<PAGE>
File No. 70-8671
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NARRAGANSETT ENERGY RESOURCES COMPANY
280 Melrose Street
Providence, Rhode Island 02901
NEW ENGLAND ELECTRIC SYSTEM
25 Research Drive
Westborough, MA 01582
(Name of companies filing this statement and
addresses of principal executive offices)
NEW ENGLAND ELECTRIC SYSTEM
(Name of top registered holding company parent of applicant)
Michael E. Jesanis Kirk L. Ramsauer
Treasurer Assistant General Counsel
25 Research Drive 25 Research Drive
Westborough, MA 01582 Westborough, MA 01582
(Name and address of agents for service)
<PAGE>
Form U-1 Application/Declaration dated August 10, 1995
(Commission's File No. 70-8671) and amended on August 16, 1995,
relating to the issue and sale of one or more notes and the pledge
of collateral, is hereby amended as follows:
1. By amending the first two paragraphs under the heading
"Proposed Issue and Sale of the Note" to read as follows:
"The Company proposes to issue and sell, on or
before December 31, 1996, the Note in an aggregate
principal amount not to exceed $33 million. The Note
will be issued pursuant to a note agreement (the Note
Agreement), the specific terms of which will be
negotiated with a purchaser. The Note will have a
maturity of up to 17 years from the time of issuance.
The Note will bear interest at a fixed rate not to exceed
12% per annum. The Note Agreement may provide for a
sinking fund or other mandatory pre-payments and
limitations on callability or refundability, depending
upon market conditions. The Company proposes that the
Note will be redeemable at any time at its option, upon
reasonable notice, at the then outstanding principal
amount plus accrued interest and redemption premium, and
may include a yield to maturity premium. The Note may be
secured by an assignment of the Company's OSP partnership
interests. The Company will give the purchaser(s) a
first priority security interest in all distributions in
the form of cash and other property received by the
Company in respect to these partnership interests. The
Company will propose to potential lenders that the terms
and conditions of the financing be those listed in
Exhibit A-1 hereto. The Company proposes that the
security interest be given under the terms and conditions
in the proposed Assignment and Security Agreements in
Exhibit A-2 hereto.
The proceeds from the proposed issue and sale of the
Note will be applied by the Company (i) to pay fees and
expenses incurred by the Company in connection with the
sale of the Note, (ii) to pay working capital expenses of
the Company, and (iii) to the retirement (in part) of
subordinated notes issued by the Company to NEES in order
to fund the Company's initial equity contribution to both
OSP units."
2. By supplying the following Exhibits:
A-1 Proposed Draft Note Agreement (including form of
Note)
A-2 Proposed Draft Assignment and Security Agreements
A-3 Proposed Draft Pledge Agreement
F Opinion of Counsel
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, each undersigned company has duly caused this
Amendment No. 2 to Form U-1 (Commission's File No. 70-8671) to be
signed on its behalf, as indicated, by the undersigned officer
thereunto duly authorized by each such company.
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
Date: October 20, 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.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ---------- ----------- ----
A-1 Proposed Draft Filed herewith
Note Agreement
A-2 Proposed Draft Assignment and Filed herewith
Security Agreements
A-3 Proposed Draft Pledge Filed herewith
Agreement
F Opinion of Counsel Filed herewith
G Schedule of Estimated Fees Previously filed
and Expenses
H Proposed Form of Notice Previously filed
Financial
Statement No. Description Page
- ------------- ----------- ----
1-a Balance sheet of Narragansett Previously filed
Energy Resources Company as
of June 30, 1995, actual and
pro forma
1-b Balance sheet of NEES and Previously filed
subsidiaries consolidated as
of June 30, 1995, actual and
pro forma
2-a Statement of Income and Previously filed
Retained Earnings of
Narragansett Energy Resources
Company for the twelve months
ended June 30, 1995, actual
and pro forma
2-b Statement of Income and Previously filed
Retained Earnings of NEES and
subsidiaries consolidated for
the twelve months ended
June 30, 1995, actual and
pro forma
<PAGE>
EXHIBIT INDEX
Financial
Data Schedules Description Page
- -------------- ----------- ----
1 Financial Data Schedule for Previously filed
the Company as of June 30,
1995
2 Financial Data Schedule for Previously filed
NEES as of June 30, 1995
<PAGE>
Exhibit A-1
===========
NARRAGANSETT ENERGY RESOURCES COMPANY
$32,000,000
_____% SENIOR SECURED NOTES DUE NOVEMBER 30, 2010
NOTE AGREEMENT
Dated as of December 1, 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
PURCHASER SCHEDULE
<PAGE>
TABLE OF CONTENTS (Continued)
EXHIBIT A -- FORM OF NOTE
EXHIBIT B -- FORM OF OPINION OF COMPANY'S COUNSEL
EXHIBIT C-1 -- 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
EXHIBIT H -- FORM OF SUBORDINATION PROVISIONS
<PAGE>
NARRAGANSETT ENERGY RESOURCES COMPANY
Address: 280 Melrose Street
Providence, Rhode Island 02907
As of December 1, 1995
[Noteholder(s)]
[Address(es)]
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 ____% 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 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, Notes in the aggregate principal amount of
$32,000,000 at 100% of such aggregate principal amount. 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 names,
evidencing the aggregate principal amount of Notes to be purchased by you and
in the denomination or denominations 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 December 1, 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").
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, 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
<PAGE>
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;
(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
<PAGE>
(v) the Consent and Agreements duly authorized, executed and
delivered by each of the Partnerships.
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.
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) Except as set forth on Schedules 3M and 8D, 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.
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.
<PAGE>
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 atpar 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.
(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), 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.
<PAGE>
4D. Partial Payments Pro Rata. Upon any partial prepayment of
the Notes pursuant to Section 4A or 4B, the 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 financial
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.
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
<PAGE>
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 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 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;
<PAGE>
(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 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:
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.
<PAGE>
(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 and other Indebtedness owed to the Noteholders pursuant to this
Agreement, (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.
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 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 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 Collateral created by the Collateral
Security Documents shall have been taken.
<PAGE>
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 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.
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) 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
<PAGE>
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 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 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
amount payable by the Company to the Noteholders hereunder 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 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 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
<PAGE>
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 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 "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, 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
<PAGE>
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 Required Holder(s) may at its or their option, by notice in
writing to the Company, declare all of the Notes and all other amounts owing
under the Basic Documents to be, and all of the 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, if any, with respect to each 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 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 (vi), inclusive, and (viii), (ix) or (x) of this Section 7A, (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 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 shall have been declared immediately due and payable pursuant to
Section 7A, the Required 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, the principal of and Yield-
Maintenance Amount, if any, payable with respect to any 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, (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 or this
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 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
<PAGE>
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 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 and
the other Basic Documents, and each of this Agreement and the Partnership
Agreements has been duly and validly executed and delivered and constitutes,
and the 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 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, 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. Except as set forth in Schedules 3M and 8D,
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
<PAGE>
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, nor fulfillment of nor compliance with the terms and provisions of
the Basic Documents will 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 (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 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 any similar
security of the Company for sale to, or solicited any offers to buy the 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 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 will be
used (i) to pay fees and expenses incurred by the Company in connection with
the sale of the 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 this Agreement or the Notes to violate Regulation
G, Regulation T or any other regulation of the Board of Governors of the
<PAGE>
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 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 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, the offering, issuance, sale or delivery of the
Notes or fulfillment of or compliance with the terms and provisions hereof or
of the Notes.
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
<PAGE>
does not represent that the results contemplated by such Projections will be
achieved.
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 Security
Agent for the ratable benefit of the Noteholders 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; (iii) the securing of the 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 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 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.
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
<PAGE>
Senior Notes Documents, the OSP Revolver Documents, the Subordinated Note 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 or will be payable, or
asserted to be payable, with respect to the issuance and sale of the Notes or
the transactions contemplated hereby or ancillary 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, 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
<PAGE>
"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.
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 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
<PAGE>
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 Exhibit ___ 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 Exhibit __ 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. Exhibit ___ 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.
(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 Exhibit __
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. Sections 9601, et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Sections 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 Exhibit
___ 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 Exhibit
___ 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 Exhibit __ 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 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
<PAGE>
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 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.
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.
<PAGE>
"Basic Documents" shall mean collectively, this Agreement, the
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.
"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.
"Collateral Agency Agreement" shall mean the collateral agency
agreement dated as of the date hereof, between the Company, the 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 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 under Section 4A(ii) during such period plus the aggregate amount of
any overdue scheduled and mandatory debt service payments 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.
"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.
"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.
<PAGE>
"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.
"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 indebtedness secured thereby
<PAGE>
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.
"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.
"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.
"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.
<PAGE>
"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 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 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 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
<PAGE>
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.
"Project Stabilization Agreements" shall mean [to be defined].
"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.
"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 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 from time to time
outstanding.
"Requirement of Law" shall mean as to any Person, the certificate
of incorporation and by-laws or partnership agreement 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 ______________________, 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.
<PAGE>
"Subordinated Note" shall mean the Subordinated Note, dated as of
the date hereof, in the principal amount of $________ made by the Company in
favor of NEES.
"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.
"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 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,
<PAGE>
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, without the written consent of the holder or holders of
all Notes at the time outstanding, no amendment to this Agreement shall change
the maturity of any Note, or change the principal of, or the rate or time of
payment of interest on or any Yield-Maintenance Amount payable with respect to
any Note, or affect the time, amount or allocation of any prepayments, or
change the proportion of the principal amount of the Notes required with
respect to any consent, amendment, waiver or declaration. 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 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.
<PAGE>
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 $2
million.
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 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 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
<PAGE>
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.
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.
<PAGE>
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:
The foregoing Agreement is
hereby accepted as of the
date first above written.
[NOTEHOLDER]
By
Name:
Title:
<PAGE>
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
[NOTEHOLDER]
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Each such wire transfer shall set forth the name
of the Company, a reference to "____% 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.
(2) Address for all notices relating to payments:
Address for all other communications and notices:
(4) Recipient of telephonic prepayment notices:
(5) Tax Identification No.: __________________
<PAGE>
EXHIBIT A
[FORM OF NOTE]
NARRAGANSETT ENERGY RESOURCES COMPANY
__________% SENIOR SECURED NOTE DUE November 30, 2010
No. _____________ , 199_
$32,000,000
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 [ ],
or registered assigns, the principal sum of THIRTY-TWO MILLION 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 ____% 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) ____% 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.
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
_________________________ in ____________________ 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 December 1, 1995
(herein called the "Agreement"), between the Company, [Noteholder(s)] 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 (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 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
<PAGE>
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.
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]
[Noteholder(s)]
[Address(es)]
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 Agreement,
dated as of December 1, 1995, between the Company and you (the "Note
Agreement"), pursuant to which the Company has issued to you today its ____%
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 December , 1995 by NEES for the benefit of
________________, 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. I
have also reviewed the Consent and Agreement dated as of December , 1995,
among 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
December , 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 Agreement have the respective meanings specified in the Note Agreement.
This letter is being delivered to you in satisfaction of the condition set
forth in paragraph 3B of the Note Agreement and with the understanding that
you are 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 you in paragraph 9A of the Note Agreement.
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
<PAGE>
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3. It is not necessary in connection with the offering,
issuance, sale and delivery of the Notes under the circumstances contemplated
by the Note Agreement 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 Agreement), 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 Company, NEES and/or either Partnership.
7. Except as set forth in Schedule 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 this Agreement 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
<PAGE>
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 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.
(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 A-2
===========
Security Agreement and
Collateral Assignment
of Partnership Interest
____________________________
SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT OF PARTNERSHIP
INTEREST (this "Agreement"), dated as of December ___, 1995, made by
NARRAGANSETT ENERGY RESOURCES COMPANY, a Rhode Island corporation (the
"Obligor"), for the benefit of _____________, as security agent
(together with its successors and assigns in such capacity, the
"Security Agent") for the ratable benefit of all holders from time to
time of the Notes (as defined in the Note Agreement (defined below) (the
"Secured Parties")).
R E C I T A L S
_________________
A. Ocean State Power, a Rhode Island general partnership
(the "Partnership"), together with Ocean State Power II, a Rhode Island
general partnership ("OSP II"), owns and operates an approximately 500
megawatt gas-fired electric generating plant located in Burrillville,
Rhode Island.
B. The Obligor is a general partner of each of the
Partnership and OSP II.
C. The Obligor has entered into a Note Agreement, dated
as of December 1, 1995 (as amended, modified or supplemented from time
to time, the "Note Agreement"), with the purchaser(s) of the Notes
(defined below). The Note Agreement provides for the Noteholders
(therein defined) to purchase $32,000,000 in aggregate principal amount
of secured promissory notes issued by the Obligor (the "Notes") subject
to the terms and conditions set forth therein. The proceeds of such
Notes are to be applied by the Obligor to pay fees and expenses incurred
by the Obligor in connection with the sale of the Notes, to pay working
capital expenses, and to repay (in part) the outstanding principal
balances under loans made by New England Energy System to the Obligor.
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings assigned thereto in the Note Agreement.
D. The Noteholders are willing to enter into the Note
Agreement upon the terms and conditions set forth therein, but only if
the Obligor shall make the pledges contemplated by this Agreement.
E. The Obligor is willing to make the pledges requested
and to enter into this Agreement so as to induce the Noteholders to
enter into the Note Agreement.
NOW, THEREFORE, in consideration of these premises and in
order to induce the Noteholders to enter into the Note Agreement, and
other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Obligor agrees as follows:
<PAGE>
ARTICLE I
UNDERTAKINGS
SECTION 1.1 Pledge.
____________________
(a) The Obligor hereby pledges, assigns, hypothecates,
delivers, sets over and grants 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 Obligor under the
Note Agreement and the other Basic Documents, (ii) performance when due
by the Obligor of all its obligations under the Note Agreement and the
other Basic Documents, and (iii) payment and performance when due of any
and all sums and all obligations of the Obligor hereunder (collectively,
the "Obligations"), a first lien on and prior perfected security
interest in all of the Obligor's right, title and interest in, to and
under the following, whether now owned or hereafter acquired
(collectively, the "Pledged Interest"):
all income, cash flow, revenues, issues, profits, losses,
distributions, payments, proceeds and other property of
every kind and variety due, accruing or owing to, or to be
turned over to, or disbursed to the Obligor by the
Partnership in connection with the Obligor's partnership
interests in the Partnership, including without limitation
(i) all rights of the Obligor to distributions made by the
Partnership pursuant to Section 6 of the Partnership
Agreement and other distributions and payments made on or
after the date hereof as provided in the Partnership
Agreement, as such Partnership Agreement may be amended,
supplemented, or modified from time to time, and (ii) any
and all cash, investments and securities from time to time
on deposit (including all income or gain earned thereon) in
the "Security Account" created pursuant to the Collateral
Agency Agreement, and in any other account into which
proceeds of the foregoing are deposited.
Obligor and the Secured Parties hereby expressly acknowledge
and agree that the Pledged Interest is limited to Obligor's economic
rights with respect to Obligor's partnership interest in the
Partnership, and is not intended to and shall not be deemed to include
any voting or other consensual rights of Obligor with respect to such
partnership interest or the right to be or become a partner in the
Partnership.
(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 distributions from the Partnership or the Obligor, or
by their exercise of any rights hereunder, be deemed to have any
liability for any Contractual Obligations of the Partnership or the
Obligor.
SECTION 1.2 Security for Obligations. This Agreement secures
the payment and performance of all Obligations.
SECTION 1.3 Delivery of Pledged Interest. If the Obligor
shall become entitled to receive or shall receive any certificate,
instrument, option or rights, whether as an addition to, in substitution
of, or in exchange for the Pledged Interest or any part thereof, or
otherwise, the Obligor shall accept any such certificate, instrument,
option or rights as the Security Agent's agent, shall hold them in trust
for the Security Agent, and shall deliver them forthwith to the Security
Agent in the exact form received, with the Obligor's endorsement when
<PAGE>
necessary, or accompanied by duly executed instruments of transfer or
assignment in blank or, if requested by the Security Agent, an
additional pledge agreement or security agreement executed and delivered
by the Obligor, all in form and substance satisfactory to the Security
Agent, to be held by the Security Agent, subject to the terms hereof, as
further collateral security for the Obligations.
SECTION 1.4 Waiver. The Obligor 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 failure by the Obligor to promptly perform or
pay the Obligations when due, the Security Agent at the direction of the
Required Holder(s) may proceed directly and at once, without notice,
against the Pledged Interest to collect and recover the full amount or
any portion of the Obligations so due and payable, without first
proceeding against the Obligor or against any other security or
collateral provided by the Obligor with respect to the Obligations.
SECTION 1.5 Further Assurances. The Obligor agrees that at
any time and from time to time, at its expense, the Obligor shall
promptly execute and deliver all further instruments and documents
(including, without limitation, financing statements or any additional
pledge agreement or security agreement), and take all further action
that, in the opinion of the Required Holder(s) or the Security Agent,
may be necessary or reasonably desirable in order to perfect and protect
any security interest in the Pledged Interest 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 Interest
or any part thereof.
SECTION 1.6 Distributions. So long as any of the Obligations
shall be outstanding, all rights of the Obligor to receive the
distributions which it would otherwise be authorized to receive and
retain pursuant to the Partnership Agreement shall be vested in the
Security Agent who shall have the sole right to such distributions as
additional security hereunder for the benefit of the Secured Parties,
subject to the rights of the Obligor to have such amounts disbursed by
the Security Agent to it in accordance with the terms of the Note
Agreement and the Collateral Agency Agreement. All distributions which
are received by the Obligor contrary to the provisions of this Section
1.6 shall be received in trust for the benefit of the Security Agent,
shall be segregated from other funds of the Obligor and shall be
forthwith paid over to the Security Agent in the same form as so
received (with any necessary endorsement). The Obligor shall cause the
Partnership to make all distributions otherwise payable to the Obligor
directly to the Security Account or such other account as the Security
Agent shall direct in compliance herewith and shall cause the
Partnership to acknowledge and agree to make such payments directly to
the Security Account by executing a Consent and Agreement substantially
in the form attached as Exhibit F-2 to the Note Agreement.
ARTICLE II
POWER OF ATTORNEY
SECTION 2.1 Security Agent As Attorney-in-Fact. The Obligor
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 Obligor's attorney-in-fact, with full power and
authority, in its own name or in the name, place and stead of the
Obligor or otherwise, upon the occurrence of an Event of Default, (a) to
exercise all rights related to the Pledged Interest, and (b) at any time
and from time to time generally to do, at the Security Agent's request
and the Obligor's expense, all acts and things which the Security Agent
<PAGE>
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
Obligor representing any payment or other distribution in respect of the
Pledged Interest or any part thereof and to give full discharge for the
same, all as fully and effectually as the Obligor might or could do; and
the Obligor 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 2.2 Right to Perform. Subject to the limitations set
forth in the last paragraph of Section 1.1(a), 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 or in the Partnership Agreement (including without
limitation any right to cure a default thereunder), and the costs and
expenses (including without limitation any amounts paid by the Security
Agent and/or any Secured Party to the Partnership in satisfaction of the
Obligor's payment obligations under the Partnership Agreement) of the
Security Agent, any Secured Party or such other performing party
incurred in connection therewith shall be payable by the Obligor;
provided, however, that the Security Agent and the Secured Parties shall
have no obligation to perform or cause performance of any of the
Obligor's obligations hereunder or under the Partnership Agreement and
any such performance of the Obligor's obligations shall not limit the
other remedies available to the Security Agent and the Secured Parties
hereunder and under the other Basic Documents; and provided further,
that the foregoing shall not confer any right upon the Security Agent or
any Secured Party to act as a partner of the Partnership or exercise any
rights of a partner in the Partnership except for the right to receive
property constituting the Pledged Interest.
SECTION 2.3 Reasonable Care. The Security Agent shall be
deemed to have exercised reasonable care in the custody and preservation
of the Pledged Interest in its possession if the Pledged Interest 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 parties with respect to the Pledged
Interest. The powers conferred on the Security Agent hereunder shall not
impose any duty on the Security Agent to exercise such powers.
ARTICLE III
REMEDIES
SECTION 3.1 Collection; Sale of Pledged Interest. 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 3.1), 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 Interest), and in addition may sell, give an option or options
to purchase, contract to sell or otherwise dispose of the Pledged
Interest, or any part thereof, as hereinafter provided and may collect,
receive, appropriate and realize upon and/or sell, lease, finance,
refinance, mortgage or convey the Pledged Interest or any part thereof.
The Pledged Interest or any part thereof may be sold or otherwise
disposed of in one or more sales, at public or private sale, conducted
<PAGE>
by any officer or agent 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 Interest 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 Interest 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 Obligor 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 Interest
so sold. Each purchaser (including any Secured Party) at any such sale
shall hold the Pledged Interest so sold absolutely free from any claim
or right of whatsoever kind, including any equity or right of redemption
of the Obligor. The Security Agent shall give the Obligor at least ten
days' notice (which the Obligor 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 Interest 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
Interest on credit or for future delivery, the Pledged Interest 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 Interest so sold, and, in case of any such failure,
such Pledged Interest may again be sold pursuant to the provisions
hereof.
SECTION 3.2 Conveyances. The Security Agent may as attorney-
in-fact pursuant to Section 2.1 hereof, in the name and stead of the
Obligor, make and execute all conveyances, assignments and transfers of
the Pledged Interest sold pursuant to Section 3.1 hereof, and the
Obligor hereby ratifies and confirms all that the Security Agent, as
said attorney-in-fact, shall do by virtue hereof. Nevertheless, the
Obligor 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 3.3 Application of Proceeds. All cash proceeds
received by the Security Agent in respect of any sale or other transfer
of, collection from, or other realization upon all or any part of the
Pledged Interest may be held by the Security Agent as collateral for the
Obligations and/or applied to the 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 Obligor or whomsoever the Security
Agent shall determine to be lawfully entitled thereto.
<PAGE>
SECTION 3.4 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.
SECTION 3.5 No Liability. Neither the Security Agent nor any
Secured Party shall incur any liability as a result of the sale of the
Pledged Interest, or any part thereof, at any private sale conducted in
a commercially reasonable manner. The Obligor 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 Interest, 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
Interest, or any part thereof, was 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 3.6 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 IV
ADDITIONAL RIGHTS OF THE SECURITY AGENT
If the Security Agent shall determine to exercise its right to
collect, receive, appropriate and realize upon and/or sell, lease,
finance, refinance, or convey all or any of the Pledged Interest
pursuant to Section 3.1 hereof, the Obligor 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 action of the Pledged
Interest or any part thereof valid and binding and in compliance with
any Requirement of Law.
ARTICLE V
INDEMNIFICATION
The Obligor 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 Obligor
to perform or observe any of the provisions hereof including, without
limitation, (a) the sale of, collection from, or other realization upon,
the Pledged Interest, 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 Obligor contained in this
Article V shall continue in full force and effect notwithstanding the
full payment of the Obligations and the discharge thereof. The Obligor
will upon demand pay to the Security Agent or any Secured Party the
amount of any and all 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 Obligor to perform
<PAGE>
or observe any of the provisions hereof, including, without limitation,
(i) the sale of, collection from, or other realization upon, the Pledged
Interest, or any part thereof, in connection with such failure, or (ii)
the exercise or enforcement of any of the rights of the Security Agent
or any Secured Party hereunder.
If any obligation of the Obligor arising under this Article V
shall be prohibited or unenforceable in any jurisdiction, then, as to
such jurisdiction, the Obligor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which
is permissible under applicable law.
ARTICLE VI
WAIVER
To the fullest extent permitted by law, the Obligor 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 Interest; the Obligor 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 Interest marshaled upon any foreclosure hereof, and agrees
that any court having jurisdiction to foreclose this Agreement may order
the sale of the Pledged Interest as an entirety. Without limiting the
generality of the foregoing, the Obligor hereby (a) authorizes the
Security Agent, for the benefit of the Secured Parties, in its sole
discretion and without notice to or demand upon the Obligor and without
otherwise affecting the obligations of the Obligor 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
Interest 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.
ARTICLE VII
TERMINATION
Except as provided in Article V hereof, this Agreement shall
terminate upon the receipt by the Security Agent of evidence
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 Obligor, will execute and deliver to
the Obligor a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign,
transfer and deliver to the Obligor such of the Pledged Interest 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
Interest and not otherwise applied to the payment of the Obligations.
<PAGE>
ARTICLE VIII
CONTINUING SECURITY INTEREST;
TRANSFER OF NOTES
This Agreement shall create a continuing security interest in
the Pledged Interest and shall (a) remain in full force and effect until
full and indefeasible payment and performance of the Obligations, (b) be
binding upon the Obligor, its successors and assigns, and (c) inure,
together with the rights and remedies of the Security Agent hereunder,
for the benefit of the Secured Parties and their respective successors,
transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Secured Party may assign or otherwise transfer
any Note held by it or grant a participation in such Note or in such
rights and obligations to any other person or entity, and such other
person or entity shall thereupon become vested with all the benefits in
respect thereof granted to such Secured Party herein or otherwise,
subject, however, to the provisions of the Note Agreement.
ARTICLE IX
REINSTATEMENT
This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any amount received by
any Secured Party in respect of the Obligations is rescinded or must
otherwise be restored or returned by the Security Agent or any Secured
Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Obligor or the Partnership or upon the appointment
of any intervenor or conservator of, or agent or similar official for,
the Obligor or the Partnership or any part of its assets, or otherwise,
all as though such payments had not been made.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments. This Agreement may not be changed
orally, but only by an agreement in writing signed by the Obligor and
the Security Agent (with the consent of the Required Holder(s)).
SECTION 10.2 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Obligor, the Security Agent
and the Secured Parties, all future holders of any of the Notes and
their respective successors and assigns. The Obligor 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 Obligor
but only concurrently with and in accordance with an assignment by such
Secured Party under the Note Agreement.
SECTION 10.3 Notices. All notices, demands, requests and
other communications provided for hereunder to the Company and the
Secured Parties shall be made in accordance with Section 11I of the Note
Agreement, and to the Security Agent in accordance with Section 13.03 of
the Collateral Agency Agreement.
SECTION 10.4 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 10.5 Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
<PAGE>
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 10.6 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 any of them has under this Agreement
or any course of dealing between the Obligor 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 10.7 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 10.8 Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
SECTION 10.9 Consent to Jurisdiction.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, ANY OF THE 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
OBLIGOR 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
OBLIGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE OBLIGOR 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 Obligor hereby irrevocably designates, appoints and empowers C T
Corporation System (the "Process 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 Obligor service of
process in the State of New York. The Obligor 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 Obligor, 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 Obligor by
registered mail, return receipt requested, at its address referred to in
Section 11I of the Note Agreement, or to such other address as the
Obligor may notify the Process Agent in writing. Service upon the
Process Agent as aforesaid shall be deemed to be personal service on the
<PAGE>
Obligor and shall be legal and binding upon the Obligor 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
Obligor receive the same.
(d) The Obligor 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 Obligor to receive service of process in the County of New York
on its behalf or shall have changed its address without notification
thereof to the Process Agent, the Obligor, 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 Obligor in the courts of any jurisdiction
where the Obligor or any of its property or assets may be found or
located. To the extent permitted by the applicable laws of any such
jurisdiction, the Obligor 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 its present or future domiciles, or
otherwise, may be available to it.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered by their proper and duly authorized
officers in counterparts all as of the date first above written.
NARRAGANSETT ENERGY RESOURCES
COMPANY
By: ________________________
Name:
Title:
______________________,
as Security Agent
By: ________________________
Name:
Title:
<PAGE>
Security Agreement and
Collateral Assignment
of Partnership Interest-OSP II
______________________________
SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT OF PARTNERSHIP
INTEREST (this "Agreement"), dated as of December ___, 1995, made by
NARRAGANSETT ENERGY RESOURCES COMPANY, a Rhode Island corporation (the
"Obligor"), for the benefit of _____________, as security agent
(together with its successors and assigns in such capacity, the
"Security Agent") for the ratable benefit of all holders from time to
time of the Notes (as defined in the Note Agreement (defined below) (the
"Secured Parties")).
R E C I T A L S
_______________
A. Ocean State Power II, a Rhode Island general
partnership (the "Partnership"), together with Ocean State Power, a
Rhode Island general partnership ("OSP"), owns and operates an
approximately 500 megawatt gas-fired electric generating plant located
in Burrillville, Rhode Island.
B. The Obligor is a general partner of each of the
Partnership and OSP.
C. The Obligor has entered into a Note Agreement, dated
as of December 1, 1995 (as amended, modified or supplemented from time
to time, the "Note Agreement"), with the purchaser(s) of the Notes
(defined below). The Note Agreement provides for the Noteholders
(therein defined) to purchase $32,000,000 in aggregate principal amount
of secured promissory notes issued by the Obligor (the "Notes") subject
to the terms and conditions set forth therein. The proceeds of such
Notes are to be applied by the Obligor to pay fees and expenses incurred
by the Obligor in connection with the sale of the Notes, to pay working
capital expenses, and to repay (in part) the outstanding principal
balances under loans made by New England Energy System to the Obligor.
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings assigned thereto in the Note Agreement.
D. The Noteholders are willing to enter into the Note
Agreement upon the terms and conditions set forth therein, but only if
the Obligor shall make the pledges contemplated by this Agreement.
E. The Obligor is willing to make the pledges requested
and to enter into this Agreement so as to induce the Noteholders to
enter into the Note Agreement.
NOW, THEREFORE, in consideration of these premises and in
order to induce the Noteholders to enter into the Note Agreement, and
other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Obligor agrees as follows:
ARTICLE I
UNDERTAKINGS
SECTION 1.1 Pledge.
(a) The Obligor hereby pledges, assigns, hypothecates,
delivers, sets over and grants to the Security Agent for the ratable
<PAGE>
benefit of the Secured Parties, as security for the timely and punctual
(i) payment when due of any and all sums owing by the Obligor under the
Note Agreement and the other Basic Documents, (ii) performance when due
by the Obligor of all its obligations under the Note Agreement and the
other Basic Documents, and (iii) payment and performance when due of any
and all sums and all obligations of the Obligor hereunder (collectively,
the "Obligations"), a first lien on and prior perfected security
interest in all of the Obligor's right, title and interest in, to and
under the following, whether now owned or hereafter acquired
(collectively, the "Pledged Interest"):
all income, cash flow, revenues, issues, profits, losses,
distributions, payments, proceeds and other property of
every kind and variety due, accruing or owing to, or to be
turned over to, or disbursed to the Obligor by the
Partnership in connection with the Obligor's partnership
interests in the Partnership, including without limitation
(i) all rights of the Obligor to distributions made by the
Partnership pursuant to Section 6 of the Partnership
Agreement and other distributions and payments made on or
after the date hereof as provided in the Partnership
Agreement, as such Partnership Agreement may be amended,
supplemented, or modified from time to time, and (ii) any
and all cash, investments and securities from time to time
on deposit (including all income or gain earned thereon) in
the "Security Account" created pursuant to the Collateral
Agency Agreement, and in any other account into which
proceeds of the foregoing are deposited.
Obligor and the Secured Parties hereby expressly acknowledge
and agree that the Pledged Interest is limited to Obligor's economic
rights with respect to Obligor's partnership interest in the
Partnership, and is not intended to and shall not be deemed to include
any voting or other consensual rights of Obligor with respect to such
partnership interest or the right to be or become a partner in the
Partnership.
(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 distributions from the Partnership or the Obligor, or
by their exercise of any rights hereunder, be deemed to have any
liability for any Contractual Obligations of the Partnership or the
Obligor.
SECTION 1.2 Security for Obligations. This Agreement secures
the payment and performance of all Obligations.
SECTION 1.3 Delivery of Pledged Interest. If the Obligor
shall become entitled to receive or shall receive any certificate,
instrument, option or rights, whether as an addition to, in substitution
of, or in exchange for the Pledged Interest or any part thereof, or
otherwise, the Obligor shall accept any such certificate, instrument,
option or rights as the Security Agent's agent, shall hold them in trust
for the Security Agent, and shall deliver them forthwith to the Security
Agent in the exact form received, with the Obligor's endorsement when
necessary, or accompanied by duly executed instruments of transfer or
assignment in blank or, if requested by the Security Agent, an
additional pledge agreement or security agreement executed and delivered
by the Obligor, all in form and substance satisfactory to the Security
Agent, to be held by the Security Agent, subject to the terms hereof, as
further collateral security for the Obligations.
SECTION 1.4 Waiver. The Obligor hereby waives diligence,
presentment, demand of any kind, filing of claims with a court in the
<PAGE>
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 failure by the Obligor to promptly perform or
pay the Obligations when due, the Security Agent at the direction of the
Required Holder(s) may proceed directly and at once, without notice,
against the Pledged Interest to collect and recover the full amount or
any portion of the Obligations so due and payable, without first
proceeding against the Obligor or against any other security or
collateral provided by the Obligor with respect to the Obligations.
SECTION 1.5 Further Assurances. The Obligor agrees that at
any time and from time to time, at its expense, the Obligor shall
promptly execute and deliver all further instruments and documents
(including, without limitation, financing statements or any additional
pledge agreement or security agreement), and take all further action
that, in the opinion of the Required Holder(s) or the Security Agent,
may be necessary or reasonably desirable in order to perfect and protect
any security interest in the Pledged Interest 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 Interest
or any part thereof.
SECTION 1.6 Distributions. So long as any of the Obligations
shall be outstanding, all rights of the Obligor to receive the
distributions which it would otherwise be authorized to receive and
retain pursuant to the Partnership Agreement shall be vested in the
Security Agent who shall have the sole right to such distributions as
additional security hereunder for the benefit of the Secured Parties,
subject to the rights of the Obligor to have such amounts disbursed by
the Security Agent to it in accordance with the terms of the Note
Agreement and the Collateral Agency Agreement. All distributions which
are received by the Obligor contrary to the provisions of this Section
1.6 shall be received in trust for the benefit of the Security Agent,
shall be segregated from other funds of the Obligor and shall be
forthwith paid over to the Security Agent in the same form as so
received (with any necessary endorsement). The Obligor shall cause the
Partnership to make all distributions otherwise payable to the Obligor
directly to the Security Account or such other account as the Security
Agent shall direct in compliance herewith and shall cause the
Partnership to acknowledge and agree to make such payments directly to
the Security Account by executing a Consent and Agreement substantially
in the form attached as Exhibit F-2 to the Note Agreement.
ARTICLE II
POWER OF ATTORNEY
SECTION 2.1 Security Agent As Attorney-in-Fact. The Obligor
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 Obligor's attorney-in-fact, with full power and
authority, in its own name or in the name, place and stead of the
Obligor or otherwise, upon the occurrence of an Event of Default, (a) to
exercise all rights related to the Pledged Interest, and (b) at any time
and from time to time generally to do, at the Security Agent's request
and the Obligor'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 Obligor
representing any payment or other distribution in respect of the Pledged
Interest or any part thereof and to give full discharge for the same,
all as fully and effectually as the Obligor might or could do; and the
Obligor hereby ratifies all that said attorney shall lawfully do or
<PAGE>
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 2.2 Right to Perform. Subject to the limitations set
forth in the last paragraph of Section 1.1(a), 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 or in the Partnership Agreement (including without
limitation any right to cure a default thereunder), and the costs and
expenses (including without limitation any amounts paid by the Security
Agent and/or any Secured Party to the Partnership in satisfaction of the
Obligor's payment obligations under the Partnership Agreement) of the
Security Agent, any Secured Party or such other performing party
incurred in connection therewith shall be payable by the Obligor;
provided, however, that the Security Agent and the Secured Parties shall
have no obligation to perform or cause performance of any of the
Obligor's obligations hereunder or under the Partnership Agreement and
any such performance of the Obligor's obligations shall not limit the
other remedies available to the Security Agent and the Secured Parties
hereunder and under the other Basic Documents; and provided further,
that the foregoing shall not confer any right upon the Security Agent or
any Secured Party to act as a partner of the Partnership or exercise any
rights of a partner in the Partnership except for the right to receive
property constituting the Pledged Interest.
SECTION 2.3 Reasonable Care. The Security Agent shall be
deemed to have exercised reasonable care in the custody and preservation
of the Pledged Interest in its possession if the Pledged Interest 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 parties with respect to the Pledged
Interest. The powers conferred on the Security Agent hereunder shall not
impose any duty on the Security Agent to exercise such powers.
ARTICLE III
REMEDIES
SECTION 3.1 Collection; Sale of Pledged Interest. 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 3.1), 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 Interest), and in addition may sell, give an option or options
to purchase, contract to sell or otherwise dispose of the Pledged
Interest, or any part thereof, as hereinafter provided and may collect,
receive, appropriate and realize upon and/or sell, lease, finance,
refinance, mortgage or convey the Pledged Interest or any part thereof.
The Pledged Interest or any part thereof may be sold or otherwise
disposed of in one or more sales, at public or private sale, conducted
by any officer or agent 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
<PAGE>
purchase of all or any part of the Pledged Interest 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 Interest 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 Obligor 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 Interest
so sold. Each purchaser (including any Secured Party) at any such sale
shall hold the Pledged Interest so sold absolutely free from any claim
or right of whatsoever kind, including any equity or right of redemption
of the Obligor. The Security Agent shall give the Obligor at least ten
days' notice (which the Obligor 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 Interest 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
Interest on credit or for future delivery, the Pledged Interest 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 Interest so sold, and, in case of any such failure,
such Pledged Interest may again be sold pursuant to the provisions
hereof.
SECTION 3.2 Conveyances. The Security Agent may as attorney-
in-fact pursuant to Section 2.1 hereof, in the name and stead of the
Obligor, make and execute all conveyances, assignments and transfers of
the Pledged Interest sold pursuant to Section 3.1 hereof, and the
Obligor hereby ratifies and confirms all that the Security Agent, as
said attorney-in-fact, shall do by virtue hereof. Nevertheless, the
Obligor 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 3.3 Application of Proceeds. All cash proceeds
received by the Security Agent in respect of any sale or other transfer
of, collection from, or other realization upon all or any part of the
Pledged Interest may be held by the Security Agent as collateral for the
Obligations and/or applied to the 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 Obligor or whomsoever the Security
Agent shall determine to be lawfully entitled thereto.
SECTION 3.4 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
<PAGE>
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.
SECTION 3.5 No Liability. Neither the Security Agent nor any
Secured Party shall incur any liability as a result of the sale of the
Pledged Interest, or any part thereof, at any private sale conducted in
a commercially reasonable manner. The Obligor 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 Interest, 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
Interest, or any part thereof, was 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 3.6 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 IV
ADDITIONAL RIGHTS OF THE SECURITY AGENT
If the Security Agent shall determine to exercise its right to
collect, receive, appropriate and realize upon and/or sell, lease,
finance, refinance, or convey all or any of the Pledged Interest
pursuant to Section 3.1 hereof, the Obligor 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 action of the Pledged
Interest or any part thereof valid and binding and in compliance with
any Requirement of Law.
ARTICLE V
INDEMNIFICATION
The Obligor 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 Obligor
to perform or observe any of the provisions hereof including, without
limitation, (a) the sale of, collection from, or other realization upon,
the Pledged Interest, 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 Obligor contained in this
Article V shall continue in full force and effect notwithstanding the
full payment of the Obligations and the discharge thereof. The Obligor
will upon demand pay to the Security Agent or any Secured Party the
amount of any and all 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 Obligor to perform
or observe any of the provisions hereof, including, without limitation,
(i) the sale of, collection from, or other realization upon, the Pledged
<PAGE>
Interest, or any part thereof, in connection with such failure, or (ii)
the exercise or enforcement of any of the rights of the Security Agent
or any Secured Party hereunder.
If any obligation of the Obligor arising under this Article V
shall be prohibited or unenforceable in any jurisdiction, then, as to
such jurisdiction, the Obligor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which
is permissible under applicable law.
ARTICLE VI
WAIVER
To the fullest extent permitted by law, the Obligor 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 Interest; the Obligor 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 Interest marshaled upon any foreclosure hereof, and agrees
that any court having jurisdiction to foreclose this Agreement may order
the sale of the Pledged Interest as an entirety. Without limiting the
generality of the foregoing, the Obligor hereby (a) authorizes the
Security Agent, for the benefit of the Secured Parties, in its sole
discretion and without notice to or demand upon the Obligor and without
otherwise affecting the obligations of the Obligor 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
Interest 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.
ARTICLE VII
TERMINATION
Except as provided in Article VI hereof, this Agreement shall
terminate upon the receipt by the Security Agent of evidence
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 Obligor, will execute and deliver to
the Obligor a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign,
transfer and deliver to the Obligor such of the Pledged Interest 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
Interest and not otherwise applied to the payment of the Obligations.
<PAGE>
ARTICLE VIII
CONTINUING SECURITY INTEREST;
TRANSFER OF NOTES
This Agreement shall create a continuing security interest in
the Pledged Interest and shall (a) remain in full force and effect until
full and indefeasible payment and performance of the Obligations, (b) be
binding upon the Obligor, its successors and assigns, and (c) inure,
together with the rights and remedies of the Security Agent hereunder,
for the benefit of the Secured Parties and their respective successors,
transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Secured Party may assign or otherwise transfer
any Note held by it or grant a participation in such Note or in such
rights and obligations to any other person or entity, and such other
person or entity shall thereupon become vested with all the benefits in
respect thereof granted to such Secured Party herein or otherwise,
subject, however, to the provisions of the Note Agreement.
ARTICLE IX
REINSTATEMENT
This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any amount received by
any Secured Party in respect of the Obligations is rescinded or must
otherwise be restored or returned by the Security Agent or any Secured
Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Obligor or the Partnership or upon the appointment
of any intervenor or conservator of, or agent or similar official for,
the Obligor or the Partnership or any part of its assets, or otherwise,
all as though such payments had not been made.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments. This Agreement may not be changed
orally, but only by an agreement in writing signed by the Obligor and
the Security Agent (with the consent of the Required Holder(s)).
SECTION 10.2 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Obligor, the Security Agent
and the Secured Parties, all future holders of any of the Notes and
their respective successors and assigns. The Obligor 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 Obligor
but only concurrently with and in accordance with an assignment by such
Secured Party under the Note Agreement.
SECTION 10.3 Notices. All notices, demands, requests and
other communications provided for hereunder to the Company and the
Secured Parties shall be made in accordance with Section III of the Note
Agreement, and to the Security Agent in accordance with Section 13.03 of
the Collateral Agency Agreement.
SECTION 10.4 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.
<PAGE>
SECTION 10.5 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 10.6 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 any of them has under this Agreement
or any course of dealing between the Obligor 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 10.7 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 10.8 Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
SECTION 10.9 Consent to Jurisdiction.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT, ANY OF THE 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
OBLIGOR 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
OBLIGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE OBLIGOR 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 Obligor hereby irrevocably designates, appoints and empowers C T
Corporation System (the "Process 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 Obligor service of
process in the State of New York. The Obligor 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 Obligor, 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
<PAGE>
process served shall be mailed by the Process Agent to the Obligor by
registered mail, return receipt requested, at its address referred to in
Section 11I of the Note Agreement, or to such other address as the
Obligor may notify the Process Agent in writing. Service upon the
Process Agent as aforesaid shall be deemed to be personal service on the
Obligor and shall be legal and binding upon the Obligor 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
Obligor receive the same.
(d) The Obligor 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 Obligor to receive service of process in the County of New York
on its behalf or shall have changed its address without notification
thereof to the Process Agent, the Obligor, 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 Obligor in the courts of any jurisdiction
where the Obligor or any of its property or assets may be found or
located. To the extent permitted by the applicable laws of any such
jurisdiction, the Obligor 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 its present or future domiciles, or
otherwise, may be available to it.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered by their proper and duly authorized
officers in counterparts all as of the date first above written.
NARRAGANSETT ENERGY RESOURCES
COMPANY
By: ________________________
Name:
Title:
______________________,
as Security Agent
By: ________________________
Name:
Title:
<PAGE>
Exhibit A-3
===========
Stock Pledge Agreement
STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of
December , 1995, made by NEW ENGLAND ELECTRIC SYSTEM, a Massachusetts
voluntary association (the "Pledgor"), to _________________, 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 in
the Note Agreement (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 December 1, 1995 (as amended, modified or supplemented from time to
time, the "Note Agreement"), with the purchaser(s) of the Notes (defined
below). The Note Agreement provides for the Noteholders to purchase
$32,000,000 in aggregate principal amount of secured promissory notes issued
by the Corporation (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 Agreement.
E. The Noteholders are willing to enter into the 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 the
Note Agreement.
NOW, THEREFORE, in consideration of these premises and in
order to induce the Noteholders to enter into the Note Agreement, 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 Agreement and the other Basic
Documents, (ii) performance when due by the Corporation of all its obligations
under the Note Agreement, 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;
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.
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,
<PAGE>
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
(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 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'
<PAGE>
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:
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 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. 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
<PAGE>
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
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
principal 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 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
<PAGE>
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 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.
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.
<PAGE>
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 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 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;
(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;
<PAGE>
(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
(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
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.
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, 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 unless 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.
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.
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 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
<PAGE>
(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 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 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
<PAGE>
to the 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.
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.
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
<PAGE>
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.
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
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.
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.
<PAGE>
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 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 (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: _____________________
_____________________
_____________________
Pledgor: New England Electric System
25 Research Drive
Westborough, Massachusetts 01582
Attention: Treasurer
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 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
<PAGE>
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 (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 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.
<PAGE>
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)).
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
By: __________________________
Name:
Title:
_____________________
* 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>
SCHEDULE I TO STOCK PLEDGE AGREEMENT
Stock
Certificate Par Value
Class of Stock No(s). of Shares No. of Shares
_____________ ___________ _________ _____________
<PAGE>
Receipt for Stock
Certificate
____________, as Security Agent, hereby acknowledges receipt
of stock certificate No. ______ for shares of stock of Narragansett Energy
Resources Company.
Dated: _____________, 1995
______________, as Security Agent
By: ______________________________
Name:
Title:
<PAGE>
STOCK POWER
FOR VALUE RECEIVED, New England Electric Systems hereby sells, assigns and
transfers unto ____________, as Security Agent for certain Secured Parties,
shares of common stock of Narragansett Energy Resources Company, a Rhode
Island corporation, standing in its name on the books of said Corporation
represented by Certificate No. , attached hereto, and does hereby
irrevocably constitute and appoint [ ] attorney to transfer
the said stock on the books of said Corporation with full power of
substitution in the premises.
Dated: ,
NEW ENGLAND ELECTRIC SYSTEM*
By: ____________________________________
Name:
Title
_____________________
* 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 F
=========
25 Research Drive, Westborough, Massachusetts 01582
===================================================
October 20, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: File No. 70-8671
Dear Commissioners:
Narragansett Energy Resources Company (NERC) and New England Electric
System (NEES) filed an Application/Declaration on Form U-1 on August 10, 1995,
as amended, relating to the issue and sale of up to $33 million of notes by
NERC and the pledge of collateral by NERC and NEES.
NERC, incorporated under the laws of the State of Rhode Island, is a
direct, wholly-owned subsidiary of NEES. NEES is a voluntary association duly
created in The Commonwealth of Massachusetts under an Agreement and
Declaration of Trust dated as of January 2, 1926, as amended.
Based upon the foregoing and subject to necessary action by the Board of
Directors of NERC and NEES as well as appropriate action by the Commission
under the Public Utility Holding Company Act of 1935, it is my opinion that,
in the event the proposed transactions are carried out in accordance with the
statement on Form U-1 as it is now being amended:
(a) All state laws applicable to the proposed transactions will have
been complied with;
(b) NERC is validly organized and duly existing, and the notes
representing the borrowings when duly executed and delivered and
when the consideration therefore has been received, will be valid
and binding obligations of NERC in accordance with their terms
subject to laws of general application affecting the rights and
remedies of creditors; and
(c) The consummation of the proposed transactions will not violate the
legal rights of the holders of any securities issued by NERC or any
associate company thereof.
I hereby consent to the use of this opinion in connection with the
statement on Form U-1, as amended, filed with the Securities and Exchange
Commission with reference to said transactions.
Very truly yours,
s/Kirk L. Ramsauer
Kirk L. Ramsauer
Assistant General Counsel
