<PAGE>
File No. 70-8671
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
CERTIFICATE OF NOTIFICATION
Pursuant to Rule 24(a) Under the
Public Utility Holding Company Act of 1935
Filed by
NARRAGANSETT ENERGY RESOURCES COMPANY AND
NEW ENGLAND ELECTRIC SYSTEM (NEES)
It is hereby certified that the transactions covered by the
Application/Declaration on Form U-1 and the Amendments thereto, and Order No.
35-26397 of the Securities and Exchange Commission dated October 24, 1995
(Commission's File No. 70-8671) with respect thereto, have been carried out in
accordance with the terms and conditions of and for the purposes represented
in said Application/Declaration and Order of the Commission, as follows:
On December 6, 1995, Narragansett Energy Resources Company (NERC) sold
$32 million of notes (Notes). The Notes were sold pursuant to the terms of
four identical Note Agreements dated as of November 30, 1995, one of which is
attached hereto as Exhibit A, to Connecticut General Life Insurance Company,
CIGNA Property and Casualty Insurance Company, Insurance Company of North
America, and Life Insurance Company of North America and were sold at par with
an interest rate 7.25%, due November 30, 2010. In connection therewith NEES
also executed a Stock Pledge Agreement, attached hereto as Exhibit B.
The required "past tense" opinion of counsel is attached hereto as
Exhibit C.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this Certificate of
Notification to be signed on their behalf by the undersigned officers
thereunto duly authorized.
NARRAGANSETT ENERGY RESOURCES COMPANY
s/John G. Cochrane
By __________________________
John G. Cochrane
Treasurer
NEW ENGLAND ELECTRIC SYSTEM
s/Michael E. Jesanis
By __________________________
Michael E. Jesanis
Treasurer
The name "New England Electric System" means the trustee or
trustees for the time being (as trustee or trustees but not
personally) under an agreement and declaration of trust dated
January 2, 1926, as amended, which is hereby referred to, and a
copy of which as amended has been filed with the Secretary of the
Commonwealth of Massachusetts. Any agreement, obligation or
liability made, entered into or incurred by or on behalf of New
England Electric System binds only its trust estate, and no
shareholder, director, trustee, officer or agent thereof assumes
or shall be held to any liability therefor.
Dated: December 15, 1995
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
A Note Agreement Filed herewith
B Stock Pledge Agreement Filed herewith
C Past Tense Opinion of Counsel Filed herewith
<PAGE>
NARRAGANSETT ENERGY RESOURCES COMPANY
$14,500,000
7.25% SENIOR SECURED NOTES DUE NOVEMBER 30, 2010
NOTE AGREEMENT
Dated as of November 30, 1995
<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF NOTES......................1
2. PURCHASE AND SALE OF NOTES...........................1
3. CONDITIONS OF CLOSING................................2
4. PREPAYMENTS..........................................5
5. AFFIRMATIVE COVENANTS................................7
6. NEGATIVE COVENANTS..................................11
7. EVENTS OF DEFAULT...................................14
8. REPRESENTATIONS, COVENANTS AND WARRANTIES...........18
9. REPRESENTATIONS OF THE PURCHASER....................25
10. DEFINITIONS.........................................25
11. MISCELLANEOUS.......................................35
<PAGE>
Schedules
Schedule 1
Purchaser Schedule
Schedule 8U(f)
Litigation Schedule
Schedule 8U(g)
Violations of Governmental Approvals
Schedule 8U(h)
Indebtedness, Liens and Guarantees
Schedule 8U(l)
Environmental Matters
Schedule 8U(o)
Partnership Interests
TABLE OF CONTENTS (Continued)
EXHIBIT A -- FORM OF NOTE
EXHIBIT B -- FORM OF OPINION OF COMPANY'S COUNSEL
EXHIBIT C- -- FORM OF SECURITY AGREEMENT (OCEAN STATE POWER)
EXHIBIT C-2 -- FORM OF SECURITY AGREEMENT (OCEAN STATE POWER II)
EXHIBIT D -- FORM OF STOCK PLEDGE
EXHIBIT E -- FORM OF COLLATERAL AGENCY AGREEMENT
EXHIBIT F-1 -- FORM OF CONSENT AND AGREEMENT (OCEAN STATE
POWER)
EXHIBIT F-2 -- FORM OF CONSENT AND AGREEMENT (OCEAN STATE
POWER II)
EXHIBIT G -- LIST OF FACILITY CONTRACTS
<PAGE>
EXHIBIT H -- FORM OF SUBORDINATION PROVISIONS
<PAGE>
NARRAGANSETT ENERGY RESOURCES COMPANY
Address: 280 Melrose Street
Providence, Rhode Island 02907
As of November 30, 1995
Connecticut General Life Insurance Company
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Ladies and Gentlemen:
The undersigned, Narragansett Energy Resources Company,
a Rhode Island corporation (herein called the "Company"), a
direct wholly-owned subsidiary of New England Electric System, a
Massachusetts voluntary association ("NEES"), hereby agrees with
you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will
authorize the issue of its senior secured promissory notes in the
aggregate principal amount of $32,000,000, to be dated the date
of issue thereof, to mature November 30, 2010, to bear interest
on the unpaid balance thereof from the date thereof until the
principal thereof shall have become due and payable at the rate
of 7.25% per annum and on overdue payments at the rate specified
therein, and to be substantially in the form of Exhibit A
attached hereto. The term "Notes" as used herein shall include
each such senior secured promissory note delivered to you
pursuant to any provision of this Agreement and each such senior
secured promissory note delivered in substitution or exchange for
any other Note pursuant to any such provision.
2. PURCHASE AND SALE OF NOTES. The Company hereby
agrees to sell to you and, subject to the terms and conditions
herein set forth, you agree to purchase from the Company, one or
more Notes in the principal amount specified opposite your name
in Schedule 1 at 100% of such principal amount.
Contemporaneously with entering into this Agreement, the Company
is entering into the Other Agreements identical with this
<PAGE>
Agreement with each of the other purchasers named in the
Purchaser Schedule attached hereto as Schedule 1 (the "Other
Purchasers"), providing for the sale at such closing to each of
the Other Purchasers of Notes in the principal amount specified
opposite its name in the Purchaser Schedule. Your obligation
hereunder and the obligations of the Other Purchasers under the
Other Agreements are several and not joint obligations and you
shall have no obligation under any Other Agreement and no
liability to any Person for the performance or non-performance by
any Other Purchaser thereunder. The term "Other Notes" as used
herein shall mean any and all of the "Notes" from time to time
outstanding under the Other Agreements. The Company will deliver
to you, at the offices of Chadbourne & Parke at 30 Rockefeller
Plaza, New York, New York 10112, one or more Notes registered in
your name, evidencing the aggregate principal amount of Notes to
be purchased by you and in the denomination or denominations
opposite your name specified in the Purchaser Schedule attached
hereto, against payment of the purchase price thereof by transfer
of immediately available funds for credit to ________________,
account number __________ at The First National Bank of Boston
(ABA No. _____________) on the date of closing, which shall be
November 30, 1995 or any other date on or before December 31,
1995, upon which the Company and you may mutually agree (herein
called the "closing" or the "date of closing"). If at the
closing the Company shall fail to tender such Notes to you as
provided above in this Section 2, you shall, at your election, be
relieved of all further obligations under this Agreement, without
thereby waiving any rights you and the Other Purchasers may have
by reason of such failure or such nonfulfillment.
3. CONDITIONS OF CLOSING. Your obligation to purchase
and pay for the Notes to be purchased by you hereunder is subject
to the satisfaction, on or before the date of closing, of the
following conditions:
3A. Opinion of Purchaser's Special Counsel. You shall
have received from Chadbourne & Parke, who are acting as special
counsel for you in connection with this transaction, a favorable
opinion satisfactory to you as to such matters incident to the
matters herein contemplated as you may reasonably request.
3B. Opinion of Company's Counsel. You shall have
received from Robert King Wulff and/or Kirk L. Ramsauer,
Corporation Counsel and Assistant General Counsel, respectively,
<PAGE>
to the Company, a favorable opinion satisfactory to you and
substantially in the form of Exhibit B attached hereto.
3C. Representations and Warranties; No Default. The
representations and warranties contained in Article 8 shall be
true on and as of the date of closing, except to the extent of
changes caused by the transactions herein contemplated; there
shall exist on the date of closing no Event of Default or
Default; and the Company shall have delivered to you an Officer's
Certificate, dated the date of closing, to both such effects.
3D. Purchase Permitted By Applicable Laws. The
purchase of and payment for the Notes to be purchased by you on
the date of closing on the terms and conditions herein provided
(including the use of the proceeds of such Notes by the Company)
shall be a legal investment under the laws of each jurisdiction
to which you may be subject without resort to any basket
provision of said laws and shall not violate any applicable law
or governmental regulation (including, without limitation,
section 5 of the Securities Act or Regulation G, T or X of the
Board of Governors of the Federal Reserve System) and shall not
subject you to any tax, penalty, liability or other onerous
condition under or pursuant to any applicable law or governmental
regulation, and you shall have received such certificates or
other evidence (if any) as you may request to establish
compliance with this condition.
3E. Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be
satisfactory in substance and form to you, and you shall have
received all such counterpart originals or certified or other
copies of such documents as you may reasonably request. The
documentation to be delivered to you on or before the date of
closing pursuant to this Section 3E shall include, without
limitation, the following:
(i)evidence as to the authority of and certified
signatures of the representatives of the Company and NEES,
as applicable, authorized to execute each of the Basic
Documents to which each of them is a party, and all
related documents and certificates required hereunder or
thereunder;
<PAGE>
(ii) evidence of corporate authorization of the
Company and NEES, as applicable, with respect to the
execution, delivery and performance of each of the Basic
Documents to which each of them is a party and all related
documents and certificates required hereunder or
thereunder;
(iii) true and correct copies of each of the
Partnership Agreements, certified as such by an officer of
the Company (including any amendments thereto);
(iv) true and correct copies of each of the articles
of incorporation, by-laws and Declaration of Trust, as
appropriate, certified as such by an officer of the
Company (including any amendments thereto), together with
incumbency certificates and good standing certificates, as
appropriate, with respect to the Company and NEES.
3F. Note Agreement and Notes. You shall have received
this Agreement and the Notes being purchased by you, duly
authorized, executed and delivered by the Company.
3G. Collateral Security Documents. You shall have
received the following documents (the "Collateral Security
Documents"):
(i) the Collateral Agency Agreement, duly authorized,
executed and delivered by the Company and the Security
Agent;
(ii) the Security Agreements, duly authorized,
executed and delivered by the Company;
(iii) the Stock Pledge, duly authorized, executed and
delivered by NEES;
(iv) the UCC-1 financing statements reasonably
required by you, duly authorized, executed and delivered
by the required signatories thereto; and
(v) the Consent and Agreements duly authorized,
executed and delivered by each of the Partnerships.
<PAGE>
3H. Facility Contracts, etc. You shall have received
copies of the Facility Contracts (excluding the Property
Stabilization Agreements), the OSP Senior Notes Documents, the
OSP Revolver Documents and any supplements or amendments thereto,
certified by the Company as of the Closing Date as being true,
complete and correct.
3I. Filings and Recordings. Each of the Collateral
Security Documents shall have been duly filed, recorded and/or
registered in all places as may be required, necessary or
desirable to establish, perfect, protect and preserve your
rights, titles, interests, remedies, privileges, liens and
security interests thereunder or in respect thereof, and to
create valid first priority security interests in the Collateral
superior to all other Liens other than Permitted Liens, and all
recording and filing taxes and fees shall have been paid, and any
giving of notice or the taking of any other action to such end
(whether similar or dissimilar) required or desirable shall have
been given or taken and you shall have received evidence
satisfactory to you as to any such filing, recording,
registration, search, giving of notice and/or other action.
3J. Officer's Certificate. You shall have received a
certificate of an officer of the Company dated the date of
closing to the effect that the conditions set forth in this
Section 3 are satisfied at such time, and that no Event of Loss
has occurred.
3K. Financial Statements. You shall have received the
audited financial statements of NEES and each of the Partnerships
and the unaudited financial statements of the Company for the
fiscal year ended December 31, 1994 and unaudited financial
statements of the Company, NEES and each of the Partnerships for
the nine-month period ended September 30, 1995, as set forth in
Section 8B.
3L. UCC Searches. You shall have received Uniform
Commercial Code and other judgment and lien searches from each
jurisdiction in which any Collateral is located, which shall
reveal no filings or recordings with respect to any of the
Collateral in favor of any Person other than you.
<PAGE>
3M. Governmental Approvals. (a) The Company and NEES
shall have obtained all Governmental Approvals, including an
order of the Securities and Exchange Commission approving under
PUHCA the transactions contemplated by the Basic Documents,
required to enter into the transactions contemplated in this
Agreement. You shall have received a true and correct copy of
such order.
(b) All Governmental Approvals then required in
connection with the ownership and operation of the Project by the
Partnerships shall have been obtained. Such Governmental
Approvals shall (i) be in full force and effect and not subject
to appeal or, to the Company's knowledge, judicial, governmental
or other review, (ii) have been granted in the name of the
Partnership required to obtain them and (iii) not be subject to
any restriction, condition, limitation or other provision that in
your sole judgment adversely affects or will adversely affect the
effective operation of the Project in the manner contemplated by
the Facility Contracts, the ability of the Company to make all
payments hereunder or of the Project Borrower to make all
payments under the OSP Senior Notes Documents or of the
Partnerships to make all payments under the OSP Revolver
Documents.
3N. Sale of Other Notes. Contemporaneously with the
closing the Company shall sell to the Other Purchasers and the
Other Purchasers shall purchase the Notes to be purchased by them
at the closing specified in the Purchaser Schedule.
3O. Private Placement Number. A Private Placement
number issued by Standard & Poor's CUSIP Service Bureau (in
cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained
for the Notes.
3P. Payment of Special Counsel Fees. Without limiting
the provisions of Section 11B, the Company shall have paid on or
before the closing the fees, charges and disbursements of your
special counsel referred to in Section 3A to the extent reflected
in a statement of such counsel rendered to the Company at least
one business day prior to the closing.
<PAGE>
4. PREPAYMENTS. The Notes shall be subject to
prepayment with respect to the required prepayments specified in
Section 4A and the optional prepayments permitted by Section 4B.
4A. Required Prepayments.
(i) (x) Upon the occurrence of an Event of Loss, the
Company shall prepay at par immediately after receipt by
the Company of Net Proceeds in respect of such Event of
Loss an amount of the outstanding principal of the Notes
equal to the amount of said Net Proceeds; and (y) within
60 days after the date that the Company shall first have
received an aggregate of $250,000 in Net Proceeds with
respect to a Taking not constituting an Event of Loss, the
Company shall prepay at par an amount of the Notes equal
to the sum of such Net Proceeds plus all other Net
Proceeds received by the Company with respect to such
Taking, and shall continue from time to time to prepay at
par an amount of the Notes equal to any additional Net
Proceeds thereafter received by the Company with respect
to such Taking immediately after the Company's receipt
thereof; and (z) within 60 days after the date that the
Company shall have first received an aggregate of $250,000
in Net Proceeds with respect to a Special Distribution
Event, the Company shall prepay at par an amount of the
Notes equal to the sum of such Net Proceeds plus all other
Net Proceeds received by the Company with respect to such
Special Distribution Event, and shall continue from time
to time to prepay at par an amount of the Notes equal to
any additional Net Proceeds thereafter received by the
Company with respect to such Special Distribution Event
immediately after the Company's receipt thereof;
(ii) Until the Notes shall be paid in full, the Company
shall apply to the prepayment of the Notes, without
premium, the amounts set forth on the Amortization
Schedule on the dates set forth therein, and such
principal amount of the Notes, together with interest
thereon to the prepayment dates, shall become due on such
prepayment dates.
<PAGE>
(iii) All prepayments pursuant to Section 4A(i) shall
be without payment of the Yield-Maintenance Amount and
shall be applied in satisfaction of required payments of
principal pro rata among their scheduled due dates.
(iv) Net Proceeds shall be deemed "received" by the
Company under Section 4A(i) when actually paid over to the
Company, whether distributed by the Partnerships to the
Company, paid directly to the Company, or otherwise paid
over to the Company from any source.
4B. Optional Prepayment With Yield-Maintenance Amount.
The Notes shall be subject to prepayment, in whole at any time or
from time to time in part (in multiples of $1,000,000 in the
aggregate for the Notes and the Other Notes), at the option of
the Company, at 100% of the principal amount so prepaid plus
interest thereon to the prepayment date and the Yield-Maintenance
Amount, if any, with respect to each Note. Any partial
prepayment of the Notes pursuant to this Section 4B shall be
applied in satisfaction of required payments of principal in
inverse order of their scheduled due dates.
4C. Notice of Optional Prepayment. The Company shall
give the holder of each Note irrevocable written notice of any
prepayment pursuant to Section 4B not less than 30 days prior to
the prepayment date, specifying such prepayment date and the
principal amount of the Notes, and of the Notes held by such
holder, to be prepaid on such date and stating that such
prepayment is to be made pursuant to Section 4B. Notice of
prepayment having been given as aforesaid, the principal amount
of the Notes specified in such notice, together with interest
thereon to the prepayment date and together with the Yield-
Maintenance Amount, if any, with respect thereto, shall become
due and payable on such prepayment date. The Company shall, on
or before the day on which it gives written notice of any
prepayment pursuant to Section 4B, give telephonic notice of the
principal amount of the Notes to be prepaid and the prepayment
date to each Noteholder which shall have designated a recipient
of such notices in the Purchaser Schedule attached hereto or by
notice in writing to the Company.
4D. Partial Payments Pro Rata. Upon any partial
prepayment of the Notes pursuant to Section 4A or 4B, the
<PAGE>
principal amount so prepaid shall be allocated to all Notes at
the time outstanding (including, for the purpose of this
Section 4D only, all Notes prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates other than by prepayment pursuant to
Section 4A or 4B) in proportion to the respective outstanding
principal amounts thereof.
4E. Retirement of Notes. The Company shall not, and
shall not permit any of its Subsidiaries or Affiliates to, prepay
or otherwise retire in whole or in part prior to their stated
final maturity (other than by prepayment pursuant to Section 4A
or 4B or upon acceleration of such final maturity pursuant to
Section 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder unless the Company or such
Subsidiary or Affiliate shall have offered to prepay or otherwise
retire or purchase or otherwise acquire, as the case may be, the
same proportion of the aggregate principal amount of Notes held
by each other holder of Notes at the time outstanding upon the
same terms and conditions. Any Notes so prepaid or otherwise
retired or purchased or otherwise acquired by the Company or any
of its Subsidiaries or Affiliates shall not be deemed to be
outstanding for any purpose under this Agreement, except as
provided in Section 4D.
5. AFFIRMATIVE COVENANTS.
5A. Financial Statements. The Company covenants that
it will deliver to each Noteholder in duplicate:
(i) promptly upon receipt thereof, a copy of each
report submitted to the Company by independent accountants
in connection with any annual, interim or special audit
made by them of the books of the Company;
(ii) promptly upon receipt thereof, copies of all f
inancial statements, notices and reports as shall be delivered to
the holders of the indebtedness represented by the OSP Senior Notes
Documents; and
(iii) with reasonable promptness, such other financial
data and other information with respect to the Company or
either of the Partnerships as any Noteholder may
reasonably request.
<PAGE>
Within 45 days after the end of each fiscal quarter of the
Company, the Company will deliver to each Noteholder an Officer's
Certificate demonstrating (with computations in reasonable
detail) compliance by the Company and its Subsidiaries with the
provisions of Sections 6B, 6F and 6J and stating the actual Debt
Service Coverage Ratio for such quarter and that there exists no
Event of Default or Default, or, if any Event of Default or
Default exists, specifying the nature and period of existence
thereof and what action the Company proposes to take with respect
thereto. Together with each delivery of audited annual financial
statements of the Company, the Company will deliver a certificate
of its independent accountants setting forth the Debt Service
Coverage Ratio for such fiscal year end and for each of the
immediately preceding four fiscal quarters and stating that, in
making the audit necessary for their report on such financial
statements, they have obtained no knowledge of any Event of
Default or Default, or, if they have obtained knowledge of any
Event of Default or Default, specifying the nature and period of
existence thereof; provided, however, such accountants shall not
be liable to anyone by reason of their failure to obtain
knowledge of any Event of Default or Default which would not be
disclosed in the course of an audit conducted in accordance with
generally accepted auditing standards.
5B.
Conduct of Business, Maintenance of Existence, etc. The Company
will at all times (i) engage solely in the business of owning its
interest in the Partnerships and activities necessarily related
thereto and (ii) preserve and maintain in full force and effect
(A) its existence as a corporation under the laws of the State of
Rhode Island and (B) all of its rights, privileges and franchises
necessary for the ownership of its interest in the Partnerships
the failure of which could reasonably be expected to have a
material adverse effect upon the Company or its ability to
perform its obligations under the Basic Documents and the
Partnership Agreements.
5C. Performance of Obligations. The Company will duly
perform and observe all of the covenants, agreements and
conditions on its part to be performed and observed under the
Basic Documents and the Partnership Agreements and, in the case
of the Partnership Agreements, the failure of which could
reasonably be expected to have a material adverse effect upon the
Company or its ability to perform its obligations under the Basic
<PAGE>
Documents and the Partnership Agreements.
5D. Inspection of Property, Books and Records;
Discussions. The Company will keep proper books of record and
account in which full, true and correct entries in conformity
with generally accepted accounting principles and all
Requirements of Law shall be made of all dealings and
transactions in relation to its business and activities
throughout the periods involved. The Company shall permit
representatives of any Noteholder to visit and inspect its
properties, to examine its books of record and account and to
make copies thereof and to discuss its affairs, finances and
accounts with its principal officers and independent accountants,
all at such times during business hours and at such intervals as
such Noteholder may reasonably request.
5E.
Compliance with Laws, Contractual Obligations, etc. The Company
will comply with all Requirements of Law and all Contractual
Obligations, and will from time to time obtain and comply with
all Governmental Approvals and other consents and approvals as
shall now or hereafter be necessary or desirable in connection
with the ownership of its interest in the Partnerships, the
failure to obtain or comply with which could reasonably be
expected to have a material adverse effect upon the Company or
its ability to perform its obligations under the Basic Documents
or the Partnership Agreements.
5F. Payment of Taxes and Claims. The Company will pay
and discharge all Taxes imposed upon it or on its income or
profits or on any of its property prior to the date on which
interest or penalties attach thereto and all claims, levies or
liabilities (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due
and payable and which, if unpaid might become, or which have
become a Lien (other than a Permitted Lien) upon any of the
Collateral. The Company shall have the right, however, to
contest in good faith the validity or amount of any such Taxes or
claim by proper proceedings timely instituted, and may permit the
Taxes or claims so contested to remain unpaid during the period
of such contest if (i) the Company diligently prosecutes such
contest, (ii) the Company sets aside on its books adequate
reserves with respect to the contested items, (iii) during the
period of such contest the enforcement of any contested item is
<PAGE>
effectively stayed and (iv) such contest does not involve
material risk of the sale, forfeiture or loss of any of the
Collateral. The Company will promptly pay or cause to be paid
any valid, final and non-appealable judgment enforcing any such
Tax or claim and cause the same to be satisfied of record.
5G. Notices. The Company will, promptly upon
obtaining knowledge of any of the following, give notice to the
holders of the Notes:
(a)of the occurrence of any Default or Event of
Default;
(b)of the occurrence of any "Default" or "Event of
Default" under and as such terms are defined in the OSP Senior
Notes Documents and OSP Revolver Documents;
(c)of any investigation or proceeding by any
Governmental Authority, or of any litigation or claim, which in
each case may exist at any time relating to the Company or either
of the Partnerships, which could reasonably be expected to have a
material adverse effect on the properties, business prospects,
operations or financial or other condition of the Company;
(d)of any change, condition or circumstance relating to
the Company which has or could reasonably be expected to have a
material adverse effect on the ability of the Company to perform
its obligations under any of the Basic Documents;
(e)of any Event of Loss;
(f)of any Special Distribution Event;
(g)of any amendment, modification or waiver of any of
the OSP Senior Notes Documents, the OSP Revolver Documents, the
Partnership Agreements or the Power Sales Agreements;
(h)of any management decision of either Partnership to
make a call for additional capital contributions;
(i)of any event or circumstance which under the terms
of Sections 4.1.2 or 4.2 of the Partnership Agreements would
allow any individual partner in either Partnership to elect to be
repaid any amounts theretofore contributed by it to the
<PAGE>
respective Partnerships or which would allow such partner to
elect to have its "Capital Account" (as defined in each
Partnership Agreement) credited or debited;
(j)of any requests by the respective "Management
Committees" of each Partnership for any action, consent or vote
by any partner thereof which could reasonably be expected to have
a material adverse effect on the ability of the Company to
perform its obligations under any of the Basic Documents;
(k)of any information or report supplied by either
Partnership to the Company in its capacity as general partner
thereof the contents of which reveal any event or circumstance
which could reasonably be expected to have a material adverse
effect on the ability of the Company to perform its obligations
under any of the Basic Documents;
(l)of the withdrawal of any partner in either
Partnership; and
(m)of any event which would constitute a reportable
event under Section 4043(b) of Title IV of ERISA with respect to
any Plan has occurred, which event would be likely to result in a
liability material to the Company, or that the PBGC or the
Company has instituted or will institute proceedings under such
Title to terminate such Plan and as a result thereof the Company
would be likely to incur a material liability, or the Company
receives notice from a Multiemployer Plan sponsor concerning the
imposition of withdrawal liability under Title IV of ERISA.
5H. Further Assurances. The Company will make,
execute or endorse, and acknowledge and deliver or file or
record, all notices, and certificates and additional agreements,
undertakings, conveyances, transfers, assignments, financing
statements, continuation statements or further assurances, and
take any and all such other action as any Noteholder may, from
time to time, reasonably deem necessary or advisable in
connection with any of the Basic Documents or the transactions
contemplated by any such documents, for the better assuring and
confirming for such Noteholder of all or any part of the security
for the Notes and any other obligations under the Basic
Documents.
6. NEGATIVE COVENANTS. The Company agrees that, so
long as any of the Notes are outstanding:
<PAGE>
6A.Organization, Sale of Assets, Purchases, etc.
(a) The Company will not merge into or consolidate
with any other Person, change its form of organization or the
scope or nature of its business or business objectives, or
liquidate or dissolve itself (or suffer any such liquidation or
dissolution), or sell, lease, transfer or otherwise dispose of
all or any substantial portion of its assets which constitute
part of the Collateral.
(b) The Company will not purchase or acquire any
assets or sell any assets, other than (i) in the ordinary course
of its business as reasonably required in its capacity as a
general partner in each of the Partnerships and (ii) Permitted
Investments.
6B. Indebtedness. The Company will not create, incur,
assume or suffer to exist any Indebtedness, except
(a) Indebtedness represented by the Notes, the Other Notes and
other Indebtedness owed to the Noteholders pursuant to this
Agreement or the holders of the Other Notes pursuant to the Other
Agreements, (b) trade or similar Indebtedness incurred in the
ordinary course of business, not exceeding $250,000 in the
aggregate at any one time, (c) Indebtedness of the Partnerships
for which the Company is liable as a general partner thereof, (d)
Indebtedness in respect of Taxes to the extent they are not yet
due and payable or are being contested in accordance with Section
5F, (e) Indebtedness for accrued Distributions declared not in
contravention of the provisions of Section 6J but not yet made
and (f) Indebtedness to NEES subordinated in accordance with the
provisions of Exhibit H hereto to any Indebtedness of the Company
existing under the Basic Documents to which the Company is a
party.
6C. Liens. The Company will not create, incur, assume
or suffer to exist any Lien securing any Indebtedness or other
obligation of the Company or any other Person, except Permitted
Liens.
6D. Nature of Business. The Company will not engage
in any business other than serving as a general partner of each
of Partnerships and other activities necessarily related
thereto.
<PAGE>
6E. Amendment of Contracts, etc. The Company will
not, without the prior written consent of the Required Holder(s),
consent to or vote in favor of, or refrain from consenting to or
voting in favor of, or refrain from objecting to or voting
against, any amendment, supplement or modification of,
termination of, or waiver with respect to any of the provisions
of, any of (i) the Partnership Agreements or (ii) its articles of
incorporation or by-laws, or (iii) any of the OSP Senior Notes
Documents or OSP Revolver Documents, or (iv) any of the Power
Sales Agreements, in each case to the extent such action or
inaction by the Company could reasonably be expected to have a
material adverse effect (A) upon the Company or upon its ability
to perform its obligations under the Basic Documents or (B) upon
the validity or enforceability of any of the Basic Documents,
upon the Noteholders' rights and remedies thereunder or upon the
Liens of the Noteholders on the Collateral created pursuant to
the Collateral Security Documents.
6F. Investments. The Company will not make any
investments (whether by transfer of property, contributions to
capital, acquisitions of stock, bonds, promissory notes or other
securities, loans, advances or otherwise) other than Permitted
Investments.
6G. Change of Office. The Company will not change the
location of its chief executive office or principal place of
business (the address specified at the head of this Agreement) or
the office where it keeps its records concerning its business (25
Research Drive, Westborough, MA 01582) from that existing on the
date of this Agreement (and which the Company represents to be
the addresses so specified), unless (i) the Company shall have
given the Noteholders, the holders of the Other Notes and the
Security Agent at least 60 days prior written notice and (ii) all
action necessary or advisable in the opinion of the Required
Holder(s) to protect and perfect the Liens and security interests
with respect to the Collateral created by the Collateral Security
Documents shall have been taken.
6H. Change of Name. The Company will not change its
name unless (i) the Company shall have given the Noteholders, the
holders of the Other Notes and the Security Agent at least 60
days prior written notice and (ii) all actions necessary or
advisable in the opinion of the Required Holder(s) to protect and
perfect the Liens and security interests with respect to the
<PAGE>
Collateral created by the Collateral Security Documents shall
have been taken.
6I. Limitation on Transactions with Affiliates. The
Company will not conduct any business or enter into any
transaction or series of similar transactions (including, without
limitation, the purchase, sale, lease or exchange of any property
or the rendering of any service) with any Affiliate except for
(i) services rendered by New England Power Service Company
("NEPSCO") or other Affiliates for the services outlined, and
under the cost terms, substantially as provided in the Service
Contract, dated December 30, 1994, between the Company and NEPSCO
(subject to the limitation on Indebtedness set forth in Section
6B(b)), (ii) the receipt of loans from NEES permitted under
Section 6B(f), (iii) those transactions in its capacity as a
general partner of each of the Partnerships which are required by
each of the Partnership Agreements and (iv) Distributions by the
Company to its sole stockholder otherwise permitted under Section
6J.
6J. Distributions.
(a) The Company will not make or permit any
Distribution unless:
(i) no Default or Event of Default hereunder shall
have occurred and be continuing; and
(ii) the amount on deposit in the Security Account is,
at the time and after giving effect to such Distribution,
at least equal to the Required Amount; and
(iii) the Debt Service Coverage Ratio for the fiscal
quarter ended immediately prior to the proposed
Distribution is equal to or greater than 1.15 to 1.00 and
no event or condition has occurred which could reasonably
be expected to result in the Debt Service Coverage Ratio
for the 12 month period commencing on the first day of
such immediately preceding fiscal quarter being less than
1.15 to 1.00.
6K. Capital Expenditures and Leases. The Company will
not make any capital expenditures nor enter into, or permit to
remain in effect, any agreement to rent or lease, as lessee or
<PAGE>
lessor, any property (whether as a capital lease, operating lease
or otherwise) except for such capital expenditures and leases as
are required by the Partnership Agreements to be made or entered
into by the Company in its capacity as a general partner of the
respective Partnerships.
6L. Assignment. The Company shall not assign any of
its rights or obligations under any of the Basic Documents or the
Partnership Agreements to any Person without the prior written
consent of all of the Noteholders and all of the holders of the
Other Notes.
6M. Employee Plans. The Company will not adopt or
participate in a Plan. The Company will not suffer or permit to
exist any accumulated funding deficiency with respect to any Plan
now or hereafter established by any ERISA Affiliate; nor will the
Company suffer or permit to occur or exist any other event or
circumstance which (singly or in the aggregate with all other
such events or circumstances then existing) would be likely to
subject the Company or any ERISA Affiliate to any liability to
the PBGC or any other Person, entity or other liability under
ERISA in an aggregate amount which would have a material adverse
effect on the Company.
6N. Partnership Distributions. The Company shall not
consent to or vote in favor of or refrain from objecting to or
voting against any limitations or restrictions on the ability of
either of the Partnerships to make distributions to the partners
in either Partnership other than (i) as permitted by the OSP
Senior Notes Documents and the OSP Revolver Documents in the form
delivered to the Noteholders pursuant to Section 3H (or as
amended with the prior written consent of the Noteholders and the
holders of the Other Notes) or (ii) as mandated by any
Requirement of Law.
6O. Partnership Obligations. The Company shall not
(i) fail to make any "Capital Contribution" (as defined in each
Partnership Agreement) or any other payment required by either
Partnership Agreement, or (ii) withdraw from, or take any action
or fail to take any action which could result in its automatic or
involuntary withdrawal from, or take any action in furtherance of
the liquidation or dissolution of, either Partnership, nor fail
to elect to continue each Partnership in the event either
Partnership is deemed to be dissolved as a result of the
<PAGE>
withdrawal, dissolution or bankruptcy of any of the partners
thereof, or (iii) fail to use best efforts to attend any meeting
of the Management Committee (as defined in each Partnership
Agreement) of either Partnership where the Company could
reasonably be expected to anticipate any action, or discussion of
any proposed or expected action or circumstance at such meeting
which could reasonably be expected to materially adversely affect
the Company's ability to perform its obligations under the Basic
Documents.
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
principal of any Note or any Other Note when the same
shall become due, either by the terms thereof or otherwise
as herein provided; or
(ii) the Company defaults in the payment of interest
on or Yield-Maintenance Amount payable with respect to any
Note or any Other Note or any other amount payable by the
Company to the Noteholders hereunder, under any Other
Agreement or under any other Basic Document, and such
default continues for 10 days; or
(iii) the Company defaults (whether as primary obligor
or as guarantor or other surety) in any payment of
principal of or interest on any other obligation for money
borrowed (or any Capitalized Lease Obligation, any
obligation under a conditional sale or other title
retention agreement, any obligation issued or assumed as
full or partial payment for property whether or not
secured by a purchase money mortgage or any obligation
under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided
with respect thereto, or the Company fails to perform or
observe any other agreement, term or condition contained
in any agreement under which any such obligation is
<PAGE>
created (or if any other event thereunder or under any
such agreement shall occur and be continuing) and the
effect of such failure or other event is to cause, or to
permit the holder or holders of such obligations
aggregating at least $250,000 in amount (or a trustee on
behalf of such holder or holders) to cause, obligations
aggregating at least $250,000 in amount to become due (or
to be repurchased by the Company) prior to any stated
maturity; or
(iv) any representation or warranty made by the Company
or NEES herein or in any Basic Document or by the Company
or NEES, or any of their respective officers in any
writing furnished in connection with or pursuant to any
Basic Document shall be or prove to be false in any
material respect on the date as of which made; or
(v) the Company fails to perform or observe any
agreement contained in Section 5G or in Section 6 hereof
or NEES fails to perform or observe any agreement
contained in Sections 3.1, 3.3, 3.4, 3.6, and 3.12 of the
Stock Pledge; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein or any Basic
Document, or NEES fails to perform or observe any other
agreement, term or condition contained in the Stock
Pledge, and, in either case, such failure shall not be
remedied within 60 days (or such longer period, not to
exceed 120 days, as is required to cure such failure,
provided that (A) the Company or NEES, as the case may be,
shall be diligently seeking to cure such failure and (B)
such failure could not reasonably be expected to have a
material adverse effect on the Company's or NEES' ability
to perform their obligations under the Basic Documents to
which they are a party) after an officer of the Company or
NEES (as applicable) obtains actual knowledge thereof; or
(vii) the Company, NEES, or either Partnership makes
an assignment for the benefit of creditors or is generally
not paying its debts as such debts become due; or
(viii) any decree or order for relief in respect of the
Company, NEES, or either Partnership is entered under any
<PAGE>
bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or
liquidation or similar law, whether now or hereafter in
effect (herein called the "Bankruptcy Law"), of any
jurisdiction; or
(ix) the Company, NEES, or either Partnership
petitions or applies to any tribunal for, or consents to,
the appointment of, or taking possession by, a trustee,
receiver, custodian, liquidator or similar official of the
Company, or of any substantial part of its assets, or
commences a voluntary case under the Bankruptcy Law of the
United States or any proceedings relating to it under the
Bankruptcy Law of any other jurisdiction; or
(x) any petition or application of the kind described
in the immediately preceding subsection (ix) is filed, or
any proceedings described in said subsection are
commenced, against the Company, NEES, or either
Partnership, and the Company, NEES, or either Partnership
(as applicable) by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order,
judgment or decree is entered appointing any such trustee,
receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings, and such
order, judgment or decree remains unstayed and in effect
for more than 60 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company, NEES, or either
Partnership, decreeing the dissolution of the Company,
NEES, or either Partnership (as applicable), and such
order, judgment or decree remains unstayed and in effect
for more than 60 days; or
(xii) a final judgment in an amount in excess of
$250,000 is rendered against the Company and, within 60
days after entry thereof, such judgment is not discharged
or execution thereof stayed pending appeal, or within 60
days after the expiration of any such stay, such judgment
is not discharged; or
(xiii) a "Default Notice" shall exist under and as
defined in the OSP Senior Notes Documents or a notice of
<PAGE>
"Default" or an "Event of Default" (as such terms are
defined in the OSP Revolver Documents) shall exist under
the OSP Revolver Documents, and the noteholders thereunder
shall elect to exercise any of their remedies thereunder;
or
(xiv) any Collateral Security Document shall fail to
provide, or cease to be effective to grant, to the
Security Agent for the ratable benefit of the Noteholders
and the holders of the Other Notes, a perfected first
priority Lien (subject to Permitted Liens) on the
Collateral intended to be created thereby or cease to be
in full force and effect or the validity thereof or the
applicability thereof to any Note, or any other
obligations purported to be secured or guaranteed thereby
or any part thereof shall be questioned or disaffirmed by
or on behalf of the Company or any other party thereto
except the Noteholders;
then (a) if such event is an Event of Default specified in clause
(i) or (ii) of this Section 7A, the holder of any Note (other
than the Company or any of its Subsidiaries or Affiliates) may at
its option, by notice in writing to the Company, declare such
Note and all other amounts owing under the Basic Documents to be,
and such Note and such other amounts shall thereupon be and
become, immediately due and payable together with interest
accrued thereon without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the
Company, (b) if such event is an Event of Default specified in
clause (viii), (ix) or (x) of this Section 7A with respect to the
Company, all of the Notes and all other amounts owing under the
Basic Documents at the time outstanding shall automatically
become immediately due and payable at par together with interest
accrued thereon, without presentment, demand, protest or notice
of any kind, all of which are hereby waived by the Company, and
(c) if such event is not an Event of Default specified in clause
(viii), (ix) or (x) of this Section 7A with respect to the
Company, the Majority Holder(s) may at its or their option, by
notice in writing to the Company, declare all of the Notes, the
Other Notes and all other amounts owing under the Basic Documents
to be, and all of the Notes, the Other Notes and all other
amounts owing under any Basic Document shall thereupon be and
become, immediately due and payable together with interest
accrued thereon and together with the Yield-Maintenance Amount,
<PAGE>
if any, with respect to each Note and Other Note, without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Company, provided that the Yield-
Maintenance Amount, if any, with respect to each Note and Other
Note shall be due and payable upon such declaration only if (x)
such event is an Event of Default specified in any of clauses (i)
to (xiv) of this Section 7A, inclusive, except an Event of
Default specified in clauses (viii), (ix) or (x) with respect to
the Company only, (y) the Required Holder(s) shall have given to
the Company, at least 10 Business Days before such declaration,
written notice stating its or their intention so to declare the
Notes and the Other Notes to be immediately due and payable and
identifying one or more such Events of Default whose occurrence
on or before the date of such notice permits such declaration and
(z) one or more of the Events of Default so identified shall be
continuing at the time of such declaration.
7B. Rescission of Acceleration. At any time after any
or all of the Notes and the Other Notes shall have been declared
immediately due and payable pursuant to Section 7A, the Majority
Holder(s) may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if (i) the Company
shall have paid all overdue interest on the Notes and the Other
Notes, the principal of and Yield-Maintenance Amount, if any,
payable with respect to any Notes or Other Notes which have
become due otherwise than by reason of such declaration, and
interest on such overdue interest and overdue principal and
Yield-Maintenance Amount at the rate specified in the Notes and
the Other Notes, (ii) the Company shall not have paid any amounts
which have become due solely by reason of such declaration, (iii)
all Events of Default and Defaults, other than non-payment of
amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to
Section 11C, and (iv) no judgment or decree shall have been
entered for the payment of any amounts due pursuant to the Notes,
the Other Notes, this Agreement or any Other Agreement. No such
rescission or annulment shall extend to or affect any subsequent
Event of Default or Default or impair any right arising
therefrom.
7C. Notice of Acceleration or Rescission. Whenever
any Note shall be declared immediately due and payable pursuant
to Section 7A or any such declaration shall be rescinded and
annulled pursuant to Section 7B, the Company shall forthwith give
<PAGE>
written notice thereof to the holder of each Note at the time
outstanding.
7D. Other Remedies. If any Event of Default or
Default shall occur and be continuing, the holder of any Note may
proceed (in addition to any remedies specified in Section 7A) to
protect and enforce its rights under this Agreement or any other
Basic Document (including without limitation its rights as a
secured party under the Collateral Security Documents) and such
Note, by exercising such remedies as are available to such holder
in respect thereof under applicable law, either by suit in equity
or by action at law, or both, whether for specific performance of
any covenant or other agreement contained in this Agreement or in
aid of the exercise of any power granted in this Agreement. No
remedy conferred in this Agreement upon the holder of any Note is
intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to every
other remedy conferred herein or now or hereafter existing at law
or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The
Company represents, covenants and warrants as follows:
8A. Organization. The Company is a corporation duly
organized and existing in good standing under the laws of the
State of Rhode Island, and is qualified to do business in every
jurisdiction where the conduct of its business or the ownership
of its assets requires it so to qualify. The Company has no
Subsidiaries.
8B. Financial Statements. The Company has furnished
you with the following financial statements, identified by a
principal financial officer of the Company or NEES, as the case
may be: (i) an unaudited balance sheet of the Company as at
December 31, 1994, and unaudited statements of income,
stockholder's equity and cash flows of the Company for such year,
prepared by the Company; (ii) an unaudited balance sheet of the
Company as at September 30, 1995 and unaudited statements of
income and cash flows for the nine-month period ended on such
date, prepared by the Company; (iii) a consolidated balance sheet
of NEES and its Subsidiaries as at December 31, 1994, and
consolidated statements of income, stockholders' equity and cash
flows of NEES and its Subsidiaries for such year, all audited by
Coopers & Lybrand, L.L.P.; and (iv) an unaudited consolidated
<PAGE>
balance sheet of NEES and its Subsidiaries as at September 30,
1995, and unaudited consolidated statements of income and cash
flows for the nine-month period ended on such date, prepared by
NEES. Such financial statements (including any related schedules
and/or notes) are true and correct in all material respects
(subject, as to interim statements, to changes resulting from
audits and year-end adjustments), have been prepared in
accordance with generally accepted accounting principles
consistently followed throughout the periods involved and show
all liabilities, direct and contingent, of the Company or of NEES
and its Subsidiaries, as the case may be, required to be shown in
accordance with such principles. The balance sheets fairly
present the condition of the Company and of NEES and its
Subsidiaries, as applicable, as at the dates thereof, and the
statements of income and cash flows fairly present the results of
the operations of the Company and of NEES and its Subsidiaries,
as applicable, and their cash flows for the periods indicated.
There has been no material adverse change in the business,
condition (financial or otherwise) or operations of the Company
or of NEES and its Subsidiaries taken as a whole since September
30, 1995.
8C. Corporate Authority and No Breach. The Company
has the corporate power to make, issue and sell, and perform
under, the Notes and to execute, deliver and perform the
Partnership Agreements, this Agreement, the Other Agreements and
the other Basic Documents, and each of this Agreement, the Other
Agreements and the Partnership Agreements has been duly and
validly executed and delivered and constitutes, and the Notes and
the Other Notes and the other Basic Documents when executed and
delivered will constitute, its legal, valid and binding
obligations, each enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The making,
issuance and sale of the Notes, and the execution, delivery and
performance by the Company of this Agreement, the Other
Agreements, the other Basic Documents and the Partnership
Agreements, have been duly authorized by all necessary corporate
action. Each of the Facility Contracts has been duly authorized
and validly executed and delivered by each Partnership party
thereto and constitutes each such Partnership's legal, valid and
binding obligation, each enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
<PAGE>
reorganization, moratorium, and similar laws of general
applicability, relating to or affecting creditors' rights and to
general equity principles. With respect to the Property
Stabilization Agreements, the representation in the foregoing
sentence is made to the best of the Company's knowledge.
8D. Actions Pending. There is no action, suit,
investigation or proceeding pending or, to the knowledge of the
Company, threatened, against the Company, or any properties or
rights of the Company (it being expressly understood that the
Company's representations with respect to actions, suits,
investigations or proceedings pending or threatened against the
Project Borrower or the Partnerships are set forth in Sections
8T(e) and 8U(f)), by or before any court, arbitrator or
administrative or governmental body which could reasonably be
expected to result in any material adverse change in the
business, condition (financial or otherwise) or operations of the
Company or on its ability to perform its obligations under the
Basic Documents or the Partnership Agreements.
8E. Outstanding Indebtedness. The Company is a
single-purpose entity and does not have outstanding any
Indebtedness or other obligations (contingent or otherwise) other
than Indebtedness permitted under Section 6B.
8F. Title to Properties. The Company has no
properties other than its interests as a general partner in each
of the Partnerships and has good title to such general partner
interests, subject to no Lien of any kind except Permitted Liens.
8G. Taxes. The Company has filed all federal, state
and other income tax returns which are required to be filed, and
has paid all Taxes as shown on such returns and on all
assessments received by it to the extent that such Taxes have
become due.
8H. Conflicting Agreements and Other Matters. The
Company is not a party to any contract or agreement or subject to
any charter or other corporate restriction which materially and
adversely affects its business, property or assets, or financial
condition. Neither the execution nor delivery of any of the
Basic Documents, nor the offering, issuance and sale of the Notes
and the Other Notes, nor fulfillment of nor compliance with the
terms and provisions of the Basic Documents will conflict with,
<PAGE>
or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of, or
result in the creation of any Lien (other than Liens created by
the Basic Documents) upon any of the properties or assets of the
Company pursuant to, any Contractual Obligation or any
Requirement of Law. The Company is not a party to, or otherwise
subject to any provision contained in, any instrument evidencing
Indebtedness of the Company, any agreement relating thereto or
any other contract or agreement (including its charter) which
limits the amount of, or otherwise imposes restrictions on the
incurring of, Indebtedness of the Company of the type to be
evidenced by the Notes, the Other Notes and the Basic Documents.
8I. Offering of Notes. Neither the Company nor any
agent acting on its behalf has, directly or indirectly, offered
the Notes or the Other Notes or any similar security of the
Company for sale to, or solicited any offers to buy the Notes or
the Other Notes or any similar security of the Company from, or
otherwise approached or negotiated with respect thereto with, any
Person other than [_________] institutional investors, and
neither the Company nor any agent acting on its behalf has taken
or will take any action which would subject the issuance or sale
of the Notes or the Other Notes to the provisions of section 5 of
the Securities Act or to the provisions of any securities or Blue
Sky law of any applicable jurisdiction.
8J. Use of Proceeds. The Company does not own or have
any present intention of acquiring any "margin stock" as defined
in Regulation G (12 CFR Part 207) of the Board of Governors of
the Federal Reserve System (herein called "margin stock"). The
proceeds of sale of the Notes and the Other Notes will be used
(i) to pay fees and expenses incurred by the Company in
connection with the sale of the Notes and the Other Notes, (ii)
to pay working capital expenses of the Company and (iii) to repay
(in part) the outstanding principal balances under loans made by
NEES. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock or for the
purpose of maintaining, reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any stock that
is currently a margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning
of such Regulation G. Neither the Company nor any agent acting
on its behalf has taken or will take any action which might cause
<PAGE>
this Agreement, any Other Agreement, the Notes or any Other Note
to violate Regulation G, Regulation T or any other regulation of
the Board of Governors of the Federal Reserve System or to
violate the Exchange Act, in each case as in effect now or as the
same may hereafter be in effect.
8K. ERISA. No accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, exists with respect to any Plan (other
than a Multiemployer Plan). No liability to the Pension Benefit
Guaranty Corporation has been or is expected by the Company or
any ERISA Affiliate to be incurred with respect to any Plan
(other than a Multiemployer Plan) by the Company or any ERISA
Affiliate which is or would be materially adverse to the
business, condition (financial or otherwise) or operations of the
Company. Neither the Company nor any ERISA Affiliate has
incurred or presently expects to incur any withdrawal liability
under Title IV of ERISA with respect to any Multiemployer Plan
which is or would be materially adverse to the business,
condition (financial or otherwise) or operations of the Company.
The execution and delivery of this Agreement and the issuance and
sale of the Notes and the Other Notes will be exempt from, or
will not involve any transaction which is subject to, the
prohibitions of section 406 of ERISA and will not involve any
transaction in connection with which a penalty could be imposed
under section 502(i) of ERISA or a tax could be imposed pursuant
to section 4975 of the Code. The representation by the Company
in the next preceding sentence is made in reliance upon and
subject to the accuracy of your representation in Section 9B.
8L. Governmental Consent. Except for the order of the
Securities and Exchange Commission approving under PUHCA the
transactions contemplated by the Basic Documents, which order has
been duly obtained, is valid, in full force and effect and not
subject to appeal, and routine filings after the date of closing
with the Securities and Exchange Commission and/or state Blue Sky
authorities, neither the nature of the Company, nor any of its
businesses or properties, nor any relationship between the
Company and any other Person, nor any circumstance in connection
with the offering, issuance, sale or delivery of the Notes and
the Other Notes is such as to require any authorization, consent,
approval, exemption or other action by or notice to or filing
with any court or administrative or governmental body in
connection with the execution and delivery of this Agreement or
<PAGE>
any Other Agreement, the offering, issuance, sale or delivery of
the Notes or any Other Note or fulfillment of or compliance with
the terms and provisions hereof or of any Other Agreement or of
the Notes or any Other Note.
8M. No Defaults. No Default or Event of Default
exists under this Agreement. No "Default" or "Event of Default"
(as such terms are defined in the OSP Senior Notes Documents or
OSP Revolver Documents) exists under any of the OSP Senior Notes
Documents or OSP Revolver Documents. The Company is in
compliance in all material respects with all of the provisions of
the Partnership Agreements applicable to the Company, and,
without limiting the generality of the foregoing, the Company has
made all capital contributions required to be made by it under
the Partnership Agreements. The Company is in compliance with
all other Contractual Obligations and Requirements of Law, the
failure to comply with which could reasonably be expected to have
a material adverse effect upon the ability of the Company to
perform its obligations under the Basic Documents and/or the
Partnership Agreements.
8N. Disclosure. Neither any of the Basic Documents,
the Descriptive Memorandum, nor any other document, certificate
or statement furnished to you by or on behalf of the Company in
connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements contained herein and therein not misleading.
There is no fact peculiar to the Company which materially
adversely affects or in the future may (so far as the Company can
now foresee) materially adversely affect the business, property
or assets, or financial condition of the Company and which has
not been set forth in the Basic Documents or in the other
documents, certificates and statements furnished to you by or on
behalf of the Company prior to the date hereof in connection with
the transactions contemplated hereby. The Projections are
reasonable based on the assumptions stated therein and the best
information available to the officers of the Company. The
Projections constitute the Company's good faith estimate of the
future financial performance of the Partnerships, and the Company
believes such projections to be reasonable, provided that the
Company does not represent that the results contemplated by such
Projections will be achieved.
<PAGE>
8O. Collateral Security Documents. The Collateral
Security Documents are or when executed will be effective to
create, in favor of the Security Agent for the ratable benefit of
the Noteholders and the holders of the Other Notes, and the
Security Agent for the ratable benefit of the Noteholders and the
holders of the Other Notes has, legal, valid and enforceable
first priority Liens, subject to Permitted Liens, on and first
priority security interests in all of the Collateral. The
descriptions of the Collateral set forth in the Collateral
Security Documents are true and accurate in all material respects
and are adequate for the purpose of establishing, preserving,
protecting and perfecting the interests and rights (and the first
priority of Liens) intended to be created by the Collateral
Security Documents. All necessary and appropriate recordings and
filings have been or will be duly effected in all appropriate
public offices so that on or prior to the date of the Closing
Date each of the Collateral Security Documents constitutes or
will constitute a perfected first Lien on and prior perfected
security interest in all right, title, estate and interest of the
Company in and to the Collateral. Such first Lien and security
interest are prior and superior to all other Liens and security
interests in the Collateral, existing or future, except Permitted
Liens.
8P. Investment Company; Investment Adviser. 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. The Company is not an
"investment adviser" within the meaning of the Investment
Advisers Act of 1940, as amended.
8Q. Public Utility Status.
(a) The Company is a "subsidiary company", "affiliate"
and "associate company" of a public utility holding company, as
such terms are defined under PUHCA.
(b) Neither the Security Agent nor the Noteholders
will, solely by reason of (i) the ownership interest of the
Company in the Partnerships, (ii) the purchasing of the Notes and
the Other Notes; (iii) the securing of the Notes and the Other
Notes by Liens on the Collateral or (iv) any other transaction
contemplated by this Agreement or any of the other Basic
Documents, be deemed by any Governmental Authority to be, or to
<PAGE>
be subject to regulation as, (x) an "electric utility", "electric
corporation", "electrical company", "public utility" or "public
utility holding company," under any existing law, rule or
regulation of any Governmental Authority, or (y) an "affiliate"
of a public utility holding company as such terms are defined in
PUHCA. Except as provided below, none of the Security Agent, the
Noteholders nor the holders of the Other Notes will, by reason of
its or their ownership of the Collateral upon the exercise of
their remedies under the Collateral Security Documents, nor, by
reason of its or their exercise of other remedies hereunder, be
deemed by any Governmental Authority to be (x) subject to
financial, organizational or rate regulation as an "electric
utility", "electric corporation", "electrical company", "public
utility" or a "public utility holding company" under any existing
law, rule or regulation of any Governmental Authority, or (y) an
"affiliate" of a public utility holding company as such terms are
defined in PUHCA; provided that to the extent that the Security
Agent or Noteholders and the holders of the Other Notes exercise
their remedies under the Stock Pledge to foreclose upon the
shares of stock pledged thereunder and become the owner or owners
of such shares of stock, then unless the Company shall at such
time be an "Exempt Wholesale Generator" pursuant to Section 32 of
PUHCA or shall control less than ten percent of the aggregate
voting rights in either of the Partnerships, the Security Agent,
the Noteholders and the holders of the Other Notes may have to
make certain filings with the Federal Energy Regulatory
Commission and/or the Securities and Exchange Commission to avoid
becoming subject to regulation as an "electric utility" or an
"affiliate" of a public utility holding company as such terms are
defined in PUHCA.
8R. Facility Contracts. The list of Facility
Contracts set forth on Exhibit G hereto is true, complete (except
for the exclusion of the Property Stabilization Agreements), and
correct, and together with the OSP Senior Notes Documents, the
OSP Revolver Documents, subordinated indebtedness in the amount
of $__________ owing to NEES and the Basic Documents, constitutes
all material Contractual Obligations entered into by the Project
Borrower and/or the Partnerships and/or the Company in connection
with the ownership, operation or financing of the Project.
8S.Broker's or Finder's Commissions. No broker's or
finder's fee or commission or investment banking fee (other than
a placement fee payable to CS First Boston Corporation) has been
<PAGE>
or will be payable, or asserted to be payable, with respect to
the issuance and sale of the Notes or the Other Notes or the
transactions contemplated hereby or thereby or ancillary hereto
or thereto, and the Company agrees that all such fees (including,
without limitation, the aforesaid placement fee) shall be paid by
it and that it will indemnify, defend and hold you harmless from
any claim, demand or liability for any broker's or finder's fees
or commissions or investment banking fees incurred or alleged to
have been incurred in connection with any matters relating to any
transaction referred to in this paragraph.
8T.Representations and Warranties as to the Project
Borrower. The Company further represents and warrants (for
itself and not intending to obligate either Partnership or the
Project Borrower), to the best of its knowledge after due
inquiry, as follows:
(a)Corporate Existence and Good Standing. The Project
Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with all
requisite corporate power to own or hold under lease the assets it
purports so to own or hold under lease, to transact the business in
which it is engaged and to perform its obligations under the OSP
Senior Notes Documents to which it is a party, and the Project
Borrower is qualified to do business in Rhode Island and all other
states in which it is required to be qualified.
(b)Authorization, etc. The OSP Senior Notes Documents to
which the Project Borrower is a party constitute, legal, valid and
binding obligations of the Project Borrower enforceable against the
Project Borrower in accordance with their respective terms, subject
as to the enforcement of remedies to applicable bankruptcy,
reorganization, insolvency and similar laws affecting creditors'
rights generally and to general principles of equity.
(c)No Legal Bar; No Conflict. The consummation by the
Project Borrower of the transactions contemplated by the OSP Senior
Notes Documents to which it is a party, and the performance of the
provisions thereof have not resulted and will not result in any
violation or breach of, any default under or, except as
specifically contemplated thereby, the creation of any Lien in
respect of any of the Project Borrower's property pursuant to or
under, its charter or by-laws, any Governmental Approval or
statute, rule or regulation applicable to it or any agreement,
<PAGE>
document or instrument to which it is a party or by which it is
bound.
(d)Taxes. The Project Borrower has filed all tax returns
which are required to be filed, and has paid all taxes as shown on
said returns and all other taxes and assessments that have become
due and before they have become delinquent. All tax liabilities
are adequately provided for on the Project Borrower's books. None
of the Project Borrower's tax liabilities have been examined and
closed for any fiscal year.
(e)Litigation, etc. There is no action, proceeding or
investigation pending or, to the Project Borrower's knowledge,
threatened against the Project Borrower or any of its assets or
properties which questions the validity of any of the OSP Senior
Notes Documents to which it is a party or any action taken or to be
taken pursuant thereto or which, if adversely determined, could
reasonably be expected to result, either in any case or in the
aggregate, in any material adverse effect on the business,
operations, affairs or condition (financial or otherwise) of the
Project Borrower or the Partnerships.
(f)Investment Company Act. The Project Borrower is not
an "investment company" or a company "controlled" by or acting on
behalf of an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(g)Public Utility Holding Company Act; Federal Power Act.
The Project Borrower is a "subsidiary company" of a "holding
company" within the meaning of PUHCA. The Project Borrower is not
a "public utility", as such term is defined in the Federal Power
Act, as amended.
(h)Ownership of Project Borrower, etc. The Partnerships
are the registered owners of all the Project Borrower's issued and
outstanding capital stock, all of which has been validly issued and
is fully paid and nonassessable. The Project Borrower owns no
capital stock of, or interest in, any other Person.
(i)Single Purpose Entity. The Project Borrower is a
single purpose entity whose sole business is to provide financing
for the Partnerships with respect to the Facility.
<PAGE>
8U.Representations and Warranties as to the
Partnerships. The Company represents and warrants (for itself
and not intending to obligate either Partnership) as follows:
(a)Partnership Existence. Each of the Partnerships is a
general partnership duly formed and validly existing under the laws
of Rhode Island, with all requisite partnership power to own or
hold under lease its assets, to transact the business in which it
is engaged, and such Partnership is qualified to do business in all
states in which the nature of the business conducted or to be
conducted by it or the ownership or lease of its assets makes such
qualification necessary or desirable.
(b)Partnership Power and Authorization, etc. The OSP
Senior Notes Documents and the OSP Revolver Documents to which
either Partnership is a party have been duly authorized by all
necessary partnership action on the part of such Partnership, and
such OSP Senior Notes Documents and OSP Revolver Documents
constitute legal, valid and binding obligations of such Partnership
enforceable against it in accordance with their respective terms,
subject as to the enforcement of remedies to applicable bankruptcy,
reorganization, and similar laws affecting creditors' rights
generally and to general principles of equity.
(c)No Legal Bar; No Conflict. The consummation of the
transactions contemplated by the OSP Senior Notes Documents, the
OSP Revolver Documents and the Power Sales Agreements, and the
performance of the provisions thereof have not resulted and will
not result in any violation or breach of, any default under or,
except as specifically contemplated thereby, the creation of any
Lien in respect of any of such Partnership's property pursuant to
or under its partnership agreement or other governing documents,
any Governmental Approval or any statute, rule or regulation
applicable to it or any agreement, document or instrument to which
it is a party or by which it is bound.
(d) Financial Statements, etc. Each Partnership has
delivered to you its balance sheets as of the last day of each of
the fiscal years ended December 31, 1992 through 1994, and the
related statements of income, partners' capital and cash flows for
each of such years, certified by Arthur Andersen, independent
public accountants. Such financial statements have been prepared
in accordance with GAAP and present fairly its financial condition
as of the dates of such balance sheets and the results of its
<PAGE>
operations for the fiscal years then ended. Since December 31,
1994, there have been no material adverse changes in such
Partnership's business, operations, affairs or condition (financial
or other).
(e)Taxes. Each Partnership has filed all tax returns
which are required to be filed, and has paid all taxes as shown on
said returns and all other taxes and assessments that have become
due and before they become delinquent. All tax liabilities are
adequately provided for on such Partnership's books. None of such
Partnership's tax liabilities have been examined and closed for any
fiscal year.
(f) Litigation, etc. Except as set forth on Schedule
8U(f) hereto, there is no action, proceeding or investigation
pending or, to the Company's knowledge, threatened against either
Partnership or any of its assets or properties which could, if
adversely determined, reasonably be expected to result, either in
any case or in the aggregate, in any material adverse effect on the
business, operations, affairs or condition (financial or otherwise)
of either Partnership.
(g)Legal Compliance. Neither Partnership is in violation
of any term of its partnership agreement or other governing
documents. Except as disclosed in Schedule 8U(g) hereto, neither
Partnership is in violation of any term of any Governmental
Approval, any statute, rule or regulation applicable to it or any
agreement, document or instrument to which it is a party or by
which it is bound, except where such violation could not reasonably
be expected to result in any material adverse effect on the
business, operations, affairs or condition (financial or otherwise)
of either Partnership.
(h)Indebtedness and Liens; No Defaults. Schedule 8U(h)
hereto sets forth a complete and correct list of (1) all of each
Partnership's Indebtedness and any Liens securing such Indebtedness
and (2) all Partnership Guarantees.
(i) Investment Company Act. Neither Partnership is an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940,
as amended.
<PAGE>
(j)Public Utility Holding Company Act; Federal Power Act;
Rhode Island General Laws. Each Partnership is a "public utility
company" and a "subsidiary company" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as
amended. Each Partnership is a "public utility", as such term is
defined in the Federal Power Act, as amended, and in the Rhode
Island General Laws.
(k)Title. Each Partnership has good title to its
properties and assets, and none of such properties and assets is
subject to any Lien except for Liens created and existing pursuant
to, or permitted under, the OSP Senior Notes Documents or the OSP
Revolver Documents. Such ownership or leasehold interests are
sufficient to permit such Partnership to operate the portion of the
Facility owned by it. Each Partnership enjoys peaceful and
undisturbed possession under all leases of real property on which
facilities operated by it are situated, and all such leases are
valid and subsisting and are in full force and effect.
(l)Environmental Compliance. Except as disclosed in
Schedule 8U(l) hereto, to the Company's knowledge after due
inquiry, there has been no generation, treatment, use or storage
on, or disposal, release, spill, escape on or from, the Facility or
any other property owned, occupied or operated by either
Partnership, its predecessor in interest or any other person for
whose conduct it is responsible, of any industrial, toxic or
hazardous substances or solid or hazardous waste material or
substance ("Hazardous Materials") in violation of common law, the
Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Section 9601, et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901, et seq.), or any
applicable state laws relating to the protection of human health,
safety and the environment or the release or threatened release of
Hazardous Materials, as each may have been amended, or any
regulation under or any interpretations of the foregoing
(collectively, the "Environmental Laws"), and neither Partnership
has received any notice or made any discovery, after reasonable
inquiry of its employees, of any violation relating to the
Environmental Laws arising out of its activities or the activities
of anyone else on the Facility or such other property. Except as
disclosed in Schedule 8U(l) hereto, to the Company's knowledge
after due inquiry, there are and have been no underground storage
tanks, vessels or related equipment or containers, and no
electrical transformers or other equipment containing
polychlorinated
<PAGE>
biphenyls, owned or operated by either Partnership or located on
the property included in the Facility, which are subject to the
Environmental Laws or other Federal, state or local laws and
regulations. No item disclosed in Schedule 8U(l) will cause or
result in any liability to either Partnership that could,
individually or in the aggregate, have a material adverse effect on
the business, operations, affairs or condition (financial or
otherwise) of such Partnership or the Company.
(m)Single Purpose Entity. Each Partnership is a single
purpose entity organized for the sole purpose of carrying out the
construction, ownership, operation and maintenance of its portion
of the Facility, and other activities incident thereto.
(n)Ownership of Project Borrower, etc. Each Partnership
is the registered and beneficial owner of 50% of the Project
Borrower's issued and outstanding capital stock, all of which has
been validly issued and is fully paid and nonassessable and free
and clear of all Liens. Each Partnership owns no capital stock of,
or interest in, any other Person.
(o) Ownership of Partnership Interest, etc. The owners of
all outstanding partnership interests of each Partnership and their
respective ownership percentages in the Partnerships are set forth
in Schedule 8U(o) hereto, and all capital contributions required to
be made in respect of such partnership interests as of the date
hereof have been paid in full.
(p)Undisclosed Liabilities. Neither Partnership has any
material liabilities, other than liabilities pursuant to the
Facility Contracts, the OSP Senior Notes Documents and the OSP
Revolver Documents and as set forth in the financial statements
referred to in subparagraph (d) hereof.
9.REPRESENTATIONS OF THE PURCHASER. You represent as
follows:
9A. Nature of Purchase. You are not acquiring the
Notes to be purchased by you hereunder with a view to or for sale
in connection with any distribution thereof within the meaning of
the Securities Act, provided that the disposition of your
property shall at all times be and remain within your control.
9B. Source of Funds. No part of the funds being used
by you to pay the purchase price of the Notes being purchased by
<PAGE>
you hereunder constitutes assets allocated to any separate
account maintained by you. For the purpose of this section 9B,
the term "separate account" shall have the meaning specified in
section 3 of ERISA.
10. DEFINITIONS. For the purpose of this Agreement,
the terms defined in the introductory sentence and in Sections 1,
2 and 3 shall have the respective meanings specified therein,
and the following terms shall have the meanings specified with
respect thereto below:
10A. Yield-Maintenance Terms.
"Business Day" shall mean any day other than a
Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed.
"Called Principal" shall mean, with respect to any
Note, the principal of such Note that is to be prepaid pursuant
to Section 4B or is declared to be immediately due and payable
pursuant to Section 7A, as the context requires.
"Discounted Value" shall mean, with respect to the
Called Principal of any Note, the amount obtained by discounting
all Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield
with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the
Called Principal of any Note, the yield to maturity implied by
(i) the yields reported, as of 10:00 a.m. (New York City time) on
the fourth Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as
"Page 7677" on the Telerate Service (or such other display as may
replace Page 7677 on the Telerate Service) for On The Run United
States Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such
Settlement Date, plus 0.50%, or if such yields shall not be
reported as of such time or the yields reported as of such time
shall not be ascertainable, (ii) the Treasury Constant Maturity
<PAGE>
Series yields reported, for the latest day for which such yields
shall have been so reported as of the fourth Business Day
preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or
any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such
Settlement Date, plus 0.50%. Such implied yield shall be
determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between yields
reported for various maturities.
"Remaining Average Life" shall mean, with respect to
the Called Principal of any Note, the number of years (calculated
to the nearest one-twelfth year) obtained by dividing (i) such
Called Principal into (ii) the sum of the products obtained by
multiplying (a) each Remaining Scheduled Payment of such Called
Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will
elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" shall mean, with respect
to the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due on or after the
Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled
due date.
"Settlement Date" shall mean, with respect to the
Called Principal of any Note, the date on which such Called
Principal is to be prepaid pursuant to section 4B or is declared
to be immediately due and payable pursuant to section 7A , as the
context requires.
"Yield-Maintenance Amount" shall mean, with respect to
any Note, an amount equal to the excess, if any, of the
Discounted Value of the Called Principal of such Note over the
sum of (i) such Called Principal plus (ii) interest accrued
thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance
Amount shall in no event be less than zero.
<PAGE>
10B. Other Terms.
"Affiliate" shall mean any Person directly or
indirectly controlling, controlled by, or under direct or
indirect common control with, another Person, except a
Subsidiary. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of
such corporation, whether through the ownership of Voting Stock,
by contract or otherwise.
"Amortization Schedule" shall mean the amortization
schedule attached to the form of Note attached hereto as
Exhibit A.
"Bankruptcy Law" shall have the meaning specified in
clause (vii) of Section 7A.
"Basic Documents" shall mean collectively, this
Agreement, the Other Agreements, the Notes, the Other Notes, the
Collateral Security Documents, and any and all other agreements,
instruments, opinions, certificates, and other documents executed
and delivered pursuant to and in connection therewith, as the
same may be amended, supplemented, or otherwise modified from
time to time in accordance with the terms hereof.
"Business Day" shall mean any day other than a
Saturday, a Sunday or a day on which commercial banks in New York
City or Boston, Massachusetts are required or authorized to be
closed.
"Capitalized Lease Obligation" shall mean any rental
obligation which, under generally accepted accounting principles,
would be required to be capitalized on the books of a Person or
its Subsidiary, taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with such
principles.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall mean all property which is subject
or becomes subject to the security interests and liens granted by
any of the Collateral Security Documents.
<PAGE>
"Collateral Agency Agreement" shall mean the collateral
agency agreement dated as of the date hereof, between the
Company, the Noteholders, the Other Noteholders and the Security
Agent and substantially in the form of Exhibit E hereto.
"Company" shall have the meaning given thereto in the
introductory sentence of this Agreement, and for purposes of
taking or failing to take any action in the Company's role as a
general partner of each Partnership, as contemplated by
Articles V and VI hereof, shall include (without limitation) the
Company's "Representative" and/or "Alternative Representative" on
the "Management Committee" as each such term is defined in each
Partnership Agreement.
"Contractual Obligations" shall mean as to any Person,
any provision of any security issued by such Person or of any
indenture, mortgage, deed of trust, contract, document,
agreement, lease, instrument, preferential payment arrangement or
undertaking to which such Person is a party or by which it or any
of its property is bound or subject.
"Consent and Agreements" shall mean the consent and
agreements executed and delivered by the Partnerships,
substantially in the form of Exhibits F-1 and F-2, respectively.
"Debt Service Coverage Ratio" shall mean for any
period, the ratio of (i) the sum of all cash distributions
received by the Company from the Partnerships during such period,
excluding any thereof which consist of proceeds required by the
terms of this Agreement and the Other Agreements to be applied to
the mandatory prepayment of the Notes under Section 4A(i), to
(ii) scheduled debt service payable by the Company in respect of
principal and accrued interest on the Notes and the Other Notes
under Section 4A(ii) hereof and of the Other Agreements during
such period plus the aggregate amount of any overdue scheduled
and mandatory debt service payments hereunder and under the Other
Note Agreements from previous periods.
"Default" shall mean any event, act or condition which
with notice or lapse of time, or both, would constitute an Event
of Default.
<PAGE>
"Descriptive Memorandum" shall mean the Direct Placement
Memorandum dated October 1995, as amended, supplemented or modified
to and including the date hereof, prepared and distributed in
connection with the offering of the Notes and the Other Notes.
"Distribution" shall mean any distribution or dividend,
in cash or in kind, direct or indirect, on account of the capital
stock or other equity interest in the Company or any subordinated
indebtedness of the Company or any payment in cash or in kind, in
redemption, retirement, purchase or other acquisition, direct or
indirect, of such capital stock or equity interest or
subordinated indebtedness.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any corporation which is a
member of the same controlled group of corporations as the
Company within the meaning of section 414(b) of the Code, or any
trade or business which is under common control with the Company
within the meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the events specified
in Section 7A, provided that there has been satisfied any
requirement in connection with such event for the giving of notice,
or the lapse of time, or both.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Event of Loss" shall mean (a) damage to or destruction
of all or substantially all of the Project or a constructive or
compromise loss of substantially all of the Project based on an
insurance settlement as a result of damages to the Project or (b)
any Taking of all or substantially all of the Project.
"Facility Contracts" shall mean the contracts,
commitments and other agreements set forth on Exhibit G hereto.
"Governmental Approval" shall mean any approval,
consent, authorization license, permit, order of, or declaration,
filing or registration with any governmental body.
<PAGE>
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof, and
any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government, including, without limitation, any central bank or
other fiscal, monetary or other authority.
"Guarantee" shall mean, with respect to any Person, any
direct or indirect liability, contingent or otherwise, of such
Person with respect to any indebtedness, lease, dividend or other
obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or
in respect of which such Person is otherwise directly or
indirectly liable, including, without limitation, any such
obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain the solvency or any
balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or
supplies or for any transportation or services regardless of the
non-delivery or non-furnishing thereof, in any such case if the
purpose or intent of such agreement is to provide assurance that
such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the
holders of such obligation will be protected against loss in
respect thereof. The amount of any Guarantee shall be equal to
the outstanding principal amount of the obligation guaranteed or
such lesser amount to which the maximum exposure of the guarantor
shall have been specifically limited.
"Indebtedness" shall mean, with respect to any Person,
without duplication, (i) all items (excluding items of
contingency reserves or of reserves for deferred income taxes)
which in accordance with generally accepted accounting principles
would be included in determining total liabilities as shown on
the liability side of a balance sheet of such Person as of the
date on which Indebtedness is to be determined, (ii) all
indebtedness secured by any Lien on any property or asset owned
or held by such Person subject thereto, whether or not the
<PAGE>
indebtedness secured thereby shall have been assumed, and (iii)
all indebtedness of others with respect to which such Person has
become liable by way of a Guarantee.
"Lien" shall mean any mortgage, pledge, security
interest, encumbrance, lien (statutory or otherwise) or charge of
any kind (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of
any jurisdiction) or any other type of preferential arrangement
for the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an
obligation.
"Majority Holder(s)" shall mean the holder or holders
of more than 51% of the aggregate principal amount of the Notes
and the Other Notes from time to time outstanding.
"Multiemployer Plan" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section
4001(a)(3) of ERISA).
"NEES Money Pool" shall mean the intercompany lending
arrangement among NEES and its subsidiary companies, as such
arrangement is amended from time to time, as approved by the
Securities and Exchange Commission under PUHCA.
"Net Proceeds" shall mean all amounts, including
without limitation insurance proceeds, received as a result of
(i) the loss, theft, destruction or damage to all or any portion
of the Project, (ii) the condemnation, confiscation or
requisition of all or any portion of the Project, (iii) a defect
in title of all or any portion of the Project, (iv) the failure
of the Project to perform at the guaranteed levels, or (v)
rebates, refunds, contract payments or other payments of any
kind, including damages in late performance, made by any Person
under any warranty or guarantee relating to the Project.
"Noteholder" shall mean you and any holder from time to
time of any of the Notes, including without limitation any
Transferee.
<PAGE>
"Obligations" shall mean all obligations, fees,
Company from time to time owing to the Noteholders, individually
or collectively, under or in connection with the transactions
contemplated by the Note Agreement and the other Basic Documents.
"Officer's Certificate" shall mean a certificate signed
in the name of a Person by an officer thereof.
"OSP Revolver Documents" shall mean the documents
executed and delivered by the Partnerships in connection with a
secured revolving credit agreement for a maximum outstanding
principal amount of $15,000,000 with The Bank of New York. The
OSP Revolver Documents include the Secured Credit Agreement,
dated as of July 20, 1994, among the Partnerships and The Bank of
New York, the Notes made in connection therewith, and the
Supplement to the Guarantor Security Agreement, dated as of July
24, 1994, among the Partnerships, The Bank of New York and [State
Street Bank and Trust Company, as collateral agent,] as the same
may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof.
"OSP Senior Notes Documents" shall mean the documents
executed and delivered by the Project Borrower and the
Partnerships, in conjunction with the sale of $208,000,000
aggregate principal amount of guaranteed senior notes, issued at
par in three series of $109,000,000, $41,000,000 and $58,000,000,
respectively. The OSP Senior Notes Documents include the Note
and Guaranty Agreement, dated as of October 19, 1992 among the
Project Borrower, the Partnerships and the purchasers named
therein (the "Senior Note Agreement"), and the "Notes", the
"Security Agreements", "the Guarantor Agreement", the "Guarantor
Notes" and the "Guarantees" endorsed on the Senior Notes (in each
case as defined in Senior Note Agreement), as the same may be
amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"Other Agreements" shall mean (i) the Note Agreement,
dated as of November 30, 1995, between the Company and CIGNA
Property and Casualty Insurance Company, (ii) the Note Agreement,
dated as of November 30, 1995, between the Company and Insurance
Company of North America and (iii) the Note Agreement, dated as
of November 30, 1995, between the Company and Life Insurance
Company of North America, in each case as the same may be
amended, supplemented or otherwise modified from time to time in
<PAGE>
accordance with the terms hereof and thereof and of the
Collateral Agency Agreement.
"Partnership Agreements" shall mean collectively, (i)
the Ocean State Power Amended and Restated Partnership Agreement,
dated as of December 29, 1988, and (ii) the Ocean State Power II
Amended and Restated Partnership Agreement, dated as of
September 29, 1989, in such case as the same may be amended,
supplemented or otherwise modified from time to time in
accordance with the terms thereof. "Partnership Agreement" shall
mean either one of the Partnership Agreements.
"Partnerships" shall mean Ocean State Power and Ocean
State Power II, each of which is a Rhode Island general
partnership. "Partnership" shall mean either one of the
Partnerships.
"PBGC" shall mean The Pension Benefit Guaranty
Corporation or any successor thereto.
"Permitted Investments" shall mean obligations issued
or guaranteed as to the punctual payment of principal and
interest by the United States of America and maturing within 270
days after acquisition thereof; (ii) obligations issued or
guaranteed as to the punctual payment of principal and interest
by any state or political subdivision of the Unites States of
America, maturing within 270 days after acquisition thereof, with
a rating of at least "A-1", "MIG-1" or "P-1" by Moody's or "A-1"
by S&P; (iii) open-market commercial paper, maturing within 270
days after acquisition thereof, issued by U.S. domestic
corporations having on any date of determination a commercial
paper rating of at least "P-1" by Moody's or "A-1" by S&P; (iv)
certificates of deposit, maturing within 270 days after
acquisition thereof, issued by or banker's acceptances eligible
for rediscount under the requirements of the Board of Governors
of the Federal Reserve System drawn on and accepted by a domestic
commercial bank (1) with a bank deposit rating or a commercial
paper rating of at least "P-1" by Moody's or "A-1" by S&P or, if
such bank does not have a commercial paper or bank discount
rating, an outstanding long-term debt rating of at least "A" by
S&P, (2) that is a member of the Federal Deposit Insurance
Corporation and (3) having a combined capital, surplus and
undistributed profits of at least $500,000,000; and (v)
investments in the NEES Money Pool (but only in respect of funds
<PAGE>
which are available for Distribution not in contravention of the
provisions of Section 6J).
"Permitted Liens" shall mean (i) the liens and security
interests created for the benefit of the Security Agent and/or
the Noteholders and the holders of the Other Notes under and
pursuant to the Collateral Security Documents, (ii) liens or
encumbrances in respect of the partnership interests held by the
Company in the Partnerships created under the terms of the
respective Partnership Agreements as in effect on the Closing
Date, (iii) liens for taxes the payment of which is not at the
time required by Section 5F and (iv) liens, security interests
and other encumbrances of property or assets of the Partnerships
which are deemed to be liens, security interests or encumbrances
on property or assets of the Company solely by virtue of its
status as a general partner of either the Partnership.
"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.
"Plan" shall mean any "employee pension benefit plan"
(as such term is defined in section 3 of ERISA) which is or has
been established or maintained, or to which contributions are or
have been made, by the Company or any ERISA Affiliate.
"Power Sales Agreements" shall mean (a) with respect to
Ocean State Power, the Unit Power Agreement dated as of
December 31, 1985, between Ocean State Power and Boston Edison
Company; the Unit Power Agreement, dated May 14, 1986, between
Ocean State Power and New England Power; the Unit Power
Agreement, dated May 14, 1986, between Ocean State Power and
Montaup Electric Company; the Unit Power Agreement, dated as of
May 14, 1986, between Ocean State Power and Newport Electric
Corporation, as assigned by Newport Electric Corporation to
Montaup Electric Company pursuant to a Consent, Assignment and
Assumption Agreement, dated March 13, 1994, among such Persons
and Ocean State Power; (b) with respect to Ocean State Power II,
the Unit Power Agreement, dated as of July 1, 1988, between Ocean
State Power II and Boston Edison Company, the Unit Power
Agreement, dated as of June 15, 1988, between Ocean State Power
II and New England Power Company; the Unit Power Agreement, dated
as of September 28, 1988, between Ocean State Power II and
<PAGE>
Montaup Electric Company; and the Unit Power Agreement, dated as
of July 12, 1988, between Ocean State Power II and Newport
Electric Corporation, as assigned by Newport Electric Corporation
to Montaup Electric Company pursuant to a Consent, Assignment and
Assumption Agreement, dated March 13, 1994, among such Persons
and Ocean State Power II; (c) any substitute power sale agreement
for the energy produced by the Project; and (d) any amendment,
modification or supplement to any of the foregoing.
"Project" shall mean the two-unit, 500 megawatt,
combined-cycle, natural gas-fired electric generating plant
located in Burrillville, Rhode Island, owned severally by the
Partnerships.
"Project Borrower" shall mean OSP Finance Company,
which is the borrower of the loans made pursuant to the OSP
Senior Notes Documents.
"Projections" shall mean the pro forma economic
projections for the Project and the Company provided by the
Company to the Noteholders on the Closing Date. The Projections
include calculations of major revenue and expense items,
operating income, taxable income, debt service schedules and
anticipated cash flows to the Partnerships and, as appropriate,
the Company.
"Property Stabilization Agreements" shall mean [to be
defined].
"PUHCA" shall mean the Public Utility Holding Company
Act of 1935, as amended.
"Required Amount" shall mean as of any date within a
given fiscal quarter, an amount equal to the aggregate amount of
scheduled debt service payable by the Company in respect of
principal and accrued interest on the Notes and the Other Notes
on the last day of such fiscal quarter.
"Required Holder(s)" shall mean the holder or holders
of at least 66 2/3% of the aggregate principal amount of the
Notes and the Other Notes from time to time outstanding.
"Requirement of Law" shall mean as to any Person, the
certificate of incorporation and by-laws or partnership agreement
<PAGE>
or other organizational or governing documents of such Person,
and any law, treaty, rule, directive or regulation, or
determination, interpretation or order of an arbitrator or a
court or other Governmental Authority, in each case applicable to
or binding upon such Person or any of its properties or to which
such Person or any of its properties is subject.
"Security Account" shall mean the cash collateral
account maintained with the Security Agent pursuant to the
Collateral Agency Agreement.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Security Agent" shall mean State Street Bank and Trust
Company, which is acting as security agent under the Collateral
Agency Agreement, and any of its successors or assigns.
"Security Agreements" shall mean the Security
Agreements and Collateral Assignment of Partnership Interests
between the Security Agent and the Company dated as of the date
hereof, and substantially in the form of Exhibits C-1 and C-2
hereto.
"Special Distribution Event" shall mean any
extraordinary event not in the normal course of business of the
Project (other than an Event of Loss or Taking) which results in
the receipt of proceeds by either of the Partnerships which are
applied to reduce the aggregate dollar amount of equity capital
of the Project (except for payments attributable to Taxes payable
by any partner in the Partnership) where such amount is not on
account of, or a return of, any capital contributions which are
made after the date of this Agreement.
"Stock Pledge" shall mean the Stock Pledge Agreement
entered into as of the date hereof by NEES for the benefit of the
Security Agent, and substantially in the form of Exhibit D
hereto.
"Subsidiary" shall mean any corporation more than 50%
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 a Person either directly or through
Subsidiaries.
<PAGE>
"Taking" shall mean a temporary or permanent taking by
a Governmental Authority or political subdivision thereof during
the term hereof of all or any part of the Project, or any
interest herein or right accruing thereto, as the result of or in
lieu of or in anticipation of the exercise of the right of
condemnation or eminent domain, or a change of grade affecting
the Project or any part thereof.
"Taxes" shall mean all Federal, state, local and other
income, franchise, property, sales or other taxes, fees or
charges, or payments in lieu of any of the foregoing, together
with all related assessments, interest and penalties.
"Transferee" shall mean any direct or indirect
transferee of all or any part of any Note purchased by you under
this Agreement.
"Voting Stock" shall mean, with respect to any
corporation, any shares of stock of such corporation whose
holders are entitled under ordinary circumstances to vote for the
election of directors of such corporation (irrespective of
whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any
contingency).
10C. Accounting Principles, Terms and Determinations.
All references in this Agreement to "generally accepted
accounting principles" shall be deemed to refer to generally
accepted accounting principles in effect in the United States at
the time of application thereof. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted,
all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and
certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles, consistently applied.
11. MISCELLANEOUS.
11A. Note Payments. The Company agrees that, so long
as you shall hold any Note, it will make payments of principal
of, interest on and any Yield-Maintenance Amount payable with
respect to such Note, which comply with the terms of this
Agreement, by wire transfer of immediately available funds for
<PAGE>
credit (not later than 12:00 noon, New York City time, on the
date due) to your account or accounts as specified in the
Purchaser Schedule attached hereto, or such other account or
accounts in the United States as you may designate in writing,
notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. You agree that, before
disposing of any Note, you will make a notation thereon (or on a
schedule attached thereto) of all principal payments previously
made thereon and of the date to which interest thereon has been
paid. The Company agrees to afford the benefits of this Section
11A to any Transferee which shall have made the same agreement as
you have made in this section 11A.
11B. Expenses. The Company agrees, whether or not the
transactions contemplated hereby shall be consummated, to pay,
and save you and any Transferee harmless against liability for
the payment of, all reasonable out-of-pocket expenses arising in
connection with such transactions, including (i) all document
production and duplication charges and the fees and expenses of
any special counsel engaged by you or such Transferee in
connection with any of the Basic Documents, the transactions
contemplated hereby, and thereby and any subsequent proposed
modification of, or proposed consent under, any of the Basic
Documents, whether or not such proposed modification shall be
effected or proposed consent granted, and (ii) the costs and
expenses, including attorneys' fees, incurred by you or such
Transferee in enforcing (or determining whether or how to
enforce) any rights under any of the Basic Documents or in
responding to any subpoena or other legal process or informal
investigative demand issued in connection with any of the Basic
Documents or the transactions contemplated hereby or thereby or
by reason of your or such Transferee's having acquired any Note,
including without limitation costs and expenses incurred in any
bankruptcy case. The obligations of the Company under this
Section 11B shall survive the transfer of any Note or portion
thereof or interest therein by you or any Transferee and the
payment of any Note.
11C. Consent to Amendments. This Agreement may be
amended, and the Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it,
if the Company shall obtain the written consent to such
amendment, action or omission to act, of the Required Holder(s)
except that no such action shall be taken if the effect thereof
<PAGE>
is to (i) change the maturity of any Note or any installment
thereof, or change the rate or extend the time of payment of
interest thereon, or change the principal amount thereof, or
change any fees payable to any Noteholder thereunder, without the
prior written consent of each Noteholder and each holder of the
Other Notes, (ii) release any collateral purported to be covered
by any of the Collateral Security Documents, or amend the
definition of "Required Holders" or "Majority Holders", without
the prior written consent of each Noteholder and each holder of
the Other Notes, (iii) create or permit additional Indebtedness
secured by the Collateral without the prior written consent of
each Noteholder and each holder of the Other Notes or (iv) amend,
modify or waive any of the provisions of this Section 11C,
without the prior written consent of each Noteholder and each
holder of the Other Notes. Each holder of any Note at the time
or thereafter outstanding shall be bound by any consent
authorized by this Section 11C, whether or not such Note shall
have been marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such consent. No
course of dealing between the Company and the holder of any Note
nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of
such Note. As used herein and in the Notes, the term "this
Agreement" and references thereto shall mean this Agreement as it
may from time to time be amended or supplemented.
11D.
Form, Registration, Transfer and Exchange of Notes; Lost Notes.
The Notes are issuable as registered notes without coupons in
denominations of at least $100,000, except as may be necessary to
reflect any principal amount not evenly divisible by $100,000.
The Company shall keep at its principal office a register in
which the Company shall provide for the registration of Notes and
of transfers of Notes. Upon surrender for registration of
transfer of any Note at the principal office of the Company, the
Company shall, at its expense, execute and deliver one or more
new Notes of like tenor and of a like aggregate principal amount,
registered in the name of such transferee or transferees. At the
option of the holder of any Note, such Note may be exchanged for
other Notes of like tenor and of any authorized denominations, of
a like aggregate principal amount, upon surrender of the Note to
be exchanged at the principal office of the Company. Whenever
any Notes are so surrendered for exchange, the Company shall, at
its expense, execute and deliver the Notes which the holder
<PAGE>
making the exchange is entitled to receive. Every Note
surrendered for registration of transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes
issued in exchange for any Note or upon transfer thereof shall
carry the rights to unpaid interest and interest to accrue which
were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such
transfer or exchange. Upon receipt of written notice from the
holder of any Note of the loss, theft, destruction or mutilation
of such Note and, in the case of any such loss, theft or
destruction, upon receipt of such holder's unsecured indemnity
agreement, or in the case of any such mutilation upon surrender
and cancellation of such Note, the Company will make and deliver
a new Note, of like tenor, in lieu of the lost, stolen, destroyed
or mutilated Note. Upon any transfer of a Note, in whole or in
part, the transferee Noteholder shall, as a condition to the
effectiveness of such transfer, deliver to the Company and the
transferor Noteholder an officer's certificate of such transferee
containing as to such transferee the representation and warranty
set forth in Section 9A.
11E. Persons Deemed Owners; Participations. Prior to
due presentment for registration of transfer, the Company may
treat the Person in whose name any Note is registered as the
owner and holder of such Note for the purpose of receiving
payment of principal of, interest on and any Yield-Maintenance
Amount payable with respect to such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue,
and the Company shall not be affected by notice to the contrary.
Subject to the preceding sentence, the holder of any Note may
from time to time grant participations in such Note to any Person
on such terms and conditions as may be determined by such holder
in its sole and absolute discretion, provided that any such
participation shall be in a principal amount of at least
$100,000.
11F.
Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein or made in
writing by or on behalf of the Company in connection herewith
shall survive the execution and delivery of this Agreement and
the Notes, the transfer by you of any Note or portion thereof or
<PAGE>
interest therein and the payment of any Note, and may be relied
upon by any Transferee, regardless of any investigation made at
any time by or on behalf of you or any Transferee. Subject to
the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company
and supersede all prior agreements and understandings relating to
the subject matter hereof.
11G. Successors and Assigns. All covenants and other
agreements in this Agreement contained by or on behalf of either
of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto
(including, without limitation, any Transferee) whether so
expressed or not.
11H. Disclosure to Other Persons. You agree to use
your best efforts to hold in confidence and not disclose any
information (other than information (i) which was publicly known
or otherwise known to you at the time of disclosure, (ii) which
subsequently becomes publicly known through no act or omission by
you or (iii) which otherwise becomes known to you, other than
through disclosure by the Company), delivered or made available
on behalf of the Company, in connection with or pursuant to this
Agreement which is proprietary in nature and clearly marked or
labeled as being confidential information, provided the Company
acknowledges that the holder of any Note may deliver copies of
any financial statements and other documents delivered to such
holder, and disclose any other information disclosed to such
holder, by or on behalf of the Company, NEES or any Subsidiary
thereof in connection with or pursuant to this Agreement
(including without limitation pursuant to Section 5G) to (i) such
holder's directors, officers, employees, agents and professional
consultants, (ii) any other holder of any Note, (iii) any Person
to which such holder offers to sell such Note or any part
thereof, (iv) any Person to which such holder sells or offers to
sell a participation in all or any part of such Note, (v) any
Person from which such holder offers to purchase any security of
the Company (provided that in the case of the foregoing
clauses (iii), (iv) and (v) you will use your best efforts to
have such other Person agree to be bound by this Section 11H),
(vi) any federal or state regulatory authority having
jurisdiction over such holder, (vii) the National Association of
Insurance Commissioners or any similar organization or (viii) any
other Person to which such delivery or disclosure may be
<PAGE>
necessary or appropriate (a) in compliance with any law, rule,
regulation or order applicable to such holder, (b) in response to
any subpoena or other legal process or informal investigative
demand or (c) in connection with any litigation to which such
holder is a party. The Company acknowledges that it is not
prohibited or restricted by any Contractual Obligation or
Requirement of Law or otherwise from providing the information
required by Section 5G in accordance with the terms of this
Agreement. No public announcement or tombstone or similar
advertisement of the transaction contemplated hereby shall be
made by any Noteholder, the Security Agent or any of their agents
or representatives without the prior written consent of the
Company, provided that any Noteholder will be free after written
notice to the Company to correct any false or misleading
information which may become public concerning its relationship
with the Company or the transactions contemplated by the Basic
Documents.
11I. Notices. All written communications provided for
hereunder shall be sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to
you, addressed to you at the address specified for such
communications in the Purchaser Schedule attached hereto, or at
such other address as you shall have specified to the Company in
writing, (ii) if to any other holder of any Note, addressed to
such other holder at such address as such other holder shall have
specified to the Company in writing or, if any such other holder
shall not have so specified an address to the Company, then
addressed to such other holder in care of the last holder of such
Note which shall have so specified an address to the Company, and
(iii) if to the Company, addressed to it at 25 Research Drive,
Westborough, MA 01582, Attention: Treasurer, or at such other
address as the Company shall have specified to the holder of each
Note in writing; provided, however, that any such communication
to the Company may also, at the option of the holder of any Note,
be delivered by any other means either to the Company at its
address specified above or to any officer of the Company.
11J.Payments Due on Non-Business Days. Anything in
this Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or interest on any Note that is due on a
date other than a Business Day shall be made on the next
succeeding Business Day.
<PAGE>
11K. Satisfaction Requirement. If any agreement,
certificate or other writing, or any action taken or to be taken,
is by the terms of this Agreement required to be satisfactory to
you or to the Required Holder(s), the determination of such
satisfaction shall be made by you or the Required Holder(s), as
the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
11L. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW
(OTHER THAN THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF SUCH STATE).
11M. 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.
11N. Descriptive Headings. The descriptive headings
of the several paragraphs of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
11O. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original
but all of which together shall constitute one instrument.
If you are in agreement with the foregoing, please sign
the form of acceptance on the enclosed counterpart of this letter
and return the same to the Company, whereupon this letter shall
become a binding agreement between the Company and you.
Very truly yours,
NARRAGANSETT ENERGY RESOURCES
CORPORATION
By
Name:
Title:
<PAGE>
The foregoing Agreement is
hereby accepted as of the
date first above written.
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By: CIGNA Investments, Inc.
By
Name:
Title:
<PAGE>
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchaser Purchased ination(s)
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY $14,500,000 $9,700,000
$4,800,000
Aggregate
Principal
Amount of
Other Notes to be Note Denom-
Purchasers Purchased ination(s)
CIGNA PROPERTY AND $4,800,000 $4,800,000
CASUALTY INSURANCE
COMPANY
INSURANCE COMPANY OF $9,700,000 $9,700,000
NORTH AMERICA
LIFE INSURANCE COMPANY OF $3,000,000 $3,000,000
NORTH AMERICA
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA # 021000021
<PAGE>
Each such wire transfer shall set forth the name
of the Company, a reference to "7.25% Senior Secured
Notes due November 30, 2010, Security No. !INV !",
and the due date and application (as among principal,
interest and Yield-Maintenance Amount) of the
payment being made, contact name and phone.
(2) Address for all notices relating to payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing S-206
900 Cottage Grove Road
Hartford CT 06152-2206
with a copy to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
Fax: 212-552-3107/1005
Address for all other communications and notices:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Fax: 203-726-7203
(4) Tax Identification No.: 13-3574027
<PAGE>
EXHIBIT A
[FORM OF NOTE]
NARRAGANSETT ENERGY RESOURCES COMPANY
7.25% SENIOR SECURED NOTE DUE November 30, 2010
Private Placement Number:__________
No. _____________ , 199_
$14,500,000
FOR VALUE RECEIVED, the undersigned, NARRAGANSETT ENERGY
RESOURCES COMPANY (herein called the "Company"), a corporation
organized and existing under the laws of the State of Rhode
Island, hereby promises to pay to CIG & Co. as nominee for
Connecticut General Life Insurance Company, or registered
assigns, the principal sum of FOURTEEN MILLION FIVE HUNDRED
THOUSAND DOLLARS on November 30, 2010, with interest (computed on
the basis of a 360-day year and 30-day months) (a) on the unpaid
balance thereof at the rate of 7.25% per annum from the date
hereof, payable quarterly on the last day of March, June,
September and December in each year, commencing with the first
such date next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) on any overdue
payment (including any overdue prepayment) of principal, any
overdue payment of interest and any overdue payment of any Yield-
Maintenance Amount (as defined in the Note Agreement referred to
below), payable quarterly as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from
time to time equal to the greater of (i) 9.25% or (ii) 2.0% over
the rate of interest publicly announced by Morgan Guaranty Trust
Company of New York from time to time in New York City as its
Prime Rate.
<PAGE>
Payments of principal of, interest on and any Yield-Maintenance
Amount payable with respect to this Note are to be made at the
main office of CIG & Co. in Hartford, Connecticut or at such
other place as the holder hereof shall designate to the Company
in writing, in lawful money of the United States of America.
This Note is one of a series of Senior Secured Notes (herein
called the "Notes") issued pursuant to a Note Agreement, dated as
of November 30, 1995 (herein called the "Agreement"), between the
Company, Connecticut General Life Insurance Company and the other
holders (if any) from time to time of any Notes and is entitled
to the benefits thereof.
This Note is secured, on a parity basis with all other Notes and
Other Notes (if any), by liens on and security interests in
certain property of the Company and of New England Electric
System, which have been granted by each of them to the Security
Agent for the ratable benefit of the Noteholders and the holders
of the Other Notes pursuant to the Collateral Security Documents.
Reference is hereby made to the Collateral Security Documents for
a description of the Collateral securing this Note, the terms and
conditions upon which such liens and security interest were
granted and the rights of the holder of this Note in respect
thereof.
This Note is a registered Note and, as provided in the Agreement,
upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder's
attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name
of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company
shall not be affected by any notice to the contrary.
The Company agrees to make required prepayments of principal on
the dates and in the amounts specified in the Agreement and
including without limitation on the dates and in the amounts
specified in the Amortization Schedule attached hereto. This
Note is also subject to optional prepayment, in whole or from
time to time in part, on the terms specified in the Agreement.
<PAGE>
In case an Event of Default, as defined in the Agreement, shall
occur and be continuing, the principal of this Note may be
declared or otherwise become due and payable in the manner and
with the effect provided in the Agreement.
This Note is intended to be performed in the State of New York
and shall be construed and enforced in accordance with the law of
such State.
NARRAGANSETT ENERGY RESOURCES
COMPANY
By
<PAGE>
EXHIBIT B
[FORM OF OPINION OF COMPANY'S COUNSEL]
[Kirk L. Ramsauer/Robert King Wulff]
[Date of Closing]
Connecticut General Life Insurance Company
CIGNA Property and Casualty Insurance Company
Insurance Company of North America
Life Insurance Company of North America
c/o CIGNA Investments, Inc.
S-215
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Ladies and Gentlemen:
I have acted as counsel for (i) Narragansett Energy Resources
Company, a Rhode Island corporation (the "Company") in connection
with the Note Agreements, dated as of November 30, 1995, between
the Company and each of you (the "Note Agreements"), pursuant to
which the Company has issued to you today its 7.25% senior
secured notes due November 30, 2010 (the "Notes") in the
aggregate principal amount of $32,000,000, and (ii) New England
Electric System, a Massachusetts voluntary association ("NEES"),
in connection with the Stock Pledge Agreement dated as of
November 30, 1995 by NEES for the benefit of State Street Bank
and Trust Company, as security agent (the "Security Agent") for
the ratable benefit of you and any other holders from time to
time of any of the Notes (the "Noteholders"). I have also
reviewed the Consent and Agreement dated as of November 30, 1995,
among each of you, the Company, Ocean State Power (of which the
Company is a general partner) and the Security Agent and the
Consent and Agreement dated as of November 30, 1995, among you,
the Company, Ocean State Power II (of which the Company is a
general partner) and the Security Agent (Ocean State Power and
Ocean State Power II being herein called collectively, the
"Partnerships" and individually a "Partnership.") All terms
used herein that are defined in the Note Agreements have the
<PAGE>
respective meanings specified in the Note Agreements. This
letter is being delivered to you in satisfaction of the condition
set forth in paragraph 3B of the Note Agreements and with the
understanding that each of you is purchasing the Notes in
reliance on the opinions expressed herein.
In this connection, I have examined such certificates
of public officials, certificates of officers of the Company,
NEES and the Partnerships, and copies certified to my
satisfaction of corporate documents and records of the Company,
NEES and the Partnerships and of other papers, and have made such
other investigations, as I have deemed relevant and necessary as
a basis for my opinion hereinafter set forth. I have relied upon
such certificates of public officials and of officers of the
Company, NEES and the Partnerships with respect to the accuracy
of material factual matters contained therein which were not
independently established. With respect to the opinion expressed
in paragraph 3 below, I have also relied upon the representation
made by each of you in paragraph 9A of the Note Agreements.
Based on the foregoing, it is my opinion that:
1. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Rhode
Island. NEES is a voluntary association duly organized and
existing in good standing under the laws of the Commonwealth of
Massachusetts. Each of the Partnerships is a general partnership
duly formed and existing under the laws of the State of Rhode
Island.
2. Each of the Basic Documents to which the Company,
NEES and/or either of the Partnerships is a party has been duly
authorized by all requisite corporate and/or partnership action
and duly executed and delivered by authorized officers of each
such Person, and is a valid obligation of each such Person,
legally binding upon and enforceable against each such Person in
accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
<PAGE>
3. It is not necessary in connection with the
offering, issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements to register the
Notes under the Securities Act or to qualify an indenture in
respect of the Notes under the Trust Indenture Act of 1939, as
amended.
4. The extension, arranging and obtaining of the
credit represented by the Notes do not result in any violation of
Regulation G, T or X of the Board of Governors of the Federal
Reserve System.
5. The execution and delivery of the Basic Documents,
the offering, issuance and sale of the Notes and fulfillment of
and compliance with the respective provisions of the Basic
Documents do not conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation
of any Lien upon any of the properties or assets of the Company,
NEES and/or either Partnership pursuant to, or, except as set
forth in paragraph 6 below, require any authorization, consent,
approval, exemption or other action by or notice to or filing
with any court, administrative or governmental body or other
Person (other than routine filings after the date hereof with the
Securities and Exchange Commission and/or state Blue Sky
authorities) pursuant to, the charter, by-laws or partnership
agreement of each such Person, any applicable law (including any
securities or Blue Sky law), statute, rule or regulation or
(insofar as is known to us after having made due inquiry with
respect thereto) any agreement (including, without limitation,
any agreement listed in Exhibit G to the Note Agreements),
instrument, order, judgment or decree to which any such Person is
a party or otherwise subject.
6. Other than the Order of the Securities and
Exchange Commission under PUHCA approving the issuance and sale
of the Notes by the Company and the other transactions
contemplated by the Basic Documents, which order has been duly
obtained, is valid, in full force and effect, final and not
subject to appeal, no Governmental Approval of any Governmental
Authority is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Basic
Document by the Company, NEES and/or either Partnership, or
(ii) the enforceability of any Basic Document against the
<PAGE>
Company, NEES and/or either Partnership.
7. Except as set forth in Schedule 8U(f) to the Note
Agreement, there is no action, suit, investigation or proceeding
pending or, to our knowledge threatened, against or affecting the
Company, NEES and/or either Partnership, or any properties or
rights of the Company, NEES and/or either Partnership, by or
before any court, arbitrator or administrative or governmental
body which could reasonably be expected to result in any material
adverse change in the business, condition (financial or
otherwise) or operations of the Company, NEES and/or either
Partnership or on their ability to perform their respective
obligations under the Basic Documents and the Partnership
Agreements.
8. The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
The Company is not an "investment adviser" within the meaning of
the Investment Advisers Act of 1940, as amended.
9. The Company is a "subsidiary company", "affiliate"
and "associate company" of a public utility holding company, as
such terms are defined under PUHCA.
10. Neither the Security Agent nor the Noteholders
will, solely by reason of (i) the ownership interest of the
Company in the Partnerships, (ii) the purchasing of the Notes;
(iii) the securing of the Notes by Liens on the Collateral or
(iv) any other transaction contemplated by the Note Agreements or
any of the other Basic Documents, be deemed by any Governmental
Authority to be, or to be subject to regulation as, (x) an
"electric utility", "electric corporation", "electrical company",
"public utility" or "public utility holding company," under any
existing law, rule or regulation of any Governmental Authority,
or (y) an "affiliate" of a public utility holding company as such
terms are defined in PUHCA. Except as provided below, neither
the Security Agent nor the Noteholders will, by reason of its or
their ownership of the Collateral upon the exercise of their
remedies under the Collateral Security Documents, nor, by reason
of its or their exercise of other remedies hereunder, be deemed
by any Governmental Authority to be (x) subject to financial,
organizational or rate regulation as an "electric utility",
"electric corporation", "electrical company", "public utility" or
a "public utility holding company" under any existing law, rule
<PAGE>
or regulation of any Governmental Authority, or (y) an
"affiliate" of a public utility holding company as such terms are
defined in PUHCA; provided that to the extent that the Security
Agent or Noteholders exercise their remedies under the Stock
Pledge to foreclose upon the shares of stock pledged thereunder
and become the owner or owners of such shares of stock, then
unless the Company shall at such time be an "Exempt Wholesale
Generator" pursuant to Section 32 of PUHCA or shall control less
than ten percent of the aggregate voting rights in either of the
Partnerships, the Security Agent and the Noteholders may have to
make certain filings with the Federal Energy Regulatory
Commission and/or the Securities and Exchange Commission to avoid
becoming subject to regulation as an "electric utility" or an
"affiliate" of a public utility holding company as such terms are
defined in PUHCA.
11. When NEES delivers to the Security Agent in the
State of New York the stock certificates representing all of the
shares of capital stock of the Company (which are identified in
Schedule I to the Stock Pledge and are owned by NEES on the date
hereof (the "Pledged Shares")), accompanied by undated stock
powers duly executed in blank, the security interest in the
Pledged Shares granted by NEES pursuant to the Stock Pledge in
favor of the Security Agent will constitute a perfected, first
priority security interest in the Pledged Shares under the
Uniform Commercial Code as in effect in the State of New York.
12. The Pledged Shares have been validly issued and,
assuming the receipt by the Company as the issuing corporation of
the consideration therefor stated in the records of the Company,
are fully paid and non-assessable.
13. (a) The Collateral Security Documents are
effective to create, in favor of the Security Agent for the
ratable benefit of the holders from time to time of the Notes,
legal, valid and enforceable security interests in all right,
title and interest of the respective grantors thereunder in and
to the Collateral described therein.
(b) The descriptions of the Collateral set forth
in each of the Collateral Security Documents relating thereto are
legally sufficient for the purpose of establishing and perfecting
the interests and rights intended to be created by those
Collateral Security Documents.
<PAGE>
(c) The UCC Financing Statements are in proper
form under applicable law and have been filed and recorded in all
appropriate filing offices for purposes of perfecting the
interests and rights intended to be created by the Collateral
Security Documents; the security interests created by the
Collateral Security Documents have been duly perfected; and,
except for the filing of continuation statements, as and when
required pursuant to the Uniform Commercial Code as in effect in
each applicable jurisdiction, no further filings or other actions
are necessary in order to maintain the perfection and priority of
those security interests.
This letter may be relied upon by any Transferee of the
Notes and by the Security Agent and its successors and assigns.
Very truly yours,
<PAGE>
Exhibit B
=========
Stock Pledge Agreement
STOCK PLEDGE AGREEMENT (this "Agreement"), dated
as of November 30, 1995, made by NEW ENGLAND ELECTRIC
SYSTEM, a Massachusetts voluntary association (the
"Pledgor"), to STATE STREET BANK AND TRUST COMPANY, as
security agent (together with its successors in such
capacity, the "Security Agent") for the ratable benefit of
all holders from time to time of the Notes (as defined
below (the "Secured Parties")).
R E C I T A L S
A. The Pledgor is the legal and beneficial owner
of 100% of the shares of the issued and outstanding capital
stock of Narragansett Energy Resources Company, a Rhode
Island corporation (the "Corporation"), which shares are
described in Schedule I attached hereto (such shares,
collectively, the "Pledged Shares").
B. Ocean State Power, a Rhode Island general
partnership, together with Ocean State Power II, a Rhode
Island general partnership (together, the "Partnerships"),
severally own and operate an approximately 500 megawatt
gas-fired electric generating plant located in
Burrillville, Rhode Island.
C. The Corporation is a general partner of each
of the Partnerships.
D. The Corporation has entered into a Note
Agreement dated as of November 30, 1995 with each of the
Noteholders (defined below) (as each such Agreement may be
amended, modified or supplemented from time to time, the
"Note Agreement" and collectively, the "Note Agreements").
Each Note Agreement provides for the Noteholder party
<PAGE>
thereto to purchase secured promissory note(s) issued by
the Corporation pursuant to such Note Agreement (each such
note, a "Note" and collectively, the "Notes") subject to
the terms and conditions set forth therein. The proceeds
of such Notes are to be applied by the Corporation to the
retirement of subordinated notes issued by the Corporation
to pay fees and expenses incurred by the Corporation in
connection with the sale of the Notes, to pay working
capital expenses of the Corporation and to repay (in part)
the outstanding principal balances under loans made by the
Pledgor to the Corporation to finance the Pledgor's equity
interests in the Partnerships. Capitalized terms used in
this Agreement and not otherwise defined herein shall have
the meanings assigned thereto in the Note Agreements.
E. Each Noteholder is willing to enter into each
respective Note Agreement upon the terms and conditions set
forth therein, but only if the Pledgor shall make the
pledges contemplated by this agreement.
F. The Pledgor is willing to make the pledges
requested and to enter into this Agreement so as to induce
the Noteholders to enter into each respective Note
Agreement.
G. State Street Bank and Trust Company has been
appointed as Security Agent of the Noteholders pursuant to
a Collateral Agency Agreement, dated as of November 30,
1995, by and among the Corporation, the Noteholders and the
Security Agent.
NOW, THEREFORE, in consideration of these
premises and in order to induce the Noteholders to enter
into the Note Agreements, and other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Pledgor agrees as follows:
<PAGE>
ARTICLE I
UNDERTAKINGS
SECTION 1.1 Pledge.
(a) The Pledgor hereby assigns, transfers,
hypothecates and pledges to the Security Agent for the
ratable benefit of the Secured Parties, as security for the
timely and punctual (i) payment when due of any and all
sums owing by the Corporation under the Note Agreements and
the other Basic Documents, (ii) performance when due by the
Corporation of all its obligations under the Note
Agreements, the Notes and the other Basic Documents, and
(iii) payment and performance when due of any and all sums
and all obligations of the Pledgor hereunder (collectively,
the "Obligations") and grants a first lien on, and prior
perfected security interest in, all of the Pledgor's right,
title and interest in, to and under the following, whether
now owned or hereafter acquired (collectively, the "Pledged
Collateral"):
(i) the Pledged Shares and the certificates
representing the Pledged Shares, and all dividends,
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 Shares; and
(ii) all additional shares of stock and
other securities of the Corporation from time to time
acquired by the Pledgor in any manner, and the
certificates representing such additional shares and
other securities, and all dividends, 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 such
shares;
<PAGE>
provided that, for so long as no Event of Default shall
have occurred and be continuing, the Pledged Collateral
shall not include any dividends paid to the Pledgor in
respect of the Pledged Collateral if otherwise permitted by
the Basic Documents.
(b) This Agreement and the grant of the security
interest made hereby is for collateral purposes only, and
neither the Security Agent nor the Secured Parties shall by
virtue of this Agreement, by their receipt of dividends
from the Corporation, or by their exercise of any rights
hereunder, be deemed to have any liability for any
Contractual Obligations of the Partnerships, the
Corporation or the Pledgor.
SECTION 1.2 Security for Obligations. This
Agreement secures the payment and performance of all
Obligations.
SECTION 1.3 Delivery of Pledged Collateral. All
certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on
behalf of the Security Agent 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. The Security Agent shall have the
right, at any time, in its discretion, and without notice
to the Pledgor, following the occurrence and continuance of
an Event of Default, to transfer to or to register in the
name of the Security Agent or any of its nominees any or
all of the Pledged Collateral. In addition, the Security
Agent shall have the right, at any time, in its discretion,
without notice to the Pledgor, to exchange certificates or
instruments representing or evidencing Pledged Collateral
for certificates or instruments of smaller or larger
denominations.
<PAGE>
SECTION 1.4 Waiver. The Pledgor hereby waives
diligence, presentment, demand of any kind, filing of
claims with a court in the event of receivership or
bankruptcy, protests of any kind, notices of any kind, and
all setoffs and counterclaims, to the extent permitted by
applicable law. Upon the occurrence and continuance of an
Event of Default, the Security Agent may proceed directly
and at once, without notice, against the Pledged Collateral
to collect and recover the full amount or any portion of
the Obligations so due and payable, without first
proceeding against the Corporation or against any other
security or collateral provided by the Corporation with
respect to the Obligations.
SECTION 1.5 Further Assurances. The Pledgor
agrees that at any time and from time to time, at its
expense, the Pledgor shall promptly execute and deliver all
further instruments and documents (including, without
limitation, any additional pledge agreement or security
agreement), and take all further action that, in the
opinion of the Required Holder(s), may be necessary or
reasonably desirable in order to perfect and protect any
security interest in the Pledged Collateral granted or
purported to be granted hereby or to enable the Security
Agent to exercise and enforce its rights and remedies
hereunder with respect to the Pledged Collateral or any
part thereof.
SECTION 1.6 Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have
occurred and be continuing:
(i) the Pledgor shall be entitled to
exercise 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 and the other
Basic Documents; and
<PAGE>
(ii) the Pledgor shall be entitled to
receive and retain any and all dividends paid in
respect of the Pledged Collateral to the extent
payment thereof is permitted by the terms of the
Basic Documents.
(b) Upon the occurrence and continuance of an
Event of Default:
(i) all rights of the Pledgor to
exercise the voting and other consensual rights
which the Pledgor would otherwise be entitled to
exercise pursuant to Section 1.6(a)(i) and to
receive the dividends and interest payments which
the Pledgor would otherwise be authorized to
receive and retain pursuant to Section 1.6(a)(ii)
shall cease, and all such rights shall thereupon
become vested in the Security Agent, which shall
thereupon have the sole right to exercise such
voting and other consensual rights and to receive
and hold as Pledged Collateral such dividends and
interest payments; and
(ii) all dividends which are received
by the Pledgor contrary to the provisions of
Section 1.6(b)(i) shall be received in trust for
the benefit of the Security Agent, shall be
segregated from other funds of the Pledgor and
shall be forthwith paid over to the Security
Agent as Pledged Collateral in the same form as
so received (with any necessary endorsement).
SECTION 1.7 Limited Recourse. Except as
provided in this Section, the obligations of the Pledgor
hereunder shall be payable only from the income and
proceeds from the Pledged Collateral, it being expressly
understood that except as provided in the immediately
succeeding proviso the obligations and liabilities of the
Pledgor under this Agreement and any other related
document, agreement or instrument, are solely nonrecourse
<PAGE>
obligations, provided, that nothing herein shall (i) be
deemed to prevent recourse to or enforcement against the
Pledged Collateral for all liabilities, obligations and
undertakings contained in the Basic Documents (ii) be, or
be deemed to be, a release or impairment of said
obligations or any part thereof; (iii) limit or otherwise
prejudice in any way the Security Agent's or Secured
Parties' rights to foreclosure under the Collateral
Security Documents or to enforce the Security Agent's and
the Secured Parties' other rights or remedies under the
Collateral Security Documents; nor shall such limitation of
liability apply to the Pledgor if and to the extent that
Pledgor commits fraud or wilful misrepresentation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Pledgor makes the following representations
and warranties, each of which shall survive the execution
and delivery of this Agreement:
<PAGE>
SECTION 2.1 Organization; Power and
Authorization; Enforceable Obligations.
(a) The Pledgor is a voluntary association,
created pursuant to an Agreement and Declaration of Trust,
dated January 2, 1926 (as amended, modified or supplemented
from time to time, the "Trust Agreement"), is duly
authorized and existing in good standing under the laws of
the Commonwealth of Massachusetts and is duly registered as
a public utility holding company under PUHCA. The Pledgor
has full power and authority and the legal right to conduct
its business as now conducted and as proposed to be
conducted by it, to execute, deliver and perform this
Agreement and to take all actions necessary to complete the
transactions contemplated by this Agreement. The Pledgor
has taken all necessary action to authorize the
transactions contemplated hereby on the terms and
conditions of this Agreement, and to authorize the
execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized,
executed and delivered by the Pledgor and constitutes the
legal, valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its
terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally or by limitation upon the availability of
equitable remedies.
SECTION 2.2 No Legal Bar. The execution,
delivery and performance of this Agreement will not violate
or conflict with, or result in a breach of the terms or
conditions of, any Requirement of Law applicable to, any
Contractual Obligation of, or the Trust Agreement or other
organizational documents of, the Pledgor. The execution,
delivery and performance of this Agreement will not result
in, or require the creation or imposition of any Lien on
any of the properties or revenues of the Pledgor pursuant
to any Requirement of Law or Contractual Obligation, except
<PAGE>
for the Liens created or permitted by this Agreement. No
approvals or consents of any trustee or any holder of any
indebtedness of the Pledgor are required in connection with
the execution, delivery and performance by the Pledgor of
this Agreement, except such approvals or consents as have
been duly obtained and are in full force and effect.
SECTION 2.3 Governmental Approval. No
Governmental Approvals or other consents or approvals are
required to be obtained by the Pledgor in connection with
the execution, delivery and performance of this Agreement
or the taking of any action by the Pledgor contemplated
hereby, other than the approval by the Securities and
Exchange Commission, required under PUHCA for the
Corporation and Pledgor to enter into the transactions
contemplated by the Basic Documents, which has been duly
obtained, is in full force and effect, final and not
subject to appeal.
SECTION 2.4 Litigation. Except as disclosed in
the Pledgor's Quarterly Report on Form 10-Q for the period
ending September 30, 1995, no litigation, investigation or
proceeding of or before, or inquiry by, any arbitrator or
Governmental Authority is pending, and no such litigation,
investigation, proceeding or inquiry is, to the best
knowledge of the Pledgor, threatened against or in a manner
affecting the Pledgor, or against or in a manner affecting
any of its properties, rights, revenues or assets, which in
any such case, could reasonably be expected to have a
material adverse effect upon the ability of the Pledgor to
perform its obligations under this Agreement.
SECTION 2.5 Pledged Shares Authorized. The
Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
SECTION 2.6 Complete Ownership. The Pledged
Shares constitute one hundred percent (100%) of the issued
and outstanding shares of capital stock of the Corporation.
The Corporation's equity and voting interests in the
Partnerships as general partner constitute 100% of the
<PAGE>
Pledgor's (indirect) equity and voting interests in the
Partnerships. The Pledgor is the legal and beneficial
owner of the Pledged Collateral free and clear of any Lien
except for the security interest created by this Agreement.
Schedule I truly and accurately sets forth the number of
the issued and outstanding shares of the Corporation's
capital stock.
SECTION 2.7 Control. The Pledgor has actual and
effective control over the Corporation, its wholly-owned
Subsidiary.
SECTION 2.8 First Lien. The pledge of the
Pledged Shares pursuant to this Agreement and delivery
thereof to the Security Agent in New York creates a valid
and perfected first priority security interest therein,
securing the payment of the Obligations.
SECTION 2.9 Margin Stock. None of the Pledged
Shares constitutes "margin stock," as such term is defined
in Regulation U and Regulation G of the Board of Governors
of the Federal Reserve System.
SECTION 2.10 No Default. The Pledgor is not in
breach of any of the terms or provisions of and no default
exists under, this Agreement. The Corporation is not in
breach of any of the terms or provisions of the Partnership
Agreements. The Pledgor is not in breach of any of the
terms or provisions of any Contractual Obligation or
Requirement of Law which breach could reasonable by
expected to have a material adverse effect upon the ability
of the Pledgor to perform its obligations under this
Agreement.
SECTION 2.11 Financial Statements. The Pledgor
has furnished the Noteholders with the following financial
statements, identified by a financial officer of the
Pledgor: (i) a consolidated balance sheet of the Pledgor
and its Subsidiaries as at December 31, 1994, and
consolidated statements of income, stockholders' equity and
cash flows of the Pledgor and its Subsidiaries for such
<PAGE>
year, all audited by Coopers & Lybrand, L.L.P.; and (ii) an
unaudited consolidated balance sheet of the Pledgor and its
Subsidiaries as at September 30, 1995, and unaudited
consolidated statements of income and cash flows for the
nine-month period ended on such date, prepared by the
Pledgor. Such financial statements (including any related
schedules and/or notes) are true and correct in all
material respects (subject, as to interim statements, to
changes resulting from audits and year-end adjustments),
have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the
periods involved and show all liabilities, direct and
contingent, of the Pledgor and its Subsidiaries required to
be shown in accordance with such principles. The balance
sheets fairly present the condition of the Pledgor and its
Subsidiaries as at the dates thereof, and the statements of
income, stockholders' equity (if any) and cash flows fairly
present the results of the operations of the Pledgor and
its Subsidiaries and their cash flows for the periods
indicated. There has been no material adverse change in
the business, condition (financial or otherwise) or
operations of the Pledgor and its Subsidiaries taken as a
whole since September 30, 1995.
SECTION 2.12 Investment Company; Investment
Adviser. The Pledgor 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.
The Pledgor is not an "investment adviser" within the
meaning of the Investment Advisers Act of 1940, as amended.
SECTION 2.13 Public Utility Status. Neither the
Security Agent nor any of the Secured Parties will solely
by reason of (a) the ownership interest of the Pledgor in
the Corporation, (b) the purchasing of the Notes; (c) the
securing of the Obligations by Liens on the Pledged
Collateral or (d) any other transaction contemplated by
this Agreement or any of the other Basic Documents, be
deemed by any Governmental Authority to be, or to be
subject to regulation as (i) an "electric utility",
"electric corporation", "electrical company", "public
utility" or "public utility holding company" under existing
law, rule or regulation of any Governmental Authority, or
(ii) an "affiliate" of a public utility holding company as
such terms are defined in the PUHCA. Neither the Security
Agent nor any of the Secured Parties will, by reason of its
<PAGE>
or their ownership of the Pledged Collateral upon the
exercise of their remedies hereunder and under the other
Basic Documents, nor by reason of its or their exercise of
other remedies thereunder, be deemed by any Governmental
Authority to be (i) subject to financial, organizational or
rate regulation as an "electric utility", "electric
corporation", "electrical company", "public utility" or a
"public utility holding company" under any existing law,
rule or regulation of any Governmental Authority, or
(ii) an "affiliate of a public utility holding company as
such terms are defined in PUHCA; provided that to the
extent that the Security Agent or the Noteholders exercise
their remedies under the Stock Pledge to foreclose under
the shares of stock pledged thereunder and become the owner
or owners of such shares of stock, then unless the Company
shall at such time be an "Exempt Wholesale Generator"
pursuant to Section 32 of PUHCA or shall control less than
ten percent of the aggregate voting rights in either of the
Partnerships, the Security Agent and the Noteholders may
have to make certain filings with the Federal Energy
Regulation Commission and/or the Securities and Exchange
Commission to avoid becoming subject to regulation as an
"electric utility" or an "affiliate" of a public utility
holding company as such terms are defined in PUHCA.
<PAGE>
ARTICLE III
COVENANTS
So long as the Obligations remain outstanding,
the Pledgor covenants and agrees with the Security Agent,
and the Secured Parties as follows:
SECTION 3.1
Transfers and Other Liens; Additional Shares.
(a) The Pledgor will not sell, transfer, convey
or otherwise dispose of, grant any option with respect to,
or pledge any of the Pledged Collateral (except in a
transaction permitted by Section 3.12) at any time, nor
create or permit to exist any Lien upon or with respect to
any of the Pledged Collateral, other than the Lien created
pursuant to this Agreement.
(b) The Pledgor will not, without the prior
written consent of the Security Agent, consent to or
approve the cancellation of any of the Pledged Shares or
the creation or authorization of any ownership interest in
the Corporation other than the interests in existence on
the date hereof.
SECTION 3.2 Defense of Pledged Collateral. The
Pledgor warrants and will defend the Security Agent's
right, title and security interest in and to the Pledged
Collateral against the claims of any Person.
SECTION 3.3
No Consent to Dispositions of Pledged Interest. The
Pledgor shall not consent to or permit to exist any sale,
transfer, exchange, assignment, pledge or other
disposition of the Pledged Collateral or of any other
interest in the Corporation.
SECTION 3.4 Governing Documents. The Pledgor
shall not amend or modify, or permit the amendment or
modification of, any provision of the articles of
incorporation, by-laws or other organizational documents of
the Corporation or the Corporation's Contractual
Obligations or any agreement relating to the articles of
<PAGE>
incorporation, by-laws or other organizational documents of
the Corporation or the Corporation's Contractual
Obligations without the express written consent of the
Required Holder(s).
SECTION 3.5 Taxes. The Pledgor shall before
delinquency pay and discharge or cause to be paid and
discharged all Taxes imposed upon the Pledgor or upon its
income or profits and all claims, levies or liabilities
(including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and
payable or, if unpaid, might become a Lien (other than a
Permitted Lien) upon the Pledged Collateral, or upon any
part thereof; provided that the Pledgor shall not be
required to pay any such Tax, claim, levy or liability if
(a) the validity or amount thereof shall currently be
diligently contested in good faith by appropriate
proceedings timely instituted, (b) the Pledgor sets aside
on its books adequate reserves with respect to the
contested items in accordance with generally accepted
accounting principles, (c) during the period of such
contest, the enforcement of any contested item is
effectively stayed, and (d) such contest does not involve
material risk of the sale, forfeiture or loss of any of the
Pledged Collateral. The Pledgor shall promptly pay or
cause to be paid any valid, final judgment enforcing any
such Tax, claim, levy or liability and cause the same to be
satisfied of record.
SECTION 3.6 Change of Name; Address. The
Pledgor shall not change its name or address except on 60
days' prior written notice to the Security Agent and upon
the filing of additional UCC financing statements (if
deemed necessary by the Required Holder(s)) which reflect
the name and/or address change.
SECTION 3.7 Financial Statements. The Pledgor
covenants that it will deliver to the Security Agent with
sufficient copies for each Noteholder in duplicate or upon
the election of the Required Holder(s), to the Noteholders
in duplicate without a copy to the Security Agent:
(i) as soon as practicable and in any event
within 60 days after the end of each quarterly period
(other than the last quarterly period) in each fiscal year,
unaudited consolidated statements of income and cash flows
<PAGE>
of the Pledgor and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of such
quarterly period, and an unaudited consolidated balance
sheet of the Pledgor 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
satisfactory in form to the Required Holder(s) and
certified by an authorized financial officer of the
Pledgor, subject to changes resulting from year-end
adjustments; provided, that for so long as it is required
to file Quarterly Reports on Form 10-Q with the Securities
and Exchange Commission, the Pledgor may satisfy the
foregoing obligation by delivering each such report to the
Security Agent or each Noteholder (as applicable) not later
than five days after such filing;
(ii) as soon as practicable and in any event
within 120 days after the end of each fiscal year,
consolidated statements of income, cash flows and
stockholders' equity of the Pledgor and its Subsidiaries
for such year, and a balance sheet of the Pledgor and its
Subsidiaries as at the end of such year, setting forth in
each case in comparative form corresponding figures from
the preceding annual audit, all in reasonable detail and
satisfactory in form to the Required Holder(s) and reported
on by independent public accountants of recognized national
standing selected by the Pledgor, whose report shall be of
substantially the same scope as the audited financials for
fiscal year 1994 provided to the Noteholders, and in
accordance with generally accepted auditing standards and
satisfactory in substance to the Required Holder(s) and
certified by an authorized financial officer of the
Pledgor; provided, that for so long as it is required to
file Annual Reports on Form 10-K with the Securities and
Exchange Commission, the Pledgor may satisfy the foregoing
obligation by delivering each such report to the Security
Agent or each Noteholder (as applicable) not later than ten
days after such filing;
(iii) promptly upon the filing thereof with the
Securities and Exchange Commission, a copy of each Report
on Form 8-K of the Pledgor; and
<PAGE>
(iv) with reasonable promptness, such other
financial data and other information with respect to the
Pledgor, the Corporation or either of the Partnerships as
the Security Agent or any Secured Party may reasonably
request.
SECTION 3.8 Maintenance of Existence, etc. The
Pledgor will at all times preserve and maintain in full
force and effect (i) its existence as a voluntary
association under the laws of the Commonwealth of
Massachusetts, provided, however, that the Pledgor may
convert from a voluntary association to a duly-formed and
existing corporation organized under the laws of any United
States state succeeding to all or substantially all of the
Pledgor's assets; provided, that in connection with such
conversion, the successor corporation expressly
acknowledges in writing the continuing validity of this
Agreement and, in such written acknowledgment, expressly
assumes the obligations of the Pledgor and the
enforceability of such obligations against such successor
corporation, and (ii) all of its rights, privileges and
franchises necessary for the ownership of its interest in
the Corporation.
SECTION 3.9 Performance of Obligations. The
Pledgor will duly perform and observe all of the covenants,
agreements and conditions on its part to be performed and
observed under the Basic Documents.
SECTION 3.10 Inspection of Property, Books and
Records; Discussions. The Pledgor will keep proper books
of record and account in which full, true and correct
entries in conformity with generally accepted accounting
principles and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and
activities throughout the periods involved. The Pledgor
shall permit representatives of the Security Agent and any
Secured Party to visit and inspect its properties, to
examine its books of record and account and to make copies
thereof and discuss its affairs, finances and accounts with
its principal officers and independent accountants, all at
such times during business hours and at such intervals as
the Security Agent or such Secured Party may reasonably
request.
<PAGE>
SECTION 3.11 Compliance with Laws, Contractual
Obligations, etc. The Pledgor will comply with all
Requirements of Law and all Contractual Obligations, and
will from time to time obtain and comply with all
Governmental Approvals and other consents and approvals as
shall now or hereafter be necessary or desirable in
connection with the ownership of its interest in the
Corporation, the failure of which could reasonably be
expected to have a material adverse effect upon the Pledgor
or its ability to perform its Contractual Obligations.
SECTION 3.12 Merger, Sale of Assets. The
Pledgor will not merge into or consolidate with any other
Person, or liquidate or dissolve itself (or suffer any such
liquidation or dissolution), or sell, lease, transfer or
otherwise dispose of all or any substantial portion of its
assets unless (a) in connection therewith the surviving or
successor entity expressly acknowledges in writing the
continuing validity of this Agreement and, in such written
acknowledgment, expressly assumes the obligations of the
Pledgor and the enforceability of such obligations against
such surviving entity or successor or (b) in connection
with any sale, lease, transfer, or other disposition of a
substantial portion of the Pledgor's assets, upon such
sale, lease, transfer or other disposition, (i) the senior
debt of the Pledgor (or of the subsidiary corporations of
the Pledgor accounting in Pledgor's most recent annual
financial statements for 60% or more of Pledgor's income
before interest charges) is confirmed by either Standard &
Poor's Corporation or Moody's Investor Services, Inc. as
being A - A3, respectively, or better and (ii) the Pledgor
has a consolidated tangible net worth of $500 million or
more.
SECTION 3.13 Continuation Statements. The
Pledgor will, from time to time, at its own expense,
promptly prepare, execute and deliver any additional
instruments or documents and take all additional action
that, in the opinion of the Noteholders, may be necessary
or reasonably desirable in order to preserve, protect and
maintain the security interest in the Pledged Collateral
granted or purported to be granted hereby.
<PAGE>
ARTICLE IV
POWER OF ATTORNEY
SECTION 4.1 Security Agent As Attorney-in-Fact.
The Pledgor does hereby make, constitute and appoint the
Security Agent, and any collateral agent or officer of the
Security Agent, with full power of substitution, as the
Pledgor's attorney-in-fact, with full power and authority,
in its own name or in the name, place and stead of the
Pledgor, or otherwise upon the occurrence of an Event of
Default, (a) to exercise all voting, consent, managerial
and other rights related to the Pledged Collateral,
including, without limitation, any right to manage the
operations and the business and affairs of the Corporation,
and (b) at any time and from time to time, generally to do,
at the Security Agent's request and the Pledgor's expense,
all acts and things which the Security Agent and/or the
Required Holder(s) deems necessary or advisable to
accomplish the purposes of this Agreement including,
without limitation, to receive, endorse and collect all
instruments made payable to the Pledgor representing any
payment or other dividend in respect of the Pledged
Collateral or any part thereof and to give full discharge
for the same, all as fully and effectually as the Pledgor
might or could do; and the Pledgor hereby ratifies all that
said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this
Agreement and thereafter as long as any of the Obligations
shall be outstanding. Any attempted revocation of the
powers of attorney granted herein shall be null and void.
There are no conditions or requirements imposed on the
Security Agent's exercise of the powers of attorney other
than as set forth herein.
SECTION 4.2 Right to Perform. If an Event of
Default shall have occurred and be continuing, the Security
Agent and/or any Secured Party may itself perform, or cause
performance of, any agreement contained herein, and the
expenses of the Security Agent, and Secured Party or such
other performing party incurred in connection therewith
shall be payable by the Pledgor; provided, however, that
the Security Agent shall have no obligation to perform or
cause performance of any of the Pledgor's obligations under
any provision of this Agreement, including without
limitation, Article V hereof.
<PAGE>
SECTION 4.3 Reasonable Care. The Security Agent
shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment
substantially equal to that which the Security Agent
accords its own property, it being understood that neither
the Security Agent nor any Secured Party shall have
responsibility for taking any steps to preserve rights
against any third parties with respect to the Pledged
Collateral. The powers conferred on the Security Agent
hereunder shall not impose any duty on the Security Agent
to exercise such powers.
ARTICLE V
REMEDIES
SECTION 5.1 Substitution for Pledgor. If an
Event of Default shall have occurred and be continuing,
then, in addition to any other rights and remedies provided
for herein or otherwise available to it, the Security Agent
may exercise the powers of attorney set forth in Section
4.1 of this Agreement and manage (or designate another
Person to manage) the operations, business and affairs of
the Corporation.
SECTION 5.2 Sale of Pledged Collateral. If an
Event of Default shall have occurred and be continuing,
then, in addition to any other rights and remedies provided
for herein or otherwise available to it, the Security Agent
may without any further demand, advertisement or notice
(except as expressly provided in this Section 5.2),
exercise all the rights and remedies of a secured party
under the Uniform Commercial Code as in effect in any
relevant jurisdiction (whether or not the Uniform
Commercial Code applies to the Pledged Collateral), and in
addition may sell, give an option or options to purchase,
contract to sell or otherwise dispose of the Pledged
Collateral, or any part thereof, as hereinafter provided
and may sell, lease, finance, refinance, mortgage or convey
the Pledged Collateral. The Pledged Collateral may so be
sold or otherwise disposed of in one or more sales, at
public or private sale, conducted by any officer or agent
<PAGE>
of, or auctioneer or attorney for, the Security Agent, at
any exchange or broker's board or at the Security Agent's
place of business or elsewhere, for cash, upon credit or
for other property, for immediate or future delivery, and
at such price or prices and on such terms (including,
without limitation, a requirement that any purchase of all
or any part of the Pledged Collateral for investment be
without any intention to make a distribution thereof) as
the Security Agent shall, in its sole discretion, deem
appropriate. Any Secured Party may be the purchaser of any
or all of the Pledged Collateral so sold at a public sale
and thereafter hold the same, absolutely free from any
right or claim of whatsoever kind and the obligations of
the Pledgor to such purchaser may be applied as a credit
against the purchase price. The Security Agent may in its
sole discretion, at any such sale, restrict the prospective
bidders or purchasers as to their number, nature of
business and investment intention. Upon any such sale, the
Security Agent shall have the right to deliver, assign and
transfer to the purchaser thereof (including any Secured
Party) the Pledged Collateral so sold. Each purchaser
(including any Secured Party) at any such sale shall hold
the Pledged Collateral so sold absolutely free from any
claim or right of whatsoever kind, including any equity or
right of redemption of the Pledgor. The Security Agent
shall give the Pledgor at least ten days' notice (which the
Pledgor agrees is reasonable notification within the
meaning of Section 9-504(c) of the Uniform Commercial Code
of the State of New York or its equivalent in the Uniform
Commercial Code of any other relevant jurisdiction) of any
such public or private sale. Such notice shall state the
time and place fixed for any public sale and the time after
which any private sale is to be made. Any such public sale
shall be held at such time or times within ordinary
business hours as the Security Agent shall fix in the
notice of such sale. At any such sale the Pledged
Collateral may be sold in one lot as an entirety or in
separate parcels. The Security Agent shall not be
obligated to make any sale pursuant to any such notice.
The Security Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and
place fixed for such sale, and any such sale may be made at
any time or place to which the same may be so adjourned
without further notice or publication. In case of any sale
of all or any part of the Pledged Collateral on credit or
<PAGE>
for future delivery, the Pledged Collateral so sold may be
retained by the Security Agent until the full selling price
is paid by the purchaser thereof, but the Security Agent
shall not incur any liability in case of the failure of
such purchaser to take up and pay for the Pledged
Collateral so sold, and, in case of any such failure, such
Pledged Collateral may again be sold pursuant to the
provisions hereof.
SECTION 5.3 Conveyances. The Security Agent may
as attorney-in-fact pursuant to Section 4.1 hereof, in the
name and stead of the Pledgor, make and execute all
conveyances, assignments and transfers of the Pledged
Collateral sold pursuant to Section 5.2 hereof, and the
Pledgor hereby ratifies and confirms all that the Security
Agent, as said attorney-in-fact, shall do by virtue hereof.
Nevertheless, the Pledgor shall, if so requested by the
Security Agent, ratify and confirm any sale or sales by
executing and delivering to the Security Agent, or to such
purchaser or purchasers, all such instruments as may, in
the judgment of the Security Agent, be advisable for the
purpose.
SECTION 5.4 Application of Proceeds. All cash
proceeds received by the Security Agent in respect of any
sale or lease of, collection from, or other realization
upon all or any part of the Pledged Collateral may be held
by the Security Agent as collateral for the Obligations
and/or applied to the ratable payment of the Obligations,
as directed by the Required Holder(s). Any surplus of such
cash proceeds held by the Security Agent and remaining
after payment in full of the Obligations shall be paid over
to the Pledgor or whomsoever the Security Agent shall
determine to be lawfully entitled thereto.
SECTION 5.5 Discharge of Purchaser. The receipt
by the Security Agent of the purchase money paid at any
such sale made by it shall be a sufficient discharge
therefor, sold as aforesaid; and no purchaser (or
representative or assign of any purchaser), after paying
such purchase money and receiving such receipt, shall be
bound to see to the application of such purchase money or
any part thereof or in any manner whatsoever be answerable
for any loss, misapplication or non-application of any such
purchase money, or any part thereof, or be bound to inquire
as to the authorization, necessity, expediency or
regularity of any such sale.
<PAGE>
SECTION 5.6 No Liability. Neither the Security
Agent nor any Secured Party shall incur any liability as a
result of the sale of the Pledged Collateral, or any part
thereof, at any private sale conducted in a commercially
reasonable manner. The Pledgor hereby waives, to the full
extent permitted by applicable law, all claims, damages and
demands against the Security Agent and any Secured Party
arising out of the repossession, retention or sale of the
Pledged Collateral, including, without limitation, any
claims against the Security Agent and any Secured Party,
arising by reason of the fact that the price at which the
Pledged Collateral, or any part thereof, were sold was less
than may have been obtained at a public sale or was less
than the aggregate amount of the Obligations so long as
such sale shall have been conducted in accordance with this
Agreement.
SECTION 5.7 Remedies Cumulative. Each and every
right and remedy of the Security Agent shall, to the extent
permitted by law, be cumulative and shall be in addition to
any other remedy given hereunder or under any other Basic
Document or any other document now or hereafter existing at
law or in equity or by statute.
ARTICLE VI
ADDITIONAL RIGHTS OF THE SECURITY AGENT
If the Security Agent shall determine to exercise
its right to sell all or any of the Pledged Collateral
pursuant to Section 5.2, the Pledgor shall, upon request of
the Security Agent, at its own expense do or cause to be
done all such other acts and things as may be necessary to
make such sale of the Pledged Collateral or any part
thereof valid and binding and in compliance with any
Requirement of Law.
<PAGE>
ARTICLE VII
INDEMNIFICATION
The Pledgor shall indemnify each of the Security
Agent and the Secured Parties from and against any and all
claims, losses and liabilities growing out of or resulting
from the failure by the Pledgor to perform or observe any
of the provisions hereof including, without limitation,
(a) the sale of, collection from, or other realization
upon, the Pledged Collateral, or any part thereof, in
connection with such failure, or (b) the exercise or
enforcement of any of the rights of the Security Agent or
any Secured Party hereunder, except for claims, losses or
liabilities resulting from such party's gross negligence or
willful misconduct. The indemnity obligations of the
Pledgor contained in this Article VII shall continue in
full force and effect notwithstanding the full payment of
the Obligations and the discharge thereof. The Pledgor
will upon demand pay to the Security Agent, or any Secured
Party the amount of any and all reasonable expenses,
including the fees and expenses of its and their respective
counsel and of any experts and agents, which such party may
incur in connection with the failure by the Pledgor to
perform or observe any of the provisions hereof, including,
without limitation, (a) the sale of, collection from, or
other realization upon, the Pledged Collateral, or any part
thereof, in connection with such failure, or (b) the
exercise or enforcement of any of the rights of the
Security Agent, or any Secured Party hereunder.
If any obligation of the Pledgor arising under
this Article VII shall be prohibited or unenforceable in
any jurisdiction, then, as to such jurisdiction, the
Pledgor hereby agrees to make the maximum contribution to
the payment and satisfaction of such obligations which is
permissible under applicable law.
<PAGE>
ARTICLE VIII
WAIVER
To the fullest extent it may lawfully so agree,
the Pledgor agrees that it will not at any time insist
upon, claim, plead, or take any benefit or advantage of any
appraisement, valuation, stay, extension, moratorium,
redemption or similar law now or hereafter in force in
order to prevent, delay or hinder the enforcement hereof or
the absolute sale of any part of the Pledged Collateral;
the Pledgor for itself and all who claim through it, so far
as it or they now or hereafter lawfully may do so, hereby
waives the benefit of all such laws, and all right to have
the Pledged Collateral marshaled upon any foreclosure
hereof, and agrees that any court having jurisdiction to
foreclose this Agreement may order the sale of the Pledged
Collateral as an entirety. Without limiting the generality
of the foregoing, the Pledgor hereby (a) authorizes the
Security Agent, for the ratable benefit of the Secured
Parties, in its sole discretion and without notice to or
demand upon the Pledgor and without otherwise affecting the
obligations of the Pledgor hereunder, from time to time to
take and hold other collateral for payment of any
Obligations, or any part thereof, and to exchange, enforce
or release such other collateral or any part thereof, and
to accept and hold any endorsement or guarantee of payment
of the Obligations or any part thereof, and to release or
substitute any endorser or guarantor or any other person
granting security for or in any other way obligated upon
any Obligations or any part thereof and (b) waives and
releases any and all right to require the Security Agent or
any Secured Party to collect any of the Obligations from
any specific item or items of the Pledged Collateral or
from any other party liable as guarantor or in any other
manner in respect of any of the Obligations or from any
collateral for any of the Obligations.
<PAGE>
ARTICLE IX
TERMINATION
Except as provided in Article VII hereof, this
Agreement shall terminate upon the receipt by the Security
Agent of evidence reasonably satisfactory to it and the
Required Holder(s) of the full and indefeasible payment (or
prepayment) and performance of all Obligations, including
the principal of and the premium, if any, and interest on
all such Obligations. At the time of such termination, the
Security Agent, at the request and expense of the Pledgor,
will execute and deliver to the Pledgor a proper instrument
or instruments acknowledging the satisfaction and
termination of this Agreement, and will duly assign,
transfer and deliver to the Pledgor such of the Pledged
Collateral as has not yet theretofore been sold or
otherwise applied or released pursuant to this Agreement,
together with any moneys at the time held by the Security
Agent or any Secured Party hereunder on account of the
Pledged Collateral and not otherwise applied to the payment
of the Obligations.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of
the Pledgor, the Security Agent and the Secured Parties,
all future holders of any of the Notes and their respective
successors and assigns. Except as set forth in Section
3.12 the Pledgor may not assign or transfer any of its
rights or obligations under this Agreement without the
prior written consent of all of the Noteholders. Any
Secured Party may at any time assign or transfer any of its
rights or obligations under this Agreement without the
prior written consent of the Pledgor but only concurrently
with and in accordance with an assignment by such Secured
Party under the respective Note Agreement.
SECTION 10.2 Notices. All notices, demands,
requests and other communications provided for hereunder
shall be in writing and shall be deemed to have been given
<PAGE>
(a) when presented personally, (b) when transmitted by
telex to the number specified below and the proper answer
back is received, (c) if sent by overnight courier service,
on the Business Day following the date of delivery to such
courier service, or such later day as demonstrated by a
bona fide receipt therefor, or (d) if sent by the United
States Postal Service, postage prepaid, registered or
certified, return receipt requested, on the date received,
addressed to the respective party, as the case may be, at
the following address, or such other address as any party
may from time to time designate by written notice to the
others as herein required. Transmission by telecopy at the
numbers provided below shall constitute provision of notice
under this Agreement only if receipt thereof is
acknowledged by the recipient.
Security Agent: State Street Bank
Corporate Trust Department
Two International Place
Boston, MA 02110
Attention: Gerald Wheeler
Facsimile: (617) 664 - 5371
Pledgor: New England Electric System
25 Research Drive
Westborough, Massachusetts 01582
Attention: Treasurer
Facsimile: (508) 389 - 2463
SECTION 10.3 Descriptive Headings. The
descriptive headings of the several paragraphs of this
Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
SECTION 10.4 Governing Law. THIS AGREEMENT
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW (OTHER THAN THE PROVISIONS OF SECTION 5-
1401 OF THE GENERAL OBLIGATIONS LAW OF SUCH STATE).
SECTION 10.5 No Waiver. Failure by the Security
Agent or any of the Secured Parties to exercise, or any
delay in exercising, any right, remedy, power or privilege
<PAGE>
any of them has under this Agreement, or any course of
dealing between the Pledgor and the Security Agent or the
Secured Parties, shall not operate as a waiver of any such
right, remedy, power or privilege. Neither shall any
single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise
of the same or of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges
provided under this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges
provided by law.
SECTION 10.6 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 of this
Agreement and without affecting the validity or
enforceability of such or any other provision in any other
jurisdiction.
SECTION 10.7 Consent to Jurisdiction.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT, ANY OF THE COLLATERAL SECURITY DOCUMENTS
OR OTHER BASIC DOCUMENTS, OR OTHER DOCUMENTS OR
TRANSACTIONS IN CONNECTION WITH OR RELATING HERETO OR
THERETO, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE
SECURITY AGENT, ANY SECURED PARTY OR THE PLEDGOR MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND THE PLEDGOR HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF THE PLEDGED COLLATERAL, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE PLEDGOR HEREBY IRREVOCABLY WAIVES
ANY OBJECTIONS, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
(b) In the case of the courts of the State of
New York or of the United States sitting in the City of New
York, State of New York, the Pledgor hereby irrevocably
designates, appoints and empowers C T Corporation System
<PAGE>
(the "Process Security Agent") (which has consented
thereto) with offices on the date hereof at 1633 Broadway,
New York, New York 10019, as agent to receive for and on
behalf of the Pledgor service of process in the State of
New York. The Pledgor further agrees that such service of
process may be made on the Process Agent by personal
service of a copy of the summons and complaint or other
legal process in any such legal suit, action or proceeding
on the Process Agent, or by any other method of service
provided for under the applicable laws in effect in the
County of New York, State of New York, and the Process
Agent hereby is authorized and directed to accept such
service for and on behalf of the Pledgor, and to admit
service with respect thereto.
(c) Upon service of process being made on the
Process Agent as aforesaid, a copy of the summons and
complaint or other legal process served shall be mailed by
the Process Agent to the Pledgor by registered mail, return
receipt requested, at his address referred to in Section
10.2 hereof, or to such other address as the Pledgor may
notify the Process Agent in writing. Service upon the
Process Agent as aforesaid shall be deemed to be personal
service on the Pledgor and shall be legal and binding upon
the Pledgor for all purposes, notwithstanding any failure
of the Process Agent to mail copies of such legal process
thereto, or any failure on the part of the Pledgor to
receive the same.
(d) The Pledgor agrees that it will at all times
continuously maintain an agent to receive service of
process in the County of New York on its behalf. In the
event that for any reason the Process Agent or any
successor thereto shall no longer serve as agent for the
Pledgor to receive service of process in the County of New
York on its behalf or shall have changed his address
without notification thereof to the Process Agent, the
Pledgor, immediately after having knowledge thereof, will
irrevocably designate and appoint a substitute agent in the
City of New York, New York and advise the Security Agent
thereof.
(e) Nothing contained in this section shall
preclude the Security Agent or any Secured Party from
bringing any legal suit, action or proceeding against the
Pledgor in the courts of any jurisdiction where the Pledgor
<PAGE>
or any of his property or assets may be found or located.
To the extent permitted by the applicable laws of any such
jurisdiction, the Pledgor hereby irrevocably submits to the
jurisdiction of any such court and expressly waives, in
respect of any such suit, action or proceeding, the
jurisdiction of any court or courts which now or hereafter,
by reason of his present or future domiciles, or otherwise,
may be available to it.
SECTION 10.8 Amendments. This Agreement may not
be changed orally, but only by an agreement in writing
signed by Pledgor and the Security Agent (with the consent
of the Required Holder(s)).
<PAGE>
IN WITNESS WHEREOF, the Pledgor has caused this
Agreement to be duly executed and delivered as of the date
first above written.
NEW ENGLAND ELECTRIC SYSTEM *
s\ Michael E. Jesanis
By: __________________________
Michael E. Jesanis
Treasurer
_________________
The name "New England Electric System" means the trustee or
trustees for the time being (as trustee or trustees but not
personally) under an agreement and declaration of trust
dated January 2, 1926, as amended, which is hereby referred
to, and a copy of which as amended has been filed with the
Secretary of the Commonwealth of Massachusetts. Any
agreement, obligation or liability made, entered into or
incurred by or on behalf of New England Electric System
binds only its trust estate, and no shareholder, director,
trustee, officer or agent thereof assumes or shall be held
to any liability therefor.
<PAGE>
Exhibit C
25 RESEARCH DRIVE, WESTBOROUGH, MASSACHUSETTS 01582
===================================================
December 15, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Narragansett Energy Resources Company and
New England Electric System; File No. 70-8671
Ladies and Gentlemen:
The statement on Form U-1, as amended, regarding the issue
and sale by Narragansett Energy Resources Company (NERC) of long-
term secured notes in an aggregate principal amount not to exceed
$33 million (the Notes) pursuant to one or more note agreements
(the Note Agreements), was permitted to become effective by the
Commission's Order No. 35-26397, dated October 24, 1995.
I have reviewed the following actions taken subsequent to my
opinion, dated October 20, 1995, to carry out the transactions
described in the statement:
1. As stated above, requisite action of your Commission
under the Public Utility Holding Company Act of 1935 was
taken by Order No. 35-26397 dated October 24, 1995.
2. The Board of Directors of NERC adopted votes authorizing
the issue and sale of the Notes to Connecticut General
Life Insurance Company, CIGNA Property and Casualty
Insurance Company, Insurance Company of North America,
and Life Insurance Company of North America (Purchasers),
and the Note Agreements.
3. On December 6, 1995, the Note Agreements, dated as of
November 30, 1995, were executed and delivered and NERC
issued the Notes to the Purchasers bearing interest at
the rate of 7.25% per year, for cash.
<PAGE>
Securities and Exchange Commission
Page 2
December 15, 1995
4. The Board of Directors of NEES adopted votes authorizing
NEES to enter into the Stock Pledge Agreement pledging
its share of NERC stock to the ratable benefit of the
Purchasers (Stock Pledge Agreement).
5. On December 6, 1995, the Stock Pledge Agreement, dated as
of November 30, 1995, was executed and delivered to the
Purchasers.
I have reviewed my opinion dated October 20, 1995 as Exhibit
F, and hereby confirm the statements made therein. Based on the
foregoing, it is my further opinion that the above-described
transactions have been carried out in accordance with the
statement on Form U-1.
Very truly yours,
s/Kirk L. Ramsauer
Kirk L. Ramsauer
Attorney for
Narragansett Energy Resources Company
and New England Electric System
