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File No. 70-7732
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 2
TO
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NEW ENGLAND ELECTRIC SYSTEM
(Name of company filing this statement)
25 Research Drive, Westborough, Massachusetts 01582
(Address of principal executive offices)
NEW ENGLAND ELECTRIC SYSTEM
(Name of top registered holding company parent in system)
Michael E. Jesanis Robert King Wulff
Treasurer Corporation Counsel
25 Research Drive 25 Research Drive
Westborough, MA 01582 Westborough, MA 01582
(Names and addresses of agents for service)
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Item I. Description of Proposed Transaction
Background
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By orders dated March 8, 1990 (HCAR No. 25051) and
January 25, 1991 (HCAR No. 25247), (File No. 70-7732), the
Commission permitted to become effective an Application/
Declaration, as amended, under which New England Electric System
(NEES or the Company) proposed to issue and sell from time to
time through May 1, 1995, an aggregate of up to 500,000 shares of
its authorized but unissued common shares, $1 par value, pursuant
to the New England Electric System Companies' Incentive Share
Plan (the Plan). Through March 31, 1995, NEES issued 41,363
shares pursuant to the Plan leaving a balance of 458,637
authorized but unissued shares.
The Company now proposes to further extend the period for
issuing common shares under the Plan to December 31, 1997.
Participation
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Management employees who are participants in New England
Electric Companies' Senior Incentive Compensation Plan (SICP),
Incentive Compensation Plan (ICP), Incentive Compensation Plan II
(ICPII), and Performance Based Bonus Plan (PBBP) participate in
the Plan.
Share Award
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Each participant's award under the Plan is determined by
multiplying the cash award, if any, received under the SICP, ICP,
ICPII, or PBBP, by a fixed percentage. The fixed percentage
varies depending upon the cash award plan in which the
participant participates. Cash awards under SICP, ICP, ICPII,
and PBBP are contingent upon NEES achieving certain minimum
fiscal and/or operating goals and upon the individual achieving
specified performance goals.
Restrictions on Shares
----------------------
Participants who are awarded Shares under the Plan hold all
voting, tender offer, exchange offer, and dividend rights to such
Shares. However, the Plan prohibits the sale, assignment,
transfer, or conveyance of Shares awarded under the Plan for a
period of five years from the date of issuance. Under certain
circumstances the restriction on Shares lapse or may be removed.
If a participant dies or becomes disabled, the restrictions on
all Shares issued to the participant under the Plan lapse. If a
participant experiences a serious financial emergency resulting
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from circumstances beyond his or her control the Benefits
Committee of the NEES Companies' Final Average Pay Pension Plan
may authorize a removal of restrictions on the number of
restricted Shares necessary to alleviate the hardship. In
addition, in the event of a "change in control", as defined by
the Plan, the restriction on all Shares issued to all
participants under the Plan lapse. In short, a "change in
control" is defined as an occurrence of certain events which
either evidence a merger or acquisition of NEES or cause a
significant change in the makeup of the NEES board of directors
over a short period of time.
Issue of Shares to the Plan
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Shares awarded to participants under the Plan come from
authorized but unissued common shares or from purchases in the
open market. Since May, 1991, all purchases have been made in
the open market. The decision whether to purchase in the open
market or from NEES takes into account NEES' need for common
equity, general market conditions, and the relationship between
the purchase price and the book value per Share.
The price of Shares purchased from NEES is based upon the
average of the high and low prices of Shares on the New York
Stock Exchange - Composite Transactions as reported in The Wall
Street Journal for five consecutive trading days ending on the
last trading day prior to the fifteenth day of January following
the year for which the award applies. The price of Shares
purchased in the open market is the price paid therefrom,
exclusive of commissions.
The proceeds from the continued sale of the Shares by NEES
will be added to the general funds of NEES and be used for any or
all of the following purposes: (i) investment in NEES's
subsidiaries, through loans or advances to such subsidiaries,
purchases of additional shares of their capital stock, or capital
contributions, (ii) payment of indebtedness of NEES, or (iii)
general purposes of NEES.
Neither NEES nor any subsidiary has an ownership interest in
an exempt wholesale generator ("EWG") or foreign utility company
("FUCO") as defined in Sections 32 and 33 of the Act nor will
NEES or any susidiary acquire such an interest as a result of the
transactions proposed herein. Additionally, neither NEES nor any
subsidiary is a party to, or has any rights under, a service,
sales or construction agreement with an EWG or FUCO.
Administration, Amendment and Termination
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The Plan is administered by the Management Committee, which
consists of the Chairman and the President of NEES. The
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Compensation Committee of the NEES board of directors has sole
authority to amend or terminate the Plan.
Item 2. Fees, Commissions and Expenses
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Costs of administering the program are de minimus, with the
exception of brokerage fees related to the purchase of Shares on
the open market, which have been 3 cents a share for purchases of
37,967 and 49,856 shares for years 1993 and 1994, respectively.
Further, there is a $2,000 filing fee associated with the
Company's request for an extension to the period for issuing NEES
common shares pursuant to the Plan.
None of such fees, commissions, or expenses are to be paid
to any associate company or affiliate of NEES except for
financial, legal and other services to be performed, at cost, by
New England Power Service Company. New England Power Service
Company is an affiliated service company operating pursuant to
Section 13 of the Public Utility Holding Company Act of 1935 (the
Act) and the Commission's rules thereunder.
Item 3. Applicable Statutory Provisions
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The proposed transactions are believed to require approval
of the Commission under sections 6, 7, 9, 10 and 12 of the Act.
Item 6. Exhibits and Financial Statements
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F Opinion of Counsel
H-1 Proposed Form of Notice
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned Company has duly caused this
Post-Effective Amendment No. 2 to be signed on its behalf, as
indicated, by the undersigned officer thereunto duly authorized.
NEW ENGLAND ELECTRIC SYSTEM
s/Michael E. Jesanis
Michael E. Jesanis
Treasurer
Date: April 28, 1995
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.
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
F Opinion of Counsel Filed herewith
H-1 Proposed Form of Notice Filed herewith
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Exhibit F
25 RESEARCH DRIVE, WESTBOROUGH, MASSACHUSETTS 01582
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April 28, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: New England Electric System
Issue and Sale of Common Shares Pursuant to New England
Electric System Companies' Incentive Share Plan
File No. 70-7732
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Dear Commissioners:
The undersigned, Corporation Counsel and Assistant General
Counsel for New England Electric System (the Company), have been
of counsel for the Company in connection with its proposed issue
of up to 500,000 common shares in accordance with and pursuant to
the Company's Incentive Share Plan (the Plan) through December
31, 1997. As such counsel, we have reviewed the various
documents and proceedings relating to said issue, including,
without limiting the foregoing and the corporate and regulatory
authority with reference to said issue. Accordingly, we are
familiar with the proceedings taken in connection with such
issue.
The proposed transaction is subject to (1) compliance with
the applicable provisions of the Public Utility Holding Company
Act of 1935, the Securities Act of 1933, the Securities Exchange
Act of 1934, and the rules and regulations under each, and (2)
due issuance of the shares and receipt of full payment therefor.
Subject to the foregoing, it is our opinion that in the
event that the proposed transaction is consummated in accordance
with the statement on Form U-1 as amended:
1. All state laws applicable to the proposed transaction
will have been complied with.
2. The Company is a duly created and existing voluntary
association in The Commonwealth of Massachusetts. The authorized
shares of the Company consists of 150,000,000 shares of the par
value of $1 each.
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3. When duly issued and paid for, the authorized common
shares will be, validly issued, full-paid and non-assessable, and
the holders thereof will be entitled to the rights and privileges
appertaining thereto set forth in the Agreement and Declaration
of Trust dated January 2, 1926, as amended (the Agreement).
Article 9 of the Agreement provides in substance that no
shareholder, director, officer, or agent shall be held to any
liability in contract, tort or otherwise; that every person shall
look only to the trust estate for payment or damages or
otherwise, and that in every written agreement or obligation
reference shall be made to the Agreement and to the substance of
such part of the above provisions of Article 9 as are applicable,
and that neither the Board of Directors nor the Trustee nor any
officer, agent or representative shall have any power or
authority to enter into any agreement or obligation on behalf of
the Company except in accordance with the provisions of said
Article 9. Article 10 of the Agreement provides that no trustee,
director, officer, or agent of the Company shall be entitled to
look to the shareholders personally for indemnity against
liability incurred by them or to call upon the shareholders for
the payment of any assessment except only in the case of shares
which by their express terms are issued part-paid and assessable
and then only as therein provided. In Article 27 of the
Agreement it is further provided that all shares issued and to be
issued shall be full-paid and non-assessable except to the extent
otherwise specifically provided in the certificates representing
such shares. The Agreement expressly declares in Article 39 that
a trust and not a partnership is deemed to be created and that
the shareholders shall be deemed to hold only the relationship of
cestuis que trustent to the Trustee. Despite these provisions,
the shareholders of a voluntary association such as the Company
might, with respect to the liability of shareholders under
Massachusetts law, be treated in legal contemplation as partners
and as such under some circumstances might be held personally
liable for certain obligations or liabilities of the Company. We
consider the possibility of any such liability remote because, in
our opinion, shareholders are protected under the laws of
Massachusetts from personal liability on contract obligations
arising from instruments containing the substance of such said
provisions of Article 9 as are applicable (it being the practice
of the Company to insert such in all contract obligations,
including all debt securities), and because the Company is a
holding company so that the possibility of substantial
liabilities arising from torts or statutory liabilities or
penalties, other than tax liabilities, is not as great as in the
case of companies operating physical properties. Notwithstanding
the fact that the Company is a holding company, in suits and
claims against its subsidiaries, including environmental claims,
courts and agencies might disregard corporate formalities and
assign liability to the Company despite traditional principles of
corporate law. Further, we understand that unincorporated
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voluntary associations have been treated as general partnerships
under the laws of a few states, including Texas in which the
Company's oil and gas subsidiary has qualified to do business as
a foreign corporation. Even so, for the reasons cited above and
because of the substantial capitalization of the Company and its
subsidiaries, we consider the possibility of personal liability
of the shareholders of the Company to be remote.
4. Consummation of the proposed transaction will not
violate the legal rights of the holders of any securities issued
by the Company or any associate company thereof.
5. The sale of the authorized shares of the Company
pursuant to the Plan is exempt from registration under the
Securities Act of 1933 because the Plan is an involuntary,
noncontributory bonus plan as provided in Release No. 33-6188.
This opinion does not relate to qualification or
registration of shares under securities or "blue sky" laws of the
several states, or to the Federal income tax consequences of
participation in the Plan.
We hereby give our consent to the use of this opinion as a
part of the statement on Form U-1, as amended, filed by the
Company with the Securities and Exchange Commission.
Very truly yours,
s/Kirk L. Ramsauer
Kirk L. Ramsauer
Assistant General Counsel
s/Robert King Wulff
Robert King Wulff
Corporation Counsel
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Exhibit H-1
Proposed Form of Notice
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NOTICE OF PROPOSED EXTENSION OF AUTHORIZATION TO ISSUE
ADDITIONAL COMMON SHARES PURSUANT TO
INCENTIVE SHARE PLAN
New England Electric System (NEES or the Company), 25
Research Drive, Westborough, Massachusetts 01582, a registered
holding company, has filed Post-Effective Amendment No. 2 to its
Application/Declaration with this Commission pursuant to Sections
6 and 7 of the Public Utility Holding Company Act of 1935 and
Rule 50(a)(5) thereunder.
By orders dated March 8, 1990 (HCAR No. 25051) and January
25, 1991 (HCAR No. 25247), the Commission permitted to become
effective an Application/Declaration, as amended, under which New
England Electric System (NEES or the Company) proposed to issue
and sell from time to time through May 1, 1995, up to 500,000
shares of its authorized by unissued common shares, $1 par value,
pursuant to the New England Electric System Companies Incentive
Share Plan (the Plan). The Plan is sponsored by certain NEES
subsidiaries. Through March 31, 1995, NEES issued 41,363 shares
pursuant to the Plan leaving a balance of 458,637 authorized but
unissued shares.
The Company now proposes to further extend the period for
issuing common shares under the Plan to December 31, 1997.
The proceeds from the sale of any common shares will be
added to the general funds of the Company and be used for any or
all of the following purposes: (i) investment in the Company's
subsidiaries, through loans or advances to such subsidiaries,
purchases of additional shares of their capital stocks, or
capital contributions, (ii) payment of indebtedness of the
Company, or (iii) general purposes of the Company.
The proposal and any amendments thereto are available for
public inspection through the Commission's Office of Public
Reference. Interested persons wishing to comment or request a
hearing should submit their views in writing by to
the Secretary, Securities and Exchange Commission, Washington
D.C. 20549, and serve a copy on the applicant at the address
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specified above. Proof of service (by affidavit or, in the case
of an attorney at law by certificate) should be filed with the
request. Any request for a hearing shall identify specifically
the issues of fact or law that are disputed. A person who so
requests will be notified of any hearing, if ordered, and will
receive a copy of any notice or order issued in this matter.
After said date, the proposal, as filed or as it may be amended,
may be authorized.
For the Commission, by the Office of Public Utility
Regulation, pursuant to delegated authority.
