SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
(Mark One)
[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, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File Number 1-5366
Eastern Utilities Associates
(Exact name of registrant as specified in its charter)
Massachusetts 04-1271872
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
One Liberty Square, Boston, Massachusetts 02109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 357-9590
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each Exchange on which registered
Common Shares, par value New York Stock Exchange
$5 per share Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has 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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of 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 ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. As of March 21, 1994:
Common Shares, $5 par value - $499,603,064
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Shares Outstanding at March 21, 1994
19,592,277
Documents Incorporated by Reference
Portions of the Annual Report to Shareholders for the year ended December 31,
1993, are incorporated by reference into Part II.
Portions of the Proxy Statement dated March 28, 1994 are incorporated by
reference into Part III.
EASTERN UTILITIES ASSOCIATES
1993 Annual Report on Form 10-K
Table of Contents
PART I
Page
Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . (i)
Glossary of Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . (iv)
Item 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EUA Cogenex . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Construction and Energy Related Investments . . . . . . . . . . . . 6
Fuel for Generation . . . . . . . . . . . . . . . . . . . . . . . . 7
Nuclear Power Issues. . . . . . . . . . . . . . . . . . . . . . . . 9
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Decommissioning. . . . . . . . . . . . . . . . . . . . . . . . 10
Yankee Atomic. . . . . . . . . . . . . . . . . . . . . . . . . 11
Seabrook Unit 2. . . . . . . . . . . . . . . . . . . . . . . . 11
Public Utility Regulation . . . . . . . . . . . . . . . . . . . . . 11
Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
FERC Proceedings . . . . . . . . . . . . . . . . . . . . . . . 14
Massachusetts Proceedings. . . . . . . . . . . . . . . . . . . 15
Rhode Island Proceedings . . . . . . . . . . . . . . . . . . . 16
Environmental Regulation. . . . . . . . . . . . . . . . . . . . . . 17
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Electric and Magnetic Fields . . . . . . . . . . . . . . . . . 19
Water Regulation . . . . . . . . . . . . . . . . . . . . . . . 19
Air Regulation . . . . . . . . . . . . . . . . . . . . . . . . 20
Environmental Regulation of Nuclear Power . . . . . . . . . . . . . 21
Energy Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(i)
PART I (continued)
Page
Item 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Power Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Generating Units in Service. . . . . . . . . . . . . . . . . . . . 24
Other Property . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 25
Rate Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 25
Environmental Proceedings. . . . . . . . . . . . . . . . . . . . . 25
Shareholder Proceeding . . . . . . . . . . . . . . . . . . . . . . 29
Other Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 29
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . 30
Executive Officers of the Registrant . . . . . . . . . . . . . 30
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND
RELATED SHAREHOLDER MATTERS. . . . . . . . . . . . . . . . 32
Item 6. SELECTED DATA. . . . . . . . . . . . . . . . . . . . . . . . . 32
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . . 32
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . 33
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT . . . . . . . . . . . . . . . . . . . . . . . . 33
Item 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . 33
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT. . . . . . . . . . . . . . . . . . . 33
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 34
(ii)
PART IV
Page
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, and
REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . . . . . 34
(a)(1) Financial Statements . . . . . . . . . . . . . . . . . . . 34
(a)(2) Financial Statement Schedules. . . . . . . . . . . . . . . 34
(a)(3) Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 48
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . 50
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . 56
(iii)
GLOSSARY OF DEFINED TERMS
The following is a glossary of frequently used abbreviations and/or
acronyms found throughout this report:
The EUA System Companies
Blackstone Blackstone Valley Electric Company
Eastern Edison Eastern Edison Company
EUA Eastern Utilities Associates
EUA Cogenex EUA Cogenex Corporation
EUA Day EUA Day Company, a subsidiary of EUA
Cogenex
EUA Nova EUA Nova, a division of EUA Cogenex
NEM Northeast Energy Management, Inc., a
subsidiary of EUA Cogenex
EUA Energy EUA Energy Investment Corporation
EUA Ocean State EUA Ocean State Corporation
EUA Service EUA Service Corporation
Montaup Montaup Electric Company
Newport Newport Electric Corporation
Registrant EUA
Retail Subsidiaries Blackstone, Eastern Edison
and Newport
Non-Affiliated Companies
Aquidneck Aquidneck Power Limited Partnership
Great Bay Power Great Bay Power Corporation (formerly EUA
Power)
Maine Yankee Maine Yankee Atomic Power Company
OSP Ocean State Power Project Units 1 and 2
Yankee Atomic Yankee Atomic Electric Company
Regulators/Regulations
1935 Act Public Utility Holding Company Act of 1935
Bankruptcy Court United States Bankruptcy Court for the
District of New Hampshire
CERCLA Federal Comprehensive Environmental
Response, Compensation and Liability
Act of 1980
Chapter 21E Massachusetts Oil and Hazardous Material
Release Prevention and Response Act
Clean Air Act Amendments Clean Air Act Amendments of 1990
CRMC Rhode Island Coastal Resources Management
Council
DEP Massachusetts Department of Environmental
Protection
DEQE Massachusetts Department of Environmental
Quality Engineering
DOE Department of Energy
Energy Act Energy Policy Act of 1992
EPA Federal Environmental Protection Agency
(iv)
GLOSSARY OF DEFINED TERMS (Cont'd)
Regulators/Regulations (continued)
FASB Financial Accounting Standards Board
FAS87 Employers' Accounting for Pensions
FAS96 Statement No. 96 "Accounting for Income
Taxes"
FAS106 Statement No. 106 "Accounting for
Post-Retirement Benefits Other Than
Pensions"
FAS107 Statement No. 107 "Disclosures about
Fair Value of Financial Instruments"
FAS109 Statement No. 109 "Accounting for Income
Taxes"
FAS112 Statement No. 112 "Employers' Accounting
for Post-Employment Benefits"
FERC Federal Energy Regulatory Commission
IRS Internal Revenue Service
MCP Massachusetts Contingency Plan
MDPU Massachusetts Department of Public
Utilities
NESCAUM Northeast States for Coordinated Air Use
Management
NHPUC New Hampshire Public Utilities
Commission
NRC Nuclear Regulatory Commission
NWPA Nuclear Waste Policy Act
OPA-90 Oil Pollution Act of 1990
Price-Anderson Act The Price-Anderson Act, as amended by the
Price-Anderson Amendments of 1988
PURPA Public Utility Regulatory Policies Act
of 1978
RACT Reasonably Available Control Technology
RCRA Resource Conservation and Recovery Act of
1976
RIDEM Rhode Island Department of Environmental
Management
RIDPUC Rhode Island Division of Public Utilities
and Carriers
RIPUC Rhode Island Public Utilities Commission
SEC Securities and Exchange Commission
SPCC Spill Prevention, Countermeasures, and
Control Plan regulations
USCG United States Coast Guard
TSCA Toxic Substances Control Act
Other
AFUDC Allowance for Funds Used During
Construction
BTU British Thermal Unit
C&LM Conservation and Load Management
DSM Demand Side Management
EMF Electric and Magnetic Fields
(v)
GLOSSARY OF DEFINED TERMS (Cont'd)
Other (continued)
EMS Energy Management Services
EWG Exempt Wholesale Generator
IPP Independent Power Producer
kWh Kilowatthour
MBTU Millions of British Thermal Units
MOU Memorandum of Understanding
MW Megawatt
NEPOOL New England Power Pool
NOx Nitrogen Oxides
PCB Polychlorinated Biphenyls
PRP Potentially Responsible Party
QF Qualifying cogeneration and small power
production facilities pursuant to PURPA
Seabrook Project Seabrook Nuclear Power Project located in
Seabrook, New Hampshire
(vi)
PART I
Item 1. BUSINESS
General
The Registrant, Eastern Utilities Associates, is a Massachusetts voluntary
association organized and existing under a Declaration of Trust dated April 2,
1928, as amended, and is a registered holding company under the 1935 Act. EUA
owns directly all of the shares of common stock of three operating retail
electric utility companies: Blackstone, Eastern Edison and Newport. Blackstone
operates in northern Rhode Island, Eastern Edison operates in southeastern
Massachusetts, and Newport operates in south coastal Rhode Island. These
subsidiaries are collectively referred to as the Retail Subsidiaries. Eastern
Edison owns all of the permanent securities of Montaup, a generation and
transmission company, which supplies electricity to Eastern Edison, to
Blackstone, to Newport and to two unaffiliated utilities for resale. EUA also
owns directly all of the shares of common stock of EUA Cogenex, EUA Energy, EUA
Ocean State and EUA Service. EUA Service provides various accounting,
financial, engineering, planning, data processing and other services to all EUA
System companies. EUA Cogenex is an energy services and cogeneration company.
EUA Energy was organized to invest in energy-related projects. EUA Ocean State
owns a 29.9% interest in OSP's two gas-fired generating units. (See Item 2.
PROPERTIES -- Power Supply.) The holding company system of EUA, the Retail
Subsidiaries, Montaup, EUA Service, EUA Cogenex, EUA Energy and EUA Ocean State
is referred to as the EUA System. For 1991 and 1992, electric utility
operations accounted for approximately 95% and 92% of total operating revenues,
respectively. For 1993, electric utility operations accounted for
approximately 88% of total operating revenues. The remaining 12% of operating
revenues in 1993 were attributable to EUA Cogenex.
The EUA System supplies retail electric service in 33 cities and towns in
southeastern Massachusetts and Rhode Island. The largest communities served
are the cities of Brockton and Fall River, Massachusetts. The retail electric
service territory covers approximately 595 square miles and has an estimated
population of approximately 725,000. At December 31, 1993, EUA System
companies served approximately 292,000 retail customers.
Montaup supplies Eastern Edison and Blackstone with nearly 100% of each
company's electric requirements, approximately 53% of Newport's electric
requirements and approximately 85% of the electric requirements of the EUA
System. About 47% of the net generating capacity of the EUA System comes from
a combination of the following sources: (i) wholly owned EUA System generating
plants, primarily Montaup's 156 MW Somerset facility located in Somerset,
Massachusetts; (ii) Montaup's net entitlement of 207 MW from the 584 MW Canal
No. 2 unit, which is located in Sandwich, Massachusetts and is 50% owned by
Montaup; and, (iii) entitlements from units in which Montaup or Newport have
partial ownership interests (by joint ownership through tenancy-in-common or by
stock ownership) in which Montaup's or Newport's share is 4.5% or less. The
remaining 53% of the net generating capacity of the EUA System comes from units
in which Montaup or Newport have long-term or short-term power contracts for
shares ranging from 0.49% to 41.67% of the unit's capacity, including 28% of
the OSP Units 1 and 2 in which EUA Ocean State has a 29.9% partnership
interest, or entitlements from the Hydro-Quebec Project through NEPOOL. On
January 25, 1994, Somerset's Unit No. 5 was placed in deactivated reserve,
resulting in the reduction of approximately 69 MW of the EUA System's total net
generating capacity. Newport intends to become an all requirements customer of
Montaup when Montaup's next change in its all requirements wholesale tariff
rate is approved by FERC. At that time Newport, subject to obtaining
regulatory approval, if necessary, expects to lease all of its generation and a
share of its transmission facilities to Montaup. (See Item 2. PROPERTIES --
Power Supply for further details of the EUA System's sources of power supply).
The Retail Subsidiaries and Montaup hold valid franchises, permits and
other rights which are necessary to allow these companies to conduct electric
business within the territories which they serve. Such franchises, permits and
other rights contain no unduly burdensome restrictions or limitations upon
duration.
The EUA System's electric sales are seasonal to some extent due to
electricity usage for heating and lighting in the winter and air conditioning
in the summer.
The EUA System is not dependent on a single customer or a few customers
for its electric sales.
There is no competition from other electric utilities within the retail
territories served by the Retail Subsidiaries at this time. Federal law
permits, however, certain federal facilities to by-pass the local utility and
purchase power directly from another utility. It is possible that in the
future retail competition could be imposed by legislative or regulatory action
at the federal or state level.
At the wholesale level, Montaup faces new sources of competition primarily
as a result of PURPA, the Energy Act and other policies being implemented by
the MDPU and considered by the RIPUC relating to the solicitation of
competitive proposals for new generation sources. Non-utility wholesale
generators, generally known as independent power producers or IPPs, are subject
to FERC regulations under the Federal Power Act as well as various other
federal, state, and local regulators. However, PURPA was intended, among other
things, to promote national energy independence and diversification of energy
supply and to improve the overall efficiency of energy usage. PURPA created a
new class of non-utility power generation facilities called QFs. PURPA allows
QFs to sell power generated by the QFs to local utilities at specified rates
based on each utility's avoided cost. In order to further promote competition
in energy supply, the Energy Act established a new class of non-utility
generators, generally referred to as EWGs, which are exempt from the 1935 Act.
As a complement to the federal initiatives, the MDPU and the RIPUC have
implemented regulations which require utilities to integrate least-cost
planning with competitive proposals to meet requirements for new generation.
Both states have also approved a Memorandum of Understanding among Montaup and
the Retail Subsidiaries that establishes a framework which makes possible a
coordinated, regional review of the resource planning and procurement process
of the EUA Companies. Montaup will face increased competition in the wholesale
generating market, primarily based on price, from QFs and EWGs and in the
future could be affected by such competition supplying generation to its
customers. Several states have begun discussions on retail wheeling (the
transmission of power from one utility for sale by that system to the retail
customer of a different system). In Massachusetts, two House Bills dealing
with retail wheeling were introduced in the legislature. Neither bill was
enacted. In Rhode Island, the Energy Coordinating Council's subcommittee on
Retail Wheeling did not reach a consensus on retail wheeling and stated that it
was unlikely to do so. Therefore, no directives on retail wheeling are
expected in Massachusetts or Rhode Island in the near future.
All of the transmission facilities within the EUA System are inter
connected with the NEPOOL transmission grid. Montaup and the Retail
Subsidiaries are members of NEPOOL, which is open to all investor-owned,
municipal and cooperative electric utilities in New England that are connected
to the New England power grid. NEPOOL provides for coordinated planning of
future facilities as well as operation of nearly 100% of the existing
generating capacity in New England and of related transmission facilities
essentially as if they were one system. The NEPOOL agreement imposes
obligations concerning generating capacity reserve and the right to use major
transmission lines, and provides for central dispatch of the generating
capacity of NEPOOL's members with the objective of achieving economical use of
the region's facilities. Pursuant to the NEPOOL agreement, interchange sales
to NEPOOL are made at a price approximately equal to the fuel cost for
generation without contribution to the support of fixed charges. The capacity
responsibilities of Montaup and the Retail Subsidiaries under the NEPOOL
agreement are based on an allocated share of a New England capacity requirement
which is determined for each period on the basis of certain regional
reliability criteria. Because of its participation in NEPOOL, the EUA System's
operating revenues and costs are affected to some extent by the operations of
other members.
As of December 31, 1993, the number of EUA System regular employees was
1,444 of which 1,206 were in the core electric business and 238 were in the
energy-related business. Relations with employees are considered to be
satisfactory. Labor bargaining unit contracts covering approximately 267
employees of Eastern Edison in the Fall River area, of Newport and of Montaup
expire in June 1995, September 1996 and March 1996, respectively.
Approximately 30 of the 140 employees at Montaup's Somerset Station may be
impacted by the deactivation of Unit No. 5, announced in January 1994. (See
Item 2. PROPERTIES -- Power Supply.)
EUA Cogenex
EUA Cogenex is a wholly owned subsidiary of EUA. EUA Cogenex operates in
three segments of the energy management industry:
Energy Management Services (EMS)
EMS encompasses EUA Cogenex's original business activities, in which EUA
Cogenex provides EMS directly to institutional, commercial/industrial and
governmental customers to reduce their energy costs and consumption. In its
EMS programs, EUA Cogenex employs energy efficiency technology and equipment
through building automation, lighting modifications, boiler replacement, and
other heat recovery methods. EUA Cogenex is compensated for these services
primarily through "shared savings" or energy services agreements in which EUA
Cogenex and the customer, who occupies or owns a facility, agree upon a
prescribed base year and a set of savings calculations. EUA Cogenex then
receives a portion of the savings that result from the installation and
maintenance of the energy efficient equipment in the facility. EUA Cogenex
revenues under these agreements are dependent upon the actual achievement of
energy savings; therefore EUA Cogenex assesses the financial and technical risk
of each customer and project. EUA Cogenex finances the project and acts as the
contractor for each project by engaging the necessary professionals to install
and/or modify equipment.
Demand Side Management (DSM)
EUA Cogenex participates in demand side management programs sponsored by
electric utilities as a means to decrease both base load and peak demand on the
utilities' systems. In utility DSM programs, EUA Cogenex contracts with the
utility and its commercial and industrial customers in order to decrease the
overall demand on the utility system or to reduce peak demand, curtailing the
need for costly capacity additions. EUA Cogenex is paid by the utility based
on the reduction in the demand on the utility's system and may also receive a
portion of the customers' savings by entering into shared savings agreements of
the type described above with those customers. EUA Cogenex contracts for
utility DSM programs through a bidding process or participates in the utility's
"Standard Offer Program". EUA Cogenex also may, from time to time, acquire
existing DSM contracts or the benefits from those contracts from other DSM
contractors.
Self-Generation
EUA Cogenex participates in various self-generation projects in which it
installs electric and heat generating facilities for a particular building or
group of buildings. Typically, electricity and heat can be generated by the
cogeneration facility at a lower cost to the building owners or occupants than
the retail cost of heating fuel and electricity sold by the local utility.
When combined with other energy management services provided by EUA Cogenex,
cogeneration projects can result in savings to the owners or occupants, a
portion of which is paid to EUA Cogenex. In a self-generation project, a
cogeneration facility (i) is sized to a minimum base load thermal requirement
for the customer and (ii) produces electricity which displaces a portion of the
customer's retail electric consumption -- a so-called "inside the fence"
application. EUA Cogenex's strategy has been to keep its cogeneration projects
below a five megawatt level, sized to a minimum base load thermal requirement
for the particular facility to avoid competition from larger independent power
project developers.
EUA Cogenex also provides consulting services to its customers in the form
of training in the proper use and maintenance of the energy equipment. This
service includes instruction in the use of existing equipment as well as newly
installed equipment so that further energy savings can be realized. In
addition, EUA Cogenex monitors installed projects on a 24 hour basis and
dispatches third party contractors to make repairs and/or adjustments.
There are no seasonal factors that impact normal business operations of
EUA Cogenex.
There is no single customer, small group of customers, or outside
supplier, the loss of which would have a materially adverse effect on the
operations of the business of EUA Cogenex.
As a result of its ownership by EUA, a registered holding company under
the 1935 Act, EUA Cogenex is regulated by the SEC in matters related to
financing and asset acquisitions. In addition, the SEC requires that EUA
Cogenex earn more than 50% of its revenues in the New England/New York area,
not including revenues derived from development of qualifying cogeneration
facilities and qualifying small power production facilities. To date, revenues
have continued to grow within the New England/New York area so that they have
not limited EUA Cogenex's growth outside that area. For the year ended
December 31, 1993, approximately 72% of EUA Cogenex's revenues subject to this
restriction were generated from within the New England/New York area. The Day
Co. and NEM acquisitions, as discussed below, will provide additional revenues
from the New England/New York area in 1994 and beyond. Nevertheless, EUA
Cogenex is actively pursuing legislative action and may pursue regulatory
action to mitigate any future negative impact that current geographic
requirements may have on future revenues. If EUA Cogenex's endeavors are
unsuccessful, revenues from outside the New England/New York area may be
restricted.
At December 31, 1993, EUA Cogenex employed 238 persons in its operations,
of which 54 employees were added with the acquisitions of James L. Day Co.
There were no additional EUA employees as a result of the acquisition of
Northeast Energy Management, Inc. on January 4, 1994. (see below)
EUA Cogenex's competition in the EMS market is comprised primarily of the
manufacturers and distributors of the energy efficiency equipment which it
installs. Competition within the DSM markets is primarily from other energy
services companies and engineering consulting firms. Competition in the
self-generation industry is limited given EUA Cogenex's focus on the small
cogeneration units and its strategy of limiting development of new cogeneration
projects.
EUA Nova, a division of EUA Cogenex acquired in December, 1992, provides
lighting services designed to achieve an efficiency gain through the
integration of various lamp, ballast and light reflector products. EUA Nova's
other business activities include the retail sale and installation of
energy-conserving window film for residential, commercial, industrial and
institutional sales and computer-aided designed custom lighting services.
In December 1993, EUA Cogenex acquired the James L. Day Co. (renamed EUA
Day). EUA Day is primarily engaged in the business of customization,
installation and servicing of building temperature control systems and process
control systems for the purpose of energy conservation. These systems are
primarily designed for regulating lighting and heating, ventilation and
air-conditioning, but can also simultaneously be used for security
surveillance, building entry and exit, equipment monitoring, and air quality
monitoring. The acquisition of EUA Day is intended to enable EUA Cogenex to
increase its market share in building control systems, and at the same time
provide customers with EUA Day's expertise in system customization and enhanced
applications.
In January 1994, EUA Cogenex acquired Northeast Energy Management, Inc., a
DSM contractor operating in Maine. EUA Cogenex acquired the existing utility
DSM contract with Central Maine Power Company under its "Power Partners
Program" for commercial/industrial energy efficiency projects. Because all of
NEM's customers are located in Maine, the acquisition will allow EUA Cogenex to
expand the services it provides in its base region (New England and New York).
The acquisition will also afford EUA Cogenex the opportunity to market
additional energy services to those customers and engage in new projects with
other Central Maine Power Company customers.
EUA Cogenex currently participates in seven partnerships. It is the
managing general partner in six of the partnerships and a general partner in
the seventh. EUA Cogenex also has limited partnership interest in six of the
partnerships. EUA Cogenex has provided virtually all of the capital to the
partnerships and is generally entitled to a return of, and on, this capital
before any significant partnership distribution is made to the other general
partners. All partnerships and their customers are subject to the same
selection and screening process to establish acceptable credit quality.
The rates charged by EUA Cogenex to its EMS and DSM customers are not
subject to the jurisdiction of any regulatory agency. In addition, the prices
charged by EUA Cogenex to its self-generation customers have not been regulated
by any federal or state authority. In some states where EUA Cogenex has a QF
facility, it is possible that a state public utility commission may seek to
assert jurisdiction over the terms of EUA Cogenex's cogeneration contract.
The following table sets forth the amounts of revenues, pre-tax income,
net earnings and identifiable assets attributable to the consolidated
operations of EUA Cogenex:
Year Ended December 31,
1993 1992 1991
(Thousands)
Operating Revenues $ 66,912 $ 44,154 $ 29,729
Pre-tax Income $ 5,864 $ 4,798 $ 3,596
Net Earnings $ 3,536 $ 2,839 $ 2,785
Total Assets $191,432 $150,658 $107,104
See Note J of Consolidated Financial Statements contained in the
Registrant's Annual Report to Shareholders for the year ended December 31, 1993
(Exhibit 13-1 filed herewith).
Construction and Energy Related Investments
The EUA System's construction expenditures for the year ended December 31,
1993 were approximately $63.1 million (including AFUDC and capitalized interest
of EUA Cogenex of approximately $2.4 million).
Planned construction expenditures for 1994, 1995 and 1996, as set forth
below, are estimated to total $278.9 million (including AFUDC and capitalized
interest of approximately $13.5 million and estimated environmental
expenditures and nuclear fuel costs where applicable). These projections do
not include expenditures for compliance with nitrogen oxide emissions standards
under the Clean Air Act for certain units in which Montaup has a joint
ownership interest.
EUA SYSTEM CONSTRUCTION PROGRAM
(Dollars in Thousands)
1994 1995 1996 3-Yr.Total
Generation $21,281 $15,540 $20,847 $ 57,668
Transmission 4,905 2,902 808 8,615
Distribution 19,327 21,309 20,509 61,145
General 848 1,153 837 2,838
Total Utility 46,361 40,904 43,001 130,266
EUA Cogenex 45,491 51,563 51,563 148,617
Total $91,852 $92,467 $94,564 $278,883
======= ======= ======= ========
Investments in energy related facilities in 1993, primarily those of EUA
Cogenex, amounted to approximately $13.2 million. Energy related investments
of EUA Cogenex are estimated to be $11.3 million in 1994 and $10.0 million in
1995 and 1996, respectively.
Fuel for Generation
For 1993, the EUA System's sources of energy, by fuel type, were as
follows: 34% nuclear, 26% gas, 6% coal, 28% oil and 6% other. During 1993,
Montaup had an average inventory of 87,108 tons of coal for its steam
generating units at the Somerset Station, the equivalent of 62 days' supply
(based on average daily output at 80% capacity factor for the coal units (see
Item 2. PROPERTIES -- Power Supply)). The cost of coal averaged about $46.14
per ton in 1993 which is equivalent to oil at $11.18 per barrel. Montaup
intends to solicit bids from various suppliers of low sulfur content coal
during the last three quarters of 1994. The 1993 year-end inventory of
approximately 95,000 tons of high sulfur content coal will be reduced in order
to facilitate the necessary changeover to all low sulfur content coal by
December 31, 1994. Montaup also maintained an average inventory of jet oil of
3,397 barrels at an average cost per barrel of $26.28 during 1993 for its two
peaking units at the Somerset Station.
Canal Electric Company (Canal), on behalf of itself, Montaup and others
has contracts with a supplier for up to 100% of the fuel-oil requirements of
Canal Unit Nos. 1 and 2 for the period ending April 30, 1995. The contracts
permit up to 20% of fuel oil purchases in the spot market. For 1993, the cost
of oil per barrel at Canal averaged $13.78. Canal and Montaup have entered
into agreements with Algonquin Gas Transmission Company (Algonquin) for
Algonquin to provide gas transmission facilities and services to the Canal
facilities. The agreements are subject to (i) Algonquin obtaining the
appropriate permits and authorization to construct and operate the transmission
facilities and (ii) Canal and Montaup receiving the necessary permits and
authorizations to construct natural gas fired electric generation equipment and
the facilities to receive natural gas.
Montaup's costs of fossil and nuclear fuels for the years 1991 through
1993, together with the weighted average cost of all fuels, are set forth
below:
Mills* per kWh
----------------------------------
1993 1992 1991
Nuclear . . . . . . . . . 7.5 7.7 8.7
Coal . . . . . . . . . 24.1 21.2 21.4
Oil . . . . . . . . . 25.5 26.0 18.9
Gas . . . . . . . . . 15.1 13.0 16.2
All fuels . . . . . . . . . 15.5 14.8 15.7
*One Mill is 1/10 of one cent
The rate schedules of Montaup and the Retail Subsidiaries are designed to
pass on to customers the increases and decreases in fuel costs and the cost of
purchased power, subject to review and approval by appropriate regulatory
authorities (see Rates below).
OSP has two gas supply contracts which expire December 14, 2009 and
September 29, 2010, respectively for its two 250 MW generators. The cost of
gas for 1993 averaged $1.15 per MBTU or approximately 9.7 mills per kWh
generated.
The owners (or lead participants) of the nuclear units in which Montaup
has an interest have made, or expect to make, various arrangements for the
acquisition of uranium concentrate, the conversion, enrichment, fabrication and
utilization of nuclear fuel and the disposition of that fuel after use. The
owners (or lead participants) of United States nuclear units have entered into
contracts with the DOE for disposal of spent nuclear fuel in accordance with
the NWPA. The NWPA requires (subject to various contingencies) that the
federal government design, license, construct and operate a permanent
repository for high level radioactive wastes and spent nuclear fuel and
establish prescribed fees for the disposal of such wastes and fuel. The NWPA
specifies that the DOE provide for the disposal of such waste and spent nuclear
fuel starting in 1998. Objections on environmental and other grounds have been
asserted against proposals for storage as well as disposal of spent nuclear
fuel. The DOE anticipates that a permanent disposal site for spent fuel will
be ready to accept fuel for storage or disposal by the year 2010. However, the
NRC, which must license the site, stated only that a repository will become
available by the year 2025. Montaup owns a 4.01% interest in Millstone Unit 3
and a 2.9% interest in Seabrook Unit 1. Northeast Utilities, the operator of
the units, indicates that Millstone Unit 3 has sufficient on-site storage
facilities to accommodate high-level wastes and spent fuel for the projected
life of the unit. Only minimal capital expenditures are projected for the
foreseeable future. Similarly, at the Seabrook Project, there is on-site
storage capacity which, with minimal capital expenditures, should be sufficient
for twenty years or until the year 2010. No near-term capital expenditures are
anticipated to accommodate an increase in storage requirements after 2010. The
Energy Act requires that a fund be created for the decommissioning and
decontamination of the DOE uranium enrichment facilities. The fund will be
financed in part by special assessments on nuclear power plants in which
Montaup has an interest. These assessments will be calculated based on the
utilities' prior use of the government facilities. These special assessment
have been levied by the DOE starting in September 1993 and will continue over
15 years. This cost is passed on to the joint owners or power buyers as an
additional fuel charge on a monthly basis.
Nuclear Power Issues
General:
Nuclear generating facilities, including those in service in which Montaup
participates, as shown in the table under Item 2. PROPERTIES -- Power Supply,
are subject to extensive regulation by the NRC. The NRC is empowered to
authorize the siting, construction and operation of nuclear reactors after
consideration of public health, safety, environmental and anti-trust matters
(see Yankee Atomic, below).
The NRC has promulgated numerous requirements affecting safety systems,
fire protection, emergency response planning and notification systems, and
other aspects of nuclear plant construction, equipment and operation. These
requirements have caused modifications to be made at some of the nuclear units
in which Montaup has an interest. Montaup has been affected, to the extent of
its proportionate share, by the costs of such modifications.
Nuclear units in the United States have been subject to widespread
criticism and opposition. Some nuclear projects have been cancelled following
substantial construction delays and cost overruns as the result of licensing
problems, unanticipated construction defects and other difficulties. Various
groups have by litigation, legislation and participation in administrative
proceedings sought to prohibit the completion and operation of nuclear units
and the disposal of nuclear waste. In the event of cancellation or shutdown of
any unit, NRC regulations require that it be completely decontaminated of any
residual radioactivity. The cost of such decommissioning, depending on the
circumstances, could substantially exceed the owners' investment at the time of
cancellation.
The continuing public controversy concerning nuclear power could affect
the operating units in which Montaup has an interest. While management cannot
predict the ultimate effect of such controversy, it is possible that it could
result in the premature shutdown of one or more of the units (see Yankee
Atomic, below).
The Price-Anderson Act provides, among other things, that the liability
for damages resulting from a nuclear incident would not exceed an amount which
at present is about $9.2 billion. Under the Price-Anderson Act, prior to
operation of a nuclear reactor, the licensee is required to insure against this
exposure by purchasing the maximum amount of liability insurance available from
private sources (currently $200 million) and to maintain the insurance
available under a mandatory industry-wide retrospective rating program. Should
an individual licensee's liability for an incident exceed $200 million, the
difference between such liability and the overall maximum liability, currently
about $9.2 billion, will be made up by the retrospective rating program. Under
such a program, each owner of an operating nuclear facility may be assessed a
retrospective premium of up to a limit of $79.3 million (which shall be
adjusted for inflation at least every five years) for each reactor owned in the
event of any one nuclear incident occurring at any reactor in the United
States, with provision for payment of such assessment to be made over time as
necessary to limit the payment in any one year to no more than $10 million per
reactor owned. With respect to operating nuclear facilities of which it is a
part owner or from which it contracts (on terms reflecting such liability) to
purchase power, Montaup would be obligated to pay its proportionate share of
any such assessment.
Joint owners of nuclear projects are also subject to the risk that one of
their number may be unable or unwilling to finance its share of the project's
costs, thus jeopardizing continuation of the project. On February 28, 1991,
EUA Power (now know as Great Bay Power Corporation), a 12.1% owner of the
Seabrook Project in which Montaup has a 2.9% ownership interest, filed for
protection under Chapter 11 of the Federal Bankruptcy Code. The Great Bay
Power Corporation Plan of Reorganization was confirmed by the Bankruptcy Court
on March 5, 1993. On February 2, 1994, the Official Bondholders Committee of
Great Bay Power Corporation announced that it accepted a plan of reorganization
financing proposal from Omega Advisers, Inc. which provide for a $35 million
equity investment in exchange for 60% of the equity of the reorganized Great
Bay Power Corporation. Implementation of the Omega proposal will require
modification of the plan of reorganization and approval from the Bankruptcy
Court, the NRC, FERC and the NHPUC. Under the plan, as modified, the
bondholders will receive 40% of the equity in the reorganized Great Bay Power
Corporation in exchange for their bondholder claims.
On May 6, 1991, the New Hampshire Electric Cooperative, Inc. (NHEC), a
2.2% owner of the Seabrook Project, announced that it had filed for Chapter 11
bankruptcy protection. A reorganization plan, filed by the NHEC with the
Bankruptcy Court in September, 1991 and revised on January 14, 1992 was
approved by the Bankruptcy Court in March 1992 and approved by the NHPUC on
October 5, 1992. All appeals of the NHPUC order approving the reorganization
plan have been resolved in NHEC's favor and the effective date of the plan
occurred on December 1, 1993.
Decommissioning:
Each of the three operating nuclear generating companies in which Montaup
has an equity ownership interest (see Item 2. PROPERTIES -- Power Supply) has
developed its estimate of the cost of decommissioning its unit and has received
the approval of FERC to include charges for the estimated costs of
decommissioning its unit in the cost of energy which it sells. From time to
time, these companies re-estimate the cost of decommissioning and apply to FERC
for increased rates in response to increased decommissioning costs. Maine
Yankee has filed a decommissioning financing plan under a Maine statute which
requires the establishment of a decommissioning trust fund. That statute also
provides that if the trust has insufficient funds to decommission the plant,
the licensee (Maine Yankee) is responsible for the deficiency and, if the
licensee is unable to provide the entire amount, the "owners" of the licensee
are jointly and severally responsible for the remainder. The definition of
"owner" under the statute includes Montaup and may include companies affiliated
with Montaup. The applicability and effect of this statute cannot be
determined at this time. Montaup would seek to recover through its rates any
payments that might be required (see Yankee Atomic, below).
Montaup is recovering through rates its share of estimated decommissioning
costs for Millstone Unit 3 and Seabrook Unit 1. Montaup's share of the current
estimate of total costs to decommission Millstone Unit 3 is $15.1 million in
1993 dollars, and Seabrook Unit 1 is $10.6 million in 1993 dollars. These
figures are based on studies performed for the lead owners of the plants. In
addition, pursuant to contractual arrangements with other nuclear generating
facilities in which Montaup has an equity ownership interest or life of the
unit entitlement, Montaup pays into decommissioning reserves. Such expenses
are currently recoverable through rates.
Yankee Atomic:
On February 26, 1992, Yankee Atomic announced that it would permanently
cease power operation of Yankee Rowe and began preparing for an orderly
decommissioning of the facility. Montaup has a 7.8 MW entitlement from the
plant and has a 4.5% equity ownership in Yankee Atomic with a book value of
approximately $1.1 million at December 31, 1993. Under the terms of its
purchased power contract with the facility, Montaup must pay its proportionate
share of unrecovered costs and expenses incurred after the plant is retired.
In December 1992, Yankee Atomic received FERC authorization to recover
essentially all costs related to the decommissioning of the plant.
Seabrook Unit 2:
Montaup has a 2.9% ownership interest in Seabrook Unit 2. On November 6,
1986, the joint owners of the Seabrook Project, recognizing that Seabrook Unit
2 had been cancelled in 1984, voted to dispose of Seabrook Unit 2. Plans
regarding disposition of Seabrook Unit 2 are now under consideration, but have
not been finalized and approved. Montaup is unable, therefore, to estimate the
costs for which it would be responsible in connection with the disposition of
Seabrook Unit 2. Monthly charges are required to be paid by Montaup with
respect to Seabrook Unit 2 in order to preserve and protect its components and
various warranties. Montaup recovered its investment in Seabrook Unit 2 under
a FERC approved rate case settlement. As of December 31, 1993, Montaup had
fully amortized its investment in Seabrook Unit 2.
Public Utility Regulation
Eastern Edison and Montaup are subject to regulation by the MDPU with
respect to the issuance of securities, the form of accounts, and in the case of
Eastern Edison, rates to be charged, services to be provided and other
matters. Blackstone and Newport are subject to regulation in numerous respects
by the RIPUC and the RIDPUC, including matters pertaining to financing, sales
and transfers of utility properties, accounting, rates and service. In
addition, by reason of its ownership of fractional interests in certain
facilities located in other states, Montaup is subject to limited regulation in
those states.
QFs, including those in which EUA Cogenex may have an interest, must
satisfy the regulatory requirements of PURPA and are exempt from most state and
federal laws regulating power generation. IPPs, including OSP in which EUA
Ocean State has a 29.9% ownership interest, do not benefit from the PURPA
exemptions and are subject to FERC regulation under the Federal Power Act as
well as various other federal, state and local regulations.
The EUA System is subject to the jurisdiction of the SEC under the 1935
Act by virtue of which the SEC has certain powers of regulation, including
jurisdiction over the issuance of securities, changes in the terms of
outstanding securities, acquisition or sale of securities or utility assets or
other interests in any business, intercompany loans and other intercompany
transactions, payment of dividends under certain circumstances, and related
matters. Eastern Edison is a holding company under the 1935 Act by reason of
its ownership of securities of Montaup. As a subsidiary of EUA, a registered
holding Company, Eastern Edison is exempted from registering as a holding
company by complying with the applicable rules thereunder.
The Retail Subsidiaries and Montaup are also subject to the jurisdiction
of FERC under Parts II and III of the Federal Power Act. That jurisdiction
includes, among other things, rates for sales for resale, interconnection of
certain facilities, accounts, service, and property records.
The MDPU and RIPUC have approved a Memorandum of Understanding (MOU) with
Eastern Edison, Blackstone, Newport and Montaup. The MOU establishes a
framework for a coordinated, regional review of the resource planning and
procurement process of those companies. It is based on the assumption that
resource planning and procurement by a regional electric company may be
implemented more effectively under a coordinated, consensual review process
involving the EUA Retail companies and the state public utility commissions to
which the EUA retail companies are subject. Pursuant to the terms of the MOU,
at least every two years Montaup and each EUA Retail subsidiary will file a
integrated resource plan concurrently with the MDPU and RIPUC. The MOU
outlines a mechanism and a timetable by which the reviews by the two
commissions will be coordinated and any inconsistencies among the decisions by
the state commissions will be resolved.
In conjunction with its approval of the MOU, the MDPU granted Eastern
Edison and Montaup an exemption from the MDPU's Integrated Resource Management
regulations, but required them to plan, solicit and procure additional
resources according to newly promulgated regional Integrated Regional Planning
procedures consistent with the MOU. The Integrated Resource Management Plan of
Blackstone and Newport meet the criteria of the RIPUC.
Implementation of the MOU is not expected to have a material effect on the
EUA System.
See Rates with respect to regulation of rates charged to customers. See
Environmental Regulation. See Fuel for Generation with respect to the disposal
of spent nuclear fuel. See Environmental Regulation of Nuclear Power and see
Nuclear Power Issues with respect to regulation of nuclear facilities by the
NRC. See also Energy Policy.
Rates
Rates charged by Montaup (which sells power only for resale) are subject
to the jurisdiction of FERC. The rates for services rendered by the Retail
Subsidiaries for the most part are subject to approval by and are on file with
the MDPU in the case of Eastern Edison and with the RIPUC in the case of
Blackstone and Newport. For the twelve months ended December 31, 1993, 61% of
EUA's consolidated revenues were subject to the jurisdiction of FERC, 12% to
that of the MDPU and 15% to that of the RIPUC. The remaining 12% of
consolidated revenues are not subject to jurisdiction of the respective utility
commissions. Additionally, rates charged by OSP are subject to the
jurisdiction of FERC. All OSP (Unit 1 and Unit 2) power contracts have been
approved by FERC. However, pursuant to the OSP unit power agreements, rate
supplements are required to be filed annually subject to FERC approval. This
process may result in rate increases or decreases to OSP power purchasers.
Recent general rate increases for Montaup and the Retail Subsidiaries are
as follows (thousands of dollars):
<TABLE>
<S> <C> <C> <C> <C>
Applied For Implemented (1) Effective (2)
---------------- ---------------- -----------------------------
Return on
Annual Annual Annual Common
Revenue Date Revenue Date Revenue Date Equity %
Federal
- Montaup
M-12 20,500 3/5/90 20,500 8/19/90 20,000 1/23/91 12.00
M-13 10,500 3/6/91 10,500 5/7/91 8,100 12/3/91 11.72(4)
Massachusetts
- Eastern Edison
MDPU - 92-148 14,927(3) 6/15/92 8,100 1/12/93 11.50(4)
Rhode Island
- Blackstone
RIPUC - 2016 5,140(5) 6/17/91 2,999 3/16/92(6)11.43 RIPUC - 2045
- Phase I 2,724 6/26/92(7) 353 1/1/93
- Phase II 353 11/1/93(7) 353 1/1/94
- Newport
RIPUC - 2036
- Phase I 6,094 12/27/91 3,660 9/28/92(6)11.40
- Phase II 1,250 12/27/91(8)
RIPUC - 2045
- Phase I 1,250 6/26/92(7) 417 1/1/93
- Phase II 417 11/1/93(7) 417 1/1/94
</TABLE>
_____________________
Notes:
(1) Montaup's rate increases were implemented on a subject to refund
basis.
(2) Per final FERC order or settlement agreement.
(3) Reduced from $16,401 as originally filed.
(4) Rate used for AFUDC calculation purposes. Settlement contains no
specific finding on allowed common equity return. Rates approved for
consumption of electricity on and after January 1, 1993.
(5) Reduced from $6,027 as originally filed.
(6) The new rate applied to meter readings taken 30 days after the date
of the order.
(7) RIPUC Docket No. 2045 was a generic docket for all Rhode Island
Utilities reviewing FAS106 expenses. The effective amount represents
the revenue requirement for one-third of the tax deductible amount of
the FAS106 expense (see Rhode Island Proceedings below). As this was
a single issue proceeding, the RIPUC made no revisions to the allowed
return on common equity.
(8) Phase II of Docket 2036 incorporated by reference into Docket 2045.
FERC Proceedings:
On March 5, 1990, Montaup filed its M-12 rate request based on a
forward-looking test year beginning May 1, 1990. The requested annual increase
of $20.5 million primarily reflected the increased operation and maintenance
expenses and full rate base treatment of Seabrook Unit 1. The application
included a request to add approximately $124.4 million of Seabrook Unit 1
construction costs to Montaup's rate base in addition to the $74.6 million of
Seabrook Unit 1 construction work in progress previously allowed in rate base.
The annual increase also included $7 million for the implementation of
conservation and load management programs in the service territories of
Montaup's affiliated companies. On April 25, 1990, FERC authorized the
implementation of the rate increase, subject to refund, effective with the
commercial operation of Seabrook Unit 1. On May 22, 1990 a FERC administrative
law judge issued an order to separate the M-12 request into two phases. Phase
I was to address all cost of service issues other than Seabrook Unit 1 prudency
concerns, and Phase II would address the Seabrook Unit 1 prudency issues. On
August 19, 1990, commercial operation of Seabrook Unit 1 was declared and the
M-12 rate was made effective, subject to refund. On October 22, 1990, Montaup
filed a settlement agreement with FERC with respect to Phase I, reducing the
originally filed rate by $500,000. The Phase I settlement agreement was
approved by FERC on January 23, 1991.
On December 6, 1991, the FERC administrative law judge presiding over
Phase II of Montaup's M-12 rate case proceeding issued an initial decision
finding that Montaup had been prudent in its oversight of its Seabrook Unit 1
investment with respect to emergency planning and recommended no prudency
disallowance. Exceptions to the initial decision were filed by the intervening
parties. The FERC's Order with respect to Phase II was issued on August 4,
1992 and affirmed the FERC administrative law judge's initial decision, thus
allowing Montaup to recover and earn a return on its full investment in
Seabrook Unit 1 through rates.
On December 3, 1991, FERC approved a settlement agreement between Montaup
and the intervenors in Montaup's March 1991 wholesale rate increase request
(M-13). Montaup had filed for an annual increase of $10.5 million and FERC
allowed implementation of the new rate commencing May 7, 1991 subject to refund
pending final adjudication. The approved settlement agreement called for an
annual increase of $8.1 million. Montaup refunded the difference collected to
its wholesale electric utility customers in December 1991 billings.
After the acquisition of Newport, Montaup and Newport had instituted a
90/10 allocation of the energy savings which the two companies realize through
their treatment as a single entity in NEPOOL in recognition of the difference
in the size of each company. On December 20, 1991, after discussions with the
staff of FERC and in compliance with its position, Montaup and Newport filed
with FERC an application to have a proposed 50/50 allocation of their energy
savings approved. Protests and motions to intervene opposing the filing and
seeking a larger allocation of the savings to Montaup were filed with the FERC
in January 1992 by the MDPU, the Attorney General of Massachusetts and
Montaup's non-affiliated customers. On May 19, 1992 FERC approved the 50/50
allocation method as appropriate and accepted the revised energy savings
agreement for filing. However, the agreement incorrectly defined the
calculations necessary to compute a shared savings rate. Montaup and Newport
were directed to file a revised shared savings formula. On June 1, 1992
Montaup and Newport filed a rate schedule revision and Montaup M-Rate fuel
clause revisions in compliance with the FERC's order.
On December 17, 1992, FERC issued a Statement of Policy regarding the
recovery through rates of the cost of post-employment benefits other than
pensions (PBOP), as a result of FAS106 issued to address accounting procedures
for these costs. The FERC's policy recognizes allowances for prudently
incurred costs of such benefits of company employees when determined on an
accrual basis that is consistent with the accounting principles set forth in
FAS106. Furthermore, companies must agree to make cash deposits to an
irrevocable external trust fund equal to the annual test period allowance for
the cost of such benefits and they must maximize the use of income tax
deductions for contributions to the trust fund. If tax deductions are not
available for some portion of currently funded amounts, deferred income tax
accounting must be followed for the tax effects of such transactions.
Within three years of their adoption of FAS106, FERC regulated companies
must also file a general rate change and seek inclusion of these costs in their
rates. Companies may defer the jurisdictional portion of the difference
between the costs determined pursuant to accounting principles previously
followed and FAS106 accruals from the time they adopt FAS106 until they file
the general rate case described above. Montaup deferred its incremental FAS106
expenses of approximately $1.4 million for 1993, and will file for recovery of
such amounts in its 1994 rate application.
On March 21, 1994 Montaup filed a rate application with the FERC to reduce
annual revenues by $10.1 million. This request is intended to match more
closely Montaup's revenues with its decreasing cost of doing business resulting
from, among other things, a reduced rate base, lower capital costs and
successful cost control efforts. The application also includes a request for
recovery of all of Montaup's FAS106 expenses as provided in FERC's generic
order of December 1992. Also incorporated in this filing is a request to make
Newport an all requirements customer of Montaup. Currently Newport purchases
approximately 47% of its power requirements from suppliers other than Montaup.
If approved Montaup would assume all purchased power contracts of Newport and
subsequently provide Newport with 100% of its power needs. FERC can approve
Montaup's requested reduction to take effect as early as May 21, 1994 pending
final adjudication and approval. A final decision on this application is
expected during second half of 1994.
Massachusetts Proceedings:
On December 31, 1992, the MDPU issued its order in response to a $14.9
million (reduced from the originally filed $16.4 million) rate increase request
of Eastern Edison. The $8.1 million rate relief granted represented 49% of
Eastern Edison's original rate request filed on June 15, 1992 based on a 1991
test year. The new rates filed in compliance with the order became effective
for sales subsequent to January 1, 1993.
In authorizing the increase, the MDPU accepted a settlement proposal
offered jointly by Eastern Edison and the Massachusetts Attorney General, the
sole intervenor. The settlement stipulated the total revenue requirement which
included an amortization of Hurricane Bob costs over a five-year period without
a return on the unamortized amount. The settlement also reflects the recovery
of the full tax deductible amount of post-retirement benefits other than
pensions (FAS106 expenses), without any phasing-in of the increase over the
current ("pay-as-you-go") level. All FAS106 amounts recovered are required to
be placed in trusts permitted by the IRS which will maximize tax deductibility
and provide tax-free benefits to retirees. The depreciation rate and the
common equity component of AFUDC were also specified. The composite rate for
the depreciation calculation was set at 4.13%, up slightly from the 4.07%
previously authorized. Solely for the purpose of calculating AFUDC, the common
equity return component was set at 11.5%.
In a recently decided rate case, the MDPU put all companies on notice that
it expects them..."to consider mergers or acquisitions in order to further
optimize least-cost planning efforts and better fulfill their obligations to
serve." Thereafter, the MDPU instituted an investigation, which is now
underway, for the purpose of establishing, among other things, guidelines and
standards for acquisitions and mergers of utilities and evaluating proposals
regarding the recovery of costs associated with such activities. It is not
possible to predict what effects, if any, the MDPU proceeding will have on the
EUA System.
Rhode Island Proceedings:
On June 17, 1991, Blackstone filed with the RIPUC a request for increased
annual revenues of approximately $6 million or 5.0%. Subsequently, Blackstone
reduced this request to $5.1 million or 4.2%. On March 16, 1992 the RIPUC
issuedits order granting Blackstone rate relief of $3.0 million or 58% of the
requested amount. The order included an allowed return on common equity of
11.43%.
On December 27, 1991, Newport filed an application with the RIPUC for a
total rate increase of $7.3 million, to take effect in two steps. Phase I would
increase annual revenues by $6.1 million and is related to increases in
Newport's cost of service and a decline in kWh sales. In Phase II, Newport
proposed toincrease rates by an additional $1.3 million, to take effect in
January 1993, when Newport was required to adopt FAS106. On September 28,
1992 the RIPUC issued its order granting Newport rate relief of $3.7 million or
60% of the requested Phase I amount.
In authorizing the Phase I increase, the RIPUC accepted a conditional
offer of settlement filed jointly by Newport and the RIDPUC. The settlement
consisted of three separate stipulated agreements which applied to revenue
requirements, rate class revenue requirements, and rate design. Other
intervening parties agreed to some but not all of these stipulations. The
order included an allowed return on common equity of 11.4% for annualized
earnings and for AFUDC. The order also called for the elimination of an
accrued deficit in Newport's storm contingency fund of approximately
$1.2 million. The deficit in the storm contingency fund was the result of
excessive damages incurred as a result of Hurricane Bob. The damages from
Hurricane Bob far exceeded amounts set aside for such purposes. The RIPUC
ordered the elimination of this deficit on the grounds that it was deemed to be
equivalent to the value of the OSP transfer and should be attributed to
ratepayers. Newport Electric Power Corporation, a wholly owned subsidiary of
Newport, transferred its right of ownership in the Ocean State Power Project on
December 31, 1990 to an EUA wholly owned subsidiary, EUA Ocean State. It did
so because neither it, nor its parent (Newport) could raise the $11 million an
equity contribution required at the time of the completion of the Ocean State
Power Project. On October 2, 1992, Newport filed an appeal with the Rhode
Island supreme court for reversal of the RIPUC directive to write off the storm
contingency deficit. On May 26, 1993, the Rhode Island supreme court
overturned the ruling by the RIPUC. The Phase I rate increase granted of
$3.7 million was not affected by the Supreme Court decision.
On April 7, 1992, the RIPUC initiated generic Docket No. 2045 pertaining
to the FAS106 issue for all Rhode Island utility companies. On June 26, 1992
Newport and Blackstone filed proposed rate increases to reflect the impact of
FAS106 of approximately $1.3 million and $2.7 million respectively. Phase II
of Docket No. 2036, discussed above, was incorporated by reference. An order
was issued on December 11, 1992 granting recovery of a tax deductible amount of
FAS106 phased into rates over a three-year period with the initial one-third to
be recovered no earlier than the first fiscal year beginning after December 15,
1992, and the deferrals of the first two years recovered in rates over the
seven-year period following the three-year phase-in. On December 21, 1992,
Newport and Blackstone filed compliance rates representing phase one of the
three-year phase-in. The Phase I revenue requirement representing one third of
the incremental FAS106 tax deductible amount for Blackstone and Newport were
calculated to be $353,000 and $417,000 respectively. Phase II compliance was
filed November 1, 1993. The revenue requirement representing two thirds of the
incremental FAS106 tax deductible expense for Blackstone and Newport were
calculated to be $706,000 and $834,000 respectively. The RIPUC also ordered
that all amounts recovered be placed in trusts permitted by the IRS which will
maximize tax deductibility. In 1993, total FAS106 expenses for Blackstone and
Newport were approximately $2.0 million and $1.2 million, respectively.
On October 22, 1992, the RIPUC issued Order No. 14060 which established
Docket No. 2073 to review design of Blackstone's rates. In compliance with the
RIPUC's Order, Blackstone filed testimony on December 9, 1992 in support of a
proposed rate class redesign. After a hearing held by the RIPUC on
Blackstone's proposals, a stipulation and settlement agreement was signed by
all parties to the proceeding which reallocated Blackstone's existing revenue
requirements among the rate classes. In Order No 14209 which became effective
on May 6, 1993, the RIPUC accepted the stipulation and settlement without
modification.
Also, on January 14, 1994, the RIPUC issued a written order establishing
Docket No. 2167 for a Comprehensive Review of Newport's rate design. A
prehearing conference was held on February 8, 1994 at which time a schedule for
pre-filing testimony was established.
Environmental Regulation
General:
The Retail Subsidiaries and Montaup and other companies owning generating
units from which power is obtained are subject, like other electric utilities,
to environmental and land use regulations at the federal, state and local
levels. The EPA, and certain state and local authorities, have jurisdiction
over releases of pollutants, contaminants and hazardous substances into the
environment and have broad authority in connection therewith including the
ability to require installation of pollution control devices and remedial
actions.
Federal, Massachusetts and Rhode Island legislation requires consideration
of reports evaluating environmental impact as a prerequisite to the granting of
various permits and licenses with a view of limiting such impact. Federal,
Massachusetts and Rhode Island air quality regulations also require that plans
(including procedures for operation and maintenance) for construction or
modification of fossil fuel generating facilities receive prior approval from
the DEP or RIDEM. In addition, in Massachusetts, certain electric generation
and transmission facilities will be permitted to be built only if they are
consistent with a long-range forecast filed by the utility concerned and
approved by the Massachusetts Energy Facilities Siting Board. In Rhode Island,
siting, construction and modification of major electric generating and
transmission facilities must be approved by the Rhode Island Energy Facility
Siting Board and the Rhode Island Coastal Resource Management Council.
Generating facilities in which Montaup and Newport have an interest, and
are required to pay a share of the costs, are also subject, like other electric
utilities, to regulation with regard to zoning, land use, and similar controls
by various state and local authorities.
The EPA and state and local authorities may, after appropriate
proceedings, require modification of generating facilities for which
construction permits or operating licenses have already been issued, or impose
new conditions on such permits or licenses, and may require that the operation
of a generating unit cease or that its level of operation be temporarily or
permanently reduced. Such action may result in increases in capital costs and
operating costs which may be substantial, in delays or cancellation of
construction of planned facilities, or in modification or termination of
operations of existing facilities.
Other activities of the EUA System from time to time are subject to the
jurisdiction of various other local, state and federal regulatory agencies. It
is not possible to predict with certainty what effects the above described
statutes and regulations will have on the EUA System.
The EPA has issued regulations relating to the generation, transportation,
storage and disposal of certain wastes under RCRA; in Massachusetts, the
requirements are implemented and enforced by the DEP, whereas in Rhode Island,
RIDEM implements and enforces its own regulations under a state statute
comparable to RCRA as well as pursuant to EPA authorization.
There is an extensive body of federal and state statutes governing
environmental matters, including CERCLA, as amended by the Superfund Amendments
and Reauthorization Act of 1986 and, in Massachusetts, Chapter 21E, which
permit, among other things, federal and state authorities to initiate legal
action providing for liability, compensation, cleanup, and emergency response
to the release or threatened release of hazardous substances into the
environment and for the cleanup of inactive hazardous waste disposal sites
which constitute substantial hazards. Under CERCLA and Chapter 21E, joint and
several liability for cleanup costs may be imposed on, among others, the owners
or operators of a facility where hazardous substances were disposed, the party
who generated the substances, or any party who arranged for the disposition or
transport of the substances. Due to the nature of the business of EUA's
utility subsidiaries, certain materials are generated that may be classified as
hazardous under CERCLA and Chapter 21E. As a rule, the subsidiaries employ
licensed contractors to dispose of such materials. See Item 3. LEGAL
PROCEEDINGS -- Environmental Proceedings.
The EPA, pursuant to TSCA, regulates the use, storage, and disposal of
PCBs. Because the EUA System owns and uses some electrical transformers
containing PCBs, it is subject to EPA regulation under TSCA. The System is in
the process of phasing out its use of transformers which contain PCBs.
Electric and Magnetic Fields:
A number of scientific studies in the past several years have examined the
possibility of health effects from EMF that are found wherever there is
electricity. While some of the studies have indicated some association between
exposure to EMF and health effects, many others have indicated no direct
association. The research to date has not conclusively established a direct
causal relationship between EMF exposure and human health. Additional studies,
which are intended to provide a better understanding of EMF, are continuing.
Some states have enacted regulations to limit the strength of EMF at the
edge of transmission line rights-of-way. Rhode Island has enacted a statute
which authorizes and directs the Rhode Island Energy Facility Siting Board to
establish rules and/or regulations governing construction of high voltage
transmission lines of 69 KV or more. Various bills are pending in the
Massachusetts legislature that would require certain disclosures about the
potential health effects of EMF. Management cannot predict the impact, if
any, which legislation or other developments concerning EMF may have on the
EUA System.
Water Regulation:
The objective of the Federal Water Pollution Control Act is to restore and
maintain the chemical, physical, and biological integrity of the nation's
navigable waters. The elimination of pollutant discharges (including heat)
into navigable waters is one goal aimed at achieving this objective. Another
step mandated by Federal Water Pollution Control Act was the creation of a
rigorous permit program. All water discharge permits for plants in
Massachusetts, including those for the Somerset and Canal plants, are issued
jointly by the EPA and DEP. These same agencies also regulate certain
industrial stormwater discharges.
Under the Federal Water Pollution Control Act, the Massachusetts Wetland
Protection Act, and the Rhode Island Wetland Act, standards have been
established to control the dredging and filling of wetlands. The EPA's Army
Corps of Engineers, RIDEM, CRMC and the DEP are pursuing a non-degradation (no
loss) policy for wetlands.
Under the Massachusetts Water Management Act, the DEP is responsible for
promulgating regulations relating to water usage and conservation.
Most of the generating units from which Montaup obtains power operate
under permits which limit their effluent discharges into water and which
require monitoring and, in some instances, biological studies and toxicity
testing of the impact of the discharges. Such permits are issued for a period
of not more than five years, at the expiration of which renewal must be
sought. The permit for the Somerset plant must be renewed by August 30, 1994.
The Oil Pollution Act of 1990 (OPA-90) was passed after several major oil
spills occurred in waters of the United States. The primary intent of this
legislation is to mandate strong contingency plans to prevent releases of oil
and to require that sufficient resources are in place and ready to respond to
any release. EPA, USCG, RIDEM, and DEP have a number of other rules in place,
such as EPA's SPCC regulations, which are designed to minimize the release of
oil and other substances into navigable waters and the environment.
Air Regulation:
All fossil fuel plants from which Montaup obtains power operate under
permits which limit their emissions into the air and require monitoring of the
emissions. Air quality requirements adopted by state authorities in
Massachusetts pursuant to the Clean Air Act impose limitations with respect to
pollutants such as sulfur dioxide, oxides of nitrogen and particulate matter.
Montaup's Somerset Station currently is permitted to burn coal which results in
sulfur dioxide emissions not in excess of 2.42 pounds per million BTU heat
release potential (approximately 1.5% sulfur content coal). The Canal Station
Unit 2 is permitted to burn fuel oil which results in sulfur dioxide emissions
not in excess of 2.42 pounds per million BTU heat release potential
(approximately 2.2% sulfur content fuel oil) when operating at 450 MW or above
and 1% sulfur content fuel oil when operating at less than 450 MW.
The EPA has established clean air standards for certain pollutants,
including standards limiting emissions from coal-fired and oil-fired
generators. Congress passed amendments to the Clean Air Act in 1990 which
created regulatory programs and generally updated and strengthened air
pollution control laws. These amendments will expand the regulatory role of
the EPA regarding emissions from electric generating facilities. Title IV of
the Clean Air Act Amendments addresses acid deposition abatement and
establishes a 2-phase utility power plant pollution control program to reduce
emissions of sulfur dioxide and oxides of nitrogen. The first phase begins in
1995 and affects 261 large units in 21 eastern and midwestern states. Phase
II, which begins in the year 2000, tightens the emission limits imposed on
these larger plants and also sets restrictions on smaller, cleaner plants fired
by coal, oil and gas. Montaup's Somerset Station is classified as a Phase II
facility with a compliance deadline by the end of 1999. The control program
establishes a national cap of 8.95 million tons per year for sulfur dioxide
emissions. This reflects a reduction of about 10 million tons per year.
Beginning in the year 2000, the EPA will issue 8.95 million sulfur dioxide
allowances to utilities annually. The sulfur allowance program will not affect
Montaup's Somerset Station until January 1, 2000.
Massachusetts DEP regulations establish a statewide cap on sulfur dioxide
emissions and require Montaup's facilities to meet an average emission rate of
1.21 pounds of sulfur dioxide per million BTU of fuel input by the end of
1994. Under federal standards, Montaup would not be required to meet this
sulfur dioxide emission level until the year 2000 as a result of Title IV of
the Clean Air Act. However, Massachusetts DEP regulations require compliance
five years earlier. As required by state regulations, Montaup submitted and
received approval of a plan detailing how it would meet the 1995 sulfur dioxide
standard. Montaup intends to achieve compliance by substituting lower sulfur
content fuels. Tests at Montaup's Somerset Station indicate that Unit #6 will
be able to utilize lower sulfur content coal than is already being burned to
meet the 1995 air standards with only a minimal capital investment. Montaup
determined that it would not be economical to repair Unit #5 of the Somerset
Station and has placed it in deactivated reserve (see Item 2. PROPERTIES).
Other provisions of the Clean Air Act Amendments will likely impact
Montaup by 1995. Title I of the Act sets a strategy for states to move toward
attaining national air quality standards, with the emphasis on meeting the
ozone standard. Ozone relates directly to the nation's smog problem. Oxides
of nitrogen are one of the precursors of ozone formation. Title I requires
additional controls on industrial sources of oxides of nitrogen including
utility power plants. The Act creates the Northeast Ozone Transport Region,
covering the area from Virginia to Maine, including Massachusetts and Rhode
Island. Areas within the transport region will become subject to enhanced
controls on oxides of nitrogen emissions.
In April 1992, NESCAUM, an environmental advisory group for eight
Northeast states including Massachusetts and Rhode Island issued
recommendations for oxides of nitrogen controls for existing utility boilers
required to meet the ozone non-attainment requirements of the Clean Air Act
Amendments. The NESCAUM recommendations are more restrictive than EPA's
requirements. Massachusetts has issued new regulations to implement oxides of
nitrogen reduction requirements. The DEP has amended its regulations to
require that Reasonably Available Control Technology (RACT) be implemented at
all stationary sources potentially emitting 50 tons per year or more of oxides
of nitrogen. Rhode Island has not yet issued regulations to implement oxides
of nitrogen reduction requirements. Montaup is in the process of reviewing
compliance strategies and of providing input to Massachusetts environmental
regulators. Any compliance strategy may require the implementation of
additional pollution control technology as early as 1995. Montaup would seek
recovery of pollution control expenditures through rates.
Title V of the Clean Air Act Amendments provides EPA with broad new
permitting authority by 1995, with the goal of having states issue federally
enforceable operating permits which will outline limits and conditions
necessary to comply with all applicable air requirements. The Act's permitting
program will be phased in over the next couple of years. Although individual
sources will be required to pay fees to the various states which will
administer the program, the impact of these requirements is not expected to
have a material financial impact on EUA.
Environmental Regulation of Nuclear Power
The NRC has promulgated a variety of standards to protect the public from
radiological pollution caused by the normal operation of nuclear generating
facilities. For example, the NRC requires licensed facilities to develop plans
to respond to unexpected developments.
In some environmental areas the NRC and the EPA have overlapping
jurisdiction. Thus, NRC regulations are subject to all conditions imposed by
the EPA and a variety of federal environmental statutes, including obtaining
permits for the discharge of pollutants (including heat) into the nation's
navigable waters. In addition, the EPA has established standards, and is in
the process of reviewing existing standards, for certain toxic air pollutants,
including radionuclides, under the Clean Air Act Amendments which apply to
NRC-licensed facilities. The effective date for the new radionuclide standards
has been stayed as to nuclear generating units. The EPA has also promulgated
environmental radiation protection standards for nuclear power plants which
regulate the doses of radiation received by the general public.
The NWPA provides for development by the federal government of facilities
for the disposal or permanent storage of civilian nuclear waste. For further
details about NWPA see Item 1. BUSINESS -- Fuel for Generation. The NRC has
also promulgated regulations regarding the disposal of nuclear waste materials
designed to protect the public from radiological dangers.
Environmental regulation of nuclear facilities in which the EUA System has
an interest or from which they purchase power may result in significant
increases in capital and operating costs, in delays or cancellation of
construction of planned improvements, or in modification or termination of
existing facilities.
Energy Policy
The Energy Act deals with many aspects of national energy policy and
includes important changes for electric utilities and registered holding
companies. It is not possible to predict the impact which the Energy Act and
the rules and regulations which will be promulgated by various regulatory
agencies pursuant to the Energy Act will have on the EUA System. Certain
provisions of the Energy Act will increase competition in the generation of
electricity, while other provisions will open up new investment opportunities
for registered holding companies. Certain provisions of the Energy Act are
intended to encourage conservation of electricity while other provisions may
create additional demand for electricity.
The Energy Act encourages investments in certain types of energy
conversion and energy efficient equipment and requires the federal government
to undertake major new conservation projects. On the other hand, by
encouraging the development of electric motor vehicles, the Energy Act may
create additional demand for electricity.
One of the more significant provisions of the Energy Act creates a new
class of generation companies exempt from the 1935 Act, which sell exclusively
at wholesale, called exempt wholesale generators or EWGs. The Energy Act also
grants FERC new authority to mandate transmission access for QFs, EWGs and
traditional utilities. The Energy Act reduces the restrictions on certain
types of investments by registered holding companies including investments in
EWGs, investments in foreign utilities which do not operate in the United
States and investments in certain types of QFs which were previously limited to
the holding company's service territories or areas closely interconnected with
those service territories. Pursuant to certain provisions of the Energy Act,
the SEC has promulgated regulations to minimize the risks of investments in
EWG's by registered holding companies and their utility subsidiaries.
Regulations regarding investments in foreign utilities are also required under
the Energy Act but have not yet been promulgated by the SEC.
The Energy Act prevents an EWG directly or indirectly owned by a
registered holding company from entering into a power contract with a utility
affiliate of the holding company without the approval of each state commission
having jurisdiction over the rates of the utility affiliate.
It is not possible to predict the timing or content of future energy
policy legislation and the significance of such legislation to the EUA System.
Various issues not addressed by the 1992 Energy Act, including regional
planning and transmission arrangements, could be addressed in future
legislation.
Item 2. PROPERTIES
Power Supply
Montaup supplies the EUA System with approximately 85% of its electric
requirements. In 1993, the EUA System's wholly owned generating units referred
to in the following table consisted of Montaup's jet-fueled peaking units
(Somerset Jet 1 and Jet 2) and Somerset 6 which were converted from oil to coal
in 1983, Blackstone's Pawtucket Hydro, which was repowered in 1985 and
Newport's diesel peaking units (Jepson in Jamestown and Eldred in Portsmouth)
which supplied the EUA System with 8 MW and 8.25 MW, respectively. With the
exception of Somerset's Jet 1 and Jet 2, Montaup has not significantly
increased its wholly owned generating units since 1959. The EUA System has
found it more economical to join with other utilities in the joint ownership of
large generating units and in long-term purchase contracts, and to supplement
these sources with short-term purchases as required. EUA believes that
spreading the EUA System's sources of electricity among a number of plants
should improve the reliability of its power supply and limit the financial
exposure relating to construction and potentially prolonged outages of a
generating unit. Under the Eastern Edison/Request for Proposal process,
Montaup negotiated a purchase power contract with Meridian Middleboro
Corporation for approximately 44 MW of capacity. The proposed facility will be
a combined cycle unit. Its primary source of fuel will be natural gas and
secondary source of fuel will be No. 2 fuel oil. The contract is estimated to
be in effect at the beginning of the year 2001.
On January 25, 1994, generating the Unit No. 5 at Somerset Station was
placed in deactivated reserve. The 69 MW, 42 year old unit had been out of
service for 5 months because of mechanical problems. An assessment of the cost
and feasibility of repairing and refurbishing the unit to meet reliability
standards and Clean Air Act Amendments regulations concluded that rebuilding
the unit would not be economical. Current forecasts indicate that with a
combination of company owned generation, current long-term purchased power
contracts, expected short-term power opportunities, and EUA System's C&LM
programs, no additional capacity requirements will be needed through the year
1999.
Montaup recovered approximately $13.5 million through rates in 1993 for
C&LM programs. C&LM is designed to (i) decrease existing energy demand and
(ii) offset future load growth through conservation incentives thereby
minimizing future need for large capital investment in generating facilities.
The peak EUA System demand in 1993 was approximately 854 MW experienced on
August 27, 1993. The all time peak EUA System demand experienced to date was
approximately 879 MW experienced on July 19, 1991.
<TABLE>
EUA SYSTEM CAPABILITY
GENERATING UNITS IN SERVICE AS OF DECEMBER 31, 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS WINTER MAX GROSS NET
IN SYSTEM CLAIMED SYSTEM UNIT SYSTEM
SERVICE SHARE CAPABILITY SHARE SALES SHARE
DATE UNIT NAME FUEL TYPE OWNER/OPERATOR % MW MW MW MW
100% OWNERSHIP:
1951 SOMERSET 1 COAL MONTAUP ELECTRIC CO. 100.00 68.93 68.93 0.00 68.93
1959 SOMERSET 6 COAL MONTAUP ELECTRIC CO. 100.00 107.00 107.00 0.00 107.00
1970 SOMERSET J1 JET OIL MONTAUP ELECTRIC CO. 100.00 25.50 25.50 0.00 25.50
1971 SOMERSET J2 JET OIL MONTAUP ELECTRIC CO. 100.00 23.00 23.00 0.00 23.00
1985 PAWTUCKET HYDRO HYDRO BLACKSTONE VALLEY ELEC. 100.00 1.24 1.24 0.00 1.24
1961 JEPSON DIESEL NEWPORT ELECTRIC CORP. 100.00 8.00 8.00 0.00 8.00
1978 ELDRED DIESEL NEWPORT ELECTRIC CORP. 100.00 8.25 8.25 0.00 8.25
SUBTOTAL: 242.00 0.00 241.92
JOINT OWNERSHIP:
1976 CANAL 2 NO. 6 OIL CANAL ELECTRIC COMPANY 50.00 584.00 292.00 85.00 207.00
1978 WYMAN 4 (YAR 4) NO. 6 OIL CENTRAL MAINE POWER CO. 2.63 (1) 619.25 16.28 0.00 16.28
1986 MILLSTONE 3 NUCLEAR NORTHEAST UTILITIES 4.01 1148.70 46.05 0.00 46.05
1990 SEABROOK NUCLEAR NORTH ATLANTIC ENERGY CORP. 2.90 1150.00 33.35 0.00 33.35
SUBTOTAL: 388.00 85.00 302.68
EQUITY OWNERSHIP:
1968 CONN. YANKEE NUCLEAR CONN. YANKEE ATOMIC POWER 4.50 583.20 26.24 0.00 26.24
1972 MAINE YANKEE NUCLEAR MAINE YANKEE ATOMIC POWER 3.59 880.00 31.61 0.00 31.61
1972 VERMONT YANKEE NUCLEAR VT. YANKEE NUCLEAR POWER 2.25 519.33 11.68 0.00 11.68
SUBTOTAL: 69.53 0.00 69.53
PURCHASED POWER:
1968 CANAL1 NO. 6 OIL CANAL ELECTRIC COMPANY 25.00 (2) 572.00 143.00 0.00 143.00
1972 PILGRIM 1 NUCLEAR BOSTON EDISON COMPANY 11.00 (2) 670.00 73.70 0.00 73.70
1977 POTTER 2 GAS/OIL BRAINTREE ELEC. LIGHT DEPT.41.67 (2) 96.00 40.00 0.00 40.00
1975 CLEARY 9 GAS/OIL TAUNTON MUNIC. LIGHTING 13.64 (2) 110.00 15.00 0.00 15.00
1982 STONY BROOK 2A NO.2 OIL MASS. MUNIC. WHOLESALE CO. 32.35 85.00 27.50 0.00 27.50
1986 STONY BROOK 2B NO.2 OIL MASS. MUNIC. WHOLESALE CO. 32.35 85.00 27.50 0.00 27.50
1984 MCNEIL WOOD VERMONT ELECTRIC POWER 15.24 (3) 53.00 8.08 0.00 8.08
1978 WYMAN 4 NO. 6 OIL CENTRAL MAINE POWER 0.81 (3) 619.25 5.00 0.00 5.00
1972 SALEM HBR 4 NO. 6 OIL NEW ENGLAND POWER 1.25 (3) 400.00 5.00 0.00 5.00
1974 BRAYTON 4 NO. 6 OIL NEW ENGLAND POWER 1.13 (3) 442.00 5.00 0.00 5.00
1990 OSP 1 GAS OCEAN STATE POWER 28.00 (4) 281.00 78.68 0.00 78.68
1991 OSP 2 GAS OCEAN STATE POWER 28.00 (4) 281.00 78.68 0.00 78.68
1991 NEA GAS NORTHEAST ENERGY ASSOC. 8.62 334.38 28.83 0.00 28.83
NU SLICE-EUA
1970 SMDW J11-J14 JET OIL NORTHEAST UTILITIES 0.98 195.60 1.91 0.00 1.91
1969 COS COB 10-12 JET OIL NORTHEAST UTILITIES 0.98 68.60 0.67 0.00 0.67
1971 MONTVILLE 6 NO. 6 OIL NORTHEAST UTILITIES 0.86 410.00 3.51 0.00 3.51
1964 MIDDLETOWN 3 NO. 6 OIL NORTHEAST UTILITIES 0.86 245.00 2.10 0.00 2.10
1973 MIDDLETOWN 4 NO. 6 OIL NORTHEAST UTILITIES 0.86 400.00 3.42 0.00 3.42
1960 NORWALK HBR 1 NO. 6 OIL NORTHEAST UTILITIES 0.86 164.00 1.40 0.00 1.40
1963 NORWALK HBR 2 NO. 6 OIL NORTHEAST UTILITIES 0.86 172.00 1.47 0.00 1.47
1970 MILLSTONE 1 NUCLEAR NORTHEAST UTILITIES 0.65 647.70 4.22 0.00 4.22
1975 MILLSTONE 2 NUCLEAR NORTHEAST UTILITIES 0.49 874.50 4.32 0.00 4.32
1986 MILLSTONE 3 NUCLEAR NORTHEAST UTILITIES 0.61 1148.70 6.97 0.00 6.97
1972 NFLD G 1-4 PUMPED HYDRO NORTHEAST UTILITIES 0.99 1080.00 10.72 0.00 10.72
SUBTOTAL: 576.68 0.00 576.68
HYDRO QUEBEC ENTITLEMENT:
1991 HYDRO QUEBEC I&II HYDRO HQ / NEPOOL 4.06(5) 1215.00 49.31 0.00 49.31
SUBTOTAL: 49.31 0.00 49.31
TOTAL GROSS SYSTEM CAPABILITY (MW) --------------------- 1325.12 (6)
LESS: UNIT CONTRACT SALES (MW) --------------------------- 85.00
TOTAL NET SYSTEM CAPABILITY (MW) -------------------------- 1240.12(6)
NOTES (1) REPRESENTS MONTAUP JOINT OWNERSHIP SHARE OF 1.9618% AND NEWPORT JOINT OWNERSHIP OF .6666%.
(2) "LIFE OF UNIT" PURCHASE CONTRACT.
(3) PURCHASED POWER OF NEWPORT.
(4) FOR EACH UNIT, MONTAUP IS A POWER PURCHASER WITH 22% ENTITLEMENT AND NEWPORT IS A POWER PURCHASER
WITH 6% ENTITLEMENT. (EUA OCEAN STATE HOLDS A 29.9% EQUITY INTEREST IN OCEAN STATE POWER PARTNERSHIP.)
(5) ENTITLEMENT % IS WEIGHTED AVERAGE OF PHASE I & II SHARES (40% PHASE I (4.01987%); 60% PHASE II (4.0842%)).
(6) TOTAL CAPABILITY INCLUDES SOMERSET 5 (68.93 MW) WHICH WAS PLACED ON DEACTIVATED RESERVE ON
JANUARY 25, 1994.
</TABLE>
Montaup's participation in generating units of which it is not the sole
owner takes various forms including stock (equity) ownership, joint ownership
and purchase contracts. In most cases (other than short-term purchased power
contracts) the purchaser is required to pay its share (i.e., the same
percentage as the percentage of its entitlement to the output) of all of the
costs of the generating unit (whether or not the unit is operating) including
fixed costs, operating costs, costs of additional construction or modification,
costs associated with condemnation, shutdown, retirement, or decommissioning of
the unit, and certain transmission charges. Under its contracts with Maine
Yankee, Connecticut Yankee Atomic Power Company, Vermont Yankee Nuclear Power
Corporation, and Yankee Atomic and, under its agreements relating to Phase II
of the interconnection with Hydro-Quebec, Montaup may be called upon to provide
additional capital and/or other types of direct or indirect financial support.
(See Item 1. BUSINESS -- Yankee Atomic.)
Other Property
The EUA System owns approximately 4,700 miles of transmission and
distribution lines and approximately 114 substations located in the cities and
towns served.
In addition to the above, the Retail Subsidiaries, Montaup, and EUA
Service also own several buildings which house distribution, maintenance or
general office personnel. See Note F of Notes to Consolidated Financial
Statements contained in the Registrant's Annual Report to Shareholders for the
year ended December 31, 1993, (Exhibit 13-1 filed herewith) regarding
encumbrances.
Item 3. LEGAL PROCEEDINGS
Rate Proceeding
See descriptions of proceedings under Item 1, BUSINESS -- Rates.
Environmental Proceedings
1. In March 1985, Blackstone was notified by the DEQE, which is now the
DEP, that it had been identified, along with other parties, as a potentially
responsible party under Massachusetts law for a condition of soil and ground
water contamination in Lowell, Massachusetts. The site in question was
occupied by a scrap metal reclamation facility which received transformers and
other electrical equipment from utility companies and others from the early
1960s until 1984. Among the contaminants apparently released at the site were
PCBs. The potentially responsible parties (PRPs), including Blackstone,
performed site studies and proposed a remedial action plan, which was approved
by the DEQE several years ago. Since that time, the PRPs have negotiated over
access, taxes and similar issues with the site owner and other parties. The
remedial option selected but not yet completed is a process of solidification;
however, a risk assessment that may now be required could lead the PRPs to
choose capping as the remedial option. The cost of implementing either remedy
(which is less than the total costs for parties associated with the site) could
vary from $250,000 for capping to $600,000 for solidification. Blackstone is
alleged to be the fifth ranked generator out of approximately twenty
potentially responsible parties. However, Blackstone's estimated 2% share
allocation is considerably less than the shares of the four largest
contributors at the site. As a result, Blackstone expects to be offered a
deminimis party buyout settlement from the major members of the site PRPs in
the near future.
2. On July 14, 1987, the Commonwealth of Massachusetts on behalf of the
DEP filed a cost recovery action pursuant to CERCLA and Mass. Gen. Laws Chapter
21E against Blackstone in the United States District Court of Boston. The
Complaint seeks $2.2 million in costs incurred by DEP in the cleanup of an
alleged coal gasification waste site at Mendon Road in Attleboro,
Massachusetts. In October 1987, without admitting liability, Blackstone
entered into an administrative Consent Order with DEP regarding the Mendon Road
site and another alleged coal gasification site discovered by the DEP
approximately 1/4 mile away known as the Lawn/Knoll site in Attleboro.
Blackstone agreed to perform preliminary assessments at both sites in order to
determine what remediation, if any, was necessary at the site. In 1988,
Blackstone submitted Phase II testing results for the Lawn/Knoll site to the
DEP for review and approval, but Blackstone has not received a response or DEP
authorization to proceed with further studies or remedial action. On May 26,
1993, the DEP requested Blackstone to submit additional Phase I testing for the
Mendon Road site which was completed and sent to the DEP on December 20, 1993.
Meanwhile, Blackstone has defended the DEP's cost recovery action, arguing,
inter alia, that the waste remediated at the Mendon Road site was not
"hazardous" within the meaning of CERCLA or Mass. Gen. Laws Chapter 21E and the
DEP's cleanup actions were inconsistent with the National Contingency Plan
(NCP). On November 20, 1991 the Court held that the waste was "hazardous"
within the meaning of both statutes and on December 20, 1992, the Court held
Blackstone and a co-defendant, the Courtois Sand & Gravel Co. (Courtois) liable
for an undetermined amount of cleanup costs. The Court remanded the case to
the DEP to supplement the Administrative Record with Blackstone's oral and
written comments concerning the cleanup. On March 19, 1993, Blackstone made an
oral presentation to the DEP and on April 19, 1993, Blackstone submitted
written comments. On June 21, 1993, the DEP submitted its response to
Blackstone's comments and then recertified the Administrative Record to the
Court for its review. The Court must now make a judicial determination whether
the DEP's actions were inconsistent with the NCP. If the Court finds in favor
of the DEP on the NCP issue, then it must determine how much money Blackstone &
Courtois owe the DEP. The DEP has filed a motion for judgment seeking $5.1
million in cleanup costs, administrative expenses and interest for the Mendon
Road site. On January 28, 1994, Blackstone filed a Complaint in the United
States District Court in Boston seeking contribution and reimbursement from
Stone & Webster Inc., of New York City and several affiliated companies (Stone
& Webster), and Valley Gas Company of Cumberland, Rhode Island (Valley) for any
damages incurred by Blackstone regarding the Mendon Road site. Blackstone's
Complaint also seeks a declaratory judgment that Stone & Webster and Valley
owned and/or operated a coal gasification plant on Tidewater Street in
Pawtucket (the Tidewater Plant) where the coal gasification waste allegedly was
generated, and that they individually or collectively arranged for the disposal
of such waste.
3. On October 28, 1986, RIDEM notified Blackstone that there may have been
a release of hazardous material at the Tidewater Plant site in Pawtucket, Rhode
Island. The site was placed on EPA's CERCLIS list in 1987. The site includes
the Tidewater Plant owned by Valley Gas Company (approximately 10 acres), the
No. 1 Station owned by Blackstone (approximately 10 acres), and land formerly
owned by Blackstone that was sold in 1968 to the City of Pawtucket
(approximately 10 acres). RIDEM told Blackstone that the site contained
cyanide-contaminated wastes and petroleum-contaminated soils due to tanks
formerly located at the site. In December, 1990, after obtaining approval from
RIDEM, Blackstone removed approximately 1,000 tons of soil from the site. On
September 3, 1991, RIDEM initiated a site investigation which constitutes the
second step in a site screening and assessment process established by the EPA
to determine whether the site should be listed as a Superfund site. On
February 3, 1993, RIDEM notified Blackstone that it required further assessment
and evaluation of site conditions to determine if the site qualifies for review
pursuant to the Hazardous Ranking System. The EPA is planning to review the
site to determine whether a further investigation and a hazard ranking should
be performed. On January 28, 1994, Blackstone filed a Complaint (previously
mentioned in paragraph 2) in United State District Court for the District of
Massachusetts seeking, inter alia, a declaratory judgment that Stone & Webster
and Valley are responsible for owning and/or operating the Tidewater Plant and
disposing and/or arranging for the disposal of coal gasification wastes at the
Tidewater Plant site.
4. In 1987, Blackstone cleaned up a PCB spill which occurred approximately
18 years ago and was discovered in 1986 at the Davies Vocational School in
Lincoln, Rhode Island. The Company is negotiating post-closure care and a
consent agreement with the RIDEM and the Rhode Island Department of Education.
5. Montaup and EUA Service received a Notice of Responsibility on July 27,
1987 from the DEP for suspected hazardous material at a site owned by Montaup
on Hortonville Road in Swansea, Massachusetts. EUA Service has contracted for
and received an environmental site assessment for the property identifying the
previous property owner as the party likely responsible for the deposit of
suspected hazardous waste materials on the site. This assessment has been
submitted to the DEP, identifying the previous property owner. Under MCP
regulations, Montaup must take the initiative to complete investigative and
remedial actions by August 1997.
6. Blackstone received a notice from the EPA dated July 29, 1988, stating
that Blackstone is potentially liable for the alleged disposal of hazardous
waste on a hazardous waste site in North Smithfield, Rhode Island. The EPA has
conducted a remedial investigation and a feasibility study for this site and is
seeking participation in clean-up activities. Blackstone is attempting to
determine whether there is any basis for the liability claimed by the EPA.
Individually and as a member of a group of approximately 80 PRPs, Blackstone
has conducted negotiations with the EPA concerning settlement and concerning
the need to grant access and use rights over land owned by Blackstone that is
adjacent to the waste site. In September 1990, however, the EPA served a
number of parties (not including Blackstone) with unilateral administrative
orders to compel such parties to carry out remedial activities at the site.
Separate settlement negotiations among Blackstone, the EPA and the parties that
are subject to the administrative orders resulted in a settlement agreement
between Blackstone and certain major generators of materials at the site,
effective as of March 1, 1991. The parties (not including the EPA) have
indemnified Blackstone against liabilities and actions associated with the site
in return for a settlement payment and Blackstone's agreement to convey to the
parties an easement and access agreement over land adjacent to the site to
facilitate site remediation. Negotiations between Blackstone and those parties
over certain terms of the easement and access agreement are continuing.
7. During March-April 1990, Eastern Edison conducted a limited
environmental investigation (Phase I study) of a portion of its Dupont
Substation in Brockton, Massachusetts. During the investigation, Eastern
Edison notified the DEP that it had encountered oils and PCBs. On May 3, 1990,
the DEP notified Eastern Edison of its liability for releases of oil and/or
hazardous materials at the site, and requested a copy of the Phase I study.
Following its review of the Phase I study on January 23, 1991, the DEP issued a
Notice of Responsibility to Eastern Edison requiring a Phase II - Comprehensive
Site Investigation. On February 12, 1991, Eastern Edison notified the DEP that
it will perform the Phase II study and continue to work with the DEP at this
site. A scope of work for the Phase II study was submitted on April 12, 1991.
Eastern Edison will proceed once the DEP approves the scope of the work. Under
the new MCP, the DEP must classify this site before Eastern Edison can proceed
with further studies. A Phase II study and a site ranking may be required by
July 1995.
8. Blackstone received a letter dated May 25, 1990 from the RIDEM requiring
site assessment and remediation activities relative to gasoline contamination
encountered at Blackstone's Operations Center in Lincoln, Rhode Island.
Gasoline contamination was encountered during an underground storage tank
removal and replacement project. Environmental assessments have been completed
and submitted to the RIDEM. A remedial system was designed, permitted and put
in service in July 1991.
Blackstone, Eastern Edison, Montaup and EUA Service are unable to predict
the outcome of any of the foregoing environmental matters or to estimate the
potential costs which may ultimately result. It is the policy of these
companies in such cases to provide notice to liability insurers and to make
claims. However, at this time, no claims have been filed against any insurer
and it is not possible at this time to predict whether liability, if any, will
be assumed by, or can be enforced against, the insurance carrier in these
matters. Under CERCLA, each responsible party can be held "jointly and
severally" liable for clean-up costs. EUA or a subsidiary could thus be held
fully liable for environmental damages for which they were only partially
responsible. However, EUA might then be entitled to recover costs from other
PRPs.
As of December 31, 1993, the EUA System has incurred costs of approxi
mately $2.8 million in connection with the foregoing environmental matters and
estimates that additional expenditures may be incurred through 1995 up to $9.2
million. Of these amounts, approximately $2.7 million of the incurred costs to
date and approximately $8.4 million of the estimated future costs relate to
Blackstone.
As a general matter, the EUA System will seek to recover costs relating to
environmental proceedings in their rates, although there is no assurance that
they will be authorized to recover any particular cost. Blackstone applied
for, and received authority to recover in rates certain of the incurred costs
over a five-year period. Montaup is currently recovering certain of the
incurred costs in its rates. Estimated amounts after 1995 are not now
determinable since site studies which are the basis of these estimates have not
been completed. As a result of the recoverability in current rates and the
uncertainty regarding both its estimated liability, as well as potential
contributions from insurance carriers and other responsible parties, EUA does
not believe that the ultimate impact of the environmental costs will be
material to the EUA System or to any individual subsidiary and thus, no loss
accrual has been recorded.
Shareholder Proceeding
The Superior Court of The Commonwealth of Massachusetts, in approving a
settlement agreement in connection with a class action suit filed in Superior
Court on behalf of certain EUA shareholders naming EUA and certain current and
former Trustees of EUA as defendants, permitted a former shareholder of
approximately 540,000 shares to exclude himself from the plaintiff class. On
February 11, 1992 that former shareholder filed a suit against EUA and three
officers of EUA in the Federal District Court for Massachusetts alleging
fraudulent and negligent misrepresentations and violations of Rule 10b-5 under
the Securities Exchange Act in connection with statements made regarding the
business prospects for EUA Power and the portion of EUA's common share
dividends attributable to AFUDC from EUA Power. The suit has been dismissed
with respect to two of the officers. EUA and the remaining officer named in
the suit deny all allegations of liability and all of the claims and
contentions alleged by the former shareholder and are vigorously contesting the
suit. Discovery has proceeded throughout 1993 and the deadline for discovery
has been extended until April 30, 1994. EUA believes that the outcome of this
litigation will not have a material impact on its financial position.
Other Proceedings:
In December 1992, Montaup commenced a declaratory judgment action in which
it sought to have the Massachusetts Superior Court determine its rights under
the Power Purchase Agreement between it and Aquidneck Power Limited Partnership
(Aquidneck). Montaup sought a declaration that the Power Purchase Agreement
was binding on the parties according to its terms. Aquidneck asserted that
Montaup had either an express or implied obligation to negotiate new terms and
conditions to the Power Purchase Agreement. Specifically, the defendants
sought to amend, through negotiations, certain milestone events to which they
were bound in the Power Purchase Agreement as written. Aquidneck failed to
meet the first milestone of January 1, 1993. Accordingly, on January 5, 1993,
Montaup exercised its rights to terminate the Power Purchase Agreement
effective immediately. In January 1994, a counterclaim by Aquidneck claimed
certain breaches of the Power Purchase Agreement, including an alleged failure
on the part of Montaup to renegotiate the terms and conditions of the Power
Purchase Agreement relating to the first milestone event. Also in January
1994, Aquidneck sought to join EUA and EUA Service as parties to the suit.
Aquidneck apparently claims $11 million of damages on the theory that EUA
can "avoid an approximately $11 million obligation to purchase capacity and
power which it does not currently need." Aquidneck seeks treble damages
claiming Montaup, EUA and EUA Service violated state laws willfully and
knowingly.
Montaup, EUA and EUA Service intend to defend the counterclaim vigorously
and believe that Aquidneck's claims have no basis in law.
On June 30, 1987, the MDPU commenced a proceeding for the purpose of
investigating Eastern Edison's power planning process after rejecting a
proposed Purchased Capacity Adjustment Clause. One of the purposes of this
proceeding is to investigate the prudency of Eastern Edison's all-requirements
contract with Montaup. No procedural dates have been set nor has any other
activity occurred in this docket. EUA cannot predict the outcome of this
matter at this time.
On January 8, 1992, the Massachusetts Municipal Wholesale Electric
Cooperative and its member municipalities, all of which are members of NEPOOL,
filed a suit in Massachusetts Superior Court against the investor-owned
utilities that are also members of NEPOOL. The suit alleges damages by
NEPOOL's establishment of minimum size requirements for generating units
designated as pool-planned generating units. The suit names as defendants
members of NEPOOL, including Blackstone, Eastern Edison, Montaup and Newport
(NEPOOL members of the EUA System). Discovery has not begun, pending
resolution of certain procedural matters. The FERC initiated an action when
the EUA subsidiaries and other participants filed an amendment to the NEPOOL
Agreement with the FERC that concerns many of the issues raised in the
Massachusetts litigation. The plaintiffs in the Massachusetts litigation, and
one other participant have objected to the amendment, and have sought to
prevent or delay its effectiveness. The FERC has not yet determined whether or
when it will hold hearings on this matter. Management cannot predict the
ultimate outcome of this proceeding at this time.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of all of the executive officers of EUA as
of March 16, 1994 are listed below along with their business experience during
the past five years. Officers are elected annually by the Trustees at the
meeting of Trustees next following the annual meeting of shareholders. The
1994 Annual Meeting of Shareholders is scheduled to be held on May 16, 1994.
There are no family relationships among these officers, nor any arrangement or
understanding between any officer and any other person pursuant to which the
officer was selected.
Name,_Age_and_Position Business_Experience_During_Past_5_Years
Richard M. Burns, 56 Comptroller since 1976, Assistant Secretary
Comptroller (1) since 1978, and Assistant Treasurer since
April 1986. Chief Accounting Officer of
EUA.
Arthur A. Hatch, 63 Executive Vice President since January 1990;
Executive Vice President (2) President of Eastern Edison from June 1986
to December 1989; responsible for power
supply, purchasing management, engineering
and operations of the transmission and
distribution facilities of the EUA System.
Clifford J. Hebert, Jr., 46 Treasurer since April 1986. Responsible for
Treasurer (3) financial and treasury activities of the
EUA System.
William F. O'Connor, 54 Secretary since 1971; responsible for corpo-
Secretary (4) rate affairs and human resources activi
ties of the EUA System.
Donald G. Pardus, 53 Chairman since July 1990; Chief Executive
Chairman of the Board, Officer since April 1989; President from
Chief Executive Officer December 1985 through June 1990; Chief
and Trustee (5) Operating Officer from January 1988 to
April 1989; responsible for the overall
management of the EUA System.
Robert G. Powderly, 46 Executive Vice President since April 1992;
Executive Vice President (6) President of Newport Electric Corporation
from March 1990 to April 1992; prior to
that, he was a Vice President of EUA
Service since April 1986; responsible for
corporate communications, customer
service, information systems and rate
activities of the EUA System.
John R. Stevens, 53 President since July 1990; Chief Operating
President, Chief Operating Officer since January 1990; Senior Execu-
Officer and Trustee (7) tive Vice President from January 1990 to
July 1990; Executive Vice President from
June 1987 to December 1989; responsible
for retail operations and new ventures of
the EUA System.
________________
(1) Vice President, Comptroller, Assistant Treasurer, Assistant
Clerk/Secretary
and Director of EUA Service; Vice President, Assistant Treasurer and
Assistant Clerk/Secretary of Eastern Edison and Blackstone; Comptroller,
Assistant Treasurer and Director of EUA Cogenex; Vice President, Assistant
Treasurer, Assistant Clerk and Director of Montaup and EUA Energy;
Assistant Treasurer of EUA Ocean State; Vice President and Assistant
Treasurer of Newport.
(2) Executive Vice President and Director of Blackstone, Eastern Edison, EUA
Cogenex, EUA Energy, EUA Ocean State, EUA Service, Montaup and Newport.
(3) Treasurer of Blackstone, Eastern Edison, EUA Energy, EUA Ocean State,
Montaup, EUA Service and Newport; Treasurer and Assistant Clerk/Secretary
of EUA Cogenex.
(4) Vice President, Clerk, Secretary and Director of EUA Service;
Secretary/Clerk of Blackstone, Eastern Edison, EUA Ocean State and
Newport; Clerk and Director of EUA Cogenex, EUA Energy and Montaup.
(5) Chairman and Director of Blackstone, Eastern Edison, EUA Cogenex, EUA
Energy, EUA Ocean State, EUA Service, Montaup and Newport.
(6) Executive Vice President and Director of Blackstone, Eastern Edison, EUA
Cogenex, EUA Energy, EUA Ocean State, EUA Service, Montaup and Newport.
(7) Vice Chairman and Director of Blackstone, Eastern Edison, EUA Cogenex and
Newport; President and Director of EUA Energy, EUA Ocean State, Montaup
and EUA Service.
Except as described below, there have been no events under any bankruptcy
act, no criminal proceedings and no judgements or injunctions material to the
evaluation of the ability and integrity of any director or executive officer
during the past five years.
On February 28, 1991, EUA Power (now Great Bay Power), filed a voluntary
petition with the federal Bankruptcy Court for protection under Chapter 11 of
the federal Bankruptcy Code. EUA Power, a wholly owned subsidiary of EUA prior
to February 5, 1993, the date it redeemed all of its equity securities held by
EUA, was organized solely for the purpose of acquiring an interest in the
Seabrook Project and selling in the wholesale market its share of electricity
generated by the project. EUA has no ownership interest in Great Bay Power.
Messrs. Burns, Hatch, Hebert, O'Connor, Pardus and Stevens, were officers
or directors of EUA Power since its formation in 1986, resigned their positions
effective December 30, 1992, with the exception of Mr. Stevens who remains the
sole officer and director of Great Bay Power. Mr. Stevens serves at the
request, and subject to discretion of the Official Bondholders Committee of
Great Bay Power.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information set forth under the caption Quarterly Financial and Common
Share Information included in the Registrant's Annual Report to Shareholders
for the year ended December 31, 1993 (Exhibit 13-1 filed herewith) is
incorporated herein by reference.
The closing price of the Registrant's Common Shares as reported by the
Wall Street Journal on March 21, 1994 was $25.50.
Item 6. SELECTED DATA
The information set forth under the caption Selected Consolidated
Financial Data included in the Registrant's Annual Report to Shareholders for
the year ended December 31, 1993 (Exhibit 13-1 filed herewith) is incorporated
herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The statements and information set forth under the caption Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the Registrant's Annual Report to Shareholders for the year ended
December 31, 1993 (Exhibit 13-1 filed herewith) are incorporated herein by
reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and its
subsidiaries, included in the Registrant's Annual Report To Shareholders for
the year ended December 31, 1993 (Exhibit 13-1 filed herewith) are incorporated
herein by reference:
Consolidated Statement of Income for the three years in the period ended
December 31, 1993.
Consolidated Statement of Retained Earnings for the three years in the
period ended December 31, 1993.
Consolidated Statement of Cash Flows for the three years in the period
ended December 31, 1993.
Consolidated Balance Sheet at December 31, 1993 and 1992.
Consolidated Statement of Equity Capital and Preferred Stock at December
31, 1993 and 1992.
Consolidated Statement of Indebtedness at December 31, 1993 and 1992.
Notes to Consolidated Financial Statements at December 31, 1993, 1992, and
1991.
Report of Independent Accountants, dated March 4, 1994.
The statements and information set forth under the captions Quarterly
Financial and Common Share Information included in the Registrant's Annual
Report to Shareholders for the year ended December 31, 1993 (Exhibit 13-1 filed
herewith) are incorporated herein by reference.
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning trustees and executive officers set forth under
the caption "ELECTION OF TRUSTEES AND OWNERSHIP OF COMMON SHARES" in the
Registrant's definitive Proxy Statement to be mailed to shareholders in
connection with the shareholders' annual meeting to be held on May 16, 1994 and
filed with the SEC is incorporated herein by reference. See also "Executive
Officers Of The Registrant" following Item 4 herein.
Item 11. EXECUTIVE COMPENSATION
The information concerning executive compensation set forth under the
caption "COMPENSATION AND OTHER COMPENSATION" in the Registrant's definitive
Proxy Statement to be mailed to shareholders in connection with the
shareholders' annual meeting to be held on May 16, 1994 and filed with the SEC
is incorporated herein by reference with the exception of the Report of the
Compensation and Nominating Committee on Compensation of Executive Officers and
accompanying Corporate Performance Graph that appears therein and which are
specifically not incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The statements concerning security ownership of certain beneficial owners
and management set forth under the caption "ELECTION OF TRUSTEES AND OWNERSHIP
OF COMMON SHARES" in the Registrant's definitive Proxy Statement to be mailed
to shareholders in connection with the shareholders' annual meeting to be held
on May 16, 1994 and filed with the SEC are incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The response to this portion of Item 14 is set forth under Item 8.
(a)(2) Financial Statement Schedules
The following additional consolidated financial statement schedules filed
herewith should be considered in conjunction with the financial statements
in the Registrant's Annual Report to Shareholders for the year ended
December 31, 1993 (Exhibit 13-1 filed herewith):
1. Financial Statement Schedules:
Schedule V - Property, Plant and Equipment for the three years ended
December 31,1993.
Schedule VI - Accumulated Depreciation, Depletion and Amortization of
Property, Plant and Equipment for the three years ended
December 31, 1993.
Schedule VII - Valuation and Qualifying Accounts for the three years
ended December 31, 1993.
Schedule IX - Short-Term Borrowings for the three years ended December
31, 1993.
Schedule X - Supplementary Income Statement Information for the three
years ended December 31, 1993.
All other schedules have been omitted because the required information is
not present or not sufficiently material to require submission of the
schedule, or because the information required is included in the financial
statements or the notes thereto.
2. Report of Independent Accountants (Coopers & Lybrand) for 1993, 1992
and 1991 included in the Registrant's Annual Report to Shareholders
for the year ended December 31, 1993 (Exhibit 13-1 filed herewith).
(a)(3) Exhibits (*denotes filed herewith).
Articles of Incorporation and By-Laws:
3-1.03 - Declaration of Trust of EUA, dated April 2, 1928, as amended
(Exhibit A-3, File No. 70-3188; Exhibit 1 to EUA's 8-K Reports
for April in each of the years 1957, 1962, 1966, 1968, 1972,
and 1973, File No. 1-5366; Exhibit A-1 (a), Amendment No. 2 to
Form U-1, File No. 70-5997; Exhibit 4-3, Registration No.
2-72589; Exhibit 1 to Certificate of Notification, File No.
70-6713; Exhibit 1 to Certificate of Notification, File No.
70-7084; Exhibit 3-2, Form 10-K of EUA or 1987, File No.
1-5366).
Instruments Defining the Rights of Shareholders, Including Indentures:
- Eastern Edison -
4-1.08 - Indenture of First Mortgage and Deed of Trust dated as of
September 1, 1948 of Eastern Edison (Exhibit 4-1, Registration
No. 2-77468).
4-2.08 - First Supplemental Indenture dated as of February 1, 1953 of
Eastern Edison (Exhibit A, File No. 70-3015).
4-3.08 - Second Supplemental Indenture dated as of May 1, 1954 of
Eastern Edison (Exhibit A-3, File No. 70-3371).
4-4.08 - Third Supplemental Indenture dated as of June 1, 1955 of
Eastern Edison (Exhibit C to Certificate of Notification, File
No. 70-3371).
4-5.08 - Fourth Supplemental Indenture dated as of September 1, 1957 of
Eastern Edison (Exhibit D to Certificate of Notification, File
No. 70-3619).
4-6.08 - Fifth Supplemental Indenture dated as of April 1, 1959 of
Eastern Edison (Exhibit D to Certificate of Notification, File
No. 70-3798).
4-7.08 - Sixth Supplemental Indenture dated as of October 1, 1963 of
Eastern Edison (Exhibit F to Certificate of Notification, File
No. 70-4164).
4-8.08 - Seventh Supplemental Indenture dated as of June 1, 1969 of
Eastern Edison (Exhibit D to Certificate of Notification, File
No. 70-4748).
4-9.08 - Eighth Supplemental Indenture dated as of July 1, 1972 of
Eastern Edison (Exhibit C to Certificate of Notification, File
No. 70-5195).
4-10.08 - Ninth Supplemental Indenture dated as of September 1, 1973 of
Eastern Edison (Exhibit F to Certificate of Notification, File
No. 70-5379).
4-11.08 - Tenth Supplemental Indenture dated as of October 1, 1975 of
Eastern Edison (Exhibit C to Certificate of Notification, File
No. 70-5719).
4-12.08 - Eleventh Supplemental Indenture dated as of January 1, 1979 of
Eastern Edison (Exhibit 5-24, Registration No. 2-65785).
4-13.08 - Twelfth Supplemental Indenture dated as of October 1, 1980 of
Eastern Edison (Exhibit F to Certificate of Notification, File
No. 70-6463).
4-14.08 - Thirteenth Supplemental Indenture dated as of July 1, 1981 of
Eastern Edison (Exhibit C to Certificate of Notification, File
No. 70-6608).
4-15.08- Fourteenth Supplemental Indenture dated as of June 1, 1982 of
Eastern Edison (Exhibit C to Certificate of Notification, File
No. 70-6737).
4-16.08 - Fifteenth Supplemental Indenture dated as of August 1, 1983 of
Eastern Edison (Exhibit F to Certificate of Notification, File
No. 70-6851).
4-17.08 - Sixteenth Supplemental Indenture dated as of September 1, 1984
of Eastern Edison (Exhibit 4-31, Form 10-K of EUA for 1984,
File No. 1-5366).
4-18.08- Seventeenth Supplemental Indenture dated as of July 1, 1986 of
Eastern Edison (Exhibit F to Certificate of Notification, File
No. 70-7254).
4-19.08 - Eighteenth Supplemental Indenture dated as of June 1, 1987 of
Eastern Edison (Exhibit C to Certificate of Notification, File
No. 70-7373).
4-20.08 - Nineteenth Supplemental Indenture dated as of November 1, 1987
of Eastern Edison (Exhibit C to Certificate of Notification,
File No. 70-7373).
4-21.08 - Twentieth Supplemental Indenture dated as of May 1, 1988 of
Eastern Edison (Exhibit C to Certificate of Notification, File
No. 70-7373).
4-22.08 - Twenty-first Supplemental Indenture dated as of September 1,
1988 of Eastern Edison (Exhibit F to Certificate of
Notification, File No. 20-7511).
4-23.08 - Twenty-second Supplemental Indenture dated as of December 1,
1990 of Eastern Edison (Exhibit 4-34, Form 10-K of Eastern
Edison for 1990, File No. 0-8480).
4-24.08 - Twenty-third Supplemental Indenture dated as of July 1, 1992 of
Eastern Edison (Exhibit 4-24, Form 10-K of Eastern Edison for
1992, File No. 0-8480).
4-25.08 - Indenture dated as of December 1, 1990 of Eastern Edison with
Citibank, N.A., as Trustee (Exhibit 4-35, Form 10-K of Eastern
Edison for 1990, File No. 0-8480).
4-26.08 - Form of Eastern Edison Medium Term Note (Exhibit 4-36, Form
10-K of Eastern Edison for 1990, File No. 0-8480).
4-27.08 - Twenty-Fourth Supplemental Indenture dated as of May 1, 1993
(filed as Exhibit A-27 to Form U-1, File No. 70-7865 of Eastern
Edison).
4-28.08 - Twenty-Fifth Supplemental Indenture dated as of July 1, 1993
(filed as Exhibit A-38 to Form U-1, File No. 70-7865 of Eastern
Edison).
4-29.08 - Form of Restated and Amended Articles of Organization (filed as
Exhibit A-39 to Form U-1 File No. 70-7865 of Eastern Edison)
- Montaup -
4-1.05 - Form of 8% Debenture Bonds due 2000 of Montaup (Exhibit 4-10,
Registration No. 2-41488).
4-2.05 - Form of 8-1/4% Debenture Bonds due 2003 of Montaup (Exhibit
B-3, Form U5S of EUA for year 1973).
4-3.05 - Form of 14% Debenture Bonds due 2005 of Montaup (Exhibit 4-11,
Registration No. 2-55990).
4-4.05 - Form of 10% Debenture Bonds due 2008 of Montaup (Exhibit 5-3,
Registration No. 2-65785).
4-5.05 - Form of 16-1/2% Debenture Bonds due 2010 of Montaup (Exhibit
4-11, Form 10-K of EUA for 1980, File No. 1-5366).
4-6.05 - Form of 12-3/8% Debenture Bonds due 2013 of Montaup (Exhibit
4-13, Form 10-K of EUA for 1983, File No. 1-5366).
4-7.05 - Form of 10-1/8% Debentures due 2008 of Montaup (Exhibit 4, Form
10-Q of Eastern Edison for quarter ended September 30, 1983,
File No. 0-8480).
4-8.05 - Form of 9% Debenture Bonds due 2020 of Montaup (Exhibit 4-10,
Form 10-K of Eastern Edison for 1990, File No. 0-8480).
4-9.05 - Form of 9 3/8% Debenture Bonds due 2020 of Montaup (Exhibit
4-11, Form 10-K of Eastern Edison for 1990, File No. 0-8480).
- Blackstone -
4-1.01 - First Mortgage Indenture and Deed of Trust dated as of December
1, 1980 of Blackstone (Exhibit A, Form 8-K of EUA dated January
14, 1981, File No. 1-5366).
4-2.01 - First Supplemental Indenture dated as of August 1, 1989 of
Blackstone (Exhibit 4-33, Form 10-K of EUA for 1989, File No.
1-5366).
4-3.01 - Second Supplemental Indenture dated as of November 26, 1990 of
Blackstone (Exhibit 4-3, Form 10-K of BVE for 1990, File No.
0-2602).
4-4.01 - Loan Agreement between Rhode Island Industrial Facilities
Corporation and Blackstone dated as of December 1, 1984
(Exhibit 10-72, Form 10-K of EUA for 1984, File No. 1-5366).
- EUA Service -
4-1.07 - Note Purchase Agreement dated as of January 13, 1988 of Service
(Exhibit 4-38, Form 10-K of EUA for 1987, File No. 1-5366).
- EUA Cogenex -
4-1.10 - Note Agreement dated as of June 28, 1990 of EUA Cogenex with
the Prudential Insurance Company of America. (Exhibit 4-46,
Form 10-K of EUA for 1990, File No. 1-5366).
4-2.10 - Note Agreement dated as of October 29, 1991 between EUA Cogenex
and Prudential Insurance Company of America. (Exhibit 4-55,
Form 10-K of EUA for 1991, File No. 1-5366).
4-3.10 - Note Purchase Agreement dated as of September 29, 1992 of EUA
Cogenex and the Prudential Life Insurance Company of America.
(Exhibit 4-44, Form 10-K of EUA for 1992, File No. 1-5366).
*4-4.10 - Indenture dated September 1, 1993 between EUA Cogenex and the
Bank of New York as Trustee.
- Newport -
4-1.14 - Indenture of First Mortgage dated as of June 1, 1954 of
Newport, as supplemented on August 1, 1959, April 1, 1962,
October 1, 1964, April 1, 1967, September 1, 1969, September 1,
1970, June 1, 1978, October 1, 1978, May 1, 1986, December 1,
1987 and November 1, 1989 (Exhibit 4-49, Form 10-K of EUA for
1990, File No. 1-5366).
4-2.14 - United States Government Small Business Administration Loan to
Newport entitled, "Base Closing Economic Injury Loan", signed
May 30, 1975 and amended on October 6, 1983 (Exhibit 4-50, Form
10-K of EUA for 1990, File No. 1-5366).
4-3.14 - Indenture of Second Mortgage dated as of September 1, 1982 of
Newport, as supplemented on December 1, 1988 (Exhibit 4-51,
Form 10-K of EUA for 1990, File No. 1-5366).
*4-4.14 - Loan Agreement between the Rhode Island Port Authority and
Economic Development Corporation and Newport Electric
Corporation dated as of January 6, 1994.
*4-5.14 - Trust Indenture between the Rhode Island Authority and Economic
Development Corporation and Newport Electric Corporation dated
as of January 1, 1994.
*4-6.14 - Letter of Credit and Reimbursement Agreement dated January X,
1994.
- EUA Ocean State -
4-1.12 - Note Purchase Agreement dated as of January 16, 1992 between
EUA Ocean State Corporation and John Hancock Mutual Life
Insurance Company (Exhibit 4-56, Form 10-K of EUA for 1991,
File No. 1-5366).
Material Contracts:
- EUA -
10-1.03 - Employees' Retirement Plan of Eastern Utilities Associates and
its Subsidiary Companies Trust Agreement as amended and
restated, effective July 1, 1981 (Exhibit 10-1, Registration
No. 2-80205).
10-2.03 - Employees' Retirement Plan of Eastern Utilities Associates and
its Subsidiary Companies Plan as amended and restated,
effective January 1, 1985 as amended as of January 1, 1985,
July 1, 1987, January 1, 1989, December 30, 1990, July 1, 1991,
September 2, 1991, and March 1, 1992 (Exhibit 10-2, Form 10-K
of EUA for 1985, File No. 1-5366; Exhibit 10-77, Form 10-K of
EUA for 1986, File No. 1-5366; Exhibit 10-118, Form 10-K of EUA
for 1987, File No. 1-5366; Exhibit 10-95, Form 10-K of EUA for
1988, File No. 1-5366; Exhibit 10-79, Form 10-K of Eastern
Edison for 1990, File No. 0-8480; Exhibit 10-120, Form 10-K of
EUA for 1991, File No. 1-5366; Exhibit 10-122, Form 10-K of EUA
for 1991, File No. 1-5366; Exhibit 10-123, Form 10-K of EUA for
1991, File No. 1-5366; Exhibit 10-70, Form 10-K of EUA for
1992, File No. 1-5366).
10-3.03 - Eastern Utilities Associates Employees' Savings Plan Trust
Agreement (Exhibit 10-3, Form 10-K of EUA for 1992, File No.
1-5366).
10-4.03 - Eastern Utilities Associates Employees' Savings Plan as amended
and restated effective January 1, 1989 (Exhibit 10-4, Form 10-K
of EUA for 1992, File No. 1-5366).
10-5.03 - Stock Purchase Agreement dated as of December 10, 1986, among
Eastern Utilities Associates, Citizens Corporation and Citizens
Energy Corporation (Exhibit 10-104, Form 10-K of EUA for 1986,
File No. 1-5366).
10-6.03 - Precedent Agreement dated as of November 29, 1989 between EUA
and NECO Enterprises, Inc. (Exhibit B-4, Form U-1, File No.
70-7677).
10-7.03 - Amendment to and Restatement of Stock Purchase Agreement dated
as of February 1, 1990 between EUA, NECO Enterprises, Inc.,
Newport Electric Corporation and a special-purpose subsidiary
of EUA for the acquisition by EUA of the stock of Newport
Electric Corporation (Exhibit B-3, Form U-1, File No. 70-7677).
10-8.03 - Letter of Assurance in connection with the Credit Agreement
between Vermont Electric Transmission Company, Inc. and Bank of
America National Trust and Savings Association dated July 19,
1983 (Exhibit 10-111, Form 10-K of EUA for 1990, File No.
1-5366).
10-9.03 - Amended and Restated Equity Maintenance Agreement dated as of
September 29, 1992 among EUA and The Prudential Insurance
Company of America and Pruco Life Insurance Company (Exhibit
10-9, EUA 10-K for 1992, File No. 1-5366).
10-10.03- Guaranty, dated June 28, 1990 made by EUA in favor of The
Prudential Life Insurance Company of America (Exhibit 10-10,
EUA 10-K for 1992, File No. 1-5366).
10-11.03- Guaranty, dated January 16, 1992 made by EUA in favor of John
Hancock Mutual Life Insurance Company (Exhibit 4-125, Form 10-K
of EUA for 1991, File No. 1-5366).
10-12.03- Form of Service Contract between EUA Service Corporation and
each of the other companies (including EUA) in the EUA System
(Exhibit 13-1, Registration No. 2-55990).
10-13.03- Form of EUA Restricted Stock Plan effective July 17, 1989
(Exhibit 10-13, EUA 10-K for 1992, File No. 1-5366).
*10-14.03- Service contract and supplement among the EUA System, New
England Electric System, Boston Edison Co., New England Gas &
Electric Association system and Vermont Electric Power Company,
Inc. for services to be provided by the New England Power
Service Company dated as of January 1, 1994.
*10-15.03- Thirtieth Amendment to NEPOOL Agreement dated as of June 1,
1993 regarding pool planning, pool-planned facilities,
pool-planned purchases and pool-planned unit provisions.
- Eastern Edison -
10-1.08 - Trust Agreement dated as of July 1, 1993 between Massachusetts
Industrial Finance Agency and Shawmut Bank, N.A. (filed as
Exhibit 10-1.08 to Eastern Edison's Form 10-K for 1993, File
No. 0-8480).
10-2.08 - Loan Agreement dated as of July 1, 1993 between Massachusetts
Industrial Finance Agency and Eastern Edison (filed as Exhibit
10-2.08 to Eastern Edison's Form 10-K for 1993, File No.
0-8480).
10-3.08 - Power Purchase Agreement entered into as of September 20, 1993
by and between Meridian Middleboro Limited Partnership and
Eastern Edison Company (filed as Exhibit 10-3.08 to Eastern
Edison's Form 10-K for 1993, File No. 0-8480).
10-4.08 - Inducement Letter dated July 14, 1993 from Eastern Edison to
the Massachusetts Industrial Finance Agency and Goldman,
Sachs & Company and Citicorp Securities Markets, Inc. (filed
as Exhibit 10-4.08 to Eastern Edison's Form 10-K for 1993, File
No. 0-8480).
- Montaup -
10-1.05 - Montaup Contract, as amended (Exhibit 4-B, Registration No.
2-14119; Exhibit 13-A1, Registration No. 2-14718; Exhibit
4-B-2, Registration No. 2-26509; Exhibit 4-B-3, Registration
No. 2-33061; Exhibits 13-3 and 13-4, Registration No. 2-48966;
Exhibit B-2, Form U5S of EUA for year 1974 and Exhibit 5-40,
Registration No. 2-62862).
10-2.05 - Transmission Contract (composite copy) among Yankee Atomic
Electric Company's Sponsors, including Montaup, dated June 30,
1959 (Exhibit 13-6-D, Registration No. 2-15798).
10-3.05 - Power Contract (composite copy) between Connecticut Yankee
Atomic Power Company and Montaup dated July 1, 1964 (Exhibit
B-1, File No. 70-4245).
10-4.05 - Capital Funds Agreement (composite copy) between Connecticut
Yankee Atomic Power Company and Montaup dated September 1, 1964
(Exhibit B-2, File No. 70-4245).
10-5.05 - Stockholder Agreement (composite copy) among Connecticut Yankee
Atomic Power Company's Sponsors, including Montaup, dated July
1, 1964 (Exhibit B-4, File No. 70-4245).
10-6.05 - Capital Funds Agreement (composite copy) between Vermont Yankee
Nuclear Power Corporation and Montaup dated as of February 1,
1968, and Amendment thereto dated as at March 12, 1968 (Exhibit
B-2, File No. 70-4611; Exhibit B-3, File No. 70-4611).
10-7.05 - Form of Power Contract between Vermont Yankee Nuclear Power
Corporation and Montaup dated as of February 1, 1968, as
amended June 1, 1972, April 15, 1983, April 24, 1985, June 1,
1985, May 6, 1988 (2), June 15, 1989 and December 1, 1989
(Exhibit B-4, File No. 70-4591; Exhibit 13-21, Registration No.
2-46612; Exhibit 10-63, Form 10-K of EUA for 1983, File No.
1-5366; Exhibit 10-74, Form 10-K of EUA for 1985, File No.
1-5366; Exhibit 10-78, Form 10-K of EUA for 1986, File No.
1-5366; Exhibits 10-97 and 10-98, Form 10-K of EUA for 1988,
File No. 1-5366; Exhibit 10-95, Form 10-K of EUA for 1989, File
No. 1-5366; Exhibit 10-80, Form 10-K of Eastern Edison for
1990, File No. 0-8480).
10-8.05 - Sponsor Agreement (composite copy) among Vermont Yankee Nuclear
Power Corporation's Sponsors, including Montaup, dated as of
August 1, 1968 (Exhibit 4-0, Registration No. 2-33061).
10-9.05 - Capital Funds Agreement (composite copy) between Maine Yankee
and Montaup dated May 20, 1968 and as amended August 1, 1985
(Exhibit B-2, File No. 70-4658; Exhibit 10-78, Form 10-K of EUA
for 1985, File No. 1-5366).
10-10.05- Power Contract (composite copy) between Maine Yankee Atomic and
Montaup dated May 20, 1968, as amended December 19, 1983 and
January 1, 1984 (Exhibit B-3, File No. 70-4658; Exhibit 10-64,
Form 10-K of EUA for 1983, File No. 1-5366; Exhibit 10-66, Form
10-K of EUA for 1984, File No. 1-5366).
10-11.05- Stockholder Agreement (composite copy) among Maine Yankee
Sponsors, including Montaup, dated May 20, 1968 (Exhibit B-4,
File 70-4658).
10-12.05- Agreement (composite copy) among Vermont Yankee Nuclear Power
Corporation's Sponsors, including Montaup, dated as of April
30, 1969 (Exhibit B-7, File No. 70-4435).
10-13.05- Form of Agreement among Maine Yankee Atomic Power Company's
Sponsors dated as of May 20, 1969 (Exhibit B-5, File No.
70-4658).
10-14.05- Form of New England Power Pool Agreement dated as of September
1, 1971, as amended as of July 1, 1972, March 1, 1973, April 2,
1973, March 15, 1974, June 1, 1975, September 1, 1975, December
31, 1976, January 18, 1977, July 1, 1977, August 1, 1977,
August 15, 1978, January 31, 1980, February 1, 1980, September
1, 1981, December 1, 1981, June 1, 1982, June 15, 1983, October
1, 1983, August 1, 1985, August 15, 1985, January 1, 1986,
September 1, 1986, March 1, 1988, May 1, 1988, March 15, 1989
and October 1, 1990, (Exhibit 13-45, Registration No. 2-41488;
Exhibit 13-38, Registration No. 2-46612; Exhibits 13-39 and
13-40, Registration No. 2-48966; Exhibit B-3, Form U5S of EUA
for year 1974; Exhibit 13-35(a), Registration No. 2-54449;
Exhibit 13-35, Registration No. 2-55990, Exhibits 5-69 and
5-70, Registration Exhibit 13-35(a), Registration No. 2-54449;
Exhibit 13-35, Registration No. 2-55990, Exhibits 5-69 and
5-70, Registration No. 2-58625; Exhibit 6, Form 10-K of EUA for
1977, File No. 1-5366; Exhibit 1, Form 10-K of EUA for 1979,
File No. 1-5366; Exhibit No. 10-67, Registration No. 2-80205;
Exhibit 10-65, Form 10-K of EUA for 1983, File No. 1-5366;
Exhibit 10-66, Form 10-K of EUA for 1983, File No. 1-5366;
Exhibits 10-75, 10-76, and 10-77, Form 10-K of EUA for 1985,
File No. 1-5366; Exhibit 10-79, Form 10-K of EUA for 1986, File
No. 1-5366; Exhibits 10-99 and 10-100, Form 10-K of EUA for
1988, File No. 1-5366; Exhibit 10-96, Form 10-K of EUA for
1989, File No. 1-5366; Exhibit 10-81, Form 10-K of Eastern
Edison for 1990, File No. 0-8480).
10-15.05- Joint Ownership Agreement--NEPCO Nuclear Units dated as of
January 2, 1976 as amended August 6, 1976 among New England
Power Company and other utilities, including Montaup (Exhibit
13-41, Registration No. 2-55990; Exhibit 5-77, Registration No.
2-58625).
10-16.05- Unit Participation Agreement between Maine Electric Power
Company, Inc. and New Brunswick Electric Power Commission dated
November 15, 1971 (Exhibit 13-43.1, Registration No. 2-44377).
10-17.05- Assignment Agreement dated March 20, 1972 between Maine
Electric Power Company, Inc. and New Brunswick Electric Power
Commission (Exhibit 13-43.3, Registration No. 2-44377).
10-18.05- Agreement dated October 13, 1972 for Joint Ownership, Con -
struction and Operation of Pilgrim Unit No. 2 among Boston
Edison Company and other utilities including Montaup, as
amended July 25, 1973, September 15, 1974, December 1, 1974,
February 15, 1975, April 30, 1975, June 30, 1975, November 30,
1975 and December 15, 1975 (Exhibit 13-51, Registration No.
2-46612; Exhibit 13-56, Registration No. 2-48966; Exhibit B-5,
Form U5S of EUA for year 1974; Exhibit 13-52-A and 13-52-B,
Registration No. 2-53819; Exhibit 13-45(a), Registration No.
2-54449; Exhibits 13-48 and 13-47(a), Registration No.
2-55990).
10-19.05- Agreement dated as of May 1, 1973 for Joint Ownership,
Construction and Operation of New Hampshire Nuclear Units among
Public Service Company of New Hampshire and other utilities
including Montaup, as amended as of May 24, 1974, June 21,
1974, September 25, 1974, October 25, 1974, January 31, 1975,
as supplemented by Letter Agreement dated April 27, 1978 and
amended as of April 18, 1979 (two amendments), April 25, 1979,
June 8, 1979, October 11, 1979, December 15, 1979, June 16,
1980, December 31, 1980, June 1, 1982, April 27, 1984, June 15,
1984, March 8, 1985, March 14, 1986, May 1, 1986, September 19,
1986, November 1987, January 13, 1989 and November 1, 1990.
(Exhibit 13-57, Registration No. 2-48966; Exhibit B-6, Form U5S
of EUA for year 1974; Exhibit 5-130, Registration No. 2-62862;
Exhibit 5-70, Registration No. 2-65785; Exhibit 2, Form 10-K of
EUA for 1979, File No. 1-5366; Exhibit 5-34, Registration No.
2-69052; Exhibit 20-1, Form 10-K of EUA for 1980, File No.
1-5366; Exhibit 10-69, Registration No. 2-80205; Exhibit 2,
Form 10-Q of EUA for the Quarter Ended March 31, 1984, File No.
1-5366; Exhibit 3, Form 10-Q of EUA for the Quarter Ended June
30, 1984, File No. 1-5366; Exhibit 10-70, Form 10-K of EUA for
1985, File No. 1-5366; Exhibits 10-80 and 10-81, Form 10-K of
EUA for 1986, File No. 1-5366; Exhibits 10-95 and 10-96, Form
10-K of EUA for 1987, File No. 1-5366; Exhibit 10-101, Form
10-K of EUA for 1988, File No. 1-5366; Exhibit 10-82, Form 10-K
of Eastern Edison for 1990, File No. 0-8480).
10-20.05- Sharing Agreement dated as of September 1, 1973 among The
Connecticut Light and Power Company and other utilities,
including Montaup, concerning participation in a nuclear
generating unit located in Connecticut (Millstone Unit No. 3),
as amended and supplemented by Amendatory Agreement dated May
11, 1984 as amended as of April 1, 1986 (Exhibit B-17, Form U5S
of EUA for year 1973; Exhibit B-8, as amended as of April 11,
1986, Form U5S of EUA for year 1974; Exhibit B-30, Form U5S of
EUA for year 1976; Exhibit 10-68, Form 10-K of EUA for 1984,
File No. 1-5366; Exhibit 10-82, Form 10-K of EUA for 1986, File
No. 1-5366).
10-21.05- Agreement for Joint Ownership, Construction and Operation of
William F. Wyman Unit No. 4 dated November 1, 1974 as amended
June 30, 1975, August 16, 1976 and December 31, 1978 among
Central Maine Power Company and other utilities including
Montaup (Exhibit B-9, Form U5S of EUA for year 1974; Exhibit
13-58, Registration No. 2-55990; Exhibit 5-95, Registration No.
2-58625; Exhibit 5-40, Registration No. 2-69052).
10-22.05- Agreement for Joint Ownership dated as of October 27, 1970
between Canal Electric Company and Montaup (Exhibit 13-71,
Registration No. 2-55990).
10-23.05- Agreement for use of Common Facilities by Canal Units I and II
and for Allocation of Related Costs dated as of October 27,
1970 between Canal Electric Company and Montaup (Exhibit 13-72,
Registration No. 2-55990).
10-24.05- Supplementary Power Contract dated as of April 1, 1978, by and
between Connecticut Yankee Atomic Power Company and Montaup
(Exhibit 10-45, Form 10-K of EUA for 1987, File No. 1-5366).
10-25.05- Guarantee Agreement (composite copy) dated as of November 13,
1981 between The Connecticut Bank and Trust Company, as
Trustee, and Montaup relating to debentures of Connecticut
Yankee Atomic Power Company (Exhibit 10-61, Form 10-K of EUA
for 1981, File No. 1-5366).
10-26.05- Guarantee Agreement dated as of November 5, 1981 between
Bankers Trust Company, as Trustee of the Vernon Energy Trust,
and Montaup relating to a nuclear fuel sales agreement and
related transactions entered into by Vermont Yankee Nuclear
Power Corporation (Exhibit 10-63, Form 10-K of EUA for 1981,
File No. 1-5366).
10-27.05- Agreement for Seabrook Project Disbursing Agent, dated as of
May 23, 1984, as amended March 8, 1985, May 20, 1985, June 18,
1985, January 1, 1986, November, 1987, August 1, 1989, and
restated as of November 1, 1990, among the participants in the
Seabrook nuclear generating project, including Montaup and
Yankee Atomic Electric Company (Exhibit 2, Form 10-Q of EUA for
the Quarter Ended June 30, 1984, File No. 1-5366; Exhibit
10-69, Form 10-K of EUA for 1985, File No. 1-5366; Exhibits
10-86, 10-87 and 10-88, Form 10-K of EUA for 1986, File No.
1-5366; Exhibit 10-97, Form 10-K of EUA for 1987, File No.
1-5366; Exhibit 10-105, Form 10-K of EUA for 1989, File No.
1-5366; Exhibit 10-84, Form 10-K of Eastern Edison for 1990,
File No. 0-8480).
10-28.05- Guarantee Agreement dated as of August 1, 1985 among
The Connecticut Bank and Trust Company, Connecticut Yankee
Atomic Power Company and Montaup Electric Company relating to
Revolving Credit Loans of Connecticut Yankee (Exhibit 10-85,
Form 10-K of EUA for 1985, File No. 1-5366).
10-29.05- Equity Funding Agreement for New England Hydro-Transmission
Corporation dated as of June 1, 1985, between New England
Hydro-Transmission Corporation and several New England electric
utilities, including Montaup as amended as of May 1, 1986 and
September 1, 1987 (Exhibits 10-96 and 10-97, Form 10-K of EUA
for 1986, File No. 1-5366; Exhibit 10-116, Form 10-K of EUA for
1987, File No. 1-5366).
10-30.05- Equity Funding Agreement for New England Hydro-Transmission
Electric Company, Inc. dated as of June 1, 1985, between New
England Hydro-Transmission Electric Company, Inc. and several
New England electric utilities, including Montaup as amended as
of May 1, 1986 and September 1, 1987 (Exhibits 10-98 and 10-99,
Form 10-K of EUA for 1986, File No. 1-5366; Exhibit 10-117,
Form 10-K of EUA for 1987, File No. 1-5366).
10-31.05- Unit Power Agreement for the Sale of Unit Capacity and Energy
from Ocean State Power Project to Montaup Electric Company
dated as of May 14, 1986 as amended as of August 27, 1986,
September 27, 1987, October 21, 1988, July 21, 1989, February
1, 1990 and December 21, 1990 (Exhibits 10-101 and 10-102, Form
10-K of EUA for 1986, File No. 1-5366; Exhibits 10-106 and
10-107, Form 10-K of EUA for 1988, File No. 1-5366; Exhibit
10-106, Form 10-K of EUA for 1989, File No. 1-5366; Exhibits
10-86 and 10-87, Form 10-K of Eastern Edison for 1990, File No.
0-8480).
10-32.05- Power Purchase Agreement dated as of October 17, 1986, between
Northeast Energy Associates and Montaup as amended as of June
28, 1989 (Exhibit 10-103, Form 10-K of EUA for 1986, File No.
1-5366; Exhibit 10-103, Form 10-K of EUA for 1989, File No.
1-5366).
10-33.05- Unit Sales Agreement between Montaup Electric Company and
Massachusetts Municipal Wholesale Electric Company for Purchase
of Capacity and Energy from Canal No. 2 dated as of November 1,
1986 (Exhibit 10-105, Form 10-K of EUA for 1986, File No.
1-5366).
10-34.05- Settlement Agreement dated as of January 13, 1989 among
Montaup, EUA Power, certain past and present owners of the
Seabrook Project and Yankee Atomic Electric Company (Exhibit
10-110, Form 10-K of EUA for 1988, File No. 1-5366).
10-35.05- Unit Power Agreement for the Sale of Second Unit Capacity and
Energy from Ocean State Power Project to Montaup Electric
Company dated as of September 28, 1988 as amended by an
amendment dated July 21, 1989, and February 7, 1990 and a
Supplemental Agreement dated July 21, 1989 (Exhibit 10-104,
Form 10-K of EUA for 1989, File No. 1-5366; Exhibit No. 10-88,
Form 10-K of Eastern Edison for 1990, File No. 0-8480).
10-36.05- Purchase Power Contract between Newport and Montaup dated July
23, 1963, as revised on March 23, 1983 (Exhibit 10-108, Form
10-K of EUA for 1990, File No. 1-5366).
10-37.05- Purchase Power Contract between Newport and Montaup for
Contract Demand Service effective May 1, 1983, as amended on
July 1, 1983, December 28, 1983 and November 1, 1984 (Exhibit
10-89, Form 10-K of Eastern Edison for 1990, File No. 0-8480
and Exhibit 10-109, Form 10-K of EUA for 1990, File No. 1-5366).
10-38.05- Power Contract (composite copy) between Yankee Atomic Electric
Company and Montaup dated June 30, 1959 as revised April 1,
1975, as further amended October 1, 1980, April 1, 1985, May 6,
1988, June 26, 1989, July 1, 1989 and February 1, 1992 (Exhibit
10-6, Registration No. 2-72655; Exhibit 10-73, Form 10-K of EUA
for 1985, File No. 1.5366; Exhibit 10-96, Form 10-K of EUA for
1988, File No. 1-5366; Exhibits 10-93 and 10-94, Form 10-K of
EUA for 1989, File No. 1-5366; Exhibit 10-46 Form 10-K of
Eastern Edison for 1992, File No. 0-8480).
10-39.05- Memorandum of understanding by and between Canal Electric
Company and Montaup Electric Company dated September 23, 1993
(Exhibit 10-39.05, Eastern Edison 10-K for 1993, File No.
0-8480).
10-40.05- Ancillary Agreement by and between Algonquin Gas Transmission
Company, Canal Electric Company and Montaup Electric Company
dated October 8, 1993. (Exhibit 10-40.05 of Eastern Edison 10-K
for 1993, File No. 0-8480).
- Blackstone -
10-1.01 - Trust Indenture between Rhode Island Industrial Facilities
Corporation and the Rhode Island Hospital Trust Company dated
as of December 1, 1984 (Exhibit 10-73, Form 10-K of EUA for
1984, File No. 1-5366).
10-2.01 - Remarketing Agreement between Rhode Island Hospital Trust
Company, Citibank and Blackstone dated as of December 19, 1984
(Exhibit 10-74, Form 10-K of EUA for 1984, File No. 1-5366).
10-3.01 - Letter of Credit and Reimbursement Agreement between Blackstone
Valley Electric Company and The Bank of New York dated as of
January 21, 1993 (Exhibit 10-10, Form 10-K of Blackstone for
1992, File No. 0-2602).
10-4.01 - Interconnection Agreement by and between Blackstone and Ocean
State Power dated November 1, 1988, as amended and restated
effective August 16, 1989 by and among Blackstone, Ocean State
Power I and Ocean State Power II (Exhibit 10-100, Form 10-K of
EUA for 1989, File No. 1-5366).
10-5.01 - Power Purchase Agreement between Blackstone and Blackstone
Hydro, Inc. dated as of January 8, 1989 and assignment to
Montaup (Exhibits 10-101 and 10-102, Form 10-K of EUA for 1989,
File No. 1-5366).
- Newport -
10-1.14 - Letter amendment dated August 4, 1983 reallocating the
participating shares originally assigned to the Chicopee
Municipal Lighting Plant and the Taunton Municipal Lighting
Plant under the Phase I Vermont Transmission Line Support
Agreement between Vermont Electric Transmission Company, Inc.
and several New England electric utilities, including Newport,
dated December 1, 1981, as amended on June 1, 1982 and November
1, 1982 (See Exhibit 10-52) (Exhibit 10-110, Form 10-K of EUA
for 1990, File No. 1-5366).
10-2.14 - Letter amendment dated July 29, 1983 reallocating the
participating shares originally assigned to the Chicopee
Municipal Lighting Plant and the Taunton Municipal Lighting
Plant under the Phase I Terminal Facility Support Agreement
between New England Transmission Corporation and several New
England electric utilities, including Newport, dated December
1, 1981, as amended on June 1, 1982 and November 1, 1982 (See
Exhibit 10-54) (Exhibit 10-112, Form 10-K of EUA for 1990, File
No. 1-5366).
10-3.14 - Unit Power Contract between Newport and New England Power for
purchase of 15 MW of power for a ten year period starting
November 1, 1985 and ending October 31, 1995 (Exhibit 10-114,
Form 10-K of EUA for 1990, File No. 1-5366).
10-4.14 - Purchase Power Contract between Newport and City of Burlington
Electric Department (life of the unit contract) for purchase of
8 MW from Joseph C. McNeil Electric Generating Station located
in Burlington, Vermont dated December 19, 1984 (Exhibit 10-115,
Form 10-K of EUA for 1990, File No. 1-5366).
10-5.14 - Firm Energy Contract between Hydro-Quebec and several New
England electric utilities, including Newport, dated as of
October 14, 1985 (Exhibit 10-116, Form 10-K of EUA for 1990,
File No. 1-5366).
10-6.14 - Unit Power Agreement for the Sale of Unit Capacity and Energy
from Ocean State Power Project to Newport Electric Corporation
dated May 14, 1986, as amended on August 20, 1986, July 12,
1988, September 23, 1988, October 21, 1988, July 21, 1989,
February 7, 1990 and December 21, 1990 (Exhibit 10-117, Form
10-K for 1990, File No. 1-5366).
10-7.14 - Unit Power Agreement for the Sale of Second Unit Capacity and
Energy from Ocean State Power Project to Newport Electric
Corporation dated July 12, 1988 as amended September 23, 1988,
July 21, 1989 and February 7, 1990 (Exhibit 10-118, Form 10-K
for 1990, File No. 1-5366).
- EUA Ocean State -
10-1.12 - Ocean State Power Amended and Restated General Partnership
Agreement among EUA Ocean State, Ocean State Power Company,
TCPL Power Ltd., Narragansett Energy Resources Company and NECO
Power, Inc. (collectively, the "OSP Partners") dated as of
December 2, 1988, and First Amendment thereto dated as of March
27, 1989 (Exhibit 10-107, Form 10-K of EUA for 1989, File No.
1-5366).
10-2.12 - Assignment and Security Agreement between EUA Ocean State and
Irving Trust Company dated as of December 29, 1988 and
Amendment No. 1 thereto dated as of September 29, 1989 (Exhibit
10-108, Form 10-K of EUA for 1989, File No. 1-5366).
10-3.12 - Ocean State Power II Amended and Restated General Partnership
Agreement among EUA Ocean State, JMC Ocean State Corporation,
Makowski Power, Inc., TCPL Power Ltd., Narragansett Energy
Resources Company and Newport Electric Power Corporation
(collectively, the "OSP II Partners") dated as of September 29,
1989 (Exhibit 10-110, Form 10-K of EUA for 1989, File No.
1-5366).
10-4.12 - Settlement Agreement entered into on November 18, 1992 among
EUA Power Corporation, EUA and the Official Bondholders'
Committee of EUA Power filed as Exhibit B to Form U-1, File No.
70-8099.
Amendments to Exhibits Previously Filed:
None
Annual Report to Shareholders:
*13-1.03- Annual Report to Shareholders of EUA for 1993, portions of
which are incorporated by reference in this Annual Report on
Form 10-K. Only the portions expressly so incorporated under
PART II, Items 5, 6, 7 and 8 are to be deemed filed herewith.
Subsidiaries of the Registrant:
21-1.03 - Direct subsidiaries of Eastern Utilities Associates and the
state of organization of each are: Blackstone Valley Electric
Company (Rhode Island), Eastern Edison Company (Massachusetts),
EUA Cogenex Corporation (Massachusetts), EUA Service
Corporation (Massachusetts), EUA Ocean State Corporation (Rhode
Island), EUA Energy Investment Corporation (Massachusetts) and
Newport Electric Corporation (Rhode Island). Montaup Electric
Company (Massachusetts) is a subsidiary of Eastern Edison
Company. Each of the above subsidiaries does business under
its indicated corporate name.
Consent of Experts and Counsel:
*23-1.03- Consent of Independent Accountants.
(b) Reports on Form 8-K.
- On January 25, 1994, the Registrant filed a current report on
Form 8-K with respect to Item 5. (Other Events).
- On March 23, 1994, the Registrant filed a current report on
Form 8-K with respect to Item 5. (Other Events).
- On March 28, 1994, the Registrant filed a current report on
Form 8-K with respect to Item 5. (Other Events).
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.
Signature Title Date
EASTERN UTILITIES ASSOCIATES
By /s/ Richard M. Burns Comptroller March 21, 1994
--------------------
Richard M. Burns (Principal Accounting 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.
s/s Donald G. Pardus Chairman and Chief Executive Officer
- -------------------------------- (Principal Executive Officer)
Donald G. Pardus and Trustee
/s/ John R. Stevens President and Chief Operating Officer
- -------------------------------- (Principal Financial Officer) and Trustee
John R. Stevens
/s/ Richard M. Burns Comptroller
- -------------------------------- (Principal Accounting Officer)
Richard M. Burns
/s/ Russell A. Boss Trustee
- --------------------------------
Russell A. Boss
/s/ Paul J. Choquette, Jr. Trustee
- --------------------------------
Paul J. Choquette, Jr.
March 21, 1994
Trustee
- --------------------------------
John E. Conway
/s/ Peter S. Damon Trustee
- --------------------------------
Peter S. Damon
/s/ John F. G. Eichorn, Jr. Trustee
- --------------------------------
John F. G. Eichorn, Jr.
/s/ Peter B. Freeman Trustee
- --------------------------------
Peter B. Freeman
/s/ Wesley W. Marple, Jr. Trustee
- --------------------------------
Wesley W. Marple, Jr.
/s/ Margaret M. Stapleton Trustee
- --------------------------------
Margaret M. Stapleton
/s/ W. Nicholas Thorndike Trustee
- --------------------------------
W. Nicholas Thorndike
EASTERN UTILITIES ASSOCIATES AND
SUBSIDIARY COMPANIES
Item 14(a)(2). Financial Statement Schedules
<TABLE>
Schedule V
Eastern Utilities Associates and Subsidiary Companies
Property, Plant and Equipment
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
COL. A COL. B COL. C COL. D COL. E COL. F
Balance at Other Charges Balance at
Beginning Additions Add (Deduct) - End of
Classification of Period at Cost Retirements Describe Period
For the Year Ended December 31, 1993:
Production Nuclear......... $367,193 $492 $498 ($48) (a) $367,139
Production -- Steam........ 125,669 3,582 894 128,357
Production -- Hydraulic.... 7,083 0 7,083
Production -- Other........ 7,668 1 2 7,667
Transmission and Distribution 412,505 17,995 5,292 425,208
General Plant.............. 59,910 1,196 436 20 (b) 60,690
Intangible Plant........... 608 608
Electric Property Held for 821 821
Nuclear Fuel in Service.... 20,358 2,347 4,512 18,193
Construction Work in Progress 4,943 3,785 8,728
Nuclear Fuel in Process.... 903 (216) 687
Total Utility Plant............. $1,007,661 $29,182 $11,634 ($28) $1,025,181
Non-Utility Property $105,793 $29,993 $14,153 $1,477 $123,110
For the Year Ended December 31
Production Nuclear....... $367,748 $654 $509 ($700) $367,193
Production -- Steam...... 123,621 2,418 370 0 125,669
Production -- Hydraulic.. 7,083 7,083
Production -- Other...... 7,625 45 2 0 7,668
Transmission and Distribution 403,035 17,490 8,013 (7) 412,505
General Plant............ 57,323 2,920 619 286 59,910
Intangible Plant......... 608 0 608
Electric Property Held for Future Use 824 3 821
Nuclear Fuel in Service.. 18,857 4,998 3,497 20,358
Construction Work in Progress 6,880 (1,937) 4,943
Nuclear Fuel in Process.. 4,003 (3,100) 903
Total Utility Plant........... $997,607 $23,488 $13,013 ($421) (c) $1,007,661
Non-Utility Property $81,646 $32,563 $9,393 $977 $105,793
For the Year Ended December 31
Production Nuclear....... $367,562 $689 $503 $367,748
Production -- Steam...... 132,527 3,888 12,792 (d) (2) (e) 123,621
Production -- Hydraulic.. 7,083 7,083
Production -- Other...... 7,467 399 215 (26) (e) 7,625
Transmission and Distribution 388,987 20,621 6,599 26 (e) 403,035
General Plant............ 55,539 1,932 108 (40) (e) 57,323
Intangible Plant......... 566 42 (e) 608
Electric Property Held for Future Use 824 824
Nuclear Fuel in Service.. 15,557 6,343 (f) 3,043 18,857
Construction Work in Progress 6,809 71 6,880
Nuclear Fuel in Process.. 9,026 (5,023) (f) 4,003
Total Utility Plant........... $991,947 $28,920 $23,260 $0 $997,607
Non-Utility Property $65,484 $27,785 $11,623 $81,646
</TABLE>
(a) Millstone Sales Tax Refund received for years 1982 - 1986.
(b) Adjustment made directly to plant for EUASC Voucher incorrectly
classified.
(c) Principally Includes:
Credit to Montaup for Millstone 3 Connecticut Sales Tax Adjustment of
approximately ($245,000)
Credit to Montaup for Seabrook Decommissioning Refund to of approximately
($586,000)
Transfer of Unamortized Cost for Improvements to Blackstone Office
Facility of approximately $291,000.
Transfer in Montaup of Seabrook Pre-operating Decommissioning Surety
Premium of approximately $120,000.
(d) Principally includes the Retirement of Montaup (Units 1 thru 4) $12,370,758
which were fully depreciated.
(e) Transfer between accounts.
(f) Transfer Nuclear Fuel from in Process to in Service.
<TABLE>
Schedule VI
Eastern Utilities Associates and Subsidiary Companies
Accumulated Depreciation, Depletion and Amortization of
Property, Plant and Equipment
(in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Column A Column B Column C Column D Column E Column F
Other
Additions Charges
Balance at Charged to Add Balance at
Beginning Costs and (Deduct) - End of
Description of Period Expenses Retirements Describe Period
For the Year Ended December 31, 1993:
Accumulated Depreciation, Depletion
and Amortization - Utility Plant $274,725 $37,923 $15,596 ($57) (a)$296,995
Nonutility Property $18,518 $7,727 $3,516 $591 $ 23,320
For the Year Ended December 31, 1992:
Accumulated Depreciation, Depletion
and Amortization - Utility Plant $251,503 $36,842 $14,133 $513 (b)$274,725
Nonutility Property $15,261 $8,412 $5,720 $565 (c)$ 18,518
For the Year Ended December 31, 1991:
Accumulated Depreciation, Depletion
and Amortization - Utility Plant $241,128 $35,444 $25,012 ($57) (d)$251,503
Nonutility Property $8,130 $8,140 $1,009 $ 15,261
</TABLE>
(a) FERC Order adjustment.
(b) Principally Sale of Water Heaters and Buy Out of Nuclear Fuel Contract.
(c) EUA Nova acquisition 11/30/92.
(d) FERC audit adjustment due to change in rates, ($57,000)
<TABLE>
Schedule VIII
Eastern Utilities Associates and Subsidiary Companies
Valuation and Qualifying Accounts
(In Thousands)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Column A Column B Column C Column D Column E
Additions
(1) (2)
Balance at Charged to Charged Balance at
Beginning Costs and to Other Deduction- End of
Description of Period Expenses Accounts Describe Period
For the Year Ended December 31, 1993:
Allowance for Doubtful Accounts $603 $1,029 $255 (a) $1,274 (b) $613
For the Year Ended December 31, 1992:
Allowance for Doubtful Accounts $737 $1,322 $228 (a) $1,684 (b) $603
For the Year Ended December 31, 1991:
Allowance for Doubtful Accounts $747 $913 $382 (a) $1,305 (b) $737
</TABLE>
(a) Recoveries of accounts previously written off.
(b) Principally Accounts Receivable written off.
<TABLE>
Schedule IX
Eastern Utilities Associates and Subsidiary Companies
Short-Term Borrowings
(In Thousands)
<CAPTION>
<S> <C> <C> <C> <C> <C>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Maximum Average Weighted
Category of amount amount average
aggregate Balance Weighted outstanding outstanding Interest rate
short-term at end Average during during the during the
borrowings of period Interest Rate the period period (a) period (b)
Notes Payable
to Banks:
December 31,
1993 $37,168 3.6% $112,641 $80,815 3.6%
1992 $109,936 4.0% $120,259 $86,488 4.2%
1991 $118,449 5.6% $118,449 $78,253 6.3%
</TABLE>
(a) The average amount outstanding during the period was computed by
dividing the summation of the daily principal balances outstanding
by 365 days in 1993 and 1991, respectively and 366 in 1992.
(b) The weighted average interest rate during the period was computed by
dividing the actual interest expense by the daily average short-term
debt outstanding.
<TABLE>
Schedule X /wg
Eastern Utilities Associates and Subsidiary Companies
Supplementary Income Statement Information
(In Thousands of Dollars)
<S> <C> <C>
COLUMN A COLUMN B
For the Years Ended December 31,
1993 1992 1991
Charged to Costs and Expense
Taxes -- Other than Income: (a)
Newport Electric Corporation 4,112 3,255 3,413
EUA Cogenex................. 647 391 238
EUA Service Corporation..... 2,009 1,898 1,822
Blackstone Valley Electric Company 9,593 9,357 9,403
Eastern Edison Company...... 4,082 3,715 3,529
Montaup Electric Company.... 5,233 6,235 5,161
Total.................. 25,676 24,851 23,566
Less: Charged to Other Accounts 1,208 1,066 1,080
Charged to Operating Expense 24,468 23,785 22,486
</TABLE>
Amounts of rents, advertising costs and research and development costs
did not exceed 1% of gross revenues.
Amounts of depreciation expense were as shown in the income statement
and notes thereto.
<TABLE>
<S> <C> <C> <C> <C>
Local
NOTES: (a) Payroll Property Corporation Sales and
Taxes Taxes Tax Use Tax
For the Year Ended
December 31, 1993:
Newport Electric........ 380 1,292 2,432 8
EUA Cogenex............. 579 51 17
EUA Service............. 1,713 248 48
Blackstone.............. 667 3,292 5,619 15
Eastern Edison.......... 1,231 2,722 129
Montaup................. 970 4,172 0 91
Total................... 5,540 11,777 8,051 308 25,676
For the Year Ended
December 31, 1992:
Newport Electric........ 369 597 2,284 5
EUA Cogenex............. 352 7 32 391
EUA Service............. 1,638 241 19
Blackstone.............. 644 3,269 5,444
Eastern Edison.......... 1,214 2,500 1
Montaup................. 880 5,016 339
Total................... 5,097 11,630 7,728 396 24,851
For the Year Ended
December 31, 1991:
EUA Power ..............
Newport Electric........ 392 726 2,283 12
EUA Cogenex............. 238 0 0
EUA Service............. 1,601 221 0 0
Blackstone.............. 611 3,177 5,615
Eastern Edison.......... 1,218 2,308 0 3
Montaup................. 824 4,337
Total................... 4,884 10,769 7,898 15
</TABLE>
Report of Independent Accountants
To the Directors and Shareholders of
Eastern Utilities Associates:
Our report on the consolidated financial statements of Eastern Utilities
Associates and subsidiaries has been incorporated by reference in this Form
10-K from page 36 of the 1993 Annual Report to Shareholders of Eastern
Utilities Associates. In connection with our audits of such consolidated
financial statements, we have also audited the related consolidated financial
statement schedules listed in the index on page 34 of this Form 10-K.
In our opinion, the consolidated financial statements schedules referred to
above, when considered in relation to the basic financial statements taken as a
whole, present fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand
Boston, Massachusetts
March 4, 1994
[This page left blank intentionally]
EXHIBIT 4.4.10
EUA COGENEX CORPORATION
AND
THE BANK OF NEW YORK
Trustee
____________________
Indenture
Dated as of [__________], 1993
____________________
Debt Securities
<TABLE>
CROSS-REFERENCE TABLE
<CAPTION>
Indenture
TIA Section Section
<S> <C>
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . ........... . . . . . . . . . . . ............ 7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... N.A.
311(a) . . . . . . . . .... . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . .. . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
(b) . .. . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
(c) . .. . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
313(a) . . . .... . . . . . . . . . . . . . . . . . . . . . .7.6
(b)(1). . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2). . . . . . . . . . . . . . . . . . . . . . . . .7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . .7.6
314(a) . . . . .. . . . . . . . . . . . . . . . . .4.[4]; 10.2
(b) . . . . ...... . . . . . . . . . . . . . . . . . . N.A.
(c)(1). . . . . . . . . . . . . . . . . . . . .. . . 10.4
(c)(2). . . . . . . . . . . . . . . . . . . .. . . 10.4
(c)(3). . . . . . . . . . . . . . . . . . . .. .. . N.A.
(d) . . . . . . . . . . . . . . . . . . . . .. .. . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . 10.5
(f) . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . ... . . . . . . . . . . . . . . . . . . .... 7.1(b)
(b) . . . . . . . . . . . . . . . . . . . . . .7.5; 10.2
(c) . . ...... . . . . . . . . . . . . . . . . . . . 7.1(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . 7.1(c)
(e) . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence). . . . . . . . . . . . . .. . . . 10.6
(a)(1)(A) . . . . .. . . . . . . . . . . . . . . . .6.5
(a)(1)(B) . . . . ...... . . . . . . . . . . . . . .6.4
(a)(2). . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . .6.7
317(a)(1). . . . . . . . . . . . . . . . . . . . . .6.8
(a)(2). . . . . . . . . . . . . . . . . . . . . .6.9
(b) . . . . . . . . . . . ...... . . . . . . . . . .2.4
318(a) . . . . . . . . . . . . . . . . . . . . . . 10.1
</TABLE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S>
<C> ARTICLE I. - DEFINITIONS AND INCORPORATION BY REFERENCE. . . . . . 1
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitions. . . . . . . . . . . . . . . .. . . . . 7
SECTION 1.3. Incorporation by Reference of Trust Indenture Act . . . . . 7
SECTION 1.4. Rules of Construction. . . . . . . . . . . . . . . . . . . 8
ARTICLE II. - THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.1. Terms and Form. . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2. Execution and Authentication . . . . . . . . . . . . . . . 9
SECTION 2.3. Registrar and Paying Agent.. . . . . . . . . . . . . . . . 10
SECTION 2.4. Paying Agent to Hold Money In Trust. . . . . . . .. . . . 10
SECTION 2.5. Securityholder Lists.. . . . . . . . . . . . . . . . . . 10
SECTION 2.6. Transfer and Exchange. . . . . . . . . . . . . . . . . . 10
SECTION 2.7. Replacement Securities.. . . . . . . . . . . . . ... . . 11
SECTION 2.8. Outstanding Securities.. . . . . . . . . . . . . . . . . 11
SECTION 2.9. Temporary Securities.. . . . . . . . . . . . . . ... . . 11
SECTION 2.10. Cancellation. . . . . . . . . . . . . . . . . . .. . . 12
SECTION 2.11. Defaulted Interest. . . . . . . . . . . . . . .. .. . . 12
SECTION 2.12. Provisions Concerning Global Securities.. . . . . . 12
SECTION 2.13. CUSIP Numbers.. . . . . . . . . . . . . . . . . . . 14
ARTICLE III. - REDEMPTION. . . . . . . . . . . . . . . . . . . . ... . . 15
SECTION 3.1. Notices to Trustee.. . . . . . . . . . . . . . . . . . . 15
SECTION 3.2. Selection of Securities to be Redeemed.. . . . . . . .. . 15
SECTION 3.3. Notice of Redemption.. . . . . . . . . . . . . . . . .. . 15
SECTION 3.4. Effect of Notice of Redemption.. . . . . . . . . . . . . . 16
SECTION 3.5. Deposit of Redemption Price. . . . . . . . . . . . . . . 16
SECTION 3.6. Securities Redeemed in Part. . . . . . . . . . . . . . . 16
ARTICLE IV. - COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.1. Payment of Securities. . . . . . . . . . . . . . . . . . . 17
SECTION 4.2. Books and Records. . . . . . . . . . . . . . . . . . .. . 17
SECTION 4.3. Conduct of Business, Maintenance of Existence, Etc.. .. . 17
SECTION 4.4. Covenant To Secure Notes Equally.. . . . . . . . . . . . . 17
SECTION 4.5. Consolidated Interest Charge Coverage Ratio. . . . . . . 17
SECTION 4.6. Common Equity to Capitalization Ratio. . . . . . . . . . 18
SECTION 4.7. Restrictions on Debt.. . . . . . . . . . . . . . . . . 18
SECTION 4.8. Loans, Advances, Investments and Contingent Liabilities. . 18
SECTION 4.9. Restricted Payments. . . . . . . . . . . . . . . . . . . 18
SECTION 4.10. No Lien Created.. . . . . . . . . . . . . . . . . . . . 18
SECTION 4.11. Compliance Certificate. . . . . . . . . . . . . . . . . 18
SECTION 4.12. Financial Statements and Reports. . . . . . . . . . . 19
ARTICLE V. - MERGER AND SALE OF ASSETS . . . . . . . . . . . . . . . ... 19
SECTION 5.1. Merger and Sale of Assets. . . . ... . . . . . . . . . . . 19
ARTICLE VI. - DEFAULTS AND REMEDIES. . . . . . . . . . . . . . . . . . . 20
SECTION 6.1. Events of Default. . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.2. Acceleration.. . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.3. Other Remedies.. . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.4. Waiver of Past Defaults. . . . . . . . . . . . . . . . . 22
SECTION 6.5. Control by Majority. . . . . . . . . . . . . . . . . . 22
SECTION 6.6. Limitation on Suits. . . . . . . . . .. . . . . . . . 22
SECTION 6.7. Rights of Holders to Receive Payment... . . . . . . . 23
SECTION 6.8. Collection Suit by Trustee.. . . . . .. . . . . . . . 23
SECTION 6.9. Trustee May File Proofs of Claim.. . .. . . . . . . . 23
SECTION 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . 23
SECTION 6.11. Undertaking for Costs.. . . . . . . . . . . . . . . 24
ARTICLE VII. - TRUSTEE . . . . . . . . . . . . . . ... . . . . . . . . . 24
SECTION 7.1. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.2. Rights of Trustee. . . . . . . . . . . . . . . . . . . . 25
SECTION 7.3. Individual Rights of Trustee.. . . . . . . . . . . . . . 25
SECTION 7.4. Trustee's Disclaimer.. . . . . . . . . . . . . . . . . . 26
SECTION 7.5. Notice of Defaults.. . . . . . . . . . . . . . . . . . 26
SECTION 7.6. Reports by Trustee to Holders. . . . . . . . . . . . 26
SECTION 7.7. Compensation and Indemnity.. . . . . . . . . . . . . 26
SECTION 7.8. Replacement of Trustee.. . . . . . . . . . . . . . . 27
SECTION 7.9. Successor Trustee by Merger, etc.. . . . . . . . . . 28
SECTION 7.10. Eligibility; Disqualification.. . . . . . . . . . . 28
SECTION 7.11. Preferential Collection of Claims Against Company. . . 28
ARTICLE VIII. - DISCHARGE OF INDENTURE . . . . . . . . . . . . ... . . . 29
SECTION 8.1. Termination of Company's Obligations.. . . . . . . . . . . 29
SECTION 8.2. Application of Trust Money.. . . . . . . . . . . . .. . . 30
SECTION 8.3. Repayment to Company.. . . . . . . . . . . . . . . . . . 30
ARTICLE IX. - AMENDMENTS, SUPPLEMENTS AND WAIVERS. . . . . . . . . . . . 30
SECTION 9.1. Without Consent of Holders.. . . . . . . . . . . . . . . . 30
SECTION 9.2. With Consent of Holders. . . . . . . . . . . . . . .. . . 31
SECTION 9.3. Compliance with Trust Indenture Act. . . . . . . . . . . 31
SECTION 9.4. Revocation and Effect of Consents. . . . . . . . . . . . 32
SECTION 9.5. Notation on or Exchange of Securities. . . . . . . . . . 32
SECTION 9.6. Trustee to Sign Amendments, etc. . . . . . . . . . . . . 32
ARTICLE X. - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . ... . . 32
SECTION 10.1. Trust Indenture Act Controls. . . . . . . . . . . . . . . 32
SECTION 10.2. Notices.. . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 10.3. Communication by Holders with Other Holders.. . . . . . 33
SECTION 10.4. Certificate and Opinion as to Conditions Precedent. . . 33
SECTION 10.5. Statements Required in Certificate or Opinion.. . . . . 33
SECTION 10.6. Treasury Securities.. . . . . . . . . . . . . . . . . . 34
SECTION 10.7. Rules by Trustee, Paying Agent, Registrar.. . . . . . . 34
SECTION 10.8. Legal Holidays. . . . . . . . . . . . . . . . . . . . 34
SECTION 10.9. Governing Law.. . . . . . . . . . . . . . . . . . . . 34
SECTION 10.10. No Recourse Against Others.. . . . . . . . . . .. . 34
SECTION 10.11. Successors.. . . . . . . . . . . . . . . . . . .. . 34
SECTION 10.12. Execution in Counterparts. . . . . . . . . . . . . 34
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . .. . 36
EXHIBIT A. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
INDENTURE dated as of September 1, 1993, between EUA COGENEX
CORPORATION, a Massachusetts corporation ("Company"), and The Bank of New
York, a New York banking corporation, as trustee ("Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Company's Securities:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Accounts Receivable" means the accounts receivable on the consolidated
balance sheet of the Company and its Subsidiaries determined in accordance
with generally accepted accounting principles on a basis consistent with the
balance sheet of the Company on December 31, 1992.
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
"Agent" means any Registrar or Paying Agent. See Section 2.3.
"Board of Directors" means the Board of Directors of the Company or any
committee of the Board of Directors duly authorized to act for it hereunder.
"Board Vote" means a vote of the Board of Directors, which may be
evidenced by a certificate of the Secretary or an Assistant Secretary of the
Company which states that such vote has been duly adopted by the Board of
Directors and is in full force and effect.
"Capitalized Lease Obligation" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with such principles.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Consolidated Capitalization" of the Company and its Subsidiaries shall
mean, without duplication, the sum of (i) Debt, (ii) capital stock (but
excluding treasury stock and capital stock subscribed and unissued), (iii)
contributed or capital surplus, (iv) retained earnings, and (v) premium on
capital stock to the extent not included in surplus, all determined and
consolidated in accordance with generally accepted accounting principles,
after eliminating all intercompany items and all amounts attributable to any
write-up in the book value of any assets on the books of the Company or any
Subsidiary subsequent to June 30, 1993; provided that in calculating
Consolidated Capitalization for purposes of Section 4.6 hereof, an amount of
Current Debt equal to the lesser of 20% of Consolidated Capitalization
(including all Current Debt) or $50,000,000 shall be excluded.
"Consolidated Common Equity" of the Company and its Subsidiaries shall
mean, without duplication, the sum of (i) the total capital represented by the
common stock of the Company at the time outstanding, (ii) contributed or
capital surplus, (iii) retained earnings, and (iv) premium on the common stock
of the Company to the extent not included in surplus, all determined and
consolidated in accordance with generally accepted accounting principles,
after eliminating all amounts attributable to any write-up in the book value
of any assets on the books of the Company or any Subsidiary subsequent to June
30, 1993.
"Consolidated Interest Charges" shall mean for any period, the expenses
(net of interest income earned during such period) expensed or accrued for
such period for interest (including, without limitation, imputed interest,
accrued original interest discount and interest payable in kind) on all debt
(including Capitalized Lease Obligations), determined in accordance with
generally accepted accounting principals.
"Consolidated Net Income" shall mean for any period (A) consolidated
gross revenues of the Company and its Subsidiaries for such period, but not
including in gross revenues (i) proceeds of any life insurance policies, (ii)
any gains resulting from the write-up of assets, (iii) any equity of the
Company or any Subsidiary in the unremitted earnings of any Person which is
not a Subsidiary, (iv) any earnings of any Person acquired by the Company or
any Subsidiary through purchase, merger, consolidation or otherwise for any
prior to the date of acquisition, (v) in the case of any successor to the
Company by merger or consolidation or any transferee of the assets of the
Company, any earnings of such successor or transferee corporation prior to the
date in which such merger, consolidation or transfer of assets becomes
effective, (vi) any gain resulting from the discontinuance of operations or
any other extraordinary revenue item of a non-recurring or non-operating
nature, (vii) any deferred credit representing the excess of equity in any
Subsidiary at the date of acquisition over the cost of investment in such
Subsidiary, and (viii) any gain resulting from the acquisition of any debt
security at a cost less than the sum of a the principal amount thereof plus
accrued interest, minus (B) all operating and non-operating expenses of the
Company and its Subsidiaries, including all charges of a proper character
(including current and deferred Taxes on income, provision for Taxes on
unremitted foreign earnings which are included in gross revenues, and current
additions to reserves, but not including any loss resulting from the
discontinuance of operations or any other extraordinary loss item of a non-
recurring or non-operating nature); all such amounts to be determined in
accordance with generally accepted accounting principles.
"Consolidated Net Income Available for Restricted Payments" shall mean an
amount equal to (A) the sum of (i) $5,000,000 plus (ii) 100% (or minus 100% in
case of a deficit) of Consolidated Net Income (but excluding any gain
resulting from the sale of assets not in the ordinary course of business) for
the period (taken as one accounting period) commencing on June 30, 1991 and
terminating at the end of the last fiscal quarter preceding the date of any
proposed Restricted Payment plus (iii) additions to paid-in capital subsequent
to the date hereof, less (B) aggregate Restricted Payments made after June 30,
1991.
"Current Debt" shall mean any obligation for borrowed money (and any
notes payable and drafts accepted and any other instruments representing
extensions of credit, whether or not representing obligations for borrowed
money) payable on demand or in a period of one year or less from the date of
the creation thereof; provided that any obligation shall be treated as Funded
Debt, regardless of its term if such obligation is renewable pursuant to the
terms thereof or of a revolving credit or similar agreement effective for more
than one year after the date of the creation of such obligation, or may be
payable out of the proceeds of a similar agreement effective for more than one
year after the date of the creation of such obligation pursuant to the terms
of such obligation or of any such agreement.
"Debt" shall mean and include both Funded Debt and Current Debt. Any
obligation secured by a Lien on, or payable out of the proceeds of production
from, property of the Company or any Subsidiary shall be deemed to be Funded
or Current Debt, as the case may be, of the Company or such Subsidiary even
though such obligation shall not be assumed by the Company or such Subsidiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Existing Investments" shall mean and include the Investments listed on
Schedule I hereto.
"Funded Debt" shall mean (without duplication):
(i) any obligation payable more than one year from the date of
creation thereof, which under generally accepted accounting principles is
shown on the balance sheet as a liability (including Capitalized Lease
Obligations but excluding reserves for deferred income taxes and other
reserves to the extent that such reserves do not constitute an obligation),
(ii) indebtedness payable more than one year from the date of
creation thereof which is secured by any Lien on property owned by the Company
or any Subsidiary, whether or not the indebtedness secured thereby shall have
been assumed by the Company or such Subsidiary,
(iii) guarantees, endorsements (other than endorsements of
negotiable instruments for collection in the ordinary course of business) and
other contingent liabilities (whether direct or indirect) in connection with
the obligations, stock or dividends of any Person, and
(iv) obligations under any other contract which, in economic
effect, are substantially equivalent to Funded Debt; all as determined in
accordance with generally accepted accounting principles.
"Holder" or "Securityholder" or "Noteholder" means a person in whose name
a Security is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Investments" shall mean all loans, advances, capital contributions and
transfers of assets (other than sales in the ordinary course of business or
for cash), and all purchases or other acquisitions for consideration of
evidences of indebtedness, capital stock or other securities.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement and any
lease in the nature thereof.
"Officer" means the Chairman of the Board, the Vice Chairman of the
Board, the President, any Vice President, the Treasurer, the Secretary (or
Clerk) or the Comptroller of the Company.
"Officers' Certificate" means a certificate signed by two Officers or by
an Officer and an Assistant Treasurer, Assistant Secretary (or Assistant
Clerk) or Assistant Comptroller of the Company. See Sections 10.4 and 10.5.
"Opinion of Counsel" means a written opinion from legal counsel who may
be an employee of or counsel to the Company, or who may be other counsel
satisfactory to the Trustee.
"Permitted Investments" shall mean and include the following Investments:
(i) Existing Investments;
(ii) Marketable direct obligations issued or unconditionally
guaranteed by the United States of America maturing within one (1) year from
the date of acquisition thereof;
(iii) Commercial paper maturing not more than two hundred and
seventy (270) days from the date of acquisition thereof and having the highest
rating obtainable from Standard & Poor's Corporation and Moody's Investor
Services, Inc.
(iv) Obligations of any State, Territory or possession of the
United States of America, or any political subdivision of any of the
foregoing, or of the District of Columbia, which obligations are rated "A" or
better by Standard & Poor's Corporation and mature within one (1) year from
the date of acquisition thereof;
(v) Certificates of deposit maturing within one (1) year from
the date of acquisition thereof issued by commercial banks incorporated under
the laws of the United States of America or any State thereof or the District
of Columbia, each having, as of the date of acquisition, combined capital and
surplus of not less than $250,000,000;
(vi) Obligations of any issuer (other than an Affiliate of the
Company) maturing within one (1) year from the date of acquisition thereof and
which qualify as legal investments for trust funds or savings banks under the
laws of New York or Massachusetts, as specified in and subject to the
condition prescribed by Rule 40(a)(1) under the Public Utility Holding Company
Act of 1935;
(vii) Repurchase agreements of banks described in clause (v)
hereof, secured solely by Investments described in clauses (ii), (iii) and
(iv) hereof;
(viii) Interests in mutual funds and similar investment
companies, provided that the obligations and other securities held thereunder
consist exclusively of Investments described in clauses (ii) through (vii)
hereof; and
(ix) Project, partnership and other business Investments
undertaken by the Company in the ordinary course of business; provided that to
the extent the aggregate value of such Investments in any one year exceeds
$5,000,000 (excluding an Investment consisting primarily of energy management
services projects and utility demand side management progams in the EUA/Beacon
Partners, G.P., a general partnership to be formed with the Beacon Energy
Limited Partnership or an affiliate thereof), they shall consist only of cash.
"Permitted Liens" shall mean and include the following liens:
(i) Liens for Taxes not yet due or which are being actively
contested in good faith by appropriate proceedings;
(ii) Other Liens incidental to the conduct of the business of
the Company or any of its Subsidiaries or the ownership of their respective
property and assets which were not incurred in connection with Capitalized
Leases, the borrowing of money or the obtaining of advances or credit, and
which do not in the aggregate detract from the value of the property or
assets, or materially impair the use thereof in the operation of the business
of the Company and all of its Subsidiaries as a whole, including, but not
limited to, the following Liens:
(a) materialmen's, mechanics', carriers', workmen's and
other like Liens arising in the ordinary course of business, or deposits to
obtain the release of such Liens,
(b) pledges or deposits to secure obligations under
workmen's compensation laws, unemployment laws or similar legislation, and
(c) easements, licenses, rights of way or other
restrictions on the use of real property which do not, in the opinion of the
Board of Directors of the Company, materially impair the use of such property
in the operation of the business of the Company and its Subsidiaries as a
whole or the value of such property for the purpose of such business;
(iii) Liens on property or assets of a Subsidiary of the Company
to secure obligations of such Subsidiary to the Company or to another
Subsidiary of the Company;
(iv) Liens of or resulting from any judgment or award, provided
that (a) the time for appeal or the filing of a petition for rehearing shall
not have expired, (b) the Company or a Subsidiary of the Company, as the case
may be, shall in good faith be diligently prosecuting an appeal or proceeding
for review, (c) a stay of execution of such judgment or award pending such
appeal or proceeding for review shall have been obtained, (d) the payment of
any sums required to be paid under the Notes or this Indenture shall not be
interfered with or otherwise affected by any such appeal or proceeding for
review, and (e) the Company shall notify you of any such Liens as promptly as
practicable;
(v) Liens on property or assets of a Subsidiary securing Debt
of such Subsidiary to third parties for which the Company is not liable;
(vi) Liens arising or attaching after the date hereof and given
by the Company or any Subsidiary of the Company to secure the payment of the
purchase price of property acquired by the Company or such Subsidiary
(including, for purposes hereof, Liens existing on such property at the time
of acquisition thereof); provided that (a) no such Lien shall extend to or
cover any property of the Company or such Subsidiary, as the case may be,
other than the property acquired subject thereto, and (b) the Debt secured by
any such Lien shall not exceed 100% of the lesser of (I) the total purchase
price of the subject property or (II) the fair market value of the subject
property at the time of acquisition thereof (as determined in good faith by
the Board of Directors of the Company);
(vii) Liens in existence on the date hereof and disclosed on
Schedule II hereto;
(viii) Liens securing lease obligations; provided, however, that
no such Lease Obligations shall arise out of the sale and lease back of assets
unless the sale and lease back in questions is entered into prior to, at the
time of or within 180 days of the acquisition of the assets being sold and
leased back;
(ix) Liens at any time existing securing the Notes; and
(x) Liens on Accounts Receivable securing Debt.
"Person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, and a
government or any department or agency thereof.
"Project Finance Obligation" shall mean any obligation of the
Company or any Subsidiary of the Company secured by a Lien on, or payable out
of the proceeds or production from specific assets of said obligor; provided
that such obligation shall be wholly without recourse to the Company or any
Subsidiary of the Company
"Project Finance Subsidiary" shall mean any Subsidiary of the
Company, eighty percent (80%) of the Funded Debt of which, owing to parties
other than Affiliates, consists exclusively of Project Finance Obligations.
"Responsible Officer" means any officer in the corporate trust
department of the Trustee or any other officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Restricted Payments" shall mean (i) any dividends or any other
distributions on account of any class of stock and (ii) any redemption,
purchase or other acquisition, direct or indirect, of any shares of stock of
the Company. There shall not be included in Restricted Payments or in any
computation of Consolidated Net Income Available for Restricted Payments
dividends paid, or distributions made, in the common stock of the Company and
(b) exchanges of stock of one or more classes of the Company. The term
"stock", as used in this definition, shall include warrants or options to
purchase stock.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture;
provided, however, that if at any time there is more than one entity acting as
Trustee under this Indenture, "Securities" as to which such entity is Trustee
means Securities authenticated and delivered under this Indenture, exclusive,
however, of Securities of any Series as to which such entity is not Trustee.
"Series" of Securities means all Securities provided for by one
or more indentures supplemental hereto, Board Votes or Officers' Certificates
as being part of the same series.
"Significant Partnership" shall mean any Subsidiary of the
Company (i) which is a partnership, (ii) for which the Company accounts by the
equity method of accounting, and (iii) in which Investments by the Company
constitute more than 10% of the aggregate Investments by the Company in all of
its partnership Subsidiaries.
"Subsidiary" shall mean, as to any Person, (i) any corporation a
majority of the total combined voting power of all classes of Voting Stock of
which shall, at the time as of which any determination is being made, be owned
by such Person either directly or through Subsidiaries, and (ii) any
partnership in which such Person or any Subsidiary of such Person is or, by
contract or otherwise, exercises (or has the right to exercise) the powers of,
a general partner, or otherwise possesses, directly or indirectly, the power
to direct or cause the direction of the management and policies of such
partnership.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sec.
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided
by Section 9.3; provided, however, that in the event the Trust Indenture Act
of 1939 is amended after such date, "TIA" means, to the extent required by any
such amendment, the Trust Indenture Act as so amended.
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor. If at any time there are one or more additional parties acting as
trustee hereunder for any Series of Securities, "Trustee" shall also mean such
parties and the term "Trustee" as used with respect to the Securities of a
particular Series means the Trustee with respect to Securities of that Series.
"United States" means the United States of America including its
territories and possessions.
<TABLE>
SECTION 1.2 Other Definitions.
<CAPTION>
Term Defined in
Section
<S> <C>
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1
"Custodian". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1
"Depository" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12.1
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1
"Global Security". . . . . . . . . . . . . . . . . . . . . . . . . . 2.12.1
"Legal Holiday". . . . . . . . . . . . . . . . . . . . . . . . . .. . . 10.8
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
"Registrar". . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
"U.S. Government Obligations". . . . . . . . . . . . . . . . . . . . .8.1
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company.
All other TIA terms used in this Indenture that are defined by
TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them.
SECTION 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term, not otherwise defined, has the
meaning assigned to it in accordance with generally accepted
accounting principles;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the
plural include the singular.
ARTICLE II.
THE SECURITIES
SECTION 2.1. Terms and Form.
The Securities may be issued from time to time in one or more
Series. Each Series shall be limited to such aggregate principal amount,
shall bear the title and interest at the rates and from the dates, shall
mature at the times, shall or may be redeemable at the prices and upon the
terms, and shall contain or be subject to all terms as shall be established in
an indenture supplemental hereto or by or pursuant to a Board Vote (and, to
the extent not set forth in the Board Vote, in an Officers' Certificate
detailing the adoption of terms pursuant to the Board Vote). Securities of a
Series shall be substantially identical except as to denomination and except
as may be otherwise provided in a Board Vote and/or an Officers' Certificate
or in an indenture supplemental hereto. The Officers' Certificate may provide
for the method by which specified terms (such as interest rate, maturity date,
record date or date from which interest shall accrue) are to be determined.
See Section 2.12.4.
The Securities of each Series hereunder shall be substantially in
the form set forth in Exhibit A or in such other form as shall be established
pursuant to a Board Vote (and, to the extent not set forth in the Board Vote,
in an Officers' Certificate detailing the adoption of such form) or one or
more indenture supplements to this Indenture, in each case, with such
insertions, omissions, substitutions, and other variations as are required or
permitted by this Indenture, such Board Vote (and Officers' Certificate) or
such indenture supplement. If a form of any Security is approved by a Board
Vote, such Officers' Certificate shall also state that all conditions
precedent relating to the authentication and delivery of such Security have
been complied with and shall be accompanied by a copy of the Board Vote by or
pursuant to which the form of such Security has been approved. The Securities
may have notations, legends or endorsements required by law, stock exchange
rule or usage. The Company shall approve the form of the Securities and any
notation, legend or endorsement on them, such approval to be conclusively
evidenced by the execution of such Securities. Unless the form of a Security
of a Series provides otherwise, each Security shall be dated the date of its
authentication.
Unless the form of a Security of a Series provides otherwise, the
Securities of such Series shall be issued in denominations of $1,000 or
multiples thereof.
In the event that Securities issued hereunder are to be resold in
reliance on Rule 144A of the Securities Act of 1933, a Board Vote shall be
taken providing for the transfer restrictions and procedures required by said
Rule 144A.
SECTION 2.2. Execution and Authentication.
Two Officers shall sign the Securities for the Company and may
employ facsimile signatures. The Company's seal shall be impressed, affixed
or reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited. The Trustee
shall authenticate Securities for original issue upon (or in accordance with
such procedures acceptable to the Trustee set forth in) a written order of the
Company signed by two Officers or by an Officer and an Assistant Treasurer of
the Company.
A Security shall not be valid until the Trustee manually signs
the certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture. The Trustee's authentication shall be in the following form
(except that where applicable any successor or additional Trustee's name for
Securities of a Series shall be substituted for the Trustee named below):
This is one of the Securities of
the Series designated therein referred
to in the within-mentioned Indenture.
The Bank of New York
as Trustee
By__________________________________
Authorized Signatory
SECTION 2.3. Registrar and Paying Agent.
The Company shall designate a Registrar who shall maintain an
office or agency where Securities may be presented for registration of
transfer and where Securities may be presented for exchange ("Registrar") and
a paying agent who shall maintain an office or agency where Securities may be
presented for payment ("Paying Agent"). Initially, The Bank of New York, 101
Barclay Street, New York, New York 10286 will act as the Registrar and Paying
Agent. The Registrar shall keep a register of the Securities and of their
transfer and exchange. With the consent of the Trustee, which shall not be
unreasonably withheld, the Company may designate one or more co-registrars and
one or more Paying Agents. The term "Registrar" includes any additional co-
registrar. The term "Paying Agent" includes any additional paying agent. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. If the Company fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such.
SECTION 2.4. Paying Agent to Hold Money In Trust.
The Company, by written agreement, shall require each Paying
Agent other than the Trustee to agree that the Paying Agent will hold in trust
for the benefit of Securityholders or the Trustee all money held by the Paying
Agent for the payment of principal of and premium, if any, or interest on the
Securities, and will notify the Trustee of any default by the Company in
making any such payment. If the Company acts as Paying Agent, it shall
segregate the money and hold it as a separate trust fund. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee.
Upon doing so the Paying Agent shall have no further liability for the money.
SECTION 2.5. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee any information in the possession or control of the
Company (a) on or before each semi-annual interest payment date of any Series
of Securities, and (b) at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
SECTION 2.6. Transfer and Exchange.
When a Security is presented to the Registrar with a request to
register a transfer, the Registrar shall register the transfer as requested in
the manner provided in this Section 2.6. See Section 2.12.5.
Every Security presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Registrar) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar duly executed by the Holder
thereof or his attorney duly authorized in writing. To permit transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's request. The Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed for any exchange or transfer but not for any exchange pursuant to
Section 2.9, 3.6 or 9.5.
The Company shall not be required (i) to issue, register the
transfer of or exchange Securities of any Series during a period beginning at
the opening of business 15 days before the day of selection for redemption of
Securities of that Series under Section 3.2 and ending at the close of
business on the day of the mailing of notice of redemption, or (ii) to
register the transfer of, or exchange any Security so selected for redemption
in whole or in part, except the unredeemed portion of any Security being
redeemed in part.
SECTION 2.7. Replacement Securities.
If the Holder of a mutilated Security surrenders such Security to
the Trustee of if the Holder of a Security presents evidence satisfactory to
the Company and the Trustee that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the requirements of Section 8-405(2) of the
Massachusetts Uniform Commercial Code as in effect on the date of this
Indenture are met. In case any such Security has or is about to become due
and payable, the Company may pay the Security instead of issuing a new
Security. If required by the Company or the Trustee, such Holder shall
provide an indemnity bond which must be sufficient in the judgment of the
party requiring it to protect the Company, the Trustee and any Agent from any
loss which any of them may suffer if a Security is replaced. The Company or
the Trustee may charge the Holder for its expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.8. Outstanding Securities.
Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those paid
pursuant to Section 2.7, those Securities of any Series for which the Company
has made a deposit in accordance with Section 8.1 and those described in this
Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate holds the Security. See Section 10.6.
If a Security is replaced pursuant to Section 2.7, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds on a redemption date or maturity date
money sufficient to pay Securities payable on that date, then on and after
that date such Securities cease to be outstanding and interest on them ceases
to accrue.
SECTION 2.9. Temporary Securities.
Until definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Securities in exchange for
temporary Securities.
SECTION 2.10. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration
of transfer, exchange, payment or cancellation and shall return such cancelled
Securities to the Company. The Company may not issue new Securities to
replace Securities that it has paid or delivered to the Trustee for
cancellation.
SECTION 2.11. Defaulted Interest.
If the Company defaults in the payment of interest on any Series
of the Securities, it shall pay the defaulted interest, plus any interest
payable on such defaulted interest to the extent permitted by law, to persons
who are Holders of Securities of such Series on a subsequent special record
date. The Company shall fix the special record date and the payment date. At
least 15 days before such special record date, the Company shall notify the
Trustee and each Holder of such special record date, the payment date and the
amount of interest to be paid. The Company may pay defaulted interest in any
other lawful manner.
SECTION 2.12. Provisions Concerning Global Securities.
The following provisions shall govern the establishment and
issuance of Global Securities and shall be effective at all times when any
Global Securities shall be outstanding.
2.12.1. Certain Definitions. The following terms shall
have their associated meanings:
"Depository" means, with respect to the Securities of
any Series issuable or issued in whole or in part in the
form of one or more Global Securities, the person
designated as Depository for such Series by the Company,
which Depository shall be a clearing agency registered
under the Securities Exchange Act of 1934, as amended; and
if at any time there is more than one such person,
"Depository" as used with respect to the Securities of any
Series shall mean the Depository with respect to the
Securities of such Series.
"Global Security" means a Security in the form
prescribed in Section 2.1 and this Section 2.12 evidencing
all or part of a Series of Securities, issued to the
Depository for such Series or its nominee, and registered
in the name of such Depository or nominee.
2.12.2. Acts of Holders. The Depository, as a Holder,
may appoint agents and otherwise authorized participants to give
or take any request, demand, authorization, direction, notice,
consent, waiver or other action which a Holder is entitled to
give or take under the Indenture.
2.12.3. Legend. Any Global Security shall bear a legend
in substantially the following form:
"This Security is a Global Security within the
meaning of the Indenture hereinafter referred to and is
registered in the name of the Depository or a nominee of
the Depository. This Security is exchangeable for
Securities registered in the name of a person other than
the Depository or its nominee only in the limited
circumstances described in the Indenture, and may not be
transferred except as a whole by the Depository to a
nominee of the Depository, by a nominee of the Depository
to the Depository or another nominee of the Depository or
by the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository."
2.12.4. Terms of Securities. An indenture supplemental
to the Indenture or a Board Vote (and, to the extent not set
forth in the Board Vote, in an Officers' Certificate detailing
the adoption of terms pursuant to the Board Vote) shall establish
whether the Securities of a Series shall be issued in whole or in
part in the form of one or more Global Securities and the
Depository for such Global Securities or Securities.
2.12.5. Transfer and Exchange. Notwithstanding any
provisions to the contrary contained in Section 2.6 and in
addition thereto, any Global Securities shall be exchangeable
pursuant to Section 2.6 for Securities registered in the names of
Holders other than the Depository for such Securities or its
nominee only if (i) such Depository notifies the Company that it
is unwilling or unable to continue as Depository for such Global
Security or if at any time such Depository ceases to be a
clearing agency registered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, in either such case,
the Company fails to appoint a successor Depository within 90
days of such event, (ii) the Company executes and delivers to the
Trustee an Officers' Certificate that such Global Securities
shall be so exchangeable or (iii) an event shall have happened
and be continuing which, after notice or lapse of time, or both,
would be an Event of Default with respect to the Securities
represented by such Global Security. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be
exchangeable for Securities registered in such names as the
Depository shall direct in writing in an aggregate principal
amount equal to the principal amount of the Global Security with
like tenor and terms.
Except as provided in this Section 2.12.5, a Global
Security may not be transferred except as a whole by the
Depository with respect to such Global Security to a nominee of
such Depository, by a nominee of such Depository to such
Depository or another nominee of such Depository or by the
Depository or any such nominee to a successor Depository or a
nominee of such successor Depository.
2.12.6. Acceleration. Notwithstanding any provisions to
the contrary contained in Section 6.2 and in addition thereto,
upon receipt by the Trustee of any declaration of acceleration,
or rescission and annulment thereof, with respect to Securities
of a Series all or part of which is represented by a Global
Security, the Trustee shall establish a record date for
determining Holders of outstanding Securities of such Series
entitled to join in such declaration of acceleration, or
rescission and annulment, as the case may be, which record date
shall be at the close of business on the day the Trustee receives
such declaration of acceleration, or rescission and annulment, as
the case may be. The Holders on such record date, or their duly
designated proxies, and only such Holders, shall be entitled to
join in such declaration of acceleration, or rescission and
annulment, as the case may be, whether or not such Holders remain
Holders after such record date; provided, however, that unless
such declaration of acceleration, or rescission and annulment, as
the case may be, shall have become effective by virtue of the
requisite percentage having been obtained prior to the day which
is 90 days after such record date, such declaration of
acceleration, or rescission and annulment, as the case may be,
shall automatically and without further action by any Holder be
cancelled and of no further effect. Nothing in this paragraph
shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new declaration of
acceleration, or rescission or annulment thereof, as the case may
be, that is identical to a declaration of acceleration, or
rescission or annulment thereof, which has been cancelled
pursuant to the proviso to the preceding sentence, in which event
a new record date shall be established pursuant to the provisions
of this Section 2.12.6.
2.12.7. Control by Majority. Notwithstanding any
provisions to the contrary contained in Section 6.5, and in
addition thereto, upon receipt by the Trustee of any direction
with respect to Securities of a Series all or part of which is
represented by a Global Security, the Trustee shall establish a
record date for determining Holders of outstanding Securities of
such Series entitled to join in such direction, which record date
shall be at the close of business on the date the Trustee
receives such direction. The Holders on such record date, or
their duly designated proxies, and only such Holders, shall be
entitled to join in such direction, whether or not such Holders
remain Holders after such record date; provided, however, that
unless such majority in principal amount shall have been obtained
prior to the day which is 90 days after such record date, such
direction shall automatically and without further action by any
Holder be cancelled and of no further effect. Nothing in this
paragraph shall prevent a Holder, or a proxy of a Holder from
giving, after expiration of such 90-day period, a new direction
identical to a direction which has been cancelled pursuant to the
provisions to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this
Section 2.12.7.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.
ARTICLE III.
REDEMPTION
SECTION 3.1. Notices to Trustee.
If the Company wants to redeem Securities of any Series pursuant
to the terms of the Securities of that Series, the Company shall notify the
Trustee of the redemption date and the principal amount of the Securities to
be redeemed.
Each such notice shall be accompanied by an Officers' Certificate
stating that the conditions to such redemption as provided in such Security
and in this Indenture have been complied with. If the Company elects to
redeem less than all the Securities of a Series, the Company shall notify the
Trustee of such redemption date and of the principal amount of such Securities
to be redeemed and shall deliver to the Trustee such documentation and records
as shall enable the Trustee to select the Securities to be redeemed pursuant
to Section 3.2.
If any Series of Securities by its terms is redeemable pursuant
to the operation of a sinking fund, the Company shall notify the Trustee by an
Officers' Certificate of the amount of the next sinking fund payment and the
portion of such payment which is to be satisfied by delivering and crediting
Securities of the same Series pursuant to Section 3.5.
If the Company wants to credit against any mandatory redemption
Securities of the same Series it has not previously delivered to the Trustee
for cancellation, it shall deliver the Securities with such Officers'
Certificate.
The Company shall give each notice or Officers' Certificate
provided for in this Section at least 60 days before the redemption date
(unless shorter notice is satisfactory to the Trustee).
SECTION 3.2. Selection of Securities to be Redeemed.
If less than all the Securities of a Series are to be redeemed,
the Trustee shall select the Securities to be redeemed by a method the Trustee
considers fair and appropriate. The Trustee shall make the selection from
Securities of such Series outstanding not previously called for redemption.
The Trustee may select for redemption portions of the principal of Securities
of such Series that have denominations larger than $1,000. Securities and
portions of them it selects shall be in amounts of $1,000 or multiples of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption
date, the Company shall mail a notice of redemption by first-class mail to
each Holder of Securities to be redeemed.
The notice shall identify the Securities (including CUSIP number,
if any) to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price and the accrued interest;
(3) if less than all Securities of a Series outstanding
are to be redeemed, the identification (and, if any Security is
to be redeemed in part, the principal amount) of the particular
Security to be redeemed;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(6) that interest on Securities called for redemption
ceases to accrue on and after the redemption date; and
(7) that the redemption is pursuant to a sinking fund, if
that is the case.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.
SECTION 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date and at the applicable
redemption price. Upon surrender to the Paying Agent, such Securities shall
be paid at the applicable redemption price plus accrued interest to the
redemption date; provided, however, that any regular payment of interest
becoming due on the redemption date shall be payable to the Holders of such
Securities in accordance with their terms.
SECTION 3.5. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit with
the Paying Agent (or if the Company is its own Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date.
Unless any Security by its terms prohibits any sinking fund
payment obligation from being satisfied by delivering and crediting Securities
(including Securities redeemed otherwise than through a sinking fund), the
Company may deliver such Securities to the Trustee for crediting against such
payment obligation in accordance with the terms of such Securities and this
Indenture.
SECTION 3.6. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate and deliver to the Holder a new Security of the
same Series equal in principal amount to the unredeemed portion of the
Security surrendered.
ARTICLE IV.
COVENANTS
SECTION 4.1. Payment of Securities.
The Company shall pay the principal of, and interest and premium,
if any, on each Series of Securities on the date and in the manner provided in
the Securities and this Indenture. An installment of principal or interest
shall be considered paid on the date it is due if the Trustee or Paying Agent
holds on that date money irrevocably designated for and sufficient to pay the
installment. At the Company's option, it can pay any interest on any
Securities by mailing checks by first class mail to the Holders of such
Securities at their addresses as shown on the Registrar's books.
The Company shall pay interest on overdue principal and premium,
if any, at the rate or rates borne by each Series of the Securities; it shall,
to the extent lawful, pay interest on overdue installments of interest at the
same rate or rates.
SECTION 4.2. Books and Records.
The Company covenants that, so long as any Securities of any
Series should be outstanding, it shall keep, in accordance with generally
accepted accounting principles, proper and complete books, records, and
accounts.
SECTION 4.3. Conduct of Business, Maintenance of Existence, Etc.
The Company shall at all times (i) preserve and maintain in full
force and effect its existence as a corporation under the laws of its
jurisdiction of incorporation and its qualification to do business in all
other jurisdictions where the failure to so maintain such qualification would
have a material adverse effect on the Company and its Subsidiaries, taken as a
whole, (ii) maintain in full force and effect all of its rights, privileges,
licenses, permits and franchises where failure to maintain the same would have
a material adverse effect on the Company and its Subsidiaries taken as a
whole, and (iii) preserve and maintain all its material assets and properties
which are used or useful in the conduct of its business in good working order
and condition and in material compliance with all applicable laws.
SECTION 4.4. Covenant To Secure Notes Equally.
The Company covenants that, if it or any Subsidiary shall create
or assume any Lien upon any of its property or assets, whether now owned or
hereafter acquired, other than Permitted Liens, then, unless prior written
consent to the creation or assumption thereof shall have been given by the
requisite Holders of the Notes, it will, prior to or simultaneously with the
inception of such Lien, make or cause to be made effective provisions whereby
the Notes will be secured by such Lien equally and ratably with any and all
other Debt thereby secured so long as any other Debt shall be so secured.
SECTION 4.5. Consolidated Interest Charge Coverage Ratio.
The Company will not incur any additional Funded Debt if, after
giving effect to such incurrence, the ratio of (i) Consolidated Net Income
(before Taxes thereon) plus Consolidated Interest Charges to (ii) Consolidated
Interest Charges at the end of any fiscal quarter is less than 1.10 to 1.0.
SECTION 4.6. Common Equity to Capitalization Ratio.
The Company will not permit Consolidated Common Equity (i) to be
less than 20% of Consolidated Capitalization at any time during the period
from and including the date hereof through June 30, 1995 and (ii) to be less
than 30% of Consolidated Capitalization from and after June 30, 1995;
provided, however, that it will not constitute an Event of Default hereunder
if such Consolidated Common Equity is less than 30% but greater than 25% so
long as the Company refrains from making any Restricted Payments or incurring
any additional Debt until such time as the Consolidated Common Equity ratio is
at least 30%; and provided further that it will not constitute an Event of
Default hereunder if such Consolidated Common Equity ratio is less than 25% so
long as the ratio is not less than 25% at the end of two successive calendar
quarters.
SECTION 4.7. Restrictions on Debt.
The Company will not, and will not permit any Subsidiary to,
incur, assume, create or enter into any Debt unless immediately after such
incurring, assumption, creation or entering into, after giving effect to the
utilization of any proceeds thereof, the Company's Consolidated Common Equity
will be not less than (i) 20% of Consolidated Capitalization at any time
through June 30, 1995, or (ii) 25% of Consolidated Capitalization from and
after June 30, 1995.
SECTION 4.8. Loans, Advances, Investments and Contingent Liabilities.
The Company will not, and will not permit any Subsidiary to, make
or permit to remain outstanding any loan or advance to, or guarantee, endorse
or otherwise be or become contingently liable, directly or indirectly, in
connection with the obligations, stock or dividends of, or own, purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any Person, except that the Company or any
Subsidiary may:
(i) own, purchase or acquire any Permitted Investment; and
(ii) endorse negotiable instruments for collection in the
ordinary course of business.
SECTION 4.9. Restricted Payments.
The Company shall not declare, make, or agree or otherwise commit
to make any Restricted Payments, except out of Consolidated Net Income
Available for Restricted Payments, and then only if, at the time of such
Restricted Payment and after giving effect thereto, (i) no Default or Event of
Default shall have occurred or be continuing, and (ii) on or after June 30,
1995 the Company's Consolidated Common Equity shall be not less than 30% of
Consolidated Capitalization.
SECTION 4.10. No Lien Created.
This Indenture and the Securities do not create a Lien, charge or
encumbrance on any property of the Company or any Subsidiary.
SECTION 4.11. Compliance Certificate.
The Company shall deliver to the trustee within 120 days after
the end of each fiscal year of the Company an Officers' Certificate, one of
the signatories of which shall be the Company's chief executive officer, the
chief financial officer or the chief accounting officer at the time such
Officers' Certificate is signed, stating whether or not the signers know of
any Default by the Company in performing its covenants and obligations
hereunder that occurred during the fiscal year and is continuing. If they do
know of such a Default, the Certificate shall describe the nature and status
of the Default. The Certificate need not comply with Section 10.5. The first
certificate shall be delivered to the Trustee by April 30, 1994.
SECTION 4.12. Financial Statements and Reports.
So long as the Company is not subject to Section 13 or 15(d) of
the Exchange Act, it shall file with the Trustee and mail to each Holder at
its registered address the following: (i) within 105 days after the end of
each fiscal year, consolidated statements of income, retained earnings,
capitalization and cash flows of the Company and its Subsidiaries for such
year, accompanied by a "Managements' Discussion and Analysis of Financial
Condition and Results of Operations" with respect thereto, and a consolidated
balance sheet of the Company and its Subsidiaries as at the end of such year,
setting forth in each case in comparative form corresponding consolidated
figures for the preceding fiscal year; and (ii) within 60 days after the end
of each of the first three fiscal quarters of each fiscal year, consolidated
statements of income and cash flows of the Company and its Subsidiaries for
the period from the beginning of the current fiscal year to the end of such
quarterly period, and a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarterly period, setting forth in each
case in comparative form figures for the corresponding period in the preceding
fiscal year, all in reasonable detail and certified by an authorized financial
officer of the Company, subject to changes resulting from year-end
adjustments.
At such time as the Company is subject to Section 13 or 15(d) of the Exchange
Act, the Company shall file with the Trustee within 15 days after it files
them with the SEC copies of the annual reports and the information, documents
and other reports (or copies of such portions of any of the foregoing as the
SEC may by rules and regulations prescribe) which the Company is required to
file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
Company also shall comply with the other provisions of Section 314(a) of TIA.
ARTICLE V.
MERGER AND SALE OF ASSETS
SECTION 5.1. Merger and Sale of Assets.
The Company will not merge or consolidate with any other Person,
or sell, lease, transfer or otherwise dispose of all or substantially all of
its Consolidated Assets to any Person, except that:
(i) the Company may merge or consolidate with any Person,
provided, that (a) the Company is the continuing or surviving corporation and
(b) immediately after giving effect to such merger or consolidation, no
Default or Event of Default shall exist; and
(ii) the Company may merge or consolidate with any Person in a
merger or consolidation in which the Company is not the continuing or
surviving corporation, provided that (a) the continuing or surviving
corporation shall be incorporated in the United States of America or any state
or jurisdiction thereof, (b) the continuing or surviving corporation shall
have expressly assumed in writing the due and punctual payment of the Notes
and the observance of and compliance with all covenants and agreements
contained therein and in this Indenture, and (c) immediately after giving
effect to such merger or consolidation, no Default or Event of Default on the
part of the continuing or surviving corporation shall exist.
Any sale, disposition or other transfer of assets must be made at
fair market value.
ARTICLE VI.
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default
Unless the form of a Security of a Series provides otherwise, an
"Event of Default" occurs with respect to Securities of any Series if:
(1) the Company defaults in the payment of interest on
any Security of that Series when the same becomes due and payable
and the Default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal
of, or premium, if any, on, any Security of that Series when the
same becomes due and payable at maturity, upon redemption or
otherwise, provided that in the case of default in the making or
satisfaction of any sinking fund payment, such default continues
for a period of 10 days;
(3) the Company fails to comply with any of its other
agreements in the Securities of that Series or this Indenture
(other than a default which has expressly been included in this
Indenture solely for the benefit of a Series of Securities other
than that Series) and the default continues for the period and
after the notice specified below;
(4) an event of default, as defined in any mortgage,
indenture or instrument under which there is or may be issued
indebtedness of the Company or any Subsidiary for money borrowed
(including an Event of Default with respect to a Security of any
Series hereunder) in the principal amount exceeding $5,000,000,
shall occur with the result that such indebtedness shall have
been declared due and payable prior to the date on which it would
otherwise become due and payable, but if any such default is
cured by the Company or such Subsidiary or is waived by the
specified percentage of holders of such mortgage, indenture or
instrument entitled so to waive, then the Event of Default under
this Indenture by reason of such default shall be deemed to have
been cured and, and provided that this clause (4) shall not apply
to any payment default or other failure or event causing or
permitting acceleration in respect of (a) any Project Finance
Obligation of the Company, (b) any obligation of any Subsidiary
of the Company to the Company, or (c) any obligation of any
Subsidiary of the Company for which the Company is not liable;
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(a) commences a voluntary case;
(b) consents to the entry of an order for relief
from claims against it in an involuntary case;
(c) consents to the appointment of a Custodian of it
or for all or substantially all of its property; or
(d) makes a general assignment for the benefit of
its creditors (excluding the assignment of debts incurred
or arising in connection with Project Finance
Obligations);
(6) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company in an
involuntary case;
(b) appoints a Custodian of the Company or for all
or substantially all of its property; or
(c) orders the liquidation of the Company;
(7) if Eastern Utilities Associates shall at any time
own, beneficially and of record, less than 51% of all then issued
and outstanding shares of capital stock of the Company having
ordinary voting rights for the election of directors.
(8) any other Event of Default provided for Securities of
that Series occurs.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or State law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar
official under any Bankruptcy Law.
A Default with respect to any Series of Securities under clause
(3) is not an Event of Default until the Trustee notifies the Company or the
Holders of at least 33% in principal amount of the outstanding Securities of
that Series notify the Trustee and the Company of the Default and the Company
does not cure the Default within 90 days after receipt of the notice. The
notice must specify the Default, demand that it be remedied and state that the
notice is a "Notice of Default."
SECTION 6.2. Acceleration.
If an Event of Default with respect to Securities of any Series
occurs and is continuing, the Trustee by notice to the Company, or the Holders
of at least 33% in principal amount of the outstanding Securities of that
Series by notice to the Company and the Trustee, may declare that the
principal of and accrued interest on all the Securities of that Series (or, if
any of the Securities of that Series so provide, such portion of the principal
amount of such Securities as may be specified in the terms thereof) shall be
due and payable immediately. Upon such declaration, such principal (or
specified amount) and interest shall be due and payable immediately. The
Holders of a majority in principal amount of the outstanding Securities of
that Series by notice to the Company and the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default have been cured
or waived except nonpayment of principal, interest or premium, if any, that
has become due solely because of the acceleration. See Section 2.12.6.
SECTION 6.3. Other Remedies.
If an Event of Default with respect to Securities of any Series
occurs and is continuing, the Trustee may pursue any available remedy by
proceeding at law or in equity to collect the payment of principal of,
interest or premium, if any, on, the Securities of that Series or to enforce
the performance of any provision of the Securities of that Series or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities of that Series or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults.
Subject to Section 9.2, the Holders of a majority in principal
amount of the outstanding Securities or any Series on behalf of the Holders of
the outstanding Securities of that Series by notice to the Trustee may waive
an existing past Default or Event of Default and its consequences but such
waiver shall not extend to any future Event of Default. When a Default or
Event of Default is waived by the Holders of any Series of Securities, it is
cured and stops continuing with respect to Securities of that Series.
SECTION 6.5. Control by Majority.
The Holders of a majority in principal amount of the outstanding
Securities of any Series may direct the time, method and place of (1)
conducting any proceeding for any remedy available to the Trustee; or (2)
exercising any trust or power conferred on the Trustee with respect to the
Securities of that Series. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, or, subject to Section
7.1, that the Trustee determines would be unduly prejudicial to the rights of
other Securityholders of that Series or that would involve the Trustee in
personal liability. See Section 2.12.7.
SECTION 6.6. Limitation on Suits.
A Securityholder may pursue a remedy with respect to this
Indenture or the Securities of that Series only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 33% in principal amount of
the outstanding Securities of that Series make a written request
to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of indemnity;
and
(5) during such 60-day period the Holders of a majority
in principal amount of the outstanding Securities of that Series
do not give the Trustee a direction inconsistent with the
request.
A Holder of any Series of Securities may not use any provision of
this Indenture to prejudice the rights of another Holder of any Securities of
that Series or to obtain a preference or priority over another Holder of any
Securities of that Series.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right
of any Holder of a Security to receive payment of principal of, interest and
premium, if any, on the Security, on or after the respective due dates
expressed in the Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of the Holder.
SECTION 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(1) or (2) occurs
and is continuing for Securities of any Series, the Trustee may recover
judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal, interest and any premium remaining
unpaid on the Securities of that Series.
SECTION 6.9. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee and the Holders of Securities of any Series allowed in any judicial
proceedings relative to the Company, its creditors or its property.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article with
respect to Securities of any Series, it shall pay out the money in the
following order:
FIRST: to the Trustee and any predecessor trustee of it
for amounts due under Section 7.7;
SECOND: to Holders of Securities of that Series for
amounts due and unpaid on the Securities of that Series for
principal, interest and premium, if any, ratably without
preference or priority of any kind, according to the amounts due
and payable on the Securities of that Series of principal,
interest and premium, if any, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date of any payment
to Securityholders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit, and
the court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party
litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7 or a suit by Holders of more than 10% in principal
amount of the Securities of any Series.
ARTICLE VII.
TRUSTEE
SECTION 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise its rights and powers and use the same degree of care
and skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own wilful
misconduct, except that:
(1) This paragraph (c) does not limit the effect of
paragraph (b) of this Section;
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it
is proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it is assured of indemnity satisfactory to it against
any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
SECTION 7.2. Rights of Trustee.
(1) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on the Certificate or Opinion.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
(5) The Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon.
(6) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction.
SECTION 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
an Affiliate with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities other than its certificate of
authentication.
SECTION 7.5. Notice of Defaults.
If a Default occurs and is continuing with respect to Securities
of any Series and if it is known to the Trustee, the Trustee shall mail to
each Holder of Securities of that Series notice of the Default within 90 days
after it occurs. Except in the case of a Default in payment on any Security
of that Series, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Holders of Securities of that
Series.
SECTION 7.6. Reports by Trustee to Holders.
After this Indenture shall be qualified under the TIA, within 60
days after each May 15 beginning with the May 15 following the date of this
Indenture, the Trustee shall mail to the Company and each Securityholder a
brief report dated as of such May 15 that complies with TIA Section 313(a), if
such report is required by such TIA Section 313(a). The Trustee shall also
comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange on which
the Securities of any Series are listed.
The Company shall promptly notify the Trustee whenever the
Securities of any Series are listed on any stock exchange.
SECTION 7.7. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed to in writing between the Company and the
Trustee for its services (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred by it. Such expenses shall
include, without limitation, the reasonable compensation and expenses of the
Trust's agents and counsel.
Except as provided below in this paragraph, the Company shall
indemnify each of the Trustee and any predecessor trustee of it against any
loss, damage, claim, liability or expense, including taxes (other than taxes
based on the income of the Trustee) incurred by it in connection with the
acceptance or administration of the trust created by this Indenture or the
performance of its duties hereunder, including all reasonable costs and
expenses in defending itself against any claim or liability in connection with
the exercise or performance of any of its powers and duties under this
Indenture. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity but failure to do so shall not relieve the Company
of its obligations under this Section 7.7. The Company need not pay for any
settlement made by the Trustee without the Company's consent. The Company
need not reimburse any expense or indemnify against any loss or liability
incurred by either the Trustee or any predecessor trustee of it through its
own negligence or willful misconduct. In respect of the Company's payment
obligations in this Section 7.7, the Trustee shall have a senior claim to
which the Securities are hereby made subordinate on all money or property held
or collected by the Trustee as such and not in its individual capacity, except
for money or property held in trust for the benefit of the Holders to pay the
principal of and interest and premium, if any, on particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 6.1(5) or Section
6.1(6), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or State bankruptcy,
insolvency or other similar law.
The provisions of this Section 7.7 shall survive the termination
of this Indenture.
SECTION 7.8. Replacement of Trustee.
The Trustee may resign with respect to any or all Series of
Securities by so notifying the Company. The Holders of a majority in
principal amount of the outstanding Securities or any Series may remove the
Trustee with respect to the Securities of that Series by notifying the removed
Trustee and the Company. Those Holders may appoint a successor Trustee with
respect to the Securities of the Series with the Company's consent. The
Company may remove the Trustee with respect to any or all Series of Securities
or, if there is more than one Trustee hereunder, with respect to all Series of
Securities for which such Trustee acts as trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee with respect to one or more Series of Securities
resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Company shall promptly appoint a successor Trustee. Within one
year after the successor Trustee takes office, the Holders of a majority in
principal amount of the Securities may appoint a successor Trustee to replace
the successor Trustee appointed by the Company.
If a successor Trustee with respect to one or more Series of
Securities does not take office within 60 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the Holders of a
majority in principal amount of the Securities with respect to such Series of
Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, and upon the payment of all amounts owed to the Trustee hereunder, the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture with respect to the Securities
of Series for which it acts as Trustee. A successor Trustee shall mail notice
of its succession to each Holder of Securities of a Series for which it acts
as Trustee.
If at the time a successor to the Trustee succeeds to the trusts
created by this Indenture any of the Securities of any Series shall have been
authenticated but not delivered, the successor to the Trustee of the
Securities of that Series may adopt the certificate of authentication of any
predecessor trustee for that Series of Securities and deliver the Securities
for that Series so authenticated. If at that time any of the Securities of a
Series shall not have been authenticated, any successor to the Trustee for
that Series of Securities may authenticate the Securities for that Series
either in the name of any predecessor trustee for that Series of Securities
hereunder or in the name of the successor trustee. In all such cases the
certificate of authentication shall have the same force and effect which the
provisions of the Securities or this Indenture provided that certificates of
authentication of the Trustee shall have, except that the right to adopt the
certificate of authentication of any predecessor Trustee for a Series of
Securities or to authenticate Securities of a Series in the name of any
predecessor Trustee for that Series of Securities shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates, mergers or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, the successor corporation shall be the successor Trustee, without
any further act.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have for each Series of Securities a
Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee
shall always have a combined capital and surplus of at least $25,000,000 as
set forth in its most recent published annual report of condition. If any
Series of Securities is admitted to trading on the New York Stock Exchange,
Inc., or any successor thereto, the Company shall ensure that a transfer agent
facility maintain an office or agency in the Borough of Manhattan, the City of
New York, as long as such Series of Securities shall be so admitted. With
respect to each Series of Securities, the Trustee shall comply with TIA Sec
310(b), including
the proviso contained in TIA Sec 310(b)(1) and the exception permitted by the
first full sentence of TIA Sec 310(b)(9)], provided, however, there shall be
excluded from TIA Sec 310(b) as incorporated herein this Indenture with
respect to
Securities of other Series.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VIII.
DISCHARGE OF INDENTURE
SECTION 8.1. Termination of Company's Obligations.
The Company at any time may terminate its obligation to pay an
installment of principal and premium, if any, or interest if it deposits with
the Trustee money or U.S. Government Obligations sufficient to pay the
installment when due. The Company shall designate the installment for which
payment is being made.
The Company at any time may terminate all of its obligations
under the Securities of any or all Series and this Indenture with respect to
such Series or all Series if:
(1) all Securities of such Series previously
authenticated and delivered (other than destroyed, lost or stolen
Securities of such Series which have been replaced or paid) have
been delivered to the Trustee for cancellation; or
(2) the Company (i) irrevocably deposits in trust with
the Trustee money or U.S. Government Obligations (a) sufficient
to pay principal of, and interest and premium, if any, on the
Securities of such Series to maturity or redemption, as the case
may be, or (b) in the case of a Series of Securities which
provides for a mandatory sinking fund, sufficient to make all
mandatory sinking fund payments to maturity and sufficient to pay
at maturity any principal of and interest on Securities of such
Series not redeemed prior to maturity (other than moneys paid to
the Company or discharged from trust in accordance with Section
8.3) and (ii) delivers to the Trustee an Opinion of Counsel to
the effect that the Holders of the Securities of such Series will
not recognize income, gain or loss for Federal income tax
purposes as a result of the Company's exercise of its option
under this paragraph and will be subject to Federal income tax on
the same amount and in the same manner and at the same times as
would have been the case if such option had not been exercised,
which opinion shall be based upon at least one of the following
authorities: (a) a public ruling of the Internal Revenue Service,
(b) a private ruling of the Internal Revenue Service issued to
the Company with respect to such Securities, (c) a provision of
the Internal Revenue Code or (d) a final regulation promulgated
by the Department of the Treasury.
However, the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 4.1,
7.7, 7.8 and 8.3 with respect to the Securities of such Series shall survive
until the Securities of such Series are no longer outstanding. Thereafter the
Company's obligations in Section 7.7 shall survive.
After such a deposit, the Trustee upon request shall acknowledge,
in writing, the discharge of the Company's obligations under the Securities of
such Series and this Indenture except for those surviving obligations
specified above.
In order to have money available on a payment date to pay
principal of, and interest or premium, if any, on, the Securities, the U.S.
Government Obligations shall be payable as to principal of, interest or
premium, if any, on or before such payment date in such amounts as will
provide the necessary money. U.S. Government Obligations shall not be
callable at the issuer's option.
"U.S. Government Obligations" means direct obligations of the
United States for the payment of which the full faith and credit of the United
States is pledged.
SECTION 8.2. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.1. It shall apply the
deposited money and the money from U.S. Government Obligations through the
Paying Agent in accordance with this Indenture to the payment of principal of,
interest and premium, if any, on, the Securities of the Series or to the
payment of any mandatory sinking fund payments, for which the money or U.S.
Government Obligations have been deposited.
SECTION 8.3. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the
Company upon request any excess money or U.S. Government Obligations held by
them at any time. The Trustee and Paying Agent shall pay to the Company upon
written request any money or U.S. Government Obligations held by them for the
payment of principal, interest or premium, if any, on any Security or for the
payment of any mandatory sinking fund payments, that remains unclaimed for two
years after such principal, interest, premium or mandatory sinking fund
payments have become due and payable. If such money or U.S. Government
Obligations are then held by the Company they shall be discharged from the
trust. After that, Securityholders entitled to the money must look to the
Company for payment as unsecured general creditors unless an applicable
abandoned property law designates another person or entity.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders.
The Company and the Trustee may amend or supplement this
Indenture or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or
inconsistency or to make other formal changes;
(2) to comply with Article IV or V;
(3) to provide for uncertificated Securities in addition
to or in place of certificated Securities;
(4) to add to the covenants of the Company or to add any
additional Events of Default for the benefit of all or any Series
of Securities;
(5) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or
facilitate the issuance of Securities in (i) bearer form,
registrable or not registrable as to principal, and/or (ii)
coupon form, registrable or not registrable as to principal, and
to provide for exchangeability of such Securities with Securities
issued hereunder in fully registered form;
(6) to add to or change any provisions of this Indenture
as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee;
(7) to establish the form or terms of the Securities of
any Series pursuant to Section 2.1; or
(8) to make any change that does not adversely affect the
rights of any Securityholder;
but none of such changes shall adversely affect the rights of any
Securityholder.
SECTION 9.2. With Consent of Holders.
The Company and the Trustee may amend this Indenture or the
Securities without notice to any Securityholder but with the written consent
of the Holders of at least a majority in principal amount of the outstanding
Securities of each Series affected by such indenture supplement or amendment
(each Series voting separately as one class). The Holders of a majority in
principal amount of the outstanding Securities of each such Series (each
Series voting separately as one class) may waive compliance by the Company in
a particular instance with any provision of this Indenture or the Securities
of such Series without notice to any Holder of Securities of such Series.
Without the consent of each Securityholder affected, however, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.4, may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest on any Security;
(3) reduce the principal of or change the fixed maturity
of any Security;
(4) waive a default in the payment of the principal of or
premium, if any, or interest on any Security; or
(5) make any Security payable in money other than that
stated in the Security.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed supplement, but it
shall be sufficient if such consent approves the substance thereof.
SECTION 9.3. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents.
A consent to an amendment, supplement or waiver by a Holder of a
Security of any Series is a continuing consent, irrevocable for a period of
nine months from the date given or, if earlier, until the amendment,
supplement or waiver becomes effective, both as to the Holder giving such
consent and as to every subsequent Holder of a Security of that Series or a
portion of such a Security that evidences the same debt as the consenting
Holder's Security, even if notation of the consent is not made on each
Security of that Series. An amendment, supplement or waiver becomes effective
in accordance with its terms and thereafter binds every Securityholder of that
Series.
SECTION 9.5. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the term of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security
about an amendment, supplement or waiver and return it to the Holder.
Alternatively, the Company in exchange for Securities may issue and the
Trustee shall authenticate new Securities that reflect an amendment,
supplement or waiver.
SECTION 9.6. Trustee to Sign Amendments, etc.
The Trustee need not sign any supplemental indenture that
adversely affects its rights. In signing such amendment, supplement or
waiver, the Trustee shall be entitled to receive, and (subject to Section 7.1)
shall be fully protected in relying upon an Officers' Certificate and Opinion
of Counsel stating that such amendment, supplement or waiver is authorized or
permitted by this Indenture.
ARTICLE X.
MISCELLANEOUS
SECTION 10.1. Trust Indenture Act Controls.
If at any time this Indenture must conform to the requirements of
the TIA and at such time, any provision of this Indenture limits, qualifies,
or conflicts with another provision which is required to be included in this
Indenture by the TIA, then the required provision shall control.
SECTION 10.2. Notices.
Any notice or communication shall be in writing and delivered in
person or mailed by first-class mail to the other's address as follows:
If to the Company: EUA Cogenex Corporation
C/O Eastern Utilities Associates
One Liberty Square, Floor 13
Boston, Massachusetts 02107
Attention: Clifford J. Hebert, Jr.,
Treasurer
If to the Trustee: The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder of a Security
shall be mailed by first class mail to his or her address shown on the
register kept by the Registrar. Failure to mail a notice or communication to
a Securityholder or any defect in it shall not affect its sufficiency with
respect to other Securityholders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
In case, by reason of the suspension of regular mail service, or
by reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
SECTION 10.3. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b)
with other Securityholders with respect to their rights under this Indenture
or the Securities. The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).
SECTION 10.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied
with.
SECTION 10.5. Statements Required in Certificate or Opinion.
Each Certificate or Opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such Certificate
or Opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such Certificate or Opinion are based;
(3) a statement that, in the opinion of such person, he
or she has made such examination or investigation as is necessary
to enable him or her to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with.
SECTION 10.6. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or an Affiliate shall be disregarded, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which the
Trustee actually knows are so owned shall be so disregarded.
Securities so owned which have been pledged in good faith shall
not be disregarded if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to the Securities and that
the pledgee is not the Company or an Affiliate.
SECTION 10.7. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or a meeting
of Securityholders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 10.8. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in a jurisdiction in which an action is required
hereunder are not required to be open. If a payment date is a Legal Holiday
at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.
SECTION 10.9. Governing Law.
The law of the Commonwealth of Massachusetts shall govern this
Indenture and the Securities.
SECTION 10.10. No Recourse Against Others.
All liability described in the Securities of any director,
officer, employee or stockholder, as such, of the Company is waived and
released.
SECTION 10.11. Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 10.12. Execution in Counterparts.
The parties may sign this Indenture in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same agreement.
SIGNATURES
EUA COGENEX CORPORATION
By:/s/ Joseph Fitspatrick
----------------------
Joseph Fitspatrick
Attest:/s/ W. F. O'Connor
--------------------
W. F. O'Connor
(SEAL) Clerk
THE BANK OF NEW YORK, as Trustee
By:/s/ Mary Jane Morrissey
___________________________
Mary Jane Morrissey, Assistant
Vice President
Attest:_______________________
[ ]
(SEAL)
COMMONWEALTH OF MASSACHUSETTS }
COUNTY OF SUFFOLK } ss.
}
On the 12th day of October, 1993, before me personally came
Joseph S. Fitspatrick, to me known, who, being by me duly sworn, did depose and
say that he resides at that he is President of EUA Cogenex Corporation, one of
the corporations described in and which executed the above instrument; that he
knows the corporate seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by the authority of
the Board of Directors of said corporation; and that he signed his name thereto
by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARY PUBLIC
[SEAL]
COMMONWEALTH OF MASSACHUSETTS }
COUNTY OF SUFFOLK } ss.
}
On the 8th day of October, 1993, before me personally came
Joseph S. Fitspatrick, to me known, who, being by me duly sworn, did depose and
say that he resides at that he is President of The Bank of New York, a New York
banking corporation described in and which executed the above instrument;
that he knows the corporate seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by the authority of the Board of Directors of said
banking corporation; and that he signed his name thereto by like authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
/s/ Robert Schneck
NOTARY PUBLIC
[SEAL] Robert Schneck
Notary Public, State of New York
No. 4746935
Qualified in Nassau County
Certificare filed in New York County
Commission Expires May 31, 1995
(FORM OF FACE OF SECURITY)
No. $____________________
EUA COGENEX CORPORATION
[Insert Title of Securities]
_______________________
EXHIBIT A
[INSERT TITLE OF SECURITIES]
[INSERT THIS LEGEND TO THE EXTENT APPLICABLE]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). EACH BENEFICIAL OWNER OF
AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY
(INCLUDING ANY PARTICIPANT IN THE DEPOSITORY HOLDING THE GLOBAL
SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE RECORDS OF
SUCH DEPOSITORY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH ANY SUCH
PARTICIPANT), BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF
THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED (X) PRIOR TO THE THIRD ANNIVERSARY OF THE LATER OF THE
ISSUANCE HEREOF (OR ANY PREDECESSOR NOTE HERETO) OR THE SALE HEREOF (OR
ANY PREDECESSOR NOTE HERETO) BY THE COMPANY OR ANY AFFILIATE OF THE
COMPANY (COMPUTED IN ACCORDANCE WITH PARAGRAPH (d) OF RULE 144 UNDER
THE SECURITIES ACT) OR (Y) BY AN AFFILIATE OF THE COMPANY OR BY ANY
HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE
MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN
(1) TO THE COMPANY OR (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATIONS UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THE
SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a) (1), (2) (3) or (7) UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THE SECURITY) THAT IS ACQUIRING THE SECURITY
FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE IN
THE FORM ATTACHED TO THE SECURITY IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE, OR (5) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT SUBJECT TO THE RECEIPT BY
THE COMPANY OF AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE
TRANSFEROR, WHICH COUNSEL MAY BE AN EMPLOYEE OF THE TRANSFEROR) THAT
SUCH RESALE, PLEDGE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND NOTIFICATION BY THE TRANSFEROR
TO THE TRANSFEREE OF THE RESALE RESTRICTIONS REFERRED TO ABOVE BY
DELIVERY OF A COPY OF THE NOTICE TO INVESTORS (COPIES OF WHICH MAY BE
OBTAINED FROM THE TRUSTEE).
[INSERT THE REMAINING LEGEND IF A GLOBAL SECURITY]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY ( THE "DEPOSITORY") OR A NOMINEE OF THE
DEPOSITORY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH
NOMINEE TO A SUCCESSOR OF THE DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW
YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED UPON
REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR, OR IN LIEU OF, THIS
SECURITY IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE REGISTERED FORM, THIS REGISTERED GLOBAL
SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO
A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OR THE DEPOSITORY TO THE
DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY
OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.
EUA COGENEX CORPORATION, a corporation duly organized and
existing under the laws of The Commonwealth of Massachusetts (herein
called the "Company", which term includes any successor corporation
under the Indenture hereinafter referred to), for value received,
hereby promises to pay to [ ], or registered assigns, the
principal sum of [ ] DOLLARS ($[ ]) on [ ] (the
"Maturity Date") and to pay interest thereon at a rate per annum equal
to the interest rate specified in the title to this Security
[semi-annually] on [ ] [ and ] of each year (each are
"Interest Payment Dates"), commencing [ ], from the ISSUE DATE
or, from the most recent interest payment date to which interest has
been paid or duly provided for, on the Interest Payment Dates-in each
year and on the Maturity Date until the principal hereof is paid or
make available for payment. Interest hereon is accrued from and
including the next preceding Interest Payment Date in respect of which
interest has been paid or duly provided for (or from and including the
ISSUE DATE if no interest has been paid) to but excluding the
succeeding Interest Payment Date or Maturity Date, as the case may be.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid
to the person (the "Holder") in whose name this Security is registered
[(which, this being a Global Security, will be the Depository or a
nominee of the Depository)] at the close of business on the [
] [and ] (each a "Regular Record Date") (whether or not a
Business Day) next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for on such Regular
Record Date may either be paid to the person in whose name this
Security is registered at the close of business on a special record
date for the payment of such defaulted interest to be fixed by the
Company, notice of which shall be given to the registered Holder of
Securities of this Series not less than 15 days prior to such special
record date, or be paid at any time in any other lawful manner, all as
more fully provided in said Indenture. Interest herein will be
computed on the basis of a 360-day year of twelve 30-day months.
Any payment of principal (and premium, if any) or interest (if
any) on this Security due on any Interest Payment Date or Maturity Date
which is not a Business Day (as defined herein) shall not be made on
such day, but shall be made on the next succeeding Business Day with
the same force and effect as if made on such due date, and no interest
shall accrue with respect to such payment for the period from after
such Interest Payment Date or Maturity Date, as the case may be.
[This being a Global Security, the total amount of any
principal, premium (if any) and interest (if any) due on this security
on any Interest Payment Date or Maturity Date will be made available to
the Trustee on such date. The Trustee will promptly make such payments
to the Depository.]
Unless otherwise specified above, the principal amount hereof
(and premium, if any) payable on the Maturity Date will be paid in
immediately available funds upon surrender of this Security at the
corporate trust office of the Trustee, as the initial Paying Agent, in
[ ] or at a paying agency maintained by the Company,
provided that this Security is presented to such paying agent in time
for the paying agent to make such payments in accordance with its
normal procedures. The Company may treat the person in whose name this
Security is registered as the owner of this Security for the purpose of
receiving payments of principal and interest on this Security and for
all purposes whatsoever.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS
SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS
PLACE.
Reverse of Security
This Security is one of a duly authorized issue of securities of
the Company (herein called the "Securities"), issued and to be issued
in one or more series under an Indenture dated as of September 1, 1993
(herein, together with all other indentures from time to time
supplemental thereto, referred to as the "Indenture"), between the
Company and [ ], as trustee (the "Trustee"), to
which Indenture reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to
be, authenticated and delivered. This Security is one of the series
designated the [ ].
[ ] Optional Redemption. [ If applicable, insert]
The Company may redeem all the Securities of this Series at any
time or some of them from time to time at the following redemption
prices (expressed in percentages of principal amount), plus accrued
interest to the redemption date:
If redeemed during the 12-month period ending
Year Percentage Year Percentage
and thereafter without premium.
However, the Company may not so redeem the Securities of this Series
before , 19 through refunding directly or indirectly from, or in
anticipation of, money borrowed by or for the account of the Company or
a Subsidiary at an interest cost (calculated in accordance with
generally accepted financial practice) of % per annum or less. In the
case of any redemption pursuant to this paragraph prior to , 19
, the Company will deliver to the Trustee, prior to the mailing of any
notice of such redemption, an Officers' Certificate stating that such
redemption will comply with this limitation.
[ ] Mandatory Redemption -- Sinking Fund. [If applicable, insert]
The Company will redeem $ principal amount of Securities of
this Series on and on each thereafter through at a
redemption price of 100% of principal amount, plus accrued interest to
the redemption date. The Company may, at its option, receive credit
towards the principal amount of the Securities of this Series to be
redeemed pursuant to this paragraph in an amount equal to 100% of
the principal amount (excluding premium) of any Security of this Series
that the Company has delivered to the Trustee for cancellation or
redemption other than pursuant to this paragraph . The Company may so
receive credit for the same Security of this Series only once.
[ ] Additional Optional Redemption. [If applicable, insert]
In addition to redemption pursuant to paragraph , the company
may redeem not more than $ principal amount of the Securities of
this Series, or such lesser amount which is a multiple of $ 1,000,
on 1, and on each 1 thereafter through at a redemption
price of 100% of principal amount, plus accrued interest to the
redemption date. The right to redeem such an additional amount shall
not accumulate from year to year but shall lapse to the extent not
exercised in any year it is available. At the election of the Company,
any optional redemptions so made may be applied to reduce the amount of
any subsequent mandatory sinking fund payment required in paragraph .
[ ] Notice of Redemption. [If applicable, insert]
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of a
Security of this Series to be redeemed at his or her registered
address. Securities of this Series in denominations larger than $1,000
may be redeemed in part. On and after the redemption date, interest
ceases to accrue on the Securities of this series or portion of them
called for redemption.
"Business Day" as used herein, means any day other than a
Saturday or Sunday which is not day on which banking institutions in
[ ] are required or authorized by law or executive
order to close.
If an Event of Default with respect to the Securities of this
series shall occur and be continuing, the principal of the Securities
of this series may be declared due and payable in the manner and with
the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of
the entire indebtedness of the Company on this Security upon compliance
with certain conditions set forth therein.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the
Securities of any series to be affected under the Indenture at any time
the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time outstanding
of each series to be affected by such amendment or modification (each
series voting separately as one class). The Indenture also contains
provisions permitting the Holders of a majority in principal amount of
the outstanding Securities of each such series (each series voting
separately as one class), on behalf of the Holders of all Securities of
such series, to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon
this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal
of, premium (if any) and interest on this Security at the times, place
and rate herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
register of securities maintained by the Registrar, upon surrender of
such Securities for registration of transfer or exchange at the office
or agency of the Registrar, duly endorsed by, or accompanied by written
instrument of transfer in form satisfactory to the Company and the
Registrar duly executed by the Holder hereof or his attorney duly
authorized in writing.
The Securities of this series are issuable only in registered
form without coupons in denomination of $1,000 and any integral
multiple of $1,000 in excess thereof.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company or the Trustee and any agent of the Company or
the Trustee may treat Holder as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the
Indenture and are not otherwise defined herein shall have the meanings
assigned to them in the Indenture.
This Security shall be governed by and construed in accordance
with the laws of The Commonwealth of Massachusetts.
[Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.]
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
EUA COGENEX CORPORATION
By:
-----------------------
Title:
[SEAL]
Attest:
---------------------------
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the Series
designed therein referred to in the within
mentioned Indenture.
[ ],
as Trustee
By:
--------------------------
Authorized Signatory
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ....Custodian....
(Cust) (Minor)
Uniform Gifts to
Minors Act
TEN ENT - as tenants by the entireties .................
(State)
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in above list.
------------------------------
FOR VALUE RECEIVED, I or we sell, assign and transfer to
INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNER:
_________________________________
______________________________________________________________________
(Print or type name, address and zip code of assignee)
- ----------------------------------------------------------------------
this Note and all rights hereunder and irrevocably
appoint attorney to transfer this Note on the books of
the Corporation. The agent may substitute another to act for him.
Dated: Signed:
----------------------- --------------------------
Signature (s) Guaranteed by: (Sign exactly as name
appears on the other side of
this
Note)
NOTICE: The signature (s) to this assignment must correspond with the
name as it appears upon the face of the within Note in every
particular, without alteration or enlargement or any change whatever.
SCHEDULE I
EXISTING INVESTMENTS
Energy Capital and Services I, L.P.
Energy Capital and Services II, L.P.
EUA/FRC II Energy Associates Investment
EUA/Highland Energy Partners, L.P.
EUA/ICC Partners, L.P.
Micro Utility Partners of America, L.P.
EUA/Onsite, L.P.
SCHEDULE II
EXISTING LIENS
1. Any Lien created by Section 7.7 to this Indenture in favor of
the Trustee.
EXHIBIT-4-4.14
LOAN AGREEMENT
between
RHODE ISLAND PORT AUTHORITY AND ECONOMIC
DEVELOPMENT CORPORATION
and
NEWPORT ELECTRIC CORPORATION
Dated as of January 6, 1994
Relating to $7,925,000
Rhode Island Port Authority and Economic
Development Corporation
Electric Energy Facilities
Revenue Refunding Bonds
(Newport Electric Corporation Project - 1994 Series)
This instrument was prepared by:
TILLINGHAST COLLINS & GRAHAM
One Old Stone Square
Providence, Rhode Island 02903
Telephone: (401) 456-1200
LOAN AGREEMENT
TABLE OF CONTENTS
(The Table of Contents for this Loan Agreement is for
convenience of reference only and is not intended to
define, limit or describe the scope of intent of any
provisions of this Loan Agreement.)
PAGE
PARTIES 1
ARTICLE I
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 1.1. Definitions . . . . . . . . . . . . . . 1
Section 1.2. Certain Rules of Interpretation . . . . 7
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer . . . . . 8
Section 2.2. Representations by the Company. . . . . 9
ARTICLE III
LOAN OF BOND PROCEEDS
Section 3.1. Loan of Bond Proceeds . . . . . . . . . 13
ARTICLE IV
COMMENCEMENT AND COMPLETION OF THE PROJECT;
ISSUANCE OF THE BONDS
Section 4.1. Operation of the Project. . . . . . . . 14
Section 4.2. Agreement to Issue Bonds;
Application of Bond Proceeds . . . 14
Section 4.3. Disbursements from the Project Fund . . 14
Section 4.4. Investment of Bond Fund, Project
Fund and Bond Purchase Fund
Moneys Permitted . . . . . . . . . 14
PAGE
ARTICLE V
EFFECTIVE DATE OF THIS AGREEMENT; DURATION
OF LOAN TERM; LOAN PAYMENTS; SECURITY AGREEMENT
Section 5.1. Effective Date of This Agreement;
Duration of Loan Term. . . . . . . 15
Section 5.2. Delivery and Acceptance of
Possession . . . . . . . . . . . . 15
Section 5.3. Loan Payments . . . . . . . . . . . . . 15
Section 5.4. Additional Payment Obligations of
the Company. . . . . . . . . . . . 16
Section 5.5. Letter of Credit; Alternate Credit
Facility; Fixed Rate Credit
Facility . . . . . . . . . . . . . 17
Section 5.6. Administrative Expenses . . . . . . . . 19
Section 5.7. Obligations of Company Hereunder
Absolute and Unconditional . . . . 20
Section 5.8. Company Consent to Assignment of
Agreement and Execution of
Indenture. . . . . . . . . . . . . 21
Section 5.9. Company's Performance Under
Indenture. . . . . . . . . . . . . 21
ARTICLE VI
MAINTENANCE, MODIFICATION, TAXES AND INSURANCE
Section 6.1. Maintenance and Modification of
Project by Company . . . . . . . . 22
Section 6.2. Removal and Substitution of
Equipment. . . . . . . . . . . . . 22
Section 6.3. Taxes, Other Governmental Charges
and Utility Charges. . . . . . . . 22
Section 6.4. Insurance Required. . . . . . . . . . . 23
Section 6.5. Other Issuer Expenses . . . . . . . . . 23
Section 6.6. Indemnification of Issuer . . . . . . . 23
Section 6.7. Limited Liability; Immunity of
Directors of Issuer. . . . . . . . 25
Section 6.8. Worker's Compensation . . . . . . . . . 25
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1. Damage, Destruction and Condemnation. . 26
Section 7.2. Condemnation of Company-Owned
Property . . . . . . . . . . . . . 26
PAGE
ARTICLE VIII
SPECIAL AGREEMENTS
Section 8.1. No Warranty of Condition or
Suitability by the Issuer. . . . . 27
Section 8.2. Inspection of the Project . . . . . . . 27
Section 8.3. Company to Maintain Its Corporate
Existence; Exceptions
Permitted. . . . . . . . . . . . . 27
Section 8.4. Covenants of the Company with Respect
to Exemption of Interest from
Federal Income Taxation. . . . . . 28
Section 8.5. Non-Arbitrage Covenant. . . . . . . . . 28
Section 8.6. Reserved. . . . . . . . . . . . . . . . 29
Section 8.7. Financial Information . . . . . . . . . 29
Section 8.8. Covenant Against Discrimination . . . . 29
Section 8.9. Taxability Charge . . . . . . . . . . . 29
Section 8.10. Fixed Rate. . . . . . . . . . . . . . . 29
ARTICLE IX
ASSIGNMENT, LEASING AND PLEDGING
Section 9.1. Assignment and Leasing. . . . . . . . . 30
Section 9.2. Restrictions on Issuer. . . . . . . . . 30
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined . . . . . . . 31
Section 10.2. Remedies. . . . . . . . . . . . . . . . 32
Section 10.3. No Remedy Exclusive . . . . . . . . . . 34
Section 10.4. Agreement to Pay Counsel Fees
and Expenses . . . . . . . . . . . 34
Section 10.5. No Additional Waiver Implied by
One Waiver . . . . . . . . . . . . 34
ARTICLE XI
PREPAYMENT OF THE LOAN
Section 11.1. Options to Prepay Loan Payments . . . . 35
Section 11.2. Obligation to Prepay Loan Payments
Upon Determination of
Taxability . . . . . . . . . . . . 36
PAGE
ARTICLE XI (Continued)
Section 11.3. Mandatory Prepayment. . . . . . . . . . 38
Section 11.4. Relative Position of Options and
Indenture. . . . . . . . . . . . . 38
ARTICLE XII
MISCELLANEOUS
Section 12.1. Notices . . . . . . . . . . . . . . . . 39
Section 12.2. Binding Effect. . . . . . . . . . . . . 40
Section 12.3. Severability. . . . . . . . . . . . . . 40
Section 12.4. Amounts Remaining in Bond Fund or
Bond Purchase Fund . . . . . . . . 40
Section 12.5. Delegation of Duties by Issuer. . . . . 40
Section 12.6. Amendments, Changes and
Modifications. . . . . . . . . . . 41
Section 12.7. Counterparts. . . . . . . . . . . . . . 41
Section 12.8. Captions. . . . . . . . . . . . . . . . 41
Section 12.9. Law Governing Construction of
Agreement. . . . . . . . . . . . . 41
Section 12.10. References to Bank. . . . . . . . . . . 41
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . 43
EXHIBIT "A" -- FORM OF REQUISITION . . . . . . . . . . . . A-1
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is entered into as of January 6,
1994, by and between the RHODE ISLAND PORT AUTHORITY AND ECONOMIC DEVELOPMENT
CORPORATION (the "Issuer"), a public corporation, governmental agency and
public instrumentality of the State of Rhode Island, and NEWPORT ELECTRIC
CORPORATION (the "Company"), a Rhode Island corporation.
W I T N E S S E T H:
In consideration of the respective representations and agreements
hereinafter contained, the Issuer and the Company DO HEREBY AGREE, as follows
(provided, that in the performance of the agreements of the Issuer herein
contained, any obligation it may thereby incur for the payment of money shall
not be a debt of the State of Rhode Island or any political subdivision
thereof and neither the State of Rhode Island nor any political subdivision
thereof shall be liable on such obligation but such obligation shall be
payable solely out of the "Pledged Revenues" (hereinafter defined), revenues
derived from the sale of the "Bonds" (hereinafter defined) and amounts on
deposit from time to time in the "Bond Fund" (hereinafter defined),
subject to the provisions of this Agreement and the "Indenture" (hereinafter
defined) permitting the application thereof):
ARTICLE I
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 1.1. Definitions. In addition to the words and terms elsewhere
defined herein, the following words and terms as used herein shall have the
following meanings unless the context or use clearly indicates another or
different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings when used herein as assigned them in
the Indenture unless the context or use clearly indicates another or different
meaning or intent:
"Act" means Chapter 64 of Title 42 of the General Laws of the State of
Rhode Island, 1956 (1993 Reenactment), as amended and supplemented;
"Administrative Expenses" means (i) a percentage administrative fee, if
any, set by vote of the Board of Directors of the Issuer, in no case to exceed
1/8 of 1% per year of the principal amount of the Bonds outstanding, and (ii)
the reasonable and necessary expenses incurred by the Issuer in connection
with this Agreement and the Indenture;
"Agreement" means this Loan Agreement, dated as of January 6, 1994, by and
between the Issuer and the Company, including any amendments hereto;
"Authorized Company Representative" means the person at the time
designated to act on behalf of the Company by written certificate furnished to
the Issuer and the Trustee containing the specimen signature of such person
and signed on behalf of the Company by the Chairman or the President, any Vice
President, Treasurer, Assistant Treasurer or Secretary of the Company. Such
certificate may designate an alternate or alternates;
"Authorized Issuer Representative" means the person at the time designated
to act on behalf of the Issuer by written certificate furnished to the Company
and the Trustee containing the specimen signature of such person and signed on
behalf of the Issuer by its Chairman, Vice Chairman, Executive Director,
Secretary, Assistant Secretary, Deputy Director of Finance, Treasurer or their
respective designees. Such certificate may designate an alternate or
alternates;
"Bank" means Canadian Imperial Bank of Commerce, in its capacity as the
issuer of the Letter of Credit, its successors in such capacity and their
assigns, and upon the issuance of any Alternate Credit Facility, the issuer of
such Alternate Letter of Credit.
"Principal Office" of the Bank means the principal office of Canadian
Imperial Bank of Commerce which office at the date of issuance and delivery of
the Bonds is located at 425 Lexington Avenue, New York, New York 10017, and
upon the issuance of any Alternate Credit Facility, "Principal Office" of the
Bank means the principal office of the issuer of such Alternate Credit
Facility;
"Bond Counsel" means a firm of nationally recognized attorneys at law
experienced in the financing of facilities for non-exempt persons through the
issuance of tax-exempt revenue bonds under Section 103(b) of the Code and
reasonably acceptable to the Issuer;
"Bond Fund" means the Bond Fund created pursuant to Section 601 of the
Indenture and within which there shall be established a Company Payments
Account, an Accrued Interest Account, a Credit Facility Account and, if
applicable, a Fixed Rate Credit Facility Account;
"Bond Purchase Agreement" means the Bond Purchase Agreement dated January
5, 1994, between Goldman, Sachs & Co. and the Issuer;
"Bond Purchase Fund" means the Bond Purchase Fund created pursuant to
Section 801 of the Indenture and within which there shall be established a
Company Payments Account, a Remarketing Account and a Credit Facility Account;
"Bond Registrar" means the Trustee and any successor Trustee appointed and
serving in such capacity pursuant to the Indenture. "Principal Office" of the
Bond Registrar means the Principal Office of the Trustee designated in the
Indenture, and with respect to any successor Bond Registrar appointed and
serving in such capacity pursuant to the Indenture, the principal office of
such successor Bond Registrar designated in writing to the Issuer, the
Company, the Trustee, the Bank, the Paying Agent, any Co-Paying Agent, and the
Remarketing Agent;
"Bondholder" or "holder of the Bonds" means the registered owner of any
Bond as shown on the registration books maintained by the Bond Registrar;
"Bonds" means any and all of the Rhode Island Port Authority and Economic
Development Corporation Electric Energy Facilities Revenue Refunding Bonds
(Newport Electric Corporation Project - 1994 Series) in the aggregate
principal amount of $7,925,000, to be issued by the Issuer under the
Indenture. Any percentage of Bonds, specified herein for any purpose, is to
be figured on the aggregate principal amount of Bonds then outstanding;
"Code" means the Internal Revenue Code of 1954, as in effect on September
9, 1982, and such provisions of the Internal Revenue Code of 1986, as amended,
as apply to the Bonds;
"Company" means Newport Electric Corporation, a Rhode Island corporation,
its successors and assigns, and any surviving, resulting or transferee
corporation as permitted under Section 8.3.
"Principal Office" of the Company means the principal office of the
Company, which office at the date of issuance and delivery of the Bonds is
located at 12 Turner Road, Middletown, Rhode Island 02840;
"Company Documents" means this Agreement, the Remarketing Agent's
Agreement, the Reimbursement Agreement, the Inducement Letter and the Tax
Regulatory Agreement;
"Counsel" means an attorney, or firm thereof, admitted to practice law
before the highest court of any state in the United States of America or the
District of Columbia;
"Default" means an event or condition the occurrence of which would, with
the lapse of time or the giving of notice or both, become an Event of Default;
"Event of Default" means one of the events so denominated and described in
Section 10.1;
"Financing Statements" means any and all financing statements (including
continuation statements) filed for record from time to time to perfect the
security interests created or assigned in the Indenture;
"Fixed Rate Conversion Date" means the date of conversion of the interest
rate on the Bonds to the Fixed Rate pursuant to the Indenture;
"Indenture" means the Trust Indenture, dated as of January 1, 1994, by and
between the Issuer and the Trustee, including any indentures supplemental
thereto;
"Issuer" means the Rhode Island Port Authority and Economic Development
Corporation, a public corporation, governmental agency and public
instrumentality of the State, duly organized and existing under the laws of
the State and any body, board, authority, agency or other political sub-
division or instrumentality of the State which shall hereafter succeed to
the powers, duties and functions thereof;
"Letter of Credit" means the irrevocable Letter of Credit to be delivered
by the Bank to the Trustee in accordance with Section 5.5 hereof and in the
form attached to the Reimbursement Agreement, including any extensions or
renewals thereof, or, upon issuance of any Alternate Credit Facility,
"Letter of Credit" means and includes such Alternate Credit Facility;
"Loan Term" means the duration of this Agreement and the interest created
hereby as specified in Section 5.1;
"Net Proceeds of the Sale of the Bonds" means those proceeds of the sale
of the Bonds by the Issuer remaining after the deposit of all accrued interest
(if any) received from the sale of the Bonds in the Bond Fund;
"Outstanding" or "outstanding" when used with reference to the Bonds at
any date as of which the amounts of outstanding Bonds is to be determined,
means "Outstanding" or "outstanding" as defined in the Indenture;
"Outstanding Bonds" means the Issuer's $6,045,000 Electric Energy
Facilities Revenue Bonds (Newport Electric Corporation Project) Series 1982 A
and the Issuer's $1,880,000 Electric Energy Facilities Revenue Bonds (Newport
Electric Corporation Project) Series 1988;
"Paying Agent" and "Co-Paying Agent" means the Trustee and any successor
Trustee and any Co-Paying Agent appointed and serving in such capacity
pursuant to the Indenture.
"Principal Office" of the Paying Agent or any Co-Paying Agent means, with
respect to the Paying Agent, the Principal Office of the Trustee designated in
the Indenture, and with respect to any Co-Paying Agent appointed and serving
in such capacity pursuant to the Indenture, the principal office of the Co-
Paying Agent designated in writing to the Issuer, the Company, the Trustee,
the Bank, the Bond Registrar and the Remarketing Agent;
"Person" means any natural person, corporation, cooperative, partnership,
trust or unincorporated organization, government or governmental body or
agency, political subdivision or other legal entity as in the context may be
appropriate;
"Pledged Revenues" means and shall include:
(a) the loan payments and other payments required to be made by the
Company under this Agreement, except for (i) payments to be made
to the Trustee for services rendered as Trustee under the
Indenture and to the Bond Registrar and Paying Agent for the
Bonds, and (ii) expenses, indemnification and other payments
required to be made pursuant to sections 5.6, 6.5, 6.6 and 10.4
hereof, and (iii) payments required to be made into the Rebate
Fund;
(b) any proceeds which arise upon any disposition of the Trust
Estate; and
(c) any other revenues arising out of or in connection with the
Issuer's interest in the Project; provided, however, that such
term shall not include any of the proceeds of any drawing (or
deemed drawing) under the Credit Facility or any moneys in the
Credit Facility Account in the Bond Fund or the Bond Purchase
Fund or in the Fixed Rate Credit Facility Account in the Bond
Fund;
"Reimbursement Agreement" means that certain Reimbursement Agreement by
and between the Company and the Bank dated January 6, 1994, including any
amendments thereto and any other Reimbursement Agreement by and between the
Company and a Credit Facility Issuer including a Fixed Rate Credit Facility
Reimbursement Agreement;
"Related Person", when used with reference to any Substantial User, means
a "related person" within the meaning of Section 103(b)(6) of the Code;
"Remarketing Agent" means the Remarketing Agent appointed pursuant to the
Remarketing Agreement and any successor appointed pursuant to the Indenture.
"Principal Office" of the Remarketing Agent shall mean as to the initial
Remarketing Agent, the Office specified in the Indenture and as to any
successor the Office of the Remarketing Agent designated in writing to the
Issuer, the Company, the Trustee, the Bank, the Paying Agent and the Bond
Registrar;
"Remarketing Agent's Agreement" means that certain Remarketing Agent's
Agreement dated January 5, 1994, between the Company, Goldman, Sachs & Co. and
approved by the Issuer;
"Secretary" means the Secretary, Assistant Secretary or his or her
designee of the Issuer;
"State" means the State of Rhode Island and Providence Plantations;
"Subsidiary" means any corporation at least a majority of whose securities
(other than directors' qualifying shares) having ordinary voting power for the
election of directors (other than securities having such power only by reason
of the happening of a contingency) is at the time owned by another
corporation (the "Parent") and/or one or more of the Subsidiaries of the
Parent;
"Substantial User" means, with respect to any "facilities" (as the term
"facilities" is used in Section 103(b)(4)(E) of the Code), a "substantial
user" of such "facilities" within the meaning of Section 103(b)(13) of the
Code;
"Taxability Change" means any change in the Constitution or laws of the
United States of America or the applicable Income Tax Regulations thereunder
occurring after the date of issuance of the Bonds which results in the
interest on any of the Bonds being included in the gross income of any holder
(other than a holder who is a Substantial User or a Related Person);
"Tender Date" means any Optional Tender Date, Mandatory Tender Date or
the Conversion Date (as defined in the Indenture);
"Trustee" means Rhode Island Hospital Trust National Bank, a national
banking association organized and existing under the laws of the United
States, as trustee under the Indenture, or any co-trustee or any successor
trustee under the Indenture.
"Principal Office" of the Trustee means the principal corporate trust
office of Rhode Island Hospital Trust National Bank, which office on the date
of issuance and delivery of the Bonds is located in Canton, Massachusetts, and
upon appointment of any successor trustee under the Indenture, "Principal
Office" of the Trustee means the principal corporate trust office of
any such successor trustee;
"U.C.C." means the Uniform Commercial Code of the State, as now or
hereafter amended;
Section 1.2. Certain Rules of Interpretation. The definitions set forth
in Section 1.1 shall be equally applicable to both the singular and plural
forms of the terms therein defined and shall cover all genders.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore", "hereinafter"
and other equivalent words refer to this Agreement and not solely to the
particular Article, Section or subdivision hereof in which such word is used.
Reference herein to an Article number (e.g., Article IV) or a Section
number (e.g., Section 6.8) shall be construed to be a reference to the
designated Article number or Section number hereof unless the context or use
clearly indicates another or different meaning or intent.
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer. The Issuer makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) Corporate Organization, Authorization and Powers. The Issuer
represents and warrants that it is a public corporation,
governmental agency and public instrumentality of the State of
Rhode Island, with the power under and pursuant to the Act to
enter into and perform this Agreement, the Indenture, and the
Bond Purchase Agreement and that by proper corporate action it
has duly authorized the execution and delivery of this
Agreement, the Indenture, and the Bond Purchase Agreement and
that it has the power to issue and sell the Bonds in order to
refund the Outstanding Bonds pursuant hereto and pursuant to the
Indenture. The Issuer further represents and warrants that it
has taken all necessary action and complied with all provisions
of the Constitution of the State and the Act and that this
Agreement, the Indenture, and the Bond Purchase Agreement are
valid and binding obligations of the Issuer enforceable in
accordance with their terms except as enforceability may be
subject to the exercise of judicial discretion in accordance
with general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws for the
relief of debtors heretofore or hereafter enacted, and the
execution and delivery of this Agreement, the Indenture, and the
Bond Purchase Agreement and the consummation of the transactions
contemplated therein will not conflict with its charter or
by-laws, or conflict with, constitute a breach of or default
under any bond, indenture, note or other evidence of
indebtedness of the Issuer, or any contract, lease or other
instrument to which the Issuer is a party or by which it is
bound or cause the Issuer to be in violation of any applicable
statute or rule or regulation of any governmental authority.
(b) Limited Special Obligations. Notwithstanding anything herein
contained to the contrary, any obligation the Issuer may hereby
incur for the payment of money shall not constitute an
indebtedness of the State or of any political subdivision
thereof within the meaning of any State constitutional provision
or statutory limitation and shall not give rise to a pecuniary
liability of the State or a political subdivision thereof, or
constitute a charge against the general credit or taxing or
taking power of the State or a political subdivision thereof,
but shall be limited special obligations of the Issuer payable
solely from (i) the Pledged Revenues, (ii) revenues derived from
the sale of the Bonds, and (iii) amounts on deposit from time to
time in the Bond Fund, subject to the provisions of this
Agreement and the Indenture permitting the application thereof
for the purposes and on the terms and conditions set forth
herein and therein.
It is specifically understood and agreed that the liability of the Issuer
for the inaccuracy or nonfulfillment of any of the foregoing representations
and warranties shall not constitute nor give rise to any pecuniary liability
or charge against the general credit of the Issuer.
Section 2.2 Representations by the Company. The Company makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) Corporate Organization and Power; Subsidiaries. The Company (i)
is a corporation duly organized, validly existing and in good
standing under the laws of the State, (ii) has all requisite
corporate power and authority and all necessary licenses and
permits to own and operate its properties and to carry on its
business as now being conducted and as presently proposed to be
conducted, (iii) has no Subsidiaries; and (iv) is duly qualified
as a foreign corporation to do business in any jurisdiction
where such qualification is so required.
(b) Pending or Threatened Litigation. There are no proceedings
pending, or to the knowledge of the Company threatened against
or affecting the Company in any court or before any governmental
authority or arbitration board or tribunal which involve the
possibility of materially and adversely affecting the
properties, business, prospects, profits or condition (financial
or otherwise) of the Company, or the ability of the Company to
perform its obligations under the Company Documents.
(c) The Company Documents Are Legal and Authorized. The execution
and delivery by the Company of the Company Documents and the
compliance by the Company with all of the provisions of each of
the Company Documents (i) are within the corporate power and
authority of the Company, (ii) will not conflict with or result
in any breach of any of the provisions of, or constitute a
default under, or result in the creation of any lien, charge or
encumbrance upon any property of the Company under the
provisions of, any agreement, charter document, by-law or other
instrument to which the Company is a party or by which it may be
bound, or any applicable license, judgment, decree, law,
statute, order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of
its activities or properties, and (iii) have been duly
authorized by all necessary corporate action on the part of the
Company. The Company Documents are the valid and binding
obligations of the Company and are enforceable in accordance
with their respective terms.
(d) Governmental Consent. Neither the Company nor any of its
business or properties, nor any relationship between the Company
and any other person, nor any circumstances in connection with
the execution, delivery and performance by the Company of the
Company Documents or the offer, issue, sale or delivery by the
Issuer of the Bonds, is such as to require the consent, approval
or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of
the Company other than authorization from the Rhode Island
Public Utilities Commission and authorization from the United
States Securities and Exchange Commission (the "SEC") under the
Public Utilities Holding Company Act of 1935 which
authorizations have been obtained except that the SEC has
reserved jurisdiction over the issuance of the Alternate Letter
of Credit if the net cost to the Company for the Alternate
Letter of Credit exceeds the cost of the initial Letter of
Credit.
(e) No Defaults. No event has occurred and no condition exists with
respect to the Company that would constitute an "Event of
Default" under any of the Company Documents or the Indenture or
which, with the lapse of time or with the giving of notice or
both, would become an "Event of Default" under any of the
Company Documents or the Indenture. The Company is not in
default with respect to an order of any court, governmental
authority or arbitration board or tribunal or in violation in
any material respect of any agreement, charter document, by-law
or other instrument to which it is a party or by which it may be
bound, the effect of which default or violation is materially
adverse to the properties, business, prospects, profits or
condition (financial or otherwise) of the Company.
(f) Compliance with Law. The Company is not in violation of any
laws, ordinances, governmental rules or regulations to which it
is subject and has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to
the ownership of its properties or to the conduct of its
business, which violation or failure to obtain might materially
and adversely affect the properties, business, prospects,
profits or conditions (financial or otherwise) of the Company.
(g) Operation of Project. The Company intends to operate the
Project to the expiration or sooner termination of this
Agreement as provided herein as a "project" within the meaning
of the Act. The Company also intends to operate or cause the
Project to be operated in accordance with all applicable laws
which are material until the expiration or sooner termination of
this Agreement as provided herein.
(h) Form 8038 Information. The information furnished by the Company
and used by the Issuer in preparing the Form 8038, Information
Return for Private Activity Bond Issues, which has been filed by
or on behalf of the Issuer with the Internal Revenue Service
Center in Philadelphia, Pennsylvania, pursuant to the Code, was
true and complete as of the date of filing of said Form 8038.
(i) Limitation on Maturity. The weighted average maturity of the
Bonds does not exceed the weighted average estimated economic
life of the components comprising the Project by more than 120%,
determined pursuant to Section 147(b) of the 1986 Code.
(j) Reasonable Expectations. Based on current facts, estimates and
circumstances, it is expected that:
(i) the net proceeds of the sale of the Bonds are needed for the
purpose of refunding the Outstanding Bonds, and
(ii) the Project will not be sold or disposed of, in whole or in
part, prior to payment in full of the Bonds.
(k) Project Complete. The Company represents that the acquisition
and construction of the Project is complete on the date of the
execution and delivery hereof.
(l) No Untrue or Omitted Statements. No one of this Agreement, the
Bond Purchase Agreement, or the Inducement Letter or any other
document, certificate or statement prepared by or on behalf of
or furnished by or on behalf of the Company to the Issuer or to
the purchasers in connection with this Agreement, or the Bond
Purchase Agreement or the Inducement Letter or relating to the
issue and sale by the Issuer or the purchase by the purchasers
of the Bonds contains any untrue statements of a material fact
concerning the Company or omits to state a material fact
necessary in order to make the statements contained herein
and therein with respect to the Company not misleading. There
is no fact since September 30, 1993 which materially adversely
affects the business, operations, affairs, conditions,
properties or assets of the Company which has not been set
forth in a document, certificate or statement furnished to the
purchasers by or on behalf of the Company prior to or on the
date of delivery hereof.
ARTICLE III
LOAN OF BOND PROCEEDS
Section 3.1. Loan of Bond Proceeds. the Issuer agrees to make a loan to
the Company by the deposit of the proceeds of the sale of the Bonds in the
amount of Seven Million Nine Hundred Twenty-five Thousand Dollars ($7,925,000)
to the appropriate funds with the Trustee and the subsequent disbursement
thereof in accordance with the terms of this Agreement and the Indenture for
the purpose of refunding the Outstanding Bonds. The Company hereby agrees to
repay the loan in accordance with Article V of this Agreement.
ARTICLE IV
OPERATION OF THE PROJECT; ISSUANCE OF THE BONDS
Section 4.1. Operation of the Project. The Company shall maintain,
improve and operate the Project as a "project" within the meaning of the Act
and in compliance with all applicable building, zoning and land use,
environmental protection, sanitary and safety and other laws, rules and
regulations and shall not permit a nuisance therein; but 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
diligently contest the validity thereof.
Section 4.2. Agreement to Issue Bonds; Application of Bond Proceeds. In
order to provide funds for making the loan referred to in Section 3.1 hereof,
the Issuer agrees that as soon as possible it will authorize, sell and cause
to be delivered to the initial purchaser or purchasers thereof, the
Bonds, bearing interest and maturing as set forth in Article II of the
Indenture, at a price to be approved by the Company plus accrued interest (if
any) to the date of issuance and delivery of the Bonds, and it will thereupon
deposit all accrued interest (if any) received upon the sale of the Bonds in
the Bond Fund and will deposit all proceeds from said sale in the Project
Fund.
Section 4.3. Disbursements from the Project Fund. The Issuer will
pursuant to the Indenture authorize and direct the Trustee to use the moneys
in the Project Fund for the redemption of the Outstanding Bonds.
The Company agrees for the benefit of the Trustee and the holders of the
Bonds that the proceeds of the Bonds will not be used in any manner which
would result in the loss of the exemption from federal income taxation of the
interest on the Bonds.
Section 4.4. Investment of Bond Fund, Project Fund and Bond Purchase Fund
Moneys Permitted. Any moneys held in the Bond Fund, Project Fund and the Bond
Purchase Fund shall be invested or reinvested by the Trustee upon the request
and direction of the Company in Permitted Investments, to the extent permitted
by the laws of the State in the manner provided in Article X of the Indenture.
ARTICLE V
EFFECTIVE DATE OF THIS AGREEMENT;
DURATION OF LOAN TERM; LOAN PAYMENTS; SECURITY AGREEMENT
Section 5.1. Effective Date of This Agreement; Duration of Loan Term.
This Agreement shall become effective upon its execution and delivery and the
rights and obligations created hereby shall then begin, and, subject to the
other provisions hereof (including particularly Articles X and XI), shall
expire upon Payment in Full of the Bonds.
Section 5.2. Delivery and Acceptance of Possession. The Company shall be
entitled to sole and exclusive possession of the Project (subject to the right
of the Issuer and the Trustee to enter thereon for inspection purposes and to
the other provisions of Section 8.2).
Section 5.3. Loan Payments.
(a) To repay the loan described in Section 3.1 hereof, the Company
agrees to pay to the Trustee, as assignee and pledgee of and for
the account of the Issuer, for deposit in the Company Payments
Account in the Bond Fund, on or before each date on which any
principal, or redemption premium, if any, or interest shall
become due, amounts sufficient, together with any moneys then
held by the Trustee in the Bond Fund and available for such
purpose under Section 603 of the Indenture, to pay the principal
of, and the redemption premium (if any) and the interest on, the
Bonds as the same become due on such date, whether at maturity,
upon redemption or by acceleration or otherwise; provided,
however, that if the Credit Facility is outstanding, payments
hereunder required to pay principal or interest (but not the
redemption premium) on the Bonds, whether at maturity, upon
redemption or by acceleration or otherwise, shall be made
subject to Section 213 of the Indenture on behalf of the Company
by the Trustee with funds drawn by the Trustee under the Letter
of Credit pursuant to Section 902 of the Indenture, and any
amounts so drawn under the Credit Facility shall be credited
against the loan payments due from the Company hereunder with
respect to such payments on the Bonds to the extent that funds
are drawn under the Credit Facility and applied by the Trustee
to such payments on the Bonds; and provided further, that so
long as any Fixed Rate Credit Facility is in place, any amounts
drawn under any such Fixed Rate Credit Facility shall be
credited against the loan payments due hereunder to the extent
such amounts are applied by the Trustee to such payments on the
Bonds. Notwithstanding anything herein to the contrary, if on
any date on which principal of, or redemption premium, if any,
or interest on the Bonds is due, the amount theretofore paid by
or on behalf of the Company hereunder is, for any reason,
insufficient to make the required payment on the Bonds on such
date, the Company hereby agrees to immediately pay an amount
equal to such deficiency to the Trustee. All such payments
shall be made to the Trustee at its Principal Office in lawful
money of the United States of America which will be immediately
available on the date each such payment is due.
(b) The Company hereby authorizes the Trustee to make drawings under
the Credit Facility in accordance with the terms thereof from
time to time to the extent necessary to provide funds which
shall be sufficient, together with any moneys held by the
Trustee in the Bond Fund and available for such purpose under
Section 603 of the Indenture, to pay the principal of and the
interest on the Bonds when the same shall become due, whether at
maturity, upon redemption or by acceleration or otherwise.
(c) Anything herein, in the Indenture or in the Bonds to the
contrary notwithstanding, the obligations of the Company
hereunder shall be subject to the limitation that payments
constituting interest under this Section shall not be required
to the extent that the receipt of such payments by the holder of
any Bond would be contrary to the provisions of law applicable
to such holder which limit the maximum rate of interest which
may be charged or collected by such holder.
Section 5.4. Additional Payment Obligations of the Company.
(a) The Company agrees to pay to the Trustee, for deposit in the
Company Payments Account in the Bond Purchase Fund, on or before
each Tender Date amounts sufficient, together with any moneys
then held by the Trustee in the Bond Purchase Fund and available
for such purpose under Section 803 of the Indenture, to enable
the Trustee to pay the purchase price of any Bonds to be
purchased by the Trustee on such Tender Date pursuant to Section
301 or 302 of the Indenture; provided, however, that if the
Letter of Credit is outstanding, payment of the purchase price
of Bonds on any Tender Date shall be made, to the extent
provided in the Indenture, by the Trustee with funds drawn by
the Trustee under the Letter of Credit pursuant to Section 902
of the Indenture, and no additional payments shall be due or
paid by the Company hereunder with respect to the purchase price
of such Bonds to the extent that funds are drawn under the
Letter of Credit and applied by the Trustee to payment of the
purchase price of the Bonds purchased on such date.
Notwithstanding anything herein to the contrary, if on any
Tender Date, the amount theretofore paid by or on behalf of the
Company hereunder is, for any reason, insufficient to pay the
purchase price of the Bonds being tendered on such date, the
Company hereby agrees to immediately pay an amount equal to such
deficiency to the Trustee. All such payments shall be made to
the Trustee at its Principal Office in lawful money of the
United States of America which will be immediately available on
the date each such payment is due.
(b) The Company hereby authorizes the Trustee to make drawings under
the Letter of Credit in accordance with the terms thereof to the
extent necessary to provide funds which shall be sufficient,
together with the amount of funds held by the Trustee in the
Bond Purchase Fund and available for that purpose under Section
803 of the Indenture, to pay the purchase price of Bonds
purchased by the Trustee on any Tender Date.
(c) The Company hereby authorizes the Trustee to purchase Bonds for
the Company's account pursuant to Sections 301 and 302 of the
Indenture. The Issuer and the Company agree that the Trustee in
such capacity shall be acting solely for the benefit of the
Company, and no purchase of Bonds by the Trustee in such
capacity shall constitute a redemption of Bonds or an
extinguishment of the debt thereby evidenced.
Section 5.5. Letter of Credit; Alternate Credit Facility; Fixed Rate
Credit Facility.
(a) At all times prior to the Fixed Rate Conversion Date, the
Company shall arrange for the Letter of Credit to be in effect
with such terms and conditions as required under Section 901 of
the Indenture.
(b) At any time prior to the 45th day preceding the Interest Payment
Date preceding the scheduled expiration date of the initial
Letter of Credit (or any Alternate Credit Facility) the Company
may deliver to the Trustee an Alternate Credit Facility which
shall be effective on or before the scheduled expiration date of
the Letter of Credit. An Alternate Credit Facility shall be an
irrevocable letter of credit issued by a commercial bank
organized and doing business in the United States, with a term
of at least 360 days, the terms of which shall in all material
respects be the same as the initial Letter of Credit (except
that the expiration date of such Alternate Credit Facility may
be later than (January 6, 1997); provided, however, that on or
before the date of such delivery of an Alternate Credit Facility
to the Trustee, (i) if the Bonds are rated at the time of such
delivery, the Company shall furnish to the Trustee and Paying
Agent written evidence from Moody's, if the Bonds are rated by
Moody's, and from S&P, if the Bonds are rated by S&P, that such
rating agency has reviewed the proposed Alternate Credit
Facility and that the substitution of the proposed Alternate
Credit Facility will not, by itself, result in a reduction of
its rating of the Bonds from that which then prevails or (ii) if
the Bonds are not then rated, the Company shall furnish to the
Trustee written evidence that the issuer of the proposed Letter
of Credit constitutes a commercial bank organized and doing
business in the United States and having capital, surplus and
profit of at least $100,000,000 and has long-term debt rated by
Moody's or S&P in one of its two (2) highest rating categories
(without regard to any refinement or gradation within a rating
category); and provided, further, that on or prior to the date
of delivery of an Alternate Credit Facility to the Trustee, the
Company shall furnish to the Trustee an opinion of Bond Counsel
stating that the delivery of such Alternate Credit Facility to
the Trustee is lawful under applicable law, is authorized under
this Agreement and complies with the terms hereof and does not
adversely affect the exemption from federal income taxes of the
interest on the Bonds.
(c) Not less than 40 days preceding the Interest Payment Date
preceding the expiration date of the Letter of Credit or any
Alternate Credit Facility, the Company shall arrange for the
delivery to the Trustee of a Fixed Rate Credit Facility as
described in this paragraph to be in effect on the Fixed Rate
Conversion Date. After the Fixed Rate Conversion Date, the
Company may, at its option, subject to the provisions of this
Section and Section 904A of the Indenture, at any time prior to
40 days preceding the scheduled expiration date of a Fixed Rate
Credit Facility, deliver to the Trustee a Fixed Rate Credit
Facility in substitution for a Fixed Rate Credit Facility
previously supplied, which substitute Fixed Rate Credit
Facility shall be in effect on the date of expiration of
the previously supplied Fixed Rate Credit Facility. On or
prior to the date of delivery of any Fixed Rate Credit Facility
to the Trustee, the Company shall furnish to the Trustee and the
Issuer an opinion of Bond Counsel stating that the delivery of
such Fixed Rate Credit Facility to the Trustee is lawful under
applicable law and permitted under this Agreement and complies
with the terms hereof and that the delivery of such Fixed Rate
Credit Facility will not adversely affect the exemption from
federal income taxes of the interest on the Bonds.
(d) Before the Fixed Rate Conversion Date, at any time prior to 40
days preceding the Interest Payment Date preceding the scheduled
expiration date of the Letter of Credit or any Alternate Credit
Facility and, after the Fixed Rate Conversion Date, at any time
prior to the 40 days preceding the scheduled expiration date of
any Fixed Rate Credit Facility, upon written notice provided to
the Issuer, the Trustee and the Remarketing Agent, the Letter
of Credit, or Alternate Credit Facility or Fixed Rate Credit
Facility, as the case may be, may be extended or renewed from
time to time.
Section 5.6. Administrative Expenses. So long as any portion of the
principal amount of the Bonds remains outstanding, the Company covenants and
agrees to pay to the Issuer on June 1 and December 1 of each year commencing
June 1, 1994 one-half of the Issuer's annual Administrative Expenses.
The Company shall pay, or cause to be paid out of its own funds, (i) the
reasonable fees and charges of the Issuer, as and when the same become due,
including the reasonable fees of its Counsel (including Bond Counsel), (ii)
the reasonable fees and charges of the Trustee for Ordinary Services rendered
as Trustee under the Indenture and its reasonable Ordinary Expenses incurred
as Trustee under the Indenture, including the reasonable fees of its Counsel,
(iii) the reasonable fees and charges of the Trustee for Extraordinary
Services rendered as Trustee under the Indenture and reasonable Extraordinary
Expenses incurred as Trustee under the Indenture, as and when the same become
due, including the reasonable fees of its Counsel, (iv) the reasonable fees
and expenses of the Paying Agent and any Co-Paying Agent for acting as Paying
Agent for the Bonds, as and when the same become due, including the
reasonable fees of its Counsel, (v) the reasonable fees and charges of the
Bond Registrar for acting as Bond Registrar for the Bonds, as and when the
same become due, including the reasonable fees of its Counsel, and (vi) the
reasonable fees and charges of the Remarketing Agent for acting as Remarketing
Agent for the Bonds, as and when the same become due, including the reasonable
fees of its Counsel.
The Company further agrees to indemnify the Trustee, Paying Agent,
Depository and Bond Registrar for, and to hold them harmless against, any
loss, liability or expense incurred without negligence or bad faith on their
part, arising out of or in connection with the acceptance or administration of
the Indenture, including the costs and expenses of defending themselves
against any claim or liability in connection with the exercise or performance
of any of their powers or duties under the Indenture.
If the Company should fail to make any of the payments required in this
Section, the item or installment which the Company has failed to make shall
continue as an obligation of the Company until the same shall have been fully
paid, and the Company agrees to pay the same with interest thereon at the
Prime Rate per annum.
Section 5.7. Obligations of Company Hereunder Absolute and Unconditional.
The obligations of the Company to make the payments required to be made in
Section 5.3, 5.4 and 5.6 and to perform and observe the other agreements on
its part contained herein shall be absolute and unconditional and shall not be
subject to diminution by set-off, counterclaim, abatement or otherwise. Until
such time as the principal of, the redemption premium (if any) and the
interest on, the Bonds shall have been paid in full, the Company (a) will not
suspend or discontinue any payments required to be made under Sections 5.3,
5.4 and 5.6 except to the extent the same have been prepaid, (b) will perform
and observe all of its other agreements contained herein, and (c) except as
provided in Sections 11.1 and 11.2, will not terminate the Loan Term for any
cause, including, without limiting the generality of the foregoing, failure of
the Company's title in and to the Project or any part thereof, any acts or
circumstances that may constitute failure of consideration, sale, loss,
eviction or constructive eviction, destruction of or damage to the Project,
commercial frustration of purpose, any change in the tax or other laws of the
United States of America or of the State or any political subdivision
of either or any failure of the Issuer to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out
of or in connection herewith or with the Indenture. Nothing contained in this
Section shall be construed to release the Issuer from the performance of any
of the agreements on its part herein contained; and if the Issuer should fail
to perform any such agreement, the Company may institute such action against
the Issuer as the Company may deem necessary to compel performance or recover
its damages for nonperformance so long as such action shall not do violence to
the agreements on the part of the Company contained in the preceding sentence.
The Company may, however, at its own cost and expense and in its own name
or in the name of the Issuer, prosecute or defend any action or proceeding or
take any other action involving third persons which the Company deems
reasonably necessary in order to secure or protect its right of possession,
occupancy and use of the Project, and in such event the Issuer hereby agrees
to cooperate fully with the Company.
Nothing contained herein shall be construed as a waiver of any rights
which the Company may have against the Issuer under this Agreement, or against
any person under this Agreement, the Indenture or otherwise, or under any
provision of law.
Section 5.8. Company Consent to Assignment of Agreement and Execution of
Indenture. The Company understands that the Issuer, as security for the
payment of the principal of, the redemption premium (if any) and the interest
on, the Bonds, will assign and pledge to, and create a security interest in
favor of, the Trustee pursuant to the Indenture certain of its rights, title
and interest in and to this Agreement including all Pledged Revenues
reserving, however, its rights (a) pursuant to this Agreement providing that
copies of notices, approvals, consents, requests and other communications
be given to the Issuer, (b) to reimbursement and payment of costs and expenses
under Sections 5.6, 6.5 and 10.4, (c) of access under Section 8.2, and (d) to
indemnification and to exemption from liability, both individual and
corporate, under Sections 6.6 and 8.1, and the Company hereby agrees and
consents to such assignment and pledge. The Company acknowledges that it has
received a copy of the Indenture and consents to the execution of the same by
the Issuer.
The Issuer and the Company recognize and agree that the assignment and
pledge by the Issuer of its rights in this Agreement to the Trustee pursuant
to the Indenture shall not extinguish any of the rights or protections of the
Issuer under this Agreement, including, but not limited to, the provisions
relating to indemnification and insurance protection.
Section 5.9. Company's Performance Under Indenture. The Company agrees,
for the benefit of the bondholders, to do and perform all acts and things
contemplated in the Indenture to be done or performed by it.
ARTICLE VI
MAINTENANCE, MODIFICATION, TAXES AND INSURANCE
Section 6.1. Maintenance and Modification of Project by Company.
(a) Throughout the Loan Term the Company shall at its own expense
keep the Project in as reasonably safe condition as the
operation thereof will permit.
(b) The Company may, from time to time, in its sole discretion and
at its own expense, make any additions, modifications or
improvements to the Project, including installation of
additional machinery, equipment, and related property, which it
may deem desirable for its business purposes; provided that such
additions, modifications and improvements do not change the
Project's character to such an extent that the Project would not
constitute a "project" within the meaning of the Act. All
machinery, equipment and related property so installed by the
Company shall remain the sole property of the Company in which
the Issuer shall not have any interest and may be modified or
removed at any time.
Section 6.2. Removal and Substitution of Equipment. The Company shall
not be under any obligation to renew, repair or replace any inadequate,
obsolete, worn out, unsuitable, undesirable, inappropriate or unnecessary
equipment. If the Company, in its sole discretion, determines that any such
items of equipment have become inadequate, obsolete, worn out, unsuitable,
undesirable, inappropriate or unnecessary for its purposes at such time, the
Company may remove such items from the Project and sell, trade in, or
otherwise dispose of them (as a whole or in part) without any responsibility
or accountability to the Issuer or the Trustee therefor. The removal from the
Project of any portion of the equipment pursuant to the provisions of this
Section shall not entitle the Company to any diminution in or postponement or
abatement of the payments required to be made by the Company under
Sections 5.3. and 5.4.
Section 6.3. Taxes, Other Governmental Charges and Utility Charges. The
Company shall pay or cause to be paid promptly as the same become due, and
before any penalty is added thereto or imposed thereon because of nonpayment,
all Impositions. The term "Impositions" as used herein shall mean all taxes
and assessments, including, but not limited to, real estate taxes, ad valorem
taxes, use and occupancy taxes, personal property taxes, transit taxes, water
and sewer charges, rates and rents, charges for utility services, excises,
levies, license and permit fees, mercantile taxes, gross receipts taxes, sales
taxes and other charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, of any kind and nature whatsoever, which shall or may
during the Loan Term be assessed, levied, charged, confirmed or imposed upon
or become payable out of or become a lien on the Project, or any part thereof,
or the interest of the Company therein.
The Company may, at its own expense and in its own name, in good faith
contest any such taxes, assessments and other charges and, in the event of any
such contest, may permit the taxes, assessments and other charges so contested
to remain unpaid during the period of such contest and any appeal
therefrom.
Section 6.4. Insurance Required. Throughout the Loan Term the Company
shall keep the Project, or cause the Project to be kept, continuously insured
against such risks as is prudent, in the reasonable opinion of the Company,
paying as the same become due all premiums in respect thereto; and provided,
however, that if the Company maintains a program of self-insurance with
respect to other properties owned by the Company, the Company may, at its
election, insure the Project partially or wholly under such self-insurance
program.
Notwithstanding the foregoing, throughout the Loan Term the Company shall
keep in full force and effect with an insurance company authorized to do
business within the State and approved by the Issuer, public liability
insurance in an amount not less than $1,000,000 per occurrence for bodily
injury, death and property damage. All proceeds of insurance carried by the
Company pursuant to this paragraph shall be applied toward extinguishment or
satisfaction of the liability with respect to which such insurance proceeds
may be paid.
Section 6.5. Other Issuer Expenses. Anything to the contrary herein
notwithstanding, the Company shall pay any expenses not specifically mentioned
herein which are incurred by the Issuer, the State or any political
subdivision of the State in connection with the Project, this Agreement, the
Indenture, the Letter of Credit, the Financing Statements or the Bonds.
The provisions of this Section shall survive the termination of this
Agreement.
Section 6.6. Indemnification of Issuer. The Company recognizes that the
Issuer is entering into, executing and delivering this Agreement and
participating in the financing contemplated by the Agreement as an
accommodation to the Company and for the benefit of the Company pursuant to
the intent of the Act. The Company covenants and agrees that neither the
Issuer nor any member of its Board nor any officer, agent, attorney or
employee of the Issuer shall be liable to the Company on account of any matter
or thing whatsoever. In addition, the Company hereby agrees to protect and
indemnify the Issuer, its agents, members, officers, attorneys and
employees against and to hold them harmless and defend them from any loss,
expense (including counsel fees) or liability of any nature whatsoever
incurred by reason of the Issuer's said participation. The within provision,
together with the provisions of Section 6.4 relating to insurance protection
of the Issuer, and every other provision of this Agreement which grants
specific protection and benefits for the Issuer and its interests hereunder,
shall continue for the benefit of the Issuer throughout the Loan Term and
shall survive any assignment or termination hereof.
Without in any way limiting the indemnification set forth in the preceding
paragraph, the Company agrees to indemnify and hold the Issuer and its
members, directors, officers and employees harmless from and against any and
all losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, the Trust Indenture Act of
1939, as amended and any other securities laws, or otherwise, including the
Glass-Steagall Act, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of the sale of the Bonds or the
subsequent tendering or remarketing of the Bonds, and the Company will
reimburse such persons for any legal or other expenses reasonably incurred in
connection with investigating, defending or preparing to defend any such
action or claim.
Without in any way limiting the indemnification set forth in the preceding
paragraphs, the Company hereby agrees to indemnify and hold the Issuer
harmless from any and all liability, loss, damages, costs and expenses of any
nature (including interest and counsel fees) arising out of or in connection
with the Remarketing Agent's or the Company's obligations under the
Remarketing Agreement.
Nothing contained in this Section 6.6 shall be construed to indemnify any
person or entity from any liability arising out of such person's or such
entity's gross negligence or willful misconduct.
Section 6.7. Limited Liability; Immunity of Directors of Issuer. This
Agreement does not pledge the general credit or the taxing or taking power of
the State or any political subdivision thereof. The liability of the Issuer
shall be limited to the proceeds received from the repayment of the loan
hereunder.
It is understood and agreed that the Issuer is not generally or personally
liable for the debt or any portion of the debt evidenced by this Agreement or
the interest thereon; neither is the Issuer nor are the directors of the
Issuer, the agents, attorneys or employees of the Issuer, or their
respective heirs, personal representatives or successors personally or
generally liable in connection with any matter, cause or thing pertaining to
this Agreement, the Financing Statements or any instruments and documents
executed and delivered by the Issuer in connection with the Project or the
Bonds.
No covenant or agreement contained in this Agreement shall be deemed to be
the covenant or agreement of any director, officer, attorney, agent or
employee of the Issuer in an individual capacity. No recourse shall be had
for the payment of the principal or the interest thereon, if any, payable upon
the redemption of the Bonds or any claim based thereon against any officer,
director, agent, attorney or employee of the Issuer past, present or future,
or its successors or assigns, as such, either directly or through the Issuer,
or any such successor corporation, whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any assessment or
penalty, or otherwise, all of such liability of such directors, officers,
agents, attorneys or employees, being hereby released as a condition of, and
as a consideration for, the execution and delivery of this Agreement.
Section 6.8. Worker's Compensation. At all times until the end of the
term of this Agreement, the Company shall comply with the laws of the State
relating to Worker's Compensation with respect to the Project.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1. Damage, Destruction and Condemnation. If prior to payment
in full of the Bonds the Project is damaged by fire or other casualty, or the
title in and to, or the temporary use of, the Project or any part thereof
shall be taken under the exercise of the power of eminent domain by any
governmental body or by any other person acting under governmental authority,
or the Project or any part thereof is sold in lieu of such exercise of the
power of eminent domain, the Company shall be obligated to continue to make
the payments required to be made by the Company under Sections 5.3, 5.4 and
5.6.
The Issuer shall cooperate fully with the Company in the handling and
conduct of any prospective or pending eminent domain proceeding with respect
to the Project or any part thereof. In no event will the Issuer voluntarily
settle, or consent to the settlement of, any prospective or pending
eminent domain proceeding with respect to the Project or any part thereof
without the written consent of the Company.
Section 7.2. Condemnation of Company-Owned Property. The Company shall
be entitled to the proceeds of any condemnation award made for damages to or
taking of its own property including the Project.
ARTICLE VIII
SPECIAL AGREEMENTS
Section 8.1. No Warranty of Condition or Suitability by the Issuer. THE
ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION OF
THE PROJECT OR THAT IT IS SUITABLE FOR THE COMPANY'S PURPOSES OR NEEDS.
Section 8.2. Inspection of the Project. The Company agrees that the
Issuer and the Trustee and their duly authorized agents who are acceptable to
the Company shall have the right at reasonable times during business hours,
subject to the Company's usual safety and security requirements for persons on
the Project, to enter upon the Project and to examine and inspect the Project
without interference or prejudice to the Company's operations; provided,
however, that any such right of inspection shall be solely (a) in the case of
the Issuer, for the purpose of determining the Company's compliance with this
Agreement, and (b) in the case of the Trustee, for the purpose of (i)
determining the Company's compliance with this Agreement, and (ii) enforcing
the rights of the bondholders pursuant to the Trustee's responsibilities
under the Indenture. Before exercising any such right of inspection, the
Issuer or the Trustee, as the case may be, shall first give notice, written or
oral, to the Company at least three (3) hours prior to making the requested
inspection of the Project.
Section 8.3. Company to Maintain Its Corporate Existence; Exceptions
Permitted. The Company agrees that so long as the Bonds remain outstanding it
shall maintain its corporate existence and shall not merge or consolidate with
any other corporation and shall not transfer or convey all or substantially
all of its property, assets and licenses; provided, however, the Company may,
without violating any provision hereof, consolidate with or merge into another
corporation or permit one or more other corporation to consolidate with or
merge into it, or transfer all or substantially all of its assets to another
corporation and thereafter dissolve, but only on condition that the assignee
corporation or the corporation resulting from or surviving such merger (if
other than the Company) or consolidation of the corporation to which such
transfer is made is in compliance with the terms of this Section and shall
expressly assume in writing and agree to perform all of the Company's
obligations under this Agreement. Provided, however, the Company may sell
or lease all or substantially all of its transmission and generation
facilities, including purchase power contracts, to Montaup Electric Company.
If the Company is the surviving corporation in such a merger, the express
assumption referred to above shall not be required.
Section 8.4. Covenants of the Company with Respect to Exemption of
Interest from Federal Income Taxation. The Bonds are being issued by the
Issuer in compliance with the conditions necessary for the interest income on
the Bonds to be exempt from Federal income taxation pursuant to the provisions
of Section 103(b) of the Code relating to "industrial development bonds"
substantially all of the proceeds of which are to be used for the acquisition,
construction, reconstruction or improvement of land or property of a
character subject to the allowance for depreciation under Section 167 of the
Code. It is the intention of the parties hereto that the interest on the
Bonds be and remain free from Federal income taxation, and, to that end, the
Company hereby covenants with the Trustee and each of the holders of any
Bonds, as follows:
(a) that it will not cause or permit the proceeds of the Bonds to be
used in a manner which will cause the interest on the Bonds to
lose the exemption from Federal income taxation conferred by
Section 103(b) of the Code;
(b) that, during the Loan Term, the Company will fully comply with
all effective rules, rulings and regulations promulgated by the
Department of Treasury or the Internal Revenue Service with
respect to bonds issued under Section 103(b) of the Code so as
to maintain the tax-exempt status of the interest payable on the
Bonds; and
(c) that the Company will make no change in the Project which would
result in (i) the Project not being a "project" within the
meaning of the Act, (ii) less than substantially all of the net
proceeds of the sale of the Bonds being used to pay the costs of
land or property of a character subject to the allowance for
depreciation under Section 167 of the Code, or (iii) a violation
of the limitation on maturity of the Bonds under Section
103(b)(14) of the Code.
Section 8.5. Non-Arbitrage Covenant. The Company hereby represents that
it has not taken or omitted to take, or permitted to be taken on its behalf,
and agrees not to take or omit to take, or permit to be taken on the Company's
behalf, any action which, if taken or omitted, would adversely effect the
excludability from the gross income of the Bondholders of the interest paid on
the Bonds for Federal income tax purposes, and that the Company shall take,
or require to be taken, such acts as may be required of the Company from time
to time under applicable law or regulation to continue that exclusion. The
representations, warranties, covenants and statements of expectation of the
Company set forth in the Tax Regulatory Agreement are by this reference
incorporated in this Agreement as though fully set forth herein.
Section 8.6. [Reserved]
Section 8.7. Financial Information. The Company hereby covenants and
agrees to provide to the Issuer the balance sheets and other statements
required to be furnished to the Bank pursuant to the Reimbursement Agreement
as the same is in effect on the date hereof.
Section 8.8. Covenant Against Discrimination. The Company agrees and
warrants that in the performance of this Agreement it will not discriminate or
permit discrimination against any person or group of persons on the grounds of
race, color, religion, sex or national origin in any manner prohibited by
the laws of the United States or the State.
Section 8.9. Taxability Change. In the event of a Taxability Change, the
Company agrees to advise the Trustee in writing that a Determination of
Taxability has occurred.
Section 8.10. Fixed Rate. The Company may, at any time, by written
notice of the exercise of its option, which option is hereby granted to the
Company, cause the interest payable on the Bonds to convert to the Fixed Rate
in accordance with the terms and provisions in Section 206A of the Indenture.
ARTICLE IX
ASSIGNMENT, LEASING AND PLEDGING
Section 9.1. Assignment and Leasing. This Agreement may be assigned, in
whole or in substantial part, and the Project may be leased, as a whole or in
part, by the Company without the necessity of obtaining the consent of the
Issuer or the Trustee, subject, however, to the following conditions:
(a) no assignment (other than pursuant to Section 8.3) or lease
shall relieve the Company from primary liability for any of its
obligations hereunder, and if any such assignment occurs the
Company shall continue to remain primarily liable for the
payments to be made by the Company under Sections 5.3, 5.4 and
5.6 and for performance and observance of the other agreements
on its part herein provided to be performed and observed by it;
(b) the assignee or lessee shall assume the obligations of the
Company hereunder to the extent of the interest assigned or
leased;
(c) the Company shall, within thirty (30) days after the delivery
thereof, furnish or cause to be furnished to the Issuer and to
the Trustee a true and complete copy of each such assignment or
lease, as the case may be, together with any instrument of
assumption; and
(d) such assignment or lease shall not violate any of the provisions
of the Act.
Section 9.2. Restrictions on Issuer. The Issuer agrees that, except for
the assignment and pledge of the Trust Estate to the Trustee pursuant to the
Indenture, it shall not create or suffer to be created any assignment, pledge,
charge, lien or encumbrance on the Trust Estate.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined. The following shall be "events
of default" hereunder and the term "Event of Default" shall mean, whenever it
is used herein, any one or more of the following events:
(a) failure by the Company to pay the payments required to be made
under Section 5.3 and 5.4 at the times specified therein which
result in an "Event of Default" under Section 1201(a), (b) or
(c) of the Indenture;
(b) failure by the Company to comply with the provisions of Section
8.3 of this Agreement;
(c) failure by the Company to observe and/or perform any agreement
hereunder on its part to be observed and/or performed, other
than as referred to in subsection (a) or (b) of this Section,
for a period of thirty (30) days after written notice,
specifying such failure and requesting that it be remedied, is
given to the Company by the Issuer, the Bank or the Trustee,
unless the Issuer, the Bank and the Trustee shall agree in
writing to an extension of such time prior to its expiration;
provided, however, if the failure stated in the notice cannot be
corrected within the applicable period, the Issuer, the Bank and
the Trustee will not unreasonably withhold their consent to an
extension of such time if it is possible to correct such failure
and corrective action is instituted by the Company within the
applicable period and diligently pursued until the failure is
corrected;
(d) any representation by or on behalf of the Company contained in
this Agreement or in any instrument furnished in compliance with
or in reference to this Agreement or the Indenture proves false
or misleading in any material respect as of the date of the
making or furnishing thereof;
(e) an Act of Bankruptcy
(f) an "Event of Default" occurs and is continuing under the
Indenture or the Reimbursement Agreement.
(g) The Issuer shall reasonably determine that a material adverse
change in the financial condition, results of operations, assets
or business of the Company, or the Company and its Subsidiaries,
taken as a whole, from that set forth in the balance sheet of
the Company as of September 30, 1993 and the related statements
of income of the Company furnished to the Issuer, has occurred
and is continuing as of the date of determination.
(h) Eastern Utilities Associates shall cease to own all of the
issued and outstanding common stock of the Company unless
otherwise approved by the Issuer and the Trustee in writing.
(i) failure to deliver a Fixed Rate Credit Facility upon the
expiration or termination of any Fixed Rate Credit Facility.
The foregoing provisions of subsection (c) of this Section are subject to
the following limitations: If by reason of force majeure the Company is
unable in whole or in part to carry out the agreements on its part therein
referred to, the failure to perform such agreements due to such inability
shall not constitute an Event of Default nor shall it become an Event
of Default upon appropriate notification to the Company and/or the passage of
the stated period of time. The term "force majeure" as used herein shall
mean, without limitation, the following: acts of God, strikes, lockouts or
other industrial disturbances; acts of public enemies; orders of any kind of
the government of the United States of America or of the State or any of their
departments, agencies, political subdivisions or officials, or any civil or
military authority; insurrections; riots; epidemics; landslides; lightning;
earthquakes; fires; hurricanes; tornadoes; storms; floods; washouts; droughts;
arrests; restraint of government and people; civil disturbances; explosions;
breakage or accident to machinery, transmission pipes or canals; partial or
entire failure of utilities; or any other cause or event not reasonably within
the control of the Company. The Company agrees, however, to the remedy with
all reasonable dispatch the cause or causes preventing the Company from
carrying out such agreements; provided, that the settlement of strikes,
lockouts and other industrial disturbances shall be entirely within the
discretion of the Company, and the Company shall not be required to make
settlement of strikes, lockouts and other industrial disturbances by acceding
to the demands of the opposing party or parties when such course is, in the
judgment of the Company, unfavorable to the Company.
Section 10.2. Remedies. Whenever any Event of Default occurs, the
Trustee, on behalf of the Issuer as provided in the Indenture, may take any
one or more of the following actions:
(a)(1) Upon the occurrence of (i) an "Event of Default" under the
Indenture and acceleration of payment of the Bonds pursuant to Section
1202 of the Indenture and (ii) an "Event of Default" hereunder (other than
under Section 10.1(e) hereof), the Trustee may, at its option, declare all
payments to be made by the Company under Section 5.3 to be immediately due and
payable, whereupon the same shall become immediately due and payable, and (2)
upon the occurrence of an "Event of Default" under Section 10.1(e) hereof, all
payments to be made by the Company under Section 5.3 shall automatically be
due and payable, without any act or action on the part of any person. If
the Trustee elects to exercise the remedy afforded in this subsection (a) and
accelerates all amounts payable under Section 5.3 for the remainder of the
Loan Term or such amounts are automatically accelerated, the Company shall
pay an amount sufficient, together with any moneys held by the Trustee in the
Bond Fund and available for such purpose under Section 603 of the Indenture,
to enable the Trustee to pay the aggregate principal amount of the outstanding
Bonds and all interest on the Bonds then due and to become due to the date of
such acceleration; provided, however, that if the Letter of Credit is
outstanding, payments hereunder required to pay the principal of and the
interest on the Bonds due and payable upon the acceleration of the Bonds shall
be made on behalf of the Company by the Trustee with funds drawn by the
Trustee under the Letter of Credit pursuant to Section 902 of the Indenture,
and any amounts so drawn under the Letter of Credit shall be credited
against the prepayment of amounts due from the Company hereunder with respect
to such payments of principal of and interest on the Bonds to the extent that
funds are drawn under the Letter of Credit and applied by the Trustee to
payment of the principal of and interest on the Bonds then due and payable.
In addition, the Company shall pay (but not from the proceeds of a drawing
under the Letter of Credit) all fees and expenses of the Trustee and any
Paying Agent or Co-Paying Agent accrued and to accrue through the
date of such acceleration.
(b) The Trustee may take whatever action at law or in equity as may
appear necessary or desirable to collect the loan payments then due and
thereafter to become due, or to enforce performance and observance of any
agreement of the Company hereunder.
Any amounts collected pursuant to action taken under this Section shall be
paid into the Bond Fund and applied in accordance with the provisions of the
Indenture.
Section 10.3. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Issuer or the Trustee is intended to be exclusive of any other
remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon the occurrence of any Event of
Default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right or power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Issuer or
the Trustee to exercise any remedy reserved in this Article, it shall not be
necessary to give any notice, other than such notice or notices as may be
herein expressly required. Such remedies as are reserved to the Issuer in
this Article shall also extend to the Trustee, and the Trustee and the holders
of the Bonds shall be deemed third-party beneficiaries of all agreements
herein contained.
Section 10.4. Agreement to Pay Counsel Fees and Expenses. If there
should occur a default or an Event of Default hereunder and the Issuer or the
Trustee should employ Counsel or incur other expenses for the collection of
loan payments due hereunder or the enforcement of performance or observance of
any agreement on the part of the Company herein contained, the Company agrees
that it will on demand therefor pay to the Issuer or the Trustee the
reasonable fee of such Counsel and such other reasonable expenses so incurred
by the Issuer or the Trustee.
If the Company should fail to make any payments required in this Section,
such item shall continue as an obligation of the Company until the same shall
have been paid in full, and the Company agrees to pay the same with interest
thereon from the date such payment was due at the Prime Rate per annum until
paid in full.
The provisions of this Section shall survive the termination of this
Agreement.
Section 10.5. No Additional Waiver Implied by One Waiver. If any
agreement contained herein should be breached by either party and thereafter
waived by the other party, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach hereunder.
ARTICLE XI
PREPAYMENT OF THE LOAN
Section 11.1. Options to Prepay Loan Payments.
(a) The Company shall have, and is hereby granted, on the first day
of any Interest Computation Period prior to the Fixed Rate
Conversion Date, the option to prepay the loan payments required
to be made by the Company under Section 5.3 in whole or in part
and to direct the Trustee to redeem the Bonds in whole or in
part pursuant to Section 306 of the Indenture. To exercise the
option granted in this Section, the Company shall, not less than
thirty (30) days before the desired prepayment date, give
written notice to the Issuer and the Trustee of its intention to
prepay the loan payments required to be made by the Company
under Section 5.3 in whole or in part on such date and shall
specify therein the principal amount of Bonds to be redeemed
with the moneys received upon such prepayment. Upon the
exercise of such option, the Company shall direct the Trustee to
redeem Bonds in the principal amount and on the dates specified
in the notice referred to in the preceding sentence and shall
make arrangements satisfactory to the Trustee for the giving of
the required notice of redemption of the Bonds. On or prior to
the redemption date for the Bonds, the Company shall pay to the
Trustee, as a prepayment of loan payments under Section 5.3, an
amount sufficient, together with any moneys held by the Trustee
in the Bond Fund and available for such purpose under Section
603 of the Indenture, to enable the Trustee to pay the
redemption price of the Bonds to be redeemed pursuant to Section
306 of the Indenture plus accrued interest thereon to the
redemption date; provided, however, that if the Letter of Credit
is outstanding, payment of the redemption price of the Bonds to
be redeemed pursuant to Section 306 of the Indenture shall be
made by the Trustee with funds drawn by the Trustee under the
Letter of Credit pursuant to Section 902 of the Indenture, and
no prepayment of loan payments shall be due or paid by the
Company hereunder with respect to the redemption price of such
Bonds to the extent that funds are drawn under the Letter of
Credit and applied by the Trustee to payment of the redemption
price of such Bonds. In addition, the Company shall pay (but
not from the proceeds of a drawing under the Letter of Credit)
all fees and expenses of the Trustee, the Issuer and any Paying
Agent or Co-Paying Agent accrued and to accrue through such
redemption date.
(b) The Company shall have, and is hereby granted, at any time after
the Fixed Rate Conversion Date, the option to prepay the loan
payments required to be made by the Company under Section 5.3 in whole or in
part at any time at which the Bonds may be redeemed under Section 306 of the
Indenture and to direct the Trustee to redeem the Bonds in whole or in part
pursuant to Section 306 of the Indenture. To exercise the option granted in
this subsection (c), the Company shall, not less than thirty (30) days before
the desired prepayment date, give written notice to the Issuer and the Trustee
of its intention to prepay the loan payments required to be made by
the Company under Section 5.3 in whole or in part on such date and shall
specify therein the principal amount of Bonds to be redeemed with the moneys
received upon such prepayment. Upon the exercise of such option, the Company
shall direct the Trustee to redeem Bonds in the principal amount and on the
dates specified in the notice referred to in the preceding sentence and shall
make arrangements satisfactory to the Trustee for the giving of the required
notice of redemption of the Bonds. On or prior to the redemption date for the
Bonds, the Company shall pay to the Trustee, as a prepayment of loan
payments under Section 5.3, an amount sufficient, together with any moneys
held by the Trustee in the Bond Fund and available for such purpose under
Section 603 of the Indenture, to enable the Trustee to pay the redemption
price of the Bonds to be redeemed pursuant to Section 306 of the Indenture.
In addition, the Company shall pay all fees and expenses of the Trustee and
any Paying Agent or Co-Paying Agent accrued and to accrue through such
redemption date.
(c) The Company shall have, and is hereby granted, at any time after
the Fixed Rate Conversion Date, the option to prepay the loan
payments required to be made by the Company under Section 5.3 in
whole by causing the Bonds to be deemed to be paid pursuant to
Section 1102 of the Indenture by (i) depositing irrevocably with
the Trustee either moneys or Government Obligations, or a
combination thereof, satisfying the requirements of Section 1102
of the Indenture, (ii) paying to the Trustee all Trustee's,
Issuer's and Paying Agent's fees and expenses due in connection
with the payment or redemption of any such Bonds, and (iii) if
the Bonds are to be redeemed on any date prior to their
maturity, directing the Trustee to make arrangements
satisfactory to the Trustee for the giving of the required
notice of redemption of the Bonds.
Section 11.2. Obligation to Prepay Loan Payments Upon Determination of
Taxability. Upon the occurrence of a Determination of Taxability, as soon as
practicable, but in no event more than 30 days following the date of such
Determination of Taxability, the Company shall be obligated to prepay all
loan payments required to be made by the Company under Section 5.3 and to
direct the Trustee to make arrangements for the giving of notice of redemption
of the Bonds and to redeem the Bonds in whole within the time provided
in Section 306 of the Indenture.
The Company shall give prompt written notice to the Issuer and the Trustee
of its receipt of any oral or written advice from the Internal Revenue Service
that a Determination of Taxability has occurred.
Promptly upon learning of an occurrence of a Determination of Taxability,
the Trustee shall cause notice thereof to be given to the bondholders in the
same manner as is provided in the Indenture for notices of redemption. In
such notice to bondholders, the Trustee may make provisions for obtaining
advice from bondholders, in such form as shall be deemed appropriate,
respecting relevant assessments made on such bondholders by the Internal
Revenue Service.
On or prior to the redemption date, the Company shall pay to the Trustee,
as a prepayment of loan payments under Section 5.3, an amount sufficient,
together with any moneys held by the Trustee in the Bond Fund and available
for such purpose under Section 603 of the Indenture, to enable the Trustee to
pay the Redemption Price of the Bonds to be redeemed pursuant to
Section 306 of the Indenture; provided, however, that if the Letter of Credit
is outstanding, payment of the Redemption Price of the Bonds to be redeemed
shall be made by the Trustee with funds drawn by the Trustee under the Letter
of Credit pursuant to Section 902 of the Indenture, and no prepayment of
loan payments shall be due or paid by the Company hereunder with respect to
the redemption price of such Bonds to the extent that funds are drawn under
the Letter of Credit and applied by the Trustee to payment of the redemption
price of such Bonds.
Upon the redemption date provided for in this Section, provided there has
been deposited with the Trustee the total amount as required, such amounts
shall constitute the total compensation due the Issuer and the holders of the
Bonds as a result of the occurrence of such Determination of Taxability
and the Company shall not be deemed to be in default hereunder by reason of
the occurrence of such Determination of Taxability.
Upon the occurrence of a Determination of Taxability, any option of the
Company to prepay the loan payments for the Project or to direct the Trustee
to redeem the Bonds under any redemption provision of the Indenture shall be
superseded by its obligation to prepay loan payments for the Project under
this Section as set forth herein.
The provisions of this Section shall survive the termination of this
Agreement.
Section 11.3. Mandatory Prepayment. If the Bonds shall be subject to
mandatory redemption pursuant to Section 306 (b) or (c) of the Indenture, the
Company shall be obligated to prepay all loan payments required to be made by
the Company under Section 5.3 hereof and to direct the Trustee to make
arrangements for the giving of notice of redemption of the Bonds and to redeem
the Bonds in whole within the time provided in Section 306 of the Indenture.
On or prior to the redemption date, the Company shall pay to the Trustee,
as a prepayment of loan paymnts under Section 5.3, an amount sufficient,
together with any moneys held by the Trustee in the Bond Fund and available
for such purpose under Section 603 of the Indenture, to enable the Trustee to
pay the redemption price of the Bonds to be redeemed pursuant to
Section 306 (b) or (c), as the case may be, of the Indenture; provided,
however, that if the Credit Facility is outstanding, payment of the redemption
price of the Bonds to be redeemed shall be made by the Trustee with funds
drawn by the Trustee under the Credit Facility pursuant to Section 902 of the
Indenture, and no prepayment of loan payments shall be due or paid by the
Company hereunder with respect to the redemption price of such Bonds to the
extent that funds are drawn under the Credit Facility and applied by the
Trustee to payment of the Redemption Price of such Bonds.
Section 11.4. Relative Position of Options and Indenture. The options
granted to the Company in this Article shall be and remain prior and superior
to the Indenture and may be exercised whether or not there exists an Event of
Default hereunder, provided that the existence of such Event of Default will
not result in nonfulfillment of any condition to the exercise of any such
option.
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Notices. All notices, approvals, consents, requests and
other communications hereunder shall be in writing and shall be deemed to have
been given when delivered or mailed by first class registered or certified
mail, return receipt requested, postage prepaid, and addressed, or transmitted
by telex or telefax as follows:
(a) If to the Issuer - Rhode Island Port Authority
and Economic Development
Corporation
Attention: Deputy Director of
Finance
Seven Jackson Walkway
Providence, Rhode Island 02903
(b) If to the Company - Newport Electric Corporation
c/o Eastern Utilities Associates
One Liberty Square
13th Floor
Post Office Box 2333
Boston, Massachusetts 02107
Attn: Treasurer
(c) If to the Trustee - Rhode Island Hospital Trust
National Bank
150 Royall Street
Canton, Massachusetts 02021
Attn: Corporate Trust Division
Providence, Rhode Island 02903
(d) If to the Bank - Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
With a Copy to
200 West Madison - Suite 2300
Chicago, Illinois 60606
(e) If to the
Remarketing Agent - Goldman, Sachs & Co.
85 Broad Street, 24th Floor
New York, New York 10004
Attn: Municipal Note Trading Desk
(f) If to the Paying
Agent - Rhode Island Hospital Trust
National Bank
150 Royall Street
Canton, Massachusetts 02021
Attn: Corporate Trust Division
(g) If to the Depository - Depository Trust Company
55 Water Street
New York, New York
A duplicate copy of each notice, approval, consent, request or other
communication given hereunder by the Issuer, the Company, the Trustee or the
Bank to any one of the others shall also be given to all of the others. The
Issuer, the Company, the Trustee and the Bank may, by notice given hereunder,
designate any further or different addresses to which subsequent notices,
approvals, consents, requests or other communications shall be sent or persons
to whose attention the same shall be directed.
Section 12.2. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the Issuer, the Company and their respective
successors and assigns.
Section 12.3. Severability. If any provision hereof shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.
Section 12.4. Amounts Remaining in Bond Fund or Bond Purchase Fund. It
is agreed by the parties hereto that any amounts remaining in the Bond Fund or
Bond Purchase Fund upon expiration or sooner termination of this Agreement,
after payment in full of the Bonds and payment of the fees, charges
and expenses of the Trustee, the Bond Registrar, the Paying Agent, any Co-
Paying Agent, the Remarketing Agent and the Remarketing Agent in accordance
with the Indenture, shall be disposed of in accordance with the terms of the
Indenture.
Section 12.5. Delegation of Duties by Issuer. It is agreed that under
the terms of this Agreement the Issuer has delegated certain of its duties
hereunder to the Company and that under the terms of the Indenture the Issuer
has delegated certain of its duties thereunder to the Trustee. The fact of
such delegation shall be deemed a sufficient compliance by the Issuer to
satisfy the duties so delegated and the Issuer shall not be liable in any way
by reason of acts done or omitted by the Company, the Authorized Company
Representative or the Trustee. The Issuer shall have the right at all times
to act in reliance upon the authorization, representation or certification of
the Authorized Company Representative or the Trustee.
Section 12.6. Amendments, Changes and Modifications. This Agreement may
not be effectively amended or terminated except as provided in the Indenture.
Section 12.7. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
Section 12.8. Captions. The captions and headings herein are for
convenience only and in no way define, limit or describe the scope or intent
of any provisions hereof.
Section 12.9. Law Governing Construction of Agreement. This Agreement
shall be governed by, and construed in accordance with, the laws of the State.
Section 12.10. References to Bank. Upon the expiration or termination of
the Letter of Credit, or repayment of all amounts owed under the Reimbursement
Agreement then any provision of this Agreement requiring notification to be
given to the Bank, or requiring that the Bank consent to any action,
shall become ineffective.
EXHIBIT A
REQUISITION NO.
Rhode Island Port Authority and
Economic Development Corporation
$7,925,000 Electric Energy Facilities Revenue Refunding Bonds
(Newport Electric Corporation Project - 1994 Series)
To: Rhode Island Hospital Trust National Bank
Trustee under Trust Indenture dated as of January 1, 1994.
This Requisitions is made pursuant to Section 7.03 of
the above Trust Indenture and Section 4.3 of the Loan
Agreement, as defined in the Trust Indenture.
The Trustee is directed to pay sums out of the Project
Fund as follows:
Payee Purpose of Payment Amount
I hereby certify on behalf of Newport Electric
Corporation (the "Company") that (capitalized terms are as
defined in the Agreement and the Tax Regulatory Agreement):
(i) each obligation mentioned herein (a) has been
properly incurred, (b) is a proper charge against the
Project Fund, (c) is currently due and payable, (d) has not
been previously paid or reimbursed (as applicable) and (e)
has not been the basis of any previous withdrawal and;
(ii) this requisition and the use of proceeds set
forth herein are consistent in all material respects with
the Tax Regulatory Agreement;
(iii) this requisition and the use of proceeds set
forth herein will not cause more than 2% of the proceeds of
the Bonds to be applied to costs of issuance of the Bonds;
(iv) this requisition shall be conclusive evidence of
the facts and statements set forth herein and shall
constitute full warrant, protection and authority to the
Trustee for its actions taken pursuant hereto.
NEWPORT ELECTRIC CORPORATION
By
Authorized Company
Representative
Approved:
RHODE ISLAND HOSPITAL
TRUST NATIONAL BANK
By
Acknowledged:
RHODE ISLAND PORT AUTHORITY AND
ECONOMIC DEVELOPMENT CORPORATION
By
Authorized Issuer
Representative
WPPJDC/2557
Exhibit 4-5.14
TRUST INDENTURE
between
RHODE ISLAND PORT AUTHORITY
AND ECONOMIC DEVELOPMENT CORPORATION
and
RHODE ISLAND HOSPITAL TRUST NATIONAL BANK
as Trustee, Paying Agent, Tender Agent and Bond Registrar
Dated as of January 1, 1994
$7,925,000
Rhode Island Port Authority
and Economic Development Corporation
Electric Energy Facilities
Revenue Refunding Bonds
(Newport Electric Corporation Project - 1994 Series)
This instrument was prepared by:
TILLINGHAST COLLINS & GRAHAM
One Old Stone Square
Providence, Rhode Island 02903
Telephone: (401) 456-1200
Fax: (401) 456-1210
TRUST INDENTURE
TABLE OF CONTENTS
(The Table of Contents for this Trust Indenture
is for convenience of reference only and is not
intended to define, limit or describe the scope
or intent of any provisions of this Trust Indenture)
PAGE
PARTIES 1
ARTICLE I
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 101. Definitions . . . . . . . . . . . . . . . . 6
Section 102. Certain Rules of Interpretation . . . . . . 20
ARTICLE II
THE BONDS
Section 201. Authorized Amount of Bonds. . . . . . . . . 22
Section 202. Issuance of Bonds . . . . . . . . . . . . . 22
Section 203. Execution . . . . . . . . . . . . . . . . . 25
Section 204. Authentication. . . . . . . . . . . . . . . 25
Section 205. Form of Bonds . . . . . . . . . . . . . . . 26
Section 206. Delivery of Bonds . . . . . . . . . . . . . 26
Section 207. Mutilated, Lost, Stolen, Destroyed or
Untendered Bonds . . . . . . . . . . . 26
Section 208. Exchangeability and Transfer of Bonds;
Persons Treated as Owners. . . . . . . 27
Section 209. [Reserved]. . . . . . . . . . . . . . . . . 28
Section 210. Payment of Principal, Purchase Price,
Redemption Price and Interest;
Persons Entitled Thereto . . . . . . . 28
Section 211. Cancellation. . . . . . . . . . . . . . . . 30
Section 212. Limited Liability of Issuer; Immunity
of Members of Issuer . . . . . . . . . 30
Section 213. Company Bonds not Entitled to
Payment under Letter of Credit . . . . 31
PAGE
ARTICLE II-A
INTEREST RATES AND INTEREST RATE PERIODS
Section 201A. Initial Interest Rate; Interest Rates
Generally. . . . . . . . . . . . . . . 32
Section 202A. Rate Periods. . . . . . . . . . . . . . . . 32
Section 203A. Determination of Interest Rates . . . . . . 32
Section 204A. Notice of Interest Rates. . . . . . . . . . 37
Section 205A. [Reserved]. . . . . . . . . . . . . . . . . 37
Section 206A. The Fixed Rate. . . . . . . . . . . . . . . 37
Section 207A. Failure of Notices. . . . . . . . . . . . . 39
Section 208A. All Determinations Conclusive . . . . . . . 39
ARTICLE III
TENDER, PURCHASE AND REDEMPTION OF BONDS
Section 301. Optional Tenders for Purchase during
Weekly Rate Periods. . . . . . . . . . 40
Section 302. Mandatory Tenders for Purchase. . . . . . . 42
Section 303. Remarketing . . . . . . . . . . . . . . . . 44
Section 304. Purchase of Tendered Bonds. . . . . . . . . 44
Section 305. Inadequate Funds for Tenders. . . . . . . . 47
Section 306. Bonds Subject to Redemption . . . . . . . . 47
Section 307. Bank Bonds. . . . . . . . . . . . . . . . . 50
Section 308. Drawings on Credit Facility for Purchase
of Bonds . . . . . . . . . . . . . . . 52
Section 309. Trustee as Agent of Company . . . . . . . . 53
ARTICLE IV
[RESERVED]
ARTICLE V
GENERAL AGREEMENTS
Section 501. Payment of Bonds. . . . . . . . . . . . . . 55
Section 502. Performance of Agreements; Issuer . . . . . 55
Section 503. Ownership . . . . . . . . . . . . . . . . . 55
Section 504. Recordation of Financing Statements . . . . 55
Section 505. [Reserved]. . . . . . . . . . . . . . . . . 55
Section 506. Priority of Pledge and Security Interest. . 55
Section 507. Rights Under Loan Agreement . . . . . . . . 56
Section 508. Issuer's Obligation not to Create a
General Liability. . . . . . . . . . . 56
PAGE
ARTICLE VI
BOND FUND
Section 601. Creation of the Bond Fund . . . . . . . . . 57
Section 602. Payments into the Bond Fund . . . . . . . . 57
Section 603. Use of Moneys in the Bond Fund. . . . . . . 58
Section 604. Non-presentment of Bonds at Final
Maturity . . . . . . . . . . . . . . . 60
Section 605. Moneys to Be Held in Trust. . . . . . . . . 61
Section 606. Payments to the Company and the Bank
from the Bond Fund . . . . . . . . . . 61
ARTICLE VII
PROJECT FUND AND REBATE FUND
Section 701. Creation of the Project Fund. . . . . . . . 63
Section 702. Disposition of Bond Proceeds. . . . . . . . 63
Section 703. Disbursements from the Project Fund . . . . 63
Section 704. Creation of the Rebate Fund . . . . . . . . 64
Section 705. Payments into the Rebate Fund . . . . . . . 64
Section 706. Disbursements from the Rebate Fund. . . . . 64
ARTICLE VIII
BOND PURCHASE FUND
Section 801. Creation of the Bond Purchase Fund. . . . . 66
Section 802. Payments Into the Bond Purchase Fund. . . . 66
Section 803. Use of Moneys in the Bond Purchase Fund . . 67
Section 804. Moneys to be Held in Trust. . . . . . . . . 68
Section 805. Payments to the Company and the Bank
from the Bond Purchase Fund. . . . . . 68
ARTICLE IX
LETTER OF CREDIT
Section 901. Delivery of Letter of Credit. . . . . . . . 70
Section 902. Letter of Credit Drawings . . . . . . . . . 72
Section 903. Disposition of Moneys Drawn Under
Letter of Credit . . . . . . . . . . . 73
Section 904. Alternate Credit Facility . . . . . . . . . 74
PAGE
ARTICLE IX-A
Section 901A. Delivery of Fixed Rate Credit Facility. . . 76
Section 902A. Fixed Rate Credit Facility Drawing. . . . . 76
Section 903A. Disposition of Moneys Drawn Under
Fixed Rate Credit Facility . . . . . . 77
Section 904A. Alternate Fixed Rate Credit Facility. . . . 77
ARTICLE X
INVESTMENTS
Section 1001. Bond Fund Investments . . . . . . . . . . . 79
Section 1002. Project Fund Investments. . . . . . . . . . 79
Section 1003. Rebate Fund Investment. . . . . . . . . . . 80
Section 1004. Bond Purchase Fund Investments. . . . . . . 81
ARTICLE XI
DISCHARGE OF LIEN
Section 1101. Discharge of Lien and Security Interests. . 82
Section 1102. Provision for Payment of Bonds. . . . . . . 82
Section 1103. Discharge of the Indenture. . . . . . . . . 83
ARTICLE XII
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS
Section 1201. Defaults; Events of Default . . . . . . . . 84
Section 1202. Acceleration. . . . . . . . . . . . . . . . 85
Section 1203. Other Remedies. . . . . . . . . . . . . . . 85
Section 1204. Rights of Bondholders . . . . . . . . . . . 86
Section 1205. Right of Bondholders and Bank to Direct
Proceedings. . . . . . . . . . . . . . 86
Section 1206. Application of Moneys . . . . . . . . . . . 86
Section 1207. Rights and Remedies Vested in the Trustee . 88
Section 1208. Rights and Remedies of Bondholders. . . . . 89
Section 1209. Termination of Proceedings. . . . . . . . . 89
Section 1210. Waivers of Events of Default. . . . . . . . 90
Section 1211. Notice of Defaults; Opportunity of Issuer
and Company to Cure Defaults . . . . . 91
PAGE
ARTICLE XIII
THE TRUSTEE, PAYING AGENT AND CO-PAYING AGENT,
BOND REGISTRAR, CO-BOND REGISTRAR
Section 1301. Acceptance of the Trusts. . . . . . . . . . 93
Section 1302. Fees, Charges, Expenses and
Indemnification of Trustee . . . . . . 97
Section 1303. Notice to Bondholders and the Bank If
Default Occurs . . . . . . . . . . . . 97
Section 1304. Intervention by Trustee . . . . . . . . . . 98
Section 1305. Successor Trustee . . . . . . . . . . . . . 98
Section 1306. Resignation by the Trustee. . . . . . . . . 98
Section 1307. Removal of the Trustee. . . . . . . . . . . 99
Section 1308. Appointment of Successor Trustee by the
Bondholders; Temporary Trustee . . . . 99
Section 1309. Concerning Any Successor Trustee. . . . . . 99
Section 1310. Right of Trustee to Pay Taxes and
Other Charges. . . . . . . . . . . . . 100
Section 1311. Trustee Protected in Relying Upon
Resolutions, etc.. . . . . . . . . . . 101
Section 1312. Successor Trustee as Custodian of Funds . . 101
Section 1313. Trust Estate May Be Vested in Co-Trustee. . 101
Section 1314. Filing of Certain Continuation Statements . 102
Section 1315. Paying Agent; Co-Paying Agent . . . . . . . 102
Section 1316. Qualifications of Paying Agent and
Co-Paying Agent; Resignation; Removal. 103
Section 1317. Remarketing Agent . . . . . . . . . . . . . 104
Section 1318. Qualifications of Remarketing Agent;
Resignation; Removal . . . . . . . . . 104
Section 1319. Bond Registrar; Co-Bond Registrar . . . . . 105
Section 1320. Qualifications of Bond Registrar and Co-
Bond Registrar; Resignation; Removal . 105
Section 1321. Several Capacities. . . . . . . . . . . . . 106
ARTICLE XIV
MEETINGS OF BONDHOLDERS
Section 1401. Purposes for Which Bondholders' Meetings
May Be Called. . . . . . . . . . . . . 107
Section 1402. Place of Meetings of Bondholders. . . . . . 107
Section 1403. Call and Notice of Bondholders' Meetings. . 107
Section 1404. Persons Entitled to Vote at Bondholders'
Meetings . . . . . . . . . . . . . . . 108
Section 1405. Determination of Voting Rights; Conduct
and Adjournment of Meetings. . . . . . 108
PAGE
Section 1406. Counting Votes and Recording Action of
Meetings . . . . . . . . . . . . . . . 109
Section 1407. Revocation by Bondholders . . . . . . . . . 110
ARTICLE XV
SUPPLEMENTAL INDENTURES
Section 1501. Supplemental Indentures Not Requiring
Consent of Bondholders . . . . . . . . 111
Section 1502. Supplemental Indentures Requiring
Consent of Bondholders . . . . . . . . 112
Section 1503. Trustee Authorized to Join in Supplements;
Reliance on Counsel. . . . . . . . . . 113
Section 1504. Approval of Bank, etc.. . . . . . . . . . . 113
ARTICLE XVI
AMENDMENT OF LOAN AGREEMENT
Section 1601. Amendments, etc., to Loan Agreement Not
Requiring Consent of Bondholders . . . 114
Section 1602. Amendments, etc. to Loan Agreement Requiring
Consent of Bondholders . . . . . . . . 114
Section 1603. Trustee Authorized to Join in Amendments;
Reliance on Counsel. . . . . . . . . . 115
Section 1604. Approval of Bank, etc.. . . . . . . . . . . 115
ARTICLE XVII
MISCELLANEOUS
Section 1701. Consents, etc. of Bondholders . . . . . . . 116
Section 1702. Limitation of Rights. . . . . . . . . . . . 116
Section 1703. Severability. . . . . . . . . . . . . . . . 117
Section 1704. Notices . . . . . . . . . . . . . . . . . . 117
Section 1705. Payments Due on Saturdays, Sundays and
Holidays . . . . . . . . . . . . . . . 118
Section 1706. Counterparts. . . . . . . . . . . . . . . . 118
Section 1707. Laws Governing Indenture. . . . . . . . . . 118
Section 1708. References to Bank. . . . . . . . . . . . . 118
Section 1709. Limited Liability; Immunity of Directors
of the Issuer. . . . . . . . . . . . . 118
Section 1710. Resolution of Conflicts . . . . . . . . . . 119
Section 1711. Notice to Rating Agencies . . . . . . . . . 119
EXHIBIT A - LETTER OF REPRESENTATIONS TO DTC
EXHIBIT B - FORMS OF BOND
TRUST INDENTURE
THIS TRUST INDENTURE (this "Indenture"), dated as of
January 1, 1994, made and entered into by and between the RHODE
ISLAND PORT AUTHORITY AND ECONOMIC DEVELOPMENT CORPORATION (the
"Issuer"), a public corporation, governmental agency and public
instrumentality of the State of Rhode Island, and Rhode Island
Hospital Trust National Bank (the "Trustee"), a national
banking association organized and existing under and by virtue
of the laws of the United States, having power and authority to
accept and execute trusts, and having a principal corporate
trust office in Canton, Massachusetts as Trustee, Paying Agent,
Tender Agent and Bond Registrar;
W I T N E S S E T H:
WHEREAS, the Issuer is authorized and empowered by the
provisions of Chapter 64 of Title 42 of the General Laws of
Rhode Island, 1956 (1993 Reenactment), as supplemented and
amended (the "Act"), to construct, acquire, own, repair,
develop, operate, maintain, extend, improve, rehabilitate,
renovate, furnish and equip port projects including any real or
personal property designed, intended or utilized for
generating, manufacturing, producing, storing, transmitting,
distributing, delivering or furnishing natural or manufactured
gas, steam, electrical or nuclear energy, heat, light or power
directly or indirectly to or for any project user or for the
public; and
WHEREAS, in accordance with its resolutions adopted
July 19, 1982 and August 24, 1982, and in furtherance of the
purposes of the Act, the Issuer issued its Electric Energy
Facilities Revenue Bonds (Newport Electric Corporation Project)
Series 1982 A in the principal amount of $6,200,000 (the
"Series 1982 A Bonds") and Series 1982 B in the principal
amount of $1,800,000 (the "Series 1982 B Bonds") pursuant to a
Trust Indenture dated as of September 1, 1982 by and between
the Issuer and Industrial National Bank, now known as Fleet
National Bank ("Fleet"), as trustee (the "Original Indenture");
and
WHEREAS, the Issuer loaned the proceeds of the Series
1982 A Bonds and the Series 1982 B Bonds to Newport Electric
Corporation (the "Company"), a corporation organized under the
laws of the State of Rhode Island with its principal place of
business in the Town of Middletown, Rhode Island pursuant to a
Loan Agreement, dated as of September 1, 1982 (the "Original
Agreement") by and between the Issuer and the Company, and the
Company accepted the proceeds of the Series 1982 A Bonds and the Series 1982 B
Bonds from the Issuer upon the terms and
conditions set forth in the Original Agreement; and
WHEREAS, the Company used the proceeds of the Series
1982 A and Series 1982 B Bonds to finance, in part, the
acquisition and installation of various machinery, equipment
and fixtures to be used to improve and expand the capacity of
the Company to generate, transmit and distribute electricity in
the City of Newport and the Towns of Jamestown, Middletown, and
Portsmouth, Rhode Island (the "Project"); and
WHEREAS, in accordance with the Company's request, and
a resolution of the Issuer adopted November 28, 1988, the
Issuer issued its Electric Energy Facilities Revenue Bonds
(Newport Electric Corporation Project) Series 1988 (the "Series
1988 Bonds") in the principal amount of $1,880,000 pursuant to
the First Supplemental Indenture, dated as of December 1, 1988
by and between the Issuer and Fleet, as trustee (the "First
Supplemental Indenture") to refund the Series 1982 B Bonds; and
WHEREAS, the Company has requested, and the Issuer has
agreed in accordance with resolutions adopted October 25, 1993,
and November 29, 1993 to issue, pursuant to and upon the terms
and conditions contained in this Indenture its Electric Energy
Facilities Revenue Refunding Bonds (Newport Electric
Corporation Project - 1994 Series) in the principal amount of
$7,925,000 (hereinafter referred to as the "Bonds") to refund
the Series 1982 A Bonds and the Series 1988 Bonds (the
"Outstanding Bonds"); and
WHEREAS, the execution and delivery of this Indenture
and issuance of the Bonds under the Act have been in all
respects duly and validly authorized by resolution duly passed
and approved by the Issuer; and
WHEREAS, the Issuer and the Company will enter into a
Loan Agreement, dated as of January 6, 1994 (the "Loan
Agreement"), under the terms of which the Issuer will use the
proceeds of the sale of the Bonds to refund and replace the
Outstanding Bonds and the Company will make loan payments
sufficient to pay the principal and purchase price of, and the
redemption premium (if any) and the interest on, the Bonds as
the same become due and payable and to pay certain
administrative expenses in connection with the Bonds; and
WHEREAS, the Bonds shall be special obligations of the
Issuer, payable solely out of the revenues or other receipts,
funds or monies of the Issuer pledged therefor and shall not
constitute nor give rise to a pecuniary liability or a charge
against the general credit of the Issuer; and
WHEREAS, as security for the payment of the Bonds, the
Issuer has agreed to assign and pledge to the Trustee all
right, title and interest of the Issuer in (a) the Loan
Agreement (except certain rights reserved by the Issuer under
the terms of this Indenture), together with the Loan Agreement
itself, and (b) the "Pledged Revenues" (hereinafter defined);
and
WHEREAS, Canadian Imperial Bank of Commerce, a bank
duly organized and validly existing under the laws of Canada
and acting by and through its New York Agency (the "Bank"), has
agreed, subject to certain conditions specified in the
Reimbursement Agreement hereinafter defined, to issue an
irrevocable Letter of Credit on the date of the initial
delivery of the Bonds (the "Letter of Credit"), in favor of the
Trustee, for the account of the Company, obligating the Bank to
pay to the Trustee for the periods described therein upon
request and in accordance with the terms thereof, up to (a) an
aggregate amount not exceeding $7,925,000 for the payment of
principal or that portion of the Purchase Price or Redemption
Price of the Bonds corresponding to principal of the Bonds and
(b) an aggregate amount not exceeding $107,500 for the payment
of interest or that portion of the Purchase Price or Redemption
Price of the Bonds corresponding to interest on the Bonds
(being an amount equal to interest accruing on the Bonds for a
period of 45 days, calculated at an assumed rate of 11% on the
basis of a 365-day year).
WHEREAS, the Bank and the Company will enter into a
Reimbursement Agreement dated January 6, 1994 (the
"Reimbursement Agreement"), under the terms of which the
Company will agree to reimburse the Bank for all amounts drawn
by the Trustee under the Letter of Credit, together with any
interest due on such amounts; and
WHEREAS, in order to provide for the purchase of the
Bonds authorized and issued pursuant to the authority of this
Indenture which may be tendered by Registered Owners from time
to time as more fully described herein, the Company has
appointed and the Issuer has approved Goldman, Sachs & Co., New
York, New York, to initially serve as Remarketing Agent for the
purpose of remarketing any tendered Bonds and adjusting the
interest rates thereon in accordance with the procedures set
forth herein; and
WHEREAS, all things necessary to make the Bonds, when
authenticated by the Trustee and issued and delivered as in
this Indenture provided, the legal, valid, binding and
enforceable special obligations of the Issuer, according to the
import thereof, and to create a valid assignment and pledge of
the Pledged Revenues to the payment of the principal of, and
the redemption premium (if any) and the interest on, the Bonds
and a valid assignment of certain of the rights, title and
interest of the Issuer in the Loan Agreement, have been done
and performed, and the execution and delivery of this Indenture
and the execution, issuance and delivery of the Bonds, subject
to the terms hereof, have in all respects been authorized;
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS
INDENTURE WITNESSETH:
That the Issuer, in consideration of the premises and
of the acceptance by the Trustee of the trusts hereby created,
and of the purchase and acceptance of the Bonds by the holders
thereof, and of the sum of TEN DOLLARS ($10.00), lawful money
of the United States of America, to it paid by the Trustee, at
or before the execution and delivery of these presents, and for
other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, in order to
secure the payment of the principal of, and the redemption
premium (if any) and the interest on, the Bonds and all other
amounts payable by the Issuer pursuant to the terms of the
Bonds and/or this Indenture according to their tenor and effect
and to insure the performance and observance by the Issuer of
all the agreements expressed or implied herein and in the
Bonds, has given, granted, assigned, pledged, conveyed,
mortgaged and transferred and does by these presents give,
grant, assign, pledge, convey, mortgage and transfer to the
Trustee, and to its successors in the trusts hereby created,
and to them and their assigns forever:
GRANTING CLAUSE I.
All right, title and interest of the Issuer in the
Loan Agreement, together with the Loan Agreement itself, and
all amendments, modifications and renewals thereof, reserving,
however, the rights of the Issuer under Sections 5.6, 6.5, 6.6,
8.2 and 10.4 of the Loan Agreement.
GRANTING CLAUSE II.
All right, title and interest of the Issuer in the
Pledged Revenues.
TO HAVE AND TO HOLD all the same with all privileges
and appurtenances hereby given, granted, assigned, pledged,
conveyed, mortgaged and transferred, or agreed or intended so
to be to the Trustee and its successors in said trusts and to
them and their assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts
herein set forth, for the equal and proportionate benefit,
security and protection of all holders of the Bonds issued or
to be issued under and secured by this Indenture, without
preference, priority or distinction as to lien or otherwise of
any of the Bonds over any of the others except as herein
expressly provided;
IT BEING, HOWEVER, UNDERSTOOD, that the Issuer, has no
right, title and interest in the Letter of Credit (which will
be issued and delivered by the Bank directly to the Trustee for
the account of the Company) or in any of the proceeds of any
drawing thereunder; there shall not be subject to the lien of
this Indenture any proceeds of any drawing (or deemed drawing)
under the Letter of Credit or any monies in the Credit Facility
Account in the Bond Fund or the Bond Purchase Fund, or the
Fixed Rate Credit Facility Account in the Bond Fund but the
Letter of Credit, such proceeds and such monies shall be held
by the Trustee hereunder in trust solely for the benefit of the
owners of the Bonds, subject, however, to the provisions of
Sections 606(b) and 805(c);
PROVIDED, HOWEVER, that when the principal of, the
redemption premium (if any) and the interest on, all of the
Bonds secured hereby have been paid or shall be deemed to have
been paid in accordance with the terms and provisions of this
Indenture, and the other conditions specified in Section 1101
hereof shall have been satisfied, then this Indenture and the
rights hereby granted shall cease, determine and be voided;
otherwise, this Indenture shall be of full force and effect.
THIS INDENTURE FURTHER WITNESSETH and it is expressly
declared that all Bonds issued and secured hereunder are to be
issued, authenticated and delivered and all property hereby
given, granted, assigned, pledged, conveyed, mortgaged or
transferred is to be dealt with and disposed of under, upon and
subject to the terms, conditions, stipulations, agreements,
trusts, uses and purposes as hereinafter expressed, and the
Issuer has agreed and does hereby agree with the Trustee and
with the respective holders, from time to time, of the Bonds or
any part thereof, as follows:
ARTICLE I.
DEFINITIONS AND CERTAIN RULES OF INTERPRETATION
Section 101. Definitions. In addition to the words
and terms elsewhere defined herein, the following words and
terms as used herein shall have the following meanings unless
the context or use clearly indicates another or different
meaning or intent, and any other words and terms defined in the
Loan Agreement and the Tax Regulatory Agreement, hereinafter
defined, shall have the same meanings as assigned to them in
the Loan Agreement and the Tax Regulatory Agreement unless when
used herein the context or use clearly indicates another or
different meaning or intent:
"Accrued Interest Account" means the separate account
of that name established in the Bond Fund created pursuant to
Section 601 hereof to hold the accrued interest on the Bonds
paid by the purchasers thereof;
"Act" means Chapter 64 of Title 42 of the General Laws
of the State of Rhode Island, 1956 (1993 Reenactment), as
amended and supplemented;
"Act of Bankruptcy" means: (i) the Company shall
commence a voluntary case under the federal bankruptcy laws, or
shall become insolvent or unable to pay its debts as they
become due, or shall make an assignment for the benefit of
creditors, or shall apply for, consent to, or acquiesce in the
appointment of, or taking possession by, a trustee, receiver,
custodian or similar official or agent for itself or any
substantial part of its property; (ii) a trustee, receiver,
custodian or similar official or agent shall be appointed for
the Issuer or the Company or for any substantial part of its
property, and such trustee, receiver, custodian or similar
official shall not be discharged within sixty (60) days; or
(iii) to the extent permitted under applicable law, the Issuer
or the Company shall have an order or decree for relief in an
involuntary case under the federal bankruptcy laws entered
against it, or a petition seeking reorganization, readjustment,
arrangement, composition, or other similar relief under the
federal bankruptcy laws or any similar law for the relief of
debtors shall be brought against it to the extent such
proceeding shall not be discharged within sixty (60) days;
"Additional Credit Facility" means any direct-pay
letter of credit or other credit enhancement or support
facility delivered to the Trustee pursuant to Article IX to pay
any portion of the principal or redemption or Purchase Price
of, or interest on, the Bonds while another Credit Facility is
then in effect;
"Administrative Expenses" means (i) a percentage
administrative fee, if any, set by vote of the Board of
Directors of the Issuer, in no case to exceed 1/8 of 1% per
year of the principal amount of the Bonds outstanding, and (ii)
the reasonable and necessary expenses incurred by the Issuer
with respect to the Loan Agreement and this Indenture;
"Alternate Credit Facility" means any direct-pay
letter of credit, or irrevocable Letter of Credit delivered to
the Trustee in accordance with Section 5.5 of the Loan
Agreement, or other credit enhancement or support facility
delivered to the Trustee pursuant to Section 904 (other than an
Additional Credit Facility) and may include any combination of
such facilities which may be issued in substitution for the
previous Credit Facility or at its expiration, and shall
include any extension of the Letter of Credit;
"Alternate Fixed Rate Credit Facility" means any
direct pay letter of credit delivered to the Trustee pursuant
to Section 904A and may include any combination of such
facilities in substitution for the previous Fixed Rate Credit
Facility or at its expiration, and shall include any extension
of the Fixed Rate Credit Facility;
"Assumed L C Rate" means, with respect to a Credit
Facility which is a letter of credit, the maximum rate of
interest on the Bonds used to compute the stated amount of such
letter of credit, such rate being initially the Maximum Rate;
"Authorized Company Representative" means Authorized
Company Representative as defined in the Loan Agreement;
"Authorized Issuer Representative" means Authorized
Issuer Representative as defined in the Loan Agreement;
"Bank" means Canadian Imperial Bank of Commerce, in
its capacity as the issuer of the Letter of Credit, its
successors in such capacity and their assigns, and upon the
issuance of any Alternate Credit Facility, the issuer of such
Alternate Credit Facility. "Principal Office" of the Bank,
means the principal office of Canadian Imperial Bank of
Commerce, which office at the date of issuance and delivery of
the Bonds is located at 425 Lexington Avenue, New York, New
York 10017, and upon issuance of any Alternate Credit Facility,
"Principal Office" of the Bank means the principal office of
the issuer of such Alternate Credit Facility;
"Bank Bonds" means all Bonds purchased pursuant to the
Indenture with the proceeds from a Draft (as defined in the
Reimbursement Agreement) made under the Letter of Credit;
"Beneficial Owner" means any person who acquires
beneficial ownership interest in a bond held by the
Depository. In determining the Beneficial Owner of any Bond,
the Trustee and the Remarketing Agent may rely exclusively upon
written representations made and information given to the
Trustee, or the Remarketing Agent by the Depository or its
Participants with respect to any Bond held by the Depository in
which a beneficial ownership is claimed;
"Bond Counsel" means a firm of nationally recognized
attorneys at law experienced in the financing of facilities for
non-exempt persons through the issuance of tax-exempt revenue
bonds under Section 103(b) of the Code and reasonably
acceptable to the Issuer;
"Bond Fund" means the Bond Fund created by Section 601
in which there shall be established a Company Payments Account,
an Accrued Interest Account, a Credit Facility Account and, if
applicable, a Fixed Rate Credit Facility Account;
"Bond Purchase Fund" means the Bond Purchase Fund
created pursuant to Section 801 and within which there shall be
established a Company Payments Account, a Remarketing Account
and a Credit Facility Account;
"Bond Registrar" means the Trustee and any successor
Trustee appointed and serving in such capacity pursuant to this
Indenture. "Principal Office" of the Bond Registrar means the
principal corporate trust office of the Trustee, which is Rhode
Island Hospital Trust National Bank, located at 150 Royall
Street, Canton, Massachusetts 02021, and with respect to any
successor Bond Registrar, appointed and serving in such
capacity pursuant to this Indenture, the principal office of
such successor Bond Registrar designated in writing to the
Issuer, the Company, the Trustee, the Bank, the Paying Agent,
any Co-Paying Agent;
"Bondholder" or "holder" or "owner" of the Bonds means
the registered owner of any Bonds as shown on the registration
books maintained by the Bond Registrar;
"Bonds" means any and all of the Rhode Island Port
Authority and Economic Development Corporation Electric Energy
Facilities Revenue Refunding Bonds (Newport Electric
Corporation Project - 1994 Series) in the aggregate principal
amount of $7,925,000, to be issued by the Issuer under this
Indenture;
"Bond Year" means the period from the date of original
issue of the Bonds through and including the date immediately
preceding the first anniversary of such date of original issue,
and each succeeding twelve-month period thereafter;
"Business Day" means a day of the year, other than a
Saturday or Sunday, on which banks are not required or
authorized to close in New York, New York; Atlanta, Georgia or
in the state in which the Principal Office of the Trustee, or
the Principal Office of the Company, the Paying Agent or the
Remarketing Agent is located and the New York Stock Exchange is
open;
"Code" means the Internal Revenue Code of 1954, as in
effect on September 9, 1982, and such provisions of the
Internal Revenue Code of 1986, as amended, as apply to the
Bonds;
"Company" means Newport Electric Corporation, a Rhode
Island corporation, its successors and assigns, and any
surviving, resulting or transferee corporation as permitted
under Section 8.3 of the Loan Agreement. "Principal Office" of
the Company means the principal office of the Company, which
office at the date of issuance and delivery of the Bonds is
located at Middletown, Rhode Island 02840;
"Company Bonds" means any Bond or Bonds owned by, or
held for the benefit of, the Company, or any parent company of
the Company owning at least a majority of the securities of the
Company having ordinary voting power for the election of
directors (the "Parent Company"), or any Subsidiary of the
Company or the Parent Company or any insider as such term is
defined under the federal Bankruptcy Code or guarantor (which
Subsidiaries, Parent Company, insiders or guarantors are
collectively referred to herein as "Affiliates"), including,
without limitation, any Bonds which have been purchased by the
Trustee hereunder for the account of the Company as described
in Section 309;
"Company Payments Account" means the separate account
of that name established in the Bond Fund with the Trustee
pursuant to Section 601 and as the context requires, the
separate account of that name established in the Bond Purchase
Fund with the Trustee pursuant to Section 801;
"Conversion Date" means (a) when used with respect to
the Fixed Rate Period, the Fixed Rate Conversion Date, (b) when
used with respect to the Flexible Rate Period, the Flexible
Rate Conversion Date, (c) when used with respect to the Weekly
Rate Period, the Weekly Rate Conversion Date. Each Conversion
Date shall be an Interest Payment Date;
"Counsel" means an attorney, or firm thereof, admitted
to practice law before the highest court for any state in the
United States of America or the District of Columbia;
"Credit Facility" means the Letter of Credit, any
Alternate Credit Facility, any Additional Credit Facility,
Fixed Rate Credit Facility, or Alternate Fixed Rate Credit
Facility delivered to the Trustee hereunder;
"Credit Facility Account" means the separate account
of that name established in the Bond Fund with the Trustee
pursuant to Section 601 to hold proceeds of drawings on the
Letter of Credit to pay principal of and interest on the Bonds
or the separate account of that name established in the Bond
Purchase Fund with the Trustee pursuant to Section 801;
"Credit Facility Issuer" means the Bank with respect
to the Letter of Credit or the institution issuing any
Alternate Credit Facility, Additional Credit Facility, or Fixed
Rate Credit Facility Provider and for purposes of giving any
consent, approval, acceptance, instructions or similar
direction hereunder and under the Loan Agreement, shall include
any financial institution acting as agent for any Credit
Facility Issuer.
"Date of Issuance" means the date of original issuance
and delivery of the Bonds authorized hereunder;
"Default" means an event or condition the occurrence
of which would, with the lapse of time or the giving of notice
or both, become an Event of Default;
"Default Rate" means the rate of interest established
pursuant to Section 1.4(e) of the Reimbursement Agreement;
"Defeasance Obligations" means noncallable (i) United
States Government Obligations or (ii) evidence of ownership of
specified (book-entry) United States Government Obligations,
which United States Government Obligations are held by a bank
or trust company organized and existing under the laws of the
United States of America or any state thereof in the capacity
of custodian;
"Depository" means the Depository Trust Company, or
any other Depository appointed and serving in such capacity
pursuant to this Indenture. "Principal Office" of the
Depository means, with respect to the Depository Trust Company,
55 Water Street, 49th Floor, New York, New York 10041, or such
other office of the Depository designated in writing to the
Issuer, the Company, the Trustee, the Bank, the Paying Agent,
any Co-Paying Agent, the Bond Registrar and the Remarketing
Agent;
"Determination of Taxability" means (i) the enactment
of legislation or the adoption of final regulations or a final
decision, ruling or technical advice by any federal judicial or
administrative authority which has the effect of requiring
interest on the Bonds to be included in the gross income of the
holders for federal income tax purposes (other than a holder
who is a Substantial User of the Project or a Related Person),
(ii) the receipt by the Trustee of an opinion by Bond Counsel
selected by the Company to the effect that interest on the
Bonds is to be included in the gross income of the holders for
federal income tax purposes (other than a holder who is a
Substantial User of the Project or a Related Person), or
(iii) the failure to redeem the Series 1982 A and the Series
1988 Bonds as provided in Section 703 within ninety (90) days
after the date the Bonds are issued; provided that no decision
by any court or decision, ruling or technical advice by any
administrative authority shall be considered final unless the
holder involved in the proceeding or action giving rise to such
decision, ruling or technical advice (A) gives the Company, the
Bank, and the Trustee prompt written notice of the commencement
thereof, and (B) offers the Company the opportunity to control
the contest thereof, provided the Company shall have agreed to
bear all expenses in connection therewith and to indemnify the
holder against all periods for judicial review or appeal;
"DTC" means The Depository Trust Company, New York,
New York or any successor Depository for the Bonds;
"Effective Date" means, with respect to a Bond in the
Flexible and Weekly Modes, the date on which a new Rate Period
for the Bond takes effect;
"Electronic Notice" means notice transmitted through a
time-sharing terminal, if operative as between any two parties,
or if not operative, in writing, by facsimile transmission or
by telephone (promptly confirmed in writing or by facsimile
transmission);
"Event of Default" means the events specified in
Section 1201;
"Extraordinary Services" and "Extraordinary Expenses"
means all services rendered and all expenses incurred by the
Trustee under this Indenture other than Ordinary Services and
Ordinary Expenses;
"Financing Statements" means any and all financing
statements (including continuation statements) filed for record
from time to time to perfect the security interests created or
assigned in this Indenture;
"Fixed Rate" means a rate of interest on the Bonds
that is fixed for the remaining term of the Bonds;
"Fixed Rate Conversion Date" means the date upon which
the Fixed Rate first becomes effective for the Bonds;
"Fixed Rate Credit Facility" means the fixed rate
credit facility described in Section 901A hereof and, includes
any Alternate Fixed Rate Credit Facility upon the issuance
thereof;
"Fixed Rate Credit Facility Account" means the
separate account of that name established in the Bond Fund by
the Trustee pursuant to Section 601 to hold proceeds of
drawings on the Fixed Rate Credit Facility to pay principal of,
and premium, if any, and interest on Bonds bearing interest at
a Fixed Rate;
"Fixed Rate Credit Facility Reimbursement Agreement"
means the agreement between the Company and the Provider
pursuant to which the Fixed Rate Credit Facility is provided;
"Fixed Rate Mode" has the meaning set forth in the
form of Fixed Rate Bonds;
"Fixed Rate Period" means the period during which
Bonds bear interest at a Fixed Rate;
"Flexible Mode" has the meaning set forth in the form
of Flexible Bonds;
"Flexible Rate" means a rate of interest set by the
Remarketing Agent for the Flexible Rate Period;
"Flexible Rate Conversion Date" means the date on
which a Flexible Rate Mode for the Bonds takes effect;
"Flexible Rate Period" means as to any Bond, the
period of from one (1) to 270 days set by the Remarketing Agent
during which period the Bond shall bear interest at a Flexible
Rate, provided that no Flexible Rate Period may exceed the
maximum number of days of interest coverage under the Letter of
Credit or any substitute or replacement therefor, minus eight
(8) days;
"Government Obligations" means (a) direct obligations
of the United States of America for the payment of which the
full faith and credit of the United States of America is
pledged, or (b) obligations issued by a person controlled or
supervised by and acting as an instrumentality of the United
States of America, the payment of the principal of, premium, if
any, and the interest on which is fully guaranteed as a full
faith and credit obligation of the United States of America
(including any securities described in (a) or (b) issued or
held in book-entry form on the books of the Department of
Treasury of the United States of America), which obligations,
in either case, are not subject to redemption prior to maturity
at less than par by anyone other than the holder;
"Indenture" means this Trust Indenture, dated as of
January 1, 1994, between the Issuer and the Trustee, including
any indentures supplemental hereto;
"Interest Computation Period" means, with respect to
all Bonds in the Weekly Mode, each period prior to the
Conversion Date from and including Wednesday in each calendar
week to and including the Tuesday in the following calendar
week, except that the first Interest Computation Period shall
be the period from and including the date of initial
authentication and delivery of the Bonds to and including the
next Tuesday and the last Interest Computation Period shall be
the period from and including the Wednesday immediately prior
to September 1, 2011 to but not including September 1, 2011.
For each Bond in the Flexible Mode, "Interest Computation
Period" means each period from the Effective Date of the
Flexible Rate through to and including the last day of the Rate
Period selected for that Bond;
"Interest Determination Date" shall mean the first
Business Day preceding the first day of an Interest Computation
Period in the case of the Weekly Mode, the first day of an
Interest Computation Period in the case of the Flexible Mode
and the second Business Day preceeding the first day of the
Interest Computation Period in the case of Fixed Rate Mode;
"Interest Payment Date" means each date on which
interest is payable on the Bonds as provided in the forms of
Bond;
"Interest Period" means the period from and including
any Interest Payment Date to and including the day immediately
preceding the next following Interest Payment Date, as
applicable;
"Issuer" means the Rhode Island Port Authority and
Economic Development Corporation, a public corporation,
governmental agency and public instrumentality of the State,
duly organized and existing under the laws of the State, and
any body, board, authority, agency or other political
subdivision or instrumentality of the State which shall
hereafter succeed to the powers, duties, and functions thereof;
"Letter of Credit" means the irrevocable Letter of
Credit to be delivered by the Bank to the Trustee in accordance
with the Loan Agreement and the Reimbursement Agreement,
including any extensions or renewals thereof, or, upon issuance
of any Alternate Credit Facility, "Letter of Credit" means and
includes such Alternate Credit Facility;
"Letter of Representations" means the Letter of
Representations by the Issuer, Remarketing Agent, Tender Agent,
Paying Agent, Trustee and the Depository, and any amendments or
supplements thereto;
"Loan Agreement" means the Loan Agreement, dated as of
January 6, 1994, by and between the Issuer and the Company,
including any amendments thereto;
"Loan Term" means Loan Term as defined as defined in
the Loan Agreement;
"Mandatory Tender Date" means a Business Day on which
any Bonds subject to mandatory tender are purchased;
"Maximum Rate" means the maximum interest rate on the
Bonds, which rate is 11% per annum. The Maximum Rate for any
Bond may be increased at any time but not above 11% and
decreased on any Effective Date for Bonds in the Flexible Mode
or on any Conversion Date for Bonds in the Weekly Mode by the
Company filing with the Issuer and the Trustee a certificate
stating the new Maximum Rate. There may be more than one
Maximum Rate in effect from time to time, but there shall not
be more than one Maximum Rate for each Mode. In no event shall
an increase in a Maximum 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 Sections 5.3 and 5.4
of the Loan Agreement. In no event shall the Maximum Rate 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 Rate will not cause
interest on the Bonds to be included in gross income of the
owners thereof for federal income tax purposes;
"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, and the Fixed Rate Mode;
"Moody's" means Moody's Investors Service, Inc., a
corporation organized and existing under the laws of the State
of Delaware, its successors and their assigns, and if such
corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Issuer and approved
by the Remarketing Agent and the Company;
"Optional Tender Date" means a Business Day not prior
to the seventh day next-succeeding the date of delivery of an
Optional Tender Notice as herein defined which date the Bonds
so tendered shall be purchased pursuant to an optional tender
in the form of Weekly Bonds;
"Optional Tender Notice" means a written notice of the
Registered Owners of Bonds bearing interest at Weekly Rates of
their election to have their Bonds (or portions thereof)
purchased at the applicable Purchase Price;
"Ordinary Services" and "Ordinary Expenses" means
those services normally rendered and those expenses normally
incurred by a trustee under instruments similar hereto,
including, but not limited to, counsel fees and expenses;
"Outstanding or outstanding", when used with reference
to the Bonds at any date as of which the amount of outstanding
Bonds is to be determined, means all Bonds which have been
authenticated and delivered by the Trustee hereunder, except:
(a) Bonds cancelled at or prior to such date;
(b) Bonds for the payment or redemption of which
sufficient money and/or Government Obligations meeting the
terms and conditions specified in Section 1102 shall have
been theretofore transferred or deposited into the Bond
Fund (whether upon or prior to the maturity or redemption
date of any such Bonds); provided that if such Bonds are to
be redeemed prior to the maturity thereof, notice of such
redemption shall have been given or arrangements
satisfactory to the Trustee shall have been made therefor,
or waiver of such notice satisfactory in form to the
Trustee shall have been filed with the Trustee;
(c) Bonds in lieu of which others have been
authenticated under Section 207 or 208;
(d) For purposes of any consent or other action to be
taken by the holders of a specified percentage of
outstanding Bonds hereunder, all Company Bonds; and
(e) Untendered Bonds for which there has been
irrevocably deposited in trust in the Bond Purchase Fund
moneys sufficient to pay the purchase price thereof
pursuant to Section 301 or 302;
"Paying Agent" and "Co-Paying Agent" means the Trustee
appointed and serving in such capacity pursuant to this
Indenture. "Principal Office" of the Paying Agent means the
principal corporate trust office of the Trustee, which is Rhode
Island Hospital Trust National Bank, 150 Royall Street, Canton,
Massachusetts 02021, or with respect to any Co-Paying Agent
appointed and serving in such capacity pursuant to this
Indenture, the principal office of such Co-Paying Agent
designated in writing to the Issuer, the Company, the Trustee,
the Bank, the Bond Registrar and the Remarketing Agent;
"Payment in full of the Bonds" specifically
encompasses the situations referred to in Section 1102;
"Permitted Investments" means (i) obligations of the
United States of America; (ii) obligations the principal of and
interest on which are guaranteed by the United States of
America; and (iii) obligations of agencies and
instrumentalities of the United States of America; (iv)
obligations the interest on which is excluded from gross income
under Section 103(a) of the Code, which obligations are rated
in one of the three highest debt rating categories of Moody's
or S&P; (v) certificates of deposit, bankers' acceptances or
repurchase agreements of the Trustee or banks and trust
companies organized under the laws of the United States of
America or any state thereof, having total assets of not less
than $500,000,000 and which maintain an active secondary market
for such certificates of deposit, provided that any repurchase
agreements shall be secured by obligations described in (i)
above; and (vi) shares of any money market fund that has at
least 85% of its assets invested in investments of the types
described in clauses (i), (ii) and (iii) above;
"Person" means any natural person, individual,
corporation, cooperative, joint venture, partnership, trust,
unincorporated organization, government or governmental body,
agency, political subdivision or other legal entity as in the
context may be appropriate;
"Pledge Agreement" means that certain Pledge Agreement
by and between the Company and the Bank attached as Exhibit D
to the Reimbursement Agreement;
"Pledged Revenues" means and shall include:
(a) the loan payments and other payments required to
be made by the Company under the Loan Agreement, except for
(i) payments to be made to the Trustee for services
rendered as Trustee under the Indenture and to the Bond
Registrar and Paying Agent for the Bonds, and (ii)
expenses, indemnification and other payments required to be
made pursuant to sections 5.6, 6.5, 6.6 and 10.4 thereof,
and (iii) payments required to be made into the Rebate Fund;
(b) all amounts on deposit from time to time in the
Bond Fund, subject to provisions of the Loan Agreement and
this Indenture permitting the application thereof for the
purposes and on the terms and conditions set forth therein
and herein;
(c) any proceeds which arise upon any disposition of
the Trust Estate; and
(d) any other revenues arising out of or in
connection with the Issuer's interest in the Project;
provided, however, that such terms shall not include any of the
proceeds of any drawing (or deemed drawing) under the Letter of
Credit or any moneys in the Credit Facility Account in the Bond
Fund or the Bond Purchase Fund or in the Fixed Rate Credit
Facility Account in the Bond Fund;
"Prime Rate" means the rate of interest announced from
time to time by the Trustee as its "prime rate". Changes in
the Prime Rate shall take effect on the date announced, unless
otherwise specified in the announcement;
"Project" means "Project" as defined on page 2 herein;
"Project Fund" means the Project Fund created pursuant
to Section 701 herein;
"Provider" means any financial institution providing a
Fixed Rate Credit Facility or Alternate Fixed Rate Credit
Facility pursuant to Article IX-A.
"Purchase Date" means, while the Bonds are in a
Flexible or Weekly 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 or Weekly Rate Bonds;
"Purchase Price" shall have the meanings set forth in
the forms of Flexible and Weekly Rate Bonds;
"Rate Period" or "Period" when used with respect to
any particular rate of interest for a Bond in the Flexible or
Weekly Mode, the period during which such rates of interest
determined for such Bond will remain in effect as described
herein;
"Rebate Fund" means the Rebate Fund created pursuant
to Section 704 herein;
"Record Date" means (i) for Weekly Mode, the close of
business on the Business Day immediately preceding the first
Business Day of each calendar month, (ii) for Flexible Mode,
the close of business on the first Business Day following the
last day of the Rate Period for that Bond; and (iii) for Fixed
Rate Mode, the fifteenth (15th) day (whether or not a Business
Day) of the month immediately preceding the applicable Interest
Payment Date;
"Redemption Price" means the principal of and premium,
if any of, plus accrued interest on, any Bond being redeemed;
"Registered Owner" means the Bondholder;
"Reimbursement Agreement" means the Reimbursement
Agreement by and between the Company and the Bank dated
January 6, 1994, including any amendments thereto and any other
Reimbursement Agreement by and between the Company and a Credit
Facility Issuer including a Fixed Rate Credit Facility
Reimbursement Agreement;
"Related Person" means Related Person as defined in
the Tax Regulatory Agreement;
"Remarketing Account" means the separate account of
that name established in the Bond Purchase Fund with the
Trustee pursuant to Section 801 to hold the proceeds of any
remarketing of the Bonds by the Remarketing Agent;
"Remarketing Agent" means the remarketing agent at the
time serving as such under the Remarketing Agreement, initially
Goldman, Sachs & Co.;
"Remarketing Agent's Agreement" means the Remarketing
Agent's Agreement dated January 5, 1994, among the Company and
the Remarketing Agent and approved by the Issuer, including any
amendments thereto;
"S&P" means Standard & Poor's Ratings Group, a
corporation organized and existing under the laws of the State
of New York, its successors and assigns, and, if such
corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, "S&P"
shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Issuer with the
approval of the Remarketing Agent and the Company;
"State" means the State of Rhode Island and Providence
Plantations;
"Stated Amount" means the Stated Amount as defined in
the Letter of Credit;
"Stated Termination Date" means the stated termination
date of the Letter of Credit. If the Letter of Credit is
extended, an Alternate Credit Facility is provided as described
in Section 904, a Fixed Rate Credit Facility is provided as
described in Section 901A, or an Alternate Fixed Rate Credit
Facility is provided as described in Section 904A, "Stated
Termination Date" means the expiration date of the Letter of
Credit as last so extended or the expiration date of such other
Credit Facility.
"Subsidiary" means any corporation at least a majority
of whose securities (other than directors' qualifying shares)
having ordinary voting power for the election of directors
(other than securities having such power only by reason of the
happening of a contingency) is at the time owned by another
corporation (the "parent") and/or one or more of the
Subsidiaries of the parent;
"Substantial User" means Substantial User as defined
in the Tax Regulatory Agreement;
"Tax Regulatory Agreement" means the Tax Regulatory
Agreement dated January 6, 1994, by and among the Company, the
Issuer and the Trustee, including any amendments thereto;
"Tender Agent" means the Trustee appointed and serving
in such capacity pursuant to this Indenture;
"Tendered Bonds" means all Bonds subject to purchase
at the election of the Registered Owner thereof and presented
to the Remarketing Agent for purchase;
"Test-Period Beneficiary" means Test-Period
Beneficiary as defined in the Tax Regulatory Agreement;
"Trustee" means Rhode Island Hospital Trust National
Bank, a national banking association organized and existing
under and by virtue of the laws of the United States, or any
co-trustee or successor trustee under this Indenture.
"Principal Office" of the Trustee means the principal corporate
trust office of Rhode Island Hospital Trust National Bank,
which office on the date of issuance and delivery of the Bonds
is located at 150 Royall Street, Canton, Massachusetts 02021,
Attention: Corporate Trust Division, and upon appointment of
any successor trustee under this Indenture, "Principal Office"
of the Trustee means the principal corporate trust office of
any such successor trustee;
"Trust Estate" means the property described in the
granting clauses hereof;
"U.C.C." means the Uniform Commercial Code of the
State, as now or hereafter amended;
"Untendered Bonds" shall have the meaning given to
such term in Section 207 hereof;
"Variable Rate" means, as the context requires, the
Weekly or Flexible Rate applicable from time to time on Bonds;
"Variable Rate Period" means each period during which
Bonds bear interest at a specific Variable Rate;
"Weekly Mode" has the meaning set forth in the form of
Weekly Bond;
"Weekly Rate" means the interest rate to be determined
for Bonds on a weekly basis pursuant to Section 203A hereof;
"Weekly Rate Conversion Date" means each day on which
the Bonds convert to the Weekly Mode from another mode pursuant
to Section 203A hereof; and
"Weekly Rate Period" means the period during which
Bonds bear interest at a Weekly Rate.
Section 102. Certain Rules of Interpretation. The
definitions set forth herein shall be equally applicable to
both the singular and plural forms of the words and terms
therein defined and shall cover all genders.
"Herein", "hereby", "hereunder", "hereof",
"hereinbefore", "hereinafter" and other equivalent words refer
to this Indenture and not solely to the particular Article,
Section or subdivision hereof in which such word is used.
Reference herein to an Article number (e.g., Article
IV) or a Section number (e.g., Section 702) shall be construed
to be a reference to the designated Article number or Section
number hereof unless the context or use clearly indicates
another or different meaning or intent.
ARTICLE II
THE BONDS
Section 201. Authorized Amount of Bonds. No Bonds
may be issued under the provisions of this Indenture except in
accordance with this Article. The total principal amount of
Bonds that may be issued hereunder is expressly limited to
$7,925,000.
Section 202. Issuance of Bonds.
(a) The Bonds (i) shall be designated "Rhode
Island Port Authority and Economic Development Corporation
Electric Energy Facilities Revenue Refunding Bonds (Newport
Electric Corporation Project - 1994 Series)", (ii) shall be
dated as of the date of issuance, (iii) shall be in the
aggregate principal amount of $7,925,000, (iv) shall mature
on September 1, 2011, and (v) shall bear interest at the
rate or rates set forth in Section 201A hereof.
While in the Flexible Mode and Weekly Mode, interest
on the Bonds shall be computed on the basis of actual days
elapsed, divided by 365 or 366, as appropriate. While in the
Fixed Rate Mode, interest on the Bonds shall be computed on the
basis of a 360-day year consisting of twelve (12) 30-day months.
Upon the execution and delivery hereof, the Issuer
shall execute the Bonds and deliver them to the Trustee for
initial authentication. On the Date of Issuance, at the
direction of the Issuer, the Trustee shall authenticate the
Bonds and deliver same to DTC, on behalf of the purchaser or
purchasers thereof. Unless the Issuer shall otherwise direct,
the Bonds shall each be lettered "R" and shall each be numbered
separately from 1 upward.
All Bonds bearing interest at Weekly Rates shall be
issued in denominations of $100,000 or whole multiples thereof,
with a single denomination of an additional $25,000. All Bonds
bearing interest at a Flexible Rate shall be issued in
denominations of $100,000 or any multiple of $1,000 in excess
of $100,000.
All Bonds bearing interest at the Fixed Rate shall be
issued in denominations of $5,000 or a whole multiple thereof.
(b) Registration of Bonds in Book-Entry Only System.
(i) The provisions of this Subsection shall
apply with respect to any Bond registered to Cede &
Co. or any other nominee of DTC while the Book-Entry
Only System, as defined from time to time by DTC, is
in effect.
(ii) The Bonds shall initially be issued in the
form of a separate single authenticated fully
registered bond in the amount of each separate stated
maturity of the Bonds. On the date of original
delivery thereof, the Bonds shall be registered in the
registry books of the Bond Registrar in the name of
Cede & Co., as nominee of DTC. With respect to Bonds
registered in the registry books kept by the Bond
Registrar, the Issuer, the Company, the Paying 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
and/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 thereof
pursuant to the arrangements for book entry
determination of ownership applicable to DTC)
including with regard to (A) the accuracy of the
records of DTC or any Participant with respect to any
ownership interest in the Bonds, (B) the delivery to
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 (C)
the payment to any Participant, any Beneficial Owner
or any other person, other than DTC, of any amount
with respect to the principal of 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 to fully
satisfy and discharge the Issuer's obligations with
respect to the principal of and premium, if any, and
interest on the Bonds to the extent of the sum or sums
so paid. No person other than DTC shall receive an
authenticated Bond evidencing the obligation of the
Issuer to make payments of principal of and premium,
if any, and interest pursuant to this Indenture. Upon
delivery by DTC to the Trustee of written notice to
the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., the words "Cede & Co."
in this Indenture shall refer to such new nominee of
DTC.
(iii) Upon receipt by the Issuer or the Trustee
of written notice from DTC to the effect that DTC is
unable or unwilling to discharge its responsibilities,
and communication of such notice to the Bond
Registrar, the Bond Registrar shall issue, transfer
and exchange Bonds as requested by DTC in appropriate
amounts, and whenever DTC requests the Issuer, the
Bond Registrar and the Paying Agent to do so, the
Issuer, the Bond Registrar and the Paying Agent will
cooperate with DTC in taking appropriate action after
reasonable notice (A) to arrange for a substitute bond
depository willing and able upon reasonable and
customary terms to maintain custody of the Bonds or
(B) to make available Bonds registered in whatever
name or names the Bondholders transferring or
exchanging Bonds shall designate, in accordance with
Subsection 202(c) below.
(iv) In the event the Issuer determines that it
is in the best interests of the Beneficial Owners that
they be able to obtain Bond certificates, the Issuer
may so notify DTC, the Paying Agent, the Bond
Registrar and the Trustee, whereupon DTC will notify
the Participants of the availability through DTC of
certificates for Bonds. In such event, the Bond
Registrar shall issue, transfer, and exchange
certificates for Bonds as requested by DTC in
appropriate amounts, and whenever DTC requests the
Issuer, the Paying Agent, the Bond Registrar, and the
Trustee to do so, the Trustee, the Bond Registrar, the
Paying Agent, and the Issuer will cooperate with DTC
in taking appropriate action after reasonable notice
to make available Bonds registered in whatever name or
names the Beneficial Owners transferring or exchanging
Bonds shall designate, in accordance with Subsection
202(c) below.
(v) Notwithstanding any other provision of this
Indenture to the contrary, so long as any Bond is
registered in the name of Cede & Co., as nominee of
DTC, all payments with respect to the principal of and
premium, if any, and interest on such Bond and all
notices with respect to such Bond shall be made and
given, respectively, to DTC as provided in the
Representation Letter, the form of which is included
as Exhibit A to this Indenture.
(vi) In connection with any notice or other
communication to be provided to Bondholders pursuant
to this Indenture by the Issuer or the Trustee with
respect to any consent or other action to be taken by
Bondholders, DTC shall consider the date of receipt of
notice of such consent or other action as the record
date for such consent or other action, provided that
the Issuer or the Trustee may establish a special
record date for such consent or other action. The
Issuer or the Trustee, as applicable, shall give DTC
notice of such special record date not less than 15
calendar days in advance of such special record date
to the extent possible.
(c) Non Book-Entry Only System for Bonds. In the
event that the Book-Entry Only System pursuant to
Subsection 202(b) is discontinued, the Bonds shall be
issued as certificates in fully registered form.
Section 203. Execution. The Bonds shall be executed
on behalf of the Issuer by the manual or facsimile signature of
its Chairman, Vice Chairman, Executive Director, Deputy
Director, Secretary, Assistant Secretary, Treasurer or their
designees and the Issuer's corporate seal shall be affixed
thereto or printed or otherwise reproduced thereon and attested
by the manual or facsimile signature of its Secretary or
Assistant Secretary, or their designees. If any officer of the
Issuer who shall have executed any Bond shall cease to be such
officer before the Bond so executed (by manual or facsimile
signature) shall be authenticated and delivered by the Trustee,
such Bond nevertheless may be authenticated and delivered as
though the person who executed such Bond had not ceased to be
such officer of the Issuer, and also any Bond may be executed
on behalf of the Issuer by such persons as at the actual time
of such execution of such Bond shall be the proper officers of
the Issuer, although at the date of such Bond such persons may
not have been officers of the Issuer.
Section 204. Authentication. Only such Bonds as
shall have endorsed thereon a certificate of authentication
substantially in the form hereinafter set forth executed by the
Trustee shall be entitled to any right or benefit hereunder.
No Bond shall be valid or obligatory for any purpose unless and
until such certificate of authentication shall have been
executed by the Trustee, as Bond Registrar, and such executed
certificate of the Trustee upon any such Bond shall be
conclusive evidence that such Bond has been authenticated and
delivered hereunder. Said certificate of authentication on any
Bond shall be deemed to have been executed by the Trustee if
signed by an authorized signatory of the Trustee, but it shall
not be necessary that the same signatory sign the certificate
of authentication on all of the Bonds issued hereunder.
Section 205. Form of Bonds. The Bonds, the
certificate of authentication, the form of assignment and the
schedule of payments on account of principal, if any, shall be
in substantially the forms attached hereto as Exhibit B with
such appropriate variations, omissions, substitutions and
insertions as are permitted or required hereby and may have
such letters, numbers or other marks of identification and such
legends and endorsements placed thereon, as may be required to
comply with any applicable laws or rules or regulations, or as
may, consistently herewith, be determined by the officers
executing such Bonds, as evidenced by their execution of the
Bonds.
Section 206. Delivery of Bonds. Upon the execution
and deliver of this Indenture, and satisfaction of the
condition established by the Issuer and in the Bond Purchase
Agreement for initial delivery of the Bonds, the Issuer shall
execute the Bonds and deliver them to the Trustee. Thereupon,
the Trustee shall authenticate the Bonds and the Trustee shall
deliver them to, or on the order of, the Purchaser, as directed
by the Issuer in accordance with this Section.
Before the Trustee delivers any Bonds, the Trustee
shall have received a written request and authorization to the
Trustee on behalf of the Issuer, signed by the Authorized
Issuer Representative, to have the Trustee authenticate the
Bonds and have the Trustee deliver the Bonds as directed by the
Issuer upon payment to the Trustee of the amount specified
therein (including without limitation, any accrued interest),
which amount shall be deposited as provided in this Indenture.
The Trustee, as authenticating agent hereunder, may
authenticate and deliver Bonds as directed by the Remarketing
Agent or the Issuer.
Section 207. Mutilated, Lost, Stolen, Destroyed or
Untendered Bonds. If any Bond is mutilated, lost, stolen or
destroyed, or if a Bond subject to mandatory tender or subject
to a notice of tender is not tendered at the appropriate time
(an "Untendered Bond"), then the Issuer may execute and the
Trustee (upon the receipt of a written authorization from the
Issuer) or the Paying Agent may cancel the old certificate,
authenticate and deliver a new Bond of the same maturity,
interest rate (if stated), aggregate principal amount and tenor
in lieu of and in substitution for the Bond mutilated, lost,
stolen, destroyed, or an Untendered Bond; provided that, in the
case of any mutilated Bond, such mutilated Bond shall first be
surrendered to the Trustee, and in the case of any lost, stolen
or destroyed Bond, there shall be first furnished to the
Trustee evidence satisfactory to it of the ownership of such
Bond and of such loss, theft or destruction, together with
indemnity satisfactory to it. If any such Bond shall have
matured or a redemption date pertaining thereto shall have
passed, instead of issuing a new Bond the Issuer may pay the
same without surrender thereof. The Issuer and the Trustee may
charge the holder of such Bond with their reasonable fees and
expenses in this connection.
In executing a new Bond and in furnishing the Trustee
with the written authorization to authenticate and deliver a
new Bond as provided for in this Section, the Issuer may rely
conclusively on a representation of the Trustee that the
Trustee is satisfied with the adequacy of the evidence
presented concerning the mutilation, loss, theft or destruction
of any Bond.
Section 208. Exchangeability and Transfer of Bonds;
Persons Treated as Owners. The ownership of each Bond shall be
recorded in the registration books of the Issuer, which books
shall be kept by the Bond Registrar at its Principal Office and
shall contain such information as the Trustee and Bond
Registrar shall deem appropriate for the administration of
their duties under this Indenture.
Any holder of a Bond, in person or by his duly
authorized attorney, may register the transfer of title to such
Bond on the books of registration kept by the Bond Registrar,
upon surrender of such Bond at the Principal Office of the Bond
Registrar, together with a written instrument of transfer (in
substantially the form of assignment attached to the Bond)
executed by such holder or his duly authorized attorney and
such other documents as the Bond Registrar may reasonably
require. Upon surrender for registration of transfer of any
Bond, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or
transferees a new Bond or Bonds of the same maturity, interest
rate, aggregate principal amount and tenor and of any
authorized denomination or denominations.
Bonds may be exchanged at the Principal Office of the
Bond Registrar for an equal aggregate principal amount of Bonds
of the same maturity, interest rate, aggregate principal amount
and tenor and of any authorized denomination or denominations.
The Issuer shall execute and the Trustee shall authenticate and
deliver Bonds which the Bondholder making the exchange is
entitled to receive, bearing numbers not contemporaneously then
outstanding.
Such registrations of transfers or exchanges of Bonds
shall be without charge to the holders of such Bonds, but any
taxes or other governmental charges required to be paid with
respect to the same shall be paid by the holder of the Bond
requesting such registration of transfer or exchange as a
condition precedent to the exercise of such privilege.
The Bond Registrar shall not be required to register
any transfer or exchange any Bond during the period following
any Record Date and preceding the related Interest Payment Date
of such Bond, or to register any transfer or exchange any Bond
after the giving of notice calling such Bond for redemption or
partial redemption has been made.
The person in whose name any Bond shall be registered
shall be deemed and regarded as the absolute owner thereof for
all purposes, and payment of or on account of either principal
or interest shall be made only to or upon the order of the
registered owner thereof or his duly authorized attorney, but
such registration may be changed as hereinabove provided. All
such payments shall be valid and effectual to satisfy and
discharge the liability upon such Bond to the extent of the sum
or sums so paid.
All Bonds issued upon any transfer or exchange of
Bonds shall be legal, valid and binding limited special
obligations of the Issuer, evidencing the same debt, and
entitled to the same security and benefits under this Indenture
as the Bonds surrendered upon such transfer or exchange.
In executing any Bond upon exchange or transfer
provided for in this Section, the Issuer may rely conclusively
on a representation of the Bond Registrar that such execution
is required.
Section 209. [Reserved]
Section 210. Payment of Principal, Purchase Price,
Redemption Price and Interest; Persons Entitled Thereto.
(a) The principal, Purchase Price, or Redemption
Price of each Bond shall be payable upon surrender of such
Bond at the Principal Office of Paying Agent. During any
Weekly or Flexible Rate Period, payments of Purchase Price
of the Bonds shall be payable in immediately available
funds by the Paying Agent by wire or bank transfer within
the continental United States to such accounts as specified
in the registration books of the Bond Registrar as of the
date of payment. During a Fixed Rate Period, payments of
principal or Redemption Price of the Bonds shall be payable
by check or draft in clearing house funds at the Principal
Office of the Paying Agent. Such payments shall be made to
the Registered Owner of the Bond so surrendered, as shown
on the registration books maintained by the Bond Registrar
on the date of payment or as assigned. The Purchase Price
or Redemption Price shall not include interest to the
extent that interest accrued to the Purchase Date or
redemption date is paid on or prior to the Purchase Date or
redemption date in accordance with subparagraph (b) below.
(b) Subject to the further provision of Article II-A
hereof, each Bond shall bear interest and be payable as to
interest as follows:
(i) Each Bond shall bear interest (at the
applicable rate determined pursuant to Article II-A
hereof), (A) from the date of authentication, if
authenticated on an Interest Payment Date to which
interest had been paid, or (B) from the last preceding
Interest Payment Date (or special Interest Payment
Date provided for in subparagraph (b) (iii) below) to
which interest has been paid or provided for (or from
the Date of Issuance of the Bonds if no interest
thereon has been paid or provided for) in all other
cases.
(ii) Subject to the provisions of subparagraph
(b) (iii) below, the interest due on any Bond on any
Interest Payment Date shall be paid to the Registered
Owner of such Bond as shown on the registration books
kept by the Bond Registrar on the Record Date. The
amount of interest so payable on any Interest Payment
Date shall be computed (1) on the basis of a 365 or
366-day, as applicable, year for the number of days
actually elapsed during Weekly and Flexible Rate
Periods, and (2) on the basis of a 360-day year of
twelve 30-day months during the Fixed Rate Period.
(iii) If the interest due on any Bond is not
paid in accordance with this Indenture on any Interest
Payment Date, the Record Date shall no longer be
applicable with respect to any such Bond. If
sufficient funds for the payment of such overdue
interest thereafter become available, the Paying Agent
shall immediately establish a special interest payment
date for the payment of the overdue interest and a
Special Record Date (which shall be a Business Day)
for determining the Registered Owners entitled to such
payments. Notice of each date so established shall be
mailed to each Registered Owner at least ten (10) days
prior to the Special Record Date, but not more than
thirty (30) days prior to the special interest payment
date. The overdue interest shall be paid on the
special interest payment date to the Registered
Owners, as shown on the registration books kept by the
Bond Registrar as of the close of business on the
Special Record Date.
All payments of interest on the Bonds shall be paid to the
Registered Owners entitled thereto pursuant to Section
210(b)(ii) or (iii) above, by wire or bank transfer in
immediately available funds in the continental United
States to the holders on the Record Date for Bonds in the
Weekly Mode, or by check or draft in clearing house funds
to the holders on the Record Date for Bonds in the Fixed
Rate Mode. Interest on Bonds in the Flexible Mode will be
paid only as part of the Purchase Price as described in
Section 210(a) above.
Section 211. Cancellation. All Bonds which have been
surrendered for the purpose of payment upon maturity or
redemption prior to maturity shall be cancelled and a
certificate evidencing such cancellation shall be delivered by
the Trustee or the Paying Agent to the Issuer.
Section 212. Limited Liability of Issuer; Immunity of
Members of Issuer. The Bonds shall be special obligations of
the Issuer, payable solely out of the Pledged Revenues.
Neither the State nor any political subdivision of the State
(other than the Issuer) shall be obligated to pay the Principal
or redemption premium (if any) of or the interest on the Bonds,
and neither the faith and credit nor the taking or taxing power
of the State or any such political subdivision thereof is
pledged to pay such principal, redemption premium (if any) or
interest. The Bonds shall never constitute a debt or liability
of the State or any political subdivision thereof or a bond
issued or guaranteed by the State or any political subdivision
thereof within the meaning of any constitutional or statutory
limitation. The Issuer has no taxing power.
No covenant or agreement contained in this Indenture,
the Loan Agreement or the Bonds shall be deemed to be the
covenant or agreement of any director, officer, attorney, agent
or employee of the Issuer in an individual capacity. No
recourse shall be had for the payment of the principal of, or
the redemption premium (if any) or the interest on the Bonds or
any claim based thereon against any officer, director, agent,
attorney or employee of the Issuer past, present or future, or
its successors or assigns, as such, either directly or through
the Issuer, or any such successor corporation, whether by
virtue of any constitutional provision, statute or rule of law,
or by the enforcement of any assessment or penalty, or otherwise,
all of such liability of such directors, officers,
agents, attorneys or employees being hereby released as a
condition of and as a consideration for the execution and
delivery of this Indenture, the Loan Agreement and the Bonds.
Section 213. Company Bonds Not Entitled to Payment
Under Letter of Credit. Notwithstanding any provision of this
Indenture to the contrary, Company Bonds shall not be entitled
to payment from moneys drawn by the Trustee under the Letter of
Credit, and Company Bonds, to such extent, are not equally and
ratably secured with other Bonds.
ARTICLE II-A
INTEREST RATES AND INTEREST RATE PERIODS
Section 201A. Initial Interest Rate; Interest Rates
Generally. The Bonds as initially issued on their Date of
Issuance shall bear interest at a Weekly Rate determined in
accordance with Section 203A hereof, payable on each Interest
Payment Date applicable thereto. The Bonds shall continue to
bear interest at a Weekly Rate unless the type of Rate Period
for the Bonds is converted to a different type of Rate Period.
The type of Rate Period applicable to any Bonds in effect at
any time shall continue to be in effect unless and until the
applicable provisions of this Article II-A permitting the
conversion of the Bonds to a different type of Rate Period are
satisfied.
Section 202A. Rate Periods.
The Rate Periods for the Bonds shall be:
(a) Weekly Rate Periods. Weekly Rate Periods shall
commence on Wednesday of each week and end on Tuesday of
the following week; except that (A) in the case of a
conversion to, or initial issuance in, a Weekly Rate
Period, the initial Weekly Rate Period for Bonds shall
commence on the Weekly Rate Conversion Date and end on
Tuesday of the following week; and (B) in the case of a
conversion from a Weekly Rate Mode to a different Rate
Period, the last Weekly Rate Mode prior to conversion shall
end on the last day immediately preceding the Conversion
Date.
(b) Flexible Rate Period. Flexible Rate Periods
shall commence on the Effective Date determined by the
Remarketing Agent and will remain in effect through the
last day of the Rate Period selected for those Bonds as
described herein and in the form of Flexible Rate Bond
attached hereto and made a part hereof. Bonds in the
Flexible Mode are subject to mandatory tender at the end of
the applicable Rate Period pursuant to Section 203A(c)
hereof.
Section 203A. Determination of Interest Rates.
(a) The interest rate for the Bonds in the Weekly
Mode shall be the rate of interest determined by the
Remarketing Agent for each Rate Period to be the lowest
rate which in its judgment, on the basis of prevailing
financial market conditions, would cause the Bonds to have
a market value of par plus accrued interest as of the date
such rate becomes effective, but not greater than the
Maximum Rate. The interest rate for the Bonds in the
Flexible Mode shall be the rate of interest determined by
the Remarketing Agent for each Rate Period to be the lowest
rate which in its judgment, on the basis of prevailing
financial market conditions, is necessary as of the date
such rate becomes effective to remarket the Bonds having
such Rate Period in a secondary market transaction at a
price equal to par, but not greater than the Maximum Rate.
(b) The interest rate shall be determined by the
Remarketing Agent for each Rate Period as follows:
(1) Flexible Mode.
(a) Determination of Flexible Rates. The
Remarketing Agent shall determine the Flexible Rate
(which shall not be greater than the Maximum Rate) as
provided in form of Flexible Bonds and shall notify
the Paying Agent thereof electronically or by
telephone not later that 1:00 p.m., New York City
time, 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 Issuer, 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 (including any
failure to determine the Flexible Rate upon a failed
conversion), or if for any reason such manner of
determination shall be determined to be invalid or
unenforceable, that Bond shall be deemed to be in a
Rate Period of one day and the Flexible Rate shall be
equal to 100% of the Prime Commercial Paper A-1/P-1
(30 days) rate shown in the table captioned
"Short-Term Tax-Exempt Yields" in the edition of the
Bond Buyer published on the day on which such rate is
determined or, if such rate is not published on that
day, the most recent publication of such rate.
In determining the Flexible Rate and remarketing
Bonds in the Flexible Mode, there shall not be offered
(1) Rate Periods greater than the maximum number of
days of interest coverage under the Credit Facility at
the Maximum Rate less eight (8) days or extending
beyond the expiration date of the Credit Facility less
eight (8) days, or (2) Rate Periods applicable to
Bonds to be converted extending beyond the day
preceding any scheduled conversion of the Bonds to
another Mode or the final maturity of the Bonds. In
connection with the determination of the Flexible Rate
and the remarketing of Bonds in the Flexible Mode, the
Paying Agent shall follow any written directions of
the Remarketing Agent in consultation with an
Authorized Company Representative, provided such
instructions are 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.
(b) Conversions from the Flexible Mode. The
Bonds in the Flexible Mode, or any portion of such
Bonds, may be converted at the election of the Company
from the Flexible Mode to the Weekly or Fixed Rate
Mode as provided in the form of Flexible Bonds, so
long as no Default hereunder exists as certified to
the Trustee by an Authorized Company Representative.
Any Bonds to be converted to the Weekly Mode shall be
supported by a Credit Facility. Any Bonds to be
converted to the Fixed Rate Mode shall be supported by
a Fixed Rate Credit Facility. Written notice of a
conversion from the Flexible Mode shall be given by
the Company to the Issuer, the Trustee, the Paying
Agent, the Bank, the Remarketing Agent, Moody's and
S&P not fewer than thirty (30) 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. 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 Section
206A.
Notwithstanding the foregoing, if the
preconditions to conversion to a new Mode established
by the preceding paragraph are not met by 11:00 a.m.,
New York City time, 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 Trustee
shall by 12 noon, New York City time, on the proposed
Conversion Date draw on the Credit Facility an amount
which is sufficient to pay the Purchase Price on said
date of all Bonds that were to have been converted.
In no event shall the failure of Bonds to be converted
to another Mode for any reason be deemed to be, in and
of itself, a Default or Event of Default under this
Indenture, so long as the Purchase Price of all Bonds
required to be purchased is made available as provided
above.
(c) Mandatory Tender for Purchase. On each
Effective Date, Bonds in the Flexible Mode are subject
to mandatory tender for purchase as provided in the
form of Flexible Bonds.
(2) Weekly Mode.
(a) Determination of Weekly Rates. The
Remarketing Agent shall determine the Weekly Rate as
provided in the form of Weekly Bonds and shall notify
the Paying Agent thereof electronically or by
telephone not later than 4:00 p.m., New York City
time, 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
Issuer, the Trustee, the Paying Agent, the Bank, the
Company and the Bondowners. If for any reason the
rate for any Bond in the Weekly Mode is not determined
as provided herein, the Bond shall bear interest for
the current rate period at the rate in effect for the
prior Rate Period.
(b) Conversions from Weekly Mode. The Bonds in
the Weekly Mode or any portion of such Bonds may be
converted on the first Business Day of any calendar
month at the election of the Company from the Weekly
Mode to Flexible or Fixed Rate Mode, as provided in
the form of Weekly Bonds, so long as no Default
hereunder exists as certified to the Trustee by an
Authorized Company Representative. Any Bonds to be
converted to the Flexible Mode shall be supported by a
Credit Facility. Any Bonds to be converted to the
Fixed Rate Mode shall be supported by a Fixed Rate
Credit Facility. Written notice of a conversion of
Bonds from the Weekly Mode shall be given by the
Company to the Issuer, the Trustee, the Bank, the
Paying Agent, the Remarketing Agent, Moody's and S&P
not fewer than thirty (30) days prior to the proposed
Conversion Date, which date shall be specified by
Company in such notice. Notice of a conversion of
Bonds from the Weekly Mode and the mandatory tender of
Bonds for purchase on such Conversion Date shall be
given to the owners of such Bonds as provided in
Section 302 hereof and the form of Weekly Bonds.
Conversion to the Fixed Rate Mode shall also be
governed by Section 206A hereof.
Notwithstanding the foregoing, if the
preconditions to conversion to another Mode
established by the preceding paragraph are not met by
11:00 a.m. New York City time, on the Conversion Date,
the Paying Agent shall deem the proposed conversion to
have failed and shall immediately notify the Trustee
and the Remarketing Agent, and the Bonds shall be
subject to mandatory tender as provided in Section 302
hereof. In such event, the Paying Agent shall by
12:00 noon New York City time 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
Indenture, so long as the Purchase Price of all Bonds
required to be purchased is made available as provided
above.
(3) Interest on Overdue Principal. Any overdue
principal of any Bond shall bear interest after its
maturity or acceleration at the last interest rate in
effect on that Bond. Whenever a Bond is deemed to be in
the Flexible Rate Mode with a Rate Period of one day under
the terms of this Indenture (as a result of a failure by
the Remarketing Agent to determine a Flexible Rate or Rate
Period, or if such determination is determined to be
invalid or unenforceable) it shall not be necessary for the
Trustee or the Paying Agent to authenticate and deliver a
new Bond certificate to evidence such Flexible Mode Bond
with a one day Rate Period, but such Mode and Rate Period
shall be reflected in the records of the Paying Agent.
(4) Conditions Precedent to Alternate Interest Rate
Period. Subject to the provisions set forth in this
Section, a change to a new Mode for any Bonds shall not
take place unless the Company shall deliver, or cause to be
delivered, to the Trustee, the Paying Agent, the Bank, the
Issuer and the Remarketing Agent on the Effective Date of
the alternate Mode an opinion of Bond Counsel. The opinion
of Bond Counsel shall state that the action proposed to be
taken is authorized or permitted by the Indenture and the
Act and will not adversely affect the exclusion of interest
on the Bonds from gross income for purposes of federal
income taxation under Section 103 of the Code. If such
opinion of Bond Counsel is not received on the proposed
Effective Date of such alternate Mode, then all such Bonds
shall be purchased on such date as provided in this
Indenture, and all such Bonds shall continue to be subject
to the current Mode. Notwithstanding the foregoing, the
requirement of delivery of such Bond Counsel opinion may be
waived upon delivery of an opinion of Bond Counsel to the
effect that changes in Modes (other than a change to a
Fixed Rate Mode) no longer require delivery of such
aforesaid opinion of Bond Counsel.
Section 204A. Notice of Interest Rates. The
Remarketing Agent shall advise the Paying Agent by telephone of
each interest rate by the close of business on the day such
rate is determined, confirmed in writing by the close of
business on the next Business Day and the Paying Agent shall
promptly notify the Trustee and the Company by telephone of the
rate.
Section 205A. [Reserved]
Section 206A. The Fixed Rate. At the option of the
Company, the Bonds may be converted to bear interest at a Fixed
Rate to their final maturity. Bonds to be converted are
subject to mandatory tender pursuant to Section 302(a) hereof.
Any such conversion shall be made as follows:
(a) The Fixed Rate Conversion Date shall be an
Interest Payment Date on which interest is payable for the
Rate Period from which the conversion is to be made.
(b) (i) The Company shall give written notice of any
such conversion to the Issuer, the Trustee, the Bank, the
Remarketing Agent and the Paying Agent not fewer than
thirty (30) days prior to the proposed Conversion Date.
Such notice shall specify the Fixed Rate Conversion Date.
(ii) Not fewer than thirty (30) days prior to the
Fixed Rate Conversion Date, the Paying Agent or Trustee
shall mail (by first class mail) a written notice of the
conversion to the Registered Owners of the Bonds,
specifying the proposed Conversion Date and stating that
the Bonds will be subject to mandatory tender for purchase
on the Conversion Date. The notice shall state that (i)
all Bonds must be delivered to the Paying Agent for
mandatory purchase on the Conversion Date at a price equal
to the principal amount thereof, (ii) if the Registered
Owner fails to deliver any Bonds to the Paying Agent on the
Purchase Date and the Paying Agent is in receipt of the
Purchase Price therefor, such Bonds shall be deemed to be
purchased on the Purchase Date and ownership transferred to
the purchaser thereof, (iii) the Registered Owner who fails
to deliver such Bonds shall have no further rights
thereunder except the right to receive the Purchase Price
thereof upon presentation and surrender of such Bond to the
Paying Agent, and (iv) the former owner shall hold the
certificate for such undelivered Bonds as agent for the
Paying Agent.
(c) The Fixed Rate shall be determined by the
Remarketing Agent no later than 2:00 p.m., New York City
time, on the date which is two (2) Business Days preceding
the Fixed Rate Conversion Date. The Fixed Rate shall be
the lowest rate of interest which, in the judgment of the
Remarketing Agent as of the date of determination and under
prevailing financial market conditions, would cause the
Bonds to have a market value equal to the principal amount
thereof, provided that in no event shall such rate exceed
the Maximum Rate. The Remarketing Agent shall notify the
Paying Agent by telephone (promptly confirmed in writing)
and the Paying Agent shall promptly notify the Issuer, the
Trustee and the Company by telephone (promptly confirmed in
writing), telegram, telecopy, telex or other similar means
of communication of the rate so determined.
(d) Any conversion to a Fixed Rate pursuant to this
Section 206A shall be subject to the conditions that on or
before the Fixed Rate Conversion Date, (i) there shall have
been supplied to the Trustee a Fixed Rate Credit Facility
conforming to the requirements set forth in Section 901A
hereof and Section 5.5(c) of the Loan Agreement and which
shall have a minimum term ending not sooner than three (3)
years from the Fixed Rate Conversion Date (or, if sooner,
September 15, 2011,) and (ii) the Company shall have
delivered to the Issuer, the Trustee, the Bank, the Paying
Agent and the Remarketing Agent an opinion of Bond Counsel
satisfactory to the Trustee to the effect that the
conversion is authorized hereunder and under the Act and
will not adversely affect the exclusion from gross income
of interest on the Bonds for federal income tax purposes.
If the foregoing conditions are not met for any
reason, the conversion shall not be effective, there shall be
no mandatory tender and the Bonds shall continue to bear
interest at the last effective Variable Rate.
Section 207A. Failure of Notices. The Issuer, the
Company, the Trustee, the Paying Agent and the Remarketing
Agent shall not be liable to any Registered Owners for failure
to give any notice required under the provisions of this
Article II-A or for failure of any Registered Owners to
receive any such notice.
Section 208A. All Determinations Conclusive. Absent
manifest error, all determinations of Variable Rate or the
Fixed Rate pursuant to this Article shall be conclusive and
binding upon the Issuer, the Company, the Trustee, the Paying
Agent and the Registered Owners of the Bonds to which such
rates are applicable.
ARTICLE III
TENDER, PURCHASE AND REDEMPTION OF BONDS
Section 301. Optional Tenders for Purchase during
Weekly Rate Periods.
(a) Purchase Dates. The Registered Owners of Bonds
bearing interest at Weekly Rates may elect to have their
Bonds (or portions thereof in amounts equal to the lowest
denomination then authorized pursuant to Section 202 hereof
or whole multiples of such lowest denomination) purchased
at a Purchase Price equal to 100% of the principal amount
of such Bonds (or portions thereof) plus, except as
hereinafter provided, accrued and unpaid interest, if any,
on the following purchase dates and upon the giving of the
following written notices meeting the further requirements
of subsection (b) below, and otherwise in the manner and
subject to the limitations described in the form of Weekly
Bonds.
Bonds bearing interest at the Weekly Rate may be
tendered for purchase at a price payable in immediately
available funds on any Business Day prior to conversion
from a Weekly Rate Period to a different Rate Period upon
delivery of an Optional Tender Notice to the Paying Agent
not later than 5:00 p.m., New York City time, on a Business
Day not fewer than seven (7) days prior to the Purchase
Date.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in the
form of Weekly Bonds and in this Section; 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 1202 hereof and such acceleration shall not have
been annulled.
If the Purchase Date of any Bonds tendered for
purchase is not a Business Day, such purchase date shall be
the next succeeding Business Day.
If the Purchase Date of any Bond tendered for
purchase occurs after the Record Date applicable to the
interest accrued on such Bond from the last occurring
Interest Payment Date, then the Purchase Price shall not
include accrued and unpaid interest, which shall be paid to
the Registered Owner as of the close of business on the
applicable Record Date.
The purchase of Bonds tendered shall not extinguish
the debt represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
(b) Notice of Tender. The Optional Tender Notice
delivered to the Paying Agent as provided in the form of
Weekly Bonds prior to the Purchase Date of Tendered Bonds
shall be in substantially the form provided in the form of
Weekly Bond or such other form as the Paying Agent may
accept. Each notice of tender:
(i) shall be in writing and, except as otherwise
specified, be delivered by or on behalf of the
Registered Owner to the Paying Agent at its Principal
Office;
(ii) shall specify the name of the Registered
Owner and state (A) the principal amount of the Bond
or Bonds to which the notice relates, (B) that the
Registered Owner irrevocably demands purchase of such
Bond or Bonds or a specified portion thereof in an
amount equal to the lowest denomination then
authorized pursuant to Section 202 hereof or a whole
multiple of such lowest denomination, and (C) the date
on which such Bond or Bonds or portion thereof is to
be purchased, and (D) payment instructions with
respect to the Purchase Price; and
(iii) shall automatically constitute (A) an
irrevocable offer to sell the Bond or portion thereof
to which the notice relates on the Purchase Date to
any purchaser selected by the Remarketing Agent, at a
price equal to the principal amount of such Bond or
portion thereof plus, with respect to Bonds bearing
interest at Weekly Rates, except as provided in
Section 301(a), any interest thereon accrued and
unpaid as of the Purchase Date, (B) an irrevocable
authorization and instruction to the Paying Agent to
effect the transfer of such Bond or portion thereof
upon payment of such price to the Paying Agent on the
Purchase Date, (C) an irrevocable authorization and
instruction to the Paying Agent to effect the exchange
of the Bond to be purchased in whole or in part for
other Bonds in an equal aggregate principal amount so
as to facilitate the sale of such Bond or portion
thereof to be purchased, and (D) an acknowledgment
that such Registered Owner will have no further rights
with respect to such Bond or portion thereof upon
payment of the Purchase Price thereof to the Paying
Agent on the Purchase Date, except for the right of
such Registered Owner to receive such Purchase Price
upon surrender of such Bond to the Paying Agent and
that after the purchase date such Registered Owner
will hold any undelivered certificate as agent for the
Paying Agent. The determination of the Paying Agent
as to whether a notice of tender has been properly
delivered pursuant to the foregoing shall be
conclusive and binding upon the Registered Owner. The
Paying Agent may waive nonconforming tenders.
So long as the Book-Entry Only System is in effect, a
Beneficial Owner shall give notice to elect to have its Bonds
tendered through its participant, to the Paying Agent, and
shall effect delivery of such Bond by causing the direct
participant to transfer the participant's interest in the
Bonds, on DTC's records, to the Paying Agent.
(c) Bonds to be Remarketed. Not later than
11:00 a.m., New York City time, on the Business Day
immediately following the date of receipt of any notice of
tender, the Paying Agent shall notify, in writing or by
telephone promptly confirmed in writing, the Trustee, the
Bank, the Company and the Remarketing Agent of the
principal amount of Bonds (or portions thereof) to be
purchased and the date of purchase.
Section 302. Mandatory Tenders for Purchase.
(a) Conversions. In the event that Bonds in the
Weekly Mode are converted or proposed to be 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 Trustee to the Bondowners as
provided in the form of Weekly Bonds, which notice shall
state that the Bonds are subject to mandatory tender for
purchase. In the Flexible Mode, Bonds are subject to
mandatory tender for purchase at the Purchase Price on the
day following the last day of each Rate Period.
(b) Mandatory Purchase on Substitution or Expiration
of Credit Facility. The Bonds in the Weekly Mode are
subject to mandatory tender for purchase as provided in the
form of Weekly Bonds in connection with the expiration of
the Credit Facility on a Business Day established by the
Trustee that is not more than 15 or less than 2 days prior
to the Stated Expiration Date, or in connection with the
substitution of a Credit Facility, on the effective date of
the Substitution, unless the Trustee receives at least
thirty (30) days prior to the last Interest Payment Date
scheduled to occur at least thirty (30) days before the
Stated Termination Date of the Credit Facility, an
Alternate Credit Facility and written notice from Moody's,
if the Bonds are then rated by Moody's, and S&P, if the
Bonds are then rated by S&P, that such substitution will
not result in a reduction or withdrawal of the ratings on
the Bonds. Nor more than thirty (30) days and no less than
fifteen (15) days prior to the Mandatory Tender Date, the
Trustee shall give notice to the Bondowners of the
mandatory tender of Bonds pursuant to this Section. Bonds
in the Flexible Mode are subject to mandatory tender at the
expiration of their respective Rate Periods. In the event
of an expiration of the Credit Facility or in connection
with a substitution of a Credit Facility unless the Trustee
receives an Alternate Credit Facility and notice from
Moody's and S&P as provided above, prior to the expiration
of such Rate Period, the Trustee shall, as soon as
practicable, draw on the Credit Facility, an amount
sufficient to pay the Purchase Price of such Bonds on their
Purchase Date.
(c) Mandatory Tender on Termination of Credit
Facility. While the Credit Facility is in effect, the
Bonds in the Weekly Mode shall be subject to mandatory
tender at a Purchase Price equal to the principal amount
thereof, plus accrued interest, if any, thereon to the
Purchase Date, if the Trustee receives notice from the
Credit Facility Issuer (i) stating that an Event of Default
under and as defined in the Reimbursement Agreement has
occurred and is continuing and (ii) notifying the Trustee
of the termination of the Credit Facility and directing a
mandatory purchase of the Bonds. The Trustee shall give
immediate notice to the Bondholders. Such mandatory tender
shall occur on a Business Day established by the Trustee
that is not more than four (4) days following the date of
receipt by the Trustee of notice from the Credit Facility
Issuer of the occurrence of an Event of Default under the
Reimbursement Agreement. Bonds in the Flexible Mode are
subject to mandatory tender at the expiration of their
respective Rate Periods. If the Trustee receives notice
from the Credit Facility Issuer (i) stating that an Event
of Default under and as defined in the Reimbursement
Agreement has occurred and is continuing and (ii) notifying
the Trustee of the termination of the Credit Facility and
directing a mandatory purchase of the Bonds prior to the
expiration of such Rate Period the Trustee shall, as soon
as practicable, draw on the Credit Facility, an amount
sufficient to pay the Purchase Price of such Bonds on their
Purchase Date.
Section 303. Remarketing.
The Remarketing Agent shall offer for sale and use its
best efforts to solicit offers for purchase for all Bonds in
the Weekly or Flexible Mode or portions thereof for which
notice of optional tender has been received or which are
subject to mandatory tender. The terms of any sale by the
Remarketing Agent shall provide for the payment of the
Purchase Price for Tendered Bonds by the Remarketing Agent to
the Trustee in exchange for new registered Bonds (i) in
immediately available funds at or before 2:00 p.m., New York
City time, on the Purchase Date, in the case of Bonds bearing
interest at Weekly Rates and (ii) in immediately available
funds at or before 2:15 p.m., New York City time, on the
Purchase Date, in the case of Bonds bearing interest at
Flexible Rates. The Remarketing Agent shall not sell any Bond
as to which a notice of conversion to a Variable Rate Period,
from one type of Variable Rate Period to another, or to a
Fixed Rate Period, has been given by the Paying Agent, unless
the Remarketing Agent has advised the person to whom the sale
is made of the conversion. The Remarketing Agent shall not
sell any Bond which has been called for redemption unless a
copy of the notice of redemption given by the Trustee is
provided to the purchaser of such Bond prior to such sale.
Any Bonds supported by a Credit Facility shall not be
remarketed to the Issuer, Company or insiders of either of
them as that term is defined in the United States Bankruptcy
Code, as amended from time to time.
Section 304. Purchase of Tendered Bonds.
(a) Notices.
(i) The Remarketing Agent shall give notice by
telephone, telegraph, telecopy, telex or other similar
communication to the Paying Agent and the Company of
the principal amount of Tendered Bonds which were
remarketed and the amount of funds that will be
delivered to the Paying Agent at or before 3:00 p.m.,
New York City time, on the Business Day immediately
preceding the date fixed for purchase of Tendered
Bonds bearing interest at Weekly and Flexible Rates;
(ii) The Paying Agent shall give notice by
telephone, telegraph, telecopy, or other similar
communication to the Company specifying the principal
amount of Tendered Bonds as to which the Remarketing
Agent has not found a purchaser not later than 5:00
p.m., New York City time, on the date the Paying Agent
receives notice from the Remarketing Agent under
Section 304(a)(i) for Tendered Bonds bearing interest
at Weekly and Flexible Rates; and
(iii) The Remarketing Agent shall give notice to
the Paying Agent by telephone (promptly confirmed in
writing) of the names, addresses and taxpayer
identification numbers of the purchasers, the
denominations of Bonds to be delivered to each
purchaser and, if available, payment instructions for
regularly scheduled interest payments, or of any
changes in any of the foregoing, from time to time to
the extent known by the Remarketing Agent but in any
event no later than 1:00 p.m., New York City time (for
Bonds, in Book-Entry Only form) or 1:30 p.m., New York
City time, (for Certificated Bonds), in either case,
on the date fixed for purchase for Tendered Bonds
bearing interest at Weekly and Flexible Rates.
(b) Sources of Payment.
(i) The Remarketing Agent shall cause to be paid
to the Paying Agent by 11:30 a.m., New York City time,
on the date fixed for the purchase of Tendered Bonds,
all amounts representing proceeds of the remarketing
of such Bonds, which the Paying Agent will deposit
into the Remarketing Account in the Bond Purchase
Fund. If such amounts, plus all other amounts
received by the Paying Agent for the purchase of
Tendered Bonds (from parties other than the Company,
its Affiliates or the Issuer in each case), are not
sufficient to pay the Purchase Price of such Tendered
Bond when due, the Paying Agent shall immediately
notify the Trustee and the Company of any deficiency
and shall simultaneously draw on the Credit Facility
for the amount of such deficiency no later than 12:00
noon, New York City time, on the Purchase Date.
If the Tendered Bonds are not supported by a
Credit Facility, the Paying Agent shall notify the
Company of the amount necessary to purchase such Bonds
for which Remarking Agent has not received the
Purchase Price, and the Company shall pay to the
Paying Agent such amount in immediately available
funds by 12:00 noon, New York City time, on the date
of notification.
(c) Payments by the Trustee. On or before 3:00 p.m.,
New York City time, on the date set for purchase of
Tendered Bonds and upon receipt by the Trustee of 100% of
the aggregate Purchase Price of the Tendered Bonds, the
Trustee shall pay the Purchase Price of such Bonds to the
Registered Owners thereof, upon presentation at its
Principal Office, by check or, in the case of Bonds
required to be issued in minimum denominations of $100,000,
at the written direction of the Registered Owner, by bank
wire transfer in immediately available funds to a bank
within the continental United States or by deposit to a
designated account of the Paying Agent, such written
direction to be received by the Paying Agent not later than
the Business Day prior to the date on which such payment is
due.
Anything herein to the contrary notwithstanding, the
Trustee shall not be obligated to use its own funds to
purchase any Bonds hereunder.
(d) Registration and Delivery of Tendered or
Purchased Bonds. On the date of purchase, the Bond
Registrar shall register and deliver (or hold) all Bonds
purchased on any Purchase Date as follows: (i) Bonds
purchased or remarketed by the Remarketing Agent shall be
made available to the purchasers thereof by 2:15 p.m. New
York City time in the case of Bonds that are to be in the
Flexible Mode immediately after the Purchase Date and Bonds
purchased or remarketed by the Remarketing Agent shall be
made available by 2:00 p.m., New York City time, in the
case of Bonds that are to be in the Weekly or Fixed Mode
immediately after the Purchase Date and registered in
accordance with the instructions of the recipient thereof,
provided that such Bonds shall not be delivered unless and
until the Trustee has received the Purchase Price thereof,
except that the Bonds in the Flexible Mode may be delivered
against a window receipt guaranteeing same day payment in
immediately available funds and Bonds not remarketed shall
be held by the Trustee. Bonds previously purchased with
moneys drawn under the Credit Facility shall not be
delivered upon remarketing unless the Credit Facility has
been reinstated; and (ii) Bank Bonds shall be registered in
the name of the Bank, Credit Facility Issuer, or their
designees as pledgee, and all certificates or instruments
representing or evidencing the Bank Bonds shall be
delivered to and held by the Paying Agent on behalf of the
Bank pursuant to Section 3 of the Pledge Agreement and
shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance
satisfactory to the Bank or (iii) if the Bank Bonds are
then registered under a book-entry only system with DTC,
the Bank's interest as pledgee in the Bank Bonds shall be
delivered by transfer of such Bank Bonds on DTC's records
to an account specified from time to time by the Bank that
the Bank's designee maintains at DTC.
(e) Delivery of Bonds; Effect of Failure to Surrender
Bonds. All Bonds to be purchased on any date shall be
required to be delivered to the Principal Office of the
Paying Agent at or before 11:00 a.m., New York City time,
on the Purchase Date in the case of Bonds bearing interest
at the Weekly and Flexible Rates. If the Registered Owner
of any Bond (or portion thereof) that is subject to
purchase pursuant to this Section fails to deliver such
Bond to the Paying Agent for purchase on the Purchase Date,
and if the Paying Agent is in receipt of the Purchase Price
therefore, such Bond shall be deemed to be purchased on the
day fixed for purchase thereof and ownership of such Bond
(or portion thereof) shall be transferred to the Purchaser
thereof. Any Registered Owner who fails to deliver such
Bond for purchase shall have no further rights thereunder
except the right to receive the Purchase Price thereof upon
presentation and surrender of said Bond to the Paying Agent.
Section 305. Inadequate Funds for Tenders. If the
funds available for purchases of Bonds pursuant to this
Article III are inadequate for the purchase of all Bonds
tendered on any Purchase Date, the Paying Agent shall (a)
return all tendered Bonds to the Registered Owners thereof;
(b) return all moneys received for the purchase of such Bonds
to the persons providing such moneys; and (c) notify the
Trustee of the return of such Bonds and moneys and the failure
to make payment for Tendered Bonds.
Section 306. Bonds Subject to Redemption. The Bonds
shall be subject to redemption prior to maturity as set forth
below:
(a) Optional Redemption of Bonds. Bonds shall be
subject to redemption at the option of the Issuer, in whole
or in part, as directed by the Company by written notice to
the Issuer and the Trustee stating its intention to prepay
all amounts due or to become due under the Loan Agreement
as follows:
(i) the Bonds shall be subject to optional
redemption on any Interest Payment Date at an optional
redemption price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to
the redemption date if the Bonds bear interest at the
Weekly Rate;
(ii) on the next Business Day following the last
day of the applicable Rate Period if the Bonds bear
interest at the Flexible Rate, at an optional
redemption price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to
the redemption date; and
(iii) After conversion to the Fixed Rate Mode,
the Bonds shall be subject to optional redemption on
the date and at the optional redemption prices (plus
accrued and unpaid interest, if any, to the redemption
date) as follows:
Years Remaining
Until Final Maturity Redemption Period Redemption Price
More than 15 years Tenth anniversary 102%, declining by
of commencement 1/2% on each
of Fixed Rate succeeding
Period anniversary of the
first day of the
redemption period
until reaching 100%
and thereafter at
100%
More than 10, but Eighth 101 1/2%, declining
not more than anniversary of by 1/2% on each
15 years commencement of succeeding
Fixed Rate anniversary of the
Period first day of the
redemption period
until reaching 100%
and thereafter at
100%
More than 5, but Fifth anniversary 101%, declining by
not more than of commencement of 1/2% on each
10 years Fixed Rate succeeding
Period anniversary of the
first day of the
redemption period
until reaching 100%
and thereafter at
100%
5 years or less Non-callable Non-callable
The foregoing redemption periods and redemption prices
may be revised at the time of any conversion to a Fixed Rate,
upon certification by the Remarketing Agent that the foregoing
schedule is not consistent with prevailing market conditions
and provided that an opinion of nationally recognized Bond
Counsel is delivered to the Trustee to the effect that such
revision will not adversely affect the exclusion of interest on
the Bonds from gross income for federal income tax purposes.
(b) Mandatory Redemption Following Determination of
Taxability. The Bonds are subject to mandatory redemption
as a whole on any date at a Redemption Price equal to 100%
of the amount thereof plus accrued interest to the date of
redemption, as soon as is practical, but within 60 days
following a Determination of Taxability.
(c) Mandatory Redemption Upon Expiration of Credit
Facility. (i) If, with respect to any Bond, the Trustee
shall not have received, at least thirty (30) days prior to
the last Interest Payment Date scheduled to occur at least
thirty (30) days before the Stated Termination Date of the
Letter of Credit, Alternate Credit Facility, Fixed Rate
Credit Facility, or Alternate Fixed Rate Credit Facility
relating to such Bond, an Alternate Credit Facility
pursuant to Section 904 or an Alternate Fixed Rate Credit
Facility pursuant to Section 904A, such Bond shall be
subject to mandatory redemption at the written direction of
the Credit Facility Issuer on a date not later than the
Stated Termination Date at the price established under
subsection (a) for such Bond plus accrued interest thereon
to the date of redemption. If the Trustee receives no such
direction from the Credit Facility Issuer, the Bonds shall
be subject to Mandatory Purchase pursuant to Section 302(b)
hereof.
(ii) If the Trustee shall not have received with
respect to any Fixed Rate Bonds, at least forty (40) days
prior to the last Interest Payment Date on or before the
Stated Termination Date of the Fixed Rate Credit Facility
issued with respect to such Fixed Rate Bonds either a
notice from the Provider that the Stated Termination Date
has been extended or an Alternate Fixed Rate Credit
Facility pursuant to Section 904A such Fixed Rate Bonds
shall be subject to mandatory redemption not later than
such Stated Termination Date at a price set forth in
subsection (a) (iii) with respect to such Bonds, or if
there are 5 years or less remaining until final maturity of
such Bonds, at a Redemption Price equal to 102% of the
amount thereof, plus accrued interest thereon to the date
of redemption.
(d) Selection of Bonds for Redemption. So long as
the Bonds are held in the Book-Entry Only System, if fewer
than all the Bonds in a particular Mode are to be redeemed,
the particular Bonds (or portions thereof in authorized
denominations) to be called for redemption shall be
selected by the Depository. If the Bonds are no longer
held in the Book-Entry Only System and fewer than all the
Bonds in a particular Mode are to be redeemed, the
particular Bonds (or portions thereof in authorized
denominations) to be called for redemption shall be
selected by the Trustee by lot or in any other manner
deemed fair by the Trustee.
(e) Notice of Redemption. Notice of redemption of
Bonds shall be mailed to the Registered Owners of any Bonds
which are to be redeemed (which, so long as the Book-Entry
Only System is in effect, shall mean DTC or its nominee by
mailing a copy of such notice of redemption to the owners
of the Bonds by First-class mail, postage prepaid, at their
address shown on the registration kept by the Bond
Registrar, not less than 30 days prior to the redemption
date. An affidavit of the Trustee as to mailing shall be
conclusive evidence of the fact of mailing to the owner of
any Bond. Notice of redemption (which notice may state
that it is subject to the receipt of the redemption moneys
by the Trustee on or before the date fixed for redemption
and which notice shall be of no effect unless such moneys
are so received on or before such date) shall identify the
Bonds (or portions thereof) 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 of
redemption shall further state that on such date there
shall become due and payable upon each Bond (or portion
there) to be redeemed, the Redemption Price thereof and
that moneys therefor having been deposited with the Paying
Agent, interest thereon shall cease to accrue and that the
Bonds or portions thereof called for redemption shall cease
to be entitled to any benefit under this Indenture except
the right to receive payment of the Redemption Price.
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.
Section 307. Bank Bonds.
(a) (i) The Bond Registrar shall register in the name
of the Bank, Credit Facility Issuer, or their designees as
pledgee, any Bonds delivered to the Paying Agent purchased
with a Draft on the Credit Facility upon receipt of notice
from the Paying Agent of such delivery which notice the
Paying Agent hereby agrees to give, and all certificates or
instruments representing or evidencing the Bank Bonds shall
be delivered to and held by the Paying Agent on behalf of
the Bank pursuant to Section 3 of the Pledge Agreement and
shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance
satisfactory to the Bank or (ii) if the Bank Bonds are then
registered under a book-entry system with DTC, the Paying
Agent shall cause the Bank's interest as pledgee in the
Bank Bonds to be delivered by transfer of such Bank Bonds
on DTC's records to an account specified from time to time
by the Bank that the Bank's designee maintains at DTC.
Thereafter the Paying Agent or the Bank's designee shall
hold or DTC's records shall reflect such Bonds pledged for
the account of and subject to the security interest in
favor of the Credit Facility Issuer as agent for the Credit
Facility Issuer, pursuant to the Pledge Agreement. Each
such Bond shall constitute a Bank Bond until released as
therein provided, and shall be deposited in a separate
custodial account established by the Paying Agent, and
shall be released against payment therefor only after the
Paying Agent shall have received written notice from the
Credit Facility Issuer that the Credit Facility has been
reinstated for the principal and interest portions of the
drawing made to pay the Purchase Price of such Bond. Upon
the remarketing of a Bond as described in the preceding
sentence, all amounts owed to the Bank pursuant to the
Reimbursement Agreement shall be immediately paid to the
Bank and such Bond shall be released and made available to
be picked up by the purchaser thereof as identified by the
Remarketing Agent against receipt of such Purchase Price
from such purchaser on such date. Except as provided in
this subsection, the Credit Facility Issuer shall not sell
or direct the Company to sell any Bank Bond (whether before
or after any event of default or foreclosure under any
reimbursement agreement, security agreement, or pledge
agreement under which the Credit Facility shall have been
issued) to any person other than an affiliate or successor
of the Bank. Neither the Trustee nor the Bond Registrar
shall recognize any transfer made in violation of the
preceding sentence.
(b) On each Interest Payment Date prior to the release
of Bank Bonds, the Trustee shall apply moneys credited to
the Company Payments Account of the Bond Fund to pay
principal, Redemption Price, if any, and interest on such
Bank Bonds to the Credit Facility Issuer, but shall not
draw on the Credit Facility or otherwise use moneys
credited to the Credit Facility Account of the Bond Fund
for that purpose to any extent whatsoever.
Section 308. Drawings on Credit Facility for Purchase
of Bonds.
(a) In General. At or prior to 11:00 a.m. (New York
City time) on each Purchase Date, the Trustee shall, by
Electronic Notice, determine the amount of moneys delivered
to it by the Remarketing Agent which are held in the
Remarketing Account in the Bond Purchase Fund. The Trustee
shall by 12:00 noon (New York City time) draw under the
Credit Facility then held by the Trustee in accordance with
its terms in a manner so as to furnish immediately
available funds by 2:00 p.m. (New York City time) on such
Purchase Date, in an amount sufficient, together with
moneys described in Section 304(b)(i) and available for
such purchase, to enable the Paying Agent to pay the
Purchase Price of such Bonds to be purchased on such
Purchase Date, directly to the Paying Agent which shall
deposit those moneys directly into the Credit Facility
Account.
(b) Alternate Credit Facilities. If another Credit
Facility permits any drawings to be made later than is
provided herein for same day payment, the Paying Agent
shall make any drawing required under this Section 308 in
accordance with the terms of such Credit Facility for
drawing thereunder in a manner so as to be reasonably
assured that immediately available funds will be available
to the Paying Agent by 4:30 p.m. (New York City time) on a
Purchase Date to pay the Purchase Price, and the Paying
Agent shall deposit those moneys directly into the Credit
Facility Account.
(c) Reimbursement of Credit Facility. The moneys in
the Company Payments Account shall be paid first, to the
Credit Facility Issuer to the extent of any amounts that
the Company owes the Credit Facility Issuer pursuant to the
Reimbursement Agreement and, second, to the Company. If
any Bonds held by the Paying Agent for the account of the
Company are remarketed by the Remarketing Agent, then the
proceeds received from such remarketing shall (after
satisfaction of any unpaid amounts under the Reimbursement
Agreement) be remitted by the Paying Agent to the Company.
If any Bank Bonds held by the Paying Agent are remarketed
by the Remarketing Agent, then the proceeds received from
such remarketing shall, on the date of such remarketing, be
delivered to the Paying Agent, for the account of the
Credit Facility Issuer, with Electronic Notice of the
amount of such proceeds given by the Remarketing Agent to
the Credit Facility Issuer, the Trustee and the Company,
against delivery of such Bonds.
Section 309. Trustee as Agent of Company. The
Company hereby authorizes the Trustee to purchase Bonds for
the Company's account pursuant to Sections 301 and 302 and in
accordance with Section 803(b) hereof. The Issuer and the
Trustee agree that the Trustee in such capacity shall be
acting solely for the benefit of the Company, and no purchase
of Bonds by the Trustee in such capacity shall constitute a
redemption of Bonds or an extinguishment of the debt thereby
evidenced.
ARTICLE IV.
[RESERVED]
ARTICLE V.
GENERAL AGREEMENTS
Section 501. Payment of Bonds. The Issuer agrees that
it will promptly pay, but solely from the Pledged Revenues,
the principal of, and the redemption premium (if any) and the
interest on, the Bonds as the same become due.
Section 502. Performance of Agreements; Issuer. The
Issuer agrees that it will faithfully perform at all times any
and all of its agreements, undertakings, stipulations and
provisions contained in this Indenture, in any and every Bond,
and in all proceedings of the Issuer pertaining thereto.
The Issuer agrees and represents that it is authorized
under the Constitution and laws of the State (a) to issue the
Bonds and to execute, deliver and perform this Indenture, and
to apply the proceeds of the Bonds as set forth herein, and
(b) to grant to the Trustee a security interest in the Trust
Estate in the manner and to the extent herein set forth, that
all action on its part for the issuance of the Bonds and the
execution, delivery and performance of this Indenture has been
effectively taken, and that the Bonds are and will be legal,
valid, binding and enforceable special obligations of the
Issuer according to the import thereof.
Section 503. Ownership. The Issuer agrees that the
Company owns the Project.
Section 504. Recordation of Financing Statements.
The Issuer shall cause all Financing Statements to the extent
required hereunder (other than continuation statements) to be
kept recorded and filed in such manner and in such places as
may be required by law in order to fully protect and preserve
the priority of the interest of the bondholders in the
property conveyed hereunder and the rights, privileges and
options of the Trustee hereunder.
Section 505. [Reserved]
Section 506. Priority of Pledge and Security
Interest. The pledge herein made of the Trust Estate and the
security interest created herein with respect thereto
constitutes a first and prior pledge of, and a security
interest in, the Trust Estate. Said pledge and security
interest shall at no time be impaired directly or indirectly
by the Issuer or the Trustee and the Trust Estate shall not
otherwise be pledged and, except as provided herein and in the
Loan Agreement, no persons shall have any rights with respect
thereto.
Section 507. Rights Under Loan Agreement. The Loan
Agreement sets forth the respective obligations of the Issuer
and the Company relating to the Project, including a provision
that subsequent to the initial issuance of the Bonds and prior
to payment in full thereof, the Loan Agreement may not be
effectively amended, changed, modified, altered or terminated
(other than as provided therein) without the written consent
of the Trustee and the Bank. Reference is hereby made to the
Loan Agreement for a detailed statement of the obligations of
the Company thereunder.
Section 508. Issuer's Obligation not to Create a
General Liability. Each and every covenant herein made,
including all predicated upon the condition that any
obligation for the payment of money incurred by the Issuer, or
for the taking of any action by the Issuer (or the breach of
any of the foregoing obligations) shall not constitute nor
give rise to a pecuniary liability or a charge against its
general credit. The principal, interest and premium, if any,
required to be paid at any time and any and all other charges
and expenses of whatever nature shall be payable solely out of
the revenues or other receipts, funds or moneys of the Issuer
specifically pledged to the payment thereof in the manner and
to the extent in this Indenture specified and nothing in the
Bonds or in this Indenture shall be considered as pledging any
other revenues, receipts, funds, moneys or assets of the
Issuer.
ARTICLE VI.
BOND FUND
Section 601. Creation of the Bond Fund. There is
hereby created by the Issuer and ordered established with the
Trustee a trust fund to be designated "Rhode Island Port
Authority and Economic Development Corporation Bond
Fund -- Newport Electric Corporation Project, 1994 Series",
which shall be used to pay the principal of, redemption
premium (if any) and the interest on, the Bonds. There shall
be established as trust accounts within the Bond Fund a
Company Payments Account, an Accrued Interest Account, a
Credit Facility Account, and a Fixed Rate Credit Facility
Account.
Section 602. Payments into the Bond Fund. Any
accrued interest on the Bonds shall be deposited in the
Accrued Interest Account. There shall be paid into the
Company Payments Account in the Bond Fund, as and when
received,
(a) each payment by the Company pursuant to
Section 5.3 of the Loan Agreement (which payment (together
with any investments thereof and the income therefrom and
proceeds thereof) shall at all times be held by the Trustee
in the Company Payments Account in the Bond Fund); and
(b) each other payment received by the Trustee under
and pursuant to any of the provisions of this Indenture or
the Loan Agreement which is required, or which is
accompanied by directions that such payment is, to be paid
into the Company Payments Account in the Bond Fund (which
payment (together with any investments thereof and the
income therefrom and the proceeds thereof) shall at all
times be held by the Trustee in the Company Payments
Account in the Bond Fund; including all other payments
referred to in this clause).
There shall be paid into the Credit Facility Account
in the Bond Fund, as and when received, any and all moneys
drawn by the Trustee under the Letter of Credit pursuant to
Sections 902(a) and (c) hereof.
There shall be paid into the Fixed Rate Credit
Facility Account in the Bond Fund, as and when received, any
and all moneys drawn by the Trustee under the Fixed Rate
Credit Facility pursuant to Sections 902A(a) and (b) hereof.
Section 603. Use of Moneys in the Bond Fund.
(a) Except as provided in Section 606, moneys in the
Bond Fund shall be used solely for the payment of the
principal of, the redemption premium (if any) and the
interest on, the Bonds.
(b) At the maturity date, upon acceleration, upon the
occurrence of an Event of Default of the type described in
clause (d) of Section 1201 and the resulting automatic
acceleration, and at the redemption date prior to maturity
of each Bond and at the due date of each installment of
interest on each Bond the Trustee shall withdraw as
specified below, from time to time, sufficient moneys from
the Company Payments Account and Credit Facility Account or
Fixed Rate Credit Facility Account in the Bond Fund to pay
the principal of, the redemption premium (if any) and
accrued interest on, the Bonds as the same become due and
payable, which authorization and direction the Trustee
hereby accepts.
(c) Prior to the Fixed Rate Conversion Date, funds
for the payment of the principal of and interest on the Bonds
shall be derived from the following sources:
(1) Funds for the payment of the principal of the
Bonds, whether at maturity, by acceleration or upon
redemption, shall be drawn by the Trustee from funds in the
Bond Fund in the order of priority indicated below and,
subject to Section 213 of this Indenture, in each case
applied first to Bonds other than Company Bonds (until the
principal of Bonds not Company Bonds shall have been paid
in full) and second to Company Bonds:
(i) upon the due date of any principal of the
Bonds, or the final maturity date of the Bonds,
amounts in the Credit Facility Account in the Bond
Fund, which represent amounts drawn by the Trustee
under the Letter of Credit pursuant to Section 902(a)
hereof;
(ii) upon the occurrence of an Event of Default
described in Section 1201(d) hereof (which results in
automatic acceleration of payment of the Bonds), or
upon the occurrence of any other Event of Default
hereunder and acceleration of payment of the Bonds,
amounts in the Credit Facility Account in the Bond
Fund, which represent amounts drawn by the Trustee
under the Letter of Credit pursuant to Section 902(c)
hereof;
(iii) amounts in the Company Payments Account in
the Bond Fund, which represent payments received by
the Trustee from the Company pursuant to Section 5.3
of the Loan Agreement, and amounts derived from the
investment of such amounts; and
(iv) any other amounts in the Company Payments
Account in the Bond Fund and which were received by
the Trustee under and pursuant to the Loan Agreement
or from any other source and were accompanied by
directions by the Company that such monies are to be
paid into the Company Payments Account in the Bond
Fund, and amounts derived from the investment of such
amounts.
(2) Funds for the payment of interest payments on the
Bonds shall be derived from the following sources in the
order of priority indicated below and, subject to
Section 213 of this Indenture, in each case applied first
to interest payments on Bonds other than Company Bonds
(until the interest payments on Bonds not Company Bonds
shall have been paid in full) and second to interest
payments on Company Bonds:
(i) except as otherwise provided in clause (ii)
below, with respect to interest payments due at any
time, amounts in the Credit Facility Account in the
Bond Fund and which represent amounts drawn by the
Trustee under the Credit Facility pursuant to
Section 902(a) hereof;
(ii) with respect to interest payment due upon
the occurrence of an Event of Default described in
Section 1201(d) hereof (which results in an automatic
acceleration of payment of the Bonds), or upon the
occurrence of any other Event of Default hereunder and
acceleration of payment of the Bonds, amounts in the
Credit Facility Account in the Bond Fund and which
represent amounts drawn by the Trustee under the
Credit Facility pursuant to Section 902(c) hereof;
(iii) amounts in the Company Payments Account in
the Bond Fund and which represent payments received by
the Trustee from the Company pursuant to Section 5.3
of the Loan Agreement, and amounts derived from the
investment of such amounts; and
(iv) all other amounts in the Company Payments
Account in the Bond Fund and which were received by
the Trustee under and pursuant to the Loan Agreement
or from any other source and were accompanied by
directions by the Company that such moneys are to be
paid into the Company Payments Account in the Bond
Fund, and amounts derived from the investment of such
amounts.
(d) After the Fixed Rate Conversion Date, funds for
the payment of the principal of, and the redemption premium
(if any) and the interest on, the Bonds shall be derived from
the following sources in the order of priority indicated below
and in each case applied first to Bonds other than Company
Bonds (until the principal of, and the redemption premium (if
any) and the interest on, the Bonds not Company Bonds shall
have been paid in full) and then to Company Bonds:
(1) amounts in the Fixed Rate Credit Facility Account
in the Bond Fund and which represent amounts drawn by the
Trustee under the Fixed Rate Credit Facility pursuant to
Section 905 hereof;
(2) amounts in the Company Payments Account in the
Bond Fund and which represent payments received by the
Trustee from the Company pursuant to Section 5.3(a) of the
Loan Agreement, and amounts derived from the investment of
such amounts; and
(3) all other amounts in the Company Payments Account
in the Bond Fund and which were received by the Trustee
under and pursuant to the Loan Agreement or from any other
source and were accompanied by directions by the Company
that such moneys are to be paid into the Company Payments
Account in the Bond Fund, and amounts derived from the
investment of such amounts.
(e) Upon an Event of Default hereunder of the type
described in clause (d) of Section 1201, and the drawing by
the Trustee under the Credit Facility or Fixed Rate Credit
Facility pursuant to the proviso to Section 902(c) or 902A(b)
as a result thereof, the Trustee shall pay the proceeds of
such drawing to the Bondholders, for application to the
payment of the principal of, redemption premium, if any, and
interest on the Bonds, subject to Section 213 of this
Indenture, and to the extent of such payment the obligations
of the Issuer under this Indenture shall be deemed to have
been satisfied.
Section 604. Non-presentment of Bonds at Final
Maturity. If any Bond shall not be presented for payment when
the principal thereof becomes due, either at maturity or at
the redemption date, provided moneys sufficient to pay such
Bond shall have been made available to the Trustee and are
held in the appropriate account in the Bond Fund for the
benefit of the holder thereof, all liability of the Issuer to
the holder thereof for the payment of such Bond shall
forthwith cease, terminate and be completely discharged, and
thereupon it shall be the duty of the Trustee to hold such
moneys, subject to the provision of Section 606, in the Bond
Fund, without liability for interest thereon, for the benefit
of the holder of such Bond, who shall thereafter be restricted
exclusively to moneys so held by the Trustee, for any claim of
whatever nature on his part hereunder or on, or with respect
to, such Bond.
Section 605. Moneys to Be Held in Trust. All moneys
paid over to the Trustee for the account of the Bond Fund (to
be held in the Company Payments Account or the Accrued
Interest Account or the Credit Facility Account or the Fixed
Rate Credit Facility Account therein) under any provision
hereof shall be held (subject to the provisions of
Section 606) in trust by the Trustee for the benefit of the
holders of the Bonds entitled to be paid therefrom.
Section 606. Payments to the Company and the Bank
from the Bond Fund.
(a) Any moneys remaining in the Company Payments
Account in the Bond Fund after payment in full of all Bonds
(taking into account Section 1102), and termination of the
Loan Term, the fees, charges and expenses of the Trustee,
the Paying Agent, any Co-Paying Agent, Bond Registrar and
the Issuer which have accrued and which will accrue and all
other items required to be paid hereunder shall be paid
first to the Bank if any amounts are then outstanding under
the Reimbursement Agreement and next to the Company.
(b) Any moneys remaining in the Credit Facility
Account or the Fixed Rate Credit Facility Account in the
Bond Fund after payment in full of the Bonds (taking into
account Section 1102), termination of the Loan Term and the
satisfaction of the conditions specified in Section 1101
hereof shall be paid to the Bank.
(c) All funds in the Bond Fund held by the Trustee
constituting the payment or Redemption Price of Bonds not
yet presented for payment or redemption shall be retained
by the Trustee exclusively for the benefit of the holders
of those Bonds; if after two (2) years such moneys have not
been claimed, such moneys shall be paid first to the Bank
if any amounts are then outstanding under the Reimbursement
Agreement, and next to the Company, subject to any other
requirements of law as may be applicable to such moneys,
and all liability of the Trustee with respect to such
moneys shall thereupon cease.
ARTICLE VII.
PROJECT FUND AND REBATE FUND
Section 701. Creation of the Project Fund. There is
hereby created by the Issuer and ordered established with the
Trustee a trust fund to be designated "Rhode Island Port
Authority and Economic Development Corporation Project Fund -
Newport Electric Corporation Project - 1994 Series".
Section 702. Disposition of Bond Proceeds. Upon the
issuance and a delivery of the Bonds, the net proceeds of the
sale of the Bonds less accrued interest, if any, shall be
deposited in the Project Fund.
Section 703. Disbursements from Project Fund.
(a) Immediately on the deposit of proceeds of the
Bonds into the Project Fund and without the need for any
requisition, the Trustee shall pay such proceeds to Fleet, as
trustee for the Outstanding Bonds. The Issuer shall instruct
Fleet that such monies are to be held by Fleet as provided in
the Original Indenture as amended by the First Supplemental
Indenture. The Issuer shall notify Fleet to apply such
amounts to the payment of the principal of the Series 1982 A
Bonds and the Series 1988 Bonds on February 10, 1994.
(b) All moneys deposited in the Project Fund
(including moneys earned on investments made pursuant to
Section 4.7 of the Loan Agreement) after disbursement of
moneys in the Project Fund as provided by Section 4.3 of the
Loan Agreement shall be (i) used by the Trustee, at the
written request of the Company to the maximum extent
practicable consistent with making partial redemptions of
Bonds at the earliest date permitted herein or for the
purchase of Bonds for the purposes of cancellation prior to
the earliest date permitted herein for redemption or (ii) paid
into the Bond Fund to pay interest on the Bonds or (iii) used
in a combination of (i) and (ii) as is provided in such
written direction. Any balance remaining of such retained
moneys after full payment of all such Project costs shall be
used by the Trustee as directed in writing by the Company in
the manner specified in clauses (i), (ii) or (iii) of this
subsection. Amounts directed by the Company to be used by the
Trustee to redeem Bonds or to purchase Bonds for the purpose
of cancellation shall not, pending such use, be invested at a
yield which exceeds the yield on the Bonds. Such money shall
not be directed by the Company to be used for the purposes
described in clauses (i), (ii) or (iii) without providing the
Trustee with an opinion of Bond Counsel stating that such use
will not impair the exemption of the interest on the Bonds
from federal income taxation pursuant to Section 103(a) of the
Code.
The disbursement or payments specified in this
subsection shall be made by the Trustee only in accordance
with and upon receipt of a written requisition for such
payment signed by the Authorized Company Representative,
reviewed and approved by the Bank, and acknowledged by an
Authorized Issuer Representative. Such requisition shall be
in substantially the form attached to the Loan Agreement as an
exhibit and by this reference thereto made a part hereof.
A duplicate copy of each requisition shall be
furnished to the Issuer simultaneously with the filing of the
original with the Trustee.
In making any such payment from the Project Fund, the
Trustee may rely on any such requisition and any such
certificates delivered to it pursuant to this Section and the
Trustee shall be relieved of all liability with respect to
making such payments in accordance with such requisitions and
such supporting certificate or certificates without inspection
of the Project or any other investigation.
(c) The Trustee shall maintain adequate records
pertaining to the Project Fund and all disbursements therefrom.
Section 704. Creation of the Rebate Fund. There is
hereby created by the issuer and ordered established with the
Trustee a trust fund to be designated "Rhode Island Port
Authority and Economic Development Corporation Rebate Fund -
Newport Electric Corporation Project 1994 Series".
Section 705. Payments into the Rebate Fund. There
shall be paid into the Rebate Fund such amounts at such times
as are required to be paid by the Company pursuant to the Tax
Regulatory Agreement as the Rebate Amount. Computations of
the Rebate Amount shall be furnished to the Trustee by the
Company in accordance with the Tax Regulatory Agreement. The
Trustee shall provide the Company with such information
regarding investments of moneys on deposit in the funds
created by this Indenture as shall be required under the Tax
Regulatory Agreement. The Trustee may rely on such
computations and shall be relieved of all liability with
respect thereto.
Section 706. Disbursements from the Rebate Fund. The
Trustee, upon receipt of written instructions from an
Authorized Company Representative in accordance with the Tax
Regulatory Agreement, shall pay to the United States out of
amounts on deposit in the Rebate Fund (a) not later than 30
days after the end of each five year period following the date
of issuance of the Bonds, an amount such that, together with
amounts previously paid, the total amount paid to the United
States is equal to 90% of the Rebate Amount calculated as of
the end of the most recent Computation Period as provided by
the Company to the Trustee pursuant to Section 702 and (b) not
later than 30 days after the date on which all of the Bonds
have been paid in full, 100% of the Rebate Amount as of the
end of the final Computation Period as provided by the Company
to the Trustee pursuant to Section 702. The Trustee may
conclusively rely upon directions and instructions received
from the Company and shall have no independent obligations
with respect to computations of the amounts required to be
paid into the Rebate Fund, or the application of amounts on
deposit in the Rebate Fund.
ARTICLE VIII.
BOND PURCHASE FUND
Section 801. Creation of the Bond Purchase Fund.
There is hereby created by the Issuer and ordered established
with the Trustee a trust fund to be designated "Rhode Island
Port Authority and Economic Development Corporation Bond
Purchase Fund -- Newport Electric Corporation Project, 1994
Series", which shall be used to pay the Purchase Price of
Bonds required to be purchased by the Trustee pursuant to
Sections 301 and 302. There shall be established as trust
accounts within the Bond Purchase Fund a Company Payments
Account, a Remarketing Account and a Credit Facility Account.
Neither the Issuer nor the Company shall have any interest in
the Remarketing Account or Credit Facility Account.
Section 802. Payments Into the Bond Purchase Fund.
There shall be paid into the following accounts in the Bond
Purchase Fund, as and when received,
(a) all proceeds of the remarketing of Bonds by the
Remarketing Agent pursuant to Section 303 to persons other
than the Company, its Affiliates and the Issuer (such
proceeds (together with any investments thereof) and the
income therefrom and the proceeds thereof)) shall at all
times be held by the Trustee in the Remarketing Account in
the Bond Purchase Fund);
(b) each payment by the Company pursuant to Section
5.4 of the Loan Agreement (which payment (together with any
investments thereof and the income therefrom and proceeds
thereof) shall at all times be held by the Trustee in the
Company Payments Account); and
(c) each other payment received by the Trustee under
and pursuant to any of the provisions of this Indenture or
the Loan Agreement which is required, or which is
accompanied by directions that such payment is, to be paid
into the Company Payments Account in the Bond Purchase Fund
(which payment (together with any investments thereof and
the income therefrom and proceeds thereof) shall at all
times be held by the Trustee in the Remarketing Account
representing proceeds of the remarketing of Bonds by the
Remarketing Agent pursuant to Section 303 or any investment
thereof and the income therefrom and proceeds thereof).
(d) There shall be paid into the Credit Facility
Account in the Bond Purchase Fund, as and when received,
any and all moneys drawn by the Trustee under the Credit
Facility pursuant to Section 902(b) hereof.
Section 803. Use of Moneys in the Bond Purchase Fund.
(a) Except as provided in Section 805, moneys in the
Bond Purchase Fund shall be used solely for the payment of
the Purchase Price of Bonds required to be purchased by the
Trustee on any Optional Tender Date or Mandatory Tender
Date pursuant to Section 301 and 302.
(b) On each Conversion Date, Optional Tender Date or
Mandatory Tender Date, the Trustee shall withdraw, from
time to time, sufficient moneys from the Remarketing
Account and Credit Facility Account in the Bond Purchase
Fund to pay the Purchase Price of Bonds required to be
purchased by the Trustee on each Optional Tender Date,
Mandatory Tender Date or Conversion Date pursuant to
Section 301 and 302, as the same become due and payable,
which authorization and direction the Trustee hereby
accepts. Funds for the payment of the Purchase Price of
such Bonds shall be drawn by the Trustee from the
Remarketing Account and Credit Facility Account in the Bond
Purchase Fund in the order of priority indicated below and,
subject to Section 213 of this Indenture, in each case
applied first to Bonds other than Company Bonds (until the
Purchase Price for Bonds not Company Bonds shall have been
paid in full) and second to Company Bonds;
(1) amounts in the Remarketing Account in the Bond
Purchase Fund which represent proceeds of the remarketing
of such Bonds pursuant to Section 303 (other than any
proceeds derived directly or indirectly from a remarketing
of Bonds to the Company, its Affiliates, or the Issuer)
received by the Trustee on or prior to 12:00 noon, New York
City time on such Optional Tender Date, Mandatory Tender
Date, or Conversion Date;
(2) amounts in the Credit Facility Account in the
Bond Purchase Fund which represent moneys drawn under the
Credit Facility; and
(3) amounts in the Company Payments Account which
represent payments made by the Company pursuant to Section
5.4 of the Loan Agreement or described in Section 802(c)
hereof, and amounts derived from the investment of such
amounts.
(c) If prior to the Conversion Date, either an Event
of Default shall occur hereunder and the payment of the Bonds
shall be accelerated pursuant to Section 1202 (or if such
Event of Default is an Event of Default of the type described
in clause (d) of Section 1201, then regardless of whether or
not the payment of the Bonds shall have been accelerated), or
the Bonds are to be redeemed pursuant to Section 306(a) or
306(b), the Trustee shall transfer to the Credit Facility
Account in the Bond Fund all moneys then held by the Trustee
in the Credit Facility Account in the Bond Purchase Fund,
which shall thereafter be deemed to be amounts drawn under the
Credit Facility pursuant to Section 902(a) or 902(c), as
appropriate, for all purposes hereof.
Section 804. Moneys to be Held in Trust. All moneys
paid over to the Trustee for the account of the Bond Purchase
Fund (to be held in the Company Payments Account, the
Remarketing Account or the Credit Facility Account therein)
under any provision hereof are held in trust by the Trustee
for the benefit of the holders of the Bonds entitled to be
paid therefrom.
Section 805. Payments to the Company and the Bank
from the Bond Purchase Fund.
(a) Any moneys remaining in the Company Payments
Account in the Bond Purchase Fund after payment in full of
the Bonds (taking into account Section 1102) and
termination of the Loan Term, shall be paid to the Company.
(b) Any moneys held by the Trustee in the
Remarketing Account in the Bond Purchase Fund shall be
retained by the Trustee exclusively for the benefit of
holders of Bonds not yet presented for payment of the
Purchase Price thereof; such moneys shall not be paid to
the Company or the Bank or to any other person other than
the holders of Bonds entitled thereto, and any such holder
shall look only to such moneys for the payment of the
Purchase Price of such Bonds. Provided, however, that if
after two (2) years such moneys have not been claimed, such
moneys shall be paid first to the Bank if any amounts are
then outstanding under the Reimbursement Agreement and next
to the Company, subject to any other requirements of law as
may be applicable to such moneys, and all liability of the
Trustee with respect to such moneys shall thereupon cease.
(c) Any moneys remaining in the Credit Facility
Account in the Bond Purchase Fund following any Fixed Rate
Conversion Date, and any moneys remaining in the Credit
Facility Account in the Bond Purchase Fund after payment in
full of the Bonds (taking into account Section 1202) and
termination of the Loan Term, shall be paid to the Bank
forthwith following such Conversion Date or Payment in Full
and termination, as the case may be.
(d) Any moneys remaining in the Credit Facility
Account in the Bond Purchase Fund on any Optional Tender
Date or Mandatory Tender Date which (i) were drawn by the
Trustee on such date pursuant to Section 902(b) to provide
for the purchase of Bonds tendered pursuant to Section 301,
and (ii) which are not applied to the purchase of Bonds
tendered on such Optional Tender Date or Mandatory Tender
Date, shall be immediately paid to the Bank.
(e) All moneys held by the Trustee in the Company
Payments Account in the Bond Purchase Fund constituting the
Purchase Price of Bonds not yet presented for payment shall
be retained by the Trustee exclusively for the benefit of
the holders of those Bonds; if after two (2) years such
moneys have not been claimed, such moneys shall be paid
first to the Bank if any amounts are then outstanding under
the Reimbursement Agreement and next to the Company,
subject to any other requirements of law as may be
applicable to such moneys, and all liability of the Trustee
with respect to such moneys shall thereupon cease. All
funds in the Remarketing Account and in the Credit Facility
Account in the Bond Purchase Fund constituting the Purchase
Price of Bonds not yet presented for payment shall be
retained by the Trustee exclusively for the benefit of the
holders of those Bonds; if after two (2) years such moneys
have not been claimed, such moneys shall be paid first to
the Bank if any amounts are then outstanding under the
Reimbursement Agreement and next to the Company, except as
otherwise may be required by applicable law, and all
liability of the Trustee with respect to such moneys shall
thereupon cease.
ARTICLE IX.
LETTER OF CREDIT
Section 901. Delivery of Letter of Credit.
(a) Pursuant to the Reimbursement Agreement, the
Bank has agreed, subject to certain conditions, to deliver
to the Trustee on the date of delivery of the Bonds for the
account of the Company the initial Letter of Credit, to be
held by the Trustee in trust in order to provide for the
payment of the principal, Redemption Price and Purchase
Price of and the interest on the Bonds, and the Trustee
hereby agrees to accept the initial Letter of Credit and to
perform its obligations with respect thereto in accordance
with the express terms and conditions of this Indenture,
the Loan Agreement and the initial Letter of Credit.
The initial Letter of Credit will be issued pursuant
to the Reimbursement Agreement.
(b) The initial Letter of Credit will be an
irrevocable obligation of the Bank to pay to the Trustee,
upon presentation of drafts and certificates in accordance
with the terms thereof, (i) an aggregate amount not
exceeding $7,925,000 for the payment of principal or that
portion of the Purchase Price or Redemption Price of the
Bonds corresponding to principal of the Bonds and (ii) an
aggregate amount not exceeding $107,500 for the payment of
interest on that portion of the Purchase Price or
Redemption Price of the Bonds corresponding to interest on
the Bonds (being an amount equal to interest accruing on
the Bonds for a period of 45 days, calculated at an assumed
rate of 11% on the basis of a 365-day year).
(c) The initial Letter of Credit will expire on
the earliest to occur of (i) the Stated Termination Date,
(ii) the date upon which the Bank honors a draft drawn on
the Letter of Credit accompanied by a certificate of the
Trustee which states that such draft is the final draft and
that, upon the honoring of such draft, the Letter of Credit
will expire in accordance with its terms, (iii) the date
upon which the Bank receives a certificate from the Trustee
stating that no Bonds entitled to the benefits of the
Letter of Credit are outstanding hereunder, (iv) the close
of business on the first Business Day following receipt of
notice by the Bank from the Trustee that all of the Bonds
have been converted to the Fixed Rate Mode; (v) the fifth
business day following the date on which Bonds supported by
the Credit Facility shall be tendered or redeemed as a
result of receipt by the Trustee of written notice from the
Bank of the Bank's determination to terminate the Credit
Facility on such fifth business day as a result of the
occurrence of an "Event of Default" under the Reimbursement
Agreement and to direct either a mandatory tender or
acceleration pursuant hereto, and (vi) the date on which
the Bank receives a written certificate from the Trustee
stating that a substitute or replacement Credit Facility
has been obtained. Upon such expiration the Trustee shall
surrender the Letter of Credit to the Bank. A Credit
Facility must be maintained in effect with respect to any
Bonds.
(d) The obligation of the Bank under the Letter
of Credit will be reduced (and not reinstated) to the
extent of any drawing thereunder to pay principal (or the
portion of the redemption price, but not the Purchase
Price, corresponding to principal) of the Bonds. With
respect to any drawing to pay interest (or the portion of
the Purchase Price, but not the redemption price,
corresponding to interest) on the Bonds in the Weekly Mode,
the Letter of Credit shall be reinstated on the eighth day
following such drawing, unless prior to such day the Bank
has notified the Trustee that such reinstatement will not
be made because the Company has not reimbursed the Bank for
such drawings or because an Event of Default under the
Reimbursement Agreement has occurred and is continuing.
With respect to any drawing to pay interest (or the portion
of the Purchase Price, but not the Redemption Price,
corresponding to interest) on Bonds in the Flexible Mode,
the Letter of Credit shall be immediately reinstated after
each drawing, unless prior to or concurrent with such
drawing the Bank has notified the Trustee that such
reinstatement will not be made because the Company has not
reimbursed the Bank for one or more previous drawings not
constituting an "Advance" as defined under the
Reimbursement Agreement, or because an Event of Default
under the Reimbursement Agreement has occurred and is
continuing. Following any drawing to pay the portion of
the Purchase Price corresponding to principal of Bonds, the
Letter of Credit shall be reinstated in the amount of such
drawing upon the reimbursement to the Bank to the amount so
drawn (whether as a result of the subsequent remarketing of
such Bonds or otherwise).
Except with respect to any Company Bonds or Bank Bonds
so long as the Letter of Credit is in effect: (i) the
Trustee shall draw moneys under the Letter of Credit in
accordance with the terms thereof to the extent necessary
to make timely payments of principal and interest (and that
portion of the Redemption Price or the Purchase Price
corresponding to principal and interest) on the Bonds and
(ii) the Trustee shall draw moneys under the Letter of
Credit in accordance with the terms thereof on each date
that the Bonds (or portions thereof in authorized
denominations) are tendered for purchase to the extent
proceeds of remarketing the Bonds are insufficient to pay
the Purchase Price of the Bonds.
When a drawing is made to enable the Trustee to pay
the Purchase Price of the Bonds delivered to it, Bonds in an
aggregate principal amount equal to the amount of the portion
of the Purchase Price equal to principal shall be delivered to
the Trustee and held by the Trustee for the account of the
Company. Any Bonds so held by the Trustee shall be released
as soon as practicable by the Trustee for delivery to the
Company or to such persons as the Company shall designate in
writing to the Trustee once the Trustee has delivered a
certificate to the Bank in the form of Annex E to the Letter
of Credit accompanied by the amount to be reimbursed in
immediately available funds, and has received a copy of such
Annex E, time-stamped, if available from the Bank.
Section 902. Letter of Credit Drawings. The Trustee
shall draw moneys under the Letter of Credit in the following
circumstances and only in the following circumstances:
(a) The Trustee shall, without making any prior
demand or claim upon the Company, make a drawing under and
in accordance with the Letter of Credit so as to receive
moneys thereunder in an amount which shall be sufficient to
pay in full (i) the principal of the Bonds other than Bank
Bonds and interest on the Bonds (other than Bank Bonds or
Company Bonds) when due, and (ii) the principal of the
Bonds other than Bank Bonds and accrued interest on the
Bonds (and to be accrued interest in the case of Flexible
Rate Bonds) (other than Bank Bonds or Company Bonds) to be
redeemed pursuant to Section 306, in each case by 12:00
noon, New York City time, on the date such payment is
required to be made hereunder.
(b) The Trustee shall, without making any prior
demand or claim upon the Company, make a drawing under and
in accordance with the Letter of Credit to the extent that
moneys in the Bond Purchase Fund representing proceeds (not
including proceeds derived directly or indirectly from the
Company) from the remarketing of Bonds pursuant to Section
303 or amounts derived from the investment of such proceeds
are not available for such purpose, to pay the Purchase
Price of all Bonds (other than Company Bonds) required to
be purchased by the Trustee pursuant to Sections 301 and
302, by 12:00 noon, New York City time, on the date such
payment is required to be made hereunder.
(c) Upon the occurrence of an Event of Default and
the acceleration of payment of the Bonds pursuant to
Section 1202, the Trustee shall, without making any prior
demand or claim upon the Company, make a drawing on the
date of such declaration of acceleration under the Letter
of Credit so as to receive same day funds thereunder in an
amount which will be sufficient, to pay the principal of
and accrued and to be accrued interest on the Bonds (other
than Company Bonds); provided that if such Event of Default
is an event of default of the type described in clause (d)
of Section 1201, (which results in an automatic
acceleration on the date of such default), then, the
Trustee shall, without making any prior demand or claim
upon the Company, make a drawing under the Letter of Credit
on the day immediately following the date of such Event of
Default so as to receive same day funds thereunder in an
amount which will be sufficient, to pay the principal of
and accrued interest on the Bonds (other than Company
Bonds).
Section 903. Disposition of Moneys Drawn Under Letter
of Credit. All amounts drawn by the Trustee under the Letter
of Credit shall be applied, as follows:
(a) Amounts drawn under the Letter of Credit pursuant
to Section 902(a) shall be deposited in the Credit Facility
Account in the Bond Fund and applied as provided in Section
603 or 606, as the case may be.
(b) Amounts drawn under the Letter of Credit pursuant
to Section 902(b) shall be deposited in the Credit Facility
Account in the Bond Purchase Fund unless an Event of
Default shall have occurred hereunder and the payment of
the Bonds shall have been accelerated pursuant to Section
1202 (or if such Event of Default is an Event of Default of
the type described in clause (d) of Section 1201, upon the
automatic acceleration in which case such amounts shall be
deposited by the Trustee in the Credit Facility Account in
the Bond Fund) and applied as provided in Section 803 or
805, as the case may be.
(c) Amounts drawn under the Letter of Credit pursuant
to Section 902(c) shall be deposited into the Credit
Facility Account in the Bond Fund and shall be paid out of
the Bond Fund and distributed to the bondholders pursuant
to Section 603.
Section 904. Alternate Credit Facility. Upon
satisfaction of the requirements described below and subject
to the succeeding paragraph, 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 an Alternate Credit Facility; provided,
however, that (i) the Credit Facility being replaced shall in
no event be released until the Company has given not less than
45 days' written notice to the Issuer, the Trustee and the
Remarketing Agent, and the Trustee has received the proceeds
of all outstanding drawings on the Credit Facility being
replaced, (ii) if any Bonds supported by the Credit Facility
being replaced are in the Weekly Mode, the Trustee has given
not less than 30 days' written notice of the release of the
Credit Facility to owners of such Bonds in the Weekly Mode,
and (iii) if any Bonds supported by the Credit Facility being
replaced are in the Flexible Mode, the Credit Facility being
replaced shall in no event be released earlier than on an
Effective Date for all such Bonds.
Any Credit Facility then in effect shall not be
released, and no written certificate shall be sent by the
Trustee to the Bank pursuant to Section 901(c)(vi) hereof
until the effective date of the Alternate Credit Facility.
Prior to the replacement of any Credit Facility, the
Company shall deliver to the Trustee: (i) an opinion of
counsel for the issuer of the Alternate Credit Facility to the
effect that it constitutes a legal, valid and binding
obligation of the issuer enforceable in accordance with its
terms; (ii) an opinion of Bond Counsel to the effect that the
issuance of an Alternate Credit Facility will not adversely
affect the exclusion of interest on the Bonds from gross
income for federal income tax purposes and that such Credit
Facility is permitted hereunder; (iii) an opinion of counsel
to the Company stating that the delivery of such substitute
Credit Facility is authorized under the Loan Agreement and
complies with the terms thereof; (iv) a certificate of the
Bank that amounts due under the Reimbursement Agreement have
been paid and that the Company has fulfilled all its
obligations arising out of the Reimbursement Agreement; and
(v) if the Bonds are rated at the time of such delivery, the
Company shall furnish to the Trustee written evidence from
Moody's, if the Bonds are rated by Moody's, and from S&P, if
the Bonds are rated by S&P, that such rating agency has
reviewed the proposed Alternate Credit Facility and that the
substitution of the proposed Alternate Credit Facility will
not, by itself, result in a reduction of its rating of the
Bonds from that which then prevails.
Each Credit Facility must:
(i) be an irrevocable, unconditional obligation of a
financial institution;
(ii) be on terms no less favorable to the Trustee
than the Letter of Credit and entitle the Trustee 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, and (A) at least 45
days' accrued interest at the Maximum Rate on the principal
amount of Bonds outstanding in the Weekly Mode and (B) at
least 45 days' accrued interest at the Maximum Rate on the
principal amount of Bonds outstanding in the Flexible Mode; and
(iii) provide for an original term which may not
expire in less than 360 days and which may not expire or be
terminated prior to the fifth business day after the Mandatory
Tender Date applicable to Bonds being supported by the Credit
Facility. The Company shall not enter into any reimbursement
agreement or similar arrangement with the issuer of a Credit
Facility or agree to any amendment thereof which in any way
limits the obligation of such issuer to provide funds under
the Credit Facility for the purchase of Bonds without the
prior written consent of the holders of 100% of the principal
amount of the Bonds outstanding and entitled to the benefit
thereof.
ARTICLE IX-A
FIXED RATE CREDIT FACILITY
Section 901A. Delivery of Fixed Rate Credit Facility.
(a) The Fixed Rate Credit Facility, if any, will be
an irrevocable obligation of the Provider to pay to the
Trustee, upon presentation of drafts and certificates in
accordance with the terms thereof, (i) an aggregate amount not
exceeding $8,083,500 for the payment of principal or
Redemption Price of the Bonds and (ii) an aggregate amount not
exceeding 195 days' accrued interest on the Bonds at the Fixed
Rate, calculated on the basis of a year consisting of twelve
30 day months for the payment of interest on the Bonds.
(b) Any Fixed Rate Credit Facility must:
(i) be an irrevocable, unconditional obligation of a
financial institution;
(ii) be on terms no less favorable to the Trustee
than the Letter of Credit and entitle the Trustee 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 Fixed Rate Credit Facility, any premium
applicable thereto, and at least 195 days accrued interest at
the Fixed Rate on the principal amount of Bonds outstanding in
the Fixed Rate Mode; and
(iii) provide for an original term which may not
expire earlier than three (3) years from the Fixed Rate
Conversion Date (or September 1, 2011, if earlier).
Section 902A. Fixed Rate Credit Facility Drawings.
The Trustee shall draw moneys under the Fixed Rate Credit
Facility in the following circumstances and only in the
following circumstances:
(a) The Trustee shall, without making any prior
demand or claim upon the Company, make a drawing under and
in accordance with the Fixed Rate Credit Facility so as to
receive moneys thereunder in an amount which shall be
sufficient to pay in full (i) the principal of and interest
on the Fixed Rate Bonds when due, (ii) the principal of and
premium, if any, and accrued interest on the Fixed Rate
Bonds to be redeemed pursuant to Section 306, in each case
by 12:00 p.m., New York City time, on the date such payment
is required to be made hereunder.
(b) Upon the occurrence of an Event of Default and
the acceleration of payment of the Bonds pursuant to
Section 1202, the Trustee shall, without making any prior
demand or claim upon the Company, make a drawing under the
Fixed Rate Credit Facility so as to receive same day funds
thereunder in an amount which will be sufficient to pay the
principal of and accrued interest on the Fixed Rate Bonds
on the date of such declaration of acceleration; provided
that if such Event of Default is an Event of Default of the
type described in clause (d) of Section 1201, which results
in automatic acceleration then the Trustee shall, without
making any prior demand or claim upon the Company, make a
drawing under the Fixed Rate Credit Facility so as to
receive same day funds thereunder in an amount which will
be sufficient to pay the principal of and accrued interest
on the Bonds on the day immediately following the date of
such Event of Default.
Section 903A. Disposition of Moneys Drawn Under Fixed
Rate Credit Facility. All amounts drawn by the Trustee under
the Fixed Rate Credit Facility shall be applied, as follows:
(a) Amounts drawn under the Fixed Rate Credit
Facility pursuant to Section 902A (a) shall be deposited
in the Fixed Rate Credit Facility Account in the Bond Fund
and applied as provided in Section 603 or 606, as the case
may be.
(b) Amounts drawn under the Fixed Rate Credit
Facility pursuant to Section 902A (b) shall be deposited
into the Fixed Rate Credit Facility Account in the Bond
Fund and shall be paid out of the Bond Fund and distributed
to the bondholders pursuant to Section 603.
Section 904A. Alternate Fixed Rate Credit Facility.
Upon satisfaction of the requirements described below and
subject to the succeeding paragraph, the Company may replace a
Fixed Rate Credit Facility then in effect with an Alternate
Fixed Rate Credit Facility; provided, however, that the Fixed
Rate Credit Facility being replaced shall in no event be
terminated or released until the Company has given not less
than 45 days' written notice to the Issuer and the Trustee,
and the Trustee has received the proceeds of all outstanding
drawings on the Fixed Rate Credit Facility being replaced.
Prior to the replacement of any Fixed Rate Credit
Facility, the Company shall deliver to the Trustee: (i) an
opinion of counsel for the Provider of the Alternate Fixed
Rate Credit Facility to the effect that it constitutes a
legal, valid and binding obligation of the Provider
enforceable in accordance with its terms; (ii) an opinion of
Bond Counsel to the effect that the issuance of an Alternate
Fixed Rate Credit Facility will not adversely affect the
exclusion of interest on the Bonds from gross income for
federal income tax purposes and that such Fixed Rate Credit
Facility is permitted hereunder; (iii) an opinion of counsel
to the Company stating that the delivery of such Alternate
Fixed Rate Credit Facility is authorized under the Loan
Agreement and complies with the terms thereof and (iv) a
certificate of the Provider of the Fixed Rate Credit Facility
being replaced that amounts due under the applicable Fixed
Rate Credit Facility Reimbursement Agreement have been paid
and that the Company has fulfilled all its obligations arising
out of the applicable Fixed Rate Credit Facility Reimbursement
Agreement; and (v) if the Fixed Rate Bonds are rated at the
time of such delivery, the Company shall furnish to the
Trustee and Paying Agent written evidence from Moody's, if the
Fixed Rate Bonds are then rated by Moody's, and from S&P, if
the Fixed Rate Bonds are then rated by S&P, that such rating
agency has reviewed the proposed Alternate Fixed Rate Credit
Facility and that the substitution of the proposed Alternate
Fixed Rate Credit Facility will not, by itself, result in a
reduction of its rating of the Fixed Rate Bonds from that
which then prevails.
ARTICLE X.
INVESTMENTS
Section 1001. Bond Fund Investments. Moneys held in
the Accrued Interest Account and the Company Payments Account
in the Bond Fund shall be invested and reinvested by the
Trustee in Permitted Investments as directed in writing by the
Company pursuant to Section 4.4 of the Loan Agreement. Any
investment herein shall be made in accordance with the Tax
Regulatory Agreement, including particularly the terms and
conditions thereof relating to arbitrage. Such investments
shall be held by or under the control of the Trustee and shall
be deemed at all times a part of the Bond Fund and the interest
accruing thereon and any profit realized therefrom shall be
credited to the Bond Fund and any loss resulting therefrom
shall be credited to the Bond Fund and any loss resulting
therefrom shall be charged to the Bond Fund. The Trustee is
directed to sell and convert to cash a sufficient amount of
such investments whenever the cash held in the Bond Fund is
insufficient to provide for the payment of the principal of
(whether at the maturity date or the redemption date prior to
maturity) and premium, if any, and interest on the Bonds as the
same become due and payable.
Amounts in the Credit Facility Account or Fixed Rate
Credit Facility Account of the Bond Fund, including without
limitation amounts held pending disbursement under this
Indenture, may be invested and reinvested by the Trustee, at
the request of and as directed in writing by the Company, only
in Governmental Obligations maturing in time to pay principal
of and interest on the Bonds and not more than 90 days after
the date on which they are acquired.
If the Company specifies to the Trustee the investment
so to be sold and converted to cash, the Trustee shall not, to
the extent it conforms to such specification, have any
responsibility for confirming that such specifications conform
to the obligations of the Company set forth in the Tax
Regulatory Agreement. If the Company fails to specify in
writing to the Trustee the investments so to be sold and
converted to cash, the Trustee may sell and convert to cash any
investment credited to the Bond Fund as, in the Trustee's sole
discretion, without regard to the restrictions on investment
set out herein or in the Tax Regulatory Agreement, the Trustee
may decide so to sell and convert.
Section 1002. Project Fund Investments. Moneys held
in the Project Fund shall be invested and reinvested by the
Trustee in Permitted Investments as directed in writing by the Company.
with the Tax Regulatory Agreement, including particularly the
terms and conditions thereof relating to arbitrage. Such
investments shall be held by or under the control of the
Trustee and shall be deemed at all times a part of the Project
Fund and the interest accruing thereon and any profit
resulting therefrom shall be credited to the Project Fund and
any loss resulting therefrom shall be charged to the Project
Fund. The Trustee is directed to sell and convert to cash a
sufficient amount of such investments whenever the cash held
in the Project Fund is insufficient to make a timely
disbursement required to be made therefrom.
If the Company specifies to the Trustee the
investments so to be sold and converted to cash, the Trustee shall
not, to the extent it conforms to each specification,
have any responsibility for confirming that such specifications
conform to the obligations of the Company set forth in the Tax
Regulatory Agreement. If the Company fails to specify in
writing to the Trustee the investments so to be sold and
converted to cash, the Trustee may sell and convert to cash any
investment credited to the Project Fund as, in the Trustee's
sole discretion, without regard to the restrictions on
investment set out herein or in the Tax Regulatory Agreement,
the Trustee may decide so to sell and convert.
Section 1003. Rebate Fund Investment. Moneys held in
the Rebate Fund shall be invested and reinvested by the Trustee
in Permitted Investments as directed in writing by the
Company. Any investment herein shall be made in accordance
with the Tax Regulatory Agreement, including particularly the
terms and conditions thereof relating to arbitrage. Such
investments shall be held by or under the control of the
Trustee and shall be deemed at all times a part of the Rebate
Fund and the interest accruing thereon and any profit realized
therefrom shall be credited to the Rebate Fund and any loss
resulting therefrom shall be charged to the Rebate Fund. The
Trustee is directed to sell and convert to cash a sufficient
amount of such investments whenever cash held in the Rebate
Fund is insufficient to provide for the payment of the Rebate
Amount.
If the Company specifies to the Trustee the
investments so to be sold and converted to cash, the Trustee
shall not, to the extent it conforms to such specification,
have any responsibility for confirming that such specifications
conform to the obligations of the Company set forth in the Tax
Regulatory Agreement. If the Company fails to specify in
writing to the Trustee the investments so to be sold and
converted to cash, the Trustee may sell and convert to cash any
investment credited to the Rebate Fund as, in the Trustee's
sole discretion, without regard to the restrictions on
investment set out herein or in the Tax Regulatory Agreement,
the Trustee may decide so to sell and covert.
Section 1004. Bond Purchase Fund Investments. Moneys
held in the Company Payments Account, the Remarketing Account
and the Credit Facility Account in the Bond Purchase Fund shall
be invested and reinvested by the Trustee in Permitted
Investments as directed in writing by the Company pursuant to
Section 4.4 of the Loan Agreement and subject to the same
restrictions as the Bond Fund, the Project Fund and the Rebate
Fund.
ARTICLE XI.
DISCHARGE OF LIEN
Section 1101. Discharge of Lien and Security
Interests. If the Issuer shall pay or cause to be paid the
principal of, the redemption premium (if any) and the interest
on, the Bonds at the times and in the manner stipulated
therein and herein, and if the Issuer shall keep, perform and
observe all agreements in the Bonds and herein expressed as to
be kept, performed and observed by it or on its part, then the
lien hereof, these presents and the Trust Estate and the
security interests shall cease, determine and be void. Upon
the lien hereof, these presents and the Trust Estate and the
security interests ceasing, determining and being void as
provided in the preceding sentence, the Trustee, upon receipt
by the Trustee of an opinion of Counsel (which may be Counsel
to the Company) stating that in the opinion of the signer all
conditions precedent to the satisfaction and discharge of this
Indenture have been complied with, shall cancel and discharge
this Indenture and the security interests, and shall execute
and deliver to the Issuer such instruments in writing as shall
be required to cancel and discharge this Indenture and the
security interests, shall apply any moneys and Government
Obligations comprising the Trust Estate in accordance with
Section 606, except for moneys and Government Obligations held
in the Bond Fund for the purpose of paying Bonds which have
not yet been presented for payment and moneys and Government
Obligations held in the Bond Purchase Fund for the purpose of
paying the Purchase Price of Bonds which have not yet been
presented for purchase; provided, however, such cancellation
and discharge of the Indenture shall not terminate the powers
and rights granted to the Trustee with respect to the payment,
transfer and exchange of the Bonds.
Section 1102. Provision for Payment of Bonds. After
the Fixed Rate Conversion Date, Bonds shall be deemed to have
been paid within the meaning of Section 1101 if
(a) there shall have been irrevocably deposited in
the Bond Fund either:
(i) sufficient moneys, or
(ii) Government Obligations of such maturities
and interest payment dates and bearing such interest
(at a yield not to exceed the yield on the Bonds) as
will, without further investment or reinvestment of
either the principal amount thereof or the interest
earnings thereon (said earnings to be held in trust
also), and without any requirement that the same be
sold prior to their stated maturities be sufficient
together with any moneys referred to in subsection (i)
above, for the payment at their respective maturities
or redemption dates prior to maturity, of the
principal thereof and the interest to accrue thereon
to such maturity or redemption dates, as the case may
be;
(b) there shall have been paid to the Trustee all
Trustee's, Paying Agent's, Co-Paying Agent's, Bond
Registrar's and Issuer's fees and expenses due or to become
due in connection with the payment or redemption of the
Bonds or there shall be sufficient available moneys in the
Bond Fund to make said payments; and
(c) if any Bonds are to be redeemed on any date prior
to their maturity, the Issuer shall have given to the
Trustee in form satisfactory to the Trustee irrevocable
instructions to redeem such Bonds on such date and either
evidence satisfactory to the Trustee that all redemption
notices required by this Indenture have been given or
irrevocable power authorizing the Trustee to give such
redemption notices.
Limitations elsewhere specified herein regarding the
investment of moneys held by the Trustee in the Bond Fund
shall not be construed to prevent the depositing and holding
in the Bond Fund of the obligations described in the preceding
subparagraph (a)(ii) for the purpose of defeasing the lien of
this Indenture as to Bonds which have not yet become due and
payable.
Section 1103. Discharge of the Indenture.
Notwithstanding the fact that the lien of this Indenture upon
the Trust Estate may have been discharged and cancelled in
accordance with Section 1101, this Indenture and the rights
granted and duties imposed hereby, to the extent not
inconsistent with the fact that the lien upon the Trust Estate
may have been discharged and cancelled, shall nevertheless
continue and subsist until the principal of, the redemption
premium (if any) and the interest on, all of the Bonds shall
have been paid in full or the Trustee shall have applied in
accordance with Sections 606 and 805 all funds and Government
Obligations theretofore held by the Trustee for payment or
purchase of any Bonds not theretofore presented for payment or
purchase.
ARTICLE XII.
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS
Section 1201. Defaults; Events of Default. If any of
the following events occurs, subject to the terms of Section
1211, it is hereby defined as and declared to be and to
constitute an "Event of Default" hereunder:
(a) default in the due and punctual payment of any
interest on any Bond; or
(b) default in the due and punctual payment of the
principal and redemption premium, if any, of any Bond
whether at the maturity date or the redemption date prior
to maturity, or upon acceleration thereof; or
(c) default in the due and punctual payment of the
Purchase Price of any Bond; or
(d) an Act of Bankruptcy; or
(e) the occurrence of an Event of Default under the
Loan Agreement; or
(f) subject to Section 1211 herein, default in the
performance or observance of any other of the agreements or
conditions on the part of the Issuer contained herein or in
the Bonds after 30 days written notice specifying such
failure and requesting that it be remedied is given by the
Trustee to the Issuer; or
(g) a notice of non-reinstatement of amounts drawn
under the Letter of Credit to pay interest or the portion
of the Purchase Price equal to the principal amount on the
Bonds is given by the Bank to the Trustee in accordance
with the Letter of Credit; or
(h) receipt by the Trustee of written notice from the
Bank of a termination of the Credit Facility and directing
the Trustee to accelerate the principal of the Bonds and
the interest thereon to the date of acceleration because an
event of default has occurred under the Reimbursement
Agreement.
Upon the occurrence of any Event of Default under
subsections 1201 (a), (b), (e), (g), or (h), the Trustee shall
immediately give Electronic Notice of that Event of Default to
the Remarketing Agent and the Credit Facility Issuer. If an
Event of Default occurs under Section 1201 (c), the Trustee
shall immediately give Electronic Notice of that Event of
Default to the Trustee, and the Trustee shall give Electronic
Notice to the Remarketing Agent, the Company and the Credit
Facility Issuer.
Section 1202. Acceleration. Upon (i) the occurrence
of an Event of Default under subsection (a), (b), (c), (e),
(g), or (h) of Section 1201, or (ii) the occurrence of an
Event of Default under subsection (f) of Section 1201 and at
the written request of the owners of not less than
thirty-three percent (33%) in principal amount of the
Outstanding Bonds and written direction from the Bank, the
Trustee shall, by notice in writing delivered to the Issuer,
the Bank, the Paying Agent and the Company, declare the
principal of the Bonds and the interest accrued thereon to the
date of such acceleration immediately due and payable. Upon
the occurrence of an Event of Default under subsection (d) of
Section 1201, the principal of the Bonds and the interest
accrued thereon to the date of such Event of Default shall
automatically be accelerated to be due and payable, without
any act or action on the part of any person. Upon any such
acceleration, the Trustee shall immediately draw under the
Credit Facility an amount sufficient to pay the aggregate
principal amount of the Outstanding Bonds, premium if any, and
all interest on the Bonds then due or to become due to the
date of such acceleration, the Trustee shall pay in accordance
with the provisions of Section 1206, but solely from amounts
drawn under the Credit Facility to pay the aggregate principal
amount of the outstanding Bonds, premium if any, and all
interest on the Bonds then due and to become due to the date
of such acceleration. Upon any declaration of acceleration
hereunder, the Trustee shall immediately declare the payments
required to be made by the Company under Section 5.3 of the
Loan Agreement to be immediately due and payable in accordance
with Section 10.2 of the Loan Agreement. Interest shall cease
to accrue on the Bonds on the date of acceleration.
Section 1203. Other Remedies. Upon the occurrence of
an Event of Default, the Trustee shall have the power to
proceed with any right or remedy granted by the Constitution
and laws of the State, as it may deem best, including any
suit, action or special proceeding in equity or at law for the
specific performance of any covenant or agreement contained
herein or for the enforcement of any proper legal or equitable
remedy as the Trustee shall deem most effectual to protect the
rights aforesaid, insofar as such may be authorized by law.
The rights herein specified are to be cumulative to all other
available rights, remedies or powers and shall not exclude any
such rights, remedies or powers.
No delay or omission to exercise any right or remedy
accruing upon any Event of Default shall impair any such right
or remedy or shall be construed to be a waiver of any such
Event of Default or acquiescence therein; and every such right
and remedy may be exercised from time to time and as often as
may be deemed expedient.
No waiver of any Event of Default hereunder, whether
by the Trustee or by the Bondholders, shall extend to or shall
affect any subsequent Event of Default or shall impair any
rights or remedies consequent thereon.
Section 1204. Rights of Bondholders. Upon the
occurrence of an Event of Default and if requested so to do by
the holders of a majority in principal amount of Bonds then
outstanding and indemnified as provided in Section 1301, the
Trustee, subject to the provisions of Section 1205, shall be
obligated to exercise such one or more of the rights and
remedies conferred by this Article as the Trustee, being
advised by Counsel, shall deem most expedient in the interests
of the Bondholders.
Section 1205. Right of Bondholders and the Bank to
Direct Proceedings. Anything herein to the contrary
notwithstanding, the holders of a majority in principal amount
of Bonds then outstanding and, prior to the Fixed Rate
Conversion Date, the Bank (so long as the Bank has not failed
to honor a proper draw on the Credit Facility) shall have the
right, at any time, by an instrument or instruments in writing
executed and delivered to the Trustee, to direct the method
and place of conducting all proceedings to be taken in
connection with the enforcement of the terms and conditions
hereof, or for the appointment of a receiver or any other
proceedings hereunder.
Section 1206. Application of Moneys. All moneys
received by the Trustee (other than pursuant to the Credit
Facility or any monies in the Bond Fund held for the benefit
of the Bondholders) pursuant to any right given or action
taken under the provisions of this Article shall, after
payment of the costs and expenses of the proceedings resulting
in the collection of such moneys and of the fees, expenses,
liabilities and advances due, incurred or made by the Trustee,
be deposited in the Company Payments Account in the Bond Fund
and all moneys drawn by the Trustee pursuant to any right
given or action taken under the provisions of this Article
under the Credit Facility shall be deposited in the Credit
Facility Account or Fixed Rate Credit Facility Account as
applicable in the Bond Fund and shall be applied, as follows:
(a) Unless the principal of all the Bonds shall have
become or shall have been declared due and payable, all
such money shall be applied:
FIRST - to the payment to the persons entitled
thereto of all installments of interest then due on
the Bonds (other than installments of interest on
Company Bonds and on Bonds with respect to the payment
of which moneys and/or Government Obligations are set
aside in the Bond Fund), in the order of the maturity
of the installments of such interest and, if the
amount available shall not be sufficient to pay in
full any particular installment, then to the payment
ratably, according to the amounts due on such
installment, to the persons entitled thereto, without
any discrimination or privilege;
SECOND - to the payment to the persons entitled
thereto of the unpaid principal of any of the Bonds
which shall have become due (other than principal of
Company Bonds and Bonds with respect to the payment of
which moneys and/or Government Obligations are set
aside in the Bond Fund), in the order of their due
dates, with interest on such Bonds from the respective
dates upon which they become due and, if the amount
available shall not be sufficient to pay in full the
principal coming due on such Bonds on any particular
date, together with such interest, then to the payment
ratably, according to the amount of principal due on
such date, to the persons entitled thereto without any
discrimination or privilege; and
THIRD - to the payment of the principal and
interest on the Company Bonds then due, subject to
Section 213 of this Indenture, in such amounts as the
holders thereof shall direct the Trustee.
(b) If the principal of all the Bonds shall have
become due or shall have been declared due and payable, all
such moneys shall be applied FIRST, to the payment of the
principal and the interest then due and unpaid upon the
Bonds (other than principal of and the interest on Company
Bonds and Bonds with respect to the payment of which moneys
and/or Government Obligations are set aside in the Bond
Fund), without preference or priority of principal over
interest or of interest over principal, or of any
installment of interest over any other installment of
interest, or of any Bond over any other Bond, ratably,
according to the amounts due respectively for principal and
interest, to the persons entitled thereto without any
discrimination or privilege, and SECOND, subject to Section
213 of this Indenture, to the payment of the principal of
and interest on the Company Bonds in such manner as the
holders thereof shall direct the Trustee.
(c) If the principal of all the Bonds shall have been
declared due and payable, and if such declaration shall
thereafter have been rescinded and annulled under the
provisions of this Article, then, subject to the provisions
of paragraph (b) of this Section in the event that the
principal of all the Bonds shall later become due or be
declared due and payable, the moneys shall be applied in
accordance with the provisions of paragraph (a) of this
Section.
Whenever moneys are to be applied pursuant to the
provisions of this Section, such moneys shall be applied at
such times, and from time to time, as the Trustee shall
determine, having due regard to the amount of such moneys
available for application and the likelihood of additional
moneys becoming available for such application in the future.
Whenever the Trustee shall apply such funds, it shall fix the
date (which shall be the earlier of one (1) Business Day after
the acceleration or an Interest Payment Date unless it shall
deem another date is more suitable) upon which such
application is to be made and upon such date interest on the
amounts of principal to be paid on such dates shall cease to
accrue. The Trustee shall give such notice as it may deem
appropriate of the deposit with it of any such moneys and of
the fixing of any such date, and shall not be required to make
payment to the holder of any Bond until such Bond shall be
presented to the Trustee.
Whenever all Bonds and the interest thereon have been
paid under the provisions of this Section all expenses and
charges of the Trustee and Paying Agent and the Bond Registrar
have been paid, any balance remaining in the Bond Fund shall
be disposed of in the manner provided in Section 606.
Section 1207. Rights and Remedies Vested in the
Trustee. All rights and remedies of action (including the
right to file proof of claims) hereunder or under any of the
Bonds may be enforced by the Trustee without the possession of
any of the Bonds or the production thereof in any trial or
other proceedings relating thereto and any such suit or
proceeding instituted by the Trustee shall be brought in its
name as Trustee without the necessity of joining as plaintiffs
or defendants any holders of the Bonds, and any recovery of
judgment shall be for the equal benefit of the holders of the
Bonds.
Section 1208. Rights and Remedies of Bondholders. No
holder of any Bond shall have any right to institute any suit,
action or proceeding in equity or at law for the enforcement
hereof, for the execution of any trust hereof or for the
appointment of a receiver or to enforce any other right or
remedy hereunder, unless (i) a default has occurred of which
the Trustee has been notified as provided in
subsection (e)(iv) of Section 1301, or of which by said
subsection it is deemed to have notice, (ii) such default
shall have become an Event of Default and the holders of
thirty-three per centum (33%) in principal amount of Bonds
then outstanding shall have made written request to the
Trustee and shall have offered reasonable opportunity either
to proceed to exercise the powers hereinbefore granted or to
institute such action, suit or proceeding in its own name, and
(iii) such bondholders have offered to the Trustee indemnity
as provided in Section 1301 and the Trustee shall thereafter
fail or refuse to exercise the powers hereinbefore granted, or
to institute such action, suit or proceeding in its own name.
Such notification, request and offer of indemnity are hereby
declared in every case at the option of the Trustee to be
conditions precedent to the execution of the powers and trusts
hereof, and to any action or cause of action for the
enforcement hereof, or for the appointment of a receiver or
for any other right or remedy hereunder; it being understood
and intended that no one or more holders of the Bonds shall
have nay right in any manner whatsoever to affect, disturb or
prejudice the lien hereof by its, his or their action or to
enforce any right or remedy hereunder except in the manner
herein provided, and that all proceedings at law or in equity
shall be instituted, had and maintained in the manner herein
provided and for the benefit first of the holders of all Bonds
other than Company Bonds and second to the holders of Company
Bonds. Nothing herein contained shall, however, affect or
impair the right of any bondholder to enforce the payment of
the principal and purchase price of, the redemption premium
(if any) and the interest on, any Bond at and after the date
such payment is due, or the obligation of the Issuer or the
Trustee to pay the principal and purchase price of, the
redemption price (if any) and the interest on, each of the
Bonds issued hereunder to the respective holders thereof at
the time, place, from the source and in the manner expressed
in the Bonds.
Section 1209. Termination of Proceedings. If the
Trustee shall have proceeded to enforce any right or remedy
hereunder by the appointment of a receiver, by entry or
otherwise, and such proceedings shall have been discontinued
or abandoned for any reason, or shall have been determined
adversely, then and in every such case the Issuer and the
Trustee shall be restored to their former positions and rights
hereunder with respect to the Trust Estate, and all rights,
remedies and powers of the Trustee shall continue as if no
such proceedings had been taken.
Section 1210. Waivers of Events of Default. The
Trustee shall waive any Event of Default hereunder and its
consequences and rescind any declaration of maturity of
principal upon the written request of both the holders of a
majority in principal amount of all Bonds then outstanding and
the Bank in the case of any Event of Default; provided,
however, that there shall not be waived
(a) any Event of Default pertaining to the payment of
the principal or purchase price of any Bond at its maturity
date or redemption date prior to maturity or purchase date,
or
(b) any Event of Default pertaining to the payment
when due of the interest on any Bond,
unless prior to such waiver or rescission, all arrears of
principal, purchase price and interest, with interest thereon
for the period of such default (to the extent permitted by
law) at the rate per annum equal to the Prime Rate in respect
of which such Event of Default shall have occurred, and all
expenses, liabilities and advances of the Trustee in
connection with such Event of Default, including reasonable
attorneys fees, shall have been paid or provided for, and the
holders of a majority in principal amount of all Bonds then
outstanding and the Bank have consented to such waiver or
rescission and in case of any such waiver or rescission, or in
case any proceeding taken by the Trustee on account of any
such Event of Default shall have been discontinued or
abandoned or determined adversely, then and in every such case
the Issuer, the Trustee, the Bank, and the Bondholders shall
be restored to their former positions and rights hereunder,
respectively, but no such waiver or rescission shall extend to
any subsequent or other Event of Default, or impair any right
consequent thereon. The Trustee shall not have any discretion
to waive any Event of Default hereunder and its consequences
except in the manner and subject to the terms expressed above
and only if the Credit Facility shall be in full force and
effect.
In no event shall any Event of Default under
Subsections (g) or (h) of Section 1201 be waived without the
prior written consent of the Bank and written evidence from
the Bank of full reinstatement of the Letter of Credit.
If a declaration of acceleration is made pursuant to
Section 1202, then and in every such case, the Trustee shall,
upon the written request of both the holders of a majority in
principal amount of all Bonds then outstanding, the Bank (if
all of the Bonds are not in the Fixed Rate Mode) and each
Provider (if some of the Bonds are in the Fixed Rate Mode),
annul such declaration, and the consequences thereof, provided
that at the time such declaration is annulled:
(A) no judgment or decree has been entered for the
payment of any moneys due pursuant to the Bonds;
(B) all arrears of interest on all of the Bonds and
all other sums payable under the Bonds (except as to
principal of, and interest on, the Bonds which has become
due and payable by reason of such declaration) shall have
been duly paid; and
(C) each and every default hereunder shall have been
waived pursuant to the preceding paragraph or otherwise
made good or cured;
and provided further, that no such annulment shall extend to
or affect any subsequent Event of Default or impair any right
consequent thereto. The Trustee shall not have any discretion
to annul any declaration of acceleration made pursuant to
Section 1202 and its consequences except in the manner and
subject to the terms expressed hereinabove.
Section 1211. Notice of Defaults; Opportunity of
Issuer and Company to Cure Defaults. No default specified in
Section 1201(f) shall constitute an Event of Default hereunder
until notice of such default by registered or certified mail
shall be given by the Trustee to the Issuer, the Company, and
the Bank, and the Issuer shall have had thirty (30) days after
receipt of such notice to correct said default or cause said
default to be corrected, and shall not have corrected said
default or caused said default to be corrected within the
applicable period; provided, further, that if a default
specified in said Section 1201(f) be such that it can be
corrected but not within the period specified herein, it shall
not constitute the basis of an Event of Default hereunder (a)
if corrective action capable of remedying such default is
instituted by the Issuer within the applicable period and
diligently pursued until the default is corrected, and (b) if
the Issuer shall within the applicable period furnish to the
Trustee and the Bank a certificate executed as provided in
Section 1301(e)(ii) certifying that said default is such that
it can be corrected but not within the applicable period and
that corrective action capable of remedying such default has
be instituted and is being diligently pursued and will be
diligently pursued until the default is corrected and (c) the
Bank consents to such extension of time within which the
Issuer is to cure such default. The Issuer shall notify the
Trustee and the Bank by certificate executed as above when
such default has been corrected. The Trustee shall be
entitled to rely upon any such certificate given pursuant to
this Section.
With regard to any default concerning which notice is
given to the Company or the Issuer under the provisions of
this Section, the Issuer hereby grants to the Company full
authority to perform any obligation the performance of which
by the Issuer is alleged in said notice to be in default, such
performance by the Company to be in the name and stead of the
Issuer with full power to do any and all things and acts to
the same extent that the Issuer could do and perform any such
things and acts and with power of substitution.
ARTICLE XIII.
THE TRUSTEE, PAYING AGENT AND CO-PAYING AGENT,
BOND REGISTRAR, CO-BOND REGISTRAR
Section 1301. Acceptance of the Trusts. The Trustee
hereby accepts the trusts imposed upon it hereby, and agrees
to perform said trusts, but only upon and subject to the
following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event
of Default and after the curing of all events of default
which may have occurred, undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture, and no implied agreement or obligations shall be
read into this Indenture against the Trustee; and, in the
absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform
to the requirements of this Indenture. In case an Event of
Default has occurred and is continuing, the Trustee shall
exercise such rights and powers vested in it by this
Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
(b) The Trustee may execute any of the trusts or
powers hereof and perform any of its duties by or through
attorneys, agents, receivers or employees and the Trustee
shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed with due
care by it hereunder, and shall be entitled to advice of
Counsel concerning all matters of trusts hereof and the
duties hereunder, and may in all cases pay such reasonable
compensation to all such attorneys, agents, receivers and
employees as may reasonably be employed in connection with
the trusts hereof. The Trustee may act upon the opinion or
advice of any attorney (who may be the attorney or
attorneys for the Issuer or the Company), approved by the
Trustee in the exercise of reasonable care. The Trustee
shall not be responsible for any loss or damage resulting
from any action or non-action in good faith in reliance
upon such opinion or advice.
(c) The Trustee shall not be responsible for any
recital herein, or in the Bonds (except in respect to the
authentication certificate of the Trustee endorsed on the
Bonds), or for the recording or re-recording, filing or
re-filing of this Indenture or the Loan Agreement, or for
insuring the Trust Estate or any part of the Project or
collecting any insurance moneys, or for the validity of the
execution hereof by the Issuer or of any supplements hereto
or instruments of further assurance, or for the sufficiency
of the security for the bonds, or for the value of or title
in and to the Trust Estate or any part of the Project or
otherwise as to the maintenance of the security hereof;
except that if the Trustee enters into possession of a part
or all of the Trust Estate pursuant to any provision hereof
it shall use due diligence in preserving the same, and the
Trustee shall not be bound to ascertain or inquire as to
the performance or observance of any agreements or
conditions on the part of the Issuer or on the part of the
Company under the Loan Agreement, except as hereinafter set
forth; but the Trustee may require of the Issuer or the
Company full information and advice as to the performance
of the agreement and conditions aforesaid and as to the
condition of the Trust Estate.
(d) Except to the extent herein specifically
provided, the Trustee shall not be accountable for the use
of the proceeds of any of the Bonds. The Trustee, the
Paying Agent, and Co-Paying Agent, the Bond Registrar, any
Co-Bond Registrar or the Remarketing Agent, in its
individual capacity, may in good faith buy, sell, own, hold
or deal in any of the Bonds issued hereunder, and may join
in any action which any Bondholder may be entitled to take
with like effect as if such person did not act in any
capacity hereunder. The Trustee, the Paying Agent, any
Co-Paying Agent, the Bond Registrar, any Co-Bond Registrar
or the Remarketing Agent, in its individual capacity,
either as principal or agent, may also engage in or be
interested in any financial or other transaction with the
Issuer or the Company, and may act as depository, trustee
or agent for any of them or for any committee or body of
bondholders or holders of other obligations of the Issuer
as freely as if such person did not act in any capacity
hereunder.
(e) Except as is otherwise provided in subsection (a)
above:
(i) The Trustee shall be protected in acting in
accordance with any notice, request, consent,
certificate, order, affidavit, letter, telegram or
other paper or document believed to be genuine and
correct and to have been signed or sent by the proper
person or persons. Any action taken by the Trustee,
pursuant hereto upon the request, authority or consent
of any person who at the time of making such request
or giving such authority or consent of any person who
at the time of making such request or giving such or
consent is the holder of any Bond, shall be conclusive
and binding upon all future holders of the same Bond
and upon Bonds issued in exchange therefor or in place
thereof.
(ii) As to the existence or non-existence of any
fact or as to the sufficiency or validity of any
instrument, paper or proceeding, the Trustee shall be
entitled to rely upon a certificate signed and
attested on behalf of the Issuer by an Authorized
Issuer Representative as sufficient evidence of the
facts therein contained and prior to the occurrence of
a default of which the Trustee has been notified as
provided in subsection (e)(iv) of this Section, or of
which by said subsection it is deemed to have notice,
shall also be at liberty to accept and rely upon a
similar certificate to the effect that any particular
dealing, transaction or action is necessary or
expedient, but may at its discretion secure such
further evidence deemed necessary or advisable, but
shall in no case be bound to secure the same. The
Trustee may accept a certificate of an Authorized
Issuer Representative under its seal to the effect
that such resolution has been adopted and is in full
force and effect.
(iii) The right of the Trustee to do things
enumerated herein shall not be construed as a duty and
the Trustee shall not be answerable for other than its
gross negligence or willful misconduct.
(iv) The Trustee shall not be required to take
notice or be deemed to have notice of any default
hereunder except failure to make any payments to the
Trustee required to be made by Article VI or Article
VIII and any Event of Default under Subsection (g) or
(h) of Section 1201, unless the Trustee shall be
specifically notified in writing of such default by
the Issuer, the Bank, or by the holders of at least
thirty-three per centum (33%) in principal amount of
Bonds. All notices or other instruments required to
be delivered to the Trustee must, in order to be
effective, be delivered at the Principal Office of the
Trustee, and in the absence of such notice so
delivered the Trustee may conclusively assume there is
no default except as aforesaid. In the event that any
payment required to be made by Article VI or VIII is
not paid when due, the Trustee shall immediately
notify the Company by telephone notice that such
payment has not been made and shall immediately
confirm such notice in writing to the Company.
(f) The Trustee shall not be personally liable for
any debts contracted or for damages to persons or property,
or for salaries or non-fulfillment of contracts during any
period in which it may be in the possession of or managing
the Project as herein provided.
(g) At reasonable times and as often as reasonably
requested in connection with its rights under this
Indenture, the Trustee and its duly authorized agents who
are acceptable to the Company shall have the right to, but
shall not be obligated to, inspect the Project as provided
in Section 8.2 of the Loan Agreement.
(h) The Trustee shall not be required to give any
bond or surety in respect of the execution of the said
trusts and powers or otherwise in respect of this Indenture.
(i) Notwithstanding anything elsewhere herein
contained, the Trustee shall have the right, but shall not
be required, to demand, in respect of the authentication of
any Bonds, the withdrawal of any cash, the release of any
property, or any action whatsoever within the purview
hereof, any showings, certificates, opinions, appraisals or
other information, or corporate action or evidence thereof,
in addition to that required by the terms hereof as a
condition of such action by the Trustee which the Trustee
deems desirable for the purpose of establishing the right
of the Issuer to the authentication of any Bonds, the
withdrawal of any cash, the release of any property or the
taking of any other action by the Trustee.
(j) Before taking any action hereunder at the request
or direction of any Bondholder, the Trustee may require
that an indemnity bond satisfactory to the Trustee be
furnished for the reimbursement of all expenses to which it
may be put and to protect it against all liability, except
liability which is adjudicated to have resulted from the
negligence or willful misconduct of the Trustee by reason
of any action so taken. Notwithstanding the foregoing, the
Trustee shall not, under any circumstances, suspend the
performance of its Ordinary Services pending reimbursement
for the expenses it has incurred in connection therewith.
(k) All moneys received by the Trustee, the Paying
Agent, or any Co-Paying Agent for the Bonds shall, until
used or applied or invested as herein provided, be held in
trust for the purposes for which they were received but
need not be segregated from other funds except to the
extent required herein or by law. Neither the Trustee, the
Paying Agent, any Co-Paying Agent nor the Remarketing Agent
shall be under any liability for interest on any moneys
received hereunder except such as may be agreed upon.
(l) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights
or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured to it.
Section 1302. Fees, Charges, Expenses and
Indemnification of Trustee. The Company shall pay or cause to
be paid the reasonable fees, charges and expenses of the
Trustee, Paying Agent, Depository and Bond Registrar as
required by Section 5.6 of the Loan Agreement and the Company
shall indemnify the Trustee, Paying Agent, Bond Registrar and
Depository as required by Section 5.6 of the Loan Agreement.
Upon the occurrence of an Event of Default, but only upon such
occurrence, the Trustee shall have a first lien on the Trust
Estate with right of payment prior to payment of the principal
of, the redemption premium (if any) and the interest on, any
Bond for the foregoing fees, charges and expenses.
Notwithstanding any provision hereof to the contrary, the
Trustee shall have no lien upon or right to receive payment of
any fees, charges, expenses, liabilities or advances (i) from
the Bond Fund or the Bond Purchase Fund or (ii) from amounts
drawn (or deemed to have been drawn) under the Letter of
Credit or held in the Credit Facility Account or Fixed Rate
Credit Facility Account in the Bond Fund or the Credit
Facility Account in the Bond Purchase Fund.
Section 1303. Notice to Bondholders and the Bank If
Default Occurs. If a default occurs of which the Trustee is
by subsection (e) (iv) of Section 1301 required to take notice
or if notice of a default be given as in said subsection (e)
(iv) provided, then the Trustee shall give (i) immediate
telephonic notice to the Bank, with written confirmation
thereof to follow within two (2) Business Days thereafter, and
(ii) written notice thereof by first-class mail, postage
prepaid, to the Bank and the holders of all Bonds then
outstanding, and, as to defaults described in Section 1201(f),
to the Issuer; provided, however, that, except in the case of
a default in the payment of the principal of (or premium, if
any) or interest on any Bond or in the payment of any Bond
Purchase Fund installment, the Trustee shall be protected in
withholding such notice from the Bondholders (but not the
Bank) if and so long as the board of directors, the executive
committee or a trust committee of directors and/or responsible
officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the
Bondholders.
Section 1304. Intervention by Trustee. In any
judicial proceeding to which the Issuer is a party which in
the opinion of the Trustee and its Counsel, has a substantial
bearing on the interest of the Bondholders, the Trustee may
intervene on behalf of the Bondholders and shall do so if
requested in writing by the holders of at least thirty-three
per centum (33%) in principal amount of the outstanding
Bonds. The rights and obligations of the Trustee under this
Section are subject to the approval of a court of competent
jurisdiction if such approval is required by law as a
condition to such intervention.
Section 1305. Successor Trustee. Any Company or
association into which the Trustee may be converted or merged,
or with which it may be consolidated, or to which it may sell
or transfer its trust business and assets as a whole or
substantially as a whole, or any corporation or association
resulting from any such conversion, merger, consolidation,
sale or transfer to which it is a party, ipso facto, shall be
and become successor Trustee hereunder and vested with all of
the title to the Trust Estate and all the trusts, powers,
discretions, immunities, privileges and all other matters as
was its predecessor, without the execution or filing of any
instrument or any further act, deed or conveyance on the part
of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 1306. Resignation by the Trustee. The
Trustee and any successor Trustee may at any time resign from
the trusts hereby created by giving written notice by
first-class mail, postage prepaid, to the Issuer, the Company
and the Bank and to each Bondholder, and such resignation
shall take effect upon the appointment of a successor Trustee
by the Bondholders or by the Issuer; provided, however, that
if a successor Trustee shall not have been appointed within
thirty (30) days from the date of such notice or resignation,
the resigning Trustee shall remain as Trustee but may petition
any court of competent jurisdiction for the appointment of a
successor Trustee.
Section 1307. Removal of the Trustee. The Trustee
may be removed at any time after thirty (30) days' written
notice, by an instrument or concurrent instruments in writing
delivered to the Trustee and to the Issuer, the Company, the
Paying Agent, any Co-Paying Agent, the Bond Registrar, any
Co-Bond Registrar, and the Bank, and signed by the holders of
a majority in principal amount of the outstanding Bonds;
provided, however, that such removal shall take effect only
upon the appointment of a successor Trustee, and provided,
further, that if a successor Trustee shall not have been
appointed within thirty (30) days from the date of such notice
or removal, the resigning Trustee shall remain as Trustee but
the holder of a majority in principal amount of the
Outstanding Bonds may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
Section 1308. Appointment of Successor Trustee by the
Bondholders; Temporary Trustee. If the Trustee shall resign,
be removed, be dissolved, be in course of dissolution or
liquidation, or shall otherwise become incapable of acting
hereunder or in case it shall be taken under the control of
any public officer, officers or a receiver appointed by a
court, a successor may be appointed by the holders of a
majority in principal amount of the outstanding Bonds, by an
instrument or concurrent instruments in writing signed by such
holders, or by their attorney-in-fact, duly authorized;
provided, nevertheless, that in case of such vacancy the
Issuer, by an instrument signed and attested by an Authorized
Issuer Representative under its seal, may appoint a temporary
Trustee to fill such vacancy until a successor Trustee shall
be appointed by the Bondholders in the manner above provided;
and any such temporary Trustee shall immediately and without
further act be superseded by the Trustee so appointed by such
Bondholders. Every such Trustee appointed pursuant to the
provisions of this Section shall be a trust company or bank
(having trust powers) in good standing, shall be located
within or outside the State, shall have an unimpaired capital
and surplus of not less than FIFTY MILLION DOLLARS
($50,000,000).
Section 1309. Concerning Any Successor Trustee.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to its predecessor and also to the
Issuer an instrument in writing accepting such appointment
hereunder, and thereupon such successor, without any further
act, deed or conveyance, shall, with the exception of the
lien, if any, as provided for in Section 5.6 of the Loan
Agreement, become fully vested with all the estates,
properties, rights, powers, trusts, duties and obligations of
its predecessor; but such predecessor shall, nevertheless, on
the written request of the Issuer, or of its successor,
execute and deliver an instrument transferring to such
successor Trustee all the estates, properties, rights, powers
and trusts of such predecessor hereunder; and every
predecessor Trustee shall deliver all securities and moneys
held by it as Trustee hereunder to its successor. Should any
instrument in writing from the Issuer be required by any
successor Trustee in order to more fully and certainly vest in
such successor the estates, properties, rights, powers and
trusts hereby vested or intended to be vested in the
predecessor any and all such instruments in writing shall, on
request, be executed, acknowledged and deliver by the Issuer.
The resignation of any Trustee and the instrument or
instruments removing any Trustee and appointing a successor
hereunder, together with all other instruments provided for in
this Article, shall be filed and/or recorded by the successor
Trustee in each recording office where the Financing
Statements shall have been filed and/or recorded. In the
event of any appointment of a successor Trustee, the Letter of
Credit or Fixed Rate Credit Facility, as the case may be,
shall be transferred to the successor Trustee pursuant to the
provisions thereof.
Section 1310. Right of Trustee to Pay Taxes and Other
Charges. If any tax, assessment or governmental or other
charge upon any part of the Trust Estate or the Project is not
paid as required herein, the Trustee may, but is not obligated
to, pay such tax, assessment or charge, without prejudice,
however, to any rights of the Trustee, the Bank or the
bondholders hereunder arising in consequent of such failure;
and any amount of any time so paid under this Section, with
interest thereon from the date of payment at the rate per
annum equal to the Prime Rate, shall become so much additional
indebtedness secured hereby, and the same shall be given a
preference in payment over the principal of, the redemption
premium (if any) and the interest on, the Bonds and shall be
paid out of the revenues and receipts from the Trust Estate,
if not otherwise caused to be paid; provided, however, that
the Trustee shall not have any such preference in payment of
any such tax, assessment or charge (i) from the Bond Fund or
the Bond Purchase Fund or (ii) from amounts drawn (or deemed
to have been drawn) under the Letter of Credit or held in the
Credit Facility Accounts in the Bond Fund or the Bond Purchase
Fund. The Trustee shall not be under obligation to make any
such payment unless it shall have been requested to do so by
the holders of at least thirty-three per centum (33%) in
principal amount of the Bonds then outstanding and shall have
been provided with sufficient moneys for the purpose of making
such payment.
Section 1311. Trustee Protected in Relying Upon
Resolutions, etc. The Trustee may accept as conclusive
evidence of the facts and conclusions stated therein and may
rely and shall be protected in acting or refraining from
acting upon the resolutions, opinions, certificates and other
instruments, papers or documents provided for herein.
Section 1312. Successor Trustee as Custodian of
Funds. Upon a change in the office of Trustee, the
predecessor Trustee which has resigned or has been removed
shall cease to be the holder of the Bond Fund, the Project
Fund and Rebate Fund and the Bond Purchase Fund, and the
successor Trustee shall become such holder.
Section 1313. Trust Estate May Be Vested in
Co-Trustee. It is the purpose hereof that there shall be no
violation of any law of any jurisdiction (including
particularly the laws of the State) denying or restricting the
right of banking corporations or associations to transact
business as trustee in such jurisdiction. It is recognized
that in case of litigation under this Indenture or the Loan
Agreement, and in particular in case of the enforcement of
either upon the occurrence of an Event of Default, it may be
necessary that the Trustee and the Issuer enter into a
supplemental indenture to appoint an additional individual or
institution as a separate Trustee or Co-Trustee as permitted
in Section 1501(e). The following provision of this Section
are adapted to these ends.
Upon the incapacity or lack of authority of the
Trustee, by reason of any present or future law of any
jurisdiction, to exercise any of the rights, powers and trusts
hereunder granted to the Trustee or to hold title to the Trust
Estate or to take any other action which may be necessary or
desirable in connection therewith, each and every remedy,
power, right, claim, demand, cause of action, immunity,
estate, title, interest and lien expressed or intended to be
exercised by or vested in or conveyed to the Trustee with
respect thereto shall be exercisable by and vest in a separate
Trustee or Co-Trustee appointed by the Trustee but only to the
extent necessary to enable the separate Trustee or Co-Trustee
to exercise such rights, powers and trusts, and every
agreement and obligation necessary to the exercise thereof by
such separate Trustee or Co-trustee shall run to and be
enforceable by either of them. Notwithstanding the foregoing,
any Co-Trustee appointed under the provisions of this
Indenture shall not become the beneficiary of the Letter of
Credit unless the Trustee transfer the Letter of Credit to
such Co-Trustee in accordance with the terms of the
Reimbursement Agreement.
Should any deed, conveyance or instrument in writing
from the Issuer be required by the separate Trustee or
Co-Trustee so appointed by the Trustee in order to more fully
and certainly vest in and confirm to him or it such
properties, rights, powers, trusts, duties and obligations,
any and all such deeds, conveyances and instruments shall, on
request, be executed, acknowledged and delivered by the
Issuer. In case any separate Trustee or Co-Trustee, or a
successor to either, shall die, become incapable of acting,
design or be removed, all the estates, properties, rights,
powers, trusts, duties and obligations of such separate
Trustee or Co-Trustee, so far as permitted by law, shall vest
in and be exercised by the Trustee until the appointment of a
new Trustee or successor to such separate Trustee or
Co-Trustee.
Section 1314. Filing of Certain Continuation
Statements. From time to time, the Trustee shall file or
cause to be filed continuation statements for the purpose of
continuing without lapse the effectiveness of (i) those
Financing Statements which shall have been filed at or prior
to the issuance of the Bonds in connection with the security
for the Bonds pursuant to the authority of the U.C.C., and
(ii) any previously filed continuation statements which shall
have been filed as herein required. The Issuer and the
Company shall sign and deliver to the Trustee or its designee
such continuation statements as may be requested of them from
time to time by the Trustee.
Section 1315. Paying Agent; Co-Paying Agent. Rhode
Island Hospital Trust National Bank is hereby appointed Paying
Agent for the Bonds. The Trustee may, with the approval of
the Company, appoint one or more Co-Paying Agents for the
Bonds, subject to the conditions set forth in Section 1316.
The Paying Agent and any such Co-Paying Agent shall designate
its Principal Office and mailing address and signify its
acceptance of the duties and obligations imposed upon it
hereunder by a written instrument of acceptance delivered to
the Issuer, the Company, the Trustee and the Bank under which
the Paying Agent and each such Co-Paying Agent will agree,
particularly:
(a) to hold all sums held by such Paying Agent or
Co-Paying Agent for the payment of the principal of, or the
redemption premium (if any) or the interest on, Bonds in
trust for the benefit of the Bondholders until such sums
shall be paid to such Bondholders or otherwise disposed of
as herein provided;
(b) to keep such books and records as shall be
consistent with prudent industry practice, to make such
books and records available for inspection by the Issuer,
the Trustee and the Company at all reasonable times and,
upon the request of the Trustee, to promptly furnish copies
of such books and records to the Trustee and to promptly
notify the Trustee of any change in such books or records;
and
(c) upon the request of the Trustee, to forthwith
deliver to the Trustee all sums so held in trust by such
Paying Agent or Co-Paying Agent.
The Issuer shall cooperate with the Trustee and the
Company to cause the necessary arrangements to be made and to
be thereafter continued whereby funds derived from the sources
specified in Section 602 will be made available for payment
when due of the Bonds as presented at the Principal Offices of
the Paying Agent and any Co-Paying Agent.
Section 1316. Qualifications of Paying Agent and
Co-Paying Agent; Resignation; Removal. The Paying Agent and
each Co-Paying Agent shall be banking associations or
corporations duly organized under the laws of the United
States of America or any state or territory thereof, having a
combined capital stock, surplus and undivided profits of at
least FIFTEEN MILLION DOLLARS ($15,000,000) and authorized by
law to perform all the duties imposed upon it by this
Indenture. The Paying Agent and any Co-Paying Agent may at
any time resign or be discharged of the duties and obligations
created by this Indenture by giving at least sixty (60) days
notice to the Issuer, the Company, the Trustee and the Bank.
The Paying Agent and any Co-Paying Agent may be removed at any
time, at the direction of the Company or the Trustee, by an
instrument signed by the Issuer and the Company or the
Trustee, as the case may be, and filed with the Paying Agent
or such Co-Paying Agent, as the case may be, and with the
Trustee, the Bond Registrar, any Co-Bond Registrar, and the
Bank.
In the event of the resignation or removal of the
Paying Agent or any Co-Paying Agent, the Paying Agent or such
Co-Paying Agent, as the case may be, shall pay over, assign
and deliver any moneys held by it in such capacity to its
successor or, if there be no successor, to the Trustee.
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 Issuer shall not
have appointed its successor as Paying Agent, the Trustee
shall ipso facto be deemed to be the Paying Agent for all
purposes of this Indenture until the appointment by the Issuer
of the Paying Agent or successor Paying Agent, as the case may
be.
Section 1317. Remarketing Agent. Goldman Sachs &
Co., has been appointed Remarketing Agent pursuant to the
Remarketing Agent's Agreement. The Company shall, with the
approval of the Issuer, appoint any successor Remarketing
Agent for the Bonds, subject to the conditions set forth in
Section 1318. The Remarketing Agent shall designate to the
Trustee its Principal Office and signify its acceptance of the
duties and obligations imposed upon it hereunder by a written
instrument of acceptance delivered to the Issuer, the Company
and the Trustee under which the Remarketing Agent will agree
particularly to (i) use its best efforts to place any Bond
delivered to the Trustee for purchase pursuant to Article III
hereof, and (ii) keep such books and records as shall be
consistent with prudent industry practice and to make such
books and records available for inspection by the Issuer, the
Trustee and the Company at all reasonable times. Receipt by
the Trustee of a fully executed copy of the Remarketing
Agent's Agreement shall constitute compliance with the
preceding sentence as to the Bank.
The Issuer shall cooperate with the Trustee, the Bond
Registrar, any Co-Bond Registrar and the Company to cause the
necessary arrangements to be made and to be thereafter
continued whereby funds from the sources specified herein and
in the Loan Agreement will be made available to pay the
purchase price of Bonds presented at the Principal Office of
the Trustee.
Section 1318. Qualifications of Remarketing Agent;
Resignation; Removal. Any Remarketing Agent shall be an
institution authorized by law to perform all the duties
imposed upon it by this Indenture. The Remarketing Agent may
at any time resign and be discharged of the duties and
obligations created by this Indenture by giving notice to the
Issuer, the Company, the Bank and the Trustee, such
resignation and discharge to become effective upon the earlier
of (i) 30 days following the date of such notice or (ii) the
designation of another Remarketing Agent hereunder. Upon 30
days' written notice to the Remarketing Agent, the Remarketing
Agent may be removed by the Issuer at the direction of the
Company, by an instrument signed by the Issuer and the Company
and filed with the Remarketing Agent and with the Trustee, the
Bank, the Depository, if applicable, and the Company.
Section 1319. Bond Registrar; Co-Bond Registrar.
Rhode Island Hospital Trust National Bank is hereby appointed
Bond Registrar for the Bonds. The Issuer may, with the
approval of the Company, appoint a Co-Bond Registrar to
perform one or more functions of the Bond Registrar under this
Indenture. The Bond Registrar and any such Co-Bond Registrar
shall designate its Principal Office and mailing address and
signify its acceptance of the duties imposed upon it hereunder
by a written instrument of acceptance delivered to the Issuer,
the Company, and the Trustee under which such Bond Registrar
or Co-Bond Registrar will agree, particularly, to keep such
books and records as shall be consistent with prudent industry
practice and to make such books and records available for
inspection by the Issuer, the Company, and the Trustee at all
reasonable times.
The Issuer shall cooperate with the Trustee and the
Company to cause the necessary arrangements to be made and to
be thereafter continued whereby Bonds, executed by the Issuer
and authenticated by the Trustee, shall be made available for
exchange and registration of transfer at the Principal Office
of the Bond Registrar. The Issuer shall cooperate with the
Trustee, the Bond Registrar and the Company to cause the
necessary arrangements to be made and to be thereafter
continued whereby the Paying Agent, any Co-Paying Agent and
the Remarketing Agent shall be furnished such records and
other information, at such times, as shall be required to
enable the Paying Agent, any Co-Paying Agent and the
Remarketing Agent to perform the duties and obligations
imposed upon them hereunder.
Section 1320. Qualifications of Bond Registrar and
Co-Bond Registrar; Resignation; Removal. The Bond Registrar
and each Co-Bond Registrar shall be a banking association or
corporation organized under the laws of the United States of
America or any state or territory thereof having a combined
capital stock, surplus and undivided profits of at least
FIFTEEN MILLION DOLLARS ($15,000,000) and authorized by law to
perform all the duties imposed upon it by this Indenture. The
Bond Registrar and the Co-Bond Registrar may at any time
resign and be discharged of the duties and obligations created
by this Indenture by giving at least sixty (60) days notice to
the Issuer, the Company, the Trustee and the Bank. The Bond
Registrar and any Co-Bond Registrar may be removed at any
time, at the direction of the Company, by an instrument signed
by the Issuer and the Company and filed with the Bond
Registrar or such Co-Bond Company and filed with the Bond
Registrar or such Co-bond Registrar, as the case may be, and
with the Trustee, the Paying Agent, any Co-Paying Agent, the
Remarketing Agent and the Bank.
In the event that the Bond Registrar shall resign or
be removed, or be dissolved, or if the property or affairs of
the Bond Registrar 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
Issuer shall not have appointed its successor as Bond
Registrar, the Trustee shall ipso facto be deemed to be the
Bond Registrar for all purposes of this Indenture until the
appointment by the Issuer of the Bond Registrar or successor
Bond Registrar, as the case may be.
Section 1321. Several Capacities. Anything in this
Indenture to the contrary notwithstanding, the same entity may
serve hereunder as the Trustee, the Paying Agent, the Bond
Registrar and the Remarketing Agent and in any other
combination of such capacities, to the extent permitted by law.
ARTICLE XIV.
MEETINGS OF BONDHOLDERS
Section 1401. Purposes for Which Bondholders'
Meetings May Be Called. A meeting of Bondholders may be
called at any time and from time to time for any of the
following purposes:
(a) to give any notice to the Issuer, the Company or
the Trustee, or to give any directions to the Trustee, or
to consent to the waiving of any default or Event of
Default hereunder and its consequences, or to take any
other action authorized to be taken by Bondholders pursuant
to Section 1208;
(b) to remove the Trustee pursuant to Section 1307,
and to appoint a successor Trustee pursuant to Section 1308;
(c) to consent to the execution of a supplemental
indenture pursuant to Section 1502, or to consent to the
execution of an amendment, change or modification of the
Loan Agreement pursuant to Section 1602; or
(d) to take any other action authorized to be taken
by or on behalf of the holders of any specified principal
amount of the Bonds under any other provision hereof or
under applicable law.
Section 1402. Place of Meetings of Bondholders.
Meetings of Bondholders may be held at such place or
places as the Trustee or, in case of its failure to act, the
Bondholders calling the meeting shall, from time to time
determine.
Section 1403. Call and Notice of Bondholders'
Meetings.
(a) The Trustee may at any time call a meeting of
Bondholders to be held at such time and at such place as
the Trustee shall determine. Notice of every meeting of
Bondholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be
taken at such meeting, shall be by first class mail postage
prepaid, to the Bondholders at the address shown on the
registration books.
(b) In case at any time the holders of at least 33%
in aggregate principal amount of the Bonds outstanding
shall have requested the Trustee to call a meeting of the
Bondholders by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and
the Trustee shall not have given the notice of such meeting
within twenty (20) days after receipt of such request, then
such Bondholders may determine the time and the place for
such meeting and may call such meeting to take any action
authorized in Section 1401 by giving notice thereof as
provided in subsection (a) of this Section.
Section 1404. Persons Entitled to Vote at
Bondholders' Meetings. To be entitled to vote at any meeting
of Bondholders, a person shall be a registered holder of one
or more Bonds outstanding, or a person appointed by an
instrument in writing as proxy for a bondholder by such a
bondholder. The only persons who shall be entitled to be
present or to speak at any meeting of Bondholders shall be the
persons entitled to vote at such meeting and their Counsel,
any representatives of the Trustee and its Counsel, any
representatives of the Issuer and its Counsel.
Section 1405. Determination of Voting Rights; Conduct
and Adjournment of Meetings.
(a) Notwithstanding any other provisions hereof, the
Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Bondholders in regard to proof
of the holding of Bonds and of the appointment and duties
of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the
meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding
of Bonds shall be proved in the manner specified in Section
1701 and the appointment of any proxy shall be proved in
the manner specified in Section 1701 or by having the
signature of the person executing the proxy witnessed or
guaranteed by any bank, banker or trust company authorized
by Section 1701 to certify to the holding of Bonds. Such
regulations may provide that written instruments appointing
proxies, regular on their face, may be presumed valid and
genuine without the proof specified in Section 1701 or
other proof.
(b) The Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the
meeting shall have been called by Bondholders as provided
in subsection (b) of Section 1403, in which case the
Bondholders calling the meeting shall in like manner
appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote
of the holders of a majority of the Bonds represented at
the meeting and entitled to vote.
(c) At any meeting each bondholder or proxy shall be
entitled to one vote for each $100,000 principal amount of
Bonds prior to the Conversion Date and each $5,000
principal amount of Bonds outstanding held or represented
by him after the Conversion Date; provided, however, that
no vote shall be cast or counted at any meeting in respect
of any bond challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The
chairman of the meeting shall have no right to vote, except
as a bondholder or proxy.
(d) At any meeting of Bondholders, the presence of
persons holding or representing Bonds in an aggregate
principal amount sufficient under the appropriate provision
hereof to take action upon the business for the transaction
of which such meeting was called shall constitute a
quorum. Any meeting of Bondholders called pursuant to
Section 1403 may be adjourned from time to time by vote of
the holders (or proxies for the holders) of a majority of
the Bonds represented at the meeting and entitled to vote,
whether or not a quorum shall be present; and the meeting
may be held as adjourned without further notice.
Section 1406. Counting Votes and Recording Action of
Meetings. The vote upon any resolution submitted to any
meeting of Bondholders shall be by written ballots on which
shall be subscribed the signatures of the Bondholders or of
their representatives by proxy and the number or numbers of
the Bonds outstanding held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors
of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record, at
least in triplicate, of the proceedings of each meeting of
Bondholders shall be prepared by the secretary of the meeting
and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken
and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and
showing that said notice was published or mailed as provided
in Section 1403. Each copy shall be signed and verified by
the affidavits of the permanent chairman and secretary of the
meeting and copies shall be delivered to the Issuer, the
Company and the Trustee to be preserved by the Trustee, which
copy shall have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
Section 1407. Revocation by Bondholders. At any time
prior to (but not after) the evidencing to the Trustee, in the
manner provided in Section 1406, of the taking of any action
by the holders of the percentage in aggregate principal amount
of the Bonds specified herein in connection with such action,
any holder of a Bond the number of which is included in the
Bonds the holders of which have consented to such action may,
by filing written notice with the Trustee at its principal
office and upon proof of holding as provided in Section 1701,
revoke such consent so far as concerns such Bond. Except as
aforesaid any such consent given by the holder of any bond
shall be conclusive and binding upon such holder and upon all
future holders of such Bond and of any Bond issued in exchange
therefor or in lieu thereof, irrespective of whether or not
any notation in regard thereto is made upon such Bond. Any
action taken by the holders of the percentage in principal
amount of the Bonds specified herein in connection with such
action shall be conclusively binding upon the Issuer, the
Company, the Trustee and the holders of all the Bonds.
ARTICLE XV.
SUPPLEMENTAL INDENTURES
Section 1501. Supplemental Indentures Not Requiring
Consent of Bondholders. The Issuer and the Trustee may,
without the consent of, or notice to, any of the Bondholders,
enter into an indenture or indentures supplemental hereto
which shall not be inconsistent with the terms and provisions
hereof for any one or more of the following purposes, provided
that in the opinion of Counsel to the Trustee the change
effected thereby is not to the prejudice of the interests of
the Trustee or the Bondholders:
(a) to cure any ambiguity or formal defect or
omission herein;
(b) to grant to or confer upon the Trustee for the
benefit of the Bondholders any additional rights, remedies,
powers or authorities that may lawfully be granted to or
conferred upon the Bondholders or the Trustee or either of
them;
(c) to subject to the lien and pledge hereof
additional payments, revenues, properties or collateral;
(d) to modify, amend or supplement this Indenture or
any indenture supplemental hereto in such manner as to
permit the qualification hereof and thereof under the Trust
Indenture Act of 1939, as amended, or any similar Federal
statute hereafter in effect or to permit the qualification
of the Bonds for sale under the securities laws of any of
the states of the United States of America, and, if they so
determine, to add hereto or to any indenture supplemental
hereto such other terms, conditions and provisions as may
be permitted by said Trust Indenture Act of 1939 or similar
Federal statute;
(e) to evidence the appointment of a separate Trustee
or Co-Trustee or the succession of a new Trustee hereunder;
(f) to effect any other supplement to this Indenture
which, in the judgment of the Trustee, will not adversely
affect the interests of the Bondholders;
(g) to effect any change herein, other than those
specified in clauses (a) through (f) above or in Section
1502, required in order to obtain a rating from Moody's or
S&P, if the Bonds are not then rated.
In connection with any amendment pursuant to Section
1501(g) or in connection with any change in the Letter of
Credit required in order to obtain a rating on the Bonds, the
Trustee is authorized to surrender the Letter of Credit to the
Bank for cancellation upon receipt of a new Letter of Credit
complying with the requirements of the Loan Agreement. Such
action shall not be deemed the substitution of an Alternate
Credit Facility.
Section 1502. Supplemental Indentures Requiring
Consent of Bondholders. Exclusive of supplemental indentures
covered by Section 1601 and subject to the terms and
provisions contained in this Section, and not otherwise, the
holders of not less than two-thirds (2/3) in principal amount
of the Bonds outstanding shall have the right, from time to
time, anything contained herein to the contrary
notwithstanding, to consent to and approve the execution by
the Issuer and the Trustee of such other indenture or
indentures supplemental hereto as shall be deemed necessary
and desirable by the Issuer for the purpose of modifying,
altering, amending, adding to or rescinding, in any
particular, any of the terms or provisions contained herein or
in any supplemental indenture; provided, however, that nothing
in this Section contained shall permit, or be construed as
permitting without the consent of the holders of all the bonds
affected thereby, (a) an extension of the maturity date on
which the principal of or the interest on any Bond is, or is
to become, due and payable, (b) a reduction in the principal
amount of any Bond, the rate of interest thereon or any
redemption premium, (c) a privilege or priority of any Bond or
Bonds over any other Bond or Bonds, or (d) a reduction in the
principal amount of the Bonds required for consent to such
supplemental indenture.
If the Issuer shall request the Trustee to enter into
any such supplemental indenture for any of the purposes of
this Section, the Trustee shall, upon being satisfactorily
indemnified with respect to expenses, cause written notice of
the proposed execution of such supplemental indenture together
with a copy of such proposed supplemental indenture to be
given by first class mail, postage prepaid, to the holders of
the Bonds at their addresses shown on the Trustee's books of
registration. If, within sixty (60) days or such longer
period as shall be prescribed by the Issuer following the
mailing of such notice, the holders of not less than
two-thirds (2/3) in principal amount of the Bonds then
outstanding shall have consented to and approved the execution
of such supplemental indenture as herein provided, no holder
of any Bond shall have any right to object to any of the terms
and provisions contained therein, or the operation thereof, or
in any manner to question the propriety of the execution
thereof, or to enjoin or restrain the Trustee or the Issuer
from executing the same or from taking any action pursuant to
the provisions thereof. Upon the execution of any such
supplemental indenture as in this Section permitted and
provided, this Indenture shall be modified and amended in
accordance therewith.
Anything herein to the contrary notwithstanding, a
supplemental indenture under this Article XV which affects any
right of the Company under the Loan Agreement shall not become
effective unless and until the Company shall have consented to
the execution and delivery of such supplemental indenture. In
this regard, the Trustee shall cause notice of the proposed
execution and delivery of any such supplemental indenture
together with a copy of the proposed supplemental indenture to
be mailed by certified or registered mail to the Company at
lease fifteen (15) days prior to the proposed date of
execution and delivery of any such supplemental indenture,
unless such notice is waived in writing by the Company. The
Company shall be deemed to have consented to the execution and
delivery of any such supplemental indenture if the Trustee
does not receive a letter of protest or objection thereto
signed by or on behalf of the Company on or before 4:30 p.m.,
New York City time, on the fifteenth (15th) day after the
mailing of said notice and a copy of the proposed supplemental
indenture, unless such waiting period is waived in writing by
the Company.
This Indenture may not be amended, changed or modified
except by the execution and delivery of a supplemental
indenture entered into in accordance with the provisions of
this Article XV.
Section 1503. Trustee Authorized to Join in
Supplements; Reliance on Counsel. The Trustee is authorized
to join with the Issuer in the execution and delivery of any
supplemental indenture permitted by this Article XV and, in so
doing, shall be fully protected by an opinion of independent
Counsel that such supplemental indenture is so permitted and
has been duly authorized by the Issuer and that all things
necessary to make it a valid and binding supplemental
indenture have been done.
Section 1504. Approval of Bank, etc. Anything
contained in this Article XV to the contrary notwithstanding,
no indenture supplemental to this Indenture shall be entered
into without the prior written consent of the Bank.
ARTICLE XVI.
AMENDMENT OF LOAN AGREEMENT
Section 1601. Amendments, etc., to Loan Agreement Not
Requiring Consent of Bondholders. The Trustee shall, without
the consent of, or notice to, the Bondholders, consent to any
amendment, change or modification of the Loan Agreement as may
be required.
(a) by the provisions of the Loan Agreement or hereby;
(b) for the purpose of curing any ambiguity or formal
defect or omission in the Loan Agreement; or
(c) to effect any other amendment to the Loan
Agreement which, in the judgment of the Trustee, will not
adversely affect the interests of the Bondholders.
Section 1602. Amendments, etc., to Loan Agreement
Requiring Consent of Bondholders. Except for the amendments,
changes or modifications as provided in Section 1601, neither
the Issuer nor the Trustee shall consent to any other
amendment, change or modification of the Loan Agreement
without the giving of notice and the written approval or
consent of the holders of not less than the written approval
or consent of the holders of not less than two-thirds (2/3)
in principal amount of the Bonds then outstanding given and
procured in accordance with the procedure set fourth in
Section 1502; provided, however, nothing contained in this
Article shall permit, or be construed as permitting, any
amendment, change or modification of the Company's
unconditional obligation to make the payments required under
the Loan Agreement or the Company's agreements with respect to
the use of Bond proceeds without the consent of the holders of
all Bonds affected thereby. If at any time the Issuer and the
Company shall request the consent of the Trustee to any such
proposed amendment, change or modification of the Loan
Agreement, the Trustee shall, upon being satisfactorily
indemnified with respect to expenses, cause notice of such
proposed amendment, change or modification to be given in the
same manner as provided by Section 1502 with respect to
proposed supplemental indentures.
Such notice shall briefly set forth the nature of such
proposed amendment, change or modification and shall state
that copies of the instrument embodying the same are on file
at the principal office of the Trustee for inspection by
Bondholders.
Section 1603. Trustee Authorized to Join in
Amendments; Reliance on Counsel. The Trustee is authorized to
join with the Issuer in the execution and delivery of any
amendment permitted by this Article XVI and, in so doing,
shall be fully protected by an opinion of independent Counsel
that such amendment is so permitted and has been duly
authorized by the Issuer and that all things necessary to make
it a valid and binding agreement have been done.
Section 1604. Approval of Bank, etc. Anything
contained in this Article XVI to the contrary notwithstanding,
no amendment, change or modification of the Loan Agreement may
be entered into without the prior written consent of the Bank.
ARTICLE XVII.
MISCELLANEOUS
Section 1701. Consents, etc. of Bondholders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided to be
given or taken by Bondholders may be embodied in and
evidenced by one or more instruments of substantially
similar tenor signed by such Bondholders in person or by
agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required,
to the Issuer and the Company. Proof of execution of any
such instrument or of a writing appointing any such agent
shall be sufficient for any purpose hereof and conclusive
in favor of the Trustee, the Company, and the Issuer, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any person
of any such instrument or writing may be proved by the
affidavit of a witness of such execution or by the
certificate of any notary public or other officer
authorized by law to take acknowledgements of deeds,
certifying that the individual signing such instrument or
writing acknowledged to him the execution thereof. Where
such execution is by an officer of a company or a member of
a partnership, on behalf of such company or partnership,
such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The ownership of Bonds shall be proved by the
registration books kept by the Trustee as Bond Registrar.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other action by any bondholder
shall bind every future holder of the same Bond in respect
of anything done or suffered to be done by the Trustee or
the Issuer in reliance thereon, whether or not notation of
such action is made upon such Bond.
Section 1702. Limitation of Rights. With the
exception of rights herein expressly conferred, nothing
expressed or mentioned in or to be implied herefrom or from
the Bonds is intended or shall be construed to give to any
person other than the parties hereto, the Company and the
holders of the Bonds, any legal or equitable right, remedy or
claim under or in respect hereto or any agreement, conditions
and provisions herein contained; this Indenture and all of the
agreement, conditions and provisions hereof being intended to
be and being for the sole and exclusive benefit of the parties
hereto, the Company and the holders of the Bonds as herein
provided.
Section 1703. Severability. If any provision hereof
shall be held or deemed to be or shall, in fact, be
inoperative or unenforceable as applied in any particular case
in any jurisdiction or jurisdictions or in all jurisdictions,
or in all cases because it conflicts with any other provision
or provisions hereof or any constitution or statute or rule of
public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in
question invalid, inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or
unenforceable to any extent whatever.
Section 1704. Notices. Except as otherwise expressly
provided herein, it shall be sufficient service of any notice,
approval, consent, request, complaint, demand, direction or
other communication if the same shall be in writing and shall
be delivered or mailed by first class registered or certified
mail, return receipt requested, postage prepaid, and
addressed, as follows:
(a) If to the Issuer - Rhode Island Port Authority and
Economic Development Corporation
Seven Jackson Walkway
Providence, Rhode Island 02903
Attn: Treasurer
(b) If to the Corporation - Newport Electric Corporation
c/o Eastern Utilities Associates
One Liberty Square
13th Floor, P.O. Box 2333
Boston, MA 02107
Attn: Treasurer
(c) If to the Trustee - Rhode Island Hospital Trust
National Bank
150 Royall Street, Mail Stop
45-0215
Canton, Massachusetts 02021
Attn: Corporate Trust Division
(d) If to the Bank - Canadian Imperial Bank of
Commerce
425 Lexington Avenue
New York, New York 10017
A duplicate copy of each notice, approval, consent, request,
complaint, demand or other communication given hereunder by
the Issuer, the Company, the Trustee or the Bank to any one of
the others shall also be given to all of the others. A
duplicate copy of each notice, approval, consent, request,
complaint, demand or other communication given hereunder shall
also be given to the Remarketing Agent at Goldman, Sachs &
Co., 85 Broad Street, 24th Floor, New York, New York 10004
Attention: Municipal Note Trading Desk; and to the Paying
Agent and Bond Registrar (so long as Rhode Island Hospital
Trust National Bank is Paying Agent and Bond Registrar) at 150
Royall Street, Canton, Massachusetts 02021, Attention:
Corporate Trust Division; and to the Depository (so long as
the Depository Trust Company is Depository) at 55 Water
Street, New York, New York. The Issuer, the Company, the
Trustee, the Bank, the Remarketing Agent, the Paying Agent and
the Bond Registrar may, by notice given hereunder, designate
any further or different addresses to which subsequent
notices, approvals, consents, requests, complaints, demands or
other communications shall be sent or persons to whose
attention the same shall be directed.
Section 1705. Payments Due on Saturdays, Sundays and
Holidays In any case where the date of maturity of principal
of and/or the interest on the Bonds or the date fixed for the
redemption of any Bonds shall not be a Business Day, then
payment of principal and/or interest need not be made on such
date but may be made on the next succeeding Business Day with
the same force and effect as if made on the date of maturity
or the date fixed for the redemption, and no interest shall
accrue for the period after such date.
Section 1706. Counterparts. This Indenture may be
executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which together shall
constitute one and the same instrument.
Section 1707. Laws Governing Indenture. The effect
and meaning hereof and the rights of all parties hereunder
shall be governed by, and construed according to, the laws of
the State.
Section 1708. References to Bank. Upon the
expiration or termination of the Letter of Credit, any
provision of this Indenture requiring notification to be given
to the Bank, or requiring that the Bank consent to any action,
shall become ineffective.
Section 1709. Limited Liability; Immunity of
Directors of the Issuer. This Indenture does not pledge the
general credit or taxing or taking power of the State. No
provision, covenant or agreement contained in this Indenture
or in the Bonds or any obligations herein or therein imposed
upon the Issuer or the breach thereof, shall constitute or
give rise to or impose upon the Issuer a pecuniary liability
or a charge against its general credit. In making the
agreements, provisions and covenants set forth in this
Indenture, the Issuer has not obligated itself except with
respect to the Trust Estate and the application of the
revenues, income and all other property therefrom, as
hereinabove provided.
It is understood and agreed that the Issuer is not
generally or personally liable for the debt or any portion of
the debt evidenced by this Indenture or the interest thereon
after the liquidation of the real estate and equipment which
are the subject of the financing for which the Bonds are
issued; neither is the Issuer nor are the directors of the
Issuer, the agents, attorneys or employees of the Issuer, or
their respective heirs, personal representatives of successors
personally or generally liable in connection with any matter,
cause or thing pertaining to this Indenture, the Financing
Statements or any instruments and documents executed and
delivered by the Issuer in connection with the Project.
No covenant or agreement contained in this Indenture
shall be deemed to be the covenant or agreement of any
directors, officer, attorney, agent or employee of the Issuer
in an individual capacity. No recourse shall be had for the
payment of the principal of or the interest thereon, if any,
payable upon the redemption of the Bonds or any claim based
thereon against any officer, director, agent, attorney or
employee of the Issuer past, present or future, or its
successors of assigns, as such, either directly or through the
Issuer, or any such successor company, whether by virtue of
any constitutional provision, statute or rule of law, or by
the enforcement of any assessment or penalty, or otherwise,
all of such liability of such directors, officers, agents,
attorneys or employees, being hereby released as a condition
of, and as a consideration for, the execution and delivery of
this Indenture.
Section 1710. Resolution of Conflicts. To the extent
that there may be a conflict among the provisions of this
Indenture or the Loan Agreement, this Indenture shall govern.
Section 1711. Notice to Rating Agencies. The Trustee
shall give, as soon as practicable, written notice to Moody's
if the Bonds are then rated by Moody's or S&P, if the Bonds
are then rated by S&P of any (i) expiration, termination or
substitution of the Letter of Credit, Credit Facility or any
Alternate Credit Facility; (ii) redemption or purchase of all
Outstanding Bonds; (iii) any conversion to a new Mode; (iv)
any amendments to the Indenture, Loan Agreement, Letter of
Credit, or Reimbursement Agreement; (v) conversion of all of
the Bonds to the Fixed Rate; or (vi) Payment in Full of the
Bonds.
IN WITNESS WHEREOF, the Rhode Island Port Authority
and Economic Development Corporation has caused this Indenture
to be executed in its corporate name and its corporate seal to
be affixed hereto and attested by its authorized officers, and
to evidence its acceptance of the trusts hereby created the
Trustee has caused these presents to be executed in its
corporate name and its corporate seal to be affixed hereto and
attested by its authorized officers, all as of the date first
above written.
(CORPORATE SEAL)
RHODE ISLAND PORT AUTHORITY
AND ECONOMIC DEVELOPMENT
CORPORATION
Attest:
By
Authorized Issuer
Representative
Authorized Issuer
Representative
(CORPORATE SEAL)
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK
as Trustee
Attest:
By
Title:
Title:
JDC/2554
EXHIBIT A/B
TRUST INDENTURE
EXHIBIT A
LETTER OF REPRESENTATIONS TO DTC
BOOK-ENTRY-ONLY VARIABLE-RATE DEMAND OBLIGATION (VRDO)
LETTER OF REPRESENTATIONS
[To Be Completed By Issuer, Remarketing Agent,
Tender Agent, Paying Agent, and Trustee]
[NAME OF ISSUER]
[NAME OF REMARKETING AGENT]
[NAME OF TENDER AGENT]
[NAME OF PAYING AGENT]
[NAME OF TRUSTEE]
[DATE]
The Depository Trust Company
55 Water Street - 49th floor
New York, NY 10041-0099
Attention: General Counsel's Office
Re:
[ISSUE DESCRIPTION]
Ladies and Gentlemen:
The purpose of this letter is to set out certain matters
relating to the above-referenced issue (the "Bonds").
(the "Issuer") is issuing the
Bonds pursuant to a trust indenture, bond resolution, or other
such document authorizing the issuance of the Bonds dated as of
, 199 (the "Document").
(THE "REMARKETING AGENT") is acting
as remarketing agent with respect to the Bonds.
(THE "TENDER AGENT") is acting as
tender agent with respect to the Bonds.
(THE "PAYING AGENT") is
acting as paying agent with respect to the Bonds.
(THE "TRUSTEE") is acting as
trustee with respect to the Bonds. (THE
"UNDERWRITER") is distributing the Bonds through The Depository
Trust Company ("DTC").
To induce DTC to accept the Bonds as eligible for deposit at
DTC and to act in accordance with its Rules with respect to the
Bonds, the Issuer, the Remarketing Agent, the Tender Agent, the
Paying Agent, and the Trustee make the following
representations to DTC:
1. Prior to closing on the Bonds on , 199 ,
there shall be deposited with DTC on Bond certificate
registered in the name of DTC's nominee, Cede & Co., for
each stated maturity, the total of which represents 100% of
the principal amount of such Bonds. If, however, the
aggregate principal amount of any maturity excess $100
million, one certificate will be issued with respect to
each $100 million of principal amount and an additional
certificate will be issued with respect to any remaining
principal amount. Each $100 million Bond certificate shall
bear the following legend:
"Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC") to the issuer 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."
2. The Document provides for the solicitation of consents from and voting
by holders of the Bonds under certain circumstances. The Trustee or
the Issuer shall establish a record date for such purposes and shall,
to the extent possible, give DTC notice of such record date not less
than 15 calendar days in advance of such record date. If delivered by
hand or sent by mail or overnight delivery, such notice shall be sent
to:
Supervisor, Proxy Department
The Depository Trust Company
7 Hanover Square, 23rd floor
New York, New York 10004-2695
If sent by facsimile transmission, such notice shall be sent to (212) 709-
6896 or (212) 709-6897. The Trustee or Issuer shall confirm DTC's receipt
of such facsimile transmission by telephoning (212) 709-6870.
3. In the event of a redemption of any other similar transaction
resulting in the retirement of all Bonds outstanding or a reduction in
the aggregate principal amount of Bonds outstanding ("full or partial
redemption"), the Trustee or Issuer shall send DTC a notice of such
event not less than 30 days nor more than 60 days prior to the
redemption date or, in the event of an advance refunding of all or
part of the Bonds outstanding, the date the proceeds are deposited in
escrow.
In the event of a partial redemption, the Trustee or the Issuer shall send
DTC a notice specifying: (a) the amount of the redemption, (b) the date
such notice is to be mailed to Bondholders or published (the "Publication
Date"), and (c) whether any concurrent optional tender privilege is
available. Such notice shall be sent to DTC by a secure means (e.g.,
legible facsimile transmission, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in
DTC's possession no later than the close of business two business days
before the Publication Date. The Trustee or Issuer shall forward such
notice either in a separate secure transmission for each CUSIP number or
in a secure transmission for multiple CUSIP numbers (if applicable)
which will include a manifest or list of each CUSIP number submitted in
that transmission. In the event of a partial redemption, the Publication
Date shall be not less than 30 days nor more than 60 days prior to the
redemption date.
Notice given to DTC pursuant to this paragraph 3, if sent by mail or
overnight delivery shall be sent to:
Supervisor, Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
If sent by facsimile transmission, such notice shall be sent to (516) 227-
4164 or (516) 227-4190. If the Trustee or Issuer does not receive a
facsimile receipt from DTC confirming that the notice has been received,
it should telephone (516) 227-4070.
In cases where, prior to a partial redemption, certain Bonds are not
subject to such redemption, if requested as follows, DTC will exclude such
Bonds from its redemption procedures. Such request shall be in writing
and shall contain: (A) certifications by the Trustee or Issuer that
the principal amount of such Bonds is not subject to the partial
redemption and by a custodian/DTC Participant that the Participant's
position on DTC's records includes such Bonds, and (B) certification by
the Trustee or Issuer that the election to exclude such Bonds from the
partial redemption is authorized under the Document. Such request
shall be sent to the Call Notification Department in the manner indicated
above to assure that such request is in DTC's possession no later than the
close of business two business days before the Publication Date of the
partial redemption notice.
4. For so long as the Bonds have an adjustable rate of interest, the
Remarketing Agent shall deliver to DTC by hand or facsimile
transmission, before the close of business on the final rate
determination date preceding each interest payment date* a written
notice containing the following information:
* The final rate determination date for each interest payment shall occur
not less than two business days prior to the interest payment date.
(a) "Today's" date (the final rate determination date)
(b) Bond CUSIP Number
(c) Bond Description
(d) Interest Record Date
(e) Interest Payment Date
(f) Amount of the interest payment expressed in whole amd
fractional dollars per $1,000 of Bond face amount
(g) Whether interest accrues record date to record date or
payment date to payment date
(h) The name, telephone number, and address of the Remarketing Agent
person responsible for determining (f) and (g) above
The name, telephone number, telecopy number (if available), and address of
the Remarketing Agent person initially responsible for determining (f) and
(g) above at the time of issuance of the Bonds will be:
If delivered by hand, such notice shall be sent to:
Manager, VRDO Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square - 22nd floor
New York, New York 10004-2695
If sent by facsimile transmission, such notice shall be
sent to (212) 709-1723 or (212 709-1520. The Remarketing
Agent shall confirm DTC's receipt of such facsimile
transmission by telephoning (212) 709-1178.
If the interest payment date is a moving calendar day such
as the fifth business day of each month, the Remarketing
Agent shall send a copy of such notice to a service bureau
designated by DTC, by hand or facsimile transmission,
before the close of business on the final rate
determination date preceding each interest payment date.
In order to enable DTC to confirm independently the
interest payment information provided by the Remarketing
Agent, the Trustee shall deliver to DTC by noon ET on the
business day next following the final rate determination
date a written notice containing the following information:
(a) "Today's" date (the business day next following the
final rate determination date)
(b) Bond CUSIP Number
(c) Bond Description
(d) Interest Record Date
(e) Interest Payment Date
(f) Amount of the interest payment expressed in whole and
fractional dollars per $1,000 of Bond face amount
(g) The name, telephone number, telecopy number (if
available), and address of the Trustee person
responsible for determining (f) above
The name, telephone number, telecopy number (if available),
and address of the Trustee person initially responsible for
determining (f) above at the time of issuance of the Bonds
will be:
Such notice shall be sent to Manager, VRDO Announcements,
Dividend Department, as indicated on page 5.
If the interest payment date is a moving calendar day such
as the fifth business day of each month, the Trustee shall
send a copy of such notice to a service bureau designated
by DTC, by hand or facsimile transmission, by noon ET on
the business day next following the final rate
determination date.
5. Transactions in the Bonds shall be eligible for
same-day (Federal) funds settlement in DTC's Same-Day Funds
Settlement ("SDFS") system. For so long as the Bonds are
Eligible Securities in the SDFS system ("SDFS Securities"):
A. Interest payments shall be received by Cede & Co., as
nominee of DTC, or its registered assigns, on each payment
date in same-day funds or the equivalent in accordance with
existing arrangements between the Paying Agent and DTC.
Such payments shall be made payable to the order of Cede &
Co.
B. Payments of principal shall be received by DTC on each
payment date in same-day funds in the manner set forth in
the SDFS Paying Agent Operating Procedures for the Wiring
of Maturity, Redemption, and Reorganization Payments to
DTC (a copy of which previously has been furnished to the
Paying Agent). Such payments shall be sent in time to be
credited to DTC's account at the Federal Reserve Bank of
New York ("FRBNY") no later than 10:00 a.m. (Paying Agent's
local time) on the payment date.
The name, telephone number, telecopy number (if available),
and address of the Paying Agent person initially
responsible for arranging such payments to DTC will be:
If transactions in the Bonds become eligible for next-day (Clearinghouse)
funds settlement in DTC's Next-Day Funds Settlement ("NDFS") system and
for so long as the Bonds are Eligible Securities in the NDFS system ("NDFS
Securities"):
C. Interest payments shall be received by Cede & Co., as nominee of DTC,
or its registered assigns, on each payment date in next-day funds or
the equivalent in accordance with existing arrangements between the
Paying Agent and DTC. Such payments shall be made payable to the
order of Cede & Co.
D. Payments of principal for maturity and redemption payments to DTC
shall be received by Cede & Co., as nominee of DTC, or its registered
assigns, on each payment date in next-day funds or the equivalent in
accordance with existing arrangements between the Paying Agent and
DTC. Such payments shall be made payable to the order of Cede &
Co., and shall be addressed as follows:
Collection Supervisor
NDFS Redemptions Department
The Depository Trust Company
55 Water Street - 50th floor
New York, NY 10041-0099
6. It is understood that for so long as optional tenders of the Bonds may
be made daily following same-day or seven-day notice, such tenders
will be effected by means of DTC's Deliver Order Procedures. DTC
shall have no responsibility to distribute notices regarding such
optional tenders, or to ascertain that any such tender has been made.
Except as otherwise provided, herein, and in accordance with DTC's
Omnibus Voting Procedures, the parties hereto acknowledge that so long
as Cede & Co. is the sole record owner of the Bonds, it shall be
entitled to all voting rights applicable to the Bonds and to receive
the full amount of all distributions payable with respect to the
Bonds. The parties acknowledge that DTC shall treat any DTC
Participant ("Participant") having Bonds credited to its DTC accounts
as entitled to the full benefits of ownership of such Bonds even if
the credits of Bonds to the DTC account of such Participant result
from failures to deliver or improper deliveries by an owner of Bonds
subject to tender for purchase. Without limiting the generality of
the preceeding sentence, the parties acknowledge that DTC shall treat
any Participant having Bonds credited to its DTC accounts as entitled
to receive distributions and voting rights, if any, with respect to
the Bonds and to receive certificates evidencing Bonds if such
certificates are to be issued in accordance with paragraph 12 or 13
hereof. (The treatment by DTC of the effects of the crediting by it
of Bonds to the accounts of Participants described in the preceding
two sentences shall not affect the rights of the parties hereto
against any Participant.)
7. It is understood that for so long as optional tenders of the Bonds
may be made less frequently than daily following same-day or seven-
day notice (e.g., during a quarterly, semi-annual, or annual tender
period) and Cede & Co., as nominee of DTC, or its registered assigns,
as the record owner of Bonds unentitled to tender the Bonds, such
tender will be effected by means of DTC's Repayment Option
Procedures. Under the Repayment Option Procedures, DTC will receive
during the applicable tender period instructions from its
Participants to tender Bonds for purchase. The undersigned agree
that such tender for purchase may be made by DTC by means of a book-
entry credit of such Bonds to the account of the Tender Agent,
provided that such credit is made on or before the final day of the
applicable tender period. DTC agrees that promptly after the
recording of any such book-entry credit, it will provide to the
Tender Agent and Agent Receipt and Confirmation or the Equivalent in
accordance with the Repayment Option Procedures, identifying the
Bonds and the aggregate principal amount thereof as to which such
tender for purchase has been made.
The Trustee or Issuer shall send DTC a notice regarding such optional
tender by hand or by a secure means (e.g., legible facsimile transmission,
registered or certified mail, overnight delivery) in a timely manner
designed to assure that such notice is in DTC's possession no later
than the close of business two business days before the Publication Date.
The Publication Date shall be not less than 15 days prior to the
expiration date of the applicable tender period. Such notice shall state
whether any partial redemption of the Bonds is scheduled to occur during
the applicable optional tender period.
If delivered by hand or sent by mail or overnight delivery,
such notice shall be sent to:
Supervisor, Put Bond Unit
Reorganization Department
The Depository Trust Company
7 Hanover Square - 23rd floor
New York, NY 10004-2695
If sent by facsimile transmission, such notice shall be
sent to (212) 709-1093 or (212) 709-1094. The Trustee or
Issuer shall confirm DTC's receipt of such facsimile
transmission by telephoning (212) 709-1470.
For so long as the Bond are SDFS Securities, payments of
principal (plus accrued interest, if any) as the result of
optional tenders for purchase effected by means of DTC's
Repayment Option Procedures shall be received by DTC on
each purchase date in same-day funds in the manner set
forth in the SDFS Paying Agent Operating Procedures. Such
payments shall be sent in time to be credited to DTC's
account at the FRBNY no later than 10:00 a.m. (Paying
Agent's local time) on the purchase date. It is understood
that until DTC receives such payments in its FRBNY account,
the optionally tendered bonds will remain in the DTC
account of the Tender Agent.
The name, telephone number, telecopy number (if available),
and address of the Tender Agent person initially
responsible for arranging such payments to DTC will be:
For so long as the Bonds are NDFS Securities, payments of
principal (plus accrued interest, if any) as the result of
optional tenders for purchase effected by means of DTC's
Repayment Option Procedures shall be received by Cede &
Co., as nominee of DTC, or its registered assigns, on each
purchase date in next-day funds or the equivalent in
accordance with existing arrangements between the Tender
Agent and DTC. Such payments shall be made payable to the
order of Cede & Co. and shall be addressed to Supervisor,
Put Bond Unit, Reorganization Department, as indicated
above.
8. In the event of a change of proposed change in the
interest rate mode of the Bonds from one variable-rate mode
to any other variable-rate mode, or to a fixed-rate mode,
the Trustee or Issuer shall send DTC a notice of such event
specifying, as applicable: (a) the name and number of the
DTC Participant account to which mandatorily tendered Bonds
are to be delivered by DTC on the purchase date after DTC
receives payment for such Bonds, and (b) the first interest
payment date under the new mode. Such notice shall be sent
to DTC by a secure means (e.g., legible facsimile
transmission, registered or certified mail, overnight delivery)
in a timely manner designed to assure that such
notice is in DTC's possession no later than the close of
business two business days before the Publication Date.
The Publication Date shall be less than 15 days prior to
the expiration date of the period provided for bondowner
elections to retain Bonds discussed in paragraph 10
hereof. If delivered by hand or sent by mail or overnight
delivery, such notice shall be sent to both the following
departments:
Manager, VRDO Eligibility Section
Underwriting Department
The Depository Trust Company
55 Water Street - 19th floor
New York, New York 10041-0099
Supervisor, Put Bond Unit
Reorganization Department
The Depository Trust Company
7 Hanover Square - 23rd floor
New York, New York 10004-2695
If sent by facsimile transmission, such notice shall be
sent to:
DTC's Underwriting Department:
(212) 344-1530 or (212) 344-1531
DTC's Reorganization Department:
(212) 709-1093 or (212) 709-1094
The Trustee or Issuer shall confirm DTC's receipt of such
facsimile transmission by telephoning the Underwriting
Department at (212) 558-8307 and the Reorganization
Department at (212) 709-1470.
All other notices regarding the interest rate on the Bonds
(before and after any change in the interest rate mode)
shall be delivered to Manager, VRDO Announcements, Dividend
Department, as indicated in paragraph 4.
9. In the event of expiration or substitution of a
facility supporting the Bonds (such as a letter of credit)
or non-reinstatement of the amount available to pay
interest on the Bonds pursuant to such a facility, the
Trustee or Issuer shall send DTC a notice of such event
specifying, as applicable, the name and number of the DTC
Participant account to which mandatorily tendered Bonds are
to be delivered by DTC on the purchase date after DTC receives
payment for such Bonds. Such notice shall be sent
to DTC by a secure means (e.g., legible facsimile
transmission, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such
notice is in DTC's possession no later than the close of
business two business days before the Publication Date or,
as applicable, immediately after the Trustee receives
notice that the Bonds are subject to acceleration. The
Publication Date shall be not less than 15 days prior to
the expiration date of the period provided for bondowner
elections to retain Bonds discussed in paragraph 10
hereof. Such notice shall be sent to Supervisor, Put Bond
Unit, Reorganization Department, as indicated above.
10. Where the Document provides that the Bonds are subject
to mandatory tender except with respect to bondowner
elections to retain Bonds, it is understood that DTC will
use its Repayment Option Procedures to process such
elections. Under the Repayment Option Procedures, DTC will
receive during the applicable election period instructions
from Participants to retain Bonds. DTC, on behalf of such
Participants, will notify the Tender Agent of the aggregate
principal amount of Bonds that will not be tendered and
will be retained. If the mandatorily tendered Bonds are to
be replaced with two or more issues of Bonds (the
"Replacement Bonds"), the Tender Agent shall be responsible
for allocating, specific Replacement Bonds by CUSIP number
to the Participants that elected to retain Bonds.
In cases where, prior to a mandatory tender, certain Bonds
are not subject to such mandatory tender, if requested as
follows DTC will exclude such Bonds from its mandatory
tender procedures. Such request shall be in writing and
shall contain: (a) certifications by the Trustee or Issuer
that the principal amount of such Bonds is not subject to
the mandatory tender and by a custodian/Participant that
the Participant's position on DTC's records includes such
Bonds, and (b) certification by the Trustee or Issuer that
the election to exclude such Bonds from the mandatory
tender is authorized under the Document. Such request
shall be sent to Supervisor, Put Bond Unit, Reorganization
Department, in the manner indicated in paragraph 8 to
assure that such request is in DTC's possession no later
than the close of business two business days before the
Publication Date of the mandatory tender notice.
For so long as the Bonds are SDFS Securities, payments of
principal (plus accrued interest, if any) as the result of
mandatory tenders for purchase (including mandatory tenders upon
change in the interest rate mode of the Bonds, or upon expiration,
substitution, or non-reinstatement of a
facility supporting the Bonds) shall be received by DTC on
the purchase date in same-day funds in the manner set forth
in paragraph 7.
For so long as the Bonds are NDFS Securities, such payments
of principal shall be received by DTC on the purchase date
in next-day funds in the manner set forth in paragraph 7.
11. In the event of a redemption, acceleration, or any
other similar transaction (e.g., tenders made and accepted
in response to the Trustee's or Issuer's invitation to
tender) necessitating a reduction in aggregate principal
amount of Bonds outstanding, or an advance refunding of
part of the Bonds outstanding, DTC in its discretion:
(a) may request the Trustee or Issuer to issue and
authenticate a new Bond certificate, or (b) shall make an
appropriate notation on the Bond certificate indicating the
date and amounts of such reduction in principal, except in
the case of final maturity in which case the certificate
must be presented to the Trustee prior to payment. In the
event of an advance refunding of part of the Bonds
outstanding, the Trustee or Issuer shall obtain a CUSIP
number from the CUSIP Service Bureau and issue and
authenticate a new Bond certificate for the refunded Bonds.
12. In the event the Issuer determines pursuant to the
Document that beneficial owners of the Bonds shall be able
to obtain certificated Bonds, the Trustee or Issuer shall
notify DTC of the availability of Bond certificates and
shall issue, transfer, and exchange Bond certificates in
appropriate amounts as required by DTC and others.
13. DTC may determine to discontinue its service as
securities depository with respect to the Bonds at any time
by giving reasonable notice to the Trustee or Issuer (at
which time DTC will confirm with the Trustee or Issuer the
aggregate principal amount of the Bonds outstanding) and
discharging its responsibilities with respect to thereto
under applicable law. Under such circumstances, at DTC's
request the Trustee or Issuer shall cooperate fully with
DTC by taking prompt, appropriate action to make available
one or more separate certificates evidencing the Bonds to
any Participant having Bonds credited to its DTC accounts.
14. Nothing herein shall be deemed to require the Paying
Agent, to advance funds on behalf of the Issuer.
15. All notices and payment advices sent to DTC shall
contain the CUSIP number of the Bonds.
16. DTC may direct the Issuer, Remarketing Agent, Tender
Agent, Paying Agent, or Trustee to use any other telephone
number for facsimile transmission, address, or department
of DTC as the number, address, or department to which
payments of interest or principal or notices may be sent.
17. The Issuer, Remarketing Agent, Tender Agent, paying
Agent, or Trustee sending notices or requests to DTC, shall
have a method to verify subsequently the use of the means
to deliver such notices and request to DTC, and timeliness
of receipt of them by DTC.
Very truly yours,
(AS ISSUER)
By:
(AUTHORIZED OFFICER'S
SIGNATURE)
(PRINT NAME AND TITLE)
(AS REMARKETING AGENT (AS TENDER AGENT)
By: By:
(AUTHORIZED OFFICER'S (AUTHORIZED OFFICER'S
SIGNATURE) SIGNATURE)
(PRINT NAME AND TITLE) (PRINT NAME AND TITLE)
(AS PAYING AGENT) (AS TRUSTEE)
(AUTHORIZED OFFICER'S (AUTHORIZED OFFICER'S
SIGNATURE) SIGNATURE)
(PRINT NAME AND TITLE) (PRINT NAME AND TITLE)
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By:
(AUTHORIZED OFFICER'S
SIGNATURE)
(PRINT NAME AND TITLE)
WPPJDC2515
EXHIBIT B
FORMS OF BOND
The Bonds shall be issued in substantially the
following forms for the respective various modes:
(FORM OF WEEKLY BOND)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company to the issuer or
its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede &
Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.
$7,925,000 No. R-1
ANY BONDOWNER WHO FAILS TO DELIVER A BOND FOR PURCHASE AT
THE TIMES AND AT THE PLACE REQUIRED HEREIN SHALL HAVE NO
FURTHER RIGHTS HEREUNDER EXCEPT THE RIGHT TO RECEIVE THE
PURCHASE PRICE HEREOF UPON PRESENTATION AND SURRENDER OF
THIS BOND TO THE PAYING AGENT AS DESCRIBED HEREIN, AND
SHALL HOLD THIS BOND AS AGENT FOR THE PAYING AGENT.
NEITHER THE STATE OF RHODE ISLAND AND PROVIDENCE
PLANTATIONS NOR ANY POLITICAL SUBDIVISION THEREOF IS
OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR
TAXING OR TAKING POWER OF THE STATE OF RHODE ISLAND AND
PROVIDENCE PLANTATIONS NOR ANY POLITICAL SUBDIVISION
THEREOF IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OF OR
INTEREST ON THIS BOND.
Rhode Island Port Authority and Economic
Development Corporation
Electric Energy Facilities Revenue Refunding Bond
(Newport Electric Corporation Project - 1994 Series)
DATE OF THIS BOND: January 6, 1994
(Date as of which Bonds of this series were initially issued)
MATURITY DATE: September 1, 2011
INTEREST PAYMENT DATES:
(i) the first Business Day of each calendar month, and (ii) the
Maturity Date
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: SEVEN MILLION NINE HUNDRED TWENTY-FIVE
THOUSAND DOLLARS
CUSIP NUMBER: 762214AD6
MODE: Weekly
RHODE ISLAND PORT AUTHORITY AND ECONOMIC DEVELOPMENT
CORPORATION (the "Issuer"), a public corporation, governmental
agency and public instrumentality of the State of Rhode Island
and Providence Plantations (the "State"), for value received,
hereby promises to pay to the REGISTERED OWNER or registered
assigns, on the MATURITY DATE, solely from the sources and in
the manner hereinafter provided, upon presentation and
surrender hereof, in lawful money of the United States of
America, the PRINCIPAL AMOUNT and in like manner to pay
interest on the unpaid principal balance thereof, until the
Issuer's obligation with respect to the payment of such sum
shall be discharged. Interest shall be payable from the most
recent INTEREST PAYMENT DATE, as defined below, to which
interest has been paid or duly provided for or, if no interest
has been paid, from the DATE OF THIS BOND until paid in full,
at the rates set forth below, payable on each INTEREST PAYMENT
DATE. Until conversion to the Flexible or Fixed Rate Mode as
provided below, this bond shall bear interest at the Weekly
Rate. The Weekly Rate for this bond shall be the rate of
interest determined by the Remarketing Agent designated as
provided in the Indenture (herein, with its successors, the
"Remarketing Agent"), for each Rate Period, as defined below,
to be the lowest rate which in its judgment, on the basis of
prevailing financial market conditions, would cause the Bonds
(as defined below) in the Weekly Mode to have a market value of
par plus accrued interest on and as of the Effective Date, as
defined below, but not greater than the Maximum Rate. If this
bond is converted to the Flexible or Fixed Rate Mode it shall
bear interest at the Flexible or Fixed Rate, as the case may
be, as defined in the Indenture. The Remarketing Agent shall
determine the initial Weekly Rate on or before the date of
issue in or of conversion to the Weekly Mode, which rate shall
remain in effect as provided in the Indenture. Thereafter, the
Remarketing Agent shall redetermine the Weekly Rate for each
Rate Period as provided below. The amount of interest due on
any INTEREST PAYMENT DATE shall be the amount of unpaid
interest accrued on this bond through the day preceding such
INTEREST PAYMENT DATE.
Payment of Principal and Interest. While this bond is
in the Weekly Mode, the principal of this bond is payable when
due by wire or bank transfer of immediately available funds
within the continental United States to the REGISTERED OWNER
hereof but only upon presentation and surrender of this bond at
the office of Rhode Island Hospital Trust National Bank, 150
Royall Street, Canton, Massachusetts 02021, as Paying Agent
(with its successors in such capacity, the "Paying Agent").
Interest on this bond while in the Weekly Mode is payable in
immediately available funds by wire or bank transfer within the
continental United States from the Paying Agent to the REGISTERED OWNER,
determined as of the close of business on the
applicable record date at its address shown on the registration
books maintained by the Paying Agent. The Purchase Price (as
defined below) of Bonds tendered for purchase shall be paid as
provided below.
The record date for payment of interest while this
bond is in the Weekly Mode is the Business Day preceding the
date on which interest is to be paid. With respect to overdue
interest or interest payable on redemption of this bond other
than on an INTEREST PAYMENT DATE or interest on any overdue
amount, the Trustee may establish a special record date. The
special record date may be not more than thirty (30) days
before the date set for payment. The Paying Agent will mail
notice of a special record date to the Bondowners at least ten
(10) days before the special record date. The Paying Agent
will promptly certify to the Issuer, 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 Depository Trust Company ("DTC") has been
appointed to act as securities depository for the Bonds. For
so long as DTC acts as securities depository, beneficial
ownership interests in the Bonds shall be evidenced by a
book-entry system maintained by the securities depository. The
ownership of one fully registered bond for each maturity has
been registered in the name of Cede & Co., as nominee of DTC.
For as long as DTC acts as securities depository, the principal
amount and interest on this Bond is payable by wire or bank
transfer from Rhode Island Hospital Trust National Bank or any
successor paying agent, as Paying Agent, to The Depository
Trust Company to be remitted to its participants for subsequent
distribution to the beneficial owners determined as of the
close of business on the applicable record date. If no
securities depository holds the Bonds, interest shall be
payable by wire or bank transfer to each owner of a Bond at the
address of such owner as it appears on the applicable Record
Date on the registration books kept by the Bond Registrar.
Under such circumstances, principal shall be payable at the
office of the Paying Agent upon presentation and surrender
hereof.
THE BONDS ARE SPECIAL OBLIGATIONS OF THE ISSUER AND
ARE EQUALLY AND RATABLY SECURED, TO THE EXTENT PROVIDED IN THE
INDENTURE, SOLELY BY A PLEDGE OF THE REVENUES AND RECEIPTS
DERIVED BY THE ISSUER FROM OR IN CONNECTION WITH THE LOAN
AGREEMENT, AND THIS BOND SHALL NOT CONSTITUTE NOR GIVE RISE TO
ANY PECUNIARY LIABILITY OR A CHARGE AGAINST THE GENERAL CREDIT
OF THE ISSUER. NEITHER THE STATE OF RHODE ISLAND AND PROVIDENCE
PLANTATIONS NOR ANY POLITICAL SUBDIVISION THEREOF
SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF OR INTEREST ON THE
BONDS, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING OR
TAKING POWER OF THE STATE OF RHODE ISLAND AND PROVIDENCE
PLANTATIONS OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO
THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS.
Authorization and Purpose. This bond is one of an
authorized issue of Bonds of the Issuer in the aggregate
principal amount of $7,925,000 Rhode Island Port Authority and
Economic Development Corporation Electric Energy Facilities
Revenue Refunding Bonds - (Newport Electric Corporation
Project - 1994 Series) (the "Bonds") which are issued for the
purpose of refunding in full the outstanding principal amount
of the Issuer's $6,045,000 Electric Energy Facilities Revenue
Bonds (Newport Electric Corporation Project - Series 1982 A),
the proceeds of which were used to finance, in part, the
acquisition and installation of various machinery, equipment
and fixtures to be used to improve and expand the capacity of
Newport Electric Corporation (the "Company"), a corporation
organized and existing under the laws of the State to generate,
transmit and distribute electricity in the City of Newport, and
Towns of Jamestown, Middletown and Portsmouth, Rhode Island
(the "Project") and the Issuer's $1,880,000 Electric Energy
Facilities Revenue Bonds (Newport Electric Corporation Project
- - Series 1988) the proceeds of which were used to refund the
Issuer's $1,800,000 Electric Energy Facilities Revenue Bonds
(Newport Electric Corporation Project - Series 1982 B). The
Bonds are issued pursuant to the Constitution and laws of the
State, including particularly Chapter 64 of Title 42 of the
General Laws of Rhode Island, 1956 (1993 Reenactment), as
amended and supplemented (the "Act"), resolutions adopted by
the Issuer on October 25, 1993 and November 29, 1993 and a
Trust Indenture dated as of January 1, 1994 (which Indenture as
from time to time amended and supplemented is herein referred
to as the "Indenture"), duly executed and delivered by the
Issuer to the Trustee, and are equally and ratably secured by
and entitled to the protection of the Indenture, which is on
file in the office of the Trustee.
Pledge and Security. Pursuant to the Indenture, the
Issuer has assigned to the Trustee all of its right, title and
interest in and to a Loan Agreement (the "Loan Agreement")
dated as of January 6, 1994 between the Issuer and the Company,
including all rights to receive loan payments sufficient to pay
the principal of, premium, if any, and interest and all other
amounts due on the Bonds as the same become due, to be made by
the Company pursuant to the Loan Agreement. The Loan Agreement
sets forth the terms and conditions under which the Issuer will
provide for refinancing of the Project and under which the Company
will use and occupy the Project and make loan payments
to the Issuer in such amounts as are necessary to pay the
principal of, premium if any, and interest on the Bonds.
Reference is hereby made to the Indenture for the definition of
any capitalized word or term used but not defined herein and
for a description of the property pledged, assigned and
otherwise available for the payment of the Bonds, the
provisions, among others, with respect to the nature and extent
of the security, the rights, duties and obligations of the
Issuer, the Trustee and the owners of the Bonds, and the terms
upon which the Bonds are issued and secured, and the holders of
the Bonds are deemed to assent to the provisions of the
Indenture by the acceptance of this bond.
Letter of Credit. 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 monies drawn by the
Trustee on an irrevocable letter of credit for the Bonds
(together with any extensions, amendments, and renewals
thereof, the "Letter of Credit") issued by Canadian Imperial
Bank of Commerce, in the initial aggregate stated amount of
$8,032,500 pursuant to the terms of a Reimbursement Agreement
dated as of January 6, 1994 (the "Reimbursement Agreement") by
and between the Company and Canadian Imperial Bank of Commerce
(together with any other issuer of a Credit Facility, the
"Bank") and the participating banks named therein, if any. The
Trustee 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
January 6, 1997 but may be terminated earlier upon the
occurrence of certain events set forth in the Loan Agreement,
the Indenture 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
or other credit facility (collectively with the Letter of
Credit, a "Credit Facility") is provided in accordance with the
Loan Agreement, the Bonds will become subject to mandatory
purchase as described below. The Company may substitute a new
Credit Facility as provided in the Loan Agreement.
Event of Default. In case any Event of Default occurs
and is continuing, the principal amount of this bond together
with accrued interest may become or be declared immediately due
and payable in the manner and with the effect as provided in
the Indenture.
Definitions. The following terms are defined as
follows:
"Business Day" means a day of the year, other than a
Saturday or Sunday, on which banks are not required or
authorized to close in New York, New York; Atlanta, Georgia or
in the state in which the Principal Office of the Trustee or
the Principal Office of the Company, the Paying Agent (as
defined in the Indenture) or the Remarketing Agent (as defined
in the Indenture) is located and the New York Stock Exchange is
open.
"Effective Date" means, with respect to a Bond in the
Weekly Mode, the date on which a new Rate Period for the Bond
takes effect.
"Effective Rate" means, with respect to a Bond in the
Weekly Mode, the Weekly Rate in effect for each Rate Period.
"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 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 the Weekly Mode, a seven-day period commencing on
Wednesday of each week and ending on Tuesday of the following
week (the period may be shorter than seven days and the
commencement and ending dates may vary for a Rate Period
immediately prior or subsequent to a conversion from or to the
Weekly Mode).
Conversion. At the option of the Company and upon
certain conditions provided for in the Indenture described
below, (a) all or a portion of the Bonds may be converted or
reconverted from time to time (i) from the Weekly Mode to the
Flexible Mode or(ii) from the Flexible Mode to the Weekly Mode
or (b) all, but not less than all, of the Bonds may be
converted to the Fixed Rate Mode.
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 Trustee to the REGISTERED OWNER of this bond.
Conversion of this bond to another Mode shall be subject to
certain conditions set forth in the Indenture. In the event
that the conditions for a proposed conversion to a new Mode are
not met (i) such new Mode shall not take effect on the proposed
conversion date, notwithstanding any prior notice to the
Bondowners of such conversion, (ii) this bond shall continue to
bear interest at the rate in effect for the prior Rate Period,
and (iii) this bond shall be subject to mandatory tender for
purchase as provided below. In no event shall the failure of
this bond to be converted to another Mode be deemed to be a
Default or an Event of Default under the Indenture as long as
the Purchase Price (as defined below) is made available on the
failed conversion date to owners of all Bonds that were to have
been converted.
Interest While in Weekly Mode. When this Bond is in
the Weekly Mode, the Effective Rate shall be determined by the
Remarketing Agent, not later than the Business Day next
preceding the Effective Date. In the event that the
Remarketing Agent fails to make such determination or fails to
announce the Effective Rate as required with respect to any
Bonds in the Weekly Mode, or if for any reason such manner of
determination shall be determined to be invalid or
unenforceable, the Effective Rate for any such bond for the
next Rate Period shall be deemed to be the Effective Rate of
the previous Rate Period. The Remarketing Agent shall announce
the Effective Rate by telephone to the Trustee on the date of
determination thereof, and shall promptly confirm such notice
in writing. While this bond is in the Weekly Mode, a 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 Issuer, 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.
Purchase of Bonds. While this bond is in the Weekly
Mode, the REGISTERED OWNER shall have the right to tender this
bond for purchase in multiples of $100,000 at a price (the
"Purchase Price") equal to 100% of the principal amount
thereof, plus accrued interest, if any, to the Purchase Date,
upon compliance with the conditions described below, provided
that if the Purchase Date is an INTEREST PAYMENT DATE, accrued
interest shall be paid separately, and not as part of the
Purchase Price on such date. In order to exercise the right to
tender, the REGISTERED OWNER must deliver to the Paying Agent a
written irrevocable notice of tender substantially in the form
of the Optional Tender Notice set forth hereon or in such other
form as is satisfactory to the Paying Agent. While this bond
is in the Weekly Mode, it will be purchased on the Business Day
specified in such Optional Tender Notice, provided such date is
at least seven calendar days after receipt by the Paying Agent
of such notice. If the REGISTERED OWNER of this bond has
elected to require purchase as provided above, the REGISTERED
OWNER shall be deemed, by such election, to have agreed
irrevocably to sell this bond to any purchaser determined in
accordance with the provisions of the Indenture on the date
fixed for purchase at the Purchase Price.
Tender of this bond will not be effective and this
bond will not be purchased if at the time fixed for purchase an
acceleration of the maturity of the Bonds shall have occurred
and not have been annulled in accordance with the Indenture.
Notice of tender of this bond is irrevocable. All notices of
tender of Bonds shall be made to the Paying Agent at Rhode
Island Hospital Trust National Bank, 150 Royall Street, Canton,
Massachusetts 02021, Attention: Corporate Trust Division, 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 Rhode Island Hospital Trust National
Bank, 150 Royall Street, Canton, Massachusetts 02021,
Attention: Corporate Trust Division, 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 from the
Weekly Mode to another Mode, (ii) on the effective date of a
substitute Credit Facility unless the Trustee receives at least
thirty (30) days prior to the last Interest Payment Date
scheduled to occur at least 30 days before the expiration of
the Credit Facility, 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 of the rating of this bond, (iii) on a date that is
not more than fifteen (15) or less than two (2) days prior to
the expiration of the Credit Facility and (iv) on a date that
is not more than four (4) days following receipt by the Trustee
of notice from the Credit Facility Issuer of an occurrence of
an Event of Default under the Reimbursement Agreement. 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 or as soon as
possible following the receipt of notice by the Trustee that the
Credit Facility will terminate as a result of the
occurrence of an event of default under the Reimbursement
Agreement. THE OWNER OF THIS BOND, BY ACCEPTANCE HEREOF,
AGREES TO SELL AND SURRENDER THIS BOND AT SUCH PRICE TO ANY
PURCHASER DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF THE
INDENTURE IN THE EVENT OF SUCH MANDATORY TENDER AND, ON SUCH
PURCHASE DATE, TO SURRENDER THIS BOND TO THE PAYING AGENT FOR
PAYMENT OF THE PURCHASE PRICE. From and after the Purchase
Date, no further interest on this bond shall be payable to the
REGISTERED OWNER, provided that there are sufficient funds
available on the Effective Date to pay the Purchase Price.
The Purchase Price of this bond shall be paid to the
REGISTERED OWNER by the Paying Agent on the Delivery Date,
which shall be the Purchase Date or any subsequent Business Day
on which this bond is delivered to the Paying Agent. The
Purchase Price of this bond shall be paid only upon surrender
of this bond to the Paying Agent as provided herein. From and
after the Purchase Date, no further interest on this bond shall
be payable to the REGISTERED OWNER who gave notice of tender
for purchase, provided that there are sufficient funds
available on the Purchase Date to pay the Purchase Price. The
Purchase Price of bonds tendered for purchase is payable for
Bonds in the Weekly Mode by wire or bank transfer within the
continental United States in immediately available funds from
the Paying Agent to the REGISTERED OWNER at its address shown
on the registration books maintained by the Paying Agent. If
on any date this bond is subject to mandatory tender for
purchase or is required to be purchased at the election of the
REGISTERED OWNER, payment of the Purchase Price of this bond to
such owner shall be made on the Purchase Date if presentation
and surrender of this bond is made prior to 11:00 a.m., New
York City time, on the Purchase Date or on such later Business
Day upon which presentation and surrender of this bond is made
prior to 11:00 a.m., New York City time.
Mandatory Taxability Redemption. In the event of a
Determination of Taxability, the Bonds shall be redeemed on a
day selected by the Company that is not more than 60 days after
the occurrence of such Determination of Taxability as provided
in the Indenture, at the Redemption Price equal to 100% of the
principal amount thereof plus accrued interest to the date of
redemption. Redemption under this paragraph shall be in whole
unless not less than forty-five (45) days prior to the
redemption date the 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.
Credit Facility Related Redemption. In the event of a
substitution, expiration or termination of the Credit Facility,
the principal amount of this bond together with accrued
interest may become or be declared immediately due and payable
in the manner and with the effect as provided in the Indenture.
General Optional Redemption. Bonds in the Weekly Mode
are subject to redemption in whole or in part at the option of
the Issuer, which option shall be exercised 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 Indenture with
Bonds in the Weekly Mode being redeemed in units of $100,000.
In the event this bond is selected for redemption,
notice (which notice may state that it is subject to the
receipt of the redemption moneys by the Trustee on or before
the date fixed for redemption and which notice shall be of no
effect unless such moneys are so received on or before such
date) will be mailed not 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)
(and a single denomination of an additional $25,000) or any
multiple thereof may be redeemed. If less than all of the
principal amount is to be redeemed, upon surrender of this bond
to the Paying Agent, there will be issued to the REGISTERED
OWNER, without charge, a new Bond or Bonds, at the option of
the REGISTERED OWNER, for the unredeemed principal amount.
Notice of redemption having been duly mailed, this
bond, or the portion called for redemption, will become due and
payable on the redemption date at the applicable redemption
price and, monies for the redemption having been deposited with
the Paying Agent, from and after the date fixed for redemption,
interest on this bond (or such portion) will no longer accrue.
IN CERTAIN CIRCUMSTANCES SET OUT HEREIN, THIS BOND (OR
PORTION HEREOF) IS SUBJECT TO PURCHASE OR REDEMPTION, IN EACH
CASE UPON NOTICE TO OR FROM THE OWNER HEREOF AS OF A DATE PRIOR
TO SUCH PURCHASE OR REDEMPTION. IN EACH SUCH EVENT AND UPON DEPOSIT
OF THE PURCHASE OR REDEMPTION PRICE WITH THE PAYING
AGENT ON THE PURCHASE OR REDEMPTION DATE, AS THE CASE MAY BE,
THIS BOND (OR PORTION HEREOF) SHALL CEASE TO BE OUTSTANDING
UNDER THE INDENTURE, INTEREST HEREON SHALL CEASE TO ACCRUE AS
OF THE PURCHASE OR REDEMPTION DATE, AND THE REGISTERED OWNER
HEREOF SHALL BE ENTITLED ONLY TO RECEIVE THE PURCHASE OR
REDEMPTION PRICE SO DEPOSITED WITH THE PAYING AGENT UPON
SURRENDER OF THIS CERTIFICATE TO THE PAYING AGENT.
Transfer of Bonds. This bond is transferable by the
REGISTERED OWNER, in person or by its attorney duly authorized
in writing, at the office of the Paying Agent, upon surrender
of this bond to the Paying Agent for cancellation. Upon the
transfer, a new Bond or Bonds in authorized denominations of
the same aggregate principal amount will be issued to the
transferee at the same office. No transfer will be effective
unless represented by such surrender and reissue. This bond
may also be exchanged at the office of the Paying Agent for a
new Bond or Bonds in authorized denominations of the same
aggregate principal amount without transfer to a new registered
owner. Exchanges and transfers will be without expense to the
owner except for applicable taxes or other governmental
charges, if any. The Paying Agent will not be required to make
an exchange or transfer of this bond (except in connection with
any optional or mandatory tender of this bond) (i) if this bond
(or any portion thereof) has been selected for redemption or
(ii) during the fifteen (15) days preceding any date fixed for
selection for redemption if this bond (or any portion thereof)
is eligible to be selected for redemption.
Amendment of Indenture. The Indenture permits, with
certain exceptions as therein provided, the amendment thereof
and the modification of the rights and obligations of the
Issuer and the rights of the owners of the Bonds at any time by
the Issuer with the consent of the Bank (if a Credit Facility
is in effect) and of the owners of not less than two thirds
(2/3) in aggregate principal amount of each series of the Bonds
at the time outstanding thereunder. Any such consent shall be
conclusive and binding upon each such owner and upon all future
owners of each Bond and of any such Bond issued upon the
transfer thereof, whether or not notation of such consent is
made thereon. The Indenture also permits the amendment thereof
by the Issuer with the consent of the Bank (if a Credit
Facility is in effect) but without the consent of the owners of
the Bonds for certain specified purposes.
Limitation on Bondholder Enforcement Rights. The
owner of this bond shall have no right to enforce the
provisions of the Indenture, to institute action to enforce the
provisions and covenants thereof or to institute, appear in or
defend any suit or other proceedings with respect thereto,
except as provided in the Indenture.
Special Obligations of the Issuer. This bond and the
issue of which it forms a part are special obligations of the
Issuer, payable solely out of the revenues or other receipts,
funds or monies of the Issuer pledged under the Indenture and
from any amounts otherwise available under the Indenture for
the payment of the Bonds. Neither the State nor any political
subdivision thereof shall be obligated to pay the principal or
redemption price, if any, of or interest on this bond and
neither the faith and credit nor taxing or taking power of the
State or any political subdivision thereof is pledged to such
payment. The Bonds do not now and shall never constitute a
debt or liability of the State or any political subdivision
thereof or bonds issued or guaranteed by either of them within
the meaning of any constitutional or statutory limitation.
Estoppel Clause. This bond is issued pursuant to and
in full compliance with the Constitution and laws of the
State. It is hereby certified, recited and declared that all
acts, conditions and things required to exist, happen and be
performed precedent to and in the issuance of this bond do
exist, have happened and have been performed in due time, form
and manner as required by law and that the issuance of this
bond and of the issue of which it forms a part, together with
all other obligations of the Issuer, do not exceed or violate
any constitutional or statutory limitation.
No Personal Liability. Neither the officers,
directors or employees of the Issuer or the Trustee nor any
person executing this bond shall be liable personally or be
subject to any personal liability or accountability by reason
of the issuance hereof.
Authentication. This bond shall not be valid or
become obligatory for any purpose or be entitled to any
security or benefit under the Indenture until the certificate
of authentication hereon shall have been signed by the Trustee.
Authorized Denomination. The Bonds are issuable only
in fully registered form and while in the Weekly Mode shall be
in denominations of $100,000 (with a single denomination of an
additional $25,000) or any multiple thereof.
Persons Deemed Owners. The Issuer, 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.
IN WITNESS WHEREOF, the RHODE ISLAND PORT AUTHORITY
AND ECONOMIC DEVELOPMENT CORPORATION has caused this bond to be
executed in its name by the manual or facsimile signature of
its Deputy Director and its Corporate Seal to be affixed hereto
and attested by the manual or facsimile signature of its
Secretary.
RHODE ISLAND PORT AUTHORITY
AND ECONOMIC DEVELOPMENT
CORPORATION
By:
Deputy Director - Finance
(CORPORATE SEAL)
Attest:
Secretary
CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds of the issue described in the
within mentioned Indenture.
Date of Registration:
Rhode Island Hospital Trust
National Bank, as Trustee
and Paying Agent
By
Authorized Signature
ASSIGNMENT
FOR VALUE RECEIVED the undersigned sells, assigns and
transfers unto
the within Bond and does hereby irrevocably constitute and
appoint Attorney-in-Fact to
transfer such Bond on the books kept for the registration
thereof, with full power of substitution in the premises.
Dated:
NOTICE: The signature to this
assignment must
correspond with the
name as it appears on
the face of the
within Bond in every
particular.
In the presence of:
Participant in a recognized
Signature Guaranty Medallion
Program
Authorized Officer
NOTE: Assignment form should
state both the name and
address of the assignee
in the space provided.
The following abbreviations, when used in the inscription
on the face of this bond, shall be construed as though they
were written out in full according to applicable law.
TEN COM - as tenants in common
UNIF GIFT MIN ACT
TEN ENT - as tenants by the entirety Custodian
JT TEN - as joint tenants with rights (Cust) (Minor)
of survivorship and not as
tenants in common
Act
(State)
Additional abbreviations may also be used though not set forth
in the list above.
The following is the Optional Tender Notice described
herein:
OPTIONAL TENDER NOTICE
Rhode Island Port Authority and
Economic Development Corporation
Electric Energy Facilities Revenue Refunding Bonds
(Newport Electric Corporation
Project - 1994 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, provided that for so long as
the Bonds are in the Book-Entry Only System, physical surrender
of the Bonds to the Paying Agent shall not be required and the
Bonds shall be tendered pursuant to the procedures described in
the Indenture referred to below.
Except as otherwise indicated herein and unless the context
otherwise requires, the terms used herein shall have the
meanings set forth in the Indenture dated as of January 1, 1994
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 Optional Tender Notice is being delivered
without any change whatsoever. If this notice is signed by a
person other than the registered owner of any Tendered Bond(s),
the Tendered Bond(s) must be either endorsed on the Assignment
appearing on each Bond or accompanied by appropriate bond
powers, in each case signed exactly as the name or names of the
registered owner or owners appear on the bond register. The
method of presenting this notice to the Paying Agent is the
choice of the person making such presentation. If it is made
by mail, it should be by registered mail with return receipt
requested.
(END OF FORM OF WEEKLY BOND)
(FORM OF FLEXIBLE BOND)
$ No. R-
ANY BONDOWNER WHO FAILS TO DELIVER A BOND FOR PURCHASE AT
THE TIMES AND AT THE PLACE REQUIRED HEREIN SHALL HAVE NO
FURTHER RIGHTS HEREUNDER EXCEPT THE RIGHT TO RECEIVE THE
PURCHASE PRICE HEREOF UPON PRESENTATION AND SURRENDER OF
THIS BOND TO THE PAYING AGENT AS DESCRIBED HEREIN, AND
SHALL HOLD THIS BOND AS AGENT FOR THE PAYING AGENT.
NEITHER THE STATE OF RHODE ISLAND NOR ANY POLITICAL
SUBDIVISION THEREOF IS OBLIGATED TO PAY, AND NEITHER THE
FAITH AND CREDIT NOR TAXING OR TAKING POWER OF THE STATE
NOR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE
PAYMENT OF, THE PRINCIPAL OR INTEREST ON THIS BOND.
Rhode Island Port Authority and
Economic Development Corporation
Electric Energy Facilities Revenue Refunding Bonds
(Newport Electric Corporation Project - 1994 Series)
DATE OF THIS BOND:
MATURITY DATE: September 1, 2011
INTEREST DUE:
(on the Next Purchase Date)
INTEREST RATE: %
(to the Next Purchase Date)
NEXT PURCHASE DATE:
COMMENCEMENT DATE OF RATE PERIOD:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CUSIP NUMBER:
MODE: Flexible
RHODE ISLAND PORT AUTHORITY AND ECONOMIC DEVELOPMENT
CORPORATION (the "Issuer"), a public corporation, governmental
agency and public instrumentality of the State of Rhode Island
and Providence Plantations (the "State"), for value received,
hereby promises to pay to the REGISTERED OWNER or registered assigns,
on the MATURITY DATE, solely from the sources and in
the manner hereinafter provided, upon presentation and
surrender hereof, in lawful money of the United States of
American the PRINCIPAL AMOUNT and in like manner to pay
interest on the unpaid principal balance thereof, until the
Issuer's obligation with respect to the payment of such sum
shall be discharged. Interest shall be payable from the most
recent Interest Payment Date, as defined below, to which
interest has been paid or duly provided for or, if no interest
has been paid, from the DATE OF THIS BOND, until paid in full,
at the rates set forth below, payable on each Interest Payment
Date. So long as this bond is in the Flexible Mode, interest
shall be due on this bond on each Purchase Date (as defined
below) and on the MATURITY DATE, and when the bond is in any
other Mode interest shall be due on the dates (the "Interest
Payment Dates") provided in the Indenture (as defined below).
Until conversion to the Weekly or Fixed Rate Mode as provided
below, this bond shall bear interest at the Flexible Rate. The
Flexible Rate for this bond shall be the rate of interest
determined by the Remarketing Agent designated as provided in
the Indenture (herein, with its successors, the "Remarketing
Agent"), for each Rate Period, as defined below, to be the
lowest rate which in its judgment, on the basis of prevailing
financing 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 Rate. If this bond is converted to the Weekly or Fixed
Rate Mode it shall bear interest at the Weekly or Fixed Rate,
as the case may be, as defined in the Indenture. The
Remarketing Agent shall determine the initial Flexible Rate on
or before the date of issue in or of conversion to the Flexible
Mode, which rate shall remain in effect as provided in the
Indenture. Thereafter, the Remarketing Agent shall redetermine
the Flexible Rate for each Rate Period as provided below. The
amount of interest due on any Interest Payment Date shall be
the amount of unpaid interest accrued on this bond through the
day preceding such Interest Payment Date.
Payment of Principal and Interest. While this bond is
in the Flexible Mode, the principal of and interest on this
bond due on the MATURITY DATE are payable when due by wire or
bank transfer of immediately available funds within the
continental United States to the REGISTERED OWNER hereof but
only upon presentation and surrender of this bond at the
offices of Rhode Island Hospital Trust National Bank, 150
Royall Street, Canton, Massachusetts 02021 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, 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 Issuer,
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 SPECIAL OBLIGATIONS OF THE ISSUER AND
ARE EQUALLY AND RATABLY SECURED, TO THE EXTENT PROVIDED IN THE
INDENTURE, SOLELY BY A PLEDGE OF THE REVENUES AND RECEIPTS
DERIVED BY THE ISSUER FROM OR IN CONNECTION WITH THE LOAN
AGREEMENT, AND THIS BOND SHALL NOT CONSTITUTE NOR GIVE RISE TO
ANY PECUNIARY LIABILITY OR A CHARGE AGAINST THE GENERAL CREDIT
OF THE ISSUER. NEITHER THE STATE OF RHODE ISLAND AND
PROVIDENCE PLANTATIONS NOR ANY POLITICAL SUBDIVISION THEREOF
SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF OR PREMIUM (IF ANY)
OR INTEREST ON THE BONDS, AND NEITHER THE FAITH AND CREDIT NOR
THE TAXING POWER OF THE STATE OF RHODE ISLAND AND PROVIDENCE
PLANTATIONS OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO
THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS.
Authorization and Purpose. This bond is one of an
authorized issue of Bonds of the Issuer in the aggregate
principal amount of $7,925,000 designated: Electric Energy
Facilities Revenue Refunding Bonds (Newport Electric
Corporation Project - 1994 Series) (the "Bonds") which are
issued for the purpose of refunding in full the outstanding
principal amount of the Issuer's $6,045,000 Electric Energy
Facilities Revenue Bonds (Newport Electric Corporation
Project - Series 1982 A), the proceeds of which were used to
finance, in part, the acquisition and installation of various
machinery, equipment and fixtures used to improve and expand
the capacity of Newport Electric Corporation (the "Company"), a
corporation organized and existing under the laws of the State
to generate, transmit and distribute electricity in the City of
Newport and Towns of Jamestown, Middletown and Portsmouth,
Rhode Island (the "Project") and the Issuer's $1,880,000
Electric Energy Facilities Revenue Bonds (Newport Electric
Corporation Project) Series 1988 the proceeds of which were
used to refund the Issuer's $1,800,000 Electric Energy
Facilities Revenue Bonds (Newport Electric Corporation Project
- - Series 1982 B). The Bonds are issue pursuant to the
Constitution and laws of the State, including particularly
Chapter 64 of Title 42 of the General Laws of Rhode Island,
1993, as amended and supplemented (the "Act"), resolutions
adopted by the Issuer on October 25, 1993 and November 29, 1993
and a Trust Indenture dated as of January 1, 1994 (which
Indenture as from time to time amended and supplemented is
herein referred to as the "Indenture"), duly executed and
delivered by the Issuer to the Trustee, and are equally and
ratably secured by and entitled to the protection of the
Indenture, which is on file in the office of the Trustee.
Pledge and Security. Pursuant to the Indenture, the
Issuer has assigned to the Trustee all of its right, title and
interest in and to a Loan Agreement (the "Loan Agreement")
dated as of January 1, 1994 between the Issuer and the Company,
including all rights to receive loan payments sufficient to pay
the principal of, premium, if any, and interest and all other
amounts due on the Bonds as the same become due, to be made by
the Company pursuant to the Loan Agreement. The Loan Agreement
sets forth the terms and conditions under which the Issuer will
provide for refinancing of the Project and under which the
Company will use and occupy the Project and make loan payments
to the Issuer in such amounts as are necessary to pay the
principal of, and interest on the Bonds. Reference is hereby
made to the Indenture for the definition of any capitalized
word or term used but not defined herein and for a description
of the property pledged, assigned and otherwise available for
the payment of the Bonds, the provisions, among others, with
respect to the nature and extent of the security, the rights,
duties and obligations of the Issuer, the Trustee and the
owners of the Bonds, and the terms upon which the Bonds are
issued and secured, and the holders of the Bonds are deemed to
assent to the provisions of the Indenture by the acceptance of
this bond.
Letter of Credit. 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 monies drawn by the Paying
Agent on an irrevocable letter of credit for the Bonds (together
with any extensions, amendments, and renewals
thereof, the "Letter of Credit") issued by Canadian Imperial
Bank of Commerce, in the initial aggregate stated amount of
$8,032,500 pursuant to the terms of a Reimbursement Agreement
dated as of January 5, 1994 (the "Reimbursement Agreement") by
and between the Company and Canadian Imperial Bank of Commerce
(together with any other issuer of a Credit Facility, the
"Bank"). The Letter of Credit initially expires on January 5,
1997 but may be terminated earlier upon the occurrence of
certain events set forth in the Loan Agreement, the Indenture
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 or other credit facilities (collectively with the Letter
of Credit, a "Credit Facility") as provided in the Loan
Agreement. The Company may substitute a new Credit Facility as
provided in the Loan Agreement.
Event of Default. If any Event of Default occurs and
is continuing, the principal amount of this bond together with
accrued interest may become or be declared immediately due and
payable in the manner and with the effect as provided in the
Indenture.
Definitions. The following terms are defined as
follows:
"Business Day" means a day of the year, other than a
Saturday or Sunday, on which banks are not required or
authorized to close in New York City, Atlanta, Georgia or in
the state in which the Principal Office of the Trustee or the
Principal Office of the Company, the Paying Agent (as defined
in the Indenture) or the Remarketing Agent (as defined in the
Indenture) is located and the New York Stock Exchange is open.
"Effective Date" means, with respect to a Bond in the
Flexible Mode, 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 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.
"Purchase Price" means, while this bond is in the
Flexible Mode, the sum of par plus accrued interest up to, but
not including the Effective Date.
"Rate Period" or "Period" means, when used with
respect to any particular rate of interest for a Bond in the
Flexible Mode, the period during which such rate of interest
determined for such Bond will remain in effect as described
herein.
Conversion. At the option of the Company and upon
certain conditions provided for in the Indenture described
below, (a) all or a portion of the Bonds may be converted or
reconverted from time to time (i) from the Weekly Mode to the
Flexible Mode, or, (ii) from the Flexible Mode to the Weekly
Mode, or (b) all, but not less than all of the Bonds may be
converted to the Fixed Rate Mode. While this bond is in the
Flexible Mode, a new interest rate shall take effect on the
Effective Date of the next Flexible Rate Period, as defined
herein, applicable to this bond.
While this bond is in the Flexible Mode, conversions
to any other Mode may take place only on an Effective Date.
Conversion of this bond to another Mode shall be subject to
certain conditions set forth in the Indenture. In the event
that the conditions for a proposed conversion to a new Mode are
not met (i) such new Mode shall not take effect on the proposed
conversion date, notwithstanding any prior notice to the
Bondowners of such conversion and (ii) this bond shall remain
in the Flexible Mode with a Rate Period of one day. In no
event shall the failure of this bond to be converted to another
Mode be deemed to be a Default or an Event of Default under the
Indenture as long as the Purchase Price (as defined below) is
made available on the failed conversion date to owners of all
Bonds that were to have been converted.
Interest While in Flexible Mode. While Bonds are in
the Flexible Mode, the interest rate for each particular Bond
and the length of each Rate Period 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 day of the Rate Period.
If for any reason the Rate Period and the Flexible Rate for any
Bond while in the Flexible Mode are not determined, the Bond
shall be deemed to have a Rate Period of one day and the
Flexible Rate shall be equal to 100% of the Prime Commercial
Paper A-1/P-1 (30 days) rate shown in the table captioned
"Short-Term Tax-Exempt Yields" in the edition of The Bond Buyer
published on the day on which such rate is determined or, if
such rate is not published on that day, in the most recent
publication of such rate.
While the Bonds are in the Flexible Mode, each and any
Bond may have successive Rate Periods different from any other
Bond. Bonds in the Flexible Mode shall not have Rate Periods
longer than the maximum number of days of interest coverage
under the Letter of Credit or any Credit Facility minus eight
(8) days. In no event may the Remarketing Agent selecte Rate
Periods in excess of two-hundred seventy (270) days.
While this bond is in the Flexible Mode it is subject
to mandatory tender for purchase on each applicable Effective
Date at the Purchase Price. THE OWNER OF THIS BOND, BY
ACCEPTANCE HEREOF, AGREES TO SELL AND SURRENDER THIS BOND IN
ACCORDANCE WITH THE PROVISIONS OF THE INDENTURE AND, ON THE
PURCHASE DATE, TO SURRENDER THIS BOND TO THE PAYING AGENT FOR
PAYMENT OF THE PURCHASE PRICE. UPON DEPOSIT OF THE PURCHASE
PRICE WITH THE PAYING AGENT ON THE PURCHASE DATE, THIS BOND
SHALL BE DEEMED TENDERED FOR PURCHASE AND SHALL CEASE TO BE
OUTSTANDING UNDER THE INDENTURE, INTEREST HEREON SHALL CEASE TO
ACCRUE AS OF THE PURCHASE DATE, AND THE REGISTERED OWNER HEREOF
SHALL BE ENTITLED ONLY TO RECEIVE THE PURCHASE PRICE SO
DEPOSITED WITH THE PAYING AGENT UPON SURRENDER OF THIS
CERTIFICATE TO THE PAYING AGENT. The Purchase Price shall be
paid on the Delivery Date, which shall be the Effective Date or
any subsequent Business Day on which this bond is delivered to
the Paying Agent. The Purchase Price of this bond shall be
paid only upon surrender of this bond to the Paying Agent as
provided herein. From and after the Effective Date, no further
interest shall be payable to the REGISTERED OWNER during the
preceding Rate Period, provided that there are sufficient funds
available on the Effective Date to pay the Purchase Price.
Each determination and redetermination of the Flexible
Rate shall be conclusive and binding on the Issuer, 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.
Mandatory Taxability Redemption. In the event of a
Determination of Taxability, the Bonds shall be redeemed on a
day selected by the Company that is not more than 60 days after
the occurrence of such Determination of Taxability as provided
in the Indenture, at the Redemption Price equal to 100% of the
principal amount thereof plus accrued interest to the date of
redemption. Redemption under this paragraph shall be in whole
unless not less than forty-five (45) days prior to the
redemption date the 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. Any bond in
the Flexible Mode that has a Purchase Date prior to the
redemption date shall be redeemed on that Purchase Date.
Notice of Redemption. Notice of redemption of this
bond (which notice may state that it is subject to the receipt
of the redemption moneys by the Trustee on or before the date
fixed for redemption and which notice shall be of no effect
unless such moneys are so received on or before such date) will
be given by first class mail, postage prepaid, not less than
thirty (30) days prior to the redemption date to the REGISTERED
OWNER at its registered address; provided, however, no notice
shall be given to the owner of any bond in the Flexible Mode
that has a Purchase Date prior to the Redemption Date. Failure
to mail notice to the owner of any other bond or any defect in
the notice to such other owner shall not affect the redemption
of this bond.
Transfer of Bonds. This bond is transferable by the
REGISTERED OWNER, in person or by its attorney duly authorized
in writing, at the office of the Paying Agent, upon surrender
of this bond to the Paying Agent for cancellation. Upon the
transfer, a new Bond or Bonds in authorized denominations of
the same aggregate principal amount will be issued to the
transferee at the same office. No transfer will be effective
unless represented by such surrender and reissue. This bond
may also be exchanged at the office of the Paying Agent for a
new Bond or Bonds in authorized denominations of the same
aggregate principal amount without transfer to a new registered
owner except for applicable taxes or other governmental
charges, if any.
Amendment of Indenture. The Indenture permits, with
certain exceptions as therein provided, the amendment thereof
and the modification of the rights and obligations of the
Issuer and the rights of the owners of the Bonds at any time by
the Issuer with the consent of the Bank (if a Credit Facility
is in effect) and of the owners of not less than 66 2/3% in
aggregate principal amount of the Bonds at the time outstanding
thereunder. Any such consent shall be conclusive and binding
upon each such owner and upon all future owners of each Bond
and of any such Bond issued upon the transfer thereof, whether
or not notation of such consent is made thereon. The Indenture
also permits the amendment thereof by the Issuer with the
consent of the Bank (if a Credit Facility is in effect) but
without the consent of the owners of the Bonds for certain
specified purposes.
Limitation on Bondholder Enforcement Rights. The
owner of this bond shall have no right to enforce the
provisions of the Indenture, to institute action to enforce the
provisions and covenants thereof or to institute, appear in or
defend any suit or other proceedings with respect thereto,
except as provided in the Indenture.
Special Obligations of the Issuer. This bond and the
issue of which it forms a part are special obligations of the
Issuer, payable solely out of the revenues or other receipts,
funds or monies of the Issuer pledged under the Indenture and
from any amounts otherwise available under the Indenture for
the payment of the Bonds. Neither the State nor any political
subdivision thereof shall be obligated to pay the principal or
redemption price, if any, of or interest on this bond and
neither the faith and credit nor taxing or taking power of the
State or any thereof is pledged to such payment. The Bonds do
not now and shall never constitute a debt or liability of the
State or any political subdivision thereof or bonds issued or
guaranteed by either of them within the meaning of any
constitutional or statutory limitation.
Estoppel Clause. This bond is issued pursuant to and
in full compliance with the Constitution and laws of the
State. It is hereby certified, recited and declared that all
acts, conditions and things required to exist, happen and be
performed precedent to and in the issuance of this bond do
exist, have happened and have been performed in due time, form
and manner as required by law and that the issuance of this
bond and of the issue of which it forms a part, together with
all other obligations of the Issuer, do not exceed or violate
any constitutional or statutory limitation.
No Personal Liability. Neither the officers,
directors or employees of the Issuer or the Trustee nor any
person executing this bond shall be liable personally or be
subject to any personal liability or accountability by reason
of the issuance hereof.
Authentication. This bond shall not be valid or
become obligatory for any purpose or be entitled to any
security or benefit under the Indenture until the certificate
of authentication hereon shall have been signed by the Trustee.
Authorized Denomination. The bonds are issuable only
in fully registered form and while in the Flexible Mode shall
be in denominations of $100,000 or any multiple of $1,000 in
excess of $100,000.
Persons Deemed Owners. The Issuer, 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.
IN WITNESS WHEREOF, the RHODE ISLAND PORT AUTHORITY
AND ECONOMIC DEVELOPMENT CORPORATION has caused this Bond to be
executed in its name by the manual or facsimile signature of
its [Chairman, Vice Chairman, Executive Director, Deputy
Director, Secretary, Assistant Secretary, Treasurer or their
designees] and its corporate seal affixed hereto and attested
by the manual or facsimile signature of its [Secretary,
Assistant Secretary, or their designees].
RHODE ISLAND PORT AUTHORITY
AND ECONOMIC DEVELOPMENT
CORPORATION
By
[]
(CORPORATE SEAL)
Attest:
[ ] (FORM OF CERTIFICATE OF
AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds of the issue described
in the within mentioned Indenture.
Rhode Island Hospital Trust
National Bank, as
Trustee and Paying Agent
By
Authorized Signature
(FORM OF ASSIGNMENT)
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto the within Bond and
does hereby irrevocably constitute and appoint
Attorney-in-Fact to transfer such Bond on the books
kept for the registration thereof, with full powers of
substitution in the premises.
Dated:
NOTICE: The signature to this
assignment must correspond
with the name as it
appears on the face of the
within Bond in every
particular.
In the presence of:
Participant in a recognized
Signature Guarantee
Medallion Program
Authorized Officer
NOTE: Assignment form should state
both the name and address of
the assignee in the space
provided.
The following abbreviations, when used in the
inscription on the face of this bond, shall be construed as
though they were written out in full according to applicable law.
TEN COM - as tenants in common UNIF GIFT MIN ACT
TEN ENT - as tenants by the entirety Custodian
JT TEN - as joint tenants with (Cust) (Minor)
of survivorship and not
as tenants in common Act
(State)
Additional abbreviation may also be used though not set forth in
the list above.
(END OF FORM OF FLEXIBLE BOND)
(FORM OF FIXED RATE BOND)
Unless the certificate is presented by an authorized
representative of The Depository Trust Company to the issuer or
its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede &
Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.
$ No. R-
NEITHER THE STATE OF RHODE ISLAND NOR ANY POLITICAL
SUBDIVISION THEREOF IS OBLIGATED TO PAY, AND NEITHER
POLITICAL SUBDIVISION, THE FAITH AND CREDIT NOR TAXING OR
TAKING POWER OF THE STATE OF RHODE ISLAND NOR ANY POLITICAL
SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF, THE
PRINCIPAL, PREMIUM, IF ANY, OF OR INTEREST ON THIS BOND
Rhode Island Port Authority
and Economic Development Corporation
Electric Energy Facilities
Revenue Refunding Bonds (Newport Electric
Corporation Project - 1994 Series)
DATE OF THIS BOND:
MATURITY DATE: September 1, 2011
INTEREST PAYMENT DATES: March 1, and September 1, (but not
before , )
INTEREST RATE:
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
CUSIP NUMBER:
MODE: Fixed
RHODE ISLAND PORT AUTHORITY AND ECONOMIC DEVELOPMENT
CORPORATION (the "Issuer"), a public corporation, governmental
agency and public instrumentality of the State of Rhode Island
and Providence Plantations (the "State"), for value received,
hereby promises to pay to the REGISTERED OWNER or registered
assigns, on the MATURITY DATE, solely from the sources and in the
manner hereinafter provided, upon presentation and
surrender hereof, in lawful money of the United States of
America, the PRINCIPAL AMOUNT and in like manner to pay
interest on the unpaid principal balance thereof until the
Issuer's obligation with respect to the payment of such sum
shall be discharged. Interest shall be payable (computed on
the basis of a 360-day year consisting of twelve 30-day months)
from the most recent INTEREST PAYMENT DATE, as defined below,
to which interest has been paid or duly provided for or, if no
interest has been paid, from the DATE OF THIS BOND at the
INTEREST RATE per annum, payable semi-annually on the INTEREST
PAYMENT DATES until the date on which this bond becomes due,
whether at maturity or by acceleration or redemption. From and
after that date, any unpaid principal will bear interest at the
same rate until paid or duly provided for.
Payment of Principal and Interest. The principal and
premium if any, of this Bond is payable in clearinghouse funds
at the office of Rhode Island Hospital Trust National Bank, 150
Royall Street, Canton, Massachusetts 02021, 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 Bond Registrar. 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 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 Issuer 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.
Both principal and interest on this Bond are payable in any
coin or currency of the United States of America which, on the
respective dates of payment thereof, shall be legal tender for
the payment of public and private debts.
The Depository Trust Company ("DTC") has been appointed to
act as securities depository for the Bonds. For so long as DTC
acts as securities depository, beneficial ownership interests
in the Bonds shall be evidenced by a book-entry system
maintained by the securities depository. The ownership of one
fully registered bond for each maturity has been registered in
the name of Cede & Co., as nominee of DTC. For as long as DTC
acts as securities depository, the principal amount and
interest on this Bond is payable by wire or bank transfer from
Rhode Island Hospital Trust National Bank or any successor
paying agent, as Paying Agent, to The Depository Trust Company
to be remitted to its participants for subsequent distribution
to the beneficial owners determined as of the close of business
on the applicable record date. If no securities depository
holds the Bonds, interest shall be payable by wire or bank
transfer to each owner of a Bond at the address of such owner
as it appears on the applicable Record Date on the registration
books kept by the Bond Registrar. Under such circumstances,
principal shall be payable at the office of the Paying Agent
upon presentation and surrender hereof.
THE BONDS ARE SPECIAL OBLIGATIONS OF THE ISSUER AND ARE
EQUALLY AND RATABLY SECURED, TO THE EXTENT PROVIDED IN THE
INDENTURE, SOLELY BY A PLEDGE OF THE REVENUES AND RECEIPTS
DERIVED BY THE ISSUER FROM OR IN CONNECTION WITH THE LOAN
AGREEMENT, AND THIS BOND SHALL NOT CONSTITUTE NOR GIVE RISE TO
ANY PECUNIARY LIABILITY OR A CHARGE AGAINST THE GENERAL CREDIT
OF THE ISSUER. NEITHER THE STATE OF RHODE ISLAND AND
PROVIDENCE PLANTATIONS NOR ANY POLITICAL SUBDIVISION THEREOF
SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF OR PREMIUM (IF ANY)
OR INTEREST ON THE BONDS, AND NEITHER THE FAITH AND CREDIT NOR
THE TAXING POWER OF THE STATE OF RHODE ISLAND AND PROVIDENCE
PLANTATIONS OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO
THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE BONDS.
Authorization and Purpose. This bond is one of an
authorized issue of Bonds of the Issuer in the aggregate
principal amount of $7,925,000 designated: Rhode Island Port
Authority and Economic Development Corporation Electric Energy
Facilities Revenue Refunding Bonds - (Newport Electric
Corporation Project - 1994 Series) (the "Bonds") which are
issued for the purpose of refunding in full the outstanding
principal amount of the Issuer's $6,045,000 Electric Energy
Facilities Revenue Bonds (Newport Electric Corporation Project
- - Series 1982 A), the proceeds of which were used to finance, in
part, the acquisition and installation of various machinery,
equipment and fixtures to be used to improve and expand the
capacity of Newport Electric Corporation (the "Company"), a
corporation organized and existing under the laws of the State
to generate, transmit and distribute electricity in the City of
Newport, and Towns of Jamestown, Middletown and Portsmouth,
Rhode Island (the "Project") and the Issuer's $1,880,000
Electric Energy Facilities Revenue Bonds (Newport Electric
Corporation Project - Series 1988) the proceeds of which were
used to refund the Issuer's $1,800,000 Electric Energy
Facilities Revenue Bonds (Newport Electric Corporation Project
- - Series 1982 B). The Bonds are issued pursuant to the
Constitution and laws of the State, including particularly
Chapter 64 of Title 42 of the General Laws of Rhode Island,
1956, (1993 Reenactment), as amended and supplemented, as
amended, resolutions adopted by the Issuer on October 25, 1993
and November 29, 1993 and a Trust Indenture dated as of January
1, 1994 (which Indenture as from time to time amended and
supplemented is herein referred to as the "Indenture"), duly
executed and delivered by the Issuer to the Trustee, and are
equally and ratably secured by and entitled to the protection
of the Indenture, which is on file in the office of the Trustee.
Pledge and Security. Pursuant to the Indenture, the Issuer
has assigned to the Trustee all of its right, title and
interest in and to a Loan Agreement (the "Loan Agreement")
dated as of January 1, 1994 between the Issuer and the Company,
including all rights to receive loan payments sufficient to pay
the principal or premium if any, of and interest and all other
amounts due on the Bonds as the same become due, to be made by
the Company pursuant to the Loan Agreement. The Loan Agreement
sets forth the terms and conditions under which the Issuer will
provide for refinancing of the Project and under which the
Company will use and occupy the Project and make loan payments
to the Issuer in such amounts as are necessary to pay the
principal of, premium if any, and interest on the Bonds.
Reference is hereby made to the Indenture for the definition of
any capitalized word or term used but not defined herein and
for a description of the property pledged, assigned and
otherwise available for the payment of the Bonds, the
provisions, among others, with respect to the nature and extent
of the security, the rights, duties and obligations of the
Issuer, the Trustee and the owners of the Bonds, and the terms
upon which the Bonds are issued and secured, and the holders of
the Bonds are deemed to assent to the provisions of the
Indenture by the acceptance of this bond.
Letter of Credit. The principal of and interest on
this bond while it is in the Fixed Mode is also payable from
monies drawn by the Paying Agent on an irrevocable letter of
credit for the Bonds (together with any extensions, amendments,
and renewals thereof, the "Letter of Credit") issued by
[ ], in the initial aggregate
stated amount of $[ ] 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") and the participating
banks named therein, if any. The Paying Agent may draw on the
Letter of Credit presently in place for the payment of up to
[ ] ([ ]) days' interest. The Letter of Credit
initially expires on [ ] but may be terminated
earlier upon the occurrence of certain events set forth in the
Loan Agreement, the Indenture 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 or other credit facility (collectively with
the Letter of Credit, a "Credit Facility") is provided in
accordance with the Loan Agreement, the Bonds will become
subject to mandatory purchase as described below. The Company
may substitute a new Credit Facility as provided in the Loan
Agreement.
Event of Default. In case any Event of Default occurs and
is continuing, the principal amount of this bond together with
accrued interest may be declared due and payable in the manner
and with the effect provided in the Indenture.
General Option Redemption. The Bonds are subject to
redemption pursuant to the Indenture at the option of the
Issuer, by direction of the Company as a whole or in part at
any time, at the following prices expressed in percentage of
their principal amount, plus accrued interest to the redemption
date:
Years Remaining
Until Final Maturity Redemption Period Redemption Price
More than 15 years Tenth Anniversary 102%, declining by
of commencement 1/2% on each
of Fixed Rate succeeding
Period anniversary of the
first day of the
redemption period
until reaching 100%
and thereafter at
100%
More than 10, but Eighth 101 1/2%, declining
not more than anniversary of by 1/2% on each
15 years commencement of anniversary of the
Fixed Rate first day of the
Period redemption period
until reaching 100%
and thereafter at
100%
More than 5, but Fifth anniversary 101%, declining by
not more than of commencement of 1/2% on each
10 years Fixed Rate Period succeeding
anniversary of the
first day of the
redemption period
until reaching 100%
and thereafter at
100%
5 Years or less Non-callable Non-callable
Mandatory Taxability Redemption. In the event of a
Determination of Taxability, the Bonds shall be redeemed on a
day selected by the Corporation that is not more than 60 days
after the occurrence of such Determination of Taxability as
provided in the Indenture, at the Redemption Price equal to
100% of the principal amount thereof plus accrued interest to
the date of redemption. Redemption under this paragraph shall
be in whole unless not less than forty-five (45) days prior to
the redemption date the 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.
If less than all of the Outstanding Bonds are to be called
for redemption, the Bonds (or portions thereof) to be redeemed
shall be selected as provided in the Indenture.
In the event this bond is selected for redemption, notice
(which notice may state that it is subject to the receipt of
the redemption moneys by the Trustee on or before the date
fixed for redemption and which notice shall be of no effect
unless such moneys are so received on or before such date) will
be mailed not less than thirty (30) day 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 not longer accrue.
Transfer of Bonds. This bond is transferable by the
REGISTERED OWNER, in person or by its attorney duly authorized
in writing, at the office of the Paying Agent, upon surrender
of this bond to the Paying Agent for cancellation. Upon the
transfer, a new Bond or Bonds in authorized denominations of
the same aggregate principal amount will be issued to the
transferee at the same office. No transfer will be effective
unless represented by such surrender and reissue. This bond
may also be exchanged at the office of the Paying Agent for a
new Bond or Bonds in authorized denominations of the same
aggregate principal amount without transfer to a new registered
owner. Exchanges and transfers will be without expense to the
owner except for applicable taxes or other governmental
charges, if any. The Paying Agent will not be required to make
an exchange or transfer of this bond during the fifteen (15)
days preceding any date fixed for selection for redemption if
this bond (or any portion thereof) is eligible to be selected
for redemption.
Amendment of Indenture. The Indenture permits, with
certain exceptions as therein provided, the amendment thereof
and the modification of the rights and obligations of the
Issuer and the rights of the owners of the Bonds at any time by
the Issuer with the consent of the owners of not less than
66 2/3% in aggregate principal amount of each series of the
Bonds at the time outstanding thereunder. Any such consent
shall be conclusive and binding upon each such owner and upon
all future owners of each Bond and of any such Bond issued upon
the transfer thereof, whether or not notation of such consent
is made thereon. The Indenture also permits the amendment
thereof by the Issuer but without the consent of the owners of
the Bonds for certain specified purposes.
Limitation on Bondholder Enforcement Rights. The owner of
this bond shall have no right to enforce the provisions of the
Indenture, to institute action to enforce the provisions and
covenants thereof or to institute, appear in or defend any suit
or other proceedings with respect thereto, except as provided
in the Indenture.
Special Obligations of the Issuer. This bond and the issue
of which it forms a part are special obligations of the Issuer,
payable solely out of the revenues or other receipts, funds or
moneys of the Issuer pledged under the Indenture and from any
amounts otherwise available under the Indenture for the payment
of the Bonds. Neither the State nor any political subdivision
thereof shall be obligated to pay the principal or redemption
price, if any, of or interest on this bond and neither the
faith and credit nor taxing or taking power of the State or any
political subdivision thereof is pledged to such payment. The
Bonds do not now and shall never constitute a debt or liability
of the State or any political subdivision thereof or bonds
issued or guaranteed by either of them within the meaning of
any constitutional or statutory limitation.
Estoppel Clause. This bond is issued pursuant to and in
full compliance with the Constitution and laws of the State.
It is hereby certified, recited and declared that all acts,
conditions and things required to exist, happen and be
performed precedent to and in the issuance of this bond do
exist, have happened and have been performed in due time, form
and manner as required by law and that the issuance of this
bond and of the issue of which it forms a part, together with
all other obligations of the Issuer, do not exceed or violate
any constitutional or statutory limitation.
No Personal Liability. Neither the officers, directors or
employees of the Issuer or the Trustee nor any person executing
this bond shall be liable personally or be subject to any
personal liability or accountability by reason of the issuance
hereof.
Authentication. This bond shall not be valid or become
obligatory for any purpose or be entitled to any security or
benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee.
Authorized Denomination. The Bonds are issuable only in
fully registered form in denominations of $5,000 or any
multiple thereof.
Persons Deemed Owners. The Issuer, 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.
IN WITNESS WHEREOF, the RHODE ISLAND PORT AUTHORITY AND
ECONOMIC DEVELOPMENT CORPORATION has caused this Bond to be
executed in its name by the manual or facsimile signature of
its Authorized Representative.
RHODE ISLAND PORT AUTHORITY AND
ECONOMIC DEVELOPMENT CORPORATION
By
Authorized Representative
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds of the issue described
in the within mentioned Indenture.
Date of Registration:
Rhode Island Hospital Trust
National Bank, as Trustee and
Paying Agent
By
Authorized Signature
(FORM OF ASSIGNMENT)
ASSIGNMENT
For VALUE RECEIVED the undersigned sells, assigns and
transfers unto
the within Bond and does hereby irrevocably constitute and
appoint Attorney-in-Fact
to transfer such Bond on the books kept for the registration
thereof, with full power of substitution in the premises.
Dated:
NOTICE: The Signature to
this assignment must
correspond with the
name as it appears
on the face of the
within Bond in every
particular.
In the presence of:
Name of State or National
Bank or member of National
Association of Securities
Dealers
Authorized Officer
NOTE: Assignment form should
state both the name and
address of the assignee
in the space provided.
The following abbreviations, when used in the inscription
on the face of this bond, shall be construed as though they
were written out in full according to applicable law.
TEN COM - as tenants in common UNIF GIFT IN ACT
TEN COM - as tenants by the entirety Custodian
JT TEN - as joint tenants with rights (Cust) (Minor)
of survivorship and not as
tenants in common
Act
(State)
Additional abbreviations may also be used though not set forth
in the list above.
(END OF FORM OF FIXED RATE BOND)
WPPJDC/2464
EXHIBIT-4-6.14
EXHIBIT A
[FORM OF LETTER OF CREDIT]
IRREVOCABLE LETTER OF CREDIT
No. U-94-0047
January 6, 1994
Rhode Island Hospital Trust National Bank,
as Trustee
150 Royal Street
Canton, Massachusetts 02021
Attention: Corporate Trust
Dear Sirs:
We hereby establish, at the request and for the account of
Newport Electric Corporation (the "Company"), in your favor, as
Trustee under the Trust Indenture, dated as of January 1, 1994
(the "Indenture") between Rhode Island Port Authority and
Economic Development Corporation (the "Issuer") and you, pursuant
to which $7,925,000 in aggregate principal amount of the Issuer's
Electric Energy Facilities Revenue Refunding Bonds (Newport
Electric Corporation Project 1994 Series) (the "Bonds") are being
issued, our direct-pay, Irrevocable Letter of Credit No. U-94-
0047 in the amount of $8,032,500 (the "Stated Amount") of which
(i) $7,925,000 shall support the payment of the principal or
portion of the purchase price or redemption price corresponding
to principal of the Bonds (the "Principal Component"), and (ii)
$107,500 shall support the payment of up to 45 days' interest or
portion of the purchase price or redemption price corresponding
to interest on the Bonds computed at the assumed interest rate of
11.0% per annum (computed on the basis of a 365 day year) (as
more fully described below) (the "Interest Component"), effective
immediately and expiring at 3 P.M. (New York City time) on
January 6, 1997 (the "Scheduled Termination Date"), or such
earlier date as may be set forth herein. All drawings under this
Letter of Credit will be paid with our own funds.
We hereby irrevocably authorize you to draw on us, in an
aggregate amount not to exceed the amount of this Letter of
Credit set forth above and in accordance with the terms and
conditions and subject to the reductions in amount as hereinafter
set forth, (1) in one or more drawings (subject to the provisions
contained in the next following paragraph) by your draft
referring thereon to the number of this Letter of Credit, payable
at sight on a day of the year, other than a Saturday or Sunday,
on which banks are not required or authorized to close in New
York City, Atlanta, Georgia or in the state in which your
principal office or the principal corporate office of the
Company, the Paying Agent (as defined in the Indenture) or the
Remarketing Agent (as defined in the Indenture) is located and
the New York Stock Exchange is open (a "Business Day"), and
accompanied by your written and completed certificate signed by
you in substantially the form of Annex A attached hereto (such
draft accompanied by such certificate being your "Interest
Draft"), an amount not exceeding $107,500 representing up to 45
days' interest on the Bonds, computed at the assumed rate of
11.0% per annum (based on a 365 day year); (2) in one or more
drawings (subject to the reinstatement provisions below) by one
or more of your drafts, referring thereon to the number of this
Letter of Credit, payable at sight on a Business Day, and
accompanied by your written and completed certificate signed by
you in substantially the form of Annex B attached hereto (any
such draft accompanied by such certificate being your "Purchase
Draft"), an aggregate amount not exceeding $8,032,500 covering
the portion of the purchase price of the bonds corresponding to
principal and interest; (3) in one or more drawings by one or
more of your drafts referring thereon to the number of this
Letter of Credit, payable at sight on a Business Day, and
accompanied by your written and completed certificate signed by
you in substantially the form of Annex C attached hereto (any
such draft accompanied by such certificate being your "Partial
Redemption Draft"), an aggregate amount not exceeding $8,032,500,
covering principal and interest on the Bonds; and (4) in a single
drawing by your draft referring thereon to the number of this
Letter of Credit, payable at sight on a Business Day, and
accompanied by your written and completed certificate signed by
you in substantially the form of Annex D attached hereto (such
draft accompanied by such certificate being your "Final Draft"
and any Draft referred to in this paragraph being a "Draft"), an
amount not exceeding $8,032,500 covering principal of and accrued
and unpaid interest on, or the purchase price corresponding to
the principal of and accrued and unpaid interest on, the Bonds.
Drafts are not available to pay any premium due and owing on (or
with respect to the purchase or redemption price of) the Bonds.
(i) If you shall draw on us by your Interest Draft or
Purchase Draft while you are in Weekly Mode (as defined in the
Indenture) and you shall not have received from us within seven
(7) calendar days from the date of such drawing a written notice
to the effect that (a) we have not been reimbursed for such
drawing, (b) or that an event of default has occurred and is
continuing under that certain Reimbursement Agreement entered
into in connection with this Letter of Credit (the "Reimbursement
Agreement"), and that the Interest Component of the Letter of
Credit will not be reinstated in the amount of such drawing
corresponding to interest, or (ii) if you shall draw on us by
your Interest Draft or your Purchase Draft while you are in
Flexible Mode (as defined in the Indenture) and you shall not
have received from us prior or concurrently with such drawing a
written notice to the effect that (a) we have not been reimbursed
for any prior drawings hereunder not constituting an Advance, or
(b) that an event of default has occurred and is continuing under
the Reimbursement Agreement, and that the Interest Component of
the Letter of Credit will not be reinstated in the amount of such
drawing corresponding to interest, your right to draw on us with
respect to the Interest Component of the Letter of Credit by
Drafts shall be automatically reinstated in the amount of such
drawing corresponding to interest, and, effective (x) when clause
(i) is operative, the eighth (8th) calendar day from the date of
such drawing, or (y) when clause (ii) above is operative,
immediately after such drawing. This automatic reinstatement of
your right to draw on us with respect to the Interest Component
of the Letter of Credit by your Drafts shall be applicable to
successive drawings by your Drafts (subject to this paragraph) so
long as this Letter of Credit shall not have terminated as set
forth below.
Upon our honoring of any Purchase Draft, Final Draft or
Partial Redemption Draft hereunder, the amount available
hereunder to be drawn by your subsequent Interest Drafts
hereunder shall be reduced by the amount of any such Drafts
corresponding to accrued and unpaid interest on the Bonds,
subject to reinstatement as indicated in the next preceding and
following paragraphs with respect to such Drafts.
Upon our honoring any Purchase Draft, Final Draft or Partial
Redemption Draft presented by you hereunder, the amount of this
Letter of Credit and the amounts available to be drawn by you
hereunder by any subsequent Purchase Draft, Partial Redemption
Draft, and Final Draft shall be automatically decreased by an
amount equal to the amount of such Purchase Draft (subject to the
reinstatement of the Interest Component described above), or
Final Draft and, in the case of a drawing by your Partial
Redemption Draft, by an amount equal to the principal amount of
Bonds that are the subject of such Draft plus 45 days' interest
on such principal amount of Bonds computed at an assumed rate of
11.0% per annum, subject to reinstatement (if any) as follows:
(i) with respect to amounts decreased on payment of
any Purchase Draft, the Principal Component of this Letter
of Credit shall be automatically increased when and to the
extent, but only when and to the extent, that we are
reimbursed by or on behalf of the Company for any amount
drawn hereunder by such Purchase Draft (including any
accrued interest received with respect to the Bank Bonds
being resold) or the Remarketing Agent advises you that the
Remarketing Agent has found a purchaser to whom it can
remarket Pledged Bonds acquired with such Drafts all as set
forth in your completed certificate signed by you in
substantially the form of Annex E attached hereto. The
Interest Component of the Purchase Draft shall be reinstated
as set forth above. Any amount received by us from or on
behalf of the Company in reimbursement of amounts drawn
hereunder by any Purchase Draft corresponding to principal
shall, if accompanied by such certificate, be applied to the
extent of the amount indicated therein corresponding to
principal to reimburse us for amounts drawn hereunder by
your Purchase Drafts corresponding to principal;
(ii) with respect to amounts decreased on payment of
any Partial Redemption Draft or Final Draft, the amount of
this Letter of Credit shall not be reinstated.
Funds from us under this Letter of Credit are available to
you against your Drafts. Each such Draft shall be dated the date
of its presentation, and each such Draft shall be presented to
our Atlanta office, which is currently located at Two Paces West,
2727 Paces Ferry Road, Suite 1200, Atlanta, Georgia 30339,
Attention: Clare C. Coyne, Senior Associate, Credit Operations,
or at any other office which we may designate to you by written
notice from time to time. In lieu of delivery to us of any such
Draft, you may transmit to us by facsimile transmission, the text
of such draft to the following number: (404) 319-4950 (or at any
other number which we may designate to you by written notice from
time to time).
If we receive any of your Drafts at such office, all in
strict conformity with the terms and conditions of this Letter of
Credit, with respect to any drawing, not later than 12:00 Noon
(New York City time) on a Business Day prior to the termination
hereof, we will honor the same by 2:00 P.M. (New York City time)
on the same day in accordance with your payment instructions. If
we receive any of your Drafts at such office, all in strict
conformity with the terms and conditions of this Letter of
Credit, later than the times specified in the preceding sentence
on a Business Day prior to the termination hereof, we will honor
the same on the next succeeding Business Day in accordance with
your payment instructions. If requested by you, payment under
this Letter of Credit may be made by wire transfer of Federal
Reserve Bank of New York funds to your account in a bank on the
Federal Reserve wire system or by deposit of same day funds into
a designated account that you maintain with us.
In connection with the presentation of any Purchase Draft or
any Final Draft (upon a purchase, upon expiration, termination or
substitution of the Letter of Credit), Bonds in aggregate
principal amount equal to the principal amount of such Purchase
Draft or Final Draft shall be delivered to the Bank or its
designee as promptly as practicable, registered in the name of
the Bank, or its designee, as pledgee of the Company, pledged to
the Bank pursuant to the Pledge Agreement, dated as of January 6,
1994 made by the Company in favor of the Bank (the "Pledge
Agreement") and in any event within five (5) Business Days after
such presentation. With respect to any Purchase Draft, the Bank
agrees that it shall not release any Bonds pledged to it until
the Letter of Credit shall be reinstated with respect to any
amounts drawn hereunder by such Drafts, and the Bank shall notify
its designee to release Bonds held on behalf of the Bank upon
such reinstatement of the Letter of Credit.
Upon the earliest of (i) our honoring your Final Draft
presented hereunder, (ii) the Scheduled Termination Date, (iii)
the date on which we receive a certificate signed by you stating
that the Company has provided and you have accepted an Alternate
Credit Facility in accordance with the terms of the Indenture
that is effective the date of such certificate, (iv) the close of
business on the first Business Day following receipt of notice
from you to us that all of the Bonds have been converted to a
Fixed Rate (as defined in the Indenture), (v) the fifth Business
Day following receipt by you of our determination to terminate
the Letter of Credit on such fifth business day as a result of an
occurrence of an event of default under the Reimbursement
Agreement and to direct either a mandatory tender or acceleration
and/or redemption pursuant to the Indenture, and (vi) the close
of business on the date on which there are no longer any Bonds
Outstanding and of which notice was given to us by you of such
occurrence, this Letter of Credit shall terminate (such earliest
date, the "Credit Termination Date").
This Letter of Credit is transferable in its entirety to any
transferee whom you certify to us has succeeded you as Trustee
under the Indenture, and may be successively 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 in
substantially the form of Annex F attached hereto. Upon such
presentation we shall forthwith transfer the same to your
transferee or, if so requested by your transferee, issue a letter
of credit to your transferee with provisions therein consistent
with this Letter of Credit.
This Letter of Credit sets forth in full our undertaking,
and 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 and
the Reimbursement Agreement), except only the certificates and the drafts
referred to herein which are hereby incorporated by reference; 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.
This Letter of Credit shall be governed by the laws of the
State of New York, including the Uniform Commercial Code as in
effect in the State of New York, except that Article 22(c) of the
Uniform Customs and Practice for Documentary Credits (1983
Revision), International Chamber of Commerce Publication No. 400,
shall govern solely with respect to telecopy transmissions.
Communications with respect to this Letter of Credit other than
presentations of Drafts and certificates hereunder shall be in
writing and shall be addressed to us at the above-referenced
Atlanta, Georgia address, with a copy to Canadian Imperial Bank
of Commerce, 200 West Madison Street, Suite 2300, Chicago,
Illinois 60606, Attention: Margaret McTigue, specifically
referring to the number of this Letter of Credit.
Very truly yours,
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY
By____________________________
Title:
By____________________________
Title:
Annex A
Form of Certificate for Interest Draft
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF UP
TO 45 DAYS' INTEREST ON THE BONDS
Irrevocable Letter of Credit No. U-94-0047
The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to Canadian
Imperial Bank of Commerce, New York Agency (the "Bank"), with
reference to Irrevocable Letter of Credit No. U-94-0047 (the
"Letter of Credit", the terms defined therein and not otherwise
defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment of interest on the Bonds on
an Interest Payment Date under the Indenture (other than
Company Bonds (as defined in the Indenture), or Bank Bonds
(as defined in the Indenture)), which payment is due and
payable.
(3) [The Interest Draft accompanying this Certificate
is the first Interest Draft presented by the Trustee under
the Letter of Credit.] [The Interest Draft last
presented by the Trustee under the Letter of Credit was
honored and paid by the Bank on ____________, 19__, and the
Trustee has not received a notice prior or on the date
hereof, from the Bank that would prevent the Trustee from
presenting this Interest Draft.]
(4) The amount of the Interest Draft accompanying this
certificate is $__________. It was computed in compliance
with the terms and conditions of the Bonds and the Indenture
and does not exceed the amount available to be drawn by the
Trustee under the Letter of Credit.
(5) The amount demanded hereby does not include any
amount in respect of the payment of interest on or portion
of purchase price corresponding to interest on Bonds being
redeemed or purchased, respectively, on the Interest Payment
Date to which this drawing relates.
(6) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same
directly to the payment when due of the interest amount
owing on account of the Bonds pursuant to the Indenture, (b)
no portion of said amount shall be applied by the
undersigned for any other purpose, and (c) no portion of
said amount shall be commingled with other funds held by the
undersigned.
IN WITNESS WHEREOF, the Trustee has executed and
delivered this certificate as of the ____ day of __________, 19 .
Rhode Island Hospital Trust
National Bank,
as Trustee
By______________________________
Name:
Title:
Annex B
Form of Certificate for Purchase Draft
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
PRINCIPAL PLUS ACCRUED INTEREST OF BONDS TO BE PURCHASED
PURSUANT TO SECTIONS 301 OR 302(a) OF THE INDENTURE
Irrevocable Letter of Credit No. U-94-0047
The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to Canadian
Imperial Bank of Commerce, New York Agency (the "Bank"), with
reference to Irrevocable Letter of Credit No. U-94-0047 (the
"Letter of Credit", the terms defined therein and not otherwise
defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter
of Credit with respect to a payment, upon a tender or
purchase of all or less than all of the Bonds that are
Outstanding (as defined in the Indenture), of the unpaid
principal amount of Bonds to be purchased pursuant to the
terms of Section 301 or Section 302(a) with respect to the
conversion of Bonds to any different Rate Period other than
a Fixed Rate Period (other than Company Bonds (as defined in
the Indenture), or Bank Bonds (as defined in the
Indenture)), which payment is due on the date on which this
Certificate and the Purchase Draft it accompanies are being
presented to the Bank.
(3) The amount of the Purchase Draft accompanying this
Certificate is equal to the sum of (i) $_________ being
drawn in respect of the unpaid principal amount of Bonds
(other than Company Bonds (as defined in the Indenture), or
Bank Bonds as defined in the Indenture)) to be purchased as
a result of a tender and (ii) $_________ being drawn in
respect of the payment of up to 45 days' accrued and unpaid
interest on such Bonds.
(4) Unless the Bonds purchased hereunder are
remarketed by the Remarketing Agent, the Trustee shall
register or cause to be registered in the name of the Bank,
or its designee, as pledgee of the Company, pursuant to
Section 3 of the Pledge Agreement, and shall deliver or
cause to be delivered to the Bank or its designee a
principal amount of Bonds equal to the amount set forth in
paragraph 3(i) above as promptly as practicable, and in any
event within five (5) Business Days after presentation of
the Purchase Draft accompanying this Certificate.
(5) The amount of the Purchase Draft accompanying this
certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not
exceed the amount available to be drawn by the Trustee under
the Letter of Credit.
(6) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same
directly to the payment when due of the portion of the
purchase price corresponding to principal and interest on
Bonds tendered or purchased pursuant to the Indenture, (b)
no portion of said amount shall be applied by the
undersigned for any other purpose, and (c) no portion of
said amount shall be commingled with other funds held by the
undersigned.
The Trustee acknowledges that, pursuant to the terms of
the Letter of Credit, upon the Bank's honoring of the Purchase
Draft accompanying this Certificate, the amount of the Letter of
Credit and the amounts available to be drawn by the Trustee
thereunder with respect to principal of the Bonds by any
subsequent Purchase Draft, Partial Redemption Draft, and Final
Draft are automatically decreased by an amount equal to the
amount set forth in paragraph 3(i) above, subject to
reinstatement as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the ____ day of _________, 19 .
Rhode Island Hospital Trust
National Bank,
as Trustee
By________________________________
Name:___________________________
Title:__________________________
Annex C
Form of Certificate for Partial Redemption Draft
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT OF
PRINCIPAL AND ACCRUED INTEREST UPON PARTIAL REDEMPTION
Irrevocable Letter of Credit No. U-94-0047
The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to Canadian
Imperial Bank of Commerce, New York Agency (the "Bank"), with
reference to Irrevocable Letter of Credit No. U-94-0047 (the
"Letter of Credit", the terms defined therein and not otherwise
defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter
of Credit with respect to a payment, upon redemption of less
than all of the Bonds that are Outstanding (as defined in
the Indenture), pursuant to the terms of Section 306(a) or
Section 306(c) of the unpaid principal amount of, and up to
45 days' accrued and unpaid interest on, the Bonds to be
redeemed pursuant to the Indenture (other than Company Bonds
(as defined in the Indenture), or Bank Bonds (as defined in
the Indenture)).
(3) The amount of the Partial Redemption Draft
accompanying this Certificate is equal to the sum of (i)
$__________ being drawn in respect of the payment of unpaid
principal of Bonds (other than Company Bonds (as defined in
the Indenture), or Bank Bonds (as defined in the Indenture))
to be redeemed, and (ii) $_________ being drawn in respect
of the payment of up to 45 days' accrued and unpaid interest
on such Bonds.
(4) The amount of the Partial Redemption Draft
accompanying this Certificate was computed in accordance
with the terms and conditions of the Bonds and the Indenture
and does not exceed the amount available to be drawn by the
Trustee under the Letter of Credit.
(5) This Certificate and the Partial Redemption Draft
it accompanies are dated, and are being presented to the
Bank on, the date on which the unpaid principal amount of,
and accrued and unpaid interest on, Bonds to be redeemed are
due and payable under the Indenture upon redemption of less
than all of the Bonds that are Outstanding (as defined in
the Indenture).
(6) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same
directly to the payment when due of the principal amount of
and accrued and unpaid interest on the Bonds pursuant to the
Indenture, (b) no portion of said amount shall be applied by
the undersigned for any other purpose and (c) no portion of
said amount shall be commingled with other funds held by the
undersigned.
The Trustee acknowledges that, pursuant to the terms of
the Letter of Credit, upon the Bank's honoring the Partial
Redemption Draft accompanying this Certificate, the amount of the
Letter of Credit and the amounts available to be drawn by the
Trustee thereunder with respect to principal and interest,
respectively, of the Bonds are automatically and permanently
decreased by an amount equal to the principal amount of Bonds
that are the subject of this Certificate plus 45 days interest on
such principal amount of Bonds computed at an assumed rate of
11.0% per annum.
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the ____ day of _________, 19 .
Rhode Island Hospital Trust
National Bank,
as Trustee
By________________________________
Name:___________________________
Title:__________________________
Annex D
Form of Certificate for Final Draft
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL AND UP TO 45 DAYS' INTEREST, UPON STATED
OR ACCELERATED MATURITY OR OPTIONAL OR MANDATORY
REDEMPTION AS A WHOLE OR MANDATORY PURCHASE AT THE DIRECTION
OF THE BANK OR OTHERWISE OR EXPIRATION OR CANCELLATION OR
SUBSTITUTION OF THE LETTER OF CREDIT
Irrevocable Letter of Credit No. U-94-0047
The undersigned, a duly authorized officer of the
undersigned Trustee (the "Trustee"), hereby certifies to Canadian
Imperial Bank of Commerce, New York Agency (the "Bank"), with
reference to Irrevocable Letter of Credit No. U-94-0047 (the
"Letter of Credit", the terms defined therein and not otherwise
defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter
of Credit with respect to a payment, either at stated
maturity, upon acceleration, or as a result of a redemption
as a whole pursuant to the Indenture, or upon a mandatory
purchase at the direction of the Bank or otherwise upon (i)
expiration or cancellation of the Letter of Credit pursuant
to Section 302(a) upon conversion to a Fixed Rate (as
defined in the Indenture) or Section 302(b) of the
Indenture, (ii) mandatory redemption as a whole following a
Determination of Taxability (as defined in the Indenture)
pursuant to Section 306(b), (iii) termination of the Letter
of Credit pursuant to Section 306(c)(i) of the Indenture,
(iv) at the direction of the Bank pursuant to Section 302(c)
following an Event of Default under and as defined in the
Reimbursement Agreement, or (v) at the direction of the
Authority (as defined in the Indenture) pursuant to Section
306 of the unpaid principal amount of, or the portion of the
purchase price corresponding to the unpaid principal amount
of, and up to 45 days' accrued and unpaid interest on, or
the portion of the purchase price corresponding to accrued
and to be accrued and unpaid interest through the date of
purchase on, all of the Bonds that are "Outstanding" within
the meaning of the Indenture (other than Company Bonds (as
defined in the Indenture), or Bank Bonds (as defined in the
Indenture)).
(3) The amount of the Final Draft accompanying this
Certificate is $ and is equal to the sum of (i)
$_________ being drawn in respect of the payment of unpaid
principal of, or the portion of the purchase price
corresponding to the unpaid principal amount of, Bonds
(other than Company Bonds (as defined in the Indenture), or
Bank Bonds (as defined in the Indenture)), and (ii)
$_________ being drawn in respect of the payment of up to 45
days' accrued and unpaid interest, or the portion of the
purchase price corresponding to accrued and unpaid interest
on, such Bonds.
(4) The amount of the Final Draft accompanying this
Certificate was computed in compliance with the terms and
conditions of the Bonds and the Indenture and does not
exceed the amount available to be drawn by the Trustee under
the Letter of Credit.
(5) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same
directly to the payment when due of the principal amount, or
the portion of the purchase price corresponding to such
principal amount, and accrued and unpaid interest, or the
portion of the purchase price corresponding to accrued and
unpaid interest, thereon owing on account of the Bonds
pursuant to the Indenture, (b) no portion of said amount
shall be applied by the undersigned for any other purpose
and (c) no portion of said amount shall be commingled with
other funds held by the undersigned.
(6) The Trustee shall register or cause to be
registered in the name of the Bank, or its designee, as
pledgee of the Company, pursuant to Section 3 of the Pledge
Agreement, and shall deliver or cause to be delivered to the
Bank, or its designee, a principal amount of Bonds equal to
the principal amount of the Final Draft (unless such drawing
is for a redemption as a whole of the Bonds) accompanying
this Certificate as promptly as practicable, and in any
event within five (5) Business Days after presentation of
such Final Draft accompanying this Certificate.
(7) Upon payment by you of the Final Draft
accompanying this Certificate, we acknowledge that the
Letter of Credit will terminate.
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the ____ day of _________, 19 .
Rhode Island Hospital Trust
National Bank,
as Trustee
By________________________________
Name:___________________________
Title:__________________________
Annex E
Form of Reinstatement Certificate for Purchase Draft
CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO. U-94-0047
The undersigned, a duly authorized officer or agent of
the undersigned Trustee (the "Trustee"), hereby certifies to
Canadian Imperial Bank of Commerce, New York Agency (the "Bank"),
with reference to Irrevocable Letter of Credit No. U-94-0047 (the
"Letter of Credit", the terms defined therein and not otherwise
defined herein being used herein as therein defined) issued by
the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
[(2) The Trustee has received notice from the Company
that the amount of $_________ paid to you today by or on behalf
of the Company is a payment made to reimburse you, pursuant to
that certain Reimbursement Agreement dated as of January 6, 1994
(the "Reimbursement Agreement") between the Company and the Bank,
for amounts drawn under the Letter of Credit by Purchase Draft(s)
with respect to principal together with any accrued interest
received with respect to the Bonds being resold after the date of
such Purchase Draft(s). The Trustee hereby requests that you
reinstate the Principal Component of the Letter of Credit upon
receipt of such payment in an amount equal to the principal
amount specified below, respectively:
Principal: $___________________
Accrued Interest: $___________________]
[(3) The Trustee has received notice from the
Remarketing Agent that the Remarketing Agent has found
purchaser(s) to whom it can remarket Bonds pledged to you in
connection with a Purchase Draft, pursuant to the Indenture. The
principal amount of such Bonds and the amount of accrued interest
being repaid thereon, as communicated to us by the Remarketing
Agent, are as follows and the Trustee hereby requests that you
reinstate the Principal Component of the Letter of Credit by an
amount equal to such principal amount specified below:
Principal: $___________________
Interest: $___________________]
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Notice as of the ___ day of ___________, 19 .
Rhode Island Hospital Trust
National Bank,
as Trustee
By:__________________________
Title:
Annex F
Form of Transfer Certificate
INSTRUCTION TO TRANSFER
[Date]
Canadian Imperial Bank
of Commerce
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Attention: Clare C. Coyne, Senior Associate,
Credit Operations
Re: Canadian Imperial Bank of Commerce, New York
Agency Irrevocable Letter of Credit No. U-94-0047
Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
[Name of Transferee]
[Address]
all rights of the undersigned beneficiary to draw under the
above-captioned Letter of Credit (the "Letter of Credit"). The
transferee has succeeded the undersigned as Trustee under the
Indenture (as defined in the Letter of Credit).
By this transfer, all rights of the undersigned
beneficiary in the Letter of Credit are transferred to the
transferee and the transferee shall hereafter have the sole
rights as beneficiary thereof.
The Letter of Credit is returned herewith and in
accordance therewith we ask that this transfer be effective and
that you transfer the Letter of Credit to our transferee or that,
if so requested by the Transferee, you issue a new irrevocable
letter of credit in favor of the transferee with provisions
consistent with the Letter of Credit:
Very truly yours,
_____________,
as predecessor Trustee
By________________________________
Name:___________________________
Title:__________________________
EXHIBIT C
INTEREST RATE NOTICE
Canadian Imperial Bank of Commerce
Two Paces West
2727 Pace Ferry Road
Suite 1200
Atlanta, Georgia 30339
Re: Newport Electric Corporation
Ladies and Gentlemen:
This Interest Rate Notice is delivered to you pursuant to
Section 1.4(c) of the Reimbursement Agreement, dated as of
January 6, 1994 (together with all amendments, if any, from time
to time made thereto, the "Reimbursement Agreement"), between
Newport Electric Corporation, a Rhode Island corporation (the
"Company"), and you. Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings
provided in the Reimbursement Agreement.
The Company hereby requests that on ,
19 ,
(1) [$ in principal amount of Advances to
be made on , 19 ] [$ of
the presently outstanding principal amount of the
Advances originally made on , 19
[and $ of the presently outstanding principal
amount of the Advances originally made on
, 19 ], and all presently being
maintained as [Base Rate Loans] [CD Rate Loans]
[LIBO Rate Loans]],
(2) be [made as] [converted into] [continued as],
(3) [CD Rate Loans having an Interest Period of
days][LIBO Rate Loans having an Interest Period of
months][Base Rate Loans].
The Company hereby:
(a) certifies and warrants that no Default has occurred and
is continuing; and
(b) agrees that if prior to the time of such disbursement,
continuation or conversion any matter certified to
herein by it will not be true and correct at such time
as if then made, it will immediately so notify you.
Except to the extent, if any, that prior to the time of the
disbursement, continuation or conversion requested hereby you
shall receive written notice to the contrary from the Company,
each matter certified to herein shall be deemed to be certified
at the date of such disbursement, continuation or conversion as
if then made.
The Company has caused this Interest Rate Notice to be
executed and delivered, and the certification and warranties
contained herein to be made, by its duly authorized officer this
day of , 19 .
NEWPORT ELECTRIC CORPORATION
By
Title
EXHIBIT B-1
FORM OF OPINION OF
COUNSEL TO THE COMPANY
January 6, 1994
Canadian Imperial Bank of Commerce,
New York Agency
New York, New York
Goldman, Sachs & Co.
85 Broad Street
24th Floor
New York, New York 10004
Re: Rhode Island Port Authority and Economic
Development Corporation Electric Energy Facilities
Revenue Refunding Bonds (Newport Electric
Corporation Project 1994 Series)
Ladies and Gentlemen:
We are ____________________, Counsel to Newport
Electric Corporation, a Rhode Island corporation (the "Company").
In that capacity, we are familiar with the matters relating to
the preparation, execution and delivery of a Reimbursement
Agreement dated as of January 6, 1994 (the "Reimbursement
Agreement"), between the Company and Canadian Imperial Bank of
Commerce, New York Agency (the "Bank"). This opinion is
delivered to you under Section 2.1(ix) of the Reimbursement
Agreement. Terms defined in the Reimbursement Agreement have the
same meaning in this opinion, unless otherwise indicated.
We have examined or have arranged for the examination
by an attorney or attorneys under my general supervision such
agreements, instruments and documents as we have deemed necessary
as a basis for the opinions hereafter expressed. As to questions
of fact material to such opinions, we or such attorneys have,
when relevant facts were not independently established by us or
by them, relied upon certificates of the Company and its officers
or of public officials. We have assumed the due execution and
delivery of the Reimbursement Agreement by the Bank and the due
execution and delivery by the parties thereto, other than the
Company, of the Pledge Agreement, the Loan Agreement, the Bond
Purchase Agreement, the Remarketing Agreement, the Indenture and
each of the other Related Documents to which the Company is a
party.
Based upon and subject to the foregoing and upon such
investigation and examination of law as I have deemed necessary,
we are of the opinion that:
(1) The Company has been duly incorporated and is
validly existing in good standing under the laws of the
State of Rhode Island. The Company has full corporate power
and authority to conduct its business, to own its properties
and to execute and deliver and perform all of its
obligations under the Reimbursement Agreement, the Bond
Purchase Agreement, the Remarketing Agreement, the Pledge
Agreement, the Loan Agreement, and each of the other Related
Documents to which it is a party.
(2) The execution, delivery and performance by the
Company of the Reimbursement Agreement, the Bond Purchase
Agreement, the Remarketing Agreement, the Pledge Agreement,
the Loan Agreement, and each of the other Related Documents
to which it is a party have been duly authorized by all
necessary corporate action, and do not violate (i) any
provision of the charter or By-Laws of the Company, (ii) any
applicable law or (iii) to the best of my knowledge, any
material contractual restriction binding on the Company or
any of its Subsidiaries, and, to the best of my knowledge,
do not require the creation of, any lien, security interest
or other charge or encumbrance (except pursuant to, or as
contemplated by, the Reimbursement Agreement, the Pledge
Agreement or the Indenture) upon or with respect to any of
its property.
(3) Except for the RIPUC Order, the Issuer Resolution
and authorizations necessary under the Public Utility
Holding Company Act of 1935, as amended, which have each
been duly obtained and are in full force and effect, no
authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory
body, except such as may be required under state securities
or Blue Sky laws in connection with the purchase and
distribution of the Bonds, is required for the due
execution, delivery and performance by the Company of the
Reimbursement Agreement, the Bond Purchase Agreement, the
Remarketing Agreement, the Pledge Agreement, the Loan
Agreement, or any of the other Related Documents to which it
is a party.
(4) The Reimbursement Agreement, the Bond Purchase
Agreement, the Remarketing Agreement, the Pledge Agreement,
the Loan Agreement, and each of the other Related Documents
to which it is a party are the legal, valid and binding
obligations of the Company enforceable against the Company
in accordance with their respective terms, except as the
same may be limited by bankruptcy or other laws affecting
the enforcement of creditors' rights generally or by general
equitable principles and except as rights to indemnity or
nonrecourse provisions under the Reimbursement Agreement,
the Loan Agreement, the Remarketing Agreement, the Bond
Purchase Agreement or any of the other Related Documents to
which it is a party may be limited by applicable securities
law or principles of public policy.
(5) The Company is not an "investment company" or a
company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
(6) The Company is a subsidiary of Eastern Utilities
Associates which registered under and subject to the Public
Utility Holding Company Act of 1935 and rules thereunder,
but the execution, delivery and performance by the Company
of the Reimbursement Agreement and the other Related
Documents to which it is a party do not violate any
provision of such Act or any rule or regulation thereunder.
(7) The choice of New York law to govern the
Reimbursement Agreement is valid under the laws of the State
of Rhode Island (the "State") and would be recognized by and
given effect to by the courts of the State and federal
courts of the United States of America sitting in the State.
(8) To the best of our knowledge after due inquiry,
except as described in the Preliminary Official Statement
and the Official Statement, there is no pending or
threatened action or proceeding before any court,
governmental agency or arbitrator against the Company that
would reasonably be expected to have a material adverse
effect on the ability of the Company to perform its
obligations under the Reimbursement Agreement, the Bond
Purchase Agreement, the Remarketing Agreement, the Pledge
Agreement, the Loan Agreement, or any of the other Related
Documents to which it is a party.
(9) To the best of our knowledge after due inquiry,
except as described in the Preliminary Official Statement
and the Official Statement, the Company is not in violation
of any law, statute, ordinance, decree, order, judgment,
rule or regulation of any governmental authority or
regulatory body to which it is subject, which violation
would reasonably be expected to have a material adverse
effect on the ability of the Company to perform its
obligations under the Reimbursement Agreement, the Bond
Purchase Agreement, the Remarketing Agreement, the Pledge
Agreement, the Loan Agreement, or any of the Related
Documents to which it is a party.
In connection with the opinion set forth in paragraph
(3), we express no view as to whether the Bonds or other
securities are required to be registered under the federal
securities laws.
We are a member of the Bar of the States of
______________ and __________ and, as such, do not hold ourselves
out as an expert in the law of any jurisdiction other than the
State of ______________ and _____________ and the Federal law of
the United States. [We note that the Reimbursement Agreement and
the Pledge Agreement are stated to be governed by the laws of the
State of New York. However, for purposes of paragraph 4 above,
we have assumed that the Reimbursement Agreement and the Pledge
Agreement are stated to be governed by the laws of the State of
Rhode Island.]
EXHIBIT B-2
[FORM OF OPINION OF MAYER, BROWN & PLATT
SPECIAL NEW YORK COUNSEL TO THE BANK]
January 6, 1994
Canadian Imperial Bank of Commerce
New York Agency
New York, New York
Rhode Island Hospital Trust
National Bank, as Trustee
150 Royal Street
Canton, Massachusetts 02021
Rhode Island Port Authority
and Economic Development Corporation
Seven Jackson Walkway
Providence, Rhode Island 02903
Goldman, Sachs & Co.
85 Broad Street
24th Floor
New York, New York 10004
Re: Rhode Island Port Authority and Economic Development
Corporation Electric Energy Facilities Revenue
Refunding Bonds (Newport Electric Corporation Project
1994 Series)
Ladies and Gentlemen:
We have acted as special New York counsel to Canadian
Imperial Bank of Commerce (the "Bank"), acting through its New
York Agency (the "Agency"), in connection with the issuance of
its Irrevocable Letter of Credit Number U-94-0047 (the "Letter of
Credit") in the stated amount of $8,032,500 issued by the Agency
for the benefit of Rhode Island Hospital Trust National Bank, as
Trustee for the above-referenced bonds, pursuant to the terms of
a Reimbursement Agreement (the "Agreement") dated as of January
6, 1994, by and between the Bank, acting through the Agency, and
Newport Electric Corporation (the "Company"). This opinion is
furnished at the request of the Bank pursuant to Section 2.1(ix)
of the Agreement.
In connection with the opinions hereinafter expressed, we
have examined the Letter of Credit and an executed copy of the
Agreement, as well as originals, or copies certified or otherwise
identified to our satisfaction, of such other instruments,
certificates, records and documents as we have deemed necessary
and relevant as a basis for our opinion. In such examination, we
have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity
with originals of all documents submitted to us as copies
thereof, and compliance and continued compliance by the Bank and
the Agency with any applicable lending limit restrictions. As to
questions of fact material to the opinions expressed below, we
have, when relevant facts were not independently established by
us, examined and relied upon certificates of officers of the
Agency or of public officials.
We have, with your approval, relied as to all matters
governed by or involving conclusions under the laws of Canada (or
any Province thereof) upon the opinion (including the
qualifications, assumptions and limitations expressed therein) of
Timothy Murray, Solicitor, Legal Department, to the Bank, dated
the date hereof, a copy of which has been delivered to you in
connection herewith.
In rendering the opinions expressed herein, we call to your
attention the provisions of Sec. 5-114(2) of the Uniform Commercial
Code of the State of New York.
Based upon the foregoing examination and assumptions, and
upon our reliance on the opinions of counsel set forth above, and
subject to the qualifications set forth below, we are of the
opinion that, under current law and regulations:
1. The Bank is duly licensed as a foreign bank agency by
the banking department of the State of New York (the "NYSBD") to
engage in the business of a foreign bank agency in accordance
with Article V of the Banking Law of the State of New York (the
"NYSBL"). The Bank is duly authorized by the NYSBL to execute,
deliver and perform its obligations under the Letter of Credit.
2. The Letter of Credit has been duly authorized, executed
and delivered by the Bank and constitutes the legal, valid and
binding obligation of the Bank, acting through the Agency,
enforceable against the Bank, acting through the Agency, in
accordance with its terms, except as limited by applicable
bankruptcy, receivership, reorganization, insolvency,
liquidation, readjustment of debt, moratorium or other similar
laws affecting the enforcement of the rights of creditors
generally as such laws may be applied in the event of a
reorganization, bankruptcy, receivership, insolvency,
liquidation, readjustment of debt or other similar proceeding of
or moratorium applicable to the Agency or the Bank and by general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). Such equitable principles
include, but are not limited to, the equitable power of a court
in a bankruptcy or similar proceeding of the Company temporarily
to restrain the payment of the Letter of Credit by the Bank;
however, in our opinion, any such proceeding would not, in and of
itself, be the proper basis for a court to permanently enjoin
such payment.
3. Section 3(a)(2) of the Securities Act of 1933, as
amended (the "Act"), affords an exemption from registration for
any security "issued or guaranteed by any bank." Section 3(a)(2)
defines a "bank" as "any 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 . . . ." The Securities
and Exchange Commission has taken the position in Release No. 33-
6661 (dated September 29, 1986), that, for purposes of the
exemption from registration provided by Section 3(a)(2) of the
Act, a branch or agency of a foreign bank located in the United
States will be deemed to be a "national bank," or a "banking
institution organized under the laws of any State, territory, or
the District of Columbia," provided that the nature and extent of
the federal and/or state regulation and supervision of the
particular branch or agency is substantially equivalent to that
applicable to federal and state chartered domestic banks doing
business in the same jurisdiction. It is our opinion that, for
purposes of applying Release No. 33-6661 to the issuance of the
Letter of Credit by the Bank, acting through the Agency, the
nature and extent of regulation and supervision of the Agency by
the Banking Department of the State of New York is substantially
equivalent to that applicable to state chartered domestic banks
doing business in the State of New York and that, as a result,
the Letter of Credit is not subject to the registration
requirements of the Act.
Our opinion expressed above is limited to the law of the
State of New York and the Federal law of the United States, and
we do not express any opinion herein concerning any other law.
This opinion is addressed to you, but it may also be relied
upon by Moody's Investors Service, Inc., Standard & Poor's
Corporation, and Timothy Murray, Esq. It may not be used by or
relied upon by any other person without our prior written
consent.
Very truly yours,
JTM:meh EXHIBIT B-3
[FORM OF OPINION OF SOLICITOR, LEGAL DEPARTMENT,
TO THE BANK]
Janaury 5, 1994
Canadian Imperial Bank of Commerce
New York Agency
New York, New York
Rhode Island Hospital
Trust National Bank, as Trustee
150 Royal Street
Canton, Massachusetts 02021
Rhode Island Port Authority
and Economic Development Corporation
Seven Jackson Walkway
Providence, Rhode Island 02903
Goldman, Sachs & Co.
85 Broad Street
24th Floor
New York, New York 10004
Re: Rhode Island Port Authority and Economic Development
Corporation Electric Energy Facilities Revenue
Refunding Bonds (Newport Electric Corporation Project
1994 Series)
Ladies and Gentlemen:
I am a Solicitor of, and have acted as counsel to, Canadian
Imperial Bank of Commerce (the "Bank"), acting through its New
York Agency (the "Agency"), in connection with the issuance of
its Irrevocable Letter of Credit Number U-94-0047 (the "Letter of
Credit") in the stated amount of $8,032,500 issued by the Agency
for the benefit of Rhode Island Hospital Trust National Bank, as
Trustee (the "Trustee") for the above-referenced bonds, pursuant
to the terms of a Reimbursement Agreement (the "Agreement") dated
as of January 6, 1994, by and between the Bank acting through the
Agency and Newport Electric Corporation. At the request of the
Bank, this opinion is furnished to you pursuant to
Section 2.1(ix) of the Agreement.
In connection with the opinions hereinafter expressed, I
have examined an executed copy of the Letter of Credit and the
Agreement. In addition, I have examined the Bank Act (which
constitutes the charter of the Bank) and certified copies of the
by-laws of the Bank. I have also examined such certificates of
public officials, corporate records and other documents and have
considered such questions of law as I have deemed relevant or
necessary as a basis for the opinions expressed below.
In my examination of the foregoing documents, I have assumed
the genuineness of all signatures, the authenticity of all
documents submitted to me as originals and the conformity to
authentic original documents of all documents submitted to me as
certified or conformed copies or facsimiles.
I have, with your approval, relied as to certain matters
governed by or involving conclusions under the laws of the State
of New York upon the opinion (including the qualifications,
assumptions and limitations expressed therein) of Mayer, Brown &
Platt, special New York counsel to the Bank, dated the date
hereof, a copy of which has been delivered to you in connection
herewith.
Based upon the foregoing examination and assumptions, and
upon my reliance on the opinions of counsel set forth above, and
subject to the qualifications set out below, I am of the opinion
that under current law and regulations:
1. The Bank is a corporation duly organized and validly
existing under the laws of Canada and the Bank has all requisite
power and authority (corporate and otherwise) to execute and
deliver the Letter of Credit.
2. The Letter of Credit has been duly authorized by the
Bank and executed and delivered by the Bank through the Agency.
3. (a) The governing law clause subjecting the Letter of
Credit to New York law is valid under the laws of Canada and
the Province of Ontario.
(b) Under the laws of Canada and the Province of
Ontario, New York law will be applied to agreements such as
the Letter of Credit which under the laws of Canada and the
Province of Ontario have been validly subjected to New York
law, unless any terms of such agreements or any provisions
of New York law applicable to such agreements violate the
public policy or similar principle of Canada or the Province
of Ontario. I presently see no reason to believe that any
of the terms of the Letter of Credit violates the public
policy of Canada or the Province of Ontario.
(c) Assuming that the Letter of Credit is legal, valid
and binding and enforceable under New York law, it is
enforceable against the Bank in accordance with its terms,
the rules of civil procedure of the Province of Ontario and,
subject to the opinion contained in paragraphs (3)(a) and
(b), the applicable provisions of the chosen law of New
York, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, liquidation and other laws and equitable
principles relating to or affecting the enforcement of
creditors' rights generally as they may be applied in the
event of the bankruptcy, insolvency, moratorium,
reorganization, liquidation of, or the appointment of a
receiver with respect to the property of, or a similar event
applicable to the Bank.
4. No authorization, consent or approval or other action
by, and no notice to or filing with, any governmental,
administrative or other authority or court of Canada or the
Province of Ontario is required for the due execution, delivery
and performance by the Bank of the Letter of Credit.
5. In the event of the insolvency or winding-up of the
Bank, the obligations of the Bank under the Letter of Credit will
rank pari passu with the deposit liabilities and all other senior
unsecured obligations of the Bank, except payment of amounts due
to Canada or a province and those unsecured obligations that by
their terms rank subordinate to the deposit liabilities of the
Bank.
6. The Rules of Practice of Ontario relating to summary
procedures permit an action to be brought on any final and
conclusive in personam judgment of a foreign jurisdiction, such
as a court of the State of New York or a Federal Court sitting in
the State of New York, which is not impeachable as void or
voidable under the domestic laws of such foreign jurisdiction,
for a sum certain and without a review of the merits if: (i)
such judgment was not obtained by fraud and the enforcement
thereof would not be inconsistent with public policy (I presently
see no reason to believe that public policy would preclude
enforcement of such a foreign judgment as to the Letter of
Credit); (ii) the proceedings leading to such judgment were not
contrary to natural justice; (iii) the enforcement of such
judgment does not constitute, directly or indirectly, the
enforcement of foreign revenue, expropriatory or penal laws; and
(iv) there has been compliance with the Limitations Act (Ontario)
which in effect provides that any action to enforce a foreign
judgment must be commenced within six years of the date of the
foreign judgment.
7. Assuming that under the applicable laws of the State of
New York and/or the United States of America the Trustee has the
right to demand and receive, in its own name for the benefit of
the holders of the Bonds, payment by the Agency under the Letter
of Credit, if the Agency defaults in the performance of its
obligation to make payments under the Letter of Credit or if the
Agency ceases to exist, then the Trustee may institute legal
proceedings in Canada directly against the Bank.
The foregoing opinions are subject to the following
qualifications:
(i) Under the laws of Canada judgments may only be
rendered in Canadian dollars.
(ii) I am qualified to practice law in Canada and the
Province of Ontario and I do not express any opinion with
respect to any law other than the law of Canada and the
Province of Ontario.
This opinion is addressed to you, but it may also be relied
upon by Moody's Investors Service, Inc., Standard & Poor's
Corporation, and Mayer, Brown & Platt. It may not be used by or
relied upon by any other person without my prior written consent.
Yours truly,
_______________________
Solicitor
Legal Division
EXHIBIT D
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of January 6, 1994, made by
NEWPORT ELECTRIC CORPORATION, a corporation organized under the
laws of Rhode Island (the "Pledgor"), to CANADIAN IMPERIAL BANK
OF COMMERCE, NEW YORK AGENCY (the "Bank"), as contemplated by the
Reimbursement Agreement, dated as of January 6, 1994 (said
Agreement, as it may hereafter be amended or otherwise modified
from time to time, being the "Reimbursement Agreement", the terms
defined therein and not otherwise defined herein being used
herein as therein defined), between the Pledgor and the Bank.
PRELIMINARY STATEMENTS:
(1) Rhode Island Port Authority and Economic
Development Corporation (the "Issuer") has agreed to issue its
Electric Energy Facilities Revenue Refunding Bonds (Newport
Electric Corporation Project 1994 Series) pursuant to a Trust
Indenture, dated as of January 6, 1994, between the Issuer and
the Trustee (as amended or supplemented from time to time, the
"Indenture").
(2) The Indenture requires that under certain
circumstances Bonds delivered by the holders thereof to the
Paying Agent (as defined in the Indenture) be purchased with the
proceeds of drawings under the Letter of Credit issued by the
Bank under the Reimbursement Agreement (Bonds purchased with
proceeds of drawings under the Letter of Credit being the
"Pledged Bonds").
(3) It is a condition precedent to the obligation of
the Bank to enter into the Reimbursement Agreement and to issue
the Letter of Credit that the Pledgor shall have executed and
delivered this Agreement to the Bank.
NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration receipt of which is
hereby acknowledged, the Pledgor hereby agrees with the Bank as
follows:
SECTION 1. Pledge. The Pledgor hereby pledges to the
Bank, and grants to the Bank a security interest in, all of its
right, title and interest in and to the Pledged Bonds and the
certificates representing the Pledged Bonds, as the same may be
from time to time delivered to the Paying Agent (as defined in
the Indenture) or Trustee by the holder thereof, and all
interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Bonds (the "Pledged
Collateral").
SECTION 2. Security for Obligations. This Agreement
and the pledge and security interest granted by the Pledgor to
the Bank hereunder secures the payment and performance of all
obligations of the Pledgor to the Bank now or hereafter existing
under the Reimbursement Agreement and the Related Documents,
including, without limitation, any Advances that have been made
as set forth in Section 1.3 of the Reimbursement Agreement,
whether for principal, interest, fees, expenses or otherwise, and
all obligations of the Pledgor now or hereafter existing under
this Agreement to the Bank (all such obligations of the Pledgor
being the "Obligations").
SECTION 3. Delivery of Pledged Collateral. In
connection with the presentation of any Purchase Draft or Final
Draft (as such terms are defined in the Letter of Credit),
Pledged Bonds in aggregate principal amount equal to the
principal amount of such Purchase Draft or Final Draft shall be
delivered by the Paying Agent to the Bank or the Agent (as
defined in Section 21 hereof) on behalf of the Bank pursuant to
the Indenture as promptly as practicable, and in any event within
five (5) Business Days after such presentation. Pledged Bonds
shall be (i) registered in the name of the Bank or its designee
as pledgee, and all certificates or instruments representing or
evidencing the Pledged Collateral shall be delivered to and held
by the Agent on behalf of the Bank pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to
the Bank or (ii) if the Pledged Bonds are then registered under a
book-entry-only system with DTC (as such term is defined in the
Indenture), delivered by transfer of such Pledged Bonds to an
account specified from time to time by the Bank that the Bank's
designee maintains at DTC. With respect to any transfer referred
to in clause (ii) of the preceding sentence, the Bank's designee
shall cause appropriate entries to be made in its records to
identify that such Pledged Bonds are registered in the same Bank,
as pledgee in accordance with Section 8-313 of the Uniform
Commercial Code as in effect in the State of New York. In
addition, the Agent (in the case of clause i above) or the Bank's
designee (in the case of clause ii above) on behalf of the Bank
shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
Pledged Bonds held by or on behalf of the Bank shall not be
entitled to the benefits of, and shall not be presented for
payment under, the Letter of Credit.
SECTION 4. Release of Pledged Bonds. The Pledgor
hereby agrees that the Bank shall not release any of the Pledged
Bonds in connection with Pledged Bonds purchased with the
proceeds of a Purchase Draft until (i) the Bank is reimbursed in
full pursuant to Section 1.5 of the Reimbursement Agreement for
any amounts then outstanding made to the Pledgor as a result of a
drawing or drawings under the Letter of Credit to purchase such
Pledged Bonds (or the Remarketing Agent notifies the Bank that it
has found a purchaser to whom it can remarket Pledged Bonds), and
(ii) the amount available to be drawn under the Letter of Credit
(if the Letter of Credit is then in effect) for payment of
principal or purchase price equal to principal of Bonds has been
reinstated in an amount equal to the principal amount of the
Pledged Bonds to be so released. If the Pledgor, or the
Remarketing Agent or the Paying Agent on behalf of the Pledgor,
reimburses the Bank for any such Advances (or the Remarketing
Agent notifies the Bank that it has found a purchaser to whom it
can remarket Pledged Bonds), and the Bank is notified by the
Trustee by the delivery of a certificate completed and signed by
the Trustee in substantially the form of Annex E to the Letter of
Credit, the Bank hereby authorizes the Agent to release from the
lien of this Agreement and deliver to the Pledgor (or its order)
or the Remarketing Agent (if such reimbursement is made by the
Remarketing Agent or Paying Agent on behalf of the Pledgor or if
such Bonds are to be remarketed) Pledged Bonds in a principal
amount equal to the amount of such reimbursement (or the
principal amount of Pledged Bonds to be purchased by such
purchaser).
While the Letter of Credit is in effect, the Bank
agrees that notice to the Agent to release Pledged Bonds shall be
conclusive evidence of the reinstatement of the Letter of Credit
with respect to such Pledged Bonds and the Agent agrees not to
release Pledged Bonds absent such notice from the Bank or
authorization hereunder.
SECTION 5. Representations and Warranties. The
Pledgor represents and warrants that:
(a) Upon the delivery of the Pledged Bonds to the Bank
or the Agent the Pledgor is the legal and beneficial owner of the
Pledged Collateral free and clear of any lien, security interest,
option or other charge or encumbrance except for the security
interest created by this Agreement, and on the date of delivery
to the Trustee on behalf of the Bank of Pledged Bonds described
herein, to the best knowledge of the Pledgor neither the
Remarketing Agent, the Paying Agent nor the Trustee will have any
right, title or interest in or to the Pledged Bonds.
(b) The Pledgor has, and on the date of delivery to
the Trustee on behalf of the Bank of the Pledged Bonds will have,
full power and authority to pledge all of its right, title and
interest in and to the Pledged Bonds pursuant to this Agreement.
(c) (i) In the case of Pledged Bonds delivered
pursuant to clause (i) of Section 3, upon the delivery of the
Pledged Bonds to the Bank or the Agent, the pledge of the Pledged
Bonds pursuant to this Agreement creates a valid and perfected
first priority security interest in the Pledged Collateral,
securing the payment of the Obligations, and (ii) in the case of
Pledged Bonds delivered pursuant to clause (ii) of Section 3,
DTC's recordation of appropriate entries in its books reducing
the account of the Pledgor (or, if the Pledgor is not a
participant of DTC, the account of the DTC participant acting for
the Pledgor with respect to the relevant securities) and
increasing the account maintained by the Bank's designee at DTC
in the amount of such Pledged Bonds is effective to create a
valid and perfected first priority security interest in the
Pledged Collateral securing the payment of the Obligations. No
filing or other action will be necessary to perfect or protect
the security interest created thereby, in each case subject to no
prior pledge, lien, mortgage, hypothecation, security interest,
charge, option or encumbrance created by the Pledgor or to any
agreement purporting to grant to any third party a security
interest in the property or assets of the Pledgor that would
include the Pledged Bonds. No filing or other action will be
necessary to perfect or protect the security interest created
hereby.
(d) This Agreement has been duly authorized, executed
and delivered by the Pledgor and constitutes a legal, valid and
binding obligation of the Pledgor enforceable in accordance with
its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
or equitable principles relating to or limiting creditors' rights
generally.
(e) No authorization, approval, or other action by,
and no notice to or filing with, any governmental authority or
regulatory body is required either (i) for the pledge by the
Pledgor of the Pledged Collateral pursuant to this Agreement or
(ii) for the execution, delivery or performance of this Agreement
by the Pledgor.
(f) The execution, delivery and performance of this
Agreement does not violate any provision of any law or regulation
presently in effect and known to Pledgor to have applicability to
it or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign of
which the Pledgor is aware, or of the charter or by-laws of the
Pledgor or of any material mortgage, indenture, lease contract,
or agreement, to which the Pledgor is a party or which is binding
upon the Pledgor or upon any of its assets, and does not result
in the creation or imposition of any lien, charge or encumbrance
on or security interest in any of the assets of the Pledgor
except as provided in or contemplated by this Agreement, the
Reimbursement Agreement or other Related Documents.
(g) To the best knowledge of the Pledgor there is no
pending action or proceeding before any court, governmental
agency or arbitrator against or directly involving the Pledgor
and there is no threatened action or proceeding affecting the
Pledgor before any court, governmental agency or arbitrator
which, in any case, is likely materially to impair the Pledgor's
ability to perform its obligations under this Agreement.
SECTION 6. Affirmative Covenants. So long as a
drawing is available under the Letter of Credit or any Advance
shall remain outstanding or the Reimbursement Agreement is still
in effect, the Pledgor covenants and agrees that, unless the Bank
shall otherwise consent in writing:
(a) Upon delivery of any Pledged Bond to the Agent on
behalf of the Bank or to the Bank and payment of the proceeds of
the related amounts then outstanding, if any, to or for the
account of the holder who delivered such Bond pursuant to the
Indenture, the Pledgor will own the same free and clear of all
liens, claims, encumbrances and security interests of any nature
whatsoever created by the Pledgor, except for the lien and
security interest provided for by this Agreement.
(b) The Pledgor will defend the Bank's position as
pledgee of the Pledged Bonds against the claims and demands of
all persons whomsoever.
(c) The Pledgor will have like title to and right to
pledge any other property at any time hereafter pledged to the
Bank as Pledged Collateral hereunder and will likewise defend the
Bank's right thereto and security interest therein.
SECTION 7. Negative Covenant. So long as a drawing is
available under the Letter of Credit or any Advance shall remain
outstanding or the Reimbursement Agreement shall otherwise remain
in effect, the Pledgor will not, without the written consent of
the Bank, sell, assign, transfer, exchange, or otherwise dispose
of, or grant any option with respect to, the Pledged Bonds, nor
will it create, incur or permit to exist any affirmative pledge,
lien, mortgage, hypothecation, security interest, charge, option
or any other affirmative encumbrance with respect to any of the
Pledged Bonds or Pledged Collateral, or any interest therein, or
any proceeds thereof, except for (i) the lien and security
interest provided for by this Agreement, and (ii) any of the
foregoing that were not created by the Pledgor and that are being
contested in good faith.
SECTION 8. Further Assurances. The Pledgor agrees
that at any time and from time to time, at the expense of the
Pledgor, the Pledgor will promptly execute and deliver all
further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Bank may
reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable
the Bank to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.
SECTION 9. Voting Rights; Interest; Etc. (a) So long
as no Event of Default or Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise, or refrain
from exercising, any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the
Reimbursement Agreement; provided, however, that the Pledgor
shall not exercise or refrain from exercising any such right if,
the Bank notifies the Pledgor that, in the Bank's judgment, such
action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof, and provided further,
that the Pledgor shall give the Bank at least two days' written
notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right.
(b) Upon the occurrence and during the continuance of
an Event of Default or a Default, all rights of the Pledgor to
exercise the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 9(a) shall
cease, and all such rights shall thereupon become vested in the
Bank which shall thereupon have the sole right to exercise such
voting and other consensual rights.
(c) If the Company shall become entitled to receive or
shall receive any principal or interest payment in respect of the
Pledged Bonds, the Company agrees to accept the same as the
Bank's agent and to hold the same in trust on behalf of the Bank
and to deliver the same forthwith to the Bank. All sums of money
so paid in respect of the Pledged Bonds that are received by the
Company and paid to the Bank shall be credited against the
obligations of the Company to the Bank under the Reimbursement
Agreement.
SECTION 10. Bank Appointed Attorney-in-Fact. The
Pledgor hereby appoints the Bank the Pledgor's attorney-in-fact,
said appointment being coupled with an interest, with full
authority in the place and stead of the Pledgor, and in the name
of the Pledgor or otherwise, from time to time in the Bank's
discretion to take any action and to execute any instrument which
the Bank may deem necessary or advisable to assure that Pledged
Bonds are pledged to the Bank and the Pledgor's agreements and
Obligations hereunder are performed and satisfied, including,
without limitation, to receive, indorse and collect all
instruments made payable to the Pledgor representing any interest
payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the
same.
SECTION 11. Bank May Perform. If the Pledgor fails to
perform any agreement contained herein, the Bank, upon notice to
the Pledgor, may itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Bank incurred in
connection therewith shall be payable by the Pledgor under
Section 15.
SECTION 12. Reasonable Care. The Bank and the Agent
shall be deemed to have exercised reasonable care in the custody
and preservation of the Pledged Collateral in their possession if
the Pledged Collateral is accorded treatment substantially equal
to that which the Bank or the Agent accords its own property, it
being understood that the Bank and the Agent shall not have any
responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Pledged Collateral, whether or not the
Bank or the Agent has or is deemed to have knowledge of such
matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Pledged Collateral.
SECTION 13. Sale of Collateral. The Pledgor agrees to
do or cause to be done all such other acts and things as may be
necessary to make any sale or sales of any portion or all of the
Pledged Bonds contemplated by Section 14 hereof valid and binding
and in compliance with any and all applicable laws, regulations,
orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic
or foreign, having jurisdiction over any such sale or sales, all
at the Pledgor's expense. The Pledgor further agrees that a
breach of any of the covenants contained in this Section 13 will
cause irreparable injury to the Bank, that the Bank has no
adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in
this Section shall be specifically enforceable against the
Pledgor and the Pledgor hereby waives and agrees not to assert
any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has
occurred. The Pledgor further acknowledges the impossibility of
ascertaining the amount of damages which would be suffered by the
Bank by reason of a breach of any of such covenants and,
consequently, agrees that, if the Bank shall sue for damages for
breach, it shall pay, as liquidated damages and not as a penalty,
against release to it of the Pledged Bonds, an amount equal to
the principal amount of the Pledged Bonds, plus accrued interest
on all Advances and other amounts then outstanding with respect
to the Pledged Bonds, on the date the Bank shall demand
compliance with this Section.
SECTION 14. Remedies upon Default. If any Event of
Default shall have occurred and be continuing:
(a) The Bank may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the
rights and remedies of a secured party on default under the
Uniform Commercial Code (the "UCC") in effect in the State
of New York at that time, and the Bank may also, without
notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange, broker's board or
at any of the Bank's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as
the Bank may deem commercially reasonable. The Pledgor
agrees that, to the extent notice of sale shall be required
by law, at least ten days' notice to the Pledgor of the time
and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable
notification. The Bank shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale
having been given. The Bank may adjourn any public or
private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned.
(b) Any cash held by the Bank or on its behalf as
Pledged Collateral and all cash proceeds received by the
Bank in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral
may, in the discretion of the Bank, be held by the Bank or
on its behalf as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to
the Bank pursuant to Section 15) in whole or in part by the
Bank against, all or any part of the Obligations in such
order as the Bank shall elect. Any surplus of such cash or
cash proceeds held by the Bank or on its behalf and
remaining after payment and performance in full of all the
Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus
promptly, but in any event within two Business Days of the
receipt thereof.
SECTION 15. Expenses. The Pledgor will upon demand
pay to the Bank the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of
any agents, which the Bank may incur in connection with (i) the
administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the
exercise or enforcement of any of the rights of the Bank
hereunder, or (iv) the failure by the Pledgor to perform or
observe any of the provisions hereof.
SECTION 16. Amendments, Etc. No amendment or waiver
of any provision of this Agreement nor consent to any departure
by the Pledgor herefrom, shall in any event be effective unless
the same shall be in writing and signed by the Bank and the
Pledgor, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given. The Bank shall not by any act, delay, omission or
otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver shall be valid unless in writing, signed
by the Bank, and then only to the extent therein set forth. A
waiver by the Bank of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy
which the Bank would otherwise have on any future occasion. No
failure to exercise nor any delay in exercising on the part of
the Bank, any right, power or privilege hereunder, shall operate
as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and not
exclusive of any rights or remedies provided by law.
SECTION 17. Amendments, Modifications and Waivers with
Respect to Obligations. The Pledgor hereby consents that,
without the necessity of any reservation of rights against the
Pledgor, and without notice to or further assent by the Pledgor,
any demand for payment of any of the Obligations made by the Bank
may be rescinded by the Bank and any of the Obligations
continued, and the Obligations, or the liability of the Pledgor
or any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered, or released by the Bank, and the
Reimbursement Agreement, the Letter of Credit or any collateral
security documents or guarantees or documents in connection
therewith may be amended, modified, supplemented or terminated,
in whole or in part, as the Bank may deem advisable from time to
time, and any collateral security at any time held by the Bank
for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released, all without the necessity of any
reservation of rights against the Pledgor and without notice to
or further assent by the Pledgor, which will remain bound
hereunder, notwithstanding any such renewal, extension,
modification, acceleration, compromise, amendment, supplement,
termination, sale, exchange, waiver, surrender or release.
Subject to Section 12 hereof, the Bank shall have no obligation
to protect, secure, perfect or insure any other collateral
security document or property subject thereto at any time held as
security for the Obligations. The Pledgor waives any and all
notice of the creation, renewal, extension or accrual of any of
the Obligations and notice of or proof of reliance by the Bank
upon this Agreement, and the Obligations, and any of them shall
conclusively be deemed to have been created, contracted or
incurred in reliance upon this Agreement, and all dealings
between the Pledgor and the Bank shall likewise be conclusively
presumed to have been had or consummated in reliance upon this
Agreement. The Pledgor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon
the Pledgor with respect to the Obligations.
SECTION 18. Addresses for Notices. All notices and
other communications provided for hereunder shall be in writing
(including tested telex) and, if to the Pledgor, telexed or
delivered to it, return receipt requested, addressed to it at the
address of the Pledgor specified in the Reimbursement Agreement;
if to the Bank, telexed or delivered to it, return receipt
requested, addressed to it at the address of the Bank specified
in the Reimbursement Agreement; if to the Agent, to the Agent in
care of the Trustee and if to the Trustee, Paying Agent or
Remarketing Agent, telexed or delivered to it, addressed to it at
the address of the Trustee, Paying Agent or Remarketing Agent
specified in the Indenture, or as to any party at such other
address as shall be designated by such party in a written notice
to each other party complying as to delivery with the terms of
this Section. All such notices and other communications shall,
when telexed or delivered, as the case may be, be effective upon
receipt.
SECTION 19. Continuing Security Interest. This
Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect
until payment and performance in full (after the Credit
Termination Date of the Letter of Credit) of the Obligations,
(ii) be binding upon the Pledgor, its successors and assigns, and
(iii) inure to the benefit of the Bank and its successors,
transferees and assigns. Without limiting the generality of the
foregoing clause (iii), the Bank may assign or otherwise transfer
the Reimbursement Agreement and this Agreement to any other
person or entity, and such other person or entity shall thereupon
become vested with all the benefits in respect thereof granted to
the Bank herein or otherwise. Upon the payment and performance
in full (after the Credit Termination Date of the Letter of
Credit) of the Obligations, the Pledgor shall be entitled to the
return, upon its request and at its expense, of such of the
Pledged Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof.
SECTION 20. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 21. Appointment of Agent. The Bank hereby
appoints and authorizes Rhode Island Hospital Trust National Bank
to act as its agent and bailee (the "Agent") hereunder in
connection with the Bank's lien and security interest in the
Pledged Bonds. Rhode Island Hospital Trust National Bank hereby
accepts such appointment as the Agent of the Bank. With respect
to the Pledged Bonds, the Agent undertakes to perform only such
duties as are expressly set forth herein. The Agent may rely and
shall be protected in acting or refraining from acting upon any
written notice, instruction or request furnished to it hereunder
by the Bank and believed by it to be genuine and to have been
signed or presented by the proper party. The Agent may consult
with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or suffered by
it hereunder in good faith and in accordance with the provisions
of this Agreement and the opinion of such counsel. The Bank
agrees to indemnify the Agent for, and to hold it harmless
against, any loss, liability or expense incurred on the part of
the Agent which arises out of or in connection with the
administration of this Agreement and its duties hereunder, other
than any such loss, liability or expense incurred as a result of
gross negligence or willful misconduct on the part of the Agent.
SECTION 22. Governing Law; Terms. This Agreement
shall be governed by and construed in accordance with the
internal laws of the State of New York. Unless otherwise defined
herein or in the Reimbursement Agreement, terms defined in
Article 9 of the UCC in effect from time to time in the State of
New York are used herein as therein defined.
SECTION 23. Execution in Counterparts. This Agreement
may be executed in separate counterparts, all of which taken
together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the Pledgor has caused this
Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date and year first above
written.
NEWPORT ELECTRIC CORPORATION
By____________________________
Title:
Agreed as of the date
first above written:
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, as the Bank
By_________________________________
Vice President
RHODE ISLAND HOSPITAL TRUST NATIONAL BANK,
as the Agent and the Paying Agent
By_________________________________
Title:
EXHIBIT E
SUBSIDIARIES
None.
EXHIBIT-10-14.03
NEW ENGLAND POWER SERVICE COMPANY
25 Research Drive
Westborough, Massachusetts 01582
SERVICE CONTRACT
As of January 1. 1994
Date
TO REMVEC
c/o New England Power Service Company
25 Research Drive
Westborough. Massachusetts 01582
New England Power Service Company (hereinafter called Service Company)
is a company engaged primarily in the rendering of services to companies in
the New England Electric System holding-company system. The organization,
conduct of business and method of cost allocation of the Service Company are
designed to meet the requirements of Section 13 under the Public Utility
Holding Company Act of 1935 and the rules and regulations promulgated
thereunder to the end that services performed by the Service Company for said
associate companies will be rendered to them at cost, fairly and equitably
allocated. Services will be rendered by Service Company only upon receipt from
time to time of specific or general requests therefor. Said requests may
always be modified or canceled by you at your discretion. The parties hereto
agree as follows:
1. The Service Company agrees to furnish you upon the terms and
conditions herein set forth such of the services described in Schedule 1
hereto as you may from time to time request. Service-Company will also
furnish, if available, such services not described in Schedule 1 as you may
request. Notwithstanding the foregoing the Service Company shall not furnish
under this agreement any engineering, construction, or maintenance services
for a nuclear generating plant.
2. The Service Company has and will maintain a staff trained and
experienced in the engineering, construction, operation, maintenance and
management of public utility properties. In addition to the services of its
own staff, Service Company will, after consultation with you concerning
services to be rendered pursuant to your request, arrange for services of non-
affiliated experts, consultants, accountants and attorneys.
3. All of the services rendered under this agreement will be at actual cost
thereof. Direct charges will be made for services where a direct allocation of
cost is possible. The methods of determining such costs and the allocation
thereof are set forth in Schedule ll hereto. These methods are reviewed
annually and more frequently, if appropriate. Such methods may be modified or
changed by Service Company without the necessity of an amendment of this
agreement provided that in each instance all services rendered hereunder will
be at actual cost thereof, fairly and equitably allocated, and all in
accordance with the requirements of the Public Utility Holding Company Act of
1935 and rules and regulations and orders thereunder. You will be advised from
time to time of any material changes in such methods .
4. Bills will be rendered as soon as practicable after the close of each
month and will be payable within fifteen days after receipt. Any amount
remaining unpaid after fifteen days following receipt of the bill shall bear
interest thereon from the date of the bill at an annual rate of 2% above the
lowest interest rate then being charged by the first National Bank of Boston
on 90 day commercial loans. Services will be performed hereunder for not more
than one year commencing January 1, 1994, and continuing through December 31,
1994, unless terminated at an earlier date by either party giving thirty days'
written notice to the other of such termination at the end of any month.
5. This agreement will be subject to termination or modification at any
time to the extent its performance may conflict with any federal or state law
or any rule, regulation or order of a federal or state regulatory body having
jurisdiction. The agreement shall be subject to approval of any federal or
state regulatory body whose approval is a legal prerequisite to its execution
and delivery or performance.
6. Supplement No. 1 dated NEW ENGLAND POWER SERVICE COMPANY
as of January 1, 1994.
Accepted * , 19
By
By See acceptances at end of supplement No. 1
*As of January 1, 1994
SCHEDULE I
Description of Services which are Available from
New England Power Service Company
Accounting:
The keeping of accounts and collateral activities, including
billing, payroll and customer relations; preparation of
reports and preservation of records.
Auditing:
Periodic audits by Service Company auditors and the
furnishing of reports and recommendations.
Construction:
Manpower and equipment for construction and maintenance of
electric properties. Assistance in obtaining, and
supervision of, non-affiliated contractors.
Corporate and corporate records:
Cooperation with attorneys, officers and special counsel of
associate companies on corporate matters, financing,
regulation, contracts, claims and litigation. Services in
connection with stockholders' and directors' meetings and
keeping of corporate records.
Data processing
Maintenance and operation of data processing center and
equipment for accounting, engineering, administration and
other functions.
Emergencies
Assistance in emergency-maintenance and restoration of
utility service and in mobilization of personnel and
equipment.
Employee relations
Service re labor relations, personnel, wage and salary
schedules, employee training and safety and medical
programs.
Engineering
Civil, mechanical, electrical, and other engineering
services; technical advice, design, installation,
supervision, planning, research, testing, operation of
communications, including microwave, and operation and
maintenance of specialized technical equipment.
Executive and administrative
Consultation and services in management and administration
of all aspects of electric utility business.
Insurance
Development, placement and administration of insurance
coverages and employee benefit programs, including group
insurance and retirement annuities; property inspections and
valuations for insurance.
Marketing
Services re policy development and functional direction of
field marketing departments, including rate application and
training, plus specialized residential, commercial and
industrial services.
Properties
Services re acquisition and disposition of properties;
cooperation with attorneys of associate companies in title
examinations and conveyancing; maintenance of property
records; and making of property inventories and valuations.
Power supply
Planning and other services for supply of electric power,
and negotiation of contracts therefor.
Public information and relations
Services re information to and relations with the public,
including customers, security holders, employees, financial
analysts, rating agencies and investment firms.
Purchasing and stores
Services re purchase and storing of materials, supplies and
equipment.
Rates
Review, design, interpretation, analysis and other services
re rates and special contracts for sale of electricity.
Regulation
Analysis of laws, rules and regulations and recommendations
for action hereunder; handling of matters with regulatory
and governmental authorities; preparation of applications
and registrations.
Systems
Establishing of accounting and other procedures and
standards.
Taxes
Service re federal, state and municipal taxes, preparation
of returns and handling of audits and claims by taxing
authorities.
Treasury and statistical
Services re financing of associate companies, both short and
long-term, determination of capital needs, and preparation
of financial and statistical reports.
SCHEDULE ll
Determination of Cost of Service and Allocation Thereof
Cost of service will be determined in accordance with the Public Utility
Holding Company Act of 1935 and the rules and regulations and orders
thereunder, and will include all costs of doing business incurred by the
Service Company.
Records will be maintained for each Department and Division of the Service
Company in order to accumulate all costs of doing business and to determine
the cost of service. These costs will include wages and salaries of employees
and related expenses such as insurance, taxes, pensions and other employee
welfare expenses, and rent, light, heat, telephone, supplies, and other
housekeeping costs. In addition, records will be maintained of general
administrative expenses, which will include the costs of operating the Service
Company as a corporate entity.
Charges for services rendered and related expenses and non-personnel expenses
(e.g., use of automotive equipment, etc.) will be billed directly to the
serviced companies, either individually or, when the services performed are
for a group for a group of companies, by means of an equitable allocation
formula. Each formula will have an appropriate basis such as customers,
meters, employees, plant investments, inventories or operating revenues.
Charges for services will be determined from the time sheets of employees and
will be computed on the basis of each employee's hourly rate plus a percentage
factor to cover related expenses and general administrative expenses. Records
of such related expenses and general administrative expenses will be
maintained and subjected to periodic review.
Out-of-pocket expenses which are incurred for the serviced companies will be,
billed at cost. Charges for non-personnel expenses, such as for use of
automobiles. trucks and heavy equipment, will normally be computed on the
basis of costs per hour or per mile.
Supplement No. 1 dated as of January 1, 1994
to Service Contract for services to REMVEC.
In addition to services described in Schedule I to the
Service Contract of which this supplement is a part, the Service
Company agrees to furnish you, upon the terms and conditions of
the Contract, such additional services as are encompassed by the
letter of Service Company to the Securities and Exchange
Commission dated January 19, 1968 a copy of which is attached
hereto. (Also attached hereto is a letter in response thereto
from the Securities and Exchange Commission dated February 1,
1968.)
Billings to the Participants of REMVEC for all expenses of
REMVEC, including the services of Service Company, will be in
accordance with the Agreement dated as of August 1, 1968 as
amended, between the Participants of REMVEC. Unless otherwise
directed in writing from a Participant, each such bill shall be
split between the companies comprising such Participant on the
basis of their respective gross revenues during the prior
calendar year.
The obligations of the Participants hereunder shall be
several and not joint or joint and several.
The Service Contract shall not be cancellable prior to its
termination date except by a vote of at least three of the
Participants who have at least two-thirds (2/3) of the aggregate
Territorial KWH of all such Participants, upon withdrawal from
REMVEC, may concurrently cancel his participation in this Service
contract.
441 STUART STREET, BOSTON 16, MASS
April 3, 1969
New England Power Service Company
Turnpike Road
Westboro, Massachuestts 01581
Attention: Mr. R. V. Rist, Controller
Gentlemen:
In accordance with Supplement No. 1 to the Service
Contract dated Aprll 1, 1969 under which New England Power
Service Company is to furnish certain services to REMVEC,
this is to notify you that, inasmuch as New England Power
Company is responsible for generation and transmission fo-
thc New England Electric System companies, New England Power
Company will pay all the expenses of REMVEC payable by New
England Electric System companics. Therefore, each bill for
the expenses of REHVEC payable by the ,New England Electric
System companies should be made out and sent to New England
Power Company and not to Granite State Electric Company,
Massachusetts Electric Company or The Narragansett Electric
Company.
Very truly yours,
NEW ENGLAND POWER COMPANY
GRANITE STATE ELECTRIC COMPANY
MASSACHUSETTS ELECTRIC COMPANY
THE NARAGANSETT ELECTRIC COMPANY
Subsidiaries of NEW ENGLAND ELECTRIC SYSTEM
Agent
Copies to: Stephen J. Sweeney, REMVEC Manager
N. G. Hodgman, Chairman
REMVEC Operating Committee
NEW ENGLAND POWER SERVICE COMPANY
441 Stuart Street
Boston, MA 02116
January 19, 1968
Securities and Exchange Commisssion
500 North Capital Street
Washington, D.C. 20549
RE: File 37-7
Dear Sirs:
A central dispatch center covering eastern Massachusetts, Rhode Island and
Vermont is being planned with Boston Edison Company, each of the Eastern
Utilities Associates, New England Electric System (NEES) and New England Gas
and Electric Association holding-company systems, and Vermont Electric Power
Company, Inc. (acting for itself and Central Vermont Public Service
Corporation and Green Mountain Power Corporation) are the five participants.
It is to be named the Eastern Massachusetts - Vermont Energy Control Center
(EMVEC). EMVEC would be one of four dispatching centers all satellite to a
proposed New England-wide dispatch center to be known as NEPEX. However,
whether or not NEPEX comes into being, the participants in EMVEC contemplate
that EMVEC will be implemented.
Under present plans the EMVEC dispatch center will be located at Westboro
in or adjacent to the computer and acconting center of the NEES holding-
company system. The computer and accounting center is under long-term lease
from John Hancock Life Insurance Company and it is expected that a building to
house the EMVEC dispatch center will also be leased from that Insurance
Company. Bids on the necessary computer equipment have been received and an
order for the computer is expected to be placed soon. It and other equipment
probably will be leased either from the manufacturers or from a leasing
corporation.
The EMVEC dispatch center will be manned with people either on loan from
the participant utilities or on the permanent payroll of New England Power
Service Company (NEPSCO), a subsidiary of NEES. We anticipate EMVEC will be
operational in 1969 and there will be about 24 employees at the center. In
addition, various office and other subsidiary services will be supplied by the
NEPSCO organization. Commencing July 1, 1967 two men were stationed at
Westboro and are devoting full time to EMVEC activities, namely, Mr. Sweeney
from Boston Edison Company and Mr. David Hayward from the NEES system.
Personnel loaned to the center will remain on the payrolls of the employer
companies and will continue to have the fringe benefits of their respective
employers. However, their pay probably will be on an equalized basis in line
with a salary schedule for the EMVEC center itself. To date, costs related to
the EMVEC dispatch center have been paid by various of the participant
utilities and are being collected in suspense accounts. However, as soon as
the necessary notice has been given to the Commission and any required
approval obtained, it is planned for NEPSCO to collect all of the charges
relating to the EMVEC dispatch center and to bill such out to the
participating utilities on an equitable basis. Amounts initially held in
suspense accounts would be billed in the same fashion through the Service
Company to the participating utilities.
Currently the aggregate costs for such center are running between $4,500
and $5,000 a month. By the time the center becomes operational it is expected
that the annual costs will be about $1,000,000 and that equipment will cost in
excess of $1,000,000. NEPSCO will so maintain its accounts as to insure that
none of the costs or charges related to the EMVEC dispatch center, other than
the portion of the charges of EMVEC attributable to the NEES system in
accordance with the above formula, will fall on the other companies in the
NEES holding-company system.
It is anticipated that EMVEC will improve the operations and reliability
of the electric systems of the participants and will provide these
improvements at substantial savings as compared to the aggregate dispatching
costs if each of the participants attempted to install an EMVEC type dispatch
center for its own use.
To the extent that the above constitutes a change in the organization of
NEPSCO, the type and character of companies to be serviced by it, the method
of allocating costs to associate companies, the scope or character of services
t be rendered, or in the basic accounting principles or cost allocations of
NEPSCO, this letter is written notice thereof. Unless prior to March 22, 1968
the Commission shall have notified the Service Company that a question exists
as to whether or not the proposed change is consistent with the provisions of
Section 13 of the Public Utility Holding Company Act or of any rule,
regulation or order thereunder, the change will be effective on that date and
the Service Company at any time thereafter may perofrm services on behalf of
the EMVEC dispatch center for the participants therein. However, inasmuch as
this matter has been discussed with your staff in advance of this letter, we
would appreciate a letter from you permitting the change to be effective at an
earlier date.
Very truly yours,
NEW ENGLAND POWER SERVICE COMPANY
by: Guy W. Nichols, Jr.
Vice President
Securities and Exchange Commission
Washington, D.C. 20549
Mr. Guy W. Nichols, Jr.
Vice President
New England Power Service Company
441 Stuart Street
Boston, MA 02116
RE: File 37-7-1
Dear Mr. Nichols:
This will acknowledge the receipt of your letter dated January 19, 1968 in
which, pursuant to the first condition in this Commission's Order in New
England Power Service Company, dated August 3, 1961 (Holding Company Act
Release No. 14491), you have notified this Commission, to the extent required,
of the proposal to establish the Eastern Massachusetts-Vermont Energy Control
Center ("EMVEC") for the joint benefit of the New England Electric System
("NEES"), Boston Edison Company, the Eastern Utilities Associates system, the
New England Gas and Electric Association system, and Vermont Electric Power
Company, Inc.; and of the intent of your company ("NEPSCO") to perform certain
services for the participating companies.
You state that the ""EMVEC" center will be located in Westboro, Massachusetts
in a building to be leased from the John Hancock Life Insurance Company, that
it will be furnished with computer and other necessary equipment to be leased
from the manufacturers or a leasing corporation, and that EMVEC will be manned
by personnel on loan from the participant companies or on the permanent
payroll of NEPSCO. You further state that NEPSCO will collect all of the
charges relating to EMVEC and bill out such charges to the participating
companies on an equitable basis, that EMVEC is expected to become operational
in 1969, and that annual costs of its operation will approximate $1 million
and that equipment required for the center will cost in excess of $1 million.
Since it appears from the contents of your letter that EMVEC will improve the
operations and reliability of the electric systems of the participating
companies and will provide such improvements at substantial savings over the
aggregate dispatching costs which would be incurred if each of the
participants attempted to install its own EMVEC type dispatch center, no
objection will be made to the carrying out of the proposals set forth in your
letter at the earliest practicable date.
In the third paragragh of your letter you state that the charges relating to
EMVEC which NEPSCO will collect will be billed out to participating companies
on an equitable basis. It is requested that, as soon as practicable after
necessary arrangements have been completed, you advise the Commission as to
the formula or formulas which will be employed by NEPSCO in distributing such
charges among the participants.
Sincerely yours,
Solomon Freedman
Director
This Service Contract for the benefit of REMVEC is accepted as of January
1, 1994, by the following Participants of REMVEC:
BOSTON EDISON COMPANY
By Date
BLACKSTONE VALLEY ELECTRIC COMPANY
EASTERN EDISON COMPANY
MONTAUP ELECTRIC COMPANY
NEWPORT ELECTRIC CORPORATION
Subsidiaries of EASTERN UTILITIES ASSOCIATES
By Arthur Hatch Date: 12/23/92
NEW ENGLAND POWER COMPANY
GRANITE STATE ELECTRIC COMPANY
MASSACHUSETTS ELECTRIC COMPANY
THE NARRAGANSETT ELECTRIC COMPANY
Subsidiaries of NEW ENGLAND ELECTRIC SYSTEM
By Date
CAMBRIDGE ELECTRIC LIGHT COMPANY
COMMONWEALTH ELECTRIC COMPANY
CANAL ELECTRIC COMPANY
Subsidiaries of COMMONWEALTH ENERGY SYSTEM
By Date
FITCHBURG GAS & ELECTRIC LIGHT COMPANY
By Date
EXHIBIT-10-15.03
CDB394.1
66227-00012
February 15, 1994 9:56am
THIRTIETH AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
THIS AGREEMENT, dated as of the 1st day of June, 1993 is entered into
by the signatories hereto for the amendment by them of the New England Power
Pool Agreement dated as of September 1, 1971 (the "NEPOOL Agreement"), as
previously amended by twenty- eight (28) amendments, the most recent of which
was dated as of September 15, 1992, and as proposed to be amended by a
pending twenty-ninth amendment dated as of May 1, 1993.
WHEREAS, the signatory Participants propose to amend the provisions on
NEPOOL planning in the NEPOOL Agreement, and to provide for new categories of
Pool-Planned Facilities and Pool-Planned Purchases and to couple this with a
change in the definition of Pool-Planned Unit to reference only existing
Units; and
WHEREAS, the proposed amendments are intended, among other things, to
facilitate the use of revenue bond financing by Participants which are
Massachusetts municipal utilities, and to avoid in the future controversies
over criteria for the designation of Pool-Planned Units.
NOW THEREFORE, the signatories hereby agree as follows:
SECTION I
AMENDMENTS
Section 1. Amendment of Section 7.12
Section 7.12(j) is amended to read as follows:
(j) coordinating the review of proposed plans of
Participants pursuant to Sections 10.1, 10.4 and 11.1
and coordinating the submission of recommendations to
the Management Committee regarding such proposed
plans;
Section 7.12 is further amended by deleting the "and" at the end of
Subsection (i) and by adding the following new Subsections at the end of the
Section:
(k) to the extent appropriate, enabling the planning and
installation of reliable and economical bulk power
supply and related facilities of NEPOOL by
establishing reasonable criteria, guidelines and
methods relating to the appropriate provisions for
integrated bulk power supply planning and related
facilities on behalf of all the NEPOOL Participants;
(l) preparing forecasts of the aggregate coincidental
Adjusted Load of the Participants and of the Annual
and Monthly Peaks and the Adjusted Annual and Monthly
Peaks of each of the Participants for use by the
Management Committee in estimating "C" and "E" for
purposes of Section 9.2(a); and
(m) coordinating with neighboring pools, non-Participants
and the regional reliability council on matters of
regional planning and regional reliability.
Section 2. Amendment of Section 9.4(a)
Section 9.4(a) is amended to read as follows:
(a) At the conclusion of each Capability Period, the
Operations Committee shall determine whether each
Participant has satisfied its Capability
Responsibility obligation for each month during such
Capability Period. If the minimum monthly System
Capability of a Participant during a month was less
than its Capability Responsibility, the number of
Kilowatts of its deficiency shall be computed and the
Participant shall pay a Capability Responsibility
adjustment charge for the month computed at the rate
prescribed by Section 9.4(b). For purposes of
Sections 9.4(a) and 9.4(d), the minimum monthly System
Capability of a Participant for a month during a
Capability Period is equal to the sum of (i) the
Participant's lowest System Capability (as determined
without taking into account any Entitlements in Pool-
Planned Facilities initially placed in commercial
operation during the Capability Period) for any day
during the month, plus (ii) for each Pool-Planned
Facility initially placed in commercial operation
during the Period on or prior to the first day of the
third month of the Period, one-sixth of (A) the amount
of the Participant's Entitlement, if any, in such
Facility times (B) the number of full months during
such period that such Facility was in commercial
operation, subject to the right of the Participant to
elect, by written notice received by the chairman of
the Operations Committee prior to the end of the
Period, not to receive credit under this clause ( ii),
plus (iii) for each Pool-Planned Facility initially
placed in commercial operation during the period on or
prior to the first day of the month and for which no
credit was given under clause (ii), the amount of the
Participant's Entitlement, if a ny, in such Facility.
Retirements made on the last day of any month shall
not be deducted from System Capability for that month.
Section 3. Amendment of Section 10.1
Section 10.1 is amended to read as follows:
10.1 Recommendation of Additional Facilities
The Management Committee shall periodically review the
need for, and shall recommend, additions to and
changes in generating and transmission facilities of
the Participants, or sales to or purchases of power
from Non-Participants, to meet the reliability
standards established by it pursuant to Section 5.13
and the other objectives of NEPOOL. In making its
review and recommendations, the Management Committee
shall give due consideration to (i) reports of the
Policy Planning Committee as to any alternatives
proposed by the Policy Planning Committee, and (ii)
such other matters as the Management Committee deems
pertinent.
The Management Committee shall specify the type, range
of capacity, target date for initial commercial
operation and other appropriate characteristics of
recommended facilities.
At least once every three years the Management
Committee shall adopt a ten-year NEPOOL expansion plan
specifying the type and timing of additional
generating units, PTF facilities and other resources
recommended for commercial operation during the period
of the expansion plan.
The Management Committee shall also periodically
review the need for, and shall recommend, arrangements
to meet the reliability standards established by it
pursuant to Section 5.13 and the other objectives of
NEPOOL, under which Participants, affiliates of
Participants or other persons may effect additions to
and changes in generating and transmission facilities
for use by Participants. Any such facilities shall be
eligible for designation as Pool-Planned Facilities
under Section 11.1.
Section 4. Amendment of Section 10.6
Section 10.6 is amended to read as follows:
10.6 Increase in Reserves Because of Non-NEPOOL Planned
Unit or Facility
If a Participant has at any time an Entitlement in a
generating unit placed in commercial operation after
October 31, 1975, which is not a Pool-Planned Unit or
a Pool-Planned Facility and with respect to which no
significant firm commitments to manufacturers or
constructors were made on or before November 1, 1971,
and as a result of the character, size or operation of
such unit NEPOOL reserves are required to be
increased, such Participant shall be responsible for
providing (at its expense and, if more than one
Participant has an Entitlement in the unit, in
proportion to its Entitlement in such unit) the
required additional NEPOOL reserves for so long as,
and to the extent that, such increase is required by
reason of such unit, or until such unit is accepted by
the Management Committee as a Pool-Planned Unit or a
Pool-Planned Facility; provided that such Entitlement
shall be included in the Participant's System
Capability for Capability Responsibility purposes.
Section 5. Amendment of Section 11.1
Section 11.1 is amended to read as follows:
11.1 Pool Access Objectives; Designation of Pool-Planned
Facilities or Purchases
It is an objective of NEPOOL that each Participant
shall have an appropriate opportunity to meet its
Capability Responsibility from Pool-Planned
Facilities.
It is recognized that in the past Participants have
satisfied their generating needs in various ways, as
sole or joint owners of generating units, as joint
owners of interests in generating companies, as
purchasers from other Participants or Non-Participants
under Unit Contracts or as wholesale customers,
although some smaller Participants have indicated a
desire to change their mode of participation in the
future by ceasing to be wholesale customers in whole
or part. It is anticipated that such smaller
Participants and their suppliers will work out
individual arrangements covering the phase-out of
present contracts and that in many cases this may best
be accomplished over a five-to-ten year period.
Furthermore, Participants have participated in
transmission facilities as sole owners, as joint
owners of interests in transmission companies, or by
entering into joint long-term support arrangements,
and it is expected that this diversity will continue
in the future because of the varying situations of the
Participants. Many of the joint arrangements have
been arranged or facilitated by NEPOOL action, and it
is a continuing objective of NEPOOL to facilitate, in
appropriate circumstances, joint generation and
transmission arrangements through the designation of
Pool-Planned Facilities and Pool-Planned Purchases.
A Participant which proposes, or whose affiliate
proposes, a joint arrangement for the installation
with other Participants of an additional generating
unit rated 25 MW (gross) or above or a transmission
facility rated 69 kV o r above, or for a purchase
jointly with other Participants of a Unit Contract
Entitlement from a Non-Participant may submit, in such
form, manner and detail as the Management Committee or
the Policy Planning Committee may reasonably
prescribe, a request to the Management Committee to
designate the generating unit or the transmission
facility as a Pool-Planned Facility or the purchase as
a Pool-Planned Purchase, as the case may be. If the
request relates to an additional generating unit or
transmission facility to be installed by the
Participant or its affiliate, the request shall be
submitted at or before the time the Participant's plan
for the facility is submitted pursuant to Section
10.4. It shall be a condition to the granting of the
requested Pool-Planned status for a generating unit or
purchase that the share of the unit or purchase which
the Participant proposes to make available for joint
participation be at least a 25% share and that it be
offered first to all other Particip ants on a fair and
nondiscriminatory basis, before any offering is made
to Non-Participants.
The Policy Planning Committee shall review the
Participant's proposal to determine its consistency
with NEPOOL objectives and shall report the results of
its review to the Management Committee. If the
Management Committee det ermines, on the basis of the
Policy Planning Committee's report and such other
information as the Management Committee deems
appropriate, that the proposal is consistent with
NEPOOL objectives and that the Participant has made
the offer of joint participation contemplated by this
Section, if required, (whether or not such offer has
been accepted by one or more other Participants), it
shall designate the proposed generating unit or
transmission facility as a Pool-Planned Facility, or
shall design ate the purchase as a Pool-Planned
Purchase, as the case may be.
Provided the Participant has offered at least 25% of
the capacity to other Participants through joint
ownership or unit contract participation, the
Management Committee may not unreasonably withhold
designation as a Pool-Planned Facility of a generating
unit proposed to be constructed by one or more
Participants in order to satisfy their anticipated
Capability Responsibilities and/or to provide an
appropriate mix of their generating capabilities if
the needs of such Participants in these regards have
not been satisfied from other units or facilities
designated as Pool-Planned on a basis consistent with
the following objectives:
(a) Each Participant should have a reasonable
opportunity to satisfy its load over some reasonable
time period with a mix of generation reasonably
comparable as to economics and types to that being
developed for New England.
(b) No Participant should be required to subject
itself to an excessively disproportionate exposure to
backup power costs or reserve obligations as a result
of having to take any Entitlement which is excessively
disproport ionately large as compared to the
Participant's size, or as the result, during any
sustained period, of having to take a disproportionate
portion of its capacity from immature units.
(c) No Participant which has maintained an
integrated system in the past should be required to
impair the attractiveness of its securities in the
capital markets by making unreasonably large capital
investments in new generation or by becoming dependent
upon other Participants for a substantially
disproportionate amount of its System Capability.
Section 6. Amendment of Section 15.33
Section 15.33 is amended to read as follows:
15.33 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).
Section 7. Addition of New Section 15.33A
The Agreement is amended by adding new Section 15.33A, as follows:
15.33A Pool-Planned Facility and Pool-Planned Purchase are,
respectively, (a)(i) a generating unit or transmission
facility designated as a "Pool-Planned Facility"
pursuant to Section 11.1 or (ii) which was designated
as a "Pool-Plan ned facility" pursuant to Section 10.1
prior to January 1, 1993, and (b) a purchase from a
Non-Participant designated by the Management Committee
as a "Pool-Planned Purchase" pursuant to Section 11.1;
provided that a "Pool-Planned Purchase" will not be
entitled to transfer rights under Section 13.2(c), but
Section 13.2(c) shall continue to be effective as to
existing and new purchases from Hydro-Quebec utilizing
the HQ Interconnection.
SECTION II
EFFECTIVENESS OF AGREEMENT
Following its execution by the requisite number of Participants, this
Agreement, and the amendments provided for above, shall become effective on
September 30, 1993, or on such later date as the Federal Energy Regulatory
Commission shall provide that such amendment shall become effective.
SECTION III
USAGE OF DEFINED TERMS
The usage in this Agreement of terms which are defined in the NEPOOL
Agreement shall be deemed to be in accordance with the definitions thereof in
the NEPOOL Agreement.
SECTION IV
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 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 thereof, 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, each of the signatories has caused a counterpart
signature page to be executed by its duly authorized representative, as of the
1st day of June, 1993.
COUNTERPART SIGNATURE PAGE
TO THIRTIETH AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF JUNE 1, 1993
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by twenty-eight (28) amendments (with a pending twenty-nine
(29) amendment dated as of May 1, 1993), the most recent prior amendment which
has become effective being an amendment dated as of September 15, 1992.
______________________________
By: ________________________ ______
Name:
Title:
Address:
COUNTERPART SIGNATURE PAGE
TO THIRTIETH AGREEMENT AMENDING
NEW ENGLAND POWER POOL AGREEMENT
DATED AS OF JUNE 1, 1993
The NEPOOL Agreement, being dated as of September 1, 1971, and being
previously amended by twenty-eight (28) amendments (with a pending twenty-
ninth (29) amendment dated as of May 1, 1993), the most recent prior amendment
which has become effective being an amendment dated as of September 15, 1992.
Boston Edison Company
By: /s/ Cameron H. Daley
Senior Vice President
800 Boylston Street
Boston, MA 02199
Central Maine Power Company
By: /s/ Donald F. Kelly
Senior Vice President
Edison Drive
Augusta, Maine 04336
Commonwealth Electric Company for
Cambridge Electric
Light Company
Canal Electric Company
Commonwealth Electric
Company
By: /s/ James J. Keane
Vice President
2421 Cranberry Highway
Wareham, MA 02571
Eastern Utilities Associates Companies
Blackstone Valley
Electric Company
Eastern Edison Company
Montaup Electric
Company
Newport Electric
Corporation
By: /s/ Arthur A. Hatch
Executive Vice President
One Liberty Square
Boston, MA 02109
The Narragansett Electric Company
By: /s/ Robert L. McCabe
President
280 Melrose Street
Providence, RI 02901
New England Electric System Operating Companies
Granite State Electric Company
By: /s/ Lydia M. Pastuszek
President
4 Park Street
Concord, NH 03301 -6313
Massachusetts Electric Company
By: /s/ John H. Dickson
President
25 Research Drive
Westborough, MA 01582
New England Power
Company
By: /s/ Jeffrey D. Tranen
President
25 Research Drive
Westborough, MA 01582
Northeast Utilities Companies
The Connecticut Light
and Power Company
Western Massachusetts
Electric Company
Holyoke Water Power
Company
Holyoke Power and
Electric Company
By: /s/ Frank P. Sabatino
Vice President
-Marketing
P.O. Box 270
Hartford, CT 06141 -0270
Public Service Company of New Hampshire
By: /s/ Frank R. Locke
President
1000 Elm Street
Manchester, NH 03105
Vermont Electric Power Company, Inc.
By: /s/ Richard W. Mallary
P.O. Box 548
Rutland, VT 05702
Central Vermont Public Service Corp.
By: /s/ Robert de R. Stein
77 Grove Street
Rutland, VT 05701
Vermont Marble Company
By: /s/ John M. Mitchell
Executive Vice President
61 Main Street
Proctor, VT 05765
Village of Enosburg Falls Water & Light Department
By: /s/ Edward Gill de Rubio
Manager
Route 4
Enonsburg Falls, VT 05450
Village of Hardwick Electric Department
By: /s/ Jack E. Young
General Manager
P.O. Box 516
Hardwick, VT 05843
Village of Jacksonville
By: /s/ Earle S. Holland
President
Box 73
Jacksonville, VT 05342
Village of Morrisville Water & Light Department
By: /s/ James C. Fox
Manager/Superintendent
P.O. Box 325
Morrisville, VT 05661
Village of Northfield Electric Department
By: /s/ Kevin O'Donnell
Municipal Manager
26 South Main Street
Northfield , VT 05663
Village of Readsboro Electric Light Department
By: /s/ Annette Caruso
P.O. Box 247
Readsboro, VT 05350
Vermont Public Power Supply Authority
By: /s/ William J. Gallagher
General Manager
512 St. George Road
Williston, VT 05495
The United Illuminating Company
By: /s/ Richard A. Grossi
Chairman and CEO
15787 Church Street
New Haven, CT 06506-0901
EXHIBIT-21-1.03
Eastern Utilities Associates 1993 Annual Report
EUA System Profile
Eastern Utilities Associates is an investor-owned holding company whose shares
are traded on the New York and Pacific Stock Exchanges under the ticker symbol
EUA. Its subsidiaries are principally engaged in the generation, transmission,
distribution and sale of electricity; energy related services such as energy
management and cogeneration; and promoting the conservation and efficient use of
energy.
To better reflect the competitive business environment in which it operates,
EUA is organized in four distinct business units.
Core Electric Business
EUA's core electric business comprises two business units. The retail business
unit provides electric service to more than 290,000 customers in southeastern
Massachusetts, and northern and coastal Rhode Island. Retail electric
subsidiaries are Blackstone Valley Electric Company, Eastern Edison Company and
Newport Electric Corporation. The wholesale business unit is Montaup Electric
Company, EUA's generation and transmission subsidiary, which provides
electricity at wholesale to the retail business units and two other non-
affiliated municipal electric utilities.
Energy Related Business
EUA's energy related business unit includes EUA Cogenex Corporation, EUA Ocean
State Corporation and EUA Energy Investment Corporation. EUA Cogenex is the
most active of our energy related companies with over 700 energy services
contracts in 32 states and the District of Columbia (map). EUA Ocean State
owns a 29.9% partnership interest in the Ocean State Power Project in northern
Rhode Island. EUA Energy makes investments in energy related businesses.
Corporate
The corporate business unit is made up of Eastern Utilities Associates - the
System's parent company - and EUA Service Corporation which provides
professional and technical services to all EUA System companies.
"Map of Southern New England shaded to depict the following:"
Montaup Electric Wholesale Territory
Blackstone Valley Electric Service Area
Eastern Edison Service Area
Newport Electric Service Area
"Map of the United States shaded to depict the following:"
The 32 states and the District of Columbia, where EUA Cogenex does
business.
On The Cover
Symbols of the electric industry and of Eastern Utilities Associates were used
by noted artist/illustrator Frank Miller to create the collage comprising the
front and back covers of this Annual Report. Individual portions of the
collage are used for illustration within the publication.
Highlights
<TABLE>
<S> <C> <C> <C>
1993 1992 1991
FINANCIAL DATA (dollars in thousands)
Operating Revenues $ 566,477 $ 541,964(1) $ 522,583(1)
Consolidated Net Earnings 44,931 34,111 26,260
Return on Average Common Equity 15.0% 13.2% 10.8%
Common Shareholder Equity-
% of Capitalization (Year End) 38.7% 34.5% 31.8%
Total Assets 1,203,137 1,203,320(1) 1,163,776(1)
Cash Construction Expenditures 60,767 55,736 57,570
COMMON SHARE DATA
Consolidated Earnings per Share $ 2.44 $ 2.00 $ 1.58
Dividends Paid per Share $ 1.42 $ 1.36 $ 1.45
Annual Dividend Rate $ 1.44 $ 1.36 $ 1.36
Total Common Shares Outstanding 19,032,598 17,237,788 16,831,062
Average Common Shares Traded Daily 42,854 30,511 56,874
Book Value per Share (Year End) $ 17.50 $ 15.48 $ 14.77
Market Price - High 29 7/8 25 1/4 25
- Low 23 7/8 20 3/8 15 3/4
- Year End 28 24 3/4 20 5/8
OPERATING DATA
Total Primary Sales (mwh) 4,352,000 4,279,000 4,265,000
System Requirements (mwh) 4,599,000 4,520,000 4,545,000
System Peak Demand (mw) 854 849 879
System Reserve Margin (At Peak) 37.1% 46.1% 28.9%
System Load Factor 61.5% 57.5% 59.0%
Customers (Year End) 291,799 291,123 289,586
Employees (Year End) - Core Electric 766 806 838
- Energy Related 238 150 75
- Corporate 440 443 450
</TABLE>
(1) Restated to reflect consolidation of EUA Cogenex partnerships previously
reflected as equity investments.
(Earnings & Dividends Per Share & Dividend Payout Ratio chart here)
Earnings & Dividends Per Share
"Bar Chart depicting Earnings and Dividends paid per share for 1991, 1992
and 1993 as follows:"
1991 1992 1993
Earnings $1.58 $2.00 $2.44
Dividends paid per share $1.45 $1.36 $1.42
Dividend Payout Ratio
"Line Graph depicting Dividend Payout Ratio of EUA and Industry Index for
1991, 1992 and 1993 as follows:"
1991 1992 1993
EUA 92% 68% 58%
Industry Index 81% 83% 78%
To Our Shareholders
In 1993 we achieved our goal of providing you with an above average return
on your investment while continuing to position Eastern Utilities to meet the
intensifying competition developing within the electric utility industry. Our
constant emphasis on cost control and strategic planning has resulted in
increased earnings, a stronger core utility business and continued success in
diversifying our energy-related investments.
Financial Results Earnings per common share in 1993 were $2.44, a 22%
improvement over 1992's $2.00. Consolidated return on average common equity
increased in 1993 to 15.0%, versus 1992's 13.2%. Total return on shareholder
investment was 20%. Slightly more than one-half the 1993 earnings increase
came from utilization of investment tax credits associated with the EUA Power
Settlement. Our energy-related investments and effective cost control measures
also contributed to the increase. In a addition, we made considerable progress
in strengthening our balance sheet in 1993.
Your dividend was increased to an annual rate of $1.44, the first dividend
increase since 1990. This is the 65th consecutive year that Eastern Utilities
shareholders have received a dividend.
Competition Competition, without a doubt, is the most discussed issue in the
electric utility industry today. EUA recognized early on that competition
would drive management to prioritize its resources and dramatically change the
way we do business . To prepare for an intensified competitive environment,
EUA has reorganized to meet these challenges. Through our Strategic Planning
process, we have segregated our business into four strategic units which are
described in the Business and Strategies section which follows this letter.
Core Electric Business There are encouraging signs that the long awaited
economic recovery may finally be taking hold in our region. Total primary sales
increased 1.7% in 1993. Sales to industrial customers were up for the second
year in a row; residential customer sales increased after three years of
decline. Commercial sales, however, remained flat.
This March we expect to request the Federal Energy Regulatory Commission to
authorize a reduction in the rate Montaup Electric, our wholesale generating
subsidiary, charges its customers. This reduction, coupled with incentive rates
intended to encourage rage economic development in our service territories, is
expected to improve our competitive position and help promote economic growth
in the communities we serve.
In 1993, we continued to seek and implement economies in operations without
sacrificing our high standards of service reliability and safety. We
consolidated retail division functions and reduced our core electric business
workforce by almost 5%, mostly through attrition. Over the past three
years, the reduction has been 12%. Through the diligence of our employees and
the Teaming Up for Performance incentive program, controllable operation and
maintenance expenses were reduced about 6% compared to last year. We also
refinanced a number of debt issues in 1993 to take advantage of lower interest
rates.
The outlook for our core electric business is relatively stable in terms of
annual earnings potential. Each company within this unit is expected to earn
at or near its allowed rate of return without increasing their rates. These
companies will also finance their cash construction requirements with
internally generated funds thus avoiding the negative impact of higher interest
rates should they return. Benefitting from the economic recovery in our
service territories, this business unit will continue to provide a stable
contribution to EUA earnings over the next few years.
Energy Related Businesses Our EUA Cogenex subsidiary remains a leader in the
energy services field with a growing client list that includes the Department
of Energy and its headquarters building in Washington D.C.. That project won
first place in a respected national trade publication's Efficient Building
Awards program. EUA Cogenex also acquired the James L. Day Co. of Victor,
N.Y., which has been renamed EUA Day. It is one of the oldest and largest
distributors of Andover building automation on controls in the country. The
addition of Northeast Energy Management, Inc., a Maine based energy services
company similar to EUA Cogenex, provides new growth opportunities in that
state.
In keeping with our strategy to invest only in energy related activities, our
EUA Energy Investment Corporation subsidiary has invested in a limited
partnership, TransCapacity L.P., which will provide services nationally to all
gas users as they struggle to cope with the impacts of the Federal Energy
Regulatory Commission's Order 636 and gas pipeline deregulation.
We fully expect that as we move forward, our Energy Related business unit
will contribute a growing share of EUA's earnings. While EUA has emerged as a
diversified energy services company, we recognize that our core electric
business remains the foundation of the EUA System.
Changing Times While there has always been competition for customers from
other energy suppliers, competition from within the industry itself demands
that we sharpen our focus to ensure continued success in a changing
environment. We have instituted procedures to tie strategic planning to our
operating budget that will enhance our ability to control costs and meet
customer needs. We have also made the marketing of the products and services
we offer a priority and continue to stress the import once of employee training
and better customer service.
We are grateful to EUA System employees for their enthusiastic support and
hard work. We appreciate your loyalty as shareholders. Your confidence will
be rewarded as we remain dedicated to enhancing the value of your investment.
Sincerely,
Donald G. Pardus
Chairman
John R. Stevens
President
March 8, 1994
Businesses And Strategies
Overview
Competition is the most discussed issue in the electric utility industry today.
While competition is not new to the industry, its role to date has been minor
compared to the part it will play in the future. One of the major goals of the
National Energy Policy Act of 1992 is to increase competition within the
electric utility industry, in order to accelerate its restructuring. As
competition shapes the future of the business, those companies that have
recognized the need to change course will be in a better position to compete -
those still mired in the monopoly mindset will find it difficult to survive.
The "electric company" of monopoly days is gone. EUA recognized early on
that competition would require it to prioritize resources and change the way it
does business. We have emerged as a diversified energy services company,
poised for competition, the challenges it poses and the opportunities it
provides. To prepare for competition, EUA's Strategic Plan set goals and
strategies for each of its business units: Retail, Wholesale, Energy Related
and Corporate. The Retail and Wholesale business units combine to form our
Core Electric Business, which remains the foundation of the EUA System. The
Energy Related Business unit combines our energy related diversification
efforts, while the Corporate business unit provides professional and technical
services to all EUA System companies. Stable capital requirements in our Core
Electric Business over the next few years will allow management to invest its
resources in other business opportunities that present greater potential for
growth of your investment. The following 1993 business review maps EUA's
strategic direction to successfully meet the challenge of an intensifying
competitive environment.
Core Electric Business
The Core Electric Business is comprised of our Retail electric and Wholesale
electric business units. In 1993 these business units combined to contribute
over $33.5 million or $1.82 per share to EUA's consolidated earnings per share.
The Retail Business Unit (Blackstone Valley Electric Company, Eastern Edison
Company and Newport Electric Corporation) has prepared for increasing
competitive pressures by continuing strict cost control measures which began
four years ago; by re-emphasizing our commitment to quality customer service;
and by filing economic development rates designed to help existing customers
expand and attract new business to the area. Our retail subsidiaries continue
to consolidate retail division functions by state, streamline organizations and
further cut costs. During 1993, the Retail Business Unit saw its controllable
operation and maintenance expenses decrease by more than 2% - in the face of an
increase in the Consumer Price Index of approximately 3%. This was
accomplished both by reducing our Retail Business Unit workforce by an
additional 4%, bringing the total reductions since 1990 to almost 12%, and by
keeping tight rein on how our operations and maintenance expense dollars are
spent. As important as cost control is, quality customer service continues to
be a primary focus of our Core Electric Business. We also are training
employees to sharpen their marketing skills to better serve our customers.
The economy in our service territory has bottomed out and is starting to
improve. Kilowatthour (kWh) sales to our customers were up 1.7% in 1993 - even
though our successful conservation programs reduced sales by almost 1%. Rising
employment, increased housing starts and sales of existing homes, increased
retail sales, and a substantial increase in industrial sales of almost 4% are
all indicators that our service territory economy is on a steady course to
recovery.
We continue to monitor the potential impacts of competition. The fact that
our industrial sales account for only 18% of the EUA System's total kWh sales
and that they are derived from a diverse mix of many relatively small customers
should mitigate potential negative impacts from external competition in this
sector.
The outlook for our Retail Business Unit is relatively stable in terms of
investment, rate base and annual income potential. Each company within this
Business Unit is expected to earn at or near its allowed rate of return and to
cover all its cash construction requirements with internally generated funds.
We expect that this Business Unit will continue to provide a stable
contribution to EUA System financial results over the next few years.
We recognize that historically electric utilities in the Northeastern United
States have had rates that are higher than many other sections of the country.
The ultimate goal of the Retail Business Unit is to reduce our costs relative
to the other utilities in the region and to be a provider of energy and related
services with more competitive prices, while maintaining a level of service
above that of any competitors.
The Wholesale Business Unit (Montaup Electric Company) will respond to
increasing competitive pressures by continuing to control costs and by seeking
innovative ways to reduce its overall cost of providing electricity to its
customers. Like the Retail Business Unit, our Wholesale Business Unit saw a
reduction of more than 1% in controllable operation and maintenance costs
versus a Consumer Price Index increase of 3%. Our Wholesale Business Unit
workforce was reduced an additional 7% in 1993. In March 1994, Montaup expects
to file for a reduction in the rates it charges its wholesale customers, which
will lower ultimate customer costs because the reduction will flow through to
our retail electric businesses.
The Wholesale Business Unit expects to have sufficient generating capacity
available to meet the needs of its customers through the end of this decade.
While a declining rate base will result in lower annual income contributions
over the next few years, we expect construction requirements to be stable or to
decline slightly.
The primary goal of the Wholesale Business Unit is to continue to lower its
cost of wholesale power relative to other suppliers.
Energy Related Business
The Energy Related Business Unit, - EUA Cogenex Corporation, EUA Ocean State
Corporation and EUA Energy Investment Corporation - contributed $7.2 million or
39 cents per share to consolidated earnings in 1993. As we move forward, we
expect our Energy Related Business Unit to contribute a growing percentage of
EUA's net income and investment.
EUA Cogenex's contribution to EUA's consolidated earnings in 1993 increased
by 25% to $3.5 million or 19 cents per share. EUA Cogenex is the most active
of our energy related businesses with over 700 energy service contracts in 32
states and the District of Columbia. Recognized as one of the leaders in the
energy services industry, EUA Cogenex recently completed two strategic
acquisitions designed to enhance its competitive position in this rapidly
expanding industry. James L. Day Company, renamed EUA Day, is one of the
oldest and largest distributors of building automation controls in the country
and Northeast Energy Management, Inc., a Maine-based company, provides energy
services similar to EUA Cogenex.
In a recent study done for the Department of Energy, the energy efficiency
market was estimated to be up to $27 billion domestically through the end of
this decade. To maximize our participation in this market, EUA Cogenex has
been developing a high highly-trained national sales force to actively pursue
new customers in 1994 and beyond. This skilled staff will help drive EUA
Cogenex's growth in 1995 and beyond. Annual sales growth of 20% is a realistic
goal which should enable EUA Cogenex to continue increasing its contribution to
consolidated earnings.
Our EUA Ocean State subsidiary contributed $5.3 million or 29 cents per share
to EUA's Consolidated earnings in 1993. This equates to a return on our
invested equity of almost 32%. Since EUA Ocean State's only asset is its 29.9%
ownership interest in the Ocean State Power Project in Rhode Island, we expect
its contribution to decline gradually over the 20-year life of the plant.
Our decision to invest only in energy related opportunities resulted in the
establishment of EUA Energy Investment in 1987. One such opportunity is a
recent investment in TransCapacity Limited Partnership (L.P.). The entire
investment, $2.2 million, was charged to expense in 1993. TransCapacity L.P.
is developing specialized software and systems for assessing the gas pipeline
information that will become available as a result of The Federal Energy
Regulatory Commission's Order 636 which deregulated portions of the gas
industry. More importantly, it has the potential to provide services on a fee
basis nationally to all gas users as they struggle with the impacts of Order
636 and gas pipeline deregulation. While it is still too early to project
earnings contributions from this investment with confidence, we are excited
about its potential for meaningful contributions in the future.
The goals of our Energy Related Business Unit are to provide an increasing
percentage of EUA System earnings, maintain EUA Cogenex's leadership in the
energy services industry and investigate new energy related business
opportunities that will enhance e Shareholder value.
Summary
As always, we will continue to carefully evaluate our strategies to enhance
share value for our shareholders. We will aggressively pursue diversification
through energy related businesses, while recognizing that our core electric
business remains our primary business.
Selected Consolidated Financial Data(1)
<TABLE>
<S> <C> <C> <C> <C> <C>
Years Ended December 31,
(In Thousands Except Common Share Data) 1993 1992(2) 1991(2) 1990 1989
INCOME STATEMENT DATA:
Operating Revenues $ 566,477 $ 541,964 $ 522,583 $ 465,685 $ 429,422
Operating Income 75,406 64,347 66,336 55,385 58,388
Consolidated Net Earnings (Loss) 44,931 34,111 26,260 (130,182) 40,877
BALANCE SHEET DATA:
Plant in Service 1,016,453 1,002,717 990,726 985,138 687,833
Construction Work in Progress 8,728 4,943 6,881 6,809 674,850
Gross Utility Plant 1,025,181 1,007,660 997,607 991,947 1,362,683
Accumulated Depreciation and
Amortization 296,995 274,725 251,503 241,128 203,990
Net Utility Plant 728,186 732,935 746,104 750,819 1,158,693
Total Assets 1,203,137 1,203,320 1,163,776 1,094,740 1,376,032
CAPITALIZATION:
Long-Term Debt - Net 496,816 462,958 488,452 443,595 606,079
Redeemable Preferred Stock - Net 25,053 28,496 29,980 34,530 34,612
Non-Redeemable Preferred Stock - Net 6,900 15,850 15,850 15,850 15,079
Common Equity 333,165 266,855 248,598 237,393 375,016
Total Capitalization 861,934 774,159 782,880 731,368 1,030,786
Short-Term Debt 37,168 109,936 72,449 43,071 58,676
COMMON SHARE DATA:
Consolidated Earnings (Loss) per Average
Common Share $ 2.44 $ 2.00 $ 1.58 $ (8.18) $ 2.95
Average Number of Shares Outstanding 18,391,147 17,039,224 16,608,090 15,917,255 13,877,091
Return on Average Common Equity 15.0% 13.2% 10.8% (42.5%) 12.1%
Market Price - High 29 7/8 25 1/4 25 41 1/2 41 3/4
- Low 23 7/8 20 3/8 15 3/4 20 3/4 30 3/8
- Year End 28 24 3/4 20 5/8 23 7/8 41 3/4
Dividends Paid per Share $ 1.42 $ 1.36 $ 1.45 $ 2.575 $ 2.475
</TABLE>
(1) Includes financial and operating statistics for Newport Electric
Corporation from April 1, 1990 and EUA Power Corporation through December 31,
1990 at which time EUA Power was deconsolidated for financial reporting
purposes.
(2) Income Statement and Balance Sheet Data have been restated to reflect
consolidation of EUA Cogenex partnerships previously reflected as equity
investments.
Management's Discussion And Analysis Of Financial Conditions And Review Of
Operations
Overview
Eastern Utilities Associates' (EUA) Consolidated Net Earnings for 1993
increased 31.7% to $44.9 million or $2.44 per average common share, from 1992
Consolidated Net Earnings of $34.1 million, or $2.00 per share. Earnings Per
Share increased in spite of a 7.9% increase in the average number of common
shares outstanding primarily due to the April 1993 issuance of 1.3 million
common shares.
Net Earnings and Earnings Per Share By Business Unit:
1993 1992
Net Net Earnings
Earnings Earnings Earnings (Loss)
(000's) Per Share (000's) Per Share
Core Electric Business $33,461 $1.82 $31,958 $1.88
Energy Related Business 7,243 0.39 9,768 0.57
Corporate 4,227 0.23 (7,615) (0.45)
Consolidated $44,931 $2.44 $34,111 $2.00
The 1993 results were impacted by a number of factors described under each
business unit below.
Core Electric Business: Positive earnings impacts included:
- Rate increases implemented by EUA's retail electric subsidiaries during
1992 and 1993;
- Increased kilowatthour (kwh) sales;
- A marked reduction in long-term debt interest charges resulting from
the recent financing activity of the Core Electric Business; and
- EUA's continued commitment to controlling costs wherever possible
without impacting the safety, adequacy and reliability of its electric service.
These positive earnings impacts were somewhat offset by the unrecovered
expense related to the accrual of post-retirement benefits other than pensions
mandated by the Financial Accounting Standards Board (FASB) Statement No. 106
(FAS106).
Energy Related Business: The Energy Related Business impacts on 1993 earnings
were as follows:
- Increased earnings contributions from EUA's energy services subsidiary,
EUA Cogenex Corporation (EUA Cogenex);
- Lower earnings contributions from EUA's investment in the Ocean State
Power Project (OSP); and
- Lower earnings contributions from EUA Energy Investment Corporation
(EUA Energy) resulting from start-up costs related to its initial investment in
TransCapacity Limited Partnership (L.P.).
Corporate: The most significant impact on 1993 earnings was the utilization of
investment tax credits which expire with the 1993 tax year and are related to
the December 1992 EUA Power settlement agreement. The utilized tax credits
which lowered 1993 federal income tax expense amounted to $4.9 million, or 27
cents per share, are included in corporate results above.
The EUA Power settlement also caused a significant decrease in legal expenses
in 1993.
Comparison of Financial Results
In 1993 EUA consolidated the EUA Cogenex partnerships which had previously been
accounted for as equity investments. The 1992 and 1991 financial statements
have been restated to present these partnerships on a consolidated basis. The
restatements do not materially change amounts previously reported.
Operating Revenues
The table below sets forth estimates of the factors which contributed to the
change in Operating Revenues from 1991 through 1993:
Increase(Decrease)
From Prior Years
($ in millions) 1993 1992
Operating Revenue change attributable to:
Core Electric Business:
Purchased Power Recovery $ 7.0 $ 7.1
Recovery of Fuel Costs (2.3) (6.6)
Effect of Rate Changes 8.6 3.6
Unit Contracts and Sales to NEPOOL (13.1) 3.6
Kilowatthour Sales and Other 1.5 (2.8)
Energy Related Business:
EUA Cogenex 22.8 14.5
Total $ 24.5 $19.4
Core Electric Business: The revenue attributable to the Purchase Power
Recovery reflects our retail companies' method of recovery of purchased power
capacity costs.
Revenues attributable to Recovery of Fuel Costs result from the operation of
fuel adjustment clauses. The change in such revenues reflects corresponding
underlying changes in fuel costs.
The Effect of Rate Changes reflects base rate increases for; (i) Montaup
Electric Company (Montaup), effective May 1991; (ii) Blackstone Valley Electric
Company (Blackstone) effective in April 1992; (iii) Newport Electric
Corporation (Newport), effective October 1992, and (iv) Eastern Edison Company
(Eastern Edison) effective January 1993.
Revenues attributable to Unit Contracts and sales to NEPOOL reflect revenues
from such short-term contracts and Montaup's and Newport's interchange sales to
the New England Power Pool.
The change in revenues associated with kwh Sales and Other reflects the effect
of kwh sales on base revenues and changes in other operating revenues.
Energy Related Business: EUA Cogenex revenues reflect the change in total
revenues of that company. The 1993 increase is due primarily to revenues from
its EUA Nova division which was acquired in December 1992 and increased
revenues related to the sale of energy equipment. The 1992 increase is due
primarily to an increase in revenues of the consolidated partnerships. See
offsetting increases in 1992 partnership expenses below.
Core Electric Business Kwh Sales
Total Energy Sales decreased in 1993 from 1992 due to a significant decrease in
short-term unit contract sales, which include sales to NEPOOL. Short-term unit
contract and NEPOOL sales recover the underlying cost of fuel only and
therefore have no impact on earnings. Total primary sales, however, increased
by 1.7% in 1993, paced by improvements of 3.9% and 3.1% in sales to our
industrial and residential classes, respectively. Contributing to these gains
was the hotter than normal summer of 19 93 and the slow but steady economic
recovery taking place in our retail service territories. Economic indicators
suggest that this trend will continue for the foreseeable future.
The 1992 versus 1991 increase in Total Energy Sales of the Core Electric
Business was due to a significant increase in short-term unit contract sales.
Total primary sales increased by 0.3% primarily due to gains of nearly 1% in
sales to both our commercial and industrial customers. The positive effects of
the slow economic recovery and colder 1992 winter months were mitigated by
unusually mild weather in summer 1992. Total system requirements remained
relatively flat due to changes in Losses and Company Use.
Percentage Changes in Kwh Sales by Class of Customer:
Percent
Increase (Decrease)
From Prior Year
1993 1992
Residential 3.1 (0.3)
Commercial 0.0 0.8
Industrial 3.9 0.9
Other Electric Utilities (9.9) 3.5
Other (0.3) (4.5)
Total Primary Sales 1.7 0.3
Losses and Company Use 2.4 (13.5)
Total System Requirements 1.7 (0.5)
Unit Contracts (54.2) 23.0
Total Energy Sales (15.5) 5.7
Expenses 1993 vs. 1992
Fuel And Purchased Power: The EUA System's most significant expense items
continue to be fuel and purchased power expenses of our Core Electric Business
which together comprised about 45.8% of total operating expenses for 1993.
Fuel expense decreased approximately $11.5 million or 11.9%, from 1992, due
largely to a decrease in total System generation resulting from outages
experienced by company-owned units. Canal Unit 2, which is 50% owned by
Montaup, began a scheduled outage on February 13, 1993, and returned to service
on April 5, 1993 while Somerset Unit No. 6, a wholly-owned unit of Montaup, was
out of service for most of 1993 due to unanticipated waterwall restoration.
Also, Somerset Unit 5 was out of service for five months prior to being placed
in deactivated reserve on January 25, 1994. Offsetting these impacts on fuel
expense somewhat was a 3.7% increase in Montaup's average cost of fuel for the
period.
Purchased Power expense decreased $2.3 million or 1.6%, as compared to 1992.
The decrease was caused primarily by a $2.9 million decrease in conservation and
load management (C&LM) expense recorded as purchased power and a $1.0 million
decrease attributable to Newport purchases from sources other than Montaup.
Offsetting these decreases somewhat were the increased costs of $1.6 million
billed by Montaup's suppliers.
Operation And Maintenance: Overview: Other Operation and Maintenance (O&M)
expenses for 1993 totaled $182.1 million an increase of $29.2 million over 1992.
Total O&M expenses are comprised of three components-Direct Controllable,
Indirect and Energy Related. Changes in these components for 1993 were as
follows:
Increase
1993 1992 (Decrease)
(In Millions of Dollars)
Direct Controllable $ 82.7 $ 88.5 $ (5.8)
Indirect 50.6 36.6 14.0
Energy Related 48.8 27.8 21.0
Total O&M $ 182.1 $ 152.9 $ 29.2
Direct Controllable expenses of our Core Electric and Corporate Business Units
represent 45% of total O&M and include expense items such as: salaries, fringe
benefits, insurance, maintenance, etc. The reduction in Direct Controllable
expenses in 1993 reflects our continued commitment to cost control. Our core
electric workforce was reduced an additional 5% in 1993 and through the
diligent efforts of our employees we were able to reduce direct controllable
expenses in spite of an increase in the Consumer Price Index of approximately
3%.
Indirect expenses include items over which we have limited short-term control.
Indirects would include such expense items as: O&M expenses related to EUA's
ownership interests in nuclear generating facilities such as Seabrook Unit 1
and Millstone Unit 3 (see Note I of Notes to Consolidated Financial Statements
for other jointly owned units), power contracts where transmission rental fees
are fixed, conservation and load management expenses that are fully recovered
in revenues and expenses related to new accounting standards such as FAS87 and
FAS106, to name a few.
The Energy Related component relates to O&M expenses of our Energy Related
Business Unit where increases are tied to new and expanded business activity.
EUA Cogenex continues to be the fastest growing company in this Business Unit
as is reflected by its acquisitions of three smaller companies over the past
13 months.
The increase of $29.2 million in 1993 was due primarily to the following:
Core Electric Business: (i) increased C&LM expenses of $4.1 million; (ii)
additional expenses of approximately $3.5 million relating to EUA's adoption of
FAS106 (iii) increases of approximately $1.5 million relating to pension
accrual; and (iv) increased eased expenses of approximately $3.9 million
relating to Montaup's jointly owned units.
Energy Related Business: (i) increased EUA Cogenex expenses of approximately
$19.3 million, relating primarily to the operations of its EUA Nova division;
and (ii) increased expenses of $2.2 million related to EUA Energy's expensing
of its initial investment in TransCapacity L.P.
Corporate: The increases discussed above were offset somewhat by decreases of
approximately $3.7 million in corporate legal expenses due primarily to the
fourth quarter 1992 settlement of legal proceedings related to EUA Power.
Interest Charges: Interest on long-term debt for 1993 decreased approximately
$4.1 million or 9%, compared to 1992. This decrease is due, in part, to
Eastern Edison's redemption of $30 million of 9-1/4% First Mortgage and
Collateral Trust Bonds (FMBs) in May 1992 and $15 million of 8-1/2% FMBs in
June 1992. The redemptions were made primarily with cash proceeds from the
early redemption of Montaup securities, which were owned by Eastern Edison.
Eastern Edison also refinanced $35 million of 10% FMBs with $35 million of
7.78% Medium Term Notes in July 1992. See "System Financing Activity" for
additional factors contributing to the decline in long-term debt interest
expense.
Offsetting these declines somewhat was the issuance by EUA Cogenex of $15
million of 7.22% Unsecured Notes in September 1992 and $50 million of 7%
Unsecured Notes in October 1993.
Income Taxes: EUA files a consolidated federal income tax return for the EUA
System. EUA's 1993 composite federal and state effective tax rate was
approximately 27.3% as compared to approximately 32.4% in 1992. This decrease
is primarily attributable to the income recognition of a portion of the expected
utilization of EUA Power's investment tax credits to reduce EUA's 1993
consolidated tax liability. These tax credits amounted to approximately $4.9
million in 1993 and are included in Other Income (Deductions) - Net. The
decrease more than offset the 1% increase in the federal tax rate to 35% in
1993.
Other Items: Depreciation and Amortization increased by $1.9 million or 4.4%
due primarily to an increase in EUA Cogenex depreciation expense of $1.3
million. Allowance for Funds Used during Construction (AFUDC) represents a
non-cash element of income and amounted to only 5.3% of Consolidated Net
Earnings in 1993. Total AFUDC and capitalized interest for 1993 did not
significantly change from the 1992 level.
Equity in Earnings of Jointly Owned Companies decreased in 1993 by
approximately $2.7 million due primarily to lower earnings on EUA Ocean State
Corporation's (EUA Ocean State) investment in the Ocean State Power Project.
Other Income (Deductions)-Net decreased by $2.3 million in 1993 due primarily
to the 1992 reversal of certain previously established reserves relating to
matters in litigation, the favorable resolution of which was reached in 1992.
Partially offsetting this decrease was a reduction in federal income tax
expense of $4.9 million as discussed above.
The Preferred Dividend requirement of the retail subsidiaries decreased by
approximately $700,000 or 18% in 1993 due to Eastern Edison's 1993 Preferred
Stock financing activity. See "EUA System Financing Activity" for further
discussion.
Inflation continues to have an impact on the operation of our System. At the
federal level, wholesale ratemaking practices permit a forward looking test
period which enables us to anticipate inflationary increases. The traditional
use of an historical test period for retail ratemaking purposes in
Massachusetts does not provide us this opportunity.
Expenses 1992 vs. 1991
Fuel And Purchased Power: Fuel expense decreased $2.3 million, or 2.3%, when
compared to 1991. This change was due to the offsetting effects of a 6%
decrease in the average cost of fuel due to greater usage of less expensive
natural gas in 1992 and an increase in total energy sales of 5.7% due primarily
to unit contract and system sales.
Purchased power expense decreased $1.9 million to $141.8 million in 1992 due
primarily to $9.5 million of credits recognized by EUA's retail subsidiaries in
1992 relating to prior period billings. These credits were offset somewhat by
an increase in net purchases under expiring and new purchased power contracts
(including OSP Unit II) aggregating $4.6 million, increased purchased power
costs billed by power suppliers of Montaup and Newport aggregating $800,000,
and an increase in C&LM expense o f $2.1 million.
Operation And Maintenance: Other operation and maintenance expenses increased
$16.1 million, or 11.8%, in 1992 over 1991 due primarily to a $14.6 million
increase in EUA Cogenex partnership expenses. Also contributing to the change
was the offsetting impacts of an increase of $4.7 million in Corporate legal
expenses and decrease of $3.4 million in Eastern Edison amortization expense.
Previously deferred costs of Eastern Edison, including Hurricane Gloria and
computer conversion costs, became fully amortized in December 1991.
Interest Charges: Interest expense on long-term debt increased by $3 million,
or 6.9%, in 1992 as compared to 1991. This increase was due to new issuances
of long-term debt in 1992 along with EUA Cogenex's October 1991 issuance of $20
million of 9.6% Unsecured Notes. Partially offsetting this increase was the
interest savings resulting from 1992 refinancing and redemption activity of the
Core Electric Business.
Other Items: Depreciation and amortization expense increased by $1.1 million,
or 2.6%, in 1992 over 1991 primarily due to an increase in depreciable plant of
our Core Electric Business and an increase in depreciation expense of EUA
Cogenex partnerships.
Total AFUDC and capitalized interest, which represented 6.9% of 1992
Consolidated Net Earnings, decreased $242,000 from 1991 due primarily to lower
AFUDC rates used in 1992.
The increase in Equity Earnings of Jointly Owned Companies in 1992 relates
primarily to EUA Ocean State's equity earnings from its investment in OSP.
Other Income and (Deductions) - Net increased $6.9 million in 1992 when
compared with 1991. The increase was primarily due to the following: (i) a net
reduction of $4.3 million in the level of reserves to be established under
generally accepted accounting principles relating to certain matters in
litigation, the favorable resolution of which was reached in 1992; (ii) an
increase of $1.2 million in EUA Cogenex's interest income and other income;
and, (iii) a decrease of $1.7 million in costs incurred for litigation from
1991 levels. These factors were partially offset by a reduction in the
amount of income tax credits allocated to this account in 1991 as a result
of the utilization of EUA Parent tax losses incurred in 1991.
Core Electric Business Rate Activity
Montaup expects to file a rate reduction application with the Federal Energy
Regulatory Commission. This application will match more closely Montaup's
revenues with its decreasing cost of doing business resulting from, among other
things, a reduced rate base, lower capital costs and successful cost control
efforts. The application will also include a request for recovery of all of
Montaup's FAS106 expenses as provided in FERC's generic order of December 1992.
A decision on this application is expected during the second half of 1994.
EUA System Financing Activity
Core Electric Business: As shown on the accompanying Consolidated Statement of
Indebtedness, Eastern Edison issued new FMBs and Tax-Exempt Securities
aggregating $195 million during 1993, the proceeds of which were used to redeem
a like amount of higher cost debt.
1993 Long-Term Debt Activity
(Excluding sinking fund payments)
(Dollar Amounts in Millions) Issuances Redemptions
Eastern Edison May $20 at 5 7/8% June $ 10 at 8 3/8%
Refinancings $40 at 6 7/8% $ 35 at 10 1/8%
$40 at 8% July $ 55 at 9 5/8%
July $40 at 5 7/8% Aug. $ 40 at 10 1/8%
$40 at 5 3/4% Sept. $ 40 at 9 7/8%
Sept. $ 7 at 4 7/8% Oct. $ 7 at 6 1/2%
$ 8 at 6.35% $ 8 at 7 7/8%
Eastern Edison Oct. $ 5 at 4 1/2%
Maturity:
Eastern Edison June $ 5 at 8 3/8%
Redemption:
Newport March $0.6 at 10 %
Redemption: $1.4 at 11 1/2%
Cogenex Oct. $50 at 7%
Issuance:
In 1993 Eastern Edison used available cash to redeem all of its outstanding
4.64%, 8.32% and 9.00% series of Preferred Stock aggregating $21.6 million, and
$10 million of FMBs.
Eastern Edison also issued $30 million of 6 5/8% Preferred Stock in August,
the proceeds of which were used to redeem $20 million of its 9.80% Preferred
Stock and for other corporate purposes.
On January 6, 1994, Newport issued $7.9 million of variable rate Electric
Energy Facilities Revenue Refunding Bonds due 2011. The proceeds were used to
redeem $6.0 million of 12% Series Energy Facilities Revenue Bonds and $1.9
million of 8.5% Series Energy Facilities Revenue Bonds.
Energy Related Business: In October 1993, EUA Cogenex issued $50 million of 7%
Unsecured Notes due September 15, 2000. Proceeds were used to retire all
outstanding short-term bank loans and repay a portion of its short-term loans
to EUA.
Corporate: A sale of 1.3 million new common shares of EUA in April 1993
resulted in net proceeds to EUA of approximately $35.1 million. These funds
were used to reduce EUA's short-term bank debt.
In addition to its public offering, EUA received proceeds in 1993 of
approximately $10.1 million from the issuance and sale of 385,825 common shares
primarily through its Dividend Reinvestment and Common Share Purchase Plans.
In 1993 EUA registered 1.5 million common shares with the Securities and
Exchange Commission (SEC) to be issued in connection with possible EUA Cogenex
acquisitions, of which 108,985 were issued in connection with the December 1993
acquisition of James L. Day Co. Inc. (Day Co.) and 464,579 were issued in
connection with the January 1994 acquisition of Northeast Energy Management,
Inc (NEM). See "Energy Related Businesses" below for more details.
Financial Condition And Liquidity
The EUA System's need for permanent capital is primarily related to investments
in facilities required to meet the needs of its existing and future customers.
Core Electric Business: For 1993, 1992 and 1991, the Core Electric Business
cash construction expenditures were $31.9 million, $21.8 million and $29.4
million, respectively. Cash construction expenditures for 1994, 1995 and 1996
are estimated to be approximately $44.2 million, $38.4 million and $40.6
million, respectively.
In the utility industry, cash construction requirements beyond those
satisfied with internally generated funds are customarily funded with
short-term borrowings, which are ultimately funded with permanent capital.
In 1993, internally generated funds available after the payment of dividends of
our Core Electric Business amounted to $51.8 million, or 162.3% of its cash
construction requirements.
CASH CONSTRUCTION EXPENDITURES/INTERNALLY GENERATED FUNDS
"Bar chart depicting cash construction expenditures and internally
generated Funds for 1989, 1990, 1991, 1992 and 1993 as follows:"
(in millions) Cash Internally
Construction Generated
Expenditures Funds
1989 $75,861 $32,734
1990(1) $59,929 $35,024
1991 $46,652 $63,681
1992 $42,209 $53,256
1993 $60,767 $84,290
(1) Excludes EUA Power Cash Interest Payments
In 1992, internally generated funds amounted to $53.5 million or 240.7% of
the cash construction requirements of our Core Electric Business. Various
laws, regulations and contract provisions limit the use of EUA's internally
generated funds such that the funds generated by one subsidiary are not
generally available to fund the operations of another subsidiary.
Internally generated funds are expected to supply approximately 130% of 1994
estimated cash construction requirements of the Core Electric Business.
In addition to construction expenditures, projected requirements for
scheduled cash sinking fund payments and mandatory redemption of securities in
1994, 1995 and 1996 are $1.9 million, $37.4 million, and $9.4 million,
respectively.
Energy Related Business: Construction expenditures of our Energy Related
Business amounted to $28.5 million, $32.6 million and $27.8 million in 1993,
1992, and 1991, respectively. In addition, investments in energy related
facilities, primarily those of EUA Cogenex and EUA Ocean State for 1993,
1992, and 1991 amounted to approximately $13.2 million, $17.2 million and
$39.9 million.
Estimated construction expenditures of the Energy Related Business are $42.4
million, $49.0 million and $49.5 million for 1994, 1995, and 1996,
respectively.
In addition, energy related investments of EUA Cogenex for the years 1994
through 1996 are estimated to be $11.3 million, $10.0 million, and $10.0
million, respectively.
Internally generated funds are expected to supply approximately 70% of 1994
estimated cash construction requirements. Continued growth at EUA Cogenex may
require some external financing in 1994 which would require regulatory
approval.
In addition to construction expenditures and energy related investments,
projected requirements for scheduled cash sinking fund payments and mandatory
redemption of securities in 1994, 1995 and 1996 are $2.5 million, $3.3
million, and $9.2 million, respectively.
Corporate: Projected requirements for scheduled cash sinking fund payments
for the corporate operations for each of the three years following 1993 are
$1.1 million.
Short-Term Lines of Credit: At December 31, 1993, EUA System companies
maintained short-term lines of credit with various banks aggregating
approximately $140 million. Short-term debt outstanding at year's end was
$37.2 million, a decrease of $72.8 million from year end 1992 balances.
Year End Short-Term Debt Outstanding By Business Unit ($000's):
1993 1992
Core Electric Business $ 0 $ 0
Energy Related Business 8,588 42,688
Corporate 28,580 67,248
$37,168 $109,936
The decrease in short-term debt is due to 1993 system financing activity as
previously discussed. EUA expects to repay the outstanding balances of
indebtedness through internally generated funds, the issuance of additional
common shares through its Dividend Reinvestment and Common Share Purchase
Plan, and the possible issuance of additional EUA Cogenex Debt securities
which, as noted above, would require further regulatory approval.
Energy Related Businesses
Net Earnings and Earnings Per Share
Contributions of EUA's Energy Related Businesses:
1993 1992
Net Net
Earnings Earnings Earnings Earnings
(000's) Per Share (000's) Per Share
EUA Cogenex $3,536 $0.19 $2,839 $0.17
EUA Ocean State 5,258 0.29 7,043 0.41
EUA Energy Investment (1,551) (0.09) (114) (0.01)
Energy Related Business $7,243 $0.39 $9,768 $0.57
EUA Cogenex: EUA Cogenex participates in energy conservation and cogeneration
projects in 32 states and the District of Columbia. EUA Cogenex's contribution
to earnings increased by 24.5% in 1993 due primarily to operations of its EUA
Nova Division, acquired in December 1992, and increased business activity.
REGULATION - PERCENT OF REVENUES
"Two pie charts depicting Regulation of Revenues for 1989 and 1993 as
follows:
(amounts in %) 1989 1993
Federal Energy Regulatory Commission 73 61
Rhode Island Public Utilities Commission 9 15
Massachusetts Department of Public
Utilities and Carries 16 12
EUA Cogenex Corporation 2 12
EUA Cogenex continues to grow its business strategically as evidenced by two
recent acquisitions. In December 1993, EUA Cogenex completed its acquisition
of Day Co., of Victor, N.Y. Renamed EUA Day and operating as a division of
EUA Cogenex, the company is primarily engaged in the business of
customization, installation and servicing of building temperature control
systems for the purpose of energy conservation. The acquisition will enable
EUA Cogenex to increase its market share in building control systems and
provide customers with additional expertise in system customization and
enhanced applications.
In January 1994, EUA Cogenex completed the acquisition of NEM of Brunswick,
Me. NEM is an energy services and demand side management contracting company
operating as a wholly-owned subsidiary of EUA Cogenex.
The acquisitions were accomplished by the exchange of common stock of Day
Co. and NEM to EUA Cogenex for common shares of EUA.
EUA Cogenex revenues are still subject to the SEC requirement that it earn
more than 50% of its revenues in the New England/New York area, not including
revenues derived from development of qualifying cogeneration facilities and
qualifying small power production facilities. To date, revenues have
continued to grow within the New England/New York area so that they have not
limited EUA Cogenex's growth outside that area. For the year ended December
31, 1993, approximately 72% of EUA Cogenex's revenues subject to this
restriction were generated from within the New England/New York area. The Day
Co. and NEM acquisitions will provide additional revenues from the New
England/New York area in 1994 and beyond. Nevertheless, EUA Cogenex is
actively pursuing legislative action and may pursue regulatory action to
mitigate any future negative impact that current geographic requirements may
have on future revenues. If EUA Cogenex's endeavors are unsuccessful,
revenues from outside the New England/New York area may be restricted.
EUA Ocean State: EUA Ocean State owns 29.9% of each of the partnerships which
developed and operate Units I and II of OSP, twin 250-megawatt gas-fired
generating units located in northern Rhode Island. Both units have provided a
premium return since their respective in-service dates of December 31, 1990,
and October 1, 1991. The decrease in EUA Ocean State's earnings contribution
was due primarily to a decrease in the allowed rate of return on equity billed
by the project, slightly lower performance bonuses in 1993 and a decrease in
the rate base and investment base from which the project's rates are
determined.
EUA Energy Investment: EUA Energy Investment was organized to seek out
investments in energy related businesses. Prior to 1993 the company had been,
for all intents and purposes, an inactive subsidiary of EUA. The $1.5 million
loss in 1993 was related to the expensing of all of EUA Energy's initial
investment in TransCapacity L.P. The partnership will develop and market a
computer software system for the collection, compilation and distribution of
information regarding natural gas pipeline capacity and capacity rights. The
system developed by TransCapacity L.P. will allow customers to quickly sort
and process the information supplied by gas pipelines in compliance with FERC
Order 636.
Under FERC Order 636, natural gas capacity rights information will no longer
be proprietary and must be made accessible to the public in a non-
discriminatory manner. It is anticipated that the system will be operational
by June 1, 1994.
FUEL MIX
"Three pie charts depict Fuel Mix for 1989, 1993 and 1998 as follows:"
(amounts in %) 1989 1993 1998
Oil 44 28 20
Gas - 26 31
Coal 29 6 13
Nuclear 27 34 30
Other - principally hydro - 6 6
Operations The EUA System's fuel mix continues to be diverse. Nuclear power
supplied 34% of EUA's energy needs in 1993, matching its 1992 contribution and
continuing as EUA's largest and lowest cost fuel source. Natural gas supplied
26% of EUA's energy requirements in 1993 down from the 29% of 1992. The
system again increased its hydroelectric capacity in 1993 through Montaup's
and Newport's 4.06% aggregate share in the Hydro Quebec Phase II energy
agreement with the New England Power Pool. Hydroelectric facilities
accounted for 6% of the System's energy in 1993.
Oil provided 28% of energy needs in 1993, up from its 13% contribution in
1992. This increase is due mainly to the unanticipated outages at Montaup's
coal fired Somerset Units. As a result, coal supplied only 6% of our energy
needs in 1993, down from 19% in 1992. EUA currently projects that gas will
supply approximately 31% of its energy needs by 1998; nuclear, approximately
30%; coal, approximately 14%; and oil, approximately 19%. The balance will
come from a combination of hydroelectric power and such non-traditional
sources as cogeneration and independent power producers.
On January 25, 1994 Montaup announced that its 42-year-old, 69-mw Somerset
Station Unit #5 had been placed in deactivated reserve. This unit had been
out of service for the prior five months due to mechanical problems. Montaup
has determined that the costs to repair the Unit and to bring it into
compliance with Clean Air Act requirements would not be economical. Montaup's
net plant investment in the unit was $6.4 million at December 31, 1993.
Current forecasts indicate that with a combination of owned generation,
current long-term purchased power contracts, expected short-term purchased
power opportunities and the EUA System's C&LM programs, no additional capacity
requirements will be needed through the year 1999.
Conservation And Load Management
The EUA System offers customers a comprehensive set of C&LM programs. These
programs provide EUA with a flexible, cost effective resource option, while
serving customers with valued cost control opportunities to develop and
maintain a competitive advantage within our service territories. The
programs also offer opportunities to EUA and our customers to comply with
environmental standards and reduce air emissions.
During 1993, 23,272 customers participated in one or more of the EUA System
C&LM programs, resulting in 38,309 megawatthours of annual energy savings. In
addition, the programs delivered a reduction in customers' demand of 7,028
kilowatts in 1993 and provided the long-term benefits of reducing the need to
invest in costly new generating facilities.
Environmental Matters
The federal Environmental Protection Agency (EPA), as well as state and local
authorities, have jurisdiction over releases of pollutants into the
environment. They have broad authority to set rules and regulations,
including the required installation of pollution control devices and remedial
actions. The EPA has updated its clean air standards regulating the emissions
from utility power plants into the air, to take effect in 1995. Tests at
Montaup's Somerset Station indicate that Unit #6 will be able to utilize lower
sulfur coal than is already being burned to meet the 1995 air standards with
only a minimal capital investment. Montaup determined that it would not be
economical to repair Unit # 5 of the Somerset Station and has placed it in
deactivated reserve. (See above).
In April 1992, the Northeast States for Coordinated Air Use Management
(NESCAUM), an environmental advisory group for eight Northeast states
including Massachusetts and Rhode Island, issued recommendations for nitrogen
oxide (NOx) controls for existing utility boilers required to meet the ozone
non-attainment requirements of the Clean Air Act Amendments of 1990 (Clean Air
Act). The NESCAUM recommendations are more restrictive than the Clean Air Act
requirements. The Massachusetts Department of Environmental Management has
amended its regulations to require that Reasonably Available Control
Technology be implemented at all stationary sources potentially emitting 50
tons or more per year of NOx. Rhode Island has not yet issued regulations to
implement NOx reduction requirements. Montaup is in the process of reviewing
compliance strategies. Any compliance strategy may require the implementation
of additional pollution control technology as early as 1995. Montaup would
seek recovery of pollution control expenditures through rates.
Because of the nature of the EUA System's business, various by-products and
substances are produced or handled which are classified as hazardous under the
rules and regulations promulgated by the EPA as well as state and local
authorities. The EUA System generally provides for the disposal of such
substances through licensed contractors, but these statutory provisions
generally impose potential joint and several responsibility on the generators
of the wastes for cleanup costs. Subsidiaries of EUA have been notified with
respect to a number of sites where they may be responsible for such costs,
including sites where they may have joint and several liability with other
responsible parties. It is the policy of the EUA System companies to notify
liability insurers and to initiate claims; at this time, however, no claims
have been filed against any insurer and EUA is unable to predict whether
liability, if any, will be assumed by, or can be enforced against, the
insurance carrier in these matters.
As of December 31, 1993, the EUA System has incurred costs of approximately
$2.8 million in connection with these sites. Of this amount, approximately
$2.7 million relates to Blackstone. These amounts have been financed
primarily by internally generated cash. Blackstone is currently amortizing
substantially all of its incurred costs over a five-year period and recovering
those costs in rates.
EUA estimates that additional costs ranging from $2.0 million to $9.2
million may be incurred at these sites through 1995 by its subsidiaries and the
other responsible parties. Of this amount, approximately $8.4 million relates
to sites at which Blackstone is a potentially responsible party. Estimates
beyond 1995 cannot be made since site studies, which are the basis of these
estimates, have not been completed.
As a result of the recoverability of cleanup costs in rates and the
uncertainty regarding both its estimated liability, as well as its potential
contributions from insurance carriers and other responsible parties, EUA does
not believe that the ultimate impact of the environmental costs will be
material to the EUA System or to any individual subsidiary and thus no loss
accrual has been made at this time.
A number of scientific studies in the past several years have examined the
possibility of health effects from electric and magnetic fields (EMF) that are
found everywhere there is electricity. While some of the studies have
indicated there may be so me association between exposure to EMF and health
effects, many studies have indicated no direct association. In addition, the
research to date has not conclusively established a direct causal relationship
between EMF exposure and human health. Additional studies, which are
intended to provide a better understanding of the subject, are continuing.
Some states have enacted regulations to limit the strength of magnetic
fields at the edge of transmission line rights-of-way. Rhode Island has
enacted a statute which authorizes and directs the Energy Facility Siting
Board to establish rules and regulations governing construction of high
voltage transmission lines of 69kv or more. Various bills are pending in the
Massachusetts Legislature that would require certain disclosures about the
potential health effects of EMF. Management cannot predict the ultimate
outcome of the EMF issue.
Changes In Accounting Standards
The EUA System adopted FAS106, "Accounting for Post-Retirement Benefits Other
Than Pensions," as of January 1, 1993. This standard establishes accounting
and reporting standards for such post-retirement benefits as health care and
life insurance. FAS106 further requires the accrual of the cost of such
benefits during an employee's years of service and the recognition of the
actuarially determined total post-retirement benefit obligations (Transition
Obligation) earned by existing employees and retirees. Previously, EUA
followed the "pay-as-you-go" methodology of accounting for such costs. EUA
elected to recognize the Transition Obligation over a period of 20 years, as
permitted by FAS106. The resultant annual expense, including amortization of
the Transition Obligation and net of capitalized amounts, was approximately
$8.1 million in 1993. Regulatory decisions issued in December 1992 permitted
EUA's retail subsidiaries to recover through rates approximately $3.5 million
of this a mount in 1993. As a result of the December 1992 regulatory
decisions, EUA's retail subsidiaries established a regulatory asset of
approximately $1.5 million in 1993 due to the future recoverability of such
amounts. Montaup was allowed to defer FAS106 related expenses through 1995
or until it filed for recovery of such amounts prior to that time.
Accordingly approximately $1.4 million of FAS106 related expenses were
deferred by Montaup in 1993. Montaup will request recovery of all of its
FAS106 expenses, including amortization of deferred amounts in its
March 1994 rate application. The EUA system has also established an
irrevocable external Voluntary Employee Benefit Association Trust Fund as
required by the aforementioned regulatory decisions. Contributions to the
fund began in March 1993 and totaled approximately $6.0 million during 1993.
Effective January 1993, EUA adopted FASB Statement No. 109, "Accounting for
Income Taxes" (FAS109), which essentially supersedes its Statement No. 96
(FAS96). As a result of the adoption of FAS96 in 1990, FAS109 resulted only
in the reclassification of certain assets and liabilities and did not
significantly impact EUA.
In November 1992, FASB issued Statement No. 112, "Employers' Accounting for
Post-employment Benefits." EUA is required to adopt this standard no later
than January 1, 1994. The estimated impact of this standard on EUA System is
immaterial and therefore it is anticipated that no liability will be recorded.
Other
Montaup is recovering through rates its share of estimated decommissioning
costs for the Millstone Unit 3 and Seabrook Unit 1 nuclear generating units.
Montaup's share of the currently allowed estimated total costs to decommission
Millstone Unit 3 is approximately $15.1 million in 1993 dollars and Seabrook
Unit 1 is approximately $10.6 million in 1993 dollars. These figures are based
on studies performed for the lead owners of the units. Montaup also pays into
decommissioning reserves, pursuant to contractual arrangements, at other
nuclear generating facilities in which it has an equity ownership interest or
life-of-unit entitlement. Such expenses are currently recovered through rates.
In December 1992, Montaup commenced a declaratory judgment action in which
it sought to have the Massachusetts Superior Court determine its rights under
the Power Purchase Agreement between it and Aquidneck Power Limited
Partnership (Aquidneck). Montaup sought a declaration that the Power
Purchase Agreement was binding on the parties according to its terms.
Aquidneck asserted, in effect, that Montaup had either an express or implied
obligation to negotiate new terms and conditions to the Power Purchase
Agreement.
In January 1994, a counterclaim by Aquidneck claimed certain breaches of the
Power Purchase Agreement, including an alleged failure on the part of Montaup
to renegotiate the terms and conditions of the Power Purchase Agreement. Also
in January 1994, Aquidneck sought to join EUA and EUA Service Corporation as
parties to the suit.
Montaup, EUA and EUA Service intend to defend the counterclaim vigorously and
believe that Aquidneck's claims have no basis in law.
Financial Table Of Contents
Consolidated Statement of Income 20
Consolidated Statement of Cash Flows 21
Consolidated Balance Sheet 22
Consolidated Statement of Retained Earnings 23
Consolidated Statement of Equity Capital and Preferred Stock 23
Consolidated Statement of Indebtedness 24
Notes to Consolidated Financial Statements 25
Report of Independent Accountants 36
Report of Management 36
Quarterly Financial and Common Share Information 37
Consolidated Operating and Financial Statistics 38
Shareholder Information 40
Trustees and Officers Inside Back Cover
Consolidated Statement Of Income
<TABLE>
<S> <C> <C> <C>
Years Ended December 31,
(In Thousands Except Common Shares and per Share Amounts) 1993 1992 1991
OPERATING REVENUES $ 566,477 $ 541,964 $ 522,583
OPERATING EXPENSES:
Fuel 85,218 96,767 99,075
Purchased Power-Demand 139,524 141,829 143,775
Other Operation 156,972 131,348 114,832
Maintenance 25,148 21,589 21,956
Depreciation and Amortization 44,722 42,824 41,759
Taxes - Other Than Income 24,468 23,785 22,486
Income Taxes 15,019 19,475 12,364
Total Operating Expenses 491,071 477,617 456,247
Operating Income 75,406 64,347 66,336
Equity in Earnings of Jointly Owned Companies 14,140 16,790 10,975
Allowance for Other Funds Used
During Construction 379 549 616
Other Income (Deductions) - Net 3,898 6,184 (739)
Income Before Interest Charges 93,823 87,870 77,188
INTEREST CHARGES:
Interest on Long-Term Debt 41,530 45,646 42,691
Amortization of Debt Expense and Premium - Net 1,904 1,184 1,108
Other Interest Expense 4,137 4,703 4,960
Allowance for Borrowed Funds Used During
Construction (Credit) (1,989) (1,813) (1,988)
Net Interest Charges 45,582 49,720 46,771
Net Income 48,241 38,150 30,417
Preferred Dividends of Subsidiaries 3,310 4,039 4,157
Consolidated Net Earnings $ 44,931 $ 34,111 $ 26,260
Average Common Shares Outstanding 18,391,147 17,039,224 16,608,090
Consolidated Earnings per Share $ 2.44 $ 2.00 $ 1.58
Dividends Paid per Share $ 1.42 $ 1.36 $ 1.45
</TABLE>
The accompanying notes are an integral part of the financial statements.
Consolidated Statement Of Cash Flows
<TABLE>
<S> <C> <C> <C>
Years Ended December 31,
(In Thousands) 1993 1992 1991
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 48,241 $ 38,150 $ 30,417
Adjustments to Reconcile Net Income
to Net Cash Provided from Operating Activities:
Depreciation and Amortization 50,492 47,492 49,800
Amortization of Nuclear Fuel 5,136 5,054 4,219
Deferred Taxes 11,099 (3,645) 12,228
Investment Tax Credit, Net (1,279) (1,452) 83
Allowance for Funds Used During Construction (2,368) (2,362) (2,604)
Other - Net 13,010 22,175 (1,642)
Changes in Operating Assets and Liabilities:
Accounts Receivable (9,609) 6,572 (13,468)
Notes Receivable (5,603) 2,181 (8,676)
Materials and Supplies 452 (629) 5,221
Accounts Payable (1,885) 5,138 (7,665)
Taxes Accrued 3,382 1,610 4,491
Other - Net (10,154) (4,593) 3,290
Net Cash Provided from Operating Activities 100,914 115,691 75,694
CASH FLOW FROM INVESTING ACTIVITIES:
Construction Expenditures (60,767) (55,736) (57,570)
Increase in Other Investments (13,244) (17,205) (39,888)
EUA Power Obligations Paid by EUA (37,522)
EUA Power Settlement (20,000)
Net Cash Used in Investing Activities (74,011) (92,941) (134,980)
CASH FLOW FROM FINANCING ACTIVITIES:
Issuances:
Common Shares 46,313 8,738 9,532
Long-Term Debt 245,000 50,000 66,000
Preferred Stock 30,000
Redemptions:
Long-Term Debt (214,809) (86,203) (2,170)
Preferred Stock (41,700) (1,300) (1,300)
Premium on Reacquisition and
Financing Expenses (14,956) (3,783) (942)
EUA Common Share Dividends Paid (26,101) (23,114) (23,952)
Subsidiary Preferred Dividends Paid (3,316) (4,039) (4,157)
Net (Decrease) Increase in Short-Term Debt (72,768) 37,487 29,378
Net Cash (Used in) Provided from Financing Activities (52,337) (22,214) 72,389
NET INCREASE IN CASH AND
TEMPORARY CASH INVESTMENTS: (25,434) 536 13,103
Cash and Temporary Cash Investments at Beginning of Year 29,614 29,078 15,975
Cash and Temporary Cash Investments at End of Year $ 4,180 $ 29,614 $ 29,078
Cash Paid during the year for:
Interest (Net of Amounts Capitalized) $ 45,057 $ 47,132 $ 45,236
Income Taxes $ 12,919 $ 897 $ 4,842
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
Consolidated Balance Sheet
December 31,
(In Thousands) 1993 1992
<S> <C> <C>
ASSETS
Utility Plant and Other Investments:
Utility Plant in Service $ 1,016,453 $ 1,002,717
Less Accumulated Provisions for Depreciation and Amortization 296,995 274,725
Net Utility Plant in Service 719,458 727,992
Construction Work in Progress 8,728 4,943
Net Utility Plant 728,186 732,935
Non-utility Property - Net 99,791 87,276
Investments in Jointly Owned Companies 73,632 76,841
Other 51,282 38,492
Total Utility Plant and Other Investments 952,891 935,544
Current Assets:
Cash and Temporary Cash Investments 4,180 29,614
Accounts Receivable:
Customers, Net 57,473 54,408
Accrued Unbilled Revenues 10,481 9,624
Other 16,885 11,199
Notes Receivable 16,407 10,804
Materials and Supplies (at average cost):
Fuel 6,411 7,286
Plant Materials and Operating Supplies 6,722 6,298
Other Current Assets 16,340 19,820
Total Current Assets 134,899 149,053
Other Assets 115,347 118,723
Total Assets $ 1,203,137 $ 1,203,320
LIABILITIES AND CAPITALIZATION
Capitalization:
Common Equity $ 333,165 $ 266,855
Non-Redeemable Preferred Stock of Subsidiaries - Net 6,900 15,850
Redeemable Preferred Stock of Subsidiaries - Net 25,053 28,496
Long-Term Debt - Net 496,816 462,958
Total Capitalization 861,934 774,159
Current Liabilities:
Notes Payable - Banks 37,168 109,936
Long-Term Debt Due Within One Year 5,415 9,943
Accounts Payable 36,111 37,996
Redeemable Preferred Stock Sinking Fund Requirement 50 1,450
Taxes Accrued 12,299 8,917
Interest Accrued 10,688 13,410
Other Current Liabilities 19,285 30,196
Total Current Liabilities 121,016 211,848
Other Liabilities 82,747 81,393
Accumulated Deferred Taxes 137,440 135,920
Commitments and Contingencies (Note K)
Total Liabilities and Capitalization $ 1,203,137 $ 1,203,320
</TABLE>
The accompanying notes are an integral part of the financial statements.
Consolidated Statement Of Retained Earnings
<TABLE>
<S> <C> <C> <C>
Years Ended December 31,
(In Thousands) 1993 1992 1991
Retained Earnings (Deficit) - Beginning of Year $ 21,434 $ 11,053 $ (78,313)
Accounting Reorganization 80,035
Consolidated Net Earnings 44,931 34,111 26,260
Total 66,365 45,164 27,982
Dividends Paid - EUA Common Shares 26,101 23,114 16,316
Other 622 616 613
Retained Earnings -
Accumulated since June 1991 Accounting Reorganization
in which a deficit of $80,034,506 was eliminated. $ 39,642 $ 21,434 $ 11,053
</TABLE>
Consolidated Statement Of Equity Capital & Preferred Stock
<TABLE>
<S> <C> <C>
December 31,
(Dollar Amounts In Thousands) 1993 1992
EASTERN UTILITIES ASSOCIATES:
Common Shares:
$5 par value 36,000,000 shares authorized, 19,032,598 shares
outstanding in 1993 and 17,237,788 shares in 1992. $ 95,163 $ 86,189
Other Paid-In Capital 202,182 161,590
Common Share Expense (3,822) (2,358)
Retained Earnings Accumulated since June 1991 Accounting
Reorganization in which a deficit of $80,034,506 was eliminated. 39,642 21,434
Total Common Equity 333,165 266,855
CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES:
Non-Redeemable Preferred:
Blackstone Valley Electric Company:
4.25% $100 par value 35,000 shares (1) 3,500 3,500
5.60% $100 par value 25,000 shares (1) 2,500 2,500
Premium 129 129
Eastern Edison Company:
4.64% $100 par value 60,000 shares (1) 6,000
8.32% $100 par value 30,000 shares (1) 3,000
Expense, Net of Premium (50)
Newport Electric Corporation:
3.75% $100 par value 7,689 shares (1) 769 769
Premium 2 2
Total Non-Redeemable Preferred Stock 6,900 15,850
Redeemable Preferred:
Eastern Edison Company:
9.00% $100 par value 126,000 shares (1) 12,600
9.80% $100 par value 200,000 shares (1) 20,000
6 5/8% $100 par value 300,000 shares (2) 30,000
Expense, Net of Premium (330) (558)
Preferred Stock Redemption Costs (4,846) (2,472)
Sinking Fund Requirement Due Within One Year (1,400)
Newport Electric Corporation:
9.75% $100 par value 2,900 shares (1) 290 390
Expense (11) (14)
Sinking Fund Requirement Due Within One Year (50) (50)
Total Redeemable Preferred Stock 25,053 28,496
Total Preferred Stock of Subsidiaries $ 31,953 $ 44,346
</TABLE>
(1) Authorized and Outstanding.
(2) Authorized 400,000 shares. Outstanding 300,000 at December 31, 1993.
The accompanying notes are an integral part of the financial statements.
Consolidated Statement Of Indebtedness
<TABLE>
<S> <C> <C>
December 31,
(In Thousands) 1993 1992
EUA Service Corporation:
10.2% Secured Notes due 2008 $ 15,600 $ 17,800
EUA Cogenex Corporation:
7.22% Unsecured Notes due 1997 15,000 15,000
7.0% Unsecured Notes due 2000 50,000
9.6% Unsecured Notes due 2001 20,000 20,000
10.56% Unsecured Notes due 2005 35,000 35,000
EUA Ocean State Corporation:
9.59% Unsecured Notes due 2011 38,497 43,378
Blackstone Valley Electric Company:
First Mortgage Bonds:
9 1/2% due 2004 (Series B) 15,000 15,000
10.35% due 2010 (Series C) 18,000 18,000
Variable Rate Demand Bonds due 2014 (1) 6,500 6,500
Eastern Edison Company
First Mortgage and Collateral Trust Bonds:
4 1/2% due 1993 5,000
8.9% Secured Medium Term Notes due 1995 10,000 10,000
4 7/8% due 1996 7,000
6 1/2% due 1997 7,000
10 1/8% due 1997 35,000
5 7/8% due 1998 20,000
5 3/4% due 1998 40,000
9 7/8% due 1998 40,000
8 3/8% due 1999 5,000
7 7/8% due 2002 8,000
7.78% Secured Medium Term Notes due 2002 35,000 35,000
6 7/8% due 2003 40,000
6.35% due 2003 8,000
8 3/8% due 2003 10,000
9 5/8% due 2016 55,000
8.0% due 2023 40,000
Pollution Control Revenue Bonds:
10 1/8% due 2008 40,000
5 7/8% due 2008 40,000
Unsecured Medium Term Notes:
9-9 1/4% due 1995 (Series A) 25,000 25,000
Newport Electric Corporation:
First Mortgage Bonds:
4 3/4% due 1994 1,000 1,000
11 1/2% due 1997 1,400
10.0% due 1998 600
9.0% due 1999 1,400 1,400
9.8% due 1999 8,000 8,000
8.95% due 2001 5,200 5,850
Second Mortgage Bonds:
8.5% due 1998 1,880 1,880
12.0% due 2011 6,045 6,045
Small Business Administration Loan:
6.5% due 2005 975 1,046
Promissory Notes:
12.0% due 1993
7
Unamortized (Discount) - Net (866) (5)
502,231 472,901
Less Portion Due Within One Year 5,415 9,943
Total Long-Term Debt - Net $496,816 $ 462,958
</TABLE>
(1) Weighted average interest rate was 2.5% for 1993 and 3.2% for 1992.
The accompanying notes are an integral part of the financial statements.
Notes To Consolidated Financial Statements
December 31, 1993, 1992 and 1991
(A) Summary Of Significant Accounting Policies:
Basis of Consolidation: The consolidated financial statements include the
accounts of Eastern Utilities Associates (EUA) and all subsidiaries. In 1993
EUA consolidated the EUA Cogenex Corporation (EUA Cogenex) partnerships which
had previously been accounted for as equity investments. The 1992 and 1991
financial statements have been restated to present these partnerships on a
consolidated basis. The restatements do not materially change amounts
previously reported. All material intercompany transactions between the
consolidated subsidiaries have been eliminated.
System of Accounts: The accounts of EUA and its consolidated subsidiaries are
maintained in accordance with the uniform system of accounts prescribed by the
regulatory bodies having jurisdiction.
Jointly Owned Companies: Montaup Electric Company (Montaup) follows the
equity method of accounting for its stock ownership investments in jointly
owned companies including four regional nuclear generating companies.
Montaup's investments in these nuclear generating companies range from 2.25%
to 4.50%. Montaup is entitled to electricity produced from these facilities
based on its ownership interests and is billed for its entitlement pursuant to
contractual agreements which are approved by the Federal Energy Regulatory
Commission (FERC). One of the four facilities is being decommissioned, but
Montaup is required to pay, and has received FERC authorization to recover,
its proportionate share of any unrecovered costs and costs incurred after the
plant's retirement.
Montaup also has a stock ownership investment of 3.27% in each of two
companies which own and operate certain transmission facilities between the
Hydro Quebec electric system and New England.
EUA Ocean State Corporation's (EUA Ocean State) follows the equity method of
accounting for its 29.9% partnership interest in the Ocean State Power Project.
Montaup's stock ownership investments and EUA Ocean State's investment in the
Ocean State Power Project are included in "Investments in Jointly Owned
Companies" on the Consolidated Balance Sheet.
Plant and Depreciation: Utility plant is stated at original cost. The cost
of additions to utility plant includes contracted work, direct labor and
material, allocable overhead, allowance for funds used during construction
and indirect charges for engineering and supervision. For financial statement
purposes, depreciation is computed on the straight-line method based on
estimated useful lives of the various classes of property. On a consolidated
basis, provisions for depreciation on utility plant were equivalent to a
composite rate of approximately 3.4% in 1993 and 3.3% in both 1992 and 1991
based on the average depreciable property balances at the beginning and end of
each year.
Non-utility property and equipment of EUA Cogenex is stated at original cost.
For financial statement purposes, depreciation on office furniture and
equipment and computer equipment is computed on the straight-line method based
on estimated useful lives ranging from five to fifteen years. Project
equipment is depreciated over the term of the applicable contracts or based on
the estimated useful lives, whichever is shorter, ranging from five to fifteen
years.
Allowance for Funds Used During Construction (AFUDC) and Capitalized Interest:
AFUDC represents the estimated cost of borrowed and equity funds used to
finance the EUA System's construction program. In accordance with regulatory
accounting, AFUDC is capitalized as a cost of utility plant in the same
manner as certain general and administrative costs. AFUDC is not an item of
current cash income but is recovered over the service life of utility plant in
the form of increased revenues collected as a result of higher depreciation
expense. The combined rate used in calculating AFUDC was 9.5% in 1993, 10.8%
in 1992 and 11.5% in 1991. The caption Allowance for Borrowed Funds Used
During Construction also includes interest capitalized for non-regulated
entities in accordance with Financial Accounting Standards Board (FASB)
Statement No. 34.
Operating Revenues: Utility revenues are based on billing rates authorized by
applicable federal and state regulatory commissions. Eastern Edison Company
(Eastern Edison), Blackstone Valley Electric Company (Blackstone) and Newport
Electric Corporation (Newport) (collectively, the Retail Subsidiaries) accrue
the estimated amount of unbilled base rate revenues at the end of each month
to match costs and revenues more closely. In addition they also record the
difference between fuel costs incurred and fuel costs billed. Montaup
recognizes revenues when billed. Montaup, Blackstone, and Newport also record
revenues related to rate adjustment mechanisms.
EUA Cogenex's revenues are recognized based on financial arrangements
established by each individual contract. Under paid from savings contracts,
revenues are recognized as energy savings are realized by customers. Revenue
from the sale of energy equipment is recognized when the sale is complete.
Revenue from sales-type lease contracts is recognized when savings to be
realized by customers are verified. Energy Sales Contracts revenue is
recognized as energy is provided to the customer. In circumstances in which
material uncertainties exist as to contract profitability, cost recovery
accounting is followed and revenues received under such contracts are first
accounted for as recovery of costs to the extent incurred.
Federal Income Taxes: EUA and its subsidiaries generally reflect in income
the estimated amount of taxes currently payable, and provide for deferred
taxes on certain items subject to temporary timing differences to the extent
permitted by the various regulatory agencies. EUA's rate-regulated
subsidiaries generally defer recognition of annual investment tax credits and
amortize these credits over the productive lives of the related assets.
Reclassifications: Certain prior period amounts on the financial statements
have been reclassified to conform with current presentation.
Cash and Temporary Cash Investments: EUA considers all highly liquid
investments and temporary cash investments with a maturity of three months or
less when acquired to be cash equivalents.
(B) Accounting Reorganization:
On June 30, 1991, EUA effected an accounting reorganization to eliminate a
retained earnings deficit resulting principally from EUA's 1990 write-off of
its entire investment in EUA Power Corporation (EUA Power, now known as Great
Bay Power Corporation). The accounting reorganization eliminated the
accumulated deficit in retained earnings of $80,034,506 by transferring that
amount from Other Paid-In Capital. The accounting reorganization did not
involve any revaluation of assets or liabilities.
(C) Income Taxes:
EUA adopted FASB statement No. 109, "Accounting for Income Taxes" (FAS109)
effective as of January 1, 1993. FAS109 superseded FASB Statement No. 96
(FAS96) which required recognition of deferred income taxes for temporary
differences that are reported in different years for financial reporting and
tax purposes using the liability method. Under the liability method, deferred
tax liabilities or assets are computed using the tax rates that will be in
effect when temporary differences reverse. Generally, for regulated
companies, the change in tax rates may not be immediately recognized in
operating results because of rate making treatment and provisions in the Tax
Reform Act of 1986. The adoption of FAS109 had no impact on the results of
operations for 1993. At December 31, 1993 total deferred tax assets for which
no valuation allowance was deemed necessary were $41.8 million and total
deferred tax liabilities were $179 million. Total deferred tax assets and
liabilities are comprised as follows:
Deferred Tax Deferred Tax
Assets Liabilities
(000) (000)
Plant Related Plant Related
Differences $19,574 Differences $159,370
Alternative Refinancing
Minimum Tax 9,507 Costs 2,666
Litigation 1,218 Pensions 1,981
Bad Debts 2,274
Pensions 1,497
Other 7,776 Other 14,977
Total $41,846 Total $178,994
As of December 31, 1993 and 1992, EUA had recorded on its Consolidated
Balance Sheet a regulatory liability to ratepayers of approximately $28.8
million and $35.9 million, respectively. These amounts primarily represent
excess deferred income taxes resulting from the reduction in the federal
income tax rate and also include deferred taxes provided on investment tax
credits. Also at December 31, 1993 and 1992, a regulatory asset of
approximately $46.7 million and $51.1 million, respectively, had been
recorded, representing the cumulative amount of federal income taxes on
temporary depreciation differences which were previously flowed through to
ratepayers.
EUA has approximately $4.9 million of investment tax credit carryforwards
which expire between the years 2001 and 2005.
EUA also has $9.2 million of alternative minimum tax credits which can be
utilized to reduce the consolidated regular tax liability and have no
expiration.
Under the terms of the December 1992 settlement agreement with EUA Power,
EUA is entitled to utilize EUA Power's tax credits to reduce the 1993
Consolidated Tax Liability without compensation to EUA Power. Approximately
$6.9 million of such credits were utilized in 1993 of which $4.9 million was
charged against 1993 federal income tax expense.
Components of income tax expense for the year
1993, 1992 and 1991 are as follows:
<TABLE>
<S> <C> <C> <C>
(In Thousands) 1993 1992 1991
Federal:
Current $ 9,390 $ 7,761 $ 2,570
Deferred 4,204 9,977 6,235
Investment Tax Credit, Net (1,197) (1,371) 165
12,397 16,367 8,970
State:
Current 2,289 1,900 1,027
Deferred 333 1,208 2,367
2,622 3,108 3,394
Charged to Operations 15,019 19,475 12,364
Charged to Other Income:
Current 1,583 13,709 (1,245)
Deferred 6,562 (14,830) 3,626
Investment Tax Credit, Net (5,049) (82) (82)
3,096 (1,203) 2,299
Total $ 18,115 $ 18,272 $ 14,663
Total income tax expense was different from the amounts computed by applying
federal income tax statutory rates to book income subject to tax for the
following reasons:
(In Thousands) 1993 1992 1991
Federal Income Tax Computed at Statutory Rates $ 23,224 $ 19,184 $ 15,327
(Decrease) Increase in Tax From:
Equity Component of AFUDC (133) (171) (209)
Depreciation of Equity AFUDC 1,230 745 373
Amortization and Utilization of ITC (6,295) (1,338) (1,340)
State taxes, net of federal income tax benefit 2,237 2,307 2,358
Tax impact of EUA's write-off of its investment in EUA Power (1,999)
Cost of Removal (583) (8) (1,184)
Other (1,565) (448) (662)
Total Income Tax Expense $ 18,115 $ 18,272 $ 14,663
The provision for deferred taxes resulting from temporary differences comprises
the following:
(In Thousands) 1993 1992 1991
Excess Tax Depreciation $ 8,936 $ 9,656 $ 9,016
Estimated Unbilled Revenue 250 118 196
Unbilled Fuel Costs 129 277 (400)
Debt Component of AFUDC (1,899) (1,899) (1,924)
Abandonment Losses (622) (706)
Capitalized Overheads (64) (371) (744)
Effect of State and Local Taxes 321 1,498 2,367
Deferred Charges 350 (602) (13)
Alternative Minimum Tax 545
Net Operating Loss Carry forward 4,108 (2,955)
Pilgrim Refund 127 300 3,643
Provision for estimated tax liability resulting from
the write-off of EUA's investment in EUA Power 4,046 (15,986)
Deferred tax expense (benefits) associated with write-offs (56) (424) 2,995
Other-Net (1,041) (243) 753
Total $ 11,099 $ (3,645) $ 12,228
</TABLE>
D) Capital Stock:
The changes in the number of common shares outstanding and related increases
in Other Paid-In Capital during the years ended December 31, 1993, 1992 and
1991 were as follows (dollars in thousands):
Number of Common Shares Issued
Dividend
Reinvestment Common Other
Public and Employee J.L. Day Co. Shares Paid-In
Offering Savings Plans Acquisition At Par Capital
1993 1,300,000 385,825 108,985 $ 8,974 $ 40,339
1992 406,726 2,034 6,704
1991 478,354 2,392 7,140
Pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC) under the Public Utility Holding Company Act of 1935
(the 1935 Act), EUA System companies are prohibited from paying dividends out
of capital or unearned surplus without prior authorization. In 1991, EUA
requested and received authority from the 1935 Act to pay common share
dividends for the second and third quarters of 1991 out of Other Paid-In
Capital in an aggregate amount not exceeding $8 million. Dividends after the
third quarter of 1991 are payable only from retained earnings accumulated
subsequent to the June 1991 accounting reorganization.
Eastern Edison redeemed with available cash its 8.32% Series and 4.64%
Series non-redeemable preferred stock on June 1, 1993 and December 1, 1993,
respectively. In connection with these redemptions, Eastern Edison incurred
premiums of approximately $106,000 related to the 8.32% Series and $179,000
related to the 4.64% Series. These amounts are included in Preferred Stock
Redemption Costs on the Consolidated Statement of Equity Capital and Preferred
Stock. Eastern Edison will seek recovery of these amounts in its next rate
proceeding.
In the event of involuntary liquidation, the holders of non-redeemable
preferred stock of the Retail Subsidiaries are entitled to $100 per share plus
accrued dividends. In the event of voluntary liquidation, or if redeemed at
the option of these companies, each share of the non-redeemable preferred
stock is entitled to accrued dividends plus the following:
Company Issue Amount
Blackstone: 4.25% issue $104.40
5.60% issue 103.82
Newport: 3.75% issue 103.50
The preferred stock provisions of the Retail Companies place certain
restrictions upon the payment of dividends on common stock by each company.
At December 31, 1993 and 1992, each company was in excess of the minimum
requirements which would make these restrictions effective.
(E) Redeemable Preferred Stock:
On June 1, 1993, Eastern Edison used available cash to redeem all of its 9.00%
Series Preferred Stock. In connection with this redemption, a premium of
approximately $850,500 was incurred and is included in Preferred Stock
Redemption Costs on the Consolidated Statement of Equity Capital and Preferred
Stock.
On August 11, 1993, Eastern Edison issued 300,000 shares of $100 par value,
6 5/8% Preferred Stock. The proceeds were used to redeem its outstanding
9.80% Series Preferred Stock and for other corporate purposes. In connection
with the 9.80% Series redemption, Eastern Edison incurred a premium of
approximately $1,352,000. This premium is also included in Preferred Stock
Redemption Costs on the Consolidated Statement of Equity Capital and Preferred
Stock. Eastern Edison will seek recovery of these premiums in its next rate
proceeding.
Eastern Edison's 6 5/8% Preferred Stock issue is entitled to mandatory
sinking funds sufficient to redeem 15,000 shares during each twelve-month
period commencing September 1, 2003. The redemption price is $100 per share
plus accrued dividends. All outstanding shares of the 6 5/8% issue will be
subject to mandatory redemption on September 1, 2008 at a price of $100 per
share plus accrued dividends.
Newport's 9.75% Preferred Stock issue is entitled to a mandatory sinking
fund sufficient to redeem 500 shares during each twelve-month period until the
year 2000, at which time any shares outstanding must be redeemed. The
redemption price is $100 per share plus accrued dividends.
In the event of liquidation, the holders of Eastern Edison's 6 5/8%
Preferred Stock are entitled to $100 per share plus accrued dividends.
In the event of involuntary liquidation, the holders of Newport's
redeemable preferred stock are entitled to $100 per share plus accrued
dividends. In the event of voluntary liquidation, or if redeemed at the
option of Newport, the holders of the 9 .75% issue are entitled to $104.88 per
share plus accrued dividends prior to October 1, 1993 and $102.44 per share
plus accrued dividends thereafter.
The aggregate amount of redeemable preferred stock sinking fund requirements
for each of the five years following 1993 is $50,000.
(F) Long-Term Debt:
The various mortgage bond issues of Blackstone, Eastern Edison, and Newport
are collateralized by substantially all of their utility plant. In addition,
Eastern Edison's bonds are collateralized by securities of Montaup, which are
wholly- owned by Eastern Edison, in the principal amount of approximately $259
million.
Blackstone's Variable Rate Demand Bonds are collateralized by an irrevocable
letter of credit which expires on January 21, 1996. The letter of credit
permits an extension of one year upon mutual agreement of the bank and
Blackstone.
EUA Service Corporation's (EUA Service) 10.2% Secured Notes due 2008 are
collateralized by certain real estate and property of the company.
In March 1993, Newport used available cash to redeem $600,000 of 10% and
$1.4 million of 11 1/2% First Mortgage Bonds (FMBs).
In May 1993, Eastern Edison issued $100 million of FMBs in the following
denominations: (i) $20 million of 5 7/8% Bonds due May 1, 1998; (ii) $40
million of 6 7/8% Bonds due May 1, 2003; and (iii) $40 million of 8% Bonds due
May 1, 2023. The proceeds were used to redeem Eastern Edison's $55 million
of 9 5/8%, $35 million of 10 1/8% and $10 million of 8 3/8% FMBs.
In June 1993, Eastern Edison used available cash to redeem $5 million of 8
3/8% FMBs.
In July 1993, Eastern Edison issued $40 million of 5 3/4% FMBs, proceeds of
which were used to redeem its $40 million of 9 7/8% FMBs in September 1993.
Eastern Edison redeemed in mid-August 1993 its $40 million of 10 1/8%
Pollution Control Revenue Bonds with the proceeds from the July issuance of
$40 million of 5 7/8% Pollution Control Revenue Bonds.
In September 1993, Eastern Edison issued $8 million of 6.35% FMBs and $7
million of 4 7/8% FMBs. The proceeds were used to redeem $8 million of 7 7/8%
FMBs and $7 million of 6 1/2%.
In October Eastern Edison used available cash to redeem $5 million of 4 1/2%
FMBs at maturity.
Also in October 1993, EUA Cogenex issued $50 million of 7% Unsecured Notes.
Proceeds were used to retire all outstanding bank loans and repay a portion of
its short-term loans to EUA.
On January 6, 1994, Newport issued $7.9 million of variable rate Electric
Energy Facilities Revenue Refunding Bonds due 2011. The proceeds were used
to redeem Second Mortgage Bonds of Newport in amounts of $6.0 million at 12%
and $1.9 million at 8.5 %.
The EUA System's aggregate amount of current cash sinking fund requirements
and maturities of long-term debt, (excluding amounts that may be satisfied by
available property additions) for each of the five years following 1993 are:
$5,416,000 in 1994, $41,721,000 in 1995, $19,626,000 in 1996, $27,631,000 in
1997 and $73,916,000 in 1998.
(G) Fair Value Of Financial Instruments:
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate:
Cash and Temporary Cash Investments: The carrying amount approximates fair
value because of the short-term maturity of these instruments.
Preferred Stock and Long-Term Debt of Subsidiaries: The fair value of the
System's redeemable preferred stock and long-term debt were based on quoted
market prices for such securities at December 31, 1993.
The estimated fair values of the System's financial instruments at December
31, 1993 are as follows (dollars in thousands):
Carrying Fair
Amount Value
Cash and Temporary Cash Investments $ 4,180 $ 4,180
Redeemable Preferred Stock 30,290 31,265
Long-Term Debt 503,097 521,583
(H) Lines Of Credit:
EUA System companies maintain short-term lines of credit with various banks
aggregating approximately $140 million. At December 31, 1993, unused short-
term lines of credit were approximately $103 million. In accordance with
informal agreements with the various banks, commitment fees are required to
maintain certain lines of credit.
(I) Jointly Owned Facilities:
At December 31, 1993, in addition to the stock ownership interests discussed in
Note A, Summary of Significant Accounting Policies - Jointly Owned Companies,
Montaup and Newport had direct ownership interests in the following electric
generating facilities (dollars in thousands):
Accumulated
Provision For Net Construct-
Utility Depreciation Utility tion
Percent Plant in and Plant in Work in
Owned Service Amortization Service Progress
Montaup:
Canal Unit 2 50.00% $ 67,000 $40,142 $26,858 $ 873
Wyman Unit 4 1.96% 4,020 1,803 2,217 11
Seabrook Unit 1 2.90% 207,898 15,676 192,222 1,480
Millstone Unit 3 4.01% 183,938 33,491 150,447 486
Newport:
Wyman Unit 4 0.67% 1,311 603 708 -
The foregoing amounts represent Montaup's and Newport's interest in each
facility, including nuclear fuel where appropriate, and are included on the
like-captioned lines on the Consolidated Balance Sheet. At December 31,
1993, Montaup's total net investment in nuclear fuel of the Seabrook and
Millstone Units amounted to $5.7 million and $2.8 million, respectively.
Montaup's and Newport's shares of related operating and maintenance expenses
with respect to units reflected in the table above are included in the
corresponding operating expenses.
(J) Financial Information By Business Segments:
The Core Electric Business includes results of the System's electric utility
operations of Blackstone, Eastern Edison, Newport and Montaup.
Energy Related Business includes results of our diversified energy related
subsidiaries, EUA Cogenex, EUA Ocean State and EUA Energy Investment
Corporation (EUA Energy).
Corporate results include the operations of EUA Service and EUA Parent.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Pre-Tax Depreciation Cash Equity in
Operating Operating Income and Construction Subsidiary
(Dollars in Thousands) Revenues Income Taxes Amortization Expenditures Earnings
Year Ended
December 31, 1993
Core Electric $ 499,565 $ 84,654 $ 18,443 $ 34,035 $ 31,928 $ 1,750
Energy Related 66,912 6,690 (3,523) 10,031 28,459 12,390
Corporate - (919) 99 656 380 -
Total $ 566,477 $ 90,425 $ 15,019 $ 44,722 $ 60,767 $ 14,140
Year Ended
December 31, 1992
Core Electric $ 497,810 $ 80,324 $17,869 $ 33,003 $ 21,849 $ 1,953
Energy Related 44,154 6,792 2,096 8,712 32,563 14,837
Corporate - (3,294) (490) 1,109 1,324 -
Total $ 541,964 $ 83,822 $19,475 $ 42,824 $ 55,736 $ 16,790
Year Ended
December 31, 1991
Core Electric $ 492,855 $ 73,366 $11,743 $ 32,339 $ 29,443 $ 2,011
Energy Related 29,728 5,204 571 8,338 27,785 8,964
Corporate - 130 50 1,082 342 -
Total $ 522,583 $ 78,700 $12,364 $ 41,759 $ 57,570 $ 10,975
</TABLE>
December 31,
1993 1992
Total Plant and Other Investments
Core Electric $ 723,664 $ 727,623
Energy Related 208,457 186,187
Corporate 20,770 21,734
Total Plant and Other Investments 952,891 935,544
Other Assets
Core Electric 188,611 219,294
Energy Related 43,842 30,104
Corporate 17,793 18,378
Total Other Assets 250,246 267,776
Total Assets $ 1,203,137 $ 1,203,320
K) Commitments And Contingencies:
Nuclear Power Issues: Joint owners of nuclear projects are subject to the
risk that one of their number may be unable or unwilling to finance its share
of the project's costs, thus jeopardizing continuation of the project. On
February 28, 1991, Great Bay Power Corporation (formerly known as EUA Power
Corporation) a 12.13% owner of the Seabrook nuclear project, filed for
protection under Chapter 11 of the Federal Bankruptcy Code. On March 5, 1993,
the United States Bankruptcy Court for the District of New Hampshire
(Bankruptcy Court) confirmed the fifth amended plan of reorganization as
filed by the officially appointed committee representing the holders of Great
Bay Power's outstanding secured notes (Bondholders Committee). The plan was
subject to securing a financing facility in an amount sufficient to cover
projected cash operating shortfalls through December 1995.
On February 2, 1994, the Bondholders Committee announced that it accepted a
plan of reorganization financing proposal which provided for a $35 million
equity investment in exchange for 60% of the equity of the reorganized Great
Bay Power. A modified plan of reorganization filed by the Bondholders
Committee with the Bankruptcy Court awaits approval. The modified plan also
requires the approval of various regulatory agencies including the Nuclear
Regulatory Commission (NRC).
In addition to its 2.9% ownership interest in Seabrook Unit 1, Montaup also
has a 2.9% ownership interest in Seabrook Unit 2. On November 6, 1986, the
joint owners of Seabrook, recognizing that Seabrook Unit 2 had been cancelled,
voted to dispose of the Unit. Plans regarding disposition of Seabrook Unit 2
are still under consideration, but have not been finalized and approved.
Montaup is unable, therefore, to estimate the costs for which it would be
responsible in connection with the disposition of Seabrook Unit 2. Montaup
must pay monthly charges with respect to Seabrook Unit 2 in order to preserve
and protect its components and various warranties. These costs are currently
being recovered in rates.
Nuclear Fuel Disposal and Nuclear Plant Decommissioning Costs: The Nuclear
Waste Policy Act of 1982 (NWPA) establishes that the federal government is
responsible for the disposal of spent nuclear fuel and obligates the
Department of Energy (DOE) to design, license, build and operate a permanent
repository for high level radioactive wastes and spent nuclear fuel. NWPA
specifies that DOE provide for the disposal of the waste and spent fuel
starting in 1998. DOE does not expect to achieve this date. As an interim
strategy, DOE is considering making available other federal government sites
to temporarily accommodate those firms that have depleted their own on-site
spent nuclear fuel storage capacity. The DOE anticipates that a permanent
disposal site for spent fuel will be ready to accept fuel for storage or
disposal on or before 2010. However, the NRC, which must license the site,
has stated only that a permanent repository will become available by the year
2025. Millstone Unit 3 management has indicated it has sufficient on-site
storage facilities to accommodate high level wastes and spent fuel for the
projected life of the unit. No significant expenditures are projected for the
foreseeable future. At Seabrook there is on-site storage capacity which, with
minimal capital expenditures, should be sufficient for twenty years, or to the
year 2010. No near-term capital expenditures are anticipated to accommodate
an increase in storage requirements after 2010. Montaup is required to pay
a fee based on its share of the generation from Millstone Unit 3 and Seabrook
Unit 1. Montaup is recovering these fees through its fuel adjustment clause.
Also, Montaup is recovering through rates its share of estimated
decommissioning costs for Millstone Unit 3 and Seabrook Unit 1. Montaup's
share of the current estimate of total costs to decommission Millstone Unit 3
is $15.1 million in 1993 dollars, and Seabrook Unit 1 is $10.6 million in
1993 dollars. These figures are based on studies performed for the lead
owners of the plants. Montaup also pays into decommissioning reserves
pursuant to contractual arrangements with other nuclear generating facilities
in which it has an equity ownership interest or life of the unit entitlement.
Such expenses are currently recoverable through rates.
Shareholder Proceeding: The Superior Court of The Commonwealth of
Massachusetts, in approving a settlement agreement in connection with a class
action suit filed on behalf of certain EUA shareholders in Superior Court
naming EUA and certain current and former Trustees of EUA as defendants,
permitted a former shareholder of approximately 540,000 shares to exclude
himself from the plaintiff class. On February 11, 1992 that former
shareholder filed a suit against EUA and three officers of EUA in the Federal
District Court of Massachusetts alleging fraudulent and negligent
misrepresentations and violations of Rule 10b-5 under the Securities Exchange
Act in connection with statements made regarding the business prospects for
EUA Power and the portion of EUA's common share dividends attributable to
AFUDC from EUA Power. The suit has been dismissed with respect to two of the
officers. EUA and the officer named in the Federal District Court suit deny
all allegations of liability and all of the claims and contentions
alleged by the former shareholder, and are vigorously contesting the suit.
Discovery has proceeded through 1993 and the deadline for discovery has been
extended until April 30, 1994. EUA believes that the outcome of this
litigation will not have a material impact on its financial position.
Pensions: The EUA System companies' retirement plans are non-contributory
defined benefit pension plans covering substantially all of their employees.
Regular plan benefits are based on years of service and average compensation
over the four years prior to retirement or in the case of the supplemental
retirement plan for certain officers of the EUA System, benefits are based on
compensation at retirement date. It is the EUA System's policy to fund the
regular plan on a current basis in amount s determined to meet the funding
standards established by the Employee Retirement Income Security Act of 1974.
Net pension (income) expense for the regular plan for 1993, 1992 and 1991
included the following components (dollars in thousands):
1993 1992 1991
Service cost-benefits earned
during the period $ 2,567 $ 2,395 $ 2,169
Interest cost on projected
benefit obligations 8,761 8,050 7,408
Actual return on assets (18,005) (7,971) (22,510)
Net amortization and
deferrals 6,795 (2,683) 12,211
Net periodic pension
expense (income) $ 118 $ (209) $ (722)
Assumptions used to determine pension costs:
Discount Rate 8.75% 8.75% 8.75%
Compensation
Increase Rate 6.00% 6.00% 6.00%
Long-Term
Return on Assets 10.00% 10.00% 10.00%
The following table sets forth the actuarial present value of benefit
obligations and funded status at December 31, 1993, 1992 and 1991
(in thousands):
1993 1992 1991
Accumulated benefit obligations
Vested $ 101,279 $ 81,466 $ 73,404
Non-vested 358 291 256
Total $ 101,637 $ 81,757 $ 73,660
Projected benefit obligations $(121,082) $(99,862) $ (90,379)
Plan assets at fair value,
primarily stocks and bonds 130,040 117,373 114,391
Less: Unrecognized net gain
on assets (11,689) (20,562) (23,994)
Unamortized net
assets at January 1 5,944 6,383 3,105
Net pension assets $ 3,213 $ 3,332 $ 3,123
The assumptions used to determine pension costs changed effective January 1,
1994 to 7.25%, 4.75% and 9.50% for the discount rate, compensation increase
rate and expected long-term return on assets, respectively. These rates were
used to calculate t he plans funded status at December 31, 1993.
All benefits provided under the supplemental plan are unfunded and any
payments to plan participants are made by EUA. As of December 31, 1993
approximately $2.1 million was included in accrued expenses and other
liabilities for this plan. For the years ended December 31, 1993, 1992 and
1991 expenses related to the supplemental plan were $2.3 million, $0.3 million
and $0.2 million, respectively.
Post-Retirement Benefits: Retired employees are entitled to participate in
health care and life insurance benefit plans. Health care benefits are
subject to deductibles and other limitations. Health care and life insurance
benefits are partially funded by EUA System companies for all qualified
employees.
The EUA System adopted FAS106, "Accounting for Post-Retirement Benefits Other
Than Pensions," as of January 1, 1993. This standard establishes accounting
and reporting standards for such post-retirement benefits as health care and
life insurance. FAS106 further requires the accrual of the cost of such
benefits during an employee's years of service and the recognition of the
actuarially determined total post-retirement benefit obligations (Transition
Obligation) earned by existing employees and retirees. EUA elected to
recognize the Transition Obligation over a period of 20 years, as permitted by
FAS106. The resultant annual expense, including amortization of the
Transition Obligation and net of capitalized amounts, was approximately $8.1
million in 1993. Regulatory decisions issued in December 1992 permit EUA's
retail subsidiaries to recover through rates approximately $3.5 million of
this amount in 1993. As a result of the December 1992 regulatory decisions,
EUA's retail subsidiaries established a regulatory asset of approximately
$1.5 million in 1993 due to the future recoverability of such amounts.
Montaup was allowed to defer FAS106-related expenses through 1995 or until it
filed for recovery of such amounts prior to that time. Accordingly
approximately $1.4 million of FAS106-related expenses were deferred by Montaup
in 1993. Montaup has requested recovery of all of its FAS106 expenses
including amortization of deferred amounts in its 1994 rate application.
The total cost of post-retirement benefits other than pensions for 1993
includes the following components (in thousands):
1993
Service cost $ 1,337
Interest cost 5,983
Actual return on plan assets (68)
Amortization of transition obligation 3,429
Other amortizations & deferrals -net (60)
Total post-retirement benefit cost $ 10,621
Assumptions:
Discount rate 8.75%
Health care cost trend rate -near-term 13%
-long-term 6.25%
Salary increase rate 6.00%
Rate of return on plan assets -union 8.50%
-non-union 5.50%
Reconciliation of funded status:
1993
Accumulated post-retirement benefit obligation (APBO):
Retirees $ (38,008)
Active employees fully eligible for benefits (15,324)
Other active employees (25,357)
Total $ (78,689)
Fair value of assets, primarily notes and bonds 3,522
Unrecognized transition obligation 65,147
Unrecognized prior service cost -
Unrecognized net loss (gain) 5,368
(Accrued)/prepaid post-retirement benefit cost $ (4,652)
The assumptions used to determine post-retirement benefit costs were changed
effective January 1, 1994 to 7.25%, 13.0% and 5.0% for the discount rate, near-
term health care cost trend and long-term health care cost trend, respectively.
These assumptions were used to calculate the funded status of Post-Retirement
benefits at December 31, 1993.
Increasing the assumed health care cost trend rate by 1% each year would
increase the total post-retirement benefit cost for 1993 by $1.1 million and
increase the total accumulated post-retirement benefit obligation by $10.8
million.
Prior to 1993 the EUA System followed the "pay-as-you-go" methodology for
accounting for post retirement benefits other than pensions. The costs of the
benefits, which amounted to $2,367,000 in 1992 and $1,872,000 in 1991, were
charged to expense. The EUA System, has also established an irrevocable
external Voluntary Employee Benefit Association Trust Fund as required by the
aforementioned regulatory decisions. Contributions to the fund commenced in
March 1993 and totaled approximately $6.0 million during 1993.
Post-Employment Benefits: In November 1992, FASB issued Statement No. 112,
"Employers' Accounting for Post-employment Benefits". EUA is required to
adopt this standard no later than January 1, 1994. The estimated impact of
this standard on the EUA System is immaterial and therefore it is anticipated
that no liability will be recorded.
Long-Term Purchased Power Contracts: The EUA System is committed under
long-term purchased power contracts, expiring on various dates through
September 2021, to pay demand charges whether or not energy is received.
Under terms in effect at December 31, 1993, the aggregate annual minimum
commitments for such contracts are approximately $139 million in 1994, $136
million in 1995 and 1996, $133 million in 1997, $137 million in 1998 and will
aggregate $1.6 billion for the ensuing years. In addition, the EUA System is
required to pay additional amounts depending on the actual amount of energy
received under such contracts. The demand costs associated with these
contracts are reflected as Purchased Power-Demand on the Consolidated
Statement of Income. Such costs are recoverable through rates.
Construction and Energy Related Investments: The EUA System's cash
construction requirements are estimated at $84.0 million for the year 1994 and
$342.7 million for the years 1995 through 1998. This includes estimated
construction expenditures of EUA Cogenex of $42.4 million for 1994 and $197.5
million for the years 1995 through 1998.
In addition, energy related investments of EUA Cogenex are estimated to be
$11.3 million for 1994 and aggregate $40.0 million for the years 1995 through
1998.
Environmental Matters: The Comprehensive Environmental Response, Compensation
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, and certain similar state statutes authorize
various governmental authorities to seek court orders compelling responsible
parties to take cleanup action at disposal sites which have been determined by
such governmental authorities to present an imminent and substantial danger to
the public and to the environment because of an actual or threatened release
of hazardous substances. Because of the nature of the EUA System's business,
various by-products and substances are produced or handled which are
classified as hazardous under the rules and regulations promulgated by the
EPA as well as state and local authorities. The EUA System generally provides
for the disposal of such substances through licensed contractors, but these
statutory provisions generally impose potential joint and several
responsibility on the generators of the wastes for cleanup costs. Subsidiaries
of EUA have been notified with respect to a number of sites where they may be
responsible for such costs, including sites where they may have joint and
several liability with other responsible parties. It is the policy of the EUA
System companies to notify liability insurers and to initiate claims; at this
time, however, no claims have been filed against any insurer and EUA is unable
to predict whether liability, if any, will be assumed by, or can be enforced
against, the insurance carrier in these matters.
As of December 31, 1993, the EUA System had incurred costs of approximately
$2.8 million in connection with these sites. Of this amount, approximately
$2.7 million relates to Blackstone. These amounts have been financed
primarily by internally gene rated cash. Blackstone is currently amortizing
substantially all of its incurred costs over a five-year period, and
recovering those costs in rates.
EUA estimates that additional costs ranging from $2.0 million to $9.2
million may be incurred at these sites through 1995 by its subsidiaries and
the other responsible parties. Of this amount, approximately $8.4 million
relates to sites at which Blackstone is a potentially responsible party.
Estimates beyond 1995 cannot be made since site studies, which are the basis
of these estimates, have not been completed.
As a result of the recoverability of cleanup costs in rates and the
uncertainty regarding both its estimated liability, as well as its potential
contributions from insurance carriers and other responsible parties, EUA does
not believe that the ultimate impact of the environmental costs will be
material to the EUA System or to any individual subsidiary and thus no loss
accrual has been made.
The Clean Air Act Amendments of 1990 (Clean Air Act) created new regulatory
programs and generally updated and strengthened air pollution control laws.
These amendments will expand the regulatory role of the United States
Environmental Protection Agency (EPA) regarding emissions from electric
generating facilities and a host of other sources. EUA System generating
facilities will most probably be first affected in 1995, when EPA regulations
will take effect for facilities owned by the EUA System. Tests at Montaup's
coal-fired Somerset Unit #6 indicate it will be able to utilize lower sulfur
coal than is already being burned to meet the 1995 air standards with only a
minimal capital investment. Montaup determined that it would not be
economical to repair Unit #5 of the Somerset Station and therefore has placed
it in deactivated reserve. EUA does not anticipate the impact from the
Amendments to be material to the financial position of the EUA System.
In April 1992, the Northeast States for Coordinated Air Use Management
(NESCAUM), an environmental advisory group for eight Northeast states
including Massachusetts and Rhode Island, issued recommendations for nitrogen
oxide (NOx) controls for existing utility boilers required to meet the ozone
non-attainment requirements of the Clean Air Act. The NESCAUM recommendations
are more restrictive than the Clean Air Act requirements. The Massachusetts
Department of Environmental Management has amend ed its regulations to require
that Reasonably Available Control Technology be implemented at all stationary
sources potentially emitting 50 tons or more per year of NOx. Rhode Island
has not yet issued regulations to implement NOx reduction requirements.
Montaup is in the process of reviewing compliance strategies. Any compliance
strategy may require the implementation of additional pollution control
technology as early as 1995. Montaup would seek recovery of pollution control
expenditures through rates.
A number of scientific studies in the past several years have examined the
possibility of health effects from electric and magnetic fields (EMF) that are
found everywhere there is electricity. While some of the studies have
indicated there may be so me association between exposure to EMF and health
effects, many studies have indicated no direct association. In addition, the
research to date has not conclusively established a direct causal relationship
between EMF exposure and human health. Additional studies, which are intended
to provide a better understanding of the subject, are continuing.
Some states have enacted regulations to limit the strength of magnetic
fields at the edge of transmission line rights-of-way. Rhode Island has
enacted a statute which authorizes and directs the Energy Facility Siting
Board to establish rules and regulations governing construction of high
voltage transmission lines of 69kv or more. Various bills are pending in the
Massachusetts Legislature that would require certain disclosures about the
potential health effects of EMF. Management cannot predict the ultimate
outcome of the EMF issue.
Guarantee of Financial Obligations: EUA has guaranteed or entered into equity
maintenance agreements in connection with certain obligations of its
subsidiaries. EUA has guaranteed the repayment of EUA Cogenex's $35 million
10.56% unsecured long-term notes due 2005 and EUA Ocean State's $38.6 million
9.59% unsecured long-term notes due 2011. In addition, EUA has entered into
equity maintenance agreements in connection with the issuance of EUA Service's
10.2% Secured Notes and EUA Cogenex's 7.22 % and 9.6% Unsecured Notes.
Under the December 1992 settlement agreement with EUA Power, EUA reaffirmed
its guarantee of up to $10 million of EUA Power's share of the decommissioning
costs of Seabrook Unit 1 and any costs of cancellation of Unit 1 or Unit 2.
EUA guaranteed this obligation in 1990 in order to secure the release to EUA
Power of a $10 million fund established by EUA Power at the time EUA Power
acquired its Seabrook interest. EUA has not provided a reserve for this
guarantee because management believes that it is unlikely that EUA will ever
be required to honor the guarantee.
Montaup is a 3.27% equity participant in two companies which own and operate
transmission facilities interconnecting New England and the Hydro Quebec
system in Canada. Montaup has guaranteed approximately $6.0 million of the
outstanding debt of these two companies. In addition, Montaup and Newport
have minimum rental commitments which total approximately $14.3 million and
$1.8 million, respectively under a noncancelable transmission facilities
support agreement for years subsequent to 1993.
Other: In December 1992, Montaup commenced a declaratory judgment action in
which it sought to have the Massachusetts Superior Court determine its rights
under the Power Purchase Agreement between it and Aquidneck Power Limited
Partnership (Aquidneck). Montaup sought a declaration that the Power Purchase
Agreement was binding on the parties according to its terms. Aquidneck
asserted that Montaup had
either an express or implied obligation to negotiate new terms and conditions
to the Power Purchase Agreement. Specifically, the defendants sought to
amend, through negotiations, certain milestone events to which they were bound
in the Power Purchase Agreement as written. Aquidneck failed to meet the
first milestone of January 1, 1993. Accordingly, on January 5, 1993, Montaup
exercised its rights to terminate the Power Purchase Agreement effective
immediately.
In January 1994 a counterclaim by Aquidneck claimed certain breaches of the
Power Purchase Agreement, including an alleged failure on the part of Montaup
to renegotiate the terms and conditions of the Power Purchase Agreement
relating to the first milestone event. Also in January 1994, Aquidneck
sought to join EUA and EUA Service as parties to the suit.
Aquidneck apparently claims $11 million of damages on the theory that EUA
can "avoid an approximately $11 million obligation to purchase capacity and
power which it does not currently need." Aquidneck seeks treble damages
claiming Montaup, EUA and EUA Service violated state laws willfully and
knowingly.
Montaup, EUA and EUA Service intend to defend the counterclaim vigorously
and believe that Aquidneck's claims have no basis in law.
Report Of Independent Accountants
To the Trustees and Shareholders of
Eastern Utilities Associates
We have audited the accompanying consolidated balance sheets and
consolidated statements of equity capital and preferred stock and indebtedness
of Eastern Utilities Associates and subsidiaries (the Company) as of December
31, 1993 and 1992, and t he related consolidated statements of income,
retained earnings and cash flows for each of the three years in the period
ended December 31, 1993. 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
statements presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of the Company as of December 31, 1993 and 1992, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
March 4, 1994
Report Of Management
The management of Eastern Utilities Associates is responsible for the
consolidated financial statements and related information included in this
annual report. The financial statements are prepared in accordance with
generally accepted accounting principles and include amounts based on the best
estimates and judgments of management, giving appropriate consideration to
materiality. Financial information included elsewhere in this annual report is
consistent with the financial statements.
The EUA System maintains an accounting system and related internal controls
which are designed to provide reasonable assurances as to the reliability of
financial records and the protection of assets. The system's staff of internal
auditors conducts reviews to maintain the effectiveness of internal control
procedures.
Coopers & Lybrand, an independent accounting firm, is engaged by EUA to
audit and express an opinion on our financial statements. Their audit includes
a review of internal controls to the extent required by generally accepted
auditing standards for such audit.
The Audit Committee of the Board of Trustees, which consists solely of
outside Trustees, meets with management, internal auditors and Coopers &
Lybrand to discuss auditing, internal controls and financial reporting
matters. The internal auditors and Coopers & Lybrand have free access to the
Audit Committee without management present.
Quarterly Financial And Common Share Information (Unaudited)
(Thousands of Dollars, Except Per Share and Share Price Amounts)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings
per Dividends Common Share
Consolidated Average Paid Per Market Price
Operating Operating Net Net Common Common
Revenues(1) Income (1) Income Earnings Share (2) Share High Low
FOR THE QUARTERS
ENDED 1993:
December 31 $ 146,941 $ 21,372 $ 10,282 $ 9,652 $ 0.51 $ 0.36 29 3/4 26 1/2
September 30 156,238 21,439 14,719 13,913 0.74 0.36 29 7/8 28 1/4
June 30 125,596 12,896 9,999 9,119 0.49 0.36 28 1/4 25 7/8
March 31 137,702 19,699 13,241 12,247 0.71 0.34 27 7/8 23 7/8
FOR THE QUARTERS
ENDED 1992:
December 31 $ 139,976 $ 9,703(3) $ 8,177 $ 7,183 $ 0.42 $ 0.34 25 1/4 22 1/2
September 30 134,542 17,392 11,087 10,090 0.59 0.34 24 1/8 22 1/8
June 30 126,353 16,593 7,439 6,414 0.38 0.34 23 1/2 20 7/8
March 31 141,093 20,659 11,447 10,424 0.62 0.34 21 3/4 20 3/8
(1) Restated to reflect consolidation of EUA Cogenex partnerships previously
reflected as equity investments.
(2) The sum of the quarterly amounts may not equal annual earnings per average
common share due to change in shares outstanding.
(3) Operating Income for the fourth quarter of 1992 was impacted by the
recognition of certain non-recurring operating expenses related to inventory
obsolescence, storm damage costs not recovered in rates and legal expenses
related to litigation activities. A corresponding increase in Other Income
(Deductions) - Net resulting from the reduction of previously established
reserves for matters in litigation, the favorable resolution of which was
reached in 1992, offset this impact.
Consolidated Operating and Financial Statistics (1)
Years Ended December 31, 1993 1992 1991 1990 1989 1988 1983
ENERGY GENERATED
AND PURCHASED (millions of kwh):
Generated
- by Somerset Station 319 936 957 985 1,296 1,190 1,123
- by Nuclear Units 1,033 1,050 1,109 1,635 956 472 1,019
- by Jointly-Owned Units 1,809 2,105 2,053 1,793 2,075 1,836 1,724
- by Life of the Unit Contracts 602 793 863 753 836 884 452
- by Newport 1 1 1 7
Interchange with NEPOOL 360 157 191 298 262 23 (285)
Purchased Power - Unit Power 1,396 1,489 1,006 380 410 495 168
Total Generated and Purchased 5,520 6,531 6,180 5,851 5,835 4,900 4,201
OPERATING REVENUES
(thousands):
Residential $ 189,470 $ 176,538 $ 178,812 $ 156,883 $ 141,254 $ 127,883 $ 104,101
Commercial 179,145 170,034 171,732 149,514 131,306 119,362 89,225
Industrial 81,445 76,946 78,273 69,885 70,852 69,516 58,901
Other Electric Utilities 5,098 5,103 4,828 4,317 19,625 23,660 16,212
Other 21,790 21,314 17,984 22,748 11,642 10,290 13,463
Total Primary Sales Revenues 476,948 449,935 451,629 403,347 374,679 350,711 281,902
Unit Contracts 22,617 47,875 41,225 43,670 46,373 19,518 20,548
Non-Electric(2) 66,912 44,154 29,729 18,668 8,370 3,909
Total Operating Revenues $ 566,477 541,964 $ 522,583 $ 465,685 $ 429,422 $ 374,138 $ 302,450
ENERGY SALES (millions of kwh):
Residential 1,624 1,575 1,579 1,531 1,416 1,412 1,197
Commercial 1,704 1,704 1,689 1,623 1,497 1,424 1,103
Industrial 816 785 777 834 832 869 810
Other Electric Utilities 61 68 66 130 389 377 386
Other 147 147 154 121 28 28 34
Total Primary Sales 4,352 4,279 4,265 4,239 4,162 4,110 3,530
Losses and Company Use 247 241 280 249 234 220 201
Total System Requirements 4,599 4,520 4,545 4,488 4,396 4,330 3,731
Unit Contracts 921 2,011 1,635 1,363 1,439 570 470
Total Energy Sales 5,520 6,531 6,180 5,851 5,835 4,900 4,201
NUMBER OF CUSTOMERS:
Residential 259,654 257,026 255,620 254,928 227,440 224,933 209,678
Commercial 30,805 32,851 32,745 32,836 27,890 26,611 21,605
Industrial 1,294 1,197 1,172 1,175 1,222 1,217 1,189
Other Electric Utilities 12 15 15 12 14 13 12
Other 34 34 34 34 29 29 31
Total Customers 291,799 291,123 289,586 288,985 256,595 252,803 232,515
Average Annual Revenue
per Residential Customer (dollars) 730 687 699 636 621 569 496
Average Annual Use per Residential
Customer (kwh) 6,254 6,128 6,177 6,221 6,226 6,277 5,708
AVERAGE REVENUE
PER KWH (cents):
Residential 11.67 11.21 11.32 10.25 9.98 9.06 8.70
Commercial 10.51 9.98 10.17 9.21 8.77 8.38 8.09
Industrial 9.98 9.80 10.07 8.38 8.52 8.00 7.27
</TABLE>
(1) Includes financial and operating statistics for Newport Electric
Corporation from April 1, 1990 and EUA Power Corporation through December 31,
1990 at which time EUA Power Corporation was deconsolidated for financial
reporting purposes.
(2) 1992 and 1991 amounts restated to reflect consolidation of EUA Cogenex
partnerships previously reflected as equity investments.
<TABLE>
Consolidated Operating and Financial Statistics(1)
Years Ended December 31, 1993 1992 1991 1990 1989 1988 1983
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITALIZATION (thousands):
Bonds - Net $ 300,389 306,898 $ 346,146 $ 363,566 $ 306,500 $ 294,500 $ 226,219
Other Long-Term Debt - Net 196,427 156,060 142,306 80,029 299,579 260,064 30,179
Total Long-Term Debt - Net 496,816 462,958 488,452 443,595 606,079 554,564 256,398
Preferred Stock - Net 31,953 44,346 45,830 50,380 49,691 49,693 49,234
Common Equity 333,165 266,855 248,598 237,393 375,016 301,759 172,327
Total Capitalization $861,934 774,159 $ 782,880 $ 731,368$ 1,030,786 $ 906,016 $ 477,959
CAPITALIZATION RATIOS (%)
Long-Term Debt 57 60 62 61 59 61 54
Preferred Stock 4 6 6 7 5 6 10
Common Equity 39 34 32 32 36 33 36
COMMON SHARE DATA:
Earnings (Loss) per Average
Common Share ($) 2.44 2.00 1.58 (8.18)(2) 2.95 2.85 2.80
Dividends per Share ($) 1.42 1.36 1.45 2.575 2.475 2.375 1.79
Payout (%) 58.2 68.0 91.8 (31.5) 83.9 83.3 63.9
Average Common
Shares Outstanding 18,391,147 17,039,224 16,608,090 15,917,255 13,877,091 13,167,915 9,062,810
Total Common Shares
Outstanding 19,032,598 17,237,788 16,831,062 16,352,708 15,262,237 13,371,252 10,192,304
Book Value per Share ($) 17.50 15.48 14.77 14.52 24.57 22.57 16.91
Percent Earned On Average
Common Equity 15.0 13.2 10.8 (42.5) 12.1 12.8 16.2
Market Price ($):
High 29 7/8 25 1/4 25 41 1/2 41 3/4 33 1/8 18 3/8
Low 23 7/8 20 3/8 15 3/4 20 3/4 30 3/8 21 1/8 13 7/8
Year End 28 24 3/4 20 5/8 23 7/8 41 3/4 31 1/2 14 7/8
Miscellaneous ($ in thousands):
Total Construction Expenditures ($)(3) 63,134 58,089 60,174 133,629 188,599 151,198 103,309
Cash Construction Expenditures ($)(3) 60,767 55,736 57,570 59,929 75,861 65,307 78,912
Internally Generated Funds ($) 84,290 53,256 63,681 35,024(4) 32,734 38,894 27,258
Internally Generated Funds as
a % of Cash Construction (%) 138.7 126.2 123.0 58.4(4) 43.2 59.6 34.5
Installed Capability - MW 1,256(5) 1,325 1,349 1,359 1,169 1,090 931
Less: Unit Contract Sales - MW 85 85 216 86 116 98 75
System Capability - MW 1,171 1,240 1,133 1,273 1,053 992 856
System Peak Demand - MW 854 849 879 850 831 813 700
Reserve Margin (%) 37.1 46.1 28.9 49.8 26.7 22.0 22.3
System Load Factor (%) 61.5 57.5 59.0 60.3 60.4 60.8 60.8
Sources of Energy (%):
Nuclear 34.0 34.1 31.3 37.8 26.8 18.2 23.8
Coal 5.4 18.6 21.0 22.6 28.9 27.0 16.3
Oil 28.3 12.7 26.9 37.9 44.3 54.8 59.9
Gas 26.0 29.3 17.2 1.7
Other 6.3 5.3 3.6
Cost of Fuel (Mills per kwh):
Nuclear 7.5 7.7 8.7 8.3 7.6 8.2 6.5
Coal 24.1 21.2 21.4 21.2 20.1 20.5 21.6
Oil 25.5 26.0 18.9 26.3 24.7 22.6 41.5
Gas 15.1 13.0 16.2 30.6
All Fuels Combined 15.5 14.8 15.7 18.4 18.8 19.4 30.7
</TABLE>
(1) Includes financial and operating statistics for Newport Electric
Corporation from April 1, 1990 and EUA Power Corporation through December 31,
1990 at which time EUA Power Corporation was deconsolidated for financial
reporting purposes.
(2) After additional charges to 1990 earnings.
(3) 1992 and 1991 amounts restated to reflect consolidation of EUA Cogenex
partnerships previously reflected as equity investments.
(4) Excludes EUA Power Corporation's cash interest payments.
(5) Excludes the 69 MW Somerset Station Unit #5 which was placed in
deactivated reserve on January 25, 1994.
Shareholder Information
Shares of Eastern Utilities Associates are listed on the New York and Pacific
Stock Exchanges, under the ticker symbol EUA. As of February 1, 1994, there
were 13,274 common shareholders of record.
Form 10-K
A copy of EUA's 1993 Annual Report on Form 10-K filed with the Securities and
Exchange Commission is available to shareholders without charge by writing to
us.
Annual Meeting
The 1994 Annual Meeting of Shareholders will be held on
Monday, May 16, 1994, at 9:30 a.m.,
in the Enterprise Room, 5th Floor
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts
Registrar, Transfer Agent
And Dividend Disbursing Agent For Common And Preferred Shares
Shareholder Services - Investor Relations
Mail Stop 450209
The First National Bank of Boston
Post Office Box 644
Boston, MA 02102-0644
Lost Or Stolen Stock Certificates
If your stock certificate is lost, destroyed or stolen, you should notify the
transfer agent immediately so a "stop transfer" order can be placed on the
missing certificate. The transfer agent then will send you the required
documents to obtain a replacement certificate.
Dividends
Schedule of anticipated record and payment dates for 1994 dividends on EUA
Common Shares:
Record Payment
February 1 February 15
May 2 May 16
August 1 August 15
November 1 November 15
Replacement Of Dividend Checks
If you do not receive your dividend check within ten business days after the
dividend payment date, or if your check is lost, destroyed or stolen, you
should notify the disbursing agent in writing for a replacement.
Dividend Reinvestment And Common Share Purchase Plan
A Dividend Reinvestment and Common Share Purchase Plan is available to all
registered shareholders and EUA System company employees. It is a simple and
convenient method of purchasing additional shares of EUA common stock.
Participants in the Plan receive a 5% discount on shares purchased with
reinvested dividends.
Participants also may make cash payments to purchase additional shares with
no discount. You may obtain complete details by writing to:
William F. O'Connor, Secretary
Eastern Utilities Associates
Post Office Box 2333
Boston, MA 02107
Duplicate Mailings
Duplicate mailings are costly. Shareholders may be receiving duplicate copies
of annual and quarterly reports due to multiple stock accounts in the same
household. To eliminate additional mailings of these reports, please write to
us and enclose label(s) or label information from the duplicate reports.
Dividend checks and proxy material will continue to be sent for each account
on record.
EUA is required by law to create a separate account for each name when
stock is held in similar but different names (e.g.: John A. Smith, J. A. Smith,
John A. and Mary K. Smith, etc.). Please contact the Company for instructions
if you wish to consolidate multiple accounts.
Quarterly Report To Shareholders
Beneficial owners of our stocks whose shares are registered in names other
than their own (e.g., a broker or bank nominee) may obtain copies of our
Quarterly Reports to Shareholders on an on-going basis by making a written
request to our General Offices address to the attention of the Investor
Relations Department. Note that the Annual Report will continue to be mailed
to beneficial owners directly by their bank or broker.
Financial Community Inquiries
Institutional investors and securities analysts should direct inquiries to:
Clifford J. Hebert, Jr., Treasurer
Eastern Utilities Associates
Post Office Box 2333
Boston, MA 02107
(617) 357-9590
The name Eastern Utilities Associates is the designation of the Trustees for
the time being under a Declaration of Trust dated April 2, 1928, as amended.
All persons dealing with Eastern Utilities Associates must look solely to the
trust property for the enforcement of any claims against Eastern Utilities
Associates, as neither the Trustees, Officers nor Shareholders assume any
personal liability for obligations entered into on behalf of Eastern Utilities
Associates.
Trustees
Russell A. Boss (A, C)
President and Chief Executive Officer, A. T. Cross Company
Lincoln, Rhode Island
Paul J. Choquette, Jr. (A, P)
President, Gilbane Building Company
Providence, Rhode Island
John E. Conway (A, F)
Chairman of the Board, Jack Conway & Company, Inc.
Norwell, Massachusetts
Peter S. Damon (F, P)
President and Chief Executive Officer, Bank of Newport
Newport, Rhode Island
John F. G. Eichorn, Jr. (F, P)
Retired Chairman of the Board of Trustees of the Association
Peter B. Freeman (A, C)
Corporate Director and Trustee
Providence, Rhode Island
Wesley W. Marple, Jr. (F, P)
Professor of Business Administration, Northeastern University
Boston, Massachusetts
Donald G. Pardus
Chairman of the Board of Trustees and
Chief Executive Officer of the Association
Margaret M. Stapleton (A, C)
Vice President, John Hancock Mutual Life Insurance Company
Boston, Massachusetts
John R. Stevens
President and Chief Operating Officer of the Association
W. Nicholas Thorndike (C, P)
Corporate Director and Trustee
Brookline, Massachusetts
A- Indicates member of Audit Committee
C- Indicates member of Compensation and Nominating Committee
F- Indicates member of Finance Committee
P- Indicates member of Pension Trust Committee
EUA Officers
Donald G. Pardus
Chairman of the Board of Trustees
and Chief Executive Officer
John R. Stevens
President and Chief Operating Officer
Arthur A. Hatch
Executive Vice President
Robert G. Powderly
Executive Vice President
Richard M. Burns
Comptroller
Clifford J. Hebert, Jr.
Treasurer
William F. O'Connor
Secretary
Subsidiary Presidents
David H. Gulvin, President, Blackstone Valley Electric and Newport Electric.
John D. Carney, President, Eastern Edison.
Joseph S. Fitzpatrick, President, EUA Cogenex
Exhibit 24-1.03
Consent of Independent Accountants
To the Trustees and Shareholders of
Eastern Utilities Associates:
We consent to the incorporation by reference in the registration statements of
Eastern Utilities Associates on Forms S-3, S-4 and S-8 (File No. 33-50226 33-
50099 and 33-49897, respectively) of our reports dated March 4, 1994, on our
audits of the consolidated financial statements and financial statement
schedules of Eastern Utilities Associates and subsidiaries as of December 31,
1993 and 1992, and for the years ended December 31, 1993, 1992 and 1991, which
reports are incorporated by reference or included in this Annual Report of Form
10-K.
Coopers & Lybrand
Boston, Massachusetts
March 23, 1994
