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, 1999
-----------------
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
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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)
107 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, New York Stock Exchange, Inc.
$5.00 par value
The Connecticut 9.3% Cumulative New York Stock Exchange, Inc.
Light and Power Monthly Income
Company 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
- ---------- -------------------
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
is 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 is 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
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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. [X]
The aggregate market value of Northeast Utilities' Common Share, $5.00 Par
Value, held by nonaffiliates, was $2,584,522,278 based on a closing sales
price of $18.815 per share for the 137,383,244 common shares outstanding on
February 29, 2000. 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, 1999:
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 dated March 31, 2000 Part III
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
Select Energy........................ Select Energy, Inc.
Mode 1............................... Mode 1 Communications, Inc.
HEC.................................. HEC Inc.
Quinnehtuk........................... The Quinnehtuk Company
The NU 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
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
DTE.................................. Massachusetts Department of
Telecommunications and Energy
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
1999 Form 10-K Annual Report
Table of Contents
PART I
Page
Item 1. Business....................................................... 1
The Northeast Utilities System..................................... 1
Safe Harbor Statement.............................................. 2
Mergers and Acquisitions........................................... 3
Consolidated Edison, Inc. Merger............................... 3
Yankee Energy System, Inc. Merger.............................. 5
Rates and Electric Industry Restructuring.......................... 5
General........................................................ 5
Connecticut Rates and Restructuring............................ 6
Massachusetts Rates and Restructuring.......................... 7
New Hampshire Rates and Restructuring.......................... 8
Competitive System Businesses...................................... 9
Energy-Related Products and Service and Gas Investments........ 9
Electric Generation and Services............................... 11
Energy Management Services..................................... 11
Telecommunications............................................. 12
Financing Program.................................................. 13
1999 Financings................................................ 13
2000 Financing Requirements.................................... 14
2000 Financing Plans........................................... 14
Financing Limitations.......................................... 15
Construction Program............................................... 19
Regulated Electric Operations...................................... 19
Distribution and Sales......................................... 20
Regional and System Coordination............................... 21
Transmission Access and FERC Regulatory Changes................ 21
Nuclear Generation................................................. 21
General........................................................ 21
Nuclear Plant Performance...................................... 23
Nuclear Insurance.............................................. 24
Nuclear Fuel................................................... 24
Decommissioning................................................ 26
Other Regulatory and Environmental Matters......................... 29
Environmental Regulation....................................... 29
Electric and Magnetic Fields................................... 32
FERC Hydroelectric Project Licensing........................... 32
Employees.......................................................... 33
Year 2000.......................................................... 33
Item 2. Properties..................................................... 34
Item 3. Legal Proceedings.............................................. 39
Item 4. Submission of Matters to a Vote of Security Holders............ 42
PART II
Item 5. Market for Registrants' Common Equity and Related
Shareholder Matters............................................ 42
Item 6. Selected Financial Data........................................ 42
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 43
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.................................................... 43
Item 8. Financial Statements and Supplementary Data.................... 44
Item 9. Changes in Disagreements with Accountants on
Accounting and Financial Disclosure............................ 44
PART III
Item 10. Directors and Executive Officers of the Registrants............ 45
Item 11. Executive Compensation......................................... 50
Item 12. Security Ownership of Certain Beneficial Owners and
Management..................................................... 61
Item 13. Certain Relationships and Related Transactions................. 63
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K........................................... 64
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 company of the Northeast Utilities
system (the NU system). The NU system furnishes franchised retail electric
service in Connecticut, New Hampshire and western Massachusetts through three
of NU's wholly owned subsidiaries (The Connecticut Light and Power Company
[CL&P], Public Service Company of New Hampshire [PSNH] and Western
Massachusetts Electric Company [WMECO]) and to a limited number of customers
through another wholly owned subsidiary, Holyoke Water Power Company (HWP).
The NU system serves approximately 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.
NU, through its wholly owned subsidiary, NU Enterprises, Inc. (NUEI),
owns a number of competitive energy and telecommunications related businesses,
including Northeast Generation Company (NGC), Northeast Generation Services
Company (NGS), Select Energy, Inc. (Select Energy), HEC Inc. (HEC), Mode 1
Communications, Inc. (Mode 1) and Select Energy Portland Pipeline, Inc.
(SEPPI). For information regarding the activities of these subsidiaries, see
"Competitive System Businesses."
North Atlantic Energy Corporation (NAEC) is a wholly owned 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 (Seabrook Power Contracts).
Several wholly owned subsidiaries of NU provide support services for the
NU system companies and, in some cases, for other New England utilities.
Northeast Utilities Service Company (NUSCO) provides centralized accounting,
administrative, information technology, engineering, financial, legal,
operational, planning, purchasing, and other services to the NU system
companies. North Atlantic Energy Service Corporation (NAESCO) has operational
responsibility for Seabrook. Northeast Nuclear Energy Company (NNECO) acts
as agent for the NU system companies in operating the Millstone nuclear
generating units (Millstone) in Waterford, Connecticut. Three other
subsidiaries construct, acquire or lease some of the property and facilities
used by the NU system companies.
The NU system is 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 industry and the service areas in
which each company operates, including the Connecticut Department of Public
Utility Control (DPUC), the New Hampshire Public Utilities Commission (NHPUC)
and the Massachusetts Department of Telecommunications and Energy (DTE). In
recent years, there has been significant activity at both the legislative and
regulatory levels to change the nature of regulation of the industry. For
more information regarding these restructuring initiatives, see "Rates and
Electric Industry Restructuring" and "Regulated Electric Operations."
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), NU and its reporting subsidiaries
are hereby filing cautionary statements identifying important factors that
could cause NU or its subsidiaries' actual results to differ materially from
those projected in forward looking statements (as such term is defined in the
Reform Act) made by or on behalf of NU or its subsidiaries in this combined
Form 10-K, in any subsequent filings with the SEC, in presentations, in
response to questions, or otherwise. Any statements that express or involve
discussions as to expectations, beliefs, plans, objectives, assumptions or
future events, or performance (often, but not always, through the use of words
or phrases such as will likely result, are expected to, will continue, is
anticipated, estimated, projection, outlook) are not statements of historical
facts and may be forward looking. Forward looking statements involve
estimates, assumptions and uncertainties that could cause actual results to
differ materially from those expressed in the forward looking statements.
Accordingly, any such statements are qualified in their entirety by reference
to, and are accompanied by, the following important factors that could cause
NU or its subsidiaries' actual results to differ materially from those
contained in forward looking statements of NU or its subsidiaries made by or
on behalf of NU or its subsidiaries.
Any forward looking statement speaks only as of the date on which such
statement is made, and NU and its subsidiaries undertake no obligation to
update any forward looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect
the occurrence of unanticipated events. New factors emerge from time to time
and it is not possible for management to predict all of such factors, nor can
it assess the impact of each such factor on the business or the extent to
which any factor, or combination of factors may cause actual results to
differ materially from those contained in any forward looking statements;
however, NU and its subsidiaries are required by law to update and disclose
any material developments related to previously disclosed information or to
correct any material statement made in this report and in all future reports
that turns out to be false.
Some important factors that could cause actual results or outcomes to
differ materially from those discussed in the forward looking statements
include prevailing governmental policies and regulatory actions, including
those of the SEC, the NRC, the FERC, and state regulatory agencies, with
respect to allowed rates of return, industry and rate structure, operation of
nuclear power facilities, acquisition and disposal of assets and facilities,
operation and construction of plant facilities, recovery of purchased-power
costs, stranded costs, decommissioning costs, and present or prospective
wholesale and retail competition (including but not limited to retail
wheeling and transmission costs).
The business and profitability of NU and its subsidiaries are also
influenced by economic and geographic factors including political and
economic risks, changes in environmental and safety laws and policies,
weather conditions (including natural disasters), population growth rates and
demographic patterns, competition for retail and wholesale customers, pricing
and transportation of commodities, market demand for energy from plants or
facilities, changes in tax rates or policies or in rates of inflation,
changes in project costs, unanticipated changes in certain expenses and
capital expenditures, capital market conditions, competition for new energy
development opportunities, and legal and administrative proceedings (whether
civil or criminal) and settlements.
All such factors are difficult to predict, contain uncertainties which
may materially affect actual results and are beyond the control of NU or its
subsidiaries.
MERGERS AND AQUISITIONS
CONSOLIDATED EDISON, INC. (CON EDISON) MERGER
On October 13, 1999, NU and Con Edison agreed to a merger to combine the
two companies. Assuming the merger closes on December 31, 2000, and NU meets
the nuclear divestiture condition discussed below, Con Edison will pay
approximately $3.8 billion for all the common shares of NU. In addition, Con
Edison will assume NU's debt, capitalized leases and preferred securities
which totaled $3.7 billion as of December 31, 1999. As of the present time,
however, NU and Con Edison are attempting to achieve a closing in July 2000.
Under the agreement, Con Edison will pay a base price of $25 for each
share of NU in a combination of cash and Con Edison common stock. NU
shareholders will receive an additional $1 per share in value if definitive
agreements to sell CL&P's and WMECO's interests in Millstone 2 and 3 are
entered into and recommended by the Utility Operations and Management Unit of
the DPUC on or prior to the later of December 31, 2000, or the closing of the
merger (the divestiture condition). If the merger closes before the
divestiture condition is met, NU shareholders still will receive the
additional $1 per share if the divestiture condition is met prior to December
31, 2000. Further, the value of the amount of cash or stock to be received
by NU shareholders will increase by $0.0034 per share per day, or about 10
cents per month, for each day that the transaction does not close after
August 5, 2000.
NU shareholders will have the right to elect either cash or stock, but
their elections are subject to proration if the cumulative elections exceed
50 percent in either cash or stock. NU shareholders who elect to receive
stock will receive a number of shares of Con Edison stock based on the
average trading price of Con Edison shares, determined pursuant to a formula,
during a fixed period prior to the closing (pricing period).
The merger price is subject to a trading price collar on Con Edison's
share price of between $36 and $46. Assuming the divestiture condition is
satisfied, a Con Edison average stock price within the collar and a year end
2000 closing, the total value of Con Edison common stock received by the NU
shareholders for each NU share will be $26.50. However, if the average price
of Con Edison stock is below $36 per share during the pricing period, the
stock component of the transaction will decline in value. For example,
assuming a shareholder receives 50 percent stock and 50 percent cash, for
each $1 below $36 that Con Edison averages during the pricing period, the
total value of each NU share will decline by approximately 37 cents per share.
Conversely, for each $1 above $46 that Con Edison averages during the pricing
period, the value of the transaction to that NU shareholder grows by
approximately 29 cents per share.
Ultimately the value of the transaction to NU shareholders depends on
NU's ability to satisfy the divestiture condition, the actual timing of the
closing, and the average price of Con Edison shares during the pricing
period.
On July 7, 1999, the DPUC issued a decision on the determination of the
minimum bids to be utilized in the auction process to dispose of Millstone.
On December 29, 1999, the Connecticut Office of Consumer Counsel (OCC) filed
a motion with the Connecticut Superior Court for a partial stay of the
decision, which, if granted, would stay the fixing of the minimum bid prices
for CL&P's share of Millstone. Although CL&P believes that it is highly
unlikely that such a stay will be granted, such a stay would delay the
commencement of the auction process for Millstone and adversely affect NU's
ability to meet the divestiture condition.
The merger is conditioned upon the approval of the shareholders of both
companies and several state regulatory agencies, the FERC, the SEC, and
the NRC. The companies hope that these regulatory proceedings can be
completed by the end of July 2000.
Upon completion of the merger, NU will become a wholly owned subsidiary
of Con Edison. NU's operating companies will retain their names, and their
headquarters will continue to be located in their respective service
territories. The combined company will be the nation's largest electric
distribution utility as measured by customers with over 5 million electric as
well as 1.4 million gas customers serving a diverse mix of urban and suburban
communities with a population of more than 13 million. The companies have
estimated that the combined company will have revenues on a pro forma basis
of approximately $11.9 billion and total assets of $27.3 billion, as of
December 31, 1999.
YANKEE ENERGY SYSTEM, INC. (YANKEE) MERGER
On March 1, 2000, NU acquired Yankee, and Yankee became a wholly owned
subsidiary of NU. Yankee is the parent of the Yankee Gas Services Company,
the largest natural gas distribution company in Connecticut. NU paid $45 per
share or $478 million in cash and stock for all Yankee shares. In addition,
NU assumed $164 million of Yankee's outstanding long-term debt and all of its
short-term debt which totaled $70 million at closing. Yankee shareholders
received 45 percent of the $478 million in NU common shares and 55 percent
in cash. NU arranged financing for the cash portion of the deal and met the
stock component of the deal by issuing 11.1 million new NU shares. NU expects
to redeem the majority of these shares later this year by closing out a forward
share purchase program with proceeds from restructuring. The forward share
purchase program was conducted late in 1999 and early in 2000 through two
financial institutions. With certain limited exceptions, NU is prohibited
from purchasing additional shares under its merger agreement with Con Edison.
Yankee will continue to act as the holding company of the Yankee Gas
Services Company and its four active nonutility subsidiaries, NorConn
Properties, Inc., which holds the property and facilities of Yankee; Yankee
Energy Financial Services Company, which provides customers with financing
for energy equipment installations; Yankee Energy Services Company (YESCO),
which provides energy-related services; and R.M. Services, Inc., which
provides debt collection service to utilities and other businesses
nationwide. It is expected that YESCO's business will be closely coordinated
with HEC's energy management business. For more information regarding HEC,
see "Competitive System Businesses" below.
RATES AND ELECTRIC INDUSTRY RESTRUCTURING
GENERAL
NU's electric utility subsidiaries, CL&P, WMECO and PSNH, have
undergone, or will undergo, fundamental changes in their business operations
as a result of the restructuring of the electric industry in their respective
jurisdictions. Most notably, the companies have divested, or will divest,
all of their interests in generation assets and will solely act as
transmission and distribution companies in the future. In general, their
customers will be able to choose their energy suppliers, with the electric
utility companies furnishing "standard offer" service just to those customers
who do not choose a competitive supplier. Critical to this restructuring is
the companies' ability to recover their stranded costs. Stranded costs are
expenditures incurred, or commitments for future expenditures made, on behalf
of customers with the expectation such expenditures would continue to be
recoverable in the future through rates. However, under certain circumstances
these costs might not be recoverable from customers in a fully competitive
electric utility industry (i.e., the costs may result in above-market energy
prices).
As discussed more fully below, Connecticut and Massachusetts have
enacted restructuring legislation that permits CL&P and WMECO to recover
substantially all of their prudently incurred stranded costs. NU, PSNH and
the state of New Hampshire have reached a settlement (Settlement Agreement),
which, if approved, will permit, PSNH to recover a substantial portion of its
stranded costs in connection with restructuring.
CONNECTICUT RATES AND RESTRUCTURING
Pursuant to legislation enacted in April 1998, CL&P has sold or will
sell all of its generating capacity and disposed of or renegotiated its power
supply contracts, and effective January 1, 2000, began acquiring its standard
offer energy supply on the open market through competitive bidding. On
January 1, 2000, up to 35 percent of CL&P customers located in distressed
cities became eligible to choose their electric supplier. On July 1, 2000,
100 percent of CL&P's customers will be able to choose their electric
supplier. Customers who do not choose an alternate supplier may take standard
offer service from CL&P until December 31, 2003.
CL&P had sought permission in March 1999 from the DPUC pursuant to the
restructuring legislation to recover from customers approximately $4.4
billion of its stranded costs. In a July 7, 1999 decision, the DPUC approved
the recovery of approximately $3.5 billion of stranded costs and provided for
the possible recovery of a significant portion of the remaining amount in the
future through adjustments to the decision's assumptions about future market
prices of power and other variables when the actual prices and values of
those variables are known. The OCC appealed this decision in August 1999.
The appeal is now pending.
In April 1999, CL&P filed with the DPUC for approval of its standard
offer rates. On October 1, 1999 and December 15, 1999, the DPUC issued
decisions regarding this filing. CL&P's overall rates, effective January 1,
2000, reflect a 10 percent reduction from the December 31, 1996 rate, as
mandated by the state restructuring legislation. CL&P's rates have been
unbundled into seven components, including an energy component, in order to
implement the legislation and allow customers to purchase energy from
competitive suppliers beginning on January 1, 2000.
In the October 1, 1999 decision, the DPUC also identified $470 million
of nonnuclear stranded costs that would be eligible for securitization if
customer benefits can be shown in a separate proceeding, which is expected to
be filed in the spring of 2000. Securitization is the monetizing of stranded
costs through the sale of nonrecourse debt securities, rate reduction bonds,
by a special purpose entity, as authorized by legislation, which are
collateralized by the NU system companies' interests in their stranded cost
recoveries. Securitization proceeds are applied in general to retire higher
cost capital of the utility.
The DPUC approved an interim nuclear capital recovery mechanism for the
period from January 1, 2000, until the nuclear units are sold at auction. The
DPUC, however, denied the recovery of most of the capital costs associated
with CL&P's nuclear investment subsequent to June 30, 1997, which CL&P had
expended or will expend prior to the sale of the plants, currently estimated
to occur in 2001. The DPUC has reopened the docket to reconsider this portion
of the order. Management believes the restructuring legislation provides for
the recovery of these prudently incurred expenditures. If CL&P is
unsuccessful in favorably resolving this contingency, an impairment loss of
approximately $50 million would be recorded.
CL&P's power supply to furnish standard offer service was procured
through a competitive bidding process conducted by the DPUC. On November 3,
1999, two unaffiliated companies were awarded 50 percent of CL&P's total
standard offer service load. As permitted in the restructuring legislation,
CL&P's competitive affiliate, an energy supply company, Select Energy, is
providing the remaining 50 percent, at the weighted average price of the
winning bids submitted by the unaffiliated companies. The four-year supply
contracts were effective January 1, 2000.
On December 15, 1999, as required by the restructuring legislation, CL&P
sold 2,235 megawatts (MW) of fossil-fueled generation assets in Connecticut
to an unaffiliated company for $460 million, and in March 2000, CL&P
transferred 1,057 MW of hydroelectric generation assets in Connecticut and
Massachusetts to NGC, an affiliated company, for approximately $681 million.
During the first quarter of 1999, in accordance with the Connecticut
restructuring legislation, CL&P renegotiated 15 power purchase agreements
(PPAs) with independent power producers. These renegotiations resulted in
buy out, buy down or prepayment agreements relating to the 15 PPAs. These
agreements were filed with the DPUC for approval and require that CL&P make
cash payments to the plant owners, contingent upon its receipt of proceeds
from rate reduction bonds. The DPUC has approved one of the agreements and
the DPUC proceedings concerning the remaining agreements are pending. For
CL&P's PPAs that were not renegotiated, an auction is being conducted by the
DPUC. CL&P expects that the auction results will be known in the first
quarter of 2000.
In November 1999, CL&P filed its divestiture plan for Millstone with the
DPUC. CL&P expects the auction of its share of Millstone, which will include
WMECO's and PSNH's share as well, to begin shortly after the DPUC has
approved its divestiture plan, which is currently expected to occur in March
2000. Based on this schedule a successful bidder could be chosen by mid 2000
with a closing in 2001. No NU system company will participate. CL&P intends
to auction its interest in the Seabrook nuclear plant when NAEC auctions its
Seabrook interest. The NAEC auction is contingent on approval of the PSNH
Settlement Agreement, discussed more fully below, and on NHPUC approval of a
divestiture plan.
In the fall of 1999, in order to implement the generation divestiture
provisions of the restructuring legislation, CL&P and WMECO agreed to sell
the capacity and energy associated with their unit entitlements in Millstone
2 and 3 and Seabrook to Select Energy and five unaffiliated companies
beginning January 1, 2000, and ending December 31, 2001. The price the
purchasers will pay is generally comprised of a capacity charge and an energy
charge. If the units operate as expected, the revenues that result from
these contracts over the two year period are expected to recover CL&P's and
WMECO's share of the nuclear operating costs including a return of and on the
remaining nuclear plant balances. The energy payments to CL&P and WMECO,
however, are contingent on the plants operating.
MASSACHUSETTS RATES AND RESTRUCTURING
Massachusetts enacted comprehensive electric utility industry
restructuring in November 1997. The legislation mandated, among other
things, customer choice of an energy supplier as of March 1, 1998, and
reduction of each electric utility's rates, including WMECO, by
September 1, 1999, to a level 15 percent below those in effect in August
1997, adjusted for inflation.
On September 17, 1999 and on December 20, 1999, the DTE issued orders on
WMECO'S restructuring plan. The orders permit WMECO to recover, among other
items, nonnuclear generation-related asset costs, certain nuclear generation-
related asset costs and nuclear decommissioning costs. The DTE also
approved WMECO's requested 11 percent return on equity for those transition
costs earning a return as well as the sale of WMECO's interest in Millstone
to be conducted concurrently with CL&P's sale of its interest in Millstone.
The DTE disallowed a return on WMECO's Millstone 1 investment and on its
investment in Millstone 2 and 3 from the date of retail access (March 1,
1998) until the date such units returned to service from their extended
outages (July 15, 1998 for Millstone 3 and May 19, 1999 for Millstone 2).
The pretax impact to WMECO's earnings from these dissallowances was $41
million. Two intervenors in WMECO's restructuring proceedings have appealed
the decision.
On December 30, 1999, the DTE approved the results of the auctions held
by WMECO to procure competitive standard offer service, default service and
interruptible rate standard offer service for the year 2000 from four
unaffiliated entities. Select Energy will supply customers receiving
interruptible rate standard offer service. WMECO will competitively procure
standard offer service, default service and interruptible rate standard offer
service from January 1, 2001 through February 28, 2005, at a later date.
On July 23, 1999, pursuant to the restructuring legislation, WMECO
completed the $47 million sale of 290 MW of fossil and hydroelectric
generation assets to Consolidated Edison Energy, Massachusetts, Inc., and in
March 2000, WMECO transferred 272 MW of hydro generation assets to NGC for
approximately $184 million. The net proceeds from these sales reduce WMECO's
stranded costs.
WMECO intends to file an application with the DTE in 2000, requesting
authorization to securitize a portion of its stranded costs.
NEW HAMPSHIRE RATES AND RESTRUCTURING
The state of New Hampshire's attempts to restructure the electric
utility industry in that state have resulted in extensive litigation in
various federal and state courts. In 1996, New Hampshire enacted legislation
requiring a competitive electric industry beginning in 1997. In February
1997, the NHPUC issued restructuring orders that would have forced PSNH and
NAEC to write off all of their regulatory assets and possibly seek protection
under Chapter 11 of the bankruptcy laws. Following the issuance of these
orders, PSNH immediately sought declaratory and injunctive relief on various
grounds in federal district court and received a preliminary injunction that
prevents implementation of the NHPUC's restructuring orders.
In August 1999, NU, PSNH and the state of New Hampshire signed a
Settlement Agreement intended to settle a number of pending regulatory and
court proceedings related to PSNH. Parties to the agreement included the
governor of New Hampshire, the Governor's Office of Energy and Community
Service, the New Hampshire attorney general, certain members of the staff of
the NHPUC, PSNH, and NU. The Settlement Agreement was submitted to the NHPUC
on August 2, 1999, and is awaiting approval. If approved by the NHPUC, the
Settlement Agreement would resolve 11 NHPUC dockets and PSNH's federal
lawsuit which had enjoined the state of New Hampshire from implementing its
restructuring legislation, would require PSNH to write off $225 million
after-tax of its stranded costs and would allow for the recovery of the
remaining amount. Also, implementation of the Settlement Agreement is
contingent upon the issuance of $725 million in rate reduction bonds
(securitization). Issuance of the rate reduction bonds requires the initial
approval of the NHPUC and final approval from the New Hampshire Legislature
via enactment of appropriate legislation. Other approvals are also required
from various federal and state regulatory agencies and financial lenders.
Under the terms of the Settlement Agreement, on the effective date, PSNH's
rates will be reduced from current levels by an average of 18.3 percent. A
decision on the Settlement Agreement is expected in the first quarter of
2000.
The Settlement Agreement also requires PSNH to sell its generation
assets and certain power contracts, including PSNH's current purchased-power
contract with NAEC for the output from Seabrook. The net proceeds from all
sales will be used to recover a portion of PSNH's stranded costs. The sales
would be accomplished through an auction process subject to approval by the
NHPUC. Following the divestiture, the transmission and distribution portion
of the business will continue to be cost-of-service based.
On November 2, 1999, the NHPUC approved continuation of the fuel and
purchased-power adjustment clause (FPPAC) charge for PSNH at its current
level until May 31, 2000.
COMPETITIVE SYSTEM BUSINESSES
NU is engaged in a variety of competitive businesses through Select
Energy, HEC, NGC, NGS, SEPPI, and Mode 1. With the exception of HEC whose
business is nationwide, the competitive businesses operate primarily in the
Northeast region of the United States.
ENERGY-RELATED PRODUCTS AND SERVICES AND GAS INVESTMENTS
Select Energy sells electricity, natural gas and oil to wholesale and
retail customers in the northeastern United States. Select Energy is the
largest wholesale and retail electric energy marketer in New England as
measured by MW load. In addition, Select Energy also markets natural gas and
develops and markets energy-related products and services and offers energy
management services through an affiliate, HEC, discussed more fully below.
Select Energy has recently received licenses to provide retail electric
supply from Delaware, New Jersey, Maine, Pennsylvania, New York,
Massachusetts, Rhode Island, and New Hampshire. The DPUC has also granted
Select Energy a six-month provisional license expiring on June 30, 2000, to
serve customers in Connecticut. Proceedings at the DPUC are ongoing to
extend Select Energy's license. Select Energy is currently registered with
approximately 50 electric distribution companies and 50 gas distribution
companies to provide retail services.
Select Energy's goal is to be the regional and national leader in
providing standard offer service to those Northeast markets opened to retail
competition. Currently, Select Energy provides more than 5,000 MW of
standard offer load, making it the largest provider of standard offer service
in the Northeast. On December 22, 1999, Select Energy and a Massachusetts
utility signed a six-month power supply agreement, effective January 1, 2000,
to meet the utility's standard offer service requirements, which are expected
to exceed 3,000 MW. This contract does not include renewal or termination
provisions. Select Energy has been serving this standard offer load since
December 1998. During 1999, revenues billed to this customer totaled $276.1
million, or approximately 46 percent of Select Energy's revenues. On January
1, 2000, Select Energy began serving CL&P with one-half of its approximately
2,000 MW standard offer requirement for a four-year period. The CL&P
standard offer contract does not include renewal provisions. Select Energy
can terminate the contract if the FERC or DPUC require changes to the
contract which create material adverse economic impact to Select Energy which
cannot be cured. These power supply contracts are expected to provide Select
Energy with over 50 percent of its revenues in the year 2000. In addition,
beginning in January 2000, Select Energy assumed responsibility for serving
approximately 500 MW of market-based wholesale contracts throughout New
England with electric energy supply that was previously provided by CL&P and
WMECO. For the most part, the prices are fixed by contract and applicable to
actual volumes.
As of December 31, 1999, Select Energy had contracts with retail electric
customers in states throughout the Northeast with primarily one-year
terms. These contracts represent approximately 650 MW of load and 17,000
service locations and include predominantly commercial, institutional and
industrial accounts. This retail load establishes Select Energy as the
largest competitive retail supplier in New England as measured by MW load.
There is no single retail customer that accounts for over 5 percent of Select
Energy's expected retail revenues.
The energy marketing and brokering business is intensely competitive,
with many large companies with larger financial resources than NU's bidding
for business in the increasingly restructured New England market. Sharply
fluctuating cost of power supply caused by, among other things, weather
extremes, plant outages and fuel costs, and a lack of load-following
generating facilities, have made it difficult for Select Energy to
economically match its wholesale power purchases with its power supply
obligations. In 1998, Select Energy recorded a net loss of $13.4 million on
revenues of $29.3 million, and in 1999 Select Energy recorded a net loss of
$38.8 million on revenues of $554.9 million.
Disputes with respect to interpretation and implementation of the New
England Power Pool (NEPOOL) market rules have arisen with respect to various
competitive product markets. In certain cases, Select Energy and the NU
operating companies stand to gain as a result of resolution of such disputes.
In other cases, Select Energy and the NU operating companies could incur
additional costs as a result of resolution of the disputes. The various
disputes are in different stages of resolution through alternative dispute
resolution and regulatory review. It is too early to tell the level of
potential gain or loss that may result upon resolution of these issues.
Select Energy's ability to economically compete has also been affected by
NU's weakened financial position caused by the extended Millstone outages
which ended in mid 1999.
In order to support and complement its growing wholesale and retail
business, Select Energy has contracted with NGC, NU's generation holding
company affiliate, to purchase 1,329 MW from resources acquired at auction
from CL&P and WMECO for a six-year period beginning in 2000. In addition,
Select Energy is purchasing approximately 200 MW of coal and hydroelectric
generating resources from HWP and more than 1,500 MW of electrical supply from
various New England generating facilities on a long-term basis. In addition,
Select Energy utilizes generation failure insurance, options and energy
futures to hedge its supply requirements.
In May of 1999, Select Energy signed a $26 million asset purchase
agreement with Aurora Natural Gas LLC (Aurora). Aurora is a privately
held natural gas marketing and trading company based in Dallas, Texas which
serves the producer, wholesale and retail market segments. Select Energy
acquired Aurora's retail customer contracts and associated natural gas
supplies in New England, making Select Energy one of the region's largest
competitive retail gas providers as measured by volume. As of December 31,
1999, Select Energy had contracts with approximately 650 retail gas
customers, primarily located in Connecticut, Massachusetts and Pennsylvania.
These contracts generally have one-year terms and include only commercial,
institutional and industrial accounts. There is no single retail gas
customer that accounts for over 5 percent of Select Energy's expected retail
gas revenues. In 1999, Select Energy's retail gas revenues were
approximately $20 million.
SEPPI was formed in March 1999 to hold a 5 percent partnership interest
in the Portland Natural Gas Transmission System. SEPPI's investment in the
project was $9.6 million as of December 31, 1999.
ELECTRIC GENERATION AND SERVICES
NGC was formed in 1999 to acquire generating facilities. In March 2000,
1,329 MW of hydroelectric and pumped storage generating assets in Connecticut
and Massachusetts were transferred to NGC from CL&P and WMECO. These assets
include seven facilities of CL&P's Housatonic River System (123 MW), three
facilities that make up CL&P's Eastern Connecticut System, including one gas
turbine (27 MW), the Northfield Mountain pumped storage station (owned 81% by
CL&P and 19% by WMECO) and the Cabot and Turners Falls No. 1 hydroelectric
stations located in Massachusetts and owned by WMECO (1,179 MW in aggregate).
NGC has sold the capacity and output of the plants to Select Energy for a
period of six years.
NGS was formed in 1999 to provide energy-related operation and maintenance
services to owners of generation facilities and the industrial market in the
Northeast. NGS currently focuses on providing turnkey management and operation
services and also a full range of industrial and consulting services. NGS has
entered into contracts to operate the generating facilities of NGC and HWP.
NGS's industrial services include maintenance, permitting, and
environmental and specialized electrical testing services to large and
medium-sized industrial businesses. NGS also provides consulting services to
these customers, including engineering and design, construction management,
asset development, due diligence reviews and environmental regulatory
compliance and permitting services. During 1999, NGS's revenues were
approximately $5.3 million, but are expected to grow significantly in 2000 as
a result of the NGC and HWP contracts referenced above, which are expected to
account for over 60 percent of NGS's revenues in 2000.
ENERGY MANAGEMENT SERVICES
In general, HEC contracts to reduce its customers' energy costs, improve
their facilities and conserve energy and other resources. HEC's energy
management and consulting services have primarily been directed to the
commercial, industrial and institutional markets and utilities in the eastern
United States. HEC has been awarded energy-saving contracts for federal
installations throughout the United States. In competitive procurements by
the U.S. Departments of Energy and Defense, HEC has been selected as an
"Energy Saving Performance Contractor" (ESPC) for all 50 states and overseas
bases. Specific task orders have been placed with HEC to date by Fort
Huachuca in Arizona, Portsmouth Naval Shipyard in Maine and Tobyhanna Army
Depot in Pennsylvania. The Tobyhanna award is the largest and calls for HEC
to build a 13.5-mile gas pipeline, replace the inefficient central plant,
upgrade controls and lighting, and provide gas and maintenance services for
22 years. In 1999, federal ESPC work constituted 38% of HEC's revenues.
NU's aggregate equity investment in HEC was approximately $19 million as of
December 31, 1999. HEC's 1999 revenues were approximately $46.6 million,
double their 1998 total revenues.
In August 1999, HEC acquired through a wholly owned subsidiary, Select
Energy Contracting, Inc., the name and substantially all of the assets of
Denron Plumbing and HVAC, Inc. of Manchester, New Hampshire, the largest
mechanical contractor in northern New England. HEC's revenues from the
acquisition were $6.3 million in 1999.
TELECOMMUNICATIONS
Mode 1 was established in 1996 to participate in a wide range of
telecommunications activities both within and outside New England. NU's
cumulative, total investment in Mode 1 was approximately $6.3 million as of
December 31, 1999. Mode 1 is a licensed competitive local exchange carrier
authorized to provide local phone service within the state of Connecticut.
In 1999, Mode 1 constructed a fiber optic network called "HELPNET"
connecting 41 public schools and libraries in the city of Hartford. Mode 1
was awarded a $3.3 million contract from the city for the HELPNET project,
under a grant from the federal government.
Mode 1 currently owns approximately 26 percent, fully diluted, or
approximately 4.8 million, of the common shares of NorthEast Optic Network,
Inc. (NEON), which is constructing a fiber optic communications network
through New England, New York, Philadelphia, and Washington, D.C., utilizing a
portion of the NU system companies' transmission and distribution facilities.
An officer of NU and an officer of NUSCO are members of the Board of
Directors of NEON. In addition, NU is a party to an agreement with Central
Maine Power Company (CMP), an owner of approximately 33 percent of NEON's
common shares, fully diluted, wherein NU and CMP each agree that, as long as
NU owns at least 10 percent of the outstanding common stock of NEON, fully
diluted, and the cumulative holdings of NU and CMP are at least 33 1/3
percent, fully diluted, neither NU nor CMP will take any action which will
allow NEON to merge, consolidate, liquidate or sell, lease or transfer
substantially all of its assets or commence or acquiesce to any action or
proceeding under any bankruptcy laws.
In November 1999, NEON entered into subscription agreements with
Consolidated Edison Communications, Inc. (CEC), a subsidiary of Con Edison,
and another unaffiliated company for NEON to issue stock in exchange for
contributions to NEON by each utility of telecommunications assets in kind
and cash. Under the agreements, CEC and the other party, subject to certain
vesting conditions, ultimately would receive 10.75 and 9.25 percent of NEON
stock, respectively, and would each nominate one member to the NEON board of
directors. The agreements are subject to regulatory approvals, which are
expected by the spring of 2000.
FINANCING PROGRAM
1999 FINANCINGS
On April 14, 1999, PSNH entered into two letters of credit and
reimbursement agreements totaling $115.4 million, which support its Series D
and E pollution control revenue bonds (PCRBs). The new letters of credit,
which replaced similar letters of credit that were set to expire on April 22,
1999, allow the PCRBs to remain in their flexible, floating interest rate
mode and expire on April 12, 2000. In connection with these letter of credit
transactions, on April 14, 1999, PSNH terminated its $75 million revolving
credit facility that was set to expire on April 22, 1999.
On November 19, 1999, NU entered into a $350 million, 364-day revolving
credit facility which allows NU access to $200 million in cash and allows
Select Energy and other competitive subsidiaries, subject to the overall $350
million limit, access to $250 million in letters of credit.
On November 19, 1999, CL&P and WMECO entered into a new 364-day
revolving credit facility for $500 million, replacing the previous $313.75
million facility which was to expire on November 21, 1999. Under this
agreement, CL&P and WMECO may draw up to $300 million and $200 million,
respectively. Once CL&P and WMECO receive the proceeds of securitization,
the borrowing limits will be reduced to $300 million, with a $200 million
limit for CL&P and a $100 million limit for WMECO.
In connection with the sale of CL&P's fossil units, CL&P redeemed in
December 1999, the following series of first mortgage bonds: 1994 Series B 6
1/8%, Series YY 7 1/2% and Series ZZ 7 3/8% and a portion of its Series XX 5
3/4%.
On September 14, 1999, the NU Board of Trustees approved the payment of
NU's first common share dividend since March 1997. NU paid a dividend of 10
cents per share on December 30, 1999, to shareholders of record as of the
close of business December 1, 1999. On January 11, 2000, the NU Board of
Trustees declared a regular quarterly dividend of 10 cents per share, payable
March 31, 2000, to shareholders of record of March 1, 2000. The record date
for this dividend was changed on January 31, 2000 to March 6, 2000, to
provide Yankee shareholders who received NU common shares the opportunity to
receive the dividend following the Yankee merger.
Total NU system debt, including short-term and capitalized lease
obligations, was $3.3 billion as of December 31, 1999, compared with $3.9
billion as of December 31, 1998. For more information regarding NU system
financing, see "Notes to Consolidated Statements of Capitalization" in NU's
financial statements, other footnotes related to long-term debt, short-term
debt and the sale of accounts receivables, as applicable, in the notes to
NU's, CL&P's, PSNH's, WMECO's, and NAEC's financial statements and "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
2000 FINANCING REQUIREMENTS
The NU system's aggregate capital requirements for 2000 are approximately
as follows:
CL&P PSNH WMECO NAEC Other NU system
(Millions)
Construction $205.8 $ 51.6 $24.2 $ 4.5 $23.6 $309.7
Nuclear Fuel 47.5 1.2 10.7 14.8 - 74.2
Maturities 159.0 - 60.0 200.0 - 419.0
Cash Sinking Funds 19.8 25.0 1.5 70.0 28.1 144.4
------ ------ ----- ------ ----- ------
Total $432.1 $ 77.8 $96.4 $289.3 $51.7 $947.3
====== ====== ===== ====== ===== ======
For further information on the NU system's 2000 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,
WMECO's, and NAEC's financial statements and "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations."
2000 FINANCING PLANS
As a result of industry restructuring and new business initiatives, the
NU system companies are likely to undertake a much higher level of financing,
refinancing, and debt and preferred stock retirement in 2000 than they have
in previous years. CL&P, PSNH and WMECO all intend to work with authorities
in their respective states in 2000 to securitize stranded costs. More than
$2.5 billion could become available to those three regulated companies and
NAEC to retire debt and preferred stock and return common equity to the
parent company. Additionally, the transfer of 1,329 MW of generating assets
to NGC in March 2000 provided CL&P and WMECO with $681 million and $184
million, respectively, of additional proceeds, approximately $390 million of
which is expected to be returned to NU in the form of stock repurchases
($300 million from CL&P and $90 million from WMECO) and the balance was used
primarily to pay off debt and preferred stock. By the end of 2000, assuming
securitization occurs in each state, NU anticipates that the total
capitalization of CL&P, PSNH, WMECO, and NAEC will be materially reduced from
levels at the start of the year. Each of the regulated subsidiaries'
construction needs, nuclear fuel purchases, maturities, and sinking funds is
expected to be largely met through internally generated funds and short-term
borrowings.
NU's merger with Yankee on March 1, 2000, was financed with a combination
of 11.1 million newly issued NU shares and a $263 million senior term loan
credit facility. NGC expects to finance the acquisition of certain of CL&P's
and WMECO's hydroelectric assets with a $430 million credit facility that will
mature on December 29, 2000. NGC is examining various options for refinancing
that facility prior to its maturity.
As discussed above, PSNH has approximately $110 million of letters of
credit that support certain variable-rate pollution control bonds. These
letters of credit will expire on April 12, 2000. On March 1, 2000, the NHPUC
approved PSNH's application to renew them for a 12-month period from April 4,
2000.
FINANCING LIMITATIONS
Many of the NU system companies' charters and borrowing facilities
contain financial limitations that must be satisfied before borrowings can be
made and for outstanding borrowings to remain outstanding.
Under their current revolving credit agreement, CL&P and WMECO are
required to maintain a ratio of common equity to total capitalization of at
least 28 percent through December 31, 1999, and 30 percent thereafter. At
December 31, 1999, CL&P's and WMECO's common equity ratios were 34.61 percent
and 34.65 percent, respectively. This agreement also requires, beginning in
the fourth quarter of 1999, both CL&P and WMECO to maintain a quarterly ratio
of 12-month operating income to interest expense (interest coverage ratio) of
at least 2 to 1. For the quarter ended December 31, 1999, CL&P's and WMECO's
interest coverage ratios were 3.44 to 1 and 2.69 to 1, respectively.
Under NU's revolving short-term credit agreement and its Yankee-related
short-term loan agreement, NU is required to maintain a consolidated common
equity ratio of at least 28 percent through December 31, 1999, and 30 percent
thereafter. At December 31, 1999, NU's consolidated common equity ratio was
35.31 percent. In addition, NU is required to maintain a consolidated
quarterly interest coverage ratio of 2 to 1. For the quarter ended
December 31, 1999, NU's consolidated interest coverage ratio was 2.67 to 1.
NU is also required to maintain as of the end of each quarter commencing with
the quarter ending March 31, 2000, a ratio of operating cash flow to fixed
charges of at least 1.50 to 1.
These agreements also limit NU's ability, without creditor approval, to
incur additional debt, except for debt incurred in connection with pending
matters, and limit NU's ability to make future investments, including
investments in Select Energy and other subsidiaries in excess of $100 million
and $50 million, respectively.
PSNH and NAEC are parties to a variety of financing agreements which
provide that the credit thereunder can be terminated or accelerated if each
does not maintain specified minimum ratios of common equity to capitalization
(as defined in each agreement). For PSNH, the minimum common equity ratio
required in certain letters of credit and reimbursement agreements is not
less than 32.5 percent. At December 31, 1999, PSNH's common equity ratio was
56.6 percent. For NAEC, the minimum common equity ratio required under its
term loan agreement is 25 percent; at December 31, 1999, NAEC's common equity
ratio was 30.02 percent.
In addition, PSNH's letters of credit and reimbursement agreements
require 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 2.35 to 1 at the end of each fiscal quarter for the remaining term of
the agreements. The NAEC term loan agreement requires a ratio of adjusted
net income to interest expense of 1.50 to 1 at the end of each fiscal quarter
for the remaining term of the agreement. For the 12-month period ended
December 31, 1999, the corresponding ratios for PSNH and NAEC were 4.98 to 1
and 2.84 to 1, respectively.
PSNH's letters of credit and reimbursement agreements limit PSNH's
unsecured debt to $25 million. In addition, these financing agreements
provide 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.
The amount of short-term debt that may be incurred by NU, CL&P, WMECO,
HWP, and NAEC are also subject to periodic approval by the SEC under the 1935
Act. PSNH's short-term debt is regulated by the NHPUC. The following table
shows the amount of short-term borrowings authorized by the SEC or the NHPUC
for each company, as the case may be, as of December 31, 1999, and the net
amounts of outstanding short-term debt and cash investments of those
companies at the end of 1999 and as of March 1, 2000:
Short-Term Debt
Maximum Authorized Outstanding
Short-Term Debt and (Cash Investments)*
------------------ -----------------------
December 31, March 1,
1999 2000
(Millions)
NU.................. $400.0 $ 19.7 $ 34.7
CL&P ............... 375.0 101.7 9.6
PSNH**.............. 68.3 (180.1) (237.1)
WMECO............... 250.0 132.4 133.4
HWP................. 5.0 (15.5) (17.2)
NAEC................ 60.0 (56.4) (61.0)
OTHER............... N/A 45.1 74.5
------- -------
Total $ 46.9 $(63.1)
======= =======
* These columns include borrowings of or cash investments by various NU
system companies from NU and other NU system companies. Total NU system
short-term indebtedness to unaffiliated lenders was $278 million at
December 31, 1999, and $288 million at March 1, 2000.
** Under applicable NHPUC provisions, PSNH can incur short-term debt up to
10 percent of net fixed plant. As of December 31, 1999, PSNH's net fixed plant
as measured by FERC was approximately $683 million, so PSNH could borrow up
to $68.3 million of short-term debt.
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 NU system companies' stock,
limitations of liens on NU assets and restrictions on distributions on and
acquisitions of NU stock. Under these provisions, NU, CL&P, PSNH, and WMECO
may not dispose of voting stock of CL&P, PSNH or WMECO other than to NU or
another NU 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. Many of the NU system
companies' loan agreements have similar restrictions. As of December 31,
1999, no NU debt was secured by liens on NU assets. Furthermore, NU may not
declare or make distributions on its capital stock, acquire its capital stock
(or rights thereto), or permit a NU 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.
Pursuant to its revolving short-term credit agreement and the Yankee
credit agreement, NU may not declare dividends or make distributions, except
for dividends not to exceed $53 million during any 12-month period and stock
repurchases of up to $215 million in connection with the Yankee merger.
Similar restrictions are found in NU's merger agreement with Con Edison.
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, 1999, CL&P's and WMECO's charters permit CL&P and WMECO to incur
an additional $322 million and $132 million, respectively, of unsecured debt.
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 bonds to be issued. While CL&P's and WMECO's 1999 earnings
permit them to meet those earnings coverage tests, their loan agreements
prohibit the issuance of additional first mortgage bonds.
The preferred stock provisions of CL&P'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.
The supplemental indentures under which CL&P'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, 1999, CL&P had an accumulated deficit of approximately $359 million that
must be made up before it is able to make such distributions to NU. CL&P,
however, has requested approval from the SEC permitting it to make up to $310
million of distributions to NU arising out of restructuring. 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, 1999, approximately $23 million was available
to be paid under this provision.
PSNH's letters of credit and reimbursement agreements prohibit it from
declaring or paying any cash dividends or distributions on any of its capital
stock, except for dividends on preferred stock, unless minimum interest
coverage and common equity ratio tests discussed above are satisfied. These
agreements also require creditor approval for PSNH to pay more than an
aggregate of $40 million of certain restricted payments (dividends or other
distributions to NU and NUG settlement payments). 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 20 percent of total
capitalization. At December 31, 1999, approximately $1,047 million was
available to be paid under these provisions. NAEC is also subject to a
similar test under its term note agreement. At December 31, 1999, $29
million was available to be paid by NAEC under this provision.
In March 2000, in connection with the approval of PSNH's extension of
certain letter of credit and reimbursement agreements, the NHPUC restated a
previous order requiring PSNH to obtain NHPUC approval before paying any
dividends on its common stock and before investing any PSNH funds in the NU
system money pool during the expected 364-day term of the facilities. It is
expected that the NHPUC will address this issue in connection with its decision
on the Settlement Agreement.
Applicable merger accounting rules require that upon acquisition by NU,
Yankee's and its subsidiaries' retained earnings are converted to capital
surplus. Also, the merger premium NU paid to acquire Yankee will be
allocated among Yankee and its subsidiaries, "pushed down" to their balance
sheets and amortized to expense. The majority of the merger premium will be
amortized over 40 years. Under the 1935 Act, subsidiaries of registered
holding companies are only allowed to pay dividends out of retained earnings
unless the SEC allows otherwise. The effect of this rule would be to prevent
Yankee from paying dividends to NU from any source other than post-merger
earnings, as reduced by the merger premium amortization. NU has sought
permission from the SEC for Yankee and its subsidiaries to pay dividends up
to the amount of Yankee's pre-merger retained earnings and post-merger
retained earnings and without regard to merger premium amortization
thereafter, and expects to receive this authorization during the second
quarter of 2000.
NU also intends to apply to the SEC for waivers of these rules so that,
following the merger with Con Edison, it and its subsidiaries, including
Yankee, will be able to pay dividends utilizing the pre-merger retained
earnings of the NU system and compute current earnings without regard to the
amortization of the NU merger premium. If this order is not granted NU's
ability to pay dividends to Con Edison would be constrained.
NU is required under the 1935 Act to maintain its consolidated common
equity at a level equal to at least 30 percent of its consolidated
capitalization. Following the issuance of rate reduction bonds by its
subsidiaries, NU will temporarily be unable to meet this standard because
such bonds, although nonrecourse to the NU system company issuers, are
considered to be indebtedness of the companies under generally accepted
accounting principles. The SEC has granted a waiver to NU allowing it to
maintain its consolidated common equity ratio below 30 percent for one year
following the date all of the NU system companies have issued the maximum
amount of rate reduction bonds. The 30 percent test also applies to NU's
electric operating subsidiaries. The SEC has granted them a waiver of this
test for 12 years following the issuance of their respective rate reduction
bonds.
NU provides credit assurance in the form of guarantees, letters of
credit, performance guarantees and other assurances for the financial
performance obligation of certain of its unregulated subsidiaries,
particularly Select Energy. NU currently has authorization from the SEC to
provide up to $500 million of guarantees, but is limited under certain loan
agreements to $350 million of such arrangements without creditor approval.
As of December 31, 1999, NU had provided approximately $190 million of such
credit assurances.
Certain NU system financing agreements also have covenants or trigger
events tied to credit ratings of certain NU system companies.
CONSTRUCTION PROGRAM
The NU system's construction program expenditures, including allowance
for funds used during construction (AFUDC), in the period 2000 through 2004
are estimated to be as follows:
2000 2001 2002 2003 2004
---- ---- ---- ---- ----
(Millions of Dollars)
CL&P $205.8 $217.2 $268.2 $302.3 $271.0
PSNH 51.6 48.1 68.2 79.1 67.3
WMECO 24.2 21.0 22.0 23.5 21.9
NAEC 4.5 5.1 - - -
NGC 3.3 9.1 8.9 12.4 1.3
Other 20.3 19.6 17.3 13.4 11.6
------ ------ ------ ------ ------
NU System Total $309.7 $320.1 $384.6 $430.7 $373.1
====== ====== ====== ====== ======
The construction program data shown above includes 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. While the data assumes the sale of Millstone
and Seabrook by June 30, 2001 and December 31, 2001, respectively, the
companies hope to close the Millstone sale by April 1, 2001. The
construction program's main focus is maintaining and upgrading the existing
transmission and distribution system and nuclear and hydroelectric generating
assets.
REGULATED ELECTRIC OPERATIONS
DISTRIBUTION AND SALES
CL&P, PSNH and WMECO furnish retail franchise service in 149, 198 and 59
cities and towns in Connecticut, New Hampshire and Massachusetts,
respectively. In December 1999, CL&P furnished retail franchise service to
approximately 1.12 million customers in Connecticut, PSNH provided retail
service to approximately 428,000 customers in New Hampshire and WMECO served
approximately 198,000 retail franchise customers in Massachusetts. HWP
serves 32 retail customers in Holyoke, Massachusetts.
The following table shows the sources of 1999 electric franchise retail
revenues based on categories of customers:
CL&P PSNH WMECO Total NU system
---- ---- ----- ---------------
Residential........... 46% 42% 41% 45%
Commercial............ 39% 35% 37% 37%
Industrial............ 13% 22% 21% 17%
Other................. 2% 1% 1% 1%
---- ---- ---- ----
Total................. 100% 100% 100% 100%
==== ==== ==== ====
The actual changes in retail kWh sales for the last two years and the
forecasted retail sales growth estimates for the ten-year period 1999 through
2009 for CL&P, PSNH and WMECO are set forth below:
1999 over 1998 over Forecast 1999-2009
1998 1997 Compound Rate of Growth
--------- --------- -----------------------
NU system....... 3.8% 1.9% 1.4%
CL&P........... 2.9% 2.2% 1.5%
PSNH........... 5.3% 2.3% 1.6%
WMECO.......... 3.6% 1.3% 1.1%
Consolidated NU retail sales grew by 3.8 percent in 1999, compared with
1998, primarily due to the continued strengthening of the regional economy and
weather that was both hotter in the summer and colder in the winter than in
1998. Residential electric sales were up 6.2 percent. Commercial sales were
up by 3 percent for the year and industrial sales increased by 1.5 percent.
Retail sales for all of the NU system electric operating companies increased
in 1999 with CL&P, WMECO and PSNH sales up 2.9 percent, 3.6 percent and 5.3
percent, respectively.
REGIONAL AND SYSTEM COORDINATION
The NU system companies and most other New England utilities are parties
to an agreement (NEPOOL Agreement), which provides for coordinated planning
and operation of the region's generation and transmission facilities. The
NEPOOL Agreement was restated and revised as of March 1997 to provide for a
pool-wide open access transmission tariff and for the creation of an
Independent System Operator (ISO). Under these new arrangements: (i) the
ISO, a nonprofit corporation whose board of directors and staff are not
controlled by or affiliated with market participants, ensures the reliability
of the NEPOOL transmission system, administers the NEPOOL tariff and oversees
the efficient and competitive functioning of the regional power market; (ii)
the NEPOOL tariff provides for nondiscriminatory open access to the regional
transmission network at one rate regardless of transmitting distance for all
transactions; and (iii) a broader governance structure for NEPOOL and a more
open, competitive market structure are established.
On April 7, 1999, the NEPOOL Executive Committee filed a comprehensive
settlement of all issues set for hearing concerning the NEPOOL transmission
tariff. The settlement resolves disputes concerning the calculation of
revenue requirements for transmission over NEPOOL facilities and resolves
disputes over alleged "double charges" under grandfathered transmission
contracts retained by individual transmission providers, including NU. The
settlement also includes a rate of return on equity ("ROE") component which
sets the ROE for each individual transmission provider owning NEPOOL
transmission facilities with respect to those facilities from March 1, 1997
through at least June 1, 2000, provided no changes to individual network
transmission tariff rates are made after December 31, 1999. NU's ROE has
been set at 11.75 percent.
There are two agreements that determine the manner in which costs and
savings are allocated among the NU system electric operating companies.
Under an agreement (NUG&T) among CL&P, WMECO and HWP, these companies pool
their electric production costs and the costs of their principal transmission
facilities. Pursuant to the merger agreement between NU and PSNH, these
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.
On June 10, 1999, NUSCO, on behalf of CL&P, HWP and WMECO submitted a
filing at the FERC to amend the NUG&T in order to eliminate the generation
aspects of the agreement. Interventions were submitted by the Massachusetts
attorney general and the DTE. While the DTE raised no issues with the
proposed amendment, the Massachusetts attorney general protested the
amendment, claiming that it would result in stranded costs being transferred
unfairly to WMECO. On July 28, 1999, the FERC approved the proposed amendment
subject to the outcome of a hearing which was held in abeyance pending the
outcome of state restructuring proceedings. The DTE rejected the
Massachusetts attorney general's arguments in an order dated December 1,
1999. While the FERC hearing continues to be held in abeyance, NUSCO and the
Massachusetts attorney general filed pleadings on February 1, 2000, regarding
the final disposition of the FERC proceeding.
Under the Settlement Agreement between PSNH and the state of New
Hampshire, if approved, the Sharing Agreement would be terminated.
TRANSMISSION ACCESS AND FERC REGULATORY CHANGES
Pursuant to FERC Order 888 (issued in April 1996) NU system companies
operate their transmission system under an open access, nondiscrimatory
transmission tariff.
In December 1999, the FERC issued an order calling on all transmission
owners to voluntarily join Regional Transmission Organizations (RTOs) in
order to boost competition in electric markets. In general, these
organizations would be an independent operator over all transmission
facilities, and would perform, among other functions, tariff administration,
construction planning and reliability management for the particular regional
transmission system. NU's active voting interest in such an organization
would be limited to 5 percent under the proposal.
NU system companies and other parties have requested rehearing of this
order. Of primary concern to NU is the ratemaking authority granted to RTOs
and its impact on the ability of transmission owners to earn appropriate
returns on their transmission investment under the organizational structure
and the minimum functions proposed in the order. The NU system companies are
required to participate in a collaborative process established by the FERC
beginning in March of 2000. NU is also required to notify the FERC of its
plans with regard to joining one of these organizations no later than
January 15, 2001.
NUCLEAR GENERATION
GENERAL
Certain NU system companies have ownership interests in four nuclear
units, Millstone 1, 2 and 3 and Seabrook, and equity interests in four
regional nuclear companies (the Yankee companies) that separately own the
Connecticut Yankee nuclear unit (CY), the Maine Yankee nuclear unit (MY), the
Vermont Yankee nuclear unit (VY), and the Yankee Rowe nuclear unit (Yankee
Rowe). NU system companies operate the two Millstone units and Seabrook.
Yankee Rowe, CY, MY, and Millstone 1 have been permanently removed from
service.
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,
PSNH's and WMECO's ownership interests in the unit are 52.93, 2.85 and 12.24
percent, respectively. NAEC and CL&P have 35.98 percent and 4.06 percent
ownership interests, respectively, in Seabrook.
In 1996, one of the joint owners of Millstone 3, the Vermont Electric
Generation and Transmission Cooperative, Inc. (VEG&T), filed for bankruptcy.
The subsequent liquidation resulted in the offering of VEG&T's .35 percent
share of Millstone 3 for sale to the joint owners of Millstone 3. None of
the non-NU joint owners accepted the offer. CL&P intends, subject to approval
of the bankruptcy court and the DPUC, to include the VEG&T share in its
planned Millstone auction.
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 minority owners for a deliberate breach of
the agreement pursuant to authorized corporate action.
For information regarding lawsuits filed against NU by the minority
owners of Millstone 3 regarding the sharing agreement and certain arbitration
proceedings related to the ongoing Millstone outages, see "Item 3. Legal
Proceedings."
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 and decommissioning
costs of the respective Yankee company and are entitled to proportional
shares of the electrical output in the case of VY, which is the only
operating unit of the four Yankee companies set forth below. 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.
CL&P's, PSNH's and WMECO's stock ownership percentages in the Yankee companies
are set forth below:
CL&P PSNH WMECO NU 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%
On October 15, 1999, VYNPC agreed to sell VY for $22 million to
AmerGen Energy Company LLC (AmerGen). AmerGen, among other commitments,
agreed to assume the decommissioning cost of the unit after it is taken out
of service, and the VYNPC owners have agreed to fund the uncollected
decommissioning cost to a negotiated amount at the time of the closing of the
sale. VYNPC's owners have also agreed either to enter into a new purchased-
power agreement with AmerGen or to buy out such future power payment
obligations by making a fixed payment to AmerGen. CL&P, WMECO and PSNH have
elected the buyout option. The owners' obligations to close and pay such
amounts are conditioned upon their receipt of satisfactory regulatory
approval of the transaction, including provision for adequate recovery of
these payments.
The operators of Millstone 2 and 3, VY and Seabrook hold full term
operating licenses from the NRC and 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 has jurisdiction over the
decommissioning activities at Yankee Rowe, CY, MY, and Millstone 1.
The NRC also regularly conducts generic reviews of technical and other
issues, a number of which may affect the nuclear plants in which NU 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.
NUCLEAR PLANT PERFORMANCE
MILLSTONE 3
Millstone 3 has a license expiration date of November 25, 2025. In 1999,
Millstone 3 operated at a capacity factor of 81.7 percent. After a 60-day
refueling and maintenance outage, Millstone 3 returned to service on June 29,
1999, and achieved a 98.1 percent capacity factor from that date to
December 31, 1999.
MILLSTONE 2
Millstone 2 has a license expiration date of July 31, 2015. Millstone 2
returned to service on May 11, 1999, following an extended outage, which
began in February 1996 and achieved a 90.3 percent capacity factor from that
date to December 31, 1999. For the full year 1999, Millstone 2 operated at a
capacity factor of 57.9 percent.
SEABROOK
Seabrook has a license expiration date of October 17, 2026. In 1999,
Seabrook operated at a capacity factor of 86.4 percent. However, since
returning to service on May 13, 1999, after a 48-day refueling and
maintenance outage, Seabrook achieved a 99 percent capacity factor through
December 31, 1999.
VERMONT YANKEE
VY has a license expiration date of March 21, 2012. In 1999, VY operated
at a capacity factor of 88.8 percent.
NUCLEAR INSURANCE
For 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
GENERAL
The supply of nuclear fuel for the NU 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 NU
system's units. Fuel may also be purchased at a point after any of the above
processes are completed. The NU system expects that uranium concentrates and
related services for the units operated by the NU system and for the other
units in which the NU system companies are participating that are not covered
by existing contracts, will be available for the foreseeable future on
reasonable terms and prices.
As a result of the Energy Policy 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 Policy 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 NU
system's remaining share to be recovered, assuming no escalation, is
approximately $36.7 million as of December 31, 1999. 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.
On October 22, 1998, an action was initiated by the owners of Millstone
in the U.S. Court of Federal Claims against the DOE regarding the special
annual assessment that the DOE imposes on purchasers of enriched uranium to
meet the future costs of decontaminating and decommissioning (D&D) government
owned uranium enrichment facilities. Similar actions for Seabrook and CY
were filed on October 23, 1998. The lawsuits challenge the imposition of the
D&D assessment on federal constitutional grounds, and are similar to actions
filed by a number of other utilities against DOE. Proceedings in the
Millstone, Seabrook and CY cases are stayed pending the final resolution of a
similar claim brought against the DOE by MYAPC. In July 1999, the claims
court dismissed MYAPC's complaint. MYAPC has appealed this decision. As of
December 31, 1999, the NU system companies had paid approximately $32.6
million into the fund.
Nuclear fuel costs associated with nuclear plant operations include
amounts for disposal of spent nuclear fuel. The NU system companies include
in their nuclear fuel expense spent fuel disposal costs accepted by the DPUC,
NHPUC and DTE in rate case or fuel adjustment decisions. Spent fuel disposal
costs also are reflected in the 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 (SNF) and high-level waste. As required by the NWPA, electric utilities
generating 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 NU system
companies have been paying for such services for fuel burned on or after
April 7, 1983, on a quarterly basis since July 1983. The DPUC, NHPUC and DTE
permit the fee to be recovered through rates. 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's
current estimate for an available site is 2010.
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 SNF. There have been numerous litigation proceedings involving
the DOE's statutory and contractual obligation to accept high-level waste and
SNF. While the courts have declined to order the DOE to begin accepting
spent fuel for disposal on January 31, 1998, the courts left open the
utilities' ability to bring damage claims against the DOE.
On February 18, 1998, YAEC filed a complaint against the DOE in the
United States Court of Federal Claims seeking damages in excess of $70
million resulting from the DOE's failure to accept spent nuclear fuel for
disposal. CYAPC and MYAPC filed similar complaints on March 4, 1998 and
June 2, 1998, seeking damages of over $90 million and $128 million,
respectively. On October 29, 1998, the court found liability on the part
of the DOE to YAEC for breach of the standard contract, based upon the DOE's
failure to begin disposal of SNF. In separate orders dated October 30, 1998
and November 3, 1998, respectively, the court extended its rulings in the YAEC
case to the damage claim cases filed by CYAPC and MYAPC. The DOE has appealed
the claims court decisions.
Until the federal government begins accepting nuclear waste for
disposal, 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 are
expected to be adequate for the projected life of the unit. With the
implementation of currently planned modifications, the storage facilities for
Millstone 2 are expected to be adequate (maintaining the capacity to
accommodate a full-core discharge from the reactor) until 2005. Fuel
consolidation, which has been licensed for Millstone 2, could provide
adequate storage capability for its projected life. Seabrook is expected to
have spent fuel storage capacity until at least 2010.
The available capacity of the VY spent fuel pool is expected to be able
to accommodate full-core removal through 2001. In 1999, VYNPC received an NRC
license amendment allowing the installation of additional storage racks in
the existing spent fuel pool. When installed, the additional storage racks
will increase the capacity of the spent fuel pool to allow full core
discharge capability through the 2008 refueling outage.
Adequate storage capacity exists to accommodate all of the SNF at
Millstone 1, CY, MY, and Yankee Rowe until that fuel is removed by the DOE.
LOW-LEVEL RADIOACTIVE WASTE
The NU system currently has contracts to dispose of its low-level
radioactive waste (LLRW) at two privately operated facilities in Clive, Utah,
and in Barnwell, South Carolina. The NU system is also supporting efforts by
the Northeast Interstate Low Level Radioactive Waste Management Compact,
consisting of Connecticut and New Jersey, to accept South Carolina as a new
member. If successful, this arrangement would entitle Millstone and CY
access to Barnwell through their decommissioning. Such an arrangement may
exclude other nuclear plants from accessing Barnwell. This option is
expected to be decided by mid 2000. Because access to LLRW disposal may be
lost at any time, the NU system has plans that will allow for onsite storage
of LLRW for at least five years.
DECOMMISSIONING
Based upon the NU 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 as soon as practical
after their retirement. The table below sets forth the estimated Millstone
and Seabrook decommissioning costs for the NU system companies. The
estimates are based on the latest site studies, stated in December 31, 1999
dollars.
CL&P PSNH WMECO NAEC NU system
---- ---- ----- ---- ---------
(Millions)
Millstone 1*.... $ 580.3 $ - $136.1 $ - $ 716.4
Millstone 2..... 334.9 - 78.5 - 413.4
Millstone 3..... 327.9 17.6 75.8 - 421.3
Seabrook........ 22.9 - - 203.3 226.2
-------- ----- ------ ------ --------
Total......... $1,266.0 $17.6 $290.4 $203.3 $1,777.3
======== ===== ====== ====== ========
* The costs shown include all of the expected future billings associated
with the funding of decommissioning, recovery of remaining assets and other
closure costs associated with the early retirement of Millstone 1 as of
December 31, 1999, which have been recorded as an obligation on the books of
the NU system companies.
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. WMECO
has established independent trusts to hold all decommissioning expense
collections from customers. The DTE 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 Seabrook are billed by it to PSNH and recovered by
PSNH under the Rate Agreement. During April 1999, the Nuclear Decommissioning
Finance Committee (NDFC) issued an order that adjusted the decommissioning
collection period and funding levels. The NDFC's order concluded that
Seabrook's anticipated energy producing life was 25 years from the date it
went into commercial operation, and accordingly Seabrook will end its energy
producing life in October 2015. This is 11 years earlier than the service life
established by Seabrook's NRC operating license. The order also updated
Seabrook's decommissioning estimate to $513 million (in 1998 dollars).
The cost of funding the decommissioning of Seabrook is now accrued over the
expected remaining service life of the plant, as determined by the NDFC,
and is included in depreciation expense.
As of December 31, 1999, the NU system recorded balances (at market) in
its external decommissioning trust funds are as follows:
CL&P PSNH WMECO NAEC NU system
---- ---- ----- ---- ---------
(Millions)
Millstone 1... $234.6 $ - $ 67.1 $ - $301.7
Millstone 2... 164.3 - 47.3 - 211.6
Millstone 3... 113.1 6.9 30.1 - 150.1
Seabrook...... 4.8 - - 43.7 48.5
------ ---- ------ ----- ------
Total......... $516.8 $6.9 $144.5 $43.7 $711.9
====== ==== ====== ===== ======
The decommissioning cost estimates for the NU 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 different decommissioning method could change
these estimates. CL&P, PSNH and WMECO expect to recover sufficient amounts
through their allowed rates to cover their expected decommissioning costs.
Based on present estimates, and assuming its nuclear units operate to the end
of their respective license periods, the NU system expects that the
decommissioning trust funds will be substantially funded when those
expenditures have to be made.
Under the restructuring legislation in Connecticut and Massachusetts,
CL&P and WMECO are permitted to recover their decommissioning obligations as
a stranded cost. It is not clear at this time how decommissioning will be
treated in connection with the auction of the Millstone units.
Pursuant to the PSNH Settlement Agreement, upon a successful sale of
NAEC's share of Seabrook, the existing Seabrook Power Contract between PSNH
and NAEC will be terminated. However, subsequent to such sale, PSNH shall
continue to be responsible for funding NAEC's former ownership share of its
decommissioning liability, calculated on the basis of full funding by
December 31, 2015, using an estimated decommissioning date of 2015 or as
otherwise determined by the NDFC. PSNH may enter into a new contract to
provide for the payment of Seabrook nuclear decommissioning costs, with full
recovery of the costs of that contract to be recoverable from PSNH's
customers. Under no circumstances will PSNH's customers have any
responsibility for increases in decommissioning funding above the amount
calculated based upon the payment schedule as of the sale date.
In June 1999, NNECO filed with the NRC the Post-Shutdown Decommissioning
Activities Report for Millstone 1. The total estimated decommissioning costs,
which have been updated to reflect the early shutdown of the unit, are
approximately $716.4 million as of December 31, 1999 ($580.3 million for CL&P
and $136.1 million for WMECO).
CYAPC, YAEC, VYNPC, and MYAPC are all collecting revenues for
decommissioning from their power purchasers. The table below sets forth the
NU system companies' estimated share of decommissioning costs (and closure
costs where applicable) of the Yankee units. The estimates are based on the
latest site studies. For information on the equity ownership of the NU
system companies in each of the Yankee units and the proposed sale of VY, see
"Electric Operations - Nuclear Generation - General."
CL&P PSNH WMECO NU system
---- ---- ----- ---------
(Millions)
VY............ $ 40.8 $17.1 $10.7 $ 68.6
Yankee Rowe*.. 8.0 2.3 2.3 12.7
CY*........... 153.2 22.2 42.2 217.5
MY*........... 76.9 32.1 19.2 128.2
------ ----- ----- ------
Total....... $278.9 $73.7 $74.4 $427.0
====== ===== ===== ======
* The costs shown include all of the expected future billings
associated with the funding of decommissioning, recovery of remaining assets
and other closure costs associated with the early retirement of Yankee Rowe,
CY and MY as of December 31, 1999, which have been recorded as an obligation
on the books of the NU system companies.
As of December 31, 1999, the NU system's share of the external decommissioning
trust fund balances (at market), which have been recorded on the books of the
Yankee nuclear companies, is as follows:
CL&P PSNH WMECO NU system
---- ---- ----- ---------
(Millions)
VY.............. $ 23.5 $ 9.9 $ 6.2 $ 39.5
Yankee Rowe..... 39.3 11.2 11.2 61.8
CY.............. 64.3 9.3 17.7 91.3
MY.............. 21.7 9.1 5.4 36.2
------ ----- ----- ------
Total........... $148.8 $39.5 $40.5 $228.8
====== ===== ===== ======
In August 1998, the FERC released an initial decision regarding CY
decommissioning. If upheld, CYAPC's management has estimated the effect of
the ALJ decision on CYAPC's earnings to be approximately $37.5 million, of
which the NU's share would be approximately $18.4 million. NU continues
to support CYAPC's efforts to contest this initial decision.
On June 1, 1999, the FERC accepted an offer of settlement, which
resolved all the issues in the FERC decommissioning rate case proceeding
related to MY. The settlement provides, among other things, the following:
(1) MYAPC will collect $33.1 million annually to pay for decommissioning and
spent fuel; (2) its return on equity will be set at 6.5 percent; (3) MYAPC is
permitted full recovery of all of its unamortized investment in MY, including
fuel; and (4) an incentive budget for decommissioning is set at $436.3
million.
Effective January 1996, YAEC began billing its sponsors, including CL&P,
WMECO and PSNH, amounts based on a revised decommissioning cost estimate
approved by the FERC. Under the terms of its rate settlement agreement with
the FERC, YAEC filed a revised decommissioning cost estimate, which was
approved as of March 1, 2000. The YAEC filing assumes NRC license
termination and completion of decommissioning activities by 2004.
OTHER REGULATORY AND ENVIRONMENTAL MATTERS
ENVIRONMENTAL REGULATION
GENERAL
The NU 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. Additionally,
the NU 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.
SURFACE WATER QUALITY REQUIREMENTS
The federal Clean Water Act 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. NU system facilities
are in the process of obtaining or renewing all required NPDES permits in
effect. Compliance with NPDES and state water discharge permits has
necessitated substantial expenditures, which are difficult to estimate, and
may require further expenditures because of additional requirements that
could be imposed in the future. For information regarding civil lawsuits
related to alleged violations of certain facilities' NPDES permits, see
"Item 3. Legal Proceedings."
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 NU 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 NU system owns facilities and through which the NU 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 NU
system currently carries general liability insurance in the total amount of
$100 million annual coverage for oil spills. This amount may decrease in the
future as a result of generation asset sales due to restructuring.
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 and expanded permitting provisions also are included. Compliance
with CAAA requirements has cost the NU system approximately $48 million as of
December 31, 1999: $11 million for CL&P, $33 million for PSNH, $1 million for
WMECO, and $3 million for HWP. In addition, PSNH expects to spend
approximately $2 million a year for SO2 allowances.
Further requirements for NOX reductions became effective in 1999. PSNH
spent approximately $20 million for improvements at its Merrimack and
Schiller Stations to meet these requirements. These costs were offset by the
sale of $16 million of emission credits. Following divestiture of the NU
system's fossil units, these federal and state air quality regulations are
not expected to have a material impact on the NU system companies.
HAZARDOUS WASTE REGULATIONS
As many other industrial companies have done in the past, the NU 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 polychlorinated
biphenyls (PCBs). It has since been determined that deposited or buried
wastes, under certain circumstances, could cause groundwater contamination or
create other environmental risks. The NU 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 NU 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 NU system companies for such past disposal. At
December 31, 1999, the liability recorded by the NU system for its estimated
environmental remediation costs for known sites needing remediation including
those sites described below, exclusive of recoveries from insurance or from
third parties, was approximately $24.8 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, the EPA has
the authority to clean up or order the clean up of hazardous waste sites and
to impose the clean up 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. The NU system currently is involved in
one Superfund site in New Jersey, one in New York, one in New Hampshire, and
one in Kentucky, which could have a material impact on the NU system. The NU
system has committed in the aggregate approximately $1.9 million to its share
of the clean up of these sites.
As discussed below, in addition to the remediation efforts for the
above-mentioned Superfund sites, the NU system has been named as a
potentially responsible party (PRP) and is monitoring developments in
connection with several state environmental actions. The level of study of
each site and the information about the waste contributed to the site by the
NU system and other parties differs from site to site. Where reliable
information is available that permits the NU system to make a reasonable
estimate of the expected total costs of remedial action and/or the NU
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.
In 1987, the Connecticut Department of Environmental Protection (CDEP)
published a list of 567 hazardous waste disposal sites in Connecticut. The
NU system owns two sites, in Stamford and Rockville, which are on this list.
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. Site investigations have been completed at these sites and
discussions with state regulators are in progress to address the need for and
extent of remediation necessary to protect public health and the environment.
The total reserve established for these two sites is $6.5 million.
CL&P owns a section of an abandoned railroad bed in Ridgefield,
Connecticut. Past studies of portions of the railroad bed have indicated
elevated levels of arsenic in the upper two to three feet of soil at the
location. The NU system has reserved approximately $1.2 million for future
remediation efforts. A similar site in Portland, Connecticut has been
remediated.
PSNH contacted the New Hampshire Department of Environmental Services
(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. A remediation action plan was approved by the NHDES in
March of 1999. PSNH entered into a cash settlement with the other PRP at the
site. A reserve of $8.4 million has been established for this site,
including amounts received in the settlement.
PSNH has also received requests from NHDES to conduct site
investigations at three additional former manufactured gas plant sites.
These sites are located in Keene, Nashua, and Dover, New Hampshire. Studies
are now being planned to understand site conditions and any environmental
impacts. PSNH is also involved in other site studies to assess
contamination, but PSNH's liability at these sites is not expected to be
material.
Environmental contaminants have been identified at the former Manchester
Steam generating station in Manchester, New Hampshire. A reserve of $4.1
million has been established to abate and remediate this station.
In Massachusetts, NU system companies have been designated by the
Massachusetts Department of Environmental Protection (MDEP) as PRPs for
12 sites under the MDEP's hazardous waste and spill remediation program. At
two sites, the NU system may incur remediation costs that may be material to
HWP depending on the remediation requirements. At one site, HWP has been
identified by the 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. The PRPs have been notified of the need to remove tar
deposits from the river. The total estimated costs for removal of tar
patches in the river range from $2 million to $3 million. HWP has agreed to
complete the removal of tar patches subject to negotiations of an acceptable
consent decree with various state and federal regulatory agencies.
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. An analysis of
the human, health and ecological risks at the site and a remedial action plan
was submitted to the MDEP in 1999. WMECO has reserved approximately $4.3
million for remediation costs for the site.
Environmental contaminants have been identified at the former Riverside
generating station in Holyoke, Massachusetts. A reserve of $2.3 million has
been established for HWP to abate and remediate fuel oil outside the former
generating station, asbestos inside the station and to demolish a section of
the existing structure.
In the past, the NU system has received other claims from government
agencies and third parties for the cost of remediating sites not currently
owned by the NU system but affected by past NU system disposal activities and
may receive more such claims in the future. The NU 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
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 studies
to date, agree that current information remains inconclusive, inconsistent
and insufficient for characterizing EMF as a health risk.
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. The NU system companies have closely
monitored research and government policy developments for many years and will
continue to do so.
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. To date, no courts have concluded that individuals
have been harmed by EMF from electric utility facilities, but if utilities
were to be found liable for damages, the potential monetary exposure for all
utilities, including the NU 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.
FERC HYDROELECTRIC PROJECT LICENSING
Federal Power Act licenses may be issued for hydroelectric projects for
terms of 30 to 50 years as determined by the FERC. Upon the expiration of a
license, any hydroelectric project so licensed is subject to reissuance by
the 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 NU system companies currently hold FERC licenses for 12 hydroelectric
projects aggregating approximately 1,411 MW of capacity, located in
Connecticut, Massachusetts and New Hampshire. CL&P's and WMECO's five
licenses with approximately 1,302 MW of capacity were transferred to NGC in
March 2000. As part of the Settlement Agreement, PSNH has proposed to auction
its six hydroelectric projects with approximately 65 MW of capacity upon
approval of the agreement.
The license for HWP's Holyoke Project expired in late 1999. On August 20,
1999, the FERC issued a new 40-year license to HWP. HWP was the successful
co-applicant in a contested license application proceeding for the project,
winning over co-applicants, the City of Holyoke Gas & Electric Department, the
Massachusetts Municipal Wholesale Electric Company and the Ashburnham
Municipal Light Plant. HWP filed a motion for stay and motion for rehearing
of the FERC's order, requesting that the FERC reconsider various aspects of
the license, including mandatory Section 18 fishway prescriptions, bypass reach
minimum flows and compliance schedules. Motions for rehearing of the FERC's
order were also filed by various other parties. The FERC issued an order
granting rehearing. HWP is awaiting further action by the FERC. In a
separate but related proceeding, HWP filed an appeal of the state water
quality certificate conditions and requested an adjudicatory hearing with the
MDEP. Settlement discussions in this proceeding are ongoing.
NGC's FERC licenses for operation of the Falls Village and Housatonic
hydroelectric projects expire in 2001. A license application, which proposed
to combine both projects under one license, was submitted to the FERC on
August 31, 1999.
The FERC has issued a notice indicating that it has authority to order
project licensees to decommission projects that are no longer economic to
operate. The potential costs of decommissioning a project, however, could be
substantial. The FERC has recently ordered its first project decommissioning
under this authority. It is likely that this FERC decision will be appealed.
EMPLOYEES
As of December 31, 1999, the NU system companies had 9,099 full and
part-time employees on their payrolls, of which 2,377 were employed by CL&P,
1,258 by PSNH, 482 by WMECO, 78 by HWP, 1,859 by NNECO, 2,220 by NUSCO, and
825 by NAESCO. NU, NAEC, Mode 1, NUEI, NGC, NGS, SEPPI, and Select Energy
have no employees. On March 5, 2000, approximately 119 employees of NUSCO
were transferred to Select Energy.
Approximately 2,379 employees of CL&P, PSNH, WMECO, NAESCO, and HWP are
covered by ten union agreements, which expire between October 1, 2000 and
May 31, 2002.
YEAR 2000
For information regarding the NU system's efforts to address this issue,
see "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations."
ITEM 2. PROPERTIES
The physical properties of the NU 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 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,
nuclear control room simulators, vehicles, and office space that are leased.
With few exceptions, the NU 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 and PSNH's properties are subject to the lien of each company's
respective first mortgage indenture. 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 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. Also,
CL&P and WMECO granted, as collateral, their second mortgage ownership
interests in Millstone 2 and 3 that secure their borrowings under the New
Credit Agreement. 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 NU system companies' properties are well maintained and are in good
operating condition.
TRANSMISSION AND DISTRIBUTION SYSTEM
At December 31, 1999, the NU system companies owned 104 transmission
and 373 distribution substations that had an aggregate transformer capacity
of 23,573,489 kilovoltamperes (kVa) and 8,933,772 kVa, respectively; 3,075
circuit miles of overhead transmission lines ranging from 69 kilovolt (kV)
to 345 kV, and 196 cable miles of underground transmission lines ranging
from 69 kV to 138 kV; 33,069 pole miles of overhead and 2,119 conduit bank
miles of underground distribution lines; and 419,651 line transformers in
service with an aggregate capacity of 18,068,000 kVa.
ELECTRIC GENERATING PLANTS
As of December 31, 1999, the electric generating plants of the NU system
companies and the NU System companies' entitlement in the generating plant of
the VYnpc 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 2 Nuclear 1975 705,814
Unit 3 Nuclear 1986 603,436
Seabrook (Seabrook, NH) Nuclear 1990 47,135
VT Yankee (Vernon, VT) Nuclear 1972 45,189
---------
Total Nuclear-Steam Plants ( 4 units) 1,401,574
Total Hydro-Conventional (25 units) 1903-55 98,970
Total Hydro-Pumped Storage ( 7 units) 1928-73 905,200
Total Internal Combustion ( 5 units) 1969-70 216,400
---------
Total CL&P Generating Plant (41 units) 2,622,144
=========
PSNH Millstone (Waterford, CT)
Unit 3 Nuclear 1986 32,461
VT Yankee (Vernon, VT) Nuclear 1972 18,999
---------
Total Nuclear-Steam Plants ( 2 units) 51,460
Total Fossil-Steam Plants ( 7 units) 1952-78 1,060,398
Total Hydro-Conventional (20 units) 1917-83 67,930
Total Internal Combustion ( 5 units) 1968-70 104,530
---------
Total PSNH Generating Plant (34 units) 1,284,318
=========
WMECO Millstone (Waterford, CT)
Unit 2 Nuclear 1975 165,561
Unit 3 Nuclear 1986 139,519
VT Yankee (Vernon, VT) Nuclear 1972 11,904
---------
Total Nuclear-Steam Plants ( 3 units) 316,984
Total Hydro-Conventional (14 units) 1905-30 93,210**
Total Hydro-Pumped Storage ( 4 units) 1972-73 205,200
---------
Total WMECO Generating Plant (21 units) 615,394
=========
NAEC Seabrook (Seabrook, NH) Nuclear 1990 417,751
=========
HWP Mt. Tom (Holyoke, MA) Fossil-Steam 1960 147,000
Total Hydro-Conventional (15 units) 1905-1983 43,560
---------
Total HWP Generating Plant (16 units) 190,560
=========
NU System Millstone (Waterford, CT)
Unit 2 Nuclear 1975 871,375
Unit 3 Nuclear 1986 775,416
Seabrook (Seabrook, NH) Nuclear 1990 464,886
VT Yankee (Vernon, VT) Nuclear 1972 76,092
---------
Total Nuclear-Steam Plants ( 4 units) 2,187,769
Total Fossil-Steam Plants ( 8 units) 1952-78 1,207,398
Total Hydro-Conventional (74 units) 1903-83 303,670
Total Hydro-Pumped Storage ( 7 units) 1928-73 1,110,400
Total Internal Combustion (10 units) 1968-70 320,930
---------
Total NU system
Generating Plant
Including Vermont Yankee (103 units) 5,130,167
=========
Excluding Vermont Yankee (102 units) 5,054,075
=========
* Claimed capability represents winter ratings as of December 31, 1999.
** Total Hydro-Conventional capability includes the Cobble Mtn. plant's
33,960 kW which is leased from the City of Springfield, MA.
FRANCHISES
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 provide electric transmission and distribution
services, and, until January 2000, to sell electricity, in the respective
areas in which it is now supplying such service.
In addition to the right to provide electric transmission and
distribution services as set forth above, the franchises of CL&P include,
among others, limited rights and powers, as set forth in Title 16 of the
Connecticut General Statutes and the special act of the General Assembly
constituting its charter, to manufacture, generate, purchase, and sell
electricity at retail, including to provide standard offer, backup and
default service, 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. The NHPUC, pursuant to statutory requirement, has issued orders
granting PSNH exclusive 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.
Pursuant to the Massachusetts restructuring legislation, the DTE is
required to define service territories for each distribution company,
including WMECO, based on the service territories actually served on July 1,
1997, and following to the extent possible municipal boundaries. The DTE has
not yet defined service territories. After established by the DTE, until
terminated by effect of law or otherwise, the distribution company shall have
the exclusive obligation to provide distribution service to all retail
customers within its service territory, and no other person shall provide
distribution service within such service territory without the written
consent of such distribution company.
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 to purchasers who use the electricity in
their own business in the counties of Hampden or Hampshire, Massachusetts and
cities and towns in these counties, and 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. HP&E has no retail service territory area and
sells electric power exclusively at wholesale.
ITEM 3. LEGAL PROCEEDINGS
1. Connecticut Attorney General - Civil Environmental Lawsuit
On October 5, 1998, the Connecticut Superior Court, after hearing
arguments, approved a settlement which resolved a civil lawsuit by the CDEP
against NNECO and NUSCO for violations of the Millstone water permit and
Connecticut water discharge regulations. The settlement required NNECO to
pay a $700,000 civil penalty and expend $500,000 to fund three supplemental
environmental projects. NNECO is also required to perform and have a third-
party review of two environmental audits of its water compliance program and
to inform the CDEP of major changes to its environmental management system.
An intervening party has appealed the approval of the settlement to
Connecticut Appellate Court. On March 3, 2000, the Connecticut Supreme Court
assumed jurisdiction over this matter.
2. Connecticut Superior Court - Fish Unlimited Lawsuits
On March 11, 1999, Fish Unlimited and several other parties brought a
civil suit in Connecticut Superior Court against NNECO and NUSCO seeking a
temporary and a permanent injunction to prevent the restart of Millstone 2
until a fish return system and cooling tower are installed. On April 27,
1999, a temporary restraining order (TRO) was issued to prevent NNECO from
starting up Millstone 2 until the temporary injunction request was heard. On
May 7, 1999, the TRO was dissolved and the applications for both temporary
and permanent injunctions were denied. Fish Unlimited has appealed to the
Connecticut Appellate Court.
On June 2, 1999, Fish Unlimited and eight other plaintiffs filed another
suit in Connecticut Superior Court against NNECO and NUSCO. The plaintiffs'
primary claim was that Millstone is discharging pollutants into navigable
waters without a valid NPDES permit. On July 15, 1999, NUSCO and NNECO's
motion to dismiss this lawsuit was granted. Fish Unlimited has appealed the
decision to the Connecticut Appellate Court.
On March 3, 2000, the Connecticut Supreme Court assumed jurisdiction
over these matters.
3. Shareholder Securities Class Actions - Nuclear Matters
Consolidated Federal Court Actions: Pursuant to a court order dated
October 1, 1997, the six class actions separately filed against NU in 1996
were consolidated for pre-trial and trial purposes. The actions are based on
various federal securities law and common law theories alleging
misrepresentations and omissions in public disclosures related to the NU
system's nuclear problems, which resulted in extended outages at Millstone
and impacted the financial condition of NU and certain of its subsidiaries.
These complaints represent classes of plaintiffs who purchased or otherwise
acquired NU common stock during periods ranging from March 1994 to April
1996.
The parties have reached an agreement in principal to settle all of the
shareholder class actions. Final settlement is subject to the plaintiffs'
completion of discovery to confirm the reasonableness of the proposed
settlement and approval by the court. Discovery has been completed, and court
approval is expected in the spring of 2000.
State Court Actions: NU has been served with two separately filed class
actions based on various state securities law and common law theories
alleging misrepresentations and omissions in public disclosures related to
the NU system's nuclear problems. These complaints represent classes of
plaintiffs who purchased or otherwise acquired NU common stock during periods
ranging from December 1993 to April 1996. Plaintiffs' counsel in both state
actions agreed to stay the actions pending the outcome of the consolidated
federal court actions described above.
4. Shareholder Securities Class Actions - Con Edison Merger
On October 13, 1999 and October 19, 1999, virtually identical complaints
were filed in the Supreme Court of New York against NU and its trustees.
Both complaints purport to be "class action complaints" and allege that the
trustees have breached their fiduciary duties to the plaintiffs and other
members of the class by not (i) obtaining the best price for NU's assets and
businesses and (ii) entrenching themselves and their corporate offices. The
plaintiffs seek equitable relief, including an order that the trustees
maximize shareholder value and award attorneys' fees. NU removed the cases
from the state court to federal court in New York City and has filed motions
to dismiss the actions on various grounds. NU believes that all of these
class actions are without merit and intends to vigorously defend against all
such actions.
5. Millstone 3 - Joint Owner Litigation
CL&P and WMECO, through NNECO as agent, operate Millstone 3, at cost and
without profit, under a sharing agreement. On August 7, 1997, the non-NU
owners of Millstone 3 (minority owners) filed demands for arbitration with
CL&P and WMECO as well as three lawsuits in Massachusetts Superior Court
against NU and its current and many of its former trustees. The minority
owners raise a number of contract, tort and statutory claims, arising out of
the operation of Millstone 3. The demands and lawsuits seek to recover
compensatory damages totaling approximately $300 million, punitive damages,
treble damages, and attorneys' fees.
Hearings in the arbitration proceeding commenced on November 16, 1999,
and an initial decision on liability is not expected before the third quarter
of 2000. One of the three lawsuits has been dismissed as a result of the
settlements discussed below. The remaining lawsuits have been consolidated,
but no firm trial date has been set.
NU, CL&P and WMECO have reached settlements with three of the minority
owners, who hold approximately 58 percent of the minority owners' interest.
The agreements involve the payment of $36.4 million and certain contingent
payments, and provide for the inclusion of their Millstone 3 interests in
CL&P's nuclear auction process. No agreements have been reached with the
other seven minority owners.
6. Maine Yankee - Secondary Purchasers Dispute
A number of municipalities and cooperatives (Secondary Purchasers)
notified the sponsors of MY, including CL&P, WMECO and PSNH, that they
consider their purchase and payment obligations under their purchase
agreements to have been terminated as a result of the August 6, 1997 decision
by the MYAPC Board of Directors (MY Board) to retire MY. Accordingly, these
Secondary Purchasers informed the sponsors that they would be making no
further payments under the contracts for the period following the MY Board's
decision. Through such contracts, the sponsors agreed to deliver a portion
of the capacity and electrical output from MY until the year 2003 in exchange
for payment by the Secondary Purchasers of a pro-rata share of the plant's
costs and expenses.
Following a series of regulatory and legal proceedings related to this
matter at the FERC and in Maine state courts, on February 5, 1999, the
parties have filed settlements with the FERC in this matter, which the FERC
accepted on June 1, 1999. As a result, the Secondary Purchasers will make a
total settlement payment of $16.5 million in full satisfaction of their
obligations with respect to all past and future MY-related operations and
decommissioning costs.
7. Amended Partial Requirements Agreement
On September 30, 1999, PSNH announced that it reached a settlement
agreement with the New Hampshire Electric Cooperative (NHEC), the state's
second largest utility. The agreement resolves all outstanding issues
between PSNH and NHEC, its largest wholesale electric customer. As part of
the agreement, PSNH has opened its transmission and distribution facilities
to NHEC, which provides NHEC members the opportunity to purchase power from
a competitive energy supplier. NHEC paid PSNH a one-time payment of $18
million as a contract termination payment which will be used to reduce PSNH's
stranded costs. In connection with the settlement, PSNH recorded a loss of
approximately $6 million.
8. Other Legal Proceedings
The following sections of Item 1. "Business" discuss additional legal
proceedings: See "Rates and Electric Industry Restructuring" for information
about various state restructuring proceedings and civil lawsuits related
thereto; "Regulated Electric Operations- Transmission Access and FERC
Regulatory Changes" for information about proceedings relating to power and
transmission issues; "Regulated Electric Operations - Nuclear Generation" and
"Regulated Electric Operations - Nuclear Plant Performance" 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, CL&P, PSNH, WMECO, or NAEC.
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
---- ------- ---- ---
1999 First $16 7/16 $ 13 3/4
Second 18 5/16 13 9/16
Third 19 17 3/8
Fourth 22 17 3/4
1998 First $14 5/16 $ 11 11/16
Second 17 13 5/8
Third 17 1/16 14 3/8
Fourth 17 1/4 15 7/16
As of January 31, 2000, there were 81,132 common shareholders of record
of NU. As of the same date, there were a total of 137,388,633 common shares
issued, including 5,483,268 million unallocated ESOP shares held in the ESOP
trust.
On September 14, 1999, the NU Board of Trustees approved the payment of
NU's first common share dividend since March 1997. NU paid a dividend of 10
cents per share on December 30, 1999, to shareholders of record as of the
close of business December 1, 1999.
No dividends were declared or paid in 1998.
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 (a) to the "Consolidated
Statements of Shareholders' Equity" on page 34 of NU's 1999 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 54 of NU's 1999 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 44 of CL&P's 1999 Annual Report, which
information is incorporated herein by reference.
PSNH. Reference is made to information under the heading "Selected
Financial Data" contained on page 43 of PSNH's 1999 Annual Report, which
information is incorporated herein by reference.
WMECO. Reference is made to information under the heading "Selected
Financial Data" contained on page 41 of WMECO's 1999 Annual Report, which
information is incorporated herein by reference.
NAEC. Reference is made to information under the heading "Selected
Financial Data" contained on page 30 of NAEC's 1999 Annual Report, which
information is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS; AND
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
NU. Reference is made to information under the heading "Management's
Discussion and Analysis and Results of Operations" contained on pages 21
through 29 in NU's 1999 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 1 through 11 in CL&P's 1999 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 1 through 9 in PSNH's 1999
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 1 through 10 in WMECO's 1999 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 1 through 7 in NAEC's 1999 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 Comprehensive Income," "Consolidated
Balance Sheets," "Consolidated Statements of Shareholders' Equity,"
"Consolidated Statements of Cash Flows," "Consolidated Statements of Income
Taxes," "Consolidated Statements of Capitalization," "Notes to Consolidated
Financial Statements," and "Consolidated Statements of Quarterly Financial
Data" contained on pages 30 through 53 in NU's 1999 Annual Report to
Shareholders, which information is incorporated herein by reference.
CL&P. Reference is made to information under the headings "Report of
Independent Public Accountants," "Consolidated Statements of Income,"
"Consolidated Statements of Comprehensive Income," "Consolidated Balance
Sheets," "Consolidated Statements of Common Stockholder's Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial
Statements," and "Statements of Quarterly Financial Data" contained on pages
12 through 44 in CL&P's 1999 Annual Report, which information is incorporated
herein by reference.
PSNH. Reference is made to information under the headings "Report of
Independent Public Accountants," "Statements of Income," "Statements of
Comprehensive Income," "Balance Sheets," "Statements of Common Stockholder's
Equity," "Statements of Cash Flows," "Notes to Financial Statements," and
"Statements of Quarterly Financial Data" contained on pages 10 through 43 in
PSNH's 1999 Annual Report, which information is incorporated herein by
reference.
WMECO. Reference is made to information under the headings "Report of
Independent Public Accountants," "Consolidated Statements of Income,"
"Consolidated Statements of Comprehensive Income," "Consolidated Balance
Sheets," "Consolidated Statements of Common Stockholder's Equity,"
"Consolidated Statements of Cash Flows," "Notes to Consolidated Financial
Statements," and "Statements of Quarterly Financial Data" contained on pages
11 through 41 in WMECO's 1999 Annual Report, which information is incorporated
herein by reference.
NAEC. Reference is made to information under the headings "Report of
Independent Public Accountants," "Statements of Income," "Statements of
Comprehensive Income," "Balance Sheets," "Statements of Common Stockholder's
Equity," "Statements of Cash Flows," "Notes to Financial Statements," and
"Statements of Quarterly Financial Data" contained on pages 8 through 30 in
NAEC's 1999 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," "Executive Compensation," "Pension
Benefits," and "Report on Executive Compensation" of the definitive proxy
statement for solicitation of proxies by NU's Board of Trustees, dated
March 31, 2000, which will be filed with the Commission pursuant to Rule
14a-6 under the Securities Exchange Act of 1934 (the Act).
First First
Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
John H. Forsgren EVP, CFO 02/01/96 n/a
William T. Frain, Jr. OTH 02/01/94 n/a
Cheryl W. Grise SVP, SEC, GC 06/01/91 n/a
Bruce D. Kenyon P 09/03/96 n/a
Hugh C. MacKenzie P 07/01/88 n/a
Michael G. Morris CHB, P, CEO, T 08/19/97 08/19/97
Gary D. Simon OTH 04/15/98 n/a
Lisa J. Thibdaue OTH 01/01/98 n/a
CL&P.
First First
Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
David H. Boguslawski VP, D 09/09/96 06/30/99
John H. Forsgren (1) OTH 02/10/96 n/a
Cheryl W. Grise (2) OTH 06/01/91 n/a
Bruce D. Kenyon (3) OTH 09/03/96 n/a
Hugh C. MacKenzie P, D 07/01/88 06/06/90
Michael G. Morris (4) OTH 08/19/97 n/a
Rodney O. Powell VP, D 10/18/98 06/30/99
Lisa J. Thibdaue (5) OTH 01/01/98 n/a
PSNH.
First First
Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
David H. Boguslawski VP, D 06/05/92 06/30/99
John C. Collins D n/a 10/19/92
John H. Forsgren (1) OTH, D 02/01/96 08/05/96
William T. Frain, Jr. P, COO, D 03/18/71 02/01/94
Cheryl W. Grise (2) OTH 06/01/91 n/a
Bruce D. Kenyon (3) OTH 09/03/96 n/a
Gerald Letendre D n/a 10/19/92
Hugh C. MacKenzie (6) D n/a 02/01/94
Michael G. Morris CH, CEO, D 08/19/97 08/19/97
Jane E. Newman D n/a 10/19/92
Lisa J. Thibdaue (5) OTH 01/01/98 n/a
WMECO.
First First
Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
David H. Boguslawski VP, D 09/09/96 06/30/99
James E. Byrne D n/a 09/17/99
John H. Forsgren (1) OTH, D Note 1 06/10/96
Cheryl W. Grise (2) OTH 06/01/91 n/a
Bruce D. Kenyon (3) OTH 09/03/96 n/a
Kerry J. Kuhlman P, COO, D 10/18/98 04/01/99
Hugh C. MacKenzie (6) OTH, D Note 2 06/06/90
Paul J. McDonald D n/a 09/17/99
Michael G. Morris CH, CEO, D 08/19/97 08/19/97
Melinda M. Phelps D n/a 09/17/99
Lisa J. Thibdaue (5) OTH 01/01/98 n/a
NAEC.
First First
Elected Elected
Name Positions Held an Officer a Trustee
- ------------------------- -------------- ---------- ---------
William A. DiProfio D n/a 06/30/99
Ted C. Feigenbaum EVP, CNO, D 10/21/91 06/30/99
John H. Forsgren (1) OTH 02/01/96 n/a
Cheryl W. Grise (2) OTH 06/01/91 n/a
Bruce D. Kenyon P, CEO, D 09/03/96 09/03/96
Michael G. Morris (4) OTH 08/19/97 n/a
1. Mr. Forsgren resigned as Executive Vice President and Chief Financial
Officer of CL&P, PSNH, WMECO, and NAEC and as a Director of CL&P and
NAEC, effective June 30, 1999. He is considered an Executive Officer of
CL&P, PSNH, WMECO, and NAEC because of his policy-making function for the
NU system.
2. Mrs. Grise resigned as Senior Vice President, Secretary and General Counsel
of CL&P, PSNH and NAEC and as Senior Vice President, Secretary, Assistant
Clerk, and General Counsel of WMECO, effective June 30, 1999. She is
considered an Executive Officer of CL&P, PSNH, WMECO, and NAEC because of
her policy-making function for the NU system.
3. Mr. Kenyon resigned as President-Generation Group and as a Director of
CL&P, PSNH and WMECO, effective June 30, 1999. He is considered an
Executive Officer of CL&P, PSNH and WMECO because of his policy-making
function for the NU system.
4. Mr. Morris resigned as Chairman and as a Director of CL&P and NAEC,
effective June 30, 1999. He is considered an Executive Officer of CL&P
and NAEC because of his policy-making function for the NU system.
5. Ms. Thibdaue resigned as Vice President of CL&P, PSNH and WMECO, effective
June 30, 1999. She is considered an Executive Officer of CL&P, PSNH and
WMECO because of her policy-making function for the NU system.
6. Mr. MacKenzie resigned as President of WMECO, effective April 1, 1999.
He is considered an Executive Officer of PSNH and WMECO because of
his policy-making function for the NU system.
Key:
AC - Assistant Clerk EVP - Executive Vice President
CAO - Chief Administrative Officer GC - General Counsel
CEO - Chief Executive Officer OTH - Executive Officer of Registrant
because of policy-making function
for NU System
CFO - Chief Financial Officer P - President
CH - Chairman SEC - Secretary
CHB - Chairman of the Board SVP - Senior Vice President
COO - Chief Operating Officer T - Trustee
D - Director VP - Vice President
Name Age Business Experience During Past 5 Years
- ------------------------- --- ---------------------------------------
David H. Boguslawski 45 Vice President-Energy Delivery of CL&P, PSNH
and WMECO, since 1996; previously Vice
President-Customer Operations of PSNH from
January 1994 to September 1996.
James E. Byrne 45 Partner, Finneran, Byrne & Dreshsler, L.L.P.,
since 1982.
John C. Collins (1) 54 Chief Executive Officer, Dartmouth-Hitchcock
Clinic, Dartmouth - Hitchcock Medical Center
since 1977.
William A. DiProfio 57 Seabrook Station Director, North Atlantic
Energy Service Corporation since 1992.
Ted C. Feigenbaum (2) 49 Executive Vice President and Chief Nuclear
Officer of NAEC since February, 1996;
previously Senior Vice President of NAEC
since 1991; Senior Vice President and Chief
Nuclear Officer of PSNH from June 1992 to
August 1992; President and Chief Executive
Officer-New Hampshire Yankee Division of PSNH
from 1990 to 1992 and Chief Nuclear
Production Officer of PSNH from 1990 to 1992.
John H. Forsgren (3) 53 Executive Vice President and Chief Financial
Officer of NU since February 1996; previously
Executive Vice President and Chief Financial
Officer of CL&P, PSNH, WMECO, and NAEC from
February 1996 to June 1999; Managing Director
of the Chase Manhattan Bank from 1995 to 1996
and Senior Vice President of The Walt Disney
Company from 1990 to 1994.
William T. Frain, Jr.(4) 58 President and Chief Operating Officer of PSNH
since February 1994; previously Senior Vice
President of PSNH from 1992 to 1994.
Cheryl W. Grise 47 Senior Vice President, Secretary and General
Counsel of NU since July 1998; previously
Senior Vice President, Secretary and General
Counsel of CL&P, PSNH and NAEC and Senior
Vice President, Secretary, Assistant Clerk
and General Counsel of WMECO from July 1998
to June 1999; Senior Vice President and Chief
Administrative Officer of CL&P, PSNH and
NAEC, and Senior Vice President of WMECO from
1995 to 1998; Senior Vice President-Human
Resources and Administrative Services of
CL&P, WMECO and NAEC from 1994 to 1995 and
Vice President-Human Resources of CL&P, WMECO
and NAEC from 1992 to 1994.
Bruce D. Kenyon (5) 57 President and Chief Executive Officer of NAEC
since September 1996 and President-Generation
Group of NU since March 1999; previously
President-Generation Group of CL&P, PSNH and
WMECO from March 1999 to June 1999;
President-Nuclear Group of NU, CL&P, PSNH, and
WMECO from September 1996 to March 1999;
President and Chief Operating Officer of
South Carolina Electric and Gas Company from
1990 to 1996.
Kerry J. Kuhlman 49 President and Chief Operating Officer of
WMECO since April 1999; previously Vice
President-Customer Operations of WMECO from
October 1998 to April 1999; Vice President-
Central Region of CL&P from August 1997 to
October 1998; and Vice President-Eastern
Region of CL&P from July 1994 to August 1997.
Gerald Letendre 58 President, Diamond Casting & Machine Co.,
Inc. since 1972.
Hugh C. MacKenzie 57 President-Retail Business Group of NU since
February 1996 and President of CL&P since
January 1994; previously President of WMECO
from January 1994 to April 1999; Senior Vice
President-Customer Service Operations of CL&P
and WMECO from 1990 to 1994.
Paul J. McDonald (6) 56 Advisor to the Board of Directors, Friendly
Ice Cream Corporation since January 2000;
previously Senior Executive Vice President
and Chief Financial Officer, Friendly Ice
Cream Corporation, from 1986 to 1999.
Michael G. Morris 53 Chairman of the Board, President and Chief
Executive Officer of NU, Chairman and Chief
Executive Officer of PSNH, and Chairman of
WMECO since August 1997; previously Chairman
of CL&P and NAEC from August 1997 to June
1999; President and Chief Executive Officer
of Consumers Power Company from 1994 to 1997
and Executive Vice President and Chief
Operating Officer of Consumers Power Company
from 1992 to 1994.
Jane E. Newman (7) 54 Managing Director, The CommerceGroup, LLC,
since January 1999; previously Dean,
Whittemore School of Business and Economics
of the University of New Hampshire from
January 1998 to January 1999; Executive Vice
President and Director, Exeter Trust Company
from 1995 to 1997 and President, Coastal
Broadcasting Corporation from 1992 to 1995.
Melinda M. Phelps 56 Partner, Keyes and Donnellan, P.C., since
1992 and Police Commissioner, City of
Springfield, Massachusetts since 1998.
Rodney O. Powell 47 Vice-President-Central Region of CL&P since
October 1998; previously General Manager-
Simsbury of CL&P from October 1997 to October
1998; Manager-Regulatory Relations of NUSCO
from December 1995 to October 1997 and Senior
Customer Engineering and Marketing Services
Consultant of NUSCO from January 1994 to
December 1995.
Gary D. Simon (8) 51 Senior Vice President-Strategy and
Development of NUSCO since April 1998.
Lisa J. Thibdaue 46 Vice President-Rates, Regulatory Affairs and
Compliance of Northeast Utilities Service
Company since January 1998; previously Vice
President-Rates, Regulatory Affairs and
Compliance of CL&P, PSNH and WMECO from
January 1998 to June 1999; Executive
Director, Rates and Regulatory Affairs,
Consumers Power Company from 1996 to 1998
and Director of Regulatory Affairs, Consumers
Power Company from 1991 to 1996.
(1) Director of Blue Cross and Blue Shield of Vermont, Fleet Bank -
New Hampshire, Hamden Assurance Company Limited and the Business and
Industry Association of New Hampshire.
(2) Director of Connecticut Yankee Atomic Power Company, Maine Yankee Atomic
Power Company, Vermont Yankee Nuclear Power Corporation, and Yankee
Atomic Electric Company.
(3) Director of NorthEast Optic Network, Inc.
(4) Director of the Business and Industry Association of New Hampshire and
the Greater Manchester Chamber of Commerce; Trustee of Saint Anselm
College.
(5) Trustee of Columbia College and Director of Connecticut Yankee Atomic
Power Company.
(6) Director of CIGNA Investments, Inc.
(7) Director of Exeter Trust Company and Perini Corporation.
(8) Director of NorthEast Optic Network, Inc.
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 "Executive Compensation," "Summary Compensation Table," "Option/SAR
Grants in Last Fiscal Year," "Fiscal Year End Option/SAR Values," "Pension
Benefits," and "Report on Executive Compensation" of the definitive proxy
statement for solicitation of proxies by NU, dated March 31, 2000, which will
be filed with the Commission pursuant to Rule 14a-6 under the Act.
<TABLE>
CL&P, PSNH, WMECO, AND NAEC SUMMARY COMPENSATION TABLE
The following tables present the cash and non-cash compensation received by the Chief Executive Officer
and the next four highest paid executive officers of CL&P, PSNH, WMECO and NAEC, in accordance with rules of
the SEC:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
------------------- -----------------------------------------------
Awards Payouts
------------------------- ---------------------
Restricted Securities Long-Term All
Stock Underlying Incentive Other
Other Annual Award(s) Options/Stock Program Compen-
Name and Salary Compensation ($) Appreciation Payouts sation ($)
Principal Position Year ($) Bonus ($) ($) Note 1) (Note 2) Rights (#) ($) (Note 3)
- ---------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Michael G. Morris 1999 783,173 1,253,300 92,243 348,611 118,352 - 23,210
Chairman of the
Board, President 1998 757,692 891,000 134,376 255,261 64,574 - 22,731
and Chief Executive
Officer 1997 258,333 1,350,000 - - 500,000 - -
Bruce D. Kenyon 1999 500,000 - - 77,690 20,804 462,500 15,000
President -
Generation Group 1998 500,000 300,000 - - 21,236 - 14,800
1997 500,000 300,000 - 306,522 139,745 - -
John H. Forsgren 1999 429,904 400,000 - 122,682 32,852 87,003 12,888
Executive Vice
President and 1998 373,077 - - - 73,183 - 104,800
Chief Financial
Officer 1997 350,000 - - 378,787 184,382 - 50,000
Hugh C. MacKenzie 1999 270,000 250,000 - 73,612 19,712 - 108,100
President - Retail
Business Group 1998 270,000 - - - 15,496 42,972 7,500
1997 270,000 - - 189,778 142,549 26,998 4,800
Cheryl W. Grise 1999 244,712 250,000 - 73,612 19,712 - 82,247
Senior Vice
President, 1998 209,231 - - - 12,916 20,720 6,123
Secretary and
General Counsel 1997 200,000 - - 119,109 89,467 15,188 4,800
(in CL&P, PSNH and
WMECO tables only)
Ted C. Feigenbaum 1999 260,000 130,000 - 28,620 7,664 24,827 5,849
Executive Vice
President and 1998 260,000 48,750 - 40,961 10,044 20,723 7,800
Chief Nuclear Officer
of NAEC 1997 260,000 30,119 - - - 21,498 4,800
(in NAEC table only)
</TABLE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Individual Grants Grand Date Value
----------------- ----------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Options/SARs Employees Base Price Expiration Present
Name Granted (#) in Fiscal Year ($/sh) Date Value ($)
- ----------------------------------------------------------------------------------------------------
<S> <S> <S> <S> <S> <S>
Michael G. Morris 93,352 (Note 4) 14.7% 14.9375 2/23/2009 620,791
25,000 (Note 5) 3.9% 17.5625 9/13/2009 198,000
Bruce D. Kenyon 20,804 (Note 5) 3.3% 14.9375 2/23/2009 138,347
John H. Forsgren 32,852 (Note 4) 5.2% 14.9375 2/23/2009 218,466
Hugh C. MacKenzie 19,712 (Note 4) 3.1% 14.9375 2/23/2009 131,085
Cheryl W. Grise 19,712 (Note 4) 3.1% 14.9375 2/23/2009 131,085
Ted C. Feigenbaum 7,664 (Note 4) 1.2% 14.9375 2/23/2009 50,966
</TABLE>
<TABLE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Shares With
Respect to Number of Securities Value of Unexercised
Which Underlying Unexercised In-the-Money
SARs Were Value Options/SARs Options/SARs
Exercised Realized at Fiscal Year End (#) at Fiscal Year End ($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael G. Morris - - 318,049 364,877 2,992,333 3,350,961
Bruce D. Kenyon 98,509 332,468 52,410 27,883 344,674 147,108
John H. Forsgren 129,974 438,662 99,259 57,247 582,727 288,471
Hugh C. MacKenzie 100,486 339,140 49,351 24,877 334,118 132,831
Cheryl W. Grise 63,067 212,851 33,101 24,017 218,741 129,176
Ted C. Feigenbaum - - 6,696 11,012 28,458 57,339
Notes to Summary Compensation and Option/SAR Grants Tables:
1. Other annual compensation for Mr. Morris consists of 1998 and 1999 relocation expense
reimbursements.
2. At December 31, 1999, the aggregate restricted stock holdings by the five individuals named in
the table for CL&P, WMECO and PSNH were 51,989 shares with a value of $1,069,024 and for NAEC
were 49,814 shares with a value of $1,024,301. Awards shown for 1997 have vested. Awards
shown for 1999 vest one-third on February 23, 2000, one-third on February 23, 2001, and one-
third on February 23, 2002. During 1999, a total of 51,989 restricted shares were awarded to
the individuals shown in the table for CL&P, WMECO and PSNH, and a total of 48,977 restricted
shares were awarded to the individuals shown in the table for NAEC. Dividends paid on
restricted stock are either paid out or reinvested into additional shares.
3. "All Other Compensation" for 1999 consists of employer matching contributions under the
Northeast Utilities Service Company 401k Plan, generally available to all eligible employees
($4,800 for each named officer), matching contributions under the Deferred Compensation Plan
for Executives (Mr. Morris - $18,710, Mr. Kenyon - $10,200, Mr. Forsgren - $8,088,
Mr. MacKenzie - $3,300, Mrs. Grise - $2,447, and Mr. Feigenbaum - $1,049), and retention
payments (Mr. MacKenzie - $100,000 and Mrs. Grise - $75,000).
4. These options were granted on February 23, 1999, under the Incentive Plan. All options granted
vest one-third on February 23, 2000, one-third on February 23, 2001, and one-third on February 23,
2002. Valued using the Black-Scholes option pricing model, with the following assumptions:
Volatility: 36.52 percent (36 months of monthly data); Risk-free rate: 5.61 percent; Dividend
yield: 1.89 percent; Exercise date: February 23, 2009.
5. These options were granted on September 14, 1999, and were fully exercisable on the date of
grant. Valued using the Black-Scholes option pricing model, with the following assumptions:
Volatility: 34.66 percent (36 months of monthly data); Risk-free rate: 6.45 percent; Dividend
yield: 1.89 percent; Exercise date: September 13, 2009.
</TABLE>
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Overview and Strategy
The Compensation Committee of the Board of Trustees (the Committee) 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.
The goal of the Committee's executive compensation program for 1999 was to
provide a competitive compensation package to enable the Company to attract
and retain key executives with an eye towards the future in a more
competitive environment. The Committee further sought to align executive
interests with those of Northeast Utilities' shareholders and with Company
performance by continuing with the increased use of share-based incentives.
To help achieve these goals, the Committee drew upon information from a
variety of sources, including compensation consultants, utility and general
industry surveys, and other publicly available information, including proxy
statements. In 1999, the Company's comparison groups for purposes of
executive compensation consisted of a consultant's database of roughly 1,000
companies from a broad variety of industries, a consultant's database of over
75 electric and combination electric and gas utilities, and a smaller group
of ten electric utilities whose operating characteristics were substantially
similar to those of the Company in terms of generation mix and customer size.
Nine 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 the NU Proxy Statement.
Base Salary
The Committee sets the annual base salary for each executive officer
except for the Chief Executive Officer (CEO), whose base salary is set by the
Board of Trustees following a recommendation by the Committee pursuant to an
evaluation process developed by the Committee in conjunction with the
Corporate Governance Committee of the Board of Trustees. In 1999 the
Committee reviewed the base salary levels of the Company's entire officer
group against those of the 75 utility market comparison group with a goal of
targeting aggregate officer base salary to the median. The Committee
periodically adjusts officers' base salaries to reflect considerations such
as changes in responsibility, market sensitivity, individual performance and
internal equity. The CEO's base salary was increased by 3.23 percent in 1999
based on the market review and the Committee's judgment as to his past and
expected future performance.
Annual Incentive Awards
The Committee again implemented an Annual Incentive Program during 1999.
The incentive payout target was 80 percent of base salary for the CEO, and
varied from 25 to 50 percent of base salary for the other officers. The
Annual Incentive Program was designed to calculate actual aggregate payouts
based on the Company's performance against an earnings per share goal and
pre-established individual goals. Individual awards were made in cash in
February 2000. The CEO received an award under this program of $1,253,300, or
20 percent of target, determined solely on the fulfillment of the earnings-
per-share goal. In addition, during September 1999, the Board approved an
award of 25,000 stock options for the CEO on account of a highly successful
year in 1999 including the sale of the fossil/hydroelectric plants and the
restart of Millstone Unit 2.
Long-Term Incentive Grants
Long-term stock-based incentive grants were made in February 1999 to
each executive officer and other officers and certain key employees of the
Company. The Committee targeted these awards such that the total of base
pay, target annual incentive awards, and long-term incentive awards for the
officer group would be at the 75th percentile of the utility market
comparison group. Approximately one-half of the grants' intended value was
made in restricted stock and one-half was made in stock options. The CEO's
grant was targeted at 110 percent of base salary based upon the consultant's
survey database of utilities and general industry and the Committee's goal of
making long-term incentive awards competitive with these companies.
Internal Revenue Service Limitation on Deductibility of Executive
Compensation
The Committee believes that its compensation program adequately responds
to issues raised by the deductibility cap placed on executive salaries by
Section 162(m) of the Internal Revenue Code because of the use of stock
options and qualified performance-based compensation in Company incentive
programs.
Respectfully submitted,
Robert E. Patricelli, Chairman
William J. Pape II, Vice Chairman
Cotton Mather Cleveland
E. Gail de Planque
Elizabeth T. Kennan
John F. Swope
Dated: February 22, 2000
PENSION BENEFITS
The following table shows the estimated annual retirement benefits
payable to an executive officer of Northeast Utilities 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 plans 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 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).
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. 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 401k 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.
ANNUAL BENEFIT
Final Average Years of Credited Service
Compensation
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
Each of the executive officers of Northeast Utilities named in the
Summary Compensation Table is currently eligible for a target benefit, except
Messrs. Morris and Kenyon, whose Employment Agreements provide specially
calculated retirement benefits, based on their previous arrangements with CMS
Energy/Consumers Energy Company (CMS) and South Carolina Electric and Gas,
respectively. Mr. Morris's agreement provides that upon retirement after
reaching the fifth anniversary of his employment date (or upon disability or
termination without cause or following a change in control, as defined) he
will be entitled to receive a special retirement benefit calculated by
applying the benefit formula of the CMS Supplemental Executive Retirement
Plan to all compensation earned from the NU system and to all service rendered
to the Company and CMS. If Mr. Kenyon retires with at least three years of
service with the Company, he will be deemed to have two extra years of service
for purpose of his special retirement benefit. If after achieving three years
of service he voluntarily terminates employment following a "substantial
change, in responsibilities resulting from a material change in the business
of Northeast Utilities", he will be deemed to have an additional year of
service for purpose of his special retirement benefit, and if he retires with
at least three years of service with the Company, he will receive a lump sum
payment of $500,000.
In addition, Mr. Forsgren's Employment Agreement provides for
supplemental pension benefits based on crediting up to ten years additional
service and providing payments equal to 25 percent of salary for up to 15
years following retirement, reduced by four percentage points for each year
that his age is less than 65 years at retirement.
As of December 31, 1999, the executive officers named in the Summary
Compensation Table had the following years of credited service for purposes
of calculating target benefits under the Supplemental Plan (or in the case of
Messrs. Morris and Kenyon, for purposes of calculating the special retirement
benefits under their respective Employment Agreements): Mr. Morris - 21,
Mr. Kenyon - 5, Mr. Forsgren - 3, Mr. MacKenzie - 34, Mrs. Grise - 19, and
Mr. Feigenbaum - 14. In addition, Mr. Forsgren had 6 years of service for
purposes of his supplemental pension benefit and would have 25 years of
service for such purpose if he were to retire at age 65. Assuming that
retirement were to occur at age 65 for these officers, retirement would occur
with 33, 13, 15, 41, 37, and 29 years of credited service, respectively.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
NUSCO has entered into employment agreements (the Officer Agreements)
with each of the named executive officers. The Officer Agreements are also
binding on Northeast Utilities and on each majority-owned subsidiary of
Northeast Utilities.
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, and that the officer will
participate in specified benefits under the Supplemental Executive Retirement
Plan or other supplemental retirement programs (see Pension Benefits, above)
and/or in certain executive incentive programs at specified incentive
opportunity levels.
Each Officer Agreement provides for a specified employment term and 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 supplemental retirement benefit, if any, shall be due), or by
the officer on 30 days' prior written notice for any reason. Absent
"cause", the Company may remove the officer from his or her position on 60
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 following a change of control, as defined, between (a) the earlier
of the date shareholders approve a change of control transaction or a change
of control transaction occurs and (b) the earlier of the date, if any, on
which the Board of Trustees abandons the transaction or the date two years
following the change of control, if the officer signs a release of all claims
against the Company, the officer will be entitled to certain payments
including a multiple (not to exceed four) of annual base salary, 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, the Officer Agreements of Messrs.
Morris, Kenyon and Forsgren provide for a specified salary, cash, restricted
stock and/or stock options upon employment, special incentive programs, and/or
special retirement benefits. See Pension Benefits, above, for further
description of these provisions. During 1999, the Officer Agreements of
Messrs. Morris, Kenyon and Forsgren and Mrs. Grise were amended to provide
that a termination of employment initiated by such officer upon the
imposition of a limitation of scope of the officer's responsibilities
following a change of control such that the officer's responsibilities relate
primarily to a company whose common equity is not publicly held shall
constitute a termination upon a change of control. Mr. Kenyon's Officer
Agreement also provides for a special short term incentive compensation
program in lieu of a portion of the Stock Price Recovery Incentive Program.
Under this special program Mr. Kenyon is 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.
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," "Executive
Compensation," "Pension Benefits," and "Report on Executive Compensation" of
the definitive proxy statement for solicitation of proxies by NU, dated
March 31, 1999 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 24, 2000, the Directors and Executive
Officers 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. 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.
CL&P, PSNH, WMECO, and NAEC DIRECTORS AND EXECUTIVE OFFICERS
- ------------------------------------------------------------------------------
Title of Amount and Nature of Percent of
Class Name Beneficial Ownership Class (1)
- ------------------------------------------------------------------------------
NU Common David H. Boguslawski 14,981 (2)
NU Common James E. Byrne 0
NU Common John C. Collins 0
NU Common William A. DiProfio 4,648 (3)
NU Common Ted C. Feigenbaum 36,357 (4)
NU Common John H. Forsgren 78,746 (5)
NU Common William T. Frain, Jr. 17,516 (6)
NU Common Cheryl W. Grise 32,347 (7)
NU Common Bruce D. Kenyon 87,377 (8)
NU Common Kerry J. Kuhlman 9,457 (9)
NU Common Gerald Letendre 0
NU Common Hugh C. MacKenzie 35,034 (10)
NU Common Paul J. McDonald 500
NU Common Michael G. Morris 400,496 (11)
NU Common Jane E. Newman 0
NU Common Melinda M. Phelps 0
NU Common Rodney O. Powell 4,094 (12)
Amount beneficially owned by Directors and Executive Officers as a group:
Amount and Nature of
Company Number of Persons Beneficial Ownership
- ------- ----------------- --------------------
CL&P 8 667,240 (13)
PSNH 11 680,027 (13)
WMECO 11 671,968 (13)
NAEC 6 639,971
(1) As of February 24, 2000, there were 137,388,633 common shares of NU
outstanding. The percentage of such shares beneficially owned by any
Director or Executive Officer, and by all Directors and Executive
Officers of CL&P, PSNH, WMECO, and NAEC as a group, does not exceed one
percent.
(2) Includes 2,016 restricted shares, as to which Mr. Boguslawski has sole
voting power but no dispositive power. Includes 7,368 shares that could
be acquired by Mr. Boguslawski pursuant to currently exercisable options.
(3) Includes 879 shares that could be acquired by Mr. DiProfio pursuant to
currently exercisable options.
(4) Includes 2,114 restricted shares, as to which Mr. Feigenbaum has sole
voting power but no dispositive power. Includes 9,251 shares that could
be acquired by Mr. Feigenbaum pursuant to currently exercisable options.
(5) Includes 174 shares held in an employee stock ownership plan and 5,475
restricted shares, as to which Mr. Forsgren has sole voting power but no
dispositive power. Includes 59,739 shares that could be acquired by
Mr. Forsgren pursuant to currently exercisable options.
(6) Includes 2,149 restricted shares, as to which Mr. Frain has sole voting
power but no dispositive power. Includes 7,892 shares that could be
acquired by Mr. Frain pursuant to currently exercisable options.
(7) Includes 3,285 restricted shares, as to which Mrs. Grise has sole voting
power, but no dispositive power. Includes 15,182 shares that could be
acquired by Mrs. Grise pursuant to currently exercisable options.
Includes 261 shares held by Mrs. Grise's husband as custodian for her
children, with whom she shares voting and dispositive power.
(8) Includes 305 shares held in an employee stock ownership plan and 3,467
restricted shares, as to which Mr. Kenyon has sole voting power but no
dispositive power. Includes 21,092 shares that could be acquired by
Mr. Kenyon pursuant to currently exercisable options.
(9) Includes 947 restricted shares, as to which Ms. Kuhlman has sole voting
power but no dispositive power. Includes 3,474 shares that could be
acquired by Ms. Kuhlman pursuant to currently exercisable options.
(10) Includes 3,285 restricted shares, as to which Mr. MacKenzie has sole
voting power but no dispositive power. Includes 16,902 shares that
could be acquired by Mr. MacKenzie pursuant to currently exercisable
options.
(11) Includes 265 shares held in an employee stock ownership plan and 20,939
restricted shares, as to which Mr. Morris has sole voting power but no
dispositive power. Includes 349,167 shares that could be acquired by
Mr. Morris pursuant to currently exercisable options. Includes 13,095
shares held jointly by Mr. Morris and his wife, who share voting and
investment power.
(12) Includes 631 restricted shares, as to which Mr. Powell has sole voting
power but no dispositive power. Includes 2,946 shares that could be
acquired by Mr. Powell pursuant to currently exercisable options.
(13) Includes 196 shares held in an employee stock ownership plan and 1,995
restricted shares held by an executive officer other than those named in
the table above as to which such officer has sole voting power but no
dispositive power. Includes 7,759 shares that could be acquired by such
officer pursuant to currently exercisable options.
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
March 31, 2000, 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 1999 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 on Schedules 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
and Subsidiary are listed in the Index to Financial
Statements Schedules S-4
3. Exhibits Index E-1
(b) Reports on Form 8-K:
NU and CL&P filed 8-Ks dated January 28, 1999, disclosing terms
contained within the January 1999 issued Connecticut DPUC draft
decision, and its proposed effects on the NU system companies.
NU filed a Form 8-K dated February 23, 1999, disclosing the NU
Board of Trustees adopted a shareholder rights plan (subject to
regulatory approval) together with a brief summary of the terms of
the Rights Plan.
NU, CL&P and WMECO filed Form 8-Ks dated April 27, 1999, disclosing:
o On April 27, 1999, the Connecticut Superior Court granted a
plaintiff's request for a temporary restraining order to prevent
Millstone 2 from resuming operations until at least June 15, 1999;
o On April 29, 1999, the NRC notified NNECO that it could restart
Millstone 2; although NNECO received NRC approval, the unit
could not commence operations, until the temporary restraining
order initiated by Fish Unlimited is lifted.
o NU filed a Form 8-K dated May 7, 1999, announcing the distribution
of rights to shareholders under its shareholder rights plan dated
February 23, 1999.
NU filed a Form 8-K dated June 14, 1999, disclosing:
o On June 15, 1999, NU and Yankee announced that they have agreed
to a merger in which Yankee will become a subsidiary of NU.
NU, PSNH and NAEC filed Form 8-Ks dated June 14, 1999, disclosing:
o NU, its subsidiary, PSNH, and the state of New Hampshire signed
a Memorandum of Understanding intended to settle a number of
pending regulatory and court proceedings related to PSNH.
NU, CL&P and WMECO filed Form 8-Ks dated July 6, 1999, disclosing:
o The results of the auction of CL&P's and the remainder of
WMECO's nonnuclear generation assets held in conformity with
the electric utility restructuring laws of Connecticut and
Massachusetts, respectively.
NU filed a Form 8-K dated September 14, 1999, disclosing:
o On September 14, 1999, the NU Board of Trustees approved the
payment of NU's first common stock dividend since March 1997.
NU, CL&P, PSNH, and WMECO filed Form 8-Ks dated September 14, 1999,
disclosing:
o On September 15, 1999, NU announced that the Millstone Station
nuclear power plant assets of its subsidiaries, CL&P and WMECO,
will be put up for public auction as soon as practical. The
35.98 percent share of the Seabrook Nuclear Station in New
Hampshire owned by NU's subsidiary NAEC also will put up for
public auction.
NU filed a Form 8-K dated October 13, 1999, disclosing:
o On October 13, 1999, NU and Con Edison announced that they have
agreed to a merger to combine the two companies.
o On October 13, 1999, a NU shareholder class action complaint
was filed in New York Supreme Court for the County of New York.
An additional class action complaint was filed with the same
court on October 18, 1999. The complaints name as defendants
NU and ten individual Trustees of NU.
NU, CL&P and WMECO filed Form 8-Ks dated October 27, 1999,
disclosing:
o On October 27, 1999, NU and its subsidiaries, CL&P and WMECO,
agreed to settle various arbitration and litigation claims
arising out of the operation of the Millstone 3 nuclear power
plant.
o NU, CL&P, WMECO, and PSNH filed Form 8-Ks dated December 2,
1999, disclosing:
o On December 2, 1999, NU and its subsidiaries CL&P, WMECO and
PSNH, agreed in principle with a non-NU joint owner to settle
various arbitration and litigation claims arising out of the
operation of Millstone 3.
o On December 15, 1999, CL&P completed the sale of 2,235 MW of
fossil-fueled generation in Connecticut to an unaffiliated
company.
o On December 15, 1999, the DPUC issued a supplemental decision
in Docket No. 99-03-36 approving the components of CL&P's rates
for standard offer service commencing on January 1, 2000.
o On December 20, 1999, the DTE issued an order related to WMECO's
October 18, 1999, compliance filing.
o On December 29, 1999, the DPUC approved the merger between NU
and Yankee.
o As of January 11, 2000, NU and Con Edison entered into an
amended and restated agreement and plan of merger replacing the
agreement and plan of merger executed on October 12, 1999.
NU filed Form 8-K dated February 29, 2000, disclosing:
o The 1999 financial statements for NU Consolidated and notes
thereto. In addition, it includes, Management's Discussion and
Analysis of Financial Condition and Results of Operations
relating to the 1999 financial statements.
o The completion of the merger of NU and Yankee.
NORTHEAST UTILITIES
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.
NORTHEAST UTILITIES
-------------------
(Registrant)
Date: March 15, 2000 By /s/ Michael G. Morris
-----------------------------------------
Michael G. Morris
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 15, 2000 Chairman of the Board, /s/ Michael G. Morris
President and Michael G. Morris
Chief Executive Officer
and a Trustee
March 15, 2000 Executive Vice /s/ John H. Forsgren
President and Chief John H. Forsgren
Financial Officer
March 15, 2000 Vice President and /s/ John J. Roman
Controller John J. Roman
March 15, 2000 Trustee /s/ Cotton M. Cleveland
Cotton M. Cleveland
March 15, 2000 Trustee /s/ William F. Conway
William F. Conway
March 15, 2000 Trustee /s/ E. Gail de Planque
E. Gail de Planque
March 15, 2000 Trustee /s/ Raymond L. Golden
Raymond L. Golden
March 15, 2000 Trustee /s/ Elizabeth T. Kennan
Elizabeth T. Kennan
March 15, 2000 Trustee /s/ William J. Pape II
William J. Pape II
March 15, 2000 Trustee /s/ Robert E. Patricelli
Robert E. Patricelli
March 15, 2000 Trustee /s/ John F. Swope
John F. Swope
March 15, 2000 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 15, 2000 By /s/ Hugh C. MacKenzie
---------------------
Hugh C. MacKenzie
President
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 15, 2000 President and Director /s/ Hugh C. MacKenzie
Hugh C. MacKenzie
March 15, 2000 Treasurer /s/ Randy A. Shoop
Randy A. Shoop
March 15, 2000 Controller /s/ John P. Stack
John P. Stack
March 15, 2000 Director /s/ David H. Boguslawski
David H. Boguslawski
March 15, 2000 Director /s/ Rodney O. Powell
Rodney O. Powell
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 15, 2000 By /s/ Michael G. Morris
----------------------------------------
Michael G. Morris
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 15, 2000 Chairman and Chief /s/ Michael G. Morris
Executive Officer Michael G. Morris
and a Director
March 15, 2000 President and Chief /s/ William T. Frain, Jr.
Operating Officer and William T. Frain, Jr.
a Director
March 15, 2000 Vice President and Treasurer /s/ David R. McHale
David R. McHale
March 15, 2000 Vice President and Controller /s/ John J. Roman
John J. Roman
March 15, 2000 Director /s/ David H. Boguslawski
David H. Boguslawski
March 15, 2000 Director /s/ John C. Collins
John C. Collins
March 15, 2000 Director /s/ Gerald Letendre
Gerald Letendre
March 15, 2000 Director /s/ John H. Forsgren
John H. Forsgren
March 15, 2000 Director /s/ Hugh C. MacKenzie
Hugh C. MacKenzie
March 15, 2000 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)
Date: March 15, 2000 By /s/ Michael G. Morris
----------------------------------------
Michael G. Morris
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 15, 2000 Chairman and Chief Executive /s/ Michael G. Morris
Officer and a Director Michael G. Morris
March 15, 2000 President and Chief Operating /s/ Kerry J. Kuhlman
Officer and a Director Kerry J. Kuhlman
March 15, 2000 Vice President and Treasurer /s/ David R. McHale
David R. McHale
March 15, 2000 Vice President and Controller /s/ John J. Roman
John J. Roman
March 15, 2000 Director /s/ David H. Boguslawski
David H. Boguslawski
March 15, 2000 Director /s/ James E. Byrne
James E. Byrne
March 15, 2000 Director /s/ John H. Forsgren
John H. Forsgren
March 15, 2000 Director /s/ Hugh C. MacKenzie
Hugh C. MacKenzie
March 15, 2000 Director /s/ Paul J. McDonald
Paul J. McDonald
March 15, 2000 Director /s/ Melinda M. Phelps
Melinda M. Phelps
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)
Date: March 15, 2000 By /s/ Bruce D. Kenyon
---------------------------------
Bruce D. Kenyon
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 15, 2000 President and Chief Executive /s/ Bruce D. Kenyon
Officer and a Director Bruce D. Kenyon
March 15, 2000 Vice President and Treasurer /s/ David R. McHale
David R. McHale
March 15, 2000 Vice President and Controller /s/ John J. Roman
John J. Roman
March 15, 2000 Director /s/ William A. DiProfio
William A. DiProfio
March 15, 2000 Director /s/ Ted C. Feigenbaum
Ted C. Feigenbaum
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
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 January 25, 2000.
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 to
Financial Statements Schedules 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 a 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
January 25, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
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 January
25, 2000. Our reports on the financial statements 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 to
Financial Statements Schedules 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 a 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
January 25, 2000
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports dated January 25, 2000, included (or incorporated by reference) in
this Form 10-K into the Company's previously filed Registration Statements
No. 33-55279 of The Connecticut Light and Power Company, No. 33-56537 of CL&P
Capital, LP and No. 33-34622, No. 33-44814, No. 33-63023, No. 33-40156,
No. 333-52413, No. 333-52415, and No. 333-85613 of Northeast Utilities. It
should be noted that we have not audited any financial statements of the
Company subsequent to December 31, 1999 or performed any audit procedures
subsequent to the date of our report.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Hartford, Connecticut
March 23, 2000
INDEX TO FINANCIAL STATMENTS SCHEDULES
Schedule
I. Financial Information of Registrant:
Northeast Utilities (Parent) Balance
Sheets 1999 and 1998 S-5
Northeast Utilities (Parent) Statements
of Income 1999, 1998, and 1997 S-6
Northeast Utilities (Parent) Statements
of Cash Flows 1999, 1998, and 1997 S-7
II. Valuation and Qualifying Accounts and Reserves
1999, 1998, and 1997:
Northeast Utilities and Subsidiaries S-8 - S-10
The Connecticut Light and Power Company
and Subsidiaries S-11 - S-13
Public Service Company of New Hampshire S-14 - S-16
Western Massachusetts Electric Company
and Subsidiary S-17 - S-19
All other schedules of the companies' for which provision is made in the
applicable regulations of the SEC 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, 1999 AND 1998
(Thousands of Dollars)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
- ------
Other Property and Investments:
Investments in subsidiary companies, at
equity................................................... $2,252,175 $2,161,901
Investments in transmission companies, at equity.......... 16,460 17,692
Other, at cost............................................ 54 67
----------- -----------
2,268,689 2,179,660
----------- -----------
Current Assets:
Notes receivable from affiliated companies................ 45,300 34,400
Notes and accounts receivable............................ 625 723
Receivables from affiliated companies..................... 8,351 1,033
Taxes receivable...................................... 418 7,969
Prepayments............................................... 1,192 96
----------- -----------
55,886 44,221
----------- -----------
Deferred Charges:
Accumulated deferred income taxes......................... - 5,236
Unamortized debt expense.................................. 6 101
Other..................................................... 122 256
Deferred Yankee Energy System, Inc. acquisition expenses.. 3,427 -
----------- -----------
3,555 5,593
----------- -----------
Total Assets......................................... $2,328,130 $2,229,474
=========== ===========
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common Shareholders' Equity:
Common shares, $5 par value--Authorized
225,000,000 shares; 137,393,829 shares issued and
131,870,284 shares outstanding in 1999 and
137,031,264 shares issued and
130,954,740 outstanding in 1998......................... $ 686,969 $ 685,156
Capital surplus, paid in.................................. 940,726 940,661
Deferred contribution plan--employee stock ownership plan. (127,725) (140,619)
Retained earnings......................................... 581,817 560,769
Accumulated other comprehensive income.................... 1,524 1,405
----------- -----------
Total common shareholders' equity....................... 2,083,311 2,047,372
Long-term debt............................................ 138,000 158,000
----------- -----------
Total capitalization.................................... 2,221,311 2,205,372
----------- -----------
Current Liabilities:
Long-term debt--current portion........................... 20,000 19,000
Notes payable to banks.................................... 65,000 -
Accounts payable.......................................... 7,258 1,882
Accounts payable to affiliated companies.................. 1,201 714
Accrued taxes............................................. - 15
Accrued interest.......................................... 1,705 2,097
Accrued Con Edison/Northeast Utilities merger fees........ 6,143 -
----------- -----------
101,307 23,708
----------- -----------
Accumulated deferred income taxes........................... 5,302 -
Other Deferred Credits...................................... 210 394
----------- -----------
5,512 394
----------- -----------
Total Capitalization and Liabilities $2,328,130 $2,229,474
=========== ===========
</TABLE>
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Thousands of Dollars Except Share Information)
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Operating Revenues................ $ - $ - $ -
------------- ------------- -------------
Operating Expenses:
Other........................... 19,126 7,674 8,657
Federal income taxes............ (4,849) 1,569 (10,697)
------------- ------------- -------------
Total operating expenses....... 14,277 9,243 (2,040)
------------- ------------- -------------
Operating (Loss)/Income........... (14,277) (9,243) 2,040
------------- ------------- -------------
Other Income/(Loss):
Equity in earnings of
subsidiaries................... 56,812 (145,874) (118,195)
Equity in earnings of
transmission companies......... 2,608 2,903 2,968
Other, net...................... 2,628 21,995 2,184
Income taxes.................... 2,057 - -
------------- ------------- -------------
Other income/(loss), net...... 64,105 (120,976) (113,043)
------------- ------------- -------------
Income/(loss) before interest
charges...................... 49,828 (130,219) (111,003)
------------- ------------- -------------
Interest Charges.................. 15,612 16,534 18,959
------------- ------------- -------------
Earnings/(Loss) for Common Shares. $ 34,216 $ (146,753) $ (129,962)
============= ============= =============
Earnings/(Loss) Per Common Share--
Basic and Diluted............... $ 0.26 $ (1.12) $ (1.01)
============= ============= =============
Common Shares Outstanding
(average)........................ 131,415,126 130,549,760 129,567,708
============= ============= =============
</TABLE>
SCHEDULE I
NORTHEAST UTILITIES (PARENT)
FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(Thousands of Dollars)
<TABLE>
<CAPTION> 1999 1998 1997
------------ -------------- --------------
<S> <C> <C> <C>
Operating Activities:
Net income\(loss)........................................ $ 34,216 $ (146,753) $ (135,708)
Adjustments to reconcile to net cash
provided by operating activities:
Equity in earnings of subsidiary companies............. (56,812) 145,874 123,941
Cash dividends received from subsidiary companies...... 66,000 47,000 132,994
Deferred income taxes.................................. 74 777 1,558
Other sources of cash.................................. 16,655 20,926 9,637
Changes in working capital:
Receivables.......................................... (7,220) (84) 6,247
Accounts payable..................................... 5,863 523 (14,031)
Other working capital (excludes cash)................ 12,191 (15,981) 5,490
------------ -------------- --------------
Net cash flows provided by operating activities............ 70,967 52,282 130,128
------------ -------------- --------------
Financing Activities:
Issuance of common shares................................ 5,318 2,659 6,502
Net increase/(decrease) in short-term debt............... 65,000 - (38,750)
Reacquisitions and retirements of long-term debt......... (19,000) (17,000) (16,000)
Cash dividends on common shares.......................... (13,168) - (32,134)
------------ -------------- --------------
Net cash flows used in financing activities................ 38,150 (14,341) (80,382)
------------ -------------- --------------
Investment Activities:
NU system Money Pool..................................... (10,900) (200) (28,725)
Investment in subsidiaries............................... (99,462) (40,029) (22,583)
Other investment activities, net......................... 1,245 2,278 1,562
------------ -------------- --------------
Net cash flows used in investing activities................ (109,117) (37,951) (49,746)
------------ -------------- --------------
Net decrease in cash for the period........................ 0 (10) 0
Cash - beginning of period................................. 0 10 10
------------ -------------- --------------
Cash - end of period....................................... $ 0 $ 0 $ 10
============ ============== ==============
Supplemental Cash Flow Information
Cash paid/(refunded) during the year for:
Interest, net of amounts capitalized..................... $ 15,724 $ 16,610 $ 18,960
============ ============== ==============
Income taxes............................................. $ 28,982 $ 16,929 $ (16,000)
============ ============== ==============
</TABLE>
<TABLE>
NORTHEAST UTILITIES AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1999
(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 $ 2,417 $ 8,026 $ - $ 5,548 (a) $ 4,895
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $40,438 $18,597 $ - $14,040 (b) $44,995
======= ======= ======= ======= =======
(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, 1998
(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 $ 2,052 $ 3,042 $ - $ 2,677 (a) $ 2,417
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $34,437 $12,427 $ - $ 6,426 (b) $40,438
======= ======= ======= ======= =======
(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, 1997
(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 $17,062 $14,854 $ - $29,864 (a) $ 2,052
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $36,260 $ 9,542 $ - $11,365 (b) $34,437
======= ======= ======= ======= =======
(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, 1999
(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 $ 300 $ 290 $ - $ 290 (a) $ 300
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $16,656 $ 5,422 $ - $ 6,009 (b) $16,069
======= ======= ====== ======= =======
(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, 1998
(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 $ 300 $ 183 $ - $ 183 (a) $ 300
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $14,962 $ 5,612 $ - $ 3,918 (b) $16,656
======= ======= ====== ======= =======
(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, 1997
(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 $13,241 $10,509 $ - $23,450 (a) $ 300
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $18,879 $ 4,458 $ - $ 8,375 (b) $14,962
======= ======= ====== ======= =======
(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>
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1999
(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 $ 2,041 $ 1,590 $ - $ 2,272 (a) $ 1,359
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 9,906 $ 7,268 $ - $ 5,769 (b) $11,405
======= ======= ======= ======= =======
(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>
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1998
(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 $ 1,702 $ 2,726 $ - $ 2,387 (a) $ 2,041
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 7,788 $ 4,136 $ - $ 2,018 (b) $ 9,906
======= ======= ======= ======= =======
(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>
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED DECEMBER 31, 1997
(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 $ 1,700 $ 3,259 $ - $ 3,257 (a) $ 1,702
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 7,265 $ 1,647 $ - $ 1,124 (b) $ 7,788
======= ======= ====== ======= =======
(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, 1999
(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 $ 50 $ 4,564 $ - $ 2,974 (a) $ 1,640
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 5,960 $ 3,085 $ - $ 1,857 (b) $ 7,188
======= ======= ====== ======= =======
(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, 1998
(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 $ 50 $ 106 $ - $ 106 (a) $ 50
======= ======= ======= ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 5,503 $ 816 $ - $ 359 (b) $ 5,960
======= ======= ======= ======= =======
(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, 1997
(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 $ 2,121 $ 1,086 $ - $ 3,157 (a) $ 50
======= ======= ====== ======= =======
RESERVES NOT APPLIED AGAINST ASSETS:
Operating reserves $ 5,575 $ 1,093 $ - $ 1,165 (b) $ 5,503
======= ======= ====== ======= =======
(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.
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 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Reports on Form 10-K for CL&P, PSNH, WMECO, and NAEC.
# - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for CL&P.
@ - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for PSNH.
** - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 NU Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for WMECO.
## - Filed with the 1999 Annual Report on Form 10-K for NU and herein
incorporated by reference from the 1999 Form 10-K, File No. 1-5324
into the 1999 Annual Report on Form 10-K for NAEC.
Exhibit
Number Description
2 Plan of acquisition, reorganization, arrangement, liquidation
or succession
2.1 Agreement and Plan of Merger (Exhibit 1 in NU's Current Report
on Form 8-K dated June 14, 1999, File No. 1-5324)
2.2 Agreement and Plan of Merger (Exhibit 1 to NU's Current Report
on Form 8-K dated October 13, 1999, File No. 1-5324).
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.
(Exhibit 3.2.2, 1996 NU Form 10-K, File No. 1-5324)
3.2.3 Certificate of Amendment to Certificate of
Incorporation of CL&P, dated April 27, 1998. (Exhibit
3.2.3, 1998 NU Form 10-K, File No. 1-5324)
3.2.4 By-laws of CL&P, as amended to January 1, 1997.
(Exhibit 3.2.3, 1996 NU Form 10-K, File No. 1-5324)
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 April 1, 1999.
(Exhibit 3.1, 1999 NU Form 10-Q for the Quarter Ended
June 30, 1999, 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 Credit Agreements among NU, CL&P, WMECO, and the Co-
Agents and Banks named therein, dated as of November
19, 1999 (includes Open End Mortgages), (Exhibits No.
B.13, B.14, B.15, and B.16, File No. 70-8875)
4.1.5 First Amendment and Waiver dated as of May 30, 1997,
to Credit Agreement dated as of November 21, 1996,
among NU, CL&P, WMECO, and the Co-Agents and Banks
named therein. (Exhibit B.4(a) (Execution Copy),
File No. 70-8875)
4.1.6 Second Amendment and Waiver dated as of September 11,
1998, to Credit Agreement dated as of November 21,
1996, among NU, CL&P, WMECO, and the Co-Agents and
Banks named therein. (Exhibit B.10 (Execution Copy),
File No. 70-8875)
4.1.7 Third Amendment and Waiver dated as of March 3, 1999
to Credit Agreement dated as of November 21, 1996
among NU, CL&P, WMECO, and the Co-Agents and Banks
named therein. (Exhibit B.11 (Execution Copy), File
No. 70-8875)
4.1.8 Credit Agreement dated as of February 10, 1998, among
NU, the Lenders named therein, and Toronto Dominion
(Texas), Inc., as Administrative Agent, TD Securities
(USA) Inc., as Arranger. (Exhibit B.9 (Execution
Copy), File No. 70-8875)
4.1.9 First Amendment dated as of February 8, 1999, to
Credit Agreement dated as of February 10, 1998,
among NU, the Lenders named therein, and Toronto
Dominion (Texas), Inc., as Administrative Agent,
TD Securities (USA) Inc., as Arranger. (Exhibit A
(Execution Copy), File No. 70-8875)
4.1.10 Second Amendment dated as of March 9, 1999 to Credit
Agreement dated as of February 10, 1998 among NU, the
Lenders named therein, and Toronto Dominion (Texas),
Inc., as Administrative Agent, TD Securities (USA)
Inc., as Arranger. (Exhibit B.12 (Execution Copy),
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 December 1, 1969. (Exhibit 4.2.2, 1998 NU Form 10-K,
File No. 1-5324)
4.2.3 June 30, 1982. (Exhibit 4.33, File No. 2-79235)
4.2.4 December 1, 1989. (Exhibit 4.1.26, 1989 NU Form 10-K,
File No. 1-5324)
4.2.5 July 1, 1992. (Exhibit 4.31, File No. 33-59430)
4.2.6 July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.2.7 July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.2.8 December 1, 1993. (Exhibit 4.2.14, 1993 NU Form 10-K,
File No. 1-5324)
4.2.9 February 1, 1994. (Exhibit 4.2.16, 1993 NU Form 10-K,
File No. 1-5324)
4.2.10 June 1, 1994. (Exhibit 4.2.15, 1994 NU Form 10-K, File
No. 1-5324)
4.2.11 October 1, 1994. (Exhibit 4.2.16, 1994 NU Form 10-K,
File No. 1-5324)
4.2.12 June 1, 1996. (Exhibit 4.2.16, 1996 NU Form 10-K, File
No. 1-5324)
4.2.13 January 1, 1997. (Exhibit 4.2.17, 1996 NU Form 10-K,
File No. 1-5324)
4.2.14 May 1, 1997. (Exhibit 4.19, File No. 333-30911)
4.2.15 June 1, 1997. (Exhibit 4.20, File No. 333-30911)
4.2.16 June 1, 1997. (Exhibit 4.2.17, 1997 NU Form 10-K, File
No. 1-5324)
4.2.17 May 1, 1998. (Exhibit 4.2.17, 1998 NU Form 10-K, File
No. 1-5324)
4.2.18 May 1, 1998. (Exhibit 4.2.18, 1998 NU Form 10-K, File
No. 1-5324)
4.2.19 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)
4.2.20 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)
4.2.21 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)
4.2.22 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)
4.2.23 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)
4.2.24 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)
4.2.25 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. (Exhibit 4.2.24, 1996 NU Form 10-K, File No.
1-5324)
4.2.25.1 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. (Exhibit 4.2.24.1, 1996
NU Form 10-K, File No. 1-5324)
4.2.25.2 Standby Bond Purchase Agreement among CL&P,
Societe Generale, New York Branch and the
Trustee, dated January 23, 1997. (Exhibit
4.2.24.2, 1996 NU Form 10-K, File No.
1-5324)
4.2.25.3 Amendment No. 1, dated January 21, 1998, to
the Standby Bond Purchase Agreement, dated
January 23, 1997. (Exhibit 4.2.24.3, 1997
NU Form 10-K, File No. 1-5324)
4.2.25.4 Amendment No. 2, dated December 9, 1998, to
the Standby Bond Purchase Agreement, dated
January 23, 1997. (Exhibit 4.2.25.4, 1998
NU Form 10-K, File No. 1-5324)
4.2.25.5 Amendment No. 3, dated November 5, 1999, to
the Standby Bond Purchase Agreement, dated
January 23, 1997.
4.2.25.6 AMBAC Municipal Bond Insurance Policy
issued by the Connecticut Development
Authority (CL&P) Pollution Control Revenue
Bond-1996A Series), effective January 23,
1997. (Exhibit 4.2.24.3, 1996 NU Form 10-K,
File No. 1-5324)
4.2.26 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)
4.2.27 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)
4.2.28 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)
4.3.3 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) Amended and Restated PCRB
Loan and Trust Agreement dated as of April 1, 1999.
4.3.6.1 Third Series D Letter of Credit and
Reimbursement Agreement dated as of
April 14, 1999.
4.3.6.2 Amended and Restated Second Series D
(May 1, 1991 Taxable New Issue) PCRB Letter
of Credit and Reimbursement Agreement dated
as of April 23, 1998. (Exhibit 4.3.6.3,
1998 NU Form 10-K, File No. 1-5324)
4.3.7 Series E (Taxable New Issue) Amended & Restated PCRB
Loan and Trust Agreement dated as of April 14, 1999.
4.3.7.1 Third Series E Letter of Credit and
Reimbursement Agreement dated as of
April 14, 1999.
4.3.7.2 Amended and Restated Second Series E
(May 1, 1991 Taxable New Issue) PCRB Letter
of Credit and Reimbursement Agreement dated
as of April 23, 1998. (Exhibit 4.3.7.3,
1998 NU Form 10-K, File No. 1-5324)
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 October 1, 1954. (Exhibit 4.4.2, 1998 NU Form 10-K,
File No. 1-5324)
4.4.3 March 1, 1967. (Exhibit 4.4.3, 1997 NU Form 10-K,
File No. 1-5324)
4.4.4 July 1, 1973. (Exhibit 2.10, File No. 2-68808)
4.4.5 December 1, 1992. (Exhibit 4.15, File No. 33-55772)
4.4.6 January 1, 1993. (Exhibit 4.5.13, 1992 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 May 1, 1997. (Exhibit 4.11, File No. 33-51185)
4.4.9 July 1, 1997. (Exhibit 4.4.10, 1997 NU Form 10-K,
File No. 1-5324)
4.4.10 May 1, 1998. (Exhibit 4.4.10, 1998 NU Form 10-K, File
No. 1-5324)
4.4.11 May 1, 1998. (Exhibit 4.4.11, 1998 NU Form 10-K, File
No. 1-5324)
4.4.12 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)
4.5 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 10.6, 1997 NU Form 10-K, File
No. 1-5324)
10.7 Form of Power Contract dated as of May 20, 1968, between MYAPC
and each of CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.7, 1997
Form 10-K, File No. 1-5324)
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 MYAPC
and CL&P, PSNH, HELCO, and WMECO. (Exhibit 10.8, 1997 NU Form
10-K, File No. 1-5324)
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 Vermont Yankee Nuclear Power Corporation (VYNPC).
(Exhibit 10.9, 1997 NU Form 10-K, File No. 1-5324)
10.10 Form of Power Contract dated as of February 1, 1968, between
VYNPC and each of CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.10,
1997 NU Form 10-K, File No. 1-5324)
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. (Exhibit No. 10.10.4, 1996 NU Form 10-K, File
No. 1-5324)
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
VYNPC and CL&P, HELCO, PSNH, and WMECO. (Exhibit 10.11, 1997
NU Form 10-K, File No. 1-5324)
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 10.11.1, 1997 NU
Form 10-K, File No. 1-5324)
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 Agreement to Settle PSNH Restructuring (Exhibit 10.2, 1999
NU Form 10-Q for the Quarter Ended June 30, 1999, File No.
1-5324)
10.18 Form of Seabrook Power Contract between PSNH and NAEC, as
amended and restated. (Exhibit 10.45, 1992 NU Form 10-K,
File No. 1-5324)
10.19 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)
10.19.1 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)
10.19.2 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)
10.19.2.1 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)
10.20 Amended and Restated Agreement for Seabrook Project Disbursing
Agent dated as of November 1, 1990. (Exhibit 10.4.7, File No.
33-35312)
10.20.1 Form of First Amendment to Exhibit 10.19. (Exhibit
10.4.8, File No. 33-35312)
10.20.2 Form (Composite) of Second Amendment to Exhibit 10.19.
(Exhibit 10.18.2, 1993 NU Form 10-K, File No. 1-5324)
10.21 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)
10.21.1 Amendment to Exhibit 10.20 dated June 30, 1975.
(Exhibit 5.48, File No. 2-55458)
10.21.2 Amendment to Exhibit 10.20 dated as of August 16,
1976. (Exhibit 5.19, File No. 2-58251)
10.21.3 Amendment to Exhibit 10.20 dated as of December 31,
1978. (Exhibit 5.10.3, File No. 2-64294)
10.22 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)
10.22.1 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)
10.22.2 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)
10.22.3 Form of Service Agreement dated as of June 29, 1992,
between PSNH and North Atlantic Energy Service
Corporation, and the First Amendment thereto.
(Exhibits B.7 and B.7.1, File No. 70-7787)
10.22.4 Form of Annual Renewal of Service Contract. (Exhibit
10.20.3, 1993 NU Form 10-K, File No. 1-5324)
10.23 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)
10.23.1 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)
10.23.2 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)
#** 10.23.3 Second Amendment to Memorandum of Understanding
between CL&P, HELCO, HP&E, HWP, and WMECO dated as of
June 8, 1999 with respect to pooling of generation and
transmission.
10.24 New England Power Pool (NEPOOL) 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.)
10.24.1 Form of Interim Independent System Operator (ISO)
Agreement (Attachment to Thirty-third Amendment to
Exhibit 10.23 dated as of December 31, 1996).
(Exhibit 10.23.6, 1996 NU Form 10-K, File No. 1-5324)
10.24.2 Restated NEPOOL Power Pool Agreement (restated by the
Thirty-Sixth Agreement dated as of July 20, 1998, and
includes the Restated NEPOOL Open Access Transmission
Tariff). (Exhibit 10.23.2, 1998 NU Form 10-K, File
No. 1-5324)
10.24.3 Thirty-Seventh Agreement dated as of August 15, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.3, 1998 NU
Form 10-K, File No. 1-5324)
10.24.4 Thirty-Eighth Agreement dated as of October 30, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.4, 1998 NU
Form 10-K, File No. 1-5324)
10.24.5 Thirty-Ninth Agreement dated as of November 13, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.5, 1998 NU
Form 10-K, File No. 1-5324)
10.24.6 Fortieth Agreement dated as of December 15, 1998,
amending Exhibit 10.23.2. (Exhibit 10.23.6, 1998 NU
Form 10-K, File No. 1-5324)
10.24.7 ISO New England Inc., FERC Tariff for Transmission
Dispatch and Power Administration Services. (Exhibit
10.23.7, 1998 NU Form 10-K, File No. 1-5324)
* 10.24.8 Restated NEPOOL Power Pool Agreement (restated by
the fifty-first Agreement dated as of May 7, 1999, and
includes the Restated NEPOOL Open Access Transmission
Tariff).
10.25 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.)
10.26 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)
10.26.1 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)
#** 10.26.2 Modification and Amendment to Nuclear Fuel Lease
Agreement dated as of May 17, 1999, between Bankers
Trust Company, Trustee, as Lessor, and CL&P and WMECO,
as Lessees.
10.27 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)
10.28 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)
10.29 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)
10.29.1 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)
10.30 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)
10.31 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.)
10.32 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)
10.32.1 Amendment to Note Agreement, dated September 26, 1997.
(Exhibit 10.31.1, 1997 NU Form 10-K, File No. 1-5324)
10.32.2 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)
10.32.2.1 Extension of Note Guaranty, dated
September 26, 1997. (Exhibit 10.31.2.1,
1997 NU Form 10-K, File No. 1-5324)
10.32.3 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,
1997 NU Form 10-K, File No. 1-5324)
10.32.3.1 Modification of and Confirmation of
Assignment of Leases, Rents and Profits,
Security Agreement and Negative Pledge,
dated as of September 26, 1997. (Exhibit
10.31.3.1, 1997 NU Form 10-K, File No.
1-5324)
10.32.4 Purchase and Sale Agreement, dated July 28, 1997, by
and between RRR and the Sellers and Purchasers named
therein. (Exhibit 10.31.4, 1997 NU Form 10-K, File No.
1-5324)
10.32.5 Purchase and Sale Agreement, dated September 26, 1997,
by and between RRR and the Purchaser named therein.
(Exhibit 10.31.5, 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 1 decommissioning costs. (Exhibit
No. 10.32, 1996 NU Form 10-K, File No. 1-5324)
10.33.1 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)
10.34 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. (Exhibit
No. 10.33, 1996 NU Form 10-K, File No. 1-5324)
10.34.1 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)
10.35 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. (Exhibit No. 10.34,
1996 NU Form 10-K, File No. 1-5324)
10.35.1 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)
10.36 Rights Agreement dated as of February 23, 1999, between
Northeast Utilities and Northeast Utilities Service Company, as
Rights Agent (Exhibit 1 to NU's Registration Statement on
Form 8-A, filed on 4/12/99, File No. 001-05324).
10.36.1 Amendment to Rights Agreement (Exhibit 3 to NU's
Current Report on Form 8-K dated October 13, 1999,
File No. 1-5324).
10.37 NU Executive Incentive Plan, effective as of January 1, 1991.
(Exhibit 10.44, NU 1991 Form 10-K, File No. 1-5324)
10.37.1 NU Incentive Plan, effective as of January 1, 1998.
(Exhibit 10.35.1, 1998 NU Form 10-K, File No. 1-5324)
10.37.1.1 Amendment to Exhibit 10.35.1, effective as
of February 23, 1999. (Exhibit 10.35.1.1,
1998 NU Form 10-K, File No. 1-5324)
10.38 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)
10.38.1 Amendment 1 to Exhibit 10.38, effective as of
August 1, 1993. (Exhibit 10.35.1, 1993 NU Form 10-K,
File No. 1-5324)
10.38.2 Amendment 2 to Exhibit 10.38, effective as of
January 1, 1994. (Exhibit 10.35.2, 1993 NU Form 10-K,
File No. 1-5324)
10.38.3 Amendment 3 to Exhibit 10.38, effective as of
January 1, 1996. (Exhibit 10.36.3, 1995 NU Form
10-K, File No. 1-5324)
10.39 Special Severance Program for Officers of NU system companies,
as adopted on July 15, 1998. (Exhibit 10.37, 1998 NU Form 10-K,
File No. 1-5324)
10.39.1 Amendment to Exhibit 10.39, effective as of
February 23, 1999. (Exhibit 10.37.1, 1998 NU Form
10-K, File No. 1-5324)
10.39.2 Amendment to Exhibit 10.39, effective as of
September 14, 1999. (Exhibit 10.3, 1999 NU Form 10-Q
for the Quarter Ended September 30, 1999, File No.
1-5324)
10.40 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, 1991 NU Form
10-K, File No. 1-5324)
10.40.1 First Amendment to Exhibit 10.40 dated February 7,
1992. (Exhibit 10.36.1, 1993 NU Form 10-K, File No.
1-5324)
10.40.2 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)
10.40.3 Second Amendment to Exhibit 10.40 dated April 9,
1992. (Exhibit 10.36.3, 1993 NU Form 10-K, File
No. 1-5324)
10.41 Employment Agreement with Michael G. Morris. (Exhibit 10.39,
1997 NU Form 10-K, File No. 1-5324)
10.41.1 Amendment to Exhibit 10.41, dated as of February 23,
1999. (Exhibit 10.39.1, 1998 NU Form 10-K, File No.
1-5324)
10.42 Transition and Retirement Agreement with Bernard M. Fox.
(Exhibit 10.39, 1996 NU Form 10-K, File No. 1-5324)
10.43 Employment Agreement with Bruce M. Kenyon. (Exhibit 10.40,
1996 NU Form 10-K, File No. 1-5324)
10.43.1 Amendment to Exhibit 10.43, dated as of January 13,
1998. (Exhibit 10.41.1, 1998 NU Form 10-K, File
No. 1-5324)
10.43.2 Amendment to Exhibit 10.43, dated as of February 23,
1999. (Exhibit 10.41.2, 1998 NU Form 10-K, File
No. 1-5324)
10.43.3 Amendment to Exhibit 10.43, dated as of May 14,
1999. (Exhibit 10.3, 1999 NU Form 10-Q for the Quarter
Ended June 30, 1999, File No. 1-5324)
10.44 Employment Agreement with John H. Forsgren. (Exhibit 10.41, 1996
NU Form 10-K, File No. 1-5324)
10.44.1 Amendment to Exhibit 10.44, dated as of January 13,
1998. (Exhibit 10.42.1, 1998 NU Form 10-K, File
No. 1-5324)
10.44.2 Amendment to Exhibit 10.44, dated as of February 23,
1999. (Exhibit 10.42.2, 1998 NU Form 10-K, File No.
1-5324)
10.44.3 Amendment to Exhibit 10.44, dated as of May 10, 1999.
(Exhibit 10.1, 1999 NU Form 10-Q for the Quarter Ended
March 31, 1999, File No. 1-5324)
10.44.4 Amendment to Exhibit 10.44, dated as of September 14,
1999. (Exhibit 10.4, 1999 NU Form 10-Q for the Quarter
Ended September 30, 1999, File No. 1-5324)
10.45 Employment Agreement with Hugh C. MacKenzie. (Exhibit 10.42,
1996 NU Form 10-K, File No. 1-5324)
10.45.1 Amendment to Exhibit 10.45, dated as of January 13,
1998. (Exhibit 10.43.1, 1998 NU Form 10-K, File
No. 1-5324)
10.45.2 Amendment to Exhibit 10.45, dated as of February 23,
1999. (Exhibit 10.43.2, 1998 NU Form 10-K, File No.
1-5324)
10.46 Employment Agreement with Cheryl W. Grise. (Exhibit 10.44, 1998
NU Form 10-K, File No. 1-5324)
10.46.1 Amendment to Exhibit 10.46, dated as of January 13,
1998. (Exhibit 10.44.1, 1998 NU Form 10-K, File
No. 1-5324)
10.46.2 Amendment to Exhibit 10.46, dated as of February 23,
1999. (Exhibit 10.44.2, 1998 NU Form 10-K, File
No. 1-5324)
10.46.3 Amendment to Exhibit 10.46, dated as of September 14,
1999. (Exhibit 10.5, 1999 NU Form 10-Q for the Quarter
Ended September 30, 1999, File No. 1-5324)
10.47 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)
10.48 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)
10.49 Northeast Utilities Deferred Compensation Plan for Executives,
adopted January 13, 1998. (Exhibit A.5, File No. 70-09185)
10.50 Reciprocal Support Agreement Among NNECO, NAESCO, CYAPC, YAEC,
and NUSCO dated January 1, 1996. (Exhibit 10.41, 1995 NU Form
10-K, File No. 1-5324)
10.51 Receivables Purchase and Sale Agreement (CL&P and CL&P
Receivables Corporation), dated as of September 30, 1997.
(Exhibit 10.49, 1997 NU Form 10-K, File No. 1-5324)
10.51.1 Amendment to Exhibit 10.51 dated September 29, 1998.
(Exhibit 10.49.1, 1998 NU Form 10-K, File No. 1-5324)
10.51.2 Purchase and Contribution Agreement (CL&P and CL&P
Receivables Corporation), dated as of September 30,
1997. (Exhibit 10.49.1, 1997 NU Form 10-K, File No.
1-5324)
10.52 Receivables Purchase Agreement (WMECO and WMECO Receivables
Corporation), dated as of May 22, 1997. (Exhibit 10.50, 1997 NU
Form 10-K, File No. 1-5324)
10.52.1 Purchase and Sale Agreement (WMECO and WMECO
Receivables Corporation), dated as of May 22, 1997.
(Exhibit 10.50.1, 1997 NU Form 10-K, File No. 1-5324)
10.53 Master Lease Agreement between General Electric Capital
Corporation and CL&P, dated as of June 21, 1996. (Exhibit
10.50, 1996 NU Form 10-K, File No. 1-5324)
10.53.1 Amendment No. 1 to Master Lease Agreement, dated as
of August 29, 1997. (Exhibit 10.51.1, 1997 NU Form
10-K, File No. 1-5324)
10.54 NU Guaranty, dated as of November 30, 1998, made by NU, in
favor of the Participating Banks, the Issuing Banks and the
Administrative Agent, all named in a $50,000,000 Letter of
Credit and Reimbursement Agreement, dated as of November 30,
1998, among Select Energy, Inc., the Participating Banks,
the Administrative Agent, the Issuing Bank and Documentation
Agent, and the Syndication Agent named therein. (Exhibit B.1
(Execution Copy), File No. 70-9343)
10.54.1 Amendment No. 1 dated as of November 30, 1998 to
Exhibit 10.52. (Exhibit B.1 (Execution Copy), File
No. 70-9343)
*10.55 Confirmation Agreement between Credit Suisse First Boston and
NU, dated as of November 3, 1999.
*10.56 Confirmation Agreement between Bank One and NU, dated as of
December 9, 1999.
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 21-55) 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.
</TABLE>
Exhibit 4.2.25.5
AMENDMENT NO. 3
TO THE
STANDBY BOND PURCHASE AGREEMENT
AMENDMENT NO. 3, DATED NOVEMBER 5, 1999 ("AMENDMENT NO. 3"), to
the Standby Bond Purchase Agreement, dated January 23, 1997, as amended by
Amendment No. 1, dated January 21, 1998, and Amendment No. 2, dated
December 9, 1998 (the "ORIGINAL AGREEMENT"), among THE CONNECTICUT LIGHT
AND POWER COMPANY, a corporation organized and existing and qualified to do
business as a public utility in the State of Connecticut (the "COMPANY"),
SOCIETE GENERALE, a banking corporation organized under the laws of France,
acting though its New York Branch (the "BANK"), and STATE STREET BANK AND
TRUST COMPANY, a national banking association, as successor 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 liquidity facility (the "LIQUIDITY FACILITY")
provided by the Bank pursuant to the Original Agreement is scheduled to
expire on December 7, 1999;
WHEREAS, the Company has requested that the Bank extend the
Stated Expiration Date for an additional period, to expire 364 days from
the date hereof, on November 3, 2000 (the "Third Extension"), and the Bank
has agreed to do so on the terms and conditions contained herein and, to
the extent applicable and not superseded by this Amendment No. 3, according
to the terms and conditions of the Original Agreement;
WHEREAS, certain conditions precedent to the effectiveness of
this Amendment No. 3 have been or will be fulfilled to the satisfaction of
the Bank and its counsel as of the date of this Amendment No. 3;
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:
1. DEFINITIONS. Unless otherwise defined herein, all
capitalized terms used herein shall have the same respective meanings as in
the Original Agreement. From and after the date of this Amendment No. 3,
the term "Agreement" shall be deemed to mean the Original Agreement as
amended by this Amendment No. 3. References in the Original Agreement to
"this Agreement" and the words "hereof", "herein", "hereto" and the like
shall refer to the Original Agreement, Amendment No. 1, Amendment No. 2 and
the Original Agreement as amended by this Amendment No. 3; PROVIDED, that,
except as provided in Section 3 of this Amendment No. 3, the words "the
date of this Agreement" and "the date hereof" shall continue to refer to
the date of the Original Agreement.
251933.3
-6-
2. AMENDMENTS TO THE ORIGINAL AGREEMENT. Effective upon
fulfillment of the conditions specified in Section 4 hereof, the Original
Agreement is hereby amended as follows:
A. The Stated Expiration Date is hereby extended for an
additional period, to expire 364 days from the date hereof, on November 3,
2000, and the definition of "Stated Expiration Date" contained in Section
1.1 of the Original Agreement is amended to read in its entirety as
follows:
"Stated Expiration Date" means the later of (i) November 3,
2000, 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.
B. The definition of "Bank Purchase Period" contained in
Section 1.1 of the Original Agreement is amended to read in its entirety as
follows:
"BANK PURCHASE PERIOD" means the period from the date of this
Amendment No. 3 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.
C. The definition of "Applicable Margin" contained in Section
1.1 of the Original Agreement is amended to read in its entirety as
follows:
"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:
<TABLE>
<CAPTION>
APPLICABLE MARGIN
<S> <C>
Level 1 0.45%
Level 2 0.50%
Level 3 0.55%
Level 4 0.78%
Level 5 1.05%
Level 6 1.37%
</TABLE>
3. REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants that all of the representations and warranties
contained in Article 5 of the Original Agreement are true and correct,
including any statements made regarding the Related Documents as they may
have been or will be amended, supplemented or otherwise modified in
connection with this Third Extension, as of the date hereof (except that
(i) the dates contained in Section 5.5 shall be deemed to refer to the end
of the Company's most recently completed fiscal year and most recently
completed fiscal quarter, respectively, (ii) the references in Section 5.5
to the Company's Annual Report, Quarterly Report and Current Reports shall
be deemed to refer to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1999 and the Company's Current Reports
on Form 8-K dated January 28, 1999, April 27, 1999, July 6, 1999, September
14, 1999 and October 29, 1999, and (iii) "prior to the date hereof" in
Section 5.6 shall be deemed to refer to on or prior to the date of this
Amendment No. 3). The Company further represents and warrants that no
Event of Default or Event of Termination has occurred or is occurring, and
that no event has occurred which, with notice or the lapse of time or both,
would become an Event of Default or Event of Termination, as the case may
be.
4. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AMENDMENT
NO. 3. The Bank's obligation to enter into and perform its obligations
under this Amendment No. 3 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 Amendment No. 3:
(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) RECEIPT OF DOCUMENTS. The Bank shall have received an
executed copy of this Amendment No. 3 as well as any other documents and
instruments as the Bank shall reasonably request.
(c) 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 Amendment No. 3:
(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 maintain the Bonds and to execute, deliver and perform
this Amendment No. 3;
(ii) that the Insurance Policy is currently effective and
provides 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.
(iii) 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 Amendment No. 3 or the Original
Agreement as amended by this Amendment No. 3.
(iv) all representations and warranties of the Company set
forth in the Original 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;
(v) the Company is not in default of its obligations under
this Amendment No. 3 or the Original Agreement or any of the Related
Documents to which it is a party;
(vi) except for any pending or threatened action, suit,
investigation or proceeding disclosed in the Reoffering Circular or
otherwise disclosed to the Bank in writing on or 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, the Original Agreement, this Amendment No. 3 or any
of the other transactions contemplated by this Amendment No. 3 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 this Amendment No. 3 or any of the
Related Documents.
(d) 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 Amendment No. 3 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.
(e) 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 Amendment No. 3 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.
(f) OPINION OF COMPANY COUNSEL. The Bank shall have received an
opinion addressed to it of in-house counsel of the Company, dated the
closing date on which the extension of the Liquidity Facility provided by
this Amendment No. 3 shall have become effective, in form and substance
satisfactory to the Bank and its counsel.
(g) 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 Amendment No. 3 and the Bonds shall be satisfactory to the
Bank.
5. FEES AND EXPENSES.
(a) EXPENSES RELATING TO AMENDMENT NO. 3. The Company hereby
agrees to pay all reasonable costs and expenses of 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
Amendment No. 3. The Company hereby also agrees to pay on demand all costs
and expenses paid or incurred by the Bank, if any, in connection with the
enforcement of this Amendment No. 3 and in connection the amendment or
enforcement of any 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) AMENDMENT AND EXTENSION FEE. The Company hereby also agrees
to pay a one time amendment and extension fee (the "Amendment and Extension
Fee"), calculated at 7.5 basis points on the total Liquidity Facility
amount of sixty-two million nine hundred eighteen thousand dollars
($62,918,000) for a total Amendment and Extension Fee of forty-seven
thousand one hundred eighty-eight dollars and fifty cents ($47,188.50).
6. CONTINUED EFFECTIVENESS. This Amendment No. 3 is to be
narrowly construed. Except as expressly amended by this Amendment No. 3,
all terms and provisions of the Original Agreement are and shall continue
in full force and effect. Any references to the Original Agreement in any
of the Related Documents shall hereafter be deemed to refer to the Original
Agreement, as amended by this Amendment No. 3.
7. GOVERNING LAW. This Amendment No. 3 shall be governed by,
and construed in accordance with, the laws of the State of New York.
9. COUNTERPARTS. This Amendment No. 3 may be executed by the parties
hereto in any number of counterparts.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 3 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:_______________________________________
Name:
Title:
Payment Instructions:
Societe Generale SOCIETE GENERALE,
New York New York Branch
ABA No. 026004226
Re: The Connecticut Light and
Power Company
Acct. No. 902 5855
By:_______________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as
Trustee
By:____________________________________
Name:
Title:
EXHIBIT 4.3.6
AMENDED AND RESTATED
SERIES D LOAN AND TRUST AGREEMENT
among
BUSINESS FINANCE AUTHORITY OF THE
STATE OF NEW HAMPSHIRE
(formerly known as The Industrial Development Authority
of the State of New Hampshire)
and
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
and
STATE STREET BANK AND TRUST COMPANY, as Trustee
Dated as of April 1, 1999
Amending and Restating
Series D Loan and Trust Agreement Dated as of May 1, 1991,
as amended by First Supplement Dated as of December 1, 1992
and Second Supplement Dated as of May 1, 1995
And Providing for the Issue of:
$114,500,000
($39,500,000 outstanding at the time of amendment and restatement)
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)
and
$75,000,000
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)
TABLE OF CONTENTS
ARTICLE I: INTRODUCTION AND DEFINITIONS(1)
Section 101. Description of this Agreement and the Parties
Section 102. Definitions
(a) Words
(b) Number and Gender
(c) Use of Examples
ARTICLE II: LOAN OF BOND PROCEEDS; ISSUE OF SERIES F
Section 201. Issue of Series F First Mortgage Bonds; Confirmation Concerning
Series F First Mortgage Bonds
(a) Issue of Series F First Mortgage Bonds
(b) Confirmation Concerning Series F First Mortgage Bonds
Section 202. Assignment and Pledge of the Authority
Section 203. Further Assurances
Section 204. Defeasance
ARTICLE III: THE BORROWING
Section 301. The Bonds
(a) Forms of 1991 Series D Bonds and 1992 Series D Bonds
(i) Form of Flexible 1991 Series D Bond
(ii) Form of Weekly 1991 Series D Bond
(iii) Form of Multiannual 1991 Series D Bond
(iv) Form of Fixed Rate 1991 Series D Bond
(v) Form of Flexible 1992 Series D Bond
(vi) Form of Weekly 1992 Series D Bond
(vii) Form of Multiannual 1992 Series D Bond
(viii) Form of Fixed Rate 1992 Series D Bond
(ix) Form of Book-Entry Only System Flexible 1991 Series D Bond
(b) Details of the 1991 Series D Bonds and the 1992 Series D Bonds
(i) Details of the 1991 Series D Bonds.
(ii) Details of the 1992 Series D Bonds.
(c) Tax-Exempt Refunding Bonds
(d) Flexible Mode
(i) Determination of Flexible Rates
(ii) Conversions from the Flexible Mode
(iii) Mandatory Tender for Purchase
(e) Weekly Mode
(i) Determination of Weekly Rates
(ii) Conversions from Weekly Mode
(iii) Bondowners' Option to Tender Bonds in Weekly Mode
(iv) Events Requiring Mandatory Tender of Weekly Bond
(A) Expiration of Credit Facility without Substitution or Replacement;
Substitution of Credit Facility
(B) Change in Mode
(f) Multiannual Mode
(i) Determination of Multiannual Rate
(ii) Conversions from Multiannual Mode and Changes of Rate Period
(iii) Mandatory Tender for Purchase
(g) Conversion to Fixed Rate Mode
(h) Partial Conversions
(i) General
(ii) Selection
(iii) Amendment
(i) Cancellation and Destruction of Bonds
(j) Replacement of Bonds
(k) Interest on Overdue Principal
Section 302. Application of 1991 Series D Bond Proceeds
Section 303. Application of Tax-Exempt Refunding Bond Proceeds and of 1992
Series D Bond Proceeds
(a) Application of Tax-Exempt Refunding Bond Proceeds
(b) Application of 1992 Series D Bond Proceeds
Section 304. Bond Fund
(a) Establishment and Purpose
(b) Excess in Bond Fund
(c) Unclaimed Moneys
Section 305. Rebate
Section 306. Expenses of Issue
Section 307. Application of Moneys
Section 308. Payments by the Company
(a) Payments of Debt Service by the Company
(b) Additional Payments
(c) Drawings on the Credit Facility
(i) Debt Service
(ii) Tenders for Purchase
(iii) Use of Credit Facility
(iv) Failed Conversion
(d) Payment of Debt Service
(e) Company's Purchase of Bonds
Section 309. Unconditional Obligation
Section 310. Redemption of the Bonds
(a) Optional Redemption
(b) Extraordinary Optional Redemption
(c) Notice by the Company
(d) Payment of Redemption Price and Accrued Interest
(e) Notice of Redemption
Section 311. Purchase of Bonds Tendered
(a) Procedure
(i) Notice
(ii) Sources of Payments
(b) Payments by the Paying Agent
(c) Commencement of New Mode or Rate Period
Section 312. Remarketing of Bonds Tendered
(a) General
(b) Remarketing of Bonds in the Weekly Mode Between Notice and Redemption or
Conversion Date
Section 313. Paying Agent
(a) Appointment and Responsibilities
(b) Removal or Resignation of Paying Agent
(c) Successors
Section 314. Remarketing Agent
(a) Qualifications and Responsibilities
(b) Removal or Resignation of Remarketing Agent
(c) Successors
Section 315. Investments
Section 316. Reduction of Credit Facility on Change in Mode; Release of
Credit Facility upon Conversion to Multiannual or Fixed Rate Mode
Section 317. Credit Facilities
(a) Substitution or Replacement
(b) Requirements
Section 318. Tax Status of Bonds
Section 319. Securities Laws
Section 320. Registration of Bonds (except the 1992 Series D Bonds) in the
Book-Entry Only System
Section 321. Registration of 1992 Series D Bonds in the Book-Entry Only
System
ARTICLE IV: TAX-EXEMPT REFUNDING BONDS 57
Section 401. Issuance of Tax-Exempt Refunding Bonds
Section 402. Execution and Delivery of the Tax-Exempt Refunding Bonds
Section 403. Form of Tax-Exempt Refunding Bonds
(a) General
(b) Redemption Upon Taxability
(c) Day Counting
Section 404. Conversion
Section 405. Mandatory Taxability Redemption
Section 406. Additional Limitations on Conversions of 1992 Series D Bonds to
New Modes
(a) Conversions to Multiannual Mode
(b) Conversions from Multiannual Mode to Flexible or Weekly Mode
Section 407. Tax Status of 1992 Series D Bonds
ARTICLE V. THE PROJECT
Section 501. Company not to Impair Tax Status; Use of Project Facilities
Section 502. Qualification of the Project Facilities
Section 503. Compliance with Law
Section 504. Current Expenses
Section 505. Disposition and Use of Project Facilities
Section 506. Books and Records
Section 507. Undivided Interest
ARTICLE VI: DEFAULT AND REMEDIES
Section 601. Default by the Company
(a) Events of Default; Default
(i) Debt Service on Bonds; Required Purchase
(ii) Other Obligations
(iii) First Mortgage Bond Default
(iv) Reimbursement Agreement
(v) Non-Reinstatement under the Credit Facility
(b) Waiver
Section 602. Remedies for Events of Default
(a) Acceleration
(i) Bonds Not Supported by a Credit Facility
(ii) Bonds Supported by a Credit Facility
(b) Rights as a Secured Party
(b) Rights as a Secured Party
Section 603. Court Proceedings
Section 604. Revenues after Default
Section 605. The Credit Facility; Acceleration
Section 606. Rights of Bondowners
Section 607. Performance of Company's Obligations
Section 608. Remedies Cumulative; No Waiver
ARTICLE VII: THE TRUSTEE
Section 701. Corporate Organization, Authorization and Capacity
Section 702. Rights and Duties of the Trustee
(a) Moneys to be Held in Trust
(b) Accounts
(c) Performance of the Authority's Obligations
(d) Responsibility
(e) Limitations on Actions
(f) Financial Obligations
(g) Ownership of Bonds
(h) No Surety Bond
(i) Requests by the Company
(j) Trustee as Holder of Series F First Mortgage Bonds
(k) Authentication of Bonds
Section 703. Fees and Expenses of the Trustee
Section 704. Resignation or Removal of Trustee
Section 705. Successor Trustee
ARTICLE VIII: THE AUTHORITY
Section 801. Limited Obligation
Section 802. Rights and Duties of the Authority
(a) Remedies of the Authority
(b) Limitations on Actions
(c) Responsibility
Section 803. Expenses of the Authority
Section 804. Matters to be Considered by Authority
Section 805. Actions by Authority
ARTICLE IX: THE BONDOWNERS
Section 901. Action by Bondowners
ARTICLE X: THE COMPANY
Section 1001. Existence and Good Standing; Merger; Consolidation
Section 1002. Indemnification by the Company
ARTICLE XI: MISCELLANEOUS
Section 1101. Amendments
(a) Without Bondowners' Consent
(b) With Bondowners' Consent
(c) General
Section 1102. Notices
Section 1103. Time
Section 1104. Agreement Not for the Benefit of Other Parties
Section 1105. Severability
Section 1106. Counterparts
Section 1107. Captions
Section 1108. Governing Law
SIGNATURES
EXHIBIT A The Project Facilities
EXHIBIT B Assumption Agreement
EXHIBIT C Form of Flexible 1991 Series D Bond
EXHIBIT D Form of Weekly 1991 Series D Bond
EXHIBIT E Form of Multiannual 1991 Series D Bond
EXHIBIT F Form of Fixed Rate 1991 Series D Bond
EXHIBIT G Form of Flexible 1992 Series D Bond
EXHIBIT H Form of Weekly 1992 Series D Bond
EXHIBIT I Form of Multiannual 1992 Series D Bond
EXHIBIT J Form of Fixed Rate 1992 Series D Bond
EXHIBIT K Form of Book-Entry Only System Flexible 1991 Series D Bond
EXHIBIT L Representation Letter
EXHIBIT M 1992 Series D Bonds Representation Letter
ARTICLE I: INTRODUCTION AND DEFINITIONS(1)
Section 101. Description of this Agreement and the Parties. This AMENDED
AND RESTATED SERIES D LOAN AND TRUST AGREEMENT (this "Agreement") is entered
into as of April 1, 1999 by the Business Finance Authority of the State of
New Hampshire (with its successors, the "Authority"), a body corporate and
politic created under New Hampshire Revised Statutes Annotated 162-A:3
formerly known as The Industrial Development Authority of the State of New
Hampshire; Public Service Company of New Hampshire (with its successors, the
"Company"), a New Hampshire corporation; and State Street Bank and Trust
Company, a Massachusetts trust company, as Trustee (with its successors, the
"Trustee"). This Agreement amends and restates the Series D Loan and Trust
Agreement dated as of May 1, 1991 (the "Original Agreement") among the
Authority, the Company and the Trustee, as previously amended by a First
Supplement dated as of December 1, 1992 (the "First Supplement") and a Second
Supplement dated as of May 1, 1995 (the "Second Supplement"), and is entered
into pursuant to Clauses 1101(a)(i) and (viii) of the Original Agreement.
This Agreement is a financing document combined with a security document as
one instrument in accordance with New Hampshire Revised Statutes Annotated
Chapter 162-I (the "Act") and relates to industrial facilities as defined in
Paragraphs 2, VII(d) and (e) of the Act and located in the Town of Seabrook,
Rockingham County, New Hampshire.
This Agreement provides for the following transactions:
(a) the Authority's issue of the Bonds, including the 1991 Series D Bonds,
the 1992 Series D Bonds (which are Tax-Exempt Refunding Bonds), any other
Tax-Exempt Refunding Bonds and any bond or bonds duly issued in exchange or
replacement therefor;
(b) the Authority's loan of the proceeds of the Bonds to the Company for the
purpose of financing the acquisition, construction and installation of the
Project Facilities, including the Authority's loan of the proceeds of the
1992 Series D Bonds to the Company for the purpose of refunding the principal
of $75,000,000 of the 1991 Series D Bonds;
(c) the Company's repayment of the loan of Bond proceeds from the Authority
through payment to the Trustee of all amounts necessary to pay the Bonds
issued by the Authority, including the Company's repayment of the loan of
1992 Series D Bond proceeds from the Authority through payment to the Trustee
of all amounts necessary to pay the 1992 Series D Bonds;
(d) the Company's agreement to evidence and secure its repayment obligations
hereunder and its reimbursement obligations under the Reimbursement Agreement
by the issuance of the Series F First Mortgage Bonds and the Company's
confirmation of its agreement to evidence and secure its repayment
obligations hereunder and its reimbursement obligations under the
Reimbursement Agreement with the Series F First Mortgage Bonds;
(e) the Authority's assignment to the Trustee in trust for the benefit and
security of the Bondowners of the Authority's rights in respect of the loan
to the Company hereunder, including repayment of the loan to be received from
the Company; and
(f) the amendment and restatement of the Original Agreement, as previously
amended by the First Supplement and the Second Supplement.
At the time that this Agreement is being executed and delivered, the Company
will cause an irrevocable, transferable Letter of Credit of Barclays Bank
PLC, New York Branch in the maximum aggregate amount of $41,748,000 to be
issued to the Paying Agent to be drawn upon to pay the Purchase Price of,
principal of, premium, if any, and interest on the Bonds (other than the 1992
Series D Bonds).
In consideration of the mutual promises contained in this Agreement, the
rights conferred and the obligations assumed hereby, and other good and
valuable consideration, the receipt of which is hereby acknowledged, each of
the Company, the Authority and the Trustee agree, assign, covenant, grant,
pledge, promise, represent and warrant as set forth herein for their own
benefit and for the benefit of the Bondowners and the Bank.
Section 102. Definitions.
(a) Words. In addition to terms defined elsewhere herein, the following
terms have the following meanings in this Agreement, unless the context
otherwise requires:
(1) "Act" has the meaning set forth in Section 101.
(2) "Assumption Agreement" has the meaning given such term in Section 505.
(3) "Authority's Service Charge" means payments to the Authority for its own
use which consist of (i) with respect to the 1991 Series D Bonds (A) a
payment of $5,000 on the date of the issue of the 1991 Series D Bonds and (B)
annual payments commencing on the first anniversary of the date hereof and
continuing on each subsequent anniversary, which are each equal to 1/40th of
1% of the average principal balance of the 1991 Series D Bonds on which
interest was accruing during the prior twelve-month period, or $250,
whichever is greater, with a final payment due upon the redemption or payment
of the 1991 Series D Bonds in full prorated to the date of such redemption or
payment, as the case may be, (ii) with respect to the 1992 Series D Bonds,
(A) a payment of $62,500 on the date of the issue of the 1992 Series D Bonds
and (B) annual payments commencing on the first anniversary of the date of
this First Supplement and continuing on each subsequent anniversary, which
are each equal to 1/20th of 1% of the average principal balance of the 1992
Series D Bonds on which interest was accruing during the prior twelve-month
period, or $250, whichever is greater, with a final payment due upon the
redemption or payment of the 1992 Series D Bonds in full prorated to the date
of such redemption or payment, as the case may be, and (iii) payment of such
service charges or other fees of the Authority, as and when the Authority may
require, in connection with the issuance of any other Tax-Exempt Refunding
Bonds.(2)
(4) "Bank" means Barclays Bank PLC, acting through its New York Branch, in
its capacity as issuer of the Letter of Credit and any other issuer of a
Credit Facility.(3)
(5) "Bond Counsel" means Palmer & Dodge or such other nationally recognized
bond counsel selected by the Company and reasonably satisfactory to the
Trustee.
(6) "Bond Fund" means the fund established pursuant to Section 304.
(7) "Bondowners", "owners" or words of similar import means the registered
owners of the Bonds from time to time as shown in the books kept by the
Paying Agent as bond registrar and transfer agent, except that wherever
appropriate the term "owners" shall mean the owners of the Bonds for federal
income tax purposes.
(8) "Bonds" means the 1991 Series D Bonds, the 1992 Series D Bonds, any
other Tax-Exempt Refunding Bonds and any bond or bonds duly issued in
exchange or replacement therefor.(4)
(9) "Business Day" means a day (i) that is not a Sunday or legal holiday or
a day on which banking institutions are authorized pursuant to law to close,
(ii) that is not a day on which the corporate trust office of the First
Mortgage Bond Trustee is not open for business, (iii) that is a day on which
banks are not required or authorized to close in New York, New York, and (iv)
that is a day on which banking institutions in all of the cities in which the
principal offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
(10) "Company Bond" means any Bond registered to the Company pursuant to
Subsection 311(a).
(11) "Company Representative" means the person or persons at the time
designated to act on behalf of the Company in a written certificate (or any
alternate or alternates at the time so designated) furnished to the Trustee,
containing the specimen signature of such person or persons and signed on
behalf of the Company by its Chairman, Vice Chairman, President, Chief
Financial Officer, Treasurer, any Assistant Treasurer or any Vice President.
(12) "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.
(13) "Credit Facility" means the Letter of Credit and any substitute
irrevocable transferable letter of credit delivered to the Paying Agent
pursuant to this Agreement and then in effect, as each may be amended from
time to time pursuant to the terms of this Agreement or any amendment or
supplement to this Agreement.(5) More than one Credit Facility may be in
effect from time to time.
(14) "Default" has the meaning given such term in Section 601.
(15) "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 Flexible, Weekly and
Multiannual Bonds.
(16) "Effective Date" means, with respect to a Bond in the Flexible, Weekly
and Multiannual Modes, the date on which a new Rate Period for that Bond
takes effect.
(17) "Eligible Funds" means (i) amounts drawn on any Credit Facility; (ii)
other amounts paid to the Trustee pursuant to this Agreement which have been
held by it for a period of at least 123 days during which no Event of
Bankruptcy has occurred; (iii) earnings on amounts qualifying as Eligible
Funds under clause (i) or (ii) above; and (iv) 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 Company
and satisfactory to 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), be subject to
avoidance as a preference under the United States Bankruptcy Code upon an
Event of Bankruptcy. The Trustee shall maintain records of Eligible Funds
held by it.
(18) "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 Company, any affiliates thereof, or any
guarantor of the Bonds (other than the Bank), as debtor.
(19) "Event of Default" has the meaning given such term in Section 601.
(20) "Federal Tax Statement" means the Statement as to Tax Status of Bonds
executed by the Company in connection with the original issuance of the 1991
Series D Bonds and delivered to the Trustee.
(21) "First Mortgage Bond Indenture" means the First Mortgage Indenture dated
as of August 15, 1978, as amended, and the Tenth Supplemental Indenture
thereto dated as of May 1, 1991 between the Company and First Fidelity Bank,
National Association, New Jersey, as Trustee, as amended and supplemented
from time to time.
(22) "First Mortgage Bond Trustee" means the trustee under the First Mortgage
Bond Indenture.
(23) "Fixed Rate" means a rate of interest on a Bond that is fixed for the
remaining term of the Bond.
(24) "Fixed Rate Conversion Date" means with respect to a Bond, the date upon
which the Fixed Rate first becomes effective for the Bond.
(25) "Fixed Rate Mode" has the meaning set forth in the forms of Fixed Rate
Bonds.
(26) "Flexible Mode" has the meaning set forth in the forms of Flexible
Bonds.
(27) "Flexible Rate" means a rate of interest set by the Remarketing Agent
for periods of from one to 270 days.
(28) "Government Obligations" means obligations issued by, or the full and
timely payment of which are guaranteed by, the United States.
(29) Except in the Bonds, "here" in such words as "hereby," "herein,"
"hereof" or "hereunder" means this Agreement as a whole rather than the
particular section, subsection, paragraph, subparagraph, clause or subclause
in which the word appears; and in the Bonds it refers thereto.
(30) "IRC" means the Internal Revenue Code of 1986, as it may be amended from
time to time.
(31) "Letter of Credit" means the $41,748,000 irrevocable letter of credit
No. 841777 issued by Barclays Bank PLC, acting through its New York Branch,
for the benefit of the Paying Agent.(6)
(32) "Loan" has the meaning given to such term in Subsection 201(a).
(33) "Maximum Interest Rate" means the maximum interest rate on Bonds in the
Flexible, Weekly and, if supported by a Credit Facility, Multiannual Modes,
which rate is initially 16% per annum for the 1991 Series D Bonds. The
Maximum Interest Rate for any Tax-Exempt Refunding Bonds shall be established
at the time such Bonds are initially issued. The Maximum Interest Rate for
any Bond may be increased at any time and decreased on any Effective Date for
Bonds in the Flexible or Multiannual Mode or on any Conversion Date for Bonds
in the Weekly Mode by the Company 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 each series of
Bonds shall not have more than one Maximum Interest Rate for each Mode. In
no event shall an increase in a Maximum Interest Rate be permitted to cause
the amount entitled to be drawn under a Credit Facility to be less than the
minimum required amount specified in Paragraph 317(b)(ii). In no event shall
the Maximum Interest Rate with respect to a Tax-Exempt Refunding Bond be
increased or decreased 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 any Tax-Exempt Refunding
Bonds to be included in gross income of the owners thereof for federal income
tax purposes. The Maximum Interest Rate for the 1992 Series D Bonds shall be
initially 12% per annum, subject to adjustment as provided in this Paragraph
102(a)(33).(7)
(34) "Mode" means the period for and the manner in which the interest rates
on the Bonds are set and includes the Flexible Mode, the Weekly Mode, the
Multiannual Mode and the Fixed Rate Mode.
(35) "Moody's" means Moody's Investors Service, Inc.
(36) "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
Company as described in the forms of Multiannual Bonds.
(37) "Multiannual Rate" means the rate of interest that is set on Bonds while
they are in the Multiannual Mode.
(38) "1954 Code" means the Internal Revenue Code of 1954, as amended to
October 22, 1986.
(39) (i) "1991 Series D Bonds" means the $114,500,000 principal amount of 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) and (ii) "1992 Series D Bonds" means the $75,000,000
principal amount of 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).(8)
(40) "Outstanding," when used to modify Bonds, refers to Bonds issued,
authenticated and delivered under this Agreement, excluding: (i) Bonds which
have been exchanged or replaced; (ii) Bonds which have been paid; (iii) Bonds
which have become due and for the payment of which moneys have been duly
provided; (iv) 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; and (v) Bonds with
respect to which this Agreement has been defeased pursuant to Section 204.
(41) "Paying Agent" means Security Pacific National Trust Company (New York)
or any successor or successors designated from time to time pursuant to
Section 313.
(42) "Permitted Investments" has the meaning given such term in Section 315.
(43) The word "person" means any individual or entity so recognized by law.
(44) "Pledged Bond" means any Bond purchased with proceeds provided by the
Credit Facility which is registered to the Bank or its designee pursuant to
Section 311(a).
(45) "Project Costs" means the Company's cost of acquisition or construction
and installation of the Project Facilities which are "project costs" within
the meaning of Paragraph 2, IX of the Act, including, but not limited to, the
cost of issuing the Bonds, obtaining professional and advisory services, and
certain interest on the Bonds, which may be paid from Bond proceeds pursuant
to the Act.
(46) "Project Facilities" means the Company's ownership share of the sewage
or solid waste disposal and air or water pollution control facilities at the
Station described generally in the attached Exhibit A.
(47) "Purchase Date" means, while the Bonds are in a 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 Flexible, Weekly and Multiannual Rate Bonds.
(48) "Purchase Price" shall have the meaning set forth in the forms of
Flexible, Weekly and Multiannual Rate Bonds.
(49) "Rate Period" or "Period" means, when used with respect to any
particular rate of interest for a Bond in the Flexible, Weekly or Multiannual
Mode, the period during which such rate of interest determined for such Bond
will remain in effect as described herein.
(50) "Reimbursement Agreement" means the Third Series D Letter of Credit and
Reimbursement Agreement dated as of April 1, 1999 among the Company, Barclays
Bank PLC, New York Branch, as agent and issuing bank thereunder, and the
participating banks referred to therein, and any other agreement between the
Company and a Bank under which the Company is obligated to reimburse the Bank
for payments made by the Bank under a Credit Facility.(9)
(51) "Remarketing Agent" means Goldman, Sachs Money Markets Incorporated, and
any successor Remarketing Agent appointed from time to time pursuant to
Section 314.
(52) "Seabrook Transfer" means the transfer by the Company of its interest in
the Station (including the Project Facilities) to a wholly owned subsidiary
of Northeast Utilities as contemplated by the Third Amended Joint Plan of
Reorganization dated December 28, 1989 of the Company as confirmed by an
order of the United States Bankruptcy Court for the District of New Hampshire
(Case No. BK88-00043) on April 20, 1990.
(53) "Seabrook Transferee" means the transferee of the Project Facilities
pursuant to the Seabrook Transfer and its successors.
(54) "Series F First Mortgage Bonds" means the $114,500,000 in the aggregate
principal amount First Mortgage Bonds, Series F issued by the Company and
delivered to the Trustee pursuant to Subsection 201(a) of this Agreement and
the First Mortgage Bond Indenture to evidence and secure the Company's
obligation to repay the Loan and to secure the Company's reimbursement and
certain other obligations under the Reimbursement Agreement.
(55) "S&P" means Standard & Poor's Corporation.
(56) "Station" means Unit No. 1 of the nuclear electric generating plant
located in Seabrook, New Hampshire, of which the Company is a joint owner.
(57) "Tax-Exempt Refunding Bonds" means Bonds issued to refund the 1991
Series D Bonds pursuant to Article IV hereof, including, unless the context
otherwise requires, the 1992 Series D Bonds.(10)
(58) "Tendered Bond" means any Bond tendered or deemed tendered for purchase
pursuant to Paragraphs 301(d)(iii), 301(e)(iii) or (iv), or 301(f)(iii).
(59) "Trustee" means State Street Bank and Trust Company, as trustee under
this Agreement and its successors in such capacity.
(60) "UCC" means the New Hampshire Uniform Commercial Code (New Hampshire
Revised Statutes Annotated Chapter 382-A).
(61) "Weekly Mode" has the meaning set forth in the forms of Weekly Bonds.
(62) "Weekly Rate" means the rate of interest that is set on Bonds while they
are in the Weekly Mode.
(b) Number and Gender. Wherever appropriate (1) the singular and plural
forms of words and (2) words of different gender shall, within those
respective classifications, be deemed interchangeable.
(c) Use of Examples. When a condition, class, category, circumstance or
other concept is described in general terms herein and a list of possible
examples of components of what has been described generally is associated
with that description, and regardless of whether the words "include" or
"including" or the like are also used, the listing shall be deemed
illustrative only and shall not be construed as excluding other possible
examples or components or as otherwise limiting the generality of the
description in any way.
ARTICLE II: LOAN OF BOND PROCEEDS; ISSUE OF SERIES F
FIRST MORTGAGE BONDS; THE ASSIGNMENT AND PLEDGE
Section 201. Issue of Series F First Mortgage Bonds; Confirmation
Concerning Series F First Mortgage Bonds.
(a) Issue of Series F First Mortgage Bonds.(11) The Authority shall issue the
1991 Series D Bonds pursuant to the Act in the amount, in the form and with the
terms provided herein, and shall loan to the Company such amount (the "Loan") to
finance Project Costs as hereinafter provided. The Company agrees to repay the
Loan of the aggregate principal amount of the 1991 Series D Bonds in the amounts
and at the times necessary to pay principal of, premium, if any, and interest on
the Bonds by making the payments required under Section 308, and to evidence and
secure the Company's obligation to do so and to secure the Company's
reimbursement and certain other obligations under the Reimbursement Agreement,
the Company shall issue and deliver to the Trustee a like aggregate principal
amount of its Series F First Mortgage Bonds in the form set forth in the First
Mortgage Bond Indenture. Except in the case of Bonds that are paid or are to be
paid by the issuance of Tax-Exempt Refunding Bonds or by funds drawn under the
Credit Facility, 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 204, Series
F First 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 Company thereunder terminated as provided in the First Mortgage Indenture
and shall be surrendered by the Trustee to the First Mortgage Bond Trustee
for cancellation. The Trustee shall promptly notify the First Mortgage Bond
Trustee by telephone, confirmed in writing, of any payment on the Bonds. In
accordance with the terms thereof, the Series F First 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. The Series F First Mortgage Bonds bear interest, have a
maturity date and redemption provisions corresponding to the Bonds. Payments
of principal of and premium, if any, and interest on the Series F First
Mortgage Bonds shall upon receipt by the Trustee be deemed to constitute
payments of corresponding amounts by the Company in respect of the Bonds
pursuant to Subsection 308(a).
(b) Confirmation Concerning Series F First Mortgage Bonds(12)
The Authority shall issue the 1992 Series D Bonds pursuant to the Act in the
amount, in the form and with the terms provided herein, and shall loan to the
Company such amount (the "First Supplemental Loan") to refund the principal
of $75,000,000 of the 1991 Series D Bonds as hereinafter provided. The
Company agrees to repay the First Supplemental Loan of the aggregate
principal amount of the 1992 Series D Bonds in the amounts and at the times
necessary to pay principal of, premium, if any, and interest on the Bonds by
making the payments required under Section 308 of this Agreement, and for
such purpose the First Supplemental Loan is to be treated as part of the Loan
made pursuant to this Agreement. To evidence and secure the Company's
obligation to repay the Loan, including the First Supplemental Loan, and to
secure the Company's reimbursement and certain other obligations under the
Reimbursement Agreement, the Company issued and delivered to the Trustee on
the date of issuance of the 1991 Series D Bonds a like aggregate principal
amount of its Series F First Mortgage Bonds. The Company hereby confirms
that the Series F First Mortgage Bonds evidence and secure the Company's
obligations to make payments in amounts and at times necessary to pay
principal of, premium, if any, and interest on all of the Outstanding Bonds,
including the Outstanding 1992 Series D Bonds and the Outstanding 1991 Series
D Bonds and the Company's reimbursement and certain other obligations under
the Reimbursement Agreement.
Section 202. Assignment and Pledge of the Authority.
The Authority, for consideration paid as hereinabove acknowledged, hereby
irrevocably assigns and pledges to the Trustee in trust for the security of
the Bondowners and the Bank upon the terms hereof all the Authority's right,
title and interest in (i) respect of the Loan and all payments thereon, (ii)
all moneys and securities held by the Trustee for deposit in, or deposited
in, the Bond Fund and investment earnings thereon, (iii) the Series F First
Mortgage Bonds, all bonds issued in replacement thereof or in exchange or
substitution therefor and all payments on, and proceeds of, the foregoing,
and (iv) any collateral security for, and all proceeds of, any of the
foregoing. The Trustee shall hold (a) all the rights, title and interest
received under this section and (b) all revenues (exclusive of funds to which
the Trustee is entitled in its own right as fees, reimbursement, indemnity or
otherwise) received from the Company or derived from the exercise of the
Authority's powers hereunder (which shall include all payments under
Subsection 308(a) and in respect of the Series F First Mortgage Bonds) in
trust for the security of the Bondowners and the Bank in accordance with the
provisions hereof.
Section 203. Further Assurances
.
The Company and the Authority shall from time to time execute, deliver and
record and file such instruments as the Trustee may reasonably require to
confirm, perfect or maintain the security created hereby and the assignment
and pledge of rights hereunder.
Section 204. Defeasance.
When there are in the Bond Fund sufficient funds, or non-callable and
non-prepayable Government Obligations 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 Agreement 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
Agreement (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) with respect to any Bonds that are supported by a
Credit Facility, all such funds and obligations in the Bond Fund shall be
Eligible Funds; (b) if, within ninety (90) days of such deposit, any
Tax-Exempt Refunding Bonds are not to be redeemed in full prior to maturity
or paid in full at maturity, the Trustee shall have received on the date of
the deposit an opinion of Bond Counsel to the effect that such deposit and
the investment thereof will not affect the exclusion of interest on such
Bonds from gross income of the owners thereof for federal income tax
purposes, (c) 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 (d)
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 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 204 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 Company shall be
provided to the Trustee and to Moody's; provided, however, that Moody's may
waive such verification after notification by the Company 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 Agreement 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 604),
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 IRC
<section>148(f), and upon such indemnification, if any, as the Authority or
the Trustee may reasonably require, be distributed to the Company. 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
Subsection 304(c), and interest shall cease to accrue on the principal amount
represented thereby.
When there are in the Bond 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 Agreement 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 Company and the
Bondowners notwithstanding the release and discharge of this Agreement and
the lien on the Series F First Mortgage Bonds created hereby until the Bonds
have been actually paid in full.
Notwithstanding anything herein to the contrary, if moneys or governmental
obligations have been deposited or set aside with the Trustee pursuant to the
provisions of this Section 204 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 204 will be made without the
consent of the owner of each of the Bonds affected thereby.
ARTICLE III: THE BORROWING
Section 301. The Bonds.
(a) Forms of 1991 Series D Bonds and 1992 Series D Bonds. The 1991 Series D
Bonds and the 1992 Series D Bonds shall be issued in substantially the
following forms for the various Modes: (13)
(i) Form of Flexible 1991 Series D Bond. The 1991 Series D Bonds may be
issued in the Flexible Mode in substantially the form attached hereto as
Exhibit C.
(ii) Form of Weekly 1991 Series D Bond. The 1991 Series D Bonds may be
issued in the Weekly Mode in substantially the form attached hereto as
Exhibit D.
(iii) Form of Multiannual 1991 Series D Bond. The 1991 Series D Bonds
may be issued in the Multiannual Mode in substantially the form attached
hereto as Exhibit E.
(iv) Form of Fixed Rate 1991 Series D Bond. The 1991 Series D Bonds may be
issued in the Fixed Rate Mode in substantially the form attached hereto as
Exhibit F.
(v) Form of Flexible 1992 Series D Bond. The 1992 Series D Bonds may be
issued in the Flexible Mode in substantially the form attached hereto as
Exhibit G.
(vi) Form of Weekly 1992 Series D Bond. The 1992 Series D Bonds may be
issued in the Weekly Mode in substantially the form attached hereto as
Exhibit H.
(vii) Form of Multiannual 1992 Series D Bond. The 1992 Series D Bonds
may be issued in the Multiannual Mode in substantially the form attached
hereto as Exhibit I.
(viii) Form of Fixed Rate 1992 Series D Bond. The 1992 Series D Bonds may
be issued in the Fixed Rate Mode in substantially the form attached hereto as
Exhibit J.
(ix) Form of Book-Entry Only System Flexible 1991 Series D Bond. The Book-
Entry Only System 1991 Series D Bonds may be issued in the Flexible Mode in
substantially the form attached hereto as Exhibit K.
(b) Details of the 1991 Series D Bonds and the 1992 Series D Bonds.
(i) Details of the 1991 Series D Bonds.(14) The 1991 Series D Bonds shall be
signed on behalf of the Authority by the manual or facsimile signatures of
any two of the Chairman, Vice Chairman, Treasurer, either Assistant Treasurer
and Executive Director and the corporate seal of the Authority or a facsimile
thereof shall be engraved or otherwise reproduced thereon. The Certificate
of Authentication of the Trustee shall be manually signed by the Trustee or
on behalf of the Trustee by its duly authorized agent.
In case any officer whose manual or facsimile signature shall appear on any
1991 Series D Bond shall cease to be such officer before the delivery
thereof, such manual or facsimile signature shall nevertheless be valid and
sufficient for all purposes as if he or she had remained in office until
after such delivery.
The 1991 Series D Bonds shall be issued in fully registered form and shall be
numbered from 1 upwards in the order of their issuance, or in any other
manner deemed appropriate by the Paying Agent and the Trustee. The 1991
Series D Bonds shall be in the denomination 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 and Multiannual Modes and $100,000 or any multiple
thereof in the Weekly Mode. The 1991 Series D Bonds shall be dated the date
of original delivery thereof and shall mature on May 1, 2021. The interest
on 1991 Series D 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 1991 Series D Bonds shall be initially in
the Flexible Mode.
The 1991 Series D Bonds are subject to redemption as described in Section 310
and in the forms of Bonds.
(ii) Details of the 1992 Series D Bonds.(15) The 1992 Series D Bonds shall be
signed on behalf of the Authority by the manual or facsimile signatures of
any two of the Chairman, Vice Chairman, Treasurer and Executive Director and
the corporate seal of the Authority or a facsimile thereof shall be
impressed, engraved or otherwise reproduced thereon. The Certificate of
Authentication shall be manually signed by the Trustee or the Paying Agent.
In case any officer whose manual or facsimile signature shall appear on any
1992 Series D Bond shall cease to be such officer before the delivery
thereof, such manual or facsimile signature shall nevertheless be valid and
sufficient for all purposes as if he or she had remained in office until
after such delivery.
The 1992 Series D Bonds shall be issued in fully registered form and shall be
numbered from 1 upwards in the order of their issuance, or in any other
manner deemed appropriate by the Paying Agent and the Trustee. The 1992
Series D Bonds shall be in the denomination 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 and Multiannual Modes and $100,000 or any multiple
thereof in the Weekly Mode. The 1992 Series D Bonds shall be dated the date
of original delivery thereof and shall mature on May 1, 2021. The interest
on 1992 Series D 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 1992 Series D Bonds shall be initially in
the Weekly Mode.
The 1992 Series D Bonds are subject to redemption as described in Sections
310 and 405 and in the forms of 1992 Series D Bonds.
(c) Tax-Exempt Refunding Bonds. Tax-Exempt Refunding Bonds that refund the
1991 Series D Bonds may be issued by the Authority at the request of the
Company as provided in Article IV.
(d) Flexible Mode.
(i) Determination of Flexible Rates. The Remarketing Agent shall determine
the Flexible Rate as provided in the forms 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 Company. Each determination and
redetermination of the Flexible Rate shall be conclusive and binding on the
Authority, the Trustee, the Paying Agent, the Bank, the Company 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, 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 (A) for the 1991 Series D Bonds, 100%
of the rate on thirty (30) day high-grade unsecured commercial paper notes
sold through dealers by major corporations published in the edition of The
Wall Street Journal 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, and (B) for any Tax-Exempt Refunding Bonds, 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
the Remarketing Agent shall (1) not offer Rate Periods greater than the
maximum number of days of interest coverage under the Credit Facility at the
Maximum Interest Rate less eight (8) days or extending beyond the expiration
date of the Credit Facility less eight (8) days (2) not offer 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, and (3) follow any written directions of the Company
Representative, not inconsistent with the preceding clauses (1) and (2), as
to the Rate Periods to be made available. The Company, the Trustee, the
Paying Agent and the Remarketing Agent shall cooperate to ensure compliance
with this requirement.
(ii) 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 Company
from the Flexible Mode to the Weekly, Multiannual or Fixed Rate Mode as
provided in the forms of the Flexible Bonds, so long as no Default hereunder
exists as certified to the Trustee by the Company Representative. If Bonds
that are to be converted to the Weekly or Multiannual Mode are to be
supported by a Credit Facility in their new Mode, no such conversion shall be
effective unless the Company shall have delivered to the Paying Agent by
11:00 A.M. on the Conversion Date a Credit Facility in the minimum required
face amount for the applicable Mode as provided in Section 317, and with an
expiration date not earlier than (i) 364 days(16) in the case of any Bonds
converted to the Weekly Mode and (ii) five (5) Business Days after the end of
the Rate Period in the case of Bonds in the Multiannual Mode. Any Bonds in
or to be converted to the Weekly Mode shall be supported by a Credit
Facility. Written notice of a conversion from the Flexible Mode shall be
given by the Company to the Authority, the Trustee, the Paying Agent, the
Bank, the Remarketing Agent, Moody's and S&P not fewer than twenty-five (25)
nor more than one hundred and twenty (120) days before the Conversion Date,
which date shall be specified by the Company 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. If any
of the Bonds are to be converted to the Multiannual Mode, such notice shall
include the Company's election whether or not the Bonds as converted are to
be supported by a Credit Facility. 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 301(g).
Notwithstanding the foregoing, if the preconditions to conversion to a new
Mode established by the preceding paragraph and with respect to any
Tax-Exempt Refunding Bonds, Section 404, 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 draw on the Credit Facility 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 Agreement, so long as the Purchase Price of all Bonds required to
be purchased is made available as provided above.
(iii) Mandatory Tender for Purchase. On each Effective Date, Bonds in
the Flexible Mode are subject to mandatory tender for purchase as provided in
the forms of Flexible Bonds.
(e) Weekly Mode.
(i) Determination of Weekly Rates. The Remarketing Agent shall determine
the Weekly Rate as provided in the forms 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 Company. Each
determination and redetermination of the Weekly Rate shall be conclusive and
binding on the Authority, the Trustee, the Paying Agent, the Bank, the
Company and the Bondowners.
(ii) 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 Company from the Weekly Mode to a
Multiannual, Flexible, or Fixed Rate Mode, as provided in the forms of Weekly
Bonds, so long as no Default hereunder exists as certified to the Trustee by
a Company Representative.(17) If Bonds that are to be converted to the Flexible
or Multiannual Mode are to be supported by a Credit Facility in their new Mode,
no such conversion shall be effective unless the Company shall have delivered to
the Paying Agent by 11:00 A.M. on the Conversion Date a Credit Facility in the
minimum required face amount for the applicable Mode as provided in Section 317
and with an expiration date not earlier than (i) 364 days(18) from the
Conversion Date in the case of Bonds converted to the
Flexible Mode and (ii) five (5) Business Days after the end of the Rate
Period in the case of Bonds in the Multiannual Mode. Any Bonds in or to be
converted to the Flexible Mode shall be supported by a Credit Facility,
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.
Written notice of a conversion of Bonds from the Weekly Mode shall be given
by the Company 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 Company in such notice. If any of the Bonds are to be in
the Multiannual Mode, such notice shall include the Company's election
whether or not the converted Bonds are to be supported by a Credit Facility.
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 Subparagraph 301(e)(iv) (B) and the forms of Weekly
Bonds. Conversions to the Fixed Rate Mode shall also be governed by
Subsection 301(g).
Notwithstanding the foregoing, if the preconditions to conversion to another
Mode established by the preceding paragraph and, with respect to any
Tax-Exempt Refunding Bonds, Section 404, 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
Subparagraph 301(e)(iv)(B). In such event, the Paying Agent shall by 1:00
P.M. on the proposed conversion date draw on the Credit Facility 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 Agreement, so long as the Purchase
Price of all Bonds required to be purchased is made available as provided
above.
(iii) 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 forms 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 Agreement.
The Paying Agent shall accept all Tendered Bonds properly tendered to it for
purchase as provided in the forms of Weekly Bonds and in this Paragraph
301(e)(iii); 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 602 and such acceleration shall not have
been annulled.
The Bondowner's Election Notice delivered to the Paying Agent as provided in
the forms of Weekly Bonds prior to the Purchase Date of Tendered Bonds shall
be in substantially the form provided in the forms of Weekly Bond.
As soon as practicable after receiving notice of a tender of Bonds under this
section, the Paying Agent shall notify the Remarketing Agent, the Company,
the Bank and the Trustee by telephone promptly confirmed in writing of the
amount of Tendered Bonds and the specified Purchase Date.
(iv) Events Requiring Mandatory Tender of Weekly Bonds.
(A) Expiration of Credit Facility without Substitution or Replacement;
Substitution of Credit Facility. The Bonds in the Weekly Mode are subject to
mandatory tender for purchase as provided in the forms of Weekly Bonds in
connection with the expiration or termination of the Credit Facility (other
than in connection with the conversion to a new Mode) or in connection with
the substitution of a Credit Facility, unless the Trustee receives written
notice from Moody's, if the Bonds are then rated by Moody's, or 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 Credit Facility is expiring without
substitution or replacement, the Paying Agent shall give notice to the
Bondowners of the mandatory tender of the Bonds at least thirty (30) days
prior to the mandatory tender date.(19)
(B) 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 forms of Bonds, which
notice shall state that the Bonds are subject to mandatory tender for
purchase.
(f) Multiannual Mode
.
(i) Determination of Multiannual Rate. The Remarketing Agent shall
determine the Multiannual Rate as provided in the forms 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, if
applicable, and the Company. Each determination and redetermination of the
Multiannual Rate shall be conclusive and binding on the Authority, the
Trustee, the Paying Agent, the Bank, the Company and the Bondowners.
(ii) 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 at the election of the Company from the Multiannual Mode to
the 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 forms of Multiannual Bonds so long as no Default hereunder
exists as certified to the Trustee by a Company Representative. If Bonds
that are to be converted to the Flexible or Weekly Mode or to another Rate
Period within the Multiannual Mode are to be supported by a Credit Facility
in their new Mode, no such conversion shall be effective unless the Company
shall have delivered to the Paying Agent by 11:00 A.M. on the Conversion Date
a Credit Facility in the minimum required face amount for the applicable Mode
as provided in Section 317 and with an expiration date not earlier than (i)
364 days(20) from the Conversion Date in the case of Bonds converted to the
Flexible or Weekly Modes and (ii) five (5) Business Days after the end of the
Rate Period in the case of Bonds in the Multiannual Mode. Any Bonds in or to
be converted to the Weekly or Flexible Mode shall be supported by a Credit
Facility, 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. Written notice of a change in Mode or Rate Period within the
Multiannual Mode shall be given by the Company to the Authority, the Trustee,
the Bank (if any), the Paying Agent, the Remarketing Agent, Moody's and S&P
not fewer than twenty-five (25) nor more than sixty (60) days prior to the
proposed Conversion Date. If the conversion is to a new Rate Period in the
Multiannual Mode, such notice shall include the Company's election whether or
not the converted Bonds are to be supported by a Credit Facility. Conversion
to the Fixed Rate Mode shall also be governed by Subsection 301(g).
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 and, with respect to any Tax-Exempt Refunding Bonds,
Section 404, 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. If the Bonds that were to have
been converted are supported by a Credit Facility, the Paying Agent shall by
1:00 P.M. on the proposed conversion date draw on the Credit Facility an
amount which is sufficient to pay the Purchase Price on such date on all
Bonds that were to have been converted. If the Bonds that were to have been
converted are not supported by a Credit Facility, the Company 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 Agreement, so long as the
Purchase Price of all Bonds required to be purchased is made available as
provided above.
(iii) Mandatory Tender for Purchase. On each Effective Date, Bonds in
the Multiannual Mode are subject to mandatory tender for purchase as provided
in the forms of Multiannual Bond.
(g) Conversion to Fixed Rate Mode. The interest rate on any portion of the
Bonds may be converted by the Company to the Fixed Rate as provided in the
forms of the Flexible, Weekly and Multiannual Bonds, Subsections 301(d), (e)
and (f) and this Subsection 301(g). Upon receipt of the notice of conversion
to the Fixed Rate Mode from the Company, 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 Company 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
Company and the Bondowners. The first interest payment date of Bonds
converted to the Fixed Rate shall be at least three (3) months but less than
nine (9) months after the Conversion Date. 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 Subsection 301(g) 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 Paragraph 301(d)(ii), (e)(ii) or (f)(ii), whichever is
applicable.
(h) Partial Conversions.
(i) General. The Bonds may be converted in whole or in part to 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 Agreement.
In the event the Bonds are in (or are to be converted to) more than one Mode,
the provisions of this Agreement 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 Agreement to the Bonds shall be construed to mean the Bonds in (or to
be converted to) such Mode and any reference to Credit Facility or Bank shall
be construed to mean the Credit Facility supporting the Bonds in (or to be
converted to) such Mode and the Bank issuing that Credit Facility.
(ii) 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 Company. 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 Subsection 301(b) for the particular Modes.
Bonds (or portions thereof) in the 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 Paragraph
301(e)(iv).
(iii) Amendment. Provisions of this Agreement may be amended to permit
or facilitate partial conversions of the Bonds without Bondowner consent in
accordance with clause (vii) of the first paragraph of Section 1101.
(i) Cancellation and Destruction of Bonds. All Bonds paid or redeemed,
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 and all Bonds surrendered in any exchanges or
transfers, shall thereupon be promptly canceled. All Bonds acquired and
owned by the Company and delivered to the Paying Agent for cancellation shall
be deemed paid and shall be promptly canceled. Bonds so canceled may at any
time be cremated or otherwise destroyed by the Paying Agent, which shall
execute a certificate of cremation or destruction in duplicate by the
signature of one of its authorized officers describing the Bonds so cremated
or otherwise destroyed, and one executed certificate shall be filed with the
Company 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 of
before maturity, upon cancellation of any such Bonds.
(j) Replacement of Bonds. Replacement Bonds shall be issued pursuant to
applicable law as a result of the destruction, loss or mutilation of the
Bonds. The costs of a replacement shall be paid or reimbursed by the
applicant, who shall indemnify the Authority, the Trustee, the Paying Agent,
the Remarketing Agent and the Company against all liability and expense in
connection therewith.
(k) 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.
Section 302. Application of 1991 Series D Bond Proceeds
.
The Authority shall loan the proceeds of the 1991 Series D Bonds to the
Company by promptly causing the accrued interest, if any, to be deposited in
the Bond Fund and the balance of the proceeds to be paid to or pursuant to
the direction of the Company as reimbursement for Project Costs incurred
prior to the date of delivery of the 1991 Series D Bonds. In connection with
the reimbursement of such Project Costs, the Company represents and warrants
that (i) such Project Costs were incurred by and were chargeable to the
capital account of the Company; (ii) such Project Costs are costs of "sewage
or solid waste disposal facilities" or "air or water pollution control
facilities" within the meaning of Section 103(b)(4)(E) or (F) of the 1954
Code incurred and paid after January 14, 1976; (iii) such Project Costs are
for an "industrial facility" within the meaning of Paragraphs 2, VII (d) and
(e) of the Act; and (iv) such Project Costs are costs of a facility described
in Section 1312(a) of the Tax Reform Act of 1986.
Section 303. Application of Tax-Exempt Refunding Bond Proceeds and of 1992
Series D Bond Proceeds
.
(a) Application of Tax-Exempt Refunding Bond Proceeds.(21) Proceeds of any
Tax-Exempt Refunding Bonds shall be deposited in the Bond Fund and applied to
pay principal of, premium, if any, and interest on the 1991 Series D Bonds,
or if a Credit Facility is in effect, to reimburse the Bank for any draw on
the Credit Facility to make such payment on the 1991 Series D Bonds or as may
otherwise be provided in a supplemental Agreement executed and delivered by
the parties hereto at the time of issuance of the Tax-Exempt Refunding Bonds.
(b) Application of 1992 Series D Bond Proceeds.(22) The Authority shall loan
the
proceeds of the 1992 Series D Bonds to the Company by promptly causing (A) an
amount equal to the accrued interest, if any, to be deposited in the Bond
Fund and (B) $75,000,000 to be deposited with the Trustee, in each case in
immediately available funds. Upon receipt by the Paying Agent in respect of
a drawing on the Letter of Credit of an amount necessary to pay the Purchase
Price due on $75,000,000 principal amount of 1991 Series D Bonds, the Paying
Agent shall immediately notify the Trustee that it has received sufficient
draw proceeds to pay such Purchase Price, and upon the Trustee's receipt of
such notice the Trustee shall pay to the Bank the $75,000,000 deposited with
the Trustee by the Authority under clause (B) of this section as partial
reimbursement for such drawing. If the Trustee receives such notice from the
Paying Agent before 12:00 Noon on any Business Day it shall transmit a
payment order for the above-described payment by wire transfer in immediately
available funds to the Bank by 2:30 P.M. on the same day, and if the Trustee
receives such notice after 12:00 Noon it shall make such payment by wire
transfer in immediately available funds to the Bank by 11:00 A.M. on the next
Business Day. In connection with the reimbursement of the Bank, the Company
represents and warrants that (i) not less than 95% of the proceeds of the
1991 Series D Bonds were spent to reimburse the Company for Project Costs;
(ii) such Project Costs were incurred by and were chargeable to the capital
account of the Company; (iii) such Project Costs were costs of "sewage or
solid waste disposal facilities" or "air or water pollution control
facilities" within the meaning of Section 103(b)(4)(E) or (F) of the 1954
Code incurred and paid after January 14, 1976; (iv) such Project Costs were
for an "industrial facility" within the meaning of Paragraphs 2, VII (d) and
(e) of the Act; and (v) such Project Costs were costs of a facility described
in Section 1312(a) of the Tax Reform Act of 1986.
Section 304. Bond Fund
(a) Establishment and Purpose. A Bond Fund is hereby established with the
Trustee and moneys shall be deposited therein as provided in this Agreement.
The Company hereby grants to the Trustee for the benefit of the Bondowners
and the Bank a security interest in all deposits in the Bond Fund. The
Trustee acknowledges that it holds the Bond Fund as agent for the Bondowners
and the Bank, as their interests may appear. The moneys in the Bond Fund and
any investments held as part of such Fund shall be held in trust and, except
as otherwise provided in this Agreement, shall be applied by the Trustee
solely to pay principal of, premium, if any, and interest on, the Bonds. The
Trustee shall keep separate accounts as to (A) Eligible Funds and (B) all
other funds in the Bond Fund. When moneys in the Bond 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 drawings upon the
Credit Facility shall not be deposited in the Bond Fund, but shall be held by
the Paying Agent in trust and applied as provided in this Agreement.
(b) Excess in Bond Fund. If at any time the amount of Eligible Funds in the
Bond Fund exceeds the amount necessary to pay the Purchase Price or the
principal of, premium, if any, and interest on the Bonds in full and all
amounts owing or to be owing under this 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
Reimbursement Agreement, as certified by the Bank, and second, if any balance
remains, to the Company.
(c) Unclaimed Moneys. Except as may otherwise be required by applicable
law, in case any moneys deposited with the Paying Agent for the payment of
the Purchase Price or principal of, premium, if any, or interest on any Bond
remain unclaimed for two years after such Purchase Price, principal, premium
or interest has been paid or has become due and payable, the Paying Agent
may, and upon receipt of a written request by a Company Representative shall,
pay over to the Company the amount so deposited and thereupon the Trustee,
the Paying Agent and the Authority shall be released from any further
liability with respect to the payment of such Purchase Price or principal,
premium or interest and the owner of such Bond shall be entitled (subject to
any applicable statute of limitations) to look only to the Company as an
unsecured creditor for the payment thereof.
Section 305. Rebate.
The Company shall pay to the United States when due any rebate with respect
to the Tax-Exempt Refunding Bonds pursuant to IRC <section>148(f).
Section 306. Expenses of Issue.
Not more than 2% of the proceeds of the 1991 Series D Bonds shall be used to
pay the expenses of issue of the 1991 Series D Bonds, including underwriting
charges.
Section 307. Application of Moneys.
If, in addition to moneys drawn on the Credit Facility (if any), available
moneys in the Bond 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 of all amounts owing to the Trustee and the
Authority under this 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 drawn on the Credit
Facility (if any) shall be applied exclusively to pay interest, premium, if
any, and principal on Bonds supported by the Credit Facility in accordance
with the Credit Facility. If any Bonds are supported by a Credit Facility
and the owners of such Bonds have received all payments of principal,
premium, if any, and interest that have become due and payable from a draw on
the Credit Facility, the Bank shall be treated as the owner of such Bonds for
purposes of applying this section. In the event there exist Pledged Bonds or
Company Bonds on the date of any application of moneys under this section,
moneys otherwise to be paid to the Company or to the Bank pursuant to this
section shall be applied (subject to Paragraph 308(c)(iii)) as follows:
first, so long as all payments due on Bonds supported by a Credit Facility
have been made, pro rata to all Bondowners other than the Company (but
including the Bank to the extent provided in the preceding sentence),
otherwise first, pro rata to all Bondowners other than the Bank and the
Company, second (and irrespective of which clause first applies), if any
balance remains, to the Bank in fulfillment of any obligations owed to it
under the Reimbursement Agreement or any Pledged Bonds (to the extent not
satisfied pursuant to clause first), and third, if any further balance
remains, to the Company in respect of any Company 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 Reimbursement Agreement, and the Trustee may rely
conclusively thereon.
Section 308. Payments by the Company.
(a) Payments of Debt Service by the Company.
(i) The Company shall make payments in immediately available funds to the
Trustee for deposit in the Bond Fund 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, (i) then held in the Bond
Fund and available to pay the same, and (ii) amounts received by the Paying
Agent to pay the same from a draw under a Credit Facility. The Company may
make payments to the Bond Fund earlier than required by this section, but
such payments shall not affect the accrual of interest.
(ii) The payments to be made under the foregoing paragraph shall be
appropriately adjusted to reflect the date of issue of Bonds, accrued
interest deposited in the Bond 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.
(iii) At any time when any principal of the Bonds is overdue, the Company
shall also have a continuing obligation to pay to the Trustee for deposit in
the Bond 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.
(b) Additional Payments.
(i) The Company shall pay when due the Authority's Service Charge and other
expenses as provided in Section 803.
(ii) Within thirty (30) days after notice from the Trustee, the Company shall
pay to the Trustee the reasonable fees and expenses of the Trustee as set
forth in Section 703.
(iii) Within thirty (30) days after notice from the Paying Agent, the
Company shall pay to the Paying Agent its reasonable fees and expenses as set
forth in Section 313.
(c) Drawings on the Credit Facility.
(i) Debt Service. If a Credit Facility is available for any portion of the
Bonds, the Paying Agent shall not later than 4:00 P.M. on the Business Day
next preceding any date on which payments of the principal of, premium, if
any, or interest on such Bonds are due, whether at maturity, on an interest
payment date, by acceleration, redemption, or otherwise, draw on the Credit
Facility an amount sufficient to pay in full the principal, premium, if any,
and interest then coming due on such Bonds.(23) For purposes of the
immediately preceding sentence, interest on the Bonds shall include the
component of any Purchase Price of Bonds in the Flexible Mode representing
interest on the Bonds. The Paying Agent shall immediately notify the Company
and the Trustee by telephone promptly confirmed in writing if it has not been
paid by the Bank for such a draw on the Letter of Credit by 11:00 A.M. on the
date such payment on the Bonds is due.
(ii) Tenders for Purchase. Except as provided in Paragraph 308(c)(i),
drawings on the Credit Facility for the purchase of Bonds tendered for
mandatory purchase pursuant to Paragraphs 301(d)(iii), 301(e)(iv), or
301(f)(iii) or for Bonds tendered for purchase at the Bondowner's election
pursuant to Paragraph 301(e)(iii) shall be made pursuant to Subsection
311(a).
(iii) Use of Credit Facility. All amounts received by the Paying Agent
under any Credit Facility shall be held in a segregated account, shall remain
uninvested and shall be used solely to pay the Purchase Price or principal
of, premium, if any, and interest on the Bonds for which the Credit Facility
is available. Principal and Purchase Price of, premium, if any, and interest
on Company Bonds, Pledged Bonds and Bonds not supported by a Credit Facility
shall not be paid from amounts drawn on a Credit Facility.(24)
(iv) Failed Conversion. Whenever there is a failed conversion of Bonds
supported by a Credit Facility, the Paying Agent shall draw on the Credit
Facility as provided in Paragraph 301(d)(ii), 301(e)(ii) or 301(f)(ii), as
appropriate.(25)
(d) Payment of Debt Service. The Trustee shall transfer Eligible Funds, and
to the extent necessary other funds, from the Bond Fund to the Paying Agent
for the payment of principal, premium, if any, and interest payable on the
Bonds as provided in Subsection 304(a) to the extent amounts drawn on the
Credit Facility are insufficient to pay the same, and in conjunction
therewith shall give the Paying Agent written notice of the amount of
Eligible Funds being transferred. The Paying Agent shall apply such payments
received from the Trustee and amounts drawn on the Credit Facility, in the
following order, (i) moneys drawn on the Credit Facility, (ii) Eligible Funds
on deposit in the Bond Fund other than moneys drawn on the Credit Facility,
and (iii) any other moneys in the Bond Fund; provided, however, that except
as specified in the next sentence, in no event shall the Paying Agent use any
moneys other than Eligible Funds to pay principal of, premium, if any, or
interest on Bonds supported by a Credit Facility. If and to the extent that
sufficient Eligible Funds, including moneys drawn on the Credit Facility
pursuant to this section and Section 605, are not available to pay in full
the principal of, premium, if any, and interest on the Bonds supported by a
Credit Facility, then other available moneys shall be so used.
(e) Company's Purchase of Bonds. If the amount drawn on the Credit Facility
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 Credit Facility and tendered pursuant to
Paragraph 301(d)(iii), 301(e)(iii) or (iv), or 301(f)(iii), 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 Company, the
Remarketing Agent and the Trustee of such deficiency by telephone promptly
confirmed in writing. The Company 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 311 from the proceeds of the
remarketing of such Bonds or from drawings on the Credit Facility, as
reported by the Paying Agent. Bonds so purchased with moneys furnished by
the Company shall be Company Bonds.
Section 309. Unconditional Obligation.
The obligation of the Company to make payments under this Agreement shall be
absolute and unconditional, shall be binding and enforceable in all
circumstances whatsoever, shall not be subject to setoff, recoupment or
counterclaim, and shall be a general obligation of the Company to which the
full faith and credit of the Company are pledged. The Company shall be
obligated to make such payments whether or not the Project Facilities become
functional and whether or not the Project Facilities have ceased to exist or
be functional to any extent from any cause whatsoever. The Company shall be
obligated to make such payments regardless of whether it is in possession or
entitled to be in possession of the Project Facilities.
Section 310. Redemption of the Bonds.
(a) Optional Redemption. The Bonds are redeemable prior to maturity in
accordance with the written direction of the Company to the Authority and the
Trustee. 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 Company
shall designate (to the extent not otherwise prohibited) the amount of Bonds
of each series and Mode to be redeemed, and if less than all of the Bonds
Outstanding in any series and Mode shall be called for redemption, Bonds to
be so redeemed in any series and 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 Subsection 310(a),
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 Subsection 310(a) 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. The Outstanding Bonds in the
Multiannual or Fixed Rate Modes may be redeemed at any time at the option of
the Company in whole at a price equal to 100% of the principal amount
thereof, plus accrued interest to the redemption date, if (i) all Bonds in
the Weekly Mode are to be redeemed pursuant to Subsection 310(a) on or before
such extraordinary optional redemption date and (ii) all Bonds in the
Flexible Mode are to be redeemed pursuant to Subsection 310(a) on or before
the later of (A) the first Effective Date for such Bonds after notice of the
extraordinary optional redemption is given by the Company pursuant to
Subsection 310(b) or (B) such extraordinary optional redemption date and
(iii) the redemption occurs within nine (9) months following the occurrence
of any of the following events, as evidenced in each case by the filing with
the Trustee of a certificate of a Company Representative that such event has
occurred and describing the same:
(i) Damage or destruction to the Station or the Project Facilities to such
extent that in the opinion of the Company (expressed in a resolution adopted
by the Board of Directors of the Company (a "Board Resolution")) and of an
architect or engineer acceptable to the Company (who may be an employee of
the Company), both filed with the Authority and the Trustee, (1) the Station
or the Project Facilities, 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 (2) normal operations
are thereby prevented from being carried on at the Station for a period of
not less than six (6) months.
(ii) Loss of title to or use of a substantial part of the Station or the
Project Facilities as a result of the exercise of the power of eminent domain
which, in the opinion of the Company (expressed in a Board Resolution) and of
an architect or engineer acceptable to the Company (who may be an employee of
the Company), both filed with the Authority and the Trustee, prevents or is
likely to prevent normal operations from being carried on at the Station for
a period of not less than six (6) months.
(iii) A change in the Constitution of the State of New Hampshire 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 Company with
respect to the Station or the Project Facilities or the operation thereof.
(iv) The operation of the Station or the Project Facilities 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.
(v) Changes which the Company 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 Station or
the Project Facilities shall have occurred which, in the judgment of the
Company (expressed in a Board Resolution), render the continued operation of
the Station uneconomical.
The Company's right to direct the redemption of the Bonds upon the occurrence
of any single event listed in this Subsection 310(b) shall expire six (6)
months after such event occurs.
(c) Notice by the Company. The Company shall exercise its option to have
Bonds redeemed under Subsection 310(a) or (b) by giving notice to the
Trustee, the Authority, the Paying Agent, and the Remarketing Agent at least
five (5) days before the redemption date in the case of Bonds in the Flexible
Mode, and forty-five (45) days before the redemption date in the case of
Bonds in any other Mode.(26)
(d) Payment of Redemption Price and Accrued Interest. Whenever Bonds are
called for redemption, the accrued interest thereon shall become due on the
redemption date. To the extent not otherwise provided, the Company shall
deposit with the Trustee prior to the redemption date a sufficient sum to pay
the redemption price of and accrued interest on the Bonds.
(e) Notice of Redemption. When Bonds are to be redeemed, the Paying Agent
shall give notice 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 Agreement 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
405 as and when provided in the forms of Flexible Bonds.(27)
Section 311. Purchase of Bonds Tendered.
(a) Procedure.
(i) 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) 1:00
P.M. on each Purchase Date for Tendered Bonds that are to be in the Flexible
Mode immediately after the Purchase Date, (B) 3:30 P.M. one (1) Business Day
before the Purchase Date for Tendered Bonds that are to be in the Weekly Mode
immediately after the Purchase Date, or (C) 2:00 P.M. two (2) Business Days
before the Purchase Date for Tendered Bonds that are to be in the Multiannual
or Fixed Rate Mode immediately after 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) 1:00 P.M. on each Purchase Date for Tendered
Bonds that are to be in the Flexible Mode immediately after the Purchase
Date, (B) 3:30 P.M. one (1) Business Day before the Purchase Date for
Tendered Bonds to be in the Weekly Mode immediately after the Purchase Date,
or (C) 2:00 P.M. two (2) Business Days before the Purchase Date for Tendered
Bonds to be in the Multiannual Mode immediately after the Purchase Date.
(ii) Sources of Payments. If the Tendered Bonds are supported by a Credit
Facility, the Paying Agent shall draw upon the Credit Facility the amount
necessary to purchase the Tendered Bonds for which the Remarketing Agent has
not received the Purchase Price not later than (A) 1:30 P.M. on the Purchase
Date for Tendered Bonds that are to be in the Flexible Mode immediately after
the Purchase Date, or (B) 4:00 P.M. one (1) Business Day before the Purchase
Date for Tendered Bonds that are to be in any other Mode immediately after
the Purchase Date. In determining the amount necessary to purchase such
Tendered Bonds, the Paying Agent shall take into account any amounts drawn
under the Credit Facility pursuant to Paragraph 308(c)(i) to pay interest on
such Bonds on the Tender Date. If the Tendered Bonds are not supported by a
Credit Facility, the Paying Agent shall not later than (A) 1:30 P.M. on the
Purchase Date for Tendered Bonds that are to be in the Flexible Mode
immediately after the Purchase Date, or (B) 4:00 P.M. one (1) Business Day
before the Purchase Date for Tendered Bonds that are to be in any other Mode
immediately after the Purchase Date, notify the Company of the amount
necessary to purchase the Tendered Bonds for which the Remarketing Agent has
not received the Purchase Price, and the Company 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 to be in the Flexible Mode immediately after the
Purchase Date, or (B) 10:00 A.M. on the Purchase Date in the case of Tendered
Bonds that are to be in any other Mode immediately after the Purchase Date.
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 to
be in the Flexible Mode immediately after the Purchase Date, (B) 2:00 P.M. on
the Purchase Date for Tendered Bonds that are to be in the Weekly Mode
immediately after the Purchase Date, or (C) 2:00 P.M. on the Purchase Date
for Tendered Bonds that are to be in the Multiannual or Fixed Rate Mode
immediately after the Purchase Date. If the Bonds are supported by a Credit
Facility and the Remarketing Agent does not deliver to the Paying Agent
proceeds of remarketing sufficient, together with amounts received from draws
under the Credit Facility, to pay in full the Purchase Price of all Bonds due
on the Purchase Date, the Paying Agent shall make an additional draw on the
Credit Facility pursuant to Paragraph 602(a)(ii) and thereafter the Company
shall be liable for the shortfall.
(b) 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 Credit
Facility, moneys drawn on the Credit Facility for the purpose of purchasing
Tendered Bonds (including amounts drawn on the Credit Facility to pay accrued
interest on the Tendered Bonds), and third, moneys paid to it by the Company.
If sufficient funds are not available for the purchase of all Bonds tendered
on any Delivery Date, no purchase shall be consummated.
(c) 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.(28)
Section 312. Remarketing of Bonds Tendered.
(a) General. While the Bonds are in the 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, Pledged Bonds and Company
Bonds, provided that Bonds supported by a Credit Facility shall not be
remarketed to the Authority, the Company 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
(for Bonds to be in the Flexible or Weekly Mode) or in clearinghouse funds
(for Bonds to be in the Multiannual Mode) to the Paying Agent at the time
specified in Paragraph 311(a)(ii). 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 to be in the Flexible Mode immediately after the Purchase
Date, (ii) 2:00 P.M., in the case of Bonds that are to be in the Weekly Mode
immediately after the Purchase Date, or (iii) 2:00 P.M., in the case of Bonds
that are to be in the Multiannual or Fixed Rate Mode immediately after the
Purchase Date, 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. Bonds previously purchased
with moneys drawn under the Credit Facility shall not be delivered upon
remarketing unless the Credit Facility has been reinstated as provided in the
following paragraph.
Bonds the Purchase Price of which is paid for with funds drawn on the Credit
Facility pursuant to Paragraph 311(a)(ii) shall be registered to the Bank, or
its designee, as pledgee, by the Paying Agent (whether or not such Bonds are
delivered by the tendering Bondowner) as security for the reimbursement of
the Bank for moneys drawn under the Credit Facility and shall be "Pledged
Bonds." Bonds the Purchase Price of which is paid for with funds provided by
the Company pursuant to Subsection 308(e) or Paragraph 311(a)(ii) shall be
registered in the name of the Company by the Paying Agent and shall be
"Company Bonds". Company Bonds shall be held by the Paying Agent for the
account of the Company until transferred pursuant to this Section 312 or
canceled pursuant to instructions of the Company. Any Company Bonds that
remain unsold for a period of ninety (90) days (or such longer period as may
be approved (under New Hampshire and federal law) 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 Pledged Bonds or Company 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 Pledged Bonds
or Company Bonds) upon receipt by the Paying Agent of the Purchase Price of
such Bonds, provided, however, that no Pledged Bond or Company Bond shall be
so registered and delivered unless the Paying Agent has received from the
Bank a written notice of the reinstatement of the principal and interest
component of the Credit Facility, or if prior to or simultaneously with such
registration or delivery, the amount available to be drawn under the Credit
Facility is otherwise less than the amount described in Paragraph 317(b)(ii)
determined as if Bonds which are to continue as Pledged Bonds were not
Outstanding.(29) If the Paying Agent has received from the Bank a written
notice
of non-reinstatement of the interest component of the Credit Facility with
respect to Bonds in the Flexible Mode and has, therefore, stopped
registration and delivery of remarketed Bonds, the Paying Agent may resume
the registration and delivery of Bonds upon receipt from the Bank of written
notice that the interest component of the Credit Facility has been fully
reinstated. 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 Agreement and (ii) if
the Paying Agent has been so prohibited, upon the restoration of its power
hereunder to register and deliver Bonds. Bonds purchased with moneys drawn
under the Credit Facility and registered to the Bank or its designee pursuant
to the Reimbursement Agreement 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 312 and Paragraph
313(a)(iv). 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 Credit
Facility meeting the requirements of Subsection 317(b).
(b) Remarketing of Bonds in the Weekly Mode Between Notice and Redemption or
Conversion Date. No Bonds in the Weekly Mode scheduled to be redeemed or
converted to a different Mode may be remarketed under Subsection 312(a) after
receipt by the Remarketing Agent of notice of redemption or conversion of
such Bonds to a specified Mode from the Company 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 313. Paying Agent.
(a) Appointment and Responsibilities. The initial Paying Agent shall be
Security Pacific National Trust Company (New York). 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 Agreement
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 Agreement 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
Agreement, 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 Company, the Authority, the Trustee or any
Bondowner for any claim based on this Agreement or the Bonds against any
director, officer, agent or employee of the Paying Agent unless such claim is
based upon the bad faith, fraud or deceit of such person. For the purposes
of this Agreement 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 draw under the Credit Facility pursuant to Paragraphs 308(c)(i) or
308(c)(ii), or (ii) 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 Company shall pay to the Paying Agent reasonable compensation for its
services and pay or reimburse the Paying Agent for its reasonable expenses
and disbursements, including reasonable attorneys' fees hereunder. The
Company shall indemnify and save the Paying Agent harmless against any
liabilities and reasonable expenses which it may incur in the exercise of its
duties hereunder and which are not due to its negligence or bad faith. Any
fees, expenses, reimbursements or other charges which the Paying Agent may be
entitled to receive from the Company hereunder shall be due and payable 30
days after a request for payment has been made by the Paying Agent to the
Company, and any such fees, expenses, reimbursements or other charges not
paid when due shall bear interest at the "Base Rate" of the Trustee (or, if
none, the nearest equivalent).
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:
(i) hold all sums delivered to it by the Trustee or paid to it under the
Credit Facility 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;
(ii) 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;
(iii) hold all moneys delivered to it hereunder for the purchase of Bonds
(including amounts drawn on the Credit Facility and amounts received from the
Company) 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;
(iv) hold all Pledged Bonds in trust for the benefit of the Bank until such
Pledged Bonds have been remarketed by the Remarketing Agent, purchased by the
Company, or redeemed;
(v) hold all Company Bonds in trust for the benefit of the Company until
such Company Bonds have been remarketed by the Remarketing Agent, redeemed,
or canceled.
(vi) 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;
(vii) 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;
(viii) give all notices required of it in this Agreement at the times and
in the manner required by this Agreement and send to the Remarketing Agent
copies of all such notices;
(ix) if appointed by the Trustee for such purpose, act as agent of the
Trustee for the purpose of executing the Certificate of Authentication on the
Bonds; and
(x) take all other actions and perform all other duties and obligations as
may be required of it as Paying Agent under this Agreement.
In addition, in its instrument of acceptance the Paying Agent shall assign to
the Trustee all of its rights to enforce payment under the Credit Facility
after the occurrence of an Event of Default.
(b) Removal or Resignation of Paying Agent. The Company may discharge the
Paying Agent from time to time and appoint a successor approved by the
Trustee, the Bank and the Remarketing Agent. The Company shall also
designate a successor subject to the approval of the Trustee, the Bank and
the Remarketing Agent if the Paying Agent resigns or becomes ineligible. The
Paying Agent may resign by giving at least sixty (60) days' written notice to
the parties hereto and the Remarketing Agent. Each successor Paying Agent
shall be a commercial bank or trust company having a capital and surplus of
not less than $50,000,000, shall at the time of the appointment be rated at
least Baa3/P-3 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 shall be
capable of performing the duties prescribed for it herein in New York, New
York. The Paying Agent may but need not be the same person as the Trustee.
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
Company 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.
In the event of the resignation or removal of the Paying Agent, the Paying
Agent shall pay over, assign, transfer and deliver the Credit Facility and
any moneys and Bonds, including Pledged 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.
(c) 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 Agreement and shall be subject to all the duties and obligations
of the Paying Agent under this Agreement.
In the event that the Paying Agent shall resign or be removed, or be
dissolved, or if the property or affairs of the Paying 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 the Company
shall not have appointed its successor within thirty (30) days, the Trustee
shall appoint a successor.
The Paying Agent shall send or cause to be sent notice to Bondowners of a
change of address for the delivery of Bonds or notices or the payment of
principal or purchase price of Bonds.
Section 314. Remarketing Agent.
(a) Qualifications and Responsibilities. The Company shall appoint, with
the consent of the Authority, and, if a Credit Facility is in effect, the
Bank, a Remarketing Agent when any Bonds are in the Flexible Mode, Weekly or
Multiannual Mode. The Remarketing Agent shall be authorized by law to
perform all of the duties imposed upon it by this Agreement. In addition,
the Remarketing Agent shall either (i) have a capitalization of at least
$10,000,000 and outstanding securities rated at least Baa 3 (or a
substantially equivalent rating) by Moody's if such a requirement is then
necessary to the maintenance of any then existing Moody's rating on the Bonds
or (ii) have a capitalization of at least $15,000,000 or have a line of
credit with a commercial bank in the amount of at least $15,000,000. 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 Company under which the Remarketing Agent will
agree, among other things, to:
(i) determine the Flexible, Weekly, Multiannual or Fixed Rate pursuant to
and in accordance with Paragraph 301(d)(i), (e)(i) or (f)(i) or Subsection
301(g) and the forms of Flexible, Weekly, Multiannual and Fixed Rate Bonds;
(ii) 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 Agreement;
(iii) 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 Agreement;
(iv) 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; and
(v) use its best efforts to remarket Bonds in accordance with this Agreement
and any remarketing agreement entered into by the Remarketing Agent and the
Company.
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 Agreement, 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 Agreement.
(b) Removal or Resignation of Remarketing Agent. The Company may remove the
Remarketing Agent at any time by written notice to the Remarketing Agent, the
Bank and the parties hereto and appoint a successor which meets the
qualifications set forth in Subsection 314(a) and which is reputable and
experienced in the remarketing of obligations similar to the Bonds. The
Company shall appoint a successor with similar qualifications if the
Remarketing Agent resigns or becomes ineligible. The Company shall give the
Authority, the Bank, the Paying Agent and the Trustee at least two (2) days'
notice prior to the appointment of a successor Remarketing Agent. The
Remarketing Agent may at any time resign and be discharged of the duties and
obligations created by this Agreement by giving at least thirty (30) days'
written notice to the parties hereto and the Bank and the Paying Agent. The
Trustee shall give written notice to the Bondowners of any removal or
appointment of the Remarketing Agent.
(c) Successors. 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 Agreement and shall be subject to all the duties
and obligations of the Remarketing Agent under this Agreement. 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 the Company shall not
have appointed its successor within thirty (30) days, the Trustee shall apply
to a court of competent jurisdiction for such appointment.
Section 315. Investments.
(a) Pending their use under this Agreement, moneys in the Bond Fund may be
invested by the Trustee in Permitted Investments (as defined below) maturing
or redeemable at the option of the holder at or before the time when such
moneys are expected to be needed and shall be so invested pursuant to written
direction of the Company if no Default known to the Trustee then exists under
this Agreement, provided that the Company shall not request, authorize or
permit any investment which would cause any Tax-Exempt Refunding Bonds to be
classified as "arbitrage bonds" as defined in IRC <section>148. Any
investments pursuant to this subsection shall be held by the Trustee as a
part of the Bond Fund and shall be sold or redeemed to the extent necessary
to make payments or transfers or anticipated payments or transfers from such
Fund.
(b) Any interest realized on investments in the Bond Fund and any profit
realized upon the sale or other disposition thereof shall be credited to the
Bond Fund and any loss shall be charged thereto.
(c) (1) The term "Permitted Investments" means (i) Government Obligations
or shares of a so-called money market or mutual fund that has all of its
assets invested in Government Obligations, (ii) tax-exempt bonds as defined
in IRC <section>150(a)(6) rated at least AA or Aa by S&P and Moody's,
respectively,
or the equivalent by any other nationally recognized rating agency at the
time of acquisition thereof (and Aa by Moody's if rated by Moody's and AA by
S&P if rated by S&P) or shares of a so-called money market or mutual fund
that do not constitute "investment property" within the meaning of IRC
<section>148(b)(2), provided either that the fund has all of its assets invested
in
obligations of such rating quality or, if such obligations are not so rated,
that the fund has comparable credit worthiness through insurance or otherwise
and which fund is rated AAm or AAm-G if rated by S&P, and rated investment
grade by Moody's, if rated by Moody's, or, if unrated, investment in such
fund is approved in writing by S&P and Moody's, (iii) certificates of deposit
of, banker's acceptances drawn on and accepted by, and interest bearing
deposit accounts of, a bank or trust company which has a capital and surplus
of not less than $50,000,000 and which has been rated not less than Prime-3
by Moody's, and (iv) Repurchase Agreements. The term "Repurchase Agreement"
shall mean a written agreement under which a bank or trust company which has
a capital and surplus of not less than $50,000,000 or a government bond
dealer reporting to, trading with, and recognized as a primary dealer by the
Federal Reserve Bank of New York sells to, and agrees to repurchase from the
Trustee obligations issued by, or the full and timely payment of which is
guaranteed by, the United States, provided that the market value of such
obligations is at the time of entering into the agreement at least one
hundred and three percent (103%) of the repurchase price specified in the
agreement and that such obligations are segregated from the unencumbered
assets of such bank or trust company or government bond dealer, and provided
further that unless the agreement is with a bank or trust company, such
agreement shall require the repurchase to occur on demand or on a date
certain which is not later than one (1) year after such agreement is entered
into and shall expressly authorize the Trustee to liquidate the purchased
obligations in the event of the insolvency of the party required to
repurchase such obligations or the commencement against such party of a case
under the federal Bankruptcy Code or the appointment of or taking possession
by a trustee or custodian in a case against such party under the Bankruptcy
Code. Any such investments may be purchased from or through the Trustee.
(2) Notwithstanding the immediately preceding paragraph Permitted
Investments shall not include the following:
(A) Government Obligations, certificates of deposit and bankers'
acceptances, in each case with yields lower than the yield available on
comparable obligations then offered by the United States Treasury;
(B) any demand deposit or similar account with a bank, trust company or
broker, unless (i) the account is used for holding funds for a short period
of time until such funds are reinvested or spent, and (ii) such account will
not contain an average daily balance for any bond year (selected by the
Company pursuant to Temp. Treas. Reg. <section> 1.148-8T(b)(2) or any successor
thereto) in excess of $20,000 (disregarding the 20 days with the largest
account balances); or
(C) Repurchase Agreements, unless (i) at least three (3) bids are obtained
on the proposed Repurchase Agreement from persons other than those with an
interest in the Bonds, (ii) the yield on the Repurchase Agreement is at least
equal to the yield offered by the highest bidder, and (iii) a written record
of the yield offered by each bidder is maintained.
Any of the requirements of this paragraph (2) shall not apply to moneys
allocable to Bonds as to which the Trustee and the Authority shall have
received an opinion of nationally recognized bond counsel to the effect that
such requirements are not necessary to preserve the exclusion of interest on
any Tax-Exempt Refunding Bonds from the gross income of the owner thereof for
federal income tax purposes.
Section 316. Reduction of Credit Facility on Change in Mode; Release of
Credit Facility 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 draw under the Credit Facility a reduced
number of days' interest, as described in Paragraph 317(b)(ii), the Paying
Agent may reduce the amount available to be drawn under the Credit Facility
upon such conversion in accordance with the Credit Facility.
If no Credit Facility is to be in effect for the Bonds as converted to the
Multiannual or Fixed Rate Mode, the Paying Agent shall reduce (or if all the
Bonds are so converted, release) the Credit Facility upon such conversion so
that the Credit Facility, if any, in effect satisfies the requirements
described in Paragraph 317(b)(ii).
In no event shall any reduction in or release of the Credit Facility pursuant
to this Section 316 take effect until five (5) Business Days after the
conversion.
Section 317. Credit Facilities.
(a) Substitution or Replacement. Upon satisfaction of the requirements set
forth in this Section 317 and subject to the last sentence of this Subsection
317(a), the Company may (except during the period between the giving of
notice of mandatory tender for purchase on account of the expiration of the
Credit Facility and the Purchase Date) replace a Credit Facility then in
effect with a substitute Credit Facility; provided, however, that (1) the
Credit Facility being replaced shall in no event be terminated or released
until the Company 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 drawings on the
Credit Facility being replaced, (2) if any Bonds supported by the Credit
Facility being replaced are in the Weekly Mode, the Paying Agent has given
not less than thirty (30) days' written notice of the termination or release
of the Credit Facility to owners of such Bonds in the Weekly Mode and (3) if
any of the Bonds supported by the Credit Facility being replaced are in the
Flexible Mode or the Multiannual Mode, such Credit Facility shall in no event
be terminated or released earlier than on an Effective Date for all such
Bonds.
Prior to the replacement of any Credit Facility the Company shall have
delivered to the Trustee and the Paying Agent: (i) an opinion of counsel for
the issuer of the substitute Credit Facility to the effect that it
constitutes a legal, valid and binding obligation of the issuer enforceable
in accordance with its terms; (ii) a certificate of the Bank that all amounts
due under the Reimbursement Agreement have been paid and that the Company has
fulfilled all its obligations arising out of such Agreement; and (iii) unless
all of the Bonds to be supported by the substitute Credit Facility are in the
Weekly Mode or are subject to mandatory tender for purchase on the date of
replacement, written evidence from Moody's, if such Bonds are then rated by
Moody's, and from S&P, if such Bonds are then rated by S&P, that the
replacement of the Credit Facility will not in itself result in the reduction
or withdrawal of the rating on the Bonds. Notice of the substitution or
replacement of a Credit Facility shall be sent by the Trustee to Moody's and
S&P.(30)
(b) Requirements. Each Credit Facility must:
(i) be an irrevocable, unconditional obligation of a financial institution;
(ii) be on terms no less favorable to the Paying Agent than the Letter of
Credit 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 the Bonds supported by the Credit Facility, any premium
applicable thereto, and (A) forty-five (45) days' accrued interest at the
Maximum Interest Rate on the principal amount of such Bonds then Outstanding
in the Weekly Mode, (B) thirty-eight (38) days' accrued interest at the
Maximum Interest Rate on the principal amount of such Bonds then Outstanding
in the Flexible Mode or (C) one hundred ninety (190) days' accrued interest
at the Maximum Interest Rate on the principal amount of such Bonds then
Outstanding in the Multiannual Mode; and
(iii) provide for a term which may not expire in less than 364 days(31) and
which may not expire or be terminated prior to the fifth Business Day after the
mandatory tender for purchase as provided in Paragraph 301(d)(iii),
301(e)(iv), or 301(f)(iii). The Company shall not enter into any
Reimbursement Agreement or agree to any amendment of a Reimbursement
Agreement which in any way limits the obligation of the Bank to provide funds
under the Credit Facility without the prior written consent of 100% of the
principal amount of the Bonds Outstanding and entitled to the benefit
thereof.
Section 318. Tax Status of Bonds.
The Company will perform its obligations and agreements contained in the
Federal Tax Statement as if they were set forth herein. All representations
of the Company in the Federal Tax Statement shall be treated as if they were
set forth herein. Any covenants, agreements or representations made by the
Company or any transferee of the Project Facilities in connection with such a
transfer shall be performed and treated as if set forth herein. The
Authority will cooperate with the Bondowners and the Company to the extent
deemed necessary or permitted by law in the opinion of bond counsel to the
Authority in order to preserve the exclusion of interest on the Tax-Exempt
Refunding Bonds from the gross income of the owners thereof for federal
income tax purposes. If no Tax-Exempt Refunding Bonds are outstanding, the
Company may waive the application of this Section 318 to itself (or any
successors hereunder or as owner of the Project Facilities) and the Authority
by written notice to the Authority and the Trustee that the Company will not
request the Authority to issue any Tax-Exempt Refunding Bonds.
Section 319. Securities Laws.
Notwithstanding any other provision of this Agreement, the Purchase Price,
principal of, premium, if any, and interest on the 1991 Series D Bonds shall
at all times be supported by a Credit Facility issued by a national bank, or
any banking institution organized under the laws of any state, territory or
the District of Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking commission or
similar official, unless the Company delivers to the Trustee an opinion of
counsel expert in securities law matters to the effect that failure to
provide such a Credit Facility will not cause the offering, sale or delivery
of any 1991 Series D Bonds to constitute a violation of the registration
requirements of the Securities Act of 1933, as amended, or qualification
requirements with respect to this Agreement under the Trust Indenture Act of
1939, as amended. In any remarketing of Bonds under this Agreement, the
Company shall at all times comply with applicable federal and state
securities laws.
Section 320. Registration of Bonds (except the 1992 Series D Bonds) in the
Book-Entry Only System.(32)
(a) Notwithstanding any provision of this Agreement to the contrary, the
provisions of this Section 320 shall apply with respect to any Bonds (except
the 1992 Series D Bonds) registered to CEDE & CO. or any other nominee of The
Depository Trust Company ("DTC") while the Book-Entry Only System (meaning
the system of registration described in this Section 320) is in effect. The
Book-Entry Only System shall be in effect for any series of Bonds or portion
thereof issued in or converted to any Mode or Rate Period within the
Multiannual Mode if so specified by the Company prior to the issuance in or
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 Company hereby specifies that the Book-
Entry Only System shall be in effect while the 1991 Series D Bonds are in
Flexible Mode. Notwithstanding any provision of this Section 320 to the
contrary, the provisions of this Section 320 shall not apply to the 1992
Series D Bonds, which are subject to the Book-Entry Only System described in
Section 321.
(b) The Bonds in or to be in the Book-Entry Only System shall be issued in
the form of a separate single authenticated fully registered Bond for each
separate Mode or Rate Period. Any legend required to be on the Bonds by DTC
may be added by the Trustee or Paying Agent. The form of Book-Entry Only
System 1991 Series D Bond in the Flexible Mode is attached hereto as Exhibit
K. On the date of original delivery thereof or date of conversion of any
Bonds to a Mode or Rate Period in which the Book-Entry Only System is in
effect, as applicable, such 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 Company, 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 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 Agreement. 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 Agreement
shall refer to such new nominee of DTC.
(c) 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 with respect to any Bonds, the Authority shall issue and the
Paying Agent shall transfer and exchange such 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
Company, 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 such Bonds or (B) to
make available for transfer and exchange such Bonds registered in whatever
name or names and in whatever authorized denominations as DTC shall
designate.
(d) In the event the Company determines that the Beneficial Owners of any
Bonds in the Book-Entry Only System should be able to obtain Bond
certificates, the Company may so notify DTC, the Paying Agent and the
Trustee, whereupon DTC will notify the Participants of the availability
through DTC of such 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.
(e) Notwithstanding any other provision of this Agreement to the contrary,
so long as any 1991 Series D 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 1991 Series D Bond and all
notices with respect to such 1991 Series D 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 Exhibit L attached
hereto. The form of such Representation Letter may be modified or replaced
in a manner consistent with the provisions of this Agreement upon conversion
or reconversion of the 1991 Series D Bonds to a Mode or Rate Period in which
the Book-Entry Only System is in effect.
(f) Notwithstanding any provision in Subsection 301(h) or Section 310 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.
(g) 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 this Agreement
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.
(h) 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 Agreement.
Section 321. Registration of 1992 Series D Bonds in the Book-Entry Only
System.(33)
(a) Notwithstanding any provision herein to the contrary, the provisions of
this Subsection 321 and the 1992 Series D Bonds Representation Letter (as
defined below) shall apply with respect to any 1992 Series D Bond registered
to CEDE & CO. or any other nominee of The Depository Trust Company ("DTC")
while the Book-Entry Only System (meaning the system of registration
described in Section 321) is in effect. The Book-Entry Only System shall be
in effect for any Mode or Rate Period within the Multiannual Mode if so
specified by the Company 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 Company
hereby specifies that the Book-Entry Only System shall be in effect while the
1992 Series D Bonds are in Weekly, Multiannual and Fixed Rate Modes.
(b) The 1992 Series D Bonds in or to be in the Book-Entry Only System shall
be issued in the form of a separate single authenticated fully registered
1992 Series D Bond for each separate Mode or Rate Period in substantially the
forms provided for in Section 301. 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 1992 Series D Bonds to a Mode
or Rate Period in which the Book-Entry Only System is in effect, as
applicable, the 1992 Series D 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 1992 Series D 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 Company, 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 1992 Series D 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 1992 Series D
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 1992
Series D 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 1992 Series D Bonds. The
Paying Agent shall pay all principal of and premium, if any, and interest on
the 1992 Series D 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 1992 Series D Bonds to the extent of the sum or sums so paid.
No person other than DTC shall be entitled to receive an authenticated 1992
Series D Bond evidencing the obligation of the Authority to make payments of
principal and premium, if any, and interest pursuant to this Agreement. 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 Agreement shall refer to such new nominee of DTC.
(c) 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 1992 Series D 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 Company, 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 1992 Series D Bonds or (B) to make available
for transfer and exchange 1992 Series D Bonds registered in whatever name or
names and in whatever authorized denominations as DTC shall designate.
(d) In the event the Company determines that the Beneficial Owners should be
able to obtain 1992 Series D Bond certificates, the Company may so notify
DTC, the Paying Agent and the Trustee, whereupon DTC will notify the
Participants of the availability through DTC of 1992 Series D Bond
certificates. In such event, the Authority shall issue and the Paying Agent
shall transfer and exchange 1992 Series D 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 1992 Series D Bonds registered in whatever name or
names and in whatever authorized denominations as DTC shall designate.
(e) Notwithstanding any other provision of this Agreement to the contrary,
so long as any 1992 Series D 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 1992 Series D Bond and all
notices with respect to such 1992 Series D Bond shall be made and given,
respectively, to DTC as provided in the Letter of Representation (the "1992
Series D Bonds Representation Letter"), the form of which is included as
Exhibit M attached hereto. The form of such 1992 Series D Bonds
Representation Letter may be modified in a manner consistent with the
provisions of this Agreement upon conversion or reconversion of the 1992
Series D Bonds to a Mode or Rate Period in which the Book-Entry Only System
is in effect.
(f) Notwithstanding any provision in Subsection 301(h) or Section 310 of
this Agreement to the contrary, so long as any of the 1992 Series D Bonds
outstanding are held in the Book-Entry Only System, if less than all of such
1992 Series D Bonds are to be converted or redeemed upon any conversion or
redemption of 1992 Series D Bonds hereunder, the particular 1992 Series D
Bonds or portions of 1992 Series D Bonds to be converted or redeemed shall be
selected by DTC in such manner as DTC may determine.
(g) So long as the Book-Entry Only System is in effect, a Beneficial Owner
who elects to have its 1992 Series D Bonds purchased or tendered pursuant to
this Agreement shall effect delivery by causing a Participant to transfer the
Beneficial Owner's interest in the 1992 Series D Bonds pursuant to the Book-
Entry Only System. The requirement for physical delivery of 1992 Series D
Bonds in connection with a demand for purchase or a mandatory purchase will
be deemed satisfied when the ownership rights in the 1992 Series D Bonds are
transferred in accordance with the Book-Entry Only System.
(h) 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 1992 Series D Bonds 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 Agreement.
ARTICLE IV: TAX-EXEMPT REFUNDING BONDS
Section 401. Issuance of Tax-Exempt Refunding Bonds.
Unless the Company has delivered the written notice described in Sections 318
and 502 that it will not request the Authority to issue Tax-Exempt Refunding
Bonds, the Authority may from time to time at the request of the Company
issue and sell Tax-Exempt Refunding Bonds to refund all or any portion of the
1991 Series D Bonds, subject to the requirements of the Act and the
requirements of this Article IV. Such Tax-Exempt Refunding Bonds shall have
substantially the same terms as the 1991 Series D Bonds, but with such
changes as provided in Section 403. A series of Tax-Exempt Refunding Bonds
may be initially issued in any Mode or Modes designated by the Company and
approved by the Authority prior to their delivery. All Tax-Exempt Refunding
Bonds shall be of the same rank and shall be entitled to the same security,
including the Series F First Mortgage Bonds, as the 1991 Series D Bonds.
Each of the series of Tax-Exempt Refunding Bonds shall mature on the date, be
subject to optional redemption pursuant to Section 310(a) at the times and at
the prices, and shall initially bear interest at such rate or rates as
determined by the Company and approved by the Authority. Each series of
Tax-Exempt Refunding Bonds shall be issued in fully registered form and shall
be numbered from 1 upwards in the order of their issuance, or in any other
manner deemed appropriate by the Paying Agent and the Trustee. Tax-Exempt
Refunding Bonds shall be in the denomination of $5,000 each or any multiple
thereof in the Fixed Rate or Multiannual Mode, $100,000 or any multiple
thereof in the Weekly Mode and $100,000 or any multiple of $1,000 in excess
of $100,000 in the Flexible Mode. Each series of Tax-Exempt Refunding Bonds
shall be dated the date of original delivery thereof. The interest on
Tax-Exempt Refunding Bonds until they come due shall be payable on the
interest payment dates applicable to the Mode of Bonds are in from time to
time.
Section 402. Execution and Delivery of the Tax-Exempt Refunding Bonds
Each Tax-Exempt Refunding Bond shall be signed on behalf of the Authority by
the manual or facsimile signatures of any two of the Chairman, Vice Chairman,
Treasurer, either Assistant Treasurer and Executive Director and the
corporate seal of the Authority or a facsimile thereof shall be engraved or
otherwise reproduced thereon. The Certificate of Authentication shall be
manually signed by the Trustee or on behalf of the Trustee by its duly
authorized agent for such purpose.
In case any officer whose manual or facsimile signature shall appear on the
Tax-Exempt Refunding Bond shall cease to be such officer before the delivery
thereof, such manual or facsimile signature shall nevertheless be valid and
sufficient for all purposes as if he or she had remained in office until
after such delivery.
The Trustee or its duly authorized agent for such purpose shall not
authenticate and deliver any series of Tax-Exempt Refunding Bonds until the
Trustee has received the following:
(1) A certificate signed by a Company Representative designating the
intended Mode or Modes, the maturity date, the optional redemption dates and
prices under Subsection 310(a), and the initial interest rate or rates, with
respect to the Tax-Exempt Refunding Bonds;
(2) A certificate signed by an officer of the Authority approving the terms
of the Tax-Exempt Refunding Bonds designated by the Company in the
certificate described in Paragraph (1);
(3) A copy, certified by the Executive Director of the Authority, of the
resolution of the Authority authorizing the issuance of the Tax-Exempt
Refunding Bonds;
(4) A copy, certified by the Secretary or Assistant Secretary of State of
New Hampshire, of the resolution adopted by the Governor and Council of New
Hampshire pursuant to Section 9 of the Act with respect to the Tax-Exempt
Refunding Bonds;
(5) An originally executed copy of any supplemental Agreement entered into
by the parties hereto in connection with the issuance of the Bonds of that
series;
(6) A certificate of a Company Representative (A) stating that no Default
(in reliance upon a certificate of the Trustee as to such matters as the
Company shall reasonably request) hereunder has occurred and is continuing,
(B) designating the 1991 Series D Bonds to be refunded (the "Refunded
Bonds"), (C) that the Refunded Bonds will no longer be Outstanding upon the
issuance of the Tax-Exempt Refunding Bonds, (D) that the Series F First
Mortgage Bonds evidence and secure the Company's obligation to pay the
Tax-Exempt Refunding Bonds and (E) that the Series F First Mortgage Bonds
have maturities, interest rates, interest and principal payments and
prepayment or redemption provisions and other terms properly corresponding to
the terms of the Tax-Exempt Refunding Bonds and any other Bonds the payment
of which they evidence and secure;
(7) An opinion or opinions of Bond Counsel reasonably satisfactory to the
Trustee that:
(i) the Tax-Exempt Refunding Bonds may be issued under the Act and this
Agreement,
(ii) the Tax-Exempt Refunding Bonds have been validly authorized and executed
and, when authenticated and delivered pursuant to the request of the
Authority, will be valid and binding obligations of the Authority entitled to
the benefit of the trust created hereby,
(iii) any supplemental agreement entered into by the Authority in
connection with the issuance of the Tax-Exempt Refunding Bonds has been duly
authorized, executed and delivered by the Authority, is a valid and binding
obligation of the Authority and is enforceable against the Authority in
accordance with its terms subject to principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally,
(iv) all necessary consents or approvals of government authorities required
in connection with the issue of the Tax-Exempt Refunding Bonds by the
Authority have been obtained, and
(v) interest on the Tax-Exempt Refunding Bonds will be excluded from gross
income of the owners thereof for federal income tax purposes; and
(8) An opinion of counsel reasonably satisfactory to the Trustee, who may be
counsel to the Company, that:
(i) the Series F First Mortgage Bonds evidencing and securing the Company's
obligation to pay the Tax-Exempt Refunding Bonds have been duly issued under
the First Mortgage Bond Indenture and are valid and binding obligations of
the Company entitled to the benefits and security of the First Mortgage Bond
Indenture; and
(ii) any supplemental agreement entered into by the Company in connection
with the issuance of the Tax-Exempt Refunding Bonds has been duly authorized,
executed and delivered by the Company, is a valid and binding obligation of
the Company, and is enforceable against the Company in accordance with its
terms subject to principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting creditors'
rights generally.
(9) The Trustee or its duly authorized agent for such purpose shall not
authenticate and deliver any series of Tax-Exempt Refunding Bonds unless
immediately after the delivery of such Bonds there is in effect a Credit
Facility meeting the requirements of Subsection 317(b) supporting all of the
Bonds required to be supported by a Credit Facility pursuant to this
Agreement.
Section 403. Form of Tax-Exempt Refunding Bonds.
(a) General. Each series of Tax-Exempt Refunding Bonds shall bear
substantially the designation "Pollution Control Refunding Revenue Bonds
(Public Service Company of New Hampshire Project - [Year] Tax-Exempt Series
[Letter])." Tax-Exempt Refunding Bonds shall be in substantially the same
form as the 1991 Series D Bonds, but with such additions or deletions as
described herein or as otherwise may be appropriate.
(b) Redemption Upon Taxability. In each Tax-Exempt Refunding Bond, there
shall be inserted the following:
The Tax-Exempt Refunding Bonds are subject to mandatory redemption at any
time at a redemption price of 100% of the principal amount of the Tax-Exempt
Refunding Bonds so redeemed plus accrued interest in the event (i) the
Company delivers to the Trustee an opinion of nationally recognized bond
counsel selected by the Company and reasonably satisfactory to the Trustee
("Bond Counsel") stating that interest on the Tax-Exempt Refunding Bonds is
or will become includable in gross income of the owners thereof for federal
income tax purposes, or (ii) it is finally determined by the Internal Revenue
Service or a court of competent jurisdiction, as a result of (A) a proceeding
in which the Company has participated or been given notice and an opportunity
to participate, and, (B) either (1) a failure by the Company (or the Seabrook
Transferee as defined in the Agreement) to observe any covenant or agreement
undertaken in or pursuant to the Agreement, or the inaccuracy of any
representation made by the Company (or the Seabrook Transferee) in or
pursuant to the Agreement, or (2) the Seabrook Transfer (as defined in the
Agreement), that interest payable on the Tax-Exempt Refunding Bonds is
includable for federal income tax purposes in the gross income of any owner
thereof (other than an owner which is a "substantial user" or a "related
person" within the meaning of Section 147(a) of the Internal Revenue Code of
1986). Any determination under clause (ii) above will not be considered
final for this purpose until the earliest of the conclusion of any appellate
review, the denial of appellate review or the expiration of the period for
seeking appellate review. Redemption under this paragraph shall be in whole
unless not less than forty-five (45) days prior to the redemption date the
Company 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 Tax-Exempt Refunding Bonds will preserve the tax-exempt status of
interest on the remaining Tax-Exempt Refunding Bonds outstanding subsequent
to such redemption. Except as provided in the next sentence, any such
redemption shall be made on the 90th day after the date on which the opinion
described in clause (i) is delivered or the determination described in clause
(ii) becomes final or on such earlier date as the Company may designate by
notice given to the Trustee at least forty-five (45) days prior to such
designated date. Any Tax-Exempt Refunding Bond in the Flexible 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.
If such redemption shall occur in accordance with the terms of the Agreement,
then such failure by the Company (or the Seabrook Transferee as described
above) to observe such covenant or agreement, or the inaccuracy of any such
representation will not, in and of itself, constitute a default thereunder.
If the Trustee receives written notice from any Bondowner stating that (i)
such Bondowner has been notified in writing by the Internal Revenue Service
that it proposes to include the interest on the Tax-Exempt Refunding Bonds in
the gross income of such owner for federal income tax purposes, or any other
proceeding has been instituted against such owner which may lead to a like
determination, and (ii) such owner will afford the Company the opportunity to
participate at its own expense in the proceeding, either directly or in the
name of such owner, until the conclusion of any appellate review, and the
Trustee has examined such written notice and it appears to be accurate on its
face, then the Trustee shall promptly give notice thereof to the Company, the
Authority, and each Bondowner whose Bonds may be affected. The Trustee shall
thereafter keep itself reasonably informed of the progress of any
administrative proceedings or litigation relating to such notice. Under the
Agreement the Company is required to give the Trustee written notice of such
a final determination within forty-five (45) days of such final
determination.
The foregoing two paragraphs shall be inserted immediately before the
paragraph describing the manner of selection of Bonds for redemption in the
forms of Weekly, Multiannual and Fixed Rate Bonds and immediately after the
paragraph describing the manner of payment of the Bonds in the forms of
Flexible Bonds. In addition, immediately after the foregoing additional
paragraphs in the forms of Flexible Bond there shall be added the following:
If the Purchase Date of this bond is after the redemption date, notice of
redemption of this bond 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. 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.
(c) Day Counting. While Tax-Exempt Refunding Bonds are in the Flexible Mode
interest shall be computed on the basis of actual days elapsed divided by 365
or 366 as appropriate, and each Tax-Exempt Refunding Bond in the Flexible
Mode shall so state. Tax-Exempt Refunding Bonds in any other Mode shall have
interest computed on the basis described in the applicable form of Bonds.
Section 404. Conversion.(34)
No conversion of Tax-Exempt Refunding Bonds from one Mode to another Mode,
including for this purpose the conversion to a new Rate Period in the
Multiannual Mode, shall be effective unless on or prior to the Conversion
Date the Company shall provide the Authority and the Trustee with an opinion
of Bond Counsel reasonably satisfactory to the Trustee to the effect that the
conversion will not affect the exclusion of interest on the Tax-Exempt
Refunding Bonds from gross income for federal income tax purposes.
Section 405. Mandatory Taxability Redemption.
The Outstanding Tax-Exempt Refunding Bonds are subject to mandatory
redemption at any time at a redemption price of 100% of the principal amount
of the Bonds so redeemed plus accrued interest in the event (i) the Company
delivers to the Trustee an opinion of Bond Counsel stating that interest on
the Tax-Exempt Refunding Bonds is or will become includable in gross income
of the owners thereof for federal income tax purposes, or (ii) it is finally
determined by the Internal Revenue Service or a court of competent
jurisdiction, as a result of (A) a proceeding in which the Company has
participated or been given notice and an opportunity to participate, and, (B)
either (1) a failure by the Company (or the Seabrook Transferee) to observe
any covenant or agreement undertaken in or pursuant to this Agreement, or the
inaccuracy of any representation made by the Company (or the Seabrook
Transferee) in or pursuant to this Agreement, or (2) the Seabrook Transfer,
that interest payable on the Bonds is includable for federal income tax
purposes in the gross income of any owner thereof (other than an owner which
is a "substantial user" or a "related person" within the meaning of IRC
Section 147(a)). Any determination under clause (ii) above will not be
considered final for this purpose until the earliest of the conclusion of any
appellate review, the denial of appellate review or the expiration of the
period for seeking appellate review. Redemption under this Section 405 shall
be in whole unless not later than forty-five (45) days prior to the
redemption date the Company delivers to the Trustee an opinion of Bond
Counsel to the effect that a redemption of less than all of the Tax-Exempt
Refunding Bonds will preserve the tax-exempt status of interest on the
remaining Tax-Exempt Refunding Bonds outstanding subsequent to such
redemption. Except as provided in the next sentence, any redemption under
this Section 405 shall be made on the 90th day after the date on which the
opinion described in clause (i) is delivered or the determination described
in clause (ii) becomes final or on such earlier date as the Company may
designate by notice given to the Trustee at least forty-five (45) days prior
to such designated date. Any Tax-Exempt Refunding Bond in the Flexible 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. If such redemption shall occur in accordance with the terms of this
Agreement, then such failure by the Company (or the Seabrook Transferee) to
observe such covenant or agreement, or the inaccuracy of any such
representations will not, in and of itself, constitute a Default hereunder.
If the Trustee receives written notice from any Bondowner stating that (I)
such Bondowner has been notified in writing by the Internal Revenue Service
that it proposes to include the interest on the Tax-Exempt Refunding Bonds in
the gross income of such owner for federal income tax purposes, or any other
proceeding has been instituted against such owner which may lead to a like
determination, and (II) such owner will afford the Company the opportunity to
participate at its own expense in the proceeding, either directly or in the
name of such owner, until the conclusion of any appellate review, and the
Trustee has examined such written notice and it appears to be accurate on its
face, then the Trustee shall promptly give notice thereof to the Company, the
Authority, and each Bondowner whose Tax-Exempt Refunding Bonds may be
affected. The Trustee shall thereafter keep itself reasonably informed of
the progress of any administrative proceedings or litigation relating to such
notice.
The Company shall keep the Trustee informed of the progress of any proceeding
referred to in subclause (ii)(A) of the first paragraph of this Section 405
and shall give written notice to the Trustee within forty-five (45) days
after it has actual knowledge of a final determination as described in clause
(ii) of the first paragraph of this Section 405. At least forty (40) days
prior to any redemption pursuant to this Section 405, the Trustee shall
notify the Paying Agent of the redemption date and the principal amount of
Tax-Exempt Refunding Bonds to be redeemed.(35)
Section 406. Additional Limitations on Conversions of 1992 Series D Bonds
to New Modes.(36)
(a) Conversions to Multiannual Mode. 1992 Series D Bonds converted to the
Multiannual Mode shall not be supported by a Credit Facility.
(b) Conversions from Multiannual Mode to Flexible or Weekly Mode. Any Bank
issuing a Credit Facility in connection with a conversion of 1992 Series D
Bonds from the Multiannual Mode to the Flexible or Weekly Mode shall have a
long-term corporate debt rating of Aa from Moody's or AA from S&P, or their
equivalent.
Section 407. Tax Status of 1992 Series D Bonds.(37)
The Company will perform its obligations and agreements contained in the
First Supplemental Federal Tax Statement as if they were set forth herein.
All representations of the Company in the First Supplemental Federal Tax
Statement shall be treated as if they were set forth herein. Any covenants,
agreements or representations made by the Company or the Seabrook Transferee
in the Assumption Agreement shall be performed and treated as if set forth
herein. As used in this Section 407, (a) "Assumption Agreement" means the
Assumption Agreement dated as of June 5, 1992 among the Authority, the
Company, the Trustee and the Seabrook Transferee, (b) "First Supplemental
Federal Tax Statement" means the Statement as to Tax Status of Bonds executed
by the Company and the Seabrook Transferee in connection with the original
issuance of the 1992 Series D Bonds and delivered to the Trustee and (c)
"Seabrook Transferee" means North Atlantic Energy Corporation, the transferee
of the Project Facilities pursuant to the Seabrook Transfer, and its
successors.
ARTICLE V. THE PROJECT
Section 501. Company not to Impair Tax Status; Use of Project Facilities.
Notwithstanding any provision herein to the contrary, the Company will not
use any of the proceeds of the Loan (or the income earned through the
investment thereof, if any) or operate the Project Facilities in any manner,
and will not take or omit any action or permit any action to be taken or
omitted with the result that interest on any Tax-Exempt Refunding Bonds is
included in the gross income of the owners thereof for federal income tax
purposes. The Company's use of the Project Facilities (or facilities
replacing the same) shall be in furtherance of the purpose of air or water
pollution control or sewage or solid waste disposal and in compliance with
the Act.
Section 502. Qualification of the Project Facilities.
Notwithstanding any provision herein to the contrary, the Company shall not
permit the Project Facilities to fail to qualify as (a) "industrial
facilities" under the Act, (b) a facility described in Section 1312(a) of the
Tax Reform Act of 1986, or (c) "sewage or solid waste disposal facilities" or
"air or water pollution control facilities" within the meaning of Section
103(b)(4)(E) and (F) of the 1954 Code; provided, however, that if no
Tax-Exempt Refunding Bonds are outstanding, the Company may waive the
application of clauses (b) and (c) by written notice to the Authority and the
Trustee that it will not request the Authority to issue Tax-Exempt Refunding
Bonds. No funds of the Authority, other than the proceeds of the Bonds,
shall be available to pay Project Costs. The Company acknowledges that it is
fully familiar with the physical condition of the Project Facilities and that
it is not relying on any representation of any kind by the Authority or the
Trustee concerning the nature or condition thereof. Neither the Authority
nor the Trustee shall be liable to the Company or any other person for any
latent or patent defect in the Project Facilities.
Section 503. Compliance with Law.
In the acquisition, construction, maintenance, improvement and operation of
the Project Facilities, the Company has and will comply in all material
respects with all applicable building, subdivision, zoning and land use,
environmental protection, sanitary and safety and other laws, rules and
regulations and will not permit any nuisance thereat and will to the extent
of its ownership and control, permit no nuisance to be committed thereat by
others while the Company is, or is entitled to be, in possession thereof. It
shall not be a breach of this section if the Company fails to comply with
such laws, rules and regulations during any period in which the Company shall
in good faith be diligently contesting the validity thereof.
Section 504. Current Expenses.
The Company shall pay in a timely manner all costs of maintaining and
operating the Project Facilities, including without limitation all taxes,
excises and other governmental charges lawfully levied thereon or with
respect to its interests therein or use thereof to the extent of the
Company's interest therein. It shall not be a breach of this section if the
Company fails to pay any such costs, taxes or charges during any period in
which the Company shall in good faith be contesting the validity or amount
thereof and no foreclosure proceedings have been commenced, unless the
procedures applicable to such contest require payment thereof and proceedings
for their refund or abatement.
Section 505. Disposition and Use of Project Facilities.
The Company shall not sell, lease, transfer or otherwise dispose of the
Project Facilities (other than the grant of a mortgage pursuant to a
financing transaction) unless (i) it obtains the consent of the Authority,
which consent shall not be unreasonably withheld, provided, however, that no
such consent shall be required if the sale, lease, transfer or disposition is
the Seabrook Transfer, or if such transaction has been approved by or
consented to by the New Hampshire Public Utilities Commission; (ii) if there
are any Outstanding Tax-Exempt Refunding Bonds, it obtains an opinion of Bond
Counsel addressed to and reasonably satisfactory to the Trustee and the
Authority that such sale, lease, transfer or other disposition will not
affect the exclusion of the interest on any Outstanding Tax-Exempt Refunding
Bonds from the gross income of the owners thereof for federal income tax
purposes, provided, however, that no such opinion shall be required in
connection with the Seabrook Transfer; and (iii) if the sale, lease, transfer
or disposition is the Seabrook Transfer, the Company and the Seabrook
Transferee each executes and delivers an Assumption Agreement substantially
in the form attached hereto as Exhibit B (the "Assumption Agreement"). No
sale, lease, transfer or other disposition of the Project Facilities or the
Station shall relieve the Company of any of its obligations under this
Agreement.
The Company shall not make any material change in the purposes for which the
Project Facilities are used without the consent of the Authority, which
consent shall not be unreasonably withheld. The Company at its own expense
may alter, remodel or improve the Project Facilities and construct other
facilities at the site of the Project Facilities, provided such action shall
not result in any substantial change in the Project Facilities or the
character of the activities conducted by the Company at the Project
Facilities site without the consent of the Authority, which consent shall not
be unreasonably withheld.
Section 506. Books and Records.
The Authority and the Trustee and their respective duly authorized agents
shall have the right at all reasonable times and upon the furnishing of
reasonable notice under the circumstances to examine the books and records of
the Company relating to the Project Facilities.
Section 507. Undivided Interest.
The undertakings of the Company contained in Sections 502, 503, 504 and 505
are limited to those consistent with the Company's undivided percentage
interest in the facilities of which the Project Facilities are a part.
ARTICLE VI: DEFAULT AND REMEDIES
Section 601. Default by the Company.
(a) Events of Default; Default. "Event of Default" in this Agreement means
any one of the events set forth below and "Default" means any Event of
Default without regard to any lapse of time or notice.
(i) Debt Service on Bonds; Required Purchase. Any principal of, premium, if
any, or interest on any Bond shall not be paid when due, whether at maturity,
by acceleration, upon redemption or otherwise or any Purchase Price for Bonds
shall not be paid as provided in Sections 301, 308, 311 or 312, except 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 not supported by a Credit Facility is paid within
thirty (30) days after it becomes due.
(ii) Other Obligations. The Company (or the Seabrook Transferee) shall fail
to observe or perform any of its other covenants or agreements contained
herein or in the Assumption Agreement and such failure shall continue for a
period of sixty (60) days after written notice given to the Company by the
Trustee or the Bondowners of at least 25% in principal amount of the Bonds
Outstanding; provided, however, that if such default cannot be cured by the
Company or the Seabrook Transferee within such sixty (60) day period, it
shall not constitute an Event of Default if curative action is instituted by
the Company or the Seabrook Transferee within such sixty (60) day period and
thereafter is diligently pursued until such Default is cured.
(iii) First Mortgage Bond Default. The occurrence of any "event of
default" as defined in the First Mortgage Bond Indenture.
(iv) Reimbursement Agreement. The Trustee and the Paying Agent shall have
received written notice from the Bank of the occurrence of an event of
default under the Reimbursement Agreement and of the Bank's determination to
terminate the Credit Facility on the fifth Business Day following receipt by
the Trustee and the Paying Agent of such notice.
(v) Non-Reinstatement under the Credit Facility. If any Bonds are in the
Weekly or Multiannual Mode, the Paying Agent shall receive written notice
from the Bank within five (5) days after a drawing under the Credit Facility
that the Bank has not reinstated the amount so drawn, and such
non-reinstatement causes the total amount of the obligation of the Bank under
the Credit Facility to be less than the principal amount of the Outstanding
Bonds supported by the Credit Facility, plus accrued interest (1) for a
period of forty-five (45) days at the Maximum Interest Rate with respect to
the principal amount of such Bonds then Outstanding in the Weekly Mode, and
(2) for a period of one hundred ninety (190) days at the Maximum Interest
Rate with respect to the principal amount of such Bonds then Outstanding in
the Multiannual Mode.
Immediately upon receipt of written notice from the Bank of the
non-reinstatement of an amount drawn under the Credit Facility, the Paying
Agent shall determine whether such non-reinstatement causes the total amount
of the obligation of the Bank under the Credit Facility to be less than the
principal amount of the Outstanding Bonds supported by the Credit Facility
plus accrued interest thereon calculated in the manner set forth in the
preceding sentence. Notwithstanding the outcome of such determination, the
Paying Agent shall immediately notify the Trustee of the Bank's failure to
reinstate the full amount drawn under the Credit Facility.
The Company agrees to notify the Authority, the Bank, the Remarketing Agent,
the Paying Agent and the Trustee promptly in writing of the occurrence of any
Default or Event of Default of which it has knowledge. Within seven (7) days
after becoming aware of a Default or an Event of Default the Paying Agent
will give notice to the Bondowners and, in the case of a Default or Event of
Default under (i), (ii), (iv), or (v) above, the Trustee shall give notice to
the First Mortgage Bond Trustee.
Notwithstanding anything in this section to the contrary, no action or
failure to act by the Company (or the Seabrook Transferee) which results in
interest on any Tax-Exempt Refunding Bonds becoming includable in gross
income of the owners thereof for federal income tax purposes shall constitute
a Default or Event of Default under this Agreement so long as (I) the Company
shall have delivered the opinion described in clause (i) of the first
paragraph of Section 405 or shall have complied with the last paragraph of
Section 405 and (II) the redemption provided by Section 405 occurs. In such
event, no owner of Tax-Exempt Refunding Bonds shall be entitled to any claim
for monetary damages hereunder and the redemption of the Bonds as provided
under Section 405 shall be the exclusive recourse of owners of Tax-Exempt
Refunding Bonds.
(b) Waiver. At any time before an acceleration pursuant to Paragraph
602(a)(i), 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 Paragraph 602(a)(i), by written notice to the Company, and in the
absence of inconsistent instructions from Bondowners pursuant to Sections 606
or 901 shall do so upon written instruction of the owners of at least
twenty-five per cent (25%) in principal amount of such Bonds Outstanding. 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 Paragraphs 601(a)(i), 601(a)(iv)
or 601(a)(v).
Any cure or waiver of any "event of default" under the First Mortgage Bond
Indenture and a rescission and annulment of its consequences shall constitute
a cure or waiver of the corresponding Event of Default under Paragraph
601(a)(iii) and a rescission and annulment of the consequences thereof, and
the Trustee, upon obtaining knowledge thereof, shall give written notice of
such cure or waiver, rescission or annulment to the Authority and the
Company, and shall give notice thereof by mail to all Bondowners; 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.
Section 602. Remedies for Events of Default.
If an Event of Default occurs and is continuing:
(a) Acceleration.
(i) Bonds Not Supported by a Credit Facility. If the Event of Default is
one described in Paragraph 601(a)(i), (ii) or (iii), the Trustee may, and
upon the written request of the Bondowners of at least 25% in principal
amount of the Bonds Outstanding (other than Bonds that are supported by a
Credit Facility, Pledged Bonds and Company Bonds) shall, by written notice to
the Company, the Authority, the Paying Agent, and the Remarketing Agent
declare immediately due and payable the principal of the Outstanding Bonds
(other than Bonds that are supported by a Credit Facility and Pledged Bonds,
but including Company 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 Paragraph 602(a)(i) (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 Paragraph 602(a)(i) may annul such acceleration
and its consequences by written notice to the Authority, the Trustee and the
Company. 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.
(ii) Bonds Supported by a Credit Facility. If the Event of Default is one
described in Paragraph 601(a)(i), (iv) or (v), the principal of the Bonds
that are supported by a Credit Facility and Pledged Bonds and accrued
interest thereon shall automatically become immediately due and payable
without any further notice or action, subject, however, to the proviso set
forth in Section 605. Notwithstanding the foregoing, if an Event of Default
described in Paragraph 601(a)(i) occurs due to the failure of the Paying
Agent to receive sufficient funds for the payment of the Purchase Price of
all Bonds supported by a Credit Facility tendered for purchase on any
Purchase Date, the Paying Agent shall immediately draw under the Credit
Facility an amount equal to such deficiency (except to the extent that one or
more drawings have been made previously in respect of the same deficiency),
plus one day's accrued interest on such Bonds, and only if such Event of
Default is not cured by the close of business on the next Business Day shall
there be such an automatic acceleration of the payment of principal of and
accrued interest on the Bonds.
(b) Rights as a Secured Party. The Trustee may exercise all of the rights
and remedies of a secured party under the UCC. Notice sent by registered or
certified mail, postage prepaid, or delivered during business hours, to the
Company at least seven (7) days before an event under UCC Section 9-504(3) or
any successor provision of law shall constitute reasonable notification of
such event.
Section 603. Court Proceedings.
The Trustee may enforce the provisions of this Agreement 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 Company of the
provisions of this Agreement, including (to the extent this Agreement may
lawfully provide) court costs, reasonable attorney's fees and other costs and
expenses incurred in enforcing the obligations of the Company hereunder. The
Authority may likewise enforce obligations owed to it hereunder which it has
not assigned to the Trustee. All rights under this Agreement 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 604. Revenues after Default.
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 308 (without regard to any grace periods), which amounts
shall be applied in the order specified in Section 307.
Section 605. The Credit Facility; Acceleration.
Upon acceleration of the Bonds prior to expiration of the Credit Facility,
the Trustee shall instruct the Paying Agent to draw immediately on the Credit
Facility in an amount equal to the aggregate unpaid principal of and interest
on the Bonds supported by the Credit Facility to the date of final payment
(which shall be the date of acceleration for Bonds in the Weekly and
Multiannual Modes and the next Purchase Date for each Bond in the Flexible
Mode); provided, however, that the Paying Agent shall hold in trust for the
benefit of owners of Bonds in the Flexible Mode any amounts so drawn in
respect of such Bonds and shall release such amounts only on the applicable
Purchase Date for each such Bond. The owners of such Bonds shall have no
right to make any claim for such amounts until such Purchase Date. The
Trustee shall not require indemnification for any instruction required by
this Section 605 to be given by the Trustee to the Paying Agent to draw on
the Credit Facility, prior to the time such instruction is given, except and
unless such instruction is prohibited by or violates applicable law or any
outstanding or pending court or governmental order or decree.
Section 606. Rights of Bondowners.
If an Event of Default occurs and is continuing, and if the Bondowners
representing not less than 25% in principal amount of the Bonds Outstanding
shall have requested the Trustee in writing to exercise one or more of the
rights and remedies provided hereunder and offered it indemnity as provided
in Subsection 702(e), the Trustee shall be required to exercise such one or
more of the rights and remedies hereunder as the Trustee shall determine to
be in the best interest of the Bondowners and not inconsistent with any
directions given in accordance with Section 901. No Bondowner shall have any
right to institute an action in law or equity or to pursue any other remedy
hereunder with respect to any Bond unless (i) an Event of Default of which
the Trustee has been notified has occurred and Bondowners representing not
less than 25% in principal amount of the Bonds Outstanding shall have
requested the Trustee in writing to exercise its rights and remedies with
respect thereto and shall have offered the Trustee reasonable opportunity to
do so and indemnity as provided in Subsection 702(e), and (ii) the Trustee
shall within a reasonable time thereafter fail to exercise any of such rights
or remedies. No Bondowner shall have any right to institute any action or
pursue any other remedy if and to the extent that the surrender, impairment,
waiver, or loss of the lien of this Agreement would, under applicable law,
result. Notwithstanding the foregoing, each Bondowner shall have a right of
action to enforce payment of the Bonds at and after the due dates thereof at
the place, from the sources and in the manner expressed in the Bonds. For
purposes of this Section 606, so long as a Credit Facility has paid all
amounts due on Bonds it supports, the Bank issuing such Credit Facility shall
be treated as owner of such Bonds.
Section 607. Performance of Company's Obligations.
If the Company shall fail to observe or perform any of its agreements or
obligations hereunder, the Authority or the Trustee may perform the same in
its own name or in the Company's name and each is hereby irrevocably
appointed the Company's attorney-in-fact for such purpose. Unless an Event
of Default exists, the Authority or the Trustee, as the case may be, shall
give at least five (5) days' notice to the Company before taking action under
this section, except that in case of emergency as reasonably determined by
the acting party, it may act on lesser notice or give the notice promptly
after rather than before taking the action. The reasonable cost of any such
action performed by the Trustee or the Authority shall be paid or reimbursed
by the Company within thirty (30) days after the Trustee or the Authority
notify the Company of such cost.
Section 608. Remedies Cumulative; No Waiver.
The rights and remedies under this Agreement shall be cumulative and shall
not exclude any other rights and remedies allowed by law, provided there is
no duplication of recovery. Neither the failure to insist upon a strict
performance of any of the obligations of the Company nor the failure to
exercise any remedy for any violation thereof, shall be taken as a waiver for
the future of the right to insist upon strict performance of the obligation
or of the right to exercise any remedy for the violation.
ARTICLE VII: THE TRUSTEE
Section 701. Corporate Organization, Authorization and Capacity.
The Trustee represents and warrants that it is a trust company duly organized
and validly existing under the laws of The Commonwealth of Massachusetts and
duly licensed or qualified to do business in Massachusetts, with the capacity
to exercise the powers and duties of the Trustee hereunder, and that by
proper corporate action it has duly authorized the execution and delivery of
this Agreement.
Section 702. Rights and Duties of the Trustee.
(a) Moneys to be Held in Trust. All moneys deposited with the Trustee under
this Agreement (other than amounts received for its own use) shall be held by
the Trustee in trust and applied subject to the provisions of this Agreement,
but need not be segregated from other funds except as required herein or by
law.
(b) Accounts. The Trustee shall keep proper accounts of its transactions
hereunder (separate from its other accounts), which shall be open to
inspection at reasonable times by the Authority, the Company and the
Bondowners and their representatives duly authorized in writing.
(c) Performance of the Authority's Obligations. If the Authority shall fail
to observe or perform any agreement or obligation contained in this
Agreement, the Trustee may take whatever legal proceedings may be required to
compel full performance by the Authority of its obligations, and in addition,
the Trustee may, to whatever extent it deems appropriate for the protection
of the Bondowners, itself or the Company, perform any such obligation in the
name of the Authority and on its behalf.
(d) Responsibility. The Trustee shall be entitled to the advice of counsel
(who may be the Trustee's counsel, counsel for the Authority, the Company or
any Bondowner) and shall be wholly protected as to any action taken or
omitted to be taken in good faith in reliance on such advice. The Trustee
may rely conclusively on any notice, certificate or other document furnished
to it hereunder and reasonably believed by it to be genuine. The Trustee
shall not be liable for any action taken by it in good faith and reasonably
believed by it to be within the discretion or powers conferred upon it, in
good faith omitted to be taken by it and reasonably believed to be beyond the
discretion or powers conferred upon it, taken by it pursuant to any direction
or instruction by which it is governed hereunder, or omitted to be taken by
it by reason of the lack of direction or instruction required hereby for such
action; nor shall it be responsible for the consequences of any error of
judgment reasonably made by it. The duties of the Trustee are those
expressly set forth in this Agreement, and no additional duties shall be
implied. When any payment, consent or other action by it is called for
hereby, it may defer such action pending receipt of such evidence, if any, as
it may require in support thereof. The Trustee shall in no event be liable
for the application or misapplication of funds, or for other acts or defaults
by any person, firm, or corporation, except its own directors, officers, and
employees. No recourse shall be had by the Company, the Authority or any
Bondowner for any claim based on this Agreement or any Bond against any
director, officer, employee, or agent of the Trustee alleging personal
liability on the part of such person, unless such claim is based upon the bad
faith, negligence, fraud or deceit of such person. The Trustee has no
responsibility for the validity or sufficiency of this Agreement or the Bonds
or any security therefor.
(e) Limitations on Actions. The Trustee shall not be required to monitor
the financial condition of the Company or the physical condition of the
Project Facilities and, unless otherwise expressly provided, shall not have
any responsibility with respect to notices, certificates or other documents
filed with it hereunder, except to make them available for inspection by the
Bondowners. The Trustee shall not be deemed to have knowledge of and shall
not be required to take notice of any Default or Event of Default, except for
a Default or Event of Default described in Paragraph 601(a)(i) relating to
the payment of principal of, premium, if any, and interest on the Bonds,
unless the Trustee shall be specifically notified in writing by the Company,
the Authority or Bondowners representing not less than 25% in principal
amount of the Bonds Outstanding, or in the case of a Default or Event of
Default described in Paragraph 601(a)(iii), the Trustee shall be notified in
writing by the First Mortgage Bond Trustee, or in the case of a Default or
Event of Default described in Paragraph 601(a)(iv) or (v), the Trustee shall
be notified in writing by the Bank or the Paying Agent. It shall not be
required to take any remedial action (other than the giving of notice) unless
indemnity reasonably satisfactory to it is furnished for any expense or
liability to be incurred therein, other than liability for failure to meet
the standards set forth in this section. The Trustee shall be entitled to
reimbursement from the Company for its expenses reasonably incurred or
advances reasonably made, which reimbursement shall be due and payable thirty
(30) days after notifying the Company of such expenses or advances, in the
exercise of its rights or the performance of its obligations hereunder,
whether or not it acts without previously obtaining indemnity.
A permissive right or power to act shall not be construed as a requirement to
act. Upon receipt of written notice, direction, instruction, and indemnity
as provided above and, after making such investigation, if any, as it deems
appropriate to verify the occurrence of any Default of which it is notified
by the Bondowners or the Bank, the Trustee shall pursue such remedies
hereunder (not contrary to such direction) as it deems appropriate for the
protection of the Bondowners (including the Bank as provided in Section 901);
and in its actions under this provision, the Trustee shall be required to act
for the protection of the Bondowners with the same prudence as would be
expected of a prudent person in the conduct of such person's affairs.
(f) Financial Obligations. Nothing contained in this Agreement shall in any
way obligate the Trustee to pay any debt or meet any financial obligations to
any person in relation to the Project Facilities except from moneys received
under the provisions of this Agreement (including from the exercise of its
rights and remedies hereunder) other than moneys received for its own
purposes.
(g) Ownership of Bonds. The Trustee or any affiliate of the Trustee may be
or become the owner of Bonds with the same rights as if it were not Trustee.
(h) No Surety Bond. The Trustee shall not be required to furnish any bond
or surety.
(i) Requests by the Company. Upon any request by the Company to the Trustee
to take any action under this Agreement (including but not limited to any
proposed amendment pursuant to Section 1101) the Trustee shall be entitled to
receive from the Company prior to taking such action, and to rely upon, a
certificate of a Company Representative and an opinion of counsel reasonably
satisfactory to the Trustee (who may be counsel to the Company), and, if
applicable in the reasonable judgment of the Trustee, a certificate of an
accountant satisfactory to the Company (who may be an employee of the
Company), each to the effect that in the signer's opinion all conditions
precedent applicable to such action under this Agreement, if any, have been
satisfied (and, in the case of the certificate of the Company Representative,
including but not limited to the absence of any Default or Event of Default)
and such action is permitted by this Agreement.
(j) Trustee as Holder of Series F First Mortgage Bonds. So long as no
Default has occurred and is continuing, the Trustee may, but shall have no
obligation to, take any action in its capacity as the registered holder of
the Series F First Mortgage Bonds (other than the duty to exercise reasonable
care in the safekeeping thereof and the giving of notices set forth below),
unless and except to the extent the Trustee is directed in writing by the
Bondowners as provided in Section 901 of this Agreement. The Trustee shall
promptly notify the Bondowners of the receipt of and contents of any notice
it receives under the First Mortgage Bond Indenture (other than notices
solely of payments being made on the Series F First Mortgage Bonds).
(k) Authentication of Bonds. The Trustee shall act as authenticating agent
for the Bonds. The Trustee may either sign the Certificate of Authentication
in its own name or may appoint one or more agents to sign the Certificate of
Authentication on the Trustee's behalf. So long as Bonds are in the Flexible
or Weekly Mode the Trustee shall use its best efforts to have the ability to
cause the Certificate of Authentication to be executed in New York, New York
at a location satisfactory to the Paying Agent. To satisfy this requirement,
the Trustee hereby initially appoints Security Pacific National Trust Company
(New York) to act as its agent for the purpose of signing the Certificate of
Authentication and delivery of the Bonds. The Trustee shall have no
liability for the negligence or wrongful conduct (in each case whether by act
or omission) of any such agent appointed with reasonable care. The Trustee
shall have no liability if, after its best efforts, it finds that it does not
have the ability (either directly or through an agent) to cause the
Certificate of Authentication to be executed and delivered in New York, New
York on a timely basis when Bonds are in the Flexible or Weekly Mode.
Section 703. Fees and Expenses of the Trustee.
The Company shall pay to the Trustee reasonable compensation for its services
and prepay or reimburse the Trustee for its reasonable expenses and
disbursements, including attorney's fees, hereunder. The Company shall
indemnify and save the Trustee harmless against any and all (a) claims as set
forth in Section 1002, (b) costs, counsel fees, expenses or liabilities
reasonably incurred in connection with such claims, and (c) expenses and
liabilities which it may incur in the exercise of its duties hereunder and
which are not due to the bad faith, negligence, fraud or deceit of any
director, officer, employee or agent of the Trustee. Any fees, expenses,
reimbursements, or other charges which the Trustee may be entitled to receive
from the Company hereunder shall be due and payable thirty (30) days after a
request for payment has been made by the Trustee, and if not otherwise paid,
shall be a first lien upon any funds or other property then or thereafter
held hereunder by the Trustee; provided, however, that the lien of the
Trustee shall be subordinate to the lien for the benefit of the Bondowners
upon the moneys drawn under the Credit Facility, and the proceeds of any
remarketing of the Bonds and other Eligible Funds, if any, which are the
basis of the determination made by the Paying Agent of the amount to be drawn
under the Credit Facility, including, without limitation, such funds held by
the Trustee under Section 204 and Subsection 304(c). If any such moneys are
so applied, the Company shall be immediately obligated to restore the moneys
so applied. The Trustee shall not require indemnification for any payment
when due of principal, premium or interest on any Bond to be made by the
Trustee to any Bondowner, prior to the time such payment is made by the
Trustee, except and unless such payment is prohibited by or violates
applicable law or any outstanding or pending court or governmental order or
decree.
Section 704. Resignation or Removal of Trustee.
The Trustee may resign on not less than sixty (60) days' notice given in
writing to the Authority, the Bondowners, the Bank and the Company, but such
resignation shall not take effect until a successor has been appointed and
has assumed the duties hereunder. The Trustee will promptly certify to the
other parties that it has mailed such notice to all Bondowners and such
certificate shall be conclusive evidence that such notice was given in the
manner required hereby. The Trustee may be removed by written notice to the
parties from the Bondowners representing a majority in principal amount of
the Bonds Outstanding, but no such removal shall take effect until a
successor has been appointed and assumed the duties hereunder. A petition in
a court of competent jurisdiction for removal of the Trustee and the
appointment of a successor may be filed by the Bondowners representing not
less than 25% in principal amount of the Bonds Outstanding.
Section 705. Successor Trustee.
Any corporation or association which succeeds to the corporate trust business
of the Trustee as a whole, or substantially as a whole, whether by sale,
merger, consolidation or otherwise, shall become vested with all the
property, rights and powers of the Trustee hereunder, without any further act
or conveyance.
In case the Trustee resigns or is removed or becomes incapable of acting, or
becomes bankrupt or insolvent, or if a receiver, liquidator or conservator of
the Trustee or of its property is appointed, or if a public officer takes
charge or control of the Trustee, or of its property or affairs, a successor
shall be appointed (but only with the consent of the Bank, if any Bonds shall
then be entitled to the benefits of a Credit Facility, which consent shall
not be unreasonably withheld) by written notice from the Company to the
Authority. The Company shall notify the Bondowners of the appointment in
writing within twenty (20) days from the appointment. The Company will
promptly certify to the successor 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. If no appointment of a
successor is made within twenty (20) days after the giving of written notice
in accordance with Section 704 or after the occurrence of any other event
requiring or authorizing such appointment, the outgoing Trustee or any
Bondowner may apply to any court of competent jurisdiction for the
appointment of such a successor, and such court may thereupon, after such
notice, if any, as such court may deem proper, appoint such successor. Any
successor Trustee appointed under this section shall be a trust company or a
bank having the powers of a trust company that meets the requirements of the
Act, shall have a capital and surplus of not less than $50,000,000 and shall
at the time of the appointment be rated not less than Baa3/P-3 by Moody's or
otherwise be acceptable to Moody's. Any such successor Trustee shall notify
the Authority and the Company of its acceptance of the appointment and, upon
giving such notice, shall become Trustee, vested with all the property,
rights and powers of the Trustee hereunder, without any further act or
conveyance. Such successor Trustee shall execute, deliver, record and file
such instruments as are required to confirm or perfect its succession
hereunder and any predecessor Trustee shall from time to time execute,
deliver, record and file such instruments as the incumbent Trustee may
reasonably require to confirm or perfect any succession hereunder.
ARTICLE VIII: THE AUTHORITY
Section 801. Limited Obligation.
Under no circumstances shall the Authority be obligated directly or
indirectly to pay Project Costs, principal of or premium, if any, and
interest on the Bonds, or expenses of operation, maintenance and upkeep of
the Project Facilities except from Bond proceeds or from funds received under
this Agreement, exclusive of funds received hereunder by the Authority for
its own use. This Agreement does not create any debt of the State of New
Hampshire with respect to the Project Facilities other than a special
obligation of the Authority acting on behalf of the State of New Hampshire
pursuant to the Act. Nothing contained herein shall in any way obligate the
State of New Hampshire to raise any money by taxation or use other public
funds for any purpose in relation to the Project Facilities. Neither the
State of New Hampshire nor the Authority shall pay or promise to pay any debt
or meet any financial obligation to any person at any time in relation to the
Project Facilities except (i) from moneys received or to be received under
the provisions hereof or derived from the exercise of the Authority's right
hereunder, other than moneys received for its own purposes, or (ii) as may be
required by law other than the provisions of the Act. Nothing contained in
this Agreement shall be construed to require or authorize the Authority to
operate the Project Facilities itself or to conduct any business enterprise
in connection therewith.
Section 802. Rights and Duties of the Authority.
(a) Remedies of the Authority. Notwithstanding any contrary provision in
this Agreement, the Authority shall have the right to take any action or make
any decision with respect to proceedings for indemnity against the liability
of the Authority and for collection or reimbursement from sources other than
moneys or property held under this Agreement or subject to the lien hereof.
The Authority may enforce its rights under this Agreement which have not been
assigned to the Trustee by legal proceedings for the specific performance of
any obligation contained herein or for the enforcement of any other
appropriate legal or equitable remedy, and may recover damages caused by any
breach by the Company of its obligations to the Authority under this
Agreement, including court costs, reasonable attorney's fees and other costs
and expenses incurred in enforcing such obligations.
(b) Limitations on Actions. The Authority shall not be required to monitor
the financial condition of the Company or the physical condition of the
Project Facilities and, unless otherwise expressly provided, shall not have
any responsibility with respect to notices, certificates or other documents
filed with it hereunder. The Authority shall not be required to take notice
of any breach or default except when given notice thereof by the Trustee.
The Authority shall not be responsible for the payment of any rebate to the
United States under IRC <section> 148(f). The Authority shall not be required
to
take any action unless indemnity reasonably satisfactory to it is furnished
for expenses or liability to be incurred therein (other than the giving of
notice). The Authority, upon written request of the Bondowners, the Bank or
the Trustee, and upon receipt of reasonable indemnity for expenses or
liability, shall cooperate to the extent reasonably necessary to enable the
Trustee to exercise any power granted to the Trustee by this Agreement. The
Authority shall be entitled to reimbursement pursuant to Section 803 to the
extent that it acts without previously obtaining full indemnity.
(c) Responsibility. The Authority shall be entitled to the advice of
counsel (who may be counsel for any party, for the Bank, the Paying Agent or
the Remarketing Agent, or for any Bondowner) and shall be wholly protected as
to any action taken or omitted to be taken in good faith in reliance on such
advice. The Authority may rely conclusively on any notice, certificate or
other document furnished to it under this Agreement and reasonably believed
by it to be genuine. The Authority shall not be liable for any action taken
by it in good faith and reasonably believed by it to be within the discretion
or power conferred upon it, or in good faith omitted to be taken by it and
reasonably believed to be beyond such discretion or power, or taken by it
pursuant to any direction or instruction by which it is governed under this
Agreement or omitted to be taken by it by reason of the lack of direction or
instruction required for such action under this Agreement, or be responsible
for the consequences of any error of judgment reasonably made by it. When
any payment, consent or other action by the Authority is called for by this
Agreement, the Authority may defer such action pending such investigation or
inquiry or receipt of such evidence, if any, as it may require in support
thereof. A permissive right or power to act shall not be construed as a
requirement to act, and no delay in the exercise of a right or power shall
affect the subsequent exercise thereof. The Authority shall in no event be
liable for the application or misapplication of funds, or for other acts or
defaults by any person or entity except by its own directors, officers and
employees. No recourse shall be had by the Company, the Trustee or any
Bondowner for any claim based on this Agreement or the Bonds against any
director, officer, employee or agent of the Authority unless such claim is
based upon the bad faith, fraud or deceit of such person. No covenant,
obligation or agreement of the Authority contained in this Agreement shall be
deemed to be a covenant, obligation or agreement of any present or future
director, officer, employee or agent of the Authority in his individual
capacity, and no person executing a Bond shall be liable personally thereon
or be subject to any personal liability or accountability by reason of the
issuance thereof.
Section 803. Expenses of the Authority.
The Company shall pay when due the Authority's Service Charge and shall
prepay or reimburse the Authority within thirty (30) days after notice for
all expenses (including reasonable attorney's fees) incurred by the Authority
in connection with the issuance and carrying of the Bonds and all expenses
reasonably incurred or advances reasonably made in the exercise of the
Authority's rights or their performance of its obligations hereunder. Any
fees, expenses, reimbursements or other charges which the Authority may be
entitled to receive from the Company hereunder, if not paid when due, shall
bear interest at 15% per annum.
Section 804. Matters to be Considered by Authority.
In approving, concurring in or consenting to action or in exercising any
discretion or in making any determination under this Agreement, the Authority
may consider the interests of the public, which shall include the anticipated
effect of any transaction on tax revenues and employment, as well as the
interests of the other parties hereto and the Bondowners; provided, however,
nothing herein shall be construed as conferring on any person other than the
other parties and the Bondowners any right to notice, hearing or
participation in the Authority's consideration, and nothing in this section
shall be construed as conferring on any of them any right additional to those
conferred elsewhere herein. Subject to the foregoing, the Authority will not
unreasonably withhold any approval or consent to be given by it hereunder.
Section 805. Actions by Authority.
Any action which may be taken by the Authority hereunder shall be deemed
sufficiently taken if taken on its behalf by its Chairman, its Vice Chairman
or its Executive Director or by any other director, officer or agent whom it
may designate from time to time.
ARTICLE IX: THE BONDOWNERS
Section 901. Action by Bondowners.
Subject to Subsections 601(b), 602(a) and Section 1101 (as to the waivers and
consents granted thereby), Bondowners representing a majority in principal
amount of the Bonds Outstanding shall have the right at any time, by written
notice to the Trustee and upon offering it indemnity as provided in
Subsection 702(e), to direct the Trustee (i) in the granting of any consents,
waivers or similar actions pertaining to the Bonds, (ii) in the time, method
and place of conducting all proceedings, (iii) in the exercise of any rights
or remedies available to the Trustee hereunder, or (iv) in the exercise of
any other right or power conferred upon the Trustee for the protection of the
Bondowners, provided that such direction shall be in accordance with the
provisions of law and this Agreement, and the Trustee may take any other
action determined proper by the Trustee which is not inconsistent with such
direction.
Except with respect to the matters provided below, Bondowners representing a
majority in principal amount of the Bonds Outstanding shall have the right,
at any time, by written notice to the Trustee and the offering of indemnity
as provided in Subsection 702(e), to direct the Trustee, as holder of all of
the Series F First Mortgage Bonds, to exercise the rights available to it as
holder of such bonds under the First Mortgage Bond Indenture, including,
without limitation, as to rendering notice to the First Mortgage Bond Trustee
of the occurrence of a default thereunder, the institution of any suit,
action or proceeding to enforce payments on the Series F First Mortgage Bonds
which were not paid when due or other proceeding in respect of the First
Mortgage Bond Indenture which the Trustee, as holder of the Series F First
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 Series F First Mortgage Bonds, subject however to compliance
with the applicable provisions of the First Mortgage Bond Indenture.
Where the First Mortgage Bond Trustee is required or permitted to take any
action under the First Mortgage Bond Indenture upon the direction,
authorization, consent, notice or request of the holders of a specified
percentage of principal amount of bonds outstanding thereunder or of
outstanding bonds thereunder which would be adversely affected by such
action, including with respect to acceleration of the maturity of such bonds
under Section 10.1 of the First Mortgage Bond Indenture, the time, method and
place of proceedings and waivers of events of default, as provided in Section
10.12 of the First Mortgage Bond Indenture and amendments of the First
Mortgage Bond Indenture under Article 15 thereof, each Bondowner shall be
deemed the holder of its pro-rata portion of the principal amount of Series F
First Mortgage Bonds and shall have the right to direct the Trustee whether
or not to render such direction, authorization, consent, notice or request
under the First Mortgage Bond Indenture in respect of such Bondowner's
pro-rata portion, whereupon the Trustee shall notify the First Mortgage Bond
Trustee of the action to be taken in respect of the applicable principal
amount of Series F First Mortgage Bonds.
Any request, authorization, direction, notice, consent, waiver or other
action provided by this Agreement to be given or taken by Bondowners may be
contained in and evidenced by one or more writings of substantially the same
tenor signed by the Bondowners of the requisite percentage of principal
amount of Bonds Outstanding or their attorneys duly appointed in writing.
Proof of the execution of any such instrument, or of any instrument
appointing any such attorney, shall be sufficient for any purpose of this
Agreement (except as otherwise herein expressly provided) if made in the
following manner, but the Authority or the Trustee may nevertheless in its
discretion require further or other proof in cases where it deems the same
desirable:
The fact and date of the execution by any Bondowner or his or her attorney of
such instrument may be proved by the certificate, which need not be
acknowledged or verified, of an officer of a bank or trust company
satisfactory to the Authority or to the Trustee or of any notary public or
other officer authorized to take acknowledgments of the deeds to be recorded
in the state in which he purports to act, that the person signing such
request or other instrument acknowledged to him or her the execution thereof,
or by an affidavit of a witness of such execution, duly sworn to before such
notary public or other officer. The authority of the person or persons
executing any such instrument on behalf of a corporate Bondowner may be
established without further proof if such instrument is signed by a person
purporting to be the president or a vice president of such corporation with a
corporate seal affixed and attested by a person purporting to be its clerk or
secretary or an assistant clerk or assistant secretary.
The ownership of Bonds and the amount, numbers and other identification, and
date of holding the same shall be proved by the registry books for the Bonds
maintained by the Trustee.
Any request, consent or vote of the owner of any Bond shall bind all future
owners of such Bond. Bonds owned or held by or for the account of the
Authority, the Company, or any related person to the Company within the
meaning of Section 147(a) of the IRC shall not be deemed Outstanding Bonds
for the purpose of any consent or other action by Bondowners, except that for
such purposes Pledged Bonds shall be treated as Outstanding and shall be
deemed to be owned by the Bank. So long as no Default exists under Paragraph
601(a)(i) with respect to any Bonds supported by a Credit Facility, the Bank
and not the Bondowner shall be treated as the owner of all Bonds entitled to
the benefits of such Credit Facility for the purpose of any consent or other
action by Bondowners.
ARTICLE X: THE COMPANY
Section 1001. Existence and Good Standing; Merger; Consolidation.
The Company will maintain its corporate existence, qualification to do
business and good standing under the laws of the State of New Hampshire and
will maintain itself as a foreign corporation duly qualified to do business
and in good standing, where applicable, in each jurisdiction in which the
failure to so qualify would have a material adverse effect upon its business
or properties. The Company shall not merge or consolidate with or sell all
or substantially all of its assets to another entity, except that the Company
may transfer the Station in connection with a transfer of the Project
Facilities pursuant to Section 505 and the Company may so merge or
consolidate with or sell all or substantially all of its assets to another
corporation if (i) the surviving or transferee corporation is qualified to do
business in New Hampshire, (ii) the surviving or transferee corporation (if
not the Company) has assumed in writing all of the Company's obligations
hereunder and under the Series F First Mortgage Bonds, and (iii) upon such
assumption there will not be a Default hereunder or an event of default under
the First Mortgage Bond Indenture (disregarding any required passage of time
or giving of notice thereunder).
Section 1002. Indemnification by the Company.
The Company, regardless of any agreement to maintain insurance, will
indemnify the Authority and the Trustee against (a) any and all claims by any
person related to the participation of the Authority or the Trustee in the
transactions contemplated by this Agreement, including without limitation
claims arising out of any condition of the Project Facilities or Station or
the construction, use, occupancy or management thereof; any accident, injury
or damage to any person occurring in or about the Station; any breach by the
Company of its obligations under this Agreement; any act or omission of the
Company or any of its agents, contractors, servants, employees or licensees;
or the offering, issuance, sale or any resale of the Bonds to the extent
permitted by law, and (b) all costs, counsel fees, expenses or liabilities
reasonably incurred in connection with any such claim or any action or
proceeding brought thereon. In case any action or proceeding is brought
against the Authority or the Trustee by reason of any such claim, the Company
will defend the same at its expense upon notice from the Authority or the
Trustee, and the Authority or the Trustee, as the case may be, will cooperate
with the Company, at the expense of the Company, in connection therewith.
ARTICLE XI: MISCELLANEOUS
Section 1101. Amendments.
(a) Without Bondowners' Consent. The parties may from time to time, without
the consent of any Bondowner, amend this Agreement in order to (i) cure any
ambiguity, defect or omission in this Agreement that does not materially
adversely affect the interests of the Bondowners, (ii) grant additional
rights or security to the Trustee for the benefit of the Bondowners, (iii)
add additional Events of Default as shall not be inconsistent with the
provisions of this Agreement and which shall not materially adversely affect
the interests of the Bondowners, (iv) qualify this Agreement under the Trust
Indenture Act of 1939, as amended, or corresponding provisions of federal
laws from time to time in effect, (v) provide for the establishment of a book
entry system of registration for the Bonds through a securities depository,
(vi) effective upon any Conversion Date to a new Mode, make any amendment
affecting only the Bonds being converted, (vii) add provisions relating to
the partial conversion of Bonds to a new Mode or the issuance of Tax-Exempt
Refunding Bonds which do not impair the security for the outstanding Bonds,
or (viii) make such other provisions in regard to matters or questions
arising under this Agreement as shall not be inconsistent with the provisions
of this Agreement and which shall not materially adversely affect the
interests of the Bondowners.
(b) With Bondowners' Consent. Except as set forth in Subsection 1101(a),
the parties may from time to time amend this Agreement with the consent of
the owners of more than 50% in aggregate principal amount of the Bonds
Outstanding; provided, that no amendment shall be made which adversely
affects the rights of some but less than all the Bonds Outstanding without
the consent of the owners of more than 50% in aggregate principal amount of
the Bonds so affected; and provided further, that no amendment of this
Agreement shall be effective to (i) change the principal, premium or interest
on any Bonds, (ii) change the interest payment dates, maturity dates or
purchase or redemption provisions of any Bonds, (iii) reduce the percentage
of Bondowners whose consent is required for the amendment of this Agreement
or (iv) modify the lien upon or pledge of the payments and other revenues
assigned and pledged hereunder (including any Credit Facility), without the
consent, in each case, of the owner of each Bond which would be affected by
the action proposed to be taken.
When the Trustee determines that the requisite number of consents have been
obtained for an amendment which requires Bondowner consents, it shall, within
ninety (90) days, file a certificate to that effect in its records and mail
notice to the Bondowners. No action or proceeding to invalidate the
amendment shall be instituted or maintained unless it is commenced within
sixty (60) days after such mailing. The Trustee will promptly certify to the
Authority 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. A consent to an amendment may be revoked by a notice
given by the Bondowner and received by the Trustee prior to the Trustee's
certification that the requisite consents have been obtained.
(c) General. Any amendment of this Agreement shall be accompanied by an
opinion of Bond Counsel reasonably satisfactory to the Authority and the
Trustee to the effect that the amendment is permitted by this Agreement and,
if there are any Tax-Exempt Refunding Bonds outstanding, that such amendment
will not adversely affect the exclusion from gross income for federal income
tax purposes of interest on such Tax-Exempt Refunding Bonds. So long as a
Credit Facility supports any of the Bonds no amendment to this Agreement
shall be made without the consent of the Bank.
Notice of any amendment of this Agreement, or any material change to the
Reimbursement Agreement or any remarketing agreement entered into by the
Remarketing Agent and the Company shall be sent by the Company to Moody's.
Section 1102. Notices.
Unless otherwise expressly provided, all notices to the Authority, the
Trustee, the Paying Agent and the Company shall be in writing and shall be
deemed sufficiently given if sent by registered or certified mail, postage
prepaid, or delivered during a Business Day as follows: (a) to the Authority
at its office at 14 Dixon Avenue, Suite 101, Concord, New Hampshire 03301-
4954, attention of Executive Director, (b) to the Trustee at P.O. Box 778,
Boston, Massachusetts 02102 (if by mail) or Two International Place - 4th
Floor, Boston, Massachusetts 02110 (if by courier), in each case attention of
Corporate Trust Department, (c) to the Paying Agent at 2 Rector Street, New
York, New York 10006, attention of Corporate Trust Division, (d) to the
Company at 1000 Elm Street, Manchester, New Hampshire 03105, attention of
Treasurer with a copy to Northeast Utilities Service Company at 107 Selden
Street, Berlin, Connecticut 06037, attention of the Assistant Treasurer, (e)
to Moody's at 99 Church Street, New York, New York 10007, and (f) to S&P at
25 Broadway, New York, New York 10004, or, as to all of the foregoing, to
such other address as the addressee shall have indicated by prior written
notice to the one giving notice. All notices to a Bondowner shall be in
writing and shall be deemed sufficiently given if sent by first class mail,
postage prepaid, to the Bondowner at the address shown on the registration
books for the Bonds maintained by the Paying Agent. A Bondowner may direct
the Paying Agent to change its address as shown on the registration books by
written notice to the Paying Agent. All notices to Bondowners shall identify
the Bonds by name, CUSIP number, date of original issuance, maturity date,
and such other descriptive information as may be needed to identify
accurately the Bonds.
All notices sent to Bondowners by the 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 shall be at the sole
discretion of the Trustee or the Paying Agent, as the case may be.
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 1103. Time.
All references to times of day in this Agreement are references to New York
City time.
Section 1104. Agreement Not for the Benefit of Other Parties.
This Agreement is not intended for the benefit of and shall not be construed
to create rights in parties other than the Company, the Authority, the
Trustee and the Bondowners.
Section 1105. Severability.
In the event that any provision of this Agreement shall be held to be invalid
in any circumstance, such invalidity shall not affect any other provisions or
circumstances.
Section 1106. Counterparts.
This Agreement may be executed and delivered in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts
together shall constitute one and the same instrument.
Section 1107. Captions.
The captions and table of contents of this Agreement are for convenience only
and shall not affect the construction hereof.
Section 1108. Governing Law.
This instrument shall be governed by the laws of State of New Hampshire.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Business Finance Authority of the State of New
Hampshire has caused this Agreement to be signed and its official seal to be
impressed hereon by its Executive Director; Public Service Company of New
Hampshire has caused this Agreement to be signed and its corporate seal to be
impressed hereon by an authorized officer; and State Street Bank and Trust
Company, as Trustee, has caused this Agreement to be signed and its corporate
seal to be impressed hereon by an authorized officer.
BUSINESS FINANCE AUTHORITY OF THE
STATE OF NEW HAMPSHIRE
(Seal)
By:
Jack Donovan
Executive Director
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
(Seal)
By:
Randy A. Shoop
Assistant Treasurer - Finance
STATE STREET BANK AND TRUST COMPANY,
as Trustee
(Seal)
By:
Name:
Title:
The undersigned hereby consents
to this Agreement
BARCLAYS BANK PLC, NEW YORK BRANCH
By:
Name:
Title:
EXHIBIT A
THE PROJECT FACILITIES
The Project Facilities to be financed by the Bonds consist of certain air or
water pollution control and sewage or solid waste disposal facilities at the
Seabrook Station Plant, Unit No. 1, in which Public Service Company of New
Hampshire has a 35.56942 percent ownership interest. The Project Facilities
include the following:
Waste Water Run-Off System
The Waste Water Run-Off System collects and treats yard area drainage to
remove pollutants. The System includes catch basins, yard waste water drain
pipes, and a site settling pond.
Chemical and Oily Waste Treatment System
The Chemical and Oily Waste Treatment System collects, stores, processes,
treats and disposes of non-radioactive chemical and oily wastes. The wastes
result from construction, start-up and operation of the Seabrook Station
Plant. The wastes are collected and treated to remove pollutants. The
System includes tanks, an acid and caustic handling system, waste lagoons,
system flush piping, and oil separator, curbs and drains, pipes, valves,
transfer pumps, controls and instrumentation and related support equipment.
Sanitary Waste System
Sanitary waste is collected, treated and disposed of by the Sanitary Waste
System. The System includes sanitary drains, sumps and pumps, a holding
tank, a pump station, a sewage treatment plant, piping, transfer pumps and
related support equipment.
Radioactive Gaseous Waste System
The Radioactive Gaseous Waste System collects, processes, stores and treats
radioactive gaseous waste produced during normal operations. The System
includes the following components: a main gas collection header, a waste gas
condenser with associated primary cooling water components, gas chiller
compressor units, iodine guard beds, a regeneration subsystem for dryers,
waste gas dryers, a waste gas compressor package, ambient carbon delay beds,
particulate filters, an after cooler, a hydrogen surge tank, a waste gas
radiation monitor, an equipment vent system, a hydrogenated vent header, and
associated piping, valves, controls and instrumentation.
Exhaust Filtration System
The Exhaust Filtration System collects, filters and discharges exhaust
containing low level radioactive contamination resulting from normal
operations. The System includes exhaust filters, exhaust fans, exhaust
ducts, plenums, dampers, piping, flow control valves, and controls and
instrumentation.
Liquid Radwaste System
The Liquid Radwaste System collects, processes, treats, recycles and disposes
of low level radioactive liquid waste resulting from normal operations. The
System includes tanks, filters, strainers, pumps, a reboiler, an evaporator,
an evaporator distillate condenser, an evaporator distillate accumulator, an
evaporator distillate cooler, an evaporator bottoms cooler, a waste
demineralizer and filter, equipment drains, chemical drains, a radiation
monitor, and associated controls and instrumentation.
Boron Recycle System
The Boron Recycle System collects, stores, treats, recycles and disposes of
reactor coolant letdown during normal operations. This System is required to
maintain reactor coolant letdown in accordance with federal pollution control
standards as to radioactivity. The System includes the following components:
Drain tanks, a degasifier, a preheater, a degasifier regenerative heat
exchanger, trim coolers, a degasifier prefilter, cesium removal ion
exchangers, recovery filters, waste storage tanks, recovery evaporator
packages, recovery test tanks, recovery demineralizers, recovery
demineralizer filters, a letdown rehead heat exchanger, a letdown chiller
heat exchanger, a letdown moderating heat exchanger, a chiller surge tank, a
chiller, thermal regenerative demineralizers, radiation monitors, associated
pumps, piping and valves, and controls and instrumentation.
Steam Generator Blowdown Treatment System
The Steam Generator Blowdown Treatment System collects, processes, stores and
treats steam generator blowdown for discharge or recycle during normal
operation. This is necessary in compliance with pollution control
requirements which limit the discharge of untreated steam generator blowdown.
The System includes the following components: Blowdown evaporators, an
evaporator distillate condenser, an evaporator condensate accumulator, an
evaporator distillate pump, an evaporator condensate cooler, an evaporator
bottoms pump, an evaporator bottoms cooler, blowdown demineralizers, acid and
caustic systems, blowdown heat exchangers, and associated piping, controls
and instrumentation.
Solid Radwaste System
The Solid Radwaste System collects, stores, packages and prepares solid
radioactive waste for disposal. Radioactive solid wastes processed by this
System include spent demineralizer resins, expended filter cartridges,
evaporator concentrates as well as dry active waste consisting of rags,
clothing, paper and other trash. The System includes the following
components: A spent resin storage tank, an evaporator bottoms storage tank,
associated collection piping, pumps and valves, a dry waste compactor, a
filter transfer vehicle, and associated controls and instrumentation.
Waste Processing Building
The Waste Processing Building is a reinforced concrete structure which houses
equipment used for exempt facilities. The purpose of this building is to
house the air and water pollution control facilities and the solid waste
disposal facilities.
Auxiliary Building
The Auxiliary Building is a reinforced concrete structure which houses both
pollution control and production related equipment. Pollution control
facilities located in the Auxiliary Building include portions of the liquid
radwaste and gaseous radwaste systems. The cost of the Auxiliary Building
and general support equipment has been allocated to the exempt facilities
according to the ratio of space used for qualified equipment to the total
space used in the building for all equipment.
Spent Nuclear Fuel Facility
The Spent Nuclear Fuel Facility is located in a separate building with
enclosed fuel handling equipment for production functions and for spent fuel
storage. The fuel handling facility includes a Seismic Category 1 structure
containing a spent fuel pool with racks, spent fuel cooling and purification
systems, a new fuel storage area, a spent fuel cask loading pit, and a cask
washdown area. Also included are cranes and equipment supporting the fuel
handling operations as well as the transfer canal leading the reactor
containment. The cost of the Spent Nuclear Fuel Facility is determined
through an allocation of the cost of the overall fuel facility between spent
fuel facilities and production facilities.
Circulating Water System
The Circulating Water System will provide cooling water to the main
condensers of Seabrook Station. The Circulating Water System is a
once-through system using sea water from the Atlantic Ocean to remove the
heat of condensation from the steam cycle and to dispose of that heat in an
environmentally acceptable manner. The points of inlet and discharge of the
cooling water are offshore, east of Hampton Beach, New Hampshire.
The System includes the following structures: Two 19-foot inside diameter
tunnels, lined with reinforced concrete, which connect the plant with the
offshore inlet and outlet structures; a pumphouse, located at the plant site
which encloses traveling screens and pumps for the circulating water and
service water systems; and a piping system at the plant site, for the most
part underground, interconnecting the tunnels, the pumphouse, and the
condensers.
The tunnels extend through the underlying rock in an east-west direction at
an elevation between 200 and 250 feet below sea level. They end at the plant
site with two 19-foot diameter vertical shafts, which reach above grade
transforming at the top into two transition boxes open to the atmosphere. At
the offshore end, the intake tunnel terminates with three 9-foot inside
diameter vertical shafts connecting to three submerged inlet heads. The
discharge tunnel terminates with eleven 5-foot inside diameter vertical
shafts, each connecting to a submerged bifurcated diffuser head.
Service Water Cooling Tower System
The Service Water Cooling Tower System disposes of waste heat from the plant
service water system. Waste heat from equipment throughout the plant is
collected by the service water cooling system piping. The service water
transfers waste heat to the service water cooling tower, which discharges
heat to the atmosphere, thereby controlling discharge of waste heat to the
natural water resources adjacent to the station. The Service Water Cooling
Tower System components include the service water cooling tower, service
water piping, pumps and associated electrical service, mechanical equipment,
controls and instrumentation.
Screen Wash System
The Screen Wash System collects, stores and disposes of debris removed from
the circulating and service water systems. This debris is solid waste with
no market or other value. After removal, the debris is transferred to a
landfill for final disposal. The components of the Screen Wash System
include the screen wash pumps, trash trough, trash container, piping and
valves, associated electrical service, mechanical equipment, controls and
instrumentation.
EXHIBIT B
ASSUMPTION AGREEMENT
This Assumption Agreement (the "Assumption Agreement") is entered into as of
, by The Industrial Development Authority of the State of
New Hampshire (with its successors, the "Authority"), a body corporate and
politic created under New Hampshire Revised Statutes Annotated 162-A:3;
Public Service Company of New Hampshire (with its successors, the "Company"),
a New Hampshire corporation; (with its successors,
the "Seabrook Transferee"), a corporation; and State Street Bank
and Trust Company, a Massachusetts trust company, as Trustee (with its
successors, the "Trustee") under a Series D Loan and Trust Agreement dated as
of May 1, 1991 (the "LTA") among the Authority, the Company and the Trustee,
which secures the Authority's $114,500,000 in aggregate principal amount
Pollution Control Revenue Bonds (Public Service Company of New Hampshire
Project - 1991 Taxable Series D) and any Tax-Exempt Refunding Bonds issued
thereunder (the "Bonds"). Capitalized terms not otherwise defined herein
shall have the meaning given them in the LTA.
This Assumption Agreement is entered into pursuant to Section 505 of the LTA
in connection with the transfer by the Company of its interest in the Station
(including the Project Facilities) to the Seabrook Transferee. The purpose
of this Assumption Agreement is to ensure the exclusion of interest on the
Tax-Exempt Refunding Bonds from gross income of the owners thereof for
federal income tax purposes and to satisfy certain requirements of the
Authority with respect to facilities financed under the Act. This Assumption
Agreement shall remain in effect until no Bonds remain Outstanding.
In consideration of the mutual promises contained in this Assumption
Agreement, the rights conferred and the obligations assumed hereby, and other
good and valuable consideration, the receipt of which is hereby acknowledged,
each of the Company, the Seabrook Transferee, the Authority and the Trustee
agree, assign, covenant, grant, pledge, promise, represent and warrant as set
forth herein for their own benefit and for the benefit of the Bondowners.
Section 1. Representations and Covenants of the Company. The Company
represents, warrants, covenants and agrees as follows:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Hampshire; is duly qualified
to do business and in good standing in each jurisdiction in which the failure
so to qualify would have a material adverse affect on its business or
properties; and has full corporate power to enter into this Assumption
Agreement;
(b) This Assumption Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable against the Company as provided herein and in the
LTA, subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights and to the exercise of judicial
discretion in appropriate cases.
(c) No Default or Event of Default exists, or immediately after the Seabrook
Transfer, will exist under the LTA.
(d) The Company and the Seabrook Transferee are members of the same
affiliated group within the meaning of IRC <section>1504.
(e) The Seabrook Transfer is in all material respects as contemplated by the
Third Amended Joint Plan of Reorganization dated December 28, 1989 of the
Company as confirmed by an order of the United States Bankruptcy Court for
the District of New Hampshire (Case No. BK88-00043) on April 20, 1990.
(f) The Company has obtained all regulatory approvals necessary to enter
into this Assumption Agreement and to consummate the Seabrook Transfer and
all such approvals have become final.
(g) The Company's execution and delivery of this Assumption Agreement and
the consummation of the Seabrook Transfer do not violate or constitute a
default under the Company's charter or by-laws, any applicable law, any order
or decree of any court or governmental authority having jurisdiction over the
Company, or any agreement or instrument binding on the Company or its
properties.
Section 2. Representations and Covenants of the Seabrook Transferee. The
Seabrook Transferee represents, warrants, covenants and agrees as follows:
(a) The Seabrook Transferee is a corporation duly organized, validly
existing and in good standing under the laws of ; is duly
qualified to do business and in good standing in the State of New Hampshire
and in each jurisdiction in which the failure so to qualify would have a
material adverse affect on its business or properties; and has full corporate
power to enter into this Assumption Agreement.
(b) This Assumption Agreement has been duly authorized, executed and
delivered by the Seabrook Transferee and constitutes a valid and binding
obligation of the Seabrook Transferee enforceable against the Seabrook
Transferee as provided herein, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
and to the exercise of judicial discretion in appropriate cases.
(c) The Seabrook Transferee and the Company are members of the same
affiliated group within the meaning of IRC <section>1504.
(d) The Seabrook Transfer is in all material respects as contemplated by the
Third Amended Joint Plan of Reorganization dated December 28, 1989 of the
Company as confirmed by an order of the United States Bankruptcy Court for
the District of New Hampshire (Case No. BK88-00043) on April 20, 1990.
(e) The Seabrook Transferee has obtained all regulatory approvals necessary
to enter into this Assumption Agreement and to consummate the Seabrook
Transfer and all such approvals have become final.
(f) The Seabrook Transferee's execution and delivery of this Assumption
Agreement and the consummation of the Seabrook Transfer do not violate or
constitute a default under the Seabrook Transferee's charter or by-laws, any
applicable law, any order or decree of any court or governmental authority
having jurisdiction over the Seabrook Transferee, or any agreement or
instrument binding on the Seabrook Transferee or its properties.
(g) The Seabrook Transferee will maintain its corporate existence and its
qualification to do business and good standing under the laws of the State of
New Hampshire and will maintain itself as a foreign corporation duly
qualified to do business and in good standing, where applicable, in each
jurisdiction in which the failure to so qualify would have a material adverse
effect upon its business or properties. The Seabrook Transferee shall not
merge or consolidate with or sell all or substantially all of its assets to
another entity, except that the Seabrook Transferee may so merge or
consolidate with or sell all or substantially all of its assets to another
corporation if (i) the surviving or transferee corporation is qualified to do
business in New Hampshire, and (ii) the surviving or transferee corporation
(if not the Seabrook Transferee) has assumed in writing all of the Seabrook
Transferee's obligations hereunder.
Section 3. Use of the Project. (a) Notwithstanding any provision herein or
in the LTA to the contrary, the Seabrook Transferee will not operate the
Project Facilities in any manner, and will not take or omit any action or
permit any action to be taken or omitted with the result that interest on any
Tax-Exempt Refunding Bonds is included in the gross income of the owners
thereof for federal income tax purposes. The Seabrook Transferee's use of
the Project Facilities (or facilities replacing the same) shall be in
furtherance of the purpose of air or water pollution control or sewage or
solid waste disposal and in compliance with the Act.
(b) Notwithstanding any provision herein or in the LTA to the contrary, the
Seabrook Transferee shall not permit the Project Facilities to fail to
qualify as (1) "industrial facilities" under the Act, (2) a facility
described in Section 1312(a) of the Tax Reform Act of 1986, or (3) "sewage or
solid waste disposal facilities" or "air or water pollution control
facilities" within the meaning of Section 103(b)(4)(E) or (F) of the 1954
Code; provided, however, that if the Company waives the application of
clauses (b) and (c) of Section 502 of the LTA as provided in said Section
502, clauses (2) and (3) of this Subsection 3(b) shall likewise be waived.
The Seabrook Transferee acknowledges that it is fully familiar with the
physical condition of the Project Facilities and that it is not relying on
any representation of any kind by the Authority or the Trustee concerning the
nature or condition thereof. Neither the Authority nor the Trustee shall be
liable to the Seabrook Transferee or any other person for any latent or
patent defect in the Project Facilities.
(c) In the acquisition, maintenance, improvement and operation of the
Project Facilities, the Seabrook Transferee has and will comply in all
material respects with all applicable building, subdivision, zoning and land
use, environmental protection, sanitary and safety and other laws, rules and
regulations and will not permit any nuisance thereat and will to the extent
of its ownership and control, permit no nuisance to be committed thereat by
others while the Seabrook Transferee is, or is entitled to be, in possession
thereof. It shall not be a breach of this section if the Seabrook Transferee
fails to comply with such laws, rules and regulations during any period in
which the Seabrook Transferee shall in good faith be diligently contesting
the validity thereof.
(d) The Seabrook Transferee shall pay in a timely manner all costs of
maintaining and operating the Project Facilities, including without
limitation all taxes, excises and other governmental charges lawfully levied
thereon or with respect to its interests therein or use thereof to the extent
of the Seabrook Transferee's interest therein. It shall not be a breach of
this section if the Seabrook Transferee fails to pay any such costs, taxes or
charges during any period in which the Seabrook Transferee shall in good
faith be contesting the validity or amount thereof and no foreclosure
proceedings have been commenced, unless the procedures applicable to such
contest require payment thereof and proceedings for their refund or
abatement.
(e) The Seabrook Transferee shall not sell, lease, transfer or otherwise
dispose of the Project Facilities (other than the grant of a mortgage
pursuant to a financing transaction) unless (i) it obtains the consent of the
Authority, which consent shall not be unreasonably withheld, provided,
however, that no such consent shall be required if such transaction has been
approved by or consented to by the New Hampshire Public Utilities Commission;
and (ii) if there are any Outstanding Tax-Exempt Refunding Bonds, it obtains
an opinion of Bond Counsel addressed to and reasonably satisfactory to the
Trustee and the Authority that such sale, lease, transfer or other
disposition will not affect the exclusion of the interest on any Outstanding
Tax-Exempt Refunding Bonds from the gross income of the owners thereof for
federal income tax purposes.
The Seabrook Transferee shall not make any material change in the purposes
for which the Project Facilities are used without the consent of the
Authority, which consent shall not be unreasonably withheld. The Seabrook
Transferee at its own expense may alter, remodel or improve the Project
Facilities and construct other facilities at the site of the Project
Facilities, provided such action shall not result in any substantial change
in the Project Facilities or the character of the activities conducted by the
Seabrook Transferee at the Project Facilities site without the consent of the
Authority, which consent shall not be unreasonably withheld.
(f) The Authority and the Trustee and their respective duly authorized
agents shall have the right at all reasonable times and upon the furnishing
of reasonable notice under the circumstances to examine the books and records
of the Seabrook Transferee relating to the Project Facilities.
(g) The undertakings of the Seabrook Transferee contained in Subsections
3(b), (c), (d) and (e) are limited to those consistent with the Seabrook
Transferee's undivided percentage interest in the facilities of which the
Project Facilities are a part.
Section 4. Indemnification by the Seabrook Transferee. The Seabrook
Transferee, regardless of any agreement to maintain insurance, will indemnify
the Authority and the Trustee against (a) any and all claims by any person
related to the participation of the Authority or the Trustee in the financing
of the Project Facilities, including without limitation claims arising out of
any condition of the Project Facilities or Station or the construction, use,
occupancy or management thereof; any accident, injury or damage to any person
occurring in or about the Station; any breach by the Seabrook Transferee of
its obligations under this Assumption Agreement; any act or omission of the
Seabrook Transferee or any of its agents, contractors, servants, employees or
licensees; and (b) all costs, counsel fees, expenses or liabilities
reasonably incurred in connection with any such claim or any action or
proceeding brought thereon. In case any action or proceeding is brought
against the Authority or the Trustee by reason of any such claim, the
Seabrook Transferee will defend the same at its expense upon notice from the
Authority or the Trustee, and the Authority or the Trustee, as the case may
be, will cooperate with the Seabrook Transferee, at the expense of the
Seabrook Transferee, in connection therewith.
Section 5. Failure to Comply. The Seabrook Transferee shall immediately
notify the Authority, the Company and the Trustee of any failure to observe
or perform any of its covenants or agreements contained herein, and
thereafter shall keep the Authority, the Company and the Trustee informed
with respect to any curative action instituted by the Seabrook Transferee in
order to cure such failure.
Section 6. Amendment. This Assumption Agreement may be amended by the
parties hereto, provided, however, that in connection with any amendment the
Company or the Seabrook Transferee shall furnish the Authority and the
Trustee with an opinion of Bond Counsel stating that the amendment will not
impair the exclusion of interest on the Bonds from gross income of the owners
thereof for federal income tax purposes.
Section 7. Agreement Not for the Benefit of Other Parties. This Assumption
Agreement is not intended for the benefit of and shall not be construed to
create rights in parties other than the Authority, the Company, the Seabrook
Transferee, the Trustee and the Bondowners.
Section 8. Severability. In the event that any provision of this Assumption
Agreement shall be held to be invalid in any circumstance, such invalidity
shall not affect any other provisions or circumstances.
Section 9. Counterparts. This Assumption Agreement may be executed and
delivered in any number of counterparts, each of which shall be deemed to be
an original; but such counterparts together shall constitute one and the same
instrument.
Section 10. Governing Law. This Assumption Agreement shall be governed by
the laws of the State of New Hampshire.
IN WITNESS WHEREOF, The Industrial Development Authority of the State of New
Hampshire has caused this Assumption Agreement to be signed by one of its
members and directors duly designated and authorized for the purpose and its
official seal to be impressed hereon and attested by its Executive Director;
Public Service Company of New Hampshire has caused this Assumption Agreement
to be signed and its corporate seal to be impressed hereon and attested by
authorized officers; [the Seabrook Transferee] has caused this Assumption
Agreement to be signed and its corporate seal impressed hereon and attested
by authorized officers; and State Street Bank and Trust Company, as Trustee,
has caused this Assumption Agreement to be signed and its corporate seal to
be impressed hereon and attested by authorized officers.
THE INDUSTRIAL DEVELOPMENT AUTHORITY (Seal)
OF THE STATE OF NEW HAMPSHIRE Attest:
By
Title: Executive Director
PUBLIC SERVICE COMPANY (Seal)
OF NEW HAMPSHIRE Attest:
By
Title: Title:
[SEABROOK TRANSFEREE] (Seal)
Attest:
By
Title: Title:
STATE STREET BANK AND TRUST (Seal)
COMPANY, as Trustee Attest:
By
Title: Title:
EXHIBIT C
FORM OF FLEXIBLE 1991 SERIES D BOND
$ No. R-
ANY BONDHOLDER 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire
Project - 1991 Taxable Series D)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
INTEREST DUE: $
(on the Next Purchase Date)
INTEREST RATE:
(to the Next Purchase Date)
NEXT PURCHASE DATE:
COMMENCEMENT DATE OF RATE PERIOD:
MATURITY DATE: May 1, 2021
CUSIP:
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Flexible
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW HAMPSHIRE
OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE RSA
CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE SOURCES
PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO PUBLIC FUNDS
MAY BE USED FOR THAT PURPOSE.
The Industrial Development Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest 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 set forth above, 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 provided in the Agreement (the
"Interest Payment Dates"). Until conversion to the 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 Agreement
(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 Weekly, Multiannual or Fixed Rate Mode it shall bear
interest at the Weekly, Multiannual or Fixed Rate, as the case may be, as
defined in the Agreement. 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
Agreement. 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.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 1991 Taxable Series D) (the
"Bonds") in the aggregate principal amount of $114,500,000 issued under New
Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are being
loaned to Public Service Company of New Hampshire (the "Company"), a New
Hampshire corporation, pursuant to a Series D Loan and Trust Agreement (the
"Agreement") dated as of May 1, 1991 among the Company, the Authority and
State Street Bank and Trust Company, as Trustee (the "Trustee") to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations under
the Reimbursement Agreement (as defined below), the Company has issued and
delivered to the Trustee its First Mortgage Bonds, Series F (the "Series F
First Mortgage Bonds") issued under the First Mortgage Indenture dated as of
August 15, 1978, as amended, and the Tenth Supplemental Indenture thereto
dated as of May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee (as amended and supplemented from time to
time, the "First Mortgage Bond Indenture") in an aggregate principal amount,
and with an interest rate, maturity date and redemption provisions
corresponding to those of the Bonds. As provided in the Agreement, payments
of principal of, and premium, if any, and interest on the Series F First
Mortgage Bonds shall, upon receipt by the Trustee, be deemed to constitute
payments in corresponding amounts by the Company in respect of the Bonds.
Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and
immunities of the Company, the Authority, the Trustee, the Paying Agent, and
the Bondowners, including the order of payments in the event of insufficient
funds, the disposition of unclaimed moneys held by the Trustee and
restrictions on the rights of owners of the Bonds to bring suit. The
Agreement may be amended to the extent and in the manner provided therein.
Copies of the Agreement are available for inspection at the corporate trust
office of the Trustee.
The Purchase Price (as defined below) and principal of and interest on this
bond while it is in the Flexible Mode is also payable from moneys drawn by
the Paying Agent on an irrevocable letter of credit for the Bonds (together
with any extensions and renewals thereof, the "Letter of Credit") issued by
Citibank, N.A. in the initial aggregate stated amount of $121,014,000
pursuant to the terms of a Series D Letter of Credit and Reimbursement
Agreement dated as of May 1, 1991 (the "Reimbursement Agreement") by and
between the Company and Citibank, N.A. (together with any other issuer of a
Credit Facility, the "Bank"). The Letter of Credit initially expires on the
fourth anniversary of the DATE OF THIS BOND but may be terminated earlier
upon the occurrence of certain events set forth in the Agreement and the
Reimbursement Agreement or extended as provided in the Reimbursement
Agreement. The Company may substitute the Letter of Credit in whole or in
part with one or more new letters of credit (collectively with the Letter of
Credit, a "Credit Facility") as provided in the Agreement and the
Reimbursement Agreement. The Company may substitute a new Letter of Credit
as provided in the Agreement.
Unless otherwise defined herein, capitalized terms used in this bond shall
have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or a day
on which banking institutions are authorized pursuant to law to close, (ii)
that is not a day on which the corporate trust office of the First Mortgage
Bond Trustee is not open for business, (iii) that is a day on which banks are
not required or authorized to close in New York, New York, and (iv) that is a
day on which banking institutions in all of the cities in which the principal
offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 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 Flexible, Weekly or Multiannual Mode, the
period during which such rate of interest determined for such Bond will
remain in effect as described herein.
At the option of the Company and upon certain conditions provided for in the
Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement. 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 Agreement. 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 Agreement 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.
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.
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 Agreement.
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 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. 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 Company and the Bondowners.
While this bond is in the Flexible Mode, interest shall be computed on the
basis of actual days elapsed divided by 360. 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.
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 Security Pacific National Trust Company (New
York), New York, New York, 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 at
its address shown on the registration books maintained by the Paying Agent.
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.
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 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.
The Authority, the Trustee, the Paying Agent and the Company may treat the
REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has been
signed by the Trustee or its duly appointed agent for such purpose.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK, WHICH
HAVE THE SAME EFFECT AS IF SET FORTH HERE.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Loan and Trust Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
Date of Registration:
By: , or
Authorized Signature
By: SECURITY PACIFIC NATIONAL TRUST
COMPANY (NEW YORK), as agent of the Trustee
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a national bank, trust company or member
firm of a national stock exchange.
Dated:
Signature Guaranteed:
Bank, Trust Company or Brokerage Firm
By:
Authorized Signature
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.
EXHIBIT D
FORM OF WEEKLY 1991 SERIES D BOND
$ No. R-
ANY BONDHOLDER 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire
Project - 1991 Taxable Series D)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
INTEREST PAYMENT DATES: (i) the first Business Day of each calendar
month, and (ii) the Maturity Date.
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Weekly
CUSIP:
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW HAMPSHIRE
OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE RSA
CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE SOURCES
PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO PUBLIC FUNDS
MAY BE USED FOR THAT PURPOSE.
The Industrial Development Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest from the most
recent INTEREST PAYMENT DATE to which interest has been paid or duly provided
for or, if no interest has been paid, from the DATE OF THIS BOND set forth
above, until paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the 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 Agreement
(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 Flexible, Multiannual or
Fixed Rate Mode it shall bear interest at the Flexible, Multiannual or Fixed
Rate, as the case may be, as defined in the Agreement. 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 Agreement. 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.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 1991 Taxable Series D) (the
"Bonds") in the aggregate principal amount of $114,500,000 issued under New
Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are being
loaned to Public Service Company of New Hampshire (the "Company"), a New
Hampshire corporation, pursuant to a Series D Loan and Trust Agreement (the
"Agreement") dated as of May 1, 1991 among the Company, the Authority and
State Street Bank and Trust Company, as Trustee (the "Trustee") to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations under
the Reimbursement Agreement (as defined below), the Company has issued and
delivered to the Trustee its First Mortgage Bonds, Series F (the "Series F
First Mortgage Bonds") issued under the First Mortgage Indenture dated as of
August 15, 1978, as amended, and the Tenth Supplemental Indenture thereto
dated as of May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee (as amended and supplemented from time to
time, the "First Mortgage Bond Indenture") in an aggregate principal amount,
and with an interest rate, maturity date and redemption provisions
corresponding to those of the Bonds. As provided in the Agreement, payments
of principal of, and premium, if any, and interest on the Series F First
Mortgage Bonds shall, upon receipt by the Trustee, be deemed to constitute
payments in corresponding amounts by the Company in respect of the Bonds.
Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and
immunities of the Company, the Authority, the Trustee, the Paying Agent, and
the Bondowners, including the order of payments in the event of insufficient
funds, the disposition of unclaimed moneys held by the Trustee and
restrictions on the rights of owners of the Bonds to bring suit. The
Agreement may be amended to the extent and in the manner provided therein.
Copies of the Agreement are available for inspection at the corporate trust
office of the Trustee.
The Purchase Price (as defined below) and principal of and interest on this
bond while it is in the Weekly Mode is also payable from moneys drawn by the
Paying Agent on an irrevocable letter of credit for the Bonds (together with
any extensions and renewals thereof, the "Letter of Credit") issued by
pursuant to the terms of a Reimbursement Agreement dated as of
(the "Reimbursement Agreement") by and between the Company and
(together with any other issuer of a Credit Facility, the
"Bank"). The Paying Agent may draw on the Letter of Credit presently in
place for the payment of up to forty-five (45) days' interest for Bonds in
the Weekly Mode. The Letter of Credit initially expires on ,
but may be terminated earlier upon the occurrence of certain events set
forth in the Agreement and the Reimbursement Agreement or extended as
provided in the Reimbursement Agreement. Unless the Letter of Credit is
extended or renewed or a substitute letter of credit (collectively with the
Letter of Credit, a "Credit Facility") is provided in accordance with the
Agreement, the Bonds will become subject to mandatory purchase as described
below. The Company may substitute a new Credit Facility as provided in the
Agreement.
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 provided in the
Agreement.
Unless otherwise defined herein, capitalized terms used in this bond shall
have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or a day
on which banking institutions are authorized pursuant to law to close, (ii)
that is not a day on which the corporate trust office of the First Mortgage
Bond Trustee is not open for business, (iii) that is a day on which banks are
not required or authorized to close in New York, New York, and (iv) that is a
day on which banking institutions in all of the cities in which the principal
offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 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 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 Wednesday.
At the option of the Company and upon certain conditions provided for in the
Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement.
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 the
conditions set forth in the Agreement. 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 Agreement 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.
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 not later
than the Business Day next preceding 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 Weekly Mode, or if for any
reason such manner of determination shall be determined to be invalid or
unenforceable, the rate on such Bonds to take effect on that Effective Date
shall be the Weekly Rate in effect on the day preceding such date. 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, any Bondowner
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
Company 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.
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 Security Pacific
National Trust Company (New York) New York, New York, 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 as 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.
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 and 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 Agreement 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
Agreement. Notice of tender of this bond is irrevocable. All notices of
tender of Bonds shall be made to the Paying Agent at _____________________,
New York, New York, 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 , New York, New York, Attention: , 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 and (ii) on (a) the effective date of a substitute Credit Facility if
such substitution would result in a withdrawal or reduction (excluding a
withdrawal or reduction resulting from a change in Modes) of the rating of
this bond, if any, by either Moody's or S&P or (b) a date that is not more
than fifteen (15) or less than ten (10) days prior to the expiration or
termination of the Credit Facility 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 AGREEMENT 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.
Bonds in the Weekly Mode are subject to redemption in whole or in part at the
direction of the Company on any INTEREST PAYMENT DATE at a redemption price
of par plus accrued interest.
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 Agreement with Bonds in the Weekly Mode being redeemed in units of
$100,000.
In the event this bond is selected for redemption, notice will be mailed no
more than forty-five (45) 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, 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 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 AGREEMENT, 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.
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.
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.
The Authority, the Trustee, the Paying Agent and the Company may treat the
REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has been
signed by the Trustee or its duly appointed agent for such purpose.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK, WHICH
HAVE THE SAME EFFECT AS IF SET FORTH HERE.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Loan and Trust Agreement.
STATE STREET BANK AND TRUST
COMPANY as Trustee
Date of Registration: By: , or
Authorized Signature
By: SECURITY PACIFIC NATIONAL TRUST
COMPANY (NEW YORK), as agent of the
Trustee
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact
to transfer it on the books kept for registration of the bond, with full
power of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a national bank, trust company or member
firm of a national stock exchange.
Dated:
Signature Guaranteed:
Bank, Trust Company or Brokerage Firm
By:
Authorized Signature
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:
BONDOWNER'S ELECTION NOTICE
The Industrial Development Authority of the State of New
Hampshire Pollution Control [Refunding] Revenue Bonds
(Public Service Company of New Hampshire Project - [Year]
[Tax-Exempt Refunding] [Taxable] 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 Company 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.
Except as otherwise indicated herein and unless the context otherwise
requires, the terms used herein shall have the meanings set forth in the
Series D Loan and Trust Agreement dated as of May 1, 1991 relating to the
Bonds.
Date: Signature(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.
EXHIBIT E
FORM OF MULTIANNUAL 1991 SERIES D BOND
$ No. R-
ANY BONDHOLDER 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire
Project - 1991 Taxable Series D)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
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.
CURRENT EFFECTIVE DATE:
INTEREST RATE:
(To Next Purchase Date)
NEXT PURCHASE DATE:
COMMENCEMENT DATE OF RATE PERIOD:
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Multiannual
CUSIP:
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW HAMPSHIRE
OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE RSA
CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE SOURCES
PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO PUBLIC FUNDS
MAY BE USED FOR THAT PURPOSE.
The Industrial Development Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest from the most
recent INTEREST PAYMENT DATE to which interest has been paid or duly provided
for or, if no interest has been paid, from the DATE OF THIS BOND set forth
above, until paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the Flexible, Weekly or Fixed
Rate 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 Agreement (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, but if the Bonds are supported by a
Credit Facility (as defined below) not in excess of the Maximum Interest
Rate. If this bond is converted to the Flexible, Weekly, or Fixed Rate Mode
it shall bear interest at the Flexible, Weekly or Fixed Rate, as the case may
be, as defined in the Agreement. 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
Agreement. 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.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 1991 Taxable Series D) (the
"Bonds") in the aggregate principal amount of $114,500,000 issued under New
Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are being
loaned to Public Service Company of New Hampshire (the "Company"), a New
Hampshire corporation, pursuant to a Series D Loan and Trust Agreement (the
"Agreement") dated as of May 1, 1991 among the Company, the Authority and
State Street Bank and Trust Company, as Trustee (the "Trustee") to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations, if
any, under the Reimbursement Agreement, (as defined [below] [in the
Agreement]), the Company has issued and delivered to the Trustee its First
Mortgage Bonds, Series F (the "Series F First Mortgage Bonds") issued under
the First Mortgage Indenture dated as of August 15, 1978, as amended, and the
Tenth Supplemental Indenture thereto dated as of May 1, 1991 between the
Company and First Fidelity Bank, National Association, New Jersey, as Trustee
(as amended and supplemented from time to time, the "First Mortgage Bond
Indenture") in an aggregate principal amount, and with an interest rate,
maturity date and redemption provisions corresponding to those of the Bonds.
As provided in the Agreement, payments of principal of, and premium, if any,
and interest on the Series F First Mortgage Bonds shall, upon receipt by the
Trustee, be deemed to constitute payments in corresponding amounts by the
Company in respect of the Bonds. Reference is hereby made to the Agreement
for the provisions thereof with respect to the rights, limitations of rights,
duties, obligations and immunities of the Company, the Authority, the
Trustee, the Paying Agent, and the Bondowners, including the order of
payments in the event of insufficient funds, the disposition of unclaimed
moneys held by the Trustee and restrictions on the rights of owners of the
Bonds to bring suit. The Agreement may be amended to the extent and in the
manner provided therein. Copies of the Agreement are available for
inspection at the corporate trust office of the Trustee.
[Modify as appropriate; delete if bond is not supported by a Credit Facility:
The Purchase Price (as defined below) and principal of, premium, if any, and
interest on this bond while it is in the Multiannual Mode is also payable
from moneys drawn by the Paying Agent on an irrevocable letter of credit for
the Bonds (together with any extensions and renewals thereof, the "Letter of
Credit") issued by pursuant to the terms of a
Reimbursement Agreement dated as of , (the "Reimbursement
Agreement") by and between the Company and (together with
any other issuer of a Credit Facility, the "Bank"). The Paying Agent may
draw on the Letter of Credit presently in place for the payment of up to 190
days' interest for Bonds in the Multiannual Mode. The Letter of Credit
initially expires on , but may be terminated earlier upon
the occurrence of certain events set forth in the Agreement and the
Reimbursement Agreement or extended as provided in the Reimbursement
Agreement. Unless the Letter of Credit is extended or renewed or a
substitute letter of credit (collectively with the Letter of Credit, a
"Credit Facility") is provided in accordance with the Agreement, the Bonds
will become subject to mandatory purchase as described below. The Company
may substitute a new Credit Facility as provided in the Agreement.]
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 provided in the
Agreement.
Unless otherwise defined herein, capitalized terms used in this bond shall
have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or a day
on which banking institutions are authorized pursuant to law to close, (ii)
that is not a day on which the corporate trust office of the First Mortgage
Bond Trustee is not open for business, (iii) that is a day on which banks are
not required or authorized to close in New York, New York, and (iv) that is a
day on which banking institutions in all of the cities in which the principal
offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 Flexible Mode, the Weekly Mode, the
Multiannual Mode and the Fixed Rate Mode.
"Purchase Date" means, while this bond is in a 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 Flexible, Weekly or Multiannual Mode, the
period during which such rate of interest determined for such Bond will
remain in effect as described herein.
At the option of the Company and upon certain conditions provided for in the
Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement. 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 Company.
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 Flexible or Weekly
Mode and such day is not a Business Day, the first Business Day thereafter.
Conversion of this bond to another Mode, or to a new Rate Period in the
Multiannual Mode of the same or a different length, shall be subject to the
conditions set forth in the Agreement. 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 Agreement 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.
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
Company, the Bondowners and, if applicable, the Bank.
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.
While this bond is in the Multiannual Mode, the principal of and premium, if
any, on this bond are payable when due by check or draft in clearinghouse
funds to the REGISTERED OWNER hereof but only upon presentation and surrender
of this bond at the office of Security Pacific National Trust Company (New
York), New York, New York, 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 clearinghouse 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 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 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.
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, including deliveries of Bonds subject to
mandatory tender, shall be made to the Paying Agent at , New
York, New York, Attention: , or such other address specified
in writing by the Paying Agent to the Bondowners.
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
Multiannual Mode by check or draft in clearinghouse 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.
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 direction
of the Company 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:
[No call periods and redemption prices are to be determined by the Company
upon conversion to the Multiannual Mode or change of Rate Period within the
Multiannual Mode, except that upon the issuance of a series of Tax-Exempt
Refunding Bonds all redemption terms for such series of Bonds shall be
fixed.]
[1991 Series D Bonds:
Redemption
No Call Period Price
years %, declining by % on each succeeding
anniversary of the end of the No Call Period until reaching 100% and
thereafter at 100%]
[Tax-Exempt Refunding Bonds:
Length of
Multiannual Redemption
Rate Period No Call Period Price
Greater than years years %, declining by___%
on each succeeding anniversary of the end of the no call period until reaching
100% and thereafter at 100%
Greater than , but not years %, declining by greater than
years % on each succeeding anniversary of the end of the no call period until
reaching 100% and thereafter at 100%
Greater than , but not years %, declining by greater than
years % on the next anniversary of the end of the no call period and
thereafter at 100%
Greater than , but not years %, declining greater than
years by % on the next anniversary of the end of the no call period and
thereafter at 100%
Greater than , but not years %, declining greater than
years by % on the next anniversary of the end of the no call period and
thereafter at 100%
Greater than , but not year 100%
greater than years
1 year or less
Bonds not subject to optional redemption
until commencement of
next Rate Period.]
In addition, at the option of the Company, the Bonds in the Multiannual Mode
are subject to redemption prior to maturity as a whole at any time at 100% of
the principal amount thereof, plus accrued interest to the redemption date,
within nine (9) months of the occurrence of certain extraordinary events
consisting of (a) damage or destruction, or loss of title by eminent domain,
to the Station or the Project Facilities, (b) changes in law affecting the
enforceability of the Agreement or imposing unreasonable burdens or excessive
liabilities on the Company relating to the Station or the Project Facilities
or their operation, (c) the enjoining or prohibiting of the operation of the
Station or the Project Facilities, or (d) changes in the economic
availability of fuel, materials, supplies, labor, equipment or other
properties or things rendering the continued operation of the Station
uneconomical, all as more fully described in the Agreement. The Company's
right to direct the redemption of the Bonds in the Multiannual Mode upon the
occurrence of any event listed above shall expire six (6) months after such
event occurs.
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 Agreement with Bonds in the Multiannual Mode being redeemed in units
of $5,000.
In the event this bond is selected for redemption, notice will be mailed no
more than forty-five (45) 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.
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 AGREEMENT, 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.
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.
The Bonds are issuable only in fully registered form in denominations of five
thousand dollars ($5,000) or any multiple thereof.
The Authority, the Trustee, the Paying Agent and the Company may treat the
REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has been
signed by the Trustee or its duly appointed agent for such purpose.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK, WHICH
HAVE THE SAME EFFECT AS IF SET FORTH HERE.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Loan and Trust Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
Date of Registration: By: , or
Authorized Signature
By: SECURITY PACIFIC NATIONAL TRUST
COMPANY (NEW YORK), as agent of
the Trustee
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a national bank, trust company or member
firm of a national stock exchange.
Dated:
Signature Guaranteed:
Bank, Trust Company or Brokerage Firm
By:
Authorized Signature
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.
EXHIBIT F
FORM OF FIXED RATE 1991 SERIES D BOND
$ No. R-
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire
Project - 1991 Taxable Series D)
INTEREST RATE: CUSIP:
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
INTEREST PAYMENT DATES: May 1 and November 1
(but not before
, )
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW HAMPSHIRE
OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE RSA
CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE SOURCES
PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO PUBLIC FUNDS
MAY BE USED FOR THAT PURPOSE.
The Industrial Development Authority of the State of New Hampshire (the
"Authority"), for value received promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest (computed on the
basis of a 360-day year consisting of twelve 30-day months) from the most
recent INTEREST PAYMENT DATE 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 semiannually 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. The
principal and premium, if any, of this bond is payable in clearinghouse funds
at the office of , as Paying Agent (with its
successors, the "Paying Agent"). Interest is payable by check or draft in
clearinghouse 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 be (i) a Sunday or a legal holiday, or (ii) a day
on which banking institutions are authorized pursuant to law to close and on
which the corporate trust office of the Trustee or the First Mortgage Bond
Trustee is not open for business, then the payment thereof may be made on the
next succeeding day not a day specified in (i) or (ii) 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.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 1991 Taxable Series D) (the
"Bonds") in the aggregate principal amount of $114,500,000 issued under New
Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are being
loaned to Public Service Company of New Hampshire (the "Company"), a New
Hampshire corporation, pursuant to a Series D Loan and Trust Agreement (the
"Agreement") dated as of May 1, 1991 among the Company, the Authority and
State Street Bank and Trust Company, as Trustee (the "Trustee") to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations, if
any, under the Reimbursement Agreement (as defined in the Agreement), the
Company has issued and delivered to the Trustee its First Mortgage Bonds,
Series F (the "Series F First Mortgage Bonds") issued under the First
Mortgage Indenture dated as of August 15, 1978, as amended, and the Tenth
Supplemental Indenture thereto dated as of May 1, 1991 between the Company
and First Fidelity Bank, National Association, New Jersey, as Trustee (as
amended and supplemented from time to time, the "First Mortgage Bond
Indenture") in an aggregate principal amount, and with an interest rate,
maturity date and redemption provisions corresponding to those of the Bonds.
As provided in the Agreement, payments of principal of, and premium, if any,
and interest on the Series F First Mortgage Bonds shall, upon receipt by the
Trustee, be deemed to constitute payments in corresponding amounts by the
Company in respect of the Bonds. Reference is hereby made to the Agreement
for the provisions thereof with respect to the rights, limitations of rights,
duties, obligations and immunities of the Company, the Authority, the
Trustee, the Paying Agent, and the Bondowners, including the order of
payments in the event of insufficient funds, the disposition of unclaimed
moneys held by the Trustee and restrictions on the rights of owners of the
Bonds to bring suit. The Agreement may be amended to the extent and in the
manner provided therein. Copies of the Agreement are available for
inspection at the corporate trust office of the Trustee.
In case any Event of Default (as defined in the Agreement) 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 Agreement.
The Bonds are redeemable pursuant to the Agreement prior to maturity
beginning on , , at the option of the Authority by direction of
the Company, as a whole or in part at any time, at the following prices
expressed in percentages of their principal amount, plus accrued interest to
the redemption date:
Period During Which Redeemed Redemption Price
%
[Table to be prepared upon Fixed Rate conversion. For Tax-Exempt Refunding
Bonds, the table shall be based on redemption schedule established for the
bond in the Multiannual Mode.]
In addition, at the option of the Company, this bond is subject to redemption
prior to maturity at 100% of the principal amount thereof, plus accrued
interest to the redemption date within nine (9) months of the occurrence of
certain extraordinary events consisting of (a) damage or destruction, or loss
of title by eminent domain, to the Station or the Project Facilities, (b)
changes in law affecting the enforceability of the Agreement or imposing
unreasonable burdens or excessive liabilities on the Company relating to the
Station or the Project Facilities or their operation, (c) the enjoining or
prohibiting of the operation of the Station or the Project Facilities, or (d)
changes in the economic availability of fuel, materials, supplies, labor,
equipment or other properties or things rendering the continued operation of
the Station uneconomical, all as more fully described in the Agreement. The
Company's right to direct the redemption of this bond upon the occurrence of
any event listed above shall expire six (6) months after such event occurs.
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 Agreement.
In the event this bond is selected for redemption, notice will be mailed no
more than forty-five (45) 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.
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 of the same aggregate principal amount without
transfer to a new registered owner. Exchanges and transfers will be without
expense to the holder 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 part thereof) is
eligible to be selected or has been selected for the redemption.
This bond is issuable only in fully registered form in the denominations of
five thousand dollars ($5,000) or any multiple thereof.
The Authority, the Trustee, the Paying Agent and the Company may treat the
REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has been
signed by the Trustee or its duly appointed agent for such purpose.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK, WHICH
HAVE THE SAME EFFECT AS IF SET FORTH HERE.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal)
By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Loan and Trust Agreement.
STATE STREET BANK AND TRUST COMPANY
as Trustee
Date of Registration: By: , or
Authorized Signature
By: , as agent of the Trustee
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a national bank, trust company or member
firm of a national stock exchange.
Dated:
Signature Guaranteed:
Bank, Trust Company or Brokerage Firm
By:
Authorized Signature
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.
EXHIBIT G
FORM OF FLEXIBLE 1992 SERIES D 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Refunding Revenue Bond
(Public Service Company of New Hampshire
Project - 1992 Tax-Exempt Series D)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
INTEREST DUE: $
(on the Next Purchase Date)
INTEREST RATE:
(to the Next Purchase Date)
NEXT PURCHASE DATE:
COMMENCEMENT DATE OF RATE PERIOD:
MATURITY DATE: May 1, 2021
CUSIP:
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Flexible
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW HAMPSHIRE
OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE RSA
CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE SOURCES
PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO PUBLIC FUNDS
MAY BE USED FOR THAT PURPOSE.
The Business Finance Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest 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 set forth above, 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 provided in the Agreement (the
"Interest Payment Dates"). Until conversion to the 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 Agreement
(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 Weekly, Multiannual or Fixed Rate Mode it shall bear
interest at the Weekly, Multiannual or Fixed Rate, as the case may be, as
defined in the Agreement. 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
Agreement. 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.
This bond is one of a series of Pollution Control Refunding Revenue Bonds
(Public Service Company of New Hampshire Project - 1992 Tax-Exempt Series D)
(the "Bonds") in the aggregate principal amount of $75,000,000 issued under
New Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are
being loaned to Public Service Company of New Hampshire (the "Company"), a
New Hampshire corporation, pursuant to a Series D Loan and Trust Agreement
dated as of May 1, 1991, as supplemented and amended by a First Supplement
dated as of December 1, 1992 (the "Agreement") among the Company, the
Authority and State Street Bank and Trust Company, as Trustee (the "Trustee")
to refund a like principal amount of the Authority's $114,500,000 Pollution
Control Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Taxable Series D) (the "1991 Bonds"), which were originally issued to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No.1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations under
the Reimbursement Agreement (as defined below), the Company has issued and
delivered to the Trustee its First Mortgage Bonds, Series F (the "Series F
First Mortgage Bonds") issued under the First Mortgage Indenture dated as of
August 15, 1978, as amended, and the Tenth Supplemental Indenture thereto
dated as of May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee (as amended and supplemented from time to
time, the "First Mortgage Bond Indenture") in an aggregate principal amount,
and with an interest rate, maturity date and redemption provisions
corresponding to those of the Bonds and certain other bonds issued under the
Agreement, including the 1991 Bonds. As provided in the Agreement, payments
of principal of, and premium, if any, and interest on the Series F First
Mortgage Bonds shall, upon receipt by the Trustee, be deemed to constitute
payments in corresponding amounts by the Company in respect of the Bonds and
certain other bonds issued under the Agreement, including the 1991 Bonds.
Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and
immunities of the Company, the Authority, the Trustee, the Paying Agent, and
the Bondowners, including the order of payments in the event of insufficient
funds, the disposition of unclaimed moneys held by the Trustee and
restrictions on the rights of owners of the Bonds to bring suit. The
Agreement may be amended to the extent and in the manner provided therein.
Copies of the Agreement are available for inspection at the corporate trust
office of the Trustee.
The Purchase Price (as defined below) and principal of and interest on this
bond while it is in the Flexible Mode is also payable from moneys drawn by
the Paying Agent on an irrevocable letter of credit for the Bonds and certain
other bonds issued under the Agreement, including the 1991 Bonds (together
with any extensions, amendments and renewals thereof, the "Letter of
Credit"), issued by , pursuant to the terms of a
Reimbursement Agreement dated as of (the "Reimbursement
Agreement") by and between the Company and
(together with any other issuer of a Credit Facility, the "Bank"). The
Letter of Credit initially expires on but may be terminated
earlier upon the occurrence of certain events set forth in the Agreement and
the Reimbursement Agreement or extended as provided in the Reimbursement
Agreement. The Company may substitute the Letter of Credit in whole or in
part with one or more new letters of credit (collectively with the Letter of
Credit, a "Credit Facility") as provided in the Agreement and the
Reimbursement Agreement. The Company may substitute a new Credit Facility as
provided in the Agreement.
Unless otherwise defined herein, capitalized terms used in this bond shall
have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or a day
on which banking institutions are authorized pursuant to law to close, (ii)
that is not a day on which the corporate trust office of the First Mortgage
Bond Trustee is not open for business, (iii) that is a day on which banks are
not required or authorized to close in New York, New York, and (iv) that is a
day on which banking institutions in all of the cities in which the principal
offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 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 Flexible, Weekly or Multiannual Mode, the
period during which such rate of interest determined for such Bond will
remain in effect as described herein.
At the option of the Company and upon certain conditions provided for in the
Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement. 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 Agreement. 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 Agreement 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.
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.
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 Agreement.
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 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. 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 Company 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.
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 Security Pacific National Trust Company (New
York), New York, New York, 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 at
its address shown on the registration books maintained by the Paying Agent.
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.
The Bonds are subject to mandatory redemption at any time at a redemption
price of 100% of the principal amount of the Bonds so redeemed plus accrued
interest in the event (i) the Company delivers to the Trustee an opinion of
nationally recognized bond counsel selected by the Company and reasonably
satisfactory to the Trustee ("Bond Counsel") stating that interest on the
Bonds is or will become includable in gross income of the owners thereof for
federal income tax purposes, or (ii) it is finally determined by the Internal
Revenue Service or a court of competent jurisdiction, as a result of (A) a
proceeding in which the Company has participated or been given notice and an
opportunity to participate, and, (B) either (1) a failure by the Company (or
the Seabrook Transferee as defined in the Agreement) to observe any covenant
or agreement undertaken in or pursuant to the Agreement, or the inaccuracy of
any representation made by the Company (or the Seabrook Transferee) in or
pursuant to the Agreement, or (2) the Seabrook Transfer (as defined in the
Agreement), that interest payable on the Bonds is includable for federal
income tax purposes in the gross income of any owner thereof (other than an
owner which is a "substantial user" or a "related person" within the meaning
of Section 147(a) of the Internal Revenue Code of 1986). Any determination
under clause (ii) above will not be considered final for this purpose until
the earliest of the conclusion of any appellate review, the denial of
appellate review or the expiration of the period for seeking appellate
review. Redemption under this paragraph shall be in whole unless not less
than forty-five (45) days prior to the redemption date the Company 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. Except as provided in the next sentence, any
such redemption shall be made on the 90th day after the date on which the
opinion described in clause (i) is delivered or the determination described
in clause (ii) becomes final or on such earlier date as the Company may
designate by notice given to the Trustee at least forty-five (45) days prior
to such designated date. Any Bond in the Flexible 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. If such
redemption shall occur in accordance with the terms of the Agreement, then
such failure by the Company (or the Seabrook Transferee as described above)
to observe such covenant or agreement, or the inaccuracy of any such
representation will not, in and of itself, constitute a default thereunder.
If the Trustee receives written notice from any Bondowner stating that (i)
such Bondowner has been notified in writing by the Internal Revenue Service
that it proposes to include the interest on the Bonds in the gross income of
such owner for federal income tax purposes, or any other proceeding has been
instituted against such owner which may lead to a like determination, and
(ii) such owner will afford the Company the opportunity to participate at its
own expense in the proceeding, either directly or in the name of such owner,
until the conclusion of any appellate review, and the Trustee has examined
such written notice and it appears to be accurate on its face, then the
Trustee shall promptly give notice thereof to the Company, the Authority, and
each Bondowner whose Bonds may be affected. The Trustee shall thereafter
keep itself reasonably informed of the progress of any administrative
proceedings or litigation relating to such notice. Under the Agreement the
Company is required to give the Trustee written notice of such a final
determination within forty-five (45) days of such final determination.
If the Purchase Date of this bond is after the redemption date, notice of
redemption of this bond 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. 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.
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 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.
The Authority, the Trustee, the Paying Agent and the Company may treat the
REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has been
signed by the Trustee or the Paying Agent.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK, WHICH
HAVE THE SAME EFFECT AS IF SET FORTH HERE.
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Agreement.
STATE STREET BANK AND TRUST
COMPANY
as Trustee
Date of Registration:
By: , or
Authorized Signature
By: SECURITY PACIFIC NATIONAL TRUST
COMPANY (NEW YORK), as Paying
Agent
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized
Signature Guaranty Medallion Program
By:
Authorized Signature
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.
EXHIBIT H
FORM OF WEEKLY 1992 SERIES D 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Refunding Revenue Bond
(Public Service Company of New Hampshire
Project - 1992 Tax-Exempt Series D)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
INTEREST PAYMENT DATES: (i) the first Business Day of each calendar
month, and (ii) the Maturity Date.
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Weekly
CUSIP:
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW HAMPSHIRE
OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE RSA
CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE SOURCES
PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO PUBLIC FUNDS
MAY BE USED FOR THAT PURPOSE.
The Business Finance Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest from the most
recent INTEREST PAYMENT DATE to which interest has been paid or duly provided
for or, if no interest has been paid, from the DATE OF THIS BOND set forth
above, until paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the 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 Agreement
(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 Flexible, Multiannual or
Fixed Rate Mode it shall bear interest at the Flexible, Multiannual or Fixed
Rate, as the case may be, as defined in the Agreement. 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 Agreement. 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.
This bond is one of a series of Pollution Control Refunding Revenue Bonds
(Public Service Company of New Hampshire Project - 1992 Tax-Exempt Series D)
(the "Bonds") in the aggregate principal amount of $75,000,000 issued under
New Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are
being loaned to Public Service Company of New Hampshire (the "Company"), a
New Hampshire corporation, pursuant to a Series D Loan and Trust Agreement
dated as of May 1, 1991, as supplemented and amended by a First Supplement
dated as of October 1, 1992 (the "Agreement") among the Company, the
Authority and State Street Bank and Trust Company, as Trustee (the "Trustee")
to refund a like principal amount of the Authority's $114,500,000 Pollution
Control Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Taxable Series D) (the "1991 Bonds"), which were originally issued to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations under
the Reimbursement Agreement (as defined below), the Company has issued and
delivered to the Trustee its First Mortgage Bonds, Series F (the "Series F
First Mortgage Bonds") issued under the First Mortgage Indenture dated as of
August 15, 1978, as amended, and the Tenth Supplemental Indenture thereto
dated as of May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee (as amended and supplemented from time to
time, the "First Mortgage Bond Indenture") in an aggregate principal amount,
and with an interest rate, maturity date and redemption provisions
corresponding to those of the Bonds and certain other bonds issued under the
Agreement, including the 1991 Bonds. As provided in the Agreement, payments
of principal of, and premium, if any, and interest on the Series F First
Mortgage Bonds shall, upon receipt by the Trustee, be deemed to constitute
payments in corresponding amounts by the Company in respect of the Bonds and
certain other bonds issued under the Agreement, including the 1991 Bonds.
Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and
immunities of the Company, the Authority, the Trustee, the Paying Agent, and
the Bondowners, including the order of payments in the event of insufficient
funds, the disposition of unclaimed moneys held by the Trustee and
restrictions on the rights of owners of the Bonds to bring suit. The
Agreement may be amended to the extent and in the manner provided therein.
Copies of the Agreement are available for inspection at the corporate trust
office of the Trustee.
The Purchase Price (as defined below) and principal of and interest on this
bond while it is in the Weekly Mode is also payable from moneys drawn by the
Paying Agent on an irrevocable letter of credit for the Bonds and certain
other bonds issued under the Agreement, including the 1991 Bonds (together
with any extensions, amendments, and renewals thereof, the "Letter of
Credit"), issued by Barclays Bank PLC, acting through its New York Branch,
pursuant to the terms of a Series D Letter of Credit and Reimbursement
Agreement dated as of October 1, 1992 (the "Reimbursement Agreement") by and
among the Company, Barclays Bank PLC, New York Branch (together with any
other issuer of a Credit Facility, the "Bank") and the participating banks
named therein. The Paying Agent may draw on the Letter of Credit presently
in place for the payment of up to forty-five (45) days' interest for Bonds in
the Weekly Mode. The Letter of Credit initially expires on October 1, 1995
but may be terminated earlier upon the occurrence of certain events set forth
in the Agreement and the Reimbursement Agreement or extended as provided in
the Reimbursement Agreement. Unless the Letter of Credit is extended or
renewed or a substitute letter of credit (collectively with the Letter of
Credit, a "Credit Facility") is provided in accordance with the Agreement,
the Bonds will become subject to mandatory purchase as described below. The
Company may substitute a new Credit Facility as provided in the Agreement.
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 provided in the
Agreement.
Unless otherwise defined herein, capitalized terms used in this bond shall
have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or a day
on which banking institutions are authorized pursuant to law to close, (ii)
that is not a day on which the corporate trust office of the First Mortgage
Bond Trustee is not open for business, (iii) that is a day on which banks are
not required or authorized to close in New York, New York, and (iv) that is a
day on which banking institutions in all of the cities in which the principal
offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 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 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 Wednesday.
At the option of the Company and upon certain conditions provided for in the
Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement.
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 the
conditions set forth in the Agreement. 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 Agreement 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.
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 not later
than the Business Day next preceding 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 Weekly Mode, or if for any
reason such manner of determination shall be determined to be invalid or
unenforceable, the rate on such Bonds to take effect on that Effective Date
shall be the Weekly Rate in effect on the day preceding such date. 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, any Bondowner
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
Company 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.
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 Security Pacific
National Trust Company (New York) New York, New York, 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 as 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.
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 such other form as may be 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 Agreement 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
Agreement. Notice of tender of this bond is irrevocable. All notices of
tender of Bonds shall be made to the Paying Agent at 2 Rector Street, New
York, New York, 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 2 Rector Street, New York, New York, 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 and (ii) on (a) the effective date of a substitute Credit Facility
unless the Trustee receives written evidence from Moody's (if this bond is
rated by Moody's) and 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 or (b) a date that is not more than fifteen (15) or less than ten
(10) days prior to the expiration or termination of the Credit Facility 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 AGREEMENT 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.
Bonds in the Weekly Mode are subject to redemption in whole or in part at the
direction of the Company on any INTEREST PAYMENT DATE at a redemption price
of par plus accrued interest.
The Bonds are subject to mandatory redemption at any time at a redemption
price of 100% of the principal amount of the Bonds so redeemed plus accrued
interest in the event (i) the Company delivers to the Trustee an opinion of
nationally recognized bond counsel selected by the Company and reasonably
satisfactory to the Trustee ("Bond Counsel") stating that interest on the
Bonds is or will become includable in gross income of the owners thereof for
federal income tax purposes, or (ii) it is finally determined by the Internal
Revenue Service or a court of competent jurisdiction, as a result of (A) a
proceeding in which the Company has participated or been given notice and an
opportunity to participate, and, (B) either (1) a failure by the Company (or
the Seabrook Transferee as defined in the Agreement) to observe any covenant
or agreement undertaken in or pursuant to the Agreement, or the inaccuracy of
any representation made by the Company (or the Seabrook Transferee) in or
pursuant to the Agreement, or (2) the Seabrook Transfer (as defined in the
Agreement), that interest payable on the Bonds is includable for federal
income tax purposes in the gross income of any owner thereof (other than an
owner which is a "substantial user" or a "related person" within the meaning
of Section 147(a) of the Internal Revenue Code of 1986). Any determination
under clause (ii) above will not be considered final for this purpose until
the earliest of the conclusion of any appellate review, the denial of
appellate review or the expiration of the period for seeking appellate
review. Redemption under this paragraph shall be in whole unless not less
than forty-five (45) days prior to the redemption date the Company 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. Except as provided in the next sentence, any
such redemption shall be made on the 90th day after the date on which the
opinion described in clause (i) is delivered or the determination described
in clause (ii) becomes final or on such earlier date as the Company may
designate by notice given to the Trustee at least forty-five (45) days prior
to such designated date. Any Bond in the Flexible 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. If such
redemption shall occur in accordance with the terms of the Agreement, then
such failure by the Company (or the Seabrook Transferee as described above)
to observe such covenant or agreement, or the inaccuracy of any such
representation will not, in and of itself, constitute a default thereunder.
If the Trustee receives written notice from any Bondowner stating that (i)
such Bondowner has been notified in writing by the Internal Revenue Service
that it proposes to include the interest on the Bonds in the gross income of
such owner for federal income tax purposes, or any other proceeding has been
instituted against such owner which may lead to a like determination, and
(ii) such owner will afford the Company the opportunity to participate at its
own expense in the proceeding, either directly or in the name of such owner,
until the conclusion of any appellate review, and the Trustee has examined
such written notice and it appears to be accurate on its face, then the
Trustee shall promptly give notice thereof to the Company, the Authority, and
each Bondowner whose Bonds may be affected. The Trustee shall thereafter
keep itself reasonably informed of the progress of any administrative
proceedings or litigation relating to such notice. Under the Agreement the
Company is required to give the Trustee written notice of such a final
determination within forty-five (45) days of such final determination.
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 Agreement with Bonds in the Weekly Mode being redeemed in units of
$100,000.
In the event this bond is selected for redemption, notice will be mailed no
more than forty-five (45) 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, 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 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 AGREEMENT, 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.
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.
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.
The Authority, the Trustee, the Paying Agent and the Company may treat the
REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has been
signed by the Trustee or the Paying Agent.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK, WHICH
HAVE THE SAME EFFECT AS IF SET FORTH HERE.
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Agreement.
STATE STREET BANK AND TRUST
COMPANY
as Trustee
Date of Registration: By: , or
Authorized Signature
By: SECURITY PACIFIC NATIONAL TRUST
COMPANY (NEW YORK), as Paying
Agent
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized
Signature Guaranty Medallion Program
By:
Authorized Signature
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:
BONDOWNER'S ELECTION NOTICE
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)
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 Company 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 Subsection 303(g) of the First Supplement 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
Series D Loan and Trust Agreement dated as of May 1, 1991 and in the First
Supplement dated as of December 1, 1992 relating to the Bonds.
Date: Signature(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.
EXHIBIT I
FORM OF MULTIANNUAL 1992 SERIES D 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Refunding Revenue Bond
(Public Service Company of New Hampshire
Project - 1992 Tax-Exempt Series D)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
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.
CURRENT EFFECTIVE DATE:
INTEREST RATE:
(To Next Purchase Date)
NEXT PURCHASE DATE:
COMMENCEMENT DATE OF RATE PERIOD:
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Multiannual
CUSIP:
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW HAMPSHIRE
OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE RSA
CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE SOURCES
PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO PUBLIC FUNDS
MAY BE USED FOR THAT PURPOSE.
The Business Finance Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest from the most
recent INTEREST PAYMENT DATE to which interest has been paid or duly provided
for or, if no interest has been paid, from the DATE OF THIS BOND set forth
above, until paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the Flexible, Weekly or Fixed
Rate 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 Agreement (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
Flexible, Weekly, or Fixed Rate Mode it shall bear interest at the Flexible,
Weekly or Fixed Rate, as the case may be, as defined in the Agreement. 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 Agreement. 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.
This bond is one of a series of Pollution Control Refunding Revenue Bonds
(Public Service Company of New Hampshire Project - 1992 Tax-Exempt Series D)
(the "Bonds") in the aggregate principal amount of $75,000,000 issued under
New Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are
being loaned to Public Service Company of New Hampshire (the "Company"), a
New Hampshire corporation, pursuant to a Series D Loan and Trust Agreement
dated as of May 1, 1991, as supplemented and amended by a First Supplement
dated as of December 1, 1992 (the "Agreement") among the Company, the
Authority and State Street Bank and Trust Company, as Trustee (the "Trustee")
to refund a like principal amount of the Authority's $114,500,000 Pollution
Control Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Taxable Series D) (the "1991 Bonds"), which were originally issued to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations, if
any, under the Reimbursement Agreement, (as defined in the Agreement), the
Company has issued and delivered to the Trustee its First Mortgage Bonds,
Series F (the "Series F First Mortgage Bonds") issued under the First
Mortgage Indenture dated as of August 15, 1978, as amended, and the Tenth
Supplemental Indenture thereto dated as of May 1, 1991 between the Company
and First Fidelity Bank, National Association, New Jersey, as Trustee (as
amended and supplemented from time to time, the "First Mortgage Bond
Indenture") in an aggregate principal amount, and with an interest rate,
maturity date and redemption provisions corresponding to those of the Bonds
and certain other bonds issued under the Agreement, including the 1991 Bonds.
As provided in the Agreement, payments of principal of, and premium, if any,
and interest on the Series F First Mortgage Bonds shall, upon receipt by the
Trustee, be deemed to constitute payments in corresponding amounts by the
Company in respect of the Bonds and certain other bonds issued under the
Agreement, including the 1991 Bonds. Reference is hereby made to the
Agreement for the provisions thereof with respect to the rights, limitations
of rights, duties, obligations and immunities of the Company, the Authority,
the Trustee, the Paying Agent, and the Bondowners, including the order of
payments in the event of insufficient funds, the disposition of unclaimed
moneys held by the Trustee and restrictions on the rights of owners of the
Bonds to bring suit. The Agreement may be amended to the extent and in the
manner provided therein. Copies of the Agreement are available for
inspection at the corporate trust office of the Trustee.
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 provided in the
Agreement.
Unless otherwise defined herein, capitalized terms used in this bond shall
have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or a day
on which banking institutions are authorized pursuant to law to close, (ii)
that is not a day on which the corporate trust office of the First Mortgage
Bond Trustee is not open for business, (iii) that is a day on which banks are
not required or authorized to close in New York, New York, and (iv) that is a
day on which banking institutions in all of the cities in which the principal
offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank (as defined in the Agreement) are located are
not required or authorized to remain closed and on which the New York Stock
Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 Flexible Mode, the Weekly Mode, the
Multiannual Mode and the Fixed Rate Mode.
"Purchase Date" means, while this bond is in a 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 Flexible, Weekly or Multiannual Mode, the
period during which such rate of interest determined for such Bond will
remain in effect as described herein.
At the option of the Company and upon certain conditions provided for in the
Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement. 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 Company.
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 Flexible or Weekly
Mode and such day is not a Business Day, the first Business Day thereafter.
Conversion of this bond to another Mode, or to a new Rate Period in the
Multiannual Mode of the same or a different length, shall be subject to the
conditions set forth in the Agreement. 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 Agreement 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.
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
Company, the Bondowners and, if applicable, the Bank.
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.
While this bond is in the Multiannual Mode, the principal of and premium, if
any, on this bond are payable when due by check or draft in clearinghouse
funds to the REGISTERED OWNER hereof but only upon presentation and surrender
of this bond at the office of ,
, , 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 clearinghouse
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 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 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.
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
, New York, New York, Attention: , or such
other address specified in writing by the Paying Agent to the Bondowners.
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 check or draft in clearinghouse 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.
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 direction
of the Company 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 anni-
versary of the end
of the no call
period until
reaching 100%
and thereafter at 100%
Greater than 10, but not 8 years 101 1/2%, declining
greater than 15 years by 1/2% on each suc-
ceeding anniversary
of the end of the no
call period until
reaching 100% and
thereafter at 100%
Greater than 5, but not 5 years 101%, declining by
greater than 10 years 1/2% on the next
anniversary of the
end of the no call
period and there-
after at 100%
5 years or less Bonds not subject to
optional redemption
until commencement of
next Rate Period.
In addition, at the option of the Company, the Bonds in the Multiannual Mode
are subject to redemption prior to maturity as a whole at any time at 100% of
the principal amount thereof, plus accrued interest to the redemption date,
within nine (9) months of the occurrence of certain extraordinary events
consisting of (a) damage or destruction, or loss of title by eminent domain,
to the Station or the Project Facilities, (b) changes in law affecting the
enforceability of the Agreement or imposing unreasonable burdens or excessive
liabilities on the Company relating to the Station or the Project Facilities
or their operation, (c) the enjoining or prohibiting of the operation of the
Station or the Project Facilities, or (d) changes in the economic
availability of fuel, materials, supplies, labor, equipment or other
properties or things rendering the continued operation of the Station
uneconomical, all as more fully described in the Agreement. The Company's
right to direct the redemption of the Bonds in the Multiannual Mode upon the
occurrence of any event listed above shall expire six (6) months after such
event occurs.
The Bonds are subject to mandatory redemption at any time at a redemption
price of 100% of the principal amount of the Bonds so redeemed plus accrued
interest in the event (i) the Company delivers to the Trustee an opinion of
nationally recognized bond counsel selected by the Company and reasonably
satisfactory to the Trustee ("Bond Counsel") stating that interest on the
Bonds is or will become includable in gross income of the owners thereof for
federal income tax purposes, or (ii) it is finally determined by the Internal
Revenue Service or a court of competent jurisdiction, as a result of (A) a
proceeding in which the Company has participated or been given notice and an
opportunity to participate, and, (B) either (1) a failure by the Company (or
the Seabrook Transferee as defined in the Agreement) to observe any covenant
or agreement undertaken in or pursuant to the Agreement, or the inaccuracy of
any representation made by the Company (or the Seabrook Transferee) in or
pursuant to the Agreement, or (2) the Seabrook Transfer (as defined in the
Agreement), that interest payable on the Bonds is includable for federal
income tax purposes in the gross income of any owner thereof (other than an
owner which is a "substantial user" or a "related person" within the meaning
of Section 147(a) of the Internal Revenue Code of 1986). Any determination
under clause (ii) above will not be considered final for this purpose until
the earliest of the conclusion of any appellate review, the denial of
appellate review or the expiration of the period for seeking appellate
review. Redemption under this paragraph shall be in whole unless not less
than forty-five (45) days prior to the redemption date the Company 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. Except as provided in the next sentence, any
such redemption shall be made on the 90th day after the date on which the
opinion described in clause (i) is delivered or the determination described
in clause (ii) becomes final or on such earlier date as the Company may
designate by notice given to the Trustee at least forty-five (45) days prior
to such designated date. Any Bond in the Flexible 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. If such
redemption shall occur in accordance with the terms of the Agreement, then
such failure by the Company (or the Seabrook Transferee as described above)
to observe such covenant or agreement, or the inaccuracy of any such
representation will not, in and of itself, constitute a default thereunder.
If the Trustee receives written notice from any Bondowner stating that (i)
such Bondowner has been notified in writing by the Internal Revenue Service
that it proposes to include the interest on the Bonds in the gross income of
such owner for federal income tax purposes, or any other proceeding has been
instituted against such owner which may lead to a like determination, and
(ii) such owner will afford the Company the opportunity to participate at its
own expense in the proceeding, either directly or in the name of such owner,
until the conclusion of any appellate review, and the Trustee has examined
such written notice and it appears to be accurate on its face, then the
Trustee shall promptly give notice thereof to the Company, the Authority, and
each Bondowner whose Bonds may be affected. The Trustee shall thereafter
keep itself reasonably informed of the progress of any administrative
proceedings or litigation relating to such notice. Under the Agreement the
Company is required to give the Trustee written notice of such a final
determination within forty-five (45) days of such final determination.
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 Agreement with Bonds in the Multiannual Mode being redeemed in units
of $5,000.
In the event this bond is selected for redemption, notice will be mailed no
more than forty-five (45) 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.
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 AGREEMENT, 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.
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.
The Bonds are issuable only in fully registered form in denominations of five
thousand dollars ($5,000) or any multiple thereof.
The Authority, the Trustee, the Paying Agent and the Company may treat the
REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has been
signed by the Trustee or the Paying Agent.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK, WHICH
HAVE THE SAME EFFECT AS IF SET FORTH HERE.
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal)
By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Agreement.
STATE STREET BANK AND TRUST COMPANY
as Trustee
Date of Registration: By: , or
Authorized Signature
By: SECURITY PACIFIC NATIONAL TRUST
COMPANY (NEW YORK), as Paying
Agent
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized
Signature Guaranty Medallion Program
By:
Authorized Signature
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.
EXHIBIT J
FORM OF FIXED RATE 1992 SERIES D BOND
$ No. R-
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Refunding Revenue Bond
(Public Service Company of New Hampshire
Project - 1992 Tax-Exempt Series D)
INTEREST RATE: CUSIP:
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
INTEREST PAYMENT DATES: May 1 and November 1
(but not before
, )
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW HAMPSHIRE
OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE RSA
CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE SOURCES
PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO PUBLIC FUNDS
MAY BE USED FOR THAT PURPOSE.
The Business Finance Authority of the State of New Hampshire (the
"Authority"), for value received promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest (computed on the
basis of a 360-day year consisting of twelve 30-day months) from the most
recent INTEREST PAYMENT DATE 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 semiannually 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. The
principal and premium, if any, of this bond is payable in clearinghouse funds
at the office of , as Paying Agent (with its
successors, the "Paying Agent"). Interest is payable by check or draft in
clearinghouse 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 be (i) a Sunday or a legal holiday, or (ii) a day
on which banking institutions are authorized pursuant to law to close and on
which the corporate trust office of the Trustee or the First Mortgage Bond
Trustee is not open for business, then the payment thereof may be made on the
next succeeding day not a day specified in (i) or (ii) 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.
This bond is one of a series of Pollution Control Refunding Revenue Bonds
(Public Service Company of New Hampshire Project - 1992 Tax-Exempt Series D)
(the "Bonds") in the aggregate principal amount of $75,000,000 issued under
New Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are
being loaned to Public Service Company of New Hampshire (the "Company"), a
New Hampshire corporation, pursuant to a Series D Loan and Trust Agreement
dated as of May 1, 1991, as supplemented and amended by a First Supplement
dated as of December 1, 1992 (the "Agreement") among the Company, the
Authority and State Street Bank and Trust Company, as Trustee (the "Trustee")
to refund a like principal amount of the Authority's $114,500,000 Pollution
Control Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Taxable Series D) (the "1991 Bonds"), which were originally issued to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations, if
any, under the Reimbursement Agreement (as defined in the Agreement), the
Company has issued and delivered to the Trustee its First Mortgage Bonds,
Series F (the "Series F First Mortgage Bonds") issued under the First
Mortgage Indenture dated as of August 15, 1978, as amended, and the Tenth
Supplemental Indenture thereto dated as of May 1, 1991 between the Company
and First Fidelity Bank, National Association, New Jersey, as Trustee (as
amended and supplemented from time to time, the "First Mortgage Bond
Indenture") in an aggregate principal amount, and with an interest rate,
maturity date and redemption provisions corresponding to those of the Bonds
and certain other bonds issued under the Agreement, including the 1991 Bonds.
As provided in the Agreement, payments of principal of, and premium, if any,
and interest on the Series F First Mortgage Bonds shall, upon receipt by the
Trustee, be deemed to constitute payments in corresponding amounts by the
Company in respect of the Bonds and certain other bonds issued under the
Agreement, including the 1991 Bonds. Reference is hereby made to the
Agreement for the provisions thereof with respect to the rights, limitations
of rights, duties, obligations and immunities of the Company, the Authority,
the Trustee, the Paying Agent, and the Bondowners, including the order of
payments in the event of insufficient funds, the disposition of unclaimed
moneys held by the Trustee and restrictions on the rights of owners of the
Bonds to bring suit. The Agreement may be amended to the extent and in the
manner provided therein. Copies of the Agreement are available for
inspection at the corporate trust office of the Trustee.
In case any Event of Default (as defined in the Agreement) 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 Agreement.
The Bonds are redeemable pursuant to the Agreement prior to maturity
beginning on , , at the option of the Authority by direction of
the Company, as a whole or in part at any time, at the following prices
expressed in percentages of their principal amount, plus accrued interest to
the redemption date:
Period During Which Redeemed Redemption Price
%
[Table to be prepared upon Fixed Rate conversion. The table shall be based
on redemption schedule established for the bond in the Multiannual Mode.]
In addition, at the option of the Company, this bond is subject to redemption
prior to maturity at 100% of the principal amount thereof, plus accrued
interest to the redemption date within nine (9) months of the occurrence of
certain extraordinary events consisting of (a) damage or destruction, or loss
of title by eminent domain, to the Station or the Project Facilities, (b)
changes in law affecting the enforceability of the Agreement or imposing
unreasonable burdens or excessive liabilities on the Company relating to the
Station or the Project Facilities or their operation, (c) the enjoining or
prohibiting of the operation of the Station or the Project Facilities, or (d)
changes in the economic availability of fuel, materials, supplies, labor,
equipment or other properties or things rendering the continued operation of
the Station uneconomical, all as more fully described in the Agreement. The
Company's right to direct the redemption of this bond upon the occurrence of
any event listed above shall expire six (6) months after such event occurs.
The Bonds are subject to mandatory redemption at any time at a redemption
price of 100% of the principal amount of the Bonds so redeemed plus accrued
interest in the event (i) the Company delivers to the Trustee an opinion of
nationally recognized bond counsel selected by the Company and reasonably
satisfactory to the Trustee ("Bond Counsel") stating that interest on the
Bonds is or will become includable in gross income of the owners thereof for
federal income tax purposes, or (ii) it is finally determined by the Internal
Revenue Service or a court of competent jurisdiction, as a result of (A) a
proceeding in which the Company has participated or been given notice and an
opportunity to participate, and, (B) either (1) a failure by the Company (or
the Seabrook Transferee as defined in the Agreement) to observe any covenant
or agreement undertaken in or pursuant to the Agreement, or the inaccuracy of
any representation made by the Company (or the Seabrook Transferee) in or
pursuant to the Agreement, or (2) the Seabrook Transfer (as defined in the
Agreement), that interest payable on the Bonds is includable for federal
income tax purposes in the gross income of any owner thereof (other than an
owner which is a "substantial user" or a "related person" within the meaning
of Section 147(a) of the Internal Revenue Code of 1986). Any determination
under clause (ii) above will not be considered final for this purpose until
the earliest of the conclusion of any appellate review, the denial of
appellate review or the expiration of the period for seeking appellate
review. Redemption under this paragraph shall be in whole unless not less
than forty-five (45) days prior to the redemption date the Company 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. Except as provided in the next sentence, any
such redemption shall be made on the 90th day after the date on which the
opinion described in clause (i) is delivered or the determination described
in clause (ii) becomes final or on such earlier date as the Company may
designate by notice given to the Trustee at least forty-five (45) days prior
to such designated date. Any Bond in the Flexible 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. If such
redemption shall occur in accordance with the terms of the Agreement, then
such failure by the Company (or the Seabrook Transferee as described above)
to observe such covenant or agreement, or the inaccuracy of any such
representation will not, in and of itself, constitute a default thereunder.
If the Trustee receives written notice from any Bondowner stating that (i)
such Bondowner has been notified in writing by the Internal Revenue Service
that it proposes to include the interest on the Bonds in the gross income of
such owner for federal income tax purposes, or any other proceeding has been
instituted against such owner which may lead to a like determination, and
(ii) such owner will afford the Company the opportunity to participate at its
own expense in the proceeding, either directly or in the name of such owner,
until the conclusion of any appellate review, and the Trustee has examined
such written notice and it appears to be accurate on its face, then the
Trustee shall promptly give notice thereof to the Company, the Authority, and
each Bondowner whose Bonds may be affected. The Trustee shall thereafter
keep itself reasonably informed of the progress of any administrative
proceedings or litigation relating to such notice. Under the Agreement the
Company is required to give the Trustee written notice of such a final
determination within forty-five (45) days of such final determination.
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 Agreement.
In the event this bond is selected for redemption, notice will be mailed no
more than forty-five (45) 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.
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 of the same aggregate principal amount without
transfer to a new registered owner. Exchanges and transfers will be without
expense to the holder 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 part thereof) is
eligible to be selected or has been selected for the redemption.
This bond is issuable only in fully registered form in the denominations of
five thousand dollars ($5,000) or any multiple thereof.
The Authority, the Trustee, the Paying Agent and the Company may treat the
REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has been
signed by the Trustee or the Paying Agent.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK, WHICH
HAVE THE SAME EFFECT AS IF SET FORTH HERE.
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal)
By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Agreement.
STATE STREET BANK AND TRUST COMPANY
as Trustee
Date of Registration: By: , or
Authorized Signature
By: , as Paying Agent
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized
Signature Guaranty Medallion Program
By:
Authorized Signature
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.
EXHIBIT K
FORM OF BOOK-ENTRY ONLY SYSTEM FLEXIBLE 1991 SERIES D BOND
$39,500,000 No. R-1
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to or its agent for
registration of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or
to such other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
ANY BONDHOLDER 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire
Project - 1991 Taxable Series D)
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: THIRTY-NINE MILLION FIVE HUNDRED THOUSAND DOLLARS
MATURITY DATE: May 1, 2021
CUSIP:
DATE OF THIS BOND: May 16, 1991
(Date as of which Bonds of this
series were initially issued.)
MODE: Flexible
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW HAMPSHIRE
OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE RSA
CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE SOURCES
PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO PUBLIC FUNDS
MAY BE USED FOR THAT PURPOSE.
The Industrial Development Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest 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 set forth above, 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 provided in the Agreement (the
"Interest Payment Dates"). Until conversion to the 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 Agreement
(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 Weekly, Multiannual or Fixed Rate Mode it shall bear
interest at the Weekly, Multiannual or Fixed Rate, as the case may be, as
defined in the Agreement. 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
Agreement. 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.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 1991 Taxable Series D) (the
"Bonds") in the aggregate principal amount of $114,500,000 issued under New
Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are being
loaned to Public Service Company of New Hampshire (the "Company"), a New
Hampshire corporation, pursuant to a Series D Loan and Trust Agreement (the
"Agreement") dated as of May 1, 1991 among the Company, the Authority and
State Street Bank and Trust Company, as Trustee (the "Trustee") to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations under
the Reimbursement Agreement (as defined below), the Company has issued and
delivered to the Trustee its First Mortgage Bonds, Series F (the "Series F
First Mortgage Bonds") issued under the First Mortgage Indenture dated as of
August 15, 1978, as amended, and the Tenth Supplemental Indenture thereto
dated as of May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee (as amended and supplemented from time to
time, the "First Mortgage Bond Indenture") in an aggregate principal amount,
and with an interest rate, maturity date and redemption provisions
corresponding to those of the Bonds. As provided in the Agreement, payments
of principal of, and premium, if any, and interest on the Series F First
Mortgage Bonds shall, upon receipt by the Trustee, be deemed to constitute
payments in corresponding amounts by the Company in respect of the Bonds.
Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and
immunities of the Company, the Authority, the Trustee, the Paying Agent, and
the Bondowners, including the order of payments in the event of insufficient
funds, the disposition of unclaimed moneys held by the Trustee and
restrictions on the rights of owners of the Bonds to bring suit. The
Agreement may be amended to the extent and in the manner provided therein.
Copies of the Agreement are available for inspection at the corporate trust
office of the Trustee.
The Purchase Price (as defined below) and principal of and interest on this
bond while it is in the Flexible Mode is also payable from moneys drawn by
the Paying Agent on an irrevocable letter of credit for the Bonds (together
with any extensions and renewals thereof, the "Letter of Credit") issued by
Barclays Bank PLC, New York Branch pursuant to the terms of a Second Series D
Letter of Credit and Reimbursement Agreement dated as of May 1, 1995 (the
"Reimbursement Agreement") by and between the Company and Barclays Bank PLC,
New York Branch (together with any other issuer of a Credit Facility, the
"Bank"). The Letter of Credit initially expires on May 1, 1998 but may be
terminated earlier upon the occurrence of certain events set forth in the
Agreement and the Reimbursement Agreement or extended as provided in the
Reimbursement Agreement. The Company may substitute the Letter of Credit in
whole or in part with one or more new letters of credit (collectively with
the Letter of Credit, a "Credit Facility") as provided in the Agreement and
the Reimbursement Agreement. The Company may substitute a new Letter of
Credit as provided in the Agreement.
Unless otherwise defined herein, capitalized terms used in this bond shall
have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or a day
on which banking institutions are authorized pursuant to law to close, (ii)
that is not a day on which the corporate trust office of the First Mortgage
Bond Trustee is not open for business, (iii) that is a day on which banks are
not required or authorized to close in New York, New York, and (iv) that is a
day on which banking institutions in all of the cities in which the principal
offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 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 Flexible, Weekly or Multiannual Mode, the
period during which such rate of interest determined for such Bond will
remain in effect as described herein.
At the option of the Company and upon certain conditions provided for in the
Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement. 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 Agreement. 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 Agreement 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.
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.
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 Agreement.
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 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. 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 Company and the Bondowners.
While this bond is in the Flexible Mode, interest shall be computed on the
basis of actual days elapsed divided by 360. 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.
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 BankAmerica National Trust Company, New York, New
York, 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 at its address shown on
the registration books maintained by the Paying Agent. 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.
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 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.
The Authority, the Trustee, the Paying Agent and the Company may treat the
REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has been
signed by the Trustee or its duly appointed agent for such purpose.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Chairman
By:
Executive Director
Certificate of Authentication
This bond is one of the Bonds described in the Loan and Trust Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
Date of Registration:
By: , or
Authorized Signature
By: BANKAMERICA NATIONAL TRUST
COMPANY, as agent of the Trustee
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized
Signature Guaranty Medallion Program
Firm
By:
Authorized Signature
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.
EXHIBIT L
REPRESENTATION LETTER
EXHIBIT M
1992 SERIES D BONDS REPRESENTATION LETTER
(1) Footnotes (i) indicate amendments made by the First Supplement,
(ii) indicate amendments made by the Second Supplement, (iii) indicate text
taken from the First Supplement or the Second Supplement and added
concurrently with the amendment and restatement hereof, (iv) indicate certain
other changes made concurrently with the amendment and restatement hereof,
and (v) provide explanations with respect to certain amendments and changes.
Footnotes are for convenience only and shall not affect the construction
hereof.
(2) Fees with respect to 1992 Series D Bonds from Paragraph 102(a)(3)
of First Supplement, added concurrently with the amendment and restatement
hereof.
(3) Paragraph 102(a)(4) amended concurrently with the amendment and
restatement hereof as follows:
(4) "Bank" means Barclays Bank PLC, acting through its New York Branch,
in its capacity as issuer of the Letter of Credit and any other issuer of a
Credit Facility.
(4) Paragraph 102(a)(8) amended concurrently with the amendment and
restatement hereof as follows:
(8) "Bonds" means the 1991 Series D Bonds, the 1992 Series D Bonds, any
other Tax-Exempt Refunding Bonds and any bond or bonds duly issued in
exchange or replacement therefor.
(5) First sentence of Paragraph 102(a)(13) amended by Subsection 310(b)
of First Supplement as follows:
"Credit Facility" means the Letter of Credit and any substitute irrevocable
transferable letter of credit delivered to the Paying Agent pursuant to this
Agreement and then in effect, as each may be amended from time to time
pursuant to the terms of this Agreement or any amendment or supplement to
this Agreement.
(6) Paragraph 102(a)(31) amended concurrently with the amendment and
restatement hereof as follows:
(31) "Letter of Credit" means the $41,748,000 irrevocable letter of credit
No. 841777 issued by Barclays Bank PLC, acting through its New York Branch, for
the benefit of the Paying Agent.
(7) New last sentence of Paragraph 102(a)(33) from Section 305 of First
Supplement, added concurrently with the amendment and restatement hereof.
(8) New definition of 1992 Series D Bonds in clause (ii) of Paragraph
102(a)(39) from Paragraph 102(a)(8) of First Supplement, added concurrently
with the amendment and restatement hereof.
(9) Paragraph 102(a)(50) amended concurrently with the amendment and
restatement hereof as follows:
(50) "Reimbursement Agreement" means the Third Series D Letter of Credit
and Reimbursement Agreement dated as of April 1, 1999 among the Company,
Barclays Bank PLC, New York Branch, as agent and issuing bank thereunder, and
the participating banks referred to therein, and any other agreement between
the Company and a Bank under which the Company is obligated to reimburse the
Bank for payments made by the Bank under a Credit Facility.
(10) Paragraph 102(a)(57) amended concurrently with the amendment and
restatement hereof as follows:
(57) "Tax-Exempt Refunding Bonds" means Bonds issued to refund the 1991
Series D Bonds pursuant to Article IV hereof, including, unless the context
otherwise requires, the 1992 Series D Bonds.
(11) Subsection 201(a) formerly Section 201.
(12) New Subsection 201(b) from Section 201 of First Supplement, added
concurrently with the amendment and restatement hereof.
(13) Forms of 1991 Series D Bonds moved from text to Exhibits
concurrently with the amendment and restatement hereof. Forms of 1992 Series
D Bonds from Section 301 of First Supplement and form of Book-Entry Only
System Flexible 1991 Series D Bond from Subsection 201(b) and Exhibit A of
Second Supplement added concurrently with the amendment and restatement
hereof.
(14) Paragraph 301(b)(i) formerly Subsection 301(b).
(15) New Paragraph 301(b)(ii) from Section 302 of First Supplement,
added concurrently with the amendment and restatement hereof.
(16) Clause (i) of Paragraph 301(d)(ii) amended concurrently with the
amendment and restatement hereof to change "one year" to "364 days."
(17) First sentence of Paragraph 301(e)(ii) amended by Section 312 of
First Supplement as follows:
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 Company
from the Weekly Mode to a 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 a Company Representative.
(18) Clause (i) of Paragraph 301(e)(ii) amended concurrently with the
amendment and restatement hereof to change "one year" to "364 days."
(19) Last sentence of Subparagraph 301(e)(iv)(A) amended by Section 301
of Second Supplement as follows:
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 Credit
Facility is expiring without substitution or replacement, the Paying Agent
shall give notice to the Bondowners of the mandatory tender of the Bonds at
least thirty (30) days prior to the mandatory tender date.
(20) Clause (i) of Paragraph 301(f)(ii) amended concurrently with the
amendment and restatement hereof to change "one year" to "364 days."
(21) Subsection 303(a) formerly Section 303.
(22) New Subsection 303(b) from Section 304 of First Supplement, added
concurrently with the amendment and restatement hereof.
(23) First sentence of Paragraph 308(c)(i) amended by Section 313 of
First Supplement as follows:
If a Credit Facility is available for any portion of the Bonds, the Paying
Agent shall not later than 4:00 P.M. on the Business Day next preceding any
date on which payments of the principal of, premium, if any, or interest on
such Bonds are due, whether at maturity, on an interest payment date, by
acceleration, redemption, or otherwise, draw on the Credit Facility an amount
sufficient to pay in full the principal, premium, if any, and interest then
coming due on such Bonds.
(24) Paragraph 308(c)(iii) amended by Subsection 311(a) of First
Supplement as follows:
(iii) Use of Credit Facility. All amounts received by the Paying Agent
under any Credit Facility shall be held in a fund separate and apart from all
other amounts held by the Paying Agent, shall remain uninvested and used
solely to pay the Purchase Price or principal of, premium, if any, and
interest on the Bonds for which the Credit Facility is available. Principal
and Purchase Price of, premium, if any, and interest on Company Bonds,
Pledged Bonds and Bonds not supported by a Credit Facility shall not be paid
from amounts drawn on a Credit Facility.
Paragraph 308(c)(iii) further amended concurrently with the amendment and
restatement hereof as follows:
(iii) Use of Credit Facility. All amounts received by the Paying Agent
under any Credit Facility shall be held in a segregated account, shall
remain uninvested and shall be used solely to pay the Purchase Price or
principal of, premium, if any, and interest on the Bonds for which the Credit
Facility is available. Principal and Purchase Price of, premium, if any, and
interest on Company Bonds, Pledged Bonds and Bonds not supported by a Credit
Facility shall not be paid from amounts drawn on a Credit Facility.
(25) Paragraph 308(c)(iv) added by Subsection 311(b) of First
Supplement.
(26) Subsection 310(c) amended by Section 307 of First Supplement as
follows:
(c) Notice by the Company. The Company shall exercise its option to have
Bonds redeemed under Subsection 310(a) or (b) by giving notice to the
Trustee, the Authority, the Paying Agent, and the Remarketing Agent at least
five (5) days before the redemption date in the case of Bonds in the Flexible
Mode, and forty-five (45) days before the redemption date in the case of
Bonds in any other Mode.
(27) Subsection 310(e) amended by Section 308 of First Supplement as
follows:
(e) Notice of Redemption. When Bonds are to be redeemed, the Paying Agent
shall give notice 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 Agreement 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
405 as and when provided in the form of Flexible Bonds.
(28) Subsection 311(c) added by Section 314 of First Supplement.
(29) Fifth sentence of second paragraph of Subsection 312(a) amended by
Section 315 of First Supplement and Section 302 of Second Supplement as
follows:
Upon receipt by the Paying Agent of notice from the Remarketing Agent that a
purchaser has been found for Pledged Bonds or Company 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 Pledged Bonds or
Company Bonds) upon receipt by the Paying Agent of the Purchase Price of such
Bonds, provided, however, that no Pledged Bond or Company Bond shall be so
registered and delivered unless the Paying Agent has received from the Bank
a written notice of the reinstatement of the principal and interest component
of the Credit Facility, or if prior to or simultaneously with such
registration or delivery, the amount available to be drawn under the Credit
Facility is otherwise less than the amount described in Paragraph 317(b)(ii)
determined as if Bonds which are to continue as Pledged Bonds were not
Outstanding.
(30) The second paragraph of Subsection 317(a) amended concurrently with
the amendment and restatement hereof as follows:
Prior to the replacement of any Credit Facility the Company shall have
delivered to the Trustee and the Paying Agent: (i) an opinion of counsel for
the issuer of the substitute Credit Facility to the effect that it
constitutes a legal, valid and binding obligation of the issuer enforceable
in accordance with its terms; (ii) a certificate of the Bank that all
amounts due under the Reimbursement Agreement have been paid and that the
Company has fulfilled all its obligations arising out of such Agreement; and
(iii) unless all of the Bonds to be supported by the substitute Credit
Facility are in the Weekly Mode or are subject to mandatory tender for
purchase on the date of replacement, written evidence from Moody's, if such
Bonds are then rated by Moody's, and from S&P, if such Bonds are then rated
by S&P, that the replacement of the Credit Facility will not in itself result
in the reduction or withdrawal of the rating on the Bonds. Notice of the
substitution or replacement of a Credit Facility shall be sent by the Trustee
to Moody's and S&P.
(31) Clause (iii) of Subsection 317(b) amended concurrently with the
amendment and restatement hereof to change "one year" to "364 days."
(32) New Section 320 from Section 201 of Second Supplement, added
concurrently with the amendment and restatement hereof.
(33) New Section 321 from Section 303 of First Supplement, added
concurrently with the amendment and restatement hereof.
(34) See also new Section 406 from Section 306 of First Supplement for
additional limitations on conversions of 1992 Series D Bonds to new Modes.
(35) Last sentence of Section 405 added by Section 303 of Second
Supplement.
(36) New Section 406 from Section 306 of First Supplement, added
concurrently with the amendment and restatement hereof.
(37) New Section 407 from Paragraphs 102(a)(2), (5), and (12) and
Section 309 of First Supplement, added concurrently with the amendment and
restatement hereof.
(38) Now Section 321(g) of this Agreement.
(39) Fees with respect to 1992 Series D Bonds from Paragraph 102(a)(3) of First
Supplement, added concurrently with the amendment and restatement hereof.
(40) Paragraph 102(a)(4) amended concurrently with the amendment and restatement
hereof as follows:
(4) "Bank" means Barclays Bank PLC, acting through its New York Branch, in its
capacity as issuer of the Letter of Credit and any
other issuer of a Credit Facility.
(41) Paragraph 102(a)(8) amended concurrently with the amendment and restatement
hereof as follows:
(8) "Bonds" means the 1991 Series D Bonds, the 1992 Series D Bonds, any other
Tax-Exempt Refunding Bonds and any bond or bonds duly issued in exchange or
replacement therefor.
(42) First sentence of Paragraph 102(a)(13) amended by Subsection 310(b) of
First Supplement as follows:
"Credit Facility" means the Letter of Credit and any substitute irrevocable
transferable letter of credit delivered to the Paying Agent
pursuant to this Agreement and then in effect, as each may be amended from time
to time pursuant to the terms of this Agreement or
any amendment or supplement to this Agreement.
(43) Paragraph 102(a)(31) amended concurrently with the amendment and
restatement hereof as follows:
(31) "Letter of Credit" means the $41,748,000 irrevocable letter of credit No.
841777 issued by Barclays Bank PLC, acting
through its New York Branch, for the benefit of the Paying Agent.
(44) New last sentence of Paragraph 102(a)(33) from Section 305 of First
Supplement, added concurrently with the amendment and restatement hereof.
(45) New definition of 1992 Series D Bonds in clause (ii) of Paragraph
102(a)(39) from Paragraph
102(a)(8) of First Supplement, added concurrently with the amendment and
restatement hereof.
(46) Paragraph 102(a)(50) amended concurrently with the amendment and
restatement hereof as follows:
(50) "Reimbursement Agreement" means the Third Series D Letter of Credit and
Reimbursement Agreement dated as of April 1, 1999 among the Company, Barclays
Bank PLC, New York Branch, as agent and issuing bank thereunder, and the
participating banks referred to therein, and any other agreement between the
Company and a Bank under which the Company is obligated to reimburse the Bank
for payments made by the Bank under a Credit Facility.
(47) Paragraph 102(a)(57) amended concurrently with the amendment and
restatement hereof as follows:
(57) "Tax-Exempt Refunding Bonds" means Bonds issued to refund the 1991 Series D
Bonds pursuant to Article IV hereof, including, unless the context otherwise
requires, the 1992 Series D Bonds.
(48) Clause (i) of Paragraph 301(d)(ii) amended concurrently with the amendment
and restatement hereof to change "one year" to "364 days."
(49) Clause (i) of Paragraph 301(e)(ii) amended concurrently with the
amendment and restatement hereof to change "one year" to "364 days."
(50) First sentence of Paragraph 308(c)(i) amended by Section 313 of First
Supplement as follows:
If a Credit Facility is available for any portion of the Bonds, the Paying Agent
shall not later than 4:00 P.M. on the Business Day next preceding any date on
which payments of the principal of, premium, if any, or interest on such Bonds
are due, whether at maturity, on an interest payment date, by acceleration,
redemption, or otherwise, draw on the Credit Facility an amount sufficient to
pay in full the principal, premium, if any, and interest then coming due on such
Bonds.
(51) Subsection 310(e) amended by Section 308 of First Supplement as
follows:
(e) Notice of Redemption. When Bonds are to be redeemed, the Paying Agent
shall give notice 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 Agreement 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 405 as and
when provided in the form of Flexible Bonds.
(52) Clause (iii) of Subsection 317(b) amended concurrently with the amendment
and restatement hereof
to change "one year" to "364 days."
(53) Last sentence of Section 405 added by Section 303 of Second Supplement.
(54) Now Section 321(g) of this Agreement.
<PAGE>
IRREVOCABLE LETTER OF CREDIT
NO. 841777
April 14, 1999
U.S. Bank Trust National Association
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporate Trust Division
Dear Sir or Madam:
We hereby establish, at the request and for the account of Public Service
Company of New Hampshire (the "Account Party"), in your favor, as paying agent
(the "Paying Agent") under that certain Amended and Restated Series D Loan and
Trust Agreement, dated as of April 1, 1999 (the "Indenture"), by and among the
Business Finance Authority (formerly The Industrial Development Authority) of
the State of New Hampshire (the "Issuer"), the Account Party and State Street
Bank and Trust Company, as trustee (the "Trustee"), pursuant to which
$39,500,000 in outstanding aggregate principal amount of the Issuer's Pollution
Control Revenue Bonds (Public Service Company of New Hampshire Project - 1991
Taxable Series D) (the "Bonds"), have been issued, our Irrevocable Letter of
Credit No. 841777, in the amount of US $41,748,000 (FORTY-ONE MILLION SEVEN
HUNDRED FORTY-EIGHT THOUSAND AND NO ONE-HUNDREDTHS UNITED STATES DOLLARS),
subject to reduction and reinstatement as provided below.
(1) Credit Termination Date. This Letter of Credit shall expire on the
earliest to occur of () April 12, 2000 (the "Stated Termination Date"), () the
date upon which we honor a draft accompanying a written and completed
certificate signed by you in substantially the form of Exhibit 2 attached
hereto, and stating therein that such draft is the final draft to be drawn
under this Letter of Credit and that, upon the honoring of such draft, this
Letter of Credit will expire in accordance with its terms, () the date upon
which we receive a written certificate signed by you and stating therein that
no Bonds entitled to the benefits of this Letter of Credit (as determined in
accordance with the Indenture) ("Eligible Bonds") are "outstanding" under the
Indenture, () the fifth business day following receipt by you and the Trustee
of written notice from us that an Event of Default (as defined below) has
occurred under the Reimbursement Agreement (as defined below) and of our
determination to terminate this Letter of Credit on such fifth business day and
() the date upon which we receive a written certificate signed by you and
stating therein that a substitute or replacement Credit Facility (as defined in
the Indenture) has been provided pursuant to Section 317 of the Indenture (such
earliest date being the "Credit Termination Date").
As used herein, the term "business day" shall mean any day of the year ()
that is not a Sunday or legal holiday or a day on which banking institutions
are authorized pursuant to law to close, () that is not a day on which the
corporate trust office of the First Mortgage Bond Trustee (as defined in the
Indenture) is not open for business, () that is a day on which banks are not
required or authorized to close in New York City and () that is a day on which
banking institutions in all of the cities in which the principal offices of the
Trustee, the Paying Agent and the Remarketing Agent (as defined in the
Indenture) are located are not required or authorized to remain closed and on
which the New York Stock Exchange is not closed.
As used herein "Reimbursement Agreement" shall mean the Third Series D
Letter of Credit and Reimbursement Agreement, dated as of April 14, 1999,
between the Account Party, us and certain Participating Banks referred to
therein, and the term "Event of Default" shall mean an "Event Default" as that
term is defined in the Reimbursement Agreement.
(2) Principal, Interest and Premium Components. The aggregate
amount which may be drawn under this Letter of Credit, subject to reductions in
amount and reinstatement as provided below, is US $41,748,000 (FORTY-ONE
MILLION SEVEN HUNDRED FORTY-EIGHT THOUSAND AND NO ONE-HUNDREDTHS UNITED STATES
DOLLARS), of which the aggregate amounts set forth below may be drawn as
indicated.
(i) An aggregate amount not exceeding US$39,500,000 (THIRTY-NINE
MILLION FIVE HUNDRED THOUSAND AND NO ONE-HUNDREDTHS UNITED STATES
DOLLARS), as such amount may be reduced and reinstated as provided below,
(the "Principal Component") may be drawn in respect of payment of
principal (whether upon scheduled or accelerated maturity, or upon
redemption) of Eligible Bonds or the portion of the purchase price of
Eligible Bonds corresponding to principal.
(ii) An aggregate amount not exceeding US$2,248,000 (TWO MILLION TWO
HUNDRED FORTY-EIGHT THOUSAND AND NO ONE-HUNDREDTHS UNITED STATES DOLLARS),
as such amount may be reduced and reinstated as provided below, (the
"Interest Component") may be drawn in respect of payment of:
(A) accrued and unpaid interest on Eligible Bonds not in the
Flexible Mode (as defined in the Indenture) or that portion of the
redemption price or purchase price of such Eligible Bonds
corresponding to accrued and unpaid interest, but not more than an
amount equal to accrued and unpaid interest on such Eligible Bonds
for up to a maximum of 128 days immediately preceding the date of
such drawing; and
(B) unpaid interest (whether accrued or to accrue) on Eligible
Bonds in the Flexible Mode or that portion of the redemption price or
purchase price of such Eligible Bonds corresponding to such interest,
but not more than an amount equal to such interest on such Eligible
Bonds for up to a maximum of 128 days immediately preceding the next
Purchase Date (as defined in the Indenture) for each such Eligible
Bond (or, if interest on any such Eligible Bond was not paid on the
most recent Purchase Date for such Bond, for up to a maximum of 128
days immediately preceding the date of such drawing);
calculated, in each case referred to in the foregoing clause (A) or clause
(B) at a maximum rate of sixteen percent (16%) per annum on the basis of a
year of 360 days for the actual days elapsed, or such lesser rate of
interest as shall equal the Maximum Interest Rate (as defined in the
Indenture) in effect under the Indenture with respect to such Eligible
Bonds (whether or not in the Flexible Mode).
(iii) An aggregate amount not exceeding US$0.00 (ZERO UNITED STATES
DOLLARS) may be drawn in respect of premium on Eligible Bonds (the
"Premium Component"). If, subsequent to the date hereof, the Premium
Component shall be increased by us at the request of the Account Party,
the Premium Component shall be subject to reduction as provided below, and
amounts drawn in respect thereof shall not be subject to reinstatement.
(3) Drawings. Funds under this Letter of Credit are available to you
against () your draft, stating on its face: "Drawn under Irrevocable Letter of
Credit No. 841777, dated April 14, 1999", and (ii) the appropriate certificate
specified below, purportedly executed by you and appropriately completed.
Type of Drawing Exhibit Setting Forth
Form of Certificate Required
Tender Drawing
(as hereinafter defined) Exhibit 1
Redemption/Mandatory Purchase
Drawing (as hereinafter defined) Exhibit 2
Interest Drawing (as hereinafter
defined) Exhibit 3
Drafts and certificates hereunder shall be dated the date of presentation
and shall be presented at our office located at 222 Broadway, 12th Floor, New
York, New York 10038, Attention: Trade Services Group (or at such other office
as we may designate by written notice to you). Presentation of such drafts and
certificates may be made (a) by physical presentation of such drafts and
certificates or (b) by facsimile transmission of such drafts and certificates
received by us at (212) 412-5111 (or at such other number as we may designate
by written notice to you) with prior telephone notice to us at (212) 412-5121,
Attention: Pam Seeley (or at such other number as we may designate by written
notice to you) that such presentation is to be made by facsimile transmission
and with the original executed drafts and certificates to be received by us not
later than our close of business on the next business day, it being understood
that payments hereunder shall be made upon receipt by us of such facsimile
transmission; provided however; that presentations of drafts and certificates
relating to Tender Drawings in respect of Eligible Bonds in the Flexible Mode
shall in all instances be made in accordance with the foregoing clause (b).
Drafts drawn under and in strict compliance with the terms of this Letter of
Credit will be duly honored by us upon presentation thereof in accordance with
this Paragraph 3 if presented on or prior to 4:00 P.M. (New York City time) on
the Credit Termination Date as follows:
(i) Tender Drawings; Flexible Mode: In the case of drafts and
certificates relating to Tender Drawings in respect of Eligible Bonds in
the Flexible Mode presented in accordance with the foregoing clause (b):
(A) if such drafts and certificates are presented as aforesaid
at or prior to 1:30 P.M. (New York City time) on a business day, and
provided that such drafts and certificates strictly conform to the
requirements of this Letter of Credit, we will initiate a wire
transfer of the amount so drawn to your account indicated below at or
prior to 3:30 P.M. (New York City time) on the same business day;
(B) if such drafts and certificates are presented as aforesaid
after 1:30 P.M. but at or prior to 4:00 P.M. New York City time) on a
business day, and provided that such drafts and certificates strictly
conform to the requirements of this Letter of Credit, we will
initiate a wire transfer of the amount so drawn to your account
indicated below at or prior to 10:00 A.M. on the business day next
succeeding the business day on which such drafts and certificates
were presented (notwithstanding that such day of presentation may
have been the Credit Termination Date); and
(C) if such drafts and certificates are presented as aforesaid
after 4:00 P.M. (New York City time) on a business day, and provided
that such drafts and certificates strictly conform to the
requirements of this Letter of Credit, we will initiate a wire
transfer of the amount so drawn to your account indicated below at or
prior to 1:00 P.M. (New York City time) on the business day next
succeeding the business day on which such drafts and certificates
were presented (notwithstanding that such day of presentation may
have been the Credit Termination Date);
and
(ii) All Other Drawings: In the case of any other drafts and
certificates:
(A) if such drafts and certificates are presented as aforesaid
at or prior to 4:00 P.M. (New York City time) on a business day, and
provided that such drafts strictly conform to the requirements of
this Letter of Credit, we will initiate a wire transfer of the amount
so drawn to your account indicated below at or prior to 10:00 A.M.
(New York City time) on the business day next succeeding the business
day on which such drafts and certificates were presented
(notwithstanding that such day of presentation may have been the
Credit Termination Date); and
(B) if such drafts and certificates are presented as aforesaid
after 4:00 P.M. New York City time) on a business day, and provided
that such drafts and certificates strictly conform to the
requirements of this Letter of Credit, we will initiate a wire
transfer of the amount so drawn to your account indicated below at or
prior to 1:00 P.M. (New York City time) on the business day next
succeeding the business day on which such drafts and certificates
were presented (notwithstanding that such day of presentation may
have been the Credit Termination Date).
Wire transfers of funds paid in respect of any drawing hereunder shall be made
to your Account No. 173101851827 at U.S. Bank Trust, N.A. (ABA # 091000022),
Attn: Merilyn Hess, reference: State of New Hampshire (PSNH), or to such other
account as you may from time to time specific to us in writing. All payments
made by us under this Letter of Credit will be made with our own funds and not
with any funds of the Account Party or the Issuer.
(4) Reductions. The Interest Component shall be reduced immediately
following our honoring any draft drawn hereunder to pay unpaid interest on
Eligible Bonds or to pay that portion of the purchase price or redemption price
corresponding to unpaid interest on Eligible Bonds, in each case by an amount
equal to the amount of such draft (any such drawing being an "Interest
Drawing"). The Principal Component shall be reduced immediately following our
honoring any draft drawn hereunder: () pursuant to Section 308(c)(ii) of the
Indenture to pay that portion of purchase price corresponding to principal of
Eligible Bonds that are (A) subject to mandatory tender for purchase pursuant
to Section 301(d)(iii), 301(e)(iv)(B) or 301(f)(iii) of the Indenture or (B)
tendered for purchase by the holders thereof pursuant to Section 301(e)(iii) of
the Indenture (any such drawing in respect of the circumstances referred to in
this clause (i) being a "Tender Drawing"), () pursuant to Section 308(c)(i) of
the Indenture to pay the principal of Eligible Bonds or that portion of the
redemption price of Eligible Bonds corresponding to principal, whether at
stated maturity, upon acceleration or upon redemption, or () pursuant to
Section 308(c)(ii) of the Indenture to pay that portion of the purchase price
corresponding to principal of Eligible Bonds that are subject to mandatory
tender for purchase pursuant to Section 301(e)(iv)(A) of the Indenture (any
such drawing in respect of the circumstances referred to in the foregoing
clause (ii) or in this clause (iii) being a "Redemption/Mandatory Purchase
Drawing"), in each such case by an amount equal to the amount of such draft.
The Premium Component shall be reduced immediately following our honoring any
draft drawn hereunder to pay premium on Eligible Bonds in connection with a
Redemption/Mandatory Purchase Drawing, by an amount equal to the amount of such
draft.
Additionally, upon receipt of a Notice of Reduction in the form of Exhibit
4 to this Letter of Credit purportedly executed by you, we will reduce the
Principal Component, Interest Component and Premium Component to the amounts
therein stated.
(5) Reinstatement. The Interest Component and the Principal Component
shall, from time to time, be reinstated by us in accordance with, and only to
the extent provided in, the following subparagraphs (i) and (ii). In no event
shall reductions in the Premium Component be reinstated.
(i) Interest Component. Reductions in the Interest Component
resulting from Interest Drawings shall be reinstated as follows:
(A) Immediately following each drawing hereunder to pay unpaid
interest on Eligible Bonds in the Flexible Mode or to pay that
portion of purchase price, but not redemption price, corresponding to
unpaid interest on Eligible Bonds in the Flexible Mode, the amount so
drawn shall be automatically reinstated to the Interest Component
unless, not later than the business day preceding such drawing you
shall have received written notice from us that we will not reinstate
the Interest Component in the amount of such drawing. On the fifth
day following each drawing hereunder to pay accrued and unpaid
interest on Eligible Bonds that are not in the Flexible Mode, or to
pay that portion of purchase price, but not redemption price,
corresponding to accrued and unpaid interest on Eligible Bonds that
are not in the flexible Mode, the amount so drawn shall be
automatically reinstated to the Interest Component, unless you shall
have theretofore received written notice from us that we will not
reinstate the Interest Component in the amount of such drawing. Any
notice of non-reinstatement delivered pursuant to this subparagraph
(i)(A) shall be in writing and shall be delivered to you by hand
delivery or facsimile transmission.
(B) If, subsequent to any such delivery of a notice of non-
reinstatement as aforesaid, we shall deliver to you, by hand delivery
or facsimile transmission, a Notice of Reinstatement in the form of
Exhibit 5 hereto, then, upon such delivery to you, the Interest
Component shall be immediately reinstated to the extent specified in
such Notice of Reinstatement.
(C) In no event shall the Interest Component be reinstated to an
amount in excess of 128 days' interest on all Eligible Bonds,
computed at the rate of 16% per annum on the basis of a year of 360
days for the actual days elapsed, or such lesser rate of interest as
shall equal the Maximum Interest Rate (as defined in the Indenture)
in effect under the Indenture with respect to such Eligible Bonds.
(ii) Principal Component. Reductions in the Principal Component
resulting from Redemption/Mandatory Purchase Drawings shall in no event be
reinstated. Reductions in the Principal Component resulting from Tender
Drawings shall be reinstated as follows:
(A) Immediately upon receipt by us of proceeds from the
remarketing of Pledged Bonds (as defined in the Indenture), or of
written notice from you that you have received such proceeds (or a
window receipt guaranteeing same day payment in immediately available
funds of such proceeds as contemplated by Section 312(a) of the
Indenture), the Principal Component shall be reinstated automatically
by the amount of such proceeds.
(B) Immediately upon your receipt from us, by hand delivery or
facsimile transmission, of a Notice of Reinstatement in the form of
Exhibit 5 hereto, the Principal Component shall be immediately
reinstated to the extent specified in such Notice of Reinstatement.
(C) In no event shall the Principal Component be reinstated to
an amount in excess of the aggregate principal Eligible Bonds then
outstanding under the Indenture.
Any Notice of Reinstatement delivered to you in the form set forth in Exhibit 5
hereto, whether delivered pursuant to subparagraph (i) or subparagraph (ii),
above, may be combined, in a single such Notice, with any other Notice of
Reinstatement delivered pursuant to the other such subparagraph.
(6) Notices. Communications (other than drawings) with respect to this
Letter of Credit shall be in writing and shall be addressed to us at 222
Broadway, 12th Floor, New York, New York 10038, Attention: Client Services
Unit, (telephone: (212) 412-3721, telecopy: (212) 412-5306), with a copy to:
Utilities Group, (telephone (212) 412-2470, telecopy: (212) 412-6709), or, in
each case, at such other office or telepcopy number as we may designate by
written notice to you specifically referring to the number of this Letter of
Credit.
(7) Transfer. This Letter of Credit is transferable in its entirety (but
not in part) to any transferee who has succeeded you as Paying Agent under the
Indenture and may be successively so transferred. Transfer of the available
balance under this Letter of Credit to such transferee shall be effected by the
presentation to us of this Letter of Credit accompanied by a certificate
substantially in form set forth in Exhibit 6.
(8) Governing Law, Etc. Except as otherwise provided herein, this Letter
of Credit shall be governed by and construed in accordance with the
International Standby Practices 1998 ("ISP 98") and, to the extent not
inconsistent with the ISP, the laws of the State of New York, including the
Uniform Commercial Code as in effect in the State of New York. This Letter of
Credit sets forth in full our undertaking, and, except as expressly set forth
herein, such undertaking shall not in any way be modified, amended, amplified
or limited by reference to any document, instrument or agreement referred to
herein (including, without limitation, the Bonds, the Indenture and the
Reimbursement Agreement), except only the certificates and the drafts referred
to herein; and any such reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement except for such certificates
and such drafts. Whenever and wherever the terms of this Letter of Credit
shall refer to the purpose of a draft hereunder, or the provisions of any
agreement or document pursuant to which such draft may be presented hereunder,
such purpose or provisions shall be conclusively determined by reference to the
certificate accompanying such draft; in furtherance of this sentence, whether
any drawing is in respect of payment of regularly scheduled interest on the
Bonds or of principal of or interest on the Bonds upon scheduled or accelerated
maturity or is a Tender Drawing or a Redemption/Mandatory Purchase Drawing
shall be conclusively determined by reference to the certificate accompanying
such drawing.
Very truly yours,
BARCLAYS BANK PLC,
NEW YORK BRANCH
By
Title:
By
Title:
EXHIBIT 1
TO THE LETTER OF CREDIT
CERTIFICATE FOR TENDER DRAWING
The undersigned, a duly authorized officer of (the "Paying
Agent"), hereby certifies as follows to Barclays Bank PLC, New York Branch (the
"Bank"), with reference to Irrevocable Letter of Credit No. (the
"Letter of Credit") issued by the Bank in favor of the Paying Agent. Terms
defined in the Letter of Credit and used but not defined herein shall have the
meanings given them in the Letter of Credit.
(9) The Paying Agent is the Paying Agent under the Indenture for the
holders of the Bonds.
(10) The Paying Agent is making a Tender Drawing under the Letter of
Credit in the amount of $ pursuant to Section 308(c)(ii) of the
Indenture to pay that portion of the purchase price corresponding to principal
of Eligible Bonds that are
[subject to mandatory tender for purchase pursuant to Section
[301(d)(iii)] [301(e)(iv)(B)] [301(f)(iii)] of the Indenture.]
[tendered for purchase by the holders thereof pursuant to Section
301(e)(iii) of the Indenture.]
(11) The amount of purchase price corresponding to principal of Eligible
Bonds and with respect to the payment of which the Paying Agent, pursuant to
the foregoing Sections of the Indenture, is drawing under the Letter of Credit,
is as follows, and the amount of the draft accompanying this Certificate does
not exceed such amount:
Principal: $
(12) The amount of the draft accompanying this Certificate being drawn in
respect of purchase price corresponding to principal of Eligible Bonds, as
indicated in paragraph (3), above, does not exceed the Principal Component of
the Letter of Credit. The amount of the draft accompanying this Certificate in
respect of purchase price corresponding to principal of such Bonds has been
computed in accordance with the terms and conditions of such Eligible Bonds and
the Indenture.
(13) No proceeds of this drawing will be applied to the payment of
purchase price of any Bonds that are not Eligible Bonds, including any Pledged
Bonds (as defined in the Indenture), any Company Bonds (as defined in the
Indenture) and any Bonds in the Fixed Rate Mode (as defined in the Indenture).
(14) [The Eligible Bonds in respect of which this drawing is being made
are Eligible Bonds in the Flexible Mode, and payment of this drawing shall be
made in accordance with Paragraph 3(i) of the Letter of Credit.]
[(6) The Eligible Bonds in respect of which this drawing is being made
are not Eligible Bonds in the Flexible Mode, and payment of this drawing shall
be made in accordance with Paragraph 3(ii) of the Letter of Credit].
IN WITNESS WHEREOF, the Paying Agent has executed and delivered
this Certificate as of the day of , .
[NAME OF PAYING AGENT],
as Paying Agent
By
Title:
EXHIBIT 2
TO THE LETTER OF CREDIT
CERTIFICATE FOR REDEMPTION/
MANDATORY PURCHASE DRAWING
The undersigned, a duly authorized officer of (the "Paying
Agent"), hereby certifies as follows to Barclays Bank PLC, New York Branch (the
"Bank"), with reference to Irrevocable Letter of Credit No. (the
"Letter of Credit") issued by the Bank in favor of the Paying Agent. Terms
defined in the Letter of Credit and used but not defined herein shall have the
meanings given them in the Letter of Credit.
(15) The Paying Agent is the Paying Agent under the Indenture for the
holders of the Bonds.
(16) The Paying Agent is making a Redemption/Mandatory Purchase Drawing
under the Letter of Credit in the amount of $ .
[pursuant to Section 308(c)(i) and Section 605 of the Indenture to
pay the principal of Eligible Bonds due pursuant to the Indenture
upon maturity or as a result of acceleration of such Eligible Bonds
in accordance with the Indenture and the terms of such Eligible
Bonds.]
[pursuant to Section 308(c)(i) of the Indenture to pay that portion
of the redemption price corresponding to principal of [and premium on
Eligible Bonds due pursuant to the Indenture upon redemption of such
Eligible Bonds in accordance with the Indenture and the terms of such
Eligible Bonds.]
[pursuant to Section 308(c)(ii) of the Indenture to pay that portion
of the purchase price of Eligible Bonds corresponding to principal
that are subject to mandatory tender for purchase pursuant to Section
301(e)(iv)(A) of the Indenture.]
(17) The amount of [principal of] [redemption price corresponding to
principal of] [and premium on] [purchase price corresponding to principal of]
Eligible Bonds which is due and payable and with respect to the payment of
which the Paying Agent, pursuant to the foregoing Section[s] of the Indenture,
is to draw under the Letter of Credit is as follows, and the amount of the
draft accompanying this Certificate does not exceed such amount:
Principal:$
[Premium $ ]
(18) The amount of the draft accompanying this Certificate being drawn in
respect of payment of [principal] [redemption price corresponding to principal]
[purchase price corresponding to principal] of Eligible Bonds, as indicated in
paragraph (3), above, does not exceed the Principal Component of the Letter of
Credit. [The amount of the draft accompanying this Certificate being drawn in
respect of that portion of the redemption price of Eligible Bonds corresponding
to premium, as indicated in paragraph (3), above, does not exceed the Premium
Component of the Letter of Credit.] The amount of the draft accompanying this
Certificate in respect of payment of [principal] [redemption price
corresponding to principal] [and premium] [purchase price corresponding to
principal] of such Eligible Bonds has been computed in accordance with the
terms and conditions of such Eligible Bonds and the Indenture.
(19) No proceeds of this drawing will be applied to the payment of
principal, redemption price (including premium, if any) or purchase price of
any Bonds that are not Eligible Bonds, including any Pledged Bonds (as defined
in the Indenture), any Company Bonds (as defined in the Indenture), and any
Bonds in the Fixed Rate Mode (as defined in the Indenture).
(20) Payment of this drawing shall be made in accordance with Paragraph
3(ii) of the Letter of Credit.
(21) [The draft accompanying this Certificate is the final draft to be
drawn under the Letter of Credit, and, upon the honoring of such draft, the
Letter of Credit will expire in accordance with its terms.]
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
Certificate as of the day of , .
[NAME OF PAYING AGENT],
as Paying Agent
By
Title:
EXHIBIT 3
TO THE LETTER OF CREDIT
CERTIFICATE FOR INTEREST DRAWING
The undersigned, a duly authorized officer of (the "Paying Agent"), hereby
certifies as follows to Barclays Bank PLC, New York Branch (the "Bank"), with
reference to Irrevocable Letter of Credit No. (the "Letter of
Credit") issued by the Bank in favor of the Paying Agent. Terms defined in the
Letter of Credit and used but not defined herein shall have the meanings given
them in the Letter of Credit.
(22) The Paying Agent is the Paying Agent under the Indenture for the
holders of the Bonds.
(23) The Paying Agent is making a drawing under the Letter of Credit in
the amount of $ with respect to [the payment of interest] [the payment of
the portion of redemption price corresponding to interest] [the payment of the
portion of purchase price corresponding to interest] on Eligible Bonds in
accordance with the Indenture.
(24) The amount of [interest] [redemption price corresponding to interest]
[purchase price corresponding to interest] on Eligible Bonds that is due and
owing is as follows, and the amount of the draft accompanying this Certificate
does not exceed such amount:
Interest: $
(25) The amount of the draft accompanying this Certificate being drawn in
respect of payment of [interest] [redemption price corresponding to interest]
[purchase price corresponding to interest] on Eligible Bonds, as indicated in
paragraph (3), above, does not exceed the Interest Component of the Letter of
Credit. The amount of the draft accompanying this Certificate in respect of
payment of [interest] [redemption price corresponding to interest] [purchase
price corresponding to interest] on Eligible Bonds has been computed in
accordance with the terms and conditions of such Eligible Bonds and the
Indenture.
(26) Payment of this drawing shall be made in accordance with Paragraph
3(ii) of the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
Certificate as of the day of , .
[NAME OF PAYING AGENT],
as Paying Agent
By
Title:
EXHIBIT 4
TO THE LETTER OF CREDIT
NOTICE OF REDUCTION
The undersigned, a duly authorized officer of (the "Paying
Agent"), hereby certifies as follows to Barclays Bank PLC, New York Branch (the
"Bank"), with reference to Irrevocable Letter of Credit No. (the
"Letter of Credit") issued by the Bank in favor of the Paying Agent. Terms
defined in the Letter of Credit and used but not defined herein shall have the
meanings given them in the Letter of Credit.
(27) The Paying Agent is the Paying Agent under the Indenture for the
holders of the Bonds.
(28) As of the date hereof; the aggregate principal amount of Eligible
Bonds (including for this purpose all Pledged Bonds and all Company Bonds)
outstanding is
Principal: $
(29) You are hereby directed to reduce the [Principal] [Premium] [and]
[Interest] Components of the Letter of Credit as follows:
[The Principal Component of the Letter is reduced to $ .]
[The Premium Component of the Letter of Credit is reduced to $ .]
[The Interest Component of the Letter of Credit is reduced to $ .]
IN WITNESS WHEREOF, the Paying Agent has delivered this Certificate as of
the day of , .
[NAME OF PAYING AGENT],
as Paying Agent
By
Title:
EXHIBIT 5
TO THE LETTER OF CREDIT
NOTICE OF REINSTATEMENT
The undersigned, a duly authorized officer of Barclays Bank PLC, New York
Branch (the "Bank"), hereby gives the following notice to as
paying agent (the "Paying Agent"), with reference to Irrevocable Letter of
Credit No. (the "Letter of Credit") issued by the Bank in favor of
the Paying Agent. Terms defined in the Letter of Credit and used but not
defined herein have the meanings given them in the Letter of Credit.
The Bank hereby notifies you that:
[1.] [Pursuant to Paragraph 5(i)(B) of the Letter of Credit and Section
2.04(b)(ii) of the Reimbursement Agreement, the Interest Component has
been reinstated by $ .]
[2.] [Pursuant to Paragraph 5(ii)(B) of the Letter of Credit and Section
2.04(c) of the Reimbursement Agreement, the Principal Component has been
reinstated by $ .]
IN WITNESS WHEREOF, the Bank has executed and delivered this Notice
Reinstatement as of the day of , .
BARCLAYS BANK PLC,
NEW YORK BRANCH
By
Title:
EXHIBIT 6
TO THE LETTER OF CREDIT
INSTRUCTIONS TO TRANSFER
Re: Irrevocable Letter of Credit No.
Gentlemen:
The undersigned, as Paying Agent under that certain Amended and Restated
Series D Loan and Trust Agreement, dated as of April 1, 1999 (the "Indenture"),
by and among the Business Finance Authority (formerly The Industrial
Development Authority) of the State of New Hampshire (the "Issuer"), Public
Service Company of New Hampshire and the State Street Bank and Trust Company,
as Trustee, is named as beneficiary in the Letter of Credit referred to above
(the "Letter of Credit"). The Transferee named below has succeeded the
undersigned as Paying Agent under such Indenture.
(Name of Transferee)
(Address)
Therefore, for value received, the undersigned hereby irrevocably
instructs you to transfer to such Transferee all rights of the undersigned to
draw under the Letter of Credit.
Such Transferee shall hereafter have the sole rights as beneficiary under
the Letter of Credit; provided, however, that no rights shall be deemed to have
been transferred to such Transferee until such transfer complies with the
requirements of the Letter of Credit pertaining to transfers.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the day of , .
[NAME OF RETIRING PAYING AGENT],
as Paying Agent
By
Title:
The undersigned, [Name of Transferee], hereby accepts the foregoing
transfer of rights under the Letter of Credit.
[Name of Transferee]
By
Title:
Address of Principal
Corporate Trust Office:
[insert address]
EXHIBIT 4.3.6.1
THIRD SERIES D LETTER OF CREDIT
AND REIMBURSEMENT AGREEMENT
Dated as of April 14, 1999
This THIRD SERIES D LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated
as of April 14, 1999 (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 "Account Party");
(ii) Barclays Bank PLC, New York Branch ("Barclays"), as issuer of
the Letter of Credit (the "Issuing Bank");
(iii) The Participating Banks (as hereinafter defined) from
time to time party hereto; and
(iv) Barclays as agent (together with any successor agent
hereunder, the "Agent") for such Participating Banks and the Issuing
Bank.
PRELIMINARY STATEMENT
The Business Finance Authority (formerly The Industrial Development
Authority) of the State of New Hampshire (the "Issuer"), pursuant to a Series
D Loan and Trust Agreement, dated as of May 1, 1991 (the "Original
Indenture"), by and among the Issuer, the Account Party and State Street Bank
and Trust Company, as trustee (such entity, or its successor as trustee,
being the "Trustee"), previously issued $114,500,000 aggregate principal
amount of 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) (such bonds being herein referred to as the
"Taxable Bonds"). Pursuant to the Original Indenture, a First Supplement
thereto, dated as of December 1, 1992 and a Second Supplement thereto, dated
as of May 1, 1995 (the Original Indenture, as so supplemented by such First
Supplement and such Second Supplement and as the same may be further
supplemented, amended or modified from time to time with the written consent
of the Issuing Bank, being herein referred to as the "Existing Indenture"),
the Issuer refunded $75,000,000 aggregate principal amount of the Taxable
Bonds through the issuance of $75,000,000 aggregate principal amount of
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) (such bonds being herein referred to as the
"Original Tax-Exempt Refunding Bonds").
The Account Party previously caused Barclays to issue its Irrevocable
Letter of Credit No. 839136, dated May 2, 1995 in a stated amount of
$117,858,000 (the "Existing Letter of Credit"), in support of the Taxable
Bonds and the Original Tax-Exempt Refunding Bonds, and, in connection
therewith, the Account Party entered into a Second Series D Letter of Credit
and Reimbursement Agreement dated as of May 1, 1995 (the "Existing
Reimbursement Agreement") with Barclays as issuing bank and agent thereunder
and the participating banks referred to therein.
On April 23, 1998 and May 1, 1998, respectively, the parties to the
Existing Reimbursement Agreement: (i) caused the Existing Reimbursement
Agreement to be amended and restated in its entirety and (ii) caused the
Existing Letter of Credit to be amended and extended, as a result of which
transactions, the stated expiry date of the Existing Letter of Credit was
extended to April 22, 1999 and the Original Tax-Exempt Refunding Bonds ceased
to be entitled to the benefits of the Existing Letter of Credit.
The Account Party now wishes to replace the Existing Letter of Credit
with an irrevocable, transferable letter of credit issued by the Issuing Bank
in an aggregate amount of $41,748,000 (the "Stated Amount"), of which
(i) $39,500,000 shall support the payment of principal of the Taxable Bonds
(or the portion of the purchase or redemption price of Taxable Bonds
corresponding to principal), (ii) $2,248,000 shall support the payment of up
to 128 days' interest on the principal amount of Taxable Bonds (or the
portion of the purchase or redemption price of Taxable Bonds corresponding to
interest), computed at a maximum interest rate of 16% per annum on the basis
of the actual days elapsed and a year of 360 days, subject to modification as
provided in Section 2.06 hereof, and (iii) $0.00 shall support the payment of
premium on Taxable Bonds, and otherwise in the form of Exhibit 1.01A hereto
(such letter of credit, as the same may from time to time be extended,
amended or otherwise modified pursuant to the terms of this Agreement, being
hereinafter referred to as the "Letter of Credit"). Concurrently therewith,
the Issuer, the Account Party and the Trustee are entering into that certain
Amended and Restated Series D Loan and Trust Agreement, dated as of April 1,
1999 (the "Indenture"), which Indenture amends and restates the Existing
Indenture in its entirety.
The Issuing Bank has agreed to issue the Letter of Credit, and the
Participating Banks have agreed to make certain advances and acquire certain
participation interests, in each case subject to the terms and conditions set
forth in this Agreement (including the terms and conditions relating to the
rights and obligations of the Participating Banks).
NOW, THEREFORE, in consideration of the premises set forth herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1. Certain Defined Terms. In addition to the terms defined in
the Preliminary Statement hereto, 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):
"Advances" means Initial Advances and Term Advances, without
differentiation; individually, an "Advance".
"Affiliate" means, with respect to a specified Person, another
Person that directly or indirectly through one or more intermediaries
controls or is controlled by or is directly or indirectly under 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 ("CL&P") and the Account Party, as amended by the
First Amendment to Agreement for Capacity Transfer, dated as of May 1,
1992 between CL&P and the Account Party, which provides for capacity
transfers from the Account Party to CL&P.
"Alternate Base Rate" means, for any period, a fluctuating interest
rate per annum equal at all times to the higher from time to time of:
(a) the rate of interest announced publicly by Barclays in
New York, New York, from time to time, as Barclays' prime rate; and
(b) 1/2 of one percent per annum above the Federal Funds Rate
from time to time;
plus, in either case, the Applicable Margin for Base Rate Advances. Each
change in the Alternate Base Rate shall take effect concurrently with
any change in such prime rate or Federal Funds Rate, as the case may be.
"Applicable Commission" means, for any day, two and one-quarter
percent (2.25%).
"Applicable Lending Office" means, with respect to each
Participating Bank, (i) (A) such Participating Bank's "Domestic Lending
Office", in the case of a Base Rate Advance, and (B) such Participating
Bank's "Eurodollar Lending Office," in the case of a Eurodollar Rate
Advance, in each case as specified opposite such Participating Bank's
name on Schedule I hereto (in the case of a Participating Bank initially
party to this Agreement) or in the Participation Assignment pursuant to
which such Participating Bank became a Participating Bank (in the case
of any other Participating Bank), or (ii) such other office or affiliate
of such Participating Bank as such Participating Bank may from time to
time specify to the Account Party and the Agent.
"Applicable Margin" means, for any day: (i) two and one-quarter
percent (2.25%), for any outstanding Eurodollar Rate Advance, and (ii)
one and one-quarter percent (1.25%), for any outstanding Base Rate
Advance.
"Arranger" means Barclays Bank PLC.
"Available Amount" in effect at any time means the maximum
aggregate amount available to be drawn at such time under the Letter of
Credit, the determination of such maximum amount to assume compliance
with all conditions for drawing and no reduction for (i) any amount
drawn by the Paying Agent to make a regularly scheduled payment of
interest on the Bonds (unless such amount will not be reinstated under
the Letter of Credit) or (ii) any amount not available to be drawn
because Bonds are held by or for the account of the Account Party and/or
in pledge for the benefit of the Issuing Bank, but after giving effect
nevertheless, to any reduction in the Stated Amount effected pursuant to
Section 2.06 hereof.
"Bankruptcy Code" means Title 11 of the United States Code, as the
same may be amended from time to time, or any successor bankruptcy law
of the United States.
"Base Rate Advance" means an Advance in respect of which the
Account Party has selected in accordance with Article III hereof, or
this Agreement otherwise provides for, interest to be computed on the
basis of the Alternate Base Rate.
"Bonds" means (i) the Taxable Bonds outstanding as of the date
hereof and (ii) any Tax-Exempt Refunding Bonds (as defined in the
Indenture) that may be issued in accordance with the Indenture and this
Agreement to refund any of such remaining Taxable Bonds; provided,
however, that the term "Bonds" shall in no event include the Original
Tax-Exempt Refunding Bonds.
"Business Day" means a day of the year that is not a Sunday, legal
holiday or a day on which banks are required or authorized to close in
New York City and, (i) if the applicable Business Day relates to any
Eurodollar Rate Advance, is a day on which dealings are carried on in
the London interbank market and/or (ii) if the applicable Business Day
relates to any action to be taken by, or notice furnished to or by, or
payment to be made to or by, the Trustee, the Paying Agent, the
Remarketing Agent or the First Mortgage Trustee, is a day on which
(A) banking institutions are not authorized pursuant to law to close,
(B) the corporate trust office of the First Mortgage Trustee is open for
business, (C) banking institutions in all of the cities in which the
principal offices of the Issuing Bank, the Trustee, the Paying Agent,
the First Mortgage Trustee and, if applicable, the Remarketing Agent are
located are not required or authorized to remain closed and (D) the New
York Stock Exchange is not closed.
"Cash Account" has the meaning assigned to that term in Section
7.05.
"CL&P" has the meaning assigned to that term in the definition of
Agreement for Capacity Transfer.
"Closing Date" means the Business Day upon which each of the
conditions precedent enumerated in Sections 5.01 and 5.02 of this
Agreement shall be fulfilled to the satisfaction of the Agent, the
Issuing Bank, the Participating Banks and the Account Party. All
transactions contemplated to occur on the Closing Date shall occur
contemporaneously on or prior to April 14, 1999, at the offices of King
& Spalding, 1185 Avenue of the Americas, New York, New York 10036, at
12:01 A.M. (New York City time), or at such other place and time as the
parties hereto may mutually agree.
"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 Agent" means Barclays and any successor as collateral
agent under the Intercreditor Agreement.
"Commitment" means, for each Participating Bank, such Participating
Bank's Percentage of the Available Amount. "Commitments" shall refer to
the aggregate of the Commitments.
"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 Account Party and the surplus,
paid-in, earned and other, if any, of the Account Party.
"Confidential Information" has the meaning assigned to that term in
Section 10.09 hereof.
"Conversion", "Convert" or "Converted" each refers to a conversion
of Term Advances pursuant to Section 3.04 hereof, including, but not
limited to any selection of a longer or shorter Interest Period to be
applicable to such Term Advances or any conversion of a Term Advance as
described in Section 3.04(c) hereof.
"Credit Termination Date" means the date on which the Letter of
Credit shall terminate in accordance with its terms.
"date hereof" means April 14, 1999.
"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 (not
including 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.
"Default Rate" means a fluctuating interest rate equal at all times
to 2% per annum above the rate applicable to Base Rate Advances at such
time.
"Disclosure Documents" means the Information Memorandum, the 1998
10-K and any Current Report on Form 8-K filed by the Account Party with
the Securities and Exchange Commission after December 31, 1998 and
furnished to the Participating 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 any trade or business (whether or not
incorporated, that, together with the Account Party is treated as a
single employer under Section 414(b) or (c) of the Code or, solely for
purposes of Section 302 of ERISA and Section 412 of the Code, is treated
as a single employer under Section 414 of the Code.
"ERISA Multiemployer Plan" means a "multiemployer plan" subject to
Title IV of ERISA.
"ERISA Plan" means an employee benefit plan (other than an ERISA
Multiemployer Plan) maintained for employees of the Account Party or any
ERISA Affiliate and covered by Title IV of ERISA.
"ERISA Plan Termination Event" means (i) a "reportable event", as
defined in Section 4043 of ERISA or the regulations issued thereunder
(other than an event for which the 30-day notice period is waived) with
respect to an ERISA Plan or an ERISA Multiemployer Plan, or (ii) the
existence with respect to any ERISA plan of an "accumulated funding
deficiency" (as defined in Section 412(d) of the Code or Section 302 of
ERISA), whether or not waived; (iii) the filing pursuant to Section
412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any ERISA Plan;
(iv) the incurrence by the Account Party or any of its ERISA Affiliates
of any liability under Title IV or ERISA with respect to the termination
of any ERISA Plan; (v) the receipt by Account Party or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating
to an intention to terminate any ERISA Plan or an ERISA Multiemployer
Plan under Section 4041 of ERISA or to appoint a trustee to administer
any ERISA Plan or ERISA Multiemployer Plan; (vi) the receipt by the
Account Party or any of its ERISA Affiliates of any notice, or the
receipt by an ERISA Multiemployer Plan from the Account Party or any of
its ERISA Affiliates of any notice, concerning the imposition of
liability due to any withdrawal of the Account Party 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 a determination that an ERISA Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the
meaning of Title IV of ERISA or (vii) 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 Rate" means for any Interest Period for any Eurodollar
Rate Advances comprising part of the same Term Borrowing, an interest
rate per annum equal at all times during such Interest Period to the sum
of:
(i) the rate per annum (rounded upward to the nearest whole
multiple of 1/100 of 1% per annum, if such rate is not such a
multiple) determined by the Agent at which deposits in United
States dollars in amounts comparable to the Eurodollar Rate Advance
of Barclays comprising part of such Term Borrowing and for
comparable periods as such Interest Period are offered by the
principal office of Barclays 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, plus
(ii) the Applicable Margin.
"Eurodollar Rate Advance" means an Advance in respect of which the
Account Party 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 Participating Bank 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 Participating
Bank 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 assigned to that term in Section
8.01.
"Existing Letter of Credit" has the meaning assigned to that term
in the Preliminary Statement.
"Existing Reimbursement Agreement" has the meaning assigned to
that term in the Preliminary Statement.
"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 on the next
succeeding Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers
of recognized standing selected by it.
"Final Plan" means the "Final Plan" implementing Chapter 374-F of
the Revised Statutes Annotated of New Hampshire, adopted by the NHPUC on
February 28, 1997, and any successor plan or proposal.
"First Mortgage Bonds" means first mortgage bonds issued or to be
issued by the Account Party 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
Account Party or by a governmental authority at the Account Party's
request.
"First Mortgage Indenture" means the General and Refunding Mortgage
Indenture, between the Account Party and New England Merchants National
Bank, as trustee and to which First Union National Bank is successor
trustee, dated as of August 15, 1978, as amended and supplemented
through the date hereof and as the same may thereafter be amended,
supplemented or modified from time to time.
"First Mortgage Trustee" means the trustee from time to time under
the First Mortgage Indenture.
"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 Transaction Document, Loan
Document, Related Document or Significant Contract, (ii) the grant and
perfection of any security interest, lien or mortgage contemplated by
the Security Documents, (iii) the nature of the Account Party's business
as conducted or the nature of the property owned or leased by it or (iv)
any NUG Settlement. For purposes of this Agreement, Chapter 362-C of
the Revised Statutes Annotated of New Hampshire, as in effect on May 2,
1995, 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" has the meaning assigned to that term in the
Preliminary Statement.
"Indenture Assets" means fixed assets of the Account Party
(including related Governmental Approvals and regulatory assets) 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, 1999 regarding the Account Party, as
distributed to the Issuing Bank and the Participating Banks, including,
without limitation, all schedules, attachments and supplements, if any,
thereto.
"Initial Advance" has the meaning assigned to that term in Section
3.02(a) hereof.
"Initial Repayment Date" has the meaning assigned to that term in
Section 3.02(a) hereof.
"Intercreditor Agreement" means the Collateral Agency and
Intercreditor Agreement, dated as of April 23, 1998, as amended and
restated as of the date hereof by the Intercreditor Amendment, among
the Agent, Barclays as "Agent" under the Other Reimbursement Agreement
and Barclays as Collateral Agent, as the same may be amended, modified
or supplemented from time to time.
"Intercreditor Amendment" means the First Amendment, dated as of
April 14, 1999, to the Collateral Agency and Intercreditor Agreement,
dated as of April 23, 1998, among The Chase Manhattan Bank ("Chase"), as
"Administrative Agent" under the 1998 Revolving Credit Agreement,
Barclays, as "Agent" under the Existing Reimbursement Agreement, UBS AG,
Stamford Branch, as successor to Swiss Bank Corporation, Stamford
Branch, as "Agent" under the "Other Reimbursement Agreement" referred to
in the Existing Reimbursement Agreement, the Agent, Barclays as "Agent"
under the Other Reimbursement Agreement, Chase, as the original
Collateral Agent thereunder and Barclays as successor Collateral Agent
thereunder.
"Interest Component" has the meaning assigned to that term in the
Letter of Credit.
"Interest Drawing" has the meaning assigned to that term in the
Letter of Credit.
"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
3.03(b) hereof.
"Issuer" has the meaning assigned to that term in the Preliminary
Statement.
"Issuer Resolution" means the resolution adopted by the Issuer that
authorized the issuance of the Bonds, approved the terms and provisions
of the Bonds, and approved those of the documents related to the Bonds
to which the Issuer is a party.
"Letter of Credit" has the meaning assigned to that term in the
Preliminary Statement.
"Lien" has the meaning assigned to that term in Section 7.02(a)
hereof.
"Loan Documents" means this Agreement and the Security Documents,
as each may be amended, supplemented or otherwise modified from time to
time.
"Major Electric Generating Plants" means the following nuclear,
combustion turbine and coal, oil or diesel-fired generating stations of
the Account Party: 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, (i) the
Issuing Bank and (ii) Participating Banks who, collectively, on such
date, have Participation Percentages in the aggregate of at least 66-
2/3%. Determination of those Participating Banks satisfying the criteria
specified above for action by the Majority Lenders shall be made by the
Agent and shall be conclusive and binding on all parties absent manifest
error.
"Material Adverse Effect" means a material adverse effect upon: (i)
the Account Party's business, prospects, operations, properties, assets,
or condition (financial or otherwise), (ii) the Account Party's ability
to perform under any Loan Document, Related Document, the Rate Agreement
or any Significant Contract, (iii) the value, validity, perfection and
enforceability of the any Lien granted under or in connection with any
Security Document, or (iv) the ability of the Collateral Agent, the
Agent or the Issuing Bank to enforce any of the obligations or any of
their material rights and remedies under the Loan Documents; provided,
that, any material adverse development with respect to the Rate
Proceeding, the Rate Agreement or the Final Plan that results in a
material adverse effect on the Account Party other than as described in
the Disclosure Documents shall automatically be deemed to be a Material
Adverse Effect.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"NAEC" means North Atlantic Energy Corporation, a wholly-owned
subsidiary of NU.
"NHPUC" means the New Hampshire Public Utilities Commission.
"1998 10-K" means the Account Party's 1998 Annual Report and its
Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
"1998 Revolving Credit Agreement" means the $75,000,000 (original
principal amount) Revolving Credit Agreement, dated as of April 23,
1998, among the Account Party, the Banks named therein and The Chase
Manhattan Bank, as Administrative Agent.
"NU" means Northeast Utilities, an unincorporated voluntary
business association organized under the laws of the Commonwealth of
Massachusetts.
"NUG Settlement" means any buy-out, buy-down or other transaction,
or any other arrangement or agreement, entered into or proposed to be
entered into by the Account Party to terminate or reduce, or to resolve
a dispute concerning, an obligation of the Account Party to purchase
power and/or capacity from a non-utility generator.
"NUSCO" means Northeast Utilities Service Company, a Connecticut
corporation and a wholly-owned subsidiary of NU.
"Official Statement" means any Official Statement, Preliminary
Official Statement or similar disclosure document relating to the Bonds,
and shall include any amendment, supplement or "sticker" thereto.
"Operating Income" means, for any period, the Account Party'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 Account Party during such period, if and to the extent they are
deducted in the computation of the Account Party's operating income
for such period; and
(ii) increased by the amount of any depreciation deducted by
the Account Party during such period; and
(iii) increased by the amount of any amortization of
acquisition adjustment deducted by the Account Party during such
period; and
(iv) decreased by the amount of any capital expenditures paid
by the Account Party during such period.
"Original Indenture" has the meaning assigned to that term in the
Preliminary Statement.
"Original Tax-Exempt Refunding Bonds" has the meaning assigned to
that term in the Preliminary Statement.
"Other Reimbursement Agreement" means (i) the Third Series E Letter
of Credit and Reimbursement Agreement, dated as of April 14, 1999, among
the Account Party, Barclays, as issuing bank and agent thereunder and
the Participating Banks referred to therein relating to the Issuer's
Pollution Control Revenue Bonds (Public Service Company of New Hampshire
Project-1991 Taxable Series E), as the same may from time to time be
amended, modified or supplemented or (ii) any reimbursement agreement or
similar agreement relating to a substitute credit facility applicable to
such bonds.
"Participant" shall have the meaning assigned to that term in
Section 10.06(b) hereof.
"Participating Banks" means the Persons listed on the signature
pages to this Agreement following the heading "Participating Banks" and
any other Person who becomes a party hereto pursuant to Section 10.06
hereof.
"Participation Assignment" means a participation assignment entered
into pursuant to Section 10.06 hereof by any Participating Bank and an
assignee, in substantially the form of Exhibit 1.01B hereto.
"Participation Percentage" means, as of any date of determination:
(i) with respect to a Participating Bank initially a party to this
Agreement, the percentage set forth opposite such Participating Bank's
name on the signature pages hereto, except as provided in clause (iii),
below, (ii) with respect to a Participating Bank that becomes a party
hereto by operation of Section 10.06 hereof, the Participation
Percentage stated to be assumed by such assignee Participating Bank in
the relevant Participation Assignment, except as provided in clause
(iii), below, and (iii) at any time, with respect to any Participating
Bank that assigns a percentage of its interests in accordance with
Section 10.06 hereof, its Participation Percentage determined in
accordance with clause (i) or clause (ii), above, as reduced by the
percentage so assigned.
"Paying Agent" means (i) U.S. Bank Trust National Association
(formerly First Trust of New York, National Association), and (ii) any
successor paying agent for the Bonds under the Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor entity) established under ERISA.
"Permitted Investments" means (i) securities issued or directly and
fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not
more than six (6) months from the date of acquisition by such Person;
(ii) time deposits and certificates of deposit, with maturities of not
more than six (6) months from the date of acquisition by such Person, of
any international commercial bank of recognized standing having capital
and surplus in excess of $500,000,000 and having a rating on its
commercial paper of at least A-1 or the equivalent thereof by S&P or at
least P-1 or the equivalent thereof by Moody's; (iii) commercial paper
issued by any Person, which commercial paper is rated at least A-1 or
the equivalent thereof by S&P or at least P-1 or the equivalent thereof
by Moody's and matures not more than six (6) months after the date of
acquisition by such Person; (iv) investments in money market funds
substantially all the assets of which are comprised of securities of the
types described in clauses (i) and (ii) above and (v) United States
Securities and Exchange Commission registered money market mutual funds
conforming to Rule 2a-7 of the Investment Company Act of 1940 in effect
in the United States, that invest primarily in direct obligations issued
by the United States Treasury and repurchase obligations backed by those
obligations, and rated in the highest category by S&P and Moody's.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
estate, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Pledge Agreement" means the Third Series D Pledge Agreement, dated
as of April 14, 1999, by the Account Party in favor of the Issuing Bank
and substantially in the form of Exhibit 1.01C, as the same may from
time to time be amended, modified or supplemented.
"Pledged Bonds" shall have the meaning assigned to that term in the
Pledge Agreement.
"Preferred Stock" means 3,000,000 shares of Series A Preferred
Stock of the Account Party (par value $25).
"Premium Component" has the meaning assigned to that term in the
Letter of Credit.
"Principal Component" has the meaning assigned to that term in the
Letter of Credit.
"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 Account Party as of July 10,1990 (excluding
the Unit Contract appended as Exhibit A thereto subsequent to the
effectiveness of such contract).
"Rate Proceeding" means all regulatory proceedings relating to the
Account Party and resulting from the NHPUC's adoption of the Final Plan,
together with the Federal litigation commenced by the Account Party and
certain of its Affiliates in response thereto.
"Recipient" has the meaning assigned to that term in Section 10.09
hereto.
"Related Documents" means the Letter of Credit, the Bonds, the
Indenture and any Remarketing Agreement.
"Remarketing Agent" has the meaning assigned to that term in the
Indenture.
"Remarketing Agreement" means (i) the Remarketing Agreement, dated
as of May 1, 1991, between the Account Party and Goldman, Sachs Money
Markets Inc. relating to the Taxable Bonds, (ii) any similar agreement
subsequently entered into with respect to any Tax-Exempt Refunding
Bonds, other than the Original Tax-Exempt Refunding Bonds, and (iii) any
successor agreement to any of the foregoing or any similar agreement
between the Account Party and a successor Remarketing Agent as shall be
in effect from time to time in accordance with the terms of the
Indenture.
"Restricted Payment" has the meaning assigned to that term in
Section 7.02(e) hereof.
"Revolving Credit Facility" has the meaning assigned to that term
in Section 7.04 hereof.
"S&P" means Standard and Poor's Ratings Group or any successor
thereto.
"Secured Party" has the meaning assigned to that term in the
Intercreditor Agreement.
"Security Agreement" means the Assignment and Security Agreement,
dated as of April 23, 1998, as amended and restated as of the date
hereof by the Security Agreement Amendment, between the Account Party
and the Collateral Agent, pursuant to which the Account Party has
granted to the Collateral Agent a security interest in certain of the
Account Party's accounts receivable, as the same may be amended,
modified or supplemented from time to time in accordance with this
Agreement and the Intercreditor Agreement.
"Security Agreement Amendment" means the First Amendment, dated as
of April 14, 1999, to the Assignment and Security Agreement, dated as of
April 23, 1998, between the Account Party and the Collateral Agent.
"Security Documents" means the Pledge Agreement, the Security
Agreement, the Intercreditor Agreement, the Indenture, the First
Mortgage Indenture and the Series F First Mortgage Bonds.
"Series F First Mortgage Bonds" means the Account Party's Series F
First Mortgage Bonds.
"Sharing Agreement" means the Sharing Agreement, dated as of
June 1, 1992, among CL&P, Western Massachusetts Electric Company,
Holyoke Water Power Company, Holyoke Power and Electric Company, the
Account Party and NUSCO.
"Significant Contract" 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.
"Stated Amount" has the meaning assigned to that term in the
Preliminary Statement hereto.
"Stated Termination Date" means the expiration date specified in
clause (i) of the first paragraph of Paragraph (1) of the Letter of
Credit, as such date may be extended pursuant to Section 2.05 hereof.
"Tax Allocation Agreement" means the Amended and Restated Tax
Allocation Agreement, dated as of January 1, 1990, as amended by a First
Supplement thereto, dated as of October 26, 1998, among NU and the
members of the consolidated group of which NU is the common parent,
including, without limitation, the Account Party.
"Taxable Bonds" has the meaning assigned to that term in the
Preliminary Statement.
"Tax-Exempt Refunding Bonds" has the meaning assigned to that term
in the Indenture.
"Tender Drawing" has the meaning assigned to that term in the
Letter of Credit.
"Term Advance" has the meaning assigned to that term in Section
3.02(b) hereof, and refers to a Base Rate Advance or a Eurodollar Rate
Advance (each of which shall be a "Type" of Term Advance). The Type of
a Term Advance may change from time to time when such Term Advance is
Converted. For purposes of this Agreement, all Term Advances of a
Participating Bank (or portions thereof) made as, or Converted to, the
same Type and Interest Period on the same day shall be deemed a single
Term Advance by such Participating Bank until repaid or next Converted.
"Term Borrowing" means a borrowing consisting of Term Advances of
the same Type and Interest Period made on the same day by the
Participating Banks, ratably in accordance with their respective
Participation Percentages. A Term Borrowing may be referred to herein
as being a "Type" of Term Borrowing, corresponding to the Type of Term
Advances comprising such Term Borrowing. For purposes of this Agreement,
all Term Advances made as, or Converted to, the same Type and Interest
Period on the same day shall be deemed a single Term Borrowing until
repaid or next Converted.
"Termination Date" means the Stated Termination Date or the earlier
date of termination of the Commitments pursuant to Sections 2.02 or 8.02
hereunder.
"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 Account Party
as at such day as the sum of (i) the principal amount of all long-term
Debt of the Account Party 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 Account Party on such day, (iii) the surplus
of the Account Party, paid-in, earned and other, if any, on such day and
(iv) the unpaid principal amount of all short-term Debt of the Account
Party on such day.
"Transaction Documents" means this Agreement, the Intercreditor
Amendment, the Security Agreement Amendment, the Other Reimbursement
Agreement and the other documents to be delivered by or on behalf of the
Account Party on or in connection with the Closing Date.
"Trustee" has the meaning assigned to that term in the Preliminary
Statement hereto.
"Type" has the meaning assigned to such term in the definitions of
"Term Advance" and "Term Borrowing" herein.
"Unit Contract" means the Unit Contract, dated as of June 1, 1992,
between the Account Party 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.
"Year 2000 Issue" means the failure of computer software, hardware
and firmware systems and equipment containing computer chips to properly
receive, transmit, process, manipulate, store, retrieve, re-transmit or
in any other way utilize data and information due to the occurrence of
the year 2000 or the inclusion of dates on or after January 1, 2000.
SECTION I.2. 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 I.3. 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 and pro formas
referred to in Section 5.01 hereof.
SECTION I.4. 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 (i) the Available Amount
on such date, (ii) the aggregate principal amount of all Advances outstanding
on such date and (iii) the aggregate amount of all demand loans under Section
3.01 hereunder on such date, in each case after giving effect to all
transactions to be made on such date and the application of the proceeds
thereof.
ARTICLE II
THE LETTER OF CREDIT
SECTION II.1. The Letter of Credit. The Issuing Bank agrees, on the
terms and conditions hereinafter set forth (including, without limitation,
the applicable conditions precedent set forth in Article V hereof), to issue
the Letter of Credit to the Paying Agent, upon not less than three Business
Days prior notice from the Account Party, on the Closing Date.
SECTION II.2. Termination of the Commitments. The obligation of the
Issuing Bank to issue the Letter of Credit shall automatically terminate if
not delivered at or prior to 5:00 P.M. (New York City time) on April 22,
1999.
SECTION II.3. Commissions and Fees. (a) The Account Party hereby agrees
to pay to the Agent, for the account of the Participating Banks ratably in
accordance with their respective Participation Percentages, a letter of
credit commission on the Available Amount in effect from time to time from
the date hereof until the Letter of Credit shall be surrendered for
cancellation (disregarding for such purpose any temporary diminution thereof
arising from drawings under the Letter of Credit to pay interest (or purchase
price corresponding to interest) on the Bonds, regardless of whether the
amount so drawn shall be thereafter reinstated), at a rate per annum equal to
the Applicable Commission, payable on the last Business Day of each month and
upon such surrender ; provided that if an Event of Default shall have
occurred and is continuing, the Applicable Commission in effect from time to
time shall be increased by a further 2%.
(a) The Account Party also agrees to pay to the Agent for the account
of the Participating Banks ratably in accordance with their respective
Participation Percentages, such participation fees as have been agreed among
them, the Account Party and the Agent, such participation fee to be payable
in full simultaneously with the issuance of the Letter of Credit.
(b) The Account Party also agrees to pay to the Agent, for the account
of the Issuing Bank, such other fees as have been agreed upon by the Account
Party and the Issuing Bank in that certain Fee Letter, dated February 23,
1999, between the Account Party and the Arranger (the "Fee Agreement").
(c) The Account Party also agrees to pay to the Agent, for its own
account and/or the account of Barclays, such other fees as have been agreed
upon by the Account Party and the Agent in the Fee Agreement.
SECTION II.4. Reinstatement of the Letter of Credit. (a) The Interest
Component and the Principal Component shall, from time to time, be reinstated
by the Issuing Bank in accordance with, and only to the extent provided in,
the Letter of Credit. In no event shall reductions in the Premium Component
be reinstated.
(a) Interest Component. With respect to reinstatement of reductions in
the Interest Component resulting from Interest Drawings:
(i) The Issuing Bank may only deliver to the Paying Agent any
notice of non-reinstatement pursuant to Paragraph 5(i)(A) of the Letter
of Credit if (A) the Issuing Bank and/or the Participating Banks have
not been reimbursed in full by the Account Party for one or more
drawings, together with interest if any, owing thereon pursuant to this
Agreement or (B) an Event of Default has occurred and is then
continuing.
(ii) if, subsequent to any such delivery of a notice of non-
reinstatement, the circumstances giving rise to the delivery of such
notice of non-reinstatement shall have ceased to exist (whether as a
result of reimbursement of unreimbursed drawings, or waiver or cure of
an Event of Default, or otherwise), then, provided that no other Event
of Default shall have occurred and be continuing, the Issuing Bank shall
deliver to the Paying Agent, by hand delivery or facsimile transmission,
a Notice of Reinstatement in the form of Exhibit 5 to the Letter of
Credit reinstating that portion of the Interest Component in respect of
which such notice of non-reinstatement was given.
(b) Principal Component. With respect to reinstatement of a reduction
in the Principal Component resulting from any Tender Drawing, IF:
(i) such reduction has not been reinstated pursuant to Paragraph
5(ii)(A) of the Letter of Credit;
(ii) the Issuing Bank and/or the Participating Banks shall have
been reimbursed by the Account Party for such Tender Drawing;
(iii) any demand loan(s) and Advance(s) made in respect of such
Tender Drawing shall have been repaid by the Account Party, together
with any interest thereon and any other amounts payable hereunder in
connection therewith; AND
(iv) no Event of Default shall have occurred and then be
continuing;
THEN, the Issuing Bank shall deliver to the Paying Agent, by hand delivery or
facsimile transmission, a Notice of Reinstatement in the form of Exhibit 5 to
the Letter of Credit reinstating the Principal Component to the extent of
such Tender Drawing.
SECTION II.5. Extension of the Stated Termination Date. Unless the
Letter of Credit shall have previously expired in accordance with its terms,
at least 105 days but not more than 120 days before the Stated Termination
Date, the Account Party may, by notice to the Agent (any such notice being
irrevocable), request the Issuing Bank and the Participating Banks to extend
the Stated Termination Date of the Letter of Credit for a period of one year.
If the Account Party shall make such request, the Agent shall promptly inform
the Issuing Bank and the Participating Banks and, no later than 60 days prior
to the Stated Termination Date, the Agent shall notify the Account Party in
writing (with a copy of such notice to the Trustee and the Paying Agent) if
the Issuing Bank and the Participating Banks consent to such request and the
conditions of such consent (including conditions relating to legal
documentation). The granting of any such consent shall be in the sole and
absolute discretion of the Issuing Bank and the Participating Banks, and if
the Agent shall not so notify the Account Party, such lack of notification
shall be deemed to be a determination not to consent to such request. No
such extension shall occur unless the Issuing Bank and all of the
Participating Banks consent thereto (or if less than all the Participating
Banks consent thereto, unless one or more other Participating Banks agree to
assume all of the Commitments of the non-consenting Participating Banks).
SECTION II.6. Modification of the Letter of Credit. In the event that
the Account Party elects to cause the issuance of any additional series of
Tax-Exempt Refunding Bonds pursuant to Article IV of the Indenture, the
Account Party may, but shall not be obligated to, propose amendments to the
Letter of Credit to change the method of computing the Interest Component or
such other terms thereof as may be necessary or appropriate in connection
with such issuance. Any such proposal shall be furnished to the Issuing Bank
in writing not later than 60 days prior to the date proposed for such
issuance. If the Issuing Bank shall consent to such amendments (which
consent, subject to the provisions of the next succeeding sentence, shall not
be unreasonably withheld) the Issuing Bank shall, upon surrender of the
Letter of Credit by the beneficiary thereof for amendment (or replacement, as
the Issuing Bank may elect), amend the Letter of Credit accordingly (or issue
a replacement Letter of Credit therefor reflecting such amendments but
otherwise identical to the Letter of Credit so surrendered). Notwithstanding
the foregoing, without the consent of the requisite Participating Banks as
determined in accordance with Section 10.01, the Issuing Bank shall not
consent to any amendment or amendments that (i) increase the Stated Amount or
the then-existing Available Amount, (ii) change or modify in any respect the
Credit Termination Date or any provision for determining the expiry or other
termination of the Letter of Credit, (iii) change or modify in any respect
the times, places or manner at or in which drawings under the Letter of
Credit are to be presented or paid, (iv) change or modify in any respect the
forms of drawing certificates and other annexes to the Letter of Credit,
(v) change the beneficiary of the Letter of Credit or the method prescribed
therein for the transfer of the Letter of Credit or (vi) as determined in the
good faith discretion of the Issuing Bank and its counsel, increase or
enlarge the scope, or modify the nature, of the Issuing Bank's and the
Participating Banks' credit exposure to the Account Party or any legal risks
related thereto or expose the Issuing Bank to any additional liability. In
furtherance of the foregoing, the Issuing Bank may condition the granting of
such consent on the receipt by the Issuing Bank of such certificates,
opinions of counsel and other assurances of the Account Party and its
counsel, or bond counsel or the Trustee or Paying Agent, as the Issuing Bank
may reasonably require. Each Participating Bank, by its execution of this
Agreement, or of the Participation Assignment pursuant to which it became a
Participating Bank, consents to, ratifies and affirms all actions taken and
to be taken by the Issuing Bank pursuant to this Section 2.06.
ARTICLE III
REIMBURSEMENT AND ADVANCES
SECTION III.1. Reimbursement on Demand. Subject to the provisions of
Section 3.02 hereof, the Account Party hereby agrees to pay (whether with the
proceeds of Initial Advances made pursuant to this Agreement or otherwise) to
the Issuing Bank on demand (a) on and after each date on which the Issuing
Bank shall pay any amount under the Letter of Credit pursuant to any draft,
but only after so paid by the Issuing Bank, a sum equal to such amount so
paid (which sum shall constitute a demand loan from the Issuing Bank to the
Account Party from the date of such payment by the Issuing Bank until so paid
by the Account Party), plus (b) interest on any amount remaining unpaid by
the Account Party to the Issuing Bank under clause (a), above, from the date
such amount becomes payable on demand until payment in full, at the Default
Rate in effect from time to time. No reinstatement of the Interest Component
or the Principal Component despite the failure by the Account Party to
reimburse the Issuing Bank for any previous drawing to pay interest on the
Bonds shall limit or impair the Account Party's obligations under this
Section 3.01.
SECTION III.2. Advances. Each Participating Bank agrees to make Initial
Advances and Term Advances for the account of the Account Party from time to
time upon the terms and subject to the conditions set forth in this
Agreement.
(a) Initial Advances; Repayment of Initial Advances. If the
Issuing Bank shall honor any Tender Drawing and if the conditions precedent
set forth in Section 5.03 of this Agreement have been satisfied as of the
date of such honor, then, each Participating Bank's payment made to the
Issuing Bank pursuant to Section 3.07 hereof in respect of such Tender
Drawing shall be deemed to constitute an advance made for the account of the
Account Party by such Participating Bank (each such advance being an "Initial
Advance" made by such Participating Bank). Each Initial Advance shall be made
as a Base Rate Advance, shall bear interest at the Alternate Base Rate and
shall not be entitled to be Converted. Subject to Article VIII of this
Agreement, each Initial Advance and all interest thereon shall be due and
payable on the earlier to occur of (i) the date 30 days from the date of such
Initial Advance (such repayment date being the "Initial Repayment Date" for
such Initial Advance) and (ii) the Termination Date. The Account Party may
repay the principal amount of any Initial Advance with (and to the extent of)
the proceeds of a Term Advance made pursuant to subsection (b), below, and
may prepay Initial Advances in accordance with Section 3.06 hereof.
(b) Term Advances; Repayment. Subject to the satisfaction of the
conditions precedent set forth in Section 5.04 hereof and the other
conditions of this subsection (b), each Participating Bank agrees to make one
or more advances for the account of the Account Party ("Term Advances") on
each Initial Repayment Date in an aggregate principal amount equal to the
amount of such Participating Bank's Initial Advances maturing on such Initial
Repayment Date. All Term Advances comprising a single Term Borrowing shall
be made upon written notice given by the Account Party to the Agent not later
than 11:00 A.M. (New York City time) (A) in the case of a Term Borrowing
comprised of Base Rate Advances, on the Business Day of such proposed Term
Borrowing or (B) in the case of a Term Borrowing comprised of Eurodollar Rate
Advances, three Business Days prior to the date of such proposed Term
Borrowing. The Agent shall notify each Participating Bank of the contents of
such notice promptly after receipt thereof. Each such notice shall specify
therein the following information: (W) the date on which such Term Borrowing
is to be made, (X) the principal amount of Term Advances comprising such Term
Borrowing, (Y) the Type of Term Borrowing and (Z) subject to Section 3.05(c),
the duration of the initial Interest Period, if applicable, proposed to apply
to the Term Advances comprising such Term Borrowing. The proceeds of each
Participating Bank's Term Advances shall be applied solely to the repayment
of the Initial Advances made by such Participating Bank and shall in no event
be made available to the Account Party. The principal amount of each Term
Advance, together with all accrued and unpaid interest thereon, shall be due
and payable on the earlier to occur of (x) the same calendar date occurring
12 months following the date upon which such Term Advance is made (or, if
such month does not have a corresponding date, on the last day of such month)
and (y) the Termination Date.
SECTION III.3. Interest on Advances. The Account Party shall pay
interest on the unpaid principal amount of each Advance from the date of such
Advance until such principal amount is paid in full at the applicable rate
set forth below:
(a) Alternate Base Rate. Except to the extent that the Account Party
shall elect to pay interest on any Advance for any Interest Period pursuant
to paragraph (c) of this Section 3.03, the Account Party shall pay interest
on each Advance (including all Initial Advances) from the date thereof until
the date such Advance is due, at a fluctuating interest rate per annum in
effect from time to time equal to the Alternate Base Rate in effect from time
to time. The Account Party shall pay interest on each Advance bearing
interest in accordance with this subsection monthly in arrears on the last
Business Day of each month and on the Termination Date or the earlier date
for repayment of such Advance (including the Initial Repayment Date therefor,
in the case of an Initial Advance); provided that if an Event of Default
shall have occurred and is continuing, any principal amounts outstanding
shall bear interest during such period, payable on demand, at a rate per
annum equal at all times to 2% per annum above the Alternate Base Rate in
effect from time to time.
(b) Interest Periods. Subject to the other requirements of this
Section 3.03 and to Section 3.05(c), the Account Party may from time to time
elect to have the interest on all Term Advances comprising part of the same
Term Borrowing determined and payable for a specified period (an "Interest
Period" for such Term Advances) in accordance with paragraph (c) of this
Section 3.03. The first day of an Interest Period for such Term Advances
shall be the date such Advance is made or most recently Converted, which
shall be a Business Day. All Interest Periods shall end on or prior to the
Stated Termination Date. Any Interest Period for a Term Advance that would
otherwise end after the Termination Date or earlier date for the repayment of
such Advance shall be deemed to end on the Termination Date or such earlier
repayment date, as the case may be.
(c) Eurodollar Rate. Subject to the requirements of this Section 3.03
and Article V hereof, the Account Party may from time to time elect to have
any Term Advances comprising part of the same Term Borrowing made as, or
Converted to, Eurodollar Rate Advances. Subject to Section 3.05(c), the
Interest Period applicable to such Eurodollar Rate Advances shall be of one,
two, three or six whole months' duration, as the Account Party shall select
in its notice delivered to the Agent pursuant to Section 3.02(b) or 3.04
hereof, as applicable. If the Account Party shall have made such election,
the Account Party shall pay interest on such Eurodollar Rate Advances at the
Eurodollar Rate for the applicable Interest Period for such Eurodollar Rate
Advances, which interest shall be payable on the last day of such Interest
Period, on the date for repayment for such Eurodollar Rate Advances and also,
in the case of any Interest Period of six months' duration, on that day of
the third month of such Interest Period which corresponds with 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 month); provided that if an Event of
Default shall have occurred and is continuing, any principal amounts
outstanding shall bear interest during such period, 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 Eurodollar Rate
for such Interest Period, and (B) thereafter, 2% per annum above the
Alternate Base Rate in effect from time to time. Any Interest Period
pertaining to Eurodollar Rate Advances that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.
(d) Interest Rate Determinations. The Agent shall give prompt notice
to the Account Party and the Participating Banks of the Eurodollar Rate
determined from time to time by the Agent to be applicable to each Eurodollar
Rate Advance.
SECTION III.4. Conversion of Term Advances. Subject to the
satisfaction of the conditions precedent set forth in Section 5.03 hereof,
the Account Party may elect to Convert one or more Term Advances of any Type
to one or more Term Advances of the same or any other Type on the following
terms and subject to the following conditions:
(a) Each Conversion shall be made as to all Term Advances comprising a
single Term Borrowing upon written notice given by the Account Party to the
Agent not later than 11:00 A.M. (New York City time) on the third Business
Day prior to the date of the proposed Conversion. The Agent shall notify
each Participating Bank of the contents of such notice promptly after receipt
thereof. Each such notice shall specify therein the following information:
(A) the date of such proposed Conversion (which in the case of Eurodollar
Rate Advances shall be last day of the Interest Period then applicable to
such Term Advances to be Converted), (B) Type of, and Interest Period, if
any, applicable to the Term Advances proposed to be Converted, (C) the
aggregate principal amount of Term Advances proposed to be Converted, and
(D) the Type of Term Advances to which such Term Advances are proposed to be
Converted and, subject to Section 3.05(c), the Interest Period, if any, to be
applicable thereto.
(b) During the continuance of an Unmatured Default or an Event of
Default, the right of the Account Party to Convert Term Advances to
Eurodollar Rate Advances shall be suspended, and all Eurodollar Rate Advances
then outstanding shall be Converted to Base Rate Advances on the last day of
the Interest Period then in effect, if, on such day, an Unmatured Default or
an Event of Default shall be continuing.
(c) If no notice of Conversion is received by the Agent as provided in
subsection (a) above with respect to any outstanding Eurodollar Rate
Advances, the Agent shall treat such absence of notice as a deemed notice of
Conversion providing for such Advances to be Converted to Base Rate Advances
on the last day of the Interest Period then in effect for such Eurodollar
Rate Advances.
SECTION III.5. Other Terms Relating to the Making and Conversion of
Advances. (a) Notwithstanding anything in Section 3.02, 3.03 or 3.04, above,
to the contrary:
(i) at no time shall more than six different Term Borrowings in
the aggregate be outstanding hereunder and under the Other Reimbursement
Agreement; and
(ii) each Term Borrowing consisting of Eurodollar Rate Advances
shall be in the aggregate principal amount of $10,000,000 or an integral
multiple of $1,000,000 in excess thereof.
(a) Each notice of borrowing pursuant to Section 3.02(b) hereof and
each notice of Conversion pursuant to Section 3.04 hereof shall be
irrevocable and binding on the Account Party.
(b) Until such time, if any, as the Majority Lenders shall
otherwise agree, the Interest Period for all Eurodollar Rate Advances shall
be one month.
SECTION III.6. Prepayment of Advances. (a) The Account Party shall have
no right to prepay any principal amount of any Advances except in accordance
with subsections (b) and (c) below.
(a) The Account Party may, upon at least one Business Day's notice to
the Agent stating the proposed date and aggregate principal amount of the
prepayment (and if such notice is given the Account Party shall), prepay, in
whole or ratably in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid, the outstanding principal amount
of (i) all Initial Advances made on the same date or (ii) all Term Advances
comprising the same Term Borrowing, in each case as the Account Party shall
designate in such notice; provided, however, that each partial prepayment
shall be in an aggregate principal amount not less than $10,000,000, or, if
less, the aggregate principal amount of all Advances then outstanding.
(b) Prior to or simultaneously with the resale of all of the Bonds
purchased with the proceeds of a Tender Drawing, the Account Party shall
prepay, or cause to be prepaid, in full, the then outstanding principal
amount of all Initial Advances and of all Term Advances comprising the same
Term Borrowing(s) arising pursuant to such Tender Drawing, together with all
interest thereon to the date of such prepayment. If less than all of such
Bonds are resold, then prior to or simultaneously with such resale the
Account Party shall prepay or cause to be prepaid that portion of such
Advances, together with all interest thereon to the date of such prepayment,
equal to the then outstanding principal amount thereof multiplied by a
fraction, the numerator of which shall be the principal amount of the Bonds
resold and the denominator of which shall be the principal amount of all of
the Bonds purchased with the proceeds of the relevant Tender Drawing.
SECTION III.7. Participation; Reimbursement of Issuing Bank. (a) The
Issuing Bank hereby sells and transfers to each Participating Bank, and each
Participating Bank hereby acquires from the Issuing Bank, an undivided
interest and participation to the extent of such Participating Bank's
Participation Percentage in and to (i) the Letter of Credit, including the
obligations of the Issuing Bank under and in respect thereof and the Account
Party's reimbursement and other obligations in respect thereof and (ii) each
demand loan or deemed demand loan made by the Issuing Bank, whether now
existing or hereafter arising.
(a) If the Issuing Bank (i) shall not have been reimbursed in full for
any payment made by the Issuing Bank under the Letter of Credit on the date
of such payment or (ii) shall make any demand loan to the Account Party, the
Issuing Bank shall promptly notify the Agent and the Agent shall promptly
notify each Participating Bank of such non-reimbursement or demand loan and
the amount thereof. Upon receipt of such notice from the Agent, each
Participating Bank shall pay to the Issuing Bank, directly, an amount equal
to such Participating Bank's ratable portion (according to such Participating
Bank's Participation Percentage) of such unreimbursed amount or demand loan
paid or made by the Issuing Bank, plus interest on such amount at a rate per
annum equal to the Federal Funds Rate from the date of such payment by the
Issuing Bank to the date of payment to the Issuing Bank by such Participating
Bank. All such payments by each Participating Bank shall be made in United
States dollars and in same day funds:
(x) not later than 2:45 P.M. (New York City time) on the day such
notice is received by such Participating Bank if such notice is received
at or prior to 12:30 P.M. (New York City time) on a Business Day; or
(y) not later than 12:00 Noon (New York City time) on the Business
Day next succeeding the day such notice is received by such
Participating Bank, if such notice is received after 12:30 P.M. (New
York City time) on a Business Day.
If a Participating Bank shall have paid to the Issuing Bank its ratable
portion of any unreimbursed amount or demand loan paid or made by the Issuing
Bank, together with all interest thereon required by the second sentence of
this subsection (b), such Participating Bank shall be entitled to receive its
ratable share of all interest paid by the Account Party in respect of such
unreimbursed amount or demand loan from the date paid or made by the Issuing
Bank. If such Participating Bank shall have made such payment to the Issuing
Bank, but without all such interest thereon required by the second sentence
of this subsection (b), such Participating Bank shall be entitled to receive
its ratable share of the interest paid by the Account Party in respect of
such unreimbursed amount or demand loan only from the date it shall have paid
all interest required by the second sentence of this subsection (b).
(b) Each Participating Bank's obligation to make each payment to the
Issuing Bank, and the Issuing Bank's right to receive the same, shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the foregoing or Section 4.06
hereof, or the occurrence or continuance of an Event of Default, or the non-
satisfaction of any condition precedent set forth in Sections 5.03 or 5.04
hereof, or the failure of any other Participating Bank to make any payment
under this Section 3.07. Each Participating Bank further agrees that each
such payment shall be made without any offset abatement, withholding or
reduction whatsoever.
(c) The failure of any Participating Bank to make any payment to the
Issuing Bank in accordance with subsection (b) above, shall not relieve any
other Participating Bank of its obligation to make payment, but neither the
Issuing Bank nor any Participating Bank shall be responsible for the failure
of any other Participating Bank to make such payment. If any Participating
Bank shall fail to make any payment to the Issuing Bank in accordance with
subsection (b) above, then such Participating Bank shall pay to the Issuing
Bank forthwith on demand such corresponding amount together with interest
thereon, for each day until the date such amount is repaid to the Issuing
Bank at 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 Participating Bank.
(d) If any Participating Bank shall fail to make any payment to the
Issuing Bank in accordance with subsection (b) above, then, in addition to
other rights and remedies which the Issuing Bank may have, the Agent is
hereby authorized, at the request of the Issuing Bank, to withhold and to
apply the payment of such amounts owing to such Participating Bank to the
Issuing Bank and any related interest, that portion of any payment received
by the Agent that would otherwise be payable to such Participating Bank. In
furtherance of the foregoing, if any Participating Bank shall fail to make
any payment to the Issuing Bank in accordance with subsection (b), above, and
such failure shall continue for five Business Days following written notice
of such failure from the Issuing Bank to such Participating Bank, the Issuing
Bank may acquire, or transfer to a third party in exchange for the sum or
sums due from such Participating Bank, such Participating Bank's interest in
the related unreimbursed amounts and demand loans and all other rights of
such Participating Bank hereunder in respect thereof, without, however,
relieving such Participating Bank from any liability for damages, costs and
expenses suffered by the Issuing Bank as a result of such failure. The
purchaser of any such interest shall be deemed to have acquired an interest
senior to the interest of such Participating Bank and shall be entitled to
receive all subsequent payments which the Issuing Bank or the Agent would
otherwise have made hereunder to such Participating Bank in respect of such
interest.
ARTICLE IV
PAYMENTS
SECTION IV.1. Payments and Computations. (a) The Account Party shall
make each payment hereunder (i) in the case of reimbursement obligations
pursuant to Section 3.01 hereof (excluding any portion thereof in respect of
which an Initial Advance is to be made), not later than 2:30 P.M. (New York
City time) on the day the related drawing under the Letter of Credit is paid
by the Issuing Bank, and (ii) in all other cases, not later than 12:30 P.M.
(New York City time) on the day when due, in each case in lawful money of the
United States of America to the Agent at its address referred to in Section
10.02 hereof in same day funds. The Agent will promptly thereafter cause to
be distributed like funds relating to the payment of reimbursements,
principal, interest, fees or other amounts payable to the Issuing Bank and
the Participating Banks to whom the same are payable, ratably, at its address
set forth in Section 10.02 hereof (in the case of the Issuing Bank) or for
the account of their respective Applicable Lending Offices (in the case of
the Participating Banks), in each case to be applied in accordance with the
terms of this Agreement.
(a) The Account Party hereby authorizes the Issuing Bank, and each
Participating Bank, if and to the extent payment owed to the Issuing Bank, or
such Participating Bank, as the case may be, is not made when due hereunder,
to charge from time to time against any or all of the Account Party's
accounts with the Issuing Bank or such Participating Bank, as the case may
be, any amount so due.
(b) All computations of interest based on the Alternate Base Rate when
based on Barclays' prime rate referred to in the definition of "Alternate
Base Rate" shall be made by the Agent on the basis of a year of 365 or 366
days, as the case may be, for the actual days elapsed. All other computations
of interest 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)), all
computations of commissions and fees hereunder and all computations of other
amounts pursuant to Section 4.03 hereof, shall be made by the Agent or the
party claiming such other amounts, as the case may be, on the basis of a year
of 360 days for the actual days elapsed. 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,
commissions or fees are payable. Each such determination by the Agent or a
Participating Bank, as the case may be, shall be conclusive and binding for
all purposes, absent manifest error.
(c) Whenever any payment hereunder 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, commissions and fees hereunder; provided, however, that
if such extension would cause payment of interest on or principal of
Eurodollar Rate Advances to be made, or the last day of an Interest Period
for a Eurodollar Rate 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.
(d) Unless the Agent shall have received notice from the Account Party
prior to the date on which any payment is due to the Issuing Bank or the
Participating Banks hereunder that the Account Party will not make such
payment in full, the Agent may assume that the Account Party has made such
payment in full to the Agent on such date and the Agent may, in reliance upon
such assumption, cause to be distributed to the Issuing Bank and/or each
Participating Bank on such due date an amount equal to the amount then due
the Issuing Bank and/or such Participating Bank. If and to the extent the
Account Party shall not have so made such payment in full to the Agent, the
Issuing Bank and/or each such Participating Bank shall repay to the Agent
forthwith on demand such amount distributed to the Issuing Bank and/or such
Participating Bank, together with interest thereon, for each day from the
date such amount is distributed to the Issuing Bank and/or such Participating
Bank until the date the Issuing Bank and/or such Participating Bank repays
such amount to the Agent, at the Federal Funds Rate.
(e) If, after the Agent has paid to the Issuing Bank or any
Participating Bank any amount pursuant to subsection (a) above, such payment
is rescinded or must otherwise be returned or must be paid over by the Agent
or the Issuing Bank to any Person, whether pursuant to any bankruptcy or
insolvency law, Section 4.04 hereof or otherwise, such Participating Bank
shall, at the request of the Agent or the Issuing Bank, promptly repay to the
Agent or the Issuing Bank, as the case may be, an amount equal to its ratable
share of such payment, together with any interest required to be paid by the
Agent or the Issuing Bank with respect to such payment.
SECTION IV.2. Default Interest. Any 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 the Default Rate,
payable on demand.
SECTION IV.3. Yield Protection. (ai 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 the Issuing Bank or any Participating Bank of the principal of or interest
on any Eurodollar Rate Advance made by such Participating Bank or any fees or
other amounts payable hereunder (other than changes in respect of taxes
imposed on the overall net income of the Issuing Bank or such Participating
Bank, or its Applicable Lending Office, by the jurisdiction in which the
Issuing Bank or such Participating Bank 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 letters of credit
(or participatory interests therein) issued by, commitments or assets of,
deposits with or for the account of, or credit extended by, the Issuing Bank
or such Participating Bank, or (iii) shall impose on the Issuing Bank or such
Participating Bank any other condition affecting this Agreement, the Letter
of Credit or participatory interests therein or Eurodollar Rate Advances, and
the result of any of the foregoing shall be (A) to increase the cost to the
Issuing Bank or such Participating Bank of issuing, maintaining or
participating in this Agreement or the Letter of Credit or of agreeing to
make, making or maintaining any Advance or (B) to reduce the amount of any
sum received or receivable by the Issuing Bank or such Participating Bank
hereunder (whether of principal, interest or otherwise), then the Account
Party will pay to the Issuing Bank or such Participating Bank, upon demand,
such additional amount or amounts as will compensate the Issuing Bank or such
Participating Bank for such additional costs incurred or reduction suffered.
(a) Capital. If the Issuing Bank or any Participating Bank shall have
determined that the applicability of 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 the Issuing Bank or any
Participating Bank (or any Applicable Lending Office of the Issuing Bank or
such Participating Bank), or any holding company of any such entity, 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 entity's
capital or on the capital of such entity's holding company, if any, as a
consequence of this Agreement, the Letter of Credit or such entity's
participatory interest therein, any Commitment hereunder or the portion of
the Advances made by such entity pursuant hereto to a level below that which
such entity or such entity's holding company could have achieved, but for
such applicability, adoption, change or compliance (taking into consideration
such entity's policies and the policies of such entity'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 entity or
such entity's holding company based upon the existence of this Agreement, the
Letter of Credit or such entity's participatory interest therein, any
Commitment hereunder, the portion of the Advances made by such entity
pursuant hereto and other similar such credits, participations, commitments,
agreements or assets, then from time to time the Account Party shall pay to
the Issuing Bank or such Participating Bank, upon demand, such additional
amount or amounts as will compensate such entity or such entity's holding
company for any such reduction or allocable capital cost suffered.
(b) Eurodollar Reserves. The Account Party shall pay to each
Participating Bank upon demand, so long as such Participating 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 interest on the unpaid
principal amount of such Participating Bank's portion of each Eurodollar Rate
Advance, 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 rate described in clause (i) of the
definition of "Eurodollar Rate" for the Interest Period for such Advance from
(ii) the rate obtained by dividing such rate by a percentage equal to 100%
minus the Eurodollar Reserve Percentage of such Participating Bank for such
Interest Period. Such additional interest shall be determined by such
Participating Bank and notified to the Account Party and the Issuing Bank.
(c) Breakage Indemnity. The Account Party shall indemnify each
Participating Bank against any loss, cost or reasonable expense which such
Participating Bank may sustain or incur as a consequence of (i) any failure
by the Account Party to fulfill on the date of any Advance or Conversion
hereunder the applicable conditions set forth in Articles III and V, (ii) any
failure by the Account Party to Convert any Advance hereunder after
irrevocable notice of Conversion has been given pursuant to Section 3.04
hereof, (iii) any payment, prepayment or Conversion of a Eurodollar Rate
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 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 such
Advance or any part thereof as a Eurodollar Rate Advance. Such loss, cost or
reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by such Participating Bank, of (A) its cost of
obtaining the funds for the Advance being paid, prepaid, Converted or not
borrowed (based on the Eurodollar Rate) for the period from the date of such
payment, prepayment, Conversion 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 Participating Bank) that would be realized by such Participating Bank in
reemploying the funds so paid, prepaid, Converted 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 each Participating Bank shall have
funded each such Advance with a fixed-rate instrument bearing the rates and
maturities designated in the determination of the applicable interest rate
for such Advance.
(d) Notices. A certificate of the Issuing Bank or any Participating
Bank setting forth such entity's claim for compensation hereunder and the
amount necessary to compensate such entity or its holding company pursuant to
subsections (a) through (d) of this Section 4.03 shall be submitted to the
Account Party and the Issuing Bank and shall be conclusive and binding for
all purposes, absent manifest error. The Account Party shall pay the Issuing
Bank or such Participating Bank directly the amount shown as due on any such
certificate within ten days after its receipt of the same. The failure of any
entity to provide such notice or to make demand for payment under this
Section 4.03 shall not constitute a waiver of such Participating Bank's
rights hereunder; provided, that such entity 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 entity's incurrence or
sufferance thereof or such entity's actual knowledge of the event giving rise
to such entity's rights pursuant to such subsections. The protection of this
Section 4.03 shall be available to the Issuing Bank and each Participating
Bank regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed.
(e) 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 Participating Bank to make or maintain any Eurodollar Rate
Advance or to give effect to its obligations as contemplated hereby with
respect to any Eurodollar Rate Advance, then, by written notice to the
Account Party and the Issuing Bank, such Participating Bank may:
(i) declare that Eurodollar Rate Advances will not thereafter be
made by such Participating Bank hereunder, whereupon the right of the
Account Party to select Eurodollar Rate Advances for any Advance or
Conversion shall be forthwith suspended until such Participating Bank
shall withdraw such notice as provided hereinbelow or shall cease to be
a Participating Bank hereunder; and
(ii) require that all outstanding Eurodollar Rate Advances be
Converted to Base Rate Advances, in which event all Eurodollar Rate
Advances shall be automatically Converted to Base Rate Advances as of
the effective date of such notice as provided hereinbelow.
Upon receipt of any such notice, the Agent shall promptly notify the
Participating Banks thereof. Promptly upon becoming aware that the
circumstances that caused such Participating Bank to deliver such notice no
longer exist, such Participating Bank shall deliver notice thereof to the
Account Party and the Agent withdrawing such prior notice (but the failure to
do so shall impose no liability upon such Participating Bank). Promptly upon
receipt of such withdrawing notice from such Participating Bank, the Agent
shall deliver notice thereof to the Account Party and the Participating Banks
and such suspension shall terminate. Prior to any Participating Bank giving
notice to the Account Party under this subsection (f), such Participating
Bank 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 Participating Bank, be otherwise
disadvantageous to such Participating Bank. Any notice to the Account Party
by any Participating Bank shall be effective as to each Eurodollar Rate
Advance on the last day of the Interest Period currently applicable to such
Eurodollar Rate 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 Account Party and the
Agent.
(g) Market Rate Disruptions. If, (i) the Agent determines that an
adequate basis does not exist for the determination of the Eurodollar Rate
for Eurodollar Rate Advances or (ii) if the Majority Lenders shall notify the
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, the right of the Account Party to select or receive
or Convert into Eurodollar Rate Advances shall be forthwith suspended until
the Agent shall notify the Account Party and the Participating Banks that the
circumstances causing such suspension no longer exist, and until such
notification from the Agent, each request for or Conversion into Eurodollar
Rate Advances hereunder shall be deemed to be a request for or Conversion
into Base Rate Advances.
SECTION IV.4. Sharing of Payments, Etc. If any Participating Bank 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 participations in accordance with Section 10.06
hereof to a Person that is not an Affiliate of the Account Party) 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 Participating Banks, such Participating Bank shall forthwith
purchase from the other Participating Banks such participation in the
portions of the Advances owing to them as shall be necessary to cause such
purchasing Participating Bank 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 Participating Bank, such
purchase from each Participating Bank shall be rescinded and such
Participating Bank shall repay to the purchasing Participating Bank the
purchase price to the extent of such recovery together with an amount equal
to such Participating Bank's ratable share (according to the proportion of
(i) the amount of such Participating Bank's required repayment to (ii) the
total amount so recovered from the purchasing Participating Bank) of any
interest or other amount paid or payable by the purchasing Participating Bank
in respect of the total amount so recovered. The Account Party agrees that
any Participating Bank so purchasing a participation from another
Participating Bank 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 Participating
Bank were the direct creditor of the Account Party in the amount of such
participation. Notwithstanding the foregoing, if any Participating Bank
shall obtain any such excess payment involuntarily, such Participating Bank
may, in lieu of purchasing participation from the other Participating Banks
in accordance with this Section 4.04, on the date of receipt of such excess
payment, return such excess payment to the Agent for distribution in
accordance with Section 4.01(a) hereof.
SECTION IV.5. Taxes. (ai All payments by the Account Party hereunder
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 Participating Bank and the Issuing Bank, taxes imposed on
its overall net income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Participating Bank or the Issuing
Bank (as the case may be) is organized or any political subdivision thereof
and, in the case of each Participating Bank, taxes imposed on its overall net
income, and franchise taxes imposed on it, by the jurisdiction of such
Participating Bank'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 Account Party shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to any Participating Bank or the Issuing
Bank, (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 Participating Bank or
the Issuing Bank (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Account Party
shall make such deductions and (iii) the Account Party shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(a) In addition, the Account Party 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").
(b) The Account Party will indemnify each Participating Bank and the
Issuing Bank 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 Participating Bank or
the Issuing Bank (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. This
indemnification shall be made within 30 days from the date such Participating
Bank or the Issuing Bank (as the case may be) makes written demand therefor.
If any Taxes or Other Taxes for which a Participating Bank or the Issuing
Bank has received payments from the Account Party hereunder shall be finally
determined to have been incorrectly or illegally asserted and are refunded to
such Participating Bank, such Participating Bank shall promptly forward to
the Account Party any such refunded amount. The Account Party's, the Issuing
Bank's and each Participating Bank's obligations under this Section 4.05
shall survive the payment in full of the Advances.
(c) Within 30 days after the date of any payment of Taxes, the Account
Party will furnish to the Issuing Bank, at its address referred to in Section
10.02 hereof the original or a certified copy of a receipt evidencing payment
thereof.
(d) Each Participating Bank not incorporated in the United States or a
jurisdiction within the United States shall, on or prior to the date it
becomes a Participating Bank hereunder, deliver to the Account Party and the
Issuing Bank 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 l.1441-1(a) or Section 1.1441-6(c) or
any subsequent version thereof, properly completed and duly executed by such
Participating Bank establishing that it is (i) not subject to withholding
under the Code or (ii) totally exempt from United States of America tax under
a provision of an applicable tax treaty. Each Participating Bank shall
promptly notify the Account Party and the Issuing Bank of any change in its
Applicable Lending Office and shall deliver to the Account Party and the
Issuing Bank together with such notice such certificates, documents or other
evidence referred to in the immediately preceding sentence. Unless the
Account Party and the Issuing Bank have received forms or other documents
satisfactory to them indicating that payments hereunder 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 Account Party or the Issuing Bank
shall withhold taxes from such payments at the applicable statutory rate in
the case of payments to or for any Participating Bank organized under the
laws of a jurisdiction outside the United States of America. Each
Participating Bank represents and warrants that each such form supplied by it
to the Issuing Bank and the Account Party 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.
(e) Any Participating Bank 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 Account Party 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
Participating Bank, be otherwise disadvantageous to such Participating Bank.
(f) Notwithstanding anything to the contrary set forth in this Section
4.05, the failure of any Participating Bank to provide any of the forms
referred to therein shall not relieve the Account Party from its obligations
under Sections 4.05(a), 4.05(b) and 4.05(c).
SECTION IV.6. Obligations Absolute. The obligations of the Account
Party under this Agreement shall be unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement (as the same
may be amended from time to time) under all circumstances, including, without
limitation, the following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the Security Documents or Related Documents or any document or
agreement delivered in connection therewith;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Account Party in
respect of the Letter of Credit or any other amendment or waiver of or
any consent to departure from all or any of the Loan Documents or the
Related Documents or any document or agreement delivered in connection
therewith;
(iii) the existence of any claim, set-off, defense or
other right which the Account Party may have at any time against the
Paying Agent, the Trustee or any other beneficiary, or any transferee,
of the Letter of Credit (or any persons or entities for whom the Paying
Agent, the Trustee, any such beneficiary or any such transferee may be
acting), the Agent, the Issuing Bank, or any other person or entity,
whether in connection with this Agreement, the transactions contemplated
in any of the Loan Documents or the Related Documents, or any unrelated
transaction;
(iv) any statement or any other document presented under the Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect except to the extent that a court of competent jurisdiction
shall determine that the Issuing Bank shall have engaged in gross
negligence or willful misconduct with respect thereto;
(v) payment by the Issuing Bank under the Letter of Credit against
presentation of a draft or certificate which does not comply with the
terms of the Letter of Credit, except to the extent that a court of
competent jurisdiction shall determine that the Issuing Bank shall have
engaged in gross negligence or willful misconduct with respect thereto;
(vi) any exchange of, release of or non-perfection of any interest
in any collateral, or any release or amendment or waiver of or consent
to departure from any guarantee, for all or any of the obligations of
the Account Party in respect of the Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing.
SECTION IV.7. Evidence of Indebtedness. The Issuing Bank and each
Participating Bank shall maintain, in accordance with their usual practice,
an account or accounts evidencing the indebtedness of the Account Party
resulting from each drawing under the Letter of Credit (in the case of the
Issuing Bank) and from each Advance (in the case of each Participating Bank)
made from time to time hereunder and the amounts of principal and interest
payable and paid from time to time hereunder. In any legal action or
proceeding in respect of this Agreement, the entries made in such account or
accounts shall, in the absence of manifest error, be conclusive evidence of
the existence and amounts of the obligations of the Account Party therein
recorded.
ARTICLE V
CONDITIONS PRECEDENT
SECTION V.1. Conditions Precedent to the Issuance of the Letter of
Credit. The obligation of the Issuing Bank to issue the Letter of Credit and
of each Participating Bank to make the Advances to be made by it is subject
to the fulfillment of the conditions precedent that the Agent shall have
received on or before the day of such issuance the following, each dated such
day (except where specified otherwise below), in form and substance
satisfactory to each Participating Bank (except where specified otherwise
below) and in sufficient copies for each Participating Bank:
(a) Agreements:
(i) Counterparts of this Agreement, duly executed and delivered by
the Account Party, the Agent, the Issuing Bank and each Participating
Bank.
(ii) Counterparts of the Pledge Agreement, duly executed by the
Account Party, the Agent and the Issuing Bank.
(iii) Counterparts of the Intercreditor Amendment, duly
executed by the parties thereto.
(iv) Counterparts of the Security Agreement Amendment, duly
executed by the parties thereto.
(v) Executed copies (or duplicate copies thereof certified as of
the Closing Date by the Account Party in a manner satisfactory to the
Agent to be a true copy) of the Indenture, duly executed by the parties
thereto.
(vi) For each Participating Bank who shall so request, executed
copies (or duplicate copies thereof certified as of the Closing Date by
the Account Party in a manner satisfactory to the Agent to be a true
copy) of each other Security Document, duly executed by the parties
thereto.
(vii) For each Participating Bank who shall so request,
executed copies (or duplicate copies thereof certified as of the Closing
Date by the Account Party in a manner satisfactory to the Agent to be a
true copy) of the Rate Agreement and each Significant Contract and all
amendments, modifications and supplements thereto, in each such case
duly executed by the respective parties thereto.
(b) Corporate Matters:
(i) A certificate of the Secretary or an Assistant Secretary of
the Account Party certifying that (A) attached to such certificate are
true and correct copies of the Articles of Incorporation of the Account
Party and the By-laws of the Account Party, in each case as in effect on
the Closing Date and (B) attached to such certificate are true and
correct copies of the resolutions of the Boards of Directors of the
Account Party approving, if and to the extent necessary, the Transaction
Documents to which it is a party, and all other agreements and documents
required to be executed and delivered by the Account Party in order to
carry out, give effect to, and consummate the transactions contemplated
by each of the foregoing documents, and of all documents evidencing
other necessary corporate action, if any, with respect to the execution,
delivery and performance by or on behalf of the Account Party of the
Transaction Documents and all such other agreements and documents and
certifying that such resolutions and other corporate actions, if any,
are in full force and effect and have not been revoked, rescinded or
modified.
(ii) A certificate of the Secretary or an Assistant Secretary of
the Account Party certifying the names and true signatures of the
officers of the Account Party authorized to sign this Agreement, the
other Transaction Documents and the other documents to be delivered
hereunder and under the other Loan Documents.
(c) Governmental Approvals and Litigation:
(i) A certificate of a duly authorized officer of the Account
Party 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
Account Party in connection with the execution and delivery of this
Agreement and the issuance of the Letter of Credit.
(ii) A certificate of a duly authorized officer of the Account
Party 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 Account Party 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 the
Related 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 Account Party;
except, for purposes of clause (B) only, such as is described in the
Disclosure Documents or in such certificate.
(d) Financial Accounting and Compliance Matters:
(i) Copies of the Disclosure Documents.
(ii) Financial projections, on assumptions acceptable to the
Participating Banks, demonstrating projected compliance with Section
7.01(j) of this Agreement.
(iii) A certificate signed by the Treasurer or Assistant
Treasurer of the Account Party, to the effect that: (A0 the statements
set forth in subsections (a) through (e) of Section 5.02, below, are
true and correct on and as of the date of such issuance; (B0 attached
thereto is a listing in reasonable detail of all the Account Party's
investments in, or loans to, either directly or indirectly, any
affiliate of the Account Party; and (C) the assumptions on which the
financial projections contained in the Information Memorandum were based
continue to be valid on and as of the Closing Date.
(e) Opinions of Counsel:
Favorable opinions of:
(i) Day, Berry & Howard, counsel to the Account Party, in
substantially the form of Exhibit 5.01A and as to such other matters as
the Majority Lenders, through the Agent, may reasonably request,
together with a letter from such counsel authorizing the Agent, the
Issuing Bank and the Participating Banks to rely upon the opinions of
such firm rendered in connection with the issuance of the Taxable Bonds;
(ii) Jeffrey C. Miller, Assistant General Counsel of NUSCO, in
substantially the form of Exhibit 5.01B and as to such other matters as
the Majority Lenders, through the Agent, may reasonably request;
(iii) Catherine E. Shively, Senior Counsel of the Account
Party, in substantially the form of Exhibit 5.01C and as to such other
matters as the Majority Lenders, through the Agent, may reasonably
request;
(iv) Drummond Woodsum & MacMahon, special Maine counsel to the
Account Party, in substantially the form of Exhibit 5.01D and as to such
other matters as the Majority Lenders, through the Agent, may reasonably
request;
(v) Zuccaro Willis & Bent, special Vermont counsel to the Account
Party, in substantially the form of Exhibit 5.01E and as to such other
matters as the Majority Lenders, through the Agent, may reasonably
request; and
(vi) King & Spalding, special New York counsel to the Agent and the
Issuing Bank, in substantially the form of Exhibit 5.01F.
(f) Miscellaneous:
(i) A letter from Palmer & Dodge, Bond Counsel, addressed to the
Agent, the Issuing Bank and the Participating Banks and stating therein
that the Agent, the Issuing Bank and the Participating Banks may rely on
the opinions of such firm rendered in connection with the issuance of
the Taxable Bonds, together with copies of all such opinions;
(ii) A letter from Palmer & Dodge, counsel to the Issuer, addressed
to the Agent, the Issuing Bank and the Participating Banks and stating
therein that the Agent, the Issuing Bank and the Participating Banks may
rely on the opinions of such firm rendered in connection with the
issuance of the Taxable Bonds, together with copies of all such
opinions;
(iii) Such other approvals, opinions and documents as the
Majority Lenders, through the Issuing Bank, 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 Account Party;
(iv) Copies of all such other agreements, documents and materials
(including opinions of counsel or reliance letters in respect thereof)
as the Agent, the Issuing Bank or any Participating Bank may reasonably
request relating to the issuance, offering and sale of the Taxable Bonds
and the Series F First Mortgage Bonds; and
(v) A certificate of Barclays, as "Agent" and "Issuing Bank"
thereunder, to the effect that (A) all amounts payable in connection
with the Existing Reimbursement Agreement and the Existing Letter of
Credit have been paid and (B) it thereby surrenders any and all rights
it may have under the Related Documents arising in connection with the
Existing Reimbursement Agreement and the Existing Letter of Credit,
except for any such rights it may have as an indemnified party
thereunder.
SECTION V.2. Additional Conditions Precedent to the Issuance of the
Letter of Credit. The obligation of the Issuing Bank to issue the Letter of
Credit and of each Participating Bank to make the Advances to be made by it
shall be subject to the further conditions precedent that, on the date of the
issuance of the Letter of Credit, the following statements shall be true:
(a) there has occurred no Material Adverse Effect since December
31, 1998;
(b) the representations and warranties contained in Section 6.01 shall
be correct in all material respects on and as of the Closing Date before and
after giving effect to the issuance of the Letter of Credit;
(c) no event shall have occurred and be continuing which constitutes an
Event of Default or Unmatured Default, or would result from the issuance of
the Letter of Credit;
(d) the Other Reimbursement Agreement has been duly executed and
delivered by the parties thereto, all conditions precedent to the issuance of
the "Letter of Credit" provided for thereunder have been satisfied and no
"Event of Default" or "Unmatured Default" (as defined therein) has occurred
and is continuing;
(e) the Series F First Mortgage Bonds were duly issued to the Trustee
in accordance with the Indenture, are presently outstanding, and no "Event of
Default" (as defined in the First Mortgage Indenture) has occurred and is
continuing;
(f) all UCC-1, UCC-3 and other filings and recordings in respect of the
Collateral shall have been duly completed, the results of all lien and record
searches undertaken in connection with the Security Agreement and the
Collateral thereunder shall be satisfactory to the Agent and its counsel; and
the Security Agreement shall create a first priority perfected security
interest in such Collateral;
(g) the Account Party shall have paid all fees under or referenced in
Section 2.03 hereof, to the extent then due and payable;
(h) all other matters relating to the issuance of the Letter of
Credit, the Other Reimbursement Agreement and the "Letter of Credit" to be
issued thereunder shall be satisfactory to the Agent and its counsel; and
(i) the 1998 Revolving Credit Agreement has been terminated and
all amounts payable by the Account Party in connection with the 1998
Revolving Credit Agreement have been paid in full, other than in respect
of indemnification and similar contingent obligations for which no claim
has been made.
SECTION V.3. Conditions Precedent to Initial Advances and Conversions
of Advances. The obligation of each Participating Bank to make any Initial
Advance or to Convert any Term Advance shall be subject to the conditions
precedent that, on the date of such Initial Advance or Conversion, the
following statements shall be true:
(a) the representations and warranties contained in Section 6.01 of
this Agreement (other than the last sentence of subsection (e) and clause
(ii) of subsection (f) thereof) are true and correct on and as of the date of
such Initial Advance or Conversion, before and after giving effect to such
Initial Advance or Conversion and to the application of the proceeds (if any)
therefrom, as though made on and as of such date; and
(b) no event has occurred and is continuing which constitutes an Event
of Default.
Unless the Account Party shall have previously advised the Agent in
writing that one or more of the statements contained in subsections (a) and
(b) of this Section 5.03 is no longer true, the Account Party shall be deemed
to have represented and warranted, on and as of the date of any Initial
Advance or Conversion, that the above statements are true.
SECTION V.4. Conditions Precedent to Term Advances. The obligation of
each Participating Bank to make any Term Advance shall be subject to the
conditions precedent that, on the date of such Term Advance the following
statements shall be true:
(a) the representations and warranties contained in Section 6.01 of
this Agreement (including the last sentence of subsection (e) and clause (ii)
of subsection (f) thereof) are true and correct on and as of the date of such
Term Advance, before and after giving effect to such Term Advance and to the
application of the proceeds therefrom, as though made on and as of such date;
and
(b) no event has occurred and is continuing which constitutes an Event
of Default or an Unmatured Default.
Unless the Account Party shall have previously advised the Agent in writing
that one or more of the statements contained in subsections (a) and (b) of
this Section 5.04 is no longer true, the Account Party shall be deemed to
have represented and warranted, on and as of the date of any Term Advance,
that the above statements are true.
SECTION V.5. Reliance on Certificates. The Agent, the Issuing Bank and
the Participating Banks shall be entitled to rely conclusively upon the
certificates delivered from time to time by officers of the Account Party,
NU, NUSCO and the other parties to the Loan Documents, Related Documents and
the Significant Contracts as to the names, incumbency, authority and
signatures of the respective persons named therein until such time as the
Agent may receive a replacement certificate, in form acceptable to the Agent,
from an officer of such Person identified to the 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.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION VI.1. Representations and Warranties of the Account Party. The
Account Party represents and warrants as follows:
(a) The Account Party is a corporation duly organized and validly
existing under the laws of the State of New Hampshire. The Account Party 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 Account Party of the
Rate Agreement and of each Transaction Document, Loan Document, Related
Document and Significant Contract to which it is a party, are within the
Account Party's corporate powers, have been duly authorized by all necessary
corporate action, and do not and will not contravene (i) the Account Party's
charter or bylaws or (ii) any law or legal or contractual restriction binding
on or affecting the Account Party; 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) upon or
with respect to any of its properties.
(c) All Governmental Approvals 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, except as described in the several opinions of
counsel delivered pursuant to Article V of this Agreement. The Account Party
has obtained or made all Governmental Approvals referred to in clause (iii)
of the definition of "Governmental Approvals", except those which are 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
Account Party as a whole.
(d) This Agreement, the Rate Agreement, each other Transaction
Document, Loan Document, Related Document and each Significant Contract to
which the Account Party is a party have been duly executed and delivered by
or on behalf of the Account Party and are legal, valid and binding
obligations of the Account Party enforceable against the Account Party 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 and the application of general
principles of equity (regardless of whether considered in a proceeding in
equity or law), 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 Account Party as at December 31,
1998 and the related audited statements of the Account Party setting forth
the results of operations, retained earnings and cash flows of the Account
Party for the fiscal year then ended, copies of which have been furnished to
each Participating Bank, fairly present in all material respects the
financial condition, results of operations, retained earnings and cash flows
of the Account Party 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
Account Party has no material non-contingent liabilities, and all contingent
liabilities have been appropriately reserved. The financial projections
referred to in Section 5.01(d)(ii) of this Agreement have been prepared in
good faith and on reasonable assumptions. Since December 31, 1998, there has
been no material adverse change in the financial condition, operations,
properties or prospects of the Account Party, other than as disclosed in the
Disclosure Documents; provided, however, that the existence of the Rate
Proceeding shall not be deemed in and of itself to be a material adverse
change; provided, further, however, that notwithstanding the foregoing, a
material adverse change shall be deemed to have occurred and be continuing
upon the occurrence of a material adverse change or development in the Rate
Proceeding.
(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 Account Party or its properties before any
court, governmental agency or arbitrator (i) which affects or purports to
affect the legality, validity or enforceability of the Transaction Documents,
the Loan Documents or the Related Documents, the Rate Agreement, or any
Significant Contract, or any of them or (ii) which, if adversely determined,
would materially adversely affect the financial condition, operations,
properties or prospects of the Account Party as a whole. Notwithstanding the
foregoing, any material adverse development in respect of the Rate
Proceeding, the Rate Agreement or the Final Plan that results, or would
reasonably be expected to result, in a material adverse effect on the
financial condition, operations, properties or prospects of the Account Party
as a whole, shall be deemed to be an event within clause (ii) of the
preceding sentence.
(g) All insurance required by Section 7.01(c) hereof is 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 Account Party, 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 Account Party (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 non-exempt "prohibited transaction"
has occurred with respect thereto, except as described in the Disclosure
Documents and except as the same may be exempt pursuant to Section 408 of
ERISA and regulations and orders thereunder. Neither the Account Party 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
Account Party 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 Account Party of such properties; the electric transmission
and distribution lines of the Account Party in the main are located in New
Hampshire and on land owned in fee by the Account Party or over which the
Account Party 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 Account Party'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
Account Party 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 Account Party; and the Security Documents will 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; provided, however, that no
representation is made as to any Lien purported to be created in favor of the
Trustee with respect to any interest of the Issuer in the Indenture.
(j) No material part of the properties, business or operations of the
Account Party 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 Account Party 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 Account Party 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 Account Party or its agents to the Agent, the Issuing Bank or the
Participating Banks in connection with the negotiation, execution and closing
of this Agreement and the other Transaction Documents, or the issuance of the
Bonds (including, without limitation, the Information Memorandum and the
Official Statements) 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) The Account Party has not, either directly or indirectly, made any
investment in, or loans to, any Affiliate of the Account Party, other than
such investments or loans as were outstanding on the date hereof.
(o) 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
Account Party (X) is not an "investment company" within the meaning ascribed
to that term in the Investment Company Act of 1940 or (Y) is not engaged in
the business of extending credit for the purpose of buying or carrying margin
stock.
(p) The Account Party has reviewed and continues to review the effect
of the Year 2000 Issue on the computer software, hardware and firmware
systems and equipment containing embedded microchips owned or operated by or
for the Account Party or used or relied upon in the conduct of its business
(including, without limitation, systems and equipment supplied by others).
The costs to the Account Party of any reprogramming and/or remediation
required as a result of the Year 2000 Issue to permit the proper functioning
of such systems and equipment and the proper processing of data, and testing
of such reprogramming or remediation (as the case may be), and of the
reasonably foreseeable consequences of the Year 2000 Issue to the Account
Party (including, without limitation, reprogramming errors and the failure of
systems or equipment supplied by others) are not reasonably expected to
result in an Event of Default or an Unmatured Default or to have a Material
Adverse Effect.
ARTICLE VII
COVENANTS OF THE ACCOUNT PARTY
SECTION VII.1. Affirmative Covenants. So long as any amounts shall
remain available to be drawn under the Letter of Credit or any Advance or
other amounts shall remain unpaid hereunder or any Participating Bank shall
have any Commitment, the Account Party will, unless the Majority Lenders
shall otherwise consent in writing:
(a) Use of Proceeds. Apply all proceeds of each Advance solely as
specified in Section 3.02 and Section 6.01(o) 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
Account Party 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
Account Party 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 Account Party is
contesting the same in good faith by appropriate proceedings or (ii) that any
such noncompliance, and the enforcement or correction thereof, would not
materially adversely affect the financial condition, properties, prospects or
operations of the Account Party as a whole.
(f) Inspection Rights. At any time and from time to time upon
reasonable notice, permit the 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 Account Party and to discuss the
affairs, finances and accounts of the Account Party with the Account Party
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 Account Party and the assets and business of the Account Party, in
accordance with good accounting practices consistently applied.
(h) Performance of Related Agreements. Perform and observe all
material terms and provisions of the Rate Agreement and each Significant
Contract to be performed or observed by the Account Party and take all
reasonable steps to enforce such agreements substantially in accordance with
their terms and to preserve the rights of the Account Party thereunder;
provided, that the foregoing provisions of this Section 7.01(h) shall not
preclude the Account Party 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 Account Party and all other amounts that may
from time to time be owing to the Account Party 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 2.35 to 1.00
for each period of four consecutive fiscal quarters on each quarter-end
ending after December 31, 1998.
(ii) Common Equity to Total Capitalization Ratio. Maintain at
all times a ratio of Common Equity to Total Capitalization of not less
than 0.325 to 1.00.
(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 Account Party 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 Account Party
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 Participating Bank through the Issuing Bank may reasonably
request in order to fully give effect to the interests and properties
purported to be covered by the Security Documents.
(n) Related Documents. Perform and comply in all material respects with
each of the provisions of each Related Document to which it is a party.
(o) Year 2000. Take all necessary action to complete in all respects
by September 30, 1999 the reprogramming and/or remediation of computer
software, hardware and firmware systems and equipment containing embedded
microchips owned or operated by or for the Account Party or used or relied
upon in the conduct of its business (including, without limitation, systems
and equipment supplied by others) required as a result of the Year 2000 Issue
to permit the proper functioning of such computer systems and other equipment
and the testing of such systems and equipment, as so reprogrammed or
remediated (as the case may be), except for any reprogramming, remediation
and/or testing the failure of which to complete by such date could not
reasonably be expected to result in an Event of Default or an Unmatured
Default or to have a Material Adverse Effect. At the request of the Issuing
Bank or Majority Lenders, the Account Party shall provide to the Issuing Bank
and each Participating Bank reasonable assurance of its compliance with the
preceding sentence.
SECTION VII.2. Negative Covenants. So long as any amount shall remain
available to be drawn under the Letter of Credit or any Advance or other
amounts shall remain unpaid hereunder or any Participating Bank shall have
any Commitment, the Account Party will not without the 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 Account Party 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 following, whether now existing
or hereafter created or perfected:
(i) The Liens of the First Mortgage Indenture, the Security
Agreement, the Pledge Agreement, the "Pledge Agreement" referred to in
the Other Reimbursement Agreement, and any lien created pursuant hereto;
and
(ii) Permitted Liens (as defined in the First Mortgage Indenture as
in effect on the date hereof) on the Indenture Assets; provided,
however, that (A) the exclusion contained in clause (a) of such
definition with respect to Liens junior to the Lien of the First
Mortgage Indenture shall not apply to any Lien created after the date
hereof; (B) the exclusion contained in clauses (g) and (h) of such
definition shall apply only to the extent that all Liens of the type
described therein from time to time existing do not, in the aggregate,
materially and adversely affect the value of the security granted under
the First Mortgage Indenture and no such Lien secures Debt of the
Account Party for borrowed money; and (C) the Account Party shall not,
on or after the date hereof, create, incur or assume any purchase money
Debt secured by Liens of the type described in clause (o) of such
definition;
provided, however, that this Section 7.02(a) shall not be construed to
authorize the Account Party to incur, assume, be liable for or suffer to
exist any Debt not otherwise permitted hereunder or to create any Lien on its
accounts receivable, other than the Lien of the Security Agreement.
(b) Debt. From and after the Closing Date, create, incur or assume any
Debt, other than pursuant to this Agreement, the Other Reimbursement
Agreement and unsecured debt in an aggregate amount not to exceed
$25,000,000, and then only if, 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 and (ii) the Account Party
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 Account Party continues to
believe to be reasonable), the Account Party will continue to be in
compliance at all times with the provisions of Section 7.01(j) hereof. The
Account Party 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, whether in a single transaction
or series of transactions during any consecutive 12-month period, except for
(i) the sale of the Account Party's generating assets on an arms'-length
basis in a transaction (or series of transactions) subject to approval by the
NHPUC as part of a settlement of the Rate Proceeding and (ii) sales, leases,
transfers or other dispositions in the ordinary course of the Account Party'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 Account Party's assets if, in the aggregate,
(A) the book value of such assets equals or exceeds 7.5% of the total assets,
net of regulatory assets, of the Account Party reflected in the financial
statements of the Account Party 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 Account Party from such
assets shall equal or exceed 7.5% of the total gross revenue of the Account
Party.
(e) Restricted Payments and NUG Settlements. 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 Account Party (other than stock splits and dividends
payable solely in equity securities of the Account Party), or purchase,
redeem, retire, or otherwise acquire for value any shares of any class of
capital stock of the Account Party or any warrants, rights, or options to
acquire any such shares, now or hereafter outstanding, or make any
distribution of assets to any of its shareholders (any such transaction being
a "Restricted Payment"), or make any payment of or on account of any NUG
Settlement (a "NUG Settlement Payment"); provided, that the Account Party may
make one or more Restricted Payments or NUG Settlement Payments if:
(i) the aggregate amount of all such payments during the term
of this Agreement shall not exceed $40,000,000;
(ii) in the case of a NUG Settlement Payment, such NUG
Settlement shall have been approved by the NHPUC and all other
Governmental Approvals related thereto shall have been obtained and be
in full force and effect;
(iii) no Event of Default or Unmatured Default shall have
occurred and be continuing;
(iv) after giving effect to such payment, the Account Party shall
be in full compliance with Section 7.01(j) hereof (for purposes of
determining compliance with Section 7.01(j) under this clause (vi),
computations under Section 7.01(j) shall be made as of the date of such
payment, except that, retained earnings shall be determined as of the
last day of the immediately preceding fiscal quarter (adjusted for all
Restricted Payments and NUG Settlement Payments made after the last day
of such preceding fiscal quarter)); and
(v) the Account Party 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 Account Party continues to believe to be reasonable)
and after giving effect to such payment, the Account Party will continue
to be in compliance at all times with the provisions of Section 7.01(j)
hereof.
Notwithstanding anything to the contrary contained in this Section 7.02(e),
the Account Party may declare and pay regularly scheduled quarterly dividends
and regularly scheduled sinking fund payments on the Preferred Stock, if,
immediately prior to and after giving effect to any such payment, no Event of
Default or Unmatured Default shall have occurred and be continuing.
(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 Account Party to the
PBGC, or (ii) permit to exist any occurrence of any event described in clause
(i) of the definition of ERISA Plan Termination Event, 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 Account Party.
(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 Rate Agreement,
any deviation described in the April 6, 1999 letter of David R. McHale
to the Participating Banks, and except, with respect only to the
Significant Contracts, any amendment, modification or supplement thereto
that would not reduce the rights or entitlements of the Account Party
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 Account Party 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 Account Party shall have provided to the Agent at
least 30 days prior written notice of the enforcement action proposed to
be undertaken by the Account Party.
(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 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) Prepayment or Alteration of Debt. (i) Prepay, redeem, reduce
or voluntarily retire, or make or agree to make any change in the terms of,
any Debt of the Account Party, other than to the extent permitted by Section
7.04; (ii) without limitation of the foregoing, amend, modify or supplement
the Indenture or the First Mortgage Indenture, except to the extent permitted
by Section 7.04 or (iii) issue any First Mortgage Bonds as collateral
security for any existing or future debt, or grant any other security to any
holder of existing Debt of the Account Party, except to the extent permitted
by Section 7.04.
(l) Loans and Investments. Make any loans to or investments in
any Person, other than investments in Permitted Investments.
(m) Affiliate Receivables. Permit the aggregate balance of
accounts receivable from Affiliates (other than such receivables constituting
receivables for wholesale sales of power) to equal or exceed $12,500,000 as
of the end of any calendar month.
SECTION VII.3. Reporting Obligations. So long as any amount shall
remain available to be drawn under the Letter of Credit or any Advance or
other amounts shall remain unpaid hereunder or any Participating Bank shall
have any Commitment, the Account Party will, unless the Majority Lenders
shall otherwise consent in writing, furnish to the Agent in sufficient copies
for the Issuing Bank and each Participating Bank, 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 Account Party
setting forth details of such Event of Default or Unmatured Default and
the action which the Account Party 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 Account Party, (A) if and so long as the Account Party is required
to submit to the Securities and Exchange Commission a report on Form 10-
Q, a copy of the Account Party's report on Form 10-Q submitted to the
Securities and Exchange Commission with respect to such quarter and
(B) if the Account Party ceases to be required to submit such report, a
balance sheet of the Account Party as of the end of such quarter and
statements of income and retained earnings and of cash flows of the
Account Party 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 Account
Party 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
(x) 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 Account Party proposes to take with respect thereto,
(y) demonstrating compliance with Section 7.01(j) hereof for and as of
the end of such fiscal quarter and compliance with Sections 7.02(b) and
(e) hereof, as of the dates on which any Debt was created, incurred or
assumed (using the Account Party's most recent annual actuarial
determinations in the computation of Debt referred to in clause (ix) in
the definition of "Debt") or any Restricted Payment or NUG Settlement
Payment was made during such quarter, and (z) demonstrating, after
giving effect to the incurrence of any Debt created, incurred or assumed
during such fiscal quarter (using the Account Party's most recent annual
actuarial determinations in the computation of Debt referred to in
clause (ix) in the definition of "Debt") and after giving effect to any
Restricted Payments or NUG Settlement Payments made during such fiscal
quarter, compliance with Section 7.01(j) hereof for the remainder of the
fiscal year of the Account Party based on the operating budget/forecast
of operations delivered pursuant to Section 7.03 (iv) hereof for such
fiscal year, such demonstrations to be in a schedule (in form
satisfactory to the Majority Lenders) which sets forth the computations
used by the Account Party 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 Account Party, (A) if and so
long as the Account Party is required to submit to the Securities and
Exchange Commission a report on Form 10-K, a copy of the Account Party's
report on Form 10-K submitted to the Securities and Exchange Commission
with respect to such year and (B) if the Account Party ceases to be
required to submit such report, a copy of the annual audit report for
such year for the Account Party including therein a balance sheet of the
Account Party as of the end of such fiscal year and statements of income
and retained earnings and of cash flows of the Account Party 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 (x) 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) hereof, and 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, stating the nature
thereof and the action which the Account Party proposes to take with
respect thereto and (y) demonstrating compliance with Section 7.01(j)
hereof for and as of the end of such fiscal year and compliance with
Sections 7.02(b) and (e) hereof, as of the dates on which any Debt was
created, incurred or assumed (using the Account Party's most recent
annual actuarial determinations in the computation of Debt referred to
in clause (ix) in the definition of "Debt") or any Restricted Payment or
NUG Settlement Payment was made during the last fiscal quarter of the
Account Party, such demonstrations to be in a schedule (in form
satisfactory to the Majority Lenders) which sets forth the computations
used by the Account Party 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
Account Party as approved by the Board of Directors of the Account Party
in form satisfactory to the Participating Banks for such fiscal year of
the Account Party, together with a certificate of the Chief Financial
Officer, Treasurer or Assistant Treasurer of the Account Party stating
that such budget/forecast was prepared in good faith and on reasonable
assumptions;
(v) not later than ten days following the end of each fiscal
quarter of the Account Party, a report on the progress of and
developments in the Rate Proceeding, the Final Plan and any negotiations
concerning the foregoing;
(vi) as soon as available and in any event no later than the New
Hampshire Public Utilities Commission shall have received the Account
Party'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 Account Party;
(vii) as soon as possible and in any event (A) within 30 days
after the Account Party 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 Account
Party 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 Account Party describing such ERISA Plan
Termination Event and the action, if any, which the Account Party
proposes to take with respect thereto;
(viii) promptly after receipt thereof by the Account Party or
any of its ERISA Affiliates from the PBGC, copies of each notice
received by the Account Party 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;
(ix) 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 Account Party is a
contributing employer;
(x) promptly after receipt thereof by the Account Party or any of
its ERISA Affiliates from an ERISA Multiemployer Plan sponsor, a copy of
each notice received by the Account Party 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 Account Party may be liable;
(xi) promptly after the Account Party 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 the Rate
Agreement, or any Transaction Document, Loan Document, Related Document
or Significant Contract;
(xii) promptly after the sending or filing thereof, copies of
all such proxy statements, financial statements, and reports which the
Account Party 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 Account Party files with, the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or with
any national securities exchange;
(xiii) promptly after receipt thereof, any assertion of the
character described in Section 8.01(h) hereof and the action the Account
Party proposes to take with respect thereto;
(xiv) promptly after knowledge of any material default under
the Rate Agreement or any Significant Contract, notice of such default
and the action the Account Party proposes to take with respect thereto;
(xv) 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 (xv) any filing by the Account Party in the
ordinary course of the Account Party's business with, or order issued or
action taken by, a governmental authority or regulatory body after May
16, 1991 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
(xvi) promptly after requested, such other information
respecting the financial condition, operations, properties, prospects or
otherwise, of the Account Party as the Issuing Bank or Majority Lenders
may from time to time reasonably request in writing.
SECTION VII.4. Most Favored Lender Covenants. So long as any amount
shall remain available to be drawn under the Letter of Credit or any Advance
or other amounts shall remain unpaid hereunder or any Participating Bank
shall have any Commitment:
(a) The Account Party will not amend, modify or supplement, or consent
to any amendment, modification or supplement to, the Other Reimbursement
Agreement or any Revolving Credit Facility (as defined below) (whether the
same relates to pricing, tenor, reduction, prepayment, covenants, other
credit terms or otherwise), or enter into any Revolving Credit Facility, in
each case unless the Account Party shall first have offered to amend, modify
or supplement the Loan Documents in a like manner, subject however, to the
provisions of subsection (b), to the extent applicable.
(b) If at any time the Account Party shall be unable to borrow under
any revolving credit or similar facility (a "Revolving Credit Facility")
because the Account Party is unable to satisfy any "material adverse change"
or other condition precedent to borrowing (a "Funding Suspension"), and (x)
the failure to satisfy such condition does not itself constitute an Event of
Default hereunder and (y) no Event of Default or Unmatured Default shall
have occurred and be continuing hereunder, the provisions of subsection (a)
shall be subject to the following:
(i) The Account Party will be free to negotiate with the
lenders under the Revolving Credit Facility (the"Non-Funding Lenders")
and may resolve or not resolve such Funding Suspension in such manner as
it may see fit, without any requirement that the Agent, the Issuing Bank
or the Participating Banks consent thereto;
(ii) Any improvement in pricing, covenants or other credit
terms afforded to the Non-Funding Lenders to resolve the Funding
Suspension shall be offered to the Agent, the Issuing Bank and the
Participating Banks in the manner prescribed by subsection (a). Any
additional security granted to the Non-Funding Lenders to resolve the
Funding Suspension shall be afforded equally and ratably to the Agent,
the Issuing Bank and the Participating Banks; and
(iii) If in connection with the resolution of a Funding
Suspension, the Non-Funding Lenders' facility shall be permanently
reduced such that any amounts repaid or prepaid as part of such
resolution are not available to be re-borrowed, the Account Party will
pay to the Agent, for the benefit of the Issuing Bank and the
Participating Banks an amount equal to such repayment or prepayment,
dollar-for-dollar, to be applied to the reduction of the Available
Amount or to be held as cash collateral for the obligations of the
Account Party under the Loan Documents. For the avoidance of doubt:
(A) a reduction in the unfunded portion of the Non-Funding
Lenders' commitments will not, by itself, entitle the Agent, the
Issuing Bank and the Participating Banks to any such payment or to
any reduction in the Available Amount; and
(B) the Agent, the Issuing Bank and the Participating Banks
will not be entitled to any payment or reduction in the Available
Amount solely as a result of repayments and prepayments of advances
under such facility, if such repayment or prepayment results in
the Non-Funding Lenders' commitments becoming again available to
the Account Party in at least the amount of the repayment or
prepayment.
(c) The provisions of subsection (b) shall not apply during the
continuance of an Event of Default.
SECTION VII.5. The Cash Account. Upon the occurrence and during the
continuance of any Event of Default, the Agent shall at the request, or may
with the consent, of the Majority Lenders, direct the Account Party to, and
if so directed, the Account Party shall, deposit with the Agent an amount in
the cash account (the "Cash Account") described below equal to the Available
Amount of the Letter of Credit. Such Cash Account shall at all times be free
and clear of all rights or claims of third parties. The Cash Account shall
be maintained with the Agent in the name of, and under the sole dominion and
control of, the Agent, and amounts deposited in the Cash Account shall bear
interest at a rate equal to the rate generally offered by Barclays for
deposits equal to the balance in the Cash Account, for a term to be agreed to
between the Account Party and the Agent. If any Letter of Credit drawings
then outstanding or thereafter made are not reimbursed in full immediately
after being made and upon demand, then, in any such event, the Agent may
apply the amounts then on deposit in the Cash Account, in such priority as
the Agent shall elect, toward the payment in full of any or all of the
Account Party's obligations hereunder as and when such obligations shall
become due and payable. Upon payment in full, after the termination of the
Letters of Credit, of all such obligations, the Agent will repay to the
Account Party any cash then on deposit in the Cash Account. The Issuing Bank
hereby confirms its obligation as set forth in the Letter of Credit to make
all payments under the Letter of Credit with its own funds and not with any
funds of the Account Party or the Issuer, and nothing in this Section 7.05 or
otherwise shall in any way limit such obligation.
ARTICLE VIII
DEFAULTS
SECTION VIII.1. 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 Account Party shall fail to pay any interest on any Advance or
pursuant to Section 4.02 hereof within two days after the same becomes due;
the Account Party shall fail to reimburse the Issuing Bank for any Interest
Drawing (as defined in the Letter of Credit) within two days after such
reimbursement becomes due; or the Account Party shall fail to make any other
payment required to be made pursuant to Article II or Article III hereof when
due; or
(b) Any representation or warranty made by the Account Party (or any of
its officers or agents) in any Loan Document or Transaction Document or in
any certificate or other writing delivered pursuant to any Loan Document or
Transaction Document shall prove to have been incorrect in any material
respect when made or deemed made; or
(c) The Account Party 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 Account Party shall fail to perform or observe any other term
or covenant on its part to be performed or observed contained in any Loan
Document or Transaction Document and such failure shall remain unremedied,
after written notice thereof shall have been given to the Account Party by
the Agent, the Issuing Bank or any Participating Bank, for a period of 30
days; or
(e) The Account Party shall fail to pay any of its Debt when due
(including any interest or premium thereon but excluding Debt arising
hereunder 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 Account Party'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 Account Party so that such circumstance is no longer
continuing; or
(f) The Account Party 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 Account Party 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 Account Party, either the Account Party
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
Account Party or the appointment of a receiver, trustee, custodian or other
similar official for the Account Party or any of its property) shall occur;
or the Account Party 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 Account Party or its properties and
either enforcement proceedings shall have been commenced by any creditor upon
such judgment or order and shall not have been stayed or 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,
any Significant Contract or any Related Document 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
provisions contained in Section 7.02(g) hereof; or any party thereto other
than the Participating Banks shall so assert in writing, provided that in the
case of any party other than the Account Party making such assertion in
respect of the Rate Agreement, any Significant Contract or any Related
Document, 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, such Significant Contract or such
Related Document, (ii) the Account Party 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 (iii) such a binding
determination shall have been made in favor of such asserting party's
position; or
(i) The Security Documents 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 applicable Collateral
(other than Liens in favor of the Trustee with respect to the interests of
the Issuer under the Indenture), 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 Account Party becomes aware thereof; or
(j) The Account Party 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 Account
Party'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) A default by the Account Party 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 Agent to the Account
Party 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 Account Party 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 NHPUC 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 Account Party 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 Account Party as a whole; or
(m) NU shall cease to own all of the outstanding common stock of the
Account Party, free and clear of any Liens; or
(n) An "Event of Default" (as defined therein) shall have occurred and
be continuing under the Indenture or the First Mortgage Indenture; or
(o) An "Event of Default" (as defined therein) shall have occurred and
be continuing under the Other Reimbursement Agreement.
SECTION VIII.2. Remedies Upon Events of Default. Upon the occurrence
and during the continuance of any Event of Default, then, and in any such
event the Agent with the concurrence of the Issuing Bank may, and upon the
direction of the Majority Lenders the Agent shall (i) if the Letter of Credit
shall not have been issued, instruct the Issuing Bank to (whereupon the
Issuing Bank shall) by notice to the Account Party declare its commitment to
issue the Letter of Credit to be terminated, whereupon the same shall
forthwith terminate, (ii) instruct the Issuing Bank to (whereupon the Issuing
Bank shall) furnish to the Trustee and the Paying Agent written notice of
such Event of Default in accordance with Section 6.01(a)(iv) of the Indenture
and of the Issuing Bank's determination to terminate the Letter of Credit on
the fifth business day (as defined in the Indenture) following the Trustee's
and Paying Agent's receipt of such notice, (iii) instruct the Issuing Bank
to (whereupon the Issuing Bank shall) furnish to the Trustee and the Paying
Agent written notice that the Interest Component will not be reinstated in
the amount of one or more Interest Drawings, all as provided in the Letter of
Credit; (iv) direct the Account Party to pay cash into the Cash Account in
accordance with Section 7.05; (v) declare the Advances and all other
principal amounts outstanding hereunder, all interest thereon and all other
amounts payable hereunder to be forthwith due and payable, whereupon the
Advances and all other principal amounts outstanding hereunder, all such
interest and all such other 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 Account Party, and
(vi) instruct the Issuing Bank to (whereupon the Issuing Bank shall) exercise
all the rights and remedies provided herein and under and in respect of the
Security Documents; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Account Party under
the Federal Bankruptcy Code, (A) the commitment of the Issuing Bank to issue
the Letter of Credit, the Commitments and the obligations of the
Participating Banks to make Advances shall automatically be terminated, and
(B) the Advances and all other principal amounts outstanding hereunder, all
interest accrued and unpaid thereon and all other amounts payable hereunder
shall automatically become due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived
by the Account Party.
SECTION VIII.3. Issuing Bank to Notify First Mortgage Trustee, Others.
The Issuing Bank shall, if so directed by the Majority Lenders, promptly
notify the First Mortgage Trustee by telephone, confirmed in writing, of the
occurrence of any Event of Default. In addition, the Issuing Bank shall
furnish to the Agent, the Account Party, the Paying Agent and the Issuer a
copy of (a) any notice furnished to the First Mortgage Trustee pursuant to
the preceding sentence and (b) any notice delivered to the Trustee pursuant
to clause (ii) or clause (iii) of Section 8.02. Notwithstanding the
foregoing, no failure of the Issuing Bank to give any notice (or copy of a
notice) as contemplated by this Section 8.03 shall limit or impair any rights
of the Issuing Bank, the Agent or any Participating Bank or the exercise of
any remedy hereunder, nor shall the Issuing Bank, the Agent or any
Participating Bank incur any liability as a result of any such failure.
ARTICLE IX
THE AGENT, THE PARTICIPATING
BANKS AND THE ISSUING BANK
SECTION IX.1. Authorization of Agent; Actions of Agent and Issuing
Bank. The Issuing Bank and each Participating Bank hereby appoint and
authorize the Agent to take such action as agent on their 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; provided, however, that neither the Agent nor the Issuing Bank shall
be required to take any action which exposes the Agent or the Issuing Bank to
personal liability or which is contrary to this Agreement or applicable law.
As to any matters not expressly provided for by any Related Document
(including, without limitation, enforcement or collection thereof), neither
the Agent nor the Issuing Bank shall be required to exercise any discretion
or take any action. The Agent agrees to deliver promptly (i) to the Issuing
Bank and each Participating Bank copies of each notice delivered to it by the
Account Party and (ii) to each Participating Bank copies of each notice
delivered to it by the Issuing Bank, in each case pursuant to the terms of
this Agreement.
SECTION IX.2. Reliance, Etc. Neither the Agent, the Issuing Bank, nor
any of their 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
this Agreement or any Related Document, except for its or their own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. Without limitation of the generality of the foregoing, each of
the Agent and the Issuing Bank (i) may consult with legal counsel (including
counsel for the Account Party), 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 Participating Bank and shall not be responsible to any Participating Bank
for any statements, warranties or representations made in or in connection
with this Agreement or any Related Document; (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 or any Related Document on
the part of the Account Party to be performed or observed, or to inspect any
property (including the books and records) of the Account Party; (iv) shall
not be responsible to any Participating Bank for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement
or any Related Document or any other instrument or document furnished
pursuant hereto and thereto; and (v) shall incur no liability under or in
respect of this Agreement or any Related Document by acting upon any notice,
consent certificate or other instrument or writing (which may be by telegram,
cable or telex), including, without limitation, any thereof from time to time
purporting to be from the Trustee, believed by it to be genuine and signed or
sent by the proper party or parties.
SECTION IX.3. The Agent, the Issuing Bank and Affiliates. The Agent and
the Issuing Bank shall have the same rights and powers under this Agreement
as any other Participating Bank and may exercise (or omit from exercising)
the same as though they were not the Agent and the Issuing Bank,
respectively, and the term "Participating Bank" shall, unless otherwise
expressly indicated, include Barclays in its individual capacity. The Agent,
the Issuing Bank and their respective Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, the Account Party, any of its subsidiaries and any
Person who may do business with or own securities of the Account Party or any
such subsidiary, all as if Barclays was not the Agent or the Issuing Bank,
and without any duty to account therefor to the Participating Banks.
SECTION IX.4. Participating Bank Credit Decision. Each of the Issuing
Bank and each Participating Bank acknowledges that it has, independently and
without reliance upon the Arranger, the Agent, the Issuing Bank or any other
Participating Bank and based on the financial information referred to in
Section 6.01(e) hereof and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each of the Issuing Bank and each Participating Bank also
acknowledges that it will, independently and without reliance upon the
Arranger, the Agent, the Issuing Bank or any other Participating Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement.
SECTION IX.5. Indemnification. The Participating Banks agree to
indemnify the Agent and the Issuing Bank (to the extent not reimbursed by the
Account Party), ratably according to their respective Participation
Percentages, 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 or the Issuing Bank in any way
relating to or arising out of this Agreement or any action taken or omitted
by the Agent or the Issuing Bank under or in connection with this Agreement,
provided that no Participating Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's or the
Issuing Bank's (as the case may be) gross negligence or willful misconduct.
Without limitation of the foregoing, each Participating Bank agrees to
reimburse the Agent and the Issuing Bank promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by the
Agent and the Issuing Bank in connection with the preparation, execution,
delivery, administration, modification, amendment, waiver 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 the Agent and the Issuing Bank (as the case may be) are entitled
to reimbursement for such expenses pursuant to Section 10.04 hereof but are
not reimbursed for such expenses by the Account Party.
SECTION IX.6. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Issuing Bank, the Participating Banks
and the Account Party, with any such resignation to become effective only
upon the appointment of a successor Agent pursuant to this Section 9.06.
Upon any such resignation, the Issuing Bank shall have the right to appoint a
successor Agent, which shall be another commercial bank or trust company
reasonably acceptable to the Account Party, organized or licensed under the
laws of the United States, or of any State thereof. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent and the execution and
delivery by the Account Party and the successor Agent of an agreement
relating to the fees, if any, to be paid to the successor Agent in connection
with its acting as Agent hereunder, such successor Agent shall thereupon
succeed to and become vested with all 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 hereunder as 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 Agent under this Agreement.
SECTION IX.7. Issuing Bank. (a) All notices received by the Issuing
Bank pursuant to this Agreement or any Related Document (other than the
Letter of Credit) shall be promptly delivered to the Agent for distribution
to the Participating Banks.
(a) Except to the extent permitted by Section 2.06, the Issuing Bank
shall not amend or waive any provision or consent to the amendment or waiver
of any Related Document without the written consent of the Majority Lenders.
(b) Upon receipt by the Issuing Bank from time to time of any amount
pursuant to the terms of any Related Document (other than pursuant to the
terms of this Agreement), the Issuing Bank shall promptly deliver to the
Agent such amount.
SECTION IX.8. Certain Authorizations and Consent. The Issuing Bank and
each Participating Bank, by its acceptance hereof, and each other
Participating Bank by its execution and delivery of the Participant
Assignment pursuant to which it became a Participating Bank, consents to,
authorizes, ratifies and confirms in all respects:
(i) the execution, delivery, acceptance and performance by the
Agent and by the Collateral Agent of the Intercreditor Amendment, and
the taking by the Agent and the Collateral Agent of all actions under
the Intercreditor Agreement, as the same may be amended from time to
time in accordance with the terms thereof and Section 10.01 hereof;
(ii) the execution, delivery and acceptance by the Collateral Agent
of the Security Agreement Amendment, and the taking by the Collateral
Agent of all actions under the Security Agreement, as the same may be
amended from time to time in accordance with the terms thereof and
Section 10.01 hereof;
(iii) the execution, delivery and acceptance by the Issuing
Bank of the Indenture, and the taking by the Issuing Bank of all actions
under the Indenture, as the same may be amended from time to time in
accordance with the terms thereof and Section 9.07 hereof;
the execution and delivery of this Agreement by the Issuing Bank or such
Participating Bank, or the execution and delivery of such Participant
Assignment by such Participating Bank, as the case may be, constituting
(without further act or deed) the Issuing Bank or such Participating Bank's
acceptance and approval of, and agreement to the terms of, the Intercreditor
Agreement, the Security Agreement and the Indenture with the same effect as
if the Issuing Bank or such Participating Bank were itself a party thereto.
ARTICLE X
MISCELLANEOUS
SECTION X.1. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Pledge Agreement, nor consent to any departure by the
Account Party 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 the Issuing Bank and
all the Participating Banks, do any of the following: (a) waive, modify or
eliminate any of the conditions specified in Article V of this Agreement,
(b) increase the Commitments of the Participating Banks that may be
maintained hereunder, subject the Participating Banks to any additional
obligations or extend the Stated Termination Date, (c) reduce the principal
of, or interest on, the Advances, any amount reimbursable on demand pursuant
to Section 3.01, or any fees or other amounts payable hereunder, (d) postpone
any date fixed for any payment of principal of, or interest on, the Advances,
such reimbursable amounts or any fees or other amounts payable hereunder
(other than fees payable to the Issuing Bank or the Agent pursuant to Section
2.03 hereof), (e) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Advances, or the number of
Participating Banks which shall be required for the Participating Banks or
any of them to take any action hereunder, (f) amend this Agreement or the
Pledge Agreement in a manner intended to prefer one or more Participating
Banks over any other Participating Banks, (g) amend this Section 10.01, or
(h) release any of the Collateral otherwise than in accordance with any
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 (i) no
amendment, waiver or consent shall, unless in writing and signed by the
Issuing Bank or the Agent in addition to the Participating Banks required
above to take such action, affect the rights or duties of the Issuing Bank or
the Agent, as the case may be, under this Agreement or the Pledge Agreement
and (ii) no amendment, waiver or consent shall, unless in writing and signed
by the "Majority Lenders" under the Other Reimbursement Agreement, shall
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Advances, or the number of Participating Banks which shall be
required for the Participating Banks or any of them to take, or to direct the
Collateral Agent to take, any action under the Intercreditor Agreement and
the Security Agreement.
SECTION X.2. Notices, Etc. 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 Account Party, to it in care of NUSCO at NUSCO's
address at 107 Selden Street, Berlin, Connecticut 06037 (telecopy: (860)
665-5457), Attention: Assistant Treasurer - Finance;
(ii) if to the Issuing Bank or the Agent, to it at its address at
222 Broadway, 12th Floor, New York, New York 10038, Attention: Client
Services Unit, (telephone: (212) 412-3721, telecopy: (212) 412-5306),
with a copy to: Utilities Group, (telephone (212) 412-2470, telecopy:
(212) 412-6709);
(iii) if to any Participating Bank, to it at its address set
forth on the signature pages to this Agreement or in the Participation
Assignment pursuant to which it became a Participating Bank; or
as to each party other than any Participating Bank, at such other address as
shall be designated by such party in a written notice to the other parties,
and, as to any Participating Bank, at such other address as shall be
designated by such Participating Bank in a written notice to the Account
Party and the Agent. 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 Agent or the
Issuing Bank pursuant to Article II, III or IV shall not be effective until
received by the Agent or the Issuing Bank, as the case may be.
SECTION X.3. No Waiver of Remedies. No failure on the part of any
Participating Bank or the Issuing Bank to exercise, and no delay in
exercising, any right hereunder or under any Loan Document 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 X.4. Cost; Expenses and Indemnification. (a) The Account Party
agrees to pay on demand all costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), of (i) the Arranger, the
Agent and the Issuing Bank in connection with the preparation, negotiation,
execution and delivery of the Loan Documents and Transaction Documents and
the administration of the Loan Documents and Transaction Documents, the care
and custody of any and all collateral, and any proposed modification,
amendment, or consent relating thereto; and (ii) the Arranger, the Agent, the
Issuing Bank and each Participating Bank in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement or any other Loan Document or Transaction Document.
(a) The Account Party hereby agrees to indemnify and hold the Arranger,
the Agent, the Issuing Bank and each Participating Bank 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, the Transaction Documents or
the Related Documents or any transaction contemplated thereby, or the
use by the Account Party of the proceeds of any Advance or the use by
the Paying Agent or the Trustee of the proceeds of any drawing under the
Letter of Credit;
(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
Account Party or any of its Affiliates or (B) by or on behalf of the
Account Party or any of its Affiliates at any time and in any place;
(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;
(iv) by reason of or in connection with the execution and delivery
or transfer of, or payment or failure to make payment under, the Letter
of Credit; provided, however, that the Account Party shall not be
required to indemnify the Arranger, the Agent, the Issuing Bank or any
Participating Bank pursuant to this Section for any claims, damages,
losses, liabilities, costs or expenses to the extent caused by (A) the
Issuing Bank's willful misconduct or gross negligence, as determined by
a court of competent jurisdiction, in determining whether documents
presented under the Letter of Credit are genuine or comply with the
terms of the Letter of Credit or (B) the Issuing Bank's willful or
grossly negligent failure, as determined by a court of competent
jurisdiction, to make lawful payment under the Letter of Credit after
the presentation to it by the Paying Agent of a draft and certificate
strictly complying with the terms and conditions of the Letter of
Credit; or
(v) by reason of any inaccuracy or alleged inaccuracy in any
material respect, or any untrue statement or alleged untrue statement of
any material fact, contained in any Official Statement, except to the
extent contained in or arising from information in such Official
Statement supplied in writing by and describing the Issuing Bank or any
previous issuer of a letter of credit relating to the Bonds.
(b) Nothing contained in this Section 10.04 is intended to limit the
Account Party's obligations set forth in Articles II, III and IV. The
Account Party's obligations under this Section 10.04 shall survive the
creation and sale of any participation interest pursuant to Section 10.06
hereof and shall survive as well the repayment of all amounts owing to the
Agent, the Issuing Bank and the Participating Banks under the Loan Documents
and the termination of the Commitments. If and to the extent that the
obligations of the Account Party under this Section 10.04 are unenforceable
for any reason, the Account Party agrees to make the maximum contribution to
the payment and satisfaction thereof which is permissible under applicable
law.
SECTION X.5. Right of Set-off. (a) Upon (i) the occurrence and during
the continuance of any Event of Default and (ii) the taking of any action or
the giving of any instruction by the Agent as specified by Section 8.02
hereof, the Issuing Bank and each Participating Bank are 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 the Issuing Bank or such Participating Bank to or for the credit or
the account of the Account Party against any and all of the obligations of
the Account Party now or hereafter existing under this Agreement in favor of
the Issuing Bank or such Participating Bank, irrespective of whether or not
the Issuing Bank or such Participating Bank shall have made any demand under
this Agreement and although such obligations may be unmatured. The Issuing
Bank and each Participating Bank agrees promptly to notify the Account Party
after any such set-off and application provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of the Issuing Bank and each Participating Bank under this Section are
in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Issuing Bank and/or such Participating
Bank may have.
(a) The Account Party 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 Issuing Bank and of the several Participating Banks
hereunder are several and not joint. Nothing contained herein shall
constitute a relinquishment or waiver of the Account Party's rights to any
independent claim that the Account Party may have against the Issuing Bank or
any Participating Bank, but no Participating Bank shall be liable for the
conduct of the Issuing Bank or any other Participating Bank, and the Issuing
Bank shall not be liable for the conduct of any Participating Bank.
SECTION X.6. Binding Effect; Assignments and Participants. (a) This
Agreement shall become effective when it shall have been executed and
delivered by the Account Party, the Agent, the Issuing Bank and each
Participating Bank named on the signature pages to this Agreement and
thereafter shall be binding upon and inure to the benefit of the Account
Party, the Agent, the Issuing Bank and each Participating Bank and their
respective successors and assigns, except that the Account Party shall not
have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Issuing Bank and each Participating Bank,
and the Issuing Bank may not assign its commitment to issue the Letter of
Credit or its obligations under or in respect of the Letter of Credit.
(a) Each Participating Bank may assign all or any portion of its rights
under this Agreement, under the Letter of Credit or in any security
hereunder, including, without limitation, any instruments securing the
Account Party's obligations hereunder; provided that (i) no assignment by any
Participating Bank may be made to any Person, other than to another
Participating Bank, except with the prior written consent of the Issuing Bank
and the Account Party (which consent in the case of the Account Party,
(A) shall not be unreasonably withheld and (B) shall not be required if an
Event of Default shall have occurred and be continuing and the Agent or the
Issuing Bank shall have exercised any remedy described in clause (ii), (iii)
or (v) of Section 8.02), (ii) any assignment shall be of a constant and not a
varying percentage of all of the assignor's rights and obligations hereunder
and (iii) the parties to each such assignment shall execute and deliver to
the Agent a Participation Assignment, together with a processing fee of
$3,500. Upon receipt of a completed Participation Assignment and the
processing fee, the Agent will record in a register maintained for such
purpose the name of the assignee and the percentage participation interest
assigned by the assignor and assumed by the assignee for purposes of the
determination of such assignor's and assignee's respective Participation
Percentages. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Participation Assignment,
which effective date shall be at least five Business Days after the execution
thereof, the assignee shall, to the extent of such assignment, become a party
hereto and have all of the rights and obligations of a Participating Bank
hereunder and, to the extent of such assignment, such assigning Participating
Bank shall be released from its obligations hereunder (without relieving such
Participating Bank from any liability for damages, costs and expenses
suffered by the Issuing Bank or the Account Party as a result of the failure
by such Participating Bank to perform its obligations hereunder).
(b) Each Participating Bank may grant participations to one or more
Persons in all or any part of, or any interest (undivided or divided) in,
such Participating Bank's rights and obligations under this Agreement (any
such Person being referred to hereinafter as a "Participant" and such
interests are collectively, referred to hereinafter as the "Rights");
provided, however, that (i) such Participating Bank's obligations under this
Agreement shall remain unchanged; (ii) any such Participant shall be entitled
to the benefits and cost protections provided for in Section 4.03 hereof on
the same basis as if it were a Participating Bank hereunder; (iii) the
Account Party, the Agent and the Issuing Bank shall continue to deal solely
and directly with such Participating Bank in connection with such
Participating Bank's rights and obligations under this Agreement; and (iv) no
such Participant, other than an Affiliate of such Participating Bank, shall
be entitled to require such Participating Bank to take or omit to take any
action hereunder, unless such action or omission would have an effect of the
type described in subsections (c), (d) or (h) of Section 10.01 hereof.
(c) Notwithstanding anything contained in this Section 10.06 to the
contrary, the Issuing Bank and any Participating Bank may assign and pledge
all or any portion of the Advances (or participating interests therein) owing
to the Issuing Bank or such Participating Bank 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
Issuing Bank or such Participating Bank from its obligations hereunder.
SECTION X.7. 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 X.8. Issuing Bank Not Liable. As between the Agent, the
Issuing Bank and the Participating Banks on the one hand, and the Account
Party on the other, the Account Party assumes all risks of the acts or
omissions of the Paying Agent, the Trustee and any other beneficiary or
transferee of the Letter of Credit with respect to its use of the Letter of
Credit. Neither the Agent, the Issuing Bank, any Participating Bank, nor any
of their respective officers or directors shall be liable or responsible for:
(a) the use which may be made of the Letter of Credit or any acts or
omissions of the Paying Agent, the Trustee and any other beneficiary or
transferee in connection therewith; (b) the validity, sufficiency or
genuineness of documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Issuing Bank against presentation of
documents which do not comply with the terms of the Letter of Credit,
including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever
in making or failing to make payment under the Letter of Credit, except that
the Account Party shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Account Party, to the extent of any
direct, as opposed to consequential, damages suffered by the Account Party
which the Account Party proves were caused by (i) the Issuing Bank's willful
misconduct or gross negligence, as determined by a court of competent
jurisdiction, in determining whether documents presented under the Letter of
Credit are genuine or comply with the terms of the Letter of Credit or
(ii) the Issuing Bank's willful or grossly negligent failure, as determined
by a court of competent jurisdiction, to make lawful payment under the Letter
of Credit after the presentation to it by the Paying Agent of a draft and
certificate strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, the Issuing
Bank may accept original or facsimile (including telecopy) sight drafts and
accompanying certificates presented under the Letter of Credit that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
SECTION X.9. Confidentiality. In connection with the negotiation and
administration of this Agreement and the other Loan Documents, the Account
Party has furnished and will from time to time furnish to the Agent, the
Issuing Bank and the Participating Banks (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 Account Party,
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 Account Party 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
assignees of or participants in the Recipient's position herein, but the
Recipient's ability to so exchange Confidential Information shall be
conditioned upon any such prospective assignee's or 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 Account Party as promptly as practicable.
SECTION X.10. Waiver of Jury Trial. The Account Party, the Arranger,
the Agent, the Issuing Bank, and the Participating Banks 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, any Transaction Document or any other instrument or document
delivered hereunder or thereunder.
SECTION X.11. Governing Law. This Agreement and the Pledge Agreement
shall be governed by, and construed in accordance with, the laws of the State
of New York. The Account Party, the Arranger, the Agent, the Issuing Bank
and each Participating Bank 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 X.12. 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.
THE ACCOUNT PARTY:
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
By:
Title: Assistant Treasurer - Finance
THE AGENT AND ISSUING BANK:
BARCLAYS BANK PLC,
NEW YORK BRANCH,
as Agent and as Issuing Bank
By:
Title:
THE PARTICIPATING BANKS:
BARCLAYS BANK PLC,
NEW YORK BRANCH
By:
Title:
Address for Notices
Barclays Bank PLC
222 Broadway
New York, New York 10038
Attention: Sydney Dennis
Telephone: 212/412-2470
Fax: 212/412-6709
Participation Percentage: 8.66446012%
BANK OF NEW YORK
By:
Title:
Address for Notices
Bank of New York
One Wall Street
New York, New York 10286
Attention: John Hall
Telephone: 212/635-7581
Fax: 212/635-7924
Participation Percentage: 4.33223006%
BANKBOSTON, N.A.
By:
Title:
Address for Notices
BankBoston, N.A.
100 Federal Street (MA BOS 01-08-04)
Boston, Massachusetts 02110
Attention: Jill Calabrese
Telephone: 617/434-9579
Fax: 617/434-3652
Participation Percentage: 6.49834509%
PARIBAS
By:
Title:
By:
Title:
Address for Notices
Paribas
787 Seventh Avenue
New York, New York 10019
Attention: Cheena Trikha
Telephone: 212/841-2560
Fax: 212/841-2255
Participation Percentage: 8.66446012%
CIBC, INC.
By:
Title:
Address for Notices
CIBC, Inc.
Two Paces West, Suite 1200
2727 Paces Ferry Road
Atlanta, Georgia 30339
Attention: Patrice Kelleher
Telephone: 770/319-4832
Fax: 770/319-4950
Participation Percentage: 8.66446012%
CITIBANK, N.A.
By:
Title:
Address for Notices
Citibank, N.A.
399 Park Avenue
4th Floor, Zone 20
New York, New York 10043
Attention: Robert J. Harrity, Jr.
Telephone: 212/559-6482
Fax: 212/793-6130
Participation Percentage: 4.33223006%
THE FIRST NATIONAL BANK OF CHICAGO
By:
Title:
Address for Notices
The First National Bank of Chicago
One First National Plaza, Suite 0363
Chicago, Illinois 60670-0363
Attention: Kenneth J. Bauer
Telephone: 312/732-6282
Fax: 312/732-3055
Participation Percentage: 4.33223006%
FLEET NATIONAL BANK
By:
Title:
Address for Notices
Fleet Bank
40 Westminster Street
Mail Stop: RI OP T05A
Providence, Rhode Island 02903-4963
Attention: Fred N. Manning
Telephone: 401/459-4845
Fax: 401/459-4963
Participation Percentage: 6.49834509%
THE FUJI BANK, LIMITED
By:
Title:
Address for Notices
The Fuji Bank, Limited
Two World Trade Center
New York, New York 10048
Attention: Roy Tanfield
Telephone: 212/898-2090
Fax: 212/321-9407
Participation Percentage: 4.33223006%
MELLON BANK, N.A.
By:
Title:
Address for Notices
Mellon Bank, N.A.
One Mellon Bank Center, Room 4425
Pittsburgh, Pennsylvania 15258-0001
Attention: Kurt Hewett
Telephone: 412/234-7355
Fax: 412/234-0286
Participation Percentage: 2.59933804%
CHASE SECURITIES INC., as Agent for
THE CHASE MANHATTAN BANK
By:
Title:
Address for Notices
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Eric Rosen
Telephone: 212/270-5458
Fax: 212/270-7968
Participation Percentage: 23.75275097%
TORONTO DOMINION
(NEW YORK), INC.
By:
Title:
Address for Notices
Toronto Dominion (New York), Inc.
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Mark A. Baird
Telephone: 713/653-8289
Fax: 713/951-9921
Participation Percentage: 4.33223006%
THE TRAVELERS INSURANCE
COMPANY
By:
Title:
Address for Notices
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group 9PB
Fax: 860/954-5243
Participation Percentage: 6.06512208%
UNION BANK OF CALIFORNIA
By:
Title:
Address for Notices
Union Bank of California
445 S. Figueroa Street, 15th Floor
Los Angeles, CA 90071
Attention: Ross Slusser
Telephone: 213/236-4124
Fax: 213/236-4096
Participation Percentage: 4.33223006%
TRAVELERS CORPORATE LOAN
FUND, INC.
By: Travelers Asset Management
International Corporation
By:
Title:
Address for Notices
Travelers Corporate Loan Fund, Inc.
c/o Smith Barney
388 Greenwich Street, 22nd Floor
New York, New York 10013
With a copy to:
The Travelers Insurance Company
One Tower Square - 9PB
Hartford, Connecticut 06183-2030
Attention: John Petchler
Allen Cantrell
Fax: 860/954-5243
Participation Percentage: 2.59933804%
SCHEDULE I
APPLICABLE LENDING OFFICES
Name of
Participating Bank
Barclays Bank PLC,
New York Branch
Domestic
Lending Office
75 Wall Street
New York, NY 10265
Att: Customer Service Unit
Tel: 212/412-3363
Fax: 212/412-3080
Eurodollar
Lending Office
Barclays Bank PLC,
Nassau Branch
c/o Barclays Bank PLC,
New York Branch
75 Wall Street
New York, NY 10265
Name of
Participating Bank
Bank of New York
Domestic
Lending Office
One Wall Street
New York, New York 10286
Att: John Hall
Tel: 212/635-7581
Fax: 212/635-7924
Eurodollar
Lending Office
Same
Name of
Participating Bank
BankBoston, N.A.
Domestic
Lending Office
100 Federal Street
(MA BOS 01-08-04)
Boston, Massachusetts 02110
Att: Jill Calabrese
Tel: 617/434-9579
Fax: 617/434-3652
Eurodollar
Lending Office
Same
Name of
Participating Bank
Paribas
Domestic
Lending Office
787 Seventh Avenue
New York, New York 10019
Att: Cheena Trikha
Tel: 212/841-2560
Fax: 212/841-2255
Eurodollar
Lending Office
Same
Name of
Participating Bank
CIBC, Inc.
Domestic
Lending Office
Two Paces West, Suite 1200
2727 Paces Ferry Road
Atlanta, Georgia 30339
Att: Patrice Kelleher
Tel: 770/319-4832
Fax: 770/319-4950
Eurodollar
Lending Office
Same
Name of
Participating Bank
Citibank, N.A.
Domestic
Lending Office
1 Court Square
7th Floor/Zone 1
Long Island City, NY 11120
Att: Ann Chiou
Tel: 718/248-4562
Fax: 718/248-4844
Eurodollar
Lending Office
Same
Name of
Participating Bank
Domestic
Lending Office
The First National Bank
of Chicago
1 First National Plaza
Suite 0821/IND-9
Chicago, IL 60670
Att: Ann Fritz
Tel: 312/732-5083
Fax: 312/732-1065
Eurodollar
Lending Office
Same
Name of
Participating Bank
Fleet Bank
Domestic
Lending Office
40 Westminster Street
Mail Stop: RI OP T05A
Att: Fred N. Manning
Tel: 401/459-4845
Fax: 617/459-4963
Eurodollar
Lending Office
Same
Name of
Participating Bank
The Fuji Bank, Limited
Domestic
Lending Office
Two World Trade Center
New York, NY 10048
Att: Roy Tanfield
Tel: 212/898-2064
Fax: 212/321-9407
Eurodollar
Lending Office
Same
Name of
Participating Bank
Mellon Bank, N.A.
Domestic
Lending Office
Loan Administration
Three Mellon Bank Center
Room 1525
Pittsburgh, PA 15259-0003
Att: Cathy Capp
Tel: 412/234-1870
Fax: 412/209-6111
Eurodollar
Lending Office
Same
Name of
Participating Bank
Domestic
Lending Office
The Chase Manhattan Bank
1 Chase Manhattan Plaza
8th Floor
New York, NY 10081
Att: Mark Heberer
Tel: 212/552-6368
Fax: 212/552-5642
Eurodollar
Lending Office
Same
Name of
Participating Bank
Toronto Dominion (New York), Inc.
Domestic
Lending Office
909 Fannin, Suite 1700
Houston, TX 12345
Att: Debbie Greene
Tel: 713/653-8245
Fax: 713/951-9921
Eurodollar
Lending Office
Same
Name of
Participating Bank
[Travelers Companies]
Domestic
Lending Office
[9PB, 1 Tower Street
Hartford, Connecticut 06183-2030
Att: Robert Mills
Tel: 860/277-7804
Fax: 860/954-5243]
Eurodollar
Lending Office
Same
Name of
Participating Bank
Union Bank of California
Domestic
Lending Office
445 S. Figueroa Street
15th Floor
Los Angeles, CA 90071
Att: Patricia Ayala
Tel: 213/236-6199
Fax: 213/236-4096
Eurodollar
Lending Office
Same
TABLE OF CONTENTS Page
PRELIMINARY STATEMENT
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1. Certain Defined Terms
SECTION I.2 Computation of Time Periods
SECTION 1.3 Accounting Terms
SECTION 1.4 Computions of Outstandings
ARTICLE II THE LETTER OF CREDIT
SECTION II.1. The Letter of Credit
SECTION II.2. Termination of the Commitments
SECTION II.3. Commissions and Fees
SECTION II.4. Reinstatement of the Letter of Credit
SECTION II.5. Extension of the Stated Termination Date
SECTION II.6. Modification of the Letter of Credit
ARTICLE III REIMBURSEMENT AND ADVANCES
SECTION III.1. Reimbursement on Demand
SECTION III.2. Advances
SECTION III.3. Interest on Advances
SECTION III.4. Conversion of Term Advances
SECTION III.5. Other Terms Relating to the Making and Conversion
of Advances
SECTION III.6. Prepayment of Advances
SECTION III.7. Participation; Reimbursement of Issuing Bank
ARTICLE IV PAYMENTS
SECTION IV.1. Payments and Computations
SECTION IV.2. Default Interest
SECTION IV.3. Yield Protection
SECTION IV.4. Sharing of Payments, Etc.
SECTION IV.5. Taxes
SECTION IV.6. Obligations Absolute
SECTION IV.7. Evidence of Indebtedness
ARTICLE V CONDITIONS PRECEDENT
SECTION V.1. Conditions Precedent to the Issuance of the Letter of
Credit
SECTION V.2. Additional Conditions Precedent to the Issuance of
the Letter of Credit
SECTION V.3. Conditions Precedent to Initial Advances and Conversions
of Advances
SECTION V.4. Conditions Precedent to Term Advances
SECTION V.5. Reliance on Certificates
ARTICLE VI REPRESENTATIONS AND WARRANTIES
SECTION VI.1. Representations and Warranties of the Account Party
ARTICLE VII COVENANTS OF THE ACCOUNT PARTY
SECTION VII.1. Affirmative Covenants
SECTION VII.2. Negative Covenants
SECTION VII.3. Reporting Obligations
SECTION VII.4. Most Favored Lender Covenants
SECTION VII.5. The Cash Account
ARTICLE VIII DEFAULTS
SECTION VIII.1. Events of Default
SECTION VIII.2. Remedies Upon Events of Default
SECTION VIII.3. Issuing Bank to Notify First Mortgage Trustee,
Others
ARTICLE IX THE AGENT, THE PARTICIPATINGBANKS AND THE ISSUING BANK
SECTION IX.1. Authorization of Agent; Actions of Agent and Issuing Bank
SECTION IX.2. Reliance, Etc.
SECTION IX.3. The Agent, the Issuing Bank and Affiliates
SECTION IX.4. Participating Bank Credit Decision
SECTION IX.5. Indemnification
SECTION IX.6. Successor Agent
SECTION IX.7. Issuing Bank
SECTION IX.8. Certain Authorizations and Consent
ARTICLE X MISCELLANEOUS
SECTION X.1. Amendments, Etc.
SECTION X.2. Notices, Etc.
SECTION X.3. No Waiver of Remedies
SECTION X.4. Cost; Expenses and Indemnification
SECTION X.5. Right of Set-off
SECTION X.6. Binding Effect; Assignments and Participants
SECTION X.7. Relation of the Parties; No Beneficiary
SECTION X.8. Issuing Bank Not Liable
SECTION X.9. Confidentiality
SECTION X.10. Waiver of Jury Trial
SECTION X.11. Governing Law
SECTION X.12. Execution in Counterparts
SCHEDULES
Schedule I - Applicable Lending Offices
EXHIBITS
Exhibit 1.01A - Form of Letter of Credit
Exhibit 1.01B - Form of Participation Assignment
Exhibit 1.01C - Form of Pledge Agreement
Exhibit 5.01A - Form of Opinion of Day, Berry & Howard, counsel to
the Account Party
Exhibit 5.01B - Form of Opinion of Jeffrey C. Miller, Assistant
General Counsel of NUSCO
Exhibit 5.01C - Form of Opinion of Catherine E. Shively, Senior
Counsel of the Account Party
Exhibit 5.01D - Form of Opinion of Drummond Woodsum & MacMahon,
special Maine counsel to the Account Party
Exhibit 5.01E - Form of Opinion of Zuccaro Willis & Bent, special
Vermont counsel to the Account Party
Exhibit 5.01F - Form of Opinion of King & Spalding, counsel to
the Agent and the Issuing Bank
EXECUTION COPY
THIRD SERIES D LETTER OF CREDIT
AND REIMBURSEMENT AGREEMENT
Dated as of April 14, 1999
Among
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
as Account Party
BARCLAYS BANK PLC, NEW YORK BRANCH
as Issuing Bank and as Agent
and
THE PARTICIPATING BANKS
REFERRED TO HEREIN
Relating to
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)
EXHIBIT 4.3.7
AMENDED AND RESTATED
SERIES E LOAN AND TRUST AGREEMENT
among
BUSINESS FINANCE AUTHORITY OF THE
STATE OF NEW HAMPSHIRE
formerly known as The Industrial Development Authority
of the State of New Hampshire)
and
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
and
STATE STREET BANK AND TRUST COMPANY, as Trustee
Dated as of April 1, 1999
Amending and Restating
Series E Loan and Trust Agreement Dated as of May 1, 1991,
as amended by First Supplement Dated as of December 1, 1993
and Second Supplement Dated as of May 1, 1995
And Providing for the Issue of:
$114,500,000
($69,700,000 outstanding at the time of amendment and restatement)
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)
and
$44,800,000
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)
TABLE OF CONTENTS
ARTICLE I: INTRODUCTION AND DEFINITIONS
Section 101. Description of this Agreement and the Parties
Section 102. Definitions
(a) Words
(b) Number and Gender
(c) Use of Examples
ARTICLE II: LOAN OF BOND PROCEEDS; ISSUE OF SERIES G
Section 201. Issue of Series G First Mortgage Bonds; Confirmation
Concerning Series G First Mortgage Bonds
(a) Issue of Series G First Mortgage Bonds
(b) Confirmation Concerning Series G First Mortgage Bonds
Section 202. Assignment and Pledge of the Authority
Section 203. Further Assurances
Section 204. Defeasance
ARTICLE III: THE BORROWING
Section 301. The Bonds
(a) Forms of 1991 Series E Bonds and 1993 Series E Bonds
(i) Form of Flexible 1991 Series E Bond
(ii) Form of Weekly 1991 Series E Bond
(iii) Form of Multiannual 1991 Series E Bond
(iv) Form of Fixed Rate 1991 Series E Bond
(vi) Form of Weekly 1993 Series E Bond
(vii) Form of Multiannual 1993 Series E Bond
(viii) Form of Fixed Rate 1993 Series E Bond
(ix) Form of Book-Entry Only System Flexible 1991 Series E Bond
(b) Details of the 1991 Series E Bonds and the 1993 Series E Bonds
(i) Details of the 1991 Series E Bonds.
(ii) Details of the 1993 Series E Bonds.
(c) Tax-Exempt Refunding Bonds
(d) Flexible Mode
(i) Determination of Flexible Rates
(ii) Conversions from the Flexible Mode
(iii) Mandatory Tender for Purchase
(e) Weekly Mode
(i) Determination of Weekly Rates
(ii) Conversions from Weekly Mode
(iii) Bondowners' Option to Tender Bonds in Weekly Mode
(iv) Events Requiring Mandatory Tender of Weekly Bond
(A) Expiration of Credit Facility without Substitution or Replacement;
Substitution of Credit Facility
(B) Change in Mode
(f) Multiannual Mode
(i) Determination of Multiannual Rate
(ii) Conversions from Multiannual Mode and Changes of Rate Period
(iii) Mandatory Tender for Purchase
(g) Conversion to Fixed Rate Mode
(h) Partial Conversions
(i) General
(ii) Selection
(iii) Amendment
(i) Cancellation and Destruction of Bonds
(j) Replacement of Bonds
(k) Interest on Overdue Principal
Section 302. Application of 1991 Series E Bond Proceeds
Section 303. Application of Tax-Exempt Refunding Bond
Proceeds and of 1993 Series E Bond Proceeds
(a) Application of Tax-Exempt Refunding Bond Proceeds
(b) Application of 1993 Series E Bond Proceeds
Section 304. Bond Fund
(a) Establishment and Purpose
(b) Excess in Bond Fund
(c) Unclaimed Moneys
Section 305. Rebate
Section 306. Expenses of Issue
Section 307. Application of Moneys
Section 308. Payments by the Company
(a) Payments of Debt Service by the Company
(b) Additional Payments
(c) Drawings on the Credit Facility
(i) Debt Service
(ii) Tenders for Purchase
(iii) Use of Credit Facility
(iv) Failed Conversion
(d) Payment of Debt Service
(e) Company's Purchase of Bonds
Section 309. Unconditional Obligation
Section 310. Redemption of the Bonds
(a) Optional Redemption
(b) Extraordinary Optional Redemption
(c) Notice by the Company
(d) Payment of Redemption Price and Accrued Interest
(e) Notice of Redemption
Section 311. Purchase of Bonds Tendered
(a) Procedure
(i) Notice
(ii) Sources of Payments
(b) Payments by the Paying Agent
(c) Commencement of New Mode or Rate Period
Section 312. Remarketing of Bonds Tendered
(a) General
(b) Remarketing of Bonds in the Weekly Mode Between Notice and Redemption
or Conversion Date
Section 313. Paying Agent
(a) Appointment and Responsibilities
(b) Removal or Resignation of Paying Agent
(c) Successors
Section 314. Remarketing Agent
(a) Qualifications and Responsibilities
(b) Removal or Resignation of Remarketing Agent
(c) Successors
Section 315. Investments
Section 316. Reduction of Credit Facility on Change in Mode; Release of
Credit Facility upon Conversion to Multiannual or Fixed Rate Mode
Section 317. Credit Facilities
(a) Substitution or Replacement
(b) Requirements
Section 318. Tax Status of Bonds
Section 319. Securities Laws
Section 320. Registration of Bonds (except the 1993 Series E Bonds) in
the Book-Entry only System
Section 321. Registration of 1993 Series E Bonds in the Book-Entry Only
System
ARTICLE IV: TAX-EXEMPT REFUNDING BONDS
Section 401. Issuance of Tax-Exempt Refunding Bonds
Section 402. Execution and Delivery of the Tax-Exempt Refunding Bonds
Section 403. Form of Tax-Exempt Refunding Bonds
(a) General
(b) Redemption Upon Taxability
(c) Day Counting
Section 404. Conversion
Section 405. Mandatory Taxability Redemption
Section 406. Additional Limitations on Conversions of 1993 Series E Bonds
to New Modes
(a) Conversions to Multiannual Mode
(b) Conversions from Multiannual Mode to Flexible or Weekly Mode
Section 407. Tax Status of 1993 Series E Bonds
ARTICLE V. THE PROJECT
Section 501. Company not to Impair Tax Status; Use of Project Facilities
Section 502. Qualification of the Project Facilities
Section 503. Compliance with Law
Section 504. Current Expenses
Section 505. Disposition and Use of Project Facilities
Section 506. Books and Records
Section 507. Undivided Interest
ARTICLE VI: DEFAULT AND REMEDIES
Section 601. Default by the Company
(a) Events of Default; Default
(i) Debt Service on Bonds; Required Purchase
(ii) Other Obligations
(iii)First Mortgage Bond Default
(iv) Reimbursement Agreement
(v) Non-Reinstatement under the Credit Facility
(b) Waiver
Section 602. Remedies for Events of Default
(a) Acceleration
(i) Bonds Not Supported by a Credit Facility
(ii) Bonds Supported by a Credit Facility
(b) Rights as a Secured Party
Section 603. Court Proceedings
Section 604. Revenues after Default
Section 605. The Credit Facility; Acceleration
Section 606. Rights of Bondowners
Section 607. Performance of Company's Obligations
Section 608. Remedies Cumulative; No Waiver
ARTICLE VII: THE TRUSTEE
Section 701. Corporate Organization, Authorization and Capacity
Section 702. Rights and Duties of the Trustee
(a) Moneys to be Held in Trust
(b) Accounts
(c) Performance of the Authority's Obligations
(d) Responsibility
(e) Limitations on Actions
(f) Financial Obligations
(g) Ownership of Bonds
(h) No Surety Bond
(i) Requests by the Company
(j) Trustee as Holder of Series G First Mortgage Bonds
(k) Authentication of Bonds
Section 703. Fees and Expenses of the Trustee
Section 704. Resignation or Removal of Trustee
Section 705. Successor Trustee
ARTICLE VIII: THE AUTHORITY
Section 801. Limited Obligation
Section 802. Rights and Duties of the Authority
(a) Remedies of the Authority
(b) Limitations on Actions
(c) Responsibility
Section 803. Expenses of the Authority
Section 804. Matters to be Considered by Authority
Section 805. Actions by Authority
ARTICLE IX: THE BONDOWNERS
Section 901. Action by Bondowners
ARTICLE X: THE COMPANY
Section 1001. Existence and Good Standing; Merger; Consolidation
Section 1002. Indemnification by the Company
ARTICLE XI: MISCELLANEOUS
Section 1101. Amendments
(a) Without Bondowners' Consent
(b) With Bondowners' Consent
(c) General
Section 1102. Notices
Section 1103. Time
Section 1104. Agreement Not for the Benefit of Other Parties
Section 1105. Severability
Section 1106. Counterparts
Section 1107. Captions
Section 1108. Governing Law
SIGNATURES
EXHIBIT A The Project Facilities
EXHIBIT B Assumption Agreement
EXHIBIT C Form of Flexible 1991 Series E Bond
EXHIBIT D Form of Weekly 1991 Series E Bond
EXHIBIT E Form of Multiannual 1991 Series E Bond
EXHIBIT F Form of Fixed Rate 1991 Series E Bond
EXHIBIT G Form of Flexible 1993 Series E Bond
EXHIBIT H Form of Weekly 1993 Series E Bond
EXHIBIT I Form of Multiannual 1993 Series E Bond
EXHIBIT J Form of Fixed Rate 1993 Series E Bond
EXHIBIT K Form of Book-Entry Only System Flexible 1991 Series E Bond
EXHIBIT L Representation Letter
EXHIBIT M 1993 Series E Bonds Representation Letter
ARTICLE I: INTRODUCTION AND DEFINITIONS(1)
Section 101. Description of this Agreement and the Parties. This AMENDED AND
RESTATED SERIES E LOAN AND TRUST AGREEMENT (this "Agreement") is entered into as
of April 1, 1999 by the Business Finance Authority of the State of New Hampshire
(with its successors, the "Authority"), a body corporate and politic created
under New Hampshire Revised Statutes Annotated 162-A:3 formerly known as The
Industrial Development Authority of the State of New Hampshire; Public Service
Company of New Hampshire (with its successors, the "Company"), a New Hampshire
corporation; and State Street Bank and Trust Company, a Massachusetts trust
company, as Trustee (with its successors, the "Trustee"). This Agreement amends
and restates the Series E Loan and Trust Agreement dated as of May 1, 1991 (the
"Original Agreement") among the Authority, the Company and the Trustee, as
previously amended by a First Supplement dated as of December 1, 1993 (the
"First Supplement") and a Second Supplement dated as of May 1, 1995 (the "Second
Supplement"), and is entered into pursuant to Clauses 1101(a)(i) and (viii) of
the Original Agreement. This Agreement is a financing document combined with a
security document as one instrument in accordance with New Hampshire Revised
Statutes Annotated Chapter 162-I (the "Act") and relates to industrial
facilities as defined in Paragraphs 2, VII(d) and (e) of the Act and located in
the Town of Seabrook, Rockingham County, New Hampshire.
This Agreement provides for the following transactions:
(a) the Authority's issue of the Bonds, including the 1991 Series
E Bonds, the 1993 Series E Bonds (which are Tax-Exempt Refunding Bonds),
any other Tax-Exempt Refunding Bonds and any bond or bonds duly issued in
exchange or replacement therefor;
(b) the Authority's loan of the proceeds of the Bonds to the Company
for the purpose of financing the acquisition, construction and installation
of the Project Facilities, including the Authority's loan of the proceeds of
the 1993 Series E Bonds to the Company for the purpose of refunding the
principal of $44,800,000 of the 1991 Series E Bonds;
(c) the Company's repayment of the loan of Bond proceeds from the
Authority through payment to the Trustee of all amounts necessary to pay the
Bonds issued by the Authority, including the Company's repayment of the loan
of 1993 Series E Bond proceeds from the Authority through payment to the
Trustee of all amounts necessary to pay the 1993 Series E Bonds;
(d) the Company's agreement to evidence and secure its repayment
obligations hereunder and its reimbursement obligations under the
Reimbursement Agreement by the issuance of the Series G First Mortgage Bonds
and the Company's confirmation of its agreement to evidence and secure its
repayment obligations hereunder and its reimbursement obligations under the
Reimbursement Agreement with the Series G First Mortgage Bonds;
(e) the Authority's assignment to the Trustee in trust for the benefit
and security of the Bondowners of the Authority's rights in respect of the
loan to the Company hereunder, including repayment of the loan to be received
from the Company; and
(f) the amendment and restatement of the Original Agreement, as
previously amended by the First Supplement and the Second Supplement.
At the time that this Agreement is being executed and delivered, the Company
will cause an irrevocable, transferable Letter of Credit of Barclays Bank PLC,
New York Branch in the maximum aggregate amount of $73,666,000 to be issued to
the Paying Agent to be drawn upon to pay the Purchase Price of, principal of,
premium, if any, and interest on the Bonds (other than the 1993 Series E Bonds).
In consideration of the mutual promises contained in this Agreement, the rights
conferred and the obligations assumed hereby, and other good and valuable
consideration, the receipt of which is hereby acknowledged, each of
the Company, the Authority and the Trustee agree, assign, covenant, grant,
pledge, promise, represent and warrant as set forth herein for their own benefit
and for the benefit of the Bondowners and the Bank.
Section 102. Definitions.
(a) Words. In addition to terms defined elsewhere herein, the following terms
have the following meanings in this Agreement, unless the context otherwise
requires:
(1) "Act" has the meaning set forth in Section 101.
(2) "Assumption Agreement" has the meaning given such term in Section 505.
(3) "Authority's Service Charge" means payments to the Authority for its own
use which consist of
(i) with respect to the 1991 Series E Bonds (A) a payment of $5,000 on the date
of the issue of the 1991 Series E Bonds and (B) annual payments commencing on
the first anniversary of the date hereof and continuing on each subsequent
anniversary, which are each equal to 1/40th of 1% of the average principal
balance of the 1991 Series E Bonds on which
interest was accruing during the prior twelve-month period, or $250, whichever
is greater, with a final payment due upon the redemption or payment of the 1991
Series E Bonds in full prorated to the date of such redemption or
payment, as the case may be, (ii) with respect to the 1993 Series E Bonds, (A) a
payment of $37,333.33 on the date of the issue of the 1993 Series E Bonds and
(B) annual payments commencing on the first anniversary of the date
of this First Supplement and continuing on each subsequent anniversary, which
are each equal to 1/20th of 1% of the average principal balance of the 1993
Series E Bonds on which interest was accruing during the prior twelve-month
period, or $250, whichever is greater, with a final payment due upon the
redemption or payment of the 1993 Series E Bonds in full prorated to the date of
such redemption or payment, as the case may be, and (iii) payment of such
service charges or other fees of the Authority, as and when the Authority may
require, in connection with the issuance of any other Tax-Exempt Refunding
Bonds.(2)
(4) "Bank" means Barclays Bank PLC, acting through its New York Branch, in its
capacity as issuer of the Letter of Credit and any other issuer of a Credit
Facility.(3)
(5) "Bond Counsel" means Palmer & Dodge or such other nationally recognized
bond counsel selected by the Company and reasonably satisfactory to the Trustee.
(6) "Bond Fund" means the fund established pursuant to Section 304.
(7) "Bondowners", "owners" or words of similar import means the registered
owners of the Bonds from time to time as shown in the books kept by the Paying
Agent as bond registrar and transfer agent, except that wherever appropriate the
term "owners" shall mean the owners of the Bonds for federal income tax
purposes.
(8) "Bonds" means the 1991 Series E Bonds, the 1993 Series E Bonds, any other
Tax-Exempt Refunding Bonds and any bond or bonds duly issued in exchange or
replacement therefor.(4)
(9) "Business Day" means a day (i) that is not a Sunday or legal holiday or a
day on which banking institutions are authorized pursuant to law to close, (ii)
that is not a day on which the corporate trust office of the
First Mortgage Bond Trustee is not open for business, (iii) that is a day on
which banks are not required or authorized to close in New York, New York, and
(iv) that is a day on which banking institutions in all of the cities in which
the principal offices of the Trustee and the Paying Agent and, if applicable,
the Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
(10) "Company Bond" means any Bond registered to the Company pursuant to
Subsection 311(a).
(11) "Company Representative" means the person or persons at the time designated
to act on behalf of the Company in a written certificate (or any alternate or
alternates at the time so designated) furnished to the Trustee,
containing the specimen signature of such person or persons and signed on behalf
of the Company by its Chairman, Vice Chairman, President, Chief Financial
Officer, Treasurer, any Assistant Treasurer or any Vice President.
(12) "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.
(13) "Credit Facility" means the Letter of Credit and any substitute irrevocable
transferable letter of credit delivered to the Paying Agent pursuant to this
Agreement and then in effect, as each may be amended from time to time pursuant
to the terms of this Agreement or any amendment or supplement to this
Agreement.(5) More than one Credit Facility may be in effect from time to time.
(14) "Default" has the meaning given such term in Section 601.
(15) "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 Flexible, Weekly and Multiannual
Bonds.
(16) "Effective Date" means, with respect to a Bond in the Flexible, Weekly and
Multiannual Modes, the date on which a new Rate Period for that Bond takes
effect.
(17) "Eligible Funds" means (i) amounts drawn on any Credit Facility; (ii) other
amounts paid to the Trustee pursuant to this Agreement which have been held by
it for a period of at least 123 days during which no Event of
Bankruptcy has occurred; (iii) earnings on amounts qualifying as Eligible Funds
under clause (i) or (ii) above; and (iv) 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 Company and satisfactory to
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), be subject to avoidance as a preference under the
United States Bankruptcy Code upon an Event of Bankruptcy. The Trustee shall
maintain records of Eligible Funds held by it.
(18) "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 Company, any affiliates thereof, or any guarantor of
the Bonds (other than the Bank), as debtor.
(19) "Event of Default" has the meaning given such term in Section 601.
(20) "Federal Tax Statement" means the Statement as to Tax Status of Bonds
executed by the Company in connection with the original issuance of the 1991
Series E Bonds and delivered to the Trustee.
(21) "First Mortgage Bond Indenture" means the First Mortgage Indenture dated as
of August 15, 1978, as amended, and the Tenth Supplemental Indenture thereto
dated as of May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee, as amended and supplemented from time to
time.
(22) "First Mortgage Bond Trustee" means the trustee under the First Mortgage
Bond Indenture.
(23) "Fixed Rate" means a rate of interest on a Bond that is fixed for the
remaining term of the Bond.
(24) "Fixed Rate Conversion Date" means with respect to a Bond, the date upon
which the Fixed Rate first becomes effective for the Bond.
(25) "Fixed Rate Mode" has the meaning set forth in the forms of Fixed Rate
Bonds.
(26) "Flexible Mode" has the meaning set forth in the forms of Flexible Bonds.
(27) "Flexible Rate" means a rate of interest set by the Remarketing Agent for
periods of from one to 270 days.
(28) "Government Obligations" means obligations issued by, or the full and
timely payment of which are guaranteed by, the United States.
(29) Except in the Bonds, "here" in such words as "hereby," "herein," "hereof"
or "hereunder" means this Agreement as a whole rather than the particular
section, subsection, paragraph, subparagraph, clause or subclause
in which the word appears; and in the Bonds it refers thereto.
(30) "IRC" means the Internal Revenue Code of 1986, as it may be amended from
time to time.
(31) "Letter of Credit" means the $73,666,000 irrevocable letter of credit No.
841785 issued by Barclays Bank PLC, acting through its New York Branch, for the
benefit of the Paying Agent.(6)
(32) "Loan" has the meaning given to such term in Subsection 201(a).
(33) "Maximum Interest Rate" means the maximum interest rate on Bonds in the
Flexible, Weekly and, if supported by a Credit Facility, Multiannual Modes,
which rate is initially 16% per annum for the 1991 Series E Bonds.
The Maximum Interest Rate for any Tax-Exempt Refunding Bonds shall be
established at the time such Bonds are initially issued. The Maximum Interest
Rate for any Bond may be increased at any time and decreased on any
Effective Date for Bonds in the Flexible or Multiannual Mode or on any
Conversion Date for Bonds in the Weekly Mode by the Company 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 each series of Bonds shall not have more than one Maximum Interest Rate for
each Mode. In no event shall an increase in a Maximum Interest Rate be
permitted to cause the amount entitled to be drawn under a Credit Facility to be
less than the minimum required amount specified in Paragraph 317(b)(ii). In no
event shall the Maximum Interest Rate with respect to a Tax-Exempt Refunding
Bond be increased or decreased 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 any Tax-Exempt Refunding Bonds
to be included in gross income of the owners thereof for federal income tax
purposes. The Maximum Interest Rate for the 1993 Series E Bonds shall be
initially 12% per annum, subject to adjustment as provided in this Paragraph
102(a)(33).(7)
(34) "Mode" means the period for and the manner in which the interest rates on
the Bonds are set and includes the Flexible Mode, the Weekly Mode, the
Multiannual Mode and the Fixed Rate Mode.
(35) "Moody's" means Moody's Investors Service, Inc.
(36) "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 Company
as described in the forms of Multiannual Bonds.
(37) "Multiannual Rate" means the rate of interest that is set on Bonds while
they are in the Multiannual Mode.
(38) "1954 Code" means the Internal Revenue Code of 1954, as amended to October
22, 1986.
(39) (i) "1991 Series E Bonds" means the $114,500,000 principal amount of 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) and (ii) "1993 Series E Bonds" means the $44,800,000 principal amount
of 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).(8)
(40) "Outstanding," when used to modify Bonds, refers to Bonds issued,
authenticated and delivered under this Agreement, excluding: (i) Bonds which
have been exchanged or replaced; (ii) Bonds which have been paid; (iii) Bonds
which have become due and for the payment of which moneys have been duly
provided; (iv) 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; and (v) Bonds with respect
to which this agreement has been defeased pursuant to Section 204.
(41) "Paying Agent" means Security Pacific National Trust Company (New York) or
any successor or successors designated from time to time pursuant to Section
313.
(42) "Permitted Investments" has the meaning given such term in Section 315.
(43) The word "person" means any individual or entity so recognized by law.
(44) "Pledged Bond" means any Bond purchased with proceeds provided by the
Credit Facility which is registered to the Bank or its designee pursuant to
Section 311(a).
(45) "Project Costs" means the Company's cost of acquisition or construction and
installation of the Project Facilities which are "project costs" within the
meaning of Paragraph 2, IX of the Act, including, but not limited to, the cost
of issuing the Bonds, obtaining professional and advisory services, and certain
interest on the Bonds, which may be paid from Bond proceeds pursuant to the Act.
(46) "Project Facilities" means the Company's ownership share of the sewage or
solid waste disposal and air or water pollution control facilities at the
Station described generally in the attached Exhibit A.
(47) "Purchase Date" means, while the Bonds are in a 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 Flexible, Weekly and Multiannual Rate Bonds.
(48) "Purchase Price" shall have the meaning set forth in the forms of Flexible,
Weekly and Multiannual Rate Bonds.
(49) "Rate Period" or "Period" means, when used with respect to any particular
rate of interest for a Bond in the Flexible, Weekly or Multiannual Mode, the
period during which such rate of interest determined for such Bond
will remain in effect as described herein.
(50) "Reimbursement Agreement" means the Third Series E Letter of Credit and
Reimbursement Agreement dated as of April 1, 1999 among the Company, Barclays
Bank PLC, New York Branch, as agent and issuing bank thereunder, and the
participating banks referred to therein, and any other agreement between the
Company and a Bank under which the Company is obligated to reimburse the Bank
for payments made by the Bank under a Credit Facility.(9)
(51) "Remarketing Agent" means Morgan Stanley & Co. Incorporated, and any
successor Remarketing Agent appointed from time to time pursuant to Section 314.
(52) "Seabrook Transfer" means the transfer by the Company of its interest in
the Station (including the Project Facilities) to a wholly owned subsidiary of
Northeast Utilities as contemplated by the Third Amended Joint
Plan of Reorganization dated December 28, 1989 of the Company as confirmed by an
order of the United States Bankruptcy Court for the District of New Hampshire
(Case No. BK88-00043) on April 20, 1990.
(53) "Seabrook Transferee" means the transferee of the Project Facilities
pursuant to the Seabrook Transfer and its successors.
(54) "Series G First Mortgage Bonds" means the $114,500,000 in the aggregate
principal amount First Mortgage Bonds, Series G issued by the Company and
delivered to the Trustee pursuant to Subsection 201(a) of this
Agreement and the First Mortgage Bond Indenture to evidence and secure the
Company's obligation to repay the Loan and to secure the Company's reimbursement
and certain other obligations under the Reimbursement Agreement.
(55) "S&P" means Standard & Poor's Corporation.
(56) "Station" means Unit No. 1 of the nuclear electric generating plant
located in Seabrook, New Hampshire, of which the Company is a joint owner.
(57) "Tax-Exempt Refunding Bonds" means Bonds issued to refund the 1991 Series E
Bonds pursuant to Article IV hereof, including, unless the context otherwise
requires, the 1993 Series E Bonds.(10)
(58) "Tendered Bond" means any Bond tendered or deemed tendered for purchase
pursuant to Paragraphs 301(d)(iii), 301(e)(iii) or (iv), or 301(f)(iii).
(59) "Trustee" means State Street Bank and Trust Company, as trustee under this
Agreement and its successors in such capacity.
(60) "UCC" means the New Hampshire Uniform Commercial Code (New Hampshire
Revised Statutes Annotated Chapter 382-A).
(61) "Weekly Mode" has the meaning set forth in the forms of Weekly Bonds.
(62) "Weekly Rate" means the rate of interest that is set on Bonds while they
are in the Weekly Mode.
(b) Number and Gender. Wherever appropriate (1) the singular and plural forms
of words and (2) words of different gender shall, within those respective
classifications, be deemed interchangeable.
(c) Use of Examples. When a condition, class, category, circumstance or other
concept is described in general terms herein and a list of possible examples of
components of what has been described generally is associated with that
description, and regardless of whether the words "include" or "including" or the
like are also used, the listing shall be deemed illustrative only and shall not
be construed as excluding other possible examples or components or as otherwise
limiting the generality of the description in any way.
ARTICLE II: LOAN OF BOND PROCEEDS; ISSUE OF SERIES G
FIRST MORTGAGE BONDS; THE ASSIGNMENT AND PLEDGE
Section 201. Issue of Series G First Mortgage Bonds; Confirmation
Concerning Series G First Mortgage Bonds.
(a) Issue of Series G First Mortgage Bonds.(11) The Authority shall
issue the 1991 Series E Bonds pursuant to the Act in the amount, in the form
and with the terms provided herein, and shall loan to the Company such amount
(the "Loan") to finance Project Costs as hereinafter provided. The Company
agrees to repay the Loan of the aggregate principal amount of the 1991 Series
E Bonds in the amounts and at the times necessary to pay principal of,
premium, if any, and interest on the Bonds by making the payments required
under Section 308, and to evidence and secure the Company's obligation to do
so and to secure the Company's reimbursement and certain other obligations
under the Reimbursement Agreement, the Company shall issue and deliver to the
Trustee a like aggregate principal amount of its Series G First Mortgage
Bonds in the form set forth in the First Mortgage Bond Indenture. Except in
the case of Bonds that are paid or are to be paid by the issuance of
Tax-Exempt Refunding Bonds or by funds drawn under the Credit Facility, 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 204, Series G
First 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 Company thereunder terminated as provided in the First Mortgage Indenture
and shall be surrendered by the Trustee to the First Mortgage Bond Trustee
for cancellation. The Trustee shall promptly notify the First Mortgage Bond
Trustee by telephone, confirmed in writing, of any payment on the Bonds. In
accordance with the terms thereof, the Series G First 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. The Series G First Mortgage Bonds bear interest, have a
maturity date and redemption provisions corresponding to the Bonds. Payments
of principal of and premium, if any, and interest on the Series G First
Mortgage Bonds shall upon receipt by the Trustee be deemed to constitute
payments of corresponding amounts by the Company in respect of the Bonds
pursuant to Subsection 308(a).
(b) Confirmation Concerning Series G First Mortgage Bonds.(12) The
Authority shall issue the 1993 Series E Bonds pursuant to the Act in the
amount, in the form and with the terms provided herein, and shall loan to the
Company such amount (the "First Supplemental Loan") to refund the principal
of $44,800,000 of the 1991 Series E Bonds as hereinafter provided. The
Company agrees to repay the First Supplemental Loan of the aggregate
principal amount of the 1993 Series E Bonds in the amounts and at the times
necessary to pay principal of, premium, if any, and interest on the Bonds by
making the payments required under Section 308 of this Agreement, and for
such purpose the First Supplemental Loan is to be treated as part of the Loan
made pursuant to this Agreement. To evidence and secure the Company's
obligation to repay the Loan, including the First Supplemental Loan, and to
secure the Company's reimbursement and certain other obligations under the
Reimbursement Agreement, the Company issued and delivered to the Trustee on
the date of issuance of the 1991 Series E Bonds a like aggregate principal
amount of its Series G First Mortgage Bonds. The Company hereby confirms
that the Series G First Mortgage Bonds evidence and secure the Company's
obligations to make payments in amounts and at times necessary to pay
principal of, premium, if any, and interest on all of the Outstanding Bonds,
including the Outstanding 1993 Series E Bonds and the Outstanding 1991 Series
E Bonds and the Company's reimbursement and certain other obligations under
the Reimbursement Agreement.
Section 202. Assignment and Pledge of the Authority.
The Authority, for consideration paid as hereinabove acknowledged,
hereby irrevocably assigns and pledges to the Trustee in trust for the
security of the Bondowners and the Bank upon the terms hereof all the
Authority's right, title and interest in (i) respect of the Loan and all
payments thereon, (ii) all moneys and securities held by the Trustee for
deposit in, or deposited in, the Bond Fund and investment earnings thereon,
(iii) the Series G First Mortgage Bonds, all bonds issued in replacement
thereof or in exchange or substitution therefor and all payments on, and
proceeds of, the foregoing, and (iv) any collateral security for, and all
proceeds of, any of the foregoing. The Trustee shall hold (a) all the
rights, title and interest received under this section and (b) all revenues
(exclusive of funds to which the Trustee is entitled in its own right as
fees, reimbursement, indemnity or otherwise) received from the Company or
derived from the exercise of the Authority's powers hereunder (which shall
include all payments under Subsection 308(a) and in respect of the Series G
First Mortgage Bonds) in trust for the security of the Bondowners and the
Bank in accordance with the provisions hereof.
Section 203. Further Assurances.
The Company and the Authority shall from time to time execute, deliver
and record and file such instruments as the Trustee may reasonably require to
confirm, perfect or maintain the security created hereby and the assignment
and pledge of rights hereunder.
Section 204. Defeasance.
When there are in the Bond Fund sufficient funds, or non-callable and
non-prepayable Government Obligations 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 Agreement 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
Agreement (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) with respect to any Bonds that are supported by a
Credit Facility, all such funds and obligations in the Bond Fund shall be
Eligible Funds; (b) if, within ninety (90) days of such deposit, any
Tax-Exempt Refunding Bonds are not to be redeemed in full prior to maturity
or paid in full at maturity, the Trustee shall have received on the date of
the deposit an opinion of Bond Counsel to the effect that such deposit and
the investment thereof will not affect the exclusion of interest on such
Bonds from gross income of the owners thereof for federal income tax
purposes, (c) 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 (d)
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 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 204 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 Company shall be
provided to the Trustee and to Moody's; provided, however, that Moody's may
waive such verification after notification by the Company 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 Agreement 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 604),
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 IRC <section>
148(f), and upon such indemnification, if any, as the Authority or the
Trustee may reasonably require, be distributed to the Company. 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 Subsection 304(c), and interest shall cease to accrue on the
principal amount represented thereby.
When there are in the Bond 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 Agreement 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 Company and
the Bondowners notwithstanding the release and discharge of this Agreement
and the lien on the Series G First Mortgage Bonds created hereby until the
Bonds have been actually paid in full.
Notwithstanding anything herein to the contrary, if moneys or
governmental obligations have been deposited or set aside with the Trustee
pursuant to the provisions of this Section 204 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 204 will be made without
the consent of the owner of each of the Bonds affected thereby.
ARTICLE III: THE BORROWING
Section 301. The Bonds.
(a) Forms of 1991 Series E Bonds and 1993 Series E Bonds. The 1991
Series E Bonds and the 1993 Series E Bonds shall be issued in substantially
the following forms for the various Modes:(13)
(i) Form of Flexible 1991 Series E Bond. The 1991 Series E Bonds may be issued
in the Flexible Mode in substantially the form attached hereto as Exhibit C.
(ii) Form of Weekly 1991 Series E Bond. The 1991 Series E Bonds may be issued
in the Weekly Mode in substantially the form attached hereto as
Exhibit D.
(iii) Form of Multiannual 1991 Series E Bond. The 1991 Series E Bonds may be
issued in the Multiannual Mode in substantially the form attached hereto as
Exhibit E.
(iv) Form of Fixed Rate 1991 Series E Bond. The 1991 Series E Bonds may be
issued in the Fixed Rate Mode in substantially the form attached hereto as
Exhibit F.
(v) Form of Flexible 1993 Series E Bond. The 1993 Series E Bonds may be issued
in the Flexible Mode in substantially the form attached hereto as Exhibit G.
(vi) Form of Weekly 1993 Series E Bond. The 1993 Series E Bonds may be issued
in the Weekly Mode in substantially the form attached hereto as
Exhibit H.
(vii) Form of Multiannual 1993 Series E Bond. The 1993 Series E Bonds may be
issued in the Multiannual Mode in substantially the form attached hereto as
Exhibit I.
(viii) Form of Fixed Rate 1993 Series E Bond. The 1993 Series E
Bonds may be issued in the Fixed Rate Mode in substantially the form attached
hereto as Exhibit J.
(ix) Form of Book-Entry Only System Flexible 1991 Series E Bond. The Book-Entry
Only System 1991 Series E Bonds may be issued in the Flexible Mode in
substantially the form attached hereto as Exhibit K.
(b) Details of the 1991 Series E Bonds and the 1993 Series E Bonds.
(i) Details of the 1991 Series E Bonds.(14) The 1991 Series E Bonds shall be
signed on behalf of the Authority by the manual or facsimile
signatures of any two of the Chairman, Vice Chairman, Treasurer, either
Assistant Treasurer and Executive Director and the corporate seal of the
Authority or a facsimile thereof shall be engraved or otherwise reproduced
thereon. The Certificate of Authentication of the Trustee shall be manually
signed by the Trustee or on behalf of the Trustee by its duly authorized
agent.
In case any officer whose manual or facsimile signature shall appear on
any 1991 Series E Bond shall cease to be such officer before the delivery
thereof, such manual or facsimile signature shall nevertheless be valid and
sufficient for all purposes as if he or she had remained in office until
after such delivery.
The 1991 Series E Bonds shall be issued in fully registered form and
shall be numbered from 1 upwards in the order of their issuance, or in any
other manner deemed appropriate by the Paying Agent and the Trustee. The
1991 Series E Bonds shall be in the denomination 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 and Multiannual Modes and $100,000 or any multiple
thereof in the Weekly Mode. The 1991 Series E Bonds shall be dated the date
of original delivery thereof and shall mature on May 1, 2021. The interest
on 1991 Series E 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 1991 Series E Bonds shall be initially in
the Flexible Mode.
The 1991 Series E Bonds are subject to redemption as described in
Section 310 and in the forms of Bonds.
(ii) Details of the 1993 Series E Bonds.(15) The 1993 Series E Bonds shall be
signed on behalf of the Authority by the manual or facsimile
signatures of any two of the Chairman, Vice Chairman, Treasurer and Executive
Director and the corporate seal of the Authority or a facsimile thereof shall
be impressed, engraved or otherwise reproduced thereon. The Certificate of
Authentication shall be manually signed by the Trustee or the Paying Agent.
In case any officer whose manual or facsimile signature shall appear on
any 1993 Series E Bond shall cease to be such officer before the delivery
thereof, such manual or facsimile signature shall nevertheless be valid and
sufficient for all purposes as if he or she had remained in office until
after such delivery.
The 1993 Series E Bonds shall be issued in fully registered form and
shall be numbered from 1 upwards in the order of their issuance, or in any
other manner deemed appropriate by the Paying Agent and the Trustee. The
1993 Series E Bonds shall be in the denomination 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 and Multiannual Modes and $100,000 or any multiple
thereof in the Weekly Mode. The 1993 Series E Bonds shall be dated the date
of original delivery thereof and shall mature on May 1, 2021. The interest
on 1993 Series E 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 1993 Series E Bonds shall be initially in
the Weekly Mode.
The 1993 Series E Bonds are subject to redemption as described in
Sections 310 and 405 and in the forms of 1993 Series E Bonds.
(c) Tax-Exempt Refunding Bonds. Tax-Exempt Refunding Bonds that refund
the 1991 Series E Bonds may be issued by the Authority at the request of the
Company as provided in Article IV.
(d) Flexible Mode.
(i) Determination of Flexible Rates. The Remarketing Agent shall
determine the Flexible Rate as provided in the forms 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 Company. Each determination
and redetermination of the Flexible Rate shall be conclusive and binding on
the Authority, the Trustee, the Paying Agent, the Bank, the Company 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, 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 (A) for the 1991 Series E Bonds, 100%
of the rate on thirty (30) day high-grade unsecured commercial paper notes
sold through dealers by major corporations published in the edition of The
Wall Street Journal 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, and (B) for any Tax-Exempt Refunding Bonds, 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 the Remarketing Agent shall (1) not offer Rate Periods greater than the
maximum number of days of interest coverage under the Credit Facility at the
Maximum Interest Rate less eight (8) days or extending beyond the expiration
date of the Credit Facility less eight (8) days (2) not offer 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, and (3) follow any written directions of the Company Representative,
not inconsistent with the preceding clauses (1) and (2), as
to the Rate Periods to be made available. The Company, the Trustee, the
Paying Agent and the Remarketing Agent shall cooperate to ensure compliance
with this requirement.
(ii) 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 Company from the
Flexible Mode to the Weekly, Multiannual or Fixed Rate Mode as provided in the
forms of the Flexible Bonds, so long as no Default hereunder exists as certified
to the Trustee by the Company Representative. If Bonds that are to be converted
to the Weekly or Multiannual Mode are to be
supported by a Credit Facility in their new Mode, no such conversion shall be
effective unless the Company shall have delivered to the Paying Agent by
11:00 A.M. on the Conversion Date a Credit Facility in the minimum required
face amount for the applicable Mode as provided in Section 317, and with an
expiration date not earlier than (i) 364 days(16) in the case of any Bonds
converted to the Weekly Mode and (ii) five (5) Business Days after the end of
the Rate Period in the case of Bonds in the Multiannual Mode. Any Bonds in
or to be converted to the Weekly Mode shall be supported by a Credit
Facility. Written notice of a conversion from the Flexible Mode shall be
given by the Company to the Authority, the Trustee, the Paying Agent, the
Bank, the Remarketing Agent, Moody's and S&P not fewer than twenty-five (25)
nor more than one hundred and twenty (120) days before the Conversion Date,
which date shall be specified by the Company 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. If any
of the Bonds are to be converted to the Multiannual Mode, such notice shall
include the Company's election whether or not the Bonds as converted are to
be supported by a Credit Facility. 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 301(g).
Notwithstanding the foregoing, if the preconditions to conversion to a
new Mode established by the preceding paragraph and with respect to any
Tax-Exempt Refunding Bonds, Section 404, 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 draw on the Credit Facility 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 Agreement, so long as the Purchase Price of all Bonds required to
be purchased is made available as provided above.
(iii) Mandatory Tender for Purchase. On each Effective Date, Bonds
in the Flexible Mode are subject to mandatory tender for purchase as provided
in the forms of Flexible Bonds.
(e) Weekly Mode.
(i) Determination of Weekly Rates. The Remarketing Agent shall
determine the Weekly Rate as provided in the forms 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 Company.
Each determination and redetermination of the Weekly Rate shall be conclusive
and binding on the Authority, the Trustee, the Paying Agent, the Bank, the
Company and the Bondowners.
(ii) 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 Company from the Weekly Mode to a
Multiannual, Flexible, or Fixed Rate Mode, as provided in the forms of Weekly
Bonds, so long as no Default hereunder exists as certified to the Trustee by
a Company Representative.(17) If Bonds that are to be converted to the
Flexible or Multiannual Mode are to be supported by a Credit Facility in
their new Mode, no such conversion shall be effective unless the Company
shall have delivered to the Paying Agent by 11:00 A.M. on the Conversion Date
a Credit Facility in the minimum required face amount for the applicable Mode
as provided in Section 317 and with an expiration date not earlier than (i)
364 days(18) from the Conversion Date in the case of Bonds converted to the
Flexible Mode and (ii) five (5) Business Days after the end of the Rate
Period in the case of Bonds in the Multiannual Mode. Any Bonds in or to be
converted to the Flexible Mode shall be supported by a Credit Facility,
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.
Written notice of a conversion of Bonds from the Weekly Mode shall be given
by the Company 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 Company in such notice. If any of the Bonds are to be in
the Multiannual Mode, such notice shall include the Company's election
whether or not the converted Bonds are to be supported by a Credit Facility.
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 Subparagraph 301(e)(iv) (B) and the forms of Weekly
Bonds. Conversions to the Fixed Rate Mode shall also be governed by
Subsection 301(g).
Notwithstanding the foregoing, if the preconditions to conversion to
another Mode established by the preceding paragraph and, with respect to any
Tax-Exempt Refunding Bonds, Section 404, 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
Subparagraph 301(e)(iv)(B). In such event, the Paying Agent shall by 1:00
P.M. on the proposed conversion date draw on the Credit Facility 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 Agreement, so long as the Purchase
Price of all Bonds required to be purchased is made available as provided
above.
(iii) 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 forms 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 Agreement.
The Paying Agent shall accept all Tendered Bonds properly tendered to it
for purchase as provided in the forms of Weekly Bonds and in this Paragraph
301(e)(iii); 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 602 and such acceleration shall not have
been annulled.
The Bondowner's Election Notice delivered to the Paying Agent as
provided in the forms of Weekly Bonds prior to the Purchase Date of Tendered
Bonds shall be in substantially the form provided in the forms of Weekly
Bond.
As soon as practicable after receiving notice of a tender of Bonds under
this section, the Paying Agent shall notify the Remarketing Agent, the
Company, the Bank and the Trustee by telephone promptly confirmed in writing
of the amount of Tendered Bonds and the specified Purchase Date.
(iv) Events Requiring Mandatory Tender of Weekly Bonds.
(A) Expiration of Credit Facility without Substitution or Replacement;
Substitution of Credit Facility. The Bonds in the Weekly Mode are subject to
mandatory tender for purchase as provided in the forms of Weekly Bonds in
connection with the expiration or termination of the Credit Facility (other than
in connection with the conversion to a new Mode) or in connection with the
substitution of a Credit Facility, unless the Trustee receives written notice
from Moody's, if the Bonds are then rated by Moody's, or 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 Credit Facility is expiring without substitution or
replacement, the Paying Agent shall give notice to the Bondowners of the
mandatory tender of the Bonds at least thirty (30) days prior to the mandatory
tender date.(19)
(B) 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 forms of Bonds, which notice shall state that
the Bonds are subject to mandatory tender for purchase.
(f) Multiannual Mode.
(i) Determination of Multiannual Rate. The Remarketing Agent shall determine
the Multiannual Rate as provided in the forms 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, if applicable, and the
Company. Each determination and redetermination of the Multiannual Rate shall
be conclusive and binding on the Authority, the Trustee, the Paying Agent, the
Bank, the Company and the Bondowners.
(ii) 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 at the election of the Company from the Multiannual Mode to the
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
forms of Multiannual Bonds so long as no Default hereunder exists as certified
to the Trustee by a Company Representative. If Bonds that are to be converted
to the Flexible or Weekly Mode or to another Rate Period within the Multiannual
Mode are to be supported by a Credit Facility in their new Mode, no such
conversion shall be effective unless the Company shall have delivered to the
Paying Agent by 11:00 A.M. on the Conversion Date a Credit Facility in the
minimum required face amount for the applicable Mode as provided in Section 317
and with an expiration date not earlier than (i) 364 days(20) from the
Conversion Date in the case of Bonds converted to the Flexible or Weekly Modes
and (ii) five (5) Business Days after the end of the Rate Period in the case of
Bonds in the Multiannual Mode. Any Bonds in or to be converted to the Weekly or
Flexible Mode shall be supported by a Credit Facility, 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. Written notice of a change in
Mode or Rate Period within the Multiannual Mode shall be given by the Company to
the Authority, the Trustee, the Bank (if any), the Paying Agent, the Remarketing
Agent, Moody's and S&P not fewer than twenty-five (25) nor more than sixty (60)
days prior to the proposed Conversion Date. If the conversion is to a new Rate
Period in the Multiannual Mode, such notice shall include the Company's election
whether or not the converted Bonds are to be supported by a Credit Facility.
Conversion to the Fixed Rate Mode shall also be governed by Subsection 301(g).
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 and, with respect to any Tax-Exempt Refunding Bonds,
Section 404, 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. If the Bonds that were to have
been converted are supported by a Credit Facility, the Paying Agent shall by
1:00 P.M. on the proposed conversion date draw on the Credit Facility an
amount which is sufficient to pay the Purchase Price on such date on all
Bonds that were to have been converted. If the Bonds that were to have been
converted are not supported by a Credit Facility, the Company 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 Agreement, so long as the
Purchase Price of all Bonds required to be purchased is made available as
provided above.
(iii) Mandatory Tender for Purchase. On each Effective Date, Bonds
in the Multiannual Mode are subject to mandatory tender for purchase as
provided in the forms of Multiannual Bond.
(g) Conversion to Fixed Rate Mode. The interest rate on any portion of
the Bonds may be converted by the Company to the Fixed Rate as provided in
the forms of the Flexible, Weekly and Multiannual Bonds, Subsections 301(d),
(e) and (f) and this Subsection 301(g). Upon receipt of the notice of
conversion to the Fixed Rate Mode from the Company, 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 Company 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
Company and the Bondowners. The first interest payment date of Bonds
converted to the Fixed Rate shall be at least three (3) months but less than
nine (9) months after the Conversion Date. 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 Subsection 301(g) are not met by 11:00
A.M. 0on 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 Paragraph 301(d)(ii), (e)(ii) or (f)(ii), whichever is
applicable.
(h) Partial Conversions.
(i) General. The Bonds may be converted in whole or in part to 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
Agreement. In the event the Bonds are in (or are to be converted to) more
than one Mode, the provisions of this Agreement 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 Agreement to the Bonds shall be construed
to mean the Bonds in (or to be converted to) such Mode and any reference to
Credit Facility or Bank shall be construed to mean the Credit Facility
supporting the Bonds in (or to be converted to) such Mode and the Bank
issuing that Credit Facility.
(ii) 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 Company. 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 Subsection 301(b) for the particular Modes. Bonds (or portions
thereof) in the 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 Paragraph 301(e)(iv).
(iii) Amendment. Provisions of this Agreement may be amended to
permit or facilitate partial conversions of the Bonds without Bondowner
consent in accordance with clause (vii) of the first paragraph of Section
1101.
(i) Cancellation and Destruction of Bonds. All Bonds paid or redeemed,
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 and all Bonds surrendered in any exchanges or
transfers, shall thereupon be promptly canceled. All Bonds acquired and
owned by the Company and delivered to the Paying Agent for cancellation shall
be deemed paid and shall be promptly canceled. Bonds so canceled may at any
time be cremated or otherwise destroyed by the Paying Agent, which shall
execute a certificate of cremation or destruction in duplicate by the
signature of one of its authorized officers describing the Bonds so cremated
or otherwise destroyed, and one executed certificate shall be filed with the
Company 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 of
before maturity, upon cancellation of any such Bonds.
(j) Replacement of Bonds. Replacement Bonds shall be issued pursuant
to applicable law as a result of the destruction, loss or mutilation of the
Bonds. The costs of a replacement shall be paid or reimbursed by the
applicant, who shall indemnify the Authority, the Trustee, the Paying Agent,
the Remarketing Agent and the Company against all liability and expense in
connection therewith.
(k) 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.
Section 302. Application of 1991 Series E Bond Proceeds.
The Authority shall loan the proceeds of the 1991 Series E Bonds to the
Company by promptly causing the accrued interest, if any, to be deposited in
the Bond Fund and the balance of the proceeds to be paid to or pursuant to
the direction of the Company as reimbursement for Project Costs incurred
prior to the date of delivery of the 1991 Series E Bonds. In connection with
the reimbursement of such Project Costs, the Company represents and warrants
that (i) such Project Costs were incurred by and were chargeable to the
capital account of the Company; (ii) such Project Costs are costs of "sewage
or solid waste disposal facilities" or "air or water pollution control
facilities" within the meaning of Section 103(b)(4)(E) or (F) of the 1954
Code incurred and paid after January 14, 1976; (iii) such Project Costs are
for an "industrial facility" within the meaning of Paragraphs 2, VII (d) and
(e) of the Act; and (iv) such Project Costs are costs of a facility described
in Section 1312(a) of the Tax Reform Act of 1986.
Section 303. Application of Tax-Exempt Refunding Bond Proceeds and of
1993 Series E Bond Proceeds.
(a) Application of Tax-Exempt Refunding Bond Proceeds.(21) Proceeds of
any Tax-Exempt Refunding Bonds shall be deposited in the Bond Fund and
applied to pay principal of, premium, if any, and interest on the 1991 Series
E Bonds, or if a Credit Facility is in effect, to reimburse the Bank for any
draw on the Credit Facility to make such payment on the 1991 Series E Bonds
or as may otherwise be provided in a supplemental Agreement executed and
delivered by the parties hereto at the time of issuance of the Tax-Exempt
Refunding Bonds.
(b) Application of 1993 Series E Bond Proceeds.(22) The Authority
shall loan the proceeds of the 1993 Series E Bonds to the Company by promptly
causing (A) an amount equal to the accrued interest, if any, to be deposited
in the Bond Fund and (B) $44,800,000 to be deposited with the Trustee, in
each case in immediately available funds. Upon receipt by the Paying Agent
in respect of a drawing on the Letter of Credit of an amount necessary to pay
the Purchase Price due on $44,800,000 principal amount of 1991 Series E
Bonds, the Paying Agent shall immediately notify the Trustee that it has
received sufficient draw proceeds to pay such Purchase Price, and upon the
Trustee's receipt of such notice the Trustee shall pay to the Bank the
$44,800,000 deposited with the Trustee by the Authority under clause (B) of
this section as partial reimbursement for such drawing. If the Trustee
receives such notice from the Paying Agent before 12:00 Noon on any Business
Day it shall transmit a payment order for the above-described payment by wire
transfer in immediately available funds to the Bank by 2:30 P.M. on the same
day, and if the Trustee receives such notice after 12:00 Noon it shall make
such payment by wire transfer in immediately available funds to the Bank by
11:00 A.M. on the next Business Day. In connection with the reimbursement of
the Bank, the Company represents and warrants that (i) not less than 95% of
the proceeds of the 1991 Series E Bonds were spent to reimburse the Company
for Project Costs; (ii) such Project Costs were incurred by and were
chargeable to the capital account of the Company; (iii) such Project Costs
were costs of "sewage or solid waste disposal facilities" or "air or water
pollution control facilities" within the meaning of Section 103(b)(4)(E) or
(F) of the 1954 Code incurred and paid after January 14, 1976; (iv) such
Project Costs were for an "industrial facility" within the meaning of
Paragraphs 2, VII (d) and (e) of the Act; and (v) such Project Costs were
costs of a facility described in Section 1312(a) of the Tax Reform Act of
1986.
Section 304. Bond Fund.
(a) Establishment and Purpose. A Bond Fund is hereby established with
the Trustee and moneys shall be deposited therein as provided in this
Agreement. The Company hereby grants to the Trustee for the benefit of the
Bondowners and the Bank a security interest in all deposits in the Bond Fund.
The Trustee acknowledges that it holds the Bond Fund as agent for the
Bondowners and the Bank, as their interests may appear. The moneys in the
Bond Fund and any investments held as part of such Fund shall be held in
trust and, except as otherwise provided in this Agreement, shall be applied
by the Trustee solely to pay principal of, premium, if any, and interest on,
the Bonds. The Trustee shall keep separate accounts as to (A) Eligible Funds
and (B) all other funds in the Bond Fund. When moneys in the Bond 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
drawings upon the Credit Facility shall not be deposited in the Bond Fund,
but shall be held by the Paying Agent in trust and applied as provided in
this Agreement.
(b) Excess in Bond Fund. If at any time the amount of Eligible Funds
in the Bond Fund exceeds the amount necessary to pay the Purchase Price or
the principal of, premium, if any, and interest on the Bonds in full and all
amounts owing or to be owing under this 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
Reimbursement Agreement, as certified by the Bank, and second, if any balance
remains, to the Company.
(c) Unclaimed Moneys. Except as may otherwise be required by
applicable law, in case any moneys deposited with the Paying Agent for the
payment of the Purchase Price or principal of, premium, if any, or interest
on any Bond remain unclaimed for two years after such Purchase Price,
principal, premium or interest has been paid or has become due and payable,
the Paying Agent may, and upon receipt of a written request by a Company
Representative shall, pay over to the Company the amount so deposited and
thereupon the Trustee, the Paying Agent and the Authority shall be released
from any further liability with respect to the payment of such Purchase Price
or principal, premium or interest and the owner of such Bond shall be
entitled (subject to any applicable statute of limitations) to look only to
the Company as an unsecured creditor for the payment thereof.
Section 305. Rebate.
The Company shall pay to the United States when due any rebate with
respect to the Tax-Exempt Refunding Bonds pursuant to IRC <section>148(f).
Section 306. Expenses of Issue.
Not more than 2% of the proceeds of the 1991 Series E Bonds shall be
used to pay the expenses of issue of the 1991 Series E Bonds, including
underwriting charges.
Section 307. Application of Moneys.
If, in addition to moneys drawn on the Credit Facility (if any),
available moneys in the Bond 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 of all amounts owing to the Trustee
and the Authority under this 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 drawn on the
Credit Facility (if any) shall be applied exclusively to pay interest,
premium, if any, and principal on Bonds supported by the Credit Facility in
accordance with the Credit Facility. If any Bonds are supported by a Credit
Facility and the owners of such Bonds have received all payments of
principal, premium, if any, and interest that have become due and payable
from a draw on the Credit Facility, the Bank shall be treated as the owner of
such Bonds for purposes of applying this section. In the event there exist
Pledged Bonds or Company Bonds on the date of any application of moneys under
this section, moneys otherwise to be paid to the Company or to the Bank
pursuant to this section shall be applied (subject to Paragraph 308(c)(iii))
as follows: first, so long as all payments due on Bonds supported by a
Credit Facility have been made, pro rata to all Bondowners other than the
Company (but including the Bank to the extent provided in the preceding
sentence), otherwise first, pro rata to all Bondowners other than the Bank
and the Company, second (and irrespective of which clause first applies), if
any balance remains, to the Bank in fulfillment of any obligations owed to it
under the Reimbursement Agreement or any Pledged Bonds (to the extent not
satisfied pursuant to clause first), and third, if any further balance
remains, to the Company in respect of any Company 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 Reimbursement Agreement, and the Trustee may rely
conclusively thereon.
Section 308. Payments by the Company.
(a) Payments of Debt Service by the Company.
(i) The Company shall make payments in immediately available funds to the
Trustee for deposit in the Bond Fund 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, (i) then held in the Bond
Fund and available to pay the same, and (ii) amounts received by the Paying
Agent to pay the same from a draw under a Credit Facility. The Company may
make payments to the Bond Fund earlier than required by this section, but
such payments shall not affect the accrual of interest.
(ii) The payments to be made under the foregoing paragraph shall be
appropriately adjusted to reflect the date of issue of Bonds, accrued
interest deposited in the Bond 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.
(iii) At any time when any principal of the Bonds is overdue, the
Company shall also have a continuing obligation to pay to the Trustee for
deposit in the Bond 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.
(b) Additional Payments.
(i) The Company shall pay when due the Authority's Service Charge and other
expenses as provided in Section 803.
(ii) Within thirty (30) days after notice from the Trustee, the Company shall
pay to the Trustee the reasonable fees and expenses of the Trustee as set forth
in Section 703.
(iii) Within thirty (30) days after notice from the Paying Agent,
the Company shall pay to the Paying Agent its reasonable fees and expenses as
set forth in Section 313.
(c) Drawings on the Credit Facility.
(i) Debt Service. If a Credit Facility is available for any portion of the
Bonds, the Paying Agent shall not later than 4:00 P.M. on the Business Day next
preceding any date on which payments of the principal of, premium, if any, or
interest on such Bonds are due, whether at maturity, on an interest payment
date, by acceleration, redemption, or otherwise, draw on the Credit Facility an
amount sufficient to pay in full the principal, premium, if any, and interest
then coming due on such Bonds.(23) For purposes of the immediately preceding
sentence, interest on the Bonds shall include the component of any Purchase
Price of Bonds in the Flexible Mode representing interest on the Bonds. The
Paying Agent shall immediately notify the Company and the Trustee by telephone
promptly confirmed in writing if it has not been paid by the Bank for such a
draw on the Letter of Credit by 11:00 A.M. on the date such payment on the Bonds
is due.
(ii) Tenders for Purchase. Except as provided in Paragraph 308(c)(i),
drawings on the Credit Facility for the purchase of Bonds tendered for
mandatory purchase pursuant to Paragraphs 301(d)(iii), 301(e)(iv), or
301(f)(iii) or for Bonds tendered for purchase at the Bondowner's election
pursuant to Paragraph 301(e)(iii) shall be made pursuant to Subsection
311(a).
(iii) Use of Credit Facility. All amounts received by the Paying
Agent under any Credit Facility shall be held in a segregated account, shall
remain uninvested and shall be used solely to pay the Purchase Price or
principal of, premium, if any, and interest on the Bonds for which the Credit
Facility is available. Principal and Purchase Price of, premium, if any, and
interest on Company Bonds, Pledged Bonds and Bonds not supported by a Credit
Facility shall not be paid from amounts drawn on a Credit Facility.(24)
(iv) Failed Conversion. Whenever there is a failed conversion of Bonds
supported by a Credit Facility, the Paying Agent shall draw on the Credit
Facility as provided in Paragraph 301(d)(ii), 301(e)(ii) or 301(f)(ii), as
appropriate.(25)
(d) Payment of Debt Service. The Trustee shall transfer Eligible
Funds, and to the extent necessary other funds, from the Bond Fund to the
Paying Agent for the payment of principal, premium, if any, and interest
payable on the Bonds as provided in Subsection 304(a) to the extent amounts
drawn on the Credit Facility are insufficient to pay the same, and in
conjunction therewith shall give the Paying Agent written notice of the
amount of Eligible Funds being transferred. The Paying Agent shall apply
such payments received from the Trustee and amounts drawn on the Credit
Facility, in the following order, (i) moneys drawn on the Credit Facility,
(ii) Eligible Funds on deposit in the Bond Fund other than moneys drawn on
the Credit Facility, and (iii) any other moneys in the Bond Fund; provided,
however, that except as specified in the next sentence, in no event shall the
Paying Agent use any moneys other than Eligible Funds to pay principal of,
premium, if any, or interest on Bonds supported by a Credit Facility. If and
to the extent that sufficient Eligible Funds, including moneys drawn on the
Credit Facility pursuant to this section and Section 605, are not available
to pay in full the principal of, premium, if any, and interest on the Bonds
supported by a Credit Facility, then other available moneys shall be so used.
(e) Company's Purchase of Bonds. If the amount drawn on the Credit
Facility 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 Credit Facility and tendered pursuant to
Paragraph 301(d)(iii), 301(e)(iii) or (iv), or 301(f)(iii), 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 Company, the
Remarketing Agent and the Trustee of such deficiency by telephone promptly
confirmed in writing. The Company 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 311 from the proceeds of the
remarketing of such Bonds or from drawings on the Credit Facility, as
reported by the Paying Agent. Bonds so purchased with moneys furnished by
the Company shall be Company Bonds.
Section 309. Unconditional Obligation.
The obligation of the Company to make payments under this Agreement
shall be absolute and unconditional, shall be binding and enforceable in all
circumstances whatsoever, shall not be subject to setoff, recoupment or
counterclaim, and shall be a general obligation of the Company to which the
full faith and credit of the Company are pledged. The Company shall be
obligated to make such payments whether or not the Project Facilities become
functional and whether or not the Project Facilities have ceased to exist or
be functional to any extent from any cause whatsoever. The Company shall be
obligated to make such payments regardless of whether it is in possession or
entitled to be in possession of the Project Facilities.
Section 310. Redemption of the Bonds.
(a) Optional Redemption. The Bonds are redeemable prior to maturity in
accordance with the written direction of the Company to the Authority and the
Trustee. 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 Company
shall designate (to the extent not otherwise prohibited) the amount of Bonds
of each series and Mode to be redeemed, and if less than all of the Bonds
Outstanding in any series and Mode shall be called for redemption, Bonds to
be so redeemed in any series and 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 Subsection 310(a),
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 Subsection 310(a) 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. The Outstanding Bonds in the
Multiannual or Fixed Rate Modes may be redeemed at any time at the option of
the Company in whole at a price equal to 100% of the principal amount
thereof, plus accrued interest to the redemption date, if (i) all Bonds in
the Weekly Mode are to be redeemed pursuant to Subsection 310(a) on or before
such extraordinary optional redemption date and (ii) all Bonds in the
Flexible Mode are to be redeemed pursuant to Subsection 310(a) on or before
the later of (A) the first Effective Date for such Bonds after notice of the
extraordinary optional redemption is given by the Company pursuant to
Subsection 310(b) or (B) such extraordinary optional redemption date and
(iii) the redemption occurs within nine (9) months following the occurrence
of any of the following events, as evidenced in each case by the filing with
the Trustee of a certificate of a Company Representative that such event has
occurred and describing the same:
(i) Damage or destruction to the Station or the Project Facilities to
such extent that in the opinion of the Company (expressed in a resolution
adopted by the Board of Directors of the Company (a "Board Resolution")) and
of an architect or engineer acceptable to the Company (who may be an employee
of the Company), both filed with the Authority and the Trustee, (1) the
Station or the Project Facilities, 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 (2) normal
operations are thereby prevented from being carried on at the Station for a
period of not less than six (6) months.
(ii) Loss of title to or use of a substantial part of the Station or the
Project Facilities as a result of the exercise of the power of eminent domain
which, in the opinion of the Company (expressed in a Board Resolution) and of
an architect or engineer acceptable to the Company (who may be an employee of
the Company), both filed with the Authority and the Trustee, prevents or is
likely to prevent normal operations from being carried on at the Station for
a period of not less than six (6) months.
(iii) A change in the Constitution of the State of New Hampshire 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 Company with
respect to the Station or the Project Facilities or the operation thereof.
(iv) The operation of the Station or the Project Facilities 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.
(v) Changes which the Company 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 Station or
the Project Facilities shall have occurred which, in the judgment of the
Company (expressed in a Board Resolution), render the continued operation of
the Station uneconomical.
The Company's right to direct the redemption of the Bonds upon the
occurrence of any single event listed in this Subsection 310(b) shall expire
six (6) months after such event occurs.
(c) Notice by the Company. The Company shall exercise its option to
have Bonds redeemed under Subsection 310(a) or (b) by giving notice to the
Trustee, the Authority, the Paying Agent, and the Remarketing Agent at least
five (5) days before the redemption date in the case of Bonds in the Flexible
Mode, and forty-five (45) days before the redemption date in the case of
Bonds in any other Mode.(26)
(d) Payment of Redemption Price and Accrued Interest. Whenever Bonds
are called for redemption, the accrued interest thereon shall become due on
the redemption date. To the extent not otherwise provided, the Company shall
deposit with the Trustee prior to the redemption date a sufficient sum to pay
the redemption price of and accrued interest on the Bonds.
(e) Notice of Redemption. When Bonds are to be redeemed, the Paying
Agent shall give notice 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 Agreement 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
405 as and when provided in the forms of Flexible Bonds.(27)
Section 311. Purchase of Bonds Tendered.
(a) Procedure.
(i) 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) 1:00
P.M. on each Purchase Date for Tendered Bonds that are to be in the Flexible
Mode immediately after the Purchase Date, (B) 3:30 P.M. one (1) Business Day
before the Purchase Date for Tendered Bonds that are to be in the Weekly Mode
immediately after the Purchase Date, or (C) 2:00 P.M. two (2) Business Days
before the Purchase Date for Tendered Bonds that are to be in the Multiannual
or Fixed Rate Mode immediately after 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) 1:00 P.M. on each Purchase Date for Tendered
Bonds that are to be in the Flexible Mode immediately after the Purchase
Date, (B) 3:30 P.M. one (1) Business Day before the Purchase Date for
Tendered Bonds to be in the Weekly Mode immediately after the Purchase Date,
or (C) 2:00 P.M. two (2) Business Days before the Purchase Date for Tendered
Bonds to be in the Multiannual Mode immediately after the Purchase Date.
(ii) Sources of Payments. If the Tendered Bonds are supported by a
Credit Facility, the Paying Agent shall draw upon the Credit Facility the
amount necessary to purchase the Tendered Bonds for which the Remarketing
Agent has not received the Purchase Price not later than (A) 1:30 P.M. on the
Purchase Date for Tendered Bonds that are to be in the Flexible Mode
immediately after the Purchase Date, or (B) 4:00 P.M. one (1) Business Day
before the Purchase Date for Tendered Bonds that are to be in any other Mode
immediately after the Purchase Date. In determining the amount necessary to
purchase such Tendered Bonds, the Paying Agent shall take into account any
amounts drawn under the Credit Facility pursuant to Paragraph 308(c)(i) to
pay interest on such Bonds on the Tender Date. If the Tendered Bonds are not
supported by a Credit Facility, the Paying Agent shall not later than (A)
1:30 P.M. on the Purchase Date for Tendered Bonds that are to be in the
Flexible Mode immediately after the Purchase Date, or (B) 4:00 P.M. one (1)
Business Day before the Purchase Date for Tendered Bonds that are to be in
any other Mode immediately after the Purchase Date, notify the Company of the
amount necessary to purchase the Tendered Bonds for which the Remarketing
Agent has not received the Purchase Price, and the Company 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 to be in the Flexible Mode immediately
after the Purchase Date, or (B) 10:00 A.M. on the Purchase Date in the case
of Tendered Bonds that are to be in any other Mode immediately after the
Purchase Date. 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 to be in the Flexible Mode immediately after the
Purchase Date, (B) 2:00 P.M. on the Purchase Date for Tendered Bonds that are
to be in the Weekly Mode immediately after the Purchase Date, or (C) 2:00
P.M. on the Purchase Date for Tendered Bonds that are to be in the
Multiannual or Fixed Rate Mode immediately after the Purchase Date. If the
Bonds are supported by a Credit Facility and the Remarketing Agent does not
deliver to the Paying Agent proceeds of remarketing sufficient, together with
amounts received from draws under the Credit Facility, to pay in full the
Purchase Price of all Bonds due on the Purchase Date, the Paying Agent shall
make an additional draw on the Credit Facility pursuant to Paragraph
602(a)(ii) and thereafter the Company shall be liable for the shortfall.
(b) 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
Credit Facility, moneys drawn on the Credit Facility for the purpose of
purchasing Tendered Bonds (including amounts drawn on the Credit Facility to
pay accrued interest on the Tendered Bonds), and third, moneys paid to it by
the Company. If sufficient funds are not available for the purchase of all
Bonds tendered on any Delivery Date, no purchase shall be consummated.
(c) 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.(28)
Section 312. Remarketing of Bonds Tendered.
(a) General. While the Bonds are in the 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, Pledged Bonds
and Company Bonds, provided that Bonds supported by a Credit Facility shall
not be remarketed to the Authority, the Company 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 (for Bonds to be in the Flexible or Weekly Mode) or in
clearinghouse funds (for Bonds to be in the Multiannual Mode) to the Paying
Agent at the time specified in Paragraph 311(a)(ii). 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 to be in the Flexible Mode immediately after the
Purchase Date, (ii) 2:00 P.M., in the case of Bonds that are to be in the
Weekly Mode immediately after the Purchase Date, or (iii) 2:00 P.M., in the
case of Bonds that are to be in the Multiannual or Fixed Rate Mode
immediately after the Purchase Date, 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.
Bonds previously purchased with moneys drawn under the Credit Facility shall
not be delivered upon remarketing unless the Credit Facility has been
reinstated as provided in the following paragraph.
Bonds the Purchase Price of which is paid for with funds drawn on the
Credit Facility pursuant to Paragraph 311(a)(ii) shall be registered to the
Bank, or its designee, as pledgee, by the Paying Agent (whether or not such
Bonds are delivered by the tendering Bondowner) as security for the
reimbursement of the Bank for moneys drawn under the Credit Facility and
shall be "Pledged Bonds." Bonds the Purchase Price of which is paid for with
funds provided by the Company pursuant to Subsection 308(e) or Paragraph
311(a)(ii) shall be registered in the name of the Company by the Paying Agent
and shall be "Company Bonds". Company Bonds shall be held by the Paying
Agent for the account of the Company until transferred pursuant to this
Section 312 or canceled pursuant to instructions of the Company. Any Company
Bonds that remain unsold for a period of ninety (90) days (or such longer
period as may be approved (under New Hampshire and federal law) 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 Pledged Bonds or
Company 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 Pledged Bonds or Company Bonds) upon receipt by the Paying Agent of the
Purchase Price of such Bonds, provided, however, that no Pledged Bond or
Company Bond shall be so registered and delivered unless the Paying Agent has
received from the Bank a written notice of the reinstatement of the principal
and interest component of the Credit Facility, or if prior to or
simultaneously with such registration or delivery, the amount available to be
drawn under the Credit Facility is otherwise less than the amount described
in Paragraph 317(b)(ii) determined as if Bonds which are to continue as
Pledged Bonds were not Outstanding.(29) If the Paying Agent has received
from the Bank a written notice of non-reinstatement of the interest component
of the Credit Facility with respect to Bonds in the Flexible Mode and has,
therefore, stopped registration and delivery of remarketed Bonds, the Paying
Agent may resume the registration and delivery of Bonds upon receipt from the
Bank of written notice that the interest component of the Credit Facility has
been fully reinstated. 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 Agreement
and (ii) if the Paying Agent has been so prohibited, upon the restoration of
its power hereunder to register and deliver Bonds. Bonds purchased with
moneys drawn under the Credit Facility and registered to the Bank or its
designee pursuant to the Reimbursement Agreement 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 312 and Paragraph 313(a)(iv). 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 Credit Facility meeting the requirements of
Subsection 317(b).
(b) Remarketing of Bonds in the Weekly Mode Between Notice and
Redemption or Conversion Date. No Bonds in the Weekly Mode scheduled to be
redeemed or converted to a different Mode may be remarketed under Subsection
312(a) after receipt by the Remarketing Agent of notice of redemption or
conversion of such Bonds to a specified Mode from the Company 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 313. Paying Agent.
(a) Appointment and Responsibilities. The initial Paying Agent shall
be Security Pacific National Trust Company (New York). 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
Agreement 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 Agreement 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 Agreement, 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 Company, the Authority, the Trustee or any
Bondowner for any claim based on this Agreement or the Bonds against any
director, officer, agent or employee of the Paying Agent unless such claim is
based upon the bad faith, fraud or deceit of such person. For the purposes
of this Agreement 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 draw under the Credit Facility pursuant to Paragraphs 308(c)(i) or
308(c)(ii), or (ii) 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 Company shall pay to the Paying Agent reasonable compensation for
its services and pay or reimburse the Paying Agent for its reasonable
expenses and disbursements, including reasonable attorneys' fees hereunder.
The Company shall indemnify and save the Paying Agent harmless against any
liabilities and reasonable expenses which it may incur in the exercise of its
duties hereunder and which are not due to its negligence or bad faith. Any
fees, expenses, reimbursements or other charges which the Paying Agent may be
entitled to receive from the Company hereunder shall be due and payable 30
days after a request for payment has been made by the Paying Agent to the
Company, and any such fees, expenses, reimbursements or other charges not
paid when due shall bear interest at the "Base Rate" of the Trustee (or, if
none, the nearest equivalent).
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:
(i) hold all sums delivered to it by the Trustee or paid to it under
the Credit Facility 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;
(ii) 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;
(iii) hold all moneys delivered to it hereunder for the purchase of
Bonds (including amounts drawn on the Credit Facility and amounts received
from the Company) 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;
(iv) hold all Pledged Bonds in trust for the benefit of the Bank until
such Pledged Bonds have been remarketed by the Remarketing Agent, purchased
by the Company, or redeemed;
(v) hold all Company Bonds in trust for the benefit of the Company
until such Company Bonds have been remarketed by the Remarketing Agent,
redeemed, or canceled.
(vi) 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;
(vii) 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;
(viii) give all notices required of it in this Agreement at the times
and in the manner required by this Agreement and send to the Remarketing
Agent copies of all such notices;
(ix) if appointed by the Trustee for such purpose, act as agent of the
Trustee for the purpose of executing the Certificate of Authentication on the
Bonds; and
(x) take all other actions and perform all other duties and obligations
as may be required of it as Paying Agent under this Agreement.
In addition, in its instrument of acceptance the Paying Agent shall
assign to the Trustee all of its rights to enforce payment under the Credit
Facility after the occurrence of an Event of Default.
(b) Removal or Resignation of Paying Agent. The Company may discharge
the Paying Agent from time to time and appoint a successor approved by the
Trustee, the Bank and the Remarketing Agent. The Company shall also
designate a successor subject to the approval of the Trustee, the Bank and
the Remarketing Agent if the Paying Agent resigns or becomes ineligible. The
Paying Agent may resign by giving at least sixty (60) days' written notice to
the parties hereto and the Remarketing Agent. Each successor Paying Agent
shall be a commercial bank or trust company having a capital and surplus of
not less than $50,000,000, shall at the time of the appointment be rated at
least Baa3/P-3 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 shall be
capable of performing the duties prescribed for it herein in New York, New
York. The Paying Agent may but need not be the same person as the Trustee.
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
Company 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.
In the event of the resignation or removal of the Paying Agent, the
Paying Agent shall pay over, assign, transfer and deliver the Credit Facility
and any moneys and Bonds, including Pledged 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.
(c) 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 Agreement and shall be subject to all
the duties and obligations of the Paying Agent under this Agreement.
In the event that the Paying Agent shall resign or be removed, or be
dissolved, or if the property or affairs of the Paying 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 the Company
shall not have appointed its successor within thirty (30) days, the Trustee
shall appoint a successor.
The Paying Agent shall send or cause to be sent notice to Bondowners of
a change of address for the delivery of Bonds or notices or the payment of
principal or purchase price of Bonds.
Section 314. Remarketing Agent.
(a) Qualifications and Responsibilities. The Company shall appoint,
with the consent of the Authority, and, if a Credit Facility is in effect,
the Bank, a Remarketing Agent when any Bonds are in the Flexible Mode, Weekly
or Multiannual Mode. The Remarketing Agent shall be authorized by law to
perform all of the duties imposed upon it by this Agreement. In addition,
the Remarketing Agent shall either (i) have a capitalization of at least
$10,000,000 and outstanding securities rated at least Baa 3 (or a
substantially equivalent rating) by Moody's if such a requirement is then
necessary to the maintenance of any then existing Moody's rating on the Bonds
or (ii) have a capitalization of at least $15,000,000 or have a line of
credit with a commercial bank in the amount of at least $15,000,000. 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 Company under which the Remarketing Agent will
agree, among other things, to:
(i) determine the Flexible, Weekly, Multiannual or Fixed Rate pursuant
to and in accordance with Paragraph 301(d)(i), (e)(i) or (f)(i) or Subsection
301(g) and the forms of Flexible, Weekly, Multiannual and Fixed Rate Bonds;
(ii) 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 Agreement;
(iii) 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 Agreement;
(iv) 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; and
(v) use its best efforts to remarket Bonds in accordance with this
Agreement and any remarketing agreement entered into by the Remarketing Agent
and the Company.
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 Agreement, 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 Agreement.
(b) Removal or Resignation of Remarketing Agent. The Company may
remove the Remarketing Agent at any time by written notice to the Remarketing
Agent, the Bank and the parties hereto and appoint a successor which meets
the qualifications set forth in Subsection 314(a) and which is reputable and
experienced in the remarketing of obligations similar to the Bonds. The
Company shall appoint a successor with similar qualifications if the
Remarketing Agent resigns or becomes ineligible. The Company shall give the
Authority, the Bank, the Paying Agent and the Trustee at least two (2) days'
notice prior to the appointment of a successor Remarketing Agent. The
Remarketing Agent may at any time resign and be discharged of the duties and
obligations created by this Agreement by giving at least thirty (30) days'
written notice to the parties hereto and the Bank and the Paying Agent. The
Trustee shall give written notice to the Bondowners of any removal or
appointment of the Remarketing Agent.
(c) Successors. 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 Agreement and shall be subject to
all the duties and obligations of the Remarketing Agent under this Agreement.
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 the Company
shall not have appointed its successor within thirty (30) days, the Trustee
shall apply to a court of competent jurisdiction for such appointment.
Section 315. Investments.
(a) Pending their use under this Agreement, moneys in the Bond Fund may
be invested by the Trustee in Permitted Investments (as defined below)
maturing or redeemable at the option of the holder at or before the time when
such moneys are expected to be needed and shall be so invested pursuant to
written direction of the Company if no Default known to the Trustee then
exists under this Agreement, provided that the Company shall not request,
authorize or permit any investment which would cause any Tax-Exempt Refunding
Bonds to be classified as "arbitrage bonds" as defined in IRC Section 148.
Any investments pursuant to this subsection shall be held by the Trustee as a
part of the Bond Fund and shall be sold or redeemed to the extent necessary
to make payments or transfers or anticipated payments or transfers from such
Fund.
(b) Any interest realized on investments in the Bond Fund and any
profit realized upon the sale or other disposition thereof shall be credited
to the Bond Fund and any loss shall be charged thereto.
(c) (1) The term "Permitted Investments" means (i) Government
Obligations or shares of a so-called money market or mutual fund that has all
of its assets invested in Government Obligations, (ii) tax-exempt bonds as
defined in IRC Section 150(a)(6) rated at least AA or Aa by S&P and Moody's,
respectively, or the equivalent by any other nationally recognized rating
agency at the time of acquisition thereof (and Aa by Moody's if rated by
Moody's and AA by S&P if rated by S&P) or shares of a so-called money market
or mutual fund that do not constitute "investment property" within the
meaning of IRC Section 148(b)(2), provided either that the fund has all of
its assets invested in obligations of such rating quality or, if such
obligations are not so rated, that the fund has comparable credit worthiness
through insurance or otherwise and which fund is rated AAm or AAm-G if rated
by S&P, and rated investment grade by Moody's, if rated by Moody's, or, if
unrated, investment in such fund is approved in writing by S&P and Moody's,
(iii) certificates of deposit of, banker's acceptances drawn on and accepted
by, and interest bearing deposit accounts of, a bank or trust company which
has a capital and surplus of not less than $50,000,000 and which has been
rated not less than Prime-3 by Moody's, and (iv) Repurchase Agreements. The
term "Repurchase Agreement" shall mean a written agreement under which a bank
or trust company which has a capital and surplus of not less than $50,000,000
or a government bond dealer reporting to, trading with, and recognized as a
primary dealer by the Federal Reserve Bank of New York sells to, and agrees
to repurchase from the Trustee obligations issued by, or the full and timely
payment of which is guaranteed by, the United States, provided that the
market value of such obligations is at the time of entering into the
agreement at least one hundred and three percent (103%) of the repurchase
price specified in the agreement and that such obligations are segregated
from the unencumbered assets of such bank or trust company or government bond
dealer, and provided further that unless the agreement is with a bank or
trust company, such agreement shall require the repurchase to occur on demand
or on a date certain which is not later than one (1) year after such
agreement is entered into and shall expressly authorize the Trustee to
liquidate the purchased obligations in the event of the insolvency of the
party required to repurchase such obligations or the commencement against
such party of a case under the federal Bankruptcy Code or the appointment of
or taking possession by a trustee or custodian in a case against such party
under the Bankruptcy Code. Any such investments may be purchased from or
through the Trustee.
(2) Notwithstanding the immediately preceding paragraph Permitted
Investments shall not include the following:
(A) Government Obligations, certificates of deposit and bankers'
acceptances, in each case with yields lower than the yield available on
comparable obligations then offered by the United States Treasury;
(B) any demand deposit or similar account with a bank, trust company or
broker, unless (i) the account is used for holding funds for a short period
of time until such funds are reinvested or spent, and (ii) such account will
not contain an average daily balance for any bond year (selected by the
Company pursuant to Temp. Treas. Reg. Section 1.148-8T(b)(2) or any successor
thereto) in excess of $20,000 (disregarding the 20 days with the largest
account balances); or
(C) Repurchase Agreements, unless (i) at least three (3) bids are
obtained on the proposed Repurchase Agreement from persons other than those
with an interest in the Bonds, (ii) the yield on the Repurchase Agreement is
at least equal to the yield offered by the highest bidder, and (iii) a
written record of the yield offered by each bidder is maintained.
Any of the requirements of this paragraph (2) shall not apply to moneys
allocable to Bonds as to which the Trustee and the Authority shall have
received an opinion of nationally recognized bond counsel to the effect that
such requirements are not necessary to preserve the exclusion of interest on
any Tax-Exempt Refunding Bonds from the gross income of the owner thereof for
federal income tax purposes.
Section 316. Reduction of Credit Facility on Change in Mode; Release
of Credit Facility 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 draw under the Credit Facility a
reduced number of days' interest, as described in Paragraph 317(b)(ii), the
Paying Agent may reduce the amount available to be drawn under the Credit
Facility upon such conversion in accordance with the Credit Facility.
If no Credit Facility is to be in effect for the Bonds as converted to
the Multiannual or Fixed Rate Mode, the Paying Agent shall reduce (or if all
the Bonds are so converted, release) the Credit Facility upon such conversion
so that the Credit Facility, if any, in effect satisfies the requirements
described in Paragraph 317(b)(ii).
In no event shall any reduction in or release of the Credit Facility
pursuant to this Section 316 take effect until five (5) Business Days after
the conversion.
Section 317. Credit Facilities.
(a) Substitution or Replacement. Upon satisfaction of the requirements
set forth in this Section 317 and subject to the last sentence of this
Subsection 317(a), the Company may (except during the period between the
giving of notice of mandatory tender for purchase on account of the
expiration of the Credit Facility and the Purchase Date) replace a Credit
Facility then in effect with a substitute Credit Facility; provided, however,
that (1) the Credit Facility being replaced shall in no event be terminated
or released until the Company 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 drawings on
the Credit Facility being replaced, (2) if any Bonds supported by the Credit
Facility being replaced are in the Weekly Mode, the Paying Agent has given
not less than thirty (30) days' written notice of the termination or release
of the Credit Facility to owners of such Bonds in the Weekly Mode and (3) if
any of the Bonds supported by the Credit Facility being replaced are in the
Flexible Mode or the Multiannual Mode, such Credit Facility shall in no event
be terminated or released earlier than on an Effective Date for all such
Bonds.
Prior to the replacement of any Credit Facility the Company shall have
delivered to the Trustee and the Paying Agent: (i) an opinion of counsel for
the issuer of the substitute Credit Facility to the effect that it
constitutes a legal, valid and binding obligation of the issuer enforceable
in accordance with its terms; (ii) a certificate of the Bank that all amounts
due under the Reimbursement Agreement have been paid and that the Company has
fulfilled all its obligations arising out of such Agreement; and (iii) unless
all of the Bonds to be supported by the substitute Credit Facility are in the
Weekly Mode or are subject to mandatory tender for purchase on the date of
replacement, written evidence from Moody's, if such Bonds are then rated by
Moody's, and from S&P, if such Bonds are then rated by S&P, that the
replacement of the Credit Facility will not in itself result in the reduction
or withdrawal of the rating on the Bonds. Notice of the substitution or
replacement of a Credit Facility shall be sent by the Trustee to Moody's and
S&P.(30)
(b) Requirements. Each Credit Facility must:
(i) be an irrevocable, unconditional obligation of a financial
institution;
(ii) be on terms no less favorable to the Paying Agent than the Letter
of Credit 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 the Bonds supported by the Credit Facility, any premium
applicable thereto, and (A) forty-five (45) days' accrued interest at the
Maximum Interest Rate on the principal amount of such Bonds then Outstanding
in the Weekly Mode, (B) thirty-eight (38) days' accrued interest at the
Maximum Interest Rate on the principal amount of such Bonds then Outstanding
in the Flexible Mode or (C) one hundred ninety (190) days' accrued interest
at the Maximum Interest Rate on the principal amount of such Bonds then
Outstanding in the Multiannual Mode; and
(iii) provide for a term which may not expire in less than 364
days(31) and which may not expire or be terminated prior to the fifth
Business Day after the mandatory tender for purchase as provided in Paragraph
301(d)(iii), 301(e)(iv), or 301(f)(iii). The Company shall not enter into
any Reimbursement Agreement or agree to any amendment of a Reimbursement
Agreement which in any way limits the obligation of the Bank to provide funds
under the Credit Facility without the prior written consent of 100% of the
principal amount of the Bonds Outstanding and entitled to the benefit
thereof.
Section 318. Tax Status of Bonds.
The Company will perform its obligations and agreements contained in the
Federal Tax Statement as if they were set forth herein. All representations
of the Company in the Federal Tax Statement shall be treated as if they were
set forth herein. Any covenants, agreements or representations made by the
Company or any transferee of the Project Facilities in connection with such a
transfer shall be performed and treated as if set forth herein. The
Authority will cooperate with the Bondowners and the Company to the extent
deemed necessary or permitted by law in the opinion of bond counsel to the
Authority in order to preserve the exclusion of interest on the Tax-Exempt
Refunding Bonds from the gross income of the owners thereof for federal
income tax purposes. If no Tax-Exempt Refunding Bonds are outstanding, the
Company may waive the application of this Section 318 to itself (or any
successors hereunder or as owner of the Project Facilities) and the Authority
by written notice to the Authority and the Trustee that the Company will not
request the Authority to issue any Tax-Exempt Refunding Bonds.
Section 319. Securities Laws.
Notwithstanding any other provision of this Agreement, the Purchase
Price, principal of, premium, if any, and interest on the 1991 Series E Bonds
shall at all times be supported by a Credit Facility issued by a national
bank, or any banking institution organized under the laws of any state,
territory or the District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or territorial banking
commission or similar official, unless the Company delivers to the Trustee an
opinion of counsel expert in securities law matters to the effect that
failure to provide such a Credit Facility will not cause the offering, sale
or delivery of any 1991 Series E Bonds to constitute a violation of the
registration requirements of the Securities Act of 1933, as amended, or
qualification requirements with respect to this Agreement under the Trust
Indenture Act of 1939, as amended. In any remarketing of Bonds under this
Agreement, the Company shall at all times comply with applicable federal and
state securities laws.
Section 320. Registration of Bonds (except the 1993 Series E Bonds) in
the Book-Entry Only System.(32)
(a) Notwithstanding any provision of this Agreement to the contrary,
the provisions of this Section 320 shall apply with respect to any Bonds
(except the 1993 Series E Bonds) registered to CEDE & CO. or any other
nominee of The Depository Trust Company ("DTC") while the Book-Entry Only
System (meaning the system of registration described in this Section 320) is
in effect. The Book-Entry Only System shall be in effect for any series of
Bonds or portion thereof issued in or converted to any Mode or Rate Period
within the Multiannual Mode if so specified by the Company prior to the
issuance in or 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 Company hereby specifies
that the Book-Entry Only System shall be in effect while the 1991 Series E
Bonds are in Flexible Mode. Notwithstanding any provision of this Section
320 to the contrary, the provisions of this Section 320 shall not apply to
the 1993 Series E Bonds, which are subject to the Book-Entry Only System
described in Section 321.
(b) The Bonds in or to be in the Book-Entry Only System shall be issued
in the form of a separate single authenticated fully registered Bond for each
separate Mode or Rate Period. Any legend required to be on the Bonds by DTC
may be added by the Trustee or Paying Agent. The form of Book-Entry Only
System 1991 Series E Bond in the Flexible Mode is attached hereto as Exhibit
K. On the date of original delivery thereof or date of conversion of any
Bonds to a Mode or Rate Period in which the Book-Entry Only System is in
effect, as applicable, such 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 Company, 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 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 Agreement. 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 Agreement
shall refer to such new nominee of DTC.
(c) 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 with respect to any Bonds, the Authority shall issue and the
Paying Agent shall transfer and exchange such 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
Company, 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 such Bonds or (B) to
make available for transfer and exchange such Bonds registered in whatever
name or names and in whatever authorized denominations as DTC shall
designate.
(d) In the event the Company determines that the Beneficial Owners of
any Bonds in the Book-Entry Only System should be able to obtain Bond
certificates, the Company may so notify DTC, the Paying Agent and the
Trustee, whereupon DTC will notify the Participants of the availability
through DTC of such 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.
(e) Notwithstanding any other provision of this Agreement to the
contrary, so long as any 1991 Series E 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 1991 Series E Bond and
all notices with respect to such 1991 Series E 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 Exhibit L attached
hereto. The form of such Representation Letter may be modified or replaced
in a manner consistent with the provisions of this Agreement upon conversion
or reconversion of the 1991 Series E Bonds to a Mode or Rate Period in which
the Book-Entry Only System is in effect.
(f) Notwithstanding any provision in Subsection 301(h) or Section 310
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.
(g) 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 this
Agreement 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.
(h) 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 Agreement.
Section 321. Registration of 1993 Series E Bonds in the Book-Entry
Only System.(33)
(a) Notwithstanding any provision herein to the contrary, the
provisions of this Subsection 321 and the 1993 Series E Bonds Representation
Letter (as defined below) shall apply with respect to any 1993 Series E Bond
registered to CEDE & CO. or any other nominee of The Depository Trust Company
("DTC") while the Book-Entry Only System (meaning the system of registration
described in Section 321) is in effect. The Book-Entry Only System shall be
in effect for any Mode or Rate Period within the Multiannual Mode if so
specified by the Company 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 Company
hereby specifies that the Book-Entry Only System shall be in effect while the
1993 Series E Bonds are in Weekly, Multiannual and Fixed Rate Modes.
(b) The 1993 Series E Bonds in or to be in the Book-Entry Only System
shall be issued in the form of a separate single authenticated fully
registered 1993 Series E Bond for each separate Mode or Rate Period in
substantially the forms provided for in Section 301. 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 1993 Series E
Bonds to a Mode or Rate Period in which the Book-Entry Only System is in
effect, as applicable, the 1993 Series E 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 1993 Series E 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 Company, 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 1993 Series E 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 1993
Series E 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
1993 Series E 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 1993 Series E Bonds. The
Paying Agent shall pay all principal of and premium, if any, and interest on
the 1993 Series E 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 1993 Series E Bonds to the extent of the sum or sums so paid.
No person other than DTC shall be entitled to receive an authenticated 1993
Series E Bond evidencing the obligation of the Authority to make payments of
principal and premium, if any, and interest pursuant to this Agreement. 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 Agreement shall refer to such new nominee of DTC.
(c) 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 1993 Series E 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 Company, 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 1993 Series E Bonds or (B) to make available
for transfer and exchange 1993 Series E Bonds registered in whatever name or
names and in whatever authorized denominations as DTC shall designate.
(d) In the event the Company determines that the Beneficial Owners
should be able to obtain 1993 Series E Bond certificates, the Company may so
notify DTC, the Paying Agent and the Trustee, whereupon DTC will notify the
Participants of the availability through DTC of 1993 Series E Bond
certificates. In such event, the Authority shall issue and the Paying Agent
shall transfer and exchange 1993 Series E 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 1993 Series E Bonds registered in whatever name or
names and in whatever authorized denominations as DTC shall designate.
(e) Notwithstanding any other provision of this Agreement to the
contrary, so long as any 1993 Series E 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 1993 Series E Bond and
all notices with respect to such 1993 Series E Bond shall be made and given,
respectively, to DTC as provided in the Letter of Representation (the "1993
Series E Bonds Representation Letter"), the form of which is included as
Exhibit M attached hereto. The form of such 1993 Series E Bonds
Representation Letter may be modified in a manner consistent with the
provisions of this Agreement upon conversion or reconversion of the 1993
Series E Bonds to a Mode or Rate Period in which the Book-Entry Only System
is in effect.
(f) Notwithstanding any provision in Subsection 301(h) or Section 310
of this Agreement to the contrary, so long as any of the 1993 Series E Bonds
outstanding are held in the Book-Entry Only System, if less than all of such
1993 Series E Bonds are to be converted or redeemed upon any conversion or
redemption of 1993 Series E Bonds hereunder, the particular 1993 Series E
Bonds or portions of 1993 Series E Bonds to be converted or redeemed shall be
selected by DTC in such manner as DTC may determine.
(g) So long as the Book-Entry Only System is in effect, a Beneficial
Owner who elects to have its 1993 Series E Bonds purchased or tendered
pursuant to this Agreement shall effect delivery by causing a Participant to
transfer the Beneficial Owner's interest in the 1993 Series E Bonds pursuant
to the Book-Entry Only System. The requirement for physical delivery of 1993
Series E Bonds in connection with a demand for purchase or a mandatory
purchase will be deemed satisfied when the ownership rights in the 1993
Series E Bonds are transferred in accordance with the Book-Entry Only System.
(h) 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 1993 Series E Bonds 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 Agreement.
ARTICLE IV: TAX-EXEMPT REFUNDING BONDS
Section 401. Issuance of Tax-Exempt Refunding Bonds.
Unless the Company has delivered the written notice described in
Sections 318 and 502 that it will not request the Authority to issue
Tax-Exempt Refunding Bonds, the Authority may from time to time at the
request of the Company issue and sell Tax-Exempt Refunding Bonds to refund
all or any portion of the 1991 Series E Bonds, subject to the requirements of
the Act and the requirements of this Article IV. Such Tax-Exempt Refunding
Bonds shall have substantially the same terms as the 1991 Series E Bonds, but
with such changes as provided in Section 403. A series of Tax-Exempt
Refunding Bonds may be initially issued in any Mode or Modes designated by
the Company and approved by the Authority prior to their delivery. All
Tax-Exempt Refunding Bonds shall be of the same rank and shall be entitled to
the same security, including the Series G First Mortgage Bonds, as the 1991
Series E Bonds. Each of the series of Tax-Exempt Refunding Bonds shall
mature on the date, be subject to optional redemption pursuant to Section
310(a) at the times and at the prices, and shall initially bear interest at
such rate or rates as determined by the Company and approved by the
Authority. Each series of Tax-Exempt Refunding Bonds shall be issued in
fully registered form and shall be numbered from 1 upwards in the order of
their issuance, or in any other manner deemed appropriate by the Paying Agent
and the Trustee. Tax-Exempt Refunding Bonds shall be in the denomination of
$5,000 each or any multiple thereof in the Fixed Rate or Multiannual Mode,
$100,000 or any multiple thereof in the Weekly Mode and $100,000 or any
multiple of $1,000 in excess of $100,000 in the Flexible Mode. Each series
of Tax-Exempt Refunding Bonds shall be dated the date of original delivery
thereof. The interest on Tax-Exempt Refunding Bonds until they come due
shall be payable on the interest payment dates applicable to the Mode of
Bonds are in from time to time.
Section 402. Execution and Delivery of the Tax-Exempt Refunding Bonds.
Each Tax-Exempt Refunding Bond shall be signed on behalf of the
Authority by the manual or facsimile signatures of any two of the Chairman,
Vice Chairman, Treasurer, either Assistant Treasurer and Executive Director
and the corporate seal of the Authority or a facsimile thereof shall be
engraved or otherwise reproduced thereon. The Certificate of Authentication
shall be manually signed by the Trustee or on behalf of the Trustee by its
duly authorized agent for such purpose.
In case any officer whose manual or facsimile signature shall appear on
the Tax-Exempt Refunding Bond shall cease to be such officer before the
delivery thereof, such manual or facsimile signature shall nevertheless be
valid and sufficient for all purposes as if he or she had remained in office
until after such delivery.
The Trustee or its duly authorized agent for such purpose shall not
authenticate and deliver any series of Tax-Exempt Refunding Bonds until the
Trustee has received the following:
(1) A certificate signed by a Company Representative designating the
intended Mode or Modes, the maturity date, the optional redemption dates and
prices under Subsection 310(a), and the initial interest rate or rates, with
respect to the Tax-Exempt Refunding Bonds;
(2) A certificate signed by an officer of the Authority approving the
terms of the Tax-Exempt Refunding Bonds designated by the Company in the
certificate described in Paragraph (1);
(3) A copy, certified by the Executive Director of the Authority, of
the resolution of the Authority authorizing the issuance of the Tax-Exempt
Refunding Bonds;
(4) A copy, certified by the Secretary or Assistant Secretary of State
of New Hampshire, of the resolution adopted by the Governor and Council of
New Hampshire pursuant to Section 9 of the Act with respect to the Tax-Exempt
Refunding Bonds;
(5) An originally executed copy of any supplemental Agreement entered
into by the parties hereto in connection with the issuance of the Bonds of
that series;
(6) A certificate of a Company Representative (A) stating that no
Default (in reliance upon a certificate of the Trustee as to such matters as
the Company shall reasonably request) hereunder has occurred and is
continuing, (B) designating the 1991 Series E Bonds to be refunded (the
"Refunded Bonds"), (C) that the Refunded Bonds will no longer be Outstanding
upon the issuance of the Tax-Exempt Refunding Bonds, (D) that the Series G
First Mortgage Bonds evidence and secure the Company's obligation to pay the
Tax-Exempt Refunding Bonds and (E) that the Series G First Mortgage Bonds
have maturities, interest rates, interest and principal payments and
prepayment or redemption provisions and other terms properly corresponding to
the terms of the Tax-Exempt Refunding Bonds and any other Bonds the payment
of which they evidence and secure;
(7) An opinion or opinions of Bond Counsel reasonably satisfactory to
the Trustee that:
(i) the Tax-Exempt Refunding Bonds may be issued under the Act and this
Agreement,
(ii) the Tax-Exempt Refunding Bonds have been validly authorized and
executed and, when authenticated and delivered pursuant to the request of the
Authority, will be valid and binding obligations of the Authority entitled to
the benefit of the trust created hereby,
(iii) any supplemental agreement entered into by the Authority in
connection with the issuance of the Tax-Exempt Refunding Bonds has been duly
authorized, executed and delivered by the Authority, is a valid and binding
obligation of the Authority and is enforceable against the Authority in
accordance with its terms subject to principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally,
(iv) all necessary consents or approvals of government authorities
required in connection with the issue of the Tax-Exempt Refunding Bonds by
the Authority have been obtained, and
(v) interest on the Tax-Exempt Refunding Bonds will be excluded from
gross income of the owners thereof for federal income tax purposes; and
(8) An opinion of counsel reasonably satisfactory to the Trustee, who
may be counsel to the Company, that:
(i) the Series G First Mortgage Bonds evidencing and securing the
Company's obligation to pay the Tax-Exempt Refunding Bonds have been duly
issued under the First Mortgage Bond Indenture and are valid and binding
obligations of the Company entitled to the benefits and security of the First
Mortgage Bond Indenture; and
(ii) any supplemental agreement entered into by the Company in
connection with the issuance of the Tax-Exempt Refunding Bonds has been duly
authorized, executed and delivered by the Company, is a valid and binding
obligation of the Company, and is enforceable against the Company in
accordance with its terms subject to principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally.
(9) The Trustee or its duly authorized agent for such purpose shall not
authenticate and deliver any series of Tax-Exempt Refunding Bonds unless
immediately after the delivery of such Bonds there is in effect a Credit
Facility meeting the requirements of Subsection 317(b) supporting all of the
Bonds required to be supported by a Credit Facility pursuant to this
Agreement.
Section 403. Form of Tax-Exempt Refunding Bonds.
(a) General. Each series of Tax-Exempt Refunding Bonds shall bear
substantially the designation "Pollution Control Refunding Revenue Bonds
(Public Service Company of New Hampshire Project - [Year] Tax-Exempt Series
[Letter])." Tax-Exempt Refunding Bonds shall be in substantially the same
form as the 1991 Series E Bonds, but with such additions or deletions as
described herein or as otherwise may be appropriate.
(b) Redemption Upon Taxability. In each Tax-Exempt Refunding Bond,
there shall be inserted the following:
The Tax-Exempt Refunding Bonds are subject to mandatory redemption at
any time at a redemption price of 100% of the principal amount of the
Tax-Exempt Refunding Bonds so redeemed plus accrued interest in the event (i)
the Company delivers to the Trustee an opinion of nationally recognized bond
counsel selected by the Company and reasonably satisfactory to the Trustee
("Bond Counsel") stating that interest on the Tax-Exempt Refunding Bonds is
or will become includable in gross income of the owners thereof for federal
income tax purposes, or (ii) it is finally determined by the Internal Revenue
Service or a court of competent jurisdiction, as a result of (A) a proceeding
in which the Company has participated or been given notice and an opportunity
to participate, and, (B) either (1) a failure by the Company (or the Seabrook
Transferee as defined in the Agreement) to observe any covenant or agreement
undertaken in or pursuant to the Agreement, or the inaccuracy of any
representation made by the Company (or the Seabrook Transferee) in or
pursuant to the Agreement, or (2) the Seabrook Transfer (as defined in the
Agreement), that interest payable on the Tax-Exempt Refunding Bonds is
includable for federal income tax purposes in the gross income of any owner
thereof (other than an owner which is a "substantial user" or a "related
person" within the meaning of Section 147(a) of the Internal Revenue Code of
1986). Any determination under clause (ii) above will not be considered
final for this purpose until the earliest of the conclusion of any appellate
review, the denial of appellate review or the expiration of the period for
seeking appellate review. Redemption under this paragraph shall be in whole
unless not less than forty-five (45) days prior to the redemption date the
Company 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 Tax-Exempt Refunding Bonds will preserve the tax-exempt status of
interest on the remaining Tax-Exempt Refunding Bonds outstanding subsequent
to such redemption. Except as provided in the next sentence, any such
redemption shall be made on the 90th day after the date on which the opinion
described in clause (i) is delivered or the determination described in clause
(ii) becomes final or on such earlier date as the Company may designate by
notice given to the Trustee at least forty-five (45) days prior to such
designated date. Any Tax-Exempt Refunding Bond in the Flexible 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.
If such redemption shall occur in accordance with the terms of the Agreement,
then such failure by the Company (or the Seabrook Transferee as described
above) to observe such covenant or agreement, or the inaccuracy of any such
representation will not, in and of itself, constitute a default thereunder.
If the Trustee receives written notice from any Bondowner stating that
(i) such Bondowner has been notified in writing by the Internal Revenue
Service that it proposes to include the interest on the Tax-Exempt Refunding
Bonds in the gross income of such owner for federal income tax purposes, or
any other proceeding has been instituted against such owner which may lead to
a like determination, and (ii) such owner will afford the Company the
opportunity to participate at its own expense in the proceeding, either
directly or in the name of such owner, until the conclusion of any appellate
review, and the Trustee has examined such written notice and it appears to be
accurate on its face, then the Trustee shall promptly give notice thereof to
the Company, the Authority, and each Bondowner whose Bonds may be affected.
The Trustee shall thereafter keep itself reasonably informed of the progress
of any administrative proceedings or litigation relating to such notice.
Under the Agreement the Company is required to give the Trustee written
notice of such a final determination within forty-five (45) days of such
final determination.
The foregoing two paragraphs shall be inserted immediately before the
paragraph describing the manner of selection of Bonds for redemption in the
forms of Weekly, Multiannual and Fixed Rate Bonds and immediately after the
paragraph describing the manner of payment of the Bonds in the forms of
Flexible Bonds. In addition, immediately after the foregoing additional
paragraphs in the forms of Flexible Bond there shall be added the following:
If the Purchase Date of this bond is after the redemption date, notice
of redemption of this bond 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.
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.
(c) Day Counting. While Tax-Exempt Refunding Bonds are in the Flexible
Mode interest shall be computed on the basis of actual days elapsed divided
by 365 or 366 as appropriate, and each Tax-Exempt Refunding Bond in the
Flexible Mode shall so state. Tax-Exempt Refunding Bonds in any other Mode
shall have interest computed on the basis described in the applicable form of
Bonds.
Section 404. Conversion.(34)
No conversion of Tax-Exempt Refunding Bonds from one Mode to another
Mode, including for this purpose the conversion to a new Rate Period in the
Multiannual Mode, shall be effective unless on or prior to the Conversion
Date the Company shall provide the Authority and the Trustee with an opinion
of Bond Counsel reasonably satisfactory to the Trustee to the effect that the
conversion will not affect the exclusion of interest on the Tax-Exempt
Refunding Bonds from gross income for federal income tax purposes.
Section 405. Mandatory Taxability Redemption.
The Outstanding Tax-Exempt Refunding Bonds are subject to mandatory
redemption at any time at a redemption price of 100% of the principal amount
of the Bonds so redeemed plus accrued interest in the event (i) the Company
delivers to the Trustee an opinion of Bond Counsel stating that interest on
the Tax-Exempt Refunding Bonds is or will become includable in gross income
of the owners thereof for federal income tax purposes, or (ii) it is finally
determined by the Internal Revenue Service or a court of competent
jurisdiction, as a result of (A) a proceeding in which the Company has
participated or been given notice and an opportunity to participate, and, (B)
either (1) a failure by the Company (or the Seabrook Transferee) to observe
any covenant or agreement undertaken in or pursuant to this Agreement, or the
inaccuracy of any representation made by the Company (or the Seabrook
Transferee) in or pursuant to this Agreement, or (2) the Seabrook Transfer,
that interest payable on the Bonds is includable for federal income tax
purposes in the gross income of any owner thereof (other than an owner which
is a "substantial user" or a "related person" within the meaning of IRC
Section 147(a)). Any determination under clause (ii) above will not be
considered final for this purpose until the earliest of the conclusion of any
appellate review, the denial of appellate review or the expiration of the
period for seeking appellate review. Redemption under this Section 405 shall
be in whole unless not later than forty-five (45) days prior to the
redemption date the Company delivers to the Trustee an opinion of Bond
Counsel to the effect that a redemption of less than all of the Tax-Exempt
Refunding Bonds will preserve the tax-exempt status of interest on the
remaining Tax-Exempt Refunding Bonds outstanding subsequent to such
redemption. Except as provided in the next sentence, any redemption under
this Section 405 shall be made on the 90th day after the date on which the
opinion described in clause (i) is delivered or the determination described
in clause (ii) becomes final or on such earlier date as the Company may
designate by notice given to the Trustee at least forty-five (45) days prior
to such designated date. Any Tax-Exempt Refunding Bond in the Flexible 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. If such redemption shall occur in accordance with the terms of this
Agreement, then such failure by the Company (or the Seabrook Transferee) to
observe such covenant or agreement, or the inaccuracy of any such
representations will not, in and of itself, constitute a Default hereunder.
If the Trustee receives written notice from any Bondowner stating that
(I) such Bondowner has been notified in writing by the Internal Revenue
Service that it proposes to include the interest on the Tax-Exempt Refunding
Bonds in the gross income of such owner for federal income tax purposes, or
any other proceeding has been instituted against such owner which may lead to
a like determination, and (II) such owner will afford the Company the
opportunity to participate at its own expense in the proceeding, either
directly or in the name of such owner, until the conclusion of any appellate
review, and the Trustee has examined such written notice and it appears to be
accurate on its face, then the Trustee shall promptly give notice thereof to
the Company, the Authority, and each Bondowner whose Tax-Exempt Refunding
Bonds may be affected. The Trustee shall thereafter keep itself reasonably
informed of the progress of any administrative proceedings or litigation
relating to such notice.
The Company shall keep the Trustee informed of the progress of any
proceeding referred to in subclause (ii)(A) of the first paragraph of this
Section 405 and shall give written notice to the Trustee within forty-five
(45) days after it has actual knowledge of a final determination as described
in clause (ii) of the first paragraph of this Section 405. At least forty
(40) days prior to any redemption pursuant to this Section 405, the Trustee
shall notify the Paying Agent of the redemption date and the principal amount
of Tax-Exempt Refunding Bonds to be redeemed.(35)
Section 406. Additional Limitations on Conversions of 1993 Series E
Bonds to New Modes.(36)
(a) Conversions to Multiannual Mode. 1993 Series E Bonds converted to
the Multiannual Mode shall not be supported by a Credit Facility.
(b) Conversions from Multiannual Mode to Flexible or Weekly Mode. Any
Bank issuing a Credit Facility in connection with a conversion of 1993 Series
E Bonds from the Multiannual Mode to the Flexible or Weekly Mode shall have a
long-term corporate debt rating of Aa from Moody's or AA from S&P, or their
equivalent.
Section 407. Tax Status of 1993 Series E Bonds.(37)
The Company will perform its obligations and agreements contained in the
First Supplemental Federal Tax Statement as if they were set forth herein.
All representations of the Company in the First Supplemental Federal Tax
Statement shall be treated as if they were set forth herein. Any covenants,
agreements or representations made by the Company or the Seabrook Transferee
in the Assumption Agreement shall be performed and treated as if set forth
herein. As used in this Section 407, (a) "Assumption Agreement" means the
Assumption Agreement dated as of June 5, 1992 among the Authority, the
Company, the Trustee and the Seabrook Transferee, (b) "First Supplemental
Federal Tax Statement" means the Statement as to Tax Status of Bonds executed
by the Company and the Seabrook Transferee in connection with the original
issuance of the 1993 Series E Bonds and delivered to the Trustee and (c)
"Seabrook Transferee" means North Atlantic Energy Corporation, the transferee
of the Project Facilities pursuant to the Seabrook Transfer, and its
successors.
ARTICLE V. THE PROJECT
Section 501. Company not to Impair Tax Status; Use of Project
Facilities.
Notwithstanding any provision herein to the contrary, the Company will
not use any of the proceeds of the Loan (or the income earned through the
investment thereof, if any) or operate the Project Facilities in any manner,
and will not take or omit any action or permit any action to be taken or
omitted with the result that interest on any Tax-Exempt Refunding Bonds is
included in the gross income of the owners thereof for federal income tax
purposes. The Company's use of the Project Facilities (or facilities
replacing the same) shall be in furtherance of the purpose of air or water
pollution control or sewage or solid waste disposal and in compliance with
the Act.
Section 502. Qualification of the Project Facilities.
Notwithstanding any provision herein to the contrary, the Company shall
not permit the Project Facilities to fail to qualify as (a) "industrial
facilities" under the Act, (b) a facility described in Section 1312(a) of the
Tax Reform Act of 1986, or (c) "sewage or solid waste disposal facilities" or
"air or water pollution control facilities" within the meaning of Section
103(b)(4)(E) and (F) of the 1954 Code; provided, however, that if no
Tax-Exempt Refunding Bonds are outstanding, the Company may waive the
application of clauses (b) and (c) by written notice to the Authority and the
Trustee that it will not request the Authority to issue Tax-Exempt Refunding
Bonds. No funds of the Authority, other than the proceeds of the Bonds,
shall be available to pay Project Costs. The Company acknowledges that it is
fully familiar with the physical condition of the Project Facilities and that
it is not relying on any representation of any kind by the Authority or the
Trustee concerning the nature or condition thereof. Neither the Authority
nor the Trustee shall be liable to the Company or any other person for any
latent or patent defect in the Project Facilities.
Section 503. Compliance with Law.
In the acquisition, construction, maintenance, improvement and operation
of the Project Facilities, the Company has and will comply in all material
respects with all applicable building, subdivision, zoning and land use,
environmental protection, sanitary and safety and other laws, rules and
regulations and will not permit any nuisance thereat and will to the extent
of its ownership and control, permit no nuisance to be committed thereat by
others while the Company is, or is entitled to be, in possession thereof. It
shall not be a breach of this section if the Company fails to comply with
such laws, rules and regulations during any period in which the Company shall
in good faith be diligently contesting the validity thereof.
Section 504. Current Expenses.
The Company shall pay in a timely manner all costs of maintaining and
operating the Project Facilities, including without limitation all taxes,
excises and other governmental charges lawfully levied thereon or with
respect to its interests therein or use thereof to the extent of the
Company's interest therein. It shall not be a breach of this section if the
Company fails to pay any such costs, taxes or charges during any period in
which the Company shall in good faith be contesting the validity or amount
thereof and no foreclosure proceedings have been commenced, unless the
procedures applicable to such contest require payment thereof and proceedings
for their refund or abatement.
Section 505. Disposition and Use of Project Facilities.
The Company shall not sell, lease, transfer or otherwise dispose of the
Project Facilities (other than the grant of a mortgage pursuant to a
financing transaction) unless (i) it obtains the consent of the Authority,
which consent shall not be unreasonably withheld, provided, however, that no
such consent shall be required if the sale, lease, transfer or disposition is
the Seabrook Transfer, or if such transaction has been approved by or
consented to by the New Hampshire Public Utilities Commission; (ii) if there
are any Outstanding Tax-Exempt Refunding Bonds, it obtains an opinion of Bond
Counsel addressed to and reasonably satisfactory to the Trustee and the
Authority that such sale, lease, transfer or other disposition will not
affect the exclusion of the interest on any Outstanding Tax-Exempt Refunding
Bonds from the gross income of the owners thereof for federal income tax
purposes, provided, however, that no such opinion shall be required in
connection with the Seabrook Transfer; and (iii) if the sale, lease, transfer
or disposition is the Seabrook Transfer, the Company and the Seabrook
Transferee each executes and delivers an Assumption Agreement substantially
in the form attached hereto as Exhibit B (the "Assumption Agreement"). No
sale, lease, transfer or other disposition of the Project Facilities or the
Station shall relieve the Company of any of its obligations under this
Agreement.
The Company shall not make any material change in the purposes for which
the Project Facilities are used without the consent of the Authority, which
consent shall not be unreasonably withheld. The Company at its own expense
may alter, remodel or improve the Project Facilities and construct other
facilities at the site of the Project Facilities, provided such action shall
not result in any substantial change in the Project Facilities or the
character of the activities conducted by the Company at the Project
Facilities site without the consent of the Authority, which consent shall not
be unreasonably withheld.
Section 506. Books and Records.
The Authority and the Trustee and their respective duly authorized
agents shall have the right at all reasonable times and upon the furnishing
of reasonable notice under the circumstances to examine the books and records
of the Company relating to the Project Facilities.
Section 507. Undivided Interest.
The undertakings of the Company contained in Sections 502, 503, 504 and
505 are limited to those consistent with the Company's undivided percentage
interest in the facilities of which the Project Facilities are a part.
ARTICLE VI: DEFAULT AND REMEDIES
Section 601. Default by the Company.
(a) Events of Default; Default. "Event of Default" in this Agreement
means any one of the events set forth below and "Default" means any Event of
Default without regard to any lapse of time or notice.
(i) Debt Service on Bonds; Required Purchase. Any principal of,
premium, if any, or interest on any Bond shall not be paid when due, whether
at maturity, by acceleration, upon redemption or otherwise or any Purchase
Price for Bonds shall not be paid as provided in Sections 301, 308, 311 or
312, except 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 not supported by a Credit
Facility is paid within thirty (30) days after it becomes due.
(ii) Other Obligations. The Company (or the Seabrook Transferee) shall
fail to observe or perform any of its other covenants or agreements contained
herein or in the Assumption Agreement and such failure shall continue for a
period of sixty (60) days after written notice given to the Company by the
Trustee or the Bondowners of at least 25% in principal amount of the Bonds
Outstanding; provided, however, that if such default cannot be cured by the
Company or the Seabrook Transferee within such sixty (60) day period, it
shall not constitute an Event of Default if curative action is instituted by
the Company or the Seabrook Transferee within such sixty (60) day period and
thereafter is diligently pursued until such Default is cured.
(iii) First Mortgage Bond Default. The occurrence of any "event of
default" as defined in the First Mortgage Bond Indenture.
(iv) Reimbursement Agreement. The Trustee and the Paying Agent shall
have received written notice from the Bank of the occurrence of an event of
default under the Reimbursement Agreement and of the Bank's determination to
terminate the Credit Facility on the fifth Business Day following receipt by
the Trustee and the Paying Agent of such notice.
(v) Non-Reinstatement under the Credit Facility. If any Bonds are in
the Weekly or Multiannual Mode, the Paying Agent shall receive written notice
from the Bank within five (5) days after a drawing under the Credit Facility
that the Bank has not reinstated the amount so drawn, and such
non-reinstatement causes the total amount of the obligation of the Bank under
the Credit Facility to be less than the principal amount of the Outstanding
Bonds supported by the Credit Facility, plus accrued interest (1) for a
period of forty-five (45) days at the Maximum Interest Rate with respect to
the principal amount of such Bonds then Outstanding in the Weekly Mode, and
(2) for a period of one hundred ninety (190) days at the Maximum Interest
Rate with respect to the principal amount of such Bonds then Outstanding in
the Multiannual Mode.
Immediately upon receipt of written notice from the Bank of the
non-reinstatement of an amount drawn under the Credit Facility, the Paying
Agent shall determine whether such non-reinstatement causes the total amount
of the obligation of the Bank under the Credit Facility to be less than the
principal amount of the Outstanding Bonds supported by the Credit Facility
plus accrued interest thereon calculated in the manner set forth in the
preceding sentence. Notwithstanding the outcome of such determination, the
Paying Agent shall immediately notify the Trustee of the Bank's failure to
reinstate the full amount drawn under the Credit Facility.
The Company agrees to notify the Authority, the Bank, the Remarketing
Agent, the Paying Agent and the Trustee promptly in writing of the occurrence
of any Default or Event of Default of which it has knowledge. Within seven
(7) days after becoming aware of a Default or an Event of Default the Paying
Agent will give notice to the Bondowners and, in the case of a Default or
Event of Default under (i), (ii), (iv), or (v) above, the Trustee shall give
notice to the First Mortgage Bond Trustee.
Notwithstanding anything in this section to the contrary, no action or
failure to act by the Company (or the Seabrook Transferee) which results in
interest on any Tax-Exempt Refunding Bonds becoming includable in gross
income of the owners thereof for federal income tax purposes shall constitute
a Default or Event of Default under this Agreement so long as (I) the Company
shall have delivered the opinion described in clause (i) of the first
paragraph of Section 405 or shall have complied with the last paragraph of
Section 405 and (II) the redemption provided by Section 405 occurs. In such
event, no owner of Tax-Exempt Refunding Bonds shall be entitled to any claim
for monetary damages hereunder and the redemption of the Bonds as provided
under Section 405 shall be the exclusive recourse of owners of Tax-Exempt
Refunding Bonds.
(b) Waiver. At any time before an acceleration pursuant to Paragraph
602(a)(i), 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 Paragraph 602(a)(i), by written notice to the Company, and in the
absence of inconsistent instructions from Bondowners pursuant to Sections 606
or 901 shall do so upon written instruction of the owners of at least
twenty-five per cent (25%) in principal amount of such Bonds Outstanding. 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 Paragraphs 601(a)(i), 601(a)(iv)
or 601(a)(v).
Any cure or waiver of any "event of default" under the First Mortgage
Bond Indenture and a rescission and annulment of its consequences shall
constitute a cure or waiver of the corresponding Event of Default under
Paragraph 601(a)(iii) and a rescission and annulment of the consequences
thereof, and the Trustee, upon obtaining knowledge thereof, shall give
written notice of such cure or waiver, rescission or annulment to the
Authority and the Company, and shall give notice thereof by mail to all
Bondowners; 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.
Section 602. Remedies for Events of Default.
If an Event of Default occurs and is continuing:
(a) Acceleration.
(i) Bonds Not Supported by a Credit Facility. If the Event of Default
is one described in Paragraph 601(a)(i), (ii) or (iii), the Trustee may, and
upon the written request of the Bondowners of at least 25% in principal
amount of the Bonds Outstanding (other than Bonds that are supported by a
Credit Facility, Pledged Bonds and Company Bonds) shall, by written notice to
the Company, the Authority, the Paying Agent, and the Remarketing Agent
declare immediately due and payable the principal of the Outstanding Bonds
(other than Bonds that are supported by a Credit Facility and Pledged Bonds,
but including Company 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 Paragraph 602(a)(i) (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 Paragraph 602(a)(i) may annul such acceleration
and its consequences by written notice to the Authority, the Trustee and the
Company. 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.
(ii) Bonds Supported by a Credit Facility. If the Event of Default is
one described in Paragraph 601(a)(i), (iv) or (v), the principal of the Bonds
that are supported by a Credit Facility and Pledged Bonds and accrued
interest thereon shall automatically become immediately due and payable
without any further notice or action, subject, however, to the proviso set
forth in Section 605. Notwithstanding the foregoing, if an Event of Default
described in Paragraph 601(a)(i) occurs due to the failure of the Paying
Agent to receive sufficient funds for the payment of the Purchase Price of
all Bonds supported by a Credit Facility tendered for purchase on any
Purchase Date, the Paying Agent shall immediately draw under the Credit
Facility an amount equal to such deficiency (except to the extent that one or
more drawings have been made previously in respect of the same deficiency),
plus one day's accrued interest on such Bonds, and only if such Event of
Default is not cured by the close of business on the next Business Day shall
there be such an automatic acceleration of the payment of principal of and
accrued interest on the Bonds.
(b) Rights as a Secured Party. The Trustee may exercise all of the
rights and remedies of a secured party under the UCC. Notice sent by
registered or certified mail, postage prepaid, or delivered during business
hours, to the Company at least seven (7) days before an event under UCC
Section 9-504(3) or any successor provision of law shall constitute
reasonable notification of such event.
Section 603. Court Proceedings.
The Trustee may enforce the provisions of this Agreement 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 Company of the
provisions of this Agreement, including (to the extent this Agreement may
lawfully provide) court costs, reasonable attorney's fees and other costs and
expenses incurred in enforcing the obligations of the Company hereunder. The
Authority may likewise enforce obligations owed to it hereunder which it has
not assigned to the Trustee. All rights under this Agreement 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 604. Revenues after Default.
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 308 (without regard to any grace periods), which
amounts shall be applied in the order specified in Section 307.
Section 605. The Credit Facility; Acceleration.
Upon acceleration of the Bonds prior to expiration of the Credit
Facility, the Trustee shall instruct the Paying Agent to draw immediately on
the Credit Facility in an amount equal to the aggregate unpaid principal of
and interest on the Bonds supported by the Credit Facility to the date of
final payment (which shall be the date of acceleration for Bonds in the
Weekly and Multiannual Modes and the next Purchase Date for each Bond in the
Flexible Mode); provided, however, that the Paying Agent shall hold in trust
for the benefit of owners of Bonds in the Flexible Mode any amounts so drawn
in respect of such Bonds and shall release such amounts only on the
applicable Purchase Date for each such Bond. The owners of such Bonds shall
have no right to make any claim for such amounts until such Purchase Date.
The Trustee shall not require indemnification for any instruction required by
this Section 605 to be given by the Trustee to the Paying Agent to draw on
the Credit Facility, prior to the time such instruction is given, except and
unless such instruction is prohibited by or violates applicable law or any
outstanding or pending court or governmental order or decree.
Section 606. Rights of Bondowners.
If an Event of Default occurs and is continuing, and if the Bondowners
representing not less than 25% in principal amount of the Bonds Outstanding
shall have requested the Trustee in writing to exercise one or more of the
rights and remedies provided hereunder and offered it indemnity as provided
in Subsection 702(e), the Trustee shall be required to exercise such one or
more of the rights and remedies hereunder as the Trustee shall determine to
be in the best interest of the Bondowners and not inconsistent with any
directions given in accordance with Section 901. No Bondowner shall have any
right to institute an action in law or equity or to pursue any other remedy
hereunder with respect to any Bond unless (i) an Event of Default of which
the Trustee has been notified has occurred and Bondowners representing not
less than 25% in principal amount of the Bonds Outstanding shall have
requested the Trustee in writing to exercise its rights and remedies with
respect thereto and shall have offered the Trustee reasonable opportunity to
do so and indemnity as provided in Subsection 702(e), and (ii) the Trustee
shall within a reasonable time thereafter fail to exercise any of such rights
or remedies. No Bondowner shall have any right to institute any action or
pursue any other remedy if and to the extent that the surrender, impairment,
waiver, or loss of the lien of this Agreement would, under applicable law,
result. Notwithstanding the foregoing, each Bondowner shall have a right of
action to enforce payment of the Bonds at and after the due dates thereof at
the place, from the sources and in the manner expressed in the Bonds. For
purposes of this Section 606, so long as a Credit Facility has paid all
amounts due on Bonds it supports, the Bank issuing such Credit Facility shall
be treated as owner of such Bonds.
Section 607. Performance of Company's Obligations.
If the Company shall fail to observe or perform any of its agreements or
obligations hereunder, the Authority or the Trustee may perform the same in
its own name or in the Company's name and each is hereby irrevocably
appointed the Company's attorney-in-fact for such purpose. Unless an Event
of Default exists, the Authority or the Trustee, as the case may be, shall
give at least five (5) days' notice to the Company before taking action under
this section, except that in case of emergency as reasonably determined by
the acting party, it may act on lesser notice or give the notice promptly
after rather than before taking the action. The reasonable cost of any such
action performed by the Trustee or the Authority shall be paid or reimbursed
by the Company within thirty (30) days after the Trustee or the Authority
notify the Company of such cost.
Section 608. Remedies Cumulative; No Waiver.
The rights and remedies under this Agreement shall be cumulative and
shall not exclude any other rights and remedies allowed by law, provided
there is no duplication of recovery. Neither the failure to insist upon a
strict performance of any of the obligations of the Company nor the failure
to exercise any remedy for any violation thereof, shall be taken as a waiver
for the future of the right to insist upon strict performance of the
obligation or of the right to exercise any remedy for the violation.
ARTICLE VII: THE TRUSTEE
Section 701. Corporate Organization, Authorization and Capacity.
The Trustee represents and warrants that it is a trust company duly
organized and validly existing under the laws of The Commonwealth of
Massachusetts and duly licensed or qualified to do business in Massachusetts,
with the capacity to exercise the powers and duties of the Trustee hereunder,
and that by proper corporate action it has duly authorized the execution and
delivery of this Agreement.
Section 702. Rights and Duties of the Trustee.
(a) Moneys to be Held in Trust. All moneys deposited with the Trustee
under this Agreement (other than amounts received for its own use) shall be
held by the Trustee in trust and applied subject to the provisions of this
Agreement, but need not be segregated from other funds except as required
herein or by law.
(b) Accounts. The Trustee shall keep proper accounts of its
transactions hereunder (separate from its other accounts), which shall be
open to inspection at reasonable times by the Authority, the Company and the
Bondowners and their representatives duly authorized in writing.
(c) Performance of the Authority's Obligations. If the Authority shall
fail to observe or perform any agreement or obligation contained in this
Agreement, the Trustee may take whatever legal proceedings may be required to
compel full performance by the Authority of its obligations, and in addition,
the Trustee may, to whatever extent it deems appropriate for the protection
of the Bondowners, itself or the Company, perform any such obligation in the
name of the Authority and on its behalf.
(d) Responsibility. The Trustee shall be entitled to the advice of
counsel (who may be the Trustee's counsel, counsel for the Authority, the
Company or any Bondowner) and shall be wholly protected as to any action
taken or omitted to be taken in good faith in reliance on such advice. The
Trustee may rely conclusively on any notice, certificate or other document
furnished to it hereunder and reasonably believed by it to be genuine. The
Trustee shall not be liable for any action taken by it in good faith and
reasonably believed by it to be within the discretion or powers conferred
upon it, in good faith omitted to be taken by it and reasonably believed to
be beyond the discretion or powers conferred upon it, taken by it pursuant to
any direction or instruction by which it is governed hereunder, or omitted to
be taken by it by reason of the lack of direction or instruction required
hereby for such action; nor shall it be responsible for the consequences of
any error of judgment reasonably made by it. The duties of the Trustee are
those expressly set forth in this Agreement, and no additional duties shall
be implied. When any payment, consent or other action by it is called for
hereby, it may defer such action pending receipt of such evidence, if any, as
it may require in support thereof. The Trustee shall in no event be liable
for the application or misapplication of funds, or for other acts or defaults
by any person, firm, or corporation, except its own directors, officers, and
employees. No recourse shall be had by the Company, the Authority or any
Bondowner for any claim based on this Agreement or any Bond against any
director, officer, employee, or agent of the Trustee alleging personal
liability on the part of such person, unless such claim is based upon the bad
faith, negligence, fraud or deceit of such person. The Trustee has no
responsibility for the validity or sufficiency of this Agreement or the Bonds
or any security therefor.
(e) Limitations on Actions. The Trustee shall not be required to
monitor the financial condition of the Company or the physical condition of
the Project Facilities and, unless otherwise expressly provided, shall not
have any responsibility with respect to notices, certificates or other
documents filed with it hereunder, except to make them available for
inspection by the Bondowners. The Trustee shall not be deemed to have
knowledge of and shall not be required to take notice of any Default or Event
of Default, except for a Default or Event of Default described in Paragraph
601(a)(i) relating to the payment of principal of, premium, if any, and
interest on the Bonds, unless the Trustee shall be specifically notified in
writing by the Company, the Authority or Bondowners representing not less
than 25% in principal amount of the Bonds Outstanding, or in the case of a
Default or Event of Default described in Paragraph 601(a)(iii), the Trustee
shall be notified in writing by the First Mortgage Bond Trustee, or in the
case of a Default or Event of Default described in Paragraph 601(a)(iv) or
(v), the Trustee shall be notified in writing by the Bank or the Paying
Agent. It shall not be required to take any remedial action (other than the
giving of notice) unless indemnity reasonably satisfactory to it is furnished
for any expense or liability to be incurred therein, other than liability for
failure to meet the standards set forth in this section. The Trustee shall
be entitled to reimbursement from the Company for its expenses reasonably
incurred or advances reasonably made, which reimbursement shall be due and
payable thirty (30) days after notifying the Company of such expenses or
advances, in the exercise of its rights or the performance of its obligations
hereunder, whether or not it acts without previously obtaining indemnity.
A permissive right or power to act shall not be construed as a
requirement to act. Upon receipt of written notice, direction, instruction,
and indemnity as provided above and, after making such investigation, if any,
as it deems appropriate to verify the occurrence of any Default of which it
is notified by the Bondowners or the Bank, the Trustee shall pursue such
remedies hereunder (not contrary to such direction) as it deems appropriate
for the protection of the Bondowners (including the Bank as provided in
Section 901); and in its actions under this provision, the Trustee shall be
required to act for the protection of the Bondowners with the same prudence
as would be expected of a prudent person in the conduct of such person's
affairs.
(f) Financial Obligations. Nothing contained in this Agreement shall
in any way obligate the Trustee to pay any debt or meet any financial
obligations to any person in relation to the Project Facilities except from
moneys received under the provisions of this Agreement (including from the
exercise of its rights and remedies hereunder) other than moneys received for
its own purposes.
(g) Ownership of Bonds. The Trustee or any affiliate of the Trustee
may be or become the owner of Bonds with the same rights as if it were not
Trustee.
(h) No Surety Bond. The Trustee shall not be required to furnish any
bond or surety.
(i) Requests by the Company. Upon any request by the Company to the
Trustee to take any action under this Agreement (including but not limited to
any proposed amendment pursuant to Section 1101) the Trustee shall be
entitled to receive from the Company prior to taking such action, and to rely
upon, a certificate of a Company Representative and an opinion of counsel
reasonably satisfactory to the Trustee (who may be counsel to the Company),
and, if applicable in the reasonable judgment of the Trustee, a certificate
of an accountant satisfactory to the Company (who may be an employee of the
Company), each to the effect that in the signer's opinion all conditions
precedent applicable to such action under this Agreement, if any, have been
satisfied (and, in the case of the certificate of the Company Representative,
including but not limited to the absence of any Default or Event of Default)
and such action is permitted by this Agreement.
(j) Trustee as Holder of Series G First Mortgage Bonds. So long as no
Default has occurred and is continuing, the Trustee may, but shall have no
obligation to, take any action in its capacity as the registered holder of
the Series G First Mortgage Bonds (other than the duty to exercise reasonable
care in the safekeeping thereof and the giving of notices set forth below),
unless and except to the extent the Trustee is directed in writing by the
Bondowners as provided in Section 901 of this Agreement. The Trustee shall
promptly notify the Bondowners of the receipt of and contents of any notice
it receives under the First Mortgage Bond Indenture (other than notices
solely of payments being made on the Series G First Mortgage Bonds).
(k) Authentication of Bonds. The Trustee shall act as authenticating
agent for the Bonds. The Trustee may either sign the Certificate of
Authentication in its own name or may appoint one or more agents to sign the
Certificate of Authentication on the Trustee's behalf. So long as Bonds are
in the Flexible or Weekly Mode the Trustee shall use its best efforts to have
the ability to cause the Certificate of Authentication to be executed in New
York, New York at a location satisfactory to the Paying Agent. To satisfy
this requirement, the Trustee hereby initially appoints Security Pacific
National Trust Company (New York) to act as its agent for the purpose of
signing the Certificate of Authentication and delivery of the Bonds. The
Trustee shall have no liability for the negligence or wrongful conduct (in
each case whether by act or omission) of any such agent appointed with
reasonable care. The Trustee shall have no liability if, after its best
efforts, it finds that it does not have the ability (either directly or
through an agent) to cause the Certificate of Authentication to be executed
and delivered in New York, New York on a timely basis when Bonds are in the
Flexible or Weekly Mode.
Section 703. Fees and Expenses of the Trustee.
The Company shall pay to the Trustee reasonable compensation for its
services and prepay or reimburse the Trustee for its reasonable expenses and
disbursements, including attorney's fees, hereunder. The Company shall
indemnify and save the Trustee harmless against any and all (a) claims as set
forth in Section 1002, (b) costs, counsel fees, expenses or liabilities
reasonably incurred in connection with such claims, and (c) expenses and
liabilities which it may incur in the exercise of its duties hereunder and
which are not due to the bad faith, negligence, fraud or deceit of any
director, officer, employee or agent of the Trustee. Any fees, expenses,
reimbursements, or other charges which the Trustee may be entitled to receive
from the Company hereunder shall be due and payable thirty (30) days after a
request for payment has been made by the Trustee, and if not otherwise paid,
shall be a first lien upon any funds or other property then or thereafter
held hereunder by the Trustee; provided, however, that the lien of the
Trustee shall be subordinate to the lien for the benefit of the Bondowners
upon the moneys drawn under the Credit Facility, and the proceeds of any
remarketing of the Bonds and other Eligible Funds, if any, which are the
basis of the determination made by the Paying Agent of the amount to be drawn
under the Credit Facility, including, without limitation, such funds held by
the Trustee under Section 204 and Subsection 304(c). If any such moneys are
so applied, the Company shall be immediately obligated to restore the moneys
so applied. The Trustee shall not require indemnification for any payment
when due of principal, premium or interest on any Bond to be made by the
Trustee to any Bondowner, prior to the time such payment is made by the
Trustee, except and unless such payment is prohibited by or violates
applicable law or any outstanding or pending court or governmental order or
decree.
Section 704. Resignation or Removal of Trustee.
The Trustee may resign on not less than sixty (60) days' notice given in
writing to the Authority, the Bondowners, the Bank and the Company, but such
resignation shall not take effect until a successor has been appointed and
has assumed the duties hereunder. The Trustee will promptly certify to the
other parties that it has mailed such notice to all Bondowners and such
certificate shall be conclusive evidence that such notice was given in the
manner required hereby. The Trustee may be removed by written notice to the
parties from the Bondowners representing a majority in principal amount of
the Bonds Outstanding, but no such removal shall take effect until a
successor has been appointed and assumed the duties hereunder. A petition in
a court of competent jurisdiction for removal of the Trustee and the
appointment of a successor may be filed by the Bondowners representing not
less than 25% in principal amount of the Bonds Outstanding.
Section 705. Successor Trustee.
Any corporation or association which succeeds to the corporate trust
business of the Trustee as a whole, or substantially as a whole, whether by
sale, merger, consolidation or otherwise, shall become vested with all the
property, rights and powers of the Trustee hereunder, without any further act
or conveyance.
In case the Trustee resigns or is removed or becomes incapable of
acting, or becomes bankrupt or insolvent, or if a receiver, liquidator or
conservator of the Trustee or of its property is appointed, or if a public
officer takes charge or control of the Trustee, or of its property or
affairs, a successor shall be appointed (but only with the consent of the
Bank, if any Bonds shall then be entitled to the benefits of a Credit
Facility, which consent shall not be unreasonably withheld) by written notice
from the Company to the Authority. The Company shall notify the Bondowners
of the appointment in writing within twenty (20) days from the appointment.
The Company will promptly certify to the successor 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. If no
appointment of a successor is made within twenty (20) days after the giving
of written notice in accordance with Section 704 or after the occurrence of
any other event requiring or authorizing such appointment, the outgoing
Trustee or any Bondowner may apply to any court of competent jurisdiction for
the appointment of such a successor, and such court may thereupon, after
such notice, if any, as such court may deem proper, appoint such successor.
Any successor Trustee appointed under this section shall be a trust company
or a bank having the powers of a trust company that meets the requirements of
the Act, shall have a capital and surplus of not less than $50,000,000 and
shall at the time of the appointment be rated not less than Baa3/P-3 by
Moody's or otherwise be acceptable to Moody's. Any such successor Trustee
shall notify the Authority and the Company of its acceptance of the
appointment and, upon giving such notice, shall become Trustee, vested with
all the property, rights and powers of the Trustee hereunder, without any
further act or conveyance. Such successor Trustee shall execute, deliver,
record and file such instruments as are required to confirm or perfect its
succession hereunder and any predecessor Trustee shall from time to time
execute, deliver, record and file such instruments as the incumbent Trustee
may reasonably require to confirm or perfect any succession hereunder.
ARTICLE VIII: THE AUTHORITY
Section 801. Limited Obligation.
Under no circumstances shall the Authority be obligated directly or
indirectly to pay Project Costs, principal of or premium, if any, and
interest on the Bonds, or expenses of operation, maintenance and upkeep of
the Project Facilities except from Bond proceeds or from funds received under
this Agreement, exclusive of funds received hereunder by the Authority for
its own use. This Agreement does not create any debt of the State of New
Hampshire with respect to the Project Facilities other than a special
obligation of the Authority acting on behalf of the State of New Hampshire
pursuant to the Act. Nothing contained herein shall in any way obligate the
State of New Hampshire to raise any money by taxation or use other public
funds for any purpose in relation to the Project Facilities. Neither the
State of New Hampshire nor the Authority shall pay or promise to pay any debt
or meet any financial obligation to any person at any time in relation to the
Project Facilities except (i) from moneys received or to be received under
the provisions hereof or derived from the exercise of the Authority's right
hereunder, other than moneys received for its own purposes, or (ii) as may be
required by law other than the provisions of the Act. Nothing contained in
this Agreement shall be construed to require or authorize the Authority to
operate the Project Facilities itself or to conduct any business enterprise
in connection therewith.
Section 802. Rights and Duties of the Authority.
(a) Remedies of the Authority. Notwithstanding any contrary provision
in this Agreement, the Authority shall have the right to take any action or
make any decision with respect to proceedings for indemnity against the
liability of the Authority and for collection or reimbursement from sources
other than moneys or property held under this Agreement or subject to the
lien hereof. The Authority may enforce its rights under this Agreement which
have not been assigned to the Trustee by legal proceedings for the specific
performance of any obligation contained herein or for the enforcement of any
other appropriate legal or equitable remedy, and may recover damages caused
by any breach by the Company of its obligations to the Authority under this
Agreement, including court costs, reasonable attorney's fees and other costs
and expenses incurred in enforcing such obligations.
(b) Limitations on Actions. The Authority shall not be required to
monitor the financial condition of the Company or the physical condition of
the Project Facilities and, unless otherwise expressly provided, shall not
have any responsibility with respect to notices, certificates or other
documents filed with it hereunder. The Authority shall not be required to
take notice of any breach or default except when given notice thereof by the
Trustee. The Authority shall not be responsible for the payment of any
rebate to the United States under IRC Section 148(f). The Authority shall
not be required to take any action unless indemnity reasonably satisfactory
to it is furnished for expenses or liability to be incurred therein (other
than the giving of notice). The Authority, upon written request of the
Bondowners, the Bank or the Trustee, and upon receipt of reasonable
indemnity for expenses or liability, shall cooperate to the extent reasonably
necessary to enable the Trustee to exercise any power granted to the Trustee
by this Agreement. The Authority shall be entitled to reimbursement pursuant
to Section 803 to the extent that it acts without previously obtaining full
indemnity.
(c) Responsibility. The Authority shall be entitled to the advice of
counsel (who may be counsel for any party, for the Bank, the Paying Agent or
the Remarketing Agent, or for any Bondowner) and shall be wholly protected as
to any action taken or omitted to be taken in good faith in reliance on such
advice. The Authority may rely conclusively on any notice, certificate or
other document furnished to it under this Agreement and reasonably believed
by it to be genuine. The Authority shall not be liable for any action taken
by it in good faith and reasonably believed by it to be within the discretion
or power conferred upon it, or in good faith omitted to be taken by it and
reasonably believed to be beyond such discretion or power, or taken by it
pursuant to any direction or instruction by which it is governed under this
Agreement or omitted to be taken by it by reason of the lack of direction or
instruction required for such action under this Agreement, or be responsible
for the consequences of any error of judgment reasonably made by it. When
any payment, consent or other action by the Authority is called for by this
Agreement, the Authority may defer such action pending such investigation or
inquiry or receipt of such evidence, if any, as it may require in support
thereof. A permissive right or power to act shall not be construed as a
requirement to act, and no delay in the exercise of a right or power shall
affect the subsequent exercise thereof. The Authority shall in no event be
liable for the application or misapplication of funds, or for other acts or
defaults by any person or entity except by its own directors, officers and
employees. No recourse shall be had by the Company, the Trustee or any
Bondowner for any claim based on this Agreement or the Bonds against any
director, officer, employee or agent of the Authority unless such claim is
based upon the bad faith, fraud or deceit of such person. No covenant,
obligation or agreement of the Authority contained in this Agreement shall be
deemed to be a covenant, obligation or agreement of any present or future
director, officer, employee or agent of the Authority in his individual
capacity, and no person executing a Bond shall be liable personally thereon
or be subject to any personal liability or accountability by reason of the
issuance thereof.
Section 803. Expenses of the Authority.
The Company shall pay when due the Authority's Service Charge and shall
prepay or reimburse the Authority within thirty (30) days after notice for
all expenses (including reasonable attorney's fees) incurred by the Authority
in connection with the issuance and carrying of the Bonds and all expenses
reasonably incurred or advances reasonably made in the exercise of the
Authority's rights or their performance of its obligations hereunder. Any
fees, expenses, reimbursements or other charges which the Authority may be
entitled to receive from the Company hereunder, if not paid when due, shall
bear interest at 15% per annum.
Section 804. Matters to be Considered by Authority.
In approving, concurring in or consenting to action or in exercising any
discretion or in making any determination under this Agreement, the Authority
may consider the interests of the public, which shall include the anticipated
effect of any transaction on tax revenues and employment, as well as the
interests of the other parties hereto and the Bondowners; provided, however,
nothing herein shall be construed as conferring on any person other than the
other parties and the Bondowners any right to notice, hearing or
participation in the Authority's consideration, and nothing in this section
shall be construed as conferring on any of them any right additional to those
conferred elsewhere herein. Subject to the foregoing, the Authority will not
unreasonably withhold any approval or consent to be given by it hereunder.
Section 805. Actions by Authority.
Any action which may be taken by the Authority hereunder shall be deemed
sufficiently taken if taken on its behalf by its Chairman, its Vice Chairman
or its Executive Director or by any other director, officer or agent whom it
may designate from time to time.
ARTICLE IX: THE BONDOWNERS
Section 901. Action by Bondowners.
Subject to Subsections 601(b), 602(a) and Section 1101 (as to the
waivers and consents granted thereby), Bondowners representing a majority in
principal amount of the Bonds Outstanding shall have the right at any time,
by written notice to the Trustee and upon offering it indemnity as provided
in Subsection 702(e), to direct the Trustee (i) in the granting of any
consents, waivers or similar actions pertaining to the Bonds, (ii) in the
time, method and place of conducting all proceedings, (iii) in the exercise
of any rights or remedies available to the Trustee hereunder, or (iv) in the
exercise of any other right or power conferred upon the Trustee for the
protection of the Bondowners, provided that such direction shall be in
accordance with the provisions of law and this Agreement, and the Trustee may
take any other action determined proper by the Trustee which is not
inconsistent with such direction.
Except with respect to the matters provided below, Bondowners
representing a majority in principal amount of the Bonds Outstanding shall
have the right, at any time, by written notice to the Trustee and the
offering of indemnity as provided in Subsection 702(e), to direct the
Trustee, as holder of all of the Series G First Mortgage Bonds, to exercise
the rights available to it as holder of such bonds under the First Mortgage
Bond Indenture, including, without limitation, as to rendering notice to the
First Mortgage Bond Trustee of the occurrence of a default thereunder, the
institution of any suit, action or proceeding to enforce payments on the
Series G First Mortgage Bonds which were not paid when due or other
proceeding in respect of the First Mortgage Bond Indenture which the Trustee,
as holder of the Series G First 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 Series G First Mortgage Bonds,
subject however to compliance with the applicable provisions of the First
Mortgage Bond Indenture.
Where the First Mortgage Bond Trustee is required or permitted to take
any action under the First Mortgage Bond Indenture upon the direction,
authorization, consent, notice or request of the holders of a specified
percentage of principal amount of bonds outstanding thereunder or of
outstanding bonds thereunder which would be adversely affected by such
action, including with respect to acceleration of the maturity of such bonds
under Section 10.1 of the First Mortgage Bond Indenture, the time, method and
place of proceedings and waivers of events of default, as provided in Section
10.12 of the First Mortgage Bond Indenture and amendments of the First
Mortgage Bond Indenture under Article 15 thereof, each Bondowner shall be
deemed the holder of its pro-rata portion of the principal amount of Series G
First Mortgage Bonds and shall have the right to direct the Trustee whether
or not to render such direction, authorization, consent, notice or request
under the First Mortgage Bond Indenture in respect of such Bondowner's
pro-rata portion, whereupon the Trustee shall notify the First Mortgage Bond
Trustee of the action to be taken in respect of the applicable principal
amount of Series G First Mortgage Bonds.
Any request, authorization, direction, notice, consent, waiver or other
action provided by this Agreement to be given or taken by Bondowners may be
contained in and evidenced by one or more writings of substantially the same
tenor signed by the Bondowners of the requisite percentage of principal
amount of Bonds Outstanding or their attorneys duly appointed in writing.
Proof of the execution of any such instrument, or of any instrument
appointing any such attorney, shall be sufficient for any purpose of this
Agreement (except as otherwise herein expressly provided) if made in the
following manner, but the Authority or the Trustee may nevertheless in its
discretion require further or other proof in cases where it deems the same
desirable:
The fact and date of the execution by any Bondowner or his or her
attorney of such instrument may be proved by the certificate, which need not
be acknowledged or verified, of an officer of a bank or trust company
satisfactory to the Authority or to the Trustee or of any notary public or
other officer authorized to take acknowledgments of the deeds to be recorded
in the state in which he purports to act, that the person signing such
request or other instrument acknowledged to him or her the execution thereof,
or by an affidavit of a witness of such execution, duly sworn to before such
notary public or other officer. The authority of the person or persons
executing any such instrument on behalf of a corporate Bondowner may be
established without further proof if such instrument is signed by a person
purporting to be the president or a vice president of such corporation with a
corporate seal affixed and attested by a person purporting to be its clerk or
secretary or an assistant clerk or assistant secretary.
The ownership of Bonds and the amount, numbers and other identification,
and date of holding the same shall be proved by the registry books for the
Bonds maintained by the Trustee.
Any request, consent or vote of the owner of any Bond shall bind all
future owners of such Bond. Bonds owned or held by or for the account of the
Authority, the Company, or any related person to the Company within the
meaning of Section 147(a) of the IRC shall not be deemed Outstanding Bonds
for the purpose of any consent or other action by Bondowners, except that for
such purposes Pledged Bonds shall be treated as Outstanding and shall be
deemed to be owned by the Bank. So long as no Default exists under Paragraph
601(a)(i) with respect to any Bonds supported by a Credit Facility, the Bank
and not the Bondowner shall be treated as the owner of all Bonds entitled to
the benefits of such Credit Facility for the purpose of any consent or other
action by Bondowners.
ARTICLE X: THE COMPANY
Section 1001. Existence and Good Standing; Merger; Consolidation.
The Company will maintain its corporate existence, qualification to do
business and good standing under the laws of the State of New Hampshire and
will maintain itself as a foreign corporation duly qualified to do business
and in good standing, where applicable, in each jurisdiction in which the
failure to so qualify would have a material adverse effect upon its business
or properties. The Company shall not merge or consolidate with or sell all
or substantially all of its assets to another entity, except that the Company
may transfer the Station in connection with a transfer of the Project
Facilities pursuant to Section 505 and the Company may so merge or
consolidate with or sell all or substantially all of its assets to another
corporation if (i) the surviving or transferee corporation is qualified to do
business in New Hampshire, (ii) the surviving or transferee corporation (if
not the Company) has assumed in writing all of the Company's obligations
hereunder and under the Series G First Mortgage Bonds, and (iii) upon such
assumption there will not be a Default hereunder or an event of default under
the First Mortgage Bond Indenture (disregarding any required passage of time
or giving of notice thereunder).
Section 1002. Indemnification by the Company.
The Company, regardless of any agreement to maintain insurance, will
indemnify the Authority and the Trustee against (a) any and all claims by any
person related to the participation of the Authority or the Trustee in the
transactions contemplated by this Agreement, including without limitation
claims arising out of any condition of the Project Facilities or Station or
the construction, use, occupancy or management thereof; any accident, injury
or damage to any person occurring in or about the Station; any breach by the
Company of its obligations under this Agreement; any act or omission of the
Company or any of its agents, contractors, servants, employees or licensees;
or the offering, issuance, sale or any resale of the Bonds to the extent
permitted by law, and (b) all costs, counsel fees, expenses or liabilities
reasonably incurred in connection with any such claim or any action or
proceeding brought thereon. In case any action or proceeding is brought
against the Authority or the Trustee by reason of any such claim, the Company
will defend the same at its expense upon notice from the Authority or the
Trustee, and the Authority or the Trustee, as the case may be, will cooperate
with the Company, at the expense of the Company, in connection therewith.
ARTICLE XI: MISCELLANEOUS
Section 1101. Amendments.
(a) Without Bondowners' Consent. The parties may from time to time,
without the consent of any Bondowner, amend this Agreement in order to (i)
cure any ambiguity, defect or omission in this Agreement that does not
materially adversely affect the interests of the Bondowners, (ii) grant
additional rights or security to the Trustee for the benefit of the
Bondowners, (iii) add additional Events of Default as shall not be
inconsistent with the provisions of this Agreement and which shall not
materially adversely affect the interests of the Bondowners, (iv) qualify
this Agreement under the Trust Indenture Act of 1939, as amended, or
corresponding provisions of federal laws from time to time in effect, (v)
provide for the establishment of a book entry system of registration for the
Bonds through a securities depository, (vi) effective upon any Conversion
Date to a new Mode, make any amendment affecting only the Bonds being
converted, (vii) add provisions relating to the partial conversion of Bonds
to a new Mode or the issuance of Tax-Exempt Refunding Bonds which do not
impair the security for the outstanding Bonds, or (viii) make such other
provisions in regard to matters or questions arising under this Agreement as
shall not be inconsistent with the provisions of this Agreement and which
shall not materially adversely affect the interests of the Bondowners.
(b) With Bondowners' Consent. Except as set forth in Subsection
1101(a), the parties may from time to time amend this Agreement with the
consent of the owners of more than 50% in aggregate principal amount of the
Bonds Outstanding; provided, that no amendment shall be made which adversely
affects the rights of some but less than all the Bonds Outstanding without
the consent of the owners of more than 50% in aggregate principal amount of
the Bonds so affected; and provided further, that no amendment of this
Agreement shall be effective to (i) change the principal, premium or interest
on any Bonds, (ii) change the interest payment dates, maturity dates or
purchase or redemption provisions of any Bonds, (iii) reduce the percentage
of Bondowners whose consent is required for the amendment of this Agreement
or (iv) modify the lien upon or pledge of the payments and other revenues
assigned and pledged hereunder (including any Credit Facility), without the
consent, in each case, of the owner of each Bond which would be affected by
the action proposed to be taken.
When the Trustee determines that the requisite number of consents have
been obtained for an amendment which requires Bondowner consents, it shall,
within ninety (90) days, file a certificate to that effect in its records and
mail notice to the Bondowners. No action or proceeding to invalidate the
amendment shall be instituted or maintained unless it is commenced within
sixty (60) days after such mailing. The Trustee will promptly certify to the
Authority 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. A consent to an amendment may be revoked by a notice
given by the Bondowner and received by the Trustee prior to the Trustee's
certification that the requisite consents have been obtained.
(c) General. Any amendment of this Agreement shall be accompanied by
an opinion of Bond Counsel reasonably satisfactory to the Authority and the
Trustee to the effect that the amendment is permitted by this Agreement and,
if there are any Tax-Exempt Refunding Bonds outstanding, that such amendment
will not adversely affect the exclusion from gross income for federal income
tax purposes of interest on such Tax-Exempt Refunding Bonds. So long as a
Credit Facility supports any of the Bonds no amendment to this Agreement
shall be made without the consent of the Bank.
Notice of any amendment of this Agreement, or any material change to the
Reimbursement Agreement or any remarketing agreement entered into by the
Remarketing Agent and the Company shall be sent by the Company to Moody's.
Section 1102. Notices.
Unless otherwise expressly provided, all notices to the Authority, the
Trustee, the Paying Agent and the Company shall be in writing and shall be
deemed sufficiently given if sent by registered or certified mail, postage
prepaid, or delivered during a Business Day as follows: (a) to the Authority
at its office at 14 Dixon Avenue, Suite 101, Concord, New Hampshire 03301-
4954, attention of Executive Director, (b) to the Trustee at P.O. Box 778,
Boston, Massachusetts 02102 (if by mail) or Two International Place - 4th
Floor, Boston, Massachusetts 02110 (if by courier), in each case attention of
Corporate Trust Department, (c) to the Paying Agent at 2 Rector Street, New
York, New York 10006, attention of Corporate Trust Division, (d) to the
Company at 1000 Elm Street, Manchester, New Hampshire 03105, attention of
Treasurer with a copy to Northeast Utilities Service Company at 107 Selden
Street, Berlin, Connecticut 06037, attention of the Assistant Treasurer, (e)
to Moody's at 99 Church Street, New York, New York 10007, and (f) to S&P at
25 Broadway, New York, New York 10004, or, as to all of the foregoing, to
such other address as the addressee shall have indicated by prior written
notice to the one giving notice. All notices to a Bondowner shall be in
writing and shall be deemed sufficiently given if sent by first class mail,
postage prepaid, to the Bondowner at the address shown on the registration
books for the Bonds maintained by the Paying Agent. A Bondowner may direct
the Paying Agent to change its address as shown on the registration books by
written notice to the Paying Agent. All notices to Bondowners shall identify
the Bonds by name, CUSIP number, date of original issuance, maturity date,
and such other descriptive information as may be needed to identify
accurately the Bonds.
All notices sent to Bondowners by the 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 shall be at the sole
discretion of the Trustee or the Paying Agent, as the case may be.
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 1103. Time.
All references to times of day in this Agreement are references to New
York City time.
Section 1104. Agreement Not for the Benefit of Other Parties.
This Agreement is not intended for the benefit of and shall not be
construed to create rights in parties other than the Company, the Authority,
the Trustee and the Bondowners.
Section 1105. Severability.
In the event that any provision of this Agreement shall be held to be
invalid in any circumstance, such invalidity shall not affect any other
provisions or circumstances.
Section 1106. Counterparts.
This Agreement may be executed and delivered in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts together shall constitute one and the same instrument.
Section 1107. Captions.
The captions and table of contents of this Agreement are for convenience
only and shall not affect the construction hereof.
Section 1108. Governing Law.
This instrument shall be governed by the laws of State of New Hampshire.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, THE BUSINESS FINANCE AUTHORITY OF THE STATE OF NEW
HAMPSHIRE HAS CAUSED THIS AGREEMENT TO BE SIGNED AND ITS OFFICIAL SEAL TO BE
IMPRESSED HEREON BY ITS EXECUTIVE DIRECTOR; PUBLIC SERVICE COMPANY OF NEW
HAMPSHIRE HAS CAUSED THIS AGREEMENT TO BE SIGNED AND ITS CORPORATE SEAL TO BE
IMPRESSED HEREON BY AN AUTHORIZED OFFICER; AND STATE STREET BANK AND TRUST
COMPANY, AS TRUSTEE, HAS CAUSED THIS AGREEMENT TO BE SIGNED AND ITS CORPORATE
SEAL TO BE IMPRESSED HEREON BY AN AUTHORIZED OFFICER.
BUSINESS FINANCE AUTHORITY OF THE STATE OF NEW HAMPSHIRE
(Seal)
By:
Jack Donovan
Executive Director
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
(Seal)
By:
Randy A. Shoop
Assistant Treasurer - Finance
STATE STREET BANK AND TRUST COMPANY,
as Trustee
(Seal)
By:
Name:
Title:
The undersigned hereby consents
to this Agreement
BARCLAYS BANK PLC, NEW YORK BRANCH
By:
Name:
Title:
EXHIBIT A
THE PROJECT FACILITIES
The Project Facilities to be financed by the Bonds consist of certain
air or water pollution control and sewage or solid waste disposal facilities
at the Seabrook Station Plant, Unit No. 1, in which Public Service Company of
New Hampshire has a 35.56942 percent ownership interest. The Project
Facilities include the following:
Waste Water Run-Off System
The Waste Water Run-Off System collects and treats yard area drainage to
remove pollutants. The System includes catch basins, yard waste water drain
pipes, and a site settling pond.
Chemical and Oily Waste Treatment System
The Chemical and Oily Waste Treatment System collects, stores,
processes, treats and disposes of non-radioactive chemical and oily wastes.
The wastes result from construction, start-up and operation of the Seabrook
Station Plant. The wastes are collected and treated to remove pollutants.
The System includes tanks, an acid and caustic handling system, waste
lagoons, system flush piping, and oil separator, curbs and drains, pipes,
valves, transfer pumps, controls and instrumentation and related support
equipment.
Sanitary Waste System
Sanitary waste is collected, treated and disposed of by the Sanitary
Waste System. The System includes sanitary drains, sumps and pumps, a
holding tank, a pump station, a sewage treatment plant, piping, transfer
pumps and related support equipment.
Radioactive Gaseous Waste System
The Radioactive Gaseous Waste System collects, processes, stores and
treats radioactive gaseous waste produced during normal operations. The
System includes the following components: a main gas collection header, a
waste gas condenser with associated primary cooling water components, gas
chiller compressor units, iodine guard beds, a regeneration subsystem for
dryers, waste gas dryers, a waste gas compressor package, ambient carbon
delay beds, particulate filters, an after cooler, a hydrogen surge tank, a
waste gas radiation monitor, an equipment vent system, a hydrogenated vent
header, and associated piping, valves, controls and instrumentation.
Exhaust Filtration System
The Exhaust Filtration System collects, filters and discharges exhaust
containing low level radioactive contamination resulting from normal
operations. The System includes exhaust filters, exhaust fans, exhaust
ducts, plenums, dampers, piping, flow control valves, and controls and
instrumentation.
Liquid Radwaste System
The Liquid Radwaste System collects, processes, treats, recycles and
disposes of low level radioactive liquid waste resulting from normal
operations. The System includes tanks, filters, strainers, pumps, a
reboiler, an evaporator, an evaporator distillate condenser, an evaporator
distillate accumulator, an evaporator distillate cooler, an evaporator
bottoms cooler, a waste demineralizer and filter, equipment drains, chemical
drains, a radiation monitor, and associated controls and instrumentation.
Boron Recycle System
The Boron Recycle System collects, stores, treats, recycles and disposes
of reactor coolant letdown during normal operations. This System is required
to maintain reactor coolant letdown in accordance with federal pollution
control standards as to radioactivity. The System includes the following
components: Drain tanks, a degasifier, a preheater, a degasifier
regenerative heat exchanger, trim coolers, a degasifier prefilter, cesium
removal ion exchangers, recovery filters, waste storage tanks, recovery
evaporator packages, recovery test tanks, recovery demineralizers, recovery
demineralizer filters, a letdown rehead heat exchanger, a letdown chiller
heat exchanger, a letdown moderating heat exchanger, a chiller surge tank, a
chiller, thermal regenerative demineralizers, radiation monitors, associated
pumps, piping and valves, and controls and instrumentation.
Steam Generator Blowdown Treatment System
The Steam Generator Blowdown Treatment System collects, processes,
stores and treats steam generator blowdown for discharge or recycle during
normal operation. This is necessary in compliance with pollution control
requirements which limit the discharge of untreated steam generator blowdown.
The System includes the following components: Blowdown evaporators, an
evaporator distillate condenser, an evaporator condensate accumulator, an
evaporator distillate pump, an evaporator condensate cooler, an evaporator
bottoms pump, an evaporator bottoms cooler, blowdown demineralizers, acid and
caustic systems, blowdown heat exchangers, and associated piping, controls
and instrumentation.
Solid Radwaste System
The Solid Radwaste System collects, stores, packages and prepares solid
radioactive waste for disposal. Radioactive solid wastes processed by this
System include spent demineralizer resins, expended filter cartridges,
evaporator concentrates as well as dry active waste consisting of rags,
clothing, paper and other trash. The System includes the following
components: A spent resin storage tank, an evaporator bottoms storage tank,
associated collection piping, pumps and valves, a dry waste compactor, a
filter transfer vehicle, and associated controls and instrumentation.
Waste Processing Building
The Waste Processing Building is a reinforced concrete structure which
houses equipment used for exempt facilities. The purpose of this building is
to house the air and water pollution control facilities and the solid waste
disposal facilities.
Auxiliary Building
The Auxiliary Building is a reinforced concrete structure which houses
both pollution control and production related equipment. Pollution control
facilities located in the Auxiliary Building include portions of the liquid
radwaste and gaseous radwaste systems. The cost of the Auxiliary Building
and general support equipment has been allocated to the exempt facilities
according to the ratio of space used for qualified equipment to the total
space used in the building for all equipment.
Spent Nuclear Fuel Facility
The Spent Nuclear Fuel Facility is located in a separate building with
enclosed fuel handling equipment for production functions and for spent fuel
storage. The fuel handling facility includes a Seismic Category 1 structure
containing a spent fuel pool with racks, spent fuel cooling and purification
systems, a new fuel storage area, a spent fuel cask loading pit, and a cask
washdown area. Also included are cranes and equipment supporting the fuel
handling operations as well as the transfer canal leading the reactor
containment. The cost of the Spent Nuclear Fuel Facility is determined
through an allocation of the cost of the overall fuel facility between spent
fuel facilities and production facilities.
Circulating Water System
The Circulating Water System will provide cooling water to the main
condensers of Seabrook Station. The Circulating Water System is a
once-through system using sea water from the Atlantic Ocean to remove the
heat of condensation from the steam cycle and to dispose of that heat in an
environmentally acceptable manner. The points of inlet and discharge of the
cooling water are offshore, east of Hampton Beach, New Hampshire.
The System includes the following structures: Two 19-foot inside
diameter tunnels, lined with reinforced concrete, which connect the plant
with the offshore inlet and outlet structures; a pumphouse, located at the
plant site which encloses traveling screens and pumps for the circulating
water and service water systems; and a piping system at the plant site, for
the most part underground, interconnecting the tunnels, the pumphouse, and
the condensers.
The tunnels extend through the underlying rock in an east-west direction
at an elevation between 200 and 250 feet below sea level. They end at the
plant site with two 19-foot diameter vertical shafts, which reach above grade
transforming at the top into two transition boxes open to the atmosphere. At
the offshore end, the intake tunnel terminates with three 9-foot inside
diameter vertical shafts connecting to three submerged inlet heads. The
discharge tunnel terminates with eleven 5-foot inside diameter vertical
shafts, each connecting to a submerged bifurcated diffuser head.
Service Water Cooling Tower System
The Service Water Cooling Tower System disposes of waste heat from the
plant service water system. Waste heat from equipment throughout the plant
is collected by the service water cooling system piping. The service water
transfers waste heat to the service water cooling tower, which discharges
heat to the atmosphere, thereby controlling discharge of waste heat to the
natural water resources adjacent to the station. The Service Water Cooling
Tower System components include the service water cooling tower, service
water piping, pumps and associated electrical service, mechanical equipment,
controls and instrumentation.
Screen Wash System
The Screen Wash System collects, stores and disposes of debris removed
from the circulating and service water systems. This debris is solid waste
with no market or other value. After removal, the debris is transferred to a
landfill for final disposal. The components of the Screen Wash System
include the screen wash pumps, trash trough, trash container, piping and
valves, associated electrical service, mechanical equipment, controls and
instrumentation.
EXHIBIT B
ASSUMPTION AGREEMENT
This Assumption Agreement (the "Assumption Agreement") is entered into
as of , by The Industrial Development Authority of the State
of New Hampshire (with its successors, the "Authority"), a body corporate and
politic created under New Hampshire Revised Statutes Annotated 162-A:3;
Public Service Company of New Hampshire (with its successors, the "Company"),
a New Hampshire corporation; (with its successors, the
"Seabrook Transferee"), a corporation; and State Street Bank
and Trust Company, a Massachusetts trust company, as Trustee (with its
successors, the "Trustee") under a Series E Loan and Trust Agreement dated as
of May 1, 1991 (the "LTA") among the Authority, the Company and the Trustee,
which secures the Authority's $114,500,000 in aggregate principal amount
Pollution Control Revenue Bonds (Public Service Company of New Hampshire
Project - 1991 Taxable Series E) and any Tax-Exempt Refunding Bonds issued
thereunder (the "Bonds"). Capitalized terms not otherwise defined herein
shall have the meaning given them in the LTA.
This Assumption Agreement is entered into pursuant to Section 505 of the
LTA in connection with the transfer by the Company of its interest in the
Station (including the Project Facilities) to the Seabrook Transferee. The
purpose of this Assumption Agreement is to ensure the exclusion of interest
on the Tax-Exempt Refunding Bonds from gross income of the owners thereof for
federal income tax purposes and to satisfy certain requirements of the
Authority with respect to facilities financed under the Act. This Assumption
Agreement shall remain in effect until no Bonds remain Outstanding.
In consideration of the mutual promises contained in this Assumption
Agreement, the rights conferred and the obligations assumed hereby, and other
good and valuable consideration, the receipt of which is hereby acknowledged,
each of the Company, the Seabrook Transferee, the Authority and the Trustee
agree, assign, covenant, grant, pledge, promise, represent and warrant as set
forth herein for their own benefit and for the benefit of the Bondowners.
Section 1. Representations and Covenants of the Company. The Company
represents, warrants, covenants and agrees as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Hampshire; is duly
qualified to do business and in good standing in each jurisdiction in which
the failure so to qualify would have a material adverse affect on its
business or properties; and has full corporate power to enter into this
Assumption Agreement;
(b) This Assumption Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable against the Company as provided herein and in the
LTA, subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights and to the exercise of judicial
discretion in appropriate cases.
(c) No Default or Event of Default exists, or immediately after the
Seabrook Transfer, will exist under the LTA.
(d) The Company and the Seabrook Transferee are members of the same
affiliated group within the meaning of IRC Section 1504.
(e) The Seabrook Transfer is in all material respects as contemplated
by the Third Amended Joint Plan of Reorganization dated December 28, 1989 of
the Company as confirmed by an order of the United States Bankruptcy Court
for the District of New Hampshire (Case No. BK88-00043) on April 20, 1990.
(f) The Company has obtained all regulatory approvals necessary to
enter into this Assumption Agreement and to consummate the Seabrook Transfer
and all such approvals have become final.
(g) The Company's execution and delivery of this Assumption Agreement
and the consummation of the Seabrook Transfer do not violate or constitute a
default under the Company's charter or by-laws, any applicable law, any order
or decree of any court or governmental authority having jurisdiction over the
Company, or any agreement or instrument binding on the Company or its
properties.
Section 2. Representations and Covenants of the Seabrook Transferee.
The Seabrook Transferee represents, warrants, covenants and agrees as
follows:
(a) The Seabrook Transferee is a corporation duly organized, validly
existing and in good standing under the laws of ; is duly
qualified to do business and in good standing in the State of New Hampshire
and in each jurisdiction in which the failure so to qualify would have a
material adverse affect on its business or properties; and has full corporate
power to enter into this Assumption Agreement.
(b) This Assumption Agreement has been duly authorized, executed and
delivered by the Seabrook Transferee and constitutes a valid and binding
obligation of the Seabrook Transferee enforceable against the Seabrook
Transferee as provided herein, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
and to the exercise of judicial discretion in appropriate cases.
(c) The Seabrook Transferee and the Company are members of the same
affiliated group within the meaning of IRC Section 1504.
(d) The Seabrook Transfer is in all material respects as contemplated
by the Third Amended Joint Plan of Reorganization dated December 28, 1989 of
the Company as confirmed by an order of the United States Bankruptcy Court
for the District of New Hampshire (Case No. BK88-00043) on April 20, 1990.
(e) The Seabrook Transferee has obtained all regulatory approvals
necessary to enter into this Assumption Agreement and to consummate the
Seabrook Transfer and all such approvals have become final.
(f) The Seabrook Transferee's execution and delivery of this Assumption
Agreement and the consummation of the Seabrook Transfer do not violate or
constitute a default under the Seabrook Transferee's charter or by-laws, any
applicable law, any order or decree of any court or governmental authority
having jurisdiction over the Seabrook Transferee, or any agreement or
instrument binding on the Seabrook Transferee or its properties.
(g) The Seabrook Transferee will maintain its corporate existence and
its qualification to do business and good standing under the laws of the
State of New Hampshire and will maintain itself as a foreign corporation duly
qualified to do business and in good standing, where applicable, in each
jurisdiction in which the failure to so qualify would have a material adverse
effect upon its business or properties. The Seabrook Transferee shall not
merge or consolidate with or sell all or substantially all of its assets to
another entity, except that the Seabrook Transferee may so merge or
consolidate with or sell all or substantially all of its assets to another
corporation if (i) the surviving or transferee corporation is qualified to do
business in New Hampshire, and (ii) the surviving or transferee corporation
(if not the Seabrook Transferee) has assumed in writing all of the Seabrook
Transferee's obligations hereunder.
Section 3. Use of the Project.
(a) Notwithstanding any provision herein or in the LTA to the contrary,
the Seabrook Transferee will not operate the Project Facilities in any
manner, and will not take or omit any action or permit any action to be taken
or omitted with the result that interest on any Tax-Exempt Refunding Bonds is
included in the gross income of the owners thereof for federal income tax
purposes. The Seabrook Transferee's use of the Project Facilities (or
facilities replacing the same) shall be in furtherance of the purpose of air
or water pollution control or sewage or solid waste disposal and in
compliance with the Act.
(b) Notwithstanding any provision herein or in the LTA to the contrary,
the Seabrook Transferee shall not permit the Project Facilities to fail to
qualify as (1) "industrial facilities" under the Act, (2) a facility
described in Section 1312(a) of the Tax Reform Act of 1986, or (3) "sewage or
solid waste disposal facilities" or "air or water pollution control
facilities" within the meaning of Section 103(b)(4)(E) or (F) of the 1954
Code; provided, however, that if the Company waives the application of
clauses (b) and (c) of Section 502 of the LTA as provided in said Section
502, clauses (2) and (3) of this Subsection 3(b) shall likewise be waived.
The Seabrook Transferee acknowledges that it is fully familiar with the
physical condition of the Project Facilities and that it is not relying on
any representation of any kind by the Authority or the Trustee concerning the
nature or condition thereof. Neither the Authority nor the Trustee shall be
liable to the Seabrook Transferee or any other person for any latent or
patent defect in the Project Facilities.
(c) In the acquisition, maintenance, improvement and operation of the
Project Facilities, the Seabrook Transferee has and will comply in all
material respects with all applicable building, subdivision, zoning and land
use, environmental protection, sanitary and safety and other laws, rules and
regulations and will not permit any nuisance thereat and will to the extent
of its ownership and control, permit no nuisance to be committed thereat by
others while the Seabrook Transferee is, or is entitled to be, in possession
thereof. It shall not be a breach of this section if the Seabrook Transferee
fails to comply with such laws, rules and regulations during any period in
which the Seabrook Transferee shall in good faith be diligently contesting
the validity thereof.
(d) The Seabrook Transferee shall pay in a timely manner all costs of
maintaining and operating the Project Facilities, including without
limitation all taxes, excises and other governmental charges lawfully levied
thereon or with respect to its interests therein or use thereof to the extent
of the Seabrook Transferee's interest therein. It shall not be a breach of
this section if the Seabrook Transferee fails to pay any such costs, taxes or
charges during any period in which the Seabrook Transferee shall in good
faith be contesting the validity or amount thereof and no foreclosure
proceedings have been commenced, unless the procedures applicable to such
contest require payment thereof and proceedings for their refund or
abatement.
(e) The Seabrook Transferee shall not sell, lease, transfer or
otherwise dispose of the Project Facilities (other than the grant of a
mortgage pursuant to a financing transaction) unless (i) it obtains the
consent of the Authority, which consent shall not be unreasonably withheld,
provided, however, that no such consent shall be required if such transaction
has been approved by or consented to by the New Hampshire Public Utilities
Commission; and (ii) if there are any Outstanding Tax-Exempt Refunding Bonds,
it obtains an opinion of Bond Counsel addressed to and reasonably
satisfactory to the Trustee and the Authority that such sale, lease, transfer
or other disposition will not affect the exclusion of the interest on any
Outstanding Tax-Exempt Refunding Bonds from the gross income of the owners
thereof for federal income tax purposes.
The Seabrook Transferee shall not make any material change in the
purposes for which the Project Facilities are used without the consent of the
Authority, which consent shall not be unreasonably withheld. The Seabrook
Transferee at its own expense may alter, remodel or improve the Project
Facilities and construct other facilities at the site of the Project
Facilities, provided such action shall not result in any substantial change
in the Project Facilities or the character of the activities conducted by the
Seabrook Transferee at the Project Facilities site without the consent of the
Authority, which consent shall not be unreasonably withheld.
(f) The Authority and the Trustee and their respective duly authorized
agents shall have the right at all reasonable times and upon the furnishing
of reasonable notice under the circumstances to examine the books and records
of the Seabrook Transferee relating to the Project Facilities.
(g) The undertakings of the Seabrook Transferee contained in
Subsections 3(b), (c), (d) and (e) are limited to those consistent with the
Seabrook Transferee's undivided percentage interest in the facilities of
which the Project Facilities are a part.
Section 4. Indemnification by the Seabrook Transferee. The Seabrook
Transferee, regardless of any agreement to maintain insurance, will indemnify
the Authority and the Trustee against (a) any and all claims by any person
related to the participation of the Authority or the Trustee in the financing
of the Project Facilities, including without limitation claims arising out of
any condition of the Project Facilities or Station or the construction, use,
occupancy or management thereof; any accident, injury or damage to any person
occurring in or about the Station; any breach by the Seabrook Transferee of
its obligations under this Assumption Agreement; any act or omission of the
Seabrook Transferee or any of its agents, contractors, servants, employees or
licensees; and (b) all costs, counsel fees, expenses or liabilities
reasonably incurred in connection with any such claim or any action or
proceeding brought thereon. In case any action or proceeding is brought
against the Authority or the Trustee by reason of any such claim, the
Seabrook Transferee will defend the same at its expense upon notice from the
Authority or the Trustee, and the Authority or the Trustee, as the case may
be, will cooperate with the Seabrook Transferee, at the expense of the
Seabrook Transferee, in connection therewith.
Section 5. Failure to Comply. The Seabrook Transferee shall immediately
notify the Authority, the Company and the Trustee of any failure to observe
or perform any of its covenants or agreements contained herein, and
thereafter shall keep the Authority, the Company and the Trustee informed
with respect to any curative action instituted by the Seabrook Transferee in
order to cure such failure.
Section 6. Amendment. This Assumption Agreement may be amended by the
parties hereto, provided, however, that in connection with any amendment the
Company or the Seabrook Transferee shall furnish the Authority and the
Trustee with an opinion of Bond Counsel stating that the amendment will not
impair the exclusion of interest on the Bonds from gross income of the owners
thereof for federal income tax purposes.
Section 7. Agreement Not for the Benefit of Other Parties. This
Assumption Agreement is not intended for the benefit of and shall not be
construed to create rights in parties other than the Authority, the Company,
the Seabrook Transferee, the Trustee and the Bondowners.
Section 8. Severability. In the event that any provision of this
Assumption Agreement shall be held to be invalid in any circumstance, such
invalidity shall not affect any other provisions or circumstances.
Section 9. Counterparts. This Assumption Agreement may be executed and
delivered in any number of counterparts, each of which shall be deemed to be
an original; but such counterparts together shall constitute one and the same
instrument.
Section 10. Governing Law. This Assumption Agreement shall be governed
by the laws of the State of New Hampshire.
IN WITNESS WHEREOF, The Industrial Development Authority of the State of
New Hampshire has caused this Assumption Agreement to be signed by one of its
members and directors duly designated and authorized for the purpose and its
official seal to be impressed hereon and attested by its Executive Director;
Public Service Company of New Hampshire has caused this Assumption Agreement
to be signed and its corporate seal to be impressed hereon and attested by
authorized officers; [the Seabrook Transferee] has caused this Assumption
Agreement to be signed and its corporate seal impressed hereon and attested
by authorized officers; and State Street Bank and Trust Company, as Trustee,
has caused this Assumption Agreement to be signed and its corporate seal to
be impressed hereon and attested by authorized officers.
THE INDUSTRIAL DEVELOPMENT AUTHORITY (Seal)
OF THE STATE OF NEW HAMPSHIRE Attest:
By
Title: Executive Director
PUBLIC SERVICE COMPANY (Seal)
OF NEW HAMPSHIRE Attest:
By
Title: Title:
[SEABROOK TRANSFEREE] (Seal)
Attest:
By
Title: Title:
STATE STREET BANK AND TRUST (Seal)
COMPANY, as Trustee Attest:
By
Title: Title:
EXHIBIT C
FORM OF FLEXIBLE 1991 SERIES E BOND
$ No. R-
ANY BONDHOLDER 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire
Project - 1991 Taxable Series E)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
INTEREST DUE: $
(on the Next Purchase Date)
INTEREST RATE:
(to the Next Purchase Date)
NEXT PURCHASE DATE:
COMMENCEMENT DATE OF RATE PERIOD:
MATURITY DATE: May 1, 2021
CUSIP:
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Flexible
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW
HAMPSHIRE OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE
RSA CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE
SOURCES PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO
PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
The Industrial Development Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest 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 set forth above, 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 provided in the Agreement (the
"Interest Payment Dates"). Until conversion to the 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 Agreement
(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 Weekly, Multiannual or Fixed Rate Mode it shall bear
interest at the Weekly, Multiannual or Fixed Rate, as the case may be, as
defined in the Agreement. 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
Agreement. 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.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 1991 Taxable Series E) (the
"Bonds") in the aggregate principal amount of $114,500,000 issued under New
Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are being
loaned to Public Service Company of New Hampshire (the "Company"), a New
Hampshire corporation, pursuant to a Series E Loan and Trust Agreement (the
"Agreement") dated as of May 1, 1991 among the Company, the Authority and
State Street Bank and Trust Company, as Trustee (the "Trustee") to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations under
the Reimbursement Agreement (as defined below), the Company has issued and
delivered to the Trustee its First Mortgage Bonds, Series G (the "Series G
First Mortgage Bonds") issued under the First Mortgage Indenture dated as of
August 15, 1978, as amended, and the Tenth Supplemental Indenture thereto
dated as of May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee (as amended and supplemented from time to
time, the "First Mortgage Bond Indenture") in an aggregate principal amount,
and with an interest rate, maturity date and redemption provisions
corresponding to those of the Bonds. As provided in the Agreement, payments
of principal of, and premium, if any, and interest on the Series G First
Mortgage Bonds shall, upon receipt by the Trustee, be deemed to constitute
payments in corresponding amounts by the Company in respect of the Bonds.
Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and
immunities of the Company, the Authority, the Trustee, the Paying Agent, and
the Bondowners, including the order of payments in the event of insufficient
funds, the disposition of unclaimed moneys held by the Trustee and
restrictions on the rights of owners of the Bonds to bring suit. The
Agreement may be amended to the extent and in the manner provided therein.
Copies of the Agreement are available for inspection at the corporate trust
office of the Trustee.
The Purchase Price (as defined below) and principal of and interest on
this bond while it is in the Flexible Mode is also payable from moneys drawn
by the Paying Agent on an irrevocable letter of credit for the Bonds
(together with any extensions and renewals thereof, the "Letter of Credit")
issued by Citibank, N.A. in the initial aggregate stated amount of
$121,014,000 pursuant to the terms of a Series E Letter of Credit and
Reimbursement Agreement dated as of May 1, 1991 (the "Reimbursement
Agreement") by and between the Company and Citibank, N.A. (together with any
other issuer of a Credit Facility, the "Bank"). The Letter of Credit
initially expires on the fourth anniversary of the DATE OF THIS BOND but may
be terminated earlier upon the occurrence of certain events set forth in the
Agreement and the Reimbursement Agreement or extended as provided in the
Reimbursement Agreement. The Company may substitute the Letter of Credit in
whole or in part with one or more new letters of credit (collectively with
the Letter of Credit, a "Credit Facility") as provided in the Agreement and
the Reimbursement Agreement. The Company may substitute a new Letter of
Credit as provided in the Agreement.
Unless otherwise defined herein, capitalized terms used in this bond
shall have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or
a day on which banking institutions are authorized pursuant to law to close,
(ii) that is not a day on which the corporate trust office of the First
Mortgage Bond Trustee is not open for business, (iii) that is a day on which
banks are not required or authorized to close in New York, New York, and (iv)
that is a day on which banking institutions in all of the cities in which the
principal offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 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 Flexible, Weekly or Multiannual
Mode, the period during which such rate of interest determined for such Bond
will remain in effect as described herein.
At the option of the Company and upon certain conditions provided for in
the Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement. 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 Agreement. 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 Agreement 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.
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.
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 Agreement.
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 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. 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 Company and the Bondowners.
While this bond is in the Flexible Mode, interest shall be computed on
the basis of actual days elapsed divided by 360. 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.
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 Security Pacific National Trust Company (New
York), New York, New York, 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 at
its address shown on the registration books maintained by the Paying Agent.
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.
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 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.
The Authority, the Trustee, the Paying Agent and the Company may treat
the REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has
been signed by the Trustee or its duly appointed agent for such purpose.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK,
WHICH HAVE THE SAME EFFECT AS IF SET FORTH HERE.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Loan and Trust Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
Date of Registration:
By: , or
Authorized Signature
By: SECURITY PACIFIC NATIONAL TRUST
COMPANY (NEW YORK), as agent of the Trustee
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this
bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a national bank, trust company or member
firm of a national stock exchange.
Dated:
Signature Guaranteed:
Bank, Trust Company or Brokerage Firm
By:
Authorized Signature
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.
EXHIBIT D
FORM OF WEEKLY 1991 SERIES E BOND
$ No. R-
ANY BONDHOLDER 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire
Project - 1991 Taxable Series E)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
INTEREST PAYMENT DATES: (i) the first Business Day of each calendar month, and
(ii) the Maturity Date.
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Weekly
CUSIP:
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW
HAMPSHIRE OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE
RSA CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE
SOURCES PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO
PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
The Industrial Development Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest from the most
recent INTEREST PAYMENT DATE to which interest has been paid or duly provided
for or, if no interest has been paid, from the DATE OF THIS BOND set forth
above, until paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the 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 Agreement
(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 Flexible, Multiannual or
Fixed Rate Mode it shall bear interest at the Flexible, Multiannual or Fixed
Rate, as the case may be, as defined in the Agreement. 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 Agreement. 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.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 1991 Taxable Series E) (the
"Bonds") in the aggregate principal amount of $114,500,000 issued under New
Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are being
loaned to Public Service Company of New Hampshire (the "Company"), a New
Hampshire corporation, pursuant to a Series E Loan and Trust Agreement (the
"Agreement") dated as of May 1, 1991 among the Company, the Authority and
State Street Bank and Trust Company, as Trustee (the "Trustee") to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations under
the Reimbursement Agreement (as defined below), the Company has issued and
delivered to the Trustee its First Mortgage Bonds, Series G (the "Series G
First Mortgage Bonds") issued under the First Mortgage Indenture dated as of
August 15, 1978, as amended, and the Tenth Supplemental Indenture thereto
dated as of May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee (as amended and supplemented from time to
time, the "First Mortgage Bond Indenture") in an aggregate principal amount,
and with an interest rate, maturity date and redemption provisions
corresponding to those of the Bonds. As provided in the Agreement, payments
of principal of, and premium, if any, and interest on the Series G First
Mortgage Bonds shall, upon receipt by the Trustee, be deemed to constitute
payments in corresponding amounts by the Company in respect of the Bonds.
Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and
immunities of the Company, the Authority, the Trustee, the Paying Agent, and
the Bondowners, including the order of payments in the event of insufficient
funds, the disposition of unclaimed moneys held by the Trustee and
restrictions on the rights of owners of the Bonds to bring suit. The
Agreement may be amended to the extent and in the manner provided therein.
Copies of the Agreement are available for inspection at the corporate trust
office of the Trustee.
The Purchase Price (as defined below) and principal of and interest on this
bond while it is in the Weekly Mode is also payable from moneys drawn by the
Paying Agent on an irrevocable letter of credit for the Bonds (together with
any extensions and renewals thereof, the "Letter of Credit") issued by
pursuant to the terms of a Reimbursement Agreement dated as of
(the "Reimbursement Agreement") by and between the Company and
(together with any other issuer of a Credit Facility, the
"Bank"). The Paying Agent may draw on the Letter of Credit presently in
place for the payment of up to forty-five (45) days' interest for Bonds in
the Weekly Mode. The Letter of Credit initially expires on
, but may be terminated earlier upon the occurrence of certain
events set forth in the Agreement and the Reimbursement Agreement or extended
as provided in the Reimbursement Agreement. Unless the Letter of Credit is
extended or renewed or a substitute letter of credit (collectively with the
Letter of Credit, a "Credit Facility") is provided in accordance with the
Agreement, the Bonds will become subject to mandatory purchase as described
below. The Company may substitute a new Credit Facility as provided in the
Agreement.
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 provided in the
Agreement.
Unless otherwise defined herein, capitalized terms used in this bond
shall have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or
a day on which banking institutions are authorized pursuant to law to close,
(ii) that is not a day on which the corporate trust office of the First
Mortgage Bond Trustee is not open for business, (iii) that is a day on which
banks are not required or authorized to close in New York, New York, and (iv)
that is a day on which banking institutions in all of the cities in which the
principal offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 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 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 Wednesday.
At the option of the Company and upon certain conditions provided for in
the Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement.
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
the conditions set forth in the Agreement. 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 Agreement 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.
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 not
later than the Business Day next preceding 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 Weekly Mode, or
if for any reason such manner of determination shall be determined to be
invalid or unenforceable, the rate on such Bonds to take effect on that
Effective Date shall be the Weekly Rate in effect on the day preceding such
date. 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, any
Bondowner 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 Company 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.
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 Security
Pacific National Trust Company (New York) New York, New York, 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 as 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.
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 and 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 Agreement 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 Agreement. Notice of tender of this bond is irrevocable. All
notices of tender of Bonds shall be made to the Paying Agent at
, New York, New York, 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 , New York, New York, Attention:
, 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 and (ii) on (a) the effective date of a substitute Credit
Facility if such substitution would result in a withdrawal or reduction
(excluding a withdrawal or reduction resulting from a change in Modes) of the
rating of this bond, if any, by either Moody's or S&P or (b) a date that is
not more than fifteen (15) or less than ten (10) days prior to the expiration
or termination of the Credit Facility 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 AGREEMENT 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.
Bonds in the Weekly Mode are subject to redemption in whole or in part
at the direction of the Company on any INTEREST PAYMENT DATE at a redemption
price of par plus accrued interest.
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 Agreement with Bonds in the Weekly Mode being redeemed in
units of $100,000.
In the event this bond is selected for redemption, notice will be mailed
no more than forty-five (45) 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, 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 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 AGREEMENT, 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.
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.
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.
The Authority, the Trustee, the Paying Agent and the Company may treat
the REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has
been signed by the Trustee or its duly appointed agent for such purpose.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK,
WHICH HAVE THE SAME EFFECT AS IF SET FORTH HERE.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Loan and Trust Agreement.
STATE STREET BANK AND TRUST
COMPANY as Trustee
Date of Registration: By: , or
Authorized Signature
By: SECURITY PACIFIC NATIONAL TRUST
COMPANY (NEW YORK), as agent of
the Trustee
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this
bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact
to transfer it on the books kept for registration of the bond, with full
power of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a national bank, trust company or member
firm of a national stock exchange.
Dated:
Signature Guaranteed:
Bank, Trust Company or Brokerage Firm
By:
Authorized Signature
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:
BONDOWNER'S ELECTION NOTICE
The Industrial Development Authority of the State of New
Hampshire Pollution Control [Refunding] Revenue Bonds
(Public Service Company of New Hampshire Project - [Year]
[Tax-Exempt Refunding] [Taxable] 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 Company 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.
Except as otherwise indicated herein and unless the context otherwise
requires, the terms used herein shall have the meanings set forth in the
Series E Loan and Trust Agreement dated as of May 1, 1991 relating to the
Bonds.
Date: Signature(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.
EXHIBIT E
FORM OF MULTIANNUAL 1991 SERIES E BOND
$ No. R-
ANY BONDHOLDER 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire
Project - 1991 Taxable Series E)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
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.
CURRENT EFFECTIVE DATE:
INTEREST RATE:
(To Next Purchase Date)
NEXT PURCHASE DATE:
COMMENCEMENT DATE OF RATE PERIOD:
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Multiannual
CUSIP:
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW
HAMPSHIRE OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE
RSA CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE
SOURCES PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO
PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
The Industrial Development Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest from the most
recent INTEREST PAYMENT DATE to which interest has been paid or duly provided
for or, if no interest has been paid, from the DATE OF THIS BOND set forth
above, until paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the Flexible, Weekly or Fixed
Rate 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 Agreement (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, but if the Bonds are supported by a
Credit Facility (as defined below) not in excess of the Maximum Interest
Rate. If this bond is converted to the Flexible, Weekly, or Fixed Rate Mode
it shall bear interest at the Flexible, Weekly or Fixed Rate, as the case may
be, as defined in the Agreement. 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
Agreement. 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.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 1991 Taxable Series E) (the
"Bonds") in the aggregate principal amount of $114,500,000 issued under New
Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are being
loaned to Public Service Company of New Hampshire (the "Company"), a New
Hampshire corporation, pursuant to a Series E Loan and Trust Agreement (the
"Agreement") dated as of May 1, 1991 among the Company, the Authority and
State Street Bank and Trust Company, as Trustee (the "Trustee") to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations, if
any, under the Reimbursement Agreement, (as defined [below] [in the
Agreement]), the Company has issued and delivered to the Trustee its First
Mortgage Bonds, Series G (the "Series G First Mortgage Bonds") issued under
the First Mortgage Indenture dated as of August 15, 1978, as amended, and the
Tenth Supplemental Indenture thereto dated as of May 1, 1991 between the
Company and First Fidelity Bank, National Association, New Jersey, as Trustee
(as amended and supplemented from time to time, the "First Mortgage Bond
Indenture") in an aggregate principal amount, and with an interest rate,
maturity date and redemption provisions corresponding to those of the Bonds.
As provided in the Agreement, payments of principal of, and premium, if any,
and interest on the Series G First Mortgage Bonds shall, upon receipt by the
Trustee, be deemed to constitute payments in corresponding amounts by the
Company in respect of the Bonds. Reference is hereby made to the Agreement
for the provisions thereof with respect to the rights, limitations of rights,
duties, obligations and immunities of the Company, the Authority, the
Trustee, the Paying Agent, and the Bondowners, including the order of
payments in the event of insufficient funds, the disposition of unclaimed
moneys held by the Trustee and restrictions on the rights of owners of the
Bonds to bring suit. The Agreement may be amended to the extent and in the
manner provided therein. Copies of the Agreement are available for
inspection at the corporate trust office of the Trustee.
[Modify as appropriate; delete if bond is not supported by a Credit
Facility: The Purchase Price (as defined below) and principal of, premium,
if any, and interest on this bond while it is in the Multiannual Mode is also
payable from moneys drawn by the Paying Agent on an irrevocable letter of
credit for the Bonds (together with any extensions and renewals thereof, the
"Letter of Credit") issued by pursuant to the terms of
a Reimbursement Agreement dated as of , (the "Reimbursement
Agreement") by and between the Company and (together with any
other issuer of a Credit Facility, the "Bank"). The Paying Agent may draw on
the Letter of Credit presently in place for the payment of up to 190 days'
interest for Bonds in the Multiannual Mode. The Letter of Credit initially
expires on , but may be terminated earlier upon the occurrence of
certain events set forth in the Agreement and the Reimbursement Agreement or
extended as provided in the Reimbursement Agreement. Unless the Letter of
Credit is extended or renewed or a substitute letter of credit (collectively
with the Letter of Credit, a "Credit Facility") is provided in accordance
with the Agreement, the Bonds will become subject to mandatory purchase as
described below. The Company may substitute a new Credit Facility as
provided in the Agreement.]
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 provided in the
Agreement.
Unless otherwise defined herein, capitalized terms used in this bond
shall have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or
a day on which banking institutions are authorized pursuant to law to close,
(ii) that is not a day on which the corporate trust office of the First
Mortgage Bond Trustee is not open for business, (iii) that is a day on which
banks are not required or authorized to close in New York, New York, and (iv)
that is a day on which banking institutions in all of the cities in which the
principal offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 Flexible Mode, the Weekly Mode, the
Multiannual Mode and the Fixed Rate Mode.
"Purchase Date" means, while this bond is in a 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 Flexible, Weekly or Multiannual
Mode, the period during which such rate of interest determined for such Bond
will remain in effect as described herein.
At the option of the Company and upon certain conditions provided for in
the Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement. 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 Company.
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 Flexible or
Weekly Mode and such day is not a Business Day, the first Business Day
thereafter. Conversion of this bond to another Mode, or to a new Rate Period
in the Multiannual Mode of the same or a different length, shall be subject
to the conditions set forth in the Agreement. 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 Agreement 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.
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
Company, the Bondowners and, if applicable, the Bank.
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.
While this bond is in the Multiannual Mode, the principal of and
premium, if any, on this bond are payable when due by check or draft in
clearinghouse funds to the REGISTERED OWNER hereof but only upon presentation
and surrender of this bond at the office of Security Pacific National Trust
Company (New York), New York, New York, 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 clearinghouse 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 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 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.
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, including deliveries of
Bonds subject to mandatory tender, shall be made to the Paying Agent at
, New York, New York, Attention: , or such other
address specified in writing by the Paying Agent to the Bondowners.
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 Multiannual Mode by check or draft in clearinghouse 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.
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
direction of the Company 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:
[No call periods and redemption prices are to be determined by the
Company upon conversion to the Multiannual Mode or change of Rate Period
within the Multiannual Mode, except that upon the issuance of a series of
Tax-Exempt Refunding Bonds all redemption terms for such series of Bonds
shall be fixed.]
[1991 Series E Bonds:
Redemption
<TABLE>
<CAPTION>
<S> <C> <C>
No Call Period Price
years %, declining by % on each succeeding anniversary
of the end of the No Call Period until reaching 100% and thereafter at 100%]
[Tax-Exempt Refunding Bonds:
Length of
Multiannual Redemption
Rate Period No Call Period Price
Greater than years years %, declining by % on
each succeeding anniversary of the end of the no call period until
reaching 100% and thereafter at 100%
Greater than , but not years %, declining by greater than
years
% on each succeeding anniversary of the end
of the no call period until reaching 100% and thereafter at 100%
Greater than , but not years %, declining by greater than
years
% on the next anniversary of the end of the no call period and thereafter at
100%
Greater than , but not years %, declining greater than
years
by % on the next anniversary of the end of the no call period
and thereafter at 100%
Greater than ___, but not years %, declining greater than
years
by % on the next anniversary of the end of
the no call period and thereafter at 100%
Greater than , but not year 100%
greater than years
1 year or less Bonds not subject to
optional redemption
until commencement of
next Rate Period.]
</TABLE>
In addition, at the option of the Company, the Bonds in the Multiannual
Mode are subject to redemption prior to maturity as a whole at any time at
100% of the principal amount thereof, plus accrued interest to the redemption
date, within nine (9) months of the occurrence of certain extraordinary
events consisting of (a) damage or destruction, or loss of title by eminent
domain, to the Station or the Project Facilities, (b) changes in law
affecting the enforceability of the Agreement or imposing unreasonable
burdens or excessive liabilities on the Company relating to the Station or
the Project Facilities or their operation, (c) the enjoining or prohibiting
of the operation of the Station or the Project Facilities, or (d) changes in
the economic availability of fuel, materials, supplies, labor, equipment or
other properties or things rendering the continued operation of the Station
uneconomical, all as more fully described in the Agreement. The Company's
right to direct the redemption of the Bonds in the Multiannual Mode upon the
occurrence of any event listed above shall expire six (6) months after such
event occurs.
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 Agreement with Bonds in the Multiannual Mode being
redeemed in units of $5,000.
In the event this bond is selected for redemption, notice will be mailed
no more than forty-five (45) 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.
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 AGREEMENT, 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.
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.
The Bonds are issuable only in fully registered form in denominations of
five thousand dollars ($5,000) or any multiple thereof.
The Authority, the Trustee, the Paying Agent and the Company may treat
the REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has
been signed by the Trustee or its duly appointed agent for such purpose.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK,
WHICH HAVE THE SAME EFFECT AS IF SET FORTH HERE.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Loan and Trust Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
Date of Registration: By: , or
Authorized Signature
By: SECURITY PACIFIC NATIONAL TRUST
COMPANY (NEW YORK), as agent of
the Trustee
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this
bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a national bank, trust company or member
firm of a national stock exchange.
Dated:
Signature Guaranteed:
Bank, Trust Company or Brokerage Firm
By:
Authorized Signature
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.
EXHIBIT F
FORM OF FIXED RATE 1991 SERIES E BOND
$ No. R-
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire
Project - 1991 Taxable Series E)
INTEREST RATE: CUSIP:
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
INTEREST PAYMENT DATES: May 1 and November 1
(but not before
, )
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW
HAMPSHIRE OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE
RSA CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE
SOURCES PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO
PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
The Industrial Development Authority of the State of New Hampshire (the
"Authority"), for value received promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest (computed on the
basis of a 360-day year consisting of twelve 30-day months) from the most
recent INTEREST PAYMENT DATE 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 semiannually 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. The
principal and premium, if any, of this bond is payable in clearinghouse funds
at the office of , as Paying Agent (with its
successors, the "Paying Agent"). Interest is payable by check or draft in
clearinghouse 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 be (i) a Sunday or a legal holiday, or (ii) a day
on which banking institutions are authorized pursuant to law to close and on
which the corporate trust office of the Trustee or the First Mortgage Bond
Trustee is not open for business, then the payment thereof may be made on the
next succeeding day not a day specified in (i) or (ii) 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.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 1991 Taxable Series E) (the
"Bonds") in the aggregate principal amount of $114,500,000 issued under New
Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are being
loaned to Public Service Company of New Hampshire (the "Company"), a New
Hampshire corporation, pursuant to a Series E Loan and Trust Agreement (the
"Agreement") dated as of May 1, 1991 among the Company, the Authority and
State Street Bank and Trust Company, as Trustee (the "Trustee") to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations, if
any, under the Reimbursement Agreement (as defined in the Agreement), the
Company has issued and delivered to the Trustee its First Mortgage Bonds,
Series G (the "Series G First Mortgage Bonds") issued under the First
Mortgage Indenture dated as of August 15, 1978, as amended, and the Tenth
Supplemental Indenture thereto dated as of May 1, 1991 between the Company
and First Fidelity Bank, National Association, New Jersey, as Trustee (as
amended and supplemented from time to time, the "First Mortgage Bond
Indenture") in an aggregate principal amount, and with an interest rate,
maturity date and redemption provisions corresponding to those of the Bonds.
As provided in the Agreement, payments of principal of, and premium, if any,
and interest on the Series G First Mortgage Bonds shall, upon receipt by the
Trustee, be deemed to constitute payments in corresponding amounts by the
Company in respect of the Bonds. Reference is hereby made to the Agreement
for the provisions thereof with respect to the rights, limitations of rights,
duties, obligations and immunities of the Company, the Authority, the
Trustee, the Paying Agent, and the Bondowners, including the order of
payments in the event of insufficient funds, the disposition of unclaimed
moneys held by the Trustee and restrictions on the rights of owners of the
Bonds to bring suit. The Agreement may be amended to the extent and in the
manner provided therein. Copies of the Agreement are available for
inspection at the corporate trust office of the Trustee.
In case any Event of Default (as defined in the Agreement) 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 Agreement.
The Bonds are redeemable pursuant to the Agreement prior to maturity
beginning on , , at the option of the Authority by direction of
the Company, as a whole or in part at any time, at the following prices
expressed in percentages of their principal amount, plus accrued interest to
the redemption date:
Period During Which Redeemed Redemption Price
%
[Table to be prepared upon Fixed Rate conversion. For Tax-Exempt Refunding
Bonds, the table shall be based on redemption schedule established for the
bond in the Multiannual Mode.]
In addition, at the option of the Company, this bond is subject to
redemption prior to maturity at 100% of the principal amount thereof, plus
accrued interest to the redemption date within nine (9) months of the
occurrence of certain extraordinary events consisting of (a) damage or
destruction, or loss of title by eminent domain, to the Station or the
Project Facilities, (b) changes in law affecting the enforceability of the
Agreement or imposing unreasonable burdens or excessive liabilities on the
Company relating to the Station or the Project Facilities or their operation,
(c) the enjoining or prohibiting of the operation of the Station or the
Project Facilities, or (d) changes in the economic availability of fuel,
materials, supplies, labor, equipment or other properties or things rendering
the continued operation of the Station uneconomical, all as more fully
described in the Agreement. The Company's right to direct the redemption of
this bond upon the occurrence of any event listed above shall expire six (6)
months after such event occurs.
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 Agreement.
In the event this bond is selected for redemption, notice will be mailed
no more than forty-five (45) 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.
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 of the same aggregate principal amount without
transfer to a new registered owner. Exchanges and transfers will be without
expense to the holder 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 part thereof) is
eligible to be selected or has been selected for the redemption.
This bond is issuable only in fully registered form in the denominations
of five thousand dollars ($5,000) or any multiple thereof.
The Authority, the Trustee, the Paying Agent and the Company may treat
the REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has
been signed by the Trustee or its duly appointed agent for such purpose.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK,
WHICH HAVE THE SAME EFFECT AS IF SET FORTH HERE.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal)
By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Loan and Trust Agreement.
STATE STREET BANK AND TRUST COMPANY
as Trustee
Date of Registration: By: , or
Authorized Signature
By: , as agent of the Trustee
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this
bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a national bank, trust company or member
firm of a national stock exchange.
Dated:
Signature Guaranteed:
Bank, Trust Company or Brokerage Firm
By:
Authorized Signature
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.
EXHIBIT G
FORM OF FLEXIBLE 1993 SERIES E 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Refunding Revenue Bond
(Public Service Company of New Hampshire
Project - 1993 Tax-Exempt Series E)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
INTEREST DUE: $
(on the Next Purchase Date)
INTEREST RATE:
(to the Next Purchase Date)
NEXT PURCHASE DATE:
COMMENCEMENT DATE OF RATE PERIOD:
MATURITY DATE: May 1, 2021
CUSIP:
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Flexible
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW
HAMPSHIRE OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE
RSA CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE
SOURCES PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO
PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
The Business Finance Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest 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 set forth above, 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 provided in the Agreement (the
"Interest Payment Dates"). Until conversion to the 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 Agreement
(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 Weekly, Multiannual or Fixed Rate Mode it shall bear
interest at the Weekly, Multiannual or Fixed Rate, as the case may be, as
defined in the Agreement. 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
Agreement. 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.
This bond is one of a series of Pollution Control Refunding Revenue
Bonds (Public Service Company of New Hampshire Project - 1993 Tax-Exempt
Series E) (the "Bonds") in the aggregate principal amount of $44,800,000
issued under New Hampshire RSA Chapter 162-I (the "Act"). The proceeds of
the Bonds are being loaned to Public Service Company of New Hampshire (the
"Company"), a New Hampshire corporation, pursuant to a Series E Loan and
Trust Agreement dated as of May 1, 1991, as supplemented and amended by a
First Supplement dated as of December 1, 1993 (the "Agreement") among the
Company, the Authority and State Street Bank and Trust Company, as Trustee
(the "Trustee") to refund a like principal amount of the Authority's
$114,500,000 Pollution Control Revenue Bonds (Public Service Company of New
Hampshire Project - 1991 Taxable Series E) (the "1991 Bonds"), which were
originally issued to finance certain costs associated with the Company's
ownership interest in air or water pollution control and sewage or solid
waste disposal facilities installed for use by Unit No.1 at the nuclear
electric generating station (the "Station") in Seabrook, New Hampshire (the
"Project Facilities"). Pursuant to the Agreement, the Company has
unconditionally agreed to repay such loan in the amounts and at the times
necessary to pay the principal of, premium, if any, and interest on the Bonds
when due. To evidence and secure such loan and the Company's reimbursement
and certain other obligations under the Reimbursement Agreement (as defined
below), the Company has issued and delivered to the Trustee its First
Mortgage Bonds, Series G (the "Series G First Mortgage Bonds") issued under
the First Mortgage Indenture dated as of August 15, 1978, as amended, and the
Tenth Supplemental Indenture thereto dated as of May 1, 1991 between the
Company and First Fidelity Bank, National Association, New Jersey, as Trustee
(as amended and supplemented from time to time, the "First Mortgage Bond
Indenture") in an aggregate principal amount, and with an interest rate,
maturity date and redemption provisions corresponding to those of the Bonds
and certain other bonds issued under the Agreement, including the 1991 Bonds.
As provided in the Agreement, payments of principal of, and premium, if any,
and interest on the Series G First Mortgage Bonds shall, upon receipt by the
Trustee, be deemed to constitute payments in corresponding amounts by the
Company in respect of the Bonds and certain other bonds issued under the
Agreement, including the 1991 Bonds. Reference is hereby made to the
Agreement for the provisions thereof with respect to the rights, limitations
of rights, duties, obligations and immunities of the Company, the Authority,
the Trustee, the Paying Agent, and the Bondowners, including the order of
payments in the event of insufficient funds, the disposition of unclaimed
moneys held by the Trustee and restrictions on the rights of owners of the
Bonds to bring suit. The Agreement may be amended to the extent and in the
manner provided therein. Copies of the Agreement are available for
inspection at the corporate trust office of the Trustee.
The Purchase Price (as defined below) and principal of and interest on
this bond while it is in the Flexible Mode is also payable from moneys drawn
by the Paying Agent on an irrevocable letter of credit for the Bonds and
certain other bonds issued under the Agreement, including the 1991 Bonds
(together with any extensions, amendments and renewals thereof, the "Letter
of Credit"), issued by , pursuant to the terms of a
Reimbursement Agreement dated as of (the "Reimbursement
Agreement") by and between the Company and
(together with any other issuer of a Credit Facility, the "Bank"). The
Letter of Credit initially expires on but may be terminated
earlier upon the occurrence of certain events set forth in the Agreement and
the Reimbursement Agreement or extended as provided in the Reimbursement
Agreement. The Company may substitute the Letter of Credit in whole or in
part with one or more new letters of credit (collectively with the Letter of
Credit, a "Credit Facility") as provided in the Agreement and the
Reimbursement Agreement. The Company may substitute a new Credit Facility as
provided in the Agreement.
Unless otherwise defined herein, capitalized terms used in this bond
shall have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or
a day on which banking institutions are authorized pursuant to law to close,
(ii) that is not a day on which the corporate trust office of the First
Mortgage Bond Trustee is not open for business, (iii) that is a day on which
banks are not required or authorized to close in New York, New York, and (iv)
that is a day on which banking institutions in all of the cities in which the
principal offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 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 Flexible, Weekly or Multiannual
Mode, the period during which such rate of interest determined for such Bond
will remain in effect as described herein.
At the option of the Company and upon certain conditions provided for in
the Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement. 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 Agreement. 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 Agreement 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.
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.
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 Agreement.
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 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. 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 Company 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.
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
,
, , 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 at its address shown on the registration books maintained by the Paying
Agent. 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.
The Bonds are subject to mandatory redemption at any time at a
redemption price of 100% of the principal amount of the Bonds so redeemed
plus accrued interest in the event (i) the Company delivers to the Trustee an
opinion of nationally recognized bond counsel selected by the Company and
reasonably satisfactory to the Trustee ("Bond Counsel") stating that interest
on the Bonds is or will become includable in gross income of the owners
thereof for federal income tax purposes, or (ii) it is finally determined by
the Internal Revenue Service or a court of competent jurisdiction, as a
result of (A) a proceeding in which the Company has participated or
been given notice and an opportunity to participate, and, (B) either (1) a
failure by the Company (or the Seabrook Transferee as defined in the
Agreement) to observe any covenant or agreement undertaken in or pursuant to
the Agreement, or the inaccuracy of any representation made by the Company
(or the Seabrook Transferee) in or pursuant to the Agreement, or (2) the
Seabrook Transfer (as defined in the Agreement), that interest payable on the
Bonds is includable for federal income tax purposes in the gross income of
any owner thereof (other than an owner which is a "substantial user" or a
"related person" within the meaning of Section 147(a) of the Internal Revenue
Code of 1986). Any determination under clause (ii) above will not be
considered final for this purpose until the earliest of the conclusion of any
appellate review, the denial of appellate review or the expiration of the
period for seeking appellate review. Redemption under this paragraph shall
be in whole unless not less than forty-five (45) days prior to the redemption
date the Company 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. Except as
provided in the next sentence, any such redemption shall be made on the 90th
day after the date on which the opinion described in clause (i) is delivered
or the determination described in clause (ii) becomes final or on such
earlier date as the Company may designate by notice given to the Trustee at
least forty-five (45) days prior to such designated date. Any Bond in the
Flexible 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. If such redemption shall occur in accordance
with the terms of the Agreement, then such failure by the Company (or the
Seabrook Transferee as described above) to observe such covenant or
agreement, or the inaccuracy of any such representation will not, in and of
itself, constitute a default thereunder.
If the Trustee receives written notice from any Bondowner stating that
(i) such Bondowner has been notified in writing by the Internal Revenue
Service that it proposes to include the interest on the Bonds in the gross
income of such owner for federal income tax purposes, or any other proceeding
has been instituted against such owner which may lead to a like
determination, and (ii) such owner will afford the Company the opportunity to
participate at its own expense in the proceeding, either directly or in the
name of such owner, until the conclusion of any appellate review, and the
Trustee has examined such written notice and it appears to be accurate on its
face, then the Trustee shall promptly give notice thereof to the Company, the
Authority, and each Bondowner whose Bonds may be affected. The Trustee shall
thereafter keep itself reasonably informed of the progress of any
administrative proceedings or litigation relating to such notice. Under the
Agreement the Company is required to give the Trustee written notice of such
a final determination within forty-five (45) days of such final
determination.
If the Purchase Date of this bond is after the redemption date, notice
of redemption of this bond 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.
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.
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 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.
The Authority, the Trustee, the Paying Agent and the Company may treat
the REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has
been signed by the Trustee or the Paying Agent.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK,
WHICH HAVE THE SAME EFFECT AS IF SET FORTH HERE.
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Agreement.
STATE STREET BANK AND TRUST
COMPANY
as Trustee
Date of Registration:
By: , or
Authorized Signature
By: ,
as Paying Agent
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this
bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to transfer it on
the books kept for registration of the bond, with full power of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized
Signature Guaranty Medallion Program
By:
Authorized Signature
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.
EXHIBIT H
FORM OF WEEKLY 1993 SERIES E 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Refunding Revenue Bond
(Public Service Company of New Hampshire
Project - 1993 Tax-Exempt Series E)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
INTEREST PAYMENT DATES:
(i) the first Business Day of each calendar month, and (ii) the Maturity
Date.
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Weekly
CUSIP:
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW
HAMPSHIRE OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE
RSA CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE
SOURCES PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO
PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
The Business Finance Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest from the most
recent INTEREST PAYMENT DATE to which interest has been paid or duly provided
for or, if no interest has been paid, from the DATE OF THIS BOND set forth
above, until paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the 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 Agreement
(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 Flexible, Multiannual or
Fixed Rate Mode it shall bear interest at the Flexible, Multiannual or Fixed
Rate, as the case may be, as defined in the Agreement. 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 Agreement. 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.
This bond is one of a series of Pollution Control Refunding Revenue
Bonds (Public Service Company of New Hampshire Project - 1993 Tax-Exempt
Series E) (the "Bonds") in the aggregate principal amount of $44,800,000
issued under New Hampshire RSA Chapter 162-I (the "Act"). The proceeds of
the Bonds are being loaned to Public Service Company of New Hampshire (the
"Company"), a New Hampshire corporation, pursuant to a Series E Loan and
Trust Agreement dated as of May 1, 1991, as supplemented and amended by a
First Supplement dated as of December 1, 1993 (the "Agreement") among the
Company, the Authority and State Street Bank and Trust Company, as Trustee
(the "Trustee") to refund a like principal amount of the Authority's
$114,500,000 Pollution Control Revenue Bonds (Public Service Company of New
Hampshire Project - 1991 Taxable Series E) (the "1991 Bonds"), which were
originally issued to finance certain costs associated with the Company's
ownership interest in air or water pollution control and sewage or solid
waste disposal facilities installed for use by Unit No. 1 at the nuclear
electric generating station (the "Station") in Seabrook, New Hampshire (the
"Project Facilities"). Pursuant to the Agreement, the Company has
unconditionally agreed to repay such loan in the amounts and at the times
necessary to pay the principal of, premium, if any, and interest on the Bonds
when due. To evidence and secure such loan and the Company's reimbursement
and certain other obligations under the Reimbursement Agreement (as defined
below), the Company has issued and delivered to the Trustee its First
Mortgage Bonds, Series G (the "Series G First Mortgage Bonds") issued under
the First Mortgage Indenture dated as of August 15, 1978, as amended, and the
Tenth Supplemental Indenture thereto dated as of May 1, 1991 between the
Company and First Fidelity Bank, National Association, New Jersey, as Trustee
(as amended and supplemented from time to time, the "First Mortgage Bond
Indenture") in an aggregate principal amount, and with an interest rate,
maturity date and redemption provisions corresponding to those of the Bonds
and certain other bonds issued under the Agreement, including the 1991 Bonds.
As provided in the Agreement, payments of principal of, and premium, if any,
and interest on the Series G First Mortgage Bonds shall, upon receipt by the
Trustee, be deemed to constitute payments in corresponding amounts by the
Company in respect of the Bonds and certain other bonds issued under the
Agreement, including the 1991 Bonds. Reference is hereby made to the
Agreement for the provisions thereof with respect to the rights, limitations
of rights, duties, obligations and immunities of the Company, the Authority,
the Trustee, the Paying Agent, and the Bondowners, including the order of
payments in the event of insufficient funds, the disposition of unclaimed
moneys held by the Trustee and restrictions on the rights of owners of the
Bonds to bring suit. The Agreement may be amended to the extent and in the
manner provided therein. Copies of the Agreement are available for
inspection at the corporate trust office of the Trustee.
The Purchase Price (as defined below) and principal of and interest on
this bond while it is in the Weekly Mode is also payable from moneys drawn by
the Paying Agent on an irrevocable letter of credit for the Bonds and certain
other bonds issued under the Agreement, including the 1991 Bonds (together
with any extensions, amendments, and renewals thereof, the "Letter of
Credit"), issued by Citibank, N.A. pursuant to the terms of a Series E Letter
of Credit and Reimbursement Agreement dated as of May 1, 1991 (the
"Reimbursement Agreement") by and among the Company, Citibank, N.A. (together
with any other issuer of a Credit Facility, the "Bank") and the participating
banks named therein. The Paying Agent may draw on the Letter of Credit
presently in place for the payment of up to forty-five (45) days' interest
for Bonds in the Weekly Mode. The Letter of Credit initially expires on May
16, 1995 but may be terminated earlier upon the occurrence of certain events
set forth in the Agreement and the Reimbursement Agreement or extended as
provided in the Reimbursement Agreement. Unless the Letter of Credit is
extended or renewed or a substitute letter of credit (collectively with the
Letter of Credit, a "Credit Facility") is provided in accordance with the
Agreement, the Bonds will become subject to mandatory purchase as described
below. The Company may substitute a new Credit Facility as provided in the
Agreement.
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 provided in the
Agreement.
Unless otherwise defined herein, capitalized terms used in this bond
shall have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or
a day on which banking institutions are authorized pursuant to law to close,
(ii) that is not a day on which the corporate trust office of the First
Mortgage Bond Trustee is not open for business, (iii) that is a day on which
banks are not required or authorized to close in New York, New York, and (iv)
that is a day on which banking institutions in all of the cities in which the
principal offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 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 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 Wednesday.
At the option of the Company and upon certain conditions provided for in
the Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement.
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
the conditions set forth in the Agreement. 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 Agreement 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.
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 not
later than the Business Day next preceding 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 Weekly Mode, or
if for any reason such manner of determination shall be determined to be
invalid or unenforceable, the rate on such Bonds to take effect on that
Effective Date shall be the Weekly Rate in effect on the day preceding such
date. 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, any
Bondowner 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 Company 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.
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 BankAmerica
National Trust Company, New York, New York, 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 as 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.
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 such other form as may be 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 Agreement 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 Agreement. Notice of tender of this bond is irrevocable. All
notices of tender of Bonds shall be made to the Paying Agent at 2 Rector
Street, New York, New York, 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 2 Rector Street, New York, New York, 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 and (ii) on (a) the effective date of a substitute Credit
Facility unless the Trustee receives written evidence from Moody's (if this
bond is rated by Moody's) and 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 or (b) a date that is not more than fifteen (15) or less than ten
(10) days prior to the expiration or termination of the Credit Facility other
than upon conversion to a new Mode. Notice of mandatory tender shall be
given or caused to be given by the Paying Agent 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 AGREEMENT 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.
Bonds in the Weekly Mode are subject to redemption in whole or in part
at the direction of the Company on any INTEREST PAYMENT DATE at a redemption
price of par plus accrued interest.
The Bonds are subject to mandatory redemption at any time at a
redemption price of 100% of the principal amount of the Bonds so redeemed
plus accrued interest in the event (i) the Company delivers to the Trustee an
opinion of nationally recognized bond counsel selected by the Company and
reasonably satisfactory to the Trustee ("Bond Counsel") stating that interest
on the Bonds is or will become includable in gross income of the owners
thereof for federal income tax purposes, or (ii) it is finally determined by
the Internal Revenue Service or a court of competent jurisdiction, as a
result of (A) a proceeding in which the Company has participated or been
given notice and an opportunity to participate, and, (B) either (1) a failure
by the Company (or the Seabrook Transferee as defined in the Agreement) to
observe any covenant or agreement undertaken in or pursuant to the Agreement,
or the inaccuracy of any representation made by the Company (or the Seabrook
Transferee) in or pursuant to the Agreement, or (2) the Seabrook Transfer (as
defined in the Agreement), that interest payable on the Bonds is includable
for federal income tax purposes in the gross income of any owner thereof
(other than an owner which is a "substantial user" or a "related person"
within the meaning of Section 147(a) of the Internal Revenue Code of 1986).
Any determination under clause (ii) above will not be considered final for
this purpose until the earliest of the conclusion of any appellate review,
the denial of appellate review or the expiration of the period for seeking
appellate review. Redemption under this paragraph shall be in whole unless
not less than forty-five (45) days prior to the redemption date the Company
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. Except as provided in the next
sentence, any such redemption shall be made on the 90th day after the date on
which the opinion described in clause (i) is delivered or the determination
described in clause (ii) becomes final or on such earlier date as the Company
may designate by notice given to the Trustee at least forty-five (45) days
prior to such designated date. Any Bond in the Flexible 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. If such
redemption shall occur in accordance with the terms of the Agreement, then
such failure by the Company (or the Seabrook Transferee as described above)
to observe such covenant or agreement, or the inaccuracy of any such
representation will not, in and of itself, constitute a default thereunder.
If the Trustee receives written notice from any Bondowner stating that
(i) such Bondowner has been notified in writing by the Internal Revenue
Service that it proposes to include the interest on the Bonds in the gross
income of such owner for federal income tax purposes, or any other proceeding
has been instituted against such owner which may lead to a like
determination, and (ii) such owner will afford the Company the opportunity to
participate at its own expense in the proceeding, either directly or in the
name of such owner, until the conclusion of any appellate review, and the
Trustee has examined such written notice and it appears to be accurate on its
face, then the Trustee shall promptly give notice thereof to the Company, the
Authority, and each Bondowner whose Bonds may be affected. The Trustee shall
thereafter keep itself reasonably informed of the progress of any
administrative proceedings or litigation relating to such notice. Under the
Agreement the Company is required to give the Trustee written notice of such
a final determination within forty-five (45) days of such final
determination.
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 Agreement with Bonds in the Weekly Mode being redeemed in
units of $100,000.
In the event this bond is selected for redemption, notice will be mailed
no more than forty-five (45) 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, 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 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 AGREEMENT, 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.
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.
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.
The Authority, the Trustee, the Paying Agent and the Company may treat
the REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has
been signed by the Trustee or the Paying Agent.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK,
WHICH HAVE THE SAME EFFECT AS IF SET FORTH HERE.
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Agreement.
STATE STREET BANK AND TRUST
COMPANY,
as Trustee
Date of Registration: By: , or
Authorized Signature
By: BANKAMERICA NATIONAL TRUST COMPANY, as Paying Agent
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this
bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to transfer it
on the books kept for registration of the bond, with full power of
substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized
Signature Guaranty Medallion Program
By: Authorized Signature
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:
BONDOWNER'S ELECTION NOTICE
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)
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 Company 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 Subsection 303(g) of the First Supplement 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
Series E Loan and Trust Agreement dated as of May 1, 1991 and in the First
Supplement dated as of December 1, 1993 relating to the Bonds.
Date: Signature(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.
EXHIBIT I
FORM OF MULTIANNUAL 1993 SERIES E 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Refunding Revenue Bond
(Public Service Company of New Hampshire
Project - 1993 Tax-Exempt Series E)
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
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.
CURRENT EFFECTIVE DATE:
INTEREST RATE:
(To Next Purchase Date)
NEXT PURCHASE DATE:
COMMENCEMENT DATE OF RATE PERIOD:
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
MODE: Multiannual
CUSIP:
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW
HAMPSHIRE OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE
RSA CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE
SOURCES PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO
PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
The Business Finance Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest from the most
recent INTEREST PAYMENT DATE to which interest has been paid or duly provided
for or, if no interest has been paid, from the DATE OF THIS BOND set forth
above, until paid in full, at the rates set forth below, payable on each
INTEREST PAYMENT DATE. Until conversion to the Flexible, Weekly or Fixed
Rate 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 Agreement (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
Flexible, Weekly, or Fixed Rate Mode it shall bear interest at the Flexible,
Weekly or Fixed Rate, as the case may be, as defined in the Agreement. 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 Agreement. 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.
This bond is one of a series of Pollution Control Refunding Revenue
Bonds (Public Service Company of New Hampshire Project - 1993 Tax-Exempt
Series E) (the "Bonds") in the aggregate principal amount of $44,800,000
issued under New Hampshire RSA Chapter 162-I (the "Act"). The proceeds of
the Bonds are being loaned to Public Service Company of New Hampshire (the
"Company"), a New Hampshire corporation, pursuant to a Series E Loan and
Trust Agreement dated as of May 1, 1991, as supplemented and amended by a
First Supplement dated as of December 1, 1993 (the "Agreement") among the
Company, the Authority and State Street Bank and Trust Company, as Trustee
(the "Trustee") to refund a like principal amount of the Authority's
$114,500,000 Pollution Control Revenue Bonds (Public Service Company of New
Hampshire Project - 1991 Taxable Series E) (the "1991 Bonds"), which were
originally issued to finance certain costs associated with the Company's
ownership interest in air or water pollution control and sewage or solid
waste disposal facilities installed for use by Unit No. 1 at the nuclear
electric generating station (the "Station") in Seabrook, New Hampshire (the
"Project Facilities"). Pursuant to the Agreement, the Company has
unconditionally agreed to repay such loan in the amounts and at the times
necessary to pay the principal of, premium, if any, and interest on the Bonds
when due. To evidence and secure such loan and the Company's reimbursement
and certain other obligations, if any, under the Reimbursement Agreement, (as
defined in the Agreement), the Company has issued and delivered to the
Trustee its First Mortgage Bonds, Series G (the "Series G First Mortgage
Bonds") issued under the First Mortgage Indenture dated as of August 15,
1978, as amended, and the Tenth Supplemental Indenture thereto dated as of
May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee (as amended and supplemented from time to
time, the "First Mortgage Bond Indenture") in an aggregate principal amount,
and with an interest rate, maturity date and redemption provisions
corresponding to those of the Bonds and certain other bonds issued under the
Agreement, including the 1991 Bonds. As provided in the Agreement, payments
of principal of, and premium, if any, and interest on the Series G First
Mortgage Bonds shall, upon receipt by the Trustee, be deemed to constitute
payments in corresponding amounts by the Company in respect of the Bonds and
certain other bonds issued under the Agreement, including the 1991 Bonds.
Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and
immunities of the Company, the Authority, the Trustee, the Paying Agent, and
the Bondowners, including the order of payments in the event of insufficient
funds, the disposition of unclaimed moneys held by the Trustee and
restrictions on the rights of owners of the Bonds to bring suit. The
Agreement may be amended to the extent and in the manner provided therein.
Copies of the Agreement are available for inspection at the corporate trust
office of the Trustee.
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 provided in the
Agreement.
Unless otherwise defined herein, capitalized terms used in this bond
shall have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or
a day on which banking institutions are authorized pursuant to law to close,
(ii) that is not a day on which the corporate trust office of the First
Mortgage Bond Trustee is not open for business, (iii) that is a day on which
banks are not required or authorized to close in New York, New York, and (iv)
that is a day on which banking institutions in all of the cities in which the
principal offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank (as defined in the Agreement) are located are
not required or authorized to remain closed and on which the New York Stock
Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 Flexible Mode, the Weekly Mode, the
Multiannual Mode and the Fixed Rate Mode.
"Purchase Date" means, while this bond is in a 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 Flexible, Weekly or Multiannual
Mode, the period during which such rate of interest determined for such Bond
will remain in effect as described herein.
At the option of the Company and upon certain conditions provided for in
the Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement. 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 Company.
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 Flexible or
Weekly Mode and such day is not a Business Day, the first Business Day
thereafter. Conversion of this bond to another Mode, or to a new Rate Period
in the Multiannual Mode of the same or a different length, shall be subject
to the conditions set forth in the Agreement. 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 Agreement 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.
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
Company, the Bondowners and, if applicable, the Bank.
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.
While this bond is in the Multiannual Mode, the principal of and
premium, if any, on this bond are payable when due by check or draft in
clearinghouse funds to the REGISTERED OWNER hereof but only upon presentation
and surrender of this bond at the office of ,
, 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 clearinghouse 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 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 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.
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 , New York, New York, Attention: , or such other
address specified in writing by the Paying Agent to the Bondowners.
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 check or draft in clearinghouse
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.
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
direction of the Company 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 anni-
versary of the end
of the no call
period until
reaching 100%
and thereafter at 100%
Greater than 10, but not 8 years 101 1/2%, declining
greater than 15 years by 1/2% on each suc-
ceeding anniversary
of the end of the no
call period until
reaching 100% and
thereafter at 100%
Greater than 5, but not 5 years 101%, declining by
greater than 10 years 1/2% on the next
anniversary of the
end of the no call
period and there-
after at 100%
5 years or less Bonds not subject to
optional redemption
until commencement of
next Rate Period.
In addition, at the option of the Company, the Bonds in the Multiannual
Mode are subject to redemption prior to maturity as a whole at any time at
100% of the principal amount thereof, plus accrued interest to the redemption
date, within nine (9) months of the occurrence of certain extraordinary
events consisting of (a) damage or destruction, or loss of title by eminent
domain, to the Station or the Project Facilities, (b) changes in law
affecting the enforceability of the Agreement or imposing unreasonable
burdens or excessive liabilities on the Company relating to the Station or
the Project Facilities or their operation, (c) the enjoining or prohibiting
of the operation of the Station or the Project Facilities, or (d) changes in
the economic availability of fuel, materials, supplies, labor, equipment or
other properties or things rendering the continued operation of the Station
uneconomical, all as more fully described in the Agreement. The Company's
right to direct the redemption of the Bonds in the Multiannual Mode upon the
occurrence of any event listed above shall expire six (6) months after such
event occurs.
The Bonds are subject to mandatory redemption at any time at a
redemption price of 100% of the principal amount of the Bonds so redeemed
plus accrued interest in the event (i) the Company delivers to the Trustee an
opinion of nationally recognized bond counsel selected by the Company and
reasonably satisfactory to the Trustee ("Bond Counsel") stating that interest
on the Bonds is or will become includable in gross income of the owners
thereof for federal income tax purposes, or (ii) it is finally determined by
the Internal Revenue Service or a court of competent jurisdiction, as a
result of (A) a proceeding in which the Company has participated or been
given notice and an opportunity to participate, and, (B) either (1) a failure
by the Company (or the Seabrook Transferee as defined in the Agreement) to
observe any covenant or agreement undertaken in or pursuant to the Agreement,
or the inaccuracy of any representation made by the Company (or the Seabrook
Transferee) in or pursuant to the Agreement, or (2) the Seabrook Transfer (as
defined in the Agreement), that interest payable on the Bonds is includable
for federal income tax purposes in the gross income of any owner thereof
(other than an owner which is a "substantial user" or a "related person"
within the meaning of Section 147(a) of the Internal Revenue Code of 1986).
Any determination under clause (ii) above will not be considered final for
this purpose until the earliest of the conclusion of any appellate review,
the denial of appellate review or the expiration of the period for seeking
appellate review. Redemption under this paragraph shall be in whole unless
not less than forty-five (45) days prior to the redemption date the Company
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. Except as provided in the next
sentence, any such redemption shall be made on the 90th day after the date on
which the opinion described in clause (i) is delivered or the determination
described in clause (ii) becomes final or on such earlier date as the Company
may designate by notice given to the Trustee at least forty-five (45) days
prior to such designated date. Any Bond in the Flexible 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. If such
redemption shall occur in accordance with the terms of the Agreement, then
such failure by the Company (or the Seabrook Transferee as described above)
to observe such covenant or agreement, or the inaccuracy of any such
representation will not, in and of itself, constitute a default thereunder.
If the Trustee receives written notice from any Bondowner stating that
(i) such Bondowner has been notified in writing by the Internal Revenue
Service that it proposes to include the interest on the Bonds in the gross
income of such owner for federal income tax purposes, or any other proceeding
has been instituted against such owner which may lead to a like
determination, and (ii) such owner will afford the Company the opportunity to
participate at its own expense in the proceeding, either directly or in the
name of such owner, until the conclusion of any appellate review, and the
Trustee has examined such written notice and it appears to be accurate on its
face, then the Trustee shall promptly give notice thereof to the Company, the
Authority, and each Bondowner whose Bonds may be affected. The Trustee shall
thereafter keep itself reasonably informed of the progress of any
administrative proceedings or litigation relating to such notice. Under the
Agreement the Company is required to give the Trustee written notice of such
a final determination within forty-five (45) days of such final
determination.
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 Agreement with Bonds in the Multiannual Mode being
redeemed in units of $5,000.
In the event this bond is selected for redemption, notice will be mailed
no more than forty-five (45) 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.
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 AGREEMENT, 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.
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.
The Bonds are issuable only in fully registered form in denominations of
five thousand dollars ($5,000) or any multiple thereof.
The Authority, the Trustee, the Paying Agent and the Company may treat
the REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has
been signed by the Trustee or the Paying Agent.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK,
WHICH HAVE THE SAME EFFECT AS IF SET FORTH HERE.
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal)
By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Agreement.
STATE STREET BANK AND TRUST COMPANY
as Trustee
Date of Registration: By: , or
Authorized Signature
By: ,
as Paying Agent
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this
bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to transfer
it on the books kept for registration of the bond, with full power of
substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized
Signature Guaranty Medallion Program
By:
Authorized Signature
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.
EXHIBIT J
FORM OF FIXED RATE 1993 SERIES E BOND
$ No. R-
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Refunding Revenue Bond
(Public Service Company of New Hampshire
Project - 1993 Tax-Exempt Series E)
INTEREST RATE: CUSIP:
MATURITY DATE: May 1, 2021
DATE OF THIS BOND:
(Date as of which Bonds of this
series were initially issued.)
INTEREST PAYMENT DATES: May 1 and November 1
(but not before
, )
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW
HAMPSHIRE OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE
RSA CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE
SOURCES PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO
PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
The Business Finance Authority of the State of New Hampshire (the
"Authority"), for value received promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest (computed on the
basis of a 360-day year consisting of twelve 30-day months) from the most
recent INTEREST PAYMENT DATE 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 semiannually 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. The
principal and premium, if any, of this bond is payable in clearinghouse funds
at the office of , as Paying Agent (with its
successors, the "Paying Agent"). Interest is payable by check or draft in
clearinghouse 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 be (i) a Sunday or a legal holiday, or (ii) a day
on which banking institutions are authorized pursuant to law to close and on
which the corporate trust office of the Trustee or the First Mortgage Bond
Trustee is not open for business, then the payment thereof may be made on the
next succeeding day not a day specified in (i) or (ii) 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.
This bond is one of a series of Pollution Control Refunding Revenue
Bonds (Public Service Company of New Hampshire Project - 1993 Tax-Exempt
Series E) (the "Bonds") in the aggregate principal amount of $44,800,000
issued under New Hampshire RSA Chapter 162-I (the "Act"). The proceeds of
the Bonds are being loaned to Public Service Company of New Hampshire (the
"Company"), a New Hampshire corporation, pursuant to a Series E Loan and
Trust Agreement dated as of May 1, 1991, as supplemented and amended by a
First Supplement dated as of December 1, 1993 (the "Agreement") among the
Company, the Authority and State Street Bank and Trust Company, as Trustee
(the "Trustee") to refund a like principal amount of the Authority's
$114,500,000 Pollution Control Revenue Bonds (Public Service Company of New
Hampshire Project - 1991 Taxable Series E) (the "1991 Bonds"), which were
originally issued to finance certain costs associated with the Company's
ownership interest in air or water pollution control and sewage or solid
waste disposal facilities installed for use by Unit No. 1 at the nuclear
electric generating station (the "Station") in Seabrook, New Hampshire (the
"Project Facilities"). Pursuant to the Agreement, the Company has
unconditionally agreed to repay such loan in the amounts and at the times
necessary to pay the principal of, premium, if any, and interest on the Bonds
when due. To evidence and secure such loan and the Company's reimbursement
and certain other obligations, if any, under the Reimbursement Agreement (as
defined in the Agreement), the Company has issued and delivered to the
Trustee its First Mortgage Bonds, Series G (the "Series G First Mortgage
Bonds") issued under the First Mortgage Indenture dated as of August 15,
1978, as amended, and the Tenth Supplemental Indenture thereto dated as of
May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee (as amended and supplemented from time to
time, the "First Mortgage Bond Indenture") in an aggregate principal amount,
and with an interest rate, maturity date and redemption provisions
corresponding to those of the Bonds and certain other bonds issued under the
Agreement, including the 1991 Bonds. As provided in the Agreement, payments
of principal of, and premium, if any, and interest on the Series G First
Mortgage Bonds shall, upon receipt by the Trustee, be deemed to constitute
payments in corresponding amounts by the Company in respect of the Bonds and
certain other bonds issued under the Agreement, including the 1991 Bonds.
Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and
immunities of the Company, the Authority, the Trustee, the Paying Agent, and
the Bondowners, including the order of payments in the event of insufficient
funds, the disposition of unclaimed moneys held by the Trustee and
restrictions on the rights of owners of the Bonds to bring suit. The
Agreement may be amended to the extent and in the manner provided therein.
Copies of the Agreement are available for inspection at the corporate trust
office of the Trustee.
In case any Event of Default (as defined in the Agreement) 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 Agreement.
The Bonds are redeemable pursuant to the Agreement prior to maturity
beginning on , , at the option of the Authority by direction of
the Company, as a whole or in part at any time, at the following prices
expressed in percentages of their principal amount, plus accrued interest to
the redemption date:
Period During Which Redeemed Redemption Price
%
[Table to be prepared upon Fixed Rate conversion. The table shall be based
on redemption schedule established for the bond in the Multiannual Mode.]
In addition, at the option of the Company, this bond is subject to
redemption prior to maturity at 100% of the principal amount thereof, plus
accrued interest to the redemption date within nine (9) months of the
occurrence of certain extraordinary events consisting of (a) damage or
destruction, or loss of title by eminent domain, to the Station or the
Project Facilities, (b) changes in law affecting the enforceability of the
Agreement or imposing unreasonable burdens or excessive liabilities on the
Company relating to the Station or the Project Facilities or their operation,
(c) the enjoining or prohibiting of the operation of the Station or the
Project Facilities, or (d) changes in the economic availability of fuel,
materials, supplies, labor, equipment or other properties or things rendering
the continued operation of the Station uneconomical, all as more fully
described in the Agreement. The Company's right to direct the redemption of
this bond upon the occurrence of any event listed above shall expire six (6)
months after such event occurs.
The Bonds are subject to mandatory redemption at any time at a
redemption price of 100% of the principal amount of the Bonds so redeemed
plus accrued interest in the event (i) the Company delivers to the Trustee an
opinion of nationally recognized bond counsel selected by the Company and
reasonably satisfactory to the Trustee ("Bond Counsel") stating that interest
on the Bonds is or will become includable in gross income of the owners
thereof for federal income tax purposes, or (ii) it is finally determined by
the Internal Revenue Service or a court of competent jurisdiction, as a
result of (A) a proceeding in which the Company has participated or been
given notice and an opportunity to participate, and, (B) either (1) a failure
by the Company (or the Seabrook Transferee as defined in the Agreement) to
observe any covenant or agreement undertaken in or pursuant to the Agreement,
or the inaccuracy of any representation made by the Company (or the Seabrook
Transferee) in or pursuant to the Agreement, or (2) the Seabrook Transfer (as
defined in the Agreement), that interest payable on the Bonds is includable
for federal income tax purposes in the gross income of any owner thereof
(other than an owner which is a "substantial user" or a "related person"
within the meaning of Section 147(a) of the Internal Revenue Code of 1986).
Any determination under clause (ii) above will not be considered final for
this purpose until the earliest of the conclusion of any appellate review,
the denial of appellate review or the expiration of the period for seeking
appellate review. Redemption under this paragraph shall be in whole unless
not less than forty-five (45) days prior to the redemption date the Company
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. Except as provided in the next
sentence, any such redemption shall be made on the 90th day after the date on
which the opinion described in clause (i) is delivered or the determination
described in clause (ii) becomes final or on such earlier date as the Company
may designate by notice given to the Trustee at least forty-five (45) days
prior to such designated date. Any Bond in the Flexible 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. If such
redemption shall occur in accordance with the terms of the Agreement, then
such failure by the Company (or the Seabrook Transferee as described above)
to observe such covenant or agreement, or the inaccuracy of any such
representation will not, in and of itself, constitute a default thereunder.
If the Trustee receives written notice from any Bondowner stating that
(i) such Bondowner has been notified in writing by the Internal Revenue
Service that it proposes to include the interest on the Bonds in the gross
income of such owner for federal income tax purposes, or any other proceeding
has been instituted against such owner which may lead to a like
determination, and (ii) such owner will afford the Company the opportunity to
participate at its own expense in the proceeding, either directly or in the
name of such owner, until the conclusion of any appellate review, and the
Trustee has examined such written notice and it appears to be accurate on its
face, then the Trustee shall promptly give notice thereof to the Company, the
Authority, and each Bondowner whose Bonds may be affected. The Trustee shall
thereafter keep itself reasonably informed of the progress of any
administrative proceedings or litigation relating to such notice. Under the
Agreement the Company is required to give the Trustee written notice of such
a final determination within forty-five (45) days of such final
determination.
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 Agreement.
In the event this bond is selected for redemption, notice will be mailed
no more than forty-five (45) 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.
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 of the same aggregate principal amount without
transfer to a new registered owner. Exchanges and transfers will be without
expense to the holder 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 part thereof) is
eligible to be selected or has been selected for the redemption.
This bond is issuable only in fully registered form in the denominations
of five thousand dollars ($5,000) or any multiple thereof.
The Authority, the Trustee, the Paying Agent and the Company may treat
the REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has
been signed by the Trustee or the Paying Agent.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND ON THE BACK,
WHICH HAVE THE SAME EFFECT AS IF SET FORTH HERE.
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal)
By:
Title:
By:
Title:
Certificate of Authentication
This bond is one of the Bonds described in the Agreement.
STATE STREET BANK AND TRUST COMPANY
as Trustee
Date of Registration: By: , or
Authorized Signature
By: ,
as Paying Agent
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this
bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to transfer it
on the books kept for registration of the bond, with full power of
substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized
Signature Guaranty Medallion Program
By:
Authorized Signature
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.
EXHIBIT K
FORM OF BOOK-ENTRY ONLY SYSTEM FLEXIBLE 1991 SERIES E BOND
$69,700,000 No. R-1
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to or its agent
for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
ANY BONDHOLDER 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.
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire
Project - 1991 Taxable Series E)
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: SIXTY-NINE MILLION SEVEN HUNDRED THOUSAND DOLLARS
MATURITY DATE: May 1, 2021
CUSIP:
DATE OF THIS BOND: May 16, 1991
(Date as of which Bonds of this
series were initially issued.)
MODE: Flexible
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW
HAMPSHIRE OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAMPSHIRE
RSA CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE
SOURCES PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO
PUBLIC FUNDS MAY BE USED FOR THAT PURPOSE.
The Industrial Development Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest 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 set forth above, 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 provided in the Agreement (the
"Interest Payment Dates"). Until conversion to the 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 Agreement
(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 Weekly, Multiannual or Fixed Rate Mode it shall bear
interest at the Weekly, Multiannual or Fixed Rate, as the case may be, as
defined in the Agreement. 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
Agreement. 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.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project - 1991 Taxable Series E) (the
"Bonds") in the aggregate principal amount of $114,500,000 issued under New
Hampshire RSA Chapter 162-I (the "Act"). The proceeds of the Bonds are being
loaned to Public Service Company of New Hampshire (the "Company"), a New
Hampshire corporation, pursuant to a Series E Loan and Trust Agreement (the
"Agreement") dated as of May 1, 1991 among the Company, the Authority and
State Street Bank and Trust Company, as Trustee (the "Trustee") to finance
certain costs associated with the Company's ownership interest in air or
water pollution control and sewage or solid waste disposal facilities
installed for use by Unit No. 1 at the nuclear electric generating station
(the "Station") in Seabrook, New Hampshire (the "Project Facilities").
Pursuant to the Agreement, the Company has unconditionally agreed to repay
such loan in the amounts and at the times necessary to pay the principal of,
premium, if any, and interest on the Bonds when due. To evidence and secure
such loan and the Company's reimbursement and certain other obligations under
the Reimbursement Agreement (as defined below), the Company has issued and
delivered to the Trustee its First Mortgage Bonds, Series G (the "Series G
First Mortgage Bonds") issued under the First Mortgage Indenture dated as of
August 15, 1978, as amended, and the Tenth Supplemental Indenture thereto
dated as of May 1, 1991 between the Company and First Fidelity Bank, National
Association, New Jersey, as Trustee (as amended and supplemented from time to
time, the "First Mortgage Bond Indenture") in an aggregate principal amount,
and with an interest rate, maturity date and redemption provisions
corresponding to those of the Bonds. As provided in the Agreement, payments
of principal of, and premium, if any, and interest on the Series G First
Mortgage Bonds shall, upon receipt by the Trustee, be deemed to constitute
payments in corresponding amounts by the Company in respect of the Bonds.
Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and
immunities of the Company, the Authority, the Trustee, the Paying Agent, and
the Bondowners, including the order of payments in the event of insufficient
funds, the disposition of unclaimed moneys held by the Trustee and
restrictions on the rights of owners of the Bonds to bring suit. The
Agreement may be amended to the extent and in the manner provided therein.
Copies of the Agreement are available for inspection at the corporate trust
office of the Trustee.
The Purchase Price (as defined below) and principal of and interest on
this bond while it is in the Flexible Mode is also payable from moneys drawn
by the Paying Agent on an irrevocable letter of credit for the Bonds
(together with any extensions and renewals thereof, the "Letter of Credit")
issued by Swiss Bank Corporation, New York Branch pursuant to the terms of a
Second Series E Letter of Credit and Reimbursement Agreement dated as of May
1, 1995 (the "Reimbursement Agreement") by and between the Company and Swiss
Bank Corporation, New York Branch (together with any other issuer of a Credit
Facility, the "Bank"). The Letter of Credit initially expires on May 1, 1998
but may be terminated earlier upon the occurrence of certain events set forth
in the Agreement and the Reimbursement Agreement or extended as provided in
the Reimbursement Agreement. The Company may substitute the Letter of Credit
in whole or in part with one or more new letters of credit (collectively with
the Letter of Credit, a "Credit Facility") as provided in the Agreement and
the Reimbursement Agreement. The Company may substitute a new Letter of
Credit as provided in the Agreement.
Unless otherwise defined herein, capitalized terms used in this bond
shall have the meaning given them in the Agreement. The following terms are
defined as follows:
"Business Day" means a day (i) that is not a Sunday or legal holiday or
a day on which banking institutions are authorized pursuant to law to close,
(ii) that is not a day on which the corporate trust office of the First
Mortgage Bond Trustee is not open for business, (iii) that is a day on which
banks are not required or authorized to close in New York, New York, and (iv)
that is a day on which banking institutions in all of the cities in which the
principal offices of the Trustee and the Paying Agent and, if applicable, the
Remarketing Agent and the Bank are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
"Effective Date" means, with respect to a Bond in the 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 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 Flexible, Weekly or Multiannual
Mode, the period during which such rate of interest determined for such Bond
will remain in effect as described herein.
At the option of the Company and upon certain conditions provided for in
the Agreement described below, all or a portion of the Bonds (a) 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, (b) 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 (c) 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 Agreement. 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 Agreement. 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 Agreement 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.
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.
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 Agreement.
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 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. 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 Company and the Bondowners.
While this bond is in the Flexible Mode, interest shall be computed on
the basis of actual days elapsed divided by 360. 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.
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 BankAmerica National Trust Company, New York, New
York, 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 at its address shown on
the registration books maintained by the Paying Agent. 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.
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 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.
The Authority, the Trustee, the Paying Agent and the Company may treat
the REGISTERED OWNER as the absolute owner of this bond for all purposes,
notwithstanding any notice to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond will not be valid until the Certificate of Authentication has
been signed by the Trustee or its duly appointed agent for such purpose.
THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal) By:
Chairman
By:
Executive Director
Certificate of Authentication
This bond is one of the Bonds described in the Loan and Trust Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
Date of Registration:
By: , or
Authorized Signature
By: BANKAMERICA NATIONAL TRUST
COMPANY, as agent of the Trustee
By:
Authorized Signature
Assignment
For value received the undersigned sells, assigns and transfers this
bond to
(Name and Address of Assignee)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints attorney-in-fact to
transfer it on the books kept for registration of the bond, with full power
of substitution.
NOTE: The signature to this assignment must correspond with the name as
written on the face of the bond without alteration or enlargement or other
change and must be guaranteed by a Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized
Signature Guaranty Medallion Program
Firm
By:
Authorized Signature
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.
EXHIBIT L
REPRESENTATION LETTER
EXHIBIT M
1993 SERIES E BONDS REPRESENTATION LETTER
(1) Footnotes (i) indicate amendments made by the First Supplement, (ii)
indicate amendments made by the Second Supplement, (iii) indicate text taken
from the First Supplement or the Second Supplement and added concurrently
with the amendment and restatement hereof, (iv) indicate certain other
changes made concurrently with the amendment and restatement hereof, and (v)
provide explanations with respect to certain amendments and changes.
Footnotes are for convenience only and shall not affect the construction
hereof.
(2) Fees with respect to 1993 Series E Bonds from Paragraph 102(a)(3)
of First Supplement, added concurrently with the amendment and restatement
hereof.
(3) Paragraph 102(a)(4) amended concurrently with the amendment and
restatement hereof as follows:
(4) "Bank" means Barclays Bank PLC, acting through its New York Branch, in
its capacity as issuer of the Letter of Credit and any other issuer of a
Credit Facility.
(4) Paragraph 102(a)(8) amended concurrently with the amendment and
restatement hereof as follows:
(8) "Bonds" means the 1991 Series E Bonds, the 1993 Series E Bonds, any
other Tax-Exempt Refunding Bonds and any bond or bonds duly issued in
exchange or replacement therefor.
(5) First sentence of Paragraph 102(a)(13) amended by Subsection 310(b)
of First Supplement as follows:
"Credit Facility" means the Letter of Credit and any substitute irrevocable
transferable letter of credit delivered to the Paying Agent pursuant to this
Agreement and then in effect, as each may be amended from time to time
pursuant to the terms of this Agreement or any amendment or supplement to
this Agreement.
(6) Paragraph 102(a)(31) amended concurrently with the amendment and
restatement hereof as follows:
(31) "Letter of Credit" means the $73,666,000 irrevocable letter of credit
No. 841785 issued by Barclays Bank PLC, acting through its New York Branch,
for the benefit of the Paying Agent.
(7) New last sentence of Paragraph 102(a)(33) from Section 305 of First
Supplement, added concurrently with the amendment and restatement hereof.
(8) New definition of 1993 Series E Bonds in clause (ii) of Paragraph
102(a)(39) from Paragraph 102(a)(7) of First Supplement, added concurrently
with the amendment and restatement hereof.
(9) Paragraph 102(a)(50) amended concurrently with the amendment and
restatement hereof as follows:
(50) "Reimbursement Agreement" means the Third Series E Letter of Credit and
Reimbursement Agreement dated as of April 1, 1999 among the Company,
Barclays Bank PLC, New York Branch, as agent and issuing bank thereunder, and
the participating banks referred to therein, and any other agreement between
the Company and a Bank under which the Company is obligated to reimburse the
Bank for payments made by the Bank under a Credit Facility.
(10) Paragraph 102(a)(57) amended concurrently with the amendment and
restatement hereof as follows:
(57) "Tax-Exempt Refunding Bonds" means Bonds issued to refund the 1991
Series E Bonds pursuant to Article IV hereof, including, unless the context
otherwise requires, the 1993 Series E Bonds.
(11) Subsection 201(a) formerly Section 201.
(12) New Subsection 201(b) from Section 201 of First Supplement, added
concurrently with the amendment and restatement hereof.
(13) Forms of 1991 Series E Bonds moved from text to Exhibits
concurrently with the amendment and restatement hereof. Forms of 1993 Series
E Bonds from Section 301 of First Supplement and form of Book-Entry Only
System Flexible 1991 Series E Bond from Subsection 201(b) and Exhibit A of
Second Supplement added concurrently with the amendment and restatement
hereof.
(14) Paragraph 301(b)(i) formerly Subsection 301(b).
(15) New Paragraph 301(b)(ii) from Section 302 of First Supplement,
added concurrently with the amendment and restatement hereof.
(16) Clause (i) of Paragraph 301(d)(ii) amended concurrently with the
amendment and restatement hereof to change "one year" to "364 days."
(17) First sentence of Paragraph 301(e)(ii) amended by Subsection 311(a)
of First Supplement as follows:
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 Company
from the Weekly Mode to a 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 a Company Representative.
(18) Clause (i) of Paragraph 301(e)(ii) amended concurrently with the
amendment and restatement hereof to change "one year" to "364 days."
(19) Last sentence of Subparagraph 301(e)(iv)(A) amended by Subsection
311(b) of First Supplement as follows:
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 Credit
Facility is expiring without substitution or replacement, the Paying Agent
shall give notice to the Bondowners of the mandatory tender of the Bonds at
least thirty (30) days prior to the mandatory tender date.
(20) Clause (i) of Paragraph 301(f)(ii) amended concurrently with the
amendment and restatement hereof to change "one year" to "364 days."
(21) Subsection 303(a) formerly Section 303.
(22) New Subsection 303(b) from Section 304 of First Supplement, added
concurrently with the amendment and restatement hereof.
(23) First sentence of Paragraph 308(c)(i) amended by Subsection 312(a)
of First Supplement as follows:
If a Credit Facility is available for any portion of the Bonds, the Paying
Agent shall not later than 4:00 P.M. on the Business Day next preceding any
date on which payments of the principal of, premium, if any, or interest on
such Bonds are due, whether at maturity, on an interest payment date, by
acceleration, redemption, or otherwise, draw on the Credit Facility an amount
sufficient to pay in full the principal, premium, if any, and interest then
coming due on such Bonds.
(24) Paragraph 308(c)(iii) amended by Subsection 312(b) of First
Supplement as follows:
(iii) Use of Credit Facility. All amounts received by the Paying Agent
under any Credit Facility shall be held in a fund separate and apart from all
other amounts held by the Paying Agent, shall remain uninvested and used
solely to pay the Purchase Price or principal of, premium, if any, and
interest on the Bonds for which the Credit Facility is available. Principal
and Purchase Price of, premium, if any, and interest on Company Bonds,
Pledged Bonds and Bonds not supported by a Credit Facility shall not be paid
from amounts drawn on a Credit Facility.
Paragraph 308(c)(iii) further amended concurrently with the amendment and
restatement hereof as follows:
(iii) Use of Credit Facility. All amounts received by the Paying Agent
under any Credit Facility shall be held in a segregated account, shall
remain uninvested and shall be used solely to pay the Purchase Price or
principal of, premium, if any, and interest on the Bonds for which the Credit
Facility is available. Principal and Purchase Price of, premium, if any, and
interest on Company Bonds, Pledged Bonds and Bonds not supported by a Credit
Facility shall not be paid from amounts drawn on a Credit Facility.
(25) Paragraph 308(c)(iv) added by Subsection 312(c) of First
Supplement.
(26) Subsection 310(c) amended by Section 307 of First Supplement as
follows:
(c) Notice by the Company. The Company shall exercise its option to have
Bonds redeemed under Subsection 310(a) or (b) by giving notice to the
Trustee, the Authority, the Paying Agent, and the Remarketing Agent at least
five (5) days before the redemption date in the case of Bonds in the Flexible
Mode, and forty-five (45) days before the redemption date in the case of
Bonds in any other Mode.
(27) Subsection 310(e) amended by Section 308 of First Supplement as
follows:
(e) Notice of Redemption. When Bonds are to be redeemed, the Paying Agent
shall give notice 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 Agreement 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
405 as and when provided in the form of Flexible Bonds.
(28) Subsection 311(c) added by Section 313 of First Supplement.
(29) Fifth sentence of second paragraph of Subsection 312(a) amended by
Section 314 of First Supplement as follows:
Upon receipt by the Paying Agent of notice from the Remarketing Agent that a
purchaser has been found for Pledged Bonds or Company 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 Pledged Bonds or
Company Bonds) upon receipt by the Paying Agent of the Purchase Price of such
Bonds, provided, however, that no Pledged Bond or Company Bond shall be so
registered and delivered unless the Paying Agent has received from the Bank
a written notice of the reinstatement of the principal and interest component
of the Credit Facility, or if prior to or simultaneously with such
registration or delivery, the amount available to be drawn under the Credit
Facility is otherwise less than the amount described in Paragraph 317(b)(ii)
determined as if Bonds which are to continue as Pledged Bonds were not
Outstanding.
(30) The second paragraph of Subsection 317(a) amended concurrently with
the amendment and restatement hereof as follows:
Prior to the replacement of any Credit Facility the Company shall have
delivered to the Trustee and the Paying Agent: (i) an opinion of counsel for
the issuer of the substitute Credit Facility to the effect that it
constitutes a legal, valid and binding obligation of the issuer enforceable
in accordance with its terms; (ii) a certificate of the Bank that all
amounts due under the Reimbursement Agreement have been paid and that the
Company has fulfilled all its obligations arising out of such Agreement; and
(iii) unless all of the Bonds to be supported by the substitute Credit
Facility are in the Weekly Mode or are subject to mandatory tender for
purchase on the date of replacement, written evidence from Moody's, if such
Bonds are then rated by Moody's, and from S&P, if such Bonds are then rated
by S&P, that the replacement of the Credit Facility will not in itself result
in the reduction or withdrawal of the rating on the Bonds. Notice of the
substitution or replacement of a Credit Facility shall be sent by the Trustee
to Moody's and S&P.
(31) Clause (iii) of Subsection 317(b) amended concurrently with the
amendment and restatement hereof to change "one year" to "364 days."
(32) New Section 320 from Section 201 of Second Supplement, added
concurrently with the amendment and restatement hereof.
(33) New Section 321 from Section 303 of First Supplement, added
concurrently with the amendment and restatement hereof.
(34) See also new Section 406 from Section 306 of First Supplement for
additional limitations on conversions of 1993 Series E Bonds to new Modes.
(35) Last sentence of Section 405 added by Section 315 of First
Supplement.
(36) New Section 406 from Section 306 of First Supplement, added
concurrently with the amendment and restatement hereof.
(37) New Section 407 from Paragraphs 102(a)(2), (4), and (11) and
Section 309 of First Supplement, added concurrently with the amendment and
restatement hereof.
(38) Now Section 321(g) of this Agreement
<PAGE>
IRREVOCABLE LETTER OF CREDIT
NO. 841785
April 14, 1999
U.S. Bank Trust National Association
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporate Trust Division
Dear Sir or Madam:
We hereby establish, at the request and for the account of Public
Service Company of New Hampshire (the "Account Party"), in your favor, as
paying agent (the "Paying Agent") under that certain Amended and Restated
Series E Loan and Trust Agreement, dated as of April 1, 1999 (the
"Indenture"), by and among the Business Finance Authority (formerly The
Industrial Development Authority) of the State of New Hampshire (the
"Issuer"), the Account Party and State Street Bank and Trust Company, as
trustee (the "Trustee"), pursuant to which $69,700,000 in outstanding
aggregate principal amount of the Issuer's Pollution Control Revenue Bonds
(Public Service Company of New Hampshire Project - 1991 Taxable Series E)
(the "Bonds"), have been issued, our Irrevocable Letter of Credit No. 841785,
in the amount of US $73,666,000 (SEVENTY-THREE MILLION SIX HUNDRED SIXTY-SIX
THOUSAND AND NO ONE-HUNDREDTHS UNITED STATES DOLLARS), subject to reduction
and reinstatement as provided below.
(1) Credit Termination Date. This Letter of Credit shall expire on the
earliest to occur of (i) April 12, 2000 (the "Stated Termination Date"), (ii)
the date upon which we honor a draft accompanying a written and completed
certificate signed by you in substantially the form of Exhibit 2 attached
hereto, and stating therein that such draft is the final draft to be drawn
under this Letter of Credit and that, upon the honoring of such draft, this
Letter of Credit will expire in accordance with its terms, (iii) the date
upon which we receive a written certificate signed by you and stating therein
that no Bonds entitled to the benefits of this Letter of Credit (as
determined in accordance with the Indenture) ("Eligible Bonds") are
"outstanding" under the Indenture, (iv) the fifth business day following
receipt by you and the Trustee of written notice from us that an Event of
Default (as defined below) has occurred under the Reimbursement Agreement (as
defined below) and of our determination to terminate this Letter of Credit on
such fifth business day and (v) the date upon which we receive a written
certificate signed by you and stating therein that a substitute or
replacement Credit Facility (as defined in the Indenture) has been provided
pursuant to Section 317 of the Indenture (such earliest date being the
"Credit Termination Date").
As used herein, the term "business day" shall mean any day of the year
(i) that is not a Sunday or legal holiday or a day on which banking
institutions are authorized pursuant to law to close, (ii) that is not a day
on which the corporate trust office of the First Mortgage Bond Trustee (as
defined in the Indenture) is not open for business, (iii) that is a day on
which banks are not required or authorized to close in New York City and (iv)
that is a day on which banking institutions in all of the cities in which the
principal offices of the Trustee, the Paying Agent and the Remarketing Agent
(as defined in the Indenture) are located are not required or authorized to
remain closed and on which the New York Stock Exchange is not closed.
As used herein "Reimbursement Agreement" shall mean the Third Series E
Letter of Credit and Reimbursement Agreement, dated as of April 14, 1999,
between the Account Party, us and certain Participating Banks referred to
therein, and the term "Event of Default" shall mean an "Event Default" as
that term is defined in the Reimbursement Agreement.
(2) Principal, Interest and Premium Components. The aggregate amount
which may be drawn under this Letter of Credit, subject to reductions in
amount and reinstatement as provided below, is US $73,666,000 (SEVENTY-THREE
MILLION SIX HUNDRED SIXTY-SIX THOUSAND AND NO ONE-HUNDREDTHS UNITED STATES
DOLLARS), of which the aggregate amounts set forth below may be drawn as
indicated.
(i) An aggregate amount not exceeding US$69,700,000 (SIXTY-NINE
MILLION SEVEN HUNDRED THOUSAND AND NO ONE-HUNDREDTHS UNITED STATES
DOLLARS), as such amount may be reduced and reinstated as provided
below, (the "Principal Component") may be drawn in respect of payment of
principal (whether upon scheduled or accelerated maturity, or upon
redemption) of Eligible Bonds or the portion of the purchase price of
Eligible Bonds corresponding to principal.
(ii) An aggregate amount not exceeding US$3,966,000 (THREE MILLION
NINE HUNDRED SIXTY-SIX THOUSAND AND NO ONE-HUNDREDTHS UNITED STATES
DOLLARS), as such amount may be reduced and reinstated as provided
below, (the "Interest Component") may be drawn in respect of payment of:
(A) accrued and unpaid interest on Eligible Bonds not in the
Flexible Mode (as defined in the Indenture) or that portion of the
redemption price or purchase price of such Eligible Bonds
corresponding to accrued and unpaid interest, but not more than an
amount equal to accrued and unpaid interest on such Eligible Bonds
for up to a maximum of 128 days immediately preceding the date of
such drawing; and
(B) unpaid interest (whether accrued or to accrue) on
Eligible Bonds in the Flexible Mode or that portion of the
redemption price or purchase price of such Eligible Bonds
corresponding to such interest, but not more than an amount equal
to such interest on such Eligible Bonds for up to a maximum of 128
days immediately preceding the next Purchase Date (as defined in
the Indenture) for each such Eligible Bond (or, if interest on any
such Eligible Bond was not paid on the most recent Purchase Date
for such Bond, for up to a maximum of 128 days immediately
preceding the date of such drawing);
calculated, in each case referred to in the foregoing clause (A) or
clause (B) at a maximum rate of sixteen percent (16%) per annum on the
basis of a year of 360 days for the actual days elapsed, or such lesser
rate of interest as shall equal the Maximum Interest Rate (as defined in
the Indenture) in effect under the Indenture with respect to such
Eligible Bonds (whether or not in the Flexible Mode).
(iii) An aggregate amount not exceeding US$0.00 (ZERO UNITED
STATES DOLLARS) may be drawn in respect of premium on Eligible Bonds
(the "Premium Component"). If, subsequent to the date hereof, the
Premium Component shall be increased by us at the request of the Account
Party, the Premium Component shall be subject to reduction as provided
below, and amounts drawn in respect thereof shall not be subject to
reinstatement.
(3) Drawings. Funds under this Letter of Credit are available to you
against (i) your draft, stating on its face: "Drawn under Irrevocable Letter
of Credit No. 841785, dated April 14, 1999", and (ii) the appropriate
certificate specified below, purportedly executed by you and appropriately
completed.
Exhibit Setting Forth
Type of Drawing Form of Certificate Required
Tender Drawing
(as hereinafter defined) Exhibit 1
Redemption/Mandatory Exhibit 2
Purchase Drawing (as
hereinafter defined)
Interest Drawing (as hereinafter Exhibit 3
defined)
Drafts and certificates hereunder shall be dated the date of
presentation and shall be presented at our office located at 222 Broadway,
12th Floor, New York, New York 10038, Attention: Trade Services Group (or at
such other office as we may designate by written notice to you). Presentation
of such drafts and certificates may be made (a) by physical presentation of
such drafts and certificates or (b) by facsimile transmission of such drafts
and certificates received by us at (212) 412-5111 (or at such other number as
we may designate by written notice to you) with prior telephone notice to us
at (212) 412-5121, Attention: Pam Seeley (or at such other number as we may
designate by written notice to you) that such presentation is to be made by
facsimile transmission and with the original executed drafts and certificates
to be received by us not later than our close of business on the next
business day, it being understood that payments hereunder shall be made upon
receipt by us of such facsimile transmission; provided however; that
presentations of drafts and certificates relating to Tender Drawings in
respect of Eligible Bonds in the Flexible Mode shall in all instances be made
in accordance with the foregoing clause (b). Drafts drawn under and in
strict compliance with the terms of this Letter of Credit will be duly
honored by us upon presentation thereof in accordance with this Paragraph 3
if presented on or prior to 4:00 P.M. (New York City time) on the Credit
Termination Date as follows:
(i) Tender Drawings; Flexible Mode: In the case of drafts and
certificates relating to Tender Drawings in respect of Eligible Bonds in
the Flexible Mode presented in accordance with the foregoing clause (b):
(A) if such drafts and certificates are presented as
aforesaid at or prior to 1:30 P.M. (New York City time) on a
business day, and provided that such drafts and certificates
strictly conform to the requirements of this Letter of Credit, we
will initiate a wire transfer of the amount so drawn to your
account indicated below at or prior to 3:30 P.M. (New York City
time) on the same business day;
(B) if such drafts and certificates are presented as
aforesaid after 1:30 P.M. but at or prior to 4:00 P.M. New York
City time) on a business day, and provided that such drafts and
certificates strictly conform to the requirements of this Letter of
Credit, we will initiate a wire transfer of the amount so drawn to
your account indicated below at or prior to 10:00 A.M. on the
business day next succeeding the business day on which such drafts
and certificates were presented (notwithstanding that such day of
presentation may have been the Credit Termination Date); and
(C) if such drafts and certificates are presented as
aforesaid after 4:00 P.M. (New York City time) on a business day,
and provided that such drafts and certificates strictly conform to
the requirements of this Letter of Credit, we will initiate a wire
transfer of the amount so drawn to your account indicated below at
or prior to 1:00 P.M. (New York City time) on the business day next
succeeding the business day on which such drafts and certificates
were presented (notwithstanding that such day of presentation may
have been the Credit Termination Date);
and
(i) All Other Drawings: In the case of any other drafts and
certificates:
(A) if such drafts and certificates are presented as
aforesaid at or prior to 4:00 P.M. (New York City time) on a
business day, and provided that such drafts strictly conform to the
requirements of this Letter of Credit, we will initiate a wire
transfer of the amount so drawn to your account indicated below at
or prior to 10:00 A.M. (New York City time) on the business day
next succeeding the business day on which such drafts and
certificates were presented (notwithstanding that such day of
presentation may have been the Credit Termination Date); and
(B) if such drafts and certificates are presented as
aforesaid after 4:00 P.M. New York City time) on a business day,
and provided that such drafts and certificates strictly conform to
the requirements of this Letter of Credit, we will initiate a wire
transfer of the amount so drawn to your account indicated below at
or prior to 1:00 P.M. (New York City time) on the business day next
succeeding the business day on which such drafts and certificates
were presented (notwithstanding that such day of presentation may
have been the Credit Termination Date).
Wire transfers of funds paid in respect of any drawing hereunder shall be
made to your Account No. 173101851827 at U.S. Bank Trust, N.A. (ABA #
091000022), Attn: Merilyn Hess, reference: State of New Hampshire (PSNH), or
to such other account as you may from time to time specific to us in writing.
All payments made by us under this Letter of Credit will be made with our own
funds and not with any funds of the Account Party or the Issuer.
(4) Reductions. The Interest Component shall be reduced immediately
following our honoring any draft drawn hereunder to pay unpaid interest on
Eligible Bonds or to pay that portion of the purchase price or redemption
price corresponding to unpaid interest on Eligible Bonds, in each case by an
amount equal to the amount of such draft (any such drawing being an "Interest
Drawing"). The Principal Component shall be reduced immediately following our
honoring any draft drawn hereunder: (i) pursuant to Section 308(c)(ii) of the
Indenture to pay that portion of purchase price corresponding to principal of
Eligible Bonds that are (A) subject to mandatory tender for purchase pursuant
to Section 301(d)(iii), 301(e)(iv)(B) or 301(f)(iii) of the Indenture or (B)
tendered for purchase by the holders thereof pursuant to Section 301(e)(iii)
of the Indenture (any such drawing in respect of the circumstances referred
to in this clause (i) being a "Tender Drawing"), (ii) pursuant to Section
308(c)(i) of the Indenture to pay the principal of Eligible Bonds or that
portion of the redemption price of Eligible Bonds corresponding to principal,
whether at stated maturity, upon acceleration or upon redemption, or (iii)
pursuant to Section 308(c)(ii) of the Indenture to pay that portion of the
purchase price corresponding to principal of Eligible Bonds that are subject
to mandatory tender for purchase pursuant to Section 301(e)(iv)(A) of the
Indenture (any such drawing in respect of the circumstances referred to in
the foregoing clause (ii) or in this clause (iii) being a
"Redemption/Mandatory Purchase Drawing"), in each such case by an amount
equal to the amount of such draft. The Premium Component shall be reduced
immediately following our honoring any draft drawn hereunder to pay premium
on Eligible Bonds in connection with a Redemption/Mandatory Purchase Drawing,
by an amount equal to the amount of such draft.
Additionally, upon receipt of a Notice of Reduction in the form of
Exhibit 4 to this Letter of Credit purportedly executed by you, we will
reduce the Principal Component, Interest Component and Premium Component to
the amounts therein stated.
(5) Reinstatement. The Interest Component and the Principal Component
shall, from time to time, be reinstated by us in accordance with, and only to
the extent provided in, the following subparagraphs (i) and (ii). In no event
shall reductions in the Premium Component be reinstated.
(i) Interest Component. Reductions in the Interest Component
resulting from Interest Drawings shall be reinstated as follows:
(A) Immediately following each drawing hereunder to pay
unpaid interest on Eligible Bonds in the Flexible Mode or to pay
that portion of purchase price, but not redemption price,
corresponding to unpaid interest on Eligible Bonds in the Flexible
Mode, the amount so drawn shall be automatically reinstated to the
Interest Component unless, not later than the business day
preceding such drawing you shall have received written notice from
us that we will not reinstate the Interest Component in the amount
of such drawing. On the fifth day following each drawing hereunder
to pay accrued and unpaid interest on Eligible Bonds that are not
in the Flexible Mode, or to pay that portion of purchase price, but
not redemption price, corresponding to accrued and unpaid interest
on Eligible Bonds that are not in the flexible Mode, the amount so
drawn shall be automatically reinstated to the Interest Component,
unless you shall have theretofore received written notice from us
that we will not reinstate the Interest Component in the amount of
such drawing. Any notice of non-reinstatement delivered pursuant to
this subparagraph (i)(A) shall be in writing and shall be delivered
to you by hand delivery or facsimile transmission.
(B) If, subsequent to any such delivery of a notice of non-
reinstatement as aforesaid, we shall deliver to you, by hand
delivery or facsimile transmission, a Notice of Reinstatement in
the form of Exhibit 5 hereto, then, upon such delivery to you, the
Interest Component shall be immediately reinstated to the extent
specified in such Notice of Reinstatement.
(C) In no event shall the Interest Component be reinstated to
an amount in excess of 128 days' interest on all Eligible Bonds,
computed at the rate of 16% per annum on the basis of a year of 360
days for the actual days elapsed, or such lesser rate of interest
as shall equal the Maximum Interest Rate (as defined in the
Indenture) in effect under the Indenture with respect to such
Eligible Bonds.
(ii) Principal Component. Reductions in the Principal Component
resulting from Redemption/Mandatory Purchase Drawings shall in no event
be reinstated. Reductions in the Principal Component resulting from
Tender Drawings shall be reinstated as follows:
(A) Immediately upon receipt by us of proceeds from the
remarketing of Pledged Bonds (as defined in the Indenture), or of
written notice from you that you have received such proceeds (or a
window receipt guaranteeing same day payment in immediately
available funds of such proceeds as contemplated by Section 312(a)
of the Indenture), the Principal Component shall be reinstated
automatically by the amount of such proceeds.
(B) Immediately upon your receipt from us, by hand delivery
or facsimile transmission, of a Notice of Reinstatement in the form
of Exhibit 5 hereto, the Principal Component shall be immediately
reinstated to the extent specified in such Notice of Reinstatement.
(C) In no event shall the Principal Component be reinstated
to an amount in excess of the aggregate principal Eligible Bonds
then outstanding under the Indenture.
Any Notice of Reinstatement delivered to you in the form set forth in Exhibit
5 hereto, whether delivered pursuant to subparagraph (i) or subparagraph
(ii), above, may be combined, in a single such Notice, with any other Notice
of Reinstatement delivered pursuant to the other such subparagraph.
(6) Notices. Communications (other than drawings) with respect to this
Letter of Credit shall be in writing and shall be addressed to us at 222
Broadway, 12th Floor, New York, New York 10038, Attention: Client Services
Unit, (telephone: (212) 412-3721, telecopy: (212) 412-5306), with a copy to:
Utilities Group, (telephone (212) 412-2470, telecopy: (212) 412-6709), or, in
each case, at such other office or telepcopy number as we may designate by
written notice to you specifically referring to the number of this Letter of
Credit.
(7) Transfer. This Letter of Credit is transferable in its entirety
(but not in part) to any transferee who has succeeded you as Paying Agent
under the Indenture and may be successively so transferred. Transfer of the
available balance under this Letter of Credit to such transferee shall be
effected by the presentation to us of this Letter of Credit accompanied by a
certificate substantially in form set forth in Exhibit 6.
(8) Governing Law, Etc. Except as otherwise provided herein, this
Letter of Credit shall be governed by and construed in accordance with the
International Standby Practices 1998 ("ISP 98") and, to the extent not
inconsistent with the ISP, the laws of the State of New York, including the
Uniform Commercial Code as in effect in the State of New York. This Letter of
Credit sets forth in full our undertaking, and, except as expressly set forth
herein, such undertaking shall not in any way be modified, amended, amplified
or limited by reference to any document, instrument or agreement referred to
herein (including, without limitation, the Bonds, the Indenture and the
Reimbursement Agreement), except only the certificates and the drafts
referred to herein; and any such reference shall not be deemed to incorporate
herein by reference any document, instrument or agreement except for such
certificates and such drafts. Whenever and wherever the terms of this Letter
of Credit shall refer to the purpose of a draft hereunder, or the provisions
of any agreement or document pursuant to which such draft may be presented
hereunder, such purpose or provisions shall be conclusively determined by
reference to the certificate accompanying such draft; in furtherance of this
sentence, whether any drawing is in respect of payment of regularly scheduled
interest on the Bonds or of principal of or interest on the Bonds upon
scheduled or accelerated maturity or is a Tender Drawing or a
Redemption/Mandatory Purchase Drawing shall be conclusively determined by
reference to the certificate accompanying such drawing.
Very truly yours,
BARCLAYS BANK PLC,
NEW YORK BRANCH
By
Title:
By
Title:
EXHIBIT 1
TO THE LETTER OF CREDIT
CERTIFICATE FOR TENDER DRAWING
The undersigned, a duly authorized officer of (the
"Paying Agent"), hereby certifies as follows to Barclays Bank PLC, New York
Branch (the "Bank"), with reference to Irrevocable Letter of Credit No.
(the "Letter of Credit") issued by the Bank in favor of the Paying Agent.
Terms defined in the Letter of Credit and used but not defined herein shall
have the meanings given them in the Letter of Credit.
(1) The Paying Agent is the Paying Agent under the Indenture for the
holders of the Bonds.
(2) The Paying Agent is making a Tender Drawing under the Letter of
Credit in the amount of $ pursuant to Section 308(c)(ii) of the
Indenture to pay that portion of the purchase price corresponding to
principal of Eligible Bonds that are
[subject to mandatory tender for purchase pursuant to Section
[301(d)(iii)] [301(e)(iv)(B)] [301(f)(iii)] of the Indenture.]
[tendered for purchase by the holders thereof pursuant to Section
301(e)(iii) of the Indenture.]
(3) The amount of purchase price corresponding to principal of Eligible
Bonds and with respect to the payment of which the Paying Agent, pursuant to
the foregoing Sections of the Indenture, is drawing under the Letter of
Credit, is as follows, and the amount of the draft accompanying this
Certificate does not exceed such amount:
Principal: $
(4) The amount of the draft accompanying this Certificate being drawn
in respect of purchase price corresponding to principal of Eligible Bonds, as
indicated in paragraph (3), above, does not exceed the Principal Component of
the Letter of Credit. The amount of the draft accompanying this Certificate
in respect of purchase price corresponding to principal of such Bonds has
been computed in accordance with the terms and conditions of such Eligible
Bonds and the Indenture.
(5) No proceeds of this drawing will be applied to the payment of
purchase price of any Bonds that are not Eligible Bonds, including any
Pledged Bonds (as defined in the Indenture), any Company Bonds (as defined in
the Indenture) and any Bonds in the Fixed Rate Mode (as defined in the
Indenture).
[(6) The Eligible Bonds in respect of which this drawing is being made
are Eligible Bonds in the Flexible Mode, and payment of this drawing shall be
made in accordance with Paragraph 3(i) of the Letter of Credit.]
[(6) The Eligible Bonds in respect of which this drawing is being made
are not Eligible Bonds in the Flexible Mode, and payment of this drawing
shall be made in accordance with Paragraph 3(ii) of the Letter of Credit].
IN WITNESS WHEREOF, the Paying Agent has executed and delivered
this Certificate as of the day of , .
[NAME OF PAYING AGENT],
as Paying Agent
By
Title:
EXHIBIT 2
TO THE LETTER OF CREDIT
CERTIFICATE FOR REDEMPTION/
MANDATORY PURCHASE DRAWING
The undersigned, a duly authorized officer of (the "Paying
Agent"), hereby certifies as follows to Barclays Bank PLC, New York Branch
(the "Bank"), with reference to Irrevocable Letter of Credit No.
(the "Letter of Credit") issued by the Bank in favor of the Paying Agent.
Terms defined in the Letter of Credit and used but not defined herein shall
have the meanings given them in the Letter of Credit.
(1) The Paying Agent is the Paying Agent under the Indenture for the
holders of the Bonds.
(2) The Paying Agent is making a Redemption/Mandatory Purchase Drawing
under the Letter of Credit in the amount of $
[pursuant to Section 308(c)(i) and Section 605 of the Indenture to
pay the principal of Eligible Bonds due pursuant to the Indenture
upon maturity or as a result of acceleration of such Eligible Bonds
in accordance with the Indenture and the terms of such Eligible
Bonds.]
[pursuant to Section 308(c)(i) of the Indenture to pay that portion
of the redemption price corresponding to principal of [and premium
on Eligible Bonds due pursuant to the Indenture upon redemption of
such Eligible Bonds in accordance with the Indenture and the terms
of such Eligible Bonds.]
[pursuant to Section 308(c)(ii) of the Indenture to pay that
portion of the purchase price of Eligible Bonds corresponding to
principal that are subject to mandatory tender for purchase
pursuant to Section 301(e)(iv)(A) of the Indenture.]
(3) The amount of [principal of] [redemption price corresponding to
principal of] [and premium on] [purchase price corresponding to principal of]
Eligible Bonds which is due and payable and with respect to the payment of
which the Paying Agent, pursuant to the foregoing Section[s] of the
Indenture, is to draw under the Letter of Credit is as follows, and the
amount of the draft accompanying this Certificate does not exceed such
amount:
Principal: $
[Premium $ ]
(4) The amount of the draft accompanying this Certificate being drawn
in respect of payment of [principal] [redemption price corresponding to
principal] [purchase price corresponding to principal] of Eligible Bonds, as
indicated in paragraph (3), above, does not exceed the Principal Component of
the Letter of Credit. [The amount of the draft accompanying this Certificate
being drawn in respect of that portion of the redemption price of Eligible
Bonds corresponding to premium, as indicated in paragraph (3), above, does
not exceed the Premium Component of the Letter of Credit.] The amount of the
draft accompanying this Certificate in respect of payment of [principal]
[redemption price corresponding to principal] [and premium] [purchase price
corresponding to principal] of such Eligible Bonds has been computed in
accordance with the terms and conditions of such Eligible Bonds and the
Indenture.
(5) No proceeds of this drawing will be applied to the payment of
principal, redemption price (including premium, if any) or purchase price of
any Bonds that are not Eligible Bonds, including any Pledged Bonds (as
defined in the Indenture), any Company Bonds (as defined in the Indenture),
and any Bonds in the Fixed Rate Mode (as defined in the Indenture).
(6) Payment of this drawing shall be made in accordance with Paragraph
3(ii) of the Letter of Credit.
[(7) The draft accompanying this Certificate is the final draft to be
drawn under the Letter of Credit, and, upon the honoring of such draft, the
Letter of Credit will expire in accordance with its terms.]
IN WITNESS WHEREOF, the Paying Agent has and delivered
executed
this Certificate as of the day of , .
[NAME OF PAYING AGENT],
as Paying Agent
By
Title:
EXHIBIT 3
TO THE LETTER OF CREDIT
CERTIFICATE FOR INTEREST DRAWING
The undersigned, a duly authorized officer of (the "Paying Agent"),
hereby certifies as follows to Barclays Bank PLC, New York Branch (the
"Bank"), with reference to Irrevocable Letter of Credit No. (the
"Letter of Credit") issued by the Bank in favor of the Paying Agent. Terms
defined in the Letter of Credit and used but not defined herein shall have
the meanings given them in the Letter of Credit.
(1) The Paying Agent is the Paying Agent under the Indenture for the
holders of the Bonds.
(2) The Paying Agent is making a drawing under the Letter of Credit in
the amount of $ with respect to [the payment of interest] [the payment
of the portion of redemption price corresponding to interest] [the payment of
the portion of purchase price corresponding to interest] on Eligible Bonds in
accordance with the Indenture.
(3) The amount of [interest] [redemption price corresponding to
interest] [purchase price corresponding to interest] on Eligible Bonds that
is due and owing is as follows, and the amount of the draft accompanying this
Certificate does not exceed such amount:
Interest: $
(4) The amount of the draft accompanying this Certificate being drawn
in respect of payment of [interest] [redemption price corresponding to
interest] [purchase price corresponding to interest] on Eligible Bonds, as
indicated in paragraph (3), above, does not exceed the Interest Component of
the Letter of Credit. The amount of the draft accompanying this Certificate
in respect of payment of [interest] [redemption price corresponding to
interest] [purchase price corresponding to interest] on Eligible Bonds has
been computed in accordance with the terms and conditions of such Eligible
Bonds and the Indenture.
(5) Payment of this drawing shall be made in accordance with Paragraph
3(ii) of the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
Certificate as of the day of , .
[NAME OF PAYING AGENT],
as Paying Agent
By
Title:
EXHIBIT 4
TO THE LETTER OF CREDIT
NOTICE OF REDUCTION
The undersigned, a duly authorized officer of (the
"Paying Agent"), hereby certifies as follows to Barclays Bank PLC, New York
Branch (the "Bank"), with reference to Irrevocable Letter of Credit No.
(the "Letter of Credit") issued by the Bank in favor of the Paying Agent.
Terms defined in the Letter of Credit and used but not defined herein shall
have the meanings given them in the Letter of Credit.
(1) The Paying Agent is the Paying Agent under the Indenture for the
holders of the Bonds.
(2) As of the date hereof; the aggregate principal amount of Eligible
Bonds (including for this purpose all Pledged Bonds and all Company Bonds)
outstanding is
Principal: $
(3) You are hereby directed to reduce the [Principal] [Premium] [and]
[Interest] Components of the Letter of Credit as follows:
[The Principal Component of the Letter is reduced to $ .]
[The Premium Component of the Letter of Credit is reduced to $ .]
[The Interest Component of the Letter of Credit is reduced to $ .]
IN WITNESS WHEREOF, the Paying Agent has delivered this Certificate as
of the day of , .
[NAME OF PAYING AGENT],
as Paying Agent
By
Title:
EXHIBIT 5
TO THE LETTER OF CREDIT
NOTICE OF REINSTATEMENT
The undersigned, a duly authorized officer of Barclays Bank PLC, New York
Branch (the "Bank"), hereby gives the following notice to as
paying agent (the "Paying Agent"), with reference to Irrevocable Letter of
Credit No. (the "Letter of Credit") issued by the Bank in favor of
the Paying Agent. Terms defined in the Letter of Credit and used but not
defined herein have the meanings given them in the Letter of Credit.
The Bank hereby notifies you that:
[1.] [Pursuant to Paragraph 5(i)(B) of the Letter of Credit and Section
2.04(b)(ii) of the Reimbursement Agreement, the Interest Component has
been reinstated by $ .]
[2.] [Pursuant to Paragraph 5(ii)(B) of the Letter of Credit and Section
2.04(c) of the Reimbursement Agreement, the Principal Component has been
reinstated by $ .]
IN WITNESS WHEREOF, the Bank has executed and delivered this Notice
Reinstatement as of the day of ,
BARCLAYS BANK PLC,
NEW YORK BRANCH
By
Title:
EXHIBIT 6
TO THE LETTER OF CREDIT
INSTRUCTIONS TO TRANSFER
Re: Irrevocable Letter of Credit No.
Gentlemen:
The undersigned, as Paying Agent under that certain Amended and
Restated Series E Loan and Trust Agreement, dated as of April 1, 1999 (the
"Indenture"), by and among the Business Finance Authority (formerly The
Industrial Development Authority) of the State of New Hampshire (the
"Issuer"), Public Service Company of New Hampshire and the State Street Bank
and Trust Company, as Trustee, is named as beneficiary in the Letter of
Credit referred to above (the "Letter of Credit"). The Transferee named below
has succeeded the undersigned as Paying Agent under such Indenture.
(Name of Transferee)
(Address)
Therefore, for value received, the undersigned hereby irrevocably
instructs you to transfer to such Transferee all rights of the undersigned to
draw under the Letter of Credit.
Such Transferee shall hereafter have the sole rights as beneficiary
under the Letter of Credit; provided, however, that no rights shall be deemed
to have been transferred to such Transferee until such transfer complies with
the requirements of the Letter of Credit pertaining to transfers.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the day of , .
[NAME OF RETIRING PAYING AGENT],
as Paying Agent
By
Title:
The undersigned, [Name of Transferee], hereby accepts the foregoing
transfer of rights under the Letter of Credit.
[Name of Transferee]
By
Title:
Address of Principal
Corporate Trust Office:
[insert address]
<PAGE>
EXHIBIT 1.01B to
Reimbursement Agreement
PARTICIPATION ASSIGNMENT
Dated , 19
Reference is made to the Third Series E Letter of Credit and
Reimbursement Agreement, dated as of April 14, 1999 (said Agreement as it may
hereafter be amended or otherwise modified from time to time, being the
"Agreement"; unless otherwise defined herein terms defined in the Agreement
are used herein with the same meaning), among Public Service Company of New
Hampshire (the "Account Party"), Barclays Bank PLC, New York Branch
("Barclays"), as Issuing Bank, the Participating Banks named therein and from
time to time parties thereto, and Barclays, as Agent. Pursuant to the
Agreement, (the "Assignor") has purchased a participation from
the Issuing Bank in and to the Letter of Credit and each payment thereunder
and demand loan made by the Issuing Bank and has committed to make Advances
to the Account Party.
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 that portion set forth in Section 1(c) of
Schedule 1 hereto (the "Assigned Interest") of the Assignor's rights and
obligations under the Agreement and the Pledge Agreement, including, without
limitation, the participation purchased by the Assignor pursuant to
Section 3.07 of the Agreement in respect of unreimbursed amounts and demand
loans owing from time to time to the Issuing Bank, the Commitment of the
Assignor to make Advances and the Advances outstanding on the Effective Date
(as hereinafter defined). Such Assigned Interest represents the percentage
interest specified in Section 2(b) of Schedule 1 of all outstanding rights
and obligations of the Participating Banks under the Agreement, and, after
giving effect to such sale and assignment, the Assignee's and Assignor's
Participation Percentages will be as set forth in Sections 2(b) and 2(c),
respectively, of Schedule 1. The effective date of this sale and assignment
shall be the date specified in Section 3 of Schedule 1 (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, an amount equal to (1) the aggregate amount of unreimbursed letter
of credit payments, demand loans and Advances outstanding (as set forth in
Section 1 of Schedule 1) times (2) the Assigned Interest. 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 Agreement and the
Pledge Agreement 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 reimbursements, principal, interest, fees, indemnities in respect of
claims arising after the Effective Date, increased costs, additional amounts
or otherwise; (ii) the right to vote and to instruct the Agent and the
Issuing Bank under the Agreement based on the Assigned Interest; (iii) the
right to set-off and to appropriate and apply deposits of the Account Party
as set forth in the 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 Account Party, the 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; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Agreement or
the Related Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Agreement the Related Documents or
any other instrument or document furnished pursuant thereto; and (iii) makes
no representation or warranty and assumes no responsibility with respect to
the financial condition of the Account Party or the performance or observance
by the Account Party of any of its obligations under the Agreement, the
Related Documents or any other instrument or document furnished pursuant
thereto.
4. The Assignee (i) confirms that it has received a copy of the
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 Assignment; (ii) agrees that it will, independently and without reliance
upon the Agent, the Issuing Bank, the Assignor or any other Participating
Bank and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not
taking action under the Agreement and the Related Documents; (iii) appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under the Agreement and the Pledge Agreement as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (iv) agrees that it will perform in accordance
with its terms all of the obligations which by the terms of the Agreement are
required to be performed by it as a Participating Bank and (v) confirms that
it has paid the processing fee referred to in subsection 10.06(b) of the
Agreement.
5. Following the execution of this Assignment, it will be delivered to
the Agent for acceptance and recording by the Agent. Upon such acceptance
and recording and receipt of the consent of the Issuing Bank required
pursuant to Section 10.06(b) of the Agreement (which shall be evidenced by
the Issuing Bank's execution of this Assignment on the appropriate space on
Schedule 1), as of the Effective Date, (i) the Assignee shall be a party to
the Agreement and, to the extent provided in this Assignment, have the rights
and obligations of a Participating Bank thereunder and under the Pledge
Agreement and (ii) the Assignor shall, to the extent provided in this
Assignment, relinquish its rights and be released from its obligations under
the Agreement and the Pledge Agreement.
6. Upon such acceptance, recording and consent, from and after the
Effective Date, the Agent shall make all payments under the Agreement in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest and fees with respect thereto) to the
Assignee at its address set forth on Schedule 1 hereto. The Assignor and
Assignee shall make all appropriate adjustments in payments under the
Agreement for periods prior to the Effective Date directly between
themselves.
7. This Assignment shall be governed by, and construed in accordance
with, the laws of the State of New York.
8. This Assignment may be executed in counterparts by the parties
hereto, each of which counterpart 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 WITNESS WHEREOF, the parties hereto have caused this 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
Participation Assignment
Dated , 19
Section 1.
(a) Total Unreimbursed Payments and demand loans
$
(b) Total Advances:
$
(c) Assigned Interest (1)
%
(1) Specify percentage to no more than 8 decimal points.
Section 2.
(a) Assignor's Participation Percentage (immediately prior to the
effectiveness of this Assignment)
%
(b) Assignee's Participation Percentage(2)
%
(c) Assignor's Participation Percentage(3) (upon the effectiveness of this
Assignment)
%
Section 3.
Effective Date.(3)
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:
[Address]
Telecopier No.
Attention:
(2) The sum of the percentages set forth in Section 2(b) and (c) shall equal
to the percentage set forth in Section 2(a).
(3) Such date shall be at least 5 Business Days after the execution of this
Assignment.
Consented to and Accepted this day(4)
of ,
BARCLAYS BANK, PLC,
NEW YORK BRANCH, as
Issuing Bank and as Agent
By:
Title:
APPLICABLE LENDING OFFICES
The Assignee's Applicable Lending Offices are as follows:
Domestic Lending Office:
Eurodollar Lending Office:
(4) Not to be accepted without proof of Account Party's consent pursuant to
Section 10.06(b) of the Reimbursement Agreement.
EXHIBIT 4.3.7.1
THIRD SERIES E LETTER OF CREDIT
AND REIMBURSEMENT AGREEMENT
Dated as of April 14, 1999
This THIRD SERIES E LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated
as of April 14, 1999 (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 "Account Party");
(ii) Barclays Bank PLC, New York Branch ("Barclays"), as issuer of
the Letter of Credit (the "Issuing Bank");
(iii) The Participating Banks (as hereinafter defined) from
time to time party hereto; and
(iv) Barclays as agent (together with any successor agent
hereunder, the "Agent") for such Participating Banks and the Issuing
Bank.
PRELIMINARY STATEMENT
The Business Finance Authority (formerly The Industrial Development
Authority) of the State of New Hampshire (the "Issuer"), pursuant to a Series
E Loan and Trust Agreement, dated as of May 1, 1991 (the "Original
Indenture"), by and among the Issuer, the Account Party and State Street Bank
and Trust Company, as trustee (such entity, or its successor as trustee,
being the "Trustee"), previously issued $114,500,000 aggregate principal
amount of 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) (such bonds being herein referred to as the
"Taxable Bonds"). Pursuant to the Original Indenture, a First Supplement
thereto, dated as of December 1, 1993 and a Second Supplement thereto, dated
as of May 1, 1995 (the Original Indenture, as so supplemented by such First
Supplement and such Second Supplement and as the same may be further
supplemented, amended or modified from time to time with the written consent
of the Issuing Bank, being herein referred to as the "Existing Indenture"),
the Issuer refunded $44,800,000 aggregate principal amount of the Taxable
Bonds through the issuance of $44,800,000 aggregate principal amount of
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) (such bonds being herein referred to as the
"Original Tax-Exempt Refunding Bonds").
The Account Party previously caused Swiss Bank Corporation ("Swiss
Bank") to issue its Irrevocable Letter of Credit No. S561992, dated May 2,
1995 in a stated amount of $119,129,000 (the "Existing Letter of Credit"), in
support of the Taxable Bonds and the Original Tax-Exempt Refunding Bonds,
and, in connection therewith, the Account Party entered into a Second Series
E Letter of Credit and Reimbursement Agreement dated as of May 1, 1995 (the
"Existing Reimbursement Agreement") with Swiss Bank as issuing bank and agent
thereunder and the participating banks referred to therein.
On April 23, 1998 and May 1, 1998, respectively, the parties to the
Existing Reimbursement Agreement: (i) caused the Existing Reimbursement
Agreement to be amended and restated in its entirety and (ii) caused the
Existing Letter of Credit to be amended and extended, as a result of which
transactions, the stated expiry date of the Existing Letter of Credit was
extended to April 22, 1999 and the Original Tax-Exempt Refunding Bonds ceased
to be entitled to the benefits of the Existing Letter of Credit.
The Account Party now wishes to replace the Existing Letter of Credit
with an irrevocable, transferable letter of credit issued by the Issuing Bank
in an aggregate amount of $73,666,000 (the "Stated Amount"), of which
(i) $69,700,000 shall support the payment of principal of the Taxable Bonds
(or the portion of the purchase or redemption price of Taxable Bonds
corresponding to principal), (ii) $3,966,000 shall support the payment of up
to 128 days' interest on the principal amount of Taxable Bonds (or the
portion of the purchase or redemption price of Taxable Bonds corresponding to
interest), computed at a maximum interest rate of 16% per annum on the basis
of the actual days elapsed and a year of 360 days, subject to modification as
provided in Section 2.06 hereof, and (iii) $0.00 shall support the payment of
premium on Taxable Bonds, and otherwise in the form of Exhibit 1.01A hereto
(such letter of credit, as the same may from time to time be extended,
amended or otherwise modified pursuant to the terms of this Agreement, being
hereinafter referred to as the "Letter of Credit"). Concurrently therewith,
the Issuer, the Account Party and the Trustee are entering into that certain
Amended and Restated Series E Loan and Trust Agreement, dated as of April 1,
1999 (the "Indenture"), which Indenture amends and restates the Existing
Indenture in its entirety.
The Issuing Bank has agreed to issue the Letter of Credit, and the
Participating Banks have agreed to make certain advances and acquire certain
participation interests, in each case subject to the terms and conditions set
forth in this Agreement (including the terms and conditions relating to the
rights and obligations of the Participating Banks).
NOW, THEREFORE, in consideration of the premises set forth herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1. Certain Defined Terms. In addition to the terms defined in
the Preliminary Statement hereto, 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):
"Advances" means Initial Advances and Term Advances, without
differentiation; individually, an "Advance".
"Affiliate" means, with respect to a specified Person, another
Person that directly or indirectly through one or more intermediaries
controls or is controlled by or is directly or indirectly under 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 ("CL&P") and the Account Party, as amended by the
First Amendment to Agreement for Capacity Transfer, dated as of May 1,
1992 between CL&P and the Account Party, which provides for capacity
transfers from the Account Party to CL&P.
"Alternate Base Rate" means, for any period, a fluctuating interest
rate per annum equal at all times to the higher from time to time of:
(a) the rate of interest announced publicly by Barclays in
New York, New York, from time to time, as Barclays' prime rate; and
(b) 1/2 of one percent per annum above the Federal Funds Rate
from time to time;
plus, in either case, the Applicable Margin for Base Rate Advances. Each
change in the Alternate Base Rate shall take effect concurrently with
any change in such prime rate or Federal Funds Rate, as the case may be.
"Applicable Commission" means, for any day, two and one-quarter
percent (2.25%).
"Applicable Lending Office" means, with respect to each
Participating Bank, (i) (A) such Participating Bank's "Domestic Lending
Office", in the case of a Base Rate Advance, and (B) such Participating
Bank's "Eurodollar Lending Office," in the case of a Eurodollar Rate
Advance, in each case as specified opposite such Participating Bank's
name on Schedule I hereto (in the case of a Participating Bank initially
party to this Agreement) or in the Participation Assignment pursuant to
which such Participating Bank became a Participating Bank (in the case
of any other Participating Bank), or (ii) such other office or affiliate
of such Participating Bank as such Participating Bank may from time to
time specify to the Account Party and the Agent.
"Applicable Margin" means, for any day: (i) two and one-quarter
percent (2.25%), for any outstanding Eurodollar Rate Advance, and (ii)
one and one-quarter percent (1.25%), for any outstanding Base Rate
Advance.
"Arranger" means Barclays Bank PLC.
"Available Amount" in effect at any time means the maximum
aggregate amount available to be drawn at such time under the Letter of
Credit, the determination of such maximum amount to assume compliance
with all conditions for drawing and no reduction for (i) any amount
drawn by the Paying Agent to make a regularly scheduled payment of
interest on the Bonds (unless such amount will not be reinstated under
the Letter of Credit) or (ii) any amount not available to be drawn
because Bonds are held by or for the account of the Account Party and/or
in pledge for the benefit of the Issuing Bank, but after giving effect
nevertheless, to any reduction in the Stated Amount effected pursuant to
Section 2.06 hereof.
"Bankruptcy Code" means Title 11 of the United States Code, as the
same may be amended from time to time, or any successor bankruptcy law
of the United States.
"Base Rate Advance" means an Advance in respect of which the
Account Party has selected in accordance with Article III hereof, or
this Agreement otherwise provides for, interest to be computed on the
basis of the Alternate Base Rate.
"Bonds" means (i) the Taxable Bonds outstanding as of the date
hereof and (ii) any Tax-Exempt Refunding Bonds (as defined in the
Indenture) that may be issued in accordance with the Indenture and this
Agreement to refund any of such remaining Taxable Bonds; provided,
however, that the term "Bonds" shall in no event include the Original
Tax-Exempt Refunding Bonds.
"Business Day" means a day of the year that is not a Sunday, legal
holiday or a day on which banks are required or authorized to close in
New York City and, (i) if the applicable Business Day relates to any
Eurodollar Rate Advance, is a day on which dealings are carried on in
the London interbank market and/or (ii) if the applicable Business Day
relates to any action to be taken by, or notice furnished to or by, or
payment to be made to or by, the Trustee, the Paying Agent, the
Remarketing Agent or the First Mortgage Trustee, is a day on which
(A) banking institutions are not authorized pursuant to law to close,
(B) the corporate trust office of the First Mortgage Trustee is open for
business, (C) banking institutions in all of the cities in which the
principal offices of the Issuing Bank, the Trustee, the Paying Agent,
the First Mortgage Trustee and, if applicable, the Remarketing Agent are
located are not required or authorized to remain closed and (D) the New
York Stock Exchange is not closed.
"Cash Account" has the meaning assigned to that term in Section
7.05.
"CL&P" has the meaning assigned to that term in the definition of
Agreement for Capacity Transfer.
"Closing Date" means the Business Day upon which each of the
conditions precedent enumerated in Sections 5.01 and 5.02 of this
Agreement shall be fulfilled to the satisfaction of the Agent, the
Issuing Bank, the Participating Banks and the Account Party. All
transactions contemplated to occur on the Closing Date shall occur
contemporaneously on or prior to April 14, 1999, at the offices of King
& Spalding, 1185 Avenue of the Americas, New York, New York 10036, at
12:01 A.M. (New York City time), or at such other place and time as the
parties hereto may mutually agree.
"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 Agent" means Barclays and any successor as collateral
agent under the Intercreditor Agreement.
"Commitment" means, for each Participating Bank, such Participating
Bank's Percentage of the Available Amount. "Commitments" shall refer to
the aggregate of the Commitments.
"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 Account Party and the surplus,
paid-in, earned and other, if any, of the Account Party.
"Confidential Information" has the meaning assigned to that term in
Section 10.09 hereof.
"Conversion", "Convert" or "Converted" each refers to a conversion
of Term Advances pursuant to Section 3.04 hereof, including, but not
limited to any selection of a longer or shorter Interest Period to be
applicable to such Term Advances or any conversion of a Term Advance as
described in Section 3.04(c) hereof.
"Credit Termination Date" means the date on which the Letter of
Credit shall terminate in accordance with its terms.
"date hereof" means April 14, 1999.
"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 (not
including 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.
"Default Rate" means a fluctuating interest rate equal at all times
to 2% per annum above the rate applicable to Base Rate Advances at such
time.
"Disclosure Documents" means the Information Memorandum, the 1998
10-K and any Current Report on Form 8-K filed by the Account Party with
the Securities and Exchange Commission after December 31, 1998 and
furnished to the Participating 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 any trade or business (whether or not
incorporated, that, together with the Account Party is treated as a
single employer under Section 414(b) or (c) of the Code or, solely for
purposes of Section 302 of ERISA and Section 412 of the Code, is treated
as a single employer under Section 414 of the Code.
"ERISA Multiemployer Plan" means a "multiemployer plan" subject to
Title IV of ERISA.
"ERISA Plan" means an employee benefit plan (other than an ERISA
Multiemployer Plan) maintained for employees of the Account Party or any
ERISA Affiliate and covered by Title IV of ERISA.
"ERISA Plan Termination Event" means (i) a "reportable event", as
defined in Section 4043 of ERISA or the regulations issued thereunder
(other than an event for which the 30-day notice period is waived) with
respect to an ERISA Plan or an ERISA Multiemployer Plan, or (ii) the
existence with respect to any ERISA plan of an "accumulated funding
deficiency" (as defined in Section 412(d) of the Code or Section 302 of
ERISA), whether or not waived; (iii) the filing pursuant to Section
412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any ERISA Plan;
(iv) the incurrence by the Account Party or any of its ERISA Affiliates
of any liability under Title IV or ERISA with respect to the termination
of any ERISA Plan; (v) the receipt by Account Party or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating
to an intention to terminate any ERISA Plan or an ERISA Multiemployer
Plan under Section 4041 of ERISA or to appoint a trustee to administer
any ERISA Plan or ERISA Multiemployer Plan; (vi) the receipt by the
Account Party or any of its ERISA Affiliates of any notice, or the
receipt by an ERISA Multiemployer Plan from the Account Party or any of
its ERISA Affiliates of any notice, concerning the imposition of
liability due to any withdrawal of the Account Party 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 a determination that an ERISA Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the
meaning of Title IV of ERISA or (vii) 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 Rate" means for any Interest Period for any Eurodollar
Rate Advances comprising part of the same Term Borrowing, an interest
rate per annum equal at all times during such Interest Period to the sum
of:
(i) the rate per annum (rounded upward to the nearest whole
multiple of 1/100 of 1% per annum, if such rate is not such a
multiple) determined by the Agent at which deposits in United
States dollars in amounts comparable to the Eurodollar Rate Advance
of Barclays comprising part of such Term Borrowing and for
comparable periods as such Interest Period are offered by the
principal office of Barclays 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, plus
(ii) the Applicable Margin.
"Eurodollar Rate Advance" means an Advance in respect of which the
Account Party 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 Participating Bank 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 Participating
Bank 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 assigned to that term in Section
8.01.
"Existing Letter of Credit" has the meaning assigned to that term
in the Preliminary Statement.
"Existing Reimbursement Agreement" has the meaning assigned to
that term in the Preliminary Statement.
"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 on the next
succeeding Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers
of recognized standing selected by it.
"Final Plan" means the "Final Plan" implementing Chapter 374-F of
the Revised Statutes Annotated of New Hampshire, adopted by the NHPUC on
February 28, 1997, and any successor plan or proposal.
"First Mortgage Bonds" means first mortgage bonds issued or to be
issued by the Account Party 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
Account Party or by a governmental authority at the Account Party's
request.
"First Mortgage Indenture" means the General and Refunding Mortgage
Indenture, between the Account Party and New England Merchants National
Bank, as trustee and to which First Union National Bank is successor
trustee, dated as of August 15, 1978, as amended and supplemented
through the date hereof and as the same may thereafter be amended,
supplemented or modified from time to time.
"First Mortgage Trustee" means the trustee from time to time under
the First Mortgage Indenture.
"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 Transaction Document, Loan
Document, Related Document or Significant Contract, (ii) the grant and
perfection of any security interest, lien or mortgage contemplated by
the Security Documents, (iii) the nature of the Account Party's business
as conducted or the nature of the property owned or leased by it or (iv)
any NUG Settlement. For purposes of this Agreement, Chapter 362-C of
the Revised Statutes Annotated of New Hampshire, as in effect on May 2,
1995, 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" has the meaning assigned to that term in the
Preliminary Statement.
"Indenture Assets" means fixed assets of the Account Party
(including related Governmental Approvals and regulatory assets) 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, 1999 regarding the Account Party, as
distributed to the Issuing Bank and the Participating Banks, including,
without limitation, all schedules, attachments and supplements, if any,
thereto.
"Initial Advance" has the meaning assigned to that term in Section
3.02(a) hereof.
"Initial Repayment Date" has the meaning assigned to that term in
Section 3.02(a) hereof.
"Intercreditor Agreement" means the Collateral Agency and
Intercreditor Agreement, dated as of April 23, 1998, as amended and
restated as of the date hereof by the Intercreditor Amendment, among
the Agent, Barclays as "Agent" under the Other Reimbursement Agreement
and Barclays as Collateral Agent, as the same may be amended, modified
or supplemented from time to time.
"Intercreditor Amendment" means the First Amendment, dated as of
April 14, 1999, to the Collateral Agency and Intercreditor Agreement,
dated as of April 23, 1998, among The Chase Manhattan Bank ("Chase"), as
"Administrative Agent" under the 1998 Revolving Credit Agreement, UBS
AG, Stamford Branch, as successor to Swiss Bank, Stamford Branch, as
"Agent" under the Existing Reimbursement Agreement, Barclays, as
"Agent" under the "Other Reimbursement Agreement" referred to in the
Existing Reimbursement Agreement, the Agent, Barclays as "Agent" under
the Other Reimbursement Agreement, Chase, as the original Collateral
Agent thereunder and Barclays as successor Collateral Agent thereunder.
"Interest Component" has the meaning assigned to that term in the
Letter of Credit.
"Interest Drawing" has the meaning assigned to that term in the
Letter of Credit.
"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
3.03(b) hereof.
"Issuer" has the meaning assigned to that term in the Preliminary
Statement.
"Issuer Resolution" means the resolution adopted by the Issuer that
authorized the issuance of the Bonds, approved the terms and provisions
of the Bonds, and approved those of the documents related to the Bonds
to which the Issuer is a party.
"Letter of Credit" has the meaning assigned to that term in the
Preliminary Statement.
"Lien" has the meaning assigned to that term in Section 7.02(a)
hereof.
"Loan Documents" means this Agreement and the Security Documents,
as each may be amended, supplemented or otherwise modified from time to
time.
"Major Electric Generating Plants" means the following nuclear,
combustion turbine and coal, oil or diesel-fired generating stations of
the Account Party: 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, (i) the
Issuing Bank and (ii) Participating Banks who, collectively, on such
date, have Participation Percentages in the aggregate of at least 66-
2/3%. Determination of those Participating Banks satisfying the criteria
specified above for action by the Majority Lenders shall be made by the
Agent and shall be conclusive and binding on all parties absent manifest
error.
"Material Adverse Effect" means a material adverse effect upon: (i)
the Account Party's business, prospects, operations, properties, assets,
or condition (financial or otherwise), (ii) the Account Party's ability
to perform under any Loan Document, Related Document, the Rate Agreement
or any Significant Contract, (iii) the value, validity, perfection and
enforceability of the any Lien granted under or in connection with any
Security Document, or (iv) the ability of the Collateral Agent, the
Agent or the Issuing Bank to enforce any of the obligations or any of
their material rights and remedies under the Loan Documents; provided,
that, any material adverse development with respect to the Rate
Proceeding, the Rate Agreement or the Final Plan that results in a
material adverse effect on the Account Party other than as described in
the Disclosure Documents shall automatically be deemed to be a Material
Adverse Effect.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"NAEC" means North Atlantic Energy Corporation, a wholly-owned
subsidiary of NU.
"NHPUC" means the New Hampshire Public Utilities Commission.
"1998 10-K" means the Account Party's 1998 Annual Report and its
Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
"1998 Revolving Credit Agreement" means the $75,000,000 (original
principal amount) Revolving Credit Agreement, dated as of April 23,
1998, among the Account Party, the Banks named therein and The Chase
Manhattan Bank, as Administrative Agent.
"NU" means Northeast Utilities, an unincorporated voluntary
business association organized under the laws of the Commonwealth of
Massachusetts.
"NUG Settlement" means any buy-out, buy-down or other transaction,
or any other arrangement or agreement, entered into or proposed to be
entered into by the Account Party to terminate or reduce, or to resolve
a dispute concerning, an obligation of the Account Party to purchase
power and/or capacity from a non-utility generator.
"NUSCO" means Northeast Utilities Service Company, a Connecticut
corporation and a wholly-owned subsidiary of NU.
"Official Statement" means any Official Statement, Preliminary
Official Statement or similar disclosure document relating to the Bonds,
and shall include any amendment, supplement or "sticker" thereto.
"Operating Income" means, for any period, the Account Party'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 Account Party during such period, if and to the extent they are
deducted in the computation of the Account Party's operating income
for such period; and
(ii) increased by the amount of any depreciation deducted by
the Account Party during such period; and
(iii) increased by the amount of any amortization of
acquisition adjustment deducted by the Account Party during such
period; and
(iv) decreased by the amount of any capital expenditures paid
by the Account Party during such period.
"Original Indenture" has the meaning assigned to that term in the
Preliminary Statement.
"Original Tax-Exempt Refunding Bonds" has the meaning assigned to
that term in the Preliminary Statement.
"Other Reimbursement Agreement" means (i) the Third Series D Letter
of Credit and Reimbursement Agreement, dated as of April 14, 1999, among
the Account Party, Barclays, as issuing bank and agent thereunder and
the Participating Banks referred to therein relating to the Issuer's
Pollution Control Revenue Bonds (Public Service Company of New Hampshire
Project-1991 Taxable Series D), as the same may from time to time be
amended, modified or supplemented or (ii) any reimbursement agreement or
similar agreement relating to a substitute credit facility applicable to
such bonds.
"Participant" shall have the meaning assigned to that term in
Section 10.06(b) hereof.
"Participating Banks" means the Persons listed on the signature
pages to this Agreement following the heading "Participating Banks" and
any other Person who becomes a party hereto pursuant to Section 10.06
hereof.
"Participation Assignment" means a participation assignment entered
into pursuant to Section 10.06 hereof by any Participating Bank and an
assignee, in substantially the form of Exhibit 1.01B hereto.
"Participation Percentage" means, as of any date of determination:
(i) with respect to a Participating Bank initially a party to this
Agreement, the percentage set forth opposite such Participating Bank's
name on the signature pages hereto, except as provided in clause (iii),
below, (ii) with respect to a Participating Bank that becomes a party
hereto by operation of Section 10.06 hereof, the Participation
Percentage stated to be assumed by such assignee Participating Bank in
the relevant Participation Assignment, except as provided in clause
(iii), below, and (iii) at any time, with respect to any Participating
Bank that assigns a percentage of its interests in accordance with
Section 10.06 hereof, its Participation Percentage determined in
accordance with clause (i) or clause (ii), above, as reduced by the
percentage so assigned.
"Paying Agent" means (i) U.S. Bank Trust National Association
(formerly First Trust of New York, National Association), and (ii) any
successor paying agent for the Bonds under the Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor entity) established under ERISA.
"Permitted Investments" means (i) securities issued or directly and
fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not
more than six (6) months from the date of acquisition by such Person;
(ii) time deposits and certificates of deposit, with maturities of not
more than six (6) months from the date of acquisition by such Person, of
any international commercial bank of recognized standing having capital
and surplus in excess of $500,000,000 and having a rating on its
commercial paper of at least A-1 or the equivalent thereof by S&P or at
least P-1 or the equivalent thereof by Moody's; (iii) commercial paper
issued by any Person, which commercial paper is rated at least A-1 or
the equivalent thereof by S&P or at least P-1 or the equivalent thereof
by Moody's and matures not more than six (6) months after the date of
acquisition by such Person; (iv) investments in money market funds
substantially all the assets of which are comprised of securities of the
types described in clauses (i) and (ii) above and (v) United States
Securities and Exchange Commission registered money market mutual funds
conforming to Rule 2a-7 of the Investment Company Act of 1940 in effect
in the United States, that invest primarily in direct obligations issued
by the United States Treasury and repurchase obligations backed by those
obligations, and rated in the highest category by S&P and Moody's.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
estate, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Pledge Agreement" means the Third Series E Pledge Agreement, dated
as of April 14, 1999, by the Account Party in favor of the Issuing Bank
and substantially in the form of Exhibit 1.01C, as the same may from
time to time be amended, modified or supplemented.
"Pledged Bonds" shall have the meaning assigned to that term in the
Pledge Agreement.
"Preferred Stock" means 3,000,000 shares of Series A Preferred
Stock of the Account Party (par value $25).
"Premium Component" has the meaning assigned to that term in the
Letter of Credit.
"Principal Component" has the meaning assigned to that term in the
Letter of Credit.
"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 Account Party as of July 10,1990 (excluding
the Unit Contract appended as Exhibit A thereto subsequent to the
effectiveness of such contract).
"Rate Proceeding" means all regulatory proceedings relating to the
Account Party and resulting from the NHPUC's adoption of the Final Plan,
together with the Federal litigation commenced by the Account Party and
certain of its Affiliates in response thereto.
"Recipient" has the meaning assigned to that term in Section 10.09
hereto.
"Related Documents" means the Letter of Credit, the Bonds, the
Indenture and any Remarketing Agreement.
"Remarketing Agent" has the meaning assigned to that term in the
Indenture.
"Remarketing Agreement" means (i) the Remarketing Agreement, dated
as of May 1, 1991, between the Account Party and Morgan Stanley & Co.
Incorporated relating to the Taxable Bonds, (ii) any similar agreement
subsequently entered into with respect to any Tax-Exempt Refunding
Bonds, other than the Original Tax-Exempt Refunding Bonds, and (iii) any
successor agreement to any of the foregoing or any similar agreement
between the Account Party and a successor Remarketing Agent as shall be
in effect from time to time in accordance with the terms of the
Indenture.
"Restricted Payment" has the meaning assigned to that term in
Section 7.02(e) hereof.
"Revolving Credit Facility" has the meaning assigned to that term
in Section 7.04 hereof.
"S&P" means Standard and Poor's Ratings Group or any successor
thereto.
"Secured Party" has the meaning assigned to that term in the
Intercreditor Agreement.
"Security Agreement" means the Assignment and Security Agreement,
dated as of April 23, 1998, as amended and restated as of the date
hereof by the Security Agreement Amendment, between the Account Party
and the Collateral Agent, pursuant to which the Account Party has
granted to the Collateral Agent a security interest in certain of the
Account Party's accounts receivable, as the same may be amended,
modified or supplemented from time to time in accordance with this
Agreement and the Intercreditor Agreement.
"Security Agreement Amendment" means the First Amendment, dated as
of April 14, 1999, to the Assignment and Security Agreement, dated as of
April 23, 1998, between the Account Party and the Collateral Agent.
"Security Documents" means the Pledge Agreement, the Security
Agreement, the Intercreditor Agreement, the Indenture, the First
Mortgage Indenture and the Series G First Mortgage Bonds.
"Series G First Mortgage Bonds" means the Account Party's Series G
First Mortgage Bonds.
"Sharing Agreement" means the Sharing Agreement, dated as of
June 1, 1992, among CL&P, Western Massachusetts Electric Company,
Holyoke Water Power Company, Holyoke Power and Electric Company, the
Account Party and NUSCO.
"Significant Contract" 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.
"Stated Amount" has the meaning assigned to that term in the
Preliminary Statement hereto.
"Stated Termination Date" means the expiration date specified in
clause (i) of the first paragraph of Paragraph (1) of the Letter of
Credit, as such date may be extended pursuant to Section 2.05 hereof.
"Swiss Bank" has the meaning assigned to that term in the
Preliminary Statement.
"Tax Allocation Agreement" means the Amended and Restated Tax
Allocation Agreement, dated as of January 1, 1990, as amended by a First
Supplement thereto, dated as of October 26, 1998, among NU and the
members of the consolidated group of which NU is the common parent,
including, without limitation, the Account Party.
"Taxable Bonds" has the meaning assigned to that term in the
Preliminary Statement.
" Tax-Exempt Refunding Bonds" has the meaning assigned to that term
in the Indenture.
"Tender Drawing" has the meaning assigned to that term in the
Letter of Credit.
"Term Advance" has the meaning assigned to that term in Section
3.02(b) hereof, and refers to a Base Rate Advance or a Eurodollar Rate
Advance (each of which shall be a "Type" of Term Advance). The Type of
a Term Advance may change from time to time when such Term Advance is
Converted. For purposes of this Agreement, all Term Advances of a
Participating Bank (or portions thereof) made as, or Converted to, the
same Type and Interest Period on the same day shall be deemed a single
Term Advance by such Participating Bank until repaid or next Converted.
"Term Borrowing" means a borrowing consisting of Term Advances of
the same Type and Interest Period made on the same day by the
Participating Banks, ratably in accordance with their respective
Participation Percentages. A Term Borrowing may be referred to herein
as being a "Type" of Term Borrowing, corresponding to the Type of Term
Advances comprising such Term Borrowing. For purposes of this Agreement,
all Term Advances made as, or Converted to, the same Type and Interest
Period on the same day shall be deemed a single Term Borrowing until
repaid or next Converted.
"Termination Date" means the Stated Termination Date or the earlier
date of termination of the Commitments pursuant to Sections 2.02 or 8.02
hereunder.
"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 Account Party
as at such day as the sum of (i) the principal amount of all long-term
Debt of the Account Party 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 Account Party on such day, (iii) the surplus
of the Account Party, paid-in, earned and other, if any, on such day and
(iv) the unpaid principal amount of all short-term Debt of the Account
Party on such day.
"Transaction Documents" means this Agreement, the Intercreditor
Amendment, the Security Agreement Amendment, the Other Reimbursement
Agreement and the other documents to be delivered by or on behalf of the
Account Party on or in connection with the Closing Date.
"Trustee" has the meaning assigned to that term in the Preliminary
Statement hereto.
"Type" has the meaning assigned to such term in the definitions of
"Term Advance" and "Term Borrowing" herein.
"Unit Contract" means the Unit Contract, dated as of June 1, 1992,
between the Account Party 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.
"Year 2000 Issue" means the failure of computer software, hardware
and firmware systems and equipment containing computer chips to properly
receive, transmit, process, manipulate, store, retrieve, re-transmit or
in any other way utilize data and information due to the occurrence of
the year 2000 or the inclusion of dates on or after January 1, 2000.
SECTION I.2. 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 I.3. 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 and pro formas
referred to in Section 5.01 hereof.
SECTION I.4. 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 (i) the Available Amount
on such date, (ii) the aggregate principal amount of all Advances outstanding
on such date and (iii) the aggregate amount of all demand loans under Section
3.01 hereunder on such date, in each case after giving effect to all
transactions to be made on such date and the application of the proceeds
thereof.
ARTICLE II
THE LETTER OF CREDIT
SECTION II.1. The Letter of Credit. The Issuing Bank agrees, on the
terms and conditions hereinafter set forth (including, without limitation,
the applicable conditions precedent set forth in Article V hereof), to issue
the Letter of Credit to the Paying Agent, upon not less than three Business
Days prior notice from the Account Party, on the Closing Date.
SECTION II.2. Termination of the Commitments. The obligation of the
Issuing Bank to issue the Letter of Credit shall automatically terminate if
not delivered at or prior to 5:00 P.M. (New York City time) on April 22,
1999.
SECTION II.3. Commissions and Fees. (a) The Account Party hereby agrees
to pay to the Agent, for the account of the Participating Banks ratably in
accordance with their respective Participation Percentages, a letter of
credit commission on the Available Amount in effect from time to time from
the date hereof until the Letter of Credit shall be surrendered for
cancellation (disregarding for such purpose any temporary diminution thereof
arising from drawings under the Letter of Credit to pay interest (or purchase
price corresponding to interest) on the Bonds, regardless of whether the
amount so drawn shall be thereafter reinstated), at a rate per annum equal to
the Applicable Commission, payable on the last Business Day of each month and
upon such surrender ; provided that if an Event of Default shall have
occurred and is continuing, the Applicable Commission in effect from time to
time shall be increased by a further 2%.
(a) The Account Party also agrees to pay to the Agent for the account
of the Participating Banks ratably in accordance with their respective
Participation Percentages, such participation fees as have been agreed among
them, the Account Party and the Agent, such participation fee to be payable
in full simultaneously with the issuance of the Letter of Credit.
(b) The Account Party also agrees to pay to the Agent, for the account
of the Issuing Bank, such other fees as have been agreed upon by the Account
Party and the Issuing Bank in that certain Fee Letter, dated February 23,
1999, between the Account Party and the Arranger (the "Fee Agreement").
(c) The Account Party also agrees to pay to the Agent, for its own
account and/or the account of Barclays, such other fees as have been agreed
upon by the Account Party and the Agent in the Fee Agreement.
SECTION II.4. Reinstatement of the Letter of Credit. (a) The Interest
Component and the Principal Component shall, from time to time, be reinstated
by the Issuing Bank in accordance with, and only to the extent provided in,
the Letter of Credit. In no event shall reductions in the Premium Component
be reinstated.
(a) Interest Component. With respect to reinstatement of reductions in
the Interest Component resulting from Interest Drawings:
(i) The Issuing Bank may only deliver to the Paying Agent any
notice of non-reinstatement pursuant to Paragraph 5(i)(A) of the Letter
of Credit if (A) the Issuing Bank and/or the Participating Banks have
not been reimbursed in full by the Account Party for one or more
drawings, together with interest if any, owing thereon pursuant to this
Agreement or (B) an Event of Default has occurred and is then
continuing.
(ii) if, subsequent to any such delivery of a notice of non-
reinstatement, the circumstances giving rise to the delivery of such
notice of non-reinstatement shall have ceased to exist (whether as a
result of reimbursement of unreimbursed drawings, or waiver or cure of
an Event of Default, or otherwise), then, provided that no other Event
of Default shall have occurred and be continuing, the Issuing Bank shall
deliver to the Paying Agent, by hand delivery or facsimile transmission,
a Notice of Reinstatement in the form of Exhibit 5 to the Letter of
Credit reinstating that portion of the Interest Component in respect of
which such notice of non-reinstatement was given.
(b) Principal Component. With respect to reinstatement of a reduction
in the Principal Component resulting from any Tender Drawing, IF:
(i) such reduction has not been reinstated pursuant to Paragraph
5(ii)(A) of the Letter of Credit;
(ii) the Issuing Bank and/or the Participating Banks shall have
been reimbursed by the Account Party for such Tender Drawing;
(iii) any demand loan(s) and Advance(s) made in respect of such
Tender Drawing shall have been repaid by the Account Party, together
with any interest thereon and any other amounts payable hereunder in
connection therewith; AND
(iv) no Event of Default shall have occurred and then be
continuing;
THEN, the Issuing Bank shall deliver to the Paying Agent, by hand delivery or
facsimile transmission, a Notice of Reinstatement in the form of Exhibit 5 to
the Letter of Credit reinstating the Principal Component to the extent of
such Tender Drawing.
SECTION II.5. Extension of the Stated Termination Date. Unless the
Letter of Credit shall have previously expired in accordance with its terms,
at least 105 days but not more than 120 days before the Stated Termination
Date, the Account Party may, by notice to the Agent (any such notice being
irrevocable), request the Issuing Bank and the Participating Banks to extend
the Stated Termination Date of the Letter of Credit for a period of one year.
If the Account Party shall make such request, the Agent shall promptly inform
the Issuing Bank and the Participating Banks and, no later than 60 days prior
to the Stated Termination Date, the Agent shall notify the Account Party in
writing (with a copy of such notice to the Trustee and the Paying Agent) if
the Issuing Bank and the Participating Banks consent to such request and the
conditions of such consent (including conditions relating to legal
documentation). The granting of any such consent shall be in the sole and
absolute discretion of the Issuing Bank and the Participating Banks, and if
the Agent shall not so notify the Account Party, such lack of notification
shall be deemed to be a determination not to consent to such request. No
such extension shall occur unless the Issuing Bank and all of the
Participating Banks consent thereto (or if less than all the Participating
Banks consent thereto, unless one or more other Participating Banks agree to
assume all of the Commitments of the non-consenting Participating Banks).
SECTION II.6. Modification of the Letter of Credit. In the event that
the Account Party elects to cause the issuance of any additional series of
Tax-Exempt Refunding Bonds pursuant to Article IV of the Indenture, the
Account Party may, but shall not be obligated to, propose amendments to the
Letter of Credit to change the method of computing the Interest Component or
such other terms thereof as may be necessary or appropriate in connection
with such issuance. Any such proposal shall be furnished to the Issuing Bank
in writing not later than 60 days prior to the date proposed for such
issuance. If the Issuing Bank shall consent to such amendments (which
consent, subject to the provisions of the next succeeding sentence, shall not
be unreasonably withheld) the Issuing Bank shall, upon surrender of the
Letter of Credit by the beneficiary thereof for amendment (or replacement, as
the Issuing Bank may elect), amend the Letter of Credit accordingly (or issue
a replacement Letter of Credit therefor reflecting such amendments but
otherwise identical to the Letter of Credit so surrendered). Notwithstanding
the foregoing, without the consent of the requisite Participating Banks as
determined in accordance with Section 10.01, the Issuing Bank shall not
consent to any amendment or amendments that (i) increase the Stated Amount or
the then-existing Available Amount, (ii) change or modify in any respect the
Credit Termination Date or any provision for determining the expiry or other
termination of the Letter of Credit, (iii) change or modify in any respect
the times, places or manner at or in which drawings under the Letter of
Credit are to be presented or paid, (iv) change or modify in any respect the
forms of drawing certificates and other annexes to the Letter of Credit,
(v) change the beneficiary of the Letter of Credit or the method prescribed
therein for the transfer of the Letter of Credit or (vi) as determined in the
good faith discretion of the Issuing Bank and its counsel, increase or
enlarge the scope, or modify the nature, of the Issuing Bank's and the
Participating Banks' credit exposure to the Account Party or any legal risks
related thereto or expose the Issuing Bank to any additional liability. In
furtherance of the foregoing, the Issuing Bank may condition the granting of
such consent on the receipt by the Issuing Bank of such certificates,
opinions of counsel and other assurances of the Account Party and its
counsel, or bond counsel or the Trustee or Paying Agent, as the Issuing Bank
may reasonably require. Each Participating Bank, by its execution of this
Agreement, or of the Participation Assignment pursuant to which it became a
Participating Bank, consents to, ratifies and affirms all actions taken and
to be taken by the Issuing Bank pursuant to this Section 2.06.
ARTICLE III
REIMBURSEMENT AND ADVANCES
SECTION III.1. Reimbursement on Demand. Subject to the provisions of
Section 3.02 hereof, the Account Party hereby agrees to pay (whether with the
proceeds of Initial Advances made pursuant to this Agreement or otherwise) to
the Issuing Bank on demand (a) on and after each date on which the Issuing
Bank shall pay any amount under the Letter of Credit pursuant to any draft,
but only after so paid by the Issuing Bank, a sum equal to such amount so
paid (which sum shall constitute a demand loan from the Issuing Bank to the
Account Party from the date of such payment by the Issuing Bank until so paid
by the Account Party), plus (b) interest on any amount remaining unpaid by
the Account Party to the Issuing Bank under clause (a), above, from the date
such amount becomes payable on demand until payment in full, at the Default
Rate in effect from time to time. No reinstatement of the Interest Component
or the Principal Component despite the failure by the Account Party to
reimburse the Issuing Bank for any previous drawing to pay interest on the
Bonds shall limit or impair the Account Party's obligations under this
Section 3.01.
SECTION III.2. Advances. Each Participating Bank agrees to make Initial
Advances and Term Advances for the account of the Account Party from time to
time upon the terms and subject to the conditions set forth in this
Agreement.
(a) Initial Advances; Repayment of Initial Advances. If the
Issuing Bank shall honor any Tender Drawing and if the conditions precedent
set forth in Section 5.03 of this Agreement have been satisfied as of the
date of such honor, then, each Participating Bank's payment made to the
Issuing Bank pursuant to Section 3.07 hereof in respect of such Tender
Drawing shall be deemed to constitute an advance made for the account of the
Account Party by such Participating Bank (each such advance being an "Initial
Advance" made by such Participating Bank). Each Initial Advance shall be made
as a Base Rate Advance, shall bear interest at the Alternate Base Rate and
shall not be entitled to be Converted. Subject to Article VIII of this
Agreement, each Initial Advance and all interest thereon shall be due and
payable on the earlier to occur of (i) the date 30 days from the date of such
Initial Advance (such repayment date being the "Initial Repayment Date" for
such Initial Advance) and (ii) the Termination Date. The Account Party may
repay the principal amount of any Initial Advance with (and to the extent of)
the proceeds of a Term Advance made pursuant to subsection (b), below, and
may prepay Initial Advances in accordance with Section 3.06 hereof.
(b) Term Advances; Repayment. Subject to the satisfaction of the
conditions precedent set forth in Section 5.04 hereof and the other
conditions of this subsection (b), each Participating Bank agrees to make one
or more advances for the account of the Account Party ("Term Advances") on
each Initial Repayment Date in an aggregate principal amount equal to the
amount of such Participating Bank's Initial Advances maturing on such Initial
Repayment Date. All Term Advances comprising a single Term Borrowing shall
be made upon written notice given by the Account Party to the Agent not later
than 11:00 A.M. (New York City time) (A) in the case of a Term Borrowing
comprised of Base Rate Advances, on the Business Day of such proposed Term
Borrowing or (B) in the case of a Term Borrowing comprised of Eurodollar Rate
Advances, three Business Days prior to the date of such proposed Term
Borrowing. The Agent shall notify each Participating Bank of the contents of
such notice promptly after receipt thereof. Each such notice shall specify
therein the following information: (W) the date on which such Term Borrowing
is to be made, (X) the principal amount of Term Advances comprising such Term
Borrowing, (Y) the Type of Term Borrowing and (Z) subject to Section 3.05(c),
the duration of the initial Interest Period, if applicable, proposed to apply
to the Term Advances comprising such Term Borrowing. The proceeds of each
Participating Bank's Term Advances shall be applied solely to the repayment
of the Initial Advances made by such Participating Bank and shall in no event
be made available to the Account Party. The principal amount of each Term
Advance, together with all accrued and unpaid interest thereon, shall be due
and payable on the earlier to occur of (x) the same calendar date occurring
12 months following the date upon which such Term Advance is made (or, if
such month does not have a corresponding date, on the last day of such month)
and (y) the Termination Date.
SECTION III.3. Interest on Advances. The Account Party shall pay
interest on the unpaid principal amount of each Advance from the date of such
Advance until such principal amount is paid in full at the applicable rate
set forth below:
(a) Alternate Base Rate. Except to the extent that the Account Party
shall elect to pay interest on any Advance for any Interest Period pursuant
to paragraph (c) of this Section 3.03, the Account Party shall pay interest
on each Advance (including all Initial Advances) from the date thereof until
the date such Advance is due, at a fluctuating interest rate per annum in
effect from time to time equal to the Alternate Base Rate in effect from time
to time. The Account Party shall pay interest on each Advance bearing
interest in accordance with this subsection monthly in arrears on the last
Business Day of each month and on the Termination Date or the earlier date
for repayment of such Advance (including the Initial Repayment Date therefor,
in the case of an Initial Advance); provided that if an Event of Default
shall have occurred and is continuing, any principal amounts outstanding
shall bear interest during such period, payable on demand, at a rate per
annum equal at all times to 2% per annum above the Alternate Base Rate in
effect from time to time.
(b) Interest Periods. Subject to the other requirements of this
Section 3.03 and to Section 3.05(c), the Account Party may from time to time
elect to have the interest on all Term Advances comprising part of the same
Term Borrowing determined and payable for a specified period (an "Interest
Period" for such Term Advances) in accordance with paragraph (c) of this
Section 3.03. The first day of an Interest Period for such Term Advances
shall be the date such Advance is made or most recently Converted, which
shall be a Business Day. All Interest Periods shall end on or prior to the
Stated Termination Date. Any Interest Period for a Term Advance that would
otherwise end after the Termination Date or earlier date for the repayment of
such Advance shall be deemed to end on the Termination Date or such earlier
repayment date, as the case may be.
(c) Eurodollar Rate. Subject to the requirements of this Section 3.03
and Article V hereof, the Account Party may from time to time elect to have
any Term Advances comprising part of the same Term Borrowing made as, or
Converted to, Eurodollar Rate Advances. Subject to Section 3.05(c), the
Interest Period applicable to such Eurodollar Rate Advances shall be of one,
two, three or six whole months' duration, as the Account Party shall select
in its notice delivered to the Agent pursuant to Section 3.02(b) or 3.04
hereof, as applicable. If the Account Party shall have made such election,
the Account Party shall pay interest on such Eurodollar Rate Advances at the
Eurodollar Rate for the applicable Interest Period for such Eurodollar Rate
Advances, which interest shall be payable on the last day of such Interest
Period, on the date for repayment for such Eurodollar Rate Advances and also,
in the case of any Interest Period of six months' duration, on that day of
the third month of such Interest Period which corresponds with 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 month); provided that if an Event of
Default shall have occurred and is continuing, any principal amounts
outstanding shall bear interest during such period, 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 Eurodollar Rate
for such Interest Period, and (B) thereafter, 2% per annum above the
Alternate Base Rate in effect from time to time. Any Interest Period
pertaining to Eurodollar Rate Advances that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.
(d) Interest Rate Determinations. The Agent shall give prompt notice
to the Account Party and the Participating Banks of the Eurodollar Rate
determined from time to time by the Agent to be applicable to each Eurodollar
Rate Advance.
SECTION III.4. Conversion of Term Advances. Subject to the
satisfaction of the conditions precedent set forth in Section 5.03 hereof,
the Account Party may elect to Convert one or more Term Advances of any Type
to one or more Term Advances of the same or any other Type on the following
terms and subject to the following conditions:
(a) Each Conversion shall be made as to all Term Advances comprising a
single Term Borrowing upon written notice given by the Account Party to the
Agent not later than 11:00 A.M. (New York City time) on the third Business
Day prior to the date of the proposed Conversion. The Agent shall notify
each Participating Bank of the contents of such notice promptly after receipt
thereof. Each such notice shall specify therein the following information:
(A) the date of such proposed Conversion (which in the case of Eurodollar
Rate Advances shall be last day of the Interest Period then applicable to
such Term Advances to be Converted), (B) Type of, and Interest Period, if
any, applicable to the Term Advances proposed to be Converted, (C) the
aggregate principal amount of Term Advances proposed to be Converted, and
(D) the Type of Term Advances to which such Term Advances are proposed to be
Converted and, subject to Section 3.05(c), the Interest Period, if any, to be
applicable thereto.
(b) During the continuance of an Unmatured Default or an Event of
Default, the right of the Account Party to Convert Term Advances to
Eurodollar Rate Advances shall be suspended, and all Eurodollar Rate Advances
then outstanding shall be Converted to Base Rate Advances on the last day of
the Interest Period then in effect, if, on such day, an Unmatured Default or
an Event of Default shall be continuing.
(c) If no notice of Conversion is received by the Agent as provided in
subsection (a) above with respect to any outstanding Eurodollar Rate
Advances, the Agent shall treat such absence of notice as a deemed notice of
Conversion providing for such Advances to be Converted to Base Rate Advances
on the last day of the Interest Period then in effect for such Eurodollar
Rate Advances.
SECTION III.5. Other Terms Relating to the Making and Conversion of
Advances. (a Notwithstanding anything in Section 3.02, 3.03 or 3.04, above,
to the contrary:
(i) at no time shall more than six different Term Borrowings in
the aggregate be outstanding hereunder and under the Other Reimbursement
Agreement; and
(ii) each Term Borrowing consisting of Eurodollar Rate Advances
shall be in the aggregate principal amount of $10,000,000 or an integral
multiple of $1,000,000 in excess thereof.
(a) Each notice of borrowing pursuant to Section 3.02(b) hereof and
each notice of Conversion pursuant to Section 3.04 hereof shall be
irrevocable and binding on the Account Party.
(b) Until such time, if any, as the Majority Lenders shall
otherwise agree, the Interest Period for all Eurodollar Rate Advances shall
be one month.
SECTION III.6. Prepayment of Advances. (a The Account Party shall have
no right to prepay any principal amount of any Advances except in accordance
with subsections (b) and (c) below.
(a) The Account Party may, upon at least one Business Day's notice to
the Agent stating the proposed date and aggregate principal amount of the
prepayment (and if such notice is given the Account Party shall), prepay, in
whole or ratably in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid, the outstanding principal amount
of (i) all Initial Advances made on the same date or (ii) all Term Advances
comprising the same Term Borrowing, in each case as the Account Party shall
designate in such notice; provided, however, that each partial prepayment
shall be in an aggregate principal amount not less than $10,000,000, or, if
less, the aggregate principal amount of all Advances then outstanding.
(b) Prior to or simultaneously with the resale of all of the Bonds
purchased with the proceeds of a Tender Drawing, the Account Party shall
prepay, or cause to be prepaid, in full, the then outstanding principal
amount of all Initial Advances and of all Term Advances comprising the same
Term Borrowing(s) arising pursuant to such Tender Drawing, together with all
interest thereon to the date of such prepayment. If less than all of such
Bonds are resold, then prior to or simultaneously with such resale the
Account Party shall prepay or cause to be prepaid that portion of such
Advances, together with all interest thereon to the date of such prepayment,
equal to the then outstanding principal amount thereof multiplied by a
fraction, the numerator of which shall be the principal amount of the Bonds
resold and the denominator of which shall be the principal amount of all of
the Bonds purchased with the proceeds of the relevant Tender Drawing.
SECTION III.7. Participation; Reimbursement of Issuing Bank. (a The
Issuing Bank hereby sells and transfers to each Participating Bank, and each
Participating Bank hereby acquires from the Issuing Bank, an undivided
interest and participation to the extent of such Participating Bank's
Participation Percentage in and to (i) the Letter of Credit, including the
obligations of the Issuing Bank under and in respect thereof and the Account
Party's reimbursement and other obligations in respect thereof and (ii) each
demand loan or deemed demand loan made by the Issuing Bank, whether now
existing or hereafter arising.
(a) If the Issuing Bank (i) shall not have been reimbursed in full for
any payment made by the Issuing Bank under the Letter of Credit on the date
of such payment or (ii) shall make any demand loan to the Account Party, the
Issuing Bank shall promptly notify the Agent and the Agent shall promptly
notify each Participating Bank of such non-reimbursement or demand loan and
the amount thereof. Upon receipt of such notice from the Agent, each
Participating Bank shall pay to the Issuing Bank, directly, an amount equal
to such Participating Bank's ratable portion (according to such Participating
Bank's Participation Percentage) of such unreimbursed amount or demand loan
paid or made by the Issuing Bank, plus interest on such amount at a rate per
annum equal to the Federal Funds Rate from the date of such payment by the
Issuing Bank to the date of payment to the Issuing Bank by such Participating
Bank. All such payments by each Participating Bank shall be made in United
States dollars and in same day funds:
(x) not later than 2:45 P.M. (New York City time) on the day such
notice is received by such Participating Bank if such notice is received
at or prior to 12:30 P.M. (New York City time) on a Business Day; or
(y) not later than 12:00 Noon (New York City time) on the Business
Day next succeeding the day such notice is received by such
Participating Bank, if such notice is received after 12:30 P.M. (New
York City time) on a Business Day.
If a Participating Bank shall have paid to the Issuing Bank its ratable
portion of any unreimbursed amount or demand loan paid or made by the Issuing
Bank, together with all interest thereon required by the second sentence of
this subsection (b), such Participating Bank shall be entitled to receive its
ratable share of all interest paid by the Account Party in respect of such
unreimbursed amount or demand loan from the date paid or made by the Issuing
Bank. If such Participating Bank shall have made such payment to the Issuing
Bank, but without all such interest thereon required by the second sentence
of this subsection (b), such Participating Bank shall be entitled to receive
its ratable share of the interest paid by the Account Party in respect of
such unreimbursed amount or demand loan only from the date it shall have paid
all interest required by the second sentence of this subsection (b).
(b) Each Participating Bank's obligation to make each payment to the
Issuing Bank, and the Issuing Bank's right to receive the same, shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the foregoing or Section 4.06
hereof, or the occurrence or continuance of an Event of Default, or the non-
satisfaction of any condition precedent set forth in Sections 5.03 or 5.04
hereof, or the failure of any other Participating Bank to make any payment
under this Section 3.07. Each Participating Bank further agrees that each
such payment shall be made without any offset abatement, withholding or
reduction whatsoever.
(c) The failure of any Participating Bank to make any payment to the
Issuing Bank in accordance with subsection (b) above, shall not relieve any
other Participating Bank of its obligation to make payment, but neither the
Issuing Bank nor any Participating Bank shall be responsible for the failure
of any other Participating Bank to make such payment. If any Participating
Bank shall fail to make any payment to the Issuing Bank in accordance with
subsection (b) above, then such Participating Bank shall pay to the Issuing
Bank forthwith on demand such corresponding amount together with interest
thereon, for each day until the date such amount is repaid to the Issuing
Bank at 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 Participating Bank.
(d) If any Participating Bank shall fail to make any payment to the
Issuing Bank in accordance with subsection (b) above, then, in addition to
other rights and remedies which the Issuing Bank may have, the Agent is
hereby authorized, at the request of the Issuing Bank, to withhold and to
apply the payment of such amounts owing to such Participating Bank to the
Issuing Bank and any related interest, that portion of any payment received
by the Agent that would otherwise be payable to such Participating Bank. In
furtherance of the foregoing, if any Participating Bank shall fail to make
any payment to the Issuing Bank in accordance with subsection (b), above, and
such failure shall continue for five Business Days following written notice
of such failure from the Issuing Bank to such Participating Bank, the Issuing
Bank may acquire, or transfer to a third party in exchange for the sum or
sums due from such Participating Bank, such Participating Bank's interest in
the related unreimbursed amounts and demand loans and all other rights of
such Participating Bank hereunder in respect thereof, without, however,
relieving such Participating Bank from any liability for damages, costs and
expenses suffered by the Issuing Bank as a result of such failure. The
purchaser of any such interest shall be deemed to have acquired an interest
senior to the interest of such Participating Bank and shall be entitled to
receive all subsequent payments which the Issuing Bank or the Agent would
otherwise have made hereunder to such Participating Bank in respect of such
interest.
ARTICLE IV
PAYMENTS
SECTION IV.1. Payments and Computations. (a The Account Party shall
make each payment hereunder (i) in the case of reimbursement obligations
pursuant to Section 3.01 hereof (excluding any portion thereof in respect of
which an Initial Advance is to be made), not later than 2:30 P.M. (New York
City time) on the day the related drawing under the Letter of Credit is paid
by the Issuing Bank, and (ii) in all other cases, not later than 12:30 P.M.
(New York City time) on the day when due, in each case in lawful money of the
United States of America to the Agent at its address referred to in Section
10.02 hereof in same day funds. The Agent will promptly thereafter cause to
be distributed like funds relating to the payment of reimbursements,
principal, interest, fees or other amounts payable to the Issuing Bank and
the Participating Banks to whom the same are payable, ratably, at its address
set forth in Section 10.02 hereof (in the case of the Issuing Bank) or for
the account of their respective Applicable Lending Offices (in the case of
the Participating Banks), in each case to be applied in accordance with the
terms of this Agreement.
(a) The Account Party hereby authorizes the Issuing Bank, and each
Participating Bank, if and to the extent payment owed to the Issuing Bank, or
such Participating Bank, as the case may be, is not made when due hereunder,
to charge from time to time against any or all of the Account Party's
accounts with the Issuing Bank or such Participating Bank, as the case may
be, any amount so due.
(b) All computations of interest based on the Alternate Base Rate when
based on Barclays' prime rate referred to in the definition of "Alternate
Base Rate" shall be made by the Agent on the basis of a year of 365 or 366
days, as the case may be, for the actual days elapsed. All other computations
of interest 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)), all
computations of commissions and fees hereunder and all computations of other
amounts pursuant to Section 4.03 hereof, shall be made by the Agent or the
party claiming such other amounts, as the case may be, on the basis of a year
of 360 days for the actual days elapsed. 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,
commissions or fees are payable. Each such determination by the Agent or a
Participating Bank, as the case may be, shall be conclusive and binding for
all purposes, absent manifest error.
(c) Whenever any payment hereunder 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, commissions and fees hereunder; provided, however, that
if such extension would cause payment of interest on or principal of
Eurodollar Rate Advances to be made, or the last day of an Interest Period
for a Eurodollar Rate 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.
(d) Unless the Agent shall have received notice from the Account Party
prior to the date on which any payment is due to the Issuing Bank or the
Participating Banks hereunder that the Account Party will not make such
payment in full, the Agent may assume that the Account Party has made such
payment in full to the Agent on such date and the Agent may, in reliance upon
such assumption, cause to be distributed to the Issuing Bank and/or each
Participating Bank on such due date an amount equal to the amount then due
the Issuing Bank and/or such Participating Bank. If and to the extent the
Account Party shall not have so made such payment in full to the Agent, the
Issuing Bank and/or each such Participating Bank shall repay to the Agent
forthwith on demand such amount distributed to the Issuing Bank and/or such
Participating Bank, together with interest thereon, for each day from the
date such amount is distributed to the Issuing Bank and/or such Participating
Bank until the date the Issuing Bank and/or such Participating Bank repays
such amount to the Agent, at the Federal Funds Rate.
(e) If, after the Agent has paid to the Issuing Bank or any
Participating Bank any amount pursuant to subsection (a) above, such payment
is rescinded or must otherwise be returned or must be paid over by the Agent
or the Issuing Bank to any Person, whether pursuant to any bankruptcy or
insolvency law, Section 4.04 hereof or otherwise, such Participating Bank
shall, at the request of the Agent or the Issuing Bank, promptly repay to the
Agent or the Issuing Bank, as the case may be, an amount equal to its ratable
share of such payment, together with any interest required to be paid by the
Agent or the Issuing Bank with respect to such payment.
SECTION IV.2. Default Interest. Any 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 the Default Rate,
payable on demand.
SECTION IV.3. 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 the Issuing Bank or any Participating Bank of the principal of or interest
on any Eurodollar Rate Advance made by such Participating Bank or any fees or
other amounts payable hereunder (other than changes in respect of taxes
imposed on the overall net income of the Issuing Bank or such Participating
Bank, or its Applicable Lending Office, by the jurisdiction in which the
Issuing Bank or such Participating Bank 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 letters of credit
(or participatory interests therein) issued by, commitments or assets of,
deposits with or for the account of, or credit extended by, the Issuing Bank
or such Participating Bank, or (iii) shall impose on the Issuing Bank or such
Participating Bank any other condition affecting this Agreement, the Letter
of Credit or participatory interests therein or Eurodollar Rate Advances, and
the result of any of the foregoing shall be (A) to increase the cost to the
Issuing Bank or such Participating Bank of issuing, maintaining or
participating in this Agreement or the Letter of Credit or of agreeing to
make, making or maintaining any Advance or (B) to reduce the amount of any
sum received or receivable by the Issuing Bank or such Participating Bank
hereunder (whether of principal, interest or otherwise), then the Account
Party will pay to the Issuing Bank or such Participating Bank, upon demand,
such additional amount or amounts as will compensate the Issuing Bank or such
Participating Bank for such additional costs incurred or reduction suffered.
(a) Capital. If the Issuing Bank or any Participating Bank shall have
determined that the applicability of 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 the Issuing Bank or any
Participating Bank (or any Applicable Lending Office of the Issuing Bank or
such Participating Bank), or any holding company of any such entity, 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 entity's
capital or on the capital of such entity's holding company, if any, as a
consequence of this Agreement, the Letter of Credit or such entity's
participatory interest therein, any Commitment hereunder or the portion of
the Advances made by such entity pursuant hereto to a level below that which
such entity or such entity's holding company could have achieved, but for
such applicability, adoption, change or compliance (taking into consideration
such entity's policies and the policies of such entity'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 entity or
such entity's holding company based upon the existence of this Agreement, the
Letter of Credit or such entity's participatory interest therein, any
Commitment hereunder, the portion of the Advances made by such entity
pursuant hereto and other similar such credits, participations, commitments,
agreements or assets, then from time to time the Account Party shall pay to
the Issuing Bank or such Participating Bank, upon demand, such additional
amount or amounts as will compensate such entity or such entity's holding
company for any such reduction or allocable capital cost suffered.
(b) Eurodollar Reserves. The Account Party shall pay to each
Participating Bank upon demand, so long as such Participating 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 interest on the unpaid
principal amount of such Participating Bank's portion of each Eurodollar Rate
Advance, 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 rate described in clause (i) of the
definition of "Eurodollar Rate" for the Interest Period for such Advance from
(ii) the rate obtained by dividing such rate by a percentage equal to 100%
minus the Eurodollar Reserve Percentage of such Participating Bank for such
Interest Period. Such additional interest shall be determined by such
Participating Bank and notified to the Account Party and the Issuing Bank.
(c) Breakage Indemnity. The Account Party shall indemnify each
Participating Bank against any loss, cost or reasonable expense which such
Participating Bank may sustain or incur as a consequence of (i) any failure
by the Account Party to fulfill on the date of any Advance or Conversion
hereunder the applicable conditions set forth in Articles III and V, (ii) any
failure by the Account Party to Convert any Advance hereunder after
irrevocable notice of Conversion has been given pursuant to Section 3.04
hereof, (iii) any payment, prepayment or Conversion of a Eurodollar Rate
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 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 such
Advance or any part thereof as a Eurodollar Rate Advance. Such loss, cost or
reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by such Participating Bank, of (A) its cost of
obtaining the funds for the Advance being paid, prepaid, Converted or not
borrowed (based on the Eurodollar Rate) for the period from the date of such
payment, prepayment, Conversion 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 Participating Bank) that would be realized by such Participating Bank in
reemploying the funds so paid, prepaid, Converted 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 each Participating Bank shall have
funded each such Advance with a fixed-rate instrument bearing the rates and
maturities designated in the determination of the applicable interest rate
for such Advance.
(d) Notices. A certificate of the Issuing Bank or any Participating
Bank setting forth such entity's claim for compensation hereunder and the
amount necessary to compensate such entity or its holding company pursuant to
subsections (a) through (d) of this Section 4.03 shall be submitted to the
Account Party and the Issuing Bank and shall be conclusive and binding for
all purposes, absent manifest error. The Account Party shall pay the Issuing
Bank or such Participating Bank directly the amount shown as due on any such
certificate within ten days after its receipt of the same. The failure of any
entity to provide such notice or to make demand for payment under this
Section 4.03 shall not constitute a waiver of such Participating Bank's
rights hereunder; provided, that such entity 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 entity's incurrence or
sufferance thereof or such entity's actual knowledge of the event giving rise
to such entity's rights pursuant to such subsections. The protection of this
Section 4.03 shall be available to the Issuing Bank and each Participating
Bank regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed.
(e) 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 Participating Bank to make or maintain any Eurodollar Rate
Advance or to give effect to its obligations as contemplated hereby with
respect to any Eurodollar Rate Advance, then, by written notice to the
Account Party and the Issuing Bank, such Participating Bank may:
(i) declare that Eurodollar Rate Advances will not thereafter be
made by such Participating Bank hereunder, whereupon the right of the
Account Party to select Eurodollar Rate Advances for any Advance or
Conversion shall be forthwith suspended until such Participating Bank
shall withdraw such notice as provided hereinbelow or shall cease to be
a Participating Bank hereunder; and
(ii) require that all outstanding Eurodollar Rate Advances be
Converted to Base Rate Advances, in which event all Eurodollar Rate
Advances shall be automatically Converted to Base Rate Advances as of
the effective date of such notice as provided hereinbelow.
Upon receipt of any such notice, the Agent shall promptly notify the
Participating Banks thereof. Promptly upon becoming aware that the
circumstances that caused such Participating Bank to deliver such notice no
longer exist, such Participating Bank shall deliver notice thereof to the
Account Party and the Agent withdrawing such prior notice (but the failure to
do so shall impose no liability upon such Participating Bank). Promptly upon
receipt of such withdrawing notice from such Participating Bank, the Agent
shall deliver notice thereof to the Account Party and the Participating Banks
and such suspension shall terminate. Prior to any Participating Bank giving
notice to the Account Party under this subsection (f), such Participating
Bank 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 Participating Bank, be otherwise
disadvantageous to such Participating Bank. Any notice to the Account Party
by any Participating Bank shall be effective as to each Eurodollar Rate
Advance on the last day of the Interest Period currently applicable to such
Eurodollar Rate 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 Account Party and the
Agent.
(g) Market Rate Disruptions. If, (i) the Agent determines that an
adequate basis does not exist for the determination of the Eurodollar Rate
for Eurodollar Rate Advances or (ii) if the Majority Lenders shall notify the
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, the right of the Account Party to select or receive
or Convert into Eurodollar Rate Advances shall be forthwith suspended until
the Agent shall notify the Account Party and the Participating Banks that the
circumstances causing such suspension no longer exist, and until such
notification from the Agent, each request for or Conversion into Eurodollar
Rate Advances hereunder shall be deemed to be a request for or Conversion
into Base Rate Advances.
SECTION IV.4. Sharing of Payments, Etc. If any Participating Bank 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 participations in accordance with Section 10.06
hereof to a Person that is not an Affiliate of the Account Party) 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 Participating Banks, such Participating Bank shall forthwith
purchase from the other Participating Banks such participation in the
portions of the Advances owing to them as shall be necessary to cause such
purchasing Participating Bank 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 Participating Bank, such
purchase from each Participating Bank shall be rescinded and such
Participating Bank shall repay to the purchasing Participating Bank the
purchase price to the extent of such recovery together with an amount equal
to such Participating Bank's ratable share (according to the proportion of
(i) the amount of such Participating Bank's required repayment to (ii) the
total amount so recovered from the purchasing Participating Bank) of any
interest or other amount paid or payable by the purchasing Participating Bank
in respect of the total amount so recovered. The Account Party agrees that
any Participating Bank so purchasing a participation from another
Participating Bank 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 Participating
Bank were the direct creditor of the Account Party in the amount of such
participation. Notwithstanding the foregoing, if any Participating Bank
shall obtain any such excess payment involuntarily, such Participating Bank
may, in lieu of purchasing participation from the other Participating Banks
in accordance with this Section 4.04, on the date of receipt of such excess
payment, return such excess payment to the Agent for distribution in
accordance with Section 4.01(a) hereof.
SECTION IV.5. Taxes. (a All payments by the Account Party hereunder
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 Participating Bank and the Issuing Bank, taxes imposed on
its overall net income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Participating Bank or the Issuing
Bank (as the case may be) is organized or any political subdivision thereof
and, in the case of each Participating Bank, taxes imposed on its overall net
income, and franchise taxes imposed on it, by the jurisdiction of such
Participating Bank'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 Account Party shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to any Participating Bank or the Issuing
Bank, (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 Participating Bank or
the Issuing Bank (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Account Party
shall make such deductions and (iii) the Account Party shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(a) In addition, the Account Party 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").
(b) The Account Party will indemnify each Participating Bank and the
Issuing Bank 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 Participating Bank or
the Issuing Bank (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. This
indemnification shall be made within 30 days from the date such Participating
Bank or the Issuing Bank (as the case may be) makes written demand therefor.
If any Taxes or Other Taxes for which a Participating Bank or the Issuing
Bank has received payments from the Account Party hereunder shall be finally
determined to have been incorrectly or illegally asserted and are refunded to
such Participating Bank, such Participating Bank shall promptly forward to
the Account Party any such refunded amount. The Account Party's, the Issuing
Bank's and each Participating Bank's obligations under this Section 4.05
shall survive the payment in full of the Advances.
(c) Within 30 days after the date of any payment of Taxes, the Account
Party will furnish to the Issuing Bank, at its address referred to in Section
10.02 hereof the original or a certified copy of a receipt evidencing payment
thereof.
(d) Each Participating Bank not incorporated in the United States or a
jurisdiction within the United States shall, on or prior to the date it
becomes a Participating Bank hereunder, deliver to the Account Party and the
Issuing Bank 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 l.1441-1(a) or Section 1.1441-6(c) or
any subsequent version thereof, properly completed and duly executed by such
Participating Bank establishing that it is (i) not subject to withholding
under the Code or (ii) totally exempt from United States of America tax under
a provision of an applicable tax treaty. Each Participating Bank shall
promptly notify the Account Party and the Issuing Bank of any change in its
Applicable Lending Office and shall deliver to the Account Party and the
Issuing Bank together with such notice such certificates, documents or other
evidence referred to in the immediately preceding sentence. Unless the
Account Party and the Issuing Bank have received forms or other documents
satisfactory to them indicating that payments hereunder 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 Account Party or the Issuing Bank
shall withhold taxes from such payments at the applicable statutory rate in
the case of payments to or for any Participating Bank organized under the
laws of a jurisdiction outside the United States of America. Each
Participating Bank represents and warrants that each such form supplied by it
to the Issuing Bank and the Account Party 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.
(e) Any Participating Bank 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 Account Party 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
Participating Bank, be otherwise disadvantageous to such Participating Bank.
(f) Notwithstanding anything to the contrary set forth in this Section
4.05, the failure of any Participating Bank to provide any of the forms
referred to therein shall not relieve the Account Party from its obligations
under Sections 4.05(a), 4.05(b) and 4.05(c).
SECTION IV.6. Obligations Absolute. The obligations of the Account
Party under this Agreement shall be unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement (as the same
may be amended from time to time) under all circumstances, including, without
limitation, the following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the Security Documents or Related Documents or any document or
agreement delivered in connection therewith;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Account Party in
respect of the Letter of Credit or any other amendment or waiver of or
any consent to departure from all or any of the Loan Documents or the
Related Documents or any document or agreement delivered in connection
therewith;
(iii) the existence of any claim, set-off, defense or
other right which the Account Party may have at any time against the
Paying Agent, the Trustee or any other beneficiary, or any transferee,
of the Letter of Credit (or any persons or entities for whom the Paying
Agent, the Trustee, any such beneficiary or any such transferee may be
acting), the Agent, the Issuing Bank, or any other person or entity,
whether in connection with this Agreement, the transactions contemplated
in any of the Loan Documents or the Related Documents, or any unrelated
transaction;
(iv) any statement or any other document presented under the Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect except to the extent that a court of competent jurisdiction
shall determine that the Issuing Bank shall have engaged in gross
negligence or willful misconduct with respect thereto;
(v) payment by the Issuing Bank under the Letter of Credit against
presentation of a draft or certificate which does not comply with the
terms of the Letter of Credit, except to the extent that a court of
competent jurisdiction shall determine that the Issuing Bank shall have
engaged in gross negligence or willful misconduct with respect thereto;
(vi) any exchange of, release of or non-perfection of any interest
in any collateral, or any release or amendment or waiver of or consent
to departure from any guarantee, for all or any of the obligations of
the Account Party in respect of the Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing.
SECTION IV.7. Evidence of Indebtedness. The Issuing Bank and each
Participating Bank shall maintain, in accordance with their usual practice,
an account or accounts evidencing the indebtedness of the Account Party
resulting from each drawing under the Letter of Credit (in the case of the
Issuing Bank) and from each Advance (in the case of each Participating Bank)
made from time to time hereunder and the amounts of principal and interest
payable and paid from time to time hereunder. In any legal action or
proceeding in respect of this Agreement, the entries made in such account or
accounts shall, in the absence of manifest error, be conclusive evidence of
the existence and amounts of the obligations of the Account Party therein
recorded.
ARTICLE V
CONDITIONS PRECEDENT
SECTION V.1. Conditions Precedent to the Issuance of the Letter of
Credit. The obligation of the Issuing Bank to issue the Letter of Credit and
of each Participating Bank to make the Advances to be made by it is subject
to the fulfillment of the conditions precedent that the Agent shall have
received on or before the day of such issuance the following, each dated such
day (except where specified otherwise below), in form and substance
satisfactory to each Participating Bank (except where specified otherwise
below) and in sufficient copies for each Participating Bank:
(a) Agreements:
(i) Counterparts of this Agreement, duly executed and delivered by
the Account Party, the Agent, the Issuing Bank and each Participating
Bank.
(ii) Counterparts of the Pledge Agreement, duly executed by the
Account Party, the Agent and the Issuing Bank.
(iii) Counterparts of the Intercreditor Amendment, duly
executed by the parties thereto.
(iv) Counterparts of the Security Agreement Amendment, duly
executed by the parties thereto.
(v) Executed copies (or duplicate copies thereof certified as of
the Closing Date by the Account Party in a manner satisfactory to the
Agent to be a true copy) of the Indenture, duly executed by the parties
thereto.
(vi) For each Participating Bank who shall so request, executed
copies (or duplicate copies thereof certified as of the Closing Date by
the Account Party in a manner satisfactory to the Agent to be a true
copy) of each other Security Document, duly executed by the parties
thereto.
(vii) For each Participating Bank who shall so request,
executed copies (or duplicate copies thereof certified as of the Closing
Date by the Account Party in a manner satisfactory to the Agent to be a
true copy) of the Rate Agreement and each Significant Contract and all
amendments, modifications and supplements thereto, in each such case
duly executed by the respective parties thereto.
(b) Corporate Matters:
(i) A certificate of the Secretary or an Assistant Secretary of
the Account Party certifying that (A) attached to such certificate are
true and correct copies of the Articles of Incorporation of the Account
Party and the By-laws of the Account Party, in each case as in effect on
the Closing Date and (B) attached to such certificate are true and
correct copies of the resolutions of the Boards of Directors of the
Account Party approving, if and to the extent necessary, the Transaction
Documents to which it is a party, and all other agreements and documents
required to be executed and delivered by the Account Party in order to
carry out, give effect to, and consummate the transactions contemplated
by each of the foregoing documents, and of all documents evidencing
other necessary corporate action, if any, with respect to the execution,
delivery and performance by or on behalf of the Account Party of the
Transaction Documents and all such other agreements and documents and
certifying that such resolutions and other corporate actions, if any,
are in full force and effect and have not been revoked, rescinded or
modified.
(ii) A certificate of the Secretary or an Assistant Secretary of
the Account Party certifying the names and true signatures of the
officers of the Account Party authorized to sign this Agreement, the
other Transaction Documents and the other documents to be delivered
hereunder and under the other Loan Documents.
(c) Governmental Approvals and Litigation:
(i) A certificate of a duly authorized officer of the Account
Party 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
Account Party in connection with the execution and delivery of this
Agreement and the issuance of the Letter of Credit.
(ii) A certificate of a duly authorized officer of the Account
Party 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 Account Party 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 the
Related 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 Account Party;
except, for purposes of clause (B) only, such as is described in the
Disclosure Documents or in such certificate.
(d) Financial Accounting and Compliance Matters:
(i) Copies of the Disclosure Documents.
(ii) Financial projections, on assumptions acceptable to the
Participating Banks, demonstrating projected compliance with Section
7.01(j) of this Agreement.
(iii) A certificate signed by the Treasurer or Assistant
Treasurer of the Account Party, to the effect that: (A0 the statements
set forth in subsections (a) through (e) of Section 5.02, below, are
true and correct on and as of the date of such issuance; (B0 attached
thereto is a listing in reasonable detail of all the Account Party's
investments in, or loans to, either directly or indirectly, any
affiliate of the Account Party; and (C) the assumptions on which the
financial projections contained in the Information Memorandum were based
continue to be valid on and as of the Closing Date.
(e) Opinions of Counsel:
Favorable opinions of:
(i) Day, Berry & Howard, counsel to the Account Party, in
substantially the form of Exhibit 5.01A and as to such other matters as
the Majority Lenders, through the Agent, may reasonably request,
together with a letter from such counsel authorizing the Agent, the
Issuing Bank and the Participating Banks to rely upon the opinions of
such firm rendered in connection with the issuance of the Taxable Bonds;
(ii) Jeffrey C. Miller, Assistant General Counsel of NUSCO, in
substantially the form of Exhibit 5.01B and as to such other matters as
the Majority Lenders, through the Agent, may reasonably request;
(iii) Catherine E. Shively, Senior Counsel of the Account
Party, in substantially the form of Exhibit 5.01C and as to such other
matters as the Majority Lenders, through the Agent, may reasonably
request;
(iv) Drummond Woodsum & MacMahon, special Maine counsel to the
Account Party, in substantially the form of Exhibit 5.01D and as to such
other matters as the Majority Lenders, through the Agent, may reasonably
request;
(v) Zuccaro Willis & Bent, special Vermont counsel to the Account
Party, in substantially the form of Exhibit 5.01E and as to such other
matters as the Majority Lenders, through the Agent, may reasonably
request; and
(vi) King & Spalding, special New York counsel to the Agent and the
Issuing Bank, in substantially the form of Exhibit 5.01F.
(f) Miscellaneous:
(i) A letter from Palmer & Dodge, Bond Counsel, addressed to the
Agent, the Issuing Bank and the Participating Banks and stating therein
that the Agent, the Issuing Bank and the Participating Banks may rely on
the opinions of such firm rendered in connection with the issuance of
the Taxable Bonds, together with copies of all such opinions;
(ii) A letter from Palmer & Dodge, counsel to the Issuer, addressed
to the Agent, the Issuing Bank and the Participating Banks and stating
therein that the Agent, the Issuing Bank and the Participating Banks may
rely on the opinions of such firm rendered in connection with the
issuance of the Taxable Bonds, together with copies of all such
opinions;
(iii) Such other approvals, opinions and documents as the
Majority Lenders, through the Issuing Bank, 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 Account Party;
(iv) Copies of all such other agreements, documents and materials
(including opinions of counsel or reliance letters in respect thereof)
as the Agent, the Issuing Bank or any Participating Bank may reasonably
request relating to the issuance, offering and sale of the Taxable Bonds
and the Series G First Mortgage Bonds; and
(v) A certificate of UBS AG, successor to Swiss Bank as "Agent"
and "Issuing Bank" thereunder, to the effect that (A) all amounts
payable in connection with the Existing Reimbursement Agreement and the
Existing Letter of Credit have been paid and (B) it thereby surrenders
any and all rights it may have under the Related Documents arising in
connection with the Existing Reimbursement Agreement and the Existing
Letter of Credit, except for any such rights it may have as an
indemnified party thereunder.
SECTION V.2. Additional Conditions Precedent to the Issuance of the
Letter of Credit. The obligation of the Issuing Bank to issue the Letter of
Credit and of each Participating Bank to make the Advances to be made by it
shall be subject to the further conditions precedent that, on the date of the
issuance of the Letter of Credit, the following statements shall be true:
(a) there has occurred no Material Adverse Effect since December
31, 1998;
(b) the representations and warranties contained in Section 6.01 shall
be correct in all material respects on and as of the Closing Date before and
after giving effect to the issuance of the Letter of Credit;
(c) no event shall have occurred and be continuing which constitutes an
Event of Default or Unmatured Default, or would result from the issuance of
the Letter of Credit;
(d) the Other Reimbursement Agreement has been duly executed and
delivered by the parties thereto, all conditions precedent to the issuance of
the "Letter of Credit" provided for thereunder have been satisfied and no
"Event of Default" or "Unmatured Default" (as defined therein) has occurred
and is continuing;
(e) the Series G First Mortgage Bonds were duly issued to the Trustee
in accordance with the Indenture, are presently outstanding, and no "Event of
Default" (as defined in the First Mortgage Indenture) has occurred and is
continuing;
(f) all UCC-1, UCC-3 and other filings and recordings in respect of the
Collateral shall have been duly completed, the results of all lien and record
searches undertaken in connection with the Security Agreement and the
Collateral thereunder shall be satisfactory to the Agent and its counsel; and
the Security Agreement shall create a first priority perfected security
interest in such Collateral;
(g) the Account Party shall have paid all fees under or referenced in
Section 2.03 hereof, to the extent then due and payable;
(h) all other matters relating to the issuance of the Letter of
Credit, the Other Reimbursement Agreement and the "Letter of Credit" to be
issued thereunder shall be satisfactory to the Agent and its counsel; and
(i) the 1998 Revolving Credit Agreement has been terminated and
all amounts payable by the Account Party in connection with the 1998
Revolving Credit Agreement have been paid in full, other than in respect
of indemnification and similar contingent obligations for which no claim
has been made.
SECTION V.3. Conditions Precedent to Initial Advances and Conversions
of Advances. The obligation of each Participating Bank to make any Initial
Advance or to Convert any Term Advance shall be subject to the conditions
precedent that, on the date of such Initial Advance or Conversion, the
following statements shall be true:
(a) the representations and warranties contained in Section 6.01 of
this Agreement (other than the last sentence of subsection (e) and clause
(ii) of subsection (f) thereof) are true and correct on and as of the date of
such Initial Advance or Conversion, before and after giving effect to such
Initial Advance or Conversion and to the application of the proceeds (if any)
therefrom, as though made on and as of such date; and
(b) no event has occurred and is continuing which constitutes an Event
of Default.
Unless the Account Party shall have previously advised the Agent in
writing that one or more of the statements contained in subsections (a) and
(b) of this Section 5.03 is no longer true, the Account Party shall be deemed
to have represented and warranted, on and as of the date of any Initial
Advance or Conversion, that the above statements are true.
SECTION V.4. Conditions Precedent to Term Advances. The obligation of
each Participating Bank to make any Term Advance shall be subject to the
conditions precedent that, on the date of such Term Advance the following
statements shall be true:
(a) the representations and warranties contained in Section 6.01 of
this Agreement (including the last sentence of subsection (e) and clause (ii)
of subsection (f) thereof) are true and correct on and as of the date of such
Term Advance, before and after giving effect to such Term Advance and to the
application of the proceeds therefrom, as though made on and as of such date;
and
(b) no event has occurred and is continuing which constitutes an Event
of Default or an Unmatured Default.
Unless the Account Party shall have previously advised the Agent in writing
that one or more of the statements contained in subsections (a) and (b) of
this Section 5.04 is no longer true, the Account Party shall be deemed to
have represented and warranted, on and as of the date of any Term Advance,
that the above statements are true.
SECTION V.5. Reliance on Certificates. The Agent, the Issuing Bank and
the Participating Banks shall be entitled to rely conclusively upon the
certificates delivered from time to time by officers of the Account Party,
NU, NUSCO and the other parties to the Loan Documents, Related Documents and
the Significant Contracts as to the names, incumbency, authority and
signatures of the respective persons named therein until such time as the
Agent may receive a replacement certificate, in form acceptable to the Agent,
from an officer of such Person identified to the 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.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION VI.1. Representations and Warranties of the Account PartyThe
Account Party represents and warrants as follows:
(a) The Account Party is a corporation duly organized and validly
existing under the laws of the State of New Hampshire. The Account Party 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 Account Party of the
Rate Agreement and of each Transaction Document, Loan Document, Related
Document and Significant Contract to which it is a party, are within the
Account Party's corporate powers, have been duly authorized by all necessary
corporate action, and do not and will not contravene (i) the Account Party's
charter or bylaws or (ii) any law or legal or contractual restriction binding
on or affecting the Account Party; 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) upon or
with respect to any of its properties.
(c) All Governmental Approvals 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, except as described in the several opinions of
counsel delivered pursuant to Article V of this Agreement. The Account Party
has obtained or made all Governmental Approvals referred to in clause (iii)
of the definition of "Governmental Approvals", except those which are 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
Account Party as a whole.
(d) This Agreement, the Rate Agreement, each other Transaction
Document, Loan Document, Related Document and each Significant Contract to
which the Account Party is a party have been duly executed and delivered by
or on behalf of the Account Party and are legal, valid and binding
obligations of the Account Party enforceable against the Account Party 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 and the application of general
principles of equity (regardless of whether considered in a proceeding in
equity or law), 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 Account Party as at December 31,
1998 and the related audited statements of the Account Party setting forth
the results of operations, retained earnings and cash flows of the Account
Party for the fiscal year then ended, copies of which have been furnished to
each Participating Bank, fairly present in all material respects the
financial condition, results of operations, retained earnings and cash flows
of the Account Party 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
Account Party has no material non-contingent liabilities, and all contingent
liabilities have been appropriately reserved. The financial projections
referred to in Section 5.01(d)(ii) of this Agreement have been prepared in
good faith and on reasonable assumptions. Since December 31, 1998, there has
been no material adverse change in the financial condition, operations,
properties or prospects of the Account Party, other than as disclosed in the
Disclosure Documents; provided, however, that the existence of the Rate
Proceeding shall not be deemed in and of itself to be a material adverse
change; provided, further, however, that notwithstanding the foregoing, a
material adverse change shall be deemed to have occurred and be continuing
upon the occurrence of a material adverse change or development in the Rate
Proceeding.
(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 Account Party or its properties before any
court, governmental agency or arbitrator (i) which affects or purports to
affect the legality, validity or enforceability of the Transaction Documents,
the Loan Documents or the Related Documents, the Rate Agreement, or any
Significant Contract, or any of them or (ii) which, if adversely determined,
would materially adversely affect the financial condition, operations,
properties or prospects of the Account Party as a whole. Notwithstanding the
foregoing, any material adverse development in respect of the Rate
Proceeding, the Rate Agreement or the Final Plan that results, or would
reasonably be expected to result, in a material adverse effect on the
financial condition, operations, properties or prospects of the Account Party
as a whole, shall be deemed to be an event within clause (ii) of the
preceding sentence.
(g) All insurance required by Section 7.01(c) hereof is 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 Account Party, 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 Account Party (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 non-exempt "prohibited transaction"
has occurred with respect thereto, except as described in the Disclosure
Documents and except as the same may be exempt pursuant to Section 408 of
ERISA and regulations and orders thereunder. Neither the Account Party 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
Account Party 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 Account Party of such properties; the electric transmission
and distribution lines of the Account Party in the main are located in New
Hampshire and on land owned in fee by the Account Party or over which the
Account Party 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 Account Party'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
Account Party 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 Account Party; and the Security Documents will 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; provided, however, that no
representation is made as to any Lien purported to be created in favor of the
Trustee with respect to any interest of the Issuer in the Indenture.
(j) No material part of the properties, business or operations of the
Account Party 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 Account Party 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 Account Party 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 Account Party or its agents to the Agent, the Issuing Bank or the
Participating Banks in connection with the negotiation, execution and closing
of this Agreement and the other Transaction Documents, or the issuance of the
Bonds (including, without limitation, the Information Memorandum and the
Official Statements) 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) The Account Party has not, either directly or indirectly, made any
investment in, or loans to, any Affiliate of the Account Party, other than
such investments or loans as were outstanding on the date hereof.
(o) 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
Account Party (X) is not an "investment company" within the meaning ascribed
to that term in the Investment Company Act of 1940 or (Y) is not engaged in
the business of extending credit for the purpose of buying or carrying margin
stock.
(p) The Account Party has reviewed and continues to review the effect
of the Year 2000 Issue on the computer software, hardware and firmware
systems and equipment containing embedded microchips owned or operated by or
for the Account Party or used or relied upon in the conduct of its business
(including, without limitation, systems and equipment supplied by others).
The costs to the Account Party of any reprogramming and/or remediation
required as a result of the Year 2000 Issue to permit the proper functioning
of such systems and equipment and the proper processing of data, and testing
of such reprogramming or remediation (as the case may be), and of the
reasonably foreseeable consequences of the Year 2000 Issue to the Account
Party (including, without limitation, reprogramming errors and the failure of
systems or equipment supplied by others) are not reasonably expected to
result in an Event of Default or an Unmatured Default or to have a Material
Adverse Effect.
ARTICLE VII
COVENANTS OF THE ACCOUNT PARTY
SECTION VII.1. Affirmative Covenants. So long as any amounts shall
remain available to be drawn under the Letter of Credit or any Advance or
other amounts shall remain unpaid hereunder or any Participating Bank shall
have any Commitment, the Account Party will, unless the Majority Lenders
shall otherwise consent in writing:
(a) Use of Proceeds. Apply all proceeds of each Advance solely as
specified in Section 3.02 and Section 6.01(o) 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
Account Party 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
Account Party 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 Account Party is
contesting the same in good faith by appropriate proceedings or (ii) that any
such noncompliance, and the enforcement or correction thereof, would not
materially adversely affect the financial condition, properties, prospects or
operations of the Account Party as a whole.
(f) Inspection Rights. At any time and from time to time upon
reasonable notice, permit the 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 Account Party and to discuss the
affairs, finances and accounts of the Account Party with the Account Party
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 Account Party and the assets and business of the Account Party, in
accordance with good accounting practices consistently applied.
(h) Performance of Related Agreements. Perform and observe all
material terms and provisions of the Rate Agreement and each Significant
Contract to be performed or observed by the Account Party and take all
reasonable steps to enforce such agreements substantially in accordance with
their terms and to preserve the rights of the Account Party thereunder;
provided, that the foregoing provisions of this Section 7.01(h) shall not
preclude the Account Party 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 Account Party and all other amounts that may
from time to time be owing to the Account Party 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 2.35 to 1.00
for each period of four consecutive fiscal quarters on each quarter-end
ending after December 31, 1998.
(ii) Common Equity to Total Capitalization Ratio. Maintain at
all times a ratio of Common Equity to Total Capitalization of not less
than 0.325 to 1.00.
(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 Account Party 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 Account Party
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 Participating Bank through the Issuing Bank may reasonably
request in order to fully give effect to the interests and properties
purported to be covered by the Security Documents.
(n) Related Documents. Perform and comply in all material respects
with each of the provisions of each Related Document to which it is a party.
(o) Year 2000. Take all necessary action to complete in all respects
by September 30, 1999 the reprogramming and/or remediation of computer
software, hardware and firmware systems and equipment containing embedded
microchips owned or operated by or for the Account Party or used or relied
upon in the conduct of its business (including, without limitation, systems
and equipment supplied by others) required as a result of the Year 2000 Issue
to permit the proper functioning of such computer systems and other equipment
and the testing of such systems and equipment, as so reprogrammed or
remediated (as the case may be), except for any reprogramming, remediation
and/or testing the failure of which to complete by such date could not
reasonably be expected to result in an Event of Default or an Unmatured
Default or to have a Material Adverse Effect. At the request of the Issuing
Bank or Majority Lenders, the Account Party shall provide to the Issuing Bank
and each Participating Bank reasonable assurance of its compliance with the
preceding sentence.
SECTION VII.2. Negative Covenants. So long as any amount shall remain
available to be drawn under the Letter of Credit or any Advance or other
amounts shall remain unpaid hereunder or any Participating Bank shall have
any Commitment, the Account Party will not without the 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 Account Party 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 following, whether now existing
or hereafter created or perfected:
(i) The Liens of the First Mortgage Indenture, the Security
Agreement, the Pledge Agreement, the "Pledge Agreement" referred to in
the Other Reimbursement Agreement, and any lien created pursuant hereto;
and
(ii) Permitted Liens (as defined in the First Mortgage Indenture as
in effect on the date hereof) on the Indenture Assets; provided,
however, that (A) the exclusion contained in clause (a) of such
definition with respect to Liens junior to the Lien of the First
Mortgage Indenture shall not apply to any Lien created after the date
hereof; (B) the exclusion contained in clauses (g) and (h) of such
definition shall apply only to the extent that all Liens of the type
described therein from time to time existing do not, in the aggregate,
materially and adversely affect the value of the security granted under
the First Mortgage Indenture and no such Lien secures Debt of the
Account Party for borrowed money; and (C) the Account Party shall not,
on or after the date hereof, create, incur or assume any purchase money
Debt secured by Liens of the type described in clause (o) of such
definition;
provided, however, that this Section 7.02(a) shall not be construed to
authorize the Account Party to incur, assume, be liable for or suffer to
exist any Debt not otherwise permitted hereunder or to create any Lien on its
accounts receivable, other than the Lien of the Security Agreement.
(b) Debt. From and after the Closing Date, create, incur or assume any
Debt, other than pursuant to this Agreement, the Other Reimbursement
Agreement and unsecured debt in an aggregate amount not to exceed
$25,000,000, and then only if, 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 and (ii) the Account Party
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 Account Party continues to
believe to be reasonable), the Account Party will continue to be in
compliance at all times with the provisions of Section 7.01(j) hereof. The
Account Party 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, whether in a single transaction
or series of transactions during any consecutive 12-month period, except for
(i) the sale of the Account Party's generating assets on an arms'-length
basis in a transaction (or series of transactions) subject to approval by the
NHPUC as part of a settlement of the Rate Proceeding and (ii) sales, leases,
transfers or other dispositions in the ordinary course of the Account Party'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 Account Party's assets if, in the aggregate,
(A) the book value of such assets equals or exceeds 7.5% of the total assets,
net of regulatory assets, of the Account Party reflected in the financial
statements of the Account Party 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 Account Party from such
assets shall equal or exceed 7.5% of the total gross revenue of the Account
Party.
(e) Restricted Payments and NUG Settlements. 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 Account Party (other than stock splits and dividends
payable solely in equity securities of the Account Party), or purchase,
redeem, retire, or otherwise acquire for value any shares of any class of
capital stock of the Account Party or any warrants, rights, or options to
acquire any such shares, now or hereafter outstanding, or make any
distribution of assets to any of its shareholders (any such transaction being
a "Restricted Payment"), or make any payment of or on account of any NUG
Settlement (a "NUG Settlement Payment"); provided, that the Account Party may
make one or more Restricted Payments or NUG Settlement Payments if:
(i) the aggregate amount of all such payments during the term
of this Agreement shall not exceed $40,000,000;
(ii) in the case of a NUG Settlement Payment, such NUG
Settlement shall have been approved by the NHPUC and all other
Governmental Approvals related thereto shall have been obtained and be
in full force and effect;
(iii) no Event of Default or Unmatured Default shall have
occurred and be continuing;
(iv) after giving effect to such payment, the Account Party shall
be in full compliance with Section 7.01(j) hereof (for purposes of
determining compliance with Section 7.01(j) under this clause (vi),
computations under Section 7.01(j) shall be made as of the date of such
payment, except that, retained earnings shall be determined as of the
last day of the immediately preceding fiscal quarter (adjusted for all
Restricted Payments and NUG Settlement Payments made after the last day
of such preceding fiscal quarter)); and
(v) the Account Party 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 Account Party continues to believe to be reasonable)
and after giving effect to such payment, the Account Party will continue
to be in compliance at all times with the provisions of Section 7.01(j)
hereof.
Notwithstanding anything to the contrary contained in this Section 7.02(e),
the Account Party may declare and pay regularly scheduled quarterly dividends
and regularly scheduled sinking fund payments on the Preferred Stock, if,
immediately prior to and after giving effect to any such payment, no Event of
Default or Unmatured Default shall have occurred and be continuing.
(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 Account Party to the
PBGC, or (ii) permit to exist any occurrence of any event described in clause
(i) of the definition of ERISA Plan Termination Event, 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 Account Party.
(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 Rate Agreement,
any deviation described in the April 6, 1999 letter of David R. McHale
to the Participating Banks, and except, with respect only to the
Significant Contracts, any amendment, modification or supplement thereto
that would not reduce the rights or entitlements of the Account Party
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 Account Party 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 Account Party shall have provided to the Agent at
least 30 days prior written notice of the enforcement action proposed to
be undertaken by the Account Party.
(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 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) Prepayment or Alteration of Debt. (i) Prepay, redeem, reduce
or voluntarily retire, or make or agree to make any change in the terms of,
any Debt of the Account Party, other than to the extent permitted by Section
7.04; (ii) without limitation of the foregoing, amend, modify or supplement
the Indenture or the First Mortgage Indenture, except to the extent permitted
by Section 7.04 or (iii) issue any First Mortgage Bonds as collateral
security for any existing or future debt, or grant any other security to any
holder of existing Debt of the Account Party, except to the extent permitted
by Section 7.04.
(l) Loans and Investments. Make any loans to or investments in
any Person, other than investments in Permitted Investments.
(m) Affiliate Receivables. Permit the aggregate balance of
accounts receivable from Affiliates (other than such receivables constituting
receivables for wholesale sales of power) to equal or exceed $12,500,000 as
of the end of any calendar month.
SECTION VII.3. Reporting Obligations. So long as any amount shall
remain available to be drawn under the Letter of Credit or any Advance or
other amounts shall remain unpaid hereunder or any Participating Bank shall
have any Commitment, the Account Party will, unless the Majority Lenders
shall otherwise consent in writing, furnish to the Agent in sufficient copies
for the Issuing Bank and each Participating Bank, 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 Account Party
setting forth details of such Event of Default or Unmatured Default and
the action which the Account Party 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 Account Party, (A) if and so long as the Account Party is required
to submit to the Securities and Exchange Commission a report on Form 10-
Q, a copy of the Account Party's report on Form 10-Q submitted to the
Securities and Exchange Commission with respect to such quarter and
(B) if the Account Party ceases to be required to submit such report, a
balance sheet of the Account Party as of the end of such quarter and
statements of income and retained earnings and of cash flows of the
Account Party 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 Account
Party 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
(x) 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 Account Party proposes to take with respect thereto,
(y) demonstrating compliance with Section 7.01(j) hereof for and as of
the end of such fiscal quarter and compliance with Sections 7.02(b) and
(e) hereof, as of the dates on which any Debt was created, incurred or
assumed (using the Account Party's most recent annual actuarial
determinations in the computation of Debt referred to in clause (ix) in
the definition of "Debt") or any Restricted Payment or NUG Settlement
Payment was made during such quarter, and (z) demonstrating, after
giving effect to the incurrence of any Debt created, incurred or assumed
during such fiscal quarter (using the Account Party's most recent annual
actuarial determinations in the computation of Debt referred to in
clause (ix) in the definition of "Debt") and after giving effect to any
Restricted Payments or NUG Settlement Payments made during such fiscal
quarter, compliance with Section 7.01(j) hereof for the remainder of the
fiscal year of the Account Party based on the operating budget/forecast
of operations delivered pursuant to Section 7.03 (iv) hereof for such
fiscal year, such demonstrations to be in a schedule (in form
satisfactory to the Majority Lenders) which sets forth the computations
used by the Account Party 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 Account Party, (A) if and so
long as the Account Party is required to submit to the Securities and
Exchange Commission a report on Form 10-K, a copy of the Account Party's
report on Form 10-K submitted to the Securities and Exchange Commission
with respect to such year and (B) if the Account Party ceases to be
required to submit such report, a copy of the annual audit report for
such year for the Account Party including therein a balance sheet of the
Account Party as of the end of such fiscal year and statements of income
and retained earnings and of cash flows of the Account Party 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 (x) 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) hereof, and 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, stating the nature
thereof and the action which the Account Party proposes to take with
respect thereto and (y) demonstrating compliance with Section 7.01(j)
hereof for and as of the end of such fiscal year and compliance with
Sections 7.02(b) and (e) hereof, as of the dates on which any Debt was
created, incurred or assumed (using the Account Party's most recent
annual actuarial determinations in the computation of Debt referred to
in clause (ix) in the definition of "Debt") or any Restricted Payment or
NUG Settlement Payment was made during the last fiscal quarter of the
Account Party, such demonstrations to be in a schedule (in form
satisfactory to the Majority Lenders) which sets forth the computations
used by the Account Party 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
Account Party as approved by the Board of Directors of the Account Party
in form satisfactory to the Participating Banks for such fiscal year of
the Account Party, together with a certificate of the Chief Financial
Officer, Treasurer or Assistant Treasurer of the Account Party stating
that such budget/forecast was prepared in good faith and on reasonable
assumptions;
(v) not later than ten days following the end of each fiscal
quarter of the Account Party, a report on the progress of and
developments in the Rate Proceeding, the Final Plan and any negotiations
concerning the foregoing;
(vi) as soon as available and in any event no later than the New
Hampshire Public Utilities Commission shall have received the Account
Party'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 Account Party;
(vii) as soon as possible and in any event (A) within 30 days
after the Account Party 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 Account
Party 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 Account Party describing such ERISA Plan
Termination Event and the action, if any, which the Account Party
proposes to take with respect thereto;
(viii) promptly after receipt thereof by the Account Party or
any of its ERISA Affiliates from the PBGC, copies of each notice
received by the Account Party 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;
(ix) 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 Account Party is a
contributing employer;
(x) promptly after receipt thereof by the Account Party or any of
its ERISA Affiliates from an ERISA Multiemployer Plan sponsor, a copy of
each notice received by the Account Party 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 Account Party may be liable;
(xi) promptly after the Account Party 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 the Rate
Agreement, or any Transaction Document, Loan Document, Related Document
or Significant Contract;
(xii) promptly after the sending or filing thereof, copies of
all such proxy statements, financial statements, and reports which the
Account Party 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 Account Party files with, the Securities and Exchange Commission or
any governmental authority which may be substituted therefor, or with
any national securities exchange;
(xiii) promptly after receipt thereof, any assertion of the
character described in Section 8.01(h) hereof and the action the Account
Party proposes to take with respect thereto;
(xiv) promptly after knowledge of any material default under
the Rate Agreement or any Significant Contract, notice of such default
and the action the Account Party proposes to take with respect thereto;
(xv) 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 (xv) any filing by the Account Party in the
ordinary course of the Account Party's business with, or order issued or
action taken by, a governmental authority or regulatory body after May
16, 1991 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
(xvi) promptly after requested, such other information
respecting the financial condition, operations, properties, prospects or
otherwise, of the Account Party as the Issuing Bank or Majority Lenders
may from time to time reasonably request in writing.
SECTION VII.4. Most Favored Lender Covenants. So long as any amount
shall remain available to be drawn under the Letter of Credit or any Advance
or other amounts shall remain unpaid hereunder or any Participating Bank
shall have any Commitment:
(a) The Account Party will not amend, modify or supplement, or consent
to any amendment, modification or supplement to, the Other Reimbursement
Agreement or any Revolving Credit Facility (as defined below) (whether the
same relates to pricing, tenor, reduction, prepayment, covenants, other
credit terms or otherwise), or enter into any Revolving Credit Facility, in
each case unless the Account Party shall first have offered to amend, modify
or supplement the Loan Documents in a like manner, subject however, to the
provisions of subsection (b), to the extent applicable.
(b) If at any time the Account Party shall be unable to borrow under
any revolving credit or similar facility (a "Revolving Credit Facility")
because the Account Party is unable to satisfy any "material adverse change"
or other condition precedent to borrowing (a "Funding Suspension"), and (x)
the failure to satisfy such condition does not itself constitute an Event of
Default hereunder and (y) no Event of Default or Unmatured Default shall
have occurred and be continuing hereunder, the provisions of subsection (a)
shall be subject to the following:
(i) The Account Party will be free to negotiate with the
lenders under the Revolving Credit Facility (the"Non-Funding Lenders")
and may resolve or not resolve such Funding Suspension in such manner as
it may see fit, without any requirement that the Agent, the Issuing Bank
or the Participating Banks consent thereto;
(ii) Any improvement in pricing, covenants or other credit
terms afforded to the Non-Funding Lenders to resolve the Funding
Suspension shall be offered to the Agent, the Issuing Bank and the
Participating Banks in the manner prescribed by subsection (a). Any
additional security granted to the Non-Funding Lenders to resolve the
Funding Suspension shall be afforded equally and ratably to the Agent,
the Issuing Bank and the Participating Banks; and
(iii) If in connection with the resolution of a Funding
Suspension, the Non-Funding Lenders' facility shall be permanently
reduced such that any amounts repaid or prepaid as part of such
resolution are not available to be re-borrowed, the Account Party will
pay to the Agent, for the benefit of the Issuing Bank and the
Participating Banks an amount equal to such repayment or prepayment,
dollar-for-dollar, to be applied to the reduction of the Available
Amount or to be held as cash collateral for the obligations of the
Account Party under the Loan Documents. For the avoidance of doubt:
(A) a reduction in the unfunded portion of the Non-Funding
Lenders' commitments will not, by itself, entitle the Agent, the
Issuing Bank and the Participating Banks to any such payment or to
any reduction in the Available Amount; and
(B) the Agent, the Issuing Bank and the Participating Banks
will not be entitled to any payment or reduction in the Available
Amount solely as a result of repayments and prepayments of advances
under such facility, if such repayment or prepayment results in
the Non-Funding Lenders' commitments becoming again available to
the Account Party in at least the amount of the repayment or
prepayment.
(c) The provisions of subsection (b) shall not apply during the
continuance of an Event of Default.
SECTION VII.5. The Cash Account. Upon the occurrence and during the
continuance of any Event of Default, the Agent shall at the request, or may
with the consent, of the Majority Lenders, direct the Account Party to, and
if so directed, the Account Party shall, deposit with the Agent an amount in
the cash account (the "Cash Account") described below equal to the Available
Amount of the Letter of Credit. Such Cash Account shall at all times be free
and clear of all rights or claims of third parties. The Cash Account shall
be maintained with the Agent in the name of, and under the sole dominion and
control of, the Agent, and amounts deposited in the Cash Account shall bear
interest at a rate equal to the rate generally offered by Barclays for
deposits equal to the balance in the Cash Account, for a term to be agreed to
between the Account Party and the Agent. If any Letter of Credit drawings
then outstanding or thereafter made are not reimbursed in full immediately
after being made and upon demand, then, in any such event, the Agent may
apply the amounts then on deposit in the Cash Account, in such priority as
the Agent shall elect, toward the payment in full of any or all of the
Account Party's obligations hereunder as and when such obligations shall
become due and payable. Upon payment in full, after the termination of the
Letters of Credit, of all such obligations, the Agent will repay to the
Account Party any cash then on deposit in the Cash Account. The Issuing Bank
hereby confirms its obligation as set forth in the Letter of Credit to make
all payments under the Letter of Credit with its own funds and not with any
funds of the Account Party or the Issuer, and nothing in this Section 7.05 or
otherwise shall in any way limit such obligation.
ARTICLE VIII
DEFAULTS
SECTION VIII.1. 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 Account Party shall fail to pay any interest on any Advance or
pursuant to Section 4.02 hereof within two days after the same becomes due;
the Account Party shall fail to reimburse the Issuing Bank for any Interest
Drawing (as defined in the Letter of Credit) within two days after such
reimbursement becomes due; or the Account Party shall fail to make any other
payment required to be made pursuant to Article II or Article III hereof when
due; or
(b) Any representation or warranty made by the Account Party (or any of
its officers or agents) in any Loan Document or Transaction Document or in
any certificate or other writing delivered pursuant to any Loan Document or
Transaction Document shall prove to have been incorrect in any material
respect when made or deemed made; or
(c) The Account Party 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 Account Party shall fail to perform or observe any other term
or covenant on its part to be performed or observed contained in any Loan
Document or Transaction Document and such failure shall remain unremedied,
after written notice thereof shall have been given to the Account Party by
the Agent, the Issuing Bank or any Participating Bank, for a period of 30
days; or
(e) The Account Party shall fail to pay any of its Debt when due
(including any interest or premium thereon but excluding Debt arising
hereunder 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 Account Party'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 Account Party so that such circumstance is no longer
continuing; or
(f) The Account Party 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 Account Party 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 Account Party, either the Account Party
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
Account Party or the appointment of a receiver, trustee, custodian or other
similar official for the Account Party or any of its property) shall occur;
or the Account Party 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 Account Party or its properties and
either enforcement proceedings shall have been commenced by any creditor upon
such judgment or order and shall not have been stayed or 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,
any Significant Contract or any Related Document 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
provisions contained in Section 7.02(g) hereof; or any party thereto other
than the Participating Banks shall so assert in writing, provided that in the
case of any party other than the Account Party making such assertion in
respect of the Rate Agreement, any Significant Contract or any Related
Document, 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, such Significant Contract or such
Related Document, (ii) the Account Party 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 (iii) such a binding
determination shall have been made in favor of such asserting party's
position; or
(i) The Security Documents 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 applicable Collateral
(other than Liens in favor of the Trustee with respect to the interests of
the Issuer under the Indenture), 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 Account Party becomes aware thereof; or
(j) The Account Party 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 Account
Party'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) A default by the Account Party 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 Agent to the Account
Party 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 Account Party 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 NHPUC 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 Account Party 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 Account Party as a whole; or
(m) NU shall cease to own all of the outstanding common stock of the
Account Party, free and clear of any Liens; or
(n) An "Event of Default" (as defined therein) shall have occurred and
be continuing under the Indenture or the First Mortgage Indenture; or
(o) An "Event of Default" (as defined therein) shall have occurred and
be continuing under the Other Reimbursement Agreement.
SECTION VIII.2. Remedies Upon Events of Default. Upon the occurrence
and during the continuance of any Event of Default, then, and in any such
event the Agent with the concurrence of the Issuing Bank may, and upon the
direction of the Majority Lenders the Agent shall (i) if the Letter of Credit
shall not have been issued, instruct the Issuing Bank to (whereupon the
Issuing Bank shall) by notice to the Account Party declare its commitment to
issue the Letter of Credit to be terminated, whereupon the same shall
forthwith terminate, (ii) instruct the Issuing Bank to (whereupon the Issuing
Bank shall) furnish to the Trustee and the Paying Agent written notice of
such Event of Default in accordance with Section 6.01(a)(iv) of the Indenture
and of the Issuing Bank's determination to terminate the Letter of Credit on
the fifth business day (as defined in the Indenture) following the Trustee's
and Paying Agent's receipt of such notice, (iii) instruct the Issuing Bank
to (whereupon the Issuing Bank shall) furnish to the Trustee and the Paying
Agent written notice that the Interest Component will not be reinstated in
the amount of one or more Interest Drawings, all as provided in the Letter of
Credit; (iv) direct the Account Party to pay cash into the Cash Account in
accordance with Section 7.05; (v) declare the Advances and all other
principal amounts outstanding hereunder, all interest thereon and all other
amounts payable hereunder to be forthwith due and payable, whereupon the
Advances and all other principal amounts outstanding hereunder, all such
interest and all such other 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 Account Party, and
(vi) instruct the Issuing Bank to (whereupon the Issuing Bank shall) exercise
all the rights and remedies provided herein and under and in respect of the
Security Documents; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Account Party under
the Federal Bankruptcy Code, (A) the commitment of the Issuing Bank to issue
the Letter of Credit, the Commitments and the obligations of the
Participating Banks to make Advances shall automatically be terminated, and
(B) the Advances and all other principal amounts outstanding hereunder, all
interest accrued and unpaid thereon and all other amounts payable hereunder
shall automatically become due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived
by the Account Party.
SECTION VIII.3. Issuing Bank to Notify First Mortgage Trustee, Others.
The Issuing Bank shall, if so directed by the Majority Lenders, promptly
notify the First Mortgage Trustee by telephone, confirmed in writing, of the
occurrence of any Event of Default. In addition, the Issuing Bank shall
furnish to the Agent, the Account Party, the Paying Agent and the Issuer a
copy of (a) any notice furnished to the First Mortgage Trustee pursuant to
the preceding sentence and (b) any notice delivered to the Trustee pursuant
to clause (ii) or clause (iii) of Section 8.02. Notwithstanding the
foregoing, no failure of the Issuing Bank to give any notice (or copy of a
notice) as contemplated by this Section 8.03 shall limit or impair any rights
of the Issuing Bank, the Agent or any Participating Bank or the exercise of
any remedy hereunder, nor shall the Issuing Bank, the Agent or any
Participating Bank incur any liability as a result of any such failure.
ARTICLE IX
THE AGENT, THE PARTICIPATING
BANKS AND THE ISSUING BANK
SECTION IX.1. Authorization of Agent; Actions of Agent and Issuing
Bank. The Issuing Bank and each Participating Bank hereby appoint and
authorize the Agent to take such action as agent on their 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; provided, however, that neither the Agent nor the Issuing Bank shall
be required to take any action which exposes the Agent or the Issuing Bank to
personal liability or which is contrary to this Agreement or applicable law.
As to any matters not expressly provided for by any Related Document
(including, without limitation, enforcement or collection thereof), neither
the Agent nor the Issuing Bank shall be required to exercise any discretion
or take any action. The Agent agrees to deliver promptly (i) to the Issuing
Bank and each Participating Bank copies of each notice delivered to it by the
Account Party and (ii) to each Participating Bank copies of each notice
delivered to it by the Issuing Bank, in each case pursuant to the terms of
this Agreement.
SECTION IX.2. Reliance, Etc. Neither the Agent, the Issuing Bank, nor
any of their 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
this Agreement or any Related Document, except for its or their own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. Without limitation of the generality of the foregoing, each of
the Agent and the Issuing Bank (i) may consult with legal counsel (including
counsel for the Account Party), 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 Participating Bank and shall not be responsible to any Participating Bank
for any statements, warranties or representations made in or in connection
with this Agreement or any Related Document; (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 or any Related Document on
the part of the Account Party to be performed or observed, or to inspect any
property (including the books and records) of the Account Party; (iv) shall
not be responsible to any Participating Bank for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement
or any Related Document or any other instrument or document furnished
pursuant hereto and thereto; and (v) shall incur no liability under or in
respect of this Agreement or any Related Document by acting upon any notice,
consent certificate or other instrument or writing (which may be by telegram,
cable or telex), including, without limitation, any thereof from time to time
purporting to be from the Trustee, believed by it to be genuine and signed or
sent by the proper party or parties.
SECTION IX.3. The Agent, the Issuing Bank and Affiliates. The Agent and
the Issuing Bank shall have the same rights and powers under this Agreement
as any other Participating Bank and may exercise (or omit from exercising)
the same as though they were not the Agent and the Issuing Bank,
respectively, and the term "Participating Bank" shall, unless otherwise
expressly indicated, include Barclays in its individual capacity. The Agent,
the Issuing Bank and their respective Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, the Account Party, any of its subsidiaries and any
Person who may do business with or own securities of the Account Party or any
such subsidiary, all as if Barclays was not the Agent or the Issuing Bank,
and without any duty to account therefor to the Participating Banks.
SECTION IX.4. Participating Bank Credit Decision. Each of the Issuing
Bank and each Participating Bank acknowledges that it has, independently and
without reliance upon the Arranger, the Agent, the Issuing Bank or any other
Participating Bank and based on the financial information referred to in
Section 6.01(e) hereof and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each of the Issuing Bank and each Participating Bank also
acknowledges that it will, independently and without reliance upon the
Arranger, the Agent, the Issuing Bank or any other Participating Bank and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement.
SECTION IX.5. Indemnification. The Participating Banks agree to
indemnify the Agent and the Issuing Bank (to the extent not reimbursed by the
Account Party), ratably according to their respective Participation
Percentages, 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 or the Issuing Bank in any way
relating to or arising out of this Agreement or any action taken or omitted
by the Agent or the Issuing Bank under or in connection with this Agreement,
provided that no Participating Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's or the
Issuing Bank's (as the case may be) gross negligence or willful misconduct.
Without limitation of the foregoing, each Participating Bank agrees to
reimburse the Agent and the Issuing Bank promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by the
Agent and the Issuing Bank in connection with the preparation, execution,
delivery, administration, modification, amendment, waiver 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 the Agent and the Issuing Bank (as the case may be) are entitled
to reimbursement for such expenses pursuant to Section 10.04 hereof but are
not reimbursed for such expenses by the Account Party.
SECTION IX.6. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Issuing Bank, the Participating Banks
and the Account Party, with any such resignation to become effective only
upon the appointment of a successor Agent pursuant to this Section 9.06.
Upon any such resignation, the Issuing Bank shall have the right to appoint a
successor Agent, which shall be another commercial bank or trust company
reasonably acceptable to the Account Party, organized or licensed under the
laws of the United States, or of any State thereof. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent and the execution and
delivery by the Account Party and the successor Agent of an agreement
relating to the fees, if any, to be paid to the successor Agent in connection
with its acting as Agent hereunder, such successor Agent shall thereupon
succeed to and become vested with all 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 hereunder as 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 Agent under this Agreement.
SECTION IX.7. Issuing Bank. (a) All notices received by the Issuing
Bank pursuant to this Agreement or any Related Document (other than the
Letter of Credit) shall be promptly delivered to the Agent for distribution
to the Participating Banks.
(a) Except to the extent permitted by Section 2.06, the Issuing Bank
shall not amend or waive any provision or consent to the amendment or waiver
of any Related Document without the written consent of the Majority Lenders.
(b) Upon receipt by the Issuing Bank from time to time of any amount
pursuant to the terms of any Related Document (other than pursuant to the
terms of this Agreement), the Issuing Bank shall promptly deliver to the
Agent such amount.
SECTION IX.8. Certain Authorizations and Consent. The Issuing Bank and
each Participating Bank, by its acceptance hereof, and each other
Participating Bank by its execution and delivery of the Participant
Assignment pursuant to which it became a Participating Bank, consents to,
authorizes, ratifies and confirms in all respects:
(i) the execution, delivery, acceptance and performance by the
Agent and by the Collateral Agent of the Intercreditor Amendment, and
the taking by the Agent and the Collateral Agent of all actions under
the Intercreditor Agreement, as the same may be amended from time to
time in accordance with the terms thereof and Section 10.01 hereof;
(ii) the execution, delivery and acceptance by the Collateral Agent
of the Security Agreement Amendment, and the taking by the Collateral
Agent of all actions under the Security Agreement, as the same may be
amended from time to time in accordance with the terms thereof and
Section 10.01 hereof;
(iii) the execution, delivery and acceptance by the Issuing
Bank of the Indenture, and the taking by the Issuing Bank of all actions
under the Indenture, as the same may be amended from time to time in
accordance with the terms thereof and Section 9.07 hereof;
the execution and delivery of this Agreement by the Issuing Bank or such
Participating Bank, or the execution and delivery of such Participant
Assignment by such Participating Bank, as the case may be, constituting
(without further act or deed) the Issuing Bank or such Participating Bank's
acceptance and approval of, and agreement to the terms of, the Intercreditor
Agreement, the Security Agreement and the Indenture with the same effect as
if the Issuing Bank or such Participating Bank were itself a party thereto.
ARTICLE X
MISCELLANEOUS
SECTION X.1. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Pledge Agreement, nor consent to any departure by the
Account Party 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 the Issuing Bank and
all the Participating Banks, do any of the following: (a) waive, modify or
eliminate any of the conditions specified in Article V of this Agreement,
(b) increase the Commitments of the Participating Banks that may be
maintained hereunder, subject the Participating Banks to any additional
obligations or extend the Stated Termination Date, (c) reduce the principal
of, or interest on, the Advances, any amount reimbursable on demand pursuant
to Section 3.01, or any fees or other amounts payable hereunder, (d) postpone
any date fixed for any payment of principal of, or interest on, the Advances,
such reimbursable amounts or any fees or other amounts payable hereunder
(other than fees payable to the Issuing Bank or the Agent pursuant to Section
2.03 hereof), (e) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Advances, or the number of
Participating Banks which shall be required for the Participating Banks or
any of them to take any action hereunder, (f) amend this Agreement or the
Pledge Agreement in a manner intended to prefer one or more Participating
Banks over any other Participating Banks, (g) amend this Section 10.01, or
(h) release any of the Collateral otherwise than in accordance with any
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 (i) no
amendment, waiver or consent shall, unless in writing and signed by the
Issuing Bank or the Agent in addition to the Participating Banks required
above to take such action, affect the rights or duties of the Issuing Bank or
the Agent, as the case may be, under this Agreement or the Pledge Agreement
and (ii) no amendment, waiver or consent shall, unless in writing and signed
by the "Majority Lenders" under the Other Reimbursement Agreement, shall
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Advances, or the number of Participating Banks which shall be
required for the Participating Banks or any of them to take, or to direct the
Collateral Agent to take, any action under the Intercreditor Agreement and
the Security Agreement.
SECTION X.2. Notices, Etc. 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 Account Party, to it in care of NUSCO at NUSCO's
address at 107 Selden Street, Berlin, Connecticut 06037 (telecopy: (860)
665-5457), Attention: Assistant Treasurer - Finance;
(ii) if to the Issuing Bank or the Agent, to it at its address at
222 Broadway, 12th Floor, New York, New York 10038, Attention: Client
Services Unit, (telephone: (212) 412-3721, telecopy: (212) 412-5306),
with a copy to: Utilities Group, (telephone (212) 412-2470, telecopy:
(212) 412-6709);
(iii) if to any Participating Bank, to it at its address set
forth on the signature pages to this Agreement or in the Participation
Assignment pursuant to which it became a Participating Bank; or
as to each party other than any Participating Bank, at such other address as
shall be designated by such party in a written notice to the other parties,
and, as to any Participating Bank, at such other address as shall be
designated by such Participating Bank in a written notice to the Account
Party and the Agent. 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 Agent or the
Issuing Bank pursuant to Article II, III or IV shall not be effective until
received by the Agent or the Issuing Bank, as the case may be.
SECTION X.3. No Waiver of Remedies. No failure on the part of any
Participating Bank or the Issuing Bank to exercise, and no delay in
exercising, any right hereunder or under any Loan Document 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 X.4. Cost; Expenses and Indemnification. (a) The Account Party
agrees to pay on demand all costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), of (i) the Arranger, the
Agent and the Issuing Bank in connection with the preparation, negotiation,
execution and delivery of the Loan Documents and Transaction Documents and
the administration of the Loan Documents and Transaction Documents, the care
and custody of any and all collateral, and any proposed modification,
amendment, or consent relating thereto; and (ii) the Arranger, the Agent, the
Issuing Bank and each Participating Bank in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement or any other Loan Document or Transaction Document.
(a) The Account Party hereby agrees to indemnify and hold the Arranger,
the Agent, the Issuing Bank and each Participating Bank 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, the Transaction Documents or
the Related Documents or any transaction contemplated thereby, or the
use by the Account Party of the proceeds of any Advance or the use by
the Paying Agent or the Trustee of the proceeds of any drawing under the
Letter of Credit;
(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
Account Party or any of its Affiliates or (B) by or on behalf of the
Account Party or any of its Affiliates at any time and in any place;
(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;
(iv) by reason of or in connection with the execution and delivery
or transfer of, or payment or failure to make payment under, the Letter
of Credit; provided, however, that the Account Party shall not be
required to indemnify the Arranger, the Agent, the Issuing Bank or any
Participating Bank pursuant to this Section for any claims, damages,
losses, liabilities, costs or expenses to the extent caused by (A) the
Issuing Bank's willful misconduct or gross negligence, as determined by
a court of competent jurisdiction, in determining whether documents
presented under the Letter of Credit are genuine or comply with the
terms of the Letter of Credit or (B) the Issuing Bank's willful or
grossly negligent failure, as determined by a court of competent
jurisdiction, to make lawful payment under the Letter of Credit after
the presentation to it by the Paying Agent of a draft and certificate
strictly complying with the terms and conditions of the Letter of
Credit; or
(v) by reason of any inaccuracy or alleged inaccuracy in any
material respect, or any untrue statement or alleged untrue statement of
any material fact, contained in any Official Statement, except to the
extent contained in or arising from information in such Official
Statement supplied in writing by and describing the Issuing Bank or any
previous issuer of a letter of credit relating to the Bonds.
(b) Nothing contained in this Section 10.04 is intended to limit the
Account Party's obligations set forth in Articles II, III and IV. The
Account Party's obligations under this Section 10.04 shall survive the
creation and sale of any participation interest pursuant to Section 10.06
hereof and shall survive as well the repayment of all amounts owing to the
Agent, the Issuing Bank and the Participating Banks under the Loan Documents
and the termination of the Commitments. If and to the extent that the
obligations of the Account Party under this Section 10.04 are unenforceable
for any reason, the Account Party agrees to make the maximum contribution to
the payment and satisfaction thereof which is permissible under applicable
law.
SECTION X.5. Right of Set-off. (a) Upon (i) the occurrence and during
the continuance of any Event of Default and (ii) the taking of any action or
the giving of any instruction by the Agent as specified by Section 8.02
hereof, the Issuing Bank and each Participating Bank are 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 the Issuing Bank or such Participating Bank to or for the credit or
the account of the Account Party against any and all of the obligations of
the Account Party now or hereafter existing under this Agreement in favor of
the Issuing Bank or such Participating Bank, irrespective of whether or not
the Issuing Bank or such Participating Bank shall have made any demand under
this Agreement and although such obligations may be unmatured. The Issuing
Bank and each Participating Bank agrees promptly to notify the Account Party
after any such set-off and application provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of the Issuing Bank and each Participating Bank under this Section are
in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Issuing Bank and/or such Participating
Bank may have.
(a) The Account Party 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 Issuing Bank and of the several Participating Banks
hereunder are several and not joint. Nothing contained herein shall
constitute a relinquishment or waiver of the Account Party's rights to any
independent claim that the Account Party may have against the Issuing Bank or
any Participating Bank, but no Participating Bank shall be liable for the
conduct of the Issuing Bank or any other Participating Bank, and the Issuing
Bank shall not be liable for the conduct of any Participating Bank.
SECTION X.6. Binding Effect; Assignments and Participants. (a) This
Agreement shall become effective when it shall have been executed and
delivered by the Account Party, the Agent, the Issuing Bank and each
Participating Bank named on the signature pages to this Agreement and
thereafter shall be binding upon and inure to the benefit of the Account
Party, the Agent, the Issuing Bank and each Participating Bank and their
respective successors and assigns, except that the Account Party shall not
have the right to assign its rights hereunder or any interest herein without
the prior written consent of the Issuing Bank and each Participating Bank,
and the Issuing Bank may not assign its commitment to issue the Letter of
Credit or its obligations under or in respect of the Letter of Credit.
(a) Each Participating Bank may assign all or any portion of its rights
under this Agreement, under the Letter of Credit or in any security
hereunder, including, without limitation, any instruments securing the
Account Party's obligations hereunder; provided that (i) no assignment by any
Participating Bank may be made to any Person, other than to another
Participating Bank, except with the prior written consent of the Issuing Bank
and the Account Party (which consent in the case of the Account Party,
(A) shall not be unreasonably withheld and (B) shall not be required if an
Event of Default shall have occurred and be continuing and the Agent or the
Issuing Bank shall have exercised any remedy described in clause (ii), (iii)
or (v) of Section 8.02), (ii) any assignment shall be of a constant and not a
varying percentage of all of the assignor's rights and obligations hereunder
and (iii) the parties to each such assignment shall execute and deliver to
the Agent a Participation Assignment, together with a processing fee of
$3,500. Upon receipt of a completed Participation Assignment and the
processing fee, the Agent will record in a register maintained for such
purpose the name of the assignee and the percentage participation interest
assigned by the assignor and assumed by the assignee for purposes of the
determination of such assignor's and assignee's respective Participation
Percentages. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Participation Assignment,
which effective date shall be at least five Business Days after the execution
thereof, the assignee shall, to the extent of such assignment, become a party
hereto and have all of the rights and obligations of a Participating Bank
hereunder and, to the extent of such assignment, such assigning Participating
Bank shall be released from its obligations hereunder (without relieving such
Participating Bank from any liability for damages, costs and expenses
suffered by the Issuing Bank or the Account Party as a result of the failure
by such Participating Bank to perform its obligations hereunder).
(b) Each Participating Bank may grant participations to one or more
Persons in all or any part of, or any interest (undivided or divided) in,
such Participating Bank's rights and obligations under this Agreement (any
such Person being referred to hereinafter as a "Participant" and such
interests are collectively, referred to hereinafter as the "Rights");
provided, however, that (i) such Participating Bank's obligations under this
Agreement shall remain unchanged; (ii) any such Participant shall be entitled
to the benefits and cost protections provided for in Section 4.03 hereof on
the same basis as if it were a Participating Bank hereunder; (iii) the
Account Party, the Agent and the Issuing Bank shall continue to deal solely
and directly with such Participating Bank in connection with such
Participating Bank's rights and obligations under this Agreement; and (iv) no
such Participant, other than an Affiliate of such Participating Bank, shall
be entitled to require such Participating Bank to take or omit to take any
action hereunder, unless such action or omission would have an effect of the
type described in subsections (c), (d) or (h) of Section 10.01 hereof.
(c) Notwithstanding anything contained in this Section 10.06 to the
contrary, the Issuing Bank and any Participating Bank may assign and pledge
all or any portion of the Advances (or participating interests therein) owing
to the Issuing Bank or such Participating Bank 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
Issuing Bank or such Participating Bank from its obligations hereunder.
SECTION X.7. 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 X.8. Issuing Bank Not Liable. As between the Agent, the
Issuing Bank and the Participating Banks on the one hand, and the Account
Party on the other, the Account Party assumes all risks of the acts or
omissions of the Paying Agent, the Trustee and any other beneficiary or
transferee of the Letter of Credit with respect to its use of the Letter of
Credit. Neither the Agent, the Issuing Bank, any Participating Bank, nor any
of their respective officers or directors shall be liable or responsible for:
(a) the use which may be made of the Letter of Credit or any acts or
omissions of the Paying Agent, the Trustee and any other beneficiary or
transferee in connection therewith; (b) the validity, sufficiency or
genuineness of documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Issuing Bank against presentation of
documents which do not comply with the terms of the Letter of Credit,
including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever
in making or failing to make payment under the Letter of Credit, except that
the Account Party shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Account Party, to the extent of any
direct, as opposed to consequential, damages suffered by the Account Party
which the Account Party proves were caused by (i) the Issuing Bank's willful
misconduct or gross negligence, as determined by a court of competent
jurisdiction, in determining whether documents presented under the Letter of
Credit are genuine or comply with the terms of the Letter of Credit or
(ii) the Issuing Bank's willful or grossly negligent failure, as determined
by a court of competent jurisdiction, to make lawful payment under the Letter
of Credit after the presentation to it by the Paying Agent of a draft and
certificate strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, the Issuing
Bank may accept original or facsimile (including telecopy) sight drafts and
accompanying certificates presented under the Letter of Credit that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
SECTION X.9. Confidentiality. In connection with the negotiation and
administration of this Agreement and the other Loan Documents, the Account
Party has furnished and will from time to time furnish to the Agent, the
Issuing Bank and the Participating Banks (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 Account Party,
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 Account Party 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
assignees of or participants in the Recipient's position herein, but the
Recipient's ability to so exchange Confidential Information shall be
conditioned upon any such prospective assignee's or 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 Account Party as promptly as practicable.
SECTION X.10. Waiver of Jury Trial. The Account Party, the Arranger,
the Agent, the Issuing Bank, and the Participating Banks 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, any Transaction Document or any other instrument or document
delivered hereunder or thereunder.
SECTION X.11. Governing Law. This Agreement and the Pledge Agreement
shall be governed by, and construed in accordance with, the laws of the State
of New York. The Account Party, the Arranger, the Agent, the Issuing Bank
and each Participating Bank 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 X.12. 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.
THE ACCOUNT PARTY:
PUBLIC SERVICE COMPANY OF
NEW HAMPSHIRE
By:
Title: Assistant Treasurer - Finance
THE AGENT AND ISSUING BANK:
BARCLAYS BANK PLC,
NEW YORK BRANCH,
as Agent and as Issuing Bank
By:
Title:
THE PARTICIPATING BANKS:
BARCLAYS BANK PLC,
NEW YORK BRANCH
By:
Title:
Address for Notices
Barclays Bank PLC
222 Broadway
New York, New York 10038
Attention: Sydney Dennis
Telephone: 212/412-2470
Fax: 212/412-6709
Participation Percentage: 8.66446012%
BANK OF NEW YORK
By:
Title:
Address for Notices
Bank of New York
One Wall Street
New York, New York 10286
Attention: John Hall
Telephone: 212/635-7581
Fax: 212/635-7924
Participation Percentage: 4.33223006%
BANKBOSTON, N.A.
By:
Title:
Address for Notices
BankBoston, N.A.
100 Federal Street (MA BOS 01-08-04)
Boston, Massachusetts 02110
Attention: Jill Calabrese
Telephone: 617/434-9579
Fax: 617/434-3652
Participation Percentage: 6.49834509%
PARIBAS
By:
Title:
By:
Title:
Address for Notices
Paribas
787 Seventh Avenue
New York, New York 10019
Attention: Cheena Trikha
Telephone: 212/841-2560
Fax: 212/841-2255
Participation Percentage: 8.66446012%
CIBC, INC.
By:
Title:
Address for Notices
CIBC, Inc.
Two Paces West, Suite 1200
2727 Paces Ferry Road
Atlanta, Georgia 30339
Attention: Patrice Kelleher
Telephone: 770/319-4832
Fax: 770/319-4950
Participation Percentage: 8.66446012%
CITIBANK, N.A.
By:
Title:
Address for Notices
Citibank, N.A.
399 Park Avenue
4th Floor, Zone 20
New York, New York 10043
Attention: Robert J. Harrity, Jr.
Telephone: 212/559-6482
Fax: 212/793-6130
Participation Percentage: 4.33223006%
THE FIRST NATIONAL BANK OF CHICAGO
By:
Title:
Address for Notices
The First National Bank of Chicago
One First National Plaza, Suite 0363
Chicago, Illinois 60670-0363
Attention: Kenneth J. Bauer
Telephone: 312/732-6282
Fax: 312/732-3055
Participation Percentage: 4.33223006%
FLEET NATIONAL BANK
By:
Title:
Address for Notices
Fleet Bank
40 Westminster Street
Mail Stop: RI OP T05A
Providence, Rhode Island 02903-4963
Attention: Fred N. Manning
Telephone: 401/459-4845
Fax: 401/459-4963
Participation Percentage: 6.49834509%
THE FUJI BANK, LIMITED
By:
Title:
Address for Notices
The Fuji Bank, Limited
Two World Trade Center
New York, New York 10048
Attention: Roy Tanfield
Telephone: 212/898-2090
Fax: 212/321-9407
Participation Percentage: 4.33223006%
MELLON BANK, N.A.
By:
Title:
Address for Notices
Mellon Bank, N.A.
One Mellon Bank Center, Room 4425
Pittsburgh, Pennsylvania 15258-0001
Attention: Kurt Hewett
Telephone: 412/234-7355
Fax: 412/234-0286
Participation Percentage: 2.59933804%
CHASE SECURITIES INC., as Agent for
THE CHASE MANHATTAN BANK
By:
Title:
Address for Notices
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Eric Rosen
Telephone: 212/270-5458
Fax: 212/270-7968
Participation Percentage: 23.75275097%
TORONTO DOMINION
(NEW YORK), INC.
By:
Title:
Address for Notices
Toronto Dominion (New York), Inc.
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Mark A. Baird
Telephone: 713/653-8289
Fax: 713/951-9921
Participation Percentage: 4.33223006%
THE TRAVELERS INSURANCE
COMPANY
By:
Title:
Address for Notices
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group 9PB
Fax: 860/954-5243
Participation Percentage: 6.06512208%
UNION BANK OF CALIFORNIA
By:
Title:
Address for Notices
Union Bank of California
445 S. Figueroa Street, 15th Floor
Los Angeles, CA 90071
Attention: Ross Slusser
Telephone: 213/236-4124
Fax: 213/236-4096
Participation Percentage: 4.33223006%
TRAVELERS CORPORATE LOAN
FUND, INC.
By: Travelers Asset Management
International Corporation
By:
Title:
Address for Notices
Travelers Corporate Loan Fund, Inc.
c/o Smith Barney
388 Greenwich Street, 22nd Floor
New York, New York 10013
With a copy to:
The Travelers Insurance Company
One Tower Square - 9PB
Hartford, Connecticut 06183-2030
Attention: John Petchler
Allen Cantrell
Fax: 860/954-5243
Participation Percentage: 2.59933804%
SCHEDULE I
APPLICABLE LENDING OFFICES
Name of
Participating Bank
Domestic
Lending Office
Eurodollar
Lending Office
Barclays Bank PLC,
New York Branch
75 Wall Street
New York, NY 10265
Att: Customer Service Unit
Tel: 212/412-3363
Fax: 212/412-3080
Barclays Bank PLC,
Nassau Branch
c/o Barclays Bank PLC,
New York Branch
75 Wall Street
New York, NY 10265
Bank of New York
One Wall Street
New York, New York 10286
Att: John Hall
Tel: 212/635-7581
Fax: 212/635-7924
Same
BankBoston, N.A.
100 Federal Street
(MA BOS 01-08-04)
Boston, Massachusetts 02110
Att: Jill Calabrese
Tel: 617/434-9579
Fax: 617/434-3652
Same
Paribas
787 Seventh Avenue
New York, New York 10019
Att: Cheena Trikha
Tel: 212/841-2560
Fax: 212/841-2255
Same
CIBC, Inc.
Two Paces West, Suite 1200
2727 Paces Ferry Road
Atlanta, Georgia 30339
Att: Patrice Kelleher
Tel: 770/319-4832
Fax: 770/319-4950
Same
Citibank, N.A.
1 Court Square
7th Floor/Zone 1
Long Island City, NY 11120
Att: Ann Chiou
Tel: 718/248-4562
Fax: 718/248-4844
Same
The First National Bank
of Chicago
1 First National Plaza
Suite 0821/IND-9
Chicago, IL 60670
Att: Ann Fritz
Tel: 312/732-5083
Fax: 312/732-1065
Same
Fleet Bank
40 Westminster Street
Mail Stop: RI OP T05A
Att: Fred N. Manning
Tel: 401/459-4845
Fax: 617/459-4963
Same
The Fuji Bank, Limited
Two World Trade Center
New York, NY 10048
Att: Roy Tanfield
Tel: 212/898-2064
Fax: 212/321-9407
Same
Mellon Bank, N.A.
Loan Administration
Three Mellon Bank Center
Room 1525
Pittsburgh, PA 15259-0003
Att: Cathy Capp
Tel: 412/234-1870
Fax: 412/209-6111
Same
The Chase Manhattan Bank
1 Chase Manhattan Plaza
8th Floor
New York, NY 10081
Att: Mark Heberer
Tel: 212/552-6368
Fax: 212/552-5642
Same
Toronto Dominion (New York), Inc.
909 Fannin, Suite 1700
Houston, TX 12345
Att: Debbie Greene
Tel: 713/653-8245
Fax: 713/951-9921
Same
[Travelers Companies]
[9PB, 1 Tower Street
Hartford, Connecticut 06183-2030
Att: Robert Mills
Tel: 860/277-7804
Fax: 860/954-5243]
Same
Union Bank of California
445 S. Figueroa Street
15th Floor
Los Angeles, CA 90071
Att: Patricia Ayala
Tel: 213/236-6199
Fax: 213/236-4096
Same
TABLE OF CONTENTS
Page
SCHEDULES
Schedule I - Applicable Lending Offices
EXHIBITS
Exhibit 1.01A - Form of Letter of Credit
Exhibit 1.01B - Form of Participation Assignment
Exhibit 1.01C - Form of Pledge Agreement
Exhibit 5.01A - Form of Opinion of Day, Berry & Howard, counsel to
the Account Party
Exhibit 5.01B - Form of Opinion of Jeffrey C. Miller, Assistant
General Counsel of NUSCO
Exhibit 5.01C - Form of Opinion of Catherine E. Shively, Senior
Counsel of the Account Party
Exhibit 5.01D - Form of Opinion of Drummond Woodsum & MacMahon,
special Maine counsel to the Account Party
Exhibit 5.01E - Form of Opinion of Zuccaro Willis & Bent, special
Vermont counsel to the Account Party
Exhibit 5.01F - Form of Opinion of King & Spalding, counsel to
the Agent and the Issuing Bank
EXECUTION COPY
THIRD SERIES E LETTER OF CREDIT
AND REIMBURSEMENT AGREEMENT
Dated as of April 14, 1999
Among
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
as Account Party
BARCLAYS BANK PLC, NEW YORK BRANCH
as Issuing Bank and as Agent
and
THE PARTICIPATING BANKS
REFERRED TO HEREIN
Relating to
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)
EXHIBIT 10.23.3
SECOND AMENDMENT TO
MEMORANDUM OF UNDERSTANDING
POOLING OF GENERATION AND TRANSMISSION
This agreement is dated as of June , 1999, by and between The
Connecticut Light and Power Company, Holyoke Water Power Company, Holyoke
Power and Electric Company and Western Massachusetts Electric Company
(collectively the "NU Initial System Companies").
WHEREAS, the NU Initial System Companies are operating subsidiaries of
Northeast Utilities, a registered holding company under the Public Utility
Holding Company Act of 1935;
WHEREAS, the NU Initial System Companies are parties to a Memorandum of
Understanding concerning the Pooling of Generation of Transmission dated as
of June 1, 1970 and amended as of February 2, 1982 ("NUG&T") under which the
NU Initial System Companies allocate their generation and transmission
revenues and expenses;
WHEREAS, the NUG&T includes a two part allocation formula which
allocates the NU Initial System Companies' production plant and backbone
transmission capacity costs (and revenues) on the basis of the peak demands
of the Companies and energy costs on the basis of monthly loads of the NU
Initial System Companies;
WHEREAS, legislative restructuring initiatives in Connecticut and
Massachusetts permit the retail customers of the NU Initial System Companies
in those states to obtain their energy on a competitive basis from third
party suppliers;
WHEREAS, Western Massachusetts Electric Company and The Connecticut
Light and Power Company are divesting their generating assets, under
legislative restructuring initiatives and will acquire power supplies on the
competitive market in order to provide "Standard Offer" service to retail
customers who do not choose a competitive supplier;
WHEREAS, in light of state and federal restructuring initiatives, the
New England Power Pool ("NEPOOL") has amended and restated the NEPOOL
Agreement referenced in the NUG&T and has adopted a pool-wide open access
transmission tariff (the "NEPOOL Tariff") to further the creation of a
competitive bulk power market in New England; and
WHEREAS, the effect of these restructuring initiatives will render the
current allocation formula in the NUG&T unworkable with respect to generation
costs and revenues; and
WHEREAS, the changes in the NEPOOL Agreement warrant certain changes in
the allocation formula for transmission costs and revenues,
NOW THEREFORE, in consideration of the mutual promises contained herein,
the NU Initial Companies hereby agree to the following:
1. The Hartford Electric Light Company shall be removed as a party to
the NUG&T, as it has merged with The Connecticut Light and power Company.
2. All references to the NEPOOL Agreement shall mean the NEPOOL
Agreement as restated by an amendment dated as of July 20, 1998, as amended
from time to time.
3. The title of the NUG&T, recitals and Sections 2 through 8 of the
NUG&T are amended to strike all references to energy and generation capacity
and read in the manner shown on the attached revised pages of the NUG&T.
4. Section 1 of the NUG&T is amended to delete the first sentence and
to reflect that the amendments to the NUG&T will become effective, subject to
acceptance by the Federal Energy Regulatory Commission, on the first day of
the month following the date Western Massachusetts Electric Company begins to
procure the source of supply for Standard Offer generation service on a
competitive basis.
5. The title of Section 3 is amended to delete the words "BULK POWER"
and replace them with the words "BACKBONE TRANSMISSION".
6. Section 3 (a) of the NUG&T is amended to replace "Adjusted Annual
Peaks" with "Monthly Network Load" and to strike all references to energy and
generation capacity and read in the manner shown on the attached revised
pages of the NUG&T Agreement.
7. Section 3(b)(iv) of the NUG&T is amended to delete the term
"NEPEX" and replace it with "NEPOOL or ISO" and read in the manner shown on
the attached revised pages of the NUG&T.
8. Section 4 of the NUG&T is deleted in its entirety and the remaining
paragraphs shall be renumbered, as appropriate.
9. The first paragraph of Section 5 of the NUG&T ( now renumbered as
Section 4) is amended to read as follows:
The Companies participate in the New England Power Pool (NEPOOL) pursuant to
the NEPOOL Agreement dated September 1, 1971 as restated by an amendment
dated as of July 20, 1998, as may be amended from time to time, and, as such,
are subject to the NEPOOL Open Access Transmission Tariff ("NEPOOL Tariff")
which became effective as of March 1, 1997, as amended. As used in this
Memorandum and all schedules and supplements hereto the terms ISO and Monthly
Network Load shall have the meaning specified in NEPOOL Tariff, as amended
from time to time.
10. Section 5(e) (now renumbered as Section 4(e)) is amended to strike
reference to the treatment of Fuel Expense.
11. Section 5(h) (now renumbered as section 4(h)) is amended to strike
reference to investment return in the case of a generating unit and read in
the manner shown in the attached revised pages of the NUG&T.
12. Section 5(j) (now renumbered as section 4(j)) is deleted in its
entirety.
13. Schedule A to the NUG&T, consisting of 2 pages and entitled:
"DETERMINATION OF INVESTMENT RETURN," is amended to strike all references to
generation and read in the manner shown on the attached revised Schedule A.
14. To the extent any generating assets remain in the ownership of any
or all of the NU Initial System Companies upon the effective date of this
Second Amendment, the costs and revenues associated with such assets will be
allocated among the NU Initial System Companies on the basis of each
Company's ownership share in such assets until such assets are either sold,
or otherwise transferred or retired.
15. To the extent any wholesale power contracts remain the obligation
of any or all of the NU Initial System Companies upon the effective date of
this Second Amendment, the production costs associated with such contracts
will be allocated pursuant to the last applicable NUG&T allocation of such
contracts prior to the effective date of the Second Amendment until the
contracts are either sold, assigned, terminated or otherwise transferred to
another party.
16. This Second Amendment shall become effective on the first day of
the next month after such date that Western Massachusetts Electric Company
("WMECO") begins procuring the source of supply for Standard Offer generation
service on a competitive basis.
IN WITNESS WHEREOF, each of the Companies has caused this Agreement to be
executed by its duly authorized representative, as of this day of June,
1999.
THE CONNECTICUT LIGHT AND POWER COMPANY
By:
Its
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By:
Its
HOLYOKE WATER POWER COMPANY
By:
Its
HOLYOKE POWER AND ELECTRIC COMPANY
By:
Its
ATTACHMENT 2
SECOND COMPOSITE
RESTATED
NEW ENGLAND
POWER POOL AGREEMENT
(As amended through the Fifty-First Agreement
Amending New England Power Pool Agreement)
TABLE OF CONTENTS
PART ONE INTRODUCTION
SECTION 1 DEFINITIONS
1.1 Adjusted Load
1.2 Adjusted Monthly Peak
1.3 Adjusted Net Interchange
1.3A Administrative Procedures
1.4 AGC Capability
1.5 AGC Entitlement
1.6 Agreement
1.7 Annual Transmission Revenue Requirements
1.8 Automatic Generation Control or AGC
1.8A Balloting Agent
1.9 Bid Price
1.10 Commission
1.11 Control Area
1.12 Curtailment
1.13 Direct Assignment Facilities
1.14 Dispatch Price
1.15 EHV PTF
1.16 Electrical Load
1.17 Eligible Customer
1.17A End User Participant
1.18 Energy
1.19 Energy Entitlement
1.20 Entitlement
1.21 Entity
1.22 Excepted Transaction
1.23 [Deleted.]
1.24 Facilities Study
1.25 Firm Contract
1.26 First Effective Date
1.27 Good Utility Practice
1.28 HQ Contracts
1.29 HQ Energy Banking Agreement
1.30 HQ Interconnection
1.31 HQ Interconnection Agreement
1.32 HQ Interconnection Capability Credit
1.33 HQ Interconnection Transfer Capability
1.34 HQ Net Interconnection Capability Credit
1.35 HQ Phase I Energy Contract
1.36 HQ Phase I Percentage
1.37 HQ Phase I Transfer Credit
1.38 HQ Phase II Firm Energy Contract
1.39 HQ Phase II Gross Transfer Responsibility
1.40 HQ Phase II Net Transfer Responsibility
1.41 HQ Phase II Percentage
1.42 HQ Phase II Transfer Credit
1.43 HQ Use Agreement
1.44 Installed Capability
1.45 Installed Capability Entitlement
1.46 Installed Capability Responsibility
1.47 Installed System Capability
1.48 Interchange Transactions
1.49 Internal Point-to-Point Service
1.50 Interruption
1.51 ISO
1.52 Kilowatt
1.52A Liaison Committee
1.53 Load
1.54 Local Network
1.55 Local Network Service
1.56 Lower Voltage PTF
1.57 Market Products
1.57A Market Rules
1.58 [Deleted.]
1.58A Markets Committee
1.59 Monthly Peak
1.60 NEPOOL
1.61 NEPOOL Control Area
1.62 NEPOOL Installed Capability
1.63 NEPOOL Installed Capability Responsibility
1.64 NEPOOL Objective Capability
1.64A NEPOOL Market
1.64B NEPOOL System Rules
1.64C NERC
1.65 New Unit
1.66 Non-Participant
1.66A NPCC
1.66B OASIS
1.67 Operable Capability
1.68 [Deleted]
1.69 [Deleted
1.70 [Deleted
1.71 Operating Reserve
1.72 Operating Reserve Entitlement
1.73 Other HQ Energy
1.74 Participant
1.74A Participants Committee
1.75 Pool-Planned Facility
1.76 Pool-Planned Unit
1.77 Power Year
1.78 Prior NEPOOL Agreement
1.79 Proxy Unit
1.80 PTF
1.80A Publicly Owned Entity
1.81 [Deleted.]
1.82 Regional Network Service
1.83 [Deleted.]
1.84 [Deleted.]
1.85 Related Person
1.85A Reliability Committee
1.85B Reliability Standards
1.85C Review Board
1.86 Scheduled Dispatch Period
1.87 Second Effective Date
1.87A Sector
1.88 Service Agreement
1.89 Summer Capability
1.90 Summer Period
1.91 System Contract
1.92 System Impact Study
1.93 System Operator
1.94 Target Availability Rate
1.95 Tariff
1.95A Tariff Committee
1.95B Technical Committees
1.96 Third Effective Date
1.97 Through or Out Service
1.98 Transition Period
1.99 Transmission Customer
1.99A Transmission Owner
1.99B Transmission Owners Committee
1.100 Transmission Provider
1.101 Unit Contract
1.102 [Deleted.]
1.103 Winter Capability
1.104 Winter Period
1.105 10-Minute Spinning Reserve
1.106 10-Minute Non-Spinning Reserve
1.107 30-Minute Operating Reserve
1.108 [Deleted.]
1.109 Modification of Certain Definitions When a Participant Purchases a
Portion of Its Requirements from Another Participant Pursuant to Firm Contract
SECTION 2 PURPOSE; EFFECTIVE DATES
2.1 Purpose
2.2 Effective Dates; Transitional Provisions
SECTION 3 MEMBERSHIP
3.1 Membership
3.2 Operations Outside the Control Area
3.3 Lack of Place of Business in New England
3.4 Obligation for Deferred Expenses
3.5 Financial Security
SECTION 4 STATUS OF PARTICIPANTS
4.1 Treatment of Certain Entities as Single Participant
4.2 Participants to Retain Separate Identities
SECTION 5 NEPOOL OBJECTIVES AND COOPERATION BY PARTICIPANTS
5.1 NEPOOL Objectives
5.2 Cooperation by Participants
PART TWO GOVERNANCE
SECTION 6 COMMITTEE ORGANIZATION AND VOTING
6.1 Principal Committees
6.2 Sector Representation
6.3 Appointment of Members and Alternates
6.4 Term of Members
6.5 Regular and Special Meetings
6.6 Notice of Meetings
6.7 Attendance
6.8 Quorum
6.9 Voting Definitions
6.10 Voting On Proposed Actions
6.11 Voting On Amendments
6.12 Designated Representatives and Proxies
6.13 Limits on Representatives
6.14 Adoption of Bylaws
6.15 Joint Meetings of Technical Committees
SECTION 7 PARTICIPANTS COMMITTEE
7.1 Officers
7.2 Adoption of Budgets
7.3 Establishing Reliability Standards
7.4 Appointment and Compensation of NEPOOL Personnel
7.5 Duties and Authority
7.6 Attendance of Participants at Committee Meeting
7.7 Appeal of Actions to Review Board
SECTION 8 RELIABILITY COMMITTEE
8.1 Officers
8.2 Notice to Members and Alternates of Participants Committee
8.3 Voting; Appeal of Actions
8.4 Responsibilities
8.5 Establishment of Subcommittees and Task Forces
8.6 Further Powers and Duties
SECTION 9 TARIFF COMMITTEE
9.1 Officers
9.2 Notice to Members and Alternates of Participants Committee
9.3 Voting; Appeal of Actions
9.4 Responsibilities
9.5 Establishment of Subcommittees and Task Forces
9.6 Further Powers and Duties
SECTION 10 MARKETS COMMITTEE
10.1 Officers
10.2 Notice to Members and Alternates of Participants Committee
10.3 Voting; Appeal of Actions
10.4 Responsibilities
10.5 Establishment of Subcommittees and Task Forces
10.6 Further Powers and Duties
10.7 Development of Rules Relating to Non-Participant Supply and
Demand-side Resources
SECTION 11 FURTHER RESTRUCTURING
SECTION 11A REVIEW BOARD
11A.1 Organization
11A.2 Composition
11A.3 Qualifications
11A.4 Term
11A.5 Meetings
11A.6 Bylaws
11A.7 Procedure on Appeal of Participant Committee Action or Failure to Take
Action
11A.8 Effect of a Review Board Decision
SECTION 11B TRANSMISSION OWNERS COMMITTEE
11B.1 Organization
11B.2 Membership
11B.3 Appointment of Members and Alternates
11B.4 Term of Members
11B.5 Regular and Special Meetings
11B.6 Notice of Meetings
11B.7 Attendance
11B.8 Votes
11B.9 Appointment of Task Forces or Working Groups
11B.10 Officers
11B.11 Adoption of Bylaws
11B.12 Review of Committee Actions
SECTION 11C LIAISON COMMITTEE
11C.1 Organization; Duties
11C.2 Membership
11C.3 Regular and Special Meetings
11C.4 Notice of Meetings
11C.5 Attendance
11C.6 Officers
PART THREE MARKET PROVISIONS
SECTION 12 INSTALLED CAPABILITY OBLIGATIONS AND PAYMENTS
12.1 Obligations to Provide Installed Capability.
12.2 Computation of Installed Capability Responsibilities
12.3 [Deleted].
12.4 Bids to Furnish Installed Capability
12.5 Consequences of Deficiencies in Installed Capability Responsibility
12.6 [Deleted].
12.7 Payments to Participants Furnishing Installed Capability
SECTION 13 OPERATION, GENERATION, OTHER RESOURCES,AND INTERRUPTIBLE CONTRACTS
13.1 Maintenance and Operation in Accordance with Good Utility Practice
13.2 Central Dispatch
13.3 Maintenance and Repair
13.4 Objectives of Day-to-Day System Operation
13.5 Satellite Membership
SECTION 14 INTERCHANGE TRANSACTIONS
14.1 Obligation for Energy, Operating Reserve and Automatic Generation Control
14.2 Obligation to Bid or Schedule, and Right to Receive Energy,
Operating Reserve and Automatic Generation Control
14.3 Amount of Energy, Operating Reserve and Automatic Generation
Control Received or Furnished
14.4 Payments by Participants Receiving Energy Service, Operating
Reserve and Automatic Generatin Control
14.5 Payments to Participants Furnishing Energy Service, Operating Reserve, and
Automatic Generation Control
14.6 Energy Transactions with Non-Participants
14.7 Participant Purchases Pursuant to Firm Contracts and System
Contracts
14.8 Determination of Energy Clearing Price
14.9 Determination of Operating Reserve Clearing Price
14.10 Determination of AGC Clearing Price
14.11 Funds to or from which Payments are to be Made
14.12 Development of Rules Relating to Nuclear and Hydroelectric Generating
Facilities, Limited-Fuel Generating Facilities, and Interruptible Loads
14.13 Dispatch and Billing Rules During Energy Shortages
14.14 Congestion Uplift.
14.15 Additional Uplift Charges.
PART FOUR TRANSMISSION PROVISIONS
SECTION 15 OPERATION OF TRANSMISSION FACILITIES
15.1 Definition of PTF
15.2 Maintenance and Operation in Accordance with Good Utility Practice
15.3 Central Dispatch
15.4 Maintenance and Repair
15.5 Additions to or Upgrades of PTF
SECTION 16 SERVICE UNDER TARIFF
16.1 Effect of Tariff
16.2 Obligation to Provide Regional Service
16.3 Obligation to Provide Local Network Service
16.4 Transmission Service Availability
16.5 Transmission Information
16.6 Distribution of Transmission Revenues
SECTION 17 POOL-PLANNED UNIT SERVICE
17.1 Effective Period
17.2 Obligation to Provide Service
17.3 Rules for Determination of Facilities Covered by Particular
Transactions
17.4 Payments for Uses of EHV PTF During the Transition Period
17.5 Payments for Uses of Lower Voltage PTF
17.6 Use of Other Transmission Facilities by Participants
17.7 Limits on Individual Transmission Charges
SECTION 17 A TRANSMISSION OWNERS RESERVED RIGHTS
17A.1
17A.2
17A.3
17A.4
17A.5
17A.6
17A.7
17A.8
PART FIVE GENERAL
SECTION 18 GENERATION AND TRANSMISSION FACILITIES
18.1 Designation of Pool-Planned Facilities
18.2 Construction of Facilities
18.3 Protective Devices for Transmission Facilities and Automatic
Generation Control Equipment
18.4 Review of Participant's Proposed Plans
18.5 Participant to Avoid Adverse Effect
SECTION 19 EXPENSES
19.1 Annual Fee.
19.2 NEPOOL Expenses
19.3 Restructuring Costs
SECTION 20 INDEPENDENT SYSTEM OPERATOR
SECTION 21 MISCELLANEOUS PROVISIONS
21.1 Alternative Dispute Resolution
21.2 Payment of Pool Charges; Termination of Status as Participant
21.3 Assignment
21.4 Force Majeure
21.5 Waiver of Defaults
21.6 Other Contracts
21.7 Liability and Insurance
21.8 Records and Information
21.9 Consistency with NPCC and NERC Standards
21.10 Construction
21.11 Amendment
21.12 Termination
21.13 Notices to Participants, Committees, Committee Members, or the System
Operator
21.14 Severability and Renegotiation
21.15 No Third-Party Beneficiaries
21.16 Counterparts
COMPOSITE RESTATED NEW ENGLAND 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
May 7, 1999.
In consideration of the mutual agreements and undertakings herein, the
signatories hereby agree as follows:
PART ONE
INTRODUCTION
SECT65535ON 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 1.109):
1.1 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.
1.2 Adjusted Monthly Peak of a Participant for a month is its Monthly Peak,
provided that if there has been a transfer between Participants, in whole or
part, of the responsibilities under this Agreement during such month pursuant
to a Firm Contract, the Adjusted Monthly Peak of each such Participant shall
reflect the effect of such transaction, but the Adjusted Monthly Peak of a
Participant shall not be changed from the Monthly Peak to reflect the effect of
any other transaction.
1.3 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 Markets
Committee to take account of associated electrical 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.
1.3A Administrative Procedures are procedures adopted by the System Operator
in order to fulfill its responsibilities to apply and implement NEPOOL System
Rules.
1.4 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 Markets 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.
1.5 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, Energy
Entitlement, or Operating Reserve Entitlements.
1.6 Agreement is this restated contract and attachments, including the
Tariff, as amended and restated from time to time.
1.7 Annual Transmission Revenue Requirements of a Participant's PTF or of all
Participants' PTF for purposes of this Agreement are the amounts determined in
accordance with Attachment F to the Tariff.
1.8 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.
1.8A Balloting Agent is the Secretary of the Participants Committee.
1.9 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 Markets Committee, as compensation for
(i) furnishing Installed 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, Energy, Operating
Reserve and/or AGC pursuant to a Firm Contract or System Contract in
accordance with Section 14.7.
1.10 Commission is the Federal Energy Regulatory Commission.
1.11 Control Area is 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 of the
applicable regional reliability council or the NERC; and
(4) provide sufficient generating capacity to maintain operating reserves in
accordance with Good Utility Practice.
1.12 Curtailment is a reduction in firm or non-firm transmission service in
response to a transmission capacity shortage as a result of system reliability
conditions.
1.13 Direct Assignment Facilities are facilities or portions of facilities
that are Non-PTF and are constructed for the sole use/benefit of a particular
Transmission Customer requesting service under the Tariff or Generator Owner
requesting an interconnection. Direct Assignment Facilities shall be
specified in a separate agreement with the Transmission Provider whose
transmission system is to be modified to include and/or interconnect with said
Facilities, shall be subject to applicable Commission requirements and shall
be paid for by the Transmission Customer or a Generator Owner in accordance
with the separate agreement and not under the Tariff.
1.14 Dispatch Price of a generating unit or combination 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
Contract, as determined pursuant to market operation rules approved by the
Markets Committee to incorporate the Bid Price for such Energy and any loss
adjustments, if and as appropriate under such market operation rules.
1.15 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.
1.16 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) deliveries between Entities constituting a single
Participant, or (iv) other electrical losses, if and as appropriate), of
(a) kilowatthours provided by such Participant to its retail customers for
consumption, plus
(b) kilowatthours of use by such Participant, 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.
1.17 Eligible Customer is the following: (i) Any Participant that is engaged,
or proposes to engage, in the wholesale or retail electric power business is
an Eligible Customer under the Tariff. (ii) Any electric utility (including
any power marketer), Federal power marketing agency, or any other entity
generating electric energy for sale or for resale is an Eligible Customer
under the Tariff. Electric energy sold or produced by such entity may be
electric energy produced in the United States, Canada or Mexico. However,
with respect to transmission service that the Commission is prohibited from
ordering by Section 212(h) of the Federal Power Act, such entity is eligible
only if the service is provided pursuant to a state requirement that the
Transmission Provider with which that entity is directly interconnected offer
the unbundled transmission service, or pursuant to a voluntary offer of such
service by the Transmission Provider with which that entity is directly
interconnected. (iii) Any end user taking or eligible to take unbundled
transmission service pursuant to a state requirement that the Transmission
Provider with which that end user is directly interconnected offer the
transmission service, or pursuant to a voluntary offer of such service by the
Transmission Provider with which that end user is directly interconnected, is
an Eligible Customer under the Tariff.
1.17A End User Participant is a Participant which is a consumer of
electricity in the NEPOOL Control Area that generates or purchases electricity
primarily for its own consumption or a non-profit group representing such
consumers.
1.18 Energy is power produced in the form of electricity, measured in
kilowatthours or megawatthours.
1.19 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,
Operating Reserve Entitlements, or AGC Entitlement.
1.20 Entitlement is an Installed 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.
1.21 Entity is any person or organization 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 that is either:
(a) 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 a principal or broker, of Installed Capability, Energy,
Operating Reserve, and/or AGC for resale); or
(b) a consumer of electricity in the NEPOOL Control Area that generates or
purchases electricity primarily for its own consumption or a non-profit group
representing such consumers.
1.22 Excepted Transaction is a transaction specified in Section 25 of the
Tariff for the applicable period specified in that Section, or in Sections 25A
and 25B of the Tariff.
1.23 [Deleted.]
1.24 Facilities Study is an engineering study conducted pursuant to this
Agreement or the 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 or interconnection.
1.25 Firm Contract is any contract, other than a Unit Contract, for the
purchase of Installed Capability, Energy, Operating Reserves, and/or AGC,
pursuant to which the purchaser's right to receive such Installed 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.
1.26 First Effective Date is March 1, 1997.
1.27 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.
1.28 HQ Contracts are the HQ Interconnection Agreement, the HQ Phase I Energy
Contract, and the HQ Phase II Firm Energy Contract.
1.29 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.
1.30 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.
1.31 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.
1.32 HQ Interconnection Capability Credit of a Participant for a month during
the Base Term (as defined in Section 1.38) 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 HQ Phase II Transfer Capability, times (b) the HQ Phase II Transfer
Credit. The Participants 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.
1.33 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 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 Markets 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.
1.34 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.
1.35 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.
1.36 HQ Phase I Percentage is the percentage of the total HQ Interconnection
Transfer Capability represented by the HQ Phase I Transfer Capability.
1.37 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 Participants Committee may establish.
1.38 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.
1.39 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 1.38) 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 Participants Committee shall establish an
appropriate HQ Phase II Gross Transfer Responsibility that shall remain in
effect concurrently with the HQ Interconnection Capability Credit.
1.40 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.
1.41 HQ Phase II Percentage is the percentage of the total HQ Interconnection
Transfer Capability represented by the HQ Phase II Transfer Capability.
1.42 HQ Phase II Transfer Credit is 90/131 of the HQ Phase II Transfer
Capability, or such other fraction of the HQ Phase II Transfer Capability as
the Participants Committee may establish.
1.43 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.
1.44 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.
1.45 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 Firm Contracts or 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 Energy Entitlement, Operating Reserve Entitlements, or AGC
Entitlement.
1.46 Installed Capability Responsibility * of a Participant for any month is
the number of Kilowatts determined in accordance with Section 12.2.
1.47 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.
1.48 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.
1.49 Internal Point-to-Point Service is the transmission service by that name
provided pursuant to Section 19 of the Tariff.
1.50 Interruption is a reduction in non-firm transmission service due to
economic reasons pursuant to Section 28.7 of the Tariff, other than a
reduction which results from a failure to dispatch a generating resource,
including a contract, used in a transaction requiring In Service or Through or
Out Service which is out of merit order.
1.51 ISO is the Independent System Operator which is responsible 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.
1.52 Kilowatt is a kilowatthour per hour.
1.52A Liaison Committee is the committee whose responsibilities are
specified in Section 11C.
1.53 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 provided 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 Markets 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, exclusive of use by such
Participant for the operation and maintenance of its generating unit or units,
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 Markets 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.
1.54 Local Network is the transmission facilities constituting a local network
identified on Attachment E to the Tariff, and any other local network or
change in the designation of a Local Network as a Local Network which the
Participants Committee may designate or approve from time to time. The
Participants Committee may not unreasonably withhold approval of a request by
a Participant that it effect such a change or designation.
1.55 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.
1.56 Lower Voltage PTF are all PTF facilities other than EHV PTF.
1.57 Market Products are Installed Capability, Operable Capability, Energy,
each category of Operating Reserve and AGC.
1.57A Market Rules are the system rules and operating procedures adopted
pursuant to the System Operator Agreement in connection with the
administration of the NEPOOL Market.
1.58 [Deleted.]
1.58A Markets Committee is the committee whose responsibilities are
specified in Section 10 and which may have additional responsibilities under a
proper delegation of authority by the Participants Committee. To the extent
practicable, references in the Agreement to the Markets Committee shall
include the prior Regional Market Operations Committee as the predecessor of
the Markets Committee.
1.59 Monthly Peak of a Participant for a month is the maximum Adjusted Load of
the Participant during any hour in the month.
1.60 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.
1.61 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 NPCC and NERC; and
(iv) provide sufficient generating capacity to maintain operating reserves in
accordance with Good Utility Practice.
1.62 NEPOOL Installed Capability at any particular time is the sum of the
Installed System Capabilities of all Participants at such time.
1.63 NEPOOL Installed Capability Responsibility for any month is the sum of
the Installed Capability Responsibilities of all Participants during that
month.
1.64 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 Participants
Committee, required to be provided by the Participants in aggregate for the
period to meet the reliability standards established by the Participants
Committee pursuant to Section 7.5(e).
1.64A NEPOOL Market is the market for electric energy, capacity and
certain ancillary services within the NEPOOL Control Area.
1.64B NEPOOL System Rules are the Market Rules, the NEPOOL Information
Policy and any other system rules for the operation of the System and
administration of the NEPOOL Market, the NEPOOL Agreement and the NEPOOL
Tariff.
1.64C NERC is the North American Electric Reliability Council.
1.65 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.
1.66 Non-Participant is any entity which is not a Participant.
1.66A NPCC is the Northeast Power Coordinating Council.
1.66B OASIS is the Open Access Same-Time Information System of the System
Operator.
1.67 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 Markets 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
is available to respond within an appropriate period to a schedule submitted
by a Participant for the hour in accordance with market operation rules
approved by the Markets Committee.
1.68 [Deleted].
1.69 [Deleted].
1.70 [Deleted].
1.71 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.
1.72 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, Energy Entitlement, or AGC
Entitlement.
1.73 Other HQ Energy is Energy purchased under the HQ Phase I Energy Contract
which is classified as "Other Energy" under that contract.
1.74 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.
1.74A Participants Committee is the committee whose responsibilities are
specified in Section 7. To the extent applicable, references in the Agreement
to the Participants Committee shall include the prior Management Committee or
Executive Committee as the predecessor of the Participants Committee.
1.75 Pool-Planned Facility is a generation or transmission facility designated
as "pool-planned" pursuant to Section 18.1.
1.76 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).
1.77 Power Year is (i) the period of twelve (12) months commencing on November
1, in each year to and including 1997; (ii) the period of seven (7) months
commencing on November 1, 1998; and (iii) the period of twelve (12) months
commencing on June 1, 1999 and each June 1 thereafter.
1.78 Prior NEPOOL Agreement is the NEPOOL Agreement as in effect on December
1, 1996.
1.79 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(a)(2).
1.80 PTF are the pool transmission facilities defined in Section 15.1, and any
other new transmission facilities which the Reliability Committee determines,
in accordance with criteria approved by the Participants Committee and subject
to review by the System Operator, should be included in PTF.
1.80A Publicly Owned Entity is an Entity which is either a municipality or
an agency thereof, or a body politic and public corporation created under the
authority of one of the New England states, authorized to own, lease and
operate electric generation, transmission or distribution facilities, or an
electric cooperative, or an organization of any such entities.
1.81 [Deleted.]
1.82 Regional Network Service is the transmission service by that name
provided pursuant to Section 14 of the Tariff.
1.83 [Deleted.]
1.84 [Deleted.]
1.85 Related Person of a Participant is either (i) a corporation, partnership,
business trust or other business organization 10% or more 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 10% or more of the stock or other equity interest in the
Participant, or (iii) a corporation, partnership, business trust or other
business organization 10% or more 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 10% or more of the stock
or other equity interest in the Participant.
1.85A Reliability Committee is the committee whose responsibilities are
specified in Section 8 and which may have additional responsibilities under a
proper delegation of authority by the Participants Committee. To the extent
practicable, references in the Agreement to the Reliability Committee shall
include the prior Market Reliability Planning Committee or the prior Regional
Transmission Planning Committee as the predecessor of the Reliability
Committee.
1.85B Reliability Standards are those rules, standards, procedures and
protocols approved by the Participants Committee pursuant to Section 7.3, or
its predecessors, that set forth specifics concerning how the System Operator
shall exercise its authority over matters pertaining to the reliability of the
bulk power system.
1.85C Review Board is the board whose responsibilities are specified in
Section 11A.
1.86 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).
1.87 Second Effective Date is May 1, 1999.
1.87A Sector has the meaning specified in Section 6.2.
1.88 Service Agreement is the initial agreement and any amendments or
supplements thereto entered into by the Transmission Customer and the System
Operator for service under the Tariff.
1.89 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 Markets Committee in accordance with Section
10.4(d).
1.90 Summer Period in each Power Year is the four-month period from June
through September.
1.91 System Contract is any contract for the purchase of Installed 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, Energy,
Operating Reserves and/or AGC.
1.92 System Impact Study is an assessment pursuant to Part V, VI or VII of the
Tariff of (i) the adequacy of the NEPOOL Transmission System to accommodate a
request for the interconnection of a new or materially changed generating unit
or a new or materially changed interconnection to another Control Area or new
Regional Network Service, Internal Point- to-Point Service or Through or Out
Service, and (ii) whether any additional costs may be required to be incurred
in order to provide the interconnection or transmission service.
1.93 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 NEPOOL control center and the administration of the Tariff. The
System Operator is ISO New England Inc., unless replaced by a substitute
independent system operator, a regional transmission organization or an entity
that forms a part of a regional transmission organization that has, in each
case, been approved by the Commission.
1.94 Target Availability Rate is the assumed availability of a type of
generating unit utilized by the Participants Committee in its determination
pursuant to Section 7.5(e) of NEPOOL Objective Capability.
1.95 Tariff is the NEPOOL Open Access Transmission Tariff set out in
Attachment B to the Agreement, as modified and amended from time to time.
1.95A Tariff Committee is the committee whose responsibilities are
specified in Section 9 and which may have additional responsibilities under a
proper delegation of authority by the Participants Committee. To the extent
practicable, references in the Agreement to the Tariff Committee shall include
the prior Regional Transmission Operations Committee as the predecessor of the
Tariff Committee.
1.95B Technical Committees are the Reliability Committee, the Tariff
Committee and the Markets Committee.
1.96 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 Participants 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 Participants Committee.
1.97 Through or Out Service is the transmission service by that name provided
pursuant to Section 18 of the Tariff.
1.98 Transition Period is the six-year period commencing on March 1, 1997.
1.99 Transmission Customer is 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 48 of the Tariff 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 the Tariff.
1.99A Transmission Owner is a Transmission Provider which makes its PTF
available under the Tariff and owns a Local Network listed in Attachment E to
the Tariff which is not a Publicly Owned Entity, including any affiliate of a
Transmission Provider that owns transmission facilities that are made
available as part of the Transmission Provider's Local Network; provided that
if a Transmission Provider is not listed in Attachment E to the Tariff on May
10, 1999, the Transmission Provider must also (1) own, or lease with rights
equivalent to ownership, PTF with an original capital investment in its PTF as
of the end of the most recent year for which figures are available from annual
reports submitted to the Commission in Form 1 or any similar form containing
comparable annualized data of at least $30,000,000, and (2) provide
transmission service to non-affiliated customers pursuant to an open access
transmission tariff on file with the Commission.
1.99B Transmission Owners Committee is the committee whose
responsibilities are specified in Section 11B.
1.100 Transmission Provider is the Participants, collectively, which own
PTF and are in the business of providing transmission service or provide
service under a local open access transmission tariff, or in the case of a
state or municipal or cooperatively-owned Participant, would be required to do
so if requested pursuant to the reciprocity requirements specified in the
Tariff, or an individual such Participant, whichever is appropriate.
1.101 Unit Contract is a 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 Energy, Operating Reserves and/or AGC if, or to the extent that, a
specific electric generating unit or units is or can be operated.
1.102 [Deleted.]
1.103 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 Markets Committee in accordance with
Section 10.4(d).
1.104 Winter Period in each Power Year is (i) the seven-month period from
November through May and the month of October for the Power Year commencing on
November 1 in 1997 or a prior Power Year; (ii) the seven- month period from
November through May for the Power Year commencing on November 1, 1998; and
(iii) the eight-month period from October through May for the Power Year
commencing on June 1, 1999 and each June 1 thereafter.
1.105 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 Markets 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 approved by the Markets Committee is necessary; and (2) any portion of
the Electrical Load of a Participant 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 approved by the Markets Committee is
necessary.
1.106 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 Markets 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 any portion of a
Participant's Electrical Load that the System Operator is able to verify as
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 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 approved by the
Markets Committee is necessary; (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 approved by the
Markets Committee is necessary; 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.
1.107 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 Markets 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 any portion of the
Electrical Load of a Participant 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 approved by the Markets Committee is necessary; (2) any portion of the
Electrical Load of a Participant 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 approved by the Markets Committee is necessary; and (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 in the hour.
1.108 [Deleted.]
1.109 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 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 Participant to receive such amounts of
electricity as it may require to supply its electric needs (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 Rl; 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 Rl.
The quantity Rl 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)(1),
computed as if the Firm Contract did not exist.
Terms used in this Agreement that are not defined above, 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.
SECT65535ON 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 became effective on the
First Effective Date and replaced 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 provisions of Sections 12.1(a), 12.2, 12.4 (as to
Installed Capability only), 12.5 and 12.7(a) of this Agreement became
effective on April 1, 1998 and replaced on such date the provisions of Section
9 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 became effective on the
Second Effective Date and replaced on the Second Effective Date the remaining
provisions of the Prior NEPOOL Agreement, which continued in effect until the
Second Effective Date.
As provided in Section 14, certain portions of Section 14 which became
effective on the Second Effective Date will be superseded on the Third
Effective Date by other portions of Section 14.
SECT65535ON 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 may, upon compliance with such reasonable conditions as the
Participants 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 Participants 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
Participants 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 for an applicant which qualifies for membership only as an End User
Participant, and $5,000 for all other applicants, or such other amount as may
be fixed by the Participants Committee.
3.2 Operations Outside the Control Area. Subject to the reciprocity
requirements of the Tariff, if a Participant serves a Load, or has rights in
supply or demand-side resources or owns transmission and/or distribution
facilities, located outside of the NEPOOL Control Area, such Load and
resources 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 facilities or its rights in demand
side-resources 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 such Entitlements
or rights 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 Participants 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 Participants Committee
reasonably determines may fail to meet its financial obligations under the
Agreement, the Participants Committee may require reasonable credit review
procedures which shall be made in accordance with standard commercial
practices. In addition, the Participants Committee may prescribe for such
Entity or Participant a requirement that the Entity or Participant provide and
maintain in effect an 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
Participants Committee and consistent with commercial practices established by
the Uniform Commercial Code that protects the Participants against the risk of
non- payment.
SECT65535ON 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, or equity
interest in, 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; provided, however, that any Vermont electric
utility which is a Publicly Owned Entity may elect to join the Publicly Owned
Entity Sector and be treated as a member of that Sector for purposes of
governance, annual fees and NEPOOL expense allocation, without losing the
benefits of single Participant status for any other purpose under 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.
SECT65535ON 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.
PART TWO
GOVERNANCE
SECT65535ON 6
COMMITTEE ORGANIZATION AND VOTING
6.1 Principal Committees. There shall be four principal NEPOOL Committees
(the "Principal Committees"), as follows:
(a) the Participants Committee which shall have the responsibilities
specified in Section 7;
(b) the Reliability Committee which shall have the responsibilities specified
in Section 8;
(c) the Tariff Committee which shall have the responsibilities specified in
Section 9; and
(d) the Markets Committee which shall have the responsibilities specified in
Section 10.
In addition, there shall be a Transmission Owners Committee and a Liaison
Committee, which shall have the responsibilities specified in Sections 11B and
11C, respectively, and such other committees as may be established from time
to time by the Participants Committee.
6.2 Sector Representation. The members of each Principal Committee shall
each belong to a single sector for voting purposes ("Sector"). Each
Participant shall be obligated to designate in a notice to the Secretary of
the Participants Committee a Sector that it or its Related Persons is eligible
to join and that it elects to join for purposes of all of the Principal
Committees. A Participant and its Related Persons shall together be entitled
to join only one Sector and shall have no more than one vote on each Principal
Committee.
The Sectors for each Principal Committee, the criteria for eligibility for
membership in each Sector and the minimum requirement which a Participant must
meet as a member of a Sector in order to appoint a voting member of the Sector
and Committee are as follows:
(a) a Generation Sector, which a Participant shall be eligible to join if (i)
it (A) owns or leases with rights equivalent to ownership facilities for the
generation of electric energy that are located within the NEPOOL Control Area
which are currently in operation, or (B) has proposed generation for operation
within the NEPOOL Control Area either which has received approvals under
Sections 18.4 and/or 18.5 within the past two years or for which completed
environmental air or environmental siting applications have been filed or
permits exist, and (ii) it is not a Publicly Owned Entity. Purchasing all or
a portion of the output of a generation facility shall not be sufficient to
qualify a Participant to join the Generation Sector.
A Participant which joins the Generation Sector shall be entitled but not
required to designate an individual voting member of each Principal Committee,
and an alternate to the member, if its operating or proposed generation
facilities in the NEPOOL Control Area have or will have, when placed in
operation, an aggregate Winter Capability of at least 15 MW. A Participant
which joins the Generation Sector but elects not to or is not eligible to
designate an individual voting member, shall be represented by a group voting
member and an alternate to that member for each Principal Committee
(collectively, the "Generation Group Member"). The Generation Group Member
shall be appointed by a majority of the Participants in the Generation Sector
electing or required to be represented by that member. The Generation Group
Member shall have the same percentage of the Sector vote as the individual
voting members designated by other Participants in the Generation Sector which
meet the 15 MW threshold and designate an individual voting member. The
Generation Group Member shall be entitled to split his or her vote.
(b) a Transmission Sector, which a Participant shall be eligible to join if it
is a Transmission Provider and is not a Publicly Owned Entity. Taking
transmission service shall not be sufficient to qualify a Participant to join
the Transmission Sector.
A Participant which joins the Transmission Sector shall be entitled to
designate an individual voting member of each Principal Committee, and an
alternate to the member, if it owns or leases with rights equivalent to
ownership PTF with an original capital investment in its PTF as of the end of
the most recent year for which figures are available from annual reports
submitted to the Commission in Form 1 or any similar form containing
comparable annualized data of at least $30,000,000. A Transmission Provider
with facilities which were included as PTF prior to December 31, 1998 only
pursuant to clause (3) of the definition of PTF pursuant to Section 15.1 shall
be entitled to designate an individual voting member of each Principal
Committee, and an alternate to the member, whether or not PTF which it owns or
leases with rights equivalent to ownership which has an original capital
investment of at least $30,000,000, so long as such Transmission Provider
continues to own PTF.
A Participant which joins the Transmission Sector but which is not entitled to
designate an individual voting member of each Principal Committee because (i)
it, together with all of its Related Persons, does not meet the $30,000,000
threshold or (ii) it no longer owns PTF and it does not have a Related Person
that is entitled to designate an individual voting member for each Principal
Committee in another Sector, together with the other Participants in the
Transmission Sector which for the same reasons are unable to designate an
individual voting member, shall be represented by a group voting member of
each Principal Committee (the "Transmission Group Member"), and an alternate
to that member. The Transmission Group Member and alternate shall be
appointed by a majority vote of all Participants in the Transmission Sector
required to be represented by that Member. The Transmission Group Member
shall have the same percentage of the Sector vote as the individual voting
members designated by other Participants in the Transmission Sector which meet
the $30,000,000 threshold unless and until the original capital investment in
PTF of the Participants represented by the Transmission Group Member equals or
exceeds twice the $30,000,000 threshold amount. If the aggregate original
capital investment in PTF equals or exceeds twice the $30,000,000 threshold
amount, the percentage of the Sector votes assigned to the Transmission Group
Member shall equal the number of full multiples of the $30,000,000 threshold,
provided that the Transmission Group Member shall in no event be entitled to
more than twenty-five percent (25%) of the Sector vote. For example, if
Participants represented by the Transmission Group Member have an aggregate
original capital investment in PTF in the NEPOOL Control Area totaling
$70,000,000, the Transmission Group Member will have the same percentage of
such votes as two ($70,000,000/$30,000,000 Threshold = 2.33) individual
voting members designated by individual Participants, provided that there are
at least six other members in the Sector so the Transmission Group Member does
not have more than twenty-five percent (25%) of the Transmission Sector vote.
The Transmission Group Member shall be entitled to split his or her vote.
(c) a Supplier Sector, which a Participant shall be eligible to join if (i)
it engages in, or is licensed or otherwise authorized by a state or federal
agency with jurisdiction to engage in, power marketing, power brokering or
load aggregation within the NEPOOL Control Area or it had been engaged on and
before December 31, 1998 solely in the distribution of electricity in the
NEPOOL Control Area, and (ii) it is not a Publicly Owned Entity. A
Participant which joins the Supplier Sector shall be entitled to designate a
voting member of each Principal Committee, and an alternate to the member.
(d) a Publicly Owned Entity Sector, which all Participants which are Publicly
Owned Entities are eligible to join and shall join, and which End User
Participants are eligible to join if there is not an activated End User
Sector. A Participant which joins the Publicly Owned Entity Sector shall be
entitled to designate a voting member of each Principal Committee, and an
alternate to the member, except for End User Participants whose voting
interests while they are in the Publicly Owned Entity Sector are defined in
Section 6.2(e) below.
(e) an End User Sector, which an End User Participant is eligible to join.
Participants which join the End User Sector shall be entitled to designate a
voting member of each Principal Committee and an alternate to the member.
Until there are at least ten End User Participants, all End User Participants
shall be members of the Publicly Owned Entity Sector. So long as there are
less than three End User Participants, the End User Participants in the
Publicly Owned Entity Sector shall be represented on each Principal Committee
by a single voting member. At such time as there are at least three, but less
than ten, End User Participants, End User Participants shall become a
sub-sector of the Publicly Owned Entity Sector. Such sub-sector shall have
twenty percent (20%) of the Publicly Owned Entity Sector's vote, and each End
User Participant shall be entitled to designate a voting member of each
Principal Committee, and an alternate to that member, and each voting member
shall be allocated a per capita share of the sub-sector's vote. The End User
Sector shall become fully operational automatically as soon, and shall remain
operational so long as, there are at least ten End User Participants.
The System Operator shall have the right to designate, by written notice
delivered to the Secretary of the appropriate Principal Committee, a
non-voting member and an alternate to each Principal Committee. All
Participants have the right to join and be a member of a Sector. If a
Participant ceases to be eligible to be a member of the Sector which it
previously joined and is not eligible to join another existing Sector other
than the End User Sector, it shall have the right to remain and vote in the
Sector in which the Participant is currently a member for up to one year. By
the end of such year, the NEPOOL Participants Committee shall make a filing
with the Commission pursuant to which the Participant can join another Sector
that either exists or is created pursuant to the NEPOOL Participants Committee
filing. Separate Sectors may be created, and the membership of existing
Sectors may be modified, by amendment of the Agreement.
6.3 Appointment of Members and Alternates. A Participant or group of
Participants shall designate, by a written notice delivered to the Secretary
of the appropriate Committee, the voting member appointed by it for the
Committee and an alternate of the member. In the absence of the member, the
alternate shall have all the powers of the member, including the power to
vote. A Participant may change the Sector of which it is a member. Other
than for Sector changes required by Section 6.4(c), a change in the Sector in
which a Participant is a member shall become effective beginning on the first
annual meeting of the Participants Committee following notice of such change.
6.4 Term of Members. Each voting member of a Principal Committee shall hold
office until either (a) such member is replaced by the Participant or group of
Participants which appointed the member, or (b) the appointing Participant
ceases to be a Participant, or (c) the appointing Participant (or its Related
Person) is no longer eligible to be in the Sector to which it belongs, but is
eligible to join a different Sector. Replacement of a member shall be
effected by delivery by a Participant or group of Participants of written
notice of such replacement to the Secretary of the appropriate Committee.
6.5 Regular and Special Meetings. Each Principal 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. Five or more voting
members of a Principal Committee may call subject to the notice provisions of
Section 6.6 a special meeting of the Committee in the event that the Chair
fails to schedule 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.
6.6 Notice of Meetings. Written or electronic notice of each meeting of a
Principal Committee shall be given to each Participant, whether or not such
Participant is entitled to appoint an individual voting member of the
Committee, not less than three business days prior to the date of the meeting
in the case of the Technical Committees and five business days prior to the
date of the meeting for the Participants Committee.
A notice of meeting shall specify the principal subject matters expected to be
acted upon at the meeting. In addition, such notice shall include, or specify
internet location of, all draft resolutions to be voted at the meeting (which
draft resolutions may be subject to amendment of intent but not subject matter
during the meeting), and all background materials deemed by the Chair or
Secretary to be necessary to the Committee to have an informed opinion on such
matters. Motions raised for which no draft resolutions or background
materials have been provided may not be acted upon at a meeting and shall be
deferred to a subsequent meeting which is properly noticed.
6.7 Attendance. Regular and special meetings may be conducted in person, by
telephone, or other electronic means by means of which all persons
participating in the meeting can communicate in real time with each other. In
order to vote during the course of a meeting, attendance is required in person
or by telephone or other real time electronic means by a voting member or its
alternate or a duly designated agent who has been given, in writing, the
authority to vote for the member on all matters or on specific matters in
accordance with Section 6.12.
6.8 Quorum. All actions by a Principal Committee, other than a vote by the
Participants Committee by written ballot to amend the NEPOOL Agreement or
Tariff, shall be taken at a meeting at which the members in attendance
pursuant to Section 6.7 constitute a Quorum. A Quorum requires the attendance
by members which satisfy the Sector Quorum requirements (as defined in Section
6.9) for a majority of the activated Sectors. No action may be taken by a
Principal Committee unless a Quorum is present; provided, however, that if a
Quorum is not present, the voting members then present shall have the power to
adjourn the meeting from time to time until a quorum shall be present.
6.9 Voting Definitions. For purposes of this Section 6.9 and Sections 6.10,
6.11 and 6.13, the following terms shall have the following respective
meanings:
(a) Sector Voting Share: for each active Sector, is the quotient obtained by
dividing one hundred percent (100%) by the number of active Sectors. For
example, if there are five active Sectors, the Sector Voting Share of each of
the Sectors is twenty percent (20%). The aggregate Sector Voting Shares shall
equal one hundred percent 100%.
(b) Sector Quorum: for a Sector shall be the lesser of (i) fifty percent
(50%) or more (rounded to the next higher whole number) of the voting members
of the Sector, or (ii) five (5) or more voting members of the Sector for the
Participants Committee or three (3) or more voting members of the Sector for
the Technical Committees.
(c) Member Fixed Voting Share: for a Committee voting member, whether or not
the member is in attendance, is the quotient obtained by dividing (i) the
Sector Voting Share of the Sector to which the Participant or group of
Participants which appointed the Committee voting member belongs by (ii) the
total number of Committee voting members appointed by members of that Sector,
adjusted, if necessary, to take into account (A) the manner in which the
voting shares of End User Participants are to be determined while they are
members of the Publicly Owned Entity Sector, and (B) any required change in
the voting share of a Group Member, in each case as determined in accordance
with Section 6.2.
(d) Member Adjusted Voting Share: for a Committee voting member which casts
an affirmative or negative vote on a proposed action or amendment and which
has been appointed by a Participant or group of Participants which are members
of a Sector satisfying its Sector Quorum requirement for the proposed action
or amendment, is the quotient obtained by dividing (i) the Sector Voting Share
of that Sector by (ii) the number of voting members appointed by members of
that Sector which cast affirmative or negative votes on the matter, adjusted,
if necessary, for End User Participants and group voting members as provided
in the definition of "Member Fixed Voting Share".
(e) NEPOOL Vote: with respect to a proposed action or amendment is the sum of
(i) the Member Adjusted Voting Shares of the voting members of the Committee
which cast an affirmative vote on the proposed action or amendment and which
have been appointed by a Participant or group of Participants which are
members of a Sector satisfying its Sector Quorum requirements and (ii) the
Member Fixed Voting Shares of the voting members of the Committee which cast
an affirmative vote on the proposed action or amendment and which have been
appointed by a Participant or group of Participants which are members of a
Sector which fails to satisfy its Sector Quorum requirements.
(f) Minimum Response Requirement: with respect to a proposed amendment to
this Agreement or Tariff means that the ballots received by the Balloting
Agent from Participants relating to the proposed amendment before the end of
the appropriate time specified in Section 6.11(c) must satisfy the following
thresholds:
(i) the sum of the Member Fixed Voting Shares of the Participant voting
members whose ballots are received must equal at least fifty percent (50%);
and
(ii) the Participants whose voting members timely return ballots for or
against the amendment must include Participants that are represented by voting
members having at least fifty percent (50%) of the Member Fixed Voting Shares
in each of a majority of the activated Sectors.
6.10 Voting On Proposed Actions. All matters to be acted upon by a Principal
Committee shall be stated in the form of a motion by a voting member, which
must be seconded. Only one motion and any one amendment to that motion may be
pending at one time. Passage of a motion requires a NEPOOL Vote as determined
pursuant to Section 6.9 equal to or greater than two thirds of the aggregate
Sector Voting Shares. Voting members not in attendance or represented at a
meeting as specified in Section 6.7 or abstaining shall not be counted as
affirmative or negative votes.
6.11 Voting On Amendments. Subject to Section 21.11 and Section 17A,
amendments to the NEPOOL Agreement or Tariff shall be accomplished as follows:
(a) Amendments shall be drafted by a standing or ad hoc NEPOOL committee or a
Participant and sent to the Participants Committee for its consideration.
(b) The Participants Committee shall take action pursuant to Section 6.10 to
direct the Balloting Agent to circulate ballots for approval of the draft
Amendment to each Participant for execution by its voting member or alternate
on the Participants Committee or such Participant's duly authorized officer.
(c) In order to be counted, ballots must be executed and returned to the
Balloting Agent for NEPOOL in accordance with the following schedule:
(i) If the ballots are delivered to each Participant by regular mail,
properly executed ballots must be returned to and received by the Balloting
Agent within ten (10) business days after deposit of such ballots in the mail
by the Balloting Agent, and
(ii) If the ballots are delivered to each Participant by overnight delivery,
facsimile, electronic mail or hand delivery, then properly executed ballots
must be returned to and received by the Balloting Agent within five (5)
business days after (A) deposit of such ballots with an overnight delivery
courier if delivered by overnight delivery, or (B) transmission of such
ballots by the Balloting Agent if delivered by facsimile or electronic mail,
or (C) receipt by the Participant if delivered by hand delivery.
(iii) If the Minimum Response Requirement for an amendment has not been
received by the Balloting Agent within the schedule identified in subsection
(i) or (ii) above, the Balloting Agent shall send notice by overnight
delivery, facsimile, electronic mail or hand delivery to all non-responding
Participants and shall count any additional properly executed ballots which it
receives within five (5) business days after such notice. The date by which
properly executed ballots must be returned and received by the Balloting Agent
shall be specified by the Balloting Agent in the notice accompanying such
ballots.
(d) A Participant may appeal to the Review Board or submit for resolution
pursuant to the alternative dispute resolution provisions of Section 21.1 a
proposed amendment for which ballots have been circulated, provided that such
appeal is taken or submission is presented before the end of the tenth (10th)
business day after the Participants Committee has taken action to direct the
Balloting Agent to circulate ballots for approval of the draft amendment, by
giving to the Secretary of the Participants Committee a signed and written
notice of appeal or submission. The appeal shall be moot, or submission shall
be deemed withdrawn, if the amendment is not approved in balloting by the
Participants Committee. If the amendment is approved, a valid appeal or
submission shall stay the filing with the Commission of any amendment to the
NEPOOL Agreement or Tariff until either (i) a decision on the appeal by the
Review Board, or (ii) the earlier of resolution pursuant to Section 21.1 or
termination pursuant to Section 21.1.B(2) of the suspension effects of the
submission.
(e) In order for a proposed amendment to the NEPOOL Agreement or Tariff to be
approved by the Participants Committee, the following criteria must be
satisfied:
(i) The Minimum Response Requirement must be satisfied with respect to the
proposed amendment.
(ii) The affirmative ballot votes with respect to the proposed amendment must
equal or exceed two thirds of the aggregate Sector Voting Shares.
6.12 Designated Representatives and Proxies. The vote of any member of a
Principal Committee or the member's alternate, other than a ballot on an
amendment, may be cast by another person pursuant to a written, standing
designation or proxy. A designation or proxy shall be dated not more than one
year previous to the meeting and shall be delivered by the member or alternate
to the Secretary of the Committee at or prior to any votes being taken at the
meeting at which the vote is cast pursuant to such designation or proxy. A
single individual may be the designated representative of or be given the
proxy of the voting members representing any number of Participants of any one
Sector or Participants from multiple Sectors.
6.13 Limits on Representatives. In the Generation Sector, no one person may
exercise more than twenty-five percent (25%) of that Sector's total Member
Fixed Voting Shares without the unanimous written agreement of all members of
the Generation Sector. Other Sectors may by unanimous written agreement elect
to impose limits on the voting power any one individual may have in that
Sector through being the designated representative of multiple voting members
or carrying multiple proxies from voting members of that Sector. Notice of
any such limits on voting power must be posted on the System Operator home
page and be capable of being accessed by all Participants.
6.14 Adoption of Bylaws. The Participants Committee shall adopt bylaws,
consistent with this Agreement, governing procedural matters including the
conduct of its meetings and those of the other Principal Committees. If there
is any conflict between such bylaws and the Agreement, the Agreement shall
control. A Principal Committee may vote to waive its bylaws for a particular
meeting, provided the motion to effect the waiver is approved in accordance
with Section 6.10.
6.15 Joint Meetings of Technical Committees. It is recognized that
responsibilities of the Technical Committees may overlap in certain areas. In
areas of overlap, the Reliability Committee is responsible for addressing
reliability matters, the Markets Committee is responsible for addressing
market implications of actions or recommendations, and the Tariff Committee is
responsible for addressing issues relating to transmission and ancillary
services. The Chairs of the Technical Committees, with input from the Liaison
Committee Co-Chairs or entire Liaison Committee, as appropriate, shall
prioritize and sequence Technical Committee activities to ensure full and
proper input by Participants while maximizing the efficiency of the decision
making process. To the extent appropriate and desirable, the Technical
Committees are authorized and encouraged to hold meetings, and to conduct
studies and exercise responsibilities, jointly with other Technical
Committees.
SECT65535ON 7
PARTICIPANTS COMMITTEE
7.1 Officers. At its annual meeting, the Participants Committee shall elect
from among its members a Chair and Vice-Chair; it shall also elect a Secretary
who shall not be a member. These officers shall have the powers and duties
usually incident to such offices and as set forth in the Committee bylaws.
7.2 Adoption of Budgets. At each annual meeting, the Participants Committee
shall adopt a NEPOOL budget for the ensuing calendar year. In adopting
budgets the Participants Committee shall give due consideration to the
budgetary requests of each committee. The Participants Committee may modify
any NEPOOL budget from time to time after its adoption.
7.3 Establishing Reliability Standards. It shall be the duty of the
Participants Committee, after review of reports, recommendations and actions
of the System Operator and the Reliability Committee and such other matters as
the Participants Committee deems pertinent, to establish or approve
Reliability Standards for the bulk power supply of NEPOOL. Such Reliability
Standards shall be consistent with the directives of NERC and the NPCC and
shall be reviewed periodically by the Participants Committee and revised as
the Participants Committee deems appropriate.
7.4 Appointment and Compensation of NEPOOL Personnel. The Participants
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. In addition, the Participants Committee
shall determine what resources are desirable for the effective operation of
the Technical Committees and shall, on its own or pursuant to the
recommendation of a Technical Committee, authorize the incurrence of such
expenses as may be required to enable the Technical Committee, or its
subgroups, to properly perform their duties, including, but not limited to,
the retention of a consultant or the procurement of computer time.
7.5 Duties and Authority.
(a) The Participants Committee shall have the duty and requisite authority to
administer, enforce and interpret the provisions of this Agreement and any
other agreement or document approved by the Participants Committee or its
predecessor in order to accomplish the objectives of NEPOOL including the
making of any decision or determination necessary under any provision of this
Agreement or any other agreement or document approved by the Participants
Committee or its predecessor and not expressly specified to be decided or
determined by any other body.
(b) The Participants Committee shall have the authority to provide for such
facilities, materials and supplies as the Participants Committee may determine
are necessary or desirable to carry out the provisions of this Agreement.
(c) The Participants Committee shall have, in addition to the authority
provided in Section 7.3, 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 Participants 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 Participants 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 System Operator,
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 System
Operator, and (iii) related tariffs, rate schedules and certificates of
concurrence. The Participants Committee shall, in addition, have the
authority to represent NEPOOL in proceedings before the Commission.
(e) The Participants 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 Participants Committee may determine on the basis
of such review. Since changes in the circumstances which must be assumed by
the Participants Committee in fixing NEPOOL Objective Capability for a future
period can significantly affect the required level of NEPOOL Objective
Capability for that period, the Participants 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 Participants 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 Participants Committee shall have the duty and requisite authority to
provide for the sharing by Participants, on such basis as the Participants
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 Participants 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
Participants 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) The Participants Committee shall have the authority to establish standard
conditions and waivers with respect to applications by Entities for membership
in NEPOOL and to modify such standard conditions and waivers as appropriate in
connection with changed circumstances with respect to such applicants,
provided that the Participants Committee determines that the standard
conditions and waivers for such Entities will not impose an additional burden
on other Participants.
(j) The Participants Committee shall have the duty and requisite authority to
act on appeals to it from the actions of other Principal Committees if
delegated to such Committees by the Participants Committee pursuant to Section
7.5(k), to appoint the Review Board, 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 Participants Committee shall have the authority to delegate its
powers and duties to one or more of the Technical Committees, the System
Operator, or other entity as it sees fit provided that (i) such delegation is
clearly stated and approved by a Participant Committee action, (ii) such
delegation does not violate any other provision set forth herein, and (iii)
the action of such entity on any matter delegated to it may be appealed by any
Participant to the Participants Committee provided such an appeal is taken
prior to the end of the tenth business day following the action of the
Technical Committee, the System Operator, or such entity by giving to the
Secretary of the Participants Committee a signed and written notice of appeal,
a copy of which the Secretary shall provide to the System Operator and each
member and alternate of the Participants Committee. Pending action on the
appeal by the Participants Committee, the giving of a notice of appeal as
aforesaid shall suspend the action appealed from.
(l) The Participants Committee shall have the duty and requisite authority to
establish the NEPOOL Information Policy.
(m) The Participants Committee shall have the duty and requisite authority to
adopt and approve, amend and approve or resubmit to one or more Technical
Committees for additional comment, any matter submitted to the Participants
Committee by a Technical Committee.
(n) The Participants Committee shall have such further powers and duties as
are conferred or imposed upon it by other sections of this Agreement.
7.6 Attendance of Participants at Committee Meeting. Each Participant which
does not have the right to designate an individual voting member of the
Participants Committee shall, with the exception of meetings held pursuant to
Section 11B.9 and meetings in executive session pursuant to Section 11B.10, be
entitled to attend any meeting of the Committee or any other NEPOOL committee,
and shall have a reasonable opportunity to express views on any matter to be
acted upon at the meeting.
7.7 Appeal of Actions to Review Board. Any Participant which otherwise has
the ability to submit a matter for resolution under Section 21.1 may, in lieu
of submitting a dispute as to a Participants Committee action or failure to
take action for resolution pursuant to Section 21.1, appeal such matter to the
Review Board. Except as otherwise provided in Section 6.11, such an appeal
shall be taken prior to the end of the tenth business day following the
meeting of the Participants Committee to which the appeal relates by giving to
the Secretary of the Participants Committee by hand delivery, facsimile,
electronic mail or regular mail a signed and written notice of appeal, a copy
of which the Secretary shall provide to each Participant. If no appeal of a
Participants Committee action or failure to take action is taken, and the
action or failure to take action is not submitted for resolution pursuant to
Section 21.1, within such time period, that Participants Committee action or
failure to take action shall be final and effective. If an appeal is taken,
pending action on the appeal by the Review Board, the giving of a notice of
appeal as aforesaid shall suspend the action appealed from. To the extent any
action taken relates to the approval of a rule or procedure which must be
filed with the Commission, the rule or procedure shall not be filed until the
time for appeal or submission for dispute resolution has elapsed and, if an
appeal has been filed or submission for dispute resolution has been made,
either (i) a decision on the appeal has been issued by the Review Board, or
(ii) the earlier of resolution pursuant to Section 21.1 of the matter
submitted for dispute resolution or the termination pursuant to Section
21.1.B(2) of the suspension effect of such submission.
SECT65535ON 8
RELIABILITY COMMITTEE
8.1 Officers. The Reliability Committee shall have a Chair, Vice-Chair and
Secretary. The Chair and Secretary of the Reliability Committee shall be
appointed by the System Operator from time to time in accordance with Section
20(j). The Chair will be responsible for presiding at meetings of the
Committee and establishing agendas for its meetings in conjunction with the
Vice-Chair and shall have the powers and duties as set forth in the Committee
bylaws. The Secretary shall have the powers and duties usually incident to
such office and as set forth in the Committee bylaws. The Chair and Secretary
shall have no voting rights. The Vice-Chair shall be elected by the
Reliability Committee from among its voting members from time to time. The
Vice-Chair shall have the powers and duties usually incident to such office
and such powers and duties as set forth in the Committee bylaws, including,
without limitation, the responsibility to develop in conjunction with the
Chair, Committee meeting agendas.
8.2 Notice to Members and Alternates of Participants Committee. Prior to the
end of the fifth business day following a meeting of the Reliability
Committee, the Secretary of the Reliability Committee shall give written
notice to the System Operator and each member and alternate of the
Participants Committee of any action taken by the Reliability Committee at
such meeting.
8.3 Voting; Appeal of Actions. Votes taken by the Reliability Committee
shall be binding on the Participants only for those matters in which the
Committee has specifically designated authority under this Agreement or has
been properly delegated authority by the Participants Committee pursuant to
Section 7.5(k).
Any Participant may appeal to the Participants Committee any binding action
taken by the Reliability Committee. Such an appeal shall be taken prior to
the end of the tenth business day following the meeting of the Reliability
Committee to which the appeal relates by giving to the Secretary of the
Participants Committee a signed and written notice of appeal, a copy of which
the Secretary shall provide to the System Operator and each member and
alternate of the Participants Committee. Pending action on the appeal by the
Participants Committee, the giving of a notice of appeal as aforesaid shall
suspend the action appealed from.
8.4 Responsibilities. The Reliability Committee shall perform the following
functions, in conjunction with the System Operator as appropriate, and shall
recommend action to the System Operator, Participants Committee or
Transmission Owners, as appropriate, with respect thereto:
(a) provide input to the Participants Committee, Transmission Owners, and
System Operator, as appropriate, on transmission facilities and the
development of a regional transmission plan in order to achieve the objectives
of NEPOOL;
(b) following appropriate study, recommend NEPOOL Objective Capability for
each Power Year;
(c) periodically review the procedures used to calculate NEPOOL Installed
Capability, NEPOOL Objective Capability and NEPOOL Capability Responsibility;
(d) periodically prepare short and long term load forecasts for use in NEPOOL
studies and operations and to meet requirements of regulatory agencies;
(e) review communications and liaison arrangements between NEPOOL and
governmental authorities on power supply, environmental, load forecasting, and
transmission issues;
(f) coordinate the collection and exchange of necessary system data and
future plans related to reliability for use in NEPOOL planning and to meet
requirements of regulatory agencies;
(g) coordination of studies of, and provide information to Participants on,
maintenance schedules for the supply and demand-side resources and
transmission facilities of the Participants;
(h) based on appropriate studies, recommend for Participants Committee
approval Reliability Standards to assure the reliable operation and facilitate
the efficient operation of the NEPOOL Control Area bulk power system and those
operating rules which guide the implementation of the Reliability Standards.
Such Reliability Standards and operating rules shall include, without
limitation, the following:
(i) standards to determine the current Annual Peak, Adjusted Annual Peak,
Monthly Peak, Adjusted Monthly Peak, and aggregate obligations of the
Participants in each of the NEPOOL Markets;
(ii) standards to establish short and long term load forecasts for use in
NEPOOL operations and to meet requirements of regulatory agencies;
(iii) standards with respect to the administration and enforcement of, and
reporting pursuant to, NERC and NPCC policies and requirements;
(iv) standards for use in planning and design of the NEPOOL interconnected
bulk power system;
(v) standards to ensure the continuous reliability of the bulk power
transmission system, such standards to include, without limitation, criteria
and rules relating to protective equipment, transfer limits, voltage
schedules, voltage guides, operating guides, sub-area reserves, switching,
voltage control, load shedding, emergency and restoration procedures, and the
coordination of scheduling of the operation and maintenance of supply and
demand-side resources and transmission facilities of the Participants;
(vi) standards for determining the 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; and
(vii) as appropriate, reliability standards for interpool coordination
transactions.
(i) review proposed supply and demand-side resource plans and the proposed
transmission and interconnection plans of Participants pursuant to Section
18.4 and, based on such review, recommend action regarding such proposed
plans.
(j) make recommendations regarding procedures for dispatch infrastructure
(i.e. voice and data communications protocols, AGC pulsing arrangements,
Energy Management System and System Control and Data Acquisition interfaces,
Satellite relations, etc.);
(k) provide input and make recommendations with respect to the reliability
considerations of general system operations (i.e. commitment/ decommitment,
real time dispatch, review and approval of distribution of reserves, etc.);
(l) recommend to the Participants Committee the retention of a consultant,
procurement of computer time, or the incurrence of consultant expenses or such
other expenses as may be required to enable the Reliability Committee, its
subcommittees, and task forces properly to perform their duties;
(m) make recommendations to the Participants Committee, Transmission Owners,
and System Operator, as appropriate, with respect to development and amendment
of interconnection procedures and documents related to such procedures;
(n) to the extent appropriate, develop criteria, guidelines and methodologies
to assure consistency in monitoring and assessing conformance of Participant
and regional transmission plans to accepted reliability criteria.
8.5 Establishment of Subcommittees and Task Forces. The Reliability
Committee shall have the authority to establish subcommittees and task forces
for particular studies.
8.6 Further Powers and Duties. The Reliability Committee shall have such
further powers and duties as are consistent with the duties and
responsibilities set forth herein or as may be properly delegated to it by the
Participants Committee.
SECT65535ON 9
TARIFF COMMITTEE
9.1 Officers. The Tariff Committee shall have a Chair, Vice-Chair and
Secretary. The Chair and Secretary of the Tariff Committee shall be appointed
by the System Operator from time to time in accordance with Section 20(j).
The Chair will be responsible for presiding at meetings of the Committee and
establishing agendas for its meetings in conjunction with the Vice-Chair and
shall have the powers and duties as set forth in the Committee bylaws. The
Secretary shall have the powers and duties usually incident to such office and
as set forth in the Committee bylaws. The Chair and Secretary shall have no
voting rights. The Vice-Chair shall be elected by the Tariff Committee from
among its voting members from time to time. The Vice-Chair shall have the
powers and duties usually incident to such office and such powers and duties
as set forth in the Committee bylaws, including, without limitation, the
responsibility to develop in conjunction with the Chair, Committee meeting
agendas.
9.2 Notice to Members and Alternates of Participants Committee. Prior to the
end of the fifth business day following a meeting of the Tariff Committee, the
Secretary of the Tariff Committee shall give written notice to the System
Operator and each member and alternate of the Participants Committee of any
action taken by the Tariff Committee at such meeting.
9.3 Voting; Appeal of Actions. Votes taken by the Tariff Committee shall be
binding on the Participants only for those matters in which the Committee has
specifically designated authority under this Agreement or has been properly
delegated authority by the Participants Committee pursuant to Section 7.5(k).
Any Participant may appeal to the Participants Committee any binding action
taken by the Tariff Committee. Such an appeal shall be taken prior to the end
of the tenth business day following the meeting of the Tariff Committee to
which the appeal relates by giving to the Secretary of the Participants
Committee a signed and written notice of appeal, a copy of which the Secretary
shall provide to the System Operator and each member and alternate of the
Participants Committee. Pending action on the appeal by the Participants
Committee, the giving of a notice of appeal as aforesaid shall suspend the
action appealed from.
9.4 Responsibilities. The Tariff Committee shall perform the following
functions, in conjunction with the System Operator as appropriate, and shall
recommend action to the System Operator, Participants Committee or
Transmission Owners, as appropriate, with respect thereto:
(a) develop appropriate billing procedures for transmission and ancillary
services pursuant to this Agreement and the Tariff;
(b) develop and recommend to the Participants Committee and the Transmission
Owners Committee, as appropriate, (i) amendments, additions and other changes
to the Tariff and (ii) related Tariff rules;
(c) providing input to the System Operator on the development of
Administrative Procedures with respect to the administration of the Tariff and
the OASIS;
(d) to the extent appropriate, conduct and/or review such studies and make
such determinations as are assigned to the Committee pursuant to this
Agreement and the Tariff with respect to financial treatment of additions to
or upgrades of PTF;
(e) recommend to the Participants Committee the retention of a consultant,
procurement of computer time, or the incurrence of consultant expenses or such
other expenses as may be required to enable the Tariff Committee, its
subcommittees, and task forces properly to perform their duties.
9.5 Establishment of Subcommittees and Task Forces. The Tariff Committee
shall have the authority to establish subcommittees and task forces for
particular studies.
9.6 Further Powers and Duties. The Tariff Committee shall have such further
powers and duties as are consistent with the duties and responsibilities set
forth herein or as may be properly delegated to it by the Participants
Committee.
SECT65535ON 10
MARKETS COMMITTEE
10.1 Officers. The Markets Committee shall have a Chair, Vice-Chair and
Secretary. The Chair and Secretary of the Markets Committee shall be
appointed by the System Operator from time to time in accordance with Section
20(j). The Chair will be responsible for presiding at meetings of the
Committee and establishing agendas for its meetings in conjunction with the
Vice-Chair and shall have the powers and duties as set forth in the Committee
bylaws. The Secretary shall have the powers and duties usually incident to
such office and as set forth in the Committee bylaws. The Chair and Secretary
shall have no voting rights. The Vice-Chair shall be elected by the Markets
Committee from among its voting members from time to time. The Vice-Chair
shall have the powers and duties usually incident to such office and such
powers and duties as set forth in the Committee bylaws, including, without
limitation, the responsibility to develop in conjunction with the Chair,
Committee meeting agendas.
10.2 Notice to Members and Alternates of Participants Committee. Prior to the
end of the fifth business day following a meeting of the Markets Committee,
the Secretary of the Markets Committee shall give written notice to the System
Operator and each member and alternate of the Participants Committee of any
action taken by the Markets Committee at such meeting.
10.3 Voting; Appeal of Actions. Votes taken by the Markets Committee shall be
binding on the Participants only for those matters in which the Committee has
specifically designated authority under this Agreement or has been properly
delegated authority by the Participants Committee pursuant to Section 7.5(k).
Any Participant may appeal to the Participants Committee any binding action
taken by the Markets Committee. Such an appeal shall be taken prior to the
end of the tenth business day following the meeting of the Markets Committee
to which the appeal relates by giving to the Secretary of the Participants
Committee a signed and written notice of appeal, a copy of which the Secretary
shall provide to the System Operator and each member and alternate of the
Participants Committee. Pending action on the appeal by the Participants
Committee, the giving of a notice of appeal as aforesaid shall suspend the
action appealed from.
10.4 Responsibilities. The Markets Committee shall perform the following
functions, in conjunction with the System Operator as appropriate, and shall
recommend action to the System Operator, Participants Committee or
Transmission Owners, as appropriate, with respect thereto:
(a) based on appropriate studies, develop market procedures to assure the
reliable operation and facilitate the efficient operation of the NEPOOL
Control Area bulk power supply;
(b) (i) evaluate studies of the market implications of maintenance schedules
for the supply and demand-side resources and transmission facilities of the
Participants and operable capacity margins, and (ii) develop market procedures
for scheduling maintenance for supply and demand resources and transmission
resources.
(c) to the extent appropriate to assure the efficient operation of the NEPOOL
Markets, develop 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;
(d) develop procedures for determining the market implications of the
seasonal capabilities of each electric generating unit or combination of units
in which a Participant has an Entitlement;
(e) develop procedures for determining as appropriate from time to time the
current Annual Peak, Adjusted Annual Peak, Monthly Peak, Adjusted Monthly
Peak, Installed Capability Responsibility, and obligations for Energy,
Operating Reserve and AGC of each Participant;
(f) develop Market Rules and periodically review and recommend changes
thereto as appropriate. Such Market Rules shall include, without limitation,
the following:
(i) submission of Bid Prices and the determination of prices for each of the
NEPOOL Markets;
(ii) determination for each Participants of its obligations under each of the
NEPOOL Markets;
(iii) establishment or approval of appropriate billing procedures for
market transactions pursuant to this Agreement;
(iv) calculation and equitable apportionment of losses incurred in connection
with Interchange Transactions; and
(v) interpool market contract coordination as appropriate.
(g) develop operating procedures relating to the administration of the NEPOOL
Markets and periodically review and recommend changes thereto as appropriate;
(h) recommend the retention of a consultant, procurement of computer time, or
the incurrence of consultant expenses or such other expenses as may be
required to enable the Markets Committee, its subcommittees, and task forces
properly to perform their duties.
10.5 Establishment of Subcommittees and Task Forces. The Markets Committee
shall have the authority to establish subcommittees and task forces for
particular studies.
10.6 Further Powers and Duties. The Markets Committee shall have such further
powers and duties as are consistent with the duties and responsibilities set
forth herein or as may be properly delegated to it by the Participants
Committee.
10.7 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 Markets Committee shall analyze such special problems
and recommend to the Participants Committee appropriate rules for reflecting
such resources in the Installed 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 Participants
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 upon acceptance by the Commission.
SECT65535ON 11
FURTHER RESTRUCTURING
The NEPOOL Participants undertake to finalize by March 31, 2000 the
negotiation of more comprehensive arrangements for the reassignment of
appropriate administrative responsibilities to the System Operator in the
Interim ISO Agreement.
SECTION 11A
REVIEW BOARD
11A.1 Organization. There shall be a Review Board which, in addition to
responsibility under Section 11B.12, shall be responsible for ruling on
appeals taken from actions of the Participants Committee and for advising the
Participants Committee as to the issues raised on any appeals before it
provided that appeals from actions of the System Operator shall not be taken
to the Review Board. In ruling on appeals, the Review Board shall consider,
among other things, whether the action is consistent with Commission policies.
In addition, if the appeal relates to an amendment to the Agreement or market
rule, the Review Board shall consider the extent to which such amendment
imposes a burden on the Participants which do not vote in favor of the
amendment that is materially greater in degree than that imposed on the
Participants which have voted in favor of the amendment. The Review Board
shall not have the right to review or otherwise participate in actions of the
System Operator or to take any action with respect to any matter involving a
dispute between the System Operator and either NEPOOL or any Participant. The
Participants agree that the process of selecting the Review Board shall
commence upon the initial formation of the Participants Committee. Until the
initial organization of the Review Board is completed, the Board of Directors
of the System Operator or a committee thereof consisting of not less than
three System Operator Directors designated by the System Operator Board of
Directors shall perform the functions of the Review Board, provided that the
provisions of Sections 11A.2 through 11A.6 shall not be applicable to the
Board of Directors of the System Operator acting as a Review Board. All
expenses incurred by the System Operator as a result of the Board of Directors
in acting as the Review Board shall be NEPOOL expenses.
11A.2 Composition. The Review Board shall be composed of five members.
The Review Board Members shall initially be selected by the Participants
Committee from a slate of candidates. An independent consultant, retained by
the Participants Committee, shall prepare a list of persons qualified and
willing to serve on the Review Board. A subcommittee appointed by the
Participants Committee shall review the list and distribute to the members of
the Participants Committee a slate from among the list proposed by the
independent consultant, along with information on the background and
experience of the persons on the slate appropriate to evaluating their fitness
for service on the Review Board. If the Participants Committee fails to
select a full Review Board from the slate proposed by the subcommittee, the
Committee shall direct the independent consultant to propose a further list of
nominees for consideration at the next regular meeting of the Participants
Committee. Thereafter, prior to the expiration of a Review Board Member's
term, and upon the occurrence of any vacancy on the Board, the Participants
Committee shall select a successor Member.
11A.3 Qualifications. The Review Board Members shall be independent
experts knowledgeable about issues typically faced by entities engaged in
energy production, transmission, distribution and sale under Federal or State
regulation. A Review Board Member shall not be, and shall not have been at
any time within five years of election to the Review Board, a director,
officer or employee of a Participant or of a Related Person of a Participant.
While serving on the Review Board, a Review Board Member shall have no direct
business relationship or other affiliation with any Participant or its Related
Persons and shall otherwise be subject to the same independence requirements
imposed on Directors of the System Operator Board of Directors.
11A.4 Term. A Review Board Member shall serve for a term of three years;
provided, however, that two of the Review Board Members selected initially
shall be chosen by lot to serve a term of two years, two of the Review Board
Members selected initially shall be chosen by lot to serve a term of three
years and the other Review Board Member selected initially shall serve a term
of four years.
11A.5 Meetings. Meetings of the Review Board may be conducted in person
or by telephone or other electronic means by means of which all persons
participating in the meeting can communicate in real time with each other.
11A.6 Bylaws. To the extent not inconsistent with any provision of this
Agreement, the Participants Committee shall adopt bylaws establishing
procedures for the Review Board's activities as it may deem appropriate,
including but not limited to bylaws governing the scheduling, noticing and
conduct of meetings of the Review Board, a code of conduct, selection of a
Chair and Vice-Chair of the Review Board, and action by the Review Board
without a meeting. Such bylaws shall not modify or be inconsistent with any
of the rights or obligations established by this Agreement.
11A.7 Procedure on Appeal of Participant Committee Action or Failure to
Take Action.
(a) Submission of an Appeal: A Participant seeking review ("Appealing
Party") by the Review Board of action of the Participants Committee shall give
written notice of the appeal in accordance with Section 7.7, and the appeal
shall have the suspension effect specified in Section 7.7.
(b) Intervenors and Time Limits: Any other Participant that wishes to
participate in the appeal proceeding hereunder shall give signed written
notice to the Secretary of the Participants Committee no later than ten (10)
business days after the Appealing Party has given notice of appeal and shall
upon the approval of the Review Board be permitted to participate in the
appeal.
(c) Procedural Rules: The procedural rules (if any), for the conduct of the
appeal shall be determined by the Review Board in consultation with the
Participants Committee and each Appealing Party on a case-by-case basis.
(d) Pre-hearing Submissions: Each Appealing Party shall provide the Review
Board, within 15 days of the giving of its notice of appeal or such other time
as permitted by the Review Board, 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 Review Board to review. The
Participants Committee and, as appropriate, any other Participant
participating in the appeal will provide the Review Board, within 10 days of
the Appealing Party's submission or such other time as permitted by the
Review Board, copies of the minutes of all NEPOOL committee meetings at which
the matter was discussed and if deemed appropriate by the Participants
Committee or otherwise requested by the Review Board a brief description of
the action (or failure to act) being appealed and a brief statement explaining
why the Participants Committee believes its action (or failure to act) should
be upheld by the Review Board, together with copies of documents or other
materials referenced in such submission for the Review Board to review and
materials, if any, which interested Participants provide to the Secretary of
the Participants Committee and reasonably request be submitted to the Review
Board.
In addition, each party shall designate one or more individuals to be
available to answer questions the Review Board may have on the documents or
other materials submitted. The answers to all such questions shall be reduced
to writing by the party providing the answer and a copy shall be made
available to any requesting Participant.
(e) Hearing: A hearing (if any) will be held as soon as is reasonably
practicable.
(f) Decision: The Review Board's decision, to the extent practicable, shall
be due, within ninety (90) days of the giving of notice of the appeal.
11A.8 Effect of a Review Board Decision.
(a) Each Review Board Member shall have one vote and a decision of the Review
Board, either to grant or deny an appeal, shall require affirmative votes by a
majority of the Review Board Members but not less than three (3) such Members.
(b) (i) Appeal denied. If the Review Board denies the appeal, the action of
the Participants Committee will be final and effective, subject to Commission
acceptance if and as required.
(ii) Appeal granted. If the Review Board grants the appeal, the Review
Board's determination (granting the appeal) will be final and the action of
the Participants Committee shall not take effect.
(c) If the Review Board grants an appeal, the Review Board may submit a
proposed resolution of the matter that was the subject of the appeal to the
Participants Committee. The Participants Committee may, but is not required
to, take further action with regard to the matter. If the Participants
Committee votes on an action regarding the matter (including a vote not to act
on the matter), the action or non-action of the Participants Committee shall
be subject to further appeal by any Participant to the Review Board in
accordance with Section 7.7. Any proposed resolution that the Review Board
submits to the Participants Committee is advisory only.
11A.9 An action or failure to act once appealed by a Participant to the
Review Board may not be subject to the alternative dispute resolution
provisions of Section 21.1, regardless of the outcome of the appeal.
Conversely, an action or failure to act submitted for resolution by a
Participant pursuant to Section 21.1 may not be brought before the Review
Board. If more than one Participant appeals and/or submits for alternative
dispute resolution under Section 21.1 the same issue, the Participant that
first takes such action shall determine whether the issue is to be heard by
the Review Board or considered under Section 21.1; provided that each
Participant challenging an action or failure to take action shall have the
same opportunity to present its case and may not be excluded from
participating under Section 11A.7(b).
11A.10 Any action taken or failure to take action by the Review Board does not
restrict or limit in any way the rights of a Participant to seek review by the
Commission, or a review in any other forum available to the Participant and
there shall be no requirement to submit an appeal to the Review Board
concerning any amendment, action or inaction by the Participants Committee
prior to a Participant exercising any such rights to seek review by the
Commission or any other forum with jurisdiction.
11A.11 The Review Board may not take action that is inconsistent with or
infringes upon any of the rights set forth in Section 17A.
SECTION 11B
TRANSMISSION OWNERS COMMITTEE
11B.1 Organization. There shall be a Transmission Owners Committee
established pursuant to this Section 11B which shall implement the rights
reserved to Transmission Owners by Section 17A.
11B.2 Membership. Membership on the Transmission Owners Committee shall
be open to all Transmission Owners, regardless of their individual choices in
Sector membership under Section 6.2.
11B.3 Appointment of Members and Alternates. A Transmission Owner shall
join the Transmission Owners Committee by written notice delivered to the
Secretary of the Transmission Owners Committee, and shall designate in the
notice the initial member appointed by it for the Committee and an alternate
of the member. In the absence of the member, the alternate shall have all the
powers of the member, including the power to vote.
11B.4 Term of Members. A member of the Transmission Owners Committee
appointed by a Transmission Owner shall serve until replaced by the
Transmission Owner which appointed it or until such Transmission Owner ceases
to be a Participant or otherwise lose its right to appoint the member.
Appointment or replacement of a member shall be effected by a Transmission
Owner by giving written notice of such appointment or replacement to the
Secretary of the Transmission Owners Committee.
11B.5 Regular and Special Meetings. The Transmission Owners 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. Thirty percent
(30%) or more of the voting members of the Transmission Owners Committee may
call a special meeting of the 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.
11B.6 Notice of Meetings. Written notice of each meeting of the
Transmission Owners Committee shall be given to each Transmission Owner and to
other Participants not less than five (5) business days prior to the date of
the meeting.
11B.7 Attendance. Regular and special meetings may be conducted in
person, by telephone, or other electronic means by means of which all persons
participating in the meeting can communicate in real time with each other. In
order to vote during the course of a meeting, attendance is required in person
or by telephone or other real time electronic means by a voting member or its
alternate or a duly designated agent who has been given, in writing, the
authority to vote for the member on all matters or the proxy to vote for the
member on specific matters.
11B.8 Votes. Any action taken by the Transmission Owners Committee shall
require the concurrence of:
(i) representatives of at least two-thirds of the Transmission Owners
provided that Transmission Owners that are Related Persons to one another
shall together have a single vote; and
(ii) representatives of Transmission Owners having at least two-thirds of the
Weighted Votes of all Transmission Owners, where each Transmission Owner's
Weighted Vote is equal to its original capital investment in its PTF as of the
end of the most recent year for which figures are available.
Notwithstanding the foregoing, if a vote is taken and paragraph (i) above is
satisfied but paragraph (ii) above is not, the action being voted on by the
Transmission Owners Committee shall pass if (1) there are seven or more
Transmission Owners on the Committee and fewer than three Transmission Owners
oppose the action or (2) there are less than seven Transmission Owners on the
Committee and only one Transmission Owner opposes the action.
11B.9 Appointment of Task Forces or Working Groups. The Transmission
Owners Committee shall have the authority to appoint task forces or working
groups to address matters for which the Committee is responsible.
Notwithstanding Section 7.6, such tasks force or working groups may be limited
to Transmission Owners only.
11B.10 Officers. At its annual meeting, the Transmission Owners Committee
shall elect from its 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, including the
right to convene an executive session of the Transmission Owners Committee to
consider and vote upon submittals to the Commission or litigation strategy.
11B.11 Adoption of Bylaws. The Transmission Owners Committee may adopt
bylaws, consistent with this Agreement, governing procedural matters including
the conduct of its meetings.
11B.12 Review of Committee Actions. To the extent the Commission determines,
pursuant to Section 17A.7, that Transmission Owners have the exclusive right
to make unilateral filings under Section 205 of the Federal Power Act, a
Transmission Owner may either submit a dispute for resolution pursuant to
Section 21.1 or appeal to the Review Board any action taken by the
Transmission Owners Committee with respect to such a Section 205 filing. Such
a submission or appeal shall be taken prior to the end of the tenth business
day following the meeting of the Transmission Owners Committee to which the
submission or appeal relates by giving to the Secretary of the Transmission
Owners Committee a signed and written notice of submission or appeal. Pending
action on an appeal by the Review Board, the giving of a notice of appeal as
aforesaid shall suspend the action appealed from. For purposes of the
application of the dispute resolution process of Section 21.1 and the
suspension effect of a submission to alternative dispute resolution, Section
21.1 shall be applied as if the Transmission Owners Committee were the
Participants Committee.
SECTION 11C
LIAISON COMMITTEE
11C.1 Organization; Duties. There shall be a Liaison Committee which
shall be an advisory committee only responsible to act as a steering committee
for managing NEPOOL business through the committee process and facilitating
communications between NEPOOL and the System Operator and among Participants.
The Liaison Committee's duties as a steering committee include, without
limitation, recommending that matters be assigned to particular committees for
action where the subject matter of a proposed rule or other action potentially
falls in the purview of more than one committee and assuring appropriate input
from other committees as needed.
11C.2 Membership. The Liaison Committee shall have the following members:
the Chair and Vice-Chair of each of the Principal Committees; the Chair of the
Transmission Owners Committee; a Participant representative of each Sector
that is not otherwise represented on the Liaison Committee; the chief
executive officer of the System Operator; and two members of the System
Operator's Board of Directors.
11C.3 Regular and Special Meetings. The Liaison Committee shall hold
meetings in accordance with a schedule adopted by the Committee or at the call
of the Co-Chairs.
11C.4 Notice of Meetings. Written notice of each meeting of the Liaison
Committee shall be given to each member of the Committee and all members of
the Participants Committee not less than five business days prior to the date
of the meeting.
11C.5 Attendance. Regular and special meetings may be conducted in
person, by telephone, or other electronic means by means of which all persons
participating in the meeting can communicate in real time with each other.
Participants Committee members and alternates may attend meetings of the
Liaison Committee. Any individual that is not a member of the Liaison
Committee may participate at a meeting at the invitation of a Co-Chair.
11C.6 Officers. The Co-Chairs of the Liaison Committee shall be the chief
executive officer of the System Operator and the Chair of the Participants
Committee. The Liaison Committee shall 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.
PART THREE
MARKET PROVISIONS
SECT65535ON 12
INSTALLED CAPABILITY OBLIGATIONS AND PAYMENTS
12.1 Obligations to Provide Installed 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) [Deleted].
12.2 Computation of Installed Capability Responsibilities.
(a) (1) At the conclusion of each month, the System Operator under the
direction of the Participants 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)+Np)(1+T) - C(Dp)
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 = (Fp + Dp) / (F + D), wherein:
Fp is the Participant's Adjusted Monthly Peak for the month less any
Kilowatts received by such Participant pursuant to a contract of a type that
traditionally has been treated by NEPOOL as a firm contract for the purposes
of this Section prior to January 1, 1999, but which does not constitute a
Firm Contract as defined in this Agreement.
Dp is the Participant's actual or potential load reduction resulting from
its NEPOOL Interruptible and Dispatchable Loads for the month.
F is the aggregate for the month of the Adjusted Monthly Peaks for all
Participants less any Kilowatts received by any Participant pursuant to a
contract of a type that traditionally has been treated by NEPOOL as a firm
contract for the purposes of this Section prior to January 1, 1999, but which
does not constitute a Firm Contract as defined in this Agreement.
D is the aggregate for the month of the actual or potential load reduction
resulting from all Participants' NEPOOL Interruptible and Dispatchable Loads.
C is the factor, which when multiplied by D in megawatts, results in the
reduction to NEPOOL Objective Capability that would result from including D in
the determination of NEPOOL Objective Capability. The value for C shall be
adopted by the Participants Committee each time it fixes NEPOOL Objective
Capability pursuant to Section 7.6(e).
A is the NEPOOL Objective Capability in megawatts for the month as fixed by
the Participants Committee pursuant to Section 7.
N is the aggregate of the New Unit Adjustments for all Participants for the
month as determined by the Participants Committee in accordance with Section
12.2(a)(2).
Np is the aggregate of the Participant's New Unit Adjustments for the month,
as determined by the Participants Committee, and is equal to the aggregate of
the Participant's adjustments for each New Unit 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).
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 Installed Capability
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; provided,
however, that for the purpose of determining the Four Year Target Availability
Rate (i) for months included within the Power Year which commences June 1,
1999, the determination shall be made for the months of June through October
on the basis of the calendar years 1995 through 1998, and shall be made for
the months of November through May on the basis of the calendar years 1996
through 1999, and (ii) for months included within the Power Year which
commences June 1, 2000, the determination shall be made on the basis of the
calendar years 1996 through 1999. The Target Availability Rates shall be
those utilized by the Participants Committee in its most recent determination
of NEPOOL Objective Capability pursuant to Section 7.
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 H1 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; provided, however, that for
the purpose of determining the Four Year Actual Availability Rate (i) for
months included within the Power Year which commences June 1, 1999, the
determination shall be made for the months of June through October on the
basis of the calendar years 1995 through 1998, and shall be made for the
months of November through May on the basis of the calendar years 1996
through 1999, and (ii) for months included within the Power Year which
commences June 1, 2000, the determination shall be made on the basis of the
calendar years 1996 through 1999. 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
H1 for an Installed Capability Entitlement shall be the four sequential
Twelve-Month Measurement Periods out of the twelve possible combinations which
yield the highest H1.
H1 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 Period, 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 or combination of units for each month in the Twelve-Month
Measurement Period. The Target Availability Rates shall be those utilized by
the Participants Committee in its most recent determination of NEPOOL
Objective Capability pursuant to Section 7.
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 Participants Committee
each time it fixes NEPOOL Objective Capability pursuant to Section 7.
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 12 month period beginning November 1, 1998.
R=0.25 for the 12 month period beginning November 1, 1999.
R=0 for the 12 month period beginning November 1, 2000 and all
subsequent 12 month periods.
(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. The New Unit Adjustment
Factor for each New Unit for each month shall be determined by the System
Operator under the direction of the Participants Committee in accordance with
the following formula:
n = R(K1(c-C) + K2(f-F) + K3(m-M) + K4(d-D) + K5(f- F)c2)
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 Participants 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 Participants
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 Participants Committee of NEPOOL Objective
Capability pursuant to Section 7.
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.
K1, K2, K3, K4, and K5
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 Participants Committee and reviewed every five
years (or more frequently if the Participants 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 Participants 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 (as defined in Section
15.37B of the Prior NEPOOL Agreement) 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 5 MW, 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(K1(c-C) + K2(f-F) + K3(m-M) + K4(d-D) +K5(f-F)c2) + K6(2500-a)
The symbols used in the above formula, as modified, shall have the meanings
previously specified, except that the symbols "K6" and "a" shall have the
following meanings:
K6 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 Markets Committee prior to the activation of the
Participants Committee or the Participants Committee thereafter.
(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 H1.
In such event the System Operator under the direction of the Participants
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 System Operator under the direction of the
Participants 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 Markets Committee shall analyze
such special problems and recommend to the Participants Committee for approval
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 [Deleted].
12.4 Bids to Furnish Installed Capability. Each Participant shall submit to
or have on file with the System Operator, in accordance with the market
operation rules approved by the Markets Committee prior to the activation of
the Participants Committee or the Participants Committee thereafter, 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 through
NEPOOL to other Participants. If no bid is submitted for a month for any
surplus Installed System Capability, the Bid Price for any such surplus for
which there is no bid 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
fees for services 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 [Deleted].
12.7 Payments to Participants Furnishing Installed 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 for the month under Section 12.5, excluding any
applicable fees for services 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) [Deleted].
SECT65535ON 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 Participants
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 Markets Committee prior to the activation of the Participants
Committee or the Participants Committee thereafter, (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
Markets Committee prior to the activation of the Participants Committee or the
Participants Committee thereafter.
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.
SECT65535ON 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 to
other Participants in the hour pursuant to Firm Contracts or System Contracts,
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:
ORp=SAp + [(OR-SA) (ELp/EL)], wherein
ORp is the Participant's share of that category of Operating Reserve for the
hour.
SAp is the number of Kilowatts, if any, of that category of Operating Reserve
for the hour that the Participants 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 Participants 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 Participants Committee determines should not be
shared by all Participants, but not including Operating Reserve assigned to
Non-Participants.
ELp is the Participant's Electrical Load for the hour.
EL is the sum of ELp for all Participants.
(c) Each Participant shall have for each hour an AGC obligation equal to its
share of AGC required for the NEPOOL Control Area in the hour. Subject to
adjustment pursuant to Section 14.6, a Participant's share of AGC required for
any hour shall be determined in accordance with the following formula:
AGCp=AGC (ELp/EL), wherein
AGCp 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 Markets Committee prior
to the activation of the Participants Committee or the Participants Committee
thereafter to be required for the NEPOOL Control Area for the hour that is not
assigned to Non- Participants.
ELp 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 Markets Committee prior to the activation of the Participants
Committee or the Participants Committee thereafter, 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, or pursuant to arrangements with Non-Participants
entered into under Section 14.6, 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 Markets Committee
prior to the activation of the Participants Committee or the Participants
Committee thereafter, one or more bids for each such Entitlement 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).
(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 shall be submitted in accordance with
market operation rules approved by the Markets Committee prior to the
activation of the Participants Committee or the Participants Committee
thereafter. 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 Energy Entitlements pursuant to
Firm Contracts or System Contracts which may be scheduled by the buyer in
accordance with Section 14.7(b) no later than noon on the preceding day or
such later time as is specified in the market operation rules approved by the
Markets Committee prior to the activation of the Participants Committee or
the Participants Committee thereafter. On and after the Third Effective Date,
such Bid Prices shall be submitted for each hour of the day and the notice
period 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 period 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 Markets Committee prior to the activation of the Participants
Committee or the Participants Committee thereafter 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 at 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 or units may submit a short-notice schedule for the operation or dispatch
of any or all of the Energy available from such unit or units during the
current or a 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 Energy, Operating Reserve or AGC Entitlements from
the unit or units covered by the Participant's 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 schedule is furnished at least one hour in
advance of the start of the transaction. In addition, a Participant may, on
the 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 Markets Committee
prior to the activation of the Participants Committee or the Participants
Committee thereafter 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
applicable uplift charges assessed to the Participant under Sections 14.14 and
14.15 of this Agreement and Section 24 of the Tariff and any applicable fees
for services 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 fees for
services 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 fees for services 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
Markets Committee prior to the activation of the Participants Committee or the
Participants Committee thereafter. 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 Markets Committee prior to the
activation of the Participants Committee or the Participants Committee
thereafter.
(b) A Participant that is deemed in an hour to furnish Operating Reserve
under the Agreement shall receive for each Kilowatt of each category of
Operating Reserve furnished by it the applicable Operating Reserve Clearing
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 under the
Agreement shall receive therefor an amount calculated as follows:
(i) the AGC Clearing Price for the hour as defined and determined in
accordance with Section 14.10, times the change in AGC output of the
Participant's AGC Entitlements which the System Operator requested in the
hour, times an appropriate unit conversion factor as determined in accordance
with market operation rules approved by the Markets Committee prior to the
activation of the Participants Committee or the Participants Committee
thereafter; plus
(ii) an AGC reservation payment for each AGC Entitlement that the System
Operator designated for AGC in the hour calculated as (A) the AGC Clearing
Price in effect for the hour, times (B) the level of AGC the System Operator
determines to be available in the hour from the Entitlement, times (C) the
portion of the hour during which the System Operator had designated the
Entitlement for AGC; plus
(iii) a payment that compensates the Participant for its lost opportunity
cost, if any, for the operation of the generating unit or combination of units
designated for AGC in the hour below the desired level of output in order to
provide AGC, as determined in accordance with market operation rules approved
by the Markets Committee prior to the activation of the Participants Committee
or the Participants Committee thereafter.
14.6 Energy Transactions with Non-Participants.
(a) The Participants 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 Participants 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 of this Agreement and/or
Section 24 of the Tariff and any applicable fees for services 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, 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 Markets Committee prior
to the activation of the Participants Committee or the Participants Committee
thereafter. If and to the extent necessary to implement the agreement between
the parties, such market operation rules, upon approval by the Participants
Committee, shall supersede the provisions of the Agreement that otherwise
apply for determination of the respective responsibilities and Entitlements of
the parties.
(b) In the event a Participant has the right to receive Energy, Operating
Reserve and/or AGC from a Non-Participant under a System Contract or a Firm
Contract, such Contract shall be treated as nearly as possible as if it were a
Unit Contract for an Energy Entitlement, Operating Reserve Entitlement and/or
AGC Entitlement, as applicable, provided that, in the case of Energy,
Operating Reserve, and/or AGC, the System Contract or Firm Contract permits
the scheduling of deliveries of such 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 Markets Committee prior
to the activation of the Participants Committee or the Participants Committee
thereafter.
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 Markets
Committee prior to the activation of the Participants Committee or the
Participants Committee thereafter 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 Markets Committee prior
to the activation of the Participants Committee or the Participants Committee
thereafter.
14.9 Determination of Operating Reserve 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 Markets Committee prior to the
activation of the Participants Committee or the Participants Committee
thereafter) 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 10-Minute Spinning Reserve Lost Opportunity
Prices (as defined in Section 14.9(b)) of the resources designated by the
System Operator for the hour. 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 Markets Committee prior to
the activation of the Participants Committee or the Participants Committee
thereafter) of the highest 10-Minute Spinning Reserve Lost Opportunity Prices
for the hour of the Entitlements that were designated by the System Operator
for use in the hour.
(b) The System Operator shall determine a 10-Minute Spinning Reserve Lost
Opportunity Price for each hour for use in determining the Operating Reserve
Clearing Price for 10-Minute Spinning Reserve. For the purposes of Section
14.9, the 10-Minute Spinning Reserve Lost Opportunity Price for a
Participant's resource shall be the amount by which the Energy Clearing Price
for the hour exceeds the resource's Dispatch price (not less than zero), plus
the Bid Price in the hour for each resource to provide 10-Minute Spinning
Reserve.
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 "AGC Capability Price" for the "AGC Clearing Price
Block," as both terms are defined below in this Section 14.10. The AGC
Capability Price for each hour for each AGC Entitlement designated by the
System Operator to provide AGC in the hour shall be a cost per unit of AGC
capability based on the Bid Price for the Entitlement for the hour divided by
the amount of AGC available in the hour from that Entitlement. The AGC
Clearing Price Block shall be identified by the System Operator for each hour
in accordance with market operation rules approved by the Markets Committee
prior to the activation of the Participants Committee or the Participants
Committee thereafter to reflect those AGC resources with the highest Bid
Prices that were designated by the System Operator to provide 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 Reserves or AGC furnished or received,
all uplift charges paid pursuant to this Section 14 of this Agreement and
Section 24 of the Tariff, and all fees for services paid pursuant to Section
19.2, and any payments by Non- Participants for ancillary services under
Schedules 2-7 to the Tariff or pursuant to arrangements referenced in Section
14.6, shall be allocated each month 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 pursuant to Section 14.6(b) for
such Energy by each Participant which is a participant in the Phase I
arrangements with Hydro- Quebec 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 pursuant to Section
14.6(b) for such Energy by each Participant which is a participant in the
Phase II arrangements with Hydro- Quebec 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 pursuant to Section
14.6(b) for such Energy shall be determined for each Participant which is a
participant in the Phase I or Phase II arrangements with Hydro-Quebec. 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) (A) 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
be paid, and (B) amounts owed to Hydro-Quebec for the month for Energy deemed
to be furnished pursuant to Section 14.6(b) to Participants which are not
participants in the Phase I or Phase II arrangements with Hydro-Quebec shall
be paid and, in the event the price paid by any such Participant for such
Energy is the Energy Clearing Price, the excess, if any, of the Energy
Clearing Price over the amount owed to Hydro-Quebec shall be paid to the
Participant;
(ii) amounts paid by Participants for applicable fees for services 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 (I) in the case of any Participant which is not a
participant in the Phase I or Phase II arrangements with Hydro-Quebec, be paid
to such Participant, and (II) in the case of any Participant which is a
participant in the Phase I or Phase II arrangements with Hydro-Quebec, 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
Markets Committee shall analyze such special problems and recommend to the
Participants Committee for approval 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 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 Participants 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
Markets Committee shall analyze such special problems and recommend to the
Participants Committee for approval appropriate dispatch and billing rules to
be applied during periods when the Participants 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 Participants 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.
(a) It shall be the responsibility of the Participants Committee to review
prior to January 1, 2000 the Congestion Costs incurred with the new market
arrangements contemplated by Section 14 of this Agreement and with retail
access, and to determine whether subsection (b) of this Section, together with
an amendment specifying the rights of Participants and Non-Participants across
a constrained interface within the NEPOOL Control Area and to make other
necessary or appropriate changes in subsection (b), all of the provisions of
which shall be considered for modification, or some other modified or
substitute provision dealing with the allocation of Congestion Costs in a
constrained transmission area, should be made effective on March 1, 2000 and
after the preparation of necessary implementing rules and computer software or
on an earlier or later effective date. If the Participants Committee
determines that such a provision should be made effective, it shall recommend
to the Participants any required amendment to the Agreement and/or the Tariff
and a schedule for implementation which will permit sufficient time for the
development of necessary rules and computer software. If the Participants
Committee is unable to agree on such a determination prior to January 1, 2000
any Participant or group of Participants may propose such an amendment and
schedule in a filing with the Commission.
(b) Commencing on the earlier of June 1, 2000 or the beginning of the first
calendar month sixty (60) days after the filing of an amendment to the
Agreement and/or the Tariff by the Participants Committee, any Participant or
group of Participants, but subject to the adoption of an amendment specifying
the rights of Participants and Non-Participants across constrained interfaces
within the NEPOOL Control Area and making other necessary or appropriate
changes in the language of this subsection (b), and the preparation of
necessary implementing rules and computer software, (or on such earlier or
later date as is fixed by the Participants Committee in accordance with
subsection (a) of this Section), whenever limitations in available
transmission capacity in any hour require that the System Operator dispatch
out-of-merit resources that are bid by the Participants in any area which is
determined to be a constrained transmission area in accordance with market
operation rules approved by the Regional Market Operations Committee and the
Regional Transmission Operations Committee prior to the activation of the
Participants Committee or the Participants Committee thereafter, the System
Operator shall determine for the constrained transmission area the aggregate
Congestion Costs for the hour.
Such Congestion Costs for each hour shall be allocated to and paid by
Participants and Non-Participants as a congestion uplift as follows:
(i) In accordance with market operation rules approved by the Regional Market
Operations Committee and the Regional Transmission Operations Committee prior
to the activation of the Participants Committee or the Participants Committee
thereafter, the System Operator shall identify for each Participant and
Non-Participant the difference in megawatt hours, if any, between (A)
Electrical Load served by the Participant or Non-Participant in the
constrained area and transactions by the Participant or Non-Participant
occurring in the hour which utilized the constrained interface to move Energy
through the constrained area and (B) the Participant's or Non-Participant's
in-merit Energy Entitlements located in the constrained area that were used in
the hour to serve such Electrical Load, taking into account Firm Contracts and
System Contracts between Participants and electrical losses, if and as
appropriate.
(ii) The System Operator shall identify for each Participant and
Non-Participant the megawatt hours, if any, of the rights of that Participant
or Non-Participant to use the then effective transfer capability across the
constrained interface.
(iii) The System Operator shall identify for each Participant and
Non-Participant the megawatt hours, if any, by which the amount determined
pursuant to clause (i) above for that Participant or Non-Participant exceeds
the amount determined for that Participant or Non-Participant pursuant to
clause (ii) above. If the clause (i) amount exceeds the clause (ii) amount,
the Participant or Non-Participant 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, and such Congestion Costs shall be
included, as a transmission charge, in the Regional Network Service, Internal
Point-to-Point Service or Through or Out Service charge, whichever is
applicable.
(c) As used in this Section 14.14, the "Congestion Cost" of an out-of- merit
resource for an hour means the product of (i) the difference between its
Dispatch Price and the Energy Clearing Price for the hour, times (ii) the
number of megawatt hours of out-of-merit generation produced by the resource
for the hour.
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 of this Agreement and
Section 24 of the Tariff. 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 prior to the activation of the Participants Committee or
the Participants Committee thereafter.
PART FOUR
TRANSMISSION PROVISIONS
SECT65535ON 15
OPERATION OF TRANSMISSION FACILITIES
15.1 Definition of PTF. PTF or pool transmission facilities are the
transmission facilities owned by Participants rated 69 kV or above required to
allow energy from significant power sources to move freely on the New England
transmission network, and include:
1. All transmission lines and associated facilities owned by Participants
rated 69 kV and above, except for lines and associated facilities that
contribute little or no parallel capability to the NEPOOL Transmission System
(as defined in the Tariff). The following do not constitute PTF:
(a) Those lines and associated facilities which are required to serve local
load only.
(b) Generator leads, which are defined as radial transmission from a
generation bus to the nearest point on the NEPOOL Transmission System.
(c) Lines that are normally operated open.
2. Parallel linkages in network stations owned by Participants (including
substation facilities such as transformers, circuit breakers and associated
equipment) interconnecting 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.
4. Rights of way and land owned by Participants required for the
installation of facilities which constitute PTF under (1), (2) or (3) above.
The Reliability 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 or
catalogue 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, from two geographically separate points on the NEPOOL
Transmission System, the supply to a load bus from the NEPOOL Transmission
System are included.
(iii) Lines which loop, from two geographically separate points on the
NEPOOL Transmission System, the connections between a generator bus and the
NEPOOL Transmission System are included.
(iv) Radial connections or connections from a generating station to a single
substation or switching station on the NEPOOL Transmission System 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 Participants Committee its consent to such treatment; and (ii) the
Participants 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 Tariff 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 by the Tariff Committee.
15.5 Additions to or Upgrades of PTF. The possible need for an addition to or
upgrade of PTF may be identified in connection with an application or request
for service under the Tariff, or in connection with a request for the
installation of or material change to a generation or transmission facility,
or may be separately identified by a NEPOOL committee, a Participant or the
System Operator. In such cases, a study, if necessary, to assess available
transmission capacity and, if necessary, a System Impact Study and a Facility
Study shall be performed by the affected Participant(s) in whose Local
Network(s) the addition or upgrade would or might be effected or their
designee(s), or the Reliability Committee and/or the System Operator, in the
case of a System Impact Study, or the Committee's or the System Operator's
designee(s) 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, as
appropriate, in accordance with the affected Participant's Local Network
Service Tariff, or in accordance with the applicable methodology specified in
Attachments C and D to the Tariff, and the provisions of the Local Network
Service Tariff or the applicable provisions of Attachments I and J to the
Tariff shall apply, as appropriate, with respect to the payment of the costs
of the study and the other matters covered thereby.
If any of the studies referred to above indicates that new PTF facilities or a
facility modification or other PTF upgrades are necessary to provide the
requested service, or in connection with a new or modified generation or
transmission facility, or otherwise in order 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, upon
approval of the studies by the Reliability Committee, subject to review by the
System Operator, one or more Transmission Providers shall be designated by the
Reliability Committee, subject to review by the System Operator, to design and
effect the construction or modification.
Upon the designation of a Transmission Provider to design and effect a PTF
addition or upgrade and the fixing of the cost responsibilities of the
Participants and Non-Participants and agreement as to the security and other
provisions of said arrangement, the Transmission Provider designated to
perform the construction shall, in accordance with the terms of such
arrangement and subject to Sections 18.4 and 18.5, use its best efforts to
obtain any necessary public approvals or permits, to acquire any required
rights of way or other property, and to effect the proposed construction or
modification.
Responsibility for the costs of new PTF or any modification or other upgrade
of PTF shall be determined, to the extent applicable, in accordance with Parts
V and VI and Schedule 11 of the Tariff, including without limitation the
provisions relating to responsibility for the costs of new PTF or
modifications or other upgrades to PTF exceeding regional system, regulatory
or other public requirements set forth in paragraph (ii) of Schedule 11 to the
Tariff.
SECT65535ON 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.
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
transmission facilities other than PTF shall provide service over such
facilities 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 service under its
Local Network Service Tariff or otherwise (i) 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 and (ii) to permit the delivery to an Eligible Customer taking
Internal Point-to- Point Service under the Tariff of the Energy and/or capacity
covered by its Completed Application for that Internal Point-to-Point Service.
A Local Network Service Tariff shall provide:
(i) for a pro rata allocation of monthly revenue requirements not otherwise
paid for through charges to Eligible Customers for Local Point-to-Point
Service among the Transmission Provider's Network 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 from Eligible
Customers taking Regional Network Service and Internal Point-to-Point Service
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 or Internal
Point-to-Point Service pursuant to Section 16.6;
(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 directly connected to PTF the percentage specified in the schedule
below of the applicable Local Network Service Tariff 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
% of charge to be paid 100%
Year Two
% of charge to be paid 80%
Year Three
% of charge to be paid 60%
Year Four
% of charge to be paid 40%
Years Five and Six
% of charge to be paid 20%
(iv) that if the Transmission Provider receives a distribution pursuant
to Section 16.6 from NEPOOL out of revenues paid for Through or Out Service or
for In Service (as defined in the Tariff), the amounts received shall reduce
its Local Network Service revenue requirements; and
(v) that if the Transmission Provider receives transmission revenues
from an Eligible Customer taking Local Network Service from that Transmission
Provider with respect to an Excepted Transaction, the amounts received shall
reduce the amount due from such Eligible Customer connected to the
Transmission Provider's transmission system for Local Network Service provided
thereto by the Transmission Provider rather than reducing the Transmission
Provider's total cost of service, except that any reductions to the amount due
from Eligible Customers for Excepted Transactions identified in Section 25(1)
and (2) of the Tariff shall be made only for service rendered through February
28, 1999, and such reductions shall cease and shall be replaced thereafter in
their entirety with the credits under the NEPOOL Tariff, provided in
accordance with Sections 25A and 25B of the Tariff.
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 those Participants owning PTF or those load-serving
Participants supporting PTF which are obligated to take and pay for Regional
Network Service and/or Internal Point- to-Point Service in accordance with the
Tariff, 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 such owners and supporters, in accordance with the
following Schedule:
Year One
Allocated Flows:
25%
Annual Transmission Revenue Requirements:
75%
Year Two
Allocated Flows:
20%
Annual Transmission Revenue Requirements:
80%
Year Three
Allocated Flows:
15%
Annual Transmission Revenue Requirements:
85%
Year Four
Allocated Flows:
10%
Annual Transmission Revenue Requirements:
90%
Year Five
Allocated Flows:
5%
Annual Transmission Revenue Requirements:
95%
Year Six
Allocated Flows:
2.5%
Annual Transmission Revenue Requirements:
97.5%
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 interconnection 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. Internal Point-to-Point Service Revenues. The revenues received by
NEPOOL each month for providing Internal Point-to-Point Service shall be
distributed among those load-serving Participants owning or supporting PTF
which are obligated to take and pay for Regional Network Service and/or
Internal Point-to-Point Service in accordance with the Tariff, in proportion
to their respective Annual Transmission Revenue Requirements for PTF under
Attachment F to the Tariff.
D. Ancillary Service Payments. The revenues received by NEPOOL pursuant to
Schedule 1 to the Tariff (scheduling, system control and dispatch service)
will be used to reimburse NEPOOL, the System Operator (if the System Operator
does not receive revenues for that service under a separate tariff) and
Participants for the costs which are reflected in the charges for such
service. The revenues received by NEPOOL pursuant to Schedules 2-7 to the
Tariff shall be distributed prior to the Second Effective Date in accordance
with the continuing provisions of the Prior NEPOOL Agreement and the rules
adopted thereunder, and shall be distributed on or after the Second Effective
Date in accordance with Section 14.
E. Congestion Payments. Any congestion uplift charge received as a payment
for transmission service pursuant to Section 24 of the Tariff for any hour
shall be applied in accordance with Section 14.5(a) in payment for Energy
service.
SECT65535ON 17
POOL-PLANNED UNIT SERVICE
17.1 Effective Period. The provisions contained in this Section 17 shall
continue in effect for the period to and including February 28, 2001, and
shall be of no effect after that date.
17.2 Obligation to Provide Service. Until February 28, 2001, 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 Participants 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 Participants 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 Participants 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 Participants
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; except that
the requirements for such payments shall terminate on March 1, 1999 for
Participants receiving network service under both the Tariff and applicable
Local Network Service Tariff.
17.6 Use of Other Transmission Facilities by Participants. For the period to
and including February 28, 1999, 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.
SECTION 17A
TRANSMISSION OWNERS RESERVED RIGHTS
Notwithstanding any other provision of this Agreement, or any other agreement
or amendment made in connection with the restructuring of NEPOOL, each
Transmission Owner shall retain all of the rights set forth in this Section
17A; provided, however, that such rights shall be exercised in a manner
consistent with the Transmission Owner's rights and obligations under the
Federal Power Act and the Commission's rules and regulations thereunder.
17A.1 Each Transmission Owner shall have the right at any time
unilaterally to file pursuant to Section 205 of the Federal Power Act to
change the revenue requirements underlying its component of the rates for
service under the NEPOOL Tariff and the transmission-related provisions of
this Agreement.
17A.2 Nothing in this Agreement shall restrict any rights, to the extent
such rights exist: (a) of Transmission Owners that are parties to a merger,
acquisition or other restructuring transaction to make a filing under Section
205 of the Federal Power Act with respect to the reallocation or
redistribution of revenues among such Transmission Owners; or (b) of any
Transmission Owner to terminate its participation in NEPOOL pursuant to
Section 21.2 of this Agreement, notwithstanding any effect its withdrawal from
NEPOOL may have on the distribution of transmission revenues among other
Transmission Owners. Further, nothing in this Agreement shall be interpreted
to permit the adoption of a rate design change that is inconsistent with any
settlement under the Tariff accepted by the Commission without the consent of
all signatories to the settlement.
17A.3 Each Transmission Owner retains all rights that it otherwise has
incident to its ownership of its assets, including, without limitation, its
PTF and non-PTF, including the right to build, acquire, sell, merge, dispose
of, retire, use as security, or otherwise transfer or convey all or any part
of its assets, including, without limitation, the right, individually or
collectively, to amend or terminate the Transmission Owner's relationship with
the ISO in connection with the creation of an alternative arrangement for the
ownership and/or operation of its transmission facilities on an unbundled
basis (e.g., a transmission company), subject to necessary regulatory
approvals and to any approvals required under applicable provisions of this
Agreement. This section is not intended to reduce or limit any other rights
of a Transmission Owner as a signatory to this Agreement.
17A.4 The obligation of any Transmission Owner to expand or modify its
transmission facilities in accordance with the Tariff shall be subject to the
Transmission Owners' right to recover, pursuant to appropriate financial
arrangements contained in Commission-accepted tariffs or agreements, all
reasonably incurred costs, plus a reasonable return on investment, associated
with constructing and owning or financing such expansions or modifications to
its facilities.
17A.5 Each Transmission Owner shall have the right to adopt and implement
procedures it deems necessary to protect its electric facilities from physical
damage or to prevent injury or damage to persons or property.
17A.6 Each Transmission Owner retains the right to take whatever actions
it deems necessary to fulfill its obligations under local, state or federal
law.
17A.7 In addition to having the rights reserved under other provisions of
this Section 17A, all Participants retain the right to take any position
before the Commission, and any appellate court with jurisdiction to review a
Commission determination, or to seek a determination by the Commission,
regarding whether, and the extent to which, the Transmission Owners may retain
the exclusive right to make unilateral filings under Section 205 of the
Federal Power Act to amend the Tariff and the transmission related provisions
of this Agreement. If and to the extent the Commission rules that the
Transmission Owners do not retain such rights, then any such amendment that is
not subject to any of Section 17A.1 through 17A.6 may be filed with the
Commission only upon the approval by the Participants Committee of the
amendment under Section 6.11, including Section 6.11(d). If and to the extent
the Commission rules that the Transmission Owners do retain such rights, then
the Transmission Owners, acting through the Transmission Owners Committee,
shall have the exclusive right to make unilateral filings under Section 205 of
the Federal Power Act to amend the Tariff and the transmission- related
provisions of this Agreement, other than filings subject to Sections 17A.1 or
17A.2.
17A.8 (a) Notwithstanding anything to the contrary in this Agreement, the
rights of each Participant under the Federal Power Act shall be preserved.
(b) Any dispute over whether a matter falls within the scope of any of the
rights reserved under this Section 17A will be subject to resolution pursuant
to Section 11.A.
(c) No amendment to any provision of this Section 17A or Section 11B may be
adopted without the agreement of the Transmission Owners specified in Section
11B.
(d) Any agreement entered into between NEPOOL and a System Operator shall
require the System Operator to respect the rights reserved under this Section
17A.
PART FIVE
GENERAL
SECT65535ON 18
GENERATION AND TRANSMISSION FACILITIES
18.1 Designation of Pool-Planned Facilities. At the request of a Participant,
the Participants Committee shall designate as "pool- planned" a generating or
transmission facility to be constructed by the Participant or its Related
Person if the Participants Committee determines that the facility is
consistent with NEPOOL planning. The Participants 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 Participants 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 Participants 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 Participants Committee may
determine to be required in order to maintain proper frequency for the
interconnected bulk power system of the Participants and to maintain proper
power flows into and out of the NEPOOL Control Area.
18.4 Review of Participant's Proposed Plans. Each Participant shall submit to
the System Operator, Participants Committee, the Reliability Committee, and
the Markets Committee or the Tariff Committee, as appropriate, for review by
them, in such form, manner and detail as the Participants 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
System Operator or the Participants 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 Participants 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 by this
Section 18.4 may be changed with respect to any such submission by agreement
between the Participants Committee and the Participant required to submit the
plan.
18.5 Participant to Avoid Adverse Effect. If the Participants 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 or the Non- Participant on whose
behalf the Participant has submitted its plan takes such action or constructs
at its expense such facilities as the Participants 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 Participants Committee to address the adverse
effects on reliability or operating characteristics, the negotiations either
address the adverse effects to the satisfaction of the Participants Committee,
or no satisfactory resolution can be achieved on terms acceptable to the
parties within 90 days of the Participant's receipt of the Participants
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.
SECT65535ON 19
EXPENSES
19.1 Annual Fee. Each Participant shall pay to NEPOOL in January of each year
an annual fee, which shall be applied toward NEPOOL expenses, as follows:
(a) Each End User Participant which is a non-profit residential or small
business consumer, or non-profit group representing such entities, shall pay
an annual fee of $500.
(b) Each End User Participant, other than non-profit residential or small
business consumers or non-profit groups representing such entities, shall pay
an annual fee of $500; plus an additional fee of $500 per megawatt hour of its
highest Energy use during any hour in the preceding year (net of any use of
on-site generation) up to a maximum of $5,000; plus an additional fee of $200
per megawatt hour for each megawatt hour by which its highest Energy use
during any hour in the preceding year (net of any use of on-site generation
during such hour) exceeded 20 megawatt hours.
(c) Each Participant which is a Publicly Owned Entity and a member of the
Publicly Owned Entity Sector shall pay an annual fee of $5,000, except that
any such Participant which is engaged in electricity distribution and had
annual Energy sales of less than 30,000 megawatt hours in the preceding year
shall pay an annual fee of $500, and the difference between $5,000 and $500
for each such Participant shall be paid, as an additional fee, by the
remaining Participants which are Publicly Owned Entities and members of the
Publicly Owned Entity Sector.
(d) Each Participant other than an End User Participant or a Publicly Owned
Entity shall pay an annual fee of $5,000.
19.2 NEPOOL Expenses. Commencing on January 1, 1999, most expenses of the
System Operator are recovered by it directly from Participants and Non-
Participants under the ISO's Tariff for Transmission Dispatch and Power
Administration (the "ISO Tariff") or through direct charges for services
rendered by the ISO, and have ceased to be NEPOOL expenses. At that time, the
payment of a portion of NEPEX expenses from the Savings Fund in accordance
with the Prior NEPOOL Agreement also terminated.
Further, commencing on January 1, 1999 through June 30, 1999, 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, except as otherwise provided in Section 19.3, be
allocated among and paid monthly by the Participants in accordance with their
respective voting shares, as determined in accordance with the Agreement
provisions in effect during such period.
Commencing as of July 1, 1999, such balance of NEPOOL expenses for July and
subsequent months shall be divided equally into as many shares as there are
active Sectors pursuant to Sector 6.2 (other than an End User Sector) and each
Sector's share shall be paid monthly by the Participants in each such Sector
(other than an End User Sector) in such manner as the Participants in each
Sector may determine by unanimous vote and advise the ISO, provided that if
the Participants in a Sector fail to agree unanimously on the allocation of
their Sector's share, the Participants in the Sector shall pay for such Sector
share in the same proportion as the vote they are entitled to in the Sector.
Participants in the Sector that are represented by a group voting member shall
subdivide their portion of the Sector's share of expenses in such a manner as
they may determine by unanimous agreement; provided that if there is not
unanimous agreement among the Participants represented by a group member as to
how to allocate their portion of the Sector's share of expenses, such portion
shall be allocated among the Participants represented by that group member as
follows: (i) for each Participant in the Generation Sector represented by a
group voting member, the portion will be allocated in the same proportion that
the Megawatts of generation owned by the Participants represents of the total
Megawatts owned by Participants represented by the group voting member; and
(ii) for Participants in the Transmission Sector, the portion will be
allocated equally among the Participants represented by the group member.
Notwithstanding the foregoing, no portion of such balance shall be paid by End
User Participants and, until such time as an End User Sector is activated, the
monthly share allocated to the Publicly Owned Entity Sector shall be reduced
by one-twelfth of the aggregate annual fees paid by End Users for the year
pursuant to Section 19.1 and one- third of the amount of such reduction shall
be allocated to each of the other three Sectors.
19.3 Restructuring Costs.
(a) The expense of restructuring NEPOOL ("Restructuring Expense"), including
but not limited to (i) software development, hardware and system software
costs for implementation of the Tariff and the new market system, (ii) the
costs of the formation of the Independent System Operator and related
separation costs, (iii) legal and consultant costs related to the amendment of
the NEPOOL Agreement (including the Tariff) and the proceeding with respect
thereto at the Federal Energy Regulatory Commission, and (iv) capital
expenditures and capitalized project costs of the Independent System Operator,
shall be funded (to the extent not already funded) and amortized according to
this Section 19.3.
(b) The Restructuring Expense incurred (other than certain capital
expenditures and capitalized project costs funded separately by the ISO)
before the Second Effective Date (the "Early Restructuring Expense") has been
funded during the period prior to such date by those entities which have been
the Participants during such period. Commencing at the Second Effective Date,
the Early Restructuring Expense shall be amortized in equal monthly amounts
and repaid over the next 60 months with interest thereon at the rate of 8% per
annum from the date of payment. Each month during the first twelve months of
such period each Participant shall pay its percentage "X", as determined
below, of 1/60th of the Early Restructuring Expense, plus accumulated
interest, and each Participant or other Entity which previously paid an
unreimbursed portion of the aggregate Early Restructuring Expense shall be
entitled to receive each month its percentage "Y", as determined below, of the
aggregate amount to be paid for the month, including accumulated interest.
"X" and "Y" shall be determined in accordance with the following formulas:
X = in which
X is the percentage to be paid for a month by a Participant of the
aggregate amount payable pursuant to this subsection (b) by all Participants
for the month.
A is the amount payable by the Participant for the month under Schedule 2
(Energy Administration Services) of the ISO Tariff (as defined in Section
19.2) as amended or revised from time to time.
A1 is the aggregate amount payable by all Participants for the month under
Schedule 2 (Energy Administration Services) of the ISO Tariff as amended or
revised from time to time.
Y = in which
Y is the percentage to be received for a month by a Participant or other
Entity of the aggregate amount to be received pursuant to this subsection (b)
by all Participants or other Entities for the month.
B is the amount of Early Restructuring Expense paid by the Participant or
other Entity which has not previously been reimbursed.
B1 is the aggregate amount of Early Restructuring Expense paid by all
Participants and other Entities which has not previously been reimbursed.
(c) The Restructuring Expense incurred on the Second Effective Date and to
but not including January 1, 2000 or thereafter shall be funded each month by
the Participants in proportion to the Member Fixed Voting Shares (as defined
in Section 6.9(c)) of each Participant as in effect at the beginning of the
month provided, however, that in calculating the allocation of this portion of
the Restructuring Expense, the Member Fixed Voting Shares of End User
Participants that participate in NEPOOL for governance purposes only in
accordance with NEPOOL's Standard Membership Conditions, Waivers and Reminders
("Governance Only End User Participants") shall not be included in such
calculations and the amounts that would otherwise have been payable by such
Governance Only End User Participants will be allocated to all of the other
Participants on the basis of their Member Fixed Voting Shares.
(d) The Restructuring Expense incurred on or after January 1, 2000 (the "Late
Restructuring Expense") shall initially be funded for each month, on an as
incurred basis, by the Participants in proportion to their charges under the
ISO Tariff for the prior month. The aggregate Late Restructuring Expense
funded in any calendar year shall be amortized in equal monthly amounts and
repaid over the next 60 months, commencing in January of the immediately
succeeding calendar year, with interest thereon from the date of payment at
the rate equal to the average Weighted Costs of Capital of all Transmission
Providers in effect on October 20, 1999 (without subsequent adjustment)
determined pursuant to Section II(A)(2)(a) of the Implementation Rule for
Calculating Annual Transmission Revenue Requirements filed as a supplement to
the Tariff. Thus, for example, the Late Restructuring Expense incurred in
2000 will be amortized and repaid over a 60-month period commencing in
January 2001. Each month during the applicable amortization period each
Participant shall pay its share of the portion of the Late Restructuring
Expense being amortized during such period, plus accumulated interest, and
each Participant or other Entity which previously paid an unreimbursed portion
of the aggregate Late Restructuring Expense being amortized during such period
shall be entitled to receive its share of the aggregate amount paid for such
month, including accumulated interest, according to an allocation methodology
that is based on the appropriate schedules of the ISO Tariff, which allocation
methodology will be established under subsection (e) below.
(e) The Participants agree to amend the Agreement within twelve months after
the Second Effective Date to specify how the balance of the Early
Restructuring Expense is to be paid. The Participants agree to amend the
Agreement by November 1, 2000 to provide for the amortization and repayment of
the Late Restructuring Expense, according to an allocation methodology that
is based on the appropriate schedules of the ISO Tariff as approved by the
Commission.
(f) The funding methodology set forth in subsection (d) shall terminate
automatically upon the implementation of a permanent restructuring funding
methodology acceptable to the Participants Committee and the ISO, to the
extent superseded by such permanent restructuring funding methodology.
SECT65535ON 20
INDEPENDENT SYSTEM OPERATOR
(a) The Participants Committee is authorized and directed to approve one or
more agreements to be entered into with the ISO (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, 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 those recovered under the ISO
Tariff, as defined in Section 19.2, and 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 and capitalized project 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 Participants
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 Participants
Committee. For those Participants subject to the Public Utility Holding
Company Act of 1935 ("PUHCA"), any such acquisition by those Participants is
subject to PUHCA approval to the extent such acquisition requires approval
under PUHCA. Unless otherwise agreed by the Participants, the funding of the
acquisition, or lease, of land, structures, fixtures, equipment and
facilities, and other capital and/or capitalized project related expenditures,
or the acquisition of other assets, and the ownership thereof, or the
obligations of Participants as lessees, shall be in accordance with Section
19.3 of this Agreement. 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 Participants 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
Participants Committee any action taken by any other NEPOOL committee, and
shall be entitled to appear before the Participants Committee on any such
appeal. Further, the ISO shall be entitled to submit any dispute with respect
to a vote of the Participants 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 Participants Committee which denies an appeal to
the Participants 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 Participants 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 Participants
Committee within ten days of the action of the Participants Committee and
shall mail a copy of such notice to each member of the Participants 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 Participants Committee's
action. Unless the Board of Directors of the ISO acts within 60 days of the
ISO's notice to the Participants Committee, the Participants 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.
(j) Appointment of Technical Committee Officers. The System Operator shall,
after its chief executive officer has conferred with the Participant members
of the Liaison Committee regarding such appointment(s), appoint the Chair and
Secretary of each of the Technical Committees. Each individual appointed by
the System Operator shall be an independent person not affiliated with any
Participant. Before appointing an individual to the position of Chair or
Secretary, the System Operator shall notify the Committee to which such
officer is being appointed of the proposed assignment and, consistent with its
personnel practices, provide any other information about the individual
reasonably requested by the Committee. In the event that a Technical
Committee determines that the performance of the Chair or Secretary of the
Committee is not satisfactory, the Committee shall provide notice to the
System Operator that such performance deficiencies must be corrected within
60 days. If the Committee determines that the performance deficiencies have
not been corrected within the 60-day period, the Committee may vote to remove
the officer, subject to appeal to the Participants Committee. A vote of the
Technical Committee to remove its officer shall be immediately effective and
binding on the System Operator and shall cause the System Operator to appoint
a replacement officer in accordance with the provisions of this Section 20(j)
unless an appeal to the Participants Committee has been taken prior to the end
of the tenth business day following the vote to remove the officer in which
case the vote for removal shall be subject to the outcome of such appeal. A
vote of the Participants Committee with respect to any such appeal shall be
immediately effective and binding on the System Operator and not subject to
any further appeals.
SECT65535ON 21
MISCELLANEOUS PROVISIONS
21.1 Alternative Dispute Resolution.
A. General:
If the ISO is aggrieved by a vote of the Participants 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 Participants
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 Participants Committee may submit the matter
for resolution hereunder; provided, however, that if the action of the ISO
relates to rulemaking, the Participants 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 Participants 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 Participants Committee shall give written notice to the Secretary
of the Participants Committee within ten business days of the vote, and shall
mail or telecopy a copy of its notice to each member of the Participants
Committee. Where the Participants Committee is seeking review of an action of
the ISO Board, the Participants 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
Participants 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 Participants 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 Participants Committee, the Aggrieved Party's notice to the Participants
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
Participants 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 Participants 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 Participants
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 Participants Committee's right to proceed with the arbitration
if mediation does not resolve the matter within 20 days of the giving of the
Participants Committee's notice or such longer period as may be fixed by
mutual agreement of the ISO Board and the Participants 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 Participants 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 Participants 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
Participants Committee shall attempt to choose by mutual agreement a single
neutral arbitrator to hear the dispute. If the ISO or the Participant and
the Participants Committee fail to agree upon a single arbitrator within ten
calendar days of the giving of notice of arbitration to the Secretary of the
Participants 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 Participants 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 Participants 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 Participants 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 Participants
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 Participants
Committee believes its decision should be upheld by the arbitrator, and
copies of any documents or other materials the Participants Committee wishes
the arbitrator to review. If the Participants 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
Participants 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:
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
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 Participants Committee. In the event
the Non-Participant is aggrieved by the Participants 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
Participants 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 Participants 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 Canada or any state
or province) 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
Participants 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 incurred 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 Participants 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 Participants 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, any Curtailment, 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 event of
Force Majeure affecting any Participant shall excuse that Participant from
making any payment that it is obligated to make under this Agreement. 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 Participants 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 Participants Committee. Any such waiver by the Participants
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 Participants 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 NPCC and NERC 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. Subject to Section 17A and the provisions of this
Section, this Agreement, including the Tariff, and any attachment or exhibit
hereto may be amended from time to time by vote of the Participants in
accordance with Section 6.11.
Any amendment to this Agreement approved in accordance with Section 6.11
and/or Section 17A shall be in writing and shall become effective, and shall
bind all Participants regardless of whether they have executed a ballot in
favor of such amendment, on the date specified in the amendment, subject to
acceptance or approval by the Commission. 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 Agreement.
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 Participants Committee having Member Fixed
Voting Shares equal to at least 70% of the Member Fixed 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, Committees, Committee Members, or the
System Operator.
(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 Participants Committee member or
alternate representing that Participant; (2) mailed, postage prepaid, to the
Participant at the address of its member on the Participants 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 Participants 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 Participants 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
Participants 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 notice, demand, request or other communication required or authorized
by this Agreement to be given to a member or alternate to that member of a
Principal Committee (for the purposes of this Section 21.13, individually or
collectively, the "Committee Member") shall be (1) personally delivered to the
Committee Member; (2) mailed, postage prepaid, to the Committee Member at the
address of the Committee Member set out in the NEPOOL roster; (3) sent by
facsimile ("faxed") to the Committee Member at the fax number of the Committee
Member set out in the NEPOOL roster; or (4) delivered electronically to the
Committee Member at the electronic mail address of the Committee Member set
out in the NEPOOL roster. The designation of any such address may be changed
at any time by written notice delivered to the Secretary of the Principal
Committee on which the Committee Member serves, who shall cause such change to
be reflected in the NEPOOL roster.
(d) Any notice, demand, request or other communication required or authorized
by this Agreement to be given to the System Operator shall be in writing, and
shall be (1) personally delivered to the Participants Committee member or
alternate appointed by the System Operator; (2) mailed, postage prepaid, to
the System Operator at the address of its member on the Participants Committee
as set out in the NEPOOL roster; (3) sent by facsimile ("faxed") to the System
Operator at the fax number of its member on the Participants Committee as set
out in the NEPOOL roster; or (4) delivered electronically to the System
Operator at the electronic mail address of its member on the Participants
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 Participants Committee, who shall cause such change to be
reflected in the NEPOOL roster.
(e) To the extent that the Participants Committee is required to serve upon
any Participant a copy of any document or correspondence filed with the
Commission under the Federal Power Act or the Commission's rules and
regulations thereunder, by or on behalf of any Principal Committee, such
service may be accomplished by electronic delivery to the Participant at the
electronic mail address of its Participants Committee member and alternate.
The designation of any such address may be changed at any time by written
notice delivered to the Secretary of the Participants Committee.
(f) 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, Committee Member, System Operator, or Secretary
of the NEPOOL 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.
ATTACHMENT A
TO RESTATED
NEPOOL AGREEMENT
METHODOLOGY FOR DETERMINATION OF TRANSMISSION FLOWS
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 Reliability
Committee.
B. Periodic Review
Calculations of MW-Mile allocations shall be performed whenever significant
changes to the transmission system load flows, as determined by the
Reliability Committee, 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 Reliability
Committee.
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 Reliability Committee. 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 and for which there are no
arrangements in effect by which other Participants support the facility. For
facilities that are jointly owned and/or supported, each Participant shall be
assigned MW-miles in proportion to the percentage of its ownership of
jointly-owned facilities and/or the percentage of its support for facilities
that are jointly supported to the extent such support payments are included in
the determination of Annual Transmission Revenue Requirements.
EXHIBIT 10.25.2
MODIFICATION AND AMENDMENT OF NUCLEAR FUEL LEASE
This Modification and Amendment is to the Nuclear Fuel Lease dated as of
January 4, 1982, as amended and restated as of February 11, 1992, between
BANKERS TRUST COMPANY, not in its individual capacity but solely as Trustee
(herein in such capacity called "Lessor") under the Trust Agreement dated as
of January 4, 1982, as amended and restated as of February 11, 1992, between
it and State Street Bank and Trust Company of Connecticut, N.A., as Trustor,
and The Connecticut Light and Power Company and Western Massachusetts
Electric Company, as beneficiaries, and THE CONNECTICUT LIGHT AND POWER
COMPANY and WESTERN MASSACHUSETTS ELECTRIC COMPANY, as lessees (herein
collectively called "Lessees").
W I T N E S S E T H :
WHEREAS, Lessor and Lessees entered into a Nuclear Fuel Lease Agreement
dated as of January 4, 1982 which was amended as of March 1, 1983 (the
"Original Nuclear Fuel Lease"); and
WHEREAS, Lessor and Lessees amended and restated the Original Nuclear
Fuel Lease effective as of February 11, 1992 (as so amended and restated, the
"Lease"); and
WHEREAS, the Lessees announced as of July 17, 1998 their intention to
permanently cease operations at Millstone Unit No. 1 ("Unit 1") and on
July 21, 1998 gave certification of such decision to the U.S. Nuclear
Regulatory Commission (the "NRC"); and
WHEREAS, the Lessees have also given certification to the NRC that fuel
has been permanently removed from the reactor vessel of Unit 1; and
WHEREAS, upon docketing of such certifications by the NRC, the Unit 1
license from the NRC no longer authorizes operation of the reactor or
emplacement of or retention of fuel in the reactor vessel; and
WHEREAS, Section 23(a)(ix) of the Lease provides, inter alia, (i) that
it shall be an Event of Termination under the Lease if any license, approval
or consent granted to any Lessee and required for the operation of any Unit
shall be revoked, withdrawn or withheld and such revocation, withdrawal or
withholding shall remain effective, or in Lessees' reasonable judgment which
shall be exercised within ninety days following such revocation, withdrawal
or withholding, is likely to remain effective for a period of eighteen
consecutive calendar months after its date of issuance, and Lessor shall have
given notice to Lessees that Lessor desires to terminate the Lease, and (ii)
that unless Lessor and the Collateral Agent shall have determined in their
reasonable judgment that such revocation, withdrawal or withholding does or
will have a material adverse affect on the financial condition or business
prospects of any Lessee, Lessor may only give notice to Lessees that it
wishes to partially terminate the Lease in accordance with Section 24(a)(vi)
thereof as it applies only to the Unit or Units affected by such revocation,
withdrawal or withholding; and
WHEREAS, the Lessor, the Collateral Agent and Lessees have determined in
their reasonable judgment that it is appropriate that the Lease be partially
terminated pursuant to Section 24(a)(vi) thereof with respect to Unit 1 only;
and
WHEREAS, pursuant to Section 24(a)(vi) of the Lease the Lessees are
required on the Final Settlement Date established pursuant to
Section 24(a)(ii) of the Lease to obtain the release pursuant to
Section 12(b) of all Nuclear Fuel located at or intended to be used in the
Unit or Units as to which any partial termination applies; and
WHEREAS, pursuant to Section 12(b) of the Lease the Lessees are
required, inter alia, in order to obtain the release from the Lease of a
portion (but not all) of the Nuclear Fuel, to pay to Lessor an amount equal
to the SLV for such portion of the Nuclear Fuel to be released; and
WHEREAS, the Majority Lenders (which also constitute the holders of 66
2/3% in aggregate principal amount of all IT Notes outstanding) and the
Collateral Agent have consented to the modification and amendment of the
terms of the Lease to provide for the partial termination of the Lease with
respect to the Unit 1 Nuclear Fuel (as defined below) and the release of such
Unit 1 Nuclear Fuel from the Lease upon alternative terms as set forth below.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, Lessor and
Lessees hereby agree as follows:
1. Unless the context otherwise requires, all capitalized terms used
in this Agreement and not defined herein shall have the meanings specified
therefor in the Lease.
2. Subject to receipt of required regulatory approvals, effective as
of July 17, 1998, the Lease is hereby modified and amended by adding to
Section 24 thereof the following new provision:
(c) Special Partial Termination with Respect to Unit 1.
Notwithstanding any provision to the contrary included in this Lease
including, without limitation, any provision included in Section 12(b),
Section 23(a)(ix), Section 24(a)(ii) or Section 24(a)(vi), this Lease may be
partially terminated with respect to the Nuclear Fuel located at or intended
to be used at Unit 1 (the "Unit 1 Nuclear Fuel") pursuant to
Section 23(a)(ix) upon the following terms:
(i) The Lease may be partially terminated with respect to Unit 1
(the "Unit 1 Partial Termination") in accordance with the provisions of
Section 23(a)(ix) upon the issuance by The Connecticut Light and Power
Company of Sixty-Four Million Eight Hundred Thousand Dollars ($64,800,000) of
collateral first mortgage bonds (the "1999 Series A CL&P Collateral First
Mortgage Bonds") to the Trustee, which 1999 Series A CL&P Collateral First
Mortgage Bonds shall be substantially in the form of Exhibit A-1 hereto, and
the issuance by Western Massachusetts Electric Company of Fifteen Million
Four Hundred Thousand Dollars ($15,400,000) of collateral first mortgage
bonds (the "1999 Series A WMECO Collateral First Mortgage Bonds" and,
together with the 1999 Series A CL&P Collateral First Mortgage Bonds, the
"1999 Series A Collateral First Mortgage Bonds") to the Trustee, which 1999
Series A WMECO Collateral First Mortgage Bonds shall be substantially in the
form of Exhibit A-2 hereto;
(ii) The Final Settlement Date with respect to the Unit 1 Partial
Termination shall be the date of the issuance of the 1999 Series A Collateral
First Mortgage Bonds, and no amount shall be required to be paid to the
Lessor pursuant to Section 24(a)(iii) on such date;
(iii) On the Final Settlement Date, the Unit 1 Nuclear Fuel shall be
released from this Lease pursuant to the provisions of Section 12(b) without
the receipt by the Lessor of any payment with respect to such Unit 1 Nuclear
Fuel;
(iv) Except as set forth in Section 24(c)(v), this Section 24(c) shall
be applicable only to the partial termination of this Lease in connection
with the permanent cessation of operations at Unit 1 and in no event shall be
applicable to any other Event of Termination occurring hereunder;
(v) (A) for purposes only of certain calculations required under this
Lease, "SLV" or "Stipulated Loss Value" shall include Deferred Unit 1 SLV, if
any, and (B) for purposes only of presentation of certain calculations
required under this Lease, the term "Batch" shall be deemed to include an
entry which identifies the amount of Deferred Unit 1 SLV, if any.
3. Subject to the receipt of required regulatory approvals, effective
as of July 17, 1998, the Lease is hereby further modified and amended as
follows:
(a) Annex 1 to Schedule F to the Lease is deleted in its entirety and
the amended Annex 1 to Schedule F attached hereto as Attachment 1 is
substituted in lieu thereof.
(b) The definition of "Batch" in Section 1(a) is amended by adding the
following sentence immediately following the last sentence thereof:
"For purposes only of presentation of certain computations under this
Lease, the Deferred Unit 1 SLV shall be deemed to constitute a "Batch";
provided, however, that no allocation of Fuel Cost or Additional Rent
shall be made pursuant to Section 7 of this Lease to such a Batch which
consists of Deferred Unit 1 SLV."
(c) The definition of "SLV" or "Stipulated Loss Value" in Section
1(a) of the Lease is amended by adding thereto the following sentence:
"In addition, SLV or Stipulated Loss Value shall include for any date as of
which the same is required to be determined the Deferred Unit 1 SLV as of
such date, if any."
(d) Section 1(a) of the Lease shall be further amended by adding
thereto the following additional definitions:
"Deferred Unit 1 SLV" shall mean for any date on or after July 17, 1998
as of which the same is required to be determined an amount equal to
Original Deferred Unit 1 SLV less the aggregate amount, if any, of
Deferred Unit 1 SLV Payments received by the Lessor as of such date.
"Deferred Unit 1 SLV Payment" shall mean any amount paid by a Lessee as
Additional Rent (i) in order to discharge, fully or in part, its payment
obligation under this Lease, and (ii) which relates to or is allocable
to the Nuclear Fuel which was located at or intended for use in Unit 1
as of July 17, 1998 and the SLV of which is included in Original
Deferred Unit 1 SLV.
"Original Deferred Unit 1 SLV" shall mean an amount equal to
$81,065,950.68, which represents the aggregate SLV of all Nuclear Fuel
which as of July 17, 1998 was located at or intended to be used at Unit
1.
4. This Agreement of Modification and Amendment shall be governed by,
and construed in accordance with, the laws of the State of Connecticut.
5. Except as specifically modified and amended by this Agreement of
Modification and Amendment, the Lease shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Modification and
Amendment to be duly executed by their duly authorized officers as of the __
day of May, 1999.
THE CONNECTICUT LIGHT AND POWER COMPANY
By:/s/
Its:
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By:/s/
Its:
BANKERS TRUST COMPANY, not in its individual capacity, but solely as Trustee
of the Niantic Bay Fuel Trust under Trust Agreement dated as of January 4,
1982, as amended and restated by an Amendment to and Restatement of Trust
Agreement dated as of February 11, 1992, between it and the Trustor and the
beneficiaries named therein
By:/s/
Its:
Attachment 1
Amended Annex 1
to Schedule F
ANNEX 1 TO SLV CONFIRMATION SCHEDULE
BASIC RENT PERIOD ENDING , 19
1. Batch Identification Deferred Batch Aggregate
Unit 1 & 2
UF6 Pool
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
2. Description of Nuclear Fuel State
Unit 1 & 2
UF6 Pool
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
3. Physical Location of Fuel
Unit 1 & 2
UF6 Pool
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
4. Person in Possession
Unit 1 & 2
UF6 Pool
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
5. Contract for Possession
Unit 1 & 2
UF6 Pool
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
6. SLV of each Batch as of the end of the prior Basic Rent Period
(Item 13 on Annex 1 to last previous SLV Confirmation Schedule)
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
7. Add: Fuel Cost Incurred or paid by or on behalf of Lessor for each
Batch during this Basic Rent Period (exclusive of capitalized Quarterly
Lease Charges and Additional Rent)
$
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
7a. Add: Fuel Costs (transferred and assigned to new Batch)
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
8. Add: Capitalized Quarterly Lease Charges for each Batch (amounts
allocated to Fuel Cost pursuant to Section 7(b) of the Fuel Lease)
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
9. (a) Add: Additional Rent for each Batch (amounts allocated to
Fuel Cost pursuant to Section 7(b) of the Fuel Lease)
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
(b) Add: Original Deferred Unit 1 SLV
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
(c) Less: Deferred Unit 1 SLV Payment during the Basic Rent Period
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
(d) Deferred Unit 1 SLV (Item 9(b)-Item 9(c))
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
10. Item 6 + Item 7 + Item 8 + Item 9(a) + Item 9(d)
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
11. Less: Burn-up Charge for each Batch for this Basic Rent Period
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
12. Less: SLV of Nuclear Fuel removed from the Fuel Lease pursuant to
Section 12(b) thereof during this Basic Rent Period
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
13. SLV of each Batch at the end of this Basic Rent Period (Item 10 -
Item 11 - Item 12)
Unit 1 & 2
UF6 Pool
$
Unit 3
UF6 Pool
Unit 1&2
U308Pool
Unit 3
U308 Pool
Deferred Unit 1 SLV Batch
Batch No.
Aggregate For All Batches
$
Notes:
Items 1, 6, 7, 9, 11 and 12 are to be inserted by Lessor. All other
items are to be inserted by Lessees.
Item 2 is to include whether the Batch was in Heat Production during the
Basic Rent Period.
Item 8 is to be taken from Line 1, Column 3 and Line 2, Column 2 of
Annex 2 to the Basic Rent Schedule.
Item 11 is to be taken from Item 12 of Annex 1 to the Basic Rent
Schedule.
EXHIBIT A-1
FORM OF 1999 SERIES A CL&P COLLATERAL FIRST MORTGAGE BOND
EXHIBIT A-2
FORM OF 1999 SERIES A WMECO COLLATERAL FIRST MORTGAGE BOND
EXHIBIT 10.55
November 3, 1999
Northeast Utilities
107 Selden Street
Berlin, CT 06037
Dear Sirs:
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the Transaction entered into between Party A and Party
B through the Arranging Agent on the Trade Date specified below (the
"Transaction"). This Confirmation constitutes a "Confirmation" as referred to
in the Agreement specified below.
1. The definitions and provisions contained in the 1991 ISDA Definitions
(the "1991 Swap Definitions"), as supplemented by the 1998 Supplement to
the 1991 Swap Definitions (the "Swap Definitions") and in the 1996 ISDA
Equity Derivatives Definitions (the "Equity Definitions", together with
the Swap Definitions, the "Definitions") (in each case as published by
the International Swaps and Derivatives Association, Inc.) are
incorporated into this Confirmation. In the event of any inconsistency
between the Swaps Definitions and the Equity Definitions, the Equity
Definitions will govern, and between the Definitions and the provisions
and this Confirmation, this Confirmation will govern. References herein
to a "Transaction" shall be deemed to be references to a "Swap
Transaction" for the purposes of the Swap Definitions.
If Party A and Party B are parties to the 1992 ISDA Master Agreement (the
"Agreement"), this Confirmation supplements, forms a part of, and is
subject to such Agreement. If Party A and Party B are not yet parties to
the Agreement, they agree to use their best efforts promptly to
negotiate, execute, and deliver the Agreement through the Arranging
Agent, including Party A's standard form of Schedule and Addendum for
Physical Delivery of Shares attached thereto and made a part thereof,
with such modifications as Party A and Party B shall in good faith agree.
Upon execution and delivery by Party A and Party B of the Agreement,
this Confirmation shall supplement, form a part of, and be subject to
such Agreement. Until Party A and Party B execute and deliver the
Agreement, this Confirmation (together with all other Confirmations of
Transactions previously entered into between them, notwithstanding
anything to the contrary therein) shall supplement, form a part of, and
be subject to the 1992 ISDA Master Agreement, as if, on the Trade Date of
the first such Transaction between them, Party A and Party B had executed
that agreement (incorporating therein Party A's standard form of Schedule
and Addendum for Physical Delivery of Shares) and had specified that the
Automatic Early Termination provisions contained in Section 6(a) of such
agreement would apply.
The Agreement and each Confirmation thereunder will be governed by and
construed in accordance with the laws of the State of New York without
reference to choice of law doctrine.
Party A and Party B expressly acknowledge that, in reliance upon the
other party's entering into the Transaction evidenced by this
Confirmation, each party has made (or refrained from making) substantial
financial commitments and has taken (or refrained from taking) other
material actions.
All payments in connection with this Transaction shall be made in U.S.
Dollars.
In this Confirmation, "Party A" means Credit Suisse Financial Products,
"Party B" means Northeast Utilities and "Arranging Agent" means Credit
Suisse First Boston Corporation, acting solely in its capacity as
Arranging Agent for both Party A and Party B.
2. The terms of the Transaction to which this Confirmation relates are as
follows:
General Terms:
Trade Date: November 3, 1999
Effective Date: November 3, 1999
Termination Date: December 31, 2000 subject to
adjustment in accordance with the
Following Business Day Convention,
the terms of the Party B Net
Settlement Option, the Party A
Optional Termination and the Party B
Optional Termination.
Transaction Type: Equity Forward
Seller: Party A
Buyer: Party B (sometimes also referred to
as the "Issuer").
Shares: Common Shares, par value $5.00, of
Party B.
Closing Price on the Exchange
As of the Business Day Prior
To the Trade Date: $21.0625
Notional Amount: Initially, an amount equal to the
Accumulated Adjusted Principal Share
Amount, up to an amount equal to the
Principal Share Amount, in each case
multiplied by the Initial Share
Price.
Principal Share Amount: The number of Shares that represent
purchase prices in an aggregate
principal amount of $100,000,000.
Accumulated Adjusted Principal
Share Amount: On any Valuation Date during the
Initial Pricing Period the aggregate
number of Shares purchased by Party
A up to the Principal Share Amount,
for which full payment has been made
by Party A.
Initial Share Price: The weighted average of the Average
Share Prices for all Valuation Dates
occurring during the Initial Pricing
Period or, if the last day of a
Calculation Period shall occur prior
to the completion of the Initial
Pricing Period, the weighted average
of the Average Share Price for all
Valuation Dates occurring to and
including the last day of the
relevant Calculation Period.
Average Share Price: For any Valuation Date, the weighted
average price of the Shares purchased
by Party A on such Valuation Date
(plus a $0.04 per share commission
charged by Party A).
Initial Pricing Period: The earlier to occur of (i) the
Business Day that is 22 trading days
prior to the acquisition by Party B
of Yankee Energy System, Inc.
pursuant to the terms of the
Agreement and Plan of Merger dated as
of June 14, 1999 between Yankee
Energy System, Inc. and Party B (the
"Merger Agreement"), which
acquisition is currently expected to
be April 15, 2000, subject to
extension to such later date as is
permitted by the Merger Agreement,
and for which Party B has provided
written notice to Party A through the
Arranging Agent and (ii) the Exchange
Business Day on which Shares with an
aggregate purchase price of
$100,000,000 have been purchased.
Valuation Date: In respect of the Initial Pricing
Period, any Exchange Business Day on
which a Market Disruption Event has
not occurred. In respect of the
Final Pricing Period, any Exchange
Business Day on which a Registration
Suspension Event or Market Disruption
Event has not occurred.
Exclusion Period: The first minute of trading and the
last one-half hour before the
scheduled close of trading on the
Exchange.
Calculation Period: The period from and including a
Calculation Period Interest Reset
Date to but excluding the next
succeeding Calculation Period
Interest Reset Date, provided that,
the first Calculation Period Interest
Reset Date will commence on the
Effective Date and the final
Calculation Interest Period will end
on and exclude the Termination Date.
Calculation Period
Interest Reset Dates: The 15th day of each February, May,
August and November, commencing on
November 15, 1999.
Party A Calculation Period
Payment Dates: The 15th day of each February, May,
August and November, commencing on
November 15, 1999.
Party A Payment: The Dividend Amount (as defined
below).
Party B Calculation Period
Payment Dates: The 15th day of each February, May,
August and November, commencing on
November 15, 1999.
Party B Payment: An amount in U.S. Dollars equal to
the Interest Amount determined as of
the relevant Party B Calculation
Period Payment Date.
Floating Rate Option: USD-LIBOR-BBA
Spread: 2.5% per annum
Designated Maturity: 3 months
Interest Amount/Net
Interest Amount: The payment obligation of Party A and
Party B on such Calculation Period
Payment Dates in respect of the
Dividend Amount (defined below) and
any Interest Amounts shall be
netted, such that the party obligated
to pay the greater amount shall pay
to the other party, through the
Agent, an amount equal to the
difference between such amounts (the
"Net Interest Amount").
For each Calculation Period during
the Initial Pricing Period, an amount
equal to the product of (i) the
weighted average Notional Amount for
such Calculation Period and (ii) USD-
LIBOR-BBA, plus Spread, and for each
Calculation Period thereafter, the
product of the Notional Amount and
ISD-LIBOR-BBA, plus Spread (subject
to adjustment in all cases in
accordance with the Following
Business Day Convention).
In the case either Net Cash Settlement
or Net Share Settlement has been
designated as the Method of
Settlement, the Notional Amount (and
the accrued interest attributable
thereto) shall be reduced during the
Final Reference Share Price Pricing
Period by amounts equal to the Net
Proceeds (defined below) received by
the Selling Agent in respect to sales
of the Shares, which reduction shall
occur on the Business Day on which
such Net Proceeds are received as
immediately available funds by the
Selling Agent. The Calculation Agent
may rely on the information provided
pursuant to "(D)-Physical Settlement"
hereunder unless the Selling Agent
delivers notice of any failure to
receive an anticipated payment in
respect of the Shares sold or because
of any Settlement Disruption Event or
an amendment to the time of payment in
respect of any Shares sold.
Dividend Amount: An amount in USD equal to the sum of:
(i) The aggregate amount in respect of
all dividends declared by the Issuer
to which the record holder of the
Principal Share Amount (provided,
however, that for purpose of
determining the Dividend Amount in
the case either Net Cash Settlement
or Net Share Settlement has been
designated as the Method of
Settlement, the Principal Share
Amount shall be reduced by the number
of Shares sold by the Selling Agent
prior to the record date in respect
of any dividend declared in respect
of the Shares during the Final
Reference Share Price Pricing Period)
would be entitled by virtue of the
occurrence of a dividend record date
during the period from the Effective
Date to the Settlement Date (other
than any Lagging Dividend Payment
Amount or any dividends resulting in
an Adjustment due to a Potential
Adjustment Event); and
(ii) An amount representing the interest
that could have been earned on such
dividends described in (i) at a rate
equal to USD-LIBOR-BBA for a
designated maturity of one month (any
non-conforming period shall be
linearly interpolated by the
Calculation Agent) for the period
from the date that such dividends
were or would have been received, for
which a Party A Calculation Period
Payment Date is a compounding date;
the applicable compounding rate for
each compounding period is USD-LIBOR-
BBA with a designated maturity of one
month, for which the Day Count
Fraction is Actual/360 and the
Following Business Day Convention
will apply, and for which compounding
is applicable to the Settlement Date
Lagging Dividend Payment
Amount: In the event that a dividend is
declared and payable to a holder of
record prior to the Settlement Date
of this Transaction but such dividend
has not been paid on or before such
Settlement Date, Party A agrees to
pay to Party B through the Arranging
Agent an amount equal to the
dividends received by Party A in
respect of the Number of Shares on
the next succeeding Business Day
after the payment is received.
Day Count Fraction: Actual/360
Additional Party B Payment: On the Effective Date, Party B shall
pay to Party A, through the Arranging
Agent, a structuring fee equal to
$1,250,000.
Party A and Party B Final Payments
Termination Settlement
Payment Options: In respect of the Termination Date
(including, in case any Event of
Default or Termination Event has
occurred, the related Early
Termination Date) Party B shall elect
one of the following Settlement
Options (each a "Method of
Settlement"):
(A) Gross Physical
Settlement: Unless Party B has specified Net Cash
Settlement or Net Share Settlement in
accordance with the terms hereof, on
the Settlement Date, Party A will
through the Arranging Agent, deliver
the Principal Share Amount to Party
B, and Party B will pay to Party A an
amount equal to the sum of (i) the
Notional Amount and (ii) the Net
Interest Amount.
(B) Net Cash
Settlement: If Party B has specified Net Cash
Settlement as the Method of
Settlement, the Selling Agent will
sell a number of Shares equal to the
Principal Share Amount, in accordance
with the terms hereof. On the
related Settlement Date, Party A will
pay to Party B, an amount in USD
equal to the product of the Principal
Share Amount and the Final Reference
Share Price, and Party B will pay to
Party A, through the Arranging Agent,
an amount in USD equal to the sum of
(i) the Notional Amount and (ii) the
Net Interest Amount (which will
reduce the amount due from Party B if
the Net Interest Amount is negative).
The payment obligations of Party A
and Party B on such date in respect
of such amounts shall be netted, such
that the party obligated to pay the
greater amount shall pay to the other
party, through the Arranging Agent,
an amount equal to the difference
between such amounts.
If Party A is required to pay such
differences on such Settlement Date
the Selling Agent, from the aggregate
Net Proceeds (defined below) of the
sales of Shares, will pay such
difference to Party B in accordance
with the preceding sentence and pay
the remainder of such proceeds to
Party A. If Party B is obligated to
pay such difference, Party B will pay
such amount to Party A through the
Arranging Agent and the Selling Agent
will pay the aggregate Net Proceeds
of the sales of Shares to Party A.
(C) Net Share
Settlement: If Party B has specified Net Share
Settlement as the Method of
Settlement, the Selling Agent shall
sell, in accordance with the terms
hereof, such number of Shares from
the Principal Share Amount that will
generate aggregate Net Proceeds equal
to the sum of (i) the Notional
Amount, and (ii) the Net Interest
Amount.
If during the Final Reference Share
Price Pricing Period Party A receives
aggregate Net Proceeds equal to the
sum of (i) the Notional Amount and
(ii) the Net Interest Amount (which
will reduce the amount due from Party
B if the Net Interest Amount is
negative) from the sale of a number
of Shares that is less than the
Principal Share Amount, on the
relevant Settlement Date the Selling
Agent shall deliver to Party B, a
number of Shares equal to the excess
of the Principal Share Amount less
such number of Shares sold by the
Selling Agent during such period (the
"Party A Net Share Settlement
Delivery").
If during the Final Reference Share
Price Pricing Period the Selling
Agent sells a number of Shares equal
to the Principal Share Amount and
Party A receives aggregate Net
Proceeds from such sales in an amount
that is less than the sum of (i) the
Notional Amount and (ii) the Net
Interest Amount, Party A shall notify
Party B, through the Arranging Agent,
of such fact, and by 4:30 p.m. New
York time on the second Exchange
Business Day following such
notification Party B shall deliver a
number of additional Shares (which
Party A reasonably estimates is equal
in value to the Shortfall (defined
below)) (the aggregate number of
additional Shares, delivered pursuant
to this Net Share Settlement
methodology, the "Party B Net Share
Settlement Delivery") to the Selling
Agent, which will be sold by the
Selling Agent using the Offering
Method determined pursuant to this
Confirmation as described below (to
the extent that such sales are
required to generate aggregate Net
Proceeds equal to the excess of (A)
the sum of (i) the Notional Amount
and (ii) the Net Interest Amount over
(B) the aggregate Net Proceeds
received by the Selling Agent from
the sale of the Principal Share
Amount (for purposes of determining
the obligation of Party B in
connection with Net Share Settlement,
the term "Shortfall" at anytime and
from time to time means the US Dollar
amount by which the sum of (i) the
Notional Amount plus (ii) the Net
Interest Amount exceeds the aggregate
Net Proceeds, if any, actually
received from the sale of (i) all or
a portion of the Number of Shares
plus (ii) additional Shares delivered
pursuant to the Party B Net Share
Settlement Delivery)). The Selling
Agent shall use its best efforts to
sell only such additional Shares as
shall generate aggregate Net Proceeds
equal to the Shortfall and return the
excess Shares, if any, to Party B. In
the event the additional Shares
delivered by Party B to the Selling
Agent are sold for an amount that is
less than the Shortfall, the Selling
Agent shall notify Party B, through
the Arranging Agent, of such fact and
by 4:30 p.m. New York time on the
second Exchange Business Day
following such notification Party B
shall deliver additional Shares to
Party A, through the Arranging Agent,
and, subject to Party B's delivery of
a Sale Revocation and Designation
Notice (defined below) in connection
with Physical Settlement (defined
below), Party B shall continue to so
deliver additional Shares upon
notification until the aggregate Net
Proceeds received by the Selling
Agent from the sale of all such
Shares delivered by Party B to Party
A results in a Shortfall equal to
zero; provided, however, that
notwithstanding Party B's obligations
set forth in Appendix A hereto, in
the event that Party B is required
pursuant to this paragraph to deliver
additional Shares and is unable to
deliver additional Shares which are
at the time of delivery duly
authorized, validly issued, fully
paid and nonassessable and free of
any liens, claims or encumbrances
(except liens, claims or encumbrances
pursuant to this Transaction), or
Party B otherwise fails to deliver
such additional Shares and such
inability or failure continues for
five Exchange Business Days (the "Net
Share Settlement Incapacity Event"),
such Net Share Settlement shall be
deemed terminated and Party B shall
be obligated to pay Party A within
five Business Days from the date of
the Net Share Settlement Incapacity
Event an amount in cash equal to the
amount of the Shortfall that has not
been received from the sale of
additional Shares as of the date of
the Net Share Settlement Incapacity
Event and the Selling Agent shall
deliver to Party B any additional
Shares received in respect of such
Shortfall and not sold by the Selling
Agent as of the date of the Net Share
Settlement Incapacity Event.
The term "Net Proceeds" in respect of
a sale of Shares shall mean gross
proceeds of such sale less reasonable
and customary discounts, fees,
commissions and expenses (the "Sale
Expenses"), including, but not
limited to, reasonable commissions,
discounts, fees and expenses
customarily payable to
underwriter(s) in the case of a
Registered Offering (defined below)
or to a placement agent in the case
of an Exempt Offering (defined
below), which may include reasonable
amounts customarily payable to the
Selling Agent acting as underwriter
or placement agent, as well as any
additional reasonable fees and
expenses of any dealers engaged by
any such underwriter or placement
agent which are customarily payable.
(D) Physical
Settlement: In the event Party B elects either
Net Cash Settlement or Net Share
Settlement, the Selling Agent agrees
to provide the Calculation Agent and
Party B not later than 5:00 PM on any
Business Day on which it has sold
Shares a report through the Arranging
Agent of the number of Shares sold,
the average sale price and the
aggregate Net Proceeds received by
the Selling Agent from such sales and
a reasonable breakdown of the Sales
Expenses.
At any time after the designation of
the Method of Sale, and if
applicable, the Offering Method, but
prior to the execution and delivery
of any underwriting agreement with
respect to the Shares, Party B may
deliver to the Selling Agent and to
Party A through the Arranging Agent a
revocation of the Net Cash Settlement
or Net Share Settlement Method of
Settlement and request the suspension
of any further sales of Shares in
respect of this Transaction by the
Selling Agent (a "Sale Revocation
and Designation Notice") on the
Business Day immediately following
delivery of such Sale Revocation and
Designation Notice. Receipt of the
Sale Revocation and Designation
Notice shall obligate the Selling
Agent to suspend any sales and
solicitations of orders to buy the
Shares but shall not affect Party A's
obligations to perform any settlement
or delivery of Shares in connection
with sales previously agreed and
sales which are pending agreement on
the date such Sale Revocation and
Designation Notice is received and
which have been agreed before the
close of business on such date. Upon
receipt of a Sale Revocation and
Designation Notice, the Selling Agent
shall report to Party B the number of
Shares that remain unsold (which may
be some or all of the Principal Share
Amount and any additional Shares) as
of the Business Day succeeding
delivery of the Sale Revocation and
Designation Notice (the "Remaining
Shares"). In the event of delivery
of the Sale Revocation and
Designation Notice, Party B shall be
required to deliver to Party A
through the Arranging Agent a cash
amount in respect of the Remaining
Shares such that the amount paid by
Party B to Party A for the Remaining
Shares plus the aggregate Net
Proceeds received by the Selling
Agent from the sale of other Shares
in connection with the Net Cash
Settlement or the Net Share
Settlement equals (i) the Notional
Amount plus (ii) the Net Interest
Amount, and Party A shall be required
to deliver to Party B the Remaining
Shares. Settlement and delivery of
the Remaining Shares and payment
therefor shall be made to the parties
through the Arranging Agent on the
second Business Day after the
delivery of such Sale Revocation and
Designation Notice.
(E) Offering Method Upon receipt of notice designating
either Net Cash Settlement or Net
Share Settlement as the Method of
Settlement, Party B may determine the
offering method (the "Offering
Method") including whether the Shares
to be sold will be offered pursuant
to a registration statement filed or
to be filed (a "Registered Offering")
pursuant to the Securities Act of
1933 (the "1933 Act"), subject to
Party A's consent to a Registered
Offering, which consent shall not be
unreasonably withheld.
If Party B determines the Shares will
be offered in a Registered Offering
and Party A consents to a Registered
Offering (which consent shall not be
unreasonably withheld), Party B (and
to the extent required therein, Party
A) will use their reasonable efforts
to comply in all material respects
with the Registration Procedures set
forth in Appendix A attached hereto.
In the event that Party A, and its
underwriter(s), upon advice from
their respective counsel, reasonably
object to the form or substance of
the registration statement, Party A
will deliver to Party B through the
Arranging Agent a suspension request
stating the reason or reasons for
such objection ("Suspension Request")
and Party B will either (i) modify or
amend the registration statement to
address such reasonable objection(s)
or (ii) suspend the preparation of
such registration statement with
respect to the offering of the
Principal Share Amount. In addition,
if such registration statement has
been filed and identifies either
Party A or the Principal Share Amount
and Party B determines not to amend
or modify, or that it cannot amend or
modify the registration statement to
address Party A's or its
underwriter(s)' reasonable
objections, Party B will withdraw
such registration statement pursuant
to Rule 259 of the 1933 Act if such
registration statement relates solely
to the offering of the Principal
Share Amount. In the event that no
registration statement has been filed
identifying Party A or the Principal
Share Amount and Party B determines
not to amend or modify, or that it
cannot amend or modify the
registration statement to address
Party A's or its underwriter(s)'
reasonable objections, Party B may
within five Business Days of the
delivery of the Suspension Request
determine whether the Principal Share
Amount will be sold pursuant to an
offering that is exempt from the
registration requirements of the 1933
Act (an "Exempt Offering") as the
means of sale in respect of either a
Net Cash Settlement or a Net Share
Settlement or designate Gross
Physical Settlement as the Method of
Settlement. If, however, a
registration statement identifying
Party A or the Principal Share Amount
has been filed and such registration
statement is not amended to address
Party A's or its underwriter(s)
reasonable objections or has been
withdrawn, as set forth herein, then
not later than the third succeeding
Business Day from the receipt of the
Suspension Request Party B shall
deliver to Party A through the
Arranging Agent a notice designating
Gross Physical Settlement as the
Method of Settlement.
In the event Party A delivers to
Party B through the Arranging Agent a
notice that it will not consent to
Party B's determination that the
Principal Share Amount are to be sold
in a Registered Offering as provided
herein, Party B may, within five
Business Days from the delivery of
such notice, either revoke the Net
Cash Settlement or Net Share
Settlement Method of Settlement and
designate Gross Physical Settlement
as the Method of Settlement or elect
to have Party A pursue the
contemplated sale of Shares in
connection with Net Cash Settlement
or Net Share Settlement through an
Exempt Offering. If an Exempt
Offering is pursued and Party B and
its counsel object to the exemption
to be relied on pursuant to which
Shares are to be sold by either Party
A or the Selling Agent or the opinion
of counsel to Party A or any related
documentation to be used in
connection with the Exempt Offering,
Party B may deliver a notice of
suspension to Party A through the
Arranging Agent and Party B may
either (i) designate Gross Physical
Settlement as the Method of
Settlement, (ii) renew its
solicitation of Party A's consent for
a Registered Offering within five
Business Days of its delivery of any
notice of objection or (iii) subject
to the consent of Party A and its
counsel (which consent will not be
unreasonably withheld), request an
alternative Exempt Offering.
Notwithstanding the foregoing, if an
Event of Default or Termination Event
has occurred and is continuing with
respect to Party B, Party B will be
foreclosed from making any
determination as to the Offering
Method and, subject to the terms
hereof and all applicable regulatory
requirements, such determination
shall be in Party A's sole
discretion. In connection with any
Offering Method, Party B shall co-
operate with the reasonable
requirements of Party A and its
underwriter(s) and Party A and its
underwriter(s) shall co-operate with
the reasonable requests of Party B,
including without limitation
providing such additional information
as may reasonably be required so that
any offering document to be used does
not contain any untrue statement of a
material fact or omit to state a
material fact necessary in order to
make the statements made in such
offering document, in light of the
circumstances under which they were
made, not misleading.
Final Reference Share Price: In respect of the number of Shares
sold by the Selling Agent in
connection with a Net Cash Settlement
or a Net Share Settlement, the
average Net Proceeds per Share of all
sales of the Shares sold by the
Selling Agent in (i) transactions on
the Exchange at the exchange prices
received by the Selling Agent, if
any, (ii) a Registered Offering, if
any, based on the public offering
price and (iii) transactions with
recognized dealers or principals in
the private placement market which
are unaffiliated with Party A
pursuant to an Exempt Offering, if
any, and with or through which the
Selling Agent effects any sales of
Shares pursuant to a Net Cash
Settlement or Net Share Settlement,
which may be shortened by the
delivery of a Sale Revocation and
Designation Notice by Party B.
Final Reference
Share Price Pricing Period: The period commencing on the
Termination Date, and continuing
until the completion of the
deliveries and any sales of Shares
related thereto required for Net Cash
Settlement or Net Share Settlement.
Notwithstanding any other provisions
set forth herein, in the event that
the Settlement Date for this
transaction has been delayed to a
date that is the one year anniversary
of the Termination Date for any
reason, including, without
limitation, because a Net Share
Settlement or a Net Cash Settlement
has been designated and the Final
Reference Share Price Pricing Period
has not been completed, or in the
case of any designated Method of
Settlement because of any Market
Disruption Event or Settlement
Disruption Event, then on the
Business Day next succeeding such
anniversary, Party B shall be deemed
to have delivered a Sale Revocation
and Designation Notice to Party A
through the Arranging Agent
suspending any further sales pursuant
to the terms and conditions set forth
in "(D)- Physical Settlement".
Pursuant to such paragraph (D)-
Physical Settlement, on the date such
Sale and Revocation and Designation
Notice is delivered any unsold Shares
shall be deemed to be Remaining
Shares and the payment and delivery
procedures set forth in such
paragraph shall govern the payment
and delivery obligations of the
parties
Settlement Dates: To the extent not otherwise provided
for hereunder, each of (i) the third
Exchange Business Day following the
end of the Final Reference Share
Price Pricing Period in the case of
Net Cash Settlement or Net Share
Settlement, and (ii) the next
Exchange Business day following (a)
the Termination Date that Party B
specifies or is deemed to have
specified in a Termination Notice
hereunder specifying Gross Physical
Settlement as the Method of
Settlement or (b) the Termination
Date that is applicable in the event
Party B is deemed to have specified
Gross Physical Settlement as the
Method of Settlement in the case of
Gross Physical Settlement.
If a Settlement Disruption Event
prevents a Net Share Settlement or a
Net Cash Settlement on the day that
otherwise would have been the
Settlement Date, then the Settlement
Date will be the first succeeding day
on which settlement can take place
through the Clearance System unless a
Settlement Disruption Event prevents
settlement on each of the ten (10)
consecutive Clearance System Business
Days immediately following the
original date that, but for such
Settlement Disruption Event, would
have been the Settlement Date. In
that case, (a) if the Shares can be
delivered in any other commercially
reasonable manner, then the
Settlement Date will be the first day
on which settlement of a sale of
Shares executed on that tenth (10th)
Clearance System Business Day
customarily would take place using
such other commercially reasonable
manner of delivery (which other
manner of delivery will be deemed the
Clearance System for purposes of
delivery of the relevant Shares), and
(b) if the Shares cannot be delivered
in any other commercially reasonable
manner, then the Settlement Date will
be postponed until delivery can be
effected through the Clearance System
or any other commercially reasonable
manner.
Settlement Disruption Event: An event beyond the control of the
parties as a result of which (i) the
Clearance System cannot clear the
transfer of the Shares or (ii) in the
case of any Shares in physical
certificate form, the payment system
for bank fund transfers (e.g. the
Federal Reserve wire payment system)
cannot make electronic funds payments
or otherwise transfer funds in the
ordinary course.
Trading Day: An Exchange Business Day other than
an Exchange Business Day on which (i)
a Market Disruption Event occurs, or
(ii) Party B, by notice to Party A,
through the Arranging Agent, by 8:30
a.m., New York time, determines, on
the advice of counsel respecting
applicable federal securities laws,
that such day shall not be a Trading
Day for one or more purposes of this
Transaction specified by Party B in
accordance with such advice.
Exchange Business Day: Any day that is (or, but for the
occurrence of a Market Disruption
Event, would have been) a Trading Day
on the Exchange other than a day on
which trading on the Exchange is
scheduled to close prior to its
regular weekday closing time.
Market Disruption Event: The occurrence or existence on any
Exchange Business Day of any
suspension of or material limitation
imposed on trading (by reason of
movement in price exceeding limits
permitted by the relevant exchange or
otherwise) on the Exchange in the
Shares, if, in the reasonable
determination of the Calculation
Agent, such suspension or limitation
prevents such day from being used as
a Trading Day.
Exchange: The New York Stock Exchange.
Calculation Agent: Party A, whose determinations and
calculations hereunder as Calculation
Agent will be binding in the absence
of manifest error. Subject to the
foregoing, the Calculation Agent will
have no responsibility for good faith
errors or omissions in making any
determination or calculation as
provided herein.
Selling Agent: Credit Suisse First Boston
Corporation. When selling any Shares
pursuant to this Transaction, the
Selling Agent shall determine the
number of Shares to be sold on any
Trading Day and the price or prices
at which such Shares are sold,
provided, however, that it shall act
in a commercially reasonable manner
and on commercially reasonable terms,
and shall comply with applicable
securities laws, rules and
regulations, applicable to it and the
Transaction (including sales relating
thereto).
Party A and Party B hereby
acknowledge and agree that the
execution and delivery of this
Confirmation by the Selling Agent
does not constitute a commitment or
an obligation of the Selling Agent to
purchase or sell any Shares or any
other security as principal.
Party A Optional
Termination: In addition to any other termination
rights that Party A may have under
the Agreement, in the event of any
Merger Event, the terms of which are
Share-for-Other or Share-for-
Combined, pursuant to which a
registered holder of Shares is
entitled to receive cash
consideration in connection with the
Merger Event, Party A shall have the
right within three Business Days
after the payment of any cash
consideration in connection with the
Merger Event, to cause the
Transaction to terminate in part
before the originally scheduled
Termination Date by giving a
Termination Notice to Party B through
the Arranging Agent, designating a
Termination Date not earlier than
five Business Days after the delivery
date of the Termination Notice and
making the Partial Termination
Payments consisting of (i) a deemed
payment by Party B to Party A by
means of the Merger Termination
Payment (defined below) and (ii) the
payment by Party A to Party B of the
Premium Cash Merger Payment (defined
below) on the date designated as the
Termination Date.
"Merger Termination Payment" means an
amount equal to the product of (i)
the Termination Share Amount (defined
below) and (ii) the Per Share Cash
Component (defined below).
"Termination Share Amount" means the
number of Shares equal to the product
of the Principal Share Amount and a
fraction, the numerator of which is
equal to the Per Share Cash Component
and the denominator if which is equal
to the per share total consideration
of such offer.
"Per Share Cash Component" means the
per share cash component of any offer
to purchase the Shares underlying the
Merger Event.
"Premium Cash Merger Payment" means
the amount equal to the product of
(i) the Termination Share Amount and
(ii) the result of the per share
total consideration of any offer to
purchase the Shares underlying the
Merger Event, minus the Initial Share
Price, provided, however, that such
difference shall not be less than
zero.
Party B Optional Termination: In addition to any other termination
rights that Party B may have under
the Agreement, Party B may elect to
cause this Transaction to terminate
in whole, or in part, before the
originally scheduled Termination Date
for any reason by giving a
Termination Notice to Party A through
the Arranging Agent during the last
five Business Days prior to any Party
B Calculation Period Payment Date and
designating a Termination Date.
Except for the originally scheduled
Termination Date for which no written
notice is required, no Termination
Date designated hereunder may be set
unless Party A has received a written
notice not less than 30 Business
Days, in the case of either Net Cash
Settlement or Net Share Settlement
and not less than two Business Days
in the case of Gross Physical
Settlement in connection with the
relevant Method of Settlement.
Subject to the terms of this
Transaction, Party B shall give Party
A written notice, through the
Arranging Agent of the Method of
Settlement.
Registration Notice: Party B agrees that subsequent to the
Effective Date it will not file any
registration statement, amend a
previously filed registration
statement or commence any of the
procedures set forth in Appendix A
attached hereto with respect to any
Shares that may be sold in connection
with Net Cash Settlement or Net Share
Settlement without providing notice
to, and receiving the consent of,
Party A, which consent shall not be
unreasonably withheld.
Sale Notification: If the Selling Agent sells any Shares
acquired pursuant to this Transaction
in the Initial Transaction or in
either a Net Cash Settlement or a Net
Share Settlement, such sale(s) must
be in accordance with the terms and
conditions set forth herein and the
Selling Agent must notify Party B of
such sale(s) as provided herein by
telephonic notice, promptly confirmed
in writing.
Settlement Terms: In respect of the Termination Date
Party B shall specify whether Gross
Physical Settlement, Net Cash
Settlement or Net Share Settlement is
to apply. In the event Party B fails
to specify the Method of Settlement
as provided herein, Party B shall be
deemed to have specified Gross
Physical Settlement as the Method of
Settlement in respect of such
Termination Date.
Adjustment Events:
Method of Adjustment: Calculation Agent Adjustment.
Extraordinary Events:
Consequences of
Merger Events: Following each Merger Event:
(a) Share-for-Share: Alternative Obligation
(b) Share-for-Other: Alternative Obligation
(c) Share-for-Combined: Alternative Obligation
Nationalization or Insolvency: Cancellation and Payment
3. Miscellaneous
Transfer: Neither the Transaction nor any
interest or obligation in or under
the Transaction may be transferred
(whether by way of security or
otherwise) by either party without
the prior written consent of the
other party, except that a party may
make a transfer of the Transaction
pursuant to a consolidation or
amalgamation with, or merger with or
into, or transfer of all or
substantially all its assets to,
another entity, or upon or after any
default of the other party. Any
purported transfer that is not in
compliance with this paragraph will
be void.
Party B Representation and
Covenants: On each Exchange Business Day during
a Final Reference Share Price Pricing
Period, Party B hereby represents and
warrants to Party A that, unless
Party B notifies Party A, through the
Arranging Agent, that such day is not
a Trading Day, it has publicly
disclosed all material information
necessary for Party B to be able to
purchase or sell Shares in compliance
with applicable federal securities
laws. Party B hereby represents and
warrants to Party A that: (i) it has
entered into this Transaction in
connection with the Share repurchase
program announced publicly on June 3,
1998, and July 13, 1999 for purposes
consistent with those stated in such
public disclosures and (ii) on the
Trade Date and on the Settlement
Date, Party B has available to it
before and immediately after any
purchase of Shares pursuant to this
Transaction such orders, consents or
other authorities as may be required
by the SEC pursuant to rules and
regulations of the Public Utility
Holding Company Act of 1935 (the
"1935 Act"), with respect to the
execution, delivery and performance
of the forward purchase obligations
under this Transaction , and (iii) on
the filing date of any registration
statement or the commencement of any
offer not involving a public offering
in the case of any Net Cash
Settlement or Net Share Settlement,
the offering of Shares (or New Shares
as provided herein), on the
Settlement Date and on each day
during the Final Share Price Pricing
Period, will be made pursuant to the
orders, consents or other
authorizations that may be required
under the rules and regulations
promulgated under the 1935 Act ,
which will be in full force and
effect and, to Party B's knowledge,
will be free of any pending or
overtly threatened proceedings
contemplating the revocation or
modification of such order; provided,
however, in lieu of making the
representations and warranties and
agreeing the covenants set forth in
clauses (i) and (ii), delivering an
opinion of counsel addressing such
matters as Party A may reasonably
request and are customarily provided
in connection with the purchase and
sale of common stock, including,
without limitation, that Party B is
not subject to the 1935 Act, that no
authorization, consent or notice is
required in order for Party B to
perform any purchase or sale
obligation with respect to the Shares
other than any authorizations,
consents, filings or notices that may
be required under the 1933 Act and
any applicable state law that may be
required for the authorization of any
purchase of Shares. Party B also
represents that it is not subject to
regulation by any state, county or
municipal agency, authority, board,
council or similar body having
authority or jurisdiction over Party
B within the meaning of any
applicable state law, order or
regulation or any municipal
government or authority with the
capacity or power to regulate
electric utility or gas utility
companies ("Local Regulators") and
all approvals and consents from or
notices to any Local Regulator
required by Party B to execute and
deliver the Confirmation and to
perform the Transaction and the
related transactions contemplated
thereby have been received or given
and remain in full force and effect.
Party B hereby agrees that from the
Trade Date through and including the
Settlement Date, it will comply in
all material respects with all
corporate or, if applicable, similar
laws affecting its ability to perform
its repurchase obligations under this
Transaction, including any such
requirements of the SEC or any Local
Regulator. In the event that Party B
reasonably believes that at any time
during the term of this Transaction
Party B would be prohibited from
performing its repurchase obligations
under this Transaction as currently
contemplated without delivering
notice to or obtaining the consent of
the SEC or any Local Regulator, Party
B will provide notice thereof through
the Arranging Agent and designate a
date for Settlement, which shall be a
date on which Party B still satisfies
such requirements and for which no
notice or consent is required to
perform the repurchase obligations
contemplated by this Transaction.
Other Provisions: If, notwithstanding any other
provision of this Confirmation, this
Transaction is terminated at a time
when any law, rule or regulation,
including without limitation, the
1935 Act or any applicable state law,
order or regulation, prevents Party B
from repurchasing the Number of
Shares, Gross Physical Settlement
shall not apply. Each party agrees
that if delivery of the Shares on any
Settlement Date is subject to any
restriction imposed by a regulatory
authority (other than the federal
securities laws and the rules of the
SEC affecting Registered or Exempt
Offerings) that materially restricts
or prevents delivery of any such
Shares, the parties will negotiate in
good faith a procedure to effect
settlement of such affected Shares in
a manner which complies with any
relevant rules of such regulatory
authority.
Party B Undertakings: Party B hereby agrees that if it is
the object of any merger,
consolidation, amalgamation of Party
B with or into another entity (and
Party B is not the surviving entity)
or a third party acquires such number
of Shares or the right to control
such number of Shares (or the voting
power thereof) and the acquisition of
such number of Shares or the voting
power with respect thereto results in
the transfer of control of Party B
(within the meaning of Rule 405 of
the 1933 Act), then in the event that
(i) Alternative Obligation is elected
in respect of Consequences of Merger
Event - Share- for-Combined and (ii)
a material portion of Shares are
exchanged or exchangeable for New
Shares (as defined in the Equity
Definitions), then Party B shall
cause the issuer of such New Shares
to undertake and perform each and
every obligation and satisfy each and
every condition precedent of Party B
arising under this Confirmation with
respect to any purchase or sale of
the Shares, including, but not
limited to, the representations,
agreements, and covenants that relate
to the Shares and any purchase or
sale thereof, the exercise or
election of any Method of Settlement
or Offering Method, the participation
and preparation of any materials
relating to any registration
statement in connection with any
Registered Offering of Shares, and
the determinations and decisions
relating thereto, modified in all
cases, mutatis mutandis, to apply to
the issuer and to the New Shares. Any
failure by Party B to cause the
issuer of New Shares to achieve any
undertakings, performance or
satisfaction of any such obligations
to the reasonable satisfaction of
Party A shall be deemed an
irrevocable exercise of Gross
Physical Settlement option as the
Method of Settlement that shall be
deemed to supersede any prior
exercise of any Method of Settlement
Option.
Cessation and Suspension: If at any time during the Term of the
Transaction Party B is subject to any
legal or regulatory requirements
("Legal Requirements") or any
directly related policies or
procedures adopted by Party B with
respect to the Legal Requirements,
which, in Party B's reasonable
judgement requires it, or Party A if
acting on behalf of Party B, to
refrain from purchasing or selling
Shares on any Trading Day, Party B
shall give prompt telephonic notice
of the cessation of any further
purchases or sales of Shares and the
suspension of any further purchases
or sales of Shares (each, a
"Cessation Notice"), which cessation
and suspension shall remain in effect
until further notice from Party B.
Each telephonic notice of a Cessation
Notice shall be promptly confirmed in
writing. Notwithstanding the
foregoing, the delivery of a
Cessation Notice shall not affect any
obligation of Party A to deliver or
receive Shares in settlement of any
purchase or sale of Shares agreed
prior to the delivery of the
Cessation Notice.
Issuer Repurchase Safe Harbor: Assuming that Party B's conduct
complies with the requirements of
rule 10b-18 promulgated under the
1934 Act ("Rule 10b-18"), Party A
will use its best efforts to comply
with the manner of purchase, time,
price and volume requirements of Rule
10b-18 in connection with its
purchase of Shares under this
Transaction.
Limited Liability: No shareholder or trustee of Party B
shall be held to any liability
whatever for the payment of any sum
of money or for damages or otherwise
under this Confirmation, and this
Confirmation shall not be enforceable
against any such trustee in their or
his or her individual capacities or
capacity and this Confirmation shall
be enforceable against the trustees
of Party B only as such, and every
person, firm, association, trust or
corporation having any claim or
demand arising under this
Confirmation and relating to Party B,
its shareholders or trustees shall
look solely to the trust estate of
Party B for the payment or
satisfaction thereof.
Securities Contract: Each party hereby represents to the
other that it intends this
Transaction to be a securities
contract within the meaning of
Section 741 of Bankruptcy Code, as
amended (11 U.S.C. <section>741).
4. Credit Support Documents: Party A: None
Party B: Collateral Appendix
5. Account Details:
Payments to Party A:Citibank, NY
ABA # 021-000-089
A/C: Credit Suisse First Boston Corp.
A/C: 40804388
FFC: Northeast Utilities
A/C #: 2GA3P0
Payments to Party B: Fleet
ABA # 011500010
Acct No.: 50252481
Ref.: NU Share Repurchase
Delivery of Shares
to Party A: To be advised by written notice
within 30 days of the Trade Date
Delivery of Shares
to Party B: To be advised by written notice
within 30 days of the Trade Date
6. U.S. Private Placement Representations
As this Transaction may constitute the sale by Party A to Party B in the
case of this Transaction, and by Party B to Party A in the case of the
Number of Shares, in each case, through Arranging Agent, of a Security
or Securities (as defined in the 1933 Act), in addition to the
representations contained in Section 3 of the Agreement, Party B hereby
represents to Party A in respect of this Transaction and Party A
represents to Party B in respect of the Number of Shares (for purposes
of this Section 6, the representation of Party A with respect to
Securities shall be made with respect to the Number of Shares and the
representation of Party B shall be made with respect to the Transaction,
in accordance with Section 3 of the Agreement), as follows:
(a) Each party is acquiring such Securities through the Arranging Agent
for its own account as principal, for investment purposes only, and
not with a view to, or for, resale, distribution or
fractionalization thereof, in whole or in part, and no other person
has a direct or indirect beneficial interest in any such Securities
acquired by it through the Arranging Agent;
(b) Each party understands that the offer and sale by the other party,
through the Arranging Agent, of such Securities are intended to be
exempt from registration under the 1933 Act, by virtue of Section
4(2) thereof. In furtherance thereof, each Party represents and
warrants that (i) it has the financial ability to bear the economic
risk of its investment and has adequate means of providing for its
current needs and other contingencies, (ii) it is experienced in
investing in forward purchase contracts and similar instruments and
has determined that such securities are a suitable investment for
it, and (iii) it is an institution that qualifies as an "accredited
investor" as that term is defined in Regulation D under the 1933
Act; and
(c) Each party has been given the opportunity to ask questions of, and
receive answers from, the other party through the Arranging Agent
concerning the terms and conditions of such Securities and
concerning the financial condition and business operations of the
other party and has been given the opportunity to obtain such
additional information necessary in order for each party to
evaluate the merits and risks of purchase of such Securities to the
extent the issuer of the Securities possesses such information or
can acquire it without unreasonable effort or expense.
(d) The Shares shall bear a legend substantially as set forth below:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"ACT") OR ANY STATE SECURITIES LAWS ("BLUE SKY LAW") ANY MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE BLUE
SKY LAW OR UNLESS SUCH SALE, TRANSFER, PLEDGE OR OTHER
DISPOSITION IS EXEMPT FROM REGISTRATION THEREUNDER.
THE SALE, TRANSFER, PLEDGE OR OTHER DISPOSTION OF THIS
SECURITY IS SUBJECT TO THE AGREEMENT BETWEEN THE ISSUER,
CREDIT SUISSE FIRST BOSTON CORPORATION, AS ARRANGING AGENT,
AND CREDIT SUISSE FINANCIAL PRODUCTS DATED NOVEMBER 3, 1999
(THE "AGREEMENT").
Each party hereby acknowledges that it understands and agrees that
disposition of any such Securities is restricted in the manner set forth
under the Agreement, the 1933 Act and state securities laws. For
example, such Securities have not been registered under the 1933 Act or
under the securities laws of certain states and, therefore, cannot be
resold, pledged, assigned or otherwise disposed of unless they have been
registered under the 1933 Act and under the applicable laws of such
states or an exemption from such registration is available.
9. Matters relating to the Arranging Agent:
(a) As a broker-dealer registered with the SEC, Credit Suisse First
Boston Corporation in its capacity as Arranging Agent will be
responsible for (i) effecting this Transaction, (ii) issuing all
required confirmations and statements to Party A and Party B, (iii)
maintaining books and records relating to this Transaction as
required by Rules 17a-3 and 17a-4 under the Securities Exchange Act
of 1934 (the "1934 Act") and (iv) unless otherwise requested by
Party B, receiving, delivering, and safeguarding Party B's funds
and any securities in connection with this Transaction, in
compliance with Rule 15c3-3 under the Exchange Act.
(b) Credit Suisse First Boston Corporation is acting in connection with
this Transaction solely in its capacity as Arranging Agent for
Party A and Party B pursuant to instructions from Party A and Party
B. Credit Suisse First Boston Corporation shall have no
responsibility or personal liability to Party A or Party B arising
from any failure by Party A or Party B to pay or perform any
obligations hereunder, or to monitor or enforce compliance by Party
A or Party B with any obligation hereunder, including without
limitation, any obligations to maintain collateral. Each of Party
A and Party B agrees to proceed solely against the other to collect
or recover any securities or monies owing to it in connection with
or as a result of this Transaction. Credit Suisse First Boston
Corporation shall otherwise have no liability in respect of this
Transaction, except for its gross negligence or wilful misconduct
in performing its duties as Arranging Agent.
(c) Any and all notices, demands, or communications of any kind
relating to this Transaction, including without limitation, any
option exercise notice, between Party A and Party B shall be
transmitted exclusively through the Arranging Agent at the
following address:
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, NY 10010
Facsimile No.: (212) 325-8175
Telephone No.: (212) 325-8678
Attention: Ricardo Harewood
(d) The date and time of the Transaction evidenced hereby will be
furnished by the Arranging Agent to Party A and Party B upon
written request.
(e) The Arranging Agent will furnish to Party B upon written request a
statement as to the source and amount of any remuneration received
or to be received by the Arranging Agent in connection with the
Transaction evidenced hereby.
(f) Party A and Party B each represents and agrees (i) that this
Transaction is not unsuitable for it in the light of such party's
financial situation, investment objectives and needs and (ii) that
it is entering into this Transaction in reliance upon such tax,
accounting, regulatory, legal and financial advice as it deems
necessary and not upon any view expressed by the other or the
Arranging Agent.
(g) Party A and Party B each is aware of and agrees to be bound by the
rules of the National Association of Securities Dealers, Inc.
("NASD") applicable to the Transaction and is aware of and agrees
not to violate, either alone or in concert with others, any
applicable position or exercise limits established by the NASD.
Credit Suisse Financial Products is regulated by The Securities and Futures
Authority and has entered into this transaction as principal.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Yours sincerely,
CREDIT SUISSE FIRST BOSTON CORPORATION, solely
in its capacities as Arranging Agent and
Selling Agent
By:
Name:
Title:
CREDIT SUISSE FINANCIAL PRODUCTS
By:
Name:
Title:
Confirmed as of the date first written above:
NORTHEAST UTILITIES
By:
Name:
Title:
APPENDIX A
TO
CONFIRMATION OF TRANSACTION
BETWEEN
CREDIT SUISSE FINANCIAL PRODUCTS
AND
NORTHEAST UTILITIES
CSFP REFERENCE TRN [.]
Unless otherwise agreed in writing by Party A and Party B with respect to
specific sales of Shares by the Selling Agent or specific Shares to be
delivered to the Selling Agent by Party B, the provisions of this Appendix A
shall apply to all Shares in satisfaction of a Party B Net Cash Settlement or
Net Share Settlement Delivery including the resale of the Number of Shares
which were acquired in a transaction not involving any public offering and,
in the case of Net Share Settlement, any additional Shares (collectively, the
"Shares").
(a) Party B shall have reserved and have available, out of its authorized
but unissued capital stock, for the purpose of effecting the payment of any
Party B Net Cash or Net Share Settlement Delivery in Shares as provided in
the Confirmation, the full number of shares of capital stock that would then
be issuable with respect to such payment.
(b) Party B shall have filed with the SEC a registration statement on Form
S-3 or such other form as is acceptable to Party A; such registration
statement shall have been declared effective with respect to such Shares (the
"Registration Statement") and no stop order suspending the effectiveness of
the Registration Statement shall be in effect, and no proceedings for such
purpose shall be pending before or threatened by the Commission. Party B, at
the request of Party A, shall deliver an underwriting agreement naming Party
A, or its designee, as underwriter, together with such other agreements,
certificates and instruments as Party A may reasonably require either
pursuant to such underwriting agreement or as are customarily provided
together with such underwriting agreement.
(c) Party B shall have registered or qualified such Shares under such
securities or "blue sky" laws of such States and other jurisdictions in the
United States and Puerto Rico as Party A or any underwriter shall have
reasonably requested, and shall have done any and all other acts and things
as may be reasonably necessary to be done by Party B to enable Party A or any
underwriter to consummate the disposition in such jurisdictions of the Shares
covered by the Registration Statement; provided that Party B shall not be
required to make any filing or take any action as a result of this paragraph
(c) that would required it to qualify as a foreign corporation or file a
general consent to service of process in any jurisdiction.
(d) Party B shall have caused such Shares and the issuance thereof to be
registered with or approved by such other governmental agencies or
authorities in the United States as may be reasonably necessary to be done by
Party B to enable Party A or any underwriter to consummate the disposition of
such Shares.
(e) Party B shall have (i) given Party A and its underwriter(s), if any, and
their respective counsel and accountants, the opportunity to participate in
the preparation of all materials filed with the SEC or any other governmental
agency (the "Filed Materials") prior to the first day of such Final Reference
Share Price Pricing Period, (ii) furnished to each of them copies of all such
Filed Materials (and all documents incorporated therein by reference)
sufficiently in advance of filing to provide them with a reasonable
opportunity to review such documents and comment thereon, (iii) given each of
them such opportunities to discuss the business of Party B with its officers
and the independent public accountants who have issued a report on its
financial statement as shall be reasonably necessary, in the opinion of Party
A and such underwriter(s) or their respective counsel, to conduct a
reasonable investigation (within the meaning of the 1933 Act, as amended)
with respect to such Filed Materials, (iv) delivered to Party A and its
underwriter(s), if any, the financial statements of Party B filed with the
SEC, (v) included in such Filed Materials material, furnished to Party B in
writing, which in the reasonable judgment of Party A or its underwriter(s),
if any, subject to the consent of Party B (which shall not be unreasonably
withheld), should be included with respect to Party A, Party A's
underwriter(s) and the "Plan of Distribution", including, without limitation,
language to the effect that the holding by Party A of the Shares is not to be
construed as a recommendation by Party A of the investment quality thereof
and (vi) if requested by Party A, deleted from such Filed Materials any
reference to Party A if in the written opinion of counsel to Party A, in form
and substance to Party B, such reference to Party A by name or otherwise is
not required by the 1933 Act or any similar Federal statute then in force.
(f) Party B shall have furnished to Party A and any underwriter, addressed
to Party A and any such underwriter and dated the first day of the Final
Reference Share Price Pricing Period, (i) an opinion of counsel for Party B
(which opinion may be from internal counsel for Party B) and (ii) a "cold
comfort" letter signed by the independent public accountants who have issued
a report on Party B's financial statements included in such Registration
Statement, covering substantially the same matters with respect to such
Shares and the offering, sale and issuance thereof as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriter(s) in underwritten public offerings of securities and, in the
case of the accountants' letter, such other financial matters as Party A may
have reasonably requested.
(g) Party B shall have complied with all applicable provisions of the 1933
Act and the 1934 Act and the Public Utility Holding Company Act of 1935, all
applicable rules of the SEC and all other applicable laws, rules and
regulations of any governmental or regulatory authority with respect to such
Filing Materials and such Shares and the offering, sale and issuance thereof.
(h) Party B shall have caused all such Shares to be listed on the Exchange
and on each securities exchange on which Party B has caused similar
securities issued by Party B to be listed.
(i) Party B shall have provided a transfer agent and registrar for such
Shares.
(j) Party B shall have taken such other actions as Party A or any
underwriter of such Shares shall have reasonably requested in order to
expedite or facilitate the disposition of such Shares.
(k) Party B shall provide Party A and its underwriter(s), if any, with
indemnity and contribution in form and substance acceptable to Party A
covering such matters relating to the Shares, the Filed Materials, and such
other matters as Party A shall reasonably request.
(l) Party B shall have paid all customary costs and expenses reasonably
incurred in connection with the foregoing, provided, that unless otherwise
agreed, Party A and its underwriter(s) shall be responsible for the fees and
expenses of their respective counsel.
(m) Party B shall deliver all such registered Shares through the Clearance
System.
EXHIBIT 10.56
December 9, 1999
Bank One Deal #
Northeast Utilities
107 Selden Street
Berlin, CT 06037
Dear Sirs:
The purpose of this letter agreement, including Appendices A, B and C attached
hereto, (this "Confirmation") is to confirm the terms and conditions of the
Transaction entered into between Party A and Party B on the Trade Date
specified below (the "Transaction"). Appendix C shall constitute a Credit
Support Annex for purposes of the Transaction. This Confirmation constitutes
a "Confirmation" as referred to in the Agreement specified below.
1. The definitions and provisions contained in the 1991 ISDA Definitions
(the "1991 Swap Definitions"), as supplemented by the 1998 Supplement to
the 1991 Swap Definitions (together, the "Swap Definitions") and in the
1996 ISDA Equity Derivatives Definitions (the "Equity Definitions",
together with the Swap Definitions, the "Definitions") (in each case as
published by the International Swaps and Derivatives Association, Inc.)
are incorporated into this Confirmation. In the event of any
inconsistency between the Swaps Definitions and the Equity Definitions,
the Equity Definitions will govern, and between the Definitions and the
provisions and this Confirmation, this Confirmation will govern.
References herein to a "Transaction" shall be deemed to be references to
a "Swap Transaction" for the purposes of the Swap Definitions.
If Party A and Party B are parties to the 1992 ISDA Master Agreement (the
"Agreement"), this Confirmation supplements, forms a part of, and is
subject to such Agreement. If Party A and Party B are not yet parties to
the Agreement, they agree to use their best efforts promptly to
negotiate, execute, and deliver the Agreement, including Party A's
standard form of Schedule, with such modifications as Party A and Party B
shall in good faith agree. Upon execution and delivery by Party A and
Party B of the Agreement, this Confirmation shall supplement, form a part
of, and be subject to such Agreement. Until Party A and Party B execute
and deliver the Agreement, this Confirmation (together with all other
Confirmations of Transactions previously entered into between them,
notwithstanding anything to the contrary therein) shall supplement, form
a part of, and be subject to the terms in the pre-printed 1992 ISDA
Master Agreement, as if, on the Trade Date of the first such Transaction
between them, Party A and Party B had executed that agreement
(incorporating therein Party A's standard form of Schedule) and had
specified that the Automatic Early Termination provisions contained in
Section 6(a) of such agreement would not apply.
The Agreement and each Confirmation thereunder will be governed by and
construed in accordance with the laws of the State of New York without
reference to choice of law doctrine.
Party A and Party B expressly acknowledge that, in reliance upon the
other party's entering into the Transaction evidenced by this
Confirmation, each party has made (or refrained from making) substantial
financial commitments and has taken (or refrained from taking) other
material actions.
All payments in connection with this Transaction shall be made in U.S.
Dollars.
In this Confirmation, "Party A" means Bank One, NA (Illinois) and "Party
B" means Northeast Utilities.
2. The terms of the Transaction to which this Confirmation relates are as
follows:
General Terms:
Trade Date: December 9, 1999
Effective Date: December 9, 1999
Termination Date: December 31, 2000 subject to
adjustment in accordance with the
Modified Following Business Day
Convention, the terms of the Party B
Net Settlement Option, the Party A
Optional Termination and the Party B
Optional Termination.
Transaction Type: Equity Forward
Seller: Party A
Buyer: Party B (sometimes also referred to
as the "Issuer").
Shares: Common Shares, par value $5.00, of
Party B.
Closing Price on the Exchange
As of the Business Day Prior
To the Trade Date: $ 21.25
Notional Amount: Initially, an amount equal to the
Accumulated Adjusted Principal Share
Amount, up to an amount equal to the
Principal Share Amount, in each case
multiplied by the Initial Share
Price.
Principal Share Amount: The number of Shares that represent
purchase prices in an aggregate
principal amount of $115,000,000.
Accumulated Adjusted Principal
Share Amount: On any Valuation Date during the
Initial Pricing Period the aggregate
number of Shares purchased by Party
A up to the Principal Share Amount,
for which full payment has been made
by Party A.
Initial Share Price: The weighted average of the Average
Share Prices for all Valuation Dates
occurring during the Initial Pricing
Period or, if the last day of a
Calculation Period shall occur prior
to the completion of the Initial
Pricing Period, the weighted average
of the Average Share Price for all
Valuation Dates occurring to and
including the last day of the
relevant Calculation Period.
Average Share Price: For any Valuation Date, the weighted
average price of the Shares purchased
by Party A on such Valuation Date
(plus a $.04 per share commission
charged by Party A).
Initial Pricing Period: The earlier to occur of (i) the
Business Day that is 22 Trading Days
prior to the acquisition by Party B
of Yankee Energy System, Inc.
pursuant to the terms of the
Agreement and Plan of Merger dated as
of June 14, 1999 between Yankee
Energy System, Inc. and Party B (the
"Merger Agreement"), which
acquisition is currently expected to
be April 15, 2000, subject to
extension to such later date as is
permitted by the Merger Agreement,
and for which Party B has provided
written notice to Party A and (ii)
the Exchange Business Day on which
Shares with an aggregate purchase
price of $115,000,000 have been fully
purchased by Party A.
Appendix B: As promptly as practicable after
Party A has completed its purchases
for a given Trading Day during the
Initial Pricing Period, Party A and
Party B shall update Appendix B
hereto in which the parties shall
specify (i) the Trading Day on which
Party A acquired Shares, (ii) the
Accumulated Adjusted Principal Share
Amount acquired by Party A on such
Trading Day, (iii) the Average Share
Price at which Shares were acquired
by Party A on such Trading Day, (iv)
the product of (a) the Accumulated
Adjusted Principal Share Amount
acquired by Party A on each such
Trading Day and (b) the Average Share
Price for such Trading Day, and (v)
an amount, expressed as a percentage,
equal to the USD-LIBOR-BBA as in
effect on two Business Days prior to
the Funding Day relating to such
Trading Day. Party A shall send
Party B a revised Appendix B. Party
B shall review the revised Appendix B
containing Party A's revisions
thereto and return it to Party A or
notify Party A of any disagreement
with respect to such revisions. If
Party B does not notify Party A of a
disagreement with respect to such
revisions by the close of business on
the second Exchange Business Day
following actual receipt of the
revised Appendix B by Party B, Party
B shall be deemed to have agreed to
Party A's revisions thereto, absent
manifest error.
Valuation Date: In respect of the Initial Pricing
Period, any Exchange Business Day on
which a Market Disruption Event has
not occurred. In respect of the
Final Pricing Period, any Exchange
Business Day on which a Registration
Suspension Event or Market Disruption
Event has not occurred.
Exclusion Period: The first minute of trading and the
last one-half hour before the
scheduled close of trading on the
Exchange.
Calculation Period: The period from and including a
Calculation Period Interest Reset
Date to but excluding the next
succeeding Calculation Period
Interest Reset Date, provided that,
the first Calculation Period Interest
Reset Date will commence on the
Effective Date and the final
Calculation Interest Period will end
on and exclude the Termination Date.
Calculation Period
Interest Reset Dates: The 15th day of each January, April,
July and October, commencing on
January 15, 2000.
Party A Calculation Period
Payment Dates: The 15th day of each January, April,
July and October, commencing on
January 15, 2000.
Party A Payment: The Dividend Amount (as defined
below).
Party B Calculation Period
Payment Dates: The 15th day of each January, April,
July and October, commencing on
January 15, 2000.
Party B Payment: An amount in U.S. Dollars equal to
the Interest Amount determined as of
the relevant Party B Calculation
Period Payment Date.
Floating Rate Option: USD-LIBOR-BBA
Spread: 2.50%
Designated Maturity: Three Months
Interest Amount/Net
Interest Amount: The payment obligation of Party A and
Party B on such Calculation Period
Payment Dates in respect of the
Dividend Amount (defined below) and
any Interest Amounts shall be netted,
such that the party obligated to pay
the greater amount shall pay to the
other party an amount equal to the
difference between such amounts (the
"Net Interest Amount").
For each Calculation Period during
the Initial Pricing Period, an amount
equal to the sum of each of the
products of (a) the Notional Amount
acquired by Party A on any Trading
Day, and (b) for each such Trading
Day, (i) the number of calendar days
from and including the related
Funding Day to and including the last
day of the most current Calculation
Period, divided by (ii) three hundred
sixty (360), and (c) USD-LIBOR-BBA
(using an agreed upon interpolated
designated maturity) in effect on the
second Business Day prior to a
Funding Day, plus Spread; and for
each Calculation Period thereafter,
the product of the Notional Amount
and USD-LIBOR-BBA, plus the Spread
(subject to adjustment in all cases
in accordance with the Modified
Following Business Day Convention).
In the case either Net Cash
Settlement or Net Share Settlement
has been designated as the Method of
Settlement, the Notional Amount (and
the accrued interest attributable
thereto) shall be reduced during the
Final Reference Share Price Pricing
Period by amounts equal to the Net
Proceeds (defined below) received by
Party A in respect to sales of the
Shares, which reduction shall occur
on the Business Day on which such Net
Proceeds are received as immediately
available funds by Party A. The
Calculation Agent may rely on the
information provided pursuant to
"(D)-Physical Settlement" hereunder
unless Party A delivers notice of any
failure to receive an anticipated
payment in respect of the Shares sold
or because of any Settlement
Disruption Event or an amendment to
the time of payment in respect of any
Shares sold.
Dividend Amount: An amount in USD equal to the sum of:
(i) The aggregate amount in respect of
all dividends declared by the Issuer
to which the record holder of the
Principal Share Amount (provided,
however, that for purpose of
determining the Dividend Amount in
the case either Net Cash Settlement
or Net Share Settlement has been
designated as the Method of
Settlement, the Principal Share
Amount shall be reduced by the number
of Shares sold by Party A prior to
the record date in respect of any
dividend declared in respect of the
Shares during the Final Reference
Share Price Pricing Period) would be
entitled by virtue of the occurrence
of a dividend record date during the
period from the Effective Date to the
Settlement Date (other than any
Lagging Dividend Payment Amount or
any dividends resulting in an
Adjustment due to a Potential
Adjustment Event); and
(ii) An amount representing the interest
that could have been earned on such
dividends described in (i) at a rate
equal to USD-LIBOR-BBA for a
designated maturity of one month (any
non-conforming period shall be
linearly interpolated by the
Calculation Agent) for the period
from the date that such dividends
were or would have been received, for
which a Party A Calculation Period
Payment Date is a compounding date;
the applicable compounding rate for
each compounding period is USD-LIBOR-
BBA with a designated maturity of one
month, for which the Day Count
Fraction is Actual/360 and the
Following Business Day Convention
will apply, and for which compounding
is applicable to the Settlement Date
Lagging Dividend Payment
Amount: In the event that a dividend is
declared and payable to a holder of
record prior to the Settlement Date
of this Transaction but such dividend
has not been paid on or before such
Settlement Date, Party A agrees to
pay to Party B an amount equal to the
dividends received by Party A in
respect of the Number of Shares on
the next succeeding Business Day
after the payment is received.
Day Count Fraction: Actual/360
Party A and Party B Final Payments
Termination Settlement
Payment Options: In respect of the Termination Date
(including, in case any Event of
Default or Termination Event has
occurred, the related Early
Termination Date) Party B shall elect
one of the following Settlement
Options (each a "Method of
Settlement"):
(A) Gross Physical
Settlement: Unless Party B has specified Net Cash
Settlement or Net Share Settlement in
accordance with the terms hereof, on
the Settlement Date, Party A will
deliver the Principal Share Amount to
Party B, and Party B will pay to
Party A an amount in USD equal to the
sum of (i) the Notional Amount and
(ii) the Net Interest Amount.
(B) Net Cash
Settlement: If Party B has specified Net Cash
Settlement as the Method of
Settlement, Party A will sell a
number of Shares equal to the
Principal Share Amount, in accordance
with the terms hereof. On the
related Settlement Date, Party A will
pay to Party B, an amount in USD
equal to the product of the Principal
Share Amount and the Final Reference
Share Price, and Party B will pay to
Party A an amount in USD equal to the
sum of (i) the Notional Amount and
(ii) the Net Interest Amount (which
will reduce the amount due from Party
B if the Net Interest Amount is
negative). The payment obligations of
Party A and Party B on such date in
respect of such amounts shall be
netted, such that the party obligated
to pay the greater amount shall pay
to the other party an amount equal to
the difference between such amounts.
If Party A is required to pay such
differences on such Settlement Date
from the aggregate Net Proceeds
(defined below) of the sales of
Shares, Party A will pay such
difference to Party B in accordance
with the preceding sentence and shall
retain the remainder of such
proceeds. If Party B is obligated to
pay such difference, Party B will pay
such amount to Party A.
(C) Net Share
Settlement: If Party B has specified Net Share
Settlement as the Method of
Settlement, Party A shall sell, in
accordance with the terms hereof,
such number of Shares from the
Principal Share Amount that will
generate aggregate Net Proceeds equal
to the sum of (i) the Notional Amount
and (ii) the Net Interest Amount.
If during the Final Reference Share
Price Pricing Period Party A receives
aggregate Net Proceeds equal to the
sum of (i) the Notional Amount and
(ii) the Net Interest Amount (which
will reduce the amount due from Party
B if the Net Interest Amount is
negative) from the sale of a number
of Shares that is less than the
Principal Share Amount, on the
relevant Settlement Date Party A
shall deliver to Party B a number of
Shares equal to the excess of the
Principal Share Amount less such
number of Shares sold by Party A
during such period (the "Party A Net
Share Settlement Delivery").
If during the Final Reference Share
Price Pricing Period Party A sells a
number of Shares equal to the
Principal Share Amount and Party A
receives aggregate Net Proceeds from
such sales in an amount that is less
than the sum of (i) the Notional
Amount and (ii) the Net Interest
Amount, Party A shall notify Party B
of such fact, and by 4:30 p.m. New
York time on the second Exchange
Business Day following such
notification Party B shall deliver a
number of additional Shares (which
Party A reasonably estimates is equal
in value to the Shortfall (defined
below)) (the aggregate number of
additional Shares, delivered pursuant
to this Net Share Settlement
methodology, the "Party B Net Share
Settlement Delivery") to Party A,
which will be sold by Party A using
the Offering Method determined
pursuant to this Confirmation as
described below (to the extent that
such sales are required to generate
aggregate Net Proceeds equal to the
excess of (A) the sum of (i) the
Notional Amount and (ii) the Net
Interest Amount over (B) the
aggregate Net Proceeds received by
Party A from the sale of the
Principal Share Amount (for purposes
of determining the obligation of
Party B in connection with Net Share
Settlement. The term "Shortfall" at
anytime and from time to time means
the US Dollar amount by which the sum
of (i) the Notional Amount and (ii)
the Net Interest Amount exceeds the
aggregate Net Proceeds, if any,
actually received from the sale of
(i) all or a portion of the Number of
Shares plus (ii) additional Shares
delivered pursuant to the Party B Net
Share Settlement Delivery)). Party A
shall use its best efforts to sell
only such additional Shares as shall
generate aggregate Net Proceeds equal
to the Shortfall and return the
excess Shares, if any, to Party B. In
the event the additional Shares
delivered by Party B to Party A are
sold for an amount that is less than
the Shortfall, Party A shall notify
Party B of such fact and by 4:30 p.m.
New York time on the second Exchange
Business Day following such
notification Party B shall deliver
additional Shares to Party A and,
subject to Party B's delivery of a
Sale Revocation and Designation
Notice (defined below) in connection
with Physical Settlement (defined
below), Party B shall continue to so
deliver additional Shares upon
notification until the aggregate Net
Proceeds received by Party A from the
sale of all such Shares delivered by
Party B to Party A results in a
Shortfall equal to zero; provided,
however, that notwithstanding Party
B's obligations set forth in Appendix
A hereto, in the event that Party B
is required pursuant to this
paragraph to deliver additional
Shares and is unable to deliver
additional Shares which are at the
time of delivery duly authorized,
validly issued, fully paid and
nonassessable and free of any liens,
claims or encumbrances (except liens,
claims or encumbrances pursuant to
this Transaction), or Party B
otherwise fails to deliver such
additional Shares and such inability
or failure continues for five
Exchange Business Days (the "Net
Share Settlement Incapacity Event"),
such Net Share Settlement shall be
deemed terminated and Party B shall
be obligated to pay Party A within
five Business Days from the date of
the Net Share Settlement Incapacity
Event an amount in cash equal to the
amount of the Shortfall that has not
been received from the sale of
additional Shares as of the date of
the Net Share Settlement Incapacity
Event and Party A shall deliver to
Party B any additional Shares
received in respect of such Shortfall
and not sold by Party A as of the
date of the Net Share Settlement
Incapacity Event.
The term "Net Proceeds" in respect of
a sale of Shares shall mean gross
proceeds of such sale less reasonable
and customary discounts, fees,
commissions and expenses (the "Sale
Expenses"), including, but not
limited to, reasonable commissions,
discounts, fees and expenses
customarily payable to
underwriter(s) in the case of a
Registered Offering (defined below)
or to a placement agent in the case
of an Exempt Offering (defined
below), which may include reasonable
amounts customarily payable to a
party acting as underwriter or
placement agent, as well as any
additional reasonable fees and
expenses of any dealers engaged by
any such underwriter or placement
agent which are customarily payable.
(D) Physical
Settlement: In the event Party B elects either
Net Cash Settlement or Net Share
Settlement, Party A agrees to provide
to Party B not later than 5:00 PM on
any Business Day on which it has sold
Shares a report of the number of
Shares sold, the average sale price
and the aggregate Net Proceeds
received by Party A from such sales
and a reasonable breakdown of the
Sales Expenses.
At any time after the designation of
the Method of Sale, and if
applicable, the Offering Method, but
prior to the execution and delivery
of any underwriting agreement with
respect to the Shares, Party B may
deliver to Party A a revocation of
the Net Cash Settlement or Net Share
Settlement Method of Settlement and
request the suspension of any further
sales of Shares in respect of this
Transaction by Party A (a "Sale
Revocation and Designation Notice")
effective on the Business Day
immediately following delivery of
such Sale Revocation and Designation
Notice. Receipt of the Sale
Revocation and Designation Notice
shall obligate Party A to suspend any
sales and solicitations of orders to
buy the Shares but shall not affect
Party A's obligations to perform any
settlement or delivery of Shares in
connection with sales previously
agreed and sales which are pending
agreement on the date such Sale
Revocation and Designation Notice is
received and which have been agreed
before the close of business on such
date. Upon receipt of a Sale
Revocation and Designation Notice,
Party A shall report to Party B the
number of Shares that remain unsold
(which may be some or all of the
Principal Share Amount and any
additional Shares) as of the Business
Day succeeding delivery of the Sale
Revocation and Designation Notice
(the "Remaining Shares"). In the
event of delivery of the Sale
Revocation and Designation Notice,
Party B shall be required to deliver
to Party A a cash amount in respect
of the Remaining Shares such that the
amount paid by Party B to Party A for
the Remaining Shares plus the
aggregate Net Proceeds received by
Party A from the sale of other Shares
in connection with the Net Cash
Settlement or the Net Share
Settlement equals (i) the Notional
Amount plus (ii) the Net Interest
Amount, and Party A shall be required
to deliver to Party B the Remaining
Shares. Settlement and delivery of
the Remaining Shares and payment
therefor shall be made by the parties
on the second Business Day after the
delivery of such Sale Revocation and
Designation Notice.
(E) Offering Method Upon receipt of notice designating
either Net Cash Settlement or Net
Share Settlement as the Method of
Settlement, Party B may determine the
offering method (the "Offering
Method") including whether the Shares
to be sold will be offered pursuant
to a registration statement filed or
to be filed (a "Registered Offering")
pursuant to the Securities Act of
1933 (the "1933 Act"), subject to
Party A's consent to a Registered
Offering, which consent shall not be
unreasonably withheld.
If Party B determines the Shares will
be offered in a Registered Offering
and Party A consents to a Registered
Offering (which consent shall not be
unreasonably withheld), Party B (and
to the extent required therein, Party
A) will use their reasonable efforts
to comply in all material respects
with the Registration Procedures set
forth in Appendix A attached hereto.
In the event that Party A, and its
underwriter(s), upon advice from
their respective counsel, reasonably
object to the form or substance of
the registration statement, Party A
will deliver to Party B a suspension
request stating the reason or reasons
for such objection ("Suspension
Request") and Party B will either (i)
modify or amend the registration
statement to address such reasonable
objection(s) or (ii) suspend the
preparation of such registration
statement with respect to the
offering of the Principal Share
Amount. In addition, if such
registration statement has been filed
and identifies either Party A or the
Principal Share Amount and Party B
determines not to amend or modify, or
that it cannot amend or modify the
registration statement to address
Party A's or its underwriter(s)'
reasonable objections, Party B will
withdraw such registration statement
pursuant to Rule 259 (or its
successor) of the 1933 Act if such
registration statement relates solely
to the offering of the Principal
Share Amount. In the event that no
registration statement has been filed
identifying Party A or the Principal
Share Amount and Party B determines
not to amend or modify, or that it
cannot amend or modify the
registration statement to address
Party A's or its underwriter(s)'
reasonable objections, Party B may
within five Business Days of the
delivery of the Suspension Request
determine whether the Principal Share
Amount will be sold pursuant to an
offering that is exempt from the
registration requirements of the 1933
Act (an "Exempt Offering") as the
means of sale in respect of either a
Net Cash Settlement or a Net Share
Settlement or designate Gross
Physical Settlement as the Method of
Settlement. If, however, a
registration statement identifying
Party A or the Principal Share Amount
has been filed and such registration
statement is not amended to address
Party A's or its underwriter(s)
reasonable objections or has been
withdrawn, as set forth herein, then
not later than the third succeeding
Business Day from the receipt of the
Suspension Request Party B shall
deliver to Party A a notice
designating Gross Physical Settlement
as the Method of Settlement.
In the event Party A delivers to
Party B a notice that it will not
consent to Party B's determination
that the Principal Share Amount are
to be sold in a Registered Offering
as provided herein, Party B may,
within five Business Days from the
delivery of such notice, either
revoke the Net Cash Settlement or Net
Share Settlement Method of Settlement
and designate Gross Physical
Settlement as the Method of
Settlement or elect to have Party A
pursue the contemplated sale of
Shares in connection with Net Cash
Settlement or Net Share Settlement
through an Exempt Offering. If an
Exempt Offering is pursued and Party
B and its counsel object to the
exemption to be relied on pursuant to
which Shares are to be sold by Party
A or the opinion of counsel to Party
A or any related documentation to be
used in connection with the Exempt
Offering, Party B may deliver a
notice of suspension to Party A and
Party B may either (i) designate
Gross Physical Settlement as the
Method of Settlement, (ii) renew its
solicitation of Party A's consent for
a Registered Offering within five
Business Days of its delivery of any
notice of objection or (iii) subject
to the consent of Party A and its
counsel (which consent will not be
unreasonably withheld), request an
alternative Exempt Offering.
Notwithstanding the foregoing, if an
Event of Default or Termination Event
has occurred and is continuing with
respect to Party B, Party B will be
foreclosed from making any
determination as to the Offering
Method and, subject to the terms
hereof and all applicable regulatory
requirements, such determination
shall be in Party A's sole
discretion. In connection with any
Offering Method, Party B shall
cooperate with the reasonable
requirements of Party A and its
underwriter(s) and Party A and its
underwriter(s) shall cooperate with
the reasonable requests of Party B,
including without limitation
providing such additional information
as may reasonably be required so that
any offering document to be used does
not contain any untrue statement of a
material fact or omit to state a
material fact necessary in order to
make the statements made in such
offering document, in light of the
circumstances under which they were
made, not misleading.
Final Reference Share Price: In respect of the number of Shares
sold by Party A in connection with a
Net Cash Settlement or a Net Share
Settlement, the average Net Proceeds
per Share of all sales of the Shares
sold by Party A in (i) transactions
on the Exchange at the exchange
prices received by Party A, if any,
(ii) a Registered Offering, if any,
based on the public offering price
and (iii) transactions with
recognized dealers or principals in
the private placement market which
are unaffiliated with Party A
pursuant to an Exempt Offering, if
any, and with or through which Party
A effects any sales of Shares
pursuant to a Net Cash Settlement or
Net Share Settlement, which may be
shortened by the delivery of a Sale
Revocation and Designation Notice by
Party B.
Final Reference
Share Price Pricing Period: The period commencing on the
Termination Date, and continuing
until the completion of the
deliveries and any sales of Shares
related thereto required for Net Cash
Settlement or Net Share Settlement.
Notwithstanding any other provisions
set forth herein, in the event that
the Settlement Date for this
transaction has been delayed to a
date that is the one year anniversary
of the Termination Date for any
reason, including, without
limitation, because a Net Share
Settlement or a Net Cash Settlement
has been designated and the Final
Reference Share Price Pricing Period
has not been completed, or in the
case of any designated Method of
Settlement because of any Market
Disruption Event or Settlement
Disruption Event, then on the
Business Day next succeeding such
anniversary, Party B shall be deemed
to have delivered a Sale Revocation
and Designation Notice to Party A
suspending any further sales pursuant
to the terms and conditions set forth
in "(D)- Physical Settlement".
Pursuant to such paragraph (D)-
Physical Settlement, on the date such
Sale and Revocation and Designation
Notice is delivered any unsold Shares
shall be deemed to be Remaining
Shares and the payment and delivery
procedures set forth in such
paragraph shall govern the payment
and delivery obligations of the
parties
Settlement Dates: To the extent not otherwise provided
for hereunder, each of (i) the third
Exchange Business Day following the
end of the Final Reference Share
Price Pricing Period in the case of
Net Cash Settlement or Net Share
Settlement, and (ii) the next
Exchange Business day following (a)
the Termination Date that Party B
specifies or is deemed to have
specified in a Termination Notice
hereunder specifying Gross Physical
Settlement as the Method of
Settlement or (b) the Termination
Date that is applicable in the event
Party B is deemed to have specified
Gross Physical Settlement as the
Method of Settlement in the case of
Gross Physical Settlement.
If a Settlement Disruption Event
prevents a Net Share Settlement or a
Net Cash Settlement on the day that
otherwise would have been the
Settlement Date, then the Settlement
Date will be the first succeeding day
on which settlement can take place
through the Clearance System unless a
Settlement Disruption Event prevents
settlement on each of the ten (10)
consecutive Clearance System Business
Days immediately following the
original date that, but for such
Settlement Disruption Event, would
have been the Settlement Date. In
that case, (a) if the Shares can be
delivered in any other commercially
reasonable manner, then the
Settlement Date will be the first day
on which settlement of a sale of
Shares executed on that tenth (10th)
Clearance System Business Day
customarily would take place using
such other commercially reasonable
manner of delivery (which other
manner of delivery will be deemed the
Clearance System for purposes of
delivery of the relevant Shares), and
(b) if the Shares cannot be delivered
in any other commercially reasonable
manner, then the Settlement Date will
be postponed until delivery can be
effected through the Clearance System
or any other commercially reasonable
manner.
Settlement Disruption Event: An event beyond the control of the
parties as a result of which (i) the
Clearance System cannot clear the
transfer of the Shares or (ii) in the
case of any Shares in physical
certificate form, the payment system
for bank fund transfers (e.g. the
Federal Reserve wire payment system)
cannot make electronic funds payments
or otherwise transfer funds in the
ordinary course.
Trading Day: An Exchange Business Day other than
an Exchange Business Day on which (i)
a Market Disruption Event occurs, or
(ii) Party B, by notice to Party A by
8:30 a.m., New York time, determines,
on the advice of counsel respecting
applicable federal securities laws,
that such day shall not be a Trading
Day for one or more purposes of this
Transaction specified by Party B in
accordance with such advice.
Funding Day: The third Exchange Business Day after
a Trading Day.
Exchange Business Day: Any day that is (or, but for the
occurrence of a Market Disruption
Event, would have been) a Trading Day
on the Exchange other than a day on
which trading on the Exchange is
scheduled to close prior to its
regular weekday closing time.
Market Disruption Event: The occurrence or existence on any
Exchange Business Day of any
suspension of or material limitation
imposed on trading (by reason of
movement in price exceeding limits
permitted by the relevant exchange or
otherwise) on the Exchange in the
Shares, if, in the reasonable
determination of the Calculation
Agent, such suspension or limitation
prevents such day from being used as
a Trading Day.
Exchange: The New York Stock Exchange.
Calculation Agent: Party A, whose determinations and
calculations hereunder as Calculation
Agent will be binding in the absence
of manifest error. Subject to the
foregoing, the Calculation Agent will
have no responsibility for good faith
errors or omissions in making any
determination or calculation as
provided herein.
Party A Optional
Termination: In addition to any other termination
rights that Party A may have under
the Agreement, in the event of any
Merger Event, the terms of which are
Share-for-Other or Share-for-
Combined, pursuant to which a
registered holder of Shares is
entitled to receive cash
consideration in connection with the
Merger Event, Party A shall have the
right within three Business Days
after the payment of any cash
consideration in connection with the
Merger Event, to cause the
Transaction to terminate in part
before the originally scheduled
Termination Date by giving a
Termination Notice to Party B
designating a Termination Date not
earlier than five Business Days after
the delivery date of the Termination
Notice and making the Partial
Termination Payments consisting of
(i) a deemed payment by Party B to
Party A by means of the Merger
Termination Payment (defined below)
and (ii) the payment by Party A to
Party B of the Premium Cash Merger
Payment (defined below) on the date
designated as the Termination Date.
"Merger Termination Payment" means an
amount equal to the product of (i)
the Termination Share Amount (defined
below) and (ii) the Per Share Cash
Component (defined below).
"Termination Share Amount" means the
number of Shares equal to the product
of (i) the Principal Share Amount and
(ii) a fraction, the numerator of
which is equal to the Per Share Cash
Component and the denominator of
which is equal to the per share total
consideration of such offer.
"Per Share Cash Component" means the
per share cash component of any offer
to purchase the Shares underlying the
Merger Event.
"Premium Cash Merger Payment" means
the amount equal to the product of
(i) the Termination Share Amount and
(ii) the result of the per share
total consideration of any offer to
purchase the Shares underlying the
Merger Event, minus the Initial Share
Price, provided, however, that such
difference shall not be less than
zero.
Party B Optional Termination: In addition to any other termination
rights that Party B may have under
the Agreement, Party B may elect to
cause this Transaction to terminate
in whole, or in part, before the
originally scheduled Termination Date
for any reason by giving a
Termination Notice to Party A during
the last five Business Days prior to
any Party B Calculation Period
Payment Date and designating a
Termination Date.
Except for the originally scheduled
Termination Date for which no written
notice is required, no Termination
Date designated hereunder may be set
unless Party A has received prior
written notice of not less than 30
Business Days, in the case of either
Net Cash Settlement or Net Share
Settlement and of not less than two
Business Days in the case of Gross
Physical Settlement in connection
with the relevant Method of
Settlement. Subject to the terms of
this Transaction, Party B shall give
Party A written notice of the Method
of Settlement.
Registration Notice: Party B agrees that subsequent to the
Effective Date it will not file any
registration statement, amend a
previously filed registration
statement or commence any of the
procedures set forth in Appendix A
attached hereto with respect to any
Shares that may be sold in connection
with Net Cash Settlement or Net Share
Settlement without providing notice
to, and receiving the consent of,
Party A, which consent shall not be
unreasonably withheld.
Sale Notification: If Party A sells any Shares acquired
pursuant to this Transaction in
either a Net Cash Settlement or a Net
Share Settlement, such sale(s) must
be in accordance with the terms and
conditions set forth herein and Party
A must notify Party B of such sale(s)
as provided herein by telephonic
notice, promptly confirmed in
writing.
Settlement Terms: In respect of the Termination Date
Party B shall specify whether Gross
Physical Settlement, Net Cash
Settlement or Net Share Settlement is
to apply. In the event Party B fails
to specify the Method of Settlement
as provided herein, Party B shall be
deemed to have specified Gross
Physical Settlement as the Method of
Settlement in respect of such
Termination Date.
Adjustment Events:
Method of Adjustment: Calculation Agent Adjustment.
Extraordinary Events:
Consequences of
Merger Events: Following each Merger Event:
(a) Share-for-Share: Alternative Obligation
(b) Share-for-Other: Alternative Obligation; provided
however, that if Other Consideration
consists of any securities (other
than New Shares) that are restricted
or otherwise not readily saleable by
Party A, then Cancellation and
Payment shall apply.
(c) Share-for-Combined: Alternative Obligation; provided
however, that if Other Consideration
consists of any securities (other
than New Shares) that are restricted
or otherwise not readily saleable by
Party A, then Cancellation and
Payment shall apply.
Nationalization or Insolvency: Cancellation and Payment
3. Other Provisions:
Transfer: Neither the Transaction nor any
interest or obligation in or under
the Transaction may be transferred
(whether by way of security or
otherwise) by either party without
the prior written consent of the
other party, except that a party may
make a transfer of the Transaction
pursuant to a consolidation or
amalgamation with, or merger with or
into, or transfer of all or
substantially all its assets to,
another entity, or upon or after any
default of the other party. Any
purported transfer that is not in
compliance with this paragraph will
be void.
Party B Representation and
Covenants: On each Exchange Business Day during
a Final Reference Share Price Pricing
Period and on all Valuation Dates
during the Initial Pricing Period,
Party B hereby represents and
warrants to Party A that, unless
Party B notifies Party A that such
day is not a Trading Day, it has
publicly disclosed all material
information necessary for Party B to
be able to purchase or sell Shares in
compliance with applicable federal
securities laws. Party B hereby
represents and warrants to Party A
that: (i) it has entered into this
Transaction in connection with the
Share repurchase program announced
publicly on June 3, 1998, and July
13, 1999 for purposes consistent with
those stated in such public
disclosures and (ii) on the Trade
Date and on the Settlement Date,
Party B has available to it before
and immediately after any purchase of
Shares pursuant to this Transaction
such orders, consents or other
authorities as may be required by the
SEC pursuant to rules and regulations
of the Public Utility Holding Company
Act of 1935 (the "1935 Act"), with
respect to the execution, delivery
and performance of the forward
purchase obligations under this
Transaction , and (iii) on the filing
date of any registration statement or
the commencement of any offer not
involving a public offering in the
case of any Net Cash Settlement or
Net Share Settlement, the offering of
Shares (or New Shares as provided
herein), on the Settlement Date and
on each day during the Final Share
Price Pricing Period, will be made
pursuant to the orders, consents or
other authorizations that may be
required under the rules and
regulations promulgated under the
1935 Act , which will be in full
force and effect and, to Party B's
knowledge, will be free of any
pending or overtly threatened
proceedings contemplating the
revocation or modification of such
order; provided, however, in lieu of
making the representations and
warranties and agreeing to the
covenants set forth in clauses (i)
and (ii), Party B may deliver an
opinion of counsel addressing such
matters as Party A may reasonably
request and are customarily provided
in connection with the purchase and
sale of common stock, including,
without limitation, that Party B is
not subject to the 1935 Act, that no
authorization, consent or notice is
required in order for Party B to
perform any purchase or sale
obligation with respect to the Shares
other than any authorizations,
consents, filings or notices that may
be required under the 1933 Act and
any applicable state law that may be
required for the authorization of any
purchase of Shares. Party B also
represents that it is not subject to
regulation by any state, county or
municipal agency, authority, board,
council or similar body having
authority or jurisdiction over Party
B within the meaning of any
applicable state law, order or
regulation or any municipal
government or authority with the
capacity or power to regulate
electric utility or gas utility
companies ("Local Regulators") and
all approvals and consents from or
notices to any Local Regulator
required by Party B to execute and
deliver the Confirmation and to
perform the Transaction and the
related transactions contemplated
thereby have been received or given
and remain in full force and effect.
Party B hereby agrees that from the
Trade Date through and including the
Settlement Date, it will comply in
all material respects with all
corporate or, if applicable, similar
laws affecting its ability to perform
its repurchase obligations under this
Transaction, including any such
requirements of the SEC or any Local
Regulator. In the event that Party B
reasonably believes that at any time
during the term of this Transaction
Party B would be prohibited from
performing its repurchase obligations
under this Transaction as currently
contemplated without delivering
notice to or obtaining the consent of
the SEC or any Local Regulator, Party
B will provide notice thereof to
Party A and designate a date for
Settlement, which shall be a date on
which Party B still satisfies such
requirements and for which no notice
or consent is required to perform the
repurchase obligations contemplated
by this Transaction.
Impossibility: If, notwithstanding any other
provision of this Confirmation, this
Transaction is terminated at a time
when any law, rule or regulation,
including without limitation, the
1935 Act or any applicable state law,
order or regulation, prevents Party B
from repurchasing the Number of
Shares, Gross Physical Settlement
shall not apply. Each party agrees
that if delivery of the Shares on any
Settlement Date is subject to any
restriction imposed by a regulatory
authority (other than the federal
securities laws and the rules of the
SEC affecting Registered or Exempt
Offerings) that materially restricts
or prevents delivery of any such
Shares, the parties will negotiate in
good faith a procedure to effect
settlement of such affected Shares in
a manner which complies with any
relevant rules of such regulatory
authority.
Party B Undertakings: Party B hereby agrees that if it is
the object of any merger,
consolidation, amalgamation of Party
B with or into another entity (and
Party B is not the surviving entity)
or a third party acquires such number
of Shares or the right to control
such number of Shares (or the voting
power thereof) and the acquisition of
such number of Shares or the voting
power with respect thereto results in
the transfer of control of Party B
(within the meaning of Rule 405 of
the 1933 Act), then in the event that
(i) Alternative Obligation is elected
in respect of Consequences of Merger
Event - Share- for-Combined and (ii)
a material portion of Shares are
exchanged or exchangeable for New
Shares (as defined in the Equity
Definitions), then Party B shall
transfer this Transaction to and
cause the issuer of such New Shares
to assume and perform each and every
obligation and satisfy each and every
condition precedent of Party B
arising under this Confirmation with
respect to any purchase or sale of
the Shares, including, but not
limited to, the representations,
agreements, and covenants that relate
to the Shares and any purchase or
sale thereof, the exercise or
election of any Method of Settlement
or Offering Method, the participation
and preparation of any materials
relating to any registration
statement in connection with any
Registered Offering of Shares, and
the determinations and decisions
relating thereto, modified in all
cases, mutatis mutandis, to apply to
the issuer and to the New Shares. Any
failure by Party B to transfer to and
cause the issuer of New Shares to
assume any undertakings, performance
or satisfaction of any such
obligations to the reasonable
satisfaction of Party A shall be
deemed an irrevocable exercise of
Gross Physical Settlement option as
the Method of Settlement that shall
be deemed to supersede any prior
exercise of any Method of Settlement
Option.
Cessation and Suspension: If at any time during the Term of
the
Transaction Party B is subject to any
legal or regulatory requirements
("Legal Requirements") or any
directly related policies or
procedures adopted by Party B with
respect to the Legal Requirements,
which, in Party B's reasonable
judgement requires it, or Party A if
acting on behalf of Party B, to
refrain from purchasing or selling
Shares on any Trading Day, Party B
shall give prompt telephonic notice
to Party A of the cessation of any
further purchases or sales of Shares
and the suspension of any further
purchases or sales of Shares (each, a
"Cessation Notice"), which cessation
and suspension shall remain in effect
until further notice from Party B.
Each telephonic notice of a Cessation
Notice shall be promptly confirmed in
writing. Notwithstanding the
foregoing, the delivery of a
Cessation Notice shall not affect any
obligation of Party A to deliver or
receive Shares in settlement of any
purchase or sale of Shares agreed
prior to the delivery of the
Cessation Notice.
Issuer Repurchase Safe Harbor: Assuming that Party B's conduct
complies with the requirements of
rule 10b-18 promulgated under the
1934 Act ("Rule 10b-18"), Party A
will use its best efforts to comply
with the manner of purchase, time,
price and volume requirements of Rule
10b-18 in connection with its
purchase of Shares under this
Transaction.
Limited Liability: No shareholder or trustee of Party B
shall be held to any liability
whatever for the payment of any sum
of money or for damages or otherwise
under this Confirmation, and this
Confirmation shall not be enforceable
against any such trustee in their or
his or her individual capacities or
capacity and this Confirmation shall
be enforceable against the trustees
of Party B only as such, and every
person, firm, association, trust or
corporation having any claim or
demand arising under this
Confirmation and relating to Party B,
its shareholders or trustees shall
look solely to the trust estate of
Party B for the payment or
satisfaction thereof.
Securities Contract: Each party hereby represents to the
other that it intends this
Transaction to be a securities
contract within the meaning of
Section 741 of Bankruptcy Code, as
amended (11 U.S.C. <section>741).
4. Credit Support Documents: Party A: None
Party B: Collateral Appendix
5. Account Details:
Payments to Party A:Bank One, NA
ABA # 071000013
A/C #: 48115380
Payments to Party B: Fleet
ABA # 011500010
Acct No.: 50252481
Ref.: NU Share Repurchase
Delivery of Shares
to Party A: To be advised by written notice within 30 days
of the Trade Date
Delivery of Shares
to Party B: To be advised by written notice within 30 days
of the Trade Date
6. U.S. Private Placement Representations
As this Transaction may constitute the sale by Party A to Party B in the
case of this Transaction, and by Party B to Party A in the case of the
Number of Shares, in each case of a Security or Securities (as defined
in the 1933 Act), in addition to the representations contained in
Section 3 of the Agreement, Party B hereby represents to Party A in
respect of this Transaction and Party A represents to Party B in respect
of the Number of Shares (for purposes of this Section 6, the
representation of Party A with respect to Securities shall be made with
respect to the Number of Shares and the representation of Party B shall
be made with respect to the Transaction, in accordance with Section 3 of
the Agreement), as follows:
(a) Each party is acquiring such Securities for its own account as
principal, for investment purposes only, and not with a view to, or
for, resale, distribution or fractionalization thereof, in whole or
in part, and no other person has a direct or indirect beneficial
interest in any such Securities acquired by it;
(b) Each party understands that the offer and sale by the other party
of such Securities are intended to be exempt from registration
under the 1933 Act, by virtue of Section 4(2) thereof. In
furtherance thereof, each party represents and warrants that (i) it
has the financial ability to bear the economic risk of its
investment and has adequate means of providing for its current
needs and other contingencies, (ii) it is experienced in investing
in forward purchase contracts and similar instruments and has
determined that such securities are a suitable investment for it,
and (iii) it is an institution that qualifies as an "accredited
investor" as that term is defined in Regulation D under the 1933
Act; and
(c) Each party has been given the opportunity to ask questions of, and
receive answers from, the other party concerning the terms and
conditions of such Securities and concerning the financial
condition and business operations of the other party and has been
given the opportunity to obtain such additional information
necessary in order for each party to evaluate the merits and risks
of purchase of such Securities to the extent the issuer of the
Securities possesses such information or can acquire it without
unreasonable effort or expense.
(d) The Shares shall bear a legend substantially as set forth below:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"ACT") OR ANY STATE SECURITIES LAWS ("BLUE SKY LAW") ANY MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE BLUE
SKY LAW OR UNLESS SUCH SALE, TRANSFER, PLEDGE OR OTHER
DISPOSITION IS EXEMPT FROM REGISTRATION THEREUNDER.
Each party hereby acknowledges that it understands and agrees that
disposition of any such Securities is restricted in the manner set forth
under the Agreement, the 1933 Act and state securities laws. For
example, such Securities have not been registered under the 1933 Act or
under the securities laws of certain states and, therefore, cannot be
resold, pledged, assigned or otherwise disposed of unless they have been
registered under the 1933 Act and under the applicable laws of such
states or an exemption from such registration is available.
7. Miscellaneous:
(a) Any and all notices, demands, or communications of any kind
relating to this Transaction, including without limitation, any
option exercise notice, between Party A and Party B shall be
transmitted to the following addresses:
Party A:
Bank One, NA
1 Bank One Plaza, IL1-0045
Attention: Global Derivative Products
Telephone No.: (312) 732-8580
Facsimile No.: (312) 732-5645
Party B:
Northeast Utilities
107 Selden Street
Berlin, CT 06037
Facsimile No.:
Telephone No.:
Attention:
(b) The date and time of the Transaction evidenced hereby will be
furnished by Party A to Party B upon written request.
(c) Party A and Party B each represents and agrees (i) that this
Transaction is not unsuitable for it in the light of such party's
financial situation, investment objectives and needs and (ii) that
it is entering into this Transaction in reliance upon such tax,
accounting, regulatory, legal and financial advice as it deems
necessary and not upon any view expressed by the other.
(d) When selling any Shares pursuant to this Transaction, Party A shall
determine the number of Shares to be sold on any Trading Day and the
price or prices at which such Shares are sold, provided, however,
that it shall act in a commercially reasonable manner and on
commercially reasonable terms, and shall comply with applicable
securities laws, rules and regulations, applicable to it and the
Transaction (including sales relating thereto).
(e) Party A and Party B hereby acknowledge and agree that the execution
and delivery of this Confirmation by Party A does not constitute a
commitment or an obligation of Party A to purchase or sell any
Shares or any other security as principal.
8. Performance by Designee:
Notwithstanding any other provisions of this Confirmation, in any
Transaction calling for Party A to purchase, sell, receive or deliver any
shares or other securities, Party A may designate any of its affiliate
entities to purchase, sell, receive or deliver such shares or other
securities instead and otherwise to perform Party A's obligations in
respect of such transactions, and any such designee may assume any such
obligations. Party B need not be notified of such designation and such
designation shall not relieve Party A of any obligation hereunder.
However, if any such obligation shall be performed by such designee,
Party A shall be discharged of its obligations to Party B to the extent
of such performance.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Yours sincerely,
BANK ONE, NA
By:
Name:
Title:
BANK ONE, NA
By:
Name:
Title:
NORTHEAST UTILITIES
By:
Name:
Title:
APPENDIX A
TO
CONFIRMATION OF TRANSACTION
BETWEEN
BANK ONE, NA (Illinois)
AND
NORTHEAST UTILITIES
Unless otherwise agreed in writing by Party A and Party B with respect to
specific sales of Shares or specific Shares to be delivered by Party B, the
provisions of this Appendix A shall apply to all Shares in satisfaction of a
Party B Net Cash Settlement or Net Share Settlement Delivery including the
resale of the Number of Shares which were acquired in a transaction not
involving any public offering and, in the case of Net Share Settlement, any
additional Shares (collectively, the "Shares").
(a) Party B shall have reserved and have available, out of its authorized
but unissued capital stock, for the purpose of effecting the payment of any
Party B Net Cash or Net Share Settlement Delivery in Shares as provided in
the Confirmation, the full number of shares of capital stock that would then
be issuable with respect to such payment.
(b) Party B shall have filed with the SEC a registration statement on Form
S-3 or such other form as is acceptable to Party A; such registration
statement shall have been declared effective with respect to such Shares (the
"Registration Statement") and no stop order suspending the effectiveness of
the Registration Statement shall be in effect, and no proceedings for such
purpose shall be pending before or threatened by the Commission. Party B, at
the request of Party A, shall deliver an underwriting agreement naming Party
A, or its designee, as underwriter, together with such other agreements,
certificates and instruments as Party A may reasonably require either
pursuant to such underwriting agreement or as are customarily provided
together with such underwriting agreement.
(c) Party B shall have registered or qualified such Shares under such
securities or "blue sky" laws of such States and other jurisdictions in the
United States and Puerto Rico as Party A or any underwriter shall have
reasonably requested, and shall have done any and all other acts and things
as may be reasonably necessary to be done by Party B to enable Party A or any
underwriter to consummate the disposition in such jurisdictions of the Shares
covered by the Registration Statement; provided that Party B shall not be
required to make any filing or take any action as a result of this paragraph
(c) that would required it to qualify as a foreign corporation or file a
general consent to service of process in any jurisdiction.
(d) Party B shall have caused such Shares and the issuance thereof to be
registered with or approved by such other governmental agencies or
authorities in the United States as may be reasonably necessary to be done by
Party B to enable Party A or any underwriter to consummate the disposition of
such Shares.
(e) Party B shall have (i) given Party A and its underwriter(s), if any, and
their respective counsel and accountants, the opportunity to participate in
the preparation of all materials filed with the SEC or any other governmental
agency (the "Filed Materials") prior to the first day of such Final Reference
Share Price Pricing Period, (ii) furnished to each of them copies of all such
Filed Materials (and all documents incorporated therein by reference)
sufficiently in advance of filing to provide them with a reasonable
opportunity to review such documents and comment thereon, (iii) given each of
them such opportunities to discuss the business of Party B with its officers
and the independent public accountants who have issued a report on its
financial statement as shall be reasonably necessary, in the opinion of Party
A and such underwriter(s) or their respective counsel, to conduct a
reasonable investigation (within the meaning of the 1933 Act, as amended)
with respect to such Filed Materials, (iv) delivered to Party A and its
underwriter(s), if any, the financial statements of Party B filed with the
SEC, (v) included in such Filed Materials material, furnished to Party B in
writing, which in the reasonable judgment of Party A or its underwriter(s),
if any, subject to the consent of Party B (which shall not be unreasonably
withheld), should be included with respect to Party A, Party A's
underwriter(s) and the "Plan of Distribution", including, without limitation,
language to the effect that the holding by Party A of the Shares is not to be
construed as a recommendation by Party A of the investment quality thereof
and (vi) if requested by Party A, deleted from such Filed Materials any
reference to Party A if in the written opinion of counsel to Party A, in form
and substance to Party B, such reference to Party A by name or otherwise is
not required by the 1933 Act or any similar Federal statute then in force.
(f) Party B shall have furnished to Party A and any underwriter, addressed
to Party A and any such underwriter and dated the first day of the Final
Reference Share Price Pricing Period, (i) an opinion of counsel for Party B
(which opinion may be from internal counsel for Party B) and (ii) a "cold
comfort" letter signed by the independent public accountants who have issued
a report on Party B's financial statements included in such Registration
Statement, covering substantially the same matters with respect to such
Shares and the offering, sale and issuance thereof as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriter(s) in underwritten public offerings of securities and, in the
case of the accountants' letter, such other financial matters as Party A may
have reasonably requested.
(g) Party B shall have complied with all applicable provisions of the 1933
Act and the 1934 Act and the Public Utility Holding Company Act of 1935, all
applicable rules of the SEC and all other applicable laws, rules and
regulations of any governmental or regulatory authority with respect to such
Filing Materials and such Shares and the offering, sale and issuance thereof.
(h) Party B shall have caused all such Shares to be listed on the Exchange
and on each securities exchange on which Party B has caused similar
securities issued by Party B to be listed.
(i) Party B shall have provided a transfer agent and registrar for such
Shares.
(j) Party B shall have taken such other actions as Party A or any
underwriter of such Shares shall have reasonably requested in order to
expedite or facilitate the disposition of such Shares.
(k) Party B shall provide Party A and its underwriter(s), if any, with
indemnity and contribution in form and substance acceptable to Party A
covering such matters relating to the Shares, the Filed Materials, and such
other matters as Party A shall reasonably request.
(l) Party B shall have paid all customary costs and expenses reasonably
incurred in connection with the foregoing.
(m) Party B shall deliver all such registered Shares through the Clearance
System.
APPENDIX B
TO
CONFIRMATION OF TRANSACTION
BETWEEN
BANK ONE, NA (Illinois)
AND
NORTHEAST UTILITIES
[Letterhead of Bank One, NA (Illinois)]
[Date]
TO: Northeast Utilities
107 Selden Street
Berlin, CT 06037
Attention:
Telephone No.:
Facsimile No.:
FROM: Bank One, NA
1 Bank One Plaza, IL1-0045
Attention: Global Derivative Products
Telephone No.: (312) 732-8580
Facsimile No.: (312) 732-5645
RE: Transaction between Northeast Utilities ("Counterparty") and Bank One,
NA ("Bank One")
As provided in the Confirmation dated as of December 9, 1999, between
Bank One and Counterparty (the "Confirmation") of which this Appendix forms a
part, Counterparty has agreed to review this revised Appendix B in connection
with the acquisition of Shares promptly upon receipt and either sign it
indicating agreement to Bank One's revisions hereto and return it to Bank One
or notify Bank One of any disagreement with respect to such revisions so that
errors or discrepancies can be promptly identified and rectified, and
Counterparty shall be deemed to have agreed to Bank One's revisions hereto if
Counterparty does not notify Bank One of a disagreement with respect to such
revisions by the close of business on the second Exchange Business Day
following actual receipt hereof, absent manifest error. Capitalized terms
used herein that are not otherwise defined shall be defined as provided in
the Confirmation.
Trading Day Accumulated Average Share Notional Interpolated
Adjusted Price Amount USD-LIBOR- BBA
Principal for the Funding
Share Day corresponding
Amount to the Trading Day
%
%
%
%
%
%
Totals: $ $
Please confirm your agreement to be bound by the terms stated herein by
executing this Appendix B or by sending to us a telex or letter, signed by a
vice president or above, by the close of business on the Exchange Business
Day next following actual receipt of this Appendix B by Counterparty to the
attention of [Name] [Address] at Fax No. (xxx) xxx-xxxx substantially in the
form below:
Quote
We acknowledge receipt of your fax dated [ , 199 ], with respect
to an update of Appendix B to the above-referenced Transaction between Bank
One, NA (Illinois) and Northeast Utilities in respect of a Trade Date of
[December , 1999], and confirm that such fax correctly sets forth the terms
of our agreement relating to the Transaction described therein. Very truly
yours, Northeast Utilities, by (specify name and title of authorized
officer).
Unquote
Yours sincerely,
Bank One, NA
By:
Name:
Title:
Confirmed as of the date first above written:
Northeast Utilities
By:
Name:
Title:
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION
- --------------------------------------------------------------------------------
OVERVIEW
The financial improvement that began in 1998 continued throughout 1999 at
Northeast Utilities (NU or the company), despite rate reductions in Connecticut
and Massachusetts, and larger operating losses at NU's unregulated subsidiaries.
NU's results benefited from the successful restart of the Millstone 2 nuclear
unit, the strong operating performance delivered by the Millstone 3 and
Seabrook Station (Seabrook) nuclear units, retail sales growth, and continued
control over operation and maintenance (O&M) expenses. The financial
improvement allowed NU to resume the payment of a quarterly dividend for the
first time since early 1997. NU shareholders received a common dividend of 10
cents per share in the fourth quarter of 1999.
During 1999, NU resolved key industry restructuring issues by establishing
initial stranded cost recovery levels and standard offer service tariffs and
agreements in Connecticut and by receiving final approval of a restructuring
plan in Massachusetts. The auction of substantially all of the fossil and
hydroelectric generation assets owned by The Connecticut Light and Power
Company (CL&P) and Western Massachusetts Electric Company (WMECO) and the
auction of their respective interests in the output of the Millstone units,
moved both companies along in their transition into purely electric
transmission and distribution companies, as contemplated by restructuring
legislation in both Connecticut and Massachusetts. Also in 1999, the company
made significant progress toward resolving restructuring issues in the state
of New Hampshire by negotiating a global restructuring settlement that is still
subject to regulatory approval.
NU earned $34.2 million, or $0.26 per share in 1999, compared with a loss of
$146.8 million, or $1.12 per share in 1998 and a loss of $130 million, or $1.01
per share in 1997. Absent significant one-time items, the NU system earned
$0.89 per share in 1999, compared with a loss of $0.30 per share in 1998 and a
loss of $0.76 per share in 1997. NU's improved 1999 operating results are
attributed to better operating performance of its nuclear units, a strong
economy and continued strong expense control throughout the year. The 1999
results included $83 million, or $0.63 per share, in after-tax write-offs.
These write-offs were associated with the settlement of nuclear related issues
($0.39 per share), industry restructuring ($0.15 per share) and fees related to
the pending merger with Consolidated Edison, Inc. (Con Edison) ($0.09 per
share). During 1998, NU recorded $133 million, or $0.82 per share, in after-tax
write-offs associated with a rate decision in Connecticut, the retirement of
Millstone 1 and nonrecurring charges at Charter Oak Energy, an unregulated
generation subsidiary of NU. The "Agreement to Settle PSNH Restructuring"
(Settlement Agreement), involving the Public Service Company of New Hampshire
(PSNH) calls for an after-tax write-off of $225 million. However, that write-
off was not recorded in 1999, as key aspects of the Settlement Agreement still
required regulatory and legislative approval and it was not possible to
determine the ultimate resolution of this matter at year end.
In 1999, NU's revenues exceeded $4 billion for the first time, totaling
$4.47 billion, up 18.7 percent from revenues of $3.77 billion in 1998. The
growth was primarily due to increased electric sales by Select Energy, Inc.
(Select Energy), NU's unregulated power marketing subsidiary, and higher retail
sales from NU's regulated subsidiaries. Select Energy's revenues totaled $554.9
million in 1999, compared with $29.3 million in 1998. Revenues from the
company's regulated subsidiaries also benefited from a 3.8 percent increase in
retail sales, the largest increase in retail sales in recent history.
Approximately 40 percent of that growth was due to weather related factors that
included a hotter than normal summer. The balance of that increase was due to
economic expansion in NU's service territories.
Aside from increased revenues, the primary reason for better operating
performance in 1999 was the return to service from extended outages of
Millstone 3 in July 1998 and Millstone 2 in May 1999. The return to service of
those units reduced replacement power costs by $215 million in 1999, compared
to 1998.
Retail rate reductions involving CL&P and WMECO offset some of the growth in
revenues. CL&P's rates were reduced 5 percent in early 1999. CL&P's rates were
further reduced in January 2000 by 5 percent. The additional 5 percent rate
reduction will offset some of the growth in future revenues. WMECO's rates were
reduced a total of 15 percent from its August 1997 rates, 11.8 percent adjusted
for inflation, between March 1998 and September 1999.
Sharply higher purchased-power costs at Select Energy also offset many of
the benefits from higher sales. Select Energy recorded a net loss of $38.8
million in 1999, compared with a net loss of $13.4 million in 1998. Also in
1999, Select Energy's earnings were reduced by $4.1 million related to retail
contracts which extend through 2003.
NU's ability to continue improving financial performance in 2000 will depend
largely on continued regulated sales growth and on successful control of O&M
expenses. Additionally, NU plans to meet the challenges of assimilating Yankee
Energy System, Inc. (Yankee) into its business and achieving, by July 2000, the
shareholder and regulatory approvals needed to complete the merger with Con
Edison. NU also hopes to complete in 2000 the majority of restructuring work
remaining, primarily the implementation of the Settlement Agreement in New
Hampshire, the issuance of rate reduction bonds (securitization) to lower
stranded costs at CL&P, WMECO and PSNH, and the auction of NU's ownership
interests in the Millstone units. Additionally, during 2000, NU intends to
continue focusing on the growth of its competitive businesses. NU's ability to
reverse losses in its unregulated businesses will depend largely on the energy
marketing subsidiary's ability to better balance its supply options, including
soon to be acquired hydroelectric generation assets, with sales commitments.
MERGERS
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In 1998 and 1999, NU management concluded that the pace of deregulation was
accelerating throughout the northeastern United States and that shareholders
would benefit from NU, not only remaining a major provider of electric
transmission and distribution service, but also becoming an unregulated
marketer of both electricity and natural gas. NU management also concluded that
as a result of the changes occurring in the highly competitive electric utility
industry, increased size would be crucial to achieve its objective of being a
leading provider of energy products and services in the Northeast.
NU management discussed potential business combinations with several
electric utilities in the northeastern United States. On October 13, 1999, NU
announced an agreement to merge with Con Edison, a financially stronger utility
based in New York. Con Edison will pay approximately $3.8 billion for all of
the outstanding common stock of NU and will assume NU's debt, capitalized
leases and preferred securities which totaled $3.7 billion at December 31,
1999. Under the merger agreement, NU shareholders will receive $25 per share,
in a combination of cash and Con Edison common stock. NU shareholders will have
the right to elect cash or stock subject to proration if the total elections
exceed 50 percent in either cash or stock. NU shareholders who elect to receive
stock will receive the number of shares of Con Edison stock based on the
average trading prices, determined pursuant to a formula, during a fixed period
prior to the closing. So long as such average trading prices are between $36
and $46 per share, the total value of the Con Edison common stock received by
NU shareholders will be $25 per share. NU shareholders also have the right to
receive an additional $1 per share in value as long as definitive agreements to
sell its interests (other than that now held by PSNH) in Millstone 2 and 3 are
entered into and recommended by the Utility Operations and Management Unit of
the Connecticut Department of Public Utility Control (DPUC) on or prior to the
later of December 31, 2000, or the closing of the merger. In addition, another
$0.0034 per share per day for every day beyond August 5, 2000, that the merger
is not consummated is added to the purchase price. If Con Edison's stock price
is below $36 per share, then the value received for the stock portion will be
less than $25 per share. The merger will create the nation's largest electric
distribution system with more than 5 million customers and one of the 15
largest natural gas distribution systems with 1.4 million customers.
NU and Con Edison filed with various state and federal regulatory bodies in
January 2000 to secure approval of the merger. The two companies expect these
regulatory proceedings can be completed by the end of July 2000.
Also in 1999, NU management concluded that the Northeast Utilities system
(NU system) would be stronger and customers could be better served if NU
reentered the natural gas distribution business that it had exited in 1989 and
examined several potential businesses in New England. By adding gas to NU's
energy mix, NU will be able to broaden its services to its existing customers
and will have additional opportunities for long-term growth. In June 1999, NU
announced an agreement to merge with Yankee. Yankee is the natural gas division
that CL&P divested in 1989. Yankee shareholders will receive $45 per share, or
$479.6 million in cash and NU common stock. In addition, NU will assume
Yankee's outstanding debt of approximately $240.8 million. Yankee shareholders
will receive 45 percent of the $479.6 million in NU common stock and 55 percent
in cash. NU will finance the cash portion of the transaction and will meet the
stock component of the transaction by issuing new shares. NU expects to redeem
a similar amount of shares later this year by closing out forward share
purchase transactions with proceeds from restructuring. The forward share
purchase transactions were arranged in late 1999 with two financial
institutions. NU is prohibited from purchasing additional shares under its
merger agreement with Con Edison. The merger will return to NU Connecticut's
largest natural gas distribution system, as well as several unregulated
businesses involved in energy services, collections and other areas. The Yankee
merger received final DPUC approval in December 1999 and Securities and
Exchange Commission (SEC) approval in January 2000. The merger is expected to
close in early March 2000.
LIQUIDITY
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During 1999, strong sales growth, improved nuclear performance and continued
control of O&M expenses resulted in net cash flows provided by operations of
$614.2 million in 1999, compared to $663.3 million in 1998 and $340.6 million
in 1997.
On December 15, 1999, CL&P closed on the sale of 2,235 megawatts (MW) of
fossil generation assets with an unaffiliated company. Proceeds from the sale
totaled $516.9 million, including payments for fuel and inventory. CL&P used
the proceeds primarily to par call $406 million of first mortgage bonds in
December 1999. CL&P also used $57.5 million to buy out its lease of four 40 MW
turbines.
On July 26, 1999, WMECO closed on the sale of 290 MW of fossil and
hydroelectric generation assets with an affiliate of Con Edison. Proceeds from
the sale were $48.5 million.
Proceeds from these generation asset sales are included in net cash flows
provided by investing activities. Including construction expenditures and
investments in nuclear decommissioning trusts, net cash flows provided by
investing activities were $151.2 million in 1999, compared with net cash flows
used in investing activities of $295.2 million in 1998 and $293 million in
1997.
The strong operating cash flows provided by NU's regulated businesses and
the proceeds from generation asset sales enabled the NU system to substantially
reduce its outstanding debt. As of December 31, 1999, the NU system's total
debt level, including capital lease obligations, was $3.3 billion, compared
with $3.9 billion as of December 31, 1998, and $4.1 billion as of December 31,
1997.
The net cash flows used in financing activities were $646.4 million in 1999,
compared to $375.3 million in 1998 and $98.5 million in 1997. This included
$864 million paid in 1999 to retire long-term debt and preferred stock,
compared to $331.8 million in 1998 and $313.8 million in 1997. Cash dividends
on common shares paid in 1999 were $13.2 million, compared to no cash dividends
in 1998 and $32.1 million in 1997. Payments made for preferred stock dividends
were $22.8 million, $26.4 million and $30.3 million for 1999, 1998 and 1997,
respectively.
The NU system's access to capital also benefited from the strong operating
performance at Millstone 2 and 3, continued progress toward the resolution of
all restructuring issues in New Hampshire and the announced merger with Con
Edison. During 1999, NU system securities received several upgrades from three
credit rating agencies. CL&P's and WMECO's senior secured bonds achieved
investment grade ratings for the first time since early 1997 and PSNH's bonds
were upgraded to investment grade by Standard & Poor's (S&P) for the first time
since early 1994. At year end, all securities were under review for possible
upgrades, or on "credit watch" with positive implications by S&P, Moody's
Investors Service and Fitch IBCA.
The rating agency upgrades benefited NU's efforts to broaden its credit
lines. On November 19, 1999, NU parent entered into a $350 million, 364-day
unsecured revolving credit facility which allows NU parent access to $350
million in a combination of cash and letters of credit. NU parent provides
credit assurance in the form of guarantees of letters of credit, performance
guarantees and other assurances for the financial performance obligations of
certain of its unregulated subsidiaries, particularly Select Energy. Over the
course of 1999, NU parent sought and received approval from the SEC to increase
the limit of such credit assurance arrangements from $75 million to $500
million. However, NU is limited under certain loan agreements to $350 million
of such arrangements without creditor approval. As of December 31, 1999, NU
had provided approximately $190 million of such credit assurances.
Also on November 19, 1999, CL&P and WMECO entered into a new 364-day
revolving credit facility for $500 million, replacing the previous $313.75
million facility which was to expire on November 21, 1999. The revolving credit
facility, which is secured by second mortgages on Millstone 2 and 3, will be
used to bridge gaps in working capital and provide short-term liquidity. CL&P
may draw up to $300 million and WMECO may draw up to $200 million under the
facility. Once CL&P and WMECO receive the proceeds from securitization, the
$500 million facility will be reduced to $300 million, with a $200 million
limit for CL&P and a $100 million limit for WMECO. As of December 31, 1999,
CL&P had $90 million and WMECO had $123 million outstanding under this
facility.
For further information regarding the NU parent revolving credit facility
and the CL&P and WMECO revolving credit facility, see Note 3, "Short-Term
Debt," to the consolidated financial statements.
PSNH's $75 million revolving credit agreement was terminated on April 14,
1999. PSNH currently funds its operations through cash on hand and operating
cash flows. As of December 31, 1999, PSNH had $182.6 million of cash and cash
equivalents. On April 14, 1999, PSNH renewed bank letters of credit that
support nearly $110 million of taxable variable-rate pollution control bonds.
CL&P also has arranged financing through the sale of its accounts
receivable. CL&P can finance up to $200 million through this facility. As of
December 31, 1999, CL&P had $170 million outstanding under this facility.
WMECO terminated its $40 million accounts receivable credit facility on
June 30, 1999.
In late 1999, NU arranged forward purchase transactions for approximately
10 million NU common shares with two financial institutions (counterparties).
To effect these transactions, the counterparties purchased on the open market
between November 1999 and January 2000, NU common shares, at an average price
per share of $21.26, in a total aggregate amount of $215 million. The
counterparties maintain ownership of the shares until the transactions are
settled. Additionally, NU will continue to accrue fees on the total aggregate
amount at LIBOR plus 2.5 percent per annum, until the transactions are settled.
These transactions can be settled in cash or NU common shares at the company's
discretion. As required under the terms of the contracts, NU must settle the
transactions no later than December 31, 2000, for an aggregate purchase price
equal to $215 million. However, NU expects to settle these purchase trans-
actions with the proceeds from restructuring in the second half of 2000. If
prior to the settlement date, NU's share price falls below $15.80 per share, NU
may be required to provide the counterparties with additional collateral.
During 2000, the NU system companies hope to receive regulatory approval to
begin the process of securitizing approximately $2.5 billion of approved
stranded costs. Securitization involves issuing rate reduction bonds with
interest rates lower than the company's weighted average cost of capital.
Proceeds from securitization will be used to significantly reduce the
capitalization of NU's regulated subsidiaries and buyout or buydown certain
purchased-power contracts with a number of nonutility generators.
RESTRUCTURING
- --------------------------------------------------------------------------------
During 1999, Connecticut and Massachusetts made significant progress in
resolving industry restructuring issues. Restructuring orders issued in
Connecticut and Massachusetts allowed NU to determine the impacts of
discontinuing Statement of Financial Accounting Standards (SFAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation," for the generation
portion of CL&P's and WMECO's businesses. In both states, the transmission and
distribution portion of those businesses will continue to be cost-of-service
regulated. In addition, the restructuring orders provided for a transition
charge which allows for the recovery of CL&P's and WMECO's generation-related
regulatory assets and prudently incurred stranded costs.
The process of restructuring the electric utility industry in New Hampshire
has not yet been concluded, however, significant progress has been made over
the past year. In August 1999, PSNH and state officials reached a Settlement
Agreement, addressing all rate and restructuring issues involving PSNH, which
is awaiting New Hampshire Public Utilities Commission (NHPUC) approval.
CONNECTICUT
During April 1999, CL&P filed its standard offer service plan with the DPUC and
received a decision on October 1, 1999, as amended on December 15, 1999. In
that decision, the DPUC approved the recovery of CL&P's regulatory assets and
certain stranded costs associated with CL&P's nuclear generation assets and
established the methodology for setting CL&P's standard offer rates, including
the transition charge and transmission and distribution rates. The DPUC ruled
on CL&P's stranded cost filing in July 1999 approving $3.5 billion of stranded
cost recovery, which is utilized, in part, in the determination of the
transition charge.
As provided for in the electric utility restructuring legislation enacted in
April 1998, 35 percent of CL&P's customers were able to choose their electric
generation supplier on January 1, 2000, with the remaining 65 percent having
choice on July 1, 2000. The major components of rates are a transmission and
distribution charge, a generation charge and a transition charge. For those
customers who do not or are unable to choose another competitive electric
generation supplier, CL&P will supply standard offer or generation service at
an average rate of $0.04813 per kilowatt-hour (kWh) through December 31, 2003.
The revenues attributable to standard offer (generation) service are expected
to exceed the actual cost of providing generation and the difference will be
applied against stranded costs. In accordance with a plan approved by the DPUC,
one-half of the CL&P standard offer load was procured through a competitive
bidding process, with the remaining one-half of the power being supplied by an
affiliated company. The contracts are in place through the end of 2003. For
further information regarding commitments and contingencies related to the
Connecticut restructuring order, see Note 7A, "Commitments and Contingencies --
Restructuring -- Connecticut," to the consolidated financial statements.
MASSACHUSETTS
Massachusetts enacted electric utility restructuring legislation in November
1997. Based on an interim order approving WMECO's restructuring plan filed in
December 1997, WMECO's customers were able to choose an alternative retail
electricity supplier beginning on March 1, 1998. In 1999, the Massachusetts
Department of Telecommunications and Energy (DTE) issued its final decision on
WMECO's restructuring plan. In that decision, the DTE permitted WMECO to
recover its generation-related regulatory asset balances and its nuclear
decommissioning costs. However, the DTE disallowed any return on Millstone 2
and 3 starting March 1, 1998, until they returned to service and on Millstone
1 for its remaining life. The pretax impact of these disallowances was $41
million. The DTE also approved one-year contracts with the winning bidders of
the standard offer and default service supply auction. For further information
regarding commitments and contingencies related to the Massachusetts
restructuring order, see Note 7A, "Commitments and Contingencies --
Restructuring -- Massachusetts," to the consolidated financial statements.
GENERATION ASSET DIVESTITURES--
CONNECTICUT AND MASSACHUSETTS
The Connecticut and Massachusetts restructuring laws required CL&P and WMECO to
divest of their nonnuclear generation assets and utilize substantially all of
the net gains from any sales to offset stranded costs. During 1999, WMECO and
CL&P sold their nonnuclear generation assets resulting in net gains of $22.4
million and $286.5 million, respectively. A corresponding amount of regulatory
assets was amortized. In September 1999, NU announced that the Millstone
nuclear generation assets of its subsidiaries, CL&P and WMECO, will be put up
for auction as soon as practical. For further information regarding commitments
and contingencies related to the Connecticut and Massachusetts generation asset
divestitures, see Note 7A, "Commitments and Contingencies -- Restructuring --
Nuclear Generation Assets Auction," to the consolidated financial statements.
NEW HAMPSHIRE
In August 1999, NU, PSNH and the state of New Hampshire signed the Settlement
Agreement which will resolve a number of pending regulatory and court
proceedings related to PSNH. The Settlement Agreement is awaiting approval of
the NHPUC and is subject to legislative approval of securitization. The key
components of the agreement include an after-tax write-off of $225 million of
stranded costs; the recovery of the remaining stranded costs; the
securitization of $725 million of approved stranded costs; the sale of
generation assets and wholesale power entitlements, with transition service
being available to customers for three years; a reduction in rates of an
average of 18.3 percent, and the opening of the New Hampshire electricity
market to competition. For further information regarding commitments and
contingencies related to the New Hampshire Settlement Agreement, see Note 7A,
"Commitments and Contingencies -- Restructuring -- New Hampshire," to the
consolidated financial statements.
UNREGULATED ENERGY SERVICES
- --------------------------------------------------------------------------------
The energy marketing and brokering business is intensely competitive, with many
companies with larger financial resources than NU's bidding for business in the
deregulating New England market. The sharply fluctuating cost of power supply
caused by, among other things, weather extremes, plant outages and fuel costs,
and a lack of load-following generating facilities, have made it difficult for
Select Energy to economically match its wholesale power purchases with its
power supply obligations. In 1999, Select Energy recorded a net loss of $38.8
million on revenues of $554.9 million, compared to a net loss of $13.4 million
on revenues of $29.3 million in 1998. Select Energy's ability to economically
compete has also been affected by NU's weakened financial position caused by
the extended Millstone outages which ended in mid 1999. In 2000, Select
Energy's expected contract with an affiliated company, Northeast Generation
Company, to purchase 1,329 MW of capacity and energy should significantly
reduce the load-following risk and allow Select Energy to better manage its
portfolio profitability.
Select Energy's goal is to be the regional and national leader in providing
standard offer service to those Northeast markets opened to retail competition.
Currently, Select Energy provides more than 5,000 MW of standard offer load,
making it the largest provider of standard offer service in the Northeast. On
December 22, 1999, Select Energy and an unaffiliated company signed a 6-month
power supply agreement, effective January 1, 2000, to meet the utility's
standard offer service requirements, which are expected to exceed 3,000 MW.
This contract does not include renewal or termination provisions, and payment
is due within ten days of the receipt of the bill. Select Energy has been
serving this standard offer load since December 1998. During 1999, revenues
billed to this customer totaled $276.1 million or approximately 46 percent of
Select Energy's revenues. On January 1, 2000, Select Energy began serving CL&P
with one-half of its approximately 2,000 MW standard offer requirement for a
4-year period. The CL&P standard offer contract does not include renewal
provisions. Select Energy can terminate the contract if the Federal Energy
Regulatory Commission (FERC) or DPUC require changes to the contract which
create material adverse economic impact to Select Energy which cannot be cured.
These power supply contracts are expected to provide Select Energy with over
50 percent of its revenues in the year 2000. In addition, beginning in January
2000, Select Energy assumed responsibility for serving approximately 30 market-
based wholesale contracts, totaling approximately 500 MW, throughout New
England with electric energy supply that was previously provided by CL&P and
WMECO. For the most part, the prices are fixed by contract and applicable to
actual volumes.
NUCLEAR GENERATION
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MILLSTONE NUCLEAR UNITS
Millstone 3 received the appropriate Nuclear Regulatory Commission (NRC)
approvals and resumed operation in July 1998. Millstone 2 received similar NRC
approvals, resumed operation and was returned to CL&P's rate base in May 1999.
Millstone 3 and 2 achieved annual capacity factors of 81.7 percent and 57.9
percent in 1999, respectively. After a 60-day refueling and maintenance outage,
Millstone 3 returned to service on June 29, 1999, and has achieved a 98.1
percent capacity factor through December 31, 1999. Since returning to service
in May 1999, Millstone 2 has achieved a 90.3 percent capacity factor through
December 31, 1999. NU's total share of O&M expenses associated with Millstone 3
and 2 totaled $261.8 million in 1999, as compared to $323.2 million in 1998
and $406 million in 1997. Millstone 1 is currently in decommissioning status.
An auction of the NU system's ownership interests in the Millstone units is
expected in 2000 with a closing in 2001. Based on regulatory decisions received
in 1999, management expects to recover all of its remaining nuclear stranded
costs from retail customers.
SEABROOK
Seabrook achieved an annual capacity factor of 86.4 percent in 1999. However,
since returning to service on May 13, 1999, after a 48-day refueling and
maintenance outage, Seabrook has achieved a 99 percent capacity factor through
December 31, 1999.
CL&P anticipates auctioning its 4.06 percent share of Seabrook, with the
35.98 percent share owned by its affiliate North Atlantic Energy Corporation
(NAEC) after approval of the Settlement Agreement. The Settlement Agreement
with the state of New Hampshire requires divestiture prior to December 31,
2003.
YANKEE COMPANIES
On June 1, 1999, the FERC accepted the offer of settlement which was filed on
January 15, 1999, by the Maine Yankee Atomic Power Company (MYAPC). The
significant aspects of the settlement allowed MYAPC to collect $33.1 million
annually to pay for decommissioning and spent fuel, approved its return on
equity of 6.5 percent, permitted full recovery of MYAPC's unamortized
investment, including fuel, and set an incentive budget for decommissioning at
$436.3 million.
On October 15, 1999, the Vermont Yankee Nuclear Power Corporation (VYNPC)
agreed to sell its unit for $22 million to an unaffiliated company. Among other
commitments, the acquiring company agreed to assume the decommissioning cost of
the unit after it is taken out of service, and the VYNPC owners have agreed to
fund the uncollected decommissioning cost to a negotiated amount at the time of
the closing of the sale. VYNPC's owners have also agreed either to enter into a
new purchased-power agreement with the acquiring company or to buy out such
future power payment obligations by making a fixed payment to them. CL&P, WMECO
and PSNH have elected the buyout option. The VYNPC owners' obligations to close
and pay such amounts are conditioned upon their receipt of satisfactory
regulatory approval of the transaction, including provision for adequate
recovery of these payments.
NUCLEAR DECOMMISSIONING
The staff of the SEC has questioned certain of the current accounting practices
of the electric utility industry regarding the recognition, measurement and
classification of decommissioning costs for nuclear units in their financial
statements.
Currently, the Financial Accounting Standards Board plans to review the
accounting for obligations associated with the retirement of long-lived assets,
including the decommissioning of nuclear units. If current accounting practices
for nuclear decommissioning change, the annual provision for decommissioning
could increase relative to 1999, and the estimated cost for decommissioning
could be recorded as a liability with recognition of an increase in the cost of
the related nuclear unit. However, management does not believe that such a
change will have a material impact on the NU system's financial statements due
to its current and future ability to recover decommissioning costs through
rates.
SPENT NUCLEAR FUEL DISPOSAL COSTS
The United States Department of Energy (DOE) originally was scheduled to begin
accepting delivery of spent fuel in 1998. However, delays in confirming the
suitability of a permanent storage site continually have postponed plans for
the DOE's long-term storage and disposal site. Extended delays or a default by
the DOE could lead to consideration of costly alternatives. NU has the primary
responsibility for the interim storage of its spent nuclear fuel. Adequate
storage capacity exists to accommodate all spent nuclear fuel at Millstone 1.
The facilities for Millstone 2 are expected to provide adequate storage to
accommodate a full-core discharge from the reactor until 2005 with the
implementation of currently planned modifications. Fuel consolidation, which
has been licensed for Millstone 2, could provide adequate storage capacity for
its projected life. The facilities for Millstone 3 are expected to provide
adequate storage for its projected life with the addition of new storage racks.
Seabrook is expected to have spent fuel storage capacity until at least 2010.
Meeting spent fuel storage requirements beyond these periods could require new
and separate storage facilities. For further information regarding spent
nuclear fuel disposal cost, see Note 7D, "Commitments and Contingencies - Spent
Nuclear Fuel Disposal Costs," to the consolidated financial statements.
MARKET RISK AND RISK MANAGEMENT INSTRUMENTS
- --------------------------------------------------------------------------------
The NU system uses swaps and collars to manage the market risk exposures
associated with changes in variable interest rates and energy prices. The NU
system uses these instruments to reduce risk by essentially creating offsetting
market exposures. Based on the derivative instruments which are currently being
utilized by the NU system companies to hedge some of their interest rate and
energy price risks, there may be an impact on earnings upon adoption of SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
management has not estimated at this time.
INTEREST RATE RISK MANAGEMENT INSTRUMENTS
Several NU subsidiaries hold variable-rate, long-term debt, exposing the NU
system to interest rate risk. In order to hedge some of this risk, interest
rate risk management instruments have been entered into on NAEC's $200 million
variable-rate note. A 10 percent increase in market interest rates above the
1999 weighted average variable rate during 2000 would result in an immaterial
impact on interest expense.
ENERGY PRICE RISK MANAGEMENT INSTRUMENTS
In the generation of electricity, the most significant segment of the variable
cost component is the cost of fuel. Typically, most of CL&P's fuel purchases
were protected by a regulatory fuel price adjustment clause. However, for a
specific, well-defined volume of fuel that was excluded from the energy price
adjustment clause, CL&P employed energy price risk management instruments to
protect itself against the risk of rising fuel prices, thereby limiting fuel
costs and protecting its profit margins. These risks were created by the sale
of long-term fixed-price electricity sales contracts to wholesale customers.
In 1999, CL&P divested substantially all of its fossil and hydroelectric
generation assets and also transferred the rights and obligations of its
long-term fixed-price contracts to an unregulated affiliate. As a result, the
fuel swap positions were marked-to-market and CL&P recognized a loss of $5.2
million. In January 2000, the fuel swap positions were liquidated.
UNREGULATED ENERGY SERVICES MARKET RISK
NU's unregulated companies, as major providers of electricity and natural gas,
have certain market risks inherent in their business activities. Market risk
represents the risk of loss that may impact the companies' financial position,
results of operations or cash flows due to adverse changes in commodity market
prices. In 1999, the companies increased their volume of electricity and gas
marketing activities, increasing their risks. Policies and procedures have
been established to manage these exposures including the use of risk management
instruments.
OTHER MATTERS
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ENVIRONMENTAL MATTERS
NU is subject to environmental laws and regulations structured to mitigate or
remove the effect of past operations and to improve or maintain the quality of
the environment. For further information regarding environmental matters, see
Note 7C, "Commitments and Contingencies -- Environmental Matters," to the
consolidated financial statements.
OTHER COMMITMENTS AND CONTINGENCIES
NU is subject to other other commitments and contingencies primarily relating
to nuclear litigation, nuclear insurance contingencies, its construction
program, long-term contractual arrangements, and the New England Power Pool
generation pricing. For further information regarding these other commitments
and contingencies, see Note 7, "Commitments and Contingencies," to the
consolidated financial statements.
YEAR 2000 ISSUES
The transition into the year 2000 was a success for the NU system. Its mission
to provide safe, reliable energy to its customers and to ensure continued
operability of critical business functions was not affected by any year 2000
related issues.
The projected total cost of the year 2000 program is estimated at $21
million. The total cost to date was funded through operating cash flows. The
NU system has incurred and expensed $20 million related to year 2000 readiness
efforts.
FORWARD LOOKING STATEMENTS
This discussion and analysis includes forward looking statements, which are
statements of future expectations and not facts. Words such as estimates,
expects, anticipates, intends, plans, and similar expressions identify forward
looking statements. Actual results or outcomes could differ materially as a
result of further actions by state and federal regulatory bodies, competition
and industry restructuring, changes in economic conditions, changes in
historical weather patterns, changes in laws, developments in legal or public
policy doctrines, technological developments, and other presently unknown or
unforeseen factors.
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------------
The components of significant income statement variances for the past two years are provided in the
table below.
- ---------------------------------------------------------------------------------------------------------------
INCOME STATEMENT VARIANCES 1999 OVER/(UNDER) 1998 1998 OVER/(UNDER) 1997
----------------------------- --------------------------
(Millions of Dollars) AMOUNT PERCENT AMOUNT PERCENT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues $ 704 19% $ (67) (2)%
Operating Expenses:
Fuel, purchased and net interchange power 428 29 (8) (1)
Other operation 52 7 (116) (13)
Maintenance (58) (15) (103) (20)
Depreciation (31) (9) (22) (6)
Amortization of regulatory assets, net 393 (a) 79 64
Federal and state income taxes 93 (a) 4 (a)
Taxes other than income taxes 9 4 (2) (1)
Gain on sale of utility plant (309) -- -- --
Total operating expenses 584 16 (101) (3)
Operating income 120 53 34 18
Equity in earnings of regional nuclear
generating and transmission companies (7) (59) (1) (9)
Nuclear unrecoverable costs 72 50 (143) --
Other income/(loss), net (19) (a) 19 61
Interest charges, net (5) (2) (3) (1)
Preferred dividends of subsidiaries (4) (14) (4) (13)
Net income/(loss) 181 (a) (17) (13)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Percentage greater than 100.
OPERATING REVENUES
Total revenues increased by $704 million or 19 percent in 1999 due to higher
revenues from the competitive companies ($552 million), higher regulated
wholesale revenue ($107 million) and higher regulated retail revenue ($45
million). The competitive companies' increase is due to higher revenues from
Select Energy ($526 million) and HEC Inc. (HEC) ($26 million). Select Energy's
revenues were higher in 1999 as a result of new contracts for energy sales. The
regulated wholesale revenue increase is primarily due to higher energy sales
and related capacity and transmission revenues. The regulated retail increase
is primarily due to higher retail sales ($99 million) and the impact of
Millstone 2 and 3 being returned to CL&P's rate base ($13 million). These
retail increases were partially offset by retail rate reductions for CL&P and
WMECO ($55 and $12 million, respectively). Regulated retail kilowatt-hour sales
increased by 3.8 percent.
Retail revenues decreased by $199 million in 1998 due to retail rate
reductions for CL&P, PSNH and WMECO and the accounting impact of Millstone 2
and 3 being removed from CL&P's rate base. Wholesale revenues decreased by $32
million primarily as a result of the terminated contract with the Connecticut
Municipal Electric Energy Cooperative (CMEEC). Other revenues decreased $50
million due to lower billings to outside companies for reimbursable costs and
price differences among customer classes. These decreases were partially offset
by higher fuel recoveries and higher retail sales volumes. Fuel recoveries
increased by $166 million primarily due to higher fuel revenues from PSNH as a
result of a higher fuel and purchased-power adjustment clause rate. Retail
kilowatt-hour sales were 1.9 percent higher and contributed $48 million to
nonfuel revenues in 1998 primarily as a result of economic growth in all three
states.
FUEL, PURCHASED AND NET
INTERCHANGE POWER
Fuel, purchased and net interchange power expense increased in 1999, primarily
due to higher purchased energy and capacity costs as a result of higher sales
for Select Energy ($521 million), regulated wholesale ($86 million) and
regulated retail ($36 million), partially offset by lower replacement power
costs due to the return to service of Millstone 2 and 3 ($215 million).
The change in fuel, purchased and net interchange power expense in 1998 was
not significant.
OTHER OPERATION AND MAINTENANCE
Other O&M expenses decreased in 1999, primarily due to lower costs at the
Millstone units ($125 million), partially offset by the recognition of
environmental insurance proceeds in 1998 and additional environmental reserves
in 1999 ($30 million), higher transmission and power exchange expenses ($35
million), higher spending at Seabrook ($10 million) as a result of the
refueling outage, higher expenditures for HEC and the competitive businesses
($32 million), and expenses associated with the Con Edison merger ($12 million)
in 1999.
Other O&M expenses decreased in 1998, primarily due to lower costs at the
Millstone units ($159 million), lower costs at the Seabrook and Yankee
companies' nuclear units ($50 million), the recognition of environmental
insurance proceeds ($27 million), and lower administrative and general expenses
($26 million). These decreases were offset partially by higher recognition of
nuclear refueling outage costs primarily as a result of the 1996 CL&P rate
settlement ($29 million).
DEPRECIATION
Depreciation decreased in 1999 and 1998, primarily due to the retirement of
Millstone 1.
AMORTIZATION OF REGULATORY ASSETS, NET
Amortization of regulatory assets, net increased in 1999, primarily due to the
increased amortization associated with the gain on the sale of CL&P's and
WMECO's fossil and hydroelectric generation assets ($309 million), the
amortization of CL&P's and WMECO's Millstone 1 remaining investment ($56
million) and the reclassification of the depreciation on the nuclear plants to
regulatory assets ($23 million).
Amortization of regulatory assets, net increased in 1998, primarily due to
accelerated amortizations in accordance with regulatory decisions for CL&P ($49
million), the amortization of NAEC's Seabrook deferred return ($79 million) and
the beginning of the amortization of CL&P's Millstone 1 investment ($23
million). These increases were partially offset by the lower amortization of
the PSNH acquisition premium ($40 million).
FEDERAL AND STATE INCOME TAXES
The consolidated statement of income taxes provides a reconciliation of actual
and expected tax expense. The tax effect of temporary differences is accounted
for in accordance with the rate-making treatment of the applicable regulatory
commissions. In past years, this rate-making treatment has required the company
to provide the customers with a portion of the tax benefits associated with
accelerated tax depreciation in the year it is generated (flow-through
depreciation). As these flow-through differences turn around, higher tax
expense is recorded.
Federal and state income taxes increased approximately $93 million in 1999,
primarily due to the significant increase in pretax earnings. Significant
variances of other items include a $10 million increase in flow-through
depreciation turnaround and $4.6 million of nontax deductible merger related
expenditures offset by the elimination of a $23 million deferred tax asset
valuation reserve.
Federal and state income taxes increased in 1998, primarily due to higher
book taxable income, partially offset by an increase in income tax credits
primarily due to the Millstone 1 write-off of unrecoverable costs as a result
of the February 1999 CL&P rate decision.
GAIN ON SALE OF UTILITY PLANT
CL&P and WMECO recorded gains on the sale of their fossil and hydroelectric
generation assets in 1999. A corresponding amount of amortization expense was
recorded.
EQUITY IN EARNINGS OF REGIONAL NUCLEAR
GENERATING AND TRANSMISSION COMPANIES
Equity in earnings of regional nuclear generating and transmission companies
decreased in 1999 and 1998, primarily due to lower earnings from the
Connecticut Yankee Atomic Power Company.
NUCLEAR UNRECOVERABLE COSTS
Nuclear unrecoverable costs in 1999 are comprised of one-time charges related
to the CL&P write-off of CMEEC nuclear costs ($19.9 million), the CL&P write-
off of capital projects as a result of the Connecticut standard offer decision
($11 million), the CL&P/WMECO settlement of Millstone 3 joint owner litigation,
net of insurance proceeds ($27 million), the WMECO return disallowed on
Millstone 1 unrecovered plant from March 1998 forward ($10.8 million), and the
WMECO disallowed Millstone 1 plant per the Massachusetts restructuring order
($2.1 million). In comparison, 1998 is comprised of the write-off of the
Millstone 1 entitlement formerly held by CMEEC ($27.8 million) and the write-
off of unrecoverable costs as a result of the February 1999 CL&P rate decision
($115.3 million).
OTHER INCOME/(LOSS), NET
Other income/(loss), net decreased in 1999, primarily due to the PSNH
settlement with the New Hampshire Electric Cooperative ($6.2 million) and the
loss on the CL&P assignment of market-based contracts to Select Energy ($15
million).
The 1998 increase over 1997 is primarily due to the proceeds resulting from
the shareholder derivative suit.
COMPANY REPORT
The accompanying 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 conflicts of interest.
The Audit Committee of the Board of Trustees is composed entirely of outside
trustees. The Audit 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, 1999 and 1998, and the related consolidated
statements of income, comprehensive income, shareholders' equity, cash flows
and income taxes for each of the three years in the period ended December 31,
1999. 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, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 25, 2000
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
(Thousands of Dollars, except share information) 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues $ 4,471,251 $ 3,767,714 $ 3,834,806
- ---------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel, purchased and net interchange power 1,898,314 1,470,200 1,478,566
Other 855,917 803,419 919,431
Maintenance 340,419 399,165 501,693
Depreciation 302,305 332,807 354,329
Amortization of regulatory assets, net 596,437 203,132 123,718
Federal and state income taxes 180,883 82,332 12,650
Taxes other than income taxes 261,353 251,932 253,637
Gain on sale of utility plant (308,914) -- --
- ---------------------------------------------------------------------------------------------------------------
Total operating expenses 4,126,714 3,542,987 3,644,024
- ---------------------------------------------------------------------------------------------------------------
Operating Income 344,537 224,727 190,782
- ---------------------------------------------------------------------------------------------------------------
Other Income/(Loss):
Equity in earnings of regional nuclear generating
and transmission companies 5,034 12,420 11,306
Nuclear unrecoverable costs (71,066) (143,239) --
Other, net (30,855) (12,225) (31,185)
Minority interest in loss of subsidiary (9,300) (9,300) (9,300)
Income taxes 82,272 76,393 10,702
- ---------------------------------------------------------------------------------------------------------------
Other loss, net (23,915) (75,951) (18,477)
- ---------------------------------------------------------------------------------------------------------------
Income before interest charges 320,622 148,776 172,305
- ---------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 258,093 273,824 282,095
Other interest 13,959 7,808 3,561
Deferred interest - nuclear plants (8,401) (12,543) (13,675)
- ---------------------------------------------------------------------------------------------------------------
Interest charges, net 263,651 269,089 271,981
- ---------------------------------------------------------------------------------------------------------------
Income/(loss) after interest charges 56,971 (120,313) (99,676)
Preferred Dividends of Subsidiaries 22,755 26,440 30,286
- ---------------------------------------------------------------------------------------------------------------
Net Income/(Loss) $ 34,216 $ (146,753) $ (129,962)
- ---------------------------------------------------------------------------------------------------------------
Earnings/(Loss) Per Common Share - Basic and Diluted $ 0.26 $ (1.12) $ (1.01)
- ---------------------------------------------------------------------------------------------------------------
Common Shares Outstanding (Average) 131,415,126 130,549,760 129,567,708
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
(Thousands of Dollars) 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Income/(Loss) $ 34,216 $ (146,753) $ (129,962)
- ---------------------------------------------------------------------------------------------------------------
Other comprehensive income, net of tax:
Foreign currency translation adjustments 1 -- (499)
Unrealized gains on securities 118 2,019 --
Minimum pension liability adjustments -- (613) --
- ---------------------------------------------------------------------------------------------------------------
Other comprehensive income/(loss), net of tax 119 1,406 (499)
- ---------------------------------------------------------------------------------------------------------------
Comprehensive Income/(Loss) $ 34,335 $ (145,347) $ (130,461)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED BALANCE SHEETS
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
At December 31,
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
(Thousands of Dollars) 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Utility Plant, at cost:
Electric $ 9,185,272 $ 9,570,547
Other 226,002 195,325
- ---------------------------------------------------------------------------------------------------------------
9,411,274 9,765,872
Less: Accumulated provision for depreciation 6,088,310 4,224,416
- ---------------------------------------------------------------------------------------------------------------
3,322,964 5,541,456
Unamortized PSNH acquisition costs 324,437 352,855
Construction work in progress 177,504 143,159
Nuclear fuel, net 122,529 133,411
- ---------------------------------------------------------------------------------------------------------------
Total net utility plant 3,947,434 6,170,881
- ---------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Nuclear decommissioning trusts, at market 711,910 619,143
Investments in regional nuclear generating companies, at equity 81,503 85,791
Other, at cost 94,768 151,857
- ---------------------------------------------------------------------------------------------------------------
888,181 856,791
- ---------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 255,154 136,155
Investments in securitizable assets 107,620 182,118
Receivables, less accumulated provision for uncollectible accounts
of $4,895 in 1999 and $2,416 in 1998 310,190 237,207
Unbilled revenues 75,728 42,145
Fuel, materials and supplies, at average cost 172,973 202,661
Recoverable energy costs, net - current portion 73,721 67,181
Prepayments and other 75,894 68,087
- ---------------------------------------------------------------------------------------------------------------
1,071,280 935,554
- ---------------------------------------------------------------------------------------------------------------
Deferred Charges:
Regulatory assets 3,642,439 2,328,949
Unamortized debt expense 39,192 40,416
Other 99,526 54,790
- ---------------------------------------------------------------------------------------------------------------
3,781,157 2,424,155
- ---------------------------------------------------------------------------------------------------------------
Total Assets $ 9,688,052 $10,387,381
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED BALANCE SHEETS
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
At December 31,
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
(Thousands of Dollars) 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capitalization and Liabilities:
Capitalization:
Common shares, $5 par value - authorized 225,000,000 shares; 137,393,829 shares
issued and 131,870,284 shares outstanding in 1999 and 137,031,264 shares
issued and 130,954,740 shares outstanding in 1998 $ 686,969 $ 685,156
Capital surplus, paid in 940,726 940,661
Deferred contribution plan - employee stock ownership plan (127,725) (140,619)
Retained earnings 581,817 560,769
Accumulated other comprehensive income 1,524 1,405
- ---------------------------------------------------------------------------------------------------------------
Total common shareholders' equity 2,083,311 2,047,372
Preferred stock not subject to mandatory redemption 136,200 136,200
Preferred stock subject to mandatory redemption 121,289 167,539
Long-term debt 2,372,341 3,282,138
- ---------------------------------------------------------------------------------------------------------------
Total capitalization 4,713,141 5,633,249
- ---------------------------------------------------------------------------------------------------------------
Minority Interest in Consolidated Subsidiaries 100,000 100,000
- ---------------------------------------------------------------------------------------------------------------
Obligations Under Capital Leases 62,824 88,423
- ---------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 278,000 30,000
Long-term debt and preferred stock - current portion 503,315 397,153
Obligations under capital leases - current portion 118,469 120,856
Accounts payable 347,321 338,612
Accrued taxes 158,684 50,755
Accrued interest 37,904 51,044
Other 126,768 139,367
- ---------------------------------------------------------------------------------------------------------------
1,570,461 1,127,787
- ---------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Long-Term Liabilities:
Accumulated deferred income taxes 1,688,114 1,848,694
Accumulated deferred investment tax credits 140,407 143,369
Decommissioning obligation - Millstone 1 702,351 692,000
Deferred contractual obligations 358,387 418,760
Other 352,367 335,099
- ---------------------------------------------------------------------------------------------------------------
3,241,626 3,437,922
- ---------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 9,688,052 $10,387,381
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Accumulated
Capital Deferred Retained Other
Common Surplus, Contribution Earnings Comprehensive
(Thousands of Dollars) Shares Paid In Plan -- ESOP (a) Income Total
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of January 1, 1997 $680,260 $939,589 $(176,091) $ 869,618 $ 498 $2,313,874
- ---------------------------------------------------------------------------------------------------------------
Net loss for 1997 (129,962) (129,962)
Cash dividends on common shares -
$0.25 per share (32,134) (32,134)
Issuance of 790,232 common shares,
$5 par value 3,951 2,551 6,502
Allocation of benefits - ESOP (12,238) 21,950 9,712
Capital stock expenses, net 2,592 2,592
Other comprehensive loss (499) (499)
- ---------------------------------------------------------------------------------------------------------------
Balance as of December 31, 1997 684,211 932,494 (154,141) 707,522 (1) 2,170,085
- ---------------------------------------------------------------------------------------------------------------
Net loss for 1998 (146,753) (146,753)
Issuance of 189,094 common shares,
$5 par value 945 1,714 2,659
Allocation of benefits - ESOP (4,769) 13,522 8,753
Unearned stock compensation (537) (537)
Capital stock expenses, net 3,560 3,560
Gain on equity investment 8,140 8,140
Gain on repurchase of preferred stock 59 59
Other comprehensive income 1,406 1,406
- ---------------------------------------------------------------------------------------------------------------
Balance as of December 31, 1998 685,156 940,661 (140,619) 560,769 1,405 2,047,372
- ---------------------------------------------------------------------------------------------------------------
Net income for 1999 34,216 34,216
Cash dividends on common shares -
$0.10 per share (13,168) (13,168)
Issuance of 362,565 common shares,
$5 par value 1,813 3,505 5,318
Allocation of benefits - ESOP (3,053) 12,894 9,841
Unearned stock compensation (1,194) (1,194)
Capital stock expenses, net 807 807
Other comprehensive income 119 119
- ---------------------------------------------------------------------------------------------------------------
Balance as of December 31, 1999 $686,969 $940,726 $(127,725) $ 581,817 $1,524 $ 2,083,311
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) 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,
1999, retained earnings available for the payment of dividends totaled
$158.5 million.
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
(Thousands of Dollars) 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------
Operating Activities:
<S> <C> <C> <C>
Income/(loss) after interest charges $ 56,971 $ (120,313) $ (99,676)
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation 302,305 332,807 354,329
Deferred income taxes and investment tax credits, net (183,356) 23,502 26,435
Amortization of regulatory assets, net 596,437 203,132 123,718
Amortization of demand-side-management costs, net 10,014 42,085 38,029
Amortization/(deferral) of recoverable energy costs 44,526 38,356 (54,102)
Nuclear unrecoverable costs 71,066 143,239 --
Gain on sale of utility plant (308,914) -- --
Net other (uses)/sources of cash (55,543) 55,399 (66,518)
Changes in working capital:
Receivables and unbilled revenues, net (106,566) (27,553) 352,384
Fuel, materials and supplies 29,688 10,060 (1,307)
Accounts payable 8,709 (64,258) (104,269)
Accrued taxes 107,929 4,739 38,966
Investments in securitizable assets 74,498 48,787 (230,905)
Other working capital (excludes cash) (33,546) (26,714) (36,464)
- ---------------------------------------------------------------------------------------------------------------
Net cash flows provided by operating activities 614,218 663,268 340,620
- ---------------------------------------------------------------------------------------------------------------
Financing Activities:
Issuance of common shares 5,318 2,659 6,502
Issuance of long-term debt 200 275 260,000
Net increase/(decrease) in short-term debt 248,000 (20,000) 11,250
Reacquisitions and retirements of long-term debt (817,759) (269,555) (288,793)
Reacquisitions and retirements of preferred stock (46,250) (62,211) (25,000)
Cash dividends on preferred stock (22,755) (26,440) (30,286)
Cash dividends on common shares (13,168) -- (32,134)
- ---------------------------------------------------------------------------------------------------------------
Net cash flows used in financing activities (646,414) (375,272) (98,461)
- ---------------------------------------------------------------------------------------------------------------
Investing Activities:
Investment in plant:
Electric and other utility plant (287,081) (217,009) (233,399)
Nuclear fuel (42,471) (17,026) (6,852)
- ---------------------------------------------------------------------------------------------------------------
Net cash flows used for investments in plant (329,552) (234,035) (240,251)
Investment in nuclear decommissioning trusts (74,231) (75,551) (61,046)
Investment in nonregulated assets (23,542) -- --
Net proceeds from the sale of utility plant 565,436 -- --
Other investment activities, net 13,084 14,342 8,344
- ---------------------------------------------------------------------------------------------------------------
Net cash flows provided by/(used in) investing activities 151,195 (295,244) (292,953)
- ---------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in cash for the period 118,999 (7,248) (50,794)
Cash and cash equivalents - beginning of period 136,155 143,403 194,197
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents - end of period $ 255,154 $ 136,155 $ 143,403
- ---------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information:
Cash paid/(refunded) during the year for:
Interest, net of amounts capitalized $ 266,823 $ 238,990 $ 291,335
- ---------------------------------------------------------------------------------------------------------------
Income taxes $ 86,183 $ 19,454 $ (26,387)
- ---------------------------------------------------------------------------------------------------------------
Increase in obligations:
Niantic Bay Fuel Trust and other capital leases $ 5,865 $ 12,583 $ 3,475
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
At December 31,
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
(Thousands of Dollars) 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Shareholders' Equity $2,083,311 $2,047,372
- ---------------------------------------------------------------------------------------------------------------
Cumulative Preferred Stock of Subsidiaries:
$25 par value -- authorized 36,600,000 shares at December 31, 1999 and 1998;
2,720,000 shares outstanding in 1999 and 3,780,000 shares outstanding in 1998
$50 par value -- authorized 9,000,000 shares at December 31, 1999 and 1998;
4,314,774 shares outstanding in 1999 and 4,709,774 shares outstanding in 1998
$100 par value -- authorized 1,000,000 shares at December 31, 1999 and 1998;
200,000 shares outstanding in 1999 and 1998
- ---------------------------------------------------------------------------------------------------------------
Dividend Rates Current Redemption Current Shares
Prices (a) Outstanding
- ---------------------------------------------------------------------------------------------------------------
Not Subject to Mandatory Redemption:
$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 136,200 136,200
- ---------------------------------------------------------------------------------------------------------------
Subject to Mandatory Redemption:(b)
$25 par value -- $1.90 to $2.65 $25.00 to $25.38 2,720,000 68,000 94,500
$50 par value -- $2.65 to $3.615 $50.67 to $51.93 1,990,774 99,539 119,289
- ---------------------------------------------------------------------------------------------------------------
Total Preferred Stock Subject to Mandatory Redemption 167,539 213,789
Less: Preferred Stock to be redeemed within one year 46,250 46,250
- ---------------------------------------------------------------------------------------------------------------
Preferred Stock Subject to Mandatory Redemption, net 121,289 167,539
- ---------------------------------------------------------------------------------------------------------------
Long-Term Debt:(c)
First Mortgage Bonds --
Maturity Interest Rates
- ---------------------------------------------------------------------------------------------------------------
1999 5.50% to 7.25% -- 254,000
2000 5.75% to 6.875% 159,000 260,000
2001 7.375% to 7.875% 220,000 220,000
2002 7.75% to 9.05% 489,150 560,000
2004 6.125% -- 140,000
2019-2023 7.375% to 7.50% 20,000 120,000
2024-2025 7.375% to 8.50% 305,000 430,000
- ---------------------------------------------------------------------------------------------------------------
Total First Mortgage Bonds 1,193,150 1,984,000
- ---------------------------------------------------------------------------------------------------------------
Other Long-Term Debt --
Pollution Control Notes and Other Notes -- (d)
2000 Adjustable Rate(e) and 7.67% 206,011 212,022
2005-2006 8.38% to 8.58% 158,000 177,000
2013-2018 Adjustable Rate and 5.90% 33,400 33,400
2020 Adjustable Rate 15,300 15,300
2021-2022 5.85% to 7.65% and Adjustable Rate 552,485 552,485
2028 5.85% to 5.95% 369,300 369,300
2031 Adjustable Rate 62,000 62,000
- ---------------------------------------------------------------------------------------------------------------
Total Pollution Control Notes and Other Notes 1,396,496 1,421,507
Fees and interest due for spent nuclear fuel disposal costs 226,463 216,377
Other 15,346 17,043
- ---------------------------------------------------------------------------------------------------------------
Total Other Long-Term Debt 1,638,305 1,654,927
- ---------------------------------------------------------------------------------------------------------------
Unamortized premium and discount, net (2,049) (5,886)
- ---------------------------------------------------------------------------------------------------------------
Total Long-Term Debt 2,829,406 3,633,041
Less: Amounts due within one year 457,065 350,903
- ---------------------------------------------------------------------------------------------------------------
Long-Term Debt, net 2,372,341 3,282,138
- ---------------------------------------------------------------------------------------------------------------
Total Capitalization $4,713,141 $5,633,249
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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:
(Millions of Dollars)
- -----------------------------------------------------------------------------
Balance at December 31, 1997 $ 276.0
Reacquisitions and Retirements (62.2)
- -----------------------------------------------------------------------------
Balance at December 31, 1998 213.8
Reacquisitions and Retirements (46.3)
- -----------------------------------------------------------------------------
Balance at December 31, 1999 $ 167.5
- -----------------------------------------------------------------------------
The minimum sinking fund requirements of the series subject each year to
mandatory redemption aggregate $46.3 million each year in 2000 and 2001, $21.3
million in 2002, $7.7 million in 2003 and $5.3 million in 2004. 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, 1999, for the years 2000 through 2004 are $457.1
million, $314 million, $374.6 million, $25.6 million, and $25.5 million,
respectively.
Essentially all utility plant of CL&P, PSNH, WMECO, and NAEC, 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 two life-of-unit, full cost recovery contracts.
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.
CL&P has $62 million of tax-exempt Pollution Control Revenue Bonds (PCRBs)
with bond insurance secured by the first mortgage bonds and a liquidity
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
(BFA) of the state of New Hampshire. Pursuant to these arrangements, the BFA
issued seven series of PCRBs and loaned the proceeds to PSNH. At December 31,
1999 and 1998, $516.5 million of the PCRBs were outstanding. PSNH's obligation
to repay each series of PCRBs is secured by the first mortgage bonds. Each
such series of first mortgage bonds contains similar terms and provisions as
the applicable series of PCRBs. For financial reporting purposes, these bonds
would not be considered outstanding unless PSNH failed to meet its obligations
under the PCRBs.
(d) The average effective interest rates on the variable-rate pollution control
notes ranged from 2.2 percent to 6.1 percent for 1999 and 3.1 percent to 5.6
percent for 1998.
During 1998, $535 million of adjustable-rate debt was converted to fixed-
rate debt at rates ranging from 5.85 percent to 6.0 percent.
(e) Interest rate swaps effectively fix the interest rate of NAEC's $200
million variable-rate bank note at interest rates ranging from 5.81 percent to
6.07 percent.
CONSOLIDATED STATEMENTS OF INCOME TAXES
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
(Thousands of Dollars) 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The components of the federal and state income
tax provisions charged to operations are:
Current income taxes:
Federal $ 248,012 $(13,660) $(22,760)
State 33,955 (3,903) (1,727)
- ---------------------------------------------------------------------------------------------------------------
Total current 281,967 (17,563) (24,487)
- ---------------------------------------------------------------------------------------------------------------
Deferred income taxes, net:
Federal (134,773) 51,913 46,871
State (28,789) (12,948) (10,841)
- ---------------------------------------------------------------------------------------------------------------
Total deferred (163,562) 38,965 36,030
- ---------------------------------------------------------------------------------------------------------------
Investment tax credits, net (19,794) (15,463) (9,595)
- ---------------------------------------------------------------------------------------------------------------
Total income tax expense $ 98,611 $ 5,939 $ 1,948
- ---------------------------------------------------------------------------------------------------------------
The components of total income tax expense are
classified as follows:
Income taxes charged to operating expenses $ 180,883 $ 82,332 $ 12,650
Other income taxes (82,272) (76,393) (10,702)
- ---------------------------------------------------------------------------------------------------------------
Total income tax expense $ 98,611 $ 5,939 $ 1,948
- ---------------------------------------------------------------------------------------------------------------
Deferred income taxes are comprised of the tax effects
of temporary differences as follows:
Deferred tax asset associated with net operating losses $ 14,801 $ 69,212 $ --
Depreciation, leased nuclear fuel, settlement credits
and disposal costs (4,580) 16,217 32,932
Regulatory deferral (23,463) (26,786) 19,237
State net operating loss carryforward 7,777 1,150 (7,670)
Regulatory disallowance (30,719) (18,080) --
Sale of fossil and hydroelectric generation assets (125,807) -- --
Other (1,571) (2,748) (8,469)
- ---------------------------------------------------------------------------------------------------------------
Deferred income taxes, net $(163,562) $ 38,965 $ 36,030
- ---------------------------------------------------------------------------------------------------------------
A reconciliation between income tax expense and the
expected tax expense at 35 percent of pretax income:
Expected federal income tax $ 54,454 $(40,031) $(34,205)
Tax effect of differences:
Depreciation 35,672 25,793 21,776
Amortization of regulatory assets 34,736 30,740 5,498
Amortization of PSNH acquisition costs 9,946 17,301 31,298
Investment tax credit amortization (19,794) (15,463) (9,595)
State income taxes, net of federal benefit 3,358 (10,953) (8,169)
Nondeductible penalties 17 3,589 648
Adjustment for prior years' taxes (2,796) (7,338) (2,592)
Employee stock ownership plan 1,166 (1,670) (4,648)
Dividends received deduction (1,314) (3,218) (1,563)
Adjustment to tax asset valuation allowance (23,129) 7,000 8,750
Merger related expenditures 4,597 -- --
Other, net 1,698 189 (5,250)
- ---------------------------------------------------------------------------------------------------------------
Total income tax expense $ 98,611 $ 5,939 $ 1,948
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are in integral part of these financial statements.
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 (NU system). Through its regulated utilities and unregulated
energy service companies, the NU system serves in excess of 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. The NU system's regulated utilities
furnish franchised retail electric service in Connecticut, New Hampshire and
western Massachusetts through three wholly owned subsidiaries: The Connecticut
Light and Power Company (CL&P), Public Service Company of New Hampshire (PSNH)
and Western Massachusetts Electric Company (WMECO). Another wholly owned
subsidiary, North Atlantic Energy Corporation (NAEC), sells all of its
entitlement to the capacity and output of the Seabrook Station (Seabrook)
nuclear unit to PSNH under the terms of two life-of-unit, full cost recovery
contracts (Seabrook Power Contracts). A fifth wholly owned subsidiary, Holyoke
Water Power Company (HWP), also is engaged in the production and distribution
of electric power.
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 the NU system is subject to the provisions of the 1935 Act.
Arrangements among the NU 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.
NU Enterprises, Inc. (NUEI) is a wholly owned subsidiary of NU and acts as
the holding company for NU's unregulated energy service companies. Northeast
Generation Company (NGC) was formed to acquire generating facilities. Northeast
Generation Services Company (NGS) was formed to provide services to the
electric generation market as well as to large commercial and industrial
customers in the Northeast. Select Energy, Inc. (Select Energy), HEC Inc.
(HEC) and Mode 1 Communications, Inc. (Mode 1) engage in a variety of energy-
related and telecommunications activities, as applicable, primarily in the
unregulated energy retail and wholesale commodity, marketing and services
fields. During 1999 and 1998, NUEI accounted for 13.6 percent and 1.4 percent
of consolidated revenues, respectively.
Several wholly owned subsidiaries of NU provide support services for the NU
system companies and, in some cases, for other New England utilities. Northeast
Utilities Service Company provides centralized accounting, administrative,
information resources, engineering, financial, legal, operational, planning,
purchasing, and other services to the NU system companies. Northeast Nuclear
Energy Company acts as agent for the NU system companies and other New England
utilities in operating the Millstone nuclear units. North Atlantic Energy
Service Corporation has operational responsibility for Seabrook. Three other
subsidiaries construct, acquire or lease some of the property and facilities
used by the NU system companies.
On October 13, 1999, NU and Consolidated Edison, Inc. (Con Edison) announced
that they have agreed to a merger to combine the two companies. For further
information, see Note 15, " Merger Agreement with Con Edison."
On October 12, 1999, Yankee Energy System, Inc. shareholders approved the
proposed merger with NU. On December 20, 1999, the Connecticut Department of
Public Utility Control (DPUC) issued its final decision approving the merger.
In January 2000, the SEC granted final approval of the merger. The transaction
is expected to close in early March 2000.
B. PRESENTATION
The consolidated financial statements of the NU system include the accounts of
all subsidiaries. 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. NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and hedging activities. This
statement will require derivative instruments utilized by the NU system
companies to be recognized on the balance sheets as assets or liabilities at
fair value.
In June 1999, the FASB delayed the adoption date of SFAS No. 133 until
January 1, 2001.
Based on the derivative instruments which currently are being utilized by
the NU system companies to hedge some of their interest rate risk and certain
power contracts, there may be an impact on earnings upon adoption of SFAS No.
133 which management has not estimated at this time.
D. INVESTMENTS AND JOINTLY OWNED ELECTRIC UTILITY PLANT
Regional Nuclear Generating Companies: CL&P, PSNH and WMECO own common stock in
four regional nuclear companies (Yankee Companies). The NU system's ownership
interests in the Yankee Companies at December 31, 1999 and 1998, which are
accounted for on the equity basis due to the NU system companies' ability to
exercise significant influence over their operating and financial policies are
49 percent of the Connecticut Yankee Atomic Power Company (CYAPC), 38.5 percent
of the Yankee Atomic Electric Company (YAEC), 20 percent of the Maine Yankee
Atomic Power Company (MYAPC), and 16 percent of the Vermont Yankee Nuclear
Power Corporation (VYNPC). The NU system's total equity investment in the
Yankee Companies at December 31, 1999 and 1998, is $81.5 million and $85.8
million, respectively. Each Yankee Company owns a single nuclear generating
unit. However, VYNPC is the only unit still in operation at December 31, 1999.
Millstone: CL&P and WMECO together own 100 percent of both Millstone 1, a
660 megawatt (MW) nuclear unit and Millstone 2, an 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. The company
expects to auction all three units as a single package in 2000, with a closing
in 2001. Appropriate regulatory approvals will be required to complete the
auction.
Seabrook: CL&P and NAEC together have a 40.04 percent joint ownership
interest in Seabrook, a 1,148 MW nuclear generating unit. NAEC sells all of its
share of the power generated by Seabrook to PSNH under the Seabrook Power
Contracts. CL&P and NAEC expect to auction their investment in Seabrook upon
the resolution of the restructuring issues in the state of New Hampshire.
Plant-in-service and the accumulated provision for depreciation for the NU
system's share of Millstone 2 and 3 and Seabrook are as follows:
- ------------------------------------------------------------------
At December 31,
- ------------------------------------------------------------------
(Millions of Dollars) 1999 1998
- ------------------------------------------------------------------
Plant-in-service
Millstone 2 $ 952.1 $ 936.8
Millstone 3 2,414.9 2,407.4
Seabrook 901.9 895.5
Accumulated provision for depreciation
Millstone 2 $ 910.0 $ 379.6
Millstone 3 2,220.5 765.9
Seabrook 318.8 170.0
- ------------------------------------------------------------------
Hydro-Quebec: NU has a 22.66 percent equity ownership interest, totaling
$16.5 million, in two companies that transmit electricity imported from the
Hydro-Quebec system in Canada.
E. DEPRECIATION
The provision for depreciation is calculated using the straight-line method
based on the estimated remaining useful lives of depreciable utility
plant-in-service, adjusted for salvage value and removal costs, as approved by
the appropriate regulatory agency where applicable. 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
the plant, including costs of removal less salvage, is charged to the
accumulated provision for depreciation. The costs of closure and removal of
nonnuclear facilities are accrued over the life of the plant as a component
of depreciation. The depreciation rates for the several classes of electric
plant-in-service are equivalent to a composite rate of 3.3 percent in 1999
and 1998 and 3.8 percent in 1997.
At December 31, 1999 and 1998, the accumulated provision for depreciation
included $91.5 million and $88.4 million, respectively, accrued for the cost of
removal, net of salvage, for nonnuclear generation property.
As a result of discontinuing the application of SFAS No. 71, "Accounting for
the Effects of Certain Types of Regulation," for CL&P's and WMECO's generation
businesses, including CL&P's ownership interest in Seabrook, the company
recorded a charge to accumulated depreciation for the nuclear plant in excess
of fair market value in the amount of $2 billion and a corresponding regulatory
asset was created.
F. REVENUES
Regulated 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. Regulatory
commissions also have authority over the terms and conditions of nontraditional
rate-making arrangements. At the end of each accounting period, CL&P, PSNH and
WMECO accrue a revenue estimate for the amount of energy delivered but
unbilled.
Revenues for NU's unregulated subsidiaries, primarily Select Energy, are
recognized when the energy is delivered.
G. PSNH ACQUISITION COSTS
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. The Rate Agreement provides for the
recovery through rates, with a return, of the PSNH acquisition costs. The
unrecovered balance was $324.4 million and $352.9 million at December 31, 1999
and 1998, respectively, and is being recovered ratably over a 20-year period
ending May 1, 2011, in accordance with the Rate Agreement. Through December 31,
1999 and 1998, $668 million and $640 million, respectively, has been collected.
H. REGULATORY ACCOUNTING AND ASSETS
The accounting policies of the NU system operating companies and the
accompanying consolidated financial statements conform to generally accepted
accounting principles applicable to rate-regulated enterprises and historically
reflect the effects of the rate-making process in accordance with SFAS No. 71.
As a result of final restructuring orders issued in 1999, CL&P and WMECO
discontinued the application of SFAS No. 71 for the generation portion of their
businesses.
Based on a current evaluation of the various factors and conditions that are
expected to impact future cost recovery, management continues to believe it is
probable that the NU system operating companies will recover their investments
in long-lived assets, including regulatory assets. In addition, all material
regulatory assets are earning a return. The components of the NU system
companies' regulatory assets are as follows:
- ------------------------------------------------------------------
At December 31,
- ------------------------------------------------------------------
(Millions of Dollars) 1999 1998
- ------------------------------------------------------------------
Recoverable nuclear costs $2,210.8 $ 576.3
Income taxes, net 636.6 762.5
Unrecovered contractual obligations 349.2 408.0
Recoverable energy costs, net 228.2 279.2
Deferred costs - nuclear plants 111.6 187.1
Other 106.0 115.8
- ------------------------------------------------------------------
$3,642.4 $2,328.9
- ------------------------------------------------------------------
The restructuring orders in Connecticut and Massachusetts provide for the
transmission and distribution business to continue to be cost-of-service based
and also provide for a transition charge which recovers stranded costs,
including the nuclear regulatory assets established below.
As a result of discontinuing the application of SFAS No. 71 for CL&P's and
WMECO's generation businesses, the company reclassified nuclear plant in excess
of its estimated fair market value from plant to regulatory assets. As of
December 31, 1999, both the CL&P unamortized balance ($1.38 billion) and the
WMECO unamortized balance ($316.1 million) are classified as recoverable
nuclear costs. Also included in that regulatory asset component for 1999 is
$514.7 million, which includes Millstone 1 recoverable nuclear costs relating
to the recoverable portion of the undepreciated plant and related assets
($145.7 million) and the decommissioning and closure obligation ($369 million).
At this time, management continues to believe that the application of SFAS
No. 71 for PSNH and NAEC remains appropriate. If the "Agreement to Settle PSNH
Restructuring" (Settlement Agreement), as filed, is approved by the New
Hampshire Public Utilities Commission (NHPUC) and implemented, then PSNH will
discontinue the application of SFAS No. 71 for the generation portion of its
business and record an after-tax write-off of $225 million. PSNH's transmission
and distribution business will continue to be rate-regulated on a
cost-of-service basis as the Settlement Agreement allows for the recovery of
the remaining regulatory assets through that portion of the business.
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 rate-making treatment of the applicable regulatory
commissions.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, that give rise to the
accumulated deferred tax obligation is as follows:
- --------------------------------------------------------------
At December 31,
- ---------------------------------------------------------------
(Millions of Dollars) 1999 1998
- ---------------------------------------------------------------
Accelerated depreciation and
other plant-related differences $1,388.0 $1,537.9
Net operating loss carryforwards -- (33.4)
Regulatory assets--
income tax gross-up 241.2 370.0
Other 58.9 (25.8)
- --------------------------------------------------------------
$1,688.1 $1,848.7
- --------------------------------------------------------------
As of December 31, 1999, PSNH had an Investment Tax Credit carryforward of
$23 million, which if unused, expires in 2004.
J. RECOVERABLE ENERGY COSTS
Energy Policy Act of 1992: Under the Energy Policy Act of 1992 (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 (DOE) (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, 1999 and 1998, the NU system's total D&D Assessment
deferrals were $38.4 million and $57.5 million, respectively.
CL&P: Through December 31, 1999, CL&P had an energy adjustment clause under
which fuel prices above or below base-rate levels were charged to or credited
to customers. At December 31, 1999 and 1998, recoverable energy costs included
$62.6 million and $78.1 million, respectively, of costs previously deferred.
Coincident with the start of restructuring, the fuel clause was terminated. The
balance at December 31, 1999, has been recorded as a generation-related
stranded cost and will be recovered through a transition charge mechanism.
PSNH: The Rate Agreement includes a fuel and purchased-power adjustment
clause (FPPAC) permitting PSNH to pass through to retail customers, for a
10-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. At December 31, 1999 and 1998, PSNH
had $120.7 million and $156.3 million, respectively, of noncurrent recoverable
energy costs deferred under the FPPAC. If the Settlement Agreement is approved,
the FPPAC will be recovered through a transition charge.
K. DEFERRED COSTS -- NUCLEAR PLANTS
Under the Rate Agreement, the plant costs of Seabrook were phased into rates
over a 7-year period beginning May 15, 1991. Total costs deferred under the
phase-in plan were $288 million. This plan is accounted for in compliance with
SFAS No. 92, "Regulated Enterprises -- Accounting for Phase-In Plans." The
costs will be fully recovered from PSNH's customers by May 2001.
L. UNRECOVERED CONTRACTUAL OBLIGATIONS
Under the terms of contracts with the Yankee Companies, the shareholder-
sponsored companies are responsible for their proportionate share of the
remaining costs of the units, including decommissioning. As management
expects that the NU system companies will be allowed to recover these costs
from their customers, the NU system companies have recorded regulatory assets,
with corresponding obligations, on their respective balance sheets.
M. INTEREST RATE RISK MANAGEMENT INSTRUMENTS
The NU system utilizes market risk management instruments to hedge well-defined
risks associated with variable interest rates. To qualify for hedge treatment,
the underlying hedged item must expose the company to risks associated with
market fluctuations and the market risk management instrument used must be
designated as a hedge and must reduce the NU system's exposure to market
fluctuations throughout the period. Amounts receivable or payable under
interest rate risk management instruments are accrued and offset against
interest expense.
N. CASH AND CASH EQUIVALENTS
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.
2. NUCLEAR DECOMMISSIONING AND PLANT CLOSURE COSTS
Millstone and Seabrook: The NU system operating nuclear power plants, Millstone
2 and 3 and Seabrook, have service lives that are expected to end during the
years 2015 through 2026, and upon retirement, must be decommissioned. Millstone
1's expected service life was to end in 2010, however, in July 1998, restart
activities were discontinued and preparations for decommissioning the unit
began. Current decommissioning studies conclude that complete and immediate
dismantlement as soon as practical after retirement continues to be the most
viable and economic method of decommissioning a unit. These studies are
reviewed and updated periodically to reflect changes in decommissioning
requirements, costs, technology, and inflation. 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.
The estimated cost of decommissioning Millstone 2, in year end 1999 dollars
is $413.4 million. The NU system's ownership share of the estimated cost of
decommissioning Millstone 3 and Seabrook in year end 1999 dollars, is $421.3
million and $226.2 million, respectively. Nuclear decommissioning costs are
accrued over the expected service lives of the units and are included in
depreciation expense. Nuclear decommissioning expenses for these units
amounted to $30.6 million in 1999, $27.9 million in 1998 and $28.6 million in
1997. Nuclear decommissioning, as a cost of removal, is included in the
accumulated provision for depreciation. Through December 31, 1999 and 1998,
total decommissioning expenses of $260.6 million and $229.7 million,
respectively, have been collected from customers and are reflected in the
accumulated provision for depreciation.
A Post-Shutdown Decommissioning Activities Report for Millstone 1 was filed
with the Nuclear Regulatory Commission (NRC) in June 1999 which outlines
decommissioning activities, and costs, and supports the obligation recorded by
the company. Nuclear decommissioning expenses for Millstone 1 were $25.7
million in 1999, $19.8 million in 1998 and $20.2 million in 1997.
External decommissioning trusts have been established for the costs of
decommissioning the Millstone units. Payments for the NU system's ownership
share of the cost of decommissioning Seabrook 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 and after-tax earnings
on the Millstone and Seabrook decommissioning funds of 5.5 percent and 6.5
percent, respectively.
As of December 31, 1999 and 1998, CL&P, PSNH and WMECO collected a total of
$260.6 million and $229.7 million, respectively, through rates toward the
future decommissioning costs of their shares of Millstone 2 and 3 and Seabrook,
of which $239.7 million in 1999 and $209.9 million in 1998 have been
transferred to external decommissioning trusts. Earnings on the decommissioning
trusts increase the decommissioning trust balances and the accumulated reserves
for depreciation. Unrealized gains and losses associated with the
decommissioning trusts and financing funds also impact the balance of the
trusts and the accumulated reserve for depreciation. The fair values of the
amounts in the external decommissioning trusts were $410.2 million and $349.9
million at December 31, 1999 and 1998, respectively.
Yankee Companies: VYNPC owns and operates a nuclear generating unit with a
service life that is expected to end in 2012. The NU system's ownership share
of estimated costs, in year end 1999 dollars, of decommissioning this unit is
$68.6 million. On October 15, 1999, VYNPC agreed to sell the unit for $22
million to an unaffiliated company. Among other commitments, the acquiring
company agreed to assume the decommissioning cost of the unit after it is taken
out of service, and the VYNPC owners have agreed to fund the uncollected
decommissioning cost to a negotiated amount at the time of the closing of the
sale.
As of December 31, 1999 and 1998, NU's remaining estimated obligation,
including decommissioning for the units owned by CYAPC, YAEC and MYAPC, which
have been shut down was $358.4 million and $418.8 million, respectively.
3. SHORT-TERM DEBT
Limits: The amount of short-term borrowings that may be incurred by NU and the
NU system operating companies is subject to periodic approval by either the SEC
under the 1935 Act or by the respective state regulators. SEC authorization
allowed NU, CL&P, WMECO, and NAEC, as of January 1, 1999, to incur total
short-term borrowings up to a maximum of $400 million, $375 million, $250
million, and $60 million, respectively. In addition, 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, 1999, CL&P's and WMECO's
charters permit CL&P and WMECO to incur $322 million and $132 million,
respectively, of unsecured debt. PSNH is authorized under a NHPUC order to
incur short-term borrowings up to a maximum of $68.3 million.
Credit Agreements: On November 19, 1999, CL&P and WMECO entered into a new
364-day revolving credit facility for $500 million, replacing the previous
$313.75 million facility which was to expire on November 21, 1999. The
revolving credit facility will be used to bridge gaps in working capital and
provide short-term liquidity. CL&P and WMECO may draw up to $300 million and
$200 million, respectively, under the facility which is secured by second
mortgages on Millstone 2 and 3. Unless extended, the new credit facility will
expire on November 17, 2000. At December 31, 1999 and 1998, there were $213
million and $30 million, respectively, in borrowings under these facilities.
To support the working capital needs of NU and its unregulated subsidiaries,
NU replaced its $25 million 364-day revolving credit facility which was to
expire on November 21, 1999, with a new 364-day unsecured revolving credit
facility (NU Credit Agreement) on November 19, 1999. This new facility provides
a total commitment of $350 million which is available subject to two
overlapping sub-limits. First, subject to the notional amount of any letters of
credit outstanding, amounts up to $200 million are available for advances.
Second, subject to the advances outstanding, letters of credit may be issued in
notional amounts up to $250 million. Unless extended, this credit facility will
expire on November 17, 2000. As of December 31, 1999 and 1998, there were $65
million and no borrowings under the NU Credit Agreement and the previous credit
facility, respectively. In regard to credit support, NU had $29 million in
letters of credit issued under this agreement as of December 31, 1999.
In addition, NU provides credit assurance in the form of guarantees, letters
of credit, performance guarantees and other assurances for the financial
performance obligations of certain of its unregulated subsidiaries. NU
currently has authorization from the SEC to provide up to $500 million of
guarantees, but is limited under certain loan agreements to $350 million of
such arrangements without creditor approval. As of December 31, 1999, NU had
provided approximately $190 million of such credit assurances.
Under the credit agreements discussed above, the respective borrowers may
borrow at fixed or variable rates plus an applicable margin based upon the
companies' most senior secured debt as rated by the lower of Standard and
Poor's or Moody's Investor Service (Moody's). The weighted average interest
rate on the NU system companies' notes payable to banks outstanding on
December 31, 1999 and 1998, was 7.928 percent and 6.53 percent, respectively.
Maturities of short-term debt obligations were for periods of three months or
less.
These credit agreements provide that the parties to these agreements must
comply with certain financial and nonfinancial covenants as are customarily
included in such agreements, including, but not limited to, common equity
ratios, interest coverage ratios and dividend payment restrictions.
4. LEASES
CL&P and WMECO finance their nuclear fuel for Millstone 2 and their respective
shares of the nuclear fuel for Millstone 3 under the Niantic Bay Fuel Trust
(NBFT) capital lease agreement. This capital lease agreement has an expiration
date of June 1, 2040. At December 31, 1999 and 1998, the present value of the
capital lease obligation to the NBFT was $157 million and $178.7 million,
respectively. In connection with the planned nuclear divestiture, CL&P and
WMECO anticipate that the NBFT capital lease agreement will be terminated and
the NBFT's obligation under the $180 million Series G Intermediate Term Note
agreement will be assigned to CL&P and WMECO.
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 NU system companies also have entered into lease agreements, some of
which are capital leases, 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.
Capital lease rental payments charged to operating expense were $20.8
million in 1999, $31 million in 1998 and $19 million in 1997. Interest included
in capital lease rental payments was $13.7 million in 1999, $18.3 million in
1998 and $13.6 million in 1997. Operating lease rental payments charged to
expense were $7.5 million in 1999, $15.7 million in 1998 and $17.3 million in
1997.
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, 1999 are:
- ------------------------------------------------------------------
(Millions of Dollars)
- ------------------------------------------------------------------
Capital Operating
Year Leases Leases
- ------------------------------------------------------------------
2000 $ 7.4 $ 24.4
2001 4.9 22.6
2002 3.1 19.0
2003 3.1 15.5
2004 3.0 13.6
After 2004 30.6 26.9
- ------------------------------------------------------------------
Future minimum lease payments 52.1 $ 122.0
Less amount representing interest 27.8
- ------------------------------------------------------------------
Present value of future
minimum lease payments
for other than nuclear fuel 24.3
Present value of future
nuclear fuel lease payments 157.0
- ------------------------------------------------------------------
Present value of future
minimum lease payments $ 181.3
- ------------------------------------------------------------------
5. EMPLOYEE BENEFITS
A. PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The NU system companies participate in a uniform noncontributory defined
benefit retirement plan covering substantially all regular NU system employees.
Benefits are based on years of service and the employees' highest eligible
compensation during 60 consecutive months of employment. The total pension
credit, part of which was credited to utility plant, was $54.4 million in
1999, $44.1 million in 1998 and $22.5 million in 1997.
Currently, the NU system companies annually fund an amount at least equal to
that which will satisfy the requirements of the Employee Retirement Income
Security Act and Internal Revenue Code (the Code).
The NU system companies also provide certain health care benefits, primarily
medical and dental, and life insurance benefits through a benefit plan to
retired employees. These benefits are available for employees retiring from the
NU system who have met specified service requirements. For current employees
and certain retirees, the total benefit is limited to two times the 1993 per
retiree health care cost. These costs are charged to expense over the future
estimated work life of the employee. The NU system companies annually fund
postretirement costs through external trusts with amounts that have been
rate-recovered and which also are tax deductible under the Code.
Pension and trust assets are invested primarily in domestic and
international equity securities and bonds.
The following table represents information on the plans' benefit obligation,
fair value of plan assets, and the respective plans' funded status:
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
At December 31,
- ---------------------------------------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
(Millions of Dollars) 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ (1,479.2) $(1,392.8) $(305.2) $(286.0)
Service cost (43.7) (37.4) (7.6) (6.6)
Interest cost (106.3) (96.8) (21.8) (20.9)
Plan amendment (79.6) -- -- --
Transfers -- 8.5 -- --
Actuarial gain/(loss) 133.8 (37.7) (1.3) (16.1)
Benefits paid 78.3 77.0 28.9 24.4
Settlements (19.9) -- 0.2 --
- ---------------------------------------------------------------------------------------------------------------
Benefit obligation at end of year $ (1,516.6) $(1,479.2) $(306.8) $(305.2)
- ---------------------------------------------------------------------------------------------------------------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $ 2,098.0 $ 1,919.4 $ 151.2 $ 129.4
Actual return on plan assets 310.5 264.7 18.7 17.4
Employer contribution -- -- 29.7 28.8
Benefits paid (78.3) (77.0) (28.9) (24.4)
Transfers -- (9.1) -- --
- ---------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year $ 2,330.2 $ 2,098.0 $ 170.7 $ 151.2
- ---------------------------------------------------------------------------------------------------------------
Funded status at December 31 $ 813.6 $ 618.8 $(136.1) $(154.0)
Unrecognized transition (asset)/obligation (7.4) (9.0) 196.6 211.9
Unrecognized prior service cost 99.2 27.6 -- --
Unrecognized net gain (904.7) (670.4) (60.4) (57.9)
- ---------------------------------------------------------------------------------------------------------------
Prepaid/(accrued) benefit cost $ 0.7 $ (33.0) $ 0.1 $ --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The following actuarial assumptions were used in calculating the plans' year end
funded status:
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
At December 31,
- ---------------------------------------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount rate 7.75% 7.00% 7.75% 7.00%
Compensation/progression rate 4.75 4.25 4.75 4.25
Health care cost trend rate(a) N/A N/A 5.57 5.22
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The annual per capita cost of covered health care benefits was assumed to
decrease to 4.90 percent by 2001.
The components of net periodic benefit cost are:
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- ---------------------------------------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
(Millions of Dollars) 1999 1998 1997 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 43.7 $ 37.4 $ 34.9 $ 7.6 $ 6.6 $ 5.7
Interest cost 106.3 96.8 98.6 21.8 20.9 20.6
Expected return on plan assets (175.5) (153.2) (135.1) (11.7) (9.9) (8.1)
Amortization of unrecognized net
transition (asset)/obligation (1.5) (1.5) (1.5) 15.1 15.1 15.1
Amortization of prior service cost 7.9 2.1 2.1 -- -- --
Amortization of actuarial gain (33.5) (25.7) (18.9) -- -- --
Other amortization, net -- -- -- (3.1) (3.8) (5.0)
Settlements (1.8) -- (2.6) -- -- --
- ---------------------------------------------------------------------------------------------------------------
Net periodic benefit (credit)/cost $ (54.4) $ (44.1) $ (22.5) $ 29.7 $ 28.9 $ 28.3
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
For calculating pension and postretirement benefit costs, the following
assumptions were used:
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- ---------------------------------------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Discount rate 7.00% 7.25% 7.75% 7.00% 7.25% 7.75%
Expected long-term rate of return 9.50 9.50 9.25 N/A N/A N/A
Compensation/progression rate 4.25 4.25 4.75 4.25 4.25 4.75
Long-term rate of return -
Health assets, net of tax N/A N/A N/A 7.50 7.75 7.50
Life assets N/A N/A N/A 9.50 9.50 9.25
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. The effect of changing the assumed health
care cost trend rate by one percentage point in each year would have the
following effects:
- ----------------------------------------------------------------------------
One Percentage One Percentage
(Millions of Dollars) Point Increase Point Decrease
- ----------------------------------------------------------------------------
Effect on total service and
interest cost components $ 1.4 $ (1.4)
Effect on postretirement
benefit obligation $16.4 $(16.1)
- ----------------------------------------------------------------------------
The trust holding the health plan assets is subject to federal income taxes.
B. 401(K) SAVINGS PLAN
NU maintains a 401(k) Savings Plan for substantially all NU system employees.
This savings plan provides for employee contributions up to specified limits.
NU matches employee contributions up to a maximum of 3 percent of eligible
compensation with cash and NU stock. The matching contributions made by NU were
$13.8 million for 1999, $13.2 million for 1998 and $12 million for 1997.
C. ESOP
NU maintains an Employee Stock Ownership Plan (ESOP) for purposes of allocating
shares to employees participating in the NU system's 401(k) Savings 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 the purchase of
10.8 million newly issued NU common shares (ESOP Shares). The ESOP trust is
obligated to make principal and interest payments on the ESOP notes at the same
rate that ESOP Shares are allocated to employees. NU makes annual contributions
to the ESOP equal to the ESOP's debt service, less dividends received by the
ESOP. All dividends received by the ESOP on unallocated shares are used to pay
debt service and are not considered dividends for financial reporting purposes.
During the fourth quarter of 1999, NU paid a 10 cent per share dividend. During
1998, there were no dividends paid on NU stock.
In 1999 and 1998, the ESOP trust issued 556,978 and 584,107 of NU common
shares, respectively, to satisfy 401(k) Savings Plan obligations to employees.
As of December 31, 1999 and 1998, the total allocated ESOP shares were
5,281,836 and 4,724,858, respectively, and total unallocated ESOP shares were
5,518,349 and 6,075,327, respectively. The fair market value of unallocated
ESOP shares as of December 31, 1999 and 1998, was $113.5 million and $97.2
million, respectively.
D. STOCK-BASED COMPENSATION
Employee Stock Purchase Plan (ESPP): Since July 1998, the NU system has
maintained an ESPP for all eligible employees. Under the ESPP, shares of NU
common stock may be purchased at 6-month intervals at 85 percent of the lower
of the price on the first or last day of each 6-month period. Employees may
purchase shares having a value not exceeding 25 percent of their compensation
at the beginning of the purchase period. During 1999 and 1998, employees
purchased 253,853 and 129,471 shares, respectively, at discounted prices
ranging from $13.76 to $14.93 per share in 1999 and $13.60 per share in 1998.
At December 31, 1999 and 1998, 1,616,676 and 1,870,529 shares remained reserved
for future issuance under the ESPP, respectively.
Incentive Plans: The NU system has long-term incentive plans authorizing
various types of share-based awards, including stock options, to be made to
eligible employees and board members. The exercise price of stock options, as
set at the time of grant, is generally equal to the fair market value per share
at the date of grant. Under the Northeast Utilities Incentive Plan (Incentive
Plan), the number of shares which may be utilized for awards granted during a
given calendar year may not exceed one percent of the total number of shares of
NU common stock outstanding as of the first day of that calendar year.
Stock option transactions for 1997, 1998 and 1999 are as follows:
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
Exercise Price Per Share
---------------------------------------
<CAPTION>
Weighted
Options Range Average
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding December 31, 1996 -- $ -- $ --
Granted 500,000 $ 9.625 $ 9.625
- ---------------------------------------------------------------------------------------------------------------
Outstanding December 31, 1997 500,000 $ 9.625 $ 9.625
Granted 741,273 $ 14.875 -- $ 16.8125 $ 16.178
Forfeited (7,595) $ 16.3125 $ 16.3125
- ---------------------------------------------------------------------------------------------------------------
Outstanding December 31, 1998 1,233,678 $ 9.625 -- $ 16.8125 $ 13.5213
Granted 644,123 $ 14.9375 -- $ 21.125 $ 15.2514
Exercised (19,368) $ 16.3125 -- $ 16.8125 $ 16.3986
Forfeited (32,177) $ 14.9375 -- $ 16.3125 $ 15.8714
- ---------------------------------------------------------------------------------------------------------------
OUTSTANDING DECEMBER 31, 1999 1,826,256 $ 9.625 -- $ 21.125 $ 14.0585
- ---------------------------------------------------------------------------------------------------------------
Exercisable December 31, 1997 -- $ -- $ --
Exercisable December 31, 1998 232,936 $ 14.875 -- $ 16.8125 $ 16.2972
EXERCISABLE DECEMBER 31, 1999 711,787 $ 9.625 -- $ 21.125 $ 14.0102
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The vesting schedule for the options granted in 1997 is 50 percent after two
years, 75 percent after three years and the total award after four years. The
vesting schedule for the options granted in 1998 is one-third upon grant,
two-thirds after one year and the total award after two years. The options that
were granted in 1999 vest ratably over three years from the date of grant.
Also under the Incentive Plan, the NU system awarded 91,120 and 49,973 of
restricted shares in 1999 and 1998, respectively. These shares have the same
vesting schedule as the options granted under the Incentive Plan. During 1997,
certain key officers were awarded restricted stock totaling 25,700 shares which
vest ratably over three years from the date of grant. The NU system has also
made several small grants of restricted stock and other incentive-based stock
compensation. During 1999, 1998 and 1997, $2.2 million, $0.8 million and $0.3
million, respectively, was expensed for stock-based compensation.
Had compensation cost been determined for the ESPP and the incentive plan
stock options under the fair value method as opposed to the intrinsic value
method followed by the NU system, net income/(loss) and net income/(loss) per
share would have been as follows:
- ----------------------------------------------------------------
(Millions of Dollars,
except per share amounts) 1999 1998 1997
- ----------------------------------------------------------------
Net income/(loss) $ 29.6 $(149.1) $(130.0)
Basic income/(loss)
per share $ 0.23 $ (1.14) $ (1.01)
Diluted income/(loss)
per share $ 0.22 $ (1.14) $ (1.01)
- ----------------------------------------------------------------
The fair value of each stock option grant has been estimated on the date of
grant using the Black-Scholes option pricing model with the following weighted
average assumptions:
- ---------------------------------------------------------------
1999 1998 1997
- ---------------------------------------------------------------
Risk-free interest rate 5.69% 5.82% 6.41%
Expected life 10 years 10 years 10 years
Expected volatility 36.21% 35.05% 31.89%
Expected dividend yield 1.89% 5.46% 7.42%
- ---------------------------------------------------------------
The weighted average grant date fair values of options granted during 1999,
1998 and 1997 were $6.79, $3.98 and $1.68, respectively. As of December 31,
1999, the weighted average remaining contractual life for those options out
standing is 8.47 years.
6. SALE OF CUSTOMER RECEIVABLES
As of December 31, 1999 and 1998, CL&P had sold accounts receivable of $170
million and $105 million, respectively, to a third-party purchaser with limited
recourse through the CL&P Receivables Corporation (CRC), a wholly owned
subsidiary of CL&P. In addition, at December 31, 1999 and 1998, $22.5 million
and $11.6 million, respectively, of assets was designated as collateral under
the agreement with CRC.
On June 30, 1999, WMECO terminated its $40 million accounts receivable
program with its respective sponsor. At December 31, 1998, WMECO had sold
accounts receivable of $20 million to a third-party purchaser.
Concentrations of credit risk to the purchaser under the company's agreement
with respect to the receivables are limited due to CL&P's diverse customer base
within its service territory.
7. COMMITMENTS AND CONTINGENCIES
A. RESTRUCTURING
Connecticut: During 1999, restructuring orders were issued by the DPUC which
required CL&P to discontinue the application of SFAS No. 71 to the generation
portion of its business and allowed for the recovery of the majority of its
stranded costs. Stranded costs including regulatory assets will be collected
through a transition charge through 2026. The restructuring orders also allowed
for securitization of CL&P's nonnuclear regulatory assets and the costs to
buyout or buydown the various purchased-power contracts. Securitization is the
process of monetizing stranded costs through the sale of nonrecourse debt
securities by a special purpose entity, collateralized by CL&P's interests in
its stranded cost recoveries.
On December 15, 1999, the DPUC issued a supplemental decision approving the
components of CL&P's rates for standard offer service commencing on January 1,
2000. The DPUC also approved an interim nuclear capital recovery mechanism for
the period from January 1, 2000, until the nuclear units are sold at auction.
In approving the rates, the DPUC denied recovery of most of the capital
additions made to Millstone 2 and 3 subsequent to June 30, 1997, which the
company has or will expend to maintain those plants in a safe and efficient
condition or to maintain their auction value. If implemented as approved, the
company would not recover a significant portion of the capital additions which
have been or are expected to be incurred subsequent to July 1, 1997, until the
plants are sold in 2001. On December 29, 1999, CL&P filed with the DPUC a
petition for reconsideration of this portion of the order. The DPUC has agreed
to reopen the docket to consider CL&P's petition. Management believes the
restructuring legislation provides for the recovery of these prudently incurred
expenditures. If CL&P is unsuccessful in favorably resolving this contingency,
an impairment loss of $50 million would be recorded.
Massachusetts: In 1999, restructuring orders required WMECO to discontinue
the application of SFAS No. 71 for the generation portion of its business. In
these restructuring orders, WMECO was allowed to recover the majority of its
stranded costs through a transition charge over the 12-year transition period
beginning March 1, 1998. The decision instructed WMECO to work with the
Massachusetts attorney general regarding the recovery of nuclear capital
additions made after July 1, 1991. The decision also concluded that the
company's deferred fuel balance should be included as part of the company's
outstanding generating unit performance proceedings and not as part of the
transition charge. Management believes that these costs are recoverable and
that there will not be an impact on the results of operations.
Nuclear Generation Assets Auction: In September 1999, NU announced that the
Millstone nuclear generation assets of CL&P and WMECO will be put up for
auction as soon as practical. On November 8, 1999, CL&P filed its divestiture
plan for the Millstone units with the DPUC. The auction is expected to begin in
early 2000, provided all regulatory approvals have been met, with a successful
bidder chosen by mid 2000 and a closing in 2001. No NU system company will
participate as a bidder in the auction process. Management expects to recover
all of its nuclear stranded costs through the net proceeds of generation asset
sales and through billing a transition charge to retail customers.
New Hampshire: In August 1999, NU, PSNH and the state of New Hampshire
signed a Settlement Agreement intended to settle a number of pending regulatory
and court proceedings related to PSNH. Parties to the agreement included the
governor of New Hampshire, the Governor's Office of Energy and Community
Service, the New Hampshire attorney general, certain members of the staff of
the NHPUC, PSNH and NU. The Settlement Agreement was submitted to the NHPUC on
August 2, 1999, and is awaiting approval. If approved by the NHPUC, the
Settlement Agreement would resolve 11 NHPUC dockets and PSNH's federal lawsuit
which had enjoined the state of New Hampshire from implementing its
restructuring legislation, would require PSNH to write off $225 million after-
tax of its stranded costs and would allow for the recovery of the remaining
amount. Also, implementation of the Settlement Agreement is contingent upon the
issuance of $725 million in rate reduction bonds (securitization). Issuance of
the rate reduction bonds requires the initial approval of the NHPUC and final
approval from the New Hampshire Legislature via enactment of appropriate
legislation. Other approvals are also required from various federal and state
regulatory agencies and financial lenders. Under the terms of the Settlement
Agreement, on the effective date, PSNH's rates will be reduced from current
levels by an average of 18.3 percent. Due to the number of approvals required
and still pending to implement the Settlement Agreement, management continues
to believe the application of SFAS No. 71 is appropriate for PSNH at this time.
The Settlement Agreement also requires PSNH to sell its generation assets
and certain power contracts, including PSNH's current purchased-power contract
with NAEC for the output from Seabrook. The net proceeds from all sales will be
used to recover a portion of PSNH's stranded costs. The sales would be
accomplished through an auction process subject to approval by the NHPUC.
Following the divestiture, the transmission and distribution portion of the
business will continue to be cost-of-service based.
Phase I of the proceeding regarding the Settlement Agreement allowed
proponents to provide sufficient record for the NHPUC to compare the Settlement
Agreement to a range of reasonable outcomes in the other associated dockets.
The NHPUC also determined within the testimony of Phase I that the Con Edison
merger is relevant to the Settlement Agreement and intervening parties should
have discovery in Phase II to evaluate the impact of the merger on the
Settlement Agreement. Phase II allowed opponents to file testimony concerning
the Settlement Agreement and then allowed proponents to conduct discovery and
file rebuttal testimony. A decision on the Settlement Agreement is expected in
the first quarter of 2000.
B. NUCLEAR LITIGATION
The non-NU joint owners of Millstone 3 have filed demands for arbitration with
CL&P and WMECO as well as lawsuits in Massachusetts Superior Court against NU
and its current and former trustees related to the companies' operation of
Millstone 3. During 1999, NU and these subsidiaries agreed in principle to
settle with certain of the joint owners, who own 58 percent of the non-NU
ownership of Millstone 3. The settlements provide for the payment to the
claimants of $36.4 million and certain contingent payments.
Arbitration and litigation claims remain outstanding for the remaining joint
owners who have not agreed to settle. Management cannot estimate the potential
outcome of the arbitration and litigation for the nonsettled joint owners,
therefore, no liability has been established as of December 31, 1999.
C. ENVIRONMENTAL MATTERS
The NU system is subject to environmental laws and regulations intended to
mitigate or remove the effect of past operations and improve or maintain the
quality of our environment. As such, the NU system has an active environmental
auditing and training program and believes it is in compliance with the current
laws and regulations.
However, the normal course of operations may necessarily involve activities
and substances that expose the NU system to potential liabilities of which
management cannot determine the outcome. Additionally, management cannot
determine the outcome for liabilities that may be imposed for past acts, even
though such past acts may have been lawful at the time they occurred.
Management does not believe, however, that this will have a material impact on
the NU system's financial statements.
Based upon currently available information for the estimated remediation
costs as of December 31, 1999 and 1998, the liability recorded by the NU system
for its estimated environmental remediation costs amounted to $24.8 million and
$21.5 million, respectively.
D. SPENT NUCLEAR FUEL DISPOSAL COSTS
Under the Nuclear Waste Policy Act of 1982, CL&P, PSNH, WMECO, and NAEC must
pay the DOE for the disposal of spent nuclear fuel and high-level radioactive
waste. The DOE is responsible for the selection and development of repositories
for, and 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), an accrual has
been recorded for the full liability and payment must be made prior to the
first delivery of spent fuel to the DOE. Until such payment is made, the
outstanding balance will continue to accrue interest at the 3-month treasury
bill yield rate. As of December 31, 1999 and 1998, fees due to the DOE for the
disposal of Prior Period Fuel were $226.5 million and $216.4 million,
respectively, including interest costs of $144.3 million and $134 million,
respectively.
E. NUCLEAR INSURANCE CONTINGENCIES
Insurance policies covering the NU system's nuclear facilities have been
purchased for the primary cost of repair, replacement or decontamination of
utility property, 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.
The NU system is subject to retroactive assessments if losses under those
policies exceed the accumulated funds available to the insurer. The maximum
potential assessments with respect to losses arising during the current policy
year for the primary property insurance program, the replacement power policies
and the excess property damage policies are $11 million, $6.2 million and $15
million, respectively. In addition, insurance has been purchased in the
aggregate amount of $200 million on an industry basis for coverage of worker
claims.
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 NU system could be assessed liabilities
in proportion to its ownership interest in each of its nuclear units up to
$83.9 million. The NU system's payment of this assessment would be limited to,
in proportion to its ownership interest in each of its nuclear units, $10
million in any one year per nuclear unit. In addition, if the sum of all claims
and costs from any one nuclear incident exceeds the maximum amount of financial
protection, the NU system would be subject to an additional 5 percent or $4.2
million liability, in proportion to its ownership interests in each of its
nuclear units. Based upon its ownership interests in the Millstone units and
in Seabrook, the NU system's maximum liability, including any additional
assessments, would be $271 million per incident, of which payments would be
limited to $30.8 million per year. In addition, through purchased-power
contracts with VYNPC, the NU system would be responsible for up to an
additional assessment of $14.1 million per incident, of which payments would
be limited to $1.6 million per year.
F. CONSTRUCTION PROGRAM
The NU system companies currently forecast construction expenditures of $1.8
billion for the years 2000-2004, including $309.7 million for 2000. The NU
system companies estimate that nuclear fuel requirements, including nuclear
fuel financed through the NBFT, will be $217.8 million for the years 2000-2003,
including $74.2 million for 2000.
G. LONG-TERM CONTRACTUAL ARRANGEMENTS
Yankee Companies: The NU system companies relied on VYNPC for 1.5 percent of
their capacity under long-term contracts. Under the terms of their agreements,
the NU system companies paid their ownership (or entitlement) shares of costs,
which included depreciation, operation and maintenance (O&M) expenses, taxes,
the estimated cost of decommissioning, and a return on invested capital. These
costs were recorded as purchased-power expenses and recovered through the
companies' rates. The total cost of purchases under contracts with VYNPC
amounted to $29.2 million in 1999, $27.3 million in 1998 and $24.2 million in
1997. VYNPC has agreed to sell its nuclear unit. Upon completion of the sale,
this long-term contract will be terminated.
Nonutility Generators (NUGs): CL&P, PSNH and WMECO have entered into various
arrangements for the purchase of capacity and energy from NUGs. For the years
ended December 31, 1999 and 1998, 13 percent and for the year ended December
31, 1997, 14 percent, of NU system electricity requirements were met by NUGs.
The total cost of purchases under these arrangements amounted to $461.8 million
in 1999, $459.7 million in 1998 and $447.6 million in 1997. The company is in
the process of renegotiating the terms of these contracts through either a
contract buydown or buyout. The company expects any payments to the NUGs as
result of these renegotiations to be recovered from the company's customers.
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 expenses and capital costs
of those facilities.
New Hampshire Electric Cooperative (NHEC): Previously, PSNH entered into a
buy-back agreement to purchase the capacity and energy of the NHEC's share of
Seabrook and to pay all of NHEC's Seabrook costs for a 10-year period, which
began on July 1, 1990. The total cost of purchases under this agreement was $33
million in 1999, $29.7 million in 1998 and $23.4 million in 1997. These costs
are recoverable through the FPPAC. The estimated annual cost of this agreement
for year 2000 is $14.6 million.
Estimated Annual Costs: The estimated annual costs of the NU system's
significant long-term contractual arrangements, absent the effects of any
contract terminations or buydowns are as follows:
- -------------------------------------------------------------------
(Millions of Dollars) 2000 2001 2002 2003 2004
- -------------------------------------------------------------------
VYNPC $ 24.1 $ 21.8 $ 21.9 $ 21.5 $ 21.0
NUGs 472.6 480.2 489.2 500.1 487.3
Hydro-Quebec 31.3 30.3 29.6 28.7 27.8
- -------------------------------------------------------------------
Select Energy: Select Energy maintains long-term agreements to purchase both
wholesale and retail energy in the normal course of business. The notional
amount of these purchase contracts is $3.1 billion at December 31, 1999. These
contracts extend through 2004 as follows:
- -------------------------------------------------------------------
(Millions of Dollars)
- -------------------------------------------------------------------
Year
- -------------------------------------------------------------------
2000 $1,271
2001 638
2002 573
2003 499
2004 101
- -------------------------------------------------------------------
Total $3,082
- -------------------------------------------------------------------
H. NEW ENGLAND POWER POOL (NEPOOL)
GENERATION PRICING
Disputes with respect to interpretation and implementation of the NEPOOL market
rules have arisen with respect to various competitive product markets. In
certain cases, Select Energy and the NU operating companies stand to gain as a
result of resolution of such disputes. In other cases, Select Energy and the NU
operating companies could incur additional costs as the result of resolution of
the disputes. The various disputes are in various stages of resolution through
alternative dispute resolution and regulatory review. It is too early to tell
the level of potential gain or loss that may result upon resolution of these
issues.
8. MARKET RISK AND RISK MANAGEMENT INSTRUMENTS
Interest Rate Risk Management: NAEC uses swap instruments with financial
institutions to hedge against interest rate risk associated with its $200
million variable-rate bank note. Under the agreements, NAEC exchanges quarterly
payments based on a differential between a fixed contractual interest rate and
the 3-month LIBOR rate at a given time. As of December 31, 1999 and 1998, NAEC
had outstanding agreements with a total notional value of $200 million and
mark-to-market positions of positive $0.5 million and negative $2.3 million,
respectively.
Energy Price Risk Management: Beginning in 1997 through 1999, CL&P used swap
instruments with financial institutions to hedge the energy price risk created
by long-term negotiated energy contracts. These agreements were intended to
minimize exposure associated with rising fuel prices by managing a portion of
CL&P's cost of producing power for these negotiated energy contracts.
In 1999, CL&P divested substantially all of its fossil and hydroelectric
generation assets and agreed to transfer the rights and obligations related to
the long-term negotiated energy contracts to an unregulated affiliate.
Accordingly, the fuel swap positions were marked-to-market and CL&P recognized
a loss of $5.2 million. In January 2000, the fuel swap positions were
liquidated.
Credit Risk: These agreements have been made with various financial
institutions, each of which is rated "A3" or better by Moody's rating group.
NAEC is exposed to credit risk on its respective market risk management
instruments if the counterparties fail to perform their obligations. Management
anticipates that the counterparties will fully satisfy their obligations under
the agreements.
Unregulated Energy Services Market Risk: NU's unregulated companies, as
major providers of electricity and natural gas, have certain market risks
inherent in their business activities. Market risk represents the risk of loss
that may impact the companies' financial position, results of operations or
cash flows due to adverse changes in commodity market prices. In 1999, the
companies increased their volume of the electricity and gas marketing
activities, increasing their risks. Policies and procedures have been
established to manage these exposures including the use of risk management
instruments.
9. MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY
CL&P Capital LP (CL&P LP), a subsidiary of CL&P, previously had 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 a minority interest.
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 and cash equivalents: The carrying amounts approximate fair value due
to the short-term nature of cash and cash equivalents.
Supplemental Executive Retirement Plan (SERP) Investments: Investments held
for the benefit of the SERP are recorded at fair market value. The investments
having a cost basis of $5.8 million and $5.4 million held for benefit of the
SERP were recorded at their fair market values at December 31, 1999 and 1998
of $9.2 million and $8.7 million, respectively.
Nuclear decommissioning trusts: The investments held in the NU system
companies' nuclear decommissioning trusts were marked-to-market by $129 million
as of December 31, 1999 and $110.4 million as of December 31, 1998, with
corresponding offsets to the accumulated provision for depreciation. The
amounts adjusted in 1999 and in 1998 represent cumulative net unrealized gains.
The cumulative gross unrealized holding losses were immaterial for both 1999
and 1998.
Preferred stock and long-term debt: The fair value of the NU 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 NU system's
financial instruments and the estimated fair values are as follows:
- --------------------------------------------------------------------------
At December 31, 1999
- --------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
- --------------------------------------------------------------------------
Preferred stock not subject
to mandatory redemption $ 136.2 $ 164.0
Preferred stock subject to
mandatory redemption 167.5 166.8
Long-term debt -
First mortgage bonds 1,193.2 1,209.5
Other long-term debt 1,638.3 1,430.1
MIPS 100.0 97.3
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
At December 31, 1998
- --------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
- --------------------------------------------------------------------------
Preferred stock not subject
to mandatory redemption $ 136.2 $ 97.0
Preferred stock subject to
mandatory redemption 213.8 205.9
Long-term debt -
First mortgage bonds 1,984.0 2,003.6
Other long-term debt 1,654.9 1,682.7
MIPS 100.0 102.0
- --------------------------------------------------------------------------
11. OTHER COMPREHENSIVE INCOME
The accumulated balance for each other comprehensive income item is as follows:
- --------------------------------------------------------------------------
Current
December 31, Period December 31,
(Thousands of Dollars) 1998 Change 1999
- --------------------------------------------------------------------------
Foreign currency
translation adjustments $ (1) $ 1 $ --
Unrealized gains
on securities 2,019 118 2,137
Minimum pension
liability adjustments (613) -- (613)
- --------------------------------------------------------------------------
Accumulated other
comprehensive income $ 1,405 $ 119 $ 1,524
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Current
December 31, Period December 31,
(Thousands of Dollars ) 1997 Change 1998
- --------------------------------------------------------------------------
Foreign currency
translation adjustments $(1) $ -- $ (1)
Unrealized gains
on securities -- 2,019 2,019
Minimum pension
liability adjustments -- (613) (613)
- --------------------------------------------------------------------------
Accumulated other
comprehensive income $(1) $1,406 $ 1,405
- --------------------------------------------------------------------------
The changes in the components of other comprehensive income are reported net of
the following income tax effects:
- -------------------------------------------------------------------------
(Thousands of Dollars) 1999 1998 1997
- -------------------------------------------------------------------------
Foreign currency
translation
adjustments $ -- $ -- $359
Unrealized gains
on securities (71) (1,222) --
Minimum pension
liability adjustments -- 398 --
- -------------------------------------------------------------------------
Other comprehensive
income $(71) $ (824) $359
- -------------------------------------------------------------------------
12. EARNINGS PER SHARE
Earnings per share (EPS) is computed based upon the weighted average number of
common shares outstanding during each year. Diluted earnings per share is
computed on the basis of the weighted average number of common shares
outstanding plus the potential dilutive effect if certain securities are
converted into common stock.
The following table sets forth the components of basic and diluted EPS:
- ---------------------------------------------------------------------------
(Millions of Dollars,
except share information) 1999 1998 1997
- ---------------------------------------------------------------------------
Income/(loss) after
interest charges $57.0 $(120.4) $ (99.7)
Preferred dividends
of subsidiaries 22.8 26.4 30.3
- ---------------------------------------------------------------------------
Net income/(loss) $34.2 $(146.8) $(130.0)
- ---------------------------------------------------------------------------
Basic EPS
common shares
outstanding
(average) 131,415,126 130,549,760 129,567,708
Dilutive effect
of employee
stock options 616,447 --(a) --(a)
- ---------------------------------------------------------------------------
Diluted EPS
common shares
outstanding
(average) 132,031,573 130,549,760 129,567,708
- ---------------------------------------------------------------------------
Basic earnings/
(loss) per share $0.26 $(1.12) $(1.01)
Diluted earnings/
(loss) per share $0.26 $(1.12) $(1.01)
- ---------------------------------------------------------------------------
(a) The addition of dilutive potential common shares would be anti-dilutive for
1998 and 1997 and was not included.
13. MODE 1
In August 1998, NorthEast Optic Network, Inc. (NEON) issued 4,000,000 new
common shares on the open market in an initial public offering (IPO). The IPO
had the effect of decreasing Mode 1's ownership interest in NEON from 40.78
percent to 30.74 percent. The shares were issued at an amount greater than
Mode 1's investment, resulting in a $13.7 million pretax increase to Mode 1's
equity. NU's accounting policy is to recognize the gain or loss from this type
of change in ownership interest in net income. However, as a result of the
startup nature of NEON's operations, this change in ownership interest was
recognized in additional paid in capital.
In conjunction with the IPO, Mode 1 sold 217,997 NEON shares, resulting in a
pretax gain of $1.7 million and further reducing its ownership interest to 29.4
percent of the outstanding common shares of NEON.
On November 23, 1999, NEON entered into two agreements with unaffiliated
companies. Under the agreements, NEON will provide network transport and
carrier services among the service areas of NEON and the two unaffiliated
companies and each company will provide connectivity from the backbone system
to their respective local loops. Additionally, each company will manage their
local distribution into their respective end-users' locations. NEON will also
develop, operate and market the combined telecommunications infrastructure
created under the two agreements.
As the agreements are implemented, the two unaffiliated companies will
ultimately obtain 10.75 percent and 9.25 percent ownership interests,
respectively, in NEON and will each nominate one member to the NEON Board of
Directors. The agreements are subject to regulatory approvals, which are
expected by the spring of 2000.
14. SEGMENT INFORMATION
Effective January 1, 1999, the NU system companies adopted SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." The NU
system is organized between regulated utilities and unregulated energy
services.
The regulated utilities segment represents 87 percent of the NU system's
total revenue and is comprised of several business units including generation,
transmission and distribution.
The unregulated energy services segment in the following table includes NGC,
NGS, Select Energy and HEC.
Other in the following table includes the results for Mode 1. Mode 1 had a
net loss of $4.3 million for the year ended December 31, 1999. Interest expense
included in Other primarily relates to the debt of NU parent. Inter-segment
eliminations of revenues and expenses are also included in Other.
Regulated utilities revenues primarily are derived from residential,
commercial and industrial customers and are not dependent on any single
customer. The unregulated energy services segment has a major customer whose
purchases represented 46 percent of its total revenues for the year ended
December 31, 1999.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
For the Year Ended December 31, 1999
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
Unregulated
Regulated Energy
(Millions of Dollars) Utilities Services Other Total
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $ 3,888.7 $ 606.3 $(23.7) $ 4,471.3
Operating expenses (3,495.9) (646.7) 15.9 (4,126.7)
- ---------------------------------------------------------------------------------------------------------------
Operating income/(loss) 392.8 (40.4) (7.8) 344.6
Other (loss)/income (36.4) (1.2) 13.7 (23.9)
Interest expense (247.8) (1.0) (14.9) (263.7)
Preferred dividends (22.8) -- -- (22.8)
- ---------------------------------------------------------------------------------------------------------------
Net income/(loss) $ 85.8 $ (42.6) $ (9.0) $ 34.2
- ---------------------------------------------------------------------------------------------------------------
Total assets $ 9,388.3 $ 222.5 $ 77.3 $ 9,688.1
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Prior to 1999, the NU system evaluated management performance using a
cost-based budget, therefore business segment reporting on a comparative basis
will not be available until the year 2000.
15. MERGER AGREEMENT WITH CON EDISON
On October 13, 1999, NU and Con Edison announced that they have agreed to a
merger to combine the two companies. The shareholders of NU will receive $25
per share in a combination of cash and Con Edison common stock.
NU shareholders also have the right to receive an additional $1 per share if
a definitive agreement to sell its interests (other than that now held by PSNH)
in Millstone 2 and 3 is entered into and recommended by the Utility Operations
and Management Unit of the DPUC on or prior to the later of December 31, 2000,
or the closing of the merger. Further, the value of the amount of cash or
common stock to be received by NU shareholders is subject to increase by an
amount of $0.0034 per share per day for each day that the transaction does not
close after August 5, 2000.
Upon completion of the merger, NU will become a wholly owned subsidiary of
Con Edison. The purchase is subject to the approval of the shareholders of both
companies and several regulatory agencies. The companies anticipate that these
regulatory procedures will be completed by July 2000.
CONSOLIDATED STATEMENTS OF QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
Quarter Ended (a)
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
(Thousands of Dollars, except per
share information) March 31 June 30 September 30 December 31
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
Operating Revenues $ 1,043,407 $ 1,038,569 $ 1,240,539 $ 1,148,736
Operating Income $ 89,638 $ 56,492 $ 110,544 $ 87,863
Net Income/(Loss) $ 18,444 $ 228 $ 31,218 $ (15,674)
Basic and Diluted Earnings/(Loss)
Per Common Share $ 0.14 $ -- $ 0.24 $ (0.12)
- ---------------------------------------------------------------------------------------------------------------
1998
Operating Revenues $ 958,905 $ 874,809 $ 974,382 $ 959,618
Operating Income $ 40,488 $ 76,296 $ 82,675 $ 25,268
Net (Loss)/Income $ (17,949) $ 6,273 $ (3,075) $ (132,002)
Basic and Diluted (Loss)/Earnings
Per Common Share $ (0.14) $ 0.05 $ (0.02) $ (1.01)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
CONSOLIDATED GENERATION STATISTICS (UNAUDITED)
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------
Source of Electric Energy: (kWh-millions)
<S> <C> <C> <C> <C> <C>
Nuclear -- Steam(b) 13,558 5,679 3,778 9,405 18,235
Fossil -- Steam 10,959 12,505 13,155 9,188 9,162
Hydro -- Conventional 1,206 1,510 1,260 1,544 1,099
Hydro -- Pumped Storage 944 819 959 1,217 1,209
Internal Combustion 262 80 184 206 37
Energy Used for Pumping (1,318) (1,130) (1,327) (1,668) (1,674)
- ---------------------------------------------------------------------------------------------------------------
Net Generation 25,611 19,463 18,009 19,892 28,068
- ---------------------------------------------------------------------------------------------------------------
Purchased and Net Interchange 43,849 24,945 24,377 22,111 14,256
Company Use and Unaccounted for (2,612) (2,566) (2,802) (2,473) (2,706)
- ---------------------------------------------------------------------------------------------------------------
Net Energy Sold 66,848 41,842 39,584 39,530 39,618
- ---------------------------------------------------------------------------------------------------------------
System Capability -- MW(b) (c) 8,194.2 8,169.6 8,312.0(d) 8,894.0 8,394.8
System Peak Demand -- MW 7,188.2 6,454.7 6,455.5 5,946.9 6,358.2
Nuclear Capacity -- MW(b) (c) 2,218.5 2,217.8 2,785.0(d) 3,117.8 3,239.6
Nuclear Contribution to Total
Energy Requirements (%)(b) 38.0 19.0 13.0 28.0 52.0
Nuclear Capacity Factor (%)(d) 86.4 32.8 19.6 38.0 69.9
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reclassifications of prior years' data have been made to conform with the
current presentation.
(b) Includes the NU system's entitlements in regional nuclear generating
companies, net of capacity sales and purchases.
(c) Millstone 2 returned to service during the second quarter of 1999, following
NRC approval. Millstone 3 returned to service during the third quarter of
1998 following NRC approval. During the third quarter of 1998, CL&P and
WMECO decided to retire Millstone 1 and prepare for final decommissioning.
(d) Represents the average capacity factor for the nuclear units operated by the
NU system.
SELECTED CONSOLIDATED FINANCIAL DATA (UNAUDITED)
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
(Thousands of Dollars,
except percentages and
share information) 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Net Utility Plant $ 3,947,434 $ 6,170,881 $ 6,463,158 $ 6,732,165 $ 7,000,837
Total Assets 9,688,052 10,387,381 10,414,412 10,741,748 10,559,574
Total Capitalization (a) 5,216,456 6,030,402 6,472,504 6,659,617 6,820,624
Obligations Under Capital
Leases (a) 181,293 209,279 207,731 206,165 230,482
- ---------------------------------------------------------------------------------------------------------------
Income Data:
Operating Revenues $ 4,471,251 $ 3,767,714 $ 3,834,806 $ 3,792,148 $ 3,750,560
Net Income/(Loss) 34,216 (146,753) (129,962) 38,929 282,434
- ---------------------------------------------------------------------------------------------------------------
Common Share Data:
Basic and Diluted Earnings/
(Loss) Per Common Share $0.26 $(1.12) $(1.01) $0.30 $2.24
Common Shares
Outstanding (Average) 131,415,126 130,549,760 129,567,708 127,960,382 126,083,645
Dividends Per Share $0.10 $-- $0.25 $1.38 $1.76
Market Price -- High $22 $17 1/4 $14 1/4 $25 1/4 $25 3/8
Market Price -- Low $13 9/16 $11 11/16 $7 5/8 $9 1/2 $21
Market Price -- Closing
(end of year) $20 9/16 $16 $11 13/16 $13 1/8 $24 1/4
Book Value Per Share
(end of year) $15.80 $15.63 $16.67 $18.02 $19.08
Rate of Return Earned
on Average
Common Equity (%) 1.6 (7.0) (5.8) 1.6 12.0
Market-to-Book Ratio
(end of year) 1.3 1.0 0.7 0.7 1.3
- ---------------------------------------------------------------------------------------------------------------
Capitalization:
Common Shareholders' Equity 40% 34% 34% 35% 36%
Preferred Stock (a)(b) 5 5 6 6 7
Long-Term Debt (a) 55 61 60 59 57
- ---------------------------------------------------------------------------------------------------------------
Total Capitalization 100% 100% 100% 100% 100%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes portions due within one year.
(b) Excludes $100 million of MIPS.
CONSOLIDATED SALES STATISTICS (UNAUDITED)
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues: (thousands)
Residential $1,517,913 $1,475,363 $1,499,394 $1,501,465 $1,469,988
Commercial 1,272,969 1,273,146 1,266,449 1,246,822 1,230,608
Industrial 560,801 568,913 560,782 565,900 583,204
Other Utilities 926,056 336,623 329,764 315,577 303,004
Streetlighting and Railroads 45,564 47,682 48,867 48,053 47,510
Non-Franchised Sales 24,659 22,479 21,476 8,360 --
Miscellaneous 52,357 16,429 47,446 23,513 50,353
- ---------------------------------------------------------------------------------------------------------------
Total Electric 4,400,319 3,740,635 3,774,178 3,709,690 3,684,667
Other 70,932 27,079 60,628 82,458 65,893
- ---------------------------------------------------------------------------------------------------------------
Total $4,471,251 $3,767,714 $3,834,806 $3,792,148 $3,750,560
- ---------------------------------------------------------------------------------------------------------------
Sales: (kWh - millions)
Residential 12,912 12,162 12,099 12,241 12,005
Commercial 12,850 12,477 12,091 12,012 11,737
Industrial 7,050 6,948 6,801 6,820 6,842
Other Utilities 33,575 9,742 8,034 8,032 8,718
Streetlighting and Railroads 314 320 318 319 316
Non-Franchised Sales 147 193 241 50 --
- ---------------------------------------------------------------------------------------------------------------
Total 66,848 41,842 39,584 39,474 39,618
- ---------------------------------------------------------------------------------------------------------------
Customers: (average)
Residential 1,569,932 1,555,013 1,535,134 1,532,015 1,526,127
Commercial 164,932 162,500 159,350 157,347 156,652
Industrial 7,721 7,847 7,804 7,792 7,861
Other 3,908 3,890 3,929 3,916 3,878
- ---------------------------------------------------------------------------------------------------------------
Total 1,746,493 1,729,250 1,706,217 1,701,070 1,694,518
- ---------------------------------------------------------------------------------------------------------------
Average Annual Use Per
Residential Customer (kWh) 8,243 7,799 7,898 8,005 7,880(a)
- ---------------------------------------------------------------------------------------------------------------
Average Annual Bill Per
Residential Customer $ 969.38 $ 946.80 $ 978.72 $ 980.19 $ 964.88(a)
- ---------------------------------------------------------------------------------------------------------------
Average Revenue per kWh:
Residential 11.76 cents 12.14 cents 12.39 cents 12.27 cents 12.24 cents
Commercial 9.91 10.20 10.47 10.38 10.49
Industrial 7.95 8.19 8.25 8.30 8.52
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Effective January 1, 1996, the amounts shown reflect billed and
unbilled sales. 1995 has been restated to reflect this change.
1999 Annual Report
The Connecticut Light and Power Company and Subsidiaries
Index
Contents Page
- -------- ----
Management's Discussion and Analysis of Financial
Condition and Results of Operations............................... 1
Report of Independent Public Accountants............................ 12
Consolidated Statements of Income................................... 13
Consolidated Statements of Comprehensive Income..................... 13
Consolidated Balance Sheets......................................... 14-15
Consolidated Statements of Common Stockholder's Equity.............. 16
Consolidated Statements of Cash Flows............................... 17
Notes to Consolidated Financial Statements.......................... 18
Selected Consolidated Financial Data................................ 44
Consolidated Quarterly Financial Data (Unaudited)................... 44
Consolidated Statistics (Unaudited)................................. 45
Preferred Stockholder and Bondholder Information.................... Back Cover
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition
Overview
The financial improvement that began in 1998 continued throughout 1999 at The
Connecticut Light and Power Company (CL&P or the company), an operating
subsidiary of Northeast Utilities (NU) and part of the Northeast Utilities
system (NU system), despite a rate reduction in Connecticut. CL&P's results
benefited from the successful restart of the Millstone 2 nuclear unit, the
strong operating performance delivered by the Millstone 3 and Seabrook Station
(Seabrook) nuclear units, retail sales growth, and continued control over
operation and maintenance (O&M) expenses. A rate reduction reduced the
positive financial impacts of these items.
During 1999, CL&P resolved key industry restructuring issues by establishing
initial stranded cost recovery levels and standard offer service tariffs and
agreements. The auction of substantially all of the fossil and hydroelectric
generation assets owned by CL&P and the auction of its respective interest in
the output of the Millstone units, moved CL&P along in its transition into a
purely electric transmission and distribution company, as contemplated by
restructuring legislation in Connecticut.
CL&P lost $13.6 million in 1999, compared with a loss of $195.7 million in 1998
and a loss of $139.6 million in 1997. The 1999 results included after-tax
write-offs associated with the settlement of nuclear related issues and
industry restructuring totaling $28.8 million. During 1998, CL&P's results
included write-offs associated with a rate decision in Connecticut and the
retirement of Millstone 1 totaling $133.4 million.
In 1999, CL&P's revenues increased to $2.45 billion, up 2.5 percent from
revenues of $2.39 billion in 1998. The growth was primarily due to a 2.9
percent increase in retail sales. That growth was due to weather related
factors that included a hotter than normal summer. The balance of that
increase was due to economic expansion in CL&P's service territory. A retail
rate reduction offset some of the growth in revenues. CL&P's rates were
reduced 5 percent in early 1999. CL&P's rates were further reduced in January
2000 by 5 percent. The additional 5 percent rate reduction will offset some of
the growth in future revenues.
Aside from increased revenues, the primary reason for better operating
performance in 1999 was the return to service from extended outages of
Millstone 3 in July 1998 and Millstone 2 in May 1999.
CL&P's ability to continue improving financial performance in 2000 will depend
largely on continued sales growth and on successful control of O&M expenses.
CL&P also hopes to complete in 2000 the majority of restructuring work
remaining, primarily the issuance of rate reduction bonds (securitization) to
lower stranded costs, and the auction of CL&P's ownership interests in the
Millstone units.
Mergers
In 1998 and 1999, NU management concluded that the pace of deregulation was
accelerating throughout the northeastern United States and that shareholders
would benefit from NU not only remaining a major provider of electric
transmission and distribution service, but also an unregulated marketer of both
electricity and natural gas. NU management also concluded that as a result of
the changes occurring in the highly competitive electric utility industry,
increased size would be crucial to achieve its objective of being a leading
provider of energy products and services in the Northeast.
On October 13, 1999, NU announced an agreement to merge with Consolidated
Edison, Inc. (Con Edison), a financially stronger utility based in New York.
The merger will create the nation's largest electric distribution system with
more than 5 million customers and one of the 15 largest natural gas
distribution systems with 1.4 million customers.
NU and Con Edison filed with various state and federal regulatory bodies in
January 2000 to secure approval of the merger. The two companies expect these
regulatory proceedings can be completed by the end of July 2000.
Also in 1999, NU management concluded that the NU system would be stronger and
customers could be better served if NU reentered the natural gas distribution
business that it had exited in 1989 and examined several potential businesses
in New England. By adding gas to NU's energy mix, NU will be able to broaden
its services to its existing customers and will have additional opportunities
for long-term growth. In June 1999, NU announced an agreement to merge with
Yankee Energy System, Inc. (Yankee). The merger will return to NU
Connecticut's largest natural gas distribution system, as well as several
unregulated businesses involved in energy services, collections and other
areas. The Yankee merger received Yankee shareholder approval in October 1999,
final Connecticut Department of Public Utility Control (DPUC) approval in
December 1999 and Securities and Exchange Commission (SEC) approval in January
2000. The merger closed on March 1, 2000.
Liquidity
During 1999, strong sales growth, improved nuclear performance and continued
control of O&M expenses resulted in net cash flows provided by operations of
$299.4 million in 1999, compared to $364.1 million in 1998 and $37.2 million
in 1997. The decrease in cash flows from operations is primarily related to
increased tax payments in 1999.
On December 15, 1999, CL&P sold 2,235 megawatts (MW) of fossil generation
assets to an unaffiliated company. Proceeds from the sale totaled $516.9
million, including payments for fuel and inventory. CL&P used the proceeds
primarily to par call $406 million of first mortgage bonds in December 1999.
CL&P also used $57.5 million to buy out its lease of four 40 MW turbines.
Proceeds from the generation asset sale are included in net cash flows
provided by investing activities. Including construction expenditures and
investments in nuclear decommissioning trusts, net cash flows provided by
investing activities were $261.4 million in 1999, compared with net cash
flows used in investing activities of $183 million in 1998 and $108.1 million
in 1997.
Positive operating cash flows and the proceeds from the generation asset sale
enabled CL&P to substantially reduce its outstanding debt. As of December 31,
1999, CL&P's total debt level, including capital lease obligations, was $1.6
billion, compared with $2.2 billion as of December 31, 1998, and $2.3 billion
as of December 31, 1997.
The net cash flows used in financing activities were $560.9 million in 1999,
compared to $181.2 million in 1998 and net cash flows provided by financing
activities of $71 million in 1997. This included $639.8 million paid in 1999
to retire long-term debt and preferred stock, compared to $80.7 million in 1998
and $204.1 million in 1997. There were no cash dividends on common shares
paid in 1999 and 1998 and $6 million in 1997. Payments made for preferred
stock dividends were $12.8 million, $14.1 million and $15.2 million for 1999,
1998 and 1997, respectively.
CL&P's access to capital also benefited from the strong operating performance
at Millstone 2 and 3 and the announced merger with Con Edison. During 1999,
CL&P's securities received several upgrades from three credit rating agencies.
CL&P's senior secured bonds achieved investment grade ratings for the first
time since early 1997. At year end, all securities were under review for
possible upgrades, or on "credit watch" with positive implications by Standard
& Poor's, Moody's Investors Service and Fitch IBCA.
The rating agency upgrades benefited CL&P's efforts to broaden its credit
lines. On November 19, 1999, CL&P and Western Massachusetts Electric Company
(WMECO) entered into a new 364-day revolving credit facility for $500 million,
replacing the previous $313.75 million facility which was to expire on
November 21, 1999. The revolving credit facility, which is secured by second
mortgages on Millstone 2 and 3, will be used to bridge gaps in working capital
and provide short-term liquidity. CL&P may draw up to $300 million under the
facility. Once CL&P receives the proceeds from securitization, the $500 million
facility will be reduced to $300 million, with a $200 million limit for CL&P.
As of December 31, 1999, CL&P had $90 million outstanding under this facility.
For further information regarding the CL&P and WMECO revolving credit facility,
see Note 3, "Short-Term Debt," to the consolidated financial statements.
CL&P also has arranged financing through the sale of its accounts receivable.
CL&P can finance up to $200 million through this facility. As of December 31,
1999, CL&P had $170 million outstanding under this facility.
During 2000, CL&P hopes to receive regulatory approval to begin the process of
securitizing its approved stranded costs. Securitization involves issuing rate
reduction bonds with interest rates lower than the company's weighted average
cost of capital. Proceeds from securitization will be used to significantly
reduce the capitalization of CL&P and buyout or buydown certain purchased-power
contracts with a number of nonutility generators.
Restructuring
During 1999, Connecticut made significant progress in resolving industry
restructuring issues. Restructuring orders issued in Connecticut allowed CL&P
to determine the impacts of discontinuing Statement of Financial Accounting
Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of
Regulation," for the generation portion of CL&P's business. The transmission
and distribution portion of that business will continue to be cost-of-service
regulated. In addition, the restructuring orders provided for a transition
charge which allows for the recovery of CL&P's generation-related regulatory
assets and prudently incurred stranded costs.
During April 1999, CL&P filed its standard offer service plan with the DPUC and
received a decision on October 1, 1999, as amended on December 15, 1999. In
that decision, the DPUC approved the recovery of CL&P's regulatory assets and
certain stranded costs associated with CL&P's nuclear generation assets and
established the methodology for setting CL&P's standard offer rates, including
the transition charge and transmission and distribution rates. The DPUC ruled
on CL&P's stranded cost filing in July 1999 approving $3.5 billion of stranded
cost recovery, which is utilized, in part, in the determination of the
transition charge.
As provided for in the electric utility restructuring legislation enacted in
April 1998, 35 percent of CL&P's customers were able to choose their electric
generation supplier on January 1, 2000, with the remaining 65 percent having
choice on July 1, 2000. The major components of rates are a transmission and
distribution charge, a generation charge and a transition charge. For those
customers who do not or are unable to choose another competitive electric
generation supplier, CL&P will supply standard offer or generation service
at an average rate of $0.04813 per kilowatt-hour (kWh) through December 31,
2003. The revenues attributable to standard offer (generation) service are
expected to exceed the actual cost of providing generation and the difference
will be applied against stranded costs. In accordance with a plan approved by
the DPUC, one-half of the CL&P standard offer load was procured through a
competitive bidding process, with the remaining one-half of the power being
supplied by an affiliated company. The contracts are in place through the end
of 2003. For further information regarding commitments and contingencies
related to the Connecticut restructuring order, see Note 11A, "Commitments
and Contingencies - Restructuring," to the consolidated financial statements.
Generation Asset Divestitures
The Connecticut restructuring laws required CL&P to divest of its generation
assets and utilize substantially all of the net gains from any sales to offset
stranded costs. During 1999, CL&P sold its fossil generation assets resulting
in a net gain of $286.5 million. A corresponding amount of regulatory assets
was amortized. Also during 1999, CL&P signed agreements to transfer certain
hydroelectric generation assets to Northeast Generation Company, an unregulated
affiliate of NU. This transaction closed on March 14, 2000. In September
1999, NU announced that the Millstone nuclear generation assets of its
subsidiaries, CL&P and WMECO, will be put up for auction as soon as practical.
For further information regarding commitments and contingencies related to the
generation asset divestitures, see Note 11A, "Commitments and Contingencies -
Restructuring," to the consolidated financial statements.
Nuclear Generation
Millstone Nuclear Units
Millstone 3 received the appropriate Nuclear Regulatory Commission (NRC)
approvals and resumed operation in July 1998. Millstone 2 received similar NRC
approvals, resumed operation and was returned to CL&P's rate base in May 1999.
Millstone 3 and 2 achieved annual capacity factors of 81.7 percent and 57.9
percent in 1999, respectively. After a 60-day refueling and maintenance
outage, Millstone 3 returned to service on June 29, 1999, and has achieved a
98.1 percent capacity factor through December 31, 1999. Since returning to
service in May 1999, Millstone 2 has achieved a 90.3 percent capacity factor
through December 31, 1999. NU's total share of O&M expenses associated with
Millstone 3 and 2 totaled $261.8 million in 1999, as compared to $323.2 million
in 1998 and $406 million in 1997. Millstone 1 is currently in decommissioning
status.
An auction of CL&P's ownership interests in the Millstone units is expected in
2000 with a closing in 2001. Based on regulatory decisions received in 1999,
management expects to recover all of its remaining nuclear stranded costs from
retail customers.
Seabrook
Seabrook achieved an annual capacity factor of 86.4 percent in 1999. However,
since returning to service on May 13, 1999, after a 48-day refueling and
maintenance outage, Seabrook has achieved a 99 percent capacity factor through
December 31, 1999.
CL&P anticipates auctioning its 4.06 percent share of Seabrook, with the 35.98
percent share owned by its affiliate North Atlantic Energy Corporation.
Yankee Companies
On June 1, 1999, the Federal Energy Regulatory Commission accepted the offer of
settlement which was filed on January 15, 1999, by the Maine Yankee Atomic
Power Company (MYAPC). The significant aspects of the settlement allowed MYAPC
to collect $33.1 million annually to pay for decommissioning and spent fuel,
approved its return on equity of 6.5 percent, permitted full recovery of
MYAPC's unamortized investment, including fuel, and set an incentive budget for
decommissioning at $436.3 million.
On October 15, 1999, the Vermont Yankee Nuclear Power Corporation (VYNPC)
agreed to sell its unit for $22 million to an unaffiliated company. Among
other commitments, the acquiring company agreed to assume the decommissioning
cost of the unit after it is taken out of service, and the VYNPC owners have
agreed to fund the uncollected decommissioning cost to a negotiated amount at
the time of the closing of the sale. VYNPC's owners have also agreed either
to enter into a new purchased-power agreement with the acquiring company or to
buy out such future power payment obligations by making a fixed payment to
them. CL&P has elected the buyout option. The VYNPC owners' obligations to
close and pay such amounts are conditioned upon their receipt of satisfactory
regulatory approval of the transaction, including provision for adequate
recovery of these payments.
Nuclear Decommissioning
The staff of the SEC has questioned certain of the current accounting practices
of the electric utility industry regarding the recognition, measurement and
classification of decommissioning costs for nuclear units in their financial
statements.
Currently, the Financial Accounting Standards Board plans to review the
accounting for obligations associated with the retirement of long-lived assets,
including the decommissioning of nuclear units. If current accounting
practices for nuclear decommissioning change, the annual provision for
decommissioning could increase relative to 1999, and the estimated cost for
decommissioning could be recorded as a liability with recognition of an
increase in the cost of the related nuclear unit. However, management does
not believe that such a change will have a material impact on CL&P's financial
statements due to its current and future ability to recover decommissioning
costs through rates.
Spent Nuclear Fuel Disposal Costs
The United States Department of Energy (DOE) originally was scheduled to begin
accepting delivery of spent fuel in 1998. However, delays in confirming the
suitability of a permanent storage site continually have postponed plans for
the DOE's long-term storage and disposal site. Extended delays or a default
by the DOE could lead to consideration of costly alternatives. CL&P has the
primary responsibility for the interim storage of its share of spent nuclear
fuel. Adequate storage capacity exists to accommodate all spent nuclear fuel
at Millstone 1. The facilities for Millstone 2 are expected to provide
adequate storage to accommodate a full-core discharge from the reactor until
2005 with the implementation of currently planned modifications. Fuel
consolidation, which has been licensed for Millstone 2, could provide adequate
storage capacity for its projected life. The facilities for Millstone 3 are
expected to provide adequate storage for its projected life with the addition
of new storage racks. Seabrook is expected to have spent fuel storage capacity
until at least 2010. Meeting spent fuel storage requirements beyond these
periods could require new and separate storage facilities. For further
information regarding spent nuclear fuel disposal costs, see Note 11D,
"Commitments and Contingencies - Spent Nuclear Fuel Disposal Costs," to the
consolidated financial statements.
Market Risk and Risk Management Instruments
CL&P uses energy price risk management instruments to manage the market risk
exposures associated with changes in energy prices. CL&P uses these
instruments to reduce risk by essentially creating offsetting market exposures.
Based on the derivative instruments that were being utilized by CL&P to hedge
some of their energy price risks, there may be an impact on earnings upon
adoption of SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which management has not estimated at this time.
Energy Price Risk Management Instruments
In the generation of electricity, the most significant segment of the variable
cost component is the cost of fuel. Typically, most of CL&P's fuel purchases
were protected by a regulatory fuel price adjustment clause. However, for a
specific, well-defined volume of fuel that was excluded from the energy price
adjustment clause, CL&P employed energy price risk management instruments to
protect itself against the risk of rising fuel prices, thereby limiting fuel
costs and protecting its profit margins. These risks were created by the sale
of long-term fixed-price electricity sales contracts to wholesale customers.
In 1999, CL&P divested substantially all of its fossil and hydroelectric
generation assets and also transferred the rights and obligations of its long-
term fixed-price contracts to an unregulated affiliate. As a result, the fuel
swap positions were marked-to-market and CL&P recognized a loss of $5.2
million. In January 2000, the fuel swap positions were liquidated.
Other Matters
Environmental Matters
CL&P is subject to environmental laws and regulations structured to mitigate or
remove the effect of past operations and to improve or maintain the quality of
the environment. For further information regarding environmental matters, see
Note 11C, "Commitments and Contingencies - Environmental Matters," to the
consolidated financial statements.
Other Commitments and Contingencies
CL&P is subject to other commitments and contingencies primarily
relating to nuclear litigation, nuclear insurance contingencies, its
construction program, long-term contractual arrangements, and the New
England Power Pool generation pricing. For further information
regarding these commitments and contingencies, see Note 11,
"Commitments and Contingencies," to the consolidated financial
statements.
Year 2000 Issues
The transition into the year 2000 was a success for the NU system and
CL&P. Its mission to provide safe, reliable energy to its customers
and to ensure continued operability of critical business functions was
not affected by any year 2000 related issues.
The projected total cost of the year 2000 program is estimated at $21
million for the NU system. The total cost to date was funded through
operating cash flows. The NU system has incurred and expensed $20
million related to year 2000 readiness efforts.
Forward Looking Statements
This discussion and analysis includes forward looking statements, which are
statements of future expectations and not facts. Words such as estimates,
expects, anticipates, intends, plans, and similar expressions identify forward
looking statements. Actual results or outcomes could differ materially as a
result of further actions by state and federal regulatory bodies, competition
and industry restructuring, changes in economic conditions, changes in
historical weather patterns, changes in laws, developments in legal or public
policy doctrines, technological developments, and other presently unknown or
unforeseen factors.
RESULTS OF OPERATIONS
The components of significant income statement variances for the past two years
are provided in the table below.
Income Statement Variances
(Millions of Dollars)
1999 over/(under) 1998 1998 over/(under) 1997
--------------------- ----------------------
Amount Percent Amount Percent
------ ------- ------ -------
Operating Revenues $ 66 3% $(79) (3)%
Operating Expenses:
Fuel, purchased and
net interchange power (143) (13) (60) (5)
Other operation and
maintenance (94) (12) (136) (15)
Depreciation (23) (10) (22) (9)
Amortization of regulatory
assets, net 327 (a) 59 96
Federal and state income taxes 164 - (12) (18)
Taxes other than income taxes 5 3 (2) (1)
Gain on sale of utility plant (286) - - -
Operating income 146 (a) 36 (a)
Equity in earnings of
regional nuclear
generating companies (5) (76) 1 10
Nuclear unrecoverable costs 90 63 (143) -
Other, net (20) (a) (4) (a)
Minority interest in
loss of subsidiary - - - -
Interest charges, net - - 5 3
Net Income/(Loss) 182 93 (56) (40)
(a) Percentage greater than 100.
Operating Revenues
Operating revenues increased by $66 million or 3 percent in 1999, due to higher
wholesale revenues ($72 million). The wholesale revenue increase is primarily
due to higher energy sales and related capacity and transmission revenues.
Retail revenues decreased primarily due to a retail rate reduction ($55
million) and lower fuel clause revenues ($33 million), partially offset by the
impact of Millstone 2 and 3 being returned to CL&P's rate base ($13 million)
and higher retail sales ($62 million). Retail kilowatt-hour sales increased by
2.9 percent.
The removal of Millstone 2 and 3 from CL&P's rate base reduced revenues by $68
million in 1998. Wholesale revenues decreased by $33 million, primarily as a
result of terminating the contract with the Connecticut Municipal Electric
Energy Cooperative (CMEEC). These decreases were partially offset by higher
retail sales volumes. Retail kilowatt-hour sales were 2.2 percent higher and
contributed $36 million to nonfuel revenues in 1998 primarily as a result of
economic growth.
Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power expense decreased in 1999, primarily
due to lower replacement power costs due to the return to service of Millstone
2 and 3, partially offset by higher purchased-power costs as a result of a
high sales demand.
The change in fuel, purchased and net interchange power expense in 1998, is
primarily due to lower replacement power costs due to the return to service of
Millstone 3 and lower costs at the Yankee nuclear units ($21 million). This
change was partially offset by higher capacity charges ($51 million).
Other Operation and Maintenance
Other O&M expenses decreased in 1999, primarily due to lower costs at the
Millstone units ($107 million), lower conservation and load management
amortization ($14 million), and lower fossil O&M expenses ($7 million),
partially offset by the recognition of environmental insurance proceeds in 1998
($9 million), higher transmission expenses ($12 million), and higher storm
costs ($12 million).
Other O&M expenses decreased in 1998, primarily due to lower costs at the
Millstone units ($125 million), lower administrative and general expenses
($12 million), the recognition of environmental insurance proceeds ($9
million), lower distribution costs ($8 million), a decrease in sales and
marketing expenses ($8 million), and lower costs from ISO-New England for
interchange services ($7 million). These decreases were partially offset
by higher recognition of nuclear refueling outage costs primarily as a
result of the 1996 rate settlement ($34 million).
Depreciation
Depreciation decreased in 1999 and 1998, primarily due to the retirement of
Millstone 1.
Amortization of Regulatory Assets, Net
Amortization of regulatory assets, net increased in 1999, primarily due to the
increased amortization associated with the gain on the sale of fossil
generation assets ($286 million), the amortization of CL&P's Millstone 1
remaining investment ($51 million) and the reclassification of the depreciation
on the nuclear plants transferred to regulatory assets ($19 million). These
increases were partially offset by the completion of the amortization of the
cogeneration deferral in the first quarter of 1999 ($23 million).
Amortization of regulatory assets, net increased in 1998, primarily due to
accelerated amortizations in accordance with regulatory decisions ($52 million)
and the beginning of the amortization of the Millstone 1 investment ($20
million).
Federal and State Income Taxes
Federal and state income taxes increased in 1999, primarily due to higher book
taxable income.
Federal and state income taxes decreased in 1998, primarily due to lower book
taxable income and the increase in income tax credits primarily due to the
Millstone 1 write-off of unrecoverable costs as a result of the February 1999
rate decision.
Gain on Sale of Utility Plant
CL&P recorded a gain on the sale of its fossil generation assets in 1999.
A corresponding amount of amortization expense was recorded.
Equity Earnings of Regional Nuclear Generating Companies
Equity earnings of regional nuclear generating companies decreased in 1999,
primarily due to lower earnings from the Connecticut Yankee Atomic Power
Company.
The change in equity earnings of regional nuclear generating companies in 1998
was not significant.
Nuclear Unrecoverable Costs
Nuclear unrecoverable costs in 1999 are comprised of one-time charges related
to the write-off of capital projects as a result of the Connecticut standard
offer decision ($11 million), the settlement of Millstone 3 joint owner
litigation, net of insurance proceeds ($22 million) and the write-off of CMEEC
nuclear costs ($20 million). In comparison, 1998 is comprised of the write-off
of the Millstone 1 entitlement formerly held by CMEEC ($27.8 million) and the
write-off of unrecoverable costs as a result of the February 1999 rate decision
($115.3 million).
Other, Net
Other, net, decreased in 1999, primarily due to the loss on the CL&P assignment
of market-based contracts to Select Energy, Inc.
The change in other, net in 1998 was not significant.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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, 1999
and 1998, and the related consolidated statements of income, comprehensive
income, common stockholder's equity and cash flows for each of the three years
in the period ended December 31, 1999. 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, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with generally accepted
accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 25, 2000
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999 1998 1997
- ---------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues................................. $2,452,855 $2,386,864 $2,465,587
----------- ----------- -----------
Operating Expenses:
Operation -
Fuel, purchased and net interchange power..... 927,989 1,070,677 1,131,063
Other......................................... 480,138 520,518 572,900
Maintenance...................................... 217,961 271,317 355,772
Depreciation..................................... 193,776 216,509 238,667
Amortization of regulatory assets, net........... 447,776 120,884 61,648
Federal and state income taxes................... 122,059 (11,642) (59,436)
Taxes other than income taxes.................... 174,884 170,347 172,592
Gain on sale of utility plant.................... (286,477) - -
----------- ----------- -----------
Total operating expenses................... 2,278,106 2,358,610 2,473,206
----------- ----------- -----------
Operating Income/(Loss)............................ 174,749 28,254 (7,619)
----------- ----------- -----------
Other (Loss)/Income:
Equity in earnings of regional nuclear
generating companies........................... 1,506 6,241 5,672
Nuclear unrecoverable costs...................... (53,031) (143,239) -
Other, net....................................... (25,962) (6,075) (1,856)
Minority interest in loss of subsidiary.......... (9,300) (9,300) (9,300)
Income taxes..................................... 36,921 67,127 7,573
----------- ----------- -----------
Other (loss)/income, net................... (49,866) (85,246) 2,089
----------- ----------- -----------
Income/(Loss) before interest charges...... 124,883 (56,992) (5,530)
----------- ----------- -----------
Interest Charges:
Interest on long-term debt....................... 127,533 133,192 132,127
Other interest................................... 10,918 5,541 1,940
----------- ----------- -----------
Interest charges, net...................... 138,451 138,733 134,067
----------- ----------- -----------
Net Loss........................................... $ (13,568) $ (195,725) $ (139,597)
=========== =========== ===========
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net Loss........................................... $ (13,568) $ (195,725) $ (139,597)
----------- ----------- -----------
Other comprehensive income, net of tax:
Unrealized gains on securities..................... 38 638 -
Minimum pension liability adjustments.............. - (260) -
----------- ----------- -----------
Other comprehensive income, net of tax........... 38 378 -
----------- ----------- -----------
Comprehensive Loss $ (13,530) $ (195,347) $ (139,597)
=========== =========== ===========
</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, 1999 1998
- ----------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at original cost:
Electric................................................ $ 5,811,126 $ 6,173,871
Less: Accumulated provision for depreciation......... 4,234,771 2,758,012
------------- -------------
1,576,355 3,415,859
Construction work in progress........................... 115,529 83,477
Nuclear fuel, net....................................... 80,766 87,867
------------- -------------
Total net utility plant............................. 1,772,650 3,587,203
------------- -------------
Other Property and Investments:
Nuclear decommissioning trusts, at market............... 516,796 452,755
Investments in regional nuclear generating
companies, at equity................................... 54,472 56,999
Other, at cost.......................................... 36,696 93,864
------------- -------------
607,964 603,618
------------- -------------
Current Assets:
Cash.................................................... 364 434
Investments in securitizable assets..................... 107,620 160,253
Notes receivable from affiliated companies.............. - 6,600
Receivables, less accumulated provision for
uncollectible accounts of $300 in 1999 and 1998........ 19,680 22,186
Accounts receivable from affiliated companies........... 3,390 1,721
Taxes receivable........................................ - 26,478
Fuel, materials, and supplies, at average cost.......... 37,603 71,982
Prepayments and other................................... 148,628 121,514
------------- -------------
317,285 411,168
------------- -------------
Deferred Charges:
Regulatory assets....................................... 2,564,095 1,415,838
Unamortized debt expense................................ 16,323 19,603
Other................................................... 19,967 12,768
------------- -------------
2,600,385 1,448,209
------------- -------------
Total Assets........................................ $ 5,298,284 $ 6,050,198
============= =============
</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, 1999 1998
- ------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock, $10 par value - authorized
24,500,000 shares; 12,222,930 shares outstanding
in 1999 and 1998......................................... $ 122,229 $ 122,229
Capital surplus, paid in.................................. 665,598 664,156
Retained earnings......................................... 153,254 210,108
Accumulated other comprehensive income.................... 416 378
------------- -------------
Total common stockholder's equity................ 941,497 996,871
Preferred stock not subject to mandatory redemption....... 116,200 116,200
Preferred stock subject to mandatory redemption........... 79,789 99,539
Long-term debt............................................ 1,241,051 1,793,952
------------- -------------
Total capitalization............................. 2,378,537 3,006,562
------------- -------------
Minority Interest in Consolidated Subsidiary................ 100,000 100,000
------------- -------------
Obligations Under Capital Leases............................ 50,969 68,444
------------- -------------
Current Liabilities:
Notes payable to banks.................................... 90,000 10,000
Notes payable to affiliated company....................... 11,700 -
Long-term debt and preferred stock - current portion...... 178,755 233,755
Obligations under capital leases - current portion........ 93,431 94,440
Accounts payable.......................................... 101,106 121,040
Accounts payable to affiliated companies.................. 3,215 32,758
Accrued taxes............................................. 169,214 19,396
Accrued interest.......................................... 18,640 31,409
Other..................................................... 26,347 34,872
------------- -------------
692,408 577,670
------------- -------------
Deferred Credits and Other Long-term Liabilities:
Accumulated deferred income taxes......................... 999,473 1,194,722
Accumulated deferred investment tax credits............... 107,064 114,457
Decommissioning obligation - Millstone 1.................. 580,320 560,500
Deferred contractual obligations.......................... 238,142 277,826
Other..................................................... 151,371 150,017
------------- -------------
2,076,370 2,297,522
------------- -------------
Total Capitalization and Liabilities............. $ 5,298,284 $ 6,050,198
============= =============
</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>
- ------------------------------------------------------------------------------------------------------
Accumulated
Capital Retained Other
Common Surplus, Earnings Comprehensive
Stock Paid In (a) Income Total
- ------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997............ $122,229 $639,657 $ 580,779 $ - $1,342,665
Net loss for 1997................. (139,597) (139,597)
Cash dividends on preferred
stock........................... (15,221) (15,221)
Cash dividends on common stock.... (5,989) (5,989)
Capital stock expenses, net....... 1,676 1,676
--------- --------- ---------- -------------- -----------
Balance at December 31, 1997.......... 122,229 641,333 419,972 - 1,183,534
Net loss for 1998................. (195,725) (195,725)
Cash dividends on preferred stock. (14,139) (14,139)
Capital stock expenses, net....... 2,764 2,764
Capital contribution from
Northeast Utilities............. 20,000 20,000
Gain on repurchase of preferred
stock........................... 59 59
Other comprehensive income........ 378 378
--------- --------- ---------- -------------- -----------
Balance at December 31, 1998.......... 122,229 664,156 210,108 378 996,871
Net loss for 1999................. (13,568) (13,568)
Cash dividends on preferred stock. (12,832) (12,832)
Capital stock expenses, net....... 1,442 1,442
Allocation of benefits - ESOP..... (30,454) (30,454)
Other comprehensive income........ 38 38
--------- --------- ---------- -------------- -----------
Balance at December 31, 1999.......... $122,229 $665,598 $ 153,254 $ 416 $ 941,497
========= ========= ========== ============== ===========
</TABLE>
(a) The company has dividend restrictions imposed by its long-term debt
agreements. At December 31, 1999, these restrictions totaled
approximately $512 million.
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,
- -----------------------------------------------------------------------------------------------
(Thousands of Dollars) 1999 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net loss.................................................... $ (13,568) $(195,725) $(139,597)
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation.............................................. 193,776 216,509 238,667
Deferred income taxes and investment tax credits, net..... (140,459) (65,689) (10,401)
Amortization of regulatory assets, net ................... 447,776 120,884 61,648
Amortization of demand-side-management costs, net ........ 10,014 42,085 38,029
Amortization/(deferral) of recoverable energy costs....... 12,702 30,745 (9,533)
Deferred nuclear refueling outage, net of amortization ... - - (45,333)
Nuclear unrecoverable costs............................... 53,031 143,239 -
Allocation of ESOP benefits............................... (30,454) - -
Gain on sale of utility plant............................. (286,477) - -
Net other (uses)/sources of cash.......................... (113,174) 34,016 (50,953)
Changes in working capital:
Receivables............................................... 837 29,914 254,223
Fuel, materials and supplies.............................. 34,379 9,896 (1,941)
Accounts payable.......................................... (49,477) (63,592) (22,036)
Accrued taxes............................................. 149,818 (13,621) 4,310
Investments in securitizable assets....................... 52,633 45,372 (205,625)
Other working capital (excludes cash)..................... (21,930) 30,097 (74,266)
---------- ---------- ----------
Net cash flows provided by operating activities............... 299,427 364,130 37,192
---------- ---------- ----------
Financing Activities:
Issuance of long-term debt.................................. - - 200,000
Net increase/(decrease) in short-term debt.................. 91,700 (86,300) 96,300
Reacquisitions and retirements of long-term debt............ (620,010) (45,006) (204,116)
Reacquisitions and retirements of preferred stock........... (19,750) (35,711) -
Cash dividends on preferred stock........................... (12,832) (14,139) (15,221)
Cash dividends on common stock.............................. - - (5,989)
---------- ---------- ----------
Net cash flows (used in)/provided by financing activities..... (560,892) (181,156) 70,974
---------- ---------- ----------
Investing Activities:
Investment in plant:
Electric utility plant.................................... (180,982) (132,194) (155,550)
Nuclear fuel.............................................. (26,198) (8,444) (702)
---------- ---------- ----------
Net cash flows used for investments in plant.............. (207,180) (140,638) (156,252)
Investment in NU system Money Pool.......................... 6,600 (6,600) 109,050
Investment in nuclear decommissioning trusts................ (54,582) (54,106) (45,314)
Other investment activities, net............................ (355) (1,655) (15,595)
Net proceeds from the sale of utility plant................. 516,912 - -
Capital contributions from Northeast Utilities.............. - 20,000 -
---------- ---------- ----------
Net cash flows provided by/(used in) investing activities..... 261,395 (182,999) (108,111)
---------- ---------- ----------
Net (decrease)/increase in cash for the period................ (70) (25) 55
Cash - beginning of period.................................... 434 459 404
---------- ---------- ----------
Cash - end of period.......................................... $ 364 $ 434 $ 459
========== ========== ==========
Supplemental Cash Flow Information:
Cash paid/(refunded) during the year for:
Interest, net of amounts capitalized........................ $ 142,398 $ 110,119 $ 145,962
========== ========== ==========
Income taxes................................................ $ 19,754 $ (46,747) $ (22,338)
========== ========== ==========
Increase in obligations:
Niantic Bay Fuel Trust...................................... $ 4,752 $ 10,208 $ 2,815
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. About The Connecticut Light and Power Company
The Connecticut Light and Power Company (CL&P or the company) along
with the Public Service Company of New Hampshire (PSNH), Western
Massachusetts Electric Company (WMECO), North Atlantic Energy
Corporation (NAEC), and Holyoke Water Power Company (HWP) are the
operating companies comprising the Northeast Utilities system (NU
system) and are wholly owned by Northeast Utilities (NU). The NU system
serves in excess of 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. The NU system furnishes franchised retail
electric service in Connecticut, New Hampshire and western Massachusetts
through CL&P, PSNH and WMECO. NAEC sells all of its entitlement to the
capacity and output of the Seabrook Station (Seabrook) nuclear unit to
PSNH under the terms of two life-of-unit, full cost recovery contracts.
HWP, also is engaged in the production and distribution of electric
power.
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 the NU system, including CL&P, is subject to provisions
of the 1935 Act. Arrangements among the NU 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.
CL&P is subject to further regulation for rates, accounting and other
matters by the FERC and/or applicable state regulatory commissions.
Several wholly owned subsidiaries of NU provide support services for the
NU system companies, including CL&P, 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 NU system companies, including CL&P. Northeast
Nuclear Energy Company acts as agent for the NU system companies and
other New England utilities in operating the Millstone nuclear units.
North Atlantic Energy Service Corporation has operational responsibility
for Seabrook. In addition, CL&P has established a special purpose
subsidiary whose business consists of the purchase and resale of
receivables.
On October 13, 1999, NU and Consolidated Edison, Inc. (Con Edison)
announced that they have agreed to a merger to combine the two
companies. For further information, see Note 17, "Merger Agreement
with Con Edison."
B. Presentation
The consolidated financial statements of CL&P include the accounts of
all subsidiaries. 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. New Accounting Standards
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative
instruments and hedging activities. This statement will require
derivative instruments utilized by CL&P to be recognized as assets or
liabilities at fair value.
In June 1999, the FASB delayed the adoption date of SFAS No. 133 to
January 1, 2001.
Based on the derivative instruments utilized by CL&P, there may be an
impact on earnings upon adoption of SFAS No. 133 which management has
not estimated at this time.
D. Investments and Jointly Owned Electric Utility Plant
Regional Nuclear Generating Companies: CL&P owns common stock in four
regional nuclear companies (Yankee Companies). CL&P's ownership
interests in the Yankee Companies at December 31, 1999 and 1998, which
are accounted for on the equity basis due to CL&P's ability to exercise
significant influence over their operating and financial policies are
34.5 percent of the Connecticut Yankee Atomic Power Company (CYAPC),
24.5 percent of the Yankee Atomic Electric Company (YAEC), 12 percent
of the Maine Yankee Atomic Power Company (MYAPC), and 9.5 percent of
the Vermont Yankee Nuclear Power Corporation (VYNPC). CL&P's total
equity investment in the Yankee Companies at December 31, 1999 and 1998,
is $54.5 million and $57.0 million, respectively. Each Yankee Company
owns a single nuclear generating unit. However, VYNPC is the only unit
still in operation at December 31, 1999.
Millstone: CL&P has an 81 percent joint ownership interest in both
Millstone 1, a 660 megawatt (MW) nuclear unit and Millstone 2, an 870 MW
nuclear generating unit. CL&P has a 52.93 percent joint ownership
interest in Millstone 3, a 1,154 MW nuclear generating unit. NU expects
to auction all three units as a single package in 2000, with a closing
in 2001. Appropriate regulatory approvals will be required to complete
the auction.
Seabrook: CL&P has a 4.06 percent joint ownership interest in Seabrook,
a 1,148 MW nuclear generating unit. CL&P expects to auction its
investment in Seabrook, jointly with NAEC, upon the resolution of the
restructuring issues in the state of New Hampshire.
Plant-in-service and the accumulated provision for depreciation for
CL&P's share of Millstone 2 and 3 and Seabrook are as follows:
------------------------------------------------------------------------
At December 31, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
Plant-in-service
Millstone 2............................... $ 771.7 $ 759.3
Millstone 3............................... 1,915.1 1,909.4
Seabrook.................................. 173.9 174.3
Accumulated provision for depreciation
Millstone 2............................... $ 743.3 $ 309.2
Millstone 3............................... 1,822.8 609.3
Seabrook.................................. 165.7 39.3
------------------------------------------------------------------------
E. Depreciation
The provision for depreciation is calculated using the straight-line
method based on estimated remaining useful lives of depreciable utility
plant-in-service, adjusted for salvage value and removal costs, as
approved by the appropriate regulatory agency, where applicable. 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 the plant, including costs of removal less
salvage, is charged to the accumulated provision for depreciation. The
costs of closure and removal of nonnuclear facilities are accrued over
the life of the plant as a component of depreciation. The depreciation
rates for the several classes of electric plant-in-service are
equivalent to a composite rate of 3.3 percent in 1999, 3.2 percent in
1998 and 3.8 percent in 1997.
At December 31, 1999 and 1998, the accumulated provision for
depreciation included $47.9 million accrued for the cost of removal, net
of salvage, for nonnuclear generation property.
As a result of discontinuing the application of SFAS No. 71 "Accounting
for the Effects of Certain Types of Regulation," for CL&P's generation
business, including CL&P's ownership interest in Seabrook, the company
recorded a charge to accumulated depreciation for the nuclear plant in
excess of fair market value in the amount of $1.7 billion, and a
corresponding regulatory asset was created.
F. Revenues
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. Regulatory
commissions also have authority over the terms and conditions of
nontraditional rate-making arrangements. At the end of each accounting
period, CL&P accrues a revenue estimate for the amount of energy
delivered but unbilled.
G. 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 historically reflect the
effects of the rate-making process in accordance with SFAS No. 71.
As a result of final restructuring orders issued in 1999, CL&P
discontinued the application of SFAS No. 71 for the generation portion
of its business.
Based on a current evaluation of the various factors and conditions that
are expected to impact future cost recovery, management continues to
believe it is probable that CL&P will recover its investments in long-
lived assets, including regulatory assets. In addition, all material
regulatory assets are earning a return. The components of CL&P's
regulatory assets are as follows:
------------------------------------------------------------------------
At December 31, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
Recoverable nuclear costs................ $1,781.9 $ 442.7
Income taxes, net........................ 399.5 538.5
Unrecovered contractual obligations...... 228.9 267.0
Recoverable energy costs, net............ 89.4 102.1
Other.................................... 64.4 65.5
-------- --------
$2,564.1 $1,415.8
======== ========
------------------------------------------------------------------------
The restructuring orders in Connecticut provide for the transmission and
distribution business to continue to be cost-of-service based and also
provide for a transition charge which recovers stranded costs, including
the nuclear regulatory assets established below.
As a result of discontinuing the application of SFAS No. 71 for CL&P's
generation business, the company reclassified nuclear plant in excess
of its estimated fair market value from plant to regulatory assets.
As of December 31, 1999, the unamortized balance of $1.38 billion is
classified as recoverable nuclear costs. Also included in that
regulatory asset component for 1999 is $401.9 million, which includes
Millstone 1 recoverable nuclear costs relating to the recoverable
portion of the undepreciated plant and related assets ($101.9 million)
and the decommissioning and closure obligation ($300 million).
H. 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 rate-making treatment of the
applicable regulatory commissions.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, that give rise
to the accumulated deferred tax obligation is as follows:
------------------------------------------------------------------------
At December 31, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
Accelerated depreciation and
other plant-related differences......... $845.6 $1,002.7
Net operating loss carryforwards.......... - (7.8)
Regulatory assets - income tax gross up... 153.7 279.8
Other 0.2 (80.0)
------ --------
$999.5 $1,194.7
====== ========
------------------------------------------------------------------------
I. 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 (DOE) (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, 1999 and 1998, CL&P's total D&D Assessment deferrals were
$26.9 million and $44.9 million, respectively.
Through December 31, 1999, CL&P had an energy adjustment clause under
which fuel prices above or below base-rate levels were charged to or
credited to customers. At December 31, 1999 and 1998, recoverable
energy costs included $62.6 million and $78.1 million, respectively,
of costs previously deferred. Coincident with the start of
restructuring, the fuel clause was terminated. The balance at
December 31, 1999, has been recorded as a generation-related stranded
cost and will be recovered through a transition charge mechanism.
J. Unrecovered Contractual Obligations
Under the terms of contracts with the Yankee Companies, the shareholder-
sponsored companies, including CL&P, are responsible for their
proportionate share of the remaining costs of the units, including
decommissioning. As management expects that CL&P will be allowed to
recover these costs from its customers, CL&P has recorded a regulatory
asset, with a corresponding obligation, on its balance sheet.
2. NUCLEAR DECOMMISSIONING AND PLANT CLOSURE COSTS
Millstone and Seabrook: CL&P's operating nuclear power plants, Millstone 2
and 3 and Seabrook, have service lives that are expected to end during the
years 2015 through 2026 and upon retirement, must be decommissioned.
Millstone 1's expected service life was to end in 2010, however, in July
1998, restart activities were discontinued and preparations for
decommissioning the unit began. Current decommissioning studies conclude
that complete and immediate dismantlement as soon as practical after
retirement continues to be the most viable and economic method of
decommissioning a unit. These studies are reviewed and updated
periodically to reflect changes in decommissioning requirements, costs,
technology, and inflation. 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.
CL&P's ownership share of the estimated cost of decommissioning Millstone 2
and 3 and Seabrook, in year end 1999 dollars, is $334.9 million, $327.9
million and $22.9 million, respectively. Nuclear decommissioning costs are
accrued over the expected service lives of the units and are included in
depreciation expense. Nuclear decommissioning expenses for these units
amounted to $19.6 million in 1999, $19.1 million in 1998 and $20 million
in 1997. Nuclear decommissioning, as a cost of removal, is included in
the accumulated provision for depreciation.
A Post-Shutdown Decommissioning Activities Report for Millstone 1 was filed
with the Nuclear Regulatory Commission in June 1999 which outlines
decommissioning activities, and costs, and supports the obligation recorded
by the company. Nuclear decommissioning expenses for Millstone 1 were
$22.8 million in 1999, $17.3 million in 1998 and $17.7 million in 1997.
External decommissioning trusts have been established for the costs of
decommissioning the Millstone units. Payments for CL&P's ownership share
of the cost of decommissioning Seabrook is 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
and after-tax earnings on the Millstone and Seabrook decommissioning funds
of 5.5 percent and 6.5 percent, respectively.
As of December 31, 1999 and 1998, CL&P collected a total of $185.1 million
and $165.6 million, respectively, through rates toward the future
decommissioning costs of their shares of Millstone 2 and 3 and Seabrook,
of which $164.2 million in 1999 and $145.8 million in 1998 have been
transferred to external decommissioning trusts. Earnings on the
decommissioning trusts increase the decommissioning trust balances and the
accumulated reserves for depreciation. Unrealized gains and losses
associated with the decommissioning trusts and financing funds also impact
the balance of the trusts and the accumulated reserve for depreciation.
The fair values of the amounts in the external decommissioning trusts
were $282.2 million and $242.2 million at December 31, 1999 and 1998,
respectively.
Yankee Companies: VYNPC owns and operates a nuclear generating unit with
a service life that is expected to end in 2012. CL&P's ownership share of
estimated costs, in year end 1999 dollars, of decommissioning this unit is
$40.7 million. On October 15, 1999, VYNPC agreed to sell the unit for
$22 million to an unaffiliated company. Among other commitments, the
acquiring company agreed to assume the decommissioning cost of the unit
after it is taken out of service, and the VYNPC owners have agreed to fund
the uncollected decommissioning cost to a negotiated amount at the
time of the closing of the sale.
As of December 31, 1999 and 1998, CL&P's remaining estimated obligation,
including decommissioning for the units owned by CYAPC, YAEC and MYAPC,
which have been shut down was $238.1 million and $277.8 million,
respectively.
3. 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 the respective state regulators. SEC authorization allowed CL&P, as
of January 1, 1999, to incur total short-term borrowings up to a maximum
of $375 million. In addition, the charter of CL&P contains preferred stock
provisions restricting the amount of unsecured debt the company may incur.
As of December 31, 1999, CL&P's charter permits CL&P to incur $322
million of unsecured debt.
Credit Agreement: On November 19, 1999, CL&P and WMECO entered into
a new 364-day revolving credit facility for $500 million, replacing the
previous $313.75 million facility which was to expire on November 21, 1999.
The revolving credit facility, will be used to bridge gaps in working
capital and provide short-term liquidity. CL&P may draw up to $300
million under the facility, which is secured by second mortgages on
Millstone 2 and 3. Unless extended, the new credit facility will expire
on November 17, 2000. At December 31, 1999 and 1998, there were $90
million and $10 million, respectively, in borrowings under these
facilities.
Under the credit agreement discussed above, CL&P may borrow at fixed or
variable rates plus an applicable margin based upon the company's most
senior secured debt as rated by the lower of Standard & Poor's or Moody's
Investors Service. The weighted average interest rate on CL&P's notes
payable to banks outstanding on December 31, 1999 and 1998, was 7.69
percent and 6.53 percent, respectively.
This credit agreement provides that CL&P must comply with certain financial
and nonfinancial covenants as are customarily included in such agreements,
including, but not limited to, common equity ratios and interest coverage
ratios.
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 NU 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. Borrowings based on loans from NU
parent, however, bear interest at NU parent's cost and must be repaid based
upon the terms of NU parent's original borrowing. At December 31, 1999 and
1998, CL&P had $11.7 million and no borrowings, respectively, from the
Pool. The interest rate on borrowings from the Pool at December 31, 1999
and 1998, was 4.9 percent and 5.8 percent, respectively. Maturities of
short-term debt obligations were for periods of three months or less.
4. LEASES
CL&P finances its respective shares of nuclear fuel for Millstone 2 and 3
under the Niantic Bay Fuel Trust (NBFT) capital lease agreement. This
capital lease agreement has an expiration date of June 1, 2040. At
December 31, 1999 and 1998, the present value of CL&P's capital lease
obligation to the NBFT was $127.2 million and $144.8 million, respectively.
In connection with the planned nuclear divestiture, CL&P anticipates that
its portion of the NBFT capital lease will be terminated and CL&P's portion
of the NBFT's obligation under the $180 million Series G Intermediate
Term Note agreement will be assigned to CL&P.
CL&P makes 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, CL&P's interest in the nuclear fuel transfers to CL&P.
CL&P also has entered into lease agreements, some of which are capital
leases, 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.
Capital lease rental payments charged to operating expense were $10
million in 1999, $20.5 million in 1998 and $10.5 million in 1997.
Interest included in capital lease rental payments was $9.4 million
in 1999, $14.1 million in 1998 and $9.9 million in 1997. Operating lease
rental payments charged to expense were $14.3 million in 1999, $17.9
million in 1998 and $19.7 million in 1997.
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, 1999, are:
---------------------------------------------------------------------------
Year Capital Leases Operating Leases
---------------------------------------------------------------------------
(Millions of Dollars)
2000............................... $ 2.4 $16.1
2001............................... 2.4 13.0
2002............................... 2.4 11.3
2003............................... 2.4 9.7
2004............................... 2.3 8.6
After 2004......................... 29.4 16.9
------ -----
Future minimum lease payments...... 41.3 $75.6
=====
Less amount representing interest.. 24.1
------
Present value of future minimum
lease payments for other than
nuclear fuel..................... 17.2
Present value of future nuclear
fuel lease payments.............. 127.2
------
Present value of future minimum
lease payments................... $144.4
======
---------------------------------------------------------------------------
5. PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock not subject to mandatory redemption are:
---------------------------------------------------------------------------
December 31, Shares
1999 Outstanding December 31,
Redemption December 31, ------------------
Description Price 1999 1999 1998
---------------------------------------------------------------------------
(Millions of Dollars)
$1.90 Series of 1947 $52.50 163,912 $ 8.2 $ 8.2
$2.00 Series of 1947 54.00 336,088 16.8 16.8
$2.04 Series of 1949 52.00 100,000 5.0 5.0
$2.20 Series of 1949 52.50 200,000 10.0 10.0
3.90% Series of 1949 50.50 160,000 8.0 8.0
$2.06 Series E of 1954 51.00 200,000 10.0 10.0
$2.09 Series F of 1955 51.00 100,000 5.0 5.0
4.50% Series of 1956 50.75 104,000 5.2 5.2
4.96% Series of 1958 50.50 100,000 5.0 5.0
4.50% Series of 1963 50.50 160,000 8.0 8.0
5.28% Series of 1967 51.43 200,000 10.0 10.0
$3.24 Series G of 1968 51.84 300,000 15.0 15.0
6.56% Series of 1968 51.44 200,000 10.0 10.0
------ ------
$116.2 $116.2
====== ======
---------------------------------------------------------------------------
6. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock subject to mandatory redemption are:
---------------------------------------------------------------------------
December 31, Shares
1999 Outstanding December 31,
Redemption December 31, ------------------
Description Price 1999 1999 1998
---------------------------------------------------------------------------
(Millions of Dollars)
7.23% Series of 1992 $51.93 981,434 $49.1 $ 52.8
5.30% Series of 1993 50.67 1,009,340 50.5 66.5
----- ------
99.6 119.3
Less preferred stock to
be redeemed within one year 395,000 19.8 19.8
----- ------
$79.8 $ 99.5
===== ======
---------------------------------------------------------------------------
Each of these series is subject to certain refunding limitations for the
first five years after issuance. 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 1999 1998
---------------------------------------------------------------------------
(Millions of Dollars)
7.23% Series of 1992 (1) $ 3.8 75,000 443,566
5.30% Series of 1993 (2) 16.0 320,000 270,660
(1) Sinking fund requirements commenced September 1, 1998.
(2) Sinking fund requirements commenced October 1, 1999.
The minimum sinking fund requirements of the series subject each year to
mandatory redemption aggregate $19.8 million each year for 2000 through
2002, $6.2 million in 2003, and $3.8 million in 2004. 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 CL&P is in arrears in the payment of
dividends on any outstanding shares of preferred stock, CL&P would be
prohibited from redeeming or purchasing less than all of the outstanding
preferred stock.
7. LONG-TERM DEBT
Details of long-term debt outstanding are:
---------------------------------------------------------------------------
At December 31, 1999 1998
---------------------------------------------------------------------------
(Millions of Dollars)
First Mortgage Bonds:
7 1/4% Series VV due 1999................... $ - $ 74.0
5 1/2% Series A due 1999................... - 140.0
5 3/4% Series XX due 2000................... 159.0 200.0
7 7/8% Series A due 2001................... 160.0 160.0
7 3/4% Series C due 2002................... 200.0 200.0
6 1/8% Series B due 2004................... - 140.0
7 3/8% Series TT due 2019................... 20.0 20.0
7 1/2% Series YY due 2023................... - 100.0
8 1/2% Series C due 2024................... 115.0 115.0
7 7/8% Series D due 2024................... 140.0 140.0
7 3/8% Series ZZ due 2025................... - 125.0
------- --------
794.0 1,414.0
Pollution Control Notes:
Variable rate, due 2016-2022............... 46.4 46.4
Variable tax exempt, due 2028-2031......... 377.5 377.5
Fees and interest due for spent nuclear
fuel disposal costs........................ 183.4 175.0
Other........................................ 0.2 0.1
Less amounts due within one year............. 159.0 214.0
Unamortized premium and discount, net........ (1.4) (5.0)
-------- --------
Long-term debt, net.......................... $1,241.1 $1,794.0
======== ========
---------------------------------------------------------------------------
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, 1999, for the years 2000 through 2004 are
$159 million, $160 million, $200 million, and minimal requirements for
2003 and 2004, respectively.
Essentially all utility plant of CL&P is subject to the liens of the
company's first mortgage bond indenture.
CL&P has secured $315.5 million of pollution control notes with second
mortgage liens on Millstone 1, junior to the liens of its first mortgage
bond indenture.
CL&P has $62 million of tax-exempt Pollution Control Revenue Bonds with
bond insurance secured by first mortgage bonds and a liquidity facility.
The average effective interest rate on the variable-rate pollution control
notes ranged from 2.2 percent to 3.9 percent for 1999 and from 3.6 percent
to 3.7 percent for 1998.
8. INCOME TAX EXPENSE
The components of the federal and state income tax provisions were charged/
(credited) to operations as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Current income taxes:
Federal............................... $197.7 $ (9.2) $(53.3)
State................................. 27.9 (3.9) (3.3)
------ ------ ------
Total current....................... 225.6 (13.1) (56.6)
------ ------ ------
Deferred income taxes, net:
Federal............................... (113.0) (34.9) 8.4
State................................. (20.1) (17.5) (11.4)
------ ------ ------
Total deferred...................... (133.1) (52.4) (3.0)
------ ------ ------
Investment tax credits, net............. (7.3) (13.3) (7.4)
------ ------ ------
Total income tax expense/(credit)....... $ 85.2 $(78.8) $(67.0)
====== ====== ======
---------------------------------------------------------------------------
The components of total income tax expense/(credit) are classified
as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Income taxes charged to
operating expenses................... $122.1 $(11.7) $(59.4)
Other income taxes..................... (36.9) (67.1) (7.6)
------ ------ ------
Total income tax expense/(credit)...... $ 85.2 $(78.8) $(67.0)
====== ====== ======
---------------------------------------------------------------------------
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Depreciation, leased nuclear fuel,
settlement credits and
disposal costs....................... $ (9.9) $ (5.6) $ 12.0
Regulatory deferral.................... 6.2 (36.7) (12.4)
State net operating loss carryforward.. 7.8 1.1 (7.7)
Regulatory disallowance................ (24.2) (18.1) -
Sale of fossil generation assets....... (126.1) - -
Pension accruals....................... 9.8 8.9 6.5
Contractual settlements................ 0.6 1.3 1.8
Other.................................. 2.7 (3.3) (3.2)
------- ------ ------
Deferred income taxes, net............. $(133.1) $(52.4) $ (3.0)
======= ====== ======
---------------------------------------------------------------------------
A reconciliation between income tax expense/(credit) and the expected tax
expense/(credit) at 35 percent of pretax income is as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Expected federal income tax............ $25.0 $(96.1) $(72.3)
Tax effect of differences:
Depreciation......................... 36.5 20.9 19.5
Amortization of regulatory assets.... 22.5 22.7 3.9
Investment tax credit amortization... (7.3) (13.3) (7.4)
State income taxes, net of federal
benefit............................ 5.1 (13.9) (9.6)
Other, net........................... 3.4 0.9 (1.1)
----- ------ ------
Total income tax expense/(credit)...... $85.2 $(78.8) $(67.0)
===== ====== ======
---------------------------------------------------------------------------
9. EMPLOYEE BENEFITS
A. Pension Benefits and Postretirement Benefits Other Than Pensions
The NU system companies, including CL&P, participate in a uniform
noncontributory defined benefit retirement plan covering substantially
all regular NU system employees. Benefits are based on years of
service and the employees' highest eligible compensation during 60
consecutive months of employment. CL&P's portion of the NU system's
total pension credit, part of which was credited to utility plant, was
$40.3 million in 1999, $32.6 million in 1998 and $22.5 million in 1997.
Currently, CL&P annually funds an amount at least equal to that which
will satisfy the requirements of the Employee Retirement Income Security
Act and Internal Revenue Code (the Code).
The NU system companies, including CL&P, also provide certain health
care benefits, primarily medical and dental, and life insurance benefits
through a benefit plan to retired employees. These benefits are
available for employees retiring from CL&P who have met specified
service requirements. For current employees and certain retirees, the
total benefit is limited to two times the 1993 per retiree health care
cost. These costs are charged to expense over the future estimated work
life of the employee. CL&P annually funds postretirement costs through
external trusts with amounts that have been rate-recovered and which
also are tax deductible under the Code.
Pension and trust assets are invested primarily in domestic and
international equity securities and bonds.
The following table represents information on the plans' benefit
obligation, fair value of plan assets, and the respective plans' funded
status:
- -------------------------------------------------------------------------------
At December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
(Millions of Dollars) 1999 1998 1999 1998
- -------------------------------------------------------------------------------
Change in benefit obligation
Benefit obligation
at beginning of year......... $ (562.7) $(531.6) $(133.8) $(126.6)
Service cost................... (11.0) (9.8) (2.3) (2.0)
Interest cost.................. (40.0) (37.5) (9.3) (9.2)
Plan amendment................. (32.5) - - -
Transfers...................... 1.8 (6.3) - -
Actuarial gain/(loss).......... 58.8 (12.4) (0.6) (7.7)
Benefits paid.................. 35.5 34.9 14.1 11.7
Settlements.................... (1.8) - - -
- -------------------------------------------------------------------------------
Benefit obligation
at end of year............... $ (551.9) $(562.7) $(131.9) $(133.8)
- -------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets
at beginning of year......... $ 935.7 $ 846.4 $ 53.8 $ 46.1
Actual return on plan assets... 135.8 117.9 6.6 6.1
Employer contribution.......... - - 13.4 13.3
Benefits paid.................. (35.5) (34.9) (14.1) (11.7)
Transfers...................... 1.8 6.3 - -
- -------------------------------------------------------------------------------
Fair value of plan assets
at end of year............... $1,037.8 $ 935.7 $ 59.7 $ 53.8
- -------------------------------------------------------------------------------
Funded status at December 31... $ 485.9 $ 373.0 $ (72.2) $ (80.0)
Unrecognized transition
(asset)/obligation........... (4.6) (5.5) 95.5 102.8
Unrecognized prior
service cost................. 33.1 3.2 - -
Unrecognized net gain.......... (400.9) (295.8) (23.3) (22.8)
- -------------------------------------------------------------------------------
Prepaid benefit cost........... $ 113.5 $ 74.9 $ - $ -
- -------------------------------------------------------------------------------
The following actuarial assumptions were used in calculating the plans'
year end funded status:
- -------------------------------------------------------------------------------
At December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
1999 1998 1999 1998
- -------------------------------------------------------------------------------
Discount rate................. 7.75% 7.00% 7.75% 7.00%
Compensation/progression rate. 4.75 4.25 4.75 4.25
Health care cost
trend rate(a)............... N/A N/A 5.57 5.22
- -------------------------------------------------------------------------------
(a) The annual per capita cost of covered health care benefits was
assumed to decrease to 4.90 percent by 2001.
The components of net periodic benefit (credit)/cost are:
- -------------------------------------------------------------------------------
For the Years Ended December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
(Millions of Dollars) 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------
Service cost............... $ 11.0 $ 9.8 $ 8.8 $ 2.3 $ 2.0 $ 1.7
Interest cost.............. 40.0 37.5 37.9 9.3 9.2 9.2
Expected return
on plan assets........... (78.1) (68.4) (59.6) (4.2) (3.6) (3.1)
Amortization of
unrecognized net
transition (asset)/
obligation............... (0.9) (0.9) (0.9) 7.3 7.4 7.3
Amortization of prior
service cost............. 2.7 0.3 0.3 - - -
Amortization of
actuarial gain........... (15.0) (10.9) (8.1) - - -
Other amortization, net.... - - - (1.3) (1.7) (2.3)
Settlements................ - - (0.9) - - -
- -------------------------------------------------------------------------------
Net periodic benefit
(credit)/cost............ $(40.3) $(32.6) $(22.5) $13.4 $13.3 $12.8
- -------------------------------------------------------------------------------
For calculating pension and postretirement benefit costs, the following
assumptions were used:
- -------------------------------------------------------------------------------
For the Years Ended December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------
Discount rate.............. 7.00% 7.25% 7.75% 7.00% 7.25% 7.75%
Expected long-term
rate of return........... 9.50 9.50 9.25 N/A N/A N/A
Compensation/
progression rate......... 4.25 4.25 4.75 4.25 4.25 4.75
Long-term rate of return -
Health assets,
net of tax............... N/A N/A N/A 7.50 7.75 7.50
Life assets............... N/A N/A N/A 9.50 9.50 9.25
- -------------------------------------------------------------------------------
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. The effect of changing the
assumed health care cost trend rate by one percentage point in each year
would have the following effects:
- -------------------------------------------------------------------------------
One Percentage One Percentage
(Millions of Dollars) Point Increase Point Decrease
- -------------------------------------------------------------------------------
Effect on total service and
interest cost components............ $0.6 $(0.6)
Effect on postretirement
benefit obligation.................. $7.3 $(7.2)
- -------------------------------------------------------------------------------
The trust holding the health plan assets is subject to federal
income taxes.
B. Employee Stock Ownership Plan
In June 1999, CL&P paid NU parent $30.5 million for NU shares issued
from 1992 through 1998 on behalf of its employees in accordance with
NU's 401(k) plan. CL&P charged retained earnings for this payment,
as compensation expense had already been recorded in the respective
years at the fair market value of the shares allocated.
10. SALE OF CUSTOMER RECEIVABLES
As of December 31, 1999 and 1998, CL&P had sold accounts receivable of
$170 million and $105 million, respectively, to a third-party purchaser
with limited recourse through the CL&P Receivables Corporation (CRC),
a wholly owned subsidiary of CL&P. In addition, at December 31, 1999
and 1998, $22.5 million and $11.6 million, respectively, of assets was
designated as collateral under the agreement with CRC.
Concentrations of credit risk to the purchaser under the company's
agreement with respect to the receivables are limited due to CL&P's
diverse customer base within its service territory.
11. COMMITMENTS AND CONTINGENCIES
A. Restructuring
During 1999, restructuring orders were issued by the Connecticut
Department of Public Utility Control (DPUC), which required CL&P to
discontinue the application of SFAS No. 71 to the generation portion
of its business and allowed for the recovery of the majority of its
stranded costs. Stranded costs including regulatory assets will be
collected through a transition charge through 2026. The restructuring
orders also allowed for securitization of CL&P's nonnuclear regulatory
assets and the costs to buyout or buydown the various purchased-power
contracts. Securitization is the process of monetizing stranded costs
through the sale of nonrecourse debt securities by a special purpose
entity, collateralized by CL&P's interests in its stranded cost
recoveries.
On December 15, 1999, the DPUC issued a supplemental decision approving
the components of CL&P's rates for standard offer service commencing on
January 1, 2000. The DPUC also approved an interim nuclear capital
recovery mechanism for the period from January 1, 2000, until the
nuclear units are sold at auction. In approving the rates, the DPUC
denied recovery of most of the capital additions made to Millstone 2
and 3 subsequent to June 30, 1997, which CL&P has or will expend to
maintain those plants in a safe and efficient condition or to maintain
their auction value. If implemented as approved, CL&P would not recover
a significant portion of the capital additions which have been or are
expected to be incurred subsequent to July 1, 1997, until the plants are
sold in 2001. On December 29, 1999, CL&P filed with the DPUC a petition
for reconsideration of this portion of the order. The DPUC has agreed
to reopen the docket to consider CL&P's petition. Management believes
the restructuring legislation provides for the recovery of these
prudently incurred expenditures. If CL&P is unsuccessful in favorably
resolving this contingency, an impairment loss of $50 million would be
recorded.
In September 1999, NU announced that the Millstone nuclear generation
assets of CL&P will be put up for auction as soon as practical. On
November 8, 1999, CL&P filed its divestiture plan for the Millstone
units with the DPUC. The auction is expected to begin in early 2000,
provided all regulatory approvals have been met, with a successful
bidder chosen by mid 2000 and a closing in 2001. No NU system company
will participate as a bidder in the auction process. Management expects
to recover all of CL&P's nuclear stranded costs through the net proceeds
of generation asset sales and billing through a transition charge to
retail customers.
B. Nuclear Litigation
The non-NU joint owners of Millstone 3 have filed demands for
arbitration with CL&P and WMECO as well as lawsuits in Massachusetts
Superior Court against NU and its current and former trustees related
to the companies' operation of Millstone 3. During 1999, NU and these
subsidiaries agreed in principle to settle with certain of the joint
owners, who own 58 percent of the non-NU ownership of Millstone 3. The
settlements provide for the payment to the claimants of $36.4 million
and certain contingent payments.
Arbitration and litigation claims remain outstanding for the remaining
joint owners who have not agreed to settle. Management cannot estimate
the potential outcome of the arbitration and litigation for the
nonsettled joint owners, therefore, no liability has been established
at December 31, 1999.
C. Environmental Matters
The NU system, including CL&P, is subject to environmental laws and
regulations intended to mitigate or remove the effect of past operations
and improve or maintain the quality of our environment. As such, the NU
system and CL&P have active environmental auditing and training programs
and believe they are in compliance with the current laws and
regulations.
However, the normal course of operations may necessarily involve
activities and substances that expose CL&P to potential liabilities of
which management cannot determine the outcome. Additionally, management
cannot determine the outcome for liabilities that may be imposed for
past acts, even though such past acts may have been lawful at the time
they occurred. Management does not believe, however, that this will
have a material impact on CL&P's financial statements.
Based upon currently available information for the estimated remediation
costs at December 31, 1999 and 1998, the liability recorded by CL&P for
its estimated environmental remediation costs amounted to $6.9 million
and $8 million, respectively.
D. Spent Nuclear Fuel Disposal Costs
Under the Nuclear Waste Policy Act of 1982, CL&P must pay the DOE for
the disposal of spent nuclear fuel and high-level radioactive waste.
The DOE is responsible for the selection and development of repositories
for, and 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), an accrual has been recorded for the full liability
and payment must be made prior to the first delivery of spent fuel to
the DOE. Until such payment is made, the outstanding balance will
continue to accrue interest at the 3-month treasury bill yield rate.
As of December 31, 1999 and 1998, fees due to the DOE for the disposal
of CL&P's Prior Period Fuel were $183.4 million and $175 million,
respectively, including interest costs of $116.9 million and $108.5
million, respectively.
E. Nuclear Insurance Contingencies
Insurance policies covering CL&P's ownership share of the NU system's
nuclear facilities have been purchased for the primary cost of repair,
replacement or decontamination of utility property, 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.
CL&P is subject to retroactive assessments if losses under those
policies exceed the accumulated funds available to the insurer.
The maximum potential assessments with respect to losses arising during
the current policy year for the primary property insurance program, the
replacement power policies and the excess property damage policies are
$7.1 million, $4.1 million and $8.9 million, respectively. In addition,
insurance has been purchased by the NU system in the aggregate of $200
million on an industry basis for coverage of worker claims.
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 NU system, including CL&P,
could be assessed liabilities in proportion to its ownership interest in
each of its nuclear units up to $83.9 million. The NU system's payment
of this assessment would be limited to, in proportion to its ownership
interest in each of its nuclear units, $10 million in any one year per
nuclear unit. In addition, if the sum of all claims and costs from any
one nuclear incident exceeds the maximum amount of financial protection,
the NU system would be subject to an additional 5 percent or $4.2
million liability, in proportion to its ownership interests in each of
its nuclear units. Based upon its ownership interests in the Millstone
units and in Seabrook, CL&P's maximum liability, including any
additional assessments, would be $192.9 million per incident, of which
payments would be limited to $21.9 million per year. In addition,
through purchased-power contracts with VYNPC, CL&P would be responsible
for up to an additional assessment of $8.4 million per incident, of
which payments would be limited to $1 million per year.
F. Construction Program
CL&P currently forecasts construction expenditures of $1.3 billion for
the years 2000-2004, including $205.8 million for 2000. CL&P estimates
that nuclear fuel requirements, including nuclear fuel financed through
the NBFT, will be $137.5 million for the years 2000-2003, including
$47.5 million for 2000.
G. Long-Term Contractual Arrangements
Yankee Companies: The NU system companies relied on VYNPC for 1.5
percent of their capacity under long-term contracts. Under the terms
of its agreement, CL&P paid its ownership (or entitlement) shares of
costs, which included depreciation, operation and maintenance (O&M)
expenses, taxes, the estimated cost of decommissioning, and a return
on invested capital. These costs were recorded as purchased-power
expenses and recovered through CL&P's rates. CL&P's cost of purchases
under contracts with VYNPC amounted to $17 million in 1999, $15.9
million in 1998 and $14.1 million in 1997. VYNPC has agreed to sell
its nuclear unit. Upon completion of the sale, this long-term contract
will be terminated.
Nonutility Generators (NUGs): CL&P has entered into various arrangements
for the purchase of capacity and energy from NUGs. For the years ended
December 31, 1999 and 1998, 13 percent and for the year ended December
31, 1997, 14 percent, of NU's system electricity requirements were met
by NUGs. CL&P's total cost of purchases under these arrangements
amounted to $293.8 million in 1999, $290.7 million in 1998 and $283.2
million in 1997. The company is in the process of renegotiating the
terms of these contracts through either a contract buydown or buyout.
The company expects any payments to the NUGs as a result of these
renegotiations to be recovered from the company's customers.
Hydro-Quebec: Along with other New England utilities, CL&P has entered
into an agreement 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 expenses and capital costs of
those facilities.
Estimated Annual Costs: The estimated annual costs of CL&P's
significant long-term contractual arrangements, absent the effects of
any contract terminations or buydowns, are as follows:
------------------------------------------------------------------------
2000 2001 2002 2003 2004
------------------------------------------------------------------------
(Millions of Dollars)
VYNPC................. $ 15.9 $ 16.5 $ 16.6 $ 16.2 $ 15.9
NUGs.................. 291.0 292.5 296.2 301.7 283.3
Hydro-Quebec.......... 17.8 17.3 16.8 16.3 15.8
------------------------------------------------------------------------
H. New England Power Pool (NEPOOL) Generation Pricing
Disputes with respect to interpretation and implementation of the NEPOOL
market rules have arisen with respect to various competitive product
markets. In certain cases, CL&P stands to gain as a result of resolution
of such disputes. In other cases, CL&P could incur additional costs as
the result of resolution of the disputes. The various disputes are in
various stages of resolution through alternative dispute resolution and
regulatory review. It is too early to tell the level of potential gain
or loss that may result upon resolution of these issues.
12. MARKET RISK AND RISK MANAGEMENT INSTRUMENTS
Energy Price Risk Management: Beginning in 1997 through 1999, CL&P used
swap instruments with financial institutions to hedge the energy price risk
created by long-term negotiated energy contracts. These agreements were
intended to minimize exposure associated with rising fuel prices by
managing a portion of CL&P's cost of producing power for these negotiated
energy contracts.
In 1999, CL&P divested substantially all of its fossil and hydroelectric
generation assets and agreed to transfer the rights and obligations related
to the long-term negotiated energy contracts to an unregulated affiliate.
Accordingly, the fuel swap positions were marked-to-market and CL&P
recognized a loss of $5.2 million. In January 2000, the fuel swap
positions were liquidated.
13. MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY
CL&P Capital LP (CL&P LP), a subsidiary of CL&P, previously had 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 a minority
interest.
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:
Supplemental Executive Retirement Plan (SERP) Investments: CL&P's portion
of the investments held for the benefit of the SERP are recorded at fair
market value. These investments having a cost basis of $0.2 million held
for benefit of the SERP were recorded at their fair market values at
December 31, 1999 and 1998, of $1.3 million.
Nuclear decommissioning trusts: CL&P's portion of the investments held
in the NU system companies' nuclear decommissioning trusts were marked-
to-market by $88.2 million as of December 31, 1999, and $78.7 million as
of December 31, 1998, with corresponding offsets to the accumulated
provision for depreciation. The amounts adjusted in 1999 and 1998
represent cumulative net unrealized gains. The cumulative gross unrealized
holding losses were immaterial for both 1999 and 1998.
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:
--------------------------------------------------------------------------
At December 31, 1999
--------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
--------------------------------------------------------------------------
Preferred stock not subject
to mandatory redemption................. $116.2 $144.9
Preferred stock subject to
mandatory redemption.................... 99.6 96.8
Long-term debt -
First mortgage bonds.................... 794.0 805.4
Other long-term debt.................... 607.3 564.5
MIPS...................................... 100.0 97.3
-------------------------------------------------------------------------
--------------------------------------------------------------------------
At December 31, 1998
--------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
--------------------------------------------------------------------------
Preferred stock not subject
to mandatory redemption................. $ 116.2 $ 77.2
Preferred stock subject to
mandatory redemption.................... 119.3 108.1
Long-term debt -
First mortgage bonds.................... 1,414.0 1,421.9
Other long-term debt.................... 598.9 601.2
MIPS...................................... 100.0 102.0
-------------------------------------------------------------------------
15. OTHER COMPREHENSIVE INCOME
The accumulated balance for each other comprehensive income item
is as follows:
---------------------------------------------------------------------------
Current
December 31, Period December 31,
1998 Change 1999
---------------------------------------------------------------------------
(Thousands of Dollars)
---------------------------------------------------------------------------
Unrealized gains on securities.... $ 638 $38 $ 676
Minimum pension liability
adjustments...................... (260) - (260)
---------------------------------------------------------------------------
Accumulated other
comprehensive income............ $ 378 $38 $ 416
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Current
December 31, Period December 31,
1997 Change 1998
---------------------------------------------------------------------------
(Thousands of Dollars)
---------------------------------------------------------------------------
Unrealized gains on securities.... $ - $ 638 $ 638
Minimum pension liability
adjustments...................... - (260) (260)
---------------------------------------------------------------------------
Accumulated other
comprehensive income............ $ - $ 378 $ 378
---------------------------------------------------------------------------
The changes in the components of other comprehensive income are reported
net of the following income tax effects:
---------------------------------------------------------------------------
(Thousands of Dollars) 1999 1998 1997
---------------------------------------------------------------------------
Unrealized gains on securities....... $(26) $(446) $ -
Minimum pension liability
adjustments........................ - 182 -
---------------------------------------------------------------------------
Other comprehensive income........... $(26) $(264) $ -
---------------------------------------------------------------------------
16. SEGMENT INFORMATION
Effective January 1, 1999, the NU system companies, including CL&P, adopted
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." The NU system is organized between regulated utilities
and unregulated energy services. CL&P is included in the regulated
utilities segment of the NU system and has no other reportable segments.
17. MERGER AGREEMENT WITH CON EDISON
On October 13, 1999, NU and Con Edison announced that they have agreed
to a merger to combine the two companies. The shareholders of NU will
receive $25 per share in a combination of cash and Con Edison common stock.
NU shareholders also have the right to receive an additional $1 per share
if a definitive agreement to sell its interests (other than that now held
by PSNH) in Millstone 2 and 3 is entered into and recommended by the
Utility Operations and Management Unit of the DPUC on or prior to the later
of December 31, 2000, or the closing of the merger. Further, the value of
the amount of cash or common stock to be received by NU shareholders is
subject to increase by an amount of $0.0034 per share per day for each day
that the transaction does not close after August 5, 2000.
Upon completion of the merger, NU will become a wholly owned subsidiary of
Con Edison. The purchase is subject to the approval of the shareholders
of both companies and several regulatory agencies. The companies
anticipate that these regulatory procedures can be completed by July 2000.
<TABLE>
The Connecticut Light and Power Company and Subsidiaries
- -----------------------------------------------------------------------------------------------------------
SELECTED CONSOLIDATED FINANCIAL DATA 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Operating Revenues..................... $2,452,855 $2,386,864 $2,465,587 $2,397,460 $2,387,069
Operating Income/(Loss)................ 174,749 28,254 (7,619) 59,142 324,026
Net (Loss)/Income...................... (13,568) (195,725) (139,597) (50,868) 205,216
Cash Dividends on Common Stock......... - - 5,989 138,608 164,154
Total Assets........................... 5,298,284 6,050,198 6,081,223 6,244,036 6,045,631
Long-Term Debt(a)...................... 1,400,056 2,007,957 2,043,327 2,038,521 1,822,018
Preferred Stock Not Subject to
Mandatory Redemption................. 116,200 116,200 116,200 116,200 116,200
Preferred Stock Subject to
Mandatory Redemption (a)............. 99,539 119,289 155,000 155,000 155,000
Obligations Under Capital Leases (a)... 144,400 162,884 158,118 155,708 172,264
- -----------------------------------------------------------------------------------------------------------
CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited)
- -----------------------------------------------------------------------------------------------------------
Quarter Ended
- -----------------------------------------------------------------------------------------------------------
1999 March 31 June 30 September 30 December 31
- -----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues..................... $606,997 $565,069 $667,349 $613,440
======== ======== ======== ========
Operating Income....................... $ 20,412 $ 24,370 $ 51,969 $ 77,998
======== ======== ======== ========
Net (Loss)/Income...................... $(13,705) $(6,814) $ 9,873 $( 2,922)
======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------
1998
- -----------------------------------------------------------------------------------------------------------
Operating Revenues..................... $608,961 $561,224 $628,148 $ 588,531
======== ======== ======== =========
Operating Income/(Loss)................ $ 6,261 $ 11,066 $ 29,945 $ (19,018)
======== ======== ======== =========
Net Loss............................... $(30,979) $(26,361) $(20,405) $(117,980)
======== ======== ======== =========
(a) Includes portion due within one year.
</TABLE>
The Connecticut Light and Power Company and Subsidiaries
- -------------------------------------------------------------------------------
CONSOLIDATED STATISTICS (Unaudited)
- -------------------------------------------------------------------------------
Average
Gross Electric Annual
Utility Plant Use Per
December 31, kWh Residential Electric
(Thousands of Sales Customer Customers Employees
Dollars) (Millions) (kWh) (Average) December 31,
- -------------------------------------------------------------------------------
1999 $6,007,421 29,317 8,969 1,120,846 2,377
1998 6,345,215 27,356 8,476 1,111,370 2,379
1997 6,639,786 25,766 8,526 1,103,309 2,163
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 2,285
(a) Effective January 1, 1996, the amounts shown reflect billed and unbilled
sales. The 1995 amounts have been restated to reflect this change.
1999 Annual Report
Public Service Company of New Hampshire
Index
Contents Page
- -------- ----
Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 1
Report of Independent Public Accountants.......................... 10-11
Statements of Income.............................................. 13
Statements of Comprehensive Income................................ 13
Balance Sheets.................................................... 14-15
Statements of Common Stockholder's Equity......................... 16
Statements of Cash Flows.......................................... 17
Notes to Financial Statements..................................... 18
Selected Financial Data........................................... 43
Quarterly Financial Data (Unaudited).............................. 43
Statistics (Unaudited)............................................ 44
Preferred Stockholder and Bondholder Information.................. Back Cover
Public Service Company of New Hampshire
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
Overview
Public Service Company of New Hampshire (PSNH or the company) is a wholly
owned operating subsidiary of Northeast Utilities (NU) and is part of the
Northeast Utilities system (NU system). North Atlantic Energy Corporation
(NAEC) is another wholly owned subsidiary of NU. PSNH is obligated to
purchase the capacity and output from NAEC's 35.98 percent joint ownership
interest in the Seabrook Station (Seabrook) nuclear unit under the terms of
two life-of-unit, full cost recovery contracts (Seabrook Power Contracts).
During 1999, PSNH made significant progress toward resolving industry
restructuring issues in the state of New Hampshire by negotiating a global
restructuring settlement that is still subject to regulatory approval.
The "Agreement to Settle PSNH Restructuring" (Settlement Agreement) includes
an after-tax write-off of $225 million. However, that write-off was not
recorded in 1999, as key aspects of the Settlement Agreement still required
regulatory and legislative approval and it was not possible to determine the
ultimate resolution of this matter at year end. Also, upon the approval and
implementation of the Settlement Agreement, PSNH and NAEC will restructure the
Seabrook Power Contracts to provide for the buydown of the value of the
Seabrook Asset.
During 1999, PSNH's revenues increased to $1.16 billion, up 6.7 percent from
revenues of $1.09 billion in 1998. During 1999, PSNH had net income of $84.2
million, compared to $91.7 million in 1998 and $92.2 million in 1997.
Mergers
In 1998 and 1999, NU management concluded that the pace of deregulation was
accelerating throughout the northeastern United States and that shareholders
would benefit from NU not only remaining a major provider of electric
transmission and distribution service, but also becoming an unregulated
marketer of both electricity and natural gas. NU management also concluded
that as a result of the changes occurring in the highly competitive electric
utility industry, increased size would be crucial to achieve its objective of
being a leading provider of energy products and services in the Northeast.
On October 13, 1999, NU announced an agreement to merge with Consolidated
Edison, Inc. (Con Edison), a financially stronger utility based in New York.
The merger will create the nation's largest electric distribution system
with more than 5 million customers and one of the 15 largest natural gas
distribution systems with 1.4 million customers.
NU and Con Edison filed with various state and federal regulatory bodies
in January 2000 to secure approval of the merger. The two companies expect
these regulatory proceedings can be completed by the end of July 2000.
Also in 1999, NU management concluded that the NU system would be stronger
and customers could be better served if NU reentered the natural gas
distribution business that it had exited in 1989 and examined several potential
businesses in New England. By adding gas to NU's energy mix, NU will be able
to broaden its services to its existing customers and will have additional
opportunities for long-term growth. In June 1999, NU announced an agreement
to merge with Yankee Energy System, Inc. (Yankee). The merger will return
to NU, Connecticut's largest natural gas distribution system, as well as
several unregulated businesses involved in energy services, collections and
other areas. The Yankee merger received Yankee shareholder approval in
October 1999, final Connecticut Department of Public Utility Control approval
in December 1999 and Securities and Exchange Commission (SEC) approval in
January 2000. The merger closed on March 1, 2000.
Liquidity
During 1999, net cash flows provided by operations were $199.1 million,
compared to $217.6 million in 1998 and $231.7 million in 1997. The decrease
in 1999 is primarily related to a decrease in net income and increased tax
payments.
Net cash flows used in financing activities included $31.6 million in 1999,
compared to $204.3 million in 1998 and $121.9 million in 1997. This
included $25 million paid in 1999 to retire long-term debt and preferred
stock, compared to $195 million in 1998 and $25 million in 1997. Payments
made for preferred stock dividends were $6.6 million, $9.3 million and $11.9
million for 1999, 1998 and 1997, respectively. There were no cash dividends
on common shares paid in 1999 and 1998 and $85 million in 1997.
Including construction expenditures and investments in nuclear decommissioning
trusts, net cash flows used in investing activities were $45.8 million in 1999,
compared to $46.9 million in 1998 and $16.3 million in 1997.
PSNH's access to capital also benefited from the continued progress toward the
resolution of all restructuring issues in New Hampshire. During 1999, PSNH's
securities received several upgrades from three credit rating agencies. PSNH's
bonds were upgraded to investment grade by Standard & Poor's (S&P) for the
first time since early 1994. At year end, all securities were under review for
possible upgrades, or on "credit watch" with positive implications by S&P,
Moody's Investors Service and Fitch IBCA.
PSNH's $75 million revolving credit agreement was terminated on April 14, 1999.
PSNH currently funds its operations through cash on hand and operating cash
flows. As of December 31, 1999, PSNH had $182.6 million of cash and cash
equivalents. On April 14, 1999, PSNH renewed bank letters of credit that
support nearly $110 million of taxable variable-rate pollution control bonds.
During 2000, pending the approval of the Settlement Agreement and enactment of
legislation, PSNH hopes to begin the process of securitizing approximately
$725 million of approved stranded costs. Securitization involves issuing rate
reduction bonds with interest rates lower than the company's weighted average
cost of capital. Proceeds from securitization will be used to significantly
reduce the capitalization of PSNH and other purposes as set forth in the
Settlement Agreement.
Restructuring
The process of restructuring the electric utility industry in New Hampshire has
not yet been resolved; however, significant progress has been made over the
past year. In August 1999, NU, PSNH and the state of New Hampshire signed the
Settlement Agreement which, once approved and implemented, will resolve a
number of pending regulatory and court proceedings related to PSNH. The
Settlement Agreement is awaiting approval of the New Hampshire Public Utilities
Commission and is subject to legislative approval for securitization. Some of
the key components of the agreement for PSNH include an after-tax write-off of
$225 million of stranded costs; the recovery of the remaining stranded costs;
the securitization of $725 million of approved stranded costs; a reduction in
rates of an average of 18.3 percent; the opening of the New Hampshire
electricity market to competition; and the sale of generation assets and
wholesale power entitlements with transition service being available to
customers for three years.
Upon the approval and implementation of the Settlement Agreement, PSNH and NAEC
will restructure the Seabrook Power Contract to provide for the buydown of the
value of NAEC's Seabrook asset to $100 million. Subsequent to the contract
buydown, NAEC will continue to bill PSNH for recovery of the remaining Seabrook
cost of $100 million. The Settlement Agreement also requires NAEC to sell via
public auction its share of Seabrook, with the sale to occur no later than
December 31, 2003. Upon a successful sale of NAEC's share of Seabrook, the
existing Seabrook Power Contracts between PSNH and NAEC will be terminated.
For further information regarding commitments and contingencies related to
restructuring, see Note 10A, "Commitments and Contingencies - Restructuring"
to the financial statements.
Nuclear Generation
Seabrook
Seabrook achieved an annual capacity factor of 86.4 percent in 1999. However,
since returning to service on May 13, 1999, after a 48-day refueling and
maintenance outage, Seabrook has achieved a 99 percent capacity factor through
December 31, 1999. PSNH receives 35.98 percent of Seabrook's output under
long-term contracts with NAEC.
NAEC anticipates auctioning its 35.98 percent share of Seabrook with the 4.06
percent owned by its affiliate, The Connecticut Light and Power Company, after
approval of the Settlement Agreement.
Millstone 3
PSNH has a 2.85 percent ownership share of the Millstone 3 nuclear unit.
Millstone 3 received the appropriate Nuclear Regulatory Commission approvals,
resumed operation in July 1998 and achieved an annual capacity factor of 81.7
percent in 1999. After a 60-day refueling and maintenance outage, Millstone 3
returned to service on June 29, 1999, and has achieved a 98.1 percent capacity
factor through December 31, 1999.
An auction of the NU system's ownership interests in the Millstone units is
expected in 2000 with a closing in 2001. Based on regulatory decisions
received in 1999, management expects to recover all of its remaining nuclear
stranded costs from retail customers.
Yankee Companies
On June 1, 1999, the Federal Energy Regulatory Commission accepted the offer of
settlement which was filed on January 15, 1999, by the Maine Yankee Atomic
Power Company (MYAPC). The significant aspects of the settlement allowed MYAPC
to collect $33.1 million annually to pay for decommissioning and spent fuel,
approved its return on equity of 6.5 percent, permitted full recovery of
MYAPC's unamortized investment, including fuel, and set an incentive budget
for decommissioning at $436.3 million.
PSNH is a 4 percent shareholder and sponsor company of the Vermont Yankee
Nuclear Power Corporation (VYNPC). On October 15, 1999, VYNPC agreed to sell
its unit for $22 million to an unaffiliated company. Among other commitments,
the acquiring company agreed to assume the decommissioning cost of the unit
after it is taken out of service, and the VYNPC owners have agreed to fund
the uncollected decommissioning cost to a negotiated amount at the time of
the closing of the sale. VYNPC's owners have also agreed either to enter into
a new purchased-power agreement with the acquiring company or to buy out such
future power payment obligations by making a fixed payment to them. PSNH has
elected the buyout option. The VYNPC owners' obligations to close and pay such
amounts are conditioned upon their receipt of satisfactory regulatory approval
of the transaction, including provision for adequate recovery of these
payments.
Nuclear Decommissioning
The staff of the SEC has questioned certain of the current accounting practices
of the electric utility industry regarding the recognition, measurement and
classification of decommissioning costs for nuclear units in their financial
statements.
Currently, the Financial Accounting Standards Board plans to review the
accounting for obligations associated with the retirement of long-lived assets,
including the decommissioning of nuclear units. If current accounting
practices for nuclear decommissioning change, the annual provision for
decommissioning could increase relative to 1999, and the estimated cost for
decommissioning could be recorded as a liability with recognition of an
increase in the cost of the related nuclear unit. However, management does
not believe that such a change will have a material impact on PSNH's financial
statements due to its current and future ability to recover decommissioning
costs through rates.
Spent Nuclear Fuel Disposal Costs
The United States Department of Energy (DOE) originally was scheduled to begin
accepting delivery of spent fuel in 1998. However, delays in confirming the
suitability of a permanent storage site continually have postponed plans for
the DOE's long-term storage and disposal site. Extended delays or a default
by the DOE could lead to consideration of costly alternatives. PSNH has the
primary responsibility for the interim storage of its share of spent nuclear
fuel for Millstone 3. The facilities for Millstone 3 are expected to provide
adequate storage for its projected life with the addition of new storage
racks. Seabrook is expected to have spent fuel storage capacity until at
least 2010. Meeting spent fuel storage requirements beyond these periods
could require new and separate storage facilities. For further information
regarding spent nuclear fuel disposal costs, see Note 10D, "Commitments and
Contingencies - Spent Nuclear Fuel Disposal Costs," to the financial
statements.
Other Matters
Environmental Matters
PSNH is subject to environmental laws and regulations structured to mitigate
or remove the effect of past operations and to improve or maintain the quality
of the environment. For further information regarding environmental matters,
see Note 10C, "Commitments and Contingencies - Environmental Matters," to
the financial statements.
Other Commitments and Contingencies
PSNH is subject to other commitments and contingencies primarily relating to
nuclear litigation, nuclear insurance contingencies, its construction program,
long-term contractual arrangements, the New England Power Pool generation
pricing and its deferred receivable from an affiliate company. For further
information regarding these other commitments and contingencies, see Note 10,
"Commitments and Contingencies," to the financial statements.
Year 2000 Issues
The transition into the year 2000 was a success for the NU system and PSNH.
Its mission to provide safe, reliable energy to its customers and to ensure
continued operability of critical business functions was not affected by any
year 2000 related issues.
The projected total cost of the year 2000 program is estimated at $21 million
for the NU system. The total cost to date was funded through operating cash
flows. The NU system has incurred and expensed $20 million related to year
2000 readiness efforts.
Forward Looking Statements
This discussion and analysis includes forward looking statements, which are
statements of future expectations and not facts. Words such as estimates,
expects, anticipates, intends, plans, and similar expressions identify forward
looking statements. Actual results or outcomes could differ materially as a
result of further actions by state and federal regulatory bodies, competition
and industry restructuring, changes in economic conditions, changes in
historical weather patterns, changes in laws, developments in legal or public
policy doctrines, technological developments, and other presently unknown or
unforeseen factors.
RESULTS OF OPERATIONS
The components of significant income statement variances for the past
two years are provided in the table below.
Income Statement Variances
Millions of Dollars
1999 over(under) 1998 1998 over/(under) 1997
--------------------- ----------------------
Amount Percent Amount Percent
------ ------- ------ -------
Operating Revenues $73 7% $(21) (2)%
Operating Expenses:
Fuel, purchased and
net interchange power 86 14 44 8
Other operation and maintenance 11 7 (2) (1)
Depreciation 2 5 1 2
Amortization of regulatory
assets, net 8 30 (30) (53)
Federal and state income taxes (31) (44) (16) (18)
Taxes other than income taxes - - (1) (1)
Operating Income (7) (5) (13) (9)
Equity in earnings of
regional nuclear
generating companies (2) (58) 1 93
Other, net (4) (38) 9 (a)
Interest charges, net (1) (1) (7) (15)
Net Income (7) (8) - -
(a) Percent greater than 100.
Operating Revenues
Operating revenues increased by $73 million or 7 percent in 1999, primarily
due to higher retail revenues ($43 million), higher wholesale energy and
capacity sales and transmission revenues ($30 million). Retail kilowatt-hour
sales increased by 5.3 percent.
Operating revenues decreased $21 million in 1998, primarily due to the 1997
retail rate decrease. Retail kilowatt-hour sales were 2.3 percent higher for
1998 and contributed approximately $9 million to operating revenues.
Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power expense increased in 1999, primarily
due to higher purchased-power expenses ($48 million) and higher deferred
expenses ($25 million) associated with the company's fuel clause and higher
capacity costs for Seabrook ($8 million). Seabrook's capacity costs are higher
due to costs associated with the refueling outage in 1999 and the amortization
of the return that was deferred by PSNH through November 1998.
Fuel, purchased and net interchange power expense increased in 1998, primarily
due to higher costs associated with the Seabrook Power Contract as a result of
the amortization of Seabrook phase-in costs that began in June 1998 ($57
million), partially offset by lower costs at the Millstone 3 and Maine Yankee
nuclear units ($6 million).
Other Operation and Maintenance
Other operation and maintenance (O&M) expenses increased in 1999, primarily due
to the recognition of environmental insurance proceeds which reduced O&M
expense in 1998 ($12 million), higher fossil maintenance expenses ($3 million)
and higher transmission expenses ($2 million), partially offset by lower storm
costs in 1999 ($6 million).
Other O&M expenses decreased in 1998, primarily due to the recognition of
environmental insurance proceeds ($12 million), partially offset by higher costs
related to the January ice storm, net of insurance proceeds ($8 million).
Amortization of Regulatory Assets, Net
Amortization of regulatory assets, net increased in 1999, primarily due to an
increase in the amortization of the Seabrook deferred return which began in
June 1998. The reduction of the acquisition premium amortization ($21
million) was offset by the completion of the amortization of net operating
loss carryforwards ($21 million).
Amortization of regulatory assets, net decreased in 1998, primarily due to
the completion of the amortization of a portion of the company's acquisition
premium ($40 million), partially offset by the additional amortization of
Seabrook phase-in costs ($10 million).
Federal and State Income Taxes
Federal and state income taxes decreased in 1999, primarily due to the
utilization of net operating loss carryforwards.
Federal and state income taxes decreased in 1998, primarily due to lower
taxable income.
Equity Earnings of Regional Nuclear Generating Companies
Equity in earnings of regional nuclear generating companies decreased in
1999 and 1998, primarily due to lower earnings from the Connecticut Yankee
Atomic Power Company.
Other, Net
Other, net decreased in 1999, primarily due to the settlement with the New
Hampshire Electric Cooperative which required a $6.2 million write-off.
Other, net increased in 1998, primarily due to the amortization of the
taxes associated with the Seabrook phase-in costs which began in December
1997.
Interest Charge, Net
The change in interest charges, net in 1999 were not significant compared
to 1998.
Interest charges, net decreased in 1998, primarily due to the maturity of
bonds ($170 million) in May 1998.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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, 1999 and 1998, and
the related statements of income, comprehensive income, common
stockholder's equity and cash flows for each of the three years in the
period ended December 31, 1999. 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, 1999 and 1998, and
the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1999, 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 10A,
the company, Northeast Utilities, and the state of New Hampshire are
involved in litigation regarding the proposed implementation of
restructuring legislation. The restructuring legislation as currently
contemplated would require the company to discontinue the application of
Statement of Financial Accounting Standards No. 71, "Accounting for the
Effects of Certain Types of Regulation." The discontinuance would
result in the company being in technical default under its current
financial covenants, which would, if not waived or renegotiated, give
rise to the rights of lenders to accelerate the payment of approximately
$516 million of the company's indebtedness and approximately $405
million of an affiliate's indebtedness. Although a settlement agreement
on restructuring has been reached among the company, the state of New
Hampshire, and others, implementation is subject to significant
contingencies, including New Hampshire legislative, federal and state
regulatory, and financial lender approvals. 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 the outcome of this uncertainty.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 25, 2000
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999 1998 1997
- ------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues................................. $ 1,160,572 $ 1,087,247 $ 1,108,459
------------ ------------ ------------
Operating Expenses:
Operation -
Fuel, purchased and net interchange power..... 691,743 605,518 561,197
Other......................................... 129,041 118,565 133,911
Maintenance...................................... 52,481 51,734 38,320
Depreciation..................................... 47,695 45,342 44,377
Amortization of regulatory assets, net........... 34,915 26,758 56,557
Federal and state income taxes................... 36,810 65,079 86,450
Taxes other than income taxes.................... 43,282 43,052 43,623
------------ ------------ ------------
Total operating expenses................... 1,035,967 956,048 964,435
------------ ------------ ------------
Operating Income................................... 124,605 131,199 144,024
------------ ------------ ------------
Other Income/(Loss):
Equity in earnings of regional nuclear
generating companies and subsidary company..... 1,112 2,649 1,373
Other, net....................................... 5,681 9,222 698
Income taxes..................................... (3,914) (7,473) (2,391)
------------ ------------ ------------
Other income/(loss), net................... 2,879 4,398 (320)
------------ ------------ ------------
Income before interest charges............. 127,484 135,597 143,704
------------ ------------ ------------
Interest Charges:
Interest on long-term debt....................... 42,728 43,317 51,259
Other interest................................... 547 594 273
------------ ------------ ------------
Interest charges, net...................... 43,275 43,911 51,532
------------ ------------ ------------
Net Income......................................... $ 84,209 $ 91,686 $ 92,172
============ ============ ============
STATEMENTS OF COMPREHENSIVE INCOME
Net Income......................................... $ 84,209 $ 91,686 $ 92,172
------------ ------------ ------------
Other comprehensive income, net of tax:
Unrealized gains on securities..................... 70 1,198 -
Minimum pension liability adjustments.............. - (194) -
------------ ------------ ------------
Other comprehensive income, net of tax........... 70 1,004 -
------------ ------------ ------------
Comprehensive Income............................... $ 84,279 $ 92,690 $ 92,172
============ ============ ============
</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 1999 1998
- -----------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at cost:
Electric................................................ $ 1,939,856 $ 1,927,341
Less: Accumulated provision for depreciation......... 674,155 631,584
------------- -------------
1,265,701 1,295,757
Unamortized acquisition costs........................... 324,437 352,855
Construction work in progress........................... 17,160 20,735
Nuclear fuel, net....................................... 1,734 1,323
------------- -------------
Total net utility plant............................. 1,609,032 1,670,670
------------- -------------
Other Property and Investments:
Nuclear decommissioning trusts, at market............... 6,880 5,580
Investments in regional nuclear generating
companies and subsidiary company, at equity............ 18,855 19,836
Other, at cost.......................................... 3,149 4,319
------------- -------------
28,884 29,735
------------- -------------
Current Assets:
Cash and cash equivalents............................... 182,588 60,885
Receivables, less the accumulated provision for
uncollectible accounts of $1,359 in 1999 and
and $2,041 in 1998..................................... 79,290 89,044
Accounts receivable from affiliated companies........... 9,091 12,018
Taxes receivable from affiliated companies.............. 11,661 -
Accrued utility revenues................................ 48,822 42,145
Fuel, materials, and supplies, at average cost.......... 38,076 36,642
Recoverable energy costs - current portion.............. 73,721 65,257
Prepayments and other................................... 18,121 22,744
------------- -------------
461,370 328,735
------------- -------------
Deferred Charges:
Regulatory assets....................................... 490,921 610,222
Deferred receivable from affiliated company............. 12,984 22,728
Unamortized debt expense................................ 11,896 13,995
Other................................................... 7,346 5,510
------------- -------------
523,147 652,455
------------- -------------
Total Assets........................................ $ 2,622,433 $ 2,681,595
============= =============
</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 1999 1998
- -----------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock, $1 par value - authorized
100,000,000 shares; 1,000 shares outstanding
in 1999 and 1998....................................... $ 1 $ 1
Capital surplus, paid in................................ 424,654 424,250
Retained earnings....................................... 319,938 252,912
Accumulated other comprehensive income.................. 1,074 1,004
------------- -------------
Total common stockholder's equity.............. 745,667 678,167
Preferred stock subject to mandatory redemption......... 25,000 50,000
Long-term debt.......................................... 516,485 516,485
------------- -------------
Total capitalization........................... 1,287,152 1,244,652
------------- -------------
Obligations Under Seabrook Power Contracts
and Other Capital Leases................................. 624,477 703,411
------------- -------------
Current Liabilities:
Long-term debt and preferred stock - current portion.... 25,000 25,000
Obligations under Seabrook Power Contracts and other
capital leases - current portion....................... 101,676 138,812
Accounts payable........................................ 38,685 26,227
Accounts payable to affiliated companies................ 38,229 28,410
Accrued taxes........................................... 33,443 82,743
Accrued interest........................................ 6,294 5,894
Accrued pension benefits................................ 45,504 46,004
Other................................................... 10,184 8,540
------------- -------------
299,015 361,630
------------- -------------
Deferred Credits and Other Long-term Liabilities:
Accumulated deferred income taxes....................... 266,644 225,091
Accumulated deferred investment tax credits............. 12,532 3,460
Deferred contractual obligations........................ 56,544 66,400
Deferred revenue from affiliated company................ 12,984 22,728
Other................................................... 63,085 54,223
------------- -------------
411,789 371,902
------------- -------------
Total Capitalization and Liabilities........... $ 2,622,433 $ 2,681,595
============= =============
</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>
- ---------------------------------------------------------------------------------------------------------
Accumulated
Capital Other
Common Surplus, Retained Comprehensive
Stock Paid In Earnings Income Total
- ---------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997............... $ 1 $423,058 $175,254 $ - $ 598,313
Net income for 1997.................. 92,172 92,172
Cash dividends on preferred stock.... (11,925) (11,925)
Cash dividends on common stock....... (85,000) (85,000)
Capital stock expenses, net.......... 655 655
-------- --------- --------- ------------- ----------
Balance at December 31, 1997............. 1 423,713 170,501 - 594,215
Net income for 1998.................. 91,686 91,686
Cash dividends on preferred stock.... (9,275) (9,275)
Capital stock expenses, net.......... 537 537
Other comprehensive income........... 1,004 1,004
-------- --------- --------- ------------- ----------
Balance at December 31, 1998............. 1 424,250 252,912 1,004 678,167
Net income for 1999.................. 84,209 84,209
Cash dividends on preferred stock.... (6,625) (6,625)
Capital stock expenses, net.......... 404 404
Allocation of benefits - ESOP........ (10,558) (10,558)
Other comprehensive income........... 70 70
-------- --------- --------- ------------- ----------
Balance at December 31, 1999............. $ 1 $424,654 $319,938 $ 1,074 $ 745,667
======== ========= ========= ============= ==========
</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,
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars) 1999 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net income.................................................. $ 84,209 $ 91,686 $ 92,172
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation.............................................. 47,695 45,342 44,377
Deferred income taxes and investment tax credits, net..... (5,297) 78,366 21,645
Amortization of recoverable energy costs, net............. 27,065 2,065 (12,336)
Amortization of regulatory assets, net.................... 34,915 26,758 56,557
Amortization/(deferral) of Seabrook capital costs......... 16,920 (31,587) (8,376)
Allocation of ESOP benefits.............................. (10,558) - -
Other sources/(uses) of cash.............................. 32,117 (20,360) (17,536)
Changes in working capital:
Receivables and accrued utility revenues.................. 6,004 21,536 9,407
Fuel, materials and supplies.............................. (1,434) 3,519 4,691
Accounts payable.......................................... 22,277 729 (14,897)
Accrued taxes............................................. (49,300) 13,298 69,364
Other working capital (excludes cash)..................... (5,494) (13,710) (13,365)
----------- ----------- -----------
Net cash flows provided by operating activities............... 199,119 217,642 231,703
----------- ----------- -----------
Financing Activities:
Reacquisitions and retirements of long-term debt............ - (170,000) -
Reacquisitions and retirements of preferred stock........... (25,000) (25,000) (25,000)
Cash dividends on preferred stock........................... (6,625) (9,275) (11,925)
Cash dividends on common stock.............................. - - (85,000)
----------- ----------- -----------
Net cash flows used in financing activities................... (31,625) (204,275) (121,925)
----------- ----------- -----------
Investing Activities:
Investment in plant:
Electric utility plant.................................... (46,096) (43,780) (33,570)
Nuclear fuel.............................................. (1,168) (307) 5
----------- ----------- -----------
Net cash flows used for investments in plant.............. (47,264) (44,087) (33,565)
Investment in NU system Money Pool.......................... - - 18,250
Investment in nuclear decommissioning trusts................ (678) (641) (490)
Other investment activities, net............................ 2,151 (2,213) (529)
----------- ----------- -----------
Net cash flows used in investing activities................... (45,791) (46,941) (16,334)
----------- ----------- -----------
Net increase/(decrease) in cash for the period................ 121,703 (33,574) 93,444
Cash and cash equivalents - beginning of period............... 60,885 94,459 1,015
----------- ----------- -----------
Cash and cash equivalents - end of period..................... $ 182,588 $ 60,885 $ 94,459
=========== =========== ===========
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest, net of amounts capitalized........................ $ 39,895 $ 42,677 $ 51,775
=========== =========== ===========
Income taxes................................................ $ 38,511 $ 18,948 $ 10,612
=========== =========== ===========
(Decrease)/increase in obligations:
Seabrook Power Contracts.................................... $ (115,065) $ (78,939) $ 6,197
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
NOTES TO 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) along
with 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 companies comprising the Northeast Utilities system (NU
system) and are wholly owned by Northeast Utilities (NU). The NU
system serves in excess of 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. The NU system furnishes franchised retail
electric service in New Hampshire, Connecticut, and western
Massachusetts through PSNH, CL&P and WMECO. NAEC sells all of
its entitlement to the capacity and output of Seabrook Station
(Seabrook) nuclear unit to PSNH under the terms of two life-of-unit,
full cost recovery contracts (Seabrook Power Contacts). HWP, also is
engaged in the production and distribution of electric power.
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 the NU system, including PSNH, is subject to provisions
of the 1935 Act. Arrangements among the NU 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. PSNH
is subject to further regulation for rates, accounting and other matters
by the FERC and/or applicable state regulatory commissions.
Several wholly owned subsidiaries of NU provide support services for the
NU system companies including PSNH, 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 NU system companies, including PSNH. Northeast
Nuclear Energy Company acts as agent for the NU system companies and
other New England utilities in operating the Millstone nuclear units.
North Atlantic Energy Service Corporation has operational responsibility
for Seabrook.
On October 13, 1999, NU and Consolidated Edison, Inc. (Con Edison)
announced that they have agreed to a merger to combine the two
companies. For further information, see Note 14, "Merger Agreement
with Con Edison."
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. New Accounting Standards
The Financial Accounting Standards Board (FASB) has issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative
instruments and hedging activities. This statement will require
derivative instruments utilized by the NU system companies to be
recognized as assets or liabilities at fair value.
In June 1999, the FASB delayed the adoption date of SFAS No. 133
until January 1, 2001.
There may be an impact on earnings upon adoption of SFAS No. 133
which management has not estimated at this time.
D. Investments and Jointly Owned Electric Utility Plant
Regional Nuclear Generating Companies: PSNH owns common stock in
four regional nuclear companies (Yankee Companies). PSNH's ownership
interests in the Yankee Companies at December 31, 1999 and 1998, which
are accounted for on the equity basis due to PSNH's ability to exercise
significant influence over their operating and financial policies are
5 percent of the Connecticut Yankee Atomic Power Company (CYAPC), 7
percent of the Yankee Atomic Electric Company (YAEC), 5 percent of
Maine Yankee Atomic Power Company (MYAPC), and 4 percent of Vermont
Yankee Nuclear Power Corporation (VYNPC). PSNH's total equity
investment in the Yankee Companies at December 31, 1999 and 1998 is
$12.3 million and $13.4 million, respectively. Each Yankee Company owns
a single nuclear generating unit. However, VYNPC is the only unit still
in operation at December 31, 1999.
Millstone: PSNH has a 2.85 percent joint ownership interest in
Millstone 3, a 1,154 megawatt (MW) nuclear generating unit. At
December 31, 1999 and 1998, plant-in-service included $119.3 million
and $118.8 million, respectively, and the accumulated provision for
depreciation included $39 million and $35.5 million, respectively,
related to PSNH's share of Millstone 3.
Wyman Unit 4: PSNH has a 3.14 percent ownership interest in Wyman
Unit 4, a 632 MW oil-fired generating unit. At December 31, 1999 and
1998, plant-in-service included $6.1 million in each year and the
accumulated provision for depreciation included $4.2 million and
$4 million, respectively.
E. Depreciation
The provision for depreciation is calculated using the straight-
line method based on estimated remaining useful lives of depreciable
utility plant-in-service, adjusted for salvage value and removal
costs, as approved by the appropriate regulatory agency where
applicable. 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 costs of closure and removal of
nonnuclear facilities are accrued over the life of the plant as a
component of depreciation. The depreciation rates for the several
classes of electric plant-in-service are equivalent to a composite
rate of 3.7 percent in 1999, 3.6 percent in 1998 and 3.7 percent in
1997.
At December 31, 1999 and 1998, the accumulated provision for
depreciation included $40.4 million and $37.3 million, respectively,
accrued for the cost of removal, net of salvage, for nonnuclear
generation property.
F. Revenues
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. Regulatory
commissions also have authority over the terms and conditions of non-
traditional rate-making arrangements. At the end of each accounting
period, PSNH accrues a revenue estimate for the amount of energy
delivered but unbilled.
G. PSNH Acquisition Costs
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 PSNH acquisition costs. The
unrecovered balance was $324.4 million and $352.9 million, at
December 31, 1999 and 1998, respectively, and is being recovered
ratably over a 20-year period ending May 1, 2011, in accordance with
the Rate Agreement. Through December 31, 1999 and 1998, $668 million
and $640 million, respectively, have been collected.
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 rate-making process in accordance with SFAS No. 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 PSNH's operations were no longer subject to the
provisions of SFAS No. 71, PSNH would be required to write off all
of its related regulatory assets and liabilities, unless there is a
formal transition plan that provides for the recovery, through
established rates, for the collection of these costs through a portion
of the business which would remain regulated on a cost-of-service
basis. At the time of transition, PSNH would be required to determine
any impairment to the carrying costs of deregulated plant and
inventory assets.
Based on a current evaluation of the various factors and conditions that
are expected to impact future cost recovery, management continues to
believe it is probable that PSNH will recover its investments in long-
lived assets, including regulatory assets. In addition, all material
regulatory assets are earning a return. The components of PSNH's
regulatory assets are as follows:
------------------------------------------------------------------------
At December 31, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
Recoverable energy costs, net.............. $120.7 $156.3
Income taxes, net.......................... 166.2 139.7
Unrecovered contractual obligations........ 56.5 66.4
Deferred costs - nuclear plants............ 144.4 244.6
Other...................................... 3.1 3.2
------ ------
$490.9 $610.2
====== ======
------------------------------------------------------------------------
At this time, management continues to believe that the application of
SFAS No. 71 for PSNH remains appropriate. If the "Agreement to Settle
PSNH Restructuring" (Settlement Agreement), as filed, is approved by
the New Hampshire Public Utilities Commission (NHPUC) and implemented,
then PSNH will discontinue the application of SFAS No. 71 for the
generation portion of its business and record an after-tax write-off of
$225 million. Additionally, PSNH will make a payment to NAEC to buydown
the Seabrook Power Contracts to $100 million. PSNH's transmission and
distribution business will continue to be rate-regulated on a cost-of-
service basis as the Settlement Agreement allows for the recovery of the
remaining regulatory assets through that portion of the business.
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 rate-making treatment of the
applicable regulatory commissions.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, that give rise
to the accumulated deferred tax obligation is as follows:
------------------------------------------------------------------------
At December 31, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
Accelerated depreciation and other
plant-related differences................ $102.4 $100.8
Net operating loss carryforwards........... - (25.6)
Regulatory assets - income tax gross up.... 62.0 52.4
Other...................................... 102.2 97.5
------ ------
$266.6 $225.1
====== ======
------------------------------------------------------------------------
As of December 31, 1999, PSNH had an Investment Tax Credit carryforward
of $23 million, which if unused, expires in 2004.
J. 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 (DOE) (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, 1999 and 1998, PSNH's total D&D deferrals were
approximately $0.2 million in each year.
The Rate Agreement includes a fuel and purchased-power adjustment clause
(FPPAC) permitting PSNH to pass through to retail customers, for a 10-
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. At
December 31, 1999 and 1998, PSNH had $120.5 million and $156 million,
respectively, of noncurrent recoverable energy costs deferred under the
FPPAC. If the Settlement Agreement is approved, these FPPAC costs will
be recovered through a transition charge.
In addition, under the Rate Agreement, charges made by NAEC through the
Seabrook Power Contracts, including the deferred Seabrook capital
expenses, are to be collected by PSNH through the FPPAC. Beginning on
June 1, 1998, the Seabrook deferred capital expenses began to be
recovered over a 36-month period.
K. Deferred Costs - Nuclear Plants
Under the Rate Agreement, the plant costs of Seabrook were phased into
rates over a 7-year period beginning May 15, 1991. Total costs deferred
under the phase-in plan were $288 million. This plan is accounted for
in compliance with SFAS No. 92, "Regulated Enterprises - Accounting for
Phase-In Plans." The Rate Agreement provides for these costs to be
fully recovered from PSNH's customers by May 2001.
L. Unrecovered Contractual Obligations
Under the terms of contracts with the Yankee companies, the shareholder-
sponsor companies, including PSNH, are each responsible for their
proportionate share of the remaining costs of the units, including
decommissioning. As management expects that PSNH will be allowed to
recover these costs from its customers, PSNH has recorded a regulatory
asset, with a corresponding obligation on its balance sheet.
M. Cash and Cash Equivalents
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.
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 operating license. Under these
power contracts, PSNH is obligated to pay NAEC's cost of service during
this period, regardless of whether Seabrook 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.
In August 1999, NU, PSNH and the state of New Hampshire signed the
Settlement Agreement which, once approved and implemented, will resolve
a number of pending regulatory and court proceedings related to PSNH.
The Settlement Agreement is awaiting approval of the NHPUC and is subject
to legislative approval for the issuance of rate reduction bonds
(securitization). The Settlement Agreement also requires NAEC to sell via
public auction its share of Seabrook, with the sale to occur no later than
December 31, 2003. Upon the approval and implementation of the Settlement
Agreement, PSNH and NAEC will restructure the power contracts to provide
for the buydown of the value of the Seabrook asset to $100 million. Upon
a successful sale of NAEC's share of Seabrook, the existing Seabrook Power
Contracts between PSNH and NAEC will be terminated. However, PSNH will
continue to be responsible for funding NAEC's ownership share of Seabrook's
decommissioning liability.
Currently, PSNH has included its right to buy power from NAEC on its
balance sheet as part of utility plant and regulatory assets with a
corresponding obligation. At December 31, 1999, this right to buy power
was valued at $723.1 million.
Under the current Seabrook Power Contracts, if Seabrook is shut down prior
to the expiration of its operating license, PSNH will be unconditionally
required to pay NAEC termination costs for 39 years, less the period during
which Seabrook has operated. These termination costs will reimburse NAEC
for its share of Seabrook 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 to the cancellation).
Contract payments charged to operating expenses in 1999, 1998 and 1997
were $280 million, $272 million and $188 million, respectively. Interest
included in the contract payments in 1999, 1998 and 1997 was $49 million,
$54 million and $57 million, respectively.
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, 1999, were approximately:
Year Seabrook Power Contracts
---- ------------------------
(Millions of Dollars)
2000................................. $ 193.0
2001................................. 116.8
2002................................. 77.5
2003................................. 75.2
2004................................. 72.9
After 2005........................... 1,006.8
--------
Future minimum payments.............. 1,542.2
Less amount representing interest.... 819.1
--------
Present value of Seabrook Power
Contracts payments................. $ 723.1
========
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.
Capital lease rental payments charged to operating expense were $1.5
million in 1999 and $1.6 million in 1998 and 1997. Interest included in
capital lease rental payments was $0.4 million in 1999, $0.2 million in
1998 and $0.3 million in 1997. Operating lease rental payments charged
to expense were $3.1 million in 1999, $5.4 million in 1998 and $5.7
million in 1997.
Future minimum rental payments, excluding executory costs such as property
taxes, state use taxes, insurance and maintenance, under long-term
noncancelable leases, as of December 31, 1999, are:
---------------------------------------------------------------------------
Year Capital Leases Operating Leases
---------------------------------------------------------------------------
(Millions of Dollars)
2000............................... $ 1.2 $ 7.6
2001............................... 1.2 7.1
2002............................... 0.4 4.4
2003............................... 0.4 3.0
2004............................... 0.4 2.5
After 2004......................... 1.1 3.9
----- -----
Future minimum lease payments...... 4.7 $28.5
=====
Less amount representing interest.. 1.7
-----
Present value of future minimum
lease payments..................... $ 3.0
=====
---------------------------------------------------------------------------
4. NUCLEAR DECOMMISSIONING AND PLANT CLOSURE COSTS
Millstone and Seabrook: 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. PSNH records its Seabrook decommissioning costs
as a component of purchased-power expense. Under the Rate Agreement, these
costs are recovered through base rates. The Seabrook decommissioning costs
will continue to be increased annually by its respective escalation rates
until the unit is sold. Under New Hampshire law, Seabrook decommissioning
funding requirements are set by the New Hampshire Nuclear Decommissioning
Financing Committee (NDFC). During April 1999, the NDFC issued an order
that adjusted the decommissioning collection period and funding levels
assuming that Seabrook's anticipated energy producing life was 25 years
from the date it went into commercial operation. Decommissioning
collections are now expected to be completed by October 2015, as opposed
to 2026, for the decommissioning collection period only. The cost of
funding decommissioning Seabrook is now accrued over the estimated
remaining accelerated funding period that was ordered by the NDFC.
This is eleven years earlier than the service life established by
Seabrook's Nuclear Regulatory Commission's operating license.
Millstone 3 and Seabrook's service lives are expected to end during the
years 2025 and 2026, respectively, and upon retirement, must be
decommissioned. Current decommissioning studies conclude that complete
and immediate dismantlement as soon as practical after retirement continues
to be the most viable and economic method of decommissioning a unit.
These studies are reviewed and updated periodically to reflect changes in
decommissioning requirements, costs, technology, and inflation. 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.
PSNH's ownership share of the estimated cost of decommissioning Millstone 3
and NAEC's ownership share of Seabrook, in year end 1999 dollars, is $17.6
million and $203.3 million, respectively. Nuclear decommissioning costs
are accrued over the expected service life of Millstone 3 and are included
in depreciation expense. Nuclear decommissioning expenses for PSNH's
ownership share of Millstone 3 amounted to $0.5 million in 1999 and $0.4
million in 1998 and 1997. Nuclear decommissioning, as a cost of removal,
is included in the accumulated provision for depreciation.
External decommissioning trusts have been established for the costs of
decommissioning the Millstone units. PSNH payments for NAEC's ownership
share of the cost of decommissioning Seabrook are paid by NAEC 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 and after-tax earnings on the Millstone and Seabrook
decommissioning funds of 5.5 percent and 6.5 percent, respectively.
As of December 31, 1999 and 1998, PSNH collected a total of $3.5 million
and $3 million, respectively, through rates toward the future
decommissioning costs of its share of Millstone 3, all of which have been
transferred to external decommissioning trusts. As of December 31, 1999
and 1998, NAEC has paid approximately $32.7 million and $25.6 million
(including payments made prior to the Acquisition Date by PSNH) into
Seabrook's decommissioning fund. Earnings on the decommissioning trusts
increase the decommissioning trust balances and the accumulated reserves
for depreciation. Unrealized gains and losses associated with the
decommissioning trusts and financing funds also impact the balance of
the trusts and the accumulated reserve for depreciation. The fair values
of the amounts in the external decommissioning trusts for Millstone 3
were $6.9 million and $5.6 million for 1999 and 1998, respectively.
Yankee Companies: VYNPC owns and operates a nuclear generating unit with
a service life that is expected to end in 2012. PSNH's ownership share
of estimated costs, in year end 1999 dollars, of decommissioning this unit
is $17.2 million. On October 15, 1999, VYNPC agreed to sell the unit for
$22 million to an unaffiliated company. Among other commitments, the
acquiring company agreed to assume the decommissioning cost of the unit
after it is taken out of service, and the VYNPC owners have agreed to
fund the uncollected decommissioning cost to a negotiated amount at the
time of the closing of the sale.
As of December 31, 1999 and 1998, PSNH's remaining estimated obligation,
including decommissioning for the units owned by CYAPC, YAEC and MYAPC,
which have been shut down, was $56.5 million and $66.4 million,
respectively.
5. SHORT-TERM DEBT
Limits: PSNH is authorized under an order of the NHPUC to incur short-term
borrowings up to a maximum of $68.3 million.
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 NU 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. Borrowings
based on loans from NU parent, however, bear interest at NU parent's cost
and must be repaid based upon the terms of NU parent's original borrowing.
At December 31, 1999 and 1998, PSNH had no outstanding borrowings from
the Pool. Due to the conditions placed on PSNH by lenders and the NHPUC
during April 1998, PSNH is presently restricted from lending money to the
Pool. Maturities of short-term debt obligations were for periods of
three months or less.
6. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock subject to mandatory redemption are:
---------------------------------------------------------------------------
Shares
Outstanding December 31,
Description December 31, 1999 1999 1998
---------------------------------------------------------------------------
10.60% Series A of 1991........ 2,000,000 $50.0 $75.0
Less preferred stock to be
redeemed within one year..... 1,000,000 25.0 25.0
----- -----
$25.0 $50.0
===== =====
---------------------------------------------------------------------------
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
each year, which began on June 30, 1997, sufficient to retire annually
1,000,000 shares at $25 per share. 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
redeeming or purchasing less than all of the outstanding preferred stock.
7. LONG-TERM DEBT
Details of long-term debt outstanding are:
---------------------------------------------------------------------------
At December 31, 1999 1998
---------------------------------------------------------------------------
(Millions of Dollars)
Pollution Control Revenue Bonds:
7.65% Tax-Exempt Series A, due 2021......... $ 66.0 $ 66.0
7.50% Tax-Exempt Series B, due 2021......... 109.0 109.0
7.65% Tax-Exempt Series C, due 2021......... 112.5 112.5
6.00% Tax-Exempt Series D, due 2021......... 75.0 75.0
6.00% Tax-Exempt Series E, due 2021......... 44.8 44.8
Adjustable Rate, Series D, due 2021 (a)..... 39.5 39.5
Adjustable Rate, Series E, due 2021 (a)..... 69.7 69.7
------ ------
Long-term debt.............................. $516.5 $516.5
====== ======
---------------------------------------------------------------------------
(a) On April 14, 1999, PSNH renewed bank letters of credit that support
nearly $110 million of taxable variable-rate pollution control bonds.
There are no cash sinking fund requirements or debt maturities for the
years 2000 through 2004. There are annual renewal and replacement fund
requirements equal to 2.25 percent of the average of net depreciable
utility 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.
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. PSNH's obligation to repay
each series of PCRBs is secured by the first mortgage bonds. Each such
series of first mortgage bonds contains similar terms and provisions as the
applicable series of PCRBs. For financial reporting purposes, these bonds
would not be considered outstanding unless PSNH failed to meet its
obligations under the PCRBs.
The average effective interest rates on the variable-rate pollution control
notes ranged from 2.2 percent to 6.1 percent in 1999 and from 3.1 percent
to 5.6 percent in 1998.
8. INCOME TAX EXPENSE
The components of the federal and state income tax provisions were charged/
(credited) to operations as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Current income taxes:
Federal............................... $41.4 $(6.6) $67.1
State................................. 4.6 0.8 0.1
----- ----- -----
Total current....................... 46.0 (5.8) 67.2
----- ----- -----
Deferred income taxes, net:
Federal............................... 4.6 78.0 21.0
State................................. (2.2) 0.9 1.2
----- ----- -----
Total deferred...................... 2.4 78.9 22.2
----- ----- -----
Investment tax credits, net............. (7.7) (0.5) (0.5)
----- ----- -----
Total income tax expense................ $40.7 $72.6 $88.9
===== ===== =====
---------------------------------------------------------------------------
The components of total income tax expense are classified as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Income taxes charged to
operating expenses................... $36.8 $65.1 $86.5
Other income taxes..................... 3.9 7.5 2.4
----- ----- -----
Total income tax expense............... $40.7 $72.6 $88.9
===== ===== =====
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Depreciation........................... $ (6.5) $(12.1) $(1.9)
Regulatory deferral.................... (12.6) 22.6 28.3
State net operating loss carryforward.. 29.5 69.2 -
Regulatory disallowance................ (2.3) - -
Contractual settlements................ (6.7) - -
Other.................................. 1.0 (0.8) (4.2)
------ ------ -----
Deferred income taxes, net............. $ 2.4 $ 78.9 $22.2
====== ====== =====
---------------------------------------------------------------------------
A reconciliation between income tax expense and the expected tax expense
at 35 percent of pretax income is as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Expected federal income tax............ $43.7 $57.5 $63.4
Tax effect on differences:
Depreciation......................... 0.9 (2.2) 1.1
Amortization of regulatory assets.... 9.9 17.3 31.3
Investment tax credit amortization... (7.7) (0.5) (0.5)
State income taxes, net of
federal benefit.................... 1.6 1.0 0.8
Adjustment for prior years' taxes.... - (0.9) (0.6)
Adjustment to tax asset
valuation allowance................ (7.4) - -
Other, net........................... (0.3) 0.4 (6.6)
----- ----- -----
Total income tax expense............... $40.7 $72.6 $88.9
===== ===== =====
---------------------------------------------------------------------------
9. EMPLOYEE BENEFITS
A. Pension Benefits and Postretirement Benefits Other Than Pensions
The NU system's subsidiaries, including PSNH, participate in a uniform
noncontributory defined benefit retirement plan covering substantially
all regular NU system employees. Benefits are based on years of
service and employees' highest eligible compensation during 60
consecutive months of employment. PSNH's portion of the NU system's
pension (credit)/cost, part of which was (credited)/charged to utility
plant, was $(0.5) million in 1999, $(0.1) million in 1998 and $1.3
million in 1997.
Currently, PSNH annually funds an amount at least equal to that which
will satisfy the requirements of the Employee Retirement Income Security
Act and Internal Revenue Code (the Code).
The NU system companies, including PSNH, also provide certain health
care benefits, primarily medical and dental, and life insurance benefits
through a benefit plan to retired employees. These benefits are
available for employees retiring from PSNH who have met specified
service requirements. For current employees and certain retirees, the
total benefit is limited to two times the 1993 per retiree health care
cost. These costs are charged to expense over the future estimated work
life of the employee. PSNH annually funds postretirement costs through
external trusts with amounts that have been rate-recovered and which
also are tax deductible under the Code.
Pension and trust assets are invested primarily in domestic and
international equity securities and bonds.
The following table represents information on the plans' benefit
obligation, fair value of plan assets, and the respective plans' funded
status:
- -------------------------------------------------------------------------------
At December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
(Millions of Dollars) 1999 1998 1999 1998
- -------------------------------------------------------------------------------
Change in benefit obligation
Benefit obligation
at beginning of year......... $(201.0) $(188.0) $(50.1) $(46.6)
Service cost................... (4.9) (4.3) (1.0) (0.9)
Interest cost.................. (14.3) (13.2) (3.6) (3.4)
Plan amendment................. (11.2) - - -
Transfers...................... 0.5 (0.7) - -
Actuarial gain/(loss).......... 19.1 (5.0) (1.5) (2.8)
Benefits paid.................. 10.3 10.2 5.0 3.6
- -------------------------------------------------------------------------------
Benefit obligation
at end of year............... $(201.5) $(201.0) $(51.2) $(50.1)
- -------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets
at beginning of year......... $ 213.2 $ 195.6 $ 27.3 $ 22.9
Actual return on plan assets... 30.4 27.1 3.4 3.2
Employer contribution.......... - - 4.9 4.8
Benefits paid.................. (10.3) (10.2) (5.0) (3.6)
Transfers...................... 0.5 0.7 - -
- -------------------------------------------------------------------------------
Fair value of plan assets
at end of year............... $ 233.8 $ 213.2 $ 30.6 $ 27.3
- -------------------------------------------------------------------------------
Funded status at December 31... $ 32.3 $ 12.2 $(20.6) $(22.8)
Unrecognized transition
obligation................... 3.3 3.7 38.2 41.2
Unrecognized prior
service cost................. 16.9 7.0 - -
Unrecognized net gain.......... (98.0) (68.9) (17.6) (18.4)
- -------------------------------------------------------------------------------
Accrued benefit cost........... $ (45.5) $ (46.0) $ - $ -
- -------------------------------------------------------------------------------
The following actuarial assumptions were used in calculating the
plans' year end funded status:
- -------------------------------------------------------------------------------
At December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
1999 1998 1999 1998
- -------------------------------------------------------------------------------
Discount rate................. 7.75% 7.00% 7.75% 7.00%
Compensation/progression rate. 4.75 4.25 4.75 4.25
Health care cost
trend rate(a)............... N/A N/A 5.57 5.22
- -------------------------------------------------------------------------------
(a) The annual per capita cost of covered health care benefits was assumed
to decrease to 4.90 percent by 2001.
The components of net periodic benefit (credit)/cost are:
- -------------------------------------------------------------------------------
For the Years Ended December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
(Millions of Dollars) 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------
Service cost.............. $ 4.9 $ 4.3 $ 4.0 $ 1.0 $ 0.9 $ 0.8
Interest cost............. 14.3 13.2 13.4 3.6 3.4 3.4
Expected return on
plan assets............. (17.7) (15.6) (13.9) (2.1) (1.8) (1.4)
Amortization of
unrecognized
transition
obligation.............. 0.3 0.3 0.3 2.9 2.9 2.9
Amortization of
prior service cost...... 1.3 0.5 0.5 - - -
Amortization of
actuarial gain.......... (3.6) (2.8) (2.0) - - -
Other amortization, net... - - - (0.5) (0.5) (0.8)
Settlements............... - - (1.0) - - -
- -------------------------------------------------------------------------------
Net periodic benefit
(credit)/cost........... $ (0.5) $ (0.1) $ 1.3 $ 4.9 $ 4.9 $ 4.9
- -------------------------------------------------------------------------------
For calculating pension and postretirement benefit costs, the following
assumptions were used:
- -------------------------------------------------------------------------------
For the Years Ended December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------
Discount rate.............. 7.00% 7.25% 7.75% 7.00% 7.25% 7.75%
Expected long-term
rate of return........... 9.50 9.50 9.25 N/A N/A N/A
Compensation/
progression rate......... 4.25 4.25 4.75 4.25 4.25 4.75
Long-term rate of return -
Health assets,
net of tax............... N/A N/A N/A 7.50 7.75 7.50
Life assets............... N/A N/A N/A 9.50 9.50 9.25
- -------------------------------------------------------------------------------
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. The effect of changing the
assumed health care cost trend rate by one percentage point in each
year would have the following effects:
- -------------------------------------------------------------------------------
One Percentage One Percentage
(Millions of Dollars) Point Increase Point Decrease
- -------------------------------------------------------------------------------
Effect on total service and
interest cost components............ $0.3 $(0.3)
Effect on postretirement
benefit obligation.................. $3.3 $(3.0)
- -------------------------------------------------------------------------------
The trust holding the health plan assets is subject to federal income
taxes.
B. Employee Stock Ownership Plan
In June 1999, PSNH paid NU parent $10.6 million for NU shares issued
from 1992 through 1998 on behalf of their employees in accordance with
NU's 401(k) plan. Each operating company, including PSNH, appropriately
charged retained earnings for this payment, as compensation expense had
already been recorded in the respective years at the fair market value
of the shares allocated.
10. COMMITMENTS AND CONTINGENCIES
A. Restructuring
In August 1999, NU, PSNH and the state of New Hampshire signed a
Settlement Agreement intended to settle a number of pending regulatory
and court proceedings related to PSNH. Parties to the agreement
included the governor of New Hampshire, the Governor's Office of Energy
and Community Service, the New Hampshire attorney general, certain
members of the staff of the NHPUC, PSNH and NU. The Settlement
Agreement was submitted to the NHPUC on August 2, 1999 and is awaiting
approval. If approved by the NHPUC, the Settlement Agreement would
resolve 11 NHPUC dockets and PSNH's federal lawsuit which had enjoined
the state of New Hampshire from implementing its restructuring
legislation, would require PSNH to write off $225 million after-tax of
its stranded costs and would allow for the recovery of the remaining
amount. Also, implementation of the Settlement Agreement is contingent
upon securitization. Securitization requires the initial approval of
the NHPUC and final approval from the New Hampshire Legislature via
enactment of appropriate legislation. Other approvals are also required
from various federal and state regulatory agencies and financial
lenders. Under the terms of the Settlement Agreement, on the effective
date, PSNH's rates will be reduced from current levels by an average of
18.3 percent. Due to the number of approvals required and still pending
to implement the Settlement Agreement, management continues to believe
the application of SFAS No. 71 is appropriate for PSNH at this time.
The Settlement Agreement also requires PSNH to sell its generation
assets and certain power contracts, including PSNH's current purchased-
power contracts with NAEC for the output from Seabrook. The net
proceeds from all sales will be used to recover a portion of PSNH's
stranded costs. The sales would be accomplished through an auction
process subject to approval by the NHPUC. Following the divestiture,
the transmission and distribution portion of the business will continue
to be cost-of-service based.
Phase I of the proceeding regarding the Settlement Agreement allowed
proponents to provide sufficient record for the NHPUC to compare the
Settlement Agreement to a range of reasonable outcomes in the other
associated dockets. The NHPUC also determined during Phase I that the
Con Edison merger is relevant to the Settlement Agreement and
intervening parties should have discovery in Phase II to evaluate the
impact of the merger on the Settlement Agreement. Phase II allowed
opponents to file testimony concerning the Settlement Agreement and then
allowed proponents to conduct discovery and file rebuttal testimony.
A decision on the Settlement Agreement is expected in the first
quarter of 2000.
B. Environmental Matters
The NU system, including PSNH, is subject to environmental laws and
regulations intended to mitigate or remove the effect of past operations
and improve or maintain the quality of our environment. As such, the NU
system and PSNH have active environmental auditing and training programs
and believe they are in compliance with the current laws and
regulations.
However, the normal course of operations may necessarily involve
activities and substances that expose PSNH to potential liabilities
of which management cannot determine the outcome. Additionally,
management cannot determine the outcome for liabilities that may be
imposed for past acts, even though such past acts may have been lawful
at the time they occurred. Management does not believe, however,
that this will have a material impact on PSNH's financial statements.
Based upon currently available information for the estimated remediation
costs as of December 31, 1999 and 1998, the liability recorded by PSNH
for its estimated environmental remediation costs amounted to $9.5
million and $7.9 million, respectively.
C. Spent Nuclear Fuel Disposal Costs
Under the Nuclear Waste Policy Act of 1982, PSNH must pay the DOE for
the disposal of spent nuclear fuel and high-level radioactive waste.
The DOE is responsible for the selection and development of repositories
for, and the disposal of, spent nuclear fuel and high-level radioactive
waste. Fees for nuclear fuel burned are billed currently to customers
and paid to the DOE on a quarterly basis.
D. Nuclear Insurance Contingencies
Insurance policies covering PSNH's ownership share of the NU system's
nuclear facilities have been purchased for the primary cost of repair,
replacement or decontamination of utility property, 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.
PSNH is subject to retroactive assessments if losses under those
policies exceed the accumulated funds available to the insurer. The
maximum potential assessments, including costs resulting from PSNH's
contracts with NAEC, with respect to losses arising during the current
policy year for the primary property insurance program, the replacement
power policies and the excess property damage policies are $0.2 million,
$1.2 million and $4.1 million, respectively. In addition, insurance has
been purchased in the aggregate amount of $200 million on an industry
basis by the NU system for coverage of worker claims.
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 NU system, including PSNH,
could be assessed liabilities in proportion to its ownership interest in
each of its nuclear units up to $83.9 million. The NU system's payment
of this assessment would be limited to, in proportion to its ownership
interest in each of its nuclear units, $10 million in any one year per
nuclear unit. In addition, if the sum of all claims and costs from any
one nuclear incident exceeds the maximum amount of financial protection,
the NU system would be subject to an additional 5 percent or $4.2
million liability, in proportion to its ownership interests in each of
its nuclear units. Under the terms of the Seabrook Power Contracts,
PSNH could be obligated to pay for any assessment charged to NAEC as a
cost of service. Based upon its ownership interest in Millstone 3 and
NAEC's ownership interest in Seabrook, PSNH's maximum liability,
including any additional assessments, would be $33.8 million per
incident, of which payments would be limited to $3.9 million per
year. In addition, through purchased-power contracts with VYNPC,
PSNH would be responsible for up to an additional assessment of $3.5
million per incident, of which payments would be limited to $0.3
million per year.
E. Construction Program
PSNH currently forecasts construction expenditures of $314.3 million
for the years 2000-2004, including $51.6 million for 2000. PSNH
estimates that nuclear fuel requirements for its share of Millstone 3
will be $3.2 million for the years 2000-2004, including $1.2 million
for 2000.
F. Long-Term Contractual Arrangements
Yankee Companies: The NU system companies relied on VYNPC for 1.5
percent of their capacity under long-term contracts. Under the terms
of its agreement, PSNH paid its ownership (or entitlement) shares of
costs, which included depreciation, O&M expenses, taxes, the estimated
cost of decommissioning, and a return on invested capital. These costs
were recorded as purchased-power expenses and recovered through PSNH's
rates. PSNH's cost of purchases under contracts with VYNPC amounted to
$7.5 million in 1999, $7 million in 1998 and $6.2 million in 1997.
VYNPC has agreed to sell its nuclear unit. Upon completion of the
sale, this long-term contract will be terminated.
Nonutility Generators (NUGs): PSNH is obligated under various
arrangements for the purchase of capacity and energy from NUGs. For
the years ended December 31, 1999 and 1998, 13 percent and for the
year ended December 31, 1997, 14 percent, of NU system electricity
requirements were met by NUGs. PSNH's total cost of purchases under
these arrangements amounted to $139.8 million in 1999, $139.1 million
in 1998 and $133.1 million in 1997. The company expects to renegotiate
the terms of these contracts through either a contract buydown or
buyout. The company expects any payments to the NUGs as a result of
any successful renegotiations to be recovered from the company's
customers.
Hydro-Quebec: Along with other New England utilities, PSNH has entered
into an agreement 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 expenses and capital costs of
those facilities.
New Hampshire Electric Cooperative (NHEC): PSNH entered into a buy-back
agreement to purchase the capacity and energy of the NHEC's share of
Seabrook and to pay all of NHEC's Seabrook costs for a 10-year period,
which began on July 1, 1990. The total cost of purchases under this
agreement was $33 million in 1999, $29.7 million in 1998 and $23.4
million in 1997. These costs are recoverable through the FPPAC. The
estimated annual cost of this agreement for year 2000 was $14.6 million.
Estimated Annual Costs: The estimated annual costs of PSNH's
significant long-term contractual arrangements, absent the effects
of any contract terminations or buydowns are as follows:
------------------------------------------------------------------------
2000 2001 2002 2003 2004
------------------------------------------------------------------------
(Millions of Dollars)
VYNPC................. $ 3.5 $ 0.5 $ 0.5 $ 0.5 $ 0.5
NUGs.................. 145.1 150.0 154.6 159.3 163.7
Hydro-Quebec.......... 9.7 9.4 9.2 8.9 8.6
------------------------------------------------------------------------
G. New England Power Pool (NEPOOL) Generation Pricing
Disputes with respect to interpretation and implementation of the
NEPOOL market rules have arisen with respect to various competitive
product markets. In certain cases, PSNH stands to gain as a result
of resolution of such disputes. In other cases, PSNH could incur
additional costs as the result of resolution of the disputes. The
various disputes are in various stages of resolution through alternative
dispute resolution and regulatory review. It is too early to tell the
level of potential gain or loss that may result upon resolution of these
issues.
H. 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 to accrue 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 was deferred under the consolidated
income tax rules. Beginning December 1, 1997, the gain is being
amortized into income for income tax purposes, as the deferred return
of $50.9 million, and the associated income taxes of $32.9 million, are
being collected by NAEC through the Seabrook Power Contracts. As NAEC
recovers the $32.9 million in years eight through ten of the Rate
Agreement, corresponding payments are being made to PSNH. The balance
of the deferred receivable from NAEC at December 31, 1999 and 1998,
was $13 million and $22.7 million, respectively.
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 cash equivalents: The carrying amounts approximate fair value
due to the short-term nature of cash and cash equivalents.
Supplemental Executive Retirement Plan (SERP) Investments: PSNH's portion
of the investments held for the benefit of the SERP are recorded at fair
value. The investments having a cost basis of $0.3 million held for
benefit of the SERP were recorded at their fair market values at
December 31, 1999 and 1998, of $2.2 million.
Nuclear decommissioning trusts: PSNH's portion of the investments held
in the NU system companies' nuclear decommissioning trusts were marked-to-
market by $2.2 million as of December 31, 1999, and $1.6 million as of
December 31, 1998, with corresponding offsets to the accumulated provision
for depreciation. The amounts adjusted in 1999 and 1998 represent
cumulative net unrealized gains. The cumulative gross unrealized holding
losses were immaterial for both 1999 and 1998.
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:
--------------------------------------------------------------------------
At December 31, 1999
--------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
--------------------------------------------------------------------------
Preferred stock subject
to mandatory redemption................. $ 50.0 $ 52.0
Other long-term debt....................... 516.5 517.4
--------------------------------------------------------------------------
--------------------------------------------------------------------------
At December 31, 1998
--------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
--------------------------------------------------------------------------
Preferred stock subject
to mandatory redemption................. $ 75.0 $ 78.0
Other long-term debt....................... 516.5 535.4
--------------------------------------------------------------------------
12. OTHER COMPREHENSIVE INCOME
The accumulated balance for each other comprehensive income item is
as follows:
---------------------------------------------------------------------------
Current
December 31, Period December 31,
1998 Change 1999
---------------------------------------------------------------------------
(Thousands of Dollars)
---------------------------------------------------------------------------
Unrealized gains on securities.... $1,198 $70 $1,268
Minimum pension liability
adjustments...................... (194) - (194)
---------------------------------------------------------------------------
Accumulated other
comprehensive income............ $1,004 $70 $1,074
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Current
December 31, Period December 31,
1997 Change 1998
---------------------------------------------------------------------------
(Thousands of Dollars)
---------------------------------------------------------------------------
Unrealized gains on securities.... $ - $1,198 $1,198
Minimum pension liability
adjustments...................... - (194) (194)
---------------------------------------------------------------------------
Accumulated other
comprehensive income............ $ - $1,004 $1,004
--------------------------------------------------------------------------
The changes in the components of other comprehensive income are reported
net of the following income tax effects:
---------------------------------------------------------------------------
(Thousands of Dollars) 1999 1998 1997
---------------------------------------------------------------------------
Unrealized gains on securities....... $ 39 $(660) $ -
Minimum pension liability
adjustments........................ - 107 -
---------------------------------------------------------------------------
Other comprehensive income........... $ 39 $(553) $ -
---------------------------------------------------------------------------
13. SEGMENT INFORMATION
Effective January 1, 1999, the NU system companies, including PSNH, adopted
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." The NU system is organized between regulated utilities
and unregulated energy services. PSNH is included in the regulated
utilities segment of the NU system and has no other reportable segments.
14. MERGER AGREEMENT WITH CON EDISON
On October 13, 1999, NU and Con Edison announced that they have agreed
to a merger to combine the two companies. The shareholders of NU will
receive $25 per share in a combination of cash and Con Edison common
stock.
NU shareholders also have the right to receive an additional $1 per share
if a definitive agreement to sell its interests (other than that now held
by PSNH) in Millstone 2 and 3 is entered into and recommended by the
Utility Operations and Management Unit of the Connecticut Department of
Public Utility Control on or prior to the later of December 31, 2000,
or the closing of the merger. Further, the value of the amount of cash
or common stock to be received by NU shareholders is subject to increase
by an amount of $0.0034 per share per day for each day that the
transaction does not close after August 5, 2000.
Upon completion of the merger, NU will become a wholly owned subsidiary
of Con Edison. The purchase is subject to the approval of the shareholders
of both companies and several regulatory agencies. The companies
anticipate that these regulatory procedures can be completed by July
2000.
<TABLE>
<CAPTION>
Public Service Company of New Hampshire
- -----------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL DATA 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues..................... $1,160,572 $1,087,247 $1,108,459 $1,110,169 $ 979,971
Operating Income....................... 124,605 131,199 144,024 155,758 155,628
Net Income............................. 84,209 91,686 92,172 97,465 83,255
Cash Dividends on Common Stock......... - - 85,000 52,000 52,000
Total Assets........................... 2,622,433 2,681,595 2,837,159 2,851,212 2,920,487
Long-Term Debt(a)...................... 516,485 516,485 686,485 686,485 858,985
Preferred Stock Subject to
Mandatory Redemption (a)............. 50,000 75,000 100,000 125,000 125,000
Obligations Under Seabrook Power
Contracts and Other Capital
Leases (a)........................... 726,153 842,223 921,813 914,617 915,288
- -----------------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL DATA (Unaudited)
- -----------------------------------------------------------------------------------------------------------
Quarter Ended
- -----------------------------------------------------------------------------------------------------------
1999 March 31 June 30 September 30 December 31
- -----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues..................... $286,799 $286,824 $310,739 $276,210
======== ======== ======== ========
Operating Income....................... $ 35,449 $ 29,419 $ 34,666 $ 25,071
======== ======== ======== ========
Net Income............................. $ 25,281 $ 20,695 $ 25,584 $ 12,649
======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------
1998
- -----------------------------------------------------------------------------------------------------------
Operating Revenues..................... $261,745 $250,784 $286,614 $288,104
======== ======== ======== ========
Operating Income....................... $ 18,769 $ 42,406 $ 37,434 $ 32,590
======== ======== ======== ========
Net Income............................. $ 6,791 $ 31,601 $ 29,892 $ 23,402
======== ======== ======== ========
(a) Includes portions due within one year.
</TABLE>
Public Service Company of New Hampshire
- -------------------------------------------------------------------------------
STATISTICS (Unaudited)
- -------------------------------------------------------------------------------
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,
- -------------------------------------------------------------------------------
1999 $2,283,187 12,832 6,665 427,694 1,258
1998 2,302,254 12,579 6,347 421,602 1,265
1997 2,312,628 13,340 6,528 407,642 1,254
1996 2,382,009 13,601 6,567 407,082 1,279
1995 2,469,474 11,001 6,524 (b) 406,077 1,339
(a) Includes unamortized acquisition costs.
(b) Effective January 1, 1996, the amounts shown reflect billed and unbilled
sales. The 1995 amounts have been restated to reflect this change.
1999 Annual Report
Western Massachusetts Electric Company and Subsidiary
Index
Contents Page
- -------- ----
Management's Discussion and Analysis of Financial
Condition and Results of Operations............................... 1
Report of Independent Public Accountants............................ 11
Consolidated Statements of Income................................... 13
Consolidated Statements of Comprehensive Income..................... 13
Consolidated Balance Sheets......................................... 14-15
Consolidated Statements of Common Stockholder's Equity.............. 16
Consolidated Statements of Cash Flows............................... 17
Notes to Consolidated Financial Statements.......................... 18
Selected Consolidated Financial Data................................ 41
Consolidated Quarterly Financial Data (Unaudited)................... 41
Consolidated Statistics (Unaudited)................................. 42
Preferred Stockholder and Bondholder Information.................... Back Cover
Western Massachusetts Electric Company and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
Overview
The financial improvement that began in 1998 continued throughout 1999 at
Western Massachusetts Electric Company (WMECO or the company), an operating
subsidiary of Northeast Utilities (NU) and part of the Northeast Utilities
system (NU system), despite a rate reduction in Massachusetts. WMECO's
results benefited from the successful restart of the Millstone 2 nuclear
unit, the strong operating performance delivered by the Millstone 3 nuclear
unit, retail sales growth, and continued control over operation and maintenance
(O&M) expenses. A rate reduction reduced the positive impacts of these items.
During 1999, WMECO resolved key industry restructuring issues by receiving
final approval of a restructuring plan in Massachusetts. The auction of
substantially all of the fossil and hydroelectric generation assets owned by
WMECO and the auction of its respective interest in the output of the Millstone
units, moved WMECO along in its transition into a purely electric transmission
and distribution company, as contemplated by restructuring legislation in
Massachusetts.
WMECO earned $2.9 million in 1999, compared with a loss of $9.6 million in
1998 and a loss of $27.5 million in 1997. The 1999 results included after-tax
write-offs associated with the settlement of nuclear related issues and
industry restructuring totaling $27.9 million. During 1998, WMECO's results
included write-offs associated with the retirement of Millstone 1 totaling
$26.7 million.
In 1999, WMECO's revenues increased to $414.2 million, up 5.3 percent from
revenues of $393.3 million in 1998. The growth was primarily due to a 3.6
percent increase in retail sales. That growth was due to weather related
factors that included a hotter than normal summer. The balance of that
increase was due to economic expansion in WMECO's service territory. A retail
rate reduction offset some of the growth in revenues. WMECO's rates were
reduced a total of 15 percent from its August 1997 rates, 11.8 percent
adjusted for inflation, between March 1998 and September 1999.
Aside from increased revenues, the primary reason for better operating
performance in 1999 was the return to service from extended outages of
Millstone 3 in July 1998 and Millstone 2 in May 1999.
WMECO's ability to continue improving financial performance in 2000 will
depend largely on continued sales growth and on successful control of O&M
expenses. WMECO also hopes to complete in 2000 the majority of restructuring
work remaining, primarily the issuance of rate reduction bonds (securitization)
to lower stranded costs, and the auction of WMECO's ownership interests in the
Millstone units.
Mergers
In 1998 and 1999, NU management concluded that the pace of deregulation was
accelerating throughout the northeastern United States and that shareholders
would benefit from NU not only remaining a major provider of electric
transmission and distribution service, but also an unregulated marketer
of both electricity and natural gas. NU management also concluded that
as a result of the changes occurring in the highly competitive electric
utility industry, increased size would be crucial to achieve its objective
of being a leading provider of energy products and services in the Northeast.
On October 13, 1999, NU announced an agreement to merge with Consolidated
Edison, Inc. (Con Edison), a financially stronger utility based in New York.
The merger will create the nation's largest electric distribution system
with more than 5 million customers and one of the 15 largest natural gas
distribution systems with 1.4 million customers.
NU and Con Edison filed with various state and federal regulatory bodies
in January 2000 to secure approval of the merger. The two companies expect
these regulatory proceedings can be completed by the end of July 2000.
Also in 1999, NU management concluded that the NU system would be stronger
and customers could be better served if NU reentered the natural gas
distribution business that it had exited in 1989 and examined several potential
businesses in New England. By adding gas to NU's energy mix, NU will be able
to broaden its services to its existing customers and NU will have additional
opportunities for long-term growth. In June 1999, NU announced an agreement
to merge with Yankee Energy System, Inc. (Yankee). The merger will return
to NU Connecticut's largest natural gas distribution system, as well as
several unregulated businesses involved in energy services, collections and
other areas. The Yankee merger received Yankee shareholder approval in
October 1999, final Connecticut Department of Public Utility Control (DPUC)
approval in December 1999 and Securities and Exchange Commission (SEC)
approval in January 2000. The merger closed on March 1, 2000.
Liquidity
Net cash flows provided by operations decreased to $2.1 million, compared
to $27.6 million in 1998 and $27.7 million in 1997. The impacts of strong
sales growth, improved nuclear performance and continued control of O&M
expenses were offset by the termination of its accounts receivable financing
arrangement.
In July 1999, WMECO sold 290 megawatts (MW) of fossil and hydroelectric
generation assets with an affiliate of Con Edison. Proceeds from the sale
were $48.5 million.
Proceeds from the generation asset sale are included in net cash flows
provided by investing activities. Including construction expenditures
and investments in nuclear decommissioning trusts, net cash flows
provided by investing activities were $22.9 million in 1999, compared
with net cash flows used in investing activities of $34.8 million in
1998 and $36.7 million in 1997.
Positive operating cash flows and the proceeds from the generation asset
sale enabled WMECO to reduce its outstanding debt. As of December 31, 1999,
WMECO's total debt level, including capital lease obligations, was $452.7
million, compared with $474.3 million as of December 31, 1998, and $458.9
million as of December 31, 1997.
The net cash flows used in financing activities were $24.1 million in 1999,
compared to net cash flows provided by financing activities of $7.2 million
in 1998 and $9.1 million in 1997. This included $102.4 million paid in 1999
to retire long-term debt and preferred stock, compared to $11.3 million in
1998 and $14.7 million in 1997. There were no cash dividends on common shares
paid in 1999 and 1998 and $15 million in 1997. Payments made for preferred
stock dividends were $3.3 million, $3 million and $3.1 million for 1999, 1998
and 1997, respectively.
WMECO's access to capital also benefited from the strong operating performance
at Millstone 2 and 3 and the announced merger with Con Edison. During 1999,
WMECO's securities received several upgrades from three credit rating agencies.
WMECO's senior secured bonds achieved investment grade ratings for the first
time since early 1997. At year end, all securities were under review for
possible upgrades, or on "credit watch" with positive implications by
Standard & Poor's, Moody's Investors Service and Fitch IBCA.
The rating agency upgrades benefited WMECO's efforts to broaden its credit
lines. On November 19, 1999, WMECO and The Connecticut Light and Power
Company (CL&P) entered into a new 364-day revolving credit facility for $500
million, replacing the previous $313.75 million facility which was to expire
on November 21, 1999. The revolving credit facility, which is secured by
second mortgages on Millstone 2 and 3, will be used to bridge gaps in working
capital and provide short-term liquidity. WMECO may draw up to $200 million
under the facility. Once WMECO receives the proceeds from securitization,
the $500 million facility will be reduced to $300 million, with a $100 million
limit for WMECO. As of December 31, 1999, WMECO had $123 million outstanding
under this facility.
For further information regarding the WMECO and CL&P revolving credit
facility, see Note 3, "Short-Term Debt," to the consolidated financial
statements.
Previously, WMECO also had arranged financing through the sale of its accounts
receivable. WMECO terminated its $40 million accounts receivable credit
facility on June 30, 1999.
During 2000, WMECO hopes to receive regulatory approval to begin the process
of securitizing its approved stranded costs. Securitization involves issuing
rate reduction bonds with interest rates lower than the company's weighted
average cost of capital. Proceeds from securitization will be used to
significantly reduce the capitalization of WMECO and buydown its remaining
purchased-power contract with a nonutility generator.
Restructuring
During 1999, Massachusetts made significant progress in resolving industry
restructuring issues. Restructuring orders issued in Massachusetts allowed
WMECO to determine the impacts of discontinuing Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types
of Regulation," for the generation portion of WMECO's business. The
transmission and distribution portion of that business will continue to be
cost-of-service regulated. In addition, the restructuring orders provided
for a transition charge which allows for the recovery of WMECO's generation-
related regulatory assets and prudently incurred stranded costs.
Massachusetts enacted electric utility restructuring legislation in
November 1997. Based on an interim order approving WMECO's restructuring
plan filed in December 1997, WMECO's customers were able to choose an
alternative retail electricity supplier beginning on March 1, 1998. In 1999,
the Massachusetts Department of Telecommunications and Energy (DTE) issued
its final decision on WMECO's restructuring plan. In that decision, the DTE
permitted WMECO to recover its generation-related regulatory asset balances
and its nuclear decommissioning costs. However, the DTE disallowed any return
on Millstone 2 and 3 starting March 1, 1998, until they returned to service
and on Millstone 1 for its remaining life. The pretax impact of these
disallowances was $41 million. The DTE also approved one-year contracts
with the winning bidders of the standard offer and default service supply
auction. For further information regarding commitments and contingencies
related to the Massachusetts restructuring order, see Note 11A, "Commitments
and Contingencies - Restructuring," to the consolidated financial statements.
Generation Asset Divestitures
The Massachusetts restructuring laws required WMECO to divest of its generation
assets and utilize substantially all of the net gains from any sales to offset
stranded costs. During 1999, WMECO sold its fossil and certain hydroelectric
generation assets resulting in a net gain of $22.4 million. A corresponding
amount of regulatory assets was amortized. Also during 1999, WMECO signed
agreements to transfer certain hydroelectric generation assets to Northeast
Generation Company, an unregulated affiliate of NU. This transaction closed
on March 14, 2000. In September 1999, NU announced that the Millstone nuclear
generation assets of its subsidiaries, WMECO and CL&P, will be put up for
auction as soon as practical. For further information regarding commitments
and contingencies related to the generation asset divestitures, see Note 11A,
"Commitments and Contingencies - Restructuring," to the consolidated financial
statements.
Nuclear Generation
Millstone Nuclear Units
Millstone 3 received the appropriate Nuclear Regulatory Commission (NRC)
approvals and resumed operation in July 1998. Millstone 2 received similar
NRC approvals and resumed operation in May 1999. Millstone 3 and 2 achieved
annual capacity factors of 81.7 percent and 57.9 percent in 1999, respectively.
After a 60-day refueling and maintenance outage, Millstone 3 returned to
service on June 29, 1999, and has achieved a 98.1 percent capacity factor
through December 31, 1999. Since returning to service in May 1999, Millstone 2
has achieved a 90.3 percent capacity factor through December 31, 1999.
NU's total share of O&M expenses associated with Millstone 3 and 2 totaled
$261.8 million in 1999, as compared to $323.2 million in 1998 and $406 million
in 1997. Millstone 1 is currently in decommissioning status.
An auction of WMECO's ownership interests in the Millstone units is expected
in 2000 with a closing in 2001. Based on regulatory decisions received in
1999, management expects to recover all of its nuclear stranded costs through
the net gains from generation asset sales and from retail customers.
Yankee Companies
On June 1, 1999, the Federal Energy Regulatory Commission accepted the offer
of settlement which was filed on January 15, 1999, by the Maine Yankee Atomic
Power Company (MYAPC). The significant aspects of the settlement allowed MYAPC
to collect $33.1 million annually to pay for decommissioning and spent fuel,
approved its return on equity of 6.5 percent, permitted full recovery of
MYAPC's unamortized investment, including fuel, and set an incentive budget
for decommissioning at $436.3 million.
On October 15, 1999, the Vermont Yankee Nuclear Power Corporation (VYNPC)
agreed to sell its unit for $22 million to an unaffiliated company. Among
other commitments, the acquiring company agreed to assume the decommissioning
cost of the unit after it is taken out of service, and the VYNPC owners have
agreed to fund the uncollected decommissioning cost to a negotiated amount at
the time of the closing of the sale. VYNPC's owners have also agreed either
to enter into a new purchased-power agreement with the acquiring company or
to buy out such future power payment obligations by making a fixed payment to
them. WMECO has elected the buyout option. The VYNPC owners' obligations
to close and pay such amounts are conditioned upon their receipt of
satisfactory regulatory approval of the transaction, including provision for
adequate recovery of these payments.
Nuclear Decommissioning
The staff of the SEC has questioned certain of the current accounting
practices of the electric utility industry regarding the recognition,
measurement and classification of decommissioning costs for nuclear
units in their financial statements.
Currently, the Financial Accounting Standards Board plans to review the
accounting for obligations associated with the retirement of long-lived
assets, including the decommissioning of nuclear units. If current
accounting practices for nuclear decommissioning change, the annual provision
for decommissioning could increase relative to 1999, and the estimated cost
for decommissioning could be recorded as a liability with recognition of an
increase in the cost of the related nuclear unit. However, management does
not believe that such a change will have a material impact on WMECO's financial
statements due to the current and future ability to recover decommissioning
costs through rates.
Spent Nuclear Fuel Disposal Costs
The United States Department of Energy (DOE) originally was scheduled to begin
accepting delivery of spent fuel in 1998. However, delays in confirming the
suitability of a permanent storage site continually have postponed plans for
the DOE's long-term storage and disposal site. Extended delays or a default
by the DOE could lead to consideration of costly alternatives. WMECO has the
primary responsibility for the interim storage of its spent nuclear fuel.
Adequate storage capacity exists to accommodate all spent nuclear fuel at
Millstone 1. The facilities for Millstone 2 are expected to provide adequate
storage to accommodate a full-core discharge from the reactor until 2005 with
the implementation of currently planned modifications. Fuel consolidation,
which has been licensed for Millstone 2, could provide adequate storage
capacity for its projected life. The facilities for Millstone 3 are expected
to provide adequate storage for its projected life with the addition of new
storage racks. Meeting spent fuel storage requirements beyond these periods
could require new and separate storage facilities. For further information
regarding spent nuclear fuel disposal costs, see Note 11D, "Commitments and
Contingencies - Spent Nuclear Fuel Disposal Costs," to the consolidated
financial statements.
Other Matters
Environmental Matters
WMECO is subject to environmental laws and regulations structured to mitigate
or remove the effect of past operations and to improve or maintain the quality
of the environment. For further information regarding environmental matters,
see Note 11C, "Commitments and Contingencies - Environmental Matters," to the
consolidated financial statements.
Other Commitments and Contingencies
WMECO is subject to other commitments and contingencies primarily relating to
nuclear litigation, nuclear insurance contingencies, its construction program,
long-term contractual arrangements, and the New England Power Pool generation
pricing. For further information regarding these commitments and
contingencies, see Note 11, "Commitments and Contingencies," to the
consolidated financial statements.
Year 2000 Issues
The transition into the year 2000 was a success for the NU system and WMECO.
Its mission to provide safe, reliable energy to its customers and to ensure
continued operability of critical business functions was not affected by any
year 2000 related issues.
The projected total cost of the year 2000 program is estimated at $21 million
for the NU system. The total cost to date was funded through operating cash
flows. The NU system has incurred and expensed $20 million related to year
2000 readiness efforts.
Forward Looking Statements
This discussion and analysis includes forward looking statements, which are
statements of future expectations and not facts. Words such as estimates,
expects, anticipates, intends, plans, and similar expressions identify forward
looking statements. Actual results or outcomes could differ materially as a
result of further actions by state and federal regulatory bodies, competition
and industry restructuring, changes in economic conditions, changes in
historical weather patterns, changes in laws, developments in legal or public
policy doctrines, technological developments, and other presently unknown or
unforeseen factors.
RESULTS OF OPERATIONS
The components of significant income statement variances for the past two
years are provided in the table below.
Income Statement Variances
(Millions of Dollars)
1999 over/(under) 1998 1998 over/(under) 1997
---------------------- ----------------------
Amount Percent Amount Percent
------ ------- ------ -------
Operating Revenues $21 5% $(33) (8)%
Operating Expenses:
Fuel, purchased and
net interchange power 21 16 (40) (24)
Other operation and
maintenance (25) (14) (31) (15)
Depreciation (13) (32) 1 3
Amortization of regulatory
assets, net 20 (a) (1) (6)
Federal and state
income taxes 9 (a) 16 99
Taxes other than income taxes 1 5 - -
Gain on sale of utility plant (22) - - -
Operating income 22 (a) 20 (a)
Equity in earnings
regional nuclear
generating companies (1) (76) - -
Nuclear unrecoverable costs (18) - - -
Other, net (2) (90) (1) (72)
Interest charges, net (4) (12) 2 8
Net Income 12 (a) 18 65
(a) Percentage greater than 100.
Operating Revenues
Operating revenues increased by $21 million or 5 percent in 1999, due to higher
wholesale and retail revenues. Wholesale revenues increased ($17 million) due
to higher energy sales and related capacity and transmission revenues. Retail
revenues increased by $4 million due to the retail kilowatt-hour sales increase
of 3.6 percent which increased revenues by $16 million and was partially offset
by the retail rate decrease in 1998 ($12 million).
Operating revenues decreased in 1998, primarily due to a 10 percent retail
rate decrease in 1998, partially offset by higher retail sales. Retail
kilowatt-hour sales were 1.3 percent higher than 1997.
Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power expense increased in 1999, primarily
due to a reversal of fuel expense deferrals which were recorded in other O&M
expenses as a result of the WMECO restructuring order, partially offset by
lower replacement power costs.
Fuel, purchased and net interchange power expense decreased in 1998, primarily
due to lower replacement power costs as a result of the return to service of
Millstone 3 and lower capacity charges from the Connecticut Yankee Atomic Power
Company and MYAPC ($10 million).
Other Operation and Maintenance
Other O&M expenses decreased in 1999, primarily due to lower costs at the
Millstone units ($17 million), deferrals associated with the restructuring
order ($5 million), and lower fossil and hydroelectric O&M costs ($4 million),
partially offset by higher transmission expenses ($4 million).
Other O&M expenses decreased in 1998, primarily due to lower costs at the
Millstone units.
Depreciation
Depreciation decreased in 1999, primarily due to lower rates utilized in 1999
as a result of the 1999 restructuring orders and the retirement of Millstone 1.
The change in depreciation in 1998 was not significant.
Amortization of Regulatory Assets, Net
Amortization of regulatory assets, net increased in 1999, primarily due to
increased amortization associated with the gain on the sale of fossil and
hydroelectric generation assets ($13 million), the amortization of the
Millstone 1 investment ($5 million) and the reclassification of the
depreciation on the nuclear plants transferred to regulatory assets
($4 million).
The change in amortization of regulatory assets, net in 1998 was not
significant.
Federal and State Income Taxes
Federal and state income taxes increased in 1999, primarily due to higher
book taxable income.
Federal and state income taxes increased in 1998, primarily due to higher
book taxable income.
Gain on Sale of Utility Plant
WMECO recorded a gain on the sale of its fossil and hydroelectric generation
assets in 1999. A corresponding amount of amortization expense was recorded.
Nuclear Unrecoverable Costs
Nuclear unrecoverable costs in 1999 are comprised of one-time charges related
to the return disallowed on Millstone 1 unrecovered plant from March 1998
forward ($11 million), the settlement of Millstone 3 owner litigation, net
of insurance proceeds ($5 million) and the disallowed Millstone 1 plant per
the Massachusetts restructuring order ($2 million).
Interest Charges
Interest charges decreased in 1999, primarily due to lower interest on long-
term debt outstanding.
The change in interest charges in 1998 was not significant.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Western Massachusetts Electric Company:
We have audited the accompanying consolidated balance sheets of Western
Massachusetts Electric Company (a Massachusetts corporation and a wholly owned
subsidiary of Northeast Utilities) and subsidiary as of December 31, 1999 and
1998, and the related consolidated statements of income, comprehensive income,
common stockholder's equity and cash flows for each of the three years in the
period ended December 31, 1999. 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 and subsidiary as of December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1999, in conformity with generally accepted
accounting principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 25, 2000
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1999 1998 1997
- ------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues............................. $414,231 $393,322 $426,447
--------- --------- ---------
Operating Expenses:
Operation -
Fuel, purchased and net interchange power. 151,714 130,401 170,867
Other..................................... 101,842 117,663 123,508
Maintenance.................................. 47,586 56,622 81,466
Depreciation................................. 27,771 40,901 39,753
Amortization of regulatory assets, net....... 26,488 6,016 6,428
Federal and state income taxes............... 18,849 2,109 (15,142)
Taxes other than income taxes................ 20,677 19,756 19,316
Gain on sale of utility plant................ (22,437) - -
--------- --------- ---------
Total operating expenses............... 372,490 373,468 426,196
--------- --------- ---------
Operating Income............................... 41,741 19,854 251
--------- --------- ---------
Other (Loss)/Income:
Equity in earnings of regional nuclear
generating companies....................... 407 1,699 1,524
Nuclear unrecoverable costs.................. (18,035) - -
Other, net................................... (3,618) (1,905) (1,106)
Income taxes................................. 9,906 2,198 1,026
--------- --------- ---------
Other (loss)/income, net............... (11,340) 1,992 1,444
--------- --------- ---------
Income before interest charges......... 30,401 21,846 1,695
--------- --------- ---------
Interest Charges:
Interest on long-term debt................... 24,255 28,027 26,046
Other interest............................... 3,259 3,398 3,109
--------- --------- ---------
Interest charges, net.................. 27,514 31,425 29,155
--------- --------- ---------
Net Income/(Loss).............................. $ 2,887 $ (9,579) $(27,460)
========= ========= =========
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net Income/(Loss).............................. $ 2,887 $ (9,579) $(27,460)
--------- --------- ---------
Other comprehensive income, net of tax:
Unrealized gains on securities................. 10 183 -
Minimum pension liability adjustments.......... - (33) -
--------- --------- ---------
Other comprehensive income, net of tax...... 10 150 -
--------- --------- ---------
Comprehensive Income/(Loss).................... $ 2,897 $ (9,429) $(27,460)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AT DECEMBER 31, 1999 1998
- ---------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at original cost:
Electric................................................ $ 1,175,954 $ 1,221,257
Less: Accumulated provision for depreciation......... 813,978 517,401
------------- ------------
361,976 703,856
Construction work in progress........................... 21,181 14,858
Nuclear fuel, net....................................... 18,880 19,931
------------- ------------
Total net utility plant............................. 402,037 738,645
------------- ------------
Other Property and Investments:
Nuclear decommissioning trusts, at market............... 144,567 125,598
Investments in regional nuclear generating
companies, at equity................................... 14,723 15,440
Other, at cost.......................................... 6,232 7,322
------------- ------------
165,522 148,360
------------- ------------
Current Assets:
Cash.................................................... 950 106
Investments in securitizable assets..................... - 21,865
Receivables, less the accumulated provision for
uncollectible accounts of $1,640 in 1999
and $50 in 1998....................................... 31,692 862
Accounts receivable from affiliated companies........... 3,918 4,188
Taxes receivable........................................ 1,912 14,255
Accrued utility revenues................................ 13,485 -
Fuel, materials, and supplies, at average cost.......... 3,097 5,053
Prepayments and other................................... 30,119 25,920
------------- ------------
85,173 72,249
------------- ------------
Deferred Charges:
Regulatory assets....................................... 594,800 322,435
Unamortized debt expense................................ 1,926 2,298
Other................................................... 4,146 3,695
------------- ------------
600,872 328,428
------------- ------------
Total Assets........................................ $ 1,253,604 $ 1,287,682
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AT DECEMBER 31, 1999 1998
- ---------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock, $25 par value - 1,072,471 shares
authorized and outstanding in 1999 and 1998............ $ 26,812 $ 26,812
Capital surplus, paid in................................ 171,691 151,431
Retained earnings....................................... 38,712 46,003
Accumulated other comprehensive income.................. 160 150
------------- ------------
Total common stockholder's equity.............. 237,375 224,396
Preferred stock not subject to mandatory redemption..... 20,000 20,000
Preferred stock subject to mandatory redemption......... 16,500 18,000
Long-term debt.......................................... 290,279 349,314
------------- ------------
Total capitalization........................... 564,154 611,710
------------- ------------
Obligations Under Capital Leases.......................... 8,106 12,129
------------- ------------
Current Liabilities:
Notes payable to banks.................................. 123,000 20,000
Notes payable to affiliated company..................... 9,400 30,900
Long-term debt and preferred stock - current portion.... 1,500 41,500
Obligations under capital leases - current portion...... 21,866 21,964
Accounts payable........................................ 12,974 17,952
Accounts payable to affiliated companies................ 3,208 12,866
Accrued taxes........................................... 589 1,264
Accrued interest........................................ 6,046 8,030
Other................................................... 14,384 6,831
------------- ------------
192,967 161,307
------------- ------------
Deferred Credits and Other Long-term Liabilities:
Accumulated deferred income taxes....................... 242,942 248,985
Accumulated deferred investment tax credits............. 19,765 21,895
Decommissioning obligation - Millstone 1................ 136,130 131,500
Deferred contractual obligations........................ 63,701 74,534
Other................................................... 25,839 25,622
------------- ------------
488,377 502,536
------------- ------------
Total Capitalization and Liabilities........... $ 1,253,604 $ 1,287,682
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Accumulated
Capital Retained Other
Common Surplus, Earnings Comprehensive
Stock Paid In (a) Income Total
- --------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997............... $26,812 $150,911 $104,212 $ - $281,935
Net loss for 1997.................... (27,460) (27,460)
Cash dividends on preferred
stock.............................. (3,140) (3,140)
Cash dividends on common stock....... (15,004) (15,004)
Capital stock expenses, net.......... 260 260
-------- --------- --------- ------------- ---------
Balance at December 31, 1997............. 26,812 151,171 58,608 - 236,591
Net loss for 1998.................... (9,579) (9,579)
Cash dividends on preferred
stock.............................. (3,026) (3,026)
Capital stock expenses, net.......... 260 260
Other comprehensive income........... 150 150
-------- --------- --------- ------------- ---------
Balance at December 31, 1998............. 26,812 151,431 46,003 150 224,396
Net income for 1999.................. 2,887 2,887
Cash dividends on preferred
stock.............................. (3,298) (3,298)
Capital stock expenses, net.......... 260 260
Allocation of benefits - ESOP........ (6,880) (6,880)
Capital contribution from
Northeast Utilities................ 20,000 20,000
Other comprehensive income........... 10 10
-------- --------- --------- ------------- ---------
Balance at December 31, 1999............. $26,812 $171,691 $ 38,712 $ 160 $237,375
======== ========= ========= ============= =========
(a) No dividend restrictions except for appropriated retained earnings for hydro reserves
which were established in 1978 of $0.9 million.
</TABLE>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars) 1999 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net income/(loss)........................................... $ 2,887 $ (9,579) $ (27,460)
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation.............................................. 27,771 40,901 39,753
Deferred income taxes and investment tax credits, net..... (6,544) 7,405 (1,256)
Amortization of regulatory assets, net.................... 26,488 6,016 6,428
Nuclear unrecoverable costs............................... 18,035 - -
Allocation of ESOP benefits............................... (6,880) - -
Gain on sale of utility plant............................. (22,437) - -
Other (uses)/sources of cash.............................. (13,517) 636 796
Changes in working capital:
Receivables and accrued utility revenues.................. (44,045) 1,622 49,415
Fuel, materials and supplies.............................. 1,956 807 (543)
Accounts payable.......................................... (14,636) (20,962) 4,826
Investments in securitizable assets....................... 21,865 3,415 (25,280)
Accrued taxes............................................. (675) 742 (2,137)
Other working capital (excludes cash)..................... 11,789 (3,441) (16,882)
----------- ----------- -----------
Net cash flows provided by operating activities............... 2,057 27,562 27,660
----------- ----------- -----------
Financing Activities:
Issuance of long-term debt.................................. - - 60,000
Net increase/(decrease) in short-term debt.................. 81,500 21,550 (18,050)
Reacquisitions and retirements of long-term debt............ (100,850) (9,800) (14,700)
Reacquisitions and retirements of preferred stock........... (1,500) (1,500) -
Cash dividends on preferred stock........................... (3,298) (3,026) (3,140)
Cash dividends on common stock.............................. - - (15,004)
----------- ----------- -----------
Net cash flows (used in)/provided by financing activities..... (24,148) 7,224 9,106
----------- ----------- -----------
Investing Activities:
Investment in plant:
Electric utility plant.................................... (30,192) (19,895) (26,249)
Nuclear fuel.............................................. (5,817) (1,801) (8)
----------- ----------- -----------
Net cash flows used for investments in plant.............. (36,009) (21,696) (26,257)
Investment in nuclear decommissioning trusts................ (11,387) (12,918) (9,645)
Other investment activities, net............................ 1,807 (171) (826)
Net proceeds from the sale of utility plant................. 48,524 - -
Capital contributions from Northeast Utilities.............. 20,000 - -
----------- ----------- -----------
Net cash flows provided by/(used in) investing activities..... 22,935 (34,785) (36,728)
----------- ----------- -----------
Net increase in cash for the period........................... 844 1 38
Cash - beginning of period.................................... 106 105 67
----------- ----------- -----------
Cash - end of period.......................................... $ 950 $ 106 $ 105
=========== =========== ===========
Supplemental Cash Flow Information:
Cash paid/(refunded) during the year for:
Interest, net of amounts capitalized........................ $ 30,958 $ 22,902 $ 28,711
=========== =========== ===========
Income taxes................................................ $ (6,296) $ (2,624) $ (1,121)
=========== =========== ===========
Increase in obligations:
Niantic Bay Fuel Trust...................................... $ 1,112 $ 2,375 $ 660
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. About Western Massachusetts Electric Company
Western Massachusetts Electric Company (WMECO or the company) along with
The Connecticut Light and Power Company (CL&P), Public Service Company
of New Hampshire (PSNH), North Atlantic Energy Corporation (NAEC), and
Holyoke Water Power Company (HWP) are the operating companies comprising
the Northeast Utilities system (NU system) and are wholly owned by
Northeast Utilities (NU). The NU system serves in excess of 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. The NU system
furnishes franchised retail electric service in western Massachusetts,
Connecticut and New Hampshire through WMECO, CL&P and PSNH. NAEC sells
all of its entitlement to the capacity and output of the Seabrook
Station (Seabrook) nuclear unit to PSNH under the terms of two life-of-
unit, full cost recovery contracts. HWP, also is engaged in the
production and distribution of electric power.
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 the NU system, including WMECO, is subject to provisions
of the 1935 Act. Arrangements among the NU 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.
WMECO is subject to further regulation for rates, accounting and other
matters by the FERC and/or applicable state regulatory commissions.
Several wholly owned subsidiaries of NU provide support services for the
NU system companies, including WMECO, 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 NU system companies, including WMECO. Northeast
Nuclear Energy Company acts as agent for the NU system companies and
other New England utilities in operating the Millstone nuclear units.
North Atlantic Energy Service Corporation has operational responsibility
for Seabrook. In addition, WMECO had previously established a special
purpose subsidiary whose business consisted of the purchase and resale
of receivables. This business was terminated on June 30, 1999.
On October 13, 1999, NU and Consolidated Edison, Inc. (Con Edison)
announced that they have agreed to a merger to combine the two
companies. For further information, see Note 15, "Merger Agreement
with Con Edison."
B. Presentation
The consolidated financial statements of WMECO include the accounts of
its subsidiary. 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. New Accounting Standards
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative
instruments and hedging activities. This statement will require
derivative instruments to be recognized as assets or liabilities at
fair value.
In June 1999, the FASB delayed the adoption date of SFAS No. 133 to
January 1, 2001.
There may be an impact on earnings upon adoption of SFAS No. 133 which
management has not estimated at this time.
D. Investments and Jointly Owned Electric Utility Plant
Regional Nuclear Generating Companies: WMECO owns common stock in four
regional nuclear companies (Yankee Companies). WMECO's ownership
interests in the Yankee Companies at December 31, 1999 and 1998, which
are accounted for on the equity basis due to WMECO's ability to exercise
significant influence over their operating and financial policies are
9.5 percent of the Connecticut Yankee Atomic Power Company (CYAPC),
7 percent of the Yankee Atomic Electric Company (YAEC), 3 percent of
the Maine Yankee Atomic Power Company (MYAPC), and 2.5 percent of the
Vermont Yankee Nuclear Power Corporation (VYNPC). WMECO's total equity
investment in the Yankee Companies at December 31, 1999 and 1998, is
$14.7 million and $15.4 million, respectively. Each Yankee Company owns
a single nuclear generating unit. However, VYNPC is the only unit
still in operation at December 31, 1999.
Millstone: WMECO has a 19 percent joint ownership in both Millstone 1,
a 660 megawatt (MW) nuclear unit and Millstone 2, an 870 MW nuclear
generating unit. WMECO has a 12.24 percent joint ownership interest in
Millstone 3, a 1,154 MW nuclear generating unit. NU expects to auction
all three units as a single package in 2000, with a closing in 2001.
Appropriate regulatory approvals will be required to complete the
auction.
Plant-in-service and the accumulated provision for depreciation
for WMECO's share of Millstone 2 and 3 are as follows:
------------------------------------------------------------------------
At December 31, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
Plant-in-service
Millstone 2............................... $180.4 $177.5
Millstone 3............................... 380.5 379.2
Accumulated provision for depreciation
Millstone 2............................... $166.7 $ 70.4
Millstone 3............................... 358.7 121.1
------------------------------------------------------------------------
E. Depreciation
The provision for depreciation is calculated using the straight-line
method based on estimated remaining useful lives of depreciable utility
plant-in-service, adjusted for salvage value and removal costs, as
approved by the appropriate regulatory agency, where applicable.
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 the plant, including costs
of removal less salvage, is charged to the accumulated provision for
depreciation. The costs of closure and removal of nonnuclear facilities
are accrued over the life of the plant as a component of depreciation.
The depreciation rates for the several classes of electric plant-in-
service are equivalent to a composite rate of 2.3 percent in 1999,
2.9 percent in 1998 and 3.2 percent in 1997.
At December 31, 1999 and 1998, the accumulated provision for
depreciation included $3.2 million accrued for the cost of removal, net
of salvage, for nonnuclear generation property.
As a result of discontinuing the application of SFAS No. 71, "Accounting
for the Effects of Certain Types of Regulation," for WMECO's generation
business, the company recorded a charge to accumulated depreciation for
the nuclear plant in excess of fair market value in the amount of $330
million, and a corresponding regulatory asset was created.
F. Revenues
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. Regulatory
commissions also have authority over the terms and conditions of
nontraditional rate-making arrangements. At the end of each accounting
period, WMECO accrues a revenue estimate for the amount of energy
delivered but unbilled.
G. Regulatory Accounting and Assets
The accounting policies of WMECO and the accompanying consolidated
financial statements conform to generally accepted accounting principles
applicable to rate-regulated enterprises and historically reflect the
effects of the rate-making process in accordance with SFAS No. 71.
As a result of final restructuring orders issued in 1999, WMECO
discontinued the application of SFAS No. 71 for the generation portion
of its business.
Based on a current evaluation of the various factors and conditions that
are expected to impact future cost recovery, management continues to
believe it is probable that WMECO will recover its investments in long-
lived assets, including regulatory assets. In addition, all material
regulatory assets are earning a return. The components of WMECO's
regulatory assets are as follows:
------------------------------------------------------------------------
At December 31, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
Recoverable nuclear costs................. $428.9 $133.7
Income taxes, net......................... 49.0 57.1
Unrecovered contractual obligations....... 63.7 74.5
Recoverable energy costs, net............. 16.3 19.0
Other..................................... 36.9 38.1
------ ------
$594.8 $322.4
====== ======
------------------------------------------------------------------------
The restructuring orders in Massachusetts provide for the transmission
and distribution business to continue to be cost-of-service based and
also provide for a transition charge which recovers stranded costs,
including the nuclear regulatory assets established below.
As a result of discontinuing the application of SFAS No. 71 for WMECO's
generation business, the company reclassified nuclear plant in excess
of its estimated fair market value from plant to regulatory assets.
As of December 31, 1999, the unamortized balance of $316.1 million is
classified as recoverable nuclear costs. Also included in that
regulatory asset component for 1999 is $112.8 million, which includes
Millstone 1 recoverable nuclear costs relating to the recoverable
portion of the undepreciated plant and related assets ($43.8 million)
and the decommissioning and closure obligation ($69 million).
H. 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 rate-making treatment of the
applicable regulatory commissions.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, that give rise
to the accumulated deferred tax obligation is as follows:
------------------------------------------------------------------------
At December 31, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
Accelerated depreciation and
other plant-related differences......... $213.4 $228.0
Regulatory assets - income tax gross up... 19.0 29.3
Other..................................... 10.5 (8.3)
------ ------
$242.9 $249.0
====== ======
------------------------------------------------------------------------
I. 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 (DOE) (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, 1999 and 1998, WMECO's total D&D Assessment deferrals were
$9.6 million and $10.5 million, respectively.
J. Unrecovered Contractual Obligations
Under the terms of contracts with the Yankee Companies, the shareholder-
sponsored companies, including WMECO, are responsible for their
proportionate share of the remaining costs of the units, including
decommissioning. As management expects that WMECO will be allowed to
recover these costs from its customers, WMECO has recorded a regulatory
asset, with a corresponding obligation, on its balance sheet.
2. NUCLEAR DECOMMISSIONING AND PLANT CLOSURE COSTS
Millstone: WMECO's operating nuclear power plants, Millstone 2 and 3, have
service lives that are expected to end in 2015 and 2025, respectively, and
upon retirement, must be decommissioned. Millstone 1's expected service
life was to end in 2010, however, in July 1998, restart activities were
discontinued and preparations for decommissioning the unit began. Current
decommissioning studies conclude that complete and immediate dismantlement
as soon as practical after retirement continues to be the most viable and
economic method of decommissioning a unit. These studies are reviewed and
updated periodically to reflect changes in decommissioning requirements,
costs, technology, and inflation. 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.
WMECO's ownership share of the estimated cost of decommissioning Millstone
2 and 3, in year end 1999 dollars, is $78.5 million and $75.8 million.
Nuclear decommissioning costs are accrued over the expected service lives
of the units and are included in depreciation expense. Nuclear
decommissioning expenses for these units amounted to $3.7 million in 1999,
1998 and 1997, respectively. Nuclear decommissioning, as a cost of
removal, is included in the accumulated provision for depreciation.
A Post-Shutdown Decommissioning Activities Report for Millstone 1
was filed with the Nuclear Regulatory Commission in June 1999 which
outlines decommissioning activities, and costs, and supports the obligation
recorded by the company. Nuclear decommissioning expenses for Millstone 1
were $2.9 million in 1999 and $2.5 million in 1998 and 1997, respectively.
External decommissioning trusts have been established for the costs of
decommissioning the Millstone units. Funding of the estimated
decommissioning costs assumes levelized collections for the Millstone
units and after-tax earnings on the Millstone decommissioning funds of
5.5 percent.
As of December 31, 1999 and 1998, WMECO collected a total of $39.3 million
and $35.5 million, respectively, through rates toward the future
decommissioning costs of their shares of Millstone 2 and 3, all of
which has been transferred to external decommissioning trusts. Earnings
on the decommissioning trusts increase the decommissioning trust balances
and the accumulated reserves for depreciation. Unrealized gains and losses
associated with the decommissioning trusts and financing funds also impact
the balance of the trusts and the accumulated reserve for depreciation.
The fair values of the amounts in the external decommissioning trusts
were $77.4 million and $66.9 million at December 31, 1999 and 1998,
respectively.
Yankee Companies: VYNPC owns and operates a nuclear generating unit with
a service life that is expected to end in 2012. WMECO's ownership share
of estimated costs, in year end 1999 dollars, of decommissioning this unit
is $10.7 million. On October 15, 1999, VYNPC agreed to sell the unit for
$22 million to an unaffiliated company. Among other commitments, the
acquiring company agreed to assume the decommissioning cost of the unit
after it is taken out of service, and the VYNPC owners have agreed to fund
the uncollected decommissioning cost to a negotiated amount at the
time of the closing of the sale.
As of December 31, 1999 and 1998, WMECO's remaining estimated obligation,
including decommissioning for the units owned by CYAPC, YAEC and MYAPC,
which have been shut down was $63.7 million and $74.5 million,
respectively.
3. SHORT-TERM DEBT
Limits: The amount of short-term borrowings that may be incurred by WMECO
is subject to periodic approval by either the SEC under the 1935 Act or by
the respective state regulators. SEC authorization allowed WMECO, as of
January 1, 1999, to incur total short-term borrowings up to a maximum of
$250 million. In addition, the charter of WMECO contains preferred stock
provisions restricting the amount of unsecured debt the company may incur.
As of December 31, 1999, WMECO's charter permits WMECO to incur $132
million of unsecured debt.
Credit Agreement: On November 19, 1999, WMECO and CL&P entered into a new
364-day revolving credit facility for $500 million, replacing the previous
$313.75 million facility which was to expire on November 21, 1999. The
revolving credit facility will be used to bridge gaps in working capital
and provide short-term liquidity. WMECO may draw up to $200 million under
the facility, which is secured by second mortgages on Millstone 2 and 3.
Unless extended, the new credit facility will expire on November 17, 2000.
At December 31, 1999 and 1998, there were $123 million and $20 million,
respectively, in borrowings under these facilities.
Under the credit agreement discussed above, WMECO may borrow at fixed or
variable rates plus an applicable margin based upon the company's most
senior secured debt as rated by the lower of Standard & Poor's or Moody's
Investors Service. The weighted average interest rate on the WMECO's notes
payable to banks outstanding on December 31, 1999 and 1998, was 7.70
percent and 6.53 percent, respectively.
This credit agreement provides that WMECO must comply with certain
financial and nonfinancial covenants as are customarily included in such
agreements, including, but not limited to, common equity ratios and
interest coverage ratios.
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 NU 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. Borrowings based on loans from NU
parent, however, bear interest at NU parent's cost and must be repaid based
upon the terms of NU parent's original borrowing. At December 31, 1999 and
1998, WMECO had $9.4 million and $30.9 million, respectively, of borrowings
outstanding from the Pool. The interest rate on borrowings from the Pool at
December 31, 1999 and 1998, was 4.9 percent and 5.8 percent, respectively.
Maturities of short-term debt obligations were for periods of three months
or less.
4. LEASES
WMECO finances its respective shares of the nuclear fuel for Millstone 2
and 3 under the Niantic Bay Fuel Trust (NBFT) capital lease agreement.
This capital lease agreement has an expiration date of June 1, 2040. At
December 31, 1999 and 1998, the present value of WMECO's capital lease
obligation to the NBFT was $29.8 million and $33.9 million, respectively.
In connection with the planned nuclear divestiture, WMECO anticipates that
its portion of the NBFT capital lease will be terminated and WMECO's
portion of the NBFT's obligation under the $180 million Series G
Intermediate Term Note agreement will be assigned to WMECO.
WMECO makes 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, WMECO's interest in the nuclear fuel transfers to WMECO.
WMECO also has entered into lease agreements, some of which are capital
leases, 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.
Capital lease rental payments charged to operating expense were $2.6
million in 1999, $4.1 million in 1998 and $1.8 million in 1997. Interest
included in capital lease rental payments was $3.1 million in 1999, $2.8
million in 1998 and $1.8 million in 1997. Operating lease rental payments
charged to expense were $4.8 million in 1999, $5.8 million in 1998 and
$6 million in 1997.
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, 1999, are:
---------------------------------------------------------------------------
Year Capital Leases Operating Leases
---------------------------------------------------------------------------
2000.............................. $ 0.05 $ 4.3
2001.............................. 0.05 3.9
2002.............................. 0.05 3.7
2003.............................. 0.05 3.4
2004.............................. - 3.1
After 2004........................ - 15.1
------ -----
Future minimum lease payments..... 0.20 $33.5
=====
Present value of future nuclear
fuel lease payments............. 29.80
------
Present value of future
minimum lease payments.......... $30.00
======
---------------------------------------------------------------------------
5. PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock not subject to mandatory redemption are:
---------------------------------------------------------------------------
December 31, Shares
1999 Outstanding December 31,
Redemption December 31, ------------------
Description Price 1999 1999 1998
---------------------------------------------------------------------------
(Millions of Dollars)
7.72% Series B of 1971 $103.51 200,000 $20.0 $20.0
---------------------------------------------------------------------------
6. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock subject to mandatory redemption are:
---------------------------------------------------------------------------
December 31, Shares
1999 Outstanding December 31,
Redemption December 31, ------------------
Description Price 1999 1999 1998
---------------------------------------------------------------------------
(Millions of Dollars)
7.60% Series of 1987 $25.38 720,000 $18.0 $19.5
Less preferred stock
to be redeemed
within one year 60,000 1.5 1.5
----- -----
$16.5 $18.0
===== =====
---------------------------------------------------------------------------
The series is subject to certain refunding limitations for the first five
years after issuance. The redemption price reduces in future years.
The minimum sinking fund requirements of the series subject to mandatory
redemption aggregate $1.5 million per year for each year for 2000 through
2004. 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 WMECO is
in arrears in the payment of dividends on any outstanding shares of
preferred stock, WMECO would be prohibited from redeeming or purchasing
less than all of the outstanding preferred stock.
7. LONG-TERM DEBT
Details of long-term debt outstanding are:
---------------------------------------------------------------------------
At December 31, 1999 1998
---------------------------------------------------------------------------
(Millions of Dollars)
First Mortgage Bonds:
6 1/4% Series X, due 1999.................... $ - $ 40.0
6 7/8% Series W, due 2000.................... - 60.0
7 3/8% Series B, due 2001.................... 60.0 60.0
7 3/4% Series V, due 2002.................... 84.2 85.0
7 3/4% Series Y, due 2024.................... 50.0 50.0
------ ------
194.2 295.0
Pollution Control Notes:
Tax Exempt 1993 Series A, 5.85% due 2028..... 53.8 53.8
Fees and interest due for spent nuclear
fuel disposal costs........................ 43.0 41.4
Less amounts due within one year............. - 40.0
Unamortized premium and discount, net........ (0.7) (0.9)
------ ------
Long-term debt, net.......................... $290.3 $349.3
====== ======
---------------------------------------------------------------------------
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, 1999, are $60 million and $84.2 million in
2001 and 2002, respectively. There are no long-term debt maturities or
cash sinking fund requirements for 2000, 2003 and 2004.
Essentially all utility plant of WMECO is subject to the liens of the
company's first mortgage bond indenture.
WMECO 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.
On October 1, 1998, the variable interest rate on WMECO's $53.8 million
principal amount pollution control notes, 1993 Series A, due 2028, was
fixed at a rate of 5.85 percent per annum.
8. INCOME TAX EXPENSE
The components of the federal and state income tax provisions were
charged/(credited) to operations as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Current income taxes:
Federal............................... $13.5 $(7.4) $(14.3)
State................................. 2.0 (0.1) (0.6)
----- ----- ------
Total current....................... 15.5 (7.5) (14.9)
----- ----- ------
Deferred income taxes, net:
Federal............................... (3.5) 6.5 -
State................................. (0.9) 2.4 0.2
----- ----- ------
Total deferred...................... (4.4) 8.9 0.2
----- ----- ------
Investment tax credits, net............. (2.2) (1.5) (1.5)
----- ----- ------
Total income tax expense/(credit)....... $ 8.9 $(0.1) $(16.2)
===== ===== ======
---------------------------------------------------------------------------
The components of total income tax expense/(credit) are classified as
follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Income taxes charged to
operating expenses.................... $18.8 $ 2.1 $(15.2)
Other income taxes...................... (9.9) (2.2) (1.0)
----- ----- ------
Total income tax expense/(credit)....... $ 8.9 $(0.1) $(16.2)
===== ===== ======
---------------------------------------------------------------------------
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Depreciation, leased nuclear fuel,
settlement credits, and
disposal costs........................ $(2.3) $ 5.8 $ 1.4
Regulatory deferral..................... (1.4) 1.3 -
Regulatory disallowance................. (4.2) - -
Pension accruals........................ 4.2 1.0 1.0
Other................................... (0.7) 0.8 (2.2)
----- ----- -----
Deferred income taxes, net.............. $(4.4) $ 8.9 $ 0.2
===== ===== =====
---------------------------------------------------------------------------
A reconciliation between income tax expense/(credit) and the expected
tax expense/(credit) at 35 percent of pretax income is as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Expected federal income tax............. $4.1 $(3.4) $(15.3)
Tax effect of differences:
Depreciation.......................... 1.8 2.2 0.1
Amortization of regulatory assets..... 4.6 0.9 1.9
Investment tax credit amortization.... (2.2) (1.5) (1.5)
State income taxes, net of
federal benefit..................... 0.7 1.5 (0.3)
Adjustment for prior years' taxes..... - (0.4) (0.3)
Dividends received deduction.......... (0.4) (0.7) (0.4)
Other, net............................ 0.3 1.3 (0.4)
---- ----- ------
Total income tax expense/(credit)....... $8.9 $(0.1) $(16.2)
==== ===== ======
---------------------------------------------------------------------------
9. EMPLOYEE BENEFITS
A. Pension Benefits and Postretirement Benefits Other Than Pensions
The NU system companies, including WMECO, participate in a uniform
noncontributory defined benefit retirement plan covering substantially
all regular NU system employees. Benefits are based on years of service
and the employees' highest eligible compensation during 60 consecutive
months of employment. WMECO's portion of the NU system's total pension
credit, part of which was credited to utility plant, was $10.8 million
in 1999, $7.4 million in 1998 and $5.7 million in 1997.
Currently, WMECO annually funds an amount at least equal to that which
will satisfy the requirements of the Employee Retirement Income Security
Act and Internal Revenue Code (the Code).
The NU system companies, including WMECO, also provide certain health
care benefits, primarily medical and dental, and life insurance benefits
through a benefit plan to retired employees. These benefits are
available for employees retiring from WMECO who have met specified
service requirements. For current employees and certain retirees,
the total benefit is limited to two times the 1993 per retiree health
care cost. These costs are charged to expense over the future estimated
work life of the employee. WMECO annually funds postretirement costs
through external trusts with amounts that have been rate-recovered and
which also are tax deductible under the Code.
Pension and trust assets are invested primarily in domestic and
international equity securities and bonds.
The following table represents information on the plans' benefit
obligation, fair value of plan assets, and the respective plans' funded
status:
- -------------------------------------------------------------------------------
At December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
(Millions of Dollars) 1999 1998 1999 1998
- -------------------------------------------------------------------------------
Change in benefit obligation
Benefit obligation
at beginning of year......... $(118.7) $(109.5) $(30.1) $(27.8)
Service cost................... (2.4) (2.2) (0.5) (0.5)
Interest cost.................. (8.5) (7.9) (2.1) (2.1)
Plan amendment................. (7.3) - - -
Transfers...................... 0.2 (3.0) - -
Actuarial gain/(loss).......... 10.2 (3.8) 0.4 (2.4)
Benefits paid.................. 7.8 7.7 2.6 2.7
Settlements.................... 0.6 - 0.2 -
- -------------------------------------------------------------------------------
Benefit obligation
at end of year............... $(118.1) $(118.7) $(29.5) $(30.1)
- -------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets
at beginning of year......... $ 201.6 $ 181.0 $ 14.6 $ 12.8
Actual return on plan assets... 29.9 25.3 1.7 1.6
Employer contribution.......... - - 2.9 2.9
Benefits paid.................. (7.8) (7.7) (2.6) (2.7)
Transfers...................... 0.2 3.0 - -
- -------------------------------------------------------------------------------
Fair value of plan assets
at end of year............... $ 223.9 $ 201.6 $ 16.6 $ 14.6
- -------------------------------------------------------------------------------
Funded status at December 31... $ 105.8 $ 82.9 $(12.9) $(15.5)
Unrecognized transition
(asset)/obligation........... (1.2) (1.5) 21.2 23.0
Unrecognized prior
service cost................. 7.6 1.1 - -
Unrecognized net gain.......... (85.7) (66.6) (8.2) (7.5)
- -------------------------------------------------------------------------------
Prepaid benefit cost........... $ 26.5 $ 15.9 $ 0.1 $ -
- -------------------------------------------------------------------------------
The following actuarial assumptions were used in calculating the plans'
year end funded status:
- -------------------------------------------------------------------------------
At December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
1999 1998 1999 1998
- -------------------------------------------------------------------------------
Discount rate................. 7.75% 7.00% 7.75% 7.00%
Compensation/progression rate. 4.75 4.25 4.75 4.25
Health care cost
trend rate(a)............... N/A N/A 5.57 5.22
- -------------------------------------------------------------------------------
(a) The annual per capita cost of covered health care benefits was
assumed to decrease to 4.90 percent by 2001.
The components of net periodic benefit (credit)/cost are:
- -------------------------------------------------------------------------------
For the Years Ended December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
(Millions of Dollars) 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------
Service cost............... $ 2.4 $ 2.2 $ 1.9 $ 0.5 $ 0.5 $ 0.4
Interest cost.............. 8.5 7.9 7.9 2.1 2.1 2.0
Expected return on
plan assets.............. (16.9) (14.8) (12.9) (1.0) (0.9) (0.7)
Amortization of
unrecognized net
transition (asset)/
obligation............... (0.2) (0.2) (0.2) 1.6 1.6 1.6
Amortization of prior
service cost............. 0.6 0.1 0.1 - - -
Amortization of
actuarial gain........... (3.4) (2.6) (2.0) - - -
Other amortization, net.... - - - (0.3) (0.4) (0.5)
Settlements................ (1.8) - (0.5) - - -
- -------------------------------------------------------------------------------
Net periodic benefit
(credit)/cost............. $(10.8) $ (7.4) $(5.7) $ 2.9 $ 2.9 $ 2.8
- -------------------------------------------------------------------------------
For calculating pension and postretirement benefit costs, the following
assumptions were used:
- -------------------------------------------------------------------------------
For the Years Ended December 31,
- -------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------
Discount rate.............. 7.00% 7.25% 7.75% 7.00% 7.25% 7.75%
Expected long-term
rate of return........... 9.50 9.50 9.25 N/A N/A N/A
Compensation/
progression rate......... 4.25 4.25 4.75 4.25 4.25 4.75
Long-term rate of return -
Health assets,
net of tax............... N/A N/A N/A 7.50 7.75 7.50
Life assets............... N/A N/A N/A 9.50 9.50 9.25
- -------------------------------------------------------------------------------
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. The effect of changing the
assumed health care cost trend rate by one percentage point in each year
would have the following effects:
- -------------------------------------------------------------------------------
One Percentage One Percentage
(Millions of Dollars) Point Increase Point Decrease
- -------------------------------------------------------------------------------
Effect on total service and
interest cost components............ $0.1 $(0.1)
Effect on postretirement
benefit obligation.................. $1.8 $(1.7)
- -------------------------------------------------------------------------------
The trust holding the health plan assets is subject to federal income
taxes.
B. Employee Stock Ownership Plan
In June 1999, WMECO paid NU parent $6.9 million for NU shares issued
from 1992 through 1998 on behalf of its employees in accordance with
NU's 401(k) plan. WMECO charged retained earnings for this payment,
as compensation expense had already been recorded in the respective
years at the fair market value of the shares allocated.
10. SALE OF CUSTOMER RECEIVABLES
On June 30, 1999, WMECO terminated its $40 million accounts receivable
program with its respective sponsor. At December 31, 1998, WMECO had sold
accounts receivable of $20 million to a third-party purchaser.
11. COMMITMENTS AND CONTINGENCIES
A. Restructuring
In 1999, restructuring orders required WMECO to discontinue the
application of SFAS No. 71 for the generation portion of its business.
In these restructuring orders, WMECO was allowed to recover the majority
of its stranded costs through a transition charge over the 12-year
transition period beginning March 1, 1998. The decision instructed
WMECO to work with the Massachusetts attorney general regarding the
recovery of nuclear capital additions made after July 1, 1991. The
decisions also concluded that the company's deferred fuel balance should
be included as part of the company's outstanding generating unit
performance proceedings and not as part of the transition charge.
Management believes that these costs are recoverable and that there
will not be an impact on the results of operations.
In September 1999, NU announced that the Millstone nuclear generation
assets of WMECO will be put up for auction as soon as practical. The
auction is expected to begin in early 2000, provided all regulatory
approvals have been met, with a successful bidder chosen by mid 2000
and a closing in 2001. No NU system company will participate as a
bidder in the auction process. Management expects to recover all of
WMECO's nuclear stranded costs through the net proceeds of generation
asset sales and billing through a transition charge to retail customers.
B. Nuclear Litigation
The non-NU joint owners of Millstone 3 have filed demands for
arbitration with WMECO and CL&P as well as lawsuits in Massachusetts
Superior Court against NU and its current and former trustees related
to the companies' operation of Millstone 3. During 1999, NU and these
subsidiaries agreed in principle to settle with certain of the joint
owners, who own 58 percent of the non-NU ownership of Millstone 3.
The settlements provide for the payment to the claimants of $36.4
million and certain contingent payments.
Arbitration and litigation claims remain outstanding for the
remaining joint owners who have not agreed to settle. Management
cannot estimate the potential outcome of the arbitration and litigation
for the nonsettled joint owners, therefore, no liability has been
established at December 31, 1999.
C. Environmental Matters
The NU system, including WMECO, is subject to environmental laws and
regulations intended to mitigate or remove the effect of past operations
and improve or maintain the quality of our environment. As such, the
NU system and WMECO have active environmental auditing and training
programs and believe they are in compliance with the current laws and
regulations.
However, the normal course of operations may necessarily involve
activities and substances that expose WMECO to potential liabilities
of which management cannot determine the outcome. Additionally,
management cannot determine the outcome for liabilities that may be
imposed for past acts, even though such past acts may have been lawful
at the time they occurred. Management does not believe, however, that
this will have a material impact on WMECO's financial statements.
Based upon currently available information for the estimated remediation
costs at December 31, 1999 and 1998, the liability recorded by WMECO for
its estimated environmental remediation costs amounted to $4.2 million
and $1.9 million, respectively.
D. Spent Nuclear Fuel Disposal Costs
Under the Nuclear Waste Policy Act of 1982, WMECO must pay the DOE for
the disposal of spent nuclear fuel and high-level radioactive waste.
The DOE is responsible for the selection and development of repositories
for, and 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), an accrual has been recorded for the full liability
and payment must be made prior to the first delivery of spent fuel to
the DOE. Until such payment is made, the outstanding balance will
continue to accrue interest at the 3-month treasury bill yield rate.
As of December 31, 1999 and 1998, fees due to the DOE for the disposal
of WMECO's Prior Period Fuel were $43 million and $41.4 million,
respectively, including interest costs of $27.4 million and $25.5
million, respectively.
E. Nuclear Insurance Contingencies
Insurance policies covering WMECO's ownership share of the NU system's
nuclear facilities have been purchased for the primary cost of repair,
replacement or decontamination of utility property, 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.
WMECO is subject to retroactive assessments if losses under those
policies exceed the accumulated funds available to the insurer. The
maximum potential assessments with respect to losses arising during the
current policy year for the primary property insurance program, the
replacement power policies and the excess property damage policies are
$1.6 million, $0.9 million and $2 million, respectively. In addition,
insurance has been purchased by the NU system in the aggregate of $200
million on an industry basis for coverage of worker claims.
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 NU system, including
WMECO, could be assessed liabilities in proportion to its ownership
interest in each of its nuclear units up to $83.9 million. The NU
system's payment of this assessment would be limited to, in proportion
to its ownership interest in each of its nuclear units, $10 million in
any one year per nuclear unit. In addition, if the sum of all claims
and costs from any one nuclear incident exceeds the maximum amount of
financial protection, the NU system would be subject to an additional
5 percent or $4.2 million liability, in proportion to its ownership
interests in each of its nuclear units. Based upon its ownership
interests in the Millstone units, WMECO's maximum liability, including
any additional assessments, would be $44.3 million per incident, of
which payments would be limited to $5 million per year. In addition,
through purchased-power contracts with VYNPC, WMECO would be responsible
for up to an additional assessment of $2.2 million per incident, of
which payments would be limited to $0.3 million per year.
F. Construction Program
WMECO currently forecasts construction expenditures of $112.6 million
for the years 2000-2004, including $24.2 million for 2000. WMECO
estimates that nuclear fuel requirements, including nuclear fuel
financed through the NBFT, will be $30.8 million for the years 2000-
2003, including $10.7 million for 2000.
G. Long-Term Contractual Arrangements
Yankee Companies: The NU system companies relied on VYNPC for 1.5
percent of their capacity under long-term contracts. Under the terms
of its agreement, WMECO paid its ownership (or entitlement) shares of
costs, which included depreciation, operation and maintenance (O&M)
expenses, taxes, the estimated cost of decommissioning, and a return
on invested capital. These costs were recorded as purchased-power
expenses and recovered through WMECO's rates. WMECO's cost of purchases
under contracts with VYNPC amounted to $4.7 million in 1999, $4.4
million in 1998 and $3.9 million in 1997. VYNPC has agreed to sell its
nuclear unit. Upon completion of the sale, this long-term contract will
be terminated.
Nonutility Generators (NUGs): WMECO has entered into various
arrangements for the purchase of capacity and energy from NUGs. For
the years ended December 31, 1999 and 1998, 13 percent and for the
year ended December 31, 1997, 14 percent, of NU's system electricity
requirements were met by NUGs. WMECO's total cost of purchases under
these arrangements amounted to $28.2 million in 1999, $29.9 million in
1998 and $31.2 million in 1997. The company is in the process of
renegotiating the terms of these contracts through either a contract
buydown or buyout. The company expects any payments to the NUGs as a
result of these renegotiations to be recovered from the company's
customers.
Hydro-Quebec: Along with other New England utilities, WMECO has entered
into an agreement 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 expenses and capital costs of
those facilities.
Estimated Annual Costs: The estimated annual costs of WMECO's
significant long-term contractual arrangements, absent the effects of
any contract terminations or buydowns are as follows:
------------------------------------------------------------------------
2000 2001 2002 2003 2004
------------------------------------------------------------------------
(Millions of Dollars)
VYNPC................. $ 4.7 $ 4.8 $ 4.8 $ 4.8 $ 4.6
NUGs.................. 28.8 29.5 30.4 31.2 31.9
Hydro-Quebec.......... 3.6 3.5 3.4 3.3 3.2
------------------------------------------------------------------------
H. New England Power Pool (NEPOOL) Generation Pricing
Disputes with respect to interpretation and implementation of the NEPOOL
market rules have arisen with respect to various competitive product
markets. In certain cases, WMECO stands to gain as a result of
resolution of such disputes. In other cases, WMECO could incur
additional costs as the result of resolution of the disputes. The
various disputes are in various stages of resolution through
alternative dispute resolution and regulatory review. It is too early
to tell the level of potential gain or loss that may result upon
resolution of these issues.
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:
Supplemental Executive Retirement Plan (SERP) Investments: WMECO's
portion of the investments held for the benefit of the SERP are
recorded at fair market value. These investments having a cost basis
of $0.1 million held for benefit of the SERP were recorded at their
fair market values at December 31, 1999 and 1998, of $0.4 million.
Nuclear decommissioning trusts: WMECO's portion of the investments held
in the NU system companies' nuclear decommissioning trusts were marked-
to-market by $35.4 million as of December 31, 1999, and $27.8 million as
of December 31, 1998, with corresponding offsets to the accumulated
provision for depreciation. The amounts adjusted in 1999 and 1998
represent cumulative net unrealized gains. The cumulative gross
unrealized holding losses were immaterial for both 1999 and 1998.
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 amounts of WMECO's financial instruments and the estimated
fair values are as follows:
------------------------------------------------------------------------
At December 31, 1999
------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
------------------------------------------------------------------------
Preferred stock not subject
to mandatory redemption................. $ 20.0 $ 19.1
Preferred stock subject to
mandatory redemption.................... 18.0 18.0
Long-term debt -
First mortgage bonds.................... 194.2 196.3
Other long-term debt.................... 96.8 89.9
------------------------------------------------------------------------
------------------------------------------------------------------------
At December 31, 1998
------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
------------------------------------------------------------------------
Preferred stock not subject
to mandatory redemption................. $ 20.0 $ 19.8
Preferred stock subject to
mandatory redemption.................... 19.5 19.8
Long-term debt -
First mortgage bonds.................... 295.0 297.2
Other long-term debt...................... 95.2 95.4
------------------------------------------------------------------------
13. OTHER COMPREHENSIVE INCOME
The accumulated balance for each other comprehensive income item is as
follows:
---------------------------------------------------------------------------
Current
December 31, Period December 31,
1998 Change 1999
---------------------------------------------------------------------------
(Thousands of Dollars)
---------------------------------------------------------------------------
Unrealized gains on securities.... $183 $10 $193
Minimum pension liability
adjustments...................... (33) - (33)
---------------------------------------------------------------------------
Accumulated other
comprehensive income............ $150 $10 $160
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Current
December 31, Period December 31,
1997 Change 1998
---------------------------------------------------------------------------
(Thousands of Dollars)
---------------------------------------------------------------------------
Unrealized gains on securities.... $ - $183 $183
Minimum pension liability
adjustments...................... - (33) (33)
---------------------------------------------------------------------------
Accumulated other
comprehensive income............ $ - $150 $150
--------------------------------------------------------------------------
The changes in the components of other comprehensive income are reported
net of the following income tax effects:
---------------------------------------------------------------------------
(Thousands of Dollars) 1999 1998 1997
---------------------------------------------------------------------------
Unrealized gains on securities....... $(7) $(117) $ -
Minimum pension liability
adjustments........................ - 21 -
---------------------------------------------------------------------------
Other comprehensive income........... $(7) $ (96) $ -
---------------------------------------------------------------------------
14. SEGMENT INFORMATION
Effective January 1, 1999, the NU system companies, including WMECO,
adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The NU system is organized between regulated
utilities and unregulated energy services. WMECO is included in the
regulated utilities segment of the NU system and has no other reportable
segments.
15. MERGER AGREEMENT WITH CON EDISON
On October 13, 1999, NU and Con Edison announced that they have agreed to
a merger to combine the two companies. The shareholders of NU will receive
$25 per share in a combination of cash and Con Edison common stock.
NU shareholders also have the right to receive an additional $1 per share
if a definitive agreement to sell its interests (other than that now held
by PSNH) in Millstone 2 and 3 is entered into and recommended by the
Utility Operations and Management Unit of the DPUC on or prior to the later
of December 31, 2000, or the closing of the merger. Further, the value of
the amount of cash or common stock to be received by NU shareholders is
subject to increase by an amount of $0.0034 per share per day for each day
that the transaction does not close after August 5, 2000.
Upon completion of the merger, NU will become a wholly owned subsidiary of
Con Edison. The purchase is subject to the approval of the shareholders of
both companies and several regulatory agencies. The companies anticipate
that these regulatory procedures can be completed by July 2000.
<TABLE>
<CAPTION>
Western Massachusetts Electric Company and Subsidiary
- -----------------------------------------------------------------------------------------------------------
SELECTED CONSOLIDATED FINANCIAL DATA 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Operating Revenues..................... $ 414,231 $ 393,322 $ 426,447 $ 421,337 $ 420,434
Operating Income....................... 41,741 19,854 251 33,190 63,064
Net Income/(Loss)...................... 2,887 (9,579) (27,460) 11,089 39,133
Cash Dividends on Common Stock......... - - 15,004 16,494 30,223
Total Assets........................... 1,253,604 1,287,682 1,179,128 1,191,915 1,142,346
Long-Term Debt (a)..................... 290,279 389,314 396,649 349,442 347,470
Preferred Stock Not Subject to
Mandatory Redemption................. 20,000 20,000 20,000 20,000 53,500
Preferred Stock Subject to
Mandatory Redemption (a)............. 18,000 19,500 21,000 21,000 24,000
Obligations Under Capital Leases (a)... 29,972 34,093 32,887 32,234 36,011
- -----------------------------------------------------------------------------------------------------------
CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited)
- -----------------------------------------------------------------------------------------------------------
Quarter Ended
- -----------------------------------------------------------------------------------------------------------
1999 March 31 June 30 September 30 December 31
- -----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues..................... $ 97,686 $108,829 $107,776 $ 99,940
======== ======== ======== ========
Operating Income/(Loss)................ $ 12,205 $ 8,812 $ 22,821 $ (2,097)
======== ======== ======== ========
Net Income/(Loss)...................... $ 4,852 $ 4,183 $ 11,368 $(17,516)
======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------
1998
- -----------------------------------------------------------------------------------------------------------
Operating Revenues..................... $107,189 $ 90,649 $ 93,839 $101,645
======== ======== ======== ========
Operating Income....................... $ 7,838 $ 6,614 $ 4,301 $ 1,101
======== ======== ======== ========
Net Income/(Loss)...................... $ 1,367 $ (738) $ (3,546) $ (6,662)
======== ======== ======== ========
(a) Includes portion due within one year.
</TABLE>
Western Massachusetts Electric Company and Subsidiary
- -------------------------------------------------------------------------------
CONSOLIDATED STATISTICS (Unaudited)
- -------------------------------------------------------------------------------
Average
Gross Electric Annual
Utility Plant Use Per
December 31, kWh Residential Electric
(Thousands of Sales Customer Customers Employees
Dollars) (Millions) (kWh) (Average) December 31,
- -------------------------------------------------------------------------------
1999 $1,216,015 4,654 7,423 198,012 482
1998 1,256,046 4,091 6,979 196,339 533
1997 1,334,233 4,300 7,121 195,324 507
1996 1,303,361 4,626 7,335 194,705 497
1995 1,285,269 4,846 7,105 (a) 193,964 533
(a) Effective January 1, 1996, the amounts shown reflect billed and unbilled
sales. The 1995 amounts have been restated to reflect this change.
1999 Annual Report
North Atlantic Energy Corporation
Index
Contents Page
- -------- ----
Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 1
Report of Independent Public Accountants.......................... 8-9
Statements of Income.............................................. 11
Balance Sheets.................................................... 12-13
Statements of Common Stockholder's Equity......................... 14
Statements of Cash Flows.......................................... 15
Notes to Financial Statements..................................... 16
Selected Financial Data........................................... 30
Quarterly Financial Data (Unaudited).............................. 30
Statistics (Unaudited)............................................ 30
Preferred Stockholder and Bondholder Information.................. Back Cover
North Atlantic Energy Corporation
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
Overview
North Atlantic Energy Corporation, (NAEC or the company), is a wholly owned
operating subsidiary of Northeast Utilities (NU) and is part of the Northeast
Utilities system (NU system). Public Service Company of New Hampshire (PSNH),
is another wholly owned subsidiary of NU. PSNH is obligated to purchase the
capacity and output from NAEC's 35.98 percent joint ownership interest in the
Seabrook Station (Seabrook) nuclear unit under the terms of two life-of-unit,
full cost recovery contracts (Seabrook Power Contracts).
The company's only assets are Seabrook and other Seabrook-related assets and
its only source of revenues are the Seabrook Power Contracts. PSNH's
obligations under the Seabrook Power Contracts are solely its own and have not
been guaranteed by NU. The Seabrook Power Contracts contain no provisions
entitling PSNH to terminate its obligations. If, however, PSNH were to fail
to perform its obligations under the Seabrook Power Contracts, the company
would be required to find other purchasers for Seabrook's power.
During 1999, NU made significant progress toward resolving restructuring issues
in the state of New Hampshire by negotiating a global restructuring settlement
that is still subject to regulatory approval. The "Agreement to Settle PSNH
Restructuring" (Settlement Agreement), among other things, requires PSNH to
sell its generation assets and certain power contracts, including PSNH's
current purchased-power contract with NAEC for the output from Seabrook. If
the Settlement Agreement is approved and implemented, NAEC and The Connecticut
Light and Power Company (CL&P), another NU affiliate which has a 4.06 percent
ownership interest in Seabrook, will sell their investments in Seabrook.
In 1999, NAEC's revenues increased to $287.4 million, up 3.9 percent from
revenues of $276.7 million in 1998. In 1999, NAEC had net income of $29.6
million, compared to $29.5 million in 1998.
Mergers
In 1998 and 1999, NU management concluded that the pace of deregulation was
accelerating throughout the northeastern United States and that shareholders
would benefit from NU not only remaining a major provider of electric
transmission and distribution service, but also becoming an unregulated
marketer of both electricity and natural gas. NU management also concluded
that as a result of the changes occurring in the highly competitive electric
utility industry, increased size would be crucial to achieve its objective
of being a leading provider of energy products and services in the Northeast.
On October 13, 1999, NU announced an agreement to merge with Consolidated
Edison, Inc. (Con Edison), a financially stronger utility based in New York.
The merger will create the nation's largest electric distribution system with
more than 5 million customers and one of the 15 largest natural gas
distribution systems with 1.4 million customers.
NU and Con Edison filed with various state and federal regulatory bodies in
January 2000 to secure approval of the merger. The two companies expect these
regulatory proceedings can be completed by the end of July 2000.
Also in 1999, NU management concluded that the NU system would be stronger and
customers could be better served if NU reentered the natural gas distribution
business that it had exited in 1989 and examined several potential businesses
in New England. By adding gas to NU's energy mix, NU will be able to broaden
its services to its existing customers and will have additional opportunities
for long-term growth. In June 1999, NU announced an agreement to merge with
Yankee Energy System, Inc. (Yankee). The merger will return to NU,
Connecticut's largest natural gas distribution system, as well as several
unregulated businesses involved in energy services, collections and other
areas. The Yankee merger received Yankee shareholder approval in October 1999,
final Connecticut Department of Public Utility Control approval in December
1999 and Securities and Exchange Commission (SEC) approval in January 2000.
The merger closed on March 1, 2000.
Liquidity
During 1999, net cash flows provided by operations were $181.4 million,
compared to $128.7 million in 1998 and $55.6 million in 1997. The increase in
1999 was primarily due to a decrease in tax payments.
Net cash flows used in financing activities were $130 million in 1999,
compared to $75 million in 1998 and $37.6 million in 1997. This included
$70 million to retire long-term debt, compared to $20 million paid in 1998 and
1997. Cash dividends on common shares paid in 1999 were $60 million, compared
to $45 million in 1998 and $25 million in 1997.
Including investments made in the NU System Money Pool, construction
expenditures and investments in nuclear decommissioning trusts, net cash flows
used in investing activities were $51.5 million in 1999, compared to $53.7
million in 1998 and $18.4 million in 1997.
Restructuring
In August 1999, NU, PSNH and the state of New Hampshire signed the Settlement
Agreement which, once approved and implemented, will resolve a number of
pending regulatory and court proceedings related to PSNH. The Settlement
Agreement is awaiting approval of the New Hampshire Public Utilities Commission
and is subject to legislative approval for the issuance of rate reduction bonds
(securitization). Some of the key components of the agreement for PSNH include
an after-tax write-off of $225 million of stranded costs by PSNH; the recovery
of the remaining stranded costs; the securitization of $725 million of approved
stranded costs; a reduction in rates of an average of 18.3 percent; the opening
of the New Hampshire electricity market to competition; and the sale of
generation assets and wholesale power entitlements with transition service
being available to customers for three years.
Upon the approval and implementation of the Settlement Agreement, NAEC and
PSNH will restructure the Seabrook Power Contracts to provide for the buydown
of the value of the Seabrook asset to $100 million. NAEC will utilize the
restructuring payments it receives from PSNH to significantly reduce its
capitalization. Subsequent to the contract buydown, NAEC will continue to
bill PSNH for recovery of the remaining Seabrook cost of $100 million.
NAEC's return on equity will be lowered to 7 percent. The Settlement
Agreement also requires NAEC to sell via public auction its share of Seabrook,
with the sale to occur no later than December 31, 2003. Upon a successful
sale of NAEC's share of Seabrook, the existing Seabrook Power Contracts with
PSNH and NAEC will be terminated. For further information regarding
commitments and contingencies related to restructuring, see Note 7A,
"Commitments and Contingencies - Restructuring," to the financial statements.
Nuclear Generation
Seabrook
Seabrook achieved an annual capacity factor of 86.4 percent in 1999. However,
since returning to service on May 13, 1999, after a 48-day refueling and
maintenance outage, Seabrook has achieved a 99 percent capacity factor through
December 31, 1999.
NAEC anticipates auctioning its 35.98 percent share of Seabrook, with the 4.06
percent owned by its affiliate, CL&P, after approval of the Settlement
Agreement.
Nuclear Decommissioning
The staff of the SEC has questioned certain of the current accounting practices
of the electric utility industry regarding the recognition, measurement and
classification of decommissioning costs for nuclear units in their financial
statements.
Currently, the Financial Accounting Standards Board plans to review the
accounting for obligations associated with the retirement of long-lived assets,
including the decommissioning of nuclear units. If current accounting
practices for nuclear decommissioning change, the annual provision for
decommissioning could increase relative to 1999, and the estimated cost for
decommissioning could be recorded as a liability with recognition of an
increase in the cost of the related nuclear unit. However, management does
not believe that such a change will have a material impact on NAEC's
financial statements.
Spent Nuclear Fuel Disposal Costs
The United States Department of Energy (DOE) originally was scheduled to begin
accepting delivery of spent fuel in 1998. However, delays in confirming the
suitability of a permanent storage site continually have postponed plans for
the DOE's long-term storage and disposal site. Extended delays or a default
by the DOE could lead to consideration of costly alternatives. NAEC has the
primary responsibility for the interim storage of its spent nuclear fuel.
Seabrook is expected to have spent fuel storage capacity until at least 2010.
Meeting spent fuel storage requirements beyond this period could require new
and separate storage facilities. For further information regarding spent
nuclear fuel disposal costs, see Note 7C, "Commitments and Contingencies -
Spent Nuclear Fuel Disposal Costs," to the financial statements.
Market Risk and Risk Management Instruments
NAEC uses swaps to manage its market risk exposures associated with changes in
variable interest rates. NAEC uses these instruments to reduce risk by
essentially creating offsetting market exposures. Based on the derivative
instruments which are currently being utilized by NAEC to hedge some of its
interest rate risks, there may be an impact on earnings upon adoption of
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which management has not
estimated at this time.
Interest Rate Risk Management Instruments
NAEC holds variable-rate, long-term debt, exposing the company to interest
rate risk. In order to hedge some of this risk, interest rate risk management
instruments have been entered into on NAEC's $200 million variable-rate note.
A 10 percent increase in market interest rates above the 1999 weighted average
variable rate during 2000 would result in an immaterial impact on interest
expense.
Other Matters
Environmental Matters
NAEC is subject to environmental laws and regulations structured to mitigate
or remove the effect of past operations and to improve or maintain the quality
of the environment. For further information regarding environmental matters,
see Note 7B, "Commitments and Contingencies - Environmental Matters," to the
financial statements.
Other Commitments and Contingencies
NAEC is subject to other commitments and contingencies primarily relating to
nuclear insurance contingencies, its Seabrook construction program and the
New England Power Pool generation pricing. For further information regarding
these other commitments and contingencies, see Note 7, "Commitments and
Contingencies," to the financial statements.
Year 2000 Issues
The transition into the year 2000 was a success for the NU system and NAEC.
Its mission to provide safe, reliable energy to its customers and to ensure
continued operability of critical business functions was not affected by any
year 2000 related issues.
The projected total cost of the year 2000 program is estimated at $21 million.
The total cost to date was funded through operating cash flows. The NU system
has incurred and expensed $20 million related to year 2000 readiness efforts.
Forward Looking Statements
This discussion and analysis includes forward looking statements, which are
statements of future expectations and not facts. Words such as estimates,
expects, anticipates, intends, plans, and similar expressions identify forward
looking statements. Actual results or outcomes could differ materially as a
result of further actions by state and federal regulatory bodies, competition
and industry restructuring, changes in economic conditions, changes in
historical weather patterns, changes in laws, developments in legal or public
policy doctrines, technological developments, and other presently unknown or
unforeseen factors.
RESULTS OF OPERATIONS
The components of significant income statement variances for the past two
years are provided in the table below.
Income Statement Variances
Millions of Dollars
1999 over/(under) 1998 1998 over/(under) 1997
---------------------- ----------------------
Amount Percent Amount Percent
------ ------- ------ -------
Operating Revenues $11 4% $ 84 44%
Operating Expenses:
Fuel 2 17 - -
Other operation and maintenance 10 19 (12) (20)
Depreciation 2 9 - -
Amortization of regulatory
assets, net - - 79 (a)
Federal and state income taxes (6) (28) 11 (a)
Taxes other than income
taxes 2 17 (1) (8)
Operating Income (4) (8) (3) (5)
Deferred Seabrook return
- other funds (2) (34) - -
Other, net 1 12 (8) (a)
Interest charges, net (1) (3) (1) (2)
Net Income - - - -
(a) Percent greater than 100.
Operating Revenues
Operating revenues represent amounts billed to PSNH under the terms of the
Seabrook Power Contracts and for decommissioning expense.
Operating revenues increased in 1999, primarily due to the higher operating
expenses related to the Seabrook refueling and maintenance outage in 1999.
Operating revenues increased in 1998, primarily due to amounts billed to PSNH
for the amortization of the Seabrook deferred return which began in December
1997.
Fuel
Fuel expense increased in 1999, primarily due to a higher fuel amortization
rate since the Seabrook refueling outage.
Other Operation and Maintenance
Other operation and maintenance (O&M) expenses increased in 1999, primarily
due to higher costs relating to the Seabrook refueling outage.
Other O&M expenses decreased in 1998, primarily due to lower costs associated
with Seabrook outages in 1998.
Depreciation
Depreciation increased in 1999 due to shorter useful lives for 1999 plant
asset additions.
Federal and State Income Taxes
Federal and state income taxes decreased in 1999, primarily due to lower
taxable income.
Federal and state income taxes increased in 1998, primarily due to higher
taxable income.
Taxes Other Than Income Taxes
Taxes other than income taxes increased in 1999, as the result of the New
Hampshire change to a statewide utility property tax in place of the nuclear
station tax.
The change in taxes other than income taxes in 1998 was not significant.
Deferred Seabrook Return - Other Funds
The deferred Seabrook return income decreased in 1999 as NAEC continues to
recover the Seabrook deferred return, reducing the outstanding balance.
Other, Net
Other, net increased in 1999, primarily due to higher interest income on
investments in the NU System Money Pool.
Other, net decreased in 1998, primarily due to the amortization of the taxes
associated with the Seabrook phase-in costs, which began in December 1997.
Interest Charges, Net
Interest charges, net decreased in 1999 and 1998, primarily due to lower
long-term debt outstanding.
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, 1999 and 1998, 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, 1999. 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, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, 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 7A, Public
Service Company of New Hampshire (PSNH), Northeast Utilities, and the state
of New Hampshire are involved in litigation regarding the proposed
implementation of restructuring legislation. PSNH is the sole customer of
the company. The restructuring legislation as currently contemplated would
require the company to discontinue the application of Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation." The discontinuance would result in the company being in
technical default under its current financial covenants, which would, if
not waived or renegotiated, give rise to the rights of lenders to accelerate
the payment of approximately $405 million of the company's indebtedness and
approximately $516 million of PSNH's indebtedness. Although a settlement
agreement on restructuring has been reached among the company, the state of
New Hampshire, and others, implementation is subject to significant
contingencies, including New Hampshire legislative, federal and state
regulatory, and financial lender approvals. 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 the outcome of this uncertainty.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 25, 2000
NORTH ATLANTIC ENERGY CORPORATION
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999 1998 1997
- ------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues................................. $ 287,369 $ 276,685 $ 192,381
---------- ---------- ----------
Operating Expenses:
Operation -
Fuel.......................................... 15,596 13,305 13,405
Other......................................... 41,727 36,763 39,091
Maintenance...................................... 19,030 14,120 24,146
Depreciation..................................... 27,576 25,381 25,170
Amortization of regulatory assets, net........... 85,488 85,464 6,270
Federal and state income taxes................... 34,854 36,194 14,845
Taxes other than income taxes.................... 13,370 11,401 12,393
---------- ---------- ----------
Total operating expenses................... 237,641 222,628 135,320
---------- ---------- ----------
Operating Income................................... 49,728 54,057 57,061
---------- ---------- ----------
Other Income:
Deferred Seabrook return - other funds........... 4,417 6,731 7,205
Other, net....................................... (7,432) (8,435) (747)
Income taxes..................................... 19,131 14,378 4,394
---------- ---------- ----------
Other income, net.......................... 16,116 12,674 10,852
---------- ---------- ----------
Income before interest charges............. 65,844 66,731 67,913
---------- ---------- ----------
Interest Charges:
Interest on long-term debt....................... 45,297 50,082 50,722
Other interest................................... (542) (676) 649
Deferred Seabrook return - borrowed funds........ (8,467) (12,169) (13,411)
---------- ---------- ----------
Interest charges, net...................... 36,288 37,237 37,960
---------- ---------- ----------
Net Income......................................... $ 29,556 $ 29,494 $ 29,953
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
NORTH ATLANTIC ENERGY CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AT DECEMBER 31, 1999 1998
- -----------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at original cost:
Electric................................................ $ 736,472 $ 753,379
Less: Accumulated provision for depreciation......... 196,694 165,114
------------- -------------
539,778 588,265
Construction work in progress........................... 10,274 7,090
Nuclear fuel, net....................................... 21,149 23,644
------------- -------------
Total net utility plant............................. 571,201 618,999
------------- -------------
Other Property and Investments:
Nuclear decommissioning trusts, at market............... 43,667 35,210
------------- -------------
43,667 35,210
------------- -------------
Current Assets:
Cash.................................................... - 71
Special deposits........................................ 7 11,198
Notes receivable from affiliated companies.............. 56,400 30,350
Accounts receivable from affiliated companies........... 22,840 23,804
Taxes receivable........................................ 11,717 7,887
Materials and supplies, at average cost................. 13,088 12,812
Prepayments and other................................... 1,766 2,198
------------- -------------
105,818 88,320
------------- -------------
Deferred Charges:
Regulatory assets....................................... 129,641 199,882
Unamortized debt expense................................ 1,780 2,742
------------- -------------
131,421 202,624
------------- -------------
Total Assets........................................ $ 852,107 $ 945,153
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
NORTH ATLANTIC ENERGY CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AT DECEMBER 31, 1999 1998
- -----------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock, $1 par value - 1,000 shares
authorized and outstanding in 1999 and 1998............ $ 1 $ 1
Capital surplus, paid in................................ 160,999 160,999
Retained earnings....................................... 12,752 43,196
------------- -------------
Total common stockholder's equity.............. 173,752 204,196
Long-term debt.......................................... 135,000 405,000
------------- -------------
Total capitalization........................... 308,752 609,196
------------- -------------
Current Liabilities:
Long-term debt - current portion........................ 270,000 70,000
Accounts payable........................................ 11,694 5,924
Accounts payable to affiliated companies................ 806 867
Accrued taxes........................................... - 710
Accrued interest........................................ 2,340 2,987
Other................................................... 272 285
------------- -------------
285,112 80,773
------------- -------------
Deferred Credits and Other Long-term Liabilities:
Accumulated deferred income taxes....................... 222,601 209,634
Deferred obligation to affiliated company............... 12,984 22,728
Other................................................... 22,658 22,822
------------- -------------
258,243 255,184
------------- -------------
Total Capitalization and Liabilities........... $ 852,107 $ 945,153
============= =============
</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, 1997 ............. $ 1 $ 160,999 $ 53,749 $ 214,749
Net income for 1997................. 29,953 29,953
Cash dividends on common stock...... (25,000) (25,000)
---------- ---------- --------- ----------
Balance at December 31, 1997............ 1 160,999 58,702 219,702
Net income for 1998................. 29,494 29,494
Cash dividends on common stock...... (45,000) (45,000)
---------- ---------- --------- ----------
Balance at December 31, 1998............ 1 160,999 43,196 204,196
Net income for 1999................. 29,556 29,556
Cash dividends on common stock...... (60,000) (60,000)
---------- ---------- --------- ----------
Balance at December 31, 1999............ $ 1 $ 160,999 $ 12,752 $ 173,752
========== ========== ========= ==========
</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
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
For the Years Ended December 31,
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars) 1999 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net income.................................................. $ 29,556 $ 29,494 $ 29,953
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation.............................................. 27,576 25,381 25,170
Amortization of nuclear fuel.............................. 12,642 10,453 10,705
Deferred income taxes and investment tax credits, net..... 452 6,010 22,649
Deferred return - Seabrook................................ (12,884) (18,900) (20,616)
Amortization of regulatory assets, net.................... 85,488 85,464 6,270
Deferred obligation to affiliated company................. (9,744) (9,744) (812)
Other sources of cash..................................... 35,486 18,214 3,370
Changes in working capital:
Receivables............................................... 964 1,891 (9,273)
Materials and supplies.................................... (276) 191 90
Accounts payable.......................................... 5,709 (7,161) (11,835)
Accrued taxes............................................. (710) 710 (3,486)
Other working capital (excludes cash)..................... 7,133 (13,258) 3,429
----------- ----------- -----------
Net cash flows provided by operating activities............... 181,392 128,745 55,614
----------- ----------- -----------
Financing Activities:
Net (decrease)/increase in short-term debt.................. - (9,950) 7,450
Reacquisitions and retirements of long-term debt............ (70,000) (20,000) (20,000)
Cash dividends on common stock.............................. (60,000) (45,000) (25,000)
----------- ----------- -----------
Net cash flows used in financing activities................... (130,000) (74,950) (37,550)
----------- ----------- -----------
Investing Activities:
Investment in plant:
Electric utility plant.................................... (7,895) (9,028) (6,606)
Nuclear fuel.............................................. (9,934) (6,474) (6,147)
----------- ----------- -----------
Net cash flows used for investments in plant.............. (17,829) (15,502) (12,753)
Investment in NU system Money Pool.......................... (26,050) (30,350) -
Investment in nuclear decommissioning trusts................ (7,584) (7,885) (5,597)
----------- ----------- -----------
Net cash flows used in investing activities................... (51,463) (53,737) (18,350)
----------- ----------- -----------
Net (decrease)/increase in cash for the period................ (71) 58 (286)
Cash - beginning of period.................................... 71 13 299
----------- ----------- -----------
Cash - end of period.......................................... $ - $ 71 $ 13
=========== =========== ===========
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest, net of amounts capitalized........................ $ 38,042 $ 42,498 $ 45,297
=========== =========== ===========
Income taxes................................................ $ 3,000 $ 22,136 $ -
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. About North Atlantic Energy Corporation
North Atlantic Energy Corporation (NAEC or the company) along with 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 companies
comprising the Northeast Utilities system (NU system) and are wholly
owned by Northeast Utilities (NU). The NU system serves in excess of
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. The
NU system furnishes franchised retail electric service in New Hampshire,
Connecticut and western Massachusetts through PSNH, CL&P and WMECO.
NAEC owns 35.98 percent of the Seabrook Station (Seabrook) nuclear
unit and sells all of its entitlement to the capacity and output of
Seabrook to PSNH under the terms of two life-of-unit, full cost recovery
contracts (Seabrook Power Contracts). HWP, also is engaged in the
production and distribution of electric power.
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 the NU system, including NAEC, is subject to provisions
of the 1935 Act. Arrangements among the NU 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/or applicable state regulatory commissions.
Several wholly owned subsidiaries of NU provide support services for
the NU 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 NU system companies. Northeast Nuclear Energy
Company acts as agent for the NU system companies and other New England
utilities in operating the Millstone nuclear units. North Atlantic
Energy Service Corporation (NAESCO) has operational responsibility for
Seabrook.
On October 13, 1999, NU and Consolidated Edison, Inc. (Con Edison)
announced that they have agreed to a merger to combine the two
companies. For further information, see Note 11, "Merger Agreement
with Con Edison."
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. New Accounting Standards
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative
instruments and hedging activities. This statement will require
derivative instruments utilized by NAEC to be recognized as assets or
liabilities at fair value.
In June 1999, the FASB delayed the adoption date of SFAS No. 133 until
January 1, 2001.
Based on the derivative instruments which currently are being utilized
by NAEC to hedge some of its interest rate risk there may be an impact
on earnings upon adoption of SFAS No. 133 which management has not
estimated at this time.
D. Jointly Owned Electric Utility Plant
Seabrook: NAEC has a 35.98 percent ownership interest in Seabrook,
a 1,148 megawatt nuclear generating unit. NAEC sells all of its share
of the power generated by Seabrook to PSNH under the Seabrook Power
Contracts. NAEC expects to auction its investment in Seabrook upon the
resolution of the restructuring issues in the state of New Hampshire.
NAEC's share of Seabrook's plant-in-service as of December 31, 1999 and
1998, was $728 million and $721.2 million, respectively, and the
accumulated provision for depreciation was $153 million and $130.7
million, respectively.
E. 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 costs of closure and
removal of nonnuclear facilities are accrued over the life of the
plant as a component of depreciation. The depreciation rates for the
several classes of electric plant-in-service are equivalent to a
composite rate of 3.8 percent in 1999 and 3.5 percent in 1998 and 1997.
F. Seabrook Power Contracts
NAEC and PSNH have entered into two power contracts that obligate PSNH
to purchase NAEC's share of the capacity and output of Seabrook for the
term of Seabrook's operating license. Under the terms of the power
contracts, PSNH is obligated to pay NAEC's cost of service during this
period, regardless of whether Seabrook is operating. NAEC's cost of
service includes all of its Seabrook-related costs, including operation
and maintenance 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 at $700 million. As prescribed by the 1989 rate
agreement between NU, PSNH, and 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. From June 5, 1992
(the date NU acquired PSNH and NAEC acquired Seabrook from PSNH - the
Acquisition Date) through November 1997, NAEC recorded a $203.9 million
deferred return on its investment in Seabrook. At November 30, 1997,
NAEC's utility plant included $84.1 million of the deferred return that
was transferred as part of the Seabrook plant assets to NAEC on the
Acquisition Date.
Beginning on December 1, 1997, the deferred return, including the
portion transferred to NAEC, began to be billed through the Seabrook
Power Contracts to PSNH. The deferred return will be fully recovered
from customers by May 2001. NAEC is depreciating its initial investment
over the term of Seabrook'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.
Under the current Seabrook Power Contracts, if Seabrook is shut down
prior to the expiration of its operating license, PSNH will be
unconditionally required to pay NAEC termination costs for 39 years,
less the period during which Seabrook has operated. These termination
costs will reimburse NAEC for its share of Seabrook 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. In addition, PSNH will pay NAEC a
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).
In August 1999, NU, PSNH and the state of New Hampshire signed the
"Agreement to Settle PSNH Restructuring" (Settlement Agreement) which,
once approved and implemented, will resolve a number of pending
regulatory and court proceedings related to PSNH. The Settlement
Agreement is awaiting approval of the New Hampshire Public Utilities
Commission (NHPUC) and is subject to legislative approval for the
issuance of rate reduction bonds (securitization). The Settlement
Agreement also requires NAEC to sell via public auction its share of
Seabrook, with the sale to occur no later than December 31, 2003.
Upon the approval and implementation of the Settlement Agreement,
NAEC and PSNH will restructure the power contracts to provide for the
buydown of the value of the Seabrook asset to $100 million. Upon a
successful sale of NAEC's share of Seabrook, the existing Seabrook Power
Contracts between NAEC and PSNH will be terminated. However, PSNH will
continue to be responsible for funding NAEC's ownership share of
Seabrook's decommissioning liability.
G. Regulatory Accounting and Assets
The accounting policies of NAEC and the accompanying financial
statements conform to generally accepted accounting principles
applicable to rate-regulated enterprises and reflect the effects of
the rate-making process in accordance with SFAS No. 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 NAEC's operations were no longer subject to the
provisions of SFAS No. 71, the company would be required to write off
all of its related regulatory assets and liabilities unless there is a
formal transition plan that provides for the recovery, through
established rates, for the collection of these costs through a portion
of the business, which would remain regulated on a cost-of-service
basis. At the time of transition, NAEC would be required to determine
any impairment to the carrying costs of deregulated plant and
inventory assets.
Based on a current evaluation of the various factors and conditions
that are expected to impact future cost recovery, management continues
to believe it is probable that NAEC will recover its investments in
long-lived assets, including regulatory assets. In addition, all
material regulatory assets are earning a return. The components of
NAEC's regulatory assets are as follows:
------------------------------------------------------------------------
At December 31, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
Deferred costs-Seabrook..................... $ 88.5 $147.1
Income taxes, net........................... 35.6 39.5
Recoverable energy costs.................... 1.7 1.9
Unamortized loss on reacquired debt......... 3.8 11.4
------ ------
$129.6 $199.9
====== ======
------------------------------------------------------------------------
At this time, management continues to believe that the application of
SFAS No. 71 remains appropriate. If the Settlement Agreement, as
filed, is approved by the NHPUC and implemented, then NAEC will
discontinue the application of SFAS No. 71. At that time, PSNH will
make a payment to NAEC to buydown the Seabrook Power Contracts. NAEC
will reduce the Seabrook asset to $100 million and will write off any
remaining regulatory assets.
H. 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 rate-making treatment of the
applicable regulatory commissions.
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, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
Accelerated depreciation and
other plant-related differences.......... $205.1 $182.2
Regulatory assets - income tax gross up.... 12.2 13.6
Other...................................... 5.3 13.8
------ ------
$222.6 $209.6
====== ======
------------------------------------------------------------------------
I. 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 (DOE) (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, 1999 and 1998, NAEC's
total D&D Assessment deferral was $1.7 million and $1.9 million,
respectively.
J. Deferred Cost - Seabrook
Under the Rate Agreement, the plant costs of Seabrook were phased into
rates over a 7-year period beginning May 15, 1991. Total costs deferred
under the phase-in plan were $288 million. Total deferred costs
outstanding at December 31, 1999 and 1998 were $88.5 million and $147.1
million, respectively. This plan is accounted for in compliance with
SFAS No. 92, "Regulated Enterprises - Accounting for Phase-In Plans."
The costs will be fully recovered from PSNH's customers by May 2001.
K. Interest Rate Risk Management Instruments
NAEC utilizes market risk management instruments to hedge well-defined
risks associated with variable interest rates. To qualify for hedge
treatment, the underlying hedged item must expose the company to risks
associated with market fluctuations and the market risk management
instrument used must be designated as a hedge and must reduce the
company's exposure to market fluctuations throughout the period.
Amounts receivable or payable under interest rate management instruments
are accrued and offset against interest expense.
2. NUCLEAR DECOMMISSIONING AND PLANT CLOSURE COSTS
Seabrook: 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.
Under New Hampshire law, Seabrook decommissioning funding requirements are
set by the New Hampshire Nuclear Decommissioning Financing Committee
(NDFC). During April 1999, the NDFC issued an order that adjusted the
decommissioning collection period and funding levels assuming that
Seabrook's anticipated energy producing life was 25 years from the date
it went into commercial operation. Decommissioning collections are now
expected to be completed by October 2015. The cost of funding
decommissioning Seabrook is now being accrued over the estimated remaining
accelerated funding period that was ordered by the NDFC.
Upon retirement, Seabrook must be decommissioned. Current decommissioning
studies conclude that complete and immediate dismantlement as soon as
practical after retirement continues to be the most viable and economic
method of decommissioning a unit. These studies are reviewed and updated
periodically to reflect changes in decommissioning requirements, costs,
technology, and inflation. 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.
The estimated cost of decommissioning NAEC's share of Seabrook, in year
end 1999 dollars is $203.3 million. Nuclear decommissioning costs are
accrued over the expected service life of the unit and are included in
depreciation expense. Nuclear decommissioning expenses for the unit
amounted to $6.8 million in 1999, $4.7 million in 1998 and $4.5 million
in 1997. Nuclear decommissioning, as a cost of removal, is included in
the accumulated provision for depreciation.
Payments for NAEC's ownership share of the cost of decommissioning Seabrook
are paid to an independent decommissioning financing fund managed by the
state of New Hampshire. Funding of the estimated decommissioning costs
assumes escalated collections and after-tax earnings on the Seabrook
decommissioning fund of 6.5 percent.
As of December 31, 1999 and 1998, NAEC has paid $32.7 million and $25.6
million (including payments made prior to the Acquisition Date by PSNH),
into Seabrook's decommissioning financing fund. Earnings on the
decommissioning financing fund increase the decommissioning trust balance
and the accumulated reserve for depreciation. Unrealized gains and losses
associated with the decommissioning financing fund also impact the balance
of the trust and the accumulated reserve for depreciation. The fair
values of the amounts in the external decommissioning trust for NAEC were
$43.7 million and $35.2 million at December 31, 1999 and 1998,
respectively.
3. SHORT-TERM DEBT
Limits: 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. SEC authorization allowed NAEC, as of January 1,
1999, to incur short-term borrowings up to a maximum of $60 million.
Money Pool: Certain subsidiaries of NU, including NAEC, are members of the
Northeast Utilities System Money Pool (Pool). The Pool provides a more
efficient use of the cash resources of the NU 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. Borrowings based on loans
from NU parent, however, bear interest at NU parent's cost and must be
repaid based upon the terms of NU parent's original borrowing. At
December 31, 1999 and 1998, NAEC had no borrowings outstanding from
the Pool.
4. LONG-TERM DEBT
Details of long-term debt outstanding are:
------------------------------------------------------------------------
At December 31, 1999 1998
------------------------------------------------------------------------
(Millions of Dollars)
First Mortgage Bonds:
9.05% Series A, due 2002.................... $205 $275
Notes:
Variable - Rate Facility, due 2000.......... 200 200
Less amounts due within one year............ 270 70
---- ----
Long-term debt, net........................... $135 $405
==== ====
------------------------------------------------------------------------
Long-term debt maturities and cash sinking fund requirements on debt
outstanding at December 31, 1999, for the years 2000 through 2004 are
$270 million, $70 million and $65 million for years 2000 through 2002,
respectively, and no requirements for 2003 and 2004.
Essentially all utility plant of NAEC is subject to the liens of the
company's first mortgage bond indenture.
Interest rate swaps effectively fix the interest rate of NAEC's $200
million variable-rate bank note at interest rates ranging from 5.81
percent to 6.07 percent.
5. INCOME TAX EXPENSE
The components of the federal and state income tax provisions were
charged/(credited) to operations as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Current income taxes:
Federal.............................. $15.1 $15.2 $(11.9)
State................................ 0.2 0.6 (0.3)
----- ----- ------
Total current...................... 15.3 15.8 (12.2)
----- ----- ------
Deferred income taxes, net:
Federal.............................. 0.4 4.0 21.5
State................................ - 2.0 1.1
----- ----- ------
Total deferred..................... 0.4 6.0 22.6
----- ----- ------
Total income tax expense............... $15.7 $21.8 $ 10.4
===== ===== ======
---------------------------------------------------------------------------
The components of total income tax expense/(credit) are classified
as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Income taxes charged to
operating expenses................... $ 34.8 $ 36.2 $14.8
Other income taxes..................... (19.1) (14.4) (4.4)
------ ------ -----
Total income tax expense............. $ 15.7 $ 21.8 $10.4
====== ====== =====
---------------------------------------------------------------------------
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Depreciation........................... $ 19.5 $ 21.8 $20.8
Bond redemptions....................... (2.8) (2.8) (2.4)
Seabrook deferred return............... (15.7) (14.2) 3.4
Other.................................. (0.6) 1.2 0.8
------ ------ -----
Deferred income taxes, net........... $ 0.4 $ 6.0 $22.6
====== ====== =====
---------------------------------------------------------------------------
A reconciliation between income tax expense and the expected tax expense
at 35 percent of pretax income is as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 1999 1998 1997
---------------------------------------------------------------------------
(Millions of Dollars)
Expected federal income tax............ $15.8 $18.0 $14.1
Tax effect of differences:
Amortization of regulatory assets.... 7.0 7.1 (0.3)
Depreciation......................... (3.2) 1.6 (0.5)
Deferred Seabrook return............. (1.5) (2.4) (2.5)
State income taxes,
net of federal benefit 0.1 1.7 0.5
Allocation of Parent Company's loss.. (2.1) (3.9) (0.6)
Other, net........................... (0.4) (0.3) (0.3)
----- ----- -----
Total income tax expense............... $15.7 $21.8 $10.4
===== ===== =====
---------------------------------------------------------------------------
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 to accrue a deferred
return on the unphased-in 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 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 was deferred under the consolidated
income tax rules. Beginning December 1, 1997, the gain is being amortized
into income for income tax purposes as 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 scheduled to end in May 2001.
As NAEC recovers the $33.2 million in years eight through ten of the Rate
Agreement, corresponding payments are being made to PSNH. The balance of
the deferred obligation to PSNH at December 31, 1999 and 1998, was $13
million and $22.7 million, respectively.
7. COMMITMENTS AND CONTINGENCIES
A. Restructuring
In August 1999, NU, PSNH and the state of New Hampshire signed a
Settlement Agreement intended to settle a number of pending regulatory
and court proceedings related to PSNH. Parties to the agreement
included the governor of New Hampshire, the Governor's Office of Energy
and Community Service, the New Hampshire attorney general, certain
members of the staff of the NHPUC, PSNH, and NU. The Settlement
Agreement was submitted to the NHPUC on August 2, 1999, and is awaiting
approval. If approved by the NHPUC, the Settlement Agreement would
resolve 11 NHPUC dockets and PSNH's federal lawsuit which had enjoined
the state of New Hampshire from implementing its restructuring
legislation, would require PSNH to write off $225 million after-tax of
its stranded costs and would allow for the recovery of the remaining
amount. Also, implementation of the Settlement Agreement is contingent
upon securitization. Securitization requires the initial approval
of the NHPUC and final approval from the New Hampshire Legislature via
enactment of appropriate legislation. Other approvals are also required
from various federal and state regulatory agencies and financial
lenders.
The Settlement Agreement also requires NAEC to auction its Seabrook
investment. Once NAEC's share of Seabrook is sold, the existing
Seabrook Power Contracts between NAEC and PSNH will be terminated.
However, PSNH will continue to pay NAEC's ownership share of Seabrook's
decommissioning liability.
B. Environmental Matters
The NU system, including NAESCO on behalf of NAEC, is subject to
environmental laws and regulations intended to mitigate or remove
the effect of past operations and improve or maintain the quality
of our environment. As such, the NU system and NAESCO, have an
active environmental auditing and training program and believes it
is in compliance with the current laws and regulations.
However, the normal course of operations may necessarily involve
activities and substances that expose NAEC to potential liabilities of
which management cannot determine the outcome. Additionally, management
cannot determine the outcome for liabilities that may be imposed for
past acts, even though such past acts may have been lawful at the time
they occurred. Management does not believe, however, that this will
have a material impact on NAEC's financial statements.
C. Spent Nuclear Fuel Disposal Costs
Under the Nuclear Waste Policy Act of 1982, NAEC must pay the DOE for
the disposal of spent nuclear fuel and high-level radioactive waste.
The DOE is responsible for the selection and development of repositories
for, and the disposal of, spent nuclear fuel and high-level radioactive
waste. Fees for nuclear fuel burned are billed currently to customers
and paid to the DOE on a quarterly basis.
D. Nuclear Insurance Contingencies
Insurance policies covering NAEC's ownership share of Seabrook have
been purchased for the primary cost of repair, replacement or
decontamination of utility property and certain extra costs for repair,
replacement or decontamination or premature decommissioning of utility
property.
NAEC is subject to retroactive assessments if losses under those
policies exceed the accumulated funds available to the insurer. The
maximum potential assessments against NAEC, including costs resulting
from PSNH's contracts with NAEC, with respect to losses arising during
the current policy year for the primary property insurance program and
the excess property damage policies are $2.1 million and $3.2 million,
respectively. In addition, insurance has been purchased by the NU
system in the aggregate amount of $200 million on an industry basis for
coverage of worker claims.
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 NU system, including NAEC,
could be assessed liabilities in proportion to its ownership interest
in each of its nuclear units up to $83.9 million. The NU system's
payment of this assessment would be limited to, in proportion to its
ownership interest, $10 million in any one year per nuclear unit.
In addition, if the sum of all claims and costs from any one nuclear
incident exceeds the maximum amount of financial protection, the NU
system would be subject to an additional 5 percent or $4.2 million
liability, in proportion to its ownership interest in each of its
nuclear units. Under the terms of the Seabrook Power Contracts with
NAEC, PSNH could be obligated to pay for any assessment charged to NAEC
as a cost of service. Based upon NAEC's ownership interest in Seabrook,
PSNH's maximum liability, including any additional assessments, would
be $31.3 million per incident, of which payments would be limited to
$3.6 million per year.
E. Seabrook Construction Program
NAEC currently forecasts construction expenditures for its share of
Seabrook to be $9.7 million for the years 2000-2001, including
approximately $4.6 million for 2000. In addition, NAEC estimates that
its share of Seabrook nuclear fuel requirements will be $46.3 million
for the years 2000-2003, including $14.8 million for 2000.
F. New England Power Pool (NEPOOL) Generation Pricing
Disputes with respect to interpretation and implementation of the
NEPOOL market rules have arisen with respect to various competitive
product markets. In certain cases, NAEC stands to gain as a result of
resolution of such disputes. In other cases, NAEC could incur
additional costs as the result of resolution of the disputes. The
various disputes are in various stages of resolution through alternative
dispute resolution and regulatory review. It is too early to tell the
level of potential gain or loss that may result upon resolution
of these issues.
8. MARKET RISK AND MANAGEMENT INSTRUMENTS
Interest Rate Risk Management: NAEC uses swap instruments with financial
institutions to hedge against interest rate risk associated with its $200
million variable-rate bank note. Under the agreements, NAEC exchanges
quarterly payments based on a differential between a fixed contractual
interest rate and the 3-month LIBOR rate at a given time. As of
December 31, 1999 and 1998, NAEC had outstanding agreements with a total
notional value of $200 million and mark-to-market positions of positive
$0.5 million and negative $2.3 million, respectively.
Credit Risk: These agreements have been made with various financial
institutions, each of which is rated "A3" or better by Moody's Investors
Service rating group. NAEC is exposed to credit risk on its respective
market risk management instruments if the counterparties fail to perform
their obligations. Management anticipates that the counterparties will
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 and cash equivalents: The carrying amounts approximate fair
value due to the short-term nature of cash and cash equivalents.
Nuclear decommissioning trust: The investments held in NAEC's nuclear
decommissioning fund were adjusted to market by $3.2 million as of
December 31, 1999, and by $2.3 million as of December 31, 1998, with
corresponding offsets to the accumulated provision for depreciation.
The amounts adjusted in 1999 and 1998 represent cumulative gross unrealized
holding gains. The cumulative gross unrealized holding losses were
immaterial for 1999 and 1998.
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 value.
The carrying amounts of NAEC's financial instruments and the estimated
fair values are as follows:
--------------------------------------------------------------------------
At December 31, 1999
--------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
--------------------------------------------------------------------------
First mortgage bonds....................... $205.0 $207.8
Other long-term debt....................... $200.0 $200.0
-------------------------------------------------------------------------
--------------------------------------------------------------------------
At December 31, 1998
--------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
--------------------------------------------------------------------------
First mortgage bonds....................... $275.0 $284.5
Other long-term debt....................... $200.0 $200.0
-------------------------------------------------------------------------
10. SEGMENT INFORMATION
Effective January 1, 1999, the NU system companies, including NAEC,
adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The NU system is organized between regulated
utilities and unregulated energy services. NAEC is included in the
regulated utilities segment of the NU system and has no other reportable
segments.
11. MERGER AGREEMENT WITH CON EDISON
On October 13, 1999, NU and Con Edison announced that they have agreed
to a merger to combine the two companies. The shareholders of NU will
receive $25 per share in a combination of cash and Con Edison common
stock.
NU shareholders also have the right to receive an additional $1 per share
if a definitive agreement to sell its interests (other than that now held
by PSNH) in Millstone 2 and 3 is entered into and recommended by the
Utility Operations and Management Unit of the Connecticut Department of
Public Utility Control on or prior to the later of December 31, 2000, or
the closing of the merger. Further, the value of the amount of cash or
common stock to be received by NU shareholders is subject to increase by
an amount of $0.0034 per share per day for each day that the transaction
does not close after August 5, 2000.
Upon completion of the merger, NU will become a wholly owned subsidiary of
Con Edison. The purchase is subject to the approval of the shareholders
of both companies and several regulatory agencies. The companies
anticipate that these regulatory procedures will be completed by July 2000.
North Atlantic Energy Corporation
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL DATA 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Operating Revenues..................... $287,369 $276,685 $ 192,381 $ 162,152 $ 157,183
Operating Income....................... 49,728 54,057 57,061 54,889 51,394
Net Income............................. 29,556 29,494 29,953 32,072 24,441
Cash Dividends on Common Stock......... 60,000 45,000 25,000 38,000 24,000
Total Assets........................... 852,107 945,153 1,014,639 1,017,388 1,014,649
Long-Term Debt (a)..................... 405,000 475,000 495,000 515,000 560,000
- -----------------------------------------------------------------------------------------------------------
CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited)
- -----------------------------------------------------------------------------------------------------------
Quarter Ended
- -----------------------------------------------------------------------------------------------------------
1999 March 31 June 30 September 30 December 31
- -----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues..................... $70,289 $77,203 $69,779 $70,098
======= ======= ======= =======
Operating Income....................... $12,475 $12,303 $12,122 $12,828
======= ======= ======= =======
Net Income............................. $ 6,461 $ 6,243 $ 6,442 $10,410
======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------
1998
- -----------------------------------------------------------------------------------------------------------
Operating Revenues..................... $68,169 $69,627 $69,087 $69,802
======= ======= ======= =======
Operating Income....................... $13,648 $13,365 $13,159 $13,885
======= ======= ======= =======
Net Income............................. $ 6,909 $ 8,303 $ 7,170 $ 7,112
======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------
STATISTICS (Unaudited) 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
Gross Electric Utility
Plant at December 31,
(Thousands of Dollars)............... $767,895 $784,113 $811,140 $816,446 $806,892
======== ======== ======== ======== ========
kWh Sales (Millions) for the
year ended December 31,.............. $ 3,125 $ 3,018 $ 2,859 $ 3,542 $ 3,016
======== ======== ======== ======== ========
</TABLE>
(a) Includes portion due within one year.
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000072741
<NAME> NORTHEAST UTILITIES AND SUBSIDIARIES
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,947,434
<OTHER-PROPERTY-AND-INVEST> 888,181
<TOTAL-CURRENT-ASSETS> 1,071,280
<TOTAL-DEFERRED-CHARGES> 3,781,157
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 9,688,052
<COMMON> 686,969
<CAPITAL-SURPLUS-PAID-IN> 940,726
<RETAINED-EARNINGS> 581,817
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,083,311
121,289
136,200
<LONG-TERM-DEBT-NET> 2,372,341
<SHORT-TERM-NOTES> 278,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 457,065
46,250
<CAPITAL-LEASE-OBLIGATIONS> 62,824
<LEASES-CURRENT> 118,469
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,012,303
<TOT-CAPITALIZATION-AND-LIAB> 9,688,052
<GROSS-OPERATING-REVENUE> 4,471,251
<INCOME-TAX-EXPENSE> 98,611
<OTHER-OPERATING-EXPENSES> 3,945,831
<TOTAL-OPERATING-EXPENSES> 4,126,714
<OPERATING-INCOME-LOSS> 344,537
<OTHER-INCOME-NET> (106,187)
<INCOME-BEFORE-INTEREST-EXPEN> 320,622
<TOTAL-INTEREST-EXPENSE> 263,651
<NET-INCOME> 56,971
22,755
<EARNINGS-AVAILABLE-FOR-COMM> 34,216
<COMMON-STOCK-DIVIDENDS> 13,168
<TOTAL-INTEREST-ON-BONDS> 258,093
<CASH-FLOW-OPERATIONS> 614,218
<EPS-BASIC> 0.26
<EPS-DILUTED> 0.26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000023426
<NAME> THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,772,650
<OTHER-PROPERTY-AND-INVEST> 607,964
<TOTAL-CURRENT-ASSETS> 317,285
<TOTAL-DEFERRED-CHARGES> 2,600,385
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 5,298,284
<COMMON> 122,229
<CAPITAL-SURPLUS-PAID-IN> 665,598
<RETAINED-EARNINGS> 153,254
<TOTAL-COMMON-STOCKHOLDERS-EQ> 941,497
79,789
116,200
<LONG-TERM-DEBT-NET> 1,241,051
<SHORT-TERM-NOTES> 101,700
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 159,005
19,750
<CAPITAL-LEASE-OBLIGATIONS> 50,969
<LEASES-CURRENT> 93,431
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,495,308
<TOT-CAPITALIZATION-AND-LIAB> 5,298,284
<GROSS-OPERATING-REVENUE> 2,452,855
<INCOME-TAX-EXPENSE> 85,138
<OTHER-OPERATING-EXPENSES> 2,156,047
<TOTAL-OPERATING-EXPENSES> 2,278,106
<OPERATING-INCOME-LOSS> 174,749
<OTHER-INCOME-NET> (86,787)
<INCOME-BEFORE-INTEREST-EXPEN> 124,883
<TOTAL-INTEREST-EXPENSE> 138,451
<NET-INCOME> (13,568)
12,832
<EARNINGS-AVAILABLE-FOR-COMM> (26,400)
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 127,533
<CASH-FLOW-OPERATIONS> 299,427
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000315256
<NAME>PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,609,032
<OTHER-PROPERTY-AND-INVEST> 28,884
<TOTAL-CURRENT-ASSETS> 461,370
<TOTAL-DEFERRED-CHARGES> 523,147
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,622,433
<COMMON> 1
<CAPITAL-SURPLUS-PAID-IN> 424,654
<RETAINED-EARNINGS> 319,938
<TOTAL-COMMON-STOCKHOLDERS-EQ> 745,667
25,000
0
<LONG-TERM-DEBT-NET> 516,485
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
25,000
<CAPITAL-LEASE-OBLIGATIONS> 624,477
<LEASES-CURRENT> 101,676
<OTHER-ITEMS-CAPITAL-AND-LIAB> 585,202
<TOT-CAPITALIZATION-AND-LIAB> 2,622,433
<GROSS-OPERATING-REVENUE> 1,160,572
<INCOME-TAX-EXPENSE> 40,724
<OTHER-OPERATING-EXPENSES> 999,157
<TOTAL-OPERATING-EXPENSES> 1,035,967
<OPERATING-INCOME-LOSS> 124,605
<OTHER-INCOME-NET> 6,793
<INCOME-BEFORE-INTEREST-EXPEN> 127,484
<TOTAL-INTEREST-EXPENSE> 43,275
<NET-INCOME> 84,209
6,625
<EARNINGS-AVAILABLE-FOR-COMM> 77,584
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 42,728
<CASH-FLOW-OPERATIONS> 199,119
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000106170
<NAME>WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 402,037
<OTHER-PROPERTY-AND-INVEST> 165,522
<TOTAL-CURRENT-ASSETS> 85,173
<TOTAL-DEFERRED-CHARGES> 600,872
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,253,604
<COMMON> 26,812
<CAPITAL-SURPLUS-PAID-IN> 171,691
<RETAINED-EARNINGS> 38,712
<TOTAL-COMMON-STOCKHOLDERS-EQ> 237,375
16,500
20,000
<LONG-TERM-DEBT-NET> 290,279
<SHORT-TERM-NOTES> 132,400
<LONG-TERM-NOTES-PAYABLE> 0
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<NAME>NORTH ATLANTIC ENERGY CORPORATION
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