made
in this Agreement to the principal amount outstanding on any date under this
Agreement, such reference shall refer to the sum of the aggregate principal
amount of all Advances outstanding on such date in each case after giving
effect to all Advances to be made on such date and the application of the
proceeds thereof.
ARTICLE II
COMMITMENTS
SECTION 2.01 The Commitments. (a) Each Lender severally agrees, on the
terms and conditions hereinafter set forth, to make Advances to the Borrower
from time to time on any Business Day during the period from the Closing Date
until the Termination Date in an aggregate outstanding amount not to exceed
on any day such Lender's Available Commitment (after giving effect to all
Advances to be made on such day and the application of the proceeds thereof).
Within the limits of each Lender's Available Commitment, the Borrower may
request Advances hereunder, repay or prepay Advances and utilize the
resulting increase in the Available Commitments for further Advances in
accordance with the terms hereof.
(b) In no event shall the Borrower be entitled to request or receive
any Advance under subsection (a) that would cause the total principal amount
advanced pursuant to thereto to exceed the Available Commitment. In no event
shall the Borrower be entitled to request or receive any Advance that would
cause the total principal amount outstanding hereunder to exceed the
Commitments.
(c) In addition to each Lender's Commitment under subsection (a) above,
but subject nevertheless to the provisions of subsection (b) above, the
Borrower may request Competitive Advances to be made at the discretion of
each Lender, in accordance with Section 3.03 hereof.
SECTION 2.02 Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a facility fee on the
amount of such Lender's Commitment (whether used or unused) at the Applicable
Facility Fee Rate, effective as of April 15, 1996 (as if the Commitment were
effective as of such date), in the case of each Bank, and from the effective
date specified in the Lender Assignment pursuant to which it became a Lender,
in the case of each other Lender, until the Termination Date, payable
quarterly in arrears on the last day of each March, June, September and
December, commencing the first such date following the Closing Date, with
final payment payable on the Termination Date.
(b) The Borrower agrees to pay to the Administrative Agent and to CSI
the fees specified in the Fee Letter, together with such other fees as may be
separately agreed to between the Borrower and the Administrative Agent.
SECTION 2.03 Reduction of the Commitments. (a) The Borrower may, upon
at least five Business Days' notice to the Administrative Agent, terminate in
whole or reduce ratably in part the Available Commitments of the respective
Lenders; provided (i) that any such partial reduction shall be in the
aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in
excess thereof, (ii) that in no event shall the aggregate Commitments be
reduced hereunder to an amount less than the principal amount outstanding
hereunder and (iii) that in no event shall the Commitments be reduced to an
amount less than the aggregate principal amount of Advances then outstanding.
(b) If the Closing Date does not occur on or prior to May 15, 1996, the
Commitment of each Lender shall automatically terminate.
SECTION 2.04 Extension of the Termination Date. Unless the Termination
Date shall have previously occurred in accordance with its terms, at least
105 days but not more than 120 days before the Termination Date, as then in
effect, the Borrower may, by notice to the Administrative Agent (any such
notice being irrevocable), request the Administrative Agent and the Lenders
to extend the Termination Date for a period of one year. If the Borrower
shall make such request, the Administrative Agent shall promptly inform the
Lenders and, no later than 60 days prior to the Termination Date as then in
effect, the Administrative Agent shall notify the Borrower in writing if the
Administrative Agent and the Lenders consent to such request and the
conditions of such consent (including conditions relating to legal
documentation and evidence of the obtaining of all necessary governmental
approvals). The granting of any such consent shall be in the sole and
absolute discretion of the Administrative Agent and each Lender, and if the
Administrative Agent shall not so notify the Borrower, such lack of
notification shall be deemed to be a determination not to consent to such
request. No such extension shall occur unless the Administrative Agent and
all Lenders consent thereto (or if less than all the Lenders consent thereto,
unless one or more other existing Lenders, or one or more other banks and
financial institutions acceptable to the Borrower and the Administrative
Agent, agree to assume all of the Commitments of the non-consenting Lenders).
ARTICLE III
CONTRACT AND COMPETITIVE ADVANCES
SECTION 3.01 Contract Advances. Each Contract Borrowing shall consist
of Contract Advances of the same Type and Interest Period made on the same
Business Day by the Lenders ratably according to their respective
Commitments. The Borrower may request that more than one Borrowing be made
on the same day. Each Contract Borrowing shall be made on notice, given not
later than 11:00 a.m. (New York City time) (i) in the case of Eurodollar Rate
Advances, on the third Business Day prior to the date of the proposed
Borrowing and (ii) in the case of Base Rate Advances, on the day of the
proposed Borrowing, by the Borrower to the Administrative Agent, who shall
give to each Lender prompt notice thereof on the same day such notice is
received. Each such notice of a Contract Borrowing (a "Notice of Contract
Borrowing") shall be in substantially the form of Exhibit 3.01A hereto,
specifying therein the requested (i) date of such Borrowing, (ii) Type of
Advances comprising such Borrowing and (iii) Interest Period for each such
Advance. Each proposed Borrowing shall be subject to the provisions of
Sections 3.02, 4.03 and Article V hereof.
SECTION 3.02 Terms Relating to the Making of Contract Advances.
(a) Notwithstanding anything in Section 3.01 above to the contrary:
(i) at no time shall more than ten different Contract Borrowings
be outstanding hereunder;
(ii) each Contract Borrowing hereunder shall be in an aggregate
principal amount of not less than $10,000,000 or an integral multiple of
$1,000,000 in excess thereof, or such lesser amount as shall be equal to
the total amount of the Available Commitments for Contract Advances on
such date after giving effect to all other Contract Borrowings to be
made on such date; and
(iii) each Contract Borrowing hereunder which is to be
comprised of Eurodollar Rate Advances shall be in an aggregate principal
amount of not less than $10,000,000.
(b) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower.
SECTION 3.03 (a) Competitive Advances. Each Competitive Borrowing
shall consist of Competitive Advances of the same Type and Interest Period
made by the Lenders in accordance with this Section 3.03 and shall be in a
minimum aggregate principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, except as otherwise provided pursuant to
Section 3.03(b)(iv) hereof. Competitive Advances shall be made in the
amounts accepted by the Borrower in accordance with Section 3.03(b)(iv).
Each Competitive Advance, regardless of which Lender makes such Advance, will
reduce the Available Commitments of all Lenders pro rata as provided in the
definition of "Available Commitments" in Section 1.01 hereof. Promptly after
each Competitive Borrowing, the Administrative Agent will notify each Lender
of the amount of the Competitive Borrowing, the amount by which such Lender's
Available Commitment has been reduced, the date of the Competitive Borrowing
and the Interest Period with respect thereto.
(b) Competitive Bid Procedures.
(i) In order to request Competitive Bids, (A) in the case of any
request for Eurodollar Competitive Advances, the Borrower shall hand
deliver, telex or telecopy to the Administrative Agent a duly completed
Competitive Bid Request in the form of Exhibit 3.03A-1 to be received by
the Administrative Agent not later than 10:00 a.m. (New York City time),
four Business Days prior to a proposed Competitive Borrowing to consist
of Eurodollar Competitive Advances and (B) in the case of any request
for Fixed Rate Competitive Advances, the Borrower shall give telephonic
notice of a proposed Competitive Borrowing to consist of Fixed Rate
Competitive Advances to the Administrative Agent not later than
9:15 a.m. (New York City time) on the day of a proposed Competitive
Borrowing (with written confirmation of the information given by
telephone substantially in the form of Exhibit 3.03A-2 delivered by
hand, telecopy or telex by the Borrower to the Administrative Agent no
later than 5:00 p.m. (New York City time) on the day of such Competitive
Borrowing.) No Contract Advances shall be requested in or made pursuant
to a Competitive Bid Request. A Competitive Bid Request which requests
Eurodollar Competitive Advances that does not conform substantially to
the form of Exhibit 3.03A-1 or 3.03A-2, as applicable, may be rejected
in the Administrative Agent's sole discretion, and the Administrative
Agent shall promptly notify the Borrower of such rejection by telex or
telecopier. Such request shall refer to this Agreement and specify
(1) the Lenders selected by the Borrower to make a Competitive Bid
(which shall be no more than six Lenders), (2) the date of such
Competitive Borrowing (which shall be a Business Day) and the aggregate
principal amount thereof (which shall not be less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof), (3) the Interest
Period with respect thereto and (4) whether the Borrowing then being
requested is to consist of Eurodollar Competitive Advances or Fixed Rate
Competitive Advances. Promptly after its receipt of a Competitive Bid
Request that is not rejected as aforesaid, the Administrative Agent
shall (A) in the case of a proposed Competitive Borrowing to consist of
Eurodollar Competitive Advances, invite by telex or telecopier (in the
form of Exhibit 3.03B hereto) the selected Lenders to bid to make
Competitive Advances pursuant to the Competitive Bid Request and (B) in
the case of a proposed Competitive Borrowing to consist of Fixed Rate
Competitive Advances, not later than 9:30 a.m. (New York City time) on
the day of such Competitive Bid Request, invite the selected Lenders by
telephone to make Competitive Advances pursuant to the Competitive Bid
Request, in accordance with the terms and conditions of this Agreement.
(ii) Each selected Lender may, in its sole discretion, make one or
more Competitive Bids to the Borrower which shall be responsive to the
Competitive Bid Request. Each Competitive Bid by such Lender must be
received by the Administrative Agent (A) in the case of a proposed
Competitive Borrowing to consist of Eurodollar Competitive Advances, by
telex or telecopier (in the form of Exhibit 3.03C-1 hereto) not later
than 9:30 a.m. (New York City time), three Business Days prior to a
proposed Competitive Borrowing and (B) in the case of a proposed
Competitive Borrowing to consist of Fixed Rate Competitive Advances not
later than 9:45 a.m. (New York City time) on the day of a proposed
Competitive Borrowing (subsequently confirmed in writing, not later than
11:00 a.m. (New York City time) substantially in the form of
Exhibit 3.03C-2 hereto). Multiple bids will be accepted by the
Administrative Agent. Competitive Bids, with respect to Eurodollar
Competitive Advances, that do not conform substantially to the format of
Exhibit 3.03C-1 may be rejected by the Administrative Agent after
conferring with, and upon the instruction of, the Borrower, and the
Administrative Agent shall notify the Lender making such non-conforming
bid of such rejection as soon as practicable. Each bid (a "Competitive
Bid") shall refer to this Agreement and specify (A) the principal amount
(which shall be a minimum principal amount of $5,000,000 and in an
integral multiple of $1,000,000 and which may be up to the aggregate
amount of the proposed Competitive Borrowing regardless of the
Commitment of the Lender) of the Competitive Advance that the Lender is
willing to make to the Borrower and (B) the Competitive Bid Rate or
Rates at which the Lender is prepared to make the Competitive Advances.
If any selected Lender shall elect not to make a Competitive Bid, such
Lender shall so notify the Administrative Agent (A) in the case of a
proposed Competitive Borrowing to consist of Eurodollar Competitive
Advances, by telex or telecopier, not later than 9:30 a.m. (New York
City time), three Business Days prior to a proposed Competitive
Borrowing, and (B) in the case of a proposed Competitive Borrowing to
consist of Fixed Rate Competitive Advances, by telephone, telex or
telecopier not later than 9:45 a.m. (New York City time) on the day of a
proposed Competitive Borrowing; provided, however, that failure by any
Lender to give such notice shall not cause such Lender to be obligated
to make any Competitive Advance. A Competitive Bid submitted by a
Lender pursuant to this subsection (ii) shall be irrevocable.
(iii) The Administrative Agent shall (A) in the case of a
proposed Borrowing to consist of Eurodollar Competitive Advances,
promptly notify the Borrower by telex or telecopier and (B) in the case
of a proposed Borrowing to consist of Fixed Rate Competitive Advances,
notify the Borrower by telephone not later than 10:00 a.m. (New York
City time) on the day of such proposed Competitive Borrowing of the
Competitive Bids made, the Competitive Bid Rate, the principal amount of
each Competitive Bid and the identity of the Lender that made each
Competitive Bid.
(iv) The Borrower may, in its sole and absolute discretion, subject
only to the provisions of this subsection (iv), accept or reject any
Competitive Bid. The Borrower shall notify the Administrative Agent by
telephone whether and to what extent it has decided to accept or reject
any or all of the Competitive Bids (specifying each Lender selected by
it to make Competitive Advances, the principal amount of such Advances
and the Competitive Bid Rate) (A) in the case of a Borrowing to consist
of Eurodollar Competitive Advances, by not later than 10:15 a.m. (New
York City time) three Business Days before a proposed Competitive
Borrowing (promptly confirmed by a Competitive Bid Letter, hand
delivered, telexed or telecopied by the Borrower to the Administrative
Agent), and (B) in the case of a Borrowing to consist of Fixed Rate
Competitive Advances, not later than 10:15 a.m. (New York City time) on
the day of a proposed Competitive Borrowing (confirmed in writing
substantially in the form of Exhibit 3.03A-2, hand delivered, telexed or
telecopied to the Administrative Agent not later than 5:00 p.m. (New
York City time) on the day of the proposed Competitive Borrowing);
provided, however, that 1) the failure by the Borrower to give such
notice shall be deemed to be a rejection of all the bids referred to in
subsection (iii) above, (2) the Borrower shall not accept a bid made at
a particular Competitive Bid Rate if the Borrower has decided to reject
a bid made at a lower Competitive Bid Rate, (3) the aggregate amount of
the Competitive Bids accepted by the Borrower shall not exceed the
principal amount specified in the Competitive Bid Request, (4) if the
Borrower shall determine to accept Competitive Bids made at a particular
Competitive Bid Rate but the aggregate amount of all Competitive Bids
made at such Competitive Bid Rate, when added to the aggregate amount of
all Competitive Bids at lower Competitive Bid Rates, would cause the
total amount of Competitive Bids to be accepted by the Borrower to
exceed the principal amount specified in the Competitive Bid Request,
then the Borrower shall accept all such Competitive Bids at such
Competitive Bid Rate in an aggregate amount reduced to eliminate such
excess, which acceptance, in the case of multiple Competitive Bids at
such Competitive Bid Rate, shall be made ratably in accordance with the
amount of each such Competitive Bid (subject to clause (5) below), and
(5) no Competitive Bid shall be accepted for a Competitive Advance
unless such Competitive Advance is in a minimum principal amount of
$5,000,000 and an integral multiple of $1,000,000 in excess thereof;
provided further, however, that if a Competitive Advance must be in an
amount of less than $5,000,000 because of the provisions of (4) above,
such Competitive Advance may be for a minimum of $1,000,000 or any
integral multiple thereof, and in calculating the pro rata allocation of
acceptances of portions of multiple bids at a particular Competitive Bid
Rate pursuant to (4) above, the amounts shall be rounded to integral
multiples of $1,000,000 in a manner which shall be in the discretion of
the Borrower. Notice given by the Borrower pursuant to this
subsection (iv) shall be irrevocable.
(v) The Administrative Agent shall notify each bidding Lender
whether or not its Competitive Bid has been accepted (and if so, in what
principal amount and at what Competitive Bid Rate) (A) in the case of a
proposed Borrowing to consist of Eurodollar Competitive Advances,
promptly by telex or telecopier and (B) in the case of a proposed
Borrowing to consist of Fixed Rate Competitive Advances, by telephone
(such information to be confirmed in writing by the Administrative Agent
to the Lenders not later than 12:00 noon (New York City time) on such
day), not later than 10:30 a.m. (New York City time) on the day of the
Competitive Borrowing and each successful bidder will thereupon become
bound, subject to the other applicable conditions hereof, to make the
Competitive Advance in respect of which its bid has been accepted. The
Administrative Agent shall not be required to disclose to any Lender any
other information with respect to the Competitive Bids submitted, but
the Administrative Agent may, at the request of any Lender, and at the
instruction of the Borrower, provide to such Lender certain information
with respect to Competitive Bids made and accepted as deemed appropriate
by the Borrower.
(vi) Neither the Administrative Agent nor any Lender shall be
responsible to the Borrower for (A) a failure to fund a Competitive
Advance on the date such Advance is requested by the Borrower or (B) the
funding of such Advance at a Competitive Bid Rate or in an amount other
than that confirmed pursuant to subsections (iv) and (v) above due in
each case to delays in communications, miscommunications (including,
without limitation, any variance between telephonic bids or acceptances
and the written notice provided by the Administrative Agent to the
Lenders pursuant to Sections (v) above or the written confirmation
supplied by the Borrower pursuant to subsection (iv) above) and the like
among the Borrower, the Administrative Agent and the Lenders, and the
Borrower agrees to indemnify each Lender for all reasonable costs and
expenses incurred by it in accordance with the terms of Section 4.03(e)
hereof, as a result of any such delay, miscommunication or the like that
results in a failure to fund a Competitive Advance or the funding of a
Competitive Advance at a Competitive Bid Rate or in an amount other than
that set forth in the written notice provided by the Administrative
Agent to the Lenders pursuant to subsection (v) above or the written
confirmation supplied by the Borrower pursuant to subsection (iv) above.
(vii) If the Administrative Agent has elected to submit a
Competitive Bid in its capacity as Lender, such bid must be submitted
directly to the Borrower one quarter of an hour earlier than the latest
time at which the other Lenders are required to submit their bids to the
Administrative Agent pursuant to subsection (ii) above.
(viii) A Competitive Bid Request for Eurodollar Competitive
Advances shall not be made within five Business Days after the date of
any previous Competitive Bid Request for Eurodollar Competitive
Advances.
(ix) All notices required by this Section 3.03 must be made in
accordance with Section 10.02.
(x) To facilitate the administration of this Agreement and the
processing of Competitive Bids, each Lender has submitted, or will
submit upon becoming a Lender pursuant to Section 10.07 hereof, to the
Administrative Agent a completed administrative questionnaire in the
form specified by the Administrative Agent, and each Lender agrees to
promptly notify the Administrative Agent in writing of any change in the
information so provided.
SECTION 3.04 Making of Advances. (a) Each Lender shall, before
12:00 noon (New York City time) on the date of such Borrowing, make available
for the account of its Applicable Lending Office to the Administrative Agent
at the Administrative Agent's address referred to in Section 10.02, in same
day funds, such Lender's portion of such Borrowing. Contract Advances shall
be made by the Lenders pro rata and Competitive Advances shall be made by the
Lender or Lenders whose Competitive Bids therefor have been accepted pursuant
to Section 3.03(b)(iv) in the amounts so accepted. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article V, the Administrative Agent will make such
funds available to the Borrower at the Administrative Agent's aforesaid
address.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing
in accordance with subsection (a) of this Section 3.04, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that
any such Lender (a "non-performing Lender") shall not have so made such
ratable portion available to the Administrative Agent, the non-performing
Lender and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Administrative Agent, at (i) in
the case of the Borrower, the interest rate applicable at the time to
Advances comprising such Borrowing and (ii) in the case of such Lender, the
Federal Funds Rate. Nothing herein shall in any way limit, waive or
otherwise reduce any claims that any party hereto may have against any non-
performing Lender.
(c) The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its Advance on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.
SECTION 3.05 Repayment of Advances. The Borrower shall repay the
principal amount of each Advance on the last day of the Interest Period for
such Advance, which last day shall be the maturity date for such Advance.
SECTION 3.06 Interest. (a) Interest Periods. The period commencing
on the date of each Advance and ending on the last day of the period selected
by the Borrower with respect to such Advance pursuant to the provisions of
this Section 3.06 is referred to herein as an Interest Period (the "Interest
Period"). The duration of each Interest Period shall be (i) in the case of
any Eurodollar Rate Advance or Eurodollar Competitive Advance, 1, 2, 3 or 6
months, a. in the case of any Base Rate Advance, 90 days following the date
on which such Advance was made and (ii) in the case of any Fixed Rate
Competitive Advance, any number of days, but no more than 270 days; provided,
however, that no Interest Period may be selected by the Borrower if such
Interest Period would end after the Termination Date.
(b) Interest Rates. The Borrower shall pay interest on the unpaid
principal amount of each Advance owing to each Lender from the date of such
Advance until such principal amount shall be paid in full, at the Applicable
Rate for such Advance (except as otherwise provided in this subsection (b)),
payable as follows:
(i) Eurodollar Rate Advances and Eurodollar Competitive Advances.
If such Advance is a Eurodollar Rate Advance or Eurodollar Competitive
Advance, interest thereon shall be payable on the last day of the
Interest Period therefor and, if any such Interest Period has a duration
of more than three months, also on the day of the third month during
such Interest Period which corresponds to the first day of such Interest
Period (or, if any such month does not have a corresponding day, then on
the last day of such third month); provided that any amount of principal
which is not paid when due (whether at stated maturity, by acceleration
or otherwise) shall bear interest, from the date on which such amount is
due until such amount is paid in full, payable on demand, at a rate per
annum equal at all times to (A) for the remaining term, if any, of the
Interest Period for such Advance, 2% per annum above the Applicable Rate
for such Advance for such Interest Period, and (B) thereafter, 2% per
annum above the Applicable Rate in effect from time to time for Base
Rate Advances.
(ii) Base Rate Advances. If such Advance is a Base Rate Advance,
interest thereon shall be payable quarterly on the last day of each
March, June, September and December and on the date such Base Rate
Advance shall be paid in full; provided that any amount of principal
which is not paid when due (whether at stated maturity, by acceleration
or otherwise) shall bear interest, from the date on which such amount is
due until such amount is paid in full, payable on demand, at a rate per
annum equal at all times to 2% per annum above the Applicable Rate in
effect from time to time for Base Rate Advances.
(iii) Fixed Rate Competitive Advances. If such Advance is a
Fixed Rate Competitive Advance, interest thereon shall be payable on the
last day of the Interest Period therefor and, if any Interest Period has
a duration of more than 90 days, on each day which occurs during such
Interest Period every 90 days from the first day of such Interest
Period, provided that any amount of principal which is not paid when due
(whether at stated maturity, by acceleration or otherwise) shall bear
interest, from the date on which such amount is due until such amount is
paid in full, payable on demand, at a rate per annum equal at all times
to (A) for the remaining, if any, of the original stated maturity of
such Advance, 2% per annum above the rate of interest applicable to such
Advance immediately prior to the date on which such amount became due,
and (B) thereafter, 2% per annum above the sum of the Alternate Base
Rate in effect from time to time plus the Applicable Rate in effect from
time to time for Base Rate Advances.
(c) Other Amounts. Any other amounts payable hereunder that are not
paid when due shall (to the fullest extent permitted by law) bear interest,
from the date when due until paid in full, at a rate per annum equal at all
times to 2% per annum above the Applicable Rate in effect from time to time
for Base Rate Advances, payable on demand.
(d) Interest Rate Determinations. The Administrative Agent shall give
prompt notice to the Borrower and the Lenders of the Applicable Rate
determined from time to time by the Administrative Agent for each Contract
Advance. Each Reference Bank agrees to furnish to the Administrative Agent
timely information for the purpose of determining the Eurodollar Rate for any
Interest Period. If any one Reference Bank shall not furnish such timely
information, the Administrative Agent shall determine such interest rate on
the basis of the timely information furnished by the other two Reference
Banks.
SECTION 3.07 Existing Revolving Credit Agreement. Upon the
satisfaction of the conditions set forth in Section 5.01, this Agreement
shall supersede the Existing Revolving Credit Agreement and all Commitments
of any Lender (as each term is defined in the Existing Revolving Credit
Agreement) party to the Existing Revolving Credit Agreement and not a party
to this Agreement shall be, without further act, irrevocably terminated.
ARTICLE IV
PAYMENTS
SECTION 4.01 Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the other Loan Documents not later than
12:00 noon (New York City time) on the day when due in U.S. Dollars to the
Administrative Agent at its address referred to in Section 10.02 in same day
funds. The Administrative Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal, interest, fees
or other amounts payable to the Lenders, to the respective Lenders to whom
the same are payable, for the account of their respective Applicable Lending
Offices, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of a Lender Assignment and recording of the
information contained therein in the Register pursuant to Section 10.07, from
and after the effective date specified in such Lender Assignment, the
Administrative Agent shall make all payments hereunder and under the Notes in
respect of the interest assigned thereby to the Lender assignee thereunder,
and the parties to such Lender Assignment shall make all appropriate
adjustments in such payments for periods prior to such effective date
directly between themselves.
(b) The Borrower hereby authorizes the Administrative Agent and each
Lender, if and to the extent payment owed to the Administrative Agent or such
Lender, as the case may be, is not made when due hereunder (or, in the case
of a Lender, under the Note held by such Lender), to charge from time to time
against any or all of the Borrower's accounts with the Administrative Agent
or such Lender, as the case may be, any amount so due.
(c) All computations of interest based on the Alternate Base Rate when
based on the Prime Rate and of fees payable pursuant to Section 2.02(a) shall
be made by the Administrative Agent on the basis of a year of 365 or 366
days, as the case may be. All computations of interest and other amounts
pursuant to Section 4.03 shall be made by the Lender claiming such interest
or other amount, on the basis of a year of 360 days. All other computations
of interest and fees hereunder (including computations of interest based on
the Eurodollar Rate and the Federal Funds Rate (including the Alternate Base
Rate if and so long as such Rate is based on the Federal Funds Rate) and any
interest rate applicable to a Competitive Advance) shall be made by the
Administrative Agent on the basis of a year of 360 days. In each such case,
such computation shall be made for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Each such determination by the Administrative
Agent or a Lender shall be conclusive and binding for all purposes, absent
manifest error.
(d) Whenever any payment hereunder or under any other Loan Document
shall be stated to be due, or the last day of an Interest Period hereunder
shall be stated to occur, on a day other than a Business Day, such payment
shall be made and the last day of such Interest Period shall occur on the
next succeeding Business Day, and such extension of time shall in such case
be included in the computation of payment of interest and fees hereunder;
provided, however, that if such extension would cause payment of interest on
or principal of Eurodollar Rate Advances or Eurodollar Competitive Advances
to be made, or the last day of an Interest Period for a Eurodollar Rate
Advance or a Eurodollar Competitive Advance to occur, in the next following
calendar month, such payment shall be made on the next preceding Business Day
and such reduction of time shall in such case be included in the computation
of payment of interest hereunder.
(e) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent
may, in reliance upon such assumption, cause to be distributed to each Lender
on such due date an amount equal to the amount then due such Lender. If and
to the extent the Borrower shall not have so made such payment in full to the
Administrative Agent, such Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender, together with
interest thereon, for each day from the date such amount is distributed to
such Lender until the date such Lender repays such amount to the
Administrative Agent, at the Federal Funds Rate.
SECTION 4.02 Prepayments. (a) The Borrower shall have no right to
prepay any principal amount of any Contract Advances except in accordance
with subsection (b) below. The Borrower shall have no right to prepay any
principal amount of any Competitive Advance.
(b) The Borrower may, upon at least one Business Days' notice to the
Administrative Agent stating the proposed date and aggregate principal amount
of the prepayment, and if such notice is given, the Borrower shall, prepay
the outstanding principal amounts of Contract Advances comprising part of the
same Borrowing, in whole or ratably in part, together with accrued interest
to the date of such prepayment on the principal amount prepaid; provided,
however, that each partial prepayment shall be in an aggregate principal
amount not less than $5,000,000.
SECTION 4.03 Yield Protection. (a) Change in Circumstances.
Notwithstanding any other provision herein, if after the date hereof, the
adoption of or any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not
having the force of law) shall (i) change the basis of taxation of payments
to any Lender of the principal of or interest on any Eurodollar Rate Advance
or Competitive Advance made by such Lender or any fees or other amounts
payable hereunder (other than changes in respect of taxes imposed on the
overall net income of such Lender or its Applicable Lending Office by the
jurisdiction in which such Lender has its principal office or in which such
Applicable Lending Office is located or by any political subdivision or
taxing authority therein), or (ii) shall impose, modify or deem applicable
any reserve, special deposit or similar requirement against commitments or
assets of, deposits with or for the account of, or credit extended by, such
Lender, or (iii) shall impose on such Lender or the London interbank market
any other condition affecting this Agreement or Eurodollar Rate Advances or
Competitive Advances made by such Lender, and the result of any of the
foregoing shall be to increase the cost to such Lender of agreeing to make,
making or maintaining any Advance or to reduce the amount of any sum received
or receivable by such Lender hereunder or under the Notes (whether of
principal, interest or otherwise), then the Borrower will pay to such Lender
upon demand such additional amount or amounts as will compensate such Lender
for such additional costs incurred or reduction suffered.
(b) Capital. If any Lender shall have determined that any change after
the date hereof in any law, rule, regulation or guideline adopted pursuant to
or arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption after the date
hereof of any law, rule, regulation or guideline regarding capital adequacy,
or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any Applicable Lending Office of
such Lender) or any Lender's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect (i) of reducing the rate of return on such Lender's capital or on the
capital of such Lender's holding company, if any, as a consequence of this
Agreement, the Commitment of such Lender hereunder or the Advances made by
such Lender pursuant hereto to a level below that which such Lender or such
Lender's holding company could have achieved, but for such applicability,
adoption, change or compliance (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), or (ii) of increasing or otherwise determining the amount
of capital required or expected to be maintained by such Lender or such
Lender's holding company based upon the existence of this Agreement, the
Commitment of such Lender hereunder, the Advances made by such Lender
pursuant hereto and other similar such commitments, agreements or assets,
then from time to time the Borrower shall pay to such Lender upon demand such
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction or allocable capital cost suffered.
(c) Eurodollar Reserves. The Borrower shall pay to each Lender upon
demand, so long as such Lender shall be required under regulations of the
Board of Governors of the Federal Reserve System to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, additional interest on the unpaid principal amount of each
Eurodollar Rate Advance of such Lender, from the date of such Advance until
such principal amount is paid in full, at an interest rate per annum equal at
all times to the remainder obtained by subtracting (i) the Eurodollar Rate
for the Interest Period for such Advance from (ii) the rate obtained by
dividing such Eurodollar Rate by a percentage equal to 100% minus the
Eurodollar Reserve Percentage of such Lender for such Interest Period. Such
additional interest shall be determined by such Lender and notified to the
Borrower and the Administrative Agent.
(d) Breakage Indemnity. The Borrower shall indemnify each Lender
against any loss, cost or reasonable expense which such Lender may sustain or
incur as a consequence of (i) any failure by the Borrower to fulfill on the
date of any Borrowing hereunder of Eurodollar Rate Advances or Competitive
Advances the applicable conditions set forth in Article V, (ii) any failure
by the Borrower to borrow any Eurodollar Rate Advance or Competitive Advance
hereunder after irrevocable Notice of Borrowing has been given pursuant to
Section 3.01, (iii) any payment or prepayment of a Eurodollar Rate Advance or
Competitive Advance required or permitted by any other provision of this
Agreement or otherwise made or deemed made on a date other than the last day
of the Interest Period applicable thereto, (iv) any default in payment or
prepayment of the principal amount of any Eurodollar Rate Advance or
Competitive Advance or any part thereof or interest accrued thereon, as and
when due and payable (at the due date thereof, by irrevocable notice of
prepayment or otherwise) or (v) the occurrence of any Event of Default,
including, in each such case, any loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain any Advance or any part
thereof as a Eurodollar Rate Advance or Competitive Advance. Such loss, cost
or reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by such Lender, of (A) its cost of obtaining the funds
for the Eurodollar Rate Advance or Competitive Advance being paid, prepaid or
not borrowed for the period from the date of such payment, prepayment or
failure to borrow to the last day of the Interest Period for such Advance
(or, in the case of a failure to borrow, the Interest Period for such Advance
which would have commenced on the date of such failure) over (B) the amount
of interest (as reasonably determined by such Lender) that would be realized
by such Lender in reemploying the funds so paid, prepaid or not borrowed for
such period or Interest Period, as the case may be. For purposes of this
subsection (d), it shall be presumed that in the case of any Eurodollar Rate
Advance or Eurodollar Competitive Advance, each Lender shall have funded each
such Advance with a fixed-rate instrument bearing the rates and maturities
designated in the determination of the Applicable Rate for such Advance.
(e) Notices. A certificate of each Lender setting forth such Lender's
claim for compensation hereunder and the amount necessary to compensate such
Lender or its holding company pursuant to subsections (a) through (d) of this
Section 4.03 shall be submitted to the Borrower and the Administrative Agent
and shall be conclusive and binding for all purposes, absent manifest error.
The Borrower shall pay each Lender directly the amount shown as due on any
such certificate within 10 days after its receipt of the same. The failure
of any Lender to provide such notice or to make demand for payment under this
Section 4.03 shall not constitute a waiver of such Lender's rights hereunder;
provided that such Lender shall not be entitled to demand payment pursuant to
subsections (a) through (d) of this Section 4.03, in respect of any loss,
cost, expense, reduction or reserve, if such demand is made more than one
year following the later of such Lender's incurrence or sufferance thereof or
such Lender's actual knowledge of the event giving rise to such Lender's
rights pursuant to such subsections. Each Lender shall use reasonable
efforts to ensure the accuracy and validity of any claim made by it
hereunder, but the foregoing shall not obligate any Lender to assert any
possible invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or been
imposed.
(f) Change in Legality. Notwithstanding any other provision herein, if
the adoption of or any change in any law or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the administration or interpretation thereof shall make it
unlawful for any Lender to make or maintain any Eurodollar Rate Advance or
Eurodollar Competitive Advance or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Rate Advance or Eurodollar
Competitive Advance, then, by written notice to the Borrower and the
Administrative Agent, such Lender may:
(i) declare that Eurodollar Rate Advances and Eurodollar
Competitive Advances will not thereafter be made by such Lender
hereunder, whereupon the right of the Borrower to select Eurodollar Rate
Advances for any Borrowing and any Competitive Borrowing consisting of
Eurodollar Competitive Advances shall be forthwith suspended until such
Lender shall withdraw such notice as provided hereinbelow or shall cease
to be a Lender hereunder pursuant to Section 10.07(g) hereof; and
(ii) require that all outstanding Eurodollar Rate Advances and
Eurodollar Competitive Advances made by it be repaid as of the effective
date of such notice as provided herein below.
Upon receipt of any such notice, the Administrative Agent shall promptly
notify the other Lenders. Promptly upon becoming aware that the
circumstances that caused such Lender to deliver such notice no longer exist,
such Lender shall deliver notice thereof to the Borrower and the
Administrative Agent withdrawing such prior notice (but the failure to do so
shall impose no liability upon such Lender). Promptly upon receipt of such
withdrawing notice from such Lender (or upon such Lender assigning all of its
Commitments, Advances, participation and other rights and obligations
hereunder in accordance with Section 10.07(g)), the Administrative Agent
shall deliver notice thereof to the Borrower and the Lenders and such
suspension shall terminate. Prior to any Lender giving notice to the
Borrower under this subsection (f), such Lender shall use reasonable efforts
to change the jurisdiction of its Applicable Lending Office, if such change
would avoid such unlawfulness and would not, in the sole determination of
such Lender, be otherwise disadvantageous to such Lender. Any notice to the
Borrower by any Lender shall be effective as to each Eurodollar Rate Advance
and Eurodollar Competitive Advance on the last day of the Interest Period
currently applicable to such Eurodollar Rate Advance or Eurodollar
Competitive Advance; provided that if such notice shall state that the
maintenance of such Advance until such last day would be unlawful, such
notice shall be effective on the date of receipt by the Borrower and the
Administrative Agent.
(g) Market Rate Disruptions. If (i) less than two Reference Banks
furnish timely information to the Administrative Agent for determining the
Eurodollar Rate for Eurodollar Rate Advances or Eurodollar Competitive
Advances in connection with any proposed Borrowing or (ii) if the Majority
Lenders shall notify the Administrative Agent that the Eurodollar Rate will
not adequately reflect the cost to such Majority Lenders of making, funding
or maintaining their respective Eurodollar Rate Advances or Eurodollar
Competitive Advances, the right of the Borrower to select or receive
Eurodollar Rate Advances or Eurodollar Competitive Advances for any Borrowing
shall be forthwith suspended until the Administrative Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no
longer exist, and until such notification from the Administrative Agent each
requested Borrowing of Eurodollar Rate Advances and each requested Borrowing
of Eurodollar Competitive Advances hereunder shall be deemed to be a request
for Base Rate Advances.
SECTION 4.04 Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise, but excluding any proceeds received by assignments or
sales of participation in accordance with Section 10.07 hereof to a Person
that is not an Affiliate of the Borrower) on account of the Advances owing to
it (other than pursuant to Section 4.03 hereof) in excess of its ratable
share of payments on account of the Advances obtained by all the Lenders,
such Lender shall forthwith purchase from the other Lenders such
participation in the Advances owing to them as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each
Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an
amount equal to such Lender's ratable share (according to the proportion of
(i) the amount of such Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid
or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 4.04 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were
the direct creditor of the Borrower in the amount of such participation.
Notwithstanding the foregoing, if any Lender shall obtain any such excess
payment involuntarily, such Lender may, in lieu of purchasing participation
from the other Lenders in accordance with this Section 4.04, on the date of
receipt of such excess payment, return such excess payment to the
Administrative Agent for distribution in accordance with Section 4.01(a).
SECTION 4.05 Taxes. (a) All payments by the Borrower hereunder and
under the other Loan Documents shall be made in accordance with Section 4.01,
free and clear of and without deduction for all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Lender and the
Administrative Agent, taxes imposed on its overall net income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Lender
or the Administrative Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes imposed
on its overall net income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred
to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any other Loan
Document to any Lender or the Administrative Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 4.05) such Lender or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under any other
Loan Document or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes and any Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.05) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Any Lender's claim for such indemnification shall be set forth in a
certificate of such Lender setting forth in reasonable detail the amount
necessary to indemnify such Lender pursuant to this subsection (c) and shall
be submitted to the Borrower and the Administrative Agent and shall be
conclusive and binding for all purposes, absent manifest error. The Borrower
shall pay each Lender directly the amount shown as due on any such
certificate within 30 days after the receipt of same. If any Taxes or Other
Taxes for which a Lender or the Administrative Agent has received payments
from the Borrower hereunder shall be finally determined to have been
incorrectly or illegally asserted and are refunded to such Lender or the
Administrative Agent, such Lender or the Administrative Agent, as the case
may be, shall promptly forward to the Borrower any such refunded amount. The
Borrower's, the Administrative Agent's and each Lender's obligations under
this Section 4.05 shall survive the payment in full of the Advances.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
will furnish to the Administrative Agent, at its address referred to in
Section 10.02, the original or a certified copy of a receipt evidencing
payment thereof.
(e) Each Lender shall, on or prior to the date it becomes a Lender
hereunder, deliver to the Borrower and the Administrative Agent such
certificates, documents or other evidence, as required by the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), or treasury
regulations issued pursuant thereto, including Internal Revenue Service
Form 4224 and any other certificate or statement of exemption required by
Treasury Regulation Section 1.1441-1(a) or Section 1.1441-6(c) or any
subsequent version thereof, properly completed and duly executed by such
Lender establishing that it is b. not subject to withholding under the Code
or c. totally exempt from United States of America tax under a provision of
an applicable tax treaty. Each Lender shall promptly notify the Borrower and
the Administrative Agent of any change in its Applicable Lending Office and
shall deliver to the Borrower and the Administrative Agent together with such
notice such certificates, documents or other evidence referred to in the
immediately preceding sentence. Each Lender will use good faith efforts to
apprise the Borrower as promptly as practicable of any impending change in
its tax status that would give rise to any obligation by the Borrower to pay
any additional amounts pursuant to this Section 4.05. Unless the Borrower and
the Administrative Agent have received forms or other documents satisfactory
to them indicating that payments hereunder or under the Notes are not subject
to United States of America withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, the Borrower or the Administrative
Agent shall withhold taxes from such payments at the applicable statutory
rate in the case of payments to or for any Lender organized under the laws of
a jurisdiction outside the United States of America. Each Lender represents
and warrants that each such form supplied by it to the Administrative Agent
and the Borrower pursuant to this Section 4.05, and not superseded by another
form supplied by it, is or will be, as the case may be, complete and
accurate.
(f) Any Lender claiming any additional amounts payable pursuant to this
Section 4.05 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by the
Borrower or to change the jurisdiction of its Applicable Lending Office if
the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts which may thereafter accrue and would
not, in the sole determination of such Lender, be otherwise disadvantageous
to such Lender.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions Precedent to Effectiveness. The effectiveness
of this Agreement is subject to the fulfillment of the following conditions
precedent:
(a) The Administrative Agent shall have received on or before the
Closing Date the following, each dated the Closing Date, in form and
substance satisfactory to each Lender and in sufficient copies for each
Lender except for the Notes:
(i) This Agreement, duly executed by the Borrower.
(ii) The Notes made to the order of the respective Lenders, duly
executed by the Borrower.
(iii) The Collateral Agency Agreement, duly executed by the
Borrower and by Chemical as the Collateral Agent and Administrative
Agent.
(iv) The PSNH Mortgage Amendment, duly executed by the Borrower and
the Collateral Agent, together with:
(A) acknowledgment copy of Financing Statements (Form UCC-3)
dated on or before the Closing Date duly executed by Bankers Trust
Company and indicating the assignment effected by the PSNH Mortgage
Assignment, and
(B) oral confirmation from Sulloway & Hollis of each
completion of all recordings and filings of the Security Documents
and all other actions, as may be necessary or, in the opinion of
the Collateral Agent, desirable to perfect (or continue the
perfection of) the Liens created by the Security Documents.
(v) The PSNH Mortgage Assignment, duly executed by the Borrower,
Bankers Trust Company and the Collateral Agent.
(vi) A certificate of the Secretary or Assistant Secretary of the
Borrower certifying (A) that attached thereto are true and correct
copies of (1) the Articles of Incorporation of the Borrower, and all
amendments thereto, as in effect on such date, (2) the By-laws of the
Borrower, as in effect on such date and (3) resolutions of the Executive
Committee of the Board of Directors of the Borrower approving this
Agreement, the other Loan Documents and the other documents to be
delivered by the Borrower hereunder and thereunder, and of all documents
evidencing other necessary corporate action, if any, with respect to the
execution, delivery and performance by the Borrower of this Agreement
and the other Loan Documents, (B) that such resolutions have not been
modified, revoked or rescinded and are in full force and effect on such
date and (C) the names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the other Loan Documents
and the other documents to be delivered hereunder and thereunder.
(vii) Financial projections (contained in the Information
Memorandum), on assumptions acceptable to the Banks, demonstrating
projected compliance with Section 7.01(j) hereof and the terms of this
Agreement and the Other Loan Documents.
(viii) An audited balance sheet of the Borrower as at
December 31, 1995 and the related statements of the Borrower's results
of operations, changes in retained earnings and cash flows as of and
for the year then ended, together with copies of all Current Reports on
Form 8-K, if any, filed by the Borrower with the Securities and Exchange
Commission since December 31, 1995.
(ix) A certificate of a duly authorized officer of the Borrower
certifying that attached thereto are true and correct copies of all
Governmental Approvals referred to in clause (i) of the definition of
"Governmental Approval" required to be obtained or made by the Borrower
in connection with the execution and delivery of this Agreement or any
Loan Document.
(x) A certificate of a duly authorized officer of the Borrower to
the effect that there is no pending or known threatened action or
proceeding (including, without limitation, any action or proceeding
relating to any environmental protection laws or regulations) affecting
the Borrower or its properties before any court, governmental agency or
arbitrator (A) which affects or purports to affect the legality,
validity or enforceability of the Loan Documents or any of them or
(B) as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would materially
adversely affect the financial condition, properties, prospects or
operations of the Borrower; except, for purposes of clause (B) only,
such as is described in the Disclosure Documents.
(xi) A certificate signed by the Treasurer or Assistant Treasurer
of the Borrower, certifying as to the absence of any material adverse
change in the financial condition, operations, properties or prospects
of the Borrower since December 31, 1995 except as disclosed in the
Disclosure Documents.
(xii) A certificate signed by the Chief Financial Officer,
Treasurer or Assistant Treasurer of NU, certifying as to the absence of
any material adverse change in the financial condition, operations,
properties or prospects of NU since December 31, 1995 except as
disclosed in the disclosure documents referred to in such certificate.
(xiii) A certificate of a duly authorized officer of the
Borrower stating that (i) the representations and warranties contained
in Section 6.01 are correct, in all material respects, on and as of the
Closing Date before and after giving effect to the Advances to be made
on such date and the application of the proceeds thereof, and (ii) no
event has occurred and is continuing which constitutes an Event of
Default or Unmatured Default, or would result from such initial Advances
or the application of the proceeds thereof and
(xiv) Favorable opinions of:
(A) Jeffrey C. Miller, Assistant General Counsel to NUSCO, in
substantially the form of Exhibit 5.01A and as to such other
matters as the Majority Lenders, through the Administrative Agent,
may reasonably request;
(B) Robert A. Bersak, Assistant General Counsel of the
Borrower, in substantially the form of Exhibit 5.01B and as to such
other matters as the Majority Lenders, through the Administrative
Agent, may reasonably request;
(C) Sulloway & Hollis, special New Hampshire counsel to the
Borrower, in substantially the form of Exhibit 5.01C and as to such
other matters as the Majority Lenders, through the Administrative
Agent, may reasonably request;
(D) Drummond Woodsum & MacMahon, special Maine counsel to the
Borrower, in substantially the form of Exhibit 5.01D and as to such
other matters as the Majority Lenders, through the Administrative
Agent, may reasonably request;
(E) Zuccaro, Willis & Bent, special Vermont counsel to the
Borrower, in substantially the form of Exhibit 5.01E and as to such
other matters as the Majority Lenders, through the Administrative
Agent, may reasonably request; and
(F) King & Spalding, counsel to the Administrative Agent, in
substantially the form of Exhibit 5.01F, and as to such other
matters as the Majority Lenders, through the Administrative Agent,
may reasonably request.
(b) All fees and other amounts payable pursuant to Section 2.02
hereof or pursuant to the Fee Letter shall have been paid (to the extent
then due and payable).
(c) All principal of and interest arising under, and all other
amounts payable in connection with the Existing Revolving Credit
Agreement and the notes issued thereunder shall have been paid in full
(whether from the proceeds hereof or otherwise).
(d) The Administrative Agent shall have received such other
approvals, opinions and documents as the Majority Lenders, through the
Administrative Agent, may reasonably request as to the legality,
validity, binding effect or enforceability of the Loan Documents or the
financial condition, properties, operations or prospects of the
Borrower.
SECTION 5.02 Conditions Precedent to Certain Contract Advances and All
Competitive Advances. The obligation of any Lender to make any Contract
Advance to the Borrower (except as set forth in Section 5.03) including the
initial Advance to the Borrower, or to make any Competitive Advance shall be
subject to the conditions precedent that, on the date of such Contract
Advance or Competitive Advance and after giving effect thereto:
(a) the following statement shall be true (and each of the giving of
the applicable notice or request with respect to such Advance and the
performance of such Advance without prior correction by the Borrower shall
constitute a representation and warranty by the Borrower that on the date of
such Advance such statements are true):
(i) the representations and warranties contained in Section 6.01
of this Agreement and in Section 1.02 of the PSNH Mortgage are correct
on and as of the date of such Advance, before and after giving effect to
such Advance and to the application of the proceeds therefrom, as though
made on and as of such date,
(ii) no Event of Default or Unmatured Default has occurred and
is continuing, or would result from such Advance or from the application
of the proceeds thereof, and
(iii) the making of such Advance, when aggregated with all
other outstanding and requested Advances and all other short-term debt
of the Borrower would not cause the Borrower's Debt Limit then in effect
to be exceeded; and
(b) the Borrower shall have furnished to the Administrative Agent such
other approvals, opinions or documents as any Lender, through the
Administrative Agent, may reasonably request as to the legality, validity,
binding effect or enforceability of the Loan Document.
SECTION 5.03 Conditions Precedent to Other Contract Advances. The
obligation of the Bank to make any Contract Advance that would not cause the
aggregate outstanding amount of the Contract Advances made by such Lender
(outstanding immediately prior to and after the making of such Contract
Advance) to increase shall be subject to the conditions precedent that, on
the date of such Contract Advance and after giving effect thereto:
(a) the following statement shall be true (and each of the giving of
the applicable notice or request with respect to such Contract Advance and
the acceptance of such Contract Advance without prior correction by the
Borrower shall constitute a representation and warranty by the Borrower that
on the date of such Contract Advance such statements are true):
(i) the representations and warranties contained in Section 6.01
of this Agreement (other than those set forth in the last sentence of
Section 6.01(e) and Section 6.01(f)) and in Section 1.02(b) of the PSNH
Mortgage are correct on and as of the date of such Contract Advance,
before and after giving effect to such Contract Advance and to the
application of the proceeds therefrom, as though made on and as of such
date, and
(ii) no Event of Default has occurred and is continuing, or would
result from such Advance or from the application of the proceeds
thereof, and
(iii) the making of such Advance, when aggregated with all
other outstanding and requested Advances and all other short-term debt
of the Borrower would not cause the Borrower's Debt Limit then in effect
to be exceeded; and
(b) the Borrower shall have furnished to the Administrative Agent such
other approvals, opinions or documents as any Lender, through the
Administrative Agent, may reasonably request as to the legality, validity,
binding effect or enforceability of the Loan Documents.
SECTION 5.04 Reliance on Certificates. The Lenders and the
Administrative Agent shall be entitled to rely conclusively upon the
certificates delivered from time to time by officers of the Borrower, NU and
the other parties to the Significant Contracts as to the names, incumbency,
authority and signatures of the respective persons named therein until such
time as the Administrative Agent may receive a replacement certificate, in
form acceptable to the Administrative Agent, from an officer of such Person
identified to the Administrative Agent as having authority to deliver such
certificate, setting forth the names and true signatures of the officers and
other representatives of such Person thereafter authorized to act on behalf
of such Person, and, in all cases, the Lenders and the Administrative Agent
may rely on the information set forth in any such certificate including,
without limitation, information relating to the Debt Limit.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01 Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized and validly existing
under the laws of the State of New Hampshire. The Borrower is duly qualified
to do business in, and is in good standing in, all other jurisdictions where
the nature of its business or the nature of property owned or used by it
makes such qualifications necessary.
(b) The execution, delivery and performance by the Borrower of the Rate
Agreement, each Loan Document and each Significant Contract to which it is a
party are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, and do not and will not contravene (i) the
Borrower's charter or by-laws or (ii) any law or legal or contractual
restriction binding on or affecting the Borrower; and such execution,
delivery and performance do not or will not result in or require the creation
of any Lien (other than pursuant hereto or pursuant to the Security Documents
or the First Mortgage Indenture) upon or with respect to any of its
properties.
(c) All Governmental Approval referred to in clauses (i) and (ii) of
the definition of "Governmental Approvals" have been duly obtained or made,
and all applicable periods of time for review, rehearing or appeal with
respect thereto have expired. The Borrower has obtained all Governmental
Approvals referred to in clause (iii) of the definition of "Governmental
Approvals", except those not yet required but which are obtainable in the
ordinary course of business as and when required and those the absence of
which would not materially adversely affect the financial condition,
properties, prospects or operations of the Borrower as a whole.
(d) This Agreement, the Rate Agreement, each other Loan Document and
each Significant Contract are legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms; subject to the qualifications, however, that the enforcement of the
rights and remedies herein and therein is subject to bankruptcy and other
similar laws of general application affecting rights and remedies of
creditors, that the remedy of specific performance or of injunctive relief is
subject to the discretion of the court before which any proceedings therefor
may be brought, and that indemnification against violations of securities and
similar laws may be subject to matters of public policy.
(e) The audited balance sheet of the Borrower as at December 31, 1995,
and the related statements of the Borrower setting forth the results of
operations, retained earnings and cash flows of the Borrower for the fiscal
year then ended, copies of which have been furnished to each Bank, fairly
present in all material respects the financial condition, results of
operations, retained earnings and cash flows of the Borrower at and for the
year ended on such date, and have been prepared in accordance with generally
accepted accounting principles consistently applied. Except as reflected in
such financial statements, the Borrower has no material non-contingent
liabilities, and all contingent liabilities have been appropriately reserved.
The financial projections referred to in Section 5.01(a)(iv), have each been
prepared in good faith and on reasonable assumptions. Since December 31,
1995, there has been no material adverse change in the Borrower's financial
condition, operations, properties or prospects other than as disclosed in the
Disclosure Documents.
(f) Except as set forth in the Disclosure Documents, there is no
pending or known threatened action or proceeding (including, without
limitation, any action or proceeding relating to any environmental protection
laws or regulations) affecting the Borrower or its properties before any
court, governmental agency or arbitrator, (i) which affects or purports to
affect the legality, validity or enforceability of the Loan Documents, the
Rate Agreement or any Significant Contract or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, would materially adversely affect the financial condition,
properties, prospects or operations of the Borrower as a whole.
(g) All insurance required by Section 7.01(c) hereof will be in full
force and effect.
(h) No ERISA Plan Termination Event has occurred nor is reasonably
expected to occur with respect to any ERISA Plan which would materially
adversely affect the financial condition, properties, prospects or operations
of the Borrower, except as disclosed to and consented by the Majority Lenders
in writing. Since the date of the most recent Schedule B (Actuarial
Information) to the annual report of the Borrower (Form 5500 Series), if any,
there has been no material adverse change in the funding status of the ERISA
Plans referred to therein and no "prohibited transaction" has occurred with
respect thereto, except as described in the Borrower's Annual Report on Form
10-K for the year ended December 31, 1995 and except as the same may be
exempt pursuant to Section 408 of ERISA and regulations and orders
thereunder. Neither the Borrower nor any of its ERISA Affiliates has
incurred nor reasonably expects to incur any material withdrawal liability
under ERISA to any ERISA Multiemployer Plan, except as disclosed to and
consented by the Majority Lenders in writing.
(i) The Major Electric Generating Plants are on land in which the
Borrower owns a full or an undivided fee interest subject only to Liens
permitted by Section 7.02(a) hereof, which do not materially impair the
usefulness to the Borrower of such properties; the electric transmission and
distribution lines of the Borrower in the main are located in New Hampshire
and on land owned in fee by the Borrower or over which the Borrower has
easements, or are in or over public highways or public waters pursuant to
adequate statutory or regulatory authority, and any defects in the title to
such transmission and distribution lands or easements are in the main curable
by the exercise of the Borrower's right of eminent domain upon a finding that
such eminent domain proceedings are necessary to meet the reasonable
requirements of service to the public; the Borrower enjoys peaceful and
undisturbed possession under all of the leases under which it is operating,
none of which contains any unusual or burdensome provision which will
materially affect or impair the operation of the Borrower; and the Security
Documents create valid Liens in the Collateral, subject only to Liens
permitted by Section 7.02(a) hereof, and, all filings and other actions
necessary to perfect and protect such security interests (to the extent such
security interests may be perfected or protected by filing) have been taken.
(j) No material part of the properties, business or operations of the
Borrower are materially adversely affected by any fire, explosion, accident,
strike, lockout or other labor disputes, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (except for any
such circumstance, if any, which is covered by insurance which coverage has
been confirmed and not disputed by the relevant insurer or by fully-funded
self-insurance programs).
(k) The Borrower has filed all tax returns (Federal, state and local)
required to be filed and paid taxes shown thereon to be due, including
interest and penalties, or, to the extent the Borrower is contesting in good
faith an assertion of liability based on such returns, has provided adequate
reserves in accordance with generally accepted accounting principles for
payment thereof.
(l) No exhibit, schedule, report or other written information provided
by the Borrower or its agents to the Lenders in connection with the
negotiation, execution and closing of this Agreement (including, without
limitation, the Information Memorandum) knowingly contained when made any
material misstatement of fact or knowingly omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances under which they were made.
(m) No event has occurred and is continuing which constitutes a
material default under the Rate Agreement or any Significant Contract.
(n) All proceeds of the Advances shall be used for general working
capital and for the payment in full of all amounts outstanding under the
Existing Revolving Credit Agreement. No proceeds of any Advance will be used
(i) to acquire any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934 or (ii) to buy or carry any
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System) or to extend credit to others for
such purpose. The Borrower (i) is not an "investment company" within the
meaning ascribed to that term in the Investment Company Act of 1940 and
(ii) is not engaged in the business of extending credit for the purpose of
buying or carrying margin stock.
ARTICLE VII
COVENANTS OF THE BORROWER
SECTION 7.01 Affirmative Covenants. So long as any Note shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower shall,
unless the Majority Lenders shall otherwise consent in writing:
(a) Use of Proceeds. Apply all proceeds of each Advance solely as
specified in Section 6.01(n) hereof.
(b) Payment of Taxes, Etc. Pay and discharge before the same shall
become delinquent, all taxes, assessments and governmental charges, royalties
or levies imposed upon it or upon its property except to the extent the
Borrower is contesting the same in good faith by appropriate proceedings and
has set aside adequate reserves for the payment thereof.
(c) Maintenance of Insurance. Maintain, or cause to be maintained,
insurance (including appropriate plans of self-insurance) covering the
Borrower and its properties in effect at all times in such amounts and
covering such risks as may be required by law and in addition as is usually
carried by companies engaged in similar businesses and owning similar
properties.
(d) Preservation of Existence, Etc. Preserve and maintain its
corporate existence, material rights (statutory and otherwise) and franchises
except as otherwise expressly provided for in the Security Documents.
(e) Compliance with Laws, Etc. Comply in all material respects with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority, including without limitation any such laws, rules,
regulations and orders relating to utilities, zoning, environmental
protection, use and disposal of Hazardous Substances, land use, construction
and building restrictions, and employee safety and health matters relating to
business operations, except to the extent (i) that the Borrower is contesting
the same in good faith by appropriate proceedings or (ii) that any such non-
compliance, and the enforcement or correction thereof, would not materially
adversely affect the financial condition, properties, prospects or operations
of the Borrower as a whole.
(f) Inspection Rights. At any time and from time to time upon
reasonable notice, permit the Administrative Agent and its agents and
representatives to examine and make copies of and abstracts from the records
and books of account of, and the properties of, the Borrower and to discuss
the affairs, finances and accounts of the Borrower with the Borrower and of
its officers, directors and accountants.
(g) Keeping of Books. Keep proper records and books of account, in
which full and correct entries shall be made of all financial transactions of
the Borrower and the assets and business of the Borrower, in accordance with
good accounting practices consistently applied.
(h) Performance of Related Agreements. From and after the effective
date of the Rate Agreement and each Significant Contract, (i) perform and
observe all material terms and provisions of such agreements to be performed
or observed by the Borrower and (ii) take all reasonable steps to enforce
such agreements substantially in accordance with their terms and to preserve
the rights of the Borrower thereunder; provided, that the foregoing
provisions of this Section 7.01(h) shall not preclude the Borrower from any
waiver, amendment, modification, consent or termination permitted under
Section 7.02(g) hereof.
(i) Collection of Accounts Receivable. Promptly bill, and diligently
pursue collection of, in accordance with customary utility practices, all
accounts receivable owing to the Borrower and all other amounts that may from
time to time be owing to the Borrower for services rendered or goods sold.
(j) Maintenance of Financial Covenants.
(i) Operating Income to Interest Expense. Maintain a ratio of
Operating Income to Interest Expense of not less than (A) 1.75 to 1.00
for each period of four consecutive fiscal quarters on each quarter-end
ending on or prior to June 30, 1997 and (B) 2.00 to 1.00 for each period
of four consecutive fiscal quarters on each quarter-end ending after
such date.
(ii) Common Equity to Total Capitalization. Maintain at all times
a ratio of Common Equity to Total Capitalization of not less than (A)
0.285 to 1.00 during each fiscal quarter ending on or prior to June 30,
1997 and (B) 0.30 to 1.00 during each fiscal quarter ending after such
date.
(k) Maintenance of Properties, Etc. (i) As to properties of the type
described in Section 6.01(i) hereof, maintain title of the quality described
therein; and (ii) preserve, maintain, develop, and operate in substantial
conformity with all laws, material contractual obligations and prudent
practices prevailing in the industry, all of its properties which are used or
useful in the conduct of its business in good working order and condition,
ordinary wear and tear excepted, except to the extent such non-conformity
would not materially adversely affect the financial condition, properties,
prospects or operations of the Borrower as a whole.
(l) Governmental Approvals. Duly obtain on or prior to such date as
the same may become legally required, and thereafter maintain in effect at
all times, all Governmental Approvals on its part to be obtained, except
those the absence of which would not materially adversely affect the
financial condition, properties, prospects or operations of the Borrower as a
whole.
(m) Further Assurances. Promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or that any Lender through the Administrative Agent may reasonably request in
order to fully give effect to the interests and properties purported to be
covered by the Security Documents.
SECTION 7.02 Negative Covenants. So long as any Note shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower shall
not, without the prior written consent of the Majority Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to exist any lien,
security interest, or other charge or encumbrance (including the lien or
retained security title of a conditional vendor) of any kind, or any other
type of preferential arrangement the intent or effect of which is to assure a
creditor against loss or to prefer one creditor over another creditor upon or
with respect to any of its properties of any character (any of the foregoing
being referred to herein as a "Lien") whether now owned or hereafter
acquired, or sign or file under the Uniform Commercial Code of any
jurisdiction a financing statement which names the Borrower as debtor, sign
any security agreement authorizing any secured party thereunder to file such
financing statement, or assign accounts, excluding, however, from the
operation of the foregoing restrictions the Liens created or perfected under
the Loan Documents and the following, whether now existing or hereafter
created or perfected:
(i) Liens on property specifically reserved, excepted and excluded
by subparagraphs (c) through (g) and subparagraph (j) following the
Granting Clauses section of the First Mortgage Indenture;
(ii) Permitted Encumbrances (as defined in the PSNH Mortgage) on
the Indenture Assets (except Liens referred to in paragraphs (s) and (t)
of Schedule C to the PSNH Mortgage hereafter directly created by the
Borrower, provided, however, that the Borrower may create any such Lien
with the prior consent of the Majority Lenders if such Lien would not
materially adversely affect the security granted under the PSNH
Mortgage, as determined by the Majority Lenders in their reasonable
discretion), provided that in no event shall the outstanding principal
amount of the First Mortgage Bonds exceed at any time the First Mortgage
Bond Amount;
(iii) Liens referred to in paragraphs (b) through (t) of
Schedule C to the PSNH Mortgage on realty or personalty that is subject
to the Lien of the First Mortgage Indenture but is not also subject to
the Lien of the PSNH Mortgage; provided, however, that the aggregate
principal amount of the Debt at any one time outstanding secured by
purchase money Liens permitted by paragraph (m) of Schedule C to the
PSNH Mortgage including Liens of a conditional vendor that are the
functional equivalent of purchase money Liens, shall not exceed
$20,000,000; and
(iv) Liens created or perfected under or in connection with
(A) the Other Loan Documents and (B) the Pledge Agreements referred to
in the Series D Reimbursement Agreement and the Series E Reimbursement
Agreement.
(b) Debt. Create, incur or assume any Debt unless, after giving effect
thereto, (i) no Event of Default or Unmatured Default shall have occurred and
be continuing on the date of such creation, incurrence or assumption
(determined in the case of Section 7.01(j)(i) as though such Debt were
created, incurred or assumed as of the first day of the immediately preceding
fiscal quarter and using the Borrower's most recent annual actuarial
determinations in the computation of Debt referred to in clause (ix) of the
definition of "Debt") and (ii) the Borrower shall have determined that, on
the basis of the assumptions and forecasts set forth in the most recent
operating budget/forecast of operations delivered pursuant to
Section 7.03(iv) hereof (which the Borrower continues to believe to be
reasonable), the Borrower will continue to be in compliance at all times with
the provisions of Section 7.01(j) hereof. The Borrower will furnish evidence
of its compliance with this subsection (b) for each fiscal quarter pursuant
to Section 7.03(ii) hereof.
(c) Mergers, Etc. Merge with or into or consolidate with or into, or
acquire all or substantially all of the assets of, any Person.
(d) Sales, Etc., of Assets. Sell, lease, transfer or otherwise dispose
of all or any substantial part of its assets (other than sales, transfers or
other dispositions of receivables) whether in a single transaction or series
of transactions during any consecutive 12-month period except for sales,
leases, transfers or other dispositions in the ordinary course of the
Borrower's business in accordance with ordinary and customary terms and
conditions.
For purposes of this subsection (d) any transaction or series of
transactions during any consecutive 12-month period shall be deemed to
involve a "substantial part" of the Borrower's assets if, in the aggregate,
(A) the value of such assets equals or exceeds 10% of the total assets of the
Borrower reflected in the financial statements of the Borrower delivered
pursuant to Section 7.03(ii) or 7.03(iii) hereof in respect of the fiscal
quarter or year ending on or immediately prior to the commencement of such
12-month period or (B) for the four calendar quarters ending on or
immediately prior to commencement of such 12-month period, the gross revenue
derived by the Borrower from such assets shall equal or exceed 10% of the
total gross revenue of the Borrower.
(e) Restricted Payments. Declare or pay any dividend, or make any
payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any share of any class of capital
stock of the Borrower (other than stock splits and dividends payable solely
in equity securities of the Borrower), or purchase, redeem, retire, or
otherwise acquire for value any shares of any class of capital stock of the
Borrower or any warrants, rights, or options to acquire any such Debt or
shares, now or hereafter outstanding, or make any distribution of assets to
any of its shareholders (any such transaction being a "Restricted Payment")
except for Restricted Payments made in compliance with the following
conditions:
(i) The Borrower may not make any Restricted Payments if an Event
of Default or Unmatured Default shall have occurred and be continuing.
(ii) The Borrower may not make any Restricted Payments during any
fiscal quarter if, after giving effect thereto (and to the other
computations set forth below in this clause (ii)), the Borrower would
not be in full compliance with Section 7.01(j) hereof. For purposes of
determining compliance with Section 7.01(j) under this clause (ii),
computations under Section 7.01(j) shall be made as of the date of such
Restricted Payment, except that, retained earnings shall be determined
as of the last day of the immediately preceding fiscal quarter (adjusted
for all Restricted Payments made after the last day of such preceding
fiscal quarter).
(iii) The Borrower may not make any Restricted Payments unless,
after giving effect thereto, the Borrower shall have determined that, on
the basis of the assumptions and forecasts set forth in the most recent
operating budget/forecast of operations delivered pursuant to Section
7.03(iv) hereof (which the Borrower continues to believe to be
reasonable) the Borrower will continue to be in compliance at all times
with the provisions of Section 7.01(j) hereof.
(f) Compliance with ERISA. (i) Terminate, or permit any ERISA
Affiliate to terminate, any ERISA Plan so as to result in any material (in
the opinion of the Majority Lenders) liability of the Borrower to the PBGC,
or (ii) permit to exist any occurrence of any Reportable Event (as defined in
Title IV of ERISA), or any other event or condition, which presents a
material (in the opinion of the Majority Lenders) risk of such a termination
by the PBGC of any ERISA Plan and such a material liability to the Borrower.
(g) Related Agreements.
(i) Amendments. Amend, modify or supplement or give any consent,
acceptance or approval to any amendment, modification or supplement or
deviation by any party from the terms of, the Rate Agreement or any
Significant Contract, except, with respect only to the Significant
Contracts, any amendment, modification or supplement thereto that would
not reduce the rights or entitlements of the Borrower thereunder in any
material way.
(ii) Termination. Cancel or terminate (or consent to any
cancellation or termination of) the Rate Agreement or any Significant
Contract prior to the expiration of its stated term, provided that this
subsection (ii) shall not restrict the rights of the Borrower to enforce
any remedy against any obligor under any Significant Contract in the
event of a material breach or default by such obligor thereunder if and
so long as the Borrower shall have provided to the Administrative Agent
at least 30 days prior written notice of the enforcement action proposed
to be undertaken by the Borrower.
(h) Change in Nature of Business. Engage in any material business
activity other than those established and engaged in on the date hereof.
(i) Ownership in Seabrook and Nuclear Plants. Acquire, directly or
indirectly, any ownership interest or any additional ownership interest of
any kind in any nuclear-powered electric generating plant.
(j) Subsidiaries. Create or suffer to exist any active subsidiaries
other than Properties, Inc., a New Hampshire corporation; or permit any
material assets or business to be maintained at or conducted by any
subsidiary except for the assets owned by Properties, Inc. not exceeding
$20,000,000.
(k) Debt Limit. At any time, cause or permit the Debt Limit to be
exceeded, by voluntary incurrence of short-term debt or by other means.
SECTION 7.03 Reporting Obligations. So long as any Note shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower shall,
unless the Majority Lenders shall otherwise consent in writing, furnish to
the Administrative Agent in sufficient copies for each Lender, the following:
(i) as soon as possible and in any event within five (5) days
after the occurrence of each Event of Default or Unmatured Default
continuing on the date of such statement, a statement of the Chief
Financial Officer, Treasurer or Assistant Treasurer of the Borrower
setting forth details of such Event of Default or Unmatured Default
and the action which the Borrower proposes to take with respect
thereto;
(ii) as soon as available and in any event within fifty (50)
days after the end of each of the first three quarters of each
fiscal year of the Borrower, (A) if and so long as the Borrower is
required to submit to the Securities and Exchange Commission a
report on Form 10-Q, a copy of the Borrower's report on Form 10-Q
submitted to the Securities and Exchange Commission with respect to
such quarter and (B) if the Borrower ceases to be required to
submit such report, a balance sheet of the Borrower as of the end
of such quarter and statements of income and retained earnings and
of cash flows of the Borrower for the period commencing at the end
of the previous fiscal year and ending with the end of such
quarter, all in reasonable detail and duly certified (subject to
year-end audit adjustments) by the Chief Financial Officer,
Treasurer or Assistant Treasurer of the Borrower as having been
prepared in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the
financial statements referred to in Section 6.01(e) hereof, in each
such case, delivered together with a certificate of said officer
(1) stating that no Event of Default or Unmatured Default has
occurred and is continuing or, if an Event of Default or Unmatured
Default has occurred and is continuing, a statement as to the
nature thereof and the action which the Borrower proposes to take
with respect thereto and (2) (y) demonstrating compliance with
Section 7.01(j) for and as of the end of such fiscal quarter and
compliance with Section 7.02(b), as of the dates on which any Debt
was created, incurred or assumed (using the Borrower's most recent
annual actuarial determinations in the computation of Debt referred
to in clause (ix) in the definition of "Debt"), and (z)
demonstrating, after giving effect to the incurrence of any Debt
created, incurred or assumed during such fiscal quarter (using the
Borrower's most recent annual actuarial determinations in the
computation of Debt referred to in clause (ix) in the definition of
"Debt"), compliance with Section 7.01(j) for the remainder of the
fiscal year of the Borrower based on the operating budget/forecast
of operations delivered pursuant to Section 7.03(iv) hereof for
such fiscal year, in each case, such demonstration to be in a
schedule (in form satisfactory to the Majority Lenders) which sets
forth the computations used by the Borrower in determining such
compliance;
(iii) as soon as available and in any event within 105
days after the end of each fiscal year of the Borrower, (A) if and
so long as the Borrower is required to submit to the Securities and
Exchange Commission a report on Form 10-K, a copy of the Borrower's
report on Form 10-K submitted to the Securities and Exchange
Commission with respect to such year and (B) if the Borrower ceases
to be required to submit such report, a copy of the annual audit
report for such year for the Borrower including therein a balance
sheet of the Borrower as of the end of such fiscal year and
statements of income and retained earnings and of cash flows of the
Borrower for such fiscal year, in each case certified by a
nationally-recognized independent public accountant, in each such
case delivered together with a certificate of the Chief Financial
Officer, Treasurer or Assistant Treasurer (A) (1) stating that the
financial statements were prepared in accordance with generally
accepted accounting principles consistent with those applied in the
preparation of financial statements referred to in Section 6.01(e)
hereto, and (2) no Event of Default or Unmatured Default has
occurred and is continuing, or if an Event of Default or Unmatured
Default has occurred and is continuing, a statement as to the
nature thereof and the action which the Borrower proposes to take
with respect thereto and (B) demonstrating compliance with Section
7.01(j) for and as of the end of such fiscal year and compliance
with Section 7.02(b), as of the dates on which any Debt was
created, incurred or assumed (using the Borrower's most recent
annual actuarial determinations in the computation of Debt referred
to in clause (ix) in the definition of "Debt"), such demonstration
to be in a schedule (in form satisfactory to the Majority Lenders)
which sets forth the computations used by the Borrower in
determining such compliance.
(iv) as soon as available and in any event before March 31 of
each fiscal year a copy of an operating budget/forecast of
operations of the Borrower as approved by the Board of Directors of
the Borrower in form satisfactory to the Lenders for the next
fiscal year of the Borrower, together with a certificate of the
Chief Financial Officer, Treasurer or Assistant Treasurer of the
Borrower stating that such budget/forecast was prepared in good
faith and on reasonable assumptions;
(v) as soon as available and in any event no later than the
New Hampshire Public Utilities Commission shall have received the
Borrower's annual submission, if any, relating to the "return on
equity collar" referred to in the Rate Agreement, a copy of such
annual submission of the Borrower;
(vi) as soon as possible and in any event (A) within 30 days
after the Borrower knows or has reason to know that any ERISA Plan
Termination Event described in clause (i) of the definition of
ERISA Plan Termination Event with respect to any ERISA Plan or
ERISA Multiemployer Plan has occurred and (B) within 10 days after
the Borrower knows or has reason to know that any other ERISA Plan
Termination Event with respect to any ERISA Plan or ERISA
Multiemployer Plan has occurred, a statement of the Chief Financial
Officer, Treasurer or Assistant Treasurer of the Borrower
describing such ERISA Plan Termination Event and the action, if
any, which the Borrower proposes to take with respect thereto;
(vii) promptly after receipt thereof by the Borrower or
any of its ERISA Affiliates from the PBGC, copies of each notice
received by the Borrower or any such ERISA Affiliate of the PBGC's
intention to terminate any ERISA Plan or ERISA Multiemployer Plan
or to have a trustee appointed to administer any ERISA Plan or
ERISA Multiemployer Plan;
(viii) promptly and in any event within 30 days after the
filing thereof with the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual report (Form 5500
Series) with respect to each ERISA Plan (if any) to which the
Borrower is a contributing employer;
(ix) promptly after receipt thereof by the Borrower or
any of its ERISA Affiliates from an ERISA Multiemployer Plan
sponsor, a copy of each notice received by the Borrower or any of
its ERISA Affiliates concerning the imposition or amount of
withdrawal liability in an aggregate principal amount of at least
$10,000,000 pursuant to Section 4202 of ERISA in respect of which
the Borrower may be liable;
(x) promptly after the Borrower becomes aware of the
occurrence thereof, notice of all actions, suits, proceedings or
other events (A) of the type described in Section 6.01(f), or
(B) which purport to affect the legality, validity or
enforceability of any of the Loan Documents or Significant
Contracts;
(xi) promptly after the sending or filing thereof, copies of
all such proxy statements, financial statements, and reports which
the Borrower sends to its public security holders (if any) or files
with, and copies of all regular, periodic and special reports and
all registration statements and periodic or special reports, if
any, which the Borrower files with, the Securities and Exchange
Commission or any governmental authority which may be substituted
therefor, or with any national securities exchange;
(xii) promptly after receipt thereof, any assertion of the
character described in Section 8.01(h) hereof and the action the
Borrower proposes to take with respect thereto;
(xiii) promptly after knowledge of any material default
under the Rate Agreement or any Significant Contract, notice of
such default and the action the Borrower proposes to take with
respect thereto;
(xiv) promptly after knowledge of any amendment,
modification, or other change to the Rate Agreement or any
Significant Contract or to any Governmental Approval affecting the
Rate Agreement, notice of such amendment, modification or other
change, it being understood that for purposes of this clause (xiv)
any filing by the Borrower in the ordinary course of the Borrower's
business with, or order issued or action taken by, a governmental
authority or regulatory body to implement the terms of the Rate
Agreement shall not be considered an amendment, modification or
change to a Governmental Approval affecting the Rate Agreement; and
(xv) promptly after requested, such other information
respecting the financial condition, operations, properties,
prospects or otherwise, of the Borrower as the Administrative Agent
or Majority Lenders may from time to time reasonably request in
writing.
ARTICLE VIII
DEFAULTS
SECTION 8.01 Events of Default. The following events shall each
constitute an "Event of Default" if the same shall occur and be continuing
after the grace period and notice requirement (if any) applicable thereto:
(a) The Borrower shall fail to pay any principal of any Note when due
or shall fail to pay any interest on any Note, fees or other amounts within
two days after the same becomes due; or
(b) Any representation or warranty made by the Borrower (or any of its
officers or agents) in this Agreement, any other Loan Document, certificate
or other writing delivered pursuant hereto or thereto shall prove to have
been incorrect in any material respect when made or deemed made; or
(c) The Borrower shall fail to perform or observe any term or covenant
on its part to be performed or observed contained in Sections 7.01(a), (d) or
(j), Section 7.02 or Section 7.03(i) hereof; or
(d) The Borrower shall fail to perform or observe any other term or
covenant on its part to be performed or observed contained in this Agreement
or any Loan Document and any such failure shall remain unremedied, after
written notice thereof shall have been given to the Borrower by the
Administrative Agent or any Lender, for a period of 30 days; or
(e) The Borrower shall fail to pay any of its Debt when due (including
any interest or premium thereon but excluding Debt evidenced by the Notes and
excluding other Debt aggregating in no event more than $10,000,000 in
principal amount at any one time) whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise, and such failure shall
continue after the applicable grace period, if any, specified in any
agreement or instrument relating to such Debt; or any other default under any
agreement or instrument relating to any such Debt, or any other event, shall
occur and shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or
any such Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment or as a
result of the Borrower's exercise of a prepayment option) prior to the stated
maturity thereof; unless in each such case the obligee under or holder of
such Debt or the trustee with respect to such Debt shall have waived in
writing such circumstance without consideration having been paid by the
Borrower so that such circumstance is no longer continuing; or
(f) The Borrower shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make an assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Borrower seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of its debts
under any law relating to bankruptcy, insolvency, or reorganization or relief
of debtors, or seeking the entry of an order for relief or the appointment of
a receiver, trustee, or other similar official for it or for any substantial
part of its property and, in the case of a proceeding instituted against the
Borrower, either the Borrower shall consent thereto or such proceeding shall
remain undismissed or unstayed for a period of 90 days or any of the actions
sought in such proceeding (including without limitation the entry of an order
for relief against the Borrower or the appointment of a receiver, trustee,
custodian or other similar official for the Borrower or any of its property)
shall occur; or the Borrower shall take any corporate or other action to
authorize any of the actions set forth above in this subsection (f); or
(g) Any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Borrower or its properties and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order and shall not have been stayed or (ii) there
shall be any period of 15 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(h) Any material provision of any Loan Document, the Rate Agreement or
any Significant Contract shall for any reason other than the express terms
thereof or the exercise of any right or option expressly contained therein
cease to be valid and binding on any party thereto except as otherwise
expressly permitted by the exceptions and provisos contained in
Section 7.02(g) hereof; or any party thereto other than the Lenders shall so
assert in writing provided that in the case of any party other than the
Borrower making such assertion in respect of the Rate Agreement or any
Significant Contract, such assertion shall not in and of itself constitute an
Event of Default hereunder until d. such asserting party shall cease to
perform under and in compliance with the Rate Agreement or such Significant
Contract, e. the Borrower shall fail to diligently prosecute, by appropriate
action or proceedings, a rescission of such assertion or a binding
determination as to the merits thereof or f. such a binding determination
shall have been made in favor of such asserting party's position; or
(i) The Security Documents after delivery under Article V hereof shall
for any reason, except to the extent permitted by the terms thereof, fail or
cease to create valid and perfected Liens (to the extent purported to be
granted by such documents and subject to the exceptions permitted thereunder)
in any of the Collateral, provided, that such failure or cessation relating
to any non-material portion of such Collateral shall not constitute an Event
of Default hereunder unless the same shall not have been corrected within 30
days after the Borrower becomes aware thereof; or
(j) The Borrower shall not have in full force and effect any or all
insurance required under Section 7.01(c) hereof or there shall be incurred
any uninsured damage, loss or destruction of or to the Borrower's properties
in an amount not covered by insurance (including fully-funded self-insurance
programs) which the Majority Lenders consider to be material; or
(k) Any "Event of Default" (as therein defined) shall occur and be
continuing under the Other Loan Documents, or a default by the Borrower shall
have occurred under the Rate Agreement and shall not have been effectively
cured within the time period specified therein for such cure (or, if no such
time period is specified therein, 10 days); or a default by any party shall
have occurred under any Significant Contract and such default shall not have
been effectively cured within 30 days after notice from the Administrative
Agent to the Borrower stating that, in the opinion of the Majority Lenders,
such default may have a material adverse effect upon the financial condition,
operations, properties or prospects of the Borrower as a whole; or
(l) Any Governmental Approval (whether federal, state or local)
required to give effect to the Rate Agreement (including, without limitation,
Chapter 362-C of the New Hampshire Revised Statutes and the enabling order of
The New Hampshire Public Utilities Commission issued pursuant thereto) shall
be amended, modified or supplemented, or any other regulatory or legislative
action or change (whether federal, state or local) having the effect,
directly or indirectly, of modifying the benefits or entitlements of the
Borrower under the Rate Agreement shall occur, and in any such case such
amendment, modification, supplement, action or change may have, in the
opinion of the Majority Lenders, a material adverse effect upon the financial
condition, operations, properties or prospects of the Borrower as a whole; or
(m) NU shall cease to own all of the outstanding common stock of the
Borrower, free and clear of any Liens.
SECTION 8.02 Remedies Upon Events of Default. Upon the occurrence and
during the continuance of any Event of Default, then, and in any such event,
the Administrative Agent shall at the request, or may with the consent, of
the Majority Lenders, upon notice to the Borrower (i) declare the Commitments
and the obligation of each Lender to make Advances to be terminated,
provided, that any such request or consent shall be made solely by the
Lenders having Percentages in the aggregate of not less 66-2/3%, whereupon
the same shall forthwith terminate, (ii) declare the Notes, all interest
thereon and all other amounts payable under this Agreement and the Security
Documents to be forthwith due and payable, provided, that any such request or
consent shall be made solely by the Lenders holding at least 66-2/3% of the
then aggregate unpaid principal amount of the Advances owing to the Lenders,
whereupon the Notes, all such interest and all such amounts shall become and
be forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower,
and (iii) exercise in respect of any and all collateral, in addition to the
other rights and remedies provided for herein and in the Security Documents
or otherwise available to the Administrative Agent, the Collateral Agent or
the Lenders, all the rights and remedies of a secured party on default under
the Uniform Commercial Code in effect in the State of New York and in effect
in any other jurisdiction in which Collateral is located at that time;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to the Borrower under the Federal Bankruptcy Code,
(A) the Commitments and the obligation of each Lender to make Advances shall
automatically be terminated and (B) the Notes, all such interest and all such
amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
ARTICLE IX
THE ADMINISTRATIVE AGENT
SECTION 9.01 Authorization and Action. Each Lender hereby appoints and
authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
the Administrative Agent by the terms hereof, together with such powers as
are reasonably incidental thereto. As to any matters not expressly provided
for by any Loan Documents (including, without limitation, enforcement or
collection thereof), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and
such instructions shall be binding upon all Lenders; provided, however, that
the Administrative Agent shall not be required to take any action which
exposes the Administrative Agent to personal liability or which is contrary
to this Agreement or applicable law. The Administrative Agent agrees to
deliver promptly to each Lender notice of each notice given to it by the
Borrower pursuant to the terms of this Agreement.
SECTION 9.02 Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them
under or in connection with any Loan Document, except for its or their own
gross negligence or wilful misconduct. Without limitation of the generality
of the foregoing, the Administrative Agent: (i) may treat the payee of any
Note as the holder thereof until the Administrative Agent receives and
accepts a Lender Assignment entered into by the Lender which is the payee of
such Note, as assignor, and an assignee, as provided in Section 10.07;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts;
(iii) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for the Information Memorandum or any other
statements, warranties or representations made in or in connection with any
Loan Document; (iv) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any Loan Document on the part of the Borrower to be performed or observed, or
to inspect any property (including the books and records) of the Borrower;
(v) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Loan
Document, Significant Contract or any other instrument or document furnished
pursuant hereto; and g. shall incur no liability under or in respect of any
Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, cable or telex) believed by
it to be genuine and signed or sent by the proper party or parties.
SECTION 9.03 Chemical and Affiliates. With respect to its Commitment
and the Note issued to it, Chemical shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though
it were not the Administrative Agent, and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include Chemical in its
individual capacity. Chemical and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, the Borrower, any of its subsidiaries and any
Person who may do business with or own securities of the Borrower or any such
subsidiary, all as if Chemical was not the Administrative Agent and without
any duty to account therefor to the Lenders.
SECTION 9.04 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the Information Memorandum and other financial
information referred to in Section 6.01(e) and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Agreement.
SECTION 9.05 Indemnification. The Lenders agree to indemnify CSI and
the Administrative Agent (to the extent not reimbursed by the Borrower),
ratably according to the respective principal amounts of the Notes then held
by each of them (or if no Notes are at the time outstanding, ratably
according to the respective Commitments of the Lenders or if any Notes or
Commitments are held by the Borrower or Affiliates thereof, any ratable
apportionment hereunder shall exclude the principal amount of the Notes held
by the Borrower or its Commitment hereunder), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against CSI or the
Administrative Agent in any way relating to or arising out of this Agreement
or any action taken or omitted by CSI or the Administrative Agent under this
Agreement, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from CSI's or the
Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse CSI and the
Administrative Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by CSI or the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement to the extent that CSI or
the Administrative Agent are entitled to reimbursement for such expenses
pursuant to Section 10.04 but is not reimbursed for such expenses by the
Borrower.
SECTION 9.06 Successor Administrative Agent. The Administrative Agent
may resign at any time by giving written notice thereof to the Lenders and
the Borrower, with any such resignation to become effective only upon the
appointment of a successor Administrative Agent pursuant to this Section
9.06. Upon any such resignation, the Majority Lenders shall have the right
to appoint a successor Administrative Agent, which shall be a Lender or
another commercial bank or trust company reasonably acceptable to the
Borrower organized or licensed under the laws of the United States, or of any
State thereof. If no successor Administrative Agent shall have been so
appointed by the Majority Lenders, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent, which shall be Lender or
shall be another commercial bank or trust company organized or licensed under
the laws of the United States or of any State thereof reasonably acceptable
to the Borrower. In addition to the foregoing right of the Administrative
Agent to resign, the Majority Lenders may remove the Administrative Agent at
any time, with or without cause, concurrently with the appointment by the
Majority Lenders of a successor Administrative Agent. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor
Administrative Agent and the execution and delivery by the Borrower and the
successor Administrative Agent of an agreement relating to the fees to be
paid to the successor Administrative Agent under Section 2.02(b) hereof in
connection with its acting as Administrative Agent hereunder, such successor
Administrative Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative
Agent, the provisions of this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, any Note or any Security Document, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Majority Lenders, and then
such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless in writing and signed by all the
Lenders, do any of the following: (a) waive, modify or eliminate any of the
conditions specified in Article V, (b) increase the Commitment of any Lender
hereunder or increase the Commitments of the Lenders that may be maintained
hereunder or subject the Lenders to any additional obligations, (c) reduce
the principal of, or interest on, the Notes, any Applicable Margin or any
fees or other amounts payable hereunder, (d) postpone any date fixed for any
payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder (other than fees payable to the Administrative
Agent pursuant to Section 2.02(b) hereof), (e) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or the
number of Lenders which shall be required for the Lenders or any of them to
take any action hereunder, (f) amend this Agreement, any Note or any Security
Document in a manner intended to prefer one or more Lenders over any other
Lenders, (g) amend this Section 10.01, or (h) release all or substantially
all of the Collateral otherwise than in accordance with the provisions for
such release contained in the Security Documents, or change any provision of
any Security Document providing for the release of all or substantially all
of the Collateral; and provided, further, that no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above to take such action, affect the rights
or duties of the Administrative Agent under this Agreement or any Note.
SECTION 10.02 Notices, Etc. Except as otherwise provided in
Section 3.04 hereof, all notices and other communications provided for
hereunder and under the other Loan Documents shall be in writing (including
telegraphic, telex, telecopy or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered, (i) if to the Borrower, at its
address at 1000 Elm Street, Manchester, New Hampshire 03105 (telecopy no.
603.669.2438), Attention: Treasurer, with a copy to Northeast Utilities
Service Company at its address at 107 Selden Street, Berlin, Connecticut
06037 (telecopy no. 203.665.5457), Attention: Assistant Treasurer; (ii) if
to any Bank, at its Domestic Lending Office specified opposite its name on
Schedule I hereto; (iii) if to any Lender other than a Bank, at its Domestic
Lending Office specified in the Lender Assignment pursuant to which it became
a Lender; and (iv) if to the Administrative Agent, at its address at 140 East
45th Street, New York, New York 10017, Attention: Janet Belden; or, as to
each party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and communications
shall, when mailed, telegraphed, telexed, telecopied or cabled, be effective
five days after when deposited in the mails, or when delivered to the
telegraph company, confirmed by telex answerback, telecopied or delivered to
the cable company, respectively, except that notices and communications to
the Administrative Agent pursuant to Article II, III, IV or IX shall not be
effective until received by the Administrative Agent. With respect to any
telephone notice given or received by the Administrative Agent pursuant to
Section 3.03 hereof, the records of the Administrative Agent shall be
conclusive for all purposes.
SECTION 10.03 No Waiver of Remedies. No failure on the part of any
Lender or the Administrative Agent to exercise, and no delay in exercising,
any right hereunder or under any Note shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 10.04 Costs, Expenses and Indemnification. (a) The Borrower
agrees to pay when due, in accordance with the terms hereof, all costs and
expenses, if any (including, without limitation, reasonable counsel fees and
expenses), of (i) the Administrative Agent and CSI in connection with the
preparation, negotiation, execution and delivery of the Loan Documents and
the administration of the Loan Documents, the care and custody of any and all
collateral, and any proposed modification, amendment, or consent relating
thereto; and (ii) the Administrative Agent, CSI and each Lender in connection
with the enforcement (whether through negotiations, legal proceedings or
otherwise) of this Agreement, the Notes or any other Loan Document.
(b) The Borrower hereby agrees to indemnify and hold each Lender, CSI,
the Administrative Agent and their respective officers, directors, employees,
professional advisors and affiliates (each, an "Indemnified Person") harmless
from and against any and all claims, damages, losses, liabilities, costs or
expenses (including reasonable attorney's fees and expenses, whether or not
such Indemnified Person is named as a party to any proceeding or
investigation or is otherwise subjected to judicial or legal process arising
from any such proceeding or investigation) which any of them may incur or
which may be claimed against any of them by any person or entity (except to
the extent such claims, damages, losses, liabilities, costs or expenses arise
from the gross negligence or willful misconduct of the Indemnified Person):
(i) by reason of or in connection with the execution, delivery or
performance of any of the Loan Documents or any transaction contemplated
thereby, or the use by the Borrower of the proceeds of any Advance;
(ii) in connection with or resulting from the utilization, storage,
disposal, treatment, generation, transportation, release or ownership of
any Hazardous Substance (A) at, upon or under any property of the
Borrower or any of its Affiliates or (B) by or on behalf of the Borrower
or any of its Affiliates at any time and in any place; or
(iii) in connection with any documentary taxes, assessments or
charges made by any governmental authority by reason of the execution
and delivery of any of the Loan Documents.
(c) The Borrower's obligations under this Section 10.04 shall survive
the assignment by any Lender pursuant to Section 10.07 and shall survive as
well the repayment of all amounts owing to the Lenders and the Administrative
Agent under the Loan Documents and the termination of the Commitment of any
Lender and the termination of the Commitments. If and to the extent that the
obligations of the Borrower under this Section 10.04 are unenforceable for
any reason, the Borrower agrees to make the maximum contribution to the
payment and satisfaction thereof which is permissible under applicable law.
SECTION 10.05 Right of Set-off. (a) Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making of the
request or the granting of the consent specified by Section 8.02 to authorize
the Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 8.02, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement and the Note held by such Lender, irrespective of whether or not
such Lender shall have made any demand under this Agreement or such Note and
although such obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under
this Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
(b) The Borrower agrees that it shall have no right of off-set,
deduction or counterclaim in respect of its obligations hereunder, and that
the obligations of the Lenders hereunder are several and not joint. Nothing
contained herein shall constitute a relinquishment or waiver of the
Borrower's rights to any independent claim that the Borrower may have against
the Administrative Agent or any Lender, but no Lender shall be liable for the
conduct of the Administrative Agent or any other Lender, and the
Administrative Agent shall not be liable for the conduct of any Lender.
SECTION 10.06 Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have been notified by each Bank that
such Bank has executed it and thereafter shall be binding upon and inure to
the benefit of the Borrower, the Administrative Agent and each Lender and
their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Lenders.
SECTION 10.07 Assignments and Participation. (a) Each Lender may
assign to one or more banks or other entities all or a portion of its rights
and obligations under this Agreement, the Notes and the Security Documents
(including, without limitation, all or a portion of its Commitment, the
Advances owing to it and the Note or Notes held by it) with the prior written
consent of the Borrower to the extent the assignee thereunder is not then a
Lender or an Affiliate of a Lender (which consent shall not be unreasonably
withheld); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all of the assigning Lender's
rights and obligations under this Agreement, (ii) to the extent the assignee
thereunder is not then a Lender or an Affiliate of a Lender, the amount of
the Commitment or Note of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Lender Assignment with
respect to such assignment) shall in no event be less than the lesser of the
amount of such Lender's Commitment and $3,000,000, and (iii) the parties to
each such assignment shall execute and deliver to the Administrative Agent,
for its acceptance and recording in the Register, a Lender Assignment,
together with any Note or Notes subject to such assignment and a processing
and recordation fee of $2,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Lender
Assignment, which effective date shall be at least five Business Days after
the execution thereof, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned
to it pursuant to such Lender Assignment, have the rights and obligations of
a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it to an
assignee pursuant to such Lender Assignment, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of a
Lender Assignment covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease
to be a party hereto); provided, however, if an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have declared
all Advances to be immediately due and payable hereunder a Lender may assign
all or a portion of its rights and obligations without the prior written
consent of the Borrower but otherwise in accordance with this Section.
(b) By executing and delivering a Lender Assignment, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as
provided in such Lender Assignment, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any
Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Loan Document or any other
instrument or document furnished pursuant thereto; (ii) such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under any Loan Document
or any other instrument or document furnished pursuant thereto; (iii) such
assignee confirms that it has received a copy of each Loan Document, together
with copies of the financial statements referred to in Section 6.01(e) and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Lender Assignment;
(iv) such assignee will, independently and without reliance upon the
Administrative Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement, the Notes and the Security Documents; (v) such assignee
appoints and authorizes the Administrative Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement, the Notes and
the Security Documents as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this Agreement,
the Notes and the Security Documents are required to be performed by it as a
Lender.
(c) The Administrative Agent shall maintain at its address referred to
in Section 10.02 a copy of each Lender Assignment delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Advances owing to,
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
the Borrower, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of a Lender Assignment executed by an assigning
Lender and an assignee, together with any Note or Notes subject to such
assignment, the Administrative Agent shall, if such Lender Assignment has
been completed and is in substantially the form of Exhibit 10.07 hereto,
(i) accept such Lender Assignment, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower.
Within five Business Days after its receipt of such notice, the Borrower, at
its own expense, shall execute and deliver to the Administrative Agent in
exchange for the surrendered Note or Notes a new Note to the order of such
assignee in an amount equal to the Commitment assumed by it pursuant to such
Lender Assignment and, if the assigning Lender has retained a Commitment
hereunder, a new Note to the order of the assigning Lender in an amount equal
to the Commitment retained by it hereunder. Such new Note or Notes shall be
in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such
Lender Assignment and shall otherwise be in substantially the form of
Exhibit 1.01A or Exhibit 1.01B hereto, as the case may be.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under the
Loan Documents (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any such Note for all purposes of this Agreement,
(iv) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and (v) the holder of
any such participation, other than an Affiliate of such Lender, shall not be
entitled to require such Lender to take or omit to take any action hereunder,
except action (A) extending the time for payment of interest on, or the final
maturity of any portion of the principal amount of, the Notes, (B) reducing
the principal amount of or the rate of interest payable on the Notes or
(C) releasing all or substantially all of the Collateral otherwise than in
accordance with the provisions for such release contained in the Security
Documents.
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.07,
disclose to the assignee or participant or proposed assignee or participant,
any information relating to the Borrower furnished to such Lender by or on
behalf of the Borrower; provided that, prior to any such disclosure, the
assignee or participant or proposed assignee or participant shall agree, in
accordance with the terms of Section 10.08, to preserve the confidentiality
of any Confidential Information received by it from such Lender.
(g) If any Lender shall have delivered a notice to the Administrative
Agent described in Section 4.03(a), (b), (c) or (f) hereof, or shall become a
non-performing Lender under Section 3.04(b) hereof, and if and so long as
such Lender shall not have withdrawn such notice or corrected such non-
performance in accordance with Section 3.04(b), the Borrower or the
Administrative Agent may demand that such Lender assign in accordance with
Section 10.07 hereof, to one or more assignees designated by either the
Borrower or the Administrative Agent (and reasonably acceptable to the
other), all (but not less than all) of such Lender's Commitment, Advances,
participation and other rights and obligations hereunder; provided that any
such demand by the Borrower during the continuance of an Event of Default or
an Unmatured Default shall be ineffective without the consent of the Majority
Lenders. If, within 30 days following any such demand by the Administrative
Agent or the Borrower, any such assignee so designated shall fail to tender
such assignment on terms reasonably satisfactory to the Lender, or the
Borrower and the Administrative Agent shall have failed to designate any such
assignee, then such demand by the Borrower or the Administrative Agent shall
become ineffective, it being understood for purposes of this provision that
such assignment shall be conclusively deemed to be on terms reasonably
satisfactory to such Lender, and such Lender shall be compelled to tender
such assignment forthwith, if such assignee (1) shall agree to such
assignment in substantially the form of the Lender Assignment and (2) shall
tender payment to such Lender in an amount equal to the full outstanding
dollar amount accrued in favor of such Lender hereunder (as computed in
accordance with the records of the Administrative Agent.)
(h) Anything in this Section 10.07 to the contrary notwithstanding, any
Lender may assign and pledge all or any portion of its Commitment and the
Advances owing to it to any Federal Reserve Bank (and its transferees) as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from its
obligations hereunder.
SECTION 10.08 Confidentiality. In connection with the negotiation and
administration of this Agreement and the other Loan Documents, the Borrower
has furnished and will from time to time furnish to the Administrative Agent
and the Lenders (each, a "Recipient") written information which is identified
to the Recipient when delivered as confidential (such information, other than
any such information which (i) was publicly available, or otherwise known to
the Recipient, at the time of disclosure, (ii) subsequently becomes publicly
available other than through any act or omission by the Recipient or
(iii) otherwise subsequently becomes known to the Recipient other than
through a Person whom the Recipient knows to be acting in violation of his or
its obligations to the Borrower, being hereinafter referred to as
"Confidential Information"). The Recipient will not knowingly disclose any
such Confidential Information to any third party (other than to those persons
who have a confidential relationship with the Recipient), and will take all
reasonable steps to restrict access to such information in a manner designed
to maintain the confidential nature of such information, in each case until
such time as the same ceases to be Confidential Information or as the
Borrower may otherwise instruct. It is understood, however, that the
foregoing will not restrict the Recipient's ability to freely exchange such
Confidential Information with prospective participants in or assignees of the
Recipient's position herein, but the Recipient's ability to so exchange
Confidential Information shall be conditioned upon any such prospective
participant's entering into an understanding as to confidentiality similar to
this provision. It is further understood that the foregoing will not
prohibit the disclosure of any or all Confidential Information if and to the
extent that such disclosure may be required (i) by a regulatory agency or
otherwise in connection with an examination of the Recipient's records by
appropriate authorities, (ii) pursuant to court order, subpoena or other
legal process or (iii) otherwise, as required by law; in the event of any
required disclosure under clause (ii) or (iii), above, the Recipient agrees
to use reasonable efforts to inform the Borrower as promptly as practicable.
SECTION 10.09 Certain Authorizations and Consent. Each Bank by its
acceptance hereof, and each other Lender by its execution and delivery of the
Lender Assignment pursuant to which it became a Lender, consents to,
authorizes, ratifies and confirms in all respects:
(i) the execution, delivery, acceptance and performance by the
Administrative Agent and by the Collateral Agent of the Collateral
Agency Agreement, as the same may be from time to time amended in
accordance with the terms thereof;
(ii) the execution, delivery and acceptance by the Collateral Agent
of, and the taking by the Collateral Agent of all actions under, the
Security Documents, as the same may be from time to time amended in
accordance with Section 10.01 hereof, and any and all documents that may
from time to time after the date hereof constitute Security Documents;
and
(iii) that upon the Closing hereunder, the Collateral Agency
Agreement shall supersede the Existing Collateral Agency Agreement and
Bankers Trust Company shall be replaced as Collateral Agent under the
Existing Collateral Agency Agreement by Chemical as successor Collateral
Agent under the Collateral Agency Agreement;
the execution and delivery of this Agreement by such Bank, or the execution
and delivery of such Lender Assignment by such Lender, as the case may be,
constituting (without further act or deed) such Bank's or Lender's, as the
case may be, acceptance and approval of, and agreement to the terms of, the
Collateral Agency Agreement and the other Security Documents.
SECTION 10.10 Waiver of Jury Trial. The Borrower, the Administrative
Agent, and the Lenders each hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim arising out of or relating to
this Agreement or any other Loan Document, or any other instrument or
document delivered hereunder or thereunder.
SECTION 10.11 Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Borrower, the Lenders and the Administrative Agent each
(i) irrevocably submits to the jurisdiction of any New York State Court or
Federal court sitting in New York City in any action arising out of any Loan
Document, (ii) agrees that all claims in such action may be decided in such
court, (iii) waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum and (iv) consents to the service of process
by mail. A final judgment in any such action shall be conclusive and may be
enforced in other jurisdictions. Nothing herein shall affect the right of any
party to serve legal process in any manner permitted by law or affect its
right to bring any action in any other court.
SECTION 10.12 Relation of the Parties; No Beneficiary. No term,
provision or requirement, whether express or implied, of any Loan Document,
or actions taken or to be taken by any party thereunder, shall be construed
to create a partnership, association, or joint venture between such parties
or any of them. No term or provision of the Loan Documents shall be
construed to confer a benefit upon, or grant a right or privilege to, any
Person other than the parties hereto.
SECTION 10.13 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
By /s/ David R. McHale
Name: David R. McHale
Title: Assistant Treasurer
CHEMICAL BANK,
as Administrative Agent
By /s/
Name: Jane Ritchie
Title: Vice President
Commitment Lender
$12,500,000.00 CHEMICAL BANK
By /s/
Name: Jane Ritchie
Title: Vice President
Commitment Lender
$11,111,111.11 BANK OF AMERICA ILLINOIS
By /s/
Name: Felipe A. Gomez
Title: Authorized Officer
Commitment Lender
$11,111,111.11 CITIBANK, N.A.
By /s/
Name: Paul T. Addison
Title: Attorney In Fact
Commitment Lender
$11,111,111.11 CREDIT LYONNAIS
NEW YORK BRANCH
By /s/
Name: Robert Ivosevich
Title: Senior Vice President
Commitment Lender
$11,111,111.11 THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By /s/
Name: Noboru Kubota
Title: Deputy General Manager
Commitment Lender
$5,555,555.56 FLEET NATIONAL BANK
By /s/
Name: Suresh Chivukula
Title: Vice President
Commitment Lender
$5,555,555.56 THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By /s/
Name: Gina Kearns
Title: Vice President & Manager
Commitment Lender
$5,555,555.56 THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By /s/
Name: Robert W. Ramage, Jr.
Title: Senior Vice President
Commitment Lender
$5,555,555.56 MELLON BANK, N.A.
By /s/
Name: Jocelin Reed
Title: Officer
Commitment Lender
$5,555,555.56 THE NIPPON CREDIT BANK, LTD.
By /s/
Name: Yoshihide Watanabe
Title: Vice President and Manager
Commitment Lender
$11,111,111.11 CIBC INC.
By /s/
Name: Margaret E. McTigue
Title: Director
Commitment Lender
$11,111,111.11 TORONTO DOMINION (NEW YORK),
INC.
By /s/
Name: Debbie A. Greene
Title: Vice President
Commitment Lender
$4,166,666.67 BARCLAYS BANK PLC
By /s/
Name: Sydney G. Dennis
Title: Director
Commitment Lender
$4,166,666.67 THE FIRST NATIONAL BANK
OF CHICAGO
By /s/
Name: Madeleine N. Pember
Title: Corporate Banking Officer
Commitment Lender
$5,555,555.56 THE YASUDA TRUST AND BANKING
COMPANY, LIMITED, NEW YORK
BRANCH
By /s/
Name: Y. Kobayashi
Title: Deputy General Manager
Commitment Lender
$4,166,666.67 THE FIRST NATIONAL BANK
OF BOSTON
By /s/
Name: Frank T. Smith
Title: Director
SCHEDULE I
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
U.S. $125,000,000 REVOLVING CREDIT AGREEMENT
APPLICABLE LENDING OFFICES
Eurodollar
Name of Bank Domestic Lending Office Lending Office
Chemical Bank 140 East 45th Street 140 East 45th Street
New York, NY 10017 New York, NY 10017
Bank of America Illinois 231 South LaSalle Street 231 South LaSalle Street
Chicago, IL 60697 Chicago, IL 60697
Citibank, N.A. One Court Square One Court Square
7th Floor, Zone 2 7th Floor, Zone 2
Long Island City, NY 11120 Long Island City, NY 11120
Credit Lyonnais, New Credit Lyonnais Building Credit Lyonnais Building
York Branch 1301 Avenue of the Americas 1301 Avenue of the Americas
New York, NY 10019 New York, NY 10019
The Long-Term Credit 165 Broadway 165 Broadway
Bank of Japan, Limited, New York, NY 10006 New York, NY 10006
New York Branch
Fleet National Bank 1 Federal Street 1 Federal Street
Boston, MA 02211 Boston, MA 02211
The Fuji Bank, Limited, Two World Trade Center Two World Trade Center
New York Branch New York, NY 10048 New York, NY 10048
The Industrial Bank of 245 Park Avenue, 23rd Floor 245 Park Avenue, 23rd
Floor
Japan Trust Company New York, NY 10167 New York, NY 10167
Mellon Bank, N.A. Three Mellon Bank Center Three Mellon Bank Center
Pittsburgh, PA 15259-0003 Pittsburgh, PA 15259-0003
The Nippon Credit Bank, 245 Park Avenue, 30th Floor 245 Park Avenue, 30th
Floor
Ltd. New York, NY 10167 New York, NY 10167
CIBC Inc. Two Paces West Two Paces West
2727 Paces Ferry Road 2727 Paces Ferry Road
Suite 1200 Suite 1200
Atlanta, GA 30339 Atlanta, GA 30339
Toronto Dominion 900 Fannin, Suite 1700 900 Fannin, Suite 1700
(New York), Inc. Houston, TX 77010 Houston, TX 77010
Barclays Bank PLC 222 Broadway, 11th Floor 222 Broadway, 11th Floor
New York, NY 10038 New York, NY 10038
The First National Bank One First National Plaza One First National Plaza
of Chicago Chicago, IL 60670 Chicago, IL 60670
The Yasuda Trust & 666 Fifth Avenue, Suite 801 666 Fifth Avenue, Suite 801
Banking Company, New York, NY 10103 New York, NY 10103
Limited, New York Branch
First National Bank of 100 Federal Street 100 Federal Street
Boston Boston, MA 02106 Boston, MA 02106
EXHIBIT 1.01A
FORM OF COMPETITIVE NOTE
$125,000,000 New York, New York
[Date]
FOR VALUE RECEIVED, the undersigned, PUBLIC SERVICE COMPANY OF NEW
HAMPSHIRE, a New Hampshire corporation (the "Borrower"), hereby promises to
pay to the order of (the "Lender"), at the
office of Chemical Bank at 140 East 45th Street, New York, New York 10017,
(i) on the last day of each Interest Period, as defined in the Credit
Agreement (referred to below), the aggregate unpaid principal amount of all
Competitive Advances (as defined in the Credit Agreement) made by the Lender
to the Borrower pursuant to Section 3.03 of the Credit Agreement to which
such Interest Period applies and (ii) on the Termination Date (as defined in
the Credit Agreement), the lesser of the principal sum of $125 Million
Dollars ($125,000,000) and the aggregate unpaid principal amount of all
Competitive Advances made by the Lender to the Borrower pursuant to
Section 3.03(b) of the Amended and Restated Revolving Credit Agreement dated
as of __________ __, 1996, among the Borrower, certain Lenders parties
thereto, and Chemical Bank, as Administrative Agent (the "Credit Agreement"),
in lawful money of the United States of America in immediately available
funds, and to pay interest on such principal amount from time to time
outstanding, in like funds, at said office, at a rate or rates per annum and
payable with respect to such periods and on such dates as determined pursuant
to the Credit Agreement.
The Borrower promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their
due dates at a rate or rates determined as set forth in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Competitive Note and all payments and
prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such holders
in its internal records; provided, however, that any failure of the holder
hereof to make such a notation or any error in such notation shall not in any
manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Competitive Note and the
Credit Agreement.
This Competitive Note is one of the Competitive Notes referred to in the
Credit Agreement, and is entitled to the benefits thereof and subject to the
provisions thereof and of the Collateral Agency Agreement (as defined in the
Credit Agreement). The Credit Agreement, among other things, contains
provisions for the acceleration of the maturity hereof upon the happening of
certain events, for prepayment of the principal hereof prior to the maturity
thereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. This
Competitive Note shall be construed in accordance with and governed by the
laws of the State of New York and any applicable laws of the United States of
America.
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
By /s/
Title:
GRID NOTE SCHEDULE
COMPANY NAME: PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
ISSUE DATE
AMOUNT OF PRINCIPAL
INTEREST RATE
INTEREST PERIOD
NUMBER OF DAYS
INTEREST DUE
DATE PAID
AMOUNT PAID
NOTED BY
EXHIBIT 1.01B
FORM OF CONTRACT NOTE
$[insert amount of Lender's New York, New York
Commitment] [Date]
FOR VALUE RECEIVED, the undersigned, PUBLIC SERVICE COMPANY OF NEW
HAMPSHIRE, a New Hampshire corporation (the "Borrower"), hereby promises to
pay to the order of _____________________ (the "Lender"), at the office of
Chemical Bank at 140 East 45th Street, New York, New York 10017, (i) on the
last day of each Interest Period, as defined in the Credit Agreement
(referred to below), the aggregate unpaid principal amount of all Contract
Advances (as defined in the Credit Agreement) made by the Lender to the
Borrower pursuant to Sections 3.01 of the Credit Agreement to which such
Interest Period applies and (ii) on the Termination Date (as defined in the
Credit Agreement), the lesser of the principal sum of __________ Dollars
($_________) and the aggregate unpaid principal amount of all Contract
Advances made by the Lender to the Borrower pursuant to the Amended and
Restated Revolving Credit Agreement dated as of __________ __, 1996, among
the Borrower, certain Lenders parties thereto, and Chemical Bank, as
Administrative Agent (the "Credit Agreement"), outstanding on the Termination
Date, in lawful money of the United States of America in immediately
available funds, and to pay interest on such principal amount from time to
time outstanding, in like funds, at said office, at a rate or rates per annum
and payable on such dates as determined pursuant to the Credit Agreement.
The Borrower promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their
due dates at a rate or rates determined as set forth in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Contract Note and all payments and
prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a party hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such holder
in its internal records; provided, however, that any failure of the holder
hereof to make such a notation or any error in such notation shall not in any
manner affect the obligation of the Borrower to make payments of principal
and interest in accordance with the terms of this Contract Note and the
Credit Agreement.
This Contract Note is one of the Contract Notes referred to in the
Credit Agreement and is entitled to the benefits thereof and subject to the
provisions thereof and of the Collateral Agency Agreement (as defined in the
Credit Agreement). The Credit Agreement, among other things, contains
provisions for the acceleration of the maturity hereof upon the happening of
certain events, for prepayment of the principal hereof prior to the maturity
thereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. This
Contract Note shall be construed in accordance with and governed by the laws
of the State of New York and any applicable laws of the United States of
America.
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
By /s
Title:
GRID NOTE SCHEDULE
COMPANY NAME: PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
DATE OF ADVANCE/CONVERSION DATE
AMOUNT OF PRINCIPAL
INTEREST RATE
INTEREST PERIOD
NUMBER OF DAYS
INTEREST DUE
DATE PAID
AMOUNT PAID
NOTED BY
EXHIBIT 1.01C
EXECUTION COPY
AMENDED AND RESTATED
COLLATERAL AGENCY AGREEMENT
among
CHEMICAL BANK,
as Collateral Agent
and Administrative Agent
and
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
and
THE OTHER HOLDERS OF SECURED
CLAIMS REFERRED TO HEREIN
Dated as of April 1, 1996
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS 3
1.01. Defined Terms 3
ARTICLE II
SECURITY 5
2.01. Purpose of Agreement 5
2.02. Collateral 5
2.03. Pari Passu Claims 6
2.04. Collateral Agent's Power of Investment 6
ARTICLE III
DISTRIBUTIONS 6
3.01. Default 6
3.02. Distributions 7
3.03. Marshalling 9
ARTICLE IV
AGENCY 9
4.01. Appointment and Duties of Collateral Agent 9
4.02. Rights of Collateral Agent 10
4.03. Lack of Reliance on the Collateral Agent 12
4.04. Indemnification 13
4.05. The Collateral Agent in its Individual Capacity 14
4.06. Resignation or Removal of the Collateral Agent 14
ARTICLE V
MISCELLANEOUS 15
5.01. Amendments; Etc 15
5.02. Addresses for Notices 15
5.03. Binding Effect 15
5.04. Transfers 15
5.05. Termination 16
5.06. Governing Law; Terms 16
5.07. Execution in Counterparts 16
5.08. Separate Liability 16
5.09. Sharing of Payments 16
AMENDED AND RESTATED
COLLATERAL AGENCY AGREEMENT
THIS AMENDED AND RESTATED COLLATERAL AGENCY AGREEMENT, dated as of April
1, 1996, among:
(i) Chemical Bank, as administrative agent under each of the
Credit Agreements referred to below for the Lenders referred to below
(in each such capacity together with its successors, the "Administrative
Agent");
(the parties referred to in the foregoing clause (i), together with the
Lenders referred to below, and the Collateral Agent referred to below, being
hereinafter referred to, collectively, as the "Secured Parties" and,
individually, as a "Secured Party");
(ii) Public Service Company of New Hampshire, a New Hampshire
corporation (the "Borrower"); and
(iii) Chemical Bank ("Chemical"), as mortgagee under the PSNH
Mortgage referred to below, as collateral agent hereunder for the
Secured Parties (in such capacities, all as described herein and in the
other Security Documents referred to below, in each case together with
its successors, the "Collateral Agent").
PRELIMINARY STATEMENTS
(i) In connection with securing certain credit facilities, the
Borrower entered into the Collateral Agency Agreement, dated as of May
1, 1991 (the "Existing Collateral Agency Agreement"), with Bankers Trust
Company, as Collateral Agent, Citibank, N.A., as Term Agent, and
Chemical, as Revolving Agent, and certain other holders of secured
claims thereunder;
(ii) The Term Credit Agreement (as defined in the Existing
Collateral Agency Agreement) has terminated, and accordingly the
capacity of Term Agent has terminated and Citibank, N.A. is no longer
the Term Agent;
(iii) In connection with the amendment and restatement and
supplementation of the Revolving Credit Agreement (as defined in the
Existing Collateral Agency Agreement) by the Credit Agreements referred
to below, Chemical is being redesignated as Administrative Agent under
the said Credit Agreements, and there is no longer any Revolving Agent
(as defined in the said Revolving Credit Agreement);
(iv) In connection with securing the Credit Agreements referred to
below, Bankers Trust Company, as former Collateral Agent, Chemical, as
successor Collateral Agent, and the Borrower are entering into a
Replacement of Collateral Agent, together with Assignment by Mortgagee,
Assignee and Secured Party, dated on or about the date hereof, pursuant
to which Chemical is replacing Bankers Trust Company as Collateral
Agent;
(v) The Borrower has entered into an Amended and Restated
Revolving Credit Agreement, in an aggregate principal amount of up to
$125,000,000, among the Borrower, the banks named therein and certain
lenders from time to time party thereto and the Administrative Agent,
dated as of April 1, 1996 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Amended and Restated
Revolving Credit Agreement");
(vi) The Borrower has entered into a 364-Day Revolving Credit
Agreement, in an aggregate principal amount of up to $100,000,000, among
the Borrower, the banks named therein and certain other lenders from
time to time party thereto and the Administrative Agent, dated as of
April 1, 1996 (as the same may be amended, supplemented or otherwise
modified from time to time, the "364-Day Revolving Credit Agreement");
and
(vii) Pursuant to the Credit Agreements (as defined below), the
Existing Collateral Agency Agreement is being amended and restated by
this Agreement, and Bankers Trust Company as Collateral Agent under the
Existing Collateral Agency Agreement is being replaced by Chemical as
successor Collateral Agent under this Agreement.
As security for the obligations of the Borrower to the Secured Parties,
the Borrower also has entered into the PSNH Mortgage.
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms. Terms used herein and defined in the
Amended and Restated Revolving Credit Agreement shall have the meanings
therein indicated except that the terms defined in the preamble and the
Preliminary Statements and the following terms shall have the meanings set
forth herein:
"A Claims" means all obligations of the Borrower, now or hereafter
existing, to pay principal, interest (including, without limitation,
interest that, but for the filing of a petition in bankruptcy with
respect to the Borrower, would accrue on such obligations), fees,
expenses or other amounts to the Administrative Agent and/or the
Lenders, under the Loan Documents related to the 364-Day Revolving
Credit Agreement, and any instruments or documents executed and
delivered pursuant thereto and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment
is avoided or recovered directly or indirectly from the Collateral
Agent, the Administrative Agent or any Secured Party as a preference,
fraudulent transfer or otherwise.
"Acceleration Notice" has the meaning assigned to that term in
Section 3.01(b) hereof.
"Administrative Agent Claims" means all obligations of the Borrower
now or hereafter existing, to pay fees, costs, indemnities and expenses
to the Administrative Agent under either Credit Agreement.
"Agreement" means this Collateral Agency Agreement, as amended from
time to time.
"B Claims" means all obligations of the Borrower, now or hereafter
existing, to pay principal, interest (including, without limitation,
interest that, but for the filing of a petition in bankruptcy with
respect to the Borrower, would accrue on such obligations), fees,
expenses or other amounts to the Administrative Agent and/or the
Lenders, under the Loan Documents related to the Amended and Restated
Revolving Credit Agreement and any instruments or documents executed and
delivered pursuant thereto and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment
is avoided or recovered directly or indirectly from the Collateral
Agent, the Administrative Agent or any Secured Party as a preference,
fraudulent transfer or otherwise.
"Collateral" means the collateral subject to the PSNH Mortgage, and
any other property or interest held by or for the benefit of the
Collateral Agent as security for the Secured Claims.
"Collateral Agent Claims" means all obligations of the Borrower,
now or hereafter existing, to pay fees, costs, indemnities and expenses
to the Collateral Agent pursuant to Section 4.02(g) hereof and under the
other Security Documents.
"Credit Agreements" means, collectively, the Amended and Restated
Revolving Credit Agreement and the 364-Day Revolving Credit Agreement;
individually, a "Credit Agreement".
"Default Exercise Notice" has the meaning assigned to that term in
Section 3.01(b) hereof.
"Event of Default" means any "Event of Default" (as therein
defined) under any of the Credit Agreements or Security Documents.
"Holder" has the meaning assigned to that term in Section 2.01
hereof.
"Lenders" means the Lenders and Banks under and as defined in each
of the Credit Agreements.
"Loan Documents" means the "Loan Documents" (as defined in each
Credit Agreement).
"Principal Office" means the office of the Collateral Agent
presently located at 140 East 45th Street, New York, New York 10017, or
such other office as the Collateral Agent may designate from time to
time.
"PSNH Mortgage" means the Mortgage, Assignment, Security Agreement
and Financing Statement, entitled "PSNH Mortgage" on the cover page
thereof, by Borrower as Grantor to Bankers Trust Company, dated as of
May 1, 1991, as assigned to Chemical by assignment and as amended by the
First Amendment thereto, both dated on or about the date hereof, and as
amended from time to time.
"Required Creditors" means on any date of determination, Lenders
who, collectively, on such date hold at least (i) 66-2/3% of the
aggregate principal amount of the loans and advances then outstanding
under the Credit Agreements and (ii) 66-2/3% of the aggregate Available
Commitments under the Credit Agreements. The Collateral Agent may rely
solely on certificates provided from time to time to the Collateral
Agent by the Administrative Agent under each Credit Agreement in the
Collateral Agent's determination of whether the percentage specified in
the immediately preceding sentence has been satisfied.
"Secured Claims" means the Administrative Agent Claims, the
Collateral Agent Claims, the A Claims and the B Claims.
"Security Documents" means, collectively, the PSNH Mortgage and
this Agreement, in each case, as amended, supplemented or otherwise
modified from time to time; individually, a "Security Document".
"Unmatured Default" means the occurrence and continuance of an
event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default.
ARTICLE II
SECURITY
SECTION 2.01 Purpose of Agreement. This Agreement defines various
relationships among the Secured Parties and sets forth the duties and powers
of the Collateral Agent with respect to the Collateral, and is made for the
benefit of each of the Secured Parties as holders (individually, a "Holder"
and collectively, the "Holders") of the Secured Claims existing from time to
time, to secure the payment of all such Secured Claims and the due
performance of and compliance with all the terms of and other obligations
under the Loan Documents.
SECTION 2.02 Collateral. The Holders of the Secured Claims are
entitled, pursuant to the terms hereof and of the other Security Documents,
to the benefits of any Collateral held or to be held by or for the benefit of
the Collateral Agent. The Borrower will deliver or cause to be delivered to
the Collateral Agent, promptly upon the execution and delivery thereof,
executed counterparts of all Loan Documents and the First Mortgage Indenture.
The Collateral Agent shall keep all Security Documents delivered to it at the
Principal Office and shall permit any Secured Party to inspect such Security
Documents upon request during business hours. All references herein to any
Security Document shall mean such Security Document as at the time amended,
supplemented or otherwise modified in accordance with the terms thereof and
hereof.
SECTION 2.03 Pari Passu Claims. The Administrative Agent acknowledges
and agrees (which acknowledgment and agreement shall be binding upon the
Lenders) with the other Secured Parties that, except as expressly set forth
in Section 3.02 hereof, (i) all Secured Claims shall rank pari passu and
shall be entitled to payment equally and ratably from any proceeds of and
realizations upon the Collateral and (ii) no Holder of Secured Claims shall
be entitled to any priority or preference over any other Holder of Secured
Claims.
SECTION 2.04 Collateral Agent's Power of Investment. The Collateral
Agent shall invest all moneys from time to time held by it in Permitted
Investments in accordance with the Borrower's instructions received no later
than 10:15 a.m. (New York City time) on the day on which such investments
shall be made. In the absence of any such instructions on any day on which
investments shall be made, the Collateral Agent shall invest all such moneys
in direct obligations of the United States of America, or obligations
guaranteed as to principal and interest by the United States of America. The
Collateral Agent shall maintain records of all such investment activity.
ARTICLE III
DISTRIBUTIONS
SECTION 3.01 Default. (a) Unless an Event of Default shall have
occurred and be continuing, the Collateral Agent shall not be obligated to
take any action under this Agreement or any of the Security Documents, except
for the performance of such duties as are specifically set forth herein or
therein.
(b) The Administrative Agent (in its capacity as such under either
Credit Agreement) agrees that, if with the consent or at the direction of the
Majority Lenders (as defined in either Credit Agreement, as the case may be)
the Administrative Agent shall propose to exercise any remedy provided for in
Section 8.02 of either such Credit Agreement, as the case may be, or if the
loans and advances shall automatically become due and payable as provided for
in said Section, the Administrative Agent shall, as promptly as practicable,
provide written notice (a "Default Exercise Notice") pursuant to the
applicable Credit Agreement by hand, courier or telecopy of such proposed
exercise or the automatic acceleration, as the case may be, to the Collateral
Agent. Such Default Exercise Notice shall specify the remedy then proposed
to be exercised and the Event(s) of Default entitling the Administrative
Agent to exercise such remedy. If the remedy proposed to be exercised shall
include the declaration of the loans and advances outstanding under such
Credit Agreement to be immediately due and payable or if such loans and
advances shall have become automatically due and payable, such Default
Exercise Notice shall be deemed to be an "Acceleration Notice".
(c) If at any time the Collateral Agent shall have received (i) an
Acceleration Notice from the Administrative Agent in its capacity as such
under one of the Credit Agreements but not the other or (ii) an Acceleration
Notice from the Administrative Agent in its capacity as such under one of the
Credit Agreements but shall not have received prior thereto a Default
Exercise Notice from the Administrative Agent in its capacity as such under
the other Credit Agreement, the Collateral Agent shall, subject in all cases
to Sections 3.01(d), 4.01(c), 4.02 and 5.01 hereof, exercise or refrain from
exercising all such rights, powers and remedies as shall be available to it
under the Security Documents in accordance with any written instructions
received from the Administrative Agent in its capacity pursuant to which it
delivered such Acceleration Notice. If at any time (whether or not the
provisions of the preceding sentence shall have theretofore been applicable),
the Collateral Agent shall have received (i) a Default Exercise Notice from
the Administrative Agent in its capacity as such under one of the Credit
Agreements but shall not have received an Acceleration Notice from the
Administrative Agent in such capacity under the other Credit Agreement,
(ii) a Default Exercise Notice from the Administrative Agent in its capacity
as such under one of the Credit Agreements but, thereafter, shall receive an
Acceleration Notice from the Administrative Agent in its capacity under the
other Credit Agreement, or (iii) Acceleration Notices pursuant to both Credit
Agreements, the Collateral Agent shall, subject in all cases to Sections
3.01(d), 4.01(c), 4.02 and 5.01 hereof, exercise or refrain from exercising
all such rights, powers and remedies as shall be available to it under the
Security Documents in accordance with any written instructions received from
the Required Creditors.
(d) Notwithstanding any written instructions received by the Collateral
Agent pursuant to the foregoing paragraph (c) or anything contained in
Section 5.01 to the contrary, and except as expressly provided in the PSNH
Mortgage, the Collateral Agent shall not release any Collateral or part
thereof or lien thereon without the written consent of the Administrative
Agent in its capacity as such under both Credit Agreements.
SECTION 3.02 Distributions. If any Event of Default shall have
occurred and be continuing, and if the Administrative Agent shall have
declared all loans and advances under each Credit Agreement to be immediately
due and payable thereunder (or if such loans and advances have otherwise
automatically become immediately due and payable), all Collateral held by the
Collateral Agent (including deposits and investments in cash collateral
accounts) and all cash proceeds received by the Collateral Agent in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as Collateral for the Secured Parties, and then or at any
time thereafter be distributed in whole or in part by the Collateral Agent in
the following order of priority, unless otherwise directed by all parties
hereto (other than the Borrower):
First: To the Collateral Agent in an amount equal to the
Collateral Agent Claims due and payable as of the date of such
distribution;
Second: To the Administrative Agent in an amount equal to the
Administrative Agent Claims, due and payable as of the date of such
distribution;
Third: To the Administrative Agent (on behalf of Holders of the A
Claims and the B Claims) in an amount equal to the fees, costs and
expenses due and payable in respect of such Secured Claims as of the
date of such distribution;
Fourth: To the Administrative Agent (on behalf of Holders of the A
Claims and the B Claims) in an amount equal to the interest due and
payable in respect of such Secured Claims as of the date of such
distribution;
Fifth: To the Administrative Agent (on behalf of Holders of the A
Claims and the B Claims) in an amount equal to the principal due and
payable in respect of such Secured Claims as of the date of such
distribution;
Sixth: To the Administrative Agent (on behalf of Holders of the A
Claims and the B Claims) for any other amounts not described above,
direct or contingent or whether or not due and payable (but only to the
extent then due and payable as of the date of such distribution, the
remainder to be held as collateral for the benefit of such Holders until
such time as the same shall become due and payable); and
Seventh: To the extent of any surplus (but only after payment in
full of all Secured Claims, direct or contingent, and whether or not
then due and payable), to the Borrower, except as may be provided
otherwise by law,
it being understood that the Borrower shall remain liable to the extent of
any deficiency between the amount of the proceeds of the Collateral and the
aggregate of the sums referred to in clauses first through sixth of this
Section 3.02.
Prior to any distribution hereunder, upon the request of the Collateral
Agent, the Administrative Agent shall provide to the Collateral Agent from
time to time certificates, in form and substance reasonably satisfactory to
the Collateral Agent, setting forth the respective amounts referred to in
paragraphs second through sixth of this Section 3.02 in respect of the
different Secured Claims.
In the event that funds to be distributed by the Collateral Agent
pursuant to paragraphs second through sixth of this Section 3.02 shall be
insufficient to pay in full the Secured Claims referred to therein,
distributions made pursuant to paragraphs second through sixth of this
Section 3.02 shall be made pro rata based on the aggregate amount of Secured
Claims referred to in each such paragraph.
SECTION 3.03 Marshalling. The Collateral Agent shall not be required
to marshall any present or future security for the Secured Claims or to
resort to such security in any particular order; and all of the Collateral
Agent's rights hereunder and in respect of such security shall be cumulative
and in addition to all other rights, however existing or arising.
ARTICLE IV
AGENCY
SECTION 4.01 Appointment and Duties of Collateral Agent. (a) The
Secured Parties hereby designate and appoint Chemical to act as the
Collateral Agent hereunder and with respect to the other Security Documents,
and each of the Secured Parties hereby authorizes Chemical as such Collateral
Agent, to take such actions on its behalf hereunder and under the provisions
of the other Security Documents and to exercise such powers and perform such
duties expressly delegated to the Collateral Agent by the terms of the
Security Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere
in the Security Documents, the Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth in the Security Documents,
or any fiduciary relationship with any Secured Party, and no implied
covenants, functions or responsibilities shall be read into the Security
Documents or otherwise exist against the Collateral Agent. The Collateral
Agent shall not be liable for any action taken or omitted to be taken by it
hereunder or under any Loan Document, or in connection herewith or therewith,
or in connection with the Collateral, unless caused by its gross negligence
or willful misconduct.
(b) The Collateral Agent will give notice to the Secured Parties of any
action taken under any Security Document; such notice shall be given promptly
after the taking of any such action.
(c) Notwithstanding anything to the contrary in this Agreement or any
of the other Security Documents and in any event subject to the provisions of
Section 5.01 hereof, the Collateral Agent shall not be required to exercise
any rights or remedies under any of the Security Documents or give any
consent under any of the Security Documents or enter into any agreement
amending, modifying, supplementing or waiving any provision of any Security
Document unless it shall have been directed to do so (i) in accordance with
Section 3.01(c) hereof or (i) otherwise by the Required Creditors.
(d) The Borrower shall promptly forward to the Collateral Agent copies
of all notices, certificates and other documents required to be delivered by
it to the Trustee pursuant to the terms of the First Mortgage Indenture and
not also required to be delivered by it to the Collateral Agent pursuant to
the terms of the PSNH Mortgage. The only obligation which the Collateral
Agent shall have hereunder with respect to such notices, certificates and
other documents shall be to promptly forward to the Secured Parties copies of
any such notices, certificates or documents.
SECTION 4.02 Rights of Collateral Agent. (a) The Collateral Agent may
execute and effect any of its duties under the Security Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.
(b) Neither the Collateral Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for
any action taken or omitted to be taken in good faith by it or such Person
under or in connection with any Security Document (except for its or such
Person's own gross negligence or willful misconduct), or (ii) responsible in
any manner to any of the Secured Parties for any recitals, statements,
representations or warranties made by the Borrower or any officer thereof
contained in any Loan Document, Security Document or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Collateral Agent under or in connection with, any Loan
Document, Security Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any Security Documents or Loan
Documents, or for any failure of the Borrower to perform its obligations
thereunder. The Collateral Agent shall not be under any obligation to any
Secured Party to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, any Security
Document, or to inspect the properties, books or records of the Borrower.
(c) The Collateral Agent shall be entitled to rely, and shall be fully
protected in relying upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Collateral Agent. The
Collateral Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Security Document (i) if such action
would, in the opinion of the Collateral Agent, be contrary to law or the
terms of this Agreement or the other Security Documents, (ii) if it shall not
receive any such advice or concurrence of the Administrative Agent or the
Required Creditors as it deems appropriate, or (iii) if it shall not first be
indemnified to its satisfaction by the Secured Parties against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Collateral Agent shall in all cases
be fully protected in acting, or in refraining from acting, under any
Security Document in accordance with a request of either Administrative Agent
or the Required Creditors, and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Secured Parties.
(d) If, with respect to a proposed action to be taken by it, the
Collateral Agent shall determine in good faith that the provisions of this
Agreement relating to the functions or responsibilities or discretionary
powers of the Collateral Agent are or may be ambiguous or inconsistent, the
Collateral Agent shall notify the Secured Parties, identifying the proposed
action and the provisions that it considers are or may be ambiguous or
inconsistent, and may decline either to perform such function or
responsibility or to exercise such discretionary power unless it has received
the written confirmation of the Required Creditors that the Required
Creditors concur in the circumstances that the action proposed to be taken by
the Collateral Agent is consistent with the terms of this Agreement or is
otherwise appropriate. Subject to the provisions of Sections 3.01(d) and
5.01 hereof, the Collateral Agent shall be fully protected in acting or
refraining from acting upon the confirmation of the Required Creditors in
this respect, and such confirmation shall be binding upon the Collateral
Agent and the other Secured Parties.
(e) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect knowledge or notice of the occurrence of any
Event of Default unless and until the Collateral Agent has received a Default
Exercise Notice, Acceleration Notice or certificate stating that an Event of
Default or Unmatured Default has occurred from a Secured Party or the
Borrower. The Collateral Agent shall have no obligation whatsoever either
prior to or after receiving such Default Exercise Notice, Acceleration Notice
or certificate to inquire whether an Unmatured Default or an Event of Default
has in fact occurred and shall be entitled to rely conclusively, and shall be
fully protected in so relying on any Default Exercise Notice, Acceleration
Notice or certificate so furnished to it. The Collateral Agent may, but
shall not be obligated to, take action hereunder on the basis of an Event of
Default whether or not the Collateral Agent has received any Default Exercise
Notice, Acceleration Notice or certificate stating that an Event of Default
has occurred. No provision of this Agreement shall require the Collateral
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(f) In determining whether it has been directed to take action or
refrain from taking action by the Required Creditors, the Collateral Agent
shall be entitled to request and to rely upon a certificate signed by the
Administrative Agent (in its capacity as such under each Credit Agreement) as
to any directions from the Majority Lenders under either Credit Agreement.
(g) The Borrower will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel (and any local counsel) and of any experts and
agents, which the Collateral Agent may incur in connection with (i) the
preparation, execution and delivery and the administration of this Agreement
and the other Security Documents, and any proposed modification, amendment,
consent or waiver relating thereto (whether or not executed), (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement
(whether through negotiations, legal proceedings or otherwise) of any of the
rights of the Collateral Agent or the Secured Parties hereunder or under the
other Security Documents or (iv) the failure by the Borrower to perform or
observe any of the provisions hereof or of any of the other Security
Documents.
SECTION 4.03 Lack of Reliance on the Collateral Agent. Each of the
Secured Parties expressly acknowledges that neither the Collateral Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act
by the Collateral Agent hereinafter taken, including, without limitation, any
review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Collateral Agent to any Secured Party.
Each Secured Party represents to the Collateral Agent that it has,
independently and without reliance upon the Collateral Agent or any other
Secured Party, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
the Borrower and made its own decision to enter into this Agreement, the
other Security Documents, and the Loan Documents, as the case may be. Each
Secured Party also represents that it will, independently and without
reliance upon the Collateral Agent or any other Secured Party, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking
or not taking action under this Agreement, the other Security Documents, and
the Loan Documents, as the case may be, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower. Except
for notices, reports and other documents expressly required to be furnished
to the Secured Parties by the Collateral Agent hereunder, the Collateral
Agent shall not have any duty or responsibility to provide any Secured Party
with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of the Borrower
which may come into the possession of the Collateral Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
SECTION 4.04 Indemnification. The Secured Parties (other than the
Collateral Agent) agree to indemnify the Collateral Agent in its capacity as
such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to the aggregate
principal amounts of their respective Secured Claims or, if no such Secured
Claims exist, ratably according to the aggregate amounts of their respective
Commitments, outstanding on the date the activities giving rise to the
Collateral Agent's demand for indemnification occurred, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever
which may at any time (including, without limitation, at any time following
the payment of the Secured Claims) be imposed on, incurred by or asserted
against the Collateral Agent in its capacity as such in any way relating to
or arising out of the Security Documents, or the performance of its duties as
Collateral Agent hereunder or thereunder or any action taken or omitted by
the Collateral Agent in its capacity as such under or in connection with any
of the foregoing; provided that the Secured Parties shall not be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent that any of the foregoing result from the Collateral Agent's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Secured Party (other than the Collateral Agent) agrees to reimburse the
Collateral Agent promptly upon demand, ratably according to the aggregate
principal amount of its respective Secured Claim or, if no such Secured Claim
exists, ratably according to the aggregate amount of its Commitment,
outstanding on the date the activities giving rise to such reimbursement
occurred, of any out-of-pocket expenses (including counsel fees) incurred by
the Collateral Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement and the other Security
Documents to the extent that the Collateral Agent is entitled to
reimbursement pursuant to Section 4.02(g) hereof but is not reimbursed for
such expenses by the Borrower. The agreements in this Section shall survive
the payment of the Secured Claims.
SECTION 4.05 The Collateral Agent in its Individual Capacity. The
Collateral Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower and its
Affiliates as though the Collateral Agent were not the Collateral Agent under
the Security Documents. With respect to loans made or renewed by it, any
note issued to it and any other obligations owing to it by the Borrower, the
Collateral Agent shall have the same rights and powers under the Security
Documents as any Secured Party and may exercise the same as though it were
not the Collateral Agent.
SECTION 4.06 Resignation or Removal of the Collateral Agent. The
Collateral Agent may resign as Collateral Agent upon 30 days' notice to the
Secured Parties and may be removed at any time with or without cause by the
Required Creditors, with any such resignation or removal to become effective
only upon the appointment of a successor Collateral Agent under this Section
4.06. If the Collateral Agent shall resign or be removed as Collateral Agent
under the Security Documents then the Administrative Agent shall (and if no
such successor shall have been appointed within 30 days of the Collateral
Agent's resignation or removal, the Collateral Agent may) appoint a successor
agent for the Secured Parties, whereupon such successor agent shall succeed
to the rights, powers and duties of the "Collateral Agent", and the term
"Collateral Agent" shall mean such successor agent effective upon its
appointment, and the former Collateral Agent's rights, powers and duties as
Collateral Agent shall be terminated, without any other or further act or
deed on the part of such former Collateral Agent (except that the resigning
Collateral Agent shall deliver all Collateral then in its possession to the
successor Collateral Agent) or any of the other Secured Parties. After any
retiring Collateral Agent's resignation or removal hereunder as Collateral
Agent, the provisions of Article IV of this Agreement shall continue to inure
to its benefit as to any actions taken or omitted to be taken by it while it
was Collateral Agent under the Security Documents.
ARTICLE V
MISCELLANEOUS
SECTION 5.01 Amendments; Etc. (a) No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in
writing, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that (i) no such amendment, waiver or consent shall be effective
unless made in accordance with Section 10.01 of the Credit Agreements, and
signed by the Collateral Agent and the Administrative Agent and (ii) no such
amendment, waiver or consent shall, unless in writing and signed by the
Borrower, adversely affect the rights and duties of the Borrower under this
Agreement.
(b) The Administrative Agent agrees to promptly deliver to the
Collateral Agent any amendment, modification or supplement to either Credit
Agreement and related Loan Document, in either case, to which it is a party.
SECTION 5.02 Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopy
or telegraphic communication) and, if to the Borrower, mailed, telegraphed,
telecopied or delivered to it, at its address set forth in Section 10.02 of
each Credit Agreement; if to Chemical, in its capacity as Administrative
Agent or Collateral Agent, mailed, telegraphed, telecopied or delivered to
it, addressed to it at 140 East 45th Street, New York, New York 10017,
Attention: Janet Belden: Loan Servicing. All such notices and other
communications shall, when mailed, telegraphed, telecopied or delivered, be
effective three days after when deposited in the mails, or when delivered to
the telegraph company or sent by telecopier or delivered to it, respectively,
addressed as aforesaid.
SECTION 5.03 Binding Effect. This Agreement and the obligations of the
parties hereto shall be binding upon their respective successors and assigns,
and shall, together with the rights and remedies of the parties hereto, inure
to the benefit of the parties hereto and their respective successors and
assigns.
SECTION 5.04 Transfers. Any Secured Party may at any time assign,
transfer, grant or sell participations in its rights and interests under the
Security Documents, subject, however, to the restrictions, if any, imposed on
the assignment, transfer, grant or sale of participations in the Secured
Claims owing to such Secured Party pursuant to the Loan Document giving rise
to such Secured Claims, whereupon any such transferee shall be deemed to be a
Holder of a Secured Claim, in each instance for all purposes of this
Agreement and entitled to all rights and benefits hereunder to the extent of
the interest so transferred.
SECTION 5.05 Termination. Upon receipt by the Collateral Agent of
(i) notice from the Administrative Agent under each Credit Agreement that
they have received evidence satisfactory to them of the payment in full or
other satisfaction of the A Claims and B Claims, respectively, and
(ii) payment in full or other satisfaction of the Collateral Agent Claims and
the Administrative Agent Claims, this Agreement shall terminate.
SECTION 5.06 Governing Law; Terms. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York except to
the extent that the validity or perfection of any security interest, or
remedies hereunder or under the other Security Documents, in respect of any
particular Collateral are governed by the laws of a jurisdiction other than
the State of New York. Unless otherwise defined herein or in the other
Security Documents, terms used in Article 9 of the Uniform Commercial Code in
the State of New York are used herein as therein defined.
SECTION 5.07 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
instrument.
SECTION 5.08 Separate Liability. The obligations of each Secured Party
under this Agreement shall be several and not joint, and no Secured Party
shall be liable or responsible for the acts of any other Secured Party.
SECTION 5.09 Sharing of Payments. If at any time any Secured Party (a
"Receiving Secured Party") shall have received any payment or distribution
(whether voluntary, involuntary, through the exercise of any right of set-
off, or otherwise, and whether in cash, property or securities) in excess of
the payments or distributions such Receiving Secured Party would have
received through the operation of Section 3.02 hereof (such excess payments
or distributions being referred to as "Excess Payments"), then such Receiving
Secured Party shall hold such Excess Payments in trust for the benefit of the
other Secured Parties, and shall promptly pay over such Excess Payments in
the form received (duly endorsed, if necessary, to the Collateral Agent) to
the Collateral Agent, for distribution by the Collateral Agent pursuant to
Section 3.02 hereof.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
PUBLIC SERVICE COMPANY
OF NEW HAMPSHIRE
By /s/
Title:
CHEMICAL BANK,
as Administrative Agent
under each Credit Agreement and as
Collateral Agent
By /s/
Title:
EXHIBIT 1.01D
FORM OF PSNH MORTGAGE AMENDMENT
[THIS DOCUMENT IS LOCATED AT THE END - AFTER THE $100,000,000
REVOLVING CREDIT AGREEMENT]
EXHIBIT 1.01E
FORM OF PSNH MORTGAGE ASSIGNMENT
REPLACEMENT OF COLLATERAL AGENT,
TOGETHER WITH ASSIGNMENT BY MORTGAGEE,
ASSIGNEE AND SECURED PARTY
Reference is made to that certain Mortgage, Assignment, Security
Agreement and Financing Statement (the "Mortgage"), dated as of May 1, 1991,
given by PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, a New Hampshire
corporation, as mortgagor, assignor and debtor ("GRANTOR"), to BANKERS TRUST
COMPANY, Four Albany Street, New York, New York 10015, as Collateral Agent
(as further described in the Mortgage) and as mortgagee, assignee and secured
party, which Mortgage was recorded on May 16, 1991 in each Registry of Deeds
in New Hampshire as follows:
Registry of Deeds Book Page
Belknap 1170 679
Carroll 1447 537
Cheshire 1367 549
Coos 778 392
Grafton 1909 321
Hillsborough 5255 1185
Merrimack 1859 1005
Rockingham 2876 677
Strafford 1554 1
Sullivan 938 305
WHEREAS, the Collateral Agency Agreement (as described in the Mortgage
and hereafter referred to as the "Existing Collateral Agency Agreement") is
being superseded, amended and restated effective as of April 30, 1996 (the
"Effective Date") by the Amended and Restated Collateral Agency Agreement
(the "Amended and Restated Collateral Agency Agreement") dated as of April 1,
1996, among Grantor and Chemical Bank, as Collateral Agent and Administrative
Agent, and certain other holders of secured claims referred to therein;
WHEREAS, in connection with implementation of the Amended and Restated
Collateral Agency Agreement and other agreements referred to therein Bankers
Trust Company is as of the Effective Date being replaced and removed as
Collateral Agent under the Existing Collateral Agency Agreement by Chemical
Bank as Collateral Agent under the Amended and Restated Collateral Agency
Agreement;
WHEREAS, GRANTOR concurs in the replacement and removal by CHEMICAL BANK
of BANKERS TRUST COMPANY as Collateral Agent and to the assignment of the
Mortgage to CHEMICAL BANK and the succession of CHEMICAL BANK as mortgagee,
assignee and secured party under the Mortgage;
NOW, THEREFORE, notice is hereby given and BANKERS TRUST COMPANY,
GRANTOR and CHEMICAL BANK hereby act and agree as follows:
1. BANKERS TRUST COMPANY gives notice of its replacement and removal
as Collateral Agent under the Existing Collateral Agency Agreement by
CHEMICAL BANK as Collateral Agent under the Amended and Restated Collateral
Agency Agreement, and such replacement and removal shall be effective as of
the Effective Date.
2. As of the Effective Date, BANKERS TRUST COMPANY hereby assigns all
of its right, title and interest as mortgagee, assignee and secured party
under the Mortgage to CHEMICAL BANK as successor Collateral Agent.
3. CHEMICAL BANK acknowledges that it is replacing BANKERS TRUST
COMPANY as Collateral Agent as of the Effective Date.
4. CHEMICAL BANK hereby accepts the assignment to it as successor
Collateral Agent of all of the right, title and interest of BANKERS TRUST
COMPANY as mortgagee, assignee and secured party under the Mortgage.
5. Until further written notice may be recorded, CHEMICAL BANK is
Mortgagee under the Mortgage.
6. The parties hereto hereby agree and acknowledge that the provisions
of Article IV of the Existing Collateral Agency Agreement shall survive the
delivery of the Amended and Restated Collateral Agency Agreement and shall
continue to inure to the benefit of Bankers Trust Company as to any action
taken or omitted to be taken by it while it was Collateral Agent under the
Security Documents (as defined in the Existing Collateral Agency Agreement),
including but not limited to any actions taken or omitted to be taken in
connection with its removal and replacement as Collateral Agent.
7. All persons henceforth concerned with the Mortgage shall direct any
notice, demand, consent, approval, direction, request, agreement, or other
communication to Mortgagee as follows:
CHEMICAL BANK
140 East 45th Street
New York, NY 10017
Attention: Loan Servicing
EXECUTED AND AGREED to as of April 1, 1996.
BANKERS TRUST COMPANY,
as Collateral Agent as aforesaid
[Sign in black ink] By: /s/
Name:
Its:
CHEMICAL BANK,
as successor Collateral Agent
as aforesaid
[Sign in black ink] By: /s/
Name:
Its:
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
[Sign in black ink] By: /s/
Name:
Its:
STATE OF
COUNTY OF
Then personally appeared before me ,
, of Public Service Company of New Hampshire, a New
Hampshire corporation, and severally acknowledged the foregoing instrument to
be his/her free act and deed in said capacity and the free act and deed of
said corporation.
Witness my hand and notarial seal this ______ day of _______________,
1996, at .
[Sign in black ink] /s/
Notary Public in and for the State of
My Commission Expires:
(Notarial Seal)
STATE OF
COUNTY OF
Then personally appeared before me ,
, of BANKERS TRUST COMPANY, a New York banking
corporation, and severally acknowledged the foregoing instrument to be
his/her free act and deed in said capacity and the free act and deed of said
corporation.
Witness my hand and notarial seal this ______ day of _______________,
1996, at .
[Sign in black ink] /s/
Notary Public in and for the State of
My Commission Expires:
(Notarial Seal)
STATE OF
COUNTY OF
Then personally appeared before me ,
, of CHEMICAL BANK, a New York banking corporation, and
severally acknowledged the foregoing instrument to be his/her free act and
deed in said capacity and the free act and deed of said corporation.
Witness my hand and notarial seal this ______ day of _______________,
1996, at .
[Sign in black ink] /s/
Notary Public in and for the State of
My Commission Expires:
(Notarial Seal)
EXHIBIT 3.01A
FORM OF NOTICE OF CONTRACT BORROWING
[Date]
Chemical Bank, as Agent for
the Lenders referred to below,
140 East 45th Street
New York, New York 10017
Attention:
Ladies and Gentlemen:
The undersigned, PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (the
"Borrower"), refers to the Amended and Restated Revolving Credit Agreement,
dated as of __________ __, 1996 (the "Revolving Credit Agreement"), among the
Borrower, the Lenders parties thereto, and Chemical Bank, as Administrative
Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Revolving Credit Agreement.
The Borrower hereby gives you notice pursuant to Section 3.01 of the
Revolving Credit Agreement that it requests a Contract Borrowing under the
Revolving Credit Agreement, and in that connection sets forth below the terms
on which such Borrowing is requested to be made:
(A) Date of Contract Borrowing
(which is a Business Day) ________________________
(B) Principal Amount of
Contract Borrowing(1) _________________________
(C) Interest rate basis(2) _________________________
(D) Interest Period and the last
day thereof(3) _________________________
The undersigned hereby certifies that the following statements are true
on the date hereof and will be true on the date of the Borrowing:
(A) the representations and warranties contained in Section 6.01
of the Revolving Credit Agreement, and in Section 1.02 of the PSNH
Mortgage are correct before and after giving effect to the Borrowing and
to the application of the proceeds therefrom, as though made on and as
of such date;
(B) no Event of Default or Unmatured Default has occurred and is
continuing, or would result from the Borrowing or from the application
of the proceeds thereof; and
(C) the Debt Limit in effect on such date shall not be exceeded on
such date by the making of such Advance or otherwise.
Very truly yours,
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
[By /s/
Title:]
(1)Not less than $10,000,000 and in integral multiples of 1,000,000.
(2)Eurodollar Advance or Base Rate Advance.
(3)Which shall be subject to the definition of "Interest Period" and end not
later than the Termination Date.
EXHIBIT 3.03A-1
FORM OF COMPETITIVE BID REQUEST
(Eurodollar Competitive Borrowing)
[Date](1)
Chemical Bank, as Administrative Agent, for the Lenders parties to the Credit
Agreement referred to below
140 East 45th Street
New York, New York 10017
Attention: ____________________
Ladies & Gentlemen:
The undersigned, PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (the
"Borrower"), refers to the Amended and Restated Revolving Credit Agreement,
dated as of __________ __, 1996 (the "Revolving Credit Agreement"), among the
Borrower, the Lenders named therein, and Chemical Bank, as Administrative
Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Revolving Credit Agreement.
The Borrower hereby gives you notice pursuant to Section 3.03(b)(i) of the
Revolving Credit Agreement that it requests a Competitive Borrowing to
consist of Eurodollar Competitive Advances under the Revolving Credit
Agreement, and in that connection sets forth below the terms on which such
Competitive Borrowing is requested to be made:
(i) Lenders selected to
make Competitive Bids
(no more than six Lenders)
(ii) Date of Competitive
Borrowing (which is a Business Day)
(iii) Aggregate Principal Amount
of Eurodollar Competitive
Advances
(iv) Interest Period for Eurodollar
Competitive Advances and the
last day thereof
Upon acceptance of any or all of the Eurodollar Rate Advances offered by
the Lenders in response to this request, the Borrower shall be deemed to have
represented and warranted that the conditions precedent to each Advance
specified in Section 5.02(a) of the Revolving Credit Agreement have been
satisfied.
Very truly yours,
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
[By________________________________
Title:]
(1)Not later than four Business Days prior to date of proposed Competitive
Borrowing to consist of Eurodollar Competitive Advances.
(2)Not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
(3)Which shall be subject to the definition of "Interest Period" and end not
later than the Termination Date.
EXHIBIT 3.03A-2
FORM OF CONFIRMATION OF COMPETITIVE BORROWING
(Fixed Rate Competitive Advance)
[Date](1)
Chemical Bank, as Administrative Agent, for the Lenders parties to the Credit
Agreement referred to below
140 East 45th Street
New York, New York 10017
Attention: ____________________
Ladies and Gentlemen:
The undersigned, PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (the
"Borrower"), refers to the Amended and Restated Revolving Credit Agreement,
dated as of __________ __, 1996 (the "Revolving Credit Agreement"), among the
Borrower, the Lenders named therein, and Chemical Bank, as Administrative
Agent. Capitalized terms used herein and not defined shall have the meanings
assigned to such terms in the Revolving Credit Agreement. The Borrower
hereby confirms that pursuant to Section 3.03(b) (i) of the Revolving Credit
Agreement it has requested a Competitive Borrowing to consist of Fixed Rate
Competitive Advances under the Revolving Credit Agreement, on the following
terms:
(i) Lenders selected to make
Competitive Bids
(no more than six Lenders)
(ii) Date of Competitive Borrowing
(which is a Business Day)
(iii) Aggregate Principal Amount of
Fixed Rate Advances(2)
(iv) Interest Period for Fixed
Rate Competitive Advances
and the last day thereof(3)
The undersigned further confirms that it has accepted the following
Fixed Rate Competitive Bids on the terms set forth below:
Lender _____________ Lender _______________
Principal Principal
Amount _____________(4) Amount _______________(4)
Fixed Rate _____________ Fixed Rate _______________
Lender _____________ Lender _______________
Principal Principal
Amount _____________(4) Amount _______________(4)
Fixed Rate _____________ Fixed Rate _______________
Lender _____________ Lender _______________
Principal Principal
Amount _____________(4) Amount _______________(4)
Fixed Rate _____________ Fixed Rate _______________
The undersigned hereby certifies that the following statements are true
on the date hereof:
(A) the representations and warranties contained in Section 6.01
of the Revolving Credit Agreement, in [list other Sections from other
Loan Documents] are correct, before and after giving effect to the
Borrowing and to the application of the proceeds therefrom, as though
made on and as of such date;
(B) no Event of Default or Unmatured Default has occurred and is
continuing, or would result from the Borrowing or from the application
of the proceeds thereof; and
(C) the Debt Limit in effect on such date shall not be exceeded by
the making of such Advance or otherwise.
Very truly yours,
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
[By /s/
Title:]
(1)The day of the Competitive Borrowing.
(2)Not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
(3)Which shall be subject to the definition of "Interest Period" and endnot
later than the Termination Date.
(4)Not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
EXHIBIT 3.03B
FORM OF NOTICE OF COMPETITIVE BID REQUEST
(Eurodollar Competitive Advance)
[Name of Lender]
[Address]
Attention: [Date]
Ladies and Gentlemen:
Reference is made to the Amended and Restated Revolving Credit
Agreement, dated as of __________ __, 1996 (the "Revolving Credit
Agreement"), among PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (the "Borrower"),
the Lenders named therein, and Chemical Bank, as Administrative Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Revolving Credit Agreement. The
Borrower made a Competitive Bid Request on , 19 , pursuant to
Section 3.03(b)(i) of the Revolving Credit Agreement, and in that connection
you are invited to submit a Competitive Bid by [Date]/[Time].(1) Your
Competitive Bid must comply with Section 3.03(b)(ii) of the Revolving Credit
Agreement and the terms set forth below on which the Competitive Bid Request
was made:
(i) Date of Competitive Borrowing
(which is a Business Day) _________________________
(ii) Aggregate amount of Eurodollar
Competitive Advances _________________________
(iii) Interest Period for Eurodollar
Competitive Advances and the last
day thereof _________________________
Very truly yours,
CHEMICAL BANK,
as Administrative Agent
By /s/
Title:
(1)The Competitive Bid must be received by the Administrative Agent in the
case of a proposed Competitive Borrowing to consist of Eurodollar Competitive
Advances, by telex or telecopier not later tha 9:30 a.m. (New York City
time), three Business Days prior to a proposed Competitive Borrowing.
EXHIBIT 3.03C-1
FORM OF COMPETITIVE BID
(Eurodollar Competitive Advance)
[Date]
Chemical Bank, as Administrative
Agent, for the Lenders parties to
the Credit Agreement referred to
below
140 East 45th Street
New York, New York 10017
Attention: ____________________
Ladies & Gentlemen:
The undersigned, [Name of Lender], refers to the Amended and Restated
Revolving Credit Agreement, dated as of __________ __, 1996 (the "Revolving
Credit Agreement"), among PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (the
"Borrower"), the Lenders named therein, and Chemical Bank, as Administrative
Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Revolving Credit Agreement.
The undersigned hereby makes a Competitive Bid pursuant to Section
3.03(b)(ii) of the Revolving Credit Agreement, in response to the Competitive
Bid Request made by the Borrower on _________, 19 , and in that connection
sets forth below the terms on which such Competitive Bid is made:
(i) Principal Amount of
Eurodollar Competitive
Advance ___________________
(ii) Competitive Margin [%]/[+/- %]
(iii) Interest Period for
Eurodollar Competitive Advance
and last day thereof ___________________
The undersigned hereby confirms that it is prepared to extend credit to
the Borrower upon acceptance by the Borrower of this bid in accordance with
Section 3.04 of the Revolving Credit Agreement.
Very truly yours,
[NAME OF LENDER]
By /s/
Title:
(1)Three Business Days prior to a proposed Competitive Borrowing to consist
of Eurodollar Rate Advances.
(2)Not less than $5,000,000 or greater than the aggregate amont of the
proposed Competitive Borrowing and in an integral multiple of $1,000,000.
Multiplle bids will be accepted by the Administative Agent.
EXHIBIT 3.03C-2
FORM OF CONFIRMATION OF COMPETITIVE BID
(Fixed Rate Competitive Advance)
[Date](1)
Chemical Bank, as Administrative
Agent, for the Lenders parties to
the Credit Agreement referred to
below
140 East 45th Street
New York, New York 10017
Attention: ____________________
Ladies and Gentlemen:
The undersigned, [Name of Lender], refers to the Amended and Restated
Revolving Credit Agreement, dated as of __________ __, 1996 (the "Revolving
Credit Agreement"), among PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, as
Borrower, the Lenders named therein, and Chemical Bank, as Administrative
Agent. Capitalized terms used herein and not defined shall have the meanings
assigned to such terms in the Revolving Credit Agreement. The undersigned
hereby confirms its Competitive Bid made pursuant to Section 3.03(b)(ii) of
the Revolving Credit Agreement in response to the Competitive Bid Request
made by the Borrower on ______, 19 , and in that connection sets forth below
the terms on which such Competitive Bid was made:
(i) Principal Amount of
Fixed Rate Competitive
Advance(2) _________________
(ii) Fixed Rate applicable to Fixed
Rate Competitive Advance(3) _________________%
Very truly yours,
[Name of Lender]
By /s/
Title: [Responsible Officer]
(1)The day of a proposed Competitive Borrowing to consist of Fixed Rate
Advances.
(2)Not less than $5,000,000 or an integral multiple of $1,000,000 in excess
therof.
(3)To be determined in accordance with the definition of "Fixed Rate
Competitive Advance" in Section 1.01 of the Revolving Credit Agreement.
Please add additional lines as necessary to reflect any Fixed Rate
Competitive Advances which are offered at more than one Fixed Rate.
EXHIBIT 3.03D
FORM OF COMPETITIVE BID LETTER
(Eurodollar Competitive Advance)
[Date](1)
Chemical Bank, as Administrative
Agent, for the Lenders parties to
the Credit Agreement referred to
below
140 East 45th Street
New York, New York 10017
Attention: ____________________
Ladies and Gentlemen:
We refer to the Amended and Restated Revolving Credit Agreement, dated
as of __________ __, 1996 (the "Revolving Credit Agreement"), among PUBLIC
SERVICE COMPANY OF NEW HAMPSHIRE, as Borrower, the Lenders named therein, and
Chemical Bank, as Administrative Agent.
We have received a summary of bids in connection with our Competitive
Bid Request dated ___________, 19__ and in accordance with Section 3.03(iv)
of the Revolving Credit Agreement, we hereby accept the following bids for
maturity on [date]:
Principal Amount Competitive Margin Lender
$ [%]/[+/-. %]
$
We hereby reject the following bids:
Principal Amount Competitive Margin Lender
$ [%]/[+/-. %]
$
The $ should be deposited in Chemical Bank account number [ ]
on [date] [or] [wire transferred to [Name of Bank] account number [ ]
[other wire instructions] on [date]].
Very truly yours,
PUBLIC SERVICE COMPANY
OF NEW HAMPSHIRE
[By /s/
Title:]
(1)In the case of a Competitive Borrowing to consist of Eurodollar
Competitive Advances, by not later than three Business Days before a proposed
Competitive Borrowing.
EXHIBIT 5.01A
[Form of Opinion of Jeffrey C. Miller,
Assistant General Counsel of NUSCO]
[Closing Date]
To each of the Banks party to the Credit
Agreements referred to below, to the
Administrative Agent as referred to
below and to the Collateral Agent (as
defined in the Credit Agreements)
Public Service Company of New Hampshire
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 5.01(a)(xiv)(A) of
each of 364-Day Revolving Credit Agreement and the Amended and Restated
Revolving Credit Agreement, each dated as of April 1, 1996 (collectively, the
"Credit Agreements"; individually, a "Credit Agreement"), among Public
Service Company of New Hampshire (the "Borrower"), the Banks named therein
and certain lenders from time to time party thereto, and Chemical Bank, as
Administrative Agent for the Lenders. Unless otherwise defined herein, terms
defined in the Credit Agreements are used herein as therein defined.
I am the Assistant General Counsel of NUSCO and have assisted the
Borrower in the negotiation, execution and delivery of the Credit Agreements.
In that connection, I have examined:
(a) The Credit Agreements.
(b) The articles of incorporation of the Borrower and all amendments
thereto (the "Charter") and the by-laws of the Borrower and all amendments
thereto (the "By-laws"), in each case as in effect on the date hereof.
(c) The Security Documents.
(d) The other documents furnished by the Borrower pursuant to Sections
5.01 of each Credit Agreement.
In addition, I have examined the originals, or copies certified to my
satisfaction, of such other corporate records of the Borrower, certificates
of public officials and of officers of the Borrower, and agreements,
instruments and other documents, as I have deemed necessary as a basis for
the opinions expressed below. In my examination of such agreements,
instruments and documents, I have assumed the genuineness of all signatures
(other than those of the Borrower), the authenticity of all agreements,
instruments and documents submitted to me as originals, and the conformity to
original agreements, instruments and documents of all agreements, instruments
and documents submitted to me as certified, conformed or photostatic copies
and the authenticity of the originals of such copies. As to questions of
fact material to such opinions, I have assumed without verification and
relied upon the accuracy of the representations as to factual matters set
forth in the Credit Agreements and each other Loan Document and in
certificates of the Borrower or its officers or of public officials. Nothing
has come to my attention, however, calling into question the accuracy of such
representations.
I have assumed the due execution and delivery, pursuant to due
authorization, by the Banks, the Collateral Agent and the Administrative
Agent of the Credit Agreements and each other Loan Document to which they are
parties.
I am qualified to practice law in the State of New York and for purposes
of this opinion I do not purport to be expert on any laws other than the laws
of the State of New York, including any political subdivision thereof ("New
York") and the Federal laws of the United States.
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion:
1. The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of New Hampshire, and is duly
qualified to do business in, and is in good standing in, all other
jurisdictions where the nature of its business or the nature of property
owned or used by it makes such qualification necessary.
2. The execution, delivery and performance by the Borrower of
each Loan Document (including the PSNH Mortgage Amendment and PSNH
Mortgage Assignment), the Rate Agreement and each Significant Contract
are within the Borrower's corporate powers, and have been duly
authorized by all necessary corporate action, and, in all cases, do not
and will not contravene (i) the Borrower's Charter or By-laws or (ii)
any New York or Federal law or New York or Federal legal restriction or,
to the best of my knowledge, contractual restriction contained in any
material agreement binding on or affecting the Borrower; and such
execution, delivery and performance do not and will not result in or
require the creation of any Lien (other than pursuant to the Credit
Agreements or the Security Documents) upon or with respect to any of the
Borrower's properties. Each Loan Document has been duly executed and
delivered by the Borrower.
3. Each Loan Document (including the PSNH Mortgage Amendment and
PSNH Mortgage Assignment) to which the Borrower is a party (a) is a
legal, valid and binding obligation of the Borrower enforceable against
the Borrower in accordance with its respective terms (to the extent such
enforceability is a matter of New York law) and (b) is in full force and
effect as to the Borrower.
4. To the best of my knowledge, except as set forth in the
Disclosure Documents, there is no material pending or threatened action
or proceeding before any court, governmental agency or arbitrator, (a)
which affects or purports to affect the legality, validity or
enforceability of the Loan Documents, the Rate Agreement or any
Significant Contract, or (b) as to which the Borrower or any of its
subsidiaries is a party or of which any of their property is the subject
and as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would materially
adversely affect the financial condition, properties, prospects or
operations of the Borrower and its subsidiaries as a whole.
5. No Governmental Approval of the type referred to in clause (i)
of the definition thereof pursuant to the Public Utility Holding Company
Act of 1935 is required.
The opinions set forth above are subject to the following qualifications:
(a) With respect to my opinion in paragraph 1 above, insofar as
such opinion relates to the laws of the States of Maine and Vermont, I
have relied on the opinions of Drummond Woodsum & MacMahon and Zuccaro,
Willis & Bent, respectively, delivered to you. With regard to all
matters of New Hampshire law contained herein, I have relied upon the
opinions of Robert A. Bersak, Assistant General Counsel of the Borrower,
and Sulloway & Hollis dated the date hereof.
(b) My opinions in paragraph 3 above (i) are subject to the effect
of any applicable bankruptcy, insolvency, reorganization, moratorium, or
similar law affecting creditors' rights generally, and general
principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith, and fair dealing (regardless of
whether considered in a proceeding in equity or at law) and (ii) assume
the binding effect of all documents referred to therein on all parties
thereto other than the Borrower.
(c) I note further that, in addition to the application of
equitable principles described above, courts have imposed an obligation
on contracting parties to act reasonably and in good faith in the
exercise of their contractual rights and remedies, and may also apply
public policy considerations in limiting the right of parties seeking to
obtain indemnification against violations of securities and similar laws
and under circumstances where the conduct of such parties in the
circumstances in question is determined to have constituted negligence.
(d) With respect to my opinion in paragraph 3 above, I express no
opinion herein as to (i) Section 10.05 of each Credit Agreement, (ii)
the enforceability of provisions purporting to grant to a party
conclusive rights of determination, (iii) the availability of specific
performance or other equitable remedies and (iv) the enforceability of
waivers by parties of their respective rights and remedies under law.
I am aware that King & Spalding may rely upon the opinions set forth
herein in rendering their opinions furnished pursuant to Section
5.01(a)(xiv)(F), of each Credit Agreement, and I hereby authorize such
reliance.
Very truly yours,
EXHIBIT 5.01B
[Form of Opinion of Robert A. Bersak,
Assistant General Counsel of the Borrower]
[Closing Date]
To each of the Banks party to the Credit
Agreements referred to below, to the
Administrative Agent as referred to below
and to the Collateral Agent (as defined in
the Credit Agreements)
Public Service Company of New Hampshire
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 5.01(a)(xiv)(B) of
each of the 364-Day Revolving Credit Agreement and the Amended and Restated
Revolving Credit Agreement, each dated as of April 1, 1996 (collectively, the
"Credit Agreements"), among Public Service Company of New Hampshire (the
"Borrower"), the Banks named therein and certain lenders from time to time
parties thereto, and Chemical Bank, as Administrative Agent for the Lenders.
Unless otherwise defined herein, terms defined in a Credit Agreement are used
herein as therein defined.
I am Assistant General Counsel of the Borrower and am responsible for
obtaining and maintaining all Governmental Approvals of the type referred to
in the definition of "Governmental Approvals" contained in the Credit
Agreements.
In connection with rendering this opinion I have examined:
(a) The Credit Agreements.
(b) The articles of incorporation of the Borrower and all amendments
thereto (the "Charter") and the by-laws of the Borrower and all amendments
thereto (the "By-laws"), in each case as in effect on the date hereof.
(c) The Security Documents.
(d) The other documents furnished by the Borrower pursuant to Sections
5.01 of each Credit Agreement.
In addition, I have examined the originals, or copies certified to my
satisfaction, of such other corporate records of the Borrower, certificates
of public officials and of officers of the Borrower, and agreements,
instruments and other documents, as I have deemed necessary as a basis for
the opinions expressed below. In my examination of such agreements,
instruments and documents, I have assumed the genuineness of all signatures
(other than those of the Borrower), the authenticity of all agreements,
instruments and documents submitted to me as originals, and the conformity to
original agreements, instruments and documents of all agreements, instruments
and documents submitted to me as certified, conformed or photostatic copies
and the authenticity of the originals of such copies. As to questions of
fact material to such opinions, I have assumed without verification and
relied upon the accuracy of the representations as to factual matters set
forth in the Credit Agreements and each other Loan Document and in
certificates of the Borrower or its officers or of public officials. Nothing
has come to my attention, however, calling into question the accuracy of such
representations.
I have assumed the due execution and delivery, pursuant to due
authorization, by the Banks, the Collateral Agent and the Administrative
Agent of the Credit Agreements and each other Loan Document to which they are
parties.
I am qualified to practice law in the State of New Hampshire and for
purposes of this opinion I do not purport to be expert on any laws other than
the laws of the State of New Hampshire, including any political subdivision
thereof ("New Hampshire") and the Federal laws of the United States.
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion:
1. The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of New Hampshire, and is duly
qualified to do business in, and is in good standing in, all other
jurisdictions where the nature of its business or the nature of property
owned or used by it makes such qualification necessary.
2. The execution, delivery and performance by the Borrower of
each Loan Document (including the PSNH Mortgage Amendment and PSNH
Mortgage Assignment), the Rate Agreement and each Significant Contract
are within the Borrower's corporate powers, and have been duly
authorized by all necessary corporate action, and, in all cases, do not
and will not contravene (i) the Borrower's Charter or By-laws or (ii)
any New Hampshire law or New Hampshire legal restriction or, to the
best of my knowledge, contractual restriction contained in any material
agreement binding on or affecting the Borrower; and such execution,
delivery and performance do not and will not result in or require the
creation of any Lien (other than pursuant to the Credit Agreements or
the Security Documents) upon or with respect to any of the Borrower's
properties. Each Loan Document has been duly executed and delivered by
the Borrower.
3. Each Loan Document (including the PSNH Mortgage Amendment and
PSNH Mortgage Assignment), the Rate Agreement and each Significant
Contract (a) is a legal, valid and binding obligation of the Borrower
enforceable in accordance with its respective terms (to the extent such
enforcement is a matter of New Hampshire law) and (b) is in full force
and effect as to the Borrower.
4. To the best of my knowledge, except as set forth in the
Disclosure Documents, there is no material pending or threatened action
or proceeding before any court, governmental agency or arbitrator, (a)
which affects or purports to affect the legality, validity or
enforceability of the Loan Documents, the Rate Agreement or any
Significant Contract, or (b) as to which the Borrower or any of its
subsidiaries is a party or of which any of their property is the subject
and as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would materially
adversely affect the financial condition, properties, prospects or
operations of the Borrower and its subsidiaries as a whole.
5. None of the Lenders, the Administrative Agent or the
Collateral Agent is required to qualify to do business in New Hampshire,
or to comply with the requirement of any foreign lender statute in New
Hampshire, by virtue solely of the execution, delivery, performance or
enforcement of the Loan Documents or as a condition or requirement to
avail itself of the remedies provided thereby; nor will any such Person
be subject to taxation in New Hampshire solely by virtue of any such
circumstance.
6. The Borrower has obtained all Governmental Approvals referred
to in the definition of "Governmental Approvals" contained in the Credit
Agreements (except for those referred to in the succeeding sentence)
each of which is in full force and effect and all applicable periods of
time for review, rehearing or appeal with respect thereto have expired.
The Borrower has not obtained those "Governmental Approvals" of the type
referred to in clause (iii) of the definition thereof not yet required
but which are obtainable in the ordinary course of business as and when
required and those the absence of which would not materially adversely
affect the financial condition, properties, prospects or operations of
the Borrower as a whole.
The opinions set forth above are subject to the following
qualifications:
(a) With respect to my opinion in paragraph 1 above, insofar as
such opinion relates to the laws of the States of Maine and Vermont, I
have relied on the opinions of Drummond Woodsum & MacMahon and Zuccaro,
Willis & Bent, respectively, delivered to you.
(b) My opinions in paragraph 3 above (i) are subject to the effect
of any applicable bankruptcy, insolvency, reorganization, moratorium, or
similar law affecting creditors' rights generally, to the effect of
general principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith, and fair dealing (regardless of
whether considered in a proceeding in equity or at law) and (ii) assume
the binding effect of all documents referred to therein on all parties
thereto other than the Borrower.
(c) I note further that, in addition to the application of
equitable principles described above, courts have imposed an obligation
on contracting parties to act reasonably and in good faith in the
exercise of their contractual rights and remedies, and may also apply
public policy considerations in limiting the right of parties seeking to
obtain indemnification against violations of Securities and similar laws
or under circumstances where the conduct of such parties in the
circumstances in question is determined to have constituted negligence.
(d) With respect to my opinion in paragraph 3 above, I express no
opinion herein as to (i) Section 10.05 of each Credit Agreement, (ii)
the enforceability of provisions purporting to grant to a party
conclusive rights of determination, (iii) the availability of specific
performance or other equitable remedies and (iv) the enforceability of
waivers by parties of their respective rights and remedies under law.
I am aware that King & Spalding and Jeffrey C. Miller may rely upon the
opinions set forth herein in rendering their opinions furnished pursuant to
Sections 5.01(a)(xiv)(F) and 5.01(a)(xiv)(A), respectively, of each Credit
Agreement, and I hereby authorize such reliance.
Very truly yours,
EXHIBIT 5.01C
[Form of Opinion of Sulloway & Hollis]
[Closing Date]
To each of the Banks party to the Credit
Agreements referred to below, to the
Administrative Agent as referred to
below and to the Collateral Agent (as
defined in the Credit Agreements)
Public Service Company of New Hampshire
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 5.01(a)(xiv)(C) of
each of 364-Day Revolving Credit Agreement and the Amended and Restated
Revolving Credit Agreement, each dated as of April 1, 1996 (collectively, the
"Credit Agreements"; individually, a "Credit Agreement"), among Public
Service Company of New Hampshire (the "Borrower"), the Banks named therein
and certain lenders from time to time parties thereto, and Chemical Bank, as
Administrative Agent for the Lenders. Unless otherwise defined herein, terms
defined in the Credit Agreements are used herein as therein defined.
We have acted as special New Hampshire counsel to the Borrower in
connection with the Credit Agreements and the preparation and recording of
the PSNH Mortgage Assignment and the PSNH Mortgage Amendment.
In that connection, we have examined:
(a) The Credit Agreements.
(b) The Security Documents.
In addition, we have examined the originals, or copies certified to our
satisfaction, of such other corporate records of the Borrower, certificates
of public officials and of officers of the Borrower, and agreements,
instruments and other documents, as we have deemed necessary as a basis for
the opinions expressed below. In our examination of such agreements,
instruments and documents, we have assumed the genuineness of all signatures
(other than those of the Borrower), the authenticity of all agreements,
instruments and documents submitted to us as originals, and the conformity to
original agreements, instruments and documents of all agreements, instruments
and documents submitted to us as certified, conformed or photostatic copies
and the authenticity of the originals of such copies. As to questions of
fact material to such opinions, we have assumed without verification and
relied upon the accuracy of the representations as to factual matters set
forth in the Credit Agreements and each other Loan Document and in
certificates of the Borrower or its officers or of public officials. Nothing
has come to our attention, however, calling into question the accuracy of
such representations.
We are also assuming for purposes of this opinion that :
(i) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Hampshire.
(ii) Each of the Loan Documents as defined in each Credit Agreement
(including the PSNH Mortgage Assignment and PSNH Mortgage
Amendment) has been duly authorized, executed and delivered by all
parties thereto.
(iii) All approvals or other actions by any governmental authority
necessary for the issuance of the Notes, the execution,
delivery and performance by the Borrower of the Loan
Documents, and the grant and perfection of any security
interest, lien or mortgage contemplated by the Security
Documents have been obtained, are final and not subject to
appeal and remain in full force and effect on the Closing
Date. With regard only to the PSNH Mortgage and the
"memoranda or notices" referred to in paragraph 2 below, this
assumption is limited to approvals or other actions by any
governmental authority required by reason of any state or
federal law regulating public utilities or any state or
federal securities law.
(iv) The Term Credit Agreement (as defined in the Existing Collateral
Agency Agreement) has previously terminated; and the Borrower has
given the notice required under Section 2.03(a) of the Existing
Revolving Credit Agreement to terminate the Available Commitments
of all Lenders under that Agreement effective as of the Closing
Date.
We are qualified to practice law in the State of New Hampshire and for
purposes of this opinion we do not purport to be experts on any laws other
than the laws of the State of New Hampshire, including any political
subdivision thereof ("New Hampshire").
Based upon the foregoing and upon such investigation as we have deemed
necessary, we are of the following opinion:
1. The property described as the "Premises" in the PSNH Mortgage
constitutes all of the utility franchises held by the Borrower and all
of the Borrower's principal properties and substantially all of the
other property owned by the Borrower and used by the Borrower in its
business in New Hampshire (other than exceptions explicitly stated in
the PSNH Mortgage); and the manner in which such property is described
in the granting clauses of the PSNH Mortgage is adequate for the purpose
of creating the Lien on such property set forth in paragraph 2
following.
2. The PSNH Mortgage constitutes a valid second Lien in favor of
the Collateral Agent (the "PSNH Mortgage Lien") on the "Premises" (as
defined in the PSNH Mortgage) as security for the payment of the
"Obligations" (as defined in the PSNH Mortgage) subject only to
Permitted Encumbrances (as defined in the PSNH Mortgage) that may be
entitled to priority as a matter of law, and under existing law will,
subject only to such Permitted Encumbrances, constitute a valid Lien at
the time of acquisition on all properties and assets of the Borrower
acquired after the date hereof located within New Hampshire and required
by the PSNH Mortgage to be subjected to the Lien thereof (it being
understood, however, that under certain limited circumstances the PSNH
Mortgage Lien on real property in New Hampshire and personal property
located thereon could be subordinated to a Lien in favor of the State of
New Hampshire pursuant to the New Hampshire Revised Statutes Annotated
147-B: 10-b, as amended, for expenses incurred in containing or removing
hazardous waste or materials and any necessary mitigation of damages
with respect thereto); no Liens of the type referred to in the
immediately preceding parenthetical have been recorded, or, to the best
of our knowledge, threatened to be recorded by the State of New
Hampshire against any of the Borrower's properties; and the PSNH
Mortgage (including the acknowledgment) and any and all memoranda or
notices necessary to protect the priority of the PSNH Mortgage Lien are
each in appropriate form for recording in New Hampshire and have been
duly recorded or filed in all places within New Hampshire in which such
recording or filing is required to protect the priority of the PSNH
Mortgage Lien, resulting in the perfection of the PSNH Mortgage Lien;
under existing New Hampshire law no other or further or subsequent
filing, refiling, recording, re-recording, registration or re-
registration of the PSNH Mortgage or any other instrument will be
necessary to continue the PSNH Mortgage Lien; and all taxes and fees
required to be paid with respect to the execution, delivery and
recording of the PSNH Mortgage have been paid.
3. Each Loan Document (including the PSNH Mortgage Amendment and
PSNH Mortgage Assignment) to which the Borrower is a party is a legal,
valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its respective terms (to the extent such
enforceability is a matter of New Hampshire law).
4. In any action or proceeding arising out of or relating to the
Credit Agreements, the Notes or the Collateral Agency Agreement in any
court in New Hampshire, such court would recognize and give effect to
the provisions of the Credit Agreements, the Notes and the Collateral
Agency Agreement wherein the parties thereto agreed that the Credit
Agreements, the Notes and the Collateral Agency Agreement shall be
governed by, and construed in accordance with, the laws of the State of
New York. However, if a court were to hold that any of the Credit
Agreements, the Notes and the Collateral Agency Agreement is governed
by, and to be construed in accordance with, the laws of New Hampshire,
each of the Credit Agreements, the Notes and the Collateral Agency
Agreement would, under the laws of New Hampshire, constitute a legal,
valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms.
The opinions set forth above are subject to the following qualifications:
(a) Our opinions in paragraphs 3 and 4 above are subject to the
effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally.
(b) Our opinions in paragraphs 3 and 4 above are subject to the
effect of general principles of equity, including (without limitation)
concepts of materiality, reasonableness, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at law).
(c) We note further that, in addition to the application of
equitable principles described above, courts have imposed an obligation
on contracting parties to act reasonably and in good faith in the
exercise of their contractual rights and remedies, and may also apply
public policy considerations in limiting the right of parties seeking to
obtain indemnification against violations of securities and similar laws
and under circumstances where the conduct of such parties in the
circumstances in question is determined to have constituted negligence.
(d) Our opinion in paragraph 3 above, with respect to the PSNH
Mortgage is subject to the qualification that certain provisions of the
PSNH Mortgage are or may be unenforceable in whole or in part under the
law of New Hampshire, but the inclusion of such provisions does not
affect the validity of the Mortgage, and the Mortgage contains adequate
remedies, if properly invoked, for the practical realization upon the
security afforded thereby. We point out, however, that under the law of
New Hampshire a purchaser at foreclosure sale would require the consent
and approval of the New Hampshire Public Utilities Commission to engage
in business as an electric public utility in the various areas in New
Hampshire in which the Borrower does such business.
(e) With respect to our opinions in paragraph 3 and 4 above, we
express no opinion therein as to (i) Section 10.05 of each Credit
Agreement, (i) the enforceability of provisions purporting to grant to a
party conclusive rights of determination, (i) the availability of
specific performance or other equitable remedies and (i) the
enforceability of waivers by parties of their respective rights and
remedies under law.
(f) Insofar as our opinions given above relate to the creation,
perfection or enforcement of liens on personal property of the Borrower,
they are given only to the extent that liens on such personal property
may be created, perfected or enforced under Article 9 of the Uniform
Commercial Code as presently in effect in New Hampshire.
We are aware that Jeffrey C. Miller, Robert A. Bersak and King &
Spalding may rely upon the opinions set forth herein in rendering their
opinions furnished pursuant to Sections 5.01(a)(xiv)(A), 5.01(a)(xiv)(B) and
5.01(a)(xiv)(F), respectively, of each Credit Agreement, and we hereby
authorize such reliance.
Very truly yours,
EXHIBIT 5.01D
[Form of Opinion of Drummond
Woodsum & MacMahon]
[Closing Date]
To each of the Banks party to the Credit
Agreements referred to below, to the
Administrative Agent as referred to
below and to the Collateral Agent (as
defined in the Credit Agreements)
Public Service Company of New Hampshire
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 5.01(a)(xiv)(D) of
each of the 364-Day Revolving Credit Agreement and the Amended and Restated
Revolving Credit Agreement, each dated as of April 1, 1996 (collectively, the
"Credit Agreements"; individually, a "Credit Agreement"), among Public
Service Company of New Hampshire (the "Borrower"), the Banks named therein
and certain lenders from time to time parties thereto, and Chemical Bank, as
Administrative Agent for the Lenders. Unless otherwise defined herein, terms
defined in a Credit Agreement are used herein as therein defined.
We have acted as special Maine counsel for the Borrower in connection
with the transactions contemplated under the Credit Agreements.
In connection with this opinion, we have examined the Credit Agreements,
a certificate of the Secretary of State of Maine, dated April 8, 1996,
attesting to the authorization to do business and good standing of the
Borrower in Maine, the originals or copies certified to our satisfaction of
such corporate records of the Borrower, such certificates of public officials
and officers of the Borrower, and such other agreements, instruments and
documents as we have deemed necessary as a basis for the opinions expressed
below. In our examination of such agreements, instruments and documents, we
have assumed the genuineness of all signatures and the due authorization of
all signatures, the authenticity of all agreements, instruments and documents
submitted to us as originals, and the conformity to original agreements,
instruments and documents of all agreements, instruments and documents
submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such copies.
As to questions of fact material to such opinions, we have, when
relevant facts were not independently established by us, relied upon
certificates of the Borrower or its officers or of public officials.
We are assuming, for purposes of this opinion, that the Borrower is a
corporation organized and existing under the laws of the State of New
Hampshire and has, under its articles of incorporation, all requisite
corporate power and authority to own and operate its properties and carry on
its business as presently conducted, including without limitation the power
to make, generate, sell, distribute and supply electricity at wholesale and
retail. We are also assuming that the Collateral is all located outside the
State of Maine.
We are qualified to practice law in the State of Maine and we do not
purport to be experts on any laws other than the laws of the State of Maine.
Based upon the foregoing and upon such investigation as we deemed
necessary, we are of the opinion that:
1. The Borrower is a corporation duly qualified to do business
in, and is in good standing in, the State of Maine.
2. The execution, delivery and performance by the Borrower of
each Loan Document do not and will not contravene the laws of the State
of Maine (other than the state securities or "Blue Sky" laws of Maine,
as to which we express no opinion).
3. No Governmental Approval of the types referred to in clauses
(i) and (ii) in the definition of "Governmental Approvals" contained in
the Credit Agreements by any governmental authority in the State of
Maine or by any legal or regulatory body in the State of Maine (other
than in connection with or in compliance with the state securities or
"Blue Sky" laws of Maine, as to which we express no opinion) is required
as to any Loan Document.
4. To the best of our knowledge there is no pending or threatened
action or proceeding in the State of Maine affecting the Borrower or its
properties before any court, governmental agency or arbitrator, which
may, if adversely determined, purport to affect the legality, validity
or enforceability, of any Loan Document in effect on the date hereof.
We are aware that Jeffrey C. Miller, Robert A. Bersak, Sulloway & Hollis
and King & Spalding will rely upon the opinions set forth above in rendering
their opinions furnished pursuant to Section 5.01(a)(xiv)(A), (B), (C) and
(F), respectively, of each Credit Agreement, and we hereby authorize such
reliance.
Very truly yours,
EXHIBIT 5.01E
[Form of Opinion of Zuccaro, Willis & Bent]
[Closing Date]
To each of the Banks party to the Credit
Agreements referred to below, the
Administrative Agent referred to below
and to the Collateral Agent (as defined in
the Credit Agreements)
Public Service Company of New Hampshire
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 5.01(a)(xiii)(E) of
each of the 364-Day Revolving Credit Agreement and the Amended and Restated
Revolving Credit Agreement, each dated as of April 1, 1996 (collectively, the
"Credit Agreements"; individually, a "Credit Agreement"), among Public
Service Company of New Hampshire (the "Borrower"), the Banks named therein
and certain lenders from time to time parties thereto, and Chemical Bank, as
Administrative Agent for the Lenders. Unless otherwise defined herein, terms
defined in a Credit Agreement are used herein as therein defined.
We have acted as special Vermont counsel for the Borrower in connection
with the transactions contemplated under the Credit Agreements.
In connection with this opinion, we have examined the Credit Agreements,
a certificate of the Secretary of State of Vermont, dated April __, 1996,
attesting to the authorization to do business and good standing of the
Borrower in Vermont, the originals or copies certified to our satisfaction of
such corporate records of the Borrower, such certificates of public officials
and officers of the Borrower, and such other agreements, instruments and
documents as we have deemed necessary as a basis for the opinions expressed
below. In our examination of such agreements, instruments and documents, we
have assumed the genuineness of all signatures, the authenticity of all
agreements, instruments and documents submitted to us as originals, and the
conformity to original agreements, instruments and documents of all
agreements, instruments and documents submitted to us as certified, conformed
or photostatic copies and the authenticity of the originals of such copies.
As to questions of fact material to such opinions, we have, when
relevant facts were not independently established by us, relied upon
certificates of the Borrower or its officers or of public officials.
We are assuming, for purposes of this opinion, that the Borrower is a
corporation organized and existing under the laws of the State of New
Hampshire and has, under its articles of incorporation, all requisite
corporate power and authority to own and operate its properties and carry on
its business as presently conducted, including without limitation the power
to make, generate, sell, distribute and supply electricity at wholesale and
retail.
We are qualified to practice law in the State of Vermont and we do not
purport to be experts on any laws other than the laws of the State of
Vermont.
Based upon the foregoing and upon such investigation as we deemed
necessary, we are of the opinion that:
1. The Borrower is a corporation duly qualified to do business
in, and is in good standing in, the State of Vermont.
2. The execution, delivery and performance by the Borrower of
each Loan Document do not and will not contravene the laws of the State
of Vermont (other than the state securities or "Blue Sky" laws of
Vermont, as to which we express no opinion).
3. No Governmental Approval of the types referred to in clauses
(i) and (ii) in the definition of "Governmental Approvals" contained in
the Credit Agreements by any governmental authority in the State of
Vermont or by any legal or regulatory body in the State of Vermont
(other than in connection with or in compliance with the state
securities or "Blue Sky" laws of Vermont, as to which we express no
opinion) is required [except those listed on Schedule I hereto, each of
which has been duly obtained and is in full force and effect; and all
applicable periods of time for review, rehearing or appeal with respect
to such Governmental Approvals required by any such governmental
authority, legal or regulatory body have expired].
4. To the best of our knowledge there is no pending or threatened
action or proceeding in the State of Vermont affecting the Borrower or
its properties before any court, governmental agency or arbitrator,
which may, if adversely determined, purport to affect the legality,
validity or enforceability of any Loan Document in effect on the date
hereof.
We are aware that Jeffrey C. Miller, Robert A. Bersak, Sulloway & Hollis
and King & Spalding will rely upon the opinions set forth above in rendering
their opinions furnished pursuant to Section 5.01(a)(xiv)(A), (B), (C) and
(F), respectively, of each Credit Agreement, and we hereby authorize such
reliance.
Very truly yours,
EXHIBIT 5.01F
[Closing Date]
To each of the Banks party to the Credit
Agreements referred to below, to the
Administrative Agent referred to below
and to the Collateral Agent (as defined in
the Credit Agreements)
Public Service Company of New Hampshire
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 5.01(a)(xiv)(F) of
each of the 364-Day Revolving Credit Agreement and the Amended and Restated
Revolving Credit Agreement, each dated as of April 1, 1996 (collectively, the
"Credit Agreements"; individually, a "Credit Agreement"), among Public
Service Company of New Hampshire (the "Borrower"), the Banks named therein
and certain lenders from time to time parties thereto and Chemical Bank, as
Administrative Agent for the Lenders. Unless otherwise defined herein, terms
defined in the Credit Agreements are used herein as therein defined.
We have acted as special New York counsel to the Administrative Agent in
connection with the preparation, execution and delivery of the Credit
Agreements.
In that connection, we have examined the following documents:
(a) The Credit Agreements, executed by each of the parties
thereto.
(b) The Notes, executed by the Borrower.
(c) The other documents furnished pursuant to Section 5.01 of each
Credit Agreement and listed on Exhibit A hereto, including the opinions
of counsel delivered pursuant to Sections 5.01(a)(xiv)(A) through (E) of
each Credit Agreement and listed on Exhibit A hereto as items __, __, __
and__ (collectively, the "Opinions").
In our examination of the documents referred to above, we have assumed
the authenticity of all such documents submitted to us as originals, the
genuineness of all signatures, the due authority of the parties executing
such documents and the conformity to the originals of all such documents
submitted to us as copies. We have also assumed that each of the Banks, the
Collateral Agent and the Administrative Agent has duly executed and
delivered, with all necessary power and authority (corporate and otherwise),
the Credit Agreements.
Based upon the foregoing, and subject to the qualifications set forth
below, we are of the opinion that the Opinions and the other documents
referred to in item (c), above, are substantially responsive to the
requirements of the Sections of the Credit Agreements pursuant to which the
same have been delivered.
Our opinions expressed above are limited to the law of the State of New
York and the Federal law of the United States, and we do not express any
opinion herein concerning any other law.
Very truly yours,
PKS:MEO:acss
EXHIBIT 10.07
LENDER ASSIGNMENT
Dated ,
Reference is made to the Amended and Restated Revolving Credit
Agreement, dated as of __________ __, 1996 (said Agreement, as it may
hereafter be amended or otherwise modified from time to time, being the
"Credit Agreement"), among the Borrower, the Lenders named therein and from
time to time parties thereto, and Chemical Bank, as Administrative Agent for
the Lenders. Pursuant to the Credit Agreement, ________________ (the
"Assignor") has committed to make advances ("Advances") to the Borrower,
which Advances are evidenced by a promissory note (the "Note") issued by the
Borrower to the Assignor. Terms defined in the Credit Agreement are used
herein with the same meaning.
The Assignor and (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor,
without recourse to the Assignor, a portion of the Assignor's rights and
obligations under the Credit Agreement and the Security Documents as of the
Effective Date (as defined below) which represents the percentage interest
specified on Schedule 1 of all outstanding rights and obligations of the
Lenders under the Credit Agreement (the "Assigned Interest"), including,
without limitation, such percentage interest in the Commitment as in effect
on the Effective Date, the Advances outstanding on the Effective Date and the
Notes. After giving effect to such sale and assignment, the Assignee's
Commitment will be as set forth in Section 2 of Schedule 1. The effective
date of this sale and assignment shall be the date specified on Schedule 1
hereto (the "Effective Date").
2. On the Effective Date, the Assignee will pay to the Assignor, in
same day funds, at such address and account as the Assignor shall advise the
Assignee, the principal amount of the Advances outstanding under the Credit
Agreement which are being assigned hereunder, and the sale and assignment
contemplated hereby shall thereupon become effective. From and after the
Effective Date, the Assignor agrees that the Assignee shall be entitled to
all rights, powers and privileges of the Assignor under the Credit Agreement
and the Note to the extent of the Assigned Interest, including without
limitation (i) the right to receive all payments in respect of the Assigned
Interest for the period from and after the Effective Date, whether on account
of principal, interest, fees, indemnities in respect of claims arising after
the Effective Date (subject to Section 10.04 of the Credit Agreement),
increased costs, additional amounts or otherwise; (ii) the right to vote and
to instruct the Administrative Agent under the Credit Agreement based on the
Assigned Interest; (iii) the right to set-off and to appropriate and apply
deposits of the Borrower as set forth in the Credit Agreement; and (iv) the
right to receive notices, requests, demands and other communications. The
Assignor agrees that it will promptly remit to the Assignee any amount
received by it in respect of the Assigned Interest (whether from the
Borrower, the Administrative Agent, the Collateral Agent or otherwise) in the
same funds in which such amount is received by the Assignor.
3. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (i) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Agreement, the Notes or the Security Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, the Notes, the Security Documents or any other instrument or
document furnished pursuant thereto; (ii) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Credit Agreement, the Notes, the Security Documents or
any other instrument or document furnished pursuant thereto; and
(iii) attaches its Note and requests that the Administrative Agent obtain new
Note[s] from the Borrower in accordance with the terms of subsection 10.07(d)
of the Credit Agreement.
4. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred
to in Section 6.01(e) thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Lender Assignment; (ii) agrees that it will, independently and
without reliance upon the Administrative Agent, the Assignor or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under the Credit Agreement, the Notes and the Security
Documents; (iii) appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers under the
Credit Agreement, the Notes and the Security Documents as are delegated to
the Administrative Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement, the Notes and the Security Documents are required to be
performed by it as a Lender; (v) specifies as its Domestic Lending Office
(and address for notices) and Eurodollar Lending Office the offices set forth
beneath its name on the signature pages hereof; (vi) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as
to the Assignee's status for purposes of determining exemption from United
States withholding taxes with respects to all payments to be made to the
Assignee under the Credit Agreement (and the Notes) or such other documents
as are necessary to indicate that all such payments are subject to such rates
at a rate reduced by an applicable tax treaty; (vii) attaches a completed
Schedule 2 (the Administrative Questionnaire) hereto; and (viii) confirms
that it has paid the processing and recordation fee referred to in subsection
10.07(a)(iii) of the Credit Agreement.
5. Following the execution of this Lender Assignment, it will be
delivered to the Administrative Agent for acceptance and recording by the
Administrative Agent. Upon such acceptance and recording and receipt of any
consent of the Borrower required pursuant to subsection 10.07(a), as of the
Effective Date, the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Lender Assignment, have the rights and
obligations of a Lender thereunder and under the Notes and the Security
Documents and (i) the Assignor shall, to the extent provided in this Lender
Assignment, relinquish its rights and be released from its obligations under
the Credit Agreement, the Notes and the Security Documents.
6. Upon such acceptance, recording and consent, from and after the
Effective Date, (i) the Administrative Agent shall make all payments under
the Credit Agreement and the Notes in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee. The Assignor and
Assignee shall make all appropriate adjustments in payments under the Credit
Agreement and the Notes for periods prior to the Effective Date directly
between themselves.
7. This Lender Assignment shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Lender
Assignment to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
Schedule 1
to
Lender Assignment
Dated , 19
Section 1.
(a) Total Credit Agreement Commitments: $________
(b) Percentage Interest:(1) _________%
(c) Amount of Assigned Share: $________
Section 2.
Assignee's Commitment: $________
Section 3.
Effective Date:(2) __________, 19__
[NAME OF ASSIGNOR]
By /s/
Title:
[NAME OF ASSIGNEE]
By /s/
Title:
(1)Specify percentage to no more than 8 decimal points.
(2)See Section 10.07(a). Such date shall be at least 5 Business Days after
the execution of this Lender Assignment.
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this day
of ,
CHEMICAL BANK,
as Administrative Agent
By /s/
Title:
Schedule 2
to
Lender Assignment
Dated , 19
Administrative Questionnaire
Public Service Company of New Hampshire
$125,000,000 Revolving Credit Facility
NOTE TO PARTICIPANTS: PLEASE FORWARD THIS COMPLETED FORM AS SOON AS
POSSIBLE TO ______________, STRUCTURED
FINANCE, SYNDICATIONS & PRIVATE PLACEMENTS, CHEMICAL
BANK, VIA RAPIFAX TO (212)
________
PLEASE TYPE ALL INFORMATION
Administrative Agent: Chemical Bank
140 East 45th Street
New York, New York 10017
Operational
Contact
Telecopier:
Contact:
Telecopier:
Telex: Answerback:
CHEMICAL BANK'S
wire instructions: [CHEMICAL BANK, 52 Broadway, NY
ABA #: 021000128
Loan Service Dept., 3rd Fl.
Corporate Agency A/C #400-399903
Attn: _______________
Ref: Public Service Company of New Hampshire]
Full Legal Name of your Bank:
Exact name of signing officer:
Title of signing officer:
Business address for delivery of
execution copies of credit
agreement (Please do not use
P.O. Box address; hand deliveries
cannot be made):
Signing officer's phone no.:
Alternate officer contact:
Alternate officer's phone no.:
Public Service Company of New Hampshire
PRIMARY CONTACT INFORMATION
These contacts are for critical notification (drawdowns, repayments, rate
setting, etc.)
Bank Name:
Address:
Primary Contact:
Title and Department:
Phone Number:
Primary Telecopier:
Alternate Telecopier:
Primary Telex/answerback:
********** Alternate Contact Information **********
Alternate Contact:
Title and Department:
Phone Number:
Primary Telecopier:
Alternate Telecopier:
Primary Telex/answerback:
General Operational Information
Wire instructions to your bank: Bank Name:
Dept.:
ABA #:
A/C #:
Attn:
Ref:
Telex Information: Contact Name(s)
Number
Answerback
If any changes are made to the above information please notify by rapifax to
____________ (212)________ and _____________ (212) _________.
Public Service Company of New Hampshire
PLEASE COMPLETE THE FOLLOWING INFORMATION
FOR COMPETITIVE AUCTIONS ONLY
Facility Agent: Chemical Bank
140 East 45th Street
New York, New York 10017
Telex: NY: Answerback:
Telecopier:
Contacts: Syndications/Sales Support
Syndications
Primary Contact
Competitive Auctions
Bank Name:
Address:
Primary Contact:
Title:
Department:
Telephone Number:
Telex Number and Answerback:
Telecopier Number:
Alternate Contact
Competitive Auctions
Alternate Contact:
Title:
Department:
Telephone Number:
Telex Number and Answerback:
Telecopier Number:
EXECUTION COPY
U.S. $100,000,000
364-DAY
REVOLVING CREDIT AGREEMENT
Dated as of April 1, 1996
Among
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
as Borrower
THE BANKS NAMED HEREIN
as Banks
and
CHEMICAL BANK
as Administrative Agent
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS 1
1.01. Certain Defined Terms 1
1.02. Computation of Time Periods 18
1.03. Accounting Terms 19
1.04. Computations of Outstandings 19
ARTICLE II
COMMITMENTS 19
2.01. The Commitments 19
2.02. Fees 19
2.03. Reduction of the Commitments 20
ARTICLE III
CONTRACT AND COMPETITIVE ADVANCES 20
3.01. Contract Advances 20
3.02. Terms Relating to the Making and of Contract Advances 20
3.03. (a) Competitive Advances 21
3.04. Making of Advances 26
3.05. Repayment of Advances 27
3.06. Interest 27
ARTICLE IV
PAYMENTS 29
4.01. Payments and Computations 29
4.02. Prepayments 30
4.03. Yield Protection 30
4.04. Sharing of Payments, Etc 34
4.05. Taxes 35
ARTICLE V
CONDITIONS PRECEDENT 37
5.01. Conditions Precedent to Effectiveness 37
5.02. Conditions Precedent to Certain Contract Advances and
all Competitive Advances 40
5.03. Conditions Precedent to Other Contract Advances 41
5.04. Reliance on Certificates 42
ARTICLE VI
REPRESENTATIONS AND WARRANTIES 42
6.01. Representations and Warranties of the 42
ARTICLE VII
COVENANTS OF THE BORROWER 45
7.01. Affirmative Covenants 45
7.02. Negative Covenants 48
7.03. Reporting Obligations 51
ARTICLE VIII
DEFAULTS 55
8.01. Events of Default 55
8.02. Remedies Upon Events of Default 58
ARTICLE IX
THE ADMINISTRATIVE AGENT 59
9.01. Authorization and Action 59
9.02. Administrative Agent's Reliance, 59
9.03. Chemical and Affiliates 60
9.04. Lender Credit Decision 60
9.05. Indemnification 60
9.06. Successor Administratient 61
ARTICLE X
MISCELLANEOUS 61
10.01. Amendments, Etc 61
10.02. Notices, Etc 62
10.03. No Waiver of Remedies 62
10.04. Costs, Expenses and Indemnification 63
10.05. Right of Set-off 64
10.06. Binding Effect 64
10.07. Assignments and Participation 64
10.08. Confidentiality 68
10.09. Certain Authorizations and Consent 68
10.10. Waiver of Jury Trial 69
10.11. Governing Law 69
10.12. Relation of the Parties; No Beneficiary 69
10.13. Execution in Counterparts 70
SCHEDULE
Schedule I - Applicable Lending Offices
EXHIBITS
Exhibit 1.01A - Form of Competitive Note
Exhibit 1.01B - Form of Contract Note
Exhibit 1.01C - Form of Collateral Agency Agreement
Exhibit 1.01D - Form of PSNH Mortgage Amendment
Exhibit 1.01E - Form of PSNH Mortgage Assignment
Exhibit 3.01A - Form of Notice of Contract Borrowing
Exhibit 3.03A-1 - Form of Competitive Bid Request
(Eurodollar Competitive Advance)
Exhibit 3.03A-2 - Form of Confirmation of Competitive Borrowing
(Fixed Rate Competitive Advance)
Exhibit 3.03B - Form of Notice of Competitive Bid Request
(Eurodollar Competitive Advance)
Exhibit 3.03C-1 - Form of Competitive Bid
(Eurodollar Competitive Advance)
Exhibit 3.03C-2 - Form of Confirmation of Competitive Bid
(Fixed Rate Competitive Advance)
Exhibit 3.03D - Form of Competitive Bid Letter
Exhibit 5.01A - Form of Opinion of Jeffrey C. Miller, Assistant
General Counsel to Northeast Utilities
Service Company
Exhibit 5.01B - Form of Opinion of Robert A. Bersak, Assistant
General Counsel to the Borrower
Exhibit 5.01C - Form of Opinion of Sulloway & Hollis,
special New Hampshire counsel to
the Borrower
Exhibit 5.01D - Form of Opinion of Drummond Woodsum
& MacMahon, special Maine
counsel to the Borrower
Exhibit 5.01E - Form of Opinion of Zuccaro, Willis & Bent,
special Vermont counsel to the Borrower
Exhibit 5.01F - Form of Opinion of King & Spalding,
counsel to the Administrative Agent
Exhibit 10.07 - Form of Lender Assignment
364-DAY
REVOLVING CREDIT AGREEMENT
Dated as of April 1, 1996
This 364-DAY REVOLVING CREDIT AGREEMENT (this "Agreement") is made by
and among:
(i) Public Service Company of New Hampshire, a corporation duly
organized and validly existing under the laws of the State of New
Hampshire (the "Borrower"),
(ii) The financial institutions (the "Banks") listed on the signature
pages hereof and the other Lenders (as hereinafter defined) from
time to time party hereto, and
(iii) Chemical Bank ("Chemical"), as Administrative Agent for the
Lenders hereunder.
PRELIMINARY STATEMENT
The Borrower, certain lenders parties thereto and Chemical as
administrative agent thereunder, previously entered into the Existing
Revolving Credit Agreement (as hereinafter defined). The Borrower, the Banks
and the Administrative Agent now desire to amend and restate the Existing
Revolving Credit Agreement by entering into the Other Loan Documents (as
herein defined) and, as well, to enter into this separate Agreement, which
separately supplements and adds to the credit facility formerly available
under the Existing Revolving Credit Agreement. Now therefore, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be
applicable to the singular and plural forms of the terms defined):
"Advance" means a Contract Advance or a Competitive Advance (each
of which shall be a "Class" of Advance).
"Administrative Agent" means Chemical or any successor thereto as
provided herein.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all
directors and officers of such Person), controlled by, or under direct
or indirect common control with such Person. A Person shall be deemed
to control another entity if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of such entity, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement for Capacity Transfer" means the Agreement for Capacity
Transfer, dated as of December 1, 1989, between The Connecticut Light
and Power Company and the Borrower as amended by the First Amendment to
Agreement for Capacity Transfer, dated as of May 1, 1992, which provides
for capacity transfers from the Borrower to The Connecticut Light and
Power Company.
"Alternate Base Rate" means, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/8 of 1%) equal to the greater of:
(a) the Prime Rate in effect on such day; and
(b) the Federal Funds Rate in effect on such day plus 1/2 of
1% per annum.
For purposes hereof, the term "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by Chemical as
its prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective on the date such change is
publicly announced. If the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it
is unable to ascertain the Federal Funds Rate for any reason, including
the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms thereof, the
Alternate Base Rate shall be determined without regard to clause (b) of
the first sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Rate
shall be effective on the effective date of such change in the Prime
Rate or the Federal Funds Rate, respectively.
"Applicable Facility Fee Rate" means, for any day, the percentage
per annum set forth below in effect on such day, determined on the basis
of the Applicable Rating Level:
Rating Rating Rating Rating
Level I Level II Level III Level IV
Applicability 0.20% 0.20% 0.20% 0.20%
Facility Fee Rate
Any change in the Applicable Facility Fee Rate caused by a change in the
Applicable Rating Level shall take effect at the time such change in the
Applicable Rating Level shall occur.
"Applicable Lending Office" means, with respect to each Lender:
(i) in the case of any Contract Advance, (A) such Lender's
"Eurodollar Lending Office" in the case of a Eurodollar Rate
Advance, or (B) such Lender's "Domestic Lending Office" in the
case of a Base Rate Advance, in each case as specified opposite
such Lender's name on Schedule I hereto or in the Lender Assignment
pursuant to which it became a Lender; or
(ii) in the case of any Competitive Advance, the office or
affiliate of such Lender identified as the Applicable Lending
Office in such Lender's Competitive Bid tendered pursuant to
Section 3.03 hereof; or
(iii) in each case, such other office or affiliate of such
Lender as such Lender may from time to time specify in writing to
the Borrower and the Administrative Agent.
"Applicable Margin" means, for any day for any outstanding
Contract Advance, the percentage per annum set forth below in
effect on such day, determined on the basis of the Applicable
Rating Level:
Type of Rating Rating Rating Rating
Advance Level I Level II Level III Level IV
Eurodollar 0.80% 0.80% 0.80% 0.80%
Rate
Base Rate 0.00% 0.00% 0.00% 0.00%
Any change in the Applicable Margin caused by a change in the Applicable
Rating Level shall take effect at the time such change in the Applicable
Rating Level shall occur.
"Applicable Rate" means:
(i) in the case of each Eurodollar Rate Advance comprising
part of the same Borrowing, a rate per annum during each Interest
Period equal at all times to the sum of the Eurodollar Rate for
such Interest Period plus the Applicable Margin in effect from time
to time during such Interest Period;
(ii) in the case of each Base Rate Advance, a rate per annum
equal at all times to the sum of the Alternate Base Rate in effect
from time to time plus the Applicable Margin in effect from time to
time;
(iii) in the case of each Eurodollar Competitive Advance,
a rate per annum during the Interest Period therefor, equal at all
times to the sum of the Eurodollar Rate for such Interest Period
plus or minus, as the case may be, the Competitive Margin in effect
during such Interest Period; and
(iv) in the case of each Fixed Rate Competitive Advance, at a
rate per annum during the Interest Period therefor, equal at all
times to the rate specified by such Lender in its Competitive Bid
and accepted by the Borrower for such Competitive Advance in
accordance with Section 3.03(b)(iv) hereof.
"Applicable Rating Level" shall be determined at any time and from
time to time on the basis of the long-term ratings of S&P and Moody's
applicable at such time to the Borrower's First Mortgage Bonds not
entitled to external credit support (or other senior secured debt
securities not entitled to external credit support if no First Mortgage
Bonds are then outstanding) in accordance with the following:
Rating Rating Rating Rating
Level I Level II Level III Level IV
BBB- or higher BB+ and Ba1 BB and Ba2 BB- or Ba3 or
and Baa3 or below (all
higher other cases)
In the event of a split rating, the lower of the two ratings shall
control. The Applicable Rating Level shall be redetermined as and when
any change in the ratings used in the determination thereof shall be
announced by S&P or Moody's, as the case may be.
"Available Commitment" means, for each Lender, the unused portion
of such Lender's Commitment (which shall be equal to the excess, if any,
of such Lender's Commitment over such Lender's Contract Advances
outstanding), less such Lender's Percentage of the aggregate amount of
Competitive Advances outstanding. "Available Commitments" shall refer
to the aggregate of the Lenders' Available Commitments hereunder.
"Base Rate Advance" means a Contract Advance in respect of which
the Borrower has selected in accordance with Article III hereof, or this
Agreement provides for, interest to be computed on the basis of the
Alternate Base Rate.
"Borrowing" means a Contract Borrowing or Competitive Borrowing
(each of which shall be a "Class" of Borrowing).
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and, if the applicable
Business Day relates to any Eurodollar Rate Advances or Eurodollar
Competitive Advances, on which dealings are carried on in the London
interbank market.
"CSI" means Chemical Securities Inc.
"Class" has the meaning assigned to such term (i) in the definition
of "Advance" when used in such context and (ii) in the definition of
"Borrowing" when used in such context.
"Closing" means the fulfilment of each of the conditions precedent
enumerated in Section 5.01 hereof to the satisfaction of the Lenders,
the Administrative Agent and the Borrower. All transactions
contemplated by the Closing shall take place on or prior to May 15,
1996, at the offices of King & Spalding, 120 West 45th Street, New York,
New York 10036, at 10:00 a.m. (New York City time), or such other place
and time as the parties hereto may mutually agree (the "Closing Date").
"Collateral" means all of the collateral in which liens, mortgages
or security interests are purported to be granted by any or all of the
Security Documents.
"Collateral Agency Agreement" means an Amended and Restated
Collateral Agency Agreement in substantially the form of Exhibit 1.01C
hereto as the same may be amended, supplemented or otherwise modified
from time to time.
"Collateral Agent" means Chemical or any successor thereto as
provided in the Collateral Agency Agreement.
"Commitment" means, for each Lender, the aggregate amount set forth
opposite such Lender's name on the signature pages hereof or, if such
Lender has entered into one or more Lender Assignments, set forth for
such Lender in the Register maintained by the Administrative Agent
pursuant to Section 10.07(c), in each such case as such amount may be
reduced from time to time pursuant to Section 2.03 hereof.
"Commitments" shall refer to the aggregate of the Lenders' Commitments
hereunder.
"Common Equity" means, at any date, an amount equal to the sum of
the aggregate of the par value of, or stated capital represented by, the
outstanding shares of common stock of the Borrower and the surplus,
paid-in, earned and other, if any, of the Borrower.
"Competitive Advance" means an advance by a Lender to the Borrower
as part of a Competitive Borrowing and refers to a Fixed Rate
Competitive Advance or a Eurodollar Competitive Advance (each of which
shall be a "Type" of Competitive Advance).
"Competitive Bid" means an offer by a Lender to make a Competitive
Advance under the competitive bidding procedure described in
Section 3.03(b).
"Competitive Bid Rate" means, as to any Competitive Bid made by a
Lender pursuant to Section 3.03(b)(iv), (i) in the case of a Eurodollar
Competitive Advance, the Competitive Margin and (ii) in the case of a
Fixed Rate Competitive Advance, the fixed rate of interest offered by
such Lender making such Competitive Bid.
"Competitive Bid Letter" means a letter in the form of
Exhibit 3.03D hereto.
"Competitive Bid Request" means a request made by the Borrower
pursuant to Section 3.03(b)(i) in the form of Exhibit 3.03A-1 hereto.
"Competitive Borrowing" means a borrowing consisting of one or more
Competitive Advances of the same Type and Interest Period made on the
same day by each of the Lenders whose Competitive Bid to make one or
more Competitive Advances as part of such Borrowing has been accepted by
the Borrower under the competitive bidding procedure described in
Section 3.03(b). A Competitive Borrowing may be referred to herein as
being a "Type" of Competitive Borrowing, corresponding to the Type of
Competitive Advances comprising such Borrowing.
"Competitive Margin" means, with respect to any Eurodollar
Competitive Advance, the percentage per annum (expressed in the form of
a decimal to no more than four decimal places) to be added to or
subtracted from the Eurodollar Rate in order to determine the interest
rate applicable to such Advance, as specified in the Competitive Bid
relating to such Advance.
"Competitive Note" means a promissory note of the Borrower payable
to the order of a Lender, in substantially the form of Exhibit 1.01A
hereto, evidencing the indebtedness of the Borrower to such Lender from
time to time resulting from Competitive Advances made by such Lender.
"Confidential Information" has the meaning assigned to that term in
Section 10.08.
"Contract Advance" means an advance by a Lender to the Borrower
pursuant to Section 3.01 hereof and refers to a Eurodollar Rate Advance
or a Base Rate Advance (each of which shall be a "Type" of Contract
Advance). For purposes of this Agreement, all Contract Advances of a
Lender (or portions thereof) of the same Type and Interest Period made
on the same day shall be deemed to be a single Advance by such Lender
until repaid.
"Contract Borrowing" means a borrowing consisting of Contract
Advances of the same Type and Interest Period made on the same day by
the Lenders, ratably in accordance with their respective Commitments. A
Contract Borrowing may be referred to herein as being a "Type" of
Contract Borrowing, corresponding to the Type of Contract Advances
comprising such Borrowing. For purposes of this Agreement, all Contract
Advances of the same Type and Interest Period made on the same day shall
be deemed a single Contract Borrowing hereunder until repaid.
"Contract Note" means a promissory note of the Borrower payable to
the order of a Lender, in substantially the form of Exhibit 1.01B
hereto, evidencing the aggregate indebtedness of the Borrower to such
Lender resulting from the Contract Advances made by such Lender.
"Debt" means, for any Person, without duplication, (i) indebtedness
of such Person for borrowed money, (ii) obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations of such Person to pay the deferred purchase price of
property or services, (iv) obligations of such Person as lessee under
leases which shall have been or should be, in accordance with generally
accepted accounting principles, recorded as capital leases (but
excluding the Unit Contract), (v) obligations (contingent or otherwise)
of such Person under reimbursement or similar agreements with respect to
the issuance of letters of credit, (vi) net obligations (contingent or
otherwise) of such Person under interest rate swap, "cap", "collar" or
other hedging agreements, (vii) obligations of such person to pay rent
or other amounts under leases entered into in connection with sale and
leaseback transactions involving assets of such Person being sold in
connection therewith, (viii) obligations under direct or indirect
guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) through (vii), above, and (ix) liabilities in
respect of unfunded vested benefits under ERISA Plans.
"Debt Limit" means the limitation on the incurrence of short-term
debt applicable to the Borrower in effect from time to time either in
accordance with applicable law or a waiver thereof granted by competent
governmental authority, including without limitation, the New Hampshire
Public Utilities Commission.
"Disclosure Documents" means the Information Memorandum, the
Borrower's 1995 Annual Report, the Borrower's Annual Report on Form 10-K
for the year ended December 31, 1995, and any Current Report on Form 8-K
of the Borrower filed by the Borrower with the Securities and Exchange
Commission after January 31, 1996 and furnished to the Banks prior to
the execution and delivery of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means, with respect to any Person, any trade or
business (whether or not incorporated) which is a "commonly controlled
entity" of the Borrower within the meaning of the regulations under
Section 414 of the Internal Revenue Code of 1986, as amended from time
to time.
"ERISA Multiemployer Plan" means a "multiemployer plan" subject to
Title IV of ERISA.
"ERISA Plan" means an employee benefit plan (other than a ERISA
Multiemployer Plan) maintained for employees of the Borrower or any
ERISA Affiliate and covered by Title IV of ERISA.
"ERISA Plan Termination Event" means (i) a Reportable Event
described in Section 4043 of ERISA and the regulations issued thereunder
(other than a Reportable Event not subject to the provision for 30-day
notice to the PBGC under such regulations) with respect to an ERISA Plan
or an ERISA Multiemployer Plan, or (ii) the withdrawal of the Borrower
or any of its ERISA Affiliates from an ERISA Plan or an ERISA
Multiemployer Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the filing
of a notice of intent to terminate an ERISA Plan or an ERISA
Multiemployer Plan or the treatment of an ERISA Plan or an ERISA
Multiemployer Plan under Section 4041 of ERISA, or (iv) the institution
of proceedings to terminate an ERISA Plan or an ERISA Multiemployer Plan
by the PBGC, or (v) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any ERISA Plan or ERISA
Multiemployer Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"Eurodollar Competitive Advance" means a Competitive Advance in
respect of which the Borrower has selected in accordance with
Section 3.03 hereof, and this Agreement provides, interest to be
computed on the basis of the Eurodollar Rate.
"Eurodollar Rate" means, for each Interest Period for each
Eurodollar Rate Advance or Eurodollar Competitive Advance comprising
part of the same Borrowing, an interest rate per annum equal to the
average (rounded upward to the nearest whole multiple of 1/100 of 1% per
annum, if such average is not such a multiple) of the rates per annum at
which deposits in U.S. dollars are offered by the principal office of
each of the Reference Banks in London, England to prime banks in the
London interbank market at 11:00 a.m. (London time) two Business Days
before the first day of such Interest Period in an amount of $1,000,000
and for a period equal to such Interest Period. The Eurodollar Rate for
the Interest Period for each Eurodollar Rate Advance comprising part of
the same Borrowing shall be determined by the Administrative Agent on
the basis of applicable rates furnished to and received by the
Administrative Agent from the Reference Banks two Business Days before
the first day of such Interest Period, subject, however, to the
provisions of Sections 3.06(d) and 4.03(g).
"Eurodollar Rate Advance" means a Contract Advance in respect of
which the Borrower has selected in accordance with Article III hereof,
and this Agreement provides for, interest to be computed on the basis of
the Eurodollar Rate.
"Eurodollar Reserve Percentage" of any Lender for each Interest
Period for each Eurodollar Rate Advance means the reserve percentage
applicable during such Interest Period (or if more than one such
percentage shall be so applicable, the daily average of such percentages
for those days in such Interest Period during which any such percentage
shall be so applicable) under Regulation D or other regulations issued
from time to time by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement, without benefit of or credit for
proration, exemptions or offsets) for such Lender with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 8.01.
"Existing Collateral Agency Agreement" means the Collateral Agency
Agreement, dated as of May 1, 1991, among the Borrower, Bankers Trust
Company, as Collateral Agent, Citibank, N.A., as Term Agent, Chemical,
as Revolving Agent, and certain other holders of secured claims referred
to herein.
"Existing Revolving Credit Agreement" means the Revolving Credit
Agreement, dated as of May 1, 1991, among the Borrower, Bankers Trust
Company, Chemical and Citibank, N.A. as Co-Agents and Chemical, as
Administrative Agent, and the lenders from time to time party thereto,
as amended by the First Amendment to the Revolving Credit Agreement,
dated as of May 11, 1994, among the parties to the Revolving Credit
Agreement.
"Facility" means the facility made available to the Borrower by
each of the Lenders under Sections 2.01(a), 3.01 and 3.03 to request,
prepay and repay Advances in connection with each Lender's Commitment.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers,
as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Fee Letter" means the Fee Letter, dated as of February 15, 1996,
among the Borrower, NUSCO, Chemical and CSI.
"First Mortgage Bond Amount" means $950,000,000.
"First Mortgage Bonds" means first mortgage bonds in the maximum
aggregate principal amount of up to the First Mortgage Bond Amount
issued or to be issued by the Borrower and secured, directly or
indirectly, collectively or severally, by one or more first-priority
liens on all or part of the Indenture Assets pursuant to the First
Mortgage Indenture or another indenture in form and substance
satisfactory to the Majority Lenders. For purposes hereof, all or part
of the First Mortgage Bonds may be issued as collateral for pollution
control revenue bonds or industrial revenue bonds, whether taxable or
tax exempt, issued by the Borrower or by a governmental authority at the
Borrower's request (any such pollution control revenue bonds or
industrial revenue bonds being included, without duplication as to the
principal amount of First Mortgage Bonds securing the same, within the
definition hereunder of "First Mortgage Bonds").
"First Mortgage Indenture" means the General and Refunding Mortgage
Indenture, between the Borrower and New England Merchants National Bank,
as trustee and to which First Fidelity Bank, National Association, New
Jersey, is successor trustee, dated as of August 15, 1978, as amended
and supplemented through the date hereof, as the same may hereafter be
amended, supplemented or modified from time to time.
"Fixed Rate Competitive Advance" means a Competitive Advance in
respect of which the Borrower has selected in accordance with
Section 3.03(b)(iv) hereof, and this Agreement provides, interest to be
computed on the basis of a fixed percentage rate per annum (expressed in
the form of a decimal to no more than four decimal places) specified by
the Lender making such Advance in its Competitive Bid.
"Governmental Approval" means any authorization, consent, approval,
license, permit, certificate, exemption of, or filing or registration
with, any governmental authority or other legal or regulatory body,
required in connection with any of (i) the execution, delivery or
performance of the Rate Agreement, any Loan Document or any Significant
Contract, (ii) the grant and perfection of any security interest, lien
or mortgage contemplated by the Security Documents, or (iii) the nature
of the Borrower's business as conducted or the nature of the property
owned or leased by it. For purposes of this Agreement, Chapter 362-C of
the Revised Statutes Annotated of New Hampshire, as in effect on the
date hereof, shall be deemed to be a Governmental Approval.
"Hazardous Substance" means any waste, substance or material
identified as hazardous, dangerous or toxic by any office, agency,
department, commission, board, bureau or instrumentality of the United
States of America or of the State or locality in which the same is
located having or exercising jurisdiction over such waste, substance or
material.
"Indemnified Person" has the meaning assigned to that term in
Section 10.04(b) hereof.
"Indenture Assets" means fixed assets of the Borrower (including
related Governmental Approvals and regulatory assets, but excluding the
Seabrook Interests) which from time to time are subject to the first-
priority lien under the First Mortgage Indenture.
"Information Memorandum" means the Confidential Information
Memorandum, dated February 1996, regarding the Borrower and NU, as
distributed to the Administrative Agent and the Lenders, including all
schedules and attachments thereto.
"Interest Expense" means, for any period, the aggregate amount of
any interest on Debt (including long-term and short-term Debt).
"Interest Period" has the meaning assigned to that term in
Section 3.06(a) hereof.
"Lender Assignment" means an assignment and agreement entered into
by a Lender and an assignee, and accepted by the Administrative Agent,
in substantially the form of Exhibit 10.07 hereto.
"Lenders" means the financial institutions listed on the signature
pages hereof, and each assignee that shall become a party hereto
pursuant to Section 10.07.
"Lien" has the meaning assigned to that term in Section 7.02(a)
hereof.
"Loan Documents" means this Agreement, the Notes and the Security
Documents (as each may be amended, supplemented or otherwise modified
from time to time).
"Major Electric Generating Plants" means the following generating
stations of the Borrower: the Merrimack generating station located in
Bow, New Hampshire; the Newington generating station located in
Newington, New Hampshire; the Schiller generating station located in
Portsmouth, New Hampshire; the White Lake combustion turbine located in
Tamworth, New Hampshire; the Millstone Unit No. 3 generating station
located in Waterford, Connecticut, and the Wyman Unit No. 4 generating
station located in Yarmouth, Maine.
"Majority Lenders" means on any date of determination, Lenders who,
collectively, on such date (i) hold at least 66-2/3% of the then
aggregate unpaid principal amount of the Advances owing to the Lenders
and (ii) have Percentages in the aggregate of at least 66-2/3%.
Determination of those Lenders satisfying the criteria specified above
for action by the Majority Lenders shall be made by the Administrative
Agent and shall be conclusive and binding on all parties absent manifest
error.
"Merger" means (i) the merger on June 5, 1992 of NU Acquisition
Corp., a wholly owned subsidiary of NU, with and into the Borrower and
(ii) the transfer on the same date by the Borrower, as so merged, to
NAEC of the Seabrook Interests in accordance with the Rate Agreement.
"Moody's" means Moody's Investors Services, Inc. or any successor
thereto.
"NAEC" means North Atlantic Energy Corporation, a corporation
wholly owned by NU which acquired the Seabrook Interests from the
Borrower on June 5, 1992.
"Note" means a Contract Note or a Competitive Note, as each may be
amended, supplemented or otherwise modified from time to time.
"Notice of Contract Borrowing" has the meaning assigned to that
term in Section 3.01 hereof.
"NU" means Northeast Utilities, an unincorporated voluntary
business association organized under the laws of the Commonwealth of
Massachusetts.
"NUSCO" means Northeast Utilities Service Company, a Connecticut
corporation and a wholly owned subsidiary of NU.
"Operating Income" means, for any period, the Borrower's operating
income for such period, adjusted as follows:
(i) increased by the amount of income taxes (including New
Hampshire Business Profits Tax and other comparable taxes) paid by
the Borrower during such period, if and to the extent deducted in
the computation of the Borrower's operating income for such period;
and
(ii) increased by the amount of any depreciation deducted by
the Borrower during such period; and
(iii) increased by the amount of any amortization of
acquisition adjustment deducted by the Borrower during such period;
and
(iv) decreased by the amount of any capital expenditures paid
by the Borrower during such period.
"Other Loan Documents" means the Amended and Restated Revolving
Credit Agreement, dated as of April 1, 1996 among the Borrower, the
lenders from time to time parties thereto and Chemical, as
administrative agent thereunder, together with the other "Loan
Documents" referred to therein.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor entity) established under ERISA.
"Percentage" means, in respect of any Lender on any date of
determination, the percentage obtained by dividing such Lender's
Commitment on such day by the total of the Commitments on such day, and
multiplying the quotient so obtained by 100%.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"PSNH Mortgage" means the Mortgage, Assignment, Security Agreement
and Financing Statement, dated as of May 1, 1991, by the Borrower to
Bankers Trust Company, as assigned pursuant to the PSNH Mortgage
Assignment, and as amended by PSNH Mortgage Amendment, as the same may
be further amended, supplemented or otherwise modified from time to
time.
"PSNH Mortgage Amendment" means the First Amendment to the PSNH
Mortgage, dated on or about the Closing Date, by the Borrower and the
Collateral Agent, in substantially the form of Exhibit 1.01D hereto.
"PSNH Mortgage Assignment" means the Replacement of Collateral
Agent, together with Assignment by Mortgagee, Assignee and Secured
Party, dated on or about the Closing Date, among Bankers Trust Company,
as former Collateral Agent, Chemical, as successor Collateral Agent, and
the Borrower.
"Rate Agreement" means the Agreement dated as of November 22, 1989,
as amended by the First Amendment to Rate Agreement dated as of December
5, 1989, the Second Amendment to Rate Agreement dated as of December 12,
1989, the Third Amendment to Rate Agreement dated as of December 28,
1993, the Fourth Amendment to Rate Agreement dated as of September 21,
1994 and the Fifth Amendment to Rate Agreement dated as of September 9,
1994, among NUSCO, the Governor and Attorney General of the State of New
Hampshire and adopted by the Borrower as of July 10, 1990 (excluding the
Unit Contract appended as Exhibit A thereto subsequent to the
effectiveness of such contract).
"Recipient" has the meaning assigned to that term in Section 10.08
hereof.
"Reference Banks" means Chemical, Citibank, N.A. and Bank of
America National Trust and Savings Association.
"Register" has the meaning specified in Section 10.07(c).
"S&P" means Standard and Poor's Ratings Group or any successor
thereto.
"Seabrook" means the nuclear-fueled, steam-electric generating
plant at a site located in Seabrook, New Hampshire, and the real
property interests and other fixed assets of such plant.
"Seabrook Interests" means all right, title and interest of the
Borrower, prior to the Merger, in and to the fixed assets of Seabrook,
nuclear fuel relating to Seabrook and Governmental Approvals relating
thereto, including the undeveloped land adjacent to Seabrook and
described as the "Adjacent Property" in Schedule D to the PSNH Mortgage.
"Secured Party" has the meaning assigned to that term in the
Collateral Agency Agreement.
"Security Documents" means the PSNH Mortgage and the Collateral
Agency Agreement (as the same may be amended, supplemented or otherwise
modified from time to time).
"Series D Reimbursement Agreement" means (a) the Second Series D
Letter of Credit and Reimbursement Agreement, dated as of May 1, 1995,
among the Borrower, Barclays Bank PLC, New York Branch, and the
Participating Banks named therein relating to: (i) the Industrial
Development Authority of the State of New Hampshire Pollution Control
Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Taxable Series D), (ii) Business Finance Authority of the State of New
Hampshire Pollution Control Refunding Revenue Bonds (Public Service
Company of New Hampshire Project - 1992 Tax Exempt Series D) and (iii)
any other series of "Tax-Exempt Refunding Bonds" issued from time to
time in respect of the foregoing, as such agreement may from time to
time be amended, modified or supplemented, and (b) any similar agreement
entered into in respect of letters of credit or other credit enhancement
facilities issued in support of any of the foregoing.
"Series E Reimbursement Agreement" means (a) the Second Series E
Letter of Credit and Reimbursement Agreement, dated as of May 1, 1995,
among the Borrower, Swiss Bank Corporation, New York Branch, and the
Participating Banks named therein relating to: (i) the Industrial
Development Authority of the State of New Hampshire Pollution Control
Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Taxable Series E), (ii) Business Finance Authority of the State of New
Hampshire Pollution Control Refunding Revenue Bonds (Public Service
Company of New Hampshire Project - 1993 Tax-Exempt Series E) and (iii)
any other series of "Tax-Exempt Refunding Bonds" issued from time to
time in respect of the foregoing, as such agreement may from time to
time be amended, modified or supplemented, and (b) any similar agreement
entered into in respect of letters of credit or other credit enhancement
facilities issued in support of any of the foregoing.
"Sharing Agreement" means the Sharing Agreement, dated as of June
1, 1992, among The Connecticut Light and Power Company, Western
Massachusetts Electric Company, Holyoke Water Power Company, Holyoke
Power and Electric Company, the Borrower and NUSCO.
"Significant Contracts" means the following contracts, in each case
as the same may be amended, modified or supplemented from time to time
in accordance with this Agreement:
(i) the Agreement for Capacity Transfer;
(ii) the Sharing Agreement;
(iii) the Tax Allocation Agreement; and
(iv) the Unit Contract.
"Tax Allocation Agreement" means the Tax Allocation Agreement dated
as of January 1, 1990 among NU and the members of the consolidated group
of which NU is the common parent, including, without limitation, the
Borrower.
"Termination Date" means the earlier to occur of (i) April 29,
1997, (ii) May 15, 1996, if the Closing Date shall not have occurred on
or prior to such date, (iii) the date of termination or reduction in
whole of the Commitments pursuant to Section 2.03 or 8.02 or (iv) the
date of acceleration of all amounts payable hereunder and under the
Notes pursuant to Section 8.02.
"Total Capitalization" means, as of any day, the aggregate of all
amounts that would, in accordance with generally accepted accounting
principles applied on a basis consistent with the standards referred to
in Section 1.03 hereof, appear on the balance sheet of the Borrower as
of such day as the sum of (i) the principal amount of all long-term Debt
of the Borrower on such day, (ii) the par value of, or stated capital
represented by, the outstanding shares of all classes of common and
preferred shares of the Borrower on such day, (iii) the surplus of the
Borrower, paid-in, earned and other, if any, on such day and (iv) the
unpaid principal amount of all short-term Debt of the Borrower on such
day.
"Type" has the meaning assigned to such term (i) in the definition
of "Contract Advance" when used in the such context and (i) in the
definition of "Contract Borrowing" when used in such context.
"Unit Contract" means the Unit Contract, dated as of June 5, 1992,
between the Borrower and NAEC.
"Unmatured Default" means the occurrence and continuance of an
event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default.
SECTION 1.02 Computation of Time Periods. In the computation of
periods of time under this Agreement any period of a specified number of days
or months shall be computed by including the first day or month occurring
during such period and excluding the last such day or month. In the case of
a period of time "from" a specified date "to" or "until" a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding".
SECTION 1.03 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles applied on a basis consistent with the application
employed in the preparation of the financial projections referred to in
Section 5.01 hereof.
SECTION 1.04 Computations of Outstandings. Whenever reference is made
in this Agreement to the principal amount outstanding on any date under this
Agreement, such reference shall refer to the sum of the aggregate principal
amount of all Advances outstanding on such date in each case after giving
effect to all Advances to be made on such date and the application of the
proceeds thereof.
ARTICLE II
COMMITMENTS
SECTION 2.01 The Commitments. (a) Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make Advances to the
Borrower from time to time on any Business Day during the period from the
Closing Date until the Termination Date in an aggregate outstanding amount
not to exceed on any day such Lender's Available Commitment (after giving
effect to all Advances to be made on such day and the application of the
proceeds thereof). Within the limits of each Lender's Available Commitment,
the Borrower may request Advances hereunder, repay or prepay Advances and
utilize the resulting increase in the Available Commitments for further
Advances in accordance with the terms hereof.
(b) In no event shall the Borrower be entitled to request or receive
any Advance under subsection (a) that would cause the total principal amount
advanced pursuant to thereto to exceed the Available Commitment. In no event
shall the Borrower be entitled to request or receive any Advance that would
cause the total principal amount outstanding hereunder to exceed the
Commitments.
(c) In addition to each Lender's Commitment under subsection (a) above,
but subject nevertheless to the provisions of subsection (b) above, the
Borrower may request Competitive Advances to be made at the discretion of
each Lender, in accordance with Section 3.03 hereof.
SECTION 2.02 Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a facility fee on the
amount of such Lender's Commitment (whether used or unused) at the Applicable
Facility Fee Rate, effective as of April 15, 1996 (as if the Commitments were
effective as of such date), in the case of each Bank, and from the effective
date specified in the Lender Assignment pursuant to which it became a Lender,
in the case of each other Lender, until the Termination Date, payable
quarterly in arrears on the last day of each March, June, September and
December, commencing the first such date following the Closing Date, with
final payment payable on the Termination Date.
(b) The Borrower agrees to pay to the Administrative Agent and to CSI
the fees specified in the Fee Letter, together with such other fees as may be
separately agreed to between the Borrower and the Administrative Agent.
SECTION 2.03 Reduction of the Commitments. (a) The Borrower may, upon
at least five Business Days' notice to the Administrative Agent, terminate in
whole or reduce ratably in part the Available Commitments of the respective
Lenders; provided (i) that any such partial reduction shall be in the
aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in
excess thereof, (ii) that in no event shall the aggregate Commitments be
reduced hereunder to an amount less than the principal amount outstanding
hereunder and (iii) that in no event shall the Commitments be reduced to an
amount less than the aggregate principal amount of Advances then outstanding.
(b) If the Closing Date does not occur on or prior to May 15, 1996, the
Commitment of each Lender shall automatically terminate.
ARTICLE III
CONTRACT AND COMPETITIVE ADVANCES
SECTION 3.01 Contract Advances. Each Contract Borrowing shall consist
of Contract Advances of the same Type and Interest Period made on the same
Business Day by the Lenders ratably according to their respective
Commitments. The Borrower may request that more than one Borrowing be made
on the same day. Each Contract Borrowing shall be made on notice, given not
later than 11:00 a.m. (New York City time) (i) in the case of Eurodollar Rate
Advances, on the third Business Day prior to the date of the proposed
Borrowing and (ii) in the case of Base Rate Advances, on the day of the
proposed Borrowing, by the Borrower to the Administrative Agent, who shall
give to each Lender prompt notice thereof on the same day such notice is
received. Each such notice of a Contract Borrowing (a "Notice of Contract
Borrowing") shall be in substantially the form of Exhibit 3.01A hereto,
specifying therein the requested (i) date of such Borrowing, (ii) Type of
Advances comprising such Borrowing and (iii) Interest Period for each such
Advance. Each proposed Borrowing shall be subject to the provisions of
Sections 3.02, 4.03 and Article V hereof.
SECTION 3.02 Terms Relating to the Making and of Contract Advances.
(a) Notwithstanding anything in Section 3.01 above to the contrary:
(i) at no time shall more than ten different Contract Borrowings
be outstanding hereunder;
(ii) each Contract Borrowing hereunder shall be in an aggregate
principal amount of not less than $10,000,000 or an integral multiple of
$1,000,000 in excess thereof, or such lesser amount as shall be equal to
the total amount of the Available Commitments for Contract Advances on
such date after giving effect to all other Contract Borrowings to be
made on such date; and
(iii) each Contract Borrowing hereunder which is to be
comprised of Eurodollar Rate Advances shall be in an aggregate principal
amount of not less than $10,000,000.
(b) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower.
SECTION 3.03 (a) Competitive Advances. Each Competitive Borrowing
shall consist of Competitive Advances of the same Type and Interest Period
made by the Lenders in accordance with this Section 3.03 and shall be in a
minimum aggregate principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, except as otherwise provided pursuant to
Section 3.03(b)(iv) hereof. Competitive Advances shall be made in the
amounts accepted by the Borrower in accordance with Section 3.03(b)(iv).
Each Competitive Advance, regardless of which Lender makes such Advance, will
reduce the Available Commitments of all Lenders pro rata as provided in the
definition of "Available Commitments" in Section 1.01 hereof. Promptly after
each Competitive Borrowing, the Administrative Agent will notify each Lender
of the amount of the Competitive Borrowing, the amount by which such Lender's
Available Commitment has been reduced, the date of the Competitive Borrowing
and the Interest Period with respect thereto.
(b) Competitive Bid Procedures.
(i) In order to request Competitive Bids, (A) in the case of any
request for Eurodollar Competitive Advances, the Borrower shall hand
deliver, telex or telecopy to the Administrative Agent a duly completed
Competitive Bid Request in the form of Exhibit 3.03A-1 to be received by
the Administrative Agent not later than 10:00 a.m. (New York City time),
four Business Days prior to a proposed Competitive Borrowing to consist
of Eurodollar Competitive Advances and (B) in the case of any request
for Fixed Rate Competitive Advances, the Borrower shall give telephonic
notice of a proposed Competitive Borrowing to consist of Fixed Rate
Competitive Advances to the Administrative Agent not later than
9:15 a.m. (New York City time) on the day of a proposed Competitive
Borrowing (with written confirmation of the information given by
telephone substantially in the form of Exhibit 3.03A-2 delivered by
hand, telecopy or telex by the Borrower to the Administrative Agent no
later than 5:00 p.m. (New York City time) on the day of such Competitive
Borrowing.) No Contract Advances shall be requested in or made pursuant
to a Competitive Bid Request. A Competitive Bid Request which requests
Eurodollar Competitive Advances that does not conform substantially to
the form of Exhibit 3.03A-1 or 3.03A-2, as applicable, may be rejected
in the Administrative Agent's sole discretion, and the Administrative
Agent shall promptly notify the Borrower of such rejection by telex or
telecopier. Such request shall refer to this Agreement and specify
(1) the Lenders selected by the Borrower to make a Competitive Bid
(which shall be no more than six Lenders), (2) the date of such
Competitive Borrowing (which shall be a Business Day) and the aggregate
principal amount thereof (which shall not be less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof), (3) the Interest
Period with respect thereto and (4) whether the Borrowing then being
requested is to consist of Eurodollar Competitive Advances or Fixed Rate
Competitive Advances. Promptly after its receipt of a Competitive Bid
Request that is not rejected as aforesaid, the Administrative Agent
shall (A) in the case of a proposed Competitive Borrowing to consist of
Eurodollar Competitive Advances, invite by telex or telecopier (in the
form of Exhibit 3.03B hereto) the selected Lenders to bid to make
Competitive Advances pursuant to the Competitive Bid Request and (B) in
the case of a proposed Competitive Borrowing to consist of Fixed Rate
Competitive Advances, not later than 9:30 a.m. (New York City time) on
the day of such Competitive Bid Request, invite the selected Lenders by
telephone to make Competitive Advances pursuant to the Competitive Bid
Request, in accordance with the terms and conditions of this Agreement.
(ii) Each selected Lender may, in its sole discretion, make one or
more Competitive Bids to the Borrower which shall be responsive to the
Competitive Bid Request. Each Competitive Bid by such Lender must be
received by the Administrative Agent (A) in the case of a proposed
Competitive Borrowing to consist of Eurodollar Competitive Advances, by
telex or telecopier (in the form of Exhibit 3.03C-1 hereto) not later
than 9:30 a.m. (New York City time), three Business Days prior to a
proposed Competitive Borrowing and (B) in the case of a proposed
Competitive Borrowing to consist of Fixed Rate Competitive Advances not
later than 9:45 a.m. (New York City time) on the day of a proposed
Competitive Borrowing (subsequently confirmed in writing, not later than
11:00 a.m. (New York City time) substantially in the form of
Exhibit 3.03C-2 hereto). Multiple bids will be accepted by the
Administrative Agent. Competitive Bids, with respect to Eurodollar
Competitive Advances, that do not conform substantially to the format of
Exhibit 3.03C-1 may be rejected by the Administrative Agent after
conferring with, and upon the instruction of, the Borrower, and the
Administrative Agent shall notify the Lender making such non-conforming
bid of such rejection as soon as practicable. Each bid (a "Competitive
Bid") shall refer to this Agreement and specify (A) the principal amount
(which shall be a minimum principal amount of $5,000,000 and in an
integral multiple of $1,000,000 and which may be up to the aggregate
amount of the proposed Competitive Borrowing regardless of the
Commitment of the Lender) of the Competitive Advance that the Lender is
willing to make to the Borrower and (B) the Competitive Bid Rate or
Rates at which the Lender is prepared to make the Competitive Advances.
If any selected Lender shall elect not to make a Competitive Bid, such
Lender shall so notify the Administrative Agent (A) in the case of a
proposed Competitive Borrowing to consist of Eurodollar Competitive
Advances, by telex or telecopier, not later than 9:30 a.m. (New York
City time), three Business Days prior to a proposed Competitive
Borrowing, and (B) in the case of a proposed Competitive Borrowing to
consist of Fixed Rate Competitive Advances, by telephone, telex or
telecopier not later than 9:45 a.m. (New York City time) on the day of a
proposed Competitive Borrowing; provided, however, that failure by any
Lender to give such notice shall not cause such Lender to be obligated
to make any Competitive Advance. A Competitive Bid submitted by a
Lender pursuant to this subsection (ii) shall be irrevocable.
(iii) The Administrative Agent shall (A) in the case of a
proposed Borrowing to consist of Eurodollar Competitive Advances,
promptly notify the Borrower by telex or telecopier and (B) in the case
of a proposed Borrowing to consist of Fixed Rate Competitive Advances,
notify the Borrower by telephone not later than 10:00 a.m. (New York
City time) on the day of such proposed Competitive Borrowing of the
Competitive Bids made, the Competitive Bid Rate, the principal amount of
each Competitive Bid and the identity of the Lender that made each
Competitive Bid.
(iv) The Borrower may, in its sole and absolute discretion, subject
only to the provisions of this subsection (iv), accept or reject any
Competitive Bid. The Borrower shall notify the Administrative Agent by
telephone whether and to what extent it has decided to accept or reject
any or all of the Competitive Bids (specifying each Lender selected by
it to make Competitive Advances, the principal amount of such Advances
and the Competitive Bid Rate) (A) in the case of a Borrowing to consist
of Eurodollar Competitive Advances, by not later than 10:15 a.m. (New
York City time) three Business Days before a proposed Competitive
Borrowing (promptly confirmed by a Competitive Bid Letter, hand
delivered, telexed or telecopied by the Borrower to the Administrative
Agent), and (B) in the case of a Borrowing to consist of Fixed Rate
Competitive Advances, not later than 10:15 a.m. (New York City time) on
the day of a proposed Competitive Borrowing (confirmed in writing
substantially in the form of Exhibit 3.03A-2, hand delivered, telexed or
telecopied to the Administrative Agent not later than 5:00 p.m. (New
York City time) on the day of the proposed Competitive Borrowing);
provided, however, that (1) the failure by the Borrower to give such
notice shall be deemed to be a rejection of all the bids referred to in
subsection (iii) above, (2) the Borrower shall not accept a bid made at
a particular Competitive Bid Rate if the Borrower has decided to reject
a bid made at a lower Competitive Bid Rate, (3) the aggregate amount of
the Competitive Bids accepted by the Borrower shall not exceed the
principal amount specified in the Competitive Bid Request, (4) if the
Borrower shall determine to accept Competitive Bids made at a particular
Competitive Bid Rate but the aggregate amount of all Competitive Bids
made at such Competitive Bid Rate, when added to the aggregate amount of
all Competitive Bids at lower Competitive Bid Rates, would cause the
total amount of Competitive Bids to be accepted by the Borrower to
exceed the principal amount specified in the Competitive Bid Request,
then the Borrower shall accept all such Competitive Bids at such
Competitive Bid Rate in an aggregate amount reduced to eliminate such
excess, which acceptance, in the case of multiple Competitive Bids at
such Competitive Bid Rate, shall be made ratably in accordance with the
amount of each such Competitive Bid (subject to clause (5) below), and
(5) no Competitive Bid shall be accepted for a Competitive Advance
unless such Competitive Advance is in a minimum principal amount of
$5,000,000 and an integral multiple of $1,000,000 in excess thereof;
provided further, however, that if a Competitive Advance must be in an
amount of less than $5,000,000 because of the provisions of (4) above,
such Competitive Advance may be for a minimum of $1,000,000 or any
integral multiple thereof, and in calculating the pro rata allocation of
acceptances of portions of multiple bids at a particular Competitive Bid
Rate pursuant to (4) above, the amounts shall be rounded to integral
multiples of $1,000,000 in a manner which shall be in the discretion of
the Borrower. Notice given by the Borrower pursuant to this
subsection (iv) shall be irrevocable.
(v) The Administrative Agent shall notify each bidding Lender
whether or not its Competitive Bid has been accepted (and if so, in what
principal amount and at what Competitive Bid Rate) (A) in the case of a
proposed Borrowing to consist of Eurodollar Competitive Advances,
promptly by telex or telecopier and (B) in the case of a proposed
Borrowing to consist of Fixed Rate Competitive Advances, by telephone
(such information to be confirmed in writing by the Administrative Agent
to the Lenders not later than 12:00 noon (New York City time) on such
day), not later than 10:30 a.m. (New York City time) on the day of the
Competitive Borrowing and each successful bidder will thereupon become
bound, subject to the other applicable conditions hereof, to make the
Competitive Advance in respect of which its bid has been accepted. The
Administrative Agent shall not be required to disclose to any Lender any
other information with respect to the Competitive Bids submitted, but
the Administrative Agent may, at the request of any Lender, and at the
instruction of the Borrower, provide to such Lender certain information
with respect to Competitive Bids made and accepted as deemed appropriate
by the Borrower.
(vi) Neither the Administrative Agent nor any Lender shall be
responsible to the Borrower for (A) a failure to fund a Competitive
Advance on the date such Advance is requested by the Borrower or (B) the
funding of such Advance at a Competitive Bid Rate or in an amount other
than that confirmed pursuant to subsections (iv) and (v) above due in
each case to delays in communications, miscommunications (including,
without limitation, any variance between telephonic bids or acceptances
and the written notice provided by the Administrative Agent to the
Lenders pursuant to Sections (v) above or the written confirmation
supplied by the Borrower pursuant to subsection (iv) above) and the like
among the Borrower, the Administrative Agent and the Lenders, and the
Borrower agrees to indemnify each Lender for all reasonable costs and
expenses incurred by it in accordance with the terms of Section 4.03(e)
hereof, as a result of any such delay, miscommunication or the like that
results in a failure to fund a Competitive Advance or the funding of a
Competitive Advance at a Competitive Bid Rate or in an amount other than
that set forth in the written notice provided by the Administrative
Agent to the Lenders pursuant to subsection (v) above or the written
confirmation supplied by the Borrower pursuant to subsection (iv) above.
(vii) If the Administrative Agent has elected to submit a
Competitive Bid in its capacity as Lender, such bid must be submitted
directly to the Borrower one quarter of an hour earlier than the latest
time at which the other Lenders are required to submit their bids to the
Administrative Agent pursuant to subsection (ii) above.
(viii) A Competitive Bid Request for Eurodollar Competitive
Advances shall not be made within five Business Days after the date of
any previous Competitive Bid Request for Eurodollar Competitive
Advances.
(ix) All notices required by this Section 3.03 must be made in
accordance with Section 10.02.
(x) To facilitate the administration of this Agreement and the
processing of Competitive Bids, each Lender has submitted, or will
submit upon becoming a Lender pursuant to Section 10.07 hereof, to the
Administrative Agent a completed administrative questionnaire in the
form specified by the Administrative Agent, and each Lender agrees to
promptly notify the Administrative Agent in writing of any change in the
information so provided.
SECTION 3.04 Making of Advances. (a) Each Lender shall, before
12:00 noon (New York City time) on the date of such Borrowing, make available
for the account of its Applicable Lending Office to the Administrative Agent
at the Administrative Agent's address referred to in Section 10.02, in same
day funds, such Lender's portion of such Borrowing. Contract Advances shall
be made by the Lenders pro rata and Competitive Advances shall be made by the
Lender or Lenders whose Competitive Bids therefor have been accepted pursuant
to Section 3.03(b)(iv) in the amounts so accepted. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article V, the Administrative Agent will make such
funds available to the Borrower at the Administrative Agent's aforesaid
address.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing
in accordance with subsection (a) of this Section 3.04, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that
any such Lender (a "non-performing Lender") shall not have so made such
ratable portion available to the Administrative Agent, the non-performing
Lender and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Administrative Agent, at (i) in
the case of the Borrower, the interest rate applicable at the time to
Advances comprising such Borrowing and (ii) in the case of such Lender, the
Federal Funds Rate. Nothing herein shall in any way limit, waive or
otherwise reduce any claims that any party hereto may have against any non-
performing Lender.
(c) The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its Advance on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.
SECTION 3.05 Repayment of Advances. The Borrower shall repay the
principal amount of each Advance on the last day of the Interest Period for
such Advance, which last day shall be the maturity date for such Advance.
SECTION 3.06 Interest. (a) Interest Periods. The period commencing
on the date of each Advance and ending on the last day of the period selected
by the Borrower with respect to such Advance pursuant to the provisions of
this Section 3.06 is referred to herein as an Interest Period (the "Interest
Period"). The duration of each Interest Period shall be (i) in the case of
any Eurodollar Rate Advance or Eurodollar Competitive Advance, 1, 2, 3 or 6
months, (ii) in the case of any Base Rate Advance, 90 days following the date
on which such Advance was made and (iii) in the case of any Fixed Rate
Competitive Advance, any number of days, but no more than 270 days; provided,
however, that no Interest Period may be selected by the Borrower if such
Interest Period would end after the Termination Date.
(b) Interest Rates. The Borrower shall pay interest on the unpaid
principal amount of each Advance owing to each Lender from the date of such
Advance until such principal amount shall be paid in full, at the Applicable
Rate for such Advance (except as otherwise provided in this subsection (b)),
payable as follows:
(i) Eurodollar Rate Advances and Eurodollar Competitive Advances.
If such Advance is a Eurodollar Rate Advance or Eurodollar Competitive
Advance, interest thereon shall be payable on the last day of the
Interest Period therefor and, if any such Interest Period has a duration
of more than three months, also on the day of the third month during
such Interest Period which corresponds to the first day of such Interest
Period (or, if any such month does not have a corresponding day, then on
the last day of such third month); provided that any amount of principal
which is not paid when due (whether at stated maturity, by acceleration
or otherwise) shall bear interest, from the date on which such amount is
due until such amount is paid in full, payable on demand, at a rate per
annum equal at all times to (A) for the remaining term, if any, of the
Interest Period for such Advance, 2% per annum above the Applicable Rate
for such Advance for such Interest Period, and (B) thereafter, 2% per
annum above the Applicable Rate in effect from time to time for Base
Rate Advances.
(ii) Base Rate Advances. If such Advance is a Base Rate Advance,
interest thereon shall be payable quarterly on the last day of each
March, June, September and December and on the date such Base Rate
Advance shall be paid in full; provided that any amount of principal
which is not paid when due (whether at stated maturity, by acceleration
or otherwise) shall bear interest, from the date on which such amount is
due until such amount is paid in full, payable on demand, at a rate per
annum equal at all times to 2% per annum above the Applicable Rate in
effect from time to time for Base Rate Advances.
(iii) Fixed Rate Competitive Advances. If such Advance is a
Fixed Rate Competitive Advance, interest thereon shall be payable on the
last day of the Interest Period therefor and, if any Interest Period has
a duration of more than 90 days, on each day which occurs during such
Interest Period every 90 days from the first day of such Interest
Period, provided that any amount of principal which is not paid when due
(whether at stated maturity, by acceleration or otherwise) shall bear
interest, from the date on which such amount is due until such amount is
paid in full, payable on demand, at a rate per annum equal at all times
to (A) for the remaining, if any, of the original stated maturity of
such Advance, 2% per annum above the rate of interest applicable to such
Advance immediately prior to the date on which such amount became due,
and (B) thereafter, 2% per annum above the sum of the Alternate Base
Rate in effect from time to time plus the Applicable Rate in effect from
time to time for Base Rate Advances.
(c) Other Amounts. Any other amounts payable hereunder that are not
paid when due shall (to the fullest extent permitted by law) bear interest,
from the date when due until paid in full, at a rate per annum equal at all
times to 2% per annum above the Applicable Rate in effect from time to time
for Base Rate Advances, payable on demand.
(d) Interest Rate Determinations. The Administrative Agent shall give
prompt notice to the Borrower and the Lenders of the Applicable Rate
determined from time to time by the Administrative Agent for each Contract
Advance. Each Reference Bank agrees to furnish to the Administrative Agent
timely information for the purpose of determining the Eurodollar Rate for any
Interest Period. If any one Reference Bank shall not furnish such timely
information, the Administrative Agent shall determine such interest rate on
the basis of the timely information furnished by the other two Reference
Banks.
ARTICLE IV
PAYMENTS
SECTION 4.01 Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the other Loan Documents not later than
12:00 noon (New York City time) on the day when due in U.S. Dollars to the
Administrative Agent at its address referred to in Section 10.02 in same day
funds. The Administrative Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal, interest, fees
or other amounts payable to the Lenders, to the respective Lenders to whom
the same are payable, for the account of their respective Applicable Lending
Offices, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of a Lender Assignment and recording of the
information contained therein in the Register pursuant to Section 10.07, from
and after the effective date specified in such Lender Assignment, the
Administrative Agent shall make all payments hereunder and under the Notes in
respect of the interest assigned thereby to the Lender assignee thereunder,
and the parties to such Lender Assignment shall make all appropriate
adjustments in such payments for periods prior to such effective date
directly between themselves.
(b) The Borrower hereby authorizes the Administrative Agent and each
Lender, if and to the extent payment owed to the Administrative Agent or such
Lender, as the case may be, is not made when due hereunder (or, in the case
of a Lender, under the Note held by such Lender), to charge from time to time
against any or all of the Borrower's accounts with the Administrative Agent
or such Lender, as the case may be, any amount so due.
(c) All computations of interest based on the Alternate Base Rate when
based on the Prime Rate and of fees payable pursuant to Section 2.02(a) shall
be made by the Administrative Agent on the basis of a year of 365 or 366
days, as the case may be. All computations of interest and other amounts
pursuant to Section 4.03 shall be made by the Lender claiming such interest
or other amount, on the basis of a year of 360 days. All other computations
of interest and fees hereunder (including computations of interest based on
the Eurodollar Rate and the Federal Funds Rate (including the Alternate Base
Rate if and so long as such Rate is based on the Federal Funds Rate) and any
interest rate applicable to a Competitive Advance) shall be made by the
Administrative Agent on the basis of a year of 360 days. In each such case,
such computation shall be made for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Each such determination by the Administrative
Agent or a Lender shall be conclusive and binding for all purposes, absent
manifest error.
(d) Whenever any payment hereunder or under any other Loan Document
shall be stated to be due, or the last day of an Interest Period hereunder
shall be stated to occur, on a day other than a Business Day, such payment
shall be made and the last day of such Interest Period shall occur on the
next succeeding Business Day, and such extension of time shall in such case
be included in the computation of payment of interest and fees hereunder;
provided, however, that if such extension would cause payment of interest on
or principal of Eurodollar Rate Advances or Eurodollar Competitive Advances
to be made, or the last day of an Interest Period for a Eurodollar Rate
Advance or a Eurodollar Competitive Advance to occur, in the next following
calendar month, such payment shall be made on the next preceding Business Day
and such reduction of time shall in such case be included in the computation
of payment of interest hereunder.
(e) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent
may, in reliance upon such assumption, cause to be distributed to each Lender
on such due date an amount equal to the amount then due such Lender. If and
to the extent the Borrower shall not have so made such payment in full to the
Administrative Agent, such Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender, together with
interest thereon, for each day from the date such amount is distributed to
such Lender until the date such Lender repays such amount to the
Administrative Agent, at the Federal Funds Rate.
SECTION 4.02 Prepayments. (a) The Borrower shall have no right to
prepay any principal amount of any Contract Advances except in accordance
with subsection (b) below. The Borrower shall have no right to prepay any
principal amount of any Competitive Advance.
(b) The Borrower may, upon at least one Business Days' notice to the
Administrative Agent stating the proposed date and aggregate principal amount
of the prepayment, and if such notice is given, the Borrower shall, prepay
the outstanding principal amounts of Contract Advances comprising part of the
same Borrowing, in whole or ratably in part, together with accrued interest
to the date of such prepayment on the principal amount prepaid; provided,
however, that each partial prepayment shall be in an aggregate principal
amount not less than $5,000,000.
SECTION 4.03 Yield Protection. (a) Change in Circumstances.
Notwithstanding any other provision herein, if after the date hereof, the
adoption of or any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not
having the force of law) shall (i) change the basis of taxation of payments
to any Lender of the principal of or interest on any Eurodollar Rate Advance
or Competitive Advance made by such Lender or any fees or other amounts
payable hereunder (other than changes in respect of taxes imposed on the
overall net income of such Lender or its Applicable Lending Office by the
jurisdiction in which such Lender has its principal office or in which such
Applicable Lending Office is located or by any political subdivision or
taxing authority therein), or (ii) shall impose, modify or deem applicable
any reserve, special deposit or similar requirement against commitments or
assets of, deposits with or for the account of, or credit extended by, such
Lender, or (iii) shall impose on such Lender or the London interbank market
any other condition affecting this Agreement or Eurodollar Rate Advances or
Competitive Advances made by such Lender, and the result of any of the
foregoing shall be to increase the cost to such Lender of agreeing to make,
making or maintaining any Advance or to reduce the amount of any sum received
or receivable by such Lender hereunder or under the Notes (whether of
principal, interest or otherwise), then the Borrower will pay to such Lender
upon demand such additional amount or amounts as will compensate such Lender
for such additional costs incurred or reduction suffered.
(b) Capital. If any Lender shall have determined that any change after
the date hereof in any law, rule, regulation or guideline adopted pursuant to
or arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption after the date
hereof of any law, rule, regulation or guideline regarding capital adequacy,
or any change in any of the foregoing or in the interpretation or
administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any Applicable Lending Office of
such Lender) or any Lender's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect (i) of reducing the rate of return on such Lender's capital or on the
capital of such Lender's holding company, if any, as a consequence of this
Agreement, the Commitment of such Lender hereunder or the Advances made by
such Lender pursuant hereto to a level below that which such Lender or such
Lender's holding company could have achieved, but for such applicability,
adoption, change or compliance (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), or (ii) of increasing or otherwise determining the amount
of capital required or expected to be maintained by such Lender or such
Lender's holding company based upon the existence of this Agreement, the
Commitment of such Lender hereunder, the Advances made by such Lender
pursuant hereto and other similar such commitments, agreements or assets,
then from time to time the Borrower shall pay to such Lender upon demand such
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction or allocable capital cost suffered.
(c) Eurodollar Reserves. The Borrower shall pay to each Lender upon
demand, so long as such Lender shall be required under regulations of the
Board of Governors of the Federal Reserve System to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, additional interest on the unpaid principal amount of each
Eurodollar Rate Advance of such Lender, from the date of such Advance until
such principal amount is paid in full, at an interest rate per annum equal at
all times to the remainder obtained by subtracting (i) the Eurodollar Rate
for the Interest Period for such Advance from (ii) the rate obtained by
dividing such Eurodollar Rate by a percentage equal to 100% minus the
Eurodollar Reserve Percentage of such Lender for such Interest Period. Such
additional interest shall be determined by such Lender and notified to the
Borrower and the Administrative Agent.
(d) Breakage Indemnity. The Borrower shall indemnify each Lender
against any loss, cost or reasonable expense which such Lender may sustain or
incur as a consequence of (i) any failure by the Borrower to fulfill on the
date of any Borrowing hereunder of Eurodollar Rate Advances or Competitive
Advances the applicable conditions set forth in Article V, (ii) any failure
by the Borrower to borrow any Eurodollar Rate Advance or Competitive Advance
hereunder after irrevocable Notice of Borrowing has been given pursuant to
Section 3.01, (iii) any payment or prepayment of a Eurodollar Rate Advance or
Competitive Advance required or permitted by any other provision of this
Agreement or otherwise made or deemed made on a date other than the last day
of the Interest Period applicable thereto, (iv) any default in payment or
prepayment of the principal amount of any Eurodollar Rate Advance or
Competitive Advance or any part thereof or interest accrued thereon, as and
when due and payable (at the due date thereof, by irrevocable notice of
prepayment or otherwise) or (v) the occurrence of any Event of Default,
including, in each such case, any loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain any Advance or any part
thereof as a Eurodollar Rate Advance or Competitive Advance. Such loss, cost
or reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by such Lender, of (A) its cost of obtaining the funds
for the Eurodollar Rate Advance or Competitive Advance being paid, prepaid or
not borrowed for the period from the date of such payment, prepayment or
failure to borrow to the last day of the Interest Period for such Advance
(or, in the case of a failure to borrow, the Interest Period for such Advance
which would have commenced on the date of such failure) over (B) the amount
of interest (as reasonably determined by such Lender) that would be realized
by such Lender in reemploying the funds so paid, prepaid or not borrowed for
such period or Interest Period, as the case may be. For purposes of this
subsection (d), it shall be presumed that in the case of any Eurodollar Rate
Advance or Eurodollar Competitive Advance, each Lender shall have funded each
such Advance with a fixed-rate instrument bearing the rates and maturities
designated in the determination of the Applicable Rate for such Advance.
(e) Notices. A certificate of each Lender setting forth such Lender's
claim for compensation hereunder and the amount necessary to compensate such
Lender or its holding company pursuant to subsections (a) through (d) of this
Section 4.03 shall be submitted to the Borrower and the Administrative Agent
and shall be conclusive and binding for all purposes, absent manifest error.
The Borrower shall pay each Lender directly the amount shown as due on any
such certificate within 10 days after its receipt of the same. The failure
of any Lender to provide such notice or to make demand for payment under this
Section 4.03 shall not constitute a waiver of such Lender's rights hereunder;
provided that such Lender shall not be entitled to demand payment pursuant to
subsections (a) through (d) of this Section 4.03, in respect of any loss,
cost, expense, reduction or reserve, if such demand is made more than one
year following the later of such Lender's incurrence or sufferance thereof or
such Lender's actual knowledge of the event giving rise to such Lender's
rights pursuant to such subsections. Each Lender shall use reasonable
efforts to ensure the accuracy and validity of any claim made by it
hereunder, but the foregoing shall not obligate any Lender to assert any
possible invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or been
imposed.
(f) Change in Legality. Notwithstanding any other provision herein, if
the adoption of or any change in any law or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the administration or interpretation thereof shall make it
unlawful for any Lender to make or maintain any Eurodollar Rate Advance or
Eurodollar Competitive Advance or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Rate Advance or Eurodollar
Competitive Advance, then, by written notice to the Borrower and the
Administrative Agent, such Lender may:
(i) declare that Eurodollar Rate Advances and Eurodollar
Competitive Advances will not thereafter be made by such Lender
hereunder, whereupon the right of the Borrower to select Eurodollar Rate
Advances for any Borrowing and any Competitive Borrowing consisting of
Eurodollar Competitive Advances shall be forthwith suspended until such
Lender shall withdraw such notice as provided hereinbelow or shall cease
to be a Lender hereunder pursuant to Section 10.07(g) hereof; and
(ii) require that all outstanding Eurodollar Rate Advances and
Eurodollar Competitive Advances made by it be repaid as of the effective
date of such notice as provided herein below.
Upon receipt of any such notice, the Administrative Agent shall promptly
notify the other Lenders. Promptly upon becoming aware that the
circumstances that caused such Lender to deliver such notice no longer exist,
such Lender shall deliver notice thereof to the Borrower and the
Administrative Agent withdrawing such prior notice (but the failure to do so
shall impose no liability upon such Lender). Promptly upon receipt of such
withdrawing notice from such Lender (or upon such Lender assigning all of its
Commitments, Advances, participation and other rights and obligations
hereunder in accordance with Section 10.07(g)), the Administrative Agent
shall deliver notice thereof to the Borrower and the Lenders and such
suspension shall terminate. Prior to any Lender giving notice to the
Borrower under this subsection (f), such Lender shall use reasonable efforts
to change the jurisdiction of its Applicable Lending Office, if such change
would avoid such unlawfulness and would not, in the sole determination of
such Lender, be otherwise disadvantageous to such Lender. Any notice to the
Borrower by any Lender shall be effective as to each Eurodollar Rate Advance
and Eurodollar Competitive Advance on the last day of the Interest Period
currently applicable to such Eurodollar Rate Advance or Eurodollar
Competitive Advance; provided that if such notice shall state that the
maintenance of such Advance until such last day would be unlawful, such
notice shall be effective on the date of receipt by the Borrower and the
Administrative Agent.
(g) Market Rate Disruptions. If (i) less than two Reference Banks
furnish timely information to the Administrative Agent for determining the
Eurodollar Rate for Eurodollar Rate Advances or Eurodollar Competitive
Advances in connection with any proposed Borrowing or (ii) if the Majority
Lenders shall notify the Administrative Agent that the Eurodollar Rate will
not adequately reflect the cost to such Majority Lenders of making, funding
or maintaining their respective Eurodollar Rate Advances or Eurodollar
Competitive Advances, the right of the Borrower to select or receive
Eurodollar Rate Advances or Eurodollar Competitive Advances for any Borrowing
shall be forthwith suspended until the Administrative Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no
longer exist, and until such notification from the Administrative Agent each
requested Borrowing of Eurodollar Rate Advances and each requested Borrowing
of Eurodollar Competitive Advances hereunder shall be deemed to be a request
for Base Rate Advances.
SECTION 4.04 Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise, but excluding any proceeds received by assignments or
sales of participation in accordance with Section 10.07 hereof to a Person
that is not an Affiliate of the Borrower) on account of the Advances owing to
it (other than pursuant to Section 4.03 hereof) in excess of its ratable
share of payments on account of the Advances obtained by all the Lenders,
such Lender shall forthwith purchase from the other Lenders such
participation in the Advances owing to them as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each
Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an
amount equal to such Lender's ratable share (according to the proportion of
(i) the amount of such Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid
or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 4.04 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were
the direct creditor of the Borrower in the amount of such participation.
Notwithstanding the foregoing, if any Lender shall obtain any such excess
payment involuntarily, such Lender may, in lieu of purchasing participation
from the other Lenders in accordance with this Section 4.04, on the date of
receipt of such excess payment, return such excess payment to the
Administrative Agent for distribution in accordance with Section 4.01(a).
SECTION 4.05 Taxes. (a) All payments by the Borrower hereunder and
under the other Loan Documents shall be made in accordance with Section 4.01,
free and clear of and without deduction for all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Lender and the
Administrative Agent, taxes imposed on its overall net income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Lender
or the Administrative Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes imposed
on its overall net income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred
to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any other Loan
Document to any Lender or the Administrative Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 4.05) such Lender or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under any other
Loan Document or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes and any Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.05) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Any Lender's claim for such indemnification shall be set forth in a
certificate of such Lender setting forth in reasonable detail the amount
necessary to indemnify such Lender pursuant to this subsection (c) and shall
be submitted to the Borrower and the Administrative Agent and shall be
conclusive and binding for all purposes, absent manifest error. The Borrower
shall pay each Lender directly the amount shown as due on any such
certificate within 30 days after the receipt of same. If any Taxes or Other
Taxes for which a Lender or the Administrative Agent has received payments
from the Borrower hereunder shall be finally determined to have been
incorrectly or illegally asserted and are refunded to such Lender or the
Administrative Agent, such Lender or the Administrative Agent, as the case
may be, shall promptly forward to the Borrower any such refunded amount. The
Borrower's, the Administrative Agent's and each Lender's obligations under
this Section 4.05 shall survive the payment in full of the Advances.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
will furnish to the Administrative Agent, at its address referred to in
Section 10.02, the original or a certified copy of a receipt evidencing
payment thereof.
(e) Each Lender shall, on or prior to the date it becomes a Lender
hereunder, deliver to the Borrower and the Administrative Agent such
certificates, documents or other evidence, as required by the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), or treasury
regulations issued pursuant thereto, including Internal Revenue Service
Form 4224 and any other certificate or statement of exemption required by
Treasury Regulation Section 1.1441-1(a) or Section 1.1441-6(c) or any
subsequent version thereof, properly completed and duly executed by such
Lender establishing that it is (a) not subject to withholding under the Code
or (b) totally exempt from United States of America tax under a provision of
an applicable tax treaty. Each Lender shall promptly notify the Borrower and
the Administrative Agent of any change in its Applicable Lending Office and
shall deliver to the Borrower and the Administrative Agent together with such
notice such certificates, documents or other evidence referred to in the
immediately preceding sentence. Each Lender will use good faith efforts to
apprise the Borrower as promptly as practicable of any impending change in
its tax status that would give rise to any obligation by the Borrower to pay
any additional amounts pursuant to this Section 4.05. Unless the Borrower
and the Administrative Agent have received forms or other documents
satisfactory to them indicating that payments hereunder or under the Notes
are not subject to United States of America withholding tax or are subject to
such tax at a rate reduced by an applicable tax treaty, the Borrower or the
Administrative Agent shall withhold taxes from such payments at the
applicable statutory rate in the case of payments to or for any Lender
organized under the laws of a jurisdiction outside the United States of
America. Each Lender represents and warrants that each such form supplied by
it to the Administrative Agent and the Borrower pursuant to this
Section 4.05, and not superseded by another form supplied by it, is or will
be, as the case may be, complete and accurate.
(f) Any Lender claiming any additional amounts payable pursuant to this
Section 4.05 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by the
Borrower or to change the jurisdiction of its Applicable Lending Office if
the making of such a filing or change would avoid the need for or reduce the
amount of any such additional amounts which may thereafter accrue and would
not, in the sole determination of such Lender, be otherwise disadvantageous
to such Lender.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions Precedent to Effectiveness. The effectiveness
of this Agreement is subject to the fulfillment of the following conditions
precedent:
(a) The Administrative Agent shall have received on or before the
Closing Date the following, each dated the Closing Date, in form and
substance satisfactory to each Lender and in sufficient copies for each
Lender (except for the Notes):
(i) This Agreement, duly executed by the Borrower.
(ii) The Notes made to the order of the respective Lenders, duly
executed by the Borrower.
(iii) The Collateral Agency Agreement, duly executed by the
Borrower and by Chemical as the Collateral Agent and Administrative
Agent.
(iv) The PSNH Mortgage Amendment, duly executed by the Borrower and
the Collateral Agent, together with:
(A) acknowledgment copies of Financing Statements (Form
UCC-3) dated on or before the Closing Date duly executed by Bankers
Trust Company and indicating the assignment effected by the PSNH
Mortgage Assignment, and
(B) oral confirmation from Sulloway & Hollis of completion of
all recordings and filings of the Security Documents and all other
actions, as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect (or continue the perfection of) the
Liens created by the Security Documents.
(v) The PSNH Mortgage Assignment, duly executed by the Borrower,
Bankers Trust Company and the Collateral Agent.
(vi) A certificate of the Secretary or Assistant Secretary of the
Borrower certifying (A) that attached thereto are true and correct
copies of (1) the Articles of Incorporation of the Borrower, and all
amendments thereto, as in effect on such date, (2) the By-laws of the
Borrower, as in effect on such date and (3) resolutions of the Board of
Directors of the Borrower approving this Agreement, the other Loan
Documents and the other documents to be delivered by the Borrower
hereunder and thereunder, and of all documents evidencing other
necessary corporate action, if any, with respect to the execution,
delivery and performance by the Borrower of this Agreement and the other
Loan Documents, (B) that such resolutions have not been modified,
revoked or rescinded and are in full force and effect on such date and
(C) the names and true signatures of the officers of the Borrower
authorized to sign this Agreement and the other Loan Documents and the
other documents to be delivered hereunder and thereunder.
(vii) Financial projections (contained in the Information
Memorandum), on assumptions acceptable to the Banks, demonstrating
projected compliance with Section 7.01(j) hereof and the terms of this
Agreement and the Other Loan Documents.
(viii) An audited balance sheet of the Borrower as at
December 31, 1995 and the related statements of the Borrower's results
of operations, changes in retained earnings and cash flows as of and
for the year then ended, together with copies of all Current Reports on
Form 8-K, if any, filed by the Borrower with the Securities and Exchange
Commission since December 31, 1995.
(ix) A certificate of a duly authorized officer of the Borrower
certifying that attached thereto are true and correct copies of all
Governmental Approvals referred to in clause (i) of the definition of
"Governmental Approval" required to be obtained or made by the Borrower
in connection with the execution and delivery of this Agreement or any
Loan Document.
(x) A certificate of a duly authorized officer of the Borrower to
the effect that there is no pending or known threatened action or
proceeding (including, without limitation, any action or proceeding
relating to any environmental protection laws or regulations) affecting
the Borrower or its properties before any court, governmental agency or
arbitrator (A) which affects or purports to affect the legality,
validity or enforceability of the Loan Documents or any of them or
(B) as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would materially
adversely affect the financial condition, properties, prospects or
operations of the Borrower; except, for purposes of clause (B) only,
such as is described in the Disclosure Documents.
(xi) A certificate signed by the Treasurer or Assistant Treasurer
of the Borrower, certifying as to the absence of any material adverse
change in the financial condition, operations, properties or prospects
of the Borrower since December 31, 1995 except as disclosed in the
Disclosure Documents.
(xii) A certificate signed by the Chief Financial Officer,
Treasurer or Assistant Treasurer of NU, certifying as to the absence of
any material adverse change in the financial condition, operations,
properties or prospects of NU since December 31, 1995 except as
disclosed in the disclosure documents referred to in such certificate.
(xiii) A certificate of a duly authorized officer of the
Borrower stating that (i) the representations and warranties contained
in Section 6.01 are correct, in all material respects, on and as of the
Closing Date before and after giving effect to the Advances to be made
on such date and the application of the proceeds thereof, and (ii) no
event has occurred and is continuing which constitutes an Event of
Default or Unmatured Default, or would result from such initial Advances
or the application of the proceeds thereof and
(xiv) Favorable opinions of:
(A) Jeffrey C. Miller, Assistant General Counsel to NUSCO, in
substantially the form of Exhibit 5.01A and as to such other
matters as the Majority Lenders, through the Administrative Agent,
may reasonably request;
(B) Robert A. Bersak, Assistant General Counsel of the
Borrower, in substantially the form of Exhibit 5.01B and as to such
other matters as the Majority Lenders, through the Administrative
Agent, may reasonably request;
(C) Sulloway & Hollis, special New Hampshire counsel to the
Borrower, in substantially the form of Exhibit 5.01C and as to such
other matters as the Majority Lenders, through the Administrative
Agent, may reasonably request;
(D) Drummond Woodsum & MacMahon, special Maine counsel to the
Borrower, in substantially the form of Exhibit 5.01D and as to such
other matters as the Majority Lenders, through the Administrative
Agent, may reasonably request;
(E) Zuccaro, Willis & Bent, special Vermont counsel to the
Borrower, in substantially the form of Exhibit 5.01E and as to such
other matters as the Majority Lenders, through the Administrative
Agent, may reasonably request; and
(F) King & Spalding, counsel to the Administrative Agent, in
substantially the form of Exhibit 5.01F, and as to such other
matters as the Majority Lenders, through the Administrative Agent,
may reasonably request.
(b) All fees and other amounts payable pursuant to Section 2.02 hereof
or pursuant to the Fee Letter shall have been paid (to the extent then due
and payable).
(c) All principal of and interest arising under, and all other amounts
payable in connection with the Existing Revolving Credit Agreement and the
notes issued thereunder shall have been paid in full.
(d) The Administrative Agent shall have received such other approvals,
opinions and documents as the Majority Lenders, through the Administrative
Agent, may reasonably request as to the legality, validity, binding effect or
enforceability of the Loan Documents or the financial condition, properties,
operations or prospects of the Borrower.
SECTION 5.02 Conditions Precedent to Certain Contract Advances and all
Competitive Advances. The obligation of any Lender to make any Contract
Advance to the Borrower (except as set forth in Section 5.03) including the
initial Advance to the Borrower, or to make any Competitive Advance shall be
subject to the conditions precedent that, on the date of such Contract
Advance or Competitive Advance and after giving effect thereto:
(a) the following statement shall be true (and each of the giving of
the applicable notice or request with respect to such Advance and the
performance of such Advance without prior correction by the Borrower shall
constitute a representation and warranty by the Borrower that on the date of
such Advance such statements are true):
(i) the representations and warranties contained in Section 6.01
of this Agreement and in Section 1.02 of the PSNH Mortgage are correct
on and as of the date of such Advance, before and after giving effect to
such Advance and to the application of the proceeds therefrom, as though
made on and as of such date,
(ii) no Event of Default or Unmatured Default has occurred and
is continuing, or would result from such Advance or from the application
of the proceeds thereof, and
(iii) the making of such Advance, when aggregated with all
other outstanding and requested Advances and all other short-term debt
of the Borrower would not cause the Borrower's Debt Limit then in effect
to be exceeded; and
(b) the Borrower shall have furnished to the Administrative Agent such
other approvals, opinions or documents as any Lender, through the
Administrative Agent, may reasonably request as to the legality, validity,
binding effect or enforceability of the Loan Document.
SECTION 5.03 Conditions Precedent to Other Contract Advances. The
obligation of the Bank to make any Contract Advance that would not cause the
aggregate outstanding amount of the Contract Advances made by such Lender
(outstanding immediately prior to and after the making of such Contract
Advance) to increase shall be subject to the conditions precedent that, on
the date of such Contract Advance and after giving effect thereto:
(a) the following statement shall be true (and each of the giving of
the applicable notice or request with respect to such Contract Advance and
the acceptance of such Contract Advance without prior correction by the
Borrower shall constitute a representation and warranty by the Borrower that
on the date of such Contract Advance such statements are true):
(i) the representations and warranties contained in Section 6.01
of this Agreement (other than those set forth in the last sentence of
Section 6.01(e) and Section 6.01(f)) and in Section 1.02(b) of the PSNH
Mortgage are correct on and as of the date of such Contract Advance,
before and after giving effect to such Contract Advance and to the
application of the proceeds therefrom, as though made on and as of such
date, and
(ii) no Event of Default has occurred and is continuing, or would
result from such Advance or from the application of the proceeds
thereof, and
(iii) the making of such Advance, when aggregated with all
other outstanding and requested Advances and all other short-term debt
of the Borrower would not cause the Borrower's Debt Limit then in effect
to be exceeded; and
(b) the Borrower shall have furnished to the Administrative Agent such
other approvals, opinions or documents as any Lender, through the
Administrative Agent, may reasonably request as to the legality, validity,
binding effect or enforceability of the Loan Documents.
SECTION 5.04 Reliance on Certificates. The Lenders and the
Administrative Agent shall be entitled to rely conclusively upon the
certificates delivered from time to time by officers of the Borrower, NU and
the other parties to the Significant Contracts as to the names, incumbency,
authority and signatures of the respective persons named therein until such
time as the Administrative Agent may receive a replacement certificate, in
form acceptable to the Administrative Agent, from an officer of such Person
identified to the Administrative Agent as having authority to deliver such
certificate, setting forth the names and true signatures of the officers and
other representatives of such Person thereafter authorized to act on behalf
of such Person, and, in all cases, the Lenders and the Administrative Agent
may rely on the information set forth in any such certificate including,
without limitation, information relating to the Debt Limit.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01 Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized and validly existing
under the laws of the State of New Hampshire. The Borrower is duly qualified
to do business in, and is in good standing in, all other jurisdictions where
the nature of its business or the nature of property owned or used by it
makes such qualifications necessary.
(b) The execution, delivery and performance by the Borrower of the Rate
Agreement, each Loan Document and each Significant Contract to which it is a
party are within the Borrower's corporate powers, have been duly authorized
by all necessary corporate action, and do not and will not contravene (i) the
Borrower's charter or by-laws or (ii) any law or legal or contractual
restriction binding on or affecting the Borrower; and such execution,
delivery and performance do not or will not result in or require the creation
of any Lien (other than pursuant hereto or pursuant to the Security Documents
or the First Mortgage Indenture) upon or with respect to any of its
properties.
(c) All Governmental Approval referred to in clauses (i) and (ii) of
the definition of "Governmental Approvals" have been duly obtained or made,
and all applicable periods of time for review, rehearing or appeal with
respect thereto have expired. The Borrower has obtained all Governmental
Approvals referred to in clause (iii) of the definition of "Governmental
Approvals", except those not yet required but which are obtainable in the
ordinary course of business as and when required and those the absence of
which would not materially adversely affect the financial condition,
properties, prospects or operations of the Borrower as a whole.
(d) This Agreement, the Rate Agreement, each other Loan Document and
each Significant Contract are legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective
terms; subject to the qualifications, however, that the enforcement of the
rights and remedies herein and therein is subject to bankruptcy and other
similar laws of general application affecting rights and remedies of
creditors, that the remedy of specific performance or of injunctive relief is
subject to the discretion of the court before which any proceedings therefor
may be brought, and that indemnification against violations of securities and
similar laws may be subject to matters of public policy.
(e) The audited balance sheet of the Borrower as at December 31, 1995,
and the related statements of the Borrower setting forth the results of
operations, retained earnings and cash flows of the Borrower for the fiscal
year then ended, copies of which have been furnished to each Bank, fairly
present in all material respects the financial condition, results of
operations, retained earnings and cash flows of the Borrower at and for the
year ended on such date, and have been prepared in accordance with generally
accepted accounting principles consistently applied. Except as reflected in
such financial statements, the Borrower has no material non-contingent
liabilities, and all contingent liabilities have been appropriately reserved.
The financial projections referred to in Section 5.01(a)(iv), have each been
prepared in good faith and on reasonable assumptions. Since December 31,
1995, there has been no material adverse change in the Borrower's financial
condition, operations, properties or prospects other than as disclosed in the
Disclosure Documents.
(f) Except as set forth in the Disclosure Documents, there is no
pending or known threatened action or proceeding (including, without
limitation, any action or proceeding relating to any environmental protection
laws or regulations) affecting the Borrower or its properties before any
court, governmental agency or arbitrator, (i) which affects or purports to
affect the legality, validity or enforceability of the Loan Documents, the
Rate Agreement or any Significant Contract or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, would materially adversely affect the financial condition,
properties, prospects or operations of the Borrower as a whole.
(g) All insurance required by Section 7.01(c) hereof will be in full
force and effect.
(h) No ERISA Plan Termination Event has occurred nor is reasonably
expected to occur with respect to any ERISA Plan which would materially
adversely affect the financial condition, properties, prospects or operations
of the Borrower, except as disclosed to and consented by the Majority Lenders
in writing. Since the date of the most recent Schedule B (Actuarial
Information) to the annual report of the Borrower (Form 5500 Series), if any,
there has been no material adverse change in the funding status of the ERISA
Plans referred to therein and no "prohibited transaction" has occurred with
respect thereto, except as described in the Borrower's Annual Report on Form
10-K for the year ended December 31, 1995 and except as the same may be
exempt pursuant to Section 408 of ERISA and regulations and orders
thereunder. Neither the Borrower nor any of its ERISA Affiliates has
incurred nor reasonably expects to incur any material withdrawal liability
under ERISA to any ERISA Multiemployer Plan, except as disclosed to and
consented by the Majority Lenders in writing.
(i) The Major Electric Generating Plants are on land in which the
Borrower owns a full or an undivided fee interest subject only to Liens
permitted by Section 7.02(a) hereof, which do not materially impair the
usefulness to the Borrower of such properties; the electric transmission and
distribution lines of the Borrower in the main are located in New Hampshire
and on land owned in fee by the Borrower or over which the Borrower has
easements, or are in or over public highways or public waters pursuant to
adequate statutory or regulatory authority, and any defects in the title to
such transmission and distribution lands or easements are in the main curable
by the exercise of the Borrower's right of eminent domain upon a finding that
such eminent domain proceedings are necessary to meet the reasonable
requirements of service to the public; the Borrower enjoys peaceful and
undisturbed possession under all of the leases under which it is operating,
none of which contains any unusual or burdensome provision which will
materially affect or impair the operation of the Borrower; and the Security
Documents create valid Liens in the Collateral, subject only to Liens
permitted by Section 7.02(a) hereof, and, all filings and other actions
necessary to perfect and protect such security interests (to the extent such
security interests may be perfected or protected by filing) have been taken.
(j) No material part of the properties, business or operations of the
Borrower are materially adversely affected by any fire, explosion, accident,
strike, lockout or other labor disputes, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (except for any
such circumstance, if any, which is covered by insurance which coverage has
been confirmed and not disputed by the relevant insurer or by fully-funded
self-insurance programs).
(k) The Borrower has filed all tax returns (Federal, state and local)
required to be filed and paid taxes shown thereon to be due, including
interest and penalties, or, to the extent the Borrower is contesting in good
faith an assertion of liability based on such returns, has provided adequate
reserves in accordance with generally accepted accounting principles for
payment thereof.
(l) No exhibit, schedule, report or other written information provided
by the Borrower or its agents to the Lenders in connection with the
negotiation, execution and closing of this Agreement (including, without
limitation, the Information Memorandum) knowingly contained when made any
material misstatement of fact or knowingly omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances under which they were made.
(m) No event has occurred and is continuing which constitutes a
material default under the Rate Agreement or any Significant Contract.
(n) All proceeds of the Advances shall be used for general working
capital and for the payment in full of all amounts outstanding under the
Existing Revolving Credit Agreement. No proceeds of any Advance will be used
(i) to acquire any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934 or (ii) to buy or carry any
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System) or to extend credit to others for
such purpose. The Borrower (i) is not an "investment company" within the
meaning ascribed to that term in the Investment Company Act of 1940 and
(ii) is not engaged in the business of extending credit for the purpose of
buying or carrying margin stock.
ARTICLE VII
COVENANTS OF THE BORROWER
SECTION 7.01 Affirmative Covenants. So long as any Note shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower shall,
unless the Majority Lenders shall otherwise consent in writing:
(a) Use of Proceeds. Apply all proceeds of each Advance solely as
specified in Section 6.01(n) hereof.
(b) Payment of Taxes, Etc. Pay and discharge before the same shall
become delinquent, all taxes, assessments and governmental charges, royalties
or levies imposed upon it or upon its property except to the extent the
Borrower is contesting the same in good faith by appropriate proceedings and
has set aside adequate reserves for the payment thereof.
(c) Maintenance of Insurance. Maintain, or cause to be maintained,
insurance (including appropriate plans of self-insurance) covering the
Borrower and its properties in effect at all times in such amounts and
covering such risks as may be required by law and in addition as is usually
carried by companies engaged in similar businesses and owning similar
properties.
(d) Preservation of Existence, Etc. Preserve and maintain its
corporate existence, material rights (statutory and otherwise) and franchises
except as otherwise expressly provided for in the Security Documents.
(e) Compliance with Laws, Etc. Comply in all material respects with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority, including without limitation any such laws, rules,
regulations and orders relating to utilities, zoning, environmental
protection, use and disposal of Hazardous Substances, land use, construction
and building restrictions, and employee safety and health matters relating to
business operations, except to the extent (i) that the Borrower is contesting
the same in good faith by appropriate proceedings or (ii) that any such non-
compliance, and the enforcement or correction thereof, would not materially
adversely affect the financial condition, properties, prospects or operations
of the Borrower as a whole.
(f) Inspection Rights. At any time and from time to time upon
reasonable notice, permit the Administrative Agent and its agents and
representatives to examine and make copies of and abstracts from the records
and books of account of, and the properties of, the Borrower and to discuss
the affairs, finances and accounts of the Borrower with the Borrower and of
its officers, directors and accountants.
(g) Keeping of Books. Keep proper records and books of account, in
which full and correct entries shall be made of all financial transactions of
the Borrower and the assets and business of the Borrower, in accordance with
good accounting practices consistently applied.
(h) Performance of Related Agreements. From and after the effective
date of the Rate Agreement and each Significant Contract, (i) perform and
observe all material terms and provisions of such agreements to be performed
or observed by the Borrower and (ii) take all reasonable steps to enforce
such agreements substantially in accordance with their terms and to preserve
the rights of the Borrower thereunder; provided, that the foregoing
provisions of this Section 7.01(h) shall not preclude the Borrower from any
waiver, amendment, modification, consent or termination permitted under
Section 7.02(g) hereof.
(i) Collection of Accounts Receivable. Promptly bill, and diligently
pursue collection of, in accordance with customary utility practices, all
accounts receivable owing to the Borrower and all other amounts that may from
time to time be owing to the Borrower for services rendered or goods sold.
(j) Maintenance of Financial Covenants.
(i) Operating Income to Interest Expense. Maintain a ratio of
Operating Income to Interest Expense of not less than (A) 1.75 to 1.00
for each period of four consecutive fiscal quarters on each quarter-end
ending on or prior to June 30, 1997 and (B) 2.00 to 1.00 for each period
of four consecutive fiscal quarters, ending on each quarter-end after
such date.
(ii) Common Equity to Total Capitalization. Maintain at all times
a ratio of Common Equity to Total Capitalization of not less than (A)
0.285 to 1.00 during each fiscal quarter ending on or prior to June 30,
1997 and (B) 0.30 to 1.00 during each fiscal quarter ending after such
date.
(k) Maintenance of Properties, Etc. (c) As to properties of the type
described in Section 6.01(i) hereof, maintain title of the quality described
therein; and (d) preserve, maintain, develop, and operate in substantial
conformity with all laws, material contractual obligations and prudent
practices prevailing in the industry, all of its properties which are used or
useful in the conduct of its business in good working order and condition,
ordinary wear and tear excepted, except to the extent such non-conformity
would not materially adversely affect the financial condition, properties,
prospects or operations of the Borrower as a whole.
(l) Governmental Approvals. Duly obtain on or prior to such date as
the same may become legally required, and thereafter maintain in effect at
all times, all Governmental Approvals on its part to be obtained, except
those the absence of which would not materially adversely affect the
financial condition, properties, prospects or operations of the Borrower as a
whole.
(m) Further Assurances. Promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or that any Lender through the Administrative Agent may reasonably request in
order to fully give effect to the interests and properties purported to be
covered by the Security Documents.
SECTION 7.02 Negative Covenants. So long as any Note shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower shall
not, without the prior written consent of the Majority Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to exist any lien,
security interest, or other charge or encumbrance (including the lien or
retained security title of a conditional vendor) of any kind, or any other
type of preferential arrangement the intent or effect of which is to assure a
creditor against loss or to prefer one creditor over another creditor upon or
with respect to any of its properties of any character (any of the foregoing
being referred to herein as a "Lien") whether now owned or hereafter
acquired, or sign or file under the Uniform Commercial Code of any
jurisdiction a financing statement which names the Borrower as debtor, sign
any security agreement authorizing any secured party thereunder to file such
financing statement, or assign accounts, excluding, however, from the
operation of the foregoing restrictions the Liens created or perfected under
the Loan Documents and the following, whether now existing or hereafter
created or perfected:
(i) Liens on property specifically reserved, excepted and excluded
by subparagraphs (c) through (g) and subparagraph (j) following the
Granting Clauses section of the First Mortgage Indenture;
(ii) Permitted Encumbrances (as defined in the PSNH Mortgage)
on the Indenture Assets (except Liens referred to in paragraphs (s) and
(t) of Schedule C to the PSNH Mortgage hereafter directly created by the
Borrower, provided, however, that the Borrower may create any such Lien
with the prior consent of the Majority Lenders if such Lien would not
materially adversely affect the security granted under the PSNH
Mortgage, as determined by the Majority Lenders in their reasonable
discretion), provided that in no event shall the outstanding principal
amount of the First Mortgage Bonds exceed at any time the First Mortgage
Bond Amount;
(iii) Liens referred to in paragraphs (b) through (t) of Schedule C
to the PSNH Mortgage on realty or personalty that is subject to the Lien
of the First Mortgage Indenture but is not also subject to the Lien of
the PSNH Mortgage; provided, however, that the aggregate principal
amount of the Debt at any one time outstanding secured by purchase money
Liens permitted by paragraph (m) of Schedule C to the PSNH Mortgage
including Liens of a conditional vendor that are the functional
equivalent of purchase money Liens, shall not exceed $20,000,000; and
(iv) Liens created or perfected under or in connection with (A)the
Other Loan Documents and (B) the Pledge Agreements referred to in the
Series D Reimbursement Agreement and the Series E Reimbursement
Agreement.
(b) Debt. Create, incur or assume any Debt unless, after giving effect
thereto, (i) no Event of Default or Unmatured Default shall have occurred and
be continuing on the date of such creation, incurrence or assumption
(determined in the case of Section 7.01(j)(i) as though such Debt were
created, incurred or assumed as of the first day of the immediately preceding
fiscal quarter and using the Borrower's most recent annual actuarial
determinations in the computation of Debt referred to in clause (ix) of the
definition of "Debt") and (ii) the Borrower shall have determined that, on
the basis of the assumptions and forecasts set forth in the most recent
operating budget/forecast of operations delivered pursuant to
Section 7.03(iv) hereof (which the Borrower continues to believe to be
reasonable), the Borrower will continue to be in compliance at all times with
the provisions of Section 7.01(j) hereof. The Borrower will furnish evidence
of its compliance with this subsection (b) for each fiscal quarter pursuant
to Section 7.03(ii) hereof.
(c) Mergers, Etc. Merge with or into or consolidate with or into, or
acquire all or substantially all of the assets of, any Person.
(d) Sales, Etc., of Assets. Sell, lease, transfer or otherwise dispose
of all or any substantial part of its assets (other than sales, transfers or
other dispositions of receivables) whether in a single transaction or series
of transactions during any consecutive 12-month period except for sales,
leases, transfers or other dispositions in the ordinary course of the
Borrower's business in accordance with ordinary and customary terms and
conditions.
For purposes of this subsection (d) any transaction or series of
transactions during any consecutive 12-month period shall be deemed to
involve a "substantial part" of the Borrower's assets if, in the aggregate,
(A) the value of such assets equals or exceeds 10% of the total assets of the
Borrower reflected in the financial statements of the Borrower delivered
pursuant to Section 7.03(ii) or 7.03(iii) hereof in respect of the fiscal
quarter or year ending on or immediately prior to the commencement of such
12-month period or (B) for the four calendar quarters ending on or
immediately prior to commencement of such 12-month period, the gross revenue
derived by the Borrower from such assets shall equal or exceed 10% of the
total gross revenue of the Borrower.
(e) Restricted Payments. Declare or pay any dividend, or make any
payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any share of any class of capital
stock of the Borrower (other than stock splits and dividends payable solely
in equity securities of the Borrower), or purchase, redeem, retire, or
otherwise acquire for value any shares of any class of capital stock of the
Borrower or any warrants, rights, or options to acquire any such Debt or
shares, now or hereafter outstanding, or make any distribution of assets to
any of its shareholders (any such transaction being a "Restricted Payment")
except for Restricted Payments made in compliance with the following
conditions:
(i) The Borrower may not make any Restricted Payments if an Event
of Default or Unmatured Default shall have occurred and be continuing.
(ii) The Borrower may not make any Restricted Payments during any
fiscal quarter if, after giving effect thereto (and to the other
computations set forth below in this clause (ii)), the Borrower would
not be in full compliance with Section 7.01(j) hereof. For purposes of
determining compliance with Section 7.01(j) under this clause (ii),
computations under Section 7.01(j) shall be made as of the date of such
Restricted Payment, except that, retained earnings shall be determined
as of the last day of the immediately preceding fiscal quarter (adjusted
for all Restricted Payments made after the last day of such preceding
fiscal quarter).
(iii) The Borrower may not make any Restricted Payments unless,
after giving effect thereto, the Borrower shall have determined that, on
the basis of the assumptions and forecasts set forth in the most recent
operating budget/forecast of operations delivered pursuant to Section
7.03(iv) hereof (which the Borrower continues to believe to be
reasonable) the Borrower will continue to be in compliance at all times
with the provisions of Section 7.01(j) hereof.
(f) Compliance with ERISA.
(i) Terminate, or permit any ERISA Affiliate to terminate, any
ERISA Plan so as to result in any material (in the opinion of the Majority
Lenders) liability of the Borrower to the PBGC, or (ii) permit to exist any
occurrence of any Reportable Event (as defined in
Title IV of ERISA), or any other event or condition, which presents a
material (in the opinion of the Majority Lenders) risk of such a termination
by the PBGC of any ERISA Plan and such a material liability to the Borrower.
(g) Related Agreements.
(i) Amendments. Amend, modify or supplement or give any consent,
acceptance or approval to any amendment, modification or supplement or
deviation by any party from the terms of, the Rate Agreement or any
Significant Contract, except, with respect only to the Significant
Contracts, any amendment, modification or supplement thereto that would
not reduce the rights or entitlements of the Borrower thereunder in any
material way.
(ii) Termination. Cancel or terminate (or consent to any
cancellation or termination of) the Rate Agreement or any Significant
Contract prior to the expiration of its stated term, provided that this
subsection (ii) shall not restrict the rights of the Borrower to enforce
any remedy against any obligor under any Significant Contract in the
event of a material breach or default by such obligor thereunder if and
so long as the Borrower shall have provided to the Administrative Agent
at least 30 days prior written notice of the enforcement action proposed
to be undertaken by the Borrower.
(h) Change in Nature of Business. Engage in any material business
activity other than those established and engaged in on the date hereof.
(i) Ownership in Seabrook and Nuclear Plants. Acquire, directly or
indirectly, any ownership interest or any additional ownership interest of
any kind in any nuclear-powered electric generating plant.
(j) Subsidiaries. Create or suffer to exist any active subsidiaries
other than Properties, Inc., a New Hampshire corporation; or permit any
material assets or business to be maintained at or conducted by any
subsidiary except for the assets owned by Properties, Inc. not exceeding
$20,000,000.
(k) Debt Limit. At any time, cause or permit the Debt Limit to be
exceeded, by voluntary incurrence of short-term debt or by other means.
SECTION 7.03 Reporting Obligations. So long as any Note shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower shall,
unless the Majority Lenders shall otherwise consent in writing, furnish to
the Administrative Agent in sufficient copies for each Lender, the following:
(i) as soon as possible and in any event within five (5) days
after the occurrence of each Event of Default or Unmatured Default
continuing on the date of such statement, a statement of the Chief
Financial Officer, Treasurer or Assistant Treasurer of the Borrower
setting forth details of such Event of Default or Unmatured Default
and the action which the Borrower proposes to take with respect
thereto;
(ii) as soon as available and in any event within fifty (50)
days after the end of each of the first three quarters of each
fiscal year of the Borrower, (A) if and so long as the Borrower is
required to submit to the Securities and Exchange Commission a
report on Form 10-Q, a copy of the Borrower's report on Form 10-Q
submitted to the Securities and Exchange Commission with respect to
such quarter and (B) if the Borrower ceases to be required to
submit such report, a balance sheet of the Borrower as of the end
of such quarter and statements of income and retained earnings and
of cash flows of the Borrower for the period commencing at the end
of the previous fiscal year and ending with the end of such
quarter, all in reasonable detail and duly certified (subject to
year-end audit adjustments) by the Chief Financial Officer,
Treasurer or Assistant Treasurer of the Borrower as having been
prepared in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the
financial statements referred to in Section 6.01(e) hereof, in each
such case, delivered together with a certificate of said officer
(1) stating that no Event of Default or Unmatured Default has
occurred and is continuing or, if an Event of Default or Unmatured
Default has occurred and is continuing, a statement as to the
nature thereof and the action which the Borrower proposes to take
with respect thereto and (2) (y) demonstrating compliance with
Section 7.01(j) for and as of the end of such fiscal quarter and
compliance with Section 7.02(b), as of the dates on which any Debt
was created, incurred or assumed (using the Borrower's most recent
annual actuarial determinations in the computation of Debt referred
to in clause (ix) in the definition of "Debt"), and (z)
demonstrating, after giving effect to the incurrence of any Debt
created, incurred or assumed during such fiscal quarter (using the
Borrower's most recent annual actuarial determinations in the
computation of Debt referred to in clause (ix) in the definition of
"Debt"), compliance with Section 7.01(j) for the remainder of the
fiscal year of the Borrower based on the operating budget/forecast
of operations delivered pursuant to Section 7.03(iv) hereof for
such fiscal year, in each case, such demonstration to be in a
schedule (in form satisfactory to the Majority Lenders) which sets
forth the computations used by the Borrower in determining such
compliance;
(iii) as soon as available and in any event within 105
days after the end of each fiscal year of the Borrower, (A) if and
so long as the Borrower is required to submit to the Securities and
Exchange Commission a report on Form 10-K, a copy of the Borrower's
report on Form 10-K submitted to the Securities and Exchange
Commission with respect to such year and (B) if the Borrower ceases
to be required to submit such report, a copy of the annual audit
report for such year for the Borrower including therein a balance
sheet of the Borrower as of the end of such fiscal year and
statements of income and retained earnings and of cash flows of the
Borrower for such fiscal year, in each case certified by a
nationally-recognized independent public accountant, in each such
case delivered together with a certificate of the Chief Financial
Officer, Treasurer or Assistant Treasurer (A) (1) stating that the
financial statements were prepared in accordance with generally
accepted accounting principles consistent with those applied in the
preparation of financial statements referred to in Section 6.01(e)
hereto, and (2) no Event of Default or Unmatured Default has
occurred and is continuing, or if an Event of Default or Unmatured
Default has occurred and is continuing, a statement as to the
nature thereof and the action which the Borrower proposes to take
with respect thereto and (B) demonstrating compliance with Section
7.01(j) for and as of the end of such fiscal year and compliance
with Section 7.02(b), as of the dates on which any Debt was
created, incurred or assumed (using the Borrower's most recent
annual actuarial determinations in the computation of Debt referred
to in clause (ix) in the definition of "Debt"), such demonstration
to be in a schedule (in form satisfactory to the Majority Lenders)
which sets forth the computations used by the Borrower in
determining such compliance.
(iv) as soon as available and in any event before March 31 of
each fiscal year a copy of an operating budget/forecast of
operations of the Borrower as approved by the Board of Directors of
the Borrower in form satisfactory to the Lenders for the next
fiscal year of the Borrower, together with a certificate of the
Chief Financial Officer, Treasurer or Assistant Treasurer of the
Borrower stating that such budget/forecast was prepared in good
faith and on reasonable assumptions;
(v) as soon as available and in any event no later than the
New Hampshire Public Utilities Commission shall have received the
Borrower's annual submission, if any, relating to the "return on
equity collar" referred to in the Rate Agreement, a copy of such
annual submission of the Borrower;
(vi) as soon as possible and in any event (A) within 30 days
after the Borrower knows or has reason to know that any ERISA Plan
Termination Event described in clause (i) of the definition of
ERISA Plan Termination Event with respect to any ERISA Plan or
ERISA Multiemployer Plan has occurred and (B) within 10 days after
the Borrower knows or has reason to know that any other ERISA Plan
Termination Event with respect to any ERISA Plan or ERISA
Multiemployer Plan has occurred, a statement of the Chief Financial
Officer, Treasurer or Assistant Treasurer of the Borrower
describing such ERISA Plan Termination Event and the action, if
any, which the Borrower proposes to take with respect thereto;
(vii) promptly after receipt thereof by the Borrower or
any of its ERISA Affiliates from the PBGC, copies of each notice
received by the Borrower or any such ERISA Affiliate of the PBGC's
intention to terminate any ERISA Plan or ERISA Multiemployer Plan
or to have a trustee appointed to administer any ERISA Plan or
ERISA Multiemployer Plan;
(viii) promptly and in any event within 30 days after the
filing thereof with the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual report (Form 5500
Series) with respect to each ERISA Plan (if any) to which the
Borrower is a contributing employer;
(ix) promptly after receipt thereof by the Borrower or
any of its ERISA Affiliates from an ERISA Multiemployer Plan
sponsor, a copy of each notice received by the Borrower or any of
its ERISA Affiliates concerning the imposition or amount of
withdrawal liability in an aggregate principal amount of at least
$10,000,000 pursuant to Section 4202 of ERISA in respect of which
the Borrower may be liable;
(x) promptly after the Borrower becomes aware of the
occurrence thereof, notice of all actions, suits, proceedings or
other events (A) of the type described in Section 6.01(f), or
(B) which purport to affect the legality, validity or
enforceability of any of the Loan Documents or Significant
Contracts;
(xi) promptly after the sending or filing thereof, copies of
all such proxy statements, financial statements, and reports which
the Borrower sends to its public security holders (if any) or files
with, and copies of all regular, periodic and special reports and
all registration statements and periodic or special reports, if
any, which the Borrower files with, the Securities and Exchange
Commission or any governmental authority which may be substituted
therefor, or with any national securities exchange;
(xii) promptly after receipt thereof, any assertion of the
character described in Section 8.01(h) hereof and the action the
Borrower proposes to take with respect thereto;
(xiii) promptly after knowledge of any material default
under the Rate Agreement or any Significant Contract, notice of
such default and the action the Borrower proposes to take with
respect thereto;
(xiv) promptly after knowledge of any amendment,
modification, or other change to the Rate Agreement or any
Significant Contract or to any Governmental Approval affecting the
Rate Agreement, notice of such amendment, modification or other
change, it being understood that for purposes of this clause (xiv)
any filing by the Borrower in the ordinary course of the Borrower's
business with, or order issued or action taken by, a governmental
authority or regulatory body to implement the terms of the Rate
Agreement shall not be considered an amendment, modification or
change to a Governmental Approval affecting the Rate Agreement; and
(xv) promptly after requested, such other information
respecting the financial condition, operations, properties,
prospects or otherwise, of the Borrower as the Administrative Agent
or Majority Lenders may from time to time reasonably request in
writing.
ARTICLE VIII
DEFAULTS
SECTION 8.01 Events of Default. The following events shall each
constitute an "Event of Default" if the same shall occur and be continuing
after the grace period and notice requirement (if any) applicable thereto:
(a) The Borrower shall fail to pay any principal of any Note when due
or shall fail to pay any interest on any Note, fees or other amounts within
two days after the same becomes due; or
(b) Any representation or warranty made by the Borrower (or any of its
officers or agents) in this Agreement, any other Loan Document, certificate
or other writing delivered pursuant hereto or thereto shall prove to have
been incorrect in any material respect when made or deemed made; or
(c) The Borrower shall fail to perform or observe any term or covenant
on its part to be performed or observed contained in Sections 7.01(a), (d) or
(j), Section 7.02 or Section 7.03(i) hereof; or
(d) The Borrower shall fail to perform or observe any other term or
covenant on its part to be performed or observed contained in this Agreement
or any Loan Document and any such failure shall remain unremedied, after
written notice thereof shall have been given to the Borrower by the
Administrative Agent or any Lender, for a period of 30 days; or
(e) The Borrower shall fail to pay any of its Debt when due (including
any interest or premium thereon but excluding Debt evidenced by the Notes and
excluding other Debt aggregating in no event more than $10,000,000 in
principal amount at any one time) whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise, and such failure shall
continue after the applicable grace period, if any, specified in any
agreement or instrument relating to such Debt; or any other default under any
agreement or instrument relating to any such Debt, or any other event, shall
occur and shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or
any such Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment or as a
result of the Borrower's exercise of a prepayment option) prior to the stated
maturity thereof; unless in each such case the obligee under or holder of
such Debt or the trustee with respect to such Debt shall have waived in
writing such circumstance without consideration having been paid by the
Borrower so that such circumstance is no longer continuing; or
(f) The Borrower shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make an assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Borrower seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of its debts
under any law relating to bankruptcy, insolvency, or reorganization or relief
of debtors, or seeking the entry of an order for relief or the appointment of
a receiver, trustee, or other similar official for it or for any substantial
part of its property and, in the case of a proceeding instituted against the
Borrower, either the Borrower shall consent thereto or such proceeding shall
remain undismissed or unstayed for a period of 90 days or any of the actions
sought in such proceeding (including without limitation the entry of an order
for relief against the Borrower or the appointment of a receiver, trustee,
custodian or other similar official for the Borrower or any of its property)
shall occur; or the Borrower shall take any corporate or other action to
authorize any of the actions set forth above in this subsection (f); or
(g) Any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Borrower or its properties and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order and shall not have been stayed or (ii) there
shall be any period of 15 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(h) Any material provision of any Loan Document, the Rate Agreement or
any Significant Contract shall for any reason other than the express terms
thereof or the exercise of any right or option expressly contained therein
cease to be valid and binding on any party thereto except as otherwise
expressly permitted by the exceptions and provisos contained in
Section 7.02(g) hereof; or any party thereto other than the Lenders shall so
assert in writing provided that in the case of any party other than the
Borrower making such assertion in respect of the Rate Agreement or any
Significant Contract, such assertion shall not in and of itself constitute an
Event of Default hereunder until (i) such asserting party shall cease to
perform under and in compliance with the Rate Agreement or such Significant
Contract, (ii) the Borrower shall fail to diligently prosecute, by
appropriate action or proceedings, a rescission of such assertion or a
binding determination as to the merits thereof or (e) such a binding
determination shall have been made in favor of such asserting party's
position; or
(i) The Security Documents after delivery under Article V hereof shall
for any reason, except to the extent permitted by the terms thereof, fail or
cease to create valid and perfected Liens (to the extent purported to be
granted by such documents and subject to the exceptions permitted thereunder)
in any of the Collateral, provided, that such failure or cessation relating
to any non-material portion of such Collateral shall not constitute an Event
of Default hereunder unless the same shall not have been corrected within 30
days after the Borrower becomes aware thereof; or
(j) The Borrower shall not have in full force and effect any or all
insurance required under Section 7.01(c) hereof or there shall be incurred
any uninsured damage, loss or destruction of or to the Borrower's properties
in an amount not covered by insurance (including fully-funded self-insurance
programs) which the Majority Lenders consider to be material; or
(k) Any "Event of Default" (as therein defined) shall occur and be
continuing under the Other Loan Documents, or a default by the Borrower shall
have occurred under the Rate Agreement and shall not have been effectively
cured within the time period specified therein for such cure (or, if no such
time period is specified therein, 10 days); or, a default by any party shall
have occurred under any Significant Contract and such default shall not have
been effectively cured within 30 days after notice from the Administrative
Agent to the Borrower stating that, in the opinion of the Majority Lenders,
such default may have a material adverse effect upon the financial condition,
operations, properties or prospects of the Borrower as a whole; or
(l) Any Governmental Approval (whether federal, state or local)
required to give effect to the Rate Agreement (including, without limitation,
Chapter 362-C of the New Hampshire Revised Statutes and the enabling order of
The New Hampshire Public Utilities Commission issued pursuant thereto) shall
be amended, modified or supplemented, or any other regulatory or legislative
action or change (whether federal, state or local) having the effect,
directly or indirectly, of modifying the benefits or entitlements of the
Borrower under the Rate Agreement shall occur, and in any such case such
amendment, modification, supplement, action or change may have, in the
opinion of the Majority Lenders, a material adverse effect upon the financial
condition, operations, properties or prospects of the Borrower as a whole; or
(m) NU shall cease to own all of the outstanding common stock of the
Borrower, free and clear of any Liens.
SECTION 8.02 Remedies Upon Events of Default. Upon the occurrence and
during the continuance of any Event of Default, then, and in any such event,
the Administrative Agent shall at the request, or may with the consent, of
the Majority Lenders, upon notice to the Borrower (i) declare the Commitments
and the obligation of each Lender to make Advances to be terminated,
provided, that any such request or consent shall be made solely by the
Lenders having Percentages in the aggregate of not less 66-2/3%, whereupon
the same shall forthwith terminate, (ii) declare the Notes, all interest
thereon and all other amounts payable under this Agreement and the Security
Documents to be forthwith due and payable, provided, that any such request or
consent shall be made solely by the Lenders holding at least 66-2/3% of the
then aggregate unpaid principal amount of the Advances owing to the Lenders,
whereupon the Notes, all such interest and all such amounts shall become and
be forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower,
and (iii) exercise in respect of any and all collateral, in addition to the
other rights and remedies provided for herein and in the Security Documents
or otherwise available to the Administrative Agent, the Collateral Agent or
the Lenders, all the rights and remedies of a secured party on default under
the Uniform Commercial Code in effect in the State of New York and in effect
in any other jurisdiction in which Collateral is located at that time;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to the Borrower under the Federal Bankruptcy Code,
(A) the Commitments and the obligation of each Lender to make Advances shall
automatically be terminated and (B) the Notes, all such interest and all such
amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
ARTICLE IX
THE ADMINISTRATIVE AGENT
SECTION 9.01 Authorization and Action. Each Lender hereby appoints and
authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
the Administrative Agent by the terms hereof, together with such powers as
are reasonably incidental thereto. As to any matters not expressly provided
for by any Loan Documents (including, without limitation, enforcement or
collection thereof), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and
such instructions shall be binding upon all Lenders; provided, however, that
the Administrative Agent shall not be required to take any action which
exposes the Administrative Agent to personal liability or which is contrary
to this Agreement or applicable law. The Administrative Agent agrees to
deliver promptly to each Lender notice of each notice given to it by the
Borrower pursuant to the terms of this Agreement.
SECTION 9.02 Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them
under or in connection with any Loan Document, except for its or their own
gross negligence or wilful misconduct. Without limitation of the generality
of the foregoing, the Administrative Agent: (i) may treat the payee of any
Note as the holder thereof until the Administrative Agent receives and
accepts a Lender Assignment entered into by the Lender which is the payee of
such Note, as assignor, and an assignee, as provided in Section 10.07;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts;
(iii) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for the Information Memorandum or any other
statements, warranties or representations made in or in connection with any
Loan Document; (iv) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any Loan Document on the part of the Borrower to be performed or observed, or
to inspect any property (including the books and records) of the Borrower;
(v) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Loan
Document, Significant Contract or any other instrument or document furnished
pursuant hereto; and (vi) shall incur no liability under or in respect of any
Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, cable or telex) believed by
it to be genuine and signed or sent by the proper party or parties.
SECTION 9.03 Chemical and Affiliates. With respect to its Commitment
and the Note issued to it, Chemical shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though
it were not the Administrative Agent, and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include Chemical in its
individual capacity. Chemical and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, the Borrower, any of its subsidiaries and any
Person who may do business with or own securities of the Borrower or any such
subsidiary, all as if Chemical was not the Administrative Agent and without
any duty to account therefor to the Lenders.
SECTION 9.04 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the Information Memorandum and other financial
information referred to in Section 6.01(e) and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Agreement.
SECTION 9.05 Indemnification. The Lenders agree to indemnify CSI and
the Administrative Agent (to the extent not reimbursed by the Borrower),
ratably according to the respective principal amounts of the Notes then held
by each of them (or if no Notes are at the time outstanding, ratably
according to the respective Commitments of the Lenders or if any Notes or
Commitments are held by the Borrower or Affiliates thereof, any ratable
apportionment hereunder shall exclude the principal amount of the Notes held
by the Borrower or its Commitment hereunder), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against CSI or the
Administrative Agent in any way relating to or arising out of this Agreement
or any action taken or omitted by CSI or the Administrative Agent under this
Agreement, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from CSI s or the
Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse CSI and the
Administrative Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by CSI or the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement to the extent that CSI or
the Administrative Agent are entitled to reimbursement for such expenses
pursuant to Section 10.04 but is not reimbursed for such expenses by the
Borrower.
SECTION 9.06 Successor Administrative Agent. The Administrative Agent
may resign at any time by giving written notice thereof to the Lenders and
the Borrower, with any such resignation to become effective only upon the
appointment of a successor Administrative Agent pursuant to this Section
9.06. Upon any such resignation, the Majority Lenders shall have the right
to appoint a successor Administrative Agent, which shall be a Lender or
another commercial bank or trust company reasonably acceptable to the
Borrower organized or licensed under the laws of the United States, or of any
State thereof. If no successor Administrative Agent shall have been so
appointed by the Majority Lenders, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent, which shall be Lender or
shall be another commercial bank or trust company organized or licensed under
the laws of the United States or of any State thereof reasonably acceptable
to the Borrower. In addition to the foregoing right of the Administrative
Agent to resign, the Majority Lenders may remove the Administrative Agent at
any time, with or without cause, concurrently with the appointment by the
Majority Lenders of a successor Administrative Agent. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor
Administrative Agent and the execution and delivery by the Borrower and the
successor Administrative Agent of an agreement relating to the fees to be
paid to the successor Administrative Agent under Section 2.02(b) hereof in
connection with its acting as Administrative Agent hereunder, such successor
Administrative Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative
Agent, the provisions of this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, any Note or any Security Document, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Majority Lenders, and then
such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless in writing and signed by all the
Lenders, do any of the following: (a) waive, modify or eliminate any of the
conditions specified in Article V, (b) increase the Commitment of any Lender
hereunder or increase the Commitments of the Lenders that may be maintained
hereunder or subject the Lenders to any additional obligations, (c) reduce
the principal of, or interest on, the Notes, any Applicable Margin or any
fees or other amounts payable hereunder, (d) postpone any date fixed for any
payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder (other than fees payable to the Administrative
Agent pursuant to Section 2.02(b) hereof), (e) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or the
number of Lenders which shall be required for the Lenders or any of them to
take any action hereunder, (f) amend this Agreement, any Note or any Security
Document in a manner intended to prefer one or more Lenders over any other
Lenders, (g) amend this Section 10.01, or 1. release all or substantially all
of the Collateral otherwise than in accordance with the provisions for such
release contained in the Security Documents, or change any provision of any
Security Document providing for the release of all or substantially all of
the Collateral; and provided, further, that no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent in addition
to the Lenders required above to take such action, affect the rights or
duties of the Administrative Agent under this Agreement or any Note.
SECTION 10.02 Notices, Etc. Except as otherwise provided in
Section 3.03 hereof, all notices and other communications provided for
hereunder and under the other Loan Documents shall be in writing (including
telegraphic, telex, telecopy or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered, (i) if to the Borrower, at its
address at 1000 Elm Street, Manchester, New Hampshire 03105 (telecopy no.
603.669.2438), Attention: Treasurer, with a copy to Northeast Utilities
Service Company at its address at 107 Selden Street, Berlin, Connecticut
06037 (telecopy no. 203.665.5457), Attention: Assistant Treasurer; (ii) if
to any Bank, at its Domestic Lending Office specified opposite its name on
Schedule I hereto; (iii) if to any Lender other than a Bank, at its Domestic
Lending Office specified in the Lender Assignment pursuant to which it became
a Lender; and (iv) if to the Administrative Agent, at its address at 140 East
45th Street, New York, New York 10017, Attention: Janet Belden; or, as to
each party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and communications
shall, when mailed, telegraphed, telexed, telecopied or cabled, be effective
five days after when deposited in the mails, or when delivered to the
telegraph company, confirmed by telex answerback, telecopied or delivered to
the cable company, respectively, except that notices and communications to
the Administrative Agent pursuant to Article II, III, IV or IX shall not be
effective until received by the Administrative Agent. With respect to any
telephone notice given or received by the Administrative Agent pursuant to
Section 3.03 hereof, the records of the Administrative Agent shall be
conclusive for all purposes.
SECTION 10.03 No Waiver of Remedies. No failure on the part of any
Lender or the Administrative Agent to exercise, and no delay in exercising,
any right hereunder or under any Note shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 10.04 Costs, Expenses and Indemnification. (a) The Borrower
agrees to pay when due, in accordance with the terms hereof, all costs and
expenses, if any (including, without limitation, reasonable counsel fees and
expenses), of (i) the Administrative Agent and CSI in connection with the
preparation, negotiation, execution and delivery of the Loan Documents and
the administration of the Loan Documents, the care and custody of any and all
collateral, and any proposed modification, amendment, or consent relating
thereto; and (ii) the Administrative Agent, CSI and each Lender in connection
with the enforcement (whether through negotiations, legal proceedings or
otherwise) of this Agreement, the Notes or any other Loan Document.
(b) The Borrower hereby agrees to indemnify and hold each Lender, CSI,
the Administrative Agent and their respective officers, directors, employees,
professional advisors and affiliates (each, an "Indemnified Person") harmless
from and against any and all claims, damages, losses, liabilities, costs or
expenses (including reasonable attorney's fees and expenses, whether or not
such Indemnified Person is named as a party to any proceeding or
investigation or is otherwise subjected to judicial or legal process arising
from any such proceeding or investigation) which any of them may incur or
which may be claimed against any of them by any person or entity (except to
the extent such claims, damages, losses, liabilities, costs or expenses arise
from the gross negligence or willful misconduct of the Indemnified Person):
(i) by reason of or in connection with the execution, delivery or
performance of any of the Loan Documents or any transaction contemplated
thereby, or the use by the Borrower of the proceeds of any Advance;
(ii) in connection with or resulting from the utilization, storage,
disposal, treatment, generation, transportation, release or ownership of
any Hazardous Substance (A) at, upon or under any property of the
Borrower or any of its Affiliates or (B) by or on behalf of the Borrower
or any of its Affiliates at any time and in any place; or
(iii) in connection with any documentary taxes, assessments or
charges made by any governmental authority by reason of the execution
and delivery of any of the Loan Documents.
(c) The Borrower's obligations under this Section 10.04 shall survive
the assignment by any Lender pursuant to Section 10.07 and shall survive as
well the repayment of all amounts owing to the Lenders and the Administrative
Agent under the Loan Documents and the termination of the Commitment of any
Lender and the termination of the Commitments. If and to the extent that the
obligations of the Borrower under this Section 10.04 are unenforceable for
any reason, the Borrower agrees to make the maximum contribution to the
payment and satisfaction thereof which is permissible under applicable law.
SECTION 10.05 Right of Set-off. (a) Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making of the
request or the granting of the consent specified by Section 8.02 to authorize
the Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 8.02, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement and the Note held by such Lender, irrespective of whether or not
such Lender shall have made any demand under this Agreement or such Note and
although such obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under
this Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
(b) The Borrower agrees that it shall have no right of off-set,
deduction or counterclaim in respect of its obligations hereunder, and that
the obligations of the Lenders hereunder are several and not joint. Nothing
contained herein shall constitute a relinquishment or waiver of the
Borrower's rights to any independent claim that the Borrower may have against
the Administrative Agent or any Lender, but no Lender shall be liable for the
conduct of the Administrative Agent or any other Lender, and the
Administrative Agent shall not be liable for the conduct of any Lender.
SECTION 10.06 Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have been notified by each Bank that
such Bank has executed it and thereafter shall be binding upon and inure to
the benefit of the Borrower, the Administrative Agent and each Lender and
their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Lenders.
SECTION 10.07 Assignments and Participation. (a) Each Lender may
assign to one or more banks or other entities all or a portion of its rights
and obligations under this Agreement, the Notes and the Security Documents
(including, without limitation, all or a portion of its Commitment, the
Advances owing to it and the Note or Notes held by it) with the prior written
consent of the Borrower to the extent the assignee thereunder is not then a
Lender or an Affiliate of a Lender (which consent shall not be unreasonably
withheld); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all of the assigning Lender's
rights and obligations under this Agreement, (ii) to the extent the assignee
thereunder is not then a Lender or an Affiliate of a Lender, the amount of
the Commitment or Note of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Lender Assignment with
respect to such assignment) shall in no event be less than the lesser of the
amount of such Lender's Commitment and $3,000,000, and (iii) the parties to
each such assignment shall execute and deliver to the Administrative Agent,
for its acceptance and recording in the Register, a Lender Assignment,
together with any Note or Notes subject to such assignment and a processing
and recordation fee of $2,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Lender
Assignment, which effective date shall be at least five Business Days after
the execution thereof, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned
to it pursuant to such Lender Assignment, have the rights and obligations of
a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it to an
assignee pursuant to such Lender Assignment, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of a
Lender Assignment covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease
to be a party hereto); provided, however, if an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have declared
all Advances to be immediately due and payable hereunder a Lender may assign
all or a portion of its rights and obligations without the prior written
consent of the Borrower but otherwise in accordance with this Section.
(b) By executing and delivering a Lender Assignment, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as
provided in such Lender Assignment, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with any
Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Loan Document or any other
instrument or document furnished pursuant thereto; (ii) such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under any Loan Document
or any other instrument or document furnished pursuant thereto; (iii) such
assignee confirms that it has received a copy of each Loan Document, together
with copies of the financial statements referred to in Section 6.01(e) and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Lender Assignment;
(iv) such assignee will, independently and without reliance upon the
Administrative Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement, the Notes and the Security Documents; (v) such assignee
appoints and authorizes the Administrative Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement, the Notes and
the Security Documents as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this Agreement,
the Notes and the Security Documents are required to be performed by it as a
Lender.
(c) The Administrative Agent shall maintain at its address referred to
in Section 10.02 a copy of each Lender Assignment delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Advances owing to,
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
the Borrower, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of a Lender Assignment executed by an assigning
Lender and an assignee, together with any Note or Notes subject to such
assignment, the Administrative Agent shall, if such Lender Assignment has
been completed and is in substantially the form of Exhibit 10.07 hereto,
(i) accept such Lender Assignment, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower.
Within five Business Days after its receipt of such notice, the Borrower, at
its own expense, shall execute and deliver to the Administrative Agent in
exchange for the surrendered Note or Notes a new Note to the order of such
assignee in an amount equal to the Commitment assumed by it pursuant to such
Lender Assignment and, if the assigning Lender has retained a Commitment
hereunder, a new Note to the order of the assigning Lender in an amount equal
to the Commitment retained by it hereunder. Such new Note or Notes shall be
in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such
Lender Assignment and shall otherwise be in substantially the form of
Exhibit 1.01A or Exhibit 1.01B hereto, as the case may be.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under the
Loan Documents (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any such Note for all purposes of this Agreement,
(iv) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and (v) the holder of
any such participation, other than an Affiliate of such Lender, shall not be
entitled to require such Lender to take or omit to take any action hereunder,
except action (A) extending the time for payment of interest on, or the final
maturity of any portion of the principal amount of, the Notes, (B) reducing
the principal amount of or the rate of interest payable on the Notes or
(C) releasing all or substantially all of the Collateral otherwise than in
accordance with the provisions for such release contained in the Security
Documents.
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.07,
disclose to the assignee or participant or proposed assignee or participant,
any information relating to the Borrower furnished to such Lender by or on
behalf of the Borrower; provided that, prior to any such disclosure, the
assignee or participant or proposed assignee or participant shall agree, in
accordance with the terms of Section 10.08, to preserve the confidentiality
of any Confidential Information received by it from such Lender.
(g) If any Lender shall have delivered a notice to the Administrative
Agent described in Section 4.03(a), (b), (c) or (f) hereof, or shall become a
non-performing Lender under Section 3.04(b) hereof, and if and so long as
such Lender shall not have withdrawn such notice or corrected such non-
performance in accordance with Section 3.04(b), the Borrower or the
Administrative Agent may demand that such Lender assign in accordance with
Section 10.07 hereof, to one or more assignees designated by either the
Borrower or the Administrative Agent (and reasonably acceptable to the
other), all (but not less than all) of such Lender's Commitment, Advances,
participation and other rights and obligations hereunder; provided that any
such demand by the Borrower during the continuance of an Event of Default or
an Unmatured Default shall be ineffective without the consent of the Majority
Lenders. If, within 30 days following any such demand by the Administrative
Agent or the Borrower, any such assignee so designated shall fail to tender
such assignment on terms reasonably satisfactory to the Lender, or the
Borrower and the Administrative Agent shall have failed to designate any such
assignee, then such demand by the Borrower or the Administrative Agent shall
become ineffective, it being understood for purposes of this provision that
such assignment shall be conclusively deemed to be on terms reasonably
satisfactory to such Lender, and such Lender shall be compelled to tender
such assignment forthwith, if such assignee (1) shall agree to such
assignment in substantially the form of the Lender Assignment and (2) shall
tender payment to such Lender in an amount equal to the full outstanding
dollar amount accrued in favor of such Lender hereunder (as computed in
accordance with the records of the Administrative Agent.)
(h) Anything in this Section 10.07 to the contrary notwithstanding, any
Lender may assign and pledge all or any portion of its Commitment and the
Advances owing to it to any Federal Reserve Bank (and its transferees) as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from its
obligations hereunder.
SECTION 10.08 Confidentiality. In connection with the negotiation and
administration of this Agreement and the other Loan Documents, the Borrower
has furnished and will from time to time furnish to the Administrative Agent
and the Lenders (each, a "Recipient") written information which is identified
to the Recipient when delivered as confidential (such information, other than
any such information which (i) was publicly available, or otherwise known to
the Recipient, at the time of disclosure, (ii) subsequently becomes publicly
available other than through any act or omission by the Recipient or
(iii) otherwise subsequently becomes known to the Recipient other than
through a Person whom the Recipient knows to be acting in violation of his or
its obligations to the Borrower, being hereinafter referred to as
"Confidential Information"). The Recipient will not knowingly disclose any
such Confidential Information to any third party (other than to those persons
who have a confidential relationship with the Recipient), and will take all
reasonable steps to restrict access to such information in a manner designed
to maintain the confidential nature of such information, in each case until
such time as the same ceases to be Confidential Information or as the
Borrower may otherwise instruct. It is understood, however, that the
foregoing will not restrict the Recipient's ability to freely exchange such
Confidential Information with prospective participants in or assignees of the
Recipient's position herein, but the Recipient's ability to so exchange
Confidential Information shall be conditioned upon any such prospective
participant's entering into an understanding as to confidentiality similar to
this provision. It is further understood that the foregoing will not
prohibit the disclosure of any or all Confidential Information if and to the
extent that such disclosure may be required (i) by a regulatory agency or
otherwise in connection with an examination of the Recipient's records by
appropriate authorities, (ii) pursuant to court order, subpoena or other
legal process or (iii) otherwise, as required by law; in the event of any
required disclosure under clause (ii) or (iii), above, the Recipient agrees
to use reasonable efforts to inform the Borrower as promptly as practicable.
SECTION 10.09 Certain Authorizations and Consent. Each Bank by its
acceptance hereof, and each other Lender by its execution and delivery of the
Lender Assignment pursuant to which it became a Lender, consents to,
authorizes, ratifies and confirms in all respects:
(i) the execution, delivery, acceptance and performance by the
Administrative Agent and by the Collateral Agent of the Collateral
Agency Agreement, as the same may be from time to time amended in
accordance with the terms thereof;
(ii) the execution, delivery and acceptance by the Collateral Agent
of, and the taking by the Collateral Agent of all actions under, the
Security Documents, as the same may be from time to time amended in
accordance with Section 10.01 hereof, and any and all documents that may
from time to time after the date hereof constitute Security Documents;
and
(iii) that, the Collateral Agency Agreement shall supersede the
Existing Collateral Agency Agreement and Bankers Trust Company shall be
replaced as Collateral Agent under the Existing Collateral Agency
Agreement by Chemical as successor Collateral Agent under the Collateral
Agency Agreement;
the execution and delivery of this Agreement by such Bank, or the execution
and delivery of such Lender Assignment by such Lender, as the case may be,
constituting (without further act or deed) such Bank's or Lender's, as the
case may be, acceptance and approval of, and agreement to the terms of, the
Collateral Agency Agreement and the other Security Documents.
SECTION 10.10 Waiver of Jury Trial. The Borrower, the Administrative
Agent, and the Lenders each hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim arising out of or relating to
this Agreement or any other Loan Document, or any other instrument or
document delivered hereunder or thereunder.
SECTION 10.11 Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Borrower, the Lenders and the Administrative Agent each
(i) irrevocably submits to the jurisdiction of any New York State Court or
Federal court sitting in New York City in any action arising out of any Loan
Document, (ii) agrees that all claims in such action may be decided in such
court, (iii) waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum and (iv) consents to the service of process
by mail. A final judgment in any such action shall be conclusive and may be
enforced in other jurisdictions. Nothing herein shall affect the right of any
party to serve legal process in any manner permitted by law or affect its
right to bring any action in any other court.
SECTION 10.12 Relation of the Parties; No Beneficiary. No term,
provision or requirement, whether express or implied, of any Loan Document,
or actions taken or to be taken by any party thereunder, shall be construed
to create a partnership, association, or joint venture between such parties
or any of them. No term or provision of the Loan Documents shall be
construed to confer a benefit upon, or grant a right or privilege to, any
Person other than the parties hereto.
SECTION 10.13 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
By /s/ David R. McHale
Name: David R. McHale
Title: Assistant Treasurer
CHEMICAL BANK,
as Administrative Agent
By /s/ Jane Ritchie
Name: Jane Ritchie
Title: Vice President
Commitment Lender
$10,000,000.00 CHEMICAL BANK
By /s/ Jane Ritchie
Name: Jane Ritchie
Title: Vice President
Commitment Lender
$8,888,888.89 BANK OF AMERICA ILLINOIS
By /s/ Felipe A. Gomez
Name: Felipe A. Gomez
Title: Authorized Officer
Commitment Lender
$8,888,888.89 CITIBANK, N.A.
By /s/ Paul T. Addison
Name: Paul T. Addison
Title: Attorney In Fact
Commitment Lender
$8,888,888.89 CREDIT LYONNAIS
NEW YORK BRANCH
By /s/ Robert Ivosevich
Name: Robert Ivosevich
Title: Senior Vice President
Commitment Lender
$8,888,888.89 THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By /s/ Norobu Kubota
Name: Noboru Kubota
Title: Deputy General Manager
Commitment Lender
$4,444,444.44 FLEET NATIONAL BANK
By /s/ Suresh Chivukula
Name: Suresh Chivukula
Title: Vice President
Commitment Lender
$4,444,444.44 THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By /s/ Gina Kearns
Name: Gina Kearns
Title: Vice President & Manager
Commitment Lender
$4,444,444.44 THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By /s/ Robert W. Ramage, Jr.
Name: Robert W. Ramage, Jr.
Title: Senior Vice President
Commitment Lender
$4,444,444.44 MELLON BANK, N.A.
By /s/ Jocelin Reed
Name: Jocelin Reed
Title: Officer
Commitment Lender
$4,444,444.44 THE NIPPON CREDIT BANK, LTD.
By /s/ Yoshihide Watanabe
Name: Yoshihide Watanabe
Title: Vice President and Manager
Commitment Lender
$8,888,888.89 CIBC INC.
By /s/ Margaret E. McTigue
Name: Margaret E. McTigue
Title: Director
Commitment Lender
$8,888,888.89 TORONTO DOMINION (NEW YORK),
INC.
By /s/ Debbie A. Greene
Name: Debbie A. Greene
Title: Vice President
Commitment Lender
$3,333,333.33 BARCLAYS BANK PLC
By /s/ Sydney G. Dennis
Name: Sydney G. Dennis
Title: Director
Commitment Lender
$3,333,333.33 THE FIRST NATIONAL BANK
OF CHICAGO
By /s/ Madeline N. Pember
Name: Madeline N. Pember
Title: Corporate Banking Officer
Commitment Lender
$4,444,444.44 THE YASUDA TRUST AND BANKING
COMPANY, LIMITED, NEW YORK
BRANCH
By /s/ Y. Kobayashi
Name: Y. Kobayashi
Title: Deputy General Manager
Commitment Lender
$3,333,333.33 THE FIRST NATIONAL BANK
OF BOSTON
By /s/ Frank T. Smith
Name: Frank T. Smith
Title: Director
SCHEDULE I
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
U.S. $100,000,000 REVOLVING CREDIT AGREEMENT
APPLICABLE LENDING OFFICES
Eurodollar
Name of Bank Domestic Lending Office Lending Office
Chemical Bank 140 East 45th Street 140 East 45th Street
New York, NY 10017 New York, NY 10017
Bank America Illinois 231 South LaSalle Street 231 South LaSalle
Street
Chicago, IL 60697 Chicago, IL 60697
Citibank, N.A. One Court Square One Court Square
7th Floor, Zone 2 7th Floor, Zone 2
Long Island City, NY 11120 Long Island City, NY
11120
Credit Lyonnais, New Credit Lyonnais Building Credit Lyonnais
York Branch 1301 Avenue of the Americas Building
New York, NY 10019 1301 Avenue of the
Americas
New York, NY 10019
The Long-Term Credit 165 Broadway 165 Broadway
Bank of Japan, Limited, New York, NY 10006 New York, NY 10006
New York Branch
Fleet National Bank 1 Federal Street 1 Federal Street
Boston, MA 02211 Boston, MA 02211
The Fuji Bank, Limited, Two World Trade Center Two World Trade Center
New York Branch New York, NY 10048 New York, NY 10048
The Industrial Bank of 245 Park Avenue, 23rd Floor 245 Park Avenue, 23rd
Japan Trust Company New York, NY 10167 Floor
New York, NY 10167
Mellon Bank, N.A. Three Mellon Bank Center Three Mellon Bank
Pittsburgh, PA 15259-0003 Center
Pittsburgh, PA 15259-0003
The Nippon Credit Bank, 245 Park Avenue, 30th Floor 245 Park Avenue, 30th
Ltd. New York, NY 10167 Floor
New York, NY 10167
CIBC Inc. Two Paces West Two Paces West
2727 Paces Ferry Road 2727 Paces Ferry Road
Suite 1200 Suite 1200
Atlanta, GA 30339 Atlanta, GA 30339
Toronto Dominion 900 Fannin, Suite 1700 900 Fannin, Suite 1700
(New York), Inc. Houston, TX 77010 Houston, TX 77010
Barclays Bank PLC 222 Broadway, 11th Floor 222 Broadway, 11th
New York, NY 10038 Floor
New York, NY 10038
The First National Bank of One First National Plaza One First
Chicago Chicago, IL 60670 National Plaza
Chicago, IL 60670
The Yasuda Trust & 666 Fifth Avenue, Suite 801 666 Fifth Avenue,
Banking Company, New York, NY 10103 Suite 801
Limited, New York Branch New York NY 10103
First National Bank of 100 Federal Street 100 Federal Street
Boston Boston, MA 02106 Boston, MA 02106
EXECUTION COPY
PSNH MORTGAGE AMENDMENT
FIRST AMENDMENT TO MORTGAGE,
ASSIGNMENT, SECURITY AGREEMENT
AND FINANCING STATEMENT
This FIRST AMENDMENT ("First Amendment to Mortgage") dated as
of April 1, 1996 to the Mortgage (as defined below) is made between PUBLIC
SERVICE COMPANY OF NEW HAMPSHIRE, a New Hampshire corporation,
as mortgagor, assignor and debtor hereunder ("Grantor") and CHEMICAL
BANK, a banking corporation organized under New York law, with a mailing
address of 140 East 45th Street, New York, NY 10017, Attention: Loan
Servicing, as Collateral Agent for the Secured Parties named therein under
that certain Amended and Restated Collateral Agency Agreement, dated as of
April 1, 1996, among Grantor and Chemical Bank, as Collateral Agent and as
Administrative Agent under the Revolving Credit Agreements referred to below
(said Amended and Restated Collateral Agency Agreement, as it may be further
amended, modified or supplemented from time to time, the "Amended and
Restated Collateral Agency Agreement"), and as mortgagee, assignee and
secured party under the Mortgage and this First Amendment to Mortgage.
PRELIMINARY STATEMENTS:
1. That certain Mortgage, Assignment, Security Agreement and
Financing Statement (the "Mortgage"), dated as of May 1, 1991, given by
Grantor as mortgagor, assignor and debtor thereunder, to BANKERS TRUST
COMPANY, Four Albany Street, New York, NY 10015, as Collateral Agent (as
such agency office is described in the Mortgage) and as mortgagee, assignee
and secured party, was recorded on May 16, 1991 in each Registry of Deeds in
New Hampshire as follows:
Registry of Deeds Book Page
Belknap 1170 679
Carroll 1447 537
Cheshire 1367 549
Coos 778 392
Grafton 1909 321
Hillsborough 5255 1185
Merrimack 1859 1005
Rockingham 2876 677
Strafford 1554 1
Sullivan 938 305
2. Chemical Bank is the successor to Bankers Trust Company as
Collateral Agent under the Amended and Restated Collateral Agency Agreement
and as mortgagee, assignee, and secured party under the Mortgage (reference
being made to the Replacement of Collateral Agent, Together with Assignment
by Mortgagee, Assignee and Secured Party that is being recorded at near or
even date with this First Amendment to Mortgage).
3. Chemical Bank, as such Collateral Agent, together with any
successor Collateral Agent, and as mortgagee, assignee, and secured party
under the Mortgage and this First Amendment to Mortgage, is hereinafter
referred to as the "Mortgagee."
4. The Grantor previously entered into (i) a Revolving Credit
Agreement, dated as of May 1, 1991, among Grantor, Bankers Trust Company,
Chemical Bank and Citibank, N.A., as Co-Agents, and Chemical Bank as
Administrative Agent and the lenders from time to time party thereto, as
amended by the First Amendment to the Revolving Credit Agreement, dated as
of May 11, 1994, among the parties to the Revolving Credit Agreement (as so
amended, being hereinafter referred to as the "Existing Revolving Credit
Agreement") and (ii) a Term Credit Agreement, dated as of May 1, 1991,
among Grantor, Bankers Trust Company, Chemical Bank and Citibank, N.A.
as Co-Agents, and Citibank, N.A. as Administrative Agent and the lenders from
time to time party thereto (the "Term Credit Agreement").
5. The Existing Revolving Credit Agreement has been (i) amended
and restated as the Amended and Restated Revolving Credit Agreement, dated
as of April 1, 1996 (the "Amended and Restated Revolving Credit Agreement"),
among Grantor, Chemical Bank as Administrative Agent and the Banks named
therein and the other Lenders thereunder, and (ii) separately supplemented
and added to by that certain 364-Day Revolving Credit Agreement, dated as of
April 1, 1996 (the "364-Day Revolving Credit Agreement"), among Grantor,
Chemical Bank as Administrative Agent, and the Banks named therein and the
other Lenders thereunder (said revolving credit agreements, as they may be
amended, modified or supplemented from time to time, the "Revolving Credit
Agreements," and said Banks and Lenders and any Lenders that may hereafter
become parties to either or both of the Revolving Credit Agreements,
collectively, the "Lenders" and individually a "Lender").
6. The Term Credit Agreement has terminated, with all obligations
previously outstanding thereunder having been paid in full by Grantor.
7. Pursuant to the Revolving Credit Agreements, the Lenders have
agreed to make principal advances to Grantor in an aggregate principal amount
up to but not exceeding Two Hundred Twenty-Five Million and No/100 U.S.
Dollars ($225,000,000).
8. The total indebtedness and liabilities to be secured by the
Mortgage, as amended by this First Amendment to Mortgage, amount to the
sum of the following (such indebtedness and liabilities or the instruments
evidencing the same, as applicable, being hereinafter collectively called the
"Obligations"):
(i) the aggregate principal of all advances made and to be
made by the Lenders under the Revolving Credit Agreements; plus
(ii) interest on the principal amount of all advances made and
to be made by the Lenders under the Revolving Credit Agreements, as
provided in the Revolving Credit Agreements; plus
(iii) all other amounts payable and all other obligations of
Grantor under the Revolving Credit Agreements, the other Loan
Documents referred to therein, the Mortgage, this First Amendment to
Mortgage, and any other document which relates to any of the Revolving
Credit Agreements or such other Loan Documents or any of the security
therefor, in each case as the same may be amended, modified or
supplemented from time to time (the "Mortgage Documents").
9. As a condition precedent to the obligations of the Lenders to
make advances under the Revolving Credit Agreements, the Lenders have
required Grantor to execute and deliver the Loan Documents referred to
therein (the "Loan Documents"), including this First Amendment to Mortgage
and the Amended and Restated Collateral Agency Agreement, pursuant to which
the Mortgagee has agreed to act as collateral agent for the Lenders.
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Grantor and Mortgagee hereby agree as follows:
1. Effective as of April 30, 1996 (the "Effective Date"), the
penultimate "WHEREAS" clause appearing on page 3 of the Mortgage is
deleted in its entirety.
2. The Mortgage is, effective as of the Effective Date, beginning
with the first paragraph immediately following the caption "GRANTING
CLAUSE" appearing on page 3 of the Mortgage and continuing throughout the
remaining pages of the Mortgage, amended as follows:
(a) The term "Obligations," as defined in Preliminary
Statement 8 of this First Amendment to Mortgage, shall replace the term
"Obligations" wherever it so appears.
(b) The term "Revolving Credit Agreements," as defined in
Preliminary Statement 5 of this First Amendment to Mortgage, shall replace
the term "Credit Agreements" wherever it so appears.
(c) The term "Mortgagee" wherever it so appears shall refer
to Chemical Bank, as Collateral Agent under the Amended and Restated
Collateral Agency Agreement, together with any successor Collateral Agent.
(d) The term "Amended and Restated Collateral Agency
Agreement," as defined in the first paragraph of this First Amendment to
Mortgage, shall replace the term "Collateral Agency Agreement," wherever it
so appears (and all references to any term defined in the Collateral Agency
Agreement, wherever any such reference so appears, shall be to the term as
defined in the Amended and Restated Collateral Agency Agreement).
(e) The term "Mortgage Documents," as defined in
Preliminary Statement 8(iii) of this First Amendment to Mortgage, shall
replace the term "Mortgage Documents," wherever it so appears.
(f) The term "Loan Documents," as defined in Preliminary
Statement 9 of this First Amendment to Mortgage, shall replace the term "Loan
Documents" wherever it so appears, except that the term "Mortgage
Documents," as defined in Preliminary Statement 8(iii) shall replace the term
"Loan Documents" as used in the first paragraph on page 3 of the Mortgage
immediately following the caption "GRANTING CLAUSE".
(g) All references to "Secured Swap Agreements" and
"Secured Swap Agreement" are deleted wherever either term so appears, and
Schedule E of the Mortgage is deleted.
(h) The term "Lenders," as defined in Preliminary Statement
5 of this First Amendment to Mortgage, shall replace the term "Lenders"
wherever it so appears.
3. As of the Effective Date, the sentence which reads, "For purposes
of New Hampshire Rev. Stat. Anno. 479:3 this Mortgage secures indebtedness
up to the maximum amount of Two Billion Dollars ($2,000,000,000).", as such
sentence appears on the recorded cover page of the Mortgage, is deleted in
its entirety, and the sentence which reads, "FOR PURPOSES of New Hampshire
Rev. Stat. Anno. 479:3 this Mortgage secures the obligations up to the
maximum amount of Two Billion U.S. Dollars ($2,000,000,000).", as such
sentence appears on page 9 of the Mortgage, is deleted in its entirety.
4. As of the Effective Date, the term "Closing Date," as defined in
the Revolving Credit Agreements, shall replace the term "Funding Date" as it
appears in Section 1.01 of the Mortgage.
5. As of the Effective Date, the penultimate sentence in Section
4.01 of the Mortgage is amended to read as follows: "For purposes of this
Mortgage, the "Default Rate" shall be a rate equal to the lesser of (i) the
rate described in Section 3.06(c) of the Amended and Restated Revolving
Credit Agreement or, if higher, the rate described in Section 3.06(c) of the
364-Day Revolving Credit Agreement and (ii) the maximum rate of interest
permitted by law from time to time."
6. As of the Effective Date, the term "Agents" in the tenth line of
Section 5.05 of the Mortgage is replaced by the term "Administrative Agent."
7. As of the Effective Date, in Section 8.04 of the Mortgage the
name and address for any notice to Mortgagee is changed to read as follows:
"If to Mortgagee: Chemical Bank
140 East 45th Street
New York, NY 10017
Attention: Loan Servicing"
8. As of the Effective Date, in Schedule A to the Mortgage, the
definition of "Board of Directors" is amended to read as follows: "Board of
Directors' shall mean the Board of Directors of Grantor or any committee of
such Board of Directors authorized to exercise the powers of the Board of
Directors."
9. As of the Effective Date, in Schedule C to the Mortgage,
subclause (a) is amended to read as follows:
"(a) the lien of the Indenture, the lien of this Mortgage and all
liens and encumbrances junior to the lien of the Indenture
and the lien of this Mortgage."
10. As of the Effective Date, Section B of Schedule B of the
Mortgage, which is captioned "Property Descriptions and Exceptions", is
supplemented by adding thereto references to certain descriptions of certain
properties acquired in fee simple by Grantor since May 1, 1991, which
properties constitute a portion of the Premises (as defined in the Mortgage)
and are subject to the lien of the Mortgage and this First Amendment to
Mortgage.
Such references are as set forth on Attachment 1 to this First Amendment to
Mortgage, which Attachment 1 is hereby incorporated into and made a part of
Section B of Schedule B of the Mortgage. Also, to the extent any
municipalities listed on Attachment 1 are not included in the catalog of
municipalities on page 5 and 6 of the Mortgage, such catalog is amended as of
the Effective Date by adding the names of any such municipalities under the
appropriate county.
11. Except as amended and modified by this First Amendment to
Mortgage, the Mortgage shall continue in full force and effect. The Mortgage
and this First Amendment to Mortgage shall be read, taken and construed as
one and the same instrument.
12. Grantor hereby ratifies and confirms its grant, pledge and
assignment made to Mortgagee pursuant to the Mortgage.
13. This First Amendment to Mortgage may be executed in any
number of counterparts, and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and
the same instrument.
14. This First Amendment to Mortgage shall be governed by and
construed in accordance with the laws of the State of New Hampshire.
IN WITNESS WHEREOF, the parties have caused this First Amendment
to Mortgage to be executed and delivered as of the date first above written.
[Execute in black ink] PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
Witness to Execution:
By: /s/
Name: Name:
Title:
[Execute in black ink] CHEMICAL BANK,
as Collateral Agent
Witness to Execution:
By: /s/
Name: Name:
Title:
STATE OF
COUNTY OF
The foregoing instrument was acknowledged before me this ______ day
of , 1996, by ,
of Public Service Company of New Hampshire, a New
Hampshire corporation, on behalf of the corporation.
[Execute in black ink]
Notary Public /s/
My commission Expires:
(Notarial Seal)
STATE OF
COUNTY OF
The foregoing instrument was acknowledged before me this ______ day
of , 1996, by ,
of Chemical Bank, a banking corporation organized under
the laws of New York, on behalf of the corporation.
[Execute in black ink]
Notary Public /s/
My commission Expires:
(Notarial Seal)
ATTACHMENT 1
TO FIRST AMENDMENT TO MORTGAGE
Section B of Schedule B of the Mortgage, without limiting the generality of
the provisions of Section A of said Schedule B, is supplemented by adding
thereto references to the following deeds and conveyances. Such deeds and
conveyances are recorded in the Registry of Deeds for the County in New
Hampshire indicated and contain descriptions of certain properties located
in the municipalities indicated and acquired in fee simple by Grantor since
May 1, 1991, which properties constitute a portion of the Premises (as
defined in the Mortgage) and are subject to the lien of the Mortgage:
Date Recording Data Municipality
Grantor of Deed Book Page and County
State Street Bank and 1/22/93 5412 1615 Nashua and
Trust Company, as Peterborough/
Trustee of the Pension Hillsborough
Plan of Public Service
Company of New Hampshire
State Street Bank and 1/22/93 1242 968
Gilford/Belknap
Trust Company, as
Trustee of the Pension
Plan of Public Service
Company of New Hampshire
State Street Bank and 1/22/93 1909 1736 Pittsfield/
Trust Company, as Merrimack
Trustee of the Pension
Plan of Public Service
Company of New Hampshire
Russell L. Marcum and 10/14/93 5482 1020 Hudson/
Marie A. Marcum Hillsborough
Kevin Bujnowski and 11/10/93 5491 459 Hudson/
Teresa Bujnowski Hillsborough
Exhibit 10.10.4
Amendment No. 4
to
Power Contract
AMENDMENT, dated as of the 1st day of June, 1985, between VERMONT
YANKEE NUCLEAR POWER CORPORATION ("Vermont Yankee"), and a Vermont
corporation, and THE CONNECTICUT LIGHT AND POWER COMPANY, a Connecticut
corporation (the "Purchaser"), for itself and as successor to The Hartford
Electric Light Company ("HELC"), to the Power Contracts dated February 1,
1968, as heretofore amended on June 1, 1972 and April 15, 1983, on and
between Vermont Yankee and HELC, and April 1, 1985 (collectively the "Power
Contract").
WITNESSETH
WHEREAS, pursuant to the Power Contract, Vermont Yankee supplies to the
Purchaser and, pursuant to separate power contracts substantially identical
to the Power Contract except for the names of the parties, to the other
Sponsors of Vermont Yankee, each of whom is contemporaneously entering into
an amendment to its power contract which is identical hereto except for the
necessary changes in the names of the parties, all of the capacity and the
electric energy available from the nuclear generating unit owned by Vermont
Yankee at a site adjacent to the Connecticut River at Vernon, Vermont (such
unit being herein together with the site and all related facilities owned by
Vermont Yankee, referred to as the "Unit").
WHEREAS, in order to assure the maintenance of an appropriate level of
return on common equity, Vermont Yankee and the Purchaser have agreed to
enter into this Amendment which has been approved by the Federal Energy
Regulatory Commission.
NOW, THEREFORE, in consideration of the above and of other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree that the Power Contract is hereby amended as follows:
1. Terms used herein and not defined shall have the meanings set
forth in the Power Contract.
2. The fourth paragraph of Section 7 of the Power Contract is amended
to read as follows:
"Equity percentage" as of any date shall be eight and one-half percent
(8-1.2%) or such greater percentage, if any, as shall be obtained by
dividing (a) the sum of (i) fifteen percent (15.0%) multiplied by
common stock equity investment as of such date plus (ii) the stated
dividend rate per annum of each issue of preferred stock bearing a
particular dividend rate outstanding on such date multiplied by the
aggregate par value of said issue, by (b) equity investment as of such
date.
This Amendment shall become effective as of June 1, 1985 as authorized
by the Federal Energy Regulatory Commission.
This Amendment may be executed in any number of counterparts and each
executed counterpart shall have the same force and effect as an original
instrument and as if both parties to all of the counterparts had signed the
same instrument. Any signature page of this Amendment may be detached from
any counterpart without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart of this contract identical in form
hereto but having attached to it one or more signature pages.
IN WITNESS WHEREOF, the parties have executed this Amendment by their
respective officers hereto duly authorized, as of the date first above
written.
VERMONT YANKEE NUCLEAR POWER CORPORATION
By /s/ J. M. Weigard
Its President and Chief Executive Officer
Title
Address: Box 169, Ferry Road
Brattleboro, VT 05301
THE CONNECTICUT LIGHT AND POWER COMPANY
By /s/ Walter F. Fee
Its Executive Vice President
Title
Address: 107 Seldon Street
Berlin, CT 06037
Exhibit 10.23.6
THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
THIS THIRTY-THIRD AGREEMENT, dated as of the 1st day of December, 1996,
is entered into by the signatory Participants for the amendment and restatement
by them of the New England Power Pool Agreement dated as of September, 1, 1971
(the "NEPOOL Agreement"), as previously amended by thirty (30) amendments, the
most recent of which was dated as of September 1, 1995.
WHEREAS, the signatory Participants propose to restate the NEPOOL
Agreement to provide for a restructured New England Power Pool and to include
as part of such restated pool agreement a NEPOOL Open Access Transmission
Tariff (the "Tariff");
NOW THEREFORE, the signatory Participants hereby agree as follows:
SECTION I
AMENDMENT AND RESTATEMENT OF NEPOOL AGREEMENT
The NEPOOL Agreement as in effect on December 1, 1996 (the
"Prior NEPOOL Agreement") is amended and restated, as of the effective dates
provided in Section II, to read as provided in Exhibit A hereto (the "Restated
NEPOOL Agreement").
SECTION II
EFFECTIVENESS OF THE THIRTY-THIRD AGREEMENT
This Thirty-Third Agreement, and the amendment and restatement provided
for above, shall become effective as follows:
(1) Parts One, Two, Four and Five, of the Restated NEPOOL Agreement
and all of the provisions of the Tariff shall become effective,
and Sections 1 to 8, inclusive, 10, 11, 13, 14.2, 14.3, 14.4 and
16 of the Prior NEPOOL Agreement shall cease to be in effect, on
March 1, 1997 or on such other date as the Federal Energy
Regulatory Commission ("Commission") shall provide that such
portion of the Restated NEPOOL Agreement shall become effective
(the "First Effective Date"); and
(2) the remaining portions of the Restated NEPOOL Agreement shall
become effective, and Sections 9, 12, 14.1, 14.5, 14.6, 14.7,
14.8 and 15 of the Prior NEPOOL Agreement together with the
related exhibits and supplements to the Prior NEPOOL Agreement
shall cease to be in effect, on July 1, 1997 or such other date
on or before January 1, 1998 as the NEPOOL Management Committee
may fix, after it has determined that the necessary detailed
criteria, rules and standards and computer programs to implement
such remaining portions of the Restated NEPOOL Agreement are in
place, or on such other date or dates as the Federal Energy
Regulatory Commission may fix, on its own or pursuant to the
request of the Management Committee, (the "Second Effective
Date").
SECTION III
INTENT OF AGREEMENT
This Thirty-Third Agreement is intended by the signatories hereto to
effect a comprehensive amendment and restatement of the NEPOOL Agreement and to
provide a regional open access transmission arrangement in accordance with the
Restated NEPOOL Agreement and the Tariff, which is Attachment B to the Restated
NEPOOL Agreement. Subject to the understandings expressed in the balance of
this Section and in Section IV, the signatories agree to support the acceptance
of the Thirty-Third Agreement by the Commission.
Subject to the understandings expressed in Section IV of this
Agreement, in entering into this Thirty-Third Agreement the signatories
expressly condition their commitment on acceptance of this Thirty-Third
Agreement, including the Restated NEPOOL Agreement and the Tariff, by
the Commission and any other regulatory body having jurisdiction without
significant conditions or modifications. If significant conditions are imposed
or significant modifications are required, the signatories reserve the right to
renegotiate the Thirty-Third Agreement as a whole or to terminate it.
SECTION IV
ALTERNATIVE AMENDMENTS
The signatories have been unable to reach final agreement on two
aspects of the transmission arrangements for a restructured NEPOOL which would
be in effect after the five-year Transition Period provided for in the Tariff,
as follows:
(a) the continued treatment of "grandfathered contracts" as Excepted
Transactions; and
(b) the continuance and treatment of Participant Regional Network
Service rates which differ from an average Regional Network
Service rate.
It is agreed that any Participant which signs this Agreement shall be entitled
to take any position before the Commission that it deems best with respect to
either of these two aspects of the transmission arrangements.
However, Participants signing this Agreement are requested to consider
the proposed treatment of these aspects of the transmission arrangements in the
following Alternate A and Alternate B and to indicate, if they are willing, in
the optional supplemental agreement on the signature page to this Agreement
their position on these alternates. The alternates are as follows:
Alternate A is as follows:
1. The introductory portion of paragraph (3) of Section 25 of the
Tariff shall be amended to read as follows:
(3) for the period from the effective date of the Tariff
until the termination of the transmission agreement or
the end of the Transition Period, whichever occurs
first:
2. The description of the "Participant RNS Rate" in Schedule 9 to
the Tariff shall be amended by modifying the proviso at the end of the second
sentence of paragraph (4) of the Schedule to read as follows:
provided that in no event shall its pre-1997 Participant RNS
Rate be less than 70% of the pre-1997 Pool PTF Rate until the
end of Year Five, and thereafter shall be equal to the pre-1997
Pool PTF Rate for Year Six and thereafter.
and by amending the proviso at the end of the third sentence of paragraph (4)
of the Schedule to read as follows:
provided that in no event shall its pre-1997 Participant RNS
Rate be greater than 130% of the pre-1997 Pool PTF Rate until
the end of Year Five, and thereafter shall be equal to the pre-
1997 Pool PTF Rate for Year Six and thereafter.
Alternate B is as follows:
1. The introductory portion of paragraph (3) of Section 25 of the
Tariff shall be amended to read as follows:
(3) for the period from the effective date of this Tariff
until the termination of the transmission agreement:
2. The description of the "Participant RNS Rate"in Schedule 9 to
the Tariff shall be amended by modifying the proviso at the end of the second
sentence of paragraph (4) of the Schedule to read as follows:
provided that in no event shall its pre-1997 Participant RNS
Rate be less than 70% of the pre-1997 Pool PTF Rate until the
end of Year Five, and thereafter shall be no less than 50% of
the pre-1997 Pool PTF Rate for Year Six through Year Ten, and
shall be equal to the pre-1997 Pool PTF Rate for Year Eleven and
thereafter.
and by amending the proviso at the end of the third sentence of paragraph (4)
of the Schedule to read as follows:
provided that in no event shall its pre-1997 Participant RNS
Rate be greater than 130% of the pre-1997 Pool PTF Rate until
the end of Year Five and thereafter shall be no greater than
127% of the pre-1997 Pool PTF Rate for Year Six, 123% of the
pre-1997 Pool PTF Rate for Year Seven, 118% of the pre-1997 Pool
PTF Rate for Year Eight, 112% of the pre-1997 Pool PTF Rate for
Year Nine, 105% of the pre-1997 Pool PTF Rate for Year Ten, and
shall be equal to the pre-1997 Pool PTF Rate for Year Eleven and
thereafter.
SECTION V
USAGE OF DEFINED TERMS
The usage in this Thirty-Third Agreement of terms which are defined in
the Prior NEPOOL Agreement shall be deemed to be in accordance with the
definitions thereof in the Prior NEPOOL Agreement.
SECTION VI
COUNTERPARTS
This Thirty-Third Agreement may be executed in any number of
counterparts and each executed counterpart shall have the same force and effect
as an original instrument and as if all the parties to all the counterparts had
signed the same instrument. Any signature page of this Thirty-Third Agreement
may be detached from any counterpart of this Thirty-Third Agreement without
impairing the legal effect of any signatures thereof, and may be attached to
another counterpart of this Thirty-Third Agreement identical in form thereto
but having attached to it one or more signature pages.
IN WITNESS WHEREOF, each of the signatories has caused a counterpart
signature page to be executed by its duly authorized representative, as of the
1st day of December, 1996.
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
Bangor Hydro-Electric Company
(Participant)
By: /s/ Carroll R. Lee
Name: Carroll R. Lee
Title: Senior Vice President &
Chief Operating Officer
Address: 33 State Street
Bangor, ME 04402-0932
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
Bangor Hydro-Electric Company
(Participant)
By: /s/ Carroll R. Lee
Name: Carroll R. Lee
Title: Senior Vice President &
Chief Operating Officer
Address: 33 State Street
Bangor, ME 04402-0932
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
Boston Edison Company
(Participant)
By: /s/ Douglas S. Horan
Name: Douglas S. Horan
Title: Senior Vice President
Address: 800 Boylston Street
Boston, MA 02199-8001
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
Boston Edison Company
(Participant)
By: /s/ Douglas S. Horan
Name: Douglas S. Horan
Title: Senior Vice President
Address: 800 Boylston Street
Boston, MA 02199-8001
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
Central Maine Power Company
(Participant)
By: /s/ Arthur Adelberg
Name: Arthur Adelberg
Title: VP
Address: 83 Edison Drive
Augusta, ME 04336-0001
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
Central Maine Power Company
(Participant)
By: /s/ Arthur Adelberg
Name: Arthur Adelberg
Title: VP
Address: 83 Edison Drive
Augusta, ME 04336-0001
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
COMMONWEALTH ENERGY SYSTEM COMPANIES
Cambridge Electric Light Company
Canal Electric Company
Commonwealth Electric Company
(Participants)
By: /s/ James J. Keane
Name:
Title:
Address: 2421 Cranberry Highway
Wareham, MA 02571-1002
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
COMMONWEALTH ENERGY SYSTEM COMPANIES
Cambridge Electric Light Company
Canal Electric Company
Commonwealth Electric Company
(Participants)
By: /s/ James J. Keane
Name:
Title:
Address: 2421 Cranberry Highway
Wareham, MA 02571-1002
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
Connecticut Municipal Electric Energy Company
(Participant)
By: /s/ Maurice R. Scully
Name: Maurice R. Scully
Title: Executive Director
Address: 30 Stott Avenue
Norwich, CT 06360-1535
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
Connecticut Municipal Electric Energy Company
(Participant)
By: /s/ Maurice R. Scully
Name: Maurice R. Scully
Title: Executive Director
Address: 30 Stott Avenue
Norwich, CT 06360-1535
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
EASTERN UTILITIES ASSOCIATES COMPANIES
Blackstone Valley Electric Company
Easter Edison Company
Montaup Electric Company
Newport Electric Company
(Participants)
By: /s/ Kevin A. Kirby
Name: Kevin A. Kirby
Title: Vice President
Address: 750 West Center Street
West Bridgewater, MA 02379-0543
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
EASTERN UTILITIES ASSOCIATES COMPANIES
Blackstone Valley Electric Company
Easter Edison Company
Montaup Electric Company
Newport Electric Company
(Participants)
By: /s/ Kevin A. Kirby
Name: Kevin A. Kirby
Title: Vice President
Address: 750 West Center Street
West Bridgewater, MA 02379-0543
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
Houlton Water Company
(Participant)
By: /s/ John L. Clark
Name: John L. Clark
Title: General Manager
Address: 21 Bangor Street
Houlton, ME 04730
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
Houlton Water Company
(Participant)
By: /s/ John L. Clark
Name: John L. Clark
Title: General Manager
Address: 21 Bangor Street
Houlton, ME 04730
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
Fitchburg Gas and Electric Light Company
(Participant)
By: /s/ David K. Foote
Name: David K. Foote
Title: Senior Vice President
Address: 6 Liberty Lane West
Hampton, NH 03842-1720
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
Fitchburg Gas and Electric Light Company
(Participant)
By: /s/ David K. Foote
Name: David K. Foote
Title: Senior Vice President
Address: 6 Liberty Lane West
Hampton, NH 03842-1720
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
KCS Power Marketing, Inc.
(Participant)
By: /s/ Thomas F. Withka
Name: Thomas F. Withka
Title: President
Address: 379 Thornall Street
Edison, NJ 08837
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
KCS Power Marketing, Inc.
(Participant)
By: /s/ Thomas F. Withka
Name: Thomas F. Withka
Title: President
Address: 379 Thornall Street
Edison, NJ 08837
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
GRANITE STATE ELECTRIC COMPANY
(Participant)
By: /s/ Richard P. Seigel
Name:
Title: Chairman
Address: 407 Miracle Mile, Suite 1
Lebanon, NH
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
GRANITE STATE ELECTRIC COMPANY
(Participant)
By: /s/ Richard P. Seigel
Name:
Title: Chairman
Address: 407 Miracle Mile, Suite 1
Lebanon, NH
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
MASSACHUSETTS ELECTRIC COMPANY
(Participant)
By: /s/ Lawrence J. Reilly
Name: Lawrence J. Reilly
Title: President
Address: 25 Research Dr.
Westborough, MA 01582
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
MASSACHUSETTS ELECTRIC COMPANY
(Participant)
By: /s/ Lawrence J. Reilly
Name: Lawrence J. Reilly
Title: President
Address: 25 Research Dr.
Westborough, MA 01582
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
THE NARRAGANSETT ELECTRIC COMPANY
(Participant)
By: /s/ Richard P. Seigel
Name:
Title: Chairman
Address: 28 Melrose Street
Providence, RI
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
THE NARRAGANSETT ELECTRIC COMPANY
(Participant)
By: /s/ Richard P. Seigel
Name:
Title: Chairman
Address: 28 Melrose Street
Providence, RI
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
NEW ENGLAND POWER COMPANY
(Participant)
By: /s/ Jeffrey D. Tranen
Name:
Title: President
Address: 25 Research Drive
Westborough, MA
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
NEW ENGLAND POWER COMPANY
(Participant)
By: /s/ Jeffrey D. Tranen
Name:
Title: President
Address: 25 Research Drive
Westborough, MA
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
NORTHEAST UTILITIES SYSTEM COMPANIES
The Connecticut Light and Power Company
Holyoke Power and Electric Company
Holyoke Water Power Company
Public Service Company of New Hampshire
Western Massachusetts Electric Company
(Participants)
By: /s/ Frank P. Sabatino
Name: Frank P. Sabatino
Title: Vice President -
Wholesale Marketing
Address: 107 Selden Street
Berlin, CT 06037-1616
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
NORTHEAST UTILITIES SYSTEM COMPANIES
The Connecticut Light and Power Company
Holyoke Power and Electric Company
Holyoke Water Power Company
Public Service Company of New Hampshire
Western Massachusetts Electric Company
(Participants)
By: /s/ Frank P. Sabatino
Name: Frank P. Sabatino
Title: Vice President -
Wholesale Marketing
Address: 107 Selden Street
Berlin, CT 06037-1616
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
UNITIL CORPORATION PARTICIPANT COMPANIES
Concord Electric Company
Exeter & Hampton Electric Company
UNITIL Power Corp.
(Participants)
By: /s/ James G. Daly
Name: James G. Daly
Title: President, Unitil Power Corp.
Address: 6 Liberty Lane West
Hampton, NH 03842-1720
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
UNITIL CORPORATION PARTICIPANT COMPANIES
Concord Electric Company
Exeter & Hampton Electric Company
UNITIL Power Corp.
(Participants)
By: /s/ James G. Daly
Name: James G. Daly
Title: President, Unitil Power Corp.
Address: 6 Liberty Lane West
Hampton, NH 03842-1720
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
The United Illuminating Company
(Participant)
By: /s/ James F. Crowe
Name: James F. Crowe
Title: Group V.P.
Address: 157 Church Street
New Haven, CT 06506-0901
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
The United Illuminating Company
(Participant)
By: /s/ James F. Crowe
Name: James F. Crowe
Title: Group V.P.
Address: 157 Church Street
New Haven, CT 06506-0901
<PAGE>
COUNTERPART SIGNATURE PAGE
TO THIRTY-THIRD AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF DECEMBER 1, 1996
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by thirty (30) amendments the most recent of which was dated
as of September 1,1995.
VERMONT UTILITIES
City of Burlington Electric Department
Central Vermont Public Service Corporation
Citizens Utilities Company
Green Mountain Power Corporation
Rochester Electric Light & Power Company
Vermont Electric Power Company, Inc.
Vermont Marble Company
(Participants)
By: Vermont Electric Power Company, Inc.
By: /s/ Richard M. Chapman
Name: Richard M. Chapman
Title: President and
Chief Executive Officer
Address: Pinnacle Ridge Avenue
Rutland, VT 05701
<PAGE>
SUPPLEMENTAL AGREEMENT WITH RESPECT TO ALTERNATES A & B
The undersigned agrees that either Alternate A or Alternate B as
described in Section IV of the foregoing Agreement will be acceptable to it if
chosen and accepted by the Commission without significant modifications.
Accordingly, the undersigned further agrees that in the event either Alternate
A or Alternate B, as described in Section IV of the foregoing Agreement, is
chosen and accepted without significant modifications by the Commission, the
Tariff shall be deemed to be automatically amended, effective 30 days after the
issuance of the Commission's order, to incorporate the accepted Alternate.
VERMONT UTILITIES
Central Vermont Public Service Corporation
Citizens Utilities Company
Green Mountain Power Corporation
Rochester Electric Light & Power Company
Vermont Electric Power Company, Inc.
Vermont Marble Company
(Participants)
By: Vermont Electric Power Company, Inc.
By: /s/ Richard M. Chapman
Name: Richard M. Chapman
Title: President and
Chief Executive Officer
Address: Pinnacle Ridge Avenue
Rutland, VT 05701
<PAGE>
EXHIBIT A
RESTATED
NEW ENGLAND
POWER POOL AGREEMENT
<PAGE>
TABLE OF CONTENTS
PART ONE - INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . ...1
SECTION 1- DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . ...1
1.1 Adjusted Annual Peak . . . . . . . . . . . . . . . . . . . .1
1.2 Adjusted Load. . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Adjusted Monthly Peak. . . . . . . . . . . . . . . . . . ...2
1.4 Adjusted Net Interchange . . . . . . . . . . . . . . . . ...3
1.5 AGC Capability . . . . . . . . . . . . . . . . . . . . . ...3
1.6 AGC Entitlement. . . . . . . . . . . . . . . . . . . . . ...4
1.7 Agreement. . . . . . . . . . . . . . . . . . . . . . . . ...4
1.8 Annual Peak. . . . . . . . . . . . . . . . . . . . . . . ...4
1.9 Automatic Generation Control or AGC. . . . . . . . . . . ...4
1.10 Bid Price. . . . . . . . . . . . . . . . . . . . . . . . ...5
1.11 Commission . . . . . . . . . . . . . . . . . . . . . . . ...6
1.12 Dispatch Price . . . . . . . . . . . . . . . . . . . . . ...6
1.13 EHV PTF. . . . . . . . . . . . . . . . . . . . . . . . . ...6
1.14 Electrical Load. . . . . . . . . . . . . . . . . . . . . ...6
1.15 Energy . . . . . . . . . . . . . . . . . . . . . . . . . ...8
1.16 Energy Entitlement . . . . . . . . . . . . . . . . . . . ...8
1.17 Entitlement. . . . . . . . . . . . . . . . . . . . . . . ...8
1.18 Entity . . . . . . . . . . . . . . . . . . . . . . . . . ...9
1.19 Executive Committee. . . . . . . . . . . . . . . . . . . ...9
1.20 Firm Contract. . . . . . . . . . . . . . . . . . . . . . ...9
1.21 First Effective Date . . . . . . . . . . . . . . . . . . ..10
1.22 Good Utility Practice. . . . . . . . . . . . . . . . . . ..10
1.23 HQ Contracts . . . . . . . . . . . . . . . . . . . . . . ..10
1.24 HQ Energy Banking Agreement. . . . . . . . . . . . . . . ..11
1.25 HQ Interconnection . . . . . . . . . . . . . . . . . . . ..11
1.26 HQ Interconnection Agreement . . . . . . . . . . . . . . ..12
1.27 HQ Interconnection Capability Credit . . . . . . . . . . ..12
1.28 HQ Interconnection Transfer Capability . . . . . . . . . ..12
1.29 HQ Net Interconnection Capability Credit . . . . . . . . ..13
1.30 HQ Phase I Energy Contract . . . . . . . . . . . . . . . ..13
1.31 HQ Phase I Percentage. . . . . . . . . . . . . . . . . . ..14
1.32 HQ Phase I Transfer Credit . . . . . . . . . . . . . . . ..14
1.33 HQ Phase II Firm Energy Contrac. . . . . . . . . . . . ....14
1.34 HQ Phase II Gross Transfer Responsibility. . . . . . . . ..14
1.35 HQ Phase II Net Transfer Responsibility. . . . . . . . . ..15
1.36 HQ Phase II Percentage . . . . . . . . . . . . . . . . . ..15
1.37 HQ Phase II Transfer Credit. . . . . . . . . . . . . . . ..15
1.38 HQ Use Agreement . . . . . . . . . . . . . . . . . . . . ..16
1.39 Installed Capability . . . . . . . . . . . . . . . . . . ..16
1.40 Installed Capability Entitlement . . . . . . . . . . . . ..16
1.41 Installed Capability Responsibility. . . . . . . . . . . ..17
1.42 Installed System Capability. . . . . . . . . . . . . . . ..17
1.43 Interchange Transactions . . . . . . . . . . . . . . . . ..17
1.44 ISO. . . . . . . . . . . . . . . . . . . . . . . . . . . ..17
1.45 Kilowatt . . . . . . . . . . . . . . . . . . . . . . . . ..17
1.46 Load . . . . . . . . . . . . . . . . . . . . . . . . . . ..18
1.47 Lower Voltage PTF. . . . . . . . . . . . . . . . . . . . ..19
1.48 Management Committee . . . . . . . . . . . . . . . . . . ..19
1.49 Market Reliability Planning Committee. . . . . . . . . . ..19
1.50 Monthly Peak . . . . . . . . . . . . . . . . . . . . . . ..20
1.51 NEPOOL . . . . . . . . . . . . . . . . . . . . . . . . . ..20
1.52 NEPOOL Installed Capability Responsibility . . . . . . . ..20
1.53 NEPOOL Control Area. . . . . . . . . . . . . . . . . . . ..20
1.54 NEPOOL Installed Capability. . . . . . . . . . . . . . . ..21
1.55 NEPOOL Objective Capability. . . . . . . . . . . . . . . ..21
1.56 New Unit . . . . . . . . . . . . . . . . . . . . . . . . ..22
1.57 Non-Participant. . . . . . . . . . . . . . . . . . . . . ..22
1.58 Operable Capability. . . . . . . . . . . . . . . . . . . ..22
1.59 Operable Capability Entitlement. . . . . . . . . . . . . ..23
1.60 Operable Capability Requirement. . . . . . . . . . . . . ..23
1.61 Operable System Capability . . . . . . . . . . . . . . . ..24
1.62 Operating Reserve. . . . . . . . . . . . . . . . . . . . ..24
1.63 Operating Reserve Entitlement. . . . . . . . . . . . . . ..24
1.64 Other HQ Energy. . . . . . . . . . . . . . . . . . . . . ..25
1.65 Outside Transaction Adjustme . . . . . . ..................25
1.66 Participant. . . . . . . . . . . . . . . . . . . . . . . ..25
1.67 Pool-Planned Facility. . . . . . . . . . . . . . . . . . ..25
1.68 Pool-Planned Unit. . . . . . . . . . . . . . . . . . . . ..25
1.69 Power Year . . . . . . . . . . . . . . . . . . . . . . . ..26
1.70 Prior NEPOOL Agreement . . . . . . . . . . . . . . . . . ..26
1.71 Proxy Unit . . . . . . . . . . . . . . . . . . . . . . . ..26
1.72 PTF. . . . . . . . . . . . . . . . . . . . . . . . . . . ..26
1.73 Regional Market Operations Committee . . . . . . . . . . ..27
1.74 Regional Transmission Operations Committee . . . . . . . ..27
1.75 Regional Transmission Planning Committee . . . . . . . . ..27
1.76 Related Person . . . . . . . . . . . . . . . . . . . . . ..27
1.77 Scheduled Dispatch Period. . . . . . . . . . . . . . . . ..28
1.78 Second Effective Date. . . . . . . . . . . . . . . . . . ..28
1.79 Summer Capability. . . . . . . . . . . . . . . . . . . . ..28
1.80 Summer Period. . . . . . . . . . . . . . . . . . . . . . ..28
1.81 System Contract. . . . . . . . . . . . . . . . . . . . . ..29
1.82 System Operator. . . . . . . . . . . . . . . . . . . . . ..29
1.83 Target Availability Rate . . . . . . . . . . . . . . . . ..29
1.84 Tariff . . . . . . . . . . . . . . . . . . . . . . . . . ..29
1.85 Third Effective Date . . . . . . . . . . . . . . . . . . ..30
1.86 Unit Contract. . . . . . . . . . . . . . . . . . . . . . ..30
1.87 Voting Share . . . . . . . . . . . . . . . . . . . . . . ..30
1.88 Winter Capability. . . . . . . . . . . . . . . . . . . . ..30
1.89 Winter Period. . . . . . . . . . . . . . . . . . . . . . ..31
1.90 10-Minute Spinning Reserve . . . . . . . . . . . . . . . ..31
1.91 10-Minute Non-Spinning Reserve . . . . . . . . . . . . . ..32
1.92 30-Minute Operating Reserve. . . . . . . . . . . . . . . ..33
1.93 33rd Amendment . . . . . . . . . . . . . . . . . . . . . ..34
1.94 Modification of Certain Definitions When a Participant
Purchases a Portion of Its Requirements from Another
Participant Pursuant to Firm Contract. . . . . . . . . . ..34
SECTION 2 - PURPOSE; EFFECTIVE DATES . . . . . . . . . . . . . . . . . . ..37
2.1 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . ..37
2.2 Effective Dates; Transitional Provisions . . . . . . . . ..37
SECTION 3 - MEMBERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . ..39
3.1 Membership . . . . . . . . . . . . . . . . . . . . . . . ..39
3.2 Operations Outside the Control Area. . . . . . . . . . . ..40
3.3 Lack of Place of Business in New England . . . . . . . . ..41
3.4 Obligation for Deferred Expenses . . . . . . . . . . . . ..41
3.5 Financial Security . . . . . . . . . . . . . . . . . . . ..42
SECTION 4 - STATUS OF PARTICIPANTS . . . . . . . . . . . . . . . . . . . ..43
4.1 Treatment of Certain Entities as Single Participant. . . ..43
4.2 Participants to Retain Separate Identities . . . . . . . ..43
SECTION 5 - NEPOOL OBJECTIVES AND COOPERATION BY PARTICIPANTS. . . . . . ..44
5.1 NEPOOL Objectives. . . . . . . . . . . . . . . . . . . . ..44
5.2 Cooperation by Participants. . . . . . . . . . . . . . . ..45
PART TWO - GOVERNANCE. . . . . . . . . . . . . . . . . . . . . . . . . . ..47
SECTION 6 - MANAGEMENT COMMITTEE . . . . . . . . . . . . . . . . . . . . ..47
6.1 Membership . . . . . . . . . . . . . . . . . . . . . . . ..47
6.2 Term of Members. . . . . . . . . . . . . . . . . . . . . ..48
6.3 Votes. . . . . . . . . . . . . . . . . . . . . . . . . . ..48
6.4 Number of Votes Necessary for Action . . . . . . . . . . ..57
6.5 Proxies. . . . . . . . . . . . . . . . . . . . . . . . . ..57
6.6 Alternates . . . . . . . . . . . . . . . . . . . . . . . ..57
6.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . ..58
6.8 Meetings . . . . . . . . . . . . . . . . . . . . . . . . ..58
6.9 Notice of Meetings . . . . . . . . . . . . . . . . . . . ..58
6.10 Adoption of Budgets. . . . . . . . . . . . . . . . . . . ..59
6.11 Adoption of Bylaws . . . . . . . . . . . . . . . . . . . ..59
6.12 Establishing Reliability Standards . . . . . . . . . . . ..59
6.13 Appointment and Compensation of NEPOOL Personnel . . . . ..60
6.14 Duties and Authority . . . . . . . . . . . . . . . . . . ..60
6.15 Attendance of Members of Management Committee at Other
Committee Meetings . . . . . . . . . . . . . . . . . . . ..65
SECTION 7- EXECUTIVE COMMITTEE . . . . . . . . . . . . . . . . . . . . . ..66
7.1 Organization . . . . . . . . . . . . . . . . . . . . . . ..66
7.2 Membership . . . . . . . . . . . . . . . . . . . . . . . ..67
7.3 Term of Members. . . . . . . . . . . . . . . . . . . . . ..69
7.4 Alternates . . . . . . . . . . . . . . . . . . . . . . . ..69
7.5 Votes. . . . . . . . . . . . . . . . . . . . . . . . . . ..70
7.6 Number of Votes Necessary for Action . . . . . . . . . . ..71
7.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . ..71
7.8 Meetings . . . . . . . . . . . . . . . . . . . . . . . . ..71
7.9 Notice of Meetings . . . . . . . . . . . . . . . . . . . ..72
7.10 Notice to Members of Management Committee of Actions by
Executive Committee. . . . . . . . . . . . . . . . . . . ..72
7.11 Appeal of Actions to Management Committee. . . . . . . . ..73
SECTION 8 - MARKET RELIABILITY PLANNING COMMITTEE. . . . . . . . . . . . ..73
8.1 Organization . . . . . . . . . . . . . . . . . . . . . . ..73
8.2 Membership . . . . . . . . . . . . . . . . . . . . . . . ..74
8.3 Term of Members. . . . . . . . . . . . . . . . . . . . . ..76
8.4 Voting . . . . . . . . . . . . . . . . . . . . . . . . . ..76
8.5 Alternates . . . . . . . . . . . . . . . . . . . . . . . ..77
8.6 Officers . . . . . . . . . . . . . . . . . . . . . . . . ..78
8.7 Meetings . . . . . . . . . . . . . . . . . . . . . . . . ..78
8.8 Notice of Meetings . . . . . . . . . . . . . . . . . . . ..78
8.9 Notice to Members of Management Committee. . . . . . . . ..79
8.10 Appeal of Actions to Management Committee. . . . . . . . ..79
8.11 Responsibilities . . . . . . . . . . . . . . . . . . . . ..80
8.12 Functional Planning Committees . . . . . . . . . . . . . ..82
8.13 Appointment of Task Forces . . . . . . . . . . . . . . . ..83
8.14 Consultants, Computer Time and Expenses. . . . . . . . . ..84
8.15 Further Powers and Duties. . . . . . . . . . . . . . . . ..84
8.16 Reports to Management Committee. . . . . . . . . . . . . ..84
8.17 Joint Meetings With Regional Transmission Planning
Committee. . . . . . . . . . . . . . . . . . . . . . . . ..85
SECTION 9 - REGIONAL TRANSMISSION PLANNING COMMITTEE . . . . . . . . . . ..85
9.1 Organization . . . . . . . . . . . . . . . . . . . . . . ..85
9.2 Membership . . . . . . . . . . . . . . . . . . . . . . . ..85
9.3 Term of Members. . . . . . . . . . . . . . . . . . . . . ..88
9.4 Voting . . . . . . . . . . . . . . . . . . . . . . . . . ..88
9.5 Alternates . . . . . . . . . . . . . . . . . . . . . . . ..89
9.6 Officers . . . . . . . . . . . . . . . . . . . . . . . . ..90
9.7 Meetings . . . . . . . . . . . . . . . . . . . . . . . . ..90
9.8 Notice of Meetings . . . . . . . . . . . . . . . . . . . ..91
9.9 Notice to Members of Management Committee. . . . . . . . ..91
9.10 Appeal of Actions to Management Committee. . . . . . . . ..91
9.11 Responsibilities . . . . . . . . . . . . . . . . . . . . ..92
9.12 Functional Planning Committees . . . . . . . . . . . . . ..93
9.13 Appointment of Task Forces . . . . . . . . . . . . . . . ..95
9.14 Consultants, Computer Time and Expenses. . . . . . . . . ..95
9.15 Further Powers and Duties. . . . . . . . . . . . . . . . ..96
9.16 Reports to Management Committee. . . . . . . . . . . . . ..96
9.17 Joint Meetings With Market Reliability Planning Committee..96
SECTION 10 - REGIONAL MARKET OPERATIONS COMMITTEE. . . . . . . . . . . . ..97
10.1 Organization . . . . . . . . . . . . . . . . . . . . . . ..97
10.2 Membership . . . . . . . . . . . . . . . . . . . . . . . ..97
10.3 Terms of Members . . . . . . . . . . . . . . . . . . . . ..99
10.4 Voting . . . . . . . . . . . . . . . . . . . . . . . . . .100
10.5 Alternates . . . . . . . . . . . . . . . . . . . . . . . .101
10.6 Officers . . . . . . . . . . . . . . . . . . . . . . . . .101
10.7 Meetings . . . . . . . . . . . . . . . . . . . . . . . . .102
10.8 Notice of Meetings . . . . . . . . . . . . . . . . . . . .102
10.9 Notice to Members of Management Committee. . . . . . . . .103
10.10 Appeal of Actions to Management Committee. . . . . . . . .103
10.11 Appointment of Task Forces . . . . . . . . . . . . . . . .104
10.12 Consultants, Computer Time and Expenses. . . . . . . . . .104
10.13 Responsibilities . . . . . . . . . . . . . . . . . . . . .104
10.14 Further Powers and Duties. . . . . . . . . . . . . . . . .108
10.15 Development of Rules Relating to Non-Participant Supply
and Demand-side Resources. . . . . . . . . . . . . . . . .108
10.16 Joint Meetings with Regional Transmission Operations
Committee. . . . . . . . . . . . . . . . . . . . . . . . .108
SECTION 11 - REGIONAL TRANSMISSION OPERATIONS COMMITTEE. . . . . . . . . .109
11.1 Organization . . . . . . . . . . . . . . . . . . . . . . .109
11.2 Membership . . . . . . . . . . . . . . . . . . . . . . . .109
11.3 Terms of Members . . . . . . . . . . . . . . . . . . . . .111
11.4 Voting . . . . . . . . . . . . . . . . . . . . . . . . . .112
11.5 Alternates . . . . . . . . . . . . . . . . . . . . . . . .113
11.6 Officers . . . . . . . . . . . . . . . . . . . . . . . . .113
11.7 Meetings . . . . . . . . . . . . . . . . . . . . . . . . .114
11.8 Notice of Meetings . . . . . . . . . . . . . . . . . . . .114
11.9 Notice to Members of Management Committee. . . . . . . . .115
11.10 Appeal of Actions to Management Committee. . . . . . . . .115
11.11 Appointment of Task Forces . . . . . . . . . . . . . . . .116
11.12 Consultants, Computer Time and Expenses. . . . . . . . . .116
11.13 Responsibilities . . . . . . . . . . . . . . . . . . . . .116
11.14 Further Powers and Duties. . . . . . . . . . . . . . . . .118
11.15 Joint Meetings with Regional Market Operations Committee .118
PART THREE - MARKET PROVISIONS . . . . . . . . . . . . . . . . . . . . . .119
SECTION 12 - INSTALLED CAPABILITY AND OPERABLE CAPABILITY OBLIGATIONS
AND PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . .119
12.1 Obligations to Provide Installed Capability and
Operable Capability. . . . . . . . . . . . . . . . . . . .119
12.2 Computation of Installed Capability Responsibilities . . .120
12.3 Computation of Operable Capability Requirements. . . . . .140
12.4 Bids to Furnish Installed Capability or Operable
Capability . . . . . . . . . . . . . . . . . . . . . . . .141
12.5 Consequences of Deficiencies in Installed Capability
Responsibility . . . . . . . . . . . . . . . . . . . . . .142
12.6 Consequences of Deficiencies in Operable Capability
Requirements . . . . . . . . . . . . . . . . . . . . . . .144
12.7 Payments to Participants Furnishing Installed Capability
and Operable Capability . . . . . . . . . . . . . . . . .146
SECTION 13 - OPERATION, GENERATION, OTHER RESOURCES,AND INTERRUPTIBLE
CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . .148
13.1 Maintenance and Operation in Accordance with Good
Utility Practice . . . . . . . . . . . . . . . . . . . . .148
13.2 Central Dispatch . . . . . . . . . . . . . . . . . . . . .148
13.3 Maintenance and Repair . . . . . . . . . . . . . . . . . .149
13.4 Objectives of Day-to-Day System Operation. . . . . . . . .149
13.5 Satellite Membership . . . . . . . . . . . . . . . . . . .150
SECTION 14 - INTERCHANGE TRANSACTIONS. . . . . . . . . . . . . . . . . . .151
14.1 Obligation for Energy, Operating Reserve and Automatic
Generation Control . . . . . . . . . . . . . . . . . . . .151
14.2 Obligation to Bid or Schedule, and Right to Receive
Energy, Operating Reserve and Automatic Generation
Control. . . . . . . . . . . . . . . . . . . . . . . . . .154
14.3 Amount of Energy, Operating Reserve and Automatic
Generation Control Received or Furnished . . . . . . . . .161
14.4 Payments by Participants Receiving Energy Service,
Operating Reserve and Automatic Generation Control . . . .163
14.5 Payments to Participants Furnishing Energy Service,
Operating Reserve, and Automatic Generation Control. . . .165
14.6 Energy Transactions with Non-Participants. . . . . . . . .167
14.7 Participant Purchases Pursuant to Firm Contracts and
System Contracts . . . . . . . . . . . . . . . . . . . . .169
14.8 Determination of Energy Clearing Price . . . . . . . . . .170
14.9 Determination of Operating Reserve Selling Price and
Clearing Price . . . . . . . . . . . . . . . . . . . . . .171
14.10 Determination of AGC Clearing Price. . . . . . . . . . . .175
14.11 Funds to or from which Payments are to be Made . . . . . .176
14.12 Development of Rules Relating to Nuclear and
Hydroelectric Generating Facilities, Limited-Fuel
Generating Facilities, and Interruptible Loads . . . . . .183
14.13 Dispatch and Billing Rules During Energy Shortages . . . .184
14.14 Congestion Uplift. . . . . . . . . . . . . . . . . . . . .185
14.15 Additional Uplift Charges. . . . . . . . . . . . . . . . .187
PART FOUR - TRANSMISSION PROVISIONS. . . . . . . . . . . . . . . . . . . .187
SECTION 15 - OPERATION OF TRANSMISSION FACILITIES. . . . . . . . . . . . .187
15.1 Definition of PTF. . . . . . . . . . . . . . . . . . . . .187
15.2 Maintenance and Operation in Accordance with Good
Utility Practice . . . . . . . . . . . . . . . . . . . . .190
15.3 Central Dispatch . . . . . . . . . . . . . . . . . . . . .191
15.4 Maintenance and Repair . . . . . . . . . . . . . . . . . .191
15.5 Additions to or Upgrades of PTF. . . . . . . . . . . . . .192
SECTION 16 - SERVICE UNDER TARIFF. . . . . . . . . . . . . . . . . . . . .195
16.1 Effect of Tariff . . . . . . . . . . . . . . . . . . . . .195
16.2 Obligation to Provide Regional Service . . . . . . . . . .196
16.3 Obligation to Provide Local Network Service. . . . . . . .196
16.4 Transmission Service Availability. . . . . . . . . . . . .199
16.5 Transmission Information . . . . . . . . . . . . . . . . .199
16.6 Distribution of Transmission Revenues. . . . . . . . . . .200
16.7 Changes to Tariff. . . . . . . . . . . . . . . . . . . . .203
SECTION 17 - POOL-PLANNED UNIT SERVICE . . . . . . . . . . . . . . . . . .204
17.1 Effective Period . . . . . . . . . . . . . . . . . . . . .204
17.2 Obligation to Provide Service. . . . . . . . . . . . . . .205
17.3 Rules for Determination of Facilities Covered by
Particular Transactions. . . . . . . . . . . . . . . . . .206
17.4 Payments for Uses of EHV PTF During the Transition Period.207
17.5 Payments for Uses of Lower Voltage PTF . . . . . . . . . .211
17.6 Use of Other Transmission Facilities by Participants . . .212
17.7 Limits on Individual Transmission Charges. . . . . . . . .212
PART FIVE - GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . .213
SECTION 18 - GENERATION AND TRANSMISSION FACILITIES. . . . . . . . . . . .213
18.1 Designation of Pool-Planned Facilities . . . . . . . . . .213
18.2 Construction of Facilities . . . . . . . . . . . . . . . .214
18.3 Protective Devices for Transmission Facilities and
Automatic Generation Control Equipment . . . . . . . . . .214
18.4 Review of Participant's Proposed Plans . . . . . . . . . .215
18.5 Participant to Avoid Adverse Effect. . . . . . . . . . . .216
SECTION 19 - EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . .217
19.1 Annual Fee . . . . . . . . . . . . . . . . . . . . . . . .217
19.2 NEPOOL Expenses. . . . . . . . . . . . . . . . . . . . . .218
SECTION 20 - INDEPENDENT SYSTEM OPERATOR . . . . . . . . . . . . . . . . .219
SECTION 21 - MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . .224
21.1 Alternative Dispute Resolution . . . . . . . . . . . . . .224
21.2 Payment of Pool Charges; Termination of Status as
Participant. . . . . . . . . . . . . . . . . . . . . . . .237
21.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . .240
21.4 Force Majeure. . . . . . . . . . . . . . . . . . . . . . .241
21.5 Waiver of Defaults . . . . . . . . . . . . . . . . . . . .241
21.6 Other Contracts. . . . . . . . . . . . . . . . . . . . . .242
21.7 Liability and Insurance. . . . . . . . . . . . . . . . . .242
21.8 Records and Information. . . . . . . . . . . . . . . . . .244
21.9 Consistency with NPCC and NERC Standards . . . . . . . . .244
21.10 Construction . . . . . . . . . . . . . . . . . . . . . . .244
21.11 Amendment. . . . . . . . . . . . . . . . . . . . . . . . .245
21.12 Termination. . . . . . . . . . . . . . . . . . . . . . . .247
21.13 Notices to Participants. . . . . . . . . . . . . . . . . .247
21.14 Severability and Renegotiation . . . . . . . . . . . . . .249
21.15 No Third-Party Beneficiaries . . . . . . . . . . . . . . .249
21.16 Counterparts . . . . . . . . . . . . . . . . . . . . . . .250
<PAGE>
RESTATED NEPOOL POWER POOL AGREEMENT
THIS AGREEMENT dated as of the first day of September, 1971, as amended, was
entered into by the signatories thereto for the establishment by them of a bulk
power pool to be known as NEPOOL and is restated by an amendment dated as of
December 1, 1996.
In consideration of the mutual agreements and undertakings herein, the
signatories hereby agree as follows:
PART ONE
INTRODUCTION
SECTION 1
DEFINITIONS
Whenever used in this Agreement, in either the singular or plural number, the
following terms shall have the following respective meanings (an asterisk (*)
indicates that the definition may be modified in certain cases pursuant to
Section 1.94):
1.1 Adjusted Annual Peak of a Participant for any twelve-month period is
the maximum Adjusted Load of the Participant during any hour during the
period. If, during such period, there has been a transfer, in whole or
part, of the responsibility (whether as a direct retail supplier or as
an indirect wholesale supplier pursuant to a Firm Contract) for
supplying the electric requirements of any retail customers from (or
to) such Participant to (or from) another Participant, the Adjusted
Annual Peak of each such Participant shall be reconstituted to reflect
the effect of such transfer, but a Participant's Adjusted Annual Peak
shall not be reconstituted to reflect the effect of any other
transaction.
1.2 Adjusted Load * (not less than zero) of a Participant during any
particular hour is the Participant's Load during such hour less any
Kilowatts received (or Kilowatts which would have been received except
for the application of Section 14.7(b)) by such Participant pursuant to
a Firm Contract.
1.3 Adjusted Monthly Peak of a Participant for a month is its Monthly Peak,
provided that, if there has been a transfer, in whole or part, of the
wholesale responsibilities under this Agreement during such month
pursuant to a Firm Contract, the Adjusted Monthly Peak of each such
Participant shall be reconstituted to reflect the effect of such
transaction, but the Adjusted Monthly Peak of a Participant shall not
be reconstituted to reflect the effect of any other transaction.
1.4 Adjusted Net Interchange of a Participant for an hour is (a) the
Kilowatts produced by or delivered to the Participant from its Energy
Entitlements or pursuant to arrangements entered into under Section
14.6, as adjusted in accordance with uniform market operation rules
approved by the Regional Market Operations Committee to take account
of losses, as appropriate, minus (b) the sum of (i) the Electrical Load
of the Participant for the hour, and (ii) the kilowatthours delivered
by such Participant to other Participants pursuant to Firm Contracts or
System Contracts, in accordance with the treatment agreed to pursuant
to Section 14.7(a), together with any associated electrical losses.
1.5 AGC Capability of an electric generating unit or combination of units
is the maximum dependable ability of the unit or units to increase or
decrease the level of output within a time frame specified by market
operation rules approved by the Regional Market Operations Committee,
in response to a remote direction from the System Operator in
order to maintain currently proper power flows into and out of the
NEPOOL Control Area and to control frequency.
1.6 AGC Entitlement is (a) the right to all or a portion of the AGC
Capability of a generating unit or combination of units to which an
Entity is entitled as an owner (either sole or in common) or as a
purchaser, reduced by (b) any portion thereof which such Entity is
selling pursuant to a Unit Contract, and (c) further reduced or
increased, as appropriate, to recognize rights to receive or
obligations to supply AGC pursuant to Firm Contracts or System
Contracts in accordance with Section 14.7(a). An AGC Entitlement in a
generating unit or units may, but need not, be combined with any other
Entitlements relating to such generating unit or units and may be
transferred separately from the related Installed Capability
Entitlement, Operable Capability Entitlement, Energy Entitlement, or
Operating Reserve Entitlements.
1.7 Agreement is this restated contract and attachments, including the
Tariff, as amended and restated from time to time.
1.8 Annual Peak of a Participant for any twelve-month period is the maximum
Load of the Participant during any hour during the period.
1.9 Automatic Generation Control or AGC is a measure of the ability of a
generating unit or portion thereof to respond automatically within a
specified time to a remote direction from the System Operator to
increase or decrease the level of output in order to control
frequency and to maintain currently proper power flows into and out of
the NEPOOL Control Area.
1.10 Bid Price is the amount which a Participant offers to accept, in a
notice furnished to the System Operator by it or on its behalf in
accordance with the market operation rules approved by the Regional
Market Operations Committee, as compensation for (i) furnishing
Installed Capability or Operable Capability to other Participants
pursuant to this Agreement, or (ii) preparing the start up or starting
up or increasing the level of operation of, and thereafter operating, a
generating unit or units to provide Energy to other Participants
pursuant to this Agreement, or (iii) having a unit or units available
to provide Operating Reserve to other Participants pursuant to this
Agreement, or (iv) having a unit or units available to provide AGC to
other Participants pursuant to this Agreement, or (v) providing to
other Participants Installed Capability, Operable Capability, Energy,
Operating Reserve and/or AGC pursuant to a Firm Contract or System
Contract in accordance with Section 14.7(a).
1.11 Commission is the Federal Energy Regulatory Commission or any
regulatory agency succeeding to substantially all of the authority of
the Federal Energy Regulatory Commission with respect to electric
service.
1.12 Dispatch Price of a generating unit or group of units, or a Firm
Contract or System Contract permitted to be bid to supply Energy in
accordance with Section 14.7(b), is the price to provide Energy from
the unit or units or Contracts, as determined pursuant to market
operation rules approved by the Regional Market Operations Committee to
incorporate the Bid Price for such Energy and any loss adjustments, if
and as appropriate under such market operation rules.
1.13 EHV PTF are PTF transmission lines which are operated at 230 kV or
above and related PTF facilities, including transformers which link
other EHV PTF facilities, but do not include transformers which step
down from 230 kV or a higher voltage to a voltage below 230 kV.
1.14 Electrical Load (in Kilowatts) of a Participant during any particular
hour is the total during such hour (eliminating any distortion arising
out of (i) Interchange Transactions, or (ii) transactions across the
system of such Participant, or (iii) other electrical losses,
if and as appropriate), of
(a) kilowatthours delivered by such Participant to its
retail customers for consumption, plus
(b) kilowatthours of use by such Participant on its system,
plus
(c) kilowatthours of electrical losses and unaccounted for
use by the Participant on its system, plus
(d) kilowatthours used by such Participant for pumping
Energy for its Entitlements in pumped storage
hydroelectric generating facilities, plus
(e) kilowatthours delivered by such Participant to Non-
Participants.
The Electrical Load of a Participant may be calculated in any
reasonable manner which substantially complies with this definition.
1.15 Energy is power produced in the form of electricity, measured in
kilowatthours or megawatthours.
1.16 Energy Entitlement is (i) a right to receive Energy under a System
Contract or a Firm Contract in accordance with Section 14.7(a), or (ii)
a right to receive all or a portion of the electric output of a
generating unit or units to which an Entity is entitled as an
owner (either sole or in common) or as a purchaser pursuant to a Unit
Contract, reduced by (iii) any portion thereof which such Entity is
selling pursuant to a Unit Contract. An Energy Entitlement in a
generating unit or units may, but need not, be combined with any other
Entitlements relating to such generating unit or units and may
be transferred separately from the related Installed Capability
Entitlement, Operable Capability Entitlement, Operating Reserve
Entitlements, or AGC Entitlement.
1.17 Entitlement is an Installed Capability Entitlement, Operable Capability
Entitlement, Energy Entitlement, Operating Reserve Entitlement, or AGC
Entitlement. When used in the plural form, it may be any or all such
Entitlements or combinations thereof, as the context requires.
1.18 Entity is any person or organization engaged in the electric power
business (the generation and/or transmission and/or distribution of
electricity for consumption by the public or the purchase, as principal
or broker, of Installed Capability, Operable Capability, Energy,
Operating Reserve, and/or AGC for resale at wholesale or retail),
whether the United States of America or Canada or a state or province
or a political subdivision thereof or a duly established agency of any
of them, a private corporation, a partnership, an individual, an
electric cooperative or any other person or organization recognized in
law as capable of owning property and contracting with respect thereto.
No person or organization shall be deemed to be an Entity if the
generation, transmission, or distribution of electricity by such person
or organization is primarily conducted to provide electricity for
consumption by such person or organization or a Related Person.
1.19 Executive Committee is the committee established pursuant to Section 7.
1.20 Firm Contract is any wholesale contract, other than a Unit Contract,
for the purchase of Installed Capability, Operable Capability, Energy,
Operating Reserves, and/or AGC for resale, pursuant to which the
purchaser's right to receive such Installed Capability, Operable
Capability, Energy, Operating Reserves, and/or AGC is subject only to
the supplier's inability to make deliveries thereunder as the result of
events beyond the supplier's reasonable control.
1.21 First Effective Date is March 1, 1997 or such other date as the
Commission may fix as the date on which the provisions of Parts One,
Two, Four and Five of this Agreement and the Tariff will become
effective.
1.22 Good Utility Practice shall mean any of the practices, methods, and
acts engaged in or approved by a significant portion of the electric
utility industry during the relevant time period, or any of the
practices, methods, and acts which, in the exercise of reasonable
judgement in light of the facts known at the time the decision was
made, could have been expected to accomplish the desired result at a
reasonable cost consistent with good business practices, reliability,
safety and expedition. Good Utility Practice is not limited to a
single, optimum practice, method or act to the exclusion of others, but
rather is intended to include acceptable practices, methods, or acts
generally accepted in the region.
1.23 HQ Contracts are the HQ Interconnection Agreement, the HQ Phase I
Energy Contract, and the HQ Phase II Firm Energy Contract.
1.24 HQ Energy Banking Agreement is the Energy Banking Agreement entered
into on March 21, 1983 by Hydro-Quebec, the Participants, New England
Electric Transmission Corporation and Vermont Electric Transmission
Company, Inc., as it may be amended from time to time.
1.25 HQ Interconnection is the United States segment of the transmission
interconnection which connects the systems of Hydro-Quebec and the
Participants. "Phase I" is the United States portion of the 450 kV
HVDC transmission line from a terminal at the Des Cantons Substation on
the Hydro-Quebec system near Sherbrooke, Quebec to a terminal having an
approximate rating of 690 MW at a substation at the Comerford
Generating Station on the Connecticut River. "Phase II" is the United
States portion of the facilities required to increase to approximately
2000 MW the transfer capacity of the HQ Interconnection including an
extension of the HVDC transmission line from the terminus of Phase I at
the Comerford Station through New Hampshire to a terminal at
the Sandy Pond Substation in Massachusetts. The HQ Interconnection
does not include any PTF facilities installed or modified to effect
reinforcements of the New England AC transmission system required in
connection with the HVDC transmission line and terminals.
1.26 HQ Interconnection Agreement is the Interconnection Agreement entered
into on March 21, 1983 by Hydro-Quebec and the Participants, as it may
be amended from time to time.
1.27 HQ Interconnection Capability Credit of a Participant for a month
during the Base Term (as defined in Section 1.33) of the HQ Phase II
Firm Energy Contract is the sum in Kilowatts of (1)(a) the
Participant's percentage share, if any, of the HQ Phase I Transfer
Capability times (b) the HQ Phase I Transfer Credit, plus (2)(a) the
Participant's percentage share, if any, of the Phase II Transfer
Capability, times (b) the HQ Phase II Transfer Credit. The Management
Committee shall establish appropriate HQ Interconnection Capability
Credits to apply for a Participant which has such a percentage share
(i) during an extension of the HQ Phase II Firm Energy Contract, and
(ii) following the expiration of the HQ Phase II Firm Energy Contract.
1.28 HQ Interconnection Transfer Capability is the transfer capacity of the
HQ Interconnection under normal operating conditions, as determined in
accordance with Good Utility Practice. The "HQ Phase I Transfer
Capability" is the transfer capacity under normal operating conditions,
as determined in accordance with Good Utility Practice, of the Phase I
terminal facilities as determined initially as of the time immediately
prior to Phase II of the Interconnection was first being placed in
service, and as adjusted thereafter only to take into account changes
in the transfer capacity which are independent of any effect of Phase
II on the operation of Phase I. The "HQ Phase II Transfer Capability"
is the difference between the HQ Interconnection Transfer Capability
and the HQ Phase I Transfer Capability. Determinations of, and
any adjustment in, transfer capacity shall be made by the Regional
Market Operations Committee in accordance with a schedule consistent
with that followed by it in its determination of the Winter Capability
and Summer Capability of generating units.
1.29 HQ Net Interconnection Capability Credit of a Participant at a
particular time is its HQ Interconnection Capability Credit at the time
in Kilowatts, minus a number of Kilowatts equal to (1) the percentage
of its share of the HQ Interconnection Transfer Capability committed or
used by it for an "Entitlement Transaction" at the time under the HQ
Use Agreement, times (2) its HQ Interconnection Capability Credit for
the current month.
1.30 HQ Phase I Energy Contract is the Energy Contract entered into on March
21, 1983 by Hydro-Quebec and the Participants, as it may be amended
from time to time.
1.31 HQ Phase I Percentage is the percentage of the total HQ Interconnection
Transfer Capability represented by the HQ Phase I Transfer Capability.
1.32 HQ Phase I Transfer Credit is 60/69 of the HQ Phase I Transfer
Capability, or such other fraction of the HQ Phase I Transfer
Capability as the Management Committee may establish.
1.33 HQ Phase II Firm Energy Contract is the Firm Energy Contract dated as
of October 14, 1985 between Hydro-Quebec and certain of the
Participants, as it may be amended from time to time. The "Base Term"
of the HQ Phase II Firm Energy Contract is the period commencing on the
date deliveries were first made under the Contract and ending on August
31, 2000.
1.34 HQ Phase II Gross Transfer Responsibility of a Participant for any
month during the Base Term of the HQ Phase II Firm Energy Contract (as
defined in Section 1.33) is the number in Kilowatts of (a) the
Participant's percentage share, if any, of the HQ Phase II Transfer
Capability for the month times (b) the HQ Phase II Transfer Credit.
Following the Base Term of the HQ Phase II Firm Energy Contract, and
again following the expiration of the HQ Phase II Firm Energy Contract,
the Management Committee shall establish an appropriate HQ Phase II
Gross Transfer Responsibility that shall remain in effect concurrently
with the HQ Interconnection Capability Credit.
1.35 HQ Phase II Net Transfer Responsibility of a Participant for any month
is its HQ Phase II Gross Transfer Responsibility for the month minus a
number of Kilowatts equal to (1) the highest percentage of its share of
the HQ Interconnection Transfer Capability committed or used by it on
any day of the month for an "Entitlement Transaction" under the HQ Use
Agreement, times (2) its HQ Phase II Gross Transfer Responsibility
for the month.
1.36 HQ Phase II Percentage is the percentage of the total HQ
Interconnection Transfer Capability represented by the HQ Phase II
Transfer Capability.
1.37 HQ Phase II Transfer Credit is 90/131 of the HQ PhaseII Transfer
Capability, or such other fraction of the HQ Phase II Transfer
Capability as the Management Committee may establish.
1.38 HQ Use Agreement is the Agreement with Respect to Use of Quebec
Interconnection dated as of December 1, 1981 among certain of the
Participants, as amended and restated as of September 1, 1985 and as it
may be further amended from time to time.
1.39 Installed Capability of an electric generating unit or combination of
units during the Winter Period is the Winter Capability of such unit or
units and during the Summer Period is the Summer Capability of such
unit or units.
1.40 Installed Capability Entitlement is (a) the right to all or a portion
of the Installed Capability of a generating unit or units to which an
Entity is entitled as an owner (either sole or in common) or as a
purchaser pursuant to a Unit Contract, (b) reduced by any portion
thereof which such Entity is selling pursuant to a Unit Contract, and
(c) further reduced or increased, as appropriate, to recognize rights
to receive or obligations to supply Installed Capability pursuant to
System Contracts in accordance with Section 14.7(a). An Installed
Capability Entitlement relating to a unit or units may, but need not,
be combined with any other Entitlements relating to such generating
unit or units and may be transferred separately from the related
Operable Capability Entitlement, Energy Entitlement, Operating Reserve
Entitlements, or AGC Entitlement.
1.41 Installed Capability Responsibility * of a Participant for any month is
the number of Kilowatts determined in accordance with Section 12.2.
1.42 Installed System Capability of a Participant at a particular time is
(1) the sum of such Participant's Installed Capability Entitlements
plus (2) its HQ Net Interconnection Capability Credit at the time.
1.43 Interchange Transactions are transactions deemed to be effected under
Section 12 of the Prior NEPOOL Agreement prior to the Second Effective
Date, and transactions deemed to be effected under Section 14 of this
Agreement on and after the Second Effective Date.
1.44 ISO is the Independent System Operator which is expected to assume
responsibility for the continued operation of the NEPOOL Control Area
from the NEPOOL control center and the administration of the Tariff,
subject to regulation by the Commission.
1.45 Kilowatt is a kilowatthour per hour.
1.46 Load * (in Kilowatts) of a Participant during any particular hour is
the total during such hour (eliminating any distortion arising out of
(i) Interchange Transactions, or (ii) transactions across the system of
such Participant, or (iii) deliveries between Entities constituting a
single Participant, or (iv) other electrical losses, if and as
appropriate) of
(a) kilowatthours delivered by such Participant to its
retail customers for consumption (excluding any
kilowatthours which may be classified as interruptible
under market operation rules approved by the Regional
Market Operations Committee), plus
(b) kilowatthours delivered by such Participant pursuant to
Firm Contracts to its wholesale customers for resale,
plus
(c) kilowatthours of use by such Participant on its system,
exclusive of station use, plus
(d) kilowatthours of electrical losses and unaccounted for
use by the Participant on its system.
The Load of a Participant may be calculated in any reasonable manner
which substantially complies with this definition.
For the purposes of calculating a Participant's Annual Peak, Adjusted
Monthly Peak, Adjusted Annual Peak and Monthly Peak, the Load of a
Participant shall be adjusted to eliminate any distortions resulting
from voltage reductions. In addition, upon the request of any
Participant, the Regional Market Operations Committee shall make, or
supervise the making of, appropriate adjustments in the computation of
Load for the purposes of calculating any Participant's Annual Peak,
Adjusted Monthly Peak, Adjusted Annual Peak and Monthly Peak to
eliminate any distortions resulting from emergency load curtailments
which would significantly affect the Load of any Participant.
1.47 Lower Voltage PTF are all PTF facilities other than EHV PTF.
1.48 Management Committee is the committee established pursuant to Section
6.
1.49 Market Reliability Planning Committee is the committee established
pursuant to Section8.
1.50 Monthly Peak of a Participant for a month is the maximum Adjusted Load
of the Participant during any hour in the month.
1.51 NEPOOL is the New England Power Pool, the power pool created under and
governed by this Agreement, and the Entities collectively participating
in the New England Power Pool as Participants.
1.52 NEPOOL Installed Capability Responsibility for any month is the sum of
the Installed Capability Responsibilities of all Participants during
that month.
1.53 NEPOOL Control Area is the integrated electric power system to which a
common Automatic Generation Control scheme and various operating
procedures are applied by or under the supervision of the System
Operator in order to:
(i) match, at all times, the power output of the generators
within the electric power system and capacity and Energy
purchased from entities outside the electric power
system, with the load within the electric power
system;
(ii) maintain scheduled interchange with other interconnected
systems, within the limits of Good Utility Practice;
(iii) maintain the frequency of the electric power system
within reasonable limits in accordance with Good Utility
Practice and the criteria of the Northeast Power
Coordinating Council and the North American Electric
Reliability Council; and
(iv) provide sufficient generating capacity to maintain
operating reserves in accordance with Good Utility
Practice.
1.54 NEPOOL Installed Capability at any particular time is the sum of the
Installed System Capabilities of all Participants at such time.
1.55 NEPOOL Objective Capability for any year or period during a year is the
minimum NEPOOL Installed Capability, treating the reliability benefits
of the HQ Interconnection as Installed Capability, as established by
the Management Committee, required to be provided by the Participants
in aggregate for the period to meet the reliability standards
established by the Management Committee pursuant to Section 6.12.
1.56 New Unit is an electric generating unit (including a unit or units
owned by a Non-Participant in which a Participant has an Entitlement
under a Unit Contract) first placed into commercial operation after May
1, 1987 (or, in the case of a unit or units owned by a Non-Participant,
in which a Participant's Unit Contract Entitlement became effective
after May 1, 1987) and not listed on Exhibit B to the Prior NEPOOL
Agreement.
1.57 Non-Participant is any entity which is not a Participant.
1.58 Operable Capability of an electric generating unit or units in any hour
is the portion of the Installed Capability of the unit or units which
is operating or available to respond within an appropriate period (as
identified in market operation rules approved by the Regional Market
Operations Committee) to the System Operator's call to meet the
Energy and/or Operating Reserve and/or AGC requirements of the NEPOOL
Control Area during a Scheduled Dispatch Period or which may be
scheduled directly by individual Participants for the hour in
accordance with market operation rules approved by the Regional Market
Operations Committee.
1.59 Operable Capability Entitlement is (a) the right to all or a portion of
the Operable Capability of a generating unit or units to which an
Entity is entitled as an owner (either sole or in common) or as a
purchaser pursuant to a Unit Contract, (b) reduced by any portion
thereof which such Entity is selling pursuant to a Unit Contract, and
(c) further reduced or increased, as appropriate, to recognize rights
to receive or obligations to supply Operable Capability pursuant to
Firm Contracts or System Contracts in accordance with Section 14.7(a).
An Operable Capability Entitlement relating to a unit or units may, but
need not, be combined with any other Entitlements relating to such
generating unit or units, and may be transferred separately from the
related Installed Capability Entitlement, Energy Entitlement, Operating
Reserve Entitlements, or AGC Entitlement.
1.60 Operable Capability Requirement of a Participant for any hour is the
number of Kilowatts determined in accordance with Section 12.3.
1.61 Operable System Capability of a Participant in any hour is the sum of
such Participant's Operable Capability Entitlements.
1.62 Operating Reserve is any or a combination of 10-Minute Spinning
Reserve, 10-Minute Non-Spinning Reserve, and 30-Minute Operating
Reserve, as the context requires.
1.63 Operating Reserve Entitlement is (a) the right to all or a portion of
the Operating Reserve of any category which can be provided by a
generating unit or units to which an Entity is entitled as an owner
(either sole or in common) or as a purchaser pursuant to a Unit
Contract, (b) reduced by any portion thereof which such Entity is
selling pursuant to a Unit Contract, and (c) further reduced or
increased, as appropriate, to recognize rights to receive or
obligations to supply Operating Reserve of that category pursuant to
Firm Contracts or System Contracts in accordance with Section 14.7(a).
An Operating Reserve Entitlement in any category relating to a
generating unit or units may, but need not, be combined with any other
Entitlements relating to such generating unit or units and may be
transferred separately from the other categories of Operating
Reserve Entitlements related to such unit or units and from the related
Installed Capability Entitlement, Operable Capability Entitlement,
Energy Entitlement, or AGC Entitlement.
1.64 Other HQ Energy is Energy purchased under the HQ Phase I Energy
Contract which is classified as "Other Energy" under that contract.
1.65 Outside Transaction Adjustment of a Participant for any month is the
number of Kilowatts determined in accordance with Section 12.2(a)(3).
1.66 Participant is an eligible Entity (or group of Entities which has
elected to be treated as a single Participant pursuant to Section 4.1)
which is a signatory to this Agreement and has become a Participant in
accordance with Section 3.1 until such time as such Entity's status as
a Participant terminates pursuant to Section 21.2.
1.67 Pool-Planned Facility is a generation or transmission facility
designated as "pool-planned" pursuant to Section 18.1.
1.68 Pool-Planned Unit is one of the following units: New Haven Harbor Unit
1 (Coke Works), Mystic Unit 7, Canal Unit 2, Potter Unit 2, Wyman Unit
4, Stony Brook Units 1, 1A, 1B, 1C, 2A and 2B, Millstone Unit 3,
Seabrook Unit 1 and Waters River Unit 2 (to the extent of 7 megawatts
of its Summer Capability and 12 megawatts of its Winter Capability).
1.69 Power Year is the period of twelve months commencing on November 1.
1.70 Prior NEPOOL Agreement is the NEPOOL Agreement as in effect on December
1, 1996.
1.71 Proxy Unit is a hypothetical electric generating unit which possesses a
Winter Capability, equivalent forced outage rate, annual maintenance
outage requirement, and seasonal derating determined in accordance with
Section 12.2.
1.72 PTF are the pool transmission facilities defined in Section 15.1, and
any other new transmission facilities which the Regional Transmission
Planning Committee determines, in accordance with criteria approved by
the Management Committee and subject to review by the System Operator,
should be included in PTF.
1.73 Regional Market Operations Committee is the committee established
pursuant to Section 10.
1.74 Regional Transmission Operations Committee is the committee established
pursuant to Section 11.
1.75 Regional Transmission Planning Committee is the committee established
pursuant to Section 9.
1.76 Related Person of a Participant is either (i) a corporation,
partnership, business trust or other business organization more than
50% of the stock or equity interest in which is owned directly or
indirectly by, or is under common control with, the Participant, or
(ii) a corporation, partnership, business trust or other business
organization which owns directly or indirectly more than 50% of the
stock or other equity interest in the Participant, or (iii) a
corporation, partnership, business trust or other business organization
more than 50% of the stock or other equity interest in which is owned,
directly or indirectly by a corporation, partnership, business trust or
other business organization which also owns more than 50% of the stock
or other equity interest in the Participant.
1.77 Scheduled Dispatch Period is the shortest period for which the System
Operator performs and publishes a projected dispatch schedule based on
projected Electrical Loads and actual Bid Prices and Participant-
directed schedules for resources submitted in accordance with Section
14.2(d).
1.78 Second Effective Date is the date on which Part Three of the Agreement
shall become effective and shall be July 1, 1997 or such later date on
or before January 1, 1998 as the Management Committee may fix, or such
other date as the Commission may fix on its own or pursuant to a
request of the Management Committee.
1.79 Summer Capability of an electric generating unit or combination of
units is the maximum dependable load carrying ability in Kilowatts of
such unit or units (exclusive of capacity required for station use)
during the Summer Period, as determined by the Regional Market
Operations Committee in accordance with Section 10.13(f).
1.80 Summer Period in each Power Year is the four-month period from June
through September.
1.81 System Contract is any wholesale contract for the purchase for resale
of Installed Capability, Operable Capability, Energy, Operating
Reserves and/or AGC, other than a Unit Contract or Firm Contract,
pursuant to which the purchaser is entitled to a specifically
determined or determinable amount of such Installed Capability,
Operable Capability, Energy, Operating Reserve and/or AGC.
1.82 System Operator is the central dispatching agency provided for in this
Agreement which has responsibility for the operation of the NEPOOL
Control Area from the control center and the administration of the
Tariff. The System Operator shall be the ISO after it has been
activated and is prepared to assume responsibility for the operation of
the NEPOOL Control Area and control center.
1.83 Target Availability Rate is the assumed availability of a type of
generating unit utilized by the Management Committee in its
determination pursuant to Section 6.14(e) of NEPOOL Objective
Capability.
1.84 Tariff is the NEPOOL Open Access Transmission Tariff set out in
Attachment B to the Agreement, as modified and amended from time to
time.
1.85 Third Effective Date is the date on which all Interchange Transactions
shall begin to be effected on the basis of separate Bid Prices for each
type of Entitlement. The Third Effective Date shall be fixed at the
discretion of the Management Committee to occur within six months to
one year after the Second Effective Date, or at such later date as the
Commission may fix on its own or pursuant to a request by the
Management Committee.
1.86 Unit Contract is a wholesale purchase contract pursuant to which the
purchaser is in effect currently entitled either (i) to a specifically
determined or determinable portion of the Installed Capability of a
specific electric generating unit or units, or (ii) to a specifically
determined or determinable amount of Operable Capability, Energy,
Operating Reserve and/or AGC if, or to the extent that, a specific
electric generating unit or units is or can be operated.
1.87 Voting Share has the meaning specified in Section 6.3.
1.88 Winter Capability of an electric generating unit or combination of
units is the maximum dependable load carrying ability in Kilowatts of
such unit or units (exclusive of capacity required for station use)
during the Winter Period, as determined by the Regional Market
Operations Committee in accordance with Section 10.13(f).
1.89 Winter Period in each Power Year is the seven-month period from
November through May and the month of October.
1.90 10-Minute Spinning Reserve in an hour are the following resources that
are designated by the System Operator in accordance with market
operation rules, as approved by the Regional Market Operations
Committee, to be available to provide contingency protection for the
system: (1) the Kilowatts of Operable Capability of an electric
generating unit or units that are synchronized to the system, unloaded
during all or part of the hour, and capable of providing contingency
protection by loading to supply Energy immediately on demand,
increasing the Energy output over no more than ten minutes to the full
amount of generating capacity so designated, and sustaining such
Energy output for so long as the System Operator determines in
accordance with market operation rules is necessary to satisfy the
immediate contingency; and (2) any portion of the Electrical Load of a
Participant, including Energy supplied to pumped storage hydroelectric
generating facilities operating in the pumping mode, that the
System Operator is able to verify as capable of providing contingency
protection by immediately on demand reducing Energy requirements within
ten minutes and maintaining such reduced Energy requirements for so
long as the System Operator determines in accordance with market
operation rules is necessary to satisfy the immediate contingency.
1.91 10-Minute Non-Spinning Reserve in an hour are the following resources
that are designated by the System Operator in accordance with market
operation rules, as approved by the Regional Market Operations
Committee, to be available to provide contingency protection for the
system: (1) the Kilowatts of Operable Capability of an electric
generating unit or units that are not synchronized to the system,
during all or part of the hour, and capable of providing contingency
protection by loading to supply Energy within ten minutes to the full
amount of generating capacity so designated, and sustaining such Energy
output for so long as the System Operator determines in accordance with
market operation rules is necessary to satisfy the immediate
contingency; (2) any portion of a Participant's Electrical Load that
the System Operator is able to verify as capable of providing
contingency protection by reducing Energy requirements within ten
minutes and maintaining such reduced Energy requirements for
so long as the System Operator determines in accordance with market
operations rules is necessary to satisfy the immediate contingency; and
(3) any other resources and requirements that were able to be
designated for the hour as 10-Minute Spinning Reserve but were not
designated by the System Operator for such purpose in the hour.
1.92 30-Minute Operating Reserve in an hour are the following resources that
are designated by the System Operator in accordance with market
operation rules, as approved by the Regional Market Operations
Committee, to be available to provide contingency protection for the
system: (1) the Kilowatts of Operable Capability of an electric
generating unit or units that are capable of providing contingency
protection by loading to supply Energy within thirty minutes of demand
at an output equal to its full amount of generating capacity so
designated; (2) any portion of the Electrical Load of a Participant,
including Energy supplied to pumped storage hydroelectric generating
facilities operating in the pumping mode, that the System Operator is
able to verify as capable of providing contingency protection by
reducing Energy requirements within thirty minutes and maintaining such
reduced Energy requirements for so long as the System Operator
determines in accordance with market operation rules is necessary to
satisfy the immediate contingency; (3) any other resources and
requirements that were able to be designated for the hour as 10-Minute
Spinning Reserve or 10-Minute Non-Spinning Reserve but were not
designated by the System Operator for such purposes.
1.93 33rd Amendment is the Thirty-Third Agreement Amending New England Power
Pool Agreement dated as of December 1, 1996.
1.94 Modification of Certain Definitions When a Participant Purchases a
Portion of Its Requirements from Another Participant Pursuant to Firm
Contract
Definitions marked by an asterisk (*) are modified as follows
when a Participant purchases a portion of its requirements of
electricity for resale from another Participant pursuant to a
Firm Contract:
(a) If the Firm Contract limits deliveries to a specifically
stated number of Kilowatts and requires payment of a
demand charge thereon (thus placing the responsibility
for meeting additional demands on the purchasing
Participant):
(1) in computing the Adjusted Load of the purchasing
Participant, the Kilowatts received pursuant to
such Firm Contract shall be deemed to be the
number of Kilowatts specified in the Firm
Contract; and
(2) in computing the Load of the supplying
Participant, the Kilowatts delivered pursuant to
such Firm Contract shall be deemed to be
the number of Kilowatts specified in the Firm
Contract.
(b) If the Firm Contract does not limit deliveries to a
specifically stated number of Kilowatts, but entitles
the purchasing Participant to receive such amounts of
electricity as it may require to supply the electric
needs of its customers (thus placing the responsibility
for meeting additional demands on the supplying
Participant):
(1) the Installed Capability Responsibility of the
purchasing Participant shall be equal to the
amount of its Installed Capability Entitlements;
(2) in computing the Adjusted Load of the purchasing
Participant, the Kilowatts received pursuant to
such Firm Contract shall be deemed to be a
quantity R{l}; and
(3) in computing the Load of the supplying
Participant, the Kilowatts delivered pursuant to
such Firm Contract shall be deemed to be a
quantity R{l}.
The quantity R{l} equals (i) the Load of the purchasing
Participant less (ii) the amount of the purchasing
Participant's Installed Capability Entitlements
multiplied by a fraction wherein:
X is the maximum Load of the purchasing
Participant in the month, and
Y is the NEPOOL Installed Capability
Responsibility multiplied by the
purchasing Participant's fraction P
determined pursuant to Section 12.2(a),
computed as if the Firm Contract did not
exist.
Terms used in this Agreement which are not defined above but which are
defined in the Tariff shall have the meanings specified in the Tariff.
Terms used in this Agreement that are not defined above, or in the
Tariff, or in the sections in which such terms are used, shall have the
meanings customarily attributed to such terms in the electric power
industry in New England.
SECTION 2
PURPOSE; EFFECTIVE DATES
2.1 Purpose. This Restated NEPOOL Agreement is intended to provide for a
restructuring of the New England Power Pool by modifying the pool's
governance and market provisions to take account of a changed
competitive environment, by modifying the transmission responsibilities
of the Participants so that the pool will perform the functions of a
regional transmission group and provide service to Participants and
Non-Participants under a regional open access transmission tariff, and
by providing for the activation of the ISO and the execution of a
contract between the ISO and NEPOOL to define the ISO's
responsibilities.
2.2 Effective Dates; Transitional Provisions. The provisions of Parts One,
Two, Four and Five of this Agreement and the Tariff shall become
effective on the First Effective Date, and shall replace on the First
Effective Date the provisions of Sections 1-8, inclusive, 10, 11, 13,
14.2, 14.3, 14.4 and 16 of the Prior NEPOOL Agreement.
The effectiveness of the remaining Sections of this Restated NEPOOL
Agreement shall be delayed pending the preparation of implementing
criteria, rules and standards and computer programs. These Sections
shall become effective on the Second Effective Date and shall replace
on the Second Effective Date the remaining provisions of the
Prior NEPOOL Agreement, which shall continue in effect until the Second
Effective Date.
As provided in Section 14, certain portions of Section 14 which will
become effective on the Second Effective Date will be superseded on the
Third Effective Date by other portions of Section 14.
The activation of the ISO is expected to occur after the First
Effective Date. Until that time, the NEPOOL committees shall continue
to be responsible for the supervision of the NEPOOL staff.
SECTION 3
MEMBERSHIP
3.1 Membership. Those Entities which are Participants in NEPOOL on the
First Effective Date shall continue to be Participants.
Any other Entity which is engaged, or proposes to engage, in the
wholesale or retail electric power business in New England may, upon
compliance with such reasonable conditions as the Management Committee
may prescribe, become a Participant by depositing a counterpart of this
Agreement as theretofore amended, duly executed by it, with the
Secretary of the Management Committee, accompanied by a certified copy
of a vote of its board of directors, or such other body or bodies as
may be appropriate, duly authorizing its execution and performance of
this Agreement, and a check in payment of the application fee described
below.
Any such Entity which satisfies the requirements of this Section 3.1
shall become a Participant, and this Agreement shall become fully
binding and effective in accordance with its terms as to such Entity,
as of the first day of the second calendar month following its
satisfaction of such requirements; provided that an earlier or later
effective time may be fixed by the Management Committee with the
concurrence of such Entity or by the Commission.
The application fee to be paid by each Entity seeking to become a
Participant shall be in addition to the annual fee provided by Section
19.1 and shall be $500 or such other amount as may be fixed by the
Management Committee.
3.2 Operations Outside the Control Area. Subject to the reciprocity
requirements of the Tariff, if a Participant serves a Load, or has
Entitlements in supply or demand-side resource facilities or owns
transmission and/or distribution facilities, located outside of
the NEPOOL Control Area, such Load and facilities shall not be included
for purposes of determining the Participant's rights, responsibilities
and obligations under this Agreement, except that the Participant's
Entitlements in supply or demand-side resource facilities outside the
NEPOOL Control Area shall be included in such determinations if, to the
extent, and while such Entitlements are used for retail or wholesale
sales within the NEPOOL Control Area or are designated by a Participant
for purposes of meeting its obligations under Section 12 of this
Agreement.
3.3 Lack of Place of Business in New England. If and for so long as a
Participant does not have a place of business located in one of the New
England states, the Participant shall be deemed to irrevocably (1)
submit to the jurisdiction of any Connecticut state court or
United States Federal Court sitting in Connecticut (the state whose
laws govern this Agreement) over any action or proceeding arising out
of or relating to this Agreement that is not subject to the exclusive
jurisdiction of the Commission, (2) agree that all claims with respect
to such action or proceeding may be heard and determined in such
Connecticut state court or Federal court, (3) waive any objection to
venue or any action or proceeding in Connecticut on the basis of forum
non conveniens, and (4) agree that service of process may be made on
the Participant outside Connecticut by certified mail, postage prepaid,
mailed to the Participant at the address of its member on the
Management Committee as set out in the NEPOOL roster or at the address
of its principal place of business.
3.4 Obligation for Deferred Expenses. NEPOOL may provide for the deferral
on the books of the Participants from time to time of capital or other
expenditures, and the recovery of the deferred expenses in subsequent
periods. Any Entity which becomes a Participant during the recovery
period for any such deferred expenses shall be obligated, together with
the continuing Participants, for its share of the current and
deferred expenses pursuant to Section 19.2.
3.5 Financial Security. For an Entity applying to become a Participant or
any continuing Participant that the Management Committee reasonably
determines may fail to meet its financial obligations under the
Agreement, the Management Committee may require reasonable credit
review procedures which shall be made in accordance with standard
commercial practices. In addition, the Management Committee may
prescribe for such Entity or Participant a requirement that the Entity
or Participant provide and maintain in effect an unconditional and
irrevocable letter of credit as security to meet its responsibilities
and obligations under the Agreement, or an alternative form of security
proposed by the Entity or Participant and acceptable to the Management
Committee and consistent with commercial practices established by the
Uniform Commercial Code that protects the Participants against the risk
of non-payment.
SECTION 4
STATUS OF PARTICIPANTS
4.1 Treatment of Certain Entities as Single Participant. All Entities
which are controlled by a single person (such as a corporation or a
business trust) which owns at least seventy-five percent of the voting
shares of each of them shall be collectively treated as a single
Participant for purposes of this Agreement, if they each elect such
treatment. They are encouraged to do so. Such an election shall be
made in writing and shall continue in effect until revoked in writing.
In view of the long-standing arrangements in Vermont, Vermont Electric
Power Company, Inc. and any other Vermont electric utilities which
elect in writing to be grouped with it shall be collectively treated as
a single Participant for purposes of this Agreement.
4.2 Participants to Retain Separate Identities. The signatories to this
Agreement shall not become partners by reason of this Agreement or
their activities hereunder, but as to each other and to third persons,
they shall be and remain independent contractors in all matters
relating to this Agreement. This Agreement shall not be construed to
create any liability on the part of any signatory to anyone not a party
to this Agreement. Each signatory shall retain its separate identity
and, to the extent not limited hereby, its individual freedom in
rendering service to its customers.
SECTION 5
NEPOOL OBJECTIVES AND COOPERATION BY PARTICIPANTS
5.1 NEPOOL Objectives. The objectives of NEPOOL are, through joint
planning, central dispatching, cooperation in environmental matters and
coordinated construction, central dispatch by the System Operator of
the operation and coordinated maintenance of electric supply and
demand-side resources and transmission facilities, the provision of
an open access regional transmission tariff and the provision of a
means for effective coordination with other power pools and utilities
situated in the United States and Canada,
(a) to assure that the bulk power supply of the NEPOOL
Control Area conforms to proper standards of
reliability;
(b) to create and maintain open, non-discriminatory,
competitive, unbundled markets for Energy, capacity, and
ancillary services that function efficiently in a
changing electric power industry and have access to
regional transmission at rates that do not vary with
distance;
(c) to attain maximum practicable economy, consistent with
proper standards of reliability and the maintenance of
competitive markets, in such bulk power supply; and
(d) to provide access to competitive markets within the
NEPOOL Control Area and to neighboring regions;
and to provide for equitable sharing of the resulting responsibilities,
benefits and costs.
5.2 Cooperation by Participants. In order to attain the objectives of
NEPOOL set forth in Section 5.1, each Participant shall observe the
provisions of this Agreement in good faith, shall cooperate with all
other Participants and shall not either alone or in conjunction with
one or more other Entities take advantage of the provisions of this
Agreement so as to harm another Participant or to prejudice the
position of any Participant in the electric power business.
Until the Second Effective Date, in order to assure the equitable
sharing among the Participants of the benefits contemplated by this
Agreement, no Participant shall participate, except pursuant to this
Agreement, in any transaction with one or more other Participants or
other Entities if such transaction involves an economy interchange
arrangement. The foregoing restriction shall not, however, apply to an
economy interchange or other similar arrangement between or among a
Participant and one or more Entities which are not Participants if, and
to the extent that, such arrangement is consistent with attainment of
the objectives stated in Section 5.1 and with the Participant's
obligations under this Agreement.
Until the effective date of the Tariff, in order further to assure the
equitable sharing among the Participants of the benefits and costs
contemplated by this Agreement, no transfer by a Participant to its
Related Person of an Entitlement in any generating unit shall be
recognized for purposes of this Agreement, including but not limited to
the calculation and allocation of benefits and costs under this
Agreement, if either (i) the transferee has a zero Adjusted Load or
(ii) the amount of the transferee's Installed System Capability,
including such Entitlement, bears no reasonable relation to its
Adjusted Load. Furthermore, no other arrangement substantially similar
to that described in the preceding sentence shall be recognized for
purposes of this Agreement, including but not limited to the
calculation and allocation of benefits and costs under this Agreement.
For the purposes of the preceding paragraph, the Adjusted Load and
Installed System Capability of any transferee that is not a Participant
shall be determined as if it were a Participant. The term
"transferee," as used herein, shall include, without limitation,
any Participant or Entity, or any other organization or person.
PART TWO
GOVERNANCE
SECTION 6
MANAGEMENT COMMITTEE
6.1 Membership. There shall be a Management Committee which shall be
constituted as follows: each Participant shall appoint and be
represented by one member of the Management Committee.
6.2 Term of Members. Each member of the Management Committee shall hold
office until such member is replaced by the Participant which appointed
the member or until such Participant ceases to be a Participant.
Replacement of a member shall be effected by delivery by a Participant
of written notice of such replacement to the Secretary of the
Management Committee.
6.3 Votes. Each member of the Management Committee shall have a Voting
Share in any month entitling the member to cast, on behalf of the
Participant which the member represents, votes representing the
percentage to which the member's Participant is entitled of the
aggregate Voting Shares of all Participants for the month. The
percentage of the aggregate Voting Shares of all Participants to which
a Participant is entitled in any month shall be determined in
accordance with the following formula:
.15833 P .15833 E .15833 C .15833 X .15833 M .15833 R .05 Y
V = (----)+ (----)+ (----)+ (----)+ (----)+ (----)+ (---)
P{1} E{1} C{1} X{1} M{1} R{1} Y{1}
in which
V = the Participant's Voting Share as a percentage of the aggregate
Voting Shares of all Participants;
P = the average for each of the most recently completed twelve months
of the Participant's maximum Load during any clock hour in a month;
P{1} = the average of the sums for each of the most recently completed
twelve months of the noncoincidental maximum Load during any clock
hour in a month of all Participants;
E = the average for the most recently completed twelve months of the
following: the Participant's monthly Loads plus any kilowatthours
delivered during the month to loads classified as interruptible
under market operation rules approved by the Regional Market
Operations Committee;
E{1} = the average of the sums for each of the most recently completed
twelve months of the following: the monthly Loads of all
Participants plus any kilowatthours delivered during the month to
loads classified as interruptible under market operation rules
approved by the Regional Market Operations Committee.
C = the average in megawatts for the most recently completed twelve
months of the sum for each month of the Generation Ownership
Shares, as defined in this Section, of the Participant;
C{1} = the average in megawatts for the most recently completed twelve
months of the sum for each month of the Generation Ownership Shares
of all Participants;
X = the average for the most recently completed twelve months of the
sum for each month of (i) a number of kilowatthours equal to the
Kilowatts of the Participant's Generation Ownership Shares, times
the number of hours in the month, plus (ii) the number of
kilowatthours that the Participant was entitled to receive in each
hour with respect to its Energy Entitlements under Unit Contracts
or System Contracts times, in the case of each contract, the number
of hours the contract was in effect in the month, as computed
without giving effect to any resale in whole or part of any such
Energy Entitlement;
X{1} = the average for the most recently completed twelve months of the
sum for each month of (i) a number of kilowatthours equal to the
Kilowatts of the Generation Ownership Shares of all Participants,
times the number of hours in the month, plus (ii) the number of
kilowatthours that all Participants were entitled to receive in
each hour with respect to their Energy Entitlements under Unit
Contracts or System Contracts times, in the case of each contract,
the number of hours the contract was in effect in the month, as
computed without giving effect to any resale in whole or part of
any such Energy Entitlement;
M = the circuit miles of the Participant's Transmission Ownership
Shares, as defined in this Section, of PTF transmission lines
times, in the case of each line, the nominal operating voltage of
the line;
M{1} = the aggregate of the circuit miles of the Transmission Ownership
Shares of PTF transmission lines of all Participants times, in the
case of each line, the nominal operating voltage of the line;
R = the Annual Transmission Revenue Requirements of the Participant's
PTF as of the beginning of the current calendar year as determined
in accordance with Attachment F to the Tariff except that 1) such
Revenue Requirements shall not be reduced by the transmission
support revenue received as described in Section I of that
Attachment and 2) such Revenue Requirements shall not include
transmission support payments as described in Section J of that
Attachment for support arrangements which were entered into after
December 31, 1996;
R{1} = the aggregate Annual Transmission Revenue Requirements of the PTF
of all Participants as of the beginning of the current calendar
year as determined in accordance with Attachment F to the Tariff,
except that 1) such Revenue Requirements shall not be reduced by
the transmission support revenue received as described in Section I
of that Attachment and 2) such Revenue Requirements shall not
include transmission support payments as described in Section J of
that Attachment for support arrangements which were entered into
after December 31, 1996;
Y = 1;and
Y{1} = the number of NEPOOL Participants at the beginning of the month;
provided, however, that a Participant and its Related Persons may not have
aggregate Voting Shares exceeding 25% of the aggregate Voting Shares to which
all Participants are entitled. If the aggregate Voting Shares of a Participant
and its Related Persons would be in excess of 25% if it were not for this
limitation, the remaining Voting Shares to which such Participant and its
Related Persons would otherwise be entitled shall be allocated to the other
Participants on a pro rata basis.
For purposes of the preceding formula (i) if an Entity has been a Participant
for less than twelve months, the amounts to be taken into account for purposes
of "P", "E", "C" and "X" in the formula shall be for the period during which
the Entity has been a Participant; (ii) for purposes of "X" and "X{1}" in the
formula, the number of kilowatthours to be taken into account with respect to
the HQ Phase II Firm Energy Contract for each Participant which has a share
in the HQ Phase II Firm Energy Contract shall be computed on the basis of the
number of Kilowatts of its HQ Interconnection Capability Credit, if any, for
the month; and (iii) for purposes of "X" and "X{1}" in the formula, the number
of kilowatthours to be taken into account with respect to an Energy Entitlement
under a Unit Contract or System Contract, other than the HQ Phase II Firm
Energy Contract, under which a Participant is entitled to receive Energy
from outside the NEPOOL Control Area shall be computed on the basis of the
number of Kilowatts of Installed Capability credit, or Monthly Peak reduction,
for which the Participant is given credit in determining whether it has
satisfied its Installed Capability Responsibility pursuant to Section12.
In the event a Participant both participates in the wholesale bulk power market
and owns PTF, the member appointed by the Participant shall be entitled to
divide the member's vote, as determined in accordance with this Section, on any
matter on the basis specified by it in a notice given to the Secretary of the
Management Committee at or prior to the meeting at which the vote is to be
cast, to reflect its market and transmission interests. In such case the
portion of the member's vote reflecting its transmission interest may be cast
by the member's alternate.
For purposes of this Section, the Generation Ownership Shares of a Participant
means and includes:
(A) the direct ownership interest which the Participant has as a
sole or joint owner in the Installed Capability of a generating
unit which is subject to NEPOOL central dispatch in accordance
with Section 13.2;
(B) the indirect ownership interest which the Participant has, as a
shareholder in Connecticut Yankee Atomic Power Company, Maine
Yankee Atomic Power Company, Vermont Yankee Nuclear Power
Corporation or a similar corporation, or as a general or limited
partner in Ocean State Power or a similar partnership, in the
Installed Capability of a generating unit which is subject to
NEPOOL central dispatch in accordance with Section 13.2,
provided the corporation or partnership is itself not a
Participant;
(C) any other interest which the Participant has in the Installed
Capability of a generating unit which is subject to NEPOOL
central dispatch in accordance with Section 13.2, under a lease
or other contractual arrangement, provided the other party to
the arrangement is itself not a Participant and the Management
Committee determines, at the request of the affected
Participant, that the Participant has benefits and rights, and
assumes risks, under the arrangement with respect to the unit
which are substantially equivalent to the benefits, rights
and risks of an owner; and
(D) an interest which the Participant shall be deemed to have in the
direct ownership interest, or the indirect ownership interest as
a shareholder or general or limited partner, of a Related Person
of the Participant in the Installed Capability of a generating
unit which is subject to NEPOOL central dispatch in accordance
with Section 13.2, provided the Related Person is itself not a
Participant.
For purposes of this Section, the Transmission Ownership Shares of a
Participant means and includes:
(W) the direct ownership interest which the Participant has as a
sole or joint owner of PTF;
(X) the indirect ownership interest which the Participant has, as a
shareholder in a corporation, or as a general or limited partner
in a partnership, in PTF owned by such corporation or
partnership, provided the corporation or partnership is
not itself a Participant;
(Y) any other interest which the Participant has in PTF under a
lease or other contractual arrangement, provided the other party
to the arrangement is not itself a Participant and the
Management Committee determines, at the request of the affected
Participant, that the Participant has benefits and rights, and
assumes risks, under the arrangement with respect to the PTF
which are substantially equivalent to the benefits, rights and
risks of an owner; and
(Z) an interest which the Participant shall be deemed to have in the
direct ownership interest, or the indirect ownership interest as
a shareholder or general or limited partner, of a Related Person
of the Participant in PTF, provided the Related Person is itself
not a Participant.
6.4 Number of Votes Necessary for Action. Actions of the Management
Committee shall be effected only upon an affirmative vote of members
having at least 66% of the aggregate Voting Shares to which all members
are entitled; provided, however, that the negative votes of any three
or more members representing Participants which are not Related Persons
of each other and which have at least 20% of the aggregate Voting
Shares to which all members are entitled shall defeat any proposed
action. In determining whether the negative vote total specified above
has been reached, the following limitation shall be applied: if the
member representing any Participant would be entitled to cast against
the proposed action more than 18% of the aggregate Voting Shares to
which all members are entitled, such member shall be entitled to vote
negatively only 18% of such aggregate Voting Shares.
6.5 Proxies. The vote of any member of the Management Committee or the
member's alternate may be cast by another person pursuant to a written
proxy dated not more than one year previous to the meeting and
delivered to the Secretary of the Management Committee at or prior to
the meeting at which the proxy vote is cast.
6.6 Alternates. A Participant may designate, by a written notice delivered
to the Secretary of the Management Committee, an alternate for a member
of the Management Committee appointed by it. In the absence of the
member, the alternate shall have all the powers of the member,
including the power to vote.
6.7 Officers. At its annual meeting, the Management Committee shall elect
from among its members a Chair and a Vice-Chair; it shall also elect a
Secretary who need not be a member. These officers shall have the
powers and duties usually incident to such offices.
6.8 Meetings. The Management Committee shall hold its annual meeting in
December at such time and place as the Chair shall designate and shall
hold other meetings in accordance with a schedule adopted by the
Management Committee or at the call of the Chair. One or more members
who represent Participants having in the aggregate at least 3% of the
aggregate Voting Shares of all Participants may call a special meeting
of the Management Committee in the event that the Chair shall fail to
call such a meeting within three business days following the Chair's
receipt from such member or members of a request specifying the subject
matters to be acted upon at the meeting.
6.9 Notice of Meetings. Written notice of each meeting of the Management
Committee shall be given to each member not less than five business
days prior to the date of the meeting, which notice shall specify the
principal subject matter expected to be acted upon at the meeting.
6.10 Adoption of Budgets. At each annual meeting, the Management Committee
shall adopt a NEPOOL budget for the ensuing calendar year. In adopting
budgets the Management Committee shall give due consideration to the
budgetary requests of each committee and shall include the budget of
the ISO as determined in accordance with NEPOOL's contract between
NEPOOL and the ISO. The Management Committee may modify any NEPOOL
budget from time to time after its adoption and shall modify the
NEPOOL budget if and as required to support changes to the ISO budget
adopted in accordance with the contract between NEPOOL and the ISO.
6.11 Adoption of Bylaws. The Management Committee may adopt bylaws,
consistent with this Agreement, governing procedural matters including
the conduct of its meetings and those of the other committees.
6.12 Establishing Reliability Standards. It shall be the duty of the
Management Committee, after review of reports or actions of the System
Operator and the Market Reliability Planning Committee and Regional
Transmission Planning Committees and such other matters as the
Management Committee deems pertinent, to establish or approve proper
standards of reliability for the bulk power supply of NEPOOL. Such
standards shall be consistent with the directives of the North American
Electric Reliability Council and the Northeast Power Coordinating
Council and shall be reviewed periodically by the Management Committee
and revised as the Management Committee deems appropriate.
6.13 Appointment and Compensation of NEPOOL Personnel. The Management
Committee shall determine what personnel are desirable for the
effective operation and administration of NEPOOL and shall fix or
authorize the fixing of the compensation for such persons.
6.14 Duties and Authority.
(a) The Management Committee shall have the duty and
requisite authority to administer, enforce and interpret
the provisions of this Agreement in order to accomplish
the objectives of NEPOOL including the making of
any decision or determination necessary under any
provision of this Agreement and not expressly specified
to be decided or determined by any other body.
(b) The Management Committee shall have the authority to
provide for such facilities, materials and supplies as
the Management Committee may determine are necessary or
desirable to carry out the provisions of this
Agreement.
(c) The Management Committee shall have, in addition to the
authority provided in Section 6.12, the authority, after
consultation with other NEPOOL committees and the System
Operator, to establish or approve consistent standards
with respect to any aspect of arrangements between
Participants and Non-Participants which it determines
may adversely affect the reliability of NEPOOL, and to
review such arrangements to determine compliance with
such standards.
(d) The Management Committee, or its designee, shall have
the authority to act on behalf of all Participants in
carrying out any action properly taken pursuant to the
provisions of this Agreement. Without limiting the
foregoing general authority, the Management Committee,
or its designee, shall have the authority on behalf of
all Participants to execute any contract, lease or other
instrument which has been properly authorized pursuant
to this Agreement including, but not limited to, one
or more contracts with the ISO, and to file with the
Commission and other appropriate regulatory bodies: (i)
this Agreement and documents amending or supplementing
this Agreement, including the Tariff, (ii) contracts
with Non-Participants or the ISO, and (iii) related
tariffs, rate schedules and certificates of concurrence.
The Management Committee shall, in addition, have the
authority to represent NEPOOL in proceedings before the
Commission.
(e) The Management Committee shall have the duty and
requisite authority, after consultation with other
NEPOOL committees and the System Operator, to fix the
NEPOOL Objective Capability for each month of
each Power Year prior to the beginning of the Power Year
and thereafter to review at least annually the
anticipated Load of the NEPOOL Participants and NEPOOL
Installed Capability for each month of such Power Year
and to make such adjustments in the NEPOOL Objective
Capability as the Management Committee may determine on
the basis of such review. Since changes in the
circumstances which must be assumed by the Management
Committee in fixing NEPOOL Objective Capability
for a future period can significantly affect the
required level of NEPOOL Objective Capability for that
period, the Management Committee shall, where
appropriate, also determine the effect on NEPOOL
Objective Capability of significant changes in
circumstances from those assumed, either by fixing
alternative NEPOOL Objective Capabilities, or by
adopting adjustment factors or formulas.
(f) The Management Committee shall have the duty and
requisite authority to establish or approve schedules
fixing the amounts to be paid by Participants and Non-
Participants to permit the recovery of expenses incurred
in furnishing some or all of the services furnished by
NEPOOL either directly or through the System Operator.
(g) The Management Committee shall have the duty and
requisite authority to provide for the sharing by
Participants, on such basis as the Management Committee
may deem appropriate, of payments and costs which are
not otherwise reimbursed under this Agreement and which
are incurred by Participants or under arrangements with
Non-Participants and approved or authorized by the
Committee as necessary in order to meet or avoid short-
term deficiencies in the amount of resources available
to meet the pool's reliability objectives.
(h) The Management Committee shall have the authority, at
the time that it acts on an Entity's application
pursuant to Section 3.1 to become a Participant, to
waive, conditionally or unconditionally, compliance by
such Entity with one or more of the obligations imposed
by this Agreement if the Management Committee determines
that such compliance would be unnecessary or
inappropriate for such Entity and the waiver for such
Entity will not impose an additional burden on other
Participants.
(i) Until the Second Effective Date, the Management
Committee shall have the duty and requisite authority to
determine which generating facilities should be equipped
for Automatic Generation Control in order to maintain
proper frequency for the interconnected bulk power
system of the Participants and to control power flows on
interconnections between Participants and non-
Participants. The Management Committee shall
establish a system for sharing by the Participants until
the Second Effective Date, on such basis as the
Committee may deem appropriate, of the costs, including
loss of generator efficiency, that are incurred by
Participants in installing, maintaining and operating
Automatic Generation Control equipment required by the
Committee and are not otherwise reimbursed under this
Agreement.
(j) The Management Committee shall have the duty and
requisite authority to act on appeals to it from the
actions of other NEPOOL committees and to appoint a
special committee to administer NEPOOL's alternate
dispute resolution procedures or to take any other
action if it determines that such action is necessary or
appropriate to achieve a prompt resolution of disputes
under the provisions of Section 21.1.
(k) The Management Committee shall have such further powers
and duties as are conferred or imposed upon it by other
sections of this Agreement.
6.15 Attendance of Members of Management Committee at Other Committee
Meetings. Each member of the Management Committee or that member's
designee shall be entitled to attend any meeting of any other NEPOOL
committee, and shall have a reasonable opportunity to express views on
any matter to be acted upon at the meeting.
SECTION 7
EXECUTIVE COMMITTEE
7.1 Organization. There shall be an Executive Committee which shall have
all the powers and duties of the Management Committee (except as
provided below), subject to appeal to the Management Committee pursuant
to the provisions of Section 7.11. Between meetings of the Management
Committee, the Executive Committee shall exercise the powers and
perform the duties of the Management Committee. The Executive
Committee shall not have any of the powers or duties of the Management
Committee under Sections 6.7 and 6.10, except that the Executive
Committee shall have the power of the Management Committee to modify
from time to time an overall NEPOOL annual budget adopted by the
Management Committee, subject to the limitation that the aggregate
amount of net increase in an overall budget which may be effected by
the Executive Committee for any year shall not exceed 10% of the budget
initially adopted by the Management Committee.
7.2 Membership. The Executive Committee shall be constituted as follows:
following its activation, the ISO shall have the right to appoint a
non-voting member of the Committee; each Participant whose Voting Share
equals or exceeds 3% of the aggregate Voting Shares of all Participants
shall have the right to appoint a voting member of the Committee; the
remaining Participants whose Voting Shares are less than 3% of the
aggregate Voting Shares of all Participants shall be divided into the
following five groups, with each having the right to appoint one voting
member of the Committee:
(a) One group consisting of the remaining
Participants which are municipally-owned and
cooperatively-owned utilities;
(b) One group consisting of the remaining
Participants which are not subject to traditional
utility rate regulation and which are engaged
in the NEPOOL Control Area principally in the
business of owning or operating generation
facilities and selling the output of such
generation;
(c) One group consisting of the remaining
Participants which are not subject to traditional
utility rate regulation and which are engaged
in the NEPOOL Control Area principally in a
business other than the business of owning or
operating generation or PTF facilities
and selling the output of such generation;
(d) One group consisting of the remaining
Participants, if any, which (i) own PTF, (ii) are
not engaged in electric generation or
distribution and do not participate in the
wholesale bulk power market, and (iii) are not
Related Persons of any other Participant;
and
(e) One group consisting of the remaining
Participants which are investor-owned utilities
subject to traditional rate regulation or
other Entities which do not qualify to be
included in any of the other four groups.
Notwithstanding the foregoing, any such Participant may elect to join a
different group than the one to which it would be assigned under the
foregoing provisions if this is acceptable to the members of the group
it elects to join. In the event any Participant is a Related Person of
another Participant which has the individual right to appoint a member
of the Committee on the basis of its individual Voting Share, the
Participant shall be represented on the Committee by the member
appointed by the Participant which is its Related Person and shall not
be assigned to any of the five groups.
7.3 Term of Members. The member of the Executive Committee appointed by
the ISO shall serve until replaced by the ISO. Members of the
Executive Committee appointed by a Participant or group of Participants
shall serve until replaced by the Participant or Participants which
appointed them or until such Participant or Participants shall lose
their status as Participants or otherwise lose their right to appoint
the member. Appointment or replacement of a member shall be effected
by the ISO or a Participant or group of Participants by giving written
notice of such appointment or replacement to the Secretary of the
Executive Committee.
7.4 Alternates. The ISO or a Participant or group of Participants may
designate, by a written notice given to the Secretary of the Executive
Committee, an alternate for any member of the Executive Committee
appointed by the ISO or such Participant or group of Participants. In
the absence of the member, the alternate shall have all the powers
of the member, including the power to vote.
7.5 Votes. Each voting member of the Executive Committee shall have one
vote, which may be cast in person by the member or the member's
alternate or by another person pursuant to a written proxy dated not
more than one year previous to the meeting and delivered to the
Secretary of the Executive Committee at or prior to the meeting at
which the proxy vote is cast. If a Participant which has the
individual right to appoint a member of the Executive Committee both
participates in the wholesale bulk power market and owns PTF, the
member appointed by the Participant shall be entitled to divide the
member's vote on the basis specified in a notice given by it to the
Secretary of the Committee at or prior to the meeting at which the vote
is to be cast, to reflect the Participant's market and transmission
interests. In such case the portion of the Participant member's vote
reflecting its transmission interest may be cast by the member's
alternate.
A voting member appointed by a group may divide the member's vote on
the basis specified in a notice given by it to the Secretary of the
Committee at or prior to the meeting at which the vote is to be cast,
to reflect the different positions of the members of the group.
7.6 Number of Votes Necessary for Action. The adoption of actions by the
Executive Committee shall require affirmative votes by voting members
aggregating at least 60% of the number of votes which the voting
members in attendance at a meeting at which a quorum is present are
entitled to cast. A majority of the voting members at any time
shall constitute a quorum.
7.7 Officers. At its annual meeting, the Executive Committee shall elect
from its voting members a Chair and a Vice-Chair; it shall also elect a
Secretary who need not be a member. These officers shall have the
powers and duties usually incident to such offices.
7.8 Meetings. The Executive Committee shall hold its annual meeting in
December or January at such time and place as the Chair shall designate
and shall hold other meetings in accordance with a schedule adopted by
the Executive Committee or at the call of the Chair. Any two members
may call a special meeting of the Executive Committee in the event that
the Chair shall fail to call such a meeting within three business days
following the Chair's receipt from such members of a request specifying
the subject matters to be acted upon at the meeting. Any regular or
special meeting of the Executive Committee may be conducted by means of
conference telephone or other communications equipment by means of
which all persons participating in the meeting can hear each other.
7.9 Notice of Meetings. Written notice of each meeting of the Executive
Committee shall be given to each member of the Committee and each
member of the Management Committee not less than three business days
prior to the date of the meeting. The notice shall specify the
principal subject matter expected to be acted upon at the meeting.
7.10 Notice to Members of Management Committee of Actions by Executive
Committee. Prior to the end of the fifth business day following a
meeting of the Executive Committee, the Secretary of the Executive
Committee shall give written notice to the ISO and each member of the
Management Committee of any action taken by the Executive Committee at
such meeting.
7.11 Appeal of Actions to Management Committee. The ISO or any Participant
may appeal to the Management Committee any action taken by the
Executive Committee. Such an appeal shall be taken prior to the end of
the tenth business day following the meeting of the Executive Committee
to which the appeal relates by giving to the Secretary of the
Management Committee a signed and written notice of appeal and by
mailing a copy of the notice to the ISO and each member of the
Management Committee. Pending action on the appeal by the Management
Committee, the giving of a notice of appeal as aforesaid shall suspend
the action appealed from.
SECTION 8
MARKET RELIABILITY PLANNING COMMITTEE
8.1 Organization. There shall be a Market Reliability Planning Committee
which shall have the responsibilities specified in Section 8.11. It
may provide from time to time for the creation of one or more
Functional Planning Committees to act in particular functional planning
areas and to exercise such of the Market Reliability Planning
Committee's responsibilities as it may delegate to them.
8.2 Membership. The Market Reliability Planning Committee shall be
constituted as follows: following its activation, the ISO shall have
the right to appoint a non-voting member of the Committee; each
Participant whose Voting Share equals or exceeds 3% of the aggregate
Voting Shares of all Participants shall have the right to appoint a
voting member of the Committee; the remaining Participants shall be
divided into the following five groups, with each having the right to
appoint one voting member of the Committee:
(a) One group consisting of the remaining Participants which
are municipally-owned and cooperatively-owned utilities;
(b) One group consisting of the remaining Participants which
are not subject to traditional utility rate regulation
and which are engaged in the NEPOOL Control Area
principally in the business of owning or operating
generation facilities and selling the output of such
generation;
(c) One group consisting of the remaining Participants which
are not subject to traditional utility rate regulation
and which are engaged in the NEPOOL Control Area
principally in a business other than the business
of owning or operating generation or PTF facilities and
selling the output of such generation;
(d) One group consisting of the remaining Participants, if
any, which (i) own PTF, (ii) are not engaged in electric
generation or distribution and do not participate in the
wholesale bulk power market, and (iii) are not
Related Persons of any other Participant; and
(e) One group consisting of the remaining Participants which
are investor-owned utilities subject to traditional rate
regulation or other Entities which do not qualify to be
included in any of the other four groups.
Notwithstanding the foregoing, any such Participant may elect to join a
different group than the one to which it would be assigned under the
foregoing provisions if this is acceptable to the members of the group
it elects to join. In the event any Participant is a Related Person of
another Participant which has the individual right to appoint a
member of the Committee, the Participant shall be represented in the
Committee by the member appointed by the Participant which is its
Related Person and shall not be assigned to any of the five groups.
8.3 Term of Members. The member of the Market Reliability Planning
Committee appointed by the ISO shall serve until replaced by the ISO.
Members of the Market Reliability Planning Committee appointed by a
Participant or group of Participants shall serve until replaced by the
Participant or Participants which appointed them or until such
Participant or Participants cease to be Participants or otherwise lose
their right to appoint the member. Appointment or replacement of a
member shall be effected by the ISO or a Participant or group of
Participants by giving written notice of such appointment or
replacement to the Secretary of the Market Reliability Planning
Committee.
8.4 Voting. Each voting member of the Market Reliability Planning
Committee shall have one vote which may be cast in person by the member
or the member's alternate or by another person pursuant to a written
proxy dated not more than one year previous to the meeting and
delivered to the Secretary of the Market Reliability Planning Committee
at or prior to the meeting at which the proxy vote is cast. If a
Participant which has the individual right to appoint a voting member
of the Market Reliability Planning Committee both participates in the
wholesale bulk power market and owns PTF, the member appointed by the
Participant shall be entitled to divide the member's vote on
the basis specified in a notice given by it to the Secretary of the
Committee at or prior to the meeting at which the vote is to be cast,
to reflect the Participant's market and transmission interests. In
such case the portion of the member's vote reflecting its transmission
interest may be cast by the member's alternate.
The voting member appointed by a group may divide the member's vote on
the basis specified in a notice given by it to the Secretary of the
Committee at or prior to the meeting at which the vote is to be cast,
to reflect the different positions of the members of the group.
The adoption of actions by the Market Reliability Planning Committee
shall require affirmative votes by voting members aggregating at least
60% of the number of votes which the members in attendance at a meeting
at which a quorum is present are entitled to cast. A majority of the
voting members at any time shall constitute a quorum.
8.5 Alternates. The ISO or a Participant or group of Participants may
designate, by a written notice given to the Secretary of the Market
Reliability Planning Committee, an alternate for the member of the
Market Reliability Planning Committee appointed by the ISO or such
Participant or group of Participants. In the absence of the member,
the alternate shall have all the powers of the member, including the
power to vote.
8.6 Officers. At its annual meeting, the Market Reliability Planning
Committee shall elect from its voting members a Chair and a Vice-Chair;
it shall also elect a Secretary who need not be a member of the
Committee. These officers shall have the powers and duties usually
incident to such offices.
8.7 Meetings. The Market Reliability Planning Committee shall hold its
annual meeting in December or January at such time and place as the
Chair shall designate and shall hold other meetings in accordance with
a schedule adopted by the Committee or at the call of the Chair. Any
two members may call a special meeting of the Market Reliability
Planning Committee in the event that the Chair shall fail to call such
a meeting within three business days following the Chair's receipt from
such members of a request specifying the subject matters to be
considered at the meeting. Any regular or special meeting of the
Market Reliability Planning Committee may be conducted by means of
conference telephone or other communications equipment by means of
which all persons participating in the meeting can hear each other.
8.8 Notice of Meetings. Written notice of each meeting of the Market
Reliability Planning Committee shall be given to each member not less
than five business days prior to the date of the meeting. The
principal subject matter expected to be acted upon at a meeting shall
be specified in the notice of the meeting whenever the meeting is not
held in accordance with the schedule adopted by the Committee.
8.9 Notice to Members of Management Committee. Prior to the end of the
fifth business day following a meeting of the Market Reliability
Planning Committee, the Secretary of the Market Reliability Planning
Committee shall give written notice to the ISO and each member of the
Management Committee of any action taken by the Market Reliability
Planning Committee at such meeting.
8.10 Appeal of Actions to Management Committee. The ISO or any Participant
may appeal to the Management Committee any action taken by the Market
Reliability Planning Committee. Such an appeal shall be taken prior to
the end of the tenth business day following the meeting of the Market
Reliability Planning Committee to which the appeal relates by giving to
the Secretary of the Management Committee a signed and written notice
of appeal and by mailing a copy of the notice to the ISO and each
member of the Management Committee. Pending action on the appeal by
the Management Committee, the giving of a notice of appeal as aforesaid
shall suspend the action appealed from.
8.11 Responsibilities. The Market Reliability Planning Committee shall be
responsible, either directly or through its Functional Planning
Committees, and in conjunction with the ISO and the Regional
Transmission Planning Committee, as appropriate, for the following:
(a) providing overall direction to, and coordination of,
joint studies of supply and demand-side resources and
environmental considerations in order to achieve the
objectives of NEPOOL;
(b) recommending to the Management Committee the NEPOOL
Objective Capability for each Power Year;
(c) periodically reviewing the procedures used to calculate
NEPOOL Installed Capability, NEPOOL Objective Capability
and NEPOOL Capability Responsibility;
(d) causing to be prepared periodic short and long term load
forecasts for use in NEPOOL studies and operations and
to meet requirements of regulatory agencies;
(e) overseeing communications and liaison between NEPOOL and
governmental authorities on power supply, environmental
and load forecasting issues;
(f) coordinating the collection and exchange of necessary
system data and future plans for use in NEPOOL planning
and to meet requirements of regulatory agencies;
(g) following appropriate studies, recommending to the
Management Committee reliability standards for the bulk
power system of NEPOOL; and
(h) coordinating the review of proposed supply and demand-
side resource plans of Participants pursuant to Section
18.4 and the submission of recommendations to the
Management Committee regarding such proposed plans.
8.12 Functional Planning Committees. The Market Reliability Planning
Committee's Functional Planning Committees shall remain subject to
policy-level direction and control by the Market Reliability Planning
Committee. Functional Planning Committees may participate in joint
studies with each other and with other NEPOOL committees or task
forces, but shall submit reports and recommendations directly to the
Management Committee only pursuant to the request of the Market
Reliability Planning Committee.
The members of each Functional Planning Committee shall be appointed in
the same manner as the members of the Market Reliability Planning
Committee, and, if requested by the ISO, shall include a non-voting
member appointed by the ISO. The Chair, Vice-Chair and Secretary of
each Functional Planning Committee shall be appointed in accordance
with procedures specified by the Market Reliability Planning
Committee.
Except as expressly directed by the Market Reliability Planning
Committee, its Functional Planning Committees shall be study, research
and deliberative bodies and shall not resolve by vote differences of
opinion as to proposed plans or other matters on which they may make
reports or recommendations. Functional Planning Committees shall
regularly report the results of their work to the Market Reliability
Planning Committee, and whenever a Functional Planning Committee is
unable to reach a consensus resolution of a policy issue, that issue
shall be reported to the Market Reliability Planning Committee.
Functional Planning Committee reports shall contain such personal
opinions and conclusions as any member may request. Where a vote of a
Functional Planning Committee is required for election of officers or
other organizational matters, the action shall be effective only upon
an affirmative vote of 60% of the voting members present at the
meeting.
8.13 Appointment of Task Forces. The Market Reliability Planning Committee
and its Functional Planning Committees shall have the authority, within
the Market Reliability Planning Committee's budget or with the approval
of the Management Committee if beyond its budget, to appoint task
forces for particular studies and to name thereto available employees
of Participants.
8.14 Consultants, Computer Time and Expenses. The Market Reliability
Planning Committee and its Functional Planning Committees shall have
the authority, within the Market Reliability Planning Committee's
budget or with the approval of the Management Committee if beyond its
budget, to retain the services of the ISO, to hire other consultants,
to procure computer time and to incur such expenses as may be
required to enable the Market Reliability Planning Committee, its
Functional Planning Committees and their task forces properly to
perform their duties.
8.15 Further Powers and Duties. The Market Reliability Planning Committee
shall have such further powers and duties as may be prescribed by the
Management Committee or as set forth in this Agreement.
8.16 Reports to Management Committee. The Market Reliability Planning
Committee shall report to the Management Committee periodically the
results of its work and such reports shall contain such alternative
programs as the Market Reliability Planning Committee may consider
appropriate. Market Reliability Planning Committee reports shall also
contain such minority opinions and conclusions as any member shall
request.
8.17 Joint Meetings With Regional Transmission Planning Committee. The
Market Reliability Planning Committee is authorized and encouraged to
hold its meetings, and to conduct studies and exercise its
responsibilities, jointly with the Regional Transmission Planning
Committee to the extent appropriate.
SECTION 9
REGIONAL TRANSMISSION PLANNING COMMITTEE
9.1 Organization. There shall be a Regional Transmission Planning
Committee which shall have the responsibilities specified in Section
9.11. It may provide from time to time for the creation of one or more
Functional Planning Committees to act in particular functional
transmission planning areas and to exercise such of the Regional
Transmission Planning Committee's responsibilities as it may delegate
to them.
9.2 Membership. The Regional Transmission Planning Committee shall be
constituted as follows: following its activation, the ISO shall have
the right to appoint a non-voting member of the Committee; each
Participant whose Voting Share equals or exceeds 3% of the aggregate
Voting Shares of all Participants shall have the right to appoint a
voting member of the Committee; the remaining Participants whose Voting
Shares are less than 3% of the aggregate Voting Shares of all
Participants shall be divided into the following five groups, with each
having the right to appoint one voting member of the Committee:
(a) One group consisting of the remaining Participants which
are municipally-owned and cooperatively-owned utilities;
(b) One group consisting of the remaining Participants which
are not subject to traditional utility rate regulation
and which are engaged in the NEPOOL Control Area
principally in the business of owning or operating
generation facilities and selling the output of such
generation;
(c) One group consisting of the remaining Participants which
are not subject to traditional utility rate regulation
and which are engaged in the NEPOOL Control Area
principally in a business other than the business
of owning or operating generation or PTF facilities and
selling the output of such generation;
(d) One group consisting of the remaining Participants, if
any, which (i) own PTF, (ii) are not engaged in electric
generation or distribution and do not participate in the
wholesale bulk power market, and (iii) are not
Related Persons of any other Participant; and
(e) One group consisting of the remaining Participants which
are investor-owned utilities subject to traditional
utility rate regulation or other Entities which do not
qualify to be included in any of the other four
groups.
Notwithstanding the foregoing, any such Participant may elect to join a
different group than the one to which it would be assigned under the
foregoing provisions if this is acceptable to the members of the group
it elects to join. In the event any Participant is a Related Person of
another Participant which has the individual right to appoint a
member of the Committee on the basis of its individual Voting Share,
the Participant shall be represented in the Committee by the member
appointed by the Participant which is its Related Person and shall not
be assigned to any of the five groups.
9.3 Term of Members. The member of the Regional Transmission Planning
Committee appointed by the ISO shall serve until replaced by the ISO.
Members of the Regional Transmission Planning Committee shall serve
until replaced by the Participant or Participants which appointed them
or until such Participant or Participants shall lose their status as
Participants or otherwise lose their right to appoint the member.
Appointment or replacement of a member shall be effected by the ISO or
a Participant or group of Participants by giving written notice of such
appointment or replacement to the Secretary of the Regional
Transmission Planning Committee.
9.4 Voting. Each voting member of the Regional Transmission Planning
Committee shall have one vote which may be cast in person by the member
or his alternate or by another person pursuant to a written proxy dated
not more than one year previous to the meeting and delivered to the
Secretary of the Regional Transmission Planning Committee at or prior
to the meeting at which the proxy vote is cast. If a Participant
which has the individual right to appoint a member of the Regional
Transmission Planning Committee both participates in the wholesale bulk
power market and owns PTF, the member appointed by the Participant
shall be entitled to divide the member's vote on the basis specified in
a notice given to the Secretary of the Committee at or prior to the
meeting at which the vote is to be cast, to reflect the Participant's
market and transmission interests. In such case the portion of the
member's vote reflecting its transmission interest may be cast by the
member's alternate.
The voting member appointed by a group may divide the member's vote on
the basis specified in a notice given to the Secretary of the Committee
at or prior to the meeting at which the vote is to be cast, to reflect
the different positions of the members of the group.
The adoption of actions by the Regional Transmission Planning Committee
shall require affirmative votes by voting members aggregating at least
60% of the number of votes which the members in attendance at a meeting
at which a quorum is present are entitled to cast. A majority of the
voting members at any time shall constitute a quorum.
9.5 Alternates. The ISO, or a Participant or group of Participants may
designate, by a written notice given to the Secretary of the Regional
Transmission Planning Committee, an alternate for any member of the
Regional Transmission Planning Committee appointed by the ISO or such
Participant or group of Participants. In the absence of the member,
the alternate shall have all the powers of the member, including the
power to vote.
9.6 Officers. At its annual meeting, the Regional Transmission Planning
Committee shall elect from its voting members a Chair and a Vice-Chair;
it shall also elect a Secretary who need not be a member of the
Committee. These officers shall have the powers and duties usually
incident to such offices.
9.7 Meetings. The Regional Transmission Planning Committee shall hold its
annual meeting in December or January at such time and place as the
Chair shall designate and shall hold other meetings in accordance with
a schedule adopted by the Committee or at the call of the Chair. Any
two members may call a special meeting of the Regional Transmission
Planning Committee in the event that the Chair shall fail to call such
a meeting within three business days following the Chair's receipt from
such members of a request specifying the subject matters to be
considered at the meeting. Any regular or special meeting of the
Regional Transmission Planning Committee may be conducted by means of
conference telephone or other communications equipment by means of
which all persons participating in the meeting can hear each other.
9.8 Notice of Meetings. Written notice of each meeting of the Regional
Transmission Planning Committee shall be given to each member not less
than five business days prior to the date of the meeting. The
principal subject matter expected to be acted upon at a meeting shall
be specified in the notice of the meeting whenever the meeting is not
held in accordance with the schedule adopted by the Committee.
9.9 Notice to Members of Management Committee. Prior to the end of the
fifth business day following a meeting of the Regional Transmission
Planning Committee, the Secretary of the Regional Transmission Planning
Committee shall give written notice to the ISO and each member of the
Management Committee of any action taken by the Regional Transmission
Planning Committee at such meeting.
9.10 Appeal of Actions to Management Committee. The ISO or any Participant
may appeal to the Management Committee any action taken by the Regional
Transmission Planning Committee. Such an appeal shall be taken prior
to the end of the tenth business day following the meeting of the
Regional Transmission Planning Committee to which the appeal relates by
giving to the Secretary of the Management Committee a signed and
written notice of appeal and by mailing a copy of the notice to the ISO
and each member of the Management Committee. Pending action on the
appeal by the Management Committee, the delivery of a notice of appeal
as aforesaid shall suspend the action appealed from.
9.11 Responsibilities. The Regional Transmission Planning Committee shall be
responsible, either directly or through Functional Planning Committees,
and in conjunction with the ISO and the Market Reliability Planning
Committee, as appropriate, for the following:
(a) providing overall direction to, and coordination of,
joint studies of transmission facilities and the
development of a regional transmission plan in order to
achieve the objectives of NEPOOL;
(b) overseeing communications and liaison between NEPOOL and
governmental authorities on transmission issues;
(c) coordinating the collection and exchange of necessary
system data and future plans for use in NEPOOL planning
and to meet requirements of regulatory agencies;
(d) following appropriate studies, recommending to the
Management Committee proposed reliability standards for
the bulk power system of NEPOOL;
(e) coordinating the review of proposed transmission plans
of Participants pursuant to Section 18.4 and the
submission of recommendations to the Management
Committee regarding such proposed plans; and
(f) to the extent appropriate, establishing criteria,
guidelines and methodologies to assure consistency in
monitoring and assessing conformance of Participant and
regional transmission plans to accepted reliability
criteria.
9.12 Functional Planning Committees. The Regional Transmission Planning
Committee's Functional Planning Committees shall remain subject to
policy-level direction and control by the Regional Transmission
Planning Committee. Functional Planning Committees may participate in
joint studies with each other and with other NEPOOL committees or task
forces, but shall submit reports and recommendations directly to the
Management Committee only pursuant to the request of the Regional
Transmission Planning Committee.
The members of each Functional Planning Committee shall be appointed in
the same manner as the members of the Regional Transmission Planning
Committee, and, if requested by the ISO, shall include a non-voting
member appointed by the ISO. The Chair, Vice-Chair and Secretary of
each Functional Planning Committee shall be appointed in accordance
with procedures specified by the Regional Transmission Planning
Committee.
Except as expressly directed by the Regional Transmission Planning
Committee, its Functional Planning Committees shall be study, research
and deliberative bodies and shall not resolve by vote differences of
opinion as to proposed plans or other matters on which they may make
reports or recommendations. Functional Planning Committees shall
regularly report the results of their work to the Regional Transmission
Planning Committee, and whenever a Functional Planning Committee is
unable to reach a consensus resolution of a policy issue, that issue
shall be reported to the Regional Transmission Planning Committee.
Functional Planning Committee reports shall contain such personal
opinions and conclusions as any member may request. Where a
vote of a Functional Planning Committee is required for election of
officers or other organizational matters, the action shall be effective
only upon an affirmative vote of 60% of the voting members present at a
meeting.
9.13 Appointment of Task Forces. The Regional Transmission Planning
Committee and its Functional Planning Committees shall have the
authority, within the Regional Transmission Planning Committee's budget
or with the approval of the Management Committee if beyond its budget,
to appoint task forces for particular studies and to name thereto
available employees of Participants.
9.14 Consultants, Computer Time and Expenses. The Regional Transmission
Planning Committee and its Functional Planning Committees shall have
the authority, within the Regional Transmission Planning Committee's
budget or with the approval of the Management Committee if beyond its
budget, to retain the services of the ISO, to hire other consultants,
to procure computer time and to incur such expenses as may be
required to enable the Regional Transmission Planning Committee, its
Functional Planning Committees and their task forces properly to
perform their duties.
9.15 Further Powers and Duties. The Regional Transmission Planning
Committee shall have such further powers and duties as may be
prescribed by the Management Committee or as set forth in this
Agreement.
9.16 Reports to Management Committee. The Regional Transmission Planning
Committee shall report to the Management Committee periodically the
results of its work and such reports shall contain such alternative
programs as the Regional Transmission Planning Committee may consider
appropriate. Regional Transmission Planning Committee reports shall
also contain such minority opinions and conclusions as any member shall
request.
9.17 Joint Meetings With Market Reliability Planning Committee. The
Regional Transmission Planning Committee is authorized and encouraged
to hold its meetings, and to conduct studies and exercise its
responsibilities, jointly with the Market Reliability Planning
Committee to the extent appropriate.
SECTION 10
REGIONAL MARKET OPERATIONS COMMITTEE
10.1 Organization. There shall be a Regional Market Operations Committee
which shall be responsible for establishing or approving market
operation rules and for monitoring the operation of NEPOOL supply and
demand-side resources and the wholesale bulk power market.
10.2 Membership. The Regional Market Operations Committee shall be
constituted as follows: following its activation, the ISO shall have
the right to appoint a non-voting member of the Committee; each
Participant whose Voting Share equals or exceeds 3% of the aggregate
Voting Shares of all Participants shall have the right to appoint one
voting member and each Participant whose Voting Share equals or exceeds
15% of the aggregate Voting Shares of all Participants shall have the
right, so long as such condition continues, to appoint one additional
voting member, provided that the aggregate number of members which a
Participant and its Related Persons shall have the right to appoint
shall be limited to two members; the remaining Participants shall be
divided into the following five groups, with each having the right to
appoint one voting member of the Regional Market Operations Committee:
(a) One group consisting of the remaining Participants which
are municipally-owned and cooperatively-owned
traditional utilities;
(b) One group consisting of the remaining Participants which
are not subject to traditional utility rate regulation
and which are engaged in the NEPOOL Control Area
principally in the business of owning or operating
generation facilities and selling the output of such
generation;
(c) One group consisting of the remaining Participants which
are not subject to traditional utility rate regulation
and which are engaged in the NEPOOL Control Area
principally in a business other than the business
of owning or operating generation or PTF facilities and
selling the output of such generation;
(d) One group consisting of the remaining Participants, if
any, which (i) own PTF, (ii) are not engaged in electric
generation or distribution and do not participate in the
wholesale bulk power market, and (iii) are not
Related Persons of any other Participant; and
(e) One group consisting of the remaining Participants which
are investor-owned utilities subject to traditional
utility rate regulation or other Entities which do not
qualify to be included in any of the other four
groups.
Notwithstanding the foregoing, any such Participant may elect to join a
different group than the one to which it would be assigned under the
foregoing provisions if this is acceptable to the members of the group
it elects to join. In the event any such Participant is a Related
Person of another Participant which has the individual right to
appoint one or two members of the Committee, the Participant shall be
represented in the Committee by the member or members appointed by the
Participant which is its Related Person and shall not be assigned to
any of the five groups.
10.3 Terms of Members. The member of the Regional Market Operations
Committee appointed by the ISO shall serve until replaced by the ISO.
Members of the Regional Market Operations Committee shall serve until
replaced by the Participant or Participants which appointed them or
until such Participant or Participants shall lose their status as
Participants or otherwise lose the right to appoint the member.
Appointment or replacement of a member shall be effected by the ISO or
a Participant or group of Participants giving written notice of such
appointment or replacement to the Secretary of the Regional Market
Operations Committee.
10.4 Voting. Each voting member of the Regional Market Operations Committee
shall have one vote, which may be cast in person by the member or his
alternate or by another person pursuant to a written proxy dated not
more than one year previous to the meeting and delivered to the
Secretary of the Regional Market Operations Committee at or prior to
the meeting at which the proxy vote is cast. If a Participant which
has the individual right to appoint a member or members of the Regional
Market Operations Committee both participates in the wholesale bulk
power market and owns PTF, the member or members appointed by the
Participant shall each be entitled to divide its vote on the basis
specified in a notice given by it to the Secretary of the Committee at
or prior to the meeting at which the vote is to be cast, to reflect the
Participant's market and transmission interests. In such case the
portion of a member's vote reflecting its transmission interest may be
cast by the member's alternate.
The voting member appointed by a group may divide the member's vote on
the basis specified in a notice given by it to the Secretary of the
Committee at or prior to the meeting at which the vote is to be cast,
to reflect the different positions of the members of the group.
The adoption of actions by the Regional Market Operations Committee
shall require affirmative votes by voting members aggregating at least
60% of the number of votes which the members in attendance at a meeting
at which a quorum is present are entitled to cast. A majority of the
voting members at any time shall constitute a quorum.
10.5 Alternates. The ISO or a Participant or group of Participants may
designate, by a written notice delivered to the Secretary of the
Regional Market Operations Committee, an alternate for any member of
the Regional Market Operations Committee appointed by the ISO or such
Participant or group of Participants. In the absence of the member,
the alternate shall have all of the powers of the member, including the
power to vote.
10.6 Officers. At its annual meeting, the Regional Market Operations
Committee shall elect from its voting members a Chair and a Vice-Chair;
it shall also elect a Secretary who need not be a member. These
officers shall have the powers and duties usually incident to such
offices.
10.7 Meetings. The Regional Market Operations Committee shall hold its
annual meeting in December or January at such time and place as the
Chair shall designate and shall hold other meetings in accordance with
a schedule adopted by the Regional Market Operations Committee or at
the call of the Chair. Any two members may call a special meeting of
the Regional Market Operations Committee in the event that the Chair
shall fail to call such a meeting within three business days following
the Chair's receipt from such members of a request specifying the
subject matters to be acted upon at the meeting. In the event of
emergency, any member may call a special meeting of the Regional Market
Operations Committee to be held forthwith. Any annual, special or
other meeting of the Regional Market Operations Committee may be
conducted by means of conference telephone or other communications
equipment by means of which all persons participating in the meeting
can hear each other.
10.8 Notice of Meetings. Written notice of each meeting of the Regional
Market Operations Committee shall be given to each member not less than
three business days prior to the date of the meeting. The notice shall
normally specify the principal subject matters expected to be acted
upon; provided, however, that no written notice shall be required
for a meeting called in the event of an emergency, although the
Secretary or the member calling the meeting shall use his or her best
efforts to notify every member of the meeting.
10.9 Notice to Members of Management Committee. Prior to the end of the
fifth business day following a meeting of the Regional Market
Operations Committee, the Secretary of the Regional Market Operations
Committee shall give written notice to the ISO and each member of the
Management Committee of any action taken by the Regional Market
Operations Committee at such meeting.
10.10 Appeal of Actions to Management Committee. The ISO or any Participant
may appeal to the Management Committee any action taken by the Regional
Market Operations Committee. Such an appeal shall be taken prior to
the end of the tenth business day following the meeting of the Regional
Market Operations Committee to which the appeal relates by giving to
the Secretary of the Management Committee a signed and written notice
of appeal and by mailing a copy of the notice to the ISO and each
member of the Management Committee. Pending action on the appeal by
the Management Committee, the filing of a notice of appeal as aforesaid
shall suspend the action appealed from.
10.11 Appointment of Task Forces. The Regional Market Operations Committee
shall have the authority, within its budget or with the approval of the
Management Committee if beyond its budget, to appoint task forces for
particular studies and may name thereto available employees of
Participants.
10.12 Consultants, Computer Time and Expenses. The Regional Market
Operations Committee shall have the authority, within its budget or
with the approval of the Management Committee if beyond its budget, to
retain the services of the ISO, to hire consultants, to procure
computer time, and to incur such expenses as may be required
to enable the Regional Market Operations Committee and its task forces
properly to perform their duties.
10.13 Responsibilities. The Regional Market Operations Committee, in
conjunction with the ISO and the Regional Transmission Operations
Committee, as appropriate, shall be responsible for the following:
(a) until the ISO is activated, supervising the scheduling
and coordination of the day-to-day operations of the
Participants' supply and demand-side resources and
transmission facilities and their arrangements with Non-
Participants;
(b) making or causing to be made, from time to time,
necessary studies and establishing or approving
dispatching procedures based thereon to assure
the reliable operation and facilitate the efficient
operation of the NEPOOL Control Area bulk power supply;
(c) performing the following: (i) coordinating studies of,
and providing information to Participants on,
maintenance schedules for the supply and demand-side
resources and transmission facilities of the
Participants, (ii) until the ISO is activated,
establishing or approving maintenance schedules for the
supply and demand-side resources and transmission
facilities of the Participants and, to the extent
necessary, standards for durations for maintenance of
the supply and demand-side resources of the
Participants, and (iii) adopting and implementing
uniform rules or procedures, until the Second Effective
Date, for determining when a generating unit's outages
for maintenance shall be approved for Scheduled Outage
Service and for determining whether the applicable
Capability for a unit to be used in determining the
amount of a Participant's Scheduled Outage Service shall
be the unit's Reserve Capability or its Temporary
Reserve Capability;
(d) until the ISO is activated, supervising the maintenance
and operation of the NEPOOL control center;
(e) to the extent appropriate to assure the reliable
operation of the bulk power supply of NEPOOL
establishing or approving reasonable standards, criteria
and rules relating to protective equipment, switching,
voltage control, load shedding, emergency and
restoration procedures, and the operation and
maintenance of supply and demand-side resources
and transmission facilities of the Participants;
(f) determining the seasonal capabilities of each electric
generating unit or combination of units in which a
Participant has an Entitlement in a uniform manner
applying generally accepted engineering principles;
(g) determining as appropriate from time to time the current
Annual Peak, Adjusted Annual Peak, Monthly Peak,
Adjusted Monthly Peak, Installed Capability
Responsibility, Operable Capability Requirements, and
obligations for Energy, Operating Reserve and AGC, of
each Participant;
(h) until the Second Effective Date, determining the
Incremental Costs and Decremental Costs for each
generating unit in which a Participant has an
Entitlement under the varying circumstances affecting
such costs;
(i) establishing or approving market operation rules
governing the submission of Bid Prices and the
determination of prices for Installed Capability,
Operable Capability, Energy, each category of Operating
Reserve and AGC, and establishing or approving
appropriate billing procedures for transactions pursuant
to this Agreement; and
(j) calculating and equitably apportioning losses incurred
in connection with Interchange Transactions.
10.14 Further Powers and Duties. The Regional Market Operations Committee
shall have such further powers and duties as may be prescribed by the
Management Committee or as set forth in this Agreement.
10.15 Development of Rules Relating to Non-Participant Supply and Demand-side
Resources. It is recognized that arrangements between Participants and
Non-Participants with respect to the Non-Participants' supply and
demand-side resources may create special problems in the application of
Sections 12 and 14. Accordingly, the Regional Market Operations
Committee shall analyze such special problems and develop appropriate
rules for reflecting such facilities in the Installed or Operable
System Capability of a Participant which enters into such an
arrangement and for the treatment of such arrangements for Energy,
Operating Reserve and AGC purposes. Upon approval by the Regional
Market Operations Committee, such rules shall supersede the provisions
of Sections 12 and 14 (and the related definitions in Section 1) to the
extent of any conflict therewith.
10.16 Joint Meetings with Regional Transmission Operations Committee. The
Regional Market Operations Committee is authorized and encouraged to
hold its meetings, and to conduct studies and exercise its
responsibilities, jointly with the Regional Transmission Operations
Committee to the extent appropriate.
SECTION 11
REGIONAL TRANSMISSION OPERATIONS COMMITTEE
11.1 Organization. There shall be a Regional Transmission Operations
Committee which shall be responsible for monitoring the operation of
NEPOOL transmission and the administration of the Tariff.
11.2 Membership. The Regional Transmission Operations Committee shall be
constituted as follows: following its activation, the ISO shall have
the right to appoint a non-voting member of the Committee; each
Participant whose Voting Share equals or exceeds 3% of the aggregate
Voting Shares of all Participants shall have the right to appoint one
voting member of the Committee; the remaining Participants whose Voting
Shares are less than 3% of the aggregate Voting Shares of all
Participants shall be divided into the following five groups, with each
having the right to appoint one voting member of the Committee:
(a) One group consisting of the remaining Participants which
are municipally-owned and cooperatively-owned
traditional utilities;
(b) One group consisting of the remaining Participants which
are not subject to traditional utility rate regulation
and which are engaged in the NEPOOL Control Area
principally in the business of owning or operating
generation facilities and selling the output of such
generation;
(c) One group consisting of the remaining Participants which
are not subject to traditional utility rate regulation
and which are engaged in the NEPOOL Control Area
principally in a business other than the business of
owning or operating PTF or generation facilities and
selling the output of such generation;
(d) One group consisting of the remaining Participants, if
any, which (i) own PTF, (ii) are not engaged in electric
generation or distribution and do not participate in the
wholesale bulk power market, and (iii) are not
Related Persons of any other Participant; and
(e) One group consisting of the remaining Participants which
are investor-owned utilities subject to traditional
utility rate regulation or other Entities which do not
qualify to be included in any of the other four
groups.
Notwithstanding the foregoing, any such Participant may elect to join a
different group than the one to which it would be assigned under the
foregoing provisions if this is acceptable to the members of the group
it elects to join. In the event any such Participant is a Related
Person of another Participant which has the individual right to
appoint a member of the Committee, the Participant shall be represented
in the Committee by the member appointed by the Participant which is
its Related Person and shall not be assigned to any of the five groups.
11.3 Terms of Members. The member of the Regional Transmission Operations
Committee appointed by the ISO shall serve until replaced by the ISO.
Members of the Regional Transmission Operations Committee shall serve
until replaced by the Participant or Participants which appointed them
or until such Participant or Participants cease to be Participants.
Appointment or replacement of a member shall be effected by the ISO or
a Participant or group of Participants by giving written notice of such
appointment or replacement to the Secretary of the Regional
Transmission Operations Committee.
11.4 Voting. Each voting member of the Regional Transmission Operations
Committee shall have one vote, which may be cast in person by the
member or his alternate or by another person pursuant to a written
proxy dated not more than one year previous to the meeting and
delivered to the Secretary of the Regional Transmission Operations
Committee at or prior to the meeting at which the proxy vote is cast.
If a Participant which has the individual right to appoint a member of
the Regional Transmission Operations Committee both participates in the
wholesale bulk power market and owns PTF, the member appointed by the
Participant shall be entitled to divide the member's vote on the basis
specified in a notice given by it to the Secretary of the Committee at
or prior to the meeting at which the vote is to be cast, to reflect its
market and transmission interests. In such case the portion of the
member's vote reflecting its transmission interest may be cast by the
member's alternate.
The voting member appointed by a group may divide the member's vote on
the basis specified in a notice given by it to the Secretary of the
Committee at or prior to the meeting at which the vote is to be cast,
to reflect the different positions of the members of the group.
The adoption of actions by the Regional Transmission Operations
Committee shall require affirmative votes of voting members aggregating
at least 60% of the number of votes which the members in attendance at
a meeting at which a quorum is present are entitled to cast. A
majority of the voting members at any time shall constitute a
quorum.
11.5 Alternates. The ISO or a Participant or group of Participants may
designate, by a written notice delivered to the Secretary of the
Regional Transmission Operations Committee, an alternate for any member
of the Regional Transmission Operations Committee appointed by the ISO
or such Participant or group of Participants. In the absence of the
member, the alternate shall have all of the powers of the member,
including the power to vote.
11.6 Officers. At its annual meeting, the Regional Transmission Operations
Committee shall elect from its voting members a Chair and a Vice-Chair;
it shall also elect a Secretary who need not be a member. These
officers shall have the powers and duties usually incident to such
offices.
11.7 Meetings. The Regional Transmission Operations Committee shall hold
its annual meeting in December or January at such time and place as the
Chair shall designate and shall hold other meetings in accordance with
a schedule adopted by the Regional Transmission Operations Committee or
at the call of the Chair. Any two members may call a special meeting
of the Regional Transmission Operations Committee in the event
that the Chair shall fail to call such a meeting within three business
days following the Chair's receipt from such members of a request
specifying the subject matters to be acted upon at the meeting. In the
event of emergency, any member may call a special meeting of the
Regional Transmission Operations Committee to be held forthwith. Any
annual, special or other meeting of the Regional Transmission
Operations Committee may be conducted by means of conference telephone
or other communications equipment by means of which all persons
participating in the meeting can hear each other.
11.8 Notice of Meetings. Written notice of each meeting of the Regional
Transmission Operations Committee shall be given to each member not
less than three business days prior to the date of the meeting. The
notice shall normally specify the principal subject matters expected to
be acted upon; provided, however, that no written notice shall be
required for a meeting called in the event of an emergency, although
the Secretary or the member calling the meeting shall use his or her
best efforts to notify every member of the meeting.
11.9 Notice to Members of Management Committee. Prior to the end of the
fifth business day following a meeting of the Regional Transmission
Operations Committee, the Secretary of the Regional Transmission
Operations Committee shall give written notice to the ISO and each
member of the Management Committee of any action taken by the
Regional Transmission Operations Committee at such meeting.
11.10 Appeal of Actions to Management Committee. The ISO or any Participant
may appeal to the Management Committee any action taken by the Regional
Transmission Operations Committee. Such an appeal shall be taken prior
to the end of the tenth business day following the meeting of the
Regional Transmission Operations Committee to which the appeal relates
by giving to the Secretary of the Management Committee a signed and
written notice of appeal and by mailing a copy of the notice to
the ISO and each member of the Management Committee. Pending action on
the appeal by the Management Committee, the filing of a notice of
appeal as aforesaid shall suspend the action appealed from.
11.11 Appointment of Task Forces. The Regional Transmission Operations
Committee shall have the authority, within its budget or with the
approval of the Management Committee if beyond its budget, to appoint
task forces for particular studies and may name thereto available
employees of Participants.
11.12 Consultants, Computer Time and Expenses. The Regional Transmission
Operations Committee shall have the authority, within its budget or
with the approval of the Management Committee if beyond its budget, to
retain the services of the ISO, to hire consultants, to procure
computer time, and to incur such expenses as may be required
to enable the Regional Transmission Operations Committee and its task
forces properly to perform their duties.
11.13 Responsibilities. The Regional Transmission Operations Committee, in
conjunction with the ISO and the Regional Market Operations Committee,
as appropriate, shall be responsible for the following:
(a) until the ISO is activated, overseeing the scheduling
and coordination of the day-to-day operations of the
Participants' supply and demand-side resources and
transmission facilities;
(b) making or causing to be made, from time to time,
necessary studies and establishing or approving
procedures based thereon to assure the reliable
operation and facilitate the efficient operation of the
NEPOOL Control Area bulk power supply;
(c) coordinating studies of, and providing information to
Participants on, maintenance schedules for the supply
and demand-side resources and transmission facilities of
the Participants; and, until the ISO is activated,
establishing or approving procedures for scheduling the
maintenance of the supply and demand-side resources and
transmission facilities of the Participants;
(d) to the extent appropriate to assure the reliable
operation of the bulk power supply of the NEPOOL Control
Area, establishing or approving reasonable standards,
criteria and rules relating to protective equipment,
switching, voltage control, load shedding, emergency and
restoration procedures, and the operation and
maintenance of supply and demand-side resources and
transmission facilities of the Participants;
(e) establishing or approving appropriate billing procedures
for transmission service pursuant to this Agreement and
the Tariff; and
(f) until the ISO is activated, establishing procedures for,
and thereafter monitoring, the administration of the
Tariff and the reservation of transmission capacity
pursuant to the Tariff.
11.14 Further Powers and Duties. The Regional Transmission Operations
Committee shall have such further powers and duties as may be
prescribed by the Management Committee or as set forth in this
Agreement.
11.15 Joint Meetings with Regional Market Operations Committee. The Regional
Transmission Operations Committee is authorized and encouraged to hold
its meetings, and to conduct studies and exercise its responsibilities,
jointly with the Regional Market Operations Committee to the extent
appropriate.
PART THREE
MARKET PROVISIONS
SECTION 12
INSTALLED CAPABILITY AND OPERABLE CAPABILITY
OBLIGATIONS AND PAYMENTS
12.1 Obligations to Provide Installed Capability and Operable Capability.
(a) Each Participant shall have Installed System Capability during
each hour of each month at least sufficient to satisfy its
Installed Capability Responsibility for the month.
(b) Each Participant shall have Operable System Capability in each
hour at least sufficient to satisfy its Operable Capability
Requirement for such hour.
12.2 Computation of Installed Capability Responsibilities.
(a) (1) At the conclusion of each month, the Regional Market
Operations Committee shall determine each Participant's
tentative Installed Capability Responsibility in
Kilowatts for such month in accordance with the
following formula:
X = (P(A-N)+N{p})(1+T) + OTA
As used in this Section 12.2(a)(1), the symbols used in
the formula and the additional symbols defined below
have the following meanings:
X is the Participant's tentative Installed
Capability Responsibility for the month.
P is the value of the Participant's fraction for
the month as determined in accordance with the
following formula:
P = F{p}/F, wherein:
F{p} is the Participant's Adjusted Monthly
Peak for the month.
F is the aggregate for the month of the
Adjusted Monthly Peaks for all
Participants.
A is the NEPOOL Objective Capability in megawatts
for the month as fixed by the Management Committee
pursuant to Section 6.14(e).
N is the aggregate of the New Unit Adjustments for
all Participants for the month as determined by
the Regional Market Operations Committee in
accordance with Section 12.2(a)(2).
N{p} is the aggregate of the Participant's New Unit
Adjustments for the month, as determined by the
Regional Market Operations Committee, and is equal
to the aggregate of the Participant's adjustments
for each New Unit (as defined in Section 12.2(a))
included in its Installed System Capability during
the hour of the coincident peak load of the
Participants for the month. The Participant's
adjustment for each New Unit may be positive or
negative and shall be the product of (i) the
Participant's Installed Capability Entitlement in
the New Unit during the hour of the coincident
peak load of the Participants for the month, times
(ii) the New Unit Adjustment Factor applicable to
the New Unit as determined in accordance with
Section 12.2(a)(2).
OTA is the Participant's Outside Transaction
Adjustment for the month for all interfaces as
determined in accordance with Section 12.2(a)(3).
T is the Participant's Unit Availability Adjustment
Factor for the month. T may be positive or
negative and shall be determined in accordance
with the following formula:
T = (I-H) x J x R, wherein:
100
I for the Participant for the month is the
percentage which represents the weighted average
(using the Installed Capability of each
Entitlement for such month for the weighting) of
the Four Year Installed Capability Target
Availability Rates of the Installed Capability
Entitlements which are included in the
Participant's Installed System Capability during
the hour of the coincident peak load of the
Participants for the month. The Four Year Target
Availability Rate for an Installed Capability
Entitlement for any month is the average of the
monthly Target Availability Rates for the
forty-eight months which comprise the period of
four consecutive calendar years ending within the
Power Year which includes such month, as
determined on the basis of the Target Availability
Rates for each of the forty-eight months, and as
applied on a basis which is consistent with the
fuel or maturity status of the unit for each of
the forty-eight months. The Target Availability
Rates shall be those utilized by the Management
Committee in its most recent determination of
NEPOOL Objective Capability pursuant to Section
6.14(e).
H for the Participant for the month is the
percentage which represents the weighted average
(using the Installed Capability of each Installed
Capability Entitlement for such month for the
weighting) of the Four Year Actual Availability
Rates of the Installed Capability Entitlements
which are included in the Participant's Installed
System Capability during the hour of the
coincident peak load of the Participants for the
month. The Four Year Actual Availability Rate for
an Installed Capability Entitlement for any month
is the percentage which represents the average of
the amounts determined for H{1} for the four
applicable Twelve-Month Measurement Periods within
the forty-eight months which comprise the period
of four consecutive calendar years ending within
the Power Year which includes such month. A
Twelve-Month Measurement Period is a period of
twelve sequential months. For purposes of this
sequence, the first month in the four years and
the immediately succeeding months shall be
considered to follow the forty-eighth month in the
four-year period. The four applicable
Twelve-Month Measurement Periods to be used in the
determination of H{1} for an Installed Capability
Entitlement shall be the four sequential
Twelve-Month Measurement Periods out of the twelve
possible combinations which yield the highest
H{1}.
H{1} for an Installed Capability Entitlement in a unit
or combination of units for a Twelve-Month
Measurement Period is its Actual Availability
Rate. The Actual Availability Rate of an
Installed Capability Entitlement for a
Twelve-Month Measurement Period is a percentage
and shall be the greater of:
(i) the percentage of (a) the amount of
generation which could have been received
with respect to the Installed Capability
Entitlement if the unit or combination of
units had been fully available at its
full Installed Capability throughout the
Twelve-Month Measurement Priod, which is
represented by (b) the amount of
generation which was actually available
during such period, or
(ii) the average Target Availability Rate
expressed as a percentage for the
Installed Capability Entitlement for the
Twelve-Month Measurement Period less
twenty percentage points. The average
Target Availability Rate of an Installed
Capability Entitlement for a Twelve-Month
Measurement Period is a percentage and is
the average of the monthly Target
Availability Rates for the months which
comprise the Twelve-Month Measurement
Period, as determined on the basis of the
Target Availability Rates for each of the
twelve months, and as applied on a basis
which is consistent with the fuel or
maturity status of the unit for each
month in the Twelve- Month Measurement
Period. The Target Availability Rates
shall be those utilized by the Management
Committee in its most recent
determination of NEPOOL Objective
Capability pursuant to Section 6.14(e).
J for the month is the estimated percentage point
change in NEPOOL Objective Capability which would
be required as a result of a one percentage point
change in the weighted average equivalent
availability rate of the generating units in which
the Participants have Installed Capability
Entitlements. The value for J shall be adopted by
the Management Committee each time it fixes NEPOOL
Objective Capability pursuant to Section 6.14(e).
R for the month is the phase-out factor for the
month, which shall be as follows:
R=0.75 for the Power Year beginning November 1,
1997.
R=0.50 for the Power Year beginning November 1,
1998.
R=0.25 for the Power Year beginning November 1,
1999.
R=0 for the Power Year beginning November 1,
2000 and all subsequent Power Years.
(2) A New Unit Adjustment Factor for a New Unit shall be
determined to assign the effects of the New Unit on
NEPOOL Objective Capability to those Participants with
Entitlements in the New Unit. (As used in this
Section, "New Unit" has the meaning specified for that
term in Section 15.27A of the Prior NEPOOL Agreement.)
The New Unit Adjustment Factor for each New Unit for
each month shall be determined by the Regional Market
Operations Committee in accordance with the following
formula:
n = R(K{1}(c-C) + K{2}(f-F) + K{3}(m-M) + K{4}(d-D) +
K{5}(f-F)c{2})
As used in this Section 12.2(a)(2), the symbols used in
the formula have the following meanings:
R is the phase out factor as defined in Section
12.2(a)(1) above.
n is the New Unit Adjustment Factor, expressed as a
fraction, for the month for a New Unit.
c is the Winter Capability of the New Unit.
C is the Winter Capability of the Proxy Unit, which
shall be the number of Kilowatts, as determined
by the Management Committee, which would result
in the NEPOOL Objective Capability being
approximately the same if the generating units in
which the Participants have Installed Capability
Entitlements were all units possessing Proxy Unit
characteristics.
f is the equivalent forced outage rate of the New
Unit, expressed as a fraction of a year, utilized
in the determination by the Management Committee
of NEPOOL Objective Capability for the month.
F is the equivalent forced outage rate of the Proxy
Unit. F, a fraction, shall be the weighted
average equivalent forced outage rate (using the
Winter Capability of each generating unit for
such weighting) of the generating units in which
the Participants have Installed Capability
Entitlements, adjusted to compensate for the
rounding of the annual maintenance outage
requirement of the Proxy Unit.
m is the four-year average annual maintenance
outage requirement of the New Unit, expressed as
a fraction of a year. The data used to determine
m shall include the annual maintenance outage
requirements for the current Power Year and the
next three Power Years, as utilized for the New
Unit in the most recent determination by the
Management Committee of NEPOOL Objective
Capability pursuant to Section 6.14(e).
M is the annual maintenance outage requirement of
the Proxy Unit. M shall be a fraction, the
numerator of which shall be the number of weeks
(rounded to the nearest full number) that most
closely approximates the weighted four-year
average annual maintenance outage requirement
(using the Winter Capability of each generating
unit for such weighting) for the generating units
in which the Participants have Installed
Capability Entitlements, and the denominator of
which shall be 52 weeks.
d is the summer derating of the New Unit, expressed
as a fraction of the Winter Capability of the New
Unit.
D is the summer derating of the Proxy Unit. D
shall be a fraction and shall be equal to the
weighted average fractional summer derating
(using the Winter Capability of each generating
unit for such weighting) of the generating units
in which the Participants have Installed
Capability Entitlements.
K{1}, K{2}, K{3}, K{4}, and K{5}
are conversion coefficients for each of the
Summer and Winter Periods, determined by
regression analysis such that the product
for the Installed Capability of a New Unit times
its New Unit Adjustment Factor approximates the
effect on NEPOOL Objective Capability of the New
Unit.
Proxy Unit characteristics and conversion coefficients
contained in the formula shall be adopted by the
Management Committee and reviewed every five years (or
more frequently if the Management Committee determines
that exceptional circumstances require an earlier
review) and revised as necessary.
If a New Unit has unique characteristics affecting
NEPOOL Objective Capability which are not adequately
reflected in the New Unit Adjustment Factor formula, the
Management Committee shall determine for such New Unit a
New Unit Adjustment Factor which accounts for
the New Unit's unique characteristics.
The New Unit Adjustment Factor for any Restricted Unit
for which proposed plans were submitted subsequent to
November 1, 1990 for review pursuant to Section 18.4 or
its predecessor section in the Prior NEPOOL Agreement
(or, in the case of a unit with a rated capacity of
less than 5MW, for which notification was first given to
NEPOOL subsequent to November 1, 1990) and for the
Peabody Municipal Light Plant's Waters River #2 unit
shall be determined in accordance with the formula
previously specified in Section 12.2(a)(2), modified as
follows:
n = R(K{1}(c-C) + K{2}(f-F) + K{3}(m-M) + K{4}(d-D)
+K{5}(f-F)c{2}) + K{6}(2500-a)
The symbols used in the above formula, as modified,
shall have the meanings previously specified, except
that the symbols "K{6}" and "a" shall have the following
meanings:
K{6} is a scaling factor of 0.0001.
a is as follows:
for units with more than 2500 annual hours
available for operation, "a" = 2500,
for units with annual hours available for
operation between 500 and 2500, inclusive, "a" =
annual hours available for operation, and
for units with annual hours available for
operation less than 500 hours, "a" = -7500;
provided, however, that a Participant may elect to
avoid, in whole or part, the effect on its Installed
Capability Responsibility of a Restricted Unit's
availability being limited to 2500 hours or less a year
by agreeing to leave unfilled a portion of its
dispatchable load allocation in accordance with rules
adopted by the Regional Market Operations Committee.
(3) An Outside Transaction Adjustment (OTA) shall be
determined for each Participant for each month to assign
to the Participant the net impact on reliability in the
NEPOOL Control Area of its uses in the month of each
interface with a neighboring control area other than the
HQ Interconnection which is addressed in the definitions
in Part I through the use of transfer credits and
related adjustments. When the Management Committee
determines the NEPOOL Objective Capability for the
month, it reduces the required NEPOOL Objective
Capability by taking into account the reliability
benefits of available transmission capacity in
interfaces with these neighboring control areas. If the
Participant engages in transactions across the
interfaces ("External Transactions"), the result is an
increase or decrease in the reliability benefits to the
entire region of such interfaces. As a result, in order
to maintain the same level of reliability in the NEPOOL
Control Area, the minimum required NEPOOL Installed
Capability must be increased or decreased, as
appropriate. The OTA is designed so that any such
increases or decreases in the minimum required NEPOOL
Installed Capability which result from External
Transactions are assigned to the Participants engaged in
such Transactions. To calculate the OTA, the
External Transactions are divided into two broad types
of Transactions: (1) Transactions that were entered into
prior to December 1, 1996 with the New York Power
Authority (NYPA) to purchase preference power
produced by the Niagara and St. Lawrence hydroelectric
projects or by Vermont utilities with Hydro-Quebec and
NYPA to import up to 105 megawatts during the May
through October time period and 140 megawatts during the
November through April time period over the New
York PV-20 line (collectively, "Grandfathered Imports");
and (2) all other External Transactions ("Other External
Transactions").
At the conclusion of each month, the System Operator
shall identify all of the Participants that engaged in
Grandfathered Imports and Other External Transactions
for the month. For each Participant, the System
Operator shall determine an OTA in accordance with the
following formula:
OTA = [OC{g }x (GI{i}/GI)] + [OC{o }x (IP{i}/NP)] -
[OC{o} x (XP{i}/NP)], wherein
OTA is the Participant's Outside Transaction
Adjustment for the month;
OC{g }is the increase in NEPOOL Objective Capability
for the month in Kilowatts that would have
resulted, from the Grandfathered Imports, if
there were no Other External Transactions for the
month;
GI{i }is the amount in Kilowatts of the Participant's
Grandfathered Imports for the month that qualify
as Installed Capability Entitlements for the
Participant;
GI is the aggregate in Kilowatts of all
Participants' Grandfathered Imports for the month
that qualify as Installed Capability
Entitlements;
OC{o }is the increase, if any, in NEPOOL Objective
Capability for the month in Kilowatts that
resulted, after taking into account Grandfathered
Imports, from the net imports of all Participants
that were net importers in the month under Other
External Transactions, minus the net exports of
all Participants that were net exporters for the
month under Other External Transactions;
IP{i }is the amount, if any, in Kilowatts of Installed
Capability of the Participant's net imports for
the month under Other External Transactions;
NP is the aggregate in Kilowatts for the month for
all Participants that were net importers under
Other External Transactions of their net imports
of Installed Capability under Other External
Transactions, minus the aggregate in Kilowatts
for the month for all Participants that were net
exporters under Other External Transactions of
their net exports of Installed Capability
Entitlements under Other External Transactions;
and
XP{i }is the amount, if any, in Kilowatts of Installed
Capability of the Participant's net exports for
the month under Other External Transactions.
If NP is zero or negative for a month, the second and
third bracketed terms, which both relate to OC{o}, shall
be equal to zero and the Participant's OTA for the month
shall be affected only by its Grandfathered Imports, if
any.
(b) The tentative Installed Capability Responsibilities of the
Participants for any month, as determined in accordance with
Section 12.2(a), shall be adjusted in accordance with this
Section 12.2(b) in the event the value of H for any Participant
for any of the Twelve-Month Measurement Periods applicable to
the Participant for the month is increased in accordance with
Section 12.2(a) because of the application of paragraph (ii) of
the definition of H{1}. In such event the Regional Market
Operations Committee shall determine each Participant's
tentative Installed Capability Responsibility for the month with
and without the application of said paragraph (ii). The
difference between the sum of all Participants' tentative
Installed Capability Responsibilities, with and without the
application of said paragraph (ii) for the month, shall be added
to the tentative Installed Capability Responsibilities of the
Participants, as determined in accordance with Section 12.2(a),
in proportion to said tentative Installed Capability
Responsibilities, thereby establishing each Participant's
adjusted tentative Installed Capability Responsibility for the
month.
(c) For each month, the Regional Market Operations Committee shall
determine the sum of all Participants' adjusted tentative
Installed Capability Responsibilities, as initially determined
in accordance with Section 12.2(a) and as adjusted in
accordance with Section 12.2(b), if Section 12.2(b) is
applicable for such month. If the sum is less than, or equal
to, the minimum NEPOOL Installed Capability during the month,
then the adjusted tentative Installed Capability Responsibility
as determined pursuant to Section 12.2(a) or 12.2(b), whichever
is applicable, for each Participant is the final Installed
Capability Responsibility for each Participant. If the sum is
greater than such minimum NEPOOL Installed Capability, then each
Participant's final Installed Capability Responsibility shall be
its adjusted tentative Installed Capability Responsibility
as determined pursuant to Section 12.2(a) or 12.2(b), whichever
is applicable, multiplied by the ratio of the minimum NEPOOL
Installed Capability during the month to the sum of the adjusted
tentative Installed Capability Responsibilities for the month.
(d) It is recognized that the treatment of fuel conversions, dual
fuel units, immature units, new Installed Capability
Entitlements, cogeneration and small power-producing facilities,
Unit Contracts and other contract arrangements, units with
unusual maintenance cycles, and various other matters can result
in special problems in the determination of Unit Availability
Adjustment Factors and New Unit Adjustments. Accordingly, the
Regional Market Operations Committee shall analyze such special
problems and develop appropriate market operation rules to be
applied in taking such matters into account in the determination
of Unit Availability Adjustment Factors and New Unit
Adjustments.
12.3 Computation of Operable Capability Requirements.
For each hour, the Regional Market Operations Committee shall determine
each Participant's Operable Capability Requirement in Kilowatts in
accordance with the following formula:
OP{p} = EL{p} + OR{p}
As used in this Section 12.3, the symbols used in the formula have the
following meanings:
OP{p} is the Participant's Operable Capability Requirement for
the hour.
EL{p} is the Participant's Electrical Load during the hour.
OR{p} is the amount (in Kilowatts) of Operating Reserve which
the Participant was required to provide during the hour,
as determined in accordance with Section 14.1(b).
12.4 Bids to Furnish Installed Capability or Operable Capability. Each
Participant shall submit to or have on file with the System Operator,
in accordance with the market operation rules approved by the Regional
Market Operations Committee, one or more bids specifying the Bid Price
and Kilowatt amount at which it will furnish any and all surplus
Installed System Capability for a month or Operable System Capability
for an hour through NEPOOL to other Participants. If no bid is
submitted for a month for any surplus Installed System Capability or
for any hour for any surplus Operable System Capability, the Bid Price
for any such surplus for which there are no bids shall be deemed to be
zero.
12.5 Consequences of Deficiencies in Installed Capability Responsibility.
(a) At the conclusion of each month, the System Operator shall
determine whether each Participant has satisfied its Installed
Capability Responsibility obligation for the month. If the
minimum monthly Installed System Capability of a Participant
during the month was less than its Installed Capability
Responsibility, the number of Kilowatts of its deficiency shall
be computed and the Participant shall be deemed to purchase from
other Participants through NEPOOL Kilowatts of surplus Installed
System Capability equal to the amount of its deficiency and
shall pay to NEPOOL for the month any applicable market-based
charges assessed pursuant to Section 19.2 plus the product of
its total Kilowatts of deficiency and the Installed Capability
Clearing Price for the month determined in accordance with
Section 12.5(b). For purposes of this Section 12, the minimum
monthly Installed System Capability of a Participant for a month
is the Participant's lowest Installed System Capability for any
hour during the month. Retirements made on the last day of any
month shall not be deducted from Installed System Capability for
that month.
(b) At the end of each month, the System Operator shall determine
the Installed Capability Clearing Price for the month as
follows:
(i) The System Operator shall determine the aggregate
Kilowatt shortage of Installed System Capability for
the month for all Participants that did not satisfy
their Installed Capability Responsibilities for that
month.
(ii) The System Operator shall rank in the order of lowest to
highest Bid Price all Bid Prices received from
Participants having excess Installed System Capability
for the month.
(iii) For each Participant, its Installed System Capability
with the lowest Bid Prices shall be deemed to have been
furnished first, to the extent required, to meet its
Installed Capability Responsibility. Any remainder
starting with the lowest Bid Prices shall be deemed to
have been furnished, to the extent required, to other
Participants under this Agreement to meet their
shortages of Installed System Capability for the
month.
(iv) The Installed Capability Clearing Price for the month
shall equal the highest Bid Price for Installed System
Capability that is deemed in accordance with Section
12.5(b)(iii) to have been furnished to another
Participant for the month.
12.6 Consequences of Deficiencies in Operable Capability Requirements.
(a) For each hour, the System Operator shall determine whether each
Participant has satisfied its Operable Capability Requirement
obligation for that hour. If the minimum Operable System
Capability of a Participant during any hour was less than its
Operable Capability Requirement, the number of Kilowatts of its
deficiency shall be computed and the Participant shall be deemed
to purchase from other Participants through NEPOOL Kilowatts of
surplus Operable System Capability equal to the amount of its
deficiency and shall pay for the hour any applicable uplift
charge assessed under Section 14.15 and any applicable
market-based charges assessed pursuant to Section 19.2 plus the
product of its Kilowatt deficiency for the hour and the Operable
Capability Clearing Price for the hour determined in accordance
with Section 12.6(b). The minimum Operable System Capability of
a Participant for an hour is equal to the Participant's lowest
Operable System Capability at any time during the hour.
(b) For each hour, the System Operator shall determine the Operable
Capability Clearing Price as follows:
(i) The System Operator shall determine the aggregate
Kilowatt shortage of Operable System Capability for the
hour for all Participants that did not satisfy their
Operable Capability Requirements in that hour.
(ii) The System Operator shall rank in the order of lowest to
highest Bid Price all Bid Prices received from
Participants having excess Operable System Capability
for the hour.
(iii) For each Participant, its Operable System Capability
with the lowest Bid Prices shall be deemed to have been
furnished first, to the extent required, to meet its
Operable Capability Requirement. Any remainder
starting with the lowest Bid Prices shall be deemed to
have been furnished, to the extent required, to other
Participants under this Agreement to meet their
shortages of Operable System Capability for that hour.
(iv) The Operable Capability Clearing Price for the hour
shall be equal to the highest Bid Price for Operable
System Capability that is deemed in accordance with
Section 12.6(b)(iii) to have been furnished to another
Participant in the hour.
12.7 Payments to Participants Furnishing Installed Capability and Operable
Capability.
(a) Participants that are deemed pursuant to Section 12.5 to furnish
any surplus in their Installed System Capability to other
Participants shall receive therefor their pro rata shares on a
Kilowatt basis of all payments made by Participants under
Section 12.5, excluding any applicable market-based charges
assessed pursuant to Section 19.2. If two or more Participants
with excess Installed System Capability have bid Kilowatts at
the Installed Capability Clearing Price, but not all the excess
Installed System Capability bid at such price is required to
meet shortages of Installed System Capability, then the excess
Installed System Capability bid at the Installed Capability
Clearing Price that each such Participant shall be deemed to
have furnished shall be the Kilowatts of excess Installed System
Capability bid by the Participant at that price multiplied by
the ratio of (i) the total Kilowatts of excess Installed System
Capability bid at the Installed Capability Clearing Price needed
to meet the shortages to (ii) the total Kilowatts of excess
Installed System Capability bid by all Participants at the
Installed Capability Clearing Price.
(b) Participants that are deemed pursuant to Section 12.6 to furnish
any surplus in their Operable System Capability to other
Participants shall receive therefor their pro rata shares on a
Kilowatt basis of all payments made by Participants under
Section 12.6, excluding any applicable uplift charges assessed
under Section 14.15 and any applicable market-based charges
assessed pursuant to Section 19.2. If two or more Participants
with excess Operable System Capability in an hour have bid
Kilowatts at the Operable Capability Clearing Price, but not all
the excess Operable System Capability bid at such price is
required to meet shortages of Operable System Capability, then
the excess Operable System Capability bid at the Operable
Capability Clearing Price that each such Participant shall be
deemed to have furnished shall be the Kilowatts of excess
Operable System Capability bid by the Participant at that price
multiplied by the ratio of (i) the total Kilowatts of excess
Operable System Capability bid at the Operable Capability
Clearing Price needed to meet the shortages to (ii) the
Kilowatts of excess Operable System Capability bid by all
Participants at the Operable Capability Clearing Price.
SECTION 13
OPERATION, GENERATION, OTHER RESOURCES,
AND INTERRUPTIBLE CONTRACTS
13.1 Maintenance and Operation in Accordance with Good Utility Practice.
Each Participant shall, to the fullest extent practicable, cause all
generating facilities and other resources owned or controlled by it to
be designed, constructed, maintained and operated in accordance with
Good Utility Practice.
13.2 Central Dispatch. Subject to the following sentence, each Participant
shall, to the fullest extent practicable, subject all generating
facilities and other resources owned or controlled by it to central
dispatch by the System Operator; provided, however, that each
Participant shall at all times be the sole judge as to whether or not
and to what extent safety requires that at any time any of such
facilities will be operated at less than full capacity or not at all.
Each Participant may remove from central dispatch a generating facility
or other resources owned or controlled by it if and to the extent such
removal is permitted by rules and standards approved by the Management
Committee.
13.3 Maintenance and Repair. Each Participant shall, to the fullest extent
practicable: (a) cause generating facilities and other resources owned
or controlled by it to be withdrawn from operation for maintenance and
repair only in accordance with maintenance schedules reported to and
published by the System Operator from time to time in accordance with
procedures established or approved by the Regional Market Operations
Committee, (b) restore such facilities to good operating condition with
reasonable promptness, and (c) accelerate or delay maintenance and
repair at the reasonable request of the System Operator in accordance
with market operation rules approved by the Regional Market Operations
Committee.
13.4 Objectives of Day-to-Day System Operation. The day-to-day scheduling
and coordination through the System Operator of the operation of
generating units and other resources shall be designed to assure the
reliability of the bulk power system of the NEPOOL Control Area. Such
activity shall:
(a) satisfy the NEPOOL Control Area's Operating Reserve
requirements, including the proper distribution of those
Operating Reserves;
(b) satisfy the Automatic Generation Control requirements of
the NEPOOL Control Area; and
(c) satisfy the Energy requirements of all Electrical Loads
of the Participants.
all at the lowest practicable aggregate dispatch cost to the NEPOOL
Control Area in light of available Bid Prices and Participant-directed
schedules.
13.5 Satellite Membership. Each Participant which is responsible for the
operation of transmission facilities rated 69 kV or above in the NEPOOL
Control Area or generating units and other resources which are subject
to central dispatch by NEPOOL, or which is responsible for implementing
voltage reduction and load shedding procedures in the NEPOOL Control
Area, shall become a member of the appropriate satellite dispatching
center; provided that by mutual agreement among the affected
Participants and the appropriate satellite, a Participant may be
excused from joining the satellite if it has arranged with a satellite
member to assume responsibility to the satellite for its facilities or
obligations.
SECTION 14
INTERCHANGE TRANSACTIONS
14.1 Obligation for Energy, Operating Reserve and Automatic Generation
Control.
(a) Each Participant shall have for each hour an Energy obligation
equal to its Electrical Load plus the kilowatthours delivered by
such Participant pursuant to Firm Contracts or System Contracts
to other Participants for resale as appropriate in accordance
with Section 14.7(a), together with any associated electrical
losses.
(b) Each Participant shall have for each hour Operating Reserve
obligations equal to its share of the quantity of each category
of Operating Reserve required for the NEPOOL Control Area in the
hour.
Subject to adjustment pursuant to Section 14.6, a Participant's
share of each category of Operating Reserve required for any
hour shall be determined in accordance with the following
formula:
OR{p}=SA{p} + [(OR-SA) (EL{p}/EL)], wherein
OR{p} is the Participant's share of that category of
Operating Reserve for the hour.
SA{p} is the number of Kilowatts, if any, of that
category of Operating Reserve for the hour that
the Regional Market Operations Committee
determines should be assigned specifically to
such Participant and not be shared by all
Participants.
OR is the aggregate number of Kilowatts of that
category of Operating Reserve determined by the
System Operator in accordance with the directions
of the Regional Market Operations Committee to be
required for the NEPOOL Control Area for the
hour that is not assigned to Non-Participants.
SA is the aggregate number of Kilowatts of that
category of Operating Reserve for the hour that
the Regional Market Operations Committee
determines should not be shared by all
Participants, but not including Operating Reserve
assigned to Non-Participants.
EL{p} is the Participant's Electrical Load for the
hour.
EL is the sum of EL{p} for all Participants.
(c) Each Participant shall have at all times an AGC obligation equal
to its share of AGC required for the NEPOOL Control Area for the
hour, as determined in accordance with the following formula:
AGC{p} = AGC (EL{p}/EL), wherein
AGC{p} is the Participant's share of AGC for the hour.
AGC is the total amount of AGC determined by the
System Operator in accordance with market
operation rules approved by the Regional
Market Operations Committee to be required for
the NEPOOL Control Area for the hour that is not
assigned to Non-Participants.
EL{p} and EL are as defined in Section 14.1(b).
14.2 Obligation to Bid or Schedule, and Right to Receive Energy, Operating
Reserve and Automatic Generation Control.
(a) A Participant which has Energy Entitlements shall submit
to or have on file with the System Operator, in
accordance with the market operation rules approved by
the Regional Market Operations Committee, one or
more bids for the Energy Entitlements for which the
Participant is permitted to bid specifying the Bid Price
at which it will furnish Energy through NEPOOL to other
Participants under this Agreement or to Non-Participants
for ancillary services under the Tariff, except to the
extent such Entitlements are scheduled by the
Participant consistent with Section 14.2(d).
(b) A Participant which has Operating Reserve Entitlements
or AGC Entitlements shall also submit to or have on file
with the System Operator, in accordance with the market
operation rules approved by the Regional Market
Operations Committee, one or more bids for each such
unit for which the Participant is permitted to bid
specifying the Bid Prices at which it will furnish
10-Minute Spinning Reserve, 10-Minute Non-Spinning
Reserve, 30-Minute Operating Reserve and/or AGC
through NEPOOL to other Participants under this
Agreement or to Non-Participants for ancillary services
under the Tariff, except to the extent such Entitlements
are scheduled by the Participant consistent with
Section 14.2(d). Prior to the Third Effective Date,
Participants' rights and obligations to submit bids for
Operating Reserve Entitlements in 10-Minute Spinning
Reserve shall be limited to Entitlements in
hydroelectric generating units and pumped storage
hydroelectric generating units.
(c) Except as emergency circumstances may result in the
System Operator requiring load curtailments by
Participants, each Participant shall be entitled to
receive from the other Participants (or from the service
made available from Non-Participants pursuant to
arrangements entered into under Section 14.6) such
amounts, if any, of Energy, Operating Reserve, and AGC
as it requires and Non-Participants shall be entitled to
receive from Participants the amount of ancillary
services to which they are entitled pursuant to the
Tariff. If, for any hour, load curtailments are
required, the amount that Participants and Non-
Participants with shortages are entitled to receive
shall be proportionally reduced by the System Operator
in a fair and non-discriminatory manner in light of the
circumstances.
(d) All Bid Prices for Entitlements in a generating unit or
units shall be submitted in accordance with market
operation rules approved by the Regional Market
Operations Committee. If a Bid Price is not submitted
for any such Entitlement, the Bid Price shall be deemed
to be zero. For a generating unit in which there are
multiple Entitlement holders, only one Participant shall
be permitted to submit Bid Prices for Energy,
Operating Reserve and/or AGC Entitlements for such unit
or to direct the scheduling of the unit for any
Scheduled Dispatch Period. The Entitlement holders in
each unit with multiple Entitlement holders shall
designate a single Participant that will be permitted to
submit Bid Prices and/or to direct the scheduling of the
unit. In the event that more than one Participant is
designated, or if the Entitlement holders do not
designate a single Participant, then Bid Prices for the
unit shall be based on its replacement cost of fuel,
which shall be furnished to the System Operator by the
Participant responsible for furnishing such information
as of December 1, 1996. Further, any schedules for the
unit will be submitted to the System Operator by such
Participant. Nothing in this Agreement shall affect the
rights of any Entitlement holder under the contractual
arrangements among such Entitlement holders relating to
the unit.
Prior to the Third Effective Date, Bid Prices must be
submitted for the next Scheduled Dispatch Period for all
Energy, Operating Reserve and AGC Entitlements in
generating unit or units and rights to receive
Energy Entitlements pursuant to Firm Contracts or System
Contracts which may be sold in accordance with Section
14.7(a) no later than noon on the preceding day or such
later time as specified in the market operation rules
approved by the Regional Market Operations Committee.
On and after the Third Effective Date, such Bid Prices
shall be submitted for each hour of the day and the
notice for such Bid Prices shall be reduced to one hour
or such shorter time as the System Operator determines
from time to time is practical while maintaining
reliability and meeting its other obligations to the
Participants, except that such notice shall be longer
than one hour if and to the extent that the System
Operator reasonably determines that such notice is the
shortest notice that is technically feasible at that
time to maintain reliability and meet its other
obligations to the Participants. The System Operator
shall notify the Participants following its receipt of
all Bid Prices of the expected dispatch schedule for the
next Scheduled Dispatch Period. The System Operator
shall reduce the notice required for Bid Prices and the
applicable Scheduled Dispatch Period to the minimum time
technically and practically feasible while maintaining
reliability and meeting its other obligations to the
Participants.
Energy, Operating Reserve and/or AGC Entitlements in a
generating unit or units may also be scheduled directly
by the Participants permitted to submit Bid Prices for
such Entitlements, but only in accordance with
this Section 14.2(d) and market operation rules approved
by the Regional Market Operations Committee consistent
herewith. Subject to the right of the System Operator
to direct changes to schedules in order to ensure
reliability in the NEPOOL Control Area or any
neighboring control area, a Participant permitted to bid
its Energy, Operating Reserve, and/or AGC Entitlements
in a generating unit or units, or required to
make Energy deliveries, may submit an hour-to-hour
schedule for the operation or dispatch of such
Entitlements during a Scheduled Dispatch Period on or
before the time that Bid Prices are required to be
submitted for such period. In addition, prior to the
Third Effective Date, a Participant permitted to bid a
unit may submit a short-notice schedule for the
operation or dispatch of any or all of the Energy
available from such unit during the current and
subsequent Scheduled Dispatch Period following the time
that the System Operator notifies the appropriate
Participants of their expected Entitlement commitments
for that Scheduled Dispatch Period; provided that, for
each such short-notice schedule, the Participant has not
been advised by the System Operator that the
Entitlements covered by such schedule are expected to be
used during the Scheduled Dispatch Period to meet the
region's Energy, Operating Reserve and/or AGC
requirements, and provided further that the Participant
short-notice schedule is only to facilitate transactions
during such period from resources or to load located
outside the NEPOOL Control Area; and provided further
that such notice is furnished at least one hour in
advance of the start of the transaction. In addition, a
Participant may, on such same short notice, schedule
System Contracts with Non-Participants from resources or
to load located outside of the NEPOOL Control Area.
14.3 Amount of Energy, Operating Reserve and Automatic Generation Control
Received or Furnished.
(a) For purposes of Sections 14.4, 14.5, and 14.8, the amount of
Energy which a Participant is deemed to receive or furnish in
any hour shall be the amount of its Adjusted Net Interchange.
If the Adjusted Net Interchange is negative, the Participant
shall be deemed to be receiving Energy in the hour. If the
Adjusted Net Interchange is positive, the Participant shall be
deemed to be furnishing Energy in the hour.
(b) For purposes of Sections 14.4, 14.5, and 14.9, prior to the
Third Effective Date: the amount of each category of Operating
Reserve which a Participant is deemed to receive in any hour is
the Kilowatts of such Operating Reserve assigned to the
Participant for the hour under Section 14.1(b) less any
Kilowatts provided in the hour by the Participant in accordance
with the market operation rules approved by the Regional Market
Operations Committee to meet any Operating Reserve requirements
that were specifically assigned to it and not shared by all
Participants; the amount of Operating Reserve of each category
that the Participant is deemed to have furnished under the
Agreement in the hour is the amount of such Operating Reserve
designated by the System Operator to be provided in the hour by
the Participant's applicable Operating Reserve Entitlements,
minus any Kilowatts used in the hour by the Participant in
accordance with the market operation rules to meet any Operating
Reserve requirements that were specifically assigned to it and
not shared by all Participants. For purposes of Sections 14.4,
14.5, and 14.9, on and after the Third Effective Date, the
amount of each category of Operating Reserve which a Participant
is deemed to have received or furnished in any hour is the
difference between the Kilowatts of such Operating Reserve
assigned to the Participant for the hour under Section 14.1(b)
and the Kilowatts of such Operating Reserve designated by the
System Operator to be provided in the hour by the Participant's
applicable Operating Reserve Entitlements.
(c) For purposes of Sections 14.4, 14.5, and 14.10, prior to the
Third Effective Date, the amount of AGC which a Participant is
deemed to have received in an hour is the AGC assigned to the
Participant for the hour under Section 14.1(c), and the amount a
Participant is deemed to have furnished in the hour is the
AGC designated by the System Operator to be provided in the hour
by the Participant's AGC Entitlements. For purposes of Sections
14.4, 14.5, and 14.10, on and after the Third Effective Date,
the amount of AGC which a Participant is deemed to have received
or furnished in an hour is the difference between the AGC
assigned to the Participant for the hour under Section 14.1(c)
and the AGC designated by the System Operator to be provided in
the hour by the Participant's AGC Entitlements.
14.4 Payments by Participants Receiving Energy Service, Operating Reserve
and Automatic Generation Control.
(a) For every hour in which a Participant's Adjusted Net Interchange
is negative, the number of megawatthours of its Energy
deficiency shall be computed and the Participant shall pay for
the hour the product of its total megawatthours of deficiency
and the Energy Clearing Price applicable for the hour as
determined in accordance with Section 14.8, together with any
uplift charges assessed to the Participant under Sections 14.14
or 14.15 and any applicable market-based charges assessed
pursuant to Section 19.2.
(b) For every hour in which a Participant is deemed to receive
Operating Reserve of any category in accordance with Section
14.3(b), the number of Kilowatts it is deemed to receive for the
hour in each category shall be computed. The Participant shall
pay therefor for the hour any applicable uplift charge assessed
under Section 14.15 and any applicable market-based charges
assessed pursuant to Section 19.2 plus the product of (i) the
aggregate amount paid to Participants for that category of
Operating Reserve for the hour pursuant to Section 14.5(b)
and (ii) a fraction of which the numerator is the Kilowatts of
that category of Operating Reserve deemed under Section 14.3(b)
to have been received by the Participant for the hour and the
denominator is the aggregate Kilowatts of that category of
Operating Reserve deemed under Section 14.3(b) to have been
received by all Participants for the hour.
(c) For every hour in which a Participant is deemed under Section
14.3(c) to have received AGC, the amount it is deemed to receive
shall be computed and the Participant shall pay therefor any
applicable uplift charge assessed under Section 14.15 and any
applicable market-based charges assessed pursuant to Section
19.2 plus the product of (i) the aggregate amount paid to
Participants for AGC for the hour pursuant to Section 14.5(c)
and (ii) a fraction of which the numerator is the AGC the
Participant is deemed under Section 14.3(c) to have received for
the hour and the denominator is the aggregate amount of AGC all
Participants are deemed under Section 14.3(c) to have received
for the hour.
14.5 Payments to Participants Furnishing Energy Service, Operating Reserve,
and Automatic Generation Control.
(a) Subject to the provisions of Section 14.12, a Participant that
is deemed in an hour to furnish Energy service to other
Participants pursuant to Section 14.3, or to Non-Participants
for ancillary services under the Tariff or pursuant to
arrangements entered into under Section 14.6, shall receive for
each megawatthour furnished by it the Energy Clearing Price for
the hour determined in accordance with Section 14.8 or the Bid
Price for that megawatthour, if higher than the Energy Clearing
Price and the unit is either within the Energy Clearing Price
Block (as defined in Section 14.8(c)) or is operated out of
merit if such higher Bid Price is appropriately paid pursuant to
market operation rules governing out-of-merit generation
approved by the Regional Market Operations Committee. In
addition, to the extent that the System Operator reduces Energy
production from a generating unit or units in order to provide
VAR support, Participants with Entitlements in such unit or
units may receive their lost opportunity costs if and to the
extent provided for by market operation rules approved by the
Regional Market Operations Committee.
(b) A Participant that is deemed in an hour to furnish Operating
Reserve to other Participants pursuant to Section 14.3(b), or to
Non-Participants for ancillary services under the Tariff, shall
receive for each Kilowatt of each category of Operating Reserve
furnished by it the applicable Operating Reserve Selling
Price as defined and determined in accordance with Section 14.9
or the Bid Price to provide such Kilowatt, if higher than the
Operating Reserve Selling Price for the hour.
(c) A Participant that is deemed in an hour to furnish AGC to other
Participants pursuant to Section 14.3(c), or to Non-Participants
for ancillary services under the Tariff, shall receive therefor
the sum of (i) the AGC Clearing Price for the hour as defined
and determined in accordance with Section 14.10 times the level
and duration of AGC ramping which was actually provided by the
Participant's AGC Entitlements, and (ii) for each of the
Participant's AGC Entitlements that the System Operator
designated in the hour for AGC, an AGC reservation payment
calculated as the product of (A) the AGC Clearing Price in
effect for the hour, times (B) the AGC Ramp Rate for the
Entitlement, times (C) the portion of the hour during which the
System Operator had designated the Entitlement for AGC.
14.6 Energy Transactions with Non-Participants.
(a) The Management Committee is authorized to enter into contracts
on behalf of and in the names of all Participants (i) with power
pools or other entities in one or more other control areas to
purchase or furnish emergency Energy (and related services) that
is available for the System Operator to schedule in order to
ensure reliability in the NEPOOL Control Area or neighboring
control areas, and (ii) with Non-Participants pursuant to which
ancillary services will be provided by the Participants pursuant
to the Tariff. The terms of any such contractual arrangement
shall not require the furnishing of emergency service to
any other control area until the service needs of all
Participants have been provided for with the least expensive
resources practicable. Energy purchased in any hour from Non-
Participants under a contract entered into pursuant to this
Section 14.6(a) shall be deemed to be furnished to, and paid for
by, Participants entitled to or requiring such Energy in the
hour pursuant to this Section 14 at the higher of the Energy
Clearing Price for the hour or the price paid to the Non-
Participant for the Energy.
(b) The Regional Market Operations Committee is authorized to
provide for the day-to-day scheduling through the System
Operator of the HQ Phase II Firm Energy Contract, in accordance
with the HQ Use Agreement, as if the Contract were a contract
covering Energy transactions with a Non-Participant entered
into pursuant to Section 14.6(a). The HQ Phase II Firm Energy
Contract shall not be deemed a Firm Contract for purposes of
this Agreement. Energy received in an hour from Hydro-Quebec
pursuant to the HQ Energy Banking Agreement, and Energy
purchased in any hour from Hydro-Quebec pursuant to the HQ Phase
II Firm Energy Contract or any other HQ Contract shall be
deemed to be Energy furnished to each Participant entitled to
such Energy for the hour in the amount reflected for the
Participant in the System Operator's scheduling of Energy
deliveries in the hour from Hydro-Quebec; except that
emergency Energy received from Hydro-Quebec under the HQ
Interconnection Agreement shall be deemed to be Energy provided
to (and shall be paid for by) Participants requiring such
emergency Energy in the hour. The System Operator shall
schedule such Energy deliveries to accommodate, to the
maximum extent possible, the schedule of Energy deliveries from
Hydro-Quebec requested by the Participant. The Participants
deemed to have received such Energy shall pay therefor the
higher of the Energy Clearing Price (together with any
applicable uplift charges under Sections 14.14 and/or 14.15 and
any applicable market-based charges assessed pursuant to Section
19.2) or the price paid to Hydro-Quebec for the Energy (or in
the case of Energy received under the HQ Energy Banking
Agreement, the price paid for the related Energy deliveries to
Hydro-Quebec under the Agreement and any amount payable to
Hydro-Quebec with respect to the transaction).
14.7 Participant Purchases Pursuant to Firm Contracts and System Contracts.
(a) For Firm Contracts and System Contracts, the treatment of
Installed Capability, Operable Capability, Energy, Operating
Reserve and AGC between the seller and the purchaser in
determining their respective responsibilities and Entitlements
shall be as agreed between the parties and reported to the
System Operator in accordance with market operation rules
approved by the Regional Market Operations Committee.
(b) In the event a Participant has a right to receive Operable
Capability, Energy, Operating Reserve and/or AGC from a Non-
Participant under a System Contract, or a Firm Contract, and the
Contract permits the scheduling of deliveries of such Operable
Capability, Energy, Operating Reserve and/or AGC to be subject,
in whole or part, to central dispatch through the System
Operator in accordance with market operation rules approved by
the Regional Market Operations Committee, such right to receive
Operable Capability, Energy, Operating Reserve and/or AGC shall
be treated for purposes of Section 14 as nearly as possible as
if it were a Unit Contract for an Operable Capability
Entitlement, Energy Entitlement, Operating Reserve Entitlements,
and/or AGC Entitlement, as applicable.
14.8 Determination of Energy Clearing Price.
For each hour, the System Operator shall determine the Energy Clearing
Price as follows:
(a) The System Operator shall rank in the order of lowest to highest
(i) the Dispatch Prices derived from the Bid Prices to furnish
Energy in the hour and (ii) the cost to NEPOOL of any Energy
received from Non-Participants in the hour pursuant to contracts
referenced in Section 14.6.
(b) The Energy Clearing Price shall be the weighted average of the
Dispatch Prices (or NEPOOL cost) of the "Energy Clearing Price
Block" as defined in the next sentence. The Energy Clearing
Price Block shall be identified for each hour in accordance with
market operation rules approved by the Regional Market
Operations Committee to reflect those resources with the highest
Dispatch Prices or NEPOOL cost that were centrally dispatched by
the System Operator for Energy deemed to have been furnished to
the Participants, excluding resources that were dispatched out
of merit as determined in accordance with market operation rules
approved by the Regional Market Operations Committee.
14.9 Determination of Operating Reserve Selling Price and Clearing Price.
(a) For each hour as necessary, the System Operator shall determine
the Operating Reserve Clearing Price for each category of
Operating Reserve as follows:
(i) The System Operator shall determine the aggregate
Kilowatts of the applicable category of Operating
Reserve that are deemed pursuant to Section 14.3(b) to
have been received by Participants for the hour.
(ii) For 10-Minute Non-Spinning Reserve and 30-Minute
Operating Reserve, the System Operator shall rank in the
order of lowest to highest the Bid Prices of the
resources designated by the System Operator for that
category of Operating Reserve for the hour. The
applicable Operating Reserve Clearing Price for 10-
Minute Non-Spinning Reserve or 30-Minute Operating
Reserve shall be the weighted average of the highest
Bid Prices for the 1000 Kilowatts (or such other number
as may be specified by the Regional Market Operations
Committee) of that category of Operating Reserve that
are designated by the System Operator for use in the
hour.
(iii) For 10-Minute Spinning Reserve the System Operator shall
rank in order of lowest to highest the sum for each
Operating Reserve Entitlement of (A) the Bid Price for
such Entitlement and (B) the lost opportunity costs
(as defined in Section 14.9(d)(ii)). The Operating
Reserve Clearing Price for 10-Minute Spinning Reserve
shall be the weighted average for the 1000 Kilowatts (or
such other number as may be specified by the Regional
Market Operations Committee) of the highest sums for the
hour of the Entitlements that were designated by the
System Operator for use in the hour.
(b) The Operating Reserve Selling Price for any hour for each
Kilowatt of 10-Minute Non-Spinning Reserve and 30-Minute
Operating Reserve deemed to be furnished by a Participant in the
hour pursuant to Section 14.3(b) shall be the applicable
Operating Reserve Clearing Price determined in accordance with
Section 14.9(a).
(c) Prior to the Third Effective Date, the Operating Reserve Selling
Price for any hour for each Kilowatt of 10-Minute Spinning
Reserve deemed to be furnished by a Participant from one of its
generating units designated for the hour by the System Operator
for 10-Minute Spinning Reserve pursuant to Section 14.3(b)
shall be an amount equal to the sum of the "Lost Opportunity
Clearing Price" and the lost opportunity cost (as defined in
Section 14.9(d)(ii)), if any, for the generating unit, both as
determined pursuant to Section 14.9(d) below. On and
after the Third Effective Date, the Operating Reserve Selling
Price for an hour for 10-Minute Spinning Reserve shall be the
applicable Operating Reserve Clearing Price for that hour.
(d) Prior to the Third Effective Date, for each hour, the System
Operator shall determine a Lost Opportunity Clearing Price for
use in determining the Operating Reserve Selling Price for 10-
Minute Spinning Reserve. A Lost Opportunity Clearing Price
shall be calculated for every hour as follows:
(i) The System Operator shall determine the Kilowatts of 10-
Minute Spinning Reserve that it designated and required
for the hour.
(ii) For that hour, the System Operator shall rank in order
of lowest to highest the lost opportunity costs for
generating units designated by the System Operator to
provide 10-Minute Spinning Reserve in the hour.
For purposes of this Section 14.9, the lost opportunity
cost for a Participant's generating unit shall be the
amount by which the Energy Clearing Price for the hour
exceeds the unit's Dispatch Price (not less than zero),
plus, in the case of hydroelectric generating facilities
and pumped storage hydroelectric generating facilities,
the Bid Price in the hour for each facility to provide
10-Minute Spinning Reserve.
(iii) The Lost Opportunity Clearing Price for an hour shall be
the weighted average of the highest 1000 Kilowatts (or
such other number as may be specified by the Regional
Market Operations Committee) of lost opportunity costs
for generating units that were designated by the System
Operator to provide 10-Minute Spinning Reserve in the
hour.
14.10 Determination of AGC Clearing Price.
For each hour, the System Operator shall determine the AGC Clearing
Price. The AGC Clearing Price shall be the weighted average of the Bid
Prices for the "AGC Clearing Price Block," as defined in the next
sentence. The AGC Clearing Price Block shall be identified for each
hour in accordance with market operation rules approved by the Regional
Market Operations Committee to reflect those AGC resources with the
highest Bid Prices that were designated by the System Operator for use
as AGC in the hour and were deemed pursuant to Section 14.3(c) to have
been received by Participants for the hour.
14.11 Funds to or from which Payments are to be Made.
(a) All payments for Energy, Operating Reserve or AGC
furnished or received, all uplifts paid pursuant to this
Section 14, and all market-based charges assessed
pursuant to Section 19.2 and paid in any month
shall be allocated through the Pool Interchange Fund as
follows:
Step One. For each week in which Energy is delivered or
received under the HQ Energy Banking Agreement, all
payments with respect to transactions under that
Agreement shall be made to or from the Energy
Banking Fund provided for in Section 14.11(b).
Step Two. (i) For each week in which Pre-Scheduled
Energy (as defined in the HQ Phase I Energy Contract) is
purchased pursuant to the HQ Phase I Energy Contract,
the aggregate amount which is paid by each Participant
pursuant to Section 14.6(b) for such Energy shall be
determined and paid on the Participant's account into
the Phase I Savings Fund.
(ii) For each week in which Energy is purchased pursuant
to the HQ Phase II Firm Energy Contract, the aggregate
amount which is paid by each Participant pursuant to
Section 14.6(b) for such Energy shall be determined and
paid on the Participant's account into the Phase II
Savings Fund.
Step Three. For each week in which Other HQ Energy is
purchased pursuant to the HQ Phase I Energy Contract or
Energy is purchased pursuant to the HQ Interconnection
Agreement, the aggregate amount paid by each Participant
pursuant to Section 14.6(b) for such Energy shall be
determined. Such amount shall be allocated between the
Participant's share of the Phase I Savings Fund and the
Participant's share of the Phase II Savings Fund created
under the HQ Use Agreement in the same ratio as (A) the
sum of (x) the number of kilowatthours of Other HQ
Energy deemed to be purchased by the Participant during
the week and (y) the HQ Phase I Percentage of the number
of kilowatthours deemed to be purchased by the
Participant under the HQ Interconnection Agreement
during the week, bears to (B) the HQ Phase II Percentage
of the number of kilowatthours purchased under the HQ
Interconnection Agreement during the week.
Step Four. The balance remaining in the Pool
Interchange Fund after Steps One through Three shall be
retained in the Pool Interchange Fund for the month and
shall be used and disbursed after each month in the
following order:
(i) amounts owed to Non-Participants (other than
Hydro-Quebec) for the month under contracts
entered into with them pursuant to Section
14.6(a) shall first be paid;
(ii) amounts paid by Participants for applicable
market-based charges assessed pursuant to Section
19.2 shall be used to reduce NEPOOL expenses; and
(iii) amounts owed to Participants for the month
pursuant to Section 14.5 shall then be paid.
(b) HQ Energy Banking Fund. All amounts allocated to the HQ
Energy Banking Fund for each month shall be used and
disbursed as follows:
(i) Participants which furnish Energy for delivery to
Hydro-Quebec under the HQ Energy Banking
Agreement shall receive therefor from their share
of the Energy Banking Fund the amount to
which they are entitled for such service in
accordance with Section 14.5.
(ii) amounts required to be paid to Hydro-Quebec under
the HQ Energy Banking Agreement shall be paid
from the shares of the Fund of the Participants
engaging in transactions under the HQ Energy
Banking Agreement for the month in accordance
with their respective interests in the
transactions for the month. If there is not
enough in any such share, the Participants with
the deficient shares shall be billed and pay into
their shares of the Fund the amounts required for
payments to Hydro-Quebec.
(iii) subject to the remaining provisions of this
Section, at the end of each month any balance
remaining in each Participant's share of
the HQ Energy Banking Fund shall be paid to the
Escrow Agent under the HQ Use Agreement to be
held and disbursed by it through the Phase I
Savings Fund and Phase II Savings Fund
created under the HQ Use Agreement, and shall be
allocated between the Participant's share of said
Funds as follows:
(A) the balance remaining in the Participant's
share of the HQ Energy Banking Fund for the
month shall be divided by the number of
kilowatthours deemed to be received by the
Participant under the HQ Energy Banking
Agreement during the month to determine an
average savings amount per kilowatthour;
(B) for any hour during the month in which the
number of kilowatthours received by NEPOOL
under the HQ Energy Banking Agreement
exceeded the HQ Phase I Transfer Capability,
an amount equal to (A) the Participant's
share of the excess of (1) the number of
kilowatthours received over (2) the HQ Phase
I Transfer Capability times (B) the average
savings amount per kilowatthour determined
for that Participant under (i) above shall be
allocated to the Phase II Savings Fund; and
(C) the remaining balance of the Participant's
share of the HQ Energy Banking Fund for the
month shall be allocated to the Phase I
Savings Fund.
It is recognized that, in view of the time which may
elapse between the delivery of Energy to or by Hydro-
Quebec in an Energy Banking transaction under the HQ
Energy Banking Agreement and the return of the Energy,
the amounts of Energy delivered to and received from
Hydro-Quebec, after adjustment for losses, may not be in
balance at the end of a particular month.
Further, if as of the end of any month and after
adjustment for electrical losses, the cumulative amount
of Energy so received from Hydro-Quebec exceeds the
amount so delivered, the aggregate amount paid by
Participants for the excess Energy pursuant to Section
14.6(b) shall be paid to the Energy Banking Fund. The
Escrow Agent under the HQ Use Agreement shall hold and
invest these funds. On the return of the excess
Energy to Hydro-Quebec, the amount so held by the Escrow
Agent shall be repaid to Hydro-Quebec and Participants
in accordance with the Energy Banking Agreement.
(c) Phase I HQ Savings Fund. The aggregate amount allocated
to each Participant's share of the Phase I HQ Savings
Fund for each month shall be used, first, to pay to
Hydro-Quebec the amount owed to it for the month for
Energy furnished under the Phase I HQ Energy Contract
and the HQ Phase I Percentage of the amount owed to it
for the month for Energy furnished to the Participants
under the HQ Interconnection Agreement. The balance of
the amount allocated to the Fund for the month shall be
paid to the Escrow Agent under the HQ Use Agreement
to be held and disbursed by it through the Phase I HQ
Savings Fund created thereunder in accordance with each
Participant's contribution to such balance.
(d) Phase II HQ Savings Fund. The aggregate amount
allocated to the Phase II HQ Savings Fund for each month
shall be used, first, to pay to Hydro-Quebec the amount
owed to it for the month for Energy deemed to be
furnished to the Participant under the Phase II HQ Firm
Energy Contract and the HQ Phase II Percentage of the
amount owed to it for the month for Energy deemed to be
furnished to the Participant under the HQ
Interconnection Agreement. The balance of the amount
allocated to the Fund for the month shall be paid to the
Escrow Agent under the HQ Use Agreement to be held and
disbursed by it through the Phase II HQ Savings Fund
created thereunder in accordance with each Participant's
contribution to such balance.
14.12 Development of Rules Relating to Nuclear and Hydroelectric Generating
Facilities, Limited-Fuel Generating Facilities, and Interruptible
Loads.
It is recognized that the central dispatch of Energy available from
nuclear generating facilities and from pondage associated with
hydroelectric generating facilities and from interruptible loads and of
pumping Energy for pumped storage hydroelectric generating facilities
and other limited-fuel generating facilities involves special problems
which must be resolved to assure fair and non-discriminatory treatment
of Participants having Entitlements in such generating facilities or
having such interruptible loads or any other Participants involved in
such transactions. Accordingly, the Regional Market Operations
Committee shall analyze such special problems and develop appropriate
rules for dispatching such facilities (including, but not limited to,
bids for dispatchable pumping load at pumped storage facilities), for
handling such interruptible loads and for paying for Operable
Capability, Energy, Operating Reserve and AGC involved in such
transactions on a basis consistent with the principles underlying this
Section 14; and upon approval by the Management Committee such rules
shall supersede the provisions of Sections 12 and 14 to the extent of
any conflict.
14.13 Dispatch and Billing Rules During Energy Shortages. It is recognized
that Energy shortages can result in special problems which must be
resolved to assure that dispatch and billing provisions do not prevent
achievement of the objectives specified in Section 13.4. Accordingly,
the Regional Market Operations Committee shall analyze such special
problems and develop appropriate dispatch and billing rules to be
applied during periods when the Management Committee determines that
there is, or is anticipated to be, an Energy shortage which adversely
affects the bulk power supply of the NEPOOL Control Area and any
adjoining areas served by Participants. Upon approval by the
Management Committee, such rules shall supersede the economic dispatch
and billing provisions of this Agreement to the extent of any conflict
therewith for the duration of such Energy shortage period.
14.14 Congestion Uplift. If limitations in available transmission capacity
in any hour require that the System Operator dispatch out-of-merit
resources that are bid by the Participants, the System Operator shall
determine for the constrained transmission area the aggregate of the
differences for all of the out-of-merit resources between their
Dispatch Prices and the Energy Clearing Price for the hour ("Congestion
Costs"). The amount so determined shall be the Congestion Costs for
that constrained area in the hour.
Such Congestion Costs shall be allocated to and paid by Participants
and Non-Participants as a congestion uplift as follows:
(a) In accordance with market operation rules approved by the
Regional Market Operations Committee, the System Operator shall
identify for each Participant and Non-Participant the difference
in megawatthours, if any, between (i) Electrical Load served in
the constrained area and transactions with Non-Participants
occurring in the hour which utilized the constrained interface
to import Energy into, or move Energy through, the constrained
area and (ii) in-merit Energy Entitlements located in the
constrained area that were used to serve such Electrical Load or
obligation to Non-Participants, taking into account Firm
Contracts and System Contracts between Participants and
electrical losses, if and as appropriate.
(b) The System Operator shall identify for each Participant and Non-
Participant the megawatthours, if any, of the rights of that
Participant or Non-Participant to use the then effective
transfer capability across the constrained interface.
(c) the System Operator shall identify for each Participant and Non-
Participant the megawatthours, if any, by which the amount
determined pursuant to clause (a) above for that Participant or
Non-Participant exceeds the amount determined for that
Participant or Non-Participant pursuant to clause (b) above. If
the clause (a) amount exceeds the clause (b) amount, the
Participant or Non-Participant will be deemed to have received
Energy from out-of-merit generation because of congestion, and
shall be responsible for paying a share of the aggregate
Congestion Costs in proportion to the Participant's or Non-
Participant's share of the aggregate amount of such excesses for
all Participants and Non-Participants.
14.15 Additional Uplift Charges. It is recognized that the System Operator
may be required from time to time to dispatch resources out of merit
for reasons other than those covered by Section 14.14. Accordingly, if
and to the extent appropriate, feasible and practical, dispatch and
operational costs shall be categorized and allocated as uplift
costs to those Participants and Non-Participants that are responsible
for such costs. Such allocations shall be determined in accordance
with market operation rules that are consistent with this Agreement and
any applicable regulatory requirements and approved by the Regional
Market Operations Committee.
PART FOUR
TRANSMISSION PROVISIONS
SECTION 15
OPERATION OF TRANSMISSION FACILITIES
15.1 Definition of PTF. PTF or pool transmission facilities are the
transmission facilities rated 69 kV or above owned by Participants
required to allow Energy from significant power sources to move freely
on the New England transmission network, and include:
(1) All transmission lines rated 69 kV and above, except:
(a) Those which are required to serve local load only,
thereby contributing little or no parallel capability to
the interconnected system.
(b) Generator leads, which are defined as transmission from
a generation bus to the nearest significant load bus or
radial transmission from a generator bus to the nearest
point on the interconnected network.
(c) Lines that are normally operated open.
(2) Necessary linkages (includes substation facilities such as
transformers, circuit breakers and associated equipment)
required to interconnect the lines which constitute PTF.
(3) If a Participant with significant generation in its transmission
and distribution system (initially 25 MW) is connected to the
New England network and none of the transmission facilities
owned by the Participant qualify to be included in PTF as
defined in (1) and (2) above, then such Participant's connection
to PTF will constitute PTF if both of the following requirements
are met for this connection:
(a) The connection is rated 69 kV or above.
(b) The connection is the principal transmission link
between the Participant and the remainder of the New
England PTF network.
The Regional Transmission Planning Committee shall review at least
annually the status of transmission lines and related facilities and
determine whether such facilities constitute PTF and shall prepare and
keep current a schedule of PTF facilities.
The following examples indicate the intent of the above
definitions:
(i) Radial tap lines to local load are excluded.
(ii) Lines which loop (supply from more than one
substation) a load bus into the interconnected
network are included.
(iii) Lines which loop (supply to more than one
substation) a generator bus into the
interconnected network are included.
(iv) Radial connections or connections from a
generating station to a single substation on the
interconnected network are excluded unless the
requirements of paragraph 3 above are met.
Transmission facilities owned by a Related Person of a
Participant which are rated 69 kV or above and are required to
allow Energy from significant power sources to move freely on
the New England transmission network shall also constitute PTF
provided (i) such Related Person files with the Secretary of the
Management Committee its consent to such treatment; and (ii) the
Management Committee determines that treatment of the facility
as PTF will facilitate accomplishment of NEPOOL's objectives.
If a facility constitutes PTF pursuant to this paragraph, it
shall be treated as "owned" by a Participant for purposes of
the Tariff and the other provisions of Part Four of the
Agreement.
15.2 Maintenance and Operation in Accordance with Good Utility Practice.
Each Participant which owns or operates PTF or other transmission
facilities rated 69 kV or above shall, to the fullest extent
practicable, cause all such transmission facilities owned or operated
by it to be designed, constructed, maintained and operated in
accordance with Good Utility Practice.
15.3 Central Dispatch. Each Participant which owns or operates PTF or other
transmission facilities rated 69 kV or above shall, to the fullest
extent practicable, subject all such transmission facilities owned or
operated by it to central dispatch by the System Operator; provided,
however, that each Participant shall at all times be the sole judge
as to whether or not and to what extent safety requires that at any
time any of such facilities will be operated at less than their full
capability or not at all.
15.4 Maintenance and Repair. Each Participant shall, to the fullest extent
practicable: (a) cause transmission facilities owned or operated by it
to be withdrawn from operation for maintenance and repair only in
accordance with maintenance schedules reported to and published by the
System Operator in accordance with procedures approved or established
by the Regional Transmission Operations Committee from time to time,
(b) restore such facilities to good operating condition with reasonable
promptness, and (c) in emergency situations, accelerate maintenance and
repair at the reasonable request of the System Operator in accordance
with rules approved or established by the Regional Transmission
Operations Committee.
15.5 Additions to or Upgrades of PTF. The need for an addition to or
upgrade for PTF may be determined in connection with an application or
request for service under the Tariff, or may be separately identified
by a NEPOOL committee, a Participant or the System Operator. In
accordance with the Tariff, if it is likely that a Direct Assignment
Facility will be required, a study to assess available transmission
capacity and, if necessary, a System Impact Study and a Facilities
Study shall be performed by the affected Participant in whose Local
Network the addition or upgrade would be effected and may be effected
by the Participant in any other case, subject to review by the System
Operator. A study may also be conducted by the Regional Transmission
Planning Committee and/or the System Operator with review of the study
by the System Operator if it does not perform the study. Studies to
assess available transmission capacity and System Impact Studies and
Facilities Studies shall be conducted in accordance with the applicable
methodology specified in Attachments C and D to the Tariff and the
procedures specified in the Tariff with respect to the payment of the
costs of the study shall apply.
If the studies conducted in connection with an application or request
for service under the Tariff, or as part of a separate review by a
Participant, the Regional Transmission Planning Committee or the System
Operator, indicate that new facilities or a facility modification or
other upgrade of PTF facilities are necessary to ensure adequate,
economic and reliable operation of the bulk power supply systems of the
Participants for regional purposes, whether or not a particular
customer is benefited, one or more Participants or other entities, may
be designated by the Regional Transmission Planning Committee, subject
to review by the System Operator, to design or effect the construction
or modification. The Participants shall be obligated to support all of
the carrying costs of the facility which are not designated for support
by particular Participants or Non-Participants as Direct Assignment
Facilities or on some other basis in accordance with the Tariff or by
mutual agreement, on a load ratio share basis during the Transition
Period and thereafter as part of the Annual Transmission Revenue
Requirements to be paid through the Regional Network Service rate.
In determining the support obligations ("Support Shares") for a
particular PTF upgrade or addition, the Regional Transmission Planning
Committee, subject to review by the System Operator, may determine that
the proposed facilities exceed regional system and regulatory or other
public requirements. In such a case, the Regional Transmission
Planning Committee, subject to review by the System Operator, may
require the Participant in whose Local Network the addition or upgrade
is to be effected, to bear the excess cost and include it in the costs
to be recovered under the Participant's Local Network Service tariff.
In fixing the support obligations of a PTF addition or upgrade, the
Regional Transmission Planning, subject to review by the System
Operator, may require that a portion or all of the costs be paid by
particular users. The designation of the users of a particular
facility supporting the facility may be changed by the Regional
Transmission Planning Committee, subject to review by the System
Operator, from time to time as the use changes.
Upon the designation of a Participant or other entity to design and
effect a PTF addition or upgrade and the fixing of the support payments
to be made by the Participants and Non-Participants, the designated
Participant or other entity shall, subject to Sections 18.4 and 18.5
and the receipt of any necessary public approvals or permits and the
acquisition of any required rights of way or other property, use its
best efforts to effect the proposed construction or modification.
The terms of the support arrangement for a particular PTF addition or
upgrade with respect to continued support of the facility in the event
of a termination of NEPOOL, the cancellation of the project due to a
failure to obtain regulatory approvals or permits or required rights of
way or other property, or action to terminate the project before its
completion for whatever reason shall be determined by agreement between
the designated Participant(s) or other entity and the Regional
Transmission Planning Committee, subject to review by the System
Operator, as a part of the designation process on a case-by-case basis.
SECTION 16
SERVICE UNDER TARIFF
16.1 Effect of Tariff. The Tariff specifies the terms and conditions under
which the Participants will provide regional transmission service
through NEPOOL. This Section 16 specifies various rights and
obligations with respect to the revenues to be collected by NEPOOL for
the Participants under the Tariff and related matters. The usage in
this Section 16 of terms which are defined in the Tariff and not
otherwise defined in this Agreement is in accordance with the
definitions of such terms in the Tariff.
16.2 Obligation to Provide Regional Service. The Participants which own PTF
shall collectively provide through NEPOOL regional transmission service
over their PTF facilities, and the facilities of their Related Persons
which constitute PTF in accordance with Section 15.1, to other
Participants and other Eligible Customers pursuant to the Tariff. The
Tariff provides open access for all of the types of regional
transmission service required by Participants and other Eligible
Customers over PTF and it is intended to be the only source of such
service, except for service provided for Excepted Transactions.
16.3 Obligation to Provide Local Network Service. Each Participant which
owns the PTF or other transmission facilities shall provide Local
Network Service to other Participants or other Eligible Customers
connected to the Transmission Provider's transmission system pursuant
to a tariff (a "Local Network Service Tariff") filed by the
Transmission Provider with the Commission. A Participant is also
obligated to provide Local Point-to-Point Service under its Local
Network Service Tariff or otherwise, to permit a Participant or other
Entity with an Entitlement in a generating unit in the Participant's
Local Network to deliver the output of the generating unit to an
interconnection point on PTF.
A Local Network Service tariff shall provide:
(i) for a pro rata allocation of monthly revenue requirements
between the Participant which is the Transmission Provider and
the Participants and other Eligible Customers receiving service
under the tariff on the basis of their loads during the hour in
the month in which the total connected load to the Local
Network is at its maximum, without any adjustment for credits
for generation;
(ii) for the recovery under the Local Network Service tariff of that
portion of the Transmission Provider's Annual Transmission
Revenue Requirements with respect to PTF which is not recovered
through the distribution of revenues from Regional Network
Service pursuant to Section 16.6(a);
(iii) that where all or a part of the load of a Participant or other
Eligible Customers taking service under the tariff is connected
directly to PTF, the Participant or other Eligible Customers
receiving the service shall pay each Year during the Transition
Period for such service with respect to the load solely
connected to PTF the percentage specified in the schedule below
of the applicable Local Network Service charge for service
across non-PTF transmission facilities and shall have no
obligation to pay charges for service across non-PTF
transmission facilities with respect to that portion of the
connected load after the Transition Period, but shall continue
to pay its share of any other Local Network Service costs
directly associated with the PTF-connected load; provided that
in the event of any inconsistency between the foregoing
provisions and the terms of any Excepted Transaction which is
listed in Attachment G-1 to the Tariff, the Excepted Transaction
shall control:
Year One Year Two Year Three Year Four Year Five
% of charge 100% 80% 60% 40% 20%
to be paid
(iv) that if the Transmission Provider provides Tie Benefit Service,
amounts received by it from NEPOOL pursuant to Section 16.6 out
of revenues received for such service shall reduce its Local
Network Service revenue requirements;
(v) that if the Transmission Provider receives a distribution
pursuant to Section 16.6 from NEPOOL out of revenues paid for
Through or Out Service, the amounts received shall reduce its
Local Network Service revenue requirements;
(vi) that if the Transmission Provider receives transmission revenues
with respect to an Excepted Transaction, the amounts received
shall reduce its Local Network Service revenue requirements; and
(vii) any Transition Payment paid or received by the Transmission
Provider shall increase or reduce, as appropriate, its Local
Network Service revenue requirements.
16.4 Transmission Service Availability. The availability of transmission
capacity to provide transmission service under the Tariff shall be
determined in accordance with the Tariff. In determining the
availability of transmission capacity, existing committed uses of the
Participants' transmission facilities shall include uses for existing
firm loads and reasonably forecasted changes in such loads, and for
Excepted Transactions.
16.5 Transmission Information. Information concerning (i) available
transmission capacity, (ii) transmission rates and (iii) system
conditions that may give rise to Interruptions or Curtailments shall be
made available to all Participants and Non-Participants through
the OASIS on a timely and non-discriminatory basis. All Participants
owning PTF or other transmission facilities rated 69 kV or higher shall
make available to the System Operator the information required to
permit the maintenance of the OASIS in compliance with Commission Order
889 and any other applicable Commission orders; provided that no
Participant shall be required to furnish information which is required
to be treated as confidential in accordance with NEPOOL policy without
appropriate arrangements to protect the confidentiality of such
information.
16.6 Distribution of Transmission Revenues. Payments required by the Tariff
for the use of the NEPOOL Transmission System shall be made to NEPOOL
and shall be distributed by it in accordance with this Section 16.6.
A. Regional Network Service Revenues. Revenues received by NEPOOL
for providing Regional Network Service each month during the
Transition Period shall be distributed to the Participants
owning or supporting PTF in part on the basis of allocated flows
for the region as determined in accordance with the methodology
specified in Attachment A to this Agreement and in part in
proportion to the respective Annual Transmission Revenue
Requirements for PTF of the owners and supporters, in accordance
with the following Schedule:
Year One Year Two Year Three Year Four Year Five
Allocated
flows: 25% 20% 15% 10% 5%
Annual
Transmission
Revenue
Requirements 75% 80% 85% 90% 95%
Revenues received by NEPOOL for providing Regional Network
Service each month after the Transition Period shall be
distributed to the Participants owning or supporting PTF in
proportion to their respective Annual Transmission Revenue
Requirements for PTF.
B. Through or Out Service Revenues. The revenues received by
NEPOOL each month for providing Through or Out Service shall be
distributed among the Participants owning PTF on the basis of
allocated flows for the transaction determined in accordance
with the methodology specified in Attachment A to this
Agreement; provided that for service provided during the
Transition Period but not thereafter, for an "Out" transaction
which originates on the system of a Participant which owns the
PTF facilities on the New England side of the interface with the
other Control Area over which the transaction is delivered, 100%
of the megawatt mile flows with respect to the transaction shall
be deemed to occur on such Participant's system.
C. Tie Benefit Service Revenues. The revenues received each month
by NEPOOL for Tie Benefit Service with respect to the
transmission ties to New York and New Brunswick shall be
distributed as follows during and after the Transition
Period:
1. New York Ties
The revenues derived relating to Tie Benefits received
from the New York ties will be distributed as follows:
Northeast Utilities System Companies 72%
New England Power Company 14%
Vermont Electric Power Company 14%
2. New Brunswick Ties
The revenues derived relating to Tie Benefits received
from the New Brunswick tie will be distributed as
follows:
Central Maine Power Company 78.32%
Bangor Hydro-Electric Company 14.19%
Maine Public Service Company 7.49%
D. Transition Payments. Transition Payments received by NEPOOL
each month shall be distributed to the Participants in
accordance with Schedule 11 to the Tariff.
16.7 Changes to Tariff. The Tariff constitutes part of the Agreement and
shall be subject to change either in accordance with Section 21.11 or
by an affirmative vote of members of the Management Committee having at
least 70% of the aggregate Voting Shares to which all members are
entitled; provided, however, that the negative votes of any two
or more members representing Participants which are not Related Persons
of each other and which have at least 20% of the aggregate Voting
Shares to which all members are entitled shall defeat any proposed
change. In determining whether the negative vote total specified above
has been reached, the following limitation shall be applied: if the
member representing any Participant would be entitled to cast against
the proposed action more than 18% of the aggregate Voting Shares to
which all members are entitled, such member shall be entitled to vote
negatively only 18% of such aggregate Voting Shares. Nothing in this
Agreement shall be deemed to affect in any way the ability of any
Participant or Non-Participant to apply to the Commission under Section
205 or 206 of the Federal Power Act for a change in any rate, charge,
term, condition or classification of service under the Tariff.
SECTION 17
POOL-PLANNED UNIT SERVICE
17.1 Effective Period. The provisions contained in this Section 17 shall
continue in effect until the fifth anniversary of the effective date of
the Tariff, and shall be of no effect after that date.
17.2 Obligation to Provide Service. Until the fifth anniversary of the
effective date of the Tariff, each Participant shall provide service
over its PTF facilities under this Section 17 rather than under the
Tariff, for the following purposes:
(a) the transfer to a Participant's system of its ownership
interest or its Unit Contract Entitlement under a
contract entered into by it before November 1, 1996 in a
Pool-Planned Unit which is off its system;
(b) the transfer to a Participant's system of its
Entitlement in a purchase under a contract entered into
by it before November 1, 1996 (including a purchase
under the HQ Phase II Firm Energy Contract) from Hydro-
Quebec where the line over which the transfer is made
into New England is the HQ Interconnection; and
(c) the transfer to a Non-Participant of its Entitlement in
a Pool-Planned Unit pursuant to an arrangement which has
been approved prior to November 1, 1996 by the
Management Committee.
17.3 Rules for Determination of Facilities Covered by Particular
Transactions. It is anticipated that it may be necessary with respect
to a particular transmission use under subsection (a), (b) or (c) of
Section 17.2 to determine whether the transaction is effected entirely
over PTF, entirely over facilities that are not PTF, or partially over
each.
The following rules shall be controlling in the determination of the
facilities required to effect the use:
(a) To the extent that EHV PTF is available to effect the
transaction, over all or part of the distance to be
covered, the use shall be deemed to be effected on such
EHV PTF over such portion of the distance to be
covered.
(b) To the extent that EHV PTF is not available for the
entire distance to be covered by the use, but Lower
Voltage PTF is available to cover all or part of the
distance not covered by EHV PTF, the transaction shall
be deemed to be effected on such Lower Voltage PTF.
If a Participant has ownership or contractual rights with
respect to an Excepted Transaction which are independent of this
Agreement and the Tariff and are adequate to provide for a
transfer of the types specified in subsections 17.2(a),
(b) or (c), and such rights are not limited to the transfer in
question, the transfer shall be deemed to have been effected
pursuant to such rights and not pursuant to the provisions of
this Agreement. A copy of each instrument establishing
such rights, or an opinion of counsel describing and
authenticating such rights, shall be filed with the Secretary of
the Management Committee.
17.4 Payments for Uses of EHV PTF During the Transition Period.
(a) Each Participant shall pay each month for its uses of EHV PTF
for transfers of Entitlements pursuant to subsections (a) or (b)
of Section 17.2, one-twelfth of the NEPOOL EHV PTF Participant
Summer or Winter Wheeling Rate in effect for the calendar year
ending December 31, 1996, as determined in accordance
with the Prior NEPOOL Agreement, for each Kilowatt of its
current Entitlements which qualify for transfer pursuant to
subsections (a) or (b) of Section 17.2, except as otherwise
provided in Section 17.3; provided that such payment shall be
required with respect to only one-half the Kilowatts covered
by a NEPOOL Exchange Arrangement (as hereinafter defined).
Each Participant which is a party to the HQ Phase II Firm Energy
Contract (other than a Participant (i) whose system is directly
interconnected to the HQ Interconnection or (ii) which has
contractual rights independent of this Agreement and the Tariff
which give it direct access to the HQ Interconnection
and which are not limited to transfers of Energy delivered over
the HQ Interconnection) shall also pay each month for the use of
EHV PTF for deliveries under the Phase II Firm Energy Contract
during the Base Term of the HQ Phase II Firm Energy Contract,
one-twelfth of the NEPOOL EHV PTF Participant Summer or Winter
Wheeling Rate in effect for the calendar year ending December
31, 1996, as determined in accordance with the Prior NEPOOL
Agreement, for each Kilowatt of its HQ Phase II Net Transfer
Responsibility for the month. If, and to the extent that, such
Responsibility continues for any period by which the term of
said Contract extends beyond the Base Term, each such
Participant shall continue to pay the above rate during the
extension period with respect to its continuing Responsibility.
A Participant shall not be deemed to be directly interconnected
to the HQ Interconnection for purposes of this paragraph solely
because of its participation in arrangements for the support
and/or use of PTF facilities installed or modified to effect
reinforcements of the New England AC transmission system
required in connection with the HQ Interconnection. A copy of
each contract establishing rights independent of this Agreement
and the Tariff which provides direct access to the HQ
Interconnection, or an opinion of counsel describing and
authenticating such rights, shall be filed with the Secretary of
the Management Committee.
The NEPOOL EHV PTF Participant Summer Wheeling Rate for any
calendar year shall be applicable to the months in the Summer
Period.
The NEPOOL EHV PTF Participant Winter Wheeling Rate for any
calendar year shall be applicable to the months in the Winter
Period.
A NEPOOL Exchange Arrangement is one entered into by two
Participants each of which has an ownership interest in a Pool-
Planned Unit on its own system pursuant to which each sells out
of its ownership interest, a Unit Contract Entitlement to the
other for a period of time which is, in whole or part, the
same for both sales. Such an arrangement shall constitute a
NEPOOL Exchange Arrangement even though the beginning and ending
dates of the two Unit Contract sale periods are different, but
only for the period for which both sales are in effect. If for
any period the number of Kilowatts covered by the two
Unit Contract Entitlements of a NEPOOL Exchange Agreement are
not the same, the portion of the larger Entitlement which
exceeds the amount of the smaller Entitlement shall not be
deemed to be covered by such NEPOOL Exchange Arrangement for
purposes of this Section 17.4.
(b) Each Participant shall pay each month for its use of EHV PTF for
a transfer of an Entitlement in a Pool-Planned Unit to a Non-
Participant pursuant to Section 17.2(c) such charge as is fixed
by the Management Committee at the time of its approval of the
sale, and filed with the Commission.
(c) Fifty percent of all amounts required to be paid with respect to
transfers by a Participant pursuant to subsection (a) or (b) of
Section 17.2 shall be paid to a pool transmission fund and
distributed monthly among the Participants in proportion to the
respective amounts of their costs with respect to EHV PTF for
the calendar year 1996 as determined in accordance with the
Prior NEPOOL Agreement.
(d) The remaining 50% of all amounts required to be paid with
respect to transfers by a Participant pursuant to subsections
(a) or (b) of Section 17.2 shall be paid to, and retained by,
the Participant on whose system the transfer originates, or
in the event the EHV PTF system of such Participant is supported
in part by other Participants, then to the Participant on whose
system the transfer originates and such other Participants in
proportion to the respective shares of the costs of such EHV PTF
system borne by each of them or in such other manner as the
Participants involved may jointly direct; provided that the
Participant on whose system the transfer originates shall have
the right to waive such 50% payment in whole or part as to a
particular transfer except that no such waiver may adversely
affect the payments to any other Participant which is
supporting in part the originating system's EHV PTF system.
17.5 Payments for Uses of Lower Voltage PTF. Each Participant which uses
another Participant's Lower Voltage PTF pursuant to this Section 17
shall pay each month to the owner of such Lower Voltage PTF (1) for
each Kilowatt of its use of such Lower Voltage PTF for transfer of
Entitlements pursuant to Subsections 17.2(a), (b) or (c) during the
month, and (2) during the Base Term of the HQ Phase II Firm Energy
Contract (and during any extension of the term of said Contract if and
to the extent its HQ Phase II Net Transfer Responsibility continues
during the extension period) for each Kilowatt of its HQ Phase II Net
Transfer Responsibility for the month, the owner's Lower Voltage PTF
Winter Wheeling Rate or Summer Wheeling Rate for the 1996 calendar
year, as determined in accordance with the Prior NEPOOL Agreement.
17.6 Use of Other Transmission Facilities by Participants. Each Participant
which has no direct connection between its system and PTF shall be
entitled to use the non-PTF transmission facilities of any other
Participant required to reach its system for any of the purposes for
which PTF may be used under Section 17.2. Such use shall be
effected, and payment made, in accordance with the other Participant's
filed open access tariff.
17.7 Limits on Individual Transmission Charges.
Any charges for transmission service pursuant to this Section 17 by any
Participant to another Participant shall be just, reasonable and not
unduly discriminatory or preferential. No provision of this Section 17
shall be construed to waive the right of any Participant to seek review
of any charge, term or condition applicable to such transmission
service by another Participant by the Commission or any other
regulatory authority having jurisdiction of the transaction.
PART FIVE
GENERAL
SECTION 18
GENERATION AND TRANSMISSION FACILITIES
18.1 Designation of Pool-Planned Facilities.
At the request of a Participant, the Management Committee shall
designate as "pool-planned" a generating or transmission facility to be
constructed by the Participant or its Related Person if the Management
Committee determines that the facility is consistent with NEPOOL
planning. The Management Committee may not unreasonably withhold
designation as a Pool-Planned Facility of a generation unit or other
facility proposed by one or more Participants in order to satisfy their
anticipated Installed Capability Responsibilities with a mix of
generation and other resources reasonably comparable as to economics
and types to that being developed for New England.
18.2 Construction of Facilities.
Subject to Sections 13.1, 15.2, 15.5, 18.3, 18.4 and 18.5, and to the
provisions of the Tariff, each Participant shall have the right to
determine whether, and to what extent, additions to and modifications
in its generating and transmission facilities shall be made. However,
each Participant shall give due consideration to recommendations
made to it by the Management Committee or the System Operator for any
such additions or modifications and shall follow such recommendations
unless it determines in good faith that the recommended actions would
not be in its best interest.
18.3 Protective Devices for Transmission Facilities and Automatic Generation
Control Equipment.
Each Participant shall install, maintain and operate such protective
equipment and switching, voltage control, load shedding and emergency
facilities as the Management Committee may determine to be required in
order to assure continuity of service and the stability of the
interconnected transmission facilities of the Participants. Until the
Second Effective Date, each Participant shall also install, maintain
and operate such Automatic Generation Control equipment as the
Management Committee may determine to be required in order to maintain
proper frequency for the interconnected bulk power system of the
Participants and to control power flows on interconnections between
Participants and Non-Participants.
18.4 Review of Participant's Proposed Plans.
Each Participant shall submit to the Management Committee, the Market
Reliability Planning Committee or the Regional Transmission Planning
Committee, as appropriate, and the Regional Market Operations Committee
or the Regional Transmission Operations Committee, as appropriate, for
review by them and the System Operator, in such form, manner and detail
as the Management Committee may reasonably prescribe, (i) any new or
materially changed plan for additions to, retirements of, or changes in
the capacity of any supply and demand-side resources or transmission
facilities rated 69 kV or above subject to control of such Participant,
and (ii) any new or materially changed plan for any other action to be
taken by the Participant which may have a significant effect on the
stability, reliability or operating characteristics of its system or
the system of any other Participant. No significant action (other than
preliminary engineering action) leading toward implementation of any
such new or changed plan shall be taken earlier than sixty days (or
ninety days, if the Management Committee determines that it requires
additional time to consider the plan and so notifies the Participant in
writing within the sixty days) after the plan has been submitted to the
Committees. Unless prior to the expiration of the sixty or ninety
days, whichever is applicable, the Management Committee notifies the
Participant in writing that it has determined that implementation of
the plan will have a significant adverse effect upon the reliability or
operating characteristics of its system or of the systems of one or
more other Participants, the Participant shall be free to proceed. The
time limits provided of this Section 18.4 may be changed with respect
to any such submission by agreement between the Management Committee
and the Participant required to submit the plan.
18.5 Participant to Avoid Adverse Effect.
If the Management Committee notifies a Participant pursuant to Section
18.4 that implementation of the Participant's plan has been determined
to have a significant adverse effect upon the reliability or operating
characteristics of its system or the systems of one or more other
Participants, the Participant shall not proceed to implement such plan
unless the Participant takes such action or constructs at its expense
such facilities as the Management Committee determines to be reasonably
necessary to avoid such adverse effect; provided that if the plan is
for the retirement of a supply or demand-side resource, the Participant
may proceed with its plan only if, after engaging in good faith
negotiations with persons designated by the Management Committee to
address the adverse effects on reliability or operating
characteristics, the negotiations either address the adverse effects to
the satisfaction of the Management Committee, or no satisfactory
resolution can be achieved on terms acceptable to the parties within 90
days of the Participant's receipt of the Management Committee's notice.
Any agreement resulting from such negotiations shall be in writing and
shall be filed in accordance with the Commission's filing requirements
if it requires any payment.
SECTION 19
EXPENSES
19.1 Annual Fee.
Each Participant shall pay to NEPOOL in January of each year an annual
fee of $500, which shall be applied toward NEPOOL expenses.
19.2 NEPOOL Expenses.
It is an objective of the Participants to work with the System Operator
to establish to the maximum extent possible fees that fairly allocate
NEPOOL and System Operator costs directly to the Participants and Non-
Participants responsible for such costs, rather than through the
general expense allocation identified below. Subject to the continued
payment of a portion of NEPEX Expenses from the Savings Fund until the
Second Effective Date in accordance with the Prior NEPOOL Agreement,
the balance of NEPOOL expenses remaining to be paid after the
application of (i) the annual fee to be paid pursuant to Section 19.1,
and (ii) any fees or other charges for services or other revenues
received by NEPOOL, or collected on its behalf by the System Operator,
shall be allocated among and paid monthly by the Participants in
accordance with their respective Voting Shares.
SECTION 20
INDEPENDENT SYSTEM OPERATOR
(a) The Management Committee is authorized and directed to approve
one or more agreements to be entered into with the ISO upon its
activation (the "ISO Agreement") and any amendments to the ISO
Agreement which the Committee may deem necessary or appropriate
from time to time. The ISO Agreement shall specify the rights
and responsibilities of NEPOOL and the ISO, including
the responsibilities of the ISO, for the continued operation of
the NEPOOL control center by the ISO as the control center
operator for the NEPOOL Control Area and the administration of
the Tariff. In addition, the ISO shall be responsible for the
furnishing of billing and other services required by NEPOOL.
(b) The fees and charges of the ISO (other than fees and charges for
services which are separately billed), and any indemnification
payable under the ISO Agreement, shall be shared by the
Participants in accordance with Section 19.
(c) The Participants shall provide to the ISO the financial support,
information and other resources necessary to enable the ISO to
provide the services specified in the ISO Agreement, or in this
Agreement, in accordance with Good Utility Practice and subject
to the budgeting, approval and dispute resolution provisions
of the ISO Agreement and this Agreement.
(d) The Participants shall provide appropriate funding for the
acquisition of land, structures, fixtures, equipment and
facilities, and other capital expenditures for the ISO, which
are included in the annual budget for the ISO in accordance with
the provisions of the ISO Agreement, or otherwise specifically
approved by the Management Committee. All such land,
structures, fixtures, equipment and facilities, and other
capital assets, and all software or other intellectual property
or rights to intellectual property or other assets, acquired or
developed by the ISO in order to carry out its responsibilities
under the ISO Agreement shall be the property of the
Participants or shall be acquired by the Participants under
lease in accordance with arrangements approved by the Management
Committee. Unless otherwise agreed by the Participants, the
funding of the acquisition, or lease, of land, structures,
fixtures, equipment and facilities, and other capital
expenditures, or the acquisition of other assets, and the
ownership thereof, or the obligations of Participants as
lessees, shall be in proportion to the Voting Shares of each
Participant in effect as from time to time. The Participants
shall make all such assets (including the assets of the existing
NEPOOL headquarters and control center) available for use by the
ISO in carrying out its responsibilities under the ISO
Agreement. The ISO Agreement shall require the ISO, on behalf
of the Participants, to maintain and care for, insure as
appropriate, and pay any property taxes relating to, assets made
available for its use.
(e) The ISO Agreement shall require the ISO to refrain from any
action that would create any lien, security interest or
encumbrance of any kind upon the facilities, equipment or other
assets of any Participant, or upon anything that becomes
affixed to such facilities, equipment or other assets. The
Participants and the ISO shall include in the ISO Agreement a
provision that, upon the request of any Participant, the ISO
shall (i) provide a written statement that it has taken no
action that would create any such lien, security interest or
encumbrance, and (ii) take all actions within the control of the
ISO, at the direction and expense of the requesting Participant,
required for compliance by such Participant with the provisions
of its mortgage relating to such facilities, equipment or other
assets.
(f) The ISO shall have the right to appoint a non-voting member and
an alternate to each NEPOOL committee other than the Management
Committee. The member appointed to each committee shall have
all of the rights of any other member of the committee except
the right to vote.
(g) The ISO shall have the same rights as a Participant to appeal to
the Management Committee any action taken by any other NEPOOL
committee, and shall be entitled to appear before the Management
Committee on any such appeal. Further, the ISO shall be
entitled to submit any dispute with respect to a vote of
the Management Committee to approve, modify, or reject a
proposed action to resolution in accordance with Section 21.1,
whether or not the action could have been submitted by a
Participant in accordance with Section 21.1A. In addition, the
ISO shall be entitled to submit any dispute with respect to a
vote of the Management Committee which denies an appeal to the
Management Committee by the ISO or which takes action on any
rulemaking issue to the Board of Directors of the ISO for
determination, subject to the right of the Management
Committee to seek a review in accordance with the Alternate
Dispute Resolution procedures or by the Commission. The ISO
shall give notice of any such submission to the Secretary of the
Management Committee within ten days of the action of the
Management Committee and shall mail a copy of such notice to
each member of the Management Committee. Pending final action
on the submission in accordance with Section 21.1 or by the
Board of Directors of the ISO or the Commission, as appropriate,
the giving of notice of the submission shall suspend the
Management Committee's action. Unless the Board of Directors of
the ISO acts within 60 days of the ISO's notice to the
Management Committee, the Management Committee action will be
deemed to be approved.
(h) The ISO Agreement shall specify the ISO's independent authority
with respect to rulemaking.
(i) NEPOOL and its committees and the ISO shall consult and
coordinate from time to time with the relevant state regulatory,
siting and other authorities of the six New England states on
operating, planning and other issues of concern to the states.
The New England Conference of Public Utilities Commissioners,
Inc. (NECPUC) or its designee shall be furnished notices of
meetings of all NEPOOL committees and the Board of Directors of
the ISO, and minutes of their meetings. NECPUC and other state
authorities shall be provided an appropriate opportunity to
appear at meetings of the NEPOOL committees and the Board of
Directors of the ISO and to present their views.
Representatives of NEPOOL and the ISO shall be designated to
attend meetings of NECPUC or any committee or task force of
NECPUC, to the extent NECPUC or its committee or task force may
deem such attendance appropriate.
SECTION 21
MISCELLANEOUS PROVISIONS
21.1 Alternative Dispute Resolution.
A. General:
If the ISO is aggrieved by a vote of the Management Committee to
approve, modify or reject a proposed action under this
Agreement, including the Tariff, it may submit the matter for
resolution hereunder. If the Management Committee is aggrieved
by an action of the ISO Board of Directors ("ISO Board") under
this Agreement, including the Tariff or the ISO Agreement (as
defined in Section 20(a)), the Management Committee may submit
the matter for resolution hereunder; provided, however, that if
the action of the ISO relates to rulemaking, the Management
Committee may submit the matters for resolution under this
Section 21.1 only with the concurrence of the ISO. Any
Participant which is aggrieved by a vote of the Management
Committee to approve, modify or reject a proposed action under
this Agreement, including the Tariff, may, as provided below,
submit the matter for resolution hereunder if the vote:
(1) requires such Participant to make a payment or to take
any action pursuant to this Agreement; or
(2) reduces the amount of any receipt or forbids, pursuant
to this Agreement, the taking of any action by the
Participant; or
(3) fails to afford it any right to which it is entitled
under the provisions of this Agreement or imposes on it
a burden to which it is not subject under the provisions
of this Agreement; or
(4) results in the termination of the Participant's status
as a Participant or imposes any penalty on the
Participant; or
(5) results in an allocation of transmission or other
facilities support obligations; or
(6) fails to grant in full an application for transmission
service pursuant to the Tariff.
No legal or regulatory proceeding (except those reasonably
necessary to toll statutes of limitations, claims for laches or
other bars to later legal or regulatory action) shall be
initiated by any Participant with respect to any such matter
while proceedings are pending under this Section with respect to
the matter.
B. Procedure:
(1) Submission of a Dispute: The ISO or a Participant
seeking review of a vote of the Management Committee
shall give written notice to the Secretary of the
Management Committee within ten business days of the
vote, and shall mail or telecopy a copy of its notice to
each member of the Management Committee. Where the
Management Committee is seeking review of an action of
the ISO Board, the Management Committee shall give
written notice to the Secretary of the ISO Board. The
provider of notice under this Section shall be referred
to herein as the "Aggrieved Party."
(2) Suspension of Action: If the ISO seeks review of a vote
of the Management Committee pursuant to this Section,
the vote to be reviewed shall be suspended pending
resolution of such review by the arbitrator or the
Commission if raised in regulatory proceedings. If a
Participant seeks such a review, the vote to be reviewed
shall be suspended for up to 90 days following the
giving of the Participant's notice pending resolution of
any arbitration proceeding unless the Management
Committee determines that the suspension will imperil
the stability or reliability of the NEPOOL Control Area
bulk power supply.
(3) Aggrieved Party Options: (i) If the notice is to seek
review of a vote of the Management Committee, the
Aggrieved Party's notice to the Management Committee
shall invoke arbitration as described herein in
its notice pursuant to paragraph B(1), and may also
initiate mediation with the agreement of the Management
Committee, while reserving such Party's right to proceed
with the arbitration if mediation does not resolve
the matter within 20 days of the giving of the Party's
notice or such longer period as may be fixed by mutual
agreement of the Management Committee and the Aggrieved
Party. Notwithstanding the initiation of mediation, the
arbitration proceeding shall proceed concurrently with
the selection of the arbitrator pursuant to paragraph
C(1) of this Section 21.1.
(ii) If the notice is to seek review of an ISO action, the
Management Committee's notice to the ISO Board shall
(subject to the concurrence of the ISO for actions
relating to rulemaking as provided in Section 21.1A)
invoke arbitration as described herein in its notice
pursuant to paragraph B(1), and may also initiate
mediation with the agreement of the ISO Board, while
reserving the Management Committee's right to proceed
with the arbitration if mediation does not resolve the
matter within 20 days of the giving of the Management
Committee's notice or such longer period as may be fixed
by mutual agreement of the ISO Board and the Management
Committee. Notwithstanding the initiation of mediation,
the arbitration proceeding shall proceed concurrently
with the selection of the arbitrator pursuant to
paragraph C(1) of this Section 21.1.
(4) Mediation Positions not to be Used Elsewhere: All
mediation proceedings pursuant to this Section are
confidential and shall be treated as compromise and
settlement negotiations for purposes of applicable
rules of evidence.
(5) Time Limits; Duration: Any other Participant that
wishes to participate in an arbitration proceeding
hereunder shall give signed written notice to
the Secretary of the Management Committee, and to the
Secretary of the ISO Board if the ISO is involved in
such arbitration, no later than ten calendar days after
the giving of the notice of arbitration. The arbitration
procedure shall not exceed 90 calendar days from the
date of the Aggrieved Party's notice invoking
arbitration to the arbitrator's decision unless the
parties agree upon a longer or shorter time. All
agreements by the ISO or the aggrieved Participant and
the Management Committee to use mediation shall
establish a schedule which will control unless later
changed by mutual agreement.
C. Arbitration:
(1) Selection of Arbitrator: The ISO or the
aggrieved Participant and the Management
Committee shall attempt to choose by mutual
agreement a single neutral arbitrator to hear the
dispute. If the ISO or the Participant and the
Management Committee fail to agree upon a single
arbitrator within ten calendar days of the
giving of notice of arbitration to the Secretary
of the Management Committee or the Secretary of
the ISO Board, as the case may be, the American
Arbitration Association shall be asked to
appoint an arbitrator. In either case, the
arbitrator shall be knowledgeable in matters
involving the electric power industry,
including the operation of control areas and bulk
power systems, and shall not have any substantial
business or financial relationships with the ISO,
NEPOOL or its Participants (other than previous
experience as an arbitrator) unless otherwise
mutually agreed by the ISO or the aggrieved
Participant and the Management Committee.
(2) Costs: NEPOOL shall be responsible for all of the
costs of the proceeding if it is initiated by the
ISO or by the Management Committee. If a
proceeding is initiated by an aggrieved
Participant, each party shall be responsible for
the following costs, if applicable:
(i) its own costs incurred during the arbitration
process (except that this does not preclude
billing the aggrieved Participant for its
share of NEPOOL Expenses that may include the
Management Committee's arbitration costs);
plus
(ii) One half of the common costs of the
arbitration including, but not limited to,
the arbitrator's fee and expenses, the rental
charge for a hearing room and the cost of a
court reporter and transcript, if required.
(3) Hearing Location: Unless otherwise mutually
agreed, the site for all arbitration hearings
shall be NEPOOL counsel's office.
D. Rules and Procedures:
(1) Procedure and Discovery: The procedural rules
(if any), the conduct of the arbitration and the
availability, extent and duration of pre-hearing
discovery (if any), which shall be limited to the
minimum necessary to resolve the matters in
dispute, shall be determined by the arbitrator in
his/her sole discretion at or prior to the
initial hearing.
(2) Pre-hearing Submissions: The Aggrieved Party
shall provide the arbitrator with a brief written
statement of its complaint and a statement of the
remedy or remedies it seeks, accompanied by
copies of any documents or other materials it
wishes the arbitrator to review. The Management
Committee will provide the arbitrator with a copy
of this Agreement and all relevant implementing
documents, a brief description of the action
being arbitrated, copies of the minutes of all
NEPOOL committee meetings at which the matter was
discussed, a brief statement explaining why the
Management Committee believes its decision
should be upheld by the arbitrator, and copies of
any documents or other materials the Management
Committee wishes the arbitrator to review. If
the Management Committee is the Aggrieved Party,
the ISO Board will provide copies of minutes of
the ISO Board meetings at which the matter was
discussed, a brief statement explaining why the
ISO Board believes its decision should be upheld
by the arbitrator, and copies of any documents or
other materials the ISO Board wishes the
arbitrator to review. These submissions shall be
made within five days after the selection of the
arbitrator.
In addition, each party shall designate one or
more individuals to be available to answer
questions the arbitrator may have on the
documents or other materials submitted by that
party. The answers to all such questions shall
be reduced to writing by the party providing the
answer and a copy shall be furnished to the
other party.
(3) Initial Hearing: An initial hearing will be held
no later than 10 days after the selection of the
arbitrator and shall be limited to issues raised
in the pre-hearing filings. The scheduling of
further hearings at the request of either party
or on the arbitrator's own motion shall be within
the sole discretion of the arbitrator.
(4) Decision: The arbitrator's decision shall be
due, unless the deadline is extended by mutual
agreement of the ISO or the aggrieved Participant
and the Management Committee, within sixty days
of the initial hearing or within ninety days of
the Aggrieved Party's initiation of arbitration,
whichever occurs first. The arbitrator shall be
authorized only to interpret and apply the
provisions of this Agreement and the arbitrator
shall have no power to modify or change the
Agreement in any manner.
(5) Effect of Arbitration Decision: The decision of
the arbitrator will be conclusive in a subsequent
regulatory or legal proceeding as to the facts
determined by the arbitrator but will not be
conclusive as to the law or constitute precedent
on issues of law in any subsequent regulatory or
legal proceedings.
An aggrieved party may initiate a proceeding with a
court or with the Commission with respect to the
arbitration or arbitrator's decision only:
o if the arbitration process does not
result in a decision within the time
period specified and the proceeding is
initiated within thirty days after the
expiration of such time period; or
o on the grounds specified in Sections 10
and 11 of Title 9 of the United States
Code for judicial vacation or
modification of an arbitration award and
the proceeding is initiated within
thirty days of the issuance of the
arbitrator's decision.
(6) Other Disputes: In the event a dispute arises
with a Non-Participant which receives or is
eligible to receive service under this Agreement
or the Tariff with respect to such service, the
Non-Participant shall have the right to have the
dispute considered by the Management Committee.
In the event the Non-Participant is aggrieved by
the Management Committee's vote on the dispute,
and the vote has any of the effects specified in
paragraph A of this Section 21.1, the aggrieved
Non-Participant may require that the dispute be
resolved in accordance with this Section 21.1. To
the extent that NEPOOL provides services to
Non-Participants under separate agreements, the
Management Committee shall incorporate the
provisions of this Section by reference in any
such agreement, in which case the term
"Participant" shall be deemed for purposes of the
dispute resolution provisions to include such
Non-Participant purchasers of NEPOOL services.
21.2 Payment of Pool Charges; Termination of Status as Participant.
(a) Any Participant shall have the right to terminate its status as
a Participant upon no less than six months' prior written notice
given to the Secretary of the Management Committee.
(b) If at any time during the term of this Agreement a receiver or
trustee of a Participant is appointed or a Participant is
adjudicated bankrupt or an order for relief is entered under the
Federal Bankruptcy Code against a Participant or if there shall
be filed against any Participant in any court (pursuant to the
Federal Bankruptcy Code or any statute of any state) a petition
in bankruptcy or insolvency or for reorganization or for
appointment of a receiver or trustee of all or a portion of the
Participant's property, and within ninety days after the
filing of such a petition against the Participant, the
Participant shall fail to secure a discharge thereof, or if any
Participant shall file a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy or
insolvency law or shall make an assignment for the benefit of
creditors, the Management Committee may terminate such
Participant's status as a Participant as of any time thereafter.
(c) Each Participant is obligated to pay when due in accordance with
NEPOOL procedures all amounts invoiced to it by NEPOOL, or by
the ISO on behalf of NEPOOL. If a Participant disputes a NEPOOL
invoice in whole or part, it shall be entitled to continue to
receive service under the Agreement and the Tariff, so long as
the Participant (i) continues to make all payments not in
dispute, and (ii) pays into an independent escrow account the
portion of the invoice in dispute, pending resolution of the
dispute. If the Participant fails to meet these two
requirements for continuation of service, NEPOOL may suspend
service, in whole or part, to the Participant sixty days after
the giving of notice to the Participant of NEPOOL's intention to
suspend service, in accordance with Commission policy.
(d) In the event a Participant fails, for any reason other than a
billing dispute as described in subsection (c) of this Section
21.2, to pay when due in accordance with NEPOOL procedures all
amounts invoiced to it by NEPOOL, or by the ISO on behalf of
NEPOOL, or the Participant fails to perform any other
obligation under the Agreement or the Tariff, and such failure
continues for at least ten days, NEPOOL may notify the
Participant that it is in default and may initiate a proceeding
before the Commission to terminate such Participant's
status as a Participant. Pending Commission action on such
termination, NEPOOL may suspend service, in whole or part, to
the Participant on or after 50 days after the giving of such
notice and the initiation of such proceeding, in accordance with
Commission policy, unless the Participant cures the default
within such 50-day period.
(e) If the status of a Participant as a Participant is terminated
pursuant to this Section 21.2 or any other provision of this
Agreement, such former Participant's generation and transmission
facilities shall continue to be subject to such NEPOOL or other
requirements relating to reliability as the Commission
may approve in acting on the termination, for so long as the
Commission may direct. Further, if any of such former
Participant's transmission facilities are required in order to
permit transactions among any of the remaining Participants
pursuant to this Agreement or the Tariff, all pending requests
for transmission service under the Tariff relating to such
Participant's facilities shall be followed to completion under
the Participant's own tariff and all existing service over the
Participant's facilities shall continue to be provided under the
Tariff for a period of three years. It is the intent of this
subsection that no such termination should be allowed to
jeopardize the reliability of the bulk power facilities of any
remaining Participant or should be allowed to impose any
unreasonable financial burden on any remaining Participant.
(f) No such termination of a Participant's status as a Participant
shall affect any obligation of, or to, such former Participant
arising prior to the effective time of such termination.
21.3 Assignment. The Agreement shall inure to the benefit of, and shall be
binding upon, the successors and assigns of the respective signatories
hereto, but no assignment of a signatory's interests or obligations
under the Agreement or any portion thereof shall be made without the
written consent of the Management Committee, except as otherwise
permitted by the Tariff, or except in connection with a sale, merger,
or consolidation which results in the transfer of all or a portion of a
signatory's generation or transmission assets to, and the assumption of
all of the obligations of the signatory under this Agreement (or in the
case of a transfer of a portion of a signatory's generation or
transmission assets, the assumption of obligations of the signatory
under this Agreement with respect to such assets) by, an acquiring or
surviving Entity which either is, or concurrently becomes, a
Participant, or agrees to assume such of the signatory's obligations
with respect to such assets as the Management Committee may reasonably
require, or except in connection with the grant of a security interest
in a Participant's assets as security for bonds or other financing.
21.4 Force Majeure. A Participant shall not be considered to be in default
in respect of any obligation hereunder if prevented from fulfilling
such obligation by an event of Force Majeure. An event of Force
Majeure means any act of God, labor disturbance, act of the public
enemy, war, insurrection, riot, fire, storm or flood, explosion,
breakage or accident to machinery or equipment not due to lack of
proper care or maintenance, any order, regulation or restriction
imposed by a court or governmental military or lawfully established
civilian authorities, or any other cause beyond a Participant's
control, provided that no Force Majeure shall excuse any payment
obligation hereunder. A Participant whose performance under this
Agreement is hindered by an event of Force Majeure shall make all
reasonable efforts to perform its obligations under this Agreement, and
shall promptly notify the Management Committee of the commencement and
end of any event of Force Majeure.
21.5 Waiver of Defaults. No waiver of the performance by a Participant of
any obligation under this Agreement or with respect to any default or
any other matter arising in connection with this Agreement shall be
effective unless given by the Management Committee. Any such waiver by
the Management Committee in any particular instance shall not be deemed
a waiver with respect to any subsequent performance, default or
matter.
21.6 Other Contracts. No Participant shall be a party to any other
agreement which in any manner is inconsistent with its obligations
under this Agreement.
21.7 Liability and Insurance.
(a) Each Participant will indemnify and save each of the other
Participants, its officers, directors and Related Persons (each
an "Indemnified Party") harmless from and against all actions,
claims, demands, costs, damages and liabilities asserted by a
third party against the Indemnified Party seeking
indemnification and arising out of or relating to bodily injury,
death or damage to property caused by or sustained on facilities
owned or controlled by such Participant that are the subject of
this Agreement, or caused by a failure to act in accordance
with this Agreement by the Participant from which
indemnification is sought, except (i) to the extent that such
liabilities result from the negligence or willful misconduct of
the Participant seeking indemnification, and (ii) each
Participant shall be responsible for all claims of its own
employees, agents and servants growing out of any workmen's
compensation law. The amount of any indemnity payment under the
provisions of this Section 21.7 shall be reduced (including,
without limitation, retroactively) by any insurance proceeds or
other amounts actually recovered by the Indemnified Party in
respect of the indemnified action, claim, demand, cost, damage
or liability. Notwithstanding the foregoing, no Participant
shall be liable to any Indemnified Party for any claim for loss
of profits or revenues, attorneys fees or costs, cost of capital
or financing, loss of goodwill or cost of replacement power
arising from a Participant's carrying out, or failing to carry
out, any obligations contemplated by this Agreement or for any
other indirect, incidental, special, consequential, punitive, or
multiple damages or loss; provided, however, that nothing herein
shall reduce or limit the obligations of any Participant to Non-
Participants.
(b) Each Participant shall furnish, at its sole expense, such
insurance coverage as the Management Committee may reasonably
require with respect to its obligation pursuant to Section
21.7(a).
21.8 Records and Information. Each Participant shall keep such records as
may reasonably be required by a NEPOOL committee or the System
Operator, and shall furnish to such committee or the System Operator
such records, reports and information (including forecasts) as it may
reasonably require, provided the confidentiality thereof is protected
in accordance with NEPOOL's information policy.
21.9 Consistency with NPCC and NERC Standards. The standards, criteria and
rules adopted by NEPOOL committees under this Agreement shall be
consistent with those adopted by the Northeast Power Coordinating
Council and the North American Electric Reliability Council or any
successor to either.
21.10 Construction.
(a) The Table of Contents contained in this Agreement and the
headings of the Sections of this Agreement are intended for
convenience only and shall not be deemed to be part of this
Agreement or considered in construing it.
(b) This Agreement shall be interpreted, construed and governed in
accordance with the laws of the State of Connecticut.
21.11 Amendment. This Agreement, including the Tariff, and any attachment or
exhibit hereto may be amended from time to time by an instrument signed
by Participants having aggregate Voting Shares equal to at least 70% of
the Voting Shares of all Participants; provided that an amendment shall
not become effective if two or more Participants which are not Related
Persons of each other and which have aggregate Voting Shares at least
equal to 20% of the Voting Shares of all Participants give notice
to the Secretary of the Management Committee that they object to the
amendment within thirty days after the giving of notice to them of the
prospective effectiveness of the amendment. In determining whether the
20% requirement has been met, the following limitation shall be
applied: if the Voting Share of any objecting Participant exceeds 18%,
such Participant's Voting Share for this purpose shall be reduced to
18%.
Any amendment to this Agreement shall be in writing and shall become
effective on the date specified in the amendment, subject to acceptance
or approval by the Commission, whether or not the remaining
Participants agree, provided that the remaining Participants shall have
been given written notice of the prospective effectiveness of
such amendment at least thirty days prior to the effective date of such
amendment, and provided further, that such an amendment does not impose
a burden on such remaining Participants which is materially different
in nature or materially greater in degree than that imposed on the
Participants which have agreed to such amendment. Such notice
shall be accompanied by a form of notice which may be signed and
returned to the Secretary of the Management Committee to state a
Participant's objection to the amendment. Any Participant which has
given notice of its objection to such amendment shall be entitled to
terminate its status as a Participant effective as of the effective
date of such amendment by giving to the Secretary of the Management
Committee written notice of such termination within thirty days after
notice has been given to it of the prospective effectiveness of such
amendment. Effective as of thirty days after the giving of such notice
of the prospective effectiveness of such amendment, any Participant
which has not previously given notice of its objection to such
amendment and which does not give notice of termination of status as
herein provided within such thirty-day period shall thereafter be bound
by such amendment; provided that nothing herein shall be construed to
prevent any Participant from challenging any proposed amendment before
a court or regulatory agency on the ground that the proposed amendment
or its application to the Participant is in violation of law or of this
Section 21.11.
21.12 Termination. This Agreement shall continue in effect until terminated,
in accordance with the Commission's regulations, by Participants
represented by members of the Management Committee having Voting Shares
equal to at least 70% of the Voting Shares of all Participants. No such
termination shall relieve any party of any obligation arising prior to
the effective time of such termination.
21.13 Notices to Participants.
(a) Any notice, demand, request or other communication required or
authorized by this Agreement to be given to any Participant
shall be in writing, and shall be (1) personally delivered to
the Management Committee member or alternate appointed by the
Participant; (2) mailed, postage prepaid, to the Participant at
the address of its member on the Management Committee as set out
in the NEPOOL roster; (3) sent by facsimile ("faxed") to the
Participant at the fax number of its member on the Management
Committee as set out in the NEPOOL roster; or (4) delivered
electronically to the Participant at the electronic mail address
of its member on the Management Committee or at the address of
its principal office. The designation of any such address may
be changed at any time by written notice delivered to the
Secretary of the Management Committee, who shall cause such
change to be reflected in the NEPOOL roster.
(b) Any notice, demand, request or other communication required or
authorized by this Agreement to be given to any NEPOOL committee
shall be in writing and shall be delivered to the Secretary of
the committee. Each such notice shall either be personally
delivered to the Secretary, mailed, postage prepaid, or sent
by facsimile ("faxed") to the Secretary at the address or fax
number set out in the NEPOOL roster, or delivered electronically
to the Secretary. The designation of such address may be changed
at any time by written notice delivered to each Participant.
(c) Any such notice, demand or request so addressed and mailed by
registered or certified mail shall be deemed to be given when so
mailed. Any such notice, demand, request or other communication
sent by regular mail or by facsimile ("faxed") or delivered
electronically shall be deemed given when received by
the Participant or by the Secretary of the committee, whichever
is applicable.
21.14 Severability and Renegotiation. If any provision of this Agreement is
held by a court or regulatory authority of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall continue in full
force and effect and shall in no way be affected, impaired or
invalidated, except as otherwise explicitly provided in this Section.
If any provision of this Agreement is held by a court or regulatory
authority of competent jurisdiction to be invalid, void or
unenforceable, or if the Agreement is modified or conditioned by a
regulatory authority exercising jurisdiction over this Agreement, the
Participants shall endeavor in good faith to negotiate such amendment
or amendments to this Agreement as will restore the relative benefits
and obligations of the Participants under this Agreement immediately
prior to such holding, modification or condition. If after sixty days
such negotiations are unsuccessful the Participants may exercise their
withdrawal or termination rights under this Agreement.
21.15 No Third-Party Beneficiaries. Except for the provisions of this
Agreement and the Tariff which provide for service to Non-Participants,
this Agreement is intended to be solely for the benefit of the
Participants and their respective successors and permitted assigns and,
unless expressly stated herein, is not intended to and shall not confer
any rights or benefits on any third party (other than successors and
permitted assigns) not a signatory hereto.
21.16 Counterparts. This Agreement may be executed in any number of
counterparts, and each executed counterpart shall have the same force
and effect as an original instrument and as if all the parties to all
of the counterparts had signed the same instrument. Any signature page
of this Agreement may be detached from any counterpart of this
Agreement without impairing the legal effect of any signatures thereon,
and may be attached to another counterpart of this Agreement identical
in form hereto but having attached to it one or more signature pages.
IN WITNESS WHEREOF, the signatories have caused this Agreement to be
executed by their duly authorized officers or representatives.
<PAGE>
ATTACHMENT A
TO RESTATED
NEPOOL AGREEMENT
METHODOLOGY FOR
DETERMINATION OF
TRANSMISSION FLOWS
<PAGE>
The methodology for determining parallel path transmission flows to be
used in determining the distribution of revenues received for Regional Network
Service provided during the Transition Period, or for Through or Out Service,
is as follows, and shall be determined (1) on the basis of the flows for all
transactions in the NEPOOL Control Area ("Regional Flows") for the purpose of
allocating during the Transition Period Regional Network Service revenues, and
(2) on the basis of the flows for the particular transaction ("Transaction
Flows") for the purpose of allocating revenues during or after the Transition
Period from the furnishing of Through or Out Service:
A. Responsibility for Calculations
The calculation of megawatt mile allocations in accordance with this
methodology shall be performed under the direction of the Regional Transmission
Planning Committee ("RTPC").
B. Periodic Review
Calculations of MW-Mile allocations shall be performed whenever
significant changes to the transmission system load flows, as determined by the
RTPC, occur.
C. Facilities Included in the Analysis
1. Transmission Lines
A calculation of MW-miles shall be determined for all
PTF lines.
2. Generators
The analysis shall include all generators with a Winter
Capability equal to or greater than 10.0 MW. Multiple
generators connected to a single bus with a total Winter
Capability equal to or greater than 10.0 MW shall also
be included.
3. Transformers
All transformers connecting PTF transmission lines shall
be included in the analysis.
D. Determination of Rate Distribution
1. General
Modeling of the transmission system shall be performed
using a system simulation program and associated cases
as approved by the RTPC.
2. Determination of Regional Flows
The change in real power flow (MW) over each
transmission line and transformer shall be determined
for each generator (or group of generators on a single
bus) by determining the absolute value of the
difference between the flows on each facility with the
generator(s) modeled off and while operating at its net
Winter Capability. In addition, a generator shall be
simulated at each transmission line tie to the NEPOOL
Control Area and changes in flow determined for this
generator off or while generating at a level of 100 MW.
Loads throughout the NEPOOL Control Area shall be
proportionally scaled to account for differences in
generator output and electrical losses. The changes in
flow shall be multiplied by the length of each
respective line. Changes in flow through transformers
shall be multiplied by a factor of five. Changes in
flow through phase-shifting transformers shall be
multiplied by a factor of ten. The resulting values
represent the MW-miles associated with each facility.
3. Determination of Transaction Flows
a. Definition of Supply and Receipt Areas
For the purposes of these calculations, areas of
supply and receipt shall be determined by the
RTPC. These areas shall be based on the system
boundaries of each Local Network.
b. Calculation of MW-Miles
The change in real power flow (MW) over each
transmission line and transformer shall be
determined for each combination of supply and
receipt areas by determining the absolute value
of the difference between the flows on each
facility following a scaled increase of the
supplying areas generation by 100 MW. Loads in
the area of receipt shall be scaled to account
for changes in generation and electrical losses.
In instances where the areas of supply and/or
receipt are outside the NEPOOL Control Area, the
changes in real power flow will be determined
only for facilities within the NEPOOL Control
Area. The changes in flow shall then be
multiplied by the length of each respective line.
Changes in flow through transformers shall be
multiplied by a factor of five. Changes in flow
through phase-shifting transformers shall
be multiplied by a factor of ten. The resulting
values represent the MW-miles associated with
each facility.
4. Assignment of MW-Miles to Participants
Each Participant shall have assigned to it the MW-miles
associated with each PTF facility for which it has full
ownership. Each Participant shall also be assigned MW-
miles in proportion to the percentage of its ownership
of jointly-owned facilities or the percentage of its
support for facilities for which it provides support.
<PAGE>
ATTACHMENT B
TO RESTATED
NEPOOL
AGREEMENT
NEPOOL OPEN ACCESS
TRANSMISSION TARIFF
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 1
TABLE OF CONTENTS
I. COMMON SERVICE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . .10
1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
1.1 Administrative Costs. . . . . . . . . . . . . . . . . . . . .10
1.2 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .10
1.3 Ancillary Services. . . . . . . . . . . . . . . . . . . . . .11
1.4 Annual Transmission Revenue Requirements. . . . . . . . . . .11
1.5 Application . . . . . . . . . . . . . . . . . . . . . . . . .11
1.6 Commission. . . . . . . . . . . . . . . . . . . . . . . . . .11
1.7 Completed Application . . . . . . . . . . . . . . . . . . . .12
1.8 Control Area. . . . . . . . . . . . . . . . . . . . . . . . .12
1.9 Curtailment . . . . . . . . . . . . . . . . . . . . . . . . .13
1.10 Delivering Party . . . . . . . . . . . . . . . . . . . .13
1.11 Designated Agent . . . . . . . . . . . . . . . . . . . .13
1.12 Direct Assignment Facilities . . . . . . . . . . . . . .13
1.13 Eligible Customer. . . . . . . . . . . . . . . . . . . .14
1.14 Energy Imbalance Service . . . . . . . . . . . . . . . .15
1.15 Excepted Transaction . . . . . . . . . . . . . . . . . .15
1.16 Facilities Study . . . . . . . . . . . . . . . . . . . .15
1.17 Firm Point-To-Point Transmission Service . . . . . . . .15
1.18 Firm Transmission Service. . . . . . . . . . . . . . . .15
1.19 Good Utility Practice. . . . . . . . . . . . . . . . . .16
1.20 Interest . . . . . . . . . . . . . . . . . . . . . . . .16
1.21 Interruption . . . . . . . . . . . . . . . . . . . . . .17
1.22 ISO. . . . . . . . . . . . . . . . . . . . . . . . . . .17
1.23 Load Ratio Share . . . . . . . . . . . . . . . . . . . .17
1.24 Load Shedding. . . . . . . . . . . . . . . . . . . . . .17
1.25 Local Network. . . . . . . . . . . . . . . . . . . . . .17
1.26 Local Network Service. . . . . . . . . . . . . . . . . .18
1.27 Local Point-To-Point Service . . . . . . . . . . . . . .18
1.28 Long-Term Firm Point-To-Point Transmission
Service . . . . . . . . . . . . . . . . . . . . . . . .19
1.29 Native Load Customers. . . . . . . . . . . . . . . . . .19
1.30 NEPOOL . . . . . . . . . . . . . . . . . . . . . . . . .19
1.31 NEPOOL Control Area. . . . . . . . . . . . . . . . . . .19
1.32 NEPOOL Transmission System . . . . . . . . . . . . . . .20
1.33 Network Customer . . . . . . . . . . . . . . . . . . . .20
1.34 Network Integration Transmission Service . . . . . . . .20
1.35 Network Load . . . . . . . . . . . . . . . . . . . . . .20
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 2
1.36 Network Operating Agreement. . . . . . . . . . . . . . .20
1.37 Network Operating Committee. . . . . . . . . . . . . . .21
1.38 Network Resource . . . . . . . . . . . . . . . . . . . .21
1.39 Network Upgrades . . . . . . . . . . . . . . . . . . . .22
1.40 Non-Firm Point-to-Point Transmission Service:. . . . . .22
1.41 Non-Participant. . . . . . . . . . . . . . . . . . . . .22
1.42 Non-PTF. . . . . . . . . . . . . . . . . . . . . . . . .22
1.43 Open Access Same-Time Information System
(OASIS) . . . . . . . . . . . . . . . . . . . . . . . .22
1.44 Operating Reserve - 10-Minute Non-Spinning
Reserve Service . . . . . . . . . . . . . . . . . . . .23
1.45 Operating Reserve - 10-Minute Spinning Reserve Service .23
1.46 Operating Reserve - 30-Minute Reserve Service. . . . . .23
1.47 Participant. . . . . . . . . . . . . . . . . . . . . . .23
1.48 Participant RNS Rate . . . . . . . . . . . . . . . . . .23
1.49 Point(s) of Delivery . . . . . . . . . . . . . . . . . .23
1.50 Point(s) of Receipt. . . . . . . . . . . . . . . . . . .24
1.51 Point-To-Point Transmission Service. . . . . . . . . . .24
1.52 Pool PTF Rate. . . . . . . . . . . . . . . . . . . . . .24
1.53 Pool RNS Rate. . . . . . . . . . . . . . . . . . . . . .24
1.54 Power Purchaser. . . . . . . . . . . . . . . . . . . . .25
1.55 PTF or Pool Transmission Facilities. . . . . . . . . . .25
1.56 Pre-1997 PTF Rate. . . . . . . . . . . . . . . . . . . .25
1.57 Reactive Supply and Voltage Control From
Generation Sources Service . . . . . . . . . . . . . . .25
1.58 Receiving Party. . . . . . . . . . . . . . . . . . . . .25
1.59 Regional Network Service . . . . . . . . . . . . . . . .26
1.60 Regulation and Frequency Response Service. . . . . . . .26
1.61 Reserved Capacity. . . . . . . . . . . . . . . . . . . .26
1.62 Scheduling, System Control and Dispatch
Service. . . . . . . . . . . . . . . . . . . . . . . . .26
1.63 Service Agreement. . . . . . . . . . . . . . . . . . . .26
1.64 Service Commencement Date. . . . . . . . . . . . . . . .27
1.65 Short-Term Firm Point-To-Point Transmission
Service . . . . . . . . . . . . . . . . . . . . . . . .27
1.66 System Impact Study. . . . . . . . . . . . . . . . . . .27
1.67 System Operator. . . . . . . . . . . . . . . . . . . . .28
1.68 Tariff . . . . . . . . . . . . . . . . . . . . . . . . .28
1.69 Third-Party Sale . . . . . . . . . . . . . . . . . . . .28
1.70 Through or Out Service . . . . . . . . . . . . . . . . .28
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 3
1.71 Tie Benefit. . . . . . . . . . . . . . . . . . . . . . .29
1.72 Tie Benefit Service. . . . . . . . . . . . . . . . . . .29
1.73 Transition Period. . . . . . . . . . . . . . . . . . . .30
1.74 Transmission Customer. . . . . . . . . . . . . . . . . .30
1.75 Transmission Provider. . . . . . . . . . . . . . . . . .31
1.76 Year . . . . . . . . . . . . . . . . . . . . . . . . . .31
2 Purpose of This Tariff . . . . . . . . . . . . . . . . . . . . . .31
3 Initial Allocation and Renewal Procedures. . . . . . . . . . . . .33
3.1 Initial Allocation of Available Transmission Capability . . .33
3.2 Reservation Priority For Existing Firm Service Customers. . .34
4 Ancillary Services . . . . . . . . . . . . . . . . . . . . . . . .36
4.1 Scheduling, System Control and Dispatch
Service . . . . . . . . . . . . . . . . . . . . . . . . . . .38
4.2 Reactive Supply and Voltage Control from
Generation Sources Service. . . . . . . . . . . . . . . . . .38
4.3 Regulation and Frequency Response Service . . . . . . . . . .38
4.4 Energy Imbalance Service. . . . . . . . . . . . . . . . . . .38
4.5 Operating Reserve - 10 Minute Spinning Reserve Service. . . .38
4.6 Operating Reserve - 10 Minute Non-Spinning
Reserve Service . . . . . . . . . . . . . . . . . . . . . . .39
4.7 Operating Reserve - 30 Minute Reserve Service . . . . . . . .39
5 Open Access Same-Time Information System (OASIS) . . . . . . . . .39
6 Local Furnishing and Other Tax-Exempt Bonds. . . . . . . . . . . .40
6.1 Participants That Own Facilities Financed by
Local Furnishing or Other Tax-Exempt Bonds. . . . . . . . . .40
6.2 Alternative Procedures for Requesting
Transmission Service - Local Furnishing Bonds . . . . . . . .41
Transmission Service - Other Tax-Exempt Bonds . . . . . . . .42
7 Reciprocity. . . . . . . . . . . . . . . . . . . . . . . . . . . .43
8 Billing and Payment; Accounting. . . . . . . . . . . . . . . . . .44
8.1 Participant Billing Procedure . . . . . . . . . . . . . . . .44
8.2 Non-Participant Billing Procedure . . . . . . . . . . . . . .44
8.3 Interest on Unpaid Balances . . . . . . . . . . . . . . . . .45
8.4 Customer Default. . . . . . . . . . . . . . . . . . . . . . .46
8.5 Study Costs and Revenues. . . . . . . . . . . . . . . . . . .47
9 Regulatory Filings . . . . . . . . . . . . . . . . . . . . . . . .48
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 4
10 Force Majeure and Indemnification. . . . . . . . . . . . . . . . .49
10.1 Force Majeure. . . . . . . . . . . . . . . . . . . . . .49
10.2 Indemnification. . . . . . . . . . . . . . . . . . . . .50
11 Creditworthiness . . . . . . . . . . . . . . . . . . . . . . . . .51
12 Dispute Resolution Procedures. . . . . . . . . . . . . . . . . . .52
12.1 Internal Dispute Resolution Procedures . . . . . . . . .52
12.2 Rights Under The Federal Power Act . . . . . . . . . . .53
13 Stranded Costs . . . . . . . . . . . . . . . . . . . . . . . . . .53
13.1 General. . . . . . . . . . . . . . . . . . . . . . . . .53
13.2 Commission Requirements. . . . . . . . . . . . . . . . .55
13.3 Wholesale Contracts. . . . . . . . . . . . . . . . . . .55
13.4 Right to Seek or Contest Recovery Unimpaired . . . . . .55
II. REGIONAL NETWORK SERVICE. . . . . . . . . . . . . . . . . . . . . . . .56
14 Nature of Regional Network Service . . . . . . . . . . . . . . . .56
15 Availability of Regional Network Service . . . . . . . . . . . . .57
15.1 Provision of Regional Network Service. . . . . . . . . .57
15.2 Eligibility to Receive Regional Network
Service . . . . . . . . . . . . . . . . . . . . . . . .58
16 Payment for Regional Network Service . . . . . . . . . . . . . . .59
17 Procedure for Obtaining Regional Network Service . . . . . . . . .60
III. THROUGH OR OUT SERVICE; TIE BENEFIT SERVICE. . . . . . . . . . . .62
18 Through or Out Service . . . . . . . . . . . . . . . . . . . . . .62
18.1 Provision of Through or Out Service. . . . . . . . . . .62
18.2 Use of Through or Out Service. . . . . . . . . . . . . .62
19 Payment for Through or Out Service . . . . . . . . . . . . . . . .63
20 Reservation of Capacity for Through or Out Service . . . . . . . .64
21 Tie Benefit Service. . . . . . . . . . . . . . . . . . . . . . . .65
22 Payment for Tie Benefit Service. . . . . . . . . . . . . . . . . .65
IV. SERVICE DURING THE TRANSITION PERIOD;
EXCEPTED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . .66
23 Transition Arrangements. . . . . . . . . . . . . . . . . . . . . .66
24 Transition Payments. . . . . . . . . . . . . . . . . . . . . . . .66
25 Excepted Transactions. . . . . . . . . . . . . . . . . . . . . . .67
V. THROUGH OR OUT SERVICE AS POINT-TO-POINT TRANSMISSION SERVICE . . . . .73
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
26 Nature of Review . . . . . . . . . . . . . . . . . . . . . . . . .74
27 Nature of Firm Point-To-Point Transmission
Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
27.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . .75
27.2 Reservation Priority . . . . . . . . . . . . . . . . . .75
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 5
27.3 Use of Firm Point-To-Point Transmission
Service by the Participants That Own PTF. . . . . . . .77
27.4 Service Agreements . . . . . . . . . . . . . . . . . . .77
27.5 Transmission Customer Obligations for Facility Additions
or Redispatch Costs. . . . . . . . . . . . . . . . . . .78
27.6 Curtailment of Firm Transmission Service . . . . . . . .79
27.7 Classification of Firm Point-To-Point
Transmission Service . . . . . . . . . . . . . . . . . .81
27.8 Scheduling of Firm Point-To-Point Transmission Service .84
28 Nature of Non-Firm Point-To-Point Transmission
Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
28.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . .85
28.2 Reservation Priority . . . . . . . . . . . . . . . . . .86
28.3 Use of Non-Firm Point-To-Point Transmission
Service by the Transmission Provider . . . . . . . . . .87
28.4 Service Agreements . . . . . . . . . . . . . . . . . . .88
28.5 Classification of Non-Firm Point-To-Point Transmission
Service. . . . . . . . . . . . . . . . . . . . . . . . .88
28.6 Scheduling of Non-Firm Point-to-Point
Transmission Service:. . . . . . . . . . . . . . . . . .90
28.7 Curtailment or Interruption of Service . . . . . . . . .92
29 Service Availability . . . . . . . . . . . . . . . . . . . . . . .94
29.1 General Conditions . . . . . . . . . . . . . . . . . . .94
29.2 Determination of Available Transmission
Capability . . . . . . . . . . . . . . . . . . . . . . .94
29.3 Initiating Service in the Absence of an
Executed Service Agreement . . . . . . . . . . . . . . .95
29.4 Obligation to Provide Transmission Service that Requires
Expansion or Modification of the Transmission System . .96
29.5 Deferral of Service. . . . . . . . . . . . . . . . . . .97
29.6 Real Power Losses. . . . . . . . . . . . . . . . . . . .97
30 Transmission Customer Responsibilities . . . . . . . . . . . . . .98
30.1 Conditions Required of Transmission Customers. . . . . .98
30.2 Transmission Customer Responsibility for
Third-Party Arrangements. . . . . . . . . . . . . . . .99
31 Procedures for Arranging Firm Point-To-Point
Transmission Service . . . . . . . . . . . . . . . . . . . . . . 100
31.1 Application. . . . . . . . . . . . . . . . . . . . . . 100
31.2 Completed Application. . . . . . . . . . . . . . . . . 101
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 6
31.3 Deposit. . . . . . . . . . . . . . . . . . . . . . . . 103
31.4 Notice of Deficient Application. . . . . . . . . . . . 105
31.5 Response to a Completed Application. . . . . . . . . . 106
31.6 Execution of Service Agreement . . . . . . . . . . . . 107
31.7 Extensions for Commencement of Service . . . . . . . . 108
32 Procedures for Arranging Non-Firm Point-To-Point Transmission
Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
32.1 Application. . . . . . . . . . . . . . . . . . . . . . 109
32.2 Completed Application: . . . . . . . . . . . . . . . . 110
32.3 Reservation of Non-Firm Point-To-Point
Transmission Service: .. . . . . . . . . . . . . . . . 111
32.4 Determination of Available Transmission
Capability . . . . . . . . . . . . . . . . . . . . . . 112
33 Additional Study Procedures For Firm Point-To-Point Transmission
Service Requests . . . . . . . . . . . . . . . . . . . . . . . . 113
33.1 Notice of Need for System Impact Study . . . . . . . . 113
33.2 System Impact Study Agreement and Cost
Reimbursement. . . . . . . . . . . . . . . . . . . . . 115
33.3 System Impact Study Procedures . . . . . . . . . . . . 116
33.4 Facilities Study Procedures. . . . . . . . . . . . . . 118
33.5 Facilities Study Modifications . . . . . . . . . . . . 121
33.6 Due Diligence in Completing New Facilities . . . . . . 121
33.7 Partial Interim Service. . . . . . . . . . . . . . . . 122
33.8 Expedited Procedures for New Facilities. . . . . . . . 123
34 Procedures if New Transmission Facilities for Firm
Point-To-Point Transmission Service Cannot be
Completed. . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
34.1 Delays in Construction of New Facilities . . . . . . . 124
34.2 Alternatives to the Original Facility
Additions. . . . . . . . . . . . . . . . . . . . . . . 125
34.3 Refund Obligation for Unfinished Facility
Additions. . . . . . . . . . . . . . . . . . . . . . . 127
35 Provisions Relating to Transmission Construction and Services on
the Systems of Other Utilities . . . . . . . . . . . . . . . . . 128
35.1 Responsibility for Third-Party System
Additions. . . . . . . . . . . . . . . . . . . . . . . 128
35.2 Coordination of Third-Party System Additions . . . . . 128
36 Changes in Service Specifications. . . . . . . . . . . . . . . . 130
36.1 Modifications on a Non-Firm Basis. . . . . . . . . . . 130
36.2 Modification on a Firm Basis . . . . . . . . . . . . . 132
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 7
37 Sale, Assignment or Transfer of Transmission
Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
37.1 Procedures for Sale, Assignment or Transfer of Service 133
37.2 Limitations on Assignment or Transfer of
Service. . . . . . . . . . . . . . . . . . . . . . . . 134
37.3 Information on Assignment or Transfer of
Service. . . . . . . . . . . . . . . . . . . . . . . . 135
38 Metering and Power Factor Correction at Receipt and Delivery
Points(s). . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
38.1 Transmission Customer Obligations. . . . . . . . . . . 135
38.2 NEPOOL Access to Metering Data . . . . . . . . . . . . 136
38.3 Power Factor . . . . . . . . . . . . . . . . . . . . . 136
39 Compensation for New Facilities and Redispatch
Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
VI. REGIONAL NETWORK SERVICE (INCLUDING NETWORK INTEGRATION TRANSMISSION
SERVICE). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
40 Nature of Network Integration Transmission
Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
40.1 Scope of Service . . . . . . . . . . . . . . . . . . . 138
40.2 Transmission Provider Responsibilities . . . . . . . . 138
40.3 Network Integration Transmission Service . . . . . . . 139
40.4 Secondary Service. . . . . . . . . . . . . . . . . . . 140
40.5 Real Power Losses. . . . . . . . . . . . . . . . . . . 140
40.6 Restrictions on Use of Service . . . . . . . . . . . . 141
41 Initiating Service . . . . . . . . . . . . . . . . . . . . . . . 141
41.1 Condition Precedent for Receiving Service. . . . . . . 141
41.2 Application Procedures . . . . . . . . . . . . . . . . 142
41.3 Technical Arrangements to be Completed Prior to
Commencement of Service. . . . . . . . . . . . . . . . 147
41.4 Network Customer Facilities. . . . . . . . . . . . . . 148
41.5 Filing of Service Agreement. . . . . . . . . . . . . . 148
42 Network Resources. . . . . . . . . . . . . . . . . . . . . . . . 148
42.1 Designation of Network Resources . . . . . . . . . . . 148
42.2 Designation of New Network Resources . . . . . . . . . 149
42.3 Termination of Network Resources . . . . . . . . . . . 149
42.4 Operation of Network Resources . . . . . . . . . . . . 150
42.5 Network Customer Redispatch Obligation . . . . . . . . 150
42.6 Transmission Arrangements for Network
Resources Not Physically Interconnected With
The NEPOOL Transmission System. . . . . . . . . . . . 150
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 8
42.7 Limitation on Designation of Network
Resources. . . . . . . . . . . . . . . . . . . . . . . 151
42.8 Use of Interface Capacity by the Network
Customer . . . . . . . . . . . . . . . . . . . . . . . 151
43 Designation of Network Load. . . . . . . . . . . . . . . . . . . 152
43.1 Network Load . . . . . . . . . . . . . . . . . . . . . 152
43.2 New Network Loads Connected With the NEPOOL
Transmission System . . . . . . . . . . . . . . . . . 152
43.3 Network Load Not Physically Interconnected
with the NEPOOL Transmission System . . . . . . . . 153
43.4 New Interconnection Points . . . . . . . . . . . . . . 154
43.5 Changes in Service Requests. . . . . . . . . . . . . . 155
43.6 Annual Load and Resource Information Updates . . . . . 155
44 Additional Study Procedures For Network Integration Transmission
Service Requests . . . . . . . . . . . . . . . . . . . . . . . . 156
44.1 Notice of Need for System Impact Study . . . . . . . . 156
44.2 System Impact Study Agreement and Cost
Reimbursement . . . . . . . . . . . . . . . . . . . . . . . 158
44.3 System Impact Study Procedures . . . . . . . . . . . . 160
44.4 Facilities Study Procedures. . . . . . . . . . . . . . 161
45 Load Shedding and Curtailments . . . . . . . . . . . . . . . . . 164
45.1 Procedures . . . . . . . . . . . . . . . . . . . . . . 164
45.2 Transmission Constraints . . . . . . . . . . . . . . . 164
45.3 Cost Responsibility for Relieving Transmission
Constraints. . . . . . . . . . . . . . . . . . . . . . 166
45.4 Curtailments of Scheduled Deliveries . . . . . . . . . 166
45.5 Allocation of Curtailments . . . . . . . . . . . . . . 166
45.6 Load Shedding. . . . . . . . . . . . . . . . . . . . . 167
45.7 System Reliability . . . . . . . . . . . . . . . . . . 167
46 Rates and Charges . . . . . . . . . . . . . . . . . . . . . . . 169
46.1 Determination of Network Customer's Monthly
Network Load. .. . . . . . . . . . . . . . . . . . . . 169
46.2 Redispatch Charge. . . . . . . . . . . . . . . . . . . 170
47 Operating Arrangements . . . . . . . . . . . . . . . . . . . . . 170
47.1 Operation under The Network Operating
Agreement . . . . . . . . . . . . . . . . . . . . . . 170
47.2 Network Operating Agreement. . . . . . . . . . . . . . 171
47.3 Network Operating Committee. . . . . . . . . . . . . . 173
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 9
SCHEDULE 1 Scheduling, System Control and Dispatch Service . . . . . . 174
SCHEDULE 2 Reactive Supply and Voltage Control from
Generation Sources Service . . . . . . . . . . . . . . . . 177
SCHEDULE 3 Regulation and Frequency Response Service
(Automatic Generator Control) . . . . . . . . . . . . . . . 179
SCHEDULE 4 Energy Imbalance Service. . . . . . . . . . . . . . . . . . 182
SCHEDULE 5 Operating Reserve - 10-Minute Spinning Reserve Service. . . 183
SCHEDULE 6 Operating Reserve - 10-Minute Non-Spinning Reserve Service. 186
SCHEDULE 7 Operating Reserve - 30-Minute Reserve Service . . . . . . . 189
SCHEDULE 8 Through or Out Service -The Pool PTF Rate . . . . . . . . . 192
SCHEDULE 9 Regional Network Service. . . . . . . . . . . . . . . . . . 194
SCHEDULE 10 Tie Benefit Service . . . . . . . . . . . . . . . . . . . . 201
SCHEDULE 11 Transition Payments . . . . . . . . . . . . . . . . . . . . 202
ATTACHMENT A Form of Service Agreement for Through or Out Service or
Other Point-To-PointTransmission Service . . . . . . . . . 204
ATTACHMENT B Form Of Service Agreement For Regional Network Service,
including Network Integration Transmission Service . . . . 209
ATTACHMENT C Methodology To Assess Available Transmission Capability . . 211
ATTACHMENT D Methodology for Completing a System Impact
Study . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
ATTACHMENT E Local Networks. . . . . . . . . . . . . . . . . . . . . . . 215
ATTACHMENT F Annual Transmission Revenue Requirements. . . . . . . . . . 216
ATTACHMENT G List Of Excepted Transaction Agreements . . . . . . . . . . 223
ATTACHMENT G-1 Agreements re Local Network Service . . . . . . . . . . . . 250
ATTACHMENT H Form of Network Operating Agreement . . . . . . . . . . . . 251
ATTACHMENT I Form of System Impact Study Agreement . . . . . . . . . . . 263
ATTACHMENT J Form of Facilities Study Agreement. . . . . . . . . . . . . 271
<PAGE>
FILE NO. 70-
NEPOOL Open Access Transmission Tariff
Original Sheet No. 10
I. COMMON SERVICE PROVISIONS
1 Definitions
Whenever used in this Tariff, in either the singular or plural number,
the following capitalized terms shall have the meanings specified in
Sections 1.1 to 1.76 of this Part I. Terms used in this Tariff but not
defined in Sections 1.1 to 1.76 which are defined in the Agreement
shall have the meanings specified in the Agreement. Terms used in this
Tariff that are not defined in this Tariff or in the Agreement shall
have the meanings customarily attributed to such terms by the electric
utility industry in New England.
1.1 Administrative Costs: Those costs incurred in connection with
the review of Applications for transmission service and the
carrying out of System Impact Studies and Facilities Studies.
1.2 Agreement: The Restated New England Power Pool Agreement dated
as of September 1, 1971, as amended and restated from time to
time, of which this Tariff forms a part.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 11
1.3 Ancillary Services: Those services that are necessary to
support the transmission of electric capacity and energy from
resources to loads while maintaining reliable operation of the
NEPOOL Transmission System in accordance with Good Utility
Practice.
1.4 Annual Transmission Revenue Requirements: The annual revenue
requirements of a Participant's PTF or of all Participants' PTF
for purposes of this Tariff shall be the amount determined in
accordance with Attachment F to this Tariff.
1.5 Application: A written request by an Eligible Customer for
transmission service pursuant to the provisions of this Tariff.
1.6 Commission: The Federal Energy Regulatory Commission and any
regulatory agency succeeding to substantially all of the
authority of the Federal Energy Regulatory Commission with
respect to electric power.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 12
1.7 Completed Application: An Application that satisfies all of the
information and other requirements of this Tariff, including any
required deposit.
1.8 Control Area: An electric power system or combination of
electric power systems to which a common automatic generation
control scheme is applied in order to:
(l) match, at all times, the power output of the generators
within the electric power system(s) and capacity and
energy purchased from entities outside the electric
power system(s), with the load within the electric power
system(s);
(2) maintain scheduled interchange with other Control Areas,
within the limits of Good Utility Practice;
(3) maintain the frequency of the electric power system(s)
within reasonable limits in accordance with Good Utility
Practice and the criteria or the applicable regional
reliability council or the North American Electric
Reliability Council; and
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 13
(4) provide sufficient generating capacity to maintain
operating reserves in accordance with Good Utility
Practice.
1.9 Curtailment: A reduction in firm or non-firm transmission
service in response to a transmission capacity shortage as a
result of system reliability conditions.
1.10 Delivering Party: The entity supplying capacity and/or energy
to be transmitted at Point(s) of Receipt under this Tariff.
1.11 Designated Agent: Any entity that performs actions or functions
required under the Tariff on behalf of NEPOOL, an Eligible
Customer, or a Transmission Customer.
1.12 Direct Assignment Facilities: Facilities or portions of
facilities that are constructed for the sole use/benefit of a
particular Transmission Customer requesting service under this
Tariff. Direct Assignment Facilities shall be specified in the
Service Agreement that governs service to the Transmission
Customer, shall be subject
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 14
to applicable Commission requirements and shall be paid for by
the Transmission Customer in accordance with the Service
Agreement and not under this Tariff.
1.13 Eligible Customer: (i) any Participant; (ii) any electric
utility (including any power marketer), Federal power marketing
agency, or any other entity generating electric energy for sale
or for resale; provided that electric energy sold or produced by
such entity is electric energy produced in the United States,
Canada or Mexico; and provided further, however, that such
entity shall not be eligible to receive transmission service
under this Tariff if such service would be prohibited
by Section 212(h)(2) of the Federal Power Act; and (iii) any
retail customer, or any supplier of retail service, taking
unbundled transmission service pursuant to a state retail access
program, in accordance with the applicable state requirements,
or pursuant to a voluntary offer of unbundled transmission
service by the Participants.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 15
1.14 Energy Imbalance Service: This service is the form of Ancillary
Service described in Schedule 4.
1.15 Excepted Transaction: A transaction specified in Section 25 for
the applicable period specified in that Section.
1.16 Facilities Study: An engineering study conducted pursuant to
the Agreement or this Tariff by the System Operator and/or one
or more affected Participants to determine the required
modifications to the NEPOOL Transmission System, including the
cost and scheduled completion date for such modifications, that
will be required to provide a requested transmission service.
1.17 Firm Point-To-Point Transmission Service: Point-to-Point
Transmission Service which is reserved and/or scheduled between
specified Points of Receipt and Delivery in accordance with the
applicable procedure specified in Part II or Part V of this
Tariff.
1.18 Firm Transmission Service: Service for Native Load Customers,
firm Regional Network Service (including
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 16
Network Integration Transmission Service), service for Excepted
Transactions and Firm Point-to-Point Transmission Service
(including Through or Out Service).
1.19 Good Utility Practice: Any of the practices, methods and acts
engaged in or approved by a significant portion of the electric
utility industry during the relevant time period, or any of the
practices, methods and acts which, in the exercise of reasonable
judgment in light of the facts known at the time the decision
was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business
practices, reliability, safety and expedition. Good Utility
Practice is not intended to be limited to the optimum
practice, method, or act to the exclusion of all others, but
rather includes all acceptable practices, methods, or acts
generally accepted in the region.
1.20 Interest: Interest calculated in the manner specified in Section
8.3
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 17
1.21 Interruption: A reduction in non-firm transmission service due
to economic reasons pursuant to Section 28.7.
1.22 ISO: The independent System Operator which is expected to
assume responsibility for the continued operation of the NEPOOL
Control Area from the NEPOOL control center and the
administration of this Tariff, subject to regulation by the
Commission.
1.23 Load Ratio Share: Ratio of a Transmission Customer's Network
Load to the Participants' total load computed in accordance with
Section 46.1 under Part VI of the Tariff and calculated on a
rolling twelve month average basis.
1.24 Load Shedding: The systematic reduction of system demand by
temporarily decreasing load in response to transmission system
or area capacity shortages, system instability, or voltage
control considerations under Part VI of the Tariff.
1.25 Local Network: The transmission facilities constituting a local
network identified on Attachment E, and any
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 18
other local network or change in the designation of a Local
Network as a Local Network which the Management Committee may
designate or approve from time to time. The Management
Committee may not unreasonably withhold approval of a request by
a Participant that it effect such a change or designation.
1.26 Local Network Service: Local Network Service is the service
provided, under a separate tariff or contract, by a Participant
that is a Transmission Provider to another Participant, or other
entity connected to the Transmission Provider's Local Network to
permit the other Participant or entity to efficiently and
economically utilize its resources to serve its Load.
1.27 Local Point-To-Point Service: Local Point-To-Point service is
service provided, under a separate tariff or contract, by a
Participant that is a Transmission Provider over Non-PTF or
distribution facilities to permit a Participant or other
entity with an Entitlement in a generating unit to deliver the
output of such unit
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 19
to an interconnection point on the NEPOOL Transmission System.
Local Point-To-Point Service may be included as part of Local
Network Service.
1.28 Long-Term Firm Point-To-Point Transmission Service: Firm Point-
To-Point Transmission Service under Part II or V of this Tariff
with a term of one year or more.
1.29 Native Load Customers: The wholesale and retail power customers
of a Participant or other entity which is a Transmission
Provider on whose behalf the Participant or other entity, by
statute, franchise, regulatory requirement, or contract, has
undertaken an obligation to, construct and operate its system to
meet the reliable electric needs of such customers.
1.30 NEPOOL: The New England Power Pool, the power pool created
under and governed by the Agreement, and the entities
collectively participating in the New England Power Pool.
1.31 NEPOOL Control Area: The Control Area (as defined in Section
1.8) for NEPOOL.
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NEPOOL Open Access Transmission Tariff
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1.32 NEPOOL Transmission System: The PTF transmission facilities
owned by the Participants and their Related Persons.
1.33 Network Customer: A Participant or Non-Participant receiving
transmission service pursuant to the terms of the Network
Integration Transmission Service under Part II and Part VI of
the Tariff.
1.34 Network Integration Transmission Service: The transmission
service provided under Part VI of the Tariff.
1.35 Network Load: The load that a Network Customer designates for
Network Integration Transmission Service under Parts II and VI
of the Tariff. The Network Customer's Network Load shall
include all load served by it within the NEPOOL Control Area and
any load outside the NEPOOL Control Area served by the output of
any Network Resources designated by the Network Customer.
1.36 Network Operating Agreement: An executed agreement that contains
the terms and conditions under which, in the
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 21
form of Attachment H or any other form that is mutually agreed
to, the Network Customer shall operate its facilities and the
technical and operational matters associated with the
implementation of Network Integration Transmission Service
under Part VI of this Tariff.
1.37 Network Operating Committee: A group made up of representatives
from the Network Customer(s) and the System Operator established
to coordinate operating criteria and other technical
considerations required for implementation of Network
Integration Transmission Service under Part VI of this Tariff.
1.38 Network Resource: Any designated generating resource owned or
purchased by a Network Customer under the Network Integration
Transmission Service Tariff. Network Resources do not include
any resource, or any portion thereof, that is committed for sale
to third parties or otherwise cannot be called upon to meet the
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 22
Network Customer's Network Load on a non-interruptible basis.
1.39 Network Upgrades: Modifications or additions to transmission-
related facilities that are integrated with and support the
overall NEPOOL Transmission System for the general benefit of
all users of such Transmission System.
1.40 Non-Firm Point-to-Point Transmission Service: Point-to-Point
Transmission Service under this Tariff that is subject to
Curtailment or Interruption under the circumstances specified in
Section 28.7 of this Tariff.
1.41 Non-Participant: Any entity that is not a Participant.
1.42 Non-PTF: The transmission facilities owned by the Participants
and their Related Persons that do not constitute PTF.
1.43 Open Access Same-Time Information System (OASIS): The NEPOOL
information system and standards of conduct responding to
requirements of 18 C.F.R. <section>37 of the Commission's
regulations.
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 23
1.44 Operating Reserve - 10-Minute Non-Spinning Reserve Service:
This service is the form of Ancillary Service described in
Schedule 6.
1.45 Operating Reserve - 10-Minute Spinning Reserve Service: This
service is the form of Ancillary Service described in Schedule
5.
1.46 Operating Reserve - 30-Minute Reserve Service: This service is
the form of Ancillary Service described in Schedule 7.
1.47 Participant: Participant has the meaning specified in the
Agreement.
1.48 Participant RNS Rate: The rate applicable to Regional Network
Service to effect a delivery to Load in a particular Local
Network, as determined in accordance with Schedule 9 to this
Tariff.
1.49 Point(s) of Delivery: Point(s) where capacity and/or energy
transmitted by the Participants will be made available to the
Receiving Party under this Tariff. The
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NEPOOL Open Access Transmission Tariff
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Point(s) of Delivery shall be specified in the Service
Agreement, if applicable.
1.50 Point(s) of Receipt: Point(s) of interconnection where capacity
and/or energy to be transmitted by the Participants will be made
available to NEPOOL by the Delivering Party under this Tariff.
The Point(s) of Receipt shall be specified in the Service
Agreement, if applicable.
1.51 Point-To-Point Transmission Service: The transmission of
capacity and/or energy on either a firm or non-firm basis from
the Point(s) of Receipt to the Point(s) of Delivery under this
Tariff.
1.52 Pool PTF Rate: The transmission rate determined in accordance
with Schedule 8 to this Tariff.
1.53 Pool RNS Rate: The transmission rate determined in accordance
with paragraph (2)of Schedule 9 to this Tariff.
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NEPOOL Open Access Transmission Tariff
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1.54 Power Purchaser: The entity that is purchasing the capacity
and/or energy to be transmitted under the Tariff.
1.55 PTF or Pool Transmission Facilities: The (i) transmission
facilities owned by the Participants and their Related Persons
which constitute PTF pursuant to the Agreement, and (ii) the
static var compensator installed at Chester, Maine at the
request of the Participants.
1.56 Pre-1997 PTF Rate: The transmission rate of a Participant
determined in accordance with Schedule 9 to this Tariff.
1.57 Reactive Supply and Voltage Control From Generation Sources
Service: This service is the form of Ancillary Service
described in Schedule 2.
1.58 Receiving Party: The entity receiving the capacity and/or
energy transmitted to Point(s) of Delivery under this Tariff.
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NEPOOL Open Access Transmission Tariff
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1.59 Regional Network Service: The transmission service described in
Section 14 of this Tariff.
1.60 Regulation and Frequency Response Service: This service is the
form of Ancillary Service described in Schedule 3.
1.61 Reserved Capacity: The maximum amount of capacity and energy
that is committed to the Transmission Customer for transmission
over the NEPOOL Transmission System between the Point(s) of
Receipt and the Point(s) of Delivery under Part V of this
Tariff. Reserved Capacity shall be expressed in terms of
whole kilowatts on a sixty minute interval (commencing on the
clock hour) basis.
1.62 Scheduling, System Control and Dispatch Service: This service
is the form of Ancillary Service described in Schedule 1.
1.63 Service Agreement: The initial agreement and any attachments,
amendments or supplements thereto entered into, upon completion
of any required System Impact
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 27
Study and Facilities Study, by the Transmission Customer and the
System Operator on behalf of the NEPOOL Participants, for
service under this Tariff.
1.64 Service Commencement Date: The date service is to begin
pursuant to the terms of an executed Service Agreement, or the
date service begins in accordance with Section 29.3 or Section
41.1 under this Tariff, or in the case of Regional Network
Service which is not required to be furnished under a Service
Agreement pursuant to Section 17 of this Tariff, the date
service actually commences.
1.65 Short-Term Firm Point-To-Point Transmission Service: Firm
Point-To-Point Transmission Service under Part V of this Tariff
with a term of less than one year.
1.66 System Impact Study: An assessment pursuant to Part II, V or VI
of this Tariff of (i) the adequacy of the NEPOOL Transmission
System to accommodate a request for a new interconnection or new
Regional Network Service, Through or Out Service, or Network
Integration Transmission Service and (ii) whether any
additional costs may be
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 28
required to be incurred in order to provide the transmission
service.
1.67 System Operator: The central dispatching agency provided for in
the Agreement which has responsibility for the operation of the
NEPOOL Control Area from the control center and the
administration of this Tariff. The System Operator shall be
the ISO after it has been activated and is prepared to assume
responsibility for the NEPOOL Control Area and control center.
1.68 Tariff: This NEPOOL Open Access Transmission Tariff and
accompanying schedules and attachments, as modified and amended
from time to time.
1.69 Third-Party Sale: Any sale for resale in interstate commerce by
a Participant which is a Transmission Provider to a Power
Purchaser, to be transmitted under this Tariff as Through or Out
Service.
1.70 Through or Out Service: Transmission service provided by NEPOOL
with respect to a transaction which requires the use of PTF and
which goes through the NEPOOL Control
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 29
Area, as, for example, from New Brunswick to New York, or from
one point on the NEPOOL Control Area boundary with New York to
another point on the Control Area boundary with New York, or
with respect to a transaction which goes out of the NEPOOL
Control Area from a point in the NEPOOL Control Area, as, for
example, from Boston to New York.
1.71 Tie Benefit: Tie Benefit has the meaning specified in Section
21.
1.72 Tie Benefit Service: Transmission service provided by NEPOOL
with respect to the receipt by a Participant of a Tie Benefit,
for Installed Capability Responsibility or other purposes,
provided by the existing transmission ties between the NEPOOL
Control Area, on the one hand, and New York or New Brunswick, on
the other hand. The amount in Kilowatts of Tie Benefit Service
received by a Participant at any time shall be the firm load
equivalent of the amount of the reduction in its
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 30
Installed Capability Responsibility obligation because of its
receipt of the Tie Benefit Service.
1.73 Transition Period: The five-year period commencing on the date
on which this Tariff becomes effective.
1.74 Transmission Customer: Any Eligible Customer that (i) is a
Participant which is not required to sign a Service Agreement
with respect to a service to be furnished to it in accordance
with Section 17, or (ii) executes, on its own behalf or through
its Designated Agent, a Service Agreement, or (iii) requests in
writing, on its own behalf or through its Designated Agent, that
NEPOOL file with the Commission, a proposed unexecuted Service
Agreement in order that the Eligible Customer may receive
transmission service under Parts V or VI of this Tariff or (iv)
is otherwise obligated to pay charges under the Tariff. This
term is used in Part I to include customers receiving
transmission service under this Tariff.
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 31
1.75 Transmission Provider: The Participants collectively with
respect to this Tariff, or an individual Participant with
respect to service under its individual tariff or other
arrangement.
1.76 Year: A period of 365 or 366 days, whichever is appropriate,
commencing on, or on the anniversary of, the effective date of
this Tariff. Year One is the Year commencing on the effective
date, and Years Two and higher follow it in sequence.
2 Purpose of This Tariff
This Tariff, together with the transmission provisions in Part Four of
the Agreement, is intended to provide a regional arrangement which will
cover new uses of the NEPOOL Transmission System. The arrangement is
designed and shall be operated in such a manner as to encourage and
promote competition in the electric market to the benefit of
ultimate users of electric energy. New uses of transmission facilities
which require the use of a single Participant Local Network will
continue to be provided in part under that
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 32
Participant's filed tariff as Local Network Service. Any new regional
use of the NEPOOL Transmission System must be obtained from NEPOOL
pursuant to this Tariff and not from individual Participants. All new
transmission service under this Tariff will be provided as Regional
Network Service pursuant to Part II of this Tariff at rates which
will be paid by Participants and Non-Participants on the basis of their
loads, subject to exceptions only for (i) Tie Benefit Service and (ii)
Through or Out Service which will be provided pursuant to Part III of
this Tariff at the rates specified therein, and subject also
to a requirement that Transition Payments be made in accordance with
Part IV of this Tariff. Ancillary Services will be supplied in
accordance with Section 4 of this Tariff.
Tie Benefit Service and a five-year transitional arrangement, which is
described in Part IV of this Tariff, and continuing service for
Excepted Transactions, have been negotiated to phase in the financial
impacts of the change from the historic regime in which uses of
the NEPOOL Transmission
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 33
System had to be obtained and paid for under the individual tariffs of
the Participants to a regime in which the service will be obtained from
the Participants through NEPOOL at a rate which will not vary with
distance and which covers all possible regional uses of the NEPOOL
Transmission System.
This Tariff is intended to provide for comparable, non-discriminatory
treatment of all similarly situated Transmission Providers and all
Participants and Non-Participants that are transmission users, and it
shall be construed in the manner which best achieves this objective.
This Tariff, and the provisions of Part Four of the Agreement, provide
for a two-tier transmission arrangement integrating regional service
which is provided under this Tariff, and Local Network Service and, for
limited purposes, Local Point-to-Point Service which are provided under
the Participants' individual system tariffs.
3 Initial Allocation and Renewal Procedures
3.1 Initial Allocation of Available Transmission Capability: For
purposes of determining whether existing capability
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 34
on the NEPOOL Transmission System is adequate to accommodate a
request for new Through or Out Service under Part V of this
Tariff, all Completed Applications for new service received
during the initial sixty-day period of the Transition Period
will be deemed to have been filed simultaneously. A lottery
system conducted by an independent accounting firm shall be used
to assign priorities for Completed Applications filed
simultaneously. All Completed Applications for Through or Out
Service received after the initial sixty-day period shall be
assigned a priority pursuant to Section 27.2.
3.2 Reservation Priority For Existing Firm Service Customers:
Existing firm service customers receiving service with respect
to Excepted Transactions and any other existing firm service
customers of the Participants (wholesale requirements
customers and transmission-only customers) with a contract term
of one year or more have the right to continue to take
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 35
transmission service at the same or a reduced level under this
Tariff at the time when the existing contract terminates during
or after the Transition Period. This transmission reservation
priority is independent of whether the existing customer
continues to purchase capacity and energy from its existing
supplier or elects to purchase capacity and energy from another
supplier. If, at the end of the contract term, the NEPOOL
Transmission System cannot accommodate all of the requests
for transmission service, the existing firm service customer
must agree to accept a contract term at least equal to a
competing request by any new Eligible Customer and to pay the
current just and reasonable rate, filed with the Commission, for
such service. This transmission reservation priority for
existing firm service customers is an ongoing right that may be
exercised as to any firm contract with a term of one year or
longer by filing an Application in accordance with this Tariff
at least sixty days in advance of the
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 36
first day of the calendar month in which the existing contract
term is to terminate.
4 Ancillary Services
Ancillary Services are needed with transmission service to maintain
reliability within the NEPOOL Control Area. The Participants are
required to provide through NEPOOL, and the Transmission Customer is
required to purchase from NEPOOL, Scheduling, System Control and
Dispatch Service, and Reactive Supply and Voltage Control from
Generation Sources Service.
The Participants offer to provide or arrange for, through NEPOOL, the
following Ancillary Services, but only to a Transmission Customer
serving load within the NEPOOL Control Area (i) Regulation and
Frequency Response (Automatic Generator Control), (ii) Energy
Imbalance, (iii) Operating Reserve - 10-Minute Spinning, (iv)
Operating Reserve - 10-Minute Non-Spinning and (v) Operating Reserve -
30-Minute. A Participant or other Transmission Customer serving load
within the NEPOOL Control Area is required to provide these Ancillary
Services, whether from the System Operator, from a
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 37
third party, or by self-supply. A Transmission Customer may not
decline NEPOOL's offer of these Ancillary Services unless the
Transmission Customer demonstrates to the System Operator that the
Transmission Customer has acquired Ancillary Services of equal quality
from another source. The Transmission Customer that is not a
Participant must list in its Application which Ancillary Services it
will purchase through NEPOOL.
In the event of an unauthorized use of any Ancillary Service by the
Transmission Customer, the Transmission Customer will be required to
pay 150% of the charge which would otherwise be applicable.
The specific Ancillary Services, prices and/or compensation methods are
described on the Schedules that are attached to and made a part of this
Tariff. If a rate discount is offered or attributed to a Participant
or to a Related Person of a Participant, the same discounted Ancillary
Service rate will be offered to all Eligible Customers. Information
regarding any discounted Ancillary Service rates will be
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 38
posted on OASIS pursuant to 18 C.F.R. <section>37 of the Commission's
regulations. In addition, discounts to non-affiliates will be offered
in a not unduly discriminatory manner. Sections 4.1 through 4.7 below
list the seven Ancillary Services.
4.1 Scheduling, System Control and Dispatch Service: The rates
and/or methodology are described in Schedule 1.
4.2 Reactive Supply and Voltage Control from Generation Sources
Service: The rates and/or methodology are described in Schedule
2.
4.3 Regulation and Frequency Response Service: Where applicable,
the rates and/or methodology are described in Schedule 3.
4.4 Energy Imbalance Service: Where applicable, the rates and/or
methodology are described in Schedule 4.
4.5 Operating Reserve - 10 Minute Spinning Reserve Service: Where
applicable, the rates and/or methodology for this service are
described in Schedule 5.
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 39
4.6 Operating Reserve - 10 Minute Non-Spinning Reserve Service:
Where applicable, the rates and/or methodology for this service
are described in Schedule 6.
4.7 Operating Reserve - 30 Minute Reserve Service: Where
applicable, the rates and/or methodology for this service are
described in Schedule 7.
5 Open Access Same-Time Information System (OASIS)
Terms and conditions regarding the NEPOOL Open Access Same-Time
Information System and standards of conduct are set forth in 18 C.F.R.
<section>37 of the Commission's regulations (Open Access Same-Time
Information System and Standards of Conduct for Public Utilities). In
the event available transmission capability, as posted on OASIS, is
insufficient to accommodate a request for firm transmission service,
additional studies may be required as provided by this Tariff pursuant
to Sections 33 and 44.
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 40
6 Local Furnishing and Other Tax-Exempt Bonds
6.1 Participants That Own Facilities Financed by Local Furnishing or
Other Tax-Exempt Bonds: This provision is applicable only to
Participants that have financed facilities for the local
furnishing of electric energy with tax-exempt bonds, as
described in Section 142(f) of the Internal Revenue Code ("local
furnishing bonds") or other tax-exempt bonds, as described in
Section 103(b) of the Internal Revenue Code ("other tax-exempt
bonds"). Notwithstanding any other provision of this Tariff, a
Participant shall not be required to provide service to any
Eligible Customer pursuant to this Tariff if the provision of
such transmission service would jeopardize the tax-exempt status
of any local furnishing bond(s) or other tax-exempt bonds used
to finance the Participant's facilities that would be used in
providing such Transmission Service.
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 41
6.2 Alternative Procedures for Requesting Transmission Service -
Local Furnishing Bonds:
(i) If a Participant determines that the provision of
transmission service to be provided under this Tariff
would jeopardize the tax-exempt status of any
local furnishing bond(s) used to finance the
Participant's facilities that would be used in providing
such transmission service, the Management Committee
shall be advised within thirty days of receipt of a
Completed Application by an Eligible Customer requesting
such service, or the date on which this Tariff becomes
effective, whichever is applicable.
(ii) If an Eligible Customer thereafter renews its request
for the same transmission service referred to in (i) by
tendering an application under Section 211 of the
Federal Power Act, or the Management Committee
tenders such an application requesting that service be
provided under this Tariff, the
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 42
Participant, within ten days of receiving a copy of the Section
211 application, will waive its rights to receive a request for
service under Section 213(a) of the Federal Power Act and to the
issuance of a proposed order under Section 212(c) of the Federal
Power Act and will provide the requested transmission service in
accordance with the terms and conditions of this Tariff.
6.3 Alternative Procedures for Requesting Transmission Service -
Other Tax-Exempt Bonds:
If a Participant determines that the provision of transmission
service to be provided under the Tariff would jeopardize the
tax-exempt status of any other tax-exempt bonds used to finance
the Participant's facilities that would be used in furnishing
such transmission service, it shall notify the Management
Committee within thirty days of the date on which this Tariff
becomes effective, and shall elect in its notice either to
comply with the procedure specified in Section
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 43
6.2(ii) or to make its facilities unavailable under the Tariff
and thereby waive its right to share in the distribution of
revenues received under the Tariff derived from such facilities.
Any such election may be changed at any time.
7 Reciprocity
A Transmission Customer receiving transmission service under this
Tariff, whether a Participant or a Non-Participant, agrees to provide
comparable transmission service to the Participants on similar terms
and conditions over facilities used for the transmission of electric
energy in Canada or used for such transmission in the United States in
interstate commerce and that are owned, controlled or operated by, or
on behalf of the Transmission Customer or its Related Person.
Transmission of power on the Transmission Customer's system to the
border of the NEPOOL Control Area and transfer of ownership at that
point shall not satisfy, or relieve the Transmission Customer of, the
obligation to provide reciprocal service. This reciprocity requirement
also
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 44
applies to any Transmission Customer that owns, controls or operates
transmission facilities that uses an intermediary, such as a power
marketer, to request transmission service under this Tariff. If the
Transmission Customer does not own, control or operate transmission
facilities, the Transmission Customer must include in its Application a
sworn statement of one of its duly authorized officers or other
representatives that the purpose of its Application is not to assist an
Eligible Customer to avoid the requirements of this provision.
8 Billing and Payment; Accounting
8.1 Participant Billing Procedure: Billings to Participants for
services received under this Tariff shall be made in accordance
with the billing procedures established pursuant to the
Agreement.
8.2 Non-Participant Billing Procedure: Within a reasonable time
after the first day of each month, the System Operator will
submit on behalf of the Participants an invoice to each Non-
Participant Transmission Customer
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 45
for the charges for all services furnished under this Tariff
during the preceding month. The invoice shall be paid by the
Non-Participant Transmission Customer to the System Operator for
NEPOOL within ten days of receipt. All payments shall be made,
in accordance with the procedure specified by the System
Operator, in immediately available funds payable to the System
Operator or by wire transfer to a bank account designated by the
System Operator.
8.3 Interest on Unpaid Balances: Interest on any unpaid amounts
(including amounts placed in escrow) will be calculated in
accordance with the methodology specified for interest on
refunds in 18 C.F.R. <section>35.19a(a)(2)(iii) of the
Commission's regulations. Interest on delinquent amounts will
be calculated from the due date of the bill to the date of
payment. When payments are made by mail, bills will be
considered as having been paid on the date of receipt of
payment by the System Operator or by the bank designated by the
System Operator.
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 46
8.4 Customer Default: In the event a Transmission Customer which is
a Participant fails to perform its obligations under the Tariff,
Section 21.2 of the Agreement shall be applicable to the
failure. In the event a Non-Participant Transmission
Customer fails, for any reason other than a billing dispute as
described below, to make payment to the System Operator on or
before the due date as described above, and such failure of
payment is not corrected within thirty calendar days after the
System Operator notifies the Transmission Customer to cure such
failure, or if the Transmission Customer violates any provision
of its Service Agreement, a default by the Transmission Customer
will be deemed to exist. Upon the occurrence of a default,
NEPOOL may initiate a proceeding with the Commission to
terminate service but shall not terminate service until the
Commission approves such termination. In the event of a billing
dispute between NEPOOL and the Transmission Customer, service
will continue to be provided under the Service
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 47
Agreement as long as the Transmission Customer (i) continues to
make all payments not in dispute, and (ii) pays into an
independent escrow account the portion of the invoice in
dispute, pending resolution of such dispute. If the
Transmission Customer fails to meet these two requirements for
continuation of service, then the System Operation may provide
notice to the Transmission Customer of NEPOOL's intention to
suspend service in sixty days, in accordance with applicable
Commission rules and regulations, and may proceed with such
suspension.
8.5 Study Costs and Revenues: A Participant which is a Transmission
Provider shall (i) include in a separate operating revenue
account or subaccount the revenues, if any, it receives from
transmission service when making Third-Party Sales under
this Tariff, and (ii) include in a separate transmission
operating expense account or subaccount, costs properly
chargeable to expense that are incurred to perform any System
Impact Studies or
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 48
Facilities Studies which the Transmission Provider conducts to
determine if it must construct new transmission facilities or
upgrades necessary for its own uses, including Third-Party
Sales, if any, under this Tariff; and include in a separate
operating revenue account or subaccount the revenues received
for System Impact Studies or Facilities Studies performed when
such amounts are separately stated and identified in a billing
under the Tariff.
9 Regulatory Filings
Nothing contained in this Tariff or any Service Agreement shall be
construed as affecting in any way the right of the Participants to file
with the Commission under Section 205 of the Federal Power Act and
pursuant to the Commission's rules and regulations promulgated
thereunder for a change in any rates, terms and conditions, charges,
classification of service, Service Agreement, rule or regulation.
Nothing contained in this Tariff or any Service Agreement shall be
construed as affecting in any way the ability of any
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 49
Transmission Customer receiving service under this Tariff or for an
Excepted Transaction to exercise its rights under the Federal Power Act
and pursuant to the Commission's rules and regulations promulgated
thereunder.
10 Force Majeure and Indemnification
10.1 Force Majeure: An event of Force Majeure means any act of God,
labor disturbance, act of the public enemy, war, insurrection,
riot, fire, storm or flood, explosion, breakage or accident to
machinery or equipment not due to lack of proper care or
maintenance, any Curtailment, order, regulation or restriction
imposed by a court or governmental military or lawfully
established civilian authorities, or any other cause beyond a
party's control. Neither the Participants, NEPOOL, the System
Operator nor the Transmission Customer will be considered in
default as to any obligation under this Tariff if prevented from
fulfilling the obligation due to an event of Force Majeure;
provided that no event of Force Majeure shall excuse any payment
obligation
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 50
hereunder or under a Service Agreement. However, an entity
whose performance under this Tariff is hindered by an event of
Force Majeure shall make all reasonable efforts to perform its
obligations under this Tariff, and shall promptly notify the
System Operator or the Transmission Customer, whichever is
appropriate, of the commencement and end of each event of Force
Majeure.
10.2 Indemnification: The Transmission Customer shall at all times
indemnify, defend, and save harmless the System Operator, NEPOOL
and each Participant from any and all damages, losses, claims,
including claims and actions relating to injury to or death of
any person or damage to property, demands, suits, recoveries,
costs and expenses, court costs, attorney fees, and all other
obligations by or to third parties, arising out of or resulting
from the performance by the System Operator, NEPOOL or any
Participant of their obligations under this Tariff on behalf of
the Transmission Customer, except in cases of negligence or
intentional wrongdoing
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NEPOOL Open Access Transmission Tariff
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by the System Operator, NEPOOL or a Participant, as the case may
be.
11 Creditworthiness
For the purpose of determining the ability of a Transmission Customer
which is a Non-Participant to meet its obligations related to service
hereunder, NEPOOL may require reasonable credit review procedures.
This review shall be made in accordance with standard commercial
practices. In addition, NEPOOL may require the Transmission
Customer to provide and maintain in effect during the term of the
Service Agreement an unconditional and irrevocable letter of credit as
security to meet its responsibilities and obligations under this
Tariff, or an alternative form of security proposed by the Transmission
Customer and acceptable to NEPOOL and consistent with commercial
practices established by the Uniform Commercial Code that protects the
Participants against the risk of non-payment.
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NEPOOL Open Access Transmission Tariff
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12 Dispute Resolution Procedures
12.1 Internal Dispute Resolution Procedures: Any dispute between a
Transmission Customer which is a Participant and NEPOOL
involving transmission service under the Tariff may be submitted
to mediation and/or arbitration and resolved in accordance with
the alternate dispute resolution procedures set forth in Section
21.1 of the Agreement. Any dispute between a Non-Participant
Transmission Customer and NEPOOL involving transmission service
under this Tariff (excluding applications for rate changes or
other changes to this Tariff, or to any Service Agreement
entered into under this Tariff, which shall be presented
directly to the Commission for resolution) shall be referred to
a designated senior representative of the Transmission Customer
and a representative of the Management Committee for resolution
on an informal basis as promptly as practicable. In the event
the designated representatives are unable to resolve the
dispute within
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NEPOOL Open Access Transmission Tariff
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thirty days or such other period as the parties may fix by
mutual agreement, such dispute may be submitted to mediation
and/or arbitration and resolved in accordance with the alternate
dispute resolution procedures set forth in Section 21.1 of the
Agreement.
12.2 Rights Under The Federal Power Act: Nothing in this section
shall restrict the rights of any party to file a complaint with
the Commission, or seek any other available remedy, under
relevant provisions of the Federal Power Act.
13 Stranded Costs
13.1 General: This Tariff shall not be used to evade or enhance in
whole or in part the stranded cost policies or charges
established by the regulatory commission with jurisdiction. A
retail end-use or wholesale customer that uses this Tariff to
purchase electricity from a new supplier shall pay a stranded
cost charge for access to service under this Tariff as
specifically authorized by the regulatory commission with
jurisdiction and subject
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 54
to any contract terms concerning the recovery of stranded costs.
Upon determination by a regulatory commission that an Eligible
Customer has a stranded cost obligation, and the nature and
extent of such obligation, the charge may be collected under
this Tariff, or a Participant's individual tariff or otherwise
by NEPOOL or the Participants which own any facilities that are
used to provide transmission service to the customer, provided,
however, that the amount of any such stranded cost obligation,
as determined by the appropriate regulatory commission, cannot
be collected twice. The entity that collects the stranded cost
charge shall pay the proceeds to the customer's former supplier
or the former supplier's Related Person, or successor, as
directed by the former supplier. The amount of the stranded
cost charge shall equal the amount of stranded cost that
the customer would have paid under the policies or charges
established by the regulatory commission with jurisdiction had
the customer
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NEPOOL Open Access Transmission Tariff
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become an unbundled transmission services customer of its former
supplier without using service under this Tariff.
13.2 Commission Requirements: A Participant which seeks to recover
stranded costs from a Transmission Customer pursuant to this
Tariff may do so in accordance with the terms, conditions and
procedures in the Commission's Order No. 888. However, the
Participant must separately file any specific proposed stranded
cost charge under Section 205 of the Federal Power Act.
13.3 Wholesale Contracts: Nothing in this Section 13 is intended to
affect or alter the rights or obligations of parties under
wholesale requirements contracts.
13.4 Right to Seek or Contest Recovery Unimpaired: No provision in
this Tariff shall impair a Participant's right to seek stranded
cost relief from the appropriate regulatory body or court or the
right of any Participant or other entity to contest such relief.
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NEPOOL Open Access Transmission Tariff
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II. REGIONAL NETWORK SERVICE
Regional Network Service will be provided by the Participants through
NEPOOL during and after the Transition Period to Participants and Non-
Participants pursuant to the applicable terms and conditions of this
Tariff. Local Network Service and Local Point-To-Point Service, to the
extent required, will be provided during and after the Transition
Period pursuant to the applicable terms and conditions of tariffs filed
by an individual Participant that is a Transmission Provider and/or
pursuant to an agreement between a Participant that is a Transmission
Provider and a Transmission Customer. This Tariff does not prescribe
the methodology to be used by the individual Participant in developing
its Local Network Service rate or its Local Point-to-Point Service
rate, but the Agreement prescribes certain requirements with respect
thereto.
14 Nature of Regional Network Service
Except as provided below, Regional Network Service is any new use of
the NEPOOL Transmission System which requires the use
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NEPOOL Open Access Transmission Tariff
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of PTF, other than Through or Out Service, and includes, but is not
limited to, Point-To-Point Transmission Service for the transmission of
Unit Contract Entitlements or System Contracts, Network Integration
Transmission Service, the transmission of Ancillary Services whether
provided under a bilateral contract or through NEPOOL Interchange
Transactions, and the transmission of energy and capacity-related
services provided through NEPOOL Interchange Transactions; provided,
however, that for the ten-year period commencing on the date on which
this Tariff becomes effective, Tie Benefit Service shall be provided
pursuant to Section 21 and shall not constitute Regional Network
Service.
15 Availability of Regional Network Service
15.1 Provision of Regional Network Service: Regional Network Service
shall be provided by the Participants through NEPOOL, and shall
be available to each Participant and to each Non-Participant
that qualifies as an Eligible Customer.
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NEPOOL Open Access Transmission Tariff
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15.2 Eligibility to Receive Regional Network Service: Notwithstanding
the purchase of any other service provided under the Tariff,
Regional Network Service shall be taken and paid for by (i) each
Participant which has a load within the NEPOOL Control Area, and
(ii) each Non-Participant which is an Eligible Customer and
has a load within the NEPOOL Control Area unless such Non-
Participant operates its own Control Area. Participants and
Non-Participants which are required to take and pay for Regional
Network Service must also take Local Network Service except as
otherwise provided in Section 25. Participants or Non-
Participant Eligible Customers which require the use of the
NEPOOL Transmission System or a Local Network for Regional
Network Service but which do not have a load shall also be
entitled to receive Regional Network Service for deliveries
within the NEPOOL Control Area and Local Network Service.
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NEPOOL Open Access Transmission Tariff
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When a constrained interface within the NEPOOL Control Area
occurs, then existing Firm Transmission Services will continue
to have priority over the interface. Where Curtailments or
Interruptions are required, or resources must be redispatched
this shall be effected in accordance with the applicable
procedures and with the priorities and consequences specified in
Parts V or VI of this Tariff, whichever is applicable.
16 Payment for Regional Network Service
Each Participant or Non-Participant which has a load in the NEPOOL
Control Area and is required to take and pay for Regional Network
Service shall pay to NEPOOL for each month an amount equal to its
Monthly Network Load (as defined in Section 46.1 of this Tariff) for
the month times the applicable Participant RNS Rate. The applicable
Participant Rate shall be the rate, determined in accordance with
Schedule 9, which is applicable to a delivery to load in the particular
Local Network in which the load served by the Participants or Non-
Participants is located. In the event
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NEPOOL Open Access Transmission Tariff
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the Participant or Non-Participant serves load located on more than one
Local Network, the amount to be paid by it shall be separately computed
for the load located on each Local Network. A Participant or Non-
Participant using Regional Network Service which does not have a load
in the NEPOOL Control Area shall not be obligated to make such
payments.
17 Procedure for Obtaining Regional Network Service
When Regional Network Service is used for service by a Participant or
Non-Participant under a bilateral contract, across a constrained PTF
interface within the NEPOOL Control Area, the service must be reserved
with the System Operator and posted on the OASIS and the amount to be
transferred shall be identified. The System Operator must be notified
of all other service required for transfers by a Participant or Non-
Participant under bilateral contracts. No other reservation of
transmission capacity for Regional Network Service is required by a
Participant or Non-Participant and no Service Agreement, in addition to
the Agreement, is
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 61
required to be entered into by a Participant in order to receive
Regional Network Service, unless Direct Assignment Facilities or other
facility additions or upgrades are required to provide a particular
service requested by the Participant. Subject to the foregoing
exceptions and to Section 26 of this Tariff, a Participant or Non-
Participant which receives Regional Network Service shall be, subject
to the applicable provisions of Parts V and VI of this Tariff.
A Participant or Non-Participant which requests new Regional Network
Service shall be obligated to enter into a System Impact Study
Agreement in the form of Attachment I, or in any other form that is
mutually agreed to, and to pay the costs of the study if its
request is determined to require a System Impact Study, and shall be
obligated to enter into a Facilities Study Agreement in the form of
Attachment J, or in any other form that is mutually agreed to, and to
pay the costs of the study if additions or upgrades to PTF will be
required in order to provide the requested service.
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NEPOOL Open Access Transmission Tariff
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III. THROUGH OR OUT SERVICE; TIE BENEFIT SERVICE
Through or Out Service and Tie Benefit Service will be provided during
and after the Transition Period pursuant to the applicable terms and
conditions of this Tariff.
18 Through or Out Service
18.1 Provision of Through or Out Service: Through or Out Service
shall be provided by the Participants through NEPOOL, and shall
be available to any Participant and to any Non-Participant which
is an Eligible Customer.
18.2 Use of Through or Out Service: A Participant or Non-Participant
shall take Through or Out Service as Firm or Non-Firm Point-to-
Point Transmission Service for the transmission of any Unit
Contract Entitlement or System Contract transaction with respect
to a transaction which requires the use of PTF if either (i)
the transaction goes through the NEPOOL Control Area and the
Point(s) of Receipt for NEPOOL are at one point on the NEPOOL
Control Area boundary and the Point(s) of Delivery for NEPOOL
are at another point on the NEPOOL Control Area
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 63
boundary, as, for example, from New Brunswick to New York or
from one point on the NEPOOL Control Area boundary with New York
to another point on the Control Area boundary with New York, or
(ii) the transaction goes out of the NEPOOL Control Area and the
Point(s) of Receipt are within the NEPOOL Control Area and the
Point(s) of Delivery for NEPOOL are at a NEPOOL Control Area
boundary, as, for example, from Boston to New York.
19 Payment for Through or Out Service
Each Participant or Non-Participant which takes firm or non-firm
Through or Out Service shall pay to NEPOOL a charge per Kilowatt of
Reserved Capacity based on an annual rate (the "T or O Rate") which
shall be the higher of (i) the Pool PTF Rate, or (ii) a rate derived
from the annual incremental cost of any new facilities required to
provide the service. The rate for firm Through or Out Service shall be
as follows:
Per year- the T or O Rate
Per month- the T or O Rate divided by 12
Per week- the T or O Rate divided by 52
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NEPOOL Open Access Transmission Tariff
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Per day - the T or O Rate "per week" divided by 5; provided
that the rate for 5 to 7 consecutive days may not
exceed the "per week" rate.
The rate for non-firm Through or Out Service shall be as follows:
Per year- the T or O Rate
Per month- the T or O Rate divided by 12
Per week- the T or O Rate divided by 52
Per day - the T or O Rate "per week" divided by 7;
Per hour- the non-firm T or O Rate "per day" divided by 24.
The Pool PTF Rate shall be the Rate determined annually in accordance
with paragraph 2 of Schedule 8.
20 Reservation of Capacity for Through or Out Service
Compliance with the applicable requirements of Part V of this Tariff is
required for the initiation of Through or Out Service.
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NEPOOL Open Access Transmission Tariff
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21 Tie Benefit Service
Each Participant which receives an identifiable and traceable benefit
(a "Tie Benefit"), in the determination of its Installed Capability
Responsibility or otherwise, from the existing transmission ties
between the NEPOOL Control Area, on the one hand, and New York
or New Brunswick on the other hand, shall be deemed to be a recipient
of Tie Benefit Service. In the event any of these existing
transmission ties is retired or ceases to be a tie to another Control
Area or the Tie Benefit received from it is reduced, the amount of
Tie Benefit Service which Participants are deemed to receive shall be
modified to reflect the change.
22 Payment for Tie Benefit Service
It has been agreed that, as part of the overall transition arrangements
referred to in Part IV of this Tariff, each Participant which is deemed
to be a recipient of Tie Benefit Service shall pay to NEPOOL each month
for such service received by it during the ten-year period commencing
on the effective date of this Tariff, an amount computed at the
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 66
applicable rate specified in Schedule 10 times the number of
Kilowatts of Tie Benefit Service it receives.
IV. SERVICE DURING THE TRANSITION PERIOD; EXCEPTED TRANSACTIONS
The five-year Transition Period, and additional arrangements to be in
effect during the succeeding five-year period, will permit the phase in
on a negotiated basis of the Tariff rates with financial effects which
are acceptable to Participants.
23 Transition Arrangements
The transition arrangements include (i) the treatment provided for
certain Excepted Transactions in Section 25, (ii) the rules provided in
Sections 16.3 and 16.6 of the Agreement for the distribution and
application of revenues received by NEPOOL on behalf of the Participants
from the payment of the Tariff rates, (iii) the payments for Tie
Benefits and (iv) the payment of Transition Payments.
24 Transition Payments
A schedule of Transition Payments to be made by certain Participants or
Non-Participants, and distributed to other Participants or Non-
Participants, in each year of the
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 67
(As corrected)
Transition Period is set out in Schedule 11. The amounts to be paid and
received in each year have been determined by comparing certain
transmission costs and revenues for each year of the Transition Period
for each Participant and certain Non-Participants with the similar costs
and revenues for a base period; provided that only one-half of the
payments for Tie Benefit Service expected to be received by the owners of
the ties to New York and New Brunswick have been included in calculating
the Participant tie owner's revenues for the Transition Period. One-
twelfth of the annual Transition Payments for a Participant or Non-
Participant required to make Transition Payments are to be made
monthly and distributed monthly to those Participants or Non-Participants
eligible to receive payments.
25 Excepted Transactions
Notwithstanding any other section of the Tariff, the power transfers and
other uses of the NEPOOL Transmission System effected under the
transmission agreements in effect on November 1, 1996 specified below
("Excepted Transactions")
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 68
will continue to be effected under such agreements for the respective
periods specified below rather than under this Tariff, but not
thereafter, and such transfers and other uses will continue to be
effected after such period, if still occurring, under this Tariff.
Participants receiving service under the agreements listed in Exhibit G-1
shall not be required to take Local Network Service for such transfers
and other uses. The Excepted Transactions and the period for which each
of the existing transmission agreements will be continued in effect, and
then terminated are as follows:
(1) for the Transition Period, the following transfers
pursuant to Section 17 of the Agreement:
(a) the transfer to a Participant's system within the
Control Area of its ownership interest in a Pool-
Planned Unit which is off its system;
(b) the transfer to a Participant's system within the
Control Area of its Unit Contract Entitlement,
under a contract entered into by
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 69
it on or before November 1, 1996, in a Pool-Planned
Unit which is off its system; and
(c) the transfer to a Participant's system within the
Control Area of its Entitlement in a purchase
(including a purchase under the HQ Phase II Firm
Energy Contract) from Hydro-Quebec under a
contract entered into by it on or before November
1, 1996, where the line over which the transfer is
made into New England is the HQ Interconnection;
(2) for the Transition Period, the transfer to a Participant's
system within the Control Area of its Unit Contract
Entitlement in the Maine Yankee Atomic Power Company unit,
the Vermont Yankee Nuclear Power Corporation unit or the
Pilgrim 1 unit; provided the transfer is pursuant to a
transmission agreement in effect on November 1, 1996 and
is to the entity which was receiving the service on
November 1, 1996; and
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 70
(3) for the period from the effective date of the Tariff until
. . . .: {1}
(a) existing transfers and other uses within the NEPOOL
Control Area, as of November 1, 1996, of the NEPOOL
Transmission System under the support or exchange
agreements specified in Attachment G;
(b) existing transfers and other uses within the NEPOOL
Control Area, as of November 1, 1996, of the NEPOOL
Transmission System under the comprehensive network
service agreements specified in Attachment G; and
(c) existing transfers and other uses within the NEPOOL
Control Area, as of November 1, 1996, of the NEPOOL
Transmission System under the
**FOOTNOTES**
{1} The blank space shall be filled in in accordance with the 33rd
Amendment. Pending the filling in of the blank the service
shall continue until the termination of the transmission agreement
or the end of the Transition Period, whichever occurs first.
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 71
other transmission agreements or tariff service
agreements specified in Attachment G.
The Management Committee is authorized to add additional
agreements to Attachment G if they have been inadvertently
omitted. The transfers or other uses under any of the
transmission agreements covering the transfers referred to
in paragraphs (1), (2) and (3) above shall be in accordance with
the terms of the transmission agreement as in effect on November
1, 1996, or a modification of the terms which is expressly
provided for in the agreement as in effect on November1, 1996 and
is accomplished without amendment of the agreement or by an
amendment entered into after November 1, 1996 that does not extend
the term of the agreement or increase the amount of the service.
Notwithstanding the foregoing, support agreements shall continue
in effect to provide for continued support payments and may be
extended so long as the agreement does not give priority of
service. Further,
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 72
notwithstanding the foregoing restriction on the amendment after
November 1, 1996 of transmission agreements with respect to
Excepted Transactions, the transmission arrangements for the
Masspower and Altresco facilities may continue as Excepted
Transactions in accordance with transmission agreement amendments
or memoranda of understanding entered into as of December, 1996
which do not extend the term of the agreements.
For the purpose of determining priorities under this Tariff,
Excepted Transactions shall have the same priority as Firm Point-
to-Point Transmission Service transactions for resources in
existence on the effective date of this Tariff which are effected
as Regional Network Service.
When transmission agreements cease to be Excepted Transactions
before the end of their term, the transactions shall be effected
under this Tariff and under any applicable Local Network Service
tariff, to the extent appropriate, but the transactions shall
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 73
continue to have a priority not less than the priority that they
would have had if Regional Network Service had been used for the
transactions from the effective date of this Tariff. New
transactions entered into after November 1, 1996 under umbrella
tariff agreements then in effect will not be Excepted
Transactions.
V. THROUGH OR OUT SERVICE AS POINT-TO-POINT TRANSMISSION SERVICE
Preamble
Firm or Non-Firm Point-To-Point Transmission Service shall be reserved by
all Transmission Customers, whether Participants or Non-Participants, for all
new point-to-point transfers to be effected as Through or Out Service, pursuant
to the applicable terms and conditions of this Part V of the Tariff. Point-To-
Point Transmission Service is the service required for the receipt of capacity
and energy at designated Point(s) of Receipt and the transmission of such
capacity and energy to designated Point(s) of Delivery.
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NEPOOL Open Access Transmission Tariff
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26 Nature of Review
If the Eligible Customer requesting Point-To-Point Transmission Service
as Through or Out Service for a Unit Contract or System Contract
transaction, or requesting Network Integration Transmission Service
pursuant to Part VI of this Tariff, is a Participant, it shall initially
advise the System Operator of the proposed transaction in such detail as
the System Operator may reasonably require. If the System Operator
determines, on the basis of an initial review of the reliability
requirements to meet existing and pending obligations of the Participants
and the obligations of the particular Participants whose PTF facilities
will be impacted by the proposed transaction, that no System Impact Study
is required, it shall tender a Service Agreement to the Eligible
Customer, if required. Otherwise, the applicable procedures specified in
this Part V or Part VI shall be followed. If the Eligible Customer
requesting service is not a Participant, the applicable application
procedures specified in this Part V or Part VI, whichever is applicable,
shall be
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NEPOOL Open Access Transmission Tariff
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followed, but the System Operator shall make its initial review of
available transmission capacity on the same basis as it would with a
Participant.
27 Nature of Firm Point-To-Point Transmission Service
27.1 Term: The minimum term of Firm Point-To-Point Transmission
Service as Through or Out Service shall be one day and the maximum
term shall be that specified in the Service Agreement.
27.2 Reservation Priority: Long-Term Firm Point-To-Point Transmission
Service as Through or Out Service shall be available to
Participants and Non-Participants on a first-come, first-served
basis, i.e., in the chronological sequence in which each
Transmission Customer's application for reserved service is
received by the System Operator pursuant to Section 26 or Section
31, whichever is applicable. Reservations for Short-Term Firm
Point-To-Point Transmission Service will be conditional based upon
the length of the requested transaction. If the NEPOOL
Transmission System becomes
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NEPOOL Open Access Transmission Tariff
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oversubscribed, requests for longer term service may preempt
requests for shorter term service up to the following deadlines:
one day before the commencement of daily service, one week before
the commencement of weekly service, and one month before the
commencement of monthly service. Before the deadline, if
available transmission capability is insufficient to satisfy all
Applications, an Eligible Customer with a reservation for shorter
term service has the right of first refusal to match any longer
term reservation before losing its reservation priority.
After the deadline, service will commence pursuant to the terms of
Part III of this Tariff. Firm Point-To-Point Transmission Service
as Through or Out Service will always have a reservation priority
over non-firm Point-To-Point Transmission Service under this
Tariff. All Long-Term Firm Point-To-Point Transmission Service
will have equal reservation priority with Native Load Customers
and Excepted Transactions. Reservation priorities for existing
firm
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NEPOOL Open Access Transmission Tariff
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service customers, including customers receiving service with
respect to Excepted Transactions, are provided in Section 3.2.
27.3 Use of Firm Point-To-Point Transmission Service by the
Participants That Own PTF: A Participant that owns PTF will be
subject to the rates, terms and conditions of this Tariff when
making Third-Party Sales to be transmitted as Through or Out
Service under (i) agreements executed after November 1, 1996 or
(ii) agreements executed on or before November 1, 1996 to the
extent that the Commission requires them to be unbundled, by the
date specified by the Commission. A Participant that owns PTF
will maintain separate accounting, pursuant to Section 8, for any
use of Firm Point-To-Point Transmission Service for Through or Out
Service to make Third-Party Sales.
27.4 Service Agreements: A standard form Firm Point-To-Point
Transmission Service Agreement (Attachment A) will be offered to
an Eligible Customer when it submits a
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NEPOOL Open Access Transmission Tariff
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Completed Application for Firm Point-To-Point Transmission
Service to be transmitted as Through or Out Service. Executed
Service Agreements that contain the information required under
this Tariff will be filed with the Commission in compliance with
applicable Commission regulations.
27.5 Transmission Customer Obligations for Facility Additions or
Redispatch Costs: In cases where it is determined that the
Transmission System is not capable of providing new Firm Point-To-
Point Transmission Service for Through or Out Service without (1)
degrading or impairing the reliability of service to Native Load
Customers, customers taking service for Excepted Transactions and
other Transmission Customers taking Firm Point-To-Point
Transmission Service as Regional Network Service, or (2)
interfering with a Participant's ability to meet prior firm
contractual commitments to others, the Participants will be
obligated to arrange to expand or upgrade PTF pursuant to the
terms of Section 33. The Transmission
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NEPOOL Open Access Transmission Tariff
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Customer must agree to compensate the Participants or any other
entity designated to effect construction through the System
Operator for any necessary transmission facility additions or
upgrades pursuant to the terms of Section 39. To the extent
the System Operator can relieve any system constraint more
economically by redispatching the Participants' resources, rather
than through construction of additions or upgrades, it shall do
so, provided that the Eligible Customer agrees to compensate the
Participants pursuant to the terms of Section 39. Any redispatch,
addition or upgrade or Direct Assignment Facilities costs to be
charged to the Transmission Customer under this Tariff will be
specified in the Service Agreement prior to initiating service.
27.6 Curtailment of Firm Transmission Service: In the event that a
Curtailment on the NEPOOL Transmission System, or a portion
thereof, is required to maintain reliable operation of the system,
the Curtailment will be made on
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NEPOOL Open Access Transmission Tariff
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a non-discriminatory basis to the transaction(s) that effectively
relieve the constraint. If multiple transactions require
Curtailment, to the extent practicable and consistent with Good
Utility Practice, Curtailments will be proportionally allocated
among the Participants' Firm Transmission Service customers. All
Curtailments will be made on a non-discriminatory basis; however,
non-firm Point-To-Point Transmission Service shall be subordinate
to Firm Transmission Service. When the System Operator determines
that an electrical emergency exists on the NEPOOL Transmission
System and implements emergency procedures to curtail Firm
Transmission Service, the Transmission Customer shall make the
required reductions upon the System Operator's request. However,
NEPOOL reserves the right to curtail, in whole or in part, any
Firm Transmission Service provided under this Tariff when, in the
System Operator's sole discretion, an emergency or other
unforeseen condition impairs or degrades the reliability
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NEPOOL Open Access Transmission Tariff
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of the NEPOOL Transmission System. The System Operator will
notify all affected Transmission Customers in a timely manner of
any scheduled Curtailments.
27.7 Classification of Firm Point-To-Point Transmission Service:
(a) A Transmission Customer taking Firm Point-To-Point
Transmission Service for Through or Out Service may (1)
change its Receipt and Delivery Points to obtain service
on a non-firm basis consistent with the terms of Section
36.1 or (2) request a modification of the Points of
Receipt or Delivery on a firm basis pursuant to the terms
of Section 36.2; provided that if any Participant or other
entity has constructed new facilities or upgraded
facilities to accommodate the original firm service,
such Participant shall continue to be compensated for its
facility costs by the Transmission Customer.
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NEPOOL Open Access Transmission Tariff
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(b) A Transmission Customer may purchase transmission service
to make sales from multiple generating units that are on
the NEPOOL Transmission System. For such a purchase of
transmission service the resources will be designated as
multiple Points of Receipt, unless the multiple generating
units are at the same generating plant, in which case
the units will be treated as a single Point of Receipt.
(c) Firm deliveries will be provided from the Point(s) of
Receipt to the Point(s) of Delivery. Except in the case
of the sale of power under a System Contract or Firm
Contract, each Point of Receipt at which firm transmission
capacity is reserved by the Transmission Customer shall be
set forth in the Service Agreement along with a
corresponding capacity reservation associated with each
Point of Receipt. For the transmission of power under a
System Contract or Firm Contract across the Transmission
Provider's Transmission System, the
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NEPOOL Open Access Transmission Tariff
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Transmission Customer need specify only the maximum
capacity reservation at Points of Receipt or Points of
Delivery, rather than specific MW for each Point of
Receipt. In all other cases, each Point of Delivery
at which firm transmission capacity is reserved by the
Transmission Customer shall be set forth in the Service
Agreement along with a corresponding capacity reservation
associated with each Point of Delivery. The greater of
either (1) the sum of the capacity reservations at the
Point(s) of Receipt, or (2) the sum of the capacity
reservations at the Point(s) of Delivery shall be the
Transmission Customer's Reserved Capacity. The
Transmission Customer will be billed for its Reserved
Capacity under the terms of Schedule 8. The Transmission
Customer may not exceed its firm capacity reserved at each
Point of Receipt and each Point of Delivery except as
otherwise specified in Section 36. In the event
that a Transmission
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NEPOOL Open Access Transmission Tariff
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Customer (including Third-Party Sales by the Participants)
exceeds its firm reserved capacity at any Point of Receipt
or Point of Delivery, it shall pay 150% of the charge
which is otherwise applicable for each Kilowatt of the
excess.
27.8 Scheduling of Firm Point-To-Point Transmission Service:
Unless other schedules are permitted pursuant to NEPOOL rules,
schedules for the Transmission Customer's Firm Point-To-Point
Transmission Service for Through or Out Service must be submitted
to the System Operator no later than noon of the day prior to
commencement of such service. Schedules submitted after noon will
be accommodated, if practicable. Hour-to-hour schedules of any
capacity and energy that is to be delivered must be stated in
increments of 1000 kW per hour. Transmission Customers with
multiple requests for Firm Point-To-Point Transmission Service at
a Point of Receipt, each of which request is under 1000 kW per
hour, may consolidate their service requests at a common Point of
Receipt into
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NEPOOL Open Access Transmission Tariff
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units of 1000 kW per hour for scheduling and billing purposes.
Scheduling changes will be permitted up to thirty-five minutes
before the start of the next clock hour, provided that the
Delivering Party and Receiving Party also agree to the schedule
modification. The System Operator will furnish to the Delivering
Party's system operator hour-to-hour schedules equal to those
furnished by the Receiving Party (unless reduced for losses) and
will deliver the capacity and energy provided by such schedules.
Should the Transmission Customer, Delivering Party or Receiving
Party revise or terminate any schedule, such party shall
immediately notify the System Operator, and the System Operator
will have the right to adjust accordingly the schedule for
capacity and energy to be received and to be delivered.
28 Nature of Non-Firm Point-To-Point Transmission Service
28.1 Term: Non-Firm Point-To-Point Transmission Service will be
available as Through or Out Service for periods ranging from one
hour to one month. However, a
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NEPOOL Open Access Transmission Tariff
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Purchaser of Non-Firm Point-To-Point Transmission Service for
Through or Out Service will be entitled to reserve a sequential
term of service (such as a sequential monthly term without having
to wait for the initial term to expire before requesting another
monthly term) so that the total time period for which the
reservation applies is greater than one month, subject to the
requirements of Section 32.3.
28.2 Reservation Priority: Non-Firm Point-To-Point Transmission Service
for Through or Out Service shall be available from transmission
capability in excess of that needed for reliable service to Native
Load Customers, Network Customers and other Transmission Customers
taking Long-Term and Short-Term Firm Point-To-Point Transmission
Service. A higher priority will be assigned to reservations with
a longer duration of service. In the event the NEPOOL
Transmission System is constrained, competing requests of equal
duration will be prioritized as may be determined by the System
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 87
Operator with the approval of the Management Committee. Eligible
Customers that have already reserved shorter term service have the
right of first refusal to match any longer term reservation before
being preempted. Transmission service for Network Customers from
resources other than designated Network Resources will have a
higher priority than any Non-Firm Point-To-Point Transmission
Service for Through or Out Service. Non-Firm Point-To-Point
Transmission Service for Through or Out Service over secondary
Point(s) of Receipt and Point(s) of Delivery will have the lowest
reservation priority under this Tariff.
28.3 Use of Non-Firm Point-To-Point Transmission Service by the
Transmission Provider: The Participants will be subject to the
rates, terms and conditions of Part V of this Tariff when taking
Through or Out Service for Third-Party Sales under (i) agreements
executed on or after November 1, 1996 or (ii) agreements
executed prior to the aforementioned date that the Commission
requires
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NEPOOL Open Access Transmission Tariff
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to be unbundled, by the date specified by the Commission. The
Participant will maintain separate accounting, pursuant to Section
8, for any use of Through or Out Service to make Third-Party
Sales.
28.4 Service Agreements: The System Operator shall offer a standard
form Point-To-Point Transmission Service Agreement (Attachment A)
to an Eligible Customer when it first submits a Completed
Application for Non-Firm Point-To-Point Transmission Service for
Through or Out Service pursuant to the Tariff. Executed Service
Agreements that contain the information required under this
Tariff shall be filed with the Commission in compliance with
applicable Commission regulations.
28.5 Classification of Non-Firm Point-To-Point Transmission Service:
Non-Firm Point-To-Point Transmission Service shall be offered as
Through or Out Service under terms and conditions contained in
Part IV of this Tariff. The NEPOOL Participants undertake no
obligation under this Tariff to plan the NEPOOL Transmission
System in order
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NEPOOL Open Access Transmission Tariff
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to have sufficient capacity for Non-Firm Point-To-Point
Transmission Service. Parties requesting Non-Firm Point-To-Point
Transmission Service for the transmission of firm power as Through
or Out Service do so with the full realization that such service
is subject to availability and to Curtailment or Interruption
under the terms of this Tariff. The System Operator shall specify
the rate treatment and all related terms and conditions applicable
in the event that a Transmission Customer (including Third-Party
Sales by a Participant) exceeds its non-firm capacity reservation.
(a) Non-Firm Point-To-Point Transmission Service as Through or
Out Service shall include transmission of energy on an
hourly basis and transmission of scheduled short-term
capacity and energy on a daily, weekly or monthly
basis, but not to exceed one month's reservation for any
one Application.
(b) Except in the case of the transmission of power under a
System Contract or Firm Contract, each
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NEPOOL Open Access Transmission Tariff
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Point of Receipt at which non-firm transmission capacity
is reserved by the Transmission Customer shall be set
forth in the Application along with a corresponding
capacity reservation associated with each Point of
Receipt. For the transmission of System Power across
Transmission Provider's Transmission System, the
Transmission Customer need specify only the maximum
capacity reservation at Points of Receipt or Points of
Delivery, rather than specific MW for each Point of
Receipt.
28.6 Scheduling of Non-Firm Point-to-Point Transmission Service: Unless
other schedules are permitted pursuant to NEPOOL rules, schedules
for Non-Firm Point-To-Point Transmission Service as Through or Out
Service must be submitted to the Transmission Provider no later
than noon of the day prior to commencement of such service.
Schedules submitted after noon will be accommodated, if
practicable. Hour-to-hour schedules of energy that is to be
delivered must be stated in increments of 1,000 kW
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NEPOOL Open Access Transmission Tariff
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per hour. Transmission Customers within the NEPOOL Control Area
with multiple requests for Transmission Service at a Point of
Receipt, each of which is under 1,000 kW per hour, may consolidate
their schedules at a common Point of Receipt into units of 1,000
kW per hour. Scheduling changes will be permitted up to thirty-
five minutes before the start of the next clock hour provided that
the Delivering Party and Receiving party also agree to the
schedule modification. The System Operator will furnish to the
Delivering Party's system operator, hour-to-hour schedules equal
to those furnished by the Receiving Party (unless reduced
for losses) and shall deliver the capacity and capacity and energy
provided by such schedules. Should the Transmission Customer,
Delivery Party or Receiving Party revise or terminate any
schedule, such party shall immediately notify the System Operator,
and the System Operator shall have the right to adjust accordingly
the schedule for capacity and energy to be received and to be
delivered.
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NEPOOL Open Access Transmission Tariff
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28.7 Curtailment or Interruption of Service: The System Operator
reserves the right to Curtail, in whole or in part, Non-Firm
Point-To-Point Transmission Service provided under this Tariff as
Through or Out Service for reliability reasons when, an emergency
or other unforeseen condition threatens to impair or degrade the
reliability of the NEPOOL Transmission System. The Transmission
Provider reserves the right to Interrupt, in whole or in part,
Non-Firm Point-To-Point Transmission Service provided under this
Tariff as Through or Out Service for economic reasons in order to
accommodate (1) a request for Firm Transmission Service, (2) a
request for Non-Firm Point-To-Point Transmission Service of
greater duration, or (3) transmission service for Network
Customers from non-designated resources. The System Operator also
will discontinue or reduce service to the Transmission Customer to
the extent that
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NEPOOL Open Access Transmission Tariff
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(As corrected)
deliveries for transmission are discontinued or reduced at the
Point(s) of Receipt. Where required, Curtailments or
Interruptions will be made on a non-discriminatory basis to the
transaction(s) that effectively relieve the constraint,
however, Non-Firm Point-To-Point Transmission Service furnished as
Through or Out Service shall be subordinate to Firm Transmission
Service. If multiple transactions require Curtailment or
Interruption, to the extent practicable and consistent with Good
Utility Practice, Curtailments or Interruptions will be made
to transactions of the shortest term (e.g., hourly non-firm
transactions will be Curtailed or Interrupted before daily non-
firm transactions and daily non-firm transactions will be
Curtailed or Interrupted before weekly non-firm transactions).
Transmission service for Network Customers from resources other
than designated Network Resources will have a higher priority than
any Non-Firm Point-To-Point Transmission Service furnished as
Through
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NEPOOL Open Access Transmission Tariff
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or Out Service under this Tariff. Non-Firm Point-To-Point
Transmission Service furnished as Through or Out Service over
secondary Point(s) of Receipt and Point(s) of Delivery will have a
lower priority than any Non-Firm Point-To-Point Transmission
Service under this Tariff. The System Operator will provide
advance notice of Curtailment or Interruption where such notice
can be provided consistent with Good Utility Practice.
29 Service Availability
29.1 General Conditions: Firm Point-To-Point Transmission Service as
Through or Out Service over, on or across the NEPOOL Transmission
System is available to any Transmission Customer that has met the
requirements of Section 26 or Section 31.
29.2 Determination of Available Transmission Capability:
A description of NEPOOL's specific methodology for assessing
available transmission capability posted on the NEPOOL
OASIS(Section 5) is contained in Attachment C of this Tariff. In
the event sufficient transmission
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 95
capability may not exist to accommodate a service request, a
System Impact Study will be performed.
29.3 Initiating Service in the Absence of an Executed Service
Agreement: If the System Operator and the Transmission Customer
requesting Firm Point-To-Point Transmission Service cannot agree
on all the terms and conditions of the applicable Service
Agreement, the System Operator will file with the Commission,
within thirty days after the date the Transmission Customer
provides written notification directing the System Operator to
file, an unexecuted Service Agreement containing terms and
conditions deemed appropriate by the System Operator for such
requested transmission service. The service will be commenced
subject to the Transmission Customer agreeing to (i) pay whatever
rate the Commission ultimately determines to be just and
reasonable, and (ii) comply with the terms and conditions of this
Tariff including posting appropriate security deposits in
accordance with the terms of Section 31.3.
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NEPOOL Open Access Transmission Tariff
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29.4 Obligation to Provide Transmission Service that Requires Expansion
or Modification of the Transmission System: If it is determined
that the service requested in a Completed Application for Long-
Term Firm Point-To-Point Transmission Service as Through or Out
Service cannot be provided because of insufficient capability on
the NEPOOL Transmission System, one or more Participants or other
entities will be designated to use due diligence to expand or
modify the NEPOOL Transmission System to provide the requested
Long-Term Firm Point-to-Point Transmission Service as Through or
Out Service, provided that the Transmission Customer agrees to
compensate the Participants or other entities that will be
responsible for the construction of any new facilities or
upgrades for the costs of such new facilities or upgrades pursuant
to the terms of Section 39. The System Operator and the
designated Participants or other entities will conform to Good
Utility Practice in determining the need for new transmission
facilities or
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 97
upgrades and in coordinating the design and construction of such
facilities. This obligation applies only to those facilities that
the designated Participants or other entities have the right to
expand or modify.
29.5 Deferral of Service: Long-Term Firm Point-To-Point Transmission
Service as Through or Out Service may be deferred until the
designated Participants or other entities complete construction of
new transmission facilities or upgrades needed to provide such
service whenever it is determined that providing the requested
service would, without such new facilities or upgrades, impair or
degrade reliability to any existing Firm Transmission Service.
29.6 Real Power Losses: Real power losses are associated with all
transmission service. NEPOOL is not obligated to provide real
power losses. The applicable real power loss factor shall be
determined by the System Operator on the basis of incremental loss
studies on a transaction basis.
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NEPOOL Open Access Transmission Tariff
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30 Transmission Customer Responsibilities
30.1 Conditions Required of Transmission Customers: Firm Point-To-Point
Transmission Service as Through or Out Service will be provided
only if the following conditions are satisfied by the Transmission
Customer:
a. The Transmission Customer has pending a Completed
Application for service, if required pursuant to Section
26;
b. In the case of a Non-Participant, the Transmission
Customer meets the creditworthiness criteria set forth in
Section 11;
c. The Transmission Customer will have arrangements in place
for any other transmission service necessary to effect
the delivery from the generating source to the Point of
Receipt prior to the time service under the Tariff
commences;
d. The Transmission Customer agrees to pay for any facilities
or upgrades constructed or any redispatch costs chargeable
to such Transmission
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NEPOOL Open Access Transmission Tariff
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Customer under this Tariff, whether or not the
Transmission Customer takes service for the full term of
its reservation; and
e. If required, the Transmission Customer has executed an
applicable Service Agreement or has agreed to receive
service pursuant to Section 29.3.
30.2 Transmission Customer Responsibility for Third-Party Arrangements:
Any scheduling arrangements that may be required by other electric
systems shall be the responsibility of the Transmission Customer
requesting service. (If Local Network Service will be required,
the System Operator shall notify the Transmission Customer and the
affected Participants.) The Transmission Customer shall provide,
unless waived by the System Operator, notification to the
System Operator identifying such other electric systems and
authorizing them to schedule the capacity and energy to be
transmitted pursuant to this Tariff on behalf of the Receiving
Party at the Point of Delivery or the
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NEPOOL Open Access Transmission Tariff
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Delivering Party at the Point of Receipt. The System Operator
will undertake reasonable efforts to assist the Transmission
Customer in making such arrangements, including without
limitation, providing any information or data required by such
other electric system pursuant to Good Utility Practice.
31 Procedures for Arranging Firm Point-To-Point Transmission Service
31.1 Application: Subject to Section 26, a request for Firm Point-To-
Point Transmission Service for periods of one year or longer must
be made in an Application, delivered to the New England Power
Pool, One Sullivan Road, Holyoke, MA 01040-2841 or, following the
activation of the ISO, to the ISO at the same address, or such
other address as may be specified from time to time. The request
should be delivered at least sixty days in advance of the calendar
month in which service is requested to commence. The System
Operator will consider requests for such firm service on shorter
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 101
notice when practicable. Requests for firm service for periods of
less than one year will be subject to expedited procedures that
will be negotiated between the System Operator and the party
requesting service within the time constraints provided in Section
27.8. All Firm Point-To-Point Transmission Service requests
for Through or Out Service should be submitted by entering the
information listed below on the NEPOOL OASIS. Prior to
implementation of the NEPOOL OASIS, a Completed Application may be
submitted by (i) transmitting the required information to NEPOOL
by telefax, or (ii) providing the information by telephone over
NEPOOL's time recorded telephone line. Each of these methods
will provide a time-stamped record for establishing the priority
of the Application.
31.2 Completed Application: A Completed Application for Firm Point-To-
Point Transmission as Through or Out Service shall provide all of
the information included at 18
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NEPOOL Open Access Transmission Tariff
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C.F.R. <section>2.20 of the Commission's regulations, including
but not limited to the following:
(i) The identity, address, telephone number and
facsimile number of the entity requesting service;
(ii) A statement that the entity requesting service is,
or will be upon commencement of service, an
Eligible Customer under this Tariff;
(iii) The location of the Point(s) of Receipt and Point(s) of
Delivery and the identities of the Delivering Parties and
the Receiving Parties;
(iv) The location of the generating facility(ies)
supplying the capacity and energy and the location
of the load ultimately served by the capacity and
energy transmitted. The System Operator will treat
this information as confidential in accordance with
the NEPOOL information policy except to the extent
that disclosure of this information is required by
this Tariff, by regulatory or judicial order, for
reliability purposes pursuant to Good Utility
Practice. The System Operator will treat this
information consistent with the standards of
conduct contained in 18 C.F.R. <section>37 of the
Commission's regulations;
(v) A description of the supply characteristics of the
capacity and energy to be delivered;
(vi) An estimate of the capacity and energy expected to
be delivered to the Receiving Party;
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 103
(vii) The Service Commencement Date and the term of the
requested transmission service; and
(viii) The transmission capacity requested for each Point of
Receipt and each Point of Delivery on the NEPOOL
Transmission System; customers may combine their requests
for service in order to satisfy the minimum transmission
capacity requirement.
The System Operator will treat this information consistent with
the standards of conduct contained in 18 C.F.R. Part 37 of the
Commission's regulations.
31.3 Deposit: A Completed Application for Firm Point-To-Point
Transmission Service as Through or Out Service by a Non-
Participant shall also include a deposit of either one month's
charge for Reserved Capacity or the full charge for Reserved
Capacity for service requests of less than one month. If the
Application is rejected by the System Operator because it does not
meet the conditions for service as set forth herein, or in the
case of requests for service arising in connection with losing
bidders in a request for proposals (RFP), the deposit will
be returned with Interest, less any
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 104
reasonable Administrative Costs incurred by the System Operator or
any affected Participants in connection with the review of the
Application. The deposit also will be returned with Interest less
any reasonable Administrative Costs incurred by the System
Operator or any affected Participants if the new facilities or
upgrades needed to provide the service cannot be completed. If an
Application is withdrawn or the Eligible Customer decides not to
enter into a Service Agreement for the Service, the deposit will
be refunded in full, with Interest, less reasonable Administrative
Costs incurred by the System Operator or any affected Participants
to the extent such costs have not already been recovered from the
Eligible Customer. The System Operator will provide to the
Eligible Customer a complete accounting of all costs deducted from
the refunded deposit, which the Eligible Customer may contest if
there is a dispute concerning the deducted costs. Deposits
associated with construction of new
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 105
facilities or upgrades are subject to the provisions of Section
33. If a Service Agreement for Firm Point-To-Point Transmission
Service is executed, the deposit, with interest, will be returned
to the Transmission Customer upon expiration of the Service
Agreement. Applicable Interest will be calculated from
the day the deposit is credited to the System Operator's account.
31.4 Notice of Deficient Application: If an Application fails to meet
the requirements of this Tariff, the System Operator will notify
the entity requesting service within fifteen days of the System
Operator's receipt of the Application of the reasons for
such failure. The System Operator will attempt to remedy minor
deficiencies in the Application through informal communications
with the Eligible Customer. If such efforts are unsuccessful, the
System Operator will return the Application, along with any
deposit (less the reasonable Administrative Costs incurred by the
System Operator or any affected Participants in connection with
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 106
the Application), with Interest. Upon receipt of a new or revised
Application that fully complies with the requirements of this
Tariff, the Eligible Customer will be assigned a new priority
based upon the date of receipt by the System Operator of
the new or revised Application.
31.5 Response to a Completed Application: Following receipt of a
Completed Application for Firm Point-To-Point Transmission Service
as Through or Out Service, or compliance with Section 26,
whichever is applicable, a determination of available transmission
capability will be made pursuant to Section 29.2 or 26,
whichever is applicable. The Eligible Customer will be notified
as soon as practicable, but not later than thirty days after the
date of receipt of a Completed Application, if required, that
either (i) service will be provided without performing a System
Impact Study, or (ii) such a study is needed to evaluate the
impact of the Application pursuant to Section 33.1.
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NEPOOL Open Access Transmission Tariff
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31.6 Execution of Service Agreement: Whenever the System Operator
determines that a System Impact Study is not required and that the
requested service can be provided, it will notify the Eligible
Customer as soon as practicable but no later than thirty days
after receipt of the Completed Application, and will tender a
Service Agreement to the Eligible Customer. Failure of an
Eligible Customer to execute and return the Service Agreement or
request the filing of an unexecuted Service Agreement pursuant to
Section 29.3, within fifteen days after it is tendered by the
System Operator shall be deemed a withdrawal and termination of
the Application and any deposit (less the reasonable
Administrative Costs incurred by the System Operator and any
affected Participants in connection with the Application)
submitted will be refunded with Interest. Nothing herein limits
the right of an Eligible Customer to file another Application
after such withdrawal and termination. Where a System Impact
Study is required,
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 108
the provisions of Section 33 will govern the execution of a
Service Agreement.
31.7 Extensions for Commencement of Service: The Transmission Customer
can obtain up to five one-year extensions for the commencement of
service. The Transmission Customer may postpone service by paying
a non-refundable annual reservation fee equal to one-month's
charge for Firm Point-To-Point Transmission Service as Through or
Out Service for each year or fraction thereof. If during any
extension for the commencement of service an Eligible Customer
submits a Completed Application for Firm Point-To-Point
Transmission Service, and such request can be satisfied only by
releasing all or part of the Transmission Customer's Reserved
Capacity, the original Reserved Capacity will be released
unless the following condition is satisfied: within thirty days,
the original Transmission Customer agrees to pay the applicable
rate for Firm Point-To-Point Transmission Service as Through
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 109
or Out Service for its Reserved Capacity for the period that its
reservation overlaps the period covered by such Eligible
Customer's Completed Application. In the event the Transmission
Customer elects to release the Reserved Capacity, the reservation
fees or portions thereof previously paid will be forfeited.
32 Procedures for Arranging Non-Firm Point-To-Point Transmission Service
32.1 Application: Eligible Customers seeking Non-Firm Point-To-Point
Transmission Service for Through or Out Service must submit a
Completed Application to the System Operator. Applications should
be submitted by entering the information listed below on the
NEPOOL's OASIS. Prior to implementation of the NEPOOL OASIS, a
Completed Application may be submitted by (i) transmitting the
required information to the System Operator by telefax, or (ii)
providing the information by telephone over the System Operator's
time recorded telephone line. Each of these methods will provide
a
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 110
time-stamped record for establishing the service priority of the
Application.
32.2 Completed Application: A Completed Application shall provide all
of the information included in 18 C.F.R. <section>2.20 including
but not limited to the following:
(i) The identity, address, telephone number and
facsimile number of the entity requesting service;
(ii) A statement that the entity requesting service is,
or will be upon commencement of service, an
Eligible Customer under this Tariff;
(iii) The Point(s) of Receipt and the Point(s) of Delivery;
(iv) The maximum amount of capacity requested at each
Point of Receipt and Point of Delivery; and
(v) The proposed dates and hours for initiating and
terminating transmission service hereunder.
In addition to the information specified above, when required to
properly evaluate system conditions, the System Operator also may
ask the Transmission Customer to provide the following:
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 111
(vi) The electrical location of the initial source of
the power to be transmitted pursuant to the
Transmission Customer's request for service; and
(vii) The electrical location of the ultimate load.
The System Operator will treat this information in (vi) and (vii)
as confidential at the request of the Transmission Customer except
to the extent that disclosure of this information is required by
this Tariff, by regulator or judicial order, for reliability
purposes pursuant to Good Utility Practice, or pursuant to the
NEPOOL Information Policy. The System Operator shall treat this
information consistent with the standards of conduct contained in
Part 37 of the Commission's regulations.
32.3 Reservation of Non-Firm Point-To-Point Transmission Service:
Requests for monthly service shall be submitted no earlier than
sixty days before service is to commence; requests for weekly
service shall be submitted
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NEPOOL Open Access Transmission Tariff
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no earlier than fourteen days before service is to commence,
requests for daily service shall be submitted no earlier than five
days before service is to commence, and requests for hourly
service shall be submitted no earlier than noon the second
day before service is to commence. Requests for service received
later than noon prior to the day service is scheduled to commence
will be accommodated if practicable.
32.4 Determination of Available Transmission Capability: Following
receipt of a tendered schedule the System Operator will make a
determination on a non-discriminatory basis of available
transmission capability pursuant to Section 29.2. Such
determination shall be made as soon as reasonably practicable
after receipt, but not later than the following time periods for
the following terms of service (i) thirty-five minutes for hourly
service, (ii) thirty-five minutes for daily service, (iii) four
hours for weekly service, and (iv) two days for monthly service.
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NEPOOL Open Access Transmission Tariff
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33 Additional Study Procedures For Firm Point-To-Point Transmission Service
Requests
33.1 Notice of Need for System Impact Study: After receiving a request
for Firm Point-To-Point Transmission Service as Through or Out
Service, the System Operator will review the effect of the
proposed service on the reliability requirements to meet existing
and pending obligations of the Participants and the obligations of
the particular Participants whose PTF facilities will be impacted
by the proposed service and determine on a non-discriminatory
basis whether a System Impact Study is needed. A description of
the methodology for completing a System Impact Study is provided
in Attachment D. If the System Operator determines that a System
Impact Study is necessary to accommodate the requested service, as
soon as practicable thereafter the System Operator will so inform
the Eligible Customer and any affected Participants if the System
Impact Study is to be performed by the Participants. If the
likely
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NEPOOL Open Access Transmission Tariff
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result of the study is that a Direct Assignment Facility will be
required, the study shall be performed by the affected
Participants, subject to review by the System Operator. In such
cases, the System Operator will within thirty days of receipt of
a Completed Application, or compliance with Section 26, whichever
is applicable, tender a System Impact Study agreement in the form
of Exhibit I to this Tariff, or in any other form that is mutually
agreed to, pursuant to which the Eligible Customer shall agree to
reimburse NEPOOL and any affected Participants for performing the
required System Impact Study. For a service request to remain a
Completed Application, the Eligible Customer shall execute
the System Impact Study agreement and return it to the System
Operator within fifteen days. If the Eligible Customer elects not
to execute a System Impact Study agreement, its application shall
be deemed withdrawn and its deposit (less the reasonable
Administrative Costs incurred by the System Operator and
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NEPOOL Open Access Transmission Tariff
Original Sheet No. 115
any affected Participants in connection with the Application),
will be returned with Interest.
33.2 System Impact Study Agreement and Cost Reimbursement:
(i) The System Impact Study agreement shall clearly specify
the maximum charge, based on the System Operator's
estimate of the actual cost, and time for completion of
the System Impact Study. The charge shall not
exceed the actual cost of the study. In performing the
System Impact Study, the System Operator and any affected
Participants will rely, to the extent reasonably
practicable, on existing transmission planning studies.
The Eligible Customer shall not be assessed a charge for
such existing studies; however, the Eligible Customer
shall be responsible for charges associated with any
modifications to existing planning studies that are
reasonably necessary to evaluate the impact of the
Eligible Customer's
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request for service on the NEPOOL Transmission System.
(ii) If in response to multiple Eligible Customers requesting
service in relation to the same competitive solicitation,
a single System Impact Study is sufficient for the System
Operator to accommodate the requests for service, the
costs of that study will be equitably pro-rated among the
Eligible Customers.
(iii) For System Impact Studies that the System Operator and any
affected Participants conduct on behalf of the
Participants, the Participants will record the cost of the
System Impact Studies pursuant to Section 8.5.
33.3 System Impact Study Procedures: Upon receipt of an executed
System Impact Study agreement, the System Operator and any
affected Participants will use due diligence to complete the
required System Impact Study within a sixty day period.
The System Impact Study
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shall identify any system constraints and redispatch options and
the need for additional Direct Assignment Facilities or facility
additions or upgrades required to provide the requested service.
In the event that the required System Impact Study cannot be
completed within such time period, the System Operator will so
notify the Eligible Customer and provide an estimated completion
date along with an explanation of the reasons why additional time
is required to complete the required study and an estimate of any
increase in cost which will result from the delay. A copy of the
completed System Impact Study and related work papers shall be
made available to the Eligible Customer. The System Operator will
use the same due diligence in completing the System Impact Study
for an Eligible Customer that is a Non-Participant as it uses when
completing studies for the Participants. The System Operator will
notify the Eligible Customer immediately upon completion of the
System Impact Study if the NEPOOL Transmission System
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will be adequate to accommodate all or part of a request for
service or that no costs are likely to be incurred for new
transmission facilities or upgrades. Within fifteen days of
completion of the System Impact Study, the Eligible Customer
must execute a Service Agreement or request the filing of an
unexecuted Service Agreement pursuant to Section 29.3, or the
Application shall be deemed terminated and withdrawn.
33.4 Facilities Study Procedures: If a System Impact Study indicates
that additions or upgrades to the NEPOOL Transmission System are
needed to supply the Eligible Customer's service request, the
System Operator, within thirty days of the completion of the
System Impact Study, will tender to the Eligible Customer a
Facilities Study agreement in the form of Exhibit J to this
Tariff, or in any other form that is mutually agreed to, pursuant
to which the Eligible Customer shall agree to reimburse the System
Operator and any affected Participants or other entity designated
by the System
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NEPOOL Open Access Transmission Tariff
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Operator for performing any required Facilities Study. For a
service request to remain a Completed Application, the Eligible
Customer shall execute the Facilities Study agreement and return
it to the System Operator within fifteen days. If the Eligible
Customer elects not to execute the Facilities Study agreement, its
application shall be deemed withdrawn and its deposit (less the
reasonable Administrative Costs incurred by the System Operator
and any affected Participants in connection with the Application)
will be returned with Interest. Upon receipt of an executed
Facilities Study agreement, the System Operator and any affected
Participants or other designated entity will use due diligence to
cause the required Facilities Study to be completed within a sixty
day period. If a Facilities Study cannot be completed in the
allotted time period, the System Operator will notify the
Transmission Customer and provide an estimate of the time needed
to reach a final determination and any resulting increase in the
cost,
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along with an explanation of the reasons that additional time is
required to complete the study. When completed, the Facilities
Study shall include a good faith estimate of (i) the cost of
Direct Assignment Facilities to be charged to the Transmission
Customer, or (ii) the Transmission Customer's appropriate share of
the cost of any required additions or upgrades, and (iii) the time
required to complete such construction and initiate the requested
service. The Transmission Customer shall provide a letter of
credit or other reasonable form of security acceptable to the
Participant(s) or other entities that will be responsible for the
construction of the new facilities or upgrades equivalent to the
costs of the new facilities or upgrades and consistent with
relevant commercial practices, as established by the Uniform
Commercial Code. The Transmission Customer shall have thirty days
to execute a Service Agreement or request the filing of an
unexecuted Service Agreement with the Commission and provide the
required letter of
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credit or other form of security or the request will no longer be
a Completed Application and shall be deemed terminated and
withdrawn.
33.5 Facilities Study Modifications: Any change in design arising from
inability to site or construct proposed facilities will require
development of a revised good faith estimate. New good faith
estimates also will be required in the event of new statutory or
regulatory requirements that are effective before the completion
of construction or other circumstances beyond the control of the
Participants or other entities that are responsible for the
construction of the new facilities or upgrades and that
significantly affect the final cost of the new facilities or
upgrades to be charged to the Transmission Customer pursuant to
the provisions of this Tariff.
33.6 Due Diligence in Completing New Facilities: The System Operator
will use due diligence to designate Participants or other entities
to add necessary
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facilities or upgrade the NEPOOL Transmission System within a
reasonable time. A Participant or other entity will have no
obligation to upgrade its existing or planned transmission system
in order to provide the requested Firm Point-To-Point Transmission
Service as Through or Out Service if doing so would impair system
reliability or otherwise impair or degrade existing firm service.
33.7 Partial Interim Service: If the System Operator determines that
there will not be adequate transmission capability to satisfy the
full amount of a Completed Application, or a request for service
pursuant to Section 26, whichever is applicable, for Long-Term
Firm Point-To-Point Transmission Service as Through or Out
Service, the portion of the requested Service that can be
accommodated without addition of any facilities or upgrades and
through redispatch will be offered and provided. However, there
shall be no obligation to provide the incremental amount of
requested Long-Term
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Firm Point-To-Point Transmission Service that requires the
addition of facilities or upgrades to the NEPOOL Transmission
System until such facilities or upgrades have been placed in
service.
33.8 Expedited Procedures for New Facilities: In lieu of the
procedures set forth above, the Eligible Customer shall have the
option to expedite the process by requesting the System Operator
to tender at one time, together with the results of required
studies, an "Expedited Service Agreement" pursuant to which the
Eligible Customer would agree to pay for all costs incurred
pursuant to the terms of this Tariff. In order to exercise this
option, the Eligible Customer shall request in writing an
Expedited Service Agreement covering all of the above-specified
items within thirty days of receiving the results of the System
Impact Study identifying the need for facility additions or
upgrades and costs to be incurred in providing the requested
service. While the System Operator, on behalf of the Participants
or other
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entities that will be responsible for constructing the new
facilities or upgrades, agrees to provide the Eligible Customer
with its best estimate of the new facility costs and other charges
that may be incurred, such estimate shall not be binding
and the Eligible Customer shall agree in writing to pay for all
costs incurred pursuant to the provisions of this Tariff. The
Eligible Customer shall execute and return such an Expedited
Service Agreement within fifteen days of its receipt or
the Eligible Customer's request for service will cease to be a
Completed Application and will be deemed terminated and withdrawn.
34 Procedures if New Transmission Facilities for Firm Point-To-Point
Transmission Service Cannot be Completed
34.1 Delays in Construction of New Facilities: If any event occurs
that will materially affect the time for completion of new
facilities for Firm Point-To-Point Service as Through or Out
Service, or the ability to complete such facilities, the
System Operator will
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promptly notify the Transmission Customer. In such circumstances,
the System Operator will within thirty days of notifying the
Transmission Customer of such delays, convene a technical meeting
with the Transmission Customer and any affected Participants or
other entities responsible for construction to evaluate the
alternatives available to the Transmission Customer. The System
Operator and the affected Participants or other entities will make
available to the Transmission Customer studies and work papers
related to the delay, including all information that is in the
possession of the System Operator or the Participants or other
entities that are responsible for the construction of the new
facilities or upgrades that is reasonably needed by the
Transmission Customer to evaluate any alternatives.
34.2 Alternatives to the Original Facility Additions: When the review
process of Section 34.1 determines that one or more alternatives
exist to the originally planned
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construction project, the System Operator will present such
alternatives for consideration by the Transmission Customer. If,
upon review of any alternatives, the Transmission Customer desires
to proceed with its Completed Application subject to construction
of the alternative facilities, it may request the System
Operator to submit a revised Service Agreement. If the
alternative approach solely involves Non-Firm Point-To-Point
Transmission Service, the System Operator will promptly tender a
Service Agreement for Non-Firm Point-To-Point Transmission Service
providing for such service, if a Service Agreement is required for
the service. In the event the System Operator and the affected
Participants or other entities responsible for construction
conclude that no reasonable alternative exists and the
Transmission Customer disagrees, the Transmission Customer may
seek relief under the dispute resolution procedures pursuant to
Section 12 or it may refer the dispute to the Commission for
resolution.
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NEPOOL Open Access Transmission Tariff
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34.3 Refund Obligation for Unfinished Facility Additions:
If the System Operator, the affected Participants or other
entities responsible for construction and the Transmission
Customer mutually agree that no other reasonable alternatives
exist and the requested service cannot be provided out of
existing capability under the conditions of this Tariff, the
obligation to provide the requested Firm Point-To-Point
Transmission Service as Through or Out Service shall terminate and
any deposit made by the Transmission Customer shall be returned,
with Interest. The Transmission Customer shall be responsible for
all costs prudently incurred by the System Operator and by the
Participants or other entities that have been responsible for the
construction of the new facilities or upgrades through the date
that any required regulatory approval is denied or construction is
suspended and for cost of removal, if necessary, of facilities
constructed prior to suspension.
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35 Provisions Relating to Transmission Construction and Services on the
Systems of Other Utilities
35.1 Responsibility for Third-Party System Additions: Neither the
System Operator nor any Participant will be responsible for making
arrangements for any necessary engineering, permitting, and
construction of transmission or distribution facilities
on the system(s) of any other entity or for obtaining any
regulatory approval for such facilities. The System Operator will
undertake reasonable efforts to assist the Transmission Customer
in obtaining such arrangements, including without limitation,
providing any information or data required by such other electric
system pursuant to Good Utility Practice.
35.2 Coordination of Third-Party System Additions: In circumstances
where the need for transmission facilities or upgrades is
identified pursuant to the provisions of this Tariff, and if such
upgrades further require the addition of transmission facilities
on third-party
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NEPOOL Open Access Transmission Tariff
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systems, the System Operator and the Participants or other
entities that are responsible for the construction of any new
facilities or upgrades on the NEPOOL Transmission System will have
the right to coordinate construction on the NEPOOL Transmission
System with the construction required by the third parties. The
System Operator and the Participants or other entities that are
responsible for the construction of any new facilities or upgrades
on the NEPOOL Transmission System may, after consultation with the
Transmission Customer and representatives of such other systems,
defer construction of new transmission facilities or upgrades on
the NEPOOL Transmission System if the new transmission facilities
on another system cannot be completed in a timely manner.
The System Operator will notify the Transmission Customer in
writing of the basis for any decision to defer construction and
the specific problems that must be resolved before the
construction of new facilities will be initiated or resumed.
Within
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sixty days of receiving written notification by the System
Operator of a decision to defer construction pursuant to this
section, the Transmission Customer may challenge the decision in
accordance with the dispute resolution procedures contained in
Section 12 or it may refer the dispute to the Commission for
resolution.
36 Changes in Service Specifications
36.1 Modifications on a Non-Firm Basis: The Transmission Customer
taking Firm Point-To-Point Transmission Service as Through or Out
Service may submit a request to the System Operator for
transmission service on a non-firm basis over Point(s) of Receipt
and Point(s) of Delivery other than those specified in the
Service Agreement ("Secondary Receipt and Delivery Points"), in
amounts not to exceed the Transmission Customer's firm capacity
reservation, without executing a new Service Agreement, subject to
the following conditions:
(a) service provided over Secondary Receipt and Delivery
Points will be non-firm only, on an as-
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NEPOOL Open Access Transmission Tariff
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available basis, and will not displace any firm or
non-firm service reserved or scheduled by Participants or
Non-Participants under this Tariff or by the Participants
on behalf of their Native Load Customers or Excepted
Transactions;
(b) the sum of all Firm Point-To-Point Transmission Service
and Non-Firm Point-To-Point Transmission Service provided
to the Transmission Customer as Through or Out Service at
any time pursuant to this section shall not exceed the
Reserved Capacity specified in the relevant Service
Agreement under which such services are provided;
(c) the Transmission Customer shall retain its right to
schedule Firm Point-To-Point Transmission Service as
Through or Out Service at the Point(s) of Receipt and
Point(s) of Delivery specified in the relevant Service
Agreement in the amount of the Transmission Customer's
original capacity reservation, and
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NEPOOL Open Access Transmission Tariff
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(d) all other requirements of this Tariff (except as to
transmission rates) shall apply to transmission service on
a non-firm basis over Secondary Receipt and Delivery
Points.
36.2 Modification on a Firm Basis: Any request by a Transmission
Customer to modify Point(s) of Receipt and Point(s) of Delivery on
a firm basis shall be treated as a new request for service in
accordance with Section 31, except that such Transmission Customer
shall not be obligated to pay any additional deposit if
the capacity reservation does not exceed the amount reserved in
the existing Service Agreement. While such new request is
pending, the Transmission Customer shall retain its priority for
service at the firm Receipt Point(s) and Delivery Point(s)
specified in the Transmission Customer's Service Agreement.
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37 Sale, Assignment or Transfer of Transmission Service
37.1 Procedures for Sale, Assignment or Transfer of Service:
Subject to Commission action on any necessary filings, a
Transmission Customer may sell, assign, or transfer all or a
portion of its rights under its Service Agreement, but only to
another Eligible Customer (the "Assignee"). The Transmission
Customer that sells, assigns or transfers its rights under its
Service Agreement is hereafter referred to as the "Reseller."
Compensation to the Reseller shall not exceed the higher of (i)
the original rate paid by the Reseller,(ii) the maximum applicable
rate on file under this Tariff at the time of the assignment, or
(iii) the Reseller's opportunity cost. If the Assignee does not
request any change in the Point(s) of Receipt or the Point(s) of
Delivery, or a change in any other term or condition set forth in
the original Service Agreement, the Assignee shall receive the
same services as did the Reseller and the priority of service for
the Assignee shall be the same as that of
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NEPOOL Open Access Transmission Tariff
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the Reseller. A Reseller shall notify the System Operator as soon
as possible after any sale, assignment or transfer of service
occurs, but in any event, notification must be provided prior to
any provision of service to the Assignee. The Assignee
shall be subject to all terms and conditions of this Tariff. If
the Assignee requests a change in service, the reservation
priority of service will be determined by the System Operator
pursuant to Section 27.2.
37.2 Limitations on Assignment or Transfer of Service: If the Assignee
requests a change in the Point(s) of Receipt or Point(s) of
Delivery, or a change in any other specifications set forth in the
original Service Agreement, the System Operator will consent to
such change subject to the provisions of this Tariff, provided
that the change will not impair the operation and reliability of
the Participants' generation, transmission, or distribution
systems. The Assignee shall compensate the System Operator and
any affected
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NEPOOL Open Access Transmission Tariff
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Participants for performing any System Impact Study needed to
evaluate the capability of the NEPOOL Transmission System to
accommodate the proposed change and any additional costs resulting
from such change. The Reseller shall remain liable for the
performance of all obligations under the Service Agreement,
except as specifically agreed to by the System Operator, the
Reseller and the Assignee through an amendment to the Service
Agreement.
37.3 Information on Assignment or Transfer of Service: In accordance
with Section 5, Transmission Customers may use the NEPOOL OASIS to
post information regarding transmission capacity available for
resale.
38 Metering and Power Factor Correction at Receipt and Delivery Points(s)
38.1 Transmission Customer Obligations: Unless the System Operator
otherwise agrees, the Transmission Customer shall be responsible
for installing and maintaining compatible metering and
communications equipment to
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NEPOOL Open Access Transmission Tariff
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accurately account for the capacity and energy being transmitted
under this Tariff and to communicate the information to the System
Operator. Such equipment shall remain the property of the
Transmission Customer.
38.2 NEPOOL Access to Metering Data: The System Operator will have
access to such metering data as may reasonably be required to
facilitate measurements and billing under the Service Agreement.
38.3 Power Factor: Unless otherwise agreed, the Transmission Customer
is required to maintain a power factor within the same range as
the Participants maintain pursuant to Good Utility Practice and
applicable NEPOOL requirements. The power factor requirements are
specified in the Service Agreement, where applicable.
39 Compensation for New Facilities and Redispatch Costs
Whenever a System Impact Study performed in connection with the provision
of Firm Point-To-Point Transmission Service as Through or Out Service
identifies the need for new facilities or upgrades, the Transmission
Customer shall be responsible
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NEPOOL Open Access Transmission Tariff
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for such costs to the extent they are consistent with Commission
requirements and the Agreement. Whenever a System Impact Study
identifies capacity constraints that may be relieved more economically by
redispatching the Participants' resources than by building new facilities
or upgrading existing facilities to eliminate such constraints, the
Transmission Customer shall be responsible for the redispatch costs to
the extent consistent with applicable Commission requirements.
VI. REGIONAL NETWORK SERVICE (INCLUDING NETWORK INTEGRATION TRANSMISSION
SERVICE)
The Participants will provide NEPOOL Regional Network Service, as
described in Part II of this Tariff, including the service required to
provide Network Integration Transmission Service, to Participants and
Non-Participants pursuant to the applicable terms and conditions
contained in this Tariff. Part II of this Tariff specifies the terms and
conditions which are generally applicable to the receipt of Regional
Network Service by both Participants and Non-
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NEPOOL Open Access Transmission Tariff
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Participants. This Part VI specifies additional provisions with respect
to the provision of Regional Network Service, including Network
Integration Transmission Service, to Non-Participants and, subject to
Section 26 of this Tariff to Participants.
40 Nature of Network Integration Transmission Service
40.1 Scope of Service: Network Integration Transmission Service is a
transmission service that allows Network Customers to efficiently
and economically utilize their Network Resources (as well as other
non-designated generation resources) to serve their Network Load
located in the NEPOOL Control Area and any additional load that
may be designated pursuant to Section 43.3 of this Tariff.
The Network Customer taking Network Integration Transmission
Service must obtain or provide Ancillary Services pursuant to
Section 4.
40.2 Transmission Provider Responsibilities: The NEPOOL Participants
will plan, construct, operate and maintain the NEPOOL Transmission
System in accordance with Good
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NEPOOL Open Access Transmission Tariff
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Utility Practice in order to provide the Network Customer with
Network Integration Transmission Service over the NEPOOL
Transmission System. The Participants shall include the Network
Customer's Network Load in NEPOOL Transmission System planning and
shall, consistent with Good Utility Practice, endeavor to
construct and place into service sufficient transmission capacity
to deliver the Network Customer's Network Resources to serve its
Network Load on a basis comparable to the Participants' delivery
of their own generating and purchased resources to their Native
Load Customers.
40.3 Network Integration Transmission Service: The Participants will
provide firm transmission service over the NEPOOL Transmission
System to the Network Customer for the delivery of capacity and
energy from its designated Network Resources to service its
Network Loads on a basis that is comparable to the Participants'
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use of the NEPOOL Transmission System to reliably serve their
Native Load Customers.
40.4 Secondary Service: The Network Customer may use the NEPOOL
Transmission System to deliver energy to its Network Loads from
resources that have not been designated as Network Resources.
Such energy shall be transmitted, on an as-available basis, at no
additional charge as part of Regional Network Service. Deliveries
from resources other than Network Resources will have a higher
priority than any Non-Firm Point-To-Point Transmission Service
under this Tariff.
40.5 Real Power Losses: Real Power Losses are associated with all
transmission service. The Transmission Providers are not
obligated to provide Real Power Losses. To the extent PTF losses
are not specifically allocated through the market procedures
provided for in Section 14 of the Agreement, total remaining
PTF losses, minus point-to-point losses, shall be allocated to all
load plus interruptible load on a load ratio basis.
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NEPOOL Open Access Transmission Tariff
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40.6 Restrictions on Use of Service: The Network Customer is entitled
to use Regional Network Service, including Network Integration
Transmission Service for any of the uses specified in Part II of
this Tariff.
41 Initiating Service
41.1 Condition Precedent for Receiving Service: Subject to the terms
and conditions of Parts II and VI of this Tariff, the Transmission
Provider will provide Network Integration Transmission Service and
other forms of Regional Network Service to any Non-Participant
which is an Eligible Customer, provided that, subject to
Section 26, (i) the Eligible Customer completes an Application for
service as provided under Part VI of this Tariff, (ii) the
Eligible Customer and the Transmission Provider complete the
technical arrangements set forth in Sections 41.3 and 41.4, (iii)
the Eligible Customer executes a Service Agreement pursuant
to Attachment B for service under Part VI of this Tariff or
requests in writing that the Transmission Provider file a proposed
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NEPOOL Open Access Transmission Tariff
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unexecuted Service Agreement with the Commission, and (iv) the
Eligible Customer executes a Network Operating Agreement in the
form of Exhibit H to this Tariff, or in any other form that is
mutually agreed to, with the Transmission Provider.
41.2 Application Procedures: A Non-Participant which is an Eligible
Customer requesting Regional Network Service under this Tariff
must submit an Application, with a deposit approximating the
charge for one month of service, to the Transmission Provider as
far as possible in advance of the month in which service is to
commence. Completed Applications for Regional Network Service
will be assigned a priority according to the date and time the
Application is received, with the earliest Application receiving
the highest priority. Applications should be submitted by
entering the information listed below on the NEPOOL OASIS to the
extent feasible. Prior to implementation of the NEPOOL OASIS, a
Completed Application may be submitted by (i)
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transmitting the required information to the System Operator by
telefax, or (ii) providing the information by telephone over the
System Operator's time recorded telephone line. Each of these
methods will provide a time-stamped record for establishing the
service priority of the Application. A Completed Application
shall provide all of the information included in 18 CFR
<section>2.20 including but not limited to the following:
(i) The identity, address, telephone number and facsimile
number of the party requesting service;
(ii) A statement that the party requesting service is, or will
be upon commencement of service, an Eligible Customer
under this Tariff;
(iii) A description of the Network Load at each delivery point.
This description should separately identify and provide
the Eligible Customer's best estimate of the total loads
to be served at each transmission voltage level, and the
loads to be served from each Transmission Provider
substation at the same transmission voltage level. The
description should include a ten year forecast of summer
and winter load resource requirements beginning with the
first year after the service is scheduled to commence;
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NEPOOL Open Access Transmission Tariff
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(iv) The amount and location of any interruptible loads
included in the Network Load. This shall include the
summer and winter capacity requirements for each
interruptible load (had such load not been interruptible),
that portion of the load subject to Interruption, the
conditions under which an Interruption can be implemented
and any limitations on the amount and frequency of
Interruptions. An Eligible Customer should identify the
amount of interruptible customer load (if any) included in
the ten year load forecast provided in response to (iii)
above;
(v) A description of Network Resources (current and ten-year
projection), which shall include, for each Network
Resource:
- Unit size and amount of capacity from that unit to
be designated as Network Resource
- VAR capability (both leading and lagging) of all
generators
- Operating restrictions
- Any periods of restricted operations
throughout the year
- Maintenance schedules
- Minimum loading level of unit
- Normal operating level of unit
- Any must-run unit designations required
for system reliability or contract
reasons
- Approximate variable generating cost ($/MWH) for
redispatch computations
- Arrangements governing sale and delivery of power
to third parties from generating facilities
located in the Transmission Provider Control Area,
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NEPOOL Open Access Transmission Tariff
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where only a portion of unit output is designated
as a Network Resource
- Description of purchased power designated as a
Network Resource including source of supply,
Control Area location, transmission arrangements
and delivery point(s) to the Transmission
Provider's Transmission System;
(vi) Description of Eligible Customer's transmission system:
- Load flow and stability data, such as real and
reactive parts of the load, lines, transformers,
reactive devices and load type, including normal
and emergency ratings of all transmission
equipment in a load flow format compatible with
that used by the Transmission Provider
- Operating restrictions needed for reliability
- Operating guides employed by system operators
- Contractual restrictions or committed uses of the
Eligible Customer's transmission system, other
than the Eligible Customer's Network Loads and
Resources
- Location of Network Resources described in
subsection (v) above
- ten year projection of system expansions or
upgrades
- Transmission System maps that include any proposed
expansions or upgrades
- Thermal ratings of Eligible Customer's Control
Area ties with other Control Areas; and
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NEPOOL Open Access Transmission Tariff
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(vii) Service Commencement Date and the term of the requested
Network Integration Transmission Service. The minimum
term for Network Integration Transmission Service is one
year.
Unless the Parties agree to a different time frame, the System
Operator must acknowledge the request within ten days of receipt.
The acknowledgment must include a date by which a response,
including a Service Agreement, will be sent to the Eligible
Customer. If an Application fails to meet the requirements of
this section, the System Operator shall notify the Eligible
Customer requesting service within fifteen days of receipt and
specify the reasons for such failure. Wherever possible, the
System Operator will attempt to remedy deficiencies in the
Application through informal communications with the Eligible
Customer. If such efforts are unsuccessful, the System Operator
shall return the Application without prejudice to the Eligible
Customer, who may thereafter file a new or revised Application
that fully complies with the requirements of
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NEPOOL Open Access Transmission Tariff
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this section. The Eligible Customer will be assigned a new
priority consistent with the date of the new or revised
Application. The System Operator shall treat this information
consistent with the standards of conduct contained in Part 37 of
the Commission's regulations.
41.3 Technical Arrangements to be Completed Prior to Commencement of
Service: Network Integration Transmission Service as part of
Regional Network Service shall not commence until the Participants
and the Network Customer, or a third party, have completed
installation of all equipment specified under a Network Operating
Agreement consistent with Good Utility Practice and any
additional requirements reasonably and consistently imposed to
ensure the reliable operation of the NEPOOL Transmission System.
The Participants shall exercise reasonable efforts, in
coordination with the Network Customer, to complete such
arrangements as soon
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as practicable taking into consideration the Service Commencement
Date.
41.4 Network Customer Facilities: The provision of Network Integration
Transmission Service shall be conditioned upon the Network
Customer's constructing, maintaining and operating the facilities
on its side of each delivery point or interconnection necessary to
reliably deliver capacity and energy from the NEPOOL Transmission
System to the Network Customer. The Network Customer shall be
solely responsible for constructing or installing and operating
and maintaining all facilities on the Network Customer's side of
each such delivery point or interconnection.
41.5 Filing of Service Agreement: The System Operator will file
Service Agreements with the Commission in compliance with
applicable Commission regulations.
42 Network Resources
42.1 Designation of Network Resources: Network Resources shall include
all generation owned or purchased by the
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Network Customer designated to serve Network Load under this
Tariff. Network Resources may not include resources, or any
portion thereof, that are committed for sale to non-designated
third party load or otherwise cannot be called upon to meet the
Network Customer's Network Load on a non-interruptible basis. Any
owned or purchased resources that were serving the Network
Customer's loads under firm agreements entered into on or before
the Service Commencement Date shall initially be designated as
Network Resources until the Network Customer terminates the
designation of such resources.
42.2 Designation of New Network Resources: The Network Customer may
designate a new Network Resource by providing the System Operator
with as much advance notice as practicable. A designation of a
new Network Resource must be made by a request for modification of
service pursuant to an Application under Section 41.
42.3 Termination of Network Resources: The Network Customer may
terminate the designation of all or part of a
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generating resource as a Network Resource at any time but should
provide notification to the System Operator as soon as reasonably
practicable.
42.4 Operation of Network Resources: The Network Customer shall not
operate any of its designated Network Resources which are not
subject to Central Dispatch by NEPOOL, such that the output of
those facilities exceeds its designated Network Load plus losses.
42.5 Network Customer Redispatch Obligation: As a condition to
receiving Network Integration Transmission Service, the Network
Customer agrees to redispatch its Network Resources as requested
by the System Operator pursuant to Section 45.2. To the extent
practical, the redispatch of resources pursuant to this
section shall be on a least cost, non-discriminatory basis between
all Network Customers, and the Participants.
42.6 Transmission Arrangements for Network Resources Not Physically
Interconnected With The NEPOOL Transmission System: The Network
Customer shall be responsible for
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any arrangements necessary to deliver capacity and energy from a
Network Resource not physically interconnected with the NEPOOL
Transmission System. The System Operator will undertake
reasonable efforts to assist the Network Customer in obtaining
such arrangements, including without limitation, providing
any information or data required by such other entity pursuant to
Good Utility Practice.
42.7 Limitation on Designation of Network Resources: The Network
Customer must demonstrate that it owns or has committed to
purchase generation pursuant to an executed contract in order to
designate a generating resource as a Network Resource.
Alternatively, the Network Customer may establish that execution
of a contract is contingent upon the availability of transmission
service under Part II of this Tariff.
42.8 Use of Interface Capacity by the Network Customer: There is no
limitation upon a Network Customer's use of the NEPOOL
Transmission System at any particular
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interface to integrate the Network Customer's Network Resources
(or substitute economy purchases) with its Network Loads.
However, a Network Customer's use of the NEPOOL total interface
capacity with other transmission systems may not exceed the
Network Customer's Load Ratio Share.
43 Designation of Network Load
43.1 Network Load: The Network Customer must designate the individual
Network Loads on whose behalf the Participants will provide
through NEPOOL Network Integration Transmission Service. The
Network Loads shall be specified in the Service Agreement.
43.2 New Network Loads Connected With the NEPOOL Transmission System:
The Network Customer shall provide the System Operator with as
much advance notice as reasonably practicable of the designation
of new Network Load that will be added to the NEPOOL Transmission
System. A designation of new Network Load must be made through a
modification of service pursuant to a new Application.
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The Participants will use due diligence to install or cause to be
installed any transmission facilities required to interconnect a
new Network Load designated by the Network Customer. The costs of
new facilities required to interconnect a new Network Load shall
be determined in accordance with the procedures provided in
Section 44.4 and shall be charged to the Network Customer in
accordance with Commission policies.
43.3 Network Load Not Physically Interconnected with the NEPOOL
Transmission System: This section applies to both initial
designation pursuant to Section 43.1 and the subsequent addition
of new Network Load not physically interconnected with the NEPOOL
Transmission System. To the extent that the Network Customer
desires to obtain transmission service for a load outside the
NEPOOL Transmission System, the Network Customer shall have the
option of (1) electing to include the entire load as Network Load
for all purposes under Part VI of this Tariff and designating
Network Resources in connection
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with such additional Network Load, or (2) excluding that entire
load from its Network Load. To the extent that the Network
Customer gives notice of its intent to add a new Network Load as
part of its Network Load pursuant to this section the request must
be made through a modification of service pursuant to a new
Application, and shall be available only so long as a scheduling
and interconnection agreement acceptable to the System Operator
shall be required to be in effect with the Control Area in which
the load is located. Charges for such portion of the service
shall be based on the Through or Out Service rate applied to
the amount reserved for the Network Load which is not physically
interconnected with the NEPOOL Transmission System.
43.4 New Interconnection Points: To the extent the Network Customer
desires to add a new Delivery Point or interconnection point
between the NEPOOL Transmission System and a Network Load, the
Network Customer shall
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provide the System Operator with as much advance notice as
reasonably practicable.
43.5 Changes in Service Requests: Under no circumstances shall the
Network Customer's decision to cancel or delay a requested change
in Network Integration Transmission Service (the addition of a new
Network Resource or designation of a new Network Load) in any way
relieve the Network Customer of its obligation to pay the costs of
transmission facilities constructed by or for the Participants
and charged to the Network Customer as reflected in the Service
Agreement. However, the System Operator must treat any requested
change in Network Integration Transmission Service in a non-
discriminatory manner.
43.6 Annual Load and Resource Information Updates: The Network Customer
shall provide the System Operator with annual updates of Network
Load and Network Resource forecasts consistent with those included
in its Application under Part VI of this Tariff. The Network
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Customer also shall provide the System Operator with timely
written notice of material changes in any other information
provided in its Application relating to the Network Customer's
Network Load, Network Resources, its transmission system or other
aspects of its facilities or operations affecting the
Participants' ability to provide reliable service.
44 Additional Study Procedures For Network Integration Transmission Service
Requests
44.1 Notice of Need for System Impact Study: After receiving a request
for service, the System Operator shall review the effect of the
requested service on the reliability requirements to meet existing
and pending obligations of the Participant(s) and on the
obligations of the particular Participant(s) whose PTF facilities
will be impacted by the proposed service and shall determine on a
non-discriminatory basis whether a System Impact Study is needed.
A description of the methodology for completing a System Impact
Study is provided in
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Attachment D. If the System Operator determines that a System
Impact Study is necessary to accommodate the requested service, it
shall as soon as practicable inform the Eligible Customer and any
affected Participant(s) if the System Impact Study is to be
performed by the Participant(s). If the likely result of the
study is that a Direct Assignment Facility will be required, the
study shall be performed by the affected Participant(s), subject
to review by the System Operator. In such cases, the System
Operator shall within thirty days of receipt of a Completed
Application, tender a System Impact Study agreement in the form of
Attachment I to this Tariff, or in any other form that is mutually
agreed to, pursuant to which the Eligible Customer shall agree to
reimburse the Transmission Provider for performing the required
System Impact Study. For a service request to remain a
Completed Application, the Eligible Customer shall execute a
System Impact Study agreement and return it to
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the Transmission Provider within fifteen days. If the Eligible
Customer elects not to execute a System Impact Study agreement,
its Application shall be deemed withdrawn and its deposit (less
the reasonable Administrative Costs incurred by the System
Operator and any affected Participant(s)) shall be returned with
Interest.
44.2 System Impact Study Agreement and Cost Reimbursement:
(i) The System Impact Study agreement, whether in the form
detailed in Attachment I or in any other form that is
mutually agreed to, will clearly specify the maximum
charge, based on the System Operator's actual estimate of
the actual cost, and time for completion of the System
Impact Study. The actual charge shall not exceed the
actual cost of the study. In performing the System Impact
Study, the System Operator and the affected Participants
shall rely, to the extent reasonably practicable, on
existing transmission planning studies. The
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Eligible Customer will not be assessed a charge for such
existing studies; however, the Eligible Customer will be
responsible for charges associated with any modifications
to existing planning studies that are reasonably
necessary to evaluate the impact of the Eligible
Customer's request for service on the NEPOOL Transmission
System.
(ii) If in response to multiple Eligible Customers requesting
service in relation to the same competitive solicitation,
a single System Impact Study is sufficient for the System
Operator and the affected Participants to accommodate the
service requests, the costs of that study shall be pro-
rated among the Eligible Customers.
(iii)For System Impact Studies that the System Operator and any
affected Participants conduct on behalf of the Participants, the
Participants will record the cost of the System Impact Studies
pursuant to Section 8.5.
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44.3 System Impact Study Procedures: Upon receipt of an executed System
Impact Study agreement, the System Operator and any affected
Participants will use due diligence to complete the required
System Impact Study within a 60 day period. The System Impact
Study shall identify any system constraints, redispatch
options, or the need for Network Upgrades to provide the requested
service. In the event that the System Operator and any affected
Participants are unable to complete the required System Impact
Study within such time period, the System Operator shall so notify
the Eligible Customer and provide an estimated completion date
along with an explanation of the reasons why additional time is
required to complete the required studies and an estimate of any
increase in cost which will result from the delay. A copy of the
completed System Impact Study and related work papers shall be
made available to the Eligible Customer. The System Operator will
use the same due diligence in completing the System Impact
Study
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NEPOOL Open Access Transmission Tariff
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for an Eligible Customer as it uses when completing studies for
itself. The System Operator shall notify the Eligible Customer
immediately upon completion of the System Impact Study if the
NEPOOL Transmission System will be adequate to accommodate all or
part of a request for service or that no costs are likely to be
incurred for new transmission facilities or upgrades. In order
for a request to remain a Completed Application, within fifteen
days of completion of the System Impact Study the Eligible
Customer must execute a Service Agreement or request the filing of
an unexecuted Service Agreement, or the Application shall be
deemed terminated and withdrawn.
44.4 Facilities Study Procedures: If a System Impact Study indicates
that additions or upgrades to the NEPOOL Transmission System are
needed to supply the Eligible Customer's service request, the
System Operator, within thirty days of the completion of the
System Impact Study, shall tender to the Eligible Customer
a
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NEPOOL Open Access Transmission Tariff
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Facilities Study agreement in the form of Exhibit J to this
Tariff, or in any other form that is mutually agreed to, pursuant
to which the Eligible Customer shall agree to reimburse the System
Operator and any affected Participants for performing the required
Facilities Study. For a service request to remain a Completed
Application, the Eligible Customer shall execute the Facilities
Study agreement and return it to the Transmission Provider within
fifteen days. If the Eligible Customer elects not to execute a
Facilities Study agreement, its Application shall be deemed
withdrawn and its deposit (less the reasonable Administrative
Costs incurred by the System Operator and any affected
Participants) shall be returned with Interest. Upon receipt of an
executed Facilities Study agreement, the System Operator and any
affected Participants will use due diligence to complete the
required Facilities Study within a sixty day period. If the
System Operator and any affected Participants are
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NEPOOL Open Access Transmission Tariff
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unable to complete the Facilities Study in the allotted time
period, the System Operator shall notify the Eligible Customer and
provide an estimate of the time needed to reach a final
determination along with an explanation of the reasons that
additional time is required to complete the study. When
completed, the Facilities Study will include a good faith estimate
of (i) the cost of Direct Assignment Facilities to be charged to
the Eligible Customer, (ii) the Eligible Customer's appropriate
share of the cost of any required Network Upgrades, and (iii) the
time required to complete such construction and initiate the
requested service. The Eligible Customer shall provide the System
Operator with a letter of credit or other reasonable form of
security acceptable to the System Operator equivalent to
the costs of new facilities or upgrades consistent with commercial
practices as established by the Uniform Commercial Code. The
Eligible Customer shall have thirty days to execute a Service
Agreement or
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NEPOOL Open Access Transmission Tariff
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request the filing of an unexecuted Service Agreement and provide
the required letter of credit or other form of security or the
request no longer will be a Completed Application and shall be
deemed terminated and withdrawn.
45 Load Shedding and Curtailments
45.1 Procedures: Prior to the Service Commencement Date, the System
Operator and the Network Customer shall establish Load Shedding
and Curtailment procedures pursuant to the Network Operating
Agreement with the objective of responding to contingencies on the
NEPOOL Transmission System. The Parties will implement
such programs during any period when the System Operator
determines that a system contingency exists and such procedures
are necessary to alleviate such contingency. The System Operator
will notify all affected Network Customers in a timely manner of
any scheduled Curtailment.
45.2 Transmission Constraints: During any period when the System
Operator determines that a transmission
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constraint exists on the NEPOOL Transmission System, and such
constraint may impair the reliability of the NEPOOL System, the
System Operator will take whatever actions, consistent with Good
Utility Practice, that are reasonably necessary to maintain the
reliability of the system. To the extent the System Operator
determines that the reliability of the System can be maintained by
redispatching resources, the System Operator will initiate
procedures pursuant to a Network Operating Agreement to redispatch
all Network Resources and the Participants' own resources on a
least-cost basis without regard to the ownership of such
resources. Any redispatch under this section may not unduly
discriminate between the Participants' use of the NEPOOL
Transmission System on behalf of their Native Load Customers and
any Network Customer's use of the Transmission System to serve its
designated Network Load.
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45.3 Cost Responsibility for Relieving Transmission Constraints: To the
extent not otherwise covered under the Agreement, whenever the
System Operator implements least-cost redispatch procedures in
response to a transmission constraint, the Participants and
Network Customers will each bear a proportionate share of the
total redispatch cost based on their respective Load Ratio Shares.
45.4 Curtailments of Scheduled Deliveries: If a transmission
constraint on the NEPOOL Transmission System cannot be relieved
through the implementation of least-cost redispatch procedures and
the System Operator determines that it is necessary to Curtail
scheduled deliveries, the Parties shall Curtail such schedules
in accordance with a Network Operating Agreement.
45.5 Allocation of Curtailments: The System Operator shall on a non-
discriminatory basis, Curtail the transaction(s) that effectively
relieve the constraint. However, to the extent practicable and
consistent with
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NEPOOL Open Access Transmission Tariff
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Good Utility Practice, any Curtailment will be shared by the
Participants and the Network Customer in proportion to their
respective Load Ratio Shares. The System Operator shall not
direct the Network Customer to Curtail schedules to an extent
greater than the System Operator would Curtail the Participants'
schedules under similar circumstances.
45.6 Load Shedding: To the extent that a system contingency exists on
the NEPOOL Transmission System and the System Operator determines
that it is necessary for the Participants and the Network Customer
to shed load, the Parties shall shed load in accordance with
previously established procedures under the Network Operating
Agreement, or in accordance with other mutually agreed-to
provisions.
45.7 System Reliability: Notwithstanding any other provisions of this
Tariff, the System Operator reserves the right, consistent with
Good Utility Practice and on a not unduly discriminatory basis, to
Curtail Network
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NEPOOL Open Access Transmission Tariff
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Integration Transmission Service without liability on the part of
the System Operator or the Participants for the purpose of making
necessary adjustments to, changes in, or repairs on the
Participants' lines, substations and facilities, and in
cases where the continuance of Network Integration Transmission
Service would endanger persons or property. In the event of any
adverse condition(s) or disturbance(s) on the NEPOOL Transmission
System or on any other system(s) directly or indirectly
interconnected with the NEPOOL Transmission System, the
System Operator, consistent with Good Utility Practice, also may
Curtail Network Integration Transmission Service in order to (i)
limit the extent or damage of the adverse condition(s) or
disturbance(s), (ii) prevent damage to generating or transmission
facilities, or (iii) expedite restoration of service. The
System Operator will give the Network Customer as much advance
notice as is practicable in the event of such Curtailment. Any
Curtailment of Network
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Integration Transmission Service will be not unduly discriminatory
relative to the Participants' use of the Transmission System on
behalf of their Native Load Customers. The Network Operating
Agreement shall specify the rate treatment and all related terms
and conditions applicable in the event that the Network
Customer fails to respond to established Load Shedding and
Curtailment procedures.
46 Rates and Charges
The Network Customer shall pay the Transmission Provider for any Direct
Assignment Facilities, Ancillary Services, and applicable study costs,
consistent with Commission policy, along with the charge for Regional
Network Service provided in Part II of this Tariff.
46.1 Determination of Network Customer's Monthly Network Load: The
Network Customer's "Monthly Network Load" is its hourly load
(including its designated Network Load not physically
interconnected with the Transmission Provider under Section 43.3)
coincident with the
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coincident aggregate load of the Participants and other Network
Customers served in each Local Network in the hour in which the
coincident load is at its maximum for the month ("Monthly Peak").
46.2 Redispatch Charge: To the extent not otherwise covered under the
Agreement, the Network Customer shall pay a Load Ratio Share of
any redispatch costs allocated between the Network Customer and
the Participants pursuant to Section 45. To the extent that the
Participants incur an obligation to the Network Customer for
redispatch costs in accordance with Section 45, such amounts shall
be credited against the Network Customer's bill for the applicable
month.
47 Operating Arrangements
47.1 Operation under The Network Operating Agreement: The Network
Customer shall plan, construct, operate and maintain its
facilities in accordance with Good Utility Practice and in
conformance with the Network Operating Agreement which shall be in
the form of Exhibit H to
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NEPOOL Open Access Transmission Tariff
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this Tariff, or in any other form that is mutually agreed to.
47.2 Network Operating Agreement: The terms and conditions under which
the Network Customer shall operate its facilities and the
technical and operational matters associated with the
implementation of Part VI of the Tariff shall be specified in the
Network Operating Agreement. The Network Operating Agreement
shall provide for the Parties to (i) operate and maintain
equipment necessary for integrating the Network Customer within
the NEPOOL Transmission System (including, but not limited to,
remote terminal units, metering, communications equipment and
relaying equipment), (ii) transfer data between the System
Operator and the Network Customer (including, but not limited to,
heat rates and operational characteristics of Network Resources,
generation schedules for units outside the NEPOOL Transmission
System, interchange schedules, unit outputs for redispatch
required under Section 45,
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NEPOOL Open Access Transmission Tariff
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voltage schedules, loss factors and other real time data), (iii)
use software programs required for data links and constraint
dispatching, (iv) exchange data on forecasted loads and resources
necessary for long-term planning, and (v) address any other
technical and operational considerations required for
implementation of Part VI of this Tariff, including scheduling
protocols. The Network Operating Agreement will recognize that
the Network Customer shall either (i) operate as a Control Area
under applicable guidelines of the North American Electric
Reliability Council (NERC) and the Northeast Power Coordinating
Council, (ii) satisfy its Control Area requirements, including all
necessary Ancillary Services, by contracting with the System
Operator and the Participants, or (iii) satisfy its Control Area
requirements, including all necessary Ancillary Services, by
contracting with another Entity, consistent with Good Utility
Practice, which satisfies NERC and the NPCC requirements. The
System Operator
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NEPOOL Open Access Transmission Tariff
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shall not unreasonably refuse to accept contractual arrangements
with another entity for Ancillary Services.
47.3 Network Operating Committee: A Network Operating Committee
(Committee) shall be established to coordinate operating criteria
for the Parties' respective responsibilities under the Network
Operating Agreement, where the Network Customer is not a
Participant. Each Network Customer shall be entitled to have at
least one representative on the Committee. The Committee shall
meet from time to time as need requires, but no less than once
each calendar year.
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NEPOOL Open Access Transmission Tariff
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SCHEDULE 1
Scheduling, System Control and Dispatch Service
Scheduling, System Control and Dispatch Service is the service required
to schedule at the pool level the movement of power through, out of, within, or
into the NEPOOL Control Area. It is anticipated that local level service would
be provided under the Local Network Service tariffs of the individual
Transmission Providers. For transmission service under this Tariff, this
Ancillary Service can be provided only by the System Operator and the
Transmission Customer must purchase this service from the System Operator.
Charges for Scheduling, System Control and Dispatch Service are to be based on
the expenses incurred by the System Operator, the satellite dispatch centers
and the Participants to provide these services. A surcharge for these services
will be added to the Through or Out Service rate. Transmission Customers
taking Regional Network Service and Local Network Service will have a similar
surcharge added to their Local Network Service rates pursuant to their
individual tariffs.
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NEPOOL Open Access Transmission Tariff
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The charges for service in conjunction with Regional Network Service may
be recovered as described above for an initial period not exceeding six months
and shall be superseded after such period by a rate under this Schedule to be
determined and filed with the Commission which shall be cost-based.
The System Operator expenses will be based on the functions required to
provide these services and include, but are not limited to:
o Processing and implementation of requests for service, including
support of the NEPOOL OASIS node;
o Coordination of transmission system operation and implementation
of necessary control actions by the System Operator and support
for these functions;
o Billing associated with transmission services provided under this
Tariff;
o Transmission system planning which supports this service;
o Administrative costs associated with the aforementioned
functions.
The satellite dispatch center expenses and the Participant expenses will
in each case be an allocated portion of dispatch center expense for the PTF
dispatch functions performed.
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NEPOOL Open Access Transmission Tariff
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Initially, 50% of the costs of the satellite dispatch centers and 0% of the
scheduling, system control and dispatch centers of Participants will be
allocated to PTF dispatch functions. This cost basis shall apply for a period
not exceeding six months and shall be superseded after such period by a rate
under this Schedule to be determined and filed with the Commission which shall
be cost-based.
This surcharge shall be determined for the same period on which the PTF
rate is based. The rate surcharge for each year is the amount derived by
dividing the total annual expenses for providing the service by the sum of the
average of the coincident Monthly Peaks (as defined in Section 46.1) of all
Local Networks for the same calendar year.
RATE SURCHARGE CALCULATION
FOR YEAR ONE
Total Allocated Expenses $11,720,093
Sum of the coincident Monthly Peaks
of all Participants 17,823,928kW
Rate (Expenses/sum of Pks) $0.658
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SCHEDULE 2
Reactive Supply and Voltage Control from
Generation Sources Service
In order to maintain transmission voltages on the NEPOOL Transmission
System within acceptable limits, generation facilities are operated to produce
(or absorb) reactive power. Thus, Reactive Supply and Voltage Control from
Generation Sources Service must be provided for each transaction on the NEPOOL
Transmission System. The amount of Reactive Supply and Voltage Control from
Generation Sources Service that must be supplied with respect to a Transmission
Customer's transaction will be determined based on the reactive power support
necessary to maintain transmission voltages within limits that are generally
accepted in the region and consistently adhered to by the Participants.
Reactive Supply and Voltage Control from Generation Sources Service is to
be provided through the Participants and the System Operator and the
Transmission Customer must purchase this service from the Participants through
the System Operator. The charges
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NEPOOL Open Access Transmission Tariff
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for such service for an initial period not exceeding six months shall be $0 per
Kilowatt and shall be superseded after such period by a rate to be determined
and filed with the Commission which shall be cost-based.
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NEPOOL Open Access Transmission Tariff
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SCHEDULE 3
Regulation and Frequency Response Service
(Automatic Generator Control)
Regulation and Frequency Response Service (Automatic Generator Control)
is necessary to provide for continuous balancing of resources (generation and
interchange) with Load, and for maintaining scheduled interconnection frequency
at sixty cycles per second (60 Hz). Regulation and Frequency Response Service
(Automatic Generation Control) is accomplished by committing on-line generation
whose output is raised or lowered (predominantly through the use of automatic
generating control equipment) as necessary to follow the moment-by-moment
changes in Load. The obligation to maintain this balance between resources and
Load lies with the System Operator and this service will be available to all
Participants and other entities that serve Load within the NEPOOL Control Area
which enter into separate agreements with NEPOOL through Interchange
Transactions pursuant to the Agreement which result from NEPOOL central
dispatch. The Transmission Customer must either take this service from the
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NEPOOL Open Access Transmission Tariff
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System Operator or through the Interchange or make alternative comparable
arrangements to satisfy its Regulation and Frequency Response Service
(Automatic Generator Control or AGC) obligation.
As of December 1, 1996, charges for this Service are determined under the
Prior Agreement as follows:
Payments and reimbursements under the current AGC Billing System fall
into two categories. First, those Participants who have either not made
the appropriate installation arrangements, or who have responsibility for
units that have not met the minimum AGC availability criterion, are
required to pay into a Fixed Cost fund. The dollars collected in
the fund are paid to lead Participants having AGC capability in
accordance with a formula which provides for distribution of the Fixed
Cost Fund. The billing for fixed costs is done on a calendar year basis,
by April 1 of the following year.
Second, the AGC Billing system compensates the lead Participants for the
loss of efficiency and increased maintenance costs that are experienced
as a result of AGC operation of their units. An amount representing an
estimate
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of the total increased hourly operating costs is collected from all
Participants pro rata to their hourly load. These collected funds are
distributed to the lead Participants who incurred the costs. Billing for
hourly costs is done on a monthly basis.
As of the Second Effective Date, charges for this Service will be
determined on the basis of Bid Prices submitted by the Participants in
accordance with Section 14 of the Agreement.
The transmission service required with respect to Regulation and
Frequency Response Service (Automatic Generator Control) will be paid for as
part of Regional Network Service by all Participants and other entities serving
Load in the NEPOOL Control Area. The charge for Regional Network Service is
specified in Schedule 9.
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SCHEDULE 4
Energy Imbalance Service
Energy Imbalance Service is the service provided when a difference occurs
between the scheduled and the actual delivery of energy to a Load located
within the NEPOOL Control Area during a single hour. This service will be
available to all Participants and other entities that serve Load within the
NEPOOL Control Area which enter into separate agreements with NEPOOL through
Interchange Transactions resulting from NEPOOL central dispatch at prices
which will be determined in accordance with Section 12 of the Prior Agreement
until the Second Effective Date, and which will be determined in accordance
with Section 14 of the Agreement thereafter. The Transmission Customer may
either supply its Load from its own resources or through bilateral transactions
or obtain the service through Interchange Transactions. The transmission
service required with respect to Interchange Transactions will be furnished as
part of Regional Network Service to all Participants and other entities serving
Load in the NEPOOL Control Area. The charge for Regional Network Service is
specified in Schedule 9.
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SCHEDULE 5
Operating Reserve - 10-Minute Spinning Reserve Service
10-Minute Spinning Reserve Service is a service needed to serve load
immediately in the event of a system contingency. This service will be
available to all Participants and other entities that serve load within the
NEPOOL Control Area which enter into separate agreements with NEPOOL through
Interchange Transactions resulting from NEPOOL central dispatch. The
Transmission Customer may either supply this service with its own resources or
through bilateral transactions or obtain the service through Interchange
Transactions on terms determined until the Second Effective Date in accordance
with Section 12 of the Prior Agreement, and on terms determined thereafter in
accordance with Sections 14.4, 14.5 and 14.9 of the Agreement.
Under the Prior Agreement arrangements which will remain in effect until
the Second Effective Date, operating reserve is provided through central
dispatch and the after-the-fact own load energy billing arrangements. Prior
Agreement, <section><section>12.5 - 12.8. Participants that are deemed to
carry operating reserve in any
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hour are entitled to share in distributions each month from the Pool Savings
Fund. Prior Agreement <section><section>14.1(e)(viii)(B) and 14.8(d). These
arrangements are equally applicable to 10-Minute Spinning Reserve Service, 10-
Minute Non-Spinning Reserve Service and 30-Minute Reserve Service. Prior
Agreement, <section><section>12.5, 14.1(e)(viii)(B) and 14.8(d).
Under Sections 14.4, 14.5 and 14.9 of the Agreement, as it will be in
effect after the Second Effective Date, the price to be paid for 10-Minute Non-
Spinning Reserve Service or 30-Minute Operating Reserve Service received in any
hour will be the Operating Reserve Clearing Price for the hour for that
category of reserve service, as determined on the basis of bid prices to
provide the service. Agreement, <section>14.9(a) and (b). After the Third
Effective Date, the price to be paid for 10-Minute Spinning Reserve Service
will be determined on the same basis. Agreement, <section>14.9(a) and (c).
During the period from the Second Effective Date until the Third Effective
Date, the price for 10-Minute Spinning Reserve Service will be equal to the
"Lost Opportunity Clearing Price" for the hour and the lost opportunity costs,
if
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 185
any, for the generating units which supply the service, as determined in
accordance with Section 14.9 of the Agreement. Agreement, <section>14.9(c) and
(d).
The Transmission Service required with respect to Interchange
Transactions will be furnished as part of Regional Network Service to all
Participants and other entities serving Load in the NEPOOL Control Area. The
charge for Regional Network Service is determined in accordance with Section 16
of the Tariff and Schedule 9.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 186
SCHEDULE 6
Operating Reserve - 10-Minute Non-Spinning Reserve Service
10-Minute Non-Spinning Reserve Service is a service needed to serve Load
in the event of a system contingency. This service will available to all
Participants and other entities that serve Load within the NEPOOL Control Area
which enter into separate agreements with NEPOOL through Interchange
Transactions resulting from NEPOOL central dispatch. The Transmission Customer
may either supply this service with its own resources or through bilateral
transactions or obtain the service through Interchange Transactions on terms
determined until the Second Effective Date in accordance with Section 12 of the
Prior Agreement, and on terms determined thereafter in accordance with Sections
14.4, 14.5 and 14.9 of the Agreement.
Under the Prior Agreement arrangements which will remain in effect until
the Second Effective Date, operating reserve is provided through central
dispatch and the after-the-fact own load energy billing arrangements. Prior
Agreement, <section><section>12.5 - 12.8. Participants that are deemed to
carry operating reserve in any
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 187
hour are entitled to share in distributions each month from the Pool Savings
Fund. Prior Agreement <section><section>14.1(e)(viii)(B) and 14.8(d). These
arrangements are equally applicable to 10-Minute Spinning Reserve Service, 10-
Minute Non-Spinning Reserve Service and 30-Minute Reserve Service. Prior
Agreement, <section><section>12.5, 14.1(e)(viii)(B) and 14.8(d).
Under Sections 14.4, 14.5 and 14.9 of the Agreement, as it will be in
effect after the Second Effective Date, the price to be paid for 10-Minute Non-
Spinning Reserve Service or 30-Minute Operating Reserve Service received in any
hour will be the Operating Reserve Clearing Price for the hour for that
category of reserve service, as determined on the basis of bid prices to
provide the service. Agreement, <section>14.9(a) and (b). After the Third
Effective Date, the price to be paid for 10-Minute Spinning Reserve Service
will be determined on the same basis. Agreement, <section>14.9(a) and (c).
During the period from the Second Effective Date until the Third Effective
Date, the price for 10-Minute Spinning Reserve Service will be equal to the
"Lost Opportunity Clearing Price" for the hour and the lost opportunity costs,
if
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 188
any, for the generating units which supply the service, as determined in
accordance with Section 14.9 of the Agreement. Agreement, <section>14.9(c) and
(d).
The Transmission Service required with respect to Interchange
Transactions will be furnished as part of Regional Network Service to all
Participants and other entities serving Load in the NEPOOL Control Area. The
charge for Regional Network Service is determined in accordance with Section 16
of the Tariff and Schedule 9.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 189
SCHEDULE 7
Operating Reserve - 30-Minute Reserve Service
30-Minute Reserve Service is a service needed to serve Load in the event
of a system contingency. This service will be available to all Participants
and other entities that serve Load within the NEPOOL Control Area which enter
into separate agreements with NEPOOL through Interchange Transactions resulting
from NEPOOL central dispatch. The Transmission Customer may either supply this
service with its own resources or through bilateral transactions or obtain
the service through Interchange Transactions on terms determined until the
Second Effective Date in accordance with Section 12 of the Prior Agreement, and
on terms determined thereafter in accordance with Sections 14.4, 14.5 and 14.9
of the Agreement.
Under the Prior Agreement arrangements which will remain in effect until
the Second Effective Date, operating reserve is provided through central
dispatch and the after-the-fact own load energy billing arrangements. Prior
Agreement, <section><section>12.5 - 12.8. Participants that are deemed to
carry operating reserve in any
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 190
hour are entitled to share in distributions each month from the Pool Savings
Fund. Prior Agreement <section><section>14.1(e)(viii)(B) and 14.8(d). These
arrangements are equally applicable to 10-Minute Spinning Reserve Service, 10-
Minute Non-Spinning Reserve Service and 30-Minute Reserve Service. Prior
Agreement, <section><section>12.5, 14.1(e)(viii)(B) and 14.8(d).
Under Sections 14.4, 14.5 and 14.9 of the Agreement, as it will be in
effect after the Second Effective Date, the price to be paid for 10-Minute Non-
Spinning Reserve Service or 30-Minute Operating Reserve Service received in any
hour will be the Operating Reserve Clearing Price for the hour for that
category of reserve service, as determined on the basis of bid prices to
provide the service. Agreement, <section>14.9(a) and (b). After the Third
Effective Date, the price to be paid for 10-Minute Spinning Reserve Service
will be determined on the same basis. Agreement, <section>14.9(a) and (c).
During the period from the Second Effective Date until the Third Effective
Date, the price for 10-Minute Spinning Reserve Service will be equal to the
"Lost Opportunity Clearing Price" for the hour and the lost opportunity costs,
if
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 191
any, for the generating units which supply the service, as determined in
accordance with Section 14.9 of the Agreement. Agreement, <section>14.9(c) and
(d).
The Transmission Service required with respect to Interchange
Transactions will be furnished as part of Regional Network Service to all
Participants and other entities serving Load in the NEPOOL Control Area. The
charge for Regional Network Service is determined in accordance with Section 16
of the Tariff and Schedule 9.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 192
SCHEDULE 8
Through or Out Service -
The Pool PTF Rate
(1) Except as otherwise provided in Section 19 of the Tariff, a Transmission
Customer shall pay to NEPOOL for firm or non-firm Through or Out Service
reserved for it in accordance with Section 19 of the Tariff on the basis of the
Pool PTF rate.
(2) The Pool PTF Rate in effect at any time shall be determined annually on
the basis of the information for the most recent calendar year contained in
Form 1 filings (or similar information on the books of Transmission Providers
that are not required to submit a Form 1 filing) and shall be changed annually
effective as of June 1 in each year. The Pool PTF rate shall be equal
to the sum for all Participants of Annual Transmission Revenue Requirements
determined in accordance with Attachment F divided by the sum of the coincident
Monthly Peaks (as defined in Section 46.1) of all Local Networks. The rate for
the period from the effective date of this Tariff until June 1, 1997 is
determined on the basis of the information for 1995 contained in Form 1 filings
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 193
(or similar information on the books of Transmission Providers that are not
required to submit a Form 1 filing) and is $15.61 per kilowatt year.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 194
SCHEDULE 9
Regional Network Service
(1) A Transmission Customer which serves Load in the NEPOOL Control Area shall
pay to NEPOOL each month for Regional Network Service the amount determined in
accordance with the following formula:
A = 1/12 (R {. }L)
in which
A = the amount to be paid
R = the Participant RNS Rate per Kilowatt for the current Year for the
Participant which owns the Local Network from which the Customer's
load is served
L = the Customer's Monthly Network Load for the month
Each Participant RNS Rate is to be determined in accordance with the remaining
provisions of this Schedule 9. The Participants intend that the rate will be
determined by looking separately at the costs associated with facilities which
are in service at December 31, 1996, and the costs associated with new
facilities which are placed in service after December 31, 1996. Costs of
new
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 195
facilities are to be shared regionally on a per Kilowatt basis in determining
the rates of each of the Participants with a Local Network.
Costs of existing facilities are to be determined separately for each
Participant and reflected in the rate for service to Transmission Customers
serving load in the Participant's Local Network. This is subject to a band
width which limits the variation of the Participant per Kilowatt cost from the
average per Kilowatt cost for all Participants to not less than 70%, or
more than 130%, of the average cost.
(2) The Pool RNS Rate per Kilowatt is $1 in Year One, $4 in Year Two, $7 in
Year Three, $10 in Year Four and $13 in Year Five and the period from the end
of Year Five to the next succeeding June 1, and is equal to the Pool PTF Rate
for each Year thereafter.
(3) The Participant RNS Rate for a Participant for a Year shall be a
percentage of the Pool RNS Rate for the year and shall be equal to the Pool RNS
Rate after the end of the transitional
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 196
period described in paragraph (4) of this Schedule. The percentage for each
Participant for each Year shall equal the percentage which the sum of (i) the
Participant's pre-1997 Participant RNS Rate and (ii) the post-1996 Pool PTF
Rate represents of (iii) the Pool PTF Rate for the Year.
(4) The pre-1997 Participant RNS Rate for each Participant shall be
determined by comparing its individual pre-1997 PTF Rate, for the most recent
calendar year for which information is available from Form 1 filings or
otherwise to the pre-1997 Pool PTF Rate for the same calendar year. If the
Participant's individual pre-1997 PTF Rate for a Year is less than the
pre-1997 Pool PTF Rate, its pre-1997 Participant RNS Rate for the Year shall be
the rate determined by reducing the pre-1997 Pool PTF Rate by the percentage
which the Participant's pre-1997 PTF Rate is less than the pre-1997 Pool PTF
Rate; provided that in no event shall its pre-1997 Participant RNS Rate be less
than 70% of the pre-1997 Pool PTF Rate, until the end of Year Five, and
thereafter shall be
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 197
. . . . {2} If the Participant's individual pre-1997 PTF Rate is greater than
the pre-1997 Pool PTF Rate, its pre-1997 Participant RNS Rate shall be the rate
determined by increasing the pre-1997 Pool PTF Rate by the percentage which its
pre-1997 Participant PTF Rate is greater than the pre-1997 Pool PTF Rate;
provided that in no event shall its pre-1997 Participant RNS Rate be
greater than 130% of the pre-1997 Pool PTF Rate until the end of Year Five, and
thereafter shall be . . . . {3} If for any Year the revenues to be received
from the payment by Participants or other Transmission Customers of their
respective applicable Participant RNS Rates will average more or less than the
Pool PTF Rate per Kilowatt for the Year, each Participant RNS Rate will
be increased or decreased, as appropriate, so that the revenues to be received
per Kilowatt per Year will equal the Pool PTF Rate per Kilowatt for the Year.
**FOOTNOTES**
{2} The sentence shall be completed in accordance with the 33rd Amendment.
{3} The sentence shall be completed in accordance with the 33rd Amendment.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 198
(5) The individual pre-1997 PTF Rate of a Participant which owns a Local
Network for a year is the amount derived annually by dividing its Annual
Transmission Revenue Requirements for the most recent calendar year for which
information is available from Form 1 filings (or similar information on the
books of Transmission Providers that are not required to submit a Form 1
filing) with respect to PTF placed in service before January 1, 1997, as
determined in accordance with Attachment F to this Tariff, by the average of
the Monthly Peaks (as adjusted for losses) for the Local Network for the twelve
months of the same calendar year.
(6) The pre-1997 Pool PTF Rate shall be determined in accordance with the
following formula:
R = ATRR
12CP
and the post-1996 Pool PTF Rate shall be determined in accordance with the
following formula:
R* = ATRR*
12CP
in which
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 199
R = the pre-1997 Pool PTF Rate
R* = the post-1996 Pool PTF Rate
ATRR = the aggregate of the Annual Transmission Revenue Requirements of
the Participants with respect to PTF placed in service before
January 1, 1997, as determined in accordance with Attachment F to
this Tariff.
ATRR* =the aggregate of the Annual Transmission Revenue Requirements of
the Participants with respect to PTF placed in service on or after
January 1, 1997, including upgrades, modifications or additions to
PTF placed in service before January 1, 1997, as determined in
accordance with Attachment F to this Tariff.
12CP = the average of the sum of the Monthly Peaks for all Local
Networks, as adjusted each month for NEPOOL losses, of all
Participants and any other entities serving load in the NEPOOL
Control Area for the twelve months of the calendar year on which
the rate is based.
(7) As used in this Schedule, "Monthly Peak" and "Monthly Network Load" each
has the meaning specified in Section 46.1 of this Tariff.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 200
(8) The individual Participant RNS Rates for the period starting the First
Effective Date and ending May 31, 1997 are as follows:
Bangor Hydro-Electric Company - $0.70
Boston Edison Company - $0.92
Central Maine Power Company - $1.06
Commonwealth Energy System Companies - $0.85
Eastern Utility Associates Companies - $0.73
New England Electric System Companies - $1.30
Northeast Utilities Companies - $0.83
The United Illuminating Company - $1.30
Vermont Utilities - $1.30
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 201
SCHEDULE 10
Tie Benefit Service
(1) A Transmission Customer shall pay to NEPOOL for each month for Tie Benefit
Service received by it in accordance with the following formula:
A = 1/12 (T {.} K)
in which:
A = the amount to be paid for each Kilowatt of Tie Benefit Service
received in the form of a reduction of is Installed Capability
Responsibility
T = $10 per Kilowatt of Tie Benefit Service received per year in Years
One to Five, inclusive, $4 per Kilowatt per year in Years Six and
Seven, $3 per Kilowatt per year in Years Eight and Nine and $2 per
Kilowatt per year in Year Ten.
K = the number of Kilowatts of Tie Benefit Service received for the
month, as determined in accordance with the definition of Tie
Benefit Service.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 202
SCHEDULE 11
Transition Payments
Transition Payments shall be made to NEPOOL by the Participants and Non-
Participants identified below, and distributed by NEPOOL to the other
Participants and Non-Participants identified below, in Years One through Five
in accordance with the following schedule in which amounts in parentheses
represent amounts to be paid and amounts not in parentheses represent
amounts to be received:
<TABLE>
<CAPTION>
Participant Year
<S> <C> <C> <C> <C> <C>
1 2 3 4 5
Boston Edison Co. (3,443,885) 417,243 616,469 205,412 (1,077,181)
Braintree 1,020,402 938,182 831,463 785,709 807,504
Hingham 410,141 373,626 326,838 304,136 308,166
Hull 103,450 93,434 80,725 74,009 73,955
Reading 956,845 870,604 760,262 706,005 714,008
Bangor Hydro Electric (94,438) 276,487 640,654 998,062 1,348,711
Commonwealth Energy Systems* (84,677) 233,062 336,257 387,867 328,635
Central Maine Power (1,433,565) (1,566,123) (1,724,110) (1,645,295) (1,425,034)
Eastern Utilities Associates (1,139,630) (783,772) (516,831) (339,100) (250,873)
Middleborough 236,313 192,475 160,926 141,715 134,886
Pascoag, RI 1,753 (134) (2,257) (4,614) (7,206)
Taunton 1,096,571 883,844 727,389 627,419 584,151
MMWEC (51,058) (163,395) (214,594) (204,655) (133,578)
NEES 942,957 (723,648) (249,193) 449,642 1,110,333
Ashburnham 4,210 (8,243) (17,386) (22,235) (22,938)
Boylston 3,359 (8,907) (18,039) (23,093) (24,209)
Danvers 68,190 (104,164) (231,141) (299,188) (310,331)
Georgetown 8,957 9,274 8,148 6,894 5,001
Groton, MA 13,223 13,049 10,988 8,695 5,526
Holden 40,054 37,205 30,347 22,730 13,086
Hudson 294,832 131,554 9,550 (58,690) (75,033)
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 203
Ipswich 155,236 157,925 157,349 156,698 154,730
Littleton, MA (41,619) (123,586) (181,003) (206,821) (202,092)
Mansfield 83,470 77,447 63,257 47,493 27,587
Marblehead 69,445 18,704 (18,140) (36,987) (38,448)
Middleton 15,307 (26,596) (57,548) (74,267) (77,246)
N. Attleboro 59,523 60,759 53,871 46,204 34,896
Paxton 1,842 1,029 (619) (2,450) (4,717)
Peabody 763,038 546,382 388,484 306,730 298,522
Princeton 3,434 3,944 3,920 3,891 3,652
Rowley 6,209 7,188 7,141 7,085 6,624
Shrewsbury 262,173 131,511 36,784 (11,421) (14,688)
Sterling 18,890 (865) (15,473) (23,392) (24,853)
Templeton 37,443 848 (25,981) (40,137) (42,055)
Wakefield (11,102) (12,875) (21,357) (30,787) (43,409)
W. Boylston 24,941 (6,095) (29,080) (41,596) (44,005)
Fitchburg Gas & Elec. 375,848 155,996 314 (72,632) (65,615)
Northeast Utilities (2,147,194) (4,246,007) (3,156,015) (3,749,172) (4,027,256)
Chicopee 65,354 203,640 351,337 489,743 625,658
CMEEC 186,502 863,628 1,590,007 2,281,934 2,969,848
Holyoke 730,430 584,044 504,066 465,151 474,860
S. Hadley 18,996 57,171 97,633 134,443 169,760
Westfield 43,648 133,654 229,422 317,877 403,772
Unitil 107,179 (29,883) (100,997) (206,816) (303,049)
United Illuminating 305,628 416,950 (1,229,622) (1,431,871) (1,586,875)
VELCO 112,518 257,844 290,997 233,229 76,264
Maine Public Serv.** (157,290) (157,290) (157,290) (157,290) (157,290)
Great Bay*** (43,856) (187,117) (347,921) (526,268) (722,156)
Total 0 0 0 0 0
</TABLE>
* Includes Canal Electric Company, Cambridge Electric Light Company and
Commonwealth Electric Company.
** Reflects return of Tie Benefit payments made as part of Transition
Payments.
*** Reflects return of Regional Network Service payments made as transmission
support payments.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 204
Page 1 of 5
ATTACHMENT A
Form of Service Agreement for
Through or Out Service or Other Point-To-Point
Transmission Service
1.0 This Service Agreement, dated as of , is entered into, by and
between the NEPOOL Participants acting through ____________________ (the
"System Operator") and ("Transmission Customer").
2.0 The Transmission Customer has been determined by the System Operator to
have a Completed Application for Firm Transmission Service under this
Tariff.
3.0 If required, the Transmission Customer has provided to the System
Operator an Application deposit in the amount of $ , in
accordance with the provisions of this Tariff.
4.0 Service under this Service Agreement shall commence on the later of (1)
, or (2) the date on which construction of any Direct Assignment
Facilities and/or facility additions of upgrades are completed, or (3)
such other date as it is permitted to become effective by the Commission.
Service under this Service Agreement shall terminate on . [The
Service Agreement may be a blanket agreement for non-firm service.]
5.0 The Participants agree to provide, and the Transmission Customer agrees
to take and pay for, Transmission Service in accordance with the
provisions of the Tariff and this Service Agreement.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 205
Page 2 of 5
6.0 Any notice or request made to or by either party regarding this Service
Agreement shall be made to the representative of the other party as
indicated below.
NEPOOL Participants:
New England Power Pool
One Sullivan Road
Holyoke, MA 01040-2841
Transmission Customer:
___________________________________________
___________________________________________
___________________________________________
7.0 The Tariff is incorporated in this Service Agreement and made a part
hereof.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 206
Page 3 of 5
IN WITNESS WHEREOF, the Parties have caused this Service Agreement to be
executed by their respective authorized officials.
NEPOOL Participants:
By [System Operator]
By:_____________________________ _____________
Name Title Date
Transmission Customer:
By:_____________________________ _____________
Name Title Date
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 207
Page 4 of 5
Specifications For Through or Out Service or Other
Firm Point-To-Point Transmission Service
1.0 Term of Transaction: ________________________________
Start Date: _________________________________________
Termination Date: ___________________________________
2.0 Description of capacity and energy to be transmitted by Participants
including the electric Control Area in which the transaction originates.
______________________________________________________
3.0 Point(s) of Receipt:__________________________________
Delivering party:_____________________________________
4.0 Point(s) of delivery:_________________________________
Receiving party:______________________________________
5.0 Maximum amount of capacity and energy to be transmitted (Reserved
Capacity):___________________________________
6.0 Designation of party(ies) or other entity(ies) subject to reciprocal
service obligation:_________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
7.0 Name(s) of any intervening systems providing transmission
service:__________________________________________________
__________________________________________________________
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 208
Page 5 of 5
8.0 Service under this Service Agreement may be subject to some combination
of the charges detailed below. (The appropriate charges for individual
transactions will be determined in accordance with the terms and
conditions of this Tariff.)
8.1 Transmission Charge:______________________________
__________________________________________________
8.2 System Impact Study and/or Facilities Study Charge(s):
__________________________________________________
__________________________________________________
8.3 Direct Assignment Facilities Charge:______________
__________________________________________________
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 209
ATTACHMENT B
Form Of Service Agreement For Regional
Network Service, including
Network Integration Transmission Service
1.0 This Service Agreement, dated as of ______________, is entered into, by
and between the NEPOOL Participants acting through
___________________________ (the "System Operator"), and ____________
("Transmission Customer").
2.0 The Transmission Customer has been determined by the System Operator to
be a Transmission Customer under the Tariff and has requested Regional
Network Service under the Tariff.
3.0 Regional Network Service (including, if requested, Network Integration
Transmission Service) under this Agreement shall be provided by the
NEPOOL Participants upon request by an authorized representative of the
Transmission Customer.
4.0 The Transmission Customer agrees to supply information the System
Operator deem reasonably necessary in accordance with Good Utility
Practice in order for it to provide the requested service.
5.0 The Participants agree to provide and the Transmission Customer agrees to
take and pay for Regional Network Service in accordance with the
provisions of the Tariff and this Service Agreement.
6.0 Any notice or request made to or by either party regarding this Service
Agreement shall be made to the representative of the other party as
indicated below.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 210
NEPOOL Participants:
New England Power Pool
One Sullivan Road
Holyoke, MA 01040-2841
Transmission Customer:
7.0 The Tariff is incorporated herein and made a part hereof.
IN WITNESS WHEREOF, the Parties have caused this Service Agreement to be
executed by their respective authorized officials.
Transmission Customer:
By:_______________________________________________
Name Title Date
NEPOOL Participants:
By: [System Operator]
By:_______________________________________________
Name Title Date
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 211
ATTACHMENT C
Methodology To Assess Available Transmission Capability
Available Transmission Capability (ATC) will be assessed based on industry-
accepted standards; currently, ATC will be established by reducing the
determined Total Transfer Capability (TTC) by the Transmission Reliability
Margin (TRM) and by transmission commitments.
Total Transfer Capability (TTC) is the determined amount of electric power that
can be reliably transferred over the network consistent with the following:
o Good utility practice
o NERC standards, guides, and procedures;
o NPCC criteria and guidelines;
o New England criteria, rules, procedures, and reliability standards;
o Applicable guides, standards, and criteria of the affected Transmission
Owner(s), whether Participant or Non-Participant;
o Other applicable guidelines and standards which may need to be
established from time to time.
As such, TTC will be determined at a level which maintains all of the
following:
o All equipment within its applicable capabilities;
o Voltages and reactive reserves within acceptable levels;
o Stability maintained with adequate levels of damping;
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 212
o Frequency (Hz) within acceptable levels.
TTC will be evaluated using appropriate and suitable tools, data, and
information, considering the physical impacts of electric power transfers on
the interconnected transmission network. It will reflect anticipated system
conditions and equipment status to the degree practicable.
The Transmission Reliability Margin (TRM) will be established at a level which
incorporates the uncertainties and continued variability of system conditions
and the practical limitations of system control.
Transmission commitments include existing and pending requests for transmission
service and obligations of other existing contracts under which transmission
service is provided.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 213
ATTACHMENT D
Methodology for Completing a System Impact Study
The system impact study will be performed to evaluate the impact of the
requested service on the reliability and operating characteristics of the bulk
power system, consistent with:
o Good utility practice
o NERC standards, guides, and procedures;
o NPCC criteria and guidelines;
o New England criteria, rules, procedures, and reliability standards;
o Applicable guides, standards, and criteria of the impacted Transmission
Owner(s), whether Participant or Non-Participant;
o Other applicable guidelines and standards which may need to be
established from time to time.
As such, the study will examine the impact on the New England regional bulk
power system and its component systems and neighboring and external systems.
Consistent with the aforementioned, the ability to operate the system subject
to the following will be considered:
o All equipment within its applicable capabilities;
o Voltages and reactive reserves within acceptable levels;
o Stability maintained with adequate levels of damping;
o Frequency (Hz) within acceptable levels.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 214
The study will consider the reliability requirements to meet existing and
pending obligations of the Participants and the obligations of the impacted
Transmission Owner(s).
The study will be performed using appropriate and suitable analysis tools and
modeling data consistent with the nature and duration of the requested service.
It is expected that the Eligible Customer will provide the information as
prescribed in Exhibit 1 of Attachment I, and such other information as may be
reasonably required and associated with the requested service and necessary for
its study. It is also recognized that it may be determined that additional or
specialized analysis tools or computer software are necessary for the study.
The responsibility for the provision of these items will be subject to the
System Impact Study Agreement.
The study will identify if the requested service or a portion of it can be
provided without adverse impact on the reliability and operating
characteristics of the system. The study will also identify if it appears that
modification of the system is necessary to provide the service.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 215
ATTACHMENT E
Local Networks
The Local Networks, as of the effective date of this Tariff, are those of
the following:
1. Bangor Hydro-Electric Company
2. Boston Edison Company
3. Central Maine Power Company
4. the Commonwealth Energy System companies
5. the Eastern Utility Associates companies
6. the New England Electric System companies
7. the Northeast Utilities companies
8. The United Illuminating Company
9. Vermont Electric Power Company and the entities which are grouped
with it as a single Participant.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 216
ATTACHMENT F
Annual Transmission Revenue Requirements
The Transmission Revenue Requirements for each Participant will reflect
the Participants' costs for Pool Transmission Facilities (PTF). The
Transmission Revenue Requirements will be an annual calculation based on the
previous calendar year's data as shown, in the case of Transmission Providers
which are subject to the Commission's jurisdiction, in the Participants' FERC
Form 1 report for that year, and shall be based on actual data in lieu of
allocated data if specifically identified in the Form 1 report, as set forth
below:
I. The Transmission Revenue Requirement shall equal the sum of the
Transmission Provider's (A) Return and Associated Income Taxes, (B)
Transmission Depreciation Expense, (C) Transmission Related Amortization
of Loss on Reacquired Debt, (D) Transmission Related Amortization of
Investment Tax Credits, (E) Transmission Related Municipal Tax Expense,
(F) Transmission Operation and Maintenance Expense, (G) Transmission
Related Administrative and General Expense, (H) Transmission Related
Integrated Facilities Credit, minus (I) Transmission Support Revenue,
plus (J) Transmission Support Expense, plus (K) Transmission Related
Expense from Generators.
A. Return and Associated Income Taxes shall equal the product of the
Transmission Investment Base and the Cost of Capital Rate.
1. Transmission Investment Base
The Transmission Investment Base will be (a) PTF
Transmission Plant, plus (b) Transmission Related General
Plant, plus (c) Transmission Plant Held for Future Use,
less (d) Transmission Related Depreciation Reserve,
less (e) Transmission Related
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 217
Accumulated Deferred Taxes, plus (f) Transmission Related
Loss on Reacquired Debt, plus (g) Other Regulatory Assets,
plus (h) Transmission Prepayments, plus (i) Transmission
Materials and Supplies, plus (j) Transmission Related Cash
Working Capital.
(a) PTF Transmission Plant will equal the balance of
the Transmission Provider's PTF Investment in
Transmission Plant excluding the Transmission
Provider's capital leases in the Hydro-Quebec DC
facilities (HQ leases).
(b) Transmission Related General Plant shall equal the
Transmission Provider's balance of investment in
General Plant multiplied by the ratio of
Transmission related direct Wages and Salaries
including those of the affiliated Companies to the
Transmission Provider's total direct Wages and
Salaries including those of the affiliated
Companies and excluding Administrative and General
Wages and Salaries (Transmission Wages and Salaries
Allocation Factor), multiplied by the ratio of PTF
Transmission Plant to Total Investment in
Transmission Plant excluding HQ leases (PTF
Transmission Plant Allocation Factor).
(c) Transmission Plant Held for Future Use shall equal
the balance of Transmission investment in FERC
Account 105 multiplied by the PTF Transmission
Plant Allocation Factor.
(d) Transmission Related Depreciation Reserve shall
equal the balance of Total Transmission
Depreciation Reserve, plus the monthly balance of
Transmission Related General Plant Depreciation
Reserve. Transmission Related General Plant
Depreciation Reserve shall equal the product of
General Plant Depreciation
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 218
Reserve and the Transmission Wages and Salaries
Allocation Factor described in Section (I)(A)(1)(b)
above. This sum shall be multiplied by the PTF
Transmission Plant Allocation Factor, described in
Section (I)(A)(1)(b) above.
(e) Transmission Related Accumulated Deferred Taxes
shall equal the Transmission Provider's balance of
Total Accumulated Deferred Income Taxes, multiplied
by the ratio of Total Investment in Transmission
Plant excluding HQ leases to Total Plant in service
excluding General Plant and HQ Leases (Plant
Allocation Factor), further multiplied by the PTF
Transmission Plant Allocation Factor described in
Section (I)(A)(1)(b) above.
(f) Transmission Related Loss on Reacquired Debt shall
equal the Transmission Provider's balance of Total
Loss on Reacquired Debt multiplied by the Plant
Allocation Factor as described in Section
(I)(A)(1)(e) above, further multiplied by the PTF
Transmission Plant Allocation Factor described in
Section (I)(A)(1)(b) above.
(g) Other Regulatory Assets shall equal the
Transmission Provider's balance of any deferred
rate recovery FAS 106 expenses multiplied
by the Transmission Wages and Salaries Allocation
Factor described in Section (I)(A)(1)(b), plus the
Transmission Provider's year end balance of FAS 109
multiplied by the Plant Allocation Factor described
in Section (I)(A)(1)(e) above. This sum shall be
multiplied by the PTF Transmission Plant Allocation
Factor, described in Section (I)(A)(1)(b) above.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 219
(h) Transmission Prepayments shall equal the
Transmission Provider's balance of prepayments
multiplied by the Wages and Salaries allocator
described in Section (I)(A)(1)(b) and further
multiplied by the PTF Transmission Plant Allocation
Factor described in Section (I)(A)(1)(b) above.
(i) Transmission Materials and Supplies shall equal the
Transmission Provider's balance of Transmission
Plant Materials and Supplies, multiplied by the PTF
Transmission Plant Allocation Factor described in
Section I(A)(1)(b) above.
(j) Transmission Related Cash Working Capital shall be
a 12.5% allowance (45 days/360 days) of
Transmission Operation and Maintenance Expense and
Transmission Related Administrative and General
Expense.
2. Cost of Capital Rate
The Cost of Capital Rate will equal (a) the Transmission
Provider's Weighted Cost of Capital, plus (b) Federal
Income Tax plus (c) State Income Tax.
(a) The Weighted Cost of Capital will be calculated
based upon the capital structure at the end of each
year and will equal the sum of:
(i) the long-term debt component, which equals
the product of the actual weighted average
embedded cost to maturity of the Transmission
Provider's long-term debt then outstanding
and the ratio that long-term debt is to the
Transmission Provider's total capital.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 220
(ii) the preferred stock component, which equals
the product of the actual weighted average
embedded cost to maturity of the Transmission
Provider's preferred stock then outstanding
and the ratio that preferred stock is to the
Transmission Provider's total capital.
(iii) the return on equity component, which equals
the product of the Transmission Provider's
Return on Equity as set in the Provider's LNS
open access tariff rate and the ratio that
common equity is to the Transmission
Provider's total capital.
(b) Federal Income Tax shall equal
A x FT
------
1 - FT
Where FT is the Federal Income Tax Rate and A is
the sum of the preferred stock component and the
return on equity component, as determined in
Section (I)(A)(2)(a)(ii) and Section
(I)(A)(2)(a)(iii) above.
(c) State Income Tax shall equal
(A + Federal Income Tax) x ST
------------------------------
1 - ST
where ST is the State Income Tax Rate, A is the
sum of the preferred stock component and the
return on equity component determined in Section
(I)(A)(2)(a)(ii) and Section (I)(A)(2)(a)(iii)
above, and Federal Income Tax is the rate
determined in Section (I)(A)(2)(b) above.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 221
B. Transmission Depreciation Expense shall equal the PTF Transmission
Plant Allocation Factor described in Section (I)(A)(1)(b) above,
multiplied by the sum of Depreciation Expense for Transmission
Plant, plus an allocation of General Plant Depreciation Expense
calculated by multiplying General Plant Depreciation Expense by
the Wages and Salaries Allocation Factor, described in Section
(I)(A)(1)(b) above.
C. Transmission Related Amortization of Loss on Reacquired Debt shall
equal the Transmission Provider's Amortization of Loss on
Reacquired Debt multiplied by the Plant Allocation Factor as
described in Section (I)(A)(1)(e) above, and further multiplied by
the PTF Transmission Plant Allocation Factor described in Section
(I)(A)(1)(b) above.
D. Transmission Related Amortization of Investment Tax Credits shall
equal the Transmission Provider's Amortization of Investment Tax
Credits multiplied by the Plant Allocation Factor described in
Section (I)(A)(1)(e) above, and further multiplied by the PTF
Transmission Plant Allocation Factor described in Section
(I)(A)(1)(b) above.
E. Transmission Related Municipal Tax Expense shall equal the
Transmission Provider's total municipal tax expense multiplied by
the Plant Allocation Factor described in Section (I)(A)(1)(e)
above, and further multiplied by the PTF Transmission Plant
Allocation Factor described in Section (I)(A)(1)(b) above.
F. Transmission Operation and Maintenance Expense shall equal all
expenses charged to FERC Account Numbers 560 through 573,
excluding those expenses in Account Number 565, multiplied by the
PTF Transmission Plant Allocation Factor described in Section
(I)(A)(1)(b) above.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 222
G. Transmission Related Administrative and General Expenses shall
equal the Transmission Provider's Administrative and General
Expenses, plus Payroll Taxes, multiplied by the Wages and Salaries
Allocation Factor described in Section (I)(A)(1)(b) above, further
multiplied by the PTF Transmission Plant Allocation Factor
described in Section (I)(A)(1)(b) above.
H. Transmission Related Integrated Facilities Credit shall equal the
Transmission Provider's transmission payments to affiliates for
use of the integrated transmission facilities of those affiliates.
I. Transmission Support Revenue shall equal Transmission Provider's
revenue received for PTF transmission support.
J. Transmission Support Expense shall equal Transmission Provider's
expenses paid for PTF transmission support.
K. Transmission Related Expense from Generators as may be determined
by the Management Committee.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 223
ATTACHMENT G
List Of Excepted Transaction Agreements
The lists which follow have been prepared by the individual Participants whose
names appear at the head of each list, and have not been checked or approved by
any other Participants.
Central Maine Power Company ("CMP")
Parties to the
Agreement
Arrangement CMP and:
Firm Wheeling
Expense
PSNH Wheeling for Bolt Hill NU
Revenue
Unitil Wheeling of BHE QFs Unitil
Madison Electric Works NU/MEW
Support Payments
Expense
HQ Phase II AC Facilities BECO
HQ Phase II AC Facilities NEP
HQ Phase I NEETCO
HQ Phase I VETCO
HQ Phase II NEH-TEL CO INC.
HQ Phase II NEH-T CORP (NHH)
Orrington SS MEPCO
Millstone 3 NU
Revenue
WF Wyman #4:
Section 386 (345 kV) Joint Owners
Section 164-167 (115 kV) Joint Owners
Maine Yankee (115 kV) Joint Owners
Section 214 (115 kV tie to N.H.) NU
Section 375 (345 kV Buxton to M.Y.) MEPCO
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 224
Bundled Requirements Sales
Houlton Wtr Co. Pwr Sales Agreement HWC
Fox Island Electric Coop
Kennebunk Light and Power KPL
Commonwealth Energy System
SUPPORT ARRANGEMENTS
Canal 1 Transmission Agreement
Description: Agreement to provide for transmission of electricity from Canal 1
to the transmission system of the unit power purchasers.
Parties to the Agreement: Boston Edison, Montaup, NEP, Cambridge, Commonwealth
Effective Date: 7/1/68
Canal 2 Transmission Support Agreement
Description: Agreement to support transmission facilities required for Canal 2
and Pilgrim 2.
Parties to the Agreement: Commonwealth, Boston Edison, Montaup
Effective Date: 5/1/75
324 Line (Canal to Pilgrim Stabilizer Line) & 355 Line (Pilgrim to Walpole)
Description: Agreement to support transmission facilities from Canal and
Pilgrim.
Parties to the Agreement: Commonwealth, Boston Edison, Montaup, NEP
Effective Date: 3/29/68
Seabrook Transmission Support Agreement
Description: Agreement to support three 345 KV transmission lines from Seabrook
Parties to the Agreement: Joint Owners
Effective Date: 5/1/73
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 225
Wyman 4 Transmission Agreement (Support)
Description: Agreement to support 345 kV and 115kV transmission facilities from
the unit.
Parties to the Agreement: Central Maine Power, Joint Owners (Commonwealth).
Effective Date: 11/74
Bell Rock Switching Station Support Agreement
Description: Agreement to support 115 KV switching station.
Parties to the Agreement: Commonwealth, Montaup
Effective Date: 1/15/73
Joint Ownership Agreement (336 Line)
Description: Agreement to purchase 20% interest in section of the 336 line.
Parties to the Agreement: Commonwealth, Boston Edison
Effective Date: 1/2/68
Participation Agreement (Maine-New Brunswick interconnection)
Description: Agreement to support the construction and maintenance of a 345 KV
of the portion of an interconnection between a substation in Wiscasset, ME and
a substation in New Brunswick.
Parties to the Agreement: Maine Electric Power and Participants
Effective Date: 5/69
Station 402 Agreement
Description: Agreement to support a 115 KV step down station.
Parties to the Agreement: Cambridge, Boston Edison
Effective Date: 10/1/65
Station 509 Agreement
Description: Agreement to support 345/115 KV station.
Parties to the Agreement: Cambridge, Boston Edison
Effective Date: 1/1/75
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 226
Hydro Quebec Support Agreements
Phase II Maine Electric Power SVC Facilities Support Agreement
Description: Agreement to support reinforcements to the MEP AC transmission
system. N.H. Hydro proposes to amend the N.H. Transmission Facilities Support
Agreement to include costs incurred under this Agreement.
Parties to the Agreement: Agreement is between Maine Electric Power and N.H.
Hydro
Effective Date: 10/1/88
New England Power AC Facilities Support Agreement
Description: Agreement covers improvements and reinforcements to NEP's AC
transmission system necessitated by the HQ phase II interconnection agreement.
Parties to the Agreement: NEP and Supporters
Effective Date: 6/1/85
Boston Edison AC Facilities Support Agreement
Description: Agreement covers improvements and reinforcements to BECo's AC
transmission system necessitated by the HQ phase II interconnection agreement.
Parties to the Agreement: Boston Edison and Supporters
Effective Date: 6/1/85
LONG TERM WHEELING
Agreement for Transfer of Electricity (Canal 1)
Description: Agreement for transfer of energy and capacity from Canal unit 1 to
Cambridge Electric across the BECo system.
Parties to the Agreement: Cambridge, Boston Edison
Effective Date: 7/1/68
Boott Hydro Wheeling
Description: Agreement to wheel power from Boot Hydro (20 MW) to Commonwealth
under NEP Tariff No. 3.
Parties to the Agreement: Commonwealth, NEP
Effective Date: 11/21/85
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 227
Collins Hydro Wheeling
Description: Agreement to wheel power (1.2 MW) from Collins Hydro to
Commonwealth under NEP Tariff No. 3.
Parties to the Agreement: Commonwealth, NEP
Effective Date: 12/31/84
Ware Hydro Wheeling
Description: Agreement to wheel power from Ware Hydro to Commonwealth under
NEP Tariff No. 3.
Parties to the Agreement: Commonwealth, NEP
Effective Date: 2/1/84
Chicopee Hydro Wheeling
Description: Agreement to wheel power (2 MW) from Chicopee Hydro to
Commonwealth
Parties to the Agreement: Commonwealth, Northeast Utilities
Effective Date: 5/1/95
Altresco Wheeling
Description: Wheeling charge for 30 MW entitlement
Parties to the Agreement: Cambridge, Altresco
Effective Date: 9/1/93
Altresco Wheeling
Description: Wheeling charge for 30 MW entitlement
Parties to the Agreement: Commonwealth, Altresco
Effective Date: 9/1/93
Masspower 1 Wheeling
Description: Wheeling charge for 30 MW entitlement
Parties to the Agreement: Commonwealth, Massachusetts
Effective Date: 7/31/93
Masspower 2 Wheeling
Description: Wheeling charge for 30 MW entitlement
Parties to the Agreement: Commonwealth, Masspower
Effective Date: 7/31/93
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 228
(As corrected)
Northeast Energy Associates Wheeling
Description: Wheeling of 53 MW entitlement
Parties to the Agreement: Commonwealth, Northeast Energy Associates
Effective Date: 10/1/91
Fitchburg Gas and Electric Light Co.
NU (Linweave)
a. Western Mass Electric Description - Transmission service from
Holyoke Water Power to NEP system
End Term - 10/31/2012
Capacity - 3MW
b. Holyoke Water Power Description - Distribution Agreement
End Term - 10/31/2012
Capacity - 3MW
Support Agreements CMP-Wyman #4 transmission support
agreements
NU-Millstone 3 transmission
support agreements
Various-HO Phase 1 support
agreements
Various-HO Phase 2 support
agreements
Unitil Power Corp.
Central Maine Power Co. Description
- Perc and BHE system energy
delivered to the BHE/CMP
border by BHE at no
additional charge
End Term/Capacity - 25MW
ending 07/01/1997,
24.27MW ending 10/31/2001,
20.3MW ending 08/15/2002,
and 4MW ending 02/28/2003
NEP (Maine Yankee) Description
- UPC reimburses NEP for
Maine Yankee transmission
to the NEP/PSNH border.
End Term - October 31, 2005
Capacity - 2MW
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 229
NEPOOL Open Access Transmission Tariff
Original Sheet No. 228
(As corrected)
NEP (Ocean States Description
Power 1 & 2) - Service under FERC Electric Tariff
no. 3 Delivery made from NEP system
to the PSNH border
End Term - October 31, 2010
Capacity - 22.5 MW
NEP (Salem Harbor 3) Description - Article VIII of the
contract
- Service under FERC
Electric Tariff no. 3.
Delivery made from NEP
system to the PSNH border
End Term - October 31, 2010
Capacity - 9.8 MW
UI Bridgeport Harbor 3 Description - Reimburse UI for delivery
subject to terms/conditions of Corridor &
Non-Firm outflow agreements UI-NU in
9/11/92 letter
End Term - 10/31/2005
Capacity - 15MW
Support Agreements Description - Various HQ Phase II support
agreements
NEW ENGLAND POWER COMPANY AND ITS AFFILIATES
A. Wheeling Agreements
The following NEP Long Term Point-to-Point transmission services will be
grandfathered at a fixed rate of $17.00/kW-yr. Distribution and
transformation rates, when applicable, will be subject to NEP's
applicable point-to-point tariffs.
<TABLE>
<CAPTION>
PURCHASER AMOUNT DATE OF
AGREEMENT PURCHASE KW SERVICE
<S> <C> <C> <C>
Boston Edison L'Energia 65,048 7/9/96
Braintree NEP System 2,000 7/9/96
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 230
Commonwealth Electric Boott Hydro 20,000 7/9/96
Collins Dam 1,500 7/9/96
Ware Hydro 1,200 7/9/96
Hingham NEP Manchester St 1,446 7/9/96
NEP Bear Swamp 502 7/9/96
Hull Refuse Fuels 341 7/9/96
Montaup McNeil Burlington (thru) 8,000 7/9/96
Taunton NEP System 10,000 7/9/96
Unitil Ocean State I & II 22,500* 7/9/96
Salem Harbor 9,800* 7/9/96
</TABLE>
* Amounts change with seasonal unit ratings.
B. Transmission of Maine Yankee and Pool-Planned unit sales by NEP to
Unitil will continue under its term, unless otherwise terminated by
parties.
C. Support Agreements for PTF Facilities
1. Transmission Support Agreements to facilitate interconnection of Pool
Planned Units. (Multi party agreements)
* Millstone 3 dated 8/9/74.
* Wyman 4 dated 11/1/74.
* Seabrook
a) PSNH ac reinforcements dated 5/1/73.
b NEP's Tewksbury/Amesbury line, multi parties dated 5/1/73.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 231
2. Canal Transmission Agreement/Medway line, NEP/BECO/EUA/CE, Letter
Agreement dated 3/29/68 with amendment dated 1/5/73.
3. Second Canal Circuit dated 11/4/74.
4. PTF support agreements with Boston Edison Company.
-> 342 stabilizer line dated 3/29/68 with amendment dated 1/5/73.
-> Canal/Medway dated 12/1/65, amended 2/18/66 with supplemental
agreement dated 4/9/79.
-> West Medway ACB dated 1/31/69.
-> 201/502 interconnection, Letter Agreement dated 5/11/79.
-> Golden Hills/Mystic
This is a two-way agreement dated 5/25/88 with amendment dated
2/1/95.
-> Enron Interconnection Upgrades dated 6/27/95.
NEP pays BE for upgrades required at Medway due to
interconnection of the Milford Plant.
-> NEP/BECO Sandy Pond/Tewksbury/Woburn line support, Letter
Agreement dated 7/18/73.
-> NEP/BECO M-139 line support dated 11/12/85, amended 3/1/95.
-> NEP/BECO N-140 line support dated 11/12/85, amended 3/1/95.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 232
5. All PTF related Hydro Quebec agreements. (See attached Exhibit 1 for a
list of all Hydro Quebec related agreements.)
Ongoing support of AC reinforcement of NEP transmission.
6. Agreements with EUA companies.
-> W. Farnum relays dated 2/17/95, BVE/NE.
-> April 30, 1979 Letter Agreement between EUA and NEPSCO which outlined
the basis for the next two agreements and other anticipated
transmission additions to accommodate Charlestown generation.
-> 345 kV Northern RI transmission dated 7/15/73, amended 4/1/88, BVE/NE.
-> 2nd transformer at West Farnum dated 8/1/81, BVE/NE.
7. Support Agreements with Vermont companies.
-> NEP/VELCO F-206 line dated 4/5/74.
-> NEP/CVPS 186 line dated 8/1/67.
8. Agreements with NU companies.
-> NEP/PSNH Q-195 Terminal support dated 12/22/58.
-> NEP/PSNH Y-151 agreement dated 6/26/45 and subsequently amended.
-> Tallman/Kaslow agreement and subsequent amendment. This agreement
intends to cover mutual use of interconnections between NEP and PSNH,
dated 6/29/79 and amended 2/21/90.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 233
-> North/South Integration Agreement dated 2/24/90, and last amended in
October 1996.
9. NEP/MDC support agreement for D-156 and W-23 lines dated 8/31/95.
D. Other Agreements Not Subject To The NEPOOL Agreement
The above is a list of grandfathered facilities support and wheeling
agreements over the PTF system to which NEP or its affiliated companies are a
party. This list does not include any agreement not related to rights across
PTF such as study agreements, requirement contracts and tariffs, purchase and
sales power contracts, water rights, right-of-way, pole or duct lease
agreements, distribution wheeling or support agreements, stranded cost
recovery agreements, metering agreements and services across non-PTF
transmission system. These agreements are not subject to the NEPOOL
Agreement and continue per their own terms and conditions. Furthermore, all
Network Service Agreements under NEP's Open Access Tariff, as amended from
time to time, and any agreements or arrangements between NEP and its
affiliated companies are not subject to the NEPOOL Agreement and will
continue per their terms as may be amended from time to time.
Northeast Utilities Service Company ("NUSCO")
<TABLE>
<CAPTION>
Effective
Company Service FERC Date
<S> <C> <C> <C>
CMEEC Comprehensive Transmission Service Agreement ER91-209-000 11/29/90
ER93-297-000
Chicopee Muni. Comprehensive Transmission Service Agreement ER85-689-000 11/1/95
ER93-219-000
So. Hadley Elec. Comprehensive Transmission Service Agreement EC-90-10-000 1/1/95
ER85-689-000
ER85-720-000
Westfield G&E Comprehensive Transmission Service Agreement EC90-10-000 1/1/95
Unitil (Rate 158) Comprehensive Transmission Service Agreement EL92-42-000 11/11/92
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 234
Point-to-Point Transmission Service Agreement ER94-1160-000 9/1/94
Madison Electric
NEP Point-to-Point Transmission Service Agreement ER93-403-000 4/1/93
SBNG
Holyoke G&E Point-to-Point Transmission Service Agreement ER95-1354-000 7/1/95
NYPA Power
CMP (Rate 104) Point-to-Point Transmission Service Agreement 12/15/81
Bolt Hill Sub.
Commonwealth Elec. Point-to-Point Transmission Service Agreement ER86-85-000 5/1/85
Swift River -Chicopee ER86-79-001
Units 1&2
Groton Elec. Point-to-Point Transmission Service Agreement ER92-66-000 11/1/89
Glendale Hydro
UI Point-to-Point Transmission Service Agreement ER92-65-000 5/1/90
Corridor
Groton Elec. Point-to-Point Transmission Service Agreement ER92-458-000 4/1/92
Littleville Power -Texon ER92-66-000
Hydro
ER93-219-000
Fitchburg G&E Point-to-Point Transmission Service Agreement ER94-559-000 1/1/95
Harris Hydro ER95-357-000
Masspower Point-to-Point Transmission Service Agreement ER94-902-000 7/31/93
ER93-219-000
LILCO Point-to-Point Transmission Service Agreement ER94-1201-000 5/1/94
Altresco Pittsfield Point-to-Point Transmission Service Agreement ER95-306-000 1/1/95
Limited
MMWEC Point-to-Point Transmission Service Agreement ER96-201-000 11/1/95
NYPA Power
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 235
Point-to-Point Transmission Service Agreement ER96-201-000 11/1/95
Pascoag Fire Dist.
NYPA Power
C.E. Pontook LP Point-to-Point Transmission Service Agreement 7/26/85
Suncook Energy Corp. Point-to-Point Transmission Service Agreement ER96-1277-000 4/8/96
Unitil Power Corporation Point-to-Point Transmission Service Agreement ER93-219-000 12/19/88
Baystate State Gas ER89-219-000
NUSCO Point-to-Point Transmission Service Agreement ER96-2338-000 10/1/96
Suffolk County, NY
NUSCO Point-to-Point Transmission Service Agreement ER83-358-000 12/1/81
MMWEC, Stonybrook ER93-219-000
NUSCO Point-to-Point Transmission Service Agreement ER94-1088-000 6/1/94
Unitil: Norwalk 1&2
NUSCO Point-to-Point Transmission Service Agreement ER93-417-001 11/1/94
Fitchburg G&E: System
Sale
NUSCO Point-to-Point Transmission Service Agreement ER94-1591-000 11/1/94
Reading Muni.: Slice of
System
NUSCO Point-to-Point Transmission Service Agreement ER93-901-000 11/1/93
Middleton Muni.: System
Sale
NUSCO Point-to-Point Transmission Service Agreement ER93-884-000 11/1/93
Georgetown Muni.: System
Sale
NUSCO Point-to-Point Transmission Service Agreement ER93-915-00 11/1/93
Princeton Muni.: Holyoke
Hydro
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 236
Point-to-Point Transmission Service Agreement ER93-913-000 11/1/93
NUSCO
VPPSA: System Sale
NUSCO Point-to-Point Transmission Service Agreement ER94-1211-000 5/1/94
Citizens Utilities: EC90-10-007
System
Sale
NUSCO Point-to-Point Transmission Service Agreement ER94-1592-000 11/1/94
Holyoke G&E: System Sale
NUSCO Point-to-Point Transmission Service Agreement ER94-1207-000 11/1/94
Danvers Elec.: System
Sale
NUSCO Point-to-Point Transmission Service Agreement ER94-1207-000 11/1/94
Littleton Electric L&W:
System Sale
NUSCO Point-to-Point Transmission Service Agreement ER94-1207-000 11/1/94
Mansfield Muni.: System
Sale
NUSCO Point-to-Point Transmission Service Agreement ER95-584-000 5/1/95
Sterling Muni.: System
Sale
NUSCO Point-to-Point Transmission Service Agreement ER95-1137-000 6/1/95
Princeton Muni.: System
Sale
NUSCO Point-to-Point Transmission Service Agreement ER95-1461-000 8/1/95
Vermont Marble -System
Sale
NUSCO Point-to-Point Transmission Service Agreement ER96-160-000 11/1/95
Rowley Muni.: System Sale
Littleton - Light Point-to-Point Transmission Service Agreement 10/30/91
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 237
Marlboro Hydro
Corp./Minnewawa
NEP Point-to-Point Transmission Service Agreement 12/6/91
Waste Management of
N.H./Turnkey
NEP Point-to-Point Transmission Service Agreement ER93-914-000 11/1/93
Slice of System ER95-41-000
CMEEC Point-to-Point Transmission Service Agreement ER93-663-000 6/15/93
Liquid Carbonic
Indus./Medical Corp.
Wallingford Elec. Point-to-Point Transmission Service Agreement ER92-730-000 7/27/92
CT Steel
CMP Point-to-Point Transmission Service Agreement ER94-48-000 11/1/95
ER95-1635-000
ER95-1557-000
CMP Point-to-Point Transmission Service Agreement ER94-48-000 11/1/95
ER95-1635-000
BECO Point-to-Point Transmission Service Agreement ER94-48-000 11/1/95
ER95-1851-000
ER96-3144-000
NUSCO Point-to-Point Transmission Service Agreement ER94-48-000 11/1/94
Unitil Power Corporation: ER94-1581-000
Slice
Connecticut Yankee Transmission Station Service (115 KV) Support Agreement
Millstone #3 Sharing Transmission Support Agreement 8/9/74
Agreement
345 KV Millstone -
Manchester
310 line
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 238
Transmission Support Agreement ER93-891-000 11/1/93
UI
Derby Junction (5/1/61)
Old Town-Hawthorne
(11/1/73)
Pease Road (1/1/69)
Glen Lake (7/20/56)
Devon and Trumball
Junction (7/1/61)
UI Transmission Support Agreement E-9154 12/1/72
Black Pond
Holyoke G&E Transmission Support Agreement ER82-626-000 1/1/73
Fairmont 115 KV ER82-627-000
Substation
MMWEC Transmission Support Agreement 8/1/79
345 KV Ludlow-Stonybrook
Seabrook Station Transmission Support Agreement 5/1/73
345 KV Seabrook -Timber
Swamp -Newington 369 line
345 KV Seabrook -Scobie
363 line
345 KV Seabrook -Ward
Hill -Tewksbury 394 line
VEP Transmission Support Agreement 12/1/72
Littleton 230/115 KV Sub.
NEP Transmission Support Agreement 12/22/58
Moore Sub. - Q195 115KV
Terminal
</TABLE>
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 239
<TABLE>
<CAPTION>
<S> <C>
1. Transmission Allocation Agreement Among Vermont Electric Power Company, Inc., New England Power Company, The Connecticut
Light and Power Company and Western Massachusetts Electric Company dated January 6, 1989 (ER89-522-000, Effective November 1,
1988)
2. Transmission Agreement For Use of North-South Interface Of New England Transmission System Between Northeast Utilities and
New England Power Company dated February 24, 1990.
3. Letter agreement between Northeast Utilities and Vermont Electric Power Company, dated July 24, 1990.
4. Letter agreement between Northeast Utilities and Citizens Utilities Company, dated August 2, 1990.
5. Letter agreement between Northeast Utilities/PSNH and New England Power Company, dated June 1, 1970.
6. Letter agreement between Northeast Utilities/PSNH and New England Power Company, dated June 29, 1979.
7. Letter agreement between Northeast Utilities/PSNH and Central Maine Power Company, dated November 18, 1986.
8. Transmission service pursuant to the Agreement between NUSCO/PSNH and Citizens Utilities, dated February 12, 1982 for service
to the Northumberland, New Hampshire, Bloomfield, Vermont and Beecher Falls, Vermont delivery points.
9. Transmission Agreement Between New Hampshire Electric Cooperative, Inc. and Public Service Company of New Hampshire, dated
March 31, 1981.
10. All licenses and certificates granted by the New Hampshire Public Utilities Commission or other state, municipal or federal
regulatory bodies are grandfathered.
11. All transmission arrangements supporting and providing transmission service across non-PTF facilities are not subject to this
Tariff and will continue under their existing terms and conditions.
</TABLE>
Eastern Utilities Associate System ("EUA")
<TABLE>
<CAPTION>
Expiration FERC Number/
Contract Name Parties Dates Docket Number
<S> <C> <C> <C>
Canal-Medway Line (Wood Pole Line Comelec, BECO and Montaup End of Life of Canal #1 MECO/FPC No. 5
#331)
Trans of Canal #2/Pilgrim #2 Units Comelec, BECO and Montaup 2008 E-9358
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 240
Letter Agree-Auburn St. Tap Bridges BECO and Montaup Thru Life of Tap Bridges E-9404
Use of Pilgrim Towers BECO and Montaup 19 Years From Install or ER79-485-000
When New 345 kv Circuit
is Needed
Card Street Use Agreement BECO, Comelec and BVE August 30, 2001 E-9022
Transmission to Middleboro/ Pilgrim #1 BECO and Montaup When MGLD Contract E-9276
Expires with Pilgrim Amended ER77-179-000
East Bridgewater Gas Circuit Breaker Eastern Edison and Middleboro Gas ER91-59-000
and Electric
1601 Breaker at Bridgewater Substation Middleboro and Montaup N/A
Contract Demand/Radial Line Use Middleboro and Montaup 60 Month's Written Notice ER83-485-000
ER83-486-000
Transmission Support/ Millstone #3 Montaup and Others Term of the Sharing ER93-222-000
Agreement
Transmission Support/ Seabrook #1 Montaup and Others Term of the Joint Owners ER76-694-000
Agreement
Rental Charges for Trans. Facilities Blackstone and Montaup Perpetuity Implied ER83-642-000
in Northern R.I. ER88-400-000
Sharing Charges for Trans. Facilities Blackstone/Narragansett July 14, 2003 ER83-642-000
in Northern R.I. ER88-400-000
Sharing Charges for 2nd/ Xformer W. Blackstone/Narragansett July 28, 2013 ER83-642-000
Farnum Sub.
Transmission Support Agreement Blackstone/Narragansett Mont./New 3 Year's Written Notice BVE FERC No. 21
NEP/V-148 Line England Power
Tiverton Tap NEP and Montaup UNTIL Costs are Recovered ER81-722-000
by Montaup
Support of Riverside Sub and 822 Line Blackstone and Narragansett 2 Year's Written Notice BVE ER88-400-000
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 241
Amended and Restated Blackstone and OSP Term of the Power ER89-69-000
Interconnection Agreement By Units 1 & 2 Contract
and Among Blackstone
Valley Electric and Ocean State Power
Contract for Firm Contract Service Mass Power/Montaup BECO 12/31/2013 ER93-624-000
(Wheeling) Mass Power to Comelec and Comelec 7/30/2008
BECO Comelec 7/30/2008
Contract for Firm Contract Service Altresco/Montaup 12/31/2011 ER93-623-000
(Wheeling) Altresco to Comelec and
BECO
Service Agreement (Wheeling) Cleary North Attleboro/Montaup LOU ER85-396-000
9cc to North Attleboro Contract Termination
Service Agreement (Wheeling) Cleary Hudson/Montaup LOU ER87-362-000
9cc to Hudson Contract Termination
Amendment to Contract Between Montaup Montaup/MMWEC June 30, 2001 ER87-531-000
and MMWEC (NYPA) Extended Monthly Through
October 31, 2003
Montaup Transmission Service Agreement PFD/NYPA June 30, 2001 ER87-615-000
Interconnection NEA to Blackstone's Blackstone/NEA Concurrent to Power ER92-207-000
Transmission System Agreement
Interconnection Agreement Between TMLP TMLP/Montaup Two Year's Written Notice E-9117
and Montaup or Until Cleary #9 is ER91-305-000
Reduced to Zero
Service Agreement Between Braintree TMLP/Braintree LOU or MEC Terminates Due ER85-390-000
and Montaup Wheeling Cleary 9cc to Inadequate Cap. on ER87-126-000
Service Agreement Between Hingham and Hingham/Braintree LOU or MEC Terminates Due ER93-137-000
Montaup Wheeling Cleary 9cc to Inadequate Cap. on ER87-126-000
Company's PTF
</TABLE>
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 242
The United Illuminating Company ("UI")
<TABLE>
<CAPTION>
Arrangement Parties to the Agreement UI and:
<S> <C>
Wholesale Power Agreements
BECO Exchange BECO
(November 1, 1996, until terminated by parties)
BH Sale from NHHS BH
(November 1, 1996 through October 31, 1997)
Citizens Sale from NHHS Citizens
(November 1, 1996 through October 31, 1999)
UNITIL Purchased Power Agreement, from NHHS UNITIL
(November 1, 1996 through October 31, 2006)
Corridor Service Agreement (BHS#3) NU
(May 1, 1993 through October 31, 2005)
NU Exchange Agreement NU
(May 1, 1993 until terminated by parties)
PASNY System Purchase Agreement CMEEC
(March 1, 1990 through June 30, 2001)
Support Arrangements
Interim Substation Support Agreement, dated 8/24/1993 NU
(FERC Docket ER93-891-000)
Seabrook Transmission Support Agreement Joint Owners
Hydro-Quebec Phase I NEETCO
Hydro-Quebec Phase I VETCO
Hydro-Quebec Phase II NEH-TEL CO INC.
Hydro-Quebec Phase II NEH-T CORP (NHH)
Hydro-Quebec Phase II AC Facilities BECO
Hydro-Quebec Phase II AC Facilities NEP
Millstone Support Agreement NU
Black Pond Coke Works Transmission Lines NU
</TABLE>
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 243
Bangor Hydro-Electric Company
<TABLE>
<CAPTION>
Support Party
<S> <C>
HQ Phase II AC BECO
HQ Phase II AC NEP
HQ Phase I NEETCO
HQ Phase I VETCO
HQ Phase II NEH-T Corp (NHH)
HQ Phase II NEH-TEL Co Inc
Orrington SS MEPCO
Wyman #4 (345KV) Sec 386 Joint Owners
Wyman #4 (115KV) 164-167 Joint Owners
</TABLE>
Boston Edison Company Wheeling Contracts
<TABLE>
<CAPTION>
Customer Type Expiration Date MWs
<S> <C> <C> <C>
Altresco Contract 12/31/2011 29
Braintree PASNY 10/31/2003 3
Braintree Tariff - NEES CD 10/31/2004 10
Braintree Tariff - Cleary 9 Life of unit 2
Braintree LV-PTF-Canal Life of unit 25
Braintree LV-PTF-NH Yankee Life of Unit 7
Braintree LV-PTF-Hydro-Quebec 9/1/2000 2
Hingham PASNY 10/31/2003 2
Hingham Tariff-Cleary 9 Life of unit` 3
Hingham Tariff-Manchester Life of unit 2
Hingham LV-PTF-Potter Life of unit 2
Hingham LV-PTF-Stonybrook Life of Unit 23
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 244
Hingham LV-PTF-NH Yankee Life of unit 5
Hingham LV-PTF-Hydro-Quebec 9/1/2000 1
Hingham LV-PTF-Millstone 3 Life of unit 8
Hull PASNY 10/31/2003 1
Hull Tariff-Lawrence Life of unit 1
Hull LV-PTF-Millstone 3 Life of unit 2
Hull LV-PTF-CMP Life of unit 1
Hull LV-PTF-NH Yankee Life of unit 1
Hull LV-PTF-Hydro-Quebec 9/1/2000 1
Hull LV-PTF-Stonybrook Life of unit 7
Reading PASNY 10/31/2003 6
Reading Tariff-NEP CD 10/31/99 15
Reading Tariff-Norwalk Harbor 10/31/2005 9
Reading Tariff-Millstone 3 10/31/2005 3
Reading LV-PTF-Millstone 3 Life of unit 11
Reading LV-PTF-Stonybrook Life of unit 91
Reading LV-PTF-NH Yankee Life of unit 9
Reading LV-PTF-Hydro-Quebec 9/1/2003 3
Cambridge Canal Transfer Life of unit 42
Cambridge Yank Excess Life of unit 3
Cambridge LV-PTF-Canal Life of unit 58
EUA EHV-PTF-Potter 2 Life of unit 40
EUA LV-PTF-Potter 2 Life of unit 40
UI EHV-PTF-Mystic 7 Life of unit 100
North Attleboro EHV-PTF-Potter 2 Life of unit 5
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 245
North Attleboro LV-PTF-Potter 2 Life of unit 5
Belmont PASNY 10/31/2003 2
Concord PASNY 10/31/2003 2
NEP Tariff 10/01/1997 225
Wellesley PASNY 10/31/2003 2
</TABLE>
Boston Edison Company Support Contracts
<TABLE>
<CAPTION>
BECo Revenue:
<S> <C> <C> <C>
Cambridge Station 402 3/31/1997
Cambridge Station 509 2004 or later
Com Elec Card Street Line 8/30/2001
Reading Radial Lines Life of unit
EUA Whitman Tap Life of unit
NEP Lines 255-2337,8 3 yr notice
NEP Mystic/Golden Hills 1999
NEP W.Medway Breaker 2003
NEP Line 201-502 2009
NEP Canal 1 Lines Life of unit
HQ Participants BECo HQ II AC Facilities 2020
CEC, EUA, NEP Stabilizer Line 2008
CEC, EUA Canal 2 Lines 2008
BECo Expense:
CMP Wyman 115/345kV 2005
Com Elec Line 355 2008
EUA Line 344 2008
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 246
Chester SVC 2020
NEP Sandy Pond-Tewksbury 2005
NEP M-139 Line 2015
NEP N-140 Line 2015
NEP HQ 11 AC Facilities 2020
NEP Station 90 (Golden Hills) 2017
</TABLE>
Vermont Electric Company
VELCO 1991 Transmission Agreement FEU 246.
Central Vermont Public Service Corporation
- - Vermont Yankee (Bundled T&G)
Unitil, et al
Resale Service (R-12) FPC Tariff First Rev. Vol. I Rochester Electric L & P
T&D FERC Tariff, Original Vol. 3
Vermont Electric Coop./Lyndonville Elec. Dept./Village of Ludlow, Elec.
Dept./Village of Johnson Water & Light Dept./Village of Hyde Park Water & Light
Dept./Rochester EL&P/Woodsvilles Fire Dist. Water & LD/Reserve System Capacity
Service (RS-2) FERC No. 135
Connecticut Valley Elect. Co.
Network Service FERC Tariff 6 new Hampshire Electric Cooperative
CVEC Service FERC No. 12 Woodsville Fire District Water & Light Dept.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 247
Interconnection Agreement CVPS/Green Mountain Power
FERC ER94-35-00/Northern Loop Interconnection Agreement and the VELCO
Agreements with VELCO Participants known as the VELCO Transmission Agreement
and VELCO Participants Agreement.
MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC COMPANY
("MMWEC")
MMWEC Phase I Intermediate Units Agreement for Joint Ownership, Construction
and Operation (and associated transmission)
Parties: Green Mountain Power; Village of Lyndonville, Vermont
Effective Date: October 1, 1977
Green Mountain Power Corporation ("GMP")
To the extent the Transmission Interconnection and Service Agreements between
GMP and the following entities require the use of the Y-25 69 kV line between
Bennington and Harriman, they will be Excepted Transaction Agreements:
Central Vermont Public Service Corporation
Washington Electric Cooperative
Vermont Electric Cooperative
Northfield Electric Department
Town of Readsboro Electric Light Department
Village of Hardwick Electric Department
Village of Jacksonville Electric Department
Village of Morrisville Water & Light Department
Village of Stowe Water & Light Department
Contested Arrangements over Ties
Transmission Allocation Agreement Among Vermont Electric Power Company, Inc.,
New England Power Company, The Connecticut Light and Power Company and Western
Massachusetts Electric Company dated January 6, 1989 (ER89-522-000, Effective
November 1, 1988).
The Participants have been unable to agree on the inclusion in this list of the
arrangements for use of the tie lines for transactions from New York, New
Brunswick and Hydro-Quebec beyond October 31, 1997, which is the end of the
next Capability Period, or on the effect of including such arrangements on the
list beyond that date. With respect to these tie-line arrangements, the
Participants have agreed to include such arrangements as Excepted Transaction
Agreements through October 31, 1997, and to seek Commission resolution of
whether such arrangements should be grandfathered consistent with Order No.
888. Further, the Participants agree that, until October 31, 1997, the use of
the lines under such tie-line arrangements will be firm service with equal
priority with other firm arrangements. This agreement is a compromise
solution to address an immediate concern and is without prejudice to any
Participant's rights to argue that further grandfathering of such tie-line
arrangements is inappropriate. The Participants have all reserved the right to
present arguments for or against continued inclusion of such tie-line
arrangements as Excepted Transactions Agreements after October 31,1997, without
violating their agreement to support acceptance by the Commission of the
Thirty-Third Agreement.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 248
EXHIBIT 1
HVDC Phase II Documents List
o Order Amending Authorization to Export Electric Energy to Canada,
NEPOOL
o Amendment to Presidential Permit PP-76 Authorizing VETCo to
Construct....Electric Transmission Facilities at the International Border
Between the United States and Canada.
o PJM-New England Hydro Transmission Service Agreement
o Phase II Boston Edison AC Facilities Support Agreement
o Phase II New England Power AC Facilities Support Agreement
o Preliminary Quebec Interconnection Support Agreement - Phase II
(Superseded)
o Phase II Maine Electric Power SVC Facilities Support Agreement
o Phase II Massachusetts Transmission Facilities Support Agreement
o Phase II New Hampshire Transmission Facilities Support Agreement
o Preliminary Vermont Support Agreement RE: Quebec Interconnection -
Phase II (Superseded)
o Equity Funding Agreement for New England Hydro-Transmission Corporation
o Equity Funding Agreement for New England Hydro-Transmission Electric
Company, Inc.
o Agreement Authorizing Execution of Phase II Firm Energy Contract
o Metallic Return Service Agreement Between New England Electric
Transmission Corporation and New England Hydro-Transmission Corporation
o Amendment to Agreement With Respect to Use of Quebec Interconnection
o Agreement Between VELCO and New England Hydro-Transmission Corporation
o LEASE Between New England Power and New England Hydro-Transmission
Electric Company, Inc.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 249
o LEASE Between New England Power and New England Hydro-Transmission
Corporation
o Phase II Vermont DMNRC Support Agreement
o Agreement Amending New England Power Pool Agreement
HVDC Phase I Documents List
o Order Authorizing the Exportation of Electric Energy to Canada
o Presidential Permit PP-76 Authorizing VETCo to Construct....Electric
Transmission Facilities at the International Border Between the United States
and Canada.
o Preliminary Quebec Interconnection Support Agreement, as Amended
o Phase I New Hampshire Transmission Facilities Support Agreement
o Agreement for Transmission Maintenance Service (VELCO-NEET)
o Phase I Vermont Transmission Line Support Agreement (and Amendments)
o Agreement Amending New England Power Pool Agreement
o Interconnection Agreement, Hydro-Quebec-NEPOOL Participants
o Energy Banking Agreement
o Energy Contract
o LEASE Between new England Power and New England Electric Transmission
Corporation
o Upper Development - Lower Development Transmission Line Support
Agreement, New England Electric Transmission Corporation and New England
Power Company.
o Agreement for Reinforcement and Improvement of New England Power
Company's Transmission System
o Equity Funding Agreement for New England Electric Transmission
Corporation
o Agreement With Respect to Use of Quebec Interconnection (and
amendments)
o Phase I Terminal Facilities Support Agreement
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 250
ATTACHMENT G-1
Agreements re Local Network Service
Notwithstanding any termination of the status as Excepted Transaction of the
transmission arrangements for the following agreements, the arrangements shall
continue to be excepted for their respective terms, from the requirement to pay
a Local Networks Service charge:
1. WMECO/NEP service to French King/Shelburne, Transmission Service
Agreement dated 3/15/94 and subsequently amended.
2. WMECO/NEP service to SBNGB, Transmission Service Agreement dated
2/23/93 and subsequently amended.
3. Cambridge/BECO support agreements dated 10/1/65 and 1/1/75.
4. Six UI substations, UI/NU Agreement dated 8/24/93.
5. CMP/MEW/NU Agreement dated as of May 16, 1994.
6. CMEEC/NU Agreement dated 11/29/90.
7. Chicopee/NU Agreement dated 11/1/95.
8. South Hadley/NU Agreement dated 11/1/95.
9. Westfield/NU Agreement dated 1/1/95.
10. Unitil/NU Agreement dated 11/1/92.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 251
ATTACHMENT H
Form of
Network Operating Agreement
1.0 Preamble
This Network Operating Agreement is entered into by and between the NEPOOL
Participants (the "Transmission Provider") acting through __________ (the
"System Operator") and ____________ (the "Transmission Customer") as an
implementing agreement for the NEPOOL Open Access Transmission Tariff and is
subject to and in accordance with the NEPOOL Open Access Tariff. All
definitions and other terms and conditions of the NEPOOL Open Access
Transmission Tariff are incorporated herein by reference. The Transmission
Provider may designate a satellite dispatch center and/or one or more
Participants to act for it under this Agreement.
2.0 General Terms and Conditions
The Transmission Provider agrees to provide transmission service to the
Transmission Customer's equipment or facilities, etc., subject to the
Transmission Customer operating its facilities in accordance with applicable
NEPOOL and NPCC criteria, rules, standards, procedures, or guidelines as they
may be adopted and/or amended from time to time. In addition to the
provisions defined in those documents, service to the Transmission Customer's
equipment or facilities, etc. is provided subject to the following specified
terms and conditions.
2.1 Electrical Supply: The electrical supply to the Point(s) of Delivery
shall be in the form of three-phase sixty-hertz alternating current at
a voltage class determined by mutual agreement of the parties.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 252
2.2 Coordination of Operations: The Transmission Provider shall consult the
Transmission Customer and/or its Designated Agent regarding timing of
scheduled maintenance of the Transmission System and the Transmission
Provider shall schedule any shutdown or withdrawal of facilities to
coincide with the Transmission Customer's equipment or facilities, etc.
scheduled outages of the Transmission Customer's resources, to the
extent practicable. In the event the Transmission Provider is unable
to schedule the shutdown of its facilities to coincide with
Transmission Customer's schedule, the Transmission Provider shall
notify the Transmission Customer and/or its Designated Agent, in
advance if feasible, of reasons for the shutdown, the time scheduled
for it to take place, and its expected duration. The Transmission
Provider shall use due diligence to resume delivery of electric power
as quickly as possible.
2.3 Reporting Obligations: The Transmission Customer shall be responsible
for all information required by NPCC or NEPOOL. The Transmission
Customer shall respond promptly and completely to the Transmission
Provider's reasonable requests for information, including but not
limited to, data necessary for operations, maintenance, regulatory
requirements and analysis. In particular, that information may
include:
For Network Loads:
- 10-year coincident, seasonal (summer, winter) Annual Peak Load
forecast, aggregated by geographic distribution area
- Load Power Factor performance by geographic distribution area
- Underfrequency load shedding capability aggregated by geographic
distribution area
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 253
- Block load shedding capability aggregated by geographic
distribution area
- Disturbance/interruption reports
- Protection system setting conformance
- Protection system testing and maintenance conformance
- Planned changes to protection systems
- Metering testing and maintenance conformance
- Planned changes in transformation capability
- Conformance to harmonic and voltage fluctuation limits
- Dead station tripping conformance
- Voltage reduction capability conformance
For Network Resources and interconnected generators:
- 10-year forecast of generation capacity retirements and
additions, if applicable
- Generator reactive capability verification
- Generator underfrequency relaying conformance
- Protection system testing and maintenance conformance
- Planned changes to protection system
- Planned changes to generation parameters
- Metering testing and maintenance conformance
Failure by the Transmission Customer to do so may constitute default.
Delinquency in responding by the Transmission Customer will result in a
fine as described in 5.0 below.
The Transmission Customer shall supply accurate and reliable
information to the system operators regarding metered values for MW,
MVAR, volt, amp, frequency, breaker status indication, and all other
information deemed necessary by the Transmission Provider for reliable
operation. Information shall be gathered for electronic communication
using one or more of the following: supervisory control and data
acquisition (SCADA), remote terminal unit (RTU) equipment, and remote
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 254
access pulse recorders (RAPR). All equipment used for metering, SCADA,
RTU, RAPR, and communications must be approved by the Transmission
Provider.
2.4 Operational Obligations: The Transmission Customer shall request
permission from the system operators prior to opening and/or closing
circuit breakers per applicable switching and operating procedures.
The Transmission Customer shall carry out all switching orders from the
Transmission Provider, the System Operator or the Transmission
Provider's designee in a timely manner.
The Transmission Customer shall balance the load at the Point(s) of
Delivery such that the difference in the individual phase currents are
acceptable to the Transmission Provider.
The Transmission Customer's equipment shall conform with harmonic
distortion and voltage fluctuation standards of the Transmission
Provider.
The Transmission Customer's equipment must comply with all
environmental requirements to the extent they impact the operation of
the Transmission Provider's system.
The Transmission Customer shall operate all of its equipment and
facilities connected to the Transmission Provider's system in a safe
and efficient manner and in accordance with manufacturers'
recommendations, Good Utility Practice, applicable regulations, and
requirements of the Transmission Provider, the System Operator, and
NPCC.
2.5 Notice of Transmission Service Interruptions: If at any time, in the
reasonable exercise of the system operator's judgement, operation of
the Transmission Customer's equipment adversely affects the quality of
service or interferes with the safe and reliable operation of the
system, the Transmission Provider
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 255
may discontinue transmission service until the condition has
been corrected. Unless the system operators perceive that an
emergency exists or the risk of one is imminent, the system
operators shall give the Transmission Customer and/or its
Designated Agent reasonable notice of its intention to
discontinue transmission service and, where practical, allow
suitable time for the Transmission Customer to remove the
interfering condition. The Transmission Provider's judgement
with regard to the discontinuance of service under this
paragraph shall be made in accordance with Good Utility
Practice. In the case of such discontinuance, the Transmission
Provider shall immediately confer with the Transmission Customer
regarding the conditions causing such discontinuance and its
recommendation concerning timely correction thereof. Failure by
a Customer to shed load would be subject to an additional charge
of 10<cent>/kWh for every kWh the Customer failed to shed.
2.6 Access and Control: Properly accredited representatives of the
Transmission Provider shall at all reasonable times have access to the
Transmission Customer's facilities to make reasonable inspections and
obtain information required in connection with this Tariff. Such
representatives shall make themselves known to the Transmission
Customer's personnel, state the object of their visit, and conduct
themselves in a manner that will not interfere with the construction or
operation of the Transmission Customer's facilities. The Transmission
Provider or its designee will have control such that it may open or
close the circuit breaker or disconnect and place safety grounds at the
Point(s) of Delivery, or at the station, if the Point(s) of Delivery is
remote from the station.
2.7 Point(s) of Delivery: Network Integration Transmission Service will be
delivered by the
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 256
Transmission Provider at the Point(s) of Delivery as specified
in the customer's Service Agreement, and as amended from time to
time. Each Point of Delivery shall have a unique identifier,
meter location, meter number, metered voltage, terms on meter
compensation and, the actual, or if not currently in service,
the projected in-service year.
2.8 Maintenance of Equipment: The Transmission Customer shall maintain all
of its equipment and facilities connected to the Transmission
Provider's system in a safe and efficient manner and in accordance with
manufacturers' recommendations, Good Utility Practice, applicable
regulations, and requirements of NEPOOL, and NPCC.
The Transmission Provider may request that the Transmission Customer
test, calibrate, verify or validate the data link, metering, data
acquisition, transmission, protective, or other equipment or software
consistent with the Transmission Customer's routine obligation to
maintain its equipment and facilities or for the purposes of trouble
shooting problems on the network facilities. The Transmission
Customer will be responsible for the cost to test, calibrate, verify or
validate the equipment or software.
The Transmission Provider shall have the right to inspect the tests,
calibrations, verifications and validations of the data link, metering,
data acquisition, transmission, protective, or other equipment or other
software connected to the Transmission Provider's system.
The Transmission Customer, at the Transmission Provider's request,
shall supply the Transmission Provider with a copy of the installation,
test, and calibration records of the data link, metering, data
acquisition, transmission, protective or other equipment or software
connected to the Transmission Provider's system.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 257
The Transmission Provider shall have the right, at the Transmission
Customer's expense, to monitor the factory acceptance test, the field
acceptance test, and the installation of any metering, data
acquisition, transmission, protective or other equipment or software
connected to the Transmission Provider's system.
2.9 Emergency System Operations: The Transmission Customer's equipment and
facilities, etc. shall be subject to all applicable emergency operation
standards required of and by the Transmission Provider to operate in an
interconnected transmission network.
The Transmission Provider reserves the right to have the system
operators take whatever actions or inactions they deem necessary during
emergency operating conditions to: (i) preserve the integrity of the
Transmission System, (ii) limit or prevent damage, (iii) expedite
restoration of service, or (iv) preserve public safety.
2.10 Cost Responsibility: The Transmission Customer shall be responsible for
all costs incurred by the Transmission Provider relative to the
Transmission Customer's facilities. Some costs may be allocated to
several Transmission Customers. If the method for allocating costs is
not clearly defined, then the method for allocation will be at the
Transmission Provider's discretion.
3.0 Service For a Network Resource
The following Terms and Conditions are specific to Service for a generator
Network Resource.
3.1 Voltage or Reactive Control Requirements: Unless directed otherwise,
the Transmission Customer will operate its existing interconnected
generation facility(ies) with an automatic voltage regulator(s). The
voltage regulator will control
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 258
voltage at the Point(s) of Receipt consistent with the range of
voltage scheduled by the Transmission Provider, the Transmission
Provider's agent, NEPEX, or REMVEC.
At the discretion of the Transmission Provider, the Transmission
Customer may be directed to deactivate the automatic voltage regulator
and to supply reactive power per a schedule provided by the
Transmission Provider.
If the Transmission Customer has not installed capacity sufficient to
operate its generation facility consistent with recommendations of the
Transmission Provider resulting from the System Impact and Facilities
Studies or fails to operate at such capacity, the Transmission Provider
may install, at the Transmission Customer's expense, reactive
compensation equipment necessary to ensure the proper voltage
or reactive supply at the Point(s) of Receipt.
3.2 Station Service: When the Transmission Customer's generation facility
is producing electricity, the Customer must supply its own station
service power. If and when the Transmission Customer's generation
facility is not producing electricity, the Customer must obtain station
service capacity and energy from another supplier or another of its
resources.
3.3 Protection Requirements: Protection requirements are defined in NEPOOL
and NPCC documents as may be adopted or amended from time to time.
3.4 Operational Obligations The Transmission Provider may require the
generator to be equipped for Automatic Generation Control (AGC). The
Transmission Customer will be responsible for all costs associated with
installing and maintaining an AGC system on the generator(s).
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 259
The Transmission Provider retains the right to require reduced
generation at times when system conditions present transmission
restrictions or otherwise adversely affect the Transmission Provider's
other customers. The Transmission Provider will use due diligence to
resolve the problems to allow the generator to return to the operating
level prior to the Transmission Provider's notice to reduce generation.
All operations (including start-up, shutdown and determination of
hourly generation) will be coordinated by the Transmission Provider.
3.5 Coordination of Operations: The Transmission Customer shall furnish the
Transmission Provider with generator annual maintenance schedules,
advise the Transmission Provider if its Network Resource is capable of
participation in system restoration and/or if it has black start
capability.
The Transmission Provider reserves the right to specify turbine and/or
generator control (e.g., droop) settings as determined by the System
Impact or Facilities Study or subsequent studies. The Transmission
Customer agrees to comply with such specifications by the Transmission
Provider at the Transmission Customer's expense.
If the generator is not dispatchable by the Transmission Provider, the
Transmission Customer shall notify the Transmission Provider at least
48 hours in advance of its intent to take its resource temporarily off-
line and its intent to resume generation. In circumstances such as
forced outages, the Transmission Customer shall notify the Transmission
Provider as promptly as possible of the Network Resource's temporary
interruption of generation and/or transmission.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 260
4.0 Service for Delivery to Load
The following Terms and Conditions are specific to Service for Delivery to
Load.
4.1 Power Factor Requirement: The Transmission Customer agrees to maintain
an overall Load Power Factor and reactive power supply within
predefined sub-areas as measured at the Point(s) of Delivery within
ranges specified by the Transmission Provider or NEPOOL criteria, rules
and standards which identify the power factor levels that must be
maintained throughout the applicable sub-area for each anticipated
level of total NEPOOL load. The Transmission Customer agrees to
maintain Load Power Factor and reactive power requirements within the
range specified by the Transmission Provider for the sub-area based on
total NEPOOL load during that hour. NEPOOL may revise the power factor
limits required from time to time. If the Transmission Customer lacks
the capability to maintain the Load Power Factor within the ranges
specified, the Transmission Provider may:
a) install, at the Transmission Customer's expense, reactive
compensation equipment necessary to ensure proper load power
factor at the Point(s) of Delivery;
b) charge the Transmission Customer per the Tariff Schedule OCC.
4.2 Protection Requirements: The Transmission Customer's relay and
protection systems must comply with all applicable NEPOOL and NPCC
criteria, rules, procedures, guidelines, standards or requirements as
may be adopted or amended from time to time.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 261
4.3 Operational Obligations: The Transmission Customer shall be responsible
for operating and maintaining security of its electric system in a
manner that avoids adverse impact to the Transmission Provider's or
others' interconnected systems and complies with all applicable NEPOOL,
and NPCC operating criteria, rules, procedures, guidelines and
interconnection standards as may be amended or adopted from time to
time. These actions include, but are not limited to:
- Voltage Reduction Load Shedding
- Underfrequency Load Shedding
- Block Load Shedding
- Dead Station Tripping
- Transferring Load Between Point(s) of Delivery
- Implementing Voluntary Load Reductions Including Interruptible
Customers
- Starting Stand-by Generation
- Permitting Transmission Provider Controlled Service Restoration
Following Supply Delivery Contingencies on Transmission Provider
Facilities
5.0 Default If the Transmission Customer's equipment fails to perform
consistent with the Terms and Conditions of this agreement, then the
Transmission Customer will be deemed to be in default and service may
be suspended immediately and subject to a termination through a FERC
filing. If the Transmission Customer fails to provide the information
required in Section 2.3 in a timely manner, the Transmission Provider
shall be permitted to assess a penalty of $100 per day until such
information is provided in its entirety to the Transmission Provider.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 262
The Parties whose authorizing signatures appear below warrant that they will
abide by the foregoing terms and conditions.
____________________ ____________________
NEPOOL Participants (Transmission Customers)
By (System Operator)
____________________ ____________________
By: By:
____________________ ____________________
Title: Title:
____________________ ____________________
Date: Date:
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 263
ATTACHMENT I
Form of
System Impact Study Agreement
This Agreement dated __________, is entered into by (the
"Transmission Customer") and the NEPOOL Participants (the "Transmission
Provider") acting through (the "System Operator"), for the purpose
of setting forth the terms, conditions and costs for conducting a System Impact
Study relative to ,in accordance with the NEPOOL Open Access
Transmission Tariff ("Tariff"). All definitions and other terms and conditions
of that Tariff are incorporated herein by reference. The Transmission Provider
may designate one or more Participants or the System Operator to act for it
under this Agreement.
1. The Transmission Customer agrees to provide, in a timely and complete
manner, the information and technical data specified in Exhibit 1 to
this Agreement and reasonably necessary for the Transmission Provider
to conduct the System Impact study. The Transmission Customer
understands that it must provide all such information and data
prior to the Transmission Provider's commencement of the Study. Such
information and technical data is specified in Exhibit 1 to this
Agreement.
2. All work pertaining to the System Impact Study that is the subject of
this Agreement will be approved and coordinated only through designated
and authorized representatives of the Transmission Provider and the
Transmission Customer. Each party shall inform the other in writing of
its designated and authorized representative.
3. The Transmission Provider will advise the Transmission Customer of any
additional information as it may in its sole reasonable discretion deem
necessary to complete the study. Any such additional information shall
be obtained only if
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 264
required by Good Utility Practice and shall be subject to the
Transmission Customer's consent to proceed, such consent not to be
unreasonably withheld.
4. The Transmission Provider contemplates that it will require _________
to complete the System Impact Study. Upon completion of the Study by
the Transmission Provider, the Transmission Provider will provide a
report to the Transmission Customer based on the information provided
and developed as a result of this effort. If, upon review of the
Study results, the Transmission Customer decides to pursue ,
the Transmission Provider will, at the Transmission Customer's
direction, tender a Facilities Study Agreement within thirty (30) days.
The System Impact and Facilities Studies, together with any additional
studies contemplated in Paragraph 3, shall form the basis for the
Transmission Customer's proposed use of the Transmission Provider's
transmission system and shall be furthermore utilized in obtaining
necessary third-party approvals of any interconnection facilities and
requested transmission services. The Transmission Customer understands
and acknowledges that any use of study results by the Transmission
Customer or its agents, whether in preliminary or final form, prior to
NEPOOL l8.4 approval, is completely at the Transmission Customer's risk
and that the Transmission Provider will not guarantee or warrant the
completeness, validity or utility of study results prior to NEPOOL 18.4
approval.
5. The estimated costs contained within this Agreement are the
Transmission Provider's good faith estimate of its costs to perform the
System Impact Study contemplated by this Agreement. The Transmission
Provider's estimates do not include any estimates for wheeling charges
that may be associated with the transmission of facility output to
third parties or with rates for station service. The actual costs
charged to the Transmission Customer by the Transmission Provider may
change as set forth in this Agreement. Prepayment will be required for
all study, analysis, and review work performed by the Transmission
Provider or its
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 265
Designated Agent, all of which will be billed by the Transmission
provider to the Transmission Customer in accordance with Paragraph 6 of
this Agreement.
6. The payment required is $________ from the Transmission Customer to the
Transmission Provider for the primary system analysis, coordination,
and monitoring of the System Impact Study. The Transmission Provider
will, in writing, advise the Transmission Customer in advance of any
cost increases for work to be performed if total amount increases by
10% or more. Any such changes to the Transmission Provider's costs for
the study work shall be subject to the Transmission Customer's
consent, such consent not to be unreasonably withheld. The
Transmission Customer shall, within thirty (30) days of the
Transmission Provider's notice of increase, either authorize such
increases and make payment in the amount set forth in such notice, or
the Transmission Provider will suspend the System Impact Study and this
Agreement will terminate if so permitted by the Federal Energy
Regulatory Commission.
In the event this Agreement is terminated for any reason, the
Transmission Provider shall refund to the Transmission Customer the
portion of the above credit or any subsequent payment to the
Transmission Provider by the Transmission Customer that the
Transmission provider did not expend in performing its obligations
under this Agreement. Any additional billings under this Agreement
shall be subject to an interest charge computed in accordance with the
provisions of the Transmission Provider's open access tariff. Payments
for work performed shall not be subject to refunding except in
accordance with Paragraph 7 below.
7. If the actual costs for the work exceed prepaid estimated costs, the
Transmission Customer shall make payment to the Transmission Provider
for such actual costs within thirty(30) days of the date of the
Transmission Provider's invoice for such costs. If the actual costs
for the work are less than those prepaid, the Transmission Provider
will credit such difference toward Transmission Provider costs
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 266
unbilled, or in the event there will be no additional billed expenses,
the amount of the overpayment will be returned to the Transmission
Customer with interest computed as stated in Paragraph 6 of this
Agreement, from the date of reconciliation.
8. Nothing in this Agreement shall be interpreted to give the Transmission
Customer immediate rights to wheel over or interconnect with the
Transmission Provider's transmission or distribution system. Such
rights shall be provided for under separate agreement and in accordance
with the Transmission Provider's open access tariff.
9. Within one (1) year following the Transmission Provider's issuance of a
final bill under this Agreement, the Transmission Customer shall have
the right to audit the Transmission Provider's accounts and records at
the offices where such accounts and records are maintained, during
normal business hours; provided that appropriate notice shall have been
given prior to any audit and provided that the audit shall be limited
to those portions of such accounts and records that relate to service
under this Agreement. The Transmission Provider reserves the right to
assess a reasonable fee to compensate for the use of its personnel time
in assisting any inspection or audit of its books, records or accounts
by the Transmission Customer or its Designated Agent.
10. Each party agrees to indemnify and hold the other party and its Related
Persons of each of them (collectively "Affiliates") harmless from and
against any and all damages, costs (including attorney's fees), fines,
penalties and liabilities, in tort, contract, or otherwise
(collectively "Liabilities") resulting from claims of third parties
arising, or claimed to have arisen as a result of any acts or omissions
of either party under this Agreement. Each party hereby waives
recourse against the other party and its Related Persons for,
and releases the other party and its Related Persons from, any and all
Liabilities for or arising from damage to its property due to a
performance under this
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 267
Agreement by such other party except in cases of negligence or
intentional wrongdoing by either party.
11. If either party materially breaches any of its covenants hereunder, the
other party may terminate this Agreement by filing a notice of intent
to terminate with the Federal Energy Regulatory Commission and serving
notice of same on the other party to this Agreement. This remedy is in
addition to any other remedies available to the injured party.
12. This Agreement shall be construed and governed in accordance with the
laws of the State of Connecticut and with Part II of the Federal Power
Act, 16 U.S.C. <section><section>824d et seq., and with Part 35 of
Title 18 of the Code of Federal Regulations, l8 C.F.R.
<section><section>35 et seq.
13. All amendments to this Agreement shall be in written form executed by
both parties.
14. The terms and conditions of this Agreement shall be binding on the
successors and assigns of either party.
15. This Agreement will remain in effect for a period of up to two years
from its effective date as permitted by the Federal Energy Regulatory
Commission, and is subject to extension by mutual agreement. Either
party may terminate this Agreement by thirty (30) days' notice except
as is otherwise provided herein. If this Agreement expires by
its own terms, it shall be the Transmission Provider's responsibility
to make such filing.
Transmission Customer: NEPOOL Participants
By (System Operator)
Name: Name:_________________________
Title:____________________ Title:
Date: Date:
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 268
EXHIBIT 1
Information to be Provided to the Transmission Provider
by the Transmission Customer for System Impact Study
1.0 Facilities Identification
1.1 Requested capability in MW and MVA; summer and winter
1.2 Site location and plot plan with clear geographical references
1.3 Preliminary one-line diagram showing major equipment and extent
of Transmission Customer ownership
1.4 Auxiliary power system requirements
1.5 Back-up facilities such as standby generation or alternate supply
sources
2.0 Major Equipment
2.1 Power transformer(s): rated voltage, MVA and BIL of each
winding, LTC and or NLTC taps and range, Z{1} (positive sequence)
and Z{o} (zero sequence) impedances, and winding connections.
Provide normal, long-time emergency and short-time emergency
thermal ratings.
2.2 Generator(s): rated MVA, speed and maximum and minimum MW output,
reactive capability curves, open circuit saturation curve, power
factor (V) curve, response (ramp) rates, H (inertia), D (speed
damping), short circuit ratio, X{1} (leakage), X{2}:(negative
sequence), and X{o} (zero sequence) reactances and other data:
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 269
<TABLE>
<CAPTION>
Direct Quadrature
Axis Axis
<S> <C> <C>
Saturated synchronous reactance X{dv} X{qv}
unsaturated synchronous reactance X{di} X{qt}
saturated transient reactance X'{dv} X'{qv}
unsaturated transient reactance X'{di} X'{qi}
saturated subtransient reactance X"{dv} X"{qv}
unsaturated subtransient reactance X"{di} X"{qi}
transient open-circuit time T'{do} T'{qo}
constant
transient short-circuit time T"{d} T"{q}
constant
subtransient open-circuit time T"{do} T"{qo}
constant
subtransient short-circuit time T"{d } T"{q}
constant
</TABLE>
2.3 Excitation system, power system stabilizer and governor:
manufacturer's data in sufficient detail to allow modeling in
transient stability simulations.
2.4 Prime mover: manufacturer's data in sufficient detail to allow
modeling in transient stability simulations, if determined
necessary.
2.5 Busses: rated voltage and ampacity (normal, long-time emergency
and short-time emergency thermal ratings), conductor type and
configuration.
2.6 Transmission lines: overhead line or underground cable rated
voltage and ampacity (normal, long-time emergency and short-time
emergency thermal ratings), Z{1} (positive sequence) and Z{o}
(zero sequence) impedances, conductor type, configuration, length
and termination points.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 270
2.7 Motors greater than 150 kW 3-phase or 50 kW single-phase: type
(induction or synchronous), rated hp, speed, voltage and current,
efficiency and power factor at 1/2, 3/4 and full load, stator
resistance and reactance, rotor resistance and reactance,
magnetizing reactance.
2.8 Circuit breakers and switches: rated voltage, interrupting time
and continuous, interrupting and momentary currents. Provide
normal, long-time emergency and short-time emergency thermal
ratings.
2.9 Protective relays and systems: ANSI function number, quantity
manufacturer's catalog number, range, descriptive bulletin,
tripping diagram and three-line diagram showing AC connections to
all relaying and metering.
2.10 CT's and VT's: location, quantity, rated voltage, current and
ratio.
2.11 Surge protective devices: location, quantity, rated voltage and
energy capability.
3.0 Other
3.1 Additional data reasonably necessary to perform the System Impact
Study will be provided by the Transmission Customer as requested
by the Transmission Provider.
3.2 The Transmission Provider reserves the right to require that the
Transmission Customer accept the use in the study of specific
equipment settings or characteristics necessary to meet NEPOOL
and NPCC criteria and standards.
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 271
ATTACHMENT J
Form of
Facilities Study Agreement
This agreement dated ________, is entered into by ____________ (the
Transmission Customer) and the NEPOOL Participants (the "Transmission
Operator") acting through the ____________ ("System Provider"), for the purpose
of setting
forth the terms, conditions and costs for conducting a Facilities Study
Agreement relative to ____________________, in accordance with the NEPOOL Open
Access Transmission Tariff ("Tariff"). All definitions and other terms and
conditions of that Tariff are incorporated herein by reference. The
Transmission Provider may designate one or more Participants or the System
Operator to act for it under this Agreement. The Facilities Study will
determine the detailed engineering, design and cost of the facilities necessary
to satisfy the Transmission Customer's request for service over the NEPOOL
Transmission System.
1. The Transmission customer agrees to provide, in a timely complete
manner, the information and technical data specified in Exhibit 1 to
this Agreement and reasonably necessary for the Transmission Provider
to conduct the Facilities Study. Where such information and technical
data was provided for the System Impact Study, it should be reviewed
and updated with current information, as required.
2. All work pertaining to the Facilities Study that is the subject of this
Agreement will be approved and coordinated only through designated and
authorized representatives of the Transmission Provider and the
Transmission Customer. Each party shall inform the other in writing of
its designated and authorized representative.
3. The Transmission Provider will advise the Transmission Customer of
additional information as may be reasonably deemed necessary to
complete the study by the Transmission
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 272
Provider. Any such additional information shall be obtained only if
required by Good Utility Practice and shall be subject to the
Transmission Customer's consent to proceed, such consent not to be
unreasonably withheld.
4. The Transmission Provider contemplates that it will require ____ days
to complete the Facilities Study. Upon completion of the study by the
Transmission Provider, the Transmission Provider will provide a report
to the Transmission Customer based on the information provided and
developed as a result of this effort. If, upon review of the
study results, the Transmission Customer decides to pursue its
transmission service request, the Transmission Customer must sign a
supplemental Service Agreement with the Transmission Provider under the
Tariff. The System Impact and Facilities Studies, together with any
additional studies contemplated in Paragraph 3, shall form the basis
for the Transmission Customer's proposed use of the Transmission
Provider's Transmission System and shall be furthermore utilized in
obtaining necessary third-party approvals of any facilities and
requested transmission services. The Transmission Customer understands
and acknowledges that any use of the study results by the Transmission
Customer or its agents whether in preliminary or final form, prior to
NEPOOL 18.4 approval, is completely at the Transmission Customer's risk
and that the Transmission provider will not guarantee or warrant the
completeness, validity or utility of the study results prior to NEPOOL
18.4 approval.
5. The estimated costs contained within this Agreement are the
Transmission provider's good faith estimate of its costs to perform the
Facilities Study contemplated by this Agreement. The Transmission
Provider's estimates do not include any estimates for wheeling charges
that may be associated with the transmission of facility output to
third parties or with rates for station service. The actual costs
charged to the Transmission Customer by the Transmission Provider may
change as set forth in this Agreement. Prepayment will be required for
all study, analysis, and review work performed by the Transmission
Provider's or its Designated Agent's
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 273
personnel, all of which will be billed by the Transmission Provider to
the Transmission Customer in accordance with Paragraph 6 of this
Agreement.
6. The payment required is $______________ from the Transmission Customer
to the Transmission Provider for the primary system analysis,
coordination, and monitoring of the Facilities Study to be performed by
the Transmission Provider for the Transmission Customer's requested
service. The Transmission Provider will, in writing, advise the
Transmission Customer in advance of any cost increases for work to be
performed if the total amount increases by 10% or more. Any such
changes to the Transmission Provider's costs for the study work to be
performed shall be subject to the Transmission Customer's consent, such
consent not to be unreasonably withheld. The Transmission Customer
shall, within thirty (30) days of the Transmission Provider's notice of
increase, either authorize such increases and make payment in the
amount set forth in such notice, or the Transmission Provider will
suspend the study and this Agreement will terminate if so permitted by
the Federal Energy Regulatory Commission.
In the event this Agreement is terminated for any reason, the
Transmission Provider shall refund to the Transmission Customer the
portion of the above credit or any subsequent payment to the
Transmission Provider by the Transmission Customer that the
Transmission Provider did not expend in performing its obligations
under this Agreement. Any additional billings under this Agreement
shall be subject to an interest charge computed in accordance with the
provisions of the Transmission Provider's appropriate transmission
tariff. Payments for work performed shall not be subject to
refunding except in accordance with Paragraph 7 below.
7. If the actual costs for the work exceed prepaid estimated costs, the
Transmission Customer shall make payment to the Transmission Provider
for such actual costs within thirty (30) days of the date of the
Transmission Provider's invoice
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 274
for such costs. If the actual costs for the work are less than that
prepaid, the Transmission Provider will credit such difference toward
Transmission Provider's costs unbilled, or in the event there will be
no additional billed expenses, the amount of the overpayment will be
returned to the Transmission Customer with interest computed in
accordance with the provisions of the Tariff.
8. Nothing in this Agreement shall be interpreted to give the Transmission
Customer immediate rights to interconnect to or wheel over the NEPOOL
Transmission System. Such rights shall be provided for under separate
agreement.
9. Within one (1) year following the Transmission Provider's issuance of a
final bill under this Agreement, the Transmission Customer shall have
the right to audit the Transmission Provider's accounts and records at
the offices where such accounts and records are maintained during
normal business hours; provided that appropriate notice shall have been
given prior to any audit and provided that the audit shall be limited
to those portions of such accounts and records that relate to service
under this Agreement. The Transmission provider reserves the right to
assess a reasonable fee to compensate for the use of its personnel time
in assisting any inspection or audit of its books, records or
accounts by the Transmission Customer or its Designated Agent.
10. Each party agrees to indemnify and hold the other party and its Related
Persons harmless from and against any and all damages, costs (including
attorney's fees), fines, penalties and liabilities, in tort, contract,
or otherwise (collectively "Liabilities") resulting from claims of
third parties arising, or claimed to have arisen as a result of any
acts or omissions of either party under this Agreement. Each party
hereby waives recourse against the other party and its Related Persons
for, and releases the other party and its Related Persons from, any and
all Liabilities for or
<PAGE>
NEPOOL Open Access Transmission Tariff
Original Sheet No. 275
arising from damage to its property due to performance under this Agreement by
such other party except in cases of negligence or intentional wrongdoing by
either party.
11. If any party materially breaches any of its covenants hereunder, the
other party may terminate this Agreement by filing a notice of intent
to terminate with the Federal Energy Regulatory Commission and serving
notice of same on the other party to this Agreement. This remedy is in
addition to any other remedies available for the injured party.
12. This agreement shall be construed and governed in accordance with the
laws of the State of Connecticut and with Part II of the Federal Power
Act, 16 U.S.C. <section><section>824d et seq., and with Part 35 of
Title 18 of the Code of Federal Regulations, l8 C.F.R.
<section><section>35 et seq.
13. All amendments to this Agreement shall be in written form executed by
both parties.
14. The terms and conditions of this Agreement shall be binding on the
successors and assigns of either party.
15. This Agreement will remain in effect for a period of two years from its
effective date as permitted by the Federal Energy Regulatory
Commission, and is subject to extension by mutual agreement.
Either party may terminate this Agreement by thirty (30) days' notice
except as is otherwise provided herein. If this Agreement expires by
its own terms, it shall be the Transmission Provider's responsibility
to make such filing.
Transmission Customer: NEPOOL Participants
By (System Operator)
Name:______________________ Name:_____________________
Title:_____________________ Title:____________________
Date:______________________ Date:_____________________
<PAGE>
INTERIM INDEPENDENT SYSTEM OPERATOR AGREEMENT
This Interim Independent System Operator Agreement (this "Agreement")
is made and entered into this ______ day of _________, 1997, by and between the
entities which are the participants in the New England Power Pool pursuant to
the Restated New England Power Pool Agreement dated as of September 1, 1971, as
amended and restated to date, acting herein by and through the NEPOOL
Management Committee (collectively, the "NEPOOL Participants" or "NEPOOL"), on
the one hand, and the New England ISO Corporation (the "ISO"), on the other
(each a "Party" and, together, the "Parties").
Whereas, the NEPOOL Participants own and currently operate facilities
for the generation and transmission of wholesale electric power, and/or are
engaged in the competitive wholesale electricity market in New England; and
Whereas, NEPOOL currently coordinates and directs the operation of the
System through a mechanism of central dispatch in order to attain maximum
practicable economy consistent with proper standards of reliability; and
Whereas, NEPOOL desires to transfer to the ISO responsibility for,
among other things, direction and control of the operation of the System
consistent with proper standards of reliability, administration of NEPOOL's
open-access transmission tariff and administration of a power exchange,
consistent with the requirements of the Federal Energy Regulatory Commission;
and
Whereas, NEPOOL further desires to establish a mechanism for funding
the future operations of the ISO through the imposition of certain fees on the
services provided by the ISO;
Whereas, in order to begin such transition, NEPOOL and the ISO desire
to enter into this Agreement;
Now, therefore, NEPOOL and the ISO, each in consideration of the mutual
agreements set forth herein, agree as follows.
<PAGE>
1. PURPOSE
1.1 Interim Agreement. The purpose of this Agreement is to set
forth the responsibilities and authority of the ISO and the services to
be furnished to NEPOOL by the ISO, including without limitation billing
and planning services, in connection with the transfer to the ISO of
responsibility for the operation of the NEPOOL Control Center
as the control center operator for the NEPOOL Control Area and the
administration of the transmission and market arrangements under the
Tariff and the NEPOOL Agreement.
1.2 Final ISO Agreement. The entering into of this Agreement by the
ISO shall be authorized by the ISO Board upon its election.
Thereafter, the ISO Board shall have the opportunity to negotiate such
changes to this Agreement, if any, as it may deem appropriate. Any
such changes as may be agreed to by the ISO and NEPOOL shall be
incorporated in the Final ISO Agreement.
1.3 Interim Activities. It is contemplated by the Parties that the
ISO shall assume responsibility for operation of the NEPOOL Control
Center and administration of the Tariff on or about July, 1997.
Promptly following the execution of this Agreement, the ISO Board shall
use its best efforts to hire a chief executive officer of the ISO (the
"ISO Chief Executive") and additional staff as contemplated by Section
5.3.
1.4 ISO Independence. In order for the ISO to achieve the requisite
independence to carry out the purposes articulated in the preamble to
this Agreement and in this Section, the Parties acknowledge that the
ISO must have authority over its budget and the authority to plan for
and operate the System in accordance with the System Rules and
Procedures promulgated pursuant to the provisions set forth in this
Agreement, with the concurrence of the FERC where applicable.
1.5 Intent of the Parties. In the event an issue arises as to the
interpretation of a provision of this Agreement which relates to the
extent to which the ISO is intended to operate independently, any
ambiguity in the provision in question shall be interpreted in
a manner that is consistent with the Parties' intent to ensure the
independence of the ISO.
2. DEFINITIONS
2.1 Affiliate: When used in reference to a person or entity, means
another person or entity which controls, is controlled by, or is under
common control with, such person or entity. As used in the preceding
sentence, "control" means the possession, directly or indirectly, of
the power to direct the management or policies of an entity. A voting
interest of ten percent (10%) or more creates a rebuttable presumption
of control.
<PAGE>
2.2 Agreement: The agreement identified in the first paragraph of
this document, including all schedules thereto, as the same may be
amended or supplemented from time to time.
2.3 Control Area: An electric power system or combination of
electric power systems to which a common automatic generation control
scheme is applied in order to:
(i) match, at all times, the power output of the generators
within the electric power system(s) and capacity and
energy purchased from entities outside the electric
power system(s), with the load within the electric power
system(s);
(ii) maintain scheduled interchange with other Control Areas,
within the limits of Good Utility Practice;
(iii) maintain the frequency of the electric power system(s)
within reasonable limits in accordance with Good Utility
Practice and the criteria of the applicable regional
reliability council of the NERC; and
(iv) provide sufficient generating capacity to maintain
operating reserves in accordance with Good Utility
Practice.
2.4 CRS: Criteria, Rules and Standards for administration of the
NEPOOL Agreement and operation of the System, as in effect on the date
of this Agreement.
2.5 Designated Generation Facilities: All generating facilities in
the NEPOOL Control Area that are subject to central dispatch pursuant
to Section 13 of the NEPOOL Agreement.
2.6 Designated Transmission Facilities: All transmission facilities
that constitute "Pool Transmission Facilities" pursuant to Section 15
of the NEPOOL Agreement and any other transmission facilities that are
subject to central dispatch pursuant to the NEPOOL Agreement or deemed
necessary by the ISO following consultation with NEPOOL to carry out
the ISO's responsibilities under this Agreement.
2.7 Effective Date: The later of (a) _______________, 1997 and (b)
thirty (30) days after the FERC approves, without condition or
modification, the Parties' application under Section 203 of the Federal
Power Act with respect to this Agreement.
<PAGE>
2.8 FERC: The Federal Energy Regulatory Commission.
2.9 Final ISO Agreement: The agreement to be negotiated and entered
into between NEPOOL on behalf of the NEPOOL Participants and the ISO
pursuant to Section 1.2 which will supersede this Agreement.
2.10 Force Majeure: Any act of God, labor disturbance, act of the
public enemy, war, insurrection, riot, fire, storm or flood, explosion,
breakage or accident to machinery or equipment not due to lack of
proper care or maintenance, any order, regulation or restriction
imposed by a court or governmental military or lawfully established
civilian authorities, or any other cause beyond a Party's control.
2.11 Good Utility Practice: Any practice, method, or act engaged in
or approved by a significant portion of the electric utility industry
during the relevant time period, or any practice, method, or act which,
in the exercise of reasonable judgment in light of the facts
known at the time the decision was made, could have been expected to
accomplish the desired result at a reasonable cost consistent with good
business practices, reliability, safety and expedition. Good Utility
Practice is not limited to a single, optimum practice, method or act to
the exclusion of others, but rather is intended to include acceptable
practices, methods, or acts generally accepted in the region.
2.12 ISO: New England ISO Corporation and any permitted successors
and assigns.
2.13 ISO Board: The directors of the ISO who shall be selected in
accordance with the procedures described in Sections 5.1 and 5.2.
2.14 ISO Chief Executive: The chief executive officer of the ISO to
be hired by the ISO Board.
2.15 NECPUC: The New England Conference of Public Utilities
Commissioners, Inc.
2.16 NEPOOL: The New England Power Pool, the power pool created
under and governed by the NEPOOL Agreement, and the entities
collectively participating in the New England Power Pool.
2.17 NEPOOL Agreement: The Restated New England Power Pool Agreement
dated as of September 1, 1971, as amended and restated from time to
time, governing the relationship among the NEPOOL Participants,
including the Tariff.
<PAGE>
2.18 NEPOOL Control Area: The Control Area for NEPOOL to be
administered by, or under the direction and control of, the ISO.
2.19 NEPOOL Control Center: The dispatching facilities used by NEPOOL
in carrying out its responsibilities under the NEPOOL Agreement,
consisting of certain land and a building located at One Sullivan Road,
Holyoke, Massachusetts, together with furnishings and equipment
contained therein.
2.20 NEPOOL Information Policy: The CRS No. 45 establishing
guidelines regarding the information received, created and distributed
by the NEPOOL Participants and the ISO in connection with the
settlement, operation and planning of the System, as the same may be
amended or supplemented from time to time.
2.21 NEPOOL Market: The market for electric energy, capacity and
certain ancillary services within the NEPOOL Control Area.
2.22 NEPOOL Participants: The entities (or group of entities which
have elected to be treated as a single NEPOOL Participant pursuant to
the NEPOOL Agreement) who from time to time are members of NEPOOL and
parties to the NEPOOL Agreement.
2.23 NERC: The North American Electric Reliability Council.
2.24 Non-Participant: Any entity that is not a NEPOOL Participant
that receives service under the Tariff.
2.25 NPCC: Northeast Power Coordinating Council.
2.26 NUSCO: Northeast Utilities Service Company.
2.27 OASIS: The Open Access Same-Time Information System, an
electronic bulletin board described in the Tariff.
2.28 Operating Procedures: The detailed procedures adopted by NEPOOL
for operation of the System as in effect on the date of this Agreement.
2.29 Operating Year: A calendar year. The first Operating Year
shall commence on the Effective Date and continue until the following
December 31, and the last Operating Year shall conclude on the date
that this Agreement terminates.
<PAGE>
2.30 Party or Parties: The NEPOOL Participants, acting collectively
through NEPOOL, and the ISO as identified in the first paragraph of
this Agreement.
2.31 Satellites: Those control centers now existing or to be
established whose facilities are separate from the NEPOOL Control
Center and which perform dispatching and other functions essential to
the reliable operation of the System. Satellite responsibilities
include, but are not limited to, regional transmission security
analysis, switching and tagging, and implementation of applicable
System Rules and Procedures. The locations of the Satellites as of the
date of this Agreement are set forth on Schedule A attached hereto.
2.32 System: Designated Generation Facilities and Designated
Transmission Facilities.
2.33 System Rules and Procedures: The criteria, rules, standards and
procedures to be developed pursuant to this Agreement for operation of
the System and administration of the transmission and market
arrangements under the Tariff and the NEPOOL Agreement. Upon the
Effective Date of this Agreement, the CRS and Operating Procedures then
in effect shall constitute the System Rules and Procedures until
modified, replaced or supplemented pursuant to the procedures set forth
in Section 6.17.
2.34 Tariff: The NEPOOL Open Access Transmission Tariff set out in
Attachment B to the NEPOOL Agreement, as modified and amended from time
to time, which designates the terms and conditions of non-
discriminatory regional transmission service provided by the NEPOOL
Participants.
3. TERM
The term of this Agreement shall begin on the Effective Date and
continue until the fifth anniversary of the Effective Date, unless
earlier superseded by the Final ISO Agreement or otherwise terminated
in accordance with the provisions of Section 13.
4. AGREEMENT ADMINISTRATION
4.1 Equipment, Facilities and Personnel. The ISO and each of the
NEPOOL Participants, either directly or through the Satellites, shall
maintain the necessary equipment, facilities and personnel sufficient
for the ISO to operate the NEPOOL Control Area in accordance with
Section 6.1, and the NEPOOL Participants to operate their Designated
Generation and Designated Transmission Facilities in accordance with
Section 7.1.
<PAGE>
4.2 Representative of the ISO. The ISO Board shall designate a
representative (the "ISO Representative") with authority to act for the
ISO in connection with the administration of this Agreement.
4.3 Representatives of NEPOOL. The NEPOOL Management Committee or
the NEPOOL Executive Committee acting on its behalf or its designee(s)
shall have authority to act for NEPOOL in connection with the
administration of this Agreement.
4.4 Consultation. The ISO shall consult as necessary with the
NEPOOL Executive Committee or its designee(s) in order to resolve any
matters which may arise in connection with the services of the ISO
under this Agreement. Any matter which remains in dispute shall be
resolved in accordance with the dispute resolution provisions
referred to in Section 12.
4.5 Joint Committees. The NEPOOL Executive Committee and the ISO
may from time to time form such committees as they may deem necessary
to assist them in carrying out activities appropriate to the
administration of this Agreement.
5. QUALIFICATIONS OF THE ISO
5.1 ISO Board: (a) Except for the ISO Chief Executive who shall
serve as a member of the ISO Board as provided in Section 5.2, the
initial members of the ISO Board shall be nominated by a Nominating
Committee to be established by the NEPOOL Executive Committee
reflecting the diversity of the NEPOOL Participants. The Nominating
Committee shall be composed of ten members, with two members to be
drawn from each of the following groups of NEPOOL Participants:
(i) investor-owned utilities whose voting shares under the
NEPOOL Agreement equals or exceeds 3% of the aggregate
voting shares of all NEPOOL Participants under the
NEPOOL Agreement;
(ii) investor-owned utilities whose voting shares under the
NEPOOL Agreement constitute less than 3% of the
aggregate voting shares of all NEPOOL Participants under
the NEPOOL Agreement;
(iii) municipally-owned and cooperatively-owned utilities;
(iv) non-utility generators;
(v) power marketers, brokers and load aggregators.
<PAGE>
The Nominating Committee shall give notice to and invite the
participation of a representative or representatives of NECPUC as a
non-voting member at all meetings of Nominating Committee.
(b) The Nominating Committee shall appoint a sub-committee from
among its members (the "Steering Committee") to work with an executive
search firm to review the qualifications of and pre-screen potential
candidates for the ISO Board. The candidates shall be identified by
the executive search firm or otherwise brought to the attention of
the Steering Committee. The Steering Committee shall recommend to the
Nominating Committee a pool of qualified candidates so pre-screened by
the Steering Committee. The Steering Committee shall give notice to
and invite the participation of a representative or representatives of
NECPUC as a non-voting member at all meetings of the Steering
Committee.
(c) The nine members of the ISO Board other than the ISO Chief
Executive shall be elected by the NEPOOL Executive Committee from and
out of a slate of no fewer than 15 candidates nominated by the
Nominating Committee. The NEPOOL Executive Committee shall give notice
to and invite the participation of a representative or representatives
of NECPUC as a non-voting member at the meeting held to elect the
independent directors.
(d) Subsequent directors shall be elected by a majority of the
directors then in office, in accordance with procedures set forth in
the Certificate of Incorporation of the ISO.
(e) The ISO Board shall elect from among its members a Chair of the
ISO Board; provided, however, that the ISO Chief Executive shall not be
eligible for election as the Chair. The Chair shall serve in
accordance with the By-laws of the ISO and shall preside at all
meetings of the ISO Board.
5.2 Composition. The ISO Board shall be composed of ten members,
and no director shall be affiliated with any NEPOOL Participant or
other market participant in the NEPOOL Control Area. The ISO Chief
Executive shall, by virtue of his office, serve as a member of the ISO
Board with full voting rights as a director. The remaining nine
members shall possess a cross-section of skills and experience (such
as, for purposes of illustration but not by way of mandate or
limitation, experience in FERC electric regulatory affairs, electric
utility management, corporate finance, bulk power systems, human
resource administration, power pool operations, public policy, consumer
advocacy, environmental affairs, business management and information
systems), to ensure that the ISO has sufficient knowledge and expertise
to perform its obligations under this Agreement. At least three of the
directors shall have prior relevant experience
<PAGE>
in the electric industry. In addition, to ensure sensitivity to
regional concerns, strong preference shall be given to electing members
from New England to the extent qualified candidates are available and
such representation can be accomplished consistent with the ISO's
conflict of interest policy.
5.3 ISO Staff. The ISO shall maintain a staff of employees
sufficient in number, skill, training and knowledge to satisfy its
obligations under this Agreement. In addition to such additional staff
as the ISO may deem reasonably necessary to perform its obligations
under this Agreement, it is contemplated by the Parties that the
existing NEPOOL staff, who are currently employed by NUSCO and provide
services to NEPOOL pursuant to a service agreement with NEPOOL, will be
offered employment by the ISO. Until such employment by the ISO, the
NEPOOL staff will continue to operate the NEPOOL Control Center and
administer the Tariff pursuant to a service agreement to be entered
into between the ISO and NUSCO.
5.4 Conflict of Interest Policy. (a) The ISO shall adopt and
enforce a conflict of interest policy which shall comply with the
requirements of FERC Order 888.
(b) The ISO as a corporate entity shall not have any financial
interest in the economic performance of any NEPOOL Participant or any
other market participant in the NEPOOL Control Area or any Affiliate of
either, nor shall it engage in any transactions, directly or
indirectly, for its own account in the NEPOOL Market.
5.5 Non-Profit Entity. (a) The ISO shall exist as a non-profit
corporation and shall not perform any services other than the services
contemplated by this Agreement and related activities without the prior
written consent of NEPOOL, which consent shall not be unreasonably
withheld. It is understood and agreed that the provisions of this
Section 5.5 are not intended to preclude or limit the ability of the
ISO to deal with Non-Participants in performing its duties under this
Agreement and the Tariff.
(b) If the ISO desires to engage in any activity which in its
reasonable judgment is a significant related activity not contemplated
by this Agreement, the ISO shall give written notice of its intention
to engage in such related activity to the NEPOOL Executive Committee.
The NEPOOL Executive Committee shall have thirty (30) days to
determine whether it concurs in the judgment of the ISO that the
proposed activity is a "related activity" as contemplated in
subparagraph (a) above. If the NEPOOL Executive Committee disagrees
with the determination of the ISO, it shall give written notice of its
disagreement to the ISO within such thirty (30) day period, and the ISO
shall refrain from engaging in such activity pending resolution of the
dispute in accordance with the dispute resolution procedures described
in Section 12.1.
<PAGE>
- 12 - (Revised)
5.6 Advisory Committee. (a) The ISO Board shall establish and
appoint the members of an Advisory Committee. The purpose of the
Advisory Committee shall be to provide information, feedback and
assistance to the ISO Board on matters relating to the operation of
this Agreement and the NEPOOL Market. The Advisory Committee
shall not have oversight responsibilities with respect to decisions of
the ISO Board but rather shall serve as an information resource to the
Board and a vehicle to provide the viewpoints of a broad spectrum of
parties with an interest in the NEPOOL Market. The Advisory Committee
shall be composed of approximately 20 members representing a
broad spectrum of interests, including for purposes of illustration but
not by way of mandate or limitation individuals representing the
following viewpoints:
(i) New England state regulatory;
(ii) New England residential consumer;
<PAGE>
(iii) New England commercial or industrial consumer;
(iv) environmental;
(v) public interest;
(vi) municipal government;
(vii) NEPOOL Market participants;
(viii) economic;
(ix) engineering;
(x) academia.
(b) The ISO Board shall establish Bylaws for the Advisory Committee
providing for, among other things, the appointment of a Chair and
requiring not less than one meeting a year between the ISO Board and
the Advisory Committee. The ISO shall provide the Advisory Committee
with such administrative support as may be necessary for the
committee to perform its functions as delineated by the ISO Board. The
Advisory Committee shall have no staff or budget and the members shall
serve without pay, provided, however, that the ISO shall reimburse
Advisory Committee members for reasonable out-of-pocket expenses
incurred in attending committee meetings.
6. RIGHTS AND OBLIGATIONS OF THE ISO
6.1 Operation of the System. The ISO shall serve as the operator of
the NEPOOL Control Area and assume responsibility for the continued
operation of the NEPOOL Control Center, consistent with the terms of
this Agreement, the NEPOOL Agreement and the Tariff, the System Rules
and Procedures, Good Utility Practice and applicable laws and
regulations.
6.2 Administration of Transmission and Market Arrangements. The ISO
shall administer the transmission and market arrangements in accordance
with the Tariff, the NEPOOL Agreement and the System Rules and
Procedures.
6.3 System Planning. The ISO shall have the authority to
independently conduct System assessment and planning as it may deem
necessary, and shall convey its findings and recommendations to NEPOOL.
The ISO may propose or adopt such new System Rules or Procedures as it
may deem necessary or desirable to implement any such recommendations,
subject to and in accordance with the procedures set forth in Section
6.17. The ISO shall also conduct such System assessment and planning
as may be requested by NEPOOL.
6.4 Market Assessment. The ISO shall have the authority to
independently assess the competitiveness and efficiency of the NEPOOL
Market and shall convey its findings
<PAGE>
and recommendations to NEPOOL. The ISO may propose or adopt such new
System Rules or Procedures as it may deem necessary or desirable to
implement any such recommendations, subject to and in accordance with
the procedures set forth in Section 6.17
6.5 Facilities and Equipment. (a) The ISO shall have the right to
use such facilities, equipment and software as are currently used by
NEPOOL in directing the operation of the System, including without
limitation the NEPOOL Control Center, to enable the ISO to perform its
obligations under this Agreement. The ISO shall maintain and care for,
insure as appropriate, and pay any property taxes relating to the
assets made available for its use. If the ISO determines a need for
additional facilities or equipment to carry out its responsibilities
under this Agreement (such as, for purposes of illustration, computer
equipment, but not including transmission facilities or generating
units), the ISO shall request funding for such equipment or facilities
in its budget as provided in Sections 8.2 and 8.5.
(b) All land, structures, fixtures, equipment and facilities, and
other capital assets, and all software and other intellectual property
or rights to intellectual property or other assets, acquired or
developed by the ISO in order to carry out its responsibilities under
this Agreement shall be the property of the NEPOOL Participants or
shall be acquired by the NEPOOL Participants under lease in accordance
with arrangements approved by the NEPOOL Management Committee. The ISO
shall refrain from any action that would create any lien, security
interest or encumbrance of any kind upon the facilities, equipment or
other assets of any NEPOOL Participant, or upon anything that becomes
affixed to such facilities, equipment or other assets. Upon the
request of any NEPOOL Participant, the ISO (i) shall provide a written
statement that it has taken no action that would create any such lien,
security interest or encumbrance, and (ii) shall take all actions
within the control of the ISO, at the direction and expense of the
requesting NEPOOL Participant, required for compliance by such NEPOOL
Participant with the provisions of its mortgage relating to such
facilities, equipment or other assets.
6.6 System Reliability. The ISO shall have primary responsibility
for ensuring short-term reliability of the System consistent with the
applicable standards set by NERC and the NPCC. The ISO may direct any
NEPOOL Participant to take any action necessary to preserve the
reliable operation of the NEPOOL Control Area under the circumstances
and in the manner set forth in the Tariff and the System Rules and
Procedures.
6.7 Emergency Power. The ISO shall have authority for and on behalf
of NEPOOL to enter into arrangements to procure emergency power under
the conditions set forth in
<PAGE>
the NEPOOL Agreement and the System Rules and Procedures and in
applicable interconnection agreements.
6.8 Maintenance Scheduling. The ISO shall be responsible for
overseeing the scheduling of maintenance of the Designated Transmission
Facilities and the Designated Generation Facilities in conformance with
the System Rules and Procedures.
6.9 System Restoration. In the event that a System shutdown occurs
affecting all or part of the NEPOOL Control Area, the ISO shall, in
accordance with the System Rules and Procedures, coordinate the
restoration of service in conjunction with the Satellites and other
NEPOOL Participant control centers.
6.10 Interconnection Contracts. The ISO shall administer the
interconnection contracts with utilities and other entities outside of
the NEPOOL Control Area.
6.11 Satellites. The Parties contemplate that eventually many, if
not all, of the operational and competitive functions performed by the
Satellites will be transferred to the ISO. However, because of the
significant complexity, reliability implications and cost involved in
making this transfer, the Satellites will remain in existence for at
least the next few years with the transfer date to be determined by the
ISO. In performing its obligations hereunder, the ISO shall have the
authority to direct and oversee the operation of the Satellites. The
Satellites and the personnel who operate the Satellites shall be
subject to appropriate standards of conduct complying with FERC Order
889, and the ISO shall have the authority and responsibility for
monitoring compliance by the Satellites with such standards of conduct
while competitive functions exist at the Satellites.
6.12 Dissemination of Information. The ISO shall disseminate
information furnished to it by NEPOOL Participants consistent with the
NEPOOL Information Policy and the employee code of conduct referred to
in Section 6.14, and shall maintain the confidentiality of such
information in accordance with the provisions of such policy.
6.13 OASIS. The ISO shall continue to develop, maintain and operate
an OASIS consistent with the requirements of applicable laws and
regulations.
6.14 Code of Conduct. The ISO shall develop and implement an
employee code of conduct that at a minimum complies with the
requirements of FERC Order 889.
6.15 Annual Report and Performance Audit. The ISO shall prepare and
submit to NEPOOL an annual report on its performance under this
Agreement and cooperate in the
<PAGE>
conduct of a periodic audit of its performance. The audit shall be
conducted by an independent third party to be chosen by mutual
agreement of the Parties, and shall be conducted at such intervals as
shall be determined by the NEPOOL Executive Committee, but no more
frequently than every three years unless a specified issue has
been identified for audit by the NEPOOL Executive Committee.
6.16 Financial Statements. The ISO shall deliver to NEPOOL as soon
as available but in any event within ninety (90) days after the end of
each calendar year audited financial statements for such year for the
ISO, duly certified by independent public accountants of national
recognized standing.
6.17 System Rules and Procedures. (a) The ISO shall initially
operate the NEPOOL Control Center in accordance with the CRS and
Operating Procedures as currently in effect. The ISO may propose or
implement such changes to the CRS and Operating Procedures as it may
deem necessary or advisable in connection with the performance of its
obligations under this Agreement in accordance with the procedures
set forth in this Section 6.17.
(b) NEPOOL and the ISO shall have joint responsibility to develop
such new System Rules and Procedures as may be necessary to allow the
ISO to carry out its obligations under this Agreement. The System
Rules and Procedures will in the ordinary course be developed through
the appropriate NEPOOL Committees, and the ISO will participate in
the development of these System Rules and Procedures or changes thereto
through representation on the NEPOOL Executive Committee and each of
NEPOOL's Market Reliability Planning, Regional Transmission Planning,
Regional Market Operations and Regional Transmission Operations
Committees, respectively, as provided in the NEPOOL Agreement. The ISO
shall have the right to initiate rulemaking at any time on any matter
through its representatives on the NEPOOL Committees.
(c) If the applicable NEPOOL Committee fails to adopt a System Rule
or Procedure or change thereto proposed by the ISO, the ISO shall have
the right to appeal the action of such NEPOOL Committee to the NEPOOL
Management Committee. Such appeal shall be taken prior to the end of
the tenth business day following the meeting of the NEPOOL Committee to
which the appeal relates by giving to the Secretary of the NEPOOL
Management Committee a signed and written notice of appeal and by
mailing a copy of the notice to each member of the Management
Committee. Unless the NEPOOL Management Committee otherwise acts
within sixty (60) days of such notice, the System Rule or Procedure or
change thereto proposed by the ISO will be deemed approved by the
NEPOOL Management Committee. If the NEPOOL Management Committee denies
the appeal of the ISO, the ISO may next submit the matter to the ISO
<PAGE>
- 14 - (Revised)
Board for determination. The ISO shall give notice of any such submission to
the Secretary of the NEPOOL Management Committee within ten days of the action
of the NEPOOL Management Committee and shall mail a copy of such notice to each
member of the NEPOOL Management Committee. Unless the ISO Board acts within
sixty (60) days of such notice, the NEPOOL Management Committee action will be
deemed approved. If the ISO Board determines within such period that the
System Rule or Procedure or change should be adopted, then the System Rule or
Procedure or
<PAGE>
change, as applicable, proposed by the ISO may be implemented by the
ISO sixty (60) days following delivery to the NEPOOL Management
Committee of notice of the ISO Board determination, subject to approval
by the FERC if required by applicable law or regulation. If the ISO so
implements such new System Rule or Procedure or change, then the NEPOOL
Management Committee may (i) request that the matter be submitted
to the dispute resolution process contained in Section 21.1 of the
NEPOOL Agreement or (ii) submit the decision of the ISO Board directly
to the FERC. The new System Rule or Procedure or change shall continue
in effect during the foregoing process. If NEPOOL and the ISO agree to
invoke the dispute resolution procedures and the ISO is not satisfied
with the result following that process, then notwithstanding anything
to the contrary set forth in Section 21.1 of the NEPOOL Agreement, the
ISO may promptly notify NEPOOL of its disagreement and in such event
the new System Rule or Procedure or change shall continue to remain in
effect. Upon receipt of any such notice from the ISO, NEPOOL may then
submit the matter to the FERC for final resolution.
(d) In addition to the rights of the ISO described in subparagraph
(c), the ISO shall have the right to appeal any other actions of any
NEPOOL Committee in the rulemaking process to the NEPOOL Management
Committee. Such appeal shall be taken prior to the end of the tenth
business day following the meeting of the NEPOOL Committee to
which the appeal relates by giving to the Secretary of the NEPOOL
Management Committee a signed and written notice of appeal and by
mailing a copy of the notice to each member of the Management
Committee. In the event the dispute resolution procedures described in
this subparagraph (d) have been invoked, the action of the NEPOOL
Committee subject to the dispute shall be suspended indefinitely
pending resolution of the dispute. If the NEPOOL Management Committee
denies the appeal of the ISO or takes action on any rulemaking issue
either sua sponte or on appeal from any other NEPOOL Participant and
the ISO is not in agreement with such action, the ISO may next submit
the matter to the ISO Board for determination. The ISO shall give
notice of any such submission to the Secretary of the NEPOOL Management
Committee within ten days of the action of the NEPOOL Management
Committee and shall mail a copy of such notice to each member of the
NEPOOL Management Committee. Unless the ISO Board acts within sixty
(60) days of such notice, the NEPOOL Management Committee action will
be deemed approved. If the ISO Board decides within such period
against NEPOOL, then the NEPOOL Management Committee may (i)request
that the matter be submitted to the dispute resolution process
contained in Section 21.1 of the NEPOOL Agreement or (ii)submit the
decision of the ISO Board directly to the FERC. If NEPOOL and the ISO
agree to invoke the dispute resolution procedures and the ISO is
not satisfied with the result following that process, then
notwithstanding anything to the contrary set forth in Section 21.1 of
the NEPOOL Agreement, the ISO may promptly notify NEPOOL of its
disagreement, and in such event the action of the NEPOOL Committee in
question shall continue to be suspended. Upon receipt of any such
notice from the ISO, NEPOOL may then submit the matter to the FERC for
final resolution.
<PAGE>
(e) If the ISO determines in good faith that (i) the failure to
immediately implement a new System Rule or Procedure or a modification
to the existing System Rules or Procedures would substantially and
adversely affect (A) System reliability or security, or (B) the
competitiveness or efficiency of the NEPOOL Market, and (ii) invoking
the rulemaking procedures of the relevant NEPOOL Committee would not
allow for timely redress of the ISO's concerns, the ISO may promulgate
and implement such new or modified System Rule or Procedure
unilaterally upon written notice to the NEPOOL Executive Committee,
subject to approval by the FERC, if required.
(f) In the event the ISO promulgates a new or modified System Rule
or Procedure under the circumstances set forth in subparagraph (e)
above and the NEPOOL Executive Committee does not object to such System
Rule or Procedure or change within sixty (60) days of receipt of
notification from the ISO, the System Rule or Procedure or change, as
applicable, will be deemed accepted by NEPOOL.
(g) If the NEPOOL Executive Committee does not agree to the new
System Rule and Procedure or the modification promulgated by the ISO
pursuant to subparagraph (e), the NEPOOL Executive Committee and the
ISO shall attempt in good faith to reach agreement on the issue in
dispute as soon as practicable. The NEPOOL Executive Committee may (i)
request that the matter be submitted to the dispute resolution process
contained in Section 21.1 of the NEPOOL Agreement at any time during
this process, or (ii)submit the actions of the ISO directly to the
FERC. If NEPOOL and the ISO agree to invoke the dispute resolution
procedures and the ISO is not satisfied with the result following that
process, then notwithstanding anything to the contrary set forth in
Section 21.1 of the NEPOOL Agreement, the ISO may promptly notify
NEPOOL of its disagreement, and in such event the new System Rule or
Procedure or change shall continue to remain in effect. Upon receipt
of any such notice from the ISO, NEPOOL may then submit the matter to
the FERC for final resolution. Any System Rule and Procedure or change
implemented by the ISO shall remain in effect pending resolution of
the dispute.
(h) The Parties understand and agree that the System Rules and
Procedures adopted pursuant to this Agreement shall be consistent with
the standards adopted by the NERC and the NPCC or any successor to
either.
(i) The ISO shall have sole authority to interpret and implement the
System Rules and Procedures developed pursuant to this Section 6.17 as
it performs its operating responsibilities under this Agreement.
<PAGE>
6.18 Subcontractors and Consultants. The ISO may engage
subcontractors and consultants in the performance of its obligations
under this Agreement when it determines that the use of such
subcontractors or consultants is appropriate; provided, however, that
the ISO shall not subcontract the whole or a substantial portion of its
obligations under this Agreement and any subcontract entered into by
the ISO shall not release the ISO from its obligations under this
Agreement. Except as provided in Section 5.3, the ISO shall not
subcontract with or procure any goods or services from any NEPOOL
Participant or any Affiliate of the ISO or any NEPOOL Participant
unless it has solicited bids for such subcontract or goods for services
through an open and competitive process. All procurement procedures
and protocols developed by the ISO shall be made publicly available.
7. RIGHTS AND OBLIGATIONS OF NEPOOL AND THE NEPOOL PARTICIPANTS
7.1 Operation of Facilities. The NEPOOL Participants shall operate
their Designated Generation Facilities, Designated Transmission
Facilities and Satellites in accordance with the NEPOOL Agreement and
the Tariff, the System Rules and Procedures, Good Utility Practice and
applicable laws and regulations, including the ISO's directions
pursuant to this Agreement.
7.2 Provision of Information. The NEPOOL Participants shall provide
the ISO with any and all information within their custody or control
that the ISO deems necessary to perform its obligations under this
Agreement, subject to applicable confidentiality limitations contained
in the NEPOOL Information Policy.
7.3 Development of System Rules and Procedures. The NEPOOL
Participants shall participate in developing the System Rules and
Procedures necessary to allow the ISO to carry out its obligations
under this Agreement in the manner described in Section 6.17.
7.4 Payment for Services. The NEPOOL Participants shall pay the ISO
for services provided pursuant to the terms of this Agreement.
7.5 Payment for Audits. NEPOOL shall bear all costs of the audits
of the ISO and its financial statements pursuant to Sections 6.15 and
6.16 of this Agreement.
7.6 Emergency Actions. The NEPOOL Participants shall follow the
directions of the ISO to take actions necessary to preserve the
reliable operation of the NEPOOL
<PAGE>
Control Area under the emergency and other conditions set forth in the
Tariff and the System Rules and Procedures.
7.7 Response to ISO Assessment. NEPOOL shall respond in writing to
any findings and recommendations conveyed by the ISO to the NEPOOL
which result from any assessment of the System or the functioning of
the NEPOOL Market undertaken by the ISO pursuant to Sections 6.3 and
6.4 within sixty (60) days of receipt by NEPOOL of such findings.
8. ISO BUDGET
8.1 First Operating Year. The budget for the first Operating Year
shall be as set forth in Schedule B.
8.2 Preparation of Annual Budget. Seventy-five (75) days before the
start of each Operating Year after 1997, the ISO shall prepare and
submit to the NEPOOL Executive Committee a budget approved by the ISO
Board for the upcoming Operating Year. The budget shall contain
separate sections for the ISO's (i) operating expenses, (ii) proposed
capital expenses, if any, and (iii) other extraordinary nonrecurring
expenses, if any. To the extent that any proposed capital or other
extraordinary expenses involve commitments which extend beyond the next
Operating Year, the budget shall contain the projected expenses
including carrying charges for the length of the project.
8.3 Review of Budget. The NEPOOL Executive Committee shall review
and comment on the proposed budget no later than forty-five (45)days
before the start of the Operating Year. The NEPOOL Executive Committee
shall afford the ISO representative on such committee the opportunity
to fully present the ISO's budget recommendations to the NEPOOL
Executive Committee and shall give due consideration to such
recommendations. Subject to the provisions of Sections 8.4, 8.5 and
8.6, the final budget shall be as agreed to by the NEPOOL Executive
Committee, with the approval of the NEPOOL Management Committee, and
the ISO.
8.4 Budget Disputes. If NEPOOL and the ISO cannot reach agreement
by the first day of December in the then current Operating Year as to
the budget, the final operating budget for the then current Operating
Year shall remain in effect, as adjusted by multiplying the current
budget by a reference index, and any previously approved capital
expenditures and appropriate carrying charges shall continue to be
authorized and funded; provided, however, that there shall be excluded
from the roll-over budget any capital expenses, carrying charges or
other extraordinary or nonrecurring expenses incurred by the ISO during
the current Operating Year but not previously approved for
<PAGE>
the next Operating Year. Such reference index shall be the average
quarterly escalation rate over the four previous calendar quarters
determined based on the Employment Cost Index - Compensation of Private
Industry Workers, White Collar Occupations as published by the Bureau
of Labor Statistics, U.S. Department of Labor, in "U.S. Department of
Labor News", Table3 (ECI - WCO). In the event the Employment Cost
Index - Compensation of Private Industry Workers, White Collar
Occupations is no longer published, a mutually agreed upon index shall
be adopted.
8.5 Changes to the Budget. The ISO shall use all reasonable efforts
to anticipate its funding needs for each Operating Year in connection
with the preparation and submission of its proposed budget as provided
in Section 8.2 above. Notwithstanding the foregoing, the ISO may, at
any time, request an adjustment to its then current budget to
address unanticipated events, including, but not limited to, events of
Force Majeure. If the ISO in its reasonable judgment determines that
the unanticipated event constitutes an urgent matter which requires
prompt redress, NEPOOL shall fund the budget request subject to the
right of NEPOOL to subsequently submit any item in dispute to the
dispute resolution procedures described in Section 12.1.
8.6 Dispute Resolution. In the event the NEPOOL Executive Committee
and the ISO are unable to reach agreement on the proposed budget for
the next operating year or any change in the budget for the current
year or the NEPOOL Management Committee fails to approve the budget or
change in accordance with Section 8.3, then in addition to following
the procedures set forth in Sections 8.4 and 8.5, the dispute shall be
resolved in accordance with the dispute resolution procedures described
in Section 12.1.
8.7 New Initiatives: The Parties contemplate that the Final ISO
Agreement will contain additional provisions to be negotiated by the
ISO Board and NEPOOL to address the manner in which new initiatives by
the ISO requiring the expenditure of funds not previously agreed to by
the ISO and NEPOOL will be authorized and approved. Under this
Agreement, except as otherwise provided in this Section 8, any new
spending initiatives proposed by the ISO are subject to the approval of
NEPOOL, and disagreements between the ISO and NEPOOL with respect to
such initiatives must be resolved in accordance with the dispute
resolution procedures described in Section 12.1. Prior to the entering
into of the Final ISO Agreement, NEPOOL will seek guidance from
the FERC as to the appropriateness of continuing NEPOOL's approval
right as to this type of expenditure and possible alternative
mechanisms, including without limitation the possible role of the FERC
as the avenue of first resort by the ISO for authorization of
new spending initiatives.
<PAGE>
8.8 Obligation to Pay. NEPOOL shall pay the ISO for its expenses as
set forth in the then current budget. The ISO shall bill NEPOOL for
such expenses monthly in advance. The ISO's expenses shall be
allocated among the NEPOOL Participants in accordance with the
provisions of the NEPOOL Agreement, and the ISO shall prepare
and send to each NEPOOL Participant an individual statement covering
its allocable share of the ISO's expenses in accordance with the
billing procedures set forth in Section 9.2. The ISO shall reconcile
its actual expenses against budgeted expenses no less frequently than
quarterly, and may make such adjustments to its billing cycle as may be
reasonably necessary to ensure that the ISO has sufficient working
capital to carry on its operations under this Agreement.
8.9 Fees for Scheduling, System Control and Dispatch Service.
Schedule 1 to the Tariff requires transmission customers to purchase
scheduling, system control and dispatch services from the ISO in
connection with the purchase of transmission service under the Tariff.
Charges for scheduling, system control and dispatch service are to be
based on the rate set forth on Schedule 1 to the Tariff. The ISO shall
apply the amounts received by it for such ancillary services which are
attributable to the ISO's expenses toward such expenses, and shall
reduce the amounts to be billed to NEPOOL for its expenses under
Section 8.8 by the amounts so received. Direct payment to the ISO of
such charges shall be limited to Through or Out Service, as defined in
the Tariff, for an initial period not exceeding six months.
Thereafter, Regional Network Service, as defined in the Tariff, shall
also pay such charges directly to the ISO.
8.10 Additional ISO Surcharges. The budgeting process in this
Agreement contemplates that the ISO will be compensated by NEPOOL for
the costs incurred or to be incurred by the ISO in performing its
obligations hereunder, and that subject to the offset described in
Section 8.9, such costs will be allocated to the NEPOOL Participants
in accordance with the provisions of the NEPOOL Agreement. The Parties
intend to develop a plan for funding the maximum practicable level of
costs of the ISO through the imposition of additional fees on the
services provided by the ISO. The Parties shall conclude their plan
for such transaction based fees on or before the first anniversary of
the Effective Date, and take all necessary steps to seek authorization
from the FERC to implement such fees.
9. BILLING SERVICES
9.1 Billing Agent. NEPOOL hereby appoints the ISO and the ISO
agrees to act as billing agent for NEPOOL in respect of amounts to be
collected from or disbursed to NEPOOL Participants and Non-Participants
under the NEPOOL Agreement and the Tariff.
<PAGE>
9.2 Monthly Billing. The ISO shall prepare an itemized statement no
less frequently than once a month for each NEPOOL Participant, setting
forth the amounts owed to the ISO pursuant to Section 8.8 and the other
amounts, if any, to be collected from or disbursed to such NEPOOL
Participant by the ISO as billing agent under this Agreement.
Billings to Non-Participants for services received under the Tariff
shall be made in accordance with the billing procedures established
under the Tariff.
9.3 Payment Disputes. If a NEPOOL Participant disagrees with any
amount set forth in a statement from the ISO, that NEPOOL Participant
shall promptly notify the ISO and the ISO shall attempt to resolve such
disagreement with that NEPOOL Participant. If the disagreement cannot
be resolved by the NEPOOL Participant and the ISO, the ISO shall refer
the matter to the NEPOOL Executive Committee for resolution.
If the ISO disagrees with the resolution by the NEPOOL Executive
Committee, it may submit the dispute to resolution under Section 12.1
of this Agreement. If the NEPOOL Participant disagrees with the
resolution by the NEPOOL Executive Committee, it may submit the dispute
to resolution under the dispute resolution procedures of the NEPOOL
Agreement. Notwithstanding a NEPOOL Participant's disagreement with
any amount set forth in a statement from the ISO, that NEPOOL
Participant shall (i) pay when due all amounts not in dispute and (ii)
pay into an independent escrow account the portion of the invoice in
dispute, pending resolution of the dispute, in accordance with the
procedures established pursuant to Section 21.2 of the NEPOOL
Agreement.
9.4 Failure to Pay. If a NEPOOL Participant fails to pay the ISO any
amount set forth on the monthly statement prepared by the ISO when due,
the ISO shall provide notice to such NEPOOL Participant of the non-
payment, with a copy to the NEPOOL Executive Committee or its designee.
The NEPOOL Executive Committee may take such measures as may be
permitted under the NEPOOL Agreement to collect such overdue payment
from the defaulting NEPOOL Participant. If the non-payment relates to
an amount payable under Section 8.8, the ISO may make such pro rata
adjustments to the statements of the other NEPOOL Participants as may
be required to hold the ISO harmless from the effects of such non-
payment.
10. LIABILITY, INDEMNIFICATION AND INSURANCE
10.1 Liability of ISO. The ISO shall not be liable to the NEPOOL
Participants for actions or omissions by the ISO in performing its
obligations under this Agreement, provided it has not willfully
breached this Agreement or engaged in willful misconduct.
<PAGE>
10.2 Liability of NEPOOL Participants. The NEPOOL Participants shall
not be liable to the ISO for a failure to perform under the terms of
this Agreement, unless that failure to perform was a willful breach of
this Agreement.
10.3 Limitation of Liability. In no event shall either Party to this
Agreement be liable to the other Party for any incidental,
consequential, multiple or punitive damages, loss of revenues or
profits, attorneys fees or costs arising out of, or connected in any
way with the performance or non-performance of this Agreement.
10.4 Indemnification. NEPOOL shall indemnify, defend and save
harmless the ISO and its directors, officers, members, employees and
agents from any and all damages, losses, claims and liabilities by or
to third parties arising out of or resulting from the performance by
the ISO under this Agreement or the actions or omissions of the
NEPOOL Participants in connection with this Agreement, except in cases
of gross negligence or willful misconduct by the ISO or its directors,
officers, members, employees or agents.
10.5 Insurance. The ISO shall procure or cause to be procured and
shall maintain in full force and effect at all times during the term of
this Agreement, all insurance required by applicable laws or
regulations and customary in the electric utility industry through
insurance policies with responsible insurance companies authorized to
do business in the United States in such amounts and for such coverages
and upon such terms as agreed to through the process of approving the
ISO's budget.
11. FORCE MAJEURE
11.1 Obligations Excused. A Party's obligations under this Agreement
shall be excused (except for its payment obligations) to the extent and
for the period that the Party's inability to perform is caused by an
event of Force Majeure affecting the Party, and only to the extent of
the duration of the same, provided that the Party claiming Force
Majeure shall make all reasonable efforts to cure, mitigate or remedy
the effects of the Force Majeure event. Nothing herein shall be
construed to require either Party to settle a labor dispute.
11.2 Notice of Event. The Party claiming a Force Majeure event shall
give prompt notice in writing to the other Party of the commencement of
the Force Majeure event.
<PAGE>
12. DISPUTE RESOLUTION
12.1 Mediation and Arbitration. Any dispute between the Parties to
this Agreement arising out of or related to this Agreement shall be
referred (i) by the ISO, to a representative or representatives
designated by the Board of Directors of the ISO, and (ii) by NEPOOL, to
a representative or representatives designated by the NEPOOL
Executive Committee, for informal resolution as soon as is practicable.
If the designated representatives are unable to informally resolve the
dispute within thirty days of having it referred to them, either Party
to the dispute may elect to submit the dispute to mediation,
and/or arbitration to be resolved in accordance with the dispute
resolution procedures set forth in Section 21.1 of the NEPOOL
Agreement. The provisions of such Section 21.1 are hereby incorporated
by reference herein, provided that the term "Participant" as used
therein shall be deemed for purposes of the dispute resolution
procedures to include the ISO. It is understood and agreed that the
dispute resolution procedures set forth in Section 21.1 of the NEPOOL
Agreement may be invoked by either Party to resolve a dispute under
this Agreement whether or not the matter subject to the dispute is
specified in Section 21.1A of the NEPOOL Agreement.
12.2 FERC Jurisdiction. Nothing in this Agreement shall restrict the
rights of the Parties to file a complaint with or submit any action to
the FERC under relevant provisions of the Federal Power Act, nor shall
anything in this section or elsewhere in the Agreement affect the
jurisdiction of the FERC over matters arising under this Agreement.
13. ISO TERMINATION OR RESIGNATION
13.1 ISO Default. In the event that the NEPOOL Executive Committee
determines that the ISO has failed, for any reason other than Force
Majeure or the non-performance by NEPOOL Participants of their duties
and obligations under this Agreement, to perform under this Agreement
in a satisfactory fashion, the NEPOOL Executive Committee shall attempt
to resolve the performance problem informally with the ISO Chief
Executive. In the event that such informal efforts to resolve such
performance problem are unsuccessful, the Chair of the NEPOOL Executive
Committee shall put the NEPOOL Executive Committee's concerns in
writing and shall submit a written request to the ISO Board asking that
the ISO Board take appropriate action to resolve the performance
problem. The ISO Board shall have 60 days to resolve the performance
problem to the satisfaction of the NEPOOL Executive Committee or to
submit the problem for resolution in accordance with the dispute
resolution procedures set forth in Section 12.1.
<PAGE>
13.2 Removal Vote. (a) In the event the ISO Board fails to satisfy
the concerns submitted to it pursuant to Section 13.1 to the
satisfaction of the NEPOOL Executive Committee within 60 days of the
submittal, or if the ISO Board sought resolution of the concerns in
accordance with the dispute resolution procedures set forth in Section
12.1 within such 60 day period and the concerns have not been resolved
through such procedures, the NEPOOL Executive Committee shall have the
right to submit the performance problem to the NEPOOL Management
Committee for a vote as to whether the ISO should be removed and
replaced.
(b) If the NEPOOL Management Committee votes to remove the ISO,
NEPOOL may petition the FERC for approval to terminate the services of
the ISO under this Agreement, but such termination by NEPOOL shall not
be effective without the approval of the FERC.
(c) It is the intent of the Parties that the procedures in this
Section 13.2 providing for potential removal of the ISO for failure to
perform satisfactorily under this Agreement will be used only when the
ISO has breached this Agreement and all reasonable good faith efforts
have been exhausted under Section 13.1 to resolve concerns regarding
the ISO's performance by means short of removal of the ISO.
13.3 Individual Party Concern with the ISO. In the event that any
NEPOOL Participant believes that the ISO is not performing
satisfactorily within the meaning of Section 13.1, such NEPOOL
Participant may pursue the matter only by submitting a complaint in
writing concerning the matter to the NEPOOL Executive Committee. If
the NEPOOL Executive Committee agrees with the complaint, the
procedures of Section 13.1 shall apply. Notwithstanding the foregoing,
nothing in this Section 13.3 shall restrict the right of any NEPOOL
Participant to file a complaint with or submit any action to the FERC
under the relevant provisions of the Federal Power Act.
13.4 Selection of New ISO. (a)In the event that the NEPOOL
Management Committee vote(s) to terminate the services of the ISO
pursuant to Section 13.2 and such termination is approved by the FERC,
or the ISO gives a notice of resignation pursuant to Section 13.7, the
NEPOOL Executive Committee shall designate ten individuals,
representing a diversity of interests and with input from NECPUC, to
form a subcommittee to select and negotiate a new service agreement
with, or an assignment of this Agreement to, a new independent system
operator.
(b) The selection of the new independent system operator and the
proposed new service agreement or an assignment of this Agreement shall
be subject to approval by a vote of the NEPOOL Management Committee.
<PAGE>
(c) If, as a result of the procedure set forth in this Section 13.4,
it is determined that this Agreement shall be assigned to a new
independent system operator, the ISO shall agree to the assignment of
this Agreement to the new independent system operator.
13.5 Transition. During the period that a new independent system
operator is being chosen in accordance with Section 13.4, this
Agreement shall remain in effect and the ISO shall continue to perform
its functions in accordance with this Agreement. The ISO shall also
work with the subcommittee appointed pursuant to Section 13.4 and the
new independent system operator to effect a smooth transition,
including, if requested by such subcommittee, (i) assisting in the
preparation of an inventory of all equipment and supplies, (ii)
assigning all subcontracts and other contracts as directed and (iii)
assisting the training of any personnel of the successor independent
system operator.
13.6 Breach of Contractual Obligations By NEPOOL Participants. (a)
If a NEPOOL Participant fails to perform any of its obligations (other
than its payment obligations) to the ISO under this Agreement, for
reasons other than Force Majeure, the ISO shall provide notice of such
failure to such NEPOOL Participant and to the NEPOOL Executive
Committee. The NEPOOL Executive Committee shall take such measures as
may be permitted under the NEPOOL Agreement to remedy the failure to
perform by the defaulting party.
(b) If a NEPOOL Participant fails to comply with an authorized
direction from the ISO, in circumstances in which such failure is not
permitted by the System Rules and Procedures and the NEPOOL Agreement,
and such failure imperils the safety or reliability of the NEPOOL
Control Area, the ISO shall be authorized to take any action it
deems to be prudent to maintain the safety and reliability of the
NEPOOL Control Area.
13.7 Resignation of the ISO. If, after following the requirements of
Section 13.6, the failure of a NEPOOL Participant to perform an
obligation under this Agreement has not been cured, and such failure to
perform has a material adverse effect on the ISO, the ISO may, in
addition to any other remedies that it may have at law or in equity,
resign by giving notice to the NEPOOL Executive Committee.
13.8 Effect of Removal, Resignation or Assignment. The removal or
resignation of the ISO, or the assignment of this Agreement as
specified in Section 13.4, shall not discharge or relieve the ISO or
NEPOOL from any obligations or liabilities that it may have incurred
under the terms of this Agreement prior to such removal, resignation or
assignment.
<PAGE>
13.9 Fundamental Changes. In the event that future changes in the
electric industry shall impact the operation of the NEPOOL Market in a
fundamental manner not contemplated by this Agreement, either Party may
petition the FERC to terminate this Agreement in order to address such
changes in an alternative manner. Any such termination of this
Agreement shall be on such terms as the FERC may specify.
14. GOVERNING LAW
The terms of this Agreement shall be construed and enforced in
accordance with the laws of the State of Connecticut.
15. NOTICES
Except as otherwise expressly provided herein, any notice required
hereunder shall be in writing and may be given by any of the following
means: overnight courier, hand delivery, certified mail (postage
prepaid, return receipt requested), facsimile or other reliable
electronic means.
Notice shall be given to the ISO at:
Notice shall be given to NEPOOL at:
Any notice shall be deemed to have been given (i) upon delivery if
given by overnight courier, hand delivery or certified mail or (ii)
upon confirmation if given by facsimile or other reliable electronic
means. Either Party may change their address for receiving notices
contemplated by this Agreement by delivering notice of its new address
to the other.
16. SUCCESSORS AND ASSIGNS
The rights and obligations created by this Agreement shall inure to and
bind the successors and assigns of the ISO, provided, however, that the
ISO shall not assign such rights and obligations without the written
consent of the NEPOOL Management Committee.
<PAGE>
17. RELATIONSHIP OF THE PARTIES
Nothing in this Agreement is intended to create a partnership, joint
venture or other joint legal entity making either Party jointly or
severally liable for the acts or omissions of the other Party.
18. WAIVER
Delay by either Party in enforcing its rights under this Agreement
shall not be deemed a waiver of such rights. Any waiver of rights by
either Party with respect to any default or other matter arising under
this Agreement shall not be deemed a waiver with respect to any default
or other matter arising under this Agreement.
19. SEVERABILITY
If any term, condition, covenant, restriction or other provision of
this Agreement is held by a court or regulatory agency of competent
jurisdiction or by legislative enactment to be invalid, void or
otherwise unenforceable, the remainder of the terms, conditions,
covenants, restrictions and other provisions of this Agreement shall
remain in full force and effect unless such an interpretation would
materially alter the rights and privileges of either Party hereto. If
any term, condition, covenant, restriction or other provision of this
Agreement is held by a court or regulatory agency of competent
jurisdiction or by legislative enactment to be invalid, void or
otherwise unenforceable, the Parties shall attempt to negotiate an
appropriate replacement provision or other revisions to this
Agreement to restore the rights and obligations conferred under the
original Agreement.
20. HEADINGS
The headings used in this Agreement are intended for convenience only
and shall have no effect on the interpretation of any provision of this
Agreement.
21. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each
having the same force and effect as the original.
22. ENTIRE AGREEMENT
This Agreement, including all schedules hereto, and those portions of
the NEPOOL Agreement and the Tariff relating to the obligations of the
ISO, constitute the Parties'
<PAGE>
complete and exclusive statement of the terms of the Agreement and the
matters contemplated herein. All prior written and oral
understandings, offers or other communications of every kind pertaining
to the subject matter of this Agreement are hereby superseded.
23. AMENDMENT
This Agreement may be amended only in writing and as agreed to by the
ISO and NEPOOL, acting pursuant to a vote of the NEPOOL Management
Committee.
NEPOOL and the ISO have caused this Agreement to be executed by their
duly authorized representatives as of the date first set forth above.
NEPOOL PARTICIPANTS NEW ENGLAND ISO CORPORATION
By: By:
Chairman Title:
NEPOOL Management Committee
<PAGE>
SCHEDULE A
LOCATION OF SATELLITES
1. The "Maine Satellite"
c/o Central Maine Power Company
83 Edison Drive
Augusta, ME 04336-0001
2. CONVEX
c/o Connecticut Valley Electric Exchange
P.O. Box 270
Hartford, CT 06141-0270
3. The "New Hampshire Satellite"
c/o Public Service Company of New Hampshire
1000 Elm Street, P.O. Box 330
Manchester, NH 03105-0330
4. REMVEC
c/o Rhode Island - Eastern Mass - Vermont Energy Control
25 Research Drive
Westborough, MA 01582-0001
<PAGE>
SCHEDULE B
The budget for the first Operating Year shall be based on the 1997 NEPOOL
budget of $26.45 million, which includes (i) some expenses and start-up costs
(which may be capitalized and amortized) to be incurred by NEPOOL during the
period from January 1, 1997 through the date that responsibility for operation
of the NEPOOL Control Center and administration of the Tariff is transferred by
NEPOOL to the ISO, (ii) some other types of expenses which will be retained
in a NEPOOL budget and not become part of the ISO budget, and (iii) the
expenses and costs to be incurred by the ISO from the effective date of this
Agreement through December 31, 1997.
Exhibit 10.32
MASTER TRUST AGREEMENT
RESERVE FUNDS
FOR
MILLSTONE 1 NUCLEAR UNIT DECOMMISSIONING COSTS
This MASTER TRUST AGREEMENT, dated as of September 2, 1986, between THE
CONNECTICUT LIGHT AND POWER COMPANY, a Connecticut corporation having its
principal office in Berlin, Connecticut and WESTERN MASSACHUSETTS ELECTRIC
COMPANY, a Massachusetts corporation having its principal office in West
Springfield, Massachusetts (hereinafter called "Millstone 1 Owners"), and
COLONIAL BANK, a banking corporation having its principal office in
Waterbury, Connecticut (together with its successor or successors,
hereinafter called the "Trustee").
WHEREAS, The Connecticut Light and Power Company and Western Massachusetts
Electric Company are the joint owners and licensees of a nuclear electric
generating unit known as the Millstone 1 nuclear unit and, (said joint owners
and licensees being hereinafter collectively referred to as the "Millstone 1
Owners"); and
WHEREAS, the Millstone 1 nuclear unit is currently operated pursuant to an
Operating License, No. DPR-21, dated October 7, 1970, issued in Docket No.
50-
245 by the Nuclear Regulatory Commission ("NRC"); and
WHEREAS, rules and regulations of the NRC impose upon each licensee the
responsibility for payment of the costs of permanent shutdown of the
Millstone 1 nuclear unit and maintenance of such facility in a safe condition
after said shutdown; and
WHEREAS, the Millstone 1 Owners desire to make provision for payment of the
decommissioning costs of the Millstone 1 nuclear unit in accordance with the
provisions of a decommissioning financing plan approved by the Connecticut
Department of Public Utility Control ("DPUC") pursuant to Sections 16-19m
through 16-19p of the Connecticut General Statutes; and
WHEREAS, the Millstone 1 Owners desire to establish independent trusts to
comply with the decommissioning financing plan approved by the DPUC and to
assure the financial ability of the Millstone 1 Owners to meet their
obligations to the NRC, other governmental bodies, and the general public in
connection with decommissioning the Millstone 1 nuclear unit, such trusts to
hold all payments made to them and any earnings thereon solely for the
purpose of meeting such decommissioning expenses and only thereafter for the
benefit of the Millstone 1 Owners and
WHEREAS, certain of such trusts are being established to comply with the
requirements for nuclear decommissioning trust funds set forth in Section
468A of the Internal Revenue Code of 1954, as amended (the "Code"); and
WHEREAS, all conditions and requirements necessary to make this Master Trust
Agreement a valid and legal instrument, in accordance with its terms and for
the purposes herein expressed, have been performed and fulfilled and the
execution and delivery hereof have been duly authorized.
NOW, THEREFORE, in consideration of the premises and of the sum of One Dollar
duly paid to the Trustee by the Millstone 1 Owners and of other good and
valuable considerations, the receipt whereof is hereby acknowledged, and for
the purposes of establishing the trusts and securing the faithful performance
and observance of the convenants and conditions hereinafter set forth, the
Millstone 1 Owners have executed and delivered this Master Trust Agreement to
the Trustee and said Trustee does by these presents agree, on behalf of
itself and its successor or successors in trust, to hold all property and
rights conveyed to it or them pursuant hereto upon the trusts and subject to
the conditions herein set forth, it is hereby convenanted, declared and
agreed, upon the trusts and for the purposes aforesaid, as set forth in the
following covenants, agreements, conditions and provisions, viz.:
ARTICLE I
Definitions
Section 1.01. Defined Terms. For all purposes of this Master Trust
Agreement, unless the context otherwise specifies or requires:
A. "Millstone 1 Owners" shall mean The Connecticut Light and Power Company;
Western Massachusetts Electric Company; and such other entities as may
hereafter become joint owners of the Unit. "Millstone 1 Owner" or "Owner"
shall mean one of the Millstone 1 Owners.
B. "Unit" shall mean the nuclear electric generating unit and the land
presently owned by the Millstone 1 Owners and located at Waterford,
Connecticut, known as the Millstone 1 nuclear unit, as it shall from time to
time exist, together with such structures, components and equipment now or
hereafter associated therewith which become subject to decommissioning rules,
regulations or orders of the NRC.
C. "Operating License" shall mean Operating License No. DPR-21, dated
October 7, 1970, as heretofore or hereafter amended, originally issued in
Docket No. 50-245 by the NRC.
D. "Trustee" shall mean Colonial Bank, and its successors which shall
succeed to its authorities and duties in the manner prescribed in Section
6.04.
E. "Officers' Certificate" shall mean a certificate delivered to the Trustee
and signed by the President (or a Vice President) and the Treasurer (or an
Assistant Treasurer) of either of the Millstone 1 Owners or of Northeast
Nuclear Energy Corporation, agent for the Millstone 1 Owners.
F. "Nuclear Regulatory Commission" or "NRC" shall mean the United States
Nuclear Regulatory Commission or any governmental agency or agencies
succeeding to its authority.
G. "Decommissioning Costs" shall mean all costs and expenses related to
decommissioning and removing the Unit from service and maintaining and
restoring the Unit's site.
ARTICLE II
Identification, Nature and Duration of the Trusts
Section 2.01. Identification of Trusts. The trusts established by this
Master Trust Agreement shall be named collectively the "Millstone 1
Decommissioning Trusts," and the trusts shall be individually named as
follows:
The Connecticut Light and Power Company Trust A
The Connecticut Light and Power Company Trust B
Western Massachusetts Electric Company Trust A
Western Massachusetts Electric Company Trust B
Each of the trusts identified above shall be established on behalf of the
named Millstone 1 Owner, which Owner shall be the beneficial owner of the
property in each such trust.
Each of the trusts identified above as "Trust A" shall be established as a
nuclear decommissioning trust fund under Section 468A of the Code.
In addition to their rights to amend this Master Trust Agreement set forth in
Section 2.03, the Millstone 1 Owners shall have the right to add trusts to
those identified above in the event additional entities become owners of the
Unit and obligated to make payment of a portion of the Decommissioning Costs
of the Unit. The Millstone 1 Owners shall also have the right to add
additional trusts in the names of one or more of the Millstone 1 Owners if
such additional trusts are required to comply with any law, order, rule or
regulation of any governmental body or agency.
Section 2.02. Nature and Purpose. The Millstone 1 Decommissioning Trusts
are intended to assure provision for payment of all, or as great a portion as
possible, of the Decommissioning Costs of the Unit following the final
cessation of its commercial operation. Nothing in this Master Trust
Agreement shall be interpreted to impose any obligation upon the Trustee, or
relieve the Millstone 1 Owners of any obligation, in the event that the
moneys held in the Millstone 1 Decommissioning Trusts are insufficient to
make full payment of the Decommissioning Costs of the Unit or any other costs
or expenses payable pursuant to this Master Trust Agreement.
The Millstone 1 Decommissioning Trusts will be independent of the Millstone 1
Owners, and will constitute vehicles which will hold and disburse, in
accordance with the provisions hereof, moneys collected from the Millstone 1
Owners and dedicated to the purpose of defraying the Decommissioning Costs of
the Unit. If, after completion of the decommissioning process for the Unit,
it is determined that the excess moneys may have been collected or
accumulated in one or more trusts pursuant to this Master Trust Agreement,
any such excess shall be distributed to or for the benefit of the Millstone 1
Owners pursuant to Article VII hereof.
Section 2.03. Duration: Amendment. The term of the within trusts shall
extend until the earliest of: (1) the exhaustion of all moneys in the trusts
at a time when the Millstone 1 Owners are under no further obligation to make
deposits under Section 4.01 hereof, or (2) the completion of the
decommissioning process for the Unit, or other action or order of the NRC or
any successor agency having similar effect, or (3) notification of the
Trustee by the Millstone 1 Owners of their decision to have any or all of
these trusts merged into substantially equivalent trusts and the transfer of
all the moneys in the trusts to such successor trusts; provided, however,
that any such transfer shall not change the identification of any trust or
the beneficial interest of each Owner in the trusts in its name. It is
recognized that, depending upon the amounts accumulated in the trusts and the
method or methods of decommissioning of the Unit authorized by the NRC and
other governmental agencies having jurisdiction, the trusts may extend for an
indefinite period.
The trusts are irrevocable by the Millstone 1 Owners; provided, however, that
the Millstone 1 Owners may merge any or all of these trusts into other trusts
pursuant to the preceding paragraph, and the Millstone 1 Owners may amend
this Master Trust Agreement in order to comply with any law, order, rule or
regulation of any governmental body or agency having jurisdiction over (i)
the decommissioning of the Unit, (ii) rates for utility service received by
the Millstone 1 Owners, (iii) taxes paid by the Millstone 1 Owners, or (iv)
the trusts created by this Master Trust Agreement; subject, however, to the
right of the Trustee to decline to enter into any such amendment if, in its
opinion, such amendment may not afford adequate protection to the Trustee
when the same shall become operative, and provided that no such amendment
shall disqualify any Trust A as a "Nuclear Decommissioning Trust Fund" under
Section 468A of the Code.
ARTICLE III
Particular Representations and Convenants of
the Millstone 1 Owners
Section 3.01. Corporate Rights and Franchises. Except as otherwise
specifically permitted by this Master Trust Agreement, the Millstone 1 Owners
are obligated to do or cause to be done all things necessary to preserve,
extend and keep in full force and effect those rights and franchises which
related to performance of their obligations under this Master Trust
Agreement.
Section 3.02. Unit Licenses. At the time of the execution and delivery of
this instrument, the Millstone 1 Owners and Northeast Nuclear Energy Company,
as licensees under the Operating License applicable to the Unit, are subject
to the authority of the NRC. The Millstone 1 Owners are obligated to obtain
and thereafter maintain, to the extent within their capacity, in full force
and effect, all licenses and other public authorizations, necessary or
required for the operation of the Unit to the extent the Millstone 1 Owners
or any of them continue such operation, for the decommissioning of the Unit,
and for subsequent possession and surveillance of the site.
Section 3.03. Further Instruments. The Millstone 1 Owners will execute and
deliver such further instruments and do such further acts as the Millstone 1
Owners consider necessary or proper to carry out more effectually the
purposes of this Master Trust Agreement or to transfer to any successor
trustee or trustees the estate, powers, instruments and moneys held in trust
hereunder.
Section 3.04. Appointment of Successor Trustee. Whenever necessary to avoid
or fill vacancy in the office of Trustee, the Millstone 1 Owners will, in the
manner provided in Section 6.04, appoint a Trustee so that there shall at all
times be a Trustee hereunder which is eligible and qualified in accordance
with the provisions of Section 6.02.
ARTICLE IV
Decommissioning Trust Funds
Section 4.01. Deposits to Decommissioning Trusts. All moneys deposited with
the Trustee pursuant to the provisions hereof, together with income earned
thereon, shall be held by the Trustee upon the trusts hereof. Each of the
Millstone 1 Decommissioning Trusts is held for the same purposes, whether
such trust is identified as "Trust A" or "Trust B," and each Owner shall
instruct the Trustee in writing to deposit its payments in either the Trust A
or Trust B established in that Owner's name. Each Owner may also elect to
instruct the Trustee to transfer moneys between the Trust A and the Trust B
established in that Owner's name, subject to the provisions hereof and such
reasonable procedures as the Trustee may prescribe.
Each Millstone 1 Owner may deposit with the Trustee additional moneys to be
held in one or more of the trusts, pursuant to instructions to the Trustee
which shall accompany such deposits, established in such Owner's name
hereunder.
No deposit shall be made in any Trust A which a Millstone 1 Owner has elected
to be treated as a nuclear decommissioning trust fund under Section 468A of
the Code in excess of the amount which is allowable to such Owner as a
deduction under said Section 468A. Each Owner shall be solely responsible
for determining whether any deposit or transfer of funds made by such Owner
hereunder qualifies for a deduction under Section 468A of the Code and, if
so, the amount of such deposit or transfer that is so deductible. Neither
the Trustee nor the Millstone 1 Owners shall have any responsibility for
reviewing or confirming any determination made by an Owner with respect to
the tax treatment of any deposit or transfer of funds made by an Owner
hereunder.
The Millstone 1 Owners shall prepare a schedule of payments to be made by
each Owner into the trusts identified in Section 2.01 for the purpose of
accumulating moneys for application toward payment of that Owner's share of
the Decommissioning Costs of the Unit. Such schedule, as amended from time
to time, shall be filed by the Millstone 1 Owners with the Trustee.
Thereafter, decommissioning cost moneys paid by the Millstone 1 Owners shall
be deposited into the applicable trusts in the amounts specified in the
schedule then in effect.
The Millstone 1 Owners shall not be permitted at any time to offset any
deposits required pursuant to the provisions hereof by application in any way
of expenditures or obligations which might otherwise qualify for withdrawals
under Section 4.03 hereof.
Moneys held pursuant to this Master Trust Agreement as part of any trust
estate shall be applied or paid by the Trustee only in accordance with the
provisions of this Article IV.
Section 4.02. Management of Trust Moneys. The Millstone 1 Owners intend
that the funds in each of the trusts identified as "Trust A" shall be held,
invested, and used in such a manner that the trust qualifies as a "Nuclear
Decommissioning Trust Fund" under Section 468A of the Code. The Trustee
shall hold and invest such funds pursuant to written investment guidelines
promulgated by the Millstone 1 Owners in consultation with the Trustee;
provided, however, that the Trustee shall not be responsible for ensuring
that each of the trusts identified as "Trust A" qualifies as a "Nuclear
Decommissioning Trust Fund" under Section 468A of the Code.
The Trustee shall hold and invest funds in each of the trusts identified as
"Trust B" pursuant to written investment guidelines promulgated from time to
time by the Millstone 1 Owners in consultation with the Trustee. It is
recognized that funds deposited in trusts identified as "Trust B" may not
qualify for favorable tax treatment under the Code.
The guidelines promulgated from time to time by the Millstone 1 Owners shall
follow consultation between the Millstone 1 Owners and the Trustee. These
guidelines shall take into account considerations appropriate to achievement
of the purposes described in this Master Trust Agreement, such as the
estimated commencement date for decommissioning the Unit, the amounts of
moneys held in trust and anticipated earnings, the preservation of
accumulated principal, appropriate liquidity throughout the estimated
remaining life of the Unit (so that amounts of decommissioning funds are
readily available on relatively short notice in the event of a premature
decommissioning of the Unit), and the goal of maximizing trust earnings after
payment of applicable taxes and other expenses.
In investing, reinvesting, exchanging, selling and otherwise managing the
trusts, the Trustee shall discharge its duties with the care, skill, prudence
and diligence under the circumstance then prevailing which persons of
prudence, acting in a like capacity and familiar with such matters, would use
in the conduct of an enterprise of a like character and with like aims and in
accordance with the written investment guidelines promulgated from time to
time by the Millstone 1 Owners in consultation with the Trustee.
The Millstone 1 Owners shall have the power to appoint one or more investment
managers to manage, or direct, the acquisition, holding or disposition of any
trust assets in accordance with the terms of a written appointment made by
the Millstone 1 Owners. Any such investment manager shall, unless its
appointment provides otherwise, have the power to direct the Trustee in, and
in such case the Trustee shall not be responsible for, the exercise of those
powers expressly given the Trustee under this Section 4.02 with respect to
all or part of the trust moneys, pursuant to the terms of its appointment by
the Millstone 1 Owners, and the Trustee shall, upon receipt of an Officers'
Certificate certifying such investment manager's appointment and written
acknowledgment of such appointment from such investment manager satisfactory
in form to the Trustee, exercise such powers as directed in writing by such
investment manager. The Trustee shall not be liable for any diminution in
the value of the trusts as a result of following any such direction or as a
result of not exercising any such powers in the absence of any such
direction. Notwithstanding the foregoing, the Trustee shall at all times be
responsible for determining whether an investment direction by an investment
manager is in compliance with the applicable written investment guidelines
referred to above, and if any investment direction does not so comply, the
Trustee shall not follow such direction and shall so notify the Millstone 1
Owners. If no such investment manager has been so appointed by the Millstone
1 Owners, the Trustee shall have full authority to invest and reinvest the
Fund in accordance with the provisions of this Master Trust Agreement, and
its associated written investment guidelines, and shall not be required to
follow the directions of any other person.
Section 4.03. Withdrawal of Trust Moneys.
A. Upon compliance with the requirements of this Section, moneys held by the
Trustee in the trusts may be withdrawn for the following purposes:
(1) To pay or reimburse the Millstone 1 Owners or their agent for each
Owner's share of expenditures which constitute payment of the Decommissioning
Costs of the Unit;
(2) To pay each Owner's share of taxes and other reasonable expenses incurred
in connection with the administration and operation of the trusts.
In computing the amounts which may be withdrawn under (1) above, the gross
amount of an expenditure shall be reduced by any refunds, rebates, or other
moneys similarly received by the Millstone 1 Owners or their agent with
respect thereto. Any such refund, rebate or similar payment received after
the certification of the expenditure or obligation to which it relates, and
which has not previously been taken into account, at the election of the
Owners shall be applied within three months after its receipt to reduce the
amount of a subsequent withdrawal from the trusts made under this Section or
shall be redeposited in the trusts from which the amount was withdrawn.
B. A withdrawal under this Section from the trusts shall be paid only upon
receipt by the Trustee of an Officers' Certificate dated on the date of the
withdrawal application:
(1) stating the amount to be withdrawn, and the purposes for which the
amount is to be used;
(2) specifying in reasonable detail by general classification the underlying
items of expenditures and obligations (after giving effect to any deduction
required under subsection (1)) which will constitute part of the
Decommissioning Costs, and stating that such expenditures constitute, or
obligations when paid will constitute, part of the Decommissioning Costs, and
that none of such expenditures and obligations has been made the basis of a
prior withdrawal under this Section;
(3) stating that any moneys which have previously been withdrawn from the
trusts to pay obligations have been expended on account of items which
constitute part of the Decommissioning Costs; and
(4) stating that no governmental approval for such withdrawal is necessary
or, if at any time the making of withdrawals herefrom becomes subject to the
jurisdiction of any governmental agency, stating that such regulatory
approval has been obtained and furnishing a copy thereof.
ARTICLE V
Consolidation, Merger, Conveyance
Section 5.01. The Millstone 1 Owners May Consolidate, etc., on Certain
Terms. Nothing in this Master Trust Agreement shall be interpreted to
prevent any consolidation or merger of the Millstone 1 Owners with, or into,
any other entity or entities, or the conveyance or transfer of any of their
respective rights, title and interest in the Unit to any other entity or
entities; provided, however, that upon any such consolidation, merger,
conveyance or transfer, the successor entity or entities shall be lawfully
entitled to operate such properties and shall execute and deliver to the
Trustee, simultaneously with such consolidation, merger, conveyance or
transfer, a trust agreement supplemental hereto in form satisfactory to the
Trustee, containing an agreement on the part of such successor entity or
entities to assume the due and punctual performance and observance of all the
covenants and conditions of this Master Trust Agreement, with the same effect
and to the same extent as if such successor entity or entities had been an
original party hereto.
Section 5.02. Other Successors. Nothing in this Master Trust Agreement
shall be interpreted to prevent the Millstone 1 Owners from transferring
their respective rights, title and interest in, and their obligations with
respect to, the Unit to any agent, representative, authority, agency,
commission or other entity or entities, authorized by applicable state and
federal statutes or regulations to assume responsibility for the
decommissioning of nuclear facilities; provided, however, that such
transferee shall execute and deliver to the Trustee a trust agreement
supplemental hereto in form satisfactory to the Trustee, containing an
agreement on the part of such transferee entity or entities to assume the due
and punctual performance and observance of all the covenants and conditions
of this Master Trust Agreement, with the same effect and to the same extent
as if such transferee had been an original party hereto.
Section 5.03. Successor Substituted. In the event any of the Millstone 1
Owners, pursuant to Section 5.01 or 5.02, shall consolidate with or merge
into any other entity or shall convey or transfer all or substantially all
their respective rights, title and interest in the Unit to any other entity,
the successor entity, upon causing to be executed and delivered the
supplemental Master Trust Agreement referred to in Section 5.01 shall succeed
to and be substituted hereunder with the same effect as if such successor
entity had been named herein as an original party.
ARTICLE VI
The Trustee
Section 6.01. Acceptance of Trusts; Certain Terms of the Trusts. The
Trustee, for itself and it successors, hereby accepts the trusts created by
this Master Trust Agreement and agrees to perform the same, but only upon the
terms expressly herein set forth, including the following:
A. The recitals herein shall be taken as the statements of the Millstone 1
Owners and shall not be considered as made by, or imposing any obligation or
liability upon, the Trustee. The Trustee makes no representations as to the
value, condition, or validity of the trusts (or any part thereof) to achieve
the purposes of this Master Trust Agreement and the trusts created herein,
and the Trustee shall incur no liability or responsibility in respect of any
of such matters.
B. The Trustee shall be under no responsibility or duty with respect to the
disposition of any moneys duly paid to the Millstone 1 Owners or their agent
under any provision hereof.
C. The Trustee shall be under no responsibility or obligation to collect any
deposit of moneys into the trusts.
D. The Trustee shall have no responsibility for reviewing or confirming that
payments made by an Owner comply with the requirements of the Code or any
other statutory or regulatory requirements.
E. The Trustee may not rely upon any default under any covenant in Article
III hereof as a defense against performing its trusts and powers hereunder.
F. The Trustee may execute any of the trusts or powers hereof and perform
any duty hereunder either directly or through its agents or attorneys. The
Trustee shall not be responsible for the misconduct or negligence of any
agent or attorney, provided that such agent or attorney is appointed with due
care and is supervised with due care to ensure timely compliance with the
Trustee's duties hereunder. Notwithstanding the foregoing, the Trustee shall
remain fully responsible for the performance of the duties set forth in
Section 4.02 hereof, whether or not the Trustee appoints an agent or attorney
to perform such duties.
G. The Trustee may, as an expense of administering the trusts, consult with
legal counsel to be selected by it (who may be counsel for any of the
Millstone 1 Owners), and the Trustee shall not be liable for any action taken
or suffered by it in good faith in accordance with the advice of such
counsel.
H. The Trustee shall have the continuing right to be reasonably compensated
for all services rendered hereunder and to be reimbursed for all reasonable
expenses, including reasonable fees and expenses of its counsel, incurred by
it in the administration of the trusts created hereby. The compensation and
reimbursements due to the Trustee hereunder shall be shown in quarterly bills
submitted to the Millstone 1 Owners. The Trustee's charges shall be
allocated among each of the trusts hereunder in the ratio that the balance of
the assets in each of the trusts on the last business day of the calendar
quarter to which such charges apply bears to the balance of the assets in all
trusts on such last business day, except for compensation and reimbursements
to the Trustee that specifically relate to a particular trust and are
properly chargeable directly to such trust. After 30 days following the
submission of the quarterly bills referred to above, the Trustee shall be
entitled to apply trust moneys held by it hereunder to the payment of
compensation and expense reimbursements related to such trusts.
I. The Trustee shall segregate into separately identified accounts such
portions of the trust funds held in the name of a Millstone 1 Owner as that
Owner shall direct. The Trustee shall charge such trusts for any additional
expenses resulting from such segregation and accounting.
J. Each of the Millstone 1 Owners shall be obligated to indemnify the
Trustee against any liability, loss, claim, charge or expense it may sustain,
in good faith and without negligence, in the performance of its duties
hereunder, including, but not limited to, any initial tax or additional tax
paid by the Trustee pursuant to Section 4951 of the Code.
K. The Trustee shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, statement, obligation,
appraisal or other document believed by it to be genuine and to have been
signed by the proper party or parties. The Trustee shall accept a board of
directors' resolution as conclusive evidence that a resolution has been duly
adopted and is in full force and effect. Except as otherwise expressly
provided, an Officers' Certificate shall be accepted by the Trustee as
conclusive evidence of the facts therein stated, and shall constitute full
protection to the Trustee for any action taken or omitted to be taken by the
Trustee in good faith reliance thereon. Notwithstanding the fact that the
Trustee shall have no obligation to make any investigation into the matters
stated in any such notice, resolution, request, consent, order, certificate,
report, opinion, statement, obligation, appraisal or other paper or document,
the Trustee may, in its discretion, make such further inquiry into such facts
or matters as it may see fit.
L. The Trustee shall not be responsible for any dimunition in the value of
any trust hereunder as a result of following in good faith and without
negligence the guidelines promulgated by the Millstone 1 Owners pursuant to
Section 4.02 or the instructions of an Owner pursuant to the last sentence of
the first paragraph of Section 4.01.
M. The Trustee shall maintain appropriate records of all deposits,
investments and earnings thereon received by the trusts and all disbursements
made from the trusts, and each month the Trustee shall provide to the
Millstone 1 Owners a written statement of all transactions. In addition, the
Trustee shall provide to the Millstone 1 Owners at least annually a report
certifying as to the activity in each of the trusts over the period since the
most recent report and the balances at the beginning and end of such period.
N. The Millstone 1 Owners and their agents shall have the right to review,
inspect and audit the books and records of the Trustee relating to the
trusts, providing that the expenses of such review, inspection or audit shall
be paid by the Millstone 1 Owner causing such review, inspection or audit to
be performed.
O. The Trustee shall cause appropriate tax returns with respect to the
trusts and income earned by each of the trusts to be prepared and filed and
shall pay any taxes shown to be due out of the appropriate trust moneys held
by it. In consultation with the Millstone 1 Owners, the Trustee shall have
the right to challenge the obligation to make payment of any such taxes and
shall have the authority to settle any proceedings related to such taxes, and
to receive refunds and take any other action necessary or appropriate in
regard to taxes on the trusts or income earned by the trusts.
P. The Trustee shall prepare and submit such applications, reports and other
documents as may be required by any governmental authority identified in an
Officers' Certificate as having jurisdiction over the trusts and performance
of the trust obligations and activities specified by this Master Trust
Agreement.
Q. Without in any way limiting the powers and authority conferred upon the
Trustee by other provisions of this Master Trust Agreement or by law, and to
enable the Trustee to perform its duties hereunder, the Trustee is expressly
authorized and empowered as follows:
To sell, exchange, convey, transfer or otherwise dispose of any property held
by it, by public or private sale. No person dealing with the Trustee shall
be bound to see to the application of the purchase money or to inquire into
the validity or expediency of any such sale or other disposition;
To make, execute, acknowledge and deliver any and all documents of transfer
and conveyance and any and all other instruments that may be necessary or
appropriate to carry out the powers granted in this Master Trust Agreement;
To register any securities held in the trusts in its own name or in the name
of a nominee and to hold any security in bearer form or in book entry, or to
combine certificates representing such securities with certificates of the
same issue held by the Trustee in other fiduciary capacities, or to deposit
or arrange for the deposit of such securities in a qualified central
depositary even though, when so deposited, such securities may be merged and
held in bulk in the name of the nominee of such depositary with other
securities deposited therein by another person, or to deposit or arrange for
the deposit of any securities issued by the United States Government, or any
agency or instrumentality thereof, with a Federal Reserve bank, but the books
and records of the Trustee shall at all times show that all such securities
are part of the appropriate trust hereunder;
In consultation with the Millstone 1 Owners, to compromise or otherwise
adjust claims in favor of or against the trusts.
Section 6.02. Persons Eligible for Appointment as the Trustee. The Trustee
shall at all times be a bank or trust company having its principal office and
place of business in the United States of America, and shall at all times be
a corporation authorized to do business in the State of Connecticut, with a
combined capital and surplus of at least $50,000,000 and authorized under
applicable laws to exercise corporate trust powers and subject to supervision
or examination by appropriate federal or state authorities. If the Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of any supervising or examining authority referred to in this
Section, then, for the purposes of this Section, the combined capital and
surplus of the Trustee shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.
In the event the Trustee ceases to be eligible under this Section, it shall
resign immediately in the manner and with the effect specified in Section
6.03; if the Trustee does not so resign, it shall be removed forthwith by the
Millstone 1 Owners.
Whenever necessary to avoid or fill a vacancy in the office of the Trustee,
the Millstone 1 Owners, will, in the manner provided in Section 6.04, appoint
a Trustee so that there shall at all times be a Trustee eligible under this
Section.
Section 6.03. Resignation and Removal. The Trustee may resign and be
discharged from the trusts hereby created by giving at least six weeks' prior
written notice thereof to the Millstone 1 Owners. Such resignation shall
become effective on the day specified in such notice or upon the appointment
of a successor and such successor's acceptance, whichever is later. If an
instrument of acceptance by a successor Trustee shall not have been delivered
to the Trustee within six weeks after the giving of such notice of
resignation, the retiring Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
The Millstone 1 Owners may at any time remove the Trustee, with or without
cause, upon at least six weeks' prior written notice, such notice to be in
the form of an Officers Certificate of the Millstone 1 Owners declaring such
removal and specifying the successor trustee appointed pursuant to Section
6.04.
The Trustee, after resignation or removal, may nevertheless retain a lien
upon the trust moneys to secure any amounts due to it under any provision of
this Master Trust Agreement.
Section 6.04. Appointment of Successor Trustee. In the event the Trustee
resigns, is removed, or becomes incapable of acting or is adjudged a bankrupt
or insolvent, or if a receiver of the Trustee or its property is appointed or
a public officer takes charge or control of the Trustee or its property or
affairs for the purpose of rehabilitation, conservation or liquidation, a
vacancy shall be deemed to exist in the office of the Trustee, and a
successor shall be appointed by the Millstone 1 Owners to fill such vacancy.
The validity of any such appointment, however, shall not be impaired or
affected by failure to give notice of such appointment or by any defect in
such notice.
If, in a proper case, no successor Trustee shall have been appointed pursuant
to the foregoing provisions of this Section, or if appointed, shall not have
accepted the appointment, within 60 days after the resignation of the
Trustee, or the occurrence of a vacancy in the office of the Trustee, the
Secretary of the State of Connecticut may apply to a court of competent
jurisdiction to appoint a successor Trustee.
Section 6.05. Acceptance of Appointment by Successor Trustee. A successor
Trustee appointed hereunder shall execute an instrument accepting such
appointment and deliver one counterpart thereof each to the Millstone 1
Owners, the retiring Trustee, and, if applicable, the court making such
appointment. Thereupon, without any further act, such successor Trustee
shall become vested with all the properties, rights, powers, trusts and
duties of the retiring Trustee as if originally named under this Master Trust
Agreement; however, any retiring Trustee, when requested by the successor
Trustee in writing or by the Millstone 1 Owners and upon payment of any
lawful charges and disbursements, shall nevertheless execute and deliver an
instrument or instruments conveying and transferring to such successor
Trustee all its properties, rights, powers, and trusts hereunder and shall
duly assign, transfer and deliver to such successor Trustee all property and
moneys held by it hereunder. If the successor Trustee reasonably requests an
instrument from the Millstone 1 Owners for the purpose of more fully and
certainly vesting in and confirming to it said properties, rights, powers and
trusts, then such instrument shall be executed, acknowledged and delivered to
it by the Millstone 1 Owners.
Section 6.06. Merger or Consolidation of the Trustee. Subject to the
requirements of Section 6.02 hereof, any corporation into which the Trustee
may be merged or with which it may be consolidated or any corporation
resulting from any merger or consolidation to which the Trustee shall be a
party or any corporation to which substantially all the business and assets
of the Trustee may be transferred, shall be the Trustee under this Master
Trust Agreement, without further act.
ACTICLE VII
Distribution of Assets upon Termination
Section 7.01. Transfer to Successor Trust. In the event that one or more of
decommissioning trusts established pursuant to this Master Trust Agreement is
required or permitted by an action of any governmental authority having
jurisdiction to be transferred to another trust or trusts in order to satisfy
the purposes specified in Section 2.02, the Millstone 1 Owners shall have the
right, by written notice to the Trustee, to elect to have such trust or
trusts subsumed into such other trust or trusts. Such written notice of such
election shall be signed by the Presidents or Treasurers of the Millstone 1
Owners and shall direct the Trustee to transfer the trust moneys to the
specified successor trust or trusts. Upon the completion of such transfer,
the specified trust shall terminate.
Section 7.02. Final Distribution. Any moneys remaining in a trust following
completion of the decommissioning process for the Unit or action or order of
the NRC or any successor agency having similar effect shall be distributed by
the Trustee for the benefit of the applicable Millstone 1 Owner except as may
be ordered by any governmental authority having jurisdiction over such
distribution.
If any of the trusts created by this Master Trust Agreement is finally
determined to be void for any reason by a court or other governmental
authority having jurisdiction, any portion of the trust estate which cannot
then be applied to achievement of the purposes specified herein shall be
distributed in the manner specified in this Section 7.02.
ARTICLE VIII
General Provisions
Section 8.01. Compliance Certificates and Opinions. Every certificate or
opinion with respect to compliance with a condition or covenant provided for
in this Master Trust Agreement shall include:
A. A statement that each person making such certificate or opinion has read
such covenant or condition and the definitions herein relating thereto.
B. A brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based.
C. A statement that, in the opinion of each such person, he or she has made
or caused to be made such examination or investigation as is necessary to
enable that person to express an informed opinion as to whether or not such
covenant or condition has been complied with.
D. A statement as to whether or not, in the opinion of the person making
such certificate or opinion, such condition or covenant has been complied
with.
In any case where several matters are required to be certified by, or covered
by an opinion of, any specified person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such person,
or that they be so certified or covered by the opinion of, only one such
person, or that they be so certified or covered by only one document, but one
such person may certify or give an opinion with respect to some matters and
one (or more) other such persons as to other matters, and each such person
may certify or give an opinion as to such matters in one or several
documents.
Section 8.02. No Implied Obligations. This Master Trust Agreement shall not
be interpreted to impose any duty, responsibility, obligation or liability
upon the Trustee or the Millstone 1 Owners in addition to those duties,
responsibilities, obligations and liabilities which are expressly specified
in this instrument.
Section 8.03. Transfer of Interests. No provision of this Master Trust
Agreement shall be interpreted to prohibit or restrict the transfer between
Owners of interests in the Millstone 1 Decommissioning Trusts in conjunction
with changes in their ownership interests in the Unit; provided, however,
that no such transfer shall in any way act to terminate any trust or result
in the transferee having any rights or interests which differ from those
previously held by the transferor.
ARTICLE IX
Miscellaneous
Section 9.01. Supplemental Trust Agreements. Subject to Section 2.03
hereof, this Master Trust Agreement may be amended or supplemented from time
to time by the execution and delivery of one or more supplemental trust
agreements by and between the Millstone 1 Owners and the Trustee, provided
that the amendment or supplement has received any required approval or
acceptance by any governmental body having jurisdiction.
Section 9.02. Successor Governmental Authorities. Wherever a specific
governmental authority is identified in this Master Trust Agreement, such
identification shall include any successor governmental authority, agency or
body having substantially comparable responsibilities.
Section 9.03. Amendment or Repeal of Section 468A. Any reference in this
Master Trust Agreement to Section 468A of the Code shall be deemed to refer
not only to such section, as it may from time to time be amended, but also to
any successor statutory provision. In the event that Section 468A of the
Code, or its successor statutory provision, is repealed, in whole or in part,
and certain provisions of this Master Trust Agreement cease to be required,
such provisions shall thereupon be ineffective without the necessity of
further amendment of this Master Trust Agreement.
Section 9.04. Applicable Law. This Master Trust Agreement shall be governed
by and construed in accordance with the laws of the State of Connecticut.
Section 9.05. Unenforceable Provisions. Any provision of this Master Trust
Agreement which is prohibited or is determined to be unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
Section 9.06. Written Changes and Notices. No term or provision of this
Master Trust Agreement may be changed, waived, discharged or terminated,
except by an instrument in writing signed by the party or other person
against whom enforcement of the change, waiver, discharge or termination is
sought; and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
Section 9.07. Counterparts. This Master Trust Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 9.08. Headings of Articles and Sections. The headings of the
various Articles and Sections herein are for convenience of reference only
and shall not define or limit any of the terms of provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Master Trust
Agreement to be duly executed by their respective authorized officers as of
the date first above written.
THE CONNECTICUT LIGHT AND POWER COMPANY
By /s/S. A. O'Connor
Its Vice President & Treasurer
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By /s/S. A. O'Connor
Its Vice President & Treasurer
COLONIAL BANK
By /s/Mary Lou Stewart
Its Vice President
Exhibit 10.33
MASTER TRUST AGREEMENT
RESERVE FUNDS
FOR
MILLSTONE 2 NUCLEAR UNIT DECOMMISSIONING COSTS
This MASTER TRUST AGREEMENT, dated as of September 2, 1986, between THE
CONNECTICUT LIGHT AND POWER COMPANY, a Connecticut corporation having its
principal office in Berlin, Connecticut and WESTERN MASSACHUSETTS ELECTRIC
COMPANY, a Massachusetts corporation having its principal office in West
Springfield, Massachusetts (hereinafter called "Millstone 2 Owners"), and
COLONIAL BANK, a banking corporation having its principal office in
Waterbury, Connecticut (together with its successor or successors,
hereinafter called the "Trustee").
WHEREAS, The Connecticut Light and Power Company and Western Massachusetts
Electric Company are the joint owners and licensees of a nuclear electric
generating unit known as the Millstone 2 nuclear unit and, (said joint owners
and licensees being hereinafter collectively referred to as the "Millstone 2
Owners"); and
WHEREAS, the Millstone 2 nuclear unit is currently operated pursuant to an
Operating License, No. DPR-65, dated September 26, 1975, issued in Docket No.
50-336 by the Nuclear Regulatory Commission ("NRC"); and
WHEREAS, rules and regulations of the NRC impose upon each licensee the
responsibility for payment of the costs of permanent shutdown of the
Millstone 2 nuclear unit and maintenance of such facility in a safe condition
after said shutdown; and
WHEREAS, the Millstone 2 Owners desire to make provision for payment of the
decommissioning costs of the Millstone 2 nuclear unit in accordance with the
provisions of a decommissioning financing plan approved by the Connecticut
Department of Public Utility Control ("DPUC") pursuant to Sections 16-19m
through 16-19p of the Connecticut General Statutes; and
WHEREAS, the Millstone 2 Owners desire to establish independent trusts to
comply with the decommissioning financing plan approved by the DPUC and to
assure the financial ability of the Millstone 2 Owners to meet their
obligations to the NRC, other governmental bodies, and the general public in
connection with decommissioning the Millstone 2 nuclear unit, such trusts to
hold all payments made to them and any earnings thereon solely for the
purpose of meeting such decommissioning expenses and only thereafter for the
benefit of the Millstone 2 Owners and
WHEREAS, certain of such trusts are being established to comply with the
requirements for nuclear decommissioning trust funds set forth in Section
468A of the Internal Revenue Code of 1954, as amended (the "Code"); and
WHEREAS, all conditions and requirements necessary to make this Master Trust
Agreement a valid and legal instrument, in accordance with its terms and for
the purposes herein expressed, have been performed and fulfilled and the
execution and delivery hereof have been duly authorized.
NOW, THEREFORE, in consideration of the premises and of the sum of One Dollar
duly paid to the Trustee by the Millstone 2 Owners and of other good and
valuable considerations, the receipt whereof is hereby acknowledged, and for
the purposes of establishing the trusts and securing the faithful performance
and observance of the convenants and conditions hereinafter set forth, the
Millstone 2 Owners have executed and delivered this Master Trust Agreement to
the Trustee and said Trustee does by these presents agree, on behalf of
itself and its successor or successors in trust, to hold all property and
rights conveyed to it or them pursuant hereto upon the trusts and subject to
the conditions herein set forth, it is hereby convenanted, declared and
agreed, upon the trusts and for the purposes aforesaid, as set forth in the
following covenants, agreements, conditions and provisions, viz.:
ARTICLE I
Definitions
Section 1.01. Defined Terms. For all purposes of this Master Trust
Agreement, unless the context otherwise specifies or requires:
A. "Millstone 2 Owners" shall mean The Connecticut Light and Power Company;
Western Massachusetts Electric Company; and such other entities as may
hereafter become joint owners of the Unit. "Millstone 2 Owner" or "Owner"
shall mean one of the Millstone 2 Owners.
B. "Unit" shall mean the nuclear electric generating unit and the land
presently owned by the Millstone 2 Owners and located at Waterford,
Connecticut, known as the Millstone 2 nuclear unit, as it shall from time to
time exist, together with such structures, components and equipment now or
hereafter associated therewith which become subject to decommissioning rules,
regulations or orders of the NRC.
C. "Operating License" shall mean Operating License No. DPR-65, dated
September 26, 1975, as heretofore or hereafter amended, originally issued in
Docket No. 50-336 by the NRC.
D. "Trustee" shall mean Colonial Bank, and its successors which shall
succeed to its authorities and duties in the manner prescribed in Section
6.04.
E. "Officers' Certificate" shall mean a certificate delivered to the Trustee
and signed by the President (or a Vice President) and the Treasurer (or an
Assistant Treasurer) of either of the Millstone 2 Owners or of Northeast
Nuclear Energy Corporation, agent for the Millstone 2 Owners.
F. "Nuclear Regulatory Commission" or "NRC" shall mean the United States
Nuclear Regulatory Commission or any governmental agency or agencies
succeeding to its authority.
G. "Decommissioning Costs" shall mean all costs and expenses related to
decommissioning and removing the Unit from service and maintaining and
restoring the Unit's site.
ARTICLE II
Identification, Nature and Duration of the Trusts
Section 2.01. Identification of Trusts. The trusts established by this
Master Trust Agreement shall be named collectively the "Millstone 2
Decommissioning Trusts," and the trusts shall be individually named as
follows:
The Connecticut Light and Power Company Trust A
The Connecticut Light and Power Company Trust B
Western Massachusetts Electric Company Trust A
Western Massachusetts Electric Company Trust B
Each of the trusts identified above shall be established on behalf of the
named Millstone 2 Owner, which Owner shall be the beneficial owner of the
property in each such trust.
Each of the trusts identified above as "Trust A" shall be established as a
nuclear decommissioning trust fund under Section 468A of the Code.
In addition to their rights to amend this Master Trust Agreement set forth in
Section 2.03, the Millstone 2 Owners shall have the right to add trusts to
those identified above in the event additional entities become owners of the
Unit and obligated to make payment of a portion of the Decommissioning Costs
of the Unit. The Millstone 2 Owners shall also have the right to add
additional trusts in the names of one or more of the Millstone 2 Owners if
such additional trusts are required to comply with any law, order, rule or
regulation of any governmental body or agency.
Section 2.02. Nature and Purpose. The Millstone 2 Decommissioning Trusts
are intended to assure provision for payment of all, or as great a portion as
possible, of the Decommissioning Costs of the Unit following the final
cessation of its commercial operation. Nothing in this Master Trust
Agreement shall be interpreted to impose any obligation upon the Trustee, or
relieve the Millstone 2 Owners of any obligation, in the event that the
moneys held in the Millstone 2 Decommissioning Trusts are insufficient to
make full payment of the Decommissioning Costs of the Unit or any other costs
or expenses payable pursuant to this Master Trust Agreement.
The Millstone 2 Decommissioning Trusts will be independent of the Millstone 2
Owners, and will constitute vehicles which will hold and disburse, in
accordance with the provisions hereof, moneys collected from the Millstone 2
Owners and dedicated to the purpose of defraying the Decommissioning Costs of
the Unit. If, after completion of the decommissioning process for the Unit,
it is determined that the excess moneys may have been collected or
accumulated in one or more trusts pursuant to this Master Trust Agreement,
any such excess shall be distributed to or for the benefit of the Millstone 2
Owners pursuant to Article VII hereof.
Section 2.03. Duration: Amendment. The term of the within trusts shall
extend until the earliest of: (1) the exhaustion of all moneys in the trusts
at a time when the Millstone 2 Owners are under no further obligation to make
deposits under Section 4.01 hereof, or (2) the completion of the
decommissioning process for the Unit, or other action or order of the NRC or
any successor agency having similar effect, or (3) notification of the
Trustee by the Millstone 2 Owners of their decision to have any or all of
these trusts merged into substantially equivalent trusts and the transfer of
all the moneys in the trusts to such successor trusts; provided, however,
that any such transfer shall not change the identification of any trust or
the beneficial interest of each Owner in the trusts in its name. It is
recognized that, depending upon the amounts accumulated in the trusts and the
method or methods of decommissioning of the Unit authorized by the NRC and
other governmental agencies having jurisdiction, the trusts may extend for an
indefinite period.
The trusts are irrevocable by the Millstone 2 Owners; provided, however, that
the Millstone 2 Owners may merge any or all of these trusts into other trusts
pursuant to the preceding paragraph, and the Millstone 2 Owners may amend
this Master Trust Agreement in order to comply with any law, order, rule or
regulation of any governmental body or agency having jurisdiction over (i)
the decommissioning of the Unit, (ii) rates for utility service received by
the Millstone 2 Owners, (iii) taxes paid by the Millstone 2 Owners, or (iv)
the trusts created by this Master Trust Agreement; subject, however, to the
right of the Trustee to decline to enter into any such amendment if, in its
opinion, such amendment may not afford adequate protection to the Trustee
when the same shall become operative, and provided that no such amendment
shall disqualify any Trust A as a "Nuclear Decommissioning Trust Fund" under
Section 468A of the Code.
ARTICLE III
Particular Representations and Convenants of
the Millstone 2 Owners
Section 3.01. Corporate Rights and Franchises. Except as otherwise
specifically permitted by this Master Trust Agreement, the Millstone 2 Owners
are obligated to do or cause to be done all things necessary to preserve,
extend and keep in full force and effect those rights and franchises which
related to performance of their obligations under this Master Trust
Agreement.
Section 3.02. Unit Licenses. At the time of the execution and delivery of
this instrument, the Millstone 2 Owners and Northeast Nuclear Energy Company,
as licensees under the Operating License applicable to the Unit, are subject
to the authority of the NRC. The Millstone 2 Owners are obligated to obtain
and thereafter maintain, to the extent within their capacity, in full force
and effect, all licenses and other public authorizations, necessary or
required for the operation of the Unit to the extent the Millstone 2 Owners
or any of them continue such operation, for the decommissioning of the Unit,
and for subsequent possession and surveillance of the site.
Section 3.03. Further Instruments. The Millstone 2 Owners will execute and
deliver such further instruments and do such further acts as the Millstone 2
Owners consider necessary or proper to carry out more effectually the
purposes of this Master Trust Agreement or to transfer to any successor
trustee or trustees the estate, powers, instruments and moneys held in trust
hereunder.
Section 3.04. Appointment of Successor Trustee. Whenever necessary to avoid
or fill vacancy in the office of Trustee, the Millstone 2 Owners will, in the
manner provided in Section 6.04, appoint a Trustee so that there shall at all
times be a Trustee hereunder which is eligible and qualified in accordance
with the provisions of Section 6.02.
ARTICLE IV
Decommissioning Trust Funds
Section 4.01. Deposits to Decommissioning Trusts. All moneys deposited with
the Trustee pursuant to the provisions hereof, together with income earned
thereon, shall be held by the Trustee upon the trusts hereof. Each of the
Millstone 2 Decommissioning Trusts is held for the same purposes, whether
such trust is identified as "Trust A" or "Trust B," and each Owner shall
instruct the Trustee in writing to deposit its payments in either the Trust A
or Trust B established in that Owner's name. Each Owner may also elect to
instruct the Trustee to transfer moneys between the Trust A and the Trust B
established in that Owner's name, subject to the provisions hereof and such
reasonable procedures as the Trustee may prescribe.
Each Millstone 2 Owner may deposit with the Trustee additional moneys to be
held in one or more of the trusts, pursuant to instructions to the Trustee
which shall accompany such deposits, established in such Owner's name
hereunder.
No deposit shall be made in any Trust A which a Millstone 2 Owner has elected
to be treated as a nuclear decommissioning trust fund under Section 468A of
the Code in excess of the amount which is allowable to such Owner as a
deduction under said Section 468A. Each Owner shall be solely responsible
for determining whether any deposit or transfer of funds made by such Owner
hereunder qualifies for a deduction under Section 468A of the Code and, if
so, the amount of such deposit or transfer that is so deductible. Neither
the Trustee nor the Millstone 2 Owners shall have any responsibility for
reviewing or confirming any determination made by an Owner with respect to
the tax treatment of any deposit or transfer of funds made by an Owner
hereunder.
The Millstone 2 Owners shall prepare a schedule of payments to be made by
each Owner into the trusts identified in Section 2.01 for the purpose of
accumulating moneys for application toward payment of that Owner's share of
the Decommissioning Costs of the Unit. Such schedule, as amended from time
to time, shall be filed by the Millstone 2 Owners with the Trustee.
Thereafter, decommissioning cost moneys paid by the Millstone 2 Owners shall
be deposited into the applicable trusts in the amounts specified in the
schedule then in effect.
The Millstone 2 Owners shall not be permitted at any time to offset any
deposits required pursuant to the provisions hereof by application in any way
of expenditures or obligations which might otherwise qualify for withdrawals
under Section 4.03 hereof.
Moneys held pursuant to this Master Trust Agreement as part of any trust
estate shall be applied or paid by the Trustee only in accordance with the
provisions of this Article IV.
Section 4.02. Management of Trust Moneys. The Millstone 2 Owners intend
that the funds in each of the trusts identified as "Trust A" shall be held,
invested, and used in such a manner that the trust qualifies as a "Nuclear
Decommissioning Trust Fund" under Section 468A of the Code. The Trustee
shall hold and invest such funds pursuant to written investment guidelines
promulgated by the Millstone 2 Owners in consultation with the Trustee;
provided, however, that the Trustee shall not be responsible for ensuring
that each of the trusts identified as "Trust A" qualifies as a "Nuclear
Decommissioning Trust Fund" under Section 468A of the Code.
The Trustee shall hold and invest funds in each of the trusts identified as
"Trust B" pursuant to written investment guidelines promulgated from time to
time by the Millstone 2 Owners in consultation with the Trustee. It is
recognized that funds deposited in trusts identified as "Trust B" may not
qualify for favorable tax treatment under the Code.
The guidelines promulgated from time to time by the Millstone 2 Owners shall
follow consultation between the Millstone 2 Owners and the Trustee. These
guidelines shall take into account considerations appropriate to achievement
of the purposes described in this Master Trust Agreement, such as the
estimated commencement date for decommissioning the Unit, the amounts of
moneys held in trust and anticipated earnings, the preservation of
accumulated principal, appropriate liquidity throughout the estimated
remaining life of the Unit (so that amounts of decommissioning funds are
readily available on relatively short notice in the event of a premature
decommissioning of the Unit), and the goal of maximizing trust earnings after
payment of applicable taxes and other expenses.
In investing, reinvesting, exchanging, selling and otherwise managing the
trusts, the Trustee shall discharge its duties with the care, skill, prudence
and diligence under the circumstance then prevailing which persons of
prudence, acting in a like capacity and familiar with such matters, would use
in the conduct of an enterprise of a like character and with like aims and in
accordance with the written investment guidelines promulgated from time to
time by the Millstone 2 Owners in consultation with the Trustee.
The Millstone 2 Owners shall have the power to appoint one or more investment
managers to manage, or direct, the acquisition, holding or disposition of any
trust assets in accordance with the terms of a written appointment made by
the Millstone 2 Owners. Any such investment manager shall, unless its
appointment provides otherwise, have the power to direct the Trustee in, and
in such case the Trustee shall not be responsible for, the exercise of those
powers expressly given the Trustee under this Section 4.02 with respect to
all or part of the trust moneys, pursuant to the terms of its appointment by
the Millstone 2 Owners, and the Trustee shall, upon receipt of an Officers'
Certificate certifying such investment manager's appointment and written
acknowledgment of such appointment from such investment manager satisfactory
in form to the Trustee, exercise such powers as directed in writing by such
investment manager. The Trustee shall not be liable for any diminution in
the value of the trusts as a result of following any such direction or as a
result of not exercising any such powers in the absence of any such
direction. Notwithstanding the foregoing, the Trustee shall at all times be
responsible for determining whether an investment direction by an investment
manager is in compliance with the applicable written investment guidelines
referred to above, and if any investment direction does not so comply, the
Trustee shall not follow such direction and shall so notify the Millstone 2
Owners. If no such investment manager has been so appointed by the Millstone
2 Owners, the Trustee shall have full authority to invest and reinvest the
Fund in accordance with the provisions of this Master Trust Agreement, and
its associated written investment guidelines, and shall not be required to
follow the directions of any other person.
Section 4.03. Withdrawal of Trust Moneys.
A. Upon compliance with the requirements of this Section, moneys held by the
Trustee in the trusts may be withdrawn for the following purposes:
(1) To pay or reimburse the Millstone 2 Owners or their agent for each
Owner's share of expenditures which constitute payment of the Decommissioning
Costs of the Unit;
(2) To pay each Owner's share of taxes and other reasonable expenses incurred
in connection with the administration and operation of the trusts.
In computing the amounts which may be withdrawn under (1) above, the gross
amount of an expenditure shall be reduced by any refunds, rebates, or other
moneys similarly received by the Millstone 2 Owners or their agent with
respect thereto. Any such refund, rebate or similar payment received after
the certification of the expenditure or obligation to which it relates, and
which has not previously been taken into account, at the election of the
Owners shall be applied within three months after its receipt to reduce the
amount of a subsequent withdrawal from the trusts made under this Section or
shall be redeposited in the trusts from which the amount was withdrawn.
B. A withdrawal under this Section from the trusts shall be paid only upon
receipt by the Trustee of an Officers' Certificate dated on the date of the
withdrawal application:
(1) stating the amount to be withdrawn, and the purposes for which the
amount is to be used;
(2) specifying in reasonable detail by general classification the underlying
items of expenditures and obligations (after giving effect to any deduction
required under subsection (1)) which will constitute part of the
Decommissioning Costs, and stating that such expenditures constitute, or
obligations when paid will constitute, part of the Decommissioning Costs, and
that none of such expenditures and obligations has been made the basis of a
prior withdrawal under this Section;
(3) stating that any moneys which have previously been withdrawn from the
trusts to pay obligations have been expended on account of items which
constitute part of the Decommissioning Costs; and
(4) stating that no governmental approval for such withdrawal is necessary
or, if at any time the making of withdrawals herefrom becomes subject to the
jurisdiction of any governmental agency, stating that such regulatory
approval has been obtained and furnishing a copy thereof.
ARTICLE V
Consolidation, Merger, Conveyance
Section 5.01. The Millstone 2 Owners May Consolidate, etc., on Certain
Terms. Nothing in this Master Trust Agreement shall be interpreted to
prevent any consolidation or merger of the Millstone 2 Owners with, or into,
any other entity or entities, or the conveyance or transfer of any of their
respective rights, title and interest in the Unit to any other entity or
entities; provided, however, that upon any such consolidation, merger,
conveyance or transfer, the successor entity or entities shall be lawfully
entitled to operate such properties and shall execute and deliver to the
Trustee, simultaneously with such consolidation, merger, conveyance or
transfer, a trust agreement supplemental hereto in form satisfactory to the
Trustee, containing an agreement on the part of such successor entity or
entities to assume the due and punctual performance and observance of all the
covenants and conditions of this Master Trust Agreement, with the same effect
and to the same extent as if such successor entity or entities had been an
original party hereto.
Section 5.02. Other Successors. Nothing in this Master Trust Agreement
shall be interpreted to prevent the Millstone 2 Owners from transferring
their respective rights, title and interest in, and their obligations with
respect to, the Unit to any agent, representative, authority, agency,
commission or other entity or entities, authorized by applicable state and
federal statutes or regulations to assume responsibility for the
decommissioning of nuclear facilities; provided, however, that such
transferee shall execute and deliver to the Trustee a trust agreement
supplemental hereto in form satisfactory to the Trustee, containing an
agreement on the part of such transferee entity or entities to assume the due
and punctual performance and observance of all the covenants and conditions
of this Master Trust Agreement, with the same effect and to the same extent
as if such transferee had been an original party hereto.
Section 5.03. Successor Substituted. In the event any of the Millstone 2
Owners, pursuant to Section 5.01 or 5.02, shall consolidate with or merge
into any other entity or shall convey or transfer all or substantially all
their respective rights, title and interest in the Unit to any other entity,
the successor entity, upon causing to be executed and delivered the
supplemental Master Trust Agreement referred to in Section 5.01 shall succeed
to and be substituted hereunder with the same effect as if such successor
entity had been named herein as an original party.
ARTICLE VI
The Trustee
Section 6.01. Acceptance of Trusts; Certain Terms of the Trusts. The
Trustee, for itself and it successors, hereby accepts the trusts created by
this Master Trust Agreement and agrees to perform the same, but only upon the
terms expressly herein set forth, including the following:
A. The recitals herein shall be taken as the statements of the Millstone 2
Owners and shall not be considered as made by, or imposing any obligation or
liability upon, the Trustee. The Trustee makes no representations as to the
value, condition, or validity of the trusts (or any part thereof) to achieve
the purposes of this Master Trust Agreement and the trusts created herein,
and the Trustee shall incur no liability or responsibility in respect of any
of such matters.
B. The Trustee shall be under no responsibility or duty with respect to the
disposition of any moneys duly paid to the Millstone 2 Owners or their agent
under any provision hereof.
C. The Trustee shall be under no responsibility or obligation to collect any
deposit of moneys into the trusts.
D. The Trustee shall have no responsibility for reviewing or confirming that
payments made by an Owner comply with the requirements of the Code or any
other statutory or regulatory requirements.
E. The Trustee may not rely upon any default under any covenant in Article
III hereof as a defense against performing its trusts and powers hereunder.
F. The Trustee may execute any of the trusts or powers hereof and perform
any duty hereunder either directly or through its agents or attorneys. The
Trustee shall not be responsible for the misconduct or negligence of any
agent or attorney, provided that such agent or attorney is appointed with due
care and is supervised with due care to ensure timely compliance with the
Trustee's duties hereunder. Notwithstanding the foregoing, the Trustee shall
remain fully responsible for the performance of the duties set forth in
Section 4.02 hereof, whether or not the Trustee appoints an agent or attorney
to perform such duties.
G. The Trustee may, as an expense of administering the trusts, consult with
legal counsel to be selected by it (who may be counsel for any of the
Millstone 2 Owners), and the Trustee shall not be liable for any action taken
or suffered by it in good faith in accordance with the advice of such
counsel.
H. The Trustee shall have the continuing right to be reasonably compensated
for all services rendered hereunder and to be reimbursed for all reasonable
expenses, including reasonable fees and expenses of its counsel, incurred by
it in the administration of the trusts created hereby. The compensation and
reimbursements due to the Trustee hereunder shall be shown in quarterly bills
submitted to the Millstone 2 Owners. The Trustee's charges shall be
allocated among each of the trusts hereunder in the ratio that the balance of
the assets in each of the trusts on the last business day of the calendar
quarter to which such charges apply bears to the balance of the assets in all
trusts on such last business day, except for compensation and reimbursements
to the Trustee that specifically relate to a particular trust and are
properly chargeable directly to such trust. After 30 days following the
submission of the quarterly bills referred to above, the Trustee shall be
entitled to apply trust moneys held by it hereunder to the payment of
compensation and expense reimbursements related to such trusts.
I. The Trustee shall segregate into separately identified accounts such
portions of the trust funds held in the name of a Millstone 2 Owner as that
Owner shall direct. The Trustee shall charge such trusts for any additional
expenses resulting from such segregation and accounting.
J. Each of the Millstone 2 Owners shall be obligated to indemnify the
Trustee against any liability, loss, claim, charge or expense it may sustain,
in good faith and without negligence, in the performance of its duties
hereunder, including, but not limited to, any initial tax or additional tax
paid by the Trustee pursuant to Section 4951 of the Code.
K. The Trustee shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, statement, obligation,
appraisal or other document believed by it to be genuine and to have been
signed by the proper party or parties. The Trustee shall accept a board of
directors' resolution as conclusive evidence that a resolution has been duly
adopted and is in full force and effect. Except as otherwise expressly
provided, an Officers' Certificate shall be accepted by the Trustee as
conclusive evidence of the facts therein stated, and shall constitute full
protection to the Trustee for any action taken or omitted to be taken by the
Trustee in good faith reliance thereon. Notwithstanding the fact that the
Trustee shall have no obligation to make any investigation into the matters
stated in any such notice, resolution, request, consent, order, certificate,
report, opinion, statement, obligation, appraisal or other paper or document,
the Trustee may, in its discretion, make such further inquiry into such facts
or matters as it may see fit.
L. The Trustee shall not be responsible for any dimunition in the value of
any trust hereunder as a result of following in good faith and without
negligence the guidelines promulgated by the Millstone 2 Owners pursuant to
Section 4.02 or the instructions of an Owner pursuant to the last sentence of
the first paragraph of Section 4.01.
M. The Trustee shall maintain appropriate records of all deposits,
investments and earnings thereon received by the trusts and all disbursements
made from the trusts, and each month the Trustee shall provide to the
Millstone 2 Owners a written statement of all transactions. In addition, the
Trustee shall provide to the Millstone 2 Owners at least annually a report
certifying as to the activity in each of the trusts over the period since the
most recent report and the balances at the beginning and end of such period.
N. The Millstone 2 Owners and their agents shall have the right to review,
inspect and audit the books and records of the Trustee relating to the
trusts, providing that the expenses of such review, inspection or audit shall
be paid by the Millstone 2 Owner causing such review, inspection or audit to
be performed.
O. The Trustee shall cause appropriate tax returns with respect to the
trusts and income earned by each of the trusts to be prepared and filed and
shall pay any taxes shown to be due out of the appropriate trust moneys held
by it. In consultation with the Millstone 2 Owners, the Trustee shall have
the right to challenge the obligation to make payment of any such taxes and
shall have the authority to settle any proceedings related to such taxes, and
to receive refunds and take any other action necessary or appropriate in
regard to taxes on the trusts or income earned by the trusts.
P. The Trustee shall prepare and submit such applications, reports and other
documents as may be required by any governmental authority identified in an
Officers' Certificate as having jurisdiction over the trusts and performance
of the trust obligations and activities specified by this Master Trust
Agreement.
Q. Without in any way limiting the powers and authority conferred upon the
Trustee by other provisions of this Master Trust Agreement or by law, and to
enable the Trustee to perform its duties hereunder, the Trustee is expressly
authorized and empowered as follows:
To sell, exchange, convey, transfer or otherwise dispose of any property held
by it, by public or private sale. No person dealing with the Trustee shall
be bound to see to the application of the purchase money or to inquire into
the validity or expediency of any such sale or other disposition;
To make, execute, acknowledge and deliver any and all documents of transfer
and conveyance and any and all other instruments that may be necessary or
appropriate to carry out the powers granted in this Master Trust Agreement;
To register any securities held in the trusts in its own name or in the name
of a nominee and to hold any security in bearer form or in book entry, or to
combine certificates representing such securities with certificates of the
same issue held by the Trustee in other fiduciary capacities, or to deposit
or arrange for the deposit of such securities in a qualified central
depositary even though, when so deposited, such securities may be merged and
held in bulk in the name of the nominee of such depositary with other
securities deposited therein by another person, or to deposit or arrange for
the deposit of any securities issued by the United States Government, or any
agency or instrumentality thereof, with a Federal Reserve bank, but the books
and records of the Trustee shall at all times show that all such securities
are part of the appropriate trust hereunder;
In consultation with the Millstone 2 Owners, to compromise or otherwise
adjust claims in favor of or against the trusts.
Section 6.02. Persons Eligible for Appointment as the Trustee. The Trustee
shall at all times be a bank or trust company having its principal office and
place of business in the United States of America, and shall at all times be
a corporation authorized to do business in the State of Connecticut, with a
combined capital and surplus of at least $50,000,000 and authorized under
applicable laws to exercise corporate trust powers and subject to supervision
or examination by appropriate federal or state authorities. If the Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of any supervising or examining authority referred to in this
Section, then, for the purposes of this Section, the combined capital and
surplus of the Trustee shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.
In the event the Trustee ceases to be eligible under this Section, it shall
resign immediately in the manner and with the effect specified in Section
6.03; if the Trustee does not so resign, it shall be removed forthwith by the
Millstone 2 Owners.
Whenever necessary to avoid or fill a vacancy in the office of the Trustee,
the Millstone 2 Owners, will, in the manner provided in Section 6.04, appoint
a Trustee so that there shall at all times be a Trustee eligible under this
Section.
Section 6.03. Resignation and Removal. The Trustee may resign and be
discharged from the trusts hereby created by giving at least six weeks' prior
written notice thereof to the Millstone 2 Owners. Such resignation shall
become effective on the day specified in such notice or upon the appointment
of a successor and such successor's acceptance, whichever is later. If an
instrument of acceptance by a successor Trustee shall not have been delivered
to the Trustee within six weeks after the giving of such notice of
resignation, the retiring Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
The Millstone 2 Owners may at any time remove the Trustee, with or without
cause, upon at least six weeks' prior written notice, such notice to be in
the form of an Officers Certificate of the Millstone 2 Owners declaring such
removal and specifying the successor trustee appointed pursuant to Section
6.04.
The Trustee, after resignation or removal, may nevertheless retain a lien
upon the trust moneys to secure any amounts due to it under any provision of
this Master Trust Agreement.
Section 6.04. Appointment of Successor Trustee. In the event the Trustee
resigns, is removed, or becomes incapable of acting or is adjudged a bankrupt
or insolvent, or if a receiver of the Trustee or its property is appointed or
a public officer takes charge or control of the Trustee or its property or
affairs for the purpose of rehabilitation, conservation or liquidation, a
vacancy shall be deemed to exist in the office of the Trustee, and a
successor shall be appointed by the Millstone 2 Owners to fill such vacancy.
The validity of any such appointment, however, shall not be impaired or
affected by failure to give notice of such appointment or by any defect in
such notice.
If, in a proper case, no successor Trustee shall have been appointed pursuant
to the foregoing provisions of this Section, or if appointed, shall not have
accepted the appointment, within 60 days after the resignation of the
Trustee, or the occurrence of a vacancy in the office of the Trustee, the
Secretary of the State of Connecticut may apply to a court of competent
jurisdiction to appoint a successor Trustee.
Section 6.05. Acceptance of Appointment by Successor Trustee. A successor
Trustee appointed hereunder shall execute an instrument accepting such
appointment and deliver one counterpart thereof each to the Millstone 2
Owners, the retiring Trustee, and, if applicable, the court making such
appointment. Thereupon, without any further act, such successor Trustee
shall become vested with all the properties, rights, powers, trusts and
duties of the retiring Trustee as if originally named under this Master Trust
Agreement; however, any retiring Trustee, when requested by the successor
Trustee in writing or by the Millstone 2 Owners and upon payment of any
lawful charges and disbursements, shall nevertheless execute and deliver an
instrument or instruments conveying and transferring to such successor
Trustee all its properties, rights, powers, and trusts hereunder and shall
duly assign, transfer and deliver to such successor Trustee all property and
moneys held by it hereunder. If the successor Trustee reasonably requests an
instrument from the Millstone 2 Owners for the purpose of more fully and
certainly vesting in and confirming to it said properties, rights, powers and
trusts, then such instrument shall be executed, acknowledged and delivered to
it by the Millstone 2 Owners.
Section 6.06. Merger or Consolidation of the Trustee. Subject to the
requirements of Section 6.02 hereof, any corporation into which the Trustee
may be merged or with which it may be consolidated or any corporation
resulting from any merger or consolidation to which the Trustee shall be a
party or any corporation to which substantially all the business and assets
of the Trustee may be transferred, shall be the Trustee under this Master
Trust Agreement, without further act.
ACTICLE VII
Distribution of Assets upon Termination
Section 7.01. Transfer to Successor Trust. In the event that one or more of
decommissioning trusts established pursuant to this Master Trust Agreement is
required or permitted by an action of any governmental authority having
jurisdiction to be transferred to another trust or trusts in order to satisfy
the purposes specified in Section 2.02, the Millstone 2 Owners shall have the
right, by written notice to the Trustee, to elect to have such trust or
trusts subsumed into such other trust or trusts. Such written notice of such
election shall be signed by the Presidents or Treasurers of the Millstone 2
Owners and shall direct the Trustee to transfer the trust moneys to the
specified successor trust or trusts. Upon the completion of such transfer,
the specified trust shall terminate.
Section 7.02. Final Distribution. Any moneys remaining in a trust following
completion of the decommissioning process for the Unit or action or order of
the NRC or any successor agency having similar effect shall be distributed by
the Trustee for the benefit of the applicable Millstone 2 Owner except as may
be ordered by any governmental authority having jurisdiction over such
distribution.
If any of the trusts created by this Master Trust Agreement is finally
determined to be void for any reason by a court or other governmental
authority having jurisdiction, any portion of the trust estate which cannot
then be applied to achievement of the purposes specified herein shall be
distributed in the manner specified in this Section 7.02.
ARTICLE VIII
General Provisions
Section 8.01. Compliance Certificates and Opinions. Every certificate or
opinion with respect to compliance with a condition or covenant provided for
in this Master Trust Agreement shall include:
A. A statement that each person making such certificate or opinion has read
such covenant or condition and the definitions herein relating thereto.
B. A brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based.
C. A statement that, in the opinion of each such person, he or she has made
or caused to be made such examination or investigation as is necessary to
enable that person to express an informed opinion as to whether or not such
covenant or condition has been complied with.
D. A statement as to whether or not, in the opinion of the person making
such certificate or opinion, such condition or covenant has been complied
with.
In any case where several matters are required to be certified by, or covered
by an opinion of, any specified person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such person,
or that they be so certified or covered by the opinion of, only one such
person, or that they be so certified or covered by only one document, but one
such person may certify or give an opinion with respect to some matters and
one (or more) other such persons as to other matters, and each such person
may certify or give an opinion as to such matters in one or several
documents.
Section 8.02. No Implied Obligations. This Master Trust Agreement shall not
be interpreted to impose any duty, responsibility, obligation or liability
upon the Trustee or the Millstone 2 Owners in addition to those duties,
responsibilities, obligations and liabilities which are expressly specified
in this instrument.
Section 8.03. Transfer of Interests. No provision of this Master Trust
Agreement shall be interpreted to prohibit or restrict the transfer between
Owners of interests in the Millstone 2 Decommissioning Trusts in conjunction
with changes in their ownership interests in the Unit; provided, however,
that no such transfer shall in any way act to terminate any trust or result
in the transferee having any rights or interests which differ from those
previously held by the transferor.
ARTICLE IX
Miscellaneous
Section 9.01. Supplemental Trust Agreements. Subject to Section 2.03
hereof, this Master Trust Agreement may be amended or supplemented from time
to time by the execution and delivery of one or more supplemental trust
agreements by and between the Millstone 2 Owners and the Trustee, provided
that the amendment or supplement has received any required approval or
acceptance by any governmental body having jurisdiction.
Section 9.02. Successor Governmental Authorities. Wherever a specific
governmental authority is identified in this Master Trust Agreement, such
identification shall include any successor governmental authority, agency or
body having substantially comparable responsibilities.
Section 9.03. Amendment or Repeal of Section 468A. Any reference in this
Master Trust Agreement to Section 468A of the Code shall be deemed to refer
not only to such section, as it may from time to time be amended, but also to
any successor statutory provision. In the event that Section 468A of the
Code, or its successor statutory provision, is repealed, in whole or in part,
and certain provisions of this Master Trust Agreement cease to be required,
such provisions shall thereupon be ineffective without the necessity of
further amendment of this Master Trust Agreement.
Section 9.04. Applicable Law. This Master Trust Agreement shall be governed
by and construed in accordance with the laws of the State of Connecticut.
Section 9.05. Unenforceable Provisions. Any provision of this Master Trust
Agreement which is prohibited or is determined to be unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
Section 9.06. Written Changes and Notices. No term or provision of this
Master Trust Agreement may be changed, waived, discharged or terminated,
except by an instrument in writing signed by the party or other person
against whom enforcement of the change, waiver, discharge or termination is
sought; and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
Section 9.07. Counterparts. This Master Trust Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 9.08. Headings of Articles and Sections. The headings of the
various Articles and Sections herein are for convenience of reference only
and shall not define or limit any of the terms of provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Master Trust
Agreement to be duly executed by their respective authorized officers as of
the date first above written.
THE CONNECTICUT LIGHT AND POWER COMPANY
By /s/S.A. O'Connor
Its Vice President & Treasurer
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By /s/S. A. O'Connor
Its Vice President & Treasurer
COLONIAL BANK
By /s/Mary Lou Stewart
Its Vice President
Exhibit 10.34
MASTER TRUST AGREEMENT
RESERVE FUNDS
FOR
MILLSTONE 3 NUCLEAR UNIT DECOMMISSIONING COSTS
This MASTER TRUST AGREEMENT, dated as of April 23, 1986, between THE
CONNECTICUT LIGHT AND POWER COMPANY, a Connecticut corporation having its
principal office in Berlin, Connecticut and WESTERN MASSACHUSETTS ELECTRIC
COMPANY, a Massachusetts corporation having its principal office in West
Springfield, Massachusetts (hereinafter called "Millstone 3 Lead
Participants"), and COLONIAL BANK, a banking corporation having its principal
office in Waterbury, Connecticut (together with its successor or successors,
hereinafter called the "Trustee").
WHEREAS, The Connecticut Light and Power Company; Western Massachusetts
Electric Company; City of Burlington, Vermont; Central Maine Power Company;
Central Vermont Public Service Corporation; Chicopee Municipal Lighting
Plant; Connecticut Municipal Electric Energy Cooperative; Fitchburg Gas and
Electric Light Company; Village of Lyndonville Electric Department;
Massachusetts Municipal Wholesale Electric Company; Montaup Electric Company;
New England Power Company; Public Service Company of New Hampshire; The
United Illuminating Company; and Vermont Electric Generation and Transmission
Cooperative, Inc. (collectively the "Millstone 3 Participants") are the joint
owners and licensees of a nuclear electric generating unit known as the
Millstone 3 nuclear unit; and,
WHEREAS, the Millstone 3 nuclear unit is currently operated pursuant to an
Operating License, No. NPF-49, dated January 31, 1986, as amended issued in
Docket No. 50-423 by the Nuclear Regulatory Commission ("NRC"), which
Operating Licensing by its terms expires on November 25, 2025; and
WHEREAS, rules and regulations of the NRC impose upon each licensee the
responsibility for payment of the costs of permanent shutdown of the
Millstone 3 nuclear unit and maintenance of such facility in a safe condition
after said shutdown; and
WHEREAS, the Millstone 3 Participants are parties to an agreement entitled
"Sharing Agreement - 1979 Connecticut Nuclear Unit," made as of September 1,
1973, as amended by amendments dated as of August 1, 1974, December 15, 1975,
and April 1, 1986 (said agreement, as it may be amended, being called the
"Sharing Agreement"); and
WHEREAS, Section 12A of the Sharing Agreement obligates each of the Millstone
3 Participants to pay the "Decommissioning Costs" (as that term is defined in
Section 12A of the Sharing Agreement) related to the Millstone 3 nuclear
unit, and provides that such payments may be held by an independent trust or
trusts as determined by the Millstone 3 Lead Participants; and
WHEREAS, the Millstone 3 Lead Participants desire to make provision for
payment of the decommissioning costs of the Millstone 3 nuclear unit in
accordance with the provisions of a decommissioning finance plan approved by
the Connecticut Department of Public Utility Control ("DPUC") pursuant to
Sections 16-19m through 16-19p of the Connecticut General Statutes; and
WHEREAS, the Millstone 3 Lead Participants desire to establish independent
trusts to comply with the decommissioning financing plan approved by the DPUC
and to assure the financial ability of the Millstone 3 Participants to meet
their obligations to the NRC, other governmental bodies, and the general
public in connection with decommissioning the Millstone 3 nuclear unit, such
trusts to hold all payments made to them and any earnings thereon solely for
the purpose of meeting such decommissioning expenses and only thereafter for
the benefit of the Millstone 3 Participants; and
WHEREAS, certain of such trusts are being established to comply with the
requirements for nuclear decommissioning trust funds set forth in Section
468A of the Internal Revenue Code of 1954, as amended (the "Code"); and
WHEREAS, all conditions and requirements necessary to make this Master Trust
Agreement a valid and legal instrument, in accordance with its terms and for
the purposes herein expressed, have been performed and fulfilled and the
execution and delivery hereof have been duly authorized.
NOW, THEREFORE, in consideration of the premises and of the sum of One Dollar
duly paid to the Trustee by the Millstone 3 Lead Participants and of other
good and valuable considerations, the receipt whereof is hereby acknowledged,
and for the purposes of establishing the trusts and securing the faithful
performance and observance of the convenants and conditions hereinafter set
forth, the Millstone 3 Lead Participants have executed and delivered this
Master Trust Agreement to the Trustee and said Trustee does by these presents
agree, on behalf of itself and its successor or successors in trust, to hold
all property and rights conveyed to it or them pursuant hereto upon the
trusts and subject to the conditions herein set forth, it is hereby
convenanted, declared and agreed, upon the trusts and for the purposes
aforesaid, as set forth in the following covenants, agreements, conditions
and provisions, viz.:
ARTICLE I
Definitions
Section 1.01. Defined Terms. For all purposes of this Master Trust
Agreement, unless the context otherwise specifies or requires:
A. "Millstone 3 Participants" shall mean The Connecticut Light and Power
Company; Western Massachusetts Electric Company; City of Burlington, Vermont;
Central Maine Power Company; Central Vermont Public Service Corporation;
Chicopee Municipal Lighting Plant; Connecticut Municipal Electric Energy
Cooperative; Fitchburg Gas and Electric Light Company; Village of Lyndonville
Electric Department; Massachusetts Municipal Wholesale Electric Company;
Montaup Electric Company; New England Power Company; Public Service Company
of New Hampshire; The United Illuminating Company; Vermont Electric
Generation and Transmission Cooperative, Inc., and such other entities as may
hereafter become joint owners of the Unit pursuant to the Sharing Agreement.
"Millstone 3 Participant" or "Participant" shall mean one of the Millstone 3
Participants.
B. "Unit" shall mean the nuclear electric generating unit and the land
presently owned by the Millstone 3 Participants and located at Waterford,
Connecticut, known as the Millstone 3 nuclear unit, as it shall from time to
time exist, together with such structures, components and equipment now or
hereafter associated therewith which become subject to decommissioning rules,
regulations or orders of the NRC.
C. "Operating License" shall mean Operating License No. NPF-49, dated
January 31, 1986, as heretofore or hereafter amended, originally issued in
Docket No. 50-423 by the NRC.
D. "Trustee" shall mean Colonial Bank, and its successors which shall
succeed to its authorities and duties in the manner prescribed in Section
6.04.
E. "Officers' Certificate" shall mean a certificate delivered to the Trustee
and signed by the President (or a Vice President) and the Treasurer (or an
Assistant Treasurer) of either of the Millstone 3 Lead Participants or of
Northeast Nuclear Energy Company, agent for the Millstone 3 Participants.
F. "Nuclear Regulatory Commission" or "NRC" shall mean the United States
Nuclear Regulatory Commission or any governmental agency or agencies
succeeding to its authority.
G. "Decommissioning Costs" shall mean all costs and expenses related to
decommissioning and removing the Unit from service and maintaining and
restoring the Unit's site as more fully defined in Section 12A of the Sharing
Agreement.
ARTICLE II
Identification, Nature and Duration of the Trusts
Section 2.01. Identification of Trusts. The trusts established by this
Master Trust Agreement shall be named collectively the "Millstone 3
Decommissioning Trusts," and the trusts shall be individually named as
follows:
The Connecticut Light and Power Company Trust A
The Connecticut Light and Power Company Trust B
Western Massachusetts Electric Company Trust A
Western Massachusetts Electric Company Trust B
City of Burlington, Vermont Trust A
City of Burlington, Vermont Trust B
Central Maine Power Company Trust A
Central Maine Power Company Trust B
Central Vermont Public Service Corporation Trust A
Central Vermont Public Service Corporation Trust B
Chicopee Municipal Lighting Plant Trust A
Chicopee Municipal Lighting Plant Trust B
Connecticut Municipal Electric Energy Cooperative Trust A
Connecticut Municipal Electric Energy Cooperative Trust B
Fitchburg Gas and Electric Light Company Trust A
Fitchburg Gas and Electric Light Company Trust B
Village of Lyndonville Electric Department Trust A
Village of Lyndonville Electric Department Trust B
Massachusetts Municipal Wholesale Electric Company Trust A
Massachusetts Municipal Wholesale Electric Company Trust B
Montaup Electric Company Trust A
Montaup Electric Company Trust B
New England Power Company Trust A
New England Power Company Trust B
Public Service Company of New Hampshire Trust A
Public Service Company of New Hampshire Trust B
The United Illuminating Company Trust A
The United Illuminating Company Trust B
Vermont Electric Generation and Transmission Cooperative, Inc. Trust A
Vermont Electric Generation and Transmission Cooperative, Inc. Trust B
Each of the trusts identified above shall be established on behalf of the
named Millstone 3 Participant, which Participant shall be the beneficial
owner of the property in each such trust.
Each of the trusts identified above as "Trust A" shall be established as a
nuclear decommissioning trust fund under Section 468A of the Code.
In addition to their rights to amend this Master Trust Agreement set forth in
Section 2.03, the Millstone 3 Lead Participants shall have the right to add
trusts to those identified above in the event additional entities become
obligated by the Sharing Agreement to make payment of a portion of the
Decommissioning Costs of the Unit. The Millstone 3 Lead Participants shall
also have the right to add additional trusts in the names of one or more of
the Millstone 3 Participants if such additional trusts are required to comply
with any law, order, rule or regulation of any governmental body or agency.
Section 2.02. Nature and Purpose. The Millstone 3 Decommissioning Trusts
are intended to assure provision for payment of all, or as great a portion as
possible, of the Decommissioning Costs of the Unit following the final
cessation of its commercial operation. Nothing in this Master Trust
Agreement shall be interpreted to impose any obligation upon the Trustee, or
relieve the Millstone 3 Participants of any obligation, in the event that the
moneys held in the Millstone 3 Decommissioning Trusts are insufficient to
make full payment of the Decommissioning Costs of the Unit or any other costs
or expenses payable pursuant to this Master Trust Agreement.
The Millstone 3 Decommissioning Trusts will be independent of the Millstone 3
Participants, and will constitute vehicles which will hold and disburse, in
accordance with the provisions hereof, moneys collected from the Millstone 3
Participants and dedicated to the purpose of defraying the Decommissioning
Costs of the Unit. If, after completion of the decommissioning process for
the Unit, it is determined that the excess moneys may have been collected or
accumulated in one or more trusts pursuant to this Master Trust Agreement,
any such excess shall be distributed to or for the benefit of the Millstone 3
Participants pursuant to Article VII hereof.
Section 2.03. Duration: Amendment. The term of the within trusts shall
extend until the earliest of: (1) the exhaustion of all moneys in the trusts
at a time when the Millstone 3 Participants are under no further obligation
to make deposits under Section 4.01 hereof, or (2) the completion of the
decommissioning process for the Unit, or other action or order of the NRC or
any successor agency having similar effect, or (3) notification of the
Trustee by the Millstone 3 Lead Participants of their decision to have any or
all of these trusts merged into substantially equivalent trusts and the
transfer of all the moneys in the trusts to such successor trusts; provided,
however, that any such transfer shall not change the identification of any
trust or the beneficial interest of each Participant in the trusts in its
name. It is recognized that, depending upon the amounts accumulated in the
trusts and the method of methods of decommissioning of the Unit authorized by
the NRC and other governmental agencies having jurisdiction, the trusts may
extend for an indefinite period.
The trusts are irrevocable by the Millstone 3 Lead Participants or the
Millstone 3 Participants; provided, however, that the Millstone 3 Lead
Participants may amend this Master Trust Agreement in order to comply with
any law, order, rule or regulation of any governmental body or agency having
jurisdiction over (i) the decommissioning of the Unit, (ii) rates for utility
service received by the Millstone 3 Participants, (iii) taxes paid by the
Millstone 3 Participants, or (iv) the trusts created by this Master Trust
Agreement; subject, however, to the right of the Trustee to decline to enter
into any such amendment if, in its opinion, such amendment may not afford
adequate protection to the Trustee when the same shall become operative, and
provided that no such amendment shall disqualify any Trust A as a "Nuclear
Decommissioning Trust Fund" under Section 468A of the Code.
ARTICLE III
Particular Representations and Convenants of
the Millstone 3 Lead Participants
Section 3.01. Corporate Rights and Franchises. Except as otherwise
specifically permitted by this Master Trust Agreement, the Millstone 3
Participants are obligated by the Sharing Agreement to do or cause to be done
all things necessary to preserve, extend and keep in fully force and effect
those rights and franchises which related to performance of their obligations
under this Master Trust Agreement.
Section 3.02. Unit Licenses. At the time of the execution and delivery of
this instrument, the Millstone 3 Participants and Northeast Nuclear Energy
Company, as licensees under the Operating License applicable to the Unit, are
subject to the authority of the NRC. The Sharing Agreement obligates the
Millstone 3 Participants to obtain and thereafter maintain, to the extent
within their capacity, in full force and effect, all licenses and other
public authorizations, necessary or required for the operation of the Unit to
the extent the Millstone 3 Participants or any of them continue such
operation, for the decommissioning of the Unit, and for subsequent possession
and surveillance of the site.
Section 3.03. Further Instruments. The Millstone 3 Lead Participants will
execute and deliver such further instruments and do such further acts as the
Millstone 3 Lead Participants consider necessary or proper to carry out more
effectually the purposes of this Master Trust Agreement or to transfer to any
successor trustee or trustees the estate, powers, instruments and moneys held
in trust hereunder.
Section 3.04. Appointment of Successor Trustee. Whenever necessary to avoid
or fill vacancy in the office of Trustee, the Millstone 3 Lead Participants
will, in the manner provided in Section 6.04, appoint a Trustee so that there
shall at all times be a Trustee hereunder which is eligible and qualified in
accordance with the provisions of Section 6.02.
ARTICLE IV
Decommissioning Trust Funds
Section 4.01. Deposits to Decommissioning Trusts. All moneys deposited with
the Trustee pursuant to the provisions hereof, together with income earned
thereon, shall be held by the Trustee upon the trusts hereof. Each of the
Millstone 3 Decommissioning Trusts is held for the same purposes, whether
such trust is identified as "Trust A" or "Trust B," and each Participant
shall instruct the Trustee in writing to deposit its payments in either the
Trust A or Trust B established in that Participant's name. Each Participant
may also elect to instruct the Trustee to transfer moneys between the Trust A
and the Trust B established in that Participant's name, subject to the
provisions hereof and such reasonable procedures as the Trustee may
prescribe.
In addition to the minimum Decommissioning Reserve Fund payments required to
be made pursuant to the Sharing Agreement, each Millstone 3 Participant may
deposit with the Trustee additional moneys to be held in one or more of the
trusts, pursuant to instructions to the Trustee which shall accompany such
deposits, established in such Participant's name hereunder.
No deposit shall be made in any Trust A which a Millstone 3 Participant has
elected to be treated as a nuclear decommissioning trust fund under Section
468A of the Code in excess of the amount which is allowable to such
Participant as a deduction under said Section 468A. Each Participant shall
be solely responsible for determining whether any deposit or transfer of
funds made by such Participant hereunder qualifies for a deduction under
Section 468A of the Code and, if so, the amount of such deposit or transfer
that is so deductible. Neither the Trustee nor the Millstone 3 Lead
Participants shall have any responsibility for reviewing or confirming any
determination made by a Participant with respect to the tax treatment of any
deposit or transfer of funds made by a Participant hereunder.
Each of the Millstone 3 Participants is obligated by Section 12A of the
Sharing Agreement to make payment of moneys to be deposited into the trusts
created by this Master Trust Agreement in accordance with that Section so
long as required in order to comply with the payment schedule then applicable
to such Millstone 3 Participant.
The Millstone 3 Lead Participants shall prepare a schedule of payments to be
made by each Participant into the trusts identified in Section 2.01 for the
purpose of accumulating moneys for application toward payment of that
Participant's share of the Decommissioning Costs of the Unit. Such schedule,
as amended from time to time, shall be filed by the Millstone 3 Lead
Participants with the Trustee. Thereafter, decommissioning cost moneys paid
by the Millstone 3 Participants shall be deposited into the applicable trusts
in at least the amounts specified in the schedule then in effect.
The Millstone 3 Participants shall not be permitted at any time to offset any
deposits required pursuant to the provisions hereof by application in any way
of expenditures or obligations which might otherwise qualify for withdrawals
under Section 4.03 hereof.
Moneys held pursuant to this Master Trust Agreement as part of any trust
estate shall be applied or paid by the Trustee only in accordance with the
provisions of this Article IV.
Section 4.02. Management of Trust Moneys. The Millstone 3 Lead Participants
intend that the funds in each of the trusts identified as "Trust A" shall be
held, invested, and used in such a manner that the trust qualifies as a
"Nuclear Decommissioning Trust Fund" under Section 468A of the Code. The
Trustee shall hold and invest such funds pursuant to written investment
guidelines promulgated by the Millstone 3 Lead Participants in consultation
with the Trustee; provided, however, that the Trustee shall not be
responsible for ensuring that each of the trusts identified as "Trust A"
qualifies as a "Nuclear Decommissioning Trust Fund" under Section 468A of the
Code.
The Trustee shall hold and invest funds in each of the trusts identified as
"Trust B" pursuant to written investment guidelines promulgated from time to
time by the Millstone 3 Lead Participants in consultation with the Trustee.
It is recognized that funds deposited in trusts identified as "Trust B" may
not qualify for favorable tax treatment under the Code.
The guidelines promulgated from time to time by the Millstone 3 Lead
Participants shall follow consultation between the Millstone 3 Lead
Participants and the Trustee. These guidelines shall take into account
considerations appropriate to achievement of the purposes described in this
Master Trust Agreement, such as the estimated commencement date for
decommissioning the Unit, the amounts of moneys held in trust and anticipated
earnings, the preservation of accumulated principal, appropriate liquidity
throughout the estimated remaining life of the Unit (so that amounts of
decommissioning funds are readily available on relatively short notice in the
event of a premature decommissioning of the Unit), and the goal of maximizing
trust earnings after payment of applicable taxes and other expenses.
In investing, reinvesting, exchanging, selling and otherwise managing the
trusts, the Trustee shall discharge its duties with the care, skill, prudence
and diligence under the circumstances then prevailing which persons of
prudence, acting in a like capacity and familiar with such matters, would use
in the conduct of an enterprise of a like character and with like aims and in
accordance with the written investment guidelines promulgated from time to
time by the Millstone 3 Lead Participants in consultation with the Trustee.
The Millstone 3 Lead Participants shall have the power to appoint one or more
investment managers (and to remove any such manager) to manage, or direct,
the acquisition, holding or disposition of any trust assets in accordance
with the terms of a written appointment made by the Millstone 3 Lead
Participants. Any such investment manager shall, unless its appointment
provides otherwise, have the power to direct the Trustee in, and in such case
the Trustee shall not be responsible for, the exercise of those powers
expressly given the Trustee under this Section 4.02 with respect to all or
part of the trust moneys, pursuant to the terms of its appointment by the
Millstone 3 Lead Participants, and the Trustee shall, upon receipt of an
Officers' Certificate certifying such investment manager's appointment and
written acknowledgment of such appointment from such investment manager
satisfactory in form to the Trustee, exercise such powers as directed in
writing by such investment manager. The Trustee shall not be liable for any
diminution in the value of the trusts as a result of following any such
direction or as a result of not exercising any such powers in the absence of
any such direction. Notwithstanding the foregoing, the Trustee shall at all
times be responsible for determining whether an investment direction by an
investment manager is in compliance with the applicable written investment
guidelines referred to above, and if any investment direction does not so
comply, the Trustee shall not follow such direction and shall so notify the
Millstone 3 Lead Participants. If no such investment manager has been so
appointed by the Millstone 3 Lead Participants, the Trustee shall have full
authority to invest and reinvest the Fund in accordance with the provisions
of this Master Trust Agreement, and its associated written investment
guidelines, and shall not be required to follow the directions of any other
person.
Section 4.03. Withdrawal of Trust Moneys.
A. Upon compliance with the requirements of this Section, moneys held by the
Trustee in the trusts may be withdrawn for the following purposes:
(1) To pay or reimburse the Millstone 3 Lead Participants or their agent for
each Participant's share of expenditures which constitute payment of the
Decommissioning Costs of the Unit;
(2) To pay each Participant's share of taxes and other reasonable expenses
incurred in connection with the administration and operation of the trusts.
In computing the amounts which may be withdrawn under (1) above, the gross
amount of an expenditure shall be reduced by any refunds, rebates, or other
moneys similarly received by the Millstone 3 Lead Participants or their agent
with respect thereto. Any such refund, rebate or similar payment received
after the certification of the expenditure or obligation to which it relates,
and which has not previously been taken into account, at the election of the
Lead Participants shall be applied within three months after its receipt to
reduce the amount of a subsequent withdrawal from the trusts made under this
Section or shall be redeposited in the trusts from which the amount was
withdrawn.
B. A withdrawal under this Section from the trusts shall be paid only upon
receipt by the Trustee of an Officers' Certificate dated on the date of the
withdrawal application:
(1) stating the amount to be withdrawn, and the purposes for which the
amount is to be used;
(2) specifying in reasonable detail by general classification the underlying
items of expenditures and obligations (after giving effect to any deduction
required under subsection (1)) which will constitute part of the
Decommissioning Costs, and stating that such expenditures constitute, or
obligations when paid will constitute, part of the Decommissioning Costs, and
that none of such expenditures and obligations has been made the basis of a
prior withdrawal under this Section;
(3) stating that any moneys which have previously been withdrawn from the
trusts to pay obligations have been expended on account of items which
constitute part of the Decommissioning Costs; and
(4) stating that no governmental approval for such withdrawal is necessary
or, if at any time the making of withdrawals herefrom becomes subject to the
jurisdiction of any governmental agency, stating that such regulatory
approval has been obtained and furnishing a copy thereof.
ARTICLE V
Consolidation, Merger, Conveyance
Section 5.01. The Millstone 3 Lead Participants May Consolidate, etc., on
Certain Terms. Nothing in this Master Trust Agreement shall be interpreted
to prevent any consolidation or merger of the Millstone 3 Lead Participants
with, or into, any other entity or entities, or the conveyance or transfer of
any of their respective rights, title and interest in the Unit to any other
entity or entities; provided, however, that upon any such consolidation,
merger, conveyance or transfer, the successor entity or entities shall be
lawfully entitled to operate such properties and shall execute and deliver to
the Trustee, simultaneously with such consolidation, merger, conveyance or
transfer, a trust agreement supplemental hereto in form satisfactory to the
Trustee, containing an agreement on the part of such successor entity or
entities to assume the due and punctual performance and observance of all the
covenants and conditions of this Master Trust Agreement, with the same effect
and to the same extent as if such successor entity or entities had been an
original party hereto.
Section 5.02. Other Successors. Nothing in this Master Trust Agreement
shall be interpreted to prevent the Millstone 3 Lead Participants from
transferring their respective rights, title and interest in, and their
obligations with respect to, the Unit to any agent, representative,
authority, agency, commission or other entity or entities, authorized by
applicable state and federal statutes or regulations to assume responsibility
for the decommissioning of nuclear facilities; provided, however, that such
transferee shall execute and deliver to the Trustee a trust agreement
supplemental hereto in form satisfactory to the Trustee, containing an
agreement on the part of such transferee entity or entities to assume the due
and punctual performance and observance of all the covenants and conditions
of this Master Trust Agreement, with the same effect and to the same extent
as if such transferee had been an original party hereto.
Section 5.03. Successor Substituted. In the event any of the Millstone 3
Lead Participants, pursuant to Section 5.01 or 5.02, shall consolidate with
or merge into any other entity or shall convey or transfer all or
substantially all their respective rights, title and interest in the Unit to
any other entity, the successor entity, upon causing to be executed and
delivered the supplemental Master Trust Agreement referred to in Section 5.01
shall succeed to and be substituted hereunder with the same effect as if such
successor entity had been named herein as an original party.
ARTICLE VI
The Trustee
Section 6.01. Acceptance of Trusts; Certain Terms of the Trusts. The
Trustee, for itself and it successors, hereby accepts the trusts created by
this Master Trust Agreement and agrees to perform the same, but only upon the
terms expressly herein set forth, including the following:
A. The recitals herein shall be taken as the statements of the Millstone 3
Lead Participants and shall not be considered as made by, or imposing any
obligation or liability upon, the Trustee. The Trustee makes no
representations as to the value, condition, or validity of the trusts (or any
part thereof) to achieve the purposes of this Master Trust Agreement and the
trusts created herein, and the Trustee shall incur no liability or
responsibility in respect of any of such matters.
B. The Trustee shall be under no responsibility or duty with respect to the
disposition of any moneys duly paid to the Millstone 3 Participants or their
agent under any provision hereof.
C. The Trustee shall be under no responsibility or obligation to collect any
deposit of moneys into the trusts.
D. The Trustee shall have no responsibility for reviewing or confirming that
payments made by a Participant comply with the requirements of the Sharing
Agreement, the Code, or any other statutory or regulatory requirements.
E. The Trustee may not rely upon any default under any covenant in Article
III hereof as a defense against performing its trusts and powers hereunder.
F. The Trustee may execute any of the trusts or powers hereof and perform
any duty hereunder either directly or through its agents or attorneys. The
Trustee shall not be responsible for the misconduct or negligence of any
agent or attorney, provided that such agent or attorney is appointed with due
care and is supervised with due care to ensure timely compliance with the
Trustee's duties hereunder. Notwithstanding the foregoing, the Trustee shall
remain fully responsible for the performance of the duties set forth in
Section 4.02 hereof, whether or not the Trustee appoints an agent or attorney
to perform such duties.
G. The Trustee may, as an expense of administering the trusts, consult with
legal counsel to be selected by it (who may be counsel for any of the
Millstone 3 Participants), and the Trustee shall not be liable for any action
taken or suffered by it in good faith in accordance with the advice of such
counsel.
H. The Trustee shall have the continuing right to be reasonably compensated
for all services rendered hereunder and to be reimbursed for all reasonable
expenses, including reasonable fees and expenses of its counsel, incurred by
it in the administration of the trusts created hereby. The compensation and
reimbursements due to the Trustee hereunder shall be shown in quarterly bills
submitted to the Millstone 3 Lead Participants, with copies to the other
Participants. The Trustee's charges shall be allocated among each of the
trusts hereunder in the ratio that the balance of the assets in each of the
trusts on the last business day of the calendar quarter to which such charges
apply bears to the balance of the assets in all trusts on such last business
day, except for compensation and reimbursements to the Trustee that
specifically relate to a particular trust and are properly chargeable
directly to such trust. After 30 days following the submission of the
quarterly bills referred to above, the Trustee shall be entitled to apply
trust moneys held by it hereunder to the payment of compensation and expense
reimbursements related to such trusts.
I. The Trustee shall segregate into separately identified accounts such
portions of the trust funds held in the name of a Millstone 3 Participant as
that Participant shall direct. The Trustee shall charge such trusts for any
additional expenses resulting from such segregation and accounting.
J. Each of the Millstone 3 Lead Participants shall be obligated to indemnify
the Trustee against any liability, loss, claim, charge or expense it may
sustain, in good faith and without negligence, in the performance of its
duties hereunder, including, but not limited to, any initial tax or
additional tax paid by the Trustee pursuant to Section 4951 of the Code.
K. The Trustee shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, statement, obligation,
appraisal or other document believed by it to be genuine and to have been
signed by the proper party or parties. The Trustee shall accept a board of
directors' resolution as conclusive evidence that a resolution has been duly
adopted and is in full force and effect. Except as otherwise expressly
provided, an Officers' Certificate shall be accepted by the Trustee as
conclusive evidence of the facts therein stated, and shall constitute full
protection to the Trustee for any action taken or omitted to be taken by the
Trustee in good faith reliance thereon. Notwithstanding the fact that the
Trustee shall have no obligation to make any investigation into the matters
stated in any such notice, resolution, request, consent, order, certificate,
report, opinion, statement, obligation, appraisal or other paper or document,
the Trustee may, in its discretion, make such further inquiry into such facts
or matters as it may see fit.
L. The Trustee shall not be responsible for any dimunition in the value of
any trust hereunder as a result of following in good faith and without
negligence the guidelines promulgated by the Millstone 3 Lead Participants
pursuant to Section 4.02 or the instructions of a Participant pursuant to the
last sentence of the first paragraph of Section 4.01.
M. The Trustee shall maintain appropriate records of all deposits,
investments and earnings thereon received by the trusts and all disbursements
made from the trusts, and each month the Trustee shall provide to the
Millstone 3 Lead Participants a written statement of all transactions. In
addition, the Trustee shall provide unto the Millstone 3 Participants at
least annually a report certifying as to the activity in each of the trusts
over the period since the most recent report and the balances at the
beginning and end of such period.
N. The Millstone 3 Participants and their agents shall have the right to
review, inspect and audit the books and records of the Trustee relating to
the trusts, providing that the expenses of such review, inspection or audit
shall be paid by the Millstone 3 Participant causing such review, inspection
or audit to be performed.
O. The Trustee shall cause appropriate tax returns with respect to the
trusts and income earned by each of the trusts to be prepared and filed and
shall pay any taxes shown to be due out of the appropriate trust moneys held
by it. In consultation with the Millstone 3 Lead Participants, the Trustee
shall have the right to challenge the obligation to make payment of any such
taxes and shall have the authority to settle any proceedings related to such
taxes, and to receive refunds and take any other action necessary or
appropriate in regard to taxes on the trusts or income earned by the trusts.
P. The Trustee shall prepare and submit such applications, reports and other
documents as may be required by any governmental authority identified in an
Officers' Certificate as having jurisdiction over the trusts and performance
of the trust obligations and activities specified by this Master Trust
Agreement.
Q. Without in any way limiting the powers and authority conferred upon the
Trustee by other provisions of this Master Trust Agreement or by law, and to
enable the Trustee to perform its duties hereunder, the Trustee is expressly
authorized and empowered as follows:
To sell, exchange, convey, transfer or otherwise dispose of any property held
by it, by public or private sale. No person dealing with the Trustee shall
be bound to see to the application of the purchase money or to inquire into
the validity or expediency of any such sale or other disposition;
To make, execute, acknowledge and deliver any and all documents of transfer
and conveyance and any and all other instruments that may be necessary or
appropriate to carry out the powers granted in this Master Trust Agreement;
To register any securities held in the trusts in its own name or in the name
of a nominee and to hold any security in bearer form or in book entry, or to
combine certificates representing such securities with certificates of the
same issue held by the Trustee in other fiduciary capacities, or to deposit
or arrange for the deposit of such securities in a qualified central
depositary even though, when so deposited, such securities may be merged and
held in bulk in the name of the nominee of such depositary with other
securities deposited therein by another person, or to deposit or arrange for
the deposit of any securities issued by the United States Government, or any
agency or instrumentality thereof, with a Federal Reserve bank, but the books
and records of the Trustee shall at all times show that all such securities
are part of the appropriate trust hereunder;
In consultation with the Millstone 3 Lead Participants, to compromise or
otherwise adjust claims in favor of or against the trusts.
Section 6.02. Persons Eligible for Appointment as the Trustee. The Trustee
shall at all times be a bank or trust company having its principal office and
place of business in the United States of America, and shall at all times be
a corporation authorized to do business in the State of Connecticut, with a
combined capital and surplus of at least $50,000,000 and authorized under
applicable laws to exercise corporate trust powers and subject to supervision
or examination by appropriate federal or state authorities. If the Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of any supervising or examining authority referred to in this
Section, then, for the purposes of this Section, the combined capital and
surplus of the Trustee shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.
In the event the Trustee ceases to be eligible under this Section, it shall
resign immediately in the manner and with the effect specified in Section
6.03; if the Trustee does not so resign, it shall be removed forthwith by the
Millstone 3 Lead Participants.
Whenever necessary to avoid or fill a vacancy in the office of the Trustee,
the Millstone 3 Lead Participants, will, in the manner provided in Section
6.04, appoint a Trustee so that there shall at all times be a Trustee
eligible under this Section.
Section 6.03. Resignation and Removal. The Trustee may resign and be
discharged from the trusts hereby created by giving at least six weeks' prior
written notice thereof to the Participants. Such resignation shall become
effective on the day specified in such notice or upon the appointment of a
successor and such successor's acceptance, whichever is later. If an
instrument of acceptance by a successor Trustee shall not have been delivered
to the Trustee within six weeks after the giving of such notice of
resignation, the retiring Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
The Millstone 3 Lead Participants may at any time remove the Trustee, with or
without cause, upon at least six weeks' prior written notice, such notice to
be in the form of an Officers' Certificate of the Millstone 3 Lead
Participants declaring such removal and specifying the successor trustee
appointed pursuant to Section 6.04.
The Trustee, after resignation or removal, may nevertheless retain a lien
upon the trust moneys to secure any amounts due to it under any provision of
this Master Trust Agreement.
Section 6.04. Appointment of Successor Trustee. In the event the Trustee
resigns, is removed, or becomes incapable of acting or is adjudged a bankrupt
or insolvent, or if a receiver of the Trustee or its property is appointed or
a public officer takes charge or control of the Trustee or its property or
affairs for the purpose of rehabilitation, conservation or liquidation, a
vacancy shall be deemed to exist in the office of the Trustee, and a
successor shall be appointed by the Millstone 3 Lead Participants to fill
such vacancy. The validity of any such appointment, however, shall not be
impaired or affected by failure to give notice of such appointment or by any
defect in such notice.
If, in a proper case, no successor Trustee shall have been appointed pursuant
to the foregoing provisions of this Section, or if appointed, shall not have
accepted the appointment, within 60 days after the resignation of the
Trustee, or the occurrence of a vacancy in the office of the Trustee, the
Secretary of the State of Connecticut may apply to a court of competent
jurisdiction to appoint a successor Trustee.
Section 6.05. Acceptance of Appointment by Successor Trustee. A successor
Trustee appointed hereunder shall execute an instrument accepting such
appointment and deliver one counterpart thereof each to the Millstone 3
Participants, the retiring Trustee, and, if applicable, the court making such
appointment. Thereupon, without any further act, such successor Trustee
shall become vested with all the properties, rights, powers, trusts and
duties of the retiring Trustee as if originally named under this Master Trust
Agreement; however, any retiring Trustee, when requested by the successor
Trustee in writing or by the Millstone 3 Lead Participants and upon payment
of any lawful charges and disbursements, shall nevertheless execute and
deliver an instrument or instruments conveying and transferring to such
successor Trustee all its properties, rights, powers, and trusts hereunder
and shall duly assign, transfer and deliver to such successor Trustee all
property and moneys held by it hereunder. If the successor Trustee
reasonably requests an instrument from the Millstone 3 Lead Participants for
the purpose of more fully and certainly vesting in and confirming to it said
properties, rights, powers and trusts, then such instrument shall be
executed, acknowledged and delivered to it by the Millstone 3 Lead
Participants.
Section 6.06. Merger or Consolidation of the Trustee. Subject to the
requirements of Section 6.02 hereof, any corporation into which the Trustee
may be merged or with which it may be consolidated or any corporation
resulting from any merger or consolidation to which the Trustee shall be a
party or any corporation to which substantially all the business and assets
of the Trustee may be transferred, shall be the Trustee under this Master
Trust Agreement, without further act.
ACTICLE VII
Distribution of Assets upon Termination
Section 7.01. Transfer to Successor Trust. In the event that one or more of
decommissioning trusts established pursuant to this Master Trust Agreement is
required or permitted by an action of any governmental authority having
jurisdiction to be transferred to another trust or trusts in order to satisfy
the purposes specified in Section 2.02, the Millstone 3 Lead Participants
shall have the right, by written notice to the Trustee, to elect to have such
trust or trusts subsumed into such other trust or trusts. Such written
notice of such election shall be signed by the Presidents or Treasurers of
the Millstone 3 Lead Participants and shall direct the Trustee to transfer
the trust moneys to the specified successor trust or trusts. Upon the
completion of such transfer, the specified trust shall terminate.
Section 7.02. Final Distribution. Any moneys remaining in a trust following
completion of the decommissioning process for the Unit or action or order of
the NRC or any successor agency having similar effect shall be distributed by
the Trustee for the benefit of the applicable Millstone 3 Participant, except
as may be ordered by any governmental authority having jurisdiction over such
distribution.
If any of the trusts created by this Master Trust Agreement is finally
determined to be void for any reason by a court or other governmental
authority having jurisdiction, any portion of the trust estate which cannot
then be applied to achievement of the purposes specified herein shall be
distributed in the manner specified in this Section 7.02.
ARTICLE VIII
General Provisions
Section 8.01. Compliance Certificates and Opinions. Every certificate or
opinion with respect to compliance with a condition or covenant provided for
in this Master Trust Agreement shall include:
A. A statement that each person making such certificate or opinion has read
such covenant or condition and the definitions herein relating thereto.
B. A brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based.
C. A statement that, in the opinion of each such person, he or she has made
or caused to be made such examination or investigation as is necessary to
enable that person to express an informed opinion as to whether or not such
covenant or condition has been complied with.
D. A statement as to whether or not, in the opinion of the person making
such certificate or opinion, such condition or covenant has been complied
with.
In any case where several matters are required to be certified by, or covered
by an opinion of, any specified person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such person,
or that they be so certified or covered by the opinion of, only one such
person, or that they be so certified or covered by only one document, but one
such person may certify or give an opinion with respect to some matters and
one (or more) other such persons as to other matters, and each such person
may certify or give an opinion as to such matters in one or several
documents.
Section 8.02. No Implied Obligations. This Master Trust Agreement shall not
be interpreted to impose any duty, responsibility, obligation or liability
upon the Trustee or the Millstone 3 Lead Participants in addition to those
duties, responsibilities, obligations and liabilities which are expressly
specified in this instrument.
Section 8.03. Transfer of Interests. No provision of this Master Trust
Agreement shall be interpreted to prohibit or restrict the transfer between
Participants of interests in the Millstone 3 Decommissioning Trusts in
conjunction with changes in their ownership interests in the Unit; provided,
however, that no such transfer shall in any way act to terminate any trust or
result in the transferee having any rights or interests which differ from
those previously held by the transferor.
ARTICLE IX
Miscellaneous
Section 9.01. Supplemental Trust Agreements. Subject to Section 2.03
hereof, this Master Trust Agreement may be amended or supplemented from time
to time by the execution and delivery of one or more supplemental trust
agreements by and between the Millstone 3 Lead Participants and the Trustee,
provided that the amendment or supplement has received any required approval
or acceptance by any governmental body having jurisdiction.
Section 9.02. Successor Governmental Authorities. Wherever a specific
governmental authority is identified in this Master Trust Agreement, such
identification shall include any successor governmental authority, agency or
body having substantially comparable responsibilities.
Section 9.03. Amendment or Repeal of Section 468A. Any reference in this
Master Trust Agreement to Section 468A of the Code shall be deemed to refer
not only to such section, as it may from time to time be amended, but also to
any successor statutory provision. In the event that Section 468A of the
Code, or its successor statutory provision, is repealed, in whole or in part,
and certain provisions of this Master Trust Agreement cease to be required,
such provisions shall thereupon be ineffective without the necessity of
further amendment of this Master Trust Agreement.
Section 9.04. Applicable Law. This Master Trust Agreement shall be governed
by and construed in accordance with the laws of the State of Connecticut.
Section 9.05. Unenforceable Provisions. Any provision of this Master Trust
Agreement which is prohibited or is determined to be unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
Section 9.06. Written Changes and Notices. No term or provision of this
Master Trust Agreement may be changed, waived, discharged or terminated,
except by any instrument in writing signed by the party or other person
against whom enforcement of the change, waiver, discharge or termination is
sought; and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
Section 9.07. Counterparts. This Master Trust Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 9.08. Headings of Articles and Sections. The headings of the
various Articles and Sections herein are for convenience of reference only
and shall not define or limit any of the terms of provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Master Trust
Agreement to be duly executed by their respective authorized officers as of
the date first above written.
THE CONNECTICUT LIGHT AND POWER COMPANY
By /s/S.A. O'Connor
Its Vice President & Treasurer
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By /s/S. A. O'Connor
Its Vice President & Treasurer
COLONIAL BANK
By /s/Mary Lou Stewart
Its Vice President
Exhibit 10.39
TRANSITION AND RETIREMENT AGREEMENT
THIS AGREEMENT (the "Agreement") entered into on February 20, 1997, by
and between Northeast Utilities, a Massachusetts business trust (together
with its successors and assigns permitted under the Agreement and each direct
and indirect affiliated utility company that shall adopt this Agreement
pursuant to Section 18 hereof, the "Company"), with its principal office in
West Springfield, Massachusetts, and its general office in Berlin,
Connecticut, and Bernard M. Fox, a resident of Farmington, Connecticut
("Executive").
WHEREAS, the Company and Executive entered into an Employment Agreement,
effective as of January 1, 1992, (the "Employment Agreement") at which time
Executive was President and Chief Operating Officer of Northeast Utilities
("NU"); and
WHEREAS, Executive is currently employed as the Chairman, President and
Chief Executive Officer of NU and holds other senior officer positions with
the Company; and
WHEREAS, Executive has elected to retire on the later of (i) August 1,
1997 or (ii) the election of his successor (the "Retirement Date") and the
Company believes that Executive's retirement at that time is in the best
interest of NU's shareholders; and
WHEREAS, both parties desire to enter into a new agreement that will
supersede the Employment Agreement at the time of Executive's retirement and
will reflect the transition arrangements and the special retirement and other
benefits to which Executive will be entitled upon his retirement
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment. Unless Executive's employment is terminated for
"Cause" as defined in Section 1(c) of the Employment Agreement by reason of
events, actions or circumstances arising (i) after the date of this Agreement
and before the Retirement Date or (ii) before the date of this Agreement and
as to which the Board, as of date of this Agreement, does not have full
knowledge of all material facts and circumstances (and the Company hereby
agrees that Executive's employment shall not be terminated for any other
reason prior to the Retirement Date), the Company hereby agrees to continue
the employment of Executive, and Executive hereby accepts such employment and
agrees to perform his duties and responsibilities, in accordance with the
terms, conditions and provisions of the Employment Agreement until
Executive's Retirement Date. On the Retirement Date, the parties agree that
the Employment Agreement shall be superseded by this Agreement and shall be
terminated and of no further force or effect.
2. Consulting Services. Immediately following the Retirement Date and
for a period of 24 months thereafter (the "Transition Term") , the Company
shall engage Executive as a consultant to the Board of Trustees of NU (the
"Board") to perform such services as are specified by the Board from time to
time including, among other things, assuring an orderly transition for
Executive's successor; provided, however, that Fox shall not be required to
act as a consultant in a capacity which may subject Fox to liability unless
Fox obtains indemnification from the Company or through insurance. During
the Transition Term, Executive shall receive, as his total fee for the
services so specified, $500,000 for the first 12 months and $300,000 for the
second 12 months (plus a reimbursement of all reasonable expenses incurred in
connection with the performance of the consulting services upon presentation
of appropriate documentation in accordance with NU's normal expense
reimbursement policy). Payments shall be made to Executive in monthly
installments. During the Transition Term, Executive agrees to devote such of
his time and business efforts to the performance of his consultancy under
this Section as shall reasonably be required to perform the specified
services. Nothing contained herein shall prevent Executive from pursuing
other business opportunities to the extent that there is no conflict with the
services requested by the Board or with the requirements of Section 3 and 4
of this Agreement. All services to be performed under this Agreement during
the Transition Term shall be performed by Executive in a consulting capacity
and nothing contained herein shall be construed so as to confer employment
status on Executive during that Term.
3. Confidential Information. Executive recognizes and acknowledges
that by reason of his employment by and service to the Company before and
during the Employment Term and the Transition Term, he has had and will
continue to have access to certain confidential and proprietary information
relating to the Company's business, which may include, but is not limited to,
trade secrets, trade "know-how", customer information, supplier information,
cost and pricing information, marketing and sales techniques, strategies and
programs, computer programs and software and financial information
(collectively referred to as "Confidential Information"). Executive
acknowledges that such Confidential Information is a valuable and unique
asset of the Company and Executive covenants that he will not, unless
expressly authorized in writing by the Board, at any time during the course
of his employment or consultancy, use any Confidential Information or divulge
or disclose any Confidential Information to any person, firm or corporation
except in connection with the performance of his duties for the Company and
in a manner consistent with the Company's policies regarding Confidential
Information. Executive also covenants that at any time after the termination
of such employment or consultancy, directly or indirectly, he will not use
any Confidential Information or divulge or disclose any Confidential
Information to any person, firm or corporation, unless such information is in
the public domain through no fault of Executive or except when required to do
so by a court of law, by any governmental agency having supervisory authority
over the business of the Company or by any administrative or legislative body
(including a committee thereof) with apparent jurisdiction to order him to
divulge, disclose or make accessible such information, in which case
Executive will inform the Company in writing promptly of such required
disclosure, but in any event at least two business days prior to disclosure.
All written Confidential Information (including, without limitation, in any
computer or other electronic format) which comes into Executive's possession
during the course of his employment or consultancy shall remain the property
of the Company. Except as required in the performance of Executive's duties
for the Company, or unless expressly authorized in writing by the Board,
Executive shall not remove any written Confidential Information from the
Company's premises, except in connection with the performance of his duties
for the Company and in a manner consistent with the Company's policies
regarding Confidential Information. Upon termination of Executive's
consultancy, Executive agrees immediately to return to the Company all
written Confidential Information in his possession.
4. Non-Competition; Non-Solicitation.
(a) During his employment by and consultancy for the Company and
for a period of (i) one year after the Transition Term anywhere in the United
States and (ii) two years after the Transition Term within the Company's
"service area," as defined below, Executive will not, except with the prior
written consent of the Board, directly or indirectly, own, manage, operate,
join, control, finance or participate in the ownership, management,
operation, control or financing of, or be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise
with, or use or permit his name to be used in connection with, any business
or enterprise which is engaged in any business that is competitive with any
business or enterprise in which the Company or any of its subsidiaries or
affiliates is engaged. For the purposes of this Section, "service area"
shall mean the geographic area within the states of Connecticut, Delaware,
Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio,
Pennsylvania, Washington D.C. and West Virginia, and within the countries of
Argentina, Costa Rica, China, India, New Zealand and Jamaica, or any other
geographic area in which, at the time of Executive's termination of the
consultancy with the Company, the Company, or any of its subsidiaries or
affiliates, is doing business. Executive acknowledges that the listed
service area is the area in which the Company, or its subsidiaries or
affiliates, presently does business.
(b) The foregoing restrictions shall not be construed to prohibit
the ownership by Executive of less than five percent (5%) of any class of
securities of any corporation which is engaged in any of the foregoing
businesses having a class of securities registered pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), provided that such ownership
represents a passive investment and that neither Executive nor any group of
persons including Executive in any way, either directly or indirectly,
manages or exercises control of any such corporation, guarantees any of its
financial obligations, otherwise takes any part in its business, other than
exercising his rights as a shareholder, or seeks to do any of the foregoing.
(c) Executive further covenants and agrees that during his
consultancy by the Company and for the period of two years thereafter,
Executive will not, directly or indirectly, (i) solicit, divert, take away,
or attempt to solicit, divert or take away, any of the Company's "Principal
Customers," defined for the purposes hereof to include any customer of the
Company, or of any of its subsidiaries or affiliates, from which $100,000 or
more of annual gross revenues are derived at such time, or (ii) encourage any
Principal Customer to reduce its patronage of the Company.
(d) Executive further covenants and agrees that during his
consultancy by the Company and for the period of two years thereafter,
Executive will not, directly or indirectly, solicit or hire, or encourage the
solicitation or hiring of, any person who was a managerial or higher level
employee of the Company at any time during the term of Executive's employment
by the Company by any employer other than the Company for any position as an
employee, independent contractor, consultant or otherwise. The foregoing
covenant of Executive shall not apply to any person after 12 months have
elapsed subsequent to the date on which such person's employment by the
Company has terminated.
5. Equitable Relief.
(a) Executive acknowledges and agrees that the restrictions
contained in Sections 3 and 4 are reasonable and necessary to protect and
preserve the legitimate interests, properties, goodwill and business of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by
the Company should Executive breach any of the provisions of those Sections.
Executive represents and acknowledges that (i) he has been advised by the
Company to consult his own legal counsel in respect of this Agreement, and
(ii) that he has had full opportunity, prior to execution of this Agreement,
to review thoroughly this Agreement with his counsel.
(b) Executive further acknowledges and agrees that a breach of any
of the restrictions in Sections 3 and 4 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits
and other benefits arising from any violation of Sections 3 or 4 hereof,
which rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event that any of the
provisions of Sections 3 or 4 hereof should ever be adjudicated to exceed the
time, geographic, service, or other limitations permitted by applicable law
in any jurisdiction, it is the intention of the parties that the provision
shall be amended to the extent of the maximum time, geographic, service, or
other limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication
and that the provision otherwise be enforced to the maximum extent permitted
by law.
(c) If Executive breaches any of his obligations under Sections 3
or 4 hereof, and such breach would have constituted "Cause," as defined in
Section 1(c) of the Employment Agreement if it had occurred during the
Employment Term, the Company shall thereafter have no obligation to make the
payments described in Section 2 nor shall the Company have a Target Benefit
obligation pursuant to the Company's Supplemental Executive Retirement Plan
for Officers (the "Supplemental Plan"), but shall remain obligated for the
Make-Whole Benefit under the Supplemental Plan and compensation and other
benefits provided in any plans, policies or practices then applicable to
Executive in accordance with the terms thereof. Executive irrevocably and
unconditionally (i) agrees that any suit, action or other legal proceeding
arising out of Sections 3 or 4 hereof, including without limitation, any
action commenced by the Company for preliminary and permanent injunctive
relief and other equitable relief, may be brought in the United States
District Court for the District of Connecticut, or if such court does not
have jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in Hartford, Connecticut, (ii) consents to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and
(iii) waives any objection which Executive may have to the laying of venue of
any such suit, action or proceeding in any such court. Executive also
irrevocably and unconditionally consents to the service of any process,
pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 11 hereof.
(d) Executive agrees that for a period of two years following the
termination of his consultancy by the Company he will provide, and that at
all times after the date hereof the Company may similarly provide, a copy of
Sections 3 and 4 hereof to any business or enterprise (i) which he may
directly or indirectly own, manage, operate, finance, join, control or
participate in the ownership, management, operation, financing, or control
of, or (ii) with which he may be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise, or in
connection with which he may use or permit his name to be used; provided,
however, that this provision shall not apply in respect of Section 4 after
expiration of the time periods set forth therein.
6. Death or Disability. The fees due to Executive during the
Transition Term under Section 2 and the benefits to be provided to Fox under
Section 7 shall be paid or provided to Fox (and, if applicable, his spouse
and dependents) irrespective of his death or inability to perform his duties
and responsibilities under this Agreement to the full extent required by the
Board by reason of illness, injury or incapacity, in either event occurring
after the date of this Agreement and, in the case of the benefits payable
under Section 7, prior to the Retirement Date. In the event of his death,
the Company shall pay to Executive's executors, legal representatives or
administrators, as applicable, the remaining installments as they would
otherwise become due to Executive, except as provided in Section 9.2.
7. Special Retirement Benefits. On his Retirement Date, Executive
(and, if applicable, his spouse and dependents) shall be entitled to all
compensation and benefits provided to retirees of the Company generally,
notwithstanding Executive's age (but subject to all other terms and
conditions of each plan, practice, policy and program of the Company that
provides such benefits) or to receive cash in lieu of any benefits or
premiums, as applicable, where such benefits may not be continued (or where
such continuation would adversely affect the tax status of the plan pursuant
to which the benefit is provided) under applicable law or regulations. In
addition, Executive shall also be entitled to the following:
(a) a Target Benefit under the Supplemental Plan, notwithstanding
its terms providing for forfeiture of such benefit upon the occurrence of
certain events (including, but not by way of limitation, his retirement prior
to age 60). If Executive has not attained age 57 by the Retirement Date,
such benefit shall be actuarially adjusted from age 57 backward to
Executive's age at the date payment commences; if Executive has attained age
57, the Target Benefit shall be paid without any actuarial adjustment.
(b) All SARs with respect to shares of stock of NU previously
granted to Executive as of January 1, 1997, to the extent not already vested
prior to the Retirement Date, shall be fully vested and payment with respect
to such SARs shall be made at the time and in the amount otherwise to be paid
to Executive if he had not retired on his Retirement Date and had instead
remained actively employed by the Company, including exercise within 36
months after December 31, 1998.
8. Release. Notwithstanding anything else to the contrary in this
Agreement, all payments and benefits provided for under this Agreement,
including without limitation under Sections 2, 6 and 7, shall be conditioned
upon Executive (or his executor or administrator, as applicable, in the event
of his death) executing, and not revoking as provided therein, a written
release prior to the 22nd day following his Retirement Date, substantially in
the form attached hereto as Annex 1, (the "Release"), of any and all claims
against the Company and all related parties with respect to all matters
arising out of Executive's employment by the Company (other than any
entitlements under the terms of this Agreement or under any other plans or
programs of the Company in which he participated and under which he has
accrued a benefit), or the termination thereof. No payments shall commence
to Executive under this Agreement until the eighth day following Executive's
execution of the Release without a revocation.
9. Payments Upon a Change in Control.
9.1. Definition. For purposes of this Section 9, a "Change of Control"
shall mean the happening of any of the following:
(a) When any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than
the Company, its Affiliates, or any Company employee benefit plan (including
any trustee of such plan acting as trustee), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of NU representing more than 20% of the combined
voting power of either (i) the then outstanding shares of common stock of NU
(the "Outstanding Common Stock") or (ii) the then outstanding voting
securities of NU entitled to vote generally in the election of directors (the
"Voting Securities"); or
(b) Individuals who, as of the beginning of any twenty-four month
period, constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board or cease to be able to exercise
the powers of the majority of the Board, provided that any individual
becoming a trustee subsequent to the beginning of such period whose election
or nomination for election by the Company's stockholders was approved by a
vote of at least a majority of the trustees then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Board of NU (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or
(c) Consummation by NU of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Common Stock and Voting
Securities immediately prior to such Business Combination do not, following
such Business Combination, beneficially own, directly or indirectly, more
than 75% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation, business trust or other entity resulting from or being the
surviving entity in such Business Combination in substantially the same
proportion as their ownership immediately prior to such Business Combination
of the Outstanding Common Stock and Voting Securities, as the case may be; or
(d) Consummation of a complete liquidation or dissolution of NU or
sale or other disposition of all or substantially all of the assets of NU
other than to a corporation, business trust or other entity with respect to
which, following such sale or disposition, more than 75% of, respectively,
the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Common Stock and Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Common Stock and Voting Securities, as the case may be,
immediately prior to such sale or disposition.
9.2 Payment upon a Change of Control. In the event of a Change of
Control, Executive shall receive a single sum payment equal to the then
remaining amounts due to him under Section 2 within 15 days following the
Change of Control.
10. Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
the City of Hartford, Connecticut in accordance with the National Rules for
the Resolution of Employment Disputes then in effect of the American
Arbitration Association, before a panel of three arbitrators, two of whom
shall be selected by the Company and Executive, respectively, and the third
of whom shall be selected by the other two arbitrators. Any award entered by
the arbitrators shall be final, binding and nonappealable (except as provided
in Section 52-418 of the Connecticut General Statutes) and judgment may be
entered thereon by either party in accordance with applicable law in any
court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrators shall have no authority to modify
any provision of this Agreement or to award a remedy for a dispute involving
this Agreement other than a benefit specifically provided under or by virtue
of the Agreement. If Executive prevails on any material issue which is the
subject of such arbitration or lawsuit, the Company shall be responsible for
all of the fees of the American Arbitration Association and the arbitrators
and any expenses relating to the conduct of the arbitration (including
reasonable attorneys' fees and expenses). Otherwise, each party shall be
responsible for his or its own expenses relating to the conduct of the
arbitration (including reasonable attorneys' fees and expenses) and shall
share the fees of the American Arbitration Association.
11. Notices. All notices and other communications required or
permitted under this Agreement or necessary or convenient in connection
herewith shall be in writing and shall be deemed to have been given when hand
delivered or mailed by registered or certified mail, as follows (provided
that notice of change of address shall be deemed given only when received):
If to the Company, to:
Northeast Utilities
P.O. Box 270
Hartford, CT 06141-0270
Attention: Vice President, Secretary and General Counsel
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Executive, to:
Bernard M. Fox
One Langley Park
Farmington, CT 06032
With a required copy to:
Shipman & Goodwin
One American Row
Hartford, CT 06103-2819
Attention: Brian Clemow, Esquire
or to such other names or addresses as the Company or Executive, as the case
may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this Section.
12. Contents of Agreement; Amendment and Assignment.
(a) This Agreement supersedes all prior agreements, except the
Employment Agreement shall continue to the extent and for the time period
stated in Section 1, and otherwise sets forth the entire understanding
between the parties hereto with respect to the subject matter hereof and
cannot be changed, modified, extended or terminated except upon written
amendment approved by the Board and executed on its behalf by a duly
authorized officer and by Executive.
(b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective heirs, executors, administrators, legal representatives,
successors and assigns of the parties hereto, except that the duties and
responsibilities of Executive under this Agreement are of a personal nature
and shall not be assignable or delegatable in whole or in part by Executive.
The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in
form and substance satisfactory to Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the extent the Company
would be required to perform if no such succession had taken place.
13. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect any other provision or application of this Agreement which can be
given effect without the invalid or unenforceable provision or application
and shall not invalidate or render unenforceable such provision or
application in any other jurisdiction. If any provision is held void,
invalid or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
14. Remedies Cumulative; No Waiver. No remedy conferred upon a party
by this Agreement is intended to be exclusive of any other remedy, and each
and every such remedy shall be cumulative and shall be in addition to any
other remedy given under this Agreement or now or hereafter existing at law
or in equity. No delay or omission by a party in exercising any right,
remedy or power under this Agreement or existing at law or in equity shall be
construed as a waiver thereof, and any such right, remedy or power may be
exercised by such party from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.
15. Beneficiaries/References. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary
or beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
his incompetence, reference in this Agreement to Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.
16. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the
other counterparts.
17. Withholding. The Company may withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Executive
shall bear all expense of, and be solely responsible for, all federal, state
and local taxes due with respect to any payment received under this
Agreement.
18. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Connecticut without giving effect to any
conflict of laws provisions.
19. Adoption by Affiliates; Obligations.
(a) At the earliest feasible time or times, the Company will cause
each entity in which it now or hereafter holds, directly or indirectly, more
than a 50 percent voting interest and that has at least fifty (50) employees
on its direct payroll (an "Employer") to approve and adopt this Agreement
and, by such approval and adoption, to be bound by the terms hereof as though
a signatory hereto.
(b) The obligations under this Agreement shall, in the first
instance, be paid and satisfied by Northeast Utilities Service Company
("NUSCO"). If NUSCO shall be dissolved or for any other reason shall fail to
pay and satisfy the obligations, each individual Employer shall thereafter
be jointly and severally liable to pay and satisfy the obligations to
Executive.
(c) The Declaration of Trust of NU provides that no shareholder of
NU 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 trustees of The Company or by
any officer, agent or representative elected or appointed by the trustees and
no such contract, obligation or undertaking shall be enforceable against the
trustees or any of them in their or his individual capacities or capacity and
all such contracts, obligations and undertakings shall be enforceable only
against the trustees as such and every person, firm, association, trust and
corporation having any claim or demand arising out of any such contract,
obligation or undertaking shall look only to the trust estate for the payment
or satisfaction thereof. Any liability for benefits under this Agreement
incurred by The Company shall be subject to the provisions of this Subsection
(c).
20. Costs of Defense - Retirement Benefits. Notwithstanding anything
herein to the contrary, the Company shall pay to Executive (or his survivors)
all costs incurred in defense against any reduction by the Company of the
retirement (or related survivor) benefits that the Company is obligated to
pay under this Agreement.
21. Establishment of Trust. The Company may establish an irrevocable
trust fund pursuant to a trust agreement to hold assets to satisfy any of its
obligations under this Agreement. Funding of such trust fund shall be
subject to the Board's discretion, as set forth in the agreement pursuant to
which the fund will be established.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
NORTHEAST UTILITIES
By:/s/Robert P. Wax
Senior Vice President, Secretary and General Counsel
By:/s/Bernard M. Fox
ANNEX 1
CONFIDENTIAL TRANSITION AND RETIREMENT AGREEMENT
GENERAL RELEASE
THIS AGREEMENT, made and entered into on this day of ,
1997, by and between Northeast Utilities, a Massachusetts business trust
(together with each direct and indirect affiliated utility company that has
adopted the Transition and Retirement Agreement entered into on February 20,
1997 (the "Transition Agreement"), with Bernard M. Fox, hereinafter, the
"Company"), with its principal office in West Springfield, Massachusetts, and
its general office in Berlin, Connecticut, and Bernard M. Fox, a resident of
Farmington, Connecticut ("Fox").
W I T N E S S E T H:
WHEREAS, the Company had heretofore employed Fox under an
Employment Agreement originally entered into as of January 1, 1992 (the
"Employment Agreement"); and
WHEREAS, Fox has retired and the Employment Agreement has been
terminated as of , , except to the extent specifically
provided in the Transition Agreement; and
WHEREAS, the Company and Fox wish to enter into an agreement to
provide for a mutual release as to any claims including, without limitation,
claims that might be asserted by Fox under the Employment Agreement and the
Age Discrimination in Employment Act, as further described herein, and
reaffirm Fox's right to indemnification;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. The Company and Fox hereby agree that Fox's retirement shall
be effective on , and that the Employment Agreement, except as
otherwise provided in the Transition Agreement, shall terminate on that date.
2. Notwithstanding Fox's retirement and the termination of the
Employment Agreement, in consideration of the release provided by Fox under
this Agreement, the Company shall pay or cause to be paid or provided to Fox,
subject to applicable employment and income tax withholdings and deductions,
all amounts and benefits required under the Transition Agreement.
3. Fox agrees and acknowledges that the Company, on a timely
basis, has paid, or agreed to pay, to Fox all other amounts due and owing
based on his prior services in accordance with the terms of the Employment
Agreement and that the Company has no obligation, contractual or otherwise to
Fox, except as provided herein or in the Transition Agreement, nor does it
have any obligation to hire, rehire or re-employ Fox in the future.
4. In full and complete settlement of any claims that Fox may
have against the Company, including any possible violations of the Age
Discrimination in Employment Act, 29 U.S.C. Section 621 et seq., ("ADEA") in
connection with his termination of employment, and for and in consideration
of the undertakings of the Company described herein, Fox does hereby REMISE,
RELEASE, AND FOREVER DISCHARGE the Company, and each of its subsidiaries and
affiliates, their officers, directors, shareholders, partners, employees and
agents, and their respective successors and assigns, heirs, executors and
administrators (hereinafter all included within the term "the Company"), of
and from any and all manner of actions and causes of actions, suits, debts,
claims and demands whatsoever in law or in equity, which he ever had, now
has, or hereafter may have, or which Fox's heirs, executors or administrators
hereafter may have, by reason of any matter, cause or thing whatsoever from
the beginning of Fox's employment to the date of this Agreement; and
particularly, but without limitation of the foregoing general terms, any
claims arising from or relating in any way to Fox's employment relationship
or the Employment Agreement and his retirement from that employment
relationship and the termination of the Employment Agreement, including but
not limited to, any claims which have been asserted, could have been
asserted, or could be asserted now or in the future under any federal, state
or local laws, including any claims under ADEA, Title VII of the Civil Rights
Act of 1964, as amended, 42 U.S.C. Section 2000e et seq. ("Title VII"), the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the
Rehabilitation Act of 1973, the Americans with Disabilities Act, the Family
and Medical Leave Act, the Energy Reorganization Act of 1974, as amended,
Section 11(c) of the Occupational Safety and Health Act, and the Energy
Policy Act, and any common law claims now or hereafter recognized and all
claims for counsel fees and costs. Notwithstanding the foregoing, nothing
contained in this Agreement shall prevent Fox from requiring the Company to
fulfill its obligations under this Agreement, under the Transition Agreement,
under the Employment Agreement, to the extent of any continuing obligations
accruing prior to Fox's retirement, or under any employee benefit plan, as
defined in Section 3(3) of ERISA, maintained by the Company and in which Fox
participated.
Nothing in this Agreement shall be construed to prohibit Fox from
reporting any suspected instance of illegal activity of any nature, any
nuclear safety concern, any workplace safety concern, or any public safety
concern to the Nuclear Regulatory Commission (NRC), the United States
Department of Labor, or any other federal or state governmental agency. This
Agreement shall not be construed to prohibit Fox from providing information
to the NRC or to any other federal or state governmental agency or
governmental officials, or testifying in any civil or criminal proceedings
concerning any matter. This Agreement shall not be construed as a waiver or
withdrawal of safety concerns, if any, which Fox may have reported to the
NRC, or the withdrawal of participation by Fox in any NRC proceedings.
Nothing in this Agreement shall limit or impair any right Fox may
otherwise have to indemnity and defense by the Company, and, notwithstanding
any contrary provision of this Agreement, (i) the Company shall indemnify and
defend Fox in connection with any action, suit or proceeding in which he may
be involved or with which he may be threatened by reason of his being or
having been a Trustee or officer of the Company in the same manner
contemplated by (including the payment or advancement of any reasonable
expenses as incurred) and to the fullest extent permitted by the Declaration
of Trust of Northeast Utilities as of the date hereof, unless later limited
in accordance with applicable law, or under applicable law, (in which case he
shall notify the Company within five business days after receiving service of
process as to the commencement of the action, suit or proceeding and give the
Company the right to control the defense of any such action, suit or
proceeding, provided that no delay in giving such notice shall result in a
forfeiture of any rights by Fox unless, and then only to the extent that, the
Company is actually prejudiced by such delay), and (ii) Fox may join the
Company in any action, suit or proceeding, or bring any action, suit or
proceeding against the Company, as may be necessary for the protection or
enforcement of such rights of indemnification and defense by the Company.
5. Except to the extent permitted by paragraph 4, Fox further
agrees and covenants that neither he, nor any person, organization or other
entity on his behalf, will file, charge, claim, sue or cause or permit to be
filed, charged, or claimed, any action for damages, including injunctive,
declaratory, monetary or other relief against the Company, involving any
matter occurring at any time in the past up to the date of this Agreement, or
involving any continuing effects of any actions or practices which may have
arisen or occurred prior to the date of this Agreement, including any charge
of discrimination under ADEA, Title VII, the Workers' compensation Act or
state or local laws. In addition, Fox further agrees and covenants that
should he, or any other person, organization or entity on his behalf, file,
charge, claim, sue or cause or permit to be filed, charged, or claimed, any
action for damages, including injunctive, declaratory, monetary or other
relief, despite his agreement not to do so under this Agreement, or should he
otherwise fail to abide, in any material respect, by any of the terms of this
Agreement, then the Company will be relieved of all further obligations owed
under the Transition Agreement and this Agreement, he will forfeit all monies
paid to him under Transition Agreement and he will pay all of the costs and
expenses of the Company (including reasonable attorneys' fees) incurred in
the defense of any such action or undertaking.
6. In full and complete settlement of any claims that the Company
may have against Fox, other than the fulfillment of Fox's obligations under
this Agreement or under the Transition Agreement, and for and in
consideration of the undertakings of Fox described herein, the Company does
hereby REMISE, RELEASE, AND FOREVER DISCHARGE Fox and his heirs, executors
and administrators (hereinafter all included within the term "Fox"), of and
from any and all manner of actions and causes of actions, suits, debts,
claims and demands whatsoever in law or in equity, which the Company ever
had, now has, or hereafter may have, by reason of any civil (but specifically
not any criminal act) matter, cause or thing whatsoever by reason of his
being or having been a Trustee or officer of the Company from the beginning
of Fox's employment with the Company to the date of this Agreement; and
particularly, but without limitation of the foregoing general terms, any
claims arising from or relating in any way to actions taken by Fox by reason
of his being or having been a Trustee or officer of the Company and his
retirement from those relationships with the Company.
7. The Company further agrees and covenants that neither it, nor
any person, organization or other entity on its behalf, will file, charge,
claim, sue or cause or permit to be filed, charged, or claimed, any action
for damages, including injunctive, declaratory, monetary or other relief
against Fox, involving any matter occurring at any time in the past up to the
date of this Agreement, or involving any continuing effects of any actions or
practices which may have arisen or occurred prior to the date of this
Agreement, by reason of his being or having been a Trustee or officer of the
Company, so long as Fox meets, in all material respects, his obligations
under this Agreement and the Transition Agreement. In addition, the Company
further agrees and covenants that should it, or any other person,
organization or entity on its behalf, file, charge, claim, sue or cause or
permit to be filed, charged, or claimed, any action for damages, including
injunctive, declaratory, monetary or other relief, despite its agreement not
to do so under this Agreement, then it will pay all of the costs and expenses
of Fox (including reasonable attorneys' fees) incurred in the defense of any
such action or undertaking.
8. The Company expressly excepts from the provisions of paragraph
6 and 7, above, any actions, claims, suits, or other assertions against Fox
which are instituted by the Company as the result of an investigation
conducted upon the demand of a shareholder including but not limited to the
investigation conducted upon the demand of Samuel Holtzman, or any actions
instituted on behalf of the Company by shareholders, including but not
limited to all such actions now pending in the courts of Connecticut and
Massachusetts. This paragraph 8 shall not be construed to limit or impair in
any way Fox's rights (i) to indemnity and defense by the company, (ii) under
any applicable insurance, and (iii) to the payments and other benefits under
this Agreement, under the Transition Agreement, under the Employment
Agreement, to the extent of any continuing obligations accruing prior to
Fox's retirement, or under any employee benefit plan, as defined in Section
3(3) of ERISA, maintained by the Company and in which Fox participated.
9. Fox hereby agrees and acknowledges that under this Agreement,
the Company has agreed to provide him with compensation and benefits that are
in addition to any amounts to which he otherwise would have been entitled
under the Employment Agreement or otherwise in the absence of this Agreement
and the Transition Agreement, and that such additional compensation is
sufficient to support the covenants and agreements by Fox herein.
10. Fox further agrees and acknowledges that the undertakings of
the Company as provided in the Transition Agreement are made to provide an
amicable conclusion of Fox's employment. Fox and the Company, its officers
and directors, will not, disparage the name, business reputation or business
practices of the other. In addition, by signing this Agreement, Fox agrees
not to pursue any internal grievance with the Company.
11. Fox hereby certifies that he has read the terms of this
Agreement, that he has been advised by the Company to consult with an
attorney and that he understands its terms and effects. Fox acknowledges,
further, that he is executing this Agreement of his own volition, without any
threat, duress or coercion and with a full understanding of its terms and
effects and with the intention, as expressed in Section 4 hereof, of
releasing all claims recited herein in exchange for the consideration
described herein, which he acknowledges is adequate and satisfactory to him
provided the Company meets all of its obligations under this Agreement. The
Company has made no representations to Fox concerning the terms or effects of
this Agreement other than those contained in this Agreement.
12. Fox hereby acknowledges that he was presented with this
Agreement on , , and that he was informed that he had the right
to consider this Agreement and the release contained herein for a period of
twenty-one (21) days prior to execution. Fox also understands that he has
the right to revoke this Agreement for a period of seven (7) days following
execution, by giving written notice to the Company at 107 Selden Street,
Berlin, CT 06037, in which event the provisions of this Agreement shall be
null and void, and the parties shall have the rights, duties, obligations and
remedies afforded by applicable law.
13. This Agreement shall be interpreted and enforced under the
laws of the State of Connecticut.
14. The Declaration of Trust of Northeast Utilities ("NU")
provides that no shareholder of NU 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
Trustees of NU or by any officer, agent or representative elected or
appointed by the Trustees and no such contract, obligation or undertaking
shall be enforceable against the trustees or any of them in their or his
individual capacities or capacity and all such contracts, obligations and
undertakings shall be enforceable only against the trustees as such and every
person, firm, association, trust and corporation having any claim or demand
arising out of any such contract, obligation or undertaking shall look only
to the trust estate for the payment or satisfaction thereof. Any liability
for benefits under the Transition Agreement or this Agreement incurred by NU
shall be subject to the provisions of this Section 14.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
ATTEST: NORTHEAST UTILITIES
By:
Secretary
Witness BERNARD M. FOX
Exhibit 10.40
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of August
21, 1996, by and between Northeast Utilities Service Company, a Connecticut
corporation (the "Company"), with its principal office in Berlin,
Connecticut, and Bruce D. Kenyon, a resident of Columbia, South Carolina
("Executive").
WHEREAS, Executive and the Company desire to enter into an
agreement superseding all prior employment agreements and providing for
Executive's employment as a senior level executive serving as the President
and Chief Executive Officer of Northeast Nuclear Energy Company and
Northeast Utilities' other nuclear subsidiaries and affiliates and to reflect
Executive's contribution to the Company's business in his executive
capacities and to provide for Executive's continued employment by the
Company, upon the terms and conditions set forth herein:
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment. The Company hereby agrees to employ Executive as
President and Chief Executive Officer of Northeast Nuclear Energy Company
and Northeast Utilities' other nuclear subsidiaries and affiliates commencing
as of September 3, 1996, and continue the employment of Executive throughout
the Employment Term, as hereinafter defined, and Executive hereby accepts
such employment and agrees to perform his duties and responsibilities, in
accordance with the terms, conditions and provisions hereinafter set forth.
This Agreement terminates and supersedes all prior employment agreements
between the Company and Executive. Certain provisions of this Agreement are
effective only on and after February 25, 1997 (the "Revision Date").
1.1. Employment Term. The term of Executive's employment under this
Agreement shall commence as of September 3, 1996 (the "Effective Date") and
shall continue until August 31, 1999, unless sooner terminated in accordance
with Section 5 or Section 6 hereof, and shall automatically renew for periods
of one year unless one party gives written notice to the other, at least six
months prior to August 31, 1999 or at least six months prior to the end of
any one-year renewal period, that the Agreement shall not be further
extended. The period commencing as of the Effective Date and ending on the
date on which the term of Executive's employment under the Agreement shall
terminate is hereinafter referred to as the "Employment Term".
1.2. Duties and Responsibilities. Executive shall serve in such senior
positions as directed by the Company's Board of Directors (the "Board") or
the Board of Trustees (the "Trustees") of Northeast Utilities ("NU") that
provide Executive with duties and compensation that are substantially
equivalent to President and Chief Executive Officer of Northeast Nuclear
Energy Company and Northeast Utilities' other nuclear subsidiaries and
affiliates in terms of duties and responsibilities. During the Employment
Term, Executive shall perform all duties and accept all responsibilities
incident to such positions as may be assigned to him by the Board.
1.3. Extent of Service. During the Employment Term, Executive agrees to
use his best efforts to carry out his duties and responsibilities under
Section 1.2 hereof and, consistent with the other provisions of this
Agreement, to devote substantially all his business time, attention and
energy thereto. Except as provided in Section 3 hereof, the foregoing shall
not be construed as preventing Executive from making minority investments in
other businesses or enterprises provided that Executive agrees not to become
engaged in any other business activity which, in the reasonable judgment of
the Board, is likely to interfere with his ability to discharge his duties
and responsibilities to the Company.
1.4. Base Salary and Signing Bonus. For all the services rendered by
Executive hereunder, the Company shall pay Executive a base salary ("Base
Salary") of $500,000 per annum, commencing on the Effective Date, payable in
installments at such times as the Company customarily pays its other senior
level executives (but in any event no less often than monthly). Executive's
Base Salary shall be reviewed annually for appropriate adjustment (but shall
not be reduced below that in effect on the Effective Date without Executive's
written consent) by the Trustees pursuant to its normal performance review
policies for senior level executives. The Company shall also pay Executive a
signing bonus of $400,000 on or about September 3, 1996.
1.5. Retirement and Benefit Coverages. During the Employment Term,
Executive shall be entitled to participate in all (a) employee savings plans
("Retirement Plans") and (b) welfare benefit plans and programs ("Benefit
Coverages"), in each case made available to the Company's senior level
executives as a group or to its employees generally, as such Retirement Plans
or Benefit Coverages may be in effect from time to time. In addition, the
Company shall provide Executive with a special retirement benefit as
hereinafter described (the "Special Retirement Benefit"). The Special
Retirement Benefit shall be substantially similar in design to Executive's
arrangement with South Carolina Electric & Gas (his employer immediately
previous to the Company), except that (i) Executive will not be required to
remain employed by the Company until age 65 in order to receive the
equivalent of South Carolina Electric & Gas' Key Employee Retention Program
and (ii) if Executive retires at any time after three years but less than
five years of service with the Company, he will be deemed to have five years
of service solely for purposes of the Special Retirement Benefit and will be
entitled to receive that Benefit based on five years of service. The
Company's Human Resources Department has provided and will continue to
provide Executive from time to time with a statement of the projected form,
amount and time of payment of such benefit, and such statement shall, in each
case, constitute the definitive statement of such benefit, provided that no
such statement shall reduce in amount, restrict in form, or delay in time the
payment of such Benefit as compared to the prior statement without
Executive's written consent. In addition to the above-described benefit, if
Executive retires at any time after three years of service with the Company
he shall also receive a lump sum payment of $500,000. The Special Retirement
Benefit shall also include eligibility for Executive and his spouse to
participate in the Company's retiree health plan, but the amount of cost
sharing under that plan shall be at the maximum level paid by any retiree who
qualifies for participation in such plan unless Executive, by reason of his
actual years of service, qualifies for a more favorable cost sharing
arrangement under the terms of such plan. The aggregate of the benefits
described in the preceding four sentences shall be referred to as the
"Special Retirement Benefit." For the purposes of this Agreement, a "year of
service" shall mean each successive 365 day period beginning September 1,
1996 during which Executive continues to be actively employed by the Company.
1.6. Reimbursement of Expenses; Vacation. Executive shall be provided
with reimbursement of expenses related to his employment by the Company on a
basis no less favorable than that which may be authorized from time to time
for senior level executives as a group, and shall be entitled to five weeks
of vacation and holidays in accordance with the Company's normal personnel
policies for senior level executives.
1.7. Short-Term Incentive Compensation. Executive shall be entitled
to a special short-term incentive arrangement through December 31, 1999 (the
"Special Incentive Plan"). Under the Special Incentive Plan, Executive and
the Chief Executive Officer of NU shall agree annually on certain individual
performance goals to be satisfied for the next "performance period" by
Executive and the incentive to be paid for Executive's performance of those
goals. Executive's target award shall be 50% of Base Salary and his maximum
award shall be 100% of Base Salary. The performance periods shall be
September 1, 1996 through August 31, 1997, September 1, 1997 through August
31, 1998 and September 1, 1998 though December 31, 1999. If the Employment
Term has not previously terminated, beginning on January 1, 2000, Executive
shall be entitled to participate in any short-term incentive compensation
programs established by the Company for its senior level executives generally
depending upon achievement of certain annual individual or business
performance objectives specified and approved by the Trustees (or a Committee
thereof) in its sole discretion; provided, however, that Executive's "target
opportunity" and "maximum opportunity" under any such program shall be at
least at the "President level" as in effect under the Company's then
short-term incentive arrangement(s). Executive's short-term incentive
compensation, either in shares of NU or cash, as applicable from time to
time, shall be paid to him, subject to the Board's or the Trustees'
reasonable discretion, not later than such payments are made to the Company's
senior level executives generally.
1.8. Long-Term Incentive Compensation. On and after the Effective Date
and until December 31, 1998, Executive shall participate in the NU Stock
Price Recovery Plan, in accordance with the terms adopted by the Trustees and
NU's Organization, Compensation and Board Affairs Committee on December 21,
1996. If the Employment Term has not previously terminated, beginning on
January 1, 1999, Executive shall also be entitled to participate in any
long-term incentive compensation programs established by the Company for its
senior level executives generally depending upon achievement of certain
business performance objectives specified and approved by the Trustees (or a
Committee thereof) in its sole discretion; provided, however, that
Executive's "target opportunity" and "maximum opportunity" under any such
program shall be at least at the "President level" as in effect under the
Company's then long-term incentive arrangement(s). Executive's long-term
incentive compensation, either in shares of NU or cash, as applicable from
time to time, shall be paid to him, subject to the Board's or the Trustee's
reasonable discretion, not later than such payments are made to the Company's
senior level executives generally. In addition, the Company will grant
Executive $500,000 of restricted NU Common Shares on September 3, 1996. The
restrictions will lapse if Executive is actively employed by the Company when
Millstone Station is removed from the Nuclear Regulatory Commission's
"Watchlist," provided that (i) such removal occurs within three years after
September 3, 1996 and (ii) Seabrook's current level of SALP and INPO ratings
have not materially changed, as determined by the Trustees, in its sole and
reasonable discretion; and, provided, further that in the event Executive is
transferred to a new position with the Company or an Affiliate, as defined in
Section 6.1(a), the restrictions shall lapse immediately.
2. Confidential Information. Executive recognizes and acknowledges
that by reason of his employment by and service to the Company before, during
and, if applicable, after the Employment Term he has had and will continue to
have access to certain confidential and proprietary information relating to
the business of the Company, which may include, but is not limited to, trade
secrets, trade "know-how", customer information, supplier information, cost
and pricing information, marketing and sales techniques, strategies and
programs, computer programs and software and financial information
(collectively referred to as "Confidential Information"). Executive
acknowledges that such Confidential Information is a valuable and unique
asset of the Company and Executive covenants that he will not, unless
expressly authorized in writing by the Board, at any time during the course
of his employment use any Confidential Information or divulge or disclose any
Confidential Information to any person, firm or corporation except in
connection with the performance of his duties for the Company and in a manner
consistent with the Company's policies regarding Confidential Information.
Executive also covenants that at any time after the termination of such
employment, directly or indirectly, he will not use any Confidential
Information or divulge or disclose any Confidential Information to any
person, firm or corporation, unless such information is in the public domain
through no fault of Executive or except when required to do so by a court of
law, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body
(including a committee thereof) with apparent jurisdiction to order him to
divulge, disclose or make accessible such information, in which case
Executive will inform the Company in writing promptly of such required
disclosure, but in any event at least two business days prior to disclosure.
All written Confidential Information (including, without limitation, in any
computer or other electronic format) which comes into Executive's possession
during the course of his employment shall remain the property of the Company.
Except as required in the performance of Executive's duties for the Company,
or unless expressly authorized in writing by the Board, Executive shall not
remove any written Confidential Information from the Company's premises,
except in connection with the performance of his duties for the Company and
in a manner consistent with the Company's policies regarding Confidential
Information. Upon termination of Executive's employment, Executive agrees
immediately to return to the Company all written Confidential Information in
his possession. For the purposes of this Section 2, the term "Company"
shall be deemed to include NU and the Affiliates, as defined in Section
6.1(a), of NU and the Company.
3. Non-Competition; Non-Solicitation.
(a) During his employment by the Company and for a period of two
years after Executive's termination of employment for any reason, within the
Company's "service area," as defined below, Executive will not, except with
the prior written consent of the Board, directly or indirectly, own, manage,
operate, join, control, finance or participate in the ownership, management,
operation, control or financing of, or be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise
with, or use or permit his name to be used in connection with, any business
or enterprise which is engaged in any business that is competitive with any
business or enterprise in which the Company is engaged. For the purposes of
this Section, "service area" shall mean the geographic area within the states
of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and
Vermont, or any other geographic area in which, at the time of Executive's
termination of employment from the Company, the Company is doing business.
Executive acknowledges that the listed service area is the area in which the
Company presently does business.
(b) The foregoing restrictions shall not be construed to prohibit
the ownership by Executive of less than five percent (5%) of any class of
securities of any corporation which is engaged in any of the foregoing
businesses having a class of securities registered pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), provided that such ownership
represents a passive investment and that neither Executive nor any group of
persons including Executive in any way, either directly or indirectly,
manages or exercises control of any such corporation, guarantees any of its
financial obligations, otherwise takes any part in its business, other than
exercising his rights as a shareholder, or seeks to do any of the foregoing.
(c) Executive further covenants and agrees that during his
employment by the Company and for the period of two years thereafter,
Executive will not, directly or indirectly, (i) solicit, divert, take away,
or attempt to solicit, divert or take away, any of the Company's "Principal
Customers," defined for the purposes hereof to include any customer of the
Company, from which $100,000 or more of annual gross revenues are derived at
such time, or (ii) encourage any Principal Customer to reduce its patronage
of the Company.
(d) Executive further covenants and agrees that during his
employment by the Company and for the period of two years thereafter,
Executive will not, directly or indirectly, solicit or hire, or encourage the
solicitation or hiring of, any person who was a managerial or higher level
employee of the Company at any time during the term of Executive's employment
by the Company by any employer other than the Company for any position as an
employee, independent contractor, consultant or otherwise. The foregoing
covenant of Executive shall not apply to any person after 12 months have
elapsed subsequent to the date on which such person's employment by the
Company has terminated.
(e) Nothing herein shall be construed as prohibiting Executive
from serving on Nuclear Advisory Boards or rendering other similar nuclear
advisory or consulting services to other entities.
(f) For the purposes of this Section 3, the term "Company" shall
be deemed to include NU and the Affiliates, as defined in Section 6.1(a), of
NU and the Company.
4. Equitable Relief.
(a) Executive acknowledges and agrees that the restrictions
contained in Sections 2 and 3 are reasonable and necessary to protect and
preserve the legitimate interests, properties, goodwill and business of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by
the Company should Executive breach any of the provisions of those Sections.
Executive represents and acknowledges that (i) he has been advised by the
Company to consult his own legal counsel in respect of this Agreement, and
(ii) that he has had full opportunity, prior to execution of this Agreement,
to review thoroughly this Agreement with his counsel.
(b) Executive further acknowledges and agrees that a breach of any
of the restrictions in Sections 2 and 3 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits
and other benefits arising from any violation of Sections 2 or 3 hereof,
which rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event that any of the
provisions of Sections 2 or 3 hereof should ever be adjudicated to exceed the
time, geographic, service, or other limitations permitted by applicable law
in any jurisdiction, it is the intention of the parties that the provision
shall be amended to the extent of the maximum time, geographic, service, or
other limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication
and that the provision otherwise be enforced to the maximum extent permitted
by law.
(c) If Executive breaches any of his obligations under Sections 2
or 3 hereof, and such breach constitutes "Cause," as defined in Section 5.3
hereof, or would constitute Cause if it had occurred during the Employment
Term on or after the Revision Date, the Company shall thereafter have no
obligation to provide Executive with the Special Retirement Benefit, but
shall remain obligated for other benefits provided in any plans, policies or
practices then applicable to Executive in accordance with the terms thereof.
(d) Executive irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Sections 2 or 3 hereof,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may
be brought in the United States District Court for the District of
Connecticut, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Hartford, Connecticut,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Executive
may have to the laying of venue of any such suit, action or proceeding in any
such court. Executive also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers in a manner
permitted by the notice provisions of Section 10 hereof.
(e) Executive agrees that for a period of five years following the
termination of his employment by the Company he will provide, and that at all
times after the date hereof the Company may similarly provide, a copy of
Sections 2 and 3 hereof to any business or enterprise (i) which he may
directly or indirectly own, manage, operate, finance, join, control or
participate in the ownership, management, operation, financing, or control
of, or (ii) with which he may be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise, or in
connection with which he may use or permit his name to be used; provided,
however, that this provision shall not apply in respect of Section 3 hereof
after expiration of the time periods set forth therein.
(f) For the purposes of this Section 4, the term "Company" shall
be deemed to include NU and the Affiliates, as defined in Section 6.1(a), of
NU and the Company.
5. Termination. The Employment Term shall terminate upon the
occurrence of any one of the following events:
5.1. Disability. The Company may terminate the Employment Term if
Executive is unable substantially to perform his duties and responsibilities
hereunder to the full extent required by the Board by reason of illness,
injury or incapacity for six consecutive months, or for more than six months
in the aggregate during any period of twelve calendar months; provided,
however, that the Company shall continue to pay Executive his Base Salary
until the Company acts to terminate the Employment Term. In addition,
Executive shall be entitled to receive (i) any amounts earned, accrued or
owing but not yet paid under Section 1 above, (ii) any other benefits in
accordance with the terms of any applicable plans and programs of the Company
and (iii) the Special Retirement Benefit Notwithstanding the foregoing, in
the event that Executive's disability occurs prior to September 1, 1999, the
Special Retirement Benefit shall be paid at the level that would be payable
after three years of service, but excluding the $500,000 lump sum payment.
Otherwise, the Company shall have no further liability or obligation to
Executive for compensation under this Agreement. Executive agrees, in the
event of a dispute under this Section 5.1, to submit to a physical
examination by a licensed physician selected by the Board.
5.2. Death. The Employment Term shall terminate in the event of
Executive's death. In such event, the Company shall pay to Executive's
executors, legal representatives or administrators, as applicable, an amount
equal to the installment of his Base Salary set forth in Section 1.4 hereof
for the month in which he dies. In addition, Executive's estate shall be
entitled to receive (i) any other amounts earned, accrued or owing but not
yet paid under Section 1 above and (ii) any other benefits in accordance with
the terms of any applicable plans and programs of the Company. Executive's
surviving spouse, if any, shall also receive the survivor annuity provided
under Executive's Special Retirement Benefit. Notwithstanding the foregoing,
in the event that Executive's death occurs prior to September 1, 1999, the
survivor annuity shall be paid at the level that would be payable after three
years of service, but excluding the $500,000 lump sum payment. Otherwise, the
Company shall have no further liability or obligation under this Agreement to
his executors, legal representatives, administrators, heirs or assigns or any
other person claiming under or through him.
5.3. Cause. The Company may terminate the Employment Term, at any time,
for "cause" upon written notice, in which event all payments under this
Agreement shall cease, except for Base Salary to the extent already accrued,
and, no Special Retirement Benefit shall be due under Section 1.5, but
Executive shall remain entitled to any other benefits in accordance with the
terms of any applicable plans and programs of the Company. For purposes of
this Agreement, Executive's employment may be terminated for "cause" if (i)
Executive is convicted of a felony, (ii) in the reasonable determination of
the Board, Executive has (x) committed an act of fraud, embezzlement, or
theft in connection with Executive's duties in the course of his employment
with the Company, (y) caused intentional, wrongful damage to the property of
the Company or intentionally and wrongfully disclosed Confidential
Information, or (z) engaged in gross misconduct or gross negligence in the
course of his employment with the Company or (iii) Executive materially
breached his obligations under this Agreement and shall not have remedied
such breach within 30 days after receiving written notice from the Board
specifying the details thereof. For purposes of this Agreement, an act or
omission on the part of Executive shall be deemed "intentional" only if it
was not due primarily to an error in judgment or negligence and was done by
Executive not in good faith and without reasonable belief that the act or
omission was in the best interest of the Company.
5.4. Termination Without Cause and Non-Renewal.
(a) The Company may remove Executive, at any time, without cause
from the position in which he is employed hereunder (in which case the
Employment Term shall be deemed to have ended) upon not less than 60 days'
prior written notice to Executive; provided, however, that, in the event that
such notice is given, Executive shall be under no obligation to render any
additional services to the Company and, subject to the provisions of Section
3 hereof, shall be allowed to seek other employment. Upon any such removal
or if the Company informs Executive that the Agreement will not be renewed
after August 31, 1999 or at the end of any subsequent renewal period,
Executive shall be entitled to receive, as liquidated damages for the failure
of the Company to continue to employ Executive, only the amount due to
Executive under the Company's then current severance pay plan for employees.
No other payments or benefits shall be due under this Agreement to Executive,
but Executive shall be entitled to any other benefits in accordance with the
terms of any applicable plans and programs of the Company. Notwithstanding
anything in this Agreement to the contrary, on or after Executive attains age
65, no action by the Company shall be treated as a removal from employment or
non-renewal if on the effective date of such action Executive satisfies all
of the requirements for the executive or high policy-making exception to
applicable provisions of state and federal age discrimination legislation
(b) Notwithstanding the foregoing, in the event that Executive
executes a written release upon such removal or non-renewal, substantially in
the form attached hereto as Annex 1, (the "Release"), of any and all claims
against the Company and all related parties with respect to all matters
arising out of Executive's employment by the Company (other than any
entitlements under the terms of this Agreement or under any other plans or
programs of the Company in which he participated and under which he has
accrued a benefit), or the termination thereof, Executive shall be entitled
to receive, in lieu of the payment described in subsection (a) hereof, which
Executive agrees to waive,
(i) as liquidated damages for the failure of the Company to
continue to employ Executive, a single cash payment, within 30 days after the
effective date of the removal or non-renewal, equal to his Base Compensation,
as defined in Section 6.1(b) below;
(ii) for a period of two years following the end of the
Employment Term, Executive and his spouse and dependents shall be eligible
for a continuation of those Benefit Coverages, as in effect at the time of
such termination or removal, and as the same may be changed from time to
time, as if Executive had been continued in employment during said period or
to receive cash in lieu of such benefits or premiums, as applicable, where
such Benefit Coverages may not be continued (or where such continuation would
adversely affect the tax status of the plan pursuant to which the Benefit
Coverage is provided) under applicable law or regulations;
(iii) any other amounts earned, accrued or owing but not
yet paid under Section 1 above and a payment equal to any unused vacation;
(iv) any other benefits in accordance with the terms of any
applicable plans and programs of the Company including the Special Retirement
Benefit. Notwithstanding the foregoing, in the event that the removal or
non-renewal occurs prior to September 1, 1999, the Special Retirement Benefit
shall be paid at the level that would be payable after three years of
service, but excluding the $500,000 lump sum payment;
(v) as additional consideration for the non-competition and
non-solicitation covenant contained in Section 3, a single cash payment,
within 30 days after the effective date of the removal or non-renewal, equal
to his Base Compensation, as defined in Section 6.1(b) below;
(vi) All stock appreciation rights and restricted stock units
granted to Executive under NU's Stock Price Recovery Plan or stock options or
restricted shares previously granted to Executive, to the extent not already
vested prior to the removal or non-renewal, shall be fully vested and
exercisable or paid as if Executive had remained actively employed by the
Company, including the right of exercise, where appropriate, within 36 months
after the removal or non-renewal; provided, however, that the stock
appreciation rights and restricted stock units shall be paid on a pro rata
basis for the number of completed months in the applicable period for any
such stock appreciation rights or restricted stock units during which
Executive was employed by the Company; and
(vii) Executive, upon retirement, shall be entitled to
participate in the Company's retiree health plan but the amount of cost
sharing under that plan shall be at the maximum level paid by any retiree of
the Company who qualifies for participation in such plan unless Executive, by
reason of his actual years of service, qualifies for a more favorable cost
sharing arrangement under the terms of such plan.
5.5. Voluntary Termination. Executive may voluntarily terminate the
Employment Term upon 30 days' prior written notice for any reason. In such
event, after the effective date of such termination, no further payments
shall be due under this Agreement except that Executive shall be entitled to
any benefits due in accordance with the terms of any applicable plan and
programs of the Company, and unless Executive has completed three years of
service, no Special Retirement Benefit shall be due under Section 1.5.
6. Payments Upon a Change in Control. The provisions of this Section
6 are effective as of the Revision Date.
6.1. Definitions. For all purposes of this Section 6, the following
terms shall have the meanings specified in this Section 6.1 unless the
context otherwise clearly requires:
(a) "Affiliate" shall mean an "affiliate" as defined in Rule 12b-2
of the General Rules and Regulations under the Exchange Act.
(b) "Base Compensation" shall mean Executive's annualized Base
Salary and all short-term incentive compensation at the target level for
Executive (but in no event less than the "President level" in effect on
January 1, 1996), specified under programs established by the Company for its
senior level executives generally, received by Executive in all capacities
with the Company, as would be reported for federal income tax purposes on
Form W-2, together with any and all salary reduction authorized amounts under
any of the Company's benefit plans or programs, for the most recent full
calendar year immediately preceding the calendar year in which occurs
Executive's Termination Date or preceding the Change of Control, if higher.
"Base Compensation" shall not include the value of any stock appreciation
rights or restricted stock units granted to Executive under NU's Stock Price
Recovery Plan.
(c) "Change of Control" shall mean the happening of any of the
following:
(i) When any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than
the Company, its Affiliates, or any Company or NU employee benefit plan
(including any trustee of such plan acting as trustee), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of NU representing more than 20% of the
combined voting power of either (i) the then outstanding shares of common
stock of NU (the "Outstanding Common Stock") or (ii) the then outstanding
voting securities of NU entitled to vote generally in the election of
directors (the "Voting Securities"); or
(ii) Individuals who, as of the beginning of any twenty-four month
period, constitute the Trustees (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Trustees or cease to be able to
exercise the powers of the majority of the Board, provided that any
individual becoming a trustee subsequent to the beginning of such period
whose election or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the trustees then comprising the
Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Trustees of NU
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act); or
(iii) Consummation by NU of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Common Stock and Voting
Securities immediately prior to such Business Combination do not, following
such Business Combination, beneficially own, directly or indirectly, more
than 75% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation, business trust or other entity resulting from or being the
surviving entity in such Business Combination in substantially the same
proportion as their ownership immediately prior to such Business Combination
of the Outstanding Common Stock and Voting Securities, as the case may be; or
(iv) Consummation of a complete liquidation or dissolution of NU or
sale or other disposition of all or substantially all of the assets of NU
other than to a corporation, business trust or other entity with respect to
which, following such sale or disposition, more than 75% of, respectively,
the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Common Stock and Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Common Stock and Voting Securities, as the case may be,
immediately prior to such sale or disposition.
(d) "Termination Date" shall mean the date of receipt of a Notice
of Termination of this Agreement or any later date specified therein.
(e) "Termination of Employment" shall mean the termination of
Executive's actual employment relationship with the Company, including a
failure to renew the Agreement after August 31, 1999 or at the end of any
subsequent renewal period, in either case occasioned by the Company's action.
(f) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company for any reason other than Executive's
(w) disability, as described in Section 5.1 hereof, (x) death, (y) retirement
on or after attaining age 65, or (z) "cause," as defined in Section 5.3
hereof, or (ii) initiated by Executive (A) upon any failure of the Company
materially to comply with and satisfy any of the terms of this Agreement,
including any significant reduction by the Company of the authority, duties
or responsibilities of Executive, any reduction of Executive's compensation
or benefits due hereunder, or the assignment to Executive of duties which are
materially inconsistent with the duties of his position as defined in Section
1.2 above, or (B) if Executive is transferred, without Executive's written
consent, to a location that is more than 50 miles from Executive's principal
place of business immediately preceding the Change of Control.
6.2. Notice of Termination. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto
given in accordance with Section 10 hereof. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) briefly
summarizes the facts and circumstances deemed to provide a basis for a
Termination of Employment and the applicable provision hereof, and (iii) if
the Termination Date is other than the date of receipt of such notice,
specifies the Termination Date (which date shall not be more than 15 days
after the giving of such notice).
6.3. Payments upon Termination. Subject to the provisions of Sections
6.6 and 6.7 hereof, in the event of Executive's Termination upon a Change of
Control, the Company agrees (a) in the event he executes the Release required
by Section 5.4(b), to pay to Executive, in a single cash payment, within
thirty days after the Termination Date, two multiplied by Executive's Base
Compensation and, in addition, all amounts, benefits and Benefit Coverages
described in Section 5.4(b)(ii), (iii), (iv) as amplified by Section 6.4(a),
(v), and (vii) as amplified by Section 6.4(b), provided that in (ii) Benefit
Coverages shall continue for three years instead of two or (b) in the event
he fails or refuses to execute the Release required by Section 5.4(b), to pay
to Executive, in a single payment, within thirty days after the Termination
Date, the amount due under Section 5.4(a) above and, in addition, all other
amounts and benefits described in Section 5.4(a).
6.4. Other Payments, Stock Option and Stock Grants, etc. Subject to the
provisions of Sections 6.6 and 6.7 hereof, in the event of Executive's
Termination upon a Change of Control, and the execution of the Release
required by Section 5.4(b):
(a) Executive shall be entitled to the Special Retirement Benefit.
Notwithstanding the foregoing, in the event that Executive's Termination
upon a Change of Control occurs prior to September 1, 1999, the Special
Retirement Benefit shall be paid at the level that would be payable after
three years of service, but including the $500,000 lump sum payment.
Executive shall determine the form of payment in which the Special Retirement
Benefit shall be paid in accordance with the terms of his previous employer's
plan or the Company's Supplemental Executive Retirement Plan for Officers
(the "Supplemental Plan"), as if the Special Retirement Benefit were due
under that Plan, or, instead, may elect to receive a single sum payment equal
to the then actuarial present value (computed using the 1983 GAM
(50%/Male/50%/ Female) Mortality Table and at an interest rate equal to the
discount rate used in the previous year's FASB 87 accounting for the
Company's Retirement Plan) of the amount of the Special Retirement Benefit.
Payment shall commence or be made within 30 days after the Termination Date
or on any date thereafter, as specified by Executive in a written election.
Such election may be made at any time and amended at any time but any
election or amendment, other than one made within 30 days of the Effective
Date, shall be ineffective if made within six months prior to the Termination
Date. In the absence of any election or determination provided for herein,
the terms of the Special Retirement Benefit shall govern the form and time of
payment.
(b) Executive's years of service with the Company through the 36th
month following the Termination Date shall be taken into account in
determining Executive's cost sharing under the Company's retiree health plan
and, in addition, 36 months shall be added to Executive's age for this
purpose.
(c) On Executive's Termination Date, all stock appreciation rights
and restricted stock units granted to Executive under NU's Stock Price
Recovery Plan or stock options or restricted shares previously granted to
Executive, to the extent not already vested prior to the Termination Date,
shall be fully vested and exercisable or paid as if Executive had remained
actively employed by the Company, including the right of exercise, where
appropriate, within 36 months after the Termination Date and, if the Change
of Control results in the Voting Securities of NU ceasing to be traded on a
national securities exchange or though the national market system of the
National Association of Securities Dealers Inc., the price at which the
rights or units may be exercised shall be the average of the closing prices
for the five trading days preceding the day such Voting Securities cease
trading.
6.5. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future participation in or rights under
any benefit, bonus, incentive or other plan or program provided by the
Company and for which Executive may qualify; provided, however, that if
Executive becomes entitled to and receives all of the payments provided for
in this Agreement, Executive hereby waives his right to receive payments
under any severance plan or similar program applicable to all employees of
the Company.
6.6. Certain Increase in Payments.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Payment"), would constitute an "excess parachute payment"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), Executive shall be paid an additional amount (the
"Gross-Up Payment") such that the net amount retained by Executive after
deduction of any excise tax imposed under Section 4999 of the Code, and any
federal, state and local income and employment tax and excise tax imposed
upon the Gross-Up Payment shall be equal to the Payment. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to
pay federal income tax and employment taxes at the highest marginal rate of
federal income and employment taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Executive's
residence on the Termination Date, net of the maximum reduction in federal
income taxes that may be obtained from the deduction of such state and local
taxes.
(b) All determinations to be made under this Section 6 shall be
made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to the Company and
Executive within 10 days of the Termination Date. Any such determination by
the Accounting Firm shall be binding upon the Company and Executive. Within
five days after the Accounting Firm's determination, the Company shall pay
(or cause to be paid) or distribute (or cause to be distributed) to or for
the benefit of Executive such amounts as are then due to Executive under this
Agreement.
(c) In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of the Payment or Gross-Up
Payment, a change is finally determined to be required in the amount of taxes
paid by Executive, appropriate adjustments shall be made under this Agreement
such that the net amount which is payable to Executive after taking into
account the provisions of Section 4999 of the Code shall reflect the intent
of the parties as expressed in subsection (a) above, in the manner determined
by the Accounting Firm.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above
shall be borne solely by the Company. The Company agrees to indemnify and
hold harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses
resulting from the gross negligence or wilful misconduct of the Accounting
Firm.
6.7 Changes to Sections 6.3 and 6.4. The payments, benefits and other
compensation provided under Sections 6.3 and 6.4 may be revised, in the sole
discretion of the Board, after the expiration of two years following written
notice to Executive of the Board's intention to do so and the changes to be
made; provided, however, that no revision may be made that would reduce the
payments, benefits and other compensation below those provided under Section
5.4 in the event Executive's employment is terminated without cause or this
Agreement is not renewed; and provided, further, that no such notice may be
given and no such revision may become effective following a Change of
Control. Notice under this Section 6.7 shall not constitute a non-renewal or
removal of Executive, nor shall any such actual revision be grounds for a
determination that this Agreement is not being renewed or that Executive has
been removed, for purposes of Section 5.4.
7. Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive's employment
to the extent necessary to the intended preservation of such rights and
obligations.
8. Mitigation. Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain.
9. Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement arising on or after the Revision Date, other
than a dispute in which the primary relief sought is an equitable remedy such
as an injunction, the parties shall be required to have the dispute,
controversy or claim settled by arbitration in the City of Hartford,
Connecticut in accordance with National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected
by the other two arbitrators. Any award entered by the arbitrators shall be
final, binding and nonappealable (except as provided in Section 52-418 of the
Connecticut General Statutes) and judgment may be entered thereon by either
party in accordance with applicable law in any court of competent
jurisdiction. This arbitration provision shall be specifically enforceable.
The arbitrators shall have no authority to modify any provision of this
Agreement or to award a remedy for a dispute involving this Agreement other
than a benefit specifically provided under or by virtue of the Agreement. If
Executive prevails on any material issue which is the subject of such
arbitration or lawsuit, the Company shall be responsible for all of the fees
of the American Arbitration Association and the arbitrators and any expenses
relating to the conduct of the arbitration (including the Company's and
Executive's reasonable attorneys' fees and expenses). Otherwise, each party
shall be responsible for his or its own expenses relating to the conduct of
the arbitration (including reasonable attorneys' fees and expenses) and shall
share the fees of the American Arbitration Association.
10. Notices. All notices and other communications required or
permitted under this Agreement or necessary or convenient in connection
herewith shall be in writing and shall be deemed to have been given when hand
delivered or mailed by registered or certified mail, as follows (provided
that notice of change of address shall be deemed given only when received):
If to the Company, to:
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
Attention: Senior Vice President, Secretary and General Counsel
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Executive, to:
Bruce D. Kenyon
16 Sandpiper Point Road
Old Lyme, Connecticut 06371
With a required copy to:
Shipman & Goodwin
One American Row
Hartford, CT 06103-2819
Attention: Brian Clemow, Esquire
or to such other names or addresses as the Company or Executive, as the case
may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this Section.
11. Contents of Agreement; Amendment and Assignment.
(a) This Agreement sets forth the entire understanding between the
parties hereto with respect to the subject matter hereof and cannot be
changed, modified, extended or terminated except upon written amendment
approved by the Board and executed on its behalf by a duly authorized officer
and by Executive.
(b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and
assigns of the parties hereto, except that the duties and responsibilities of
Executive under this Agreement are of a personal nature and shall not be
assignable or delegatable in whole or in part by Executive. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the extent the Company would be required
to perform if no such succession had taken place.
12. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect any other provision or application of this Agreement which can be
given effect without the invalid or unenforceable provision or application
and shall not invalidate or render unenforceable such provision or
application in any other jurisdiction. If any provision is held void,
invalid or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
13. Remedies Cumulative; No Waiver. No remedy conferred upon a party
by this Agreement is intended to be exclusive of any other remedy, and each
and every such remedy shall be cumulative and shall be in addition to any
other remedy given under this Agreement or now or hereafter existing at law
or in equity. No delay or omission by a party in exercising any right,
remedy or power under this Agreement or existing at law or in equity shall be
construed as a waiver thereof, and any such right, remedy or power may be
exercised by such party from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.
14. Beneficiaries/References. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary
or beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
his incompetence, reference in this Agreement to Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.
15. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the
other counterparts.
16. Withholding. The Company may withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Executive
shall bear all expense of, and be solely responsible for, all federal, state
and local taxes due with respect to any payment received under this
Agreement.
17. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Connecticut without giving effect to any
conflict of laws provisions.
18. Adoption by Affiliates; Obligations. The obligations under this
Agreement shall, in the first instance, be paid and satisfied by the Company;
provided, however, that with respect to those provisions of this Agreement to
be performed during the Employment Term on or after the Revision Date, the
Company will use its best efforts to cause NU and each entity in which NU
(or its successors or assigns) now or hereafter holds, directly or
indirectly, more than a 50 percent voting interest and that has at least
fifty (50) employees on its direct payroll (an "Employer") to approve and
adopt this Agreement and, by such approval and adoption, to be bound by the
terms hereof as though a signatory hereto. With respect to such provisions,
if the Company shall be dissolved or for any other reason shall fail to pay
and satisfy the obligations, each individual Employer shall thereafter shall
be jointly and severally liable to pay and satisfy the obligations to
Executive.
19. Establishment of Trust. The Company may establish an irrevocable
trust fund pursuant to a trust agreement to hold assets to satisfy any of its
obligations under this Agreement. Funding of such trust fund shall be
subject to the Board's discretion, as set forth in the agreement pursuant to
which the fund will be established.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
NORTHEAST UTILITIES
SERVICE COMPANY
By: /s/Bernard M. Fox
/s/Bruce D. Kenyon
Executive
Exhibit 10.41
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of February
1, 1996, by and between Northeast Utilities Service Company, a Connecticut
corporation (the "Company"), with its principal office in Berlin,
Connecticut, and John H. Forsgren, a resident of Lyme, Connecticut
("Executive").
WHEREAS, Executive and the Company desire to enter into an agreement
superseding all prior employment agreements to reflect Executive's
contribution to the Company's business in Executive's executive capacities
and to provide for Executive's continued employment by the Company, upon the
terms and conditions set forth herein:
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment. The Company hereby agrees to employ Executive as its
Executive Vice President and Chief Financial Officer commencing as of
February 1, 1996 and continue the employment of Executive throughout the
Employment Term, as hereinafter defined, and Executive hereby accepts such
employment and agrees to perform Executive's duties and responsibilities, in
accordance with the terms, conditions and provisions hereinafter set forth.
This Agreement terminates and supersedes all prior employment agreements
between the Company and Executive. Certain provisions of this Agreement are
effective only on and after February 25, 1997 (the "Revision Date").
1.1. Employment Term. The term of Executive's employment under this
Agreement shall commence as of February 1, 1996 (the "Effective Date") and
shall continue until December 31, 1998, unless sooner terminated in
accordance with Section 5 or Section 6 hereof, and shall automatically renew
for periods of one year unless one party gives written notice to the other,
at least six months prior to December 31, 1998 or at least six months prior
to the end of any one-year renewal period, that the Agreement shall not be
further extended. The period commencing as of the Effective Date and ending
on the date on which the term of Executive's employment under the Agreement
shall terminate is hereinafter referred to as the "Employment Term".
1.2. Duties and Responsibilities. Executive shall serve in such senior
positions reporting to the Chief Executive Officer as directed by the
Company's Board of Directors (the "Board") or the Board of Trustees (the
"Trustees") of Northeast Utilities ("NU") that provide Executive with duties
and compensation that are substantially equivalent to that of Chief Financial
Officer in terms of duties and responsibilities. During the Employment Term,
Executive shall perform all duties and accept all responsibilities incident
to such positions as may be assigned to Executive by the Board.
1.3. Extent of Service. During the Employment Term, Executive agrees to
use Executive's best efforts to carry out Executive's duties and
responsibilities under Section 1.2 hereof and, consistent with the other
provisions of this Agreement, to devote substantially all Executive's
business time, attention and energy thereto. Except as provided in Section 3
hereof, the foregoing shall not be construed as preventing Executive from
making minority investments in other businesses or enterprises provided that
Executive agrees not to become engaged in any other business activity which,
in the reasonable judgment of the Board, is likely to interfere with
Executive's ability to discharge Executive's duties and responsibilities to
the Company.
1.4. Base Salary. For all the services rendered by Executive hereunder,
the Company shall pay Executive a base salary ("Base Salary"), commencing on
February 1, 1996, of $350,000 per annum, with a going rate of $441,300 for
Executive's salary grade, payable in installments at such times as the
Company customarily pays its other senior level executives (but in any event
no less often than monthly). Executive's Base Salary shall be reviewed
annually for appropriate adjustment (but shall not be reduced below that in
effect on the Revision Date without Executive's written consent) by the
Trustees pursuant to its normal performance review policies for senior level
executives.
1.5. Retirement and Benefit Coverages. During the Employment Term,
Executive shall be entitled to participate in all (a) employee pension and
retirement plans and programs ("Retirement Plans") and (b) welfare benefit
plans and programs ("Benefit Coverages"), in each case made available to the
Company's senior level executives as a group or to its employees generally,
as such Retirement Plans or Benefit Coverages may be in effect from time to
time, including, without limitation, the Company's Supplemental Executive
Retirement Plan for Officers (the "Supplemental Plan"), both as to the
Make-Whole Benefit and the Target Benefit.
1.6. Reimbursement of Expenses; Vacation. Executive shall be provided
with reimbursement of expenses related to Executive's employment by the
Company on a basis no less favorable than that which may be authorized from
time to time for senior level executives as a group, and shall be entitled to
vacation and holidays in accordance with the Company's normal personnel
policies for senior level executives.
1.7. Short-Term Incentive Compensation. If the Employment Term has not
previously terminated, beginning on January 1, 1999, Executive shall be
entitled to participate in any short-term incentive compensation programs
established by the Company for its senior level executives generally
depending upon achievement of certain annual individual or business
performance objectives specified and approved by the Trustees (or a Committee
thereof) in its sole discretion; provided, however, that Executive's "target
opportunity" and "maximum opportunity" under any such program shall be at
least 30 percent and 60 percent, respectively, of the going rate.
Executive's short-term incentive compensation, either in shares of NU or
cash, as applicable from time to time, shall be paid to Executive, subject to
the Board's or the Trustee's reasonable discretion, not later than such
payments are made to the Company's senior level executives generally.
1.8. Long-Term Incentive Compensation. On and after the Effective Date and
until December 31, 1998, Executive shall participate in the NU Stock Price
Recovery Plan, in accordance with the terms adopted by the Trustees and NU's
Organization, Compensation and Board Affairs Committee on December 21, 1996.
If the Employment Term has not previously terminated, beginning on January 1,
1999, Executive shall also be entitled to participate in any long-term
incentive compensation programs established by the Company for its senior
level executives generally depending upon achievement of certain business
performance objectives specified and approved by the Trustees (or a Committee
thereof) in its sole discretion; provided, however, that Executive's "target
opportunity" and "maximum opportunity" under any such program shall be at
least 25 percent and 50 percent, respectively, of the going rate.
Executive's long-term incentive compensation, either in shares of NU or cash,
as applicable from time to time, shall be paid to Executive, subject to the
Board's or the Trustee's reasonable discretion, not later than such payments
are made to the Company's senior level executives generally.
1.9 Restricted Stock Award. Executive will receive $100,000 in value of NU
shares following commencement of the Employment Term, restricted as to
transfer until January 1, 1999. Dividends on such shares shall be subject to
the same restriction.
2. Confidential Information. Executive recognizes and acknowledges that by
reason of Executive's employment by and service to the Company before, during
and, if applicable, after the Employment Term Executive has had and will
continue to have access to certain confidential and proprietary information
relating to the business of the Company, which may include, but is not
limited to, trade secrets, trade "know-how", customer information, supplier
information, cost and pricing information, marketing and sales techniques,
strategies and programs, computer programs and software and financial
information (collectively referred to as "Confidential Information").
Executive acknowledges that such Confidential Information is a valuable and
unique asset of the Company and Executive covenants that Executive will not,
unless expressly authorized in writing by the Board, at any time during the
course of Executive's employment use any Confidential Information or divulge
or disclose any Confidential Information to any person, firm or corporation
except in connection with the performance of Executive's duties for the
Company and in a manner consistent with the Company's policies regarding
Confidential Information. Executive also covenants that at any time after
the termination of such employment, directly or indirectly, Executive will
not use any Confidential Information or divulge or disclose any Confidential
Information to any person, firm or corporation, unless such information is in
the public domain through no fault of Executive or except when required to do
so by a court of law, by any governmental agency having supervisory authority
over the business of the Company or by any administrative or legislative body
(including a committee thereof) with apparent jurisdiction to order
Executive to divulge, disclose or make accessible such information, in which
case Executive will inform the Company in writing promptly of such required
disclosure, but in any event at least two business days prior to disclosure.
All written Confidential Information (including, without limitation, in any
computer or other electronic format) which comes into Executive's possession
during the course of Executive's employment shall remain the property of the
Company. Except as required in the performance of Executive's duties for the
Company, or unless expressly authorized in writing by the Board, Executive
shall not remove any written Confidential Information from the Company's
premises, except in connection with the performance of Executive's duties for
the Company and in a manner consistent with the Company's policies regarding
Confidential Information. Upon termination of Executive's employment,
Executive agrees immediately to return to the Company all written
Confidential Information in Executive's possession. For the purposes of
this Section 2, the term "Company" shall be deemed to include NU and the
Affiliates, as defined in Section 6.1(a), of NU and the Company.
3. Non-Competition; Non-Solicitation.
(a) During Executive's employment by the Company and for a period of
two years after Executive's termination of employment for any reason, within
the Company's "service area," as defined below, Executive will not, except
with the prior written consent of the Board, directly or indirectly, own,
manage, operate, join, control, finance or participate in the ownership,
management, operation, control or financing of, or be connected as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise with, or use or permit Executive's name to be used in
connection with, any business or enterprise which is engaged in any business
that is competitive with any business or enterprise in which the Company is
engaged. For the purposes of this Section, "service area" shall mean the
geographic area within the states of Connecticut, Maine, Massachusetts, New
Hampshire, Rhode Island, and Vermont, or any other geographic area in which,
at the time of Executive's termination of employment from the Company, the
Company is doing business. Executive acknowledges that the listed service
area is the area in which the Company presently does business.
(b) The foregoing restrictions shall not be construed to prohibit
the ownership by Executive of less than five percent (5%) of any class of
securities of any corporation which is engaged in any of the foregoing
businesses having a class of securities registered pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), provided that such ownership
represents a passive investment and that neither Executive nor any group of
persons including Executive in any way, either directly or indirectly,
manages or exercises control of any such corporation, guarantees any of its
financial obligations, otherwise takes any part in its business, other than
exercising Executive's rights as a shareholder, or seeks to do any of the
foregoing.
(c) Executive further covenants and agrees that during Executive's
employment by the Company and for the period of two years thereafter,
Executive will not, directly or indirectly, (i) solicit, divert, take away,
or attempt to solicit, divert or take away, any of the Company's "Principal
Customers," defined for the purposes hereof to include any customer of the
Company, from which $100,000 or more of annual gross revenues are derived at
such time, or (ii) encourage any Principal Customer to reduce its patronage
of the Company.
(d) Executive further covenants and agrees that during Executive's
employment by the Company and for the period of two years thereafter,
Executive will not, directly or indirectly, solicit or hire, or encourage the
solicitation or hiring of, any person who was a managerial or higher level
employee of the Company at any time during the term of Executive's employment
by the Company by any employer other than the Company for any position as an
employee, independent contractor, consultant or otherwise. The foregoing
covenant of Executive shall not apply to any person after 12 months have
elapsed subsequent to the date on which such person's employment by the
Company has terminated.
(e) Nothing in this Section 3 shall be construed to prohibit
Executive, if Executive is a lawyer, from being connected as a partner,
principal, shareholder, associate, counsel or otherwise with another lawyer
or a law firm which performs services for clients engaged in any business or
enterprise that is competitive with any business or enterprise in which the
Company is engaged, provided that Executive is not personally involved,
directly or indirectly, in performing services for any such clients during
the period specified in Section 3(a) and provided further that such lawyer or
law firm takes reasonable precautions to screen Executive from participating
for the period specified in Section 3(a) in the representation of any such
clients. The parties agree that any such personal performance of services by
Executive for any such clients during such period would create an
unreasonable risk of violation by Executive of the provisions of Section 2 of
this Agreement, and Executive agrees (and the Company may elect) to notify in
writing any lawyer or law firm with which Executive may be connected during
the period specified in Section 3(a) of Executive's Agreement as set forth
herein. The parties further agree that, in addition to the nondisclosure
obligations of Section 2 of this Agreement, Executive remains subject to all
ethical obligations relating to confidentiality of information to the extent
that Executive acted as a lawyer for the Company, but Executive's knowledge
of such confidential information shall not be imputed to such other lawyer or
law firm with which Executive subsequently may become connected. Executive
agrees to notify the Company in writing in advance of the precautions to be
taken by such lawyer or law firm to screen Executive from any representation
of such competing client of such lawyer or law firm.
(f) For the purposes of this Section 3, the term "Company" shall
be deemed to include NU and the Affiliates, as defined in Section 6.1(a), of
NU and the Company.
4. Equitable Relief.
(a) Executive acknowledges and agrees that the restrictions
contained in Sections 2 and 3 are reasonable and necessary to protect and
preserve the legitimate interests, properties, goodwill and business of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by
the Company should Executive breach any of the provisions of those Sections.
Executive represents and acknowledges that (i) Executive has been advised by
the Company to consult Executive's own legal counsel in respect of this
Agreement, and (ii) that Executive has had full opportunity, prior to
execution of this Agreement, to review thoroughly this Agreement with
Executive's counsel.
(b) Executive further acknowledges and agrees that a breach of any
of the restrictions in Sections 2 and 3 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits
and other benefits arising from any violation of Sections 2 or 3 hereof,
which rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event that any of the
provisions of Sections 2 or 3 hereof should ever be adjudicated to exceed the
time, geographic, service, or other limitations permitted by applicable law
in any jurisdiction, it is the intention of the parties that the provision
shall be amended to the extent of the maximum time, geographic, service, or
other limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication
and that the provision otherwise be enforced to the maximum extent permitted
by law.
(c) If Executive breaches any of Executive's obligations under
Sections 2 or 3 hereof, and such breach constitutes "Cause," as defined in
Section 5.3 hereof, or would constitute Cause if it had occurred during the
Employment Term on or after the Revision Date, the Company shall thereafter
have no Target Benefit obligation pursuant to the Supplemental Plan, but
shall remain obligated for the Make-Whole Benefit under the Supplemental
Plan, but only to the extent not modified by the terms of this Agreement, and
compensation and other benefits provided in any plans, policies or practices
then applicable to Executive in accordance with the terms thereof.
(d) Executive irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Sections 2 or 3 hereof,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may
be brought in the United States District Court for the District of
Connecticut, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Hartford, Connecticut,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Executive
may have to the laying of venue of any such suit, action or proceeding in any
such court. Executive also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers in a manner
permitted by the notice provisions of Section 10 hereof.
(e) Executive agrees that for a period of five years following the
termination of Executive's employment by the Company Executive will provide,
and that at all times after the date hereof the Company may similarly
provide, a copy of Sections 2 and 3 hereof to any business or enterprise (i)
which Executive may directly or indirectly own, manage, operate, finance,
join, control or participate in the ownership, management, operation,
financing, or control of, or (ii) with which Executive may be connected as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise, or in connection with which Executive may use or
permit Executive's name to be used; provided, however, that this provision
shall not apply in respect of Section 3 hereof after expiration of the time
periods set forth therein.
(f) For the purposes of this Section 4, the term "Company" shall
be deemed to include NU and the Affiliates, as defined in Section 6.1(a), of
NU and the Company.
5. Termination. The Employment Term shall terminate upon the
occurrence of any one of the following events:
5.1. Disability. The Company may terminate the Employment Term if
Executive is unable substantially to perform Executive's duties and
responsibilities hereunder to the full extent required by the Board by reason
of illness, injury or incapacity for six consecutive months, or for more than
six months in the aggregate during any period of twelve calendar months;
provided, however, that the Company shall continue to pay Executive's Base
Salary until the Company acts to terminate the Employment Term. In addition,
Executive shall be entitled to receive (i) any amounts earned, accrued or
owing but not yet paid under Section 1 above and (ii) any other benefits in
accordance with the terms of any applicable plans and programs of the
Company. Otherwise, the Company shall have no further liability or
obligation to Executive for compensation under this Agreement. Executive
agrees, in the event of a dispute under this Section 5.1, to submit to a
physical examination by a licensed physician selected by the Board.
5.2. Death. The Employment Term shall terminate in the event of
Executive's death. In such event, the Company shall pay to Executive's
executors, legal representatives or administrators, as applicable, an amount
equal to the installment of Executive's Base Salary set forth in Section 1.4
hereof for the month in which Executive dies. In addition, Executive's
estate shall be entitled to receive (i) any other amounts earned, accrued or
owing but not yet paid under Section 1 above and (ii) any other benefits in
accordance with the terms of any applicable plans and programs of the
Company. Otherwise, the Company shall have no further liability or
obligation under this Agreement to Executive's executors, legal
representatives, administrators, heirs or assigns or any other person
claiming under or through Executive.
5.3. Cause. The Company may terminate the Employment Term, at any time, for
"cause" upon written notice, in which event all payments under this Agreement
shall cease, except for Base Salary to the extent already accrued, and no
Target Benefit shall be due under the Supplemental Plan, but Executive shall
remain entitled to the Make-Whole Benefit under the Supplemental Plan, but
only to the extent not modified by the terms of this Agreement, and any other
benefits in accordance with the terms of any applicable plans and programs of
the Company. For purposes of this Agreement, Executive's employment may be
terminated for "cause" if (i) Executive is convicted of a felony, (ii) in the
reasonable determination of the Board, Executive has (x) committed an act of
fraud, embezzlement, or theft in connection with Executive's duties in the
course of Executive's employment with the Company, (y) caused intentional,
wrongful damage to the property of the Company or intentionally and
wrongfully disclosed Confidential Information, or (z) engaged in gross
misconduct or gross negligence in the course of Executive's employment with
the Company or (iii) Executive materially breached Executive's obligations
under this Agreement and shall not have remedied such breach within 30 days
after receiving written notice from the Board specifying the details thereof.
For purposes of this Agreement, an act or omission on the part of Executive
shall be deemed "intentional" only if it was not due primarily to an error in
judgment or negligence and was done by Executive not in good faith and
without reasonable belief that the act or omission was in the best interest
of the Company.
5.4. Termination Without Cause and Non-Renewal.
(a) The Company may remove Executive, at any time, without cause from
the position in which Executive is employed hereunder (in which case the
Employment Term shall be deemed to have ended) upon not less than 60 days'
prior written notice to Executive; provided, however, that, in the event that
such notice is given, Executive shall be under no obligation to render any
additional services to the Company and, subject to the provisions of Section
3 hereof, shall be allowed to seek other employment. Upon any such removal
or if the Company informs Executive that the Agreement will not be renewed
after December 31, 1998 or at the end of any subsequent renewal period,
Executive shall be entitled to receive, as liquidated damages for the failure
of the Company to continue to employ Executive, only the amount due to
Executive under the Company's then current severance pay plan for employees.
No other payments or benefits shall be due under this Agreement to Executive,
but Executive shall be entitled to any other benefits in accordance with the
terms of any applicable plans and programs of the Company. Notwithstanding
anything in this Agreement to the contrary, on or after Executive attains age
65, no action by the Company shall be treated as a removal from employment or
non-renewal if on the effective date of such action Executive satisfies all
of the requirements for the executive or high policy-making exception to
applicable provisions of state and federal age discrimination legislation.
(b) Notwithstanding the foregoing, in the event that Executive
executes a written release upon such removal or non-renewal, substantially in
the form attached hereto as Annex 1, (the "Release"), of any and all claims
against the Company and all related parties with respect to all matters
arising out of Executive's employment by the Company (other than any
entitlements under the terms of this Agreement or under any other plans or
programs of the Company in which Executive participated and under which
Executive has accrued a benefit), or the termination thereof, Executive shall
be entitled to receive, in lieu of the payment described in subsection (a)
hereof, which Executive agrees to waive,
(i) as liquidated damages for the failure of the Company to
continue to employ Executive, a single cash payment, within 30 days after the
effective date of the removal or non-renewal, equal to Executive's Base
Compensation, as defined in Section 6.1(a) below, which shall not constitute
a "severance benefit" to Executive for purposes of the Target Benefit under
the Supplemental Plan;
(ii) for a period of two years following the end of the
Employment Term, Executive and Executive's spouse and dependents shall be
eligible for a continuation of those Benefit Coverages, as in effect at the
time of such termination or removal, and as the same may be changed from time
to time, as if Executive had been continued in employment during said period
or to receive cash in lieu of such benefits or premiums, as applicable, where
such Benefit Coverages may not be continued (or where such continuation would
adversely affect the tax status of the plan pursuant to which the Benefit
Coverage is provided) under applicable law or regulations;
(iii) any other amounts earned, accrued or owing but not yet
paid under Section 1 above;
(iv) any other benefits in accordance with the terms of any
applicable plans and programs of the Company and a payment equal to any
unused vacation;
(v) as additional consideration for the non-competition and
non-solicitation covenant contained in Section 3, a single cash payment,
within 30 days after the effective date of the removal or non-renewal, equal
to Executive's Base Compensation, as defined in Section 6.1(a) below, which
shall not constitute a "severance benefit" to Executive for purposes of the
Target Benefit under the Supplemental Plan;
(vi) Executive's years of service with the Company through the
24th month following the Termination Date shall be taken into account in
determining the amount of, and eligibility for, the Target Benefit and
Make-Whole Benefit under the Supplemental Plan and 24 months shall be added
to Executive's age for purposes of determining Executive's eligibility for
both such Benefits and the actuarial reduction under the Plan; and
(vii) All stock appreciation rights and restricted stock
units granted to Executive under NU's Stock Price Recovery Plan or stock
options or restricted shares previously granted to Executive, to the extent
not already vested prior to the removal or non-renewal, shall be fully vested
and exercisable or paid as if Executive had remained actively employed by the
Company, including the right of exercise, where appropriate, within 36 months
after the removal or non-renewal; provided, however, that the stock
appreciation rights and restricted stock units shall be paid on a pro rata
basis for the number of completed months in the applicable period for any
such stock appreciation rights or restricted stock units during which
Executive was employed by the Company.
5.5. Voluntary Termination. Executive may voluntarily terminate the
Employment Term upon 30 days' prior written notice for any reason. In such
event, after the effective date of such termination, no further payments
shall be due under this Agreement except that Executive shall be entitled to
any benefits due in accordance with the terms of any applicable plan and
programs of the Company.
6. Payments Upon a Change in Control. The provisions of this Section
6 are effective as of the Revision Date.
6.1. Definitions. For all purposes of this Section 6, the following
terms shall have the meanings specified in this Section 6.1 unless the
context otherwise clearly requires:
(a) "Affiliate" shall mean an "affiliate" as defined in Rule 12b-2
of the General Rules and Regulations under the Exchange Act.
(b) "Base Compensation" shall mean Executive's annualized Base
Salary and all short-term incentive compensation at the target level for
Executive (but in no event less than 30 percent of going rate), specified
under programs established by the Company for its senior level executives
generally, received by Executive in all capacities with the Company, as would
be reported for federal income tax purposes on Form W-2, together with any
and all salary reduction authorized amounts under any of the Company's
benefit plans or programs, for the most recent full calendar year immediately
preceding the calendar year in which occurs Executive's Termination Date or
preceding the Change of Control, if higher. "Base Compensation" shall not
include the value of any stock appreciation rights or restricted stock units
granted to Executive under NU's Stock Price Recovery Plan.
(c) "Change of Control" shall mean the happening of any of the
following:
(i) When any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than
the Company, its Affiliates, or any Company or NU employee benefit plan
(including any trustee of such plan acting as trustee), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of NU representing more than 20% of the
combined voting power of either (i) the then outstanding shares of common
stock of NU (the "Outstanding Common Stock") or (ii) the then outstanding
voting securities of NU entitled to vote generally in the election of
directors (the "Voting Securities"); or
(ii) Individuals who, as of the beginning of any twenty-four month
period, constitute the Trustees (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Trustees or cease to be able to
exercise the powers of the majority of the Board, provided that any
individual becoming a trustee subsequent to the beginning of such period
whose election or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the trustees then comprising the
Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Trustees of NU
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act); or
(iii) Consummation by NU of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Common Stock and Voting
Securities immediately prior to such Business Combination do not, following
such Business Combination, beneficially own, directly or indirectly, more
than 75% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation, business trust or other entity resulting from or being the
surviving entity in such Business Combination in substantially the same
proportion as their ownership immediately prior to such Business Combination
of the Outstanding Common Stock and Voting Securities, as the case may be; or
(iv) Consummation of a complete liquidation or dissolution of NU or sale
or other disposition of all or substantially all of the assets of NU other
than to a corporation, business trust or other entity with respect to which,
following such sale or disposition, more than 75% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Common Stock and
Voting Securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the Outstanding
Common Stock and Voting Securities, as the case may be, immediately prior to
such sale or disposition.
(d) "Termination Date" shall mean the date of receipt of a Notice of
Termination of this Agreement or any later date specified therein.
(e) "Termination of Employment" shall mean the termination of
Executive's actual employment relationship with the Company, including a
failure to renew the Agreement after December 31, 1998 or at the end of any
subsequent renewal period, in either case occasioned by the Company's action.
(f) "Termination upon a Change of Control" shall mean a Termination of
Employment upon or within two years after a Change of Control either:
(i) initiated by the Company for any reason other than
Executive's (w) disability, as described in Section 5.1 hereof, (x) death,
(y) retirement on or after attaining age 65, or (z) "cause," as defined in
Section 5.3 hereof, or (ii) initiated by Executive (A) upon any failure of
the Company materially to comply with and satisfy any of the terms of this
Agreement, including any significant reduction by the Company of the
authority, duties or responsibilities of Executive, any reduction of
Executive's compensation or benefits due hereunder, or the assignment to
Executive of duties which are materially inconsistent with the duties of
Executive's position as defined in Section 1.2 above, or (B) if Executive is
transferred, without Executive's written consent, to a location that is more
than 50 miles from Executive's principal place of business immediately
preceding the Change of Control.
6.2. Notice of Termination. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto
given in accordance with Section 10 hereof. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) briefly
summarizes the facts and circumstances deemed to provide a basis for a
Termination of Employment and the applicable provision hereof, and (iii) if
the Termination Date is other than the date of receipt of such notice,
specifies the Termination Date (which date shall not be more than 15 days
after the giving of such notice).
6.3. Payments upon Termination. Subject to the provisions of Sections
6.6 and 6.7 hereof, in the event of Executive's Termination upon a Change of
Control, the Company agrees (a) in the event Executive executes the Release
required by Section 5.4(b), to pay to Executive, in a single cash payment,
within thirty days after the Termination Date, two multiplied by Executive's
Base Compensation and, in addition, all amounts, benefits and Benefit
Coverages described in Section 5.4(b)(ii), (iii), (iv) and (v), provided that
in (ii) Benefit Coverages shall continue for three years instead of two, or
(b) in the event Executive fails or refuses to execute the Release required
by Section 5.4(b), to pay to Executive, in a single cash payment, within
thirty days after the Termination Date, the amount due under Section 5.4(a)
above and, in addition, all other amounts and benefits described in Section
5.4(a).
6.4. Other Payments, Supplemental Plan, Stock Option and Stock Grants,
etc. Subject to the provisions of Sections 6.6 and 6.7 hereof, in the event
of Executive's Termination upon a Change of Control, and the execution of the
Release required by Section 5.4(b):
(a) Under the Supplemental Plan, Executive shall be entitled to a
Target Benefit and a Make-Whole Benefit commencing as provided below with an
actuarial reduction in the event the Target Benefit and Make-Whole Benefit
commence prior to age 65 (age 60 if Executive has attained age 60 and
completed at least 30 years of service at the Termination Date), whether or
not Executive is then age 60 and notwithstanding the Plan's requirement that
a participant retire on or after age 60 and be entitled to a vested benefit
under the Company's Retirement Plan. The actuarial reduction shall be 2% for
each year younger than age 65 to age 60, if applicable, 3% for each year
younger than age 60 to age 55 and a full actuarial reduction, as determined
by the enrolled actuary for the Retirement Plan, for each year younger than
55. Executive's years of service with the Company through the 36th month
following the Termination Date shall be taken into account in determining the
amount of the Target Benefit and Make-Whole Benefit and 36 months shall be
added to Executive's age for purposes of determining Executive's eligibility
for both such Benefits and the actuarial reduction under the Plan as modified
herein. Executive shall determine the form of payment in which the Target
Benefit and Make-Whole Benefit shall be paid, in accordance with the terms of
the Supplemental Plan or may elect to receive a single sum payment equal to
the then actuarial present value (computed using the 1983 GAM (50%/Male/50%/
Female) Mortality Table and at an interest rate equal to the discount rate
used in the Retirement Plan's previous year's FASB 87 accounting) of the
amount of the Target Benefit and Make-Whole Benefit as determined in
accordance with the first three sentences of this subsection (a). Payment
shall commence or be made within 30 days after the Termination Date or on any
date thereafter, as specified by Executive in a written election. Such
election may be made at any time and amended at any time but any election or
amendment, other than one made within 30 days of the Effective Date, shall be
ineffective if made within six months prior to the Termination Date. In the
absence of any election or determination provided for herein, the terms of
the Supplemental Plan shall govern the form and time of payment.
(b) Executive's years of service with the Company through the 36th
month following the Termination Date shall be taken into account in
determining Executive's eligibility for, but not amount of cost sharing
under, the Company's retiree health plan and, in addition, 36 months shall be
added to Executive's age for this purpose.
(c) On Executive's Termination Date, all stock appreciation rights
and restricted stock units granted to Executive under NU's Stock Price
Recovery Plan or stock options or restricted shares previously granted to
Executive, to the extent not already vested prior to the Termination Date,
shall be fully vested and exercisable or paid as if Executive had remained
actively employed by the Company, including the right of exercise, where
appropriate, within 36 months after the Termination Date and, if the Change
of Control results in the Voting Securities of NU ceasing to be traded on a
national securities exchange or though the national market system of the
National Association of Securities Dealers Inc., the price at which the
rights or units may be exercised shall be the average of the closing prices
for the five trading days preceding the day such Voting Securities cease
trading.
6.5. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future participation in or rights under
any benefit, bonus, incentive or other plan or program provided by the
Company and for which Executive may qualify; provided, however, that if
Executive becomes entitled to and receives all of the payments provided for
in this Agreement, Executive hereby waives Executive's right to receive
payments under any severance plan or similar program applicable to all
employees of the Company.
6.6. Certain Increase in Payments.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Payment"), would constitute an "excess parachute payment"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), Executive shall be paid an additional amount (the
"Gross-Up Payment") such that the net amount retained by Executive after
deduction of any excise tax imposed under Section 4999 of the Code, and any
federal, state and local income and employment tax and excise tax imposed
upon the Gross-Up Payment shall be equal to the Payment. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to
pay federal income tax and employment taxes at the highest marginal rate of
federal income and employment taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Executive's
residence on the Termination Date, net of the maximum reduction in federal
income taxes that may be obtained from the deduction of such state and local
taxes.
(b) All determinations to be made under this Section 6 shall be
made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to the Company and
Executive within 10 days of the Termination Date. Any such determination by
the Accounting Firm shall be binding upon the Company and Executive. Within
five days after the Accounting Firm's determination, the Company shall pay
(or cause to be paid) or distribute (or cause to be distributed) to or for
the benefit of Executive such amounts as are then due to Executive under this
Agreement.
(c) In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of the Payment or Gross-Up
Payment, a change is finally determined to be required in the amount of taxes
paid by Executive, appropriate adjustments shall be made under this Agreement
such that the net amount which is payable to Executive after taking into
account the provisions of Section 4999 of the Code shall reflect the intent
of the parties as expressed in subsection (a) above, in the manner determined
by the Accounting Firm.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above
shall be borne solely by the Company. The Company agrees to indemnify and
hold harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses
resulting from the gross negligence or wilful misconduct of the Accounting
Firm.
6.7 Changes to Sections 6.3 and 6.4. The payments, benefits and other
compensation provided under Sections 6.3 and 6.4 may be revised, in the sole
discretion of the Board, after the expiration of two years following written
notice to Executive of the Board's intention to do so and the changes to be
made; provided, however, that no revision may be made that would reduce the
payments, benefits and other compensation below those provided under Section
5.4 in the event Executive's employment is terminated without cause or this
Agreement is not renewed; and provided, further, that no such notice may be
given and no such revision may become effective following a Change of
Control. Notice under this Section 6.7 shall not constitute a non-renewal or
removal of Executive, nor shall any such actual revision be grounds for a
determination that this Agreement is not being renewed or that Executive has
been removed, for purposes of Section 5.4.
7. Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive's employment
to the extent necessary to the intended preservation of such rights and
obligations.
8. Mitigation. Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that Executive may obtain.
9. Arbitration; Expenses. In the event of any dispute under the provisions
of this Agreement arising on or after the Revision Date, other than a dispute
in which the primary relief sought is an equitable remedy such as an
injunction, the parties shall be required to have the dispute, controversy or
claim settled by arbitration in the City of Hartford, Connecticut in
accordance with National Rules for the Resolution of Employment Disputes then
in effect of the American Arbitration Association, before a panel of three
arbitrators, two of whom shall be selected by the Company and Executive,
respectively, and the third of whom shall be selected by the other two
arbitrators. Any award entered by the arbitrators shall be final, binding
and nonappealable (except as provided in Section 52-418 of the Connecticut
General Statutes) and judgment may be entered thereon by either party in
accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrators
shall have no authority to modify any provision of this Agreement or to award
a remedy for a dispute involving this Agreement other than a benefit
specifically provided under or by virtue of the Agreement. If Executive
prevails on any material issue which is the subject of such arbitration or
lawsuit, the Company shall be responsible for all of the fees of the American
Arbitration Association and the arbitrators and any expenses relating to the
conduct of the arbitration (including the Company's and Executive's
reasonable attorneys' fees and expenses). Otherwise, each party shall be
responsible for its own expenses relating to the conduct of the arbitration
(including reasonable attorneys' fees and expenses) and shall share the fees
of the American Arbitration Association.
10. Notices. All notices and other communications required or
permitted under this Agreement or necessary or convenient in connection
herewith shall be in writing and shall be deemed to have been given when hand
delivered or mailed by registered or certified mail, as follows (provided
that notice of change of address shall be deemed given only when received):
If to the Company, to:
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
Attention: Vice President, Secretary and General Counsel
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Executive, to:
John H. Forsgren
86-2 Joshuatown Road
Lyme, CT 06371
With a required copy to:
Shipman & Goodwin
One American Row
Hartford, CT 06103-2819
Attention: Brian Clemow, Esquire
or to such other names or addresses as the Company or Executive, as the case
may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this Section.
11. Contents of Agreement; Amendment and Assignment.
(a) This Agreement sets forth the entire understanding between the
parties hereto with respect to the subject matter hereof and cannot be
changed, modified, extended or terminated except upon written amendment
approved by the Board and executed on its behalf by a duly authorized officer
and by Executive.
(b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and
assigns of the parties hereto, except that the duties and responsibilities of
Executive under this Agreement are of a personal nature and shall not be
assignable or delegatable in whole or in part by Executive. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the extent the Company would be required
to perform if no such succession had taken place.
12. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect any other provision or application of this Agreement which can be
given effect without the invalid or unenforceable provision or application
and shall not invalidate or render unenforceable such provision or
application in any other jurisdiction. If any provision is held void,
invalid or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
13. Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or
power under this Agreement or existing at law or in equity shall be construed
as a waiver thereof, and any such right, remedy or power may be exercised by
such party from time to time and as often as may be deemed expedient or
necessary by such party in its sole discretion.
14. Beneficiaries/References. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary
or beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
Executive's incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive's beneficiary, estate or
other legal representative.
15. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the
other counterparts.
16. Withholding. The Company may withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Executive
shall bear all expense of, and be solely responsible for, all federal, state
and local taxes due with respect to any payment received under this
Agreement.
17. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Connecticut without giving effect to any
conflict of laws provisions.
18. Adoption by Affiliates; Obligations. The obligations under this
Agreement shall, in the first instance, be paid and satisfied by the Company;
provided, however, that with respect to those provisions of this Agreement to
be performed during the Employment Term on or after the Revision Date, the
Company will use its best efforts to cause NU and each entity in which NU
(or its successors or assigns) now or hereafter holds, directly or
indirectly, more than a 50 percent voting interest and that has at least
fifty (50) employees on its direct payroll (an "Employer") to approve and
adopt this Agreement and, by such approval and adoption, to be bound by the
terms hereof as though a signatory hereto. With respect to such provisions,
if the Company shall be dissolved or for any other reason shall fail to pay
and satisfy the obligations, each individual Employer shall thereafter shall
be jointly and severally liable to pay and satisfy the obligations to
Executive.
19. Establishment of Trust. The Company may establish an irrevocable
trust fund pursuant to a trust agreement to hold assets to satisfy any of its
obligations under this Agreement. Funding of such trust fund shall be
subject to the Board's discretion, as set forth in the agreement pursuant to
which the fund will be established.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
NORTHEAST UTILITIES
SERVICE COMPANY
By: /s/Bernard M. Fox
By:/s/John H. Forsgren
Executive
Exhibit 10.42
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of February
25, 1997, by and between Northeast Utilities Service Company, a Connecticut
corporation (the "Company"), with its principal office in Berlin,
Connecticut, and Hugh C. MacKenzie, a resident of Madison, Connecticut
("Executive").
WHEREAS, Executive is currently employed as the President - Retail
Business Group of the Company and both parties desire to enter into an
agreement to reflect Executive's contribution to the Company's business in
Executive's executive capacities and to provide for Executive's continued
employment by the Company, upon the terms and conditions set forth herein:
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment. The Company hereby agrees to continue the employment
of Executive, and Executive hereby accepts such employment and agrees to
perform Executive's duties and responsibilities, in accordance with the
terms, conditions and provisions hereinafter set forth.
1.1. Employment Term. The term of Executive's employment under this
Agreement shall commence as of the date hereof (the "Effective Date") and
shall continue until December 31, 1998, unless sooner terminated in
accordance with Section 5 or Section 6 hereof, and shall automatically renew
for periods of one year unless one party gives written notice to the other,
at least six months prior to December 31, 1998 or at least six months prior
to the end of any one-year renewal period, that the Agreement shall not be
further extended. The period commencing as of the Effective Date and ending
on the date on which the term of Executive's employment under the Agreement
shall terminate is hereinafter referred to as the "Employment Term".
1.2. Duties and Responsibilities. Executive shall serve in such senior
positions as directed by the Company's Board of Directors (the "Board") or
the Board of Trustees (the "Trustees") of Northeast Utilities ("NU") that
provide Executive with duties and compensation that are substantially
equivalent to Executive's current position in terms of duties and
responsibilities. During the Employment Term, Executive shall perform all
duties and accept all responsibilities incident to such positions as may be
assigned to Executive by the Board.
1.3. Extent of Service. During the Employment Term, Executive agrees to
use Executive's best efforts to carry out Executive's duties and
responsibilities under Section 1.2 hereof and, consistent with the other
provisions of this Agreement, to devote substantially all Executive's
business time, attention and energy thereto. Except as provided in Section 3
hereof, the foregoing shall not be construed as preventing Executive from
making minority investments in other businesses or enterprises provided that
Executive agrees not to become engaged in any other business activity which,
in the reasonable judgment of the Board, is likely to interfere with
Executive's ability to discharge Executive's duties and responsibilities to
the Company.
1.4. Base Salary. For all the services rendered by Executive hereunder,
the Company shall pay Executive a base salary ("Base Salary"), commencing on
the Effective Date, at the annual rate then being paid to Executive by the
Company, payable in installments at such times as the Company customarily
pays its other senior level executives (but in any event no less often than
monthly). Executive's Base Salary shall be reviewed annually for appropriate
adjustment (but shall not be reduced below that in effect on the Effective
Date without Executive's written consent) by the Trustees pursuant to its
normal performance review policies for senior level executives.
1.5. Retirement and Benefit Coverages. During the Employment Term,
Executive shall be entitled to participate in all (a) employee pension and
retirement plans and programs ("Retirement Plans") and (b) welfare benefit
plans and programs ("Benefit Coverages"), in each case made available to the
Company's senior level executives as a group or to its employees generally,
as such Retirement Plans or Benefit Coverages may be in effect from time to
time, including, without limitation, the Company's Supplemental Executive
Retirement Plan for Officers (the "Supplemental Plan"), both as to the
Make-Whole Benefit and the Target Benefit.
1.6. Reimbursement of Expenses; Vacation. Executive shall be provided
with reimbursement of expenses related to Executive's employment by the
Company on a basis no less favorable than that which may be authorized from
time to time for senior level executives as a group, and shall be entitled to
vacation and holidays in accordance with the Company's normal personnel
policies for senior level executives.
1.7. Short-Term Incentive Compensation. If the Employment Term has not
previously terminated, beginning on January 1, 1999, Executive shall be
entitled to participate in any short-term incentive compensation programs
established by the Company for its senior level executives generally
depending upon achievement of certain annual individual or business
performance objectives specified and approved by the Trustees (or a Committee
thereof) in its sole discretion; provided, however, that Executive's "target
opportunity" and "maximum opportunity" under any such program shall be at
least at the same level as in effect for Executive on January 1, 1996.
Executive's short-term incentive compensation, either in shares of NU or
cash, as applicable from time to time, shall be paid to Executive, subject
to the Board's or the Trustee's reasonable discretion, not later than such
payments are made to the Company's senior level executives generally.
1.8. Long-Term Incentive Compensation. On and after the Effective Date
and until December 31, 1998, Executive shall participate in the NU Stock
Price Recovery Plan, in accordance with the terms adopted by the Trustees and
NU's Organization, Compensation and Board Affairs Committee on December 21,
1996. If the Employment Term has not previously terminated, beginning on
January 1, 1999, Executive shall also be entitled to participate in any
long-term incentive compensation programs established by the Company for its
senior level executives generally depending upon achievement of certain
business performance objectives specified and approved by the Trustees (or a
Committee thereof) in its sole discretion; provided, however, that
Executive's "target opportunity" and "maximum opportunity" under any such
program shall be at least at the same level as in effect for Executive on
January 1, 1996. Executive's long-term incentive compensation, either in
shares of NU or cash, as applicable from time to time, shall be paid to
Executive, subject to the Board's or the Trustee's reasonable discretion, not
later than such payments are made to the Company's senior level executives
generally.
2. Confidential Information. Executive recognizes and acknowledges
that by reason of Executive's employment by and service to the Company
before, during and, if applicable, after the Employment Term Executive has
had and will continue to have access to certain confidential and proprietary
information relating to the business of the Company, which may include, but
is not limited to, trade secrets, trade "know-how", customer information,
supplier information, cost and pricing information, marketing and sales
techniques, strategies and programs, computer programs and software and
financial information (collectively referred to as "Confidential
Information"). Executive acknowledges that such Confidential Information is
a valuable and unique asset of the Company and Executive covenants that
Executive will not, unless expressly authorized in writing by the Board, at
any time during the course of Executive's employment use any Confidential
Information or divulge or disclose any Confidential Information to any
person, firm or corporation except in connection with the performance of
Executive's duties for the Company and in a manner consistent with the
Company's policies regarding Confidential Information. Executive also
covenants that at any time after the termination of such employment, directly
or indirectly, Executive will not use any Confidential Information or divulge
or disclose any Confidential Information to any person, firm or corporation,
unless such information is in the public domain through no fault of Executive
or except when required to do so by a court of law, by any governmental
agency having supervisory authority over the business of the Company or by
any administrative or legislative body (including a committee thereof) with
apparent jurisdiction to order Executive to divulge, disclose or make
accessible such information, in which case Executive will inform the Company
in writing promptly of such required disclosure, but in any event at least
two business days prior to disclosure. All written Confidential Information
(including, without limitation, in any computer or other electronic format)
which comes into Executive's possession during the course of Executive's
employment shall remain the property of the Company. Except as required in
the performance of Executive's duties for the Company, or unless expressly
authorized in writing by the Board, Executive shall not remove any written
Confidential Information from the Company's premises, except in connection
with the performance of Executive's duties for the Company and in a manner
consistent with the Company's policies regarding Confidential Information.
Upon termination of Executive's employment, Executive agrees immediately to
return to the Company all written Confidential Information in Executive's
possession. For the purposes of this Section 2, the term "Company" shall be
deemed to include NU and the Affiliates, as defined in Section 6.1(a), of NU
and the Company.
3. Non-Competition; Non-Solicitation.
(a) During Executive's employment by the Company and for a period
of two years after Executive's termination of employment for any reason,
within the Company's "service area," as defined below, Executive will not,
except with the prior written consent of the Board, directly or indirectly,
own, manage, operate, join, control, finance or participate in the ownership,
management, operation, control or financing of, or be connected as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise with, or use or permit Executive's name to be used in
connection with, any business or enterprise which is engaged in any business
that is competitive with any business or enterprise in which the Company is
engaged. For the purposes of this Section, "service area" shall mean the
geographic area within the states of Connecticut, Maine, Massachusetts, New
Hampshire, Rhode Island, and Vermont, or any other geographic area in which,
at the time of Executive's termination of employment from the Company, the
Company is doing business. Executive acknowledges that the listed service
area is the area in which the Company presently does business.
(b) The foregoing restrictions shall not be construed to prohibit
the ownership by Executive of less than five percent (5%) of any class of
securities of any corporation which is engaged in any of the foregoing
businesses having a class of securities registered pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), provided that such ownership
represents a passive investment and that neither Executive nor any group of
persons including Executive in any way, either directly or indirectly,
manages or exercises control of any such corporation, guarantees any of its
financial obligations, otherwise takes any part in its business, other than
exercising Executive's rights as a shareholder, or seeks to do any of the
foregoing.
(c) Executive further covenants and agrees that during Executive's
employment by the Company and for the period of two years thereafter,
Executive will not, directly or indirectly, (i) solicit, divert, take away,
or attempt to solicit, divert or take away, any of the Company's "Principal
Customers," defined for the purposes hereof to include any customer of the
Company, from which $100,000 or more of annual gross revenues are derived at
such time, or (ii) encourage any Principal Customer to reduce its patronage
of the Company.
(d) Executive further covenants and agrees that during Executive's
employment by the Company and for the period of two years thereafter,
Executive will not, directly or indirectly, solicit or hire, or encourage the
solicitation or hiring of, any person who was a managerial or higher level
employee of the Company at any time during the term of Executive's employment
by the Company by any employer other than the Company for any position as an
employee, independent contractor, consultant or otherwise. The foregoing
covenant of Executive shall not apply to any person after 12 months have
elapsed subsequent to the date on which such person's employment by the
Company has terminated.
(e) Nothing in this Section 3 shall be construed to prohibit
Executive, if Executive is a lawyer, from being connected as a partner,
principal, shareholder, associate, counsel or otherwise with another lawyer
or a law firm which performs services for clients engaged in any business or
enterprise that is competitive with any business or enterprise in which the
Company is engaged, provided that Executive is not personally involved,
directly or indirectly, in performing services for any such clients during
the period specified in Section 3(a) and provided further that such lawyer or
law firm takes reasonable precautions to screen Executive from participating
for the period specified in Section 3(a) in the representation of any such
clients. The parties agree that any such personal performance of services by
Executive for any such clients during such period would create an
unreasonable risk of violation by Executive of the provisions of Section 2 of
this Agreement, and Executive agrees (and the Company may elect) to notify in
writing any lawyer or law firm with which Executive may be connected during
the period specified in Section 3(a) of Executive's Agreement as set forth
herein. The parties further agree that, in addition to the nondisclosure
obligations of Section 2 of this Agreement, Executive remains subject to all
ethical obligations relating to confidentiality of information to the extent
that Executive acted as a lawyer for the Company, but Executive's knowledge
of such confidential information shall not be imputed to such other lawyer or
law firm with which Executive subsequently may become connected. Executive
agrees to notify the Company in writing in advance of the precautions to be
taken by such lawyer or law firm to screen Executive from any representation
of such competing client of such lawyer or law firm.
(f) For the purposes of this Section 3, the term "Company" shall
be deemed to include NU and the Affiliates, as defined in Section 6.1(a), of
NU and the Company.
4. Equitable Relief.
(a) Executive acknowledges and agrees that the restrictions
contained in Sections 2 and 3 are reasonable and necessary to protect and
preserve the legitimate interests, properties, goodwill and business of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by
the Company should Executive breach any of the provisions of those Sections.
Executive represents and acknowledges that (i) Executive has been advised by
the Company to consult Executive's own legal counsel in respect of this
Agreement, and (ii) that Executive has had full opportunity, prior to
execution of this Agreement, to review thoroughly this Agreement with
Executive's counsel.
(b) Executive further acknowledges and agrees that a breach of any
of the restrictions in Sections 2 and 3 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits
and other benefits arising from any violation of Sections 2 or 3 hereof,
which rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event that any of the
provisions of Sections 2 or 3 hereof should ever be adjudicated to exceed the
time, geographic, service, or other limitations permitted by applicable law
in any jurisdiction, it is the intention of the parties that the provision
shall be amended to the extent of the maximum time, geographic, service, or
other limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication
and that the provision otherwise be enforced to the maximum extent permitted
by law.
(c) If Executive breaches any of Executive's obligations under
Sections 2 or 3 hereof, and such breach constitutes "Cause," as defined in
Section 5.3 hereof, or would constitute Cause if it had occurred during the
Employment Term, the Company shall thereafter have no Target Benefit
obligation pursuant to the Supplemental Plan, but shall remain obligated for
the Make-Whole Benefit under the Supplemental Plan, but only to the extent
not modified by the terms of this Agreement, and compensation and other
benefits provided in any plans, policies or practices then applicable to
Executive in accordance with the terms thereof.
(d) Executive irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Sections 2 or 3 hereof,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may
be brought in the United States District Court for the District of
Connecticut, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Hartford, Connecticut,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Executive
may have to the laying of venue of any such suit, action or proceeding in any
such court. Executive also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers in a manner
permitted by the notice provisions of Section 10 hereof.
(e) Executive agrees that for a period of five years following the
termination of Executive's employment by the Company Executive will provide,
and that at all times after the date hereof the Company may similarly
provide, a copy of Sections 2 and 3 hereof to any business or enterprise (i)
which Executive may directly or indirectly own, manage, operate, finance,
join, control or participate in the ownership, management, operation,
financing, or control of, or (ii) with which Executive may be connected as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise, or in connection with which Executive may use or
permit Executive's name to be used; provided, however, that this provision
shall not apply in respect of Section 3 hereof after expiration of the time
periods set forth therein.
(f) For the purposes of this Section 4, the term "Company" shall
be deemed to include NU and the Affiliates, as defined in Section 6.1(a), of
NU and the Company.
5. Termination. The Employment Term shall terminate upon the
occurrence of any one of the following events:
5.1. Disability. The Company may terminate the Employment Term if
Executive is unable substantially to perform Executive's duties and
responsibilities hereunder to the full extent required by the Board by reason
of illness, injury or incapacity for six consecutive months, or for more than
six months in the aggregate during any period of twelve calendar months;
provided, however, that the Company shall continue to pay Executive's Base
Salary until the Company acts to terminate the Employment Term. In addition,
Executive shall be entitled to receive (i) any amounts earned, accrued or
owing but not yet paid under Section 1 above and (ii) any other benefits in
accordance with the terms of any applicable plans and programs of the
Company. Otherwise, the Company shall have no further liability or
obligation to Executive for compensation under this Agreement. Executive
agrees, in the event of a dispute under this Section 5.1, to submit to a
physical examination by a licensed physician selected by the Board.
5.2. Death. The Employment Term shall terminate in the event of
Executive's death. In such event, the Company shall pay to Executive's
executors, legal representatives or administrators, as applicable, an amount
equal to the installment of Executive's Base Salary set forth in Section 1.4
hereof for the month in which Executive dies. In addition, Executive's
estate shall be entitled to receive (i) any other amounts earned, accrued or
owing but not yet paid under Section 1 above and (ii) any other benefits in
accordance with the terms of any applicable plans and programs of the
Company. Otherwise, the Company shall have no further liability or
obligation under this Agreement to Executive's executors, legal
representatives, administrators, heirs or assigns or any other person
claiming under or through Executive.
5.3. Cause. The Company may terminate the Employment Term, at any time,
for "cause" upon written notice, in which event all payments under this
Agreement shall cease, except for Base Salary to the extent already accrued,
and no Target Benefit shall be due under the Supplemental Plan, but Executive
shall remain entitled to the Make-Whole Benefit under the Supplemental Plan,
but only to the extent not modified by the terms of this Agreement, and any
other benefits in accordance with the terms of any applicable plans and
programs of the Company. For purposes of this Agreement, Executive's
employment may be terminated for "cause" if (i) Executive is convicted of a
felony, (ii) in the reasonable determination of the Board, Executive has (x)
committed an act of fraud, embezzlement, or theft in connection with
Executive's duties in the course of Executive's employment with the Company,
(y) caused intentional, wrongful damage to the property of the Company or
intentionally and wrongfully disclosed Confidential Information, or (z)
engaged in gross misconduct or gross negligence in the course of Executive's
employment with the Company or (iii) Executive materially breached
Executive's obligations under this Agreement and shall not have remedied such
breach within 30 days after receiving written notice from the Board
specifying the details thereof. For purposes of this Agreement, an act or
omission on the part of Executive shall be deemed "intentional" only if it
was not due primarily to an error in judgment or negligence and was done by
Executive not in good faith and without reasonable belief that the act or
omission was in the best interest of the Company.
5.4. Termination Without Cause and Non-Renewal.
(a) The Company may remove Executive, at any time, without cause
from the position in which Executive is employed hereunder (in which case the
Employment Term shall be deemed to have ended) upon not less than 60 days'
prior written notice to Executive; provided, however, that, in the event that
such notice is given, Executive shall be under no obligation to render any
additional services to the Company and, subject to the provisions of Section
3 hereof, shall be allowed to seek other employment. Upon any such removal
or if the Company informs Executive that the Agreement will not be renewed
after December 31, 1998 or at the end of any subsequent renewal period,
Executive shall be entitled to receive, as liquidated damages for the failure
of the Company to continue to employ Executive, only the amount due to
Executive under the Company's then current severance pay plan for employees.
No other payments or benefits shall be due under this Agreement to Executive,
but Executive shall be entitled to any other benefits in accordance with the
terms of any applicable plans and programs of the Company. Notwithstanding
anything in this Agreement to the contrary, on or after Executive attains age
65, no action by the Company shall be treated as a removal from employment or
non-renewal if on the effective date of such action Executive satisfies all
of the requirements for the executive or high policy-making exception to
applicable provisions of state and federal age discrimination legislation.
(b) Notwithstanding the foregoing, in the event that Executive
executes a written release upon such removal or non-renewal, substantially in
the form attached hereto as Annex 1, (the "Release"), of any and all claims
against the Company and all related parties with respect to all matters
arising out of Executive's employment by the Company (other than any
entitlements under the terms of this Agreement or under any other plans or
programs of the Company in which Executive participated and under which
Executive has accrued a benefit), or the termination thereof, Executive shall
be entitled to receive, in lieu of the payment described in subsection (a)
hereof, which Executive agrees to waive,
(i) as liquidated damages for the failure of the Company to
continue to employ Executive, a single cash payment, within 30 days after the
effective date of the removal or non-renewal, equal to Executive's Base
Compensation, as defined in Section 6.1(a) below, which shall not constitute
a "severance benefit" to Executive for purposes of the Target Benefit under
the Supplemental Plan;
(ii) for a period of two years following the end of the
Employment Term, Executive and Executive's spouse and dependents shall be
eligible for a continuation of those Benefit Coverages, as in effect at the
time of such termination or removal, and as the same may be changed from time
to time, as if Executive had been continued in employment during said period
or to receive cash in lieu of such benefits or premiums, as applicable, where
such Benefit Coverages may not be continued (or where such continuation would
adversely affect the tax status of the plan pursuant to which the Benefit
Coverage is provided) under applicable law or regulations;
(iii) any other amounts earned, accrued or owing but not yet
paid under Section 1 above;
(iv) any other benefits in accordance with the terms of any
applicable plans and programs of the Company and a payment equal to any
unused vacation;
(v) as additional consideration for the non-competition and
non-solicitation covenant contained in Section 3, a single cash payment,
within 30 days after the effective date of the removal or non-renewal, equal
to Executive's Base Compensation, as defined in Section 6.1(a) below, which
shall not constitute a "severance benefit" to Executive for purposes of the
Target Benefit under the Supplemental Plan;
(vi) Executive's years of service with the Company through the
24th month following the Termination Date shall be taken into account in
determining the amount of, and eligibility for, the Target Benefit and
Make-Whole Benefit under the Supplemental Plan and 24 months shall be added
to Executive's age for purposes of determining Executive's eligibility for
both such Benefits and the actuarial reduction under the Plan; and
(vii) All stock appreciation rights and restricted stock
units granted to Executive under NU's Stock Price Recovery Plan or stock
options or restricted shares previously granted to Executive, to the extent
not already vested prior to the removal or non-renewal, shall be fully vested
and exercisable or paid as if Executive had remained actively employed by the
Company, including the right of exercise, where appropriate, within 36 months
after the removal or non-renewal; provided, however, that the stock
appreciation rights and restricted stock units shall be paid on a pro rata
basis for the number of completed months in the applicable period for any
such stock appreciation rights or restricted stock units during which
Executive was employed by the Company.
5.5. Voluntary Termination. Executive may voluntarily terminate the
Employment Term upon 30 days' prior written notice for any reason. In such
event, after the effective date of such termination, no further payments
shall be due under this Agreement except that Executive shall be entitled to
any benefits due in accordance with the terms of any applicable plan and
programs of the Company.
6. Payments Upon a Change in Control.
6.1. Definitions. For all purposes of this Section 6, the following
terms shall have the meanings specified in this Section 6.1 unless the
context otherwise clearly requires:
(a) "Affiliate" shall mean an "affiliate" as defined in Rule 12b-2
of the General Rules and Regulations under the Exchange Act.
(b) "Base Compensation" shall mean Executive's annualized Base
Salary and all short-term incentive compensation at the target level for
Executive (but in no event less than the target level for Executive in effect
on January 1, 1996), specified under programs established by the Company for
its senior level executives generally, received by Executive in all
capacities with the Company, as would be reported for federal income tax
purposes on Form W-2, together with any and all salary reduction authorized
amounts under any of the Company's benefit plans or programs, for the most
recent full calendar year immediately preceding the calendar year in which
occurs Executive's Termination Date or preceding the Change of Control, if
higher. "Base Compensation" shall not include the value of any stock
appreciation rights or restricted stock units granted to Executive under NU's
Stock Price Recovery Plan.
(c) "Change of Control" shall mean the happening of any of the
following:
(i) When any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than
the Company, its Affiliates, or any Company or NU employee benefit plan
(including any trustee of such plan acting as trustee), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of NU representing more than 20% of the
combined voting power of either (i) the then outstanding shares of common
stock of NU (the "Outstanding Common Stock") or (ii) the then outstanding
voting securities of NU entitled to vote generally in the election of
directors (the "Voting Securities"); or
(ii) Individuals who, as of the beginning of any twenty-four month
period, constitute the Trustees (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Trustees or cease to be able to
exercise the powers of the majority of the Board, provided that any
individual becoming a trustee subsequent to the beginning of such period
whose election or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the trustees then comprising the
Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Trustees of NU
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act); or
(iii) Consummation by NU of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Common Stock and Voting
Securities immediately prior to such Business Combination do not, following
such Business Combination, beneficially own, directly or indirectly, more
than 75% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation, business trust or other entity resulting from or being the
surviving entity in such Business Combination in substantially the same
proportion as their ownership immediately prior to such Business Combination
of the Outstanding Common Stock and Voting Securities, as the case may be; or
(iv) Consummation of a complete liquidation or dissolution of NU
or sale or other disposition of all or substantially all of the assets of NU
other than to a corporation, business trust or other entity with respect to
which, following such sale or disposition, more than 75% of, respectively,
the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Common Stock and Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Common Stock and Voting Securities, as the case may be,
immediately prior to such sale or disposition.
(d) "Termination Date" shall mean the date of receipt of a Notice
of Termination of this Agreement or any later date specified therein.
(e) "Termination of Employment" shall mean the termination of
Executive's actual employment relationship with the Company, including a
failure to renew the Agreement after December 31, 1998 or at the end of any
subsequent renewal period, in either case occasioned by the Company's action.
(f) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company for any reason other than
Executive's (w) disability, as described in Section 5.1 hereof, (x) death,
(y) retirement on or after attaining age 65, or (z) "cause," as defined in
Section 5.3 hereof, or (ii) initiated by Executive (A) upon any failure of
the Company materially to comply with and satisfy any of the terms of this
Agreement, including any significant reduction by the Company of the
authority, duties or responsibilities of Executive, any reduction of
Executive's compensation or benefits due hereunder, or the assignment to
Executive of duties which are materially inconsistent with the duties of
Executive's position as defined in Section 1.2 above, or (B) if Executive is
transferred, without Executive's written consent, to a location that is more
than 50 miles from Executive's principal place of business immediately
preceding the Change of Control.
6.2. Notice of Termination. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto
given in accordance with Section 10 hereof. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) briefly
summarizes the facts and circumstances deemed to provide a basis for a
Termination of Employment and the applicable provision hereof, and (iii) if
the Termination Date is other than the date of receipt of such notice,
specifies the Termination Date (which date shall not be more than 15 days
after the giving of such notice).
6.3. Payments upon Termination. Subject to the provisions of Sections
6.6 and 6.7 hereof, in the event of Executive's Termination upon a Change of
Control, the Company agrees (a) in the event Executive executes the Release
required by Section 5.4(b), to pay to Executive, in a single cash payment,
within thirty days after the Termination Date, two multiplied by Executive's
Base Compensation and, in addition, all amounts, benefits and Benefit
Coverages described in Section 5.4(b)(ii), (iii), (iv) and (v), provided that
in (ii) Benefit Coverages shall continue for three years instead of two, or
(b) in the event Executive fails or refuses to execute the Release required
by Section 5.4(b), to pay to Executive, in a single cash payment, within
thirty days after the Termination Date, the amount due under Section 5.4(a)
above and, in addition, all other amounts and benefits described in Section
5.4(a).
6.4. Other Payments, Supplemental Plan, Stock Option and Stock Grants,
etc. Subject to the provisions of Sections 6.6 and 6.7 hereof, in the event
of Executive's Termination upon a Change of Control, and the execution of the
Release required by Section 5.4(b):
(a) Under the Supplemental Plan, Executive shall be entitled to a
Target Benefit and a Make-Whole Benefit commencing as provided below with an
actuarial reduction in the event the Target Benefit and Make-Whole Benefit
commence prior to age 65 (age 60 if Executive has attained age 60 and
completed at least 30 years of service at the Termination Date), whether or
not Executive is then age 60 and notwithstanding the Plan's requirement that
a participant retire on or after age 60 and be entitled to a vested benefit
under the Company's Retirement Plan. The actuarial reduction shall be 2% for
each year younger than age 65 to age 60, if applicable, 3% for each year
younger than age 60 to age 55 and a full actuarial reduction, as determined
by the enrolled actuary for the Retirement Plan, for each year younger than
55. Executive's years of service with the Company through the 36th month
following the Termination Date shall be taken into account in determining the
amount of the Target Benefit and Make-Whole Benefit and 36 months shall be
added to Executive's age for purposes of determining Executive's eligibility
for both such Benefits and the actuarial reduction under the Plan as modified
herein. Executive shall determine the form of payment in which the Target
Benefit and Make-Whole Benefit shall be paid, in accordance with the terms of
the Supplemental Plan or may elect to receive a single sum payment equal to
the then actuarial present value (computed using the 1983 GAM (50%/Male/50%/
Female) Mortality Table and at an interest rate equal to the discount rate
used in the Retirement Plan's previous year's FASB 87 accounting) of the
amount of the Target Benefit and Make-Whole Benefit as determined in
accordance with the first three sentences of this subsection (a). Payment
shall commence or be made within 30 days after the Termination Date or on any
date thereafter, as specified by Executive in a written election. Such
election may be made at any time and amended at any time but any election or
amendment, other than one made within 30 days of the Effective Date, shall be
ineffective if made within six months prior to the Termination Date. In the
absence of any election or determination provided for herein, the terms of
the Supplemental Plan shall govern the form and time of payment.
(b) Executive's years of service with the Company through the 36th
month following the Termination Date shall be taken into account in
determining Executive's eligibility for, but not amount of cost sharing
under, the Company's retiree health plan and, in addition, 36 months shall be
added to Executive's age for this purpose.
(c) On Executive's Termination Date, all stock appreciation rights
and restricted stock units granted to Executive under NU's Stock Price
Recovery Plan or stock options or restricted shares previously granted to
Executive, to the extent not already vested prior to the Termination Date,
shall be fully vested and exercisable or paid as if Executive had remained
actively employed by the Company, including the right of exercise, where
appropriate, within 36 months after the Termination Date and, if the Change
of Control results in the Voting Securities of NU ceasing to be traded on a
national securities exchange or though the national market system of the
National Association of Securities Dealers Inc., the price at which the
rights or units may be exercised shall be the average of the closing prices
for the five trading days preceding the day such Voting Securities cease
trading.
6.5. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future participation in or rights under
any benefit, bonus, incentive or other plan or program provided by the
Company and for which Executive may qualify; provided, however, that if
Executive becomes entitled to and receives all of the payments provided for
in this Agreement, Executive hereby waives Executive's right to receive
payments under any severance plan or similar program applicable to all
employees of the Company.
6.6. Certain Increase in Payments.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Payment"), would constitute an "excess parachute payment"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), Executive shall be paid an additional amount (the
"Gross-Up Payment") such that the net amount retained by Executive after
deduction of any excise tax imposed under Section 4999 of the Code, and any
federal, state and local income and employment tax and excise tax imposed
upon the Gross-Up Payment shall be equal to the Payment. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to
pay federal income tax and employment taxes at the highest marginal rate of
federal income and employment taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Executive's
residence on the Termination Date, net of the maximum reduction in federal
income taxes that may be obtained from the deduction of such state and local
taxes.
(b) All determinations to be made under this Section 6 shall be
made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to the Company and
Executive within 10 days of the Termination Date. Any such determination by
the Accounting Firm shall be binding upon the Company and Executive. Within
five days after the Accounting Firm's determination, the Company shall pay
(or cause to be paid) or distribute (or cause to be distributed) to or for
the benefit of Executive such amounts as are then due to Executive under this
Agreement.
(c) In the event that upon any audit by the Internal Revenue
Service, or by a state or local taxing authority, of the Payment or Gross-Up
Payment, a change is finally determined to be required in the amount of taxes
paid by Executive, appropriate adjustments shall be made under this Agreement
such that the net amount which is payable to Executive after taking into
account the provisions of Section 4999 of the Code shall reflect the intent
of the parties as expressed in subsection (a) above, in the manner determined
by the Accounting Firm.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above
shall be borne solely by the Company. The Company agrees to indemnify and
hold harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses
resulting from the gross negligence or wilful misconduct of the Accounting
Firm.
6.7 Changes to Sections 6.3 and 6.4. The payments, benefits and other
compensation provided under Sections 6.3 and 6.4 may be revised, in the sole
discretion of the Board, after the expiration of two years following written
notice to Executive of the Board's intention to do so and the changes to be
made; provided, however, that no revision may be made that would reduce the
payments, benefits and other compensation below those provided under Section
5.4 in the event Executive's employment is terminated without cause or this
Agreement is not renewed; and provided, further, that no such notice may be
given and no such revision may become effective following a Change of
Control. Notice under this Section 6.7 shall not constitute a non-renewal or
removal of Executive, nor shall any such actual revision be grounds for a
determination that this Agreement is not being renewed or that Executive has
been removed, for purposes of Section 5.4.
7. Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive's employment
to the extent necessary to the intended preservation of such rights and
obligations.
8. Mitigation. Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that Executive may obtain.
9. Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
the City of Hartford, Connecticut in accordance with National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association, before a panel of three arbitrators, two of whom shall be
selected by the Company and Executive, respectively, and the third of whom
shall be selected by the other two arbitrators. Any award entered by the
arbitrators shall be final, binding and nonappealable (except as provided in
Section 52-418 of the Connecticut General Statutes) and judgment may be
entered thereon by either party in accordance with applicable law in any
court of competent jurisdiction. This arbitration provision shall be
specifically enforceable. The arbitrators shall have no authority to modify
any provision of this Agreement or to award a remedy for a dispute involving
this Agreement other than a benefit specifically provided under or by virtue
of the Agreement. If Executive prevails on any material issue which is the
subject of such arbitration or lawsuit, the Company shall be responsible for
all of the fees of the American Arbitration Association and the arbitrators
and any expenses relating to the conduct of the arbitration (including the
Company's and Executive's reasonable attorneys' fees and expenses).
Otherwise, each party shall be responsible for its own expenses relating to
the conduct of the arbitration (including reasonable attorneys' fees and
expenses) and shall share the fees of the American Arbitration Association.
10. Notices. All notices and other communications required or
permitted under this Agreement or necessary or convenient in connection
herewith shall be in writing and shall be deemed to have been given when hand
delivered or mailed by registered or certified mail, as follows (provided
that notice of change of address shall be deemed given only when received):
If to the Company, to:
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
Attention: Vice President, Secretary and General Counsel
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Executive, to:
Hugh C. MacKenzie
44 Copperfield Drive
Madison, CT 06443
With a required copy to:
Shipman & Goodwin
One American Row
Hartford, CT 06103-2819
Attention: Brian Clemow, Esquire
or to such other names or addresses as the Company or Executive, as the case
may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this Section.
11. Contents of Agreement; Amendment and Assignment.
(a) This Agreement sets forth the entire understanding between the
parties hereto with respect to the subject matter hereof and cannot be
changed, modified, extended or terminated except upon written amendment
approved by the Board and executed on its behalf by a duly authorized officer
and by Executive.
(b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and
assigns of the parties hereto, except that the duties and responsibilities of
Executive under this Agreement are of a personal nature and shall not be
assignable or delegatable in whole or in part by Executive. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the extent the Company would be required
to perform if no such succession had taken place.
12. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect any other provision or application of this Agreement which can be
given effect without the invalid or unenforceable provision or application
and shall not invalidate or render unenforceable such provision or
application in any other jurisdiction. If any provision is held void,
invalid or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
13. Remedies Cumulative; No Waiver. No remedy conferred upon a party
by this Agreement is intended to be exclusive of any other remedy, and each
and every such remedy shall be cumulative and shall be in addition to any
other remedy given under this Agreement or now or hereafter existing at law
or in equity. No delay or omission by a party in exercising any right,
remedy or power under this Agreement or existing at law or in equity shall be
construed as a waiver thereof, and any such right, remedy or power may be
exercised by such party from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.
14. Beneficiaries/References. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary
or beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
Executive's incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive's beneficiary, estate or
other legal representative.
15. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the
other counterparts.
16. Withholding. The Company may withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Executive
shall bear all expense of, and be solely responsible for, all federal, state
and local taxes due with respect to any payment received under this
Agreement.
17. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Connecticut without giving effect to any
conflict of laws provisions.
18. Adoption by Affiliates; Obligations. The obligations under this
Agreement shall, in the first instance, be paid and satisfied by the Company;
provided, however, that the Company will use its best efforts to cause NU and
each entity in which NU (or its successors or assigns) now or hereafter
holds, directly or indirectly, more than a 50 percent voting interest and
that has at least fifty (50) employees on its direct payroll (an "Employer")
to approve and adopt this Agreement and, by such approval and adoption, to be
bound by the terms hereof as though a signatory hereto. If the Company shall
be dissolved or for any other reason shall fail to pay and satisfy the
obligations, each individual Employer shall thereafter shall be jointly and
severally liable to pay and satisfy the obligations to Executive.
19. Establishment of Trust. The Company may establish an irrevocable
trust fund pursuant to a trust agreement to hold assets to satisfy any of its
obligations under this Agreement. Funding of such trust fund shall be
subject to the Board's discretion, as set forth in the agreement pursuant to
which the fund will be established.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
NORTHEAST UTILITIES
SERVICE COMPANY
/s/Hugh C. MacKenzie By:/s/Bernard M. Fox
Executive
Exhibit 10.43
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of June 20,
1996, by and between Northeast Utilities Service Company, a Connecticut
corporation (the "Company"), with its principal office in Berlin,
Connecticut, and Ted C. Feigenbaum, a resident of Stratham, New Hampshire
("Executive").
WHEREAS, Executive is currently employed as the Executive Vice President
and Chief Nuclear Officer of the Company;
WHEREAS, both parties desire to enter into an agreement superseding all
prior employment agreements, to reflect Executive's contribution to the
Company's business in his executive capacities and to provide for Executive's
continued employment by the Company, upon the terms and conditions set forth
herein:
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment. The Company hereby agrees to continue the employment
of Executive, and Executive hereby accepts such employment and agrees to
perform his duties and responsibilities, in accordance with the terms,
conditions and provisions hereinafter set forth. This agreement terminates
and supersedes all prior employment agreements between the Company and
Executive. Certain provisions of this Agreement are effective only on and
after February 25, 1997 (the "Revision Date").
1.1. Employment Term. The term of Executive's employment under this
Agreement shall commence as of February 20, 1996 (the "Effective Date") and
shall continue until May 31, 1999, unless sooner terminated in accordance
with Section 5 or Section 6 hereof, and shall automatically renew for periods
of one year unless one party gives written notice to the other, at least six
months prior to May 31, 1999 or at least six months prior to the end of any
one-year renewal period, that the Agreement shall not be further extended.
The period commencing as of the Effective Date and ending on the date on
which the term of Executive's employment under the Agreement shall terminate
is hereinafter referred to as the "Employment Term".
1.2. Duties and Responsibilities. Executive shall serve at the
direction of the Company's President - Energy Resources Group and, during the
Employment Term on or after the Revision Date, in such positions as directed
by the Company's Board of Directors (the "Board") or the Board of Trustees
(the "Trustees") of Northeast Utilities ("NU") that provide Executive with
duties and compensation that are substantially equivalent to his current
position in terms of duties and responsibilities. During the Employment Term
on or after the Revision Date, Executive shall perform all duties and accept
all responsibilities incident to such positions as may be assigned to him by
the Board.
1.3. Extent of Service. During the Employment Term, Executive agrees to
use his best efforts to carry out his duties and responsibilities under
Section 1.2 hereof and, consistent with the other provisions of this
Agreement, to devote substantially all his business time, attention and
energy thereto. Except as provided in Section 3 hereof, the foregoing shall
not be construed as preventing Executive from making minority investments in
other businesses or enterprises provided that Executive agrees not to become
engaged in any other business activity which, in the reasonable judgment of
the Board, is likely to interfere with his ability to discharge his duties
and responsibilities to the Company.
1.4. Base Salary. For all the services rendered by Executive hereunder,
the Company shall pay Executive a base salary ("Base Salary"), commencing on
February 1, 1996, of $250,000 per annum, payable in installments at such
times as the Company customarily pays its other divisional executives (but in
any event no less often than monthly). Executive's Base Salary shall be
reviewed annually for appropriate adjustment (but shall not be reduced below
that in effect on the Revision Date without Executive's written consent) by
the Trustees pursuant to its normal salary review policies for executives.
1.5. Retirement and Benefit Coverages. During the Employment Term,
Executive shall be entitled to participate in all (a) employee pension and
retirement plans and programs ("Retirement Plans") and (b) welfare benefit
plans and programs ("Benefit Coverages"), in each case made available to the
Company's executives as a group or to its employees generally, as such
Retirement Plans or Benefit Coverages may be in effect from time to time,
including, without limitation, the Company's Supplemental Executive
Retirement Plan for Officers (the "Supplemental Plan"), as to the Make-Whole
Benefit and the Target Benefit.
1.6. Reimbursement of Expenses; Vacation. Executive shall be provided
with reimbursement of expenses related to his employment by the Company on a
basis no less favorable than that which may be authorized from time to time
for executives as a group, and shall be entitled to at least 6 weeks of
vacation and holidays in accordance with the Company's normal personnel
policies for executives. For up to 24 months from the Effective Date,
Executive shall be entitled to the comprehensive relocation package available
to NU System executive-level employees.
1.7. Short-Term Incentive Compensation. During the Employment Term on
or after the Revision Date, Executive shall be entitled to participate in any
short-term incentive compensation programs established by the Company for its
divisional executives generally depending upon achievement of certain annual
individual or business performance objectives specified and approved by the
Trustees (or a Committee thereof) in its sole discretion; provided, however,
that Executive's "target opportunity" and "maximum opportunity" under any
such program shall be at least at the same level as in effect for Executive
on the Revision Date. Executive's short-term incentive compensation, either
in shares of NU or cash, as applicable from time to time, shall be paid to
him, subject to the Board's or the Trustees' reasonable discretion, not later
than such payments are made to the Company's divisional executives generally.
1.8. Long-Term Incentive Compensation. During the Employment Term on or
after the Revision Date, Executive shall also be entitled to participate in
any long-term incentive compensation programs established by the Company for
its divisional executives generally depending upon achievement of certain
business performance objectives specified and approved by the Trustees (or a
Committee thereof) in its sole discretion; provided, however, that
Executive's "target opportunity" and "maximum opportunity" under any such
program shall be at least at the same level as in effect for Executive on the
Revision Date. Executive's long-term incentive compensation, either in
shares of the Company or cash, as applicable from time to time, shall be paid
to him, subject to the Board's or Trustees' reasonable discretion, not later
than such payments are made to the Company's divisional executives generally.
2. Confidential Information. Executive recognizes and acknowledges
that by reason of his employment by and service to the Company before, during
and, if applicable, after the Employment Term he has had and will continue to
have access to certain confidential and proprietary information relating to
the business of the Company, which may include, but is not limited to, trade
secrets, trade "know-how", customer information, supplier information, cost
and pricing information, marketing and sales techniques, strategies and
programs, computer programs and software and financial information
(collectively referred to as "Confidential Information"). Executive
acknowledges that such Confidential Information is a valuable and unique
asset of the Company and Executive covenants that he will not, unless
expressly authorized in writing by the Board, at any time during the course
of his employment use any Confidential Information or divulge or disclose any
Confidential Information to any person, firm or corporation except in
connection with the performance of his duties for the Company and in a manner
consistent with the Company's policies regarding Confidential Information.
Executive also covenants that at any time after the termination of such
employment, directly or indirectly, he will not use any Confidential
Information or divulge or disclose any Confidential Information to any
person, firm or corporation, unless such information is in the public domain
through no fault of Executive or except when required to do so by a court of
law, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body
(including a committee thereof) with apparent jurisdiction to order him to
divulge, disclose or make accessible such information, in which case
Executive will inform the Company in writing promptly of such required
disclosure, but in any event at least two business days prior to disclosure.
All written Confidential Information (including, without limitation, in any
computer or other electronic format) which comes into Executive's possession
during the course of his employment shall remain the property of the Company.
Except as required in the performance of Executive's duties for the Company,
or unless expressly authorized in writing by the Board, Executive shall not
remove any written Confidential Information from the Company's premises,
except in connection with the performance of his duties for the Company and
in a manner consistent with the Company's policies regarding Confidential
Information. Upon termination of Executive's employment, Executive agrees
immediately to return to the Company all written Confidential Information in
his possession. For the purposes of this Section 2, the term "Company"
shall be deemed to include NU and the Affiliates, as defined in Section
6.1(a), of NU and the Company.
3. Non-Competition; Non-Solicitation.
(a) During his employment by the Company and for a period of one
year after Executive's termination of employment for any reason, within the
Company's "service area," as defined below, Executive will not, except with
the prior written consent of the Board, directly or indirectly, own, manage,
operate, join, control, finance or participate in the ownership, management,
operation, control or financing of, or be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise
with, or use or permit his name to be used in connection with, any business
or enterprise which is engaged in any business that is competitive with any
business or enterprise in which the Company is engaged. For the purposes of
this Section, "service area" shall mean the geographic area within the states
of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and
Vermont, or any other geographic area in which, at the time of Executive's
termination of employment from the Company, the Company is doing business.
Executive acknowledges that the listed service area is the area in which the
Company presently does business.
(b) The foregoing restrictions shall not be construed to prohibit
the ownership by Executive of less than five percent (5%) of any class of
securities of any corporation which is engaged in any of the foregoing
businesses having a class of securities registered pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), provided that such ownership
represents a passive investment and that neither Executive nor any group of
persons including Executive in any way, either directly or indirectly,
manages or exercises control of any such corporation, guarantees any of its
financial obligations, otherwise takes any part in its business, other than
exercising his rights as a shareholder, or seeks to do any of the foregoing.
(c) Executive further covenants and agrees that during his
employment by the Company and for the period of one year thereafter,
Executive will not, directly or indirectly, (i) solicit, divert, take away,
or attempt to solicit, divert or take away, any of the Company's "Principal
Customers," defined for the purposes hereof to include any customer of the
Company, from which $100,000 or more of annual gross revenues are derived at
such time, or (ii) encourage any Principal Customer to reduce its patronage
of the Company.
(d) Executive further covenants and agrees that during his
employment by the Company and for the period of one year thereafter,
Executive will not, directly or indirectly, solicit or hire, or encourage the
solicitation or hiring of, any person who was a managerial or higher level
employee of the Company at any time during the term of Executive's employment
by the Company by any employer other than the Company for any position as an
employee, independent contractor, consultant or otherwise. The foregoing
covenant of Executive shall not apply to any person after 12 months have
elapsed subsequent to the date on which such person's employment by the
Company has terminated.
(e) For the purposes of this Section 3, the term "Company" shall
be deemed to include NU and the Affiliates, as defined in Section 6.1(a), of
NU and the Company.
4. Equitable Relief.
(a) Executive acknowledges and agrees that the restrictions
contained in Sections 2 and 3 are reasonable and necessary to protect and
preserve the legitimate interests, properties, goodwill and business of the
Company, that the Company would not have entered into this Agreement in the
absence of such restrictions and that irreparable injury will be suffered by
the Company should Executive breach any of the provisions of those Sections.
Executive represents and acknowledges that (i) he has been advised by the
Company to consult his own legal counsel in respect of this Agreement, and
(ii) that he has had full opportunity, prior to execution of this Agreement,
to review thoroughly this Agreement with his counsel.
(b) Executive further acknowledges and agrees that a breach of any
of the restrictions in Sections 2 and 3 cannot be adequately compensated by
monetary damages. Executive agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits
and other benefits arising from any violation of Sections 2 or 3 hereof,
which rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event that any of the
provisions of Sections 2 or 3 hereof should ever be adjudicated to exceed the
time, geographic, service, or other limitations permitted by applicable law
in any jurisdiction, it is the intention of the parties that the provision
shall be amended to the extent of the maximum time, geographic, service, or
other limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication
and that the provision otherwise be enforced to the maximum extent permitted
by law.
(c) If Executive breaches any of his obligations under Sections 2
or 3 hereof, and such breach constitutes "Cause," as defined in Section 5.3
hereof, or would constitute Cause if it had occurred during the Employment
Term on or after the Revision Date, the Company shall thereafter have no
Target Benefit obligation pursuant to the Supplemental Plan, but shall remain
obligated for the Make-Whole Benefit under the Supplemental Plan, but only to
the extent not modified by the terms of this Agreement, and compensation and
other benefits provided in any plans, policies or practices then applicable
to Executive in accordance with the terms thereof.
(d) Executive irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding arising out of Sections 2 or 3 hereof,
including without limitation, any action commenced by the Company for
preliminary and permanent injunctive relief and other equitable relief, may
be brought in the United States District Court for the District of
Connecticut, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Hartford, Connecticut,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Executive
may have to the laying of venue of any such suit, action or proceeding in any
such court. Executive also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers in a manner
permitted by the notice provisions of Section 10 hereof.
(e) Executive agrees that for a period of five years following the
termination of his employment by the Company he will provide, and that at all
times after the date hereof the Company may similarly provide, a copy of
Sections 2 and 3 hereof to any business or enterprise (i) which he may
directly or indirectly own, manage, operate, finance, join, control or
participate in the ownership, management, operation, financing, or control
of, or (ii) with which he may be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise, or in
connection with which he may use or permit his name to be used; provided,
however, that this provision shall not apply in respect of Section 3 hereof
after expiration of the time periods set forth therein.
(f) For the purposes of this Section 4, the term "Company" shall
be deemed to include NU and the Affiliates, as defined in Section 6.1(a), of
NU and the Company.
5. Termination. The Employment Term shall terminate upon the
occurrence of any one of the following events:
5.1. Disability. The Company may terminate the Employment Term if
Executive is unable substantially to perform his duties and responsibilities
hereunder to the full extent required by the Board by reason of illness,
injury or incapacity for six consecutive months, or for more than six months
in the aggregate during any period of twelve calendar months; provided,
however, that the Company shall continue to pay Executive his Base Salary
until the Company acts to terminate the Employment Term or until May 31,
1999, if later. In addition, Executive shall be entitled to receive (i) any
amounts earned, accrued or owing but not yet paid under Section 1 above and
(ii) any other benefits in accordance with the terms of any applicable plans
and programs of the Company. Otherwise, the Company shall have no further
liability or obligation to Executive for compensation under this Agreement.
Executive agrees, in the event of a dispute under this Section 5.1, to submit
to a physical examination by a licensed physician selected by the Board.
5.2. Death. The Employment Term shall terminate in the event of
Executive's death. In such event, the Company shall pay to Executive's
executors, legal representatives or administrators, as applicable, an amount
equal to the installment of his Base Salary set forth in Section 1.4 hereof
for the month in which he dies and shall continue to pay such Base Salary for
subsequent months until May 31, 1999, if later. In addition, Executive's
estate shall be entitled to receive (i) any other amounts earned, accrued or
owing but not yet paid under Section 1 above and (ii) any other benefits in
accordance with the terms of any applicable plans and programs of the
Company. Otherwise, the Company shall have no further liability or
obligation under this Agreement to his executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or
through him.
5.3. Cause. The Company may terminate the Employment Term, at any time,
for "cause" upon written notice, in which event all payments under this
Agreement shall cease, except for Base Salary to the extent already accrued,
but Executive shall remain entitled to the Make-Whole Benefit under the
Supplemental Plan, but only to the extent not modified by the terms of this
Agreement, and any other benefits in accordance with the terms of any
applicable plans and programs of the Company. For purposes of this
Agreement, Executive's employment may be terminated for "cause" if (i)
Executive is convicted of a felony, (ii) in the reasonable determination of
the Board, Executive has (x) committed an act of fraud, embezzlement, or
theft in connection with Executive's duties in the course of his employment
with the Company, (y) caused intentional, wrongful damage to the property of
the Company or intentionally and wrongfully disclosed Confidential
Information, or (z) engaged in gross misconduct or gross negligence in the
course of his employment with the Company or (iii) Executive materially
breached his obligations under this Agreement and shall not have remedied
such breach within 30 days after receiving written notice from the Board
specifying the details thereof. For purposes of this Agreement, an act or
omission on the part of Executive shall be deemed "intentional" only if it
was not due primarily to an error in judgment or negligence and was done by
Executive not in good faith and without reasonable belief that the act or
omission was in the best interest of the Company.
5.4. Termination Without Cause and Non-Renewal.
(a) The Company may remove Executive, at any time, without cause
from the position in which he is employed hereunder (in which case the
Employment Term shall be deemed to have ended) upon not less than 60 days'
prior written notice to Executive; provided, however, that, in the event that
such notice is given, Executive shall be under no obligation to render any
additional services to the Company and, subject to the provisions of Section
3 hereof, shall be allowed to seek other employment. Upon any such removal
or if the Company informs Executive that the Agreement will not be renewed
after May 31, 1999 or at the end of any subsequent renewal period, Executive
shall be entitled to receive, as liquidated damages for the failure of the
Company to continue to employ Executive, only the amount due to Executive
under the Company's then current severance pay plan for employees. No other
payments or benefits shall be due under this Agreement to Executive, but
Executive shall be entitled to any other benefits in accordance with the
terms of any applicable plans and programs of the Company. Notwithstanding
anything in this Agreement to the contrary, on or after Executive attains age
65, no action by the Company shall be treated as a removal from employment or
non-renewal if on the effective date of such action Executive satisfies all
of the requirements for the executive or high policy-making exception to
applicable provisions of state and federal age discrimination legislation.
(b) Notwithstanding the foregoing, in the event that Executive
executes a written release upon such removal or non-renewal, substantially in
the form attached hereto as Annex 1, (the "Release"), of any and all claims
against the Company and all related parties with respect to all matters
arising out of Executive's employment by the Company (other than any
entitlements under the terms of this Agreement or under any other plans or
programs of the Company in which he participated and under which he has
accrued a benefit), or the termination thereof, Executive shall be entitled
to receive, in lieu of the payment described in subsection (a) hereof, which
Executive agrees to waive, as liquidated damages for the failure of the
Company to continue to employ Executive, any other amounts earned, accrued or
owing but not yet paid under Section 1 above, any other benefits in
accordance with the terms of any applicable plans and programs of the
Company, a payment equal to any unused vacation and, at Executive's election
in writing within 15 days after the effective date of the removal or
non-renewal, either (A) a single cash payment, within 30 days after the
effective date of the removal or non-renewal, equal to 50% of his Base
Compensation, as defined in Section 6.1(a) below, or (B) the continuation of
his Base Salary through May 31, 1999.
(c) In the event Executive is eligible for and elects a payment
under subsection 5.4(b)(A), Executive shall also receive:
(i) For a period of one year following the end of the Employment
Term, Executive and his spouse and dependents shall be eligible for a
continuation of those Benefit Coverages, as in effect at the time of such
termination or removal, and as the same may be changed from time to time, as
if Executive had been continued in employment during said period or to
receive cash in lieu of such benefits or premiums, as applicable, where such
Benefit Coverages may not be continued (or where such continuation would
adversely affect the tax status of the plan pursuant to which the Benefit
Coverage is provided) under applicable law or regulations;
(ii) as additional consideration for the non-competition and
non-solicitation covenant contained in Section 3, a single cash payment,
within 30 days after the effective date of the removal or non-renewal, equal
to 50% of his Base Compensation, as defined in Section 6.1(a) below;
(iii) Executive's years of service with the Company through the
12th month following the Termination Date shall be taken into account in
determining the amount of, and eligibility for, the Make-Whole Benefit and
the Target Benefit under the Supplemental Plan and 12 months shall be added
to Executive's age for purposes of determining Executive's eligibility for
such Benefits and the actuarial reduction under the Plan; and
(iv) All performance share units, stock options or restricted
shares previously granted to Executive, to the extent not already vested
prior to Executive's removal or the non-renewal shall be fully vested and
exercisable or paid as if Executive had remained actively employed by the
Company, such vesting to include the right of exercise, where appropriate,
within 36 months after the removal or non-renewal; provided, however, that
the performance share units shall be paid on a pro rata basis for the number
of completed months of the performance period during which Executive was
employed by the Company.
5.5. Voluntary Termination. Executive may voluntarily terminate the
Employment Term upon 30 days' prior written notice for any reason. In such
event, after the effective date of such termination, no further payments
shall be due under this Agreement except that Executive shall be entitled to
any benefits due in accordance with the terms of any applicable plan and
programs of the Company.
6. Payments Upon a Change in Control. The provisions of this Section
6 are effective as of the Revision Date.
6.1. Definitions. For all purposes of this Section 6, the following
terms shall have the meanings specified in this Section 6.1 unless the
context otherwise clearly requires:
(a) "Affiliate" shall mean an "affiliate" as defined in Rule 12b-2
of the General Rules and Regulations under the Exchange Act.
(b) "Base Compensation" shall mean Executive's annualized Base
Salary and all short-term incentive compensation at the target level for
Executive specified under programs established by the Company for its
executives generally, received by Executive in all capacities with the
Company, as would be reported for federal income tax purposes on Form W-2,
together with any and all salary reduction authorized amounts under any of
the Company's benefit plans or programs, for the most recent full calendar
year immediately preceding the calendar year in which occurs Executive's
Termination Date or preceding the Change of Control, if higher.
(c) "Change of Control" shall mean the happening of any of the
following:
(i) When any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other
than the Company, its Affiliates, or any Company or NU employee benefit plan
(including any trustee of such plan acting as trustee), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of NU representing more than 20% of the
combined voting power of either (i) the then outstanding shares of common
stock of NU (the "Outstanding Common Stock") or (ii) the then outstanding
voting securities of NU entitled to vote generally in the election of
directors (the "Voting Securities"); or
(ii) Individuals who, as of the beginning of any twenty-four
month period, constitute the Trustees (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Trustees or cease to be able
to exercise the powers of the majority of the Board, provided that any
individual becoming a trustee subsequent to the beginning of such period
whose election or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the trustees then comprising the
Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Trustees of NU
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act); or
(iii) Consummation by NU of a reorganization, merger or
consolidation (a "Business Combination"), in each case, with respect to which
all or substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Common Stock and Voting
Securities immediately prior to such Business Combination do not, following
such Business Combination, beneficially own, directly or indirectly, more
than 75% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation, business trust or other entity resulting from or being the
surviving entity in such Business Combination in substantially the same
proportion as their ownership immediately prior to such Business Combination
of the Outstanding Common Stock and Voting Securities, as the case may be; or
(iv) Consummation of a complete liquidation or dissolution of
NU or sale or other disposition of all or substantially all of the assets of
NU other than to a corporation, business trust or other entity with respect
to which, following such sale or disposition, more than 75% of, respectively,
the then outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, is then owned beneficially,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Common Stock and Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Common Stock and Voting Securities, as the case may be,
immediately prior to such sale or disposition.
(d) "Termination Date" shall mean the date of receipt of a Notice
of Termination of this Agreement or any later date specified therein.
(e) "Termination of Employment" shall mean the termination of
Executive's actual employment relationship with the Company, including a
failure to renew the Agreement after December 31, 1998 or at the end of any
subsequent renewal period, in either case occasioned by the Company's action.
(f) "Termination upon a Change of Control" shall mean a
Termination of Employment upon or within two years after a Change of Control
either:
(i) initiated by the Company for any reason other than
Executive's (w) disability, as described in Section 5.1 hereof, (x) death,
(y) retirement on or after attaining age 65, or (z) "cause," as defined in
Section 5.3 hereof, or (ii) initiated by Executive (A) upon any failure of
the Company materially to comply with and satisfy any of the terms of this
Agreement, including any significant reduction by the Company of the
authority, duties or responsibilities of Executive, any reduction of
Executive's compensation or benefits due hereunder, or the assignment to
Executive of duties which are materially inconsistent with the duties of his
position as defined in Section 1.2 above, or (B) if Executive is transferred
without Executive's written consent, to a location that is more than 50 miles
from Executive's principal place of business immediately preceding the Change
of Control.
6.2. Notice of Termination. Any Termination upon a Change of Control
shall be communicated by a Notice of Termination to the other party hereto
given in accordance with Section 10 hereof. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) briefly
summarizes the facts and circumstances deemed to provide a basis for a
Termination of Employment and the applicable provision hereof, and (iii) if
the Termination Date is other than the date of receipt of such notice,
specifies the Termination Date (which date shall not be more than 15 days
after the giving of such notice).
6.3. Payments upon Termination. Subject to the provisions of Sections
6.6 and 6.7 hereof, in the event of Executive's Termination upon a Change of
Control, the Company agrees (a) in the event he executes the Release required
by Section 5.4(b), to pay to Executive, in a single cash payment, within 30
days after the Termination Date, an amount equal to Executive's Base
Compensation, any other amounts earned, accrued or owing but not yet paid
under Section 1 above, any other benefits in accordance with the terms of any
applicable plans and programs of the Company, a payment equal to any unused
vacation and, in addition, all amounts, benefits and Benefit Coverages,
described in Section 5.4(c)(i) and (ii), provided that in (i) Benefit
Coverages shall continue for two years instead of one and in (ii) 100% of
Base Compensation rather than 50% shall be paid, or (b) in the event he fails
or refuses to execute the Release required by Section 5.4(b), to pay to
Executive, in a single cash payment, within thirty days after the Termination
Date, the amount due under Section 5.4(a) above and, in addition, all other
amounts and benefits described in Section 5.4(a).
6.4. Other Payments, Supplemental Plan, Stock Option and Stock Grants.
Subject to the provisions of Sections 6.6 and 6.7 hereof, in the event of
Executive's Termination upon a Change of Control and the execution of the
Release required by Section 5.4(b):
(a) Under the Supplemental Plan, Executive shall be entitled to a
Target Benefit and a Make-Whole Benefit commencing as provided below with an
actuarial reduction in the event the Target Benefit and Make-Whole Benefit
commence prior to age 65 (age 60 if Executive has attained age 60 and
completed at least 30 years of service at the Termination Date), whether or
not Executive is then age 60 and notwithstanding the Plan's requirement that
a participant retire on or after age 60 and be entitled to a vested benefit
under the Company's Retirement Plan. The actuarial reduction shall be 2% for
each year younger than age 65 to age 60, if applicable, 3% for each year
younger than age 60 to age 55 and a full actuarial reduction, as determined
by the enrolled actuary for the Retirement Plan, for each year younger than
55. Executive's years of service with the Company through the 24th month
following the Termination Date shall be taken into account in determining the
amount of the Target Benefit and Make-Whole Benefit and 24 months shall be
added to Executive's age for purposes of determining Executive's eligibility
for both such Benefits and the actuarial reduction under the Plan as modified
herein. Executive shall determine the form of payment in which the Target
Benefit and Make-Whole Benefit shall be paid, in accordance with the terms of
the Supplemental Plan or may elect to receive a single sum payment equal to
the then actuarial present value (computed using the 1983 GAM (50%/Male/50%/
Female) Mortality Table and at an interest rate equal to the discount rate
used in the Retirement Plan's previous year's FASB 87 accounting) of the
amount of the Target Benefit and Make-Whole Benefit as determined in
accordance with the first three sentences of this subsection (a). Payment
shall commence or be made within 30 days after the Termination Date or on any
date thereafter, as specified by Executive in a written election. Such
election may be made at any time and amended at any time but any election or
amendment, other than one made within 30 days of the Effective Date, shall be
ineffective if made within six months prior to the Termination Date. In the
absence of any election or determination provided for herein, the terms of
the Supplemental Plan shall govern the form and time of payment.
(b) Executive's years of service with the Company through the 24th
month following the Termination Date shall be taken into account in
determining Executive's eligibility for, but not amount of cost sharing
under, the Company's retiree health plan and, in addition, 24 months shall
be added to Executive's age for this purpose.
(c) On Executive's Termination Date, all performance share units,
stock options or restricted shares previously granted to Executive, to the
extent not already vested prior to the Termination Date, shall be fully
vested and exercisable or paid as if Executive had remained actively employed
by the Company, including the right of exercise, where appropriate, within 36
months after the Termination Date; provided, however, that the performance
share units shall be paid as if the Company had met all performance targets
during the applicable performance period.
6.5. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future participation in or rights under
any benefit, bonus, incentive or other plan or program provided by the
Company and for which Executive may qualify; provided, however, that if
Executive becomes entitled to and receives all of the payments provided for
in this Agreement, Executive hereby waives his right to receive payments
under any severance plan or similar program applicable to all employees of
the Company.
6.6. Certain Reduction of Payments.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), would constitute an "excess parachute payment"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), and that Executive would receive a greater net amount
if the Payment to Executive were reduced to avoid the taxation of excess
parachute payments under Section 4999 of the Code, the aggregate present
value of amounts payable or distributable to or for the benefit of Executive
pursuant to this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement Payments") shall be
reduced (but not below zero) to the Reduced Amount. The "Reduced Amount"
shall be an amount expressed in present value which maximizes the aggregate
present value of Agreement Payments without causing any Payment to be subject
to the taxation under Section 4999 of the Code. For purposes of this Section
6, present value shall be determined in accordance with Section 280G(d)(4) of
the Code.
(b) All determinations to be made under this Section 6 shall be
made by the Company's independent public accountant immediately prior to the
Change of Control (the "Accounting Firm"), which firm shall provide its
determinations and any supporting calculations both to the Company and
Executive within 10 days of the Termination Date. Any such determination by
the Accounting Firm shall be binding upon the Company and Executive;
provided, however, that Executive shall, in his sole discretion, determine
whether, which and how much of the Agreement Payments shall be eliminated or
reduced consistent with the requirements of this Section 6. Within five days
after Executive's determination, the Company shall pay (or cause to be paid)
or distribute (or cause to be distributed) to or for the benefit of Executive
such amounts as are then due to Executive under this Agreement.
(c) As a result of the uncertainty in the application of Section
280G of the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Agreement Payments will have been made by
the Company which should not have been made ("Overpayment") or that
additional Agreement Payments which have not been made by the Company could
have been made ("Underpayment"), in each case, consistent with the
calculations required to be made hereunder. Within two years after the
Termination of Employment, the Accounting Firm shall review the determination
made by it pursuant to the preceding paragraph. In the event that the
Accounting Firm determines that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to Executive which
Executive shall repay to the Company together with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code (the "Federal
Rate"); provided, however, that no amount shall be payable by Executive to
the Company if and to the extent such payment would not increase the net
amount which is payable to Executive after taking into account the provisions
of Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of Executive together with
interest at the Federal Rate.
(d) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections (b) and (c) above
shall be borne solely by the Company. The Company agrees to indemnify and
hold harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections (b) and (c) above, except for claims, damages or expenses
resulting from the gross negligence or wilful misconduct of the Accounting
Firm.
6.7 Changes to Sections 6.3 and 6.4. The payments, benefits and other
compensation provided under Sections 6.3 and 6.4 may be revised, in the sole
discretion of the Board, after the expiration of two years following written
notice to Executive of the Board's intention to do so and the changes to be
made; provided, however, that no revision may be made that would reduce the
payments, benefits and other compensation below those provided under Section
5.4 in the event Executive's employment is terminated without cause or this
Agreement is not renewed; and provided, further, that no notice may be given
and no such revision may become effective following a Change of Control.
Notice under this Section 6.7 shall not constitute a non-renewal or removal
of Executive, nor shall any such actual revision be grounds for a
determination that this Agreement is not being renewed or that Executive has
been removed, for purposes of Section 5.4.
7. Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive's employment
to the extent necessary to the intended preservation of such rights and
obligations.
8. Mitigation. Executive shall not be required to mitigate the amount
of any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain.
9. Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement arising on or after the Revision Date, other
than a dispute in which the primary relief sought is an equitable remedy such
as an injunction, the parties shall be required to have the dispute,
controversy or claim settled by arbitration in the City of Hartford,
Connecticut in accordance with National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected
by the other two arbitrators. Any award entered by the arbitrators shall be
final, binding and nonappealable (except as provided in Section 52-418 of the
Connecticut General Statutes) and judgment may be entered thereon by either
party in accordance with applicable law in any court of competent
jurisdiction. This arbitration provision shall be specifically enforceable.
The arbitrators shall have no authority to modify any provision of this
Agreement or to award a remedy for a dispute involving this Agreement other
than a benefit specifically provided under or by virtue of the Agreement. If
Executive prevails on any material issue which is the subject of such
arbitration or lawsuit, the Company shall be responsible for all of the fees
of the American Arbitration Association and the arbitrators and any expenses
relating to the conduct of the arbitration (including the Company's and
Executive's reasonable attorneys' fees and expenses). Otherwise, each party
shall be responsible for his or its own expenses relating to the conduct of
the arbitration (including reasonable attorneys' fees and expenses) and shall
share the fees of the American Arbitration Association.
10. Notices. All notices and other communications required or
permitted under this Agreement or necessary or convenient in connection
herewith shall be in writing and shall be deemed to have been given when hand
delivered or mailed by registered or certified mail, as follows (provided
that notice of change of address shall be deemed given only when received):
If to the Company, to:
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
Attention: Senior Vice President, Secretary and General Counsel
With a required copy to:
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103-6993
Attention: Robert J. Lichtenstein, Esquire
If to Executive, to:
Ted C. Feigenbaum
8 Evergreen Way
Stratham, NH 03885
With a required copy to:
Shipman & Goodwin
One American Row
Hartford, CT 06103-2819
Attention: Brian Clemow, Esquire
or to such other names or addresses as the Company or Executive, as the case
may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this Section.
11. Contents of Agreement; Amendment and Assignment.
(a) This Agreement sets forth the entire understanding between the
parties hereto with respect to the subject matter hereof and cannot be
changed, modified, extended or terminated except upon written amendment
approved by the Board and executed on its behalf by a duly authorized officer
and by Executive.
(b) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and
assigns of the parties hereto, except that the duties and responsibilities of
Executive under this Agreement are of a personal nature and shall not be
assignable or delegatable in whole or in part by Executive. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the extent the Company would be required
to perform if no such succession had taken place.
12. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect any other provision or application of this Agreement which can be
given effect without the invalid or unenforceable provision or application
and shall not invalidate or render unenforceable such provision or
application in any other jurisdiction. If any provision is held void,
invalid or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
13. Remedies Cumulative; No Waiver. No remedy conferred upon a party
by this Agreement is intended to be exclusive of any other remedy, and each
and every such remedy shall be cumulative and shall be in addition to any
other remedy given under this Agreement or now or hereafter existing at law
or in equity. No delay or omission by a party in exercising any right,
remedy or power under this Agreement or existing at law or in equity shall be
construed as a waiver thereof, and any such right, remedy or power may be
exercised by such party from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.
14. Beneficiaries/References. Executive shall be entitled, to the
extent permitted under any applicable law, to select and change a beneficiary
or beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive's death by giving the Company written notice
thereof. In the event of Executive's death or a judicial determination of
his incompetence, reference in this Agreement to Executive shall be deemed,
where appropriate, to refer to his beneficiary, estate or other legal
representative.
15. Miscellaneous. All section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the
other counterparts.
16. Withholding. The Company may withhold from any payments under this
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Executive
shall bear all expense of, and be solely responsible for, all federal, state
and local taxes due with respect to any payment received under this
Agreement.
17. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Connecticut without giving effect to any
conflict of laws provisions.
18. Adoption by Affiliates; Obligations. The obligations under this
Agreement shall, in the first instance, be paid and satisfied by the Company;
provided, however, that with respect to those provisions of this Agreement to
be performed during the Employment Term on or after the Revision Date, the
Company will use its best efforts to cause NU and each entity in which NU
(or its successors or assigns) now or hereafter holds, directly or
indirectly, more than a 50 percent voting interest and that has at least
fifty (50) employees on its direct payroll (an "Employer") to approve and
adopt this Agreement and, by such approval and adoption, to be bound by the
terms hereof as though a signatory hereto. With respect to such provisions,
if the Company shall be dissolved or for any other reason shall fail to pay
and satisfy the obligations, each individual Employer shall thereafter shall
be jointly and severally liable to pay and satisfy the obligations to
Executive.
19. Establishment of Trust. The Company may establish an irrevocable
trust fund pursuant to a trust agreement to hold assets to satisfy any of its
obligations under this Agreement. Funding of such trust fund shall be
subject to the Board's discretion, as set forth in the agreement pursuant to
which the fund will be established.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
NORTHEAST UTILITIES
SERVICE COMPANY
By: /s/Bernard M. Fox
By:/s/Ted C. Feigenbaum
Executive
Exhibit 10.48
U.S. $200,000,000
RECEIVABLES
PURCHASE AND SALE AGREEMENT
Dated as of July 11, 1996
Among
THE CONNECTICUT LIGHT AND POWER COMPANY
as Seller
CORPORATE ASSET FUNDING COMPANY, INC.
as a Purchaser
CITIBANK, N.A.
as a Bank
and
CITICORP NORTH AMERICA, INC.
as Agent
TABLE OF CONTENTS
Section Page
Preliminary Statements 1
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms 1
Section 1.02 Other Terms 15
Section 1.03 Computation of Time Periods 15
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
Section 2.01 Designated Obligors; Special Concentration Limits 15
Section 2.02 Purchase Facility 15
Section 2.03 Making Purchases from the Seller 17
Section 2.04 Receivable Interest Percentage 18
Section 2.05 Fees 18
Section 2.06 Settlement Procedures 18
Section 2.07 Payments and Computations, Etc. 21
Section 2.08 Increased Costs 22
Section 2.09 Additional Discount on Receivable Interests
Bearing Eurodollar Rate 23
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.01 Conditions Precedent to Initial Purchase 24
Section 3.02 Conditions Precedent to All Purchases 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties of the Seller 27
ARTICLE V
GENERAL COVENANTS OF THE SELLER
Section 5.01 Affirmative Covenants of the Seller 31
Section 5.02 Reporting Requirements of the Seller 33
Section 5.03 Negative Covenants of the Seller 35
ARTICLE VI
ADMINISTRATION AND COLLECTION
Section 6.01 Designation of Collection Agent 36
Section 6.02 Duties of Collection Agent 37
Section 6.03 Rights of the Agent 39
Section 6.04 Responsibilities of the Seller 40
Section 6.05 Further Action Evidencing Purchases 41
Section 6.06 Application of Collections 42
ARTICLE VII
EVENTS OF TERMINATION
Section 7.01 Events of Termination 42
ARTICLE VIII
THE AGENT
Section 8.01 Authorization and Action 45
Section 8.02 Agent's Reliance, Etc. 45
Section 8.03 CNAI and Affiliates 46
Section 8.04 Purchasers' and Banks' Purchase Decisions 46
ARTICLE IX
ASSIGNMENT
Section 9.01 Assignability 47
ARTICLE X
INDEMNIFICATION
Section 10.01 Indemnities by the Seller 48
ARTICLE XI
MISCELLANEOUS
Section 11.01 Amendments, Etc. 51
Section 11.02 Notices, Etc. 51
Section 11.03 No Waiver; Remedies 51
Section 11.04 Binding Effect 52
Section 11.05 Governing Law 52
Section 11.06 Costs, Expenses and Taxes 52
Section 11.07 No Proceedings 53
Section 11.08 Confidentiality 53
Section 11.09 Execution in Counterparts 54
LIST OF EXHIBITS
EXHIBIT A Special Concentration Limits
EXHIBIT B Form of Seller Report
EXHIBIT C Description of Tariffs
EXHIBIT D Cancellation of Designation of Obligors and/or Special
Concentration Limits
EXHIBIT E Form of Opinion of Counsel for Seller
EXHIBIT F Audit Scope
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of July 11, 1996
THE CONNECTICUT LIGHT AND POWER COMPANY, a Connecticut corporation
(the "Seller"), CORPORATE ASSET FUNDING COMPANY, INC., a Delaware
corporation, CITIBANK, N.A., and CITICORP NORTH AMERICA INC., a Delaware
corporation ("CNAI"), as agent (the "Agent") for the Purchasers and the Banks
(as defined herein), agree as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized
and used throughout this Agreement (in addition to those defined above) are
defined in Article I of this Agreement.
(2) The Seller has, and expects to have, Set Receivables in which
the Seller intends to sell interests (referred to herein as "Receivable
Interests").
(3) CAFCO and the Banks are prepared to purchase such Receivable
Interests from the Seller on the terms set forth herein.
(4) CNAI has been requested and is prepared to act as Agent.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"Adverse Claim" means a lien, security interest, charge or
encumbrance, or other right or claim of any Person.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by or under common control with such Person.
"Affiliated Obligor" means any Obligor which is an Affiliate of
another Obligor.
"Alternate Base Rate" means a fluctuating interest rate per annum
as shall be in effect from time to time, which rate per annum shall at all
times be equal to the higher of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time as Citibank's base rate; or
(b) 1/2 of one percent above the latest three-week moving average
of secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three-week moving average being determined weekly on each
Monday (or, if such day is not a Business Day, on the next succeeding
Business Day) for the three-week period ending on the previous Friday by
Citibank on the basis of such rates reported by certificate of deposit
dealers to and published by the Federal Reserve Bank of New York or, if
such publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank from three New York
certificate of deposit dealers of recognized standing, in either case
adjusted to the nearest 1/4 of one percent or, if there is no nearest
1/4 of one percent, to the next higher 1/4 of one percent.
"Bank Commitment" of any Bank means, (a) with respect to Citibank
$200,000,000 or such amount as reduced by any assignment entered into between
Citibank and other Banks; or (b) with respect to a Bank that has entered into
an assignment with another Bank, the amount set forth therein as such Bank's
Bank Commitment, in each case as such amount may be reduced by an assignment
entered into between such Bank and an Eligible Assignee, and as may be
further reduced (or terminated) pursuant to the next sentence. Any reduction
(or termination) of the Purchase Limit pursuant to the terms of this
Agreement shall reduce ratably (or terminate) each Bank's Bank Commitment.
"Banks" means Citibank and each Eligible Assignee that shall become
a party to this Agreement pursuant to Section 9.01.
"Business Day" means any day on which (i) banks are not authorized
or required to close in New York City, and (ii) if this definition of
"Business Day" is utilized in connection with the Eurodollar Rate, dealings
are carried out in the London interbank market.
"CAFCO" means Corporate Asset Funding Company, Inc. and any
successor or assign of CAFCO that is a receivables investment company which
in the ordinary course of its business issues commercial paper or other
securities to fund its acquisition and maintenance of receivables.
"Citibank" means Citibank, N.A., a national banking association.
"Collection Agent" means at any time the Person then authorized
pursuant to Article VI to administer and collect Set Receivables.
"Collection Agent Fee" has the meaning assigned to that term in
Section 2.05.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, and any Collection of such Receivable deemed to have been
received pursuant to Section 2.06.
"Commitment Termination Date" means the earliest of (a) July 6,
1997, unless, prior to such date (or the date so extended pursuant to this
clause), upon the Seller's request, made not more than 90 nor less than 45
days prior to the then Commitment Termination Date, one or more Banks having
100% of the Purchase Limit shall in their sole discretion consent, which
consent shall be given not more than 30 days prior to the then Commitment
Termination Date, to the extension of the Commitment Termination Date to the
date occurring not more than 360 days after the then Commitment Termination
Date; provided, however, that any failure of any Bank to respond to the
Seller's request for such extension shall be deemed a denial of such request
by such Bank, (b) the Facility Termination Date and (c) the date determined
pursuant to Section 7.01.
"Concentration Limit" means, with respect to any Obligor, 2% (or
such other percentage as is agreed to by the Agent) of the Outstanding
Balance of all Receivables in a Receivables Set (a "Normal Concentration
Limit"), or such other percentage of the Outstanding Balance of all
Receivables in a Receivables Set, or such amount, as may be designated for
any Obligor by the Seller and agreed to for such Obligor by the Agent, in a
notice to the Agent in substantially the form of Exhibit A (such other
percentage or amount for any Obligor being a "Special Concentration Limit"),
subject to cancellation thereof pursuant to Section 2.01; provided, however,
that, in the case of an Obligor with one or more Affiliated Obligors which is
or are Designated Obligors, the Concentration Limit and the Receivables or
Outstanding Balance of Receivables in a Receivables Set shall be calculated
as if such Obligor and such one or more Affiliated Obligors were one Obligor.
"Contract" means the Tariffs and any agreement between the Seller
and an Obligor; provided, however, that such agreement does not vary the
payment terms of such Obligor from those in the Tariffs or the Credit and
Collection Policy.
"Credit and Collection Policy" means those credit and collection
policies and practices of the Seller in effect on the date hereof relating to
the Receivables, as modified in compliance with Section 5.03(c).
"Default Ratio" means the ratio (expressed as a percentage)
computed at any time by dividing (i) the aggregate Outstanding Balance, at
the date of the then most recent billing, of all Defaulted Receivables in all
Receivables Sets (other than Receivables which relate to an "inactive"
account) by (ii) the then Outstanding Balance of all Receivables in all
Receivables Sets.
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid for
91 days or more from the original billing date for such payment,
(ii) as to which the Obligor thereof, or any other Person
obligated thereon or owning any Related Security in respect thereof, has
taken any action, or suffered any event to occur, of the type described
in Section 7.01(g), or
(iii) which, consistent with the Credit and Collection Policy,
would be written off the Seller's books as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a percentage)
computed at any time by dividing (i) the aggregate Outstanding Balance, at
the date of the then most recent billing, of all Delinquent Receivables in
all Receivables Sets (other than Receivables which relate to an "inactive"
account) by (ii) the Outstanding Balance of all Receivables in all
Receivables Sets.
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and:
(i) as to which any payment, or part thereof, remains unpaid for
61 days or more from the original billing date for such payment; or
(ii) which, consistent with the Credit and Collection Policy,
would be classified as delinquent by the Seller.
"Designated Account" means an account in the name of, and owned by,
CNAI, as Agent, designated by the Agent for the purpose of receiving
collections of Set Receivables.
"Designated Obligor" means, at any time, all Obligors of the Seller
unless the Seller or the Agent has, following three Business Days' notice in
accordance with Section 2.01, advised the other that any Obligor shall not be
considered a Designated Obligor.
"Discount" means, with respect to any Receivable Interest, a fixed
amount equal to the sum of the portions of the Purchase Price of such
Receivable Interest estimated to be collected during each Fiscal Month
following the Purchase Date for such Receivable Interest, in each case
multiplied by the Discount Rate applicable to the Purchase of such Receivable
Interest and then by a fraction, the numerator of which shall be the number
of days from the first Settlement Date following the Purchase Date, to the
Settlement Date following the Fiscal Month in which such collection is
estimated by the Agent to occur, and the denominator of which is 360. Each
computation of the Discount with respect to a Receivable Interest shall be
made by the Agent within 18 days after the Purchase Date for such Receivable
Interest. In making such computations, the Agent shall utilize historical
data and conservative assumptions regarding future collections (including,
without limitation, the tenor of such collections and the likelihood of
defaults), such assumptions being agreed to orally or in writing by the
Seller and the Agent no later than the Purchase Date for such Receivable
Interest and subsequently confirmed in writing.
"Discount Rate" means a rate per annum applicable to the Purchase
of any Receivable Interest, specified in writing by the Seller to the Agent
prior to the first Settlement Date following the Purchase Date. After
receipt by the Agent of such specification, if the Agent (on behalf of the
Purchasers or the Banks, as the case may be) does not find the proposed
Discount Rate to be acceptable, the Agent and the Seller shall enter into
negotiations with a view to agreeing on the Discount Rate applicable to such
Purchase. If the Agent and the Seller cannot agree on an applicable Discount
Rate for the Banks, the Banks shall not be obligated to make the Purchase.
Notwithstanding the foregoing, the Discount Rate with respect to any
Receivable Interest during any period when amounts have been advanced or paid
with respect to liquidity or credit enhancement provided to CAFCO with
respect to this transaction shall be a rate per annum equal to the Eurodollar
Rate plus 1%.
"Eligible Assignee" means (a) CNAI, any of its Affiliates, any
Person managed by Citibank, or CNAI or any of their Affiliates or (b) any
financial or other institution acceptable to the Agent.
"Eligible Receivable" means, at any time and with respect to any
Receivable Interest, a Receivable:
(i) the Obligor of which is a United States resident and is not a
government or a governmental subdivision or agency, except that
Receivables of governmental Obligors will be permitted to the extent
that the aggregate Outstanding Balance of such Receivables does not
exceed 15% of the aggregate Outstanding Balance of all Set Receivables;
(ii) the Obligor of which, at the time of the purchase of an
undivided percentage ownership interest in such Receivable, is a
Designated Obligor;
(iii) which, at the time of the purchase of an undivided
percentage ownership interest in such Receivable, is not a Delinquent
Receivable or a Defaulted Receivable;
(iv) which does not relate to an "inactive" account and which,
according to the Contract related thereto, is required to be paid in
full within 30 days of the original billing date therefor;
(v) the Outstanding Balance of which, at the time of the purchase
of an undivided percentage ownership interest in such Receivable does
not, when calculated substantially as provided in the Seller Report,
exceed the Concentration Limit of such Obligor;
(vi) which arises under a Contract which has been duly authorized
and which, together with such Receivable, is in full force and effect
and constitutes the legal, valid and binding obligation of the Obligor
of such Receivable enforceable against such Obligor in accordance with
its terms and is not subject to any dispute, offset, counter-claim or
defense whatsoever (except the discharge in bankruptcy of such Obligor);
(vii) which, together with the Contract related thereto, does
not contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to usury, consumer protection, truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy) and with respect to which no
party to the Contract related thereto is in violation of any such law,
rule or regulation in any material respect;
(viii) which (A) satisfies all applicable requirements of the
Credit and Collection Policy and (B) complies with such other reasonable
criteria and requirements (other than those relating to the
collectibility of such Receivable) as the Agent may from time to time
specify to the Seller following 30 days' notice;
(ix) which is an account receivable representing all or part of the
sales price of merchandise, insurance or services, within the meaning of
Section 3(c)(5) of the Investment Company Act of 1940, as amended;
(x) a purchase of which with the proceeds of notes would
constitute a "current transaction" within the meaning of Section 3(a)(3)
of the Securities Act of 1933, as amended;
(xi) which is an "account" within the meaning of Section 9-106 of
the UCC of all applicable jurisdictions;
(xii) which is denominated and payable only in United States
dollars in the United States of America; and
(xiii) as to which, at or prior to the time of Purchase
hereunder, the Agent has not notified the Seller that the Agent has
determined, in its sole discretion, that such Receivable (or class of
Receivables) is not acceptable for purchase hereunder.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" means, for any Fiscal Month, an interest rate per
annum equal to the rate per annum at which deposits in U.S. dollars are
offered by the principal office of Citibank in London, England to prime banks
in the London interbank market at 11:00 A.M. (London Time) two Business Days
before the first day of such Fiscal Month in an amount substantially equal to
the unpaid Purchase Price associated with such Fiscal Month on such first day
and for a period equal to such Fiscal Month.
"Eurodollar Rate Reserve Percentage" of any Purchaser or Bank for
any Fiscal Month in respect of which the Discount is computed by reference to
the Eurodollar Rate means the reserve percentage applicable two Business Days
before the first day of such Fiscal Month under regulations issued from time
to time by the Board of Governors of the Federal Reserve System (or any
successor) (or if more than one such percentage shall be applicable, the
daily average of such percentages for those days in such Fiscal Month during
which any such percentage shall be so applicable) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for such Purchaser or
Bank with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurocurrency Liabilities is determined) having a term equal to such Fiscal
Month.
"Event of Termination" has the meaning assigned to that term in
Section 7.01.
"Face Amount" means for each Receivable Interest the sum of the
Purchase Price thereof, the Discount established therefor and the Loss
Reserve therefor.
"Facility" means the willingness of CAFCO to consider, in its sole
discretion pursuant to Article II, or the obligation of the Banks to make
pursuant to Article II, the purchase from the Seller of undivided percentage
interests in Set Receivables by making Purchases of Receivable Interests from
time to time.
"Facility Termination Date" means the earlier of July 11, 2001 or
the date of termination of the Facility pursuant to Section 2.02(c) or
Section 7.01.
"Fee Agreement" means the agreement of even date between the Seller
and the Agent, as the same may be amended or restated from time to time, with
respect to the fees to be paid by the Seller in connection with this
Agreement.
"Fiscal Month" means an accounting period corresponding to a
calendar month.
"Incipient Event of Termination" means an event which would
constitute an Event of Termination but for the requirement that notice be
given or time elapse or both.
"Liquidation Day" for any Receivable Interest means each day
following the Purchase Date for such Receivable Interest.
"Loss Reserve" means, for any Receivable Interest, an amount equal
to the Purchase Price for such Receivable Interest multiplied by a percentage
equal to the greatest of (i) 1.33 times the greater of the highest Default
Ratio or the highest Delinquency Ratio as of the last day of each of the
three months ended immediately preceding the Purchase Date for such
Receivable Interest, (ii) three times the Normal Concentration Limit and
(iii) 5%.
"Loss-to-Liquidation Ratio" means the ratio (expressed as a
percentage) computed as of the last day of each calendar month by dividing
(i) the aggregate Outstanding Balance of all Set Receivables written off by
the Seller, or which should have been written off by the Seller in accordance
with its Credit and Collection Policy, during such calendar month by (ii) the
aggregate amount of Collections of Set Receivables actually received during
such period.
"Normal Concentration Limit" shall have the meaning set forth in
the definition of "Concentration Limit."
"Obligor" means a Person obligated to make payments pursuant to a
Contract.
"Outstanding Balance" means, with respect to any Receivable at any
time, the then outstanding principal balance thereof, and "Outstanding
Balance" means, with respect to a Receivables Set or a Receivable Interest at
any time, the then outstanding aggregate principal balance of all Set
Receivables in such Receivables Set or the Receivables Set for such
Receivable Interest.
"Percentage" of any Bank means, (a) with respect to Citibank, the
percentage set forth on the signature page to this Agreement, or such amount
as reduced by any assignment entered into with an Eligible Assignee, or (b)
with respect to a Bank that has entered into an assignment, the amount set
forth therein as such Bank's Percentage, or such amount as reduced by an
assignment entered into between such Bank and an Eligible Assignee.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political subdivision
or agency thereof.
"Purchase" means the purchase of a Receivable Interest from the
Seller, in accordance with Section 2.03(a).
"Purchase Date" means the last day of a Fiscal Month as of which a
Receivable Interest is purchased under this Agreement, or such other date or
dates as may be agreed between the Seller and the Agent.
"Purchase Limit" means $200,000,000, as such amount may be reduced
pursuant to Section 2.02(c).
"Purchase Price" means, with respect to any Receivable Interest,
the amount paid to the Seller for such Receivable Interest by the initial
purchaser thereof.
"Purchaser" means CAFCO and all other owners by assignment or
otherwise of a Receivable Interest (other than Banks) and, to the extent of
the undivided interests so purchased, shall include any participants.
"Receivable" means the accounts, general intangibles and other
indebtedness (billed and unbilled) of an Obligor arising from the retail sale
of electricity and related services by the Seller in Connecticut to such
Obligor pursuant to a Contract as booked to Accounts 142 (excluding amounts
booked to Account 142.04) and 173 as defined under the Federal Energy
Regulatory Commission Chart of Accounts as utilized by the Seller, but
excluding any obligation of such Obligor to pay finance charges and other
amounts in the case of late payment.
"Receivable Interest" means an undivided percentage ownership
interest in all Receivables in a Receivables Set and in all Related Security
with respect to such Receivables equal to the Receivable Interest Percentage.
"Receivable Interest Percentage" means, with respect to any
Receivable Interest, a percentage equal to the following fraction:
PP + D + LR
RSB
where:
PP = the Purchase Price for such Receivable Interest.
D = the Discount for such Receivable Interest.
LR = the Loss Reserve for such Receivable Interest.
RSB = the Receivables Set Balance for such Receivable Interest.
"Receivables Set" means, with respect to any Receivable Interest,
all Receivables in existence on the Purchase Date for such Receivable
Interest, but only if the Obligors of such Receivables are Designated
Obligors on such date.
"Receivables Set Balance" means, with respect to any Receivable
Interest, the Outstanding Balance of the Eligible Receivables in the
Receivables Set for such Receivable Interest on the Purchase Date for such
Receivable Interest.
"Regulatory Authority" means each of the Connecticut Department of
Public Utility Control, Federal Energy Regulatory Commission, and any
successor commission thereto.
"Related Security" means, with respect to any Receivable:
(i) all of the Seller's interest in the merchandise (including
returned, repossessed or foreclosed merchandise), if any, relating to
the sale which gave rise to such Receivable.
(ii) all other security interests or liens and property subject thereto
from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or
otherwise; and
(iii) all guarantees, indemnities, warranties, insurance policies
and proceeds and premium refunds thereof and other agreements or
arrangements of whatever character from time to time supporting or
securing payment of such Receivable, whether pursuant to the Contract
related to such Receivable or otherwise.
"Seller Report" means a report in substantially the form of Exhibit
B hereto and containing such additional information as the Agent may
reasonably request from time to time, furnished by the Collection Agent to
the Agent pursuant to Section 6.02(g).
"Set Receivable" means a Receivable in a Receivables Set.
"Settlement Date" means the 20th day of each Fiscal Month (or if
such day is not a Business Day, the next succeeding Business Day) or such
other date or dates as may be agreed between the Seller and the Agent.
"Significant Subsidiary" means any subsidiary having total assets
exceeding 10% of consolidated total assets of the Seller.
"Special Concentration Limit" shall have the meaning set forth in
the definition of "Concentration Limit."
"Tariffs" means the tariffs described in Exhibit C, which have been
approved by the governing Regulatory Authority, as hereafter amended or
modified by the governing Regulatory Authority, pursuant to which the Seller
provides electricity to the Obligors and the Obligors are obligated to pay
for such electricity.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
SECTION 1.02. Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in effect in
the State of New York and not specifically defined herein, are used herein as
defined in such Article 9.
SECTION 1.03. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. Designated Obligors; Special Concentration Limits.
Either the Seller or the Agent may cancel the designation of an Obligor as a
Designated Obligor or any Special Concentration Limit for any Obligor, by
notice in substantially the form of Exhibit D delivered by it to the other at
least three Business Days prior to the date on which such cancellation shall
become effective. Such notice of cancellation shall be applicable only to
Receivable Interests purchased on and after its effective date.
SECTION 2.02. Purchase Facility. (a) On the terms and conditions
hereinafter set forth, CAFCO may, in its sole discretion, and the Banks
shall, ratably in accordance with their respective Bank Commitments, purchase
from the Seller undivided percentage ownership interests in Set Receivables
by making Purchases through the Agent, for the benefit of CAFCO or the Banks,
as the case may be, of Receivable Interests from time to time during the
period from the date hereof to the Facility Termination Date (in the case of
CAFCO) and to the Commitment Termination Date (in the case of the Banks).
Under no circumstances shall CAFCO make any Purchase of a Receivable
Interest, or the Banks be obligated to make any such Purchase if
(i) after giving effect to such Purchase, the aggregate amount of
the uncollected Purchase Price for the Receivable Interests
owned by all Purchasers and all Banks, would exceed the
Purchase Limit or
(ii) in the case of CAFCO, a notice of termination in whole of the
Purchase Limit has been delivered to the Seller by the Agent
and has become effective or
(iii) the Discount Rate applicable to the Purchase of such
Receivable Interest shall not have been agreed to on or prior
to the Purchase Date of such Receivable Interest.
Nothing in this Agreement shall be deemed to be or construed as a commitment
by CAFCO to purchase, or a commitment by the Seller to sell, any Receivable
Interest at any time.
(b) The Agent, on behalf of the Purchasers, may, at any time, by
written notice to the Seller terminate in whole its Purchase Limit, such
termination to become effective at the close of business on the last day of
the Fiscal Month following the Fiscal Month in which such notice is given.
(c) The Seller may, upon at least five Business Days' notice to the
Agent, terminate in whole or reduce in part the unused portion of the
Purchase Limit; provided, however, that for purposes of this Section 2.02(c),
the unused portion of the Purchase Limit shall be computed as the excess of
(i) the Purchase Limit immediately prior to giving effect to such termination
or reduction over (ii) the sum of the aggregate Purchase Prices of the
Receivable Interest or Receivable Interests outstanding under this Agreement;
provided, further, that each partial reduction shall be in the amount of at
least $5,000,000 and shall be an integral multiple of $1,000,000.
SECTION 2.03. Making Purchases from the Seller. (a) Each
Purchase from the Seller shall be made by the Agent, for the benefit of the
Purchasers or the Banks, as the case may be, as of a Purchase Date. The
Seller shall deliver a purchase request (which may be contained in the next
Seller Report following such Purchase Date) specifying (i) the aggregate
Purchase Price of the Receivable Interest or Receivable Interests to be
purchased, (ii) the proposed Purchase Date and (iii) the applicable Discount
Rate. The Purchase Price of the Receivable Interest or Receivable Interests
to be purchased shall be in the minimum amount of $5,000,000. The Agent shall
promptly thereafter transmit such request to CAFCO and the Banks. The Agent
shall promptly thereafter verbally notify the Seller whether CAFCO has
determined to make a Purchase and, if so, whether all of the terms specified
by the Seller are acceptable to CAFCO.
If CAFCO has determined not to make a proposed Purchase, the Agent
shall promptly notify all of the Banks concurrently by telecopier, telex or
cable specifying the applicable Discount Rate and each Bank's Percentage
multiplied by the aggregate Purchase Price.
(b) On the Settlement Date for the Purchase of a Receivable
Interest, CAFCO or the Banks, as the case may be, shall, upon satisfaction of
the applicable conditions set forth in Article III, make available to the
Agent at its address specified on the signature page to this Agreement the
Purchase Price for such Receivable Interest in same day funds. After receipt
by the Agent of such funds, the Agent will make such funds immediately
available to the Seller at Fleet National Bank, Hartford, Connecticut, ABA #
011900445, Account # 0012-9048, or to such other account as the Seller may
notify the Agent in writing.
(c) Notwithstanding the foregoing, a Bank shall not be obligated
to make Purchases under this Section 2.03 at any time in an amount which
would exceed such Bank's Bank Commitment less (in the case of any Bank other
than Citibank) the amount of any purchases made by such Bank under any asset
purchase agreement related hereto. Each Bank's obligation shall be several,
such that the failure of any Bank to make available to the Seller any funds
in connection with any Purchase shall not relieve any other Bank of its
obligation, if any, hereunder to make funds available on the date of such
Purchase, but no Bank shall be responsible for the failure of any other Bank
to make funds available in connection with any Purchase.
SECTION 2.04. Receivable Interest Percentage. The Discount and
the Face Amount of each Receivable Interest, and the Receivable Interest
Percentage applicable thereto, shall be determined (as of the close of
business of the Seller on the Purchase Date for such Receivable Interest),
within 18 days after the Purchase Date, and will not subsequently be
redetermined.
SECTION 2.05. Fees. (a) The Seller shall pay to the Agent
certain fees in the amounts and on the dates set forth in the Fee Agreement.
(b) Each Purchaser or each Bank, as the case may be, shall pay to
the Collection Agent a collection fee (the "Collection Agent Fee") in an
amount equal to the greater of (i) l/4 of 1% per annum on the average daily
amount of the unpaid Purchase Price of all Receivable Interests held by such
Purchaser or each Bank, as the case may be, or (ii) 110% of the reasonable
costs and expenses of the Collection Agent attributable to collecting the
Purchase Price of such Receivable Interests. Such fee shall be payable in
arrears on each Settlement Date, commencing August 20, 1996, for the period
from the preceding Settlement Date to such Settlement Date.
SECTION 2.06. Settlement Procedures. (a) Each Receivable
Interest shall begin to liquidate in accordance with this Section 2.06 on the
first day of the Fiscal Month following the Purchase Date for such Receivable
Interest.
(b) The Collection Agent shall, on each day on which Collections
of Set Receivables are received by it with respect to any Receivable
Interest:
(i) in respect of Discount, set aside on its books and hold in
trust for the Purchasers or the Banks that hold such Receivable Interest
out of the applicable Receivable Interest Percentage of such Collections
an amount equal to a fraction of such Collections, the numerator of
which shall be the Discount with respect to such Receivable Interest
estimated to be collected in the Fiscal Month in which such collection
day shall occur and the denominator of which shall be the sum of such
Discount and the portion of the Purchase Price of such Receivable
Interest estimated to be collected in the Fiscal Month in which such
collection day shall occur;
(ii) in respect of Purchase Price, if an Event of Termination or
Incipient Event of Termination has occurred and is continuing hereunder,
set aside, hold in trust and segregate for the Purchasers or the Banks
that hold such Receivable Interest an amount equal to the excess of the
applicable Receivable Interest Percentage of such Collections over the
amount set aside in respect of Discount pursuant to Section 2.06(b)(i);
and
(iii) in respect of Purchase Price, so long as no Event of
Termination or Incipient Event of Termination shall have occurred and be
continuing hereunder, set aside on its books and hold in trust for the
Purchasers or the Banks that hold such Receivable Interest an amount
equal to the excess of the applicable Receivable Interest Percentage of
such Collections over the amount set aside in respect of Discount
pursuant to Section 2.06(b)(i).
(c) For the purposes of this Section 2.06:
(i) if on any day the Outstanding Balance of any Set Receivable is
reduced or adjusted as a result of any defective, rejected, returned,
repossessed or foreclosed merchandise or services, or any cash discount,
other promotional adjustment or other retroactive credit made by the
Seller, the Seller shall be deemed to have received on such day a
Collection of such Set Receivable in the amount of such reduction or
adjustment;
(ii) if on any day any of the representations or warranties in
Section 4.01(i) is no longer true with respect to any Set Receivable,
the Seller shall be deemed to have received on such day a Collection of
such Set Receivable in full;
(iii) except as provided in paragraph (i) or (ii) of this
subsection 2.06(c), or as otherwise required by applicable law or the
relevant Contract, all Collections received from an Obligor of any
Receivable in a Receivable Set shall be applied to the Receivables of
such Obligor in such Receivables Set in the order of the age of such
Receivables, starting with the oldest such Receivable, unless such
Obligor designates its payment for application to specific Receivables;
and
(iv) if and to the extent that the Agent, any Purchaser or any Bank
shall be required for any reason to pay over to an Obligor any amount
received on its behalf hereunder, such amount shall be deemed not to
have been so received but rather to have been retained by the Seller
and, accordingly, such Purchaser, the Agent or such Bank, as the case
may be, shall have a claim against the Seller for such amount, payable
when and to the extent that any distribution from or on behalf of such
Obligor is made in respect thereof.
(d) The Collection Agent shall, for the account of the Purchasers
or the Banks that hold a Receivable Interest, deposit Collections of Set
Receivables in respect of such Receivable Interest in a special account
(account number 4070-3544) maintained with Citibank at its address specified
on the signature page hereto in the name of the Agent, as follows:
(i) So long as no Event of Termination or Incipient Event of
Termination shall have occurred and be continuing hereunder, all amounts
set aside in accordance with Section 2.06(b)(i) and (iii) and not
previously deposited in such account by the Collection Agent shall be so
deposited beginning with the second Settlement Date after the Purchase
Date for such Receivable Interest and continuing on each Settlement Date
thereafter; provided that if the Seller is the Collection Agent at the
time and the Purchasers or the Banks are funding additional Receivable
Interests on such Settlement Date, an amount equal to the Purchase Price
thereof, if not otherwise paid by the Purchasers or the Banks, as the
case may be, to the Seller on such Settlement Date, may be deducted from
all such amounts set aside in accordance with Section 2.06(b)(iii); and
(ii) If an Event of Termination or Incipient Event of Termination
has occurred and is continuing hereunder, then all amounts set aside in
accordance with Section 2.06(b) and not previously deposited in such
account by the Collection Agent shall be so deposited promptly upon
receipt thereof by the Collection Agent or otherwise as directed by the
Agent.
Promptly after its receipt of any such deposit, the Agent shall make
distribution thereof to the Purchasers or the Banks, as the case may be, for
application in respect of Discount and Purchase Price.
(e) After the Purchase Price of, and Discount with respect to, a
Receivable Interest have been collected in full by the Purchasers or the
Banks, as the case may be, the right to all remaining Collections with
respect to such Receivable Interest shall revert to and be paid to the
Seller.
SECTION 2.07. Payments and Computations, Etc. (a) All amounts to
be paid or deposited by the Seller or the Collection Agent hereunder shall be
paid or deposited in accordance with the terms hereof no later than 11:00
A.M. (New York City time) on the day when due in lawful money of the United
States of America in immediately available funds at the office of Citibank
specified on the signature page hereto.
(b) The Seller shall, to the extent permitted by applicable law,
pay interest to the Agent on any amount not paid by the Seller when required
to be paid by it hereunder, at an interest rate per annum equal to the
Alternate Base Rate, payable on demand, provided, however, that such interest
rate shall not at any time exceed the maximum rate permitted by applicable
law. Such interest shall be for the account of, and shall be distributed to,
the Purchasers or the Banks, as the case may be, ratably in accordance with
their respective interests in such overdue amount and shall be paid by the
Seller free and clear of and without deduction for any taxes of any kind
whatsoever.
(c) All computations of interest under subsection (b) above and
all computations of fees hereunder shall be made on the basis of a year of
360 days for the actual number of days (including the first but excluding the
last day) elapsed. Whenever any payment or deposit to be made hereunder
shall be stated to be due on a day other than a Business Day, such payment or
deposit shall be made on the next succeeding Business Day and such extension
of time shall in such case be included in the computation of such payment or
deposit.
SECTION 2.08. Increased Costs. (a) If CNAI, any Purchaser, any
Bank, any entity which enters into a commitment to purchase Receivable
Interests or interests therein, or any of their respective Affiliates (each
an "Affected Person") determines that compliance with any law or regulation
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect
the amount of the capital required or expected to be maintained by such
Affected Person and such Affected Person determines that the amount of such
capital is increased by or based upon the existence of any commitment to make
purchases of or otherwise to maintain the investment in Set Receivables or
interests therein related to this Agreement or to the funding thereof and
other commitments of the same type, then, upon demand by such Affected Person
(with a copy to the Agent), the Seller shall immediately pay to the Agent for
the account of such Affected Person (as a third-party beneficiary), from time
to time as specified by such Affected Person, additional amounts sufficient
to compensate such Affected Person in the light of such circumstances, to the
extent that such Affected Person reasonably determines such increase in
capital to be allocable to the existence of any of such commitments. A
certificate as to such amounts submitted to the Seller and the Agent by such
Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
(b) If, due to either (i) the introduction of or any change in or
in the interpretation of any law or regulation or (ii) compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to any Purchaser or Bank of agreeing to purchase or purchasing, or
maintaining the ownership of Receivable Interests in respect of which the
Discount Rate is computed by reference to a Eurodollar Rate, then, upon
demand by such Purchaser or Bank (with a copy to the Agent), the Seller shall
immediately pay to the Agent, for the account of such Purchaser or Bank (as a
third-party beneficiary), from time to time as specified by such Purchaser or
Bank, additional amounts sufficient to compensate such Purchaser or Bank for
such increased costs. A certificate as to such amounts submitted to the
Seller and the Agent by such Investor or Bank shall be conclusive and binding
for all purposes, absent manifest error.
SECTION 2.09. Additional Discount on Receivable Interests Bearing
a Eurodollar Rate. The Seller shall pay to any Purchaser or Bank, so long as
such Purchaser or Bank shall be required under regulations of the Board of
Governors of the Federal Reserve System to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities,
additional Discount on the unpaid Purchase Price of each Receivable Interest
of such Purchaser or Bank during each Fiscal Month in respect of which
Discount is computed by reference to the Eurodollar Rate, for such Fiscal
Month, at a rate per annum equal at all times during such Fiscal Month to the
remainder obtained by subtracting (i) the Eurodollar Rate for such Fiscal
Month from (ii) the rate obtained by dividing such Eurodollar Rate referred
to in clause (i) above by that percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage of such Purchaser or Bank for such Fiscal Month,
payable on each date on which Discount is payable on such Receivable
Interest. Such additional Discount shall be determined by such Purchaser or
Bank and notice thereof given to the Seller through the Agent within 30 days
after any Discount payment is made with respect to which such additional
Discount is requested. A certificate as to such additional Discount
submitted to the Seller and the Agent by such Purchaser or Bank shall be
conclusive and binding for all purposes, absent manifest error.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The
initial Purchase hereunder is subject to the conditions precedent that the
Agent shall have received on or before the date of such Purchase the
following, each in form and substance satisfactory to the Agent:
(a) A copy of the resolutions of the Board of Directors of the
Seller authorizing this Agreement and the other documents to be
delivered by it hereunder and the transactions contemplated hereby,
certified by its Secretary or Assistant Secretary;
(b) A certificate of the Secretary or Assistant Secretary of the
Seller certifying the names and true signatures of the officers
authorized on its behalf to sign this Agreement and the other documents
to be delivered by it hereunder (on which certificate the Agent, the
Purchasers and the Banks may conclusively rely unless and until such
time as the Agent shall receive from the Seller a replacement
certificate meeting the requirements of this subsection (b));
(c) Acknowledgment copies of proper Financing Statements (Form
UCC-1), naming the Seller as the debtor with respect to the Receivables
and Related Security and CNAI, as Agent, as secured party, or other
similar instruments or documents, as may be necessary or, in the opinion
of the Agent, desirable under the UCC of all appropriate jurisdictions
or any comparable law to perfect the ownership interests in all
Receivables and Related Security in which an interest may be sold and
transferred by the Seller hereunder;
(d) Acknowledgment copies of proper Financing Statements (Form
UCC-3), if any, necessary to release all security interests and other
rights of any person in the Receivables and Related Security previously
granted by the Seller;
(e) Certified copies of requests for information or copies (Form
UCC-11) (or a similar search report certified by a party acceptable to
the Agent), dated a date reasonably near to the date of the initial
Purchase, listing all effective financing statements which name the
Seller (under its present name and any previous name) as debtor and
which are filed in the jurisdictions in which filings were made pursuant
to subsection (c) above, together with copies of such financing
statements (none of which shall cover any Receivables, Related Security
or Contracts);
(f) The Fee Agreement referred to in Section 2.05;
(g) A favorable opinion or opinions of counsel for the Seller, in
substantially the form of Exhibit E and as to such other matters as the
Agent may reasonably request;
(h) A favorable opinion of Kaye, Scholer, Fierman, Hays & Handler,
LLP, counsel for the Agent, as the Agent may reasonably request.
(i) A favorable opinion of Kaye, Scholer, Fierman, Hays & Handler,
LLP, counsel for the Agent, addressed to CAFCO and the dealer for the
commercial paper of CAFCO, as to the correctness of the representation
and warranty of the Seller set forth in Section 4.01(m), substantially
in the form previously delivered by such counsel to the Agent.
SECTION 3.02. Conditions Precedent to All Purchases. Each
Purchase (including the initial Purchase) hereunder shall be subject to the
further conditions precedent that:
(a) the Collection Agent shall have prepared and forwarded to the
Agent, for each Purchaser and each Bank, on or prior to the 18th day of each
Fiscal Month, a Seller Report related to each Receivable Interest owned by
such Purchaser or Bank as of the close of business of the Seller on the last
day of the preceding Fiscal Month and containing such additional information
as may be reasonably requested by the Agent;
(b) on the date of such Purchase the following statements shall be
true, except that the statements in clauses (iii) and (iv) below are required
to be true only if such Purchase is by a Purchaser (and the Seller by
accepting a payment of Purchase Price shall be deemed to have certified
that):
(i) The representations and warranties contained in Section 4.01
of this Agreement are correct on and as of such date as though made on
and as of such date,
(ii) No event has occurred and is continuing, or would result from
such Purchase, which constitutes an Event of Termination or Incipient
Event of Termination,
(iii) On such date, all of the Seller's long-term public senior
debt securities are rated at least BBB- by Standard & Poor's Ratings
Services or Baa3 by Moody's Investors Service, Inc., and
(iv) The Agent shall not have given the Seller at least one
Business Day's notice that the Purchasers have terminated new Purchases
of Receivable Interests; and
(c) the Agent shall have received such other approvals, opinions
or documents as the Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The
Seller represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Connecticut.
(b) The execution, delivery and performance by the Seller of this
Agreement and the other instruments and documents to be delivered by it
hereunder, and the transactions contemplated hereby and thereby,
including the Seller's use of the proceeds of Purchases, are within the
Seller's corporate powers, have been duly authorized by all necessary
corporate action, do not contravene (i) the Seller's charter and by-
laws, (ii) any law, rule or regulation applicable to the Seller,
(iii) any contractual restriction binding on or affecting the Seller or
its property or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting the Seller or its property, and (except
as contemplated hereby) do not result in or require the creation of any
lien, security interest or other charge or encumbrance upon or with
respect to any of its properties; and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law. This
Agreement has been duly executed and delivered by the Seller.
(c) No authorization, approval, declaration, order or other action
by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Seller of this Agreement or any other document or
instrument to be delivered hereunder except for such as have been
accomplished and except for the filing of the UCC Financing Statements
referred to in Article III, all of which, at the time required in
Article III, shall have been duly made and shall be in full force and
effect.
(d) This Agreement constitutes the legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance
with its terms.
(e) This Agreement evidences the transfer to the Agent, for the
benefit of the Purchasers and the Banks, as the case may be, of legal
and equitable title to, and ownership of, an undivided percentage
ownership interest in Receivables to the extent of the applicable
Receivable Interest.
(f) The consolidated balance sheet of the Seller as at December
31, 1995, and the related statements of income and retained earnings of
the Seller for the year then ended (the "Financial Statements"), copies
of which have been furnished to the Agent, fairly present the financial
condition of the Seller as of such date and the results of the
operations of the Seller for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied, and since December 31, 1995 there has not occurred any event
which may materially adversely affect the collectibility of the
Receivables Set or the ability of the Seller to collect Set Receivables
or otherwise perform its obligations under this Agreement.
(g) There are no actions, suits or proceedings pending, or to the
knowledge of the Seller threatened, against or affecting the Seller or
any Significant Subsidiary, or the property of the Seller or of any
Significant Subsidiary, except as otherwise disclosed in the Financial
Statements and the Annual Report, the Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, and the Special Reports on Form 8-K
dated March 30, 1996, April 15, 1996, June 3, 1996, June 18, 1996 and
June 28, 1996, in any court, or before any arbitrator of any kind, or
before or by any governmental body, which may materially adversely
affect the collectibility of the Receivables Set or the ability of the
Seller to collect Set Receivables or otherwise perform its obligations
under this Agreement. Neither the Seller nor any Significant Subsidiary
is in default with respect to any order of any court, arbitrator or
governmental body except for defaults, if any, which are not material to
the business or operations of the Seller or any Significant Subsidiary.
(h) No proceeds of any Purchase will be used by the Seller to
acquire any security in any transaction which is subject to Section 13
or 14 of the Securities Exchange Act of 1934, as amended.
(i) Each Set Receivable shall (i) at the time that the Purchasers
or the Banks initially purchase an undivided percentage ownership
interest in such Set Receivable from the Seller, be owned by the Seller
free and clear of any Adverse Claim and (ii) together with the Contract
related thereto, at all times after such time be free and clear of any
Adverse Claim except as otherwise specifically provided hereunder. Upon
each Purchase of a Receivable Interest, the Agent, for the benefit of
the Purchasers or the Banks, as the case may be, shall acquire a valid
and perfected first priority undivided percentage ownership interest (to
the extent of such Receivable Interest) in each Receivable in the
Receivables Set for such Receivable Interest and in the Related Security
(to the extent able to be perfected by filing), related Contract and
(subject to Section 9-306 of the UCC) Collections with respect thereto
free and clear of any Adverse Claim except as provided hereunder; and no
effective financing statement or other instrument similar in effect
covering any such Receivable or the Related Security, related Contract
and Collections with respect thereto shall at any time be on file in any
recording office, or otherwise be effective, except such as may be filed
in favor of the Agent in accordance with this Agreement.
(j) No Seller Report (if prepared by the Seller, or any Person
with which the Seller has subcontracted pursuant to Section 6.01, or to
the extent that information contained therein is supplied by the Seller
or such other Person), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by the
Seller to the Agent, any Purchaser or any Bank in connection with this
Agreement is or shall be inaccurate in any material respect or omits or
shall omit to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
(k) The chief place of business, chief executive office of the
Seller and the offices where the Seller keeps all its books, records and
documents evidencing Set Receivables or the related Contracts are
located at the address specified in Section 5.01(f), in jurisdictions
where all action required by Section 6.05 has been taken and completed.
(l) The Seller has not (i) extended, modified or waived any of the
terms of any Contract giving rise to a Set Receivable, or (ii) made any
change in its Credit and Collection Policy except, in either case, as
permitted by Section 5.03(c).
(m) Each Purchase of a Receivable Interest hereunder will
constitute (i) a "current transaction" within the meaning of Section
3(a)(3) of the Securities Act of 1933, as amended, and (ii) a purchase
or other acquisition of notes, drafts, acceptances, open accounts
receivable or other obligations representing part or all of the sales
price of merchandise, insurance or services within the meaning of
Section 3(c)(5) of the Investment Company Act of 1940, as amended.
(n) The Receivables Set Balance with respect to each Receivable
Interest shall not be less than 100% of the Face Amount of such
Receivable Interest.
(o) The Seller is not known by and does not use any tradename or
doing-business-as name in the origination or collection of any of the
Receivables.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
SECTION 5.01. Affirmative Covenants of the Seller. Until the
latest of the Facility Termination Date, the Commitment Termination Date, the
date that the Purchase Price and Discount with respect to all Receivable
Interests shall be paid in full or the date all other amounts owed by the
Seller hereunder to the Purchasers, the Banks or the Agent are paid in full,
the Seller will, unless the Agent shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders with respect to
it, its business and properties and all Set Receivables, Related
Security and related Contracts.
(b) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in
good standing as a foreign corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would materially adversely affect the
interests of any Purchaser, any Bank or the Agent hereunder or in the
Set Receivables, or the ability of the Seller or the Collection Agent to
perform their respective obligations under this Agreement.
(c) Audits. At any time and from time to time during regular
business hours as requested by the Agent, permit the Agent, or its
agents or representatives (including independent public accountants,
which may be the Seller's independent public accountants), (i) to
conduct periodic audits of the Set Receivables, the Related Security and
the related books and records and collections systems of the Seller,
(ii) to examine and make copies of and abstracts from all books, records
and documents (including, without limitation, computer tapes and disks)
in the possession or under the control of the Seller relating to Set
Receivables and the Related Security, including, without limitation, the
related Contracts, and (iii) to visit the offices and properties of the
Seller for the purpose of examining such materials described in clause
(ii) above, and to discuss matters relating to Set Receivables and the
Related Security or the Seller's performance hereunder or under the
Contracts with any of the officers or employees of the Seller having
knowledge of such matters. In addition, upon the Agent's request at
least once per year, the Seller will, at its expense, appoint
independent public accountants (which may be the Seller's regular
independent public accountants, Arthur Andersen, LLP, or other major
nationally recognized independent public accountants), or utilize the
Agent's representatives or auditors, to prepare and deliver to the Agent
a written report with respect to the Set Receivables and the Credit and
Collection Policy (including, in each case, the systems, procedures and
records relating thereto) on a scope and in a form set forth in Exhibit
F hereto or in such other form as may be reasonably requested by the
Agent. In connection herewith and unless otherwise required by
applicable law, the Agent agrees to maintain the confidentiality of all
results of such inspections (except that the Agent shall have no
obligation or confidentiality in respect of any information which may be
generally available to the public or becomes available to the public
through no fault of the Agent).
(d) Keeping of Records and Books of Account. Maintain and
implement, or cause to be maintained and implemented, administrative and
operating procedures (including, without limitation, an ability to
recreate records evidencing Set Receivables and related Contracts in the
event of the destruction of the originals thereof), and keep and
maintain, or cause to be kept and maintained, all documents, books,
records and other information reasonably necessary or advisable for the
collection of all Set Receivables (including, without limitation,
records adequate to permit the daily identification of each Set
Receivable and all Collections of and adjustments to each existing Set
Receivable).
(e) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
under the Contracts related to the Set Receivables.
(f) Location of Records. Keep its chief place of business and
chief executive office, and the offices where it keeps its records
concerning the Set Receivables and all Contracts related thereto (and
all original documents relating thereto), at the address of the Seller
set forth under its name on the signature pages to this Agreement or (i)
in the case of such records and Contracts, at the Seller's offices in
Wethersfield, Connecticut or (ii) upon 30 days' prior written notice to
the Agent, at such other locations in a jurisdiction where all action
required by Section 6.05 shall have been taken and completed.
(g) Credit and Collection Policies. Comply in all material
respects with its Credit and Collection Policy in regard to each Set
Receivable and the related Contract.
(h) Collections. At the request of the Agent, made at any time
after the occurrence of an Event of Termination or Incipient Event of
Termination, immediately deposit or cause to be deposited all
Collections to a Designated Account.
SECTION 5.02. Reporting Requirements of the Seller. Until the
latest of the Facility Termination Date, the Commitment Termination Date, the
date that the Purchase Price and Discount with respect to all Receivable
Interests shall be paid in full or the date all other amounts owed by the
Seller hereunder to the Purchasers, the Banks or the Agent are paid in full,
the Seller will, unless the Agent shall otherwise consent in writing, furnish
to the Agent:
(a) as soon as available and in any event within 60 days after the
end of each of the first three quarters of each fiscal year of the
Seller a copy of the Seller's Quarterly Report on Form 10-Q for such
quarter;
(b) as soon as available and in any event within 105 days after
the end of each fiscal year of the Seller a copy of the Seller's Annual
Report on Form 10-K, for such fiscal year;
(c) upon request by the Agent, copies of all reports which the
Seller sends to any of its security holders and copies of all reports
and registration statements which the Seller files with the Securities
and Exchange Commission or any national securities exchange;
(d) promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any Reportable Event (as defined in
Article IV of ERISA) which the Seller or any Significant Subsidiary
files under ERISA with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor or which
the Seller or any Significant Subsidiary receives from any of the
foregoing in each case in respect of the assessment of withdrawal
liability or event or condition which could, in the aggregate, result in
the imposition of liability on the Seller in excess of $10,000,000;
(e) as soon as possible and in any event within five days after an
officer of the Seller obtains knowledge of the occurrence of an Event of
Termination or an Incipient Event of Termination, the statement of the
chief financial officer or chief accounting officer or the Treasurer or
an Assistant Treasurer of the Seller setting forth the details of such
Event of Termination or Incipient Event of Termination and the action
that the Seller proposes to take with respect thereto;
(f) upon the request of the Agent, a list of the Receivables in
which each Purchaser and each Bank has purchased an undivided percentage
ownership interest hereunder;
(g) promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or Related
Security or the conditions or operations, financial or otherwise, of the
Seller or any Significant Subsidiary as the Agent may from time to time
reasonably request in order to protect any Purchaser's, any Bank's or
the Agent's interests under or contemplated by this Agreement; and
(h) on or prior to the 18th day of each Fiscal Month, such Seller
Reports and other reports, information, documents, books or records as
the Agent may reasonably request.
SECTION 5.03. Negative Covenants of the Seller. Until the latest
of the Facility Termination Date, the Commitment Termination Date, the date
that the Purchase Price and Discount with respect to all Receivable Interests
shall be paid in full or the date all other amounts owed by the Seller
hereunder to the Purchasers, the Banks or the Agent are paid in full, the
Seller will not, without the written consent of the Agent:
(a) Sales, Liens, Etc. Except as otherwise provided herein, sell,
assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Adverse Claim upon or with respect to, the
Seller's undivided interest in any Set Receivable, Related Security,
related Contract or Collections, or upon or with respect to any lock-box
account to which any Collections of any Set Receivable are sent, or
assign any right to receive income in respect thereof.
(b) Extension or Amendment of Receivables. Except in conformance
with the Credit and Collection Policy, extend, amend or otherwise modify
the terms of any Set Receivable, or amend, modify or waive any term or
condition of any Contract related thereto if such action might reduce or
impair the rights of any Purchaser, any Bank or the Agent with respect
to any Set Receivable or the collectibility or value of any Set
Receivable.
(c) Change in Business or Contracts or Credit and Collection
Policy. Make any change in the character of its business or its
Contracts or Credit and Collection Policy, which change would, in any
case, impair the collectability of any Set Receivable.
(d) No Actions Against Obligors. Commence or settle any legal
action to enforce collection of any Set Receivable except in conformance
with the Credit and Collection Policy.
(e) Deposits to Designated Accounts. Deposit or otherwise credit,
or cause or permit to be so deposited or credited, to any Designated
Account cash or cash proceeds other than Collections of Set Receivables.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent. The servicing,
administration and collection of the Set Receivables shall be conducted by
such Person (the "Collection Agent") so designated from time to time in
accordance with this Section 6.01. Until the Agent gives notice to the
Seller of a designation of a new Collection Agent, the Seller is hereby
designated as, and hereby agrees to perform the duties and obligations of,
the Collection Agent pursuant to the terms hereof. The Agent, at any time
after the occurrence of an Event of Termination or Incipient Event of
Termination, upon notice to the Seller, may designate as Collection Agent any
Person (including itself) to succeed the Seller or any successor Collection
Agent, on the condition in each case that any such Person so designated
agrees in writing (a) to perform the duties and obligations of the Collection
Agent pursuant to the terms hereof and (b) to adhere to the provisions of
Section 11.07, which agreement shall survive the termination of this
Agreement or such writing. For purposes of satisfying the condition
contained in the preceding sentence, the Agent hereby agrees that if and when
it shall designate itself as the Collection Agent it shall perform the duties
and obligations of the Collection Agent pursuant to the terms hereof. The
Collection Agent may subcontract with Northeast Utilities Service Company and
may, upon 45 days' notice to the Seller, with the prior consent of the Agent,
subcontract with any other Person for the administration and collection of
the Set Receivables, provided that the Collection Agent shall remain liable
for the performance of the duties and obligations of the Collection Agent
pursuant to the terms hereof.
SECTION 6.02. Duties of Collection Agent. (a) The Collection
Agent shall (unless the Agent directs otherwise) take or cause to be taken
only such actions as shall be necessary or customary to collect each Set
Receivable from time to time, all in accordance with applicable laws, rules
and regulations, with reasonable care and diligence, and solely in accordance
with the Credit and Collection Policy. The Seller and the Agent hereby
appoint the Collection Agent, from time to time designated pursuant to
Section 6.01, as agent for themselves and for the Purchasers and the Banks to
enforce their respective rights and interests in and under the Set
Receivables, the Related Security and the related Contracts.
(b) The Collection Agent shall set aside for the account of the
Seller, each Purchaser and each Bank their respective allocable shares of the
Collections of Set Receivables in accordance with Section 2.06, but shall not
be required (except to the extent set forth in Section 2.06) to segregate the
funds constituting such portion of such Collections prior to the remittance
thereof in accordance with such Section. If requested by the Agent in
accordance with Section 5.01(h), the Collection Agent shall segregate and
deposit into the Designated Account such allocable share of Collections of
Set Receivables, set aside for each Purchaser and each Bank, on the first
Business Day following receipt thereof by the Collection Agent.
(c) The Collection Agent may not extend, amend or otherwise modify
the terms of any Set Receivable or amend, modify or waive any term or
condition of any Contract related thereto, or commence or settle any legal
action to enforce collection of any Set Receivable, except in conformance
with the Credit and Collection Policy.
(d) The Seller shall deliver to the Collection Agent, and the
Collection Agent shall hold in trust, keep confidential and legend
appropriately for the Seller and the Agent, acting on behalf of each
Purchaser and each Bank, in accordance with their respective interests, all
computer tapes or disks which evidence or relate to Set Receivables. Upon
the Agent's request, the Seller shall deliver to the Collection Agent, and
the Collection Agent shall hold in trust and legend appropriately for the
Seller and the Agent, acting on behalf of the Purchasers and the Banks, in
accordance with their respective interests, all documents, instruments and
other records which evidence or relate to Set Receivables.
(e) The Collection Agent shall as soon as practicable following
receipt turn over to the Seller (i) that portion of Collections of Set
Receivables representing the Seller's undivided percentage ownership interest
therein, less, in the event the Seller is not the Collection Agent, all
reasonable costs and expenses of the Collection Agent in administering and
collecting the Set Receivables to the extent not covered by the Collection
Agent Fee received by it, and (ii) the Collections of any Receivable which is
not a Set Receivable.
(f) The Collection Agent, if other than the Seller, shall as soon
as practicable upon demand deliver to the Seller all documents, instruments
and other records (including, without limitation, computer tapes or disks) in
its possession which evidence or relate to Receivables of the Seller other
than Set Receivables, and copies of documents, instruments and other records
in its possession which evidence or relate to Set Receivables.
(g) The Collection Agent shall, at any time and from time to time
at the request of the Agent, furnish to the Agent (within five Business Days
after any such request) a calculation of the amounts set aside for the
Purchasers and the Banks pursuant to Section 2.06(b).
(h) The Collection Agent shall, to the extent permitted by
applicable law, pay interest to the Agent on any amount not paid by the
Collection Agent when required to be paid by it hereunder, at an interest
rate per annum equal to the Alternate Base Rate, payable on demand, provided,
however, that such interest rate shall not at any time exceed the maximum
rate permitted by applicable law. Such interest shall be for the account of,
and shall be distributed to, the Purchasers and the Banks, as the case may
be, entitled thereto ratably in accordance with their respective interests in
such overdue amount and shall be paid by the Collection Agent free and clear
of and without deduction for any taxes of any kind whatsoever.
(i) The Collection Agent's authorization under this Agreement
shall terminate, after the Facility Termination Date and Commitment
Termination Date, upon receipt by each Purchaser and each Bank which has
purchased a Receivable Interest of the allocable Purchase Price and Discount
and upon payment in full of all other amounts payable to the Agent, each
Purchaser, each Bank and the Collection Agent under this Agreement.
SECTION 6.03. Rights of the Agent. (a) The Agent is hereby
authorized, at any time, upon notice to the Seller after the occurrence of an
Event of Termination or Incipient Event of Termination, to direct the
Obligors of Set Receivables, or any of them (and the Seller shall at the
Agent's request and at the Seller's expense, direct such Obligors), to make
payment of all amounts payable under any Set Receivable directly to the
Designated Account. Further, the Agent (upon notice to the Seller and at the
Seller's expense) may, at any time after the occurrence of an Event of
Termination or Incipient Event of Termination, notify the Obligors of Set
Receivables, or any of them, of the ownership of Receivable Interests by the
Purchasers and the Banks.
(b) At any time after the occurrence of an Event of Termination or
Incipient Event of Termination:
(i) The Agent may direct the Obligors of Set Receivables, or any
of them, that payment of all amounts payable under any Set Receivable be
made directly to the Agent or its designee.
(ii) The Seller shall, at the Agent's request and at the Seller's
expense, give notice of the ownership of Receivable Interests by the
Agent, for the benefit of the Purchasers and the Banks to each such
Obligor and direct that payments be made directly to the Agent or its
designee.
(iii) The Seller shall, at the Agent's request and at the Seller's
expense, (A) assemble all of the documents, instruments and other
records (including, without limitation, computer tapes and disks) which
evidence or relate to the Set Receivables, and the related Contracts and
Related Security, or which are otherwise necessary or desirable to
collect such Set Receivables, and shall make the same available to the
Agent at a place selected by the Agent or its designee, and (B)
segregate all cash, checks and other instruments received by it from
time to time constituting Collections of Set Receivables in a manner
acceptable to the Agent and shall, promptly upon receipt, remit all such
cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Agent or its designee.
(iv) Each of the Seller, each Purchaser and each Bank hereby
authorizes the Agent to take any and all steps in the Seller's name and
on behalf of the Seller necessary or desirable, in the determination of
the Agent, to collect all amounts due under any and all Set Receivables,
including, without limitation, endorsing the Seller's name on checks and
other instruments representing Collections of Set Receivables and
enforcing such Set Receivables and the related Contracts and taking
action or causing action to be taken with respect to any Related
Security, including with respect to transferring possession of the same
to the Agent or its designee.
SECTION 6.04. Responsibilities of the Seller. Anything herein to
the contrary notwithstanding:
(a) The Seller shall remain responsible and liable to perform all
of its duties and obligations under the Contracts related to the Set
Receivables, to the extent set forth therein;
(b) The exercise by the Agent of any of its rights hereunder shall
not release the Seller from any of its duties or obligations with respect to
any Set Receivables or under the Contacts related to the Set Receivables;
(c) Neither the Agent nor any Purchaser or Bank shall have any
obligation or liability with respect to any Set Receivables or related
Contracts, nor shall any of them be obligated to perform any of the
obligations of the Seller thereunder; and
(d) The Seller shall promptly notify the Agent of any claim or
threatened claim probable, in the opinion of the management of the Seller, to
result in any liability referred to in Article X.
SECTION 6.05. Further Action Evidencing Purchases. (a) The
Seller agrees that from time to time, at its expense, it will promptly
execute and deliver all further instruments and documents, and take all
further action, that may be necessary or that the Agent may reasonable
request in order to perfect, protect or more fully evidence the Receivable
Interests purchased by the Purchasers or the Banks hereunder, or to enable
any of them or the Agent to exercise or enforce any of their respective
rights hereunder. Without limiting the generality of the foregoing, the
Seller will upon the request of the Agent: (i) execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate; (ii) mark conspicuously each invoice evidencing each Set
Receivable and the related Contract with a legend, acceptable to the Agent,
evidencing that an undivided percentage ownership interest in such Receivable
has been sold in accordance with this Agreement; and (iii) mark its master
data processing records evidencing such Set Receivables and related Contracts
with such legend.
(b) The Seller hereby authorizes the Agent to file or cause to be
filed one or more financing or continuation statements, and amendments
thereto and assignments thereof, relative to all or any of the Set
Receivables and the Related Security now existing or hereafter arising
without the signature of the Seller where permitted by law.
(c) If the Seller fails to perform any of its agreements or
obligations under this Agreement, the Agent may (but shall not be required
to) itself perform, or cause performance of, such agreement or obligation,
and the expenses of the Agent incurred in connection therewith shall be
payable by the Seller as provided in Section 11.06.
SECTION 6.06. Application of Collections. Any payment by an
Obligor in respect of any indebtedness owed by it to the Seller shall, except
as otherwise specified by such Obligor or otherwise required by contract or
law and unless otherwise instructed by the Agent, be applied as a Collection
of any Set Receivable or Receivables of such Obligor to the extent of any
amounts then due and payable thereunder before being applied to any other
indebtedness of such Obligor.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination") shall occur and be continuing:
(a) The Collection Agent (if other than the Agent or its designee)
(i) shall fail to perform or observe any term, covenant or agreement
hereunder (other than as referred to in clause (ii) of this Section 7.01(a))
and such failure shall remain unremedied for three Business Days or
(ii) shall fail to make any payment or deposit to be made by it hereunder
when due; or
(b) The Seller shall fail (i) to transfer to the Agent when
requested by the Agent any rights pursuant to this Agreement which it has as
Collection Agent, (ii) to perform or observe any term, covenant or agreement
contained in Section 5.03(e) or Section 6.03(a), (iii) to make any payment
required under Section 10.01 or (iv) to turn over to the Collection Agent the
amounts referred to in Sections 2.06(c)(i) and (ii); or
(c) Any representation or warranty made or deemed made by the
Seller (or any of its officers) under or in connection with this Agreement,
any Seller Report or any other information or report delivered by the Seller
pursuant hereto shall prove to have been incorrect in any material respect
when made or deemed made or delivered; or
(d) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed
or observed and any such failure shall remain unremedied for 10 days after
written notice thereof shall have been given to the Seller by the Agent; or
(e) The Seller shall fail to pay the principal of or interest on
any obligation of the Seller for borrowed money in an outstanding amount of
$10,000,000 or more when due, whether by acceleration, by required prepayment
or otherwise, for a period longer than any period of grace provided in such
obligation, or fail to perform any other term, condition or covenant
contained in any such obligation, the effect of which is to cause, or to
permit the holder of such obligation or others on its behalf to cause, such
obligation then to become due prior to its stated maturity, unless such
failure shall have been cured or effectively waived; or
(f) Any Purchase of a Receivable Interest pursuant hereto shall
for any reason, except to the extent permitted by the terms hereof, cease to
create a valid and perfected first priority undivided percentage ownership
interest to the extent of such Receivable Interest in each applicable Set
Receivable and the Related Security and Collections with respect thereto; or
this Agreement shall for any reason cease to evidence the transfer to the
owner thereof of legal and equitable title to, and ownership of, an undivided
percentage ownership interest in Set Receivables and Related Security to the
extent of the applicable Receivable Interest; or
(g) (i) The Seller or any of its Significant Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Seller or any of its Significant Subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property and, if
instituted against the Seller or any of its Significant Subsidiaries, either
such proceeding shall not be stayed or dismissed for 60 days or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against it or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property) shall occur; or (ii) the Seller or any of its Significant
Subsidiaries shall take any corporate action to authorize any of the actions
set forth in clause (i) above in this subsection (g); or
(h) The Delinquency Ratio shall at any time exceed 7%; or the Default
Ratio shall at any time exceed 8% or the Loss-To-Liquidation Ratio shall at
any time exceed 2%; or
(i) The Receivables Set Balance with respect to any Receivable Interest
is less than 100% of the Face Amount of such Receivable Interest; or
(j) There shall have occurred any event which may materially adversely
affect the ability of the Seller to perform its obligations under this
Agreement; [or
then, and in any such event, the Agent may, by notice to the Seller, take
either or both of the following actions: (x) designate the Facility
Termination Date or the Commitment Termination Date; and (y) designate a
Person to succeed the Seller as the Collection Agent (if the Seller is then
serving as the Collection Agent) pursuant to Section 6.01; provided, that,
automatically upon the occurrence of any event (without any requirement for
the passage of time or the giving of notice) described in paragraph (g) of
this Section 7.01, the Facility Termination Date and the Commitment
Termination Date shall occur, the Seller (if the Seller is then serving as
the Collection Agent) shall cease to be the Collection Agent and the Agent or
its designee shall become the Collection Agent. Upon any such declaration or
designation by the Agent, or upon such automatic termination, the Agent, each
Purchaser and each Bank shall have, in addition to the rights and remedies
which they may have under this Agreement, all other rights and remedies
provided after default under the UCC of the applicable jurisdiction or
jurisdictions and other applicable laws, which rights shall be cumulative.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Purchaser and each
Bank hereby appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated
to the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto.
SECTION 8.02 Agent's Reliance, Etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them as Agent under or in connection
with this Agreement (including, without limitation, any action taken or
omitted to be taken by it or them on behalf of the Purchasers or the Banks if
designated as Collection Agent pursuant to Section 6.01), except for its or
their own gross negligence or willful misconduct. Without limiting the
foregoing, the Agent:
(i) may consult with legal counsel (including counsel for the
Seller), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel,
accountants or experts;
(ii) makes no warranty or representation to any Purchaser or any
Bank (whether written or oral) and shall not be responsible to any
Purchaser or any Bank for any statements, warranties or representations
(whether written or oral) made in or in connection with this Agreement;
(iii) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Seller or the Collection
Agent or to inspect the property (including the books and records) of
the Seller or the Collection Agent;
(iv) shall not be responsible to any Purchaser or any Bank for the
due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto; and (v) shall incur no liability
under or in respect of this Agreement by acting upon any notice
(including notice by telephone), consent, certificate or other
instrument or writing (which may be by telecopier or telex) believed by
it to be genuine and signed or sent by the proper party or parties.
SECTION 8.03. CNAI and Affiliates. The obligation of Citibank to
Purchase Receivable Interests under this Agreement may be satisfied by CNAI
or any of its Affiliates. With respect to any Receivable Interest or
interest therein owned by it, CNAI shall have the same rights and powers
under this agreement as any Bank and may exercise the same as though it were
not the Agent. CNAI and any of its Affiliates may generally engage in any
kind of business with the Seller or any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of the
Seller or any Obligor or any of their respective Affiliates, all as if CNAI
were not the Agent and without any duty to account therefor to any Purchaser
or any Bank.
SECTION 8.04. Purchasers' and Banks' Purchase Decisions. Each
Purchaser and each Bank acknowledges that it has, independently and without
reliance upon the Agent, any of its Affiliates or any other Purchaser or Bank
and based on such documents and information as it has deemed appropriate,
made its own evaluation and decision to enter into this Agreement and, if it
so determines, to purchase an undivided ownership interest in Set Receivables
hereunder. Each Purchaser and each Bank also acknowledges that it will,
independently and without reliance upon the Agent, any of its Affiliates or
any other Purchaser or Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under this Agreement.
ARTICLE IX
ASSIGNMENT
SECTION 9.01. Assignability. (a) Purchasers. This Agreement and
the Purchasers' rights and obligations herein (including ownership of each
Receivable Interest) shall be assignable by the Purchasers and their
successors and assigns. Each assignor of a Receivable Interest or any
interest therein shall notify the Agent and the Seller of any such
assignment. Each assignor of a Receivable Interest or any interest therein
may, in connection with the assignment or participation, disclose to the
assignee or participant any information relating to the Seller, including the
Receivables, furnished to such assignor by or on behalf of the Seller or by
the Agent ; provided that, prior to any such disclosure, the assignee or
participant agrees to preserve the confidentiality of any confidential
information relating to the Seller received by it from any of the foregoing
entities.
(b) Banks. Each Bank may assign to any Eligible Assignee or to
any other Bank all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Bank
Commitment and any Receivable Interests or interests therein owned by it).
The parties to each such assignment shall execute and deliver an assignment
to the Agent. In addition, Citibank or any of its Affiliates may assign any
of its rights (including, without limitation, rights to payment of Purchase
Price and Discount) under this Agreement to any Federal Reserve Bank without
notice to or consent of the Seller or the Agent.
(c) Agent. This Agreement and the rights and obligations of the
Agent herein shall be assignable by the Agent and its successors and assigns.
(d) Seller. The Seller may not assign its rights or obligations
hereunder or any interest herein without the prior written consent of the
Agent.
ARTICLE X
INDEMNIFICATION
SECTION 10.01. Indemnities by the Seller. Without limiting any
other rights that the Agent, any Purchaser, any Bank or any of their
respective Affiliates (each an "Indemnified Party") may have hereunder or
under applicable law, the Seller hereby agrees to indemnify each Indemnified
Party from and against any and all damages, losses, claims, liabilities and
related costs and expenses, including reasonable attorneys' fees and
disbursements (collectively, "Indemnified Amounts"), awarded against or
incurred by any of them arising out of or as a result of this Agreement or
the ownership of Receivable Interests or in respect of any Receivable or any
Contract, excluding, however, (a) Indemnified Amounts to the extent resulting
from gross negligence or willful misconduct on the part of such Indemnified
Party, (b) recourse (except as otherwise specifically provided in this
Agreement) for uncollectible Receivables or (c) any taxes based on or
measured by the income of any Indemnified Party incurred by such Indemnified
Party arising out of or as a result of this Agreement or the ownership of
Receivable Interests or in respect of any Receivable or any Contract.
Without limiting or being limited by the foregoing, the Seller shall pay on
demand to each Indemnified Party any and all amounts necessary to indemnify
such Indemnified Party from and against any and all Indemnified Amounts
relating to or resulting from any of the following:
(i) any Receivable, at the time of the transfer of an undivided
percentage ownership interest therein, not being an Eligible Receivable;
(ii) reliance on any representation or warranty made or deemed made
by the Seller (or any of its officers) under or in connection with this
Agreement, any Seller Report or any other information or report
delivered by the Seller pursuant hereto which shall have been false or
incorrect in any material respect when made or deemed made;
(iii) the failure by the Seller to comply with any applicable
law, rule or regulation with respect to any Set Receivable, Related
Security or the related Contract, or the nonconformity of any Set
Receivable, Related Security or the related Contract with any such
applicable law, rule or regulation;
(iv) the failure to vest in the Agent, for the benefit of the
Purchasers or the Banks, as the case may be, or to transfer to the
Agent, for the benefit of the Purchasers or the Banks, as the case may
be, legal and equitable title to, and ownership of, an undivided
percentage ownership interest, to the extent of each Receivable Interest
owned by it hereunder, in the Receivables in, or purporting to be in,
the Receivables Set for such Receivable Interest, free and clear of any
Adverse Claim;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Receivables in, or purporting to be in, the Receivables Set for any
Receivable Interest, any Contract or Related Security whether at the
time of any Purchase or at any subsequent time;
(vi) any dispute, claim, offset or defense of the Obligor (other
than discharge in bankruptcy of the Obligor) to the payment of any
Receivable in, or purporting to be in, a Receivables Set (including,
without limitation, a defense based on such Receivables or the related
Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or services related to such
Receivable or the furnishing or failure to furnish such merchandise or
services or relating to collection activities with respect to such
Receivable (if such collection activities were performed by the Seller
or any of its Affiliates acting as Collection Agent);
(vii) any failure of the Seller, as Collection Agent or
otherwise, to perform its duties or obligations in accordance with the
provisions of Article VI;
(viii) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with merchandise or
services which are the subject of any Contract;
(ix) the commingling of Collections of Set Receivables at any time
with any funds (provided that this paragraph (ix) will not cover
commingling that occurs after such Collections have been either (1)
deposited or otherwise paid over to the Agent for the account of the
Purchasers or the Banks in accordance with this Agreement or (2)
received by CNAI or any of its Affiliates acting as Collection Agent);
(x) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of Purchases or the ownership of Set
Receivables or in respect of any Set Receivable or any Contract;
(xi) any failure of the Seller to comply with its covenants
contained in Section 5.01; or
(xii) any claim brought by any Person other than an Indemnified
Party arising from any activity by the Seller or any Affiliate of the
Seller in servicing, administering or collecting any Receivable.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Seller
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent, as agent for the Purchasers and the Banks (and, in
the case of any amendment, also signed by the Seller), and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless in writing and signed by the
Collection Agent in addition to the Agent, affect the rights or duties of the
Collection Agent under this Agreement. This Agreement contains a final and
complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings.
SECTION 11.02. Notices, Etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and faxed or delivered, to each party
hereto, at its address set forth under its name on the signature pages hereof
or at such other address as shall be designated by such party in a written
notice to the other parties hereto. Notices and communications by facsimile
shall be effective when sent (and shall be followed by hard copy sent by
regular mail), and notices and communications sent by other means shall be
effective when received.
SECTION 11.03. No Waiver; Remedies. No failure on the part of the
Agent, any Purchaser or any Bank to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 11.04. Binding Effect. (a) This Agreement shall be
binding upon and inure to the benefit of the Seller, the Agent, the
Purchasers, the Banks and their respective successors and assigns.
(b) This Agreement shall create and constitute the continuing
agreement of the parties hereto in accordance with its terms, and shall
remain in full force and effect until the Facility Termination Date;
provided, however, that (i) the rights of the Purchasers and the Banks to
collect the Purchase Price and Discount in respect of the Receivable
Interests owned by them, (ii) the rights and remedies of the Purchasers and
the Banks with respect to any breach of any representation and warranty made
by the Seller pursuant to Article IV or Section 3.02, (iii) the
indemnification provisions of Article X and Section 11.06, (iv) the rights of
the Agent and the Collection Agent to be paid the fees, costs and expenses
provided for hereunder and (v) the agreement set forth in Section 11.07 shall
be continuing and shall survive any termination of this Agreement.
SECTION 11.05. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF THE PURCHASERS
AND THE BANKS IN THE RECEIVABLES, OR REMEDIES HEREUNDER IN RESPECT THEREOF,
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 11.06. Costs, Expenses and Taxes. (a) In addition to the
rights of indemnification granted under Article X hereof, the Seller agrees
to pay on demand all costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing and the
other activities contemplated in Section 5.01(c)) of this Agreement and the
other documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Agent, with
respect thereto and with respect to advising the Agent, CNAI, CAFCO, Citibank
and their respective Affiliates as to their respective rights and remedies
under this Agreement, and all costs and expenses, if any (including
reasonable counsel fees and expenses), of the Agent, CNAI, the Purchasers,
the Banks and their respective Affiliates, in connection with the enforcement
of this Agreement and the other documents to be delivered hereunder.
(b) In addition, the Seller shall pay any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing, recording or enforcement of this Agreement or
the other documents to be delivered hereunder, and agrees to save each
Indemnified Party harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
SECTION 11.07. No Proceedings. Each of the Seller, the Agent, the
Collection Agent, each Purchaser, each Bank, each assignee of a Receivable
Interest or any interest therein and each entity which enters into a
commitment to purchase Receivable Interests or interests therein hereby
agrees that it will not institute against CAFCO any proceeding of the type
referred to in Section 7.01(g) so long as any commercial paper or other
senior indebtedness issued by CAFCO shall be outstanding or there shall not
have elapsed one year plus one day since the last day on which any such
commercial paper or other senior indebtedness shall have been outstanding.
SECTION 11.08. Confidentiality. (a) By the Seller. Unless
otherwise required by applicable law (including, without limitation, the
order of any governmental authority having jurisdiction and authority to
issue such order or upon the request or demand of, or in connection with any
investigation, proceeding or audit by, any governmental authority, if such
request or demand shall have the force of law or be made in connection with
the exercise of such authority's regulatory functions), the Seller agrees to
maintain the confidentiality of this Agreement (and all drafts thereof) in
communications with third parties and otherwise; provided, however, that the
Agreement may be disclosed to third parties to the extent such disclosure is
(i) required in connection with a sale of securities of the Seller, (ii) made
solely to persons who are legal counsel for the purchaser or underwriter of
such securities, (iii) limited in scope to the provisions of Articles V, VII,
X and, to the extent defined terms are used in Articles V, VII and X, such
terms defined in Article I of this Agreement, (iv) made pursuant to a written
agreement of confidentiality in form and substance reasonably satisfactory to
the Agent, (v) to the Seller's legal counsel and accountants if they agree to
hold it confidential or (vi) with respect to information generally available
to the public or which becomes available to the public through no fault of
the Seller.
(b) By the Agent. Unless otherwise required by applicable law
(including, without limitation, the order of any governmental authority
having jurisdiction and authority to issue such order or upon the request or
demand of, or in connection with any investigation, proceeding or audit by,
any governmental authority or rating agency, if such request or demand shall
have the force of law or be made in connection with the exercise of such
authority's regulatory functions or such agency's normal functions), the
Agent agrees to maintain the confidentiality of any information provided to
the Agent by the Seller; provided, however, that such information may be
disclosed to third parties to the extent such disclosure is (i) made pursuant
to a written agreement of confidentiality in form and substance reasonably
satisfactory to the Seller or (ii) to the Agent's legal counsel and
accountants if they agree to hold it confidential or (iii) with respect to
information generally available to the public or which becomes available to
the public through no fault of the Agent.
SECTION 11.09. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to
this Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLER AND COLLECTION AGENT:
THE CONNECTICUT LIGHT AND POWER COMPANY
By: /s/ David R. McHale
Name: David R. McHale
Title: Assistant Treasurer
107 Selden Street
Berlin, Connecticut 06037
Attention: David R. McHale
Assistant Treasurer
Facsimile No.: 860-665-5457
PURCHASER:
CORPORATE ASSET FUNDING COMPANY, INC.
By: Citicorp North America, Inc.
as Attorney-in-Fact
By /s/ Michael Llodra
Name: Michael Llodra
Title: Vice President
450 Mamaroneck Avenue
Harrison, NY 10528
Attention: Corporate Asset Funding
Facsimile No. 914-899-7890
BANK: CITIBANK, N.A.
By: /s/ Michael Llodra
Name: Michael Llodra
Title: Attorney-in-Fact
Percentage: 100%
450 Mamaroneck Avenue
Harrison, N.Y. 10528
Facsimile No. 914-899-7890
AGENT:
CITICORP NORTH AMERICA, INC., as Agent
By /s/ Michael Llodra
Name: Michael Llodra
Title: Vice President
450 Mamaroneck Avenue
Harrison, N.Y. 10528
Attention: Corporate Asset Funding
Facsimile No. 914-899-7890
EXHIBIT A
SPECIAL CONCENTRATION LIMITS
Date: ____________, 19__
Citicorp North America, Inc., as Agent
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: Corporate Asset Funding Department
Reference is made to the Receivables Purchase and Sale Agreement,
dated as of July 11, 1996 (the terms defined therein being used herein as
therein defined) among The Connecticut Light and Power Company, Corporate
Asset Funding Company, Inc., Citibank, N.A. and Citicorp North America, Inc.,
as Agent.
The Seller hereby designates for the Designated Obligor[s] named
below the Special Concentration Limit[s] set forth below opposite [its]
[their respective] name[s]:
Designated Obligor Special Concentration Limit
__________________ ___________________________
__________________ ___________________________
[etc.]
THE CONNECTICUT LIGHT AND POWER COMPANY
By /s/
Name:
Title:
The undersigned hereby approves the above Special Concentration
Limit[s], as of the date hereof.
CITICORP NORTH AMERICA, INC.
as Agent
By /s/
Name:
Title:
EXHIBIT B
FORM OF SELLER REPORT
EXHIBIT C
DESCRIPTION OF TARIFFS
1. The retail rates charged by the Seller to Obligors, as approved from
time to time by the Connecticut Department of Public Utility Control.
2. The Connecticut Light and Power Company Rules and Regulations, effective
July 1, 1993, applicable to its retail rate accounts as approved by the
Connecticut Department of Public Utility Control.
EXHIBIT D
CANCELLATION OF DESIGNATION OF
OBLIGORS AND/OR SPECIAL CONCENTRATION LIMITS
Date: _____________, 19__
[Citicorp North America, Inc.,
as Agent
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: Corporate Asset
Funding]
[The Connecticut Light and Power Company,
107 Selden Street
Berlin, Connecticut]
Reference is made to the Receivables Purchase and Sale Agreement,
dated as of July 11, 1996 (the "Receivables Agreement"; the terms defined
therein being used herein as therein defined) among The Connecticut Light and
Power Company, Corporate Asset Funding Company, Inc., Citibank, N.A. and
Citicorp North America, Inc., as Agent.
The undersigned hereby cancels, effective as of the date occurring
three days after the date hereof, the designation pursuant to Section 2.01 of
the Receivables Agreement of [each of] the following Obligor[s] as a
Designated Obligor:
1. _________________________________________________
2. _________________________________________________
3. _________________________________________________
(etc.)
The undersigned hereby cancels, effective as of the date occurring
three days after the date hereof, the Special Concentration Limit of each of
the following Obligor[s]:
1. _______________________
2. _______________________
3. _______________________
(etc.)
and thus as of the date occurring three days after the date hereof the Normal
Concentration Limit shall apply to the above Obligor[s].
[CITICORP NORTH AMERICA, INC.,
as Agent]
[THE CONNECTICUT LIGHT AND POWER COMPANY]
By /s/
Name:
Title:
EXHIBIT E
FORM OF OPINION OF COUNSEL FOR THE SELLER
[Date of initial purchase]
Corporate Asset Funding Company, Inc.
c/o Citicorp North America, Inc.
450 Mamaroneck Avenue
Harrison, NY 10528
Citibank, N.A.
450 Mamaroneck Avenue
Harrison, NY 10528
Citicorp North America, Inc.,
as Agent
450 Mamaroneck Avenue
Harrison, New York 10528
Re: The Connecticut Light and Power Company (the "Seller")
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01(g) of the
Receivables Purchase and Sale Agreement, dated as of July 11, 1996 (the
"Receivables Agreement"), among the Seller, Corporate Asset Funding Company,
Inc., Citibank, N.A. and Citicorp North America, Inc., as Agent. Terms
defined in the Receivables Agreement are used herein as therein defined.
We have acted as counsel to the Seller in connection with the
preparation, execution and delivery of, and the initial purchase made under,
the Receivables Agreement.
We have examined:
(1) the Receivables Agreement;
(2) the documents furnished by the Seller pursuant to Section 3.01
of the Receivables Agreement;
(3) the [Articles] [Certificate] of Incorporation of the Seller
and all amendments thereto (the "Charter");
(4) the by-laws of the Seller and all amendments thereto (the "By-
Laws");
(5) certificates of the Secretary of State of Connecticut and The
Connecticut Department of Public Utility Control, dated ___________,
1996, attesting to the continued corporate existence and good standing
of the Seller in such State;
(6) acknowledgment copy or time stamped receipt copy of a
financing statement (the "Financing Statement") under the Uniform
Commercial Code (the "UCC") as in effect in the State of Connecticut,
naming the Seller as debtor and CNAI, as Agent, as secured party; and
(7) certificates from Data Reporting Corp. as to copies of
financing statements on file with the filing offices located in the
respective states listed in Schedule I hereto.
We have examined the originals, or copies certified to our
satisfaction, of such other corporate records of the Seller, certificates of
public officials and of officers of the Seller, and agreements, instruments
and other documents, and have made such other investigation, as we have
deemed necessary as a basis for the opinions expressed below. As to
questions of fact material to such opinions, we have, when relevant facts
were not independently established by us, relied upon the representations of
the Seller in the Receivables Agreement and upon certificates of the Seller
or its officers or of public officials. We have assumed the due execution
and delivery, pursuant to due authorization, of the Receivables Agreement by
CAFCO and the Agent.
In our examination of the certificates referred to in item (7)
above, we have assumed that all financing statements, other than the
Financing Statements, in which the Seller is named as debtor have been
properly filed and indexed in the appropriate filing offices in the states
listed on Schedule I hereto and that such certificates are accurate and
complete.
We are qualified to practice law in the State of Connecticut and we
do not purport to express an opinion on any laws other than the laws of the
State of Connecticut and the federal laws of the United States.
Based upon the foregoing and upon such investigation as we have
deemed appropriate, we are of the following opinion:
1. The Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Connecticut, and has
the corporate power and authority to own its properties and transact the
business in which it is engaged. The Seller is duly qualified as a
foreign corporation and in good standing in all of the states where the
nature of its business or the ownership or use of its property requires
such qualification except to the extent that failure to so qualify would
not have a material adverse effect on the Seller.
2. The execution, delivery and performance by the Seller of the
Receivables Agreement, and the Seller's use of the proceeds of Purchases
of Receivable Interests, are within the Seller's corporate powers, have
been duly authorized by all necessary corporate action, and (a) do not
contravene (i) the Charter or the By-Laws or (ii) any law, rule or
regulation applicable to the Seller or (iii) any contractual or legal
restriction contained in any indenture, mortgage, deed of trust,
agreement or other instrument or similar document of which we have
knowledge (after due investigation); (b) do not result in or require the
creation of any Adverse Claim (other than in accordance with the
Receivables Agreement) upon or with respect to any of the Seller's
properties; and (c) do not require compliance with any bulk sales act or
similar law. The Receivables Agreement has been duly executed and
delivered on behalf of the Seller.
3. No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Seller
of the Receivables Agreement or for the perfection of or the exercise by
the Agent, the Purchasers or the Banks, of their respective rights and
remedies under the Receivables Agreement, except for the filings of the
Financing Statements referred to in Paragraph 7 below.
4. In any action or proceeding arising out of or relating to the
Receivables Agreement in any court of the State of Connecticut or in any
federal court sitting in the State of Connecticut, such court would
recognize and give effect to the provisions of Section 11.05 of the
Receivables Agreement wherein the parties thereto agree that the
Receivables Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York. However, if a court were to
hold that the Receivables Agreement is governed by, or is to be
construed in accordance with, the laws of the State of Connecticut, the
Receivables Agreement would be, under the laws of the State of
Connecticut, the legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance with its terms, subject to
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally and to general principles of equity (whether considered in a
proceeding in equity or at law).
5. There are no actions, suits or proceedings pending or (to our
knowledge) threatened against the Seller or any of its subsidiaries
before any court, governmental agency or arbitrator which are likely to
materially adversely affect (i) the financial condition or operations of
the Seller [or any of its subsidiaries] or (ii) the ability of the
Seller to perform its obligations under the Receivables Agreement, or
which purport to affect the legality, validity, binding effect or
enforceability of the Receivables Agreement.
6. The Receivable Interests purchased pursuant to the initial
purchase on the date hereof constitute, and each Receivable Interest
purchased pursuant to a subsequent purchase will constitute, a valid and
undivided ownership interest (an "Undivided Interest"), to the extent of
such Receivable Interest, in each Set Receivable then existing or
thereafter arising and in the Related Security and Collections with
respect thereto.
7. The Financing Statements are in appropriate form and have been
duly filed pursuant to the UCC, resulting in the perfection and first
priority of each Undivided Interest, except as follows:
(a) in the case of proceeds, continuation of perfection of
the Undivided Interest therein is limited to the extent set forth
in section 9-306 of the UCC;
(b) Article 9 of the UCC requires the filing of continuation
statements within the period of six months prior to the expiration
of [five] years from the date of the original filings, in order to
maintain the effectiveness of the filings referred to in this
paragraph; and
(c) We express no opinion as to the priority of the Undivided
Interest as against any claim or lien in favor of the United States
or any agency or instrumentality thereof (including, without
limitation, federal tax liens and liens under Title IV of ERISA).
We call to your attention that the perfection of each Undivided
Interest will be terminated (i) as to any Set Receivable arising more than
four months after the Seller so changes its name, identity or corporate
structure as to make the Financing Statements seriously misleading, unless
new appropriate financing statements indicating the new name, identity or
corporate structure of the Seller are properly filed before the expiration of
such four months and (ii) as to all the Set Receivables, four months after
the Seller changes its chief executive office to a new jurisdiction outside
the State of Connecticut (or, if earlier, when perfection under the UCC of
the State of Connecticut would have ceased as set forth above in paragraph
7(b)) unless such Undivided Interest is perfected in such new jurisdiction
before such termination.
8. Each Purchase pursuant to the Receivables Agreement will
constitute (a) a "current transaction" within the meaning of Section
3(a)(3) of the Securities Act of 1933, as amended, and (b) a purchase or
other acquisition of notes, drafts, acceptances, open accounts
receivable or other obligations representing part or all of the sales
price of merchandise, insurance or services within the meaning of
Section 3(c)(5) of the Investment Company Act of 1940, as amended.
Very truly yours,
EXHIBIT F
AUDIT SCOPE
I. Review of 2-3 monthly Seller Reports
A. Agree numerical amounts to source documents
B. Recalculate percentages and ratios
C. Review customer concentrations (cross-agings)
D. Review write-off activity
E. Review AR eligibility
F. Review the aging of outstanding invoices
II. Perform a verification of receivable activity for sample Seller Report
A. Monthly activity
1. Sales
2. Collections
3. Write-offs
4. Debit and Credit memos
B. Statistical analysis
1. Turnover
2. Dilution
3. Loss-to-liquidation
III. If available, supply copy of most recent review of accounting controls
Exhibit 10.49
U.S. $40,000,000
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of September 11, 1996
Among
WESTERN MASSACHUSETTS ELECTRIC COMPANY
as the Seller and Servicer
and
MONTE ROSA CAPITAL CORPORATION
as the Purchaser
and
UNION BANK OF SWITZERLAND, NEW YORK BRANCH
as the Agent
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms 1
1.02. Other Terms 21
1.03. Computation of Time Periods 21
ARTICLE II
THE RECEIVABLES FACILITY
2.01. Purchases and Maintenance of Percentage
Interests 22
2.02. Termination or Reduction of the Purchase
Limit 24
2.03. Percentage Interests 24
2.04. Selection of Purchase Periods 24
2.05. Non-Liquidation Settlement Procedures 25
2.06. Liquidity Shortfall Event; Partial
Liquidations 25
2.07. Liquidation Settlement Procedures 26
2.08. Deemed Collections of Receivables 27
2.09. Payments and Computations, Etc. 28
2.10. Fees 29
2.11. Breakage Fee and Indemnity 29
2.12. Sharing of Payments, Etc. 30
2.13. Eurodollar Rate Protection; Illegality 30
2.14. Increased Costs; Capital Adequacy 32
2.15. Taxes 33
2.16. Security Interest 35
ARTICLE III
CONDITIONS OF PURCHASES
3.01. Conditions Precedent to Initial Purchase 35
3.02. Conditions Precedent to All Purchases and
Reinvestments 35
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the
Seller 36
4.02. Representations and Warranties of the
Servicer 40
ARTICLE V
GENERAL COVENANTS OF THE SELLER AND THE SERVICER
5.01. General Seller Covenants 41
5.02 Servicer Covenants 45
ARTICLE VI
ADMINISTRATION, COLLECTION AND MONITORING OF RECEIVABLES
6.01. Appointment and Designation of the
Servicer 46
6.02. Collection of Receivables by the Servicer;
Extensions and Amendments of Receivables 47
6.03. Distribution and Application of
Collections 47
6.04. Segregation of Collections 48
6.05. Other Rights of the Agent 48
6.06. Records; Maintenance of General Trial
Balance; Audits 49
6.07. Receivables Reporting 50
6.08 Collections 50
6.09. UCC Matters; Protection and Perfection of
Percentage Interests 51
6.10. Obligations of the Seller With Respect to
Receivables 52
ARTICLE VII
EVENTS OF TERMINATION
7.01. Events of Termination 52
ARTICLE VIII
THE AGENT
8.01. Authorization and Action 55
8.02. UCC Filings 56
8.03. Agent's Reliance, Etc. 56
8.04. Agent and Affiliates 57
8.05. Purchase Decision 57
8.06. Indemnification 57
8.07. Successor Agent 58
ARTICLE IX
INDEMNIFICATION
9.01. Indemnities by the Seller 58
9.02 Indemnities by the Servicer 60
ARTICLE X
MISCELLANEOUS
10.01. Amendments and Waivers 61
10.02. Notices, Etc. 61
10.03. No Waiver; Remedies 62
10.04. Binding Effect; Assignability 62
10.05. Term of this Agreement 63
10.06. GOVERNING LAW; SUBMISSION TO
JURISDICTION 63
10.07. Costs, Expenses and Taxes 63
10.08. No Proceedings 64
10.09. Execution in Counterparts; Severability;
Integration 65
10.10. WAIVER OF TRIAL BY JURY 65
10.11. Section Headings 65
10.12. Confidentiality 65
10.13. Restructuring 67
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE I Condition Precedent Documents
SCHEDULE II Intentionally Omitted
SCHEDULE III Tradenames, Fictitious Names and "Doing Business
As" Names
SCHEDULE IV Location of the Seller's Chief Executive Office, Principal
Place of Business and Books and Records
EXHIBITS
EXHIBIT A Form of Assignment and Acceptance
EXHIBIT B Methodology re: Unbilled Receivables
EXHIBIT C-1 Form of Bank Notice for Lock-Box Bank
EXHIBIT C-2 Form of Bank Notice for bank at which the Collection Account
is maintained
EXHIBIT D Form of Investor Report
EXHIBIT E-1 Forms of Opinions of Internal Counsel for Seller
EXHIBIT E-2 Form of Opinion of Outside Counsel for Seller
EXHIBIT F Form of Officer's Certificate
THIS RECEIVABLES PURCHASE AND SALE AGREEMENT (the "Agreement") is
made as of September 11, 1996, among:
(1) WESTERN MASSACHUSETTS ELECTRIC COMPANY, a Massachusetts
corporation (the "Seller" or "WMECO");
(2) MONTE ROSA CAPITAL CORPORATION, a Delaware corporation (the
"Purchaser"); and
(3) UNION BANK OF SWITZERLAND, NEW YORK BRANCH ("UBS"), as agent (the
"Agent").
IT IS AGREED as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. (a) Certain capitalized
terms used throughout this Agreement are defined above or in this Section
1.01.
(b) As used in this Agreement and its Exhibits, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
"Active Receivable" means a Receivable which is not an Inactive
Receivable.
"Adverse Claim" means a lien, security interest, charge,
encumbrance or other right or claim of any Person.
"Affected Party" has the meaning assigned to that term in Section
2.14.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by or under common control with such Person;
provided, however, that neither the Agent, UBS, any of UBS's branches or
agencies, the Purchaser nor any subsidiary of the Purchaser, shall be deemed
to be an affiliate of the Seller.
"Agent's Account" means a special account (account number USDDAC1
282626) in the name of the Agent maintained at the Agent's main office at New
York, New York or such other account as may be designated from time to time
by the Agent upon at least five Business Days' prior written notice to the
Seller and the Servicer.
"Alternative Rate" means, with respect to any Percentage Interest
for any Purchase Period, an interest rate per annum equal to the Eurodollar
Rate; provided, however, that the "Alternative Rate" for such Percentage
Interest for such Purchase Period shall be the Base Rate in effect from time
to time during such Purchase Period if (i) such Purchase Period is a period
of 1 to 29 days or (ii) the Purchase Price allocated to such Percentage
Interest is less than $1,000,000; and provided, further, that at all times
following the occurrence of an Event of Termination, the "Alternative Rate"
shall be the sum of (a) the Base Rate in effect from time to time, plus (b)
2.0%.
"Assignment and Acceptance" means an assignment and acceptance
entered into by an Owner and an assignee pursuant to Section 10.04,
substantially in the form of Exhibit A.
"Bank Notice" means a notice (a) from the Seller to any Lock-Box
Bank, in substantially the form of Exhibit C-1, or (b) from the Purchaser to
the bank at which the Collection Account is maintained, in substantially the
form of Exhibit C-2, as applicable.
"Base Rate" means, on any date, a fluctuating rate of interest per
annum equal to the highest of:
(a) the Prime Rate;
(b) 0.50% above the latest three-week moving average of secondary
market morning offering rates in the United States for three-month
certificates of deposit of major United States money market banks, such
three-week moving average being determined weekly on each Monday (or, if
such day is not a Business Day, on the next succeeding Business Day) for
the three-week period ending on the previous Friday by the Agent on the
basis of such rates reported by certificate of deposit dealers to and
published by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis of quotations
for such rates received by the Agent from three New York certificate of
deposit dealers of recognized standing selected by the Agent, in either
case, adjusted to the nearest 1/4 of one percent or, if therein is no
nearest 1/4 of one percent, to the next higher 1/4 of one percent; and
(c) the Federal Funds Rate, plus 0.50%.
"Benefit Plan" means any employee benefit plan as defined in
Section 3(2) of ERISA in respect of which the Seller or any ERISA Affiliate
of the Seller is, or at any time during the immediately preceding six years
was, an "employer" as defined in Section 3(5) of ERISA.
"Breakage Fee" has the meaning assigned to that term in Section
2.11.
"Business Day" means a day of the year (other than a Saturday or a
Sunday) on which (i) banks are required to be open in New York City and (ii)
if the term "Business Day" is used in connection with the Eurodollar Rate,
dealings in Dollar deposits are carried on in the London interbank Eurodollar
market.
"Change in Late Stage Delinquencies" means the amount, computed as of
each Cut-Off Date as follows:
(i) determine the sum of (A) the Outstanding Balance of Active
Receivables which remain unpaid for more than 120 days past the original
billing date plus (B) the Outstanding Balance for Inactive Receivables
which remain unpaid for a period up to 30 days past the final billing
date (hereinafter referred to as "Late Stage Delinquencies");
(ii) determine the average Late Stage Delinquencies for the twelve
most recent months, as calculated in the twelve most recent Investor
Reports;
(iii) subtract the amount determined pursuant to clause (ii) from
the amount determined pursuant to clause (i), which amount shall be the
"Change in Late Stage Delinquencies" for such Cut-Off Date;
provided, that if the amount determined pursuant to clause (iii) is less than
zero, the Change in Late Stage Delinquencies for such Cut-Off Date shall
equal zero.
"Change of Control" means any Person, or two or more Persons acting
in concert, shall acquire beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission) of 20% or more of the
outstanding voting shares of the Seller.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning assigned to that term in Section 2.16.
"Collateral Trustee" means that Person acting as "Trustee" under
(and as defined in) the Security Agreement.
"Collection Account" means the account maintained in the name of
the Purchaser, which account shall be opened prior to the initial purchase
hereunder, or such other account as is designated as the Collection Account
pursuant to Section 4.01(l).
"Collection Date" means the date following the Termination Date on
which all Percentage Interests have been reduced to zero in accordance with
Section 2.03(a) and the Agent has received all amounts due to it in
connection with this Agreement.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, any collection of such Receivable deemed to have been received
pursuant to Section 2.08 and all payments required to be made by the Seller
pursuant to Section 2.06 or the last sentence of Section 2.08.
"Commercial Paper Note" means any promissory note issued by the
Purchaser having an original maturity of 270 days or less (including the date
of issuance thereof).
"Concentration Limit" means, for any Reported Group on any Cut-Off
Date, 2.0% (or, if an Obligor identified in clause (i) of the definition of
"Reported Group" has a long term credit rating of at least AA- by Standard &
Poor's and Aa3 by Moody's, the Concentration Limit for such Obligor's
Reported Group shall mean 100%) of the Purchase Limit on such Cut-Off Date or
such other amount or percentage ("Special Concentration Limit") for any such
Reported Group designated by the Agent in a writing delivered to the Seller
from time to time.
"Coverage Ratio" means, on any date of determination, the ratio of
(x) the sum of (i) the Net Receivables Pool Balance plus (ii) the available
funds on deposit in the Collection Account to (y) the sum of the Utilized
Amounts for all Percentage Interests, in each case, as of such date.
"CP Disruption Event" means, at any time for any reason whatsoever,
the Purchaser shall be unable to raise, or shall be precluded or prohibited
from raising, funds through the issuance of Commercial Paper Notes in the
United States' commercial paper market at such time.
"CP Rate" means with respect to any Purchase Period for any
Percentage Interest, the rate equivalent to the sum of (i) the rate (or if
more than one rate, the weighted average of the rates) at which Commercial
Paper Notes having a term equal to such Purchase Period may be sold by any
placement agent or commercial paper dealer selected by the Purchaser, as
agreed between each such agent or dealer and the Purchaser; provided,
however, if the rate (or rates) as agreed between any such agent or dealer
and the Purchaser with regard to any Purchase Period for any Percentage
Interest is a discount rate (or rates), then such rate for such Purchase
Period shall be the rate (or if more than one rate, the weighted average of
the rates) resulting from converting such discount rate (or rates) to an
interest-bearing equivalent rate per annum plus (ii) the Dealer Fees for such
Purchase Period; provided, however, that at all times following the
occurrence of an Event of Termination, such rate for any Percentage Interest
shall be the Alternative Rate in effect from time to time.
"Credit and Collection Policy" means those credit and collection
policies and practices of the Seller relating to Receivables, as delivered to
the Agent prior to the date hereof, as modified in compliance with this
Agreement.
"Cut-Off Date" means the last day of a calendar month.
"Dealer Fees" means with respect to any Purchase Period for any
Percentage Interest, the rate set forth in a fee letter executed among the
Seller, the Agent and the Purchaser.
"Debt" of any Person means (i) indebtedness of such Person for
borrowed money, (ii) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations (other than
ordinary trade payables) of such Person to pay the deferred purchase price of
property or services, (iv) obligations of such Person as lessee under leases
which shall have been or should be, in accordance with GAAP, recorded as
capital leases, (v) obligations secured by an Adverse Claim upon property or
assets owned by such Person, even though such Person has not assumed or
become liable for the payment of such obligations and (vi) obligations of
such Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iv)
above.
"Defaulted Receivable" means a Receivable: (i) as to which, with
respect to Active Receivables, any payment, or part thereof, remains unpaid
for more than 90 days from the billing date for such payment, (ii) as to
which, the Obligor thereon shall generally not be able to pay its debts as
such debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against such Obligor
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property, or (iii) which,
consistent with the Credit and Collection Policy, has been or should be
written off the Seller's books as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a percentage)
computed as of each Cut-Off Date by dividing (i) the aggregate Outstanding
Balance of all Receivables that became Delinquent Receivables during the
month ending on such Cut-Off Date, by (ii) the aggregate Outstanding Balance
of all Receivables on such date.
"Delinquent Receivable" means an Active Receivable that is not a
Defaulted Receivable and as to which any payment or part thereof remains
unpaid for more than 60 days from the original billing date for such payment.
"Designated Obligor" means, at any time, each Obligor; provided,
however, that any Obligor shall cease to be a Designated Obligor upon three
Business Days' notice from the Agent to the Seller.
"Dilution Factors" means, with respect to the Receivables, any
credits, rebates, discounts, allowances, disputes, chargebacks, allowances
for early payments and other allowances or adjustments granted in accordance
with the Seller's usual practices.
"Dilution Ratio" means the ratio (expressed as a percentage)
computed as of each Cut-Off Date by dividing (i) the aggregate reduction as a
result of any of the Dilution Factors in the aggregate original principal
balance of the Receivables during such month, by (ii) the amount of
Collections (other than deemed Collections) received during such month.
"Dilution Reserve Percentage" means, on any day for any Percentage
Interest, the greater of (i) 1.00% and (ii) 2.0 times the average Dilution
Ratio for the three consecutive months ending on the most recent Cut-Off
Date.
"Dollars" or "$" means lawful money of the United States.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which is a Designated Obligor, is a United
States resident, and is not an Affiliate of any of the parties hereto;
(ii) which is not a Defaulted Receivable, a Delinquent
Receivable, an Inactive Receivable or a Hardship Receivable; and if such
Receivable is owed by an Obligor in a Reported Group, the Obligors in
such Reported Group are not the Obligors of any Defaulted Receivables or
of any Delinquent Receivables in the aggregate amount of 25% or more of
the aggregate Outstanding Balance of all Receivables of Obligors in such
Reported Group;
(iii) which (A) is required to be paid in full immediately
upon the Obligor's receipt of the original invoice therefor, (B)
constitutes the legal, valid and binding obligation of the Obligor of
such Receivable, enforceable against such Obligor in accordance with its
terms and (C) is not subject to any right of rescission, dispute,
offset, counterclaim or defense whatsoever;
(iv) (A) which is an "account" within the meaning of Section 9-106
of the UCC of all applicable jurisdictions, (B) which has been invoiced
by the Seller unless such Receivable is an Unbilled Receivable, (C) as
to which all action required to be taken in connection therewith by the
Seller for the Obligor has been taken, except that Unbilled Receivables
shall not have been invoiced, (D) is denominated and payable only in
Dollars in the United States and (E) no portion of which is payable on
account of sales, excise or similar taxes;
(v) which arises in the ordinary course of the Seller's
business in connection with the sale of electricity and/or related
services;
(vi) the sale, assignment or transfer of which (including,
without limitation, the sale of an undivided percentage interest
therein) does not contravene or conflict with any applicable laws, rules
or regulations or any contractual or other restriction, limitation or
encumbrance or require the consent of any Person;
(vii) which has not been compromised, adjusted or modified
(including by extension of time or payment or the granting of any
discounts, allowances or credits) for reasons related to the credit of
the Obligor of such Receivable;
(viii) which, together with any contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no party to any
contract related thereto, if applicable, is in violation of any such
law, rule or regulation in any material respect;
(ix) which (A) satisfies all applicable requirements of the
Credit and Collection Policy and (B) complies with such other criteria
and requirements as the Agent may from time to time specify to the
Seller following thirty days' notice;
(x) as to which the Agent has not notified the Seller that the
Agent has determined, in its sole discretion, that such Receivable (or
class of Receivables) is not acceptable for purchase hereunder;
(xi) which is neither evidenced by any promissory note,
draft, bond, debenture or other instrument nor payable pursuant to any
contract which creates a security interest in goods;
(xii) the Obligor of which is located outside of Indiana,
Minnesota or New Jersey unless the Seller has qualified to do business
in such state or has filed a Notice of Business Activities Report or
equivalent report with such state for the then current year; and
(xiii) which is free and clear from all liens (other than
liens expressly permitted by this Agreement) and (except as provided
herein) as to which the Seller has good and marketable title.
"ERISA" means, on any day, the U.S. Employee Retirement Income
Security Act of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means (i) any corporation which is a member of
the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Seller; (ii) a trade or business (whether
or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with the Seller or (iii) a member of the same
affiliated service group (within the meaning of Section 414(m) of the Code)
as the Seller, any corporation described in clause (i) above or any trade or
business described in clause (ii) above.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" means, with respect to any Percentage Interest
for any Purchase Period, the per annum rate of interest determined by the
Agent to be equal to the sum of (a) 0.85% and (b) the rate (rounded upward,
if necessary, to the nearest whole multiple of 1/16th of one percent per
annum) for deposits in Dollars for a period approximating such Purchase
Period which appears on the Reuters Screen LIBO Page as of 11:00 A.M. (London
time) on the second Business Day before (and for value on) the first day of
such Purchase Period, divided by the remainder of one minus the Eurodollar
Reserve Percentage (expressed as a decimal) applicable during such Purchase
Period.
"Eurodollar Reserve Percentage" means, with respect to any Purchase
Period for any Percentage Interest, the reserve percentage (rounded upwards,
if necessary, to the nearest 1/16th of one percent per annum) applicable
during such Purchase Period (or, if more than one such percentage shall be so
applicable during such Purchase Period, the daily average of such percentages
for those days in such Purchase Period during which any such percentages
shall be in effect) under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for banks or
other financial institutions subject to such regulations with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities
having a term equal to such Purchase Period.
"Event of Termination" has the meaning assigned to that term in
Section 7.01.
"Excess Government Exposure" means, at any time, the excess (if
any) of (x) the aggregate Outstanding Balance of Receivables owed by Obligors
that are governments or governmental subdivisions or agencies, over (y) 6.0%
of the aggregate Purchase Limit at such time.
"Excess Reported Group Exposure" means at any time the amount
computed as follows:
(i) for each Reported Group, determine the excess (if any) of
(x) the aggregate Outstanding Balance of Eligible Receivables owed by
Obligors in such Reported Group as of the most recent Cut-Off Date, over
(y) the Concentration Limit for such Reported Group, determined as of
such Cut-Off Date, and
(ii) determine the sum of the amounts determined pursuant to
clause (i) with respect to all Reported Groups, which sum shall be the
"Excess Reported Group Exposure".
"Excluded Representations" means (i) the last sentence of Section
4.01(e), and (ii) the last sentence of Section 4.01(f).
"Excluded Taxes" means, with respect to any Person, (i) net income
taxes imposed on such Person by the United States, (ii) net income and
franchise taxes imposed on such Person by the jurisdiction in which such
Person is organized or maintains its booking office for the transactions
contemplated hereby, or (iii) net income or franchise taxes imposed on such
Person by a political subdivision of the jurisdictions referred to in clause
(ii).
"Federal Funds Rate" means, for any period, a fluctuating per annum
interest rate for each day during such period equal to the weighted average
of the rates quoted on overnight Federal funds transactions with UBS for such
day by three Federal funds brokers of recognized standing selected by it.
"GAAP" means, at any particular time, generally accepted accounting
principles as in effect at such time in the United States of America,
consistently applied.
"General Trial Balance" means the accounts receivable trial balance
computer tape, containing (i) a list of Obligors and the invoiced Receivables
respectively owed by such Obligors, (ii) the aged Outstanding Balances of
each such Obligor's Receivables, determined as of the most recent Cut-Off
Date, and (iii) the aggregate balances of Unbilled Receivables owed by
Obligors, as allocated to the Seller's residential, commercial or industrial
classes and determined as of the most recent Cut-Off Date, in substantially
the form delivered to the Agent prior to the initial purchase of a Percentage
Interest hereunder.
"Gross Charge-Off Ratio" means, on any day, the ratio (expressed as
a percentage) determined by dividing (i) the Outstanding Balance of
Receivables which, consistent with the Credit and Collection Policy, were or
should have been written off the Seller's books as uncollectible during the
month ending on the most recent Cut-Off Date, by (ii) the amount of
Collections (other than deemed Collections) received during such month.
"Gross Loss Proxy" means, on any day, the sum of (i) the
Outstanding Balance of Receivables which, consistent with the Credit and
Collection Policy, were or should have been written off the Seller's books as
uncollectible during the month ending on the most recent Cut-Off Date plus
(ii) the Change in Late Stage Delinquencies as of such Cut-Off Date.
"Gross Loss Proxy Ratio" means, on any day, the ratio (expressed as
a percentage) determined by dividing (i) the Gross Loss Proxy calculated as
of the most recent Cut-Off Date, by (ii) the Outstanding Balance of
Receivables billed during the month ending five months prior to such Cut-Off
Date.
"Hardship Receivable" means a Receivable with respect to an account
which the Seller has classified as "hardship" in accordance with the Credit
and Collection Policy.
"Holder" has the meaning assigned thereto in Section 10.12(b).
"Inactive Receivable" means a Receivable owed by an Obligor whose
electrical service has been discontinued by the Seller and to which the
Seller has rendered a final bill.
"Investor Report" means a report, in substantially the form of
Exhibit D, furnished by the Servicer to the Agent for each Owner pursuant to
Section 6.07.
"Issuer" means any Person whose principal business consists of
issuing commercial paper notes, medium-term promissory notes or other
securities (including, without limitation, the Commercial Paper Notes) to
fund its acquisition and maintenance of receivables, accounts, instruments,
chattel paper, general intangibles and other similar assets.
"Liquidation Servicing Fee" means, for any Percentage Interest at
any time, an amount equal to the product of (i) the Purchase Price of such
Percentage Interest and (ii) the product of (A) the highest percentage per
annum of the Servicing Fee set forth in Section 2.10(b) and (B) a fraction,
the numerator of which equals 2.0 times the Weighted Average Maturity and the
denominator of which equals 360.
"Liquidation Yield" means, for any Percentage Interest on any date,
an amount equal to the product of (i) the Purchase Price of such Percentage
Interest and (ii) the product of (A) highest Yield Rate applicable to any
Percentage Interest (or, if higher, the Base Rate for such Percentage
Interest) on such date and (B) a fraction, the numerator of which equals 2.0
times the Weighted Average Maturity and the denominator of which equals 360
(or, if using the Base Rate as the applicable Yield Rate, 365 or (in the case
of a leap year) 366).
"Liquidity Agreement" means any credit agreement, loan agreement,
stand-by credit agreement or loan agreement, letter of credit facility or
other instrument, document or agreement providing for loans, advances or
other extensions of credit from certain Liquidity Lenders parties thereto to
the Purchaser to either provide liquidity support for the Commercial Paper
Notes issued by the Purchaser in connection with this Agreement or to fund
the acquisition and/or maintenance by the Purchaser of Percentage Interests.
"Liquidity Facility Termination Date" means any day upon which the
commitments of the Liquidity Lenders to make loans, advances or other
extensions of credit to the Purchaser under or pursuant to any Liquidity
Agreement to which such Liquidity Lenders are parties shall be terminated for
any reason (whether at the stated maturity or earlier) or shall otherwise
cease to be in full force and effect.
"Liquidity Lender" means any of the financial institutions from
time to time parties to, and extending credit commitments to the Purchaser
under, any Liquidity Agreement.
"Liquidity Shortfall Event" means the occurrence of any of the
following events: (i) any Liquidity Lender defaults on, or is unable for any
reason whatsoever to perform in respect of, its commitment under the
Liquidity Agreement to which it is a party; or (ii) any Liquidity Lender
shall cease to be rated at least A-1+ by Standard & Poor's and P-1 by
Moody's, and such downgraded Liquidity Lender has not been replaced or
substituted by a Replacement Bank within 30 days after such Liquidity Lender
was so downgraded.
"Lock-Box Account" means an account maintained at a Lock-Box Bank
for the purpose of receiving Collections in accordance with Section 6.08.
"Lock-Box Bank" means any of the banks or other financial
institutions designated by the Agent, following an Event of Termination, to
receive payments in respect of Receivables.
"Loss Horizon Ratio" means the ratio (expressed as a percentage)
computed as of each Cut-Off Date by dividing (i) the sum of (A) the
Outstanding Balance of Receivables billed during the three months ending on
such Cut-Off Date plus (B) the product of 0.50 times the Outstanding Balance
of Receivables billed during the month ending three months prior to such Cut-
Off Date, by (ii) the Outstanding Balance of Eligible Receivables as of such
Cut-Off Date.
"Loss Reserve" means, at any time for any Percentage Interest, an
amount equal to
LRP x (PP + YR)
1 - LRP
where:
LRP = the Loss Reserve Percentage for such Percentage Interest at
such time.
PP = the Purchase Price of such Percentage Interest at such time.
YR = the Yield Reserve for such Percentage Interest at such time.
"Loss Reserve Percentage" means, on any day for any Percentage
Interest, the greatest of (i) the product of (A) the Gross Loss Proxy Ratio
calculated as of the most recent Cut-Off Date, times (B) the Loss Horizon
Ratio as of the most recent Cut-Off Date, (C) times 2.00, (ii) five times the
percentage which the Concentration Limit (without giving effect to any
Special Concentration Limit) bears to the then aggregate Purchase Price of
all Percentage Interests and (iii) 10%.
"Loss-to-Liquidation Ratio" means the ratio (expressed as a
percentage) computed as of each Cut-Off Date by dividing (i) the aggregate
Outstanding Balance of all Receivables that became Defaulted Receivables
during the month ending on such Cut-Off Date, by (ii) the aggregate amount of
Collections actually received during such month.
"Material Adverse Effect" means a material adverse effect on (i)
the operations of the Seller or the Servicer, (ii) the ability of the Seller
or the Servicer to perform its obligations hereunder or (iii) the credit
quality, enforceability or collectibility of the Receivables.
"Material Parent Effect" means a material adverse effect on the
operations or financial condition of (i) Parent or (ii) Parent and its
subsidiaries.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding five years contributed to by the Seller or
any ERISA Affiliate on behalf of its employees.
"Net Receivables Pool Balance" means, at any time, (i) the
aggregate Outstanding Balance of all Eligible Receivables at such time, minus
(ii) the Excess Reported Group Exposure, minus (iii) the Excess Government
Exposure.
"Obligor" means a Person obligated to make payments to the Seller,
which obligation arises in connection with the Seller's sale of electricity
and/or related services.
"Original Balance" means, for any Receivable, the original
principal balance of such Receivable at its creation.
"Outstanding Balance" means for any Receivable at any time, the
then outstanding principal balance thereof; provided, that the Outstanding
Balance of any Unbilled Receivables shall be calculated in accordance with
Exhibit B.
"Owner" means, with respect to each Percentage Interest, upon its
purchase, the Purchaser; provided, however, that upon any assignment thereof
pursuant to Section 10.04, the assignee shall be the Owner of such Percentage
Interest (or portion thereof) so assigned, and the assignor shall cease to be
the Owner of such Percentage Interest (or portion thereof) so assigned.
"Parent" means Northeast Utilities, a Massachusetts business trust.
"Percentage Interest" means, at any time, an undivided percentage
ownership interest at such time in (i) each and every Receivable existing on
the date such Percentage Interest shall have been purchased and in each and
every Receivable existing or arising after such date but prior to the
Termination Date, (ii) all Related Security with respect to each such
Receivable, (iii) all Collections with respect to each such Receivable, and
(iv) all proceeds of any of the foregoing. Such undivided percentage
interest for such Percentage Interest shall be computed by dividing the
Utilized Amount of such Percentage Interest at such time by the Net
Receivables Pool Balance at such time. Each Percentage Interest shall be
determined from time to time pursuant to the provisions of Section 2.03(a).
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, bank, financial institution, trust,
unincorporated association, joint venture, government (or any agency or
political subdivision thereof) or other entity.
"Prime Rate" means the per annum rate of interest announced
publicly by UBS in New York, New York as its prime rate, such rate to change
as and when such announced rate changes. The Prime Rate is not intended to
be the lowest rate of interest charged by UBS in connection with extensions
of credit to debtors.
"Public Disclosure Documents" means (i) the Seller's Annual Report
on Form 10-K for the year ending December 31, 1995, (ii) the Seller's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and June
30, 1996, and (iii) the Parent's reports on Form 8-K dated January 31, 1996,
March 30, 1996, April 15, 1996, June 3, 1996, June 18, 1996, June 28, 1996
and July 22, 1996.
"Purchase Limit" means at any time $40,000,000, as such amount may
be reduced pursuant to Section 2.02 or Section 2.06(a); provided, however,
that at all times on and after the Termination Date, the "Purchase Limit"
shall mean the aggregate Purchase Price for all Percentage Interests.
"Purchase Period" means, with respect to any Percentage Interest, a
period selected by the Agent, after consultation with the Owner(s) of such
Percentage Interest; provided, however, that:
(a) with respect to any Percentage Interest the purchase or
maintenance of which is funded other than through the issuance of
Commercial Paper Notes, the Purchase Period shall be any number of days
up to (and including) 29 or one, two or three months; and
(b) with respect to any Percentage Interest the purchase or
maintenance of which is funded through the issuance of Commercial Paper
Notes, the Purchase Period shall be any number of days up to (and
including) 270;
Each Purchase Period in respect of any Percentage Interest shall commence,
initially, on the date of purchase by the Purchaser of such Percentage
Interest and thereafter on the last day of the immediately preceding Purchase
Period. Notwithstanding anything contained herein to the contrary (i) any
Purchase Period which would otherwise end on a day which is not a Business
Day shall be extended to the immediately succeeding Business Day; provided,
however, that if Yield in respect of such Percentage Interest allocated to
such Purchase Period is computed by reference to the Eurodollar Rate and such
succeeding Business Day is in the next calendar month, then such Purchase
Period shall end on the immediately preceding Business Day, (ii) any Purchase
Period which commences before the Termination Date and would otherwise end on
a date occurring after the Termination Date shall end on the Termination
Date, (iii) any Purchase Period as to which Yield accrues at the CP Rate may
be terminated at the election of, and upon notice thereof to the Seller and
each Owner of the Percentage Interests allocated thereto by, the Agent at any
time upon the occurrence and during the continuance of any CP Disruption
Event, and (iv) whenever any Purchase Period as to which Yield accrues at the
Eurodollar Rate commences on the last Business Day in a month or on a day for
which there is no numerical corresponding day in the month in which such
Purchase Period ends, such Purchase Period shall end on the last Business Day
of the month in which such Purchase Period ends.
"Purchase Price" of any Percentage Interest means the amount paid
to the Seller for such Percentage Interest at the time of its acquisition by
a Purchaser pursuant to Section 2.01, reduced from time to time by
Collections received and distributed to the Owners on account of such
Purchase Price pursuant to Sections 2.06 or 2.07 or the last sentence of
Section 2.08; provided, however, that such Purchase Price of such Percentage
Interest shall not be reduced by any distribution of any portion of
Collections if at any time such distribution is rescinded or must be returned
for any reason.
"Purchaser" means Monte Rosa Capital Corporation or, upon the
assignment of all of its rights, title, interests, obligations and
liabilities as the Purchaser hereunder in accordance with Section 10.04 (or,
in the case of any subsequent Purchaser, upon the assignment of all of such
subsequent Purchaser's rights, title, interests, obligations and liabilities
as the Purchaser hereunder in accordance with Section 10.04), such other
Issuer to which such assignment was so made; provided, however, that upon any
such assignment by any Issuer (including Monte Rosa Capital Corporation) of
all of its rights, title, interests, obligations and liabilities as the
Purchaser hereunder, such Issuer shall cease to be the Purchaser hereunder.
"Receivable" means the billed and unbilled indebtedness of any
Obligor owed (prior to giving effect to the transfer contemplated hereby) to
the Seller, whether constituting an account, chattel paper, instrument or
general intangible, as booked to Accounts 142.01 and 173 under the Federal
Energy Regulatory Commission Chart of Accounts as utilized by the Seller, but
excluding the right to payment of any interest or finance charges or taxes
with respect thereto.
"Records" means all documents, books, records and other information
(including without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) maintained by the
Seller or the Servicer with respect to the Receivables and the related
Obligors.
"Reinvested Collections" has the meaning assigned to that term in
Section 2.05.
"Reinvestment Termination Date" means that Business Day which the
Seller designates as the Reinvestment Termination Date by notice to the Agent
at least ten Business Days prior to such Business Day or, if any of the
conditions precedent in Section 3.02 are not satisfied, that Business Day
which the Agent designates as the Reinvestment Termination Date by notice to
the Seller at least one Business Day prior to such Business Day.
"Related Security" means with respect to any Receivable:
(i) all security interests or liens and the Seller's interest in
the property subject thereto from time to time purporting to secure
payment of such Receivable, whether pursuant to a contract related to
such Receivable or otherwise;
(ii) the assignment to the Agent, for the benefit of any Owner, of
all UCC financing statements covering any collateral securing payment of
such Receivable;
(iii) all guarantees, letters of credit, indemnities, warranties,
insurance policies and proceeds and premium refunds thereof and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether pursuant to a
contract related to such Receivable or otherwise;
(iv) all Records; and
(v) all proceeds of the foregoing.
"Replacement Bank" has the meaning assigned to that term in Section
2.06(a).
"Reported Group" means, on any Cut-Off Date, the Obligors
identified by the following process, as described in the most recent Investor
Report:
(i) in the Investor Reports delivered in each July and January of
each year, the Seller shall indicate each of the ten Obligors that, as
of the preceding April 30 or October 31, as the case may be, were billed
for the highest aggregate amounts of Receivables during the twelve month
period ending on such date;
(ii) for each Obligor described in clause (i), the Seller shall,
to the best of its knowledge and ability in accordance with its
practices and procedures in effect on the date hereof, identify those of
such Obligor's Affiliates that are also Obligors (determined as of such
Cut-Off Date); and
(iii) group each Obligor described in clause (i) with its
Affiliates described in clause (ii), each of which groups shall
collectively constitute a "Reported Group".
"Required Rating" means (i) at any time before February 1, 1997, BB
by Standard & Poor's and Ba2 by Moody's and (ii) at any time on or after
February 1, 1997, BB+ by Standard & Poor's and Ba1 by Moody's.
"Required Owners" means, at any time, those Owners owning
Percentage Interests, the aggregate outstanding Purchase Price of which
exceeds 50% of the aggregate outstanding Purchase Price of all Percentage
Interests outstanding hereunder.
"Restructuring" means a restructuring of the transactions
contemplated hereby, pursuant to which (i) the Seller shall transfer the
Receivables, the Related Security and the Collections to its newly
established bankruptcy remote, special purpose subsidiary, which transfer
shall be structured so as to constitute a "true sale" for purposes of
applicable state, Federal and bankruptcy law, (ii) such subsidiary shall
transfer undivided interests in the Receivables, the Related Security and the
Collections to the Owners, provided that the Agent shall be satisfied as to
form and substance (in its sole discretion) with all of the following: (i)
the capital structure of such subsidiary, (ii) the opinions (including
without limitation with respect to issues of the true sale, substantive
consolidation, tax, the creation and perfection of ownership and security
interests and satisfaction of regulatory requirements) required to be
delivered by the Agent, (iii) the Seller's ability to maintain the systems
required to comply with the reporting and operating requirements applicable
to the restructured transaction, (iv) the documentation for such
restructuring, (v) the terms and conditions of such restructuring and (vi)
the obtaining of all requisite regulatory approvals and "no-action" or
similar letters from regulatory authorities as to any matters which the Agent
believes may be necessary or appropriate.
"Reuters Screen LIBO Page" means the display page so designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as
may replace the LIBO page on such service for the purpose of displaying
London interbank offered rates of major banks).
"Scheduled Termination Date" means (i) if the Agent shall determine
that the Restructuring has been consummated, September 4, 2001; or (ii)
otherwise, February 1, 1997.
"Security Agreement" means that certain Collateral Trust and
Security Agreement of even date herewith among the Purchaser and the
Collateral Trustee, as the same may be amended, supplemented or otherwise
modified from time to time.
"Security Deposit" means a deposit of money by an Obligor with (or
for the account of) the Seller to secure the payment of the Receivables owed
by such Obligor.
"Seller Confidential Information" means information regarding the
operations or financial condition of Parent, the Seller or their respective
subsidiaries (including, without limitation, information regarding the
Obligors and the Receivables).
"Servicer" means at any time the Person then authorized pursuant to
Article VI to service, administer and collect Receivables.
"Servicer Default" means the Agent, in its reasonable discretion,
determines that an event has occurred that would reasonably materially and
adversely affect (i) the Servicer's operations, (ii) the Servicer's ability
to service the Receivables or (iii) the credit quality, collectibility or
enforceability of the Receivables.
"Servicing Fee" has the meaning assigned to that term in
Section 2.10.
"Servicing Fee Reserve" means, with respect to any Percentage
Interest at any time, the sum of (i) the Liquidation Servicing Fee for such
Percentage Interest at such time, plus (ii) the unpaid Servicing Fee relating
to such Percentage Interest accrued to such time.
"Servicing Fee Reserve Percentage" means, on any day for any
Percentage Interest, the ratio (expressed as a percentage) computed by
dividing (i) the Servicing Fee Reserve related to such Percentage Interest by
(ii) the Purchase Price for such Percentage Interest.
"Settlement Date" means, with respect to any Purchase Period for
any Percentage Interest, the last day of such Purchase Period.
"Special Concentration Limit" has the meaning assigned to that term
in the definition of "Concentration Limit".
"Standard & Poor's" means Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies, Inc.
"Subject Party" has the meaning assigned thereto in Section
10.12(b).
"Termination Date" means the earliest of (i) the Reinvestment
Termination Date, (ii) the date of termination of the Purchase Limit pursuant
to Section 2.02, (iii) the date of the declaration or automatic occurrence of
the Termination Date pursuant to Section 7.01, (iv) the occurrence of a
Liquidity Facility Termination Date, and (v) the Scheduled Termination Date.
"Total Reserve Percentage" means, on any day for any Percentage
Interest, the sum of (i) the Loss Reserve Percentage for such Percentage
Interest at such time, (ii) the Dilution Reserve Percentage for such
Percentage Interest at such time, (iii) the Yield Reserve Percentage for such
Percentage Interest at such time and (iv) the Servicing Fee Reserve
Percentage for such Percentage Interest at such time.
"Total Reserves" means, at any time for any Percentage Interest, an
amount equal to
TRP x (PP + YR)
1 - LRP
where:
TRP = the Total Reserve Percentage for such Percentage Interest at
such time.
LRP = the Loss Reserve Percentage for such Percentage Interest at
such time.
PP = the Purchase Price of such Percentage Interest at such time.
YR = the Yield Reserve for such Percentage Interest at such time.
"Transition Event" means the occurrence of any of the following:
(i) an Event of Termination, (ii) the reduction of the Coverage Ratio to
below 102%, (iii) the Termination Date, and (iv) the Seller's senior secured
debt shall be rated BB+ or lower by Standard & Poor's or Ba1 or lower by
Moody's.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
"Unbilled Receivable" means a bona fide, enforceable obligation of
a customer for the customer's metered use of electricity that will be billed
by the Seller or the Servicer during the Seller's next monthly billing cycle.
"United States" means the United States of America.
"Utilized Amount" means, for any Percentage Interest at any time,
the sum of (i) the aggregate Purchase Price of such Percentage Interest at
such time and (ii) the Total Reserves for such Percentage Interest at such
time.
"Weighted Average Maturity" means on any day, the number of days
equal to (i) 30.0 times (ii) the average of the aggregate Outstanding
Balances of Receivables on the two most recent Cut-Off Dates, divided by
(iii) Newly Generated Receivables. For purposes of this definition, "Newly
Generated Receivables" means, on any day, the amount equal to the sum of (i)
the Outstanding Balance of Receivables billed during the month ending on the
most recent Cut-Off Date, plus (ii) the difference between (A) the
Outstanding Balance of Unbilled Receivables as of the most recent Cut-Off
Date minus (B) the Outstanding Balance of Unbilled Receivables as of the
second most recent Cut-Off Date.
"Yield" means for each Percentage Interest during any Purchase
Period, the product of
YRT x PP x ED
DIY
where:
PP = the Purchase Price of such Percentage Interest during such
Purchase Period,
ED = the actual number of days elapsed during such Purchase Period,
YRT = the Yield Rate for such Percentage Interest for such Purchase
Period, and
DIY = the number of days in the year for purposes of calculating
Yield, which number shall be 360 in all cases other than if
the applicable Yield Rate for such Percentage Interest shall
be the Base Rate, in which case, such number shall be 365 or,
in the case of a leap year, 366, and
provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of Yield in excess of the maximum permitted
by applicable law and (ii) Yield for any Percentage Interest shall not be
considered paid by any distribution if at any time such distribution is
rescinded or must otherwise be returned for any reason.
"Yield Rate" for any Purchase Period for any Percentage Interest
means:
(i) to the extent the purchase or the maintenance of such
Percentage Interest is funded other than through the issuance of
Commercial Paper Notes, a rate equal to the applicable Alternative Rate
for such Purchase Period, and
(ii) to the extent the purchase or maintenance of such Percentage
Interest is funded through the issuance of Commercial Paper Notes, a
rate equal to the CP Rate, as applicable, for such Purchase Period;
provided, however, that notwithstanding anything contained herein to the
contrary, upon the assignment of any Percentage Interest (or any portion
thereof) by the Purchaser to any other Owner, the Yield Rate at which such
Percentage Interest shall thereafter accrue Yield shall be the Alternative
Rate.
"Yield Reserve" means, for any Percentage Interest at any time, the
sum of (i) the Liquidation Yield for such Percentage Interest, and (ii) the
aggregate amount of all Yield accrued and to accrue during any applicable
Purchase Period (as determined by the Agent in good faith) with respect to
such Percentage Interest.
"Yield Reserve Percentage" means, on any day for any percentage
Interest, the ratio (expressed as a percentage) computed by dividing (i) the
Yield Reserve related to such Percentage Interest by (ii) the Purchase Price
for such Percentage Interest.
SECTION 1.02. Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9.
SECTION 1.03. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
ARTICLE II
THE RECEIVABLES FACILITY
SECTION 2.01. Purchases and Maintenance of Percentage Interests.
(a) On the terms and conditions hereinafter set forth, the Purchaser hereby
agrees to purchase Percentage Interests from the Seller from time to time
during the period from the date hereof until (but not including) the
Termination Date; provided, however, that nothing in this Agreement shall be
deemed or construed as a commitment by the Purchaser or any Owner to fund the
purchase or maintenance of Percentage Interests through the issuance of
Commercial Paper Notes, and it is hereby expressly acknowledged and agreed
that such funding is, and shall continue to be, wholly discretionary on the
part of the Purchaser and all applicable Owners. Under no circumstances
shall the Purchaser make any such purchase if, after giving effect to such
purchase, the aggregate Purchase Price of all Percentage Interests hereunder
would exceed the Purchase Limit.
(b) Each purchase of a Percentage Interest hereunder shall be made
on notice from the Seller to the Agent (who shall notify the Purchaser) given
not later than 11:00 A.M. (New York City time) on the second Business Day
before the date of such requested purchase. Each such notice of a proposed
purchase of a Percentage Interest shall be by telephone, telecopier, telex or
cable and shall specify the following with respect to each such Percentage
Interest: (A) the aggregate initial Purchase Price of the Percentage Interest
so requested to be purchased, which Purchase Price shall not be less than
$1,000,000 and shall be an integral multiple of $100,000; (B) the date of
such proposed purchase (which day must be a Business Day); and (C) whether
the Alternative Rate or the CP Rate is requested with respect to such
Percentage Interest. Any notice of a requested purchase as set forth above
shall become effective and shall be binding on the Seller when given by the
Seller.
Promptly upon its receipt of such notice from the Agent, the
Purchaser shall notify the Agent and the Seller as to whether, in the case of
any requested purchase to be funded through the issuance of Commercial Paper,
it is willing to make such a purchase.
(c) On the date of such purchase, the Purchaser shall, upon the
satisfaction of the applicable conditions set forth in Article III, make
available to the Seller in same day funds, at Fleet National Bank, Hartford,
Connecticut, ABA #011900445, Account #5025-2528, the aggregate Purchase Price
of such Percentage Interest. The Purchaser shall allocate such Purchase
Price to such Purchase Periods as it shall select in accordance with the
terms of this Agreement.
(d) At least two (2) Business Days prior to the last day of each
Purchase Period, the Seller shall notify the Agent (who shall then notify the
Purchaser) as to the following with respect to the succeeding allocation of
the Purchase Price allocated to such Purchase Period then ending, (A) whether
the Alternative Rate or the CP Rate is requested with respect to such
Purchase Price and (B) if more than one rate is requested, the requested
allocation of the Purchase Price as among such rates; provided that the
Purchase Price allocated to each rate must be in a minimum amount of
$1,000,000 and in integral multiples of $100,000, except for any such
Purchase Price allocated to the Base Rate, which Purchase Price may be
allocated thereto in any amount. Such notice shall be given by telephone,
telecopier, telex or cable. If and to the extent the Purchaser elects to
make such Yield Rate(s) available to the Seller (such election to be
submitted to the Agent and the Seller, then, upon the expiration of the then
current Purchase Period, the Purchaser shall reallocate the Purchase Price
previously allocated to such Purchase Period to such other Purchase Periods
as the Agent shall select in accordance with the terms hereof, each accruing
Yield at the applicable Yield Rate requested in accordance with this Section
2.01(d). Notwithstanding anything contained in this Section 2.01(d) to the
contrary, in the event that:
(i) the Seller shall fail to give such notice with respect to any
Purchase Period then ending; or
(ii) in any case where the requested Yield Rate is the CP Rate, the
Purchaser elects not to make the requested Yield Rate available with
respect to the Purchase Price allocated to such Purchase Period then
ending (such election to be promptly submitted to the Agent and the
Seller),
and, in any such case, the Purchaser and Seller shall fail to otherwise agree
before the last day of such Purchase Period, then the Yield Rate to be
applicable to the Purchase Price allocated to such Purchase Period then
ending shall be either the CP Rate or the Alternative Rate, as the relevant
Owner of such affected Percentage Interest may elect, and such Purchase Price
shall be allocated to such Purchase Periods as shall be selected by the Agent
in accordance with the terms hereof, but in any event not to exceed five
days.
(e) If at any time after the occurrence and during the continuance
of any CP Disruption Event, the Agent elects to terminate any Purchase Period
accruing Yield at the CP Rate, the Purchase Price allocated to such
terminated Purchase Period shall be allocated to a new Purchase Period to be
designated by the Agent (but in no event to exceed 5 days) and shall accrue
Yield at the Alternative Rate.
(f) The Purchaser shall notify the Agent and the Seller, promptly
after the commencement of any Purchase Period of the amount of the Purchase
Price allocated to such Purchase Period, the duration of such Purchase
Period, and the Yield Rate applicable to such Purchase Period.
SECTION 2.02. Termination or Reduction of the Purchase Limit. The
Seller may, upon at least five Business Days' notice to the Agent, terminate
in whole or reduce in part the unused portion of the Purchase Limit;
provided, however, that each partial reduction of the Purchase Limit shall be
in an aggregate amount equal to $1,000,000 or an integral multiple thereof.
SECTION 2.03. Percentage Interests. (a) Each Percentage Interest
shall be initially computed as of the opening of business of the Servicer on
the date of its purchase. Thereafter until the Termination Date, such
Percentage Interest shall be automatically recomputed as of (i) the opening
of business of the Servicer on any day on which the aggregate Purchase Price
of all Percentage Interests hereunder is increased and (ii) the close of
business of the Servicer on each day. A Percentage Interest shall become
zero only when the Purchase Price thereof, all Yield thereon, all fees and
other amounts owing to the Owner thereof in connection with this Agreement
and all Servicing Fees in respect thereof shall have been paid in full. Each
Percentage Interest shall remain constant from the time as of which any such
computation or recomputation is made until the time as of which the next such
recomputation, if any, shall be made. From and after the Termination Date,
each Percentage Interest shall remain constant until it becomes zero as set
forth in the third sentence of this Section 2.03(a).
(b) The Agent shall maintain books and records in which shall be
recorded (i) the date and amount of each purchase of a Percentage Interest
hereunder and the Owners thereof, (ii) the date and amount of and parties to
any assignment of rights and obligations hereunder pursuant to Section 10.04,
(iii) the amount of any Yield, fees or other amount due and payable or to
become due from the Seller to the Agent, any Owner or the Servicer hereunder
and (iv) the amount and date of any reduction in the Purchase Price of any
Percentage Interest. The entries made in the Agent's books and records as
described in this Section 2.03(b) shall be conclusive and binding for all
purposes absent manifest error.
SECTION 2.04. Selection of Purchase Periods. Except as expressly
provided otherwise in this Agreement, the Agent, after consultation with the
Purchaser or the applicable Owner(s), shall designate the duration of all
Purchase Periods (subject to the restrictions set forth in the definition of
"Purchase Period" set forth in Section 1.01) to which any Purchase Price is
to be allocated hereunder and shall allocate Purchase Price accruing Yield on
the same basis (i.e., at the Alternative Rate or the CP Rate) to such
Purchase Periods in such proportions as the Purchaser or the applicable
Owner(s), as the case may be, shall, in their sole discretion, direct.
Notwithstanding anything in this Agreement to the contrary, the outstanding
Purchase Price of all Percentage Interests shall at all times be allocated to
a Purchase Period.
SECTION 2.05. Non-Liquidation Settlement Procedures. On each day
prior to the Termination Date, the Servicer shall: (i) out of Collections in
respect of each Percentage Interest received on such day, set aside on its
books and hold in trust for the Owner of such Percentage Interest an amount
equal to the Yield and Servicing Fee accrued through such day for such
Percentage Interest and not so previously set aside and (ii) reinvest the
remainder of such Collections (such reinvested portion of Collections being
"Reinvested Collections"), for the benefit of such Owner, by recomputation of
such Percentage Interest pursuant to Section 2.03 as of the end of such day
and the payment of such remainder to the Seller; provided that if for any
reason any portion of such remaining Collections cannot be so reinvested
(including, without limitation, the inability to satisfy the conditions in
Section 3.02), the Servicer shall set aside such portion on its books and
hold such portion in trust for the Owner of such Percentage Interest. The
recomputed Percentage Interest shall constitute the percentage ownership
interest in the Receivables on such day held by such Owner. On each
Settlement Date in respect of each Purchase Period for each Percentage
Interest to occur prior to the Termination Date (and, if the Agent shall so
request following a Transition Event, on each Business Day during such
Purchase Period), the Servicer shall deposit to the Agent's Account the
amounts set aside as described in the first sentence of this Section 2.05.
Upon receipt of such funds by the Agent, the Agent shall distribute them
first, to the Owner of such Percentage Interest in full payment of the
accrued Yield for such Percentage Interest, second, to the Servicer in full
payment of the accrued Servicing Fee payable with respect to such Percentage
Interest, and third to the partial liquidation of the Owners' Percentage
Interests as contemplated by Section 2.06.
SECTION 2.06. Liquidity Shortfall Event; Partial Liquidations. (a)
Immediately upon the occurrence of a Liquidity Shortfall Event, the Purchase
Limit hereunder shall be automatically reduced by (1) in the case of a
Liquidity Shortfall Event of the type described in clause (i) of the
definition thereof, the aggregate amount of any such defaulting or downgraded
Liquidity Lender's unused commitment under the Liquidity Agreements to which
it is a party; provided, however, that with respect to any such Liquidity
Shortfall Event of the type described in clause (i) of the definition
thereof, if such defaulting Liquidity Lender is replaced by or is substituted
with another bank or other financial institution acceptable to the Purchaser
(a "Replacement Bank") under the applicable Liquidity Agreement(s) within 30
days after the occurrence of such a Liquidity Shortfall Event, then the
Purchase Limit may be reinstated to the extent of such Replacement Bank's
unused commitment under such Liquidity Agreement (but not to exceed the
original Purchase Limit hereunder); and provided, further, that
notwithstanding anything contained in this Agreement to the contrary, the
Purchaser shall have no obligation to replace or substitute any such
defaulting or downgraded Liquidity Lender with a Replacement Bank under any
Liquidity Agreement, or (2) in the case of a Liquidity Shortfall Event of the
type described in clause (ii) of the definition thereof, the amount of the
liquidity deficiency determined by the Agent to exist as of such date as a
result of such Liquidity Shortfall Event. In addition, within 30 days after
the occurrence of any such Liquidity Shortfall Event, the Seller, either
through the payment of such amount to the Agent for deposit in the Agent's
Account or through a partial liquidation in accordance with Section 2.06(b),
shall reduce the outstanding Purchase Price of all Percentage Interests (to
be determined after the occurrence of such Liquidity Shortfall Event) by such
an amount, if any, as may be necessary to reduce the aggregate outstanding
Purchase Price of all Percentage Interests to an amount which is equal to or
less than the Purchase Limit as so reduced.
(b) The Seller shall be entitled at any time during the term of
this Agreement to request a partial liquidation of the Percentage Interests
such that the aggregate outstanding Purchase Price of all Percentage
Interests shall be reduced to an amount designated by the Seller in such
request. Any such partial liquidation shall be conducted by remitting
Collections that are not Reinvested Collections to the Agent in accordance
with the terms and provisions to be mutually acceptable to the Servicer, the
Agent, the Required Owners and the Collateral Trustee.
(c) If on any day the Coverage Ratio is less than 102%, the Seller
(either through a payment to the Agent for deposit in the Agent's Account or
through a partial liquidation in accordance with Section 2.06(b)), shall make
the payment required to be made pursuant to the last sentence of Section
2.08.
SECTION 2.07. Liquidation Settlement Procedures. On the
Termination Date and on each day thereafter, the Servicer shall set aside and
hold in trust for each Owner of each Percentage Interest, the Collections in
respect of such Percentage Interest received on such day. On each Settlement
Date in respect of each Purchase Period for each Percentage Interest to occur
on or after the Termination Date (and, if both the Termination Date and a
Transition Event shall have occurred and the Agent shall so request, on each
other Business Day during such Purchase Period), the Servicer shall deposit
to the Agent's Account the amounts set aside pursuant to the preceding
sentence with respect to such Percentage Interest, together with any
remaining amounts set aside pursuant to Section 2.05 prior to the Termination
Date, but not to exceed the sum of (a) the accrued Yield for such Percentage
Interest, (b) the Purchase Price of such Percentage Interest, (c) the
aggregate of all other amounts owed by the Seller to the Owner of such
Percentage Interest in connection with this Agreement and (d) the accrued
Servicing Fee payable with respect to such Percentage Interest. The Agent
shall distribute the funds so received to the Owner of such Percentage
Interest first, in full payment of the accrued Yield for such Percentage
Interest (including, without limitation, the Breakage Fee, if any for such
Percentage Interest then due and payable pursuant to the terms hereof),
second, to the extent a Servicer other than the Seller or an Affiliate of the
Seller has been designated by the Agent, in payment of the accrued Servicing
Fee payable to such Servicer with respect to such Percentage Interest,
third, in reduction (to zero) of the Purchase Price of such Percentage
Interest, and fourth, in full payment of any other amounts owed by the Seller
to such Owner in connection with this Agreement. The Agent shall distribute
any remaining funds to the Servicer (if the Seller or an Affiliate of the
Seller) in payment of the accrued Servicing Fee payable to such Person with
respect to such Percentage Interest. If there shall be insufficient funds on
deposit for the Agent to distribute funds in payment in full of the
aforementioned amounts, the Agent shall distribute funds, first, in payment
of the accrued Yield for such Percentage Interest (but, in the case of the
Breakage Fee for such Percentage Interest, only to the extent the Agent shall
elect to pay such Breakage Fee from Collections attributable to such
Percentage Interest under this Section 2.07 rather than from other funds
pursuant to Section 2.11), second, to the extent a Servicer other than the
Seller or an Affiliate of the Seller has been designated by the Agent, in
payment of the accrued Servicing Fee payable to such Person with respect to
such Percentage Interest, third, in reduction of Purchase Price of such
Percentage Interest, fourth, in payment of other amounts payable to such
Owner, and fifth, to the Servicer (if the Seller or an Affiliate of the
Seller), in payment of the accrued Servicing Fee payable to such Person with
respect to such Percentage Interest. Following the Collection Date, the
Servicer shall pay to the Seller any remaining Collections set aside and held
by the Servicer pursuant to the first sentence of this Section 2.07.
SECTION 2.08. Deemed Collections of Receivables. If on any day
the Outstanding Balance of any Receivable is either (a) reduced or adjusted
as a result of any defective, rejected, returned, repossessed or foreclosed
merchandise, any defective, disputed, or rejected services, any discount or
any other adjustment made or performed by the Seller or any other Person
(including, without limitation, those described in the definition of
"Dilution Factors") or (b) reduced or cancelled as a result of a setoff in
respect of any claim by the Obligor thereof against the Seller or any other
Person (whether such claim arises out of the same or a related transaction or
an unrelated transaction), the Seller shall be deemed to have received on
such day a Collection of such Receivable in the amount of such reduction,
cancellation or adjustment. If on any day any of the representations or
warranties in Section 4.01(h) are no longer true with respect to a
Receivable, the Seller shall be deemed to have received on such day a
Collection of such Receivable in full. If on any day the representation and
warranty in Section 4.01(i) is no longer true the Seller shall immediately
pay to the Agent, for the benefit of the Owners, an amount sufficient to make
such representation true and accurate.
SECTION 2.09. Payments and Computations, Etc. (a) All amounts to
be paid or deposited by the Seller or the Servicer hereunder shall be paid or
deposited in accordance with the terms hereof no later than 11:00 A.M. (New
York City time) on the day when due in lawful money of the United States in
immediately available funds to the Agent's Account. Each of the Seller and
the Servicer shall, to the extent permitted by law, pay to the Agent interest
on all amounts not paid or deposited by it when due hereunder at 2.0% per
annum above the Base Rate as then in effect, payable on demand; provided,
however, that such interest rate shall not at any time exceed the maximum
rate permitted by applicable law. Such interest shall be retained by the
Agent except to the extent that such failure to make a timely payment or
deposit has continued beyond the date for distribution by the Agent of such
overdue amount to the Owner of a Percentage Interest, in which case such
interest accruing after such date shall be for the account of, and
distributed by the Agent to the Owners ratably in accordance with their
respective interests in such overdue amount.
All computations of interest and all computations of Yield,
Liquidation Yield, and fees hereunder shall be made on the basis of a year of
360 days (other than with respect to any of the foregoing computations made
with respect to the Base Rate, which computations shall be made on the basis
of a 365 or, in the case of a leap year, 366-day year) for the actual number
of days (including the first but excluding the last day) elapsed.
(b) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of Yield, interest or any fee payable
hereunder, as the case may be; provided, however, that, if such extension
would cause payment of Yield on, or Purchase Price of, any Percentage
Interest on which Yield accrues at the Eurodollar Rate to be made in the next
following month, such payment shall be made on the next preceding Business
Day.
(c) If any purchase of a Percentage Interest requested by the
Seller and approved by the Purchaser and the Agent pursuant to Section
2.01(b) or any selection of a subsequent Purchase Period and applicable Yield
Rate for any Percentage Interest requested by the Seller and approved by the
Agent pursuant to Section 2.01(d) is, for any reason whatsoever, not made or
effectuated, as the case may be, on the date specified therefor, the Seller
shall indemnify the relevant Owner against any loss, cost or expense incurred
by such Owner, including, without limitation, any loss (including loss of
anticipated profits, net of anticipated profits in the reemployment of such
funds in the manner determined by such Owner), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Owner to fund or maintain such Percentage Interest during such
Purchase Period.
SECTION 2.10. Fees. (a) The Seller shall pay the Purchaser and
the Agent certain fees in the amounts and on the dates set forth in a fee
letter executed among the Seller, the Agent and the Purchaser.
(b) Each Owner shall pay to the Servicer a collection fee (the
"Servicing Fee") of (i) for so long as the Seller or an Affiliate of the
Seller shall be acting as the Servicer, one-quarter of 1% per annum of the
average daily amount of Purchase Price of each Percentage Interest, and (ii)
from and after the designation by the Agent of a Servicer other than the
Seller or an Affiliate of the Seller, one percent (1.0%) per annum of the
average daily amount of Purchase Price of each Percentage Interest, in each
case, from the date hereof until the later of the Termination Date or the
date on which all Percentage Interests are reduced to zero, payable on the
last day of each Purchase Period for such Percentage Interest; provided,
however, that, upon three Business Days' notice to the Agent, the Servicer
(if other than the Seller or an Affiliate of the Seller) may elect to be
paid, as such fee, another percentage per annum of the average daily amount
of Purchase Price of each such Percentage Interest, but in no event in excess
of 110% of the costs and expenses referred to in Section 6.03; and provided,
further, that such fee shall be payable only from Collections pursuant to,
and subject to the priority of payment set forth in, Sections 2.05 and 2.07.
SECTION 2.11. Breakage Fee and Indemnity. (a) In the event there
shall occur a reduction of the Purchase Price of any Percentage Interest or
the termination of the Purchase Period to which such Purchase Price was
allocated, in either case, prior to the date upon which the applicable
Purchase Period was originally scheduled to end, whether pursuant to Section
2.04, 2.06, 2.07, 2.08, 7.01 or otherwise, the Seller shall pay to the Agent,
for the benefit of the Owner of such Percentage Interest, upon such Owner's
demand therefor, a fee (the "Breakage Fee") equal to, in the case of any
reduction of the Purchase Price allocated to a Purchase Period or the early
termination of any such Purchase Period, the excess, if any, of (1) the Yield
that would have accrued during the remainder of such Purchase Period
subsequent to the date of such reduction or termination on that portion of
the Purchase Price allocated to such Purchase Period which is so reduced or
terminated early (such amount being the "Reduction Amount"), had not such
reduction or termination occurred, over (2) the sum of (a) to the extent the
Reduction Amount is allocated to another Purchase Period or Purchase Periods,
the Yield actually accrued on that portion of the Reduction Amount so
allocated during the remainder of such Purchase Period(s), and (b) to the
extent the Reduction Amount is not allocated to another Purchase Period, the
income, if any, actually received by such Owner from investing the portion of
the Reduction Amount not so allocated.
(b) In addition to paying the Breakage Fee as aforesaid, the
Seller shall indemnify and hold the Owners harmless for all losses, costs,
liabilities and expenses which such Owner may incur as a result of the early
reduction of the Purchase Price allocated to any Purchase Period or the early
termination of any such Purchase Period and in respect of which such Owner is
not compensated by the payment of the applicable Breakage Fee in respect
thereof.
SECTION 2.12. Sharing of Payments, Etc. If any Owner shall obtain
any payment (whether voluntary, involuntary, through the exercise of any
right of setoff, or otherwise) on account of Percentage Interests owned by it
(other than pursuant to Section 2.10(a), 2.14, 2.15 or 9.01 and other than as
a result of the differences in the timing of the applications of Collections
pursuant to Section 2.05, 2.06 or 2.07) in excess of its ratable share of
payments on account of Percentage Interests obtained by all of the Owners,
such Owner shall forthwith purchase from the other Owners such participations
in the Percentage Interests owned by them as shall be necessary to cause such
purchasing Owner to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Owner, such purchase from each
Owner shall be rescinded and each such Owner shall repay to the purchasing
Owner the purchase price paid by such purchasing Owner for such participation
to the extent of such recovery, together with an amount equal to such Owner's
ratable share (according to the proportion of (a) the amount of such Owner's
required payment to (b) the total amount so recovered from the purchasing
Owner) of any interest or other amount paid or payable by the purchasing
Owner in respect of the total amount so recovered.
SECTION 2.13. Eurodollar Rate Protection; Illegality.
(a) If the Agent is unable to obtain on a timely basis the
information necessary to determine the Eurodollar Rate for any Percentage
Interest for any Purchase Period in respect of which Yield is to accrue at
the Eurodollar Rate, then
(i) the Agent shall forthwith notify the Purchaser, the Owners and
the Seller that the interest rate cannot be determined for such
Percentage Interest for such Purchase Period, and
(ii) while such circumstances exist, the Agent shall not allocate
the Purchase Price of any additional Percentage Interest purchased
during such period or reallocate the Purchase Price allocated to any
Purchase Period ending during such period, to any Purchase Period in
respect of which Yield is to accrue at the Eurodollar Rate.
(b) If, with respect to any Percentage Interest which accrues
Yield at the Eurodollar Rate, the Purchaser or any of the applicable Owners
thereof, as the case may be, notifies the Agent that it is unable to obtain
matching deposits in the London interbank market to fund its purchase or
maintenance of such Percentage Interest or that the Eurodollar Rate
applicable to such Percentage Interest for any Purchase Period will not
adequately reflect the cost to the Purchaser or such Owner, as the case may
be, of funding or maintaining its respective Percentage Interest for such
Purchase Period, then the Agent shall forthwith so notify the Seller,
whereupon the Agent shall not, while such circumstances exist, allocate the
Purchase Price of any additional Percentage Interest purchased during such
period or reallocate the Purchase Price allocated to any Purchase Period
ending during such period, to any Purchase Period in respect of which Yield
is to accrue at the Eurodollar Rate.
(c) Notwithstanding any other provision of this Agreement, if the
Purchaser or any Owner shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that it
is unlawful, for the Purchaser or such Owner, as the case may be, to fund its
purchases or maintenance of Percentage Interests at the Eurodollar Rate, then
(i) as of the effective date of such notice from the Purchaser or such Owner,
as the case may be, to the Agent, the obligation or ability of the Purchaser
or such Owner, as the case may be, to fund its purchase or maintenance of
Percentage Interests at the Eurodollar Rate shall be suspended until the
Purchaser or such Owner, as the case may be, notifies the Agent that the
circumstances causing such suspension no longer exist and (ii) the Purchase
Price of each Percentage Interest of the Purchaser or such Owner allocated to
a Purchase Period which accrues interest at the Eurodollar Rate shall either
(a) if the Purchaser or such Owner, as the case may be, may lawfully continue
to maintain such Percentage Interest until the last day of the applicable
Purchase Period, be reallocated on the last day of such Purchase Period to
another Purchase Period in respect of which the Purchase Price allocated
thereto accrues Yield at a Yield Rate other than the Eurodollar Rate or (b)
if the Purchaser or such Owner, as the case may be, shall determine that it
may not lawfully continue to maintain such Percentage Interest until the end
of the applicable Purchase Period (at which time it may be reallocated to
another Purchase Period in accordance with Section 2.01(d) and this Section
2.13(c)), be deemed to accrue Yield at the Base Rate from the effective date
of such notice until the end of such Purchase Period.
SECTION 2.14. Increased Costs; Capital Adequacy. (a) If, due to
either (i) the introduction of or any change (other than any change by way of
imposition or increase of reserve requirements included in the Eurodollar
Reserve Percentage) in or in the interpretation of, any law or regulation or
(ii) the compliance with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law), there
shall be any increase in the cost to the Agent, any Owner or any Affiliate
thereof (each of which shall be an "Affected Party") of agreeing to make,
making or funding purchases of and/or reinvestments in Percentage Interests
hereunder or maintaining Percentage Interests hereunder, then the Seller
shall from time to time, upon demand by such Affected Party, pay to such
Affected Party additional amounts sufficient to compensate such Affected
Party for any such increased costs.
(b) If either (i) the introduction of, or any change in or in the
interpretation of, any law or regulation or (ii) the compliance by any
Affected Party with any guideline or request from any central bank or other
governmental authority issued after the date of this Agreement (whether or
not having the force of law), affects or would affect the amount of capital
required or expected to be maintained by such Affected Party, and such
Affected Party determines that the amount of such capital is increased by or
based upon its obligations hereunder or its purchasing and maintaining
Percentage Interests hereunder or, in each case, under similar financial
arrangements of this type, then, upon demand by such Affected Party (with a
copy of such demand to the Agent), the Seller shall pay to the Agent for the
account of such Affected Party, from time to time as specified by such
Affected Party, additional amounts sufficient to compensate such Affected
Party in the light of such circumstances, to the extent that such Affected
Party reasonably determines such increase in capital to be allocable to such
Affected Party's obligations hereunder or its purchasing, funding or
maintaining Percentage Interests hereunder.
(c) If as a result of any event or circumstance similar to those
described in Section 2.14(a) or 2.14(b), any Affected Party is required to
compensate a bank or other financial institution providing liquidity support,
credit enhancement or other similar support to such Affected Party in
connection with this Agreement or the funding or maintenance of purchases of
Percentage Interests hereunder, then upon demand by such Affected Party (with
a copy of such demand to the Agent), the Seller shall pay to such Affected
Party such additional amount or amounts as may be necessary to reimburse such
Affected Party for any amounts paid by it.
(d) In determining any amount provided for in this Section 2.14,
the Affected Party may use any reasonable averaging and attribution methods.
Any Affected Party making a claim under this Section 2.14 shall submit to the
Seller a certificate as to such additional or increased cost or reduction,
which certificate shall be conclusive absent demonstrable error.
SECTION 2.15. Taxes. (a) Any and all payments by the Seller or
the Servicer hereunder shall be made, in accordance with Section 2.09, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of the Purchaser, each Owner and
the Agent, Excluded Taxes for such Person (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes". If the Seller or the Servicer shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Owner or the Agent, (i) the Seller shall make an additional
payment to such Owner or the Agent, as the case may be, in an amount
sufficient so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.15),
such Owner or the Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Seller
or the Servicer, as the case may be, shall make such deductions and (iii) the
Seller or the Servicer, as the case may be, shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Seller agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as "Other Taxes").
(c) The Seller will indemnify each Owner and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.15) paid by such Owner or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto; provided that an Owner or the Agent, as appropriate,
making a demand for indemnity payment shall provide the Seller, at its
address referred to in Section 10.02, with a certificate from the relevant
taxing authority or from a responsible officer of such Owner or the Agent
stating or otherwise evidencing that such Owner or the Agent has made payment
of such Taxes or Other Taxes and will provide a copy of or extract from
documentation, if available, furnished by such taxing authority evidencing
assertion or payment of such Taxes or Other Taxes. This indemnification
shall be made within ten days from the date such Owner or the Agent (as the
case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes, the Seller or the Servicer, as the case may be, will furnish to the
Agent, at its address referred to in Section 10.02, appropriate evidence of
payment thereof.
(e) The Agent and each Owner that is not created or organized
under the laws of the United States or a political subdivision thereof shall,
to the extent that it may then do so under applicable laws and regulations,
deliver to the Seller (with, in the case of each Owner, a copy to the Agent)
(i) within 15 days after the date hereof, or, if later, the date on which
such Owner becomes an Owner pursuant to Section 10.04 hereof, two (or such
other number as may from time to time be prescribed by applicable laws or
regulations) duly completed copies of IRS Form 4224 or Form 1001 (or any
successor forms or other certificates or statements which may be required
from time to time by the relevant United States taxing authorities or
applicable laws or regulations), as appropriate, to permit the Seller to make
payments hereunder for the account of the Agent or such Owner, as the case
may be, without deduction or withholding of United States federal income or
similar taxes and (ii) upon the obsolescence of, or after the occurrence of
any event requiring a change in, any form or certificate previously delivered
pursuant to this Section 2.15(e), copies (in such numbers as may from time to
time be prescribed by applicable laws or regulations) of such additional,
amended or successor forms, certificates or statements as may be required
under applicable laws or regulations to permit the Seller to make payments
hereunder for the account of the Agent or such Owner, as the case may be,
without deduction or withholding of United States federal income or similar
taxes.
(f) For any period with respect to which an Owner or the Agent has
failed to provide the Seller with the appropriate form, certificate or
statement described in Section 2.15(e) (other than if such failure is due to
a change in law occurring after the date of this Agreement), the Agent or
such Owner, as the case may be, shall not be entitled to indemnification
under Section 2.15(a), 2.15(b) or 2.15(c) with respect to Taxes imposed by
the United States.
(g) Within 30 days of the written request of the Seller therefor,
the Agent and each Owner, as appropriate, shall execute and deliver to the
Seller such certificates, forms or other documents which can be furnished
consistent with the facts and which are reasonably necessary to assist the
Seller in applying for refunds of taxes remitted hereunder.
(h) If, in connection with an agreement or other document
providing liquidity support, credit enhancement or other similar support to
any Owner in connection with this Agreement or the funding or maintenance of
purchases of Percentage Interests hereunder, such Owner is required to
compensate a bank or other financial institution in respect of taxes under
circumstances similar to those described in this Section 2.15 then, within
ten days after demand by such Owner, the Seller shall pay to such Owner such
additional amount or amounts as may be necessary to reimburse such Owner for
any amounts paid by it.
(i) Without prejudice to the survival of any other agreement of
the Seller hereunder, the agreements and obligations of the Seller contained
in this Section 2.15 shall survive the termination of this Agreement.
SECTION 2.16. Security Interest. The Seller hereby grants to the
Purchaser, for its own benefit and for the ratable benefit of the Agent and
each of the Owners, a security interest in (i) all of the Seller's interests
in the Receivables, the Related Security, and the Collections, (ii) the
Collection Account and all funds therein and all investments and other items
therein or attributable thereto, and (iii) all proceeds of the foregoing (the
items described in items (i), (ii) and (iii) being the "Collateral"), to
secure payment of all fees and expenses, indemnity obligations and all other
obligations owed hereunder to the Agent and/or the Owners by the Seller or
the Servicer. It is understood and agreed that this Section 2.16 does not
secure or guaranty the obligations of an Obligor to pay any Receivable. The
immediately preceding sentence shall not limit the extent to which any other
provision of this Agreement creates a claim against the Seller or the
Servicer in respect of any Receivable (for reasons other than the Obligor's
credit problems), or limit the extent to which the Collateral secures such
claim.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The
initial purchase hereunder is subject to the condition precedent that the
Agent shall have received on or before the date of such purchase the items
listed in Schedule I, each (unless otherwise indicated) dated as of the date
of delivery (provided that such date is no later than the date of the initial
purchase), in form and substance satisfactory to the Agent and the
Purchasers.
SECTION 3.02. Conditions Precedent to All Purchases and
Reinvestments. Each purchase (including the initial purchase) from the
Seller by the Purchaser and the right of the Servicer to reinvest in Eligible
Receivables on behalf of the Purchaser those Collections allocable to a
Percentage Interest pursuant to Section 2.05 shall be subject to the further
conditions precedent that: (a) with respect to any such purchase (other than
the initial purchase), on or prior to the date of such purchase, the Servicer
shall have delivered to the Agent, in form and substance satisfactory to the
Agent, a completed Investor Report dated within ten days prior to the date of
such purchase and containing such additional information as may be reasonably
requested by the Agent; (b) on the date of such purchase or reinvestment the
following statements shall be true and the Seller by accepting the amount of
such purchase or by receiving the proceeds of such reinvestment shall be
deemed to have certified that:
(i) The representations and warranties contained in
Section 4.01 (other than Excluded Representations) and Section 4.02 are
correct on and as of such day as though made on and as of such date, and
(ii) No event or condition has occurred and is continuing, or
would result from such purchase or reinvestment, which would (a) cause
the Termination Date to occur or (b) constitute an Event of Termination
or would constitute an Event of Termination but for the requirement that
notice be given or time elapse or both, and
(iii) The Seller's senior secured debt shall be rated at least
the Required Rating, and
(iv) No law or regulation shall prohibit, and no order,
judgment or decree of any federal, state or local court or governmental
body, agency or instrumentality shall prohibit or enjoin, the making of
such purchase or reinvestment by the Purchaser or any applicable Owner
in accordance with the provisions hereof, and
(c) the Agent shall have received such other approvals, opinions or documents
as the Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The
Seller represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of Massachusetts and is duly
qualified to do business, and is in good standing, in every other
jurisdiction in which the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Seller of this
Agreement and all other documents to be delivered by it hereunder, including
the Seller's use of the proceeds of purchases and reinvestments, are within
the Seller's corporate powers, have been duly authorized by all necessary
corporate action, do not contravene (i) the Seller's charter or by-laws,
(ii) any law, rule or regulation applicable to the Seller, (iii) any
contractual restriction binding on or affecting the Seller or its property or
(iv) any order, writ, judgment, award, injunction or decree binding on or
affecting the Seller or its property, and do not result in or require the
creation of any lien, security interest or other charge or encumbrance upon
or with respect to any of its properties (other than in favor of the Agent
for the benefit of the Owners with respect to the Receivables and the Related
Security and Collections associated therewith); and no transaction
contemplated hereby requires compliance with any bulk sales act or similar
law. The Agreement has been duly executed and delivered by the Seller.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Seller of this
Agreement or any other document or instrument to be delivered hereunder,
except for the filing of the UCC financing statements described in Schedule
I.
(d) This Agreement and each other document or instrument delivered
by it hereunder constitutes the legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms.
(e) The consolidated balance sheets of each of the Parent and the
Seller as at December 31, 1995, and the related statements of income,
shareholders' equity and cash flows for the fiscal year then ended, copies of
which have been furnished to the Agent, fairly present the consolidated
financial condition of the Parent and Seller and their consolidated
subsidiaries as at such date and the consolidated results of the operations
of the Parent, the Seller and their consolidated subsidiaries for the period
ended on such date, all in accordance with GAAP, since December 31, 1995, and
except as disclosed in the Public Disclosure Documents, there has been no
change in any such condition or operations which has had, or could reasonably
be expected to have, a Material Adverse Effect. Since December 31, 1995, and
except as disclosed in the Public Disclosure Documents, there has been no
change in any such condition or operations that has had, or reasonably could
be expected to have, a material adverse effect on the operations or financial
condition of the Parent.
(f) Except as disclosed in the Public Disclosure Documents, (i)
there is no pending or threatened action or proceeding affecting the Parent,
the Seller or any of their subsidiaries before any court, governmental agency
or arbitrator that has had, or reasonably could be expected to have, a
Material Adverse Effect, (ii) none of the Parent, the Seller nor any of their
subsidiaries is in default with respect to any order of any court, arbitrator
or governmental body except for defaults with respect to orders of
governmental agencies which defaults are not material to the business or
operations of the Seller or any subsidiary and have not had (and cannot
reasonably be expected to have) a Material Adverse Effect, and (iii) no other
condition exists that has caused, or could reasonably be expected to cause, a
Material Adverse Effect. Except as disclosed in the Public Disclosure
Documents, (i) there is no pending or threatened action or proceeding
affecting the Parent or any of its subsidiaries before any court,
governmental agency or arbitrator that has had, or could reasonably be
expected to have, a Material Parent Effect, and (ii) neither the Parent nor
any of its subsidiaries is in default with respect to any order of any court,
arbitrator or governmental body except for defaults with respect to orders of
governmental agencies which defaults are not material to the business or
operations of the Parent or any subsidiary and has not had (and cannot
reasonably be expected to have) a Material Parent Effect.
(g) No proceeds of any purchase of Percentage Interests will be
used by the Seller to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended.
(h) Each Receivable, together with any contract related thereto,
and the Collateral shall, at all times, be owned by the Seller free and clear
of any Adverse Claim except as created by this Agreement, and upon each
purchase and reinvestment, the Owner making such purchase or reinvestment, as
the case may be, shall acquire a valid and perfected first priority undivided
percentage ownership interest to the extent of the pertinent Percentage
Interest in each Receivable then existing or thereafter arising and in the
Related Security (other than Security Deposits) and Collections with respect
thereto, free and clear of any Adverse Claim except as provided hereunder.
No effective financing statement or other instrument similar in effect
covering any Receivable, the Related Security, the Collections or the
Collateral with respect thereto shall at any time be on file in any recording
office except such as may be filed in favor of the Purchaser relating to this
Agreement.
(i) At all times on or prior to the Termination Date, the Coverage
Ratio shall equal or exceed 102%.
(j) No Investor Report, information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by the Seller
or the Servicer to the Agent or any Owner in connection with this Agreement
is or will be inaccurate in any material respect as of the date it is or
shall be dated or (except as otherwise disclosed to the Agent or such Owner,
as the case may be, at such time) as of the date so furnished, and no such
document contains or will contain any material misstatement of fact or omits
or shall omit to state a material fact or any fact necessary to make the
statements contained therein not misleading. Any Receivable described as an
Eligible Receivable in any Investor Report or such other information,
exhibit, financial statement, document, book, record or report satisfies the
requirements of the definition of "Eligible Receivable." The Seller and the
Servicer have management information systems that are adequate to generate
reliable statistical information with respect to the Receivables, including
such information as is required to be delivered pursuant to the terms of this
Agreement.
(k) The principal place of business and chief executive office of
the Seller and the offices where the Seller keeps all of the Records are
located at the addresses specified in Schedule IV (or at such other locations
as to which the notice and other requirements specified in Section 6.09 shall
have been satisfied). The Seller has places of business in more than one
town in Massachusetts.
(l) Obligors have been (or, in the case of Obligors on Unbilled
Receivables, will be) instructed to make all payments in respect of
Receivables to the Seller's post office box in Hartford, Connecticut, and
such payments are (i) processed by the Servicer in Wethersfield, Connecticut
and (ii) deposited to the Collection Account within one Business Day of the
Servicer's receipt thereof. No funds other than Collections are or will be
deposited to the Collection Account, provided that the location of such post
office box and/or such processing, and the identity of the Collection Account
may be changed with the consent of the Agent, upon 30 days' prior written
notice to the Agent, if (i) the requirements of Section 6.09 are satisfied,
(ii) the Collection Account continues to be a single-purpose account into
which Collections (and no other funds) are deposited, (iii) the Collection
Account continues to be in the name of the Purchaser, and under the exclusive
ownership and control of the Purchaser, and (iv) the bank at which the
Collection Account is maintained shall have received, executed and returned a
Bank Notice.
(m) All Obligors (other than Obligors in respect of Unbilled
Receivables) are listed on the General Trial Balance. The Seller's
methodology for determining the Outstanding Balance of Unbilled Receivables
is accurately described in Exhibit B, and such description does not omit any
fact necessary to make the statements contained therein not misleading. The
Outstanding Balance of Unbilled Receivables shall be calculated in accordance
with the methodology described in Exhibit B.
(n) Except as described in Schedule III, the Seller has no trade
names, fictitious names, assumed names or "doing business as" names other
than those names with respect to which it has satisfied its obligations under
Section 6.09.
(o) The Seller has assets which are greater than the amount of its
liabilities, and is able to pay its debts as they become due.
(p) The terms of the Receivables have not been extended or
modified, except as permitted under the Credit and Collection Policy.
(q) The Credit and Collection Policy has not been materially
changed in any way which might reasonably lead to a Material Adverse Effect.
SECTION 4.02. Representations and Warranties of the Servicer. The
Servicer represents and warrants as follows:
(a) The Servicer is a corporation duly incorporated, validly
existing and in good standing under the laws of Massachusetts and is duly
qualified to do business, and is in good standing, in every other
jurisdiction in which the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Servicer of
this Agreement and all other documents to be delivered by it hereunder are
within the Servicer's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) the Servicer's charter or
by-laws, (ii) any law, rule or regulation applicable to the Servicer,
(iii) any contractual restriction binding on or affecting the Servicer or its
property or (iv) any order, writ, judgment, award, injunction or decree
binding on or affecting the Servicer or its property, and do not result in or
require the creation of any lien, security interest or other charge or
encumbrance upon or with respect to any of its properties. The Agreement has
been duly executed and delivered by the Servicer.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Servicer of this
Agreement or any other document or instrument to be delivered hereunder.
(d) This Agreement and each other document or instrument delivered
by it hereunder constitutes the legal, valid and binding obligation of the
Servicer enforceable against the Servicer in accordance with its terms.
(e) No Investor Report (if prepared by the Servicer, or to the
extent that information contained therein is supplied by the Servicer),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by the Servicer to the Agent or any Owner in
connection with this Agreement is or will be inaccurate in any material
respect as of the date it is or shall be dated or (except as otherwise
disclosed to the Agent or such Owner, as the case may be, at such time) as of
the date so furnished, and no such document contains or will contain any
material misstatement of fact or omits or shall omit to state a material fact
or any fact necessary to make the statements contained therein not
misleading.
(f) All Obligors (other than Obligors in respect of Unbilled
Receivables) are listed on the General Trial Balance. The Seller's
methodology for determining the Outstanding Balance of Unbilled Receivables
is accurately described in Exhibit B, and such description does not omit any
fact necessary to make the statements contained therein not misleading. The
Outstanding Balance of Unbilled Receivables shall be calculated in accordance
with the methodology described in Exhibit B.
(g) The terms of the Receivables have not been extended or
modified, except as permitted under the Credit and Collection Policy.
(h) The Credit and Collection Policy has not been materially
changed in any way which might reasonably lead to a Material Adverse Effect.
(i) The Servicer has management information systems that are
adequate to generate reliable statistical information with respect to the
Receivables, including such information as is required to be delivered
pursuant to the terms of this Agreement.
ARTICLE V
GENERAL COVENANTS OF THE SELLER AND THE SERVICER
SECTION 5.01. General Seller Covenants. The Seller covenants as
follows:
(a) Compliance with Laws; Preservation of Corporate Existence.
The Seller will comply in all material respects with all applicable laws, and
all governmental rules, regulations and orders and preserve and maintain its
corporate existence, rights, franchises, qualifications and privileges, in
each case to the extent that the failure to do so could reasonably be
expected to cause a Material Adverse Effect.
(b) Sales, Liens, Etc. Except as otherwise provided herein, the
Seller will not sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Adverse Claim upon or with
respect to, any Receivable, the related contract (if any), any Collections,
any Related Security or the Collateral, or upon or with respect to any other
account to which any Collections of any Receivable are sent, or assign any
right to receive income in respect thereof.
(c) General Reporting Requirements. The Seller will provide (or
cause the Servicer to provide) to the Agent (in sufficient copies for each
Owner) the following:
(i) as soon as available and in any event within 50 days
after the end of each of the first three quarters of each fiscal year of
the Seller, a copy of the Seller's Quarterly Report on Form 10-Q
submitted to the Securities and Exchange Commission with respect to such
quarter, containing financial statements in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief financial
officer, chief accounting officer, Treasurer or Assistant Treasurer of
the Seller as having been prepared in accordance with GAAP and on a
basis consistent with the financial statements referred to in Section
4.01(e); and
(ii) as soon as available and in any event within 105 days after
the end of each fiscal year of the Seller, a copy of the Seller's Annual
Report on Form 10-K submitted to the Securities and Exchange Commission
with respect to such year, containing financial statements certified by
a nationally-recognized independent public accountant acceptable to the
Agent;
(iii) promptly after the sending or filing thereof, copies of all
reports which the Seller sends to any of its public securityholders and
copies of all reports and registration statements which the Seller files
with the Securities and Exchange Commission or any national securities
exchange other than registration statements relating to employee benefit
plans and to registrations of securities for selling securityholders;
(iv) promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which the Seller or any subsidiary of the Seller
files under ERISA with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor or which
the Seller or any subsidiary of the Seller receives from such
Corporation;
(v) as soon as possible and in any event within two days
after the occurrence of each Event of Termination or each event which,
with the giving of notice or lapse of time or both, would constitute an
Event of Termination, a statement of the chief financial officer, chief
accounting officer, Treasurer or any Assistant Treasurer of the Seller
setting forth details of such Event of Termination or event and the
action which the Seller has taken and proposes to take with respect
thereto; provided, that in the case of an event described in Section
7.01(f), such statement shall be provided to the Agent immediately;
(vi) promptly following the Agent's request therefor, such other
information respecting the Receivables or the conditions or operations,
financial or otherwise, of the Parent, the Seller, the Servicer or any
of their subsidiaries as the Agent may from time to time reasonably
request in writing in order to protect the interests of the Agent or any
Owner in connection with this Agreement;
(vii) to the extent not otherwise provided pursuant to the
immediately foregoing clauses (i)-(vi), promptly after the sending or
receipt thereof, copies of all reports and notices (other than routine
borrowing requests and confirmations under established lines) which the
Seller sends to or receives from any creditor or group of creditors of
the Seller or any representative or agent for any creditor or group of
creditors of the Seller, in each case, in respect of which the Debt
owing to such creditor or group of creditors exceeds $10,000,000 in the
aggregate; and
(viii) together with the quarterly and annual financial
statements to be delivered by the Seller pursuant to the immediately
preceding clauses (i) and (ii) respectively, a certificate from the
Seller's chief financial officer, chief accounting officer, Treasurer or
any Assistant Treasurer, in the case of the quarterly financial
statements, and independent certified public accountants, in the case of
the annual financial statements, stating, in each case, (a) that such
Person is familiar with the terms of this Agreement and that in
examining such financial statements, such Person did not become aware of
any fact or condition which would constitute (or which with the giving
of notice or passage of time, or both, would constitute) an Event of
Termination, except for those, if any, described in reasonable detail in
such certificate and (b) that, as of the date of such financial
statements, the representation and warranty of the Seller set forth in
Section 4.01(i) is true and correct.
(d) Merger, Etc. The Seller will not merge or consolidate with,
or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions), all or substantially all of its
assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership interest
of any Person (any such transaction, acquisition or other action hereinafter
referred to as a "Reorganization"), except that the Seller may enter into a
Reorganization if the following conditions are satisfied:
(i) the survivor (such term referring to the survivor of a merger
or consolidation as well as the acquirer of assets, capital stock or
other ownership interests) of such Reorganization is organized under the
laws of, and is resident in, the United States or one of the states
therein;
(ii) the senior secured debt of such survivor shall be rated at
least BBB- by Standard & Poor's and Baa2 by Moody's;
(iii) if the Seller is not the survivor of the Reorganization, such
survivor shall have assumed all of the obligations of the Seller under
or in connection with this Agreement pursuant to an agreement in form
and substance satisfactory to the Agent;
(iv) if the Seller is not the survivor of the Reorganization, the
Agent shall have received opinions of counsel satisfactory to the Agent
with respect to the matters described in the forms of opinion attached
hereto as Exhibits E-1 and E-2, and any modifications or additions to
Uniform Commercial Code filings or other security arrangements requested
by the Agent shall have been completed; and
(v) each of Standard & Poor's and Moody's shall have confirmed
that such merger or consolidation will not cause the ratings of the
Purchaser's commercial paper notes to be reduced or withdrawn.
(e) Accounting of Purchases. In its financial statements, the
Seller will account for the transactions contemplated hereby as sales of the
Percentage Interests by the Seller to the Owners.
(f) ERISA Matters. The Seller will not (i) engage or permit any
ERISA Affiliate to engage in any prohibited transaction (as defined in
Section 4975 of the Code and Section 406 of ERISA) for which an exemption is
not available or has not previously been obtained from the United States
Department of Labor; (ii) permit to exist any accumulated funding deficiency
(as defined in Section 302(a) of ERISA and Section 412(a) of the Code) or
funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (iii) fail to make any payments to any Multiemployer Plan
that the Seller or any ERISA Affiliate may be required to make under the
agreement relating to such Multiemployer Plan or any law pertaining thereto;
(iv) terminate any Benefit Plan so as to result in any liability; or
(v) permit to exist any occurrence of any reportable event described in Title
IV of ERISA which represents a material risk of a liability of the Seller or
any ERISA Affiliate under ERISA or the Code, if such prohibited transactions,
accumulated funding deficiencies, payments, terminations and reportable
events occurring within any fiscal year of the Seller, in the aggregate,
involve a payment of money or an incurrence of liability by the Seller or any
ERISA Affiliate in an amount in excess of $100,000,000.
(g) Marking of Records. At its expense, the Seller will mark (or
cause the Servicer to mark) its master data processing records relating to
the Receivables so that reports generated from such records include the
following legend:
UNDIVIDED FRACTIONAL OWNERSHIP INTERESTS IN THE RECEIVABLES
DESCRIBED HEREIN HAVE BEEN SOLD BY WESTERN MASSACHUSETTS ELECTRIC
COMPANY TO MONTE ROSA CAPITAL CORPORATION PURSUANT TO A RECEIVABLES
PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 11, 1996, AS THE SAME
MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AMONG WESTERN
MASSACHUSETTS ELECTRIC COMPANY, MONTE ROSA CAPITAL CORPORATION AND
UNION BANK OF SWITZERLAND, NEW YORK BRANCH, AS AGENT.
(h) The Seller will cause the representation in Section 4.01(l) to
be true at all times.
SECTION 5.02 Servicer Covenants. The Servicer covenants as
follows:
(a) Compliance with Laws; Preservation of Corporate Existence.
The Servicer will comply in all material respects with all applicable laws,
and all governmental rules, regulations and orders and preserve and maintain
its corporate existence, rights, franchises, qualifications and privileges,
in each case to the extent that the failure to do so could reasonably be
expected to cause a Material Adverse Effect.
(b) Merger, etc. The Servicer will not merge or consolidate with,
or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions), all or substantially all of its
assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership interest
of any Person (any such transaction, acquisition or other action hereinafter
referred to as a "Reorganization"), except that the Servicer may enter into a
Reorganization if the following conditions are satisfied:
(i) the survivor (such term referring to the survivor of a merger
or consolidation as well as the acquirer of assets, capital stock or
other ownership interests) of such Reorganization is organized under the
laws of, and is resident in, the United States or one of the states
therein;
(ii) the senior secured debt of such survivor shall be rated at
least BBB- by Standard & Poor's and Baa2 by Moody's;
(iii) if the Servicer is not the survivor of the Reorganization,
such survivor shall have assumed all of the obligations of the Servicer
under or in connection with this Agreement pursuant to an agreement in
form and substance satisfactory to the Agent;
(iv) if the Servicer is not the survivor of the Reorganization, the
Agent shall have received opinions of counsel satisfactory to the Agent
with respect to the matters described in the forms of opinion attached
hereto as Exhibits E-1 and E-2, mutatis mutandis, and any modifications
or additions to Uniform Commercial Code filings or other security
arrangements requested by the Agent shall have been completed; and
(v) each of Standard & Poor's and Moody's shall have confirmed
that such merger or consolidation will not cause the ratings of the
Purchaser's commercial paper notes to be reduced or withdrawn.
(c) Marking of Records. At its expense, the Servicer will mark
its master data processing records relating to the Receivables so that
reports generated from such records include the legend described in Section
5.01(g).
ARTICLE VI
ADMINISTRATION, COLLECTION AND MONITORING OF RECEIVABLES
SECTION 6.01. Appointment and Designation of the Servicer. The
Seller, the Purchaser, the Owners and the Agent hereby appoint the Person
(the "Servicer") designated by the Agent from time to time pursuant to this
Section 6.01, as their agent to service, administer and collect the
Receivables and otherwise to enforce their respective rights and interests in
and under the Receivables, the Related Security and any contracts between the
Seller and an Obligor. The Servicer's authorization under this Agreement
shall terminate on the Collection Date. Until the Agent gives notice to the
Seller of a designation of a new Servicer, WMECO is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Servicer pursuant
to the terms hereof. The Agent may, upon the occurrence of a Servicer
Default or other Event of Termination, designate as Servicer any Person to
succeed WMECO any successor Servicer, on the condition in each case that any
such Person so designated shall agree to perform the duties and obligations
of the Servicer pursuant to the terms hereof. The Seller agrees that any
Servicer may take any and all steps in the Seller's name and on behalf of the
Seller necessary or desirable, in the determination of the Servicer, to
collect all amounts due under any and all Receivables, including, without
limitation, endorsing the Seller's name on checks and other instruments
representing Collections and enforcing such Receivables and any related
contracts. The Seller will, upon the request of the Agent, execute such
powers of attorney and other instruments as may be necessary to facilitate
the foregoing. The Servicer may, with the prior consent of the Agent (which
consent is hereby given with respect to Northeast Utilities Service Company),
subcontract with any other Person for servicing, administering or collecting
the Receivables, provided that the Servicer shall remain liable for the
performance of the duties and obligations of the Servicer pursuant to the
terms hereof. Notwithstanding anything to the contrary contained in this
Agreement, the Servicer, if not WMECO or an Affiliate of WMECO, shall have no
obligation to collect, enforce or take any other action described in this
Article VI with respect to any receivable or other indebtedness owing to the
Seller that is not a Receivable other than to deliver to the Seller the
collections and documents with respect to any such receivable or other
indebtedness as described in Sections 6.03 and 6.06(b).
SECTION 6.02. Collection of Receivables by the Servicer;
Extensions and Amendments of Receivables. The Servicer shall take or cause
to be taken all such actions as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules
and regulations, with reasonable care and diligence, and in accordance with
the Credit and Collection Policy; provided, however, that, notwithstanding
anything to the contrary contained herein, (a) the Agent shall have the
absolute and unlimited right (subject to applicable requirements of law) to
direct the Servicer (whether the Servicer is the Seller or otherwise) to
commence or settle any legal action, to enforce collection of any Receivable
or to foreclose upon or repossess any Related Security and (b) the Servicer
shall not make the Agent or any Owner a party to any litigation without the
express written consent of the Agent or such Owner, as the case may be.
Provided that the Termination Date shall not have occurred, the Servicer may,
in accordance with the Credit and Collection Policy, (a) extend the maturity
or adjust the Outstanding Balance of any Defaulted Receivable as the Servicer
may determine to be appropriate to maximize Collections thereof, provided,
that no such extension or adjustment shall affect the characterization of
such Receivable as being a Defaulted Receivable, and (b) adjust the
Outstanding Balance of any Receivable to reflect the reductions or
cancellations described in the first sentence of Section 2.08. Except as
otherwise permitted pursuant to the preceding sentence, the Servicer will not
extend, amend or otherwise modify the terms of any Receivable, or, if there
exists a contract related to any Receivable, amend, modify or waive any term
or condition of any such contract.
SECTION 6.03. Distribution and Application of Collections. The
Servicer shall set aside on its books for the account of the Seller and each
Owner their respective allocable shares of the Collections of Receivables in
accordance with Sections 2.05, 2.06, 2.07 and 2.08; provided, however, that
if required by Section 2.05, 2.06 or 2.07 or otherwise instructed by the
Agent following a Transition Event, the Servicer shall segregate such
Collections in accordance with Section 6.04. The Servicer shall as soon as
practicable following receipt turn over to the Seller the collections of any
receivable or other indebtedness owing to the Seller which is not a
Receivable, less, in the event the Seller is not the Servicer, all reasonable
and appropriate out-of-pocket costs and expenses of such Servicer of
servicing, collecting and administering any such receivable or other
indebtedness to the extent not covered by the Servicing Fee received by it.
Any payment by an Obligor in respect of any indebtedness owed by it to the
Seller shall, except as otherwise specified by such Obligor or otherwise
required by contract or law or by instruction of the Agent, be applied as a
Collection of any Receivable of such Obligor (in the order of the age of such
Receivables, starting with the oldest such Receivable) to the extent of any
amounts then due and payable thereunder before being applied to any other
receivable or other indebtedness (other than a Receivable) of such Obligor.
SECTION 6.04. Segregation of Collections. The Servicer shall not
be required (unless required by Section 2.05, 2.06 or 2.07 or otherwise
instructed by the Agent following a Transition Event) to segregate the funds
constituting the Owners' portion of daily Collections prior to the remittance
thereof in accordance with Sections 2.05, 2.06, 2.07 and 2.08. If so
instructed by the Agent following a Transition Event, the Servicer shall (a)
on the first Business Day following its receipt thereof, segregate and
deposit with a bank designated by the Agent (which may be the Agent) each
Owner's allocable share of Collections of Receivables received by the
Servicer; provided, that on any date before the Termination Date, such
segregation shall not apply to Reinvested Collections, and (b) if so
requested by the Agent, provide payment instructions to such bank as directed
by the Agent.
SECTION 6.05. Other Rights of the Agent. At any time following
the occurrence of an Event of Termination or the designation of a Servicer
other than the Seller pursuant to Section 6.01:
(a) The Agent may or, at the request of the Agent, the Seller
and the Servicer shall (in either case, at the Seller's expense) direct
the Obligors of Receivables, or any of them, to pay all amounts payable
under any Receivable directly to the Agent or its designee; and
(b) The Seller and the Servicer shall, at the Agent's request and
at the Seller's expense, (i) assemble all Records and make the same
available to the Agent or its designee at a place selected by the Agent
or its designee, and (ii) segregate all cash, checks and other
instruments received by it from time to time constituting Collections of
Receivables in a manner acceptable to the Agent and, promptly following
receipt, remit all such cash, checks and instruments, duly endorsed or
with duly executed instruments of transfer, to the Agent or its
designee.
SECTION 6.06. Records; Maintenance of General Trial Balance;
Audits. (a) The Seller and the Servicer will maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for
the collection of all Receivables (including, without limitation, records
adequate to permit the identification of each Receivable and all Collections
thereof and adjustments thereto). The Seller will (and will cause the
Servicer to) mark all master data processing records so that reports
generated from such records include the legend described in Section 5.01(g).
(b) The Servicer shall hold all Records in trust for the Seller
and each Owner in accordance with their respective interests. Subject to the
receipt of contrary instructions from the Agent, the Seller will, upon the
designation of a Servicer other than the Seller, deliver (or cause the
Servicer to deliver) all Records to such Servicer; provided, however, that
the Servicer shall as soon as practicable upon demand deliver to the Seller
all records and documents in its possession relating to receivables and other
indebtedness owing to the Seller other than Receivables, and copies of all
Records in its possession relating to Receivables.
(c) Neither the Servicer nor the Seller will make any change or
modification to the form of the General Trial Balance which is adverse to the
interests of the Purchaser or the Owners. The Servicer will apply all
Collections to the applicable Receivables as provided in Section 6.03 and
modify the General Trial Balance to reflect such Collections, in each case,
within one Business Day following the earliest date on which such Collections
are received by the Servicer or the Seller or (following the occurrence of an
Event of Termination and the establishment of Lock-Box Accounts pursuant to
Section 6.08) deposited in a Lock-Box Account. The Servicer will post each
new invoiced Receivable on the General Trial Balance on the day such
Receivable is billed. If at any time the Servicer fails or otherwise ceases
to generate the General Trial Balance, the Agent shall have the right to
reconstruct the General Trial Balance so that a determination of the
Percentage Interests can be made pursuant to Section 2.03. The Seller and
the Servicer each agree to cooperate with such reconstruction of the General
Trial Balance, including, without limitation, the delivery to the Agent, upon
the Agent's request, of copies of all Records. The Seller shall reimburse
the Agent for all costs and expenses incurred in connection with such
reconstruction of the General Trial Balance.
(d) The Seller and the Servicer each will, from time to time
during regular business hours as reasonably requested by the Agent, permit
the Agent, or its agents or representatives, (i) to examine and make copies
of and abstracts from all Records and (ii) to visit the offices and
properties of the Seller or the Servicer for the purpose of examining such
Records and to discuss matters relating to the Receivables or the Seller's or
the Servicer's performance hereunder with any of the officers or employees of
the Seller or the Servicer, as the case may be, having knowledge of such
matters.
SECTION 6.07. Receivables Reporting. Starting with the first
month commencing after the date hereof and continuing through (and including)
the month in which the Collection Date occurs, the Servicer shall on or
before the eighteenth calendar day of each month (or if such eighteenth day
is not a Business Day, on the Business Day immediately preceding such
eighteenth day), prepare and forward to the Agent for each Owner, an Investor
Report relating to all Percentage Interests, as of the close of business of
the Servicer on the last day of the immediately preceding month, which report
will include (without limitation) (i) the information required to compute
each element of the Coverage Ratio and (ii) the aggregate amount billed by
the Seller to each Obligor in a Reported Group.
SECTION 6.08 Collections. The Seller will instruct all Obligors
to cause all Collections to be paid to the Servicer and if the Seller
receives any Collections, the Seller will remit such Collections to the
Servicer (including, without limitation, any Collections deemed to have been
received pursuant to Section 2.08) within one Business Day following the
Seller's receipt thereof. The Seller will not make any change in its
instructions to Obligors regarding payments to be made to the Seller or the
Servicer, unless the Agent shall have received at least ten Business Days'
prior written notice of such change and all actions reasonably requested by
the Agent to protect and perfect the interest of the Agent and the Owners in
the Collections of the Receivables have been taken and completed. If
requested to do so following a Transition Event, the Seller shall instruct
the Obligors to cause all Collections to be paid to a Lock-Box Bank for
deposit into a Lock-Box Account and deliver a Bank Notice to such Lock-Box
Bank. Such notice shall transfer to the Agent exclusive ownership and
control of such Lock-Box Account. The Seller hereby agrees to take any
further action necessary that the Agent may reasonably request to effect such
transfer. Without limiting the foregoing, on or prior to the date of the
initial purchase of a Percentage Interest hereunder, (i) the Seller shall
cause to be established the Collection Account, in the name of the Purchaser,
(ii) the Purchaser shall give a Bank Notice to the bank at which the
Collection Account is maintained and (iii) the Seller shall cause such bank
to execute such notice and return it to the Purchaser. Such notice shall
give the bank standing instructions to remit funds on deposit in the
Collection Account to the Servicer, unless the Purchaser, or the Agent on
behalf of the Purchaser, instructs otherwise, which instruction may only be
delivered upon the occurrence of a Transition Event.
SECTION 6.09. UCC Matters; Protection and Perfection of Percentage
Interests. The Seller will keep its principal place of business and chief
executive office, and the office where it keeps the Records, at the addresses
of the Seller specified in Schedule IV or, upon 30 days' prior written notice
to the Agent, at such other locations within the United States where all
actions reasonably requested by the Agent to protect and perfect the interest
of the Agent and the Owners in the Receivables, the Related Security
(excluding Security Deposits) relating thereto, the Collections relating
thereto and the Collateral have been taken and completed. The Seller will
not make any change to its corporate name or use any tradenames, fictitious
names, assumed names or "doing business as" names other than those described
in Schedule III, unless prior to the effective date of any such name change
or use, the Seller delivers to the Agent such executed financing statements
as the Agent may request to reflect such name change or use, together with
such other documents and instruments as the Agent may reasonably request in
connection therewith. The Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all further instruments and
documents, and take all further action that the Agent may reasonably request
in order to perfect, protect or more fully evidence the interests of the
Owners in the Receivables, the Related Security (excluding Security Deposits)
relating thereto, Collections relating thereto and the Collateral, or to
enable any of them or the Agent to exercise or enforce any of their
respective rights hereunder. Without limiting the generality of the
foregoing, the Seller will upon the request of the Agent execute and file
such financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be
necessary or appropriate or as the Agent may request. The Seller hereby
authorizes the Purchaser to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all
or any of the Receivables, the Related Security, the Collections and the
Collateral now existing or hereafter arising without the signature of the
Seller where permitted by law. A carbon, photographic or other reproduction
of this Agreement or any financing statement covering the Receivables, the
Related Security and Collections relating thereto and the Collateral (or, in
each case, any part thereof) shall be sufficient as a financing statement.
The Seller shall, upon the request of the Agent at any time after a
Transition Event and at the Seller's expense, notify the Obligors of
Receivables, or any of them, of the Owners' interests therein. If the Seller
fails to perform any of its agreements or obligations under this Section
6.09, the Agent may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of the Agent
incurred in connection therewith shall be payable by the Seller upon the
Agent's demand therefor. For purposes of enabling the Agent to exercise its
rights described in the preceding sentence and elsewhere in this Article VI,
the Seller and the Owners hereby authorize the Agent to take any and all
steps in the Seller's name and on behalf of the Seller and the Owners
necessary or desirable, in the determination of the Agent, to collect all
amounts due under any and all Receivables, including, without limitation,
endorsing the Seller's name on checks and other instruments representing
Collections and enforcing such Receivables and any related contracts. In
addition, to the extent that any Receivables Interest is intended to be or is
likely to be outstanding five years or more after the date of this Agreement,
the Seller shall provide, within six months (but not later than the 30th day)
prior to the expiration of such five year period (and, if applicable, each
subsequent five year period), or more frequently as the Agent reasonably
deems advisable, an opinion of counsel to the Seller as to the continuing
validity and perfection of the Agent's and the Owners' interests in the
Receivables and the Related Security (excluding Security Deposits) and
Collections relating thereto.
SECTION 6.10. Obligations of the Seller With Respect to
Receivables. The Seller will (a) at its expense, regardless of any exercise
by the Agent or any Owner of its rights hereunder, timely and fully perform
and comply with all material provisions, covenants and other promises
required to be observed by it under any contracts or other agreements related
to the Receivables to the same extent as if Percentage Interests had not been
sold hereunder and (b) pay when due any taxes (other than Excluded Taxes),
including without limitation, sales and excise taxes, payable in connection
with the Receivables. In no event shall the Agent or any Owner have any
obligation or liability with respect to any Receivables or related contracts,
if applicable, nor shall any of them be obligated to perform any of the
obligations of the Seller thereunder. The Seller will timely and fully
comply in all material respects with the Credit and Collection Policy in
regard to each Receivable and any related contract. The Seller will not make
any change in the character of its business or in the Credit and Collection
Policy, which change would, in either case, impair the credit quality,
enforceability or collectibility of any Receivable.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following
events ("Events of Termination") shall occur:
(a) (i) The Servicer (if other than the Agent) shall fail to
perform or observe any term, covenant or agreement hereunder (other than
as referred to in clause (ii) of this Section 7.01(a)) and such failure
shall remain unremedied for five Business Days after written notice
thereof shall have been given by the Agent to the Servicer or
(ii) either the Servicer (if other than the Agent) or the Seller shall
fail to make any payment or deposit to be made by it hereunder when due;
or
(b) Any representation or warranty made or deemed to be made by
either the Seller or the Servicer (or any of its respective officers)
under or in connection with this Agreement or any Investor Report or
other information or report delivered pursuant hereto shall prove to
have been false or incorrect in any material respect when made or deemed
to have been made and shall not have been remedied for a period of five
Business Days after written notice thereof shall have been given by the
Agent to the Seller; or
(c) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for
five Business Days after written notice thereof shall have been given by
the Agent to the Seller; or
(d) The Seller shall fail to pay any principal of or premium or
interest on any Debt in an aggregate amount exceeding $10,000,000, when
the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure
shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or any other default
under any agreement or instrument relating to any such Debt or any other
event, shall occur and shall continue after the applicable grace period,
if any, specified in such agreement or instrument if the effect of such
default or event is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof; or
(e) Any purchase of a Percentage Interest or reinvestment of
Collections shall for any reason, except to the extent permitted by the
terms hereof, cease to create a valid and perfected first priority
undivided percentage ownership interest to the extent of such Percentage
Interest in each Receivable and the Related Security (excluding Security
Deposits) and Collections with respect thereto, or any other Adverse
Claim shall attach to any Receivables, Related Security or Collections
and, provided that the attachment of any such Adverse Claim securing
payment of taxes, assessments or governmental charges shall not
constitute an Event of Termination unless it shall remain outstanding
for fifteen days; or
(f) (i) The Seller or the Servicer (if other than the Agent)
shall generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall make
a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Seller or the Servicer (if other
than the Agent) seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief
of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property; or (ii) the Seller or the
Servicer (if other than the Agent) shall take any corporate action to
authorize any of the actions set forth in clause (i) above in this
Section 7.01(f); or
(g) The Loss-to-Liquidation Ratio for any month shall exceed
6.75%, or the average Loss-to-Liquidation Ratio for any six consecutive
months shall exceed 5.25%, or the Delinquency Ratio for any month shall
exceed 6.25%, or the Gross Charge-Off Ratio for any month shall exceed
2.50%, or the average Dilution Ratio for any three consecutive months
shall exceed 1.00%, or the Weighted Average Maturity for any month shall
exceed 60.0 days; or
(h) The Seller's senior secured debt shall not be rated at least
the Required Rating, or there shall have occurred any event which has a
Material Adverse Effect; or
(i) (i) A regulatory, tax or accounting body has ordered that the
activities of the Purchaser or any Affiliate of the Purchaser
contemplated hereby be terminated or (ii) as a result of any other event
or circumstance, the activities of the Purchaser contemplated hereby may
reasonably be expected to cause the Purchaser, the financial institution
then acting as the administrator or the manager for the Purchaser, or
any of their respective Affiliates to suffer materially adverse
regulatory, accounting or tax consequences; or
(j) the Purchaser shall be unable to issue Commercial Paper Notes
for sixty consecutive days; or
(k) Any Event of Default under (and as defined in) either of the
Liquidity Agreements shall occur or a Liquidity Facility Termination
Date shall have occurred; or
(l) The Coverage Ratio shall be less than 102% for two Business
Days; or
(m) A Change of Control shall occur; or
(n) a Servicer Default shall have occurred; then, and in any such
event, the Agent may, or at the direction of the Required Owners shall,
by notice to the Seller declare the Termination Date to have occurred,
except that, in the case of any event described in clause (i) of Section
7.01(f), above, the Termination Date shall be deemed to have occurred
automatically upon the occurrence of such event. Upon any such
declaration or automatic occurrence, the Agent and the Owners shall
have, in addition to all other rights and remedies under this Agreement
or otherwise, all other rights and remedies provided under the UCC of
the applicable jurisdiction and other applicable laws, which rights
shall be cumulative.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. Each Owner hereby accepts
the appointment of and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
In addition, each of the Owners and the Agent acknowledge that the Purchaser
has entered into the Security Agreement pursuant to which certain rights of
the Purchaser hereunder were pledged to the Collateral Trustee, and the Agent
hereby agrees to take, or refrain from taking, such actions under or in
connection with this Agreement as the Collateral Trustee shall from time to
time direct in accordance with the terms of the Security Agreement.
Notwithstanding anything contained herein to the contrary, the Agent shall
not be required to take any action which exposes it to personal liability or
which is contrary to this Agreement or to applicable law. The Agent agrees
to give (i) to each Owner, prompt notice of each notice given to it by the
Seller, or by it to the Seller, pursuant to the terms of this Agreement and
(ii) to the Collateral Trustee, prompt notice of the occurrence hereunder of
any Event of Termination or the Termination Date. The appointment and
authority of the Agent hereunder shall terminate on the Collection Date. The
Agent hereby further acknowledges that to the extent it receives or holds any
funds or other amounts or property to which the Purchaser would be entitled,
the Agent shall receive and/or hold such funds as agent for the Collateral
Trustee under and in accordance with the Security Agreement. Notwithstanding
anything to the contrary, the Collateral Trustee is an intended beneficiary
of the provisions of this Section 8.01, and no amendment, supplement or other
modification to this Section which would adversely affect the interest of the
Collateral Trustee under this Section shall be effective without the
Collateral Trustee's consent.
SECTION 8.02. UCC Filings. The Owners and the Seller expressly
recognize and agree that the Agent may be listed as the assignee or secured
party of record on the various UCC filings required to be made hereunder in
order to perfect the transfer of the Percentage Interests from the Purchaser
to the other Owners, that such listing shall be for administrative
convenience only in creating a record or nominee owner to take certain
actions hereunder on behalf of such Owners and that such listing will not
affect in any way the status of such Owners as the beneficial Owners of the
Percentage Interests. In addition, such listing shall impose no duties on
the Agent other than those expressly and specifically undertaken in
accordance with this Article VIII. In furtherance of the foregoing, each
Owner shall be entitled to enforce its rights created under this Agreement
without the need to conduct such enforcement through the Agent except as
provided herein.
SECTION 8.03. Agent's Reliance, Etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable to any Owner for
any action taken or omitted to be taken by it or them as Agent under or in
connection with this Agreement (including, without limitation, the Agent's
servicing, administering or collecting Receivables as Servicer pursuant to
Article VI), except for its or their own gross negligence or willful
misconduct. Without limiting the foregoing, the Agent: (i) may consult with
legal counsel (including counsel for the Seller), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (ii) makes no warranty or
representation to any Owner and shall not be responsible to any Owner for any
statements, warranties or representations made in or in connection with this
Agreement; (iii) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of
this Agreement on the part of the Seller or to inspect the property
(including the books and records) of the Seller; (iv) shall not be
responsible to any Owner for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement, or any
other instrument or document furnished pursuant hereto; and (v) shall incur
no liability under or in respect of this Agreement by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by telex) believed by it to be genuine and signed or
sent by the proper party or parties.
SECTION 8.04. Agent and Affiliates. To the extent that the Agent
or any of its Affiliates shall become an Owner hereunder, the Agent or such
Affiliate, in such capacity, shall have the same rights and powers under this
Agreement as would any Owner hereunder and may exercise the same as though it
were not the Agent. The Agent and its Affiliates may generally engage in any
kind of business with the Seller or any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of the
Seller or any Obligor or any of their respective Affiliates, all as if it
were not the Agent hereunder and without any duty to account therefor to the
Owners.
SECTION 8.05. Purchase Decision. The Purchaser acknowledges that
it has, independently and without reliance upon the Agent or any other Owner
and based on such documents and information as it has deemed appropriate,
made its own evaluation and decision to enter into this Agreement and, if it
so determines, to purchase Percentage Interests hereunder. Each Owner
acknowledges and agrees that it will, independently and without reliance upon
the Agent, the Purchaser or any other Owner, and based on such documents and
information as it shall deem appropriate at the time, make its own decisions
in taking or not taking action under or in connection with this Agreement.
SECTION 8.06. Indemnification. Each Owner agrees to indemnify the
Agent (to the extent not reimbursed by the Seller or the Servicer), ratably
according to its share of the aggregate outstanding Purchase Price of all
Percentage Interests from time to time, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against the Agent in any
way relating to or arising out of this Agreement or any action taken or
omitted by the Agent under this Agreement; provided, however, that an Owner
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, each
Owner agrees to reimburse the Agent, ratably according to its share of the
aggregate outstanding Purchase Price of all Percentage Interests from time to
time, promptly upon demand, for any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Agent in connection with the
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement. The Agent hereby agrees
that any amount owing to it by the Purchaser pursuant to this Section 8.06
shall not be due and payable until the earliest date on which the Agent would
be entitled to initiate proceedings of the type described in Section 10.08
against the Purchaser, it being understood, however, that the Purchaser may
at any time prepay any amount owing to the Agent pursuant to this
Section 8.06. The indemnities contained in this Section 8.06 shall be
continuing and shall survive the termination of this Agreement.
SECTION 8.07. Successor Agent. The Agent may resign at any time
by giving thirty days' notice thereof to the Owners, the Seller and the
Servicer. Upon any such resignation, the Owners shall have the right to
appoint a successor Agent approved by the Seller (which approval will not be
unreasonably withheld or delayed). If no successor Agent shall have been so
appointed by the Owners and accepted such appointment within 30 days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Owners, appoint a successor Agent approved by the
Seller (which approval will not be unreasonably withheld or delayed), which
successor Agent shall be (a) either (i) a commercial bank having a combined
capital and surplus of at least $1,000,000,000 or (ii) an Affiliate of such
an institution and (b) experienced in the types of transactions contemplated
by this Agreement. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
or removal hereunder as Agent, the provisions of this Article VIII
(including, without limitation, the indemnities set forth in Section 8.06)
shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Indemnities by the Seller. Without limiting any
other rights which the Agent, any Owner or any of their respective Affiliates
may have hereunder or under applicable law, the Seller hereby agrees to
indemnify the Agent, each Owner, and each of their respective Affiliates from
and against any and all damages, losses, claims, liabilities and related
costs and expenses, including reasonable attorneys' fees and disbursements
(all of the foregoing being collectively referred to as "Indemnified
Amounts") awarded against or incurred by any of them arising out of or as a
result of this Agreement or the ownership of Percentage Interests or in
respect of any Receivable or any related contract, excluding, however,
(i) Indemnified Amounts to the extent resulting from gross negligence or
willful misconduct on the part of the Agent, such Owner or such Affiliate,
(ii) recourse (except as otherwise specifically provided in this Agreement)
for uncollectible Receivables or (iii) Excluded Taxes. Without limiting the
foregoing, the Seller shall indemnify the Agent, each Owner and each of their
respective Affiliates for Indemnified Amounts relating to or resulting from:
(i) the transfer of an ownership interest in any Receivable
other than an Eligible Receivable;
(ii) reliance on any representation or warranty made or
deemed made by the Servicer (so long as the Servicer is the Seller or an
Affiliate of the Seller) or the Seller (or any of their officers) under
or in connection with this Agreement, which shall have been false or
incorrect in any material respect when made or deemed made or delivered;
(iii) the failure by the Servicer (so long as the Servicer is
the Seller or an Affiliate of the Seller) or the Seller to comply with
any term, provision or covenant contained in this Agreement or any
agreement executed in connection with this Agreement, or with any
applicable law, rule or regulation with respect to any Receivable, the
related contract, if any, or the Related Security, or the nonconformity
of any Receivable, the related contract, if any, or the Related Security
with any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in each Owner or
to transfer to each Owner, legal and equitable title to and ownership
of, an undivided percentage ownership interest, to the extent of each
Percentage Interest owned by it hereunder, in the Receivables, together
with all Collections and Related Security relating thereto, free and
clear of any Adverse Claim whether existing at the time of the purchase
of such Percentage Interest or at any time thereafter;
(v) the failure of the Coverage Ratio to equal or exceed 102%
at all times on or prior to the Termination Date;
(vi) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Receivables, whether at the time of any purchase of a Percentage
Interest or at any subsequent time;
(vii) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of
any Receivable (including, without limitation, a defense based on such
Receivable or the related contract, if any, not being a legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the
merchandise or services related to such Receivable or the furnishing or
failure to furnish such merchandise or services;
(viii) any failure of the Seller or the Servicer (so long as
the Servicer is the Seller or an Affiliate of the Seller) to perform its
duties or obligations in accordance with the provisions of this
Agreement or to perform its duties under any contracts related to the
Receivables;
(ix) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with merchandise or
services which are the subject of any Receivable or related contract; or
(x) the failure to pay when due any taxes (other than
Excluded Taxes), including without limitation, sales, excise or personal
property taxes payable in connection with any of the Receivables; or
(xi) any repayment by the Agent or any Owner of any amount
previously distributed in reduction of Purchase Price which the Agent or
such Owner believes in good faith is required to be made; or
(xii) the commingling of Collections of Receivables at any
time with other funds; or
(xiii) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of purchases or reinvestments or
the ownership of Percentage Interests or in respect of any Receivable,
Related Security or related contract, if any.
Any amounts subject to the indemnification provisions of this Section 9.01
shall be paid by the Seller to the Agent within two Business Days following
the Agent's written demand therefor.
SECTION 9.02 Indemnities by the Servicer. Without limiting any
other rights which the Agent, any Owner or any of their respective Affiliates
may have hereunder or under applicable law, the Servicer hereby agrees to
indemnify the Agent, each Owner, and each of their respective Affiliates from
and against all Indemnified Amounts awarded against or incurred by any of
them arising out of or as a result of (i) any failure of the Servicer to
perform its duties or obligations in accordance with the provisions of this
Agreement, or (ii) reliance on any representation or warranty made or deemed
made by the Servicer (or any of its officers) under or in connection with
this Agreement, which shall have been false or incorrect in any material
respect when made or deemed made or delivered. Any amounts subject to the
indemnification provisions of this Section 9.02 shall be paid by the Servicer
to the Agent within two Business Days following the Agent's demand therefor.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Amendments and Waivers. (a) Except as provided in
Section 10.01(b), no amendment or modification of any provision of this
Agreement shall be effective without the written agreement of the Seller, the
Agent, the Required Owners and, to the extent expressly required pursuant to
Section 8.01, the Collateral Trustee, and no termination or waiver of any
provision of this Agreement or consent to any departure therefrom by the
Seller shall be effective without the written concurrence of the Agent and
the Required Owners. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(b) Notwithstanding the provisions of Section 10.01(a), (i) the
written consent of each Owner shall be required for any amendment,
modification or waiver (A) reducing the Purchase Price of, or the Yield on,
the Percentage Interests for any Purchase Period, (B) postponing any date for
any payment of the Purchase Price of, or the Yield on, the Percentage
Interests for any Purchase Period, (C) reducing the percentage specified in
the definition of "Required Owners" or (D) modifying the provisions of this
Section 10.01, (ii) the written consent of the Purchaser shall be required
for any amendment, modification or waiver increasing the Purchase Limit or
reducing any fees or other amounts payable to the Purchaser hereunder for its
own account, and (iii) the written consent of the Agent shall be required for
any amendment, modification or waiver of any provision of this Agreement
affecting the indemnities to, or the rights, duties and obligations of, the
Agent or reducing any fees or other amounts payable to the Agent hereunder
for its own account.
SECTION 10.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication and communication by facsimile copy) and
mailed, telexed, transmitted or delivered, as to each party hereto, at its
address set forth under its name on the signature pages hereof or specified
in such party's Assignment and Acceptance or at such other address as shall
be designated by such party in a written notice to the other parties hereto.
All such notices and communications shall be effective, upon receipt, or in
the case of (a) notice by mail, three days after being deposited in the
United States mails, first class postage prepaid, (b) notice by overnight
courier, one Business Day after being deposited with a national overnight
courier service, (c) notice by telex, when telexed against receipt of
answerback, or (d) notice by facsimile copy, when confirmation of receipt is
obtained, except that notices and communications pursuant to Article II shall
not be effective until received.
SECTION 10.03. No Waiver; Remedies. No failure on the part of the
Agent or any Owner to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 10.04. Binding Effect; Assignability. This Agreement
shall be binding upon and inure to the benefit of the Seller, the Servicer,
the Agent, the Owners and their respective successors and permitted assigns.
This Agreement and each Owner's rights and obligations hereunder and interest
herein shall be assignable in whole or in part (including by way of the sale
of participation interests therein) by such Owner and its successors and
assigns; provided, however, that the Purchaser may only assign its rights and
obligations as the "Purchaser" hereunder (as distinguished from its rights
and obligations as an "Owner" hereunder), in whole, to another Issuer
acceptable to the Purchaser, and, upon such assignment, such assigning
Purchaser shall cease to be the Purchaser hereunder. Neither the Seller nor
the Servicer may assign any of its rights and obligations hereunder or any
interest herein without the prior written consent of the Owners and the
Agent. The parties to each assignment or participation made pursuant to this
Section 10.04 shall execute and deliver to the Agent for its acceptance and
recording in its books and records, an Assignment and Acceptance or a
participation agreement or other transfer instrument reasonably satisfactory
in form and substance to the Agent and the Seller, and which shall provide
that the parties thereto agree to be bound by Section 10.12 of this
Agreement. Each such assignment or participation shall be effective as of
the date specified in the applicable Assignment and Acceptance or other
agreement or instrument only after the execution, delivery, acceptance and
recording as described in the preceding sentence. The Agent shall notify the
Seller of any assignment or participation thereof made pursuant to this
Section 10.04. The Purchaser or any Owner may, in connection with any
assignment or participation or any proposed assignment or participation
pursuant to this Section 10.04, disclose to the assignee or participant or
proposed assignee or participant who agrees to abide by the provisions of
Section 10.12 any information relating to the Seller and the Percentage
Interests furnished to such Owner by or on behalf of the Seller or the
Servicer. Notwithstanding the fact that the Purchaser or any Owner, as a
result of its having assigned all of its remaining rights, interests, duties
and obligations hereunder, shall cease to be the Purchaser or an Owner for
purposes hereof, such assigning Purchaser or Owner, as the case may be, shall
continue to be entitled to all rights of indemnity and reimbursement from the
Seller under this Agreement for any indemnifiable or reimbursable costs,
expenses or liabilities incurred or arising out or in connection with such
Person's acting as the Purchaser or an Owner under this Agreement.
SECTION 10.05. Term of this Agreement. This Agreement, including,
without limitation, each of the Seller's and the Servicer's obligation to
observe its respective covenants set forth in Articles V and VI, shall remain
in full force and effect until the Collection Date; provided, however, that
the rights and remedies with respect to any breach of any representation and
warranty made or deemed made by the Seller or the Servicer pursuant to
Articles III and IV and the indemnification and payment provisions of
Articles IX and Article X shall be continuing and shall survive any
termination of this Agreement.
SECTION 10.06. GOVERNING LAW; SUBMISSION TO JURISDICTION. (A)
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE INTERESTS OF THE OWNERS IN THE RECEIVABLES, THE RELATED
SECURITY AND THE COLLECTIONS, OR THE REMEDIES HEREUNDER IN RESPECT THEREOF,
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(B) EACH OF THE SELLER AND THE SERVICER HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK, NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OF THE OTHER INSTRUMENTS, DOCUMENTS OR
AGREEMENTS EXECUTED IN CONNECTION HEREWITH, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH OF THE SELLER AND THE SERVICER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING IN THIS SECTION 10.06 SHALL AFFECT THE RIGHT OF THE AGENT OR ANY OF
THE OWNERS TO BRING ANY ACTION OR PROCEEDING AGAINST THE SELLER, THE SERVICER
OR ANY OF ITS RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 10.07. Costs, Expenses and Taxes. (a) In addition to the
rights of indemnification granted to the Agent, the Owners and their
Affiliates under Article IX hereof, the Seller agrees to pay on demand all
costs and expenses of the Purchasers and the Agent incurred in connection
with the preparation, execution, delivery, administration (including periodic
auditing), amendment, modification or syndication of, or any waiver or
consent issued in connection with, this Agreement and the other documents to
be delivered hereunder or in connection herewith, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent and the Purchasers with respect thereto and with respect to advising
the Agent and the Purchasers as to their respective rights and remedies under
this Agreement and the other documents to be delivered hereunder or in
connection herewith, and all costs and expenses, if any (including reasonable
counsel fees and expenses), incurred by the Agent or the Owners in connection
with the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith.
(b) In addition, the Seller shall pay on demand any and all
commissions (other than Dealer Fees included in the definition of "CP Rate")
of placement agents and dealers in respect of Commercial Paper Notes issued
to fund the purchase or maintenance of any Percentage Interest and any and
all stamp, sales, excise and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of
this Agreement or the other documents to be delivered hereunder.
(c) In addition, the Seller shall pay on demand all other costs,
expenses and taxes (excluding income taxes) incurred by the Purchaser or any
general or limited partner or shareholder of the Purchaser ("Other Costs"),
including, without limitation, the cost of auditing the Purchaser's books by
certified public accountants, the cost of rating the Purchaser's Commercial
Paper Notes by independent financial rating agencies, the taxes (excluding
income taxes) resulting from the Purchaser's operations, and the reasonable
fees and out-of-pocket expenses of counsel for the Purchaser or any counsel
for any general or limited partner or shareholder of the Purchaser with
respect to (i) advising such Person as to its rights and remedies under this
Agreement and the other documents to be delivered hereunder or in connection
herewith, (ii) the enforcement of this Agreement and the other documents to
be delivered hereunder or in connection herewith or matters relating to the
Purchaser's operations, and (iii) advising such Person as to the issuance of
the Purchaser's Commercial Paper Notes and acting in connection with such
issuance.
SECTION 10.08. No Proceedings. Each of the Seller, the Servicer,
the Agent and the Owners hereby agrees that it will not institute against, or
join any other Person in instituting against, the Purchaser or any subsidiary
of the Purchaser any proceedings of the type referred to in clause (i) of
Section 7.01(f) so long as any Commercial Paper Notes or other debt
securities issued by the Purchaser or any of its subsidiaries shall be
outstanding or there shall not have elapsed one year and one day since the
last day on which any such Commercial Paper Notes shall have been
outstanding.
SECTION 10.09. Execution in Counterparts; Severability;
Integration. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. In case any provision
in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby. This Agreement contains the final and complete integration
of all prior expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire agreement among the parties
hereto with respect to the subject matter hereof, superseding all prior oral
or written understandings other than the fee letters described in Section
2.10(a). Each of the Seller and the Servicer acknowledges and agrees that it
is not intended to have, and shall not assert, any rights, benefits, causes
of action or remedies under or in connection with any instrument, document or
agreement to which it is not a party, or any of the transactions contemplated
thereby or in respect of any acts or omissions by any of the parties thereto,
in each case, whether relating specifically to the transactions contemplated
hereby or otherwise, including, without limitation, any Liquidity Agreements.
SECTION 10.10. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THE AGENT, THE OWNERS, THE SELLER AND THE SERVICER EACH
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED AND/OR DELIVERED IN CONNECTION
HEREWITH OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
SECTION 10.11. Section Headings. Section headings in this
Agreement are included herein for convenience of reference only and shall not
affect in any way the interpretation of any of the provisions hereof.
SECTION 10.12. Confidentiality. (a) Confidentiality of Agreement
Information. Each of the Seller and the Servicer agrees to maintain the
confidentiality of this Agreement (and all drafts thereof) and not to
disclose this Agreement or such drafts to third parties (other than to its
directors, officers, employees, accountants or counsel); provided, however,
that the Agreement may be disclosed to third parties to the extent such
disclosure is:
(i) (A) required in connection with a sale of securities of the
Seller, (B) made solely to persons who are legal counsel for the
purchaser or underwriter of such securities, and (C) limited in scope to
the provisions of Articles V, VII, X and, to the extent defined terms
are used in Articles V, VII and X, such terms defined in Article I of
this Agreement;
(ii) such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the
Agent;
(iii) with respect to information generally available to the
public through no fault of the Seller or Servicer;
(iv) to any federal or state regulatory authority having
jurisdiction over the Seller or the Servicer; or
(v) to any other Person to which such delivery or disclosure may
be necessary or appropriate (A) in compliance with any law, rule,
regulation or order applicable to the Seller or the Servicer, or (B) in
response to any subpoena or other legal process.
(b) Confidentiality of Seller Confidential Information. Each of the
Purchaser, the Agent and each Owner (each, a "Subject Party") agrees to
maintain the confidentiality of the Seller Confidential Information and not
to disclose the Seller Confidential Information to third parties (other than
to its directors, officers, employees, accountants or counsel); provided,
however, that the Seller Confidential Information may be disclosed to third
parties to the extent such disclosure is:
(i) to another Subject Party;
(ii) with respect to information generally available to the public
through no fault of such Subject Party;
(iii) to any holder of a Commercial Paper Note (a "Holder") and
any placement agent with respect to Commercial Paper Notes, or in the
case of general information regarding the nature, basic terms and status
of the Purchaser's commercial paper program (including, without
limitation, the amount and nature of the Purchase Limit, the Percentage
Interests, the nature of the Receivables, the nature and amount of the
required reserves and the performance of the Receivables pool), to any
prospective Holder;
(iv) to any party providing credit enhancement or liquidity
facilities or any other facilities to any of the Owners, any proposed
assignee or transferee of a Percentage Interest or any part thereof;
(v) to any federal or state regulatory authority having
jurisdiction over the Purchaser, any Owner or the Agent;
(vi) to any internationally recognized rating agency in connection
with the rating by such agency of an Owner; or
(vii) to any other Person to which such delivery or disclosure may
be necessary or appropriate (A) in compliance with any law, rule,
regulation or order applicable to the Purchaser, any Owner or the Agent,
(B) in response to any subpoena or other legal process, or (C) in order
to protect or enforce an Owner's investment in the Percentage Interests.
SECTION 10.13. Restructuring. Each of the parties hereto agrees
to negotiate in good faith with the other parties hereto during the period
prior to February 1, 1997 to consummate the Restructuring; provided, however,
that no party shall be obligated to agree to any term of such restructuring
which it believes, in its sole discretion, is contrary to its interests.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE SELLER:
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By: /s/David R. McHale
Title: Assistant Treasurer
174 Brush Hill Avenue
West Springfield, Massachusetts
Facsimile No.:
Confirmation No.:
Attention: David McHale, Assistant Treasurer
With a copy to:
107 Selden Street
Berlin, CT 06037
Facsimile No.: (860) 665-5457
Confirmation No.: (860) 665-3249
Attention: David McHale, Assistant Treasurer
THE SERVICER:
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By: /s/David R. McHale
Title: Assistant Treasure
174 Brush Hill Avenue
West Springfield, Massachusetts
Facsimile No.:
Confirmation No.:
Attention: David McHale, Assistant Treasurer
With a copy to:
107 Selden Street
Berlin, CT 06037
Facsimile No.: (860) 665-5457
Confirmation No.: (860) 665-3249
Attention: David McHale, Assistant Treasurer
THE AGENT:
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH, as Agent
By: /s/James F. Moore
Title:Vice President
By:/s/Dennis J. Knitowski
Title:Assistant Treasurer
299 Park Avenue
New York, New York 10171
Attention: Asset Securitization Group-
J. Fred Moore
Facsimile No.: (212) 821-3890
Confirmation No.: (212) 821-3294
THE PURCHASER:
MONTE ROSA CAPITAL CORPORATION
By: Union Bank of Switzerland, New York Branch, as its attorney-in-fact
By /s/Rick Persaud
Title:Assistant Vice President
By /s/Regina Watkins
Title:Assistant Treasurer
c/o Union Bank of Switzerland,
New York Branch
299 Park Avenue
New York, New York 10171
Attention: Asset Securitization Group-
J. Fred Moore
Facsimile No.: (212) 821-3890
Confirmation No.: (212) 821-3294
SCHEDULE I
CONDITION PRECEDENT DOCUMENTS
As required by Section 3.01 of the Agreement, each of the following
items must be delivered to the Agent prior to the date of the initial
purchase of a Percentage Interest:
(a) A copy of this Agreement duly executed by the Seller, the
Servicer, the Purchaser and the Agent;
(b) A certificate of the Secretary or Assistant Secretary of the
Seller, certifying (i) the names and true signatures of the incumbent
officers of the Seller authorized to sign this Agreement and the other
documents to be delivered by it hereunder (on which certificates the Agent
and the Owners may conclusively rely until such time as the Agent shall
receive from the Seller, a revised certificate meeting the requirements of
this paragraph (b)), (ii) that the copy of the certificate of incorporation
of the Seller attached thereto is a complete and correct copy and that such
certificate of incorporation has not been amended, modified or supplemented
and is in full force and effect, (iii) that the copy of the by-laws of the
Seller attached thereto is a complete and correct copy and that such by-laws
have not been amended, modified or supplemented and are in full force and
effect, (iv) the resolutions of the Seller's board of directors approving and
authorizing the execution, delivery and performance by the Seller of this
Agreement and the documents related thereto and (v) that the copy of its
servicing agreement with Northeast Utilities Service Company attached thereto
is a complete and correct copy and that such agreement has not been amended,
modified or supplemented and is valid, enforceable and in full force and
effect;
(c) Articles/Certificate of Incorporation of the Seller, certified
by the Secretary of State of Massachusetts no more than 20 days prior to the
effective date of this Agreement.
(d) Good standing certificates for the Seller issued by the
Secretary of State of Massachusetts, and dated no more than 20 days prior to
the effective date of this Agreement;
(e) Acknowledgment copies of proper financing statements (the
"Facility Financing Statements"), dated a date reasonably near to the date of
the initial purchase of Percentage Interests, describing the Receivables and
the Related Security and Collections relating thereto and naming the Seller
as debtor and the Purchaser as secured party, or other, similar instruments
or documents, as may be necessary or, in the opinion of the Agent or any
Owner, desirable under the UCC of all appropriate jurisdictions or any
comparable law to perfect the Owners' interests in all Receivables and
Related Security;
(f) Acknowledgment copies of proper financing statements, if any,
necessary to release all security interests and other rights of any Person in
the Receivables and Related Security previously granted by the Seller;
(g) Certified copies of requests for information or copies (or a
similar search report certified by a party acceptable to the Agent), dated a
date reasonably near to the date of the initial purchase of Percentage
Interests, listing all effective financing statements (including the Facility
Financing Statements) which name the Seller (under its present name and any
previous name) as debtor and which are filed in the jurisdictions in which
the Facility Financing Statements were filed, together with copies of such
financing statements (none of which, other than the Facility Financing
Statements, shall cover any Receivables, Related Security, Collections or
other Collateral);
(h) An officer's certificate, dated the date of such initial
purchase, in the form of Exhibit F, executed by an appropriate officer of
Seller;
(i) An opinion of internal counsel to the Seller, in substantially
the form of Exhibit E-1 and as to such other matters as the Agent may
reasonably request;
(j) An opinion of outside counsel to the Seller, in substantially
the form of Exhibit E-2 and as to such other matters as the Agent may
reasonably request;
(k) A copy of each of the Liquidity Agreements related to this
Agreement, executed by each of the Liquidity Lenders thereunder, the
Purchaser and UBS, as the Liquidity Agent, together with all other
instruments, documents and agreements required to be delivered thereunder;
(l) A letter from the Seller's independent accountants regarding
such matters as the Agent may reasonably request;
(m) The Public Disclosure Documents and such other financial
reports as may be requested by the Agent or the Purchaser;
(n) Letters from both Standard & Poor's and Moody's, confirming
that the execution and delivery of this Agreement will not cause the ratings
of the Purchaser's commercial paper notes to be reduced or withdrawn;
(o) A Bank Notice, executed by the Purchaser and the bank at which
the Collection Account is maintained, evidencing the Collection Account
opened in the name of the Purchaser and complying with all of the other
requirements of Section 6.08;
(p) An Investor Report, dated as of the Cut-Off date immediately
preceding such initial purchase; and
(q) A copy of the Credit and Collection Policy, certified by an
appropriate officer of the Company as correct and complete.
SCHEDULE III
TRADENAMES, FICTITIOUS NAMES AND "DOING BUSINESS AS" NAMES
NONE
SCHEDULE IV
LOCATIONS OF SELLER'S CHIEF EXECUTIVE OFFICE AND
PRINCIPAL PLACE OF BUSINESS AND
LOCATIONS OF BOOKS AND RECORDS
Executive Office Address:
174 Brush Hill Avenue
West Springfield, Massachusetts 01090-0010
Principal Administrative Office Address:
107 Selden Street
Berlin, Connecticut 06037
Processing Office Address:
176 Cumberland Avenue
Wethersfield, Connecticut 06109
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
Attached.
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
This ASSIGNMENT AND ACCEPTANCE, dated 19 , is by and between
, a ("Assignor"), and
("Assignee").
Reference is made to the Receivables Purchase and Sale Agreement, dated
as of September 11, 1996 (the "Receivables Purchase Agreement"), among
Western Massachusetts Electric Company, Monte Rosa Capital Corporation and
Union Bank of Switzerland, New York Branch (the "Agent"). Capitalized terms
used but not defined herein shall have the meanings assigned to them in the
Receivables Purchase Agreement.
The Assignor hereby sells, assigns, transfers and conveys to the
Assignee all of its right, title and interest in, to and under
(1) (the "Transferred Percentage Interests") in
accordance with Section 10.04 of the Receivables Purchase Agreement.
From and after the date hereof, the Assignee shall have all of the
rights, and be subject to all of the obligations, of the Assignor with
respect to the Transferred Percentage Interests. The Agent shall be informed
by both the Assignor and the Assignee of such assignment, and shall duly so
note on its records; provided, however, that the failure of the Agent duly to
so note shall not void or otherwise impair this Assignment and Acceptance or
limit the Assignee's obligations under the Receivables Purchase Agreement
with respect to the Transferred Percentage Interests.
Without limiting the foregoing, the Assignee shall be bound by the
provisions of Section 10.12 of the Receivables Purchase Agreement.
THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE RECEIVABLES PURCHASE AGREEMENT AND THE INTERNAL LAWS OF
THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties hereto have caused
this Assignment and Acceptance to be duly executed and delivered as of the
date first above written.
[ASSIGNOR]
By: /s/
Name:
Title:
[ASSIGNEE]
By: /s/
Name:
Title:
EXHIBIT B
METHODOLOGY RE: UNBILLED RECEIVABLES
Total monthly generation ("MWHR") less a loss factor of around 8% (currently
adjusted annually according to business practices) plus prior months unbilled
MWHRs minus the current months billings in MWHRs equals the current months
unbilled MWHRs. The unbilled MWHRs are allocated by class of customer
(Residential, Commercial, Industrial and Street lights) based on actual MWHRs
billed by class and then an average price per MWHR, which is calculated based
on actual revenues by class divided by actual sales in MWHRs by class, is
applied.
EXHIBIT C-1
FORM OF BANK NOTICE FOR LOCK-BOX BANK
[Letterhead of the Seller]
____________, 19__
[Name and Address of Bank]
Re: Western Massachusetts Electric Company
Lock-Box No.
Account No.
Gentlemen:
We hereby notify you that we have transferred exclusive ownership
and control of our lock-box number ____________________ (the "Lock-Box") and
the corresponding account number _____________________ (the "Account")
maintained with you to Union Bank of Switzerland, New York Branch, 299 Park
Avenue, New York, New York 10171 (the "Agent").
We hereby irrevocably instruct you to collect the monies, checks,
instruments and other items of payment mailed to the Lock-Box and deposit
into the Lock-Box Account all such monies, checks, instruments and other
items of payment (unless otherwise instructed by the Agent), and to make all
payments to be made by you out of or in connection with the Account directly
to Union Bank of Switzerland, New York Branch, 299 Park Avenue, New York, New
York 10171, account number ______________, for the account of the Agent,
unless you have received contrary instructions from the Agent. If you have
received such contrary instructions, you shall be required to make such
payments in accordance with such instructions.
We also hereby notify you that the Agent shall be irrevocably
entitled to exercise any and all rights in respect of or in connection with
the Lock-Box and the Account, including, without limitation, the right to
specify when payments are to be made out of or in connection with the Lock-
Box and the Account. The monies, checks, instruments and other items of
payment mailed to the Lock-Box and the funds deposited into the Account will
not be subject to deduction, set-off, banker's lien, or any other right in
favor of any person other than the Agent.
Please agree to the terms of, and acknowledge receipt of, this
notice by signing in the space provided below on two copies hereof sent
herewith and send one such signed copy to the Agent, at its address referred
to above, Attention: Asset Securitization Group, and send the other signed
copy to the undersigned at its address at _____________________, Attention:
_____________.
Very truly yours,
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By /s/
Title:
Agreed and acknowledged:
[NAME OF BANK]
By /s/
Title:
EXHIBIT C-2
FORM OF BANK NOTICE FOR BANK
AT WHICH THE COLLECTION ACCOUNT IS MAINTAINED
[Letterhead of the Purchaser]
____________, 19__
[Name and Address of Bank]
Re: Union Bank of Switzerland, as agent (the "Agent") under the
Receivables Purchase Agreement, dated as of September 11,
1996, among, Western Massachusetts Electric Company ("WMECO"),
Monte Rosa Capital Corporation (the "Purchaser") and the
Agent.
Gentlemen:
By your execution of this letter (where indicated below) you
confirm that the Purchaser has exclusive ownership and control of account
number _____________________ (the "Account") maintained with you.
We hereby instruct you to transfer all available funds in the
Account on each business day to WMECO's account number _________ at
_______________, unless you have received contrary instructions from the
Purchaser or the Agent, on behalf of the Purchaser. If you have received
such contrary instructions, you shall be required to transfer funds in the
Account only in accordance with such instructions.
You also hereby confirm that the Purchaser or the Agent, on behalf
of the Purchaser, shall be irrevocably entitled to exercise any and all
rights in respect of or in connection with the Account, including, without
limitation, the right to specify when payments are to be made out of or in
connection with the Account. The funds deposited into the Account will not
be subject to deduction, set-off, banker's lien, or any other right in favor
of any person other than the Purchaser.
Please agree to the terms of, and acknowledge receipt of, this
notice by signing in the space provided below on two copies hereof sent
herewith and send one such signed copy to WMECO, at its address at 107 Selden
Street, Berlin, Connecticut 06037, Attention: David McHale, and send the
other signed copy to the undersigned, care of the Agent at the Agent's
address at 299 Park Avenue, New York, New York 10171, Attention: Asset
Securitization Group.
Very truly yours,
MONTE ROSA CAPITAL CORPORATION
By: Union Bank of Switzerland, New York Branch, as its attorney-in-fact
By /s/
Title:
By /s/
Title:
Agreed and acknowledged:
[NAME OF BANK]
By /s/
Title:
EXHIBIT D
FORM OF INVESTOR REPORT
Attached.
EXHIBIT E-1
FORMS OF OPINIONS OF INTERNAL COUNSEL FOR THE SELLER
ATTACHED
EXHIBIT E-2
FORM OF OPINION OF OUTSIDE COUNSEL FOR THE SELLER
ATTACHED
EXHIBIT F
OFFICER'S CERTIFICATE
I, _________________, _________________ of Western Massachusetts
Electric Company, a Massachusetts corporation ("WMECO") hereby certify
pursuant to Section 3.01 and Schedule I(h) of the Receivables Purchase and
Sale Agreement, dated as of September 11, 1996, among WMECO, as Seller and
Servicer, Monte Rosa Capital Corporation, as Purchaser ("MRCC"), and Union
Bank of Switzerland, New York Branch, as Agent (the "Receivables Purchase
Agreement") (capitalized terms used but not defined herein have the meanings
set forth in the Receivables Purchase Agreement), that, on the date hereof:
(a) the representations and warranties contained in Section 4.01
and Section 4.02 of the Receivables Purchase Agreement are true and
correct in all material respects on the date hereof, except to the
extent that such representations relate solely to an earlier date (in
which case, such representations and warranties were true and correct in
all material respects and as of such date),
(b) the conditions precedent to the initial purchase under the
Receivables Purchase Agreement, as listed in Schedule I (per Section
3.01) of the Receivables Purchase Agreement, have been performed or
complied with on or before the date hereof,
(c) no event has occurred and is continuing, or would result from
the purchase from WMECO by MRCC of Percentage Interests under the
Receivables Purchase Agreement, that would: (i) cause the Termination
Date to occur or (ii) constitute an Event of Termination or would
constitute an Event of Termination but for the requirement that notice
be given or time elapse or both,
(d) except as disclosed in the Public Disclosure Documents, since
December 31, 1995, there has been no material adverse change in the
operations or consolidated financial condition of the Parent or WMECO
from that shown in the financial statements described in Section 4.01 of
the Receivables Purchase Agreement, and
(e) the Collection Account, which is maintained in the name of the
Purchaser, complies with the requirements of Section 6.08 of the
Receivables Purchase Agreement.
IN WITNESS WHEREOF, I have signed this certificate this _____ day of
_________________, 199____.
Name: /s/
Title:
(1)[Specify Percentage Interest, or portion thereof, being designed]
FIRST AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO RECEIVABLES PURCHASE AND SALE
AGREEMENT, dated
as of January 15, 1997 (this "Amendment"), is among WESTERN MASSACHUSETTS
ELECTRIC COMPANY, a Massachusetts corporation (the "Seller"), MONTE ROSA
CAPITAL CORPORATION, a Delaware corporation (the "Purchaser"), and UNION BANK
OF SWITZERLAND, NEW YORK BRANCH, as Agent (the "Agent").
BACKGROUND
1. The Seller, the Purchaser and the Agent entered into the
Receivables Purchase and Sale Agreement, dated as of September 11, 1996 (the
"Purchase and Sale Agreement").
2. The parties hereto desire to amend the Purchase and Sale Agreement
in certain respects as set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Definitions. Capitalized terms used in this Amendment and
not otherwise defined herein shall have the meanings assigned thereto in the
Purchase and Sale Agreement.
SECTION 2. Scheduled Termination Date. The definition of "Scheduled
Termination Date" that is set forth in Section 1.01 of the Purchase and Sale
Agreement is hereby amended by deleting the date "February 1, 1997" where it
appears in such definition and inserting in lieu thereof the date "March 31,
1997".
SECTION 3. Accounting of Purchases. Section 5.01(e) of the Purchase
and Sale Agreement is hereby waived for the period following January 1, 1997.
SECTION 4. Collection Account. The Seller acknowledges and agrees that,
under Section 10.07 of the Purchase and Sale Agreement, it is obligated to
reimburse the Agent and the Purchaser for all payments made by them to the
bank at which the Collection Account is maintained or any Lock-Box Bank for
any reason (including without limitation in respect of disallowances, fees
and charges). If any such payments are not reimbursed upon demand, the Agent
shall be entitled to reimbursement of such payments from Collections, with
the same priority under Section 2.05 or 2.07 of the Purchase and Sale
Agreement as Yield.
SECTION 5. Representations and Warranties. Seller hereby represents
and warrants that all of the representations and warranties set forth in
Article IV of the Purchase and Sale Agreement are true and correct as of the
date hereof, after giving effect to this Amendment, and shall be deemed to
have been made as of the date hereof as if fully set forth herein. Seller
hereby further represents and warrants that no Event of Termination has
occurred and is continuing or would result from this Amendment.
SECTION 6. Effectiveness. This Amendment shall become effective upon
its execution and delivery by the Seller, the Purchaser and the Agent as of
the day and year first above written.
SECTION 7. Miscellaneous. The Purchase and Sale Agreement, as amended
hereby, remains in full force and effect. From and after the date hereof,
any reference to the Purchase and Sale Agreement shall be deemed to refer to
the Purchase and Sale Agreement as amended hereby, unless otherwise expressly
stated. This Amendment may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement. This
Amendment shall be governed by, and construed in accordance with, the
internal laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the date and year
first above written.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By: /s/David R. McHale
Title: Assistant Treasurer
MONTE ROSA CAPITAL CORPORATION
By: Union Bank of Switzerland, New York Branch, as its attorney-in-fact
By: /s/Rick Persaud
Title: Assistant Vice President
By: /s/Daniel Gringauz
Title: Assistant Treasurer
UNION BANK OF SWITZERLAND, NEW YORK BRANCH, as Agent
By: /s/Rick Persaud
Title: Vice President
By: /s/Daniel Gringauzi
Title: Assistant Treasurer
Exhibit 10.50
MASTER LEASE AGREEMENT
Dated as of
June 21, 1996
Between
GENERAL ELECTRIC CAPITAL CORPORATION,
FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS,
Lessor
and
THE CONNECTICUT LIGHT AND POWER COMPANY,
Lessee
MASTER LEASE AGREEMENT
TABLE OF CONTENTS
Page
I. LEASING: 1
II. TERM, RENT AND PAYMENT 1
III. TAXES 2
IV. REPORTS 2
V. DELIVERY, USE AND OPERATION 3
VI. SERVICE 3
VII. STIPULATED LOSS VALUE 4
VIII. LOSS OR DAMAGE 4
IX. INSURANCE 4
X. RETURN OF EQUIPMENT 5
XI. DEFAULT 5
XII. ASSIGNMENT 7
XIII. NET LEASE; NO SET-OFF, ETC. 7
XIV. INDEMNIFICATION 8
XV. DISCLAIMER 9
XVI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE 10
XVII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST; USURY
SAVINGS 14
XVIII. END OF LEASE OPTIONS 15
(a) Renewal 15
(b) Return 15
(c) Purchase 15
(d) Notice of Election 16
XIX. MISCELLANEOUS 16
XX: CHOICE OF LAW; JURISDICTION 18
XXI: CHATTEL PAPER 18
EXHIBIT NO. 1 - EQUIPMENT SCHEDULE
ANNEX A - DESCRIPTION OF EQUIPMENT
ANNEX B - PURCHASE ORDER ASSIGNMENT AND CONSENT
ANNEX C - CERTIFICATE OF ACCEPTANCE
ANNEX D - STIPULATED LOSS VALUE TABLE
ANNEX E - AMORTIZATION SCHEDULE
ANNEX F - RETURN PROVISIONS
ANNEX G - ESTOPPEL/WAIVER AGREEMENT
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT, dated as of June 21, 1996 ("Agreement"),
between GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR
CERTAIN PARTICIPANTS, with an office at 303 International Circle, Suite 300,
Hunt Valley, Maryland 21031 (hereinafter called, together with its successors
and assigns, if any, "Lessor"), and THE CONNECTICUT LIGHT AND POWER COMPANY,
a Connecticut corporation with its mailing address and chief place of
business at 107 Selden Street, Berlin, Connecticut 06037-1616 (hereinafter
called "Lessee").
WITNESSETH:
I. LEASING:
(a) This Agreement shall be effective from and after the date of
execution hereof. Subject to the terms and conditions set forth below,
Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the
equipment ("Equipment") described in Annex A to any schedule hereto
("Schedule"). Terms defined in a Schedule and not otherwise defined herein
shall have the meanings ascribed to them in such Schedule.
(b) The obligation of Lessor to purchase the Equipment from the
manufacturer or supplier thereof ("Supplier") and to lease the same to Lessee
under any Schedule shall be subject to receipt by Lessor, prior to the Lease
Commencement Date (with respect to such Equipment), of each of the following
documents in form and substance satisfactory to Lessor: (i) a Schedule
relating to the Equipment then to be leased hereunder, (ii) a Purchase Order
Assignment and Consent in the form of Annex B to the applicable Schedule,
unless Lessor shall have delivered its purchase order for such Equipment,
(iii) evidence of insurance which complies with the requirements of Section
IX; (iv) an opinion of counsel for Lessee in form and substance satisfactory
to Lessor; (v) certified resolutions of Lessee's Board of Directors in form
and substance satisfactory to Lessor; (vi) an Estoppel/Waiver Agreement in
the form of Annex G to the applicable Schedule; and (vii) such other
documents as Lessor may reasonably request. As a further condition to such
obligations of Lessor, Lessee shall, upon delivery of such Equipment (but not
later than the Last Delivery Date specified in the applicable Schedule)
execute and deliver to Lessor a Certificate of Acceptance (in the form of
Annex C to the applicable Schedule) covering such Equipment, and deliver to
Lessor a bill of sale therefor (in form and substance satisfactory to
Lessor). Lessor hereby appoints Lessee its agent for inspection and
acceptance of the Equipment from the Supplier. Upon execution by Lessee of
any Certificate of Acceptance, the Equipment described thereon shall be
deemed to have been delivered to, and irrevocably accepted by, Lessee for
lease hereunder.
(c) This Agreement and the obligations of Lessee hereunder are in no way
contingent upon Lessee obtaining any authorizations or approvals from any
Federal or state regulatory authority to enter into and perform under this
Agreement, or upon Lessee recovering from its customers any Rents or other
payments arising hereunder.
II. TERM, RENT AND PAYMENT:
(a) The rent payable hereunder (the "Rent") and Lessee's right to use
the Equipment shall commence on the date of execution by Lessee of the
Certificate of Acceptance for such Equipment ("Lease Commencement Date").
The Term of this Agreement (the "Term") shall be the period specified in the
applicable Schedule. If any Term is extended, the word "Term" shall be
deemed to refer to all extended terms, and all provisions of this Agreement
shall apply during any extended terms, except as may be otherwise
specifically provided in writing.
(b) Rent shall be paid to Lessor by wire transfer of immediately
available funds to: Bankers Trust New York, New York, New York 10006,
Account No. 50-202-962, ABA No. 021-001-033, or to such other account as
Lessor may direct in writing; and shall be effective upon receipt. Payments
of Rent shall be in the amount set forth in, and due in accordance with, the
provisions of the applicable Schedule. In no event shall any Rent payments
be refunded to Lessee. If Rent is not paid within three (3) days of its due
date, Lessee agrees to pay a late charge of Five Cents ($0.05) per dollar on,
and in addition to, the amount of such Rent but not exceeding the lawful
maximum, if any.
III. TAXES:
Lessee shall have no liability for taxes imposed by the United States of
America or any State or political subdivision thereof which are on or
measured by the net income of Lessor. Lessee shall report (to the extent
that it is legally permissible) and pay promptly all other taxes, fees,
charges and assessments due, imposed, assessed or levied against any
Equipment (or the purchase, ownership, delivery, leasing, possession, use or
operation thereof), this Agreement (or any rentals or receipts hereunder),
any Schedule, Lessor or Lessee by any foreign, Federal, state or local
government or regulatory or taxing authority during or related to the term of
this Agreement, including, without limitation, all license and registration
fees, and all sales, use, personal property, excise, gross receipts, gas,
petroleum or other fuel use or import, franchise, stamp or other taxes,
imposts, duties and charges, together with any penalties, fines or interest
thereon (all hereinafter called "Taxes"). Lessee shall (i) reimburse Lessor
upon receipt of written request for reimbursement for any Taxes charged to or
assessed against Lessor, (ii) on request of Lessor, submit to Lessor written
evidence of Lessee's payment of Taxes, (iii) on all reports or returns show
the ownership of the Equipment by Lessee to the extent that it is legally
permissible, and (iv) send a copy thereof to Lessor.
IV. REPORTS:
(a) Lessee will notify Lessor in writing, within ten (10) days after (1)
any tax or other lien shall attach to any Equipment and (2) after Lessee has
knowledge of any Environmental Claim or Environmental Loss (as such terms are
hereinafter defined) with respect to or affecting in any manner the
Equipment, of the full particulars thereof, of the location of such Equipment
on the date of such notification, and of the remediation action to be
undertaken by Lessee and the timing thereof.
(b) Lessee will deliver to Lessor, within ninety (90) days of the close
of each fiscal year of Lessee, Lessee's balance sheet and profit and loss
statement, prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied, certified by a recognized firm of
certified public accountants, together with the Form 10K of Lessee and of
Northeast Utilities ("NU") filed with the Securities and Exchange Commission
("SEC"). Lessee will deliver to Lessor quarterly, within ninety (90) days of
the close of each fiscal quarter of Lessee, in reasonable detail, copies of
Lessee's quarterly financial report certified by the chief financial officer
of Lessee, together with the Form 10Q of Lessee and of NU filed with the SEC.
Lessee will deliver to Lessor, promptly after the date on which they are
filed with the SEC, all Form 8K reports filed with the SEC by Lessee or NU.
In addition, Lessee will deliver to Lessor quarterly, within fifty (50) days
of the close of each fiscal quarter of Lessee a certificate executed by the
chief financial officer of Lessee, certifying as to compliance with the
covenants set forth in Sections XVI (a)(9) and (10) hereof as of the close of
the immediately preceding fiscal quarter, together with the computation of
such covenants. Lessee will deliver to Lessor, within fifteen (15) days
after its filing with the Federal Energy Regulatory Commission (the "FERC"),
a copy of Lessee's FERC Form 1. Lessee will deliver to Lessor, within ten
(10) days of filing, any submittals known to Lessee to have been made by any
person, including without limitation, Lessee and NU to the FERC, the SEC, or
the Connecticut Department of Public Utility Control ("DPUC") the Connecticut
Department of Environmental Protection, the Nuclear Regulatory Commission
("NRC") and the Environmental Protection Agency ("EPA") (collectively or
individually "Regulatory Authorities" or "Regulatory Authority") that would
adversely affect Lessee's ability to perform hereunder including
installation, maintenance and operation of the Equipment, or subject Lessor
or the Participants (as hereinafter defined) to regulation by any Regulatory
Authority.
(c) Lessee will permit Lessor to inspect any Equipment, and all books
and records with respect to the operation and maintenance of the Equipment,
during normal business hours upon reasonable notice.
(d) Lessee will keep the Equipment at the Equipment Location (specified
in the applicable Schedule) in the State of Connecticut. Prior to any
proposed relocation of the Equipment by Lessee, Lessee shall provide Lessor
with ten (10) days' prior written notification of the date and place of such
relocation. Prior to such relocation, Lessee shall provide Lessor with such
reasonable assurances as may be requested by Lessor that such relocation will
not materially adversely affect the performance of any term of this
Agreement.
(e) Lessee will promptly and fully report to Lessor in writing if any
Equipment is lost or damaged (where the estimated repair costs would exceed
$5,000,000.00, or is otherwise involved in an accident causing personal
injury or property damage) (an "Unmatured Default").
(f) Within thirty (30) days after any request by Lessor, Lessee will
furnish a certificate of an authorized officer of Lessee stating that he has
reviewed the activities of Lessee and that, to the best of his knowledge,
there exists no Default (as hereinafter defined) or event which, with the
giving of notice or the lapse of time (or both), would become a Default.
V. DELIVERY, USE AND OPERATION:
(a) All Equipment shall be shipped directly from the Supplier to
Lessee.
(b) Lessee agrees that the Equipment will be used by Lessee solely in
the conduct of its business and in a manner complying with (1) all applicable
Federal, state, and local laws and regulations, including without limitation
the Federal Power Act ("FPA"), 16 U.S.C. Section 791 et seq.; the Public
Utility Holding Company Act of 1935 ("PUHCA"), 15 U.S.C. Section 79 et seq.,
Conn. Gen. Stat. Chapters 277 and 283, and the Clean Air Act ("CAA"), 42
U.S.C. Section 7401 et seq., as amended, and governmental approvals, (2) any
applicable insurance policies, (3) all manufacturers' recommendations, and
(4) standard utility practices; and the Equipment shall not be taken out of
commercial operation in Lessee's business as a public utility (subject to all
requirements of Regulatory Authorities).
(c) Lessee will keep the Equipment free and clear of all liens and
encumbrances other than those (1) which result from acts of Lessor , or (2)
liens for fees, taxes, levies, duties or other governmental charges of any
kind, or of mechanics, materialmen, laborers, employees or suppliers and
similar liens arising by operation of law, in each case incurred by Lessee in
the ordinary course of business for sums that are not yet delinquent or are
being contested in good faith by negotiations or by appropriate proceedings
which suspend the collection thereof (provided, however, that such
proceedings do not involve any substantial danger (as determined in Lessor's
sole reasonable discretion) of the sale, forfeiture or loss of the Equipment
or any interest therein).
VI. SERVICE:
(a) Lessee will, at its sole expense, maintain each unit of Equipment in
good operating order, repair, condition and appearance in accordance with
manufacturer's recommendations, normal wear and tear excepted. Lessee shall,
if at any time reasonably requested by Lessor, affix in a prominent position
on each unit of Equipment plates, tags or other identifying labels showing
the interest therein of Lessor.
(b) Lessee will not, without the prior written consent of Lessor, affix
or install any accessory, equipment or device on any Equipment if such
addition will impair the value, originally intended function or use of such
Equipment. All additions, repairs, parts, supplies, accessories, equipment,
and devices furnished, attached or affixed to any Equipment which are not
readily removable shall be made only in compliance with applicable law, shall
be free and clear of all liens, encumbrances or rights of others, and shall
become the property of Lessor. Lessee will not, without the prior written
consent of Lessor and subject to such conditions as Lessor may impose for its
protection, affix or install any Equipment to or in any other personal
property.
(c) Any alterations or modifications to the Equipment that may, at any
time during the term of this Agreement, be required to comply with any
applicable law, rule or regulation shall be made at the expense of Lessee.
VII. STIPULATED LOSS VALUE:
Lessee shall promptly and fully notify Lessor in writing if any unit of
Equipment shall be or become worn out, lost, stolen, destroyed, irreparably
damaged in the reasonable determination of Lessee, or permanently rendered
unfit for use from any cause whatsoever (such occurrences being hereinafter
called "Casualty Occurrences"). On the Rental Payment Date next succeeding a
Casualty Occurrence (the "Payment Date"), Lessee shall pay Lessor the sum of
(x) the Stipulated Loss Value of such unit calculated in accordance with
Annex D as of the Rent Payment Date next preceding such Casualty Occurrence
("Calculation Date"); and (y) all rental and other amounts which are due
hereunder as of the Payment Date. Upon payment of all sums due hereunder,
the Term as to such unit shall terminate and (except in the case of the loss,
theft or complete destruction of such unit) Lessee shall be entitled to
recover possession of such unit.
VIII. LOSS OR DAMAGE:
Lessee hereby assumes and shall bear the entire risk of any loss, theft,
damage to, or destruction of, any unit of Equipment from any cause whatsoever
(except such as may be caused by the gross negligence or willful misconduct
of Lessor) from the time the Equipment is shipped to Lessee.
IX. INSURANCE:
Lessee agrees, at its own expense, to keep all Equipment insured for
such amounts as specified in Paragraph D of the Equipment Schedule and
against such hazards as Lessor may require, including, but not limited to,
insurance for damage to or loss of such Equipment and liability coverage for
personal injuries, death or property damage, with Lessor named as additional
insured and with a loss payable clause in favor of Lessor, as its interest
may appear, irrespective of any breach of warranty or other act or omission
of Lessee. All such policies shall be with companies, and on terms,
satisfactory to Lessor. Lessee agrees to deliver to Lessor evidence of
insurance satisfactory to Lessor concurrently with execution of each Schedule
and annually thereafter. No insurance shall be subject to any co-insurance
clause. Lessee hereby appoints Lessor as Lessee's attorney-in-fact and
Lessor shall have the exclusive right to make proof of loss and claim for
insurance with respect to property damage, and to make adjustments with
insurers and to receive payment of and execute or endorse all documents,
checks or drafts in connection with payments made as a result of such
insurance policies. Any expense of Lessor in adjusting or collecting
insurance shall be borne by Lessee. Said policies shall provide that the
insurance may not be altered or canceled by the insurer until after thirty
(30) days' written notice to Lessor. Provided that no Default or Unmatured
Default has then occurred, the proceeds of insurance shall be applied to
repair or replace the Equipment or any portion thereof. If a Default or
Unmatured Default shall have occurred, Lessor may, at its option, apply
proceeds of insurance, in whole or in part, to (i) repair or replace the
Equipment or any portion thereof, or (ii) satisfy any obligation of Lessee to
Lessor hereunder.
X. RETURN OF EQUIPMENT:
(a) Upon any expiration or termination of this Agreement or any
Schedule, unless Lessee shall have exercised its renewal option pursuant to
Section XVIII(a) hereof, or its purchase option pursuant to Section XVIII(c)
hereof, Lessee shall promptly, at its own cost and expense, comply with the
provisions of Annex F to the Schedule.
(b) Until Lessee has fully complied with the requirements of Paragraph
(a) above, Lessee's Rent payment obligation and all other obligations under
this Agreement shall continue from month to month notwithstanding any
expiration or termination of the Term. Lessor may terminate such continued
leasehold interest upon ten (10) days' notice to Lessee. In addition to
these Rents, Lessor shall have all of its other rights and remedies available
as a result of this nonperformance.
XI. DEFAULT:
(a) Lessor may in writing declare this Agreement in default ("Default")
if: (1) Lessee breaches its obligation to pay Rent or any other sum when due
and fails to cure the breach within three (3) days; (2) Lessee breaches any
of its insurance obligations under Section IX hereof; (3) any representation,
warranty or covenant made by Lessee in connection with the Agreement shall be
false or misleading in any material respect; (4) Lessee breaches any
representation, warranty or covenant contained in Section XVI hereof; (5)
Lessee becomes insolvent or ceases to do business as a going concern; (6) any
Equipment is illegally used; (7) a petition is filed by or against Lessee
under any bankruptcy or insolvency laws; (8) Lessee shall have terminated its
corporate existence, consolidated with, merged into, or conveyed or leased
substantially all of its assets as an entirety to any person (such actions
being referred to as an "Event"), unless not less than sixty (60) days prior
to such Event: (x) such person is organized and existing under the laws of
the United States or any state, and executes and delivers to Lessor an
agreement containing an effective assumption by such person of the due and
punctual performance of this Agreement; (y) Lessor is reasonably satisfied as
to the creditworthiness of such person; and (z) Lessor is reasonably
satisfied that the Event will not cause Lessor or any Participant to become
subject to any Federal or state regulation including without limitation (i)
regulation as an "electric utility company", a "public utility company", a
"holding company" or a "subsidiary company" or an "association company" of a
holding company under PUHCA; (iii) regulation as a "public utility" under the
FPA; (iv) as a "public service company" or "electric company" under the Conn.
Gen. Stat.; or (v) regulation under the CAA; (9) effective control of
Lessee's voting capital stock, issued and outstanding from time to time, is
not retained by NU and, as determined by Lessor at its sole discretion, such
change of control results in any degradation in the creditworthiness of
Lessee; (10) Lessee or NU shall be in default under any material obligation
for borrowed money, any material obligation for the deferred purchase price
of property or any material obligation under any lease agreement; (11) [there
shall have been a material adverse change in the business or financial
condition of Lessee from the date of execution hereof]; (12) Lessee shall
fail to comply with all then applicable regulatory requirements of
governmental agencies applicable to it, to the Equipment or to the use or
operation thereof; or (13) Lessee breaches any of its other obligations
hereunder not covered by clauses (1) through (12) of this Section XI(a) and
fails to cure such breach within thirty (30) days after written notice
thereof. Such declaration shall apply to all Schedules except as
specifically excepted by Lessor.
(b) After Default, Lessee shall, without further demand, forthwith pay
to Lessor (i) as liquidated damages for loss of a bargain and not as a
penalty, the Stipulated Loss Value of the Equipment (calculated in accordance
with Annex D as of the Rent Payment Date next preceding the declaration of
default), and (ii) all Rents and other sums then due hereunder. If Lessee
fails to pay the amounts specified in the preceding sentence, then, at the
request of Lessor, Lessee shall comply with the provisions of Section X(a)
hereof. Lessee hereby authorizes Lessor to enter, with or without legal
process, any premises where any Equipment is located and take possession
thereof. Lessor may, but shall not be required to, sell Equipment at
private or public sale, in bulk or in parcels, with or without notice, and
without having the Equipment present at the place of sale; or Lessor may, but
shall not be required to, lease, otherwise dispose of or keep idle all or
part of the Equipment; and Lessor may use Lessee's premises for any or all of
the foregoing (provided that Lessor shall not be entitled to use Lessee's
premises for a lease of the Equipment in place on such premises) without
liability for rent, costs, damages or otherwise. The proceeds of sale, lease
or other disposition, if any, shall be applied in the following order of
priorities: (1) to pay all of Lessor's costs, charges and expenses incurred
in taking, removing, holding, repairing and selling, leasing or otherwise
disposing of Equipment; then, (2) to the extent not previously paid by
Lessee, to pay Lessor all sums due from Lessee hereunder; then (3) to
reimburse to Lessee any sums previously paid by Lessee as liquidated damages;
and (4) any surplus shall be paid to Lessee. Lessee shall pay any deficiency
in clauses (1) and (2) forthwith. Nothing in this Agreement shall cause
Lessor to operate the Equipment, or otherwise undertake any action that will
cause Lessor to become subject to regulation under the FPA, PUHCA, Conn. Gen.
Stats., or CAA. Upon satisfaction in full of all of Lessee's obligations
hereunder, if the Equipment has not then been sold or re-leased by Lessor in
the course of the exercise of its remedies hereunder, if the Equipment has
not then been sold or re-leased by Lessor in the course of the exercise of
its remedies hereunder, Lessor will transfer, on an AS IS, WHERE IS BASIS,
without recourse or warranty, express or implied, of any kind whatsoever ("AS
IS BASIS"), all of Lessor's interest in and to the Equipment. Lessor shall
not be required to make and may specifically disclaim any representation or
warranty as to the condition of such Equipment and other matters (except that
Lessor shall warrant that it has conveyed whatever interest it received in
the Equipment, free and clear of any lien or encumbrance created by Lessor).
Lessor shall execute and deliver to Lessee such Uniform Commercial Code
Statements of Termination and other documents and instruments as reasonably
may be required in order to convey or terminate any interest of Lessor in and
to the Equipment
(c) In the event that Lessor or any Participant for any reason arising
out of this Agreement becomes, or may become, subject to Federal or state
regulation, including without limitation, regulation as an "electric utility
company", a "public utility company", a "holding company" or a "subsidiary
company" or an "associate company" of a holding company under PUHCA; as a
"public utility" under the FPA; as a "public service company" or "electric
company" under the Conn. Gen. Stat.; or under the CAA or the AEA (hereinafter
"Change in Status"), Lessee shall promptly take such actions as Lessor
reasonably believes are necessary to remove or remedy such Change in Status,
including such reasonable actions as are necessary to assure Lessor that it
will not become subject to a Change in Status during the Term. Such actions
and assurances may include, but are not limited to, (i) such modifications of
this Agreement as are necessary to assure Lessor that it will not now or
during the Term become subject to a Change in Status, or (ii) if the Change
in Status cannot be remedied through modification of this Agreement, at
Lessor's option, upon written demand from Lessor, Lessee shall pay to Lessor
the sum of: (x) the Stipulated Loss Value of the Equipment calculated in
accordance with Annex D as of the Rent Payment Date next preceding the date
of such demand; and (y) all Rent and other amounts which are due hereunder as
of the next succeeding Rent Payment Date. Upon payment of all sums due
hereunder, Lessor will transfer, on an AS IS BASIS, all of Lessor's interest
in and to the Equipment. Lessor shall not be required to make and may
specifically disclaim any representation or warranty as to the condition of
such Equipment and other matters (except that Lessor shall warrant that it
has conveyed whatever interest it received in the Equipment, free and clear
of any lien or encumbrance created by Lessor). Lessor shall execute and
deliver to Lessee such Uniform Commercial Code Statements of Termination and
other documents and instruments as reasonably may be required in order to
convey or terminate any interest of Lessor in and to the Equipment. Such
actions or assurances, where necessary, shall be made retroactive to the date
on which the Change in Status was deemed to have occurred.
(d) In addition to the foregoing rights, Lessor may terminate this
Agreement as to any or all of the Equipment.
(e) Each of the foregoing remedies, together with any and all other
rights that Lessor may have under this Agreement or under statute or at law
or in equity or otherwise, shall be cumulative, and the exercise by Lessor of
any one or more of such rights, powers or remedies shall not preclude the
simultaneous or subsequent exercise by Lessor of any or all such other
rights, powers or remedies. Lessee waives notice of sale or other
disposition (and the time and place thereof), and the manner and place of any
advertising. If permitted by law, Lessee shall pay reasonable attorney's
fees actually incurred by Lessor in enforcing the provisions of this Lease
and any ancillary documents. Waiver of any default shall not be a waiver of
any other or subsequent default.
(f) Any default under the terms of this or any other agreement between
Lessor and Lessee may be declared by Lessor a default under this and any such
other agreement.
XII. ASSIGNMENT:
(a) LESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET OR HYPOTHECATE ANY
EQUIPMENT OR ANY INTEREST OR RIGHTS OF LESSEE HEREUNDER WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR.
(b) For a period ending sixty (60) days from the date of this Agreement,
Lessor may, without the consent of Lessee, assign this Agreement or any
Schedule, or the right to enter into any Schedule, to any Institutional
Investor or any party specified on Exhibit No. 2 attached hereto and any such
assignee may further assign this Agreement or any Schedule, or the right to
enter into any Schedule, to an entity affiliated with such assignee, without
the consent of Lessee. As used herein, "Institutional Investor" shall mean
any insurance organization who engages in the activity of investing in public
or private financial instruments, any pension fund or any mutual or money
management fund. After sixty (60) days from the date of this Agreement,
Lessor may, without the consent of Lessee, assign this Agreement or any
Schedule, or the right to enter into any Schedule. Lessee agrees that it
will pay all Rent and other amounts payable under each Schedule to the Lessor
named therein; provided, however, if Lessee receives written notice of an
assignment from Lessor, Lessee will pay all Rent and other amounts payable
under any assigned Schedule to such assignee or as instructed by Lessor.
Each Schedule, incorporating by reference the terms and conditions of this
Agreement, constitutes a separate instrument of lease, and the Lessor named
therein or its assignee shall have all rights as "Lessor" thereunder
separately exercisable by such named Lessor or assignee as the case may be,
exclusively and independently of Lessor or any assignee with respect to other
Schedules executed pursuant hereto. Without limiting the generality of the
foregoing, the grant of security interest in Section XVII(b) hereof shall, as
it relates to the Equipment leased under each Schedule (and to the proceeds
and other collateral referred to in Section XVII(b)), be deemed to have been
granted solely to the Lessor named therein, or to its assignee, as applicable
and such Equipment (and other related collateral) shall not be deemed to
collateralize Lessee's obligations under any of the Schedules to which such
named Lessor or assignee, as the case may be, is not a party. Lessee further
agrees to confirm in writing receipt of a notice of assignment as reasonably
may be requested by assignee. Lessee hereby waives and agrees not to assert
against any such assignee any defense, set-off, recoupment claim or
counterclaim which Lessee has or may at any time have against Lessor or any
other person for any reason whatsoever; provided, however, that Lessee
reserves the right to assert in a separate cause of action against Lessor or
any other person any claim which Lessee has or may at any time have against
Lessor or any other person.
(c) Lessee acknowledges that it has been advised that General Electric
Capital Corporation is acting hereunder for itself and as agent for certain
third parties (each being herein referred to as a "Participant" and,
collectively, as the "Participants"); that the interest of the Lessor in this
Agreement, the Equipment Schedules, related instruments and documents and/or
the Equipment may be conveyed to, in whole or in part, and may be used as
security for financing obtained from, one or more third parties without the
consent of Lessee (the "Syndication"). Lessee agrees reasonably to cooperate
with Lessor in connection with the Syndication, including the execution and
delivery of such other documents, instruments, notices, opinions,
certificates and acknowledgments as reasonably may be required by Lessor or
such Participant; provided, however in no event shall Lessee be required to
consent to any change that would adversely affect any of the material terms
of the transactions contemplated herein.
(d) Subject always to the foregoing, this Agreement inures to the
benefit of, and is binding upon, the successors and assigns of the parties
hereto.
XIII. NET LEASE; NO SET-OFF, ETC.:
This Agreement is a net lease. Lessee's obligation to pay Rent and
other amounts due hereunder shall be absolute and unconditional. Lessee
shall not be entitled to any abatement or reductions of, or set-offs against,
said Rent or other amounts, including, without limitation, those arising or
allegedly arising out of claims (present or future, alleged or actual, and
including claims arising out of strict liability in tort or negligence of
Lessor) of Lessee against Lessor under this Agreement or otherwise. This
Agreement shall not terminate and the obligations of Lessee shall not be
affected by reason of (a) any denial by any Federal or state regulatory,
legislative or judicial authority of any recovery from, or pass through to,
ratepayers of any rents paid or other expenses, obligations or liabilities
arising out of this Agreement including, without limitation, fuel expenses,
Equipment maintenance, insurance coverage and payment of all applicable
Taxes; or (b) any defect in or damage to, or loss of possession, use or
destruction of, any Equipment from whatsoever cause. It is the intention of
the parties hereto that Rents and other amounts due hereunder shall continue
to be payable in all events in the manner and at the times set forth herein
unless the obligation to do so shall have been terminated pursuant to the
express terms hereof.
XIV. INDEMNIFICATION:
(a) Lessee hereby agrees to indemnify, save and keep harmless Lessor,
the Participants, and their respective Affiliates, successors and assigns,
shareholders, partners, directors, officers, employees and agents (each an
"Indemnified Party"), from and against any and all liability, losses,
damages, penalties, injuries, claims, actions and suits, including legal
expenses, of whatsoever kind and nature, which may at any time be imposed or
incurred by or asserted against such Indemnified Party (other than such as
may be caused by the gross negligence or wilful misconduct of such
Indemnified Party) arising from or in any way connected to: (1) this
Agreement or the transactions contemplated hereby; (2) the selection,
manufacture, purchase, acceptance or rejection of Equipment, the ownership of
Equipment during the Term, and the delivery, lease, possession, maintenance,
uses, condition, return or operation of the Equipment (including, without
limitation, (A) any breach of any representation, warranty or covenant made
by Lessee under Section XVI hereof, (B) claims or penalties arising from any
violation of law or liability in tort (strict or otherwise), (C) loss of or
damage to any property or the environment or death or injury to any Person,
(D) latent or other defects, whether not discoverable, (E) any claim for
patent, trademark, service-mark or copyright infringement, and (F) any claim
of Lessor incurred in the administration of this Agreement, the other
Documents or any Schedule attached hereto); (3) the condition of the
Equipment sold or disposed of after use by Lessee, any sublessee or employees
of Lessee; or (4) any misrepresentation or failure by Lessee to perform its
obligations hereunder. Lessee shall, upon request, defend any actions based
on, or arising out of, any of the foregoing.
(b) In addition to the foregoing, Lessee shall defend, indemnify and
hold harmless each Indemnified Party from and against any Environmental Claim
or Environmental Loss and, unless Lessee is then contesting in good faith
such Environmental Claim or Environmental Loss and Lessee has set aside on
its books appropriate reserves therefor, Lessee shall fully and promptly pay,
perform and discharge any such Environmental Claim or Environmental Loss.
As used herein,
(1) "Adverse Environmental Condition" shall refer to (i) the
existence or the continuation of the existence, of an Environmental
Emission (including, without limitation, a sudden or non-sudden
accidental or non-accidental Environmental Emission), of, or
exposure to, any Contaminant, odor or audible noise in violation of
any Applicable Environmental Law, at, in, by, from or related to
any Equipment, (ii) the environmental aspect of the transportation,
storage, treatment or disposal of materials in connection with the
operation of any Equipment in violation of any Applicable
Environmental Law, or (iii) the violation, or alleged violation, of
any Environmental Law connected with any Equipment.
(2) "Affiliate" shall refer, with respect to any given
Person, to any Person that directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under
common control with, such Person (other than the Supplier in its
capacity as the Supplier).
(3) "Contaminant" shall refer to those substances which are
regulated by or form the basis of liability under any Environmental
Law, including, without limitation, asbestos, polychlorinated
biphenyls ("PCBs"), and radioactive substances.
(4) "Environmental Claim" shall refer to any accusation,
allegation, notice of violation, claim, demand, abatement or other
order or direction (conditional or otherwise) by any governmental
authority or any Person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage
to the environment or other adverse effects on the environment, or
for fines, penalties or restrictions, resulting from or based upon
any Adverse Environmental Condition.
(5) "Environmental Emission" shall refer to any actual or
threatened release, spill, omission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, or into or out of any of the
Equipment, including, without limitation, the movement of any
Contaminant or other substance through or in the air, soil, surface
water, groundwater, or property.
(6) "Environmental Law" shall mean any Federal, foreign,
state or local law, rule or regulation pertaining to the protection
of the environment, including, but not limited to, the
Comprehensive Environmental Response, Compensation, and Liability
Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the Hazardous
Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et
seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. Section 1361 et seq.), and the Occupational Safety and
Health Act (19 U.S.C. Section 651 et seq.), as these laws have been
amended or supplemented, and any analogous foreign, Federal, state
or local statutes, and the regulations promulgated pursuant
thereto.
(7) "Environmental Loss" shall mean any loss, cost, damage,
liability, deficiency, fine, penalty or expense (including, without
limitation, reasonable attorneys' fees, engineering and other
professional or expert fees), investigation, removal, cleanup and
remedial costs (voluntarily or involuntarily incurred) and damages
to, loss of the use of or decrease in value of the Equipment
arising out of or related to any Adverse Environmental Condition.
(8) "Person" shall mean any individual, partnership, firm,
corporation, trust, limited liability company, limited liability
partnership, association, joint venture, unincorporated
organization, government or political subdivision or
instrumentality or department or agency thereof and any other
entity.
(c) All of Lessee's obligations and all of Lessor's rights, privileges
and indemnities contained in this Section shall survive the expiration or
other termination of this Agreement. Lessor's rights, privileges and
indemnities contained in this Section are expressly made for the benefit of,
and shall be enforceable by Lessor, its successors and assigns.
XV. DISCLAIMER:
LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY
ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES NOT MAKE, HAS
NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO
THE EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS,
QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY
PURPOSE, USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT
INFRINGEMENT, OR TITLE (except that Lessor warrants that it has received such
title to the Equipment as was conveyed to it, free and clear of all liens and
encumbrances created by Lessor). All of the foregoing risks, as between
Lessor and Lessee, are to be borne by Lessee. Without limiting the
foregoing, Lessor shall have no responsibility or liability to Lessee or any
other person with respect to any of the following (i) any liability, loss or
damage caused or alleged to be caused directly or indirectly by any
Equipment, any inadequacy thereof, any deficiency or defect (latent or
otherwise) therein, or any other circumstance in connection therewith; (ii)
the use, operation or performance of any Equipment or any risks relating
thereto; (iii) any interruption of service, loss of business or anticipated
profits or consequential damages; or (iv) the delivery, operation, servicing,
maintenance, repair, improvement or replacement of any Equipment. If, and so
long as, no default exists under this Agreement, Lessee shall be, and hereby
is, authorized during the term of this Agreement to assert and enforce, at
Lessee's sole cost and expense, from time to time, in the name of and for the
account of Lessor and/or Lessee, as their interests may appear, whatever
claims and rights Lessor may have against any Supplier of the Equipment.
XVI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE:
(a) Lessee hereby represents, warrants and covenants to Lessor as
follows:
(1) Lessee has adequate power and capacity to enter into, and
perform under, this Agreement and all related documents (together, the
"Documents") and is duly qualified to do business wherever necessary to carry
on its present business and operations, including the jurisdiction(s) where
the Equipment is or is to be located.
(2) The Documents have been duly authorized, executed and
delivered by Lessee and constitute valid, legal and binding agreements,
enforceable in accordance with their terms, except to the extent that the
enforcement of remedies therein provided may be limited under applicable
bankruptcy and insolvency laws.
(3) No approval, consent or withholding of objections is required
from any governmental authority or instrumentality with respect to the entry
into or performance by Lessee of the Documents except such as have already
been obtained.
(4) The entry into and performance by Lessee of the Documents will
not: (i) violate any judgment, order, law or regulation applicable to
Lessee or any provision of Lessee's articles of incorporation, charter or
by-laws; or (ii) result in any breach of, constitute a default under or
result in the creation of any lien, charge, security interest or other
encumbrance upon any Equipment pursuant to any indenture, mortgage, deed of
trust, bank loan or credit agreement or other instrument (other than this
Agreement) to which Lessee is a party.
(5) Except as disclosed in the Disclosure Documents, there are no
suits or proceedings pending or threatened in court or before any commission,
board or other administrative agency against or affecting Lessee, which will
have a material adverse effect on the ability of Lessee to fulfill its
obligations under this Agreement. As used herein, "Disclosure Documents"
means Lessee's Annual Report for the fiscal year ended December 31, 1995, on
Form 10K, Lessee's Quarterly Report for the quarter ended March 31, 1996, on
Form 10Q and Lessee's reports dated 1996, on Form 8K.
(6) Each financial statement delivered to Lessor has been prepared
in accordance with GAAP, and since the date of the most recent financial
statement, there has been no material adverse change except as disclosed in
the Disclosure Documents.
(7) Lessee is duly incorporated and will be at all times validly
existing and in good standing under the laws of the state of its
incorporation (specified in the first sentence of this Agreement) and in each
state in which it is doing business.
(8) The Equipment will at all times be used for commercial or
business purposes.
(9) During the Term, Lessee shall maintain at all times a ratio of
Common Equity to Total Capitalization as follows: (i) 0.31:1.00 for fiscal
year 1996, (ii) 0.32:1.00 for fiscal year 1997, and (iii) 0.33:1.00 for
fiscal year 1998 and each fiscal year thereafter. As used herein, the
following terms shall have the following meanings:
"Common Equity" of Lessee shall mean for any period, an
amount equal to the sum of the aggregate of the par value
of, or stated capital represented by, the outstanding
common shares of Lessee and its subsidiaries and the
surplus, paid-in, earned and other, if any, of Lessee and
its subsidiaries as determined on a consolidated basis in
accordance with generally accepted accounting principles;
and
"Total Capitalization" of Lessee shall mean the sum of
the Common Equity, preferred stock and all long-term and
short-term Debt of Lessee and its consolidated
subsidiaries (including the current portion thereof); and
"Debt" of any person shall mean, without duplication, (i)
indebtedness of such person for borrowed money, including
but not limited to obligations of such person evidenced
by bonds, debentures, notices or other similar
instruments, (ii) obligations of such person to pay the
deferred purchase price of property or services
(excluding any obligation of such person to the United
States Department of Energy or its successor with respect
to disposition of spent nuclear fuel burned prior to
April 3, 1983), (iii) obligations of such person as
lessee under leases which shall have been or should be,
in accordance with generally accepted accounting
principles, recorded as capital leases, (iv) obligations
under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations
of others of the kinds referred to in clause (i) through
(iv) above, and (v) liabilities in respect of unfunded
vested benefits under ERISA Plans.
(10) During the Term, Lessee will be required to maintain for each
fiscal quarter in each fiscal year a ratio of Operating Income to Interest
Expense as follows: (i) 3.50:1.00 for each of fiscal year 1996 and fiscal
year 1997 and (ii) 4.50:1.00 for fiscal year 1998 and each fiscal year
thereafter. As used herein, the following terms shall have the following
meanings:
"Operating Income" of Lessee shall mean, for any
period, Lessee's consolidated operating income for
such period, adjusted as follows:
(i) increased by the amount of income taxes paid by
Lessee and its consolidated subsidiaries during
such period, if and to the extent deducted in
the computation of Lessee's consolidated
operating income for such period; and
(ii) increased by the amount of any depreciation and
amortization deducted in the computation of
Lessee's consolidated operating income for such
period; and
(iii) decreased by the amount of any capital
expenditures paid by Lessee or its
consolidated subsidiaries to the extent
not deducted in the computation of
Lessee's consolidated operating income for
such period; and
"Interest Expense" of Lessee shall mean for any
period, the aggregate amount of any interest on
consolidated Debt of Lessee and its subsidiaries
(including long-term and short-term Debt).
(11) Except as disclosed in the Disclosure Documents, Lessee and
its parents, subsidiaries and affiliates have all necessary licenses,
authorizations, approvals, waivers, exemptions and permits required under any
applicable Federal, state and local laws, including without limitation, the
FPA, PUHCA, CAA, the Atomic Energy Act of 1954, as amended, the Connecticut
General Statutes, and all rules, regulations, orders, decisions and written
policies promulgated or issued thereunder (collectively or individually,
"Regulatory Law" or "Laws"), including without limitation, those necessary
for Lessee and its parents, subsidiaries and affiliates to own and operate
their respective properties and to carry on their respective businesses as
now conducted and as proposed to be conducted throughout the Term, and with
respect to Lessee, to perform under this Agreement, the other Documents and
Schedules.
(12) Except as disclosed in the Disclosure Documents, all Lessee's
and its parents', subsidiaries' or affiliates' licenses, authorizations,
approvals, waivers, permits, exemptions and orders are valid and in full
force and effect, free and clear of any disqualifications or restrictions,
and any conditions that would impair Lessee's ability to execute and perform
(including without limitation, the ability to install, maintain and operate
the Equipment) under this Agreement, the other Documents or Schedules.
Neither Lessee nor any of its parents, subsidiaries or affiliates have
received, or have reason to believe that Lessee or any of its parents,
subsidiaries or affiliates will receive, any notice that any Regulatory
Authority intends to cancel, terminate, review, modify, amend or not renew
any of the material licenses, authorizations, approvals, waivers, permits,
exemptions and orders of Lessee or any of its parents, subsidiaries or
affiliates the absence of which would impair their ability to carry on their
respective businesses as now conducted and as proposed to be conducted
throughout the Term, and with respect to Lessee, to perform under this
Agreement, the other Documents and Schedules.
(13) Except as disclosed in the Disclosure Documents, Lessee and
its parents, subsidiaries and affiliates are in compliance with all
Regulatory Laws and no condition exists or event has occurred with respect to
any license, authorization, approval, order, waiver, exemption or permit
that, in itself or with the giving of notice or lapse of time, or both, does
or would: (a) constitute or result in a violation of any Regulatory Law; or
(b) result in a forfeiture or the suspension, termination, revocation,
impairment, modification, amendment or non-renewal of any such license,
authorization, approval, order, waiver, exemption or permit.
(14) Except as disclosed in the Disclosure Documents, there are no
judgments, decrees or orders that have been issued by any Regulatory
Authority against Lessee or any of its parents, subsidiaries or affiliates
that could impair Lessee's ability to (A) install, maintain and operate the
Equipment, and/or (B) enter into and perform under this Agreement, the other
Documents or Schedules; and there are no Regulatory Authority or judicial
proceedings pending or threatened against Lessee or any of its parents,
subsidiaries or affiliates, including, without limitation, any notice of
violation, notice of apparent liability, notice of investigation, order to
show cause or other order, or investigative proceeding, that could impair
Lessee's ability to (x) install, maintain and operate the Equipment, and/or
(y) enter into and perform under this Agreement, the other Documents or
Schedules.
(15) No consents, notices, authorizations, approvals,
registrations, declarations or filings by or with any Regulatory Authority
are required by Lessee to install, maintain or operate the Equipment, or to
enter into and perform under this Agreement, the other Documents or Schedules
except such as have been or on or before the date hereof will have been duly
obtained, given or accomplished.
(16) Neither Lessor nor any Participant will be or become, solely
by reason of its entering into or performing under this Agreement, the other
Documents or Schedules to which it is a party, or as a result of the
transactions contemplated hereby or thereby, subject to regulation as an
electric utility company, an electric company, a public service company, a
public utility or a holding company of a public utility company, electric
utility company, electric company or public service company or a subsidiary
company or an associate company of a holding company, by any Regulatory
Authority.
(17) Except as consistent with applicable Environmental Laws, no
Hazardous Substances or pollutants regulated under any Environmental Law are
present on or below the surface of Lessee's real property or leased premises,
and neither Lessee nor any of its parents, subsidiaries or affiliates or any
present or former owner or operator of such real property or leased premises
has been identified as a potentially responsible party for cleanup liability
with respect to the emission, discharge or release of any Hazardous
Substance.
(18) Lessee and its parents, subsidiaries, and affiliates have all
permits, licenses, registrations or other authorizations required by
Environmental Laws for the ownership by Lessee or its parents, subsidiaries
or affiliates of their respective assets, present use or occupancy of the
real property or leased premises included in those assets, and the present
operation of their respective businesses (including Lessee's installation,
operation and maintenance of the Equipment).
(b) The representations, warranties and covenants of Lessee made
hereunder shall be true as of the date hereof and on the date of execution of
each Schedule, and except for Section XVI(a)(5) hereof, shall be continuing
in nature and true throughout the Term.
XVII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST; USURY
SAVINGS:
(a) For income tax purposes, Lessor will treat Lessee as the owner of
the Equipment. Accordingly, Lessor agrees (1) to treat Lessee as the owner
of the Equipment on Lessor's Federal income tax return, (2) not to take
actions or positions inconsistent with such treatment on or with respect to
its federal income tax return, and (3) not claim any tax benefits available
to an owner of the Equipment on or with respect to its Federal income tax
return. The foregoing undertakings by Lessor shall not be violated by
Lessor's taking a tax position through inadvertence so long as such
inadvertent tax position is reversed by Lessor promptly upon its discovery.
Lessor shall in no event be liable to Lessee if Lessee fails to secure any of
the tax benefits available to Lessee as the owner of the Equipment except to
the extent that such failure is caused by Lessor's gross negligence or
willful misconduct.
(b) In order to secure the prompt payment of the Rent and all of the
other amounts from time to time outstanding under and with respect to the
Schedules, and the performance and observance by Lessee of all the
agreements, covenants and provisions thereof (including, without limitation,
all of the agreements, covenants and provisions of the Agreement that are
incorporated therein), Lessee hereby grants to Lessor a first priority
security interest in the Equipment leased under the Schedules, together with
all additions, attachments, accessories and accessions thereto whether or not
furnished by the supplier of the Equipment and any and all substitutions,
replacements or exchanges therefor, in each such case in which Lessee shall
from time to time acquire an interest, and any and all insurance and/or other
proceeds (but without power of sale) of the property in and against which a
security interest is granted hereunder.
(c) It is the intention of the parties hereto to comply with any
applicable usury laws to the extent that any Schedule is determined to be
subject to such laws; accordingly, it is agreed that, notwithstanding any
provision to the contrary in any Schedule or this Agreement, in no event
shall any Schedule require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such
excess interest is contracted for, charged or received under any Schedule or
this Agreement, or in the event that all of the principal balance shall be
prepaid, so that under any of such circumstances the amount of interest
contracted for, charged or received under any Schedule or this Agreement
shall exceed the maximum amount of interest permitted by applicable law, then
in such event (1) the provisions of this paragraph shall govern and control,
(2) neither Lessee nor any other person or entity now or hereafter liable for
the payment of which hereunder shall be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount of interest
permitted by applicable law, (3) any such excess which may have been
collected by Lessor shall be either applied as a credit against the then
unpaid principal balance or refunded to Lessee, at the option of Lessor, and
(4) the effective rate of interest shall be automatically reduced to the
maximum lawful contract rate allowed under applicable law as now or hereafter
construed by the courts having jurisdiction thereof. It is further agreed
that without limitation of the foregoing, all calculations of the rate of
interest contracted for, charged or received under any Schedule or this
Agreement which are made for the purpose of determining whether such rate
exceeds the maximum lawful contract rate, shall be made, to the extent
permitted by applicable law, by amortizing, prorating, allocating and
spreading in equal parts during the period of the full stated term of the
indebtedness evidenced hereby, all interest at any time contracted for,
charged or received from Lessee or otherwise by Lessor in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable
state law, so that it becomes lawful for Lessor to receive a greater interest
per annum rate than is presently allowed, the Lessee agrees that, on the
effective date of such amendment or preemption, as the case may be, the
lawful maximum rate hereunder shall be increased to the maximum interest per
annum rate allowed by the amended state law or the law of the United States
of America (but not in excess of the interest rate contemplated hereunder).
XVIII. END OF LEASE OPTIONS.
Provided that Lessee is not then in default under this Agreement or any
Schedule or any other agreement between Lessor and Lessee, Lessee shall have
the option, upon the expiration of the Term of each Schedule, to return,
purchase, or renew the Term with respect to, all (but not less than all) of
the Equipment leased under all Schedules executed hereunder subject to the
following terms and conditions.
(a) Renewal. Lessee shall have the option, upon the expiration of
the initial sixty (60) months of the term of the first Schedule to be
executed under this Agreement (the "Initial Term") and/or each of the first
four (4) Renewal Terms of the first Schedule to be executed under this
Agreement, to renew the Agreement with respect to all, but not less than all,
of the Equipment leased under all Schedules executed hereunder for an
additional term of twelve (12) months (each, a "Renewal Term"). Including
all Renewal Terms, the maximum term of the first Schedule to be executed
under this Agreement shall be ten (10) years (the Initial Term plus five (5)
Renewal Terms) (the "Maximum Lease Term"), and the maximum term of each
additional Schedule shall not exceed the then remaining Maximum Lease Term.
The Rent during any Renewal Term shall be calculated by reference to the then
applicable Interest Rate, which will be reset at the end of the Basic Term
and shall be applicable to all Renewal Terms at a prevailing interest rate
representing a spread over the then-current LIBOR Rate, commensurate with the
then credit quality of Lessee (such credit quality to be based on the then
current evaluation of Lessee by a reputable credit rating agency), such
spread to be determined to the mutual satisfaction of Lessor and Lessee. If
the parties are unable mutually to agree, Lessee's exercise of the renewal
option shall be deemed to be the exercise of Lessee's option to purchase the
Equipment pursuant to Paragraph (c) of this Section.
(b) Return. Lessee shall have the option, upon the expiration of
the Term of each Schedule, to return all (but not less than all) of the
Equipment described on all Schedules executed hereunder, to Lessor upon the
following terms and conditions: If Lessee desires to exercise this option,
Lessee shall (i) pay to Lessor on the last day of the Term with respect to
each individual Schedule, in addition to the scheduled Rent then due on such
date and all other sums then due hereunder, a terminal rental adjustment
amount equal to the Fixed Purchase Price of such Equipment, and (ii) return
the Equipment to Lessor in accordance with Section X hereof. Thereafter, upon
return of all of the Equipment described on all Schedules executed hereunder,
Lessor and Lessee shall arrange for the commercially reasonable sale, scrap
or other disposition of the Equipment. Upon satisfaction of the conditions
specified in this Paragraph (b), Lessor will transfer, on an AS IS BASIS, all
of Lessor's interest in and to the Equipment. Lessor shall not be required
to make and may specifically disclaim any representation or warranty as to
the condition of such Equipment and other matters (except that Lessor shall
warrant that it has conveyed whatever interest it received in the Equipment,
free and clear of any liens or encumbrances created by Lessor). Lessor shall
execute and deliver to Lessee such Uniform Commercial Code Statements of
Termination and other documents and instruments as reasonably may be required
in order to convey or terminate any interest of Lessor in and to the
Equipment. Upon the sale, scrap or other disposition of the Equipment the
net sales proceeds with respect to the Equipment sold will be paid to, and
held by, Lessor. Lessor shall promptly thereafter pay to Lessee an amount
equal to the Residual Risk Amount (as specified in the Schedule) of the
Equipment (less all reasonable costs, expenses and fees, including storage,
reasonable and necessary maintenance and other remarketing fees incurred in
connection with the sale, scrap, or disposition of such Equipment) plus all
net proceeds, if any, of such sale in excess of the Residual Risk Amount of
the Equipment and applicable taxes, if any.
(c) Purchase. Lessee shall have the option, upon the expiration
of the Term of each Schedule, to purchase all (but not less than all) of the
Equipment described on all Schedules executed hereunder upon the following
terms and conditions: If Lessee desires to exercise this purchase option
with respect to the Equipment, Lessee shall pay to Lessor on the last day of
the Term with respect to each individual Schedule (the "Termination Date"),
in addition to the scheduled Rent (if any) then due on such date and all
other sums then due hereunder, in cash the purchase price for the Equipment
so purchased, determined as hereinafter provided. The purchase price of the
Equipment shall be an amount equal to the Fixed Purchase Price of such
Equipment (as specified on the Schedule), plus all taxes and charges upon
sale and all other reasonable and documented expenses incurred by Lessor in
connection with such sale, including, without limitation, any such expenses
incurred based on a notice from Lessee to Lessor that Lessee intended to
return any such items of Equipment. Upon satisfaction of the conditions
specified in this Paragraph (c), Lessor will transfer, on an AS IS BASIS, all
of Lessor's interest in and to the Equipment. Lessor shall not be required to
make and may specifically disclaim any representation or warranty as to the
condition of such Equipment and other matters (except that Lessor shall
warrant that it has conveyed whatever interest it received in the Equipment,
free and clear of any lien or encumbrance created by Lessor). Lessor shall
execute and deliver to Lessee such Uniform Commercial Code Statements of
Termination and other documents and instruments as reasonably may be required
in order to convey or terminate any interest of Lessor in and to the
Equipment.
(d) Notice of Election. Lessee shall give Lessor irrevocable
written notice of its election of the options specified in this Section not
less than one hundred eighty (180) days nor more than three hundred sixty-
five (365) days before the expiration of the Basic Term or any Renewal Term
of the first Schedule to be executed under this Agreement. Such election
shall be effective with respect to all Equipment described on all Schedules
executed hereunder. If Lessee fails timely to provide such notice, without
further action Lessee automatically shall be deemed to have elected (1) to
renew the Term of this Agreement pursuant to Paragraph (a) of this Section if
a Renewal Term is then available hereunder, or (2) to purchase the Equipment
pursuant to Paragraph (c) of this Section if a Renewal Term is not then
available hereunder.
XIX. MISCELLANEOUS:
(a) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN
LESSEE AND LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY
RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED
BETWEEN LESSEE AND LESSOR. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any court
(including, without limitation, contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims). THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY RELATED DOCUMENTS, OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
(b) Any cancellation or termination by Lessor, pursuant to the
provisions of this Agreement, any Schedule, supplement or amendment hereto,
or the lease of any Equipment hereunder, shall not release Lessee from any
then outstanding obligations to Lessor hereunder. Any obligations of Lessor
to be performed after the expiration of the Term shall survive the expiration
of the Term.
(c) It is the intent of the parties that all Equipment shall at all
times remain personal property regardless of the degree of its annexation to
any real property and shall not by reason of any installation in, or
affixation to, real or personal property become a part thereof.
(d) Time is of the essence of this Agreement. Lessor's failure at any
time to require strict performance by Lessee of any of the provisions hereof
shall not waive or diminish Lessor's right thereafter to demand strict
compliance therewith.
(e) Lessee agrees, upon Lessor's request, to execute any instrument
necessary or expedient for filing, recording or perfecting the security
interest of Lessor.
(f) All notices required to be given hereunder shall be in writing,
personally delivered, delivered by overnight courier service, sent by
facsimile transmission (with confirmation of receipt), or sent by certified
mail, return receipt requested, addressed to the other party at its
respective address stated above or at such other address as such party shall
from time to time designate in writing to the other party; and shall be
effective from the date of receipt.
(g) This Agreement and any Schedule and Annexes thereto constitute the
entire agreement of the parties with respect to the subject matter hereof.
NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF ANY OF ITS
PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
(h) The representations, warranties and covenants of Lessee herein shall
be deemed to survive the closing hereunder and, except as otherwise stated,
be continuing as if remade on each day of this Agreement. Lessor's
obligations to acquire and lease specific items of Equipment shall be
conditioned upon Lessee providing to Lessor such information with respect to
Lessee's financial condition as Lessor may require, and Lessor being
satisfied that there shall have been no material adverse change in the
business or financial condition of Lessee from the date of execution hereof.
The obligations of Lessee under Sections III, X, XIV and XIX(l) which accrue
during the term of this Agreement and obligations which by their express
terms survive the termination of this Agreement, shall survive the
termination of this Agreement.
(i) In case of a failure of Lessee to comply with any provision of this
Agreement, Lessor shall have the right, but shall not be obligated, to effect
such compliance, in whole or in part; and all moneys spent and expenses and
obligations incurred or assumed by Lessor in effecting such compliance
(together with interest thereon at the rate specified in Paragraph (j) of
this Section) shall constitute additional Rent due to Lessor within five (5)
days after the date Lessor sends notice to Lessee requesting payment.
Lessor's effecting such compliance shall not be a waiver of Lessee's default.
(j) In addition to the late charge specified in Section II(b) hereof,
any Rent or other amount not paid to Lessor when due hereunder shall bear
interest, both before and after any judgment or termination hereof, at the
lesser of eighteen percent (18%) per annum or the maximum rate allowed by
law.
(k) Any provisions in this Agreement and any Schedule which are in
conflict with any statute, law or applicable rule shall be deemed omitted,
modified or altered to conform thereto.
(l) Lessee agrees to pay on demand all reasonable costs and expenses
incurred by Lessor in connection with the preparation, execution, delivery,
filing, recording, and administration of any of the Documents, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for Lessor, and all costs and expenses, if any, in connection with the
enforcement of any of the Documents (including instruments of further
assurance). In addition, Lessee shall pay any and all stamp and other taxes
and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of any of the Documents and the
other documents to be delivered under the Documents, and agrees to save
Lessor harmless from and against any and all liabilities with respect to or
resulting from any delay attributed to Lessee in paying or failing to pay
such taxes and fees.
(m) Provided that no Default has then occurred hereunder, neither Lessor
nor any person claiming through Lessor shall interfere with Lessee's right
peaceably and quietly to possess and use the Equipment during the Term.
XX: CHOICE OF LAW; JURISDICTION: THIS AGREEMENT AND THE OTHER
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
EQUIPMENT. The parties agree that any action or proceeding arising out of or
relating to this Agreement may be commenced in the United States District
Court for the Southern District of New York.
XXI: CHATTEL PAPER: To the extent that any Equipment Schedule would
constitute chattel paper, as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction, no security interest
therein may be created through the transfer or possession of this Agreement
in and of itself without the transfer or possession of the original of an
Equipment Schedule executed pursuant to this Agreement and incorporating the
Agreement by reference; and no security interest in this Agreement and an
Equipment Schedule may be created by the transfer or possession of any
counterpart of the Equipment Schedule other than the original thereof, which
shall be identified as the document marked "Original" and all other
counterparts shall be marked "Duplicate".
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Lessee and Lessor have caused this Master Lease
Agreement to be executed by their duly authorized representatives as of the
date first above written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION, THE CONNECTICUT LIGHT AND POWER
FOR ITSELF AND AS AGENT FOR CERTAIN COMPANY
PARTICIPANTS
By: /s/William C. Badgio By: /s/ David R. McHale
Title: Transaction & Syndication Manager Title: Assistant Treasurer
EQUIPMENT SCHEDULE
SCHEDULE NO. 001
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
Lessor & Mailing Address: Lessee & Mailing Address:
GENERAL ELECTRIC CAPITAL CORPORATION, THE CONNECTICUT LIGHT AND POWER
FOR ITSELF AND AS AGENT FOR CERTAIN COMPANY
PARTICIPANTS 107 Selden Street
303 International Circle Berlin, Connecticut 06037-1616
Suite 300
Hunt Valley, Maryland 21031
This Equipment Schedule is executed pursuant to, and incorporates by
reference the terms and conditions of, and capitalized terms not defined
herein shall have the meanings assigned to them in, the Master Lease
Agreement identified above ("Agreement;" said Agreement and this Schedule
being collectively referred to as "Lease"). This Equipment Schedule,
incorporating by reference the Agreement, constitutes a separate instrument
of lease.
A. Equipment.
Pursuant to the terms of the Lease, Lessor agrees to acquire and lease
to Lessee the Equipment listed on Annex A attached hereto and made a part
hereof.
B. Financial Terms.
1. Capitalized Lessor's Cost: $50,957,807.32 (to be adjusted as
provided in Paragraph C.1. below)
2. Basic Term: sixty (60) months.
3. Basic Term Commencement Date: August 1, 1996.
4. Equipment Location: Off Naugatuck Avenue, Devon, Connecticut 06460.
5. Lessee Federal Tax ID No.: 06-0303850
6. Supplier: GE Power Systems
7. Last Delivery Date: August 1, 1996.
8. Lessee agrees and acknowledges that the Capitalized Lessor's Cost
of the Equipment as stated on the Schedule is equal to the fair
market value of the Equipment on the date hereof.
9. Renewal Terms: five (5) twelve (12) month terms.
10. Maximum Lease Term: Ten (10) years.
11. Stipulated Loss Values: See Annex D.
C. Term and Rent.
1. Interim Period. For the period from and including the Lease
Commencement Date to the Basic Term Commencement Date ("Interim Period"),
interest shall accrue at the Interest Rate on the Capitalized Lessor's Cost
of the Equipment, which amount shall be capitalized and added to the
Capitalized Lessor's Cost on the Basic Term Commencement Date.
2. Basic Term and Renewal Term Rent. Commencing on September 1, 1996,
and on the same day of each month thereafter (each, a "Rent Payment Date")
during the Basic Term ("Basic Term Rent") and any Renewal Term ("Renewal Term
Rent"), Lessee shall pay as Rent monthly installments, in arrears, calculated
to amortize the Capitalized Lessor's Cost of the Equipment over the Term,
together with Lessor's return on its investment, each installment in the
principal amount specified on the attached Amortization Schedule together
with interest on the Unamortized Principal Balance specified on the attached
Amortization Schedule as of the immediately preceding Rent Payment Date
(after application of the Rent paid on such date) at the Interest Rate for
the Interest Period following such immediately preceding Rent Payment Date.
Interest shall be calculated on the basis of a 360 day year for the actual
number of days elapsed.
As used herein, the following terms shall have the following meanings:
"Interest Period" shall mean the period beginning on the Lease
Commencement Date and ending on the next Rent Payment Date, and each
subsequent monthly period.
"Interest Rate" shall mean that percentage per annum calculated as the
sum of (a) the LIBOR Rate redetermined monthly, plus (b) during the Basic
Term, one hundred (100) basis points (subject to adjustment as specified in
the next sentence), and during any Renewal Term, such number of basis points
as may mutually be agreed upon by Lessor and Lessee, commensurate with the
then credit quality of Lessee (such credit quality to be based on the then
current evaluation of Lessee by a reputable credit rating agency), pursuant
to Section XVIII (a) of the Agreement. If during the Basic Term, Lessee's
credit rating is downgraded by either Standard and Poor's Ratings Group, a
division of McGraw-Hill, Inc. ("S&P") or Moody's Investors Service, Inc.
("Moody's"), then the Interest Rate shall mean that percentage per annum
calculated as the sum of (x) the LIBOR Rate redetermined monthly, plus (y)
one hundred (100) basis points if Lessee carries either a S&P BBB- or Moody's
Baa3 credit rating; one hundred twenty-five (125) basis points if Lessee
carries either a S&P BB+ or Moody's Ba1 credit rating; one hundred fifty
(150) basis points if Lessee carries either a S&P BB or Moody's Ba2 credit
rating; one hundred seventy-five (175) basis points if Lessee carries either
a S&P BB- or Moody's Ba3 credit rating; and two hundred (200) basis points if
Lessee carries either a S&P B+ or lower credit rating or Moody's B1 or lower
credit rating. Any such change in the Interest Rate shall be effective
immediately upon any and each change in Lessee's credit rating.
"LIBOR Rate" shall mean, with respect to any Interest Period occurring
during the Term, an interest rate per annum equal at all times during such
Interest Period to the quotient of (1) the rate per annum as determined on
the basis of the average of the rates offered by a majority of the banks in
the London interbank market for deposits in U.S. Dollars for thirty (30)
days, to the extent the rates offered by these banks appear on Telerate Page
3750 two (2) Business Days before the commencement of such Interest Period,
divided by (2) a number equal to 1.00 minus the aggregate (without
duplication) of the rates (expressed as a decimal fraction) of the LIBOR
Reserve Requirements current on the date two (2) Business Days prior to the
first day of the Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (a sample of which is attached hereto as Exhibit A) (or such
other page as may replace Page 3750 on that service or such other service as
may be nominated by the British Bankers' Association as the information
vendor for the purpose of displaying British Bankers' Association Interest
Settlement Rates for U.S. Dollar deposits).
"LIBOR Reserve Requirements" shall mean the daily average for the
applicable Interest Period of the maximum rate applicable to Lessor or its
Participants at which reserves (including, without limitation, any
supplemental, marginal and emergency reserves) are imposed during such
Interest Period by the Board of Governors of the Federal Reserve System (or
any successor) on "Eurocurrency liabilities", as defined in such Board's
Regulation D (or in respect of any other category of liabilities that include
deposits by reference to which the interest rates on Eurodollar loans is
determined or any category of extensions of credit or other assets that
include loans by non-United States offices of any lender to United States
residents), having a term equal to such Interest Period, subject to any
amendments of such reserve requirement by such Board or its successor, taking
into account any transitional adjustments thereto.
If at any time Lessor or any Participant (or, without duplication, the
bank holding company of which such Participant is a subsidiary) determines
that either adequate and reasonable means do not exist for ascertaining the
LIBOR Rate, or it becomes impractical for Lessor or any Participant to obtain
funds to make or maintain the financing hereunder with interest at the LIBOR
Rate, or Lessor or any Participant shall have determined that the LIBOR Rate
will not adequately and fairly reflect the cost to Lessor or any Participant
of making, maintaining, or funding the transaction hereunder at the LIBOR
Rate, or Lessor or any Participant reasonably determines that, as a result of
changes to applicable law after the date of execution of the Agreement, or
the adoption or making after such date of any interpretations, directives or
regulations (whether or not having the force of law) by any court,
governmental authority or reserve bank charged with the interpretation or
administration thereof, it shall be or become unlawful or impossible to make,
maintain, or fund the transaction hereunder at the LIBOR Rate, then Lessor
promptly shall give notice to Lessee of such determination, and Lessor and
Lessee shall negotiate in good faith a mutually acceptable alternative method
of calculating the Interest Rate and shall execute and deliver such documents
as reasonably may be required to incorporate such alternative method of
calculating the Interest Rate in this Schedule, within thirty (30) days after
the date of Lessor's notice to Lessee. If the parties are unable mutually to
agree to such alternative method of calculating the Interest Rate in a timely
fashion, on the Rent Payment Date next succeeding the expiration of such
thirty (30) day period Lessee shall purchase all (but not less than all) of
the Equipment described on all Schedules executed pursuant to the Agreement
and shall pay to Lessor, in cash, the purchase price for the Equipment so
purchased, determined as hereinafter provided. The purchase price of the
Equipment shall be an amount equal to the Stipulated Loss Value of such
Equipment calculated in accordance with Annex D as of the date of payment,
together with all rent and other sums then due on such date, plus all taxes
and charges upon sale and all other reasonable and documented expenses
incurred by Lessor in connection with such sale. Upon satisfaction of the
conditions specified in this paragraph, Lessor will transfer, on an AS IS
BASIS, all of Lessor's interest in and to the Equipment. Lessor shall not be
required to make and may specifically disclaim any representation or warranty
as to the condition of the Equipment and other matters (except that Lessor
shall warrant that it has conveyed whatever interest it received in the
Equipment, free and clear of any liens or encumbrances created by Lessor).
Lessor shall execute and deliver to Lessee such Uniform Commercial Code
statements of termination and other documents and instruments as reasonably
may be required in order to convey or terminate any interest of Lessor in and
to the Equipment.
3. If any Rent Payment Date is not a Business Day, the Rent otherwise
due on such date shall be payable on the immediately preceding Business Day.
As used herein, "Business Day" shall mean any day other than Saturday,
Sunday, and any day on which banking institutions located in the States of
Connecticut or Maryland are authorized by law or other governmental action to
close.
4. Lessee shall pay to Lessor, for the account of each Participant,
from time to time the amounts as such Participant may determine to be
necessary to compensate it for any increased costs which such Participant
determines are attributable to its making or maintaining its interest in the
Lease and the Equipment (the "Interest") or any reduction in any amount
receivable by such Participant in respect of any such Interest (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change (as defined below)
which:
(i) changes the basis of taxation of any amounts payable to Lessor
for the account of such Participant in respect of such Interest (other than
taxes imposed on or measured by the overall net income of such Participant in
respect of the Interest by the jurisdiction in which such Participant has its
principal office or its lending office, or where the Participant is otherwise
subject to taxation); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, such Participant; or
(iii) imposes any other condition affecting this Lease or any
Interest.
For purposes hereof, "Regulatory Change" shall mean any change after the date
of this Lease in United States Federal, state or foreign law or regulations
(including, without limitation, Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as amended or supplemented from
time to time) or the adoption or making after such date of any
interpretation, directive or request applying to a class of banks including
any Participant or under any United States Federal, state or foreign law and
whether or not failure to comply therewith would be unlawful) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
Without limiting the effect of the foregoing paragraph (but without
duplication), Lessee shall pay to Lessor, for the account of each
Participant, from time to time on request such amounts as such Participant
may determine to be necessary to compensate such Participant (or, without
duplication, the bank holding company of which such Participant is a
subsidiary) for any increased costs which it determines are attributable to
the maintenance by such Participant (or any lending office or such bank
holding company), pursuant to any law or regulation or any interpretation,
directive or request (whether or not having the force of law) of any court or
governmental or monetary authority (i) following any Regulatory Change or
(ii) implementing any risk-based capital guideline or requirement (whether or
not having the force of law and whether or not the failure to comply
therewith would be unlawful) heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level
the Basle Accord (including, without limitation, the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final
Risk-Based Capital Guidelines of the Office of the Comptroller of the
Currency (12 C.F.R. Part 3, Appendix A)), of capital in respect of such
Participant's Interest (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of
such Participant (or any lending office or bank holding company) to a level
below that which such Participant (or any lending office or bank holding
company) could have achieved but for such law, regulation, interpretation,
directive or request). For purposes of this paragraph, "Basle Accord" shall
mean the proposals for risk-based capital framework described by the Basle
Committee on Banking Regulations and Supervisory Practices in its paper
entitled "International Convergence of Capital Measurement and Capital
Standards" dated July 1988, as amended, modified and supplemented and in
effect from time to time or any replacement thereof.
Each Participant shall notify Lessee of any event occurring after the
date of this Lease that will entitle such Participant to compensation under
the preceding two paragraphs as promptly as practicable, but in any event
within forty-five (45) days, after such Participant obtains actual knowledge
thereof; provided, that (i) if such Participant fails to give such notice
within forty-five (45) days after it obtains actual knowledge of such an
event, such Participant shall, with respect to compensation payable pursuant
to the preceding two paragraphs in respect of any costs resulting from such
event, only be entitled to payment under the referenced paragraphs for costs
incurred from and after the date forty-five (45) days prior to the date that
such Participant does give such notice, and (ii) such Participant will
designate a different lending office for the Interest if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole opinion of such Participant, be disadvantageous to such
Participant. Each Participant will furnish to Lessee a certificate setting
forth the basis and amount of each request by such Participant for
compensation under the preceding two paragraphs. Determinations and
allocations by each Participant for purposes of the preceding two paragraphs
shall be conclusive, absent manifest error.
D. Insurance.
1. Public Liability: $25,000,000.00, total liability per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment.
E. Fixed Purchase Price and Residual Risk Amount
END OF YEAR FIXED PURCHASE PRICE RESIDUAL RISK AMOUNT
5 66.365722 14.000000
6 58.243544 7.200000
7 49.582795 6.300000
8 40.347762 5.400000
9 30.500366 4.400000
10 20.000000 3.300000
This Schedule is not binding or effective with respect to the Agreement
or Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION, THE CONNECTICUT LIGHT AND POWER
FOR ITSELF AND AS AGENT FOR CERTAIN COMPANY
PARTICIPANTS
By:\S\ William C. Badgio By:\S\ David R. McHale
Name: William C. Badgio Name: David R. McHale
Title: Transaction & Syndication Manager Title: Assistant Treasurer
Finance
ANNEX A
TO
SCHEDULE NO. 001
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
DESCRIPTION OF EQUIPMENT
Manufacturer Serial Numbers Type and Model Number of Unit
of Equipment
[See Attachment
No. 1 to Annex
A attached hereto]
Attachment No. 1 to Annex A
SCHEDULE NO. 001
Three (3) GE LM-6000 simple cycle aeroderivative gas turbines bearing the
serial numbers listed below, together with all equipment, materials,
engineering and construction services for the installation thereof, all as
more fully described in the following proposals:
1. GE Power Systems Equipment and Services Proposal for Gas Turbine
Capacity Addition Project - Commercial Volume - PROPOSAL NO 12581BG.
2. GE Power Systems Equipment and Services Proposal for Five (5) PGLM6000
60 Hertz Combustion Gas Turbine Package Power Plants - Supporting Volume 1 of
2 - PROPOSAL N. IPS-60213.
3. GE Power Systems Equipment and Services Proposal for Gas Turbine
Capacity Addition - Supporting Volume 2 of 2 - PROPOSAL NO. 296T9954.
As further detailed in the proposal letters dated April 29, 1996; May 7,
1996; May 15, 1996; May 17, 1996; and June 17, 1996; and finally, as
described in Purchase Order No. 802823 dated May 31, 1996, as amended on June
17, 1996.
Site Unit Number
11
12
13
Turbine Serial Number
185-213
185-204
185-168
Generator Serial Number
336x614
336x623
338x622
GE MK V Controls Serial Number
TIOJV531CA001004
OJXJN561CA001001
YIVJ572CA001001
GE 15 KV Switchgear DWG. No.
0357A4395
0357A4395
0357A4395
GE MCC Diag. No.
327B7188
327B5658
327B4832
EQUIPMENT LOCATION: Off Naugatuck Avenue, Devon (Town of Milford), CT 06460
SCHEDULE A
DESCRIPTION OF REAL PROPERTY
June 20, 1996
TO: D. P. Venora
FROM: E. F. Fuller - NU East, Ext. 6938
SUBJECT: Devon Jet Turbines
Lease Area
(83-1.1)
The following is a description for area to be leased in the Town of Milford,
County of New Haven, State of Connecticut.
That certain piece or parcel of land containing 23,200 square feet, more or
less, located about 2,000 feet northerly of Interstate Route 95 and about 80
feet easterly of the Housatonic River in the Town of Milford, County of New
Haven, State of Connecticut. Said parcel is shown as "Area to be Leased" on
a map hereinafter referred to, being bounded and described as follows:
Commencing at a point marking the northeasterly corner of the most northerly
turbine foundation and the northeasterly corner of the herein described
parcel; thence the following four (4) courses and distances across land of
the Lessor and being in part along the face of the turbine foundations: 15
degrees 24' 20" W 290.00 feet to a point, marking the southeasterly corner of
the herein described parcel; N 74 degrees 35' 40" W 80.00 feet to a point,
marking the northwesterly corner of the herein described parcel; and S 74
degrees 35' 40" E 80.00 feet to the point and place of commencement.
The "Area to be Leased" is more clearly designated and defined on a map
entitled "Plan Showing Area to be Leased for Turbine Units - Devon Station
Milford, Connecticut Scale: 1" = 40' Date: 6/20/96 Dwg. No. 21767.
THIS PAGE IS A GRAPHIC REPRESENTATION OF THE MAP OF THE "DESCRIPTION OF REAL
PROPERTY"
ANNEX B
TO
SCHEDULE NO. 001
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
[INTENTIONALLY OMITTED]
ANNEX C
TO SCHEDULE NO. 001
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
CERTIFICATE OF ACCEPTANCE
To: General Electric Capital Corporation,
for Itself and as Agent for Certain Participants
Pursuant to the provisions of the above Schedule and Master Lease
Agreement (collectively, the "Lease"), Lessee hereby certifies and warrants
that (a) all Equipment listed in the related invoice is in good condition and
appearance, installed (if applicable), and in working order; and (b) Lessee
accepts the Equipment for all purposes of the Lease and all attendant
documents. Nothing herein shall be deemed to prejudice the rights of Lessor
or Lessee against the Supplier.
Lessee does further certify that as of the date hereof (i) Lessee is not
in default under the Lease; and (ii) the representations and warranties made
by Lessee pursuant to or under the Lease are true and correct on the date
hereof.
/S/ David R. McHale
Lessee's Authorized Representative
Dated: June 21, 1996
ANNEX D
TO
SCHEDULE NO. 001
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
STIPULATED LOSS VALUE
STIPULATED LOSS
PERIOD VALUE
0 100.0000000000
1 99.5233248113
2 99.0440924589
3 98.5622892246
4 98.0779013167
5 97.5909148695
6 97.1013159429
7 96.6090905220
8 96.1142245169
9 95.6167037619
10 95.1165140153
11 94.6136409591
12 94.1080701985
13 93.5997872614
14 93.0887775982
15 92.5750265810
16 92.0585195037
17 91.5392415811
18 91.0171779489
19 90.4923136627
20 89.9646336984
21 89.4341229510
22 88.9007662344
23 88.3645482813
24 87.8254537422
25 87.2834671858
26 86.7385730970
27 86.1907558786
28 85.6399996491
29 85.0862892429
30 84.5296062101
31 83.9699406155
32 83.4072710385
33 82.8415827726
34 82.2728598249
35 81.7010859155
36 81.1262446773
37 80.5483196554
38 79.9672943066
39 79.3831519969
40 78.7958760110
41 78.2054495322
42 77.6118556614
43 77.0150774067
44 76.4150976854
45 75.8118993229
46 75.2054650525
47 74.5957775149
48 73.9828192577
49 73.3665727348
50 72.7470203062
51 72.1241442369
52 71.4979266970
53 70.8683497609
54 70.2353954069
55 69.5990455165
56 68.9592818741
57 68.3160861664
58 67.6694399816
59 67.0193248095
60 66.3657220404
61 65.7086129648
62 65.0479787728
63 64.3838005536
64 63.7160592950
65 63.0447358827
66 62.3698111001
67 61.6912656273
68 61.0090800407
69 60.3232348127
70 59.6337103108
71 58.9404867972
72 58.2435444283
73 57.5428632541
74 56.8384232172
75 56.1302041531
76 55.4181857888
77 54.7023477427
78 53.9826695237
79 53.2591305309
80 52.5317100529
81 51.8003872672
82 51.0651412394
83 50.2359509230
84 49.5827951586
85 48.8356526731
86 48.0845020795
87 47.3293218760
88 46.5700904453
89 45.8067860543
90 45.0393868534
91 44.2678708754
92 43.4922160358
93 42.7124001310
94 41.9284008389
95 41.1401957173
96 40.3477622046
97 39.5510776142
98 38.7501191440
99 37.9448638853
100 37.1352887276
101 36.3213705566
102 35.5030880538
103 34.6804117955
104 33.8533242326
105 33.0217996896
106 32.1858143639
107 31.3453443252
108 30.5003655149
109 29.6508537454
110 28.7967846993
111 27.9381339285
112 27.0748768542
113 26.2069887653
114 25.3344448185
115 24.4572200369
116 23.5752893099
117 22.6886273921
118 21.7972089024
119 20.9010063240
120 0.0000000000
Initials:
/S/ WCB
Lessor
/S/ DCM
Lessee
ANNEX E
TO
SCHEDULE NO. 001
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
AMORTIZATION SCHEDULE
All rent payments are due the first day of the month.
Initials /S/ WCB
Lessor
/S/ DCM
Lessee
ANNEX E
TO
SCHEDULE NO. 001
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
AMORTIZATION SCHEDULE
All rent payments are due the first day of the month.
UNAMORTIZED
RENT PAYMENT DATE PRINCIPAL* PRINCIPAL BALANCE*
Aug-96 0.0000000000 100.0000000000
Sep-96 0.4766751887 99.5233248113
Oct-96 0.4792323524 99.0440924589
Nov-96 0.4818032343 98.5622892246
Dec-96 0.4843879079 96.0779013167
Jan-97 0.4869864472 97.5909148695
Feb-97 0.4895989268 97.1013159429
Mar-97 0.4922254208 96.6090905220
Apr-97 0.4948660051 96.1142245169
May-97 0.4975207550 95.6167037619
Jun-97 0.5001897466 95.1165140153
Jul-97 0.5028730582 94.6136409591
Aug-97 0.5055707806 94.1060701985
Sep-97 0.5082829371 93.5997872614
Oct-97 0.5110096632 93.0887775962
Nov-97 0.5137510172 92.5750265810
Dec-97 0.5165070773 92.0585195037
Jan-98 0.5192779228 91.5392415811
Feb-98 0.5220836323 91.0171779489
Mar-98 0.5248642861 90.4923136627
Apr-98 0.5276799643 89.9646336984
May-98 0.5305107475 89.4341229510
Jun-96 0.5333587166 88.9007682344
Jul-98 0.5362179531 88.3645482813
Aug-98 0.5390945390 87.8254537422
Sep-98 0.5419665586 87.2834671856
Oct-98 0.5448940886 86.7385730970
Nov-98 0.5478172184 86.1907558786
Dec-98 0.5507500295 85.6399996491
Jan-99 0.5537106061 85.0662892429
Feb-99 0.5566810328 84.5296082101
Mar-99 0.5596673946 83.9699406155
Apr-99 0.5626697770 83.4072710385
May-99 0.5858882659 82.8415827726
Jun-99 0.5687229477 82.2728598249
Jul-99 0.5717739094 81.7010859155
Aug-99 0.5748412382 81.1262446773
Sep-99 0.5779250219 80.5483196554
Oct-99 0.5810253488 79.9672943066
Nov-99 0.5841423077 79.3831519989
Dec-99 0.5872759878 78.7958760110
Jan-00 0.5904264788 78.2054495322
Feb-00 0.5935938709 77.6118556614
Mar-00 0.5967782546 77.0150774067
Apr-00 0.5999797213 76.4150976854
May-00 0.6031983625 75.8118993229
Jun-00 0.6064342704 75.2054650525
Jul-00 0.6096875376 74.5957775149
Aug-00 0.6129582572 73.9628192577
Sep-00 0.6162465228 73.3665727348
Oct-00 0.6195524287 72.7470203062
Nov-00 0.6228760893 72.1241442369
Dec-00 0.6262175399 71.4979266970
Jan-01 0.6295769361 70.8683497609
Feb-01 0.6329543540 70.2353954089
Mar-01 0.6363498904 69.5990455165
Apr-01 0.6397636424 68.9592818741
May-01 0.6431957078 68.3160661664
Jun-01 0.6466481847 67.6694399616
Jul-01 0.6501151721 67.0193248095
Aug-01 0.6538027891 66.3657220404
Sep-01 0.6571090758 65.7066129648
Oct-01 0.6606341920 65.0479787728
Nov-01 0.6641782192 64.3838005536
Dec-01 0.6677412586 63.7160592950
Jan-02 0.6713234122 63.0447358827
Feb-02 0.6749247826 62.3696111001
Mar-02 0.6785454729 61.6912656273
Apr-02 0.6821855866 61.0090800407
May-02 0.6858452280 60.3232348127
Jun-02 0.6895245019 59.6337103108
Jul-02 0.6932235136 58.9404867972
Aug-02 0.6969423689 58.2435444283
Sep-02 0.7006811743 57.5428632541
Oct-02 0.7044400368 56.8384232172
Nov-02 0.7082190641 56.1302041531
Dec-02 0.7120183643 55.4181857888
Jan-03 0.7158380461 54.7023477427
Feb-03 0.7196782190 53.9826695237
Mar-03 0.7235389928 53.2591305309
Apr-03 0.7274204780 52.5317100529
May-03 0.7313227858 51.8003872672
Jun-03 0.7352460278 51.0651412394
Jul-03 0.7391903164 50.3259509230
Aug-03 0.7431557644 49.5827951586
Sep-03 0.7471424855 48.8356526731
Oct-03 0.7511505936 48.0645020795
Nov-03 0.7551802035 47.3293218760
Dec-03 0.7592314307 46.5700904453
Jan-04 0.7633043910 45.8067880543
Feb-04 0.7673992010 45.0393868534
Mar-04 0.7715159779 44.2678706754
Apr-04 0.7758548397 43.4922160358
May-04 0.7798159047 42.7124001310
Jun-04 0.7839992921 41.9284006289
Jul-04 0.7882051217 41.1401957173
Aug-04 0.7924335137 40.3477622036
Sep-04 0.7966845893 39.5510776142
Oct-04 0.8009584702 38.7501191440
Nov-04 0.8052552787 37.9448638653
Dec-04 0.8095751377 37.1352887276
Jan-05 0.8139181710 36.3213705566
Feb-05 0.8182845029 35.5030660538
Mar-05 0.8226742583 34.6804117955
Apr-05 0.8270875629 33.8533242326
May-05 0.8315245430 33.0217996896
Jun-05 0.8359853257 32.1858143639
Jul-05 0.8404700387 31.3453443252
Aug-05 0.8449788102 30.5003655149
Sep-05 0.8495117695 29.6508537454
Oct-05 0.8540690482 28.7967846993
Nov-05 0.8586507707 27.9381339285
Dec-05 0.8632570744 27.0748768542
Jan-08 0.8678880889 26.2069887653
Feb-08 0.8725439468 25.3344448185
Mar-06 0.8772247816 24.4572200369
Apr-06 0.8819307270 23.5752893099
May-06 0.8866619179 22.6886273921
Jun-06 0.8914184896 21.7972069024
Jul-06 0.8962005784 20.9010083240
Aug-06 20.9010083240 0.0000000000
Initials:/S/ WCB
Lessor
/S/ DCM
Lessee
*The Principal and Unamortized Principal Balance as of any Rent Payment Date
shall be equal to the Capitalized Lessor's Cost of such unit multiplied by
the appropriate percentage derived from the above table.
ANNEX F
TO
SCHEDULE NO. 001
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
RETURN PROVISIONS: In addition to the provisions provided for in Section X
of this Lease, and provided that Lessee has elected not to exercise its
purchase option pursuant to Section XVIII(c) of the Lease, Lessee shall, at
its expense:
(a) With respect to maintenance, Lessee may not discriminate in favor
of similar equipment owned by Lessee as against the Equipment with respect to
scheduling of maintenance, parts or service.
(b) The Equipment shall not be taken out of commercial operation in
Lessee's business as a public utility.
(c) Lessor, at its sole discretion, may, from time to time, inspect the
Equipment at Lessor's sole expense. If any of the Equipment is not operating
within manufacturer's specifications or in accordance with current safe
utility practices, Lessor will communicate these discrepancies to Lessee in
writing. Lessee shall have thirty (30) days to rectify these discrepancies
or respond to the report at its sole expense. Lessee shall pay all expenses
for the re-inspection by the Lessor-appointed expert, if corrective measures
are required.
(d) If Lessee intends to return the Equipment at the expiration or
earlier termination of the Term, Lessee shall provide Lessor with one hundred
eighty (180) days' prior written notice (the "Return Notice"). If Lessee
gives Lessor the Return Notice, this Paragraph (d) through and including
Paragraph (p) shall be applicable.
(e) Lessee shall provide to Lessor, at least one hundred eighty (180)
days prior to lease termination a detailed inventory of all components of the
Equipment with consideration to the conditions set forth in Section VI
("Service") of the Lease. The inventory shall include but not be limited to
a detailed listing of all items of the Equipment by both the model and serial
number for all components comprising this Lease.
(f) At least one hundred eighty (180) days prior to the expiration or
earlier termination of the Term, Lessee shall (1) upon receiving reasonable
notice from Lessor, make the Equipment available for operational inspections
(where applicable) by potential purchasers; (2) cause the manufacturer(s), or
other persons expressly authorized by the manufacturer and/or Lessor, to
inspect, examine and test all material and workmanship to ensure the
Equipment is operating within the manufacturer's specifications; (3) provide
to Lessor a written report from the authorized inspector detailing said
inspection and condition of the Equipment; (4) if during such inspection,
examination or test, the authorized inspector finds any of the material or
workmanship to be defective or the Equipment not operating within the
manufacturer's specifications, then Lessee shall repair or replace such
defective material, and after corrective measures are completed, Lessee will
provide for another inspection of the Equipment by the authorized inspector
as outlined above.
(g) At least ninety (90) days prior to the expiration or earlier
termination of the Term and upon request by Lessor, Lessee shall provide, or
cause the Supplier(s) to provide to Lessor, the following documents: (1) one
set of service and operating manuals including replacements and/or additions
thereto, such that all documentation is completely up to date; and (2) one
set of documents detailing equipment configuration, hardware maps, operating
requirements, maintenance records, and other technical data concerning the
set-up and operation of the Equipment including replacements and additions
thereto, such that all documentation is completely up to date.
(h) A potential purchaser of the Equipment shall provide for the
deinstallation, packaging and transportation of the Equipment to include, but
not limited to the following: (1) the manufacturer's representative shall
de-install all Equipment (including all wire, cable and mounting hardware);
(2) the Equipment shall be packed properly and in accordance with the
manufacturer's recommendation, given its destination and mode of transport;
and (3) such potential purchaser shall transport the Equipment in a manner
consistent with the manufacturer's recommendations and practices. In the
event the Lease expires or terminates without a purchaser for the Equipment,
Lessee shall remain liable for all items outlined in this Paragraph (h).
(i) Upon expiration or termination of the Lease, a potential purchaser
of the Equipment shall obtain and pay for a policy of transit insurance for
the delivery period in an amount equal to the replacement value of the
Equipment with the Lessor named as loss payee on all such policies of
insurance, and provide transportation to locations anywhere in the
continental United States, Canada and Mexico as selected by Lessor. In the
event the Lease expires or terminates without a purchaser for the Equipment,
Lessee shall remain liable for all of the items outlined in this Paragraph
(i).
(j) Lessee shall provide safe, secure storage for the Equipment at the
Devon, Connecticut site (the "Site") for a period of up to one hundred eighty
(180) days after expiration or termination of the Lease at an accessible
location satisfactory to Lessor.
(k) Upon expiration or earlier termination of the Term, all Equipment
shall be cleaned and cosmetically acceptable, and in such condition so that
it may be immediately installed and placed into use in a similar operating
environment.
(l) Lessee shall ensure that all Equipment and equipment operation,
including emissions, conform to all applicable local, state, Environmental
Protection Agency ("EPA"), and Federal laws, health and safety guidelines
including current emission standards applicable to the potential purchasers.
(m) If available, Lessee shall make available for a period of three
hundred sixty five (365) days following successful re-installation and test
run of the Equipment, as required, any engineering and technical personnel
necessary for the training of personnel with respect to the operation,
maintenance and repair of the Equipment (said engineering and technical
personnel will be made available by Lessee for an additional sixty (60) day
period for consultation regarding the operation of the Equipment), and the
purchaser of the Equipment shall be responsible for Lessee's out-of-pocket
expenses incurred in connection with providing such engineering and technical
personnel.
(n) Lessee shall be solely responsible for the cost of all repairs,
alterations, inspections, appraisals, storage charges, insurance costs,
demonstration costs, and other related costs necessary to place the Equipment
in such condition as to be in complete compliance with the Lease.
(o) Lessor shall have the right to attempt resale of the Equipment from
Lessee's Site with Lessee's full cooperation and assistance for a period of
one hundred twenty (120) days from the expiration or earlier termination of
the Term. During this period, the Equipment must remain operational with the
necessary electric power, lighting, heat, air-conditioning, water, fuel and
compressed air necessary to maintain and demonstrate the Equipment to any
potential buyer.
(p) Upon return of the Equipment, Lessee shall pay to Lessor such
amount as is required to reimburse Lessor for the costs necessary to perform
any outstanding maintenance work (if required) on the Equipment and a
pro-rata assessment of the cost of combustion, hot gas path, and major
repairs based upon actual hours of use by Lessee of the Equipment through the
date of expiration or earlier termination of the Term.
Initials: /S/ WCB
Lessor
/S/ DCM
Lessee
ANNEX G
TO
SCHEDULE NO. 001
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
ESTOPPEL/WAIVER AGREEMENT
June 21, 1996
Bankers Trust Company
Trustee under Indenture of Mortgage and
Deed of Trust dated as of May 1, 1921,
from The Connecticut Light and Power Company
One Bankers Trust Plaza
New York, New York 10915
Gentlemen/Ladies:
General Electric Capital Corporation, for Itself and as Agent for
Certain Participants ("Lessor"), has entered into, or is about to enter into,
a lease or similar agreement (the "Lease") with The Connecticut Light and
Power Company ("Lessee"), pursuant to which Lessee has leased or will lease
from Lessor certain personal property described in the attached Annex A (such
property, together with any replacements thereof, being referred to as the
"Personal Property"). Some or all of the Personal Property is, or will be,
located at certain premises described on Annex A (the "Premises"). This
letter is being sent to you because of your interest in the Premises.
By your signature below, you hereby agree (and we shall rely on your
agreement) that: (i) the Personal Property is, and shall remain, personal
property regardless of the method by which it may be, or become, affixed to
the Premises; (ii) your interest in the Personal Property and any proceeds
thereof (including, without limitation, proceeds of any insurance therefor)
shall be, and remain, subject to the ownership interests of Lessor (until and
unless Lessor shall formally release or transfer its interest in the Personal
Property to Lessee); (iii) Lessor, and its employees and agents, shall have
the right with prior notice, from time to time, to enter the Premises for the
purpose of inspecting the Personal Property; and (iv) Lessor, and its
employees and agents, shall have the right, upon any default by Lessee under
the Lease, to enter the Premises and to remove the Personal Property from the
Premises. Lessor agrees to reimburse you for any damages actually caused to
the Premises by Lessor, or its employees or agents, during any such removal.
These agreements shall be binding upon, and shall inure to the benefit of,
any successors and assigns of the parties hereto.
We appreciate your cooperation in this matter of mutual interest.
GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR CERTAIN
PARTICIPANTS
By: /S/ William C. Badgio
Name: Willam C. Badgio
Title: Transaction and Syndication Manager
AGREED TO AND ACCEPTED BY:
By: /S/ Scott Thiel
Name: Scott Thiel
Title: Assistant Vice President
Date: June 21, 1996
Interest in the Premises (check applicable box)
Owner
Mortgagee
Landlord
Realty Manager
ATTACHMENT TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT
1. SECURED PARTY: GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS
AGENT FOR CERTAIN PARTICIPANTS
DEBTOR: THE CONNECTICUT LIGHT AND POWER COMPANY
2. DESCRIPTION OF PROPERTY:
The equipment leased pursuant to that certain Master Lease Agreement
dated as of the 21st day of June, 1996, between Secured Party, as lessor, and
Debtor, as lessee, together with all accessions, substitutions and
replacements therefor, and proceeds (including insurance proceeds) thereof
(but without power of sale); more fully described on the attached Annex(es)
A.
EQUIPMENT SCHEDULE
SCHEDULE NO. 002
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
Lessor & Mailing Address: Lessee & Mailing Address:
GENERAL ELECTRIC CAPITAL CORPORATION, THE CONNECTICUT LIGHT AND POWER
FOR ITSELF AND AS AGENT FOR CERTAIN COMPANY
PARTICIPANTS 107 Selden Street
303 International Circle Berlin, Connecticut 06037-1616
Suite 300
Hunt Valley, Maryland 21031
This Equipment Schedule is executed pursuant to, and incorporates by
reference the terms and conditions of, and capitalized terms not defined
herein shall have the meanings assigned to them in, the Master Lease
Agreement identified above ("Agreement;" said Agreement and this Schedule
being collectively referred to as "Lease"). This Equipment Schedule,
incorporating by reference the Agreement, constitutes a separate instrument
of lease.
A. Equipment.
Pursuant to the terms of the Lease, Lessor agrees to acquire and lease
to Lessee the Equipment listed on Annex A attached hereto and made a part
hereof.
B. Financial Terms.
1. Capitalized Lessor's Cost: $16,985,935.77 (to be adjusted as
provided in Paragraph C.1. below).
2. Basic Term: sixty (60) months.
3. Basic Term Commencement Date: August 1, 1996.
4. Equipment Location: Off Naugatuck Avenue, Devon, Connecticut 06460.
5. Lessee Federal Tax ID No.: 06-0303850
6. Supplier: GE Power Systems
7. Last Delivery Date: August 1, 1996.
8. Lessee agrees and acknowledges that the Capitalized Lessor's Cost
of the Equipment as stated on the Schedule is equal to the fair
market value of the Equipment on the date hereof.
9. Renewal Terms: five (5) twelve (12) month terms.
10. Maximum Lease Term: Ten (10) years.
11. Stipulated Loss Values: See Annex D.
C. Term and Rent.
1. Interim Period. For the period from and including the Lease
Commencement Date to the Basic Term Commencement Date ("Interim Period"),
interest shall accrue at the Interest Rate on the Capitalized Lessor's Cost
of the Equipment, which amount shall be capitalized and added to the
Capitalized Lessor's Cost on the Basic Term Commencement Date.
2. Basic Term and Renewal Term Rent. Commencing on September 1, 1996,
and on the same day of each month thereafter (each, a "Rent Payment Date")
during the Basic Term ("Basic Term Rent") and any Renewal Term ("Renewal Term
Rent"), Lessee shall pay as Rent monthly installments, in arrears, calculated
to amortize the Capitalized Lessor's Cost of the Equipment over the Term,
together with Lessor's return on its investment, each installment in the
principal amount specified on the attached Amortization Schedule together
with interest on the Unamortized Principal Balance specified on the attached
Amortization Schedule as of the immediately preceding Rent Payment Date
(after application of the Rent paid on such date) at the Interest Rate for
the Interest Period following such immediately preceding Rent Payment Date.
Interest shall be calculated on the basis of a 360 day year for the actual
number of days elapsed.
As used herein, the following terms shall have the following meanings:
"Interest Period" shall mean the period beginning on the Lease
Commencement Date and ending on the next Rent Payment Date, and each
subsequent monthly period.
"Interest Rate" shall mean that percentage per annum calculated as the
sum of (a) the LIBOR Rate redetermined monthly, plus (b) during the Basic
Term, one hundred (100) basis points (subject to adjustment as specified in
the next sentence), and during any Renewal Term, such number of basis points
as may mutually be agreed upon by Lessor and Lessee, commensurate with the
then credit quality of Lessee (such credit quality to be based on the then
current evaluation of Lessee by a reputable credit rating agency), pursuant
to Section XVIII (a) of the Agreement. If during the Basic Term, Lessee's
credit rating is downgraded by either Standard and Poor's Ratings Group, a
division of McGraw-Hill, Inc. ("S&P") or Moody's Investors Service, Inc.
("Moody's"), then the Interest Rate shall mean that percentage per annum
calculated as the sum of (x) the LIBOR Rate redetermined monthly, plus (y)
one hundred (100) basis points if Lessee carries either a S&P BBB- or Moody's
Baa3 credit rating; one hundred twenty-five (125) basis points if Lessee
carries either a S&P BB+ or Moody's Ba1 credit rating; one hundred fifty
(150) basis points if Lessee carries either a S&P BB or Moody's Ba2 credit
rating; one hundred seventy-five (175) basis points if Lessee carries either
a S&P BB- or Moody's Ba3 credit rating; and two hundred (200) basis points if
Lessee carries either a S&P B+ or lower credit rating or Moody's B1 or lower
credit rating. Any such change in the Interest Rate shall be effective
immediately upon any and each change in Lessee's credit rating.
"LIBOR Rate" shall mean, with respect to any Interest Period occurring
during the Term, an interest rate per annum equal at all times during such
Interest Period to the quotient of (1) the rate per annum as determined on
the basis of the average of the rates offered by a majority of the banks in
the London interbank market for deposits in U.S. Dollars for thirty (30)
days, to the extent the rates offered by these banks appear on Telerate Page
3750 two (2) Business Days before the commencement of such Interest Period,
divided by (2) a number equal to 1.00 minus the aggregate (without
duplication) of the rates (expressed as a decimal fraction) of the LIBOR
Reserve Requirements current on the date two (2) Business Days prior to the
first day of the Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (a sample of which is attached hereto as Exhibit A) (or such
other page as may replace Page 3750 on that service or such other service as
may be nominated by the British Bankers' Association as the information
vendor for the purpose of displaying British Bankers' Association Interest
Settlement Rates for U.S. Dollar deposits).
"LIBOR Reserve Requirements" shall mean the daily average for the
applicable Interest Period of the maximum rate applicable to Lessor or its
Participants at which reserves (including, without limitation, any
supplemental, marginal and emergency reserves) are imposed during such
Interest Period by the Board of Governors of the Federal Reserve System (or
any successor) on "Eurocurrency liabilities", as defined in such Board's
Regulation D (or in respect of any other category of liabilities that include
deposits by reference to which the interest rates on Eurodollar loans is
determined or any category of extensions of credit or other assets that
include loans by non-United States offices of any lender to United States
residents), having a term equal to such Interest Period, subject to any
amendments of such reserve requirement by such Board or its successor, taking
into account any transitional adjustments thereto.
If at any time Lessor or any Participant (or, without duplication, the
bank holding company of which such Participant is a subsidiary) determines
that either adequate and reasonable means do not exist for ascertaining the
LIBOR Rate, or it becomes impractical for Lessor or any Participant to obtain
funds to make or maintain the financing hereunder with interest at the LIBOR
Rate, or Lessor or any Participant shall have determined that the LIBOR Rate
will not adequately and fairly reflect the cost to Lessor or any Participant
of making, maintaining, or funding the transaction hereunder at the LIBOR
Rate, or Lessor or any Participant reasonably determines that, as a result of
changes to applicable law after the date of execution of the Agreement, or
the adoption or making after such date of any interpretations, directives or
regulations (whether or not having the force of law) by any court,
governmental authority or reserve bank charged with the interpretation or
administration thereof, it shall be or become unlawful or impossible to make,
maintain, or fund the transaction hereunder at the LIBOR Rate, then Lessor
promptly shall give notice to Lessee of such determination, and Lessor and
Lessee shall negotiate in good faith a mutually acceptable alternative method
of calculating the Interest Rate and shall execute and deliver such documents
as reasonably may be required to incorporate such alternative method of
calculating the Interest Rate in this Schedule, within thirty (30) days after
the date of Lessor's notice to Lessee. If the parties are unable mutually to
agree to such alternative method of calculating the Interest Rate in a timely
fashion, on the Rent Payment Date next succeeding the expiration of such
thirty (30) day period Lessee shall purchase all (but not less than all) of
the Equipment described on all Schedules executed pursuant to the Agreement
and shall pay to Lessor, in cash, the purchase price for the Equipment so
purchased, determined as hereinafter provided. The purchase price of the
Equipment shall be an amount equal to the Stipulated Loss Value of such
Equipment calculated in accordance with Annex D as of the date of payment,
together with all rent and other sums then due on such date, plus all taxes
and charges upon sale and all other reasonable and documented expenses
incurred by Lessor in connection with such sale. Upon satisfaction of the
conditions specified in this paragraph, Lessor will transfer, on an AS IS
BASIS, all of Lessor's interest in and to the Equipment. Lessor shall not be
required to make and may specifically disclaim any representation or warranty
as to the condition of the Equipment and other matters (except that Lessor
shall warrant that it has conveyed whatever interest it received in the
Equipment, free and clear of any liens or encumbrances created by Lessor).
Lessor shall execute and deliver to Lessee such Uniform Commercial Code
statements of termination and other documents and instruments as reasonably
may be required in order to convey or terminate any interest of Lessor in and
to the Equipment.
3. If any Rent Payment Date is not a Business Day, the Rent otherwise
due on such date shall be payable on the immediately preceding Business Day.
As used herein, "Business Day" shall mean any day other than Saturday,
Sunday, and any day on which banking institutions located in the States of
Connecticut or Maryland are authorized by law or other governmental action to
close.
4. Lessee shall pay to Lessor, for the account of each Participant,
from time to time the amounts as such Participant may determine to be
necessary to compensate it for any increased costs which such Participant
determines are attributable to its making or maintaining its interest in the
Lease and the Equipment (the "Interest") or any reduction in any amount
receivable by such Participant in respect of any such Interest (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change (as defined below)
which:
(i) changes the basis of taxation of any amounts payable to Lessor
for the account of such Participant in respect of such Interest (other than
taxes imposed on or measured by the overall net income of such Participant in
respect of the Interest by the jurisdiction in which such Participant has its
principal office or its lending office, or where the Participant is otherwise
subject to taxation); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, such Participant; or
(iii) imposes any other condition affecting this Lease or any
Interest.
For purposes hereof, "Regulatory Change" shall mean any change after the date
of this Lease in United States Federal, state or foreign law or regulations
(including, without limitation, Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as amended or supplemented from
time to time) or the adoption or making after such date of any
interpretation, directive or request applying to a class of banks including
any Participant or under any United States Federal, state or foreign law and
whether or not failure to comply therewith would be unlawful) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
Without limiting the effect of the foregoing paragraph (but without
duplication), Lessee shall pay to Lessor, for the account of each
Participant, from time to time on request such amounts as such Participant
may determine to be necessary to compensate such Participant (or, without
duplication, the bank holding company of which such Participant is a
subsidiary) for any increased costs which it determines are attributable to
the maintenance by such Participant (or any lending office or such bank
holding company), pursuant to any law or regulation or any interpretation,
directive or request (whether or not having the force of law) of any court or
governmental or monetary authority (i) following any Regulatory Change or
(ii) implementing any risk-based capital guideline or requirement (whether or
not having the force of law and whether or not the failure to comply
therewith would be unlawful) heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level
the Basle Accord (including, without limitation, the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final
Risk-Based Capital Guidelines of the Office of the Comptroller of the
Currency (12 C.F.R. Part 3, Appendix A)), of capital in respect of such
Participant's Interest (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of
such Participant (or any lending office or bank holding company) to a level
below that which such Participant (or any lending office or bank holding
company) could have achieved but for such law, regulation, interpretation,
directive or request). For purposes of this paragraph, "Basle Accord" shall
mean the proposals for risk-based capital framework described by the Basle
Committee on Banking Regulations and Supervisory Practices in its paper
entitled "International Convergence of Capital Measurement and Capital
Standards" dated July 1988, as amended, modified and supplemented and in
effect from time to time or any replacement thereof.
Each Participant shall notify Lessee of any event occurring after the
date of this Lease that will entitle such Participant to compensation under
the preceding two paragraphs as promptly as practicable, but in any event
within forty-five (45) days, after such Participant obtains actual knowledge
thereof; provided, that (i) if such Participant fails to give such notice
within forty-five (45) days after it obtains actual knowledge of such an
event, such Participant shall, with respect to compensation payable pursuant
to the preceding two paragraphs in respect of any costs resulting from such
event, only be entitled to payment under the referenced paragraphs for costs
incurred from and after the date forty-five (45) days prior to the date that
such Participant does give such notice, and (ii) such Participant will
designate a different lending office for the Interest if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole opinion of such Participant, be disadvantageous to such
Participant. Each Participant will furnish to Lessee a certificate setting
forth the basis and amount of each request by such Participant for
compensation under the preceding two paragraphs. Determinations and
allocations by each Participant for purposes of the preceding two paragraphs
shall be conclusive, absent manifest error.
D. Insurance.
1. Public Liability: $25,000,000.00, total liability per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment.
E. Fixed Purchase Price and Residual Risk Amount
END OF YEAR FIXED PURCHASE PRICE RESIDUAL RISK AMOUNT
5 66.365722 14.000000
6 58.243544 7.200000
7 49.582795 6.300000
8 40.347762 5.400000
9 30.500366 4.400000
10 20.000000 3.300000
expressed as a percent of the Capitalized Lessor's Cost of the Equipment.
This Schedule is not binding or effective with respect to the Agreement
or Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION, THE CONNECTICUT LIGHT AND POWER
FOR ITSELF AND AS AGENT FOR CERTAIN COMPANY
PARTICIPANTS
By: /S/ William C. Badgio By: /S/ David R. McHale
Name: William C. Badgio Name: David R. McHale
Title: Transaction & Syndication Title: Assistant Treasurer of
Manager Finance
ANNEX A
TO
SCHEDULE NO. 002
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
DESCRIPTION OF EQUIPMENT
Manufacturer
Serial Numbers
Type and Model of Equipment
Number of Units
Cost per Unit
[See Attachment No. 1 attached hereto]
Attachment No. 1 to Annex A
SCHEDULE NO. 002
One (1) GE LM-6000 simple cycle aeroderivative gas turbine bearing the serial
number listed below, together with all equipment, materials, engineering and
construction services for the installation thereof, all as more fully
described in the following proposals:
1. GE Power Systems Equipment and Services Proposal for Gas Turbine
Capacity Addition Project - Commercial Volume - PROPOSAL NO. 12581BG.
2. GE Power Systems Equipment and Services Proposal for Five (5) PGLM8000
60 Hertz Combustion Gas Turbine Package Power Plants - Supporting Volume 1 of
2 - PROPOSAL NO. IPS-60213.
3. GE Power Systems Equipment and Services Proposal for Gas Turbine
Capacity Addition - Supporting Volume 2 of 2 - PROPOSAL NO. 298T9954.
As further detailed in the proposal letters dated April 29, 1996; May 7,
1996; May 15, 1996; May 17, 1996; and June 17, 1996; and finally, as
described in Purchase Order No. 802823 dated May 31, 1996, as amended on June
17, 1996.
Site Number
14
Turbine Serial Number
185-172
Generator Serial Number
336X624
GE MK V Controls Serial Number
OJYJV502CA001001
GE 15 KV Switchgear DWG. No.
0357A4395
GE MCC Diag. No.
319B8738
EQUIPMENT LOCATION: Off Naugatuck Avenue, Devon (Town of Milford), CT 06460
SCHEDULE A
DESCRIPTION OF REAL PROPERTY
TO: D. P. Venora
FROM: E. F. Fuller - NU East, Ext. 6938
SUBJECT: Devon Jet Turbines
Lease Area
(83-1.1)
The following is a description for area to be leased in the Town of Milford,
County of New Haven, State of Connecticut.
That certain piece or parcel of land containing 23,200 square feet, more or
less, located about 2,000 feet northerly of Interstate Route 95 and about 80
feet easterly of the Housatonic River in the Town of Milford, County of New
Haven, State of Connecticut. Said parcel is shown as "Area to be Leased" on
a map hereinafter referred to, being bounded and described as follows:
Commencing at a point marking the northeasterly corner of the most northerly
turbine foundation and the northeasterly corner of the herein described
parcel; thence the following four (4) courses and distances across land of
the Lessor and being in part along the face of the turbine foundations: 15
degrees 24' 20" W 290.00 feet to a point, marking the southeasterly corner of
the herein described parcel; N 74 degrees 35' 40" W 80.00 feet to a point,
marking the northwesterly corner of the herein described parcel; and S 74
degrees 35' 40" E 80.00 feet to the point and place of commencement.
The "Area to be Leased" is more clearly designated and defined on a map
entitled "Plan Showing Area to be Leased for Turbine Units - Devon Station
Milford, Connecticut Scale: 1" = 40' Date: 6/20/96 Dwg. No. 21767.
[THIS PAGE IS A GRAPHIC REPRESENTATION OF THE MAP OF "THE DESCRIPTION OF REAL
PROPERTY"]
ANNEX B
TO
SCHEDULE NO. 002
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
[THIS PAGE LEFT BLANK INTENTIONALLY]
ANNEX C
TO
SCHEDULE NO. 002
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
CERTIFICATE OF ACCEPTANCE
To: General Electric Capital Corporation,
for Itself and as Agent for Certain Participants
Pursuant to the provisions of the above Schedule and Master Lease
Agreement (collectively, the "Lease"), Lessee hereby certifies and warrants
that (a) all Equipment listed in the related invoice is in good condition and
appearance, installed (if applicable), and in working order; and (b) Lessee
accepts the Equipment for all purposes of the Lease and all attendant
documents. Nothing herein shall be deemed to prejudice the rights of Lessor
or Lessee against the Supplier.
Lessee does further certify that as of the date hereof (i) Lessee is not
in default under the Lease; and (ii) the representations and warranties made
by Lessee pursuant to or under the Lease are true and correct on the date
hereof.
/S/David R. McHale
Lessee's Authorized Representative
Dated: June 21, 1996
ANNEX D
TO
SCHEDULE NO. 002
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
STIPULATED LOSS
PERIOD VALUE
0 100.0000000000
1 99.5233248113
2 99.0440924589
3 98.5622892246
4 98.0779013167
5 97.5909148695
6 97.1013159429
7 96.6090905220
8 96.1142245169
9 95.6167037619
10 95.1165140153
11 94.6136409591
12 94.1080701985
13 93.5997872614
14 93.0887775982
15 92.5750265810
16 92.0585195037
17 91.5392415811
18 91.0171779489
19 90.4923136627
20 89.9646336984
21 89.4341229510
22 88.9007662344
23 88.3645482813
24 87.8254537422
25 87.2834671858
26 86.7385730970
27 86.1907558786
28 85.6399996491
29 85.0862892429
30 84.5296062101
31 83.9699406155
32 83.4072710385
33 82.8415827726
34 82.2728598249
35 81.7010859155
36 81.1262446773
37 80.5483196554
38 79.9672943066
39 79.3831519969
40 78.7958760110
41 78.2054495322
42 77.6118556614
43 77.0150774067
44 76.4150976854
45 75.8118993229
46 75.2054650525
47 74.5957775149
48 73.9828192577
49 73.3665727348
50 72.7470203062
51 72.1241442369
52 71.4979266970
53 70.8683497609
54 70.2353954069
55 69.5990455165
56 68.9592818741
57 68.3160861664
58 67.6694399816
59 67.0193248095
60 66.3657220404
61 65.7086129648
62 65.0479787728
63 64.3838005536
64 63.7160592950
65 63.0447358827
66 62.3698111001
67 61.6912656273
68 61.0090800407
69 60.3232348127
70 59.6337103108
71 58.9404867972
72 58.2435444283
73 57.5428632541
74 56.8384232172
75 56.1302041531
76 55.4181857888
77 54.7023477427
78 53.9826695237
79 53.2591305309
80 52.5317100529
81 51.8003872672
82 51.0651412394
83 50.2359509230
84 49.5827951586
85 48.8356526731
86 48.0845020795
87 47.3293218760
88 46.5700904453
89 45.8067860543
90 45.0393868534
91 44.2678708754
92 43.4922160358
93 42.7124001310
94 41.9284008389
95 41.1401957173
96 40.3477622046
97 39.5510776142
98 38.7501191440
99 37.9448638853
100 37.1352887276
101 36.3213705566
102 35.5030880538
103 34.6804117955
104 33.8533242326
105 33.0217996896
106 32.1858143639
107 31.3453443252
108 30.5003655149
109 29.6508537454
110 28.7967846993
111 27.9381339285
112 27.0748768542
113 26.2069887653
114 25.3344448185
115 24.4572200369
116 23.5752893099
117 22.6886273921
118 21.7972089024
119 20.9010063240
120 0.0000000000
Initials:
/S/ WCB
Lessor
/S/ DCM
Lessee
ANNEX E
TO
SCHEDULE NO. 002
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
AMORTIZATION SCHEDULE
All rent payments are due the first day of the month.
UNAMORTIZED
RENT PAYMENT DATE PRINCIPAL* PRINCIPAL BALANCE*
Aug-96 0.0000000000 100.0000000000
Sep-96 0.4766751887 99.5233248113
Oct-96 0.4792323524 99.0440924589
Nov-96 0.4818032343 98.5622892246
Dec-96 0.4843879079 96.0779013167
Jan-97 0.4869864472 97.5909148695
Feb-97 0.4895989268 97.1013159429
Mar-97 0.4922254208 96.6090905220
Apr-97 0.4948660051 96.1142245169
May-97 0.4975207550 95.6167037619
Jun-97 0.5001897466 95.1165140153
Jul-97 0.5028730582 94.6136409591
Aug-97 0.5055707806 94.1060701985
Sep-97 0.5082829371 93.5997872614
Oct-97 0.5110096632 93.0887775962
Nov-97 0.5137510172 92.5750265810
Dec-97 0.5165070773 92.0585195037
Jan-98 0.5192779228 91.5392415811
Feb-98 0.5220836323 91.0171779489
Mar-98 0.5248642861 90.4923136627
Apr-98 0.5276799643 89.9646336984
May-98 0.5305107475 89.4341229510
Jun-96 0.5333587166 88.9007682344
Jul-98 0.5362179531 88.3645482813
Aug-98 0.5390945390 87.8254537422
Sep-98 0.5419665586 87.2834671856
Oct-98 0.5448940886 86.7385730970
Nov-98 0.5478172184 86.1907558786
Dec-98 0.5507500295 85.6399996491
Jan-99 0.5537106061 85.0662892429
Feb-99 0.5566810328 84.5296082101
Mar-99 0.5596673946 83.9699406155
Apr-99 0.5626697770 83.4072710385
May-99 0.5858882659 82.8415827726
Jun-99 0.5687229477 82.2728598249
Jul-99 0.5717739094 81.7010859155
Aug-99 0.5748412382 81.1262446773
Sep-99 0.5779250219 80.5483196554
Oct-99 0.5810253488 79.9672943066
Nov-99 0.5841423077 79.3831519989
Dec-99 0.5872759878 78.7958760110
Jan-00 0.5904264788 78.2054495322
Feb-00 0.5935938709 77.6118556614
Mar-00 0.5967782546 77.0150774067
Apr-00 0.5999797213 76.4150976854
May-00 0.6031983625 75.8118993229
Jun-00 0.6064342704 75.2054650525
Jul-00 0.6096875376 74.5957775149
Aug-00 0.6129582572 73.9628192577
Sep-00 0.6162465228 73.3665727348
Oct-00 0.6195524287 72.7470203062
Nov-00 0.6228760893 72.1241442369
Dec-00 0.6262175399 71.4979266970
Jan-01 0.6295769361 70.8683497609
Feb-01 0.6329543540 70.2353954089
Mar-01 0.6363498904 69.5990455165
Apr-01 0.6397636424 68.9592818741
May-01 0.6431957078 68.3160661664
Jun-01 0.6466481847 67.6694399616
Jul-01 0.6501151721 67.0193248095
Aug-01 0.6538027891 66.3657220404
Sep-01 0.6571090758 65.7066129648
Oct-01 0.6606341920 65.0479787728
Nov-01 0.6641782192 64.3838005536
Dec-01 0.6677412586 63.7160592950
Jan-02 0.6713234122 63.0447358827
Feb-02 0.6749247826 62.3696111001
Mar-02 0.6785454729 61.6912656273
Apr-02 0.6821855866 61.0090800407
May-02 0.6858452280 60.3232348127
Jun-02 0.6895245019 59.6337103108
Jul-02 0.6932235136 58.9404867972
Aug-02 0.6969423689 58.2435444283
Sep-02 0.7006811743 57.5428632541
Oct-02 0.7044400368 56.8384232172
Nov-02 0.7082190641 56.1302041531
Dec-02 0.7120183643 55.4181857888
Jan-03 0.7158380461 54.7023477427
Feb-03 0.7196782190 53.9826695237
Mar-03 0.7235389928 53.2591305309
Apr-03 0.7274204780 52.5317100529
May-03 0.7313227858 51.8003872672
Jun-03 0.7352460278 51.0651412394
Jul-03 0.7391903164 50.3259509230
Aug-03 0.7431557644 49.5827951586
Sep-03 0.7471424855 48.8356526731
Oct-03 0.7511505936 48.0645020795
Nov-03 0.7551802035 47.3293218760
Dec-03 0.7592314307 46.5700904453
Jan-04 0.7633043910 45.8067880543
Feb-04 0.7673992010 45.0393868534
Mar-04 0.7715159779 44.2678706754
Apr-04 0.7758548397 43.4922160358
May-04 0.7798159047 42.7124001310
Jun-04 0.7839992921 41.9284006289
Jul-04 0.7882051217 41.1401957173
Aug-04 0.7924335137 40.3477622036
Sep-04 0.7966845893 39.5510776142
Oct-04 0.8009584702 38.7501191440
Nov-04 0.8052552787 37.9448638653
Dec-04 0.8095751377 37.1352887276
Jan-05 0.8139181710 36.3213705566
Feb-05 0.8182845029 35.5030660538
Mar-05 0.8226742583 34.6804117955
Apr-05 0.8270875629 33.8533242326
May-05 0.8315245430 33.0217996896
Jun-05 0.8359853257 32.1858143639
Jul-05 0.8404700387 31.3453443252
Aug-05 0.8449788102 30.5003655149
Sep-05 0.8495117695 29.6508537454
Oct-05 0.8540690482 28.7967846993
Nov-05 0.8586507707 27.9381339285
Dec-05 0.8632570744 27.0748768542
Jan-08 0.8678880889 26.2069887653
Feb-08 0.8725439468 25.3344448185
Mar-06 0.8772247816 24.4572200369
Apr-06 0.8819307270 23.5752893099
May-06 0.8866619179 22.6886273921
Jun-06 0.8914184896 21.7972069024
Jul-06 0.8962005784 20.9010083240
Aug-06 20.9010083240 0.0000000000
Initials:/S/ WCB
Lessor
/S/DRM
Lessee
*The Principal and Unamortized Principal Balance as of any Rent Payment Date
shall be equal to the Capitalized Lessor's Cost of such unit multiplied by
the appropriate percentage derived from the above table.
ANNEX F
TO
SCHEDULE NO. 002
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
RETURN PROVISIONS: In addition to the provisions provided for in Section X
of this Lease, and provided that Lessee has elected not to exercise its
purchase option pursuant to Section XVIII(c) of the Lease, Lessee shall, at
its expense:
(a) With respect to maintenance, Lessee may not discriminate in favor
of similar equipment owned by Lessee as against the Equipment with respect to
scheduling of maintenance, parts or service.
(b) The Equipment shall not be taken out of commercial operation in
Lessee's business as a public utility.
(c) Lessor, at its sole discretion, may, from time to time, inspect the
Equipment at Lessor's sole expense. If any of the Equipment is not operating
within manufacturer's specifications or in accordance with current safe
utility practices, Lessor will communicate these discrepancies to Lessee in
writing. Lessee shall have thirty (30) days to rectify these discrepancies
or respond to the report at its sole expense. Lessee shall pay all expenses
for the re-inspection by the Lessor-appointed expert, if corrective measures
are required.
(d) If Lessee intends to return the Equipment at the expiration or
earlier termination of the Term, Lessee shall provide Lessor with one hundred
eighty (180) days' prior written notice (the "Return Notice"). If Lessee
gives Lessor the Return Notice, this Paragraph (d) through and including
Paragraph (p) shall be applicable.
(e) Lessee shall provide to Lessor, at least one hundred eighty (180)
days prior to lease termination a detailed inventory of all components of the
Equipment with consideration to the conditions set forth in Section VI
("Service") of the Lease. The inventory shall include but not be limited to
a detailed listing of all items of the Equipment by both the model and serial
number for all components comprising this Lease.
(f) At least one hundred eighty (180) days prior to the expiration or
earlier termination of the Term, Lessee shall (1) upon receiving reasonable
notice from Lessor, make the Equipment available for operational inspections
(where applicable) by potential purchasers; (2) cause the manufacturer(s), or
other persons expressly authorized by the manufacturer and/or Lessor, to
inspect, examine and test all material and workmanship to ensure the
Equipment is operating within the manufacturer's specifications; (3) provide
to Lessor a written report from the authorized inspector detailing said
inspection and condition of the Equipment; (4) if during such inspection,
examination or test, the authorized inspector finds any of the material or
workmanship to be defective or the Equipment not operating within the
manufacturer's specifications, then Lessee shall repair or replace such
defective material, and after corrective measures are completed, Lessee will
provide for another inspection of the Equipment by the authorized inspector
as outlined above.
(g) At least ninety (90) days prior to the expiration or earlier
termination of the Term and upon request by Lessor, Lessee shall provide, or
cause the Supplier(s) to provide to Lessor, the following documents: (1) one
set of service and operating manuals including replacements and/or additions
thereto, such that all documentation is completely up to date; and (2) one
set of documents detailing equipment configuration, hardware maps, operating
requirements, maintenance records, and other technical data concerning the
set-up and operation of the Equipment including replacements and additions
thereto, such that all documentation is completely up to date.
(h) A potential purchaser of the Equipment shall provide for the
deinstallation, packaging and transportation of the Equipment to include, but
not limited to the following: (1) the manufacturer's representative shall
de-install all Equipment (including all wire, cable and mounting hardware);
(2) the Equipment shall be packed properly and in accordance with the
manufacturer's recommendation, given its destination and mode of transport;
and (3) such potential purchaser shall transport the Equipment in a manner
consistent with the manufacturer's recommendations and practices. In the
event the Lease expires or terminates without a purchaser for the Equipment,
Lessee shall remain liable for all items outlined in this Paragraph (h).
(i) Upon expiration or termination of the Lease, a potential purchaser
of the Equipment shall obtain and pay for a policy of transit insurance for
the delivery period in an amount equal to the replacement value of the
Equipment with the Lessor named as loss payee on all such policies of
insurance, and provide transportation to locations anywhere in the
continental United States, Canada and Mexico as selected by Lessor. In the
event the Lease expires or terminates without a purchaser for the Equipment,
Lessee shall remain liable for all of the items outlined in this Paragraph
(i).
(j) Lessee shall provide safe, secure storage for the Equipment at the
Devon, Connecticut site (the "Site") for a period of up to one hundred eighty
(180) days after expiration or termination of the Lease at an accessible
location satisfactory to Lessor.
(k) Upon expiration or earlier termination of the Term, all Equipment
shall be cleaned and cosmetically acceptable, and in such condition so that
it may be immediately installed and placed into use in a similar operating
environment.
(l) Lessee shall ensure that all Equipment and equipment operation,
including emissions, conform to all applicable local, state, Environmental
Protection Agency ("EPA"), and Federal laws, health and safety guidelines
including current emission standards applicable to the potential purchasers.
(m) If available, Lessee shall make available for a period of three
hundred sixty five (365) days following successful re-installation and test
run of the Equipment, as required, any engineering and technical personnel
necessary for the training of personnel with respect to the operation,
maintenance and repair of the Equipment (said engineering and technical
personnel will be made available by Lessee for an additional sixty (60) day
period for consultation regarding the operation of the Equipment), and the
purchaser of the Equipment shall be responsible for Lessee's out-of-pocket
expenses incurred in connection with providing such engineering and technical
personnel.
(n) Lessee shall be solely responsible for the cost of all repairs,
alterations, inspections, appraisals, storage charges, insurance costs,
demonstration costs, and other related costs necessary to place the Equipment
in such condition as to be in complete compliance with the Lease.
(o) Lessor shall have the right to attempt resale of the Equipment from
Lessee's Site with Lessee's full cooperation and assistance for a period of
one hundred twenty (120) days from the expiration or earlier termination of
the Term. During this period, the Equipment must remain operational with the
necessary electric power, lighting, heat, air-conditioning, water, fuel and
compressed air necessary to maintain and demonstrate the Equipment to any
potential buyer.
(p) Upon return of the Equipment, Lessee shall pay to Lessor such
amount as is required to reimburse Lessor for the costs necessary to perform
any outstanding maintenance work (if required) on the Equipment and a
pro-rata assessment of the cost of combustion, hot gas path, and major
repairs based upon actual hours of use by Lessee of the Equipment through the
date of expiration or earlier termination of the Term.
Initials: /S/ WCB
Lessor
/S/ DRM
Lessee
ANNEX G
TO
SCHEDULE NO. 002
DATED THIS 21ST DAY OF JUNE, 1996
TO MASTER LEASE AGREEMENT DATED AS OF JUNE 21, 1996
ESTOPPEL/WAIVER AGREEMENT
June 21, 1996
Gentlemen/Ladies:
General Electric Capital Corporation, for Itself and as Agent for
Certain Participants ("Lessor"), has entered into, or is about to enter into,
a lease or similar agreement (the "Lease") with The Connecticut Light and
Power Company ("Lessee"), pursuant to which Lessee has leased or will lease
from Lessor certain personal property described in the attached Annex A (such
property, together with any replacements thereof, being referred to as the
"Personal Property"). Some or all of the Personal Property is, or will be,
located at certain premises described on Annex A (the "Premises"). This
letter is being sent to you because of your interest in the Premises.
By your signature below, you hereby agree (and we shall rely on your
agreement) that: (i) the Personal Property is, and shall remain, personal
property regardless of the method by which it may be, or become, affixed to
the Premises; (ii) your interest in the Personal Property and any proceeds
thereof (including, without limitation, proceeds of any insurance therefor)
shall be, and remain, subject to the ownership interests of Lessor (until and
unless Lessor shall formally release or transfer its interest in the Personal
Property to Lessee); (iii) Lessor, and its employees and agents, shall have
the right with prior notice, from time to time, to enter the Premises for the
purpose of inspecting the Personal Property; and (iv) Lessor, and its
employees and agents, shall have the right, upon any default by Lessee under
the Lease, to enter the Premises and to remove the Personal Property from the
Premises. Lessor agrees to reimburse you for any damages actually caused to
the Premises by Lessor, or its employees or agents, during any such removal.
These agreements shall be binding upon, and shall inure to the benefit of,
any successors and assigns of the parties hereto.
We appreciate your cooperation in this matter of mutual interest.
GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR CERTAIN
PARTICIPANTS
By:/s/William C. Badgio
Name: William C. Badgio
Title: Transaction and Syndication Manager
AGREED TO AND ACCEPTED BY:
By:/s/Scott Thiel
Name: Scott Thiel
Title: Assistant Vice President
Date: June 21, 1996
ATTACHMENT TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT
1. SECURED PARTY: GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS
AGENT FOR CERTAIN PARTICIPANTS
DEBTOR: THE CONNECTICUT LIGHT AND POWER COMPANY
2. DESCRIPTION OF PROPERTY:
The equipment leased pursuant to that certain Master Lease Agreement
dated as of the 21st day of June, 1996, between Secured Party, as lessor, and
Debtor, as lessee, together with all accessions, substitutions and
replacements therefor, and proceeds (including insurance proceeds) thereof
(but without power of sale); more fully described on the attached Annex(es)
A.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION
================================================================================
EARNINGS OVERVIEW
- --------------------------------------------------------------------------------
NU faced an extremely difficult year in 1996 as a result of the prolonged
outages at the three Millstone units (Millstone). These outages resulted in
significantly increased expenditures for replacement power and work undertaken
at Millstone, which had a significant negative impact on NU's 1996 earnings. In
1997, while all three units are out of service, NU expects to operate on a
roughly break-even basis. The combination of higher expenditures and the
uncertainty surrounding when the units will return to service made it necessary
to ensure that access to adequate cash levels would be available for the
duration of the outages. Management took various actions during 1996 to address
NU's nuclear program and liquidity issues, however, 1997 will continue to be a
serious challenge in these areas.
NU faces future uncertainty with the rapidly moving trend toward industry
restructuring in the three New England states in which NU subsidiaries provide
retail electric service. While restructuring had little direct impact on 1996
financial results, it creates an environment of significant uncertainty and
financial risk for the coming years. As discussed in further detail in
"Restructuring," the financial treatment that strandable investments will be
accorded will impact NU's ability to compete in a restructured environment.
On February 28, 1997, the New Hampshire Public Utilities Commission (NHPUC)
issued its orders for restructuring the state's electric utility industry,
including setting interim stranded cost charges for Public Service Company of
New Hampshire (PSNH). If the orders are implemented without modification, PSNH
would be required to recognize write-offs of over $400 million, after taxes.
PSNH and other NU subsidiaries filed for and received a temporary restraining
order from the United States District Court, which stayed certain portions of
the NHPUC's orders. If PSNH is unable to keep this stay in effect, receive
another appropriate court action, or otherwise modify the NHPUC's orders, the
write-off triggered by the orders would result in defaults which, if not waived
or renegotiated, would give creditors the right to accelerate the repayment of
over $1.2 billion of PSNH and North Atlantic Energy Corporation (NAEC)
indebtedness. See "Restructuring--New Hampshire" for further information on the
impact of the NHPUC's orders.
Earnings per common share were $0.01 in 1996, compared to $2.24 in 1995.
The 1996 earnings were significantly lower primarily due to costs associated
with the ongoing outages at Millstone. These costs totaled approximately $480
million and reduced earnings by $2.18 per share. They are related to the costs
of replacement power, higher 1996 Millstone operation and maintenance costs, a
reserve recognized in 1996 for 1997 expenditures to return the Millstone units
to service and costs associated with ensuring adequate generating capacity in
Connecticut. In addition, 1996 earnings decreased due to the impact of The
Connecticut Light and Power Company's (CL&P) approved rate settlement agreement,
higher 1996 CL&P cogeneration costs and higher nonnuclear operation and
maintenance costs. These decreases were partially offset by higher retail sales,
lower recognition of Millstone 3 phase-in costs and lower 1996 interest charges.
Retail kilowatt-hour sales increased by 1.6 percent in 1996 as a result of
modest economic growth in southern New England. Retail kilowatt-hour sales
increased 1.8 percent for CL&P, 2.7 percent for Western Massachusetts Electric
Company (WMECO) and 0.4 percent for PSNH. PSNH's retail sales were negatively
affected by a pilot retail access program initiated in New Hampshire in June,
1996, however the pilot had little impact on 1996 financial results. In 1997,
management expects that the regional economy will continue to experience
modest economic growth.
MILLSTONE
- --------------------------------------------------------------------------------
OUTAGES
NU has a 100 percent ownership interest in Millstone 1 and 2 and a 68 percent
ownership interest in Millstone 3. Millstone 1, 2 and 3 have been out of service
since November 4, 1995, February 21, 1996, and March 30, 1996, respectively.
Subsequent to its January 31, 1996, announcement that Millstone had been
placed on its watch list, the Nuclear Regulatory Commission (NRC) has stated
that the units cannot return to service until independent, third-party
verification teams have reviewed the actions taken to improve the design,
configuration and employee concerns issues that prompted the NRC to place the
units on its watch list. Upon successful completion of these reviews, the NRC
must approve the restart of each unit through a formal commission vote.
Management took several key steps toward improving NU's nuclear program
during 1996 and will continue to place a high priority on its recovery in 1997.
The NU Board of Trustees (the Board) formed a committee in April, 1996, to
provide high-level oversight of the safety and effectiveness of NU's nuclear
operations, progress toward resolving open NRC issues and progress in resolving
employee, community and customer concerns. In September, 1996, Bruce D. Kenyon
was appointed President and Chief Executive Officer of Northeast Nuclear Energy
Company (NNECO), a wholly-owned subsidiary of NU that operates Millstone, and
retired Admiral David M. Goebel was selected to serve as Vice President for
Nuclear Oversight. In early 1997, Neil S. Carns was selected to serve as Senior
Vice President and Chief Nuclear Officer to oversee Millstone operations.
Northeast Utilities 1996 Annual Report 11
<PAGE>
Shortly after his arrival, Mr. Kenyon unveiled a reorganization of NU's nuclear
organization that includes executives loaned from unaffiliated utility
companies. The new organization is intended to establish direct accountability
for performance at each of the nuclear units that the NU system operates and
includes a recovery team for each Millstone unit.
Under the new nuclear organization, each unit's recovery team will be
working toward restart of its respective unit simultaneously with the other two
units. Management estimates that one of the units will be ready for NNECO to
request the NRC's approval for restart in the third quarter of 1997, with the
second and third units ready in the fourth quarter of 1997 and the first quarter
of 1998, respectively. Subsequent to NNECO's request to restart any of the
units, the NRC will require a period of time to assess the results of the
reviews performed by the NRC and the independent third-party teams. Management
cannot estimate when the NRC will allow any of the units to restart, however, it
hopes to have at least one unit operating in the second half of 1997. A period
of time will be required subsequent to restart for each unit to return to
operating at full power.
Higher costs related to the Millstone outages will continue throughout
1997. Monthly replacement power costs for the NU system companies are projected
to average approximately $35 million in 1997, while all three Millstone units
remain out of service. Replacement power costs for the Millstone units expensed
in 1996 were $260 million, which was a substantial portion of the total 1996
replacement power costs. NU will continue to expense its replacement power costs
in 1997. Nonfuel operation and maintenance costs for NU's share of Millstone to
be expensed in 1997 are estimated to be $386 million. A total of $403 million
was expensed in 1996 for nonfuel operation and maintenance costs for Millstone,
including $116 million for incremental costs related to the outages and $63
million reserved for future costs. Nonfuel operation and maintenance costs have
been, and will continue to be, absorbed through the NU system companies' current
rates.
Although the NU system is not precluded from seeking rate recoveries in the
future, management has committed not to seek rate recovery for the portion of
these costs attributable to failure to meet industry standards in operating
Millstone. In light of that commitment, CL&P and WMECO will not seek rate
recovery for a substantial portion of these costs. Management does not currently
intend to request any such recoveries until after the Millstone units begin
returning to service; therefore, it is unlikely that any additional revenues
from any permitted recovery of these costs will be available to contribute to
funding the recovery efforts while the units are out of service.
Under its present planning assumptions, management believes CL&P and WMECO
have sufficient funds to restore the Millstone units to service and purchase
replacement power. See "Rate Matters--Connecticut and Massachusetts" for further
information on the recovery of outage-related costs. See "Liquidity and Capital
Resources" for further information regarding the system's liquidity.
As a result of the nuclear situation, a number of civil lawsuits and
criminal investigations have been initiated, including shareholder litigation.
In addition, there is the potential for claims by the non-NU owners of Millstone
3 for the costs associated with the current outage. To date, no reserves have
been established for existing or potential litigation. See the "Notes to
Consolidated Financial Statements" Note 7B, for further information on
litigation.
CAPACITY
During 1996 and continuing into 1997, the NU system companies have taken
measures to improve their capacity position, including obtaining additional
generating capacity, improving the availability of NU's generating units and
improving the NU system's transmission capability. During 1996, NU spent
approximately $60 million to ensure adequate generating capacity in Connecticut,
of which $42 million was expensed. NU anticipates spending approximately $47
million for additional capacity-related costs in 1997, of which $27 million is
expected to be expensed.
Assuming normal weather conditions and generating unit availability,
management expects that the NU system will have sufficient capacity to meet peak
load demands even if Millstone is not operational at any time through the summer
of 1997. If there are high levels of unplanned outages at other units in New
England, or if any of the system's transmission lines used to import power from
other states are unavailable at times of peak load demand, NU and the other New
England utilities may have to resort to operating procedures designed to reduce
customer demand. Uncertainties associated with having sufficient capacity
through the summer of 1997 include: a Seabrook refueling outage scheduled for 49
days beginning on May 10, 1997; the availability of Maine Yankee, which was put
on the NRC's watch list in January, 1997, and is currently not expected to
return to service earlier than late summer 1997; and the timing of the repairs
to the Long Island Cable, which is capable of providing as much as 300 megawatts
of transmission capability.
See the "Notes to Consolidated Financial Statements" Note 7B, for further
information on Maine Yankee.
LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------------------------------------------------------
During 1996, the NU system companies took various actions to ensure that they
will have access to adequate cash resources, at reasonable cost. The NU system
as a whole had approximately $200 million of cash as of December 31, 1996,
mostly as a result of two CL&P bond issues, one of which was issued in
anticipation of the maturity of approximately $193 million of CL&P bonds in
April, 1997. CL&P and WMECO established facilities under which they may sell up
to $200 million and $40 million, respectively, of their billed and unbilled
accounts receiv-
12 Northeast Utilities 1996 Annual Report
<PAGE>
able. As of February 21, 1997, CL&P and WMECO had sold $10 million and $15
million, respectively, using these facilities. Additionally, NU, CL&P and WMECO
entered into a new $313 million three-year revolving credit agreement (the New
Credit Agreement). Under the New Credit Agreement, NU has a contractual
short-term borrowing limit of $150 million, CL&P has a limit of $313 million and
WMECO has a limit of $150 million. The overall limit for all borrowers is $313
million.
Management believes that the borrowing facilities that are currently in
place provide the system companies with adequate access to the funds needed to
bring Millstone back to service if the units begin operating close to
the currently envisioned schedules, and if the other assumptions on which
management has based its planning do not change substantially.
At its July 22, 1996, meeting, the Board reduced NU's common dividend from
$0.44 to $0.25 per share quarterly. A $0.25 quarterly dividend conserves cash at
the rate of approximately $100 million annually compared with the earlier $0.44
quarterly dividend level. In light of the seriousness of the NHPUC's
restructuring orders for PSNH and the extent of the Millstone outages,
management will recommend that the Board consider suspending the NU dividend.
If a dividend suspension were to occur, it would conserve about $140 million
annually of additional funds, compared with the current $0.25 quarterly
dividend. See "Restructuring--New Hampshire" for further information on the
NHPUC's restructuring orders.
Some of the borrowing facilities contain financial covenants that must be
satisfied before borrowings can be made and for outstanding borrowings to remain
outstanding. Through February 21, 1997, CL&P and WMECO have satisfied all
financial covenants required under their respective borrowing facilities, but NU
needed and obtained a limited waiver of an interest coverage covenant that had
to be satisfied for NU to borrow under the New Credit Agreement.
NU, CL&P and WMECO are currently maintaining their access to the New Credit
Agreement under a written arrangement, which expires March 28, 1997, unless
extended by mutual consent, under which NU agreed not to borrow more than $27
million against the facility for a period of time. In addition, NU agreed to
enter into an interim written arrangement whereby NU, CL&P and WMECO will seek
regulatory approval for certain amendments in order to maintain access to the
New Credit Agreement through its maturity date. It is anticipated that these
amendments will include (i) CL&P and WMECO providing lenders first mortgage
bonds as collateral for specified periods and subject to specified terms for
releasing the collateral, (ii) revised financial covenants that are consistent
with NU's, CL&P's and WMECO's current financial forecasts and (iii) an upfront
payment to the lenders in order to maintain commitments under the New Credit
Agreement.
The holders of $38 million of notes issued by NU's real estate company
(Rocky River Realty Company or RRR) are entitled to require that RRR purchase
the notes because, as of December 31, 1996, PSNH and NAEC were rated below
investment grade; these notes are guaranteed by NU. NU is currently engaged in
discussions with the noteholders regarding this issue. See the "Notes to
Consolidated Financial Statements" Note 7G, for further information on these
notes.
During 1996, Standard & Poor's Ratings Group (S&P) and Moody's Investors
Service (Moody's) downgraded all non-New Hampshire NU system securities at least
once, and in some cases twice, as a direct result of the Millstone outages. As
of December 31, 1996, the CL&P and WMECO first mortgage bonds were the only
securities on the NU system rated at investment grade. In March, 1997, S&P and
Moody's downgraded NU, PSNH and NAEC securities as a result of recent
restructuring activities in New Hampshire. S&P and Moody's are reviewing all NU
system securities for further downgrades. These actions will adversely affect
the availability and cost of funds for the NU system companies.
Although cash flows from operations continue to be much higher than
earnings, cash provided from operations decreased by approximately $73 million
in 1996. The decrease was primarily due to higher cash operating expenses
associated with the Millstone outages, partially offset by lower interest
charges and higher retail sales. Cash flows from operations were also impacted
by a sharp increase in the level of accounts payable caused principally by costs
related to a severe December storm and costs associated with the Millstone
outages that had not been paid by year end.
If the return to service of one or more of the Millstone units is delayed
substantially, or if the needed waivers or modifications discussed above are not
forthcoming on reasonable terms, or if some borrowing facilities become
unavailable because of difficulties in meeting borrowing conditions, or if the
system encounters additional significant costs or other significant deviations
from management's current assumptions, the currently available borrowing
facilities could be insufficient to meet all of the system's cash requirements.
In those circumstances, management would take actions to reduce costs and cash
outflows and would attempt to take other actions to obtain additional sources of
funds. The availability of these funds would be dependent upon the general
market conditions and the NU system's credit and financial condition at the
time.
See the "Consolidated Statements of Capitalization" for information on
long-term debt funding requirements. See the "Notes to Consolidated Financial
Statements" Notes 7E and 7F, for information on construction and long-term
contractual requirements.
Northeast Utilities 1996 Annual Report 13
<PAGE>
RESTRUCTURING
- --------------------------------------------------------------------------------
The movement toward electric industry restructuring continues to gain momentum
nationally as well as within the NU system's jurisdictions. Factors that are
driving the move toward restructuring, in the Northeast in particular, include
legislative and regulatory actions and relatively high electricity prices. These
actions will impact the way that NU has historically conducted its business.
Although the NU system companies continue to operate under cost-of-service based
regulation, various restructuring initiatives in each of NU's jurisdictions,
particularly recent actions taken by the NHPUC, have created uncertainty with
respect to future rates and the recovery of strandable investments. Strandable
investments are regulatory assets or other assets that would not be economical
in a competitive environment. NU has exposure to strandable investments for its
investment in high-priced nuclear generating plants, state mandated purchased
power arrangements that are priced above the market, significant regulatory
assets that represent costs deferred by state regulators for future recovery and
costs incurred and assets created in connection with the bankruptcy
reorganization of PSNH in 1990 and NU's 1992 acquisition of PSNH. NU's exposure
to strandable investments and purchased power obligations exceeds its
shareholder's equity. NU's ability to compete in a restructured environment
would be negatively affected unless NU was able to recover substantially all of
these past investments and commitments.
NU is seeking to mitigate the impacts of restructuring by proposing stable,
lower rates, while pursuing customer choice options and full recovery of its
strandable investments. NU's strategy to recover strandable investments will
include efforts to promote state legislation that will authorize the issuance of
rate reduction bonds that would refinance these investments and which would be
recovered through nonbypassable charges to customers. Management is unable to
predict the ultimate outcome of these initiatives, which will be subject to
regulatory and legislative approvals. Management believes that it is entitled to
full recovery of its prudently incurred costs, including regulatory assets and
other strandable investments, based on the general nature of public utility
industry cost-of-service based regulation, and in New Hampshire, based on PSNH's
rate agreement that was entered into by NU, PSNH and the state of New Hampshire
in 1989 (Rate Agreement).
NEW HAMPSHIRE
On February 28, 1997, the NHPUC issued its orders for restructuring the
state's electric utility industry and setting interim stranded cost charges for
PSNH pursuant to legislation enacted in New Hampshire in 1996 (the Final Plan).
The Final Plan would implement retail choice for all customers by January 1,
1998.
The Final Plan would replace the traditional cost-of-service based
regulation with a regional average rate approach to rate setting and recovery of
strandable investments. Accordingly, unless the litigation described below
results in a stay that leads management to conclude that the ratemaking approach
in the NHPUC's restructuring orders will not go into effect, PSNH will be
required to discontinue accounting under Statement of Financial Accounting
Standards (SFAS) 71, "Accounting for the Effects of Certain Types of
Regulation." This would result in PSNH writing off from its balance sheet, as
early as the quarter ending March 31, 1997, substantially all of its
regulatory assets. The amount of the potential write-off triggered by the
Final Plan is currently estimated at over $400 million, after taxes. Management
believes that under the Final Plan, PSNH would not be required to recognize any
additional loss resulting from impairment of the value of its other long-lived
assets under the provisions of SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of."
The Final Plan also contains rulings on numerous other issues that would,
if put into effect, have a substantial effect on PSNH's operations. Included
among these rulings are: the requirement that PSNH divest within two years of
the initiation of competition all of its owned generation and all of its
wholesale power purchase contracts (including its contract with NAEC for
Seabrook output); a prohibition on the remaining distribution company and its
affiliates from engaging in retail marketing or load aggregation services; a
mandate for the filing of tariffs with the Federal Energy Regulatory Commission
(FERC) for the provision of unbundled retail transmission service; and
assertions that the Rate Agreement, which was an integral part of NU's
acquisition of PSNH, is not binding on the state. The company will challenge
these assertions.
PSNH must file revised interim stranded cost charges, in accordance with
the terms of the Final Plan, by April 30, 1997. The Final Plan also requires
each utility, including PSNH, to file comprehensive plans by June 30, 1997,
which comply with the Final Plan and supplemental orders. In addition, any
jurisdictional utility that chooses to be a distribution company must submit a
plan by December 31, 1997, to divest its generation and aggregation/marketing
service functions by the end of the two-year period following the initiation of
competition.
On March 3, 1997, PSNH, NU, NAEC and Northeast Utilities Service Company
filed for a temporary restraining order, preliminary and permanent injunctive
relief and for declaratory judgment in the United States District Court for New
Hampshire. The case was subsequently transferred to Rhode Island. On March 10,
1997, the court issued a temporary restraining order, which stayed the NHPUC's
February 28, 1997, orders to the extent they established a rate setting
methodology that is not designed to recover PSNH's costs of providing service
and would require PSNH to write off any regulatory assets under SFAS 71. An
evidentiary hearing regarding the system plaintiffs'
14 Northeast Utilities 1996 Annual Report
<PAGE>
request for a preliminary injunction will be held on March 20, 1997. PSNH also
intends to pursue claims for damages against the state of New Hampshire in the
New Hampshire state court for abrogation of the 1989 Rate Agreement. The damage
claims will be in the hundreds of millions of dollars. Management cannot predict
the ultimate outcome of these actions.
If PSNH is unable to keep this stay in effect, receive another appropriate
court action, or otherwise modify the Final Plan, the write-off triggered by the
Final Plan would result in defaults which, if not waived or renegotiated, would
give creditors the right to accelerate the repayment of approximately $686
million of PSNH indebtedness and $515 million of NAEC indebtedness. These
circumstances could force PSNH and NAEC to seek bankruptcy protection under
Chapter 11 of the bankruptcy laws.
See the "Notes to Consolidated Financial Statements" Note 11, for further
information on New Hampshire's orders.
MASSACHUSETTS
In December, 1996, the Massachusetts Department of Public Utilities (DPU)
issued its Model Rules on Restructuring (Model Rules) that set forth the
framework for full customer choice of energy suppliers beginning January 1,
1998, and proposed legislation to support the DPU's framework. After January 1,
1998, the DPU has stated that it will no longer set rates for competitive
suppliers of generation. The DPU also reiterated its concern for the maintenance
of the current level of overall system reliability by stating that it will
continue to regulate distribution companies. In March, 1997, WMECO filed
"unbundled" bills (separate charges on bills for generation, transmission,
distribution and access) with the DPU, as required by the Model Rules.
The Model Rules require a number of statutory changes be enacted in order
to implement the rules. Additionally, the Massachusetts General Court has
established a legislative task force to review restructuring during the 1997
legislative session. The Massachusetts legislature has given no formal
indication as to whether it will enact the statutory changes requested by the
DPU. It is unclear at this time how the DPU will proceed if the requested
statutory changes are not enacted.
While the DPU's Model Rules indicate that utilities will have a reasonable
opportunity to recover strandable investments, the criteria to be used in this
process will likely be subject to review in a rate proceeding.
CONNECTICUT
In December, 1996, the legislative task force on electric utility industry
restructuring issued its final report. Although the report included several
legislative recommendations, the task force members did not reach a consensus
on a restructuring proposal. The legislative members of the task force submitted
a restructuring proposal which includes two alternatives: one for retail
competition pilots available to 10 percent of the load in each rate class by
January 1, 1998, and a second for full retail competition beginning January 1,
1998, unless CL&P has effected 10 percent rate reductions for all classes by
that date. This proposal, among others, will be considered in developing
restructuring legislation in 1997.
In response to the ongoing efforts in Connecticut to restructure the
electric utility industry, CL&P has developed a restructuring proposal that
calls for reduced rates for all Connecticut customers as soon as January, 1998;
the initiation of a retail choice pilot program as soon as July, 1998;
phasing-in all customers to retail choice over four years beginning in 2000;
full recovery of strandable investments through rate reduction bonds; and
retaining ownership of generating facilities.
POTENTIAL ACCOUNTING IMPACTS
NU follows accounting principles in accordance with SFAS 71, which allows the
economic effects of rate regulation to be reflected. Under these principles,
regulators may permit incurred costs for certain events or transactions, which
would be treated as expenses by nonregulated enterprises, to be deferred as
regulatory assets and recovered through revenues at a later date.
If future competition or regulatory actions cause any portion of its
operations to no longer be subject to SFAS 71, NU would no longer be able to
recognize regulatory assets and liabilities for that portion of its business
unless those costs would be recoverable by a portion of the business remaining
on cost-of-service based regulation. Under its current regulatory environment
and subject to the successful resolution of the legal actions PSNH has taken
with respect to the NHPUC's recent restructuring activities, management believes
that NU's use of SFAS 71 remains appropriate.
If events create uncertainty about the recoverability of any of NU's
remaining long-lived assets, NU would be required to determine the fair value of
its long-lived assets, including regulatory assets, in accordance with SFAS 121.
The implementation of SFAS 121 did not have a material impact on the company's
financial position or results of operations as of December 31, 1996. Management
believes it is probable that NU will recover its investments in long-lived
assets through future revenues. This conclusion may change in the future as
competitive factors influence wholesale and retail pricing in the electric
utility industry or if the cost-of-service based regulatory structure were to
change.
See the "Notes to Consolidated Financial Statements" Note 1H, for further
information on regulatory accounting.
COMPETITION
- --------------------------------------------------------------------------------
In addition to legislative and regulatory actions, competition in the electric
utility industry continues to grow at a rapid pace as a result of technological
advances; relatively
Northeast Utilities 1996 Annual Report 15
<PAGE>
high electricity prices in certain regions of the country, including New
England; surplus generating capacity; and the increased availability of natural
gas. Competitive forces in the electric utility industry have already caused
some customers to choose alternative energy suppliers or relocate outside of the
NU system's service territory. In response, NU is preparing for a competitive
environment by expanding previously established programs and developing new ways
to fortify its relationships with existing customers and attract new customers,
both within and outside its service territory.
During 1996, NU continued to negotiate long-term power supply arrangements
with certain large commercial and industrial retail customers who require an
incentive to locate or expand their operations within NU's service territory,
are considering leaving or reducing operations in the service territory, are
facing short-term financial problems, or are considering generating their own
electricity. Approximately 12 percent of NU's commercial and industrial retail
revenues were under negotiated rate agreements at the end of 1996 and 1995. In
1996, these negotiated rate reductions amounted to approximately $39 million, up
from $35 million in 1995. These activities are expected to continue in 1997.
During 1996, NU devoted significantly more resources to its Retail
Marketing Organization, whose primary mission is to provide value added energy
solutions to customers. Training was emphasized for its 170 new employees, the
majority of whom are account executives charged with developing tailored
solutions for NU's customers and positioning NU as a valuable partner for the
future. The ability of these account executives to obtain an intimate
understanding of customers' needs and concerns and provide value added energy
solutions will play a key role in NU's ability to effectively compete in the
future.
NU subsidiaries competed actively in two pilot retail access programs that
were initiated in New England in 1996. In New Hampshire, approximately 14,500
customers are participating in a two-year statewide pilot program. NU
subsidiaries introduced three energy and service product offerings under
different brand names and competed against 35 other energy suppliers. Given the
political and regulatory environment in New Hampshire, it is notable that NU
retained approximately 60 percent of PSNH's participating customers (50 percent
of the total energy demand market share) and gained approximately 15 percent of
the customers participating from outside NU's service territory.
In a pilot covering four Massachusetts communities outside of NU's
jurisdiction, NU attained approximately 60 percent of the total energy market
share and 70 percent of the commercial energy market share. In addition to
exposing NU to a competitive environment, these pilots have enabled NU to
develop relationships with customers outside of its service territory and to
secure energy contracts with major commercial customers.
Revenue erosion from traditional retail electric sales may be significant
after restructuring. While margins on retail electric sales are likely to be
thin, utilities can compete successfully if they are allowed to recover
their strandable investments. Given this, simply expanding current programs will
not be enough for NU to maintain its leadership role in a fully competitive
electric utility industry. Therefore, NU must plan, invest in and implement
aggressive programs to grow current revenues and attract customers in markets
outside its territory, primarily through new, unregulated businesses. In an
effort to position itself for these challenges, NU formed NUSCO Energy Partners,
Inc. (Energy Partners), whose strategic intent is to become a provider of
creative energy solutions. In particular, Energy Partners was established for
the purpose of competing in state sanctioned retail access programs and
brokering or marketing all types of energy, along with "ancillary services," in
retail and wholesale markets anywhere in the United States. Energy Partners is
currently participating in pilot programs in New Hampshire, Massachusetts and
New York, offering customers a broad portfolio of energy-related services and
establishing the framework for key strategic alliances. Retail competition is
scheduled to be phased-in beginning in 1997 in Rhode Island, and additional
pilot programs are likely to occur in Pennsylvania and New Jersey.
During 1997 and beyond, NU will continue to participate in
state sanctioned retail access programs; invest in new unregulated businesses;
develop new energy-related products and services; and pursue strategic alliances
with companies in various energy-related fields, including fuel supply and
management, power quality, energy efficiency and load management services.
Strategic alliances will allow NU to enter markets that provide access to new
product lines and technologies that complement NU's current products and
services.
RATE MATTERS
- --------------------------------------------------------------------------------
CONNECTICUT
In July, 1996, the Department of Public Utility Control (DPUC) approved a rate
settlement agreement with CL&P (the CL&P Settlement). Under the CL&P Settlement,
CL&P froze base rates until at least December 31, 1997, and accelerated the
amortization of regulatory assets by $73 million in 1996 and between $54 million
and $68 million in 1997. Additionally, the CL&P Settlement terminated all
pending litigation, as of March 31, 1996, among the parties that could
potentially affect CL&P's rates. The CL&P Settlement does not impact costs
incurred subsequent to March 31, 1996, that are associated with the Millstone
outages. The CL&P Settlement reduced 1996 earnings by approximately $35 million,
or $0.17 per share. The impact on 1997 earnings is not expected to be
significant.
In October, 1996, the DPUC issued a final order establishing an Energy
Adjustment Clause (EAC), which
16 Northeast Utilities 1996 Annual Report
<PAGE>
replaced both CL&P's fossil-fuel adjustment clause and its generation
utilization adjustment clause (GUAC). The EAC, which is designed to calculate
the difference between actual fuel costs and fuel costs collected through base
rates, took effect on January 1, 1997. The order includes an incentive mechanism
which disallows recovery of the first $9 million of actual fuel costs in excess
of base rate levels, but permits CL&P to retain the first $9 million in actual
fuel costs below base rate levels.
In January, 1997, the DPUC notified CL&P that it intends to conduct its
prudence review of nuclear cost issues in multiple phases, beginning
immediately. The first phase, covering the period April 1 through June 30, 1996,
has already begun. CL&P will not be permitted to collect any replacement power
costs associated with the current nuclear outages prior to the completion of the
DPUC's prudence reviews. Management does not expect to seek recovery of a
substantial portion of these costs.
NEW HAMPSHIRE
PSNH's Rate Agreement provides for seven base rate increases and a comprehensive
fuel and purchased power adjustment clause (FPPAC). In June, 1996, the final
base rate increase of 5.5 percent went into effect. Although the FPPAC continues
for an additional three years beyond the end of the fixed-rate period, there is
uncertainty regarding how it will function after that time. Given the completion
of the fixed-rate period, and the uncertainty surrounding the FPPAC, management
expects to file a rate case with the NHPUC in May, 1997.
See the "Notes to Consolidated Financial Statements" Note 1K, for further
information on the FPPAC.
MASSACHUSETTS
In April, 1996, the DPU approved a settlement (the Agreement) that included the
continuation through February, 1998, of the 2.4 percent rate reduction
instituted in June, 1994. Additionally, the Agreement terminated certain pending
and potential reviews of WMECO's generating plant performance and accelerated
its amortization of strandable generation assets by approximately $6 million in
1996 and $10 million in 1997. The Agreement did not have a material impact on
earnings for 1996.
In February, 1997, the DPU approved a joint settlement proposed by WMECO
and the Massachusetts Attorney General that provides for a continuation of
WMECO's August, 1996, fuel adjustment charge (FAC) through August, 1997, and
stipulates that WMECO will not seek carrying charges on any deferred fuel costs
not currently recovered as a result of maintaining the prior FAC rate. In
accepting this settlement, the DPU deferred any inquiry into WMECO's replacement
power costs related to the Millstone outages. Management does not expect to seek
recovery of a substantial portion of these costs.
NUCLEAR DECOMMISSIONING
- --------------------------------------------------------------------------------
NU has a 49 percent ownership interest in the Connecticut Yankee nuclear
generating facility (CY or the plant). On December 4, 1996, the CY Board of
Directors voted unanimously to cease permanently the production of power at the
plant. The decision to retire CY from commercial operation was based on an
economic analysis of the costs of operating it compared to the costs of closing
it and incurring replacement power costs over the remaining period of the
plant's operating license, which expires in 2007. The economic analysis showed
that closing the plant and incurring replacement power costs produced
substantial savings.
CY has undertaken a number of regulatory filings intended to implement the
decommissioning. In late December, 1996, CY filed an amendment to its power
contracts with the FERC to clarify the obligations of its purchasing utilities
following the decision to cease power production. At December 31, 1996, NU's
share of these obligations was approximately $374 million, including the cost of
decommissioning and the recovery of existing assets. Management expects that
CL&P, PSNH and WMECO each will continue to be allowed to recover such
FERC-approved costs from their customers. Accordingly, NU has recognized its
share of the estimated costs as a regulatory asset, with a corresponding
obligation, on its Consolidated Balance Sheets.
NU's estimated cost to decommission its shares of Millstone 1, 2 and 3 and
Seabrook is approximately $1.2 billion in year end 1996 dollars. These costs are
being recognized over the lives of the respective units with a portion being
currently recovered through rates. As of December 31, 1996, the market value of
the contributions already made to the decommissioning trusts, including their
investment returns, was approximately $404 million.
See the "Notes to Consolidated Financial Statements" Note 2, for further
information on nuclear decommissioning, including NU's share of costs to
decommission the regional nuclear generating units.
ENVIRONMENTAL MATTERS
- --------------------------------------------------------------------------------
NU is potentially liable for environmental cleanup costs at a number of sites
inside and outside its service territory. To date, the future estimated
environmental remediation liability has not been material with respect to the
earnings or financial position of NU. At December 31, 1996, NU had
recorded an environmental reserve of approximately $13 million, the most
probable amount as required by SFAS 5, "Accounting for Contingencies."
See the "Notes to Consolidated Financial Statements" Note 7C, for further
information on environmental matters.
RISK MANAGEMENT INSTRUMENTS
- --------------------------------------------------------------------------------
CL&P uses fuel-price management instruments to reduce a portion of the
fuel-price risk associated with certain of its long-term negotiated energy
contracts. NAEC uses inter-
Northeast Utilities 1996 Annual Report 17
<PAGE>
est-rate management instruments to reduce interest-rate risk associated with its
$200 million variable-rate bank note. These instruments are not used for trading
purposes. The differential paid or received as fuel prices or interest rates
change is recognized in income when realized. As of December 31, 1996, CL&P and
NAEC had outstanding fuel-price and interest-rate management instruments with a
total notional value of approximately $229 million and $200 million,
respectively. The settlement amounts associated with the instruments reduced
fuel expense by approximately $7.5 million for CL&P and increased interest
expense by approximately $1.0 million for NAEC during 1996. CL&P's fuel-price
management instruments seek to minimize exposure associated with rising fuel
prices and effectively fix the cost of fuel and profitability of certain of its
long-term negotiated contract sales. NAEC's interest-rate management instruments
effectively fix its variable-rate bank note at 7.82 percent as of March
10, 1997.
See the "Notes to Consolidated Financial Statements" Note 8, for further
information on interest-rate and fuel-price management instruments.
RESULTS OF OPERATIONS
================================================================================
The components of significant income statement variances for the past two
years are provided in the table below.
The relative magnitude of how revenues earned in 1996 were used by NU's
continuing operations in 1996 is illustrated in the chart on page 19.
OPERATING REVENUES
Total operating revenues increased in 1996, primarily due to higher retail
sales, regulatory decisions and higher other revenues, partially offset by lower
fuel recoveries and lower wholesale revenues. Retail sales increased 1.6 percent
($40 million), primarily due to modest economic growth in 1996. Regulatory
decisions increased revenues by $22 million, primarily due to retail rate
increases for CL&P and PSNH, partially offset by 1996 reserves for CL&P
over-recoveries of demand side management costs. Other revenues increased $31
million and included higher recognition in 1996 of reimbursable conservation
services and higher transmission revenues. Fuel recoveries decreased $40
million, primarily due to lower FPPAC revenues for PSNH as a result of a
customer refund ordered by the NHPUC, partially offset by higher base fuel
revenues for PSNH as a result of the PSNH retail rate increases. Wholesale
revenues decreased $13 million, primarily due to higher recognition in 1995 of
lump-sum payments for the termination of a CL&P long-term contract and capacity
sales contracts that expired in 1995.
Total operating revenues increased in 1995, primarily due to regulatory
decisions and higher fuel recoveries, partially offset by lower wholesale
revenues. Regulatory decisions increased revenues by $79 million, primarily due
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Income Statement Variances
(Millions of Dollars)
- -----------------------------------------------------------------------------------------------
1996 over/(under) 1995 1995 over/(under) 1994
Amount Percent Amount Percent
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $42 1% $108 3%
Fuel, purchased and net interchange power 230 25 77 9
Other operation 191 20 48 5
Maintenance 127 44 (18) (6)
Depreciation 5 1 19 6
Amortization of regulatory assets, net (6) (5) (32) (20)
Federal and state income taxes (192) (73) (18) (6)
Other, net 20 (a) 3 41
Minority interest in income of subsidiary 1 7 9 100
Deferred nuclear plants return (other and
borrowed funds) (13) (36) (31) (45)
Interest on long-term debt (30) (10) 2 1
Preferred dividends of subsidiaries (6) (14) (4) (9)
Net income (281) (99) (4) (2)
- -----------------------------------------------------------------------------------------------
(a) Percentage greater than 100
</TABLE>
18 Northeast Utilities 1996 Annual Report
<PAGE>
to retail rate increases for PSNH and CL&P and higher recoveries of
demand side management costs. Fuel recoveries increased $63 million, primarily
due to higher energy costs and the recovery of GUAC costs for CL&P. Wholesale
revenues decreased $19 million, primarily due to capacity sales contracts that
expired in 1994.
FUEL, PURCHASED AND NET INTERCHANGE POWER
Fuel, purchased and net interchange power expense increased in 1996, primarily
due to higher energy costs in 1996 due to the nuclear outages and the write-off
of GUAC balances under the CL&P Settlement, partially offset by lower nuclear
generation.
Fuel, purchased and net interchange power expense increased in 1995,
primarily due to higher fossil generation, higher priced outside energy
purchases from other utilities in 1995 and higher amortization of previously
deferred FPPAC expenses in 1995.
OTHER OPERATION AND MAINTENANCE
Other operation and maintenance expenses increased in 1996, primarily due to
higher costs associated with the Millstone outages ($179 million, including
$63 million of reserves for future costs) and 1996 costs to ensure adequate
generating capacity in Connecticut ($39 million). In addition, 1996 costs
reflect higher storm and reliability expenditures, higher recognition of
conservation expenses and higher marketing costs.
Other operation and maintenance expenses increased in 1995, primarily due
to higher recognition of conservation expenses, higher recognition of
postretirement benefit costs and higher capacity charges from the regional
nuclear generating units, partially offset by higher nuclear reserves for
excess/obsolete inventory in 1994, and lower maintenance costs at the fossil
units and fossil reserves for excess/obsolete inventory in 1994.
DEPRECIATION
Although the change in 1996 was not significant, depreciation expense increased
in 1995, primarily due to higher plant balances and higher decommissioning
levels.
AMORTIZATION OF REGULATORY ASSETS, NET
Amortization of regulatory assets, net decreased in 1996, primarily due to the
completion of Millstone 3 phase-in plans in 1995, partially offset by lower
CL&P cogeneration deferrals and the accelerated amortization of regulatory
assets as a result of the CL&P Settlement.
Amortization of regulatory assets, net decreased in 1995, primarily due to
higher CL&P cogeneration deferrals in 1995, the completion during 1994 of the
amortization of a 1993 cogeneration buyout and the completion of WMECO's
amortization of Millstone 3 phase-in costs in 1995.
FEDERAL AND STATE INCOME TAXES
Federal and state income taxes decreased in 1996, primarily due to lower
book taxable income, partially offset by 1995 tax benefits from a favorable tax
ruling and the expiration of the 1991 federal statute of limitations. Income tax
expense totaled approximately $70 million in 1996, despite relatively low pretax
earnings, due to the tax effect of differences for certain items, particularly
depreciation and the amortization of PSNH acquisition costs.
Federal and state income taxes decreased in 1995, primarily due to 1995 tax
benefits from a favorable tax ruling and the expiration of the 1991 federal
statute of limitations.
OTHER, NET
Other, net increased in 1996, primarily due to higher interest income on
temporary cash investments in 1996, the 1995 write-down of CL&P's wholesale
investment in Millstone 3 and a 1995 increase to the environmental reserve. The
change in 1995 was not significant.
MINORITY INTEREST IN INCOME OF SUBSIDIARY
Although the change in 1996 was not significant, minority interest in income of
subsidiary increased in 1995, primarily due to the issuance of Monthly Income
Preferred Securities in 1995. See the "Notes to Consolidated Financial
Statements" Note 10, for further information on these securities.
DEFERRED NUCLEAR PLANTS RETURN
Deferred nuclear plants return decreased in 1996, primarily due to additional
Seabrook investment being phased into rates, partially offset by a one-time
adjustment to NAEC's Seabrook deferred return balance of approximately $5
million in 1995.
Deferred nuclear plants return decreased in 1995, primarily due to
additional Millstone 3 and Seabrook investments being phased into rates.
INTEREST ON LONG-TERM DEBT
Interest on long-term debt decreased in 1996, primarily due to lower average
interest rates as a result of refinancing activities and lower average 1996
debt levels. The change in 1995 was not significant.
PREFERRED DIVIDENDS OF SUBSIDIARIES
Preferred dividends of subsidiaries decreased in 1996, primarily due to a 1995
charge to earnings for premiums on redeemed preferred stock and a reduction in
preferred stock levels. The change in 1995 was not significant.
[PIE CHART here]
1996 USE OF REVENUE
Nonfuel Operating Expenses and Other Income, Net (6%)
Wages and Benefits (14%)
Interest and Charges (8%)
Common and Preferred Dividends (5%)
Other Operation and Maintenance Expenses (28%)
Energy Costs (30%)
Taxes (9%)
[end of Pie chart]
Northeast Utilities 1996 Annual Report 19
<PAGE>
COMPANY REPORT
The consolidated financial statements of Northeast Utilities and subsidiaries
and other sections of this Annual Report were prepared by the company. These
financial statements, which were audited by Arthur Andersen LLP, were prepared
in accordance with generally accepted accounting principles using estimates and
judgment, where required, and giving consideration to materiality.
The company has endeavored to establish a control environment that
encourages the maintenance of high standards of conduct in all of its business
activities. The company maintains a system of internal controls over financial
reporting which is designed to provide reasonable assurance to the company's
management and Board of Trustees regarding the preparation of reliable,
published financial statements. The system is supported by an organization of
trained management personnel, policies and procedures, and a comprehensive
program of internal audits. Through established programs, the company regularly
communicates to its management employees their internal control responsibilities
and policies prohibiting conflict of interest.
The Audit Committee of the Board of Trustees is composed entirely of
outside trustees. This committee meets periodically with management, the
internal auditors and the independent auditors to review the activities of each
and to discuss audit matters, financial reporting and the adequacy of internal
controls.
Because of inherent limitations in any system of internal controls, errors
or irregularities may occur and not be detected. The company believes, however,
that its system of internal accounting controls and control environment provide
reasonable assurance that its assets are safeguarded from loss or unauthorized
use and that its financial records, which are the basis for the preparation of
all financial statements, are reliable.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders
of Northeast Utilities:
We have audited the accompanying consolidated balance sheets and consolidated
statements of capitalization of Northeast Utilities (a Massachusetts trust) and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, common shareholders' equity, cash flows and income
taxes for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Northeast Utilities and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 21, 1997 (except with respect to the matter discussed in Note 11,
as to which the date is March 10, 1997)
20 Northeast Utilities 1996 Annual Report
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars, except share information) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUES...................................................... $ 3,792,148 $ 3,750,560 $ 3,642,742
- -----------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Operation--
Fuel, purchased and net interchange power........................... 1,139,616 909,244 832,420
Other............................................................... 1,157,510 966,845 919,044
Maintenance............................................................. 415,532 288,927 306,429
Depreciation............................................................ 359,507 354,293 335,019
Amortization of regulatory assets, net.................................. 122,573 128,413 160,909
Federal and state income taxes (See Consolidated
Statements of Income Taxes) ........................................ 68,261 261,287 287,951
Taxes other than income taxes........................................... 257,577 249,463 247,045
- -----------------------------------------------------------------------------------------------------------------------
Total operating expenses............................................ 3,520,576 3,158,472 3,088,817
- -----------------------------------------------------------------------------------------------------------------------
OPERATING INCOME........................................................ 271,572 592,088 553,925
- -----------------------------------------------------------------------------------------------------------------------
OTHER INCOME:
Deferred nuclear plants return--other funds............................. 8,988 14,196 27,085
Equity in earnings of regional nuclear generating
and transmission companies.......................................... 13,155 13,208 14,426
Other, net.............................................................. 30,932 10,954 7,745
Minority interest in income of subsidiary (Note 9)...................... (9,300) (8,732) --
Income taxes............................................................ (1,747) (683) 7,825
- -----------------------------------------------------------------------------------------------------------------------
Other income, net................................................... 42,028 28,943 57,081
- -----------------------------------------------------------------------------------------------------------------------
Income before interest charges...................................... 313,600 621,031 611,006
- -----------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES:
Interest on long-term debt.............................................. 285,463 315,862 314,191
Other interest.......................................................... 7,649 6,666 8,037
Deferred nuclear plants return--borrowed funds.......................... (15,119) (23,310) (41,138)
- -----------------------------------------------------------------------------------------------------------------------
Interest charges, net............................................... 277,993 299,218 281,090
- -----------------------------------------------------------------------------------------------------------------------
Income after interest charges....................................... 35,607 321,813 329,916
PREFERRED DIVIDENDS OF SUBSIDIARIES..................................... 33,776 39,379 43,042
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME.............................................................. $ 1,831 $ 282,434 $ 286,874
=======================================================================================================================
EARNINGS PER COMMON SHARE............................................... $0.01 $2.24 $2.30
=======================================================================================================================
COMMON SHARES OUTSTANDING (AVERAGE)..................................... 127,960,382 126,083,645 124,678,192
=======================================================================================================================
The accompanying notes are an intergral part of these financial statements.
</TABLE>
Northeast Utilities 1996 Annual Report 21
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
At December 31,
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars) 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
UTILITY PLANT, AT COST:
Electric............................................................ $ 9,688,005 $ 9,490,142
Other............................................................... 189,453 187,389
- -----------------------------------------------------------------------------------------------------------------------
9,877,458 9,677,531
Less: Accumulated provision for depreciation (Note 1F).............. 3,979,864 3,629,559
- -----------------------------------------------------------------------------------------------------------------------
........................................................................ 5,897,594 6,047,972
Unamortized PSNH acquisition costs (Note 1J)............................ 491,709 588,910
Construction work in progress........................................... 146,438 165,111
Nuclear fuel, net....................................................... 196,424 198,844
- -----------------------------------------------------------------------------------------------------------------------
Total net utility plant............................................. 6,732,165 7,000,837
- -----------------------------------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS:
Nuclear decommissioning trusts, at market............................... 403,544 325,674
Investments in regional nuclear generating companies, at equity (Note 1E) 85,340 81,996
Investments in transmission companies, at equity (Note 1E).............. 21,186 23,558
Investments in Charter Oak Energy, Inc. projects (Note 1E).............. 57,188 41,221
Other, at cost.......................................................... 43,372 35,247
- -----------------------------------------------------------------------------------------------------------------------
610,630 507,696
- -----------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents (Note 1Q)..................................... 194,197 29,038
Special deposits (Note 1Q).............................................. 7,039 71
Receivables, less accumulated provision for uncollectible
accounts of $17,062,000 in 1996 and $14,378,000 in 1995............. 477,021 435,931
Accrued utility revenues................................................ 127,162 136,260
Fuel, materials and supplies, at average cost........................... 211,414 200,580
Recoverable energy costs, net--current portion.......................... 1,804 79,300
Prepayments and other................................................... 48,279 34,430
- -----------------------------------------------------------------------------------------------------------------------
1,066,916 915,610
- -----------------------------------------------------------------------------------------------------------------------
DEFERRED CHARGES:
Regulatory assets (Note 1H)............................................. 2,221,839 2,048,959
Unamortized debt expense................................................ 38,146 37,645
Other................................................................... 72,052 48,827
- -----------------------------------------------------------------------------------------------------------------------
2,332,037 2,135,431
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS............................................................ $10,741,748 $10,559,574
=======================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
22 Northeast Utilities 1996 Annual Report
<PAGE>
CONSOLIDATED BALANCE SHEETS (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
At December 31,
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars) 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION: (See Consolidated Statements of Capitalization)
Common shareholders' equity (See Note (a)--Consolidated
Statements of Common Shareholders' Equity):
Common shares, $5 par value--authorized 225,000,000 shares; 136,051,938 shares issued
and 128,444,373 shares outstanding in 1996 and 135,611,166 shares issued
and 127,050,647 shares outstanding in 1995...................... $ 680,260 $ 678,056
Capital surplus, paid in............................................ 940,446 936,308
Deferred benefit plan--employee stock ownership plan (Note 5D)...... (176,091) (198,152)
Retained earnings................................................... 832,520 1,007,340
- -----------------------------------------------------------------------------------------------------------------------
....Total common shareholders' equity................................... 2,277,135 2,423,552
Preferred stock not subject to mandatory redemption..................... 136,200 169,700
Preferred stock subject to mandatory redemption......................... 276,000 302,500
Long-term debt.......................................................... 3,613,681 3,705,215
- -----------------------------------------------------------------------------------------------------------------------
Total capitalization................................................ 6,303,016 6,600,967
- -----------------------------------------------------------------------------------------------------------------------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES (Note 9) ................ 99,972 99,935
- -----------------------------------------------------------------------------------------------------------------------
OBLIGATIONS UNDER CAPITAL LEASES (Note 4)............................... 186,860 147,372
- -----------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Notes payable to banks.................................................. 38,750 99,000
Long-term debt and preferred stock--current portion..................... 319,503 219,657
Obligations under capital leases--current portion (Note 4).............. 19,305 83,110
Accounts payable........................................................ 507,139 319,038
Accrued taxes........................................................... 7,050 75,218
Accrued interest........................................................ 51,386 53,699
Accrued pension benefits................................................ 99,699 90,630
Nuclear compliance (Note 7B)............................................ 63,200 --
Other................................................................... 98,570 105,821
- -----------------------------------------------------------------------------------------------------------------------
1,204,602 1,046,173
- -----------------------------------------------------------------------------------------------------------------------
DEFERRED CREDITS:
Accumulated deferred income taxes (Note 1I)............................. 2,044,123 2,135,852
Accumulated deferred investment tax credits............................. 168,444 178,060
Deferred contractual obligations (Note 2)............................... 440,495 103,475
Other................................................................... 294,236 247,740
- -----------------------------------------------------------------------------------------------------------------------
2,947,298 2,665,127
- -----------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Note 7)
TOTAL CAPITALIZATION AND LIABILITIES.................................... $10,741,748 $10,559,574
=======================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
Northeast Utilities 1996 Annual Report 23
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Income before preferred dividends of subsidiaries....................... $ 35,607 $ 321,813 $ 329,916
Adjustments to reconcile to net cash from operating activities:
Depreciation........................................................ 359,507 354,293 335,019
Deferred income taxes and investment tax credits, net............... 45,730 164,208 146,560
Deferred nuclear plants return, net of amortization................. (14,948) 71,788 49,994
Recoverable energy costs, net of amortization....................... (14,289) (27,874) (85,573)
Amortization of PSNH acquisition costs.............................. 56,884 55,547 55,319
Deferred cogeneration costs, net of amortization.................... 25,957 (55,341) (36,821)
Deferred demand side management costs, net of amortization.......... 26,941 (937) (4,691)
Deferred nuclear refueling outage, net of amortization.............. 51,831 (29,569) --
Nuclear compliance, net (Note 7B)................................... 63,200 -- --
Other sources of cash............................................... 164,915 132,106 74,579
Other uses of cash.................................................. (41,589) (67,838) (36,596)
Changes in working capital:
Receivables and accrued utility revenues............................ (31,992) (72,081) 8,133
Fuel, materials and supplies........................................ (10,834) (10,518) 4,906
Accounts payable.................................................... 188,101 38,096 51,824
Accrued taxes....................................................... (68,168) 17,686 17,031
Other working capital (excludes cash)............................... (21,383) (2,458) 23,995
- -----------------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities................................ 815,470 888,921 933,595
- -----------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Issuance of common shares............................................... 10,622 47,218 14,551
Issuance of long-term debt.............................................. 222,150 225,100 625,000
Issuance of Monthly Income Preferred Securities......................... -- 100,000 --
Net (decrease) increase in short-term debt.............................. (60,250) (91,000) 16,500
Reacquisitions and retirements of long-term debt........................ (248,142) (425,500) (982,920)
Reacquisitions and retirements of preferred stock....................... (36,500) (140,675) (7,325)
Cash dividends on preferred stock....................................... (33,776) (39,379) (43,042)
Cash dividends on common shares......................................... (176,277) (221,701) (219,317)
- -----------------------------------------------------------------------------------------------------------------------
Net cash flows used for financing activities............................ (322,173) (545,937) (596,553)
- -----------------------------------------------------------------------------------------------------------------------
INVESTMENT ACTIVITIES:
Investment in plant:
Electric and other utility plant.................................... (222,829) (231,408) (259,904)
Nuclear fuel........................................................ (14,529) (18,261) (28,308)
- -----------------------------------------------------------------------------------------------------------------------
Net cash flows used for investments in plant............................ (237,358) (249,669) (288,212)
Investment in nuclear decommissioning trusts............................ (65,716) (60,642) (34,050)
Other investment activities, net........................................ (25,064) (30,761) (10,516)
- -----------------------------------------------------------------------------------------------------------------------
Net cash flows used for investments..................................... (328,138) (341,072) (332,778)
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH FOR THE PERIOD..................................... 165,159 1,912 4,264
Cash and cash equivalents--beginning of period.......................... 29,038 27,126 22,862
- -----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents--end of period................................ $ 194,197 $ 29,038 $ 27,126
- -----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest, net of amounts capitalized.................................... $ 268,129 $ 321,148 $ 306,224
=======================================================================================================================
Income taxes............................................................ $ 64,189 $ 108,928 $ 134,727
=======================================================================================================================
Increase in obligations:
Niantic Bay Fuel Trust and other capital leases..................... $ 3,524 $ 41,388 $ 65,932
=======================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
24 Northeast Utilities 1996 Annual Report
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Deferred
Benefit
Common Capital Surplus, Plan--ESOP Retained
Shares (a) Paid In (Note 5D) Earnings (b) Total
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994.................. $671,035 $901,740 $(228,205) $879,518 $2,224,088
- -----------------------------------------------------------------------------------------------------------------------
Net income for 1994..................... 286,874 286,874
Cash dividends on common shares--
$1.76 per share...................... (219,317) (219,317)
Loss on retirement of preferred stock... (87) (87)
Issuance of 3,201 common shares,
$5 par value......................... 16 61 77
Allocation of benefits--ESOP............ (406) 14,881 14,475
Capital stock expenses, net............. 2,976 2,976
- -----------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994................ 671,051 904,371 (213,324) 946,988 2,309,086
- -----------------------------------------------------------------------------------------------------------------------
Net income for 1995..................... 282,434 282,434
Cash dividends on common shares--
$1.76 per share...................... (221,701) (221,701)
Loss on retirement of preferred stock... (381) (381)
Issuance of 1,400,940 common shares,
$5 par value......................... 7,005 24,971 31,976
Allocation of benefits--ESOP............ 70 15,172 15,242
Capital stock expenses, net............. 6,896 6,896
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995................ 678,056 936,308 (198,152) 1,007,340 2,423,552
- -----------------------------------------------------------------------------------------------------------------------
Net income for 1996..................... 1,831 1,831
Cash dividends on common shares--
$1.38 per share...................... (176,277) (176,277)
Loss on retirement of preferred stock... (374) (374)
Issuance of 440,772 common shares,
$5 par value......................... 2,204 8,418 10,622
Allocation of benefits--ESOP............ (8,103) 22,061 13,958
Capital stock expenses, net............. 3,077 3,077
Currency translation adjustments........ 746 746
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1996................ $680,260 $940,446 $(176,091) $832,520 $2,277,135
=======================================================================================================================
(a) As part of its acquisition of PSNH, NU issued 8,430,910 warrants to former
PSNH equity security holders. Each warrant, which expires on June 5, 1997,
entitles the holder to purchase one share of NU common stock at an exercise
price of $24 per share. As of December 31, 1996, 464,187 shares had been
purchased through the exercise of warrants.
(b) Certain consolidated subsidiaries have dividend restrictions imposed by
their long-term debt agreements. These restrictions also limit the amount
of retained earnings available for NU common dividends. At December 31,
1996, these restrictions totaled approximately $559.6 million.
The accompanying notes are an integral part of these financial statements.
</TABLE>
Northeast Utilities 1996 Annual Report 25
<PAGE>
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
At December 31,
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars) 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON SHAREHOLDERS' EQUITY (See Consolidated Balance Sheets)........... $2,277,135 $2,423,552
- -----------------------------------------------------------------------------------------------------------------------
CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES:
$25 par value--authorized 36,600,000 shares at December 31, 1996 and 1995;
5,840,000 shares outstanding in 1996 and 7,300,000 shares outstanding in 1995
$50 par value--authorized 9,000,000 shares at December 31, 1996 and 1995;
5,424,000 shares outstanding in 1996 and 1995
$100 par value--authorized 1,000,000 shares at December 31, 1996 and 1995;
200,000 shares outstanding in 1996 and 1995
- -----------------------------------------------------------------------------------------------------------------------
Dividend Rates Current Redemption Prices (a) Current Shares Outstanding
- -----------------------------------------------------------------------------------------------------------------------
Not Subject to Mandatory Redemption:
$25 par value--Adjustable Rate $ -- --....... -- 33,500
$50 par value--$1.90 to $3.28 $50.50 to $54.00 2,324,000....... 116,200 116,200
$100 par value--$7.72 $103.51 200,000....... 20,000 20,000
- -----------------------------------------------------------------------------------------------------------------------
Total Preferred Stock Not Subject to Mandatory Redemption ....................... 136,200 169,700
- -----------------------------------------------------------------------------------------------------------------------
SUBJECT TO MANDATORY REDEMPTION: (b)
$25 par value--$1.90 to $2.65 $25.00 to $25.76 5,840,000....... 146,000 149,000
$50 par value--$2.65 to $3.615 $51.00 to $52.41 3,100,000....... 155,000 155,000
- -----------------------------------------------------------------------------------------------------------------------
Total Preferred Stock Subject to Mandatory Redemption............................ 301,000 304,000
Less: Preferred Stock to be redeemed within one year............................. 25,000 1,500
- -----------------------------------------------------------------------------------------------------------------------
Preferred Stock Subject to Mandatory Redemption, net............................. 276,000 302,500
- -----------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT: (c)
First Mortgage Bonds --
Maturity Interest Rates
- -----------------------------------------------------------------------------------------------------------------------
1996 8.875%........................................................... -- 172,500
1997 5.75% to 7.625%.................................................. 207,988 211,945
1998 6.50% to 9.17%................................................... 199,800 199,800
1999 5.50% to 7.25%................................................... 279,000 280,000
2000 5.75% to 6.875%.................................................. 260,000 260,000
2001 7.875%........................................................... 160,000 --
2002 7.75% to 9.05%................................................... 400,000 420,000
2004 6.125%........................................................... 140,000 140,000
2019-2023 7.375% to 7.50%.................................................. 120,000 120,000
2024-2025 7.375% to 8.50%.................................................. 430,000 430,000
- -----------------------------------------------------------------------------------------------------------------------
Total First Mortgage Bonds................................................... 2,196,788 2,234,245
- -----------------------------------------------------------------------------------------------------------------------
Other Long-Term Debt--(d)
Pollution Control Notes and Other Notes--
2000 Adjustable Rate (e).............................................. 200,000 225,000
2005-2006 8.38% to 8.58%................................................... 210,000 224,000
2013-2016 Adjustable Rate.................................................. 23,400 23,400
2018-2020 7.17% and Adjustable Rate........................................ 49,482 49,874
2021-2022 7.50% to 7.65% and Adjustable Rate............................... 552,485 552,485
2028 Adjustable Rate.................................................. 369,300 369,300
2031 Adjustable Rate (f).............................................. 62,000 --
- -----------------------------------------------------------------------------------------------------------------------
Total Pollution Control Notes and Other Notes................................ 1,466,667 1,444,059
Fees and interest due for spent nuclear fuel disposal costs (Note 1o)............ 195,023 185,158
Other............................................................................ 57,169 68,312
- -----------------------------------------------------------------------------------------------------------------------
Total Other Long-Term Debt....................................................... 1,718,859 1,697,529
- -----------------------------------------------------------------------------------------------------------------------
Unamortized premium and discount, net............................................ (7,463) (8,402)
- -----------------------------------------------------------------------------------------------------------------------
Total Long-Term Debt............................................................. 3,908,184 3,923,372
Less: Amounts due within one year................................................ 294,503 218,157
- -----------------------------------------------------------------------------------------------------------------------
Long-Term Debt, net.............................................................. 3,613,681 3,705,215
- -----------------------------------------------------------------------------------------------------------------------
TOTAL CAPITALIZATION............................................................. $6,303,016 $6,600,967
=======================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
26 Northeast Utilities 1996 Annual Report
<PAGE>
NOTES TO CONSOLIDATED STATEMENTS OF CAPITALIZATION
(a) Each of these series is subject to certain refunding limitations for the
first five years after issuance. Redemption prices reduce in future years.
(b) Changes in Preferred Stock Subject to Mandatory Redemption:
- ---------------------------------------------------------------------
(Thousands of Dollars)
- ---------------------------------------------------------------------
Balance at January 1, 1994.............................. $382,000
Reacquisitions and Retirements...................... (2,325)
- ---------------------------------------------------------------------
Balance at December 31, 1994............................ 379,675
Reacquisitions and Retirements...................... (75,675)
- ---------------------------------------------------------------------
Balance at December 31, 1995............................ 304,000
Reacquisitions and Retirements...................... (3,000)
- ---------------------------------------------------------------------
Balance at December 31, 1996............................ $301,000
=====================================================================
The minimum sinking-fund requirements of the series subject to mandatory
redemption aggregate approximately $25.0 million in 1997, $30.3 million in 1998
and $46.3 million in 1999, 2000 and 2001. In case of default on sinking-fund
payments, no payments may be made on any junior stock by way of dividends or
otherwise (other than in shares of junior stock) so long as the default
continues. If a subsidiary is in arrears in the payment of dividends on any
outstanding shares of preferred stock, the subsidiary is prohibited from
redeeming or purchasing less than all of the outstanding preferred stock.
(c) Long-term debt maturities and cash sinking-fund requirements, excluding fees
and interest due for spent nuclear fuel disposal costs, on debt outstanding at
December 31, 1996 for the years 1997 through 2001 are approximately $294.5
million, $238.1 million, $369.4 million, $551.6 million and $252.7 million,
respectively. In addition, there are annual one percent sinking- and
improvement-fund requirements of approximately $17.1 million for 1997, $15.0
million for 1998, $14.7 million for 1999, $12.0 million for 2000 and $9.4
million for 2001. Such sinking- and improvement-fund requirements may be
satisfied by the deposit of cash or bonds or by certification of property
additions. Essentially all utility plant of The Connecticut Light and Power
Company (CL&P), Public Service Company of New Hampshire (PSNH), Western
Massachusetts Electric Company (WMECO), and North Atlantic Energy Corporation
(NAEC), wholly-owned subsidiaries of NU, is subject to the liens of each
company's respective first mortgage bond indenture.
NAEC's first mortgage bonds are also secured by payments made to NAEC by
PSNH under the terms of the Seabrook Power Contracts.
In addition, CL&P and WMECO have secured $369.3 million of
pollution-control notes with second mortgage liens on Millstone 1, junior to the
liens of their respective first mortgage bond indentures. PSNH's Revolving
Credit Facility has a second lien, junior to the lien of its first mortgage bond
indenture, on all PSNH property located in New Hampshire, which will expire in
April, 1999. At December 31, 1996, there were no borrowings under the Revolving
Credit Facility. For further information on PSNH's Revolving Credit Facility,
see Note 3 "Short-Term Debt."
Concurrent with the issuance of PSNH's Series A and B first mortgage bonds,
PSNH entered into financing arrangements with the Business Finance Authority
(BFA) of the state of New Hampshire. Pursuant to these arrangements, the BFA
issued seven series of Pollution Control Revenue Bonds (PCRBs) and loaned the
proceeds to PSNH. At December 31, 1996, $516.5 million of the PCRBs were
outstanding. PSNH's obligation to repay each series of PCRBs is secured by a
series of first mortgage bonds that were issued under its indenture. Each such
series of first mortgage bonds contains terms and provisions with respect to
maturity, principal payment, interest rate and redemption that correspond to
those of the applicable series of PCRBs. For financial reporting purposes, these
bonds would not be considered outstanding unless PSNH fails to meet its
obligations under the PCRBs.
(d) The average effective interest rates on the variable-rate pollution control
notes ranged from 3.2 percent to 5.5 percent for 1996 and 3.6 percent to 6.1
percent for 1995.
(e) Interest-rate management instruments with financial institutions
effectively fix the interest rate of NAEC's $200 million variable-rate
bank note at 7.07 percent as of February 21, 1997. For further information,
see Note 8, "Interest Rate and Fuel Price Management."
(f) On January 23, 1997, the letter of credit associated with CL&P's $62 million
tax-exempt PCRBs, issued on May 21, 1996, was replaced with a bond insurance and
liquidity facility secured by first mortgage bonds. The bonds were originally
backed by a five-year letter of credit and secured by a second mortgage on
CL&P's interest in Millstone 1.
Northeast Utilities 1996 Annual Report 27
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME TAXES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The components of the federal and state income tax provisions charged to
operations are:
Current income taxes:
Federal.............................................................. $13,500 $ 53,862 $ 88,483
State................................................................ 10,778 43,900 45,083
- -----------------------------------------------------------------------------------------------------------------------
Total current............................................................ 24,278 97,762 133,566
- -----------------------------------------------------------------------------------------------------------------------
Deferred income taxes, net:
Federal.............................................................. 70,117 167,091 149,391
State................................................................ (14,793) 7,224 6,988
- -----------------------------------------------------------------------------------------------------------------------
Total deferred........................................................... 55,324 174,315 156,379
- -----------------------------------------------------------------------------------------------------------------------
Investment tax credits, net.............................................. (9,594) (10,107) (9,819)
- -----------------------------------------------------------------------------------------------------------------------
Total income tax expense................................................. $70,008 $261,970 $280,126
=======================================================================================================================
The components of total income tax expense are classified as follows:
Income taxes charged to operating expenses........................... $68,261 $261,287 $287,951
Other income taxes................................................... 1,747 683 (7,825)
- -----------------------------------------------------------------------------------------------------------------------
Total income tax expense................................................. $70,008 $261,970 $280,126
=======================================================================================================================
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
Depreciation, leased nuclear fuel, settlement credits
and disposal costs................................................ $18,401 $82,318 $ 72,078
Energy adjustment clauses............................................ (8,268) 26,851 49,017
Nuclear plant deferrals.............................................. (15,549) 2,666 (10,542)
Contractual settlements.............................................. 2,513 (9,496) 109
Bond redemptions..................................................... (4,685) 9,224 8,325
Amortization of New Hampshire regulatory settlement.................. 11,501 11,501 11,501
Deferred tax asset associated with net operating losses.............. 96,756 57,543 23,611
Nuclear compliance reserves.......................................... (26,102) -- --
Demand side management............................................... (14,954) 765 217
Other................................................................ (4,289) (7,057) 2,063
- -----------------------------------------------------------------------------------------------------------------------
Deferred income taxes, net............................................... $55,324 $174,315 $156,379
=======================================================================================================================
A reconciliation between income tax expense and the expected tax
expense at 35 percent of pretax income:
Expected federal income tax.............................................. $35,852 $204,324 $213,515
Tax effect of differences:
Depreciation......................................................... 24,337 25,639 20,003
Deferred nuclear plants return....................................... (3,146) (4,969) (9,480)
Amortization of regulatory assets.................................... 9,630 21,883 23,103
Amortization of PSNH acquisition costs............................... 31,410 31,522 31,508
Seabrook intercompany loss........................................... (7,503) (13,048) (19,637)
Investment tax credit amortization................................... (9,594) (10,107) (9,819)
State income taxes, net of federal benefit........................... (2,610) 33,231 33,847
Sale of Seabrook 2 steam generator................................... (2,516) -- --
Adjustment for prior years' taxes.................................... (962) (20,312) (4,588)
Employee stock ownership plan........................................ (4,007) (2,192) (2,198)
Dividends received deduction......................................... (3,027) (3,936) (3,692)
Other, net........................................................... 2,144 (65) 7,564
- -----------------------------------------------------------------------------------------------------------------------
Total income tax expense................................................. $70,008 $261,970 $280,126
=======================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
28 Northeast Utilities 1996 Annual Report
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ABOUT NORTHEAST UTILITIES
Northeast Utilities (NU or the company) is the parent company of the Northeast
Utilities system (the system). The system furnishes retail electric service in
Connecticut, New Hampshire and western Massachusetts through four wholly-owned
subsidiaries: CL&P, PSNH, WMECO, and Holyoke Water Power Company (HWP). A fifth
wholly-owned subsidiary, NAEC, sells all of its capacity to PSNH. In addition to
its retail service, the system furnishes firm and other wholesale electric
services to various municipalities and other utilities. The system serves about
30 percent of New England's electric needs and is one of the 20 largest electric
utility systems in the country as measured by revenues.
Several wholly-owned subsidiaries of NU provide support services for the
system companies and, in some cases, for other New England utilities. Northeast
Utilities Service Company (NUSCO) provides centralized accounting,
administrative, information resources, engineering, financial, legal,
operational, planning, purchasing and other services to the system companies.
North Atlantic Energy Service Corporation (NAESCO) has operational
responsibility for the Seabrook nuclear generating facility. Northeast Nuclear
Energy Company (NNECO) acts as agent for the system companies and other New
England utilities in operating the Millstone nuclear generating facilities.
Three other subsidiaries construct, acquire or lease some of the property and
facilities used by the system companies.
NU has four other subsidiaries, Charter Oak Energy, Inc. (COE), HEC, Inc.
(HEC), Mode 1 Communications, Inc. (Mode 1) and NUSCO Energy Partners, Inc.
(Energy Partners), which engage in a variety of activities. Directly and through
subsidiaries, COE develops and invests in cogeneration, small-power production
and other forms of nonutility generation as permitted under the Public Utility
Regulatory Policy Act, and in exempt wholesale generators and foreign utility
companies as permitted under the Energy Policy Act of 1992 (Energy Act). HEC
provides energy management services for the system's commercial, industrial and
institutional electric customers and others. Both Mode 1 and Energy Partners
were formed in 1996 to develop and invest in telecommunications and
energy-related activities, respectively.
B. PRESENTATION
The consolidated financial statements of the company include the accounts of
all wholly-owned subsidiaries. Significant intercompany transactions have been
eliminated in consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain reclassifications of prior years' data have been made to conform
with the current year's presentation.
C. PUBLIC UTILITY REGULATION
NU is registered with the Securities and Exchange Commission (SEC) as a holding
company under the Public Utility Holding Company Act of 1935 (1935 Act), and it
and its subsidiaries are subject to the provisions of the 1935 Act. Arrangements
among the system companies, outside agencies and other utilities covering
interconnections, interchange of electric power and sales of utility property
are subject to regulation by the Federal Energy Regulatory Commission (FERC)
and/or the SEC. The operating subsidiaries are subject to further regulation for
rates, accounting and other matters by the FERC and/or applicable state
regulatory commissions.
D. NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which
established accounting standards for evaluating and recording asset impairment.
The company adopted SFAS 121 as of January 1, 1996. See Note 1H, "Summary of
Significant Accounting Policies -- Regulatory Accounting and Assets" for further
information on the regulatory impacts of the company's adoption of SFAS 121.
See Note 6, "Sale of Customer Receivables," and Note 7C, "Commitments and
Contingencies -- Environmental Matters," for information on newly issued
accounting and reporting standards related to those specific areas.
E. INVESTMENTS AND JOINTLY OWNED ELECTRIC UTILITY PLANT
Regional Nuclear Generating Companies: CL&P, PSNH and WMECO own common stock of
four regional nuclear generating companies (Yankee companies). The system's
investments in the Yankee companies are accounted for on the equity basis due
to NU's ability to exercise significant
Northeast Utilities 1996 Annual Report 29
<PAGE>
influence over their operating and financial policies. The Yankee companies,
with the system's equity investments and ownership interests are:
- --------------------------------------------------------
(Thousands of Dollars Except for Percentages)
- --------------------------------------------------------
Connecticut Yankee Atomic Power
Company (a) (CY)............... $52,677 49.0%
Yankee Atomic Electric
Company (a) (YAEC)............. 9,161 38.5
Maine Yankee Atomic Power
Company (MY)................... 14,878 20.0
Vermont Yankee Nuclear Power
Corporation (VY)............... 8,624 16.0
- --------------------------------------------------------
Total Equity Investment $85,340
========================================================
(a) YAEC's and CY's nuclear power plants were shut down permanently
on February 26, 1992, and December 4, 1996, respectively.
The electricity produced by MY and VY is committed substantially on the basis of
ownership interests and is billed pursuant to contractual agreements. Under
ownership agreements with the Yankee companies, CL&P, PSNH and WMECO may be
asked to provide direct or indirect financial support for one or more of the
companies. For more information on these agreements, see Note 7F, "Commitments
and Contingencies -- Long-Term Contractual Arrangements." For more information
on the Yankee companies, see Note 2, "Nuclear Decommissioning" and Note 7B
"Commitments and Contingencies -- Nuclear Performance."
Millstone: CL&P and WMECO together own 100 percent of both Millstone 1, a
660-megawatt (MW) nuclear generating unit and Millstone 2, a 870-MW nuclear
generating unit. CL&P, PSNH and WMECO together have a 68.02 percent joint
ownership interest in Millstone 3, a 1,154-MW nuclear generating unit. For more
information regarding the Millstone units, see Note 7B, "Commitments and
Contingencies--Nuclear Performance."
Seabrook 1: CL&P and NAEC together have a 40.04 percent joint ownership
interest in Seabrook 1, a 1,148-MW nuclear generating unit. NAEC sells all of
its share of the power generated by Seabrook 1 to PSNH under two long-term
contracts (the Seabrook Power Contracts).
Plant-in-service and the accumulated provision for depreciation for the
system's share of the three Millstone units and Seabrook 1 are as follows:
- ---------------------------------------------------------
At December 31,
- ---------------------------------------------------------
(Millions of Dollars) 1996 1995
- ---------------------------------------------------------
Plant-in-service
Millstone 1........................ $ 474.7 $ 460.0
Millstone 2........................ 851.8 844.5
Millstone 3........................ 2,402.4 2,399.7
Seabrook 1......................... 892.4 889.0
Accumulated provision for depreciation
Millstone 1........................ $ 196.6 $ 182.9
Millstone 2........................ 275.8 244.3
Millstone 3........................ 633.3 572.3
Seabrook 1......................... 131.7 107.0
- ---------------------------------------------------------
The system's share of Millstone and Seabrook 1 expenses are included in the
corresponding operating expenses on the accompanying Consolidated Statements of
Income.
Hydro-Quebec: NU has a 22.66 percent equity ownership interest, totaling
approximately $21.2 million, in two companies that transmit electricity imported
from the Hydro-Quebec system in Canada. The two companies own and operate
transmission and terminal facilities, which have the capability of importing up
to 2,000 MW from the Hydro-Quebec system. See Note 7F, "Commitments and
Contingencies--Long-Term Contractual Arrangements," for additional information.
Charter Oak Energy, Inc.: COE owns and/or participates through special
purpose subsidiaries in various nonutility generation projects. These
investments are accounted for on either a cost or equity basis based upon COE's
level of participation. At December 31, 1996, COE's investments totaled
approximately $57.2 million.
F. DEPRECIATION
The provision for depreciation is calculated using the straight-line method
based on estimated remaining lives of depreciable utility plant-in-service,
adjusted for salvage value and removal costs, as approved by the appropriate
regulatory agency.
Except for major facilities, depreciation rates are applied to the average
plant-in-service during the period. Major facilities are depreciated from the
time they are placed in service. When plant is retired from service, the
original cost of plant, including costs of removal, less salvage, is charged
to the accumulated provision for depreciation. The depreciation rates for the
several classes of electric plant-in-service are equivalent to a composite rate
of 3.8 percent in 1996 and 1995, and 3.7 percent in 1994. See Note 2, "Nuclear
Decommissioning," for information on nuclear plant decommissioning.
30 Northeast Utilities 1996 Annual Report
<PAGE>
NU's nonnuclear generating facilities have limited service lives. Plant
may be retired in place or dismantled based upon expected future needs, the
economics of the closure and environmental concerns. The costs of closure and
removal are incremental costs and, for financial reporting purposes, are
accrued over the life of the asset as part of depreciation. At December 31,
1996, the accumulated provision for depreciation included approximately $77.3
million accrued for the cost of removal, net of salvage for nonnuclear
generation property.
G. REVENUES
Other than revenues under fixed-rate agreements negotiated with certain
wholesale, industrial and commercial customers and limited pilot retail access
programs, utility revenues are based on authorized rates applied to each
customer's use of electricity. In general, rates can be changed only through a
formal proceeding before the appropriate regulatory commission. At the end of
each accounting period, CL&P, PSNH and WMECO accrue an estimate for the amount
of energy delivered but unbilled.
H. REGULATORY ACCOUNTING AND ASSETS
The accounting policies of the operating companies and the accompanying
consolidated financial statements conform to generally accepted accounting
principles applicable to rate regulated enterprises and reflect the effects of
the ratemaking process in accordance with SFAS 71, "Accounting for the Effects
of Certain Types of Regulation." Assuming a cost-of-service based regulatory
structure, regulators may permit incurred costs, normally treated as expenses,
to be deferred and recovered through future revenues. Through their actions,
regulators may also reduce or eliminate the value of an asset, or create a
liability. If any portion of the company's operations were no longer subject to
the provisions of SFAS 71, as a result of a change in the cost-of-service based
regulatory structure or the effects of competition, the company would be
required to write off related regulatory assets and liabilities. The company
continues to believe that its use of regulatory accounting remains appropriate.
SFAS 121 requires the evaluation of long-lived assets, including regulatory
assets, for impairment when certain events occur or when conditions exist that
indicate the carrying amounts of assets may not be recoverable. SFAS 121
requires that any long-lived assets which are no longer probable of recovery
through future revenues be revalued based on estimated future cash flows. If the
revaluation is less than the book value of the asset, an impairment loss would
be charged to earnings. The implementation of SFAS 121 did not have a material
impact on the company's financial position or results of operations as of
December 31, 1996. Management continues to believe that it is probable that the
operating companies will recover their investments in long-lived assets through
future revenues. This conclusion may change in the future as competitive factors
influence wholesale and retail pricing in the electric utility industry or if
the cost-of-service based regulatory structure were to change. The components of
the system companies' regulatory assets are as follows:
- ---------------------------------------------------------
At December 31,
- ---------------------------------------------------------
(Thousands of Dollars) 1996 1995
- ---------------------------------------------------------
Income taxes, net (Note 1I)..... $1,012,343 $1,176,356
Recoverable energy costs,
net (Note 1K)............... 328,863 237,078
Deferred costs--nuclear
plants (Note 1L)............ 185,078 168,600
Unrecovered contractual
obligations (Note 2)........ 435,495 103,475
Deferred demand side
management costs
(Note 1M)................... 90,129 117,070
Cogeneration costs (Note 1N).... 66,205 92,162
Other........................... 103,726 154,218
- ---------------------------------------------------------
$2,221,839 $2,048,959
=========================================================
For more information on the company's regulatory environment and the
potential impacts of restructuring,see Note 7A, "Commitments and Contingencies
- --Restructuring," Note 11 "Subsequent Event" and Management's Discussion and
Analysis of Financial Condition and Results of Operations (MD&A).
I. INCOME TAXES
The tax effect of temporary differences (differences between the periods in
which transactions affect income in the financial statements and the
periods in which they affect the determination of taxable income) is accounted
for in accordance with the ratemaking treatment of the applicable regulatory
commissions. The adoption of SFAS 109, "Accounting for Income Taxes," in 1993
increased the company's net deferred tax obligation. As it is probable that the
increase in deferred tax liabilities will be recovered from customers through
rates, NU established a regulatory asset. See Note 11, "Subsequent Event" for
the possible impacts on PSNH and NAEC of the New Hampshire Public Utilities
Commission's (NHPUC) decision related to industry restructuring. See
Consolidated Statements of Income Taxes for the components of income tax
expense.
The tax effect of temporary differences, including timing differences
accrued under previously approved
Northeast Utilities 1996 Annual Report 31
<PAGE>
accounting standards, which give rise to the accumulated deferred tax
obligation is as follows:
- ----------------------------------------------------------
At December 31,
- ----------------------------------------------------------
(Thousands of Dollars) 1996 1995
- ----------------------------------------------------------
Accelerated depreciation
and other plant-
related differences......... $1,640,068 $1,703,680
Net operating loss
carryforwards............... (94,149) (191,873)
Regulatory assets--
income tax gross up......... 423,363 477,959
Other........................... 74,841 146,086
- ----------------------------------------------------------
$2,044,123 $2,135,852
==========================================================
At December 31, 1996, PSNH had a net operating loss (NOL) carryforward of
approximately $292 million which can be used against PSNH's federal taxable
income and which, if unused, expires between the years 2000 and 2006. PSNH also
had Investment Tax Credit (ITC) carryforwards of $42 million, which, if unused,
expire between the years 1997 and 2004. For a portion of the carryforward
amounts indicated above, the reorganization of PSNH under Chapter 11 of the
United States Bankruptcy Code limits the annual amount of NOL and ITC
carryforwards that may be used. Approximately $31 million of the NOL and $11
million of the ITC carryforwards are subject to this limitation.
J. UNAMORTIZED PSNH ACQUISITION COSTS
The unamortized PSNH acquisition costs represent the aggregate value placed
by the 1989 rate agreement with the state of New Hampshire (Rate Agreement) on
PSNH's assets in excess of the net book value of PSNH's non-Seabrook assets,
plus the $700 million value assigned to Seabrook by the Rate Agreement, as part
of the bankruptcy resolution on June 5, 1992 (Acquisition Date). The Rate
Agreement provides for the recovery, through rates, with a return, of the
unamortized PSNH acquisition costs. The Rate Agreement provides that $425
million of the unamortized PSNH acquisition costs be amortized over the first
seven years after PSNH's May 16, 1991, reorganization from bankruptcy
(Reorganization Date), with the remaining amount to be amortized over the
20-year period after the Reorganization Date. As of December 31, 1996, PSNH has
collected approximately $501.6 million of acquisition costs.
K. RECOVERABLE ENERGY COSTS
Energy Act: Under the Energy Act, CL&P, PSNH, WMECO and NAEC are assessed
for their proportionate shares of the costs of decontaminating and
decommissioning uranium enrichment plants owned by the United States Department
of Energy (D&D assessment). The Energy Act requires that regulators treat D&D
assessments as a reasonable and necessary current cost of fuel, to be fully
recovered in rates, like any other fuel cost. CL&P, PSNH, WMECO and NAEC are
currently recovering these costs through rates. As of December 31, 1996, the
company's total D&D deferrals were approximately $62.8 million.
CL&P: During 1996, retail electric rates included a fuel adjustment clause
(FAC) under which fossil fuel prices above or below base-rate levels are charged
or credited to customers. In addition, CL&P also utilized a generation
utilization adjustment clause (GUAC), which deferred the effect on fuel costs
caused by variations from a specified composite nuclear generation capacity
factor embedded in base rates.
At December 31, 1996, CL&P's net recoverable energy costs, excluding
current net recoverable energy costs, were approximately $97.9 million which
includes its share of the D&D assessment. For additional information, see Note
7B, "Commitments and Contingencies -- Nuclear Performance."
On October 8, 1996, the Connecticut Department of Public Utility Control
(DPUC) issued an order establishing an Energy Adjustment Clause (EAC) effective
January 1, 1997. The EAC will replace CL&P's existing FAC and GUAC. For further
information regarding the EAC, see the MD&A.
PSNH: The Rate Agreement includes a comprehensive fuel and purchased power
adjustment clause (FPPAC) permitting PSNH to pass through to retail customers,
for a ten-year period that began in May, 1991, the retail portion of differences
between the fuel and purchased power costs assumed in the Rate Agreement and
PSNH's actual costs, which include the costs related to the Seabrook Power
Contracts and the Clean Air Act Amendment. The cost components of the FPPAC are
subject to a prudence review by the NHPUC.
The costs associated with purchases from nonutility generators (NUGs) over
the level assumed in the Rate Agreement are deferred and recovered through the
FPPAC. PSNH has been renegotiating the rate orders mandating the purchase of
high-cost NUG power. The NHPUC has approved an amendment to the Rate Agreement
allowing settlement agreements to be implemented with two wood-fired NUGs.
Pursuant to the 1994 settlement agreements, the two NUGs that were settled gave
up their rights to sell their output to PSNH in exchange for lump-sum cash
payments totaling approximately $40 million. The deferred buyout payments are
included as part of PSNH's recoverable energy costs. During the Rate Agreement's
fixed-rate period, all of the savings from the buyout will be used to reduce
PSNH's recoverable energy costs. At the end of the fixed-rate period, 50 percent
of the savings will be used to reduce the recoverable energy costs, with the
remainder reducing current rates.
PSNH has also reached tentative agreements with the six remaining
wood-fired NUGs. These agreements are subject to NHPUC approval. In January,
1997, the NHPUC
32 Northeast Utilities 1996 Annual Report
<PAGE>
issued an order approving one of the six NUG settlements. However, the
conditions imposed within the order, along with the uncertainty caused by
industry restructuring proceedings, may impede PSNH's ability to move
forward with the settlements.
At December 31, 1996, PSNH's net recoverable energy costs were
approximately $211.2 million, including purchased power deferrals of $183.4
million and the NUGs deferred buyout payments of $27.6 million.
For further information on recoverable energy costs see the MD&A. See Note
11, "Subsequent Event" for the possible impacts on PSNH and NAEC of the NHPUC's
decision related to industry restructuring.
L. DEFERRED COSTS--NUCLEAR PLANTS
As prescribed by the Rate Agreement, as of May 1, 1996, NAEC phased into
rates 100 percent of the recoverable portion of its investment in Seabrook 1.
This plan is in compliance with SFAS 92, "Regulated Enterprises--Accounting for
Phase-in Plans." From the Acquisition Date through December 31, 1996, NAEC
recorded $185.1 million of deferred return on its investment in Seabrook 1.
In addition, NAEC's utility plant includes $84.1 million of deferred return
that was transferred as part of the Seabrook plant assets to NAEC on the
Acquisition Date. The deferred return, including the portion transferred to
NAEC, will be recovered with carrying charges beginning December 1, 1997, and
will be fully recovered by May, 2001.
See Note 11 "Subsequent Event" for the possible impacts on NAEC of the
NHPUC's decision related to industry restructuring.
M. DEMAND SIDE MANAGEMENT (DSM)
CL&P's DSM costs are recovered in base rates through a Conservation
Adjustment Mechanism (CAM). The $90.1 million of costs on CL&P's books as of
December 31, 1996, will be fully recovered by 2000. During November, 1996, CL&P
filed its 1997 DSM program and forecasted CAM for 1997 with the DPUC. The
filing proposes expenditures of $36 million in 1997, with recovery over
1.9 years and a zero CAM rate.
N. CL&P COGENERATION COSTS
Beginning on July 1, 1996, the deferred cogeneration balance of approximately
$86 million is being amortized over a five year period. An additional $9
million of amortization will be applied to the deferred balance in 1997, as
required under a settlement agreement which CL&P reached with the DPUC. CL&P
will continue to apply any savings associated with the renegotiation of a
certain contract with a cogeneration facility to the deferred balance. Under
current expectations, CL&P expects complete amortization of the deferred balance
by December 31, 1998.
O. SPENT NUCLEAR FUEL DISPOSAL COSTS
Under the Nuclear Waste Policy Act of 1982, CL&P, PSNH, WMECO and NAEC must
pay the United States Department of Energy (DOE) for the disposal of spent
nuclear fuel and high-level radioactive waste. Fees for nuclear fuel burned on
or after April 7, 1983, are billed currently to customers and paid to the DOE on
a quarterly basis. For nuclear fuel used to generate electricity prior to April
7, 1983 (prior-period fuel), payment must be made prior to the first delivery of
spent fuel to the DOE. The DOE was originally scheduled to begin accepting
delivery of spent fuel in 1998. However, delays in identifying a permanent
storage site have continually postponed plans for the DOE's long-term storage
and disposal site. The DOE's current estimate for an available site is 2010.
Until such payment is made, the outstanding balance will continue to accrue
interest at the three-month Treasury Bill Yield Rate. At December 31, 1996,
fees due to the DOE for the disposal of prior-period fuel were approximately
$195 million, including interest costs of $112.9 million. As of December 31,
1996, all fees had been collected through rates.
P. INTEREST RATE AND FUEL PRICE MANAGEMENT
The company utilizes interest-rate and fuel-price management instruments to
manage well defined interest rate and fuel price risks. Amounts receivable or
payable under interest-rate management instruments are accrued and offset
against interest expense. Amounts receivable or payable under fuel-price
management instruments are recognized in income when realized. Any material
unrealized gains or losses on interest rate or fuel-price management
instruments will be deferred until realized. For further information,
see Note 8, "Interest Rate and Fuel Price Management."
Q. CASH AND CASH EQUIVALENTS; SPECIAL DEPOSITS
Cash and cash equivalents includes cash on hand and short-term cash
investments which are highly liquid in nature and have original maturities of
three months or less. Special deposits at December 31, 1996 and 1995 included
approximately $7 million and $71 thousand respectively, in special deposits
that will be used to fund NAEC's share of future Seabrook operational costs.
2. NUCLEAR DECOMMISSIONING
Millstone and Seabrook: The system's nuclear power plants have service lives
that are expected to end during the years 2010 through 2026. Upon retirement,
these units must be decommissioned. Decommissioning studies prepared in 1996
concluded that complete and immediate dismantlement at retirement continues to
be the most viable and economic method of decommissioning the three Millstone
units and Seabrook 1. Decommissioning studies are reviewed and updated
periodically to reflect changes in decommissioning requirements, costs,
technology and inflation.
Northeast Utilities 1996 Annual Report 33
<PAGE>
The estimated cost of decommissioning Millstone 1 and 2, in year-end 1996
dollars, is $390.1 million and $344.5 million, respectively. The system's
ownership share of the estimated cost of decommissioning Millstone 3 and
Seabrook 1 in year-end 1996 dollars, is $314.7 million and $180.4 million,
respectively. The Millstone units and Seabrook 1 decommissioning costs will be
increased annually by their respective escalation rates. Nuclear decommissioning
costs are accrued over the expected service life of the units and are included
in depreciation expense on the Consolidated Statements of Income. Nuclear
decommissioning costs amounted to $47.8 million in 1996, $38.9 million in 1995,
and $33.5 million in 1994. Nuclear decommissioning, as a cost of removal, is
included in the accumulated provision for depreciation on the Consolidated
Balance Sheets. At December 31, 1996, the balance in the accumulated reserve
for decommissioning amounted to $435.7 million.
CL&P and WMECO have established external decommissioning trusts through a
trustee for their portions of the costs of decommissioning Millstone 1, 2, and
3. PSNH makes payments to an independent decommissioning trust for its portion
of the costs of decommissioning Millstone 3. CL&P's and NAEC's portions of the
cost of decommissioning Seabrook 1 are paid to an independent decommissioning
financing fund managed by the state of New Hampshire. Funding of the estimated
decommissioning costs assumes levelized collections for the Millstone units and
escalated collections for Seabrook 1 and after-tax earnings on the Millstone and
Seabrook decommissioning funds of 5.8 percent and 6.5 percent, respectively.
As of December 31, 1996, CL&P, PSNH and WMECO collected, through rates,
$240.8 million, $2.2 million and $53.5 million, respectively, toward the future
decommissioning costs of their share of the Millstone units, of which $264.8
million has been transferred to external decommissioning trusts. As of December
31, 1996, CL&P and NAEC (including payments made prior to the Acquisition Date
by PSNH) paid approximately $2.4 million and $16.6 million, respectively, into
Seabrook 1's decommissioning financing fund. Earnings on the decommissioning
trusts and financing fund increase the decommissioning trust balance and the
accumulated reserve for decommissioning. Unrealized gains and losses associated
with the decommissioning trusts and financing fund also impact the balance of
the trusts and the accumulated reserve for decommissioning.
Changes in requirements or technology, the timing of funding or
dismantling, or adoption of a decommissioning method other than immediate
dismantlement would change decommissioning cost estimates and the amounts
required to be recovered. CL&P, PSNH and WMECO attempt to recover sufficient
amounts through their allowed rates to cover their expected decommissioning
costs. Only the portion of currently estimated total decommissioning costs that
has been accepted by regulatory agencies is reflected in rates of the system
companies. Based on present estimates and assuming its nuclear units operate to
the end of their respective license periods, the system expects that the
decommissioning trusts and financing fund will be substantially funded when the
units are retired from service.
MY and VY: Each Yankee company owns a single nuclear generating unit. MY
and VY have service lives that are expected to end in 2008 and 2012,
respectively. The system's ownership share of estimated costs, in year-end 1996
dollars, of decommissioning the units owned and operated by MY and VY is $73.9
million and $58.5 million, respectively. Under the terms of the contracts with
the Yankee companies, the shareholders-sponsors are responsible for their
proportionate share of the operating costs of each unit, including
decommissioning. The nuclear decommissioning costs of the Yankee companies are
included as part of the cost of power purchased by CL&P, PSNH and WMECO.
CY and YAEC: On December 4, 1996, the board of directors of CY voted
unanimously to cease permanently the production of power at its nuclear plant.
The system companies relied on CY for approximately three percent of their
capacity.
CY has undertaken a number of regulatory filings intended to implement the
decommissioning and the recovery of remaining assets of CY. During late
December, 1996, CY filed an amendment to its power contracts to clarify the
obligations of its purchasing utilities following the decision to cease power
production. At December 31, 1996, the estimated obligation, including
decommissioning, amounted to $762.8 million of which NU's share was
approximately $373.8 million.
YAEC is in the process of decommissioning its nuclear facility. At
December 31, 1996, the estimated remaining costs, including decommissioning,
amounted to $173.3 million of which the NU system's share was approximately
$66.7 million.
Management expects that CL&P, PSNH and WMECO will each continue to be
allowed to recover these costs from their customers. Accordingly, NU has
recognized these costs as regulatory assets, with corresponding obligations, on
its Consolidated Balance Sheets.
Proposed Accounting: The staff of the SEC has questioned certain of the
current accounting practices of the electric utility industry, including the
company, regarding the recognition, measurement and classification of
decommissioning costs for nuclear generating units in the financial statements.
In response to these questions, FASB agreed to review the accounting for removal
costs, including decommissioning, and issued a proposed statement entitled
"Accounting for Liabilities Related to Closure or Removal of Long-Lived
Assets," in February, 1996. If current electric utility industry accounting
practices for
34 Northeast Utilities 1996 Annual Report
<PAGE>
decommissioning are changed in accordance with the proposed statement: (1)
annual provisions for decommissioning could increase, (2) the estimated cost
for decommissioning could be recorded as a liability with an offset to plant
rather than as part of accumulated depreciation, and (3) trust fund income
from the external decommissioning trusts could be reported as investment
income rather than as a reduction to decommissioning expense.
3. SHORT-TERM DEBT
Limits: The amount of short-term borrowings that may be incurred by the system's
utility companies is subject to periodic approval by either the SEC under the
1935 Act or by their respective state regulators. In addition, the charters of
CL&P and WMECO contain provisions restricting the amount of short-term
borrowings. Under the SEC and/or charter restrictions, CL&P, WMECO and NAEC were
authorized, as of January 1, 1997, to incur short-term borrowings up to a
maximum of $375 million, $150 million and $50 million, respectively. PSNH was
authorized, under a waiver from the NHPUC, to incur short-term borrowings of up
to a maximum of $225 million. This limit will be reduced to $125 million
effective May, 1997.
Credit Agreements: In November, 1996, NU entered into a three-year
revolving credit agreement (New Credit Agreement) with a group of 12 banks.
Under the terms of the New Credit Agreement, NU, CL&P and WMECO will be able to
borrow up to $150 million, $313.75 million, and $150 million, respectively. The
overall limit for all of the borrowing system companies under the entire New
Credit Agreement is $313.75 million. The system companies are obligated to pay a
facility fee of .30 percent per annum of each bank's total commitment under the
new credit facility which will expire November 21, 1999. At December 31, 1996,
there were $27.5 million in borrowings under this agreement.
Access to the New Credit Agreement is contingent upon certain financial
tests being met. NU is currently renegotiating these restrictions so that the
financial impacts of the current nuclear outages do not impact the ability to
access these facilities. Through February 21, 1997, CL&P and WMECO have
satisfied all financial covenants required under their respective borrowing
facilities, but NU needed and obtained a limited waiver of an interest coverage
covenant that had to be satisfied for NU to borrow under the New Credit
Agreement. NU, CL&P and WMECO are currently maintaining their access to the New
Credit Agreement under an interim written arrangement, under which NU agreed not
to borrow more than $27.5 million against the facility.
In addition to the New Credit Agreement, NU, CL&P, WMECO, HWP, NNECO and
The Rocky River Realty Company (RRR) have various revolving credit lines through
separate bilateral credit agreements. Under the remaining three-year portion of
the facility, four banks maintain commitments to the respective system companies
totaling $56.25 million. NU, CL&P and WMECO may borrow up to the aggregate
$56.25 million, whereas HWP, NNECO and RRR may borrow up to their short-term
debt limit of $5 million, $50 million and $22 million, respectively. Under the
terms of the agreement, the system companies are obligated to pay a facility fee
of .15 percent per annum of each bank's total commitment under the
three-year portion of the facility. These commitments will expire December 3,
1998. At December 31, 1996 and 1995, there were $11.3 million and $42.5 million
in borrowings, respectively, under the facility.
On April 30, 1996, PSNH increased its $125 million revolving-credit
agreement to $225 million with approval from the NHPUC. The agreement, which was
scheduled to expire in May, 1996, has been extended so that $100 million of the
agreement will expire in April, 1997, and the remaining $125 million will expire
in April, 1999. The revolving credit agreement is with a group of 16 banks. PSNH
is obligated to pay a facility fee of .25 percent per annum on the three-year
commitment of $125 million and .20 percent per annum on the one-year commitment
of $100 million. At December 31, 1996 and 1995, there were no borrowings under
the facility.
Under the credit facilities discussed above, the system companies may
borrow funds on a short-term revolving basis under the remaining portion of
their agreement, using either fixed-rate loans or standby loans. Fixed
rates are set using competitive bidding. Standby loans are based upon several
alternative variable rates. The weighted average annual interest rate on the
system companies' notes payable to banks outstanding on December 31, 1996 and
1995 was 8.3 percent and 6.0 percent, respectively. Maturities of short-term
debt obligations were for periods of three months or less. For further
information on short-term debt see the MD&A.
4. LEASES
CL&P and WMECO finance up to $450 million of nuclear fuel for Millstone 1
and 2 and their respective shares of the nuclear fuel for Millstone 3 under the
Niantic Bay Fuel Trust (NBFT) capital lease agreement. CL&P and WMECO make
quarterly lease payments for the cost of nuclear fuel consumed in the reactors,
based on a units-of-production method at rates which reflect estimated
kilowatt-hours of energy provided, plus financing costs associated with
the fuel in the reactors. Upon permanent discharge from the reactors, ownership
of the nuclear fuel transfers to CL&P and WMECO. The system companies have also
entered into lease agreements, some of which are capital leases, for the use
of data processing and office equipment, vehicles, gas turbines, nuclear
control room sim-
Northeast Utilities 1996 Annual Report 35
<PAGE>
ulators and office space. The provisions
of these lease agreements generally provide for renewal options.
Capital lease rental payments charged to operating expense were $28,187,000
in 1996, $75,894,000 in 1995 and $81,952,000 in 1994. Interest included in
capital lease rental payments was $14,112,000 in 1996, $15,025,000 in 1995 and
$14,881,000 in 1994. Operating lease rental payments charged to expense
were $18,316,000 in 1996, $20,859,000 in 1995 and $20,118,000 in 1994.
Substantially all of the capital lease rental payments were made pursuant
to the nuclear fuel lease agreement. Future minimum lease payments under the
nuclear fuel capital lease cannot be reasonably estimated on an annual basis due
to variations in the usage of nuclear fuel. Future minimum rental payments,
excluding annual nuclear fuel lease payments and executory costs, such as
property taxes, state use taxes, insurance and maintenance, under long-term
noncancelable leases, as of December 31, 1996, are:
- -------------------------------------------------------------------------------
(Thousands of Dollars)
- --------------------------------------------------------------------------------
Capital Operating
Year Leases Leases
- --------------------------------------------------------------------------------
1997................................ $ 8,800 $29,200
1998................................ 8,600 21,600
1999................................ 8,300 18,500
2000................................ 7,700 16,700
2001................................ 5,700 13,000
After 2001.......................... 67,100 23,900
- --------------------------------------------------------------------------------
Future minimum
lease payments...................... 106,200 122,900
- ----------------------------------------------------------------------=========
Less amount
representing interest........... 68,800
Present value of future
minimum lease payments
for other than nuclear fuel..... 37,400
Present value of future nuclear
fuel lease payments............. 168,800
- --------------------------------------------------------------------------------
Total............................... $206,200
================================================================================
5. EMPLOYEE BENEFITS
A. PENSION BENEFITS
The system's subsidiaries participate in a uniform noncontributory defined
benefit retirement plan covering all regular system employees. Benefits are
based on years of service and the employees' highest eligible compensation
during 60 consecutive months of employment. Total pension cost, part of which
was charged to utility plant, approximated $9.1 million in 1996, $0.4 million
in 1995 and $7.7 million in 1994. Pension costs for 1996, 1995 and 1994
included approximately $7.8 million, $6.8 million and $9.2 million,
respectively, related to workforce reduction programs.
Currently, the subsidiaries fund annually an amount at least equal to that
which will satisfy the requirements of the Employee Retirement Income Security
Act and the Internal Revenue Code. Pension costs are determined using
market-related values of pension assets. Pension assets are invested primarily
in domestic and international equity securities and bonds.
The components of net pension cost are:
- --------------------------------------------------------------------------------
For the Years Ended December 31,
- --------------------------------------------------------------------------------
(Thousands of Dollars) 1996 1995 1994
- --------------------------------------------------------------------------------
Service cost................... $ 43,206 $ 35,771 $ 39,317
Interest cost.................. 94,722 89,351 84,284
Return on
plan assets................ (232,604) (310,997) 2,268
Net amortization............... 103,745 186,310 (118,188)
- --------------------------------------------------------------------------------
Net pension cost............... $ 9,069 $ 435 $ 7,681
================================================================================
For calculating pension costs, the following assumptions were used:
- --------------------------------------------------------------------------------
For the Years Ended December 31,
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
Discount rate.................. 7.50% 8.25% 7.75%
Expected long-term
rate of return............. 8.75 8.50 8.50
Compensation/
progression rate........... 4.75 5.00 4.75
- --------------------------------------------------------------------------------
The following table represents the plan's funded status reconciled to the
Consolidated Balance Sheets:
- --------------------------------------------------------------------------------
At December 31,
- --------------------------------------------------------------------------------
(Thousands of Dollars) 1996 1995
- --------------------------------------------------------------------------------
Accumulated benefit obligation,
including vested benefits at
December 31, 1996 and 1995
of $943,696,000 and
$913,269,000, respectively..... $1,037,908 $ 998,614
================================================================================
Projected benefit obligation....... $1,321,146 $1,278,434
Market value of plan assets........ 1,660,404 1,503,597
- --------------------------------------------------------------------------------
Market value in excess of
projected benefit obligation... 339,258 225,163
Unrecognized transition amount..... (12,105) (13,648)
Unrecognized prior service costs... 31,802 9,710
Unrecognized net gain.............. (458,654) (311,855)
- --------------------------------------------------------------------------------
Accrued pension liability.......... $ (99,699) $ (90,630)
================================================================================
36 Northeast Utilities 1996 Annual Report
<PAGE>
The following actuarial assumptions were used in calculating the plan's year-end
funded status:
- --------------------------------------------------------------------------------
At December 31,
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
Discount rate..................................... 7.75% 7.50%
Compensation/progression rate..................... 4.75 4.75
- --------------------------------------------------------------------------------
B. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The system's subsidiaries provide certain health care benefits, primarily
medical and dental, and life insurance benefits through a benefit plan to
retired employees (referred to as SFAS 106 benefits). These benefits are
available for employees retiring from the system who have met specified service
requirements. For current employees and certain retirees, the total SFAS 106
benefit is limited to two times the 1993 per-retiree health care cost. The SFAS
106 obligation has been calculated based on this assumption. Total SFAS 106
benefits, part of which were deferred or charged to utility plant, approximated
$39.2 million in 1996, $44.1 million in 1995 and $47.6 million in 1994. NU's
subsidiaries are funding SFAS 106 postretirement costs through external trusts.
The subsidiaries are funding, on an annual basis, amounts that have been
rate-recovered and which also are tax deductible under the Internal Revenue
Code. The trust assets are invested primarily in equity securities and bonds.
The components of health care and life insurance costs are:
- --------------------------------------------------------------------------------
For the Years Ended December 31,
- --------------------------------------------------------------------------------
(Thousands of Dollars) 1996 1995 1994
- --------------------------------------------------------------------------------
Service cost....................... $ 7,457 $ 7,137 $ 7,418
Interest cost...................... 22,698 24,693 25,319
Return on plan assets.............. (9,330) (7,812) 236
Amortization of
unrecognized
transition obligation.......... 15,134 15,134 15,134
Other amortization, net............ 3,194 4,924 (553)
- --------------------------------------------------------------------------------
Net health care and
life insurance costs........... $39,153 $44,076 $47,554
================================================================================
For calculating SFAS 106 benefit costs, the following assumptions were
used:
- --------------------------------------------------------------------------------
For the Years Ended December 31,
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
Discount rate ..................... 7.50% 8.00% 7.75%
Long-term rate of return--
Health assets, net of tax...... 5.25 5.00 5.00
Life assets.................... 8.75 8.50 8.50
- -------------------------------------------------------------------------------
The following table represents the plan's funded status reconciled to the
Consolidated Balance Sheets:
- --------------------------------------------------------------------------------
At December 31,
- --------------------------------------------------------------------------------
(Thousands of Dollars) 1996 1995
- --------------------------------------------------------------------------------
Accumulated postretirement
benefit obligation of:
Retirees............................. $ 226,774 $253,993
Fully eligible active employees...... 323 354
Active employees
not eligible to retire........... 78,985 84,056
- --------------------------------------------------------------------------------
Total accumulated postretirement
benefit obligation................... 306,082 338,403
Market value of plan assets.............. 105,086 56,791
- --------------------------------------------------------------------------------
Accumulated postretirement
benefit obligation in
excess of plan assets................ (200,996) (281,612)
Unrecognized transition amount........... 242,149 257,283
Unrecognized net (gain) loss............. (41,457) 96
- --------------------------------------------------------------------------------
Accrued postretirement
benefit liability.................... $ (304) $(24,233)
================================================================================
The following actuarial assumptions were used in calculating the plan's year-end
funded status:
- --------------------------------------------------------------------------------
At December 31,
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
Discount rate ........................... 7.75% 7.50%
Health care cost trend rate (a).......... 7.23 8.40
- --------------------------------------------------------------------------------
(a) The annual growth in per capita cost of covered health care benefits
was assumed to decrease to 4.91 percent by 2001.
The effect of increasing the assumed health care cost trend rate by one
percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1996, by $16.6 million and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by $1.5 million. The
trust holding the health plan assets is subject to federal income taxes at a
39.6 percent tax rate.
CL&P and WMECO are currently recovering SFAS 106 costs. PSNH is currently
recovering SFAS 106 costs, including amounts previously deferred.
C. 401(K) SAVINGS PLAN
NU maintains a 401(k) Savings Plan for substantially all system employees.
This savings plan provides for employee contributions up to specified
limits. The company matches employee contributions up to a maximum of three
percent of eligible compensation. The matching contributions for the company
were $11.8 million for 1996 and $12.1 million per year for 1995 and 1994.
Northeast Utilities 1996 Annual Report 37
<PAGE>
D. EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
NU maintains an ESOP for purposes of allocating shares to employees
participating in the system's 401(k) plan. Under this arrangement, NU issued
unsecured notes during 1991 and 1992 totaling $250 million, the proceeds of
which were lent to the ESOP trust for purchase of approximately 10.8 million
newly issued NU common shares. NU makes principal and interest payments on the
ESOP notes at the same rate that ESOP shares are allocated to employees.
In 1996 and 1995, the ESOP trust issued approximately 953,000 and 655,000
of NU common shares, respectively, totaling approximately $22.1 million and
$15.2 million, respectively. These costs were charged to the 401(k) plan. As of
December 31, 1996 and 1995, the total allocated ESOP shares were 3,192,620 and
2,239,666, respectively, and total unallocated ESOP shares were 7,607,565 and
8,560,519, respectively. The fair market value of unallocated ESOP shares as of
December 31, 1996 and 1995 was approximately $99.8 million and $207.6 million,
respectively.
During 1996, the ESOP trust used approximately $17.0 million in dividends
paid on NU common shares and $31.5 million in contributions from NU to meet
principal and interest payments on ESOP notes.
6. SALE OF CUSTOMER RECEIVABLES
CL&P and WMECO have entered into agreements to sell up to $200 million and $40
million, respectively, of eligible customer billed and unbilled accounts
receivable. The eligible receivables are sold with limited recourse. The
agreements were entered into during July, 1996, and September, 1996, for CL&P
and WMECO, respectively, and will expire in five years. The companies have
retained collection responsibilities for receivables which have been sold under
the agreements. For the WMECO agreement, as collections reduce previously sold
undivided interests, new receivables would routinely be sold. Both agreements
provide for a loss reserve determined by a formula which reflects credit
exposure. As of February 21, 1997, CL&P and WMECO have sold approximately $10
million and $15 million, respectively, of their accounts receivable under these
agreements.
The FASB issued SFAS 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," in June, 1996. SFAS 125
became effective on January 1, 1997, and establishes, in part, criteria for
concluding whether a transfer of financial assets in exchange for consideration
should be accounted for as a sale or as a secured borrowing.
CL&P and WMECO are in the process of restructuring their receivables
programs to comply with the requirements of SFAS 125. Management believes that
the adoption of SFAS 125 will not have a material impact on the companies'
financial position or results of operations.
7. COMMITMENTS AND CONTINGENCIES
A. RESTRUCTURING
New Hampshire: The 1996 restructuring legislation that the NHPUC is charged with
implementing provides that the NHPUC may not adopt a restructuring plan that
imposes a severe financial hardship on a utility. NU management has testified
that the implementation of certain methodologies would result in a significant
loss to PSNH. If these losses were to result in the triggering of acceleration
rights that PSNH's creditors have and, if any single significant creditor
demanded payment because of the triggering of acceleration rights, all other
major creditors would immediately follow and PSNH and NAEC bankruptcy filings
would be unavoidable.
Management believes that PSNH is entitled to full recovery of its prudently
incurred costs, including regulatory assets and stranded costs. It bases this
belief both on the general nature of public utility industry cost-of-service
based regulation and the specific circumstances of the resolution of PSNH's
previous bankruptcy proceedings and its acquisition by NU, including the
recoveries provided by the Rate Agreement and related agreements.
See Note 11 "Subsequent Event" for the possible impacts on PSNH and NAEC
of the NHPUC's decision related to industry restructuring.
Connecticut/Massachusetts: Although CL&P, WMECO and HWP continue to operate
under cost-of-service based regulation, various restructuring initiatives in
each of the companies' jurisdictions have created uncertainty with respect to
future rates and the recovery of strandable investments and certain future costs
such as purchase power obligations. Strandable investments are regulatory assets
or other assets that would not be economical in a competitive environment.
Management is unable to predict the ultimate outcome of restructuring
initiatives; however, it believes that it is entitled to full recovery of its
prudently incurred costs, including regulatory assets and strandable investments
based on the general nature of public utility cost of service regulation. For
further information on restructuring, see the MD&A.
B. NUCLEAR PERFORMANCE
Millstone: The three Millstone units are managed by NNECO. Millstone 1, 2, and
3 have been out of service since November 4, 1995, February 21, 1996 and March
30, 1996, respectively, and are on the Nuclear Regulatory Commission's (NRC)
watch list. The company has restructured its nuclear organization and is
currently implementing comprehensive plans to restart the units.
According to the plans, each unit's recovery team will be working towards
restart of its respective unit on a parallel basis with the other two units.
Based upon management's current plans, it is estimated that one of the units
will be ready for restart in the third quarter of 1997 with
38 Northeast Utilities 1996 Annual Report
<PAGE>
the other two units being ready for restart during the fourth quarter of 1997
and the first quarter of 1998, respectively.
The NRC has also issued two orders affecting the Millstone units on the
subjects of independent corrective action verification and employee concerns.
Independent third parties have been retained by NNECO and area waiting NRC
approval.
Prior to and following notification to the NRC that the units are ready to
resume operations, the NRC staff will conduct extensive reviews and inspections
and, prior to such notification, independent corrective action verification
teams also will inspect each unit. The units will not be allowed to restart
without an affirmative vote of the NRC commissioners following completion of
these reviews and inspections. Management cannot estimate when the NRC will
allow any of the units to restart, but hopes to have at least one unit operating
in the second half of 1997.
The company is currently incurring substantial costs, including replacement
power costs, while the three Millstone units are not operating. Management does
not expect to recover a substantial portion of these costs. NU expensed
approximately $179 million of incremental nonfuel nuclear operation and
maintenance costs (O&M) in 1996, including a reserve of $63 million against 1997
expenditures. Management estimates NU will expense approximately $386 million of
nonfuel nuclear O&M costs in 1997.
As discussed above, management cannot predict when the NRC will allow any
of the Millstone units to return to service and thus cannot estimate the total
replacement power costs the companies will ultimately incur. At December 31,
1996, NU had expensed incremental replacement power costs associated with the
Millstone outages of approximately $260 million. Replacement power costs for NU
system companies are expected to average approximately $35 million per month
during 1997 while all three Millstone units remain out of service. Management
believes the system has sufficient resources to fund the restoration of the
Millstone units to service under its present timetable.
MY: The system companies rely on MY for approximately two percent of their
capacity. The MY nuclear generating plant has been limited to operating at 90
percent of capacity since early 1996, pending the resolution of issues related
to investigations initiated by the NRC, and on December 6, 1996, was taken off
line to resolve cable-separation and associated issues. The NRC has notified MY
that the NRC staff has placed the MY plant on its watch list. Returning the
plant to service will require NRC approval. Management cannot predict when MY's
plant will be allowed to return to service and expects there will be substantial
costs associated with the NRC's action that cannot be accurately estimated at
this time.
Shareholder Litigation: Several class-action lawsuits have been filed
against the company and certain present and former officers and employees of NU
in connection with the company's nuclear operations. Management cannot estimate
the potential outcome of these suits, but believes these suits are without merit
and intends to defend itself vigorously in all these actions.
Potential Litigation: The non-NU owners of Millstone 3 have been paying
their share of the monthly costs for Millstone 3 since the unit went out of
service in March, 1996, but have reserved their rights to contest whether the NU
system companies have any responsibility for the additional costs the non-NU
owners have borne as a result of the current outage. No formal claims have been
made, but management believes that it is possible that some or all of the non-NU
owners will assert liability on the part of the NU system. CL&P and WMECO,
through NNECO as agent, operate Millstone 3 at cost, and without profit, under a
Sharing Agreement that obligates them to utilize good utility operating practice
and requires the joint owners to share the risk of employee negligence and other
risks pro rata in accordance with their ownership shares. The Sharing Agreement
provides that CL&P and WMECO would only be liable for damages to the non-NU
owners for a deliberate breach of the Sharing Agreement. At December 31, 1996,
the costs related to this potential litigation were estimated to be $13 million
for incremental O&M costs and between $40 million and $50 million for
replacement power costs. These costs are likely to increase as long as Millstone
3 remains out of service. NU will vigorously contest such suits if they are
brought.
C. ENVIRONMENTAL MATTERS
The system is subject to regulation by federal, state and local authorities with
respect to air and water quality, the handling and disposal of toxic substances
and hazardous and solid wastes, and the handling and use of chemical products.
The system has an active environmental auditing and training program and
believes that it is in substantial compliance with current environmental laws
and regulations.
Environmental requirements could hinder the construction of new generating
units, transmission and distribution lines, substations and other facilities.
Changing environmental requirements could also require extensive and costly
modifications to the system's existing generating units and transmission and
distribution systems, and could raise operating costs significantly. As a
result, the system may incur significant additional environmental costs, greater
than amounts included in cost of removal and other reserves, in connection with
the generation and transmission of electricity and the storage, transportation
and disposal of by-products and wastes. The system may also encounter
significantly increased costs to remedy the environmental effects of prior waste
handling activities. The cumulative long-term cost impact of increasingly
stringent environmental requirements cannot accurately be estimated.
Northeast Utilities 1996 Annual Report 39
<PAGE>
The system has recorded a liability based upon currently available
information for what it believes are its estimated environmental remediation
costs that the system's subsidiaries expect to incur for waste disposal sites.
In most cases, additional future environmental cleanup costs are not reasonably
estimable due to a number of factors, including the unknown magnitude of
possible contamination, the appropriate remediation methods, the possible
effects of future legislation or regulation and the possible effects of
technological changes. At December 31, 1996, the net liability recorded by the
system for its estimated environmental remediation costs, excluding any possible
insurance recoveries or recoveries from third parties, amounted to approximately
$13 million, which management has determined to be the most probable amount
within the range of $13 million to $30 million.
The system cannot estimate the potential liability for future claims,
including environmental remediation costs, that may be brought against it.
However, considering known facts, existing laws and regulatory practices,
management does not believe the matters disclosed above will have a material
effect on the system's financial position or future results of operations.
On October 10, 1996, the American Institute of Certified Public Accountants
issued Statement of Position 96-1, "Environmental Remediation Liabilities"
(SOP). The principal objective of the SOP is to improve the manner in which
existing authoritative accounting literature is applied by entities to specific
situations of recognizing, measuring and disclosing environmental remediation
liabilities. The SOP became effective January 1, 1997. The company believes that
the adoption of this SOP will not have a material impact on the company's
financial position or results of operations.
D. NUCLEAR INSURANCE CONTINGENCIES
Under certain circumstances, in the event of a nuclear incident at one of the
nuclear facilities covered by the federal government's third-party liability
indemnification program, the system could be assessed in proportion to its
ownership interest in each nuclear unit up to $75.5 million, not to exceed $10.0
million per nuclear unit in any one year. Based on its ownership interests in
Millstone 1, 2, and 3 and in Seabrook 1, the system's maximum liability,
including any additional potential assessments, would be $244.2 million per
incident. In addition, through power purchase contracts with MY, VY and CY, the
system would be responsible for up to an additional $67.4 million per incident.
Payments for the system's ownership interest in nuclear generating facilities
would be limited to a maximum of $39.3 million per incident per year.
Insurance has been purchased to cover the primary cost of repair,
replacement or decontamination of utility property resulting from insured
occurrences. The system is subject to retroactive assessments if losses exceed
the accumulated funds available to the insurer. The maximum potential assessment
against the system with respect to losses arising during the current policy year
is approximately $13.3 million under the primary property insurance program.
Insurance has been purchased to cover certain extra costs incurred in
obtaining replacement power during prolonged accidental outages and the excess
cost of repair, replacement, or decontamination or premature decommissioning of
utility property resulting from insured occurrences. The system is subject to
retroactive assessments if losses exceed the accumulated funds available to the
insurer. The maximum potential assessments against the system with respect to
losses arising during current policy years are approximately $12.9 million under
the replacement power policies and $32.6 million under the excess property
damage, decontamination and decommissioning policies. The cost of a nuclear
incident could exceed available insurance proceeds.
Insurance has been purchased aggregating $200 million on an industry basis
for coverage of worker claims. All participating reactor operators insured under
this coverage are subject to retrospective assessments of $3 million per
reactor. The maximum potential assessment against the system with respect to
losses arising during the current policy period is approximately $12.9 million.
E. CONSTRUCTION PROGRAM
The construction program is subject to periodic review and revision by
management. The system companies currently forecast construction expenditures of
approximately $1.3 billion for the years 1997-2001, including $280 million for
1997. In addition, the system companies estimate that nuclear fuel requirements,
including nuclear fuel financed through the NBFT, will be approximately $356.1
million for the years 1997-2001, including $30.3 million for 1997. See Note 4,
"Leases," for additional information about the financing of nuclear fuel.
F. LONG-TERM CONTRACTUAL ARRANGEMENTS
Yankee Companies: The NU system relies on MY and VY for approximately three
percent of its capacity under long-term contracts. Under the terms of their
agreements, the system companies pay their ownership (or entitlement) shares
of costs, which include depreciation, O&M expenses, taxes, the estimated cost
of decommissioning and a return on invested capital. These costs are recorded
as purchased power expense and recovered through the companies' rates. The
total cost of purchases under contracts with the Yankee companies, excluding
YAEC, amounted to $149.7 million in 1996, $161.1 million in 1995, and $154.3
million in 1994. See Note 1E, "Summary of Significant
40 Northeast Utilities 1996 Annual Report
<PAGE>
Accounting Policies--Investments and Jointly Owned Electric Utility Plant,"
and Note 2, "Nuclear Decommissioning," for more information on the Yankee
companies.
Nonutility Generators: CL&P, PSNH and WMECO have entered into various
arrangements for the purchase of capacity and energy from NUGs. These
arrangements have terms from 10 to 30 years, currently expiring in the years
1998 through 2027, and require the companies to purchase energy at specified
prices or formula rates. For the 12 months ended December 31, 1996,
approximately 13 percent of system electricity requirements was met by NUGs. The
total cost of purchases under these arrangements amounted to $448.1 million in
1996, $440.4 million in 1995, and $435.0 million in 1994. These costs are
eventually recovered through the companies' rates.
New Hampshire Electric Cooperative: PSNH entered into a buy-back agreement
to purchase the capacity and energy of the New Hampshire Electric Cooperative,
Inc.'s (NHEC) share of Seabrook 1 and to pay all of NHEC's Seabrook 1 costs for
a ten-year period, which began on July 1, 1990. The total cost of purchases
under this agreement was $14.6 million in 1996, $15.8 million in 1995, and $14.6
million in 1994. A portion of these costs is collected currently through the
FPPAC and the remaining costs are deferred for future collection in accordance
with the Rate Agreement. In connection with the agreement, NHEC agreed to
continue as a firm-requirements customer of PSNH for 15 years.
Hydro-Quebec: Along with other New England utilities, CL&P, PSNH, WMECO and
HWP have entered into agreements to support transmission and terminal facilities
to import electricity from the Hydro-Quebec system in Canada. CL&P, PSNH, WMECO
and HWP, are obligated to pay, over a 30-year period ending in 2020, their
proportionate shares of the annual O&M and capital costs of these facilities.
Estimated Annual Costs: The estimated annual costs of the system's
significant long-term contractual arrangements are as follows:
- --------------------------------------------------------------------------------
(Millions of Dollars) 1997 1998 1999 2000 2001
- --------------------------------------------------------------------------------
MY and VY.................... $66.9 $56.9 $66.7 $66.3 $59.8
Nonutility
Generators............... 441.0 453.0 469.0 475.0 485.0
NHEC......................... 22.7 29.8 29.9 14.6 --
Hydro-Quebec................. 34.1 33.1 32.1 31.4 30.4
- --------------------------------------------------------------------------------
For additional information regarding the recovery of purchased power costs, see
Note 1K, "Summary of Significant Accounting Policies--Recoverable Energy
Costs--PSNH."
G. THE ROCKY RIVER REALTY COMPANY -- OBLIGATIONS
RRR provides real estate support services which includes the leasing of property
and facilities used by system companies. RRR is the obligor under financing
arrangements for certain system facilities. Under those financing arrangements,
the holders of notes for $38.4 million would be entitled to request that RRR
repurchase the notes if any major subsidiary of NU (as defined by the notes) has
debt ratings below investment grade as of any year-end during the term of the
financing. The notes are secured by real estate leases between RRR as lessor and
NUSCO as lessee. The leases provide for the acceleration of rent equal to RRR's
note obligations if RRR is unable to repay the obligation. The operating
companies, primarily CL&P, WMECO and PSNH may be billed by NUSCO for their
proportionate share of the accelerated lease obligations if the rateholders
request repurchase of the notes. NU has guaranteed the notes.
Based on the terms of the notes, PSNH and NAEC will be defined as major
subsidiaries of NU, effective as of the end of 1996, and both PSNH's and NAEC's
debt ratings were below investment grade. Accordingly, under the terms of the
RRR financing arrangements, the holders may elect to require RRR to repurchase
the notes at par. If the noteholders make such an election, RRR has the option
to refinance the notes with an institutional investor. However, it is possible
that RRR may be required to repurchase the notes. Therefore, the RRR notes have
been classified as a current obligation. As of February 21, 1997, the holders
had not made such an election. RRR plans to engage in discussions with the
noteholders regarding this issue. Management does not expect the resolution to
have a material impact on its financial condition.
8. INTEREST RATE AND FUEL PRICE MANAGEMENT
The company utilizes various financial instruments to manage well-defined
interest rate and fuel price risks. The company does not use these
instruments for trading purposes.
Fuel Price Management: CL&P uses fuel-price management instruments with
financial institutions to hedge against some of the fuel-price risk created by
long-term negotiated energy contracts. These agreements minimize exposure
associated with rising fuel prices and effectively fix a portion of CL&P's cost
of fuel for these negotiated energy contracts. Under the agreements, CL&P
exchanges monthly payments based on the differential between a fixed and
variable price for the associated fuel. As of December 31, 1996, CL&P had
outstanding agreements with a total notional value of approximately $228.8
million, and a positive mark-to-market position of approximately $1.1 million.
Interest Rate Management: NAEC uses interest-rate management instruments
with financial institutions to hedge against interest-rate risk associated with
its $200
Northeast Utilities 1996 Annual Report 41
<PAGE>
million variable rate bank note. Interest-rate management instruments minimize
exposure associated with rising interest rates, and effectively fix the interest
rate for this borrowing arrangement. Under the agreements, NAEC exchanges
quarterly payments based on a differential between a fixed contractual interest
rate and the three-month LIBOR rate at a given time. As of December 31, 1996,
NAEC had outstanding agreements with a total notional value of approximately
$200 million and a positive mark-to-market position of approximately $1.6
million.
Credit Risk: These agreements have been made with various financial
institutions, each of which is rated "BBB+" or better by Standard & Poor's
rating group. CL&P and NAEC will be exposed to credit risk on fuel-price
management instruments and interest-rate management instruments if the
counterparties fail to perform their obligations. However, management
anticipates that the counterparties will be able to fully satisfy their
obligations under the agreements.
9. MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY
In January, 1995, CL&P Capital LP (CL&P LP is a subsidiary of CL&P) issued $100
million of cumulative 9.3 percent Monthly Income Preferred Securities (MIPS),
Series A. CL&P has the sole ownership interest in CL&P LP, as a general partner,
and is the guarantor of the MIPS securities. Subsequent to the MIPS issuance,
CL&P LP loaned the proceeds of the MIPS issuance, along with CL&P's $3.1 million
capital contribution, back to CL&P in the form of an unsecured debenture. CL&P
consolidates CL&P LP for financial reporting purposes. Upon consolidation,
the unsecured debenture is eliminated, and the MIPS securities are accounted for
as minority interests.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each of the following financial instruments:
Cash, special deposits and nuclear decommissioning trusts: The carrying
amounts approximate fair value.
SFAS 115, "Accounting for Certain Investments in Debt and Equity
Securities," requires investments in debt and equity securities to be presented
at fair value. As a result of this requirement, the investments held in the
system companies' nuclear decommissioning trusts were adjusted to market by
approximately $31.4 million as of December 31, 1996, and by approximately $19.3
million as of December 31, 1995, with corresponding offsets to the accumulated
provision for depreciation. The amounts adjusted in 1996 and in 1995 represent
cumulative gross unrealized holding gains. The cumulative gross unrealized
holding losses were immaterial for both 1996 and 1995.
Preferred stock and long-term debt: The fair value of the system's
fixed-rate securities is based upon the quoted market price for those issues or
similar issues. Adjustable rate securities are assumed to have a fair value
equal to their carrying value. The carrying amounts of the system's financial
instruments and the estimated fair values are as follows:
- --------------------------------------------------------------------------------
At December 31, 1996
- --------------------------------------------------------------------------------
Carrying Fair
(Thousands of Dollars) Amount Value
- --------------------------------------------------------------------------------
Preferred stock not subject to
mandatory redemption.................. $136,200 $127,045
Preferred stock subject to
mandatory redemption.................. 301,000 264,304
Long-term debt--
First Mortgage Bonds.................. 2,196,788 2,163,031
Other long-term debt.................. 1,718,859 1,741,818
MIPS...................................... 100,000 108,520
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
At December 31, 1995
- --------------------------------------------------------------------------------
Carrying Fair
(Thousands of Dollars) Amount Value
- --------------------------------------------------------------------------------
Preferred stock not subject to
mandatory redemption.................. $169,700 $ 136,148
Preferred stock subject to
mandatory redemption.................. 304,000 313,910
Long-term debt--
First Mortgage Bonds.................. 2,234,245 2,283,920
Other long-term debt.................. 1,697,529 1,733,816
MIPS...................................... 100,000 108,520
- --------------------------------------------------------------------------------
The fair values shown above have been reported to meet disclosure requirements
and do not purport to represent the amounts at which those obligations would be
settled.
11. SUBSEQUENT EVENT
New Hampshire Restructuring: On February 28, 1997, the NHPUC issued its decision
related to restructuring the state's electric utility industry and setting
interim stranded cost charges for PSNH pursuant to legislation enacted in New
Hampshire in 1996.
In the decision, the NHPUC announced a departure from cost-based ratemaking
and instead adopted a market-priced approach to ratemaking and stranded cost
recovery as advocated by the NHPUC's consultants. Accordingly, unless the
litigation described below results in a stay, or necessary modifications to the
final plan are made that leads management to conclude that the ratemaking
approach utilized in the NHPUC's restructuring decision will not go into effect,
PSNH will be required to discontinue accounting under SFAS 71. That would result
in PSNH writing off from its balance sheet, as early as the quarter ending March
31, 1997, substantially all of its regulatory
42 Northeast Utilities 1996 Annual Report
<PAGE>
assets. The amount of the potential write-off which is triggered by the order is
currently estimated at over $400 million, after taxes. PSNH does not believe
that under the decision, it would be required to recognize any additional loss
resulting from the impairment of the value of its other long-lived assets under
the provisions of SFAS 121.
The decision also contains rulings on numerous other issues that may have a
substantial effect on the operations of PSNH. Included among these rulings are
assertions that the Rate Agreement by and between PSNH's parent company, NU and
the state of New Hampshire, which was an integral part of NU's acquisition of
PSNH in 1992, is not binding on the state; the requirement that PSNH divest
within two years from the inception of competition all of its owned generation
and all of its wholesale power contracts (including its contracts with NAEC for
Seabrook output); a prohibition on the remaining distribution company and its
affiliates from engaging in retail marketing or load aggregation services in New
Hampshire; and a mandate for the filing of tariffs with the FERC for the
provision of unbundled retail transmission service.
On March 3, 1997, PSNH, NU, NAEC and NUSCO filed for a temporary
restraining order, preliminary and permanent injunctive relief, and for
declaratory judgment in the Federal District Court for New Hampshire. The case
was subsequently transferred to Rhode Island. On March 10, 1997, the Chief Judge
of the Rhode Island federal court issued a temporary restraining order which
stayed the NHPUC's February 28, 1997, decision to the extent it established a
rate setting methodology that is not designed to recover PSNH's costs of
providing service and would require PSNH to write off any regulatory assets. A
hearing regarding the system plaintiffs' request for a preliminary injunction
will be held in the same court on March 20, 1997.
PSNH also intends to pursue claims against the state of New Hampshire for
damages in state court in New Hampshire for abrogation of the 1989 Rate
Agreement. The damage claims will be in the hundreds of millions of dollars.
PSNH and NAEC are parties to a variety of financing agreements providing
that the credit thereunder can be terminated or accelerated if they do not
maintain specified minimum ratios of common equity to capitalization (as defined
in each agreement). In addition, PSNH and NAEC are parties to a variety of
financing agreements providing in effect that the credit thereunder can be
terminated or accelerated if there are actions taken, either by PSNH or NAEC or
by the state of New Hampshire, that deprive PSNH and/or NAEC of the benefits of
the Rate Agreement and/or the Seabrook Power Contracts. If the NHPUC's February
28, 1997 decision becomes effective, it would, unless PSNH and NAEC receive
waivers from their respective lenders, result in (i) write-offs that would cause
PSNH's common equity to fall below the contractual minimums, (ii) reductions in
income that would cause PSNH's income to fall below the contractual minimums,
(iii) potential violation of the contractual provisions with respect to actions
depriving PSNH and NAEC of the benefits of the Rate Agreement, and (iv) the
potential for cross defaults to other PSNH and NAEC financing documents.
Substantially all of PSNH's and NAEC's debt obligations ($686 million of PSNH
debt and $515 million of NAEC debt) would be affected. For these actions to be
avoided, management believes that it is essential that the March 10, 1997,
temporary restraining order issued by a federal court judge be extended and made
applicable to the foregoing issues.
If these events transpired and the requested court relief is not
forthcoming, and if the creditors holding PSNH and NAEC debt obligations decide
to exercise their rights to demand payment and not to forebear while the
litigation is pending, then either creditors or PSNH and NAEC could initiate
proceedings under Chapter 11 of the bankruptcy laws.
PSNH and NAEC Report Considerations: As a result of the NHPUC decision and
the potential consequences discussed above, the reports of our auditors on the
individual financial statements of PSNH and NAEC contain explanatory paragraphs.
Those explanatory paragraphs indicate that a substantial doubt exists currently
about the ability of PSNH and NAEC to continue as going concerns. The accounts
of PSNH and NAEC are included in the accompanying consolidated financial
statements on the basis of a going concern. While the effect of the
implementation of that decision would have a material adverse impact on NU's
financial position, results of operations and cash flows, it would not in and of
itself result in defaults under borrowing or other financial agreements of NU or
its other subsidiaries.
Northeast Utilities 1996 Annual Report 43
<PAGE>
CONSOLIDATED STATEMENTS OF QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1996 Quarter Ended (a)
- -----------------------------------------------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars, except per share data)
<S> <C> <C> <C> <C>
Operating Revenues............................... $1,028,202 $871,904 $955,518 $936,524
=======================================================================================================================
Operating Income (Loss).......................... $ 133,261 $ 81,819 $ 68,032 $(11,540)
=======================================================================================================================
Net Income (Loss)................................ $ 65,502 $ 11,666 $ 1,033 $(76,370)
=======================================================================================================================
Earnings (Loss) Per Common Share................. $ 0.51 $ 0.09 $ 0.01 $ (0.60)
=======================================================================================================================
1995
=======================================================================================================================
Operating Revenues............................... $ 944,705 $840,333 $985,092 $980,430
=======================================================================================================================
Operating Income................................. $ 167,327 $118,410 $162,298 $144,053
=======================================================================================================================
Net Income....................................... $ 86,284 $ 42,398 $ 89,526 $ 64,226
=======================================================================================================================
Earnings Per Common Share........................ $ 0.69 $ 0.34 $ 0.71 $ 0.50
=======================================================================================================================
</TABLE>
CONSOLIDATED GENERATION STATISTICS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992(b)
- -----------------------------------------------------------------------------------------------------------------------
Source of Electric Energy: (kWh--millions)
<S> <C> <C> <C> <C> <C>
Nuclear--Steam (c)........................... 9,405 18,235 19,443 22,965 15,520
Fossil--Steam................................ 9,188 9,162 8,292 7,676 6,784
Hydro--Conventional.......................... 1,544 1,099 1,239 1,140 1,076
Hydro--Pumped Storage........................ 1,217 1,209 1,195 1,269 1,221
Internal Combustion.......................... 206 37 13 8 9
Energy Used for Pumping...................... (1,668) (1,674) (1,629) (1,749) (1,671)
- -----------------------------------------------------------------------------------------------------------------------
Net Generation........................... 19,892 28,068 28,553 31,309 22,939
- -----------------------------------------------------------------------------------------------------------------------
Purchased and Net Interchange................ 22,111 14,256 14,028 10,499 14,165
Company Use and Unaccounted for.............. (2,473) (2,706) (2,535) (2,591) (2,028)
- -----------------------------------------------------------------------------------------------------------------------
Net Energy Sold.......................... 39,530 39,618 40,046 39,217 35,076
=======================================================================================================================
System Capability--MW (c).................... 8,894.0 8,394.8 8,494.8 7,795.3 7,823.2
System Peak Demand--MW....................... 5,946.9 6,358.2 6,338.5 6,191.0 5,781.0
Nuclear Capacity--MW (c)..................... 3,117.8 3,239.6 3,272.6 3,110.0 2,981.1
Nuclear Contribution to Total
Energy Requirements (%) (c).............. 28.0 52.0 54.0 62.1 48.5
Nuclear Capacity Factor (%) (d).............. 38.0 69.9 67.5 80.8 63.7
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reclassifications of prior data have been made to conform with the current
presentation.
(b) Effective with the June 5, 1992 acquisition of PSNH, the consolidated
financial and statistical information of NU includes, on a prospective
basis, the operations of PSNH and NAEC.
(c) Includes the system's entitlements in regional nuclear generating
companies, net of capacity sales and purchases.
(d) Represents the average capacity factor for the nuclear units operated by
the NU system.
44 Northeast Utilities 1996 Annual Report
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992(a)
- ------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars, except percentages and per share data)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net Utility Plant (b)..................... $ 6,732,165 $ 7,000,837 $ 7,282,421 $ 7,439,159 $7,588,368
Total Assets.............................. 10,741,748 10,559,574 10,584,880 10,668,164 9,724,340
Total Capitalization (c).................. 6,622,519 6,820,624 7,035,989 7,309,898 7,421,592
Obligations Under Capital Leases (c)...... 206,165 230,482 239,121 243,760 266,100
- ------------------------------------------------------------------------------------------------------------------------
INCOME DATA:
Operating Revenues........................ $ 3,792,148 $ 3,750,560 $ 3,642,742 $ 3,629,093 $3,216,874
Net Income................................ 1,831 282,434 286,874 249,953(d) 256,054
- ------------------------------------------------------------------------------------------------------------------------
COMMON SHARE DATA:
Earnings per Share........................ $0.01 $2.24 $2.30 $2.02(d) $2.02
Dividends per Share....................... $1.38 $1.76 $1.76 $1.76 $1.76
Number of Shares
Outstanding--Average.................. 127,960,382 126,083,645 124,678,192 123,947,631(e) 130,403,488
Market Price--High........................ $25 1/4 $25 3/8 $25 3/4 $28 7/8 $26 3/4
Market Price--Low......................... $9 1/2 $21 $20 3/8 $22 $22 1/2
Market Price--Closing Price
(end of year)......................... $13 1/8 $24 1/4 $21 5/8 $23 3/4 $26 1/2
Book Value per Share (end of year)........ $17.73 $19.08 $18.47 $17.89 $16.24
Rate of Return Earned on Average
Common Equity (%)..................... 0.1 12.0 12.7 11.4 12.7
Dividend Yield (end of year) (%).......... 10.3 7.3 8.1 7.4 6.6
Cash Coverage of Common Dividends......... 4.1 4.2 4.0 3.3 2.6
Market-to-Book Ratio (end of year)........ 0.8 1.3 1.2 1.3 1.6
- ------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION:
Common Shareholders' Equity............... 34% 36% 33% 30% 29%
Preferred Stock (c)(f).................... 7 7 9 9 9
Long-term Debt (c)........................ 59 57 58 61 62
- ------------------------------------------------------------------------------------------------------------------------
Total Capitalization...................... 100% 100% 100% 100% 100%
========================================================================================================================
</TABLE>
(a) Effective with the June 5, 1992 acquisition of PSNH, the consolidated
financial and statistical information of NU includes, on a prospective
basis, the operations of PSNH and NAEC.
(b) Includes reclassification of the unamortized PSNH acquisition costs to
net utility plant.
(c) Includes portions due within one year.
(d) Includes the cumulative effect of change in accounting for municipal
property tax expense, which increased earnings for common shares and
earnings per common share by $51.7 million and $0.42, respectively.
(e) Decrease in the number of shares results from a change in accounting for
ESOP shares.
(f) Excludes $100 million of Monthly Income Preferred Securities.
Northeast Utilities 1996 Annual Report 45
<PAGE>
CONSOLIDATED SALES STATISTICS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1996 1995 1994(a) 1993 1992(b)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES: (thousands)
Residential................................ $1,501,465 $1,469,988 $1,430,239 $1,385,818 $1,213,140
Commercial................................. 1,246,822 1,230,608 1,173,808(c) 1,043,125 943,832
Industrial................................. 565,900 583,204 559,801(c) 649,876 554,587
Other Utilities............................ 299,653 303,004 330,801 383,129 346,791
Streetlighting and Railroads............... 48,053 47,510 45,943 45,480 43,296
Miscellaneous.............................. 47,797 50,353 44,140 60,008 59,465
- -----------------------------------------------------------------------------------------------------------------------
Total Electric......................... 3,709,690 3,684,667 3,584,732 3,567,436 3,161,111
Other...................................... 82,458 65,893 58,010 61,657 55,763
- -----------------------------------------------------------------------------------------------------------------------
Total.................................. $3,792,148 $3,750,560 $3,642,742 $3,629,093 $3,216,874
=======================================================================================================================
SALES: (kWh--millions)
Residential................................ 12,241 12,005 12,231 11,988 10,839
Commercial................................. 12,012 11,737 11,649(c) 10,304 9,608
Industrial................................. 6,820 6,842 6,729(c) 7,572 6,593
Other Utilities............................ 8,100 8,718 9,123 9,046 7,733
Streetlighting and Railroads............... 319 316 314 307 303
Pilot Program (PSNH)....................... 38 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total.................................. 39,530 39,618 40,046 39,217 35,076
=======================================================================================================================
CUSTOMERS: (average)
Residential................................ 1,532,015 1,526,127 1,513,987 1,503,182 1,351,019
Commercial................................. 157,347 156,652 154,703(c) 155,487 132,680
Industrial................................. 7,792 7,861 7,813(c) 6,272 5,774
Other...................................... 3,916 3,878 3,818 3,793 3,581
- -----------------------------------------------------------------------------------------------------------------------
Total.................................. 1,701,070 1,694,518 1,680,321 1,668,734 1,493,054
=======================================================================================================================
AVERAGE ANNUAL USE PER RESIDENTIAL
CUSTOMER (kWh)......................... 8,005 7,880(d) 8,152 7,987 8,129
=======================================================================================================================
AVERAGE ANNUAL BILL PER RESIDENTIAL
....CUSTOMER............................... $980.19 $964.88(d) $953.23 $923.32 $909.80
=======================================================================================================================
AVERAGE REVENUE PER KWH: (in cents)
Residential................................ 12.27 12.24 11.69 11.56 11.19
Commercial................................. 10.38 10.49 10.08 10.12 9.82
Industrial................................. 8.30 8.52 8.32 8.58 8.41
=======================================================================================================================
</TABLE>
(a) Effective January 1, 1994, the accounting for unbilled revenues was
revised to report unbilled revenues by Customer Class.
(b) Effective with the June 5, 1992 acquisition of PSNH, the consolidated
financial and statistical information of NU includes, on a prospective
basis, the operations of PSNH and NAEC.
(c) Effective January 1, 1994, approximately 1,300 customers previously
classified as commercial customers were reclassified to industrial
customers.
(d) Effective January 1, 1996, the amounts shown reflect billed and unbilled
sales. 1995 has been restated to reflect this change.
46 Northeast Utilities 1996 Annual Report
EXHIBIT 13.2
1996 Annual Report
The Connecticut Light and Power Company and Subsidiaries
Index
Contents Page
Consolidated Balance Sheets............................................. 2-3
Consolidated Statements of Income....................................... 4
Consolidated Statements of Cash Flows................................... 5
Consolidated Statements of Common Stockholder's Equity.................. 6
Notes to Consolidated Financial Statements.............................. 7
Report of Independent Public Accountants................................ 37
Management's Discussion and Analysis of Financial
Condition and Results of Operations................................... 38
Selected Financial Data................................................. 50
Statements of Quarterly Financial Data.................................. 50
Statistics.............................................................. 51
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
At December 31, 1996 1995
- -----------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at original cost:
Electric................................................ $ 6,283,736 $ 6,147,961
Less: Accumulated provision for
depreciation (Note 1F)......................... 2,665,519 2,418,557
------------- -------------
3,618,217 3,729,404
Construction work in progress........................... 95,873 103,026
Nuclear fuel, net....................................... 133,050 138,203
------------- -------------
Total net utility plant............................... 3,847,140 3,970,633
------------- -------------
Other Property and Investments:
Nuclear decommissioning trusts, at market............... 296,960 238,023
Investments in regional nuclear generating
companies, at equity (Note 1E)......................... 56,925 54,624
Other, at cost.......................................... 16,565 16,241
------------- -------------
370,450 308,888
------------- -------------
Current Assets:
Cash.................................................... 404 337
Notes receivable from affiliated companies.............. 109,050 -
Receivables, less accumulated provision for
uncollectible accounts of $13,240,000 in 1996
and $10,567,000 in 1995................................ 226,112 231,574
Accounts receivable from affiliated companies........... 3,481 3,069
Taxes receivable........................................ 40,134 -
Accrued utility revenues................................ 78,451 91,157
Fuel, materials, and supplies, at average cost.......... 79,937 68,482
Recoverable energy costs, net--current portion.......... 25,436 78,108
Prepayments and other................................... 63,344 42,894
------------- -------------
626,349 515,621
------------- -------------
Deferred Charges:
Regulatory assets (Note 1H)............................. 1,370,781 1,225,280
Unamortized debt expense................................ 17,033 14,977
Other................................................... 12,283 10,232
------------- -------------
1,400,097 1,250,489
------------- -------------
Total Assets........................................ $ 6,244,036 $ 6,045,631
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
At December 31, 1996 1995
- ----------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock--$10 par value. Authorized
24,500,000 shares; outstanding 12,222,930
shares in 1996 and 1995................................ $ 122,229 $ 122,229
Capital surplus, paid in................................ 639,657 637,981
Retained earnings....................................... 551,410 785,476
------------- -------------
Total common stockholder's equity.............. 1,313,296 1,545,686
Cumulative preferred stock--
$50 par value - authorized 9,000,000 shares;
outstanding 5,424,000 shares in 1996 and 1995
$25 par value - authorized 8,000,000 shares;
outstanding no shares in 1996 and 1995
Not subject to mandatory redemption.................... 116,200 116,200
Subject to mandatory redemption........................ 155,000 155,000
Long-term debt.......................................... 1,834,405 1,812,646
------------- -------------
Total capitalization........................... 3,418,901 3,629,532
------------- -------------
Minority Interest in Consolidated
Subsidiary (Note 13).................................... 100,000 100,000
------------- -------------
Obligations Under Capital Leases (Note 2)................. 143,347 108,408
------------- -------------
Current Liabilities:
Notes payable to banks.................................. - 41,500
Notes payable to affiliated company..................... - 10,250
Long-term debt--current portion......................... 204,116 9,372
Obligations under capital leases--current
portion (Note 2)....................................... 12,361 63,856
Accounts payable........................................ 160,945 110,798
Accounts payable to affiliated companies................ 78,481 44,677
Accrued taxes........................................... 28,707 52,268
Accrued interest........................................ 31,513 30,854
Nuclear compliance (Note 11B)........................... 50,500 -
Other................................................... 34,433 20,027
------------- -------------
601,056 383,602
------------- -------------
Deferred Credits:
Accumulated deferred income taxes (Note 1I)............. 1,365,641 1,486,873
Accumulated deferred investment tax credits............. 135,080 142,447
Deferred contractual obligations (Note 3)............... 305,627 65,847
Other................................................... 174,384 128,922
------------- -------------
1,980,732 1,824,089
------------- -------------
Commitments and Contingencies (Note 11)
Total Capitalization and Liabilities........... $ 6,244,036 $ 6,045,631
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
- ---------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues................................. $2,397,460 $2,387,069 $2,328,052
----------- ----------- -----------
Operating Expenses:
Operation --
Fuel, purchased and net interchange power..... 830,924 608,600 568,394
Other......................................... 778,329 614,382 593,851
Maintenance...................................... 300,005 192,607 207,003
Depreciation..................................... 247,109 242,496 231,155
Amortization of regulatory assets, net........... 57,432 54,217 77,384
Federal and state income taxes (Note 8).......... (20,174) 178,346 190,249
Taxes other than income taxes.................... 174,062 172,395 173,068
----------- ----------- -----------
Total operating expenses................... 2,367,687 2,063,043 2,041,104
----------- ----------- -----------
Operating Income................................... 29,773 324,026 286,948
----------- ----------- -----------
Other Income:
Deferred nuclear plants return--other funds...... 1,268 4,683 13,373
Equity in earnings of regional nuclear
generating companies........................... 6,619 6,545 7,453
Other, net....................................... 19,442 9,902 5,136
Minority interest in income of
subsidiary (Note 13)........................... (9,300) (8,732) -
Income taxes..................................... 160 (2,978) 4,248
----------- ----------- -----------
Other income, net.......................... 18,189 9,420 30,210
----------- ----------- -----------
Income before interest charges............. 47,962 333,446 317,158
----------- ----------- -----------
Interest Charges:
Interest on long-term debt....................... 127,198 124,350 119,927
Other interest................................... 1,147 5,596 6,378
Deferred nuclear plants return--borrowed funds... (146) (1,716) (7,435)
----------- ----------- -----------
Interest charges, net...................... 128,199 128,230 118,870
----------- ----------- -----------
Net (Loss) Income.................................. $ (80,237) $ 205,216 $ 198,288
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net(Loss)Income............................................. $ (80,237) $ 205,216 $ 198,288
Adjustments to reconcile to net cash
from operating activities:
Depreciation.............................................. 247,109 242,496 231,155
Deferred income taxes and investment tax credits, net..... (60,773) 49,520 37,664
Deferred nuclear plants return, net of amortization....... 7,746 95,559 82,651
Deferred demand-side-management costs, net of amortization 26,941 (937) (4,691)
Recoverable energy costs, net of amortization............. (35,567) (16,169) 3,975
Deferred cogeneration costs, net of amortization.......... 25,957 (55,341) (36,821)
Nuclear compliance, net (Note 11B)........................ 50,500 - -
Deferred nuclear refueling outage, net of amortization ... 45,643 (20,712) (4,653)
Other sources of cash..................................... 75,552 86,956 47,791
Other uses of cash........................................ (23,862) (53,745) (4,697)
Changes in working capital:
Receivables and accrued utility revenues.................. (22,378) (33,032) 45,386
Fuel, materials and supplies.............................. (11,455) (4,479) (3,756)
Accounts payable.......................................... 83,951 9,605 (24,167)
Accrued taxes............................................. (23,561) 25,855 (9,726)
Other working capital (excludes cash)..................... (5,385) (1,869) (18,403)
----------- ----------- -----------
Net cash flows from operating activities...................... 300,181 528,923 539,996
----------- ----------- -----------
Financing Activities:
Issuance of long-term debt.................................. 222,000 - 535,000
Issuance of Monthly Income
Preferred Securities....................................... - 100,000 -
Net (decrease) increase in short-term debt.................. (51,750) (127,000) 82,500
Reacquisitions and retirements of long-term debt............ (14,329) (10,866) (774,020)
Reacquisitions and retirements of preferred stock........... - (125,000) -
Cash dividends on preferred stock........................... (15,221) (21,185) (23,895)
Cash dividends on common stock.............................. (138,608) (164,154) (159,388)
----------- ----------- -----------
Net cash flows from (used for) financing activities........... 2,092 (348,205) (339,803)
----------- ----------- -----------
Investment Activities:
Investment in plant:
Electric utility plant.................................... (140,086) (131,858) (149,889)
Nuclear fuel.............................................. 553 (1,543) (20,905)
----------- ----------- -----------
Net cash flows used for investments in plant................ (139,533) (133,401) (170,794)
Investment in NU system money pool.......................... (109,050) - -
Investment in nuclear decommissioning trusts................ (50,998) (47,826) (28,129)
Other investment activities, net............................ (2,625) 581 (1,565)
----------- ----------- -----------
Net cash flows used for investments........................... (302,206) (180,646) (200,488)
----------- ----------- -----------
Net Increase (Decrease) In Cash For The Period................ 67 72 (295)
Cash - beginning of period.................................... 337 265 560
----------- ----------- -----------
Cash - end of period.......................................... $ 404 $ 337 $ 265
=========== =========== ===========
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest, net of amounts capitalized........................ $ 114,458 $ 117,074 $ 115,120
=========== =========== ===========
Income taxes................................................ $ 77,790 $ 137,706 $ 161,513
=========== =========== ===========
Increase in obligations:
Niantic Bay Fuel Trust and other capital leases............. $ 2,855 $ 33,537 $ 52,353
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Capital Retained
Common Surplus, Earnings
Stock Paid In (a) Total
- ------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Balance at January 1, 1994.......... $122,229 $630,271 $ 750,719 $1,503,219
Net income for 1994............. 198,288 198,288
Cash dividends on preferred
stock......................... (23,895) (23,895)
Cash dividends on common stock.. (159,388) (159,388)
Capital stock expenses, net..... 1,846 1,846
--------- --------- ---------- -----------
Balance at December 31, 1994........ 122,229 632,117 765,724 1,520,070
Net income for 1995............. 205,216 205,216
Cash dividends on preferred
stock......................... (21,185) (21,185)
Cash dividends on common stock.. (164,154) (164,154)
Loss on the retirement of
preferred stock............... (125) (125)
Capital stock expenses, net..... 5,864 5,864
--------- --------- ---------- -----------
Balance at December 31, 1995........ 122,229 637,981 785,476 1,545,686
Net loss for 1996............... (80,237) (80,237)
Cash dividends on preferred
stock......................... (15,221) (15,221)
Cash dividends on common stock.. (138,608) (138,608)
Capital stock expenses, net..... 1,676 1,676
--------- --------- ---------- -----------
Balance at December 31, 1996........ $122,229 $639,657 $ 551,410 $1,313,296
========= ========= ========== ===========
</TABLE>
(a) The company has dividend restrictions imposed by its long-term debt
agreements. At December 31, 1996, these restrictions totaled
approximately $540 million.
The accompanying notes are an integral part of these financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ABOUT THE CONNECTICUT LIGHT AND POWER COMPANY
The Connecticut Light and Power Company and Subsidiaries (the company or
CL&P), Western Massachusetts Electric Company (WMECO), Holyoke Water
Power Company (HWP), Public Service Company of New Hampshire (PSNH), and
North Atlantic Energy Corporation (NAEC) are the operating subsidiaries
comprising the Northeast Utilities system (the system) and are wholly
owned by Northeast Utilities (NU).
The system furnishes retail electric service in Connecticut, New
Hampshire, and western Massachusetts through CL&P, PSNH, WMECO, and HWP.
A fifth subsidiary, NAEC, sells all of its capacity to PSNH. In
addition to its retail service, the system furnishes firm and other
wholesale electric services to various municipalities and other
utilities. The system serves about 30 percent of New England's electric
needs and is one of the 20 largest electric utility systems in the
country as measured by revenues.
Other wholly owned subsidiaries of NU provide support services for the
system companies and in some cases, for other New England utilities.
Northeast Utilities Service Company (NUSCO) provides centralized
accounting, administrative, information resources, engineering,
financial, legal, operational, planning, purchasing, and other services
to the system companies. Northeast Nuclear Energy Company (NNECO) acts
as agent for the system companies in operating the Millstone nuclear
generating facilities. North Atlantic Energy Service Corporation
(NAESCO) acts as agent for CL&P and NAEC and has operational
responsibilities for the Seabrook nuclear generating facility.
B. PRESENTATION
The consolidated financial statements of CL&P include the accounts of
all wholly owned subsidiaries. Significant intercompany transactions
have been eliminated in consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain reclassifications of prior years' data have been made to conform
with the current year's presentation.
All transactions among affiliated companies are on a recovery of cost
basis which may include amounts representing a return on equity, and are
subject to approval by various federal and state regulatory agencies.
C. PUBLIC UTILITY REGULATION
NU is registered with the Securities and Exchange Commission (SEC) as a
holding company under the Public Utility Holding Company Act of 1935
(1935 Act), and it and its subsidiaries, including the company, are
subject to the provisions of the 1935 Act. Arrangements among the
system companies, outside agencies and other utilities covering
interconnections, interchange of electric power and sales of utility
property are subject to regulation by the Federal Energy Regulatory
Commission (FERC) and/or the SEC. The company is subject to further
regulation for rates, accounting and other matters by the FERC and/or
the Connecticut Department of Public Utility Control (DPUC).
D. NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," which established accounting standards for evaluating and recording
asset impairment. The company adopted SFAS 121 as of January 1, 1996.
See Note 1H, "Summary of Significant Accounting Policies - Regulatory
Accounting and Assets" for further information on the regulatory impacts
of the company's adoption of SFAS 121.
See Note 10, "Sale of Customer Receivables," and Note 11C, "Commitments
and Contingencies-Environmental Matters," for information on newly
issued accounting and reporting standards related to those specific
areas.
E. INVESTMENTS AND JOINTLY OWNED ELECTRIC UTILITY PLANT
Regional Nuclear Generating Companies: CL&P owns common stock of four
regional nuclear generating companies (Yankee companies). The Yankee
companies, with the company's ownership interests are:
Connecticut Yankee Atomic Power Company (a) (CY) ............... 34.5%
Yankee Atomic Electric Company (a) (YAEC) ...................... 24.5
Maine Yankee Atomic Power Company (MY) ......................... 12.0
Vermont Yankee Nuclear Power Corporation (VY) .................. 9.5
(a) YAEC's and CY's nuclear power plants were shut down permanently on
February 26, 1992 and December 4, 1996, respectively.
CL&P's investments in the Yankee companies are accounted for on the
equity basis due to the company's ability to exercise significant
influence over their operating and financial policies.
CL&P's investments in the Yankee companies at December 31, 1996 are:
(Thousands of Dollars)
Connecticut Yankee Atomic Power Company ................. $36,954
Yankee Atomic Electric Company ........................... 5,854
Maine Yankee Atomic Power Company ........................ 8,956
Vermont Yankee Nuclear Power Corporation ................. 5,161
$56,925
The electricity produced by MY and VY is committed substantially on the
basis of ownership interests and is billed pursuant to contractual
agreements. Under ownership agreements with the Yankee companies, CL&P
may be asked to provide direct or indirect financial support for one or
more of the companies. For more information on these agreements, see
Note 11F, "Commitments and Contingencies - Long-Term Contractual
Arrangements." For more information on the Yankee companies, see Note
3, "Nuclear Decommissioning" and Note 11B, "Commitments and
Contingencies-Nuclear Performance."
Millstone 1: CL&P has an 81.0 percent joint ownership interest in
Millstone 1, a 660-megawatt (MW) nuclear generating unit. As of
December 31, 1996 and 1995, plant-in-service included approximately
$384.5 million and $372.6 million, respectively, and the accumulated
provision for depreciation included approximately $159.4 million and
$148.4 million, respectively, for CL&P's share of Millstone 1. CL&P's
share of Millstone 1 expenses is included in the corresponding operating
expenses on the accompanying Consolidated Statements of Income.
Millstone 2: CL&P has an 81.0 percent joint ownership interest in
Millstone 2, an 870-MW nuclear generating unit. As of December 31, 1996
and 1995, plant-in-service included approximately $690.4 million and
$684.5 million, respectively, and the accumulated provision for
depreciation included approximately $224.1 million and $198.5 million,
respectively, for CL&P's share of Millstone 2. CL&P's share of
Millstone 2 expenses is included in the corresponding operating expenses
on the accompanying Consolidated Statements of Income.
Millstone 3: CL&P has a 52.93 percent joint ownership interest in
Millstone 3, a 1,154-MW nuclear generating unit. As of December 31, 1996
and 1995, plant-in-service included approximately $1.9 billion, and the
accumulated provision for depreciation included approximately $504.1
million and $455.1 million, respectively, for CL&P's share of Millstone
3. CL&P's share of Millstone 3 expenses is included in the corresponding
operating expenses on the accompanying Consolidated Statements of
Income.
For more information regarding the Millstone units, see Note 11B,
"Commitments and Contingencies-Nuclear Performance."
Seabrook 1: CL&P has a 4.06 percent joint ownership interest in
Seabrook 1, a 1,148-MW nuclear generating unit. As of December 31, 1996
and 1995, plant-in-service included approximately $173.7 million and
$173.3 million, respectively, and the accumulated provision for
depreciation included approximately $29.7 million and $24.8 million,
respectively, for CL&P's share of Seabrook 1. CL&P's share of Seabrook
1 expenses is included in the corresponding operating expenses on the
accompanying Consolidated Statements of Income.
F. DEPRECIATION
The provision for depreciation is calculated using the straight-line
method based on estimated remaining lives of depreciable utility plant-
in-service, adjusted for salvage value and removal costs, as approved by
the appropriate regulatory agency. Except for major facilities,
depreciation rates are applied to the average plant-in-service during
the period. Major facilities are depreciated from the time they are
placed in service. When plant is retired from service, the original
cost of plant, including costs of removal, less salvage, is charged to
the accumulated provision for depreciation. The depreciation rates for
the several classes of electric plant-in-service are equivalent to a
composite rate of 4.0 percent in 1996 and 1995, and 3.9 percent in 1994.
See Note 3, "Nuclear Decommissioning," for information on nuclear plant
decommissioning.
CL&P's nonnuclear generating facilities have limited service lives.
Plant may be retired in place or dismantled based upon expected future
needs, the economics of the closure and environmental concerns. The
costs of closure and removal are incremental costs and, for financial
reporting purposes, are accrued over the life of the asset as part of
depreciation. At December 31, 1996, the accumulated provision for
depreciation included approximately $43 million accrued for the cost of
removal, net of salvage for nonnuclear generation property.
G. REVENUES
Other than revenues under fixed-rate agreements negotiated with certain
wholesale, industrial and commercial customers and limited pilot retail
access programs, utility revenues are based on authorized rates applied
to each customer's use of electricity. In general, rates can be changed
only through a formal proceeding before the appropriate regulatory
commission. At the end of each accounting period, CL&P accrues an
estimate for the amount of energy delivered but unbilled.
H. REGULATORY ACCOUNTING AND ASSETS
The accounting policies of CL&P and the accompanying consolidated
financial statements conform to generally accepted accounting principles
applicable to rate regulated enterprises and reflect the effects of the
ratemaking process in accordance with SFAS 71, "Accounting for the
Effects of Certain Types of Regulation." Assuming a cost-of-service
based regulatory structure, regulators may permit incurred costs,
normally treated as expenses, to be deferred and recovered through
future revenues. Through their actions, regulators may also reduce or
eliminate the value of an asset, or create a liability. If any portion
of the company's operations were no longer subject to the provisions of
SFAS 71, as a result of a change in the cost-of-service based regulatory
structure or the effects of competition, the company would be required
to write off related regulatory assets and liabilities. The company
continues to believe that its use of regulatory accounting remains
appropriate.
SFAS 121 requires the evaluation of long-lived assets, including
regulatory assets, for impairment when certain events occur or when
conditions exist that indicate the carrying amounts of assets may not
be recoverable. SFAS 121 requires that any long-lived assets which are
no longer probable of recovery through future revenues be revalued based
on estimated future cash flows. If the revaluation is less than the
book value of the asset, an impairment loss would be charged to
earnings. The implementation of SFAS 121 did not have a material impact
on the company's financial position or results of operations as of
December 31, 1996. Management continues to believe that it is probable
that the company will recover its investments in long-lived assets
through future revenues. This conclusion may change in the future as
competitive factors influence wholesale and retail pricing in the
electric utility industry or if the cost-of-service based regulatory
structure were to change.
The components of CL&P's regulatory assets are as follows:
At December 31, 1996 1995
(Thousands of Dollars)
Income taxes, net (Note 1I) .................. $ 753,390 $ 863,521
Recoverable energy costs,
net (Note 1J) .............................. 97,900 9,662
Deferred demand side management
costs (Note 1K) ............................ 90,129 117,070
Cogeneration costs (Note 1L) ................. 66,205 92,162
Unrecovered contractual
obligations (Note 3) ....................... 300,627 65,847
Other ........................................ 62,530 77,018
$1,370,781 $1,225,280
For more information on the company's regulatory environment and the
potential impacts of restructuring, see Note 11A, "Commitments and
Contingencies-Restructuring" and Management's Discussion and Analysis of
Financial Condition and Results of Operations (MD&A).
I. INCOME TAXES
The tax effect of temporary differences (differences between the periods
in which transactions affect income in the financial statements and the
periods in which they affect the determination of taxable income) is
accounted for in accordance with the ratemaking treatment of the
applicable regulatory commissions. The adoption of SFAS 109,
"Accounting for Income Taxes," in 1993 increased the company's net
deferred tax obligation. As it is probable that the increase in
deferred tax liabilities will be recovered from customers through rates,
CL&P established a regulatory asset. See Note 8, "Income Tax Expense"
for the components of income tax expense.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, which give rise
to the accumulated deferred tax obligation is as follows:
At December 31, 1996 1995
(Thousands of Dollars)
Accelerated depreciation and other
plant-related differences .....................$1,032,857 $1,074,242
Regulatory assets - income tax
gross up ..................................... 313,420 347,673
Other .......................................... 19,364 64,958
$1,365,641 $1,486,873
J. RECOVERABLE ENERGY COSTS
Under the Energy Policy Act of 1992 (Energy Act), CL&P is assessed for
its proportionate share of the costs of decontaminating and
decommissioning uranium enrichment plants owned by the United States
Department of Energy (D&D assessment). The Energy Act requires that
regulators treat D&D assessments as a reasonable and necessary current
cost of fuel, to be fully recovered in rates, like any other fuel cost.
CL&P is currently recovering these costs through rates. As of December
31, 1996, the company's total D&D deferrals were approximately $49.2
million.
During 1996, retail electric rates included a fuel adjustment clause
(FAC) under which fossil fuel prices above or below base-rate levels are
charged or credited to customers. In addition, CL&P also utilized a
generation utilization adjustment clause (GUAC), which deferred the
effect on fuel costs caused by variations from a specified composite
nuclear generation capacity factor embedded in base rates.
At December 31, 1996, CL&P's net recoverable energy costs, excluding
current net recoverable energy costs, were approximately $97.9 million,
which includes the D&D assessment. For additional information, see Note
11B, "Commitments and Contingencies - Nuclear Performance."
On October 8, 1996, the DPUC issued an order establishing an Energy
Adjustment Clause (EAC) effective January 1, 1997. The EAC will replace
CL&P's existing FAC and GUAC. For further information regarding the
EAC, see the MD&A.
K. DEMAND SIDE MANAGEMENT (DSM)
CL&P's DSM costs are recovered in base rates through a Conservation
Adjustment Mechanism (CAM). The $90.1 million of costs on CL&P's books
as of December 31, 1996, will be fully recovered by 2000. During
November, 1996, CL&P filed its 1997 DSM program and forecasted CAM for
1997 with the DPUC. The filing proposes expenditures of $36 million in
1997, with recovery over 1.9 years and a zero CAM rate.
L. COGENERATION COSTS
Beginning on July 1, 1996, the deferred cogeneration balance of
approximately $86 million is being amortized over a five year period.
An additional $9 million of amortization will be applied to the deferred
balance in 1997, as required under a settlement agreement which CL&P
reached with the DPUC. CL&P will continue to apply any savings
associated with the renegotiation of a certain contract with a
cogeneration facility to the deferred balance. Under current
expectations, CL&P expects complete amortization of the deferred balance
by December 31, 1998.
M. SPENT NUCLEAR FUEL DISPOSAL COSTS
Under the Nuclear Waste Policy Act of 1982, CL&P must pay the United
States Department of Energy (DOE) for the disposal of spent nuclear fuel
and high-level radioactive waste. Fees for nuclear fuel burned on or
after April 7, 1983 are billed currently to customers and paid to the
DOE on a quarterly basis. For nuclear fuel used to generate electricity
prior to April 7, 1983 (prior-period fuel), payment must be made prior
to the first delivery of spent fuel to the DOE. The DOE was originally
scheduled to begin accepting delivery of spent fuel in 1998. However,
delays in identifying a permanent storage site have continually
postponed plans for the DOE's long-term storage and disposal site. The
DOE's current estimate for an available site is 2010.
Until such payment is made, the outstanding balance will continue to
accrue interest at the three-month Treasury Bill Yield Rate. At
December 31, 1996, fees due to the DOE for the disposal of prior-period
fuel were approximately $158.0 million, including interest costs of
$91.5 million. As of December 31, 1996, all fees had been collected
through rates.
N. FUEL PRICE MANAGEMENT
The company utilizes fuel-price management instruments to manage well
defined fuel price risks. Amounts receivable or payable under fuel-price
management instruments are recognized in income when realized. Any
material unrealized gains or losses on fuel-price management instruments
will be deferred until realized. For further information, see Note 12,
"Fuel Price Management."
2. LEASES
CL&P and WMECO finance up to $450 million of nuclear fuel for Millstone 1
and 2 and their respective shares of the nuclear fuel for Millstone 3 under
the Niantic Bay Fuel Trust (NBFT) capital lease agreement. CL&P and WMECO
make quarterly lease payments for the cost of nuclear fuel consumed in the
reactors, based on a units-of-production method at rates which reflect
estimated kilowatt-hours of energy provided, plus financing costs
associated with the fuel in the reactors. Upon permanent discharge from
the reactors, ownership of the nuclear fuel transfers to CL&P and WMECO.
CL&P has also entered into lease agreements, some of which are capital
leases, for the use of data processing and office equipment, vehicles, gas
turbines, nuclear control room simulators and office space. The provisions
of these lease agreements generally provide for renewal options. The
following rental payments have been charged to expense:
Year Capital Leases Operating Leases
1996 ..........$17,993,000 $22,032,000
1995 ...........56,307,000 23,793,000
1994 ...........60,975,000 24,192,000
Interest included in capital lease rental payments was $10,144,000 in 1996,
$10,587,000 in 1995, and $10,228,000 in 1994.
Substantially all of the capital lease rental payments were made pursuant
to the nuclear fuel lease agreement. Future minimum lease payments under
the nuclear fuel capital lease cannot be reasonably estimated on an annual
basis due to variations in the usage of nuclear fuel.
Future minimum rental payments, excluding annual nuclear fuel lease
payments and executory costs, such as property taxes, state use taxes,
insurance and maintenance, under long-term noncancelable leases, as of
December 31, 1996 are:
Year Capital Leases Operating Leases
(Thousands of Dollars)
1997 .................$ 2,800 $26,100
1998 ...................2,900 21,500
1999 ...................2,900 19,900
2000 ...................2,900 18,800
2001 ...................3,000 13,700
After 2001...............66,400 46,400
Future minimum lease
payments...............80,900 $146,400
Less amount representing
interest..............61,900
Present value of future
minimum lease payments
for other than
nuclear fuel...........19,000
Present value of future
nuclear fuel lease
payments..............136,800
Total ................$155,800
It is possible that certain operating lease payments related to NUSCO
leases will be accelerated from future years into 1997. See Note 11G, "The
Rocky River Realty Company - Obligations" for additional information.
3. NUCLEAR DECOMMISSIONING
CL&P's nuclear power plants have service lives that are expected to end
during the years 2010 through 2026. Upon retirement, these units must be
decommissioned. Decommissioning studies prepared in 1996 concluded that
complete and immediate dismantlement at retirement continues to be the most
viable and economic method of decommissioning the three Millstone units and
Seabrook 1. Decommissioning studies are reviewed and updated periodically
to reflect changes in decommissioning requirements, costs, technology and
inflation.
The estimated cost of decommissioning CL&P's ownership share of Millstone 1
and 2, in year-end 1996 dollars, is $316.0 million and $279.0 million,
respectively. CL&P's ownership share of the estimated cost of
decommissioning Millstone 3 and Seabrook 1 in year-end 1996 dollars, is
$244.9 million and $18.3 million, respectively. The Millstone units and
Seabrook 1 decommissioning costs will be increased annually by their
respective escalation rates. Nuclear decommissioning costs are accrued
over the expected service life of the units and are included in
depreciation expense on the Consolidated Statements of Income. Nuclear
decommissioning costs amounted to $37.8 million in 1996, $30.5 million in
1995, and $25.6 million in 1994. Nuclear decommissioning, as a cost of
removal, is included in the accumulated provision for depreciation on the
Consolidated Balance Sheets. At December 31, 1996, the balance in the
accumulated reserve for decommissioning amounted to $329.1 million.
CL&P has established external decommissioning trusts through a trustee for
its portion of the costs of decommissioning Millstone 1, 2, and 3. CL&P's
portion of the cost of decommissioning Seabrook 1 is paid to an independent
decommissioning financing fund managed by the state of New Hampshire.
Funding of the estimated decommissioning costs assume levelized collections
for the Millstone units and escalated collections for Seabrook 1 and after-
tax earnings on the Millstone and Seabrook decommissioning funds of 5.8
percent and 6.5 percent, respectively.
As of December 31, 1996, CL&P has collected, through rates, $240.8 million
toward the future decommissioning costs of its share of the Millstone
units, of which $209.1 million has been transferred to external
decommissioning trusts. As of December 31, 1996, CL&P has paid
approximately $2.4 million into Seabrook 1's decommissioning financing
fund. Earnings on the decommissioning trusts and financing fund increase
the decommissioning trust balance and the accumulated reserve for
decommissioning. Unrealized gains and losses associated with the
decommissioning trusts and financing fund also impact the balance of the
trusts and financing fund and the accumulated reserve for decommissioning.
Changes in requirements or technology, the timing of funding or
dismantling, or adoption of a decommissioning method other than immediate
dismantlement would change decommissioning cost estimates and the amounts
required to be recovered. CL&P attempts to recover sufficient amounts
through its allowed rates to cover its expected decommissioning costs.
Only the portion of currently estimated total decommissioning costs that
has been accepted by regulatory agencies is reflected in CL&P's rates.
Based on present estimates and assuming its nuclear units operate to the
end of their respective license periods, CL&P expects that the
decommissioning trusts and financing fund will be substantially funded when
the units are retired from service.
MY and VY: Each Yankee company owns a single nuclear generating unit. MY
and VY have service lives that are expected to end in 2008 and 2012,
respectively. The estimated cost, in year-end 1996 dollars, of
decommissioning CL&P's ownership share of units owned and operated by MY
and VY are $44.3 million and $34.8 million, respectively. Under the terms
of the contracts with the Yankee companies, the shareholders-sponsors are
responsible for their proportionate share of the operating costs of each
unit, including decommissioning. The nuclear decommissioning costs of the
Yankee companies are included as part of the cost of power purchased by
CL&P.
CY and YAEC: On December 4, 1996, the board of directors of CY voted
unanimously to cease permanently the production of power at its nuclear
plant. The system companies relied on CY for approximately three percent
of their capacity.
CY has undertaken a number of regulatory filings intended to implement the
decommissioning and the recovery of remaining assets of CY. During late
December, 1996, CY filed an amendment to its power contracts to clarify the
obligations of its purchasing utilities following the decision to cease
power production. At December 31, 1996, the estimated obligation,
including decommissioning, amounted to $762.8 million of which CL&P's share
was approximately $263.2 million.
YAEC is in the process of decommissioning its nuclear facility. At December
31, 1996, the estimated remaining costs, including decommissioning,
amounted to $173.3 million of which CL&P's share was approximately $42.5
million.
Management expects that CL&P will continue to be allowed to recover these
costs from its customers. Accordingly, CL&P has recognized these costs as
regulatory assets, with corresponding obligations, on its Consolidated
Balance Sheets.
Proposed Accounting: The staff of the SEC has questioned certain of the
current accounting practices of the electric utility industry, including
the company, regarding the recognition, measurement and classification of
decommissioning costs for nuclear generating units in the financial
statements. In response to these questions, FASB agreed to review the
accounting for removal costs, including decommissioning, and issued a
proposed statement entitled "Accounting for Liabilities Related to Closure
or Removal of Long-Lived Assets," in February, 1996. If current electric
utility industry accounting practices for decommissioning are changed in
accordance with the proposed statement: (1) annual provisions for
decommissioning could increase, (2) the estimated cost for decommissioning
could be recorded as a liability with an offset to plant rather than as
part of accumulated depreciation, and (3) trust fund income from the
external decommissioning trusts could be reported as investment income
rather than as a reduction to decommissioning expense.
4. SHORT-TERM DEBT
Limits: The amount of short-term borrowings that may be incurred by CL&P is
subject to periodic approval by either the SEC under the 1935 Act or by its
state regulator. In addition, the charter of CL&P contains provisions
restricting the amount of short-term debt borrowings. Under the SEC and/or
charter restrictions, the company was authorized, as of January 1, 1997, to
incur short-term borrowings up to a maximum of $375 million.
Credit Agreements: In November, 1996, NU entered into a three-year
revolving credit agreement (New Credit Agreement) with a group of 12 banks.
Under the terms of the New Credit Agreement, NU, CL&P and WMECO will be
able to borrow up to $150 million, $313.75 million, and $150 million,
respectively. The overall limit for all of the borrowing system companies
under the entire New Credit Agreement is $313.75 million. The system
companies are obligated to pay a facility fee of .30 percent per annum of
each bank's total commitment under the new credit facility which will
expire November 21, 1999. At December 31, 1996, there were $27.5 million
in borrowings under this agreement, all of which were borrowed by other
system companies.
Access to the New Credit Agreement is contingent upon certain financial
tests being met. NU is currently renegotiating these restrictions so that
the financial impacts of the current nuclear outages do not impact the
ability to access these facilities. Through February 21, 1997, CL&P and
WMECO have satisfied all financial covenants required under their
respective borrowing facilities, but NU needed and obtained a limited
waiver of an interest coverage covenant that had to be satisfied for NU to
borrow under the New Credit Agreement. NU, CL&P, and WMECO are currently
maintaining their access to the New Credit Agreement under an interim
written arrangement, under which NU agreed not to borrow more than $27.5
million against the facility.
In addition to the New Credit Agreement, NU, CL&P, WMECO, HWP, NNECO and
The Rocky River Realty Company (RRR) have various revolving credit lines
through separate bilateral credit agreements. Under the remaining three-
year portion of the facility, four banks maintain commitments to the
respective system companies totaling $56.25 million. NU, CL&P and WMECO
may borrow up to the aggregate $56.25 million, whereas HWP, NNECO and RRR
may borrow up to their short-term debt limit of $5 million, $50 million and
$22 million, respectively. Under the terms of the agreement, the system
companies are obligated to pay a facility fee of .15 percent per annum of
each bank's total commitment under the three-year portion of the facility.
These commitments will expire December 3, 1998. At December 31, 1996 and
1995, there were $11.3 million and $42.5 million in borrowings,
respectively, under the facility, of which CL&P had no borrowings in 1996
and $10 million in borrowings in 1995.
Under both credit facilities above, the company may borrow funds on a
short-term revolving basis under the remaining portion of its agreement,
using either fixed-rate loans or standby loans. Fixed rates are set using
competitive bidding. Standby loans are based upon several alternative
variable rates.
The weighted average annual interest rate on CL&P's notes payable to banks
outstanding at December 31, 1995 was 6.0 percent. Maturities of CL&P's
short-term debt obligations are for periods of three months or less.
Money Pool: Certain subsidiaries of NU, including CL&P, are members of the
Northeast Utilities System Money Pool (Pool). The Pool provides a more
efficient use of the cash resources of the system, and reduces outside
short-term borrowings. NUSCO administers the Pool as agent for the member
companies. Short-term borrowing needs of the member companies are first
met with available funds of other member companies, including funds
borrowed by NU parent. NU parent may lend to the Pool but may not borrow.
Funds may be withdrawn from or repaid to the Pool at any time without prior
notice. Investing and borrowing subsidiaries receive or pay interest based
on the average daily Federal Funds rate. However, borrowings based on loans
from NU parent bear interest at NU parent's cost and must be repaid based
upon the terms of NU parent's original borrowing. At December 31, 1996,
CL&P had no borrowings outstanding from the Pool. At December 31, 1995,
CL&P had $10.3 million of borrowings outstanding from the Pool. The
interest rate on borrowings from the Pool on December 31, 1996 and 1995
were 6.3 percent and 4.7 percent, respectively.
For further information on short-term debt see the MD&A.
5. PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock not subject to mandatory redemption are:
December 31, Shares
1996 Outstanding
Redemption December 31, December 31,
Description Price 1996 1996 1995 1994
(Thousands of Dollars)
$1.90 Series of 1947..... $52.50 163,912 $ 8,196 $ 8,196 $ 8,196
$2.00 Series of 1947..... 54.00 336,088 16,804 16,804 16,804
$2.04 Series of 1949..... 52.00 100,000 5,000 5,000 5,000
$2.06 Series E of 1954... 51.00 200,000 10,000 10,000 10,000
$2.09 Series F of 1955... 51.00 100,000 5,000 5,000 5,000
$2.20 Series of 1949..... 52.50 200,000 10,000 10,000 10,000
$3.24 Series G of 1968... 51.84 300,000 15,000 15,000 15,000
3.90% Series of 1949..... 50.50 160,000 8,000 8,000 8,000
4.50% Series of 1956..... 50.75 104,000 5,200 5,200 5,200
4.50% Series of 1963..... 50.50 160,000 8,000 8,000 8,000
4.96% Series of 1958..... 50.50 100,000 5,000 5,000 5,000
5.28% Series of 1967..... 51.43 200,000 10,000 10,000 10,000
6.56% Series of 1968..... 51.44 200,000 10,000 10,000 10,000
1989 Adjustable
Rate DARTS............. - - - - 50,000
Total preferred stock
not subject to
mandatory redemption $116,200 $116,200 $166,200
All or any part of each outstanding series of such preferred stock may be
redeemed by the company at any time at established redemption prices plus
accrued dividend to the date of redemption.
6. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock subject to mandatory redemption are:
December 31, Shares
1996 Outstanding
Redemption December 31, December 31,
Description Price* 1996 1996 1995 1994
(Thousands of Dollars)
9.00% Series of 1989.... - - $ - $ - $ 75,000
7.23% Series of 1992.... $52.41 1,500,000 75,000 75,000 75,000
5.30% Series of 1993.... $51.00 1,600,000 80,000 80,000 80,000
$155,000 $155,000 $230,000
Less preferred stock
to be redeemed
within one year......... - - 3,750
Total preferred stock
subject to mandatory
redemption.............. $155,000 $155,000 $226,250
*Each of these series is subject to certain refunding limitations for the
first five years after they were issued. Redemption prices reduce in future
years.
The following table details redemption and sinking fund activity for preferred
stock subject to mandatory redemption:
Minimum
Annual
Sinking-Fund Shares Reacquired
Series Requirement 1996 1995 1994
(Thousand of Dollars)
9.00% Series of 1989 $ - - 3,000,000 -
7.23% Series of 1992 (1) 3,750 - - -
5.30% Series of 1993 (2) 16,000 - - -
(1) Sinking fund requirements commence September 1, 1998.
(2) Sinking fund requirements commence October 1, 1999.
The minimum sinking-fund provisions of the series subject to mandatory
redemption, for the years 1998 through 2001, aggregate approximately $3.8
million in 1998, and $19.8 million in 1999, 2000 and 2001. There were no
minimum sinking-fund provisions in 1997. In case of default on sinking-
fund payments or the payment of dividends, no payments may be made on any
junior stock by way of dividends or otherwise (other than in shares of
junior stock) so long as the default continues. If the company is in
arrears in the payment of dividends on any outstanding shares of preferred
stock, the company would be prohibited from redemption or purchase of less
than all of the preferred stock outstanding. All or part of each of the
series named above may be redeemed by the company at any time at
established redemption prices plus accrued dividends to the date of
redemption, subject to certain refunding limitations.
7. LONG-TERM DEBT
Details of long-term debt outstanding are:
December 31,
1996 1995
(Thousands of Dollars)
First Mortgage Bonds:
7 5/8% Series UU due 1997................. $ 193,288 $ 197,245
6 1/2% Series T due 1998................. 20,000 20,000
7 1/4% Series VV due 1999................. 99,000 100,000
5 1/2% Series A due 1999................. 140,000 140,000
5 3/4% Series XX due 2000................. 200,000 200,000
7 7/8% Series A due 2001................. 160,000 -
6 1/8% Series B due 2004................. 140,000 140,000
7 3/8% Series TT due 2019................. 20,000 20,000
7 1/2% Series YY due 2023................. 100,000 100,000
8 1/2% Series C due 2024........................ 115,000 115,000
7 7/8% Series D due 2024........................ 140,000 140,000
7 3/8% Series ZZ due 2025................. 125,000 125,000
Total First Mortgage Bonds............. 1,452,288 1,297,245
Pollution Control Notes:
Variable rate, due 2016-2022.................. 46,400 46,400
Tax exempt, due 2028-2031..................... 377,500 315,500
Fees and interest due for spent
fuel disposal costs (Note 1M)................. 157,968 149,978
Other........................................... 10,915 20,286
Less amounts due within one year................ 204,116 9,372
Unamortized premium and discount, net........... (6,550) (7,391)
Long-term debt, net........................... $1,834,405 $1,812,646
Long-term debt and cash sinking-fund requirements on debt outstanding at
December 31, 1996 for the years 1997 through 2001 are approximately $204.1
million, $20.0 million, $239.0 million, $200.0 million, and $160.0 million,
respectively. In addition, there are annual one-percent sinking- and
improvement-fund requirements, currently amounting to $14.5 million for
1997, $12.6 million for 1998, $12.4 million for 1999, $10.0 million for
2000, and $8.0 million for 2001. Such sinking- and improvement-fund
requirements may be satisfied by the deposit of cash or bonds or by
certification of property additions.
All or any part of each outstanding series of first mortgage bonds may be
redeemed by the company at any time at established redemption prices plus
accrued interest to the date of redemption, except certain series which are
subject to certain refunding limitations during their respective initial
five-year redemption periods.
Essentially all of the company's utility plant is subject to the lien of
its first mortgage bond indenture. As of December 31, 1996 and 1995, the
company has secured $315.5 million of pollution control notes with second
mortgage liens on Millstone 1, junior to the lien of its first mortgage
bond indenture. The average effective interest rate on the variable-rate
pollution control notes ranged from 3.4 percent to 3.6 percent for 1996 and
from 3.8 percent to 4.0 percent for 1995.
On January 23, 1997, the letter of credit associated with CL&P's $62
million tax-exempt PCRBs, issued on May 21, 1996, was replaced with a bond
insurance and liquidity facility secured by First Mortgage Bonds. The
bonds were originally backed by a five-year letter of credit and secured by
a second mortgage on CL&P's interest in Millstone 1.
8. INCOME TAX EXPENSE
The components of the federal and state income tax provisions charged to
operations are:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Current income taxes:
Federal............................ $ 30,650 $ 93,906 $108,371
State.............................. 9,789 37,898 39,966
Total current.................... 40,439 131,804 148,337
Deferred income taxes, net:
Federal............................ (38,680) 52,075 44,180
State.............................. (14,726) 5,085 842
Total deferred................... (53,406) 57,160 45,022
Investment tax credits, net.......... (7,367) (7,640) (7,358)
Total income tax expense......... $(20,334) $181,324 $186,001
The components of total income tax expense are classified as
follows:
Income taxes charged to
operating expenses................. $(20,174) $178,346 $190,249
Other income taxes................... (160) 2,978 (4,248)
Total income tax expense............. $(20,334) $181,324 $186,001
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Depreciation, leased nuclear fuel,
settlement credits and
disposal costs................... $ 3,981 $44,278 $ 38,874
Energy adjustment clauses.......... (1,654) 23,302 14,465
Demand-side management............. (17,099) 1,310 203
Nuclear plant deferrals............ (18,861) (8,055) (20,452)
Bond redemptions................... (1,789) (2,255) 6,826
Contractual settlements............ 2,513 (9,496) 109
Nuclear compliance reserves........ (21,131) - -
Other.............................. 634 8,076 4,997
Deferred income taxes, net......... $(53,406) $57,160 $ 45,022
A reconciliation between income tax expense and the expected tax expense at
the applicable statutory rate is as follows:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Expected federal income tax at
35 percent of pretax income...... $(35,931) $135,289 $134,501
Tax effect of differences:
State income taxes, net of
federal benefit................ (3,209) 27,939 26,526
Depreciation..................... 21,313 23,517 18,602
Deferred nuclear plants return... (444) (1,639) (4,681)
Amortization of
regulatory assets ............. 8,601 20,218 19,755
Property tax..................... - (159) 5,286
Investment tax credit
amortization................... (7,367) (7,640) (7,358)
Adjustment for prior years'
taxes.......................... - (10,442) (2,706)
Other, net....................... (3,297) (5,759) (3,924)
Total income tax expense........... $(20,334) $181,324 $186,001
9. EMPLOYEE BENEFITS
A. PENSION BENEFITS
The company participates in a uniform noncontributory defined benefit
retirement plan covering all regular system employees. Benefits are
based on years of service and the employees' highest eligible
compensation during 60 consecutive months of employment. The
company's direct portion of the system's pension income, part of which
was credited to utility plant, approximated $8.8 million in 1996,
$10.4 million in 1995 and $2.3 million in 1994. The company's pension
costs for 1996, 1995, and 1994 included approximately $2.8 million,
$0.1 million, and $4.8 million, respectively, related to workforce
reduction programs.
Currently, the company funds annually an amount at least equal to that
which will satisfy the requirements of the Employee Retirement Income
Security Act and the Internal Revenue Code. Pension costs are
determined using market-related values of pension assets. Pension
assets are invested primarily in domestic and international equity
securities and bonds.
The components of net pension cost for CL&P are:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Service cost.................... $ 11,896 $ 7,543 $ 13,072
Interest cost................... 37,226 37,110 36,103
Return on plan assets........... (103,248) (138,582) 1,020
Net amortization................ 45,300 83,516 (52,536)
Net pension income.............. $ (8,826) $(10,413) $ (2,341)
For calculating pension cost, the following assumptions were used:
For the Years Ended December 31, 1996 1995 1994
Discount rate................... 7.50% 8.25% 7.75%
Expected long-term
rate of return................ 8.75 8.50 8.50
Compensation/progression
rate.......................... 4.75 5.00 4.75
The following table represents the plan's funded status reconciled to
the Consolidated Balance Sheets:
At December 31, 1996 1995
(Thousands of Dollars)
Accumulated benefit obligation,
including vested benefits at
December 31, 1996 and 1995 of
$405,340,000 and $404,540,000,
respectively...................... $434,473 $432,987
Projected benefit obligation........ $514,989 $515,121
Market value of plan assets......... 736,448 668,929
Market value in excess of projected
benefit obligation................ 221,459 153,808
Unrecognized transition amount...... (7,365) (8,285)
Unrecognized prior service costs.... 3,818 1,293
Unrecognized net gain............... (198,088) (135,817)
Prepaid pension asset............... $ 19,824 $ 10,999
The following actuarial assumptions were used in calculating the
plan's year-end funded status:
At December 31, 1996 1995
Discount rate.......................... 7.75% 7.50%
Compensation/progression rate.......... 4.75 4.75
B. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The company provides certain health care benefits, primarily medical
and dental, and life insurance benefits through a benefit plan to
retired employees (referred to as SFAS 106 benefits). These benefits
are available for employees retiring from the company who have met
specified service requirements. For current employees and certain
retirees, the total SFAS 106 benefit is limited to two times the 1993
per-retiree health care costs. The SFAS 106 obligation has been
calculated based on this assumption. CL&P's direct portion of SFAS
106 benefits, part of which were deferred or charged to utility plant,
approximated $17.9 million in 1996, $20.7 million in 1995 and $22.3
million in 1994.
During 1996 and 1995, the company funded SFAS 106 postretirement costs
through external trusts. The company is funding, on an annual basis,
amounts that have been rate-recovered and which also are tax
deductible under the Internal Revenue Code. The trust assets are
invested primarily in equity securities and bonds.
The components of health care and life insurance cost are:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Service cost ....................... $ 2,270 $ 2,248 $ 2,371
Interest cost ...................... 10,211 11,510 12,157
Return on plan assets .............. (2,904) (1,015) 2
Amortization of unrecognized
transition obligation ............ 7,344 7,344 7,344
Other amortization, net ............ 956 602 430
Net health care and life
insurance costs .................. $17,877 $20,689 $22,304
For calculating SFAS 106 benefit costs, the following assumptions were
used:
For the Years Ended December 31, 1996 1995 1994
Discount rate ...................... 7.50% 8.00% 7.75%
Long-term rate of return -
Health assets, net of tax .......... 5.25 5.00 5.00
Life assets ...................... 8.75 8.50 8.50
The following table represents the plan's funded status reconciled to
the Consolidated Balance Sheets:
At December 31, 1996 1995
(Thousands of Dollars)
Accumulated postretirement
benefit obligation of:
Retirees .................................... $109,299 $126,624
Fully eligible active employees ............. 165 198
Active employees not eligible
to retire ................................. 27,913 29,798
Total accumulated postretirement
benefit obligation ......................... 137,377 156,620
Market value of plan assets .................. 38,783 11,378
Accumulated postretirement benefit
obligation in excess of
plan assets ................................ (98,594) (145,242)
Unrecognized transition amount ............... 117,506 124,850
Unrecognized net (gain)/loss ................. (18,912) 1,260
Accrued postretirement benefit
liability .................................. $ 0 $(19,132)
The following actuarial assumptions were used in calculating the plan's
year-end funded status:
At December 31, 1996 1995
Discount rate ........................... 7.75% 7.50%
Health care cost trend rate (a) ......... 7.23 8.40
(a) The annual growth in per capita cost of covered health care
benefits was assumed to decrease to 4.91 percent by 2001.
The effect of increasing the assumed health care cost trend rate by one
percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1996, by $7.6
million and the aggregate of the service and interest cost components
of net periodic postretirement benefit cost for the year then ended by
$600,000. The trust holding the health plan assets is subject to
federal income taxes at a 39.6 percent tax rate. CL&P is currently
recovering SFAS 106 costs.
10. SALE OF CUSTOMER RECEIVABLES
CL&P has entered into an agreement to sell up to $200 million of eligible
customer billed and unbilled accounts receivable. The eligible receivables
are sold with limited recourse. The agreement was entered into during
July, 1996 and will expire in five years. The company has retained
collection responsibilities for receivables which have been sold under the
agreement. The agreement provides for a loss reserve determined by a
formula which reflects credit exposure. As of February 21, 1997, CL&P has
sold approximately $10 million of their accounts receivable under this
agreement.
The FASB issued SFAS 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," in June, 1996. SFAS
125 became effective on January 1, 1997, and establishes, in part, criteria
for concluding whether a transfer of financial assets in exchange for
consideration should be accounted for as a sale or as a secured borrowing.
CL&P is in the process of restructuring its receivables program to comply
with the requirements of SFAS 125. Management believes that the adoption
of SFAS 125 will not have a material impact on the company's financial
position or results of operations.
11. COMMITMENTS AND CONTINGENCIES
A.RESTRUCTURING
Although CL&P continues to operate under cost-of-service based
regulation, various restructuring initiatives in its jurisdiction have
created uncertainty with respect to future rates and the recovery of
strandable investments and certain future costs such as purchase power
obligations. Strandable investments are regulatory assets or other
assets that would not be economical in a competitive environment.
Management is unable to predict the ultimate outcome of restructuring
initiatives; however, it believes that it is entitled to full recovery
of its prudently incurred costs, including regulatory assets and
strandable investments based on the general nature of public utility
cost of service regulation. For further information on restructuring,
see the MD&A.
B.NUCLEAR PERFORMANCE
Millstone: The three Millstone units are managed by NNECO. Millstone
1, 2, and 3 have been out of service since November 4, 1995, February
21, 1996 and March 30, 1996, respectively, and are on the Nuclear
Regulatory Commission's (NRC) watch list. The company has restructured
its nuclear organization and is currently implementing comprehensive
plans to restart the units.
According to the plans, each unit's recovery team will be working
towards restart of its respective unit on a parallel basis with the
other two units. Based upon management's current plans, it is
estimated that one of the units will be ready for restart in the third
quarter of 1997 with the other two units being ready for restart during
the fourth quarter of 1997 and the first quarter of 1998, respectively.
The NRC has also issued two orders affecting the Millstone units on the
subjects of independent corrective action verification and employee
concerns. Independent third parties have been retained by NNECO and
are awaiting NRC approval.
Prior to and following notification to the NRC that the units are ready
to resume operations, the NRC staff will conduct extensive reviews and
inspections and, prior to such notification, independent corrective
action verification teams will also inspect each unit. The units will
not be allowed to restart without an affirmative vote of the NRC
commissioners following completion of these reviews and inspections.
Management cannot estimate when the NRC will allow any of the units to
restart, but hopes to have at least one unit operating in the second
half of 1997.
The company is currently incurring substantial costs, including
replacement power costs, while the three Millstone units are not
operating. Management does not expect to recover a substantial portion
of these costs. CL&P expensed approximately $143 million of
incremental nonfuel nuclear operation and maintenance costs (O&M) in
1996, including a reserve of $50 million against 1997 expenditures.
Management estimates CL&P will expense approximately $309 million of
nonfuel O&M costs in 1997.
As discussed above, management cannot predict when the NRC will allow
any of the Millstone units to return to service and thus cannot
estimate the total replacement power costs the companies will
ultimately incur. Replacement power costs for CL&P are expected to
average approximately $30 million per month during 1997 while all three
Millstone units remain out of service. Management believes the system
has sufficient resources to fund the restoration of the Millstone units
to service under its present timetable.
MY: The system companies rely on MY for approximately two percent of
their capacity. The MY nuclear generating plant has been limited to
operating at 90 percent of capacity since early 1996, pending the
resolution of issues related to investigations initiated by the NRC,
and on December 6, 1996, was taken off line to resolve cable-separation
and associated issues. The NRC has notified MY that the NRC staff has
placed the MY plant on its watch list. Returning the plant to service
will require NRC approval. Management cannot predict when MY's plant
will be allowed to return to service and expects there will be
substantial costs associated with the NRC's actions that cannot be
accurately estimated at this time.
Potential Litigation: The non-NU owners of Millstone 3 have been
paying their share of the monthly costs for Millstone 3 since the unit
went out of service in March, 1996, but have reserved their rights to
contest whether the NU system companies have any responsibility for the
additional costs the non-NU owners have borne as a result of the
current outage. No formal claims have been made, but management
believes that it is possible that some or all of the non-NU owners will
assert liability on the part of the NU system. CL&P and WMECO, through
NNECO as agent, operate Millstone 3 at cost, and without profit, under
a Sharing Agreement that obligates them to utilize good utility
operating practice and requires the joint owners to share the risk of
employee negligence and other risks pro rata in accordance with their
ownership shares. The Sharing Agreement provides that CL&P and WMECO
would only be liable for damages to the non-NU owners for a deliberate
breach of the Sharing Agreement. At December 31, 1996, the costs
related to this potential litigation were estimated to be $10.5 million
for incremental O&M costs and between $32 million and $40 million for
replacement power costs. These costs are likely to increase as long as
Millstone 3 remains out of service. NU will vigorously contest such
suits if they are brought.
C.ENVIRONMENTAL MATTERS
CL&P is subject to regulation by federal, state and local authorities
with respect to air and water quality, the handling and disposal of
toxic substances and hazardous and solid wastes, and the handling and
use of chemical products. CL&P has an active environmental auditing
and training program and believes that it is in substantial compliance
with current environmental laws and regulations.
Environmental requirements could hinder the construction of new
generating units, transmission and distribution lines, substations, and
other facilities. Changing environmental requirements could also
require extensive and costly modifications to CL&P's existing
generating units and transmission and distribution systems, and could
raise operating costs significantly. As a result, CL&P may incur
significant additional environmental costs, greater than amounts
included in cost of removal and other reserves, in connection with the
generation and transmission of electricity and the storage,
transportation and disposal of by-products and wastes. CL&P may also
encounter significantly increased costs to remedy the environmental
effects of prior waste handling activities. The cumulative long-term
cost impact of increasingly stringent environmental requirements cannot
accurately be estimated.
CL&P has recorded a liability based upon currently available
information for what it believes are its estimated environmental
remediation costs for waste disposal sites. In most cases, additional
future environmental cleanup costs are not reasonably estimable due to
a number of factors, including the unknown magnitude of possible
contamination, the appropriate remediation methods, the possible
effects of future legislation or regulation and the possible effects of
technological changes. At December 31, 1996, the net liability
recorded by CL&P for its estimated environmental remediation costs,
excluding any possible insurance recoveries or recoveries from third
parties, amounted to approximately $7.5 million, which management has
determined to be the most probable amount within the range of $7.5
million to $14.0 million.
CL&P cannot estimate the potential liability for future claims,
including environmental remediation costs, that may be brought against
it. However, considering known facts, existing laws and regulatory
practices, management does not believe the matters disclosed above will
have a material effect on CL&P's financial position or future results
of operations.
On October 10, 1996, the American Institute of Certified Public
Accountants issued Statement of Position 96-1, "Environmental
Remediation Liabilities" (SOP). The principal objective of the SOP is
to improve the manner in which existing authoritative accounting
literature is applied by entities to specific situations of
recognizing, measuring and disclosing environmental remediation
liabilities. The SOP became effective January 1, 1997. The company
believes that the adoption of this SOP will not have a material impact
on the company's financial position or results of operations.
D.NUCLEAR INSURANCE CONTINGENCIES
Under certain circumstances, in the event of a nuclear incident at one
of the nuclear facilities covered by the federal government's third-
party liability indemnification program, the company could be assessed
in proportion to its ownership interest in each nuclear unit up to $75.5
million, not to exceed $10.0 million per nuclear unit in any one year.
Based on its ownership interest in Millstone 1, 2, and 3 and in Seabrook
1, CL&P's maximum liability, including any additional potential
assessments, would be $173.6 million per incident. In addition, through
power purchase contracts with MY, VY and CY, CL&P would be responsible
for up to an additional $44.4 million per incident. Payments for CL&P's
ownership interest in nuclear generating facilities would be limited to
a maximum of $27.5 million per incident per year.
Insurance has been purchased to cover the primary cost of repair,
replacement or decontamination of utility property resulting from
insured occurrences. CL&P is subject to retroactive assessments if
losses exceed the accumulated funds available to the insurer. The
maximum potential assessment against CL&P with respect to losses arising
during the current policy year is approximately $10.4 million under the
primary property insurance program.
Insurance has been purchased to cover certain extra costs incurred in
obtaining replacement power during prolonged accidental outages and the
excess cost of repair, replacement, or decontamination or premature
decommissioning of utility property resulting from insured occurrences.
CL&P is subject to retroactive assessments if losses exceed the
accumulated funds available to the insurer. The maximum potential
assessments against the company with respect to losses arising during
current policy years are approximately $9 million under the replacement
power policies and $20.4 million under the excess property damage,
decontamination and decommissioning policies. The cost of a nuclear
incident could exceed available insurance proceeds.
Insurance has been purchased aggregating $200 million on a industry
basis for coverage of worker claims. All participating reactor
operators insured under this coverage are subject to retrospective
assessments of $3 million per reactor. The maximum potential assessment
against CL&P with respect to losses arising during the current policy
period is approximately $8.9 million.
E. CONSTRUCTION PROGRAM
The construction program is subject to periodic review and revision by
management. CL&P currently forecasts construction expenditures of
approximately $842 million for the years 1997-2001, including $165
million for 1997. In addition, the company estimates that nuclear fuel
requirements, including nuclear fuel financed through the NBFT, will be
approximately $238.4 million for the years 1997-2001, including $12.2
million for 1997. See Note 2, "Leases," for additional information
about the financing of nuclear fuel.
F. LONG-TERM CONTRACTUAL ARRANGEMENTS
Yankee Companies: CL&P, along with PSNH and WMECO, relies on MY and VY
for approximately three percent of their capacity under long-term
contracts. Under the terms of their agreements, the system companies
pay their ownership (or entitlement) shares of costs, which include
depreciation, O&M expenses, taxes, the estimated cost of decommissioning
and a return on invested capital. These costs are recorded as purchased
power expense and recovered through the company's rates. CL&P's total
cost of purchases under contracts with the Yankee companies, excluding
YAEC, amounted to $96.4 million in 1996, $105.8 million in 1995, and
$102.1 million in 1994. See Note 1E, "Summary of Significant Accounting
Policies-Investments and Jointly Owned Electric Utility Plant," and Note
3, "Nuclear Decommissioning," for more information on the Yankee
companies.
Nonutility Generators: CL&P has entered into various arrangements for
the purchase of capacity and energy from nonutility generators. These
arrangements have terms from 10 to 30 years, currently expiring in the
years 2001 through 2027, and requires the company to purchase energy at
specified prices or formula rates. For the 12 months ended December 31,
1996, approximately 13 percent of system electricity requirements was
met by nonutility generators. CL&P's total cost of purchases under these
arrangements amounted to $279.5 million in 1996, $282.2 million in 1995,
and $277.4 million in 1994. These costs are eventually recovered
through the company's rates.
Hydro-Quebec: Along with other New England utilities, CL&P, PSNH,
WMECO, and HWP have entered into agreements to support transmission and
terminal facilities to import electricity from the Hydro-Quebec system
in Canada. CL&P is obligated to pay, over a 30-year period ending in
2020, its proportionate share of the annual O&M and capital costs of
these facilities.
The estimated annual costs of CL&P's significant long-term contractual
arrangements are as follows:
1997 1998 1999 2000 2001
(Millions of Dollars)
MY and VY ........... $ 39.0 $ 33.1 $ 39.1 $ 38.9 $ 36.4
Nonutility
generators ........ 274.0 281.0 291.0 291.0 294.0
Hydro-Quebec ........ 19.4 18.8 18.2 17.9 17.3
G. THE ROCKY RIVER REALTY COMPANY - OBLIGATIONS
RRR provides real estate support services which includes the leasing of
property and facilities used by system companies. RRR is the obligor
under financing arrangements for certain system facilities. Under those
financing arrangements, the holders of notes for $38.4 million would be
entitled to request that RRR repurchase the notes if any major
subsidiary of NU (as defined by the notes) has debt ratings below
investment grade as of any year-end during the term of the financing.
The notes are secured by real estate leases between RRR as lessor and
NUSCO as lessee. The leases provide for the acceleration of rent equal
to RRR's note obligations if RRR is unable to repay the obligation. The
operating companies, primarily CL&P, WMECO and PSNH may be billed by
NUSCO for their proportionate share of the accelerated lease obligations
if the rateholders request repurchase of the notes. NU has guaranteed
the notes.
Based on the terms of the notes, PSNH and NAEC will be defined as major
subsidiaries of NU, effective as of the end of 1996, and both PSNH's and
NAEC's debt ratings were below investment grade. Accordingly, under the
terms of the RRR financing arrangements, the holders may elect to
require RRR to repurchase the notes at par. If the noteholders make
such an election, RRR has the option to refinance the notes with an
institutional investor. However, it is possible that RRR may be
required to repurchase the notes. As of February 21, 1997, the holders
had not made such an election. RRR plans to engage in discussions with
the noteholders regarding this issue. Management does not expect the
resolution to have a material impact on its financial condition.
12.FUEL PRICE MANAGEMENT
The company utilizes various financial instruments to manage well-defined
fuel price risks. The company does not use these instruments for trading
purposes.
CL&P uses fuel-price management instruments with financial institutions to
hedge against some of the fuel-price risk created by long-term negotiated
energy contracts. These agreements minimize exposure associated with rising
fuel prices and effectively fix a portion of CL&P's cost of fuel for these
negotiated energy contracts. Under the agreements, CL&P exchanges monthly
payments based on the differential between a fixed and variable price for
the associated fuel. As of December 31, 1996, CL&P had outstanding
agreements with a total notional value of approximately $228.8 million, and
a positive mark-to-market position of approximately $1.1 million.
These agreements have been made with various financial institutions, each of
which is rated "A" or better by Standard & Poor's rating group. CL&P is
exposed to credit risk on fuel-price management instruments if the
counterparties fail to perform their obligations. However, management
anticipates that the counterparties will be able to fully satisfy their
obligations under the agreements.
13.MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY
In January 1995, CL&P Capital LP (CL&P LP is a subsidiary of CL&P) issued
$100 million of cumulative 9.3 percent Monthly Income Preferred Securities
(MIPS), Series A. CL&P has the sole ownership interest in CL&P LP, as a
general partner, and is the guarantor of the MIPS securities. Subsequent to
the MIPS issuance, CL&P LP loaned the proceeds of the MIPS issuance, along
with CL&P's $3.1 million capital contribution, back to CL&P in the form of
an unsecured debenture. CL&P consolidates CL&P LP for financial reporting
purposes. Upon consolidation, the unsecured debenture is eliminated, and
the MIPS securities are accounted for as minority interests.
14.FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each of the following financial instruments:
Cash and nuclear decommissioning trusts: The carrying amounts approximate
fair value.
SFAS 115, "Accounting for Certain Investments in Debt and Equity
Securities," requires investments in debt and equity securities to be
presented at fair value. As a result of this requirement, the investments
held in the company's nuclear decommissioning trusts were adjusted to market
by approximately $22.3 million as of December 31, 1996 and by approximately
$14.4 million as of December 31, 1995, with corresponding offsets to the
accumulated provision for depreciation. The amounts adjusted in 1996 and
1995, represent cumulative gross unrealized holding gains. The cumulative
gross unrealized holding losses were immaterial for both 1996 and 1995.
Preferred stock and long-term debt: The fair value of CL&P's fixed rate
securities is based upon the quoted market price for those issues or similar
issues. Adjustable rate securities are assumed to have a fair value equal
to their carrying value.
The carrying amounts of CL&P's financial instruments and the estimated fair
values are as follows:
Carrying Fair
At December 31, 1996 Amount Value
(Thousands of Dollars)
Preferred stock not subject
to mandatory redemption...................... $ 116,200 $ 111,845
Preferred stock subject to
mandatory redemption......................... 155,000 120,900
Long-term debt -
First Mortgage Bonds......................... 1,452,288 1,410,665
Other long-term debt......................... 592,783 592,783
MIPS........................................... 100,000 108,520
Carrying Fair
At December 31, 1995 Amount Value
(Thousands of Dollars)
Preferred stock not subject
to mandatory redemption...................... $ 116,200 $ 82,448
Preferred stock subject to
mandatory redemption......................... 155,000 157,575
Long-term debt -
First Mortgage Bonds......................... 1,297,245 1,329,549
Other long-term debt......................... 532,164 532,164
MIPS........................................... 100,000 108,520
The fair values shown above have been reported to meet disclosure
requirements and do not purport to represent the amounts at which those
obligations would be settled.
To the Board of Directors
of The Connecticut Light and Power Company:
We have audited the accompanying consolidated balance sheets of The
Connecticut Light and Power Company (a Connecticut corporation and a wholly
owned subsidiary of Northeast Utilities) and subsidiaries as of December
31, 1996 and 1995, and the related consolidated statements of income,
common stockholder's equity and cash flows for each of the three years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Connecticut Light
and Power Company and subsidiaries as of December 31, 1996 and 1995, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 21, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section contains management's assessment of CL&P's (the company) financial
condition and the principal factors having an impact on the results of
operations. The company is a wholly-owned subsidiary of Northeast Utilities
(NU). This discussion should be read in conjunction with the company's
consolidated financial statements and footnotes.
FINANCIAL CONDITION
EARNINGS OVERVIEW
CL&P faced an extremely difficult year in 1996 as a result of the prolonged
outages at the three Millstone units (Millstone). These outages resulted in
significantly increased expenditures for replacement power and work undertaken
at Millstone, which resulted in a net loss for CL&P in 1996. In 1997, while all
three units are out of service, CL&P expects to continue operating at a loss.
The combination of higher expenditures and the uncertainty surrounding when the
units will return to service made it necessary to ensure that access to adequate
cash levels would be available for the duration of the outages. Management took
various actions during 1996 to address NU's nuclear program and liquidity
issues; however, 1997 will continue to be a serious challenge in these areas.
CL&P faces future uncertainty with the rapidly moving trend toward industry
restructuring. While restructuring had little direct impact on 1996 financial
results, it creates an environment of significant uncertainty and financial risk
for the coming years. As discussed in further detail in "Restructuring," the
financial treatment that strandable investments will be accorded will impact
CL&P's ability to compete in a restructured environment.
CL&P had a net loss of approximately $80 million in 1996, compared to net income
of approximately $205 million in 1995. The 1996 loss was primarily due to costs
related to the ongoing outages at Millstone which totaled approximately $400
million and reduced CL&P's 1996 earnings by approximately $232 million. These
costs included replacement power, higher 1996 Millstone operation and
maintenance costs, a reserve recognized in 1996 for 1997 expenditures to return
the Millstone units to service and costs associated with ensuring adequate
generating capacity. In addition, 1996 earnings decreased due to the impact of
CL&P's approved rate settlement agreement, higher recognition of cogeneration
costs and higher nonnuclear operation and maintenance costs. These decreases
were partially offset by higher retail sales and lower recognition of Millstone
3 phase-in costs.
Retail kilowatt-hour sales increased by 1.8 percent in 1996 as a result of
modest economic growth. In 1997, management expects that the Connecticut economy
will continue to experience modest economic growth.
MILLSTONE
OUTAGES
CL&P has an 81 percent ownership interest in Millstone 1 and 2 and a 52.93
percent ownership interest in Millstone 3. Millstone 1, 2 and 3 have been out of
service since November 4, 1995, February 21, 1996, and March 30, 1996,
respectively.
Subsequent to its January 31, 1996, announcement that Millstone had been placed
on its watch list, the Nuclear Regulatory Commission (NRC) has stated that the
units cannot return to service until independent, third-party verification teams
have reviewed the actions taken to improve the design, configuration and
employee concerns issues that prompted the NRC to place the units on its watch
list. Upon successful completion of these reviews, the NRC must approve the
restart of each unit through a formal commission vote.
Management took several key steps toward improving NU's nuclear program during
1996 and will continue to place a high priority on its recovery in 1997. The NU
Board of Trustees formed a committee in April, 1996, to provide high-level
oversight of the safety and effectiveness of NU's nuclear operations, progress
toward resolving open NRC issues and progress in resolving employee, community
and customer concerns. In September, 1996, Bruce D. Kenyon was appointed
President and Chief Executive Officer of Northeast Nuclear Energy Company
(NNECO), a wholly-owned subsidiary of NU that operates Millstone, and retired
Admiral David M. Goebel was selected to serve as Vice President for Nuclear
Oversight. In early 1997, Neil S. Carns was selected to serve as Senior Vice
President and Chief Nuclear Officer to oversee Millstone operations. Shortly
after his arrival, Mr. Kenyon unveiled a reorganization of NU's nuclear
organization that includes executives loaned from unaffiliated utility
companies. The new organization is intended to establish direct accountability
for performance at each of the nuclear units that the NU system operates and
includes a recovery team for each Millstone unit.
Under the new nuclear organization, each unit's recovery team will be working
toward restart of its respective unit simultaneously with the other two units.
Management estimates that one of the units will be ready for NNECO to request
the NRC's approval for restart in the third quarter of 1997, with the second and
third units ready in the fourth quarter of 1997 and the first quarter of 1998,
respectively. Subsequent to NNECO's request to restart any of the units, the NRC
will require a period of time to assess the results of the reviews performed by
the NRC and the independent third-party teams. Management cannot estimate when
the NRC will allow any of the units to restart, however, it hopes to have at
least one unit operating in the second half of 1997. A period of time will be
required subsequent to restart for each unit to return to operating at full
power.
Higher costs related to the Millstone outages will continue throughout 1997.
Monthly replacement power costs for CL&P are projected to average approximately
$30 million in 1997, while all three Millstone units remain out of service.
Replacement power costs for the Millstone units expensed in 1996 were $216
million, which was a substantial portion of the total 1996 replacement power
costs. CL&P will continue to expense its replacement power costs in 1997.
Nonfuel operation and maintenance costs for CL&P's share of Millstone to be
expensed in 1997 are estimated to be $309 million. A total of $322 million was
expensed in 1996 for nonfuel operation and maintenance costs for Millstone,
including $93 million for incremental costs related to the outages and $50
million reserved for future costs. Nonfuel operation and maintenance costs have
been, and will continue to be, absorbed through CL&P's current rates.
Although CL&P is not precluded from seeking rate recoveries in the future,
management has committed not to seek rate recovery for the portion of these
costs attributable to failure to meet industry standards in operating Millstone.
In light of that commitment, CL&P will not seek rate recovery for a substantial
portion of these costs. Management does not currently intend to request any such
recoveries until after the Millstone units begin returning to service;
therefore, it is unlikely that any additional revenues from any permitted
recovery of these costs will be available to contribute to funding the recovery
efforts while the units are out of service.
Under its present planning assumptions, management believes CL&P has sufficient
funds to restore the Millstone units to service and purchase replacement power.
See "Rate Matters" for further information on the recovery of outage-related
costs. See "Liquidity and Capital Resources" for further information regarding
CL&P's liquidity.
As a result of the nuclear situation, a number of civil lawsuits and criminal
investigations have been initiated, including litigation by NU's shareholders.
In addition, there is the potential for claims by the non-NU owners of Millstone
3 for the costs associated with the current outage. To date, no reserves have
been established for existing or potential litigation. See the "Notes to
Financial Statements" Note 11B, for further information on litigation.
CAPACITY
During 1996 and continuing into 1997, CL&P took measures to improve its capacity
position including obtaining additional generating capacity, improving the
availability of its generating units and improving its transmission capability.
During 1996, CL&P spent approximately $60 million to ensure adequate generating
capacity, of which $42 million was expensed. CL&P anticipates spending
approximately $47 million for additional capacity-related costs in 1997, of
which $27 million is expected to be expensed.
Assuming normal weather conditions and generating unit availability, management
expects that CL&P will have sufficient capacity to meet peak load demands even
if Millstone is not operational at any time through the summer of 1997. If there
are high levels of unplanned outages at other units in New England, or if any
transmission lines used to import power from other states are unavailable, at
times of peak load demand, CL&P and the other New England utilities may have to
resort to operating procedures designed to reduce customer demand. Uncertainties
associated with having sufficient capacity through the summer of 1997 include: a
Seabrook refueling outage scheduled for 49 days beginning on May 10, 1997; the
availability of Maine Yankee, which was put on the NRC's watch list in January,
1997, and is currently not expected to return to service earlier than late
summer 1997; and the timing of the repairs to the Long Island Cable, which is
capable of providing as much as 300 megawatts of transmission capability.
See the "Notes to Financial Statements" Note 11B, for further information on
Maine Yankee.
LIQUIDITY AND CAPITAL RESOURCES
During 1996, CL&P took various actions to ensure that it will have access to
adequate cash resources, at reasonable cost. CL&P issued two bonds totaling $222
million, one of which was issued in anticipation of the maturity of
approximately $193 million of bonds in April, 1997. CL&P established a facility
under which it may sell up to $200 million of its billed and unbilled accounts
receivable. As of February 21, 1997, $10 million had been sold using this
facility. Additionally, NU, CL&P and Western Massachusetts Electric Company
(WMECO) entered into a new $313 million three-year revolving credit agreement
(the New Credit Agreement). Under the New Credit Agreement, NU has a contractual
short-term borrowing limit of $150 million, CL&P has a limit of $313 million and
WMECO has a limit of $150 million. The overall limit for all borrowers is $313
million.
Management believes that the borrowing facilities that are currently in place
provide the system companies with adequate access to the funds needed to bring
Millstone back to service if the units begin operating close to the currently
envisioned schedules, and if the other assumptions on which management has based
its planning do not change substantially.
Some of the borrowing facilities contain financial covenants that must be
satisfied before borrowings can be made and for outstanding borrowings to remain
outstanding. Through February 21, 1997, CL&P and WMECO have satisfied all
financial covenants required under their respective borrowing facilities, but NU
needed and obtained a limited waiver of an interest coverage covenant that had
to be satisfied for NU to borrow under the New Credit Agreement.
NU, CL&P and WMECO are currently maintaining their access to the New Credit
Agreement under a written arrangement, which expires March 28, 1997, unless
extended by mutual consent, under which NU agreed not to borrow more than $27
million against the facility for a period of time. In addition, NU agreed to
enter into an interim written arrangement whereby NU, CL&P and WMECO will seek
regulatory approval for certain amendments in order to maintain access to the
New Credit Agreement through its maturity date. It is anticipated that these
amendments will include (i) CL&P and WMECO providing lenders first mortgage
bonds as collateral for specified periods and subject to specified terms for
releasing the collateral, (ii) revised financial covenants that are consistent
with NU's, CL&P's and WMECO's current financial forecasts and (iii) an upfront
payment to the lenders in order to maintain commitments under the New Credit
Agreement.
The holders of $38 million of notes issued by NU's real estate company (Rocky
River Realty Company or RRR) are entitled to require that RRR purchase the notes
because, as of December 31, 1996, Public Service Company of New Hampshire and
North Atlantic Energy Corporation were rated below investment grade; these
notes are guaranteed by NU. NU is currently engaged in discussions with the
noteholders regarding this issue. See the "Notes to Financial Statements" Note
11G, for further information on these notes.
During 1996, Standard & Poor's Ratings Group (S&P) and Moody's Investors Service
(Moody's) downgraded all non-New Hampshire NU system securities at least once,
and in some cases twice, as a direct result of the Millstone outages. As of
December 31, 1996, the CL&P and WMECO first mortgage bonds were the only
securities on the NU system rated at investment grade. S&P and Moody's are
reviewing all NU system securities for further downgrades. These actions will
adversely affect the availability and cost of funds for the NU system companies.
Cash provided from operations decreased by approximately $229 million in 1996,
primarily due to higher cash operating costs related to the Millstone outages
and costs associated with ensuring adequate generating capacity, partially
offset by higher retail sales and lower income tax payments. Cash flows from
operations were also impacted by a sharp increase in the level of accounts
payable principally caused by costs related to a severe December storm and costs
associated with the Millstone outages that had not been paid by year end. Net
cash used for financing activities decreased by approximately $350 million in
1996, primarily due to higher long-term debt issuances, lower repayment of
short-term debt and lower common dividend payments. Cash used for investments
increased by approximately $122 million in 1996, primarily due to an increase in
investments under the NU system Money Pool.
If the return to service of one or more of the Millstone units is delayed
substantially, or if the needed waivers or modifications discussed above are not
forthcoming on reasonable terms, or if some borrowing facilities become
unavailable because of difficulties in meeting borrowing conditions, or if the
system encounters additional significant costs or other significant deviations
from management's current assumptions, the currently available borrowing
facilities could be insufficient to meet all of the system's cash requirements.
In those circumstances, management would take actions to reduce costs and cash
outflows and would attempt to take other actions to obtain additional sources of
funds. The availability of these funds would be dependent upon the general
market conditions and the NU system's credit and financial condition at the
time.
See the "Notes to Financial Statements" Note 11E, 7 and 11F, for information on
construction, long-term debt funding and long-term contractual requirements.
RESTRUCTURING
The movement toward electric industry restructuring continues to gain momentum
nationally as well as within Connecticut. Factors that are driving the move
toward restructuring, in the Northeast in particular, include legislative and
regulatory actions and relatively high electricity prices. These actions will
impact the way that CL&P has historically conducted its business. Although CL&P
continues to operate under cost-of-service based regulation, various
restructuring initiatives in Connecticut have created uncertainty with respect
to future rates and the recovery of strandable investments. Strandable
investments are regulatory assets or other assets that would not be economical
in a competitive environment. CL&P has exposure to strandable investments for
its investment in high-priced nuclear generating plants, state mandated
purchased power arrangements that are priced above the market and significant
regulatory assets that represent costs deferred by state regulators for future
recovery. CL&P's exposure to strandable investments and purchased power
obligations exceed its shareholder's equity. CL&P's ability to compete in a
restructured environment would be negatively affected unless CL&P was able to
recover substantially all of these past investments and commitments.
In December, 1996, the legislative task force on electric utility industry
restructuring issued its final report. Although the report included several
legislative recommendations, the task force members did not reach a consensus on
a restructuring proposal. The legislative members of the task force submitted a
restructuring proposal which includes two alternatives: one for retail
competition pilots available to 10 percent of the load in each rate class by
January 1, 1998, and a second for full retail competition beginning January1,
1998, unless CL&P has effected 10 percent rate reductions for all rate classes
by that date. This proposal, among others, will be considered in developing
restructuring legislation in 1997.
In response to the ongoing efforts in Connecticut to restructure the electric
utility industry, CL&P has developed a restructuring proposal that calls for
reduced rates for all Connecticut customers as soon as January, 1998; the
initiation of a retail choice pilot program as soon as July, 1998; phasing-in
all customers to retail choice over four years beginning in 2000; full recovery
of strandable investments through rate reduction bonds; and retaining ownership
of generating facilities. Management believes that it is entitled to full
recovery of its prudently incurred costs, including regulatory assets and other
strandable investments, based on the general nature of public utility industry
cost-of-service based regulation.
POTENTIAL ACCOUNTING IMPACTS
CL&P follows accounting principles in accordance with Statement of Financial
Accounting Standards (SFAS) 71, "Accounting for the Effects of Certain Types of
Regulation," that allows the economic effects of rate regulation to be
reflected. Under these principles, regulators may permit incurred costs for
certain events or transactions, which would be treated as expenses by
nonregulated enterprises, to be deferred as regulatory assets and recovered
through revenues at a later date.
If future competition or regulatory actions cause any portion of its operations
to no longer be subject to SFAS 71, CL&P would no longer be able to recognize
regulatory assets and liabilities for that portion of its business unless these
costs would be recoverable by a portion of the business remaining on cost-of-
service based regulation. Under its current regulatory environment, management
believes that CL&P's use of SFAS 71 remains appropriate.
If events create uncertainty about the recoverability of any of CL&P's remaining
long-lived assets, CL&P would be required to determine the fair value of its
long-lived assets, including regulatory assets, in accordance with SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." The implementation of SFAS 121 did not have a material impact
on the company's financial position or results of operations as of December 31,
1996. Management believes it is probable that CL&P will recover its investments
in long-lived assets through future revenues. This conclusion may change in the
future as competitive factors influence wholesale and retail pricing in the
electric utility industry or if the cost-of-service based regulatory structure
were to change.
See the "Notes to Financial Statements" Note 1H, for further information on
regulatory accounting.
COMPETITION
In addition to legislative and regulatory actions, competition in the electric
utility industry continues to grow at a rapid pace as a result of technological
advances; relatively high electricity prices in certain regions of the country,
including New England; surplus generating capacity; and the increased
availability of natural gas. Competitive forces in the electric utility industry
have already caused some customers to choose alternative energy suppliers or
relocate outside of the CL&P's territory. In response, CL&P is preparing for a
competitive environment by expanding previously established programs and
developing new ways to fortify its relationships with existing customers and
attract new customers, both within and outside its service territory.
During 1996, CL&P continued to negotiate long-term power supply arrangements
with certain large commercial and industrial retail customers that require an
incentive to locate or expand their operations within CL&P's service territory,
are considering leaving or reducing operations in the service territory, are
facing short-term financial problems, or are considering generating their own
electricity. Approximately 10 percent of CL&P's commercial and industrial retail
revenues were under negotiated rate agreements at the end of 1996. These
negotiated rate reductions amounted to approximately $19 million in 1996 and
1995. These activities are expected to continue in 1997.
During 1996, the NU system devoted significantly more resources to its Retail
Marketing Organization, whose primary mission is to provide value added energy
solutions to customers. Training was emphasized for its 170 new employees, the
majority of whom are account executives charged with developing tailored
solutions for the NU system's customers and positioning NU as a valuable partner
for the future. The ability of these account executives to obtain an intimate
understanding of customers' needs and concerns and provide value added energy
solutions will play a key role in the NU system's ability to effectively
compete in the future.
NU subsidiaries competed actively in two pilot retail access programs that were
initiated in New England in 1996. In New Hampshire, approximately 14,500
customers are participating in a two-year statewide pilot program. NU
subsidiaries introduced three energy and service product offerings under
different brand names and competed against 35 other energy suppliers. In
addition to exposing the NU system to a competitive environment, these pilots
have enabled the NU system to develop relationships with customers outside of
its service territory and to secure energy contracts with major commercial
customers.
Revenue erosion from traditional retail electric sales may be significant after
restructuring. While margins on retail electric sales are likely to be thin,
utilities can compete successfully if they are allowed to recover their
strandable investments. During 1997 and beyond, the NU system will continue to
participate in state sanctioned retail access programs; invest in new
unregulated businesses; develop new energy-related products and services; and
pursue strategic alliances with companies in various energy-related fields,
including fuel supply and management, power quality, energy efficiency and load
management services. Strategic alliances will allow NU subsidiaries to enter
markets that provide access to new product lines and technologies that
complement the NU system's current products and services.
RATE MATTERS
In July, 1996, the Department of Public Utility Control (DPUC) approved a rate
settlement agreement with CL&P (the Settlement). Under the Settlement, CL&P
froze base rates until at least December 31, 1997, accelerated the amortization
of regulatory assets by $73 million in 1996 and between $54 million and $68
million in 1997, and extended the depreciable lives of transmission and
distribution assets by ten years. Additionally, the Settlement terminated all
pending litigation, as of March 31, 1996, among the parties that could
potentially affect CL&P's rates. The Settlement does not impact costs incurred
subsequent to March 31, 1996, that are associated with the Millstone outages.
The Settlement reduced 1996 earnings by approximately $35 million. The impact on
1997 earnings is not expected to be significant.
In October, 1996, the DPUC issued a final order establishing an Energy
Adjustment Clause (EAC), which replaced both CL&P's fossil-fuel adjustment
clause and its generation utilization adjustment clause (GUAC). The EAC, which
is designed to calculate the difference between actual fuel costs and fuel costs
collected through base rates, took effect on January 1, 1997. The order includes
an incentive mechanism which disallows recovery of the first $9 million of
actual fuel costs in excess of base rate levels, but permits CL&P to retain the
first $9 million in actual fuel costs below base rate levels.
In January, 1997, the DPUC notified CL&P that it intends to conduct its prudence
review of nuclear cost issues in multiple phases, beginning immediately. The
first phase, covering the period April 1 through June 30, 1996, has already
begun. CL&P will not be permitted to collect any replacement power costs
associated with the current nuclear outages prior to the completion of the
DPUC's prudence reviews. Management does not expect to seek recovery of a
substantial portion of these costs.
NUCLEAR DECOMMISSIONING
CL&P has a 34.5 percent ownership interest in the Connecticut Yankee nuclear
generating facility (CY or the plant). On December 4, 1996, the CY Board of
Directors voted unanimously to cease permanently the production of power at the
plant. The decision to retire CY from commercial operation was based on an
economic analysis of the costs of operating it compared to the costs of closing
it and incurring replacement power costs over the remaining period of the
plant's operating license, which expires in 2007. The economic analysis showed
that closing the plant and incurring replacement power costs produced
substantial savings.
CY has undertaken a number of regulatory filings intended to implement the
decommissioning. In late December, 1996, CY filed an amendment to its power
contracts with the Federal Energy Regulatory Commission (FERC) to clarify the
obligations of its purchasing utilities following the decision to cease power
production. At December 31, 1996, CL&P's share of these obligations was
approximately $263 million, including the cost of decommissioning and the
recovery of existing assets. Management expects that CL&P will continue to be
allowed to recover such FERC-approved costs from its customers. Accordingly,
CL&P has recognized its share of the estimated costs as a regulatory asset, with
a corresponding obligation, on its Balance Sheets.
CL&P's estimated cost to decommission its shares of Millstone 1, 2 and 3 and
Seabrook is approximately $858 million in year end 1996 dollars. These costs are
being recognized over the lives of the respective units with a portion being
currently recovered through rates. As of December 31, 1996, the market value of
the contributions already made to the decommissioning trusts, including their
investment returns, was approximately $297 million.
See the "Notes to Financial Statements" Note 3, for further information on
nuclear decommissioning, including CL&P's share of costs to decommission the
regional nuclear generating units.
ENVIRONMENTAL MATTERS
CL&P is potentially liable for environmental cleanup costs at a number of sites
inside and outside its service territory. To date, the future estimated
environmental remediation liability has not been material with respect to the
earnings or financial position of CL&P. At December 31, 1996, CL&P had recorded
an environmental reserve of approximately $7 million, the most probable amount
as required by SFAS 5, "Accounting for Contingencies."
See the "Notes to Financial Statements" Note 11C, for further information on
environmental matters.
RISK MANAGEMENT INSTRUMENTS
CL&P uses fuel-price management instruments to reduce a portion of the fuel-
price risk associated with certain of its long-term negotiated energy contracts.
These instruments are not used for trading purposes. The differential paid or
received as fuel prices change is recognized in income when realized. As of
December 31, 1996, CL&P had outstanding fuel-price management instruments with a
total notional value of approximately $229 million. The settlement amounts
associated with the instruments reduced fuel expense by approximately $7.5
million for CL&P during 1996. CL&P's fuel-price management instruments seek to
minimize exposure associated with rising fuel prices and effectively fix the
cost of fuel and profitability of certain of its long-term negotiated contract
sales.
See the "Notes to Financial Statements" Note 12, for further information on
fuel-price management instruments.
RESULTS OF OPERATIONS
Income Statement Variances
(Millions of Dollars)
1996 over/(under) 1995 over/(under)
1995 1994
Amount Percent Amount Percent
Operating revenues $10 -% $59 3%
Fuel, purchased and net
interchange power 222 37 40 7
Other operation 164 27 21 4
Maintenance 107 56 (14) (7)
Depreciation 5 2 11 5
Amortization of regulatory
assets, net 3 6 (23) (30)
Federal and state income
taxes (202) (a) (5) (3)
Deferred nuclear plants return
(other and borrowed funds) (5) (78) (14) (69)
Other, net 9 (a) (4) (77)
Minority interest in income
of subsidiary 1 7 9 100
Net income (285) (a) 7 4
(a) Percent greater than 100
OPERATING REVENUES
Total operating revenues increased in 1996, primarily due to higher retail sales
and regulatory decisions, partially offset by lower fuel recoveries and lower
wholesale revenues. Retail sales increased 1.8 percent ($29 million) primarily
due to modest economic growth in 1996. Regulatory decisions increased revenues
by $15 million primarily due to the mid-1995 retail rate increase, partially
offset by 1996 reserves for over-recoveries of demand side management costs.
Fuel recoveries decreased $24 million primarily due to lower average fossil fuel
prices. Wholesale revenues decreased $18 million primarily due to higher
recognition in 1995 of lump-sum payments for the termination of a long-term
contract and capacity sales contracts that expired in 1995.
Total operating revenues increased in 1995, primarily due to regulatory
decisions and higher fuel recoveries, partially offset by lower retail sales and
wholesale revenues. Revenues related to regulatory decisions increased $61
million primarily due to the effects of the mid-1994 and 1995 retail rate
increases and higher recoveries for demand side management costs. Fuel and
purchased power cost recoveries increased $25 million primarily due to higher
energy costs and the recovery of GUAC costs. Wholesale revenues decreased $16
million primarily due to capacity sales contracts that expired in 1994.
FUEL, PURCHASED AND NET INTERCHANGE POWER
Fuel, purchased and net interchange power expense increased in 1996, primarily
due to replacement power due to the nuclear outages and the 1996 write-off of
GUAC balances under the Settlement, partially offset by lower nuclear generation
and the timing of the recognition of costs under the company's fuel clauses.
Fuel, purchased and net interchange power expense increased in 1995, primarily
due to higher fossil generation and higher priced outside energy purchases from
other utilities.
OTHER OPERATION AND MAINTENANCE
Other operation and maintenance expenses increased in 1996, primarily due to
higher costs associated with the Millstone outages ($143 million, including $50
million reserved for future costs) and 1996 costs to ensure adequate generating
capacity ($39 million). In addition, these costs reflect higher storm and
reliability expenditures, higher recognition of conservation expenses and higher
marketing costs.
Other operation and maintenance expenses increased in 1995, primarily due to
higher recognition of conservation expense, higher recognition of postretirement
benefit costs and higher capacity charges from the regional nuclear generating
units, partially offset by higher reserves for excess/obsolete inventory in 1994
and lower maintenance costs at the fossil units.
DEPRECIATION
Higher plant balances and higher decommissioning levels in 1996, were partially
offset by longer depreciable lives of transmission and distribution assets under
the Settlement. Depreciation increased in 1995, primarily due to higher plant
balances and higher decommissioning levels.
AMORTIZATION OF REGULATORY ASSETS, NET
Amortization of regulatory assets, net increased in 1996, primarily due to lower
cogeneration deferrals and the accelerated amortization of regulatory assets as
a result of the Settlement, partially offset by the completion of the Millstone
3 phase-in amortization in 1995.
Amortization of regulatory assets, net decreased in 1995, primarily due to
higher cogeneration deferrals in 1995 and the completion during 1994 of the
amortization of a 1993 cogeneration buyout, partially offset by higher 1995
amortization of Millstone 3 and Seabrook 1 phase-in costs.
FEDERAL AND STATE INCOME TAXES
Federal and state income taxes decreased in 1996, primarily due to lower book
taxable income, partially offset by 1995 tax benefits from a favorable tax
ruling.
Federal and state income taxes decreased in 1995, primarily due to tax benefits
from a favorable tax ruling, partially offset by higher book taxable income.
DEFERRED NUCLEAR PLANTS RETURN
Although the change in 1996 was not significant, deferred nuclear plants return
decreased in 1995, primarily due to the completion of the Millstone 3 phase-in
in 1995.
OTHER, NET
Other, net increased in 1996, primarily due to higher income on temporary cash
investments in 1996.
Other, net decreased in 1995, primarily due to the 1993 property tax accounting
change as ordered in the 1993 CL&P rate decision. The allocation of this change
to customers occurred in 1994 and amortization began in 1995.
MINORITY INTEREST IN INCOME OF SUBSIDIARY
Although the change in 1996 was not significant, minority interest in income of
subsidiary increased in 1995, primarily due to the issuance of Monthly Income
Preferred Securities in 1995. See the "Notes to Financial Statements" Note 13,
for further information on these securities.
SELECTED FINANCIAL DATA (a)
1996 1995 1994 1993 1992
(Thousands of Dollars)
Operating Revenues.... $2,397,460 $2,387,069 $2,328,052 $2,366,050 $2,316,451
Operating Income...... 29,773 324,026 286,948 241,655 288,088
Net (Loss) Income..... (80,237) 205,216 198,288 191,449(b) 206,714
Cash Dividends on
Common Stock........ 138,608 164,154 159,388 160,365 164,277
Total Assets.......... 6,244,036 6,045,631 6,217,457 6,397,405 5,582,831
Long-Term Debt (c).... 2,038,521 1,822,018 1,823,690 2,057,280 2,087,936
Preferred Stock Not
Subject to Mandatory
Redemption........... 116,200 116,200 166,200 166,200 231,196
Preferred Stock
Subject to Mandatory
Redemption(c)........ 155,000 155,000 230,000 230,000 200,000
Obligations Under
Capital Leases(c).... 155,708 172,264 175,969 177,418 197,404
STATEMENTS OF QUARTERLY FINANCIAL DATA (Unaudited)
Quarter Ended(a)
1996 March 31 June 30 September 30 December 31
Operating Revenues $659,355 $542,999 $599,505 $ 595,601
Operating Income (Loss) $ 59,977 $ 15,197 $ 593 $ (45,994)
Net Income (Loss) $ 32,851 $(10,700) $(26,938) $ (75,450)
1995
Operating Revenues $601,194 $525,147 $638,392 $ 622,336
Operating Income $ 96,191 $ 65,867 $ 88,012 $ 73,956
Net Income $ 65,877 $ 38,089 $ 60,462 $ 40,788
(a) Reclassifications of prior data have been made to conform with the current
presentation.
(b) Includes the cumulative effect of change in accounting for municipal
property tax expense, which increased earnings for common shares by $47.7
million.
(c) Includes portion due within one year.
STATISTICS
Gross Electric Average
Utility Plant Annual
December 31, Use Per Electric
(Thousands of kWh Sales Residential Customers Employees
Dollars) (Millions) Customer (kWh) (Average) (December 31)
1996 $6,512,659 26,043 8,639 1,099,340 2,194
1995 6,389,190 26,366 8,506(a) 1,094,527 2,270
1994 6,327,967 26,975 8,775 1,086,400 2,587
1993 6,214,401 26,107 8,519 1,078,925 2,676
1992 6,100,682 25,809 8,501 1,075,425 3,028
(a) Effective January 1, 1996, the amounts shown reflect billed and
unbilled sales. 1995 has been restated to reflect this change.
1996 Annual Report
Western Massachusetts Electric Company
Index
Contents Page
Balance Sheets.......................................................... 2-3
Statements of Income.................................................... 4
Statements of Cash Flows................................................ 5
Statements of Common Stockholder's Equity............................... 6
Notes to Financial Statements........................................... 7
Report of Independent Public Accountants................................ 33
Management's Discussion and Analysis of Financial
Condition and Results of Operations................................... 34
Selected Financial Data................................................. 45
Statements of Quarterly Financial Data.................................. 45
Statistics.............................................................. 46
WESTERN MASSACHUSETTS ELECTRIC COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
At December 31, 1996 1995
- ---------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at original cost:
Electric................................................ $ 1,257,097 $ 1,234,738
Less: Accumulated provision for
depreciation (Note 1F)........................ 503,989 462,872
------------- ------------
753,108 771,866
Construction work in progress........................... 15,968 18,957
Nuclear fuel, net......................................... 30,296 31,574
------------- ------------
Total net utility plant............................... 799,372 822,397
------------- ------------
Other Property and Investments:
Nuclear decommissioning trusts, at market............... 83,611 69,903
Investments in regional nuclear generating
companies, at equity (Note 1E)......................... 15,448 14,820
Other, at cost.......................................... 4,367 4,018
------------- ------------
103,426 88,741
------------- ------------
Current Assets:
Cash.................................................... 67 202
Receivables, less accumulated provision for
uncollectible accounts of $2,121,000 in 1996
and $2,230,000 in 1995................................ 40,168 42,164
Accounts receivable from affiliated companies........... 3,525 951
Accrued utility revenues................................ 12,394 11,119
Fuel, materials, and supplies, at average cost.......... 5,317 5,114
Prepayments and other................................... 12,262 9,176
------------- ------------
73,733 68,726
------------- ------------
Deferred Charges:
Regulatory assets (Note 1H)............................. 210,852 160,986
Unamortized debt expense................................ 1,866 1,496
Other................................................... 888 -
------------- ------------
213,606 162,482
------------- ------------
Total Assets........................................ $ 1,190,137 $ 1,142,346
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
At December 31, 1996 1995
- ---------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock,$25 par value--authorized and
outstanding 1,072,471 shares in 1996 and 1995........ $ 26,812 $ 26,812
Capital surplus, paid in................................ 150,911 150,182
Retained earnings....................................... 97,045 115,296
------------- ------------
Total common stockholder's equity.............. 274,768 292,290
Cumulative preferred stock--
$100 par value--authorized 1,000,000 shares;
outstanding 200,000 shares in 1996 and 1995;
$25 par value--authorized 3,600,000 shares;
outstanding 840,000 shares in 1996
2,300,000 shares in 1995
Preferred stock not subject to mandatory redemption..... 20,000 53,500
Preferred stock subject to mandatory redemption......... 21,000 22,500
Long-term debt.......................................... 334,742 347,470
------------- ------------
Total capitalization........................... 650,510 715,760
------------- ------------
Obligations Under Capital Leases (Note 8)................. 29,269 20,855
------------- ------------
Current Liabilities:
Notes payable to affiliated company..................... 47,400 24,050
Long-term debt and preferred stock--current
portion................................................ 14,700 1,500
Obligations under capital leases--current
portion................................................ 2,965 15,156
Accounts payable........................................ 26,698 14,475
Accounts payable to affiliated companies................ 20,256 11,604
Accrued taxes........................................... 881 1,686
Accrued interest........................................ 5,643 5,670
Nuclear compliance (Note 11B)........................... 11,800 -
Other................................................... 4,754 7,768
------------- ------------
135,097 81,909
------------- ------------
Deferred Credits:
Accumulated deferred income taxes (Note 1I)............. 245,253 259,595
Accumulated deferred investment tax credits
(Note 7)<F7>........................................... 24,833 26,302
Deferred contractual obligations (Note 11F)............. 84,598 18,814
Other................................................... 20,577 19,111
------------- ------------
375,261 323,822
------------- ------------
Commitments and Contingencies (Note 11)
------------- ------------
Total Capitalization and Liabilities........... $ 1,190,137 $ 1,142,346
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
- ------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues............................. $421,337 $420,434 $421,477
--------- --------- ---------
Operating Expenses:
Operation --
Fuel, purchased and net interchange power. 115,664 86,738 67,365
Other..................................... 148,724 143,000 130,683
Maintenance.................................. 56,201 37,447 35,430
Depreciation................................. 39,710 37,924 36,885
Amortization of regulatory assets............ 9,170 19,562 29,118
Federal and state income taxes (Note 7)...... 5,995 14,060 32,653
Taxes other than income taxes................ 19,850 18,639 18,403
--------- --------- ---------
Total operating expenses............... 395,314 357,370 350,537
--------- --------- ---------
Operating Income............................... 26,023 63,064 70,940
--------- --------- ---------
Other Income:
Equity in earnings of regional nuclear
generating companies....................... 1,800 1,771 2,031
Other, net................................... 1,153 1,232 3,687
Income taxes................................. 1,068 262 (71)
--------- --------- ---------
Other income, net...................... 4,021 3,265 5,647
--------- --------- ---------
Income before interest charges......... 30,044 66,329 76,587
--------- --------- ---------
Interest Charges:
Interest on long-term debt................... 24,094 26,840 27,678
Other interest............................... 2,028 356 (548)
--------- --------- ---------
Interest charges, net.................. 26,122 27,196 27,130
--------- --------- ---------
Net Income..................................... $ 3,922 $ 39,133 $ 49,457
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net Income.................................................. $ 3,922 $ 39,133 $ 49,457
Adjustments to reconcile to net cash
from operating activities:
Depreciation.............................................. 39,710 37,924 36,885
Deferred income taxes and investment tax credits, net..... (3,439) 3,418 10,256
Deferred Millstone 3 return............................... - 7,146 13,427
Recoverable energy costs, net of amortization............. (10,517) 1,285 (8,622)
Nuclear compliance, net (Note 11B)........................ 11,800 - -
Deferred nuclear refueling outage, net of amortization.... 6,188 (8,857) (1,016)
Other sources of cash..................................... 21,248 32,266 28,569
Other uses of cash........................................ (10,270) (8,039) (23,701)
Changes in working capital:
Receivables and accrued utility revenues.................. (1,853) (1,933) 6,470
Fuel, materials and supplies.............................. (203) (285) 2,228
Accounts payable.......................................... 20,875 (11,669) 8,239
Accrued taxes............................................. (805) (3,474) (1,862)
Other working capital (excludes cash)..................... (8,144) 1,256 (2,991)
----------- ----------- -----------
Net cash flows from operating activities...................... 68,512 88,171 117,339
----------- ----------- -----------
Financing Activities:
Issuance of long-term debt.................................. - - 90,000
Net increase (decrease) in short-term debt.................. 23,350 24,050 (6,000)
Reacquisitions and retirements of long-term debt............ - (34,550) (104,169)
Reacquisitions and retirements of preferred stock........... (36,500) (15,675) (7,325)
Cash dividends on preferred stock........................... (5,305) (4,944) (5,897)
Cash dividends on common stock.............................. (16,494) (30,223) (29,514)
----------- ----------- -----------
Net cash flows used for financing activities.................. (34,949) (61,342) (62,905)
----------- ----------- -----------
Investment Activities:
Investment in plant:
Electric utility plant.................................... (23,468) (27,084) (32,680)
Nuclear fuel.............................................. 541 75 (4,928)
----------- ----------- -----------
Net cash flows used for investments in plant................ (22,927) (27,009) (37,608)
NU System Money Pool........................................ - 8,750 (8,750)
Investment in nuclear decommissioning trusts................ (9,794) (8,503) (7,761)
Other investment activities, net............................ (977) 46 (395)
----------- ----------- -----------
Net cash flows used for investments........................... (33,698) (26,716) (54,514)
----------- ----------- -----------
Net Increase (Decrease) In Cash For The Period................ (135) 113 (80)
Cash - beginning of period.................................... 202 89 169
----------- ----------- -----------
Cash - end of period.......................................... $ 67 $ 202 $ 89
=========== =========== ===========
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest, net of amounts capitalized........................ $ 21,725 $ 25,551 $ 25,174
=========== =========== ===========
Income taxes................................................ $ 7,816 $ 14,385 $ 30,040
=========== =========== ===========
Increase in obligations:
Niantic Bay Fuel Trust...................................... $ 669 $ 7,851 $ 12,237
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY
STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Capital Retained
Common Surplus, Earnings
Stock Paid In (a) Total
- ---------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Balance at January 1, 1994............... $26,812 $149,319 $ 97,627 $273,758
Net income for 1994.................. 49,457 49,457
Cash dividends on preferred
stock.............................. (5,897) (5,897)
Cash dividends on common stock....... (29,514) (29,514)
Loss on the retirement of preferred
stock.............................. (87) (87)
Capital stock expenses, net.......... 364 364
-------- --------- --------- ---------
Balance at December 31, 1994............. 26,812 149,683 111,586 288,081
Net income for 1995.................. 39,133 39,133
Cash dividends on preferred
stock.............................. (4,944) (4,944)
Cash dividends on common stock....... (30,223) (30,223)
Loss on the retirement of preferred
stock.............................. (256) (256)
Capital stock expenses, net.......... 499 499
-------- --------- --------- ---------
Balance at December 31, 1995............. 26,812 150,182 115,296 292,290
Net income for 1996.................. 3,922 3,922
Cash dividends on preferred
stock.............................. (5,305) (5,305)
Cash dividends on common stock....... (16,494) (16,494)
Loss on retirement of preferred
stock.............................. (374) (374)
Capital stock expenses, net.......... 729 729
-------- --------- --------- ---------
Balance at December 31, 1996............. $26,812 $150,911 $ 97,045 $274,768
======== ========= ========= =========
</TABLE>
(a) The company has dividend restrictions imposed by its long-term debt
agreements. At December 31, 1996, these restrictions totaled
approximately $21.5 million.
The accompanying notes are an integral part of these financial statements.
Western Massachusetts Electric Company
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ABOUT WESTERN MASSACHUSETTS ELECTRIC COMPANY
Western Massachusetts Electric Company (WMECO or the company), The
Connecticut Light and Power Company (CL&P), Holyoke Water Power Company
(HWP), Public Service Company of New Hampshire (PSNH), and North
Atlantic Energy Corporation (NAEC) are the operating subsidiaries
comprising the Northeast Utilities system (the system) and are wholly
owned by Northeast Utilities (NU).
The system furnishes retail electric service in Connecticut, New
Hampshire, and western Massachusetts through CL&P, PSNH, WMECO, and HWP.
The fifth subsidiary, NAEC, sells all of its capacity to PSNH. In
addition to its retail service, the system furnishes firm and other
wholesale electric services to various municipalities and other
utilities. The system serves about 30 percent of New England's
electric needs and is one of the 20 largest electric utility systems
in the country as measured by revenues.
Other wholly owned subsidiaries of NU provide support services for the
system companies and, in some cases, for other New England utilities.
Northeast Utilities Service Company (NUSCO) provides centralized
accounting, administrative, information resources, engineering,
financial, legal, operational, planning, purchasing, and other
services to the system companies. Northeast Nuclear Energy Company
(NNECO) acts as an agent for system companies in operating the
Millstone nuclear generating facilities.
B. PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain reclassifications of prior years' data have been made to conform
with the current year's presentation.
All transactions among affiliated companies are on a recovery of cost
basis which may include amounts representing a return on equity, and are
subject to approval by various federal and state regulatory agencies.
C.PUBLIC UTILITY REGULATION
NU is registered with the Securities and Exchange Commission (SEC) as a
holding company under the Public Utility Holding Company Act of 1935
(1935 Act), and it and its subsidiaries, including the company, are
subject to the provisions of the 1935 Act. Arrangements among the
system companies, outside agencies and other utilities covering inter-
connections, interchange of electric power and sales of utility property
are subject to regulation by the Federal Energy Regulatory Commission
(FERC) and/or the SEC. The company is subject to further regulation for
rates, accounting, and other matters by the FERC and/or the
Massachusetts Department of Public Utilities (DPU).
D.NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," which established accounting standards for evaluating and recording
asset impairment. The company adopted SFAS 121 as of January 1, 1996.
See Note 1H, "Summary of Significant Accounting Policies - Regulatory
Accounting and Assets" for further information on the regulatory impacts
of the company's adoption of SFAS 121. See Note 10, "Sale of Customer
Receivables," and Note 11C, "Commitments and Contingencies-Environmental
Matters," for information on newly issued accounting and reporting
standards related to those specific areas.
E.INVESTMENTS AND JOINTLY OWNED ELECTRIC UTILITY PLANT
Regional Nuclear Generating Companies: WMECO owns common stock of four
regional nuclear generating companies (Yankee companies). The Yankee
companies, with the company's ownership interests, are:
Connecticut Yankee Atomic Power Company (a) (CY) ................ 9.5%
Yankee Atomic Electric Company (a) (YAEC) ....................... 7.0
Maine Yankee Atomic Power Company (MY) .......................... 3.0
Vermont Yankee Nuclear Power Corporation (VY) ................... 2.5
(a) YAEC's and CY's nuclear power plants were shutdown permanently on
February 26, 1992 and December 4, 1996, respectively.
WMECO's investments in the Yankee companies are accounted for on the
equity basis due to the company's ability to exercise significant
influence over their operating and financial policies.
WMECO's investments in the Yankee companies at December 31, 1996 are:
(Thousands of Dollars)
Connecticut Yankee Atomic Power Company .............. $10,165
Yankee Atomic Electric Company ........................ 1,673
Maine Yankee Atomic Power Company .................... 2,247
Vermont Yankee Nuclear Power Corporation .............. 1,363
$15,448
The electricity produced by MY and VY is committed substantially on the
basis of ownership interests and is billed pursuant to contractual
agreements. Under ownership agreements with the Yankee companies, WMECO
may be asked to provide direct or indirect financial support for one or
more of the companies. For more information on these agreements, see
Note 11F, "Commitments and Contingencies - Long-Term Contractual
Arrangements." For more information on the Yankee companies, see Note 2,
"Nuclear Decommissioning" and Note 11B, "Commitments and Contingencies -
Nuclear Performance."
Millstone 1: WMECO has a 19 percent joint-ownership interest in
Millstone 1, a 660-megawatt (MW) nuclear generating unit. As of
December 31, 1996 and 1995, plant-in-service included approximately
$90.2 million and $87.4 million, respectively, and the accumulated
provision for depreciation included approximately $37.2 million and
$34.5 million, respectively, for WMECO's share of Millstone 1. WMECO's
share of Millstone 1 expenses is included in the corresponding
operating expenses on the accompanying Statements of Income.
Millstone 2: WMECO has a 19 percent joint-ownership interest in
Millstone 2, an 870-MW nuclear generating unit. As of December 31, 1996
and 1995, plant-in-service included approximately $161.4 million and
$160.0 million, respectively, and the accumulated provision for
depreciation included approximately $51.7 million and $45.8 million,
respectively, for WMECO's share of Millstone 2. WMECO's share of
Millstone 2 expenses is included in the corresponding operating expenses
on the accompanying Statements of Income.
Millstone 3: WMECO has a 12.24 percent joint-ownership interest in
Millstone 3, a 1,154-MW nuclear generating unit. As of December 31,
1996 and 1995, plant-in-service included approximately $377.7 million
and the accumulated provision for depreciation included approximately
$99.8 million and $90.6 million, respectively, for WMECO's share of
Millstone 3. WMECO's share of Millstone 3 expenses is included in the
corresponding operating expenses on the accompanying Statements of
Income.
For more information regarding the Millstone units, see Note 11B,
"Commitments and Contingencies - Nuclear Performance."
F.DEPRECIATION
The provision for depreciation is calculated using the straight-line
method based on estimated remaining lives of depreciable utility
plant-in-service, adjusted for salvage value and removal costs, as
approved by the appropriate regulatory agency. Except for major
facilities, depreciation rates are applied to the average
plant-in-service during the period. Major facilities are depreciated
from the time they are placed in service. When plant is retired from
service, the original cost of plant, including costs of removal, less
salvage, is charged to the accumulated provision for depreciation. The
depreciation rates for the several classes of electric plant-in-service
are equivalent to a composite rate of 3.2 percent in 1996, 3.1 percent
in 1995 and 1994. See Note 2, "Nuclear Decommissioning," for information
on nuclear plant decommissioning.
WMECO's nonnuclear generating facilities have limited service lives.
Plant may be retired in place or dismantled based upon expected future
needs, the economics of the closure and environmental concerns. The
costs of closure and removal are incremental costs and, for financial
reporting purposes, are accrued over the life of the asset as part of
depreciation. At December 31, 1996, the accumulated provision for
depreciation included approximately $3.2 million accrued for the cost of
removal, net of salvage for nonnuclear generation property.
G.REVENUES
Other than revenues under fixed-rate agreements negotiated with certain
wholesale, industrial and commercial customers, utility revenues are
based on authorized rates applied to each customer's use of electricity.
In general, rates can be changed only through a formal proceeding before
the appropriate regulatory commission. At the end of each accounting
period, WMECO accrues an estimate for the amount of energy delivered but
unbilled.
H.REGULATORY ACCOUNTING AND ASSETS
The accounting policies of WMECO and the accompanying financial
statements conform to generally accepted accounting principles
applicable to rate regulated enterprises and reflect the effects of the
ratemaking process in accordance with SFAS 71, "Accounting for the
Effects of Certain Types of Regulation." Assuming a cost-of-service
based regulatory structure, regulators may permit incurred costs,
normally treated as expenses, to be deferred and recovered through
future revenues. Through their actions, regulators may also reduce or
eliminate the value of an asset, or create a liability. If any portion
of the company's operations were no longer subject to the provisions of
SFAS 71, as a result of a change in the cost-of-service based regulatory
structure or the effects of competition, the company would be required
to write off related regulatory assets and liabilities. The company
continues to believe that its use of regulatory accounting remains
appropriate.
SFAS 121 requires the evaluation of long-lived assets, including
regulatory assets, for impairment when certain events occur or when
conditions exist that indicate the carrying amounts of assets may not be
recoverable. SFAS 121 requires that any long-lived assets which are no
longer probable of recovery through future revenues be revalued based on
estimated future cash flows. If the revaluation is less than the book
value of the asset, an impairment loss would be charged to earnings.
The implementation of SFAS 121 did not have a material impact on the
company's financial position or results of operations as of December 31,
1996. Management continues to believe that it is probable that the
company will recover its investments in long-lived assets through future
revenues. This conclusion may change in the future as competitive
factors influence wholesale and retail pricing in electric utility
industry or if the cost-of-service based regulatory structure were to
change.
The components of WMECO's regulatory assets are as follows:
At December 31, 1996 1995
(Thousands of Dollars)
Income taxes, net (Note 1I) ................ $ 71,519 $ 87,829
Unrecovered contractual obligations
(Note 2) ................................. 84,598 18,814
Amortizable property investment -
Millstone 3 .............................. - 5,600
Recoverable energy costs (Note 1J) ......... 17,510 4,974
Other ...................................... 37,225 43,769
$210,852 $160,986
For more information on the company's regulatory environment and the
potential impacts of restructuring, see Note 11A, "Commitments and
Contingencies-Restructuring," and Management's Discussion and Analysis
of Financial Condition and Results of Operations (MD&A).
I.INCOME TAXES
The tax effect of temporary differences (differences between the periods
in which transactions affect income in the financial statements and the
periods in which they affect the determination of taxable income) is
accounted for in accordance with the ratemaking treatment of the
applicable regulatory commissions. The adoption of SFAS 109,
"Accounting for Income Taxes," in 1993 increased the company's net
deferred tax obligation. As it is probable that the increase in
deferred tax liabilities will be recovered from customers through rates,
WMECO established a regulatory asset. See Note 7, "Income Tax Expense"
for the components of income tax expense.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, which give rise
to the accumulated deferred tax obligation is as follows:
At December 31, 1996 1995
(Thousands of Dollars)
Accelerated depreciation and
other plant-related differences ............ $218,389 $222,520
Regulatory assets - income tax gross up .... 29,457 34,540
Other ...................................... (2,593) 2,535
$245,253 $259,595
J.RECOVERABLE ENERGY COSTS
Under the Energy Policy Act of 1992 (Energy Act), WMECO is assessed for
its proportionate share of the costs of decontaminating and
decommissioning uranium enrichment plants owned by the United States
Department of Energy (D&D assessment). The Energy Act requires that
regulators treat D&D assessments as a reasonable and necessary current
cost of fuel, to be fully recovered in rates, like any other fuel cost.
WMECO is currently recovering these costs through rates. As of December
31, 1996, the company's total D&D deferrals were approximately $11
million.
For additional information regarding recoverable energy costs see the
MD&A.
K.SPENT NUCLEAR FUEL DISPOSAL COSTS
Under the Nuclear Waste Policy Act of 1982, WMECO must pay the United
States Department of Energy (DOE) for the disposal of spent nuclear fuel
and high-level radioactive waste. Fees for nuclear fuel burned on or
after April 7, 1983 are billed currently to customers and paid to the
DOE on a quarterly basis. For nuclear fuel used to generate electricity
prior to April 7, 1983 (prior-period fuel), payment must be made prior
to the first delivery of spent fuel to the DOE. The DOE was originally
scheduled to begin accepting delivery of spent fuel in 1998. However,
delays in identifying a permanent storage site have continually
postponed plans for the DOE's long-term storage and disposal site. The
DOE's current estimate for an available site is 2010.
Until such payment is made, the outstanding balance will continue to
accrue interest at the three-month Treasury Bill Yield Rate. At
December 31, 1996, fees due to the DOE for the disposal of prior-period
fuel were approximately $37.1 million, including interest costs of $21.5
million. As of December 31, 1996, all fees had been collected through
rates.
2. NUCLEAR DECOMMISSIONING
WMECO's nuclear power plants have service lives that are expected to end
during the years 2010 through 2025. Upon retirement, these units must be
decommissioned. The company's 1996 decommissioning study concluded that
complete and immediate dismantlement at retirement continues to be the most
viable and economic method of decommissioning the three Millstone units.
Decommissioning studies are reviewed and updated periodically to reflect
changes in decommissioning requirements, costs, technology and inflation.
The estimated cost of decommissioning WMECO's ownership share of
Millstone 1, 2, and 3, in year-end 1996 dollars, is $74.1 million, $65.5
million, and $56.6 million, respectively. The Millstone units
decommissioning costs will be increased annually by their respective
escalation rates. Nuclear decommissioning costs are accrued over the
expected service life of the units and are included in depreciation expense
on the Statements of Income. Nuclear decommissioning costs amounted to $6.2
million in 1996, $5.0 million in 1995, and $4.8 million in 1994. Nuclear
decommissioning, as a cost of removal, is included in the accumulated
provision for depreciation on the Balance Sheets. At December 31, 1996, the
balance in the accumulated reserve for decommissioning amounted to $83.6
million.
WMECO has established external decommissioning trusts through a trustee for
its portion of the costs of decommissioning Millstone 1, 2, and 3. Funding
of the estimated decommissioning costs assumes levelized collections for the
Millstone units and after-tax earnings on the Millstone decommissioning
funds of 5.8 percent. As of December 31, 1996, WMECO has collected, through
rates, $53.5 million toward the future decommissioning costs of its share of
the Millstone units, all of which has been transferred to external
decommissioning trusts. Earnings on the decommissioning trusts increase the
decommissioning trust balance and the accumulated reserve for
decommissioning. Unrealized gains and losses associated with the
decommissioning trusts and financing fund also impact the balance of the
trusts and the accumulated reserve for decommissioning.
Changes in requirements or technology, the timing of funding or dismantling,
or adoption of a decommissioning method other than immediate dismantlement
would change decommissioning cost estimates and the amounts required to be
recovered. WMECO attempts to recover sufficient amounts through its allowed
rates to cover its expected decommissioning costs. Only the portion of
currently estimated total decommissioning costs that has been accepted by
regulatory agencies is reflected in rates of the company. Based on present
estimates and assuming its nuclear units operate to the end of their
respective license periods, the company expects that the decommissioning
trusts will be substantially funded when the units are retired from service.
MY and VY: Each Yankee company owns a single nuclear generating unit. MY
and VY have service lives that are expected to end in 2008 and 2012,
respectively. The estimated cost, in year-end 1996 dollars, of
decommissioning WMECO's ownership share of units owned and operated by MY
and VY is $11.1 million and $9.1 million, respectively. Under the terms of
the contracts with the Yankee companies, the shareholder-sponsors are
responsible for their proportionate share of the operating costs of each
unit, including decommissioning. The nuclear decommissioning costs of the
Yankee companies are included as part of the cost of power purchased by
WMECO.
CY and YAEC: On December 4, 1996, the board of directors of CY voted
unanimously to cease permanently the production of power at its nuclear
plant. The system companies relied on CY for approximately 3 percent of
their capacity.
CY has undertaken a number of regulatory filings intended to implement the
decommissioning and the recovery of remaining assets of CY. During late
December, 1996, CY filed an amendment to its power contracts to clarify the
obligations of its purchasing utilities following the decision to cease
power production. At December 31, 1996, the estimated obligation, including
decommissioning amounted to $762.8 million of which the company's share was
approximately $72.5 million.
YAEC is in the process of decommissioning its nuclear facility. At December
31, 1996, the estimated remaining costs, including decommissioning, amounted
to $173.3 million of which the company's share was approximately $12.1
million.
Management expects that WMECO will continue to be allowed to recover these
costs from its customers. Accordingly, WMECO has recognized these costs as
regulatory assets, with corresponding obligations, on its Balance Sheets.
Proposed Accounting: The staff of the SEC has questioned certain of the
current accounting practices of the electric utility industry, including the
company, regarding the recognition, measurement and classification of
decommissioning costs for nuclear generating units in the financial
statements. In response to these questions, FASB agreed to review the
accounting for removal costs, including decommissioning, and issued a
proposed statement entitled "Accounting for Liabilities Related to Closure
or Removal of Long-Lived Assets," in February, 1996. If current electric
utility industry accounting practices for decommissioning are changed in
accordance with the proposed statement: (1) annual provisions for
decommissioning could increase; (2) the estimated cost for decommissioning
could be recorded as a liability with an offset to plant rather than as part
of accumulated depreciation, and (3) trust fund income from the external
decommissioning trusts could be reported as investment income rather than as
a reduction to decommissioning expense.
3. SHORT-TERM DEBT
Limits: The amount of short-term debt borrowings that may be incurred by
WMECO is subject to periodic approval by either the SEC under the 1935 Act
or by its state regulator. In addition, the charter of WMECO contains
provisions restricting the amount of short-term debt borrowings. Under the
SEC and/or charter restrictions, WMECO was authorized, as of January 1,
1997, to incur short-term borrowings up to a maximum of $150 million.
Credit Agreements: In November, 1996, NU entered into a three-year
revolving credit agreement (New Credit Agreement) with a group of 12 banks.
Under the terms of the New Credit Agreement, NU, CL&P and WMECO will be able
to borrow up to $150 million, $313.75 million, and $150 million,
respectively. The overall limit for all of the borrowing system companies
under the entire New Credit Agreement is $313.75 million. WMECO is
obligated to pay a facility fee of .30 percent per annum of each bank's
total commitment under the new credit facility which will expire November
21, 1999. At December 31, 1996, there were $27.5 million in borrowings
under this agreement, all of which were borrowed by other system companies.
Access to the New Credit Agreement is contingent upon certain financial
tests being met. NU is currently renegotiating these restrictions so that
the financial impacts of the current nuclear outages do not impact the
ability to access these facilities. Through February 21, 1997, CL&P and
WMECO have satisfied all financial covenants required under their respective
borrowing facilities, but NU needed and obtained a limited waiver of an
interest coverage covenant that had to be satisfied for NU to borrow under
the New Credit Agreement. NU, CL&P and WMECO are currently maintaining
their access to the New Credit Agreement under an interim written
arrangement, under which NU agreed not to borrow more than $27.5 million
against the facility.
In addition to the New Credit Agreement, NU, CL&P, WMECO, HWP, NNECO and The
Rocky River Realty Company (RRR) have various revolving credit lines through
separate bilateral credit agreements. Under the remaining three-year
portion of the facility, four banks maintain commitments to the respective
system companies totaling $56.25 million. NU, CL&P and WMECO may borrow up
to the aggregate $56.25 million, whereas HWP, NNECO and RRR may borrow up to
their short-term debt limit of $5 million, $50 million, and $22 million,
respectively. Under the terms of the agreement, the system companies are
obligated to pay a facility fee of .15 percent per annum of each bank's
total commitment under the three-year portion of the facility. These
commitments will expire December 3, 1998. At December 31, 1996 and 1995,
there were $11.3 million and $42.5 million in borrowings, respectively,
under the facility all of which had been borrowed by other system companies.
Under both credit facilities above, the company may borrow funds on a short-
term revolving basis under the remaining portion of its agreement, using
either fixed-rate loans or standby loans. Fixed rates are set using
competitive bidding. Standby loans are based upon several alternative
variable rates.
Maturities of WMECO's short-term debt obligations are for periods of three
months or less.
Money Pool: Certain subsidiaries of NU, including WMECO, are members of the
Northeast Utilities System Money Pool (Pool). The Pool provides a more
efficient use of the cash resources of the system, and reduces outside
short-term borrowings. NUSCO administers the Pool as agent for the member
companies. Short-term borrowing needs of the member companies are first met
with available funds of other member companies, including funds borrowed by
NU parent. NU parent may lend to the Pool but may not borrow. Funds may be
withdrawn from or repaid to the Pool at any time without prior notice.
Investing and borrowing subsidiaries receive or pay interest based on the
average daily Federal Funds rate. However, borrowings based on loans from
NU parent bear interest at NU parent's cost and must be repaid based upon
the terms of NU parent's original borrowing. At December 31, 1996 and 1995,
WMECO had $47.4 million and $24.1 million, respectively, of borrowings
outstanding from the Pool. The interest rate on borrowings from the Pool at
December 31, 1996 and 1995 was 6.3 percent and 4.7 percent, respectively.
For further information on short-term debt see the MD&A.
4. PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock not subject to mandatory redemptions are:
December 31, Shares
1996 Outstanding
Redemption December 31, December 31,
Description Price 1996 1996 1995 1994
(Thousands of Dollars)
7.72% Series B
of 1971 ........ $103.51 200,000 $20,000 $20,000 $20,000
1988 Adjustable
Rate DARTS ....... - - - 33,500 48,500
Total preferred
stock not subject
to mandatory
redemption ..... $20,000 $53,500 $68,500
All or any part of each outstanding series of preferred stock may be
redeemed by the company at any time at established redemption prices plus
accrued dividends to the date of redemption.
5. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock subject to mandatory redemption are:
December 31 Shares
1996 Outstanding
Redemption December 31, December 31,
Description Price* 1996 1996 1995 1994
(Thousands of Dollars)
7.60% Series
of 1987 ........... $25.76 840,000 $21,000 $24,000 $24,675
Less preferred stock to be
redeemed within one
year, net of reacquired
stock .............. - 1,500 675
Total preferred stock
subject to mandatory
redemption ......... $21,000 $22,500 $24,000
*Redemption price reduces in future years.
The minimum sinking-fund provisions of the 1987 Series subject to mandatory
redemption at December 31, 1996, for the years 1997 through 2001, are $0 in
1997 and $1.5 million per year for 1998 through 2001. In case of default on
sinking-fund payments, no payments may be made on any junior stock by way of
dividends or otherwise (other than in shares of junior stock) so long as the
default continues. If the company is in arrears in the payment of dividends
on any outstanding shares of preferred stock, the company would be
prohibited from redemption or purchase of less than all of the preferred
stock outstanding. All or part of the 7.60% Series of 1987 may be redeemed
by the company at any time at an established redemption price plus accrued
dividends to the date of redemption subject to certain refunding
limitations.
6. LONG-TERM DEBT
Details of long-term debt outstanding are:
December 31,
1996 1995
(Thousands of Dollars)
First Mortgage Bonds:
5 3/4% Series F, due 1997......... $ 14,700 $ 14,700
6 3/4% Series G, due 1998......... 9,800 9,800
6 1/4% Series X, due 1999......... 40,000 40,000
6 7/8% Series W, due 2000......... 60,000 60,000
7 3/4% Series V, due 2002......... 85,000 85,000
7 3/4% Series Y, due 2024......... 50,000 50,000
Total First Mortgage Bonds................... 259,500 259,500
Pollution Control Notes:
Tax Exempt Series A, due 2028............... 53,800 53,800
Fees and interest due for spent
fuel disposal costs (Note 1K).............. 37,055 35,180
Less: Amounts due within one year........... 14,700 -
Unamortized premium and discount, net........ (913) (1,010)
Long-term debt, net.......................... $334,742 $347,470
Long-term debt maturities and cash sinking-fund requirements on debt
outstanding at December 31, 1996 for the years 1997 through 2001 are
approximately $14.7 million, $9.8 million, $40 million, $60 million, and
$0 million, respectively. In addition, there are annual one-percent
sinking-and improvement-fund requirements, currently amounting to $2.6
million for 1997, $2.4 million for 1998 and 1999, $2.0 million for 2000,
and $1.4 million for 2001. Such sinking- and improvement-fund requirements
may be satisfied by the deposit of cash or bonds by certification of
property additions.
All or any part of each outstanding series of first mortgage bonds may be
redeemed by the company at any time at established redemption prices plus
accrued interest to the date of redemption, except certain series which
are subject to certain refunding limitations during their respective
initial five-year redemption periods.
Essentially all of the company's utility plant is subject to the lien of
its first mortgage bond indenture. As of December 31, 1996 and 1995, the
company has secured $53.8 million of pollution control notes with second
mortgage liens on Millstone 1, junior to the liens of its first mortgage
bond indenture. The average effective interest rate on the variable-rate
pollution control notes was 3.3 percent for 1996 and 3.7 percent for 1995.
7. INCOME TAX EXPENSE
The components of the federal and state income tax provisions charged to
operations are:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Current income taxes:
Federal............................ $7,007 $ 7,419 $18,358
State.............................. 1,358 2,961 4,110
Total current.................... 8,365 10,380 22,468
Deferred income taxes, net:
Federal............................ (1,805) 4,130 9,697
State.............................. (165) 1,003 2,267
Total deferred...................(1,970) 5,133 11,964
Investment tax credits, net.......... (1,468) (1,715) (1,708)
Total income tax expense............. $4,927 $13,798 $32,724
The components of total income tax expense are classified as follows:
Income taxes charged to
operating expenses................. $5,995 $14,060 $32,653
Other income taxes .................. (1,068) (262) 71
Total income tax expense............. $4,927 $13,798 $32,724
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Depreciation, leased nuclear
fuel, settlement credits,
and disposal costs.............. $ 32 $9,066 $ 7,016
Energy adjustment clause.......... 4,102 (1,549) 3,598
Expenses associated with
nuclear outages................. (4,633) - -
Demand side management............ 1,557 (1,184) 466
Nuclear plant deferrals........... (2,258) 2,468 (1,802)
Bond redemptions.................. (502) (572) 1,535
Other............................. (268) (3,096) 1,151
Deferred income taxes, net....... $(1,970) $5,133 $11,964
A reconciliation between income tax expense and the expected tax expense at the
applicable statutory rate is as follows:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Expected federal income tax at
35 percent of pretax income for.... $2,946 $18,526 $28,763
Tax effect of differences:
Depreciation....................... 2,280 2,173 1,740
Amortization of regulatory assets.. 1,029 1,665 3,347
Investment tax credit amortization. (1,468) (1,715) (1,708)
State income taxes, net of
federal benefit.................. 776 2,577 4,144
Adjustment for prior years' taxes.. - (7,702) (825)
Dividends received reduction....... (378) (481) (520)
Other, net......................... (258) (1,245) (2,217)
Total income tax expense............ $4,927 $13,798 $32,724
8. LEASES
WMECO and CL&P finance up to $450 million of nuclear fuel for Millstone 1
and 2 and their respective shares of the nuclear fuel for Millstone 3 under
the Niantic Bay Fuel Trust (NBFT) capital lease agreement. WMECO and CL&P
make quarterly lease payments for the cost of nuclear fuel consumed in the
reactors, based on a units-of-production method at rates which reflect
estimated kilowatt-hours of energy provided, plus financing costs associated
with the fuel in the reactors. Upon permanent discharge from the reactors,
ownership of the nuclear fuel transfers to WMECO and CL&P.
WMECO has also entered into lease agreements for the use of data processing
and office equipment, vehicles, nuclear control room simulators and office
space. The provisions of these lease agreements generally provide for
renewal options. The following rental payments have been charged to
expense:
Year Capital Leases Operating Leases
1996 .....................$ 3,598,000 $6,410,000
1995 ......................12,553,000 6,398,000
1994 ......................13,594,000 6,485,000
Interest included in capital lease rental payments was $1,858,000 in 1996,
$1,954,000 in 1995, and $1,845,000 in 1994.
Substantially all of the capital lease rental payments were made pursuant to
the nuclear fuel lease agreement. Future minimum lease payments under the
nuclear fuel capital lease cannot be reasonably estimated on an annual basis
due to variations in the usage of nuclear fuel.
Future minimum rental payments, excluding annual nuclear fuel lease payments
and executory costs such as property taxes, state use taxes, insurance, and
maintenance, under long-term noncancelable leases, as of December 31, 1996
are:
Year Operating Leases
(Thousands of Dollars)
1997 ................................$ 4,500
1998 ................................ 3,500
1999 ................................ 3,200
2000 ................................ 3,000
2001 ................................ 2,700
After 2001 ........................... 24,500
Future minimum lease payments ....... $41,400
It is possible that certain operating lease payments related to NUSCO
leases will be accelerated from future years into 1997. See Note 11G,
"The Rocky River Realty Company - Obligations" for additional
information.
9. EMPLOYEE BENEFITS
A. PENSION BENEFITS
The company participates in a uniform noncontributory defined benefit
retirement plan covering all regular system employees. Benefits are
based on years of service and the employees' highest eligible
compensation during 60 consecutive months of employment. The
company's direct portion of the system's pension income, part of
which was charged to utility plant, approximated $2.0 million in
1996, $2.7 million in 1995 and $1.0 million in 1994. The company's
pension costs for 1996, 1995 and 1994 included approximately $1.0
million, $0 million, and $0.8 million, respectively, related to
workforce reduction programs.
Currently, the company funds annually an amount at least equal to
that which will satisfy the requirements of the Employee Retirement
Income Security Act and the Internal Revenue Code. Pension costs are
determined using market-related values of pension assets. Pension
assets are invested primarily in domestic and international equity
securities and bonds.
The components of net pension cost for WMECO are:
For the Years Ended December 31, 1996 1995 1994
(Thousand of Dollars)
Service cost....................... $ 2,932 $ 1,645 $ 2,720
Interest cost...................... 7,786 7,757 7,655
Return on plan assets.............. (22,174) (29,798) 221
Net amortization................... 9,458 17,669 (11,635)
Net pension income................. $(1,998) $(2,727) $(1,039)
For calculating pension cost, the following assumptions were used:
For the Years Ended December 31, 1996 1995 1994
Discount rate.......................... 7.50% 8.25% 7.75%
Expected long-term rate
of return............................ 8.75 8.50 8.50
Compensation/progression rate.......... 4.75 5.00 4.75
The following table represents the plan's funded status reconciled to
the Balance Sheets:
At December 31, 1996 1995
(Thousands of Dollars)
Accumulated benefit obligation,
including vested benefits at
December 31, 1996 and 1995 of
$85,094,000 and $84,943,000,
respectively ....................... $ 91,170 $ 90,154
Projected benefit obligation.......... $107,816 $107,527
Market value of plan assets........... 157,863 143,632
Market value in excess of
projected benefit obligation........ 50,047 36,105
Unrecognized transition amount........ (1,963) (2,198)
Unrecognized prior service costs...... 1,213 (525)
Unrecognized net gain................. (46,486) (32,570)
Prepaid pension asset ................ $ 2,811 $ 812
The following actuarial assumptions were used in calculating
the plan's year-end funded status:
At December 31, 1996 1995
Discount rate............................ 7.75% 7.50%
Compensation/progression rate............ 4.75 4.75
B. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The company provides certain health care benefits, primarily medical
and dental, and life insurance benefits through a benefit plan to
retired employees (referred to as SFAS 106 benefits). These benefits
are available for employees retiring from the company who have met
specified service requirements. For current employees and certain
retirees, the total SFAS 106 benefit is limited to two times the 1993
per-retiree health care costs. The SFAS 106 obligation has been
calculated based on this assumption. WMECO's direct portion of SFAS
106 benefits, part of which were deferred or charged to utility
plant, approximated $3.8 million in 1996, $4.4 million in 1995, and
$5.0 million in 1994.
During 1994, the company began funding SFAS 106 postretirement costs
through external trusts. The company is funding, on an annual basis,
amounts that have been rate- recovered and which also are tax
deductible under the Internal Revenue Code. The trust assets are
invested primarily in equity securities and bonds.
The components of health care and life insurance costs are:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Service cost....................... $ 490 $ 490 $ 519
Interest cost...................... 2,236 2,544 2,703
Return on plan assets.............. (883) (718) 19
Amortization of unrecognized
transition obligation............ 1,641 1,641 1,641
Other amortization, net............ 353 473 76
Net health care and life
insurance costs.................. $3,837 $4,430 $4,958
For calculating WMECO's SFAS 106 benefit costs, the following
assumptions were used:
For the Years Ended December 31, 1996 1995 1994
Discount rate...................... 7.50% 8.00% 7.75%
Long-term rate of return -
Health assets, net of tax........ 5.25 5.00 5.00
Life assets...................... 8.75 8.50 8.50
The following table represents the plan's funded status
reconciled to the Balance Sheets:
At December 31, 1996 1995
(Thousands of Dollars)
Accumulated postretirement benefit obligation of:
Retirees...................................... $24,614 $28,787
Fully eligible active employees........... ... 28 28
Active employees not eligible to retire....... 5,449 5,847
Total accumulated postretirement
benefit obligation........................... 30,091 34,662
Market value of plan assets.................... 10,215 5,339
Accumulated postretirement benefit
obligation in excess of plan assets.......... (19,876) (29,323)
Unrecognized transition amount................. 26,259 27,901
Unrecognized net gain.......................... (6,765) (1,399)
Accrued postretirement benefit liability....... $ (382) $(2,821)
The following actuarial assumptions were used in calculating the
plan's year-end funded status:
At December 31, 1996 1995
Discount rate.................................. 7.75% 7.50%
Health care cost trend rate (a)................ 7.23 8.40
(a) The annual growth in per capita cost of covered health care
benefits was assumed to decrease to 4.91 percent by 2001.
The effect of increasing the assumed health care cost trend rate by
one percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1996, by $1.8
million and the aggregate of the service and interest cost components
of net periodic postretirement benefit cost for the year then ended
by $0.2 million. The trust holding the health plan assets is subject
to federal income taxes at a 39.6 percent tax rate.
WMECO is currently recovering SFAS 106 costs.
10. SALE OF CUSTOMER RECEIVABLES
WMECO has entered into an agreement to sell up to $40 million of eligible
customer billed and unbilled accounts receivable. The eligible receivables
are sold with limited recourse. The agreement was entered into during
September, 1996 and will expire in five years. The company has retained
collection responsibilities for receivables which have been sold under the
agreement. As collections reduce previously sold undivided interests, new
receivables would routinely be sold. The agreements provide for a loss
reserve determined by a formula which reflects credit exposure. As of
February 21, 1997, WMECO has sold approximately $15 million of their
accounts receivable under this agreement.
The FASB issued SFAS 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," in June, 1996. SFAS
125 became effective on January 1, 1997, and establishes, in part,
criteria for concluding whether a transfer of financial assets in exchange
for consideration should be accounted for as a sale or as a secured
borrowing.
WMECO is in the process of restructuring its receivable program to comply
with the requirements of SFAS 125. Management believes that the adoption
of SFAS 125 will not have a material impact on the company's financial
position or results of operations.
11. COMMITMENTS AND CONTINGENCIES
A. RESTRUCTURING
Although WMECO continues to operate under cost-of-service based
regulation, various restructuring initiatives in its jurisdiction
have created uncertainty with respect to future rates and the
recovery of strandable investments and certain future costs such
as purchase power obligations. Strandable investments are regulatory
assets or other assets that would not be economical in a competitive
environment. Management is unable to predict the ultimate outcome of
restructuring initiatives; however, it believes that it is entitled
to full recovery of its prudently incurred costs, including
regulatory assets and strandable investments based on the general
nature of public utility cost of service regulation. For further
information on restructuring, see the MD&A.
B. NUCLEAR PERFORMANCE
Millstone: The three Millstone units are managed by NNECO. Millstone
1, 2, and 3 have been out of service since November 4, 1995, February
21, 1996 and March 30, 1996, respectively, and are on the Nuclear
Regulatory Commission's (NRC) watch list. The company has
restructured its nuclear organization and is currently implementing
comprehensive plans to restart the units.
According to the plans, each unit's recovery team will be working
towards restart of its respective unit on a parallel basis with the
other two units. Based upon management's current plans, it is
estimated that one of the units will be ready for restart in the
third quarter of 1997 with the other two units being ready for
restart during the fourth quarter of 1997 and the first quarter of
1998, respectively.
The NRC has also issued two orders affecting the Millstone units on
the subjects of independent corrective action verification and
employee concerns. Independent third parties have been retained by
NNECO and are awaiting NRC approval.
Prior to and following notification to the NRC that the units are
ready to resume operations, the NRC staff will conduct extensive
reviews and inspections and, prior to such notification, independent
corrective action, verification teams will also inspect each unit.
The units will not be allowed to restart without an affirmative vote
of the NRC commissioners following completion of these reviews and
inspections. Management cannot estimate when the NRC will allow any
of the units to restart, but hopes to have at least one unit
operating in the second half of 1997.
The company is currently incurring substantial costs, including
replacement power costs, while the three Millstone units are not
operating. Management does not expect to recover a substantial
portion of these costs. WMECO expensed approximately $33 million of
incremental nonfuel nuclear operation and maintenance costs (O&M) in
1996, including a reserve of $12 million against 1997 expenditures.
Management estimates WMECO will expense approximately $73 million of
nonfuel nuclear O&M costs in 1997.
As discussed above, management cannot predict when the NRC will allow
any of the Millstone units to return to service and thus cannot
estimate the total replacement power costs WMECO will ultimately
incur. Replacement power costs for WMECO are expected to average
approximately $5 million per month during 1997 while all three
Millstone units remain out of service. Management believes the system
has sufficient resources to fund the restoration of the Millstone
units to service under its present timetable.
MY: The system companies rely on MY for approximately two percent of
their capacity. The MY nuclear generating plant has been limited to
operating at 90 percent of capacity since early 1996, pending the
resolution of issues related to investigations initiated by the NRC,
and on December 6, 1996, was taken off line to resolve cable-
separation and associated issues. The NRC has notified MY that the
NRC staff has placed the MY plant on its watch list. Returning the
plant to service will require NRC approval. Management cannot predict
when MY's plant will be allowed to return to service and expects
there will be substantial costs associated with the NRC's actions
that cannot be accurately estimated at this time.
Potential Litigation: The non-NU owners of Millstone 3 have been
paying their share of the monthly costs for Millstone 3 since the
unit went out of service in March, 1996, but have reserved their
rights to contest whether the NU system companies have any
responsibility for the additional costs the non-NU owners have borne
as a result of the current outage. No formal claims have been made,
but management believes that it is possible that some or all of the
non-NU owners will assert liability on the part of the NU system.
CL&P and WMECO, through NNECO as agent, operate Millstone 3 at cost,
and without profit, under a Sharing Agreement that obligates them to
utilize good utility operating practice and requires the joint owners
to share the risk of employee negligence and other risks pro rata in
accordance with their ownership shares. The Sharing Agreement
provides that CL&P and WMECO would only be liable for damages to the
non-NU owners for a deliberate breach of the Sharing Agreement. At
December 31, 1996, the costs related to this potential litigation were
estimated to be $2.5 million for incremental O&M costs and to be
between $8 and $10 million for replacement power costs. These costs
are likely to increase as long as Millstone 3 remains out of service.
NU will vigorously contest such suits if they are brought.
C. ENVIRONMENTAL MATTERS
WMECO is subject to regulation by federal, state and local
authorities with respect to air and water quality, the handling and
disposal of toxic substances and hazardous and solid wastes, and the
handling and use of chemical products. WMECO has an active
environmental auditing and training program and believes that it is
in substantial compliance with current environmental laws and
regulations.
Environmental requirements could hinder the construction of new
generating units, transmission and distribution lines, substations,
and other facilities. Changing environmental requirements could also
require extensive and costly modifications to WMECO's existing
generating units, and transmission and distribution systems, and
could raise operating costs significantly. As a result, WMECO may
incur significant additional environmental costs, greater than amounts
included in cost of removal and other reserves, in connection with the
generation and transmission of electricity and the storage,
transportation and disposal of by-products and wastes. WMECO may also
encounter significantly increased costs to remedy the environmental
effects of prior waste handling activities. The cumulative long-term
cost impact of increasingly stringent environmental requirements
cannot accurately be estimated.
WMECO has recorded a liability based upon currently available
information for what it believes are its estimated environmental
remediation costs for waste disposal sites. In most cases, additional
future environmental cleanup costs are not reasonably estimable due to
a number of factors, including the unknown magnitude of possible
contamination, the appropriate remediation methods, the possible
effects of future legislation or regulation and the possible effects
of technological changes. At December 31, 1996, the liability
recorded by WMECO for its estimated environmental remediation costs,
excluding any possible insurance recoveries or recoveries from third
parties, amounted to approximately $1.4 million, which management has
determined to be the most probable amount within the range of $1.4
million to $5.9 million.
WMECO cannot estimate the potential liability for future claims,
including environmental remediation costs, that may be brought against
it. However, considering known facts, existing laws and regulatory
practices, management does not believe the matters disclosed above
will have a material effect on WMECO's financial position or future
results of operations.
On October 10, 1996, the American Institute of Certified Public
Accountants issued Statement of Position 96-1, "Environmental
Remediation Liabilities" (SOP). The principal objective of the SOP is
to improve the manner in which existing authoritative accounting
literature is applied by entities to specific situations of
recognizing, measuring and disclosing environmental remediation
liabilities. The SOP became effective January 1, 1997. The company
believes the adoption of this SOP will not have a material impact on
the company's financial position or results of operations.
D. NUCLEAR INSURANCE CONTINGENCIES
Under certain circumstances, in the event of a nuclear incident at one
of the nuclear facilities covered by the federal government's third-
party liability indemnification program, the company could be
assessed, in proportion to its ownership interest in each nuclear unit
up to $75.5 million not to exceed $10 million per nuclear unit in any
one year. Based on its ownership interest in Millstone 1, 2, and 3,
WMECO's maximum liability including any additional potential
assessments, would be $39.8 million per incident. In addition,
through power purchase contracts with MY, VY and CY, WMECO would be
responsible for up to an additional $11.9 million per incident.
Payments for WMECO's ownership interest in nuclear generating
facilities would be limited to a maximum of $6.5 million per incident
per year.
Insurance has been purchased to cover the primary cost of repair,
replacement or decontamination of utility property resulting from
insured occurrences. WMECO is subject to retroactive assessments if
losses exceed the accumulated funds available to the insurer. The
maximum potential assessment against WMECO with respect to losses
arising during the current policy year is approximately $2.5 million
under the primary property insurance program.
Insurance has been purchased to cover certain extra costs incurred in
obtaining replacement power during prolonged accidental outages and
the excess cost of repair, replacement, or decontamination or
premature decommissioning of utility property resulting from insured
occurrences. WMECO is subject to retroactive assessments if losses
exceed the accumulated funds available to the insurer. The maximum
potential assessments against the company with respect to losses
arising during current policy years are approximately $2.0 million
under the replacement power policies and $4.9 million under the excess
property damage, decontamination and decommissioning policies. The
cost of a nuclear incident could exceed available insurance proceeds.
Insurance has been purchased aggregating $200 million on a industry
basis for coverage of worker claims. All participating reactor
operators insured under this coverage are subject to retrospective
assessments of $3.0 million per reactor. The maximum potential
assessment against WMECO with respect to losses arising during the
current policy period is approximately $2.2 million.
E. CONSTRUCTION PROGRAM
The construction program is subject to periodic review and
revision by management. WMECO currently forecasts construction
expenditures of approximately $169 million for the years 1997-2001,
including $37 million for 1997. In addition, the company estimates
that nuclear fuel requirements, including nuclear fuel financed
through the NBFT, will be approximately $54.1 million for the years
1997-2001, including $2.4 million for 1997. See Note 8, "Leases" for
additional information about the financing of nuclear fuel.
F. LONG-TERM CONTRACTUAL ARRANGEMENTS
Yankee Companies: WMECO along with CL&P and PSNH, relies on MY and VY
for approximately three percent of their capacity under long-term
contracts. Under the terms of their agreements, the system companies
pay their ownership (or entitlement) shares of costs, which include
depreciation, O&M expenses, taxes, the estimated cost of
decommissioning and a return on invested capital. These costs are
recorded as purchased power expense and recovered through the
company's rates. WMECO's total cost of purchases under these
contracts with the Yankee companies excluding YAEC, amounted to $28.3
million in 1996, $28.9 million in 1995, and $28.8 million in 1994.
See Note 1E, "Summary of Significant Accounting Policies-Investments
and Jointly Owned Electric Utility Plant, " and Note 2, "Nuclear
Decommissioning" for more information on the Yankee companies.
Nonutility Generators (NUG): WMECO, along with CL&P and PSNH, has
entered into various arrangements for the purchase of capacity and
energy from NUGs. These arrangements have terms form 15 to 25 years,
currently expiring in the years 2008 through 2013, and requires WMECO
to purchase energy at specified prices or formula rates. For the 12
months ended December 31, 1996, approximately 13 percent of system
electricity requirements were met by NUGs. WMECO's total cost of
purchases under these arrangements amounted to $29.5 million in 1996,
$28.6 million in 1995, and $27.5 million in 1994. These costs are
eventually recovered through the company's rates.
Hydro-Quebec: Along with other New England utilities, WMECO, CL&P,
PSNH and HWP have entered into agreements to support transmission and
terminal facilities to import electricity from the Hydro-Quebec system
in Canada. WMECO is obligated to pay, over a 30-year period ending in
2020, its proportionate share of the annual O&M and capital costs of
these facilities.
The estimated annual costs of the WMECO's significant long-term
contractual arrangements are as follows:
1997 1998 1999 2000 2001
(Millions of Dollars)
MY and VY .................. $10.4 $ 8.9 $10.5 $10.4 $ 9.5
Nonutility generators ...... 33.0 35.0 37.0 39.0 42.0
Hydro-Quebec ............... 3.9 3.8 3.7 3.6 3.5
G. THE ROCKY RIVER REALTY COMPANY - OBLIGATIONS
RRR provides real estate support services which includes the leasing
of property and facilities used by system companies. RRR is the
obligor under financing arrangements for certain system facilities.
Under those financing arrangements, the holders of notes for $38.4
million would be entitled to request that RRR repurchase the notes if
any major subsidiary of NU (as defined by the notes) has debt ratings
below investment grade as of any year-end during the term of the
financing. The notes are secured by real estate leases between RRR as
lessor and NUSCO as lessee. The leases provide for the acceleration
of rent equal to RRR's note obligations if RRR is unable to repay the
obligation. The operating companies, primarily CL&P, WMECO and PSNH
may be billed by NUSCO for their proportionate share of the
accelerated lease obligations if the rateholders request repurchase of
the notes. NU has guaranteed the notes.
Based on the terms of the notes, PSNH and NAEC will be defined as
major subsidiaries of NU, effective as of the end of 1996, and both
PSNH's and NAEC's debt ratings were below investment grade.
Accordingly, under the terms of the RRR financing arrangements, the
holders may elect to require RRR to repurchase the notes at par. If
the noteholders make such an election, RRR has the option to refinance
the notes with an institutional investor. However, it is possible
that RRR may be required to repurchase the notes. As of February 21,
1997, the holders had not made such an election. RRR plans to engage
in discussions with the noteholders regarding this issue and
management does not expect the resolution to have a material impact on
its financial condition.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each of the following financial instruments:
Cash and nuclear decommissioning trusts: The carrying amounts approximate
fair value.
SFAS 115, "Accounting for Certain Investments in Debt and Equity
Securities," requires investments in debt and equity securities to be
presented at fair value. As a result of this requirement, the investments
held in the company's nuclear decommissioning trust were adjusted to market
by approximately $8.4 million as of December 31, 1996 and by approximately
$4.5 million as of December 31, 1995, with a corresponding offset to the
accumulated provision for depreciation. The amounts adjusted in 1996 and
1995 represent cumulative gross unrealized holding gains. The cumulative
gross unrealized holding losses were immaterial for both 1996 and 1995.
Preferred stock and long-term debt: The fair value of WMECO's fixed-rate
securities is based upon the quoted market price for those issues or
similar issues. Adjustable rate securities are assumed to have a fair
value equal to their carrying value.
The carrying amount of WMECO's financial instruments and the estimated fair
values are as follows:
Carrying Fair
At December 31, 1996 Amount Value
(Thousands of Dollars)
Preferred stock not subject to
mandatory redemption......................... $ 20,000 $ 15,200
Preferred stock subject to
mandatory redemption.......................... 21,000 18,404
Long-term debt - First Mortgage Bonds.......... 259,500 260,440
Other long-term debt........................... 90,855 90,855
Carrying Fair
At December 31, 1995 Amount Value
(Thousands of Dollars)
Preferred stock not subject to
mandatory redemption..................... .... $ 53,500 $ 53,700
Preferred stock subject to
mandatory redemption.......................... 24,000 25,085
Long-term debt - First Mortgage Bonds.......... 259,500 265,280
Other long-term debt........................... 88,980 88,980
The fair values shown above have been reported to meet the disclosure
requirements and do not purport to represent the amounts at which those
obligations would be settled.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Western Massachusetts Electric Company:
We have audited the accompanying balance sheets of Western
Massachusetts Electric Company (a Massachusetts corporation and a
wholly owned subsidiary of Northeast Utilities) as of December 31,
1996 and 1995, and the related statements of income, common
stockholder's equity, and cash flows for each of the three years in
the period ended December 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Western
Massachusetts Electric Company as of December 31, 1996 and 1995, and
the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 21, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section contains management's assessment of WMECO's (the company) financial
condition and the principal factors having an impact on the results of opera-
tions. The company is a wholly-owned subsidiary of Northeast Utilities (NU).
This discussion should be read in conjunction with the company's financial
statements and footnotes.
FINANCIAL CONDITION
EARNINGS OVERVIEW
WMECO faced an extremely difficult year in 1996 as a result of the prolonged
outages at the three Millstone units (Millstone). These outages resulted in
significantly increased expenditures for replacement power and work undertaken
at Millstone, which had a significant negative impact on WMECO's 1996 earnings.
In 1997, while all three units are out of service, WMECO expects to operate on a
roughly break-even basis. The combination of higher expenditures and the
uncertainty surrounding when the units will return to service made it necessary
to ensure that access to adequate cash levels would be available for the
duration of the outages. Management took various actions during 1996 to address
NU's nuclear program and liquidity issues, however, 1997 will continue to be a
serious challenge in these areas.
WMECO faces future uncertainty with the rapidly moving trend toward industry
restructuring. While restructuring had little direct impact on 1996 financial
results, it creates an environment of significant uncertainty and financial risk
for the coming years. As discussed in further detail in "Restructuring," the
financial treatment that strandable investments will be accorded will impact
WMECO's ability to compete in a restructured environment.
Net income was approximately $4 million in 1996, compared to $39 million in
1995. WMECO's 1996 net income was significantly lower primarily due to the
ongoing outages at Millstone which totaled approximately $74 million and reduced
WMECO's earnings by approximately $43 million. These costs included replacement
power, higher 1996 Millstone operation and maintenance costs and a reserve
recognized in 1996 for 1997 expenditures to return the Millstone units to
service. These decreases were partially offset by higher retail sales and lower
regulatory asset amortization.
Retail kilowatt-hour sales increased by 2.7 percent in 1996 as a result of
modest economic growth. In 1997, management expects that the Massachusetts
economy will continue to experience modest economic growth.
MILLSTONE
OUTAGES
WMECO has an 19 percent ownership interest in Millstone 1 and 2 and a 12.24
percent ownership interest in Millstone 3. Millstone 1, 2 and 3 have been out of
service since November 4, 1995, February 21, 1996, and March 30, 1996,
respectively.
Subsequent to its January 31, 1996, announcement that Millstone had been placed
on its watch list, the Nuclear Regulatory Commission (NRC) has stated that the
units cannot return to service until independent, third-party verification teams
have reviewed the actions taken to improve the design, configuration and
employee concerns issues that prompted the NRC to place the units on its watch
list. Upon successful completion of these reviews, the NRC must approve the
restart of each unit through a formal commission vote.
Management took several key steps toward improving NU's nuclear program during
1996 and will continue to place a high priority on its recovery in 1997. The NU
Board of Trustees formed a committee in April, 1996, to provide high-level
oversight of the safety and effectiveness of NU's nuclear operations, progress
toward resolving open NRC issues and progress in resolving employee, community
and customer concerns. In September, 1996, Bruce D. Kenyon was appointed
President and Chief Executive Officer of Northeast Nuclear Energy Company
(NNECO), a wholly-owned subsidiary of NU that operates Millstone, and retired
Admiral David M. Goebel was selected to serve as Vice President for Nuclear
Oversight. In early 1997, Neil S. Carns was selected to serve as Senior Vice
President and Chief Nuclear Officer to oversee Millstone operations. Shortly
after his arrival, Mr. Kenyon unveiled a reorganization of NU's nuclear
organization that includes executives loaned from unaffiliated utility
companies. The new organization is intended to establish direct accountability
for performance at each of the nuclear units that the NU system operates and
includes a recovery team for each Millstone unit.
Under the new nuclear organization, each unit's recovery team will be working
toward restart of its respective unit simultaneously with the other two units.
Management estimates that one of the units will be ready for NNECO to request
the NRC's approval for restart in the third quarter of 1997, with the second and
third units ready in the fourth quarter of 1997 and the first quarter of 1998,
respectively. Subsequent to NNECO's request to restart any of the units, the NRC
will require a period of time to assess the results of the reviews performed by
the NRC and the independent third-party teams. Management cannot estimate when
the NRC will allow any of the units to restart, however, it hopes to have at
least one unit operating in the second half of 1997. A period of time will be
required subsequent to restart for each unit to return to operating at full
power.
Higher costs related to the Millstone outages will continue throughout 1997.
Monthly replacement power costs for WMECO are projected to average approximately
$5 million in 1997, while all three Millstone units remain out of service.
Replacement power costs for the Millstone units expensed in 1996 were $41
million, which was a substantial portion of the total 1996 replacement power
costs. WMECO will continue to expense its replacement power costs in 1997.
Nonfuel operation and maintenance costs for WMECO's share of Millstone to be
expensed in 1997 are estimated to be $73 million. A total of $76 million was
expensed in 1996 for nonfuel operation and maintenance costs for Millstone,
including $21 million for incremental costs related to the outages and $12
million reserved for future costs. Nonfuel operation and maintenance costs have
been, and will continue to be, absorbed through WMECO's current rates.
Although WMECO is not precluded from seeking rate recoveries in the future,
management has committed not to seek rate recovery for the portion of these
costs attributable to failure to meet industry standards in operating Millstone.
In light of that commitment, WMECO will not seek rate recovery for a substantial
portion of these costs. Management does not currently intend to request any such
recoveries until after the Millstone units begin returning to service;
therefore, it is unlikely that any additional revenues from any permitted
recovery of these costs will be available to contribute to funding the recovery
efforts while the units are out of service.
Under its present planning assumptions, management believes WMECO has sufficient
funds to restore the Millstone units to service and purchase replacement power.
See "Rate Matters" for further information on the recovery of outage-related
costs. See "Liquidity and Capital Resources" for further information regarding
WMECO's liquidity.
As a result of the nuclear situation, a number of civil lawsuits and criminal
investigations have been initiated, including shareholder litigation. In
addition, there is the potential for claims by the non-NU owners of Millstone 3
for the costs associated with the current outage. To date, no reserves have been
established for existing or potential litigation. See the "Notes to Financial
Statements" Note 11B, for further information on litigation.
CAPACITY
During 1996 and continuing into 1997, the NU system companies have taken
measures to improve their capacity position, including obtaining additional
generating capacity, improving the availability of NU's generating units and
improving the NU system's transmission capability.
Assuming normal weather conditions and generating unit availability, management
expects that the NU system will have sufficient capacity to meet peak load
demands even if Millstone is not operational at any time through the summer of
1997. If there are high levels of unplanned outages at other units in New
England, or if any of the system's transmission lines used to import power from
other states are unavailable, at times of peak load demand, WMECO and the other
New England utilities may have to resort to operating procedures designed to
reduce customer demand. Uncertainties associated with having sufficient capacity
through the summer of 1997 include: a Seabrook refueling outage scheduled for 49
days beginning on May 10, 1997; the availability of Maine Yankee, which was put
on the NRC's watch list in January, 1997, and is currently not expected to
return to service earlier than late summer 1997; and the timing of the repairs
to the Long Island Cable which is capable of providing as much as 300 megawatts
of transmission capability.
See the "Notes to Financial Statements" Note 11B, for further information on
Maine Yankee.
LIQUIDITY AND CAPITAL RESOURCES
During 1996, WMECO took various actions to ensure that it will have access to
adequate cash resources, at reasonable cost. WMECO established a facility under
which it may sell up to $40 million of its billed and unbilled accounts
receivable. As of February 21, 1997, $15 million had been sold using this
facility. Additionally, NU, The Connecticut Light and Power Company (CL&P) and
WMECO entered into a new $313 million three-year revolving credit agreement (the
New Credit Agreement). Under the New Credit Agreement, NU has a contractual
short-term borrowing limit of $150 million, CL&P has a limit of $313 million and
WMECO has a limit of $150 million. The overall limit for all borrowers is $313
million.
Management believes that the borrowing facilities that are currently in place
provide the system companies with adequate access to the funds needed to bring
Millstone back to service if the units begin operating close to the currently
envisioned schedules, and if the other assumptions on which management has based
its planning do not change substantially.
Some of the borrowing facilities contain financial covenants that must be
satisfied before borrowings can be made and for outstanding borrowings to remain
outstanding. Through February 21, 1997, CL&P and WMECO have satisfied all
financial covenants required under their respective borrowing facilities, but NU
needed and obtained a limited waiver of an interest coverage covenant that had
to be satisfied for NU to borrow under the New Credit Agreement.
NU, CL&P and WMECO are currently maintaining their access to the New Credit
Agreement under a written arrangement, which expires March 28, 1997, unless
extended by mutual consent, under which NU agreed not to borrow more than $27
million against the facility for a period of time. In addition, NU agreed to
enter into an interim written arrangement whereby NU, CL&P and WMECO will seek
regulatory approval for certain amendments in order to maintain access to the
New Credit Agreement through its maturity date. It is anticipated that these
amendments will include (i) CL&P and WMECO providing lenders first mortgage
bonds as collateral for specified periods and subject to specified terms for
releasing the collateral, (ii) revised financial covenants that are consistent
with NU's, CL&P's and WMECO's current financial forecasts and (iii) an upfront
payment to the lenders in order to maintain commitments under the New Credit
Agreement.
The holders of $38 million of notes issued by NU's real estate company (Rocky
River Realty Company or RRR) are entitled to require that RRR purchase the notes
because, as of December 31, 1996, Public Service Company of New Hampshire and
North Atlantic Energy Corporation were rated below investment grade; these notes
are guaranteed by NU. NU is currently engaged in discussions with the
noteholders regarding this issue. See the "Notes to Financial Statements" Note
11G, for further information on these notes.
During 1996, Standard & Poor's Ratings Group (S&P) and Moody's Investors Service
(Moody's) downgraded all non-New Hampshire NU system securities at least once,
and in some cases twice, as a direct result of the Millstone outages. As of
December 31, 1996, the CL&P and WMECO first mortgage bonds were the only
securities on the NU system rated at investment grade. S&P and Moody's are
reviewing all NU system securities for further downgrades. These actions will
adversely affect the availability and cost of funds for the NU system companies.
Cash provided from operations decreased by approximately $20 million in 1996,
primarily due to higher cash operating costs related to the nuclear outages,
partially offset by higher retail sales and lower interest charges. Cash flows
from operations were also impacted by a sharp increase in the level of accounts
payable caused principally by costs related to a severe December storm and costs
associated with the Millstone outages that had not been paid by year end. Net
cash used for financing activities decreased by approximately $26 million in
1996, primarily due to lower reacquisitions and retirements of long-term debt
and lower cash dividend payments on common shares, partially offset by higher
reacquisitions and retirements of preferred stock. Cash used for investments
increased by approximately $7 million in 1996, primarily due to lower loan
repayments from other companies under the NU system Money Pool, partially offset
by lower construction expenditures in 1996.
If the return to service of one or more of the Millstone units is delayed
substantially, or if the needed waivers or modifications discussed above are not
forthcoming on reasonable terms, or if some borrowing facilities become
unavailable because of difficulties in meeting borrowing conditions, or if the
system encounters additional significant costs or other significant deviations
from management's current assumptions, the currently available borrowing
facilities could be insufficient to meet all of the system's cash requirements.
In those circumstances, management would take actions to reduce costs and cash
outflows and would attempt to take other actions to obtain additional sources of
funds. The availability of these funds would be dependent upon the general
market conditions and the NU system's credit and financial condition at the
time.
See the "Notes to Financial Statements" Notes 11E, 6 and 11F, for information on
construction, long-term debt funding and long-term contractual requirements.
RESTRUCTURING
The movement toward electric industry restructuring continues to gain momentum
nationally as well as within Massachusetts. Factors that are driving the move
toward restructuring, in the Northeast in particular, include legislative and
regulatory actions and relatively high electricity prices. These actions will
impact the way that WMECO has historically conducted its business. Although
WMECO continues to operate under cost-of-service based regulation, various
restructuring initiatives in Massachusetts have created uncertainty with respect
to future rates and the recovery of strandable investments. Strandable
investments are regulatory assets or other assets that would not be economical
in a competitive environment. WMECO has exposure to strandable investments based
on its investment in high-priced nuclear generating plants, state mandated
purchased power arrangements that are priced above the market and significant
regulatory assets that represent costs deferred by state regulators for future
recovery. WMECO's exposure to strandable investments and purchased power
obligations exceeds its shareholder's equity. WMECO's ability to compete in a
restructured environment would be negatively affected unless WMECO was able to
recover substantially all of these past investments and commitments.
In December, 1996, the Massachusetts Department of Public Utilities (DPU) issued
its Model Rules on Restructuring (Model Rules) that set forth the framework for
full customer choice of energy suppliers beginning January 1, 1998, and proposed
legislation to support the DPU's framework. After January 1, 1998, the DPU has
stated that it will no longer set rates for competitive suppliers of generation.
The DPU also reiterated its concern for the maintenance of the current level of
overall system reliability by stating that it will continue to regulate
distribution companies. In March, 1997, WMECO filed "unbundled" bills (separate
charges on bills for generation, transmission, distribution and access) with the
DPU, as required by the Model Rules.
The Model Rules require a number of statutory changes be enacted in order to
implement the rules. Additionally, the Massachusetts General Court has
established a legislative task force to review restructuring during the 1997
legislative session. The Massachusetts legislature has given no formal
indication as to whether it will enact the statutory changes requested by the
DPU. It is unclear at this time how the DPU will proceed if the requested
statutory changes are not enacted.
While the DPU's Model Rules indicate that utilities will have a reasonable
opportunity to recover strandable investments, the criteria to be used in this
process will likely be subject to review in a rate proceeding. Management
believes that it is entitled to full recovery of its prudently incurred costs,
including regulatory assets and other strandable investments, based on the
general nature of public utility industry cost-of-service based regulation.
POTENTIAL ACCOUNTING IMPACTS
WMECO follows accounting principles in accordance with Statement of Financial
Accounting Standards (SFAS) 71, "Accounting for the Effects of Certain Types of
Regulation," which allows the economic effects of rate regulation to be
reflected. Under these principles, regulators may permit incurred costs for
certain events or transactions, which would be treated as expenses by
nonregulated enterprises, to be deferred as regulatory assets and recovered
through revenues at a later date.
If future competition or regulatory actions cause any portion of its operations
to no longer be subject to SFAS 71, WMECO would no longer be able to recognize
regulatory assets and liabilities for that portion of its business unless those
costs would be recoverable by a portion of the business remaining on cost-of-
service based regulation. Under its current regulatory environment, management
believes that WMECO's use of SFAS 71 remains appropriate.
If events create uncertainty about the recoverability of any of WMECO's
remaining long-lived assets, WMECO would be required to determine the fair value
of its long-lived assets, including regulatory assets, in accordance with SFAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." The implementation of SFAS 121 did not have a
material impact on the company's financial position or results of operations as
of December 31, 1996. Management believes that it is probable that WMECO will
recover its investments in long-lived assets through future revenues. This
conclusion may change in the future as competitive factors influence wholesale
and retail pricing in the electric utility industry or if the cost-of-service
based regulatory structure were to change.
See the "Notes to Financial Statements" Note 1H, for further information on
regulatory accounting.
COMPETITION
In addition to legislative and regulatory actions, competition in the electric
utility industry continues to grow at a rapid pace as a result of technological
advances; relatively high electricity prices in certain regions of the country,
including New England; surplus generating capacity; and the increased
availability of natural gas. Competitive forces in the electric utility industry
have already caused some customers to choose alternative energy suppliers or
relocate outside of WMECO's service territory. In response, WMECO is preparing
for a competitive environment by expanding previously established programs and
developing new ways to fortify its relationships with existing customers and
attract new customers, both within and outside its service territory.
During 1996, WMECO continued to negotiate long-term power supply arrangements
with certain large commercial and industrial retail customers who require an
incentive to locate or expand their operations within WMECO's service territory,
are considering leaving or reducing operations in the service territory, are
facing short-term financial problems, or are considering generating their own
electricity. Approximately 17 percent of WMECO's commercial and industrial
retail revenues were under negotiated rate agreements at the end of 1996. In
1996, these negotiated rate reductions amounted to approximately $6 million,
down slightly from $7 million in 1995. These activities are expected to continue
in 1997.
During 1996, the NU system devoted significantly more resources to its Retail
Marketing Organization, whose primary mission is to provide value added energy
solutions to customers. Training was emphasized for its 170 new employees, the
majority of whom are account executives charged with developing tailored
solutions for NU's customers and positioning NU as a valuable partner for the
future. The ability of these account executives to obtain an intimate
understanding of customers' needs and concerns and provide value added energy
solutions will play a key role in the NU system's ability to effectively compete
in the future.
NU subsidiaries competed actively in two pilot retail access programs that were
initiated in New England in 1996. In a pilot covering four Massachusetts
communities outside of WMECO's jurisdiction, NU attained approximately 60
percent of the total energy market share and 70 percent of the commercial energy
market share. In addition to exposing NU to a competitive environment, these
pilots have enabled NU to develop relationships with customers outside of its
service territory and to secure energy contracts with major commercial
customers.
Revenue erosion from traditional retail electric sales may be significant after
restructuring. While margins on retail electric sales are likely to be thin,
utilities can compete successfully if they are allowed to recover their
strandable investments. During 1997 and beyond, NU will continue to participate
in state sanctioned retail access programs; invest in new unregulated
businesses; develop new energy-related products and services; and pursue
strategic alliances with companies in various energy-related fields, including
fuel supply and management, power quality, energy efficiency and load management
services. Strategic alliances will allow NU to enter markets that provide access
to new product lines and technologies that complement NU's current products and
services.
RATE MATTERS
In April, 1996, the DPU approved a settlement (the Agreement) that included the
continuation through February, 1998, of the 2.4 percent rate reduction
instituted in June, 1994. Additionally, the Agreement terminated certain pending
and potential reviews of WMECO's generating plant performance and accelerated
its amortization of strandable generation assets by approximately $6 million in
1996 and $10 million in 1997. The Agreement did not have a material impact on
earnings for 1996.
In February, 1997, the DPU approved a joint settlement proposed by WMECO and the
Massachusetts Attorney General that provides for a continuation of WMECO's
August, 1996, fuel adjustment charge (FAC) through August, 1997, and stipulates
that WMECO will not seek carrying charges on any deferred fuel costs not
currently recovered as a result of maintaining the prior FAC rate. In accepting
this settlement, the DPU deferred any inquiry into WMECO's replacement power
costs related to the Millstone outages. Management does not expect to seek
recovery of a substantial portion of these costs.
NUCLEAR DECOMMISSIONING
WMECO has a 9.5 percent ownership interest in the Connecticut Yankee nuclear
generating facility (CY or the plant). On December 4, 1996, the CY Board of
Directors voted unanimously to cease permanently the production of power at the
plant. The decision to retire CY from commercial operation was based on an
economic analysis of the costs of operating it compared to the costs of closing
it and incurring replacement power costs over the remaining period of the
plant's operating license, which expires in 2007. The economic analysis showed
that closing the plant and incurring replacement power costs produced
substantial savings.
CY has undertaken a number of regulatory filings intended to implement the
decommissioning. In late December, 1996, CY filed an amendment to its power
contracts with the Federal Energy Regulatory Commission (FERC) to clarify the
obligations of its purchasing utilities following the decision to cease power
production. At December 31, 1996, WMECO's share of these obligations was
approximately $73 million, including the cost of decommissioning and the
recovery of existing assets. Management expects that WMECO will continue to be
allowed to recover such FERC-approved costs from its customers. Accordingly,
WMECO has recognized its share of the estimated costs as a regulatory asset,
with a corresponding obligation, on its Balance Sheets.
WMECO's estimated cost to decommission its shares of Millstone 1, 2 and 3 is
approximately $196 million in year end 1996 dollars. These costs are being
recognized over the lives of the respective units with a portion being currently
recovered through rates. As of December 31, 1996, the market value of the
contributions already made to the decommissioning trusts, including their
investment returns, was approximately $84 million.
See the "Notes to Financial Statements" Note 2, for further information on
nuclear decommissioning, including WMECO's share of costs to decommission the
regional nuclear generating units.
ENVIRONMENTAL MATTERS
WMECO is potentially liable for environmental cleanup costs at a number of sites
inside and outside its service territory. To date, the future estimated
environmental remediation liability has not been material with respect to the
earnings or financial position of WMECO. At December 31, 1996, WMECO had
recorded an environmental reserve of approximately $1 million, the most probable
amount as required by SFAS 5, "Accounting for Contingencies."
See the "Notes to Financial Statements" Note 11C, for further information on
environmental matters.
RESULTS OF OPERATIONS
Income Statement Variances
(Millions of Dollars)
1996 over/(under) 1995 1995 over/(under) 1994
Amount Percent Amount Percent
Operating revenues $ 1 -% $(1) -%
Fuel, purchased and net
interchange power 29 33 19 29
Other operation 6 4 12 9
Maintenance 19 50 2 6
Amortization of
regulatory assets,
net (10) (53) (10) (33)
Federal and state
income taxes (9) (64) (19) (58)
Other, net - - (2) (67)
Interest on long-
term debt (3) (10) (1) (3)
Net income (35) (90) (10) (21)
(a) Percentage greater than 100
OPERATING REVENUES
Total operating revenues increased in 1996, primarily due to higher retail
sales, partially offset by lower fuel and conservation recoveries. Retail
kilowatt-hour sales increased 2.7 percent ($9 million) primarily due to modest
economic growth in 1996. Fuel recoveries decreased $6 million, primarily due to
the timing of the recovery of costs under the company's fuel clause.
Conservation recoveries decreased approximately $6 million primarily due to
lower demand side management costs.
Total operating revenues decreased in 1995, primarily due to regulatory
decisions and lower other revenues, partially offset by higher fuel recoveries.
Revenues related to regulatory decisions decreased $2 million, primarily due to
the effects of the June 1994 retail rate reduction, partially offset by higher
demand side management costs. Other revenues include higher price discounts to
customers in 1995. Fuel recoveries increased $7 million, primarily due to higher
energy costs, partially offset by lower interchange revenues.
FUEL, PURCHASED AND NET INTERCHANGE POWER
Fuel, purchased and net interchange power expense increased in 1996, primarily
due to higher replacement power costs due to the nuclear outages, partially
offset by the timing of the recognition of costs under the company's fuel clause
and lower nuclear generation.
Fuel, purchased and net interchange power expense increased in 1995, primarily
due to a one-time benefit in May, 1994, from a rate case settlement agreement
and higher energy costs in 1995 as a result of the extended Millstone 2 outage.
OTHER OPERATION AND MAINTENANCE
Other operation and maintenance expenses increased in 1996, primarily due to
higher costs associated with the Millstone outages ($33 million, including $12
million reserved for future costs), partially offset by lower costs for demand
side management programs and a 1995 work stoppage.
Other operation and maintenance expenses increased in 1995, primarily due to
higher capacity charges from the regional nuclear units primarily due to Maine
Yankee, which was in an extended refueling outage throughout 1995; higher
benefit costs; higher demand side management programs; higher 1995 storm costs;
higher costs associated with a work stoppage; and higher outside services
employed, partially offset by lower reserves for excess/obsolete inventory and
lower maintenance costs at the company's fossil units.
AMORTIZATION OF REGULATORY ASSETS, NET
Amortization of regulatory assets, net decreased in 1996, primarily due to the
completion of the amortization of the Millstone 3 phase-in in 1995 and unuseful
investment in June, 1996, partially offset by higher amortization as a result of
the 1996 rate settlement.
Amortization of regulatory assets, net decreased in 1995, primarily due to the
completion of the company's amortization of Millstone 3 phase-in costs in June,
1995.
FEDERAL AND STATE INCOME TAXES
Federal and state income taxes decreased in 1996, primarily due to lower 1996
book taxable income, partially offset by 1995 tax benefits from a favorable tax
ruling and the expiration of the 1991 federal statute of limitations.
Federal and state income taxes decreased in 1995, primarily due to tax benefits
from a favorable tax ruling, the expiration of the 1991 federal statute of
limitations and lower book taxable income.
OTHER, NET
Although the change in 1996 was not significant, other, net decreased in 1995,
primarily because of lower deferred return due to the completion of the
Millstone 3 phase-in in 1995.
INTEREST ON LONG-TERM DEBT
Interest on long-term debt decreased in 1996, primarily due to lower average
interest rates. The change in 1995 was not significant.
Western Massachusetts Electric Company
SELECTED FINANCIAL DATA (a)
1996 1995 1994 1993 1992
(Thousands of Dollars)
Operating Revenues.... $ 421,337 $ 420,434 $ 421,477 $ 415,055 $ 410,720
Operating Income....... 26,023 63,064 70,940 60,348 60,563
Net Income............. 3,922 39,133 49,457 40,594(b) 37,022
Cash Dividends on
Common Stock......... 16,494 30,223 29,514 28,785 29,536
Total Assets........... 1,190,137 1,142,346 1,183,618 1,204,642 1,130,684
Long-Term Debt (c)..... 349,442 347,470 379,969 393,232 392,976
Preferred Stock Not
Subject to Mandatory
Redemption........... 20,000 53,500 68,500 73,500 73,500
Preferred Stock Subject
to Mandatory
Redemption(c)......... 21,000 24,000 24,675 27,000 28,500
Obligations Under
Capital Leases(c)..... 32,234 36,011 36,797 36,902 41,509
(a) Reclassifications of prior data have been made to conform with the current
presentation.
(b)Includes the cumulative effect of change in accounting for municipal
property tax expense, which increased earnings for common shares by
$3.9 million.
(c) Includes portion due within one year.
STATEMENTS OF QUARTERLY FINANCIAL DATA (Unaudited)
Quarter Ended (a)
1996 March 31 June 30 Sept. 30 Dec. 31
Operating Revenues....... $114,797 $102,602 $ 99,866 $104,072
Operating Income (Loss).. $ 13,692 $ 9,377 $ 4,327 $ (1,373)
Net Income (Loss)........ $ 8,109 $ 4,016 $ (396) $ (7,807)
1995
Operating Revenues....... $106,684 $100,593 $107,960 $105,197
Operating Income......... $ 18,085 $ 8,977 $ 19,799 $ 16,203
Net Income............... $ 12,076 $ 3,289 $ 14,141 $ 9,627
STATISTICS
Gross Electric Average
Utility Plant Annual
December 31, Use Per Electric
(Thousands kWh Sales Residential Customers Employees
of Dollars) (Millions) Customer(kWH) (Average) (December 31)
1996 $1,303,361 4,626 7,335 194,705 497
1995 1,285,269 4,846 7,105* 193,964 527
1994 1,271,513 4,978 7,433 193,187 617
1993 1,242,927 4,715 7,351 192,542 657
1992 1,214,386 4,155 7,433 191,920 739
*Effective January 1, 1996, the amounts shown reflect billed and unbilled
sales. 1995 has been restated to reflect this change.
EXHIBIT 13.4
1996 Annual Report
Public Service Company of New Hampshire
Index
Contents Page
Balance Sheets........................................................ 2-3
Statements of Income.................................................... 4
Statements of Cash Flows................................................ 5
Statements of Common Stockholder's Equity............................... 6
Notes to Financial Statements........................................... 7
Report of Independent Public Accountants................................ 37
Management's Discussion and Analysis of Financial
Condition and Results of Operations................................... 39
Selected Financial Data................................................. 49
Statistics.............................................................. 51
Statements of Quarterly Financial Data.................................. 51
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
BALANCE SHEETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
At December 31, 1996 1995
- --------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at cost:
Electric............................................. $ 1,877,955 $ 1,863,004
Less: Accumulated provision for
depreciation (Note 1F) ..................... 552,780 513,244
------------- -------------
1,325,175 1,349,760
Unamortized acquisition costs (Note 1J).............. 491,709 588,910
Construction work in progress........................ 11,032 15,975
Nuclear fuel, net.................................... 1,313 1,585
------------- -------------
Total net utility plant............................ 1,829,229 1,956,230
------------- -------------
Other Property and Investments:
Nuclear decommissioning trusts, at market............ 3,229 2,436
Investments in regional nuclear generating
companies and subsidiary company,
at equity (Note 1E)................................. 19,578 19,300
Other, at cost....................................... 1,835 1,103
------------- -------------
24,642 22,839
------------- -------------
Current Assets:
Cash................................................. 1,015 117
Notes receivable from affiliated companies........... 18,250 19,100
Receivables, less accumulated provision for
uncollectible accounts of $1,700,000 in 1996
and of $1,582,000 in 1995.......................... 105,381 91,535
Accounts receivable from affiliated companies........ 32,452 12,337
Taxes receivable from affiliated companies........... 613 -
Accrued utility revenues............................. 36,317 33,984
Fuel, materials, and supplies, at average cost....... 44,852 41,717
Prepayments and other................................ 24,016 11,196
------------- -------------
262,896 209,986
------------- -------------
Deferred Charges:
Regulatory assets (Note 1H).......................... 684,504 680,587
Deferred receivable from affiliated
company (Note 10G)................................. 33,284 33,284
Unamortized debt expense............................. 12,731 14,165
Other................................................ 3,926 3,396
------------- -------------
734,445 731,432
------------- -------------
Total Assets..................................... $ 2,851,212 $ 2,920,487
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
At December 31, 1996 1995
- ---------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock--$1 par value.
Authorized and outstanding 1,000 shares.............. $ 1 $ 1
Capital surplus, paid in.............................. 423,058 422,385
Retained earnings..................................... 174,691 143,039
------------- -------------
Total common stockholder's equity............ 597,750 565,425
Preferred stock subject to mandatory redemption....... 100,000 125,000
Long-term debt........................................ 686,485 686,485
------------- -------------
Total capitalization......................... 1,384,235 1,376,910
------------- -------------
Obligations Under Seabrook Power Contracts
and Other Capital Leases (Notes 2 and 3)............... 871,707 874,292
------------- -------------
Current Liabilities:
Long-term debt and preferred stock--current
portion.............................................. 25,000 172,500
Obligations under Seabrook Power Contracts and other
capital leases--current portion
(Notes 2 and 3)...................................... 42,910 40,996
Accounts payable...................................... 37,675 49,863
Accounts payable to affiliated companies.............. 31,130 26,656
Accrued taxes......................................... 81 798
Accrued interest...................................... 7,992 9,648
Accrued pension benefits.............................. 44,790 38,606
Other................................................. 37,516 19,077
------------- -------------
227,094 358,144
------------- -------------
Deferred Credits:
Accumulated deferred income taxes (Note 1I)........... 258,317 229,057
Accumulated deferred investment tax credits........... 4,511 5,060
Deferred contractual obligations (Note 4)............. 50,271 18,814
Deferred revenue from affiliated company
(Note 10G)........................................... 33,284 33,284
Other................................................. 21,793 24,926
------------- -------------
368,176 311,141
------------- -------------
Commitments and Contingencies (Note 10)
------------- -------------
Total Capitalization and Liabilities......... $ 2,851,212 $ 2,920,487
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
- -------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues................................. $1,110,169 $ 979,971 $ 922,039
----------- ---------- ----------
Operating Expenses:
Operation --
Fuel, purchased and net interchange power..... 356,629 257,008 222,801
Other......................................... 327,287 313,604 303,271
Maintenance...................................... 45,728 42,244 43,725
Depreciation..................................... 42,983 44,337 38,703
Amortization of regulatory assets, net........... 56,884 55,547 55,319
Federal and state income taxes (Note 9).......... 80,340 69,817 68,088
Taxes other than income taxes.................... 45,123 41,786 38,046
----------- ---------- ----------
Total operating expenses................... 954,974 824,343 769,953
----------- ---------- ----------
Operating Income................................... 155,195 155,628 152,086
----------- ---------- ----------
Other Income:
Equity in earnings of regional nuclear
generating companies and subsidiary company.... 2,075 1,645 2,079
Other, net....................................... 8,075 3,162 629
Income taxes..................................... (7,723) (770) (546)
----------- ---------- ----------
Other income, net.......................... 2,427 4,037 2,162
----------- ---------- ----------
Income before interest charges............. 157,622 159,665 154,248
----------- ---------- ----------
Interest Charges:
Interest on long-term debt....................... 57,557 76,320 76,410
Other interest................................... 3,163 90 394
----------- ---------- ----------
Interest charges, net...................... 60,720 76,410 76,804
----------- ---------- ----------
Net Income......................................... $ 96,902 $ 83,255 $ 77,444
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net Income.................................................. $ 96,902 $ 83,255 $ 77,444
Adjustments to reconcile to net cash
from operating activities:
Depreciation.............................................. 42,983 44,337 38,703
Deferred income taxes and investment tax credits, net..... 94,646 69,986 67,047
Recoverable energy costs, net of amortization............. 31,663 (15,266) (81,206)
Amortization of acquisition costs......................... 56,884 55,547 55,319
Other sources of cash..................................... 65,922 15,973 3,213
Other uses of cash........................................ (51,188) - (4,456)
Changes in working capital:
Receivables and accrued utility revenues.................. (36,907) (10,506) (3,205)
Fuel, materials and supplies.............................. (3,135) (4,264) 3,734
Accounts payable.......................................... (7,714) 2,375 18,598
Accrued taxes............................................. (717) (3,506) 4,182
Other working capital (excludes cash)..................... (12,659) 16 742
----------- ----------- -----------
Net cash flows from operating activities...................... 276,680 237,947 180,115
----------- ----------- -----------
Financing Activities:
Net decrease in short-term debt............................. - - (2,500)
Reacquisitions and retirements of long-term debt............ (172,500) (141,000) (94,000)
Cash dividends on preferred stock........................... (13,250) (13,250) (13,250)
Cash dividends on common stock.............................. (52,000) (52,000) -
----------- ----------- -----------
Net cash flows used for financing activities.................. (237,750) (206,250) (109,750)
----------- ----------- -----------
Investment Activities:
Investment in plant:
Electric utility plant.................................... (37,480) (46,672) (39,721)
Nuclear fuel.............................................. 129 (184) (1,249)
----------- ----------- -----------
Net cash flows used for investments in plant................ (37,351) (46,856) (40,970)
NU System Money Pool........................................ 850 15,900 (35,000)
Investment in nuclear decommissioning trusts................ (521) (489) (368)
Other investment activities, net............................ (1,010) (431) 300
----------- ----------- -----------
Net cash flows used for investments........................... (38,032) (31,876) (76,038)
----------- ----------- -----------
Net Increase (Decrease) in Cash For The Period................ 898 (179) (5,673)
Cash - beginning of period.................................... 117 296 5,969
----------- ----------- -----------
Cash - end of period.......................................... $ 1,015 $ 117 $ 296
=========== =========== ===========
Supplemental Cash Flow Information:
Cash paid (received) during the year for:
Interest, net of amounts capitalized........................ $ 58,835 $ 74,543 $ 74,507
=========== =========== ===========
Income taxes................................................ $ (457) $ 1,369 $ 167
=========== =========== ===========
Increase in obligations:
Seabrook Power Contracts and other capital leases........... $ 93 $ 28,028 $ 53,266
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Capital
Common Surplus, Retained
Stock Paid In Earnings Total
- ---------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Balance at January 1, 1994............... $ 1 $421,245 $ 60,840 $482,086
Net income for 1994.................. 77,444 77,444
Cash dividends on preferred stock.... (13,250) (13,250)
Capital stock expenses, net.......... 539 539
-------- --------- --------- ---------
Balance at December 31, 1994............. 1 421,784 125,034 546,819
Net income for 1995.................. 83,255 83,255
Cash dividends on preferred stock.... (13,250) (13,250)
Cash dividends on common stock....... (52,000) (52,000)
Capital stock expenses, net.......... 601 601
-------- --------- --------- ---------
Balance at December 31, 1996............. 1 422,385 143,039 565,425
Net income for 1996.................. 96,902 96,902
Cash dividends on preferred stock.... (13,250) (13,250)
Cash dividends on common stock....... (52,000) (52,000)
Capital stock expenses, net.......... 673 673
-------- --------- --------- ---------
Balance at December 31, 1996............. $ 1 $423,058 $174,691 $597,750
======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ABOUT PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
Public Service Company of New Hampshire (PSNH or the company), The
Connecticut Light and Power Company (CL&P), Western Massachusetts
Electric Company (WMECO), North Atlantic Energy Corporation (NAEC), and
Holyoke Water Power Company (HWP) are the operating subsidiaries
comprising the Northeast Utilities system (the system) and are wholly
owned by Northeast Utilities (NU).
The system furnishes retail electric service in Connecticut, New
Hampshire, and western Massachusetts through CL&P, PSNH, WMECO, and
HWP. A fifth subsidiary, NAEC, sells all of its capacity from Seabrook
1 (a 1,148-MW nuclear generating unit) to PSNH under two long-term
contracts (the Seabrook Power Contracts). In addition to its retail
service, the system furnishes firm and other wholesale electric
services to various municipalities and other utilities. The system
serves about 30 percent of New England's electric needs and is one of
the 20 largest electric utility systems in the country as measured by
revenues.
Other wholly owned subsidiaries of NU provide support services for the
system companies and, in some cases, for other New England utilities.
Northeast Utilities Service Company (NUSCO) provides centralized
accounting, administrative, information resources, engineering,
financial, legal, operational, planning, purchasing and other services
to the system companies. North Atlantic Energy Service Corporation
acts as agent for CL&P and NAEC, and has operational responsibilities
for the Seabrook 1 (Seabrook) nuclear generating facility. Northeast
Nuclear Energy Company (NNECO) acts as agent for the system companies
in operating the Millstone nuclear generating facilities.
B.PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain reclassifications of prior years' data have been made to
conform with the current year's presentation.
All transactions among affiliated companies are on a recovery of cost
basis which may include amounts representing a return on equity, and
are subject to approval by various federal and state regulatory
agencies.
C. PUBLIC UTILITY REGULATION
NU is registered with the Securities and Exchange Commission (SEC) as a
holding company under the Public Utility Holding Company Act of 1935
(1935 Act), and it and its subsidiaries, including the company, are
subject to the provisions of the 1935 Act. Arrangements among the
system companies, outside agencies and other utilities covering inter-
connections, interchange of electric power and sales of utility
property are subject to regulation by the Federal Energy Regulatory
Commission (FERC) and/or the SEC. The company is subject to further
regulation for rates, accounting and other matters by the FERC and/or
the New Hampshire Public Utilities Commission (NHPUC).
D.NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," which established accounting standards for evaluating and
recording asset impairment. The company adopted SFAS 121 as of January
1, 1996. See Note 1H, "Summary of Significant Accounting Policies -
Regulatory Accounting and Assets" for further information on the
regulatory impacts of the company's adoption of SFAS 121.
See Note 10C, "Commitments and Contingencies-Environmental Matters,"
for information on newly issued accounting and reporting standards
related to this area.
E.INVESTMENTS AND JOINTLY OWNED ELECTRIC UTILITY PLANT
Regional Nuclear Generating Companies: PSNH owns common stock of four
regional nuclear generating companies (Yankee companies). The Yankee
companies, with PSNH's ownership interests, are:
Connecticut Yankee Atomic Power Company (a) (CY) ................ 5.0%
Yankee Atomic Electric Company (a)(YAEC) ........................ 7.0
Maine Yankee Atomic Power Company (MY) .......................... 5.0
Vermont Yankee Nuclear Power Corporation (VY) ................... 4.0
(a)YAEC's and CY's nuclear power plants were shut down permanently on
February 26, 1992 and December 4, 1996, respectively.
PSNH's investments in the Yankee companies are accounted for on the
equity basis due to the company's ability to exercise significant
influence over their operating and financial policies.
The company's equity investments in the Yankee companies at December
31, 1996 are:
(Thousands of Dollars)
Connecticut Yankee Atomic Power Company ............ $ 5,558
Yankee Atomic Electric Company ..................... 1,634
Maine Yankee Atomic Power Company .................. 3,675
Vermont Yankee Nuclear Power Corporation ........... 2,100
$12,967
The electricity produced by MY and VY is committed substantially on the
basis of ownership interests and is billed pursuant to contractual
agreements. Under ownership agreements with the Yankee companies, PSNH
may be asked to provide direct or indirect financial support for one or
more of the companies. For more information on these agreements, see
Note 10F, "Commitments and Contingencies - Long-Term Contractual
Arrangements." For more information on the Yankee companies, see Note
4, "Nuclear Decommissioning" and Note 10B, "Commitments and
Contingencies - Nuclear Performance."
Millstone 3: PSNH has a 2.85 percent joint ownership interest in
Millstone 3, a 1,154-megawatt (MW) nuclear generating unit. As of
December 31, 1996 and 1995, plant-in-service included approximately
$118.7 million and $118.6 million, respectively, and the accumulated
provision for depreciation included approximately $29.4 million and
$26.5 million, respectively, for PSNH's share of Millstone 3. PSNH's
share of Millstone 3 expenses is included in the corresponding
operating expenses on the accompanying Statements of Income. For more
information on the Millstone 3 unit, see Note 10B, "Commitments and
Contingencies - Nuclear Performance."
Wyman Unit 4: PSNH has a 3.14 percent ownership interest in Wyman
Unit 4 (Wyman), a 632-MW oil-fired generating unit. At December 31,
1996 and 1995, plant-in-service included approximately $6.0 million and
the accumulated provision for depreciation included approximately $3.7
million and $3.5 million, respectively, for PSNH's share of Wyman.
PSNH's share of Wyman expenses is included in the corresponding
operating expenses on the accompanying Statements of Income.
F. DEPRECIATION
The provision for depreciation is calculated using the straight-line
method based on estimated remaining lives of depreciable utility
plant-in-service, adjusted for salvage value and removal costs, as
approved by the NHPUC or other appropriate regulatory agencies. Except
for major facilities, depreciation rates are applied to the average
plant-in-service during the period. Major facilities are depreciated
from the time they are placed in service. When plant is retired from
service, the original cost of plant, including costs of removal, less
salvage, is charged to the accumulated provision for depreciation. The
depreciation rates for the several classes of electric plant-in-service
are equivalent to a composite rate of 3.7 percent in 1996, 3.8 percent
in 1995 and 3.6 percent in 1994. See Note 4, "Nuclear Decommissioning,"
for information on nuclear plant decommissioning.
PSNH's nonnuclear generating facilities have limited service lives.
Plant may be retired in place or dismantled based upon expected future
needs, the economics of the closure and environmental concerns. The
costs of closure and removal are incremental costs and, for financial
reporting purposes, are accrued over the life of the asset as part of
depreciation. At December 31, 1996, the accumulated provision for
depreciation included approximately $31.1 million accrued for the cost
of removal, net of salvage for nonnuclear generation property.
G.REVENUES
Other than revenues under fixed-rate agreements negotiated with certain
wholesale, industrial and commercial customers and limited pilot retail
access programs, utility revenues are based on authorized rates applied
to each customer's use of electricity. In general, rates can be
changed only through a formal proceeding before the appropriate
regulatory commission. At the end of each accounting period, PSNH
accrues an estimate for the amount of energy delivered but unbilled.
H.REGULATORY ACCOUNTING AND ASSETS
The accounting policies of PSNH and the accompanying financial
statements conform to generally accepted accounting principles
applicable to rate regulated enterprises and reflect the effects of the
ratemaking process in accordance with SFAS 71, "Accounting for the
Effects of Certain Types of Regulation." Assuming a cost-of-service
based regulatory structure, regulators may permit incurred costs,
normally treated as expenses, to be deferred and recovered through
future revenues. Through their actions, regulators may also reduce or
eliminate the value of an asset, or create a liability. If any portion
of the company's operations were no longer subject to the provisions of
SFAS 71, as a result of a change in the cost-of-service based
regulatory structure or the effects of competition, the company would
be required to write off related regulatory assets and liabilities. The
company continues to believe that its use of regulatory accounting
remains appropriate.
SFAS 121 requires the evaluation of long-lived assets, including
regulatory assets, for impairment when certain events occur or when
conditions exist that indicate the carrying amounts of assets may not be
recoverable. SFAS 121 requires that any long-lived assets which are no
longer probable of recovery through future revenues be revalued based on
estimated future cash flows. If the revaluation is less than the book
value of the asset, an impairment loss would be charged to earnings.
The implementation of SFAS 121 did not have a material impact on the
company's financial position or results of operations as of December 31,
1996. Management continues to believe that it is probable that PSNH
will recover its investments in long-lived assets through future
revenues. This conclusion may change in the future as competitive
factors influence wholesale and retail pricing in the electric utility
industry or if the cost-of-service based regulatory structure were to
change.
The components of PSNH's regulatory assets are as follows:
At December 31, 1996 1995
(Thousands of Dollars)
Recoverable energy costs, net
(Note 1K)............................... $211,236 $220,093
Income taxes, net (note 1I).............. 151,431 192,690
Unrecovered contractual
obligations (Note 4)................... 50,271 18,814
Deferred costs, nuclear
plants (Note 2)........................ 269,233 246,586
Other.................................... 2,333 2,404
$684,504 $680,587
For more information on the Company's regulatory environment and the
potential impacts of restructuring, see Note 10A, "Commitments and
Contingencies - Restructuring," Note 12, "Subsequent Event," and
Management's Discussion and Analysis of Financial Condition and Results
of Operations (MD&A).
I. INCOME TAXES
The tax effect of temporary differences (differences between the
periods in which transactions affect income in the financial statements
and the periods in which they affect the determination of taxable
income) is accounted for in accordance with the ratemaking treatment of
the applicable regulatory commissions. The adoption of SFAS 109,
"Accounting for Income Taxes," in 1993 increased the company's net
deferred tax asset for net operating losses (NOLs) previously not
recognized. As the potential benefit is being given to customers
through rates, PSNH established an associated regulatory liability.
The adoption of SFAS 109 also increased deferred tax liabilities and as
it is probable that the increase in deferred tax liabilities will be
recovered from customers through rates, PSNH established a regulatory
asset.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, which give rise
to the accumulated deferred tax obligation is as follows:
At December 31, 1996 1995
(Thousands of Dollars)
Accelerated depreciation and
other plant-related differences .......... $225,263 $ 231,126
NOL carryforwards .......................... (94,149) (191,873)
Regulatory assets - income tax
gross up ................................. 68,652 85,192
Other ...................................... 58,551 104,612
$258,317 $ 229,057
At December 31, 1996, PSNH had a NOL carryforward of approximately $292
million, which can be used against PSNH's federal taxable income and
which, if unused, expires between the years 2000 and 2006. PSNH also
had Investment Tax Credit (ITC) carryforwards of $42 million, which if
unused, expires between the years 1997 and 2004. For a portion of the
carryforward amounts indicated above, the reorganization of PSNH under
Chapter 11 of the United States Bankruptcy Code limits the annual
amount of NOL and ITC carryforwards that may be used. Approximately
$31 million of the NOL and $11 million of the ITC carryforwards are
subject to this limitation. See Note 12, "Subsequent Event," for the
possible impacts on the company from the NHPUC's decision related to
industry restructuring.
J. UNAMORTIZED ACQUISITION COSTS
The unamortized acquisition costs represent the aggregate value placed by
the 1989 rate agreement with the state of New Hampshire (Rate
Agreement) on PSNH's assets in excess of the net book value of PSNH's
non-Seabrook assets, plus the $700-million value assigned to Seabrook
by the Rate Agreement, as part of the bankruptcy resolution on June 5,
1992 (Acquisition Date). The Rate Agreement provides for the recovery,
through rates, with a return, of the unamortized acquisition costs.
The Rate Agreement provides that $425 million of the unamortized
acquisition costs be amortized over the first seven years after PSNH's
May 16, 1991 reorganization from bankruptcy (Reorganization Date), with
the remaining amount to be amortized over the 20-year period after the
Reorganization Date. As of December 31, 1996, approximately $501.6
million of acquisition costs have been collected through rates.
K.RECOVERABLE ENERGY COSTS
Under the Energy Policy Act of 1992 (Energy Act), PSNH is assessed for
its proportionate share of the costs of decontaminating and
decommissioning uranium enrichment plants owned by the United States
Department of Energy (D&D assessment). The Energy Act requires that
regulators treat D&D assessments as a reasonable and necessary current
cost of fuel, to be fully recovered in rates, like any other fuel cost.
PSNH is currently recovering these costs through rates. As of December
31, 1996, PSNH's total D&D deferrals were approximately $0.2 million.
The Rate Agreement includes a comprehensive fuel and purchased power
adjustment clause (FPPAC) permitting PSNH to pass through to retail
customers, for a ten-year period that began in May, 1991, the retail
portion of differences between the fuel and purchased power costs
assumed in the Rate Agreement and PSNH's actual costs, which include
the costs related to the Seabrook Power Contracts and the Clean Air Act
Amendment. The cost components of the FPPAC are subject to a prudence
review by the NHPUC.
The costs associated with purchases from nonutility generators (NUGs)
over the level assumed in the Rate Agreement are deferred and recovered
through the FPPAC. PSNH has been renegotiating the rate orders
mandating the purchase of high-cost NUG power. The NHPUC has approved
an amendment to the Rate Agreement allowing settlement agreements to be
implemented with two wood-fired NUGs. Pursuant to the 1994 settlement
agreements, the two NUGs that were settled gave up their rights to sell
their output to PSNH in exchange for lump-sum cash payments totaling
approximately $40 million. The deferred buyout payments are included
as part of PSNH's recoverable energy costs. During the Rate
Agreement's fixed-rate period, all of the savings from the buyout will
be used to reduce PSNH's recoverable energy costs. At the end of the
fixed-rate period, 50 percent of the savings will be used to reduce the
recoverable energy costs, with the remainder reducing current rates.
PSNH has also reached tentative agreements with the six remaining wood-
fired NUGs. These agreements are subject to NHPUC approval. In
January, 1997, the NHPUC issued an order approving one of the six NUG
settlements. However, the conditions imposed within the order, along
with the uncertainty caused by industry restructuring proceedings, may
impede PSNH's ability to move forward with the settlements.
At December 31, 1996, PSNH's net recoverable energy costs were
approximately $211.2 million, including purchased power deferrals of
$183.4 million and the NUGs deferred buyout payments of $27.6 million.
For further information on recoverable energy costs, see the MD&A. See
Note 12, "Subsequent Event" for the possible impacts on the company of
the NHPUC's decision related to industry restructuring.
2. SEABROOK POWER CONTRACTS
PSNH and NAEC have entered into two power contracts that obligate PSNH to
purchase NAEC's 35.98 percent ownership of the capacity and output of
Seabrook for the term of Seabrook's Nuclear Regulatory Commission (NRC)
operating license. Under these power contracts, PSNH is obligated to pay
NAEC's cost of service during this period, regardless of whether Seabrook
1 is operating. NAEC's cost of service includes all of its Seabrook-
related costs, including operation and maintenance (O&M) expenses, fuel
expense, income and property tax expense, depreciation expense, certain
overhead and other costs and a return on its allowed investment.
PSNH has included its right to buy power from NAEC on its Balance Sheets
as part of utility plant and regulatory assets with a corresponding
obligation. At December 31, 1996, this right was valued at approximately
$910.9 million.
The contracts established the value of the initial investment in Seabrook
(initial investment) at $700 million. As prescribed by the Rate
Agreement, as of May 1, 1996, NAEC phased into rates 100 percent of the
recoverable portion of its investment in Seabrook 1. This plan is in
compliance with SFAS 92,"Regulated Enterprises-Accounting for Phase-in
Plans." From the Acquisition Date through December 31, 1996, NAEC
recorded $185.1 million of deferred return on its investment in Seabrook
1. In addition, NAEC's utility plant includes $84.1 million of deferred
return that was transferred as part of the Seabrook plant assets to NAEC
on the Acquisition Date. The deferred return, including the portion
transferred to NAEC, will be recovered with carrying charges beginning
December 1, 1997, and will be fully recovered by May 2001. NAEC
depreciated its initial investment over the term of Seabrook 1's
operating license (39 years), and any subsequent plant additions are
depreciated on a straight-line basis over the remaining term of the
power contracts at the time the subsequent additions are placed in
service.
If Seabrook 1 is shut down prior to the expiration of the NRC operating
license, PSNH will be unconditionally required to pay NAEC termination
costs for 39 years, less the period during which Seabrook 1 has operated.
These termination costs will reimburse NAEC for its share of Seabrook 1
shut-down and decommissioning costs, and will pay NAEC a return of and on
any undepreciated balance of its initial investment over the remaining
term of the power contracts, and the return of and on any capital
additions to the plant made after the Acquisition Date over a period of
five years after shut down (net of any tax benefits to NAEC attributable
the cancellation).
Contract payments charged to operating expenses are approximately:
Year Contract Payments
(Thousands of Dollars)
1996................................. $159,000
1995................................. 154,000
1994................................. 143,000
Interest included in the contract payment was $55 million in 1996, $51
million in 1995, and $43 million in 1994.
Future minimum payments, excluding executory costs, such as property taxes,
state use taxes, insurance and maintenance, under the terms of the
contracts, as of December 31, 1996, are approximately:
Year Seabrook Power Contracts
(Thousands of Dollars)
1997 ................................ $ 91,000
1998 ................................ 148,000
1999 ................................ 146,000
2000 ................................ 144,000
2001 ................................ 95,000
After 2001............................. 1,149,200
Future minimum payments................ 1,773,200
Less amount representing interest...... 862,200
Present value of Seabrook Power
Contracts payments .................. $ 911,000
See Note 12, "Subsequent Event" for the possible impacts the NHPUC's
restructuring decision may have on the Seabrook Power Contracts.
3. LEASES
PSNH has entered into lease agreements, some of which are capital leases,
for the use of data processing and office equipment, vehicles and office
space. The provisions of these lease agreements generally provide for
renewal options. The following rental payments have been charged to
expense:
Year Capital Leases Operating Leases
1996................... $1,105,000 $4,884,000
1995................... 1,103,000 5,291,000
1994................... 1,061,000 4,255,000
Interest included in capital lease rental payments was $292,000 in 1996,
$351,000 in 1995, and $394,000 in 1994.
Future minimum rental payments, excluding executory costs, such as property
taxes, state use taxes, insurance and maintenance, under long-term
noncancellable leases, as of December 31, 1996, are:
Year Capital Leases Operating Leases
(Thousands of Dollars)
1997....................... $1,500 $ 7,100
1998....................... 1,500 5,600
1999....................... 1,200 4,800
2000....................... 1,000 4,200
2001....................... 1,000 3,800
After 2001 ................ 700 9,100
Future minimum lease
payments ................ $6,900 $34,600
Less amount representing
interest ................. 3,200
Present value of future
minimum lease payments .. $3,700
It is possible that certain operating lease payments related to NUSCO
leases will be accelerated from future years into 1997. See Note 10H, "The
Rocky River Realty Company - Obligations" for additional information.
4. NUCLEAR DECOMMISSIONING
Millstone and Seabrook: Millstone 3 and Seabrook 1 have service lives that
are expected to end during the years 2025 and 2026, respectively. Upon
retirement, these units must be decommissioned. Decommissioning studies
prepared in 1996 concluded that complete and immediate dismantlement at
retirement continues to be the most viable and economic method of
decommissioning Millstone 3 and Seabrook 1. Decommissioning studies are
reviewed and updated periodically to reflect changes in decommissioning
requirements, costs, technology and inflation.
The estimated cost of decommissioning PSNH's 2.85 percent ownership share
of Millstone 3 and NAEC's 35.98 percent share of Seabrook 1, in year-end
1996 dollars, is $13.2 million and $162.1 million, respectively. Millstone
3 and Seabrook 1 decommissioning costs will be increased annually by their
respective escalation rates. PSNH's Millstone 3 decommissioning costs are
accrued over the expected service life of the unit and are included in
depreciation expense on its Statements of Income. Nuclear decommissioning
costs related to PSNH's share of Millstone 3 amounted to $0.4 in 1996 and
$0.3 million in 1995 and 1994. Nuclear decommissioning, as a cost of
removal, is included in the accumulated provision for depreciation on
PSNH's Balance Sheets. At December 31, 1996, the balance in the
accumulated reserve for decommissioning amounted to $3.2 million.
PSNH makes payments to an independent decommissioning trust for its portion
of the costs of decommissioning Millstone 3. Funding of the estimated
decommissioning costs assumes levelized collections for Millstone 3 and
escalated collections for Seabrook 1, and after-tax earnings on the
Millstone and Seabrook decommissioning funds of 5.8 percent and 6.5
percent, respectively. Under the terms of the Rate Agreement, PSNH is
obligated to pay NAEC's share of Seabrook's decommissioning costs, even if
the unit is shut down prior to the expiration of its operating license.
Accordingly, NAEC bills PSNH directly for its share of the costs of
decommissioning Seabrook 1. PSNH records its Seabrook decommissioning costs
as a component of purchased power expense on its Statements of Income.
Under the Rate Agreement, PSNH's Seabrook decommissioning costs are
recovered through base rates.
As of December 31, 1996, PSNH collected through rates approximately $2.2
million toward the future decommissioning costs of its share of
Millstone 3, which has been transferred to the external decommissioning
trust. Earnings on the decommissioning trust increase the decommissioning
trust balance and the accumulated reserve for decommissioning. Unrealized
gains and losses associated with the decommissioning trust and financing
fund also impact the balance of the trust and the accumulated reserve for
decommissioning.
As of December 31, 1996, NAEC has paid approximately $16.6 million
(including payments made prior to the Acquisition Date by PSNH), into
Seabrook 1's decommissioning financing fund.
Changes in requirements or technology, the timing of funding or
dismantling, or adoption of a decommissioning method other than immediate
dismantlement would change decommissioning cost estimates and the amounts
required to be recovered. PSNH attempts to recover sufficient amounts
through its allowed rates to cover its expected decommissioning costs.
Only the portion of currently estimated total decommissioning costs that
has been accepted by regulatory agencies is reflected in rates of PSNH.
Based on present estimates and assuming its nuclear units operate to the
end of their licensing period, PSNH expects that the decommissioning trust
and financing fund will be substantially funded when the units are retired
from service.
MY and VY: Each Yankee company owns a single nuclear generating unit. MY
and VY have service lives that are expected to end in 2008 and 2012,
respectively. PSNH's ownership share of estimated costs, in year-end 1996
dollars, of decommissioning the units owned and operated by MY and VY is
$18.5 million and $14.6 million, respectively. Under the terms of the
contracts with the Yankee companies, the shareholders-sponsors are
responsible for their proportionate share of the operating costs of each
unit, including decommissioning. The nuclear decommissioning costs of the
Yankee companies are included as part of the cost of power purchased by
PSNH.
CY and YAEC: On December 4, 1996, the board of directors of CY voted
unanimously to cease permanently the production of power at its nuclear
plant. The system companies relied on CY for approximately three percent of
their capacity.
CY has undertaken a number of regulatory filings intended to implement the
decommissioning and the recovery of remaining assets of CY. During late
December, 1996, CY filed an amendment to its power contracts to clarify the
obligations of its purchasing utilities following the decision to cease
power production. At December 31, 1996, the estimated obligation, including
decommissioning amounted to $762.8 million of which PSNH's share was
approximately $38.1 million.
YAEC is in the process of decommissioning its nuclear facility. At December
31, 1996, the estimated remaining costs, including decommissioning, amounted
to $173.3 million of which PSNH's share was approximately $12.1 million.
Management expects that PSNH will continue to be allowed to recover these
costs from its customers. Accordingly, PSNH has recognized these costs as
regulatory assets, with corresponding obligations, on its Balance Sheets.
Proposed Accounting: The staff of the SEC has questioned certain of the
current accounting practices of the electric utility industry, including the
company, regarding the recognition, measurement and classification of
decommissioning costs for nuclear generating units in the financial
statements. In response to these questions, FASB agreed to review the
accounting for removal costs, including decommissioning, and issued a
proposed statement entitled "Accounting for Liabilities Related to Closure
or Removal of Long-Lived Assets," in February, 1996. If current electric
utility industry accounting practices for decommissioning are changed in
accordance with the proposed statement: (1) annual provisions for
decommissioning could increase, (2) the estimated cost for decommissioning
could be recorded as a liability with an offset to plant rather than as part
of accumulated depreciation, and (3) trust fund income from the external
decommissioning trusts could be reported as investment income rather than as
a reduction to decommissioning expense.
5. SHORT-TERM DEBT
The amount of short-term borrowings that may be incurred by PSNH is subject
to periodic approval by the SEC under the 1935 Act or by the NHPUC. PSNH
was authorized, under a waiver from the NHPUC, as of January 1, 1997 to
incur short-term borrowings up to a maximum of $225 million. The NHPUC
borrowing limit will be reduced to $125 million effective May 1997.
On April 30, 1996, PSNH increased its $125 million revolving-credit
agreement to $225 million with approval from the NHPUC. The agreement,
which was scheduled to expire in May, 1996, has been extended so that $100
million of the agreement will expire in April, 1997, and the remaining $125
million will expire in April, 1999. The revolving credit agreement is with
a group of 16 banks. PSNH is obligated to pay a facility fee of .25 percent
per annum on the three-year commitment of $125 million and .20 percent per
annum on the one-year commitment of $100 million. At December 31, 1996 and
1995, there were no borrowings under the facility.
Money Pool: Certain subsidiaries of NU, including PSNH, are members of the
Northeast Utilities System Money Pool (Pool). The Pool provides a more
efficient use of the cash resources of the system, and reduces outside
short-term borrowings. NUSCO administers the Pool as agent for the member
companies. Short-term borrowing needs of the member companies are first
met with available funds of other member companies, including funds
borrowed by NU parent. NU parent may lend to the Pool but may not borrow.
Funds may be withdrawn from or repaid to the Pool at any time without prior
notice. Investing and borrowing subsidiaries receive or pay interest based
on the average daily Federal Funds rate. However, borrowings based on
loans from NU parent bear interest at NU parent's cost and must be repaid
based upon the terms of NU parent's original borrowing. At December 31,
1996 and 1995, PSNH had no outstanding borrowings from the Pool.
Maturities of PSNH's short-term debt obligations were for periods of three
months or less.
6. EMPLOYEE BENEFITS
A. PENSION BENEFITS
PSNH participates in a uniform noncontributory defined benefit
retirement plan covering all regular system employees. Benefits are
based on years of service and employees' highest eligible compensation
during 60 consecutive months of employment. The company's direct
portion of the system's pension cost, part of which was charged to
utility plant, approximated $6.2 million in 1996, $2.3 million in 1995
and $4.4 million in 1994. Pension costs for 1996 and 1994 included
approximately $1.9 million related to workforce reduction programs.
Currently, PSNH funds annually an amount at least equal to that which
will satisfy the requirements of the Employee Retirement Income
Security Act and the Internal Revenue Code. Pension costs are
determined using market-related values of pension assets. Pension
assets are invested primarily in domestic and international equity
securities and bonds.
The components of net pension cost for PSNH are:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Service cost............................ $ 6,161 $ 3,462 $ 5,531
Interest cost........................... 12,808 11,923 11,129
Return on plan assets................... (24,393) (33,156) 246
Net amortization........................ 11,608 20,108 (12,526)
Net pension cost........................ $ 6,184 $ 2,337 $ 4,380
For calculating pension cost, the following assumptions were used:
For the Years Ended December 31, 1996 1995 1994
Discount rate............................ 7.50% 8.25% 7.75%
Expected long-term rate of return........ 8.75 8.50 8.50
Compensation/progression rate............ 4.75 5.00 4.75
The following table represents the plan's funded status reconciled to the
Balance Sheets:
At December 31, 1996 1995
(Thousands of Dollars)
Accumulated benefit obligation,
including vested benefits at
December 31, 1996 and 1995 of
$131,624,000 and $123,475,000,
respectively ........................ $ 143,377 $133,840
Projected benefit obligation .......... 179,192 $169,040
Market value of plan assets ........... 173,035 159,094
Market value in excess of
projected benefit obligation ........ (6,157) (9,946)
Unrecognized transition amount ........ 4,337 4,671
Unrecognized prior service costs ...... 8,135 5,428
Unrecognized net gain ................. (51,105) (38,759)
Accrued pension liability ............. ($44,790) $(38,606)
The following actuarial assumptions were used in calculating the plan's
year-end funded status:
For the Years Ended December 31, 1996 1995
Discount rate............................ 7.75% 7.50%
Compensation/progression rate............ 4.75 4.75
B. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
PSNH provides certain health care benefits, primarily medical and
dental, and life insurance benefits through a benefit plan to retired
employees (referred to as SFAS 106 benefits). These benefits are
available for employees retiring from the company who have met
specified service requirements. For current employees and certain
retirees, the total SFAS 106 benefit is limited to two times the 1993
per-retiree health care costs. The SFAS 106 obligation has been
calculated based on this assumption. PSNH's direct portion of SFAS 106
benefits, part of which was deferred or charged to utility plant,
approximated $6.2 million in 1996, $7.2 million in 1995 and $7.6
million in 1994.
PSNH is funding SFAS 106 postretirement costs through external trusts.
The company is funding, on an annual basis, amounts that have been
rate-recovered and which also are tax-deductible under the Internal
Revenue Code. The trust assets are invested primarily in equity
securities and bonds.
The components of health care and life insurance costs are:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Service cost ....................... $ 914 $ 933 $ 971
Interest cost ...................... 3,559 4,063 3,844
Return on plan assets .............. (1,720) (1,694) 37
Amortization of unrecognized
transition obligation ............ 2,941 2,941 2,941
Other amortization, net ............ 547 998 (206)
Net health care and life
insurance costs .................. $6,241 $7,241 $7,587
For calculating PSNH's SFAS 106 benefit costs, the following
assumptions were used:
For the Years Ended December 31, 1996 1995 1994
Discount rate ...................... 7.50% 8.00% 7.75%
Long-term rate of return -
Health assets, net of tax ....... 5.25 5.00 5.00
Life assets ..................... 8.75 8.50 8.50
The following table represents the plan's funded status reconciled to
the Balance Sheets:
At December 31, 1996 1995
(Thousands of Dollars)
Accumulated postretirement benefit
obligation of:
Retirees ........................ $38,245 $ 44,985
Fully eligible active
employees ..................... 22 27
Active employees not
eligible to retire ............ 9,696 10,627
Total accumulated post-
retirement benefit
obligation ....................... 47,963 55,639
Market value of plan assets ........ 17,882 11,743
Accumulated postretirement
benefit obligation in
excess of plan assets ............ (30,081) (43,896)
Unrecognized transition
amount ........................... 47,049 49,989
Unrecognized net gain .............. (17,139) (8,373)
Accrued postretirement benefit
liability ........................ $ (171) $ (2,280)
The following actuarial assumptions were used in calculating
the plan's year-end funded status:
At December 31, 1996 1995
Discount rate ............................... 7.75% 7.50%
Health care cost trend rate (a) ............. 7.23 8.40
(a) The annual growth in per capita cost of covered health
care benefits was assumed to decrease to 4.91 percent by 2001.
The effect of increasing the assumed health care cost trend rate by one
percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1996, by $3.1
million and the aggregate of the service and interest cost components
of net periodic postretirement benefit cost for the year then ended by
$0.3 million. The trust holding the health plan assets is subject to
federal income taxes at a 39.6 percent tax rate.
PSNH is currently recovering SFAS 106 costs, including amounts
previously deferred.
7. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock subject to mandatory redemption are:
Shares
Outstanding December 31,
Description December 31, 1996 1996 1995 1994
(Thousands of Dollars)
10.60%
Series A of 1991 ......... 5,000,000 $125,000 $125,000 $125,000
Less preferred stock
to be redeemed
within one year ........ 1,000,000 25,000 - -
Total preferred stock
subject to
mandatory redemption ... $100,000 $125,000 $125,000
In case of default on dividends or sinking-fund payments, no payments may
be made on any junior stock by way of dividends or otherwise (other than in
shares of junior stock) so long as the default continues. If PSNH is in
arrears in the payment of dividends on any outstanding shares of preferred
stock, PSNH would be prohibited from redemption or purchase of less than
all of the preferred stock outstanding. The Series A Preferred Stock is
not subject to optional redemption by PSNH. It is subject to an annual
sinking fund requirement of $25 million, beginning on June 30, 1997,
sufficient to retire annually 1,000,000 shares at $25 per share.
8. LONG-TERM DEBT
Details of long-term debt outstanding are:
December 31,
1996 1995
(Thousands of Dollars)
First Mortgage Bonds:
8 7/8% Series A, due 1996....................... $ - $172,500
9.17% Series B, due 1998..................... 170,000 170,000
Total First Mortgage Bonds............... 170,000 342,500
Pollution Control Revenue Bonds:
7.65% Tax-Exempt Series A, due 2021............ 66,000 66,000
7.50% Tax-Exempt Series B, due 2021............ 108,985 108,985
7.65% Tax-Exempt Series C, due 2021............ 112,500 112,500
Adjustable Rate, Taxable, Series D,
due 2021 ....................................... 39,500 39,500
Adjustable Rate, Taxable, Series E,
due 2021 ....................................... 69,700 69,700
Adjustable Rate, Tax-Exempt, Series D,
due 2021 ....................................... 75,000 75,000
Adjustable Rate, Tax-Exempt, Series E
due 2021 ....................................... 44,800 44,800
Less: Amounts due within one year ............... - 172,500
Long-term debt, net ....................... $686,485 $686,485
Long-term debt maturities and cash sinking-fund requirements on debt
outstanding at December 31, 1996 aggregate approximately $170 million for
1998. There are neither sinking-fund requirements nor debt maturities
existing for the years 1997, and 1999 through 2001. Also, there are annual
renewal and replacement fund requirements equal to 2.25 percent of the
average of net depreciable property owned by PSNH at the reorganization
date, plus cumulative gross property additions thereafter. PSNH expects to
meet these future fund requirements by certifying property additions. Any
deficiency would need to be satisfied by the deposit of cash or bonds.
Essentially, all utility plant of PSNH is subject to the lien of its first
mortgage bond indenture. PSNH's Revolving Credit Facility has a second
lien, junior to the lien of its first mortgage bond indenture, on all PSNH
property located in New Hampshire which will expire in April 1999. At
December 31, 1996, there were no borrowings under the Revolving Credit
Facility.
Concurrent with the issuance of PSNH's Series A and B First Mortgage Bonds,
PSNH entered into financing arrangements with the Business Finance
Authority of the state of New Hampshire (BFA). Pursuant to these
arrangements, the BFA issued seven series of Pollution Control Revenue
Bonds (PCRBs) and loaned the proceeds to PSNH. At December 31, 1996, $516.5
million of PCRBs were outstanding. The average effective interest rates on
the variable-rate pollution control notes ranged from 3.5 percent to 5.5
percent for 1996, and from 3.9 percent to 6.1 percent for 1995. PSNH's
obligation to repay each series of PCRBs is secured by a series of First
Mortgage Bonds that were issued under its indenture. Each such series of
First Mortgage Bonds contains terms and provisions with respect to
maturity, principal payment, interest rate, and redemption that correspond
to those of the applicable series of PCRBs. For financial reporting
purposes, these bonds would not be considered outstanding unless PSNH fails
to meet its obligations under the PCRBs.
The Series B First Mortgage Bond is not redeemable prior to its maturity
except in limited circumstances. The PCRBs, except for Series D and E, are
redeemable on or after May 1, 2001, at the option of the company with
accrued interest and at specified premiums. Under current interest rate
elections by PSNH, the Series D and E PCRBs are redeemable, at par plus
accrued interest at the end of each interest-rate period. Future interest-
rate elections by PSNH could significantly defer or eliminate the
availability of optional redemptions by PSNH, and could affect costs as
well.
9. INCOME TAX EXPENSE
The components of the federal and state income tax provisions charged to
operations are:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Current income taxes:
Federal ................................ $(4,978) $(1,166) $ 368
State .................................. (1,605) 1,767 1,219
Total current ........................ (6,583) 601 1,587
Deferred income taxes, net:
Federal ................................ 94,922 72,147 63,941
State .................................. 272 (1,606) 3,666
Total deferred ...................... 95,194 70,541 67,607
Investment tax credits, net .............. (548) (555) (560)
Total income tax expense ................. $88,063 $70,587 $68,634
The components of total income tax expense are classified as follows:
Income taxes charged to operating
expenses ................................ $80,340 $69,817 $68,088
Other income taxes ....................... 7,723 770 546
Total income tax expense ................. $88,063 $70,587 $68,634
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Depreciation ............................. $(1,055) $ 1,294 $ 2,701
Deferred tax asset associated
with NOL ............................... 96,756 57,543 23,611
Energy adjustment clauses ................ (10,716) 5,098 30,954
Amortization of regulatory
settlement ............................. 11,501 11,501 11,501
Other .................................... (1,292) (4,895) (1,160)
Deferred income taxes, net ............... $95,194 $70,541 $67,607
A reconciliation between income tax expense and the expected tax expense at
the applicable statutory rate is as follows:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Expected federal income tax at
35 percent of pretax income ............. $64,616 $53,845 $51,127
Tax effect of differences:
Depreciation ............................ 1,896 1,868 1,407
Amortization of acquisition costs ....... 31,410 31,522 31,508
Seabrook intercompany loss .............. (7,504) (13,048) (19,637)
Investment tax credit amortization ...... (548) (555) (560)
State income taxes, net of
federal benefit ....................... (867) 105 3,175
Other, net .............................. (940) (3,150) 1,614
Total income tax expense .................. $88,063 $70,587 $68,634
10. COMMITMENTS AND CONTINGENCIES
A.RESTRUCTURING
New Hampshire: The 1996 restructuring legislation that the NHPUC is
charged with implementing provides that the NHPUC may not adopt a
restructuring plan that imposes a severe financial hardship on a
utility. NU management has testified that the implementation of
certain methodologies would result in a significant loss to PSNH. If
these losses were to result in the triggering of acceleration rights
that PSNH's creditors have and, if any single significant creditor
demanded payment because of the triggering of acceleration rights, all
other major creditors would immediately follow and PSNH and NAEC
bankruptcy filings would be unavoidable.
Management believes that PSNH is entitled to full recovery of its
prudently incurred costs, including regulatory assets and stranded
costs. It bases this belief both on the general nature of public
utility industry cost-of-service based regulation and the specific
circumstances of the resolution of PSNH's previous bankruptcy
proceedings and its acquisition by NU, including the recoveries
provided by the Rate Agreement and related agreements.
See Note 12, "Subsequent Event" for the possible impacts on PSNH and
NAEC of the NHPUC's decision related to industry restructuring.
B.NUCLEAR PERFORMANCE
Millstone: The three Millstone units are managed by NNECO. Millstone 1,
2 and 3 have been out of service since November 4, 1995, February 21,
1996 and March 30, 1996, respectively, and are on the NRC's watch list.
PSNH's ownership interest in the Millstone units is limited to a 2.85
percent joint ownership interest in Millstone 3. NU has restructured
its nuclear organization and is currently implementing comprehensive
plans to restart the units.
According to the plans, each unit's recovery team will be working
towards restart of its respective unit on a parallel basis with the
other two units. Based upon management's current plans, it is estimated
that one of the units will be ready for restart in the third quarter of
1997 with the other two units being ready for restart during the fourth
quarter of 1997 and the first quarter of 1998, respectively.
The NRC has also issued two orders affecting the Millstone units on the
subjects of independent corrective action verification and employee
concerns. Independent third parties have been retained by NNECO and are
awaiting NRC approval.
Prior to and following notification to the NRC that the units are ready
to resume operations, the NRC staff will conduct extensive reviews and
inspections and, prior to such notification, independent corrective
action verification teams will also inspect each unit. The units will
not be allowed to restart without an affirmative vote of the NRC
commissioners following completion of these reviews and inspections.
Management cannot estimate when the NRC will allow any of the units to
restart, but hopes to have at least one unit operating in the second
half of 1997.
NU is currently incurring substantial costs, including replacement power
costs, while the three Millstone units are not operating. Management
does not expect to recover a substantial portion of these costs. NU
expensed approximately $179 million of incremental nonfuel nuclear O&M
costs in 1996 including a reserve of $63 million against 1997
expenditures, of which PSNH's share of these costs is $3.0 million.
Management estimates NU will expense approximately $386 million of
nonfuel nuclear O&M costs in 1997 of which PSNH's share of these costs
will be approximately $4.0 million.
As discussed above, management cannot predict when the NRC will allow
any of the Millstone units to return to service and thus cannot estimate
the total replacement power costs the companies will ultimately incur.
At December 31, 1996, NU had expensed incremental replacement power
costs associated with the Millstone outages of approximately $260
million. To date, PSNH's share of replacement power costs has not been
material. PSNH's share of replacement power costs is not expected to be
material for 1997, while Millstone 3 is out of service. Management
believes the system has sufficient resources to fund the restoration of
the Millstone units to service under its present timetable.
MY: The NU system relies on MY for approximately two percent of its
capacity. The MY nuclear generating plant has been limited to operating
at 90 percent of capacity since early 1996, pending the resolution of
issues related to investigations initiated by the NRC, and on December
6, 1996, was taken off line to resolve cable-separation and associated
issues. The NRC has notified MY that the NRC staff has placed the MY
plant on its watch list. Returning the plant to service will require NRC
approval. Management cannot predict when MY's plant will be allowed to
return to service and expects there will be substantial costs associated
with the NRC's action that cannot be accurately estimated at this time.
C.ENVIRONMENTAL MATTERS
PSNH is subject to regulation by federal, state and local authorities
with respect to air and water quality, the handling and disposal of
toxic substances and hazardous and solid wastes, and the handling and
use of chemical products. PSNH has an active environmental auditing
and training program and believes that it is in substantial compliance
with current environmental laws and regulations.
Environmental requirements could hinder the construction of new
generating units, transmission and distribution lines, substations and
other facilities. Changing environmental requirements could also
require extensive and costly modifications to PSNH's existing
generating units, and transmission and distribution systems, and could
raise operating costs significantly. As a result, PSNH may incur
significant additional environmental costs, greater than amounts
included in cost of removal and other reserves, in connection with the
generation and transmission of electricity and the storage,
transportation and disposal of by-products and wastes. PSNH may also
encounter significantly increased costs to remedy the environmental
effects of prior waste handling activities. The cumulative long-term
cost impact of increasingly stringent environmental requirements cannot
accurately be estimated.
PSNH has recorded a liability based upon currently available
information for what it believes are its estimated environmental
remediation costs that it expects to incur for waste disposal sites.
In most cases, additional future environmental cleanup costs are not
reasonably estimable due to a number of factors, including the unknown
magnitude of possible contamination, the appropriate remediation
methods, the possible effects of future legislation or regulation and
the possible effects of technological changes. At December 31, 1996,
the net liability recorded by PSNH for its estimated environmental
remediation costs, excluding any possible insurance recoveries or
recoveries from third parties, amounted to approximately $4.6 million,
which management has determined to be the most probable amount within
the range of $4.6 million to $5.0 million.
PSNH cannot estimate the potential liability for future claims,
including environmental remediation costs, that may be brought against
it. However, considering known facts, existing laws, and regulatory
practices, management does not believe the matters disclosed above will
have a material effect on PSNH's financial position or future results
of operations.
On October 10, 1996, the American Institute of Certified Public
Accountants issued Statement of Position 96-1, "Environmental
Remediation Liabilities" (SOP). The principal objective of the SOP is
to improve the manner in which existing authoritative accounting
literature is applied by entities to specific situations of
recognizing, measuring and disclosing environmental remediation
liabilities. The SOP became effective January 1, 1997. The company
believes that the adoption of this SOP will not have a material impact
on the company's financial position or results of operations.
D.NUCLEAR INSURANCE CONTINGENCIES
Under certain circumstances, in the event of a nuclear incident at one
of the nuclear facilities covered by the federal government's third-
party liability indemnification program, the company could be assessed
in proportion to its ownership interest in each nuclear unit up to
$75.5 million, not to exceed $10.0 million per nuclear unit in any one
year. Under the terms of the power contracts with NAEC, PSNH could be
obligated to pay for any assessment charged to NAEC as a "cost of
service." Based on its ownership interest in Millstone 3 and NAEC's
ownership interest in Seabrook 1, PSNH's maximum liability, including
any additional potential assessments, would be $30.8 million per
incident. In addition, through power purchase contracts with MY, VY
and CY, PSNH would be responsible for up to an additional $11.1 million
per incident. Payments for PSNH's ownership interest in nuclear
generating facilities would be limited to a maximum of $5.3 million per
incident per year.
Insurance has been purchased to cover the primary cost of repair,
replacement or decontamination of utility property resulting from
insured occurrences at Millstone 3. PSNH is subject to retroactive
assessments if losses exceed the accumulated funds available to the
insurer. The maximum potential assessment against PSNH with respect to
losses arising during the current policy year is approximately $0.5
million under the primary property insurance program.
Insurance has been purchased to cover certain extra costs incurred in
obtaining replacement power during prolonged accidental outages and the
excess cost of repair, replacement, or decontamination or premature
decommissioning of utility property resulting from insured occurrences.
PSNH is subject to retroactive assessments if losses exceed the
accumulated funds available to the insurer. The maximum potential
assessments against PSNH (including costs resulting from PSNH's
contracts with NAEC), with respect to losses arising during current
policy years are approximately $1.9 million under the replacement power
policies and $7.3 million under the excess property damage,
decontamination and decommissioning policies. Although PSNH has
purchased the limits of coverage currently available from the
conventional nuclear insurance pools, the cost of a nuclear incident
could exceed available insurance proceeds.
Insurance has been purchased aggregating $200 million on an industry
basis for coverage of worker claims. All participating reactor
operators insured under this coverage are subject to retrospective
assessments of $3 million per reactor. The maximum potential assessment
against PSNH (including costs resulting from the Seabrook power
contracts with NAEC), with respect to losses arising during the current
policy period is approximately $1.8 million.
E.CONSTRUCTION PROGRAM
The construction program is subject to periodic review and revision by
management. PSNH currently forecasts construction expenditures of
$206.0 million for the years 1997-2001, including $35.0 million for
1997. In addition, the company estimates that nuclear fuel
requirements, for its share of Millstone 3, will be $4.2 million for
the years 1997-2001, including $0.4 million for 1997.
F.LONG-TERM CONTRACTUAL ARRANGEMENTS
Yankee Companies: PSNH, along with CL&P and WMECO, relies on MY and VY
for approximately three percent of their capacity under long-term
contracts. Under the terms of their agreements, the system companies
pay their ownership (or entitlement) shares of costs, which include
depreciation, O&M expenses, taxes, the estimated cost of
decommissioning and a return on invested capital. These costs are
recorded as purchased power expense and recovered through the company's
rates. PSNH's total cost of purchases under contracts with the Yankee
companies, excluding YAEC, amounted to $25.0 million in 1996, $26.4
million in 1995, and $23.4 million in 1994. See Note 1E, "Summary of
Significant Accounting Policies-Investments and Jointly Owned Electric
Utility Plant," and Note 4, "Nuclear Decommissioning," for more
information on the Yankee companies.
Nonutility Generators: PSNH has entered into various arrangements for
the purchase of capacity and energy from NUGs. These arrangements have
terms from 20 to 30 years, currently expiring in the years 1998 through
2023, and require PSNH to purchase the energy at specified prices or
formula rates. For the 12 months ended December 31, 1996,
approximately 13 percent of the system electricity requirements were
met by NUGs. PSNH's total cost of purchases under these arrangements
amounted to $139.1 million in 1996, $129.6 million in 1995, and $130.0
million in 1994. These costs are eventually recovered through the
company's rates. For additional information, see Note 1K, "Summary of
Significant Accounting Policies-Recoverable Energy Costs."
New Hampshire Electric Cooperative: PSNH entered into a buy-back
agreement to purchase the capacity and energy of the New Hampshire
Electric Cooperative, Inc.'s (NHEC) share of Seabrook 1 and to pay all
of NHEC's Seabrook 1 costs for a ten-year period, which began on July
1, 1990. The total cost of purchases under this agreement was $14.6
million in 1996, $15.8 million in 1995, and $14.6 million in 1994. A
portion of these costs is collected currently through the FPPAC and the
remaining costs are deferred for future collection in accordance with
the Rate Agreement. In connection with the agreement, NHEC agreed to
continue as a firm-requirements customer of PSNH for 15 years.
Hydro-Quebec: Along with other New England utilities, PSNH, CL&P,
WMECO, and HWP have entered into agreements to support transmission and
terminal facilities to import electricity from the Hydro-Quebec system
in Canada. PSNH is obligated to pay, over a 30-year period ending in
2020, its proportionate share of the annual O&M and capital costs of
these facilities.
The estimated annual costs of PSNH's significant long-term contractual
arrangements are as follows:
1997 1998 1999 2000 2001
(Millions of Dollars)
MY and VY ..................... $17.5 $14.9 $17.1 $17.0 $ 13.9
Nonutility Generators ......... 134.0 137.0 141.0 145.0 149.0
NHEC .......................... 22.7 29.8 29.9 14.6 -
Hydro-Quebec .................. 10.6 10.3 10.0 9.8 9.5
For additional information regarding the recovery of purchased power
costs, see Note 1K, "Summary of Significant Accounting Policies -
Recoverable Energy Costs."
G.DEFERRED RECEIVABLE FROM AFFILIATED COMPANY
At the time PSNH emerged from bankruptcy on May 16, 1991, in accordance
with the phase-in under the Rate Agreement, it began accruing a
deferred return on a portion of its Seabrook investment. From May 16,
1991 to the Acquisition Date, PSNH accrued a deferred return of $50.9
million. On the Acquisition Date, PSNH sold the $50.9 million deferred
return to NAEC as part of the Seabrook-related assets.
At the time PSNH transferred the deferred return to NAEC, it realized,
for income tax purposes, a gain that is deferred under the consolidated
income tax rules. This gain will be restored for income tax purposes
when the deferred return of $50.9 million, and the associated income
taxes of $32.9 million, are collected by NAEC through the Seabrook
power contracts. When NAEC recovers the $32.9 million in years eight
through ten of the Rate Agreement, it is obligated to make
corresponding payments to PSNH.
On the Acquisition Date, PSNH recorded the $32.9 million of income
taxes associated with the deferred return as a deferred receivable from
NAEC, with a corresponding entry to deferred revenue, on its Balance
Sheet. In 1993, due to changes in tax rates, this amount was adjusted
to $33.2 million. See Note 12, "Subsequent Event" for the possible
impacts of the NHPUC's decision related to industry restructuring on
this intercompany transaction between PSNH and NAEC.
H.THE ROCKY RIVER REALTY COMPANY - OBLIGATIONS
The Rocky River Realty Company (RRR) provides real estate support
services which includes the leasing of property and facilities used by
system companies. RRR is the obligor under financing arrangements for
certain system facilities. Under those financing arrangements, the
holders of notes for $38.4 million would be entitled to request that RRR
repurchase the notes if any major subsidiary of NU (as defined by the
notes) has debt ratings below investment grade as of any year-end during
the term of the financing. The notes are secured by real estate leases
between RRR as lessor and NUSCO as lessee. The leases provide for the
acceleration of rent equal to RRR's note obligations if RRR is unable to
repay the obligation. The operating companies, primarily CL&P, WMECO
and PSNH may be billed by NUSCO for their proportionate share of the
accelerated lease obligations if the rateholders request repurchase of
the notes. NU has guaranteed the notes.
Based on the terms of the notes, PSNH and NAEC will be defined as major
subsidiaries of NU, effective as of the end of 1996, and both PSNH's and
NAEC's debt ratings were below investment grade. Accordingly, under the
terms of the RRR financing arrangements, the holders may elect to
require RRR to repurchase the notes at par. If the noteholders make
such an election, RRR has the option to refinance the notes with an
institutional investor. However, it is possible that RRR may be
required to repurchase the notes. As of February 21, 1997, the holders
had not made such an election. RRR plans to engage in discussions with
the noteholders regarding this issue. Management does not expect the
resolution to have a material impact on its financial condition.
11.FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each of the following financial instruments:
Cash and nuclear decommissioning trusts: The carrying amounts approximate
fair value.
SFAS 115, "Accounting for Certain Investments in Debt and Equity
Securities," requires investments in debt and equity securities to be
presented at fair value. Unrealized gains and losses resulting from the
use of SFAS 115 accounting have not been material.
Preferred stock and long-term debt: The fair value of PSNH's fixed-rate
securities is based upon the quoted market price for those issues or
similar issues. Adjustable rate securities are assumed to have a fair
value equal to their carrying value. The carrying amounts of PSNH's
financial instruments and the estimated fair values are as follows:
Carrying Fair
At December 31, 1996 Amount Value
(Thousands of Dollars)
Preferred stock subject to
mandatory redemption........................... $125,000 $125,000
Long-term debt - First Mortgage Bonds............ 170,000 175,729
Other long-term debt............................. 516,485 523,536
Carrying Fair
At December 31, 1995 Amount Value
(Thousands of Dollars)
Preferred stock subject to
mandatory redemption........................... $125,000 $131,250
Long-term debt - First Mortgage Bonds............ 342,500 352,517
Other long-term debt............................. 516,485 532,190
The fair values shown above have been reported to meet the disclosure
requirements and do not purport to represent the amounts at which those
obligations would be settled.
12. SUBSEQUENT EVENT
New Hampshire Restructuring: On February 28, 1997, the NHPUC issued its
decision related to restructuring the state's electric utility industry
and setting interim stranded cost charges for PSNH pursuant to
legislation enacted in New Hampshire in 1996.
In the decision, the NHPUC announced a departure from cost-based
ratemaking and instead adopted a market-priced approach to ratemaking and
stranded cost recovery as advocated by the NHPUC's consultants.
Accordingly, unless the litigation described below results in a stay, or
necessary modifications to the final plan are made that leads management
to conclude that the ratemaking approach utilized in the NHPUC's
restructuring decision will not go into effect, PSNH will be required to
discontinue accounting under SFAS 71. That would result in PSNH writing
off from its balance sheet, as early as the quarter ending March 31,
1997, substantially all of its regulatory assets. The amount of the
potential write-off which is triggered by the order is currently
estimated at over $400 million, after taxes. PSNH does not believe that
under the decision, it would be required to recognize any additional loss
resulting from the impairment of the value of its other long-lived assets
under the provisions of SFAS 121.
The decision also contains rulings on numerous other issues that may have
a substantial effect on the operations of PSNH. Included among these
rulings are assertions that the Rate Agreement by and between PSNH's
parent company, NU and the state of New Hampshire, which was an integral
part of NU's acquisition of PSNH in 1992, is not binding on the state;
the requirement that PSNH divest within two years from the inception of
competition all of its owned-generation and all of its wholesale power
contracts (including its contracts with NAEC for Seabrook output); a
prohibition on the remaining distribution company and its affiliates from
engaging in retail marketing or load aggregation services in New
Hampshire; and a mandate for the filing of tariffs with the FERC for the
provision of unbundled retail transmission service.
On March 3, 1997, PSNH, NU, NAEC and NUSCO filed for a temporary
restraining order, preliminary and permanent injunctive relief, and for
declaratory judgment in the Federal District Court for New Hampshire.
The case was subsequently transferred to Rhode Island. On March 10, 1997,
the Chief Judge of the Rhode Island federal court issued a temporary
restraining order which stayed the NHPUC's February 28, 1997 decision to
the extent it established a rate setting methodology that is not designed
to recover PSNH's costs of providing service and would require PSNH to
write off any regulatory assets. A hearing regarding the system
plaintiffs' request for a preliminary injunction will be held in the same
court on March 20, 1997.
PSNH also intends to pursue claims against the state of New Hampshire for
damages in state court in New Hampshire for abrogation of the 1989 Rate
Agreement. The damage claims will be in the hundreds of millions of
dollars.
PSNH and NAEC are parties to a variety of financing agreements providing
that the credit thereunder can be terminated or accelerated if they do
not maintain specified minimum ratios of common equity to capitalization
(as defined in each agreement). In addition, PSNH and NAEC are parties to
a variety of financing agreements providing in effect that the credit
thereunder can be terminated or accelerated if there are actions taken,
either by PSNH or NAEC or by the state of New Hampshire, that deprive
PSNH and/or NAEC of the benefits of the Rate Agreement and/or the
Seabrook Power Contracts.
If the NHPUC's February 28, 1997 decision becomes effective, it would,
unless PSNH received waivers from its respective lenders, result in (i)
write-offs that would cause PSNH's common equity to fall below the
contractual minimums, (ii) reductions in income that would cause PSNH's
income to fall below the contractual minimums, (iii) potential violation
of the contractual provisions with respect to actions depriving PSNH and
NAEC of the benefits of the Rate Agreement, and (iv) the potential for
cross defaults to other PSNH and NAEC financing documents. Substantially
all of PSNH's and NAEC's debt obligations ($686 million of PSNH debt and
$515 million of NAEC debt) would be affected. For these actions to be
avoided, management believes that it is essential that the March 10, 1997
temporary restraining order issued by a federal court judge be extended
and made applicable to the foregoing issues.
If these events transpired and the requested court relief is not
forthcoming, and if the creditors holding PSNH and NAEC debt obligations
decide to exercise their rights to demand payment and not to forebear
while the litigation is pending, then either creditors or PSNH and NAEC
could initiate proceedings under Chapter 11 of the bankruptcy laws.
PSNH and NAEC Report Considerations: As a result of the NHPUC decision
and the potential consequences discussed above, the reports of our
auditors on the individual financial statements of PSNH and NAEC contain
explanatory paragraphs. Those explanatory paragraphs indicate that a
substantial doubt exists currently about the ability of PSNH and NAEC to
continue as going concerns. The accounts of PSNH and NAEC are included in
the consolidated financial statements of NU on the basis of a going
concern. While the effect of the implementation of that decision would
have a material adverse impact on NU's financial position, results of
operations and cash flows, it would not in and of itself result in
defaults under borrowing or other financial agreements of NU or its other
subsidiaries.
To the Board of Directors
of Public Service Company of New Hampshire:
We have audited the accompanying balance sheets of Public Service Company
of New Hampshire (a New Hampshire corporation and a wholly owned subsidiary
of Northeast Utilities) as of December 31, 1996 and 1995, and the related
statements of income, common stockholder's equity, and cash flows for each
of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Public Service Company
of New Hampshire as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 12, on
February 28, 1997 the State of New Hampshire Public Utilities Commission
(the NHPUC) issued an order outlining its final plan to restructure the
electric utility industry. The final plan announced a departure from cost-
based ratemaking effective January 1, 1998, which, if implemented, would
require the Company to discontinue the application of Financial Accounting
Standard No. 71, "Accounting for the Effects of Certain Types of
Regulation," (FAS 71). The implementation of the final plan, including the
effect of the discontinuation of FAS 71, would result in after tax write-
off of over $400 million. Such a write-off would cause the Company to be
in technical default under financial covenants imposed by lenders, which,
would, if not waived or renegotiated, give rise to the rights of lenders to
accelerate the repayment of approximately $686 million of the Company's
indebtedness and approximately $515 million of an affiliated company's
indebtedness. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements referred
to above do not include any adjustments that might result from this
uncertainty.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 21, 1997 (except with respect to the matter discussed in Note 12,
as to which the date is March 10, 1997)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section contains management's assessment of PSNH's (the company) financial
condition and the principal factors having an impact on the results of
operations. The company is a wholly-owned subsidiary of Northeast Utilities
(NU). This discussion should be read in conjunction with the company's financial
statements and footnotes.
FINANCIAL CONDITION
EARNINGS OVERVIEW
PSNH had net income of approximately $97 million in 1996, compared to
approximately $83 million in 1995. PSNH's 1996 net income increased primarily
due to lower interest on long-term debt and higher revenues, partially offset by
increased operation and maintenance costs.
On February 28, 1997, the New Hampshire Public Utilities Commission (NHPUC)
issued its orders for restructuring the state's electric utility industry,
including setting interim stranded cost charges for PSNH. If the orders are
implemented without modification, PSNH would be required to recognize write-offs
of over $400 million, after taxes. PSNH filed for and received a temporary
restraining order from the United States District Court, which stayed certain
portions of the NHPUC's orders. If PSNH is unable to keep this stay in effect,
receive another appropriate court action, or otherwise modify the orders, the
write-off triggered by the orders would result in defaults which, if not waived
or renegotiated, would give creditors the right to accelerate the repayment of
over $1.2 billion of PSNH and North Atlantic Energy Corporation (NAEC)
63
indebtedness. If the NHPUC's orders are implemented and the financial covenant
defaults are not waived, there would be substantial doubt about the company's
ability to continue as a going concern. See "Restructuring" for further
information on the impact of the NHPUC's orders.
Retail kilowatt-hour sales increased by only 0.4 percent in 1996. Modest
economic growth was partially offset by a pilot retail access program initiated
in New Hampshire in June 1996; however, the pilot had little impact on 1996
financial results. Absent the negative effects of the pilot program, sales would
have increased by 1.7 percent. In 1997, management expects that the New
Hampshire economy will continue to experience modest economic growth.
RESTRUCTURING
GENERAL
The movement toward electric industry restructuring continues to gain momentum
nationally as well as within New Hampshire. Factors that are driving the move
toward restructuring, in the Northeast in particular, include legislative and
regulatory actions and relatively high electricity prices. These actions will
impact the way that PSNH has historically conducted its business. Although PSNH
continues to operate under cost-of-service based regulation, recent actions
taken by the NHPUC, have created uncertainty with respect to future rates and
the recovery of strandable investments. Strandable investments are regulatory
assets or other assets that would not be economical in a competitive
environment. PSNH has exposure to strandable investments for its contractual
obligation to NAEC for the Seabrook nuclear generating facility, state mandated
purchased power arrangements that are priced above the market, significant
regulatory assets that represent costs deferred by state regulators for future
recovery and costs incurred and assets created in connection with the
bankruptcy reorganization of PSNH and NU's acquisition of PSNH. PSNH's
exposure to strandable investments and purchased power obligations exceeds its
shareholder's equity. PSNH's ability to compete in a restructured
environment would be negatively affected unless PSNH was able to recover
substantially all of these past investments and commitments. Management
believes that it is entitled to full recovery of its prudently incurred costs,
including regulatory assets and other strandable investments, based on the
general nature of public utility industry cost-of-service based regulation
and PSNH's rate agreement that was entered into by NU, PSNH and the state of
New Hampshire in 1989 (the Rate Agreement).
FEBRUARY 28, 1997 NHPUC ORDERS
On February 28, 1997, the NHPUC issued its orders for restructuring the state's
electric utility industry and setting interim stranded cost charges for PSNH
pursuant to legislation enacted in New Hampshire in 1996 (the Final Plan). The
Final Plan would implement retail choice for all customers by January 1, 1998.
The Final Plan would replace the traditional cost-of-service based regulation
with a regional average rate approach to rate setting and recovery of
strandable investments. Accordingly, unless the litigation described below
results in a stay that leads management to conclude that the ratemaking
approach in the NHPUC's restructuring orders will not go into effect, PSNH
will be required to discontinue accounting under Statement of Financial
Accounting Standards (SFAS) 71, "Accounting for the Effects of Certain Types
of Regulation." This would result in PSNH writing off from its balance sheet,
as early as the quarter ending March 31, 1997, substantially all of its
regulatory assets. The amount of the potential write-off triggered by the
Final Plan is currently estimated at over $400 million, after taxes. Management
believes that under the Final Plan, PSNH would not be required to recognize
any additional loss resulting from impairment of the value of its other
long-lived assets under the provisions of SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of."
The Final Plan also contains rulings on numerous other issues that would, if
put into effect, have a substantial effect on PSNH's operations. Included
among these rulings are the requirement that PSNH divest within two years of
the initiation of competition all of its owned generation and all of its
wholesale power purchase contracts (including its contract with NAEC for
Seabrook output); a prohibition on the remaining distribution company and its
affiliates from engaging in retail marketing or load aggregation services; a
mandate for the filing of tariffs with the Federal Energy Regulatory Commission
(FERC) for the provision of unbundled retail transmission service; and
assertions that the Rate Agreement, which was an integral part of NU's
acquisition of PSNH, is not binding on the state. The company will challenge
these assertions.
PSNH must file revised interim stranded cost charges, in accordance with the
terms of the Final Plan, by April 30, 1997. The Final Plan also requires each
utility, including PSNH, to file comprehensive plans, by June 30, 1997, which
comply with the Final Plan and supplemental orders. In addition, any
jurisdictional utility that chooses to be a distribution company must submit a
plan by December 31, 1997, to divest its generation and aggregation/marketing
service functions by the end of the two-year period following the initiation of
competition.
On March 3, 1997, PSNH, NU, NAEC and Northeast Utilities Service Company filed
for a temporary restraining order, preliminary and permanent injunctive relief
and for declaratory judgment in the United States District Court for New
Hampshire. The case was subsequently transferred to Rhode Island. On March 10,
1997, the court issued a temporary restraining order, which stayed the NHPUC's
February 28, 1997, orders to the extent they established a rate setting
methodology that is not designed to recover PSNH's costs of providing service
and would require PSNH to write off any regulatory assets under SFAS 71. An
evidentiary hearing regarding the system plaintiffs' request for a preliminary
injunction will be held on March 20, 1997. PSNH also intends to pursue claims
for damages against the state of New Hampshire in the New Hampshire state court
for abrogation of the 1989 Rate Agreement. The damage claims will be in the
hundreds of millions of dollars. Management cannot predict the ultimate outcome
of these actions.
If PSNH is unable to keep this stay in effect, or receive another appropriate
court action, or otherwise modify the Final Plan, the write-off triggered by
the Final Plan would result in defaults which, if not waived or renegotiated,
would give creditors the right to accelerate the repayment of approximately
$686 million of PSNH indebtedness and $515 million of NAEC indebtedness. These
circumstances could force PSNH and NAEC to seek bankruptcy protection under
Chapter 11 of the bankruptcy laws.
POTENTIAL ACCOUNTING IMPACTS
PSNH follows accounting principles in accordance with SFAS 71, which allows the
economic effects of rate regulation to be reflected. Under these principles,
regulators may permit incurred costs for certain events or transactions, which
would be treated as expenses by nonregulated enterprises, to be deferred as
regulatory assets and recovered through revenues at a later date.
If future competition or regulatory actions cause any portion of its operations
to no longer be subject to SFAS 71, PSNH would no longer be able to recognize
regulatory assets and liabilities for that portion of its business unless those
costs would be recoverable by a portion of the business remaining on cost-of-
service based regulation. Under its current regulatory environment, and subject
to the successful resolution of the legal actions PSNH has taken with respect
to the NHPUC's recent restructuring activities, management believes that PSNH's
use of SFAS 71 remains appropriate.
If events create uncertainty about the recoverability of any of PSNH's
remaining long-lived assets, PSNH would be required to determine the fair
value of its long-lived assets, including regulatory assets, in accordance
with SFAS 121. The implementation of SFAS 121 did not have a material impact
on the company's financial position or results of operations as of
December 31, 1996. Management believes it is probable that PSNH will recover
its investments in long-lived assets through future revenues. This conclusion
may change in the future as competitive factors influence wholesale and retail
pricing in the electric utility industry or if the cost-of-service based
regulatory structure were to change.
See the "Notes to Financial Statements" Note 1H, for further information on
regulatory accounting.
RATE MATTERS
PSNH's Rate Agreement provides for seven base rate increases and a
comprehensive fuel and purchased power adjustment clause (FPPAC). In June,1996,
the final base rate increase of 5.5 percent went into effect . Although the
FPPAC continues for an additional three years beyond the end of the fixed rate
period, there is uncertainty regarding how it will function after that time.
Given the completion of the fixed rate period, and the uncertainty surrounding
the FPPAC, management expects to file a rate case with the NHPUC in May, 1997.
In June, 1996, the NHPUC ordered PSNH to refund, over 12 months, $41.5 million,
(including $5 million of interest) related to small power producer costs which
had been previously collected through the FPPAC.
See the "Notes to Financial Statements" Note 1K, for further information on the
FPPAC.
COMPETITION
In addition to legislative and regulatory actions, competition in the electric
utility industry continues to grow at a rapid pace as a result of technological
advances; relatively high electricity prices in certain regions of the country,
including New England; surplus generating capacity; and the increased
availability of natural gas. Competitive forces in the electric utility
industry have already caused some customers to choose alternative energy
suppliers or relocate outside of PSNH's service territory. In response, PSNH
is preparing for a competitive environment by expanding previously established
programs and developing new ways to fortify its relationships with existing
customers and attract new customers, both within and outside its service
territory.
During 1996, PSNH continued to negotiate long-term power supply arrangements
with certain large commercial and industrial retail customers that require an
incentive to locate or expand their operations within PSNH's service territory,
are considering leaving or reducing operations in the service territory, are
facing short-term financial problems, or are considering generating their own
electricity. Approximately 14 percent of PSNH's commercial and industrial
retail revenues were under negotiated rate agreements at the end of 1996. In
1996, these negotiated rate reductions amounted to approximately $12.5 million,
up from $8 million in 1995. These activities are expected to continue in 1997.
During 1996, the NU system devoted significantly more resources to its Retail
Marketing Organization, whose primary mission is to provide value added energy
solutions to customers. Training was emphasized for its 170 new employees, the
majority of which are account executives charged with developing tailored
solutions for the NU system's customers and positioning NU as a valuable
partner for the future. The ability of these account executives to obtain an
intimate understanding of customers' needs and concerns and provide value added
energy solutions will play a key role in the NU system's ability to effectively
compete in the future.
NU subsidiaries competed actively in two pilot retail access programs that were
initiated in New Hampshire and Massachusetts in 1996. In New Hampshire,
approximately 14,500 customers are participating in a two-year statewide pilot
program. NU subsidiaries introduced three energy and service product offerings
under different brand names and competed against 35 other energy suppliers.
Given the political and regulatory environment in New Hampshire, it is notable
that NU retained approximately 60 percent of PSNH's participating customers
(50 percent of the total energy demand market share) and gained approximately
15 percent of the customers participating from outside NU's service territory.
In addition to exposing NU to a competitive environment, these pilots have
enabled NU to develop relationships with customers outside of its service
territory and to secure energy contracts with major commercial customers.
Revenue erosion from traditional retail electric sales may be significant after
restructuring. While margins on retail electric sales are likely to be thin,
utilities can compete successfully if they are allowed to recover their
strandable investments. During 1997 and beyond, the NU system will continue to
participate in state sanctioned retail access programs; invest in new
unregulated businesses; develop new energy-related products and services; and
pursue strategic alliances with companies in various energy-related fields,
including fuel supply and management, power quality, energy efficiency and load
management services. Strategic alliances will allow NU to enter markets that
provide access to new product lines and technologies that complement NU's
current products and services.
NUCLEAR PERFORMANCE
PSNH has a 2.85 percent ownership interest in Millstone 3. In addition, under
the Seabrook Power Contracts, PSNH is obligated to purchase NAEC's 35.98
percent ownership of the capacity and output of Seabrook unit 1 (Seabrook) for
a period equal to the length of the Nuclear Regulatory Commission (NRC)
full-power operating license for Seabrook (through 2026) whether or not
Seabrook is operating and without regard to the cost of alternative sources
of power. North Atlantic Energy Service Corporation (NAESCO) is the managing
agent and operates Seabrook.
Seabrook operated at a capacity factor of 96.8 percent through December 1996,
compared to 83.2 percent for the same period in 1995. The higher 1996 capacity
factor was primarily the result of the planned refueling and maintenance outage
in 1995 and the lack of an outage in 1996. The plant has a 49-day refueling
outage scheduled to begin May 10, 1997.
Subsequent to its January 31, 1996, announcement that the three Millstone units
(Millstone) had been placed on its watch list, the NRC has stated that the
units cannot return to service until independent, third-party verification
teams have reviewed the actions taken to improve the design, configuration
and employee concerns issues that prompted the NRC to place the units on its
watch list. Upon successful completion of these reviews, the NRC must approve
the restart of each unit through a formal commission vote.
In October, 1996, the NRC issued a request for information concerning all
nuclear plants in the United States, except Millstone, which had previously
received such a request. Such information will be used to verify that these
facilities are being operated and maintained in accordance with NRC regulations
and their specific licenses. NAESCO has filed its response to the NRC's request,
with respect to Seabrook. Seabrook's operations were not restricted by the
request. The NRC's April, 1996, inspection found Seabrook to be a well-operated
facility and found no major safety issues or weaknesses and noted that it would
reduce its future inspections in a number of areas as a result of its findings.
Management took several key steps toward improving NU's nuclear program during
1996 and will continue to place a high priority on its recovery in 1997. The NU
Board of Trustees formed a committee in April, 1996, to provide high-level
oversight of the safety and effectiveness of NU's nuclear operations, progress
toward resolving open NRC issues and progress in resolving employee, community
and customer concerns. In September, 1996, Bruce D. Kenyon was appointed
President and Chief Executive Officer of Northeast Nuclear Energy Company
(NNECO), a wholly-owned subsidiary of NU that operates Millstone, and retired
Admiral David M. Goebel was selected to serve as Vice President for Nuclear
Oversight. In early 1997, Neil S. Carns was selected to serve as Senior Vice
President and Chief Nuclear Officer to oversee Millstone operations. Shortly
after his arrival, Mr. Kenyon unveiled a reorganization of NU's nuclear
organization that includes executives loaned from unaffiliated utility
companies. The new organization is intended to establish direct accountability
for performance at each of the nuclear units that the NU system operates and
includes a recovery team for each Millstone unit.
Under the new nuclear organization, each unit's recovery team will be working
toward restart of its respective unit simultaneously with the other two units.
Management estimates that one of the units will be ready for NNECO to request
the NRC's approval for restart in the third quarter of 1997, with the second
and third units ready in the fourth quarter of 1997 and the first quarter of
1998, respectively. Subsequent to NNECO's request to restart any of the units,
the NRC will require a period of time to assess the results of the reviews
performed by the NRC and the independent third-party teams. Management cannot
estimate when the NRC will allow any of the units to restart, however, it hopes
to have at least one unit operating in the second half of 1997. A period of
time will be required subsequent to restart for each unit to return to
operating at full power.
To date, PSNH's costs related to the Millstone 3 outage have not had a material
impact on the company's financial position or results of operations. Management
expects that, under its current planning assumptions, Millstone 3's outage-
related costs will continue to be immaterial to the company's financial
statements.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations increased by approximately $39 million in 1996,
primarily due to lower interest on long-term debt and higher revenues,
partially offset by higher purchased power costs, higher operation and
maintenance expenses and lower funds from working capital. Cash used for
financing activities increased by approximately $32 million in 1996, primarily
due to higher long-term debt repayments. Cash used for investments increased by
approximately $6 million in 1996, primarily due to a decrease in loan repayments
from other system companies under the NU system Money Pool, partially offset by
lower construction expenditures in 1996.
The company has a more leveraged capital structure than most other investor-
owned public utilities and is required to make substantial interest payments.
The company's indebtedness under the Revolving Credit Facility, and some of the
company's pollution control revenue bonds bear interest at floating rates to be
set periodically, causing the company to be sensitive to fluctuating interest
rates.
In March, 1997, Standard & Poor's Ratings Group (S&P) and Moody's Investors
Service (Moody's) downgraded NU, PSNH and NAEC securities as a result of recent
restructuring activities in New Hampshire. None of PSNH's and NAEC's securities
are rated at investment grade. S&P and Moody's are reviewing all NU system
securities for further downgrades. These actions will adversely affect the
availability and cost of funds for PSNH.
NUCLEAR DECOMMISSIONING
PSNH has a 5 percent ownership interest in the Connecticut Yankee nuclear
generating facility (CY or the plant). On December 4, 1996, the CY Board of
Directors voted unanimously to cease permanently the production of power at the
plant. The decision to retire CY from commercial operation was based on an
economic analysis of the costs of operating it compared to the costs of closing
it and incurring replacement power costs over the remaining period of the
plant's operating license, which expires in 2007. The economic analysis showed
that closing the plant and incurring replacement power costs produced
substantial savings.
CY has undertaken a number of regulatory filings intended to implement the
decommissioning. In late December, 1996, CY filed an amendment to its power
contracts with the FERC to clarify the obligations of its purchasing utilities
73
following the decision to cease power production. At December 31, 1996, PSNH's
share of these obligations was approximately $38 million, including the cost of
decommissioning and the recovery of existing assets. Management expects that
PSNH will continue to be allowed to recover such FERC-approved costs from its
customers. Accordingly, PSNH has recognized its share of the estimated costs as
a regulatory asset, with a corresponding obligation, on its Balance Sheets.
PSNH's estimated cost to decommission its 2.85 percent share of Millstone 3 and
NAEC's 35.98 percent share of Seabrook is approximately $13 million and $162
million, respectively, in year end 1996 dollars. These costs are being
recognized over the lives of the respective units with a portion being currently
recovered through rates. Under the terms of the Rate Agreement, the company is
obligated to pay NAEC's share of Seabrook's decommissioning costs, even if the
unit is shut down prior to the expiration of its operating license. As of
December 31, 1996, the market value of the contributions already made to the
Seabrook and Millstone 3 decommissioning trusts, including their investment
returns, was approximately $20 million and $3 million, respectively.
See the "Notes to Financial Statements" Note 4, for further information on
nuclear decommissioning, including PSNH's share of costs to decommission the
regional nuclear generating units.
ENVIRONMENTAL
PSNH is potentially liable for environmental cleanup costs at a number of sites
inside and outside its service territory. To date, the future estimated
environmental remediation liability has not been material with respect to the
earnings or financial position of PSNH. At December 31, 1996, PSNH had recorded
an environmental reserve of approximately $5 million, the most probable amount
as required by SFAS 5, "Accounting for Contingencies."
See the "Notes to Financial Statements" Note 10C, for further information on
environmental matters.
RESULTS OF OPERATIONS
Income Statement Variances
(Millions of Dollars)
1996 over/(under) 1995 1995 over/(under) 1994
Amount Percent Amount Percent
Operating revenues $130 13% $58 6%
Fuel, purchased and
net interchange
power 100 39 34 15
Other operation 14 4 10 3
Maintenance 3 8 (1) (3)
Depreciation (1) (3) 6 15
Federal and state
income taxes 17 25 2 3
Other, net 5 (a) 3 (a)
Interest on
long-term debt (19) (25) - -
Other interest expense 3 (a) - -
Net income 14 16 6 8
(a) Percent greater than 100
OPERATING REVENUES
Total operating revenues increased in 1996, primarily due to higher fuel
revenues, regulatory decisions and other retail revenues. Fuel revenues
increased $112 million, primarily due to the intercompany allocation of energy
costs to NU affiliated companies ($125 million) and higher base fuel revenues as
a result of the June 1996 and 1995 retail rate increases, partially offset by
lower FPPAC revenues as a result of a customer refund ordered by the NHPUC.
Revenues related to regulatory decisions increased $13 million, primarily due to
the retail rate increases. Other retail revenues increased $5 million primarily
due to sales growth and other revenue sources. Retail sales increased 0.4
percent ($2 million), primarily due to economic growth in 1996, partially offset
by milder weather in 1996.
Total operating revenues increased in 1995, primarily due to regulatory
decisions and higher fuel recoveries, partially offset by lower retail sales.
Revenues related to regulatory decisions increased $20 million, primarily due to
the effects of the June 1995 and 1994 retail rate increases. Fuel, purchased
power and FPPAC costs recoveries increased $49 million, primarily due to higher
fuel and purchased power costs. Sales volume decreased $11 million, primarily
due to price discounts, milder weather and lower wholesale sales.
FUEL, PURCHASED AND NET INTERCHANGE POWER
Fuel, purchased and net interchange power expense increased in 1996, primarily
due to higher purchased power costs and the timing of the recognition of fuel
expenses under the FPPAC.
Fuel, purchased and net interchange power increased in 1995, primarily due to
the timing of the recognition of fuel expenses under the FPPAC.
OTHER OPERATION AND MAINTENANCE
Other operation and maintenance expenses increased in 1996, primarily due to
higher storm expenditures, higher employee benefit costs, higher capacity
charges under the Seabrook Power Contracts and higher marketing costs.
Other operation and maintenance expenses, net increased in 1995, primarily due
to higher capacity charges under the Seabrook Power Contracts due to Seabrook's
1995 refueling and maintenance outage.
DEPRECIATION
Although the change in 1996 was not significant, depreciation increased in 1995,
primarily due to the additional depreciation allowed from the savings from
burning gas at Newington Station and an increase in plant additions.
FEDERAL AND STATE INCOME TAXES
Federal and state income taxes increased in 1996 and 1995, primarily due to
higher book taxable income.
OTHER, NET
Other, net increased in 1996, primarily due to the deferral of interest expense
associated with the FPPAC refund. The change in 1995 was not significant.
INTEREST ON LONG-TERM DEBT
Interest on long-term debt decreased in 1996, primarily due to the repayment of
the $172.5 million Series A first mortgage bond in May. The change in 1995 was
not significant.
OTHER INTEREST EXPENSE
Other interest expense increased in 1996, primarily due to interest expense
associated with the FPPAC refund. The change in 1995 was not significant.
Public Service Company of New Hampshire
SELECTED FINANCIAL DATA (a)
Jan. 1, 1996 Jan. 1, 1995 Jan. 1, 1994
to to to
For the Periods Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994
(Thousands of Dollars)
Operating Revenues...... $1,110,169 $ 979,971 $ 922,039
Operating Income.......... 155,195 155,628 152,086
Net Income ............... 96,902 83,255 77,444
Cash Dividends on
Common Stock............ 52,000 52,000 -
At Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994
Total Assets........... $2,851,212 $2,920,487 $2,845,967
Long-Term Debt (c)...... 686,485 858,985 999,985
Preferred Stock
Subject to Mandatory
Redemption(c)........... 125,000 125,000 125,000
Obligations Under
Seabrook Power
Contracts and Other
Capital Lease(c)........ 914,617 915,288 887,967
(a) Reclassifications of prior data have been made to conform with
the current presentation.
(b) PSNH was acquired by NU on June 5, 1992.
(c) Includes portions due within one year.
SELECTED FINANCIAL DATA
Jan. 1, 1993 June 5, 1992 (b) Jan. 1, 1992
to to to
Dec. 31, 1993 Dec. 31, 1992 June 4, 1992
(Thousands of Dollars)
$864,415 $ 492,559 $ 381,769
124,710 61,206 34,250
52,237 29,398 12,778
- - -
Dec. 31, 1993 Dec. 31, 1992 June 4, 1992
(Thousands of Dollars)
$2,774,511 $2,793,768 $2,693,414
1,093,895 1,187,985 1,488,985
125,000 125,000 125,000
856,559 787,826 -
STATISTICS
Average
Gross Electric Annual
Utility Plant Use Per
December 31, kWh Residential Electric
(Thousands of Sales Customer Customers Employees
Dollars)(a) (Millions) (kWh) (Average) (December 31)
1996 $2,382,009 13,601 6,567 407,082 1,279
1995 2,469,474 11,001 6,524(d) 406,077 1,325
1994 2,521,960 11,008 6,768 400,775 1,374
1993 2,590,644 11,146 6,817 397,277 1,426
1992(b) 2,656,493 12,294 6,874 394,046 1,680
STATEMENTS OF QUARTERLY FINANCIAL DATA (Unaudited)
Quarter Ended (c)
1996 March 31 June 30 Sept.30 Dec. 31
Operating Revenues........ $269,540 $261,897 $296,719 $282,013
Operating Income........... $ 44,668 $ 42,156 $ 46,934 $ 21,437
Net Income.............. $ 28,545 $ 23,986 $ 30,646 $ 13,725
1995
Operating Revenues..........$252,337 $232,849 $249,626 $245,159
Operating Income.......... $ 41,858 $ 31,480 $ 40,333 $ 41,957
Net Income................ $ 21,823 $ 13,892 $ 23,195 $ 24,345
(a) Includes reclassification of the unamortized acquisition costs to gross
utility plant.
(b) PSNH was acquired by NU on June 5, 1992.
(c) Reclassifications of prior data have been made to conform with
the current presentation.
(d) Effective January 1, 1996, the amounts shown reflect billed and
unbilled sales. 1995 has been restated to reflect this change.
EXHIBIT 13.5
1996 Annual Report
North Atlantic Energy Corporation
Index
Contents Page
Balance Sheets.......................................................... 2-3
Statements of Income.................................................... 4
Statements of Cash Flows................................................ 5
Statements of Common Stockholder's Equity............................... 6
Notes to Financial Statements........................................... 7
Report of Independent Public Accountants................................ 23
Management's Discussion and Analysis of Financial
Condition and Results of Operations................................... 25
Selected Financial Data................................................. 32
Statistics.............................................................. 32
Statements of Quarterly Financial Data.................................. 32
NORTH ATLANTIC ENERGY CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
At December 31, 1996 1995
- -----------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at original cost:
Electric................................................ $ 775,794 $ 771,794
Less: Accumulated provision for
depreciation (Note 1F) ................... 124,530 99,772
------------- -------------
651,264 672,022
Construction work in progress........................... 8,887 7,616
Nuclear fuel, net....................................... 31,765 27,482
------------- -------------
Total net utility plant............................. 691,916 707,120
------------- -------------
Other Property and Investments:
Nuclear decommissioning trusts, at market............... 19,744 15,312
Other, at cost.......................................... - 222
------------- -------------
19,744 15,534
------------- -------------
Current Assets:
Cash.................................................... 299 8,313
Special deposits (Note 1M).............................. 7,039 71
Notes receivable from affiliated companies.............. - 2,500
Receivables from affiliated companies................... 16,422 18,692
Materials and supplies, at average cost................. 13,093 12,269
Prepayments and other................................... 4,302 4,157
------------- -------------
41,155 46,002
------------- -------------
Deferred Charges:
Regulatory assets (Note 1H)............................. 259,881 239,896
Unamortized debt expense................................ 4,692 5,619
Other................................................... - 478
------------- -------------
264,573 245,993
------------- -------------
Total Assets........................................ $ 1,017,388 $ 1,014,649
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
NORTH ATLANTIC ENERGY CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
At December 31, 1996 1995
- -----------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock--$1 par value. Authorized
and outstanding 1,000 shares in 1996 and 1995.......... $ 1 $ 1
Capital surplus, paid in................................ 160,999 160,999
Retained earnings....................................... 53,749 59,677
------------- -------------
Total common stockholder's equity.............. 214,749 220,677
Long-term debt.......................................... 495,000 540,000
------------- -------------
Total capitalization........................... 709,749 760,677
------------- -------------
Current Liabilities:
Notes payable to affiliated company..................... 2,500 8,000
Long-term debt--current portion......................... 20,000 20,000
Accounts payable........................................ 20,714 6,135
Accounts payable to affiliated companies................ 5,073 143
Accrued interest........................................ 2,888 3,452
Accrued taxes........................................... 3,486 1,346
Other................................................... 271 270
------------- -------------
54,932 39,346
------------- -------------
Deferred Credits:
Accumulated deferred income taxes (Note 1I)............. 196,650 179,135
Deferred obligation to affiliated company (Note 6)...... 33,284 33,284
Other................................................... 22,773 2,207
------------- -------------
252,707 214,626
------------- -------------
Commitments and Contingencies (Note 7)
------------- -------------
Total Capitalization and Liabilities........... $ 1,017,388 $ 1,014,649
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
NORTH ATLANTIC ENERGY CORPORATION
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
- ------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues................................. $ 162,152 $ 157,183 $ 145,751
---------- ---------- ----------
Operating Expenses:
Operation --
Fuel.......................................... 15,013 12,030 7,144
Other......................................... 34,356 36,737 37,929
Maintenance...................................... 9,154 12,442 14,951
Depreciation..................................... 24,056 23,406 22,959
Federal and state income taxes (Note 5).......... 12,341 10,187 8,027
Taxes other than income taxes.................... 12,343 10,987 11,791
---------- ---------- ----------
Total operating expenses................... 107,263 105,789 102,801
---------- ---------- ----------
Operating Income................................... 54,889 51,394 42,950
---------- ---------- ----------
Other Income:
Deferred Seabrook return--other
funds (Note 1K)................................ 7,700 9,405 12,951
Other, net....................................... 1,200 1,556 1,272
Income taxes--credit............................. 5,052 2,776 3,970
---------- ---------- ----------
Other income, net.......................... 13,952 13,737 18,193
---------- ---------- ----------
Income before interest charges............. 68,841 65,131 61,143
---------- ---------- ----------
Interest Charges:
Interest on long-term debt....................... 52,414 62,721 64,022
Other interest................................... (697) (519) (280)
Deferred Seabrook return--borrowed
funds (Note 1K)................................ (14,948) (21,512) (33,134)
---------- ---------- ----------
Interest charges, net...................... 36,769 40,690 30,608
---------- ---------- ----------
Net Income......................................... $ 32,072 $ 24,441 $ 30,535
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
NORTH ATLANTIC ENERGY CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Activities:
Net Income.................................................. $ 32,072 $ 24,441 $ 30,535
Adjustments to reconcile to net cash
from operating activities:
Depreciation.............................................. 24,056 23,406 22,959
Amortization of nuclear fuel.............................. 11,668 9,183 5,050
Deferred income taxes and investment tax credits, net..... 15,749 46,114 34,449
Deferred return - Seabrook................................ (22,648) (30,917) (46,085)
Sale of Seabrook 2 steam generator........................ 20,931 - -
Loss on reacquired debt................................... - (31,886) -
Other sources of cash..................................... 9,175 2,957 1,753
Other uses of cash........................................ (2,582) (3,375) (2,842)
Changes in working capital:
Receivables............................................... 2,270 (4,709) 9,998
Materials and supplies.................................... (824) (2,233) (2,683)
Accounts payable.......................................... 19,509 2,167 (2,277)
Accrued taxes............................................. 2,140 (93) 1,312
Other working capital (excludes cash)..................... (7,675) (12,161) 4,029
----------- ----------- -----------
Net cash flows from operating activities...................... 103,841 22,894 56,198
----------- ----------- -----------
Financing Activities:
Issuance of long-term debt.................................. - 225,000 -
Net increase (decrease) in short-term debt.................. (5,500) 8,000 -
Reacquisitions and retirements of long-term debt............ (45,000) (225,000) -
Cash dividends on common stock.............................. (38,000) (24,000) (10,000)
----------- ----------- -----------
Net cash flows used for financing activities.................. (88,500) (16,000) (10,000)
----------- ----------- -----------
Investment Activities:
Investment in plant:
Electric utility plant.................................... (5,921) (6,906) (11,256)
Nuclear fuel.............................................. (15,752) (16,609) (1,227)
----------- ----------- -----------
Net cash flows used for investments in plant................ (21,673) (23,515) (12,483)
NU System Money Pool........................................ 2,500 26,250 (28,750)
Investment in nuclear decommissioning trusts................ (4,404) (3,824) (3,315)
Other investment activities, net............................ 222 0 (223)
----------- ----------- -----------
Net cash flows used for investments........................... (23,355) (1,089) (44,771)
----------- ----------- -----------
Net Increase (Decrease) In Cash For The Period................ (8,014) 5,805 1,427
Cash - beginning of period.................................... 8,313 2,508 1,081
----------- ----------- -----------
Cash - end of period.......................................... $ 299 $ 8,313 $ 2,508
=========== =========== ===========
Supplemental Cash Flow Information:
Cash paid (received) during the year for:
Interest, net of amounts capitalized........................ $ 46,322 $ 73,923 $ 64,056
=========== =========== ===========
Income taxes................................................ $ (13,160) $ (36,679) $ (34,988)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
NORTH ATLANTIC ENERGY CORPORATION
STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Capital Retained
Common Surplus, Earnings
Stock Paid In (a) Total
- -----------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Balance at January 1, 1994 ............. $ 1 $ 160,999 $ 38,701 $ 199,701
Net income for 1994................. 30,535 30,535
Cash dividends on common stock...... (10,000) (10,000)
---------- ---------- --------- ----------
Balance at December 31, 1994............ 1 160,999 59,236 220,236
Net income for 1995................. 24,441 24,441
Cash dividends on common stock...... (24,000) (24,000)
---------- ---------- --------- ----------
Balance at December 31, 1995............ 1 160,999 59,677 220,677
Net income for 1996................. 32,072 32,072
Cash dividends on common stock...... (38,000) (38,000)
---------- ---------- --------- ----------
Balance at December 31, 1996............ $ 1 $ 160,999 $ 53,749 $ 214,749
========== ========== ========= ==========
</TABLE>
(a) All retained earnings are available for distribution, plus an allowance of
$10 million.
The accompanying notes are an integral part of these financial statements.
North Atlantic Energy Corporation
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A.ABOUT NORTH ATLANTIC ENERGY CORPORATION
North Atlantic Energy Corporation (NAEC or the company), The Connecticut
Light and Power Company (CL&P), Public Service Company of New Hampshire
(PSNH), Western Massachusetts Electric Company (WMECO), and Holyoke
Water Power Company (HWP), are the operating subsidiaries comprising the
Northeast Utilities system (the system) and are wholly-owned by
Northeast Utilities (NU).
The system furnishes retail electric service in Connecticut, New
Hampshire, and western Massachusetts through CL&P, PSNH, WMECO, and HWP.
NAEC sells all of its capacity to PSNH. In addition to its retail
service, the system furnishes firm and other wholesale electric services
to various municipalities and other utilities. The system serves about
30 percent of New England's electric needs and is one of the 20 largest
electric utility systems in the country as measured by revenues.
Other wholly owned subsidiaries of NU provide support services for the
system companies and, in some cases, for other New England utilities.
Northeast Utilities Service Company (NUSCO) provides centralized
accounting, administrative, information resources, engineering,
financial, legal, operational, planning, purchasing, and other services
to the system companies. North Atlantic Energy Service Corporation
(NAESCO) acts as agent for NAEC and CL&P and has operational
responsibilities for the Seabrook 1 (Seabrook) nuclear generating
facility. Northeast Nuclear Energy Company (NNECO) acts as agent for
CL&P, PSNH, and WMECO in operating the Millstone nuclear generating
facilities.
B.PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain reclassifications of prior years' data have been made to conform
with the current year's presentation.
All transactions among affiliated companies are on a recovery of cost
basis which may include amounts representing a return on equity, and are
subject to approval by various federal and state regulatory agencies.
C.PUBLIC UTILITY REGULATION
NU is registered with the Securities and Exchange Commission (SEC) as a
holding company under the Public Utility Holding Company Act of 1935
(1935 Act), and it and its subsidiaries, including the company, are
subject to the provisions of the 1935 Act. Arrangements among the
system companies, outside agencies and other utilities covering
interconnections, interchange of electric power and sales of utility
property are subject to regulation by the Federal Energy Regulatory
Commission (FERC) and/or the SEC. NAEC is subject to further regulation
for rates, accounting and other matters by the FERC and the New
Hampshire Public Utilities Commission (NHPUC).
D.NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," which established accounting standards for evaluating and recording
asset impairment. The company adopted SFAS 121 as of January 1, 1996.
See Note 1H, "Summary of Significant Accounting Policies - Regulatory
Accounting and Assets" for further information on the regulatory impacts
of the company's adoption of SFAS 121.
See Note 7B, "Commitments and Contingencies - Environmental Matters,"
for information on a newly issued accounting and reporting standard
related to this area.
E.JOINTLY OWNED ELECTRIC UTILITY PLANT
NAEC has a 35.98 percent joint-ownership interest in Seabrook 1, a
1,148-megawatt nuclear generating unit, including the 0.4 percent
ownership interest in Seabrook 1 which NAEC acquired from Vermont
Electric Generation and Transmission Cooperative in February 1994. NAEC
sells all of its share of the power generated by Seabrook 1 to PSNH
under two long-term contracts (the Seabrook Power Contracts). As of
December 31, 1996 and 1995, plant-in-service included approximately
$718.7 million and $715.7 million, respectively, and the accumulated
provision for depreciation included approximately $102.0 million and
$82.2 million, respectively, for NAEC's share of Seabrook 1. NAEC's
share of Seabrook 1 expenses is included in the corresponding operating
expenses on the accompanying Statements of Income.
For more information regarding Seabrook, see Note 10, "Nuclear
Performance."
F.DEPRECIATION
The provision for depreciation is calculated using the straight-line
method based on estimated remaining lives of depreciable utility plant-
in-service, adjusted for salvage value and removal costs, as approved by
the appropriate regulatory agency. Except for major facilities,
depreciation rates are applied to the average plant-in-service during
the period. Major facilities are depreciated from the time they are
placed in service. When plant is retired from service, the original
cost of plant, including costs of removal, less salvage, is charged to
the accumulated provision for depreciation. The depreciation rates for
the several classes of electric plant-in-service are equivalent to a
composite rate of 3.4 percent in 1996 and 3.3 percent in 1995 and 1994.
See Note 2, "Nuclear Decommissioning," for additional information on
nuclear plant decommissioning.
G.SEABROOK POWER CONTRACTS
PSNH and NAEC have entered into two power contracts that obligate PSNH
to purchase NAEC's 35.98 percent ownership of the capacity and output of
Seabrook 1 for the term of Seabrook 1's Nuclear Regulatory Commission
(NRC) operating license. Under these contracts, PSNH is obligated to
pay NAEC's cost of service during this period, regardless if Seabrook 1
is operating. NAEC's cost of service includes all of its Seabrook-
related costs, including operation and maintenance (O&M) expenses, fuel
expense, income and property tax expense, depreciation expense, certain
overhead and other costs and a return on its allowed investment.
The Seabrook Power Contracts established the value of the initial
investment in Seabrook (initial investment) at $700-million. As
prescribed by the 1989 rate agreement with the State of New Hampshire
(Rate Agreement), as of May 1, 1996, NAEC phased into rates 100 percent
of the recoverable portion of its investment in Seabrook 1. From June 5,
1992 (the date NU acquired PSNH and NAEC acquired Seabrook 1 from PSNH -
the Acquisition Date) through December 31, 1996, NAEC recorded $185.1
million of deferred return on its investment in Seabrook 1. In
addition, NAEC's utility plant includes $84.1 million of deferred return
that was transferred as part of the Seabrook plant assets to NAEC on the
Acquisition Date. The total deferred return, will be recovered from PSNH
with carrying charges beginning December 1, 1997, and will be fully
recovered by May 2001. NAEC is depreciating its initial investment over
the term of Seabrook 1's operating license (39 years), and any
subsequent plant additions are depreciated on a straight-line basis over
the remaining term of the Seabrook Power Contracts at the time the
subsequent additions are placed in service.
If Seabrook 1 is shut down prior to the expiration of the NRC operating
license, PSNH will be unconditionally required to pay NAEC termination
costs for 39 years, less the period during which Seabrook 1 has
operated. These termination costs will reimburse NAEC for its share of
Seabrook 1 shut-down and decommissioning costs, and will pay NAEC a
return of and on any undepreciated balance of its initial investment
over the remaining term of the Seabrook Power Contracts, and the return
of and on any capital additions to the plant made after the Acquisition
Date over a period of five years after shut down (net of any tax
benefits to NAEC attributable to the cancellation).
See Note 11, "Subsequent Event" for the possible impacts on NAEC and its
Seabrook Power Contracts with PSNH, of the NHPUC's decision related to
industry restructuring.
H.REGULATORY ACCOUNTING AND ASSETS
The accounting policies of the company and the accompanying financial
statements conform to generally accepted accounting principles
applicable to rate regulated enterprises and reflect the effects of the
ratemaking process in accordance with SFAS 71, "Accounting for the
Effects of Certain Types of Regulation." Assuming a cost-of-service
based regulatory structure, regulators may permit incurred costs,
normally treated as expenses, to be deferred and recovered through
future revenues. Through their actions, regulators may also reduce or
eliminate the value of an asset, or create a liability. If any portion
of the company's operations were no longer subject to the provisions of
SFAS 71, as a result of a change in the cost-of-service based regulatory
structure or the effects of competition, the company would be required
to write off related regulatory assets and liabilities. The company
continues to believe that its use of regulatory accounting remains
appropriate.
SFAS 121 requires the evaluation of long-lived assets, including
regulatory assets, for impairment when certain events occur or when
conditions exist that indicate the carrying amounts of assets may not be
recoverable. SFAS 121 requires that any long-lived assets which are no
longer probable of recovery through future revenues be revalued based on
estimated future cash flows. If the revaluation is less than the book
value of the asset, an impairment loss would be charged to earnings.
The implementation of SFAS 121 did not have a material impact on the
company's financial position or results of operations as of December 31,
1996. Management continues to believe that it is probable that the
company will recover its investments in long-lived assets through future
revenues. This conclusion may change in the future as competitive
factors influence wholesale and retail pricing in the electric utility
industry or if the cost-of-service based regulatory structure were to
change.
The components of NAEC's regulatory assets are as follows:
At December 31, 1996 1995
(Thousands of Dollars)
Deferred costs-Seabrook 1
(Note 1K) ................................ $185,078 $162,430
Income taxes, net (Note 1I)................. 47,185 43,231
Recoverable energy costs (Note 1J).......... 2,217 2,349
Unamortized Loss on Reacquired
Debt...................................... 25,401 31,886
$259,881 $239,896
For more information on the company's regulatory environment and the
potential impacts of restructuring, see Note 7A, "Commitments and
Contingencies - Restructuring," Note 11, "Subsequent Event" and
Management's Discussion and Analysis of Financial Condition and Results
of Operations (MD&A).
I.INCOME TAXES
The tax effect of temporary differences (differences between the periods
in which transactions affect income in the financial statements and the
periods in which they affect the determination of taxable income) is
accounted for in accordance with the ratemaking treatment of the
applicable regulatory commissions. The adoption of SFAS 109,
"Accounting for Income Taxes," in 1993 increased the company's net
deferred tax obligation. As it is probable that the increase in
deferred tax liabilities will be recovered through the Seabrook Power
Contracts, NAEC established a regulatory asset. See Note 5, "Income Tax
Expense" for the components of income tax expense.
See Note 11, "Subsequent Event" for the possible impacts on PSNH and
NAEC of the NHPUC decision related to industry restructuring.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, which give rise
to the accumulated deferred tax obligation is as follows:
At December 31, 1996 1995
(Thousands of Dollars)
Accelerated depreciation and
other plant-related differences ......... $136,234 $115,074
Regulatory assets - income tax
gross up ................................ 16,516 15,131
Other ..................................... 43,900 48,930
$196,650 $179,135
J.RECOVERABLE ENERGY COSTS
Under the Energy Policy Act of 1992 (Energy Act), NAEC is assessed for
its proportionate shares of the costs of decontaminating and
decommissioning uranium enrichment plants owned by the United States
Department of Energy (D&D assessment). The Energy Act requires that
regulators treat D&D assessments as a reasonable and necessary current
cost of fuel, to be fully recovered in rates, like any other fuel cost.
NAEC is currently recovering these costs through the Seabrook Power
Contracts. As of December 31, 1996, the company's total D&D deferral was
approximately $2.2 million.
See Note 11, "Subsequent Event" for the possible impacts of the NHPUC's
decision related to industry restructuring.
. K.DEFERRED COST - SEABROOK 1
As prescribed by the Rate Agreement as of May 1, 1996, NAEC phased into
rates 100 percent of the recoverable portion of its investment in
Seabrook 1. This plan is in compliance with SFAS 92, "Regulated
Enterprises - Accounting for Phase-In Plans." See Note 1G, "Summary of
Significant Accounting Policies - Seabrook Power Contracts," for terms
of Seabrook 1's phase-in.
See Note 11, "Subsequent Event" for the possible impacts of the NHPUC's
decision related to industry restructuring.
L.INTEREST RATE MANAGEMENT
The company utilizes interest rate management instruments to manage well
defined interest rate risks. Amounts receivable or payable under
interest-rate management instruments are accrued and offset against
interest expense. Any material unrealized gains or losses on interest
rate management instruments will be deferred until realized. For
further information, see Note 8, "Interest Rate Management."
M.SPECIAL DEPOSITS
There is approximately $7.0 million and $71 thousand, at December 31,
1996 and 1995, respectively, in special deposits that will be used to
fund NAEC's share of future Seabrook operational costs.
2. NUCLEAR DECOMMISSIONING
The Seabrook 1 nuclear power plant has a service life that is expected to
end in 2026. Upon retirement, this unit must be decommissioned. A 1996
Seabrook decommissioning study concluded that complete and immediate
dismantlement at retirement is the most viable and economic method of
decommissioning Seabrook 1. Decommissioning studies are reviewed and
updated periodically to reflect changes in decommissioning requirements,
costs, technology and inflation.
NAEC's 35.98 percent ownership of the estimated costs of decommissioning
Seabrook 1, in year-end 1996 dollars, is $162.1 million. Seabrook 1
decommissioning costs will be increased annually by an escalation rate.
Nuclear decommissioning costs are accrued over the expected service life of
the unit and are included in depreciation expense on the Statements of
Income. Nuclear decommissioning costs amounted to $3.5 million in 1996, $3.0
million in 1995, and $2.7 million in 1994. Nuclear decommissioning, as a
cost of removal, is included in the accumulated provision for depreciation
on the Balance Sheets. At December 31, 1996, the balance in the accumulated
reserve for decommissioning amounted to $19.7 million.
Under the terms of the Rate Agreement, PSNH is obligated to pay NAEC's share
of Seabrook 1's decommissioning costs, even if the unit is shut down prior
of the expiration of its operating license. NAEC's portion of the cost of
decommissioning Seabrook 1 is paid to an independent decommissioning
financing fund managed by the state of New Hampshire. Funding of the
estimated decommissioning costs assume escalated collections for Seabrook 1
and after-tax earnings on the Seabrook decommissioning fund of 6.5 percent.
As of December 31, 1996, NAEC (including payments made prior to the
Acquisition Date by PSNH) had paid approximately $16.6 million into Seabrook
1's decommissioning financing fund. Earnings on the decommissioning
financing fund increase the decommissioning financing fund balance and the
accumulated reserve for decommissioning. Unrealized gains and losses
associated with the decommissioning financing fund also impact the balance
of the fund and the accumulated reserve for decommissioning.
Changes in requirements or technology, the timing of funding or dismantling,
or adoption of a decommissioning method other than immediate dismantlement
would change decommissioning cost estimates and the amounts required to be
recovered. PSNH attempts to recover sufficient amounts through its allowed
rates to cover NAEC's expected decommissioning costs. Only the portion of
currently estimated total decommissioning cost that has been accepted by
regulatory agencies is reflected in PSNH's rates. Based on present
estimates and assuming Seabrook 1 operates to the end of its licensing
period, NAEC expects that the decommissioning financing fund will be
substantially funded when Seabrook 1 is retired from service.
Proposed Accounting: The staff of the SEC has questioned certain of the
current accounting practices of the electric utility industry, including the
company, regarding the recognition, measurement and classification of
decommissioning costs for nuclear generating units in the financial
statements. In response to these questions, FASB agreed to review the
accounting for removal costs, including decommissioning, and issued a
proposed statement entitled "Accounting for Liabilities Related to Closure
or Removal of Long-Lived Assets," in February, 1996. If current electric
utility industry accounting practices for decommissioning are changed in
accordance with the proposed statement: (1) annual provisions for
decommissioning could increase, (2) the estimated cost for decommissioning
could be recorded as a liability with an offset to plant rather than as part
of accumulated depreciation, and (3) trust fund income from the external
decommissioning trusts could be reported as investment income rather than as
a reduction to decommissioning expense.
3. SHORT-TERM DEBT
The amount of short-term borrowings that may be incurred by NAEC is subject
to periodic approval by either the SEC under the 1935 Act or by its state
regulator. Under the SEC restrictions, NAEC was authorized, as of January
1, 1997, to incur short-term borrowings up to a maximum of $50 million.
Money Pool: NAEC is a limited participant in the Northeast Utilities System
Money Pool (Pool). As a limited participant, NAEC is limited to borrowing
funds provided by NU parent. The Pool provides a more efficient use of the
cash resources of the system, and reduces outside short-term borrowings.
NUSCO administers the Pool as agent for the member companies. Borrowings
based on loans from NU parent bear interest at NU parent's cost and must be
repaid based upon the terms of NU parent's original borrowing. At
December 31, 1996 and 1995, NAEC had $2.5 million and $8.0 million,
respectively of borrowings outstanding from the Pool. The interest rate on
borrowings from the Pool at December 31, 1996 was 6.3 percent.
Maturities of NAEC's short-term debt obligations were for periods of three
months or less.
4. LONG-TERM DEBT
Details of long-term debt outstanding are:
December 31,
1996 1995
(Thousands of Dollars)
First Mortgage Bonds:
9.05% Series A, due 2002 ................... $315,000 $335,000
Notes:
Variable - Rate Facility, due 2000 ........ 200,000 225,000
Less: Amounts due within one year .......... 20,000 20,000
Long-term debt, net .................. $495,000 $540,000
Long-term debt maturities and cash sinking-fund requirements on debt
outstanding at December 31, 1996 for the years 1997 through 2001 are $20
million annually for 1997-1998, $70 million in 1999, $270 million in 2000,
and $70 million in 2001.
Interest rate management instruments with financial institutions effectively
fix the interest rate on NAEC's $200 million variable-rate bank note at 7.07
percent as of February 21, 1997. For more information on the interest-rate
instruments, see Note 8, "Interest Rate Management."
The Series A Bonds are not redeemable prior to maturity except out of
proceeds of sales of property subject to the lien of the Series A First
Mortgage Bond Indenture (Indenture), at general redemption prices
established by the Indenture, and out of condemnation or insurance proceeds
and through the operation of the sinking fund. Essentially all of NAEC's
utility plant is subject to the lien of its Indenture.
5. INCOME TAX EXPENSE
The components of the federal and state income tax provisions charged to
operations are:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Current income taxes:
Federal ......................... $(8,570) $(38,703) $(30,553)
State ........................... 110 - 161
Total current ................. (8,460) (38,703) (30,392)
Deferred income taxes, net:
Federal .......................... 14,884 41,885 34,449
State ............................ 865 4,229 -
Total deferred ................ 15,749 46,114 34,449
Total income tax expense ...... $ 7,289 $ 7,411 $ 4,057
The components of total income tax expense are classified as
follows:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Income taxes charged to operating
expenses ......................... $12,341 $10,187 $ 8,027
Other income taxes ................. (5,052) (2,776) (3,970)
Total income tax expense ........ $ 7,289 $ 7,411 $ 4,057
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Depreciation ..................... $12,730 $24,444 $22,783
Alternative minimum tax .......... - - 73
Bond redemptions ................. (2,359) 12,087 -
Seabrook 1 return ................ 5,438 8,109 11,597
Other ............................ (60) 1,474 (4)
Deferred income taxes, net ... $15,749 $46,114 $34,449
A reconciliation between income tax expense and the expected tax expense at
the applicable statutory rate is as follows:
For the Years Ended December 31, 1996 1995 1994
(Thousands of Dollars)
Expected federal income tax
at 35 percent of
pretax income ................ $13,776 $11,148 $12,107
Tax effect of differences:
Depreciation .................. (1,343) (2,159) (2,087)
Deferred Seabrook 1 return .... (2,695) (3,292) (4,533)
State income taxes,
net of federal benefit ...... 634 2,749 104
Sale of Seabrook 2 steam
generator ..................... (2,516) - -
Other, net ...................... (567) (1,035) (1,534)
Total income tax expense ........ $ 7,289 $ 7,411 $ 4,057
6. DEFERRED OBLIGATION TO AFFILIATED COMPANY
At the time PSNH emerged from bankruptcy on May 16, 1991, in accordance with
the phase-in under the Rate Agreement, it began accruing a deferred return
on the unphased-in portion of its Seabrook 1 investment. From May 16, 1991
to the Acquisition Date, PSNH accrued a deferred return of $50.9 million.
On the Acquisition Date, PSNH transferred the $50.9 million deferred return
to NAEC as part of the Seabrook-related assets.
At the time PSNH transferred the deferred return to NAEC, it realized, for
income tax purposes, a gain that is deferred under the consolidated income
tax rules. This gain will be restored for income tax purposes when the
deferred return of $50.9 million, and the associated income taxes of
$33.2 million, are collected by NAEC through the Seabrook power contracts.
When NAEC recovers the $33.2 million in years eight through ten of the Rate
Agreement, it is obligated to make corresponding payments to PSNH.
See Note 11, "Subsequent Event" for the possible impacts on NAEC of the
NHPUC's decision related to industry restructuring.
7. COMMITMENTS AND CONTINGENCIES
A.RESTRUCTURING
New Hampshire: The 1996 restructuring legislation that the NHPUC is
charged with implementing provides that the NHPUC may not adopt a
restructuring plan that imposes a severe financial hardship on a
utility. NU management has testified that the implementation of certain
methodologies would result in a significant loss to PSNH. If these
losses were to result in the triggering of acceleration rights that
PSNH's creditors have and, if any single significant creditor demanded
payment because of the triggering of acceleration rights, all other
major creditors would immediately follow and PSNH and NAEC bankruptcy
filings would be unavoidable.
Management believes that PSNH is entitled to full recovery of its
prudently incurred costs, including regulatory assets and stranded
costs. It bases this belief both on the general nature of public
utility industry cost-of-service based regulation and the specific
circumstances of the resolution of PSNH's previous bankruptcy
proceedings and its acquisition by NU, including the recoveries provided
by the Rate Agreement and related agreements.
See Note 11, "Subsequent Event" for the possible impacts on NAEC of the
NHPUC's decision related to industry restructuring.
B.ENVIRONMENTAL MATTERS
NAEC is subject to regulation by federal, state and local authorities
with respect to air and water quality, the handling and disposal of
toxic substances and hazardous and solid wastes, and the handling and
use of chemical products. NAEC has an active environmental auditing and
training program and believes that it is in substantial compliance with
current environmental laws and regulations.
Environmental requirements could hinder future construction. Changing
environmental requirements could also require extensive and costly
modifications to NAEC's existing investment in Seabrook 1 and could
raise operating costs significantly. As a result, NAEC may incur
significant additional environmental costs, greater than amounts
included in cost of removal and other reserves, in connection with the
generation of electricity and the storage, transportation, and disposal
of by-products and wastes. NAEC may also encounter significantly
increased costs to remedy the environmental effects of prior waste
handling activities. The cumulative long-term cost impact of
increasingly stringent environmental requirements cannot accurately be
estimated.
NAEC cannot estimate the potential liability for future claims,
including environmental remediation costs, that may be brought against
it. However, considering known facts, existing laws and regulatory
practices, management does not believe the matters disclosed above will
have a material effect on NAEC's financial position or future results of
operations.
On October 10, 1996, the American Institute of Certified Public
Accountants issued Statement of Position 96-1, "Environmental
Remediation Liabilities" (SOP). The principal objective of the SOP is
to improve the manner in which existing authoritative accounting
literature is applied by entities to specific situations of recognizing,
measuring and disclosing environmental remediation liabilities. The SOP
became effective January 1, 1997. The company believes that the
adoption of this SOP will not have a material impact on the company's
financial position or results of operations.
C.NUCLEAR INSURANCE CONTINGENCIES
Under certain circumstances, in the event of a nuclear incident at one
of the nuclear facilities covered by the federal government's third-
party liability indemnification program, the company could be assessed
in proportion to its ownership interest in its nuclear unit. Seabrook 1
could be assessed up to $75.5 million, not to exceed $10.0 million per
nuclear unit in any one year. Based on its ownership interest in
Seabrook 1, NAEC's maximum liability, including any additional potential
assessments, would be $28.5 million per incident. Payments for NAEC's
ownership interest would be limited to a maximum of $3.6 million per
incident per year.
Insurance has been purchased to cover the excess cost of repair,
replacement or decontamination or premature decommissioning of utility
property resulting from insured occurrences. NAEC is subject to
retroactive assessments if losses exceed the accumulated funds available
to the insurer. The maximum potential assessments against NAEC with
respect to losses arising during current policy years are approximately
$5.3 million. The cost of a nuclear incident could exceed available
insurance proceeds.
Insurance has been purchased aggregating $200 million on an industry
basis for coverage of worker claims. All participating reactor operators
insured under this coverage are subject to retrospective assessments of
$3.0 million per reactor. The maximum potential assessment against NAEC
with respect to losses arising during the current policy period is
approximately $1.1 million.
Under the terms of the Seabrook power contracts, any nuclear insurance
assessments described above would be passed on to PSNH as a "cost of
service."
D.SEABROOK 1 CONSTRUCTION PROGRAM
The construction program for Seabrook 1 is subject to periodic review
and revision by management. NAEC currently forecasts construction
expenditures for its share of Seabrook 1 to be $34.0 million for the
years 1997-2001, including $9 million for 1997. In addition, NAEC
estimates that its share of Seabrook 1 nuclear fuel requirements will be
$59.4 million for the years 1997-2001, including $15.3 million for 1997.
8. INTEREST RATE MANAGEMENT
The company utilizes various financial instruments to manage well-defined
interest rate risks. The company does not use them for trading purposes.
NAEC uses interest-rate management instruments with financial institutions
to hedge against interest-rate risk associated with its $200 million
variable-rate bank note. Interest-rate management instruments minimize
exposure associated with rising interest rates, and effectively fix the
interest rate for this borrowing arrangement. Under the agreements, NAEC
exchanges quarterly payments based on a differential between a fixed
contractual interest rate and the three-month LIBOR rate at a given time.
As of December 31, 1996, NAEC had outstanding agreements with a total
notional value of approximately $200 million and a positive mark-to-market
position of approximately $1.6 million.
These agreements have been made with various financial institutions, each of
which are rated "BBB+" or better by Standard & Poor's rating group. NAEC is
exposed to credit risk on the interest-rate management instruments if the
counterparties fail to perform their obligations. However, NAEC anticipates
that the counterparties will be able to fully satisfy their obligations
under the agreements.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each of the following financial instruments:
Cash, special deposits, and nuclear decommissioning trust: The carrying
amounts approximate fair value.
SFAS 115, "Accounting for Certain Investments in Debt and Equity
Securities," requires investment in debt and equity securities to be
presented at fair value. As a result of this requirement, the investments
held in NAEC's nuclear decommissioning trusts were adjusted to market by
approximately $0.3 million as of December 31, 1996 and adjusted to market by
approximately $0.3 million as of December 31, 1995, with corresponding
offsets to the accumulated provision for depreciation. The amounts adjusted
in 1996 and 1995 represent cumulative gross unrealized holding gains. The
cumulative gross unrealized holding losses were immaterial for 1996 and
1995.
Long-term debt: The fair value of NAEC's fixed rate security is based upon
the quoted market price for that issue or similar issue. The adjustable
rate security is assumed to have a fair value equal to its carrying amount.
The carrying amounts of NAEC's financial instruments and the estimated fair
values are as follows:
Carrying Fair
At December 31, 1996 Amount Value
(Thousands of Dollars)
First Mortgage Bonds ........................... $315,000 $316,197
Other long-term debt ........................... $200,000 $200,000
Carrying Fair
At December 31, 1995 Amount Value
(Thousands of Dollars)
First Mortgage Bonds ............................. $335,000 $336,575
Other long-term debt ............................. $225,000 $225,000
The fair values shown above have been reported to meet the disclosure
requirements and do not purport to represent the amounts at which those
obligations would be settled.
10.NUCLEAR PERFORMANCE
The three Millstone units are managed by NNECO. Millstone 1, 2, and 3 have
been out of service since November 4, 1995, February 21, 1996 and March 30,
1996, respectively, and are on the Nuclear Regulatory Commission's (NRC)
watch list. NU has restructured its nuclear organization and is currently
implementing comprehensive plans to restart the units.
Based upon management's current plans, it is estimated that one of the units
will be ready for restart in the third quarter of 1997 with the other two
units being ready for restart during the fourth quarter of 1997 and the
first quarter of 1998, respectively. Management cannot estimate when the
NRC will allow any of the units to restart, but hopes to have at least one
unit will be operating in the second half of 1997.
On October 9, 1996, the NRC issued a request for information concerning all
nuclear plants in the United States, excluding the three Millstone units
which had previously received such requests. Such information will be used
to verify that these facilities are being operated and maintained in
accordance with NRC regulations and the unit's specific licenses. The NRC
has indicated that the information will be used to determine whether future
inspection or enforcement activities are warranted for any plant. NAESCO has
submitted its response to the NRC's request with respect to Seabrook.
Seabrook's operations have not been restricted by the request. The NRC's
April 1996 comprehensive review found Seabrook to be a well-operated
facility without any major safety issues or weaknesses and noted that it
would reduce its future inspections in a number of areas as a result of its
findings.
11.SUBSEQUENT EVENT
New Hampshire Restructuring: On February 28, 1997, the NHPUC issued its
decision related to restructuring the state's electric utility industry and
setting interim stranded cost charges for PSNH pursuant to legislation
enacted in New Hampshire in 1996.
In the decision, the NHPUC announced a departure from cost-based ratemaking
and instead adopted a market-priced approach to ratemaking and stranded cost
recovery as advocated by the NHPUC's consultants. Accordingly, unless the
litigation described below results in a stay, or necessary modifications to
the final plan are made, that leads management to conclude that the rates in
the NHPUC's restructuring decision will not go into effect, PSNH will be
required to discontinue accounting under SFAS 71. That would result in PSNH
writing off from its balance sheet, as early as the quarter ending March 31,
1997, substantially all of its regulatory assets. The amount of the
potential write-off which is triggered by the order is currently estimated
at over $400 million, after taxes. PSNH does not believe that under the
decision, it would be required to recognize any additional loss resulting
from the impairment of the value of its other long-lived assets under the
provisions of SFAS 121.
The decision also contains rulings on numerous other issues that may have a
substantial effect on the operations of PSNH. Included among these rulings
are assertions that the Rate Agreement by and between PSNH's parent company,
NU and the state of New Hampshire, which was an integral part of NU's
acquisition of PSNH in 1992, is not binding on the state; the requirement
that PSNH divest within two years from the inception of competition all of
its owned-generation and all of its wholesale power contracts (including its
contracts with NAEC for Seabrook output); a prohibition on the remaining
distribution company and its affiliates from engaging in retail marketing or
load aggregation services in New Hampshire; and a mandate for the filing of
tariffs with the FERC for the provision of unbundled retail transmission
service.
On March 3, 1997, PSNH, NU, NAEC and NUSCO filed for a temporary restraining
order, preliminary and permanent injunctive relief, and for declaratory
judgment in the Federal District Court for New Hampshire. The case was
subsequently transferred to Rhode Island. On March 10, 1997, the Chief Judge
of the Rhode Island federal court issued a temporary restraining order which
stayed the NHPUC's February 28, 1997, decision to the extent it established
a rate setting methodology that is not designed to recover PSNH's costs of
providing service and would require PSNH to write off any regulatory assets.
A hearing regarding the system plaintiffs' request for a preliminary
injunction will be held in the same court on March 20, 1997.
PSNH also intends to pursue claims against the state of New Hampshire for
damages in State Court in New Hampshire for abrogation of the 1989 Rate
Agreement. The damage claims will be in the hundreds of millions of
dollars.
PSNH and NAEC are parties to a variety of financing agreements providing
that the credit thereunder can be terminated or accelerated if they do not
maintain specified minimum ratios of common equity to capitalization (as
defined in each agreement). In addition, PSNH and NAEC are parties to a
variety of financing agreements providing in effect that the credit
thereunder can be terminated or accelerated if there are actions taken,
either by PSNH or NAEC or by the state of New Hampshire, that deprive PSNH
and/or NAEC of the benefits of the Rate Agreement and/or the Seabrook Power
Contracts.
If the NHPUC's February 28, 1997 decision becomes effective, it would,
unless waived by the respective lenders, result in (i) write-offs that would
cause PSNH's common equity to fall below the contractual minimums, (ii)
reductions in income that would cause PSNH's income to fall below the
contractual minimums, (iii) potential violation of the contractual
provisions with respect to actions depriving PSNH and NAEC of the benefits
of the Rate Agreement, and (iv) the potential for cross defaults to other
PSNH and NAEC financing documents. Substantially all of PSNH's and NAEC's
debt obligations ($686 million of PSNH debt and $515 million of NAEC debt)
would be affected. For these actions to be avoided, management believes
that it is essential that the March 10, 1997, temporary restraining order
issued by a federal court judge be extended and made applicable to the
foregoing issues.
If these events transpired and the requested court relief is not
forthcoming, and if the creditors holding PSNH and NAEC debt obligations
decide to exercise their rights to demand payment and not to forebear while
the litigation is pending, then either creditors or PSNH and NAEC could
initiate proceedings under Chapter 11 of the bankruptcy laws.
PSNH and NAEC Report Considerations: As a result of the NHPUC decision and
the potential consequences discussed above, the reports of our auditors on
the individual financial statements of PSNH and NAEC contain explanatory
paragraphs. Those explanatory paragraphs indicate that a substantial doubt
exists currently about the ability of PSNH and NAEC to continue as going
concerns. The accounts of PSNH and NAEC are included in the consolidated
financial statements of NU on the basis of a going concern. While the
effect of the implementation of that decision would have a material adverse
impact on NU's financial position, results of operations and cash flows, it
would not result in defaults under borrowing or other financial agreements
of NU or its other subsidiaries.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of North Atlantic Energy Corporation:
We have audited the accompanying balance sheets of North Atlantic Energy
Corporation (a New Hampshire corporation and a wholly owned subsidiary of
Northeast Utilities) as of December 31, 1996 and 1995, and the related
statements of income, common stockholder's equity, and cash flows for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of North Atlantic Energy
Corporation as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 11, on February
28, 1997 the State of New Hampshire Public Utilities Commission (the NHPUC)
issued an order outlining its final plan to restructure the electric utility
industry. The final plan announced a departure from cost-based ratemaking for
Public Service Company of New Hampshire (PSNH) effective January 1, 1998. PSNH
is the sole customer of the Company. The final plan, if implemented, would
require PSNH to discontinue the application of Financial Accounting Standard No.
71, "Accounting for the Effects of Certain Types of Regulation," (FAS 71). The
effects of such a discontinuation would cause PSNH and the Company to be in
technical default under their current financial covenants, which would, if not
waived or renegotiated, give rise to the rights of lenders to accelerate the
repayment of approximately $686 million of PSNH's indebtedness and
approximately $515 million of the Company's indebtedness. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements referred to above do not include any
adjustments that might result from this uncertainty.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 21, 1997 (except with respect to the matter discussed in Note 11, as to
which the date is March 10, 1997)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section contains management's assessment of NAEC's (the company) financial
condition and the principal factors having an impact on the results of
operations. The company is a wholly-owned subsidiary of Northeast Utilities
(NU). This discussion should be read in conjunction with the company's financial
statements and footnotes.
FINANCIAL CONDITION
EARNINGS OVERVIEW
Public Service Company of New Hampshire (PSNH) and NAEC have entered into two
power contracts that unconditionally obligate PSNH to purchase NAEC's 35.98
percent ownership of the capacity and output of Seabrook unit 1 (Seabrook or the
plant) for a period equal to the length of the Nuclear Regulatory Commission
(NRC) full-power operating license for Seabrook (through 2026) whether or not
Seabrook is operating and without regard to the cost of alternative sources of
power (the Power Contracts). In addition, PSNH will be obligated to pay
decommissioning and project cancellation costs after the termination of the
operating license. NAEC does not have any employees of its own and does not
operate Seabrook. North Atlantic Energy Service Corporation (NAESCO) is the
managing agent and represents the Seabrook joint owners, including NAEC, in the
operation of the plant.
The company's cost-of-service includes all of its prudently incurred Seabrook-
related costs, including operation and maintenance expense, fuel expense,
property tax expense, depreciation expense, certain overhead and other costs and
a phased-in return on its Seabrook investment.
The company's only assets are Seabrook and other Seabrook-related assets and its
only source of revenues are the Power Contracts. PSNH's obligations under the
Power Contracts are solely its own and have not been guaranteed by NU. The Power
Contracts contain no provisions entitling PSNH to terminate its obligations. If,
however, PSNH were to fail to perform its obligation under the Power Contracts,
the company would be required to find other purchasers for Seabrook power.
On February 28, 1997, the New Hampshire Public Utilities Commission (NHPUC)
issued its orders for restructuring the state's electric utility industry,
including setting interim stranded cost charges for PSNH. If the orders are
implemented without modification, PSNH would be required to recognize write-offs
of over $400 million, after taxes. PSNH filed for and received a temporary
restraining order from the United States District Court, which stayed certain
portions of the NHPUC's orders. If PSNH is unable to keep this stay in effect,
receive another appropriate court action, or otherwise modify the orders, the
write-off triggered by the orders would result in defaults which, if not waived
or renegotiated, would give creditors the right to accelerate the repayment of
over $1.2 billion of PSNH and NAEC indebtedness. If the NHPUC's orders are
implemented and the financial covenant defaults are not waived, there would be
substantial doubt about the company's ability to continue as a going concern.
See "Restructuring" for further information on the impact of the NHPUC's orders.
NAEC had net income of approximately $32 million in 1996, compared to
approximately $24 million in 1995. The increase in net income was due to a 1995
one-time adjustment to the deferred Seabrook return balance and deferred tax
benefits associated with the proceeds from the sale of the Seabrook Unit 2 steam
generators.
RESTRUCTURING
GENERAL
The movement toward electric industry restructuring continues to gain momentum
nationally as well as within PSNH's jurisdiction. Factors that are driving the
move toward restructuring, in the Northeast in particular, include legislative
and regulatory actions and relatively high electricity prices. These actions
will impact the way that PSNH has historically conducted its business. Although
PSNH continues to operate under cost-of-service based regulation, recent actions
taken by the NHPUC have created uncertainty with respect to PSNH's ability to
meet its obligation to NAEC under the Power Contracts and the recovery of
strandable investments. Strandable investments are regulatory assets or other
assets that would not be economical in a competitive environment. PSNH has
exposure to strandable investments for its contractual obligation to NAEC for
the Seabrook nuclear generating facility, state mandated purchased power
arrangements that are priced above the market, significant regulatory assets
that represent costs deferred by state regulators for future recovery and costs
incurred and assets created in connection with the bankruptcy reorganization of
PSNH and NU's acquisition of PSNH. PSNH's exposure to strandable investments and
purchased power obligations exceeds its shareholder's equity. PSNH's ability to
compete in a restructured environment would be negatively affected unless PSNH
was able to recover substantially all of its past investments and commitments.
Management believes that it is entitled to full recovery of its prudently
incurred costs, including regulatory assets and other strandable investments,
based on the general nature of public utility industry cost-of-service based
regulation and PSNH's rate agreement that was entered into by NU, PSNH and the
state of New Hampshire in 1989 (the Rate Agreement).
FEBRUARY 28, 1997 NHPUC ORDERS
On February 28, 1997, the NHPUC issued its orders for restructuring the state's
electric utility industry and setting interim stranded cost charges for PSNH
pursuant to legislation enacted in New Hampshire in 1996 (the Final Plan). The
Final Plan would implement retail choice for all customers by January 1, 1998.
The Final Plan would replace the traditional cost-of-service based regulation
with a regional average rate approach to rate setting and recovery of strandable
investments. Accordingly, unless the litigation described below results in a
stay that leads management to conclude that the ratemaking approach in the
NHPUC's restructuring orders will not go into effect, PSNH will be required to
discontinue accounting under Statement of Financial Accounting Standards (SFAS)
71, "Accounting for the Effects of Certain Types of Regulation." This would
result in PSNH writing off from its balance sheet, as early as the quarter
ending March 31, 1997, substantially all of its regulatory assets. The amount of
the potential write-off which is triggered by the Final Plan is currently
estimated at over $400 million, after taxes. Management believes that under the
Final Plan, PSNH would not be required to recognize any additional loss
resulting from impairment of the value of its other long-lived assets under the
provisions of SFAS 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed Of."
The Final Plan also contains rulings on numerous other issues that would, if put
into effect, have a substantial effect on PSNH's operations. Included among
these rulings are the requirement that PSNH divest within two years of the
initiation of competition all of its owned generation and all of its wholesale
power purchase contracts (including its contract with NAEC for Seabrook output);
a prohibition on the remaining distribution company and its affiliates from
engaging in retail marketing or load aggregation services; a mandate for the
filing of tariffs with the Federal Energy Regulatory Commission (FERC) for the
provision of unbundled retail transmission service; and assertions that the Rate
Agreement, which was an integral part of NU's acquisition of PSNH, is not
binding on the state. The company will challenge these assertions.
On March 3, 1997, PSNH, NU, NAEC and Northeast Utilities Service Company filed
for a temporary restraining order, preliminary and permanent injunctive relief
and for declaratory judgment in the United States District Court for New
Hampshire. The case was subsequently transferred to Rhode Island. On March 10,
1997, the court issued a temporary restraining order, which stayed the NHPUC's
February 28, 1997, orders to the extent they established a rate setting
methodology that is not designed to recover PSNH's costs of providing service
and would require PSNH to write off any regulatory assets under SFAS 71. An
evidentiary hearing regarding the system plaintiffs' request for a preliminary
injunction will be held on March 20, 1997. PSNH also intends to pursue claims
for damages against the state of New Hampshire in the New Hampshire state court
for abrogation of the 1989 Rate Agreement. The damage claims will be in the
hundreds of millions of dollars. Management cannot predict the ultimate outcome
of these actions.
If PSNH is unable to keep this stay in effect, or receive another appropriate
court action, or otherwise modify the Final Plan, the write-off triggered by the
Final Plan would result in defaults which, if not waived or renegotiated, would
give creditors the right to accelerate the repayment of approximately $686
million of PSNH indebtedness and $515 million of NAEC indebtedness. These
circumstances could force PSNH and NAEC to seek bankruptcy protection under
Chapter 11 of the bankruptcy laws.
POTENTIAL ACCOUNTING IMPACTS
NAEC follows accounting principles in accordance with SFAS 71, that allows the
economic effects of rate regulation to be reflected. Under these principles,
regulators may permit incurred costs for certain events or transactions, which
would be treated as expenses by nonregulated enterprises, to be deferred as
regulatory assets and recovered through revenues at a later date.
If future competition or regulatory actions cause any portion of its operations
to no longer be subject to SFAS 71, NAEC would no longer be able to recognize
regulatory assets and liabilities for that portion of its business unless those
costs would be recoverable by a portion of the business remaining on cost-of-
service based regulation. Under its current regulatory environment, management
believes that NAEC's use of SFAS 71 remains appropriate.
At December 31, 1996, NAEC's regulatory assets totaled approximately $260
million and included approximately $185 million, related to the deferred return
associated with its investment in Seabrook. As of December 31, 1996, NAEC has
included in rates 100 percent of its Seabrook investment. In addition, NAEC's
utility plant includes approximately $84 million of deferred return. The
deferred return will be recovered under NAEC's Power Contracts with PSNH over
the period December 1997 through May 2001.
If events create uncertainty about the recoverability of any of NAEC's remaining
long-lived assets, NAEC would be required to determine the fair value of its
long-lived assets, including regulatory assets, in accordance with SFAS 121. The
implementation of SFAS 121 did not have a material impact on the company's
financial position or results of operations as of December 31, 1996. Management
believes it is probable that NAEC will recover its investments in long-lived
assets through future revenues. This conclusion may change in the future as
competitive factors influence wholesale and retail pricing in the electric
utility industry or if the cost-of-service based regulatory structure were to
change.
See the "Notes to Financial Statements" Note 1H, for further information on
regulatory accounting.
NUCLEAR PERFORMANCE
Seabrook operated at a capacity factor of 96.8 percent through December 1996,
compared to 83.2 percent for the same period in 1995. The higher 1996 capacity
factor was primarily the result of the planned refueling and maintenance outage
in 1995 and the lack of an outage in 1996. The plant has a 49-day refueling
outage scheduled to begin May 10, 1997.
Subsequent to its January 31, 1996, announcement that the three Millstone Units
(Millstone) had been placed on its watch list, the NRC has stated that the units
cannot return to service until independent, third-party verification teams have
reviewed the actions taken to improve the design, configuration and employee
concerns issues that prompted the NRC to place the units on its watch list. Upon
successful completion of these reviews, the NRC must approve the restart of each
unit through a formal commission vote. Management took several key steps toward
improving NU's nuclear program during 1996 and will continue to place a high
priority on its recovery in 1997.
In October, 1996, the NRC issued a request for information concerning all
nuclear plants in the United States, except Millstone, which had previously
received such a request. Such information will be used to verify that these
facilities are being operated and maintained in accordance with NRC regulations
and their specific licenses. NAESCO has filed its response to the NRC's request,
with respect to Seabrook. Seabrook's operations were not restricted by the
request. The NRC's April, 1996, inspection found Seabrook to be a well-operated
facility and found no major safety issues or weaknesses and noted that it would
reduce its future inspections in a number of areas as a result of its findings.
ENVIRONMENTAL MATTERS
NAEC is potentially liable for environmental cleanup costs at a number of sites
inside and outside its service territory. NAEC cannot estimate the potential
liability for these costs or for future claims, including environmental
remediation costs, that may be brought against it. However, considering known
facts, existing laws and regulatory practices, management does not believe that
these costs will have a material effect on NAEC's financial position or future
results of operations.
See the "Notes to Financial Statements" Note 7B, for further information on
environmental matters.
NUCLEAR DECOMMISSIONING
NAEC's estimated cost to decommission its share of Seabrook is approximately
$162 million in year end 1996 dollars. These costs are being recognized over the
life of the unit and a portion is being recovered through PSNH's rates. PSNH is
obligated to pay NAEC's share of Seabrook's decommissioning costs even if the
unit is shut down prior to the expiration of its license.
See the "Notes to Financial Statements" Note 2, for further information
regarding nuclear decommissioning.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations increased by approximately $81 million in 1996,
primarily due to proceeds from the sale of Seabrook unit 2 steam generators,
increased cash return associated with the phase-in of additional Seabrook plant
and expenses for a 1995 debt redemption. Cash flows from operations were also
impacted by a sharp increase in the level of accounts payable caused principally
by purchases in anticipation of the upcoming Seabrook outage. Cash used for
financing activities increased by approximately $73 million in 1996, primarily
due to higher reacquisitions and retirements of long-term debt, net of
issuances; higher dividend payments on common stock; and higher repayment of
short-term debt. Cash used for investments, increased by approximately $22
million in 1996, primarily due to a decrease in loan repayments from other
system companies under the NU system Money Pool.
In March, 1997, Standard & Poor's Ratings Group (S&P) and Moody's Investors
Service (Moody's) downgraded NU, PSNH and NAEC securities as a result of recent
restructuring activities in New Hampshire. None of PSNH's and NAEC's securities
are rated at investment grade. S&P and Moody's are reviewing all NU system
securities for further downgrades. These actions will adversely affect the
availability and cost of funds for NAEC.
RISK MANAGEMENT INSTRUMENTS
NAEC uses interest-rate management instruments to reduce interest-rate risk
associated with its $200 million variable-rate bank note. These instruments are
not used for trading purposes. The differential paid or received as interest
rates change is recognized in income when realized. As of December 31, 1996,
NAEC had outstanding interest-rate management instruments with a total notional
value of approximately $200 million. The settlement amounts associated with the
instruments increased interest expense by approximately $1.0 million for NAEC
during 1996. NAEC's interest-rate management instruments effectively fix its
variable-rate bank note at 7.82 percent as of March 10, 1997.
See the "Notes to Financial Statements" Note 8, for further information on
interest-rate management instruments.
RESULTS OF OPERATIONS
Income Statement Variances
(Millions of Dollars)
1996 over/(under) 1995 1995 over/(under) 1994
Amount Percent Amount Percent
Operating revenues $5 3% $11 8%
Fuel expenses 3 25 5 68
Other operation (2) (7) (1) (3)
Maintenance (3) (26) (3) (17)
Federal and state
income taxes - - 3 83
Deferred Seabrook
return (other
and borrowed
funds) (8) (27) (15) (33)
Interest on
long-term debt (10) (16) (1) (2)
Net income 8 31 (6) (20)
OPERATING REVENUES
Operating revenues represent amounts billed to PSNH under the terms of the Power
Contracts and billings to PSNH for decommissioning expense.
Operating revenues increased in 1996, primarily due to the increased return
associated with the phase-in of the final 15 percent of Seabrook plant's Initial
Investment in May, 1996, and the 1995 phase-in, partially offset by lower return
due to lower debt costs.
Operating revenues increased in 1995, primarily due to the increased return
associated with the phase-in of an additional 15 percent of the Seabrook plant's
Initial Investment in May, 1995, and May, 1994.
FUEL EXPENSES
Fuel expenses increased in 1996 and 1995, primarily due to higher Seabrook
capacity factors.
OTHER OPERATION AND MAINTENANCE
Other operation and maintenance expenses decreased in 1996, primarily due to the
planned refueling and maintenance outage in 1995.
Other operation and maintenance expenses decreased in 1995, primarily due to the
unplanned and extended Seabrook outages in 1994.
FEDERAL AND STATE INCOME TAXES
Although the change in 1996 was not significant, federal and state income taxes
increased in 1995, despite a decrease in income, primarily due to higher state
taxes as a result of a one-time adjustment to the deferred income tax provision.
DEFERRED SEABROOK RETURN
Deferred Seabrook return decreased in 1996, primarily due to the additional
Seabrook investment phased into rates in May, 1996, and May, 1995, partially
offset by a one-time adjustment in June, 1995, to the deferred Seabrook return
balance.
Deferred Seabrook return decreased in 1995, primarily due to additional Seabrook
investment phased into rates in May, 1995, and May, 1994, and a one-time
adjustment of approximately $5 million in 1995 to correct the deferred Seabrook
return balance.
INTEREST ON LONG-TERM DEBT
Interest on long-term debt decreased in 1996 and 1995 primarily due to the 1995
refinancing of its $205 million 15.23-percent variable-rate bank note.
North Atlantic Energy Corporation
SELECTED FINANCIAL DATA (a) 1996 1995 1994 1993 1992*
(Thousands of Dollars)
Operating Revenues...... $ 162,152 $ 157,183 $145,751 $125,408 $ 78,444
Operating Income........ $ 54,889 $ 51,394 $ 42,950 $ 33,718 $ 16,122
Net Income............... $ 32,072 $ 24,441 $ 30,535 $ 25,998 $ 12,703
Cash Dividends on
Common Stock.......... $ 38,000 $ 24,000 $ 10,000 $ - $ -
Total Assets............ $1,017,388 $1,014,649 $963,579 $900,821 $818,123
Long-Term Debt (b)...... $ 515,000 $ 560,000 $560,000 $560,000 $560,000
STATISTICS 1996 1995 1994 1993 1992(c)
Gross Electric Utility
Plant at December 31,
(Thousands of Dollars)... $816,446 $806,892 $792,880 $789,127 $774,920
kWh Sales (Millions) for
the twelve month period
ending December 31,..... 3,542 3,016 2,229 3,218 1,268
STATEMENTS OF QUARTERLY FINANCIAL DATA (Unaudited) (Thousands of Dollars)
Quarter Ended (a)
1996 March 31 June 30 Sept. 30 Dec. 31
Operating Revenues....... $36,663 $39,107 $41,565 $44,817
Operating Income......... $12,075 $13,786 $14,639 $14,389
Net Income............... $ 7,190 $ 7,356 $ 9,918 $ 7,608
1995
Operating Revenues......... $33,984 $36,362 $39,696 $47,141
Operating Income........... $10,974 $12,752 $13,795 $13,873
Net Income............... $ 7,501 $ 3,280 $ 6,914 $ 6,746
(a) Reclassifications of prior data have been made to conform with the
current presentation.
(b) Includes portion due within one year.
(c) The company began commercial operations on June 5, 1992. Information
presented in 1992 covers the period June 5, 1992 through December 31, 1992.
*The company began commercial operations on June 5, 1992. Information
presented for 1992 covers the period June 5, 1992 through December 31, 1992.
NORTHEAST UTILITIES SYSTEM Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
Northeast Utilities
The Connecticut Light and Power Company (100%)
- CL&P Capital, L.P. (3%)
- Research Park, Inc. (100%)
- The City and Suburban Electric and Gas Company (100%)
- Electric Power Incorporated (100%)
- The Connecticut Transmission Corporation (100%)
- The Nutmeg Power Company (100%)
- The Connecticut Steam Company (100%)
- Connecticut Yankee Atomic Power Company (34.5%)
- Yankee Atomic Electric Company (24.5%)
- Maine Yankee Atomic Power Company (12%)
- Vermont Yankee Nuclear Power Corporation (9.5%)
Public Service Company of New Hampshire (100%)
- Properties, Inc. (100%)
- New Hampshire Electric Company (100%)
- Connecticut Yankee Atomic Power Company (5%)
- Yankee Atomic Electric Company (7%)
- Maine Yankee Atomic Power Company (5%)
- Vermont Yankee Nuclear Power Corporation (4%)
North Atlantic Energy Corporation (100%)
North Atlantic Energy Service Corporation (100%)
Western Massachusetts Electric Company (100%)
- Connecticut Yankee Atomic Power Company (9.5%)
- Yankee Atomic Electric Company (7%)
- Maine Yankee Atomic Power Company (3%)
- Vermont Yankee Nuclear Power Corporation (2.5%)
Holyoke Water Power Company (100%)
- Holyoke Power and Electric Company (100%)
Charter Oak Energy, Inc. (100%)
- Charter Oak (Paris) Inc. (100%)
- COE Development Corporation (100%)
- COE (UK) Corp. (79.9%)
- COE (Gencoe) Corp. (49%)
- COE (UK) Corp. (20.1%)
- COE Argentina I Corp. (100%)
- COE Argentina II Corp. (100%)
- COE Tejona Corporation (100%)
- COE Ave Fenix Corporation (100%)
Northeast Nuclear Energy Company (100%)
Northeast Utilities Service Company (100%)
The Quinnehtuk Company (100%)
The Rocky River Realty Company (100%)
Mode 1 Communications, Inc. (100%)
NUSCO Energy Partners, Inc. (100%)
HEC Inc. (100%)
- HEC International Corporation (100%)
- HEC Energy Consulting Canada, Inc. (100%)
- Southwest HEC Energy Services L.L.C. (100%)
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