<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. )
------------------------
NEW ENGLAND POWER COMPANY
(NAME OF ISSUER)
NEW ENGLAND ELECTRIC SYSTEM
(NAME OF PERSON FILING STATEMENT)
<TABLE>
<CAPTION>
TITLE CUSIP NUMBER
--------------------------------------------------------------------- ------------
<S> <C>
New England Power Company, Dividend Series Preferred Stock
4.56% Series.................................................... 644188 10 4
4.60% Series.................................................... 644188 20 3
4.64% Series.................................................... 644188 30 2
6.08% Series.................................................... 644188 40 1
6% Cumulative Preferred Stock........................................ 644188 30 2
</TABLE>
(TITLE OF CLASS OF SECURITIES) (CUSIP NO. OF CLASS OF SECURITIES)
MICHAEL E. JESANIS
VICE PRESIDENT AND TREASURER
KIRK L. RAMSAUER
ASSOCIATE GENERAL COUNSEL
NEW ENGLAND ELECTRIC SYSTEM
25 RESEARCH DRIVE
WESTBOROUGH, MASSACHUSETTS 01582-0099
(508) 389-2972
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON
BEHALF OF THE PERSON FILING STATEMENT)
NOVEMBER 7, 1997
(DATE TENDER OFFER FIRST PUBLISHED,
SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$40,100,000 $8,020
</TABLE>
- ---------------
* Solely for purposes of calculating the filing fee and computed pursuant to
Section 13(e)(3) of the Securities Exchange Act of 1934, as amended, and Rule
0-11(b)(1) thereunder, the transaction value equals the total amount of funds,
excluding fees and other expenses, required to purchase all outstanding shares
of each series of securities listed above pursuant to the Offer described in
the Offer to Purchase, Proxy Statement and Information Statement filed as an
Exhibit hereto.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: Not applicable
-------------------------------------------------------------------
Form or Registration No.: Not applicable
-------------------------------------------------------------------
Filing Party: New England Electric System
-------------------------------------------------------------------
Date Filed: November 7, 1997
-------------------------------------------------------------------
</TABLE>
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<PAGE> 2
ITEM 1. SECURITY AND ISSUER.
(a) Incorporated herein by reference to the information appearing on the
front cover of the Offer to Purchase, Proxy Statement and Information Statement,
dated November 6, 1997, filed as Exhibit 9(a)(1) to this Issuer Tender Offer
Statement on Schedule 13E-4 (the "Offer to Purchase, Proxy Statement and
Information Statement").
(b) Incorporated herein by reference to the information appearing on the
front cover of the Offer to Purchase, Proxy Statement and Information Statement,
and to the information appearing under the captions "Terms of the
Offer -- Number of Shares; Purchase Prices; Expiration Date; Dividends" and
"Transactions and Agreements Concerning the Shares" in the Offer to Purchase,
Proxy Statement and Information Statement.
(c) Incorporated herein by reference to the information appearing under the
caption "Price Range of Shares; Dividends" in the Offer to Purchase, Proxy
Statement and Information Statement.
(d) New England Electric System, a Massachusetts voluntary association
("NEES"), is the person filing this Statement and is the owner of 100% of the
common stock of the issuer, New England Power Company (the "Power Company").
NEES' principal office is at 25 Research Drive, Westborough, Massachusetts
01582-0099. 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 1, 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 therefore.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) Incorporated herein by reference to the information appearing under
the caption "Source and Amount of Funds" in the Offer to Purchase, Proxy
Statement and Information Statement.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE
Incorporated herein by reference to the information appearing under the
caption "Purpose of the Offer, Proposed Amendment, and Proxy Solicitation," and
"Terms of the Offer -- Certain Effects of the Offer" in the Offer to Purchase,
Proxy Statement and Information Statement.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Incorporated herein by reference to the information appearing under the
caption "Transactions and Agreements Concerning the Shares" in the Offer to
Purchase, Proxy Statement and Information Statement.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
Incorporated herein by reference to the information appearing under the
caption "Transactions and Agreements Concerning the Shares" in the Offer to
Purchase, Proxy Statement and Information Statement.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Incorporated herein by reference to the information appearing under the
caption "Fees and Expenses Paid to Dealers" in the Offer to Purchase, Proxy
Statement and Information Statement.
1
<PAGE> 3
ITEM 7. FINANCIAL INFORMATION.
(a) Incorporated herein by reference to the financial statements included
in the Annual Report on Form 10-K for the year ended December 31, 1996 and the
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 of the Power
Company and to the information appearing under the caption "Summary of Financial
Information" in the Offer to Purchase, Proxy Statement and Information
Statement.
(b) Not applicable.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) Incorporated herein by reference to the information appearing under the
caption "Terms of the Offer -- Certain Conditions of the Offer" in the Offer to
Purchase, Proxy Statement and Information Statement.
(c) Not applicable.
(d) Not applicable.
(e) See Exhibits 9(a)(1) and 9(a)(2).
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------
<S> <C>
9(a)(1) Offer to Purchase, Proxy Statement, and Information Statement, dated November
6, 1997.
9(a)(2) Forms of Letter of Transmittal and, if applicable, Proxy for Dividend Series
Preferred Stock and 6% Cumulative Preferred Stock.
9(a)(3) Forms of Notice of Guaranteed Delivery and, if applicable, Proxy for Dividend
Series Preferred Stock and for 6% Cumulative Preferred Stock.
9(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies, and other
Nominees.
9(a)(5) Forms of Letters to Clients of Brokers, Dealers, Commercial Banks, Trust
Companies, and other nominees for Dividend Series Preferred Stock and for 6%
Cumulative Preferred Stock.
9(a)(6) Forms of Letters to Shareholders for Dividend Series Preferred Stock and for 6%
Cumulative Preferred Stock, dated November 6, 1997.
9(a)(7) Forms of Summary Instructions for Participating in the Offer for Dividend
Series Preferred Stock and for 6% Cumulative Preferred Stock.
9(a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
9(b) Not applicable.
9(c) Not applicable.
9(d) Tax Opinion of Hale and Dorr LLP
9(e) Not applicable.
9(f) Not applicable.
9(g) Annual Report on Form 10-K for the year ended December 31, 1996 (incorporated
by reference).
9(h) Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 (incorporated
by reference).
</TABLE>
2
<PAGE> 4
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: November 7, 1997
NEW ENGLAND ELECTRIC SYSTEM
By: /s/ MICHAEL E. JESANIS
------------------------------------
Vice President and Treasurer
3
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------
<S> <C>
9(a)(1) Offer to Purchase, Proxy Statement, and Information Statement, dated November
6, 1997.
9(a)(2) Forms of Letter of Transmittal and, if applicable, Proxy for Dividend Series
Preferred Stock and 6% Cumulative Preferred Stock.
9(a)(3) Forms of Notice of Guaranteed Delivery and, if applicable, Proxy for Dividend
Series Preferred Stock and for 6% Cumulative Preferred Stock.
9(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies, and other
Nominees.
9(a)(5) Forms of Letter to Clients of Brokers, Dealers, Commercial Banks, Trust
Companies, and other nominees for Dividend Series Preferred Stock and for 6%
Cumulative Preferred Stock.
9(a)(6) Forms of Letters to Shareholders for Dividend Series Preferred Stock and for 6%
Cumulative Preferred Stock, dated November 6, 1997.
9(a)(7) Forms of Summary Instruction for Participating in the Offer for Dividend Series
Preferred Stock and for 6% Cumulative Preferred Stock.
9(a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
9(b) Not applicable.
9(c) Not applicable.
9(d) Tax Opinion of Hale and Dorr LLP
9(e) Not applicable.
9(f) Not applicable.
9(g) Annual Report on Form 10-K for the year ended December 31, 1996 (incorporated
by reference).
9(h) Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 (incorporated
by reference).
</TABLE>
<PAGE> 1
OFFER TO PURCHASE AND PROXY STATEMENT AND INFORMATION STATEMENT
[LOGO]
NEW ENGLAND ELECTRIC SYSTEM
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING SERIES OF PREFERRED STOCK OF
NEW ENGLAND POWER COMPANY
100,000 SHARES, DIVIDEND SERIES PREFERRED STOCK, 4.56% SERIES AT A PURCHASE
PRICE OF $90.30 PER SHARE CUSIP NUMBER 644188 10 4
80,140 SHARES, DIVIDEND SERIES PREFERRED STOCK, 4.60% SERIES AT A PURCHASE
PRICE OF $91.09 PER SHARE CUSIP NUMBER 644188 20 3
41,500 SHARES, DIVIDEND SERIES PREFERRED STOCK, 4.64% SERIES AT A PURCHASE
PRICE OF $91.88 PER SHARE CUSIP NUMBER 644188 70 8
100,000 SHARES, DIVIDEND SERIES PREFERRED STOCK, 6.08% SERIES AT A PURCHASE
PRICE OF $103.34 PER SHARE CUSIP NUMBER 644188 40 1
75,020 SHARES, 6% CUMULATIVE PREFERRED STOCK AT A PURCHASE PRICE OF $116.50 PER
SHARE CUSIP NUMBER 644188 30 2
------------------------
NEW ENGLAND POWER COMPANY
PROXY STATEMENT AND INFORMATION STATEMENT
25 RESEARCH DRIVE, WESTBOROUGH, MASSACHUSETTS 01582
SPECIAL MEETING OF STOCKHOLDERS
DECEMBER 12, 1997
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD
TIME, ON FRIDAY, DECEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
New England Electric System, a Massachusetts voluntary association (NEES),
invites the holders of shares of each series of Dividend Series Preferred Stock
(Dividend Series Preferred) listed above and the 6% Cumulative Preferred Stock
(the 6% Cumulative Preferred) (each such series or class a Series of Preferred
or a Series, and each holder thereof a Preferred Shareholder) of New England
Power Company, a Massachusetts corporation and direct utility subsidiary of NEES
(the Power Company or the Company), to tender any and all of their shares of a
Series of Preferred (the Shares) for purchase at the purchase price per Share
listed above, plus dividends, net to the seller in cash, upon the terms and
subject to the conditions set forth in this Offer to Purchase and Proxy
Statement and Information Statement (the Booklet) and in the accompanying Letter
of Transmittal for the 6% Cumulative Preferred and Letter of Transmittal and
Proxy for the Dividend Series Preferred (collectively, the Letter of Transmittal
and Proxy) (which together constitute the Offer). NEES will purchase all Shares
validly tendered and not withdrawn, upon the terms and subject to the conditions
of the Offer. See Terms of the Offer -- Certain Conditions of the Offer and
Terms of the Offer -- Extension of Tender Period; Termination; Amendments.
THE OFFER FOR EACH SERIES OF DIVIDEND SERIES PREFERRED AND THE OFFER FOR THE
6% CUMULATIVE PREFERRED ARE NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES OF
ANY SERIES BEING TENDERED AND EACH IS INDEPENDENT OF THE OFFER FOR ANY OTHER
SERIES OF DIVIDEND SERIES PREFERRED OR THE 6% CUMULATIVE PREFERRED. THE OFFER,
HOWEVER, IS CONDITIONED UPON, AMONG OTHER THINGS, THE APPROVAL AND ADOPTION OF
THE PROPOSED AMENDMENT, AS DESCRIBED BELOW, AT THE SPECIAL MEETING OF
SHAREHOLDERS. SEE TERMS OF THE OFFER -- CERTAIN CONDITIONS OF THE OFFER.
Concurrently with the Offer, the Board of Directors of the Power Company is
soliciting proxies from the Dividend Series Preferred Stockholders for use at
the Special Meeting of Shareholders of the Power Company to be held at the Power
Company's principal office, 25 Research Drive, Westborough, Massachusetts, on
December 12, 1997 at 4:30 p.m., Eastern Standard Time, or any adjournment or
postponement of such meeting (the Special Meeting). THE BOARD OF DIRECTORS IS
NOT ASKING HOLDERS OF THE 6% CUMULATIVE PREFERRED FOR A PROXY, AND THEY ARE
REQUESTED NOT TO SEND A PROXY. THEY MAY, HOWEVER, PARTICIPATE IN THE OFFER. The
Special Meeting is being held to consider an amendment (the Proposed Amendment)
to the Power Company's By-Laws and Articles of Organization (together, the
Provisions) which would remove from the Provisions a limitation on the Power
Company's ability to issue unsecured debt without the prior approval of the
Preferred Shareholders. DIVIDEND SERIES PREFERRED SHAREHOLDERS WHO WISH TO
TENDER THEIR SHARES MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT. THE OFFER IS
FURTHER CONDITIONED UPON THE APPROVAL AND ADOPTION OF THE PROPOSED AMENDMENT AT
THE SPECIAL MEETING. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED BY THE
POWER COMPANY'S SHAREHOLDERS, THE POWER COMPANY WILL MAKE A SPECIAL CASH PAYMENT
(AS DEFINED HEREIN) IN THE AMOUNT OF $1.00 PER SHARE TO EACH DIVIDEND SERIES
PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT BUT DID NOT
TENDER SUCH SHARES PURSUANT TO THE OFFER. THOSE DIVIDEND SERIES PREFERRED
SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE
PURCHASE PRICE PER SHARE LISTED ABOVE BUT NOT THE SPECIAL CASH PAYMENT.
------------------------
THE POWER COMPANY'S BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE PROPOSED
AMENDMENT.
------------------------
This Booklet is first being mailed to Preferred Shareholders on or about
November 7, 1997.
------------------------
The Company will pay to a Soliciting Dealer (as defined herein) a
solicitation fee for any Shares tendered, accepted for payment and paid for
pursuant to the Offer and for each Share not tendered but voted in favor of the
Proposed Amendment, subject to certain conditions. See Fees and Expenses Paid to
Dealers.
------------------------
NEITHER NEES, THE POWER COMPANY, THEIR RESPECTIVE BOARDS OF DIRECTORS, ANY
OF THEIR RESPECTIVE OFFICERS, NOR ANY OTHER PERSONS AUTHORIZED BY THEM MAKES ANY
RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL
SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
------------------------
Each Series of Preferred is traded in the over-the-counter market (the OTC)
and is not listed on any national securities exchange. Through October 31, 1997,
the last reported sale prices for the 4.56% Series, the 4.60% Series, the 4.64%
Series, the 6.08% Series, and the 6.00% Series, were $70.15, $70.25, $70.25,
$92.12, and $89.00, respectively, as reported by the Nasdaq Stock Market, Inc.
Preferred Shareholders are urged to obtain a current market quotation, if
available, for their Shares.
------------------------
Questions or requests for assistance may be directed to Georgeson & Company
Inc. (Georgeson or the Information Agent) or to Merrill Lynch & Co. (Merrill
Lynch or the Dealer Manager) at their respective telephone numbers and addresses
set forth on the back cover of this Booklet. Requests for additional copies of
this Booklet, the Letter of Transmittal and Proxy, or other tender offer or
proxy materials may be directed to the Information Agent, and such copies will
be furnished promptly at the Power Company's expense. Preferred Shareholders may
also contact their local broker, dealer, commercial bank, or trust company for
assistance concerning the Offer.
------------------------
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
November 6, 1997
<PAGE> 2
IMPORTANT
Any Preferred Shareholder desiring to accept the Offer and tender any or
all Shares should, on or prior to the Expiration Date (as defined below), either
(i) request such Preferred Shareholders broker, dealer, commercial bank, trust
company, or other nominee to effect the transaction for such Preferred
Shareholders pursuant to the procedure for book-entry transfer set forth below
under Terms of the Offer -- Procedure for Tendering Shares, or (ii) complete and
sign the Letter of Transmittal and Proxy in accordance with the instructions in
the Letter of Transmittal and Proxy, and mail or deliver it, the certificates
for such Shares, and any other required documents to IBJ Schroder Bank & Trust
Company (the Depositary). A Preferred Shareholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company, or other nominee
must contact such broker, dealer, commercial bank, trust company, or other
nominee if such Preferred Shareholder desires to tender such Shares. Any
Preferred Shareholder who desires to tender Shares and whose certificates for
such Shares are not immediately available, or who cannot comply in a timely
manner with the procedure for book-entry transfer, should tender such Shares by
following the procedures for guaranteed delivery set forth below under Terms of
the Offer -- Procedure for Tendering Shares -- Guaranteed Proxy Procedure.
EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND PROXY, AND
ONLY THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY FOR SUCH SERIES OF PREFERRED
OR A NOTICE OF GUARANTEED DELIVERY MAY BE USED TO TENDER SHARES OF SUCH SERIES
OF PREFERRED.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE RELATED LETTER OF TRANSMITTAL AND PROXY. IF GIVEN OR MADE, SUCH
RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY NEES OR THE POWER COMPANY.
2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY............................................................................... 4
PURPOSE OF THE OFFER, PROPOSED AMENDMENT, AND PROXY SOLICITATION...................... 7
Industry Restructuring.............................................................. 7
Purpose of the Offer................................................................ 7
Proposed Amendment.................................................................. 7
Other Information................................................................... 8
TERMS OF THE OFFER.................................................................... 8
Number of Shares; Purchase Prices; Expiration Date; Dividends....................... 8
Procedure for Tendering Shares...................................................... 9
Withdrawal Rights................................................................... 11
Acceptance of Shares for Payment and Payment of Purchase Price and Dividends........ 12
Certain Conditions of the Offer..................................................... 12
Extension of Tender Period; Termination; Amendments................................. 14
Certain Effects of the Offer........................................................ 15
Other Information................................................................... 16
PROPOSED AMENDMENT AND PROXY SOLICITATION............................................. 18
Notice of Special Meeting of Stockholders........................................... 18
Special Meeting..................................................................... 19
Proxies............................................................................. 19
Relationship to the Offer; Special Cash Payments.................................... 19
Voting Securities, Rights and Procedures............................................ 20
Security Ownership of Certain Beneficial Owners and Management...................... 20
DESCRIPTION OF THE PROPOSED AMENDMENT................................................. 21
Explanation of the Proposed Amendment............................................... 21
Reasons for the Proposed Amendment.................................................. 22
Recommendation of Board of Directors................................................ 23
Certain Effects of the Proposed Amendment........................................... 23
Other Matters....................................................................... 23
PRICE RANGE OF SHARES; DIVIDENDS...................................................... 24
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS........................................ 25
Tax Considerations for Tendering Preferred Shareholders............................. 25
Tax Considerations for Non-Tendering Preferred Shareholders......................... 26
Tax Considerations of Accrued and Unpaid Dividends Payment.......................... 26
Tax Considerations of Special Cash Payment.......................................... 26
Backup Withholding.................................................................. 27
SOURCE AND AMOUNT OF FUNDS............................................................ 27
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES..................................... 27
FEES AND EXPENSES PAID TO DEALERS..................................................... 28
Dealer Manager Fees................................................................. 28
Solicited Tender Fees............................................................... 28
Stock Transfer Taxes................................................................ 29
SUMMARY OF FINANCIAL INFORMATION...................................................... 29
CERTAIN INFORMATION REGARDING NEES AND THE POWER COMPANY; INCORPORATION BY
REFERENCE........................................................................... 30
MISCELLANEOUS......................................................................... 31
</TABLE>
3
<PAGE> 4
SUMMARY
The following summary is provided solely for the convenience of the
Preferred Shareholders. This summary is not intended to be complete and is
qualified in its entirety by reference to the full text and more specific
details contained in this Booklet and the Letter of Transmittal and Proxy and
any amendments hereto or thereto. Preferred Shareholders are urged to read these
documents in their entirety. Each of the capitalized terms used in this summary
and not defined herein has the meaning set forth elsewhere in this Booklet.
The Companies.............. NEES, 25 Research Drive, Westborough, Massachusetts
01582, is a registered holding company under the
Public Utility Holding Company Act of 1935, as
amended (the Holding Company Act), which owns,
directly or indirectly, all of the outstanding
common stock of its electric utility subsidiaries,
including the Power Company. The service area of
NEES' electric utility subsidiaries covers portions
of Massachusetts, New Hampshire, and Rhode Island.
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.
The Power Company, 25 Research Drive, Westborough,
Massachusetts 01582, is a utility primarily engaged
in the generation, purchase, transmission, and sale
of electric energy in wholesale quantities. In
1996, 95% of the Power Company's all-requirement
revenue from the sale of electricity was derived
from sales for resale to affiliated companies and
5% from sales for resale to municipal and other
utilities. See Purpose of the Offer, Proposed
Amendment, and Proxy Solicitation -- Industry
Restructuring.
The Shares................. 4.56% Dividend Series Preferred Stock, $100 par
value, CUSIP
Number 644188 10 4
4.60% Dividend Series Preferred Stock, $100 par
value, CUSIP
Number 644188 20 3
4.64% Dividend Series Preferred Stock, $100 par
value, CUSIP
Number 644188 70 8
6.08% Dividend Series Preferred Stock, $100 par
value, CUSIP
Number 644188 40 1
6.00% Cumulative Preferred Stock, $100 par value,
CUSIP
Number 644188 30 2
The Offer and Purchase
Price...................... Offer to purchase any or all shares of each Series
of Preferred listed below at the price set forth
below.
$90.30 for 4.56% Series
$91.09 for 4.60% Series
$91.88 for 4.64% Series
$103.34 for 6.08% Series
$116.50 for 6.00% Series
Dividends.................. If declared by the Board, tendering Preferred
Shareholders will be entitled to the regular
quarterly dividend for the entire quarterly period
through December 31, 1997.
4
<PAGE> 5
Independent Offer.......... The Offer for each Series of Dividend Series
Preferred and the Offer for the 6% Cumulative
Preferred are not conditioned upon any minimum
number of Shares of any Series being tendered and
each is independent of the Offer for any other
Series of Dividend Series Preferred or the 6%
Cumulative Preferred. The Offer, however, is
conditioned upon, among other things, the approval
and adoption of the Proposed Amendment, as
described below, at the Special Meeting. See Terms
of the Offer -- Certain Conditions of the Offer. It
is a condition to the Offer that Dividend Series
Preferred Shareholders who tender their shares must
vote in favor of the Proposed Amendment. NEES will
not be required to accept or pay for tendered
Shares if the Proposed Amendment is not approved
and unless certain other conditions are met.
Expiration Date of the
Offer...................... The Offer expires at 5:00 p.m., Eastern Standard
Time, on December 12, 1997, unless extended (the
Expiration Date).
How to Tender Shares....... See Terms of the Offer -- Procedure for Tendering
Shares. For further information, call the
Information Agent or the Dealer Manager or consult
your broker for assistance.
Withdrawal Rights.......... Tendered Shares of any Series of Preferred may be
withdrawn at any time until the Expiration Date
with respect to such Series of Preferred and,
unless previously accepted for payment, may also be
withdrawn after January 6, 1998. See Terms of the
Offer -- Withdrawal Rights. A withdrawal of a
tender does not in and of itself revoke a proxy.
Purpose of the Offer....... NEES is making the Offer because NEES believes that
the purchase of Shares is economically attractive
to the Power Company, and indirectly to NEES and
its shareholders, in light of recent developments
in its industry and alternatives currently
available to it. In addition, the Offer gives
Preferred Shareholders the opportunity to sell
their Shares at a price which NEES believes to be a
premium over the market price and without the usual
transaction costs associated with a market sale.
See Purpose of the Offer, Proposed Amendment, and
Proxy Solicitation -- Purpose of the Offer
and -- Industry Restructuring; Terms of the
Offer -- Certain Effects of the Offer.
Certain Effects of the
Offer...................... Preferred Shareholders should consider carefully
the possible effects of consummation of the Offer
on the liquidity of any Shares which are not
tendered and on voting power and redemption rights.
See Purpose of the Offer, Proposed Amendment, and
Proxy Solicitation -- Other Information and Terms
of the Offer -- Voting Power.
Brokerage Commissions...... Not payable by Preferred Shareholders.
Solicitation Fee........... NEES will pay to each designated Soliciting Dealer
a solicitation fee of $1.50 per Share for any
Shares tendered, accepted for payment, and paid for
pursuant to the Offer and for each Dividend Series
Preferred Share not tendered but voted in favor of
the Proposed Amendment (except that for
transactions for beneficial owners equal to or
exceeding 2,500 Shares of all Series of Preferred
combined, NEES will pay a solicitation fee of $1.00
per Share, of which at least eighty percent (80%)
shall be paid to the Dealer Manager). A Soliciting
Dealer will not be entitled to a solicitation fee
for Shares beneficially owned by such Soliciting
Dealer. See Fees and Expenses Paid to
Dealers -- Solicited Tender Fees.
5
<PAGE> 6
Proposed Amendment......... Concurrently with the Offer, the Board of Directors
of the Power Company is soliciting proxies from
Dividend Series Preferred Stockholders for use at
the Special Meeting. Proxies are not being
solicited from holders of 6% Cumulative Preferred
Stock. The Special Meeting is being held to
consider the Proposed Amendment to the Provisions
which would remove a provision that limits the
Power Company's ability to issue unsecured debt
without the approval of the holders of a majority
of the outstanding Dividend Series Preferred and
Preferred Stock -- Cumulative. If the Proposed
Amendment is approved by the Dividend Series
Preferred Shareholders, the Power Company's ability
to issue or assume unsecured indebtedness will no
longer be subject to the approval of any Shares
that remain outstanding after the consummation of
the Offer. See Purpose of the Offer, Proposed
Amendment, Proxy Solicitation -- Purpose of the
Offer and -- Other Information; Terms of the
Offer -- Certain Effects of the Offer -- Voting
Power; and Proposed Amendment and Proxy
Solicitation -- Certain Effects of the Proposed
Amendment.
Record Date................ November 12, 1997
Special Cash Payment....... Preferred Shareholders of record who do not tender
their Shares have the right to vote for or against
the Proposed Amendment. If the Proposed Amendment
is approved and adopted by the Power Company's
Preferred Shareholders, the Power Company will make
a special cash payment of $1.00 per Share to each
Dividend Series Preferred Shareholder who voted in
favor of the Proposed Amendment but who did not
tender his or her Shares (the Special Cash
Payment). Special Cash Payments will not be made to
holders of the 6% Cumulative Preferred. Preferred
Shareholders who validly tender their Shares will
be entitled only to the purchase price per Share
listed on the front cover of this Booklet plus an
amount in cash equivalent to any dividends declared
prior to the Payment Date (as defined herein).
Stock Transfer Tax......... Except as described herein, NEES will pay or cause
to be paid any stock transfer taxes with respect to
the sale and transfer of any Shares to it or its
order pursuant to the Offer. See Instruction 6 of
the applicable Letter of Transmittal and Proxy. See
Terms of the Offer -- Acceptance of Shares for
Payment and Payment of Purchase Price and
Dividends.
Payment Date............... Promptly after the Expiration Date or any extension
thereof.
Further Information........ Additional copies of this Booklet and the
applicable Letter of Transmittal and Proxy may be
obtained by contacting Georgeson, Wall Street
Plaza, New York, New York 10005, telephone (800)
223-2064 (toll-free) and (212) 440-9800 (banks and
brokers). Questions about the Offer should be
directed to Merrill Lynch at (888) ML4-TNDR (toll-
free) ((888) 654-8637 (toll-free)).
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<PAGE> 7
PURPOSE OF THE OFFER, PROPOSED AMENDMENT,
AND PROXY SOLICITATION
The Offer and the Proposed Amendment constitute an integrated strategic
response by NEES and the Power Company to an anticipated restructuring of the
capitalization of the Power Company arising from the expected sale of the Power
Company's generation business.
INDUSTRY RESTRUCTURING
On October 1, 1996, the NEES companies announced their intention to divest
their generation business. The decision to divest the generation business was
due to a combination of factors relating to the restructuring of the electric
utility industry. On August 5, 1997, the NEES companies reached an agreement to
sell the non-nuclear generation business to USGen New England, Inc., an exempt
wholesale generator, for approximately $1.65 billion, subject to various
adjustments. The sale is subject to approval by various state and federal
regulatory agencies, which may take six to twelve months. One of the conditions
to the sale is that all regulatory approvals must be obtained within eighteen
months. As a part of the divestiture plan, the Power Company will endeavor, at a
later date, to sell, or otherwise transfer, its minority interest in four
nuclear power plants. The assets being disposed of constitute more than half of
the assets of the Power Company. Thereafter, the transmission business of the
Power Company will be the Company's primary business. The NEES companies have
announced that reductions in the number of employees would occur as a result of
the sales.
As a result of the divestiture, the Power Company's asset base and
capitalization will be reduced substantially. The Power Company has
approximately $700 million of mortgage bonds outstanding. The bond indenture
restricts the sale of the trust property in its entirety or substantially in its
entirety. The proposed sale of the Power Company's generation business will
require that the Power Company (a) amend the bond indenture or (b) either
defease or call the bonds in connection with the proposed sale. Any defeasance
of bonds would be effected by the deposit of cash representing principal and
interest to the maturity date or interest, principal, and general redemption
premium to an earlier redemption date. The Power Company requires flexibility in
restructuring its capital structure following this reduction in assets and
reduced need for capital. The Offer and the Proposed Amendment are designed to
provide such flexibility.
For a more complete description of these transactions, see the documents
filed by NEES and the Power Company with the SEC pursuant to the Exchange Act,
as described below.
PURPOSE OF THE OFFER
NEES believes that the purchase of the Shares at this time in conjunction
with the Proposed Amendment represents an attractive economic opportunity that
will benefit NEES, its shareholders, the Power Company, and the NEES companies'
utility customers by (1) contributing to the elimination of the provisions
concerning unsecured indebtedness, and (2) retiring outstanding shares of the
Power Company's Preferred Stock in contemplation of their potential replacement
with comparatively less expensive financing alternatives.
In addition, the Offer gives Preferred Shareholders the opportunity to sell
their Shares at a price which NEES believes to be a premium to the market price
on the date of the announcement of the Offer and without the usual transaction
costs associated with a sale.
PROPOSED AMENDMENT
In response to these changes in the industry, and as discussed further
below under Proposed Amendment and Proxy Solicitation -- Reasons for the
Proposed Amendment, the Power Company seeks to amend the Provisions to eliminate
a limitation on the Power Company's ability to issue unsecured debt without the
approval of the holders of a majority of the outstanding Dividend Series
Preferred Stock and Preferred Stock -- Cumulative.
Among other things, if the Proposed Amendment is passed, the Power Company
may substantially increase its short-term, unsecured indebtedness to meet cash
needs related to the divestiture of its generation
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<PAGE> 8
business. The Power Company currently anticipates that its long-term debt
following the reduction of its current capitalization and the adoption of the
Proposed Amendment will take the form of debentures (or unsecured bonds).
In order to facilitate the transition to a competitive environment, the
Power Company may establish one or more subsidiaries and transfer to them
certain "stranded" assets and related revenue streams.
OTHER INFORMATION
The Provisions provide that without a vote of at least a majority of the
votes entitled to be cast by the holders of the Dividend Series Preferred Stock
and the Preferred Stock - Cumulative of all Series then outstanding, voting as a
single class, the Power Company shall not merge or consolidate with or into any
other corporation or corporations or sell, lease, or dispose of all or
substantially all its assets, unless such merger, consolidation or sale, lease,
or disposition, or the issuance and assumption of all securities to be issued or
assumed in connection therewith, shall have been ordered, approved, or permitted
by the SEC under the provisions of the Holding Company Act or by any successor
commission or regulatory authority of the United States of America having
jurisdiction in the premises under said Act or by any court of the United States
having such jurisdiction. In the absence of any relevant decisional authority or
legislative history, it is unclear whether the SEC has jurisdiction to grant
such approval in the case of a sale by a regulated wholesale electric company,
such as the Power Company, to an exempt wholesale generating company, such as
USGen New England. The Power Company may either (i) submit a no-action letter to
the SEC seeking confirmation that the staff of the SEC would not take action
against the Power Company if no approval under the Holding Company Act were
sought, or (ii) file for approval under the Holding Company Act.
If the SEC determines that it does have jurisdiction, and gives its
approval, the only stockholder approval to be sought will be the approval of the
common and 6% Cumulative Preferred, voting together as a single class, as
required by Massachusetts law. NEES holds a sufficient number of shares of
common stock to ensure that such approval will be obtained.
If the SEC determines that it does not have jurisdiction, the Power Company
will need to obtain the approval of the holders of the Dividend Series Preferred
Stock (and any Preferred Stock - Cumulative) then outstanding as described
above. NEES would vote any Shares tendered pursuant to the Offer, or otherwise
acquired by NEES, in favor of the sale. If such approval were not to be obtained
NEES and the Power Company would consider all alternatives then available to
them, including further tenders, purchases of shares in the open market, or
redemptions of shares.
TERMS OF THE OFFER
NUMBER OF SHARES; PURCHASE PRICES; EXPIRATION DATE; DIVIDENDS
Upon the terms and subject to the conditions described herein and in the
applicable Letter of Transmittal and Proxy, NEES will purchase any and all
Shares that are validly tendered on or prior to the Expiration Date (and not
properly withdrawn in accordance with the procedures set forth under Withdrawal
Rights) at the purchase price per Share listed on the front cover of this
Booklet for the Shares tendered, net to the seller in cash. See Certain
Conditions of the Offer and Extension of Tender Period; Termination; Amendments.
THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES OF SUCH SERIES BEING TENDERED AND IS INDEPENDENT OF THE OFFER
FOR ANY OTHER SERIES. THE OFFER, HOWEVER, IS CONDITIONED UPON, AMONG OTHER
THINGS, APPROVAL AND ADOPTION OF THE PROPOSED AMENDMENT, AS DESCRIBED HEREIN, AT
THE SPECIAL MEETING. SEE CERTAIN CONDITIONS OF THE OFFER.
The Offer is being sent to all persons in whose names Shares are registered
on the books of the Power Company as of the close of business on November 6,
1997, as well as to all persons in whose names Shares are
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<PAGE> 9
registered on November 12, 1997, the Record Date. Only a record holder of Shares
on the Record Date may vote in person or by proxy at the Special Meeting. No
record date is fixed for determining which persons are permitted to tender
Shares. Any person who is the beneficial owner but not the record holder of
Shares on the Record Date must arrange for the record transfer of such Shares
prior to tendering. The Shares will trade "with proxy" during the period which
begins two days prior to the Record Date and which will end at the close of
business on the Expiration Date, as further discussed under Proposed Amendment
and Proxy Solicitation -- Voting Securities, Rights, and Procedures.
With respect to each Series of Preferred, the Expiration Date is the later
of 5:00 p.m. Eastern Standard Time, on Friday, December 12, 1997 or the latest
time and date to which the Offer with respect to such Series of Preferred is
extended. NEES expressly reserves the right, in its sole discretion, and at any
time and/or from time to time, to extend the period of time during which the
Offer for any Series is open, by giving oral or written notice of such extension
to the Depositary and making a public announcement thereof, without extending
the period of time during which the Offer for any other Series is open. There is
no assurance whatsoever that NEES will exercise its right to extend the Offer
for any Series of Preferred. If NEES decides, in its sole discretion, to (i)
decrease the number of Shares of any Series being sought, (ii) increase or
decrease the consideration offered in the Offer to holders of any Series, or
(iii) increase or decrease the Soliciting Dealers' fees and, at the time that
notice of such increase or decrease is first published, sent, or given to
holders of such Series in the manner specified herein, the Offer for such Series
is scheduled to expire at any time earlier than the tenth business day from the
date that such notice is first so published, sent, or given, such Offer will be
extended until the expiration of such ten-business-day period. For purposes of
the Offer, a business day means any day other than a Saturday, Sunday, or
Federal holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, Eastern Standard Time.
NO ALTERNATIVE, CONDITIONAL, OR CONTINGENT TENDERS WILL BE ACCEPTED.
If declared by the Board, tendering Preferred Shareholders will be entitled
to the regular quarterly dividend for the entire quarterly period through
December 31, 1997.
PROCEDURE FOR TENDERING SHARES
To tender Shares of any Series of Preferred pursuant to the Offer, the
tendering owner of Shares must either:
(a) send to the Depositary (at one of its addresses set forth on the
back cover of this Booklet) a properly completed and duly executed Letter
of Transmittal and Proxy, together with any required signature guarantees
and any other documents required by the Letter of Transmittal and Proxy
(and either (i) tender certificates for the Shares to the Depositary at one
of its addresses or (ii) deliver such Shares pursuant to the procedures for
book-entry transfer described herein (and a confirmation of such delivery
must be received by the Depositary (a Book-Entry Confirmation)), in each
case on or prior to the Expiration Date); or
(b) comply with the guaranteed delivery procedure described under
Guaranteed Delivery Procedure below.
A tender of Shares made pursuant to any method of delivery set forth herein
or in the Letter of Transmittal and Proxy will constitute a binding agreement
between the tendering holder and NEES upon the terms and subject to the
conditions of the Offer.
The Depositary will establish an account with respect to the Shares of each
Series of Preferred at The Depository Trust Company and the Philadelphia
Depository Trust Company (each a Book-Entry Transfer Facility) for purposes of
the Offer within two business days after the date of this Booklet, and any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make delivery of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with the procedures of the Book-Entry Transfer Facility. Although delivery of
Shares may be effected through book-entry transfer, such delivery must be
accompanied by either (i) a properly completed and duly executed Letter of
Transmittal and Proxy, together with any required signature guarantees and any
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<PAGE> 10
other required documents or (ii) an Agent's Message (as hereinafter defined)
and, in any case, must be received by the Depositary at one of its addresses set
forth on the back cover of this Booklet on or prior to the Expiration Date.
DELIVERY OF SUCH LETTER OF TRANSMITTAL AND PROXY AND ANY OTHER REQUIRED
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY OR TO NEES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility, received by the Depositary, and forms a part of the
Book-Entry Confirmation when the tender is initiated, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from a
participant in such Book-Entry Transfer Facility tendering Shares that the
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and Proxy and that NEES may enforce such agreement against the
participant.
Except as otherwise provided below, all signatures on a Letter of
Transmittal and Proxy must be guaranteed by a firm that is a member of a
registered national securities exchange or the National Association of
Securities Dealers, Inc. (the NASD), or by a commercial bank or trust company
having an office or correspondent in the United States that is a participant in
an approved Signature Guarantee Medallion Program (each of the foregoing being
referred to as an Eligible Institution). Signatures on a Letter of Transmittal
and Proxy need not be guaranteed if (a) the Letter of Transmittal and Proxy is
signed by the registered owner of the Shares tendered therewith and such owner
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal and Proxy
or (b) such Shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal and Proxy. If Shares are
registered in the name of a person other than the signatory on the Letter of
Transmittal and Proxy, or if unpurchased Shares are to be issued to a person
other than the registered holder(s), the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holder(s) appear on the Shares with the
signature(s) on the Shares or stock powers guaranteed as stated above. See
Instructions 4 and 7 to the Letter of Transmittal and Proxy.
Guaranteed Delivery Procedure. If a Preferred Shareholder desires to
tender Shares pursuant to the Offer and such Shareholder's certificates are not
immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary on or prior to the Expiration Date, such Shares may
nevertheless be tendered if all of the following guaranteed delivery procedures
are complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by NEES and the Power Company
herewith, is received (with any required signatures or signature
guarantees) by the Depositary as provided below on or prior to the
Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
and any other documents required by the Letter of Transmittal and Proxy,
are received by the Depositary no later than three New York Stock Exchange,
Inc. (NYSE) trading days after the date of execution of such Notice of
Guaranteed Delivery. A NYSE trading day is any day on which the NYSE is
open for business.
The Notice of Guaranteed Delivery may be either delivered by hand or mailed
to the Depositary and must include an endorsement by an Eligible Institution in
the form set forth in such Notice of Guaranteed Delivery.
In all cases, Shares shall not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal or, if applicable, an Agent's
Message, is received by the Depositary.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of certificates for (or an Agent's Message with
respect to) such Shares, a Letter of Transmittal and Proxy, properly completed
and duly
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<PAGE> 11
executed, with any required signature guarantees, and all other documents
required by the Letter of Transmittal and Proxy.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. BECAUSE IT
IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES WHETHER A
TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY.
TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE PURSUANT TO THE OFFER, EACH TENDERING PREFERRED SHAREHOLDER WHO IS
A UNITED STATES PERSON MUST NOTIFY THE DEPOSITARY OF THE CORRECT TAXPAYER
IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY
COMPLETING AND EXECUTING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL AND PROXY (OR, IN THE CASE OF A FOREIGN SHAREHOLDER, FORM W-8
OBTAINABLE FROM THE DEPOSITARY). SEE CERTAIN U.S. FEDERAL INCOME TAX
CONSIDERATIONS.
EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH SUCH PREFERRED
SHAREHOLDER'S OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER.
All questions as to the form of documents and the validity, eligibility
(including the time of receipt), and acceptance for payment of any tender of
Shares will be determined by NEES, in its sole discretion, and its determination
will be final and binding. NEES reserves the absolute right to reject any or all
tenders of Shares that (i) it determines are not in proper form or (ii) the
acceptance for payment of or payment for which may, in the opinion of NEES's
counsel, be unlawful. NEES also reserves the absolute right to waive any defect
or irregularity in any tender of Shares. None of NEES, the Power Company, the
Dealer Manager, the Depositary, the Information Agent, or any other person will
be under any duty to give notice of any defect or irregularity in tenders, nor
shall any of them incur any liability for failure to give any such notice. Any
condition to the Offer may be waived by NEES, in whole or in part, at any time
and from time to time in its sole discretion.
WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
on or prior to the Expiration Date. Thereafter, such tenders are irrevocable,
except that they may be withdrawn after January 6, 1998, unless previously
accepted for payment as provided in this Booklet.
To be effective, a written notice of withdrawal must be timely received by
the Depositary, at one of its addresses set forth on the back cover of this
Booklet, and must specify the name of the person who tendered the Shares of such
Series of Preferred to be withdrawn and the number of Shares to be withdrawn. If
the Shares to be withdrawn have been delivered to the Depositary, a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution
(except in the case of Shares tendered by an Eligible Institution) must be
submitted prior to the release of such Shares. In addition, such notice must
specify, in the case of Shares tendered by delivery of certificates, the name of
the registered owner (if different from that of the tendering Shareholder) and
the serial numbers shown on the particular certificates evidencing the Shares to
be withdrawn or, in the case of Shares tendered by book-entry transfer, the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares and the name of the registered holder (if different
from the name of such account). Withdrawals may not be rescinded, and Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered by again following one of
the procedures described in Terms of the Offer -- Procedure for Tendering Shares
at any time on or prior to the Expiration Date.
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<PAGE> 12
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by NEES, in its sole discretion, and
its determination will be final and binding. None of NEES, the Power Company,
the Dealer Manager, the Depositary, the Information Agent, or any other person
will be under any duty to give notification of any defect or irregularity in any
notice of withdrawal or will incur any liability for failure to give any such
notification.
ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE AND DIVIDENDS
Upon the terms and subject to the conditions of the Offer, and as promptly
as practicable after the Expiration Date, NEES will accept for payment (and
thereby purchase) and pay for Shares validly tendered and not withdrawn as
permitted in Terms of the Offer -- Withdrawal Rights. Thereafter, payment for
all Shares validly tendered on or prior to the Expiration Date and accepted
pursuant to the Offer will be made by the Depositary by check as promptly as
practicable after the Expiration Date. In all cases, payment for Shares accepted
for payment pursuant to the Offer will be made promptly but only after timely
receipt by the Depositary of certificates for such Shares (or an Agent's
Message), a properly completed and duly executed Letter of Transmittal and
Proxy, and any other required documents.
For purposes of the Offer, NEES will be deemed to have accepted for payment
(and thereby purchased) Shares that are validly tendered and not withdrawn as,
if, and when it gives oral or written notice to the Depositary of its acceptance
for payment of such Shares. NEES will pay for Shares that it has purchased
pursuant to the Offer by depositing the purchase price (plus an amount in cash
equivalent to any dividends declared thereon prior to the Payment Date) with the
Depositary, which will act as agent for tendering Preferred Shareholders for the
purpose of receiving payment from NEES and transmitting payment to the tendering
Shareholders. Under no circumstances will interest be paid on amounts to be paid
to tendering Preferred Shareholders, regardless of any delay in making such
payment.
Certificates for all Shares not validly tendered will be returned or, in
the case of Shares tendered by book-entry transfer, such Shares will be credited
to an account maintained with the Book-Entry Transfer Facility, as promptly as
practicable, without expense to the tendering Preferred Shareholder.
If certain events occur, NEES may not be obligated to purchase Shares
pursuant to the Offer. See Terms of the Offer -- Certain Conditions of the
Offer.
NEES will pay or cause to be paid any stock transfer taxes with respect to
the sale and transfer of any Shares to it or its order pursuant to the Offer.
If, however, payment of the purchase price is to be made to, or Shares not
tendered or not purchased are to be registered in the name of, any person other
than the registered owner, or if tendered Shares are registered in the name of
any person other than the person signing the Letter of Transmittal and Proxy,
the amount of any stock transfer taxes (whether imposed on the registered owner,
such other person, or otherwise) payable on account of the transfer to such
person will be deducted from the purchase price unless satisfactory evidence of
the payment of such taxes, or exemption therefrom, is submitted. See Instruction
6 of the accompanying Letter of Transmittal and Proxy.
CERTAIN CONDITIONS OF THE OFFER
NEES WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES OF
ANY SERIES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE
SPECIAL MEETING OR IF THE TENDERING DIVIDEND SERIES PREFERRED STOCKHOLDER DID
NOT VOTE IN FAVOR OF THE PROPOSED AMENDMENT.
In addition, notwithstanding any other provision of the Offer, NEES will
not be required to accept for payment or pay for any Shares tendered, and may
terminate or amend the Offer (by oral or written notice to the Depositary and
timely public announcement) or may postpone (subject to the requirements of the
Securities Exchange Act of 1934, as amended (the Exchange Act) for prompt
payment for or return of Shares) the acceptance for payment of, or payment for,
Shares tendered, if at any time after November 5,
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1997, and at or before the Expiration Date, any of the following shall have
occurred (which shall not have been waived by NEES):
(a) there shall have been threatened, instituted, or pending any
action or proceeding by any government or governmental, regulatory, or
administrative agency, authority, or tribunal or any other person, domestic
or foreign, or before any court, authority, agency, or tribunal that (i)
challenges the acquisition of Shares pursuant to the Offer or otherwise in
any manner relates to or affects the Offer or (ii) in the reasonable
judgment of NEES, would or might materially and adversely affect the
business, condition (financial or otherwise), income, operations, or
prospects of NEES and its subsidiaries taken as a whole, or otherwise
materially impair in any way the contemplated future conduct of the
business of NEES or any of its subsidiaries or materially impair the
Offer's contemplated benefits to NEES;
(b) there shall have been any action threatened, pending, or taken, or
approval withheld, or any statute, rule, regulation, judgment, order, or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced, or deemed to be applicable to the Offer or NEES or any
of its subsidiaries, by any legislative body, court, authority, agency, or
tribunal that, in NEES's reasonable judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment for, some or
all of the Shares illegal or otherwise restrict or prohibit consummation of
the Offer; (ii) delay or restrict the ability of NEES, or render NEES
unable, to accept for payment or pay for some or all of the Shares; (iii)
materially impair the contemplated benefits of the Offer to NEES or the
Power Company (including materially increasing the effective interest cost
of certain types of unsecured debt); or (iv) materially affect the
business, condition (financial or otherwise), income, operations, or
prospects of NEES and its subsidiaries taken as a whole, or otherwise
materially impair in any way the contemplated future conduct of the
business of NEES or any of its subsidiaries;
(c) there shall have occurred (i) any significant decrease in the
market price of the Shares; (ii) any change in the general political,
market, economic, or financial conditions in the United States or abroad
that, in the reasonable judgment of NEES, would or might have a material
adverse effect on NEES's business, operations, prospects, or ability to
obtain financing generally or the trading in the Shares or equity
securities of NEES; (iii) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation on, or any event that, in NEES's reasonable judgment, would or
might affect the extension of credit by lending institutions in the United
States; (iv) the commencement or escalation of war, armed hostilities, or
other international or national calamity directly or indirectly involving
the United States; (v) any general suspension of trading in, or limitation
on prices for, securities on any national securities exchange or in the
over-the-counter market; (vi) in the case of any of the foregoing existing
at the time of the commencement of the Offer, in NEES's reasonable
judgment, a material acceleration or worsening thereof; (vii) any decline
in either the Dow Jones Industrial Average or the Standard and Poor's
Composite 500 Stock Index by an amount in excess of 10% measured from the
close of business on November 5, 1997; or (viii) a decline in the ratings
accorded any of NEES's or the Power Company's securities by Standard &
Poor's, a division of The McGraw Hill Companies (S&P), Moody's Investors
Service, Inc. (Moody's), or Duff & Phelps, Inc. (D&P), or an announcement
by S&P, Moody's, or D&P that it has placed any such rating under
surveillance or review with negative implications;
(d) any tender or exchange offer with respect to some or all of the
Shares (other than the Offer) or any equity securities of NEES, or a
merger, acquisition, or other business combination proposal for NEES, shall
have been proposed, announced, or made by any person or entity;
(e) there shall have occurred any event or events that have resulted,
or, in NEES's reasonable judgment, may result, in an actual or threatened
change in the business, condition (financial or otherwise), income,
operations, stock ownership, or prospects of NEES and its subsidiaries; or
(f) the SEC shall have withheld approval, under the Holding Company
Act, of the acquisition of the Shares by NEES pursuant to the Offer or the
approval and adoption of the Proposed Amendment at the Special Meeting;
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<PAGE> 14
and, in the sole judgment of NEES, such event or events make it undesirable or
inadvisable to proceed with the Offer or with such acceptance for payment or
payment. With respect to the approval of the SEC referenced in clause (f) above,
the SEC must find that the acquisition of the Shares by NEES is not detrimental
to the public interest or the interests of the investors or consumers, and that
the consideration paid in connection with the acquisition and the adoption of
the Proposed Amendment, including fees, commissions, and other remuneration, is
reasonable.
The foregoing conditions (including the condition that the Proposed
Amendment be approved and adopted at the Special Meeting) are for the sole
benefit of NEES and may be asserted by NEES regardless of the circumstances
(including any action or inaction by NEES) giving rise to any such condition,
and any such condition may be waived by NEES, in whole or in part, at any time
and from time to time in its sole discretion. A decision by NEES to terminate or
otherwise amend the Offer, following the occurrence of any of the foregoing,
with respect to one Series will not create an obligation on behalf of NEES to
terminate or otherwise amend in a similar manner the Offer with respect to any
other Series. The failure by NEES at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by NEES concerning the events described above will be
final and binding on all parties.
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
NEES expressly reserves the right, in its sole discretion, and at any time
and from time to time on or prior to the Expiration Date, to extend the period
of time during which the Offer for any Series is open by giving oral or written
notice of such extension to the Depositary, without extending the period of time
during which the Offer for any other Series is open. There can be no assurance,
however, that NEES will exercise its right to extend the Offer for any Series.
During any such extension, all Shares of the subject Series previously tendered
will remain subject to the Offer, except to the extent that such Shares may be
withdrawn as set forth in Withdrawal Rights.
NEES also expressly reserves the right, in its sole discretion, to, among
other things, terminate the Offer and not accept for payment or pay for any
Shares tendered, subject to Rule 13e-4(f)(5) under the Exchange Act, which
requires NEES either to pay the consideration offered or to return the Shares
tendered promptly after the termination or withdrawal of the Offer upon the
occurrence of any of the conditions specified in Certain Conditions of the Offer
by giving oral or written notice of such termination to the Depositary, and
making a public announcement thereof.
Subject to compliance with applicable law, NEES further reserves the right,
in its sole discretion, to amend the Offer in any respect. Amendments to the
Offer may be made at any time and from time to time effected by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., Eastern Standard Time, on the next business day
after the previously scheduled Expiration Date. Any public announcement made
pursuant to the Offer will be disseminated promptly to Preferred Shareholders
affected thereby in a manner reasonably designed to inform such Preferred
Shareholders of such change. Without limiting the manner in which NEES may
choose to make a public announcement, except as required by applicable law, NEES
shall have no obligation to publish, advertise, or otherwise communicate any
such public announcement other than by making a release to the Dow Jones News
Service.
If NEES materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, NEES
will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period
during which the Offer must remain open following material changes in the terms
of the Offer or information concerning the Offer (other than a change in price,
a change in percentage of securities sought, or a change in the dealer's
solicitation fee) will depend on the facts and circumstances, including the
relative materiality of such terms or information. The SEC has stated that, in
its view, an offer should remain open for a minimum of five business days from
the date that a notice of such a material change is first published, sent, or
given. If the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that NEES publishes, sends, or gives to Preferred Shareholders a notice
that it will
14
<PAGE> 15
(i) increase or decrease the price it will pay for Shares, (ii) decrease the
percentage of Shares it seeks, or (iii) increase or decrease the soliciting
dealers' fees, the Offer will be extended until the expiration of such period of
ten business days.
THE OFFER FOR EACH SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES OF PREFERRED. IF NEES EXTENDS OR AMENDS ANY OFFER WITH RESPECT TO
ONE SERIES OF PREFERRED FOR ANY REASON, NEES WILL HAVE NO OBLIGATION TO EXTEND
THE OFFER FOR ANY OTHER SERIES OF PREFERRED.
CERTAIN EFFECTS OF THE OFFER
Shares validly tendered to the Depositary pursuant to the Offer and not
withdrawn in accordance with the procedures set forth herein shall be held until
the Expiration Date (or returned to the extent the Offer is terminated in
accordance herewith). To the extent that the Proposed Amendment is approved and
the Shares tendered are accepted for payment and paid for in accordance with the
terms hereof, NEES intends either to sell its Shares to the Power Company or to
donate the Shares to the Power Company as a capital contribution. At that time,
it is expected that the Power Company will retire and cancel the Shares.
However, in the event the Proposed Amendment is not adopted at the Special
Meeting, NEES may elect, but is not obligated, to waive, subject to applicable
law, such condition. The Power Company anticipates that, subsequent to that
waiver and purchase of the Shares, it would call another special meeting of its
shareholders and solicit proxies therefrom for an amendment substantially
similar to the Proposed Amendment. At that meeting, NEES would vote any Shares
acquired by it pursuant to the Offer or otherwise (together with its shares of
common stock) in favor of such amendment, thereby maximizing the prospects for
the adoption of such amendment.
Voting Power. If any approval of the proposed divestiture of the Power
Company's generation business is required on the part of the Dividend Series
Preferred Shareholders, the tender of Shares pursuant to the Offer or any
subsequent purchases of Shares by NEES will tend to diminish the aggregate
voting power of the remaining Dividend Series Preferred Shareholders. As
discussed under Purpose of the Offer, Proposed Amendment, and Proxy
Solication -- Other Information, the Power Company may require the approval of a
majority of the Dividend Shares Preferred Stock and Preferred
Stock -- Cumulative of all series then outstanding, voting as a single class, in
connection with the sale of its non-nuclear business. NEES may elect to retain
any Shares acquired by it pursuant to the Offer and vote such Shares at a later,
separate, special meeting in favor of the sale, thereby maximizing the prospects
of securing the necessary vote.
Trading and Liquidity. Any purchase of Shares by NEES will reduce the
number of Shares of each of the Series of Preferred that might otherwise trade
publicly or become available for purchase and/or sale and will likely reduce the
number of owners of Shares of each of the Series of Preferred, which could
adversely affect the liquidity and sale value of the Shares not purchased in the
Offer.
To the extent that Shares of any Series of Preferred are tendered and
accepted for payment in the Offer, the trading market for Shares of such Series
that remain outstanding may be significantly more limited, which might adversely
affect the liquidity, market value, and price volatility of such Shares. Equity
securities with a smaller outstanding market value available for trading (the
float) may command a lower price than would comparable equity securities with a
greater float. Therefore, the market price for Shares that are not tendered in
the Offer may be affected adversely to the extent that the amount of Shares
purchased pursuant to the Offer reduces the float. The reduced float may also
make the trading price of the Shares that are not tendered and accepted for
payment more volatile. Holders of the remaining Shares may attempt to obtain
quotations for the Shares from their brokers, through the Electronic Bulletin
Board, or otherwise; however, there can be no assurance that any trading market
will exist for such Shares following consummation of the Offer. To the extent a
market continues to exist for the Shares after the Offer, the Shares may trade
at a discount compared to present trading, depending on the market for Shares
with similar features, the performance of the Power Company, and other factors.
There is no assurance that an active market in the Shares will exist and no
assurance as to the prices at which the Shares may trade.
The Dividend Series Preferred Stock is currently registered under Section
12(g) of the Exchange Act. If the Dividend Series Preferred Stock is no longer
held by more than 300 owners of record, the Power Company
15
<PAGE> 16
may apply to the SEC for termination of such registration. Such termination
would substantially reduce the information required to be furnished by the Power
Company to holders of Dividend Series Preferred Stock and could make certain
provisions of the Exchange Act no longer applicable to the Power Company. The
registration of the 6% Cumulative Preferred Stock was terminated in June 1994.
As of September 29, 1997, there were 38 registered holders of the 4.56%
Series, 91 registered holders of the 4.60% Series, 1 registered holder of the
4.64% Series, 60 registered holders of the 6.08% Series, and 194 registered
holders of the 6% Cumulative Preferred.
Future Purchases or Redemption of Shares. Preferred Shareholders are not
under any obligation to tender Shares pursuant to the Offer. The Offer does not
constitute a notice of redemption of any Series of Dividend Series Preferred
pursuant to the Power Company's Provisions, neither does NEES or the Power
Company intend to effect any such redemption by making the Offer. Further, the
Offer does not constitute a waiver by the Power Company of any option it has to
redeem Shares.
Shares which are not tendered will continue to be subject to their current
redemption and liquidation provisions. The various series of the Dividend Series
Preferred Stock are redeemable in whole or in part upon not less than thirty
days' notice at the applicable redemption prices plus accrued dividends through
the date fixed for redemption. The redemption prices for the 4.56% Series, the
4.60% Series, the 4.64% Series, and the 6.08% Series are $104.08, $101.00,
$102,56, and $102.34, respectively. There are no sinking funds for any of the
Dividend Series Preferred Stock. The Provisions do not provide for redemption of
the 6% Cumulative Preferred. The Preferred Stockholders have no preemptive or
conversion rights.
Upon liquidation, dissolution, or winding up of the affairs of the Power
Company or any distribution of capital of the Power Company, owners of the
Dividend Series Preferred Shares would be entitled to receive an amount equal to
the full distributive amounts fixed therefor together with accrued dividends
through the date fixed for the payment of such distributive amounts. In case any
liquidation, dissolution, or winding up of the Power Company is voluntary,
Dividend Series Preferred Shareholders shall be entitled to receive said
redemption prices plus accrued dividends; if involuntary, to $100 per Share plus
accrued dividends through the date fixed for the payment of such distributive
amounts. In the case of any liquidation, dissolution, or winding up of the Power
Company, voluntary or involuntary, 6% Cumulative Preferred owners shall be
entitled to receive $100 per Share plus accrued dividends through the date fixed
for the payment of such distributive amounts. The contemplated disposition of
the Power Company's generation assets will not be deemed to be a liquidation of
the Power Company.
After the consummation of the Offer, NEES or the Power Company may purchase
additional Shares on the open market, in privately negotiated transactions,
through one or more tender offers, or otherwise. Any such purchases may be on
the same terms as, or on terms which are more or less favorable to holders of
Shares than, the terms of the Offer. However, Rule 13e-4(f)(6) under the
Exchange Act prohibits NEES and its affiliates (including the Power Company)
from purchasing any Shares of a Series of Preferred, other than pursuant to the
Offer, until at least ten business days after the Expiration Date with respect
to that Series of Preferred. Any future purchases of Shares by NEES or the Power
Company would depend on many factors, including the market price of the Shares,
NEES's business and financial position, and legal restrictions on NEES's ability
to purchase Shares, as well as general economic and market conditions.
OTHER INFORMATION
As discussed under "Purpose of the Offer, Proposed Amendment, and Proxy
Solicitation -- Industry Restructuring" and in the documents incorporated by
reference, the Power Company is divesting itself of or attempting to divest
itself of its generation business. This process will result in reductions in
employees and reallocation of executive responsibilities. As further discussed
under "Purpose of the Offer, Proposed Amendment, and Proxy
Solicitation -- Industry Restructuring" and in the documents incorporated by
reference, in light of the changes to the utility industry, NEES and the Power
Company have considered various strategies to enhance their competitive
position, including business combinations with other companies. Except as
disclosed herein and in the documents incorporated by reference, neither NEES
nor the Power Company has plans or proposals that would relate to or result in
(a) the acquisition by any person or entity of
16
<PAGE> 17
additional securities of the Power Company or the disposition of securities of
the Power Company, other than in the ordinary course of business; (b) an
extraordinary corporate transaction, such as a merger, reorganization, or
liquidation, involving the Power Company or any of its subsidiaries; (c) a sale
or transfer of a material amount of assets of the Power Company or any of its
subsidiaries; (d) any change in the present Board or management of the Power
Company; (e) any material change in the present dividend rate or policy, or
indebtedness or capitalization of the Power Company; (f) any other material
change in the Power Company's corporate structure or business; (g) any change in
the Power Company's Provisions or any actions that may impede the acquisition of
control of the Power Company by any person; (h) a class of equity securities of
the Power Company being delisted from a national securities exchange or no
longer authorized to be quoted on the OTC; (i) a class of equity securities of
the Power Company becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Exchange Act; or (j) the suspension of the Power
Company's obligation to file reports pursuant to Section 15(d) of the Exchange
Act.
17
<PAGE> 18
PROPOSED AMENDMENT AND PROXY SOLICITATION
[LOGO]
NEW ENGLAND POWER COMPANY
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
25 RESEARCH DRIVE
WESTBOROUGH, MASSACHUSETTS 01582
NOVEMBER 6, 1997
To the Holders of Common Stock,
6% Cumulative Preferred Stock, and
Dividend Series Preferred Stock of
NEW ENGLAND POWER COMPANY
You are hereby notified that the Special Meeting of Stockholders of New
England Power Company will be held in the Directors Room, 25 Research Drive,
Westborough, Massachusetts, on December 12, 1997, at 4:30 p.m., Eastern Standard
Time, for the following purposes:
1. Amendment of the Articles of Organization and By-laws to delete in
its entirety Article I, Section 4E(4), limiting the Power Company's ability
to issue unsecured indebtedness; and
2. Transaction of such other business as may be appropriate and
incidental to the foregoing purposes or which may properly come before the
meeting or any adjourned session thereof.
Stockholders entitled to vote will be determined on the basis of the
records of the Company at the close of business November 12, 1997.
The accompanying material contains further information about the matters to
be considered at the meeting.
By order of the Board of Directors.
ROBERT KING WULFF
Clerk
18
<PAGE> 19
SPECIAL MEETING
This Booklet is first being mailed on or about November 7, 1997 to the
Preferred Shareholders of the Power Company in connection with the solicitation
of proxies by the Board of Directors of the Power Company (the Board) for use at
the Special Meeting. At the Special Meeting, the shareholders of record of the
Power Company will vote upon the Proposed Amendment to the Provisions. The Board
of Directors is not asking holders of the 6% Cumulative Preferred for a proxy,
and they are requested not to send a proxy. They are entitled, however, to
attend and vote at the Special Meeting and to give proxies to others in
accordance with applicable law.
PROXIES
THE PROXY INCLUDED IN THE LETTER OF TRANSMITTAL AND PROXY IS SOLICITED FROM
THE HOLDERS OF DIVIDEND SERIES PREFERRED STOCK BY THE POWER COMPANY'S BOARD,
WHICH RECOMMENDS VOTING FOR THE PROPOSED AMENDMENT. All shares of the Power
Company's common stock will be voted in favor of the Proposed Amendment. THE
BOARD IS NOT ASKING HOLDERS OF THE 6% CUMULATIVE PREFERRED STOCK FOR A PROXY AND
THEY ARE REQUESTED NOT TO SEND A PROXY. Shares of the Power Company's Dividend
Series Preferred Stock represented by properly executed proxies received at or
prior to the Special Meeting will be voted in accordance with the instructions
thereon. If no instructions are indicated, duly executed proxies will be voted
in accordance with the recommendation of the Board. It is not anticipated that
any other matters will be brought before the Special Meeting. However, the
enclosed proxy gives discretionary authority to the proxy holders named therein
should any other matters be presented at the Special Meeting, and it is the
intention of the proxy holders to act on any other matters in accordance with
their best judgment.
Execution of a proxy will not prevent a Preferred Shareholder from
attending the Special Meeting and voting in person. Any Preferred Shareholder
giving a proxy may revoke it at any time before it is voted by delivering to the
Clerk of the Power Company written notice of revocation bearing a later date
than the proxy, by delivering a duly executed proxy bearing a later date, or by
voting in person by ballot at the Special Meeting. A proxy may not be revoked
for shares tendered pursuant to the Offer, unless the tender is withdrawn.
Withdrawal of Shares tendered pursuant to the Offer will not revoke a properly
executed proxy.
RELATIONSHIP TO THE OFFER; SPECIAL CASH PAYMENT
As noted above, the Offer and Proposed Amendment constitute an integrated
strategy of NEES and the Power Company in anticipation of the restructuring of
the capitalization of the Power Company arising from the expected sale of its
generation business. See Purpose of the Offer, Proposed Amendment, and Proxy
Solicitation.
Dividend Series Preferred Shareholders who wish to tender their Shares
pursuant to the Offer are required to vote in favor of the Proposed Amendment.
Further, the Offer is conditioned upon the approval and adoption of the Proposed
Amendment at the Special Meeting.
Subject to the terms and conditions set forth in this Booklet, if (but only
if) the Proposed Amendment is approved and adopted by the Power Company's
shareholders, the Power Company will make a Special Cash Payment in the amount
of $1.00 per Share to each Dividend Series Preferred Shareholder of record who
voted in favor of the Proposed Amendment, provided that such Shares have not
been tendered pursuant to the Offer. The Power Company intends to make the
Special Cash Payment although there is no binding legal precedent as to the
permissibility of such payments and there can be no assurance as to how a court
would rule on the question. Nevertheless, the Power Company believes the Offer
is fair to the Dividend Series Preferred Shareholders and has decided to make
the payment. If a Dividend Series Preferred Shareholder votes against the
Proposed Amendment or abstains, such Preferred Shareholder shall not be entitled
to the Special Cash Payment (regardless of whether the Proposed Amendment is
approved and adopted). The Special Cash Payment will be paid out of the Power
Company's general funds promptly after the Proposed Amendment shall have become
effective. However, no accrued interest will be paid on the Special Cash Payment
regardless of any delay in making such payments.
19
<PAGE> 20
VOTING SECURITIES, RIGHTS, AND PROCEDURES
Only holders of record of the Power Company's outstanding voting securities
at the close of business on November 12, 1997, the Record Date (or their legal
representatives or attorneys-in-fact), will be entitled to vote in person or by
proxy at the Special Meeting and to receive the Special Cash Payment from the
Power Company. Any beneficial holder of Shares who is not the registered holder
of such Shares as of the Record Date (as would be the case for any beneficial
holder whose Shares are registered in the name of such holder's broker, dealer,
commercial bank, trust company, or other nominee) must arrange with the holder
of record on the Record Date to execute and deliver a proxy form on such
beneficial owner's behalf. If a beneficial holder of Shares intends to attend
the Special Meeting and vote in person, such beneficial holder must obtain a
legal proxy form from his or her broker, dealer, commercial bank, trust company,
or other nominee.
The Dividend Series Preferred Stock will trade, during the period which
begins two days prior to the Record Date and which will end at the close of
business on the Expiration Date, in the over-the-counter market under the
symbols "NEEAT" for the 4.56% Series, "NEEDT" for the 4.60% Series, "NEEFT" for
the 4.64% Series, and "NEEGT" for the 6.08% Series, indicating that such Shares
are trading "with proxy." A Dividend Series Preferred Shareholder who acquires
such Shares during this period must obtain, or have his or her authorized
representative obtain, an assignment of proxy (which is included in the
applicable Letter of Transmittal and Proxy) at settlement from the seller. The
NASD and The Depository Trust Company have issued notices informing their
members and participants that such Shares will trade "with proxy" and that
settlement of all trades during the period described above should include an
assignment of proxy from the seller.
The Power Company's authorized voting securities consist of common stock,
6% Cumulative Preferred, and Dividend Series Preferred Stock. There are four
series of the Dividend Series Preferred Stock currently outstanding. There is
also authorized a class of Preferred Stock -- Cumulative of which there are no
shares currently outstanding. The common stock and 6% Cumulative Preferred share
general voting rights and vote together as a single class. The four series of
Dividend Series Preferred Stock vote together as a single class. Each share of
stock has one vote per share. The Shares outstanding as of the Record Date are
as follows:
<TABLE>
<CAPTION>
CLASS SHARES OUTSTANDING
------------------------------------------------------------ ------------------
<S> <C>
Common...................................................... 6,449,896
6% Cumulative Preferred..................................... 75,020
---------
Total voting as a single class.............................. 6,524,916
Dividend Series Preferred
4.56%..................................................... 100,000
4.60%..................................................... 80,140
4.64%..................................................... 41,500
6.08%..................................................... 100,000
---------
Total voting as a single class.............................. 321,640
</TABLE>
The affirmative vote of the holders of more than two-thirds of the
outstanding shares of each of the Power Company's (i) common stock and 6%
Cumulative Preferred, voting together as a single class, and (ii) Dividend
Series Preferred Stock, all Series voting together as a single class, is
required to approve the Proposed Amendment to be presented at the Special
Meeting. Abstentions and broker non-votes will have the same effect as votes
cast against the Proposed Amendment. NEES has advised the Power Company that it
intends to vote all of the outstanding shares of common stock of the Power
Company in favor of the Proposed Amendment.
There are no rights of appraisal in connection with the Proposed Amendment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As noted above, NEES owns all the outstanding common stock of the Power
Company.
20
<PAGE> 21
Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a
security is any person who directly or indirectly has or shares voting or
investment power over such security. No person or group is known by management
of the Power Company to be the beneficial owner of more than 5% of the
outstanding shares of the Power Company's 6% Cumulative Preferred Stock, or of
any Series of its Dividend Series Preferred Stock, as of the Record Date.
NEES and the Power Company's directors and executive officers do not
beneficially own any Shares as of the Record Date. The beneficial ownership of
NEES's common shares held by each Power Company director, as well as Power
Company directors and executive officers as a group, as of October 1, 1997 is
set forth in the following table.
<TABLE>
<CAPTION>
NAME SHARES
--------------------------------------------------------------------------- -------
<S> <C>
Lawrence E. Bailey......................................................... 4,963
Joan T. Bok................................................................ 17,504
Alfred D. Houston.......................................................... 13,688
Cheryl A. LaFleur.......................................................... 3,162
John F. Malley............................................................. 3,737
John W. Rowe............................................................... 23,105
Arnold H. Turner........................................................... 4,225
Directors and officers as a group (representing less than 1% of the
outstanding Shares)...................................................... 117,811
</TABLE>
- ---------------
Listed below is the only person or group known to NEES as of October 1,
1997, to beneficially own 5% or more of NEES's common shares. However, T. Rowe
Price Trust Company disclaims beneficial ownership of all such shares. The
amount of common shares listed below is as of September 8, 1997.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP COMMON SHARES
- --------------------------------------------- --------------------------------- -------------
<S> <C> <C>
T. Rowe Price Trust Company.................. 5,358,604 shares as trustee for 8.3%
100 East Pratt Street Company employee benefits plans
Baltimore, MD 21202
</TABLE>
DESCRIPTION OF THE PROPOSED AMENDMENT
THE FOLLOWING STATEMENTS, UNLESS THE CONTEXT OTHERWISE REQUIRES, ARE
SUMMARIES OF THE SUBSTANCE OR GENERAL EFFECT OF A SECTION OF THE PROVISIONS, AND
ARE QUALIFIED IN THEIR ENTIRETY BY THE PROVISIONS (AS DESCRIBED BELOW).
EXPLANATION OF THE PROPOSED AMENDMENT
The purpose of the Proxy Solicitation is the elimination of a section of
the Provisions which restricts the ability of the Power Company to incur certain
unsecured indebtedness.
ARTICLE 1, Section 4E(4) of the Provisions provides that, without a vote of
a majority of the outstanding Dividend Series Preferred Stock and Preferred
Stock -- Cumulative (voting together as a single class), the Company will not:
issue any unsecured notes, debentures or other securities representing
unsecured indebtedness, or assume any such unsecured securities, for
purposes other than the redemption or other retirement of outstanding
shares of all series of the Dividend Series Preferred Stock and the
Preferred Stock -- Cumulative, if immediately after such issue or
assumption the total principal amount of all unsecured notes, debentures
or other securities representing unsecured indebtedness issued or
assumed by the corporation and then outstanding (including unsecured
securities then to be issued or assumed but excluding unsecured
securities theretofore so voted for by holders of Dividend Series
Preferred Stock and Preferred Stock -- Cumulative) (the "Unsecured
Indebtedness") would
21
<PAGE> 22
exceed twenty per cent (20%) of the aggregate of (i) the total principal
amount of all bonds and other securities representing secured
indebtedness issued or assumed by the corporation and then outstanding
and (ii) the capital, premium and retained earnings of the corporation
as then stated on the books of account of the corporation; provided,
however, that after July 1, 1976, short-term unsecured indebtedness
shall not exceed ten per cent (10%) of such aggregate of (i) and (ii)
above; and provided, further, that after July 1, 1976, in the event
unsecured securities representing short-term unsecured indebtedness
(excluding unsecured securities theretofore so voted for by the holders
of dividend Series Preferred Stock and Preferred Stock -- Cumulative)
exceed ten per cent (10%) of such aggregate of (i) and (ii) above, no
unsecured securities representing unsecured indebtedness shall be issued
or assumed (except for the purpose of redemption or other retirement of
outstanding shares of all series of the Dividend Series Preferred Stock
and the Preferred Stock -- Cumulative) unless such ratio of short-term
unsecured indebtedness immediately after such issue or assumption is to
be not over ten per cent (10%) of such aggregate of (i) and (ii) above.
"Short-term unsecured indebtedness" as used herein means unsecured
indebtedness of an original maturity of less than ten years and
"long-term unsecured indebtedness" means unsecured indebtedness of an
original maturity of ten years or more. For the purposes hereof, when
any long-term unsecured indebtedness becomes due within ten years, or
when any long-term unsecured indebtedness is to be retired within ten
years through a sinking fund or otherwise, such long-term unsecured
indebtedness, in each case, shall be considered short-term unsecured
indebtedness; provided, however, that any long-term unsecured
indebtedness of a single maturity (except as provided above in respect
of a sinking fund therefor), or the last maturity of any long-term
unsecured indebtedness of serial maturities, shall not be considered
short-term unsecured indebtedness until due within five years.
The Power Company proposes to delete the above section in its entirety;
conforming changes to cross references elsewhere in the Provisions will also be
made.
REASONS FOR THE PROPOSED AMENDMENT
In October 1996 the NEES Companies announced their intention to divest
their generating business. (The separate sale of the oil and gas properties by
the Power Company's affiliate, New England Energy Incorporated (NEEI), is
necessary in connection therewith.) This decision was due to a combination of
factors relating to the restructuring of the electric utility industry. On
August 6, 1997, the NEES Companies reached an agreement to sell the non-nuclear
generating business to USGen New England, Inc. See Purpose of the Offer,
Proposed Amendment, and Proxy Solicitation -- Industry Restructuring. In order
to facilitate this transition to a competitive electric industry, the Power
Company may need -- prior to the completion of the sale of its generating
plants -- to buy out existing contracts with independent power producers or to
pay the difference between monies owed by NEEI and the proceeds from the sale of
NEEI's remaining oil and gas properties. The exact dollar amount of these
obligations is not yet determinable, but they may be significant. Given the
changing nature of the company, putting in place long-term financial instruments
to provide the necessary moneys may not be a cost-effective procedure.
Therefore, the Power Company believes it must increase its flexibility in
meeting its cash needs.
As discussed under Purpose of the Offer, Proposed Amendment, and Proxy
Solicitation -- Industry Restructuring, the Power Company will probably
substantially reduce its capitalization and retire its outstanding General and
Refunding Mortgage bonds through call or defeasance. The Power Company
anticipates issuing its new long-term debt in the form of debentures, which are
unsecured. Absent the Proposed Amendment, these debentures would not be
permitted by the Provisions, without prior approval by the Preferred
Shareholders.
If the Proposed Amendment is adopted, the Power Company will have increased
flexibility (i) to choose among different types of debt financing and (ii) to
finance projects using the most cost effective means. The availability and
flexibility of unsecured debt is necessary, in the estimation of NEES and the
Power Company, to take full advantage of changing conditions in the securities
markets.
22
<PAGE> 23
RECOMMENDATION OF BOARD OF DIRECTORS
IT IS FOR ALL THE ABOVE REASONS THAT THE POWER COMPANY'S BOARD BELIEVES THE
BEST LONG-TERM INTERESTS OF THE PREFERRED SHAREHOLDERS ARE SERVED BY, AND
ENCOURAGES DIVIDEND SERIES PREFERRED SHAREHOLDERS TO VOTE FOR, THE ADOPTION OF
THE PROPOSED AMENDMENT.
The Proposed Amendment to the Provisions and the Offer are subject to
approval by the SEC under the Holding Company Act. NEES and the Power Company
have filed a declaration with the SEC with respect to the Proposed Amendment and
the acquisition of the Shares by NEES pursuant to the Offer.
CERTAIN EFFECTS OF THE PROPOSED AMENDMENT
If the Proposed Amendment becomes effective, Dividend Series Preferred
Shareholders of Shares that are not tendered and purchased pursuant to the Offer
will no longer be entitled to the benefits of the debt limitation provision. As
discussed above, the unsecured debt limitation provision places restrictions on
the Power Company's ability to issue or assume unsecured indebtedness. Although
future Power Company debt instruments may contain certain restrictions on the
Power Company's ability to issue or assume debt, any such restrictions may be
waived and the increased flexibility afforded the Power Company by the deletion
of the debt limitation provision may permit the Power Company to take certain
actions that may increase the credit risks with respect to the Power Company,
adversely affecting the market price and credit rating of the remaining Shares
or that may otherwise be materially adverse to the interests of the remaining
Dividend Series Preferred Shareholders.
OTHER MATTERS
The foregoing is the only business which management intends to present or
is advised that others will present for action at the Special Meeting or any
adjournment thereof. If any other matters should properly come before the
Special Meeting, the proxies for NEES and for any other stockholders who have
sent in their proxies will be voted by the persons named therein, or their
substitutes, in accordance with their judgment.
The expense of preparing and mailing this Booklet and the incidental
expenses of soliciting the Dividend Series Preferred Stockholders will be paid
by the Power Company. The Power Company has engaged Georgeson & Company, Inc. to
act as Information Agent in connection with the solicitation of proxies for a
fee of approximately $6,000 plus reimbursement of reasonable out-of-pocket
expenses. The Power Company has requested that brokers, dealers, and other
custodians, nominees, and fiduciaries forward solicitation materials to the
beneficial owners of shares of the Power Company's Dividend Series Preferred
Stock held of record by such persons and will reimburse such brokers and other
fiduciaries for their reasonable out-of-pocket expenses incurred in connection
therewith. In addition to the use of the mails, proxies from holders of Dividend
Series Preferred Stock may be solicited by officers and regular employees
connected with the Power Company or its affiliates, personally or by telephone
or telegraph, without any additional compensation. The Information Agent has not
been retained to make, and will not make, solicitations or recommendations in
connection with the Proposed Amendment.
While the Power Company has no audit committee, its parent NEES has an
audit committee which recommends an independent auditor to audit the accounts of
the parent and its subsidiaries. Coopers and Lybrand have been auditors of the
Power Company for many years and their selection as auditors for the current
year was approved at the Annual Meeting on April 16, 1997. It is not expected
that representatives of Coopers and Lybrand will be present at the Special
Meeting on December 12, 1997, but they will be available on short notice to
attend, to answer questions regarding the Proposed Amendment, if any holder of
Shares so requests in writing prior to December 10, 1997.
23
<PAGE> 24
PRICE RANGE OF SHARES; DIVIDENDS
On August 15, 1996, the Power Company repurchased 58,500 shares of the
4.64% Series of Preferred at a price of $69.62 per Share. The Power Company has
made no other purchases of any of the Series of Preferred which are the subject
of this tender offer since January 1, 1995.
Each Series of Preferred is traded in the OTC and is not listed on any
national securities exchange. Trading in the Shares has generally been sporadic.
PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF
AVAILABLE, FOR THE SHARES.
The following table sets forth the high and low sales prices of each Series
of Preferred, as reported by the Nasdaq Stock Market, Inc., and the cash
dividends paid thereon for the fiscal quarters indicated.
DIVIDENDS AND PRICE RANGES OF PREFERRED STOCK
BY QUARTERS (1997, 1996, AND 1995)
<TABLE>
<CAPTION>
1997 - QUARTERS 1996 - QUARTERS 1995 - QUARTERS
------------------------------- ------------------------------- -------------------------------
1ST 2ND 3RD 4TH* 1ST 2ND 3RD 4TH 1ST 2ND 3RD 4TH
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6% CUMULATIVE PREFERRED STOCK
($100 Par Value)
Dividends Paid Per Share........ $1.50 $1.50 $1.50 $1.50 $1.50 $1.50 $1.50 $1.50 $1.50 $1.50 $1.50 $1.50
Market Price Per Share (OTC)
-- High....................... 84.05 85.50 88.50 92.00 87.75 80.30 83.55 84.875 75.00 80.80 83.60 86.625
-- Low........................ 79.75 81.50 82.125 84.50 78.75 77.00 77.125 77.25 64.75 70.50 73.50 77.00
DIVIDEND SERIES PREFERRED STOCK:
4.56% SERIES
Dividends Paid Per Share........ $1.14 $1.14 $1.14 $1.14 $1.14 $1.14 $1.14 $1.14 $1.14 $1.14 $1.14 $1.14
Market Price Per Share (OTC)
-- High....................... 66.625 68.85 70.15 65.875 69.20 63.975 63.975 68.55 54.75 62.90 62.625 69.80
-- Low........................ 61.125 62.75 63.125 65.875 62.00 59.00 59.00 59.25 52.00 53.00 58.75 56.50
4.60% SERIES
Dividends Paid Per Share........ $1.15 $1.15 $1.15 $1.15 $1.15 $1.15 $1.15 $1.15 $1.15 $1.15 $1.15 $1.15
Market Price Per Share (OTC)
-- High....................... 67.125 66.25 70.25 -- 70.40 64.50 66.825 69.15 58.25 65.40 64.10 69.25
-- Low........................ 61.125 63.75 65.125 -- 58.25 59.12 59.50 59.75 55.50 55.00 56.75 56.625
4.64% SERIES
Dividends Paid Per Share........ $1.16 $1.16 $1.16 $1.16 $1.16 $1.16 $1.16 $1.16 $1.16 $1.16 $1.16 $1.16
Market Price Per Share (OTC)
-- High....................... 69.69 71.20 70.85 -- 63.35 60.00 60.00 67.25 -- 62.70 63.30 --
-- Low........................ 69.69 68.65 64.375 -- 62.70 31.25 60.00 59.50 -- 60.91 63.30 --
6.08% SERIES
Dividends Paid Per Share........ $1.52 $1.52 $1.52 $1.52 $1.52 $1.52 $1.52 $1.52 $1.52 $1.52 $1.52 $1.52
Market Price Per Share (OTC)
-- High....................... 90.97 88.50 91.25 92.12 93.07 84.725 88.35 91.47 78.70 85.90 87.70 90.90
-- Low........................ 85.00 86.00 86.50 87.625 78.00 81.625 78.75 79.125 71.25 72.00 79.25 82.75
</TABLE>
- ---------------
* Prices through October 31
Note -- The above bid and asked quotations represent prices between dealers and
do not represent actual transactions. A dash indicates that a quotation was not
available.
Dividends for a Series of Preferred are payable when, as and if declared by
the Power Company's Board of Directors at the rate per annum included in such
title of the Series of Preferred. Tendering Preferred Shareholders will be
entitled to the regular quarterly dividend for the entire quarterly period
through December 31, 1997, if declared by the Board.
24
<PAGE> 25
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
EACH HOLDER OF SHARES IS URGED TO CONSULT AND RELY UPON SUCH HOLDER'S OWN
TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO THE HOLDER OF TENDERING
SHARES PURSUANT TO THE OFFER.
In the opinion of Hale and Dorr LLP, tax counsel to NEES and the Power
Company, the following summary describes the principal United States Federal
income tax consequences of sales of Shares pursuant to the Offer and the receipt
of Special Cash Payments in connection with the approval and adoption of the
Proposed Amendment. This summary is based on the Internal Revenue Code of 1986,
as amended to the date hereof (the "Code"), administrative pronouncements,
judicial decisions and existing and proposed Treasury Regulations, changes to
any of which subsequent to the date of this Booklet may adversely affect the tax
consequences described herein, possibly on a retroactive basis. This summary is
addressed to Preferred Shareholders who hold Shares as capital assets within the
meaning of Section 1221 of the Code. This summary does not discuss all of the
tax consequences that may be relevant to a Preferred Shareholder in light of
such Preferred Shareholder's particular circumstances or to Preferred
Shareholders subject to special rules (including certain financial institutions,
tax-exempt organizations, insurance companies, dealers in securities or
currencies, foreign persons or entities selling Shares pursuant to the Offer who
own or have owned, actually or constructively, more than five percent of the
outstanding amount of such Shares, Preferred Shareholders who acquired their
Shares pursuant to the exercise of stock options or other compensation
arrangements with the Power Company or Preferred Shareholders holding the Shares
as part of a conversion transaction, as part of a hedge or hedging transaction,
or as a position in a straddle for tax purposes). Preferred Shareholders should
consult their tax advisors with regard to the application of the United States
Federal income tax laws to their particular situations as well as any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction.
As used herein, the term "United States Holder" means an owner of a Share
that is (i) for United States Federal income tax purposes a citizen or resident
of the United States; (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof; (iii) an estate, or, for taxable years beginning on or
before December 31, 1996, in general, any trust, the income of which is subject
to United States Federal income taxation regardless of its source; or (iv) for
taxable years beginning after December 31, 1996, any trust if a court within the
United States is able to exercise primary supervision over the administration of
such trust and one or more United States fiduciaries have the authority to
control all substantial decisions of such trust. A "Non-United States Holder" is
a Preferred Shareholder that is not a United States Holder.
TAX CONSIDERATIONS FOR TENDERING PREFERRED SHAREHOLDERS
Characterization of the Sale. A sale of Shares by a Preferred Shareholder
pursuant to the Offer will be a taxable transaction for Federal income tax
purposes.
United States Holders. A United States Holder will recognize gain or loss
equal to the difference between the tax basis of such Holder's Shares and the
amount of cash received from NEES in exchange therefor. A United States Holder's
gain or loss will be long-term capital gain or loss if the holding period for
the Shares is more than one year as of the date of the sale of such Shares. The
excess of net long-term capital gains over net short-term capital losses is
taxed at a lower rate than ordinary income for certain non-corporate taxpayers.
Capital gain on Shares held by noncorporate taxpayers for more than eighteen
months prior to the date of the sale of such Shares will be subject to a reduced
tax rate. The distinction between long-term capital gain or loss and short-term
gain or loss is also relevant for purposes of, among other things, limitations
on the deductibility of capital losses.
NEES will treat a portion of the cash received by a tendering Dividend
Series Preferred Shareholder pursuant to the Offer as consideration paid in
exchange for the vote of such Dividend Series Preferred Shareholder in favor of
the Proposed Amendment, rather than as consideration paid in exchange for its
tendered Shares (the Special Cash Payment Equivalent Amount). The Special Cash
Payment Equivalent Amount will be equal to the Special Cash Payment a tendering
Dividend Series Preferred Shareholder would
25
<PAGE> 26
have been eligible to receive if such Dividend Series Preferred Shareholder had
voted in favor of the Proposed Amendment but had not tendered its Shares. While
the appropriate characterization of the Special Cash Payment Equivalent Amount
for United States Federal income tax purposes is not entirely clear, for Federal
income tax withholding and information reporting purposes, NEES will treat the
Special Cash Payment Equivalent Amount as ordinary, nondividend income to
tendering Dividend Series Preferred Shareholders.
Non-United States Holders. Any gain realized upon the sale of Shares by a
Non-United States Holder pursuant to the Offer generally will not be subject to
United States Federal income tax unless (i) such gain is effectively connected
with a trade or business in the United States of the Non-United States Holder,
or (ii) in the case of a Non-United States Holder who is an individual, such
individual is present in the United States for 183 days or more in the taxable
year of such sale and certain other conditions are met.
A Non-United States Holder with gain described in clause (i) above will be
taxed on the net gain derived from the sale at regular graduated United States
Federal income tax rates. If a Non-United States Holder that is a foreign
corporation has gain described under clause (i) above, it may also be subject to
an additional "branch profits tax" at a 30% rate (or such lower rate as may be
specified by an applicable income tax treaty). Unless an applicable tax treaty
provides otherwise, an individual Non-United States Holder described in clause
(ii) above will be subject to a flat 30% tax on the gain derived from the sale,
which may be offset by United States capital losses (notwithstanding the fact
that the individual is not considered a resident of the United States).
NEES will treat a portion of the cash paid to a tendering Non-United States
Holder of Dividend Series Preferred Stock pursuant to the Offer as a Special
Cash Payment Equivalent Amount, in the same manner described above under "United
States Holders." Subject to certain exceptions to the withholding requirements
summarized below with respect to the Special Cash Payments under Tax
Considerations of Special Cash Payment -- Non-United States Holders, NEES will
treat the Special Cash Payment Equivalent Amount as subject to withholding of
United States Federal income tax at a 30% rate.
TAX CONSIDERATIONS FOR NON-TENDERING PREFERRED SHAREHOLDERS
Non-Tendering Preferred Shareholders, whether or not they receive Special
Cash Payments, will not recognize any taxable gain or loss with respect to the
Shares as a result of the modification of the Provisions by the Proposed
Amendment.
TAX CONSIDERATIONS OF ACCRUED AND UNPAID DIVIDENDS PAYMENT
Payment of accrued and unpaid dividends received by the tendering Preferred
Shareholder with respect to rights to dividends declared prior to the Offer will
be treated as dividends to the extent of the Preferred Shareholder's allocable
portion of the Power Company's current and accumulated earnings and profits as
determined under United States Federal income tax principles and not as proceeds
from the sale of such Shares. Such dividend payments will be taxed to the
Preferred Shareholder in the same manner as prior dividend payments customarily
have been taxed.
TAX CONSIDERATIONS OF SPECIAL CASH PAYMENT
United States Holders. There is no direct authority concerning the Federal
income tax consequences of the receipt of Special Cash Payments. The Power
Company will, for information reporting purposes, treat Special Cash Payments as
ordinary, non-dividend income to recipient United States Holders.
Non-United States Holders. The Power Company will treat Special Cash
Payments paid to a Non-United States Holder of Shares as subject to withholding
of United States Federal income tax at a 30% rate. However, Special Cash
Payments that are effectively connected with the conduct of a trade or business
by the Non-United States Holder within the United States are not subject to the
withholding tax (provided such Non-United States Holder provides two originals
of Internal Revenue Service ("IRS") Form 4224 stating that such Special Cash
Payments are so effectively connected), but instead are subject to United States
Federal income tax on a net income basis at applicable graduated individual or
corporate rates. Any such
26
<PAGE> 27
effectively connected Special Cash Payments received by a foreign corporation
may, under certain circumstances, be subject to an additional "branch profits
tax" at a 30% rate (or such lower rate as may be specified by an applicable
income tax treaty).
A Non-United States Holder of Shares eligible for a reduced rate of United
States withholding tax pursuant to an income tax treaty may obtain a refund of
any excess amounts withheld by filing an appropriate claim for refund with the
IRS.
BACKUP WITHHOLDING
ANY TENDERING PREFERRED SHAREHOLDER OR DIVIDEND SERIES PREFERRED
SHAREHOLDER WHO VOTES IN FAVOR OF THE PROPOSED AMENDMENT (BUT DOES NOT TENDER),
AND WHO FAILS TO COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN
THE APPLICABLE LETTER OF TRANSMITTAL (OR, IN THE CASE OF A FOREIGN PREFERRED
SHAREHOLDER, FORM W-8 OBTAINABLE FROM THE DEPOSITARY) MAY BE SUBJECT TO A
REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING OF 31% OF (1) IN THE CASE OF A
TENDERING PREFERRED SHAREHOLDER, THE GROSS AMOUNT PAYABLE TO SUCH PREFERRED
SHAREHOLDER IN EXCHANGE FOR THE SHARES (INCLUDING THE SPECIAL CASH PAYMENT
EQUIVALENT AMOUNT) OR (2) IN THE CASE OF A NON-TENDERING DIVIDEND SERIES
PREFERRED SHAREHOLDER WHO VOTES IN FAVOR OF THE PROPOSED AMENDMENT, THE SPECIAL
CASH PAYMENT. To prevent backup United States Federal income tax withholding
with respect to the purchase price of Shares purchased pursuant to the Offer
(including the special cash payment equivalent amount) or the special cash
payment, as applicable, a United States Holder must provide the Depositary with
the Preferred Shareholder's correct taxpayer identification number and certify
that the Preferred Shareholder is not subject to backup withholding of Federal
income tax by completing the Substitute Form W-9 included in the applicable
Letter of Transmittal. Certain Preferred Shareholders (including, among others,
all corporations and certain foreign shareholders) are exempt from backup
withholding. For a corporate United States Holder to qualify for such exemption,
such Preferred Shareholder must provide the Depositary with a properly completed
and executed Substitute Form W-9 attesting to its exempt status. In order for a
foreign Preferred Shareholder to qualify as an exempt recipient, the foreign
holder must submit a Form W-8, Certificate of Foreign Status, signed under
penalties of perjury, attesting to that Preferred Shareholder's exempt status. A
copy of Form W-8 may be obtained from the Depositary.
Unless a Preferred Shareholder provides the appropriate certification,
under the applicable law and regulations concerning "backup withholding" of
United States Federal income tax, the Depositary will be required to withhold
and will withhold, 31% of the gross amount otherwise payable to such Preferred
Shareholder or other payee. The amount of any backup withholding from a payment
to a Preferred Shareholder will be allowed as a credit against such Preferred
Shareholder's United States Federal income tax liability and may entitle such
Preferred Shareholder to a refund, provided that the required information is
furnished to the IRS. However, backup withholding is not required for amounts
subject to withholding discussed above under Tax Considerations for Tendering
Preferred Shareholders -- Non-United States Holders and Tax Considerations of
Special Cash Payments -- Non-Untied States Holders.
SOURCE AND AMOUNT OF FUNDS
Assuming that NEES purchases all outstanding Shares of each Series of
Preferred pursuant to the Offer, the total amount required by NEES to purchase
such Shares will be approximately $40 million exclusive of the payment of
accrued but unpaid dividends, but including fees and other expenses. NEES
intends to fund the Offer through the use of its general funds (which, in the
ordinary course, include funds from the Power Company) and possibly funds
borrowed pursuant to NEES's committed lines of credit, including any bank
revolving credit agreements. The interest rates on any such borrowing will
depend upon the timing and amount of borrowings and market rates at that time.
NEES currently has regulatory authority to borrow $100 million and is seeking to
increase that amount. NEES has not had occasion to borrow money for a number of
years.
27
<PAGE> 28
The Power Company sells commercial paper directly to commercial paper
dealers who reoffer the commercial paper to investors.
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES
Each of NEES and the Power Company has been advised by its directors and
executive officers that no directors or executive officers of the respective
companies own any Shares. Based upon the companies' records and upon information
provided to each company by its directors and executive officers, neither
company nor, to the knowledge of either, any of their subsidiaries, affiliates,
directors, or executive officers, or any associates of the foregoing, has
engaged in any transactions involving Shares during the 40 business days
preceding the date hereof. Neither company nor, to the knowledge of either, any
of their directors or executive officers or any associate of the foregoing is a
party to any contract, arrangement, understanding, or relationship relating
directly or indirectly to the Offer with any other person or entity with respect
to any securities of the Power Company.
28
<PAGE> 29
FEES AND EXPENSES PAID TO DEALERS
DEALER MANAGER FEES
Merrill Lynch will act as the Dealer Manager for NEES in connection with
the Offer. NEES has agreed to pay the Dealer Manager a fee of $0.50 per Share
for any Shares tendered, accepted for payment, and paid for pursuant to the
Offer and a fee of $0.50 per Share for any Shares that are not tendered pursuant
to the Offer but which vote in favor of the Proposed Amendment. The Dealer
Manager will also be reimbursed by NEES for its reasonable out-of-pocket
expenses, including attorneys' fees, and will be indemnified against certain
liabilities, including certain liabilities under the federal securities laws, in
connection with the Offer. The Dealer Manager has rendered, is currently
rendering, and is expected to continue to render various investment banking and
other advisory services to NEES and the Power Company. The Dealer Manager has
received, and will continue to receive, customary compensation from NEES and the
Power Company for such services. NEES has retained IBJ Schroder Bank & Trust
Company as Depositary and Georgeson & Company, Inc. as Information Agent in
connection with the Offer. The Depositary and the Information Agent will receive
reasonable and customary compensation for their services and will also be
reimbursed for reasonable out-of-pocket expenses, including attorney fees.
Neither the Depositary nor the Information Agent has been retained to make
solicitations or recommendations in connection with the Offer.
SOLICITED TENDER FEES
Upon the terms and subject to the conditions of the Offer and pursuant to
Instruction 10 of the accompanying Letter of Transmittal and Proxy, NEES will
pay to designated brokers and dealers a solicitation fee of $1.50 per Share for
any Shares tendered, accepted for payment, and paid for pursuant to the Offer
and for each share of Dividend Series Preferred Stock not tendered but voted in
favor of the Proposed Amendment (except that for transactions for beneficial
owners equal to or exceeding 2,500 Shares, NEES will pay a solicitation fee of
$1.00 per Share, of which eighty percent (80%) shall be paid to the Dealer
Manager and twenty percent (20%) to the Soliciting Dealer (which may be the
Dealer Manager)). With respect to fees payable pursuant to this paragraph
involving transactions for beneficial owners whose ownership is less than 2,500
Shares, any fees payable hereunder shall be paid in full to the Dealer Manager
unless a Soliciting Dealer is designated (as described below), in which case
such fee shall be payable in full to such designated Soliciting Dealer (which
designated Soliciting Dealer may be the Dealer Manager). The Letter of
Transmittal and Proxy must include the name of an entity which obtained the
tender or proxy and which is either (a) a broker or dealer in securities,
including the Dealer Manager in its capacity as a broker or dealers, which is a
member of any national securities exchange or of the National Association of
Securities Dealers, Inc. (NASD), (b) a foreign broker or dealer not eligible for
membership in the NASD which agrees to conform to the NASD's Rules of Fair
Practice in soliciting tenders outside the United States to the same extent as
though it were an NASD member, or (c) a bank or trust company (each of which is
referred to herein as a Soliciting Dealer). No solicitation fee shall be payable
to a Soliciting Dealer with respect to the tender of Shares or delivery of a
proxy unless the Letter of Transmittal and Proxy accompanying such tender or
delivery of a proxy designates such Soliciting Dealer. No solicitation fee shall
be payable to a Soliciting Dealer in respect of Shares registered in the name of
such Soliciting Dealer unless such Shares are held by such Soliciting Dealer as
nominee and such Shares are being tendered or delivered for the benefit of one
or more beneficial owners identified on the Letter of Transmittal and Proxy or
on the Notice of Solicited Tenders. No solicitation fee shall be payable to a
Soliciting Dealer if such Soliciting Dealer is required for any reason to
transfer the amount of such fee to a depositing holder (other than itself). No
solicitation fee shall be paid to a Soliciting Dealer with respect to Shares
tendered or delivered for such Soliciting Dealer's own account. A Soliciting
Dealer shall not be entitled to a solicitation fee for Shares beneficially owned
by such Soliciting Dealer. No broker, dealer, bank, trust company, or other
nominee shall be deemed to be the agent of NEES, the Power Company, the
Depositary, the Information Agent, or the Dealer Manager for purposes of the
Offer.
Soliciting Dealers will include any of the organizations described in
clauses (a), (b), and (c) above even when the activities of such organizations
in connection with the Offer consist solely of forwarding to clients materials
relating to the Offer, including the Letter of Transmittal and Proxy, and
tendering Shares or delivering a proxy as directed by beneficial owners thereof.
No Soliciting Dealer is authorized to make any recommendation to holders of
Shares as to whether to tender or refrain from tendering in the Offer. No
assumption is made, in making
29
<PAGE> 30
payment to any Soliciting Dealer, that its activities in connection with the
Offer included any activities other than those described above, and for all
purposes noted in all materials relating to the Offer, the term "solicit" shall
be deemed to mean no more than processing Shares tendered or forwarding to
customers materials regarding the Offer.
STOCK TRANSFER TAXES
NEES will pay all stock transfer taxes, if any, payable on account of the
acquisition of Shares by NEES pursuant to the Offer, except in certain
circumstances where special payment or delivery procedures are utilized pursuant
to Instruction 6 of the accompanying Letter of Transmittal and Proxy.
SUMMARY OF FINANCIAL INFORMATION
Set forth below is certain historical financial information of the Power
Company and its subsidiaries. The historical financial information (other than
the ratios of earnings to fixed charges) was derived from the audited financial
statements included in the Power Company's Annual Report on Form 10-K for the
year ended December 31, 1996 and the unaudited consolidated financial statements
included in the Power Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997.
CONDENSED INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- ---------------------
1996 1995 1997 1996
---------- ---------- -------- --------
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C>
Operating Revenues........................... $1,600,309 $1,570,539 $834,097 $775,461
Operating Income............................. 203,761 185,413 80,680 94,905
Allowance for Borrowed and Equity Funds
Used During Construction (credit).......... (591) (19,225) (651) (267)
Net Income................................... 152,483 151,427 57,460 67,741
Preferred Stock Dividend Requirements........ 2,574 3,433 1,037 1,536
Earnings Applicable to Common Stock.......... 149,909 147,994 56,423 66,205
Ratio of Earnings to Fixed Charges........... 5.19 4.99 5.23(a) 5.17(a)
</TABLE>
- ---------------
(a) Ratio for the twelve months ended June 30.
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, JUNE 30,
------------------------- -------------------------
1996 1995 1997 1996
---------- ---------- ---------- ----------
(THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Net Utility Plant in Service.............. $1,873,457 $1,908,697 $1,876,155 $1,883,431
Construction Work in Progress............. 36,836 41,566 25,142 59,028
Cash and Cash Equivalents................. 3,046 2,607 738 251
Other Current Assets...................... 329,996 348,516 351,684 353,192
Other Assets.............................. 404,380 346,957 374,703 325,189
---------- ---------- ---------- ----------
$2,647,715 $2,648,343 $2,628,422 $2,621,091
========== ========== ========== ==========
LIABILITIES:
Common Equity............................. $ 906,205 $ 889,136 $ 898,129 $ 890,060
Cumulative Preferred Stock................ 39,666 60,516 39,666 45,516
Long-term Debt (less amounts due within
one year)............................... 733,006 735,440 647,613 735,900
Current Liabilities....................... 285,641 355,953 369,822 351,653
Other Liabilities......................... 683,197 607,298 673,192 597,962
---------- ---------- ---------- ----------
$2,647,715 $2,648,343 $2,628,422 $2,621,091
========== ========== ========== ==========
</TABLE>
30
<PAGE> 31
CERTAIN INFORMATION REGARDING NEES AND THE POWER COMPANY;
INCORPORATION BY REFERENCE
The Power Company, a Massachusetts corporation qualified to do business as
a foreign corporation in the states of New Hampshire, Vermont, Maine,
Connecticut, and Rhode Island, is a wholly owned subsidiary of NEES. The Power
Company's business is principally generating, purchasing, transmitting, and
selling electric energy in wholesale quantities. In 1996, 95% of the Power
Company's all-requirement revenue from the sale of electricity was derived from
sales for resale to affiliated companies and 5% from sales for resale to
municipal and other utilities. See Purpose of the Offer, Proposed Amendment, and
Proxy Solicitation -- Industry Restructuring.
NEES and the Power Company are subject to the informational requirements of
the Exchange Act and in accordance therewith file reports and other information
with the SEC. Such reports and other information may be inspected and copied at
the public reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549; 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
SEC, 450 Fifth Street, N.W., Washington D.C. 20549 at prescribed rates. The SEC
maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements, and other information regarding registrants that file
electronically with the SEC, including NEES and the Power Company. Reports,
proxy materials, and other information about NEES are also available at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005. In connection with the Offer NEES has filed an Issuer Tender Offer
Statement on Schedule 13E-4 with the SEC that includes certain additional
information relating to the Offer. NEES's Schedule 13E-4 will not be available
at the SEC's regional offices.
The following documents, which have heretofore been filed by NEES and the
Power Company with the SEC pursuant to the Exchange Act, are incorporated by
reference herein and shall be deemed a part hereof:
(1) Annual Report on Form 10-K for the year ended December 31, 1996,
which contains or incorporates by reference financial statements and
financial statement schedules of NEES and the Power Company as of December
31, 1996, and for each of the three years in the period ended December 31,
1996, and incorporates by reference or includes the related reports of
Coopers & Lybrand, independent certified public accountants;
(2) Quarterly reports on Form 10-Q for NEES for the quarters ended
March 31, 1997 and June 30, 1997;
(3) Quarterly reports on Form 10-Q for the Power Company for the
quarters ended March 31, 1997 and June 30, 1997;
(4) Reports on Form 8-K for NEES for the periods ended April 14, 1997,
May 20, 1997, and August 6, 1997; and
(5) Reports on Form 8-K for the Power Company for the periods ended
April 14, 1997, May 20, 1997, and August 6, 1997.
All reports filed by NEES and the Power Company with the SEC pursuant to
these sections subsequent to the date of this Booklet and prior to the
Expiration Date (or any extension thereof) shall be incorporated herein by
reference and shall be deemed a part hereof on the date of filing of such
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Booklet to the extent that a statement contained herein or
in any other subsequently filed documents which is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Booklet.
NEES and the Power Company hereby undertake to provide without charge to
each person to whom a copy of this Booklet has been delivered, upon the written
or oral request of such person, a copy of any or all of the documents referred
to above which have been or may be incorporated by reference in this Booklet,
other than exhibits to such documents. Written or oral requests for such copies
should be directed to the Treasurer,
31
<PAGE> 32
New England Power Company, 25 Research Drive, Westborough, Massachusetts 01582,
telephone (508) 389-2000.
The information relating to NEES and the Power Company contained in this
Booklet does not purport to be comprehensive and should be read together with
the information contained in the documents incorporated by reference.
MISCELLANEOUS
The Offer is not being made to, nor will NEES accept tenders from, owners
of Shares in any jurisdiction in which the Offer or its acceptance would not be
in compliance with the laws of such jurisdiction. NEES is not aware of any
jurisdiction where the making of the Offer or the tender of Shares would not be
in compliance with applicable law. If NEES becomes aware of any jurisdiction
where the making of the Offer or the tender of Shares is not in compliance with
any applicable law, NEES will make a good faith effort to comply with such law.
If, after such good faith effort, NEES cannot comply with such law, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
owners of Shares residing in such jurisdiction. In any jurisdiction in which the
securities, blue sky, or other laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on NEES's behalf by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
NEW ENGLAND ELECTRIC SYSTEM
NEW ENGLAND POWER COMPANY
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 therefore.
32
<PAGE> 1
LETTER OF TRANSMITTAL AND PROXY
RELATING TO
SHARES OF 4.56% SERIES OF DIVIDEND SERIES PREFERRED STOCK
OF
NEW ENGLAND POWER COMPANY
TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH
BY
NEW ENGLAND ELECTRIC SYSTEM,
DATED NOVEMBER 6, 1997,
FOR PURCHASE AT A PURCHASE PRICE OF
$90.30 PER SHARE
AND/OR
VOTED PURSUANT TO THE PROXY AND INFORMATION STATEMENT,
DATED NOVEMBER 6, 1997,
OF
LOGO NEW ENGLAND POWER COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME,
ON FRIDAY, DECEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED (THE EXPIRATION
DATE).
THE PROXY CONTAINED IN THIS DOCUMENT IS IN RESPECT OF THE SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON FRIDAY, DECEMBER 12, 1997, OR ON SUCH DATE TO WHICH
THE MEETING IS ADJOURNED OR POSTPONED.
To: IBJ Schroder Bank & Trust Company (the Depositary)
By First-Class Mail:
IBJ Schroder Bank & Trust Company
P.O. Box 84
Bowling Green Station
New York, New York 10274-0084
Attn: Reorganization Department
By Facsimile:
(212) 858-2611
By Hand or Overnight Delivery:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attn: Reorganization Department
Securities Processing Window SC-1
To Confirm:
(212) 858-2103
ATTENTION
THIS LETTER OF TRANSMITTAL AND PROXY IS TO BE USED BY BOTH (1) PREFERRED
SHAREHOLDERS WHO ARE TENDERING AND VOTING SHARES PURSUANT TO THE OFFER AND (2)
PREFERRED SHAREHOLDERS WHO ARE ONLY VOTING ON THE PROPOSED AMENDMENT AND NOT
TENDERING SHARES.
ANY PREFERRED SHAREHOLDER WHO HAS ANY QUESTIONS AS TO HOW TO COMPLETE THIS
LETTER OF TRANSMITTAL AND PROXY SHOULD CONTACT THE INFORMATION AGENT AT (800)
223-2064 (TOLL-FREE) AND FOR BANKS AND BROKERS (212) 440-9800 (CALL COLLECT).
<PAGE> 2
All capitalized terms used herein and not defined herein have the meanings
ascribed to them in the Offer to Purchase and Proxy Statement and Information
Statement.
DIVIDEND SERIES PREFERRED SHAREHOLDERS (INCLUDING DIVIDEND SERIES PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WILL NOT BE ABLE
TO VALIDLY TENDER THEIR SHARES UNLESS THEY HAVE SUBMITTED A DULY COMPLETED,
VALID AND UNREVOKED PROXY INDICATING THEIR VOTE FOR THE PROPOSED AMENDMENT OR
INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED
AMENDMENT AT THE SPECIAL MEETING. NEW ENGLAND ELECTRIC SYSTEM, A MASSACHUSETTS
VOLUNTARY ASSOCIATION (NEES), WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY
FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT
THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE ON THE
PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES BY CASTING
THEIR VOTE AND SIGNING THE PROXY CONTAINED WITHIN THIS LETTER OF TRANSMITTAL AND
PROXY OR BY VOTING IN PERSON AT THE SPECIAL MEETING. IF THE PROPOSED AMENDMENT
IS APPROVED AND ADOPTED, NEW ENGLAND POWER COMPANY, A MASSACHUSETTS CORPORATION
AND DIRECT SUBSIDIARY OF NEES (THE POWER COMPANY), WILL MAKE A SPECIAL CASH
PAYMENT TO EACH DIVIDEND SERIES PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE
PROPOSED AMENDMENT, PROVIDED THAT THEIR SHARES ARE NOT TENDERED PURSUANT TO THE
OFFER.
DIVIDEND SERIES PREFERRED SHAREHOLDERS WHO PURCHASE OR WHOSE PURCHASE
SETTLES OR IS REGISTERED AFTER THE CLOSE OF BUSINESS ON NOVEMBER 12, 1997 (THE
RECORD DATE) AND WHO WISH TO TENDER IN THE OFFER MUST ARRANGE WITH THEIR SELLER
TO RECEIVE A DULY COMPLETED, VALID AND UNREVOKED PROXY (WHICH MAY BE IN THE FORM
OF AN IRREVOCABLE ASSIGNMENT OF PROXY AS SET FORTH IN THIS LETTER OF TRANSMITTAL
AND PROXY) FROM THE HOLDER ON THE RECORD DATE OF SUCH SHARES. IN ORDER TO
FACILITATE RECEIPT OF PROXIES, SHARES SHALL, DURING THE PERIOD WHICH COMMENCES
NOVEMBER 10, 1997 AND WHICH WILL END AT THE CLOSE OF BUSINESS ON THE EXPIRATION
DATE, TRADE IN THE OVER-THE-COUNTER MARKET WITH A PROXY PROVIDING THE TRANSFEREE
WITH THE RIGHT TO VOTE SUCH ACQUIRED SHARES IN THE PROXY SOLICITATION.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL
AND PROXY MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW. IF
SHARES ARE NOT BEING TENDERED, YOU NEED ONLY COMPLETE THE BOXES BELOW
TITLED "PROXY" (OR, IF APPLICABLE, "IRREVOCABLE PROXY") AND
"SIGNATURES(S) OF REGISTERED HOLDER(S)" AND THE SUBSTITUTE FORM W-9.
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.
2
<PAGE> 3
PLEASE COMPLETE:
PROXY
The undersigned hereby appoints John G. Cochrane, Michael E. Jesanis, and
Robert King Wulff, and each of them, proxies, with full power of substitution,
to represent the shareholder(s) at the Special Meeting to be held on December
12, 1997, and at any and all adjournments thereof, and to vote thereat the
number of shares (Shares) of 4.56% Series of Dividend Series Preferred Stock of
New England Power Company (the Power Company) which the shareholder(s) would be
entitled to vote if then personally present, with all the powers the
shareholder(s) would then possess, but especially, without limiting the
foregoing, to vote as specified herein on the proposal set forth in the proxy
statement.
NOTE: IF YOU ARE VOTING BUT NOT TENDERING SHARES, DO NOT SEND ANY SHARE
CERTIFICATES WITH THIS LETTER OF TRANSMITTAL AND PROXY.
THIS LETTER OF TRANSMITTAL AND PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE POWER COMPANY. The proxy contained herein, when properly
executed, will be voted in the manner directed herein by the undersigned
shareholder(s). If no direction is made, the proxy will be voted FOR Item 1.
INDICATE YOUR VOTE BY AN (X). THE BOARD OF DIRECTORS OF THE POWER COMPANY
RECOMMENDS VOTING FOR ITEM 1.
HOLDERS OF SHARES WHO WISH TO TENDER THEIR SHARES MUST VOTE "FOR" THE
PROPOSED AMENDMENT EITHER BY SUBMITTING THIS PROXY OR BY VOTING AT THE SPECIAL
MEETING.
ITEM 1.
Amendment of the Articles of Organization and By-laws to delete in its
entirety Article 1, Section 4E(4), limiting the Power Company's ability to issue
unsecured indebtedness.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
NOTE: IF SHARES ARE BEING VOTED "FOR" THE PROPOSED AMENDMENT, THE SUBSTITUTE
FORM W-9 BELOW SHOULD BE COMPLETED TO AVOID BACK-UP WITHHOLDING ON THE
SPECIAL CASH PAYMENT.
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED "FOR" THE PROPOSED AMENDMENT AND OTHERWISE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF THE POWER
COMPANY, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS THAT
MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Any holder of Shares held of record on the Record Date in the name of
another holder must establish, to the satisfaction of the Power Company, such
holder's entitlement to exercise or transfer this Proxy. This will ordinarily
require an assignment by such record holder in blank, or if not in blank, to and
from each successive transferee, including the holder, with each signature
guaranteed by an Eligible Institution. A form of irrevocable assignment of proxy
has been provided herein.
Please check box if you plan to attend the Special Meeting. [ ]
3
<PAGE> 4
PLEASE COMPLETE IF APPLICABLE:
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED(1)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE USE PREADDRESSED LABEL OR FILL IN, IF
BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE SHARE CERTIFICATE(S) AND SHARE(S) TENDERED/VOTED
CERTIFICATE(S) AND SHARE(S) TENDERED) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)(1)
------------------------------------------------------------------------------------------------------------------
NUMBER OF
TOTAL NUMBER SHARES NOT
OF SHARES TENDERED BUT
REPRESENTED NUMBER AS TO WHICH
SHARE CERTIFICATE BY SHARE OF SHARES PROXIES
NUMBER(S)(2) CERTIFICATE(S)(2) TENDERED(3) GIVEN ONLY
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Total Shares:
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) If tendering or voting Share(s), please fill in table exactly as
information appears on the Certificate(s).
(2) Need not be completed by Preferred Shareholders tendering by book-entry
transfer.
(3) Unless otherwise indicated, it will be assumed that all Shares represented
by any Certificate(s) delivered to the Depositary are being tendered and a
proxy is being delivered. See Instruction 4. You must vote "FOR" the
Proposed Amendment with respect to any Shares tendered.
- --------------------------------------------------------------------------------
NOTE: IF YOU ARE DELIVERING A PROXY BUT NOT TENDERING SHARES, DO NOT SEND ANY
SHARE CERTIFICATES.
4
<PAGE> 5
PLEASE COMPLETE IF APPLICABLE:
SIGNATURE(S) OF REGISTERED HOLDER(S)*
- ------------------------------------------------------------------------------ -
(SIGNATURE)
- ------------------------------------------------------------------------------ -
(SIGNATURE)
Dated: , 1997
---------------------------------------------------------------------
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.:
--------------------------------------------
* Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in
a fiduciary or representative capacity, please set forth full title and see
Instruction 5.
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
(PLEASE PRINT)
Address of Firm:
----------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
----------------------------------------------------
Dated: , 1997
--------------------------------------------------------------------
5
<PAGE> 6
IF SELLING SHARES ON OR AFTER NOVEMBER 10, 1997, A RECORD HOLDER MUST
COMPLETE THE FOLLOWING IRREVOCABLE PROXY.
PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK PROXY TO A
SUBSEQUENT HOLDER OF PREFERRED STOCK WHO WAS NOT A HOLDER OF RECORD ON NOVEMBER
12, 1997.
IRREVOCABLE PROXY *
WITH RESPECT TO SHARES OF THE
4.56% SERIES OF DIVIDEND SERIES PREFERRED STOCK (THE SHARES) OF
NEW ENGLAND POWER COMPANY (THE POWER COMPANY)
The undersigned hereby irrevocably appoints:
------------------------------------
TYPE OR PRINT NAME OF TRANSFEREE
>as attorney and proxy, with full power of substitution, to vote and otherwise
act for and in the name(s) of the undersigned with respect to the Shares
indicated below which were held of record by the undersigned on November 12,
1997, in the manner in which the undersigned would be entitled to vote and
otherwise act in respect of such Shares on any and all matters.
This proxy shall be effective whether or not the Shares indicated below are
tendered in the Offer.
This instrument supersedes and revokes any and all previous appointments of
proxies heretofore made by the undersigned with respect to the Shares indicated
below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH
AN INTEREST.
All authority conferred or agreed to be conferred herein shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors in interest and assigned of the
undersigned. The undersigned understands that tenders of Shares pursuant to any
of the procedures described in the Offer to Purchase and Proxy and Information
Statement and in this Letter of Transmittal and Proxy will constitute a binding
agreement between the undersigned and the Power Company upon the terms and
subject to the conditions of the Offer.
DESCRIPTION OF PREFERRED STOCK
<TABLE>
<CAPTION>
CERTIFICATE NUMBER(S)
(ATTACH LIST IF AGGREGATE NUMBER
NECESSARY) OF SHARES
- ------------------------- -------------------------
<S> <C> <C>
1. -------------------------
- ------------------------- -------------------------
2. -------------------------
- ------------------------- -------------------------
3.
- -------------------------
Total
</TABLE>
- ---------------
* This irrevocable proxy must be signed on the next page to be effective.
6
<PAGE> 7
IRREVOCABLE PROXY
SIGNATURE(S) OF RECORD OR AUTHORIZED SIGNATORY*
- --------------------------------------------------------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Dated:--------------------------------------------------------------------, 1997
Tax Identification or Social Security No(s)
-------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Dated: , 1997
--------------------------------------------------------------------------
Tax Identification or Social Security No(s)
-------------------------------------
* Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
Record Date on the stock certificate(s) or on a security position listing or
by person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent or
other person acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 5.
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
-----------------------------------------------------------
Name: --------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (Full Title):
----------------------------------------------------------
Name of Firm:-------------------------------------------------------------------
(PLEASE PRINT)
Address of Firm:
----------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
-----------------------------------------------------
Dated: , 1997
--------------------------------------------------------------------
7
<PAGE> 8
NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL
AND PROXY MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW OR A FORM
W-8, AS APPLICABLE.
DELIVERY OF THIS LETTER OF TRANSMITTAL AND PROXY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER
THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN
THIS LETTER OF TRANSMITTAL AND PROXY IN THE APPROPRIATE SPACE THEREFOR PROVIDED
ABOVE AND, IF YOU ARE TENDERING ANY SHARES OR VOTING "FOR" THE PROPOSED
AMENDMENT, COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW OR A FORM W-8, AS
APPLICABLE. SEE INSTRUCTION 8 AND "IMPORTANT TAX INFORMATION" BELOW.
DO NOT SEND ANY CERTIFICATES TO NEES, THE POWER COMPANY, MERRILL LYNCH &
CO., OR GEORGESON & COMPANY, INC.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL AND PROXY SHOULD
BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL AND PROXY IS COMPLETED.
This Letter of Transmittal and Proxy is to be used if (a) certificates are
to be forwarded herewith, (b) delivery of Shares is to be made by book-entry
transfer pursuant to the procedures set forth under the heading Terms of the
Offer -- Procedure for Tendering Shares in the Offer to Purchase and Proxy and
Information Statement (as defined below) or (c) Shares are being voted in
connection with the Offer.
Preferred Shareholders who wish to tender Shares but cannot deliver their
Shares and all other documents required hereby to the Depositary on or prior to
the Expiration Date must tender their Shares pursuant to the guaranteed delivery
procedure set forth under the heading Terms of the Offer -- Procedure for
Tendering Shares -- Guaranteed Delivery Procedure in the Offer to Purchase and
Proxy and Information Statement. See Instruction 2. DELIVERY OF DOCUMENTS TO
NEES, THE POWER COMPANY OR A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE A
VALID DELIVERY.
PLEASE COMPLETE:
<TABLE>
<S> <C>
[ ] CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH.
A HOLDER TENDERING SHARES PURSUANT TO THIS LETTER OF TRANSMITTAL AND PROXY MUST
CHECK ONE OF THE FOLLOWING BOXES:
[ ] A duly completed, valid and unrevoked proxy indicating a vote "FOR" the Proposed
Amendment is included herein.
[ ] A vote "FOR" the Proposed Amendment will be cast at the Special Meeting.
</TABLE>
8
<PAGE> 9
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
<TABLE>
<S> <C>
[
] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE
FOLLOWING:
Name of tendering institution:
------------------------------------------------------------------------------
(PLEASE PRINT)
Check applicable box: [ ] DTC [ ] PDTC
Account No.
---------------------------------------------------------------------------
Transaction Code No.
-----------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY AND PROXY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of tendering Preferred Shareholder(s):
-------------------------------------
-----------------------------------------------------------------------------------------
(PLEASE PRINT)
Date of execution of Notice of Guaranteed Delivery and Proxy:
---------------------
Name of institution that guaranteed delivery:
-----------------------------------------
If delivery is by book-entry transfer:
Name of tendering institution:
---------------------------------------------------------
Account No. --------------------------------------------------------------------- at
[ ] DTC or [ ] PDTC
(CHECK ONE)
Transaction Code No.
-----------------------------------------------------------------
A HOLDER TENDERING SHARES PURSUANT TO THIS LETTER OF TRANSMITTAL AND PROXY MUST CHECK ONE
OF THE FOLLOWING BOXES:
[ ] A duly completed, valid and unrevoked proxy indicating a vote "FOR" the Proposed
Amendment was included with the Notice of Guaranteed Delivery and Proxy previously sent
to the Depositary.
[ ] A duly completed, valid and unrevoked proxy indicating a vote "FOR" the Proposed
Amendment is being delivered pursuant to a Notice of Guaranteed Delivery and Proxy
previously sent to the Depositary.
[ ] A vote "FOR" the Proposed Amendment will be cast at the Special Meeting.
</TABLE>
9
<PAGE> 10
NOTE: SIGNATURES MUST BE PROVIDED ABOVE
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The above signed hereby tenders to NEES the shares in the amount set forth
in the box above labeled "Description of Shares Tendered" pursuant to NEES'
offer to purchase any and all of the outstanding shares of the 4.56% Series of
Dividend Series Preferred Stock (the Shares) of the Power Company, shown above
as to which this Letter of Transmittal and Proxy is applicable at the purchase
price per Share shown above (the Purchase Price), net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
and Proxy and Information Statement, dated November 6, 1997 (the Booklet),
receipt of which is hereby acknowledged, and in this Letter of Transmittal and
Proxy (which together constitute the Offer). PREFERRED SHAREHOLDERS WHO WISH TO
TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED
AMENDMENT TO THE POWER COMPANY'S BY-LAWS AND ARTICLES OF ORGANIZATION (THE
PROVISIONS), AS SET FORTH IN THE BOOKLET (THE PROPOSED AMENDMENT). THE OFFER IS
CONDITIONED UPON THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE
SPECIAL MEETING (AS DEFINED IN THE BOOKLET). See Proposed Amendment and Proxy
Solicitation, Terms of the Offer -- Extension of Tender Period; Termination;
Amendments and Terms of the Offer -- Certain Conditions of the Offer in the
Booklet.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the above signed
hereby sells, assigns and transfers to, or upon the order of, NEES all right,
title and interest in and to all the Shares that are being tendered hereby and
hereby constitutes and appoints IBJ Schroder Bank & Trust Company (the
Depositary) the true and lawful agent and attorney-in-fact of the above signed
with respect to such Shares, with full power of substitution (such power of
attorney being an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares, or transfer ownership of such Shares on the
account books maintained by any of the Book-Entry Transfer Facilities, together,
in any such case, with all accompanying evidences of transfer and authenticity,
to or upon the order of NEES, (b) present such Shares for registration and
transfer on the books of the Power Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares, all in
accordance with the terms of the Offer.
The above signed hereby represents and warrants that the above signed has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and that, when and to the extent the same are accepted for
payment by NEES, NEES will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale or
transfer thereof, and the same will not be subject to any adverse claims. The
above signed will, upon request, execute and deliver any additional documents
deemed by the Depositary or NEES to be necessary or desirable to complete the
sale, assignment and transfer of the Shares tendered hereby.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the above signed, and
any obligations of the above signed hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the above signed. Except as
stated in the Offer, this tender is irrevocable.
The above signed understands that tenders of Shares pursuant to any one of
the procedures described under the heading Terms of the Offer -- Procedure for
Tendering Shares in the Booklet and in the instructions hereto will constitute
the above signed's acceptance of the terms and conditions of the Offer,
including the above signed's representation and warranty that (a) the above
signed has a net long position in the Shares being tendered within the meaning
of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended
(the Exchange Act), and (b) the tender of such Shares complies with Rule 14e-4.
NEES' acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the above signed and NEES upon the terms
and subject to the conditions of the Offer.
10
<PAGE> 11
The above signed recognizes that, under certain circumstances set forth in
the Booklet, NEES may terminate or amend the Offer or may not be required to
purchase any of the Shares tendered hereby. In either event, the above signed
understands that certificate(s) for any Shares not tendered or not purchased
will be returned to the above signed.
Unless otherwise indicated in the box below under the heading "Special
Payment Instructions," please issue the check for the Purchase Price of any
Shares purchased, and/or return any Shares not tendered or not purchased, in the
name(s) of the above signed (and, in the case of Shares tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility
designated above). Unless otherwise indicated in the box below under the heading
"Special Delivery Instructions," please mail the check for the Purchase Price of
any Shares purchased and/or any certificates for Shares not tendered or not
purchased (and accompanying documents, as appropriate) to the above signed at
the address shown below. In the event that both "Special Payment Instructions"
and "Special Delivery Instructions" are completed, please issue the check for
the Purchase Price of any Shares purchased and/or return any Shares not tendered
or not purchased in the name(s) of, and mail said check and/or any certificates
to, the person(s) so indicated. The above signed recognizes that NEES has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder(s) thereof if NEES does not accept
for payment any of the Shares so tendered.
11
<PAGE> 12
------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
SEE INSTRUCTIONS 4, 6, AND 7
To be completed ONLY if the check for the Purchase Price of Shares
purchased and/or certificates for Shares not tendered or not purchased are
to be issued in the name of someone other than the above signed.
Issue: [ ] Check [ ] Certificate(s) to:
Name
----------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------
------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER)*
* SEE SUBSTITUTE FORM W-9 BELOW.
Credit Shares delivered by book-entry transfer and not purchased to
the Book-Entry Transfer Facility Account set forth below:
[ ] DTC [ ] PDTC
Account No.:
------------------------------------------------------
======================================================
SPECIAL DELIVERY INSTRUCTIONS
SEE INSTRUCTIONS 4, 6, AND 7
To be completed ONLY if the check for the Purchase Price of Shares
purchased and/or certificates for Shares not tendered or not purchased are
to be mailed to someone other than the above signed or to the above signed
at an address other than that shown below the above signed's signature(s).
Mail: [ ] Check [ ] Certificate(s) to:
Name
----------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------
------------------------------------------------------
(INCLUDE ZIP CODE)
======================================================
PREFERRED SHAREHOLDERS WHO HAVE LOST CERTIFICATES, PLEASE CALL NEW ENGLAND
ELECTRIC SYSTEM'S SHAREHOLDER SERVICES DEPARTMENT, AT (800) 466-7215 FOR
ASSISTANCE.
12
<PAGE> 13
SOLICITED TENDERS
(SEE INSTRUCTION 10)
As provided in the Offer to Purchase and Proxy Statement and Information
Statement and Instruction 10 to the Letter of Transmittal and Proxy, NEES will
pay to any Soliciting Dealer, as defined in Instruction 10, a solicitation fee
of $1.50 per Share for any Shares tendered, accepted for payment and paid for
pursuant to the Offer and for each Share not tendered but voted in favor of the
Proposed Amendment (except that for transactions for beneficial owners equal to
or exceeding 2,500 Shares, NEES will pay a solicitation fee of $1.00 per Share).
Solicitation fees payable in transactions for beneficial owners of 2,500 or more
Shares shall be paid 80% to the Dealer Manager and 20% to the Soliciting Dealer
(which may be the Dealer Manager). However, a Soliciting Dealer will not be
entitled to a solicitation fee for Shares beneficially owned by such Soliciting
Dealer.
The undersigned represents that the Soliciting Dealer which solicited and
obtained this tender is:
Name of Firm:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Individual Broker or Financial Consultant:
- -----------------------------------------------------------
Telephone Number of Broker or Financial Consultant:
- -------------------------------------------------------
Identification Number (if known):
- ----------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
The following to be completed ONLY if customer's Shares held in nominee
name are tendered. (ATTACH ADDITIONAL LIST IF NECESSARY.)
<TABLE>
<S> <C>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------
==================================================================================================================
-
</TABLE>
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that (a) it has complied with the applicable requirements
of the Exchange Act and the applicable rules and regulations thereunder, in
connection with such solicitation; (b) it is entitled to such compensation for
such solicitation under the terms and conditions of the Offer (unless such
solicitation fee is directed to another Soliciting Dealer); (c) in soliciting
tenders of Shares, it has used no soliciting materials other than those
furnished by NEES; and (d) if it is a foreign broker or dealer not eligible for
membership in the National Association of Securities Dealers, Inc. (the NASD),
it has agreed to conform to the NASD's Rules of Fair Practice in making the
solicitations.
The payment of compensation to any Soliciting Dealer is dependent on such
Soliciting Dealer returning a Notice of Solicited Tenders to the Depositary.
(IF SHARES ARE BEING TENDERED AND/OR VOTED, PLEASE ALSO COMPLETE
SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE)
SIGN HERE:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF REGISTERED HOLDER(S))
13
<PAGE> 14
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal and Proxy must be guaranteed by a firm
that is a member of a registered national securities exchange or the NASD, or by
a commercial bank or trust company having an office or correspondent in the
United States which is a participant in an approved Signature Guarantee
Medallion Program (an Eligible Institution). Signatures on this Letter of
Transmittal and Proxy need not be guaranteed (a) if this Letter of Transmittal
and Proxy is signed by the registered holder(s) of the Shares (which term, for
purposes of this document, shall include any participant in one of the
Book-Entry Transfer Facilities whose name appears on a security position listing
as the owner of Shares) tendered herewith and such holder(s) has not completed
the box above under the heading "Special Payment Instructions" or the box above
under the heading "Special Delivery Instructions" on this Letter of Transmittal
and Proxy, (b) if such Shares are tendered for the account of an Eligible
Institution or (c) if this Letter of Transmittal and Proxy is being used solely
for the purpose of voting Shares which are not being tendered pursuant to the
Offer. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND PROXY AND SHARES. This Letter of
Transmittal and Proxy is to be used if (a) certificates are to be forwarded
herewith, (b) delivery of Shares is to be made by book-entry transfer pursuant
to the procedures set forth under the heading Terms of the Offer -- Procedure
for Tendering Shares in the Booklet or (c) Shares are being voted in connection
with the Offer. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facilities of Shares delivered electronically, as well as a
properly completed and duly executed Letter of Transmittal and Proxy (or
facsimile thereof) and any other documents required by this Letter of
Transmittal and Proxy, must be received by the Depositary at one of its
addresses set forth on the front page of this Letter of Transmittal and Proxy on
or prior to the Expiration Date with respect to all Shares. Preferred
Shareholders who wish to tender their Shares yet who cannot deliver their Shares
and all other required documents to the Depositary on or prior to the Expiration
Date must tender their Shares pursuant to the guaranteed delivery procedure set
forth under the heading Terms of the Offer -- Procedure for Tendering Shares in
the Booklet. Pursuant to such procedure: (i) such tender must be made by or
through an Eligible Institution, (ii) a properly completed and duly executed
Notice of Guaranteed Delivery and Proxy in the form provided by NEES (with any
required signature guarantees) must be received by the Depositary on or prior to
the applicable Expiration Date and (iii) the certificates for all physically
delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities of Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal and Proxy (or facsimile thereof) and any other documents
required by this Letter of Transmittal and Proxy must be received by the
Depositary within three New York Stock Exchange (NYSE) trading days after the
date of execution of such Notice of Guaranteed Delivery and Proxy, all as
provided under the heading Terms of the Offer -- Procedure for Tendering Shares
in the Booklet. A NYSE trading day is any day on which the NYSE is open for
business.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR
SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted. See
Terms of the Offer -- Number of Shares; Purchase Price; Expiration Date;
Dividends in the Booklet. By executing this Letter of Transmittal and Proxy (or
facsimile thereof), the tendering Preferred Shareholder waives any right to
receive any notice of the acceptance for payment of the Shares.
3. VOTING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO
ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES
PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO THE POWER
COMPANY'S PROVISIONS, AS SET FORTH IN THE BOOKLET. THE OFFER IS CONDITIONED UPON
THE PROPOSED AMENDMENT BEING APPROVED AND
14
<PAGE> 15
ADOPTED AT THE SPECIAL MEETING. In addition, Preferred Shareholders have the
right to vote on the Proposed Amendment regardless of whether they tender their
Shares by casting their vote and duly executing the Proxy included in this
Letter of Transmittal and Proxy or by voting in person at the Special Meeting.
By executing a Notice of Guaranteed Delivery and Proxy, a Preferred Shareholder
is deemed to have tendered the Shares described in such Notice of Guaranteed
Delivery and Proxy and to have voted such Shares in accordance with the proxy
contained therein. If no vote is indicated on an otherwise properly executed
proxy contained within this Letter of Transmittal and Proxy (or within a Notice
of Guaranteed Delivery and Proxy), then all Shares in respect of such proxy will
be voted in favor of the Proposed Amendment. See Proposed Amendment and Proxy
Solicitation in the Booklet. The Offer is being sent to all persons in whose
names Shares are registered on the books of the Power Company on November 6,
1997 as well as to all persons in whose name Shares are registered on November
12, 1997, which is the Record Date. Preferred Shareholders who purchase or whose
purchase is registered after the Record Date and who wish to tender in the Offer
must arrange with their seller to receive a proxy from the holder of record on
the Record Date of such Shares. Any holder of Shares held of record on the
Record Date in the name of another holder must establish to the satisfaction of
the Power Company such holder's entitlement to exercise or transfer such Proxy.
This will ordinarily require an assignment by such record holder in blank, or if
not in blank, to and from each successive transferee, including the holder, with
each signature guaranteed by an Eligible Institution. See Instruction 5. In
order to facilitate receipt of proxies, Shares shall, during the period which
commences November 10, 1997 and which will end at the close of business on the
Expiration Date, trade in the over-the-counter market with a proxy providing the
transferee with the right to vote such acquired shares in the Proxy
Solicitation. No record date is fixed for determining which persons are
permitted to tender Shares. However, only the holders of record, or holders who
acquire an assignment of proxy from such holders, are permitted to vote for the
Proposed Amendment and thereby validly tender Shares pursuant to the Offer. Any
person who is the beneficial owner but not the record holder of Shares must
arrange for the record transfer of such Shares prior to tendering or direct the
record holder to tender on behalf of the beneficial holder.
4. PARTIAL TENDERS. NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-
ENTRY TRANSFER. If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box above under the heading "Description of
Shares Tendered." In such case, a new certificate for the remainder of the
Shares represented by the old certificate will be sent to the person(s) signing
this Letter of Transmittal and Proxy, unless otherwise provided in the box above
under the heading "Special Payment Instructions" or "Special Delivery
Instructions," as promptly as practicable following the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL AND PROXY AND NOTICE OF GUARANTEED
DELIVERY AND PROXY; STOCK POWERS AND ENDORSEMENTS. If either this Letter of
Transmittal and Proxy or the Notice of Guaranteed Delivery and Proxy (together,
the Tender and Proxy Documents) is signed by the registered holder(s) of the
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificates without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered or voted under either Tender and Proxy
Document is held of record by two or more persons, all such persons must sign
such Tender and Proxy Document. If any of the Shares tendered or voted under
either Tender and Proxy Document are registered in different names or different
certificates, it will be necessary to complete, sign and submit as many separate
Tender and Proxy Documents as there are different registrations of certificates.
If either Tender and Proxy Document is signed by the registered holder(s)
of the Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the Purchase Price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution. See Instruction
1.
15
<PAGE> 16
If this Letter of Transmittal and Proxy is signed by a person other than
the registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If either Tender and Proxy Document or any certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to NEES of the authority of such person so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, NEES
will pay or cause to be paid any stock transfer taxes with respect to the sale
and transfer of any Shares to it or its order pursuant to the Offer. If,
however, payment of the Purchase Price is to be made to, or Shares not tendered
or not purchased are to be registered in the name of, any person other than the
registered holder(s), or if tendered Shares are registered in the name of any
person other than the person(s) signing this Letter of Transmittal and Proxy,
the amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer to
such person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of such taxes, or exemption therefrom, is submitted.
Each Preferred Shareholder will be responsible for paying any income or gross
receipts taxes imposed by any jurisdiction by reason of the Special Cash Payment
(as defined in the Booklet) and/or the sale of the Shares in the Offer. See
Terms of the Offer -- Acceptance of Shares for Payment and Payment of Purchase
Price and Dividends and Certain U.S. Federal Income Tax Considerations in the
Booklet. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY TO
AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED
HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the
Purchase Price of any Shares purchased is to be issued in the name of, any
Shares not tendered or not purchased are to be returned to, and/or the check for
the Special Cash Payment is to be issued in the name of, a person other than the
person(s) signing this Letter of Transmittal and Proxy or if the check and/or
any certificate for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal and Proxy or
to an address other than that shown in the box above under the heading
"Description of Shares Tendered," then the "Special Payment Instructions" and/or
"Special Delivery Instructions" on this Letter of Transmittal and Proxy should
be completed. Preferred Shareholders tendering Shares by book-entry transfer
will have any Shares not accepted for payment returned by crediting the account
maintained by such Preferred Shareholder at the Book-Entry Transfer Facility
from which such transfer was made.
8. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering and/or voting Preferred
Shareholder is required to provide the Depositary with either a correct Taxpayer
Identification Number (TIN) on Substitute Form W-9, which is provided under
"Important Tax Information" below, or a properly completed Form W-8 unless
exempt therefrom. Failure to provide the information on either Substitute Form
W-9 or Form W-8 may subject the tendering and/or voting Preferred Shareholder to
31% Federal income tax backup withholding on the payment of the Purchase Price
for the Shares or on the Special Cash Payment. The tendering and/or voting
Preferred Shareholder may write "Applied For" in Part I of Substitute Form W-9
and sign the "Certificate of Awaiting Taxpayer Identification Number" of
Substitute Form W-9 if the Preferred Shareholder has not been issued a TIN and
has applied for a number or intends to apply for a number in the near future. If
"Applied For" is written in Part I of Substitute Form W-9 and the "Certificate
of Awaiting Taxpayer Identification Number" of Substitute Form W-9 is signed and
the Depositary is not provided with a TIN by the time of payment, the Depositary
will withhold 31% on all payments of the Purchase Price for the Shares or the
Special Cash Payment thereafter until a TIN is provided to the Depositary.
16
<PAGE> 17
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent or the Dealer Manager at
their respective telephone numbers and addresses listed below. Requests for
additional copies of the Booklet, this Letter of Transmittal and Proxy, or other
tender offer materials may be directed to the Information Agent or the Dealer
Manager and such copies will be furnished promptly at NEES' expense. Preferred
Shareholders may also contact their local broker, dealer, commercial bank or
trust company for assistance concerning the Offer.
10. SOLICITED TENDERS. Upon the terms and subject to the conditions of the
Offer and pursuant to this Instruction, NEES will pay to designated brokers and
dealers a solicitation fee of $1.50 per Share for each Share of Dividend Series
Preferred Stock tendered, accepted for payment, and paid for pursuant to the
Offer and for each Share of Dividend Series Preferred Stock not tendered but
voted in favor of the Proposed Amendment (except that for transactions for
beneficial owners equal to or exceeding 2,500 Shares, NEES will pay a
solicitation fee of $1.00 per Share, of which eighty percent (80%) shall be paid
to the Dealer Manager and twenty percent (20%) to the Soliciting Dealer (which
may be the Dealer Manager)). With respect to fees payable pursuant to this
paragraph involving transactions for beneficial owners whose ownership is less
than 2,500 Shares, any fees payable hereunder shall be paid in full to the
Dealer Manager unless a Soliciting Dealer is designated (as described below), in
which case such fee shall be payable in full to such designated Soliciting
Dealer (which designated Soliciting Dealer may be the Dealer Manager). This
Letter of Transmittal and Proxy must include the name of an entity which
obtained the tender or proxy and which is either (a) a broker or dealer in
securities, including the Dealer Manager in its capacity as a broker or dealer,
which is a member of a national securities exchange or of the NASD, (b) a
foreign broker or dealer not eligible for membership in the NASD which agrees to
conform to the NASD's Rules of Fair Practice in soliciting tenders outside the
United States to the same extent as though it were an NASD member, or (c) a bank
or trust company (each of which is referred to herein as a Soliciting Dealer).
No solicitation fee shall be payable to a Soliciting Dealer with respect to the
tender of Shares or delivery of a proxy unless the Letter of Transmittal and
Proxy accompanying such tender or delivery designates such Soliciting Dealer. No
solicitation fee shall be payable to a Soliciting Dealer in respect of Shares
registered in the name of such Soliciting Dealer unless such Shares are held by
such Soliciting Dealer as nominee and such Shares are being tendered or
delivered for the benefit of one or more beneficial owners identified on the
Letter of Transmittal and Proxy or on the Notice of Solicited Tenders. No
solicitation fee shall be payable to a Soliciting Dealer if such Soliciting
Dealer is required for any reason to transfer the amount of such fee to a
depositing holder (other than itself). No solicitation fee shall be paid to a
Soliciting Dealer with respect to Shares tendered or delivered for such
Soliciting Dealer's own account. A Soliciting Dealer shall not be entitled to a
solicitation fee for Shares beneficially owned by such Soliciting Dealer. No
broker, dealer, bank, trust company, or other nominee shall be deemed to be the
agent of NEES, the Power Company, the Depositary, the Information Agent, or the
Dealer Manager for purposes of the Offer.
Soliciting Dealers will include any of the organizations described in
clauses (a), (b), and (c) above even when the activities of such organizations
in connection with the Offer consist solely of forwarding to clients materials
relating to the Offer, including this Letter of Transmittal and Proxy, and
tendering Shares or delivering as directed by beneficial owners thereof. No
Soliciting Dealer is authorized to make any recommendation to holders of Shares
as to whether to tender or refrain from tendering in the Offer. No assumption is
made, in making payment to any Soliciting Dealer, that its activities in
connection with the Offer included any activities other than those described
above, and for all purposes noted in all materials relating to the Offer, the
term "solicit" shall be deemed to mean no more than processing Shares tendered
or forwarding to customers materials regarding the Offer.
17
<PAGE> 18
11. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance of any tender
of Shares will be determined by NEES, in its sole discretion, and its
determination shall be final and binding. NEES reserves the absolute right to
reject any and all tenders of Shares that it determines are not in proper form
or the acceptance for payment of or payment for Shares that may, in the opinion
of NEES' counsel, be unlawful. NEES also reserves the absolute right to waive
any of the conditions to the Offer or any defect or irregularity in any tender
of Shares and NEES' interpretation of the terms and conditions of the Offer
(including these instructions) shall be final and binding. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as NEES shall determine. None of NEES, the Dealer Manager, the Depositary,
the Information Agent or any other person shall be under any duty to give notice
of any defect or irregularity in tenders nor shall any of them incur any
liability for failure to give any such notice. Tenders will not be deemed to
have been made until all defects and irregularities have been cured or waived.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate
representing Shares has been lost, destroyed or stolen, the Preferred
Shareholder should promptly call New England Electric System's Shareholder
Services Department at (800) 466-7215 for assistance. The Preferred Shareholder
will then be instructed as to the procedures that must be taken in order to
replace the certificate or tender such Shares. The tender of Shares pursuant to
this Letter of Transmittal and Proxy will not be valid unless on or prior to the
Expiration Date: (a) such procedures have been completed or (b) a Notice of
Guaranteed Delivery and Proxy has been delivered to the Depositary. See
Instruction 2.
IMPORTANT: THIS LETTER OF TRANSMITTAL AND PROXY (OR A FACSIMILE COPY HEREOF),
DULY EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR CONFIRMATION OF A
BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY AND PROXY MUST
BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
18
<PAGE> 19
IMPORTANT TAX INFORMATION
Under Federal income tax law, a Preferred Shareholder whose tendered Shares
are accepted for payment, or who will receive a Special Cash Payment as a result
of voting in favor of the Proposed Amendment, is required to provide the
Depositary (as payer) with either such Preferred Shareholder's correct TIN on
Substitute Form W-9 below or a properly completed Form W-8. If such Preferred
Shareholder is an individual, the TIN is such Preferred Shareholder's social
security number. For businesses and other entities, the number is the Federal
employer identification number. If the Depositary is not provided with the
correct TIN or properly completed Form W-8, the Preferred Shareholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
(a) payments that are made to such Preferred Shareholder with respect to Shares
purchased pursuant to the Offer or (b) Special Cash Payments made to a Preferred
Shareholder with respect to Shares voted pursuant to the proxy solicitation may
be subject to backup withholding. The Form W-8 can be obtained from the
Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" below for additional instructions.
If Federal income tax backup withholding applies, the Depositary is
required to withhold 31% of any payments made to the Preferred Shareholder.
Backup withholding is not an additional tax. Rather, the Federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of the tax withheld. If withholding results in an overpayment of taxes, a refund
may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on payments that are made to a Preferred
Shareholder with respect to Shares purchased pursuant to the Offer or on Special
Cash Payments, the Preferred Shareholder is required to notify the Depositary of
his or her correct TIN by completing the Substitute Form W-9 below certifying
that the TIN provided on Substitute Form W-9 is correct and that (a) the
Preferred Shareholder has not been notified by the Internal Revenue Service that
he or she is subject to Federal income tax backup withholding as a result of
failure to report all interest or dividends or (b) the Internal Revenue Service
has notified the Preferred Shareholder that he or she is no longer subject to
Federal income tax backup withholding. Foreign Preferred Shareholders must
submit a properly completed Form W-8 in order to avoid the applicable backup
withholding; provided, however, that backup withholding will not apply to
foreign Preferred Shareholders subject to 30% (or lower treaty rate) withholding
on gross payments received pursuant to the Offer or on the Special Cash
Payments. Foreign Preferred Shareholders that submit a properly completed Form
W-8 may nevertheless be subject to withholding under other provisions of the
Code relating to payments received by them.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Preferred Shareholder is required to give the Depositary the social
security number or employer identification number of the registered owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" below for additional guidance on
which number to report.
19
<PAGE> 20
SEE "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9" FOR ADDITIONAL INSTRUCTIONS.
SUBSTITUTE
FORM W-9
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY, AS DEPOSITARY
- ----------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND ----------------------
DATING BELOW.
---------------------------------------- Social Security Number
PAYER'S REQUEST FOR or Employer
TAXPAYER IDENTIFICATION NAME (Please Print) Identification
NUMBER (TIN) Number
(If Awaiting TIN write
---------------------------------------- "Applied for")
------------------------
DEPARTMENT OF THE TREASURY ADDRESS
INTERNAL REVENUE SERVICE PART II -- For Payees
NOT subject to backup
---------------------------------------- withholding, see the
CITY STATE ZIP CODE "Guidelines for Cer-
tification of Taxpayer
Identification Number
on Substitute Form
W-9" and complete as
instructed therein
---------------------------------------------------------------------------------------------
</TABLE>
PART III -- CERTIFICATION: -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
<TABLE>
<S> <C> <C>
SIGNATURE DATE , 1997
----------------------------------- ------------------------------
</TABLE>
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you are no longer subject
to backup withholding do not cross out item (2). Also see instructions in the
enclosed Guidelines.
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WRITE "APPLIED FOR"
IN PART I OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver such an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
<TABLE>
<S> <C>
------------------------------------------- -------------------------------------------,
1997
SIGNATURE DATE
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE "GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9"
FOR ADDITIONAL DETAILS.
20
<PAGE> 21
Any questions or requests for assistance or additional copies of Booklets,
this Letter of Transmittal and Proxy, the Notice of Guaranteed Delivery and
Proxy or other materials may be directed to the Information Agent at the address
and telephone number set forth below.
The Information Agent for the Offer is:
(LOGO)
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
(800) 223-2064 (CALL TOLL-FREE)
BANKS AND BROKERS CALL COLLECT:
(212) 440-9800
Preferred Shareholders may contact the Dealer Manager at its address and
telephone number set forth below with any questions regarding the terms of the
Offer and solicitation of proxies. In addition, Preferred Shareholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer and solicitation of proxies.
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
WORLD FINANCIAL CENTER
250 VESEY STREET
NEW YORK, NEW YORK 10281
(888) ML4-TNDR (TOLL-FREE)
(888) 654-8637 (TOLL-FREE)
<PAGE> 22
LETTER OF TRANSMITTAL
RELATING TO
SHARES OF 6% CUMULATIVE PREFERRED STOCK
OF
LOGO NEW ENGLAND POWER COMPANY
TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH
BY
NEW ENGLAND ELECTRIC SYSTEM,
DATED NOVEMBER 6, 1997,
FOR PURCHASE AT A PURCHASE PRICE OF
$116.50 PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME,
ON FRIDAY, DECEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED (THE EXPIRATION
DATE).
To: IBJ Schroder Bank & Trust Company (the Depositary)
By First-Class Mail:
IBJ Schroder Bank & Trust Company
P.O. Box 8-1
Bowling Green Station
New York, New York 10274-0084
Attn: Reorganization Department
By Facsimile:
(212) 858-2611
By Hand or Overnight Delivery:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attn: Reorganization Department
Securities Processing Window SC-1
To Conform:
(212) 858-2103
ATTENTION
THIS LETTER OF TRANSMITTAL IS TO BE USED BY PREFERRED SHAREHOLDERS WHO ARE
TENDERING SHARES PURSUANT TO THE OFFER.
ANY PREFERRED SHAREHOLDER WHO HAS ANY QUESTIONS AS TO HOW TO COMPLETE THIS
LETTER OF TRANSMITTAL SHOULD CONTACT THE INFORMATION AGENT AT (800) 223-2064
(TOLL FREE AND FOR BANKS AND BROKERS (212) 440-9800 (CALL COLLECT.
<PAGE> 23
All capitalized terms used herein and not defined herein have the meanings
ascribed to them in the Offer to Purchase and Proxy Statement and Information
Statement.
NEW ENGLAND ELECTRIC SYSTEM, A MASSACHUSETTS VOLUNTARY ASSOCIATION (NEES),
WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES TENDERED IF THE
PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE SPECIAL MEETING. 6%
CUMULATIVE PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE ON THE PROPOSED
AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES BY VOTING IN PERSON AT
THE SPECIAL MEETING.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL
MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW.
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.
2
<PAGE> 24
PLEASE COMPLETE IF APPLICABLE:
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED(1)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE USE PREADDRESSED LABEL OR FILL IN, IF
BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE SHARE CERTIFICATE(S) AND SHARE(S) TENDERED/VOTED
CERTIFICATE(S) AND SHARE(S) TENDERED) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)(1)
------------------------------------------------------------------------------------------------------------------
NUMBER OF
TOTAL NUMBER SHARES NOT
OF SHARES TENDERED BUT
REPRESENTED NUMBER AS TO WHICH
SHARE CERTIFICATE BY SHARE OF SHARES PROXIES
NUMBER(S)(2) CERTIFICATE(S)(2) TENDERED(3) GIVEN ONLY
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Total Shares:
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) If tendering or voting Share(s), please fill in table exactly as
information appears on the Certificate(s).
(2) Need not be completed by Preferred Shareholders tendering by book-entry
transfer.
(3) Unless otherwise indicated, it will be assumed that all Shares represented
by any Certificate(s) delivered to the Depositary are being tendered. See
Instruction 4.
- --------------------------------------------------------------------------------
3
<PAGE> 25
PLEASE COMPLETE IF APPLICABLE:
SIGNATURE(S) OF REGISTERED HOLDER(S)*
- -------------------------------------------------------------------------------
(SIGNATURE)
- -------------------------------------------------------------------------------
(SIGNATURE)
Dated:
- -------------------------------------------------------------------------------,
1997
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.:
----------------------------------------------------------------
* Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in
a fiduciary or representative capacity, please set forth full title and see
Instruction 5.
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address of Firm:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
-------------------------------------------------------------------------
Dated:
- -------------------------------------------------------------------------------,
1997
4
<PAGE> 26
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE
ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER
OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED ABOVE AND COMPLETE THE
SUBSTITUTE FORM W-9 SET FORTH BELOW OR A FORM W-8, AS APPLICABLE. SEE
INSTRUCTION 8 AND "IMPORTANT TAX INFORMATION" BELOW.
DO NOT SEND ANY CERTIFICATES TO NEES, NEW ENGLAND POWER COMPANY, A
MASSACHUSETTS CORPORATION AND DIRECT SUBSIDIARY OF NEES (THE POWER COMPANY),
MERRILL LYNCH & CO., OR GEORGESON & COMPANY, INC.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used if (i) certificates are to be
forwarded herewith or (ii) delivery of Shares (as defined below) is to be made
by book-entry transfer pursuant to the procedures set forth under the heading
Terms of the Offer -- Procedure for Tendering Shares in the Offer to Purchase
and Proxy and Information Statement (as defined below).
Preferred Shareholders who wish to tender Shares but cannot deliver their
Shares and all other documents required hereby to the Depositary on or prior to
the Expiration Date must tender their Shares pursuant to the guaranteed delivery
procedure set forth under the heading Terms of the Offer -- Procedure for
Tendering Shares -- Guaranteed Delivery Procedure in the Offer to Purchase and
Proxy and Information Statement. See Instruction 2. DELIVERY OF DOCUMENTS TO
NEES, THE POWER COMPANY OR A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE A
VALID DELIVERY.
5
<PAGE> 27
PLEASE COMPLETE:
[ ] CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH.
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES
AND COMPLETE THE FOLLOWING:
Name of tendering institution:
---------------------------------------------------------------------------
(PLEASE PRINT)
Check applicable box: [ ] DTC [ ] PDTC
Account No.
----------------------------------------------------------------
Transaction Code No.
-------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of tendering Preferred Shareholder(s):
-----------------------------
---------------------------------------------------------------------------
(PLEASE PRINT)
Date of execution of Notice of Guaranteed Delivery:
------------------------
Name of institution that guaranteed delivery:
-- ----------------------------
If delivery is by book-entry transfer:
Name of tendering institution:
---------------------------------------------
Account No. at [ ] DTC or [ ] PDTC
----------------------------------------- (CHECK ONE)
Transaction Code No.
-------------------------------------------------------
6
<PAGE> 28
NOTE: SIGNATURES MUST BE PROVIDED ABOVE
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The above signed hereby tenders to NEES the shares in the amount set forth
in the box above labeled "Description of Shares Tendered" pursuant to NEES'
offer to purchase any and all of the outstanding shares of the 6% Cumulative
Preferred Stock (the Shares) of the Power Company shown above to which this
Letter of Transmittal is applicable at the purchase price per Share shown above
(the Purchase Price), net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase and Proxy and Information
Statement, dated November 6, 1997 (the Booklet), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
Offer). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING APPROVED AND
ADOPTED AT THE SPECIAL MEETING (AS DEFINED IN THE BOOKLET). See Proposed
Amendment and Proxy Solicitation, Terms of the Offer -- Extension of Tender
Period; Termination; Amendments and Terms of the Offer -- Certain Conditions of
the Offer in the Booklet.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the above signed
hereby sells, assigns and transfers to, or upon the order of, NEES all right,
title and interest in and to all the Shares that are being tendered hereby and
hereby constitutes and appoints IBJ Schroder Bank & Trust Company (the
Depositary) the true and lawful agent and attorney-in-fact of the above signed
with respect to such Shares, with full power of substitution (such power of
attorney being an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares, or transfer ownership of such Shares on the
account books maintained by any of the Book-Entry Transfer Facilities, together,
in any such case, with all accompanying evidences of transfer and authenticity,
to or upon the order of NEES, (b) present such Shares for registration and
transfer on the books of the Power Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares, all in
accordance with the terms of the Offer.
The above signed hereby represents and warrants that the above signed has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and that, when and to the extent the same are accepted for
payment by NEES, NEES will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale or
transfer thereof, and the same will not be subject to any adverse claims. The
above signed will, upon request, execute and deliver any additional documents
deemed by the Depositary or NEES to be necessary or desirable to complete the
sale, assignment and transfer of the Shares tendered hereby.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the above signed, and
any obligations of the above signed hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the above signed. Except as
stated in the Offer, this tender is irrevocable.
The above signed understands that tenders of Shares pursuant to any one of
the procedures described under the heading Terms of the Offer -- Procedure for
Tendering Shares in the Booklet and in the instructions hereto will constitute
the above signed's acceptance of the terms and conditions of the Offer,
including the above signed's representation and warranty that (a) the above
signed has a net long position in the Shares being tendered within the meaning
of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended
(the Exchange Act), and (b) the tender of such Shares complies with Rule 14e-4.
NEES' acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the above signed and NEES upon the terms
and subject to the conditions of the Offer.
The above signed recognizes that, under certain circumstances set forth in
the Booklet, NEES may terminate or amend the Offer or may not be required to
purchase any of the Shares tendered hereby. In either event, the above signed
understands that certificate(s) for any Shares not tendered or not purchased
will be returned to the above signed.
7
<PAGE> 29
Unless otherwise indicated in the box below under the heading "Special
Payment Instructions," please issue the check for the Purchase Price of any
Shares purchased, and/or return any Shares not tendered or not purchased, in the
name(s) of the above signed (and, in the case of Shares tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility
designated above). Unless otherwise indicated in the box below under the heading
"Special Delivery Instructions," please mail the check for the Purchase Price of
any Shares purchased and/or any certificates for Shares not tendered or not
purchased (and accompanying documents, as appropriate) to the above signed at
the address shown below. In the event that both "Special Payment Instructions"
and "Special Delivery Instructions" are completed, please issue the check for
the Purchase Price of any Shares purchased and/or return any Shares not tendered
or not purchased in the name(s) of, and mail said check and/or any certificates
to, the person(s) so indicated. The above signed recognizes that NEES has no
obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder(s) thereof if NEES does not accept
for payment any of the Shares so tendered.
8
<PAGE> 30
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
SEE INSTRUCTIONS 4, 6, AND 7
To be completed ONLY if the check for the Purchase Price of Shares
purchased and/or certificates for Shares not tendered or not purchased are
to be issued in the name of someone other than the above signed.
Issue: [ ] Check [ ] Certificate(s) to:
Name
------------------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------------
----------------------------------------------------------------
(INCLUDE ZIP CODE)
----------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER)*
* SEE SUBSTITUTE FORM W-9 BELOW.
Credit Shares delivered by book-entry transfer and not purchased to
the Book-Entry Transfer Facility Account set forth below:
[ ] DTC [ ] PDTC
Account No.:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
SEE INSTRUCTIONS 4, 6, AND 7
To be completed ONLY if the check for the Purchase Price of Shares
purchased and/or certificates for Shares not tendered or not purchased are
to be mailed to someone other than the above signed or to the above signed
at an address other than that shown below the above signed's signature(s).
Mail: [ ] Check [ ] Certificate(s) to:
Name
------------------------------------------------------------
(PLEASE PRINT)
Address
---------------------------------------------------------
----------------------------------------------------------------
(INCLUDE ZIP CODE)
----------------------------------------------------------------
PREFERRED SHAREHOLDERS WHO HAVE LOST CERTIFICATES, PLEASE CALL NEW ENGLAND
ELECTRIC SYSTEM'S SHAREHOLDER SERVICES DEPARTMENT, AT (800) 466-7215 FOR
ASSISTANCE.
- --------------------------------------------------------------------------------
9
<PAGE> 31
SOLICITED TENDERS
(SEE INSTRUCTION 10)
As provided in the Offer to Purchase and Proxy and Information Statement
and Instruction 10 to the Letter of Transmittal, NEES will pay to any Soliciting
Dealer, as defined in Instruction 10, a solicitation fee of $1.50 per Share for
each Share tendered, accepted for payment and paid for pursuant to the Offer
(except that for transactions for beneficial owners equal to or exceeding 2,500
Shares, NEES will pay a solicitation fee of $1.00 per Share). Solicitation fees
payable in transactions for beneficial owners of 2,500 or more Shares shall be
paid 80% to the Dealer Manager and 20% to the Soliciting Dealers (which may be
the Dealer Manager). However, Soliciting Dealers will not be entitled to a
solicitation fee for Shares beneficially owned by such Soliciting Dealer.
The undersigned represents that the Soliciting Dealer which solicited and
obtained this tender is:
Name of Firm:
------------------------------------------------------------------
(PLEASE PRINT)
Name of Individual Broker or Financial Consultant:
------------------------------
Telephone Number of Broker or Financial Consultant:
-----------------------------
Identification Number (if known):
-----------------------------------------------
Address:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
The following to be completed ONLY if customer's Shares held in nominee
name are tendered. (ATTACH ADDITIONAL LIST IF NECESSARY.)
<TABLE>
<S> <C>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that (a) it has complied with the applicable requirements
of the Exchange Act and the applicable rules and regulations thereunder, in
connection with such solicitation; (b) it is entitled to such compensation for
such solicitation under the terms and conditions of the Offer (unless such
solicitation fee is directed to another Soliciting Dealer); (c) in soliciting
tenders of Shares, it has used no soliciting materials other than those
furnished by NEES; and (d) if it is a foreign broker or dealer not eligible for
membership in the National Association of Securities Dealers, Inc. (the NASD),
it has agreed to conform to the NASD's Rules of Fair Practice in making the
solicitations.
The payment of compensation to any Soliciting Dealer is dependent on such
Soliciting Dealer returning a Notice of Solicited Tenders to the Depositary.
(IF SHARES ARE BEING TENDERED, PLEASE ALSO COMPLETE
SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE)
SIGN HERE:
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF REGISTERED HOLDER(S))
10
<PAGE> 32
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm that is a
member of a registered national securities exchange or the NASD, or by a
commercial bank or trust company having an office or correspondent in the United
States which is a participant in an approved Signature Guarantee Medallion
Program (an Eligible Institution). Signatures on this Letter of Transmittal need
not be guaranteed (a) if this Letter of Transmittal is signed by the registered
holder(s) of the Shares (which term, for purposes of this document, shall
include any participant in one of the Book-Entry Transfer Facilities whose name
appears on a security position listing as the owner of Shares) tendered herewith
and such holder(s) has not completed the box above under the heading "Special
Payment Instructions" or the box above under the heading "Special Delivery
Instructions" on this Letter of Transmittal or (b) if such Shares are tendered
for the account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES. This Letter of
Transmittal is to be used if (a) certificates are to be forwarded herewith or
(b) delivery of Shares is to be made by book-entry transfer pursuant to the
procedures set forth under the heading Terms of the Offer -- Procedure for
Tendering Shares in the Booklet. Certificates for all physically delivered
Shares, or a confirmation of a book-entry transfer into the Depositary's account
at the Book-Entry Transfer Facilities of Shares delivered electronically, as
well as a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the front page of this Letter of Transmittal on or prior to the
Expiration Date with respect to all Shares. Preferred Shareholders who wish to
tender their Shares yet who cannot deliver their Shares and all other required
documents to the Depositary on or prior to the Expiration Date must tender their
Shares pursuant to the guaranteed delivery procedure set forth under the heading
Terms of the Offer -- Procedure for Tendering Shares in the Booklet. Pursuant to
such procedure: (i) such tender must be made by or through an Eligible
Institution, (ii) a properly completed and duly executed Notice of Guaranteed
Delivery in the form provided by NEES (with any required signature guarantees)
must be received by the Depositary on or prior to the applicable Expiration Date
and (iii) the certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at one of
the Book-Entry Transfer Facilities of Shares delivered electronically, as well
as a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by this Letter of Transmittal must be
received by the Depositary by 5:00 p.m. (New York City time) within three New
York Stock Exchange (NYSE) trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided under the heading Terms of the
Offer -- Procedure for Tendering Shares in the Booklet. A NYSE trading day is
any day on which the NYSE is open for business.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR
SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted. See
Terms of the Offer -- Number of Shares; Purchase Price; Expiration Date;
Dividends in the Booklet. By executing this Letter of Transmittal (or facsimile
thereof), the tendering Preferred Shareholder waives any right to receive any
notice of the acceptance for payment of the Shares.
3. VOTING. THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING
APPROVED AND ADOPTED AT THE SPECIAL MEETING. In addition, Preferred Shareholders
have the right to vote on the Proposed Amendment regardless of whether they
tender their Shares by voting in person at the Special Meeting. By executing a
Notice of Guaranteed Delivery, a Preferred Shareholder is deemed to have
tendered the Shares described in such Notice of Guaranteed Delivery. The Offer
is being sent to all persons in whose names Shares are registered on the books
of the Power Company on November 6, 1997 as well as to all persons in whose name
Shares are registered on November 12, 1997, which is the Record
11
<PAGE> 33
Date. No record date is fixed for determining which persons are permitted to
tender Shares. However, only the holders of record, or holders who acquire an
assignment of proxy from such holders, are permitted to vote on the Proposed
Amendment. Any person who is the beneficial owner but not the record holder of
Shares must arrange for the record transfer of such Shares prior to tendering or
direct the record holder to tender on behalf of the beneficial holder.
4. PARTIAL TENDERS. NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-
ENTRY TRANSFER. If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box above under the heading "Description of
Shares Tendered." In such case, a new certificate for the remainder of the
Shares represented by the old certificate will be sent to the person(s) signing
this Letter of Transmittal, unless otherwise provided in the box above under the
heading "Special Payment Instructions" or "Special Delivery Instructions," as
promptly as practicable following the expiration or termination of the Offer.
All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL AND NOTICE OF GUARANTEED DELIVERY;
STOCK POWERS AND ENDORSEMENTS. If either this Letter of Transmittal or the
Notice of Guaranteed Delivery (together, the Tender Documents) is signed by the
registered holder(s) of the Shares tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificates without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered under either Tender Document is held of
record by two or more persons, all such persons must sign such Tender Document.
If any of the Shares tendered or voted under either Tender Document are
registered in different names or different certificates, it will be necessary to
complete, sign and submit as many separate Tender Documents as there are
different registrations of certificates.
If either Tender Document is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the Purchase Price is to be made to, or Shares
not tendered or not purchased are to be registered in the name of, any person
other than the registered holder(s). Signatures on any such certificates or
stock powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If either Tender Document or any certificate or stock power is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
NEES of the authority of such person so to act must be submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, NEES
will pay or cause to be paid any stock transfer taxes with respect to the sale
and transfer of any Shares to it or its order pursuant to the Offer. If,
however, payment of the Purchase Price is to be made to, or Shares not tendered
or not purchased are to be registered in the name of, any person other than the
registered holder(s), or if tendered Shares are registered in the name of any
person other than the person(s) signing this Letter of Transmittal, the amount
of any stock transfer taxes (whether imposed on the registered holder(s), such
other person or otherwise) payable on account of the transfer to such person
will be deducted from the Purchase Price unless satisfactory evidence of the
payment of such taxes, or exemption therefrom, is submitted. See Terms of the
Offer -- Acceptance of Shares for Payment and Payment of Purchase Price and
Dividends and Certain U.S. Federal Income Tax Considerations in the Booklet.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY TO AFFIX
TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED HEREBY.
12
<PAGE> 34
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the
Purchase Price of any Shares purchased is to be issued in the name of, and/or
any Shares not tendered or not purchased are to be returned to, a person other
than the person(s) signing this Letter of Transmittal or if the check and/or any
certificate for Shares not tendered or not purchased are to be mailed to someone
other than the person(s) signing this Letter of Transmittal or to an address
other than that shown in the box above under the heading "Description of Shares
Tendered," then the "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal should be completed. Preferred
Shareholders tendering Shares by book-entry transfer will have any Shares not
accepted for payment returned by crediting the account maintained by such
Preferred Shareholder at the Book-Entry Transfer Facility from which such
transfer was made.
8. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering Preferred Shareholder is
required to provide the Depositary with either a correct Taxpayer Identification
Number (TIN) on Substitute Form W-9, which is provided under "Important Tax
Information" below, or a properly completed Form W-8 unless exempt therefrom.
Failure to provide the information on either Substitute Form W-9 or Form W-8 may
subject the tendering and/or voting Preferred Shareholder to 31% Federal income
tax backup withholding on the payment of the Purchase Price for the Shares or on
the Special Cash Payment. The tendering and/or voting Preferred Shareholder may
write "Applied For" in Part I of Substitute Form W-9 and sign the "Certificate
of Awaiting Taxpayer Identification Number" of Substitute Form W-9 if the
Preferred Shareholder has not been issued a TIN and has applied for a number or
intends to apply for a number in the near future. If "Applied For" is written in
Part I of Substitute Form W-9 and the "Certificate of Awaiting Taxpayer
Identification Number" of Substitute Form W-9 is signed and the Depositary is
not provided with a TIN by the time of payment, the Depositary will withhold 31%
on all payments of the Purchase Price for the Shares until a TIN is provided to
the Depositary.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent or the Dealer Manager at
their respective telephone numbers and addresses listed below. Requests for
additional copies of the Booklet, this Letter of Transmittal, or other tender
offer materials may be directed to the Information Agent or the Dealer Manager
and such copies will be furnished promptly at NEES' expense. Preferred
Shareholders may also contact their local broker, dealer, commercial bank or
trust company for assistance concerning the Offer.
10. SOLICITED TENDERS. Upon the terms and subject to the conditions of the
Offer and pursuant to this instruction, NEES will pay to designated brokers and
dealers a solicitation fee of $1.50 per Share for any Shares tendered, accepted
for payment, and paid for pursuant to the offer (except that for transactions
for beneficial owners equal to or exceeding 2,500 Shares, NEES will pay a
solicitation fee of $1.00 per Share of which eighty percent (80%) shall be paid
to the Dealer Manager and twenty percent (20%) to the Soliciting Dealer (which
may be the Dealer Manager)). With respect to fees payable pursuant to this
paragraph involving transactions for beneficial owners whose ownership is less
than 2,500 Shares, any fees payable hereunder shall be paid in full to the
Dealer Manager unless a Soliciting Dealer is designated (as described below), in
which case such fee shall be payable in full to such designated Soliciting
Dealer (which designated Soliciting Dealer may be the Dealer Manager). This
Letter of Transmittal must include the name of an entity which obtained the
tender and which is either (a) a broker or dealer in securities, including the
Dealer Manager in its capacity as a broker or dealer, which is a member of any
national securities exchange or of the National Association of Securities
Dealers, Inc. (NASD) (b) a foreign broker or dealer not eligible for membership
in the NASD which agrees to conform to the NASD's Rules of Fair Practice in
soliciting tenders outside the United States to the same extent as though it
were an NASD member, or (c) a bank or trust company (each of which is referred
to herein as a Soliciting Dealer). No solicitation fee shall be payable to a
Soliciting Dealer with respect to the tender of Shares by a holder unless the
Letter of Transmittal accompanying such tender designates such Soliciting
Dealer. No solicitation fee shall be payable to a Soliciting Dealer in respect
of Shares registered in the name of such Soliciting Dealer unless such Shares
are held by such Soliciting Dealer as nominee and such Shares are being
tendered, for the benefit of one or more beneficial owners identified on the
Letter of Transmittal or on the Notice of Solicited Tenders. No solicitation fee
shall be payable to a Soliciting Dealer if such Soliciting Dealer is required
for any reason to transfer the amount of such fee to a depositing holder (other
than itself). No solicitation fee shall be paid to a Soliciting
13
<PAGE> 35
Dealer with respect to Shares tendered for such Soliciting Dealer's own account.
A Soliciting Dealer shall not be entitled to a solicitation fee for Shares
beneficially owned by such Soliciting Dealer. No broker, dealer, bank, trust
company or other nominee shall be deemed to be the agent of NEES, the Power
Company, the Depositary, the Dealer Manager or the Information Agent for
purposes of the Offer.
Soliciting Dealers will include any of the organizations described in
clauses (a), (b) and (c) above even when the activities of such organizations in
connection with the Offer consist solely of forwarding to clients materials
relating to the Offer, including the Letter of Transmittal and tendering Shares
as directed by beneficial owners thereof. No Soliciting Dealer is authorized to
make any recommendation to holders of Shares as to whether to tender or refrain
from tendering in the Offer. No assumption is made, in making payment to any
Soliciting Dealer, that its activities in connection with the Offer included any
activities other than those described above, and for all purposes noted in all
materials relating to the Offer, the term "solicit" shall be deemed to mean no
more than processing Shares tendered or forwarding to customers materials
regarding the Offer.
11. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance of any tender
of Shares will be determined by NEES, in its sole discretion, and its
determination shall be final and binding. NEES reserves the absolute right to
reject any and all tenders of Shares that it determines are not in proper form
or the acceptance for payment of or payment for Shares that may, in the opinion
of NEES' counsel, be unlawful. NEES also reserves the absolute right to waive
any of the conditions to the Offer or any defect or irregularity in any tender
of Shares and NEES' interpretation of the terms and conditions of the Offer
(including these instructions) shall be final and binding. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as NEES shall determine. None of NEES, the Dealer Manager, the Depositary,
the Information Agent or any other person shall be under any duty to give notice
of any defect or irregularity in tenders nor shall any of them incur any
liability for failure to give any such notice. Tenders will not be deemed to
have been made until all defects and irregularities have been cured or waived.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate
representing Shares has been lost, destroyed or stolen, the Preferred
Shareholder should promptly call New England Electric System's Shareholder
Services Department at (800) 466-7215 for assistance. The Preferred Shareholder
will then be instructed as to the procedures that must be taken in order to
replace the certificate or tender such Shares. The tender of Shares pursuant to
this Letter of Transmittal will not be valid unless on or prior to the
Expiration Date: (a) such procedures have been completed or (b) a Notice of
Guaranteed Delivery has been delivered to the Depositary. See Instruction 2.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF), DULY
EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR CONFIRMATION OF A
BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
14
<PAGE> 36
IMPORTANT TAX INFORMATION
Under Federal income tax law, a Preferred Shareholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
either such Preferred Shareholder's correct TIN on Substitute Form W-9 below or
a properly completed Form W-8. If such Preferred Shareholder is an individual,
the TIN is such Preferred Shareholder's social security number. For businesses
and other entities, the number is the Federal employer identification number. If
the Depositary is not provided with the correct TIN or properly completed Form
W-8, the Preferred Shareholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to such Preferred
Shareholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding. The Form W-8 can be obtained from the Depositary.
See the enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" below for additional instructions.
If Federal income tax backup withholding applies, the Depositary is
required to withhold 31% of any payments made to the Preferred Shareholder.
Backup withholding is not an additional tax. Rather, the Federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of the tax withheld. If withholding results in an overpayment of taxes, a refund
may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on payments that are made to a Preferred
Shareholder with respect to Shares purchased pursuant to the Offer, the
Preferred Shareholder is required to notify the Depositary of his or her correct
TIN by completing the Substitute Form W-9 below certifying that the TIN provided
on Substitute Form W-9 is correct and that (a) the Preferred Shareholder has not
been notified by the Internal Revenue Service that he or she is subject to
Federal income tax backup withholding as a result of failure to report all
interest or dividends or (b) the Internal Revenue Service has notified the
Preferred Shareholder that he or she is no longer subject to Federal income tax
backup withholding. Foreign Preferred Shareholders must submit a properly
completed Form W-8 in order to avoid the applicable backup withholding;
provided, however, that backup withholding will not apply to foreign Preferred
Shareholders subject to 30% (or lower treaty rate) withholding on gross payments
received pursuant to the Offer. Foreign Preferred Shareholders that submit a
properly completed Form W-8 may nevertheless be subject to withholding under
other provisions of the Code relating to payments received by them.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Preferred Shareholder is required to give the Depositary the social
security number or employer identification number of the registered owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" below for additional guidance on
which number to report.
15
<PAGE> 37
SEE "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9" FOR ADDITIONAL INSTRUCTIONS.
SUBSTITUTE
FORM W-9
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY, AS DEPOSITARY
- ----------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND ----------------------
DATING BELOW.
---------------------------------------- Social Security Number
PAYER'S REQUEST FOR or Employer
TAXPAYER IDENTIFICATION NAME (Please Print) Identification
NUMBER (TIN) Number
(If Awaiting TIN write
---------------------------------------- "Applied for")
------------------------
DEPARTMENT OF THE TREASURY ADDRESS
INTERNAL REVENUE SERVICE PART II -- For Payees
NOT subject to backup
---------------------------------------- withholding, see the
CITY STATE ZIP CODE "Guidelines for Cer-
tification of Taxpayer
Identification Number
on Substitute Form
W-9" and complete as
instructed therein
---------------------------------------------------------------------------------------------
</TABLE>
PART III -- CERTIFICATION: -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
<TABLE>
<S> <C> <C>
SIGNATURE DATE , 1997
----------------------------------- --------------------------------
</TABLE>
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you are no longer subject
to backup withholding do not cross out item (2). Also see instructions in the
enclosed Guidelines.
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WRITE "APPLIED FOR"
IN PART I OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver such an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
<TABLE>
<S> <C> <C>
-------------------------------------------- ------------------------------------- , 1997
SIGNATURE DATE
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE "GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9"
FOR ADDITIONAL DETAILS.
16
<PAGE> 38
Any questions or requests for assistance or additional copies of the
Booklet, this Letter of Transmittal, the Notice of Guaranteed Delivery or other
materials may be directed to the Information Agent at the address and telephone
number set forth below.
The Information Agent for the Offer is:
(LOGO)
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
(800) 223-2064 (CALL TOLL-FREE)
BANKS AND BROKERS CALL COLLECT:
(212) 440-9800
Preferred Shareholders may contact the Dealer Manager at its address and
telephone number set forth below with any questions regarding the terms of the
Offer and solicitation of proxies. In addition, Preferred Shareholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer and solicitation of proxies.
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
WORLD FINANCIAL CENTER
250 VESEY STREET
NEW YORK, NEW YORK 10281
(888) ML4-TNDR (TOLL-FREE)
(888) 654-8637 (TOLL-FREE)
<PAGE> 1
[LOGO]
NOTICE OF GUARANTEED DELIVERY
FOR
NEW ENGLAND ELECTRIC SYSTEM
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES
OF THE FOLLOWING SERIES OF PREFERRED STOCK
OF
NEW ENGLAND POWER COMPANY
6% Cumulative Preferred Stock
As set forth in Terms of the Offer -- Procedure for Tendering Shares of the
Booklet (referred to below), this form, or a form substantially equivalent to
this form, must be used to accept the Offer (as defined below) if certificates
for shares of the 6% Cumulative Preferred Stock of New England Power Company
(the Power Company), a Massachusetts corporation and direct subsidiary of New
England Electric System (NEES), listed above (a Series of Preferred or a Series,
and each holder thereof a Preferred Shareholder) to be tendered pursuant to the
Offer (the Shares) are not immediately available or if the procedure for
book-entry transfer cannot be completed on a timely basis or if time will not
permit all other documents required by the Letter of Transmittal to be delivered
to the Depositary on or prior to the Expiration Date (as defined in the
Booklet). Such form may be delivered by hand or transmitted by mail or by
facsimile transmission, to the Depositary. See Terms of the Offer -- Procedure
for Tendering Shares in the Booklet. THE POWER COMPANY IS NOT ASKING HOLDERS OF
THE 6% CUMULATIVE PREFERRED FOR A PROXY. THEY MAY, HOWEVER, PARTICIPATE IN THE
OFFER AND MAY USE THIS FORM FOR THE GUARANTEE OF DELIVERY OF THEIR SHARES.
A SEPARATE NOTICE OF GUARANTEED DELIVERY MUST BE USED FOR EACH SERIES. THE
ELIGIBLE INSTITUTION WHICH COMPLETES THIS FORM MUST COMMUNICATE THE GUARANTEE TO
THE DEPOSITARY AND MUST DELIVER THE LETTER OF TRANSMITTAL AND CERTIFICATES FOR
SHARES TO THE DEPOSITARY WITHIN THE TIME SHOWN HEREIN. FAILURE TO DO SO COULD
RESULT IN A FINANCIAL LOSS TO SUCH ELIGIBLE INSTITUTION.
TO: IBJ SCHRODER BANK & TRUST COMPANY (THE DEPOSITARY)
<TABLE>
<S> <C>
By First-Class Mail: By Hand or Overnight Delivery:
P.O. Box 84 One State Street
Bowling Green Station New York, NY 10004
New York, NY 10274 Attn: Reorganization Department
Attn: Reorganization Department Securities Processing Window SC-1
By Facsimile: To Confirm:
(212) 858-2611 (212) 858-2103
</TABLE>
DELIVERY OF THIS NOTICE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS NOTICE TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
(as defined in the Letter of Transmittal) under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The undersigned hereby tenders to NEES, upon the terms and subject to the
conditions set forth in the Offer to Purchase and Proxy Statement and
Information Statement, dated November 6, 1997 (the Booklet), and the related
Letter of Transmittal (which together constitute the Offer), receipt of which is
hereby acknowledged, the number of Shares listed below, pursuant to the
guaranteed delivery procedure set forth in Terms of the Offer -- Procedure for
Tendering Shares in the Booklet.
Number of Shares:
---------------------------------------------------------------
Certificate Nos. (if available):
------------------------------------------------
------------------------------------------------
------------------------------------------------
2
<PAGE> 3
PLEASE COMPLETE:
SIGNATURE(S) OF REGISTERED HOLDER(S)*
- --------------------------------------------------------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
(SIGNATURE)
DATED:
- ------------------------------------------------------------------, 199_
NAME(S):
------------------------------------------------------------------------
------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.:
--------------------------------------------
- --------------------------------------------------------------------------------
* Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation, or other person acting
in a fiduciary or representative capacity, please set forth full title and see
Instruction 5 to the Letter of Transmittal.
ELIGIBLE INSTITUTIONS OR BROKERS TO COMPLETE:
If Shares will be tendered by book-entry transfer:
Name of tendering institution:
---------------------------------------------
PLEASE PRINT
Account No.
------------------------------------
Check Applicable Box: [ ] DTC [ ] PDTC
Signature(s):
-------------------------------------------------------------------
-------------------------------------------------------------------
Name(s) of Record Holder(s):
----------------------------------------------------
----------------------------------------------------
(PLEASE PRINT)
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
----------------------------------------------------
3
<PAGE> 4
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5 OF THE LETTER OF TRANSMITTAL)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
Capacity (Full Title):
----------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
(PLEASE PRINT)
Address of Firm:
----------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
----------------------------------------------------
Dated: , 199_
-------------------------------------------------------------------
4
<PAGE> 5
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States, guarantees (a) that the above-named person(s) has a net long position in
the Shares being tendered within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, (b) that such tender of Shares
complies with Rule 14e-4 and (c) to deliver to the Depositary at one of its
addresses set forth above certificate(s) for the Shares tendered hereby, in
proper form for transfer, or a confirmation of the book-entry transfer of the
Shares tendered hereby into the Depositary's account at The Depository Trust
Company, together with properly completed and duly executed Letter(s) of
Transmittal (or facsimile(s) thereof), with any required signature guarantee(s)
and any other required documents, all within three New York Stock Exchange
(NYSE) trading days after the date hereof. A NYSE trading day is any day on
which the NYSE is open for business.
<TABLE>
<S> <C>
- ------------------------------------------ ------------------------------------------
Name of Firm Authorized Signature
- ------------------------------------------ ------------------------------------------
Address Name (Please Print)
- ------------------------------------------ ------------------------------------------
City, State, Zip Code Title
- ------------------------------------------
Area Code and Telephone Number
Dated:
-------------------------------, 199_
- -----------------------------------------------------------------------------------------
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE SENT WITH
THE LETTER OF TRANSMITTAL.
</TABLE>
5
<PAGE> 6
LOGO
NOTICE OF GUARANTEED DELIVERY AND PROXY
FOR
NEW ENGLAND ELECTRIC SYSTEM
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES
OF THE FOLLOWING SERIES OF PREFERRED STOCK
OF
NEW ENGLAND POWER COMPANY
Dividend Series Preferred Stock
4.56% Series
4.60% Series
4.64% Series
6.08% Series
As set forth in Terms of the Offer -- Procedure for Tendering Shares of the
Booklet (referred to below), this form, or a form substantially equivalent to
this form, must be used to accept the Offer (as defined below) if certificates
for shares of a series of Dividend Series Preferred Stock of New England Power
Company (the Power Company), a Massachusetts corporation and direct subsidiary
of New England Electric System (NEES), listed above (each a Series of Preferred
or a Series, and each holder thereof a Preferred Shareholder) to be tendered
pursuant to the Offer (the Shares) are not immediately available or if the
procedure for book-entry transfer cannot be completed on a timely basis or if
time will not permit all other documents required by the Letter of Transmittal
and Proxy to be delivered to the Depositary on or prior to the Expiration Date
(as defined in the Booklet). Such form may be delivered by hand or transmitted
by mail or by facsimile transmission, to the Depositary. See Terms of the
Offer -- Procedure for Tendering Shares in the Booklet.
A SEPARATE NOTICE OF GUARANTEED DELIVERY AND PROXY MUST BE USED FOR EACH
SERIES. THE ELIGIBLE INSTITUTION WHICH COMPLETES THIS FORM MUST COMMUNICATE THE
GUARANTEE TO THE DEPOSITARY AND MUST DELIVER THE LETTER OF TRANSMITTAL AND,
PROXY AND CERTIFICATES FOR SHARES TO THE DEPOSITARY WITHIN THE TIME SHOWN
HEREIN. FAILURE TO DO SO COULD RESULT IN A FINANCIAL LOSS TO SUCH ELIGIBLE
INSTITUTION.
TO: IBJ SCHRODER BANK & TRUST COMPANY (THE DEPOSITARY)
<TABLE>
<S> <C>
By First-Class Mail: By Hand or Overnight Delivery:
P.O. Box 84 One State Street
Bowling Green Station New York, NY 10004
New York, NY 10274 Attn.: Reorganization Department
Attn.: Reorganization Department Securities Processing Window SC-1
By Facsimile: To Confirm:
(212) 858-2611 (212) 858-2103
</TABLE>
DELIVERY OF THIS NOTICE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS NOTICE TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 7
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal and Proxy is required to be guaranteed by an Eligible
Institution (as defined in the Letter of Transmittal and Proxy) under the
instructions thereto, such signature guarantee must appear in the applicable
space provided in the signature box on the Letter of Transmittal and Proxy.
The undersigned hereby tenders to NEES, upon the terms and subject to the
conditions set forth in the Offer to Purchase and Proxy Statement and
Information Statement, dated November 6, 1997 (the Booklet), and the related
Letter of Transmittal and Proxy (which together constitute the Offer), receipt
of which is hereby acknowledged, the number of Shares listed below, pursuant to
the guaranteed delivery procedure set forth in Terms of the Offer -- Procedure
for Tendering Shares in the Booklet. DIVIDEND SERIES PREFERRED SHAREHOLDERS
(INCLUDING SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO
WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE FOR THE PROPOSED
AMENDMENT TO THE POWER COMPANY'S ARTICLES OF ORGANIZATION AND BY-LAWS AS SET
FORTH IN THE BOOKLET (THE PROPOSED AMENDMENT). DIVIDEND SERIES PREFERRED
SHAREHOLDERS WHO PURCHASE OR WHOSE PURCHASE SETTLES OR IS REGISTERED AFTER THE
CLOSE OF BUSINESS ON NOVEMBER 12, 1997 (THE RECORD DATE) AND WHO WISH TO TENDER
THEIR SHARES IN THE OFFER MUST ARRANGE WITH THEIR SELLER TO RECEIVE A DULY
COMPLETED, VALID, AND UNREVOKED PROXY (WHICH MAY BE IN THE FORM OF IRREVOCABLE
ASSIGNMENT OF PROXY ATTACHED HERETO) FROM THE HOLDER OF RECORD ON THE RECORD
DATE AND INCLUDE SUCH PROXY WITH THIS NOTICE OF GUARANTEED DELIVERY AND PROXY OR
VOTE SUCH PROXY FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING (AS DEFINED IN
THE BOOKLET). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING
APPROVED AND ADOPTED AT THE SPECIAL MEETING.
IN ADDITION, SHAREHOLDERS HAVE THE RIGHT TO VOTE ON THE PROPOSED AMENDMENT
BY CASTING THEIR VOTE AND SIGNING THE PROXY OR BY VOTING IN PERSON AT THE
SPECIAL MEETING. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, THE POWER
COMPANY WILL MAKE A SPECIAL CASH PAYMENT TO EACH DIVIDEND SERIES PREFERRED
SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT, PROVIDED THAT SUCH
SHARES WERE NOT TENDERED PURSUANT TO THE OFFER.
2
<PAGE> 8
PLEASE COMPLETE:
PROXY
The undersigned hereby appoints John G. Cochrane, Michael E. Jesanis, and
Robert King Wulff, and each of them, proxies, with full power of substitution,
to represent the shareholder(s) at the Special Meeting to be held on December
12, 1997, and at any and all adjournments thereof, and to vote thereat the
number of shares which the shareholder(s) would be entitled to vote if then
personally present, with all the powers the shareholder(s) would then possess,
but especially, without limiting the foregoing, to vote as specified herein on
the proposal set forth in the proxy statement.
THIS NOTICE OF GUARANTEED DELIVERY AND PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE POWER COMPANY. The proxy contained herein, when
properly executed, will be voted in the manner directed herein by the
undersigned shareholder(s). If no direction is made, the proxy will be voted FOR
Item 1.
INDICATE YOUR VOTE BY AN (X). THE BOARD OF DIRECTORS OF THE POWER COMPANY
RECOMMENDS VOTING FOR ITEM 1.
ITEM 1.
HOLDERS OF SHARES OF DIVIDEND SERIES PREFERRED STOCK WHO WISH TO TENDER
THEIR SHARES MUST VOTE "FOR" THE PROPOSED AMENDMENT EITHER BY SUBMITTING THIS
PROXY OR BY VOTING AT THE SPECIAL MEETING.
Amendment of the Articles of Organization and By-laws to delete in its
entirety Article I, Section 4E(4), limiting the Power Company's ability to issue
unsecured indebtedness.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
NOTE: IF SHARES ARE BEING VOTED "FOR" THE PROPOSED AMENDMENT, THE SUBSTITUTE
FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL AND PROXY SHOULD BE COMPLETED TO
AVOID BACK-UP WITHHOLDING ON THE SPECIAL CASH PAYMENT.
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED "FOR" THE PROPOSED AMENDMENT AND OTHERWISE
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF THE POWER
COMPANY, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS THAT
MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Any holder of Shares held of record on the Record Date in the name of
another holder must establish, to the satisfaction of the Power Company, such
holder's entitlement to exercise or transfer this Proxy. This will ordinarily
require an assignment by such record holder in blank, or if not in blank, to and
from each successive transferee, including the holder, with each signature
guaranteed by an Eligible Institution. A form of irrevocable assignment of proxy
has been provided herein.
Please check box if you plan to attend the Special Meeting. [ ]
------------------------
SERIES OF PREFERRED (CHECK ONE):
Dividend Series Preferred Stock:
[ ] 4.56% Series [ ] 4.60% Series
[ ] 4.64% Series [ ] 6.08% Series
Number of Shares:
---------------------------------------------------------------
Certificate Nos. (if available):
------------------------------------------------
------------------------------------------------
------------------------------------------------
3
<PAGE> 9
PLEASE COMPLETE:
================================================================================
SIGNATURE(S) OF REGISTERED HOLDER(S)
- --------------------------------------------------------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
(SIGNATURE)
Dated:
------------------------------------------------------------------, 199_
Name(s):
------------------------------------------------------------------------
------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No.:
--------------------------------------------
- --------------------------------------------------------------------------------
* Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation, or other person acting
in a fiduciary or representative capacity, please set forth full title and see
Instruction 5 to the Letter of Transmittal and Proxy.
================================================================================
ELIGIBLE INSTITUTIONS OR BROKERS TO COMPLETE:
================================================================================
If Shares will be tendered by book-entry transfer:
Name of tendering institution:
---------------------------------------------
(PLEASE PRINT)
Check applicable box: [ ] DTC [ ] PDTC
Account No.
----------------------------------------------------------------
Signature(s):
-------------------------------------------------------------------
-------------------------------------------------------------------
Name(s) of Record Holder(s):
----------------------------------------------------
----------------------------------------------------
(PLEASE PRINT)
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
----------------------------------------------------
================================================================================
PLEASE COMPLETE:
================================================================================
A holder of Shares of Dividend Series Preferred Stock who elects to tender
Shares pursuant to this Notice of Guaranteed Delivery and Proxy must check ONE
of the boxes below:
[ ] A duly completed, valid, and unrevoked proxy indicating a vote "FOR"
the Proposed Amendment is included herein.
[ ] A valid vote "FOR" the Proposed Amendment will be cast at the Special
Meeting.
================================================================================
4
<PAGE> 10
IF SELLING SHARES ON OR AFTER NOVEMBER 10, 1997, A RECORD HOLDER OF
DIVIDEND SERIES PREFERRED STOCK MUST COMPLETE THE FOLLOWING IRREVOCABLE PROXY.
PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK PROXY TO A
SUBSEQUENT HOLDER OF DIVIDEND SERIES PREFERRED STOCK WHO WAS NOT A HOLDER OF
RECORD ON NOVEMBER 12, 1997.
IRREVOCABLE PROXY*
WITH RESPECT TO SHARES OF THE
____% SERIES OF DIVIDEND SERIES PREFERRED STOCK OF
NEW ENGLAND POWER COMPANY (POWER COMPANY)
(PLEASE INDICATE APPROPRIATE SERIES OF DIVIDEND SERIES
PREFERRED STOCK IN THE BLANK LOCATED THREE LINES ABOVE.)
The undersigned hereby irrevocably appoints:
---------------------------------------------------
Type or Print Name of Transferee
as attorney and proxy, with full power of substitution to represent the
undersigned at the Special Meeting to be held on December 12, 1997, and at any
and all adjournments thereof, and to vote thereat the Shares indicated below of
the above indicated Series of Dividend Series Preferred Stock of New England
Power Company held of record by the undersigned on November 17, 1997, which the
undersigned would be entitled to vote if personally present with all the powers
the undersigned would then possess, but especially, without limiting the
foregoing, to vote on the proposal set forth in the Proxy Statement.
This proxy shall be effective whether or not the Shares indicated below are
tendered in the Offer.
This instrument supersedes and revokes any and all previous appointments of
proxies heretofore made by the undersigned with respect to the Shares indicated
below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH
AN INTEREST.
All authority conferred or agreed to be conferred herein shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors in interest, and assigns of the
undersigned. The undersigned understands that tenders of Shares pursuant to any
of the procedures described in the Booklet and in the Letter of Transmittal and
Proxy will constitute a binding agreement between the undersigned and the Power
Company upon the terms and subject to the conditions of the Offer.
DESCRIPTION OF PREFERRED STOCK
<TABLE>
<CAPTION>
CERTIFICATE NUMBER(S)
(ATTACH LIST IF AGGREGATE NUMBER
NECESSARY) OF SHARES
- ------------------------- -------------------------
<S> <C>
1. -------------------------
- -------------------------
2. -------------------------
- -------------------------
3. -------------------------
- -------------------------
Total:
----------------------
</TABLE>
- ---------------
* THIS IRREVOCABLE PROXY MUST BE SIGNED ON THE NEXT PAGE TO BE EFFECTIVE.
5
<PAGE> 11
- --------------------------------------------------------------------------------
IRREVOCABLE PROXY
SIGNATURE(S) OF RECORD OR AUTHORIZED SIGNATORY*
- --------------------------------------------------------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Dated:
--------------------------------------------------------------------, 199_
Tax Identification or Social Security No(s)
-------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Dated:
--------------------------------------------------------------------, 199_
Tax Identification or Social Security No(s)
-------------------------------------
- --------------------------------------------------------------------------------
* Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Record Date on the stock certificate(s) or on a security position listing
or by person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent,
or other person acting in a fiduciary or representative capacity, please
provide the following information and see Instruction 5 of the Letter of
Transmittal and Proxy.
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5 OF THE LETTER OF TRANSMITTAL AND PROXY)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
Capacity (Full Title):
----------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
(PLEASE PRINT)
Address of Firm:
----------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
----------------------------------------------------
Dated:
--------------------------------------------------------------------, 199_
- --------------------------------------------------------------------------------
6
<PAGE> 12
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States, guarantees (a) that the above-named person(s) has a net long position in
the Shares being tendered within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, (b) that such tender of Shares
complies with Rule 14e-4 and (c) to deliver to the Depositary at one of its
addresses set forth above certificate(s) for the Shares tendered hereby, in
proper form for transfer, or a confirmation of the book-entry transfer of the
Shares tendered hereby into the Depositary's account at The Depository Trust
Company, together with properly completed and duly executed Letter(s) of
Transmittal and Proxy (or facsimile(s) thereof), with any required signature
guarantee(s) and any other required documents, all within three New York Stock
Exchange (NYSE) trading days after the date hereof. A NYSE trading day is any
day on which the NYSE is open for business.
<TABLE>
<S> <C>
- ------------------------------------------ ------------------------------------------
Name of Firm Authorized Signature
- ------------------------------------------ ------------------------------------------
Address Name (Please Print)
- ------------------------------------------ ------------------------------------------
City, State, Zip Code Title
- ------------------------------------------
Area Code and Telephone Number
Dated: , 199_
------------------------------
- -----------------------------------------------------------------------------------------
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE SENT WITH
THE LETTER OF TRANSMITTAL AND PROXY.
</TABLE>
7
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF
THE FOLLOWING SERIES OF PREFERRED STOCK OF
NEW ENGLAND POWER COMPANY
BY
NEW ENGLAND ELECTRIC SYSTEM
<TABLE>
<CAPTION>
TITLE OF SERIES OF PURCHASE PRICE
PREFERRED STOCK CUSIP NUMBER PER SHARE
- ------------------------------------------------------------ ------------ --------------
<S> <C> <C>
Dividend Series Preferred Stock:
4.56% Series 644188 10 4 $ 90.30
4.60% Series 644188 20 3 $ 91.09
4.64% Series 644188 70 8 $ 91.88
6.08% Series 644188 40 1 $ 103.34
6% Cumulative Preferred Stock 644188 30 2 $ 116.50
</TABLE>
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME,
ON FRIDAY, DECEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED (THE EXPIRATION
DATE).
November 6, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies, and Other Nominees:
Enclosed for your consideration is the material listed below relating to
the offer of New England Electric System, a Massachusetts voluntary association
(NEES), to the holders of each series of Dividend Series Preferred Stock and of
the 6% Cumulative Preferred Stock of New England Power Company (the Power
Company), a Massachusetts corporation and direct subsidiary of NEES, listed
above (each a Series of Preferred or a Series, and each holder thereof a
Preferred Shareholder) to tender any and all of their shares of a Series (the
Shares) for purchase at the purchase price per Share listed above (the Purchase
Price), net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase and Proxy Statement and Information
Statement, dated November 6, 1997 (the Booklet), and in the Letter of
Transmittal and Proxy for the Shares tendered. THE POWER COMPANY IS NOT ASKING
HOLDERS OF THE 6% CUMULATIVE PREFERRED FOR A PROXY. THEY MAY, HOWEVER,
PARTICIPATE IN THE OFFER. As to each Series, the Booklet, together with the
applicable Letter of Transmittal and, if applicable, Proxy, constitutes the
Offer. NEES will purchase all Shares validly tendered and not withdrawn, upon
the terms and subject to the conditions of the Offer.
THE OFFER FOR EACH SERIES IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF
SHARES OF ANY SERIES BEING TENDERED AND EACH IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES. DIVIDEND SERIES PREFERRED SHAREHOLDERS (INCLUDING SHAREHOLDERS WHO
ACQUIRE SHARES SUBSEQUENT TO NOVEMBER 12, 1997 (THE RECORD DATE)) WHO WISH TO
TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED
AMENDMENT (AS DEFINED IN THE BOOKLET). MOREOVER, THE OFFER IS CONDITIONED UPON,
AMONG OTHER THINGS, THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE
SPECIAL MEETING (AS DEFINED IN THE BOOKLET). PREFERRED SHAREHOLDERS HAVE THE
RIGHT TO VOTE ON THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR
SHARES. SEE PROPOSED AMENDMENT AND PROXY SOLICITATION, TERMS OF THE
OFFER -- CERTAIN
<PAGE> 2
CONDITIONS OF THE OFFER, AND TERMS OF THE OFFER -- EXTENSION OF TENDER PERIOD;
TERMINATION; AMENDMENTS IN THE BOOKLET.
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, DIVIDEND SERIES
PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO
BUSINESS DAYS PRIOR TO THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION
DATE MUST OBTAIN AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND VOTE
SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE
TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES OF EACH SERIES
OF DIVIDEND SERIES PREFERRED WILL TRADE "WITH PROXY" IN THE OVER-THE-COUNTER
MARKET. SETTLEMENT OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD
INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER. SEE TERMS OF THE
OFFER -- PROCEDURE FOR TENDERING SHARES IN THE BOOKLET.
The Shares will trade, during the period which begins two days prior to the
Record Date and which will end at the close of business on the Expiration Date,
in the over-the-counter market under the symbols "NEEAT" for the 4.56% Series,
"NEEDT" for the 4.60% Series, "NEEFT" for the 4.64% Series and "NEEGT" for the
6.08% Series, indicating that such Shares are trading "with proxy." A Dividend
Series Preferred Shareholder who acquires Shares during this period must obtain,
or have such holder's authorized representative obtain, an assignment of proxy
(which is included in the applicable Letter of Transmittal and Proxy) at
settlement from the seller. The National Association of Securities Dealers, Inc.
(the NASD) and The Depository Trust Company (DTC) have issued notices informing
their members and participants that the Shares will trade "with proxy" and that
settlement of all trades during the period described above should include an
assignment of proxy from the seller.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible.
Upon the terms and subject to the conditions of the Offer and pursuant to
instruction 10 of the Letter of Transmittal and Proxy, NEES will pay to
designated brokers and dealers a solicitation fee of $1.50 per Share for any
Shares tendered, accepted for payment, and paid pursuant to the Offer and for
each Share of Dividend Series Preferred Stock not tendered but voted in favor of
the Proposed Amendment (except that for transactions for beneficial owners equal
to or exceeding 2,500 Shares, NEES will pay a solicitation fee of $1.00 per
Share, of which eighty percent (80%) shall be paid to the Dealer Manager and
twenty percent (20%) to the Soliciting Dealer (which may be the Dealer
Manager)). With respect to fees payable pursuant to this paragraph involving
transactions for beneficial owners whose ownership is less than 2,500 Shares,
any fees payable hereunder shall be paid in full to the Dealer Manager unless a
Soliciting Dealer is designated (as described below), in which case such fee
shall be payable in full to such designated Soliciting Dealer (which designated
Soliciting Dealer may be the Dealer Manager). The Letter of Transmittal and
Proxy must include the name of an entity which obtained the tender or proxy and
which is either (a) a broker or dealer in securities, including the Dealer
Manager in its capacity as a broker or dealer, which is a member of any national
securities exchange or of the NASD, (b) a foreign broker or dealer not eligible
for membership in the NASD which agrees to conform to the NASD's Rules of Fair
Practice in soliciting tenders outside the United States to the same extent as
though it were an NASD member, or (c) a bank or trust company (each of which is
referred to herein as a Soliciting Dealer). No solicitation fee shall be payable
to a Soliciting Dealer with respect to the tender of Shares or delivery of a
proxy unless the Letter of Transmittal and Proxy accompanying such tender or
delivery of a proxy designates such Soliciting Dealer. No solicitation fee shall
be payable to a Soliciting Dealer in respect of Shares registered in the name of
such Soliciting Dealer unless such Shares are held by such Soliciting Dealer as
nominee and such Shares are being tendered or delivered for the benefit of one
or more beneficial owners identified on the Letter of Transmittal and Proxy or
on the Notice of Solicited Tenders. No solicitation fee shall be payable to a
Soliciting Dealer if such Soliciting Dealer is required for any reason to
transfer the amount of such fee to a depositing holder (other than itself). No
solicitation fee shall be paid to a Soliciting Dealer with respect to Shares
tendered or delivered for such
2
<PAGE> 3
Soliciting Dealer's own account. A Soliciting Dealer shall not be entitled to a
solicitation fee for Shares beneficially owned by such Soliciting Dealer. No
broker, dealer, bank, trust company, or other nominee shall be deemed to be the
agent of NEES, the Power Company, the Depositary, the Information Agent, or the
Dealer Manager for purposes of the Offer.
Soliciting Dealers will include any of the organizations described in
clauses (a), (b), and (c) above even when the activities of such organizations
in connection with the Offer consist solely of forwarding to clients materials
relating to the Offer, including the Letter of Transmittal and Proxy, and
tendering Shares or delivering a proxy as directed by beneficial owners thereof.
No Soliciting Dealer is authorized to make any recommendation to holders of
Shares as to whether to tender or refrain from tendering in the Offer. No
assumption is made, in making payment to any Soliciting Dealer, that its
activities in connection with the Offer included any activities other than those
described above, and for all purposes noted in all materials relating to the
Offer, the term "solicit" shall be deemed to mean no more than processing Shares
tendered or forwarding to customers materials regarding the Offer.
NEES will also, upon request, reimburse Soliciting Dealers for reasonable
and customary handling and mailing expenses incurred by them in forwarding
materials relating to the Offer to their customers. NEES will pay all stock
transfer taxes, if any, payable on account of the acquisition of Shares by NEES
pursuant to the Offer, except in certain circumstances where special payment or
delivery procedures are utilized pursuant to Instruction 6 of the accompanying
Letter of Transmittal and Proxy.
IN ORDER FOR A SOLICITING DEALER TO RECEIVE A SOLICITATION FEE, IBJ
SCHRODER BANK & TRUST COMPANY, AS DEPOSITARY (THE DEPOSITARY), MUST HAVE
RECEIVED FROM SUCH SOLICITING DEALER A PROPERLY COMPLETED AND DULY EXECUTED
NOTICE OF SOLICITED TENDERS IN THE FORM ATTACHED HERETO (OR A FACSIMILE THEREOF)
WITHIN THREE BUSINESS DAYS AFTER THE EXPIRATION OF THE OFFER.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name (or in the name of your nominee), we are
enclosing the following documents:
1. The Booklet, dated November 6, 1997, including the Notice of Special
Meeting of Shareholders;
2. A separate Letter of Transmittal and Proxy for each Series for your use
and for the information of your clients;
3. A letter to shareholders of the Power Company from its Treasurer;
4. A Notice of Guaranteed Delivery and Proxy to be used to accept the Offer
if the Shares and all other required documents cannot be delivered to
the Depositary by the applicable Expiration Date (as defined in the
Booklet);
5. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee,
with space for obtaining such clients' instructions with regard to the
Offer and with regard to the proxy solicitation by the Power Company;
and
6. A return envelope addressed to IBJ Schroder Bank & Trust Company, the
Depositary.
EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND PROXY, AND
ONLY THE APPLICABLE LETTER OF TRANSMITTAL AND, IF APPLICABLE, PROXY FOR A
PARTICULAR SERIES, OR A NOTICE OF GUARANTEED DELIVERY AND PROXY, MAY BE USED TO
TENDER SHARES OF SUCH SERIES.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD
TIME, ON FRIDAY, DECEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED.
3
<PAGE> 4
NEITHER NEES, THE POWER COMPANY, THEIR RESPECTIVE BOARDS OF DIRECTORS, ANY
OF THEIR RESPECTIVE OFFICERS, NOR ANY OTHER PERSON AUTHORIZED BY THEM MAKES ANY
RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL
SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
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.
Any questions or requests for assistance or additional copies of the
enclosed materials may be directed to Georgeson & Company, Inc., the Information
Agent, or to us, as Dealer Manager, at the respective addresses and telephone
numbers set forth on the back cover of the enclosed Offer to Purchase and Proxy
Statement and Information Statement.
Very truly yours,
Merrill Lynch & Co.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS THE AGENT OF NEES, THE POWER COMPANY, THE DEALER MANAGER, THE
INFORMATION AGENT, OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION
WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
4
<PAGE> 5
4.56% SERIES
NOTICE OF SOLICITED TENDERS
OF DIVIDEND SERIES PREFERRED STOCK
List below the number of Preferred Shares tendered and voted in favor of
the Proposed Amendment by each beneficial owner whose tender you have solicited.
All Shares beneficially owned by a beneficial owner, whether in one account or
several, and in however many capacities, must be aggregated for purposes of
completing the tables below. Any questions as to what constitutes beneficial
ownership should be directed to the Information Agent. If the space below is
inadequate, list the Shares on a separate signed schedule and affix the list to
this Notice of Solicited Tenders.
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE DEPOSITARY AT
THE ADDRESS SET FORTH ON THE BACK COVER OF THE OFFER TO PURCHASE WITHIN THREE
NEW YORK STOCK EXCHANGE, INC. TRADING DAYS AFTER THE EXPIRATION OF THE OFFER.
NOTICES MAY BE FAXED TO THE DEPOSITARY AT (212) 858-2611; CONFIRMATION TELEPHONE
NUMBER (212) 858-2103. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS
SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON
THE BACK COVER OF THE BOOKLET.
SOLICITED TENDERS OF 4.56% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
(IF DELIVERING THIS NOTICE TO DEPOSITARY, LAST PAGE OF THIS LETTER MUST BE
COMPLETED AND SIGNED.)
<TABLE>
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER SHARE (TENDER ONLY)
============================================================================================================
NUMBER OF SHARES NUMBER OF
DTC PARTICIPANT VOI TICKET REQUESTED FOR BENEFICIAL OWNER(S)
NUMBER NUMBER* PAYMENT REPRESENTED
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
<TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE (TENDER ONLY)
============================================================================================================
NUMBER OF NUMBER OF NAME OF
SHARES BENEFICIAL SOLICITING
DTC PARTICIPANT VOI TICKET REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER NUMBER* PAYMENT REPRESENTED DEALER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
- ---------------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer.
5
<PAGE> 6
4.56% SERIES
NOTICE OF SOLICITED TENDERS OF 4.56% SERIES
(CONTINUED)
<TABLE>
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (PROXY ONLY)
===================================================================================
NUMBER OF BENEFICIAL
DTC PARTICIPANT NUMBER OF SHARES OWNER(S)
NUMBER REQUESTED FOR PAYMENT REPRESENTED
- -----------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
<TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(PROXY ONLY)
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF BENEFICIAL NAME OF SOLICITING
DTC PARTICIPANT REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER PAYMENT REPRESENTED DEALER
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
Do not send stock certificates with this form. Your stock certificates must
be sent with the Letter of Transmittal and Proxy.
6
<PAGE> 7
4.60% SERIES
NOTICE OF SOLICITED TENDERS
OF DIVIDEND SERIES PREFERRED STOCK
List below the number of Preferred Shares tendered and voted in favor of
the Proposed Amendment by each beneficial owner whose tender you have solicited.
All Shares beneficially owned by a beneficial owner, whether in one account or
several, and in however many capacities, must be aggregated for purposes of
completing the tables below. Any questions as to what constitutes beneficial
ownership should be directed to the Information Agent. If the space below is
inadequate, list the Shares on a separate signed schedule and affix the list to
this Notice of Solicited Tenders.
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE DEPOSITARY AT
THE ADDRESS SET FORTH ON THE BACK COVER OF THE OFFER TO PURCHASE WITHIN THREE
NEW YORK STOCK EXCHANGE, INC. TRADING DAYS AFTER THE EXPIRATION OF THE OFFER.
NOTICES MAY BE FAXED TO THE DEPOSITARY AT (212) 858-2611; CONFIRMATION TELEPHONE
NUMBER (212) 858-2103. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS
SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON
THE BACK COVER OF THE BOOKLET.
SOLICITED TENDERS OF 4.60% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
(IF DELIVERING THIS NOTICE TO DEPOSITARY, LAST PAGE OF THIS LETTER MUST BE
COMPLETED AND SIGNED.)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (TENDER ONLY)
<TABLE>
============================================================================================================
NUMBER OF SHARES NUMBER OF
DTC PARTICIPANT VOI TICKET REQUESTED FOR BENEFICIAL OWNER(S)
NUMBER NUMBER* PAYMENT REPRESENTED
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(TENDER ONLY)
<TABLE>
============================================================================================================
NUMBER OF NUMBER OF NAME OF
SHARES BENEFICIAL SOLICITING
DTC PARTICIPANT VOI TICKET REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER NUMBER* PAYMENT REPRESENTED DEALER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
- ---------------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer.
7
<PAGE> 8
4.60% SERIES
NOTICE OF SOLICITED TENDERS OF 4.60% SERIES
(CONTINUED)
<TABLE>
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (PROXY ONLY)
===================================================================================
NUMBER OF BENEFICIAL
DTC PARTICIPANT NUMBER OF SHARES OWNER(S)
NUMBER REQUESTED FOR PAYMENT REPRESENTED
- -----------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
<TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(PROXY ONLY)
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF BENEFICIAL NAME OF SOLICITING
DTC PARTICIPANT REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER PAYMENT REPRESENTED DEALER
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
Do not send stock certificates with this form. Your stock certificates must
be sent with the Letter of Transmittal and Proxy.
8
<PAGE> 9
4.64% SERIES
NOTICE OF SOLICITED TENDERS
OF DIVIDEND SERIES PREFERRED STOCK
List below the number of Preferred Shares tendered and voted in favor of
the Proposed Amendment by each beneficial owner whose tender you have solicited.
All Shares beneficially owned by a beneficial owner, whether in one account or
several, and in however many capacities, must be aggregated for purposes of
completing the tables below. Any questions as to what constitutes beneficial
ownership should be directed to the Information Agent. If the space below is
inadequate, list the Shares on a separate signed schedule and affix the list to
this Notice of Solicited Tenders.
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE DEPOSITARY AT
THE ADDRESS SET FORTH ON THE BACK COVER OF THE OFFER TO PURCHASE WITHIN THREE
NEW YORK STOCK EXCHANGE, INC. TRADING DAYS AFTER THE EXPIRATION OF THE OFFER.
NOTICES MAY BE FAXED TO THE DEPOSITARY AT (212) 858-2611; CONFIRMATION TELEPHONE
NUMBER (212) 858-2103. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS
SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON
THE BACK COVER OF THE BOOKLET.
SOLICITED TENDERS OF 4.64% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
(IF DELIVERING THIS NOTICE TO DEPOSITARY, LAST PAGE OF THIS LETTER MUST BE
COMPLETED AND SIGNED.)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (TENDER ONLY)
<TABLE>
============================================================================================================
NUMBER OF SHARES NUMBER OF
DTC PARTICIPANT VOI TICKET REQUESTED FOR BENEFICIAL OWNER(S)
NUMBER NUMBER* PAYMENT REPRESENTED
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(TENDER ONLY)
<TABLE>
============================================================================================================
NUMBER OF NUMBER OF NAME OF
SHARES BENEFICIAL SOLICITING
DTC PARTICIPANT VOI TICKET REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER NUMBER* PAYMENT REPRESENTED DEALER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
- ---------------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer.
9
<PAGE> 10
4.64% SERIES
NOTICE OF SOLICITED TENDERS OF 4.64% SERIES
(CONTINUED)
<TABLE>
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (PROXY ONLY)
===================================================================================
NUMBER OF BENEFICIAL
DTC PARTICIPANT NUMBER OF SHARES OWNER(S)
NUMBER REQUESTED FOR PAYMENT REPRESENTED
- -----------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
<TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(PROXY ONLY)
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF BENEFICIAL NAME OF SOLICITING
DTC PARTICIPANT REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER PAYMENT REPRESENTED DEALER
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
Do not send stock certificates with this form. Your stock certificates must
be sent with the Letter of Transmittal and Proxy.
10
<PAGE> 11
6.08% SERIES
NOTICE OF SOLICITED TENDERS
OF DIVIDEND SERIES PREFERRED STOCK
List below the number of Preferred Shares tendered and voted in favor of
the Proposed Amendment by each beneficial owner whose tender you have solicited.
All Shares beneficially owned by a beneficial owner, whether in one account or
several, and in however many capacities, must be aggregated for purposes of
completing the tables below. Any questions as to what constitutes beneficial
ownership should be directed to the Information Agent. If the space below is
inadequate, list the Shares on a separate signed schedule and affix the list to
this Notice of Solicited Tenders.
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE DEPOSITARY AT
THE ADDRESS SET FORTH ON THE BACK COVER OF THE OFFER TO PURCHASE WITHIN THREE
NEW YORK STOCK EXCHANGE, INC. TRADING DAYS AFTER THE EXPIRATION OF THE OFFER.
NOTICES MAY BE FAXED TO THE DEPOSITARY AT (212) 858-2611; CONFIRMATION TELEPHONE
NUMBER (212) 858-2103. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS
SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON
THE BACK COVER OF THE BOOKLET.
SOLICITED TENDERS OF 6.08% SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
(IF DELIVERING THIS NOTICE TO DEPOSITARY, LAST PAGE OF THIS LETTER MUST BE
COMPLETED AND SIGNED.)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (TENDER ONLY)
<TABLE>
============================================================================================================
NUMBER OF SHARES NUMBER OF
DTC PARTICIPANT VOI TICKET REQUESTED FOR BENEFICIAL OWNER(S)
NUMBER NUMBER* PAYMENT REPRESENTED
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(TENDER ONLY)
<TABLE>
============================================================================================================
NUMBER OF NUMBER OF NAME OF
SHARES BENEFICIAL SOLICITING
DTC PARTICIPANT VOI TICKET REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER NUMBER* PAYMENT REPRESENTED DEALER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
- ---------------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer.
11
<PAGE> 12
6.08% SERIES
NOTICE OF SOLICITED TENDERS OF 6.08% SERIES
(CONTINUED)
<TABLE>
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE (PROXY ONLY)
===================================================================================
NUMBER OF BENEFICIAL
DTC PARTICIPANT NUMBER OF SHARES OWNER(S)
NUMBER REQUESTED FOR PAYMENT REPRESENTED
- -----------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
<TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
(PROXY ONLY)
- --------------------------------------------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF BENEFICIAL NAME OF SOLICITING
DTC PARTICIPANT REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER PAYMENT REPRESENTED DEALER
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
Do not send stock certificates with this form. Your stock certificates must
be sent with the Letter of Transmittal and Proxy.
12
<PAGE> 13
6% SERIES
NOTICE OF SOLICITED TENDERS
OF 6% CUMULATIVE PREFERRED STOCK
List below the number of Preferred Shares tendered by each beneficial owner
whose tender you have solicited. All Shares beneficially owned by a beneficial
owner, whether in one account or several, and in however many capacities, must
be aggregated for purposes of completing the tables below. Any questions as to
what constitutes beneficial ownership should be directed to the Information
Agent. If the space below is inadequate, list the Shares on a separate signed
schedule and affix the list to this Notice of Solicited Tenders.
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE DEPOSITARY AT
THE ADDRESS SET FORTH ON THE BACK COVER OF THE OFFER TO PURCHASE WITHIN THREE
NEW YORK STOCK EXCHANGE, INC. TRADING DAYS AFTER THE EXPIRATION OF THE OFFER.
NOTICES MAY BE FAXED TO THE DEPOSITARY AT (212) 858-2611; CONFIRMATION TELEPHONE
NUMBER (212) 858-2103. ALL QUESTIONS CONCERNING THE NOTICES OF SOLICITED TENDERS
SHOULD BE DIRECTED TO THE INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON
THE BACK COVER OF THE BOOKLET.
SOLICITED TENDERS OF 6% CUMULATIVE PREFERRED SHARES
NOT BENEFICIALLY OWNED BY SOLICITING DEALER
(IF DELIVERING THIS NOTICE TO DEPOSITARY, LAST PAGE OF THIS LETTER MUST BE
COMPLETED AND SIGNED.)
BENEFICIAL OWNERS OF LESS THAN 2,500 SHARES -- SOLICITATION FEE OF $1.50 PER
SHARE
<TABLE>
============================================================================================================
NUMBER OF SHARES NUMBER OF
DTC PARTICIPANT VOI TICKET REQUESTED FOR BENEFICIAL OWNER(S)
NUMBER NUMBER* PAYMENT REPRESENTED
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
BENEFICIAL OWNERS OF 2,500 OR MORE SHARES -- SOLICITATION FEE OF $1.00 PER SHARE
<TABLE>
============================================================================================================
NUMBER OF NUMBER OF NAME OF
SHARES BENEFICIAL SOLICITING
DTC PARTICIPANT VOI TICKET REQUESTED FOR OWNER(S) MERRILL LYNCH
NUMBER NUMBER* PAYMENT REPRESENTED DEALER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
- ---------------
* Complete if Shares delivered by book-entry transfer. Please submit a separate
VOI Ticket for Shares tendered when the solicitation fee is to be directed to
another Soliciting Dealer.
13
<PAGE> 14
SOLICITATION FEE PAYMENT INSTRUCTIONS
ISSUE CHECK TO:
Firm
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Attention
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Phone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.
- ---------------------------------------------------------
Applicable VOI Number
- ------------------------------ Number of Shares
- ------------------------
If solicitation fees are to be paid to another Eligible Institution(s),
please complete the following:
ISSUE CHECK TO:
Firm
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Attention
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Phone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.
- ---------------------------------------------------------
Applicable VOI Number
- ------------------------------ Number of Shares
- ------------------------
Series
- ------------------------------
ISSUE CHECK TO:
Firm
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Attention
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Phone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.
- ---------------------------------------------------------
Applicable VOI Number
- ------------------------------ Number of Shares
- ------------------------
Series
- ------------------------------
* NOTE: IF ADDITIONAL PAYMENT INSTRUCTIONS, PLEASE COPY AND ATTACH.
14
<PAGE> 15
All questions as to the validity, form, and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Depositary,
in its sole discretion, which determination will be final and binding. Neither
the Depositary nor any other person will be under any duty to give notification
of any defects or irregularities in any Notice of Solicited Tenders or incur any
liability for failure to give such notification.
- --------------------------------------------------------------------------------
The undersigned hereby confirms that: (i) it has complied with the
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the applicable rules and regulations thereunder, in connection with such
solicitation (unless such solicitation fee is directed to another Soliciting
Dealer); (ii) it is entitled to such compensation for such solicitation under
the terms and conditions of the Offer; (iii) in soliciting tenders of Shares, it
has used no soliciting materials other than those furnished by NEES; and (iv) if
it is a foreign broker or dealer not eligible for membership in the NASD, it has
agreed to conform to the NASD's Rules of Fair Practice in making solicitations.
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
Name of Firm Authorized Signature
- ----------------------------------------- -----------------------------------------
Address Name (Please Print)
- ----------------------------------------- -----------------------------------------
City, State, Zip Code Title
- ----------------------------------------- Dated: , 199_
Area Code and Telephone Number -----------------------------
</TABLE>
- --------------------------------------------------------------------------------
15
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF
THE FOLLOWING SERIES OF DIVIDEND SERIES PREFERRED STOCK OF
NEW ENGLAND POWER COMPANY
BY
NEW ENGLAND ELECTRIC SYSTEM
<TABLE>
<CAPTION>
TITLE OF SERIES
OF PURCHASE PRICE
PREFERRED STOCK CUSIP NUMBER PER SHARE
- ----------------- ------------ --------------
<S> <C> <C>
4.56% Series 644188 10 4 $ 90.30
4.60% Series 644188 20 3 $ 91.09
4.64% Series 644188 70 8 $ 91.88
6.08% Series 644188 40 1 $ 103.34
</TABLE>
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME,
ON FRIDAY, DECEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED (THE EXPIRATION
DATE).
- --------------------------------------------------------------------------------
November 6, 1997
To Our Clients:
Enclosed for your consideration is the material listed below relating to
the offer of New England Electric System, a Massachusetts voluntary association
(NEES), inviting tenders of Preferred Shares of New England Power Company (the
Power Company), a Massachusetts corporation and direct subsidiary of NEES, in
which you own shares. The offer is for each series of Preferred Stock of the
Power Company, listed above (each a Series of Preferred or a Series, and each
holder thereof a Preferred Shareholder) (the Shares) for purchase at the price
per Share listed above, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase and Proxy Statement and
Information Statement, dated November 6, 1997(the Booklet), and in the Letter of
Transmittal and Proxy for the Shares tendered. As to each Series, the Booklet,
together with the applicable Letter of Transmittal and Proxy, constitutes the
Offer. NEES will purchase all Shares validly tendered and not withdrawn, upon
the terms and subject to the conditions of the Offer.
THE OFFER FOR EACH SERIES IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF
SHARES OF ANY SERIES BEING TENDERED AND EACH IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO
ACQUIRE SHARES SUBSEQUENT TO NOVEMBER 12, 1997 (THE RECORD DATE)) WHO WISH TO
TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED
AMENDMENT (AS DEFINED IN THE BOOKLET). MOREOVER, THE OFFER IS CONDITIONED UPON,
AMONG OTHER THINGS, THE PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE
SPECIAL MEETING (AS DEFINED IN THE BOOKLET). PREFERRED SHAREHOLDERS HAVE THE
RIGHT TO VOTE ON THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR
SHARES. SEE PROPOSED AMENDMENT AND PROXY SOLICITATION, TERMS OF THE
OFFER -- CERTAIN CONDITIONS OF THE OFFER, AND TERMS OF THE OFFER -- EXTENSION OF
TENDER PERIOD; TERMINATION; AMENDMENTS IN THE BOOKLET.
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES AFTER NOVEMBER 10, 1977 AND UP TO AND INCLUDING
THE EXPIRATION DATE MUST OBTAIN AN IRREVOCABLE PROXY FROM THE SELLER OF SUCH
SHARES AND VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO
FACILITATE THE TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES
WILL TRADE, DURING THE PERIOD WHICH BEGINS TWO DAYS PRIOR TO THE RECORD DATE AND
WHICH WILL END AT THE CLOSE OF BUSINESS ON THE EXPIRATION DATE, IN THE
OVER-THE-COUNTER MARKET UNDER THE SYMBOLS "NEEAT" FOR THE 4.56% SERIES, "NEEDT"
FOR THE 4.60% SERIES, "NEEFT" FOR THE 4.64% SERIES, AND "NEEGT" FOR THE 6.08%
SERIES, INDICATING THAT SUCH SHARES ARE TRADING "WITH PROXY." A PREFERRED
SHAREHOLDER WHO ACQUIRES SHARES DURING THIS PERIOD MUST OBTAIN, OR HAVE SUCH
HOLDER'S AUTHORIZED REPRESENTATIVE OBTAIN, IRREVOCABLE PROXY (WHICH IS INCLUDED
IN THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY) AT SETTLEMENT FROM THE
SELLER. THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (THE NASD) AND THE
DEPOSITORY TRUST COMPANY (DTC) HAVE ISSUED NOTICES INFORMING THEIR MEMBERS AND
<PAGE> 2
PARTICIPANTS THAT THE SHARES WILL TRADE "WITH PROXY" AND THAT SETTLEMENT OF ALL
TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN IRREVOCABLE PROXY
FROM THE SELLER. SETTLEMENT OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE
SHOULD INCLUDE AN IRREVOCABLE PROXY FROM THE SELLER. SEE TERMS OF THE OFFER --
PROCEDURE FOR TENDERING SHARES IN THE BOOKLET.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT BUT NOT
REGISTERED IN YOUR NAME. A TENDER OR A VOTE OF SUCH SHARES CAN BE MADE ONLY BY
US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. ANY LETTER OF
TRANSMITTAL AND PROXY FURNISHED TO YOU IS SOLELY FOR YOUR INFORMATION AND CANNOT
BE USED BY YOU TO TENDER OR VOTE SHARES HELD BY US FOR YOUR ACCOUNT.
We request your instructions as to whether you wish us to tender and/or
vote any or all of the Shares held by us for your account upon the terms and
subject to the conditions set forth in the Offer.
PLEASE READ THE FOLLOWING INFORMATION CAREFULLY:
1. The Offer is for any and all Shares outstanding. The Offer for a
Series of Preferred is independent of the Offer for any other Series of
Preferred.
2. The Offer and withdrawal rights will expire at 5:00 p.m., Eastern
Standard Time, on Friday, December 12, 1997, unless the Offer is extended
with respect to a Series of Preferred. Your instructions to us should be
forwarded to us in ample time to permit us to submit a tender on your
behalf by the expiration of the Offer. If you would like to withdraw your
Shares that we have tendered, you can withdraw them so long as the Offer
remains open or at any time after the expiration of forty business days
from the commencement of the Offer if such tendered Shares have not been
accepted for payment.
3. Preferred Shareholders who wish to tender their Shares pursuant to
the Offer must vote FOR the Proposed Amendment. The Offer is conditioned
upon the Proposed Amendment being approved and adopted at the Special
Meeting.
4. Preferred Shareholders have the right to vote in favor of the
Proposed Amendment regardless of whether they tender their Shares. If the
Proposed Amendment is approved and adopted, the Power Company will make a
Special Cash Payment (as defined in the Booklet) in the amount of $1.00 per
Share to each Preferred Shareholder of record who voted in favor of the
Proposed Amendment, provided that such Shares have not been tendered
pursuant to the Offer.
5. Any stock transfer taxes applicable to the sale of Shares to NEES
pursuant to the Offer will be paid by NEES, except as otherwise provided in
Instruction 6 of the Letter of Transmittal and Proxy.
NEITHER NEES, THE POWER COMPANY, THEIR RESPECTIVE BOARDS OF DIRECTORS, ANY
OF THEIR RESPECTIVE OFFICERS, NOR ANY OTHER PERSON AUTHORIZED BY THEM MAKES ANY
RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL
SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
If you wish to have us tender and/or vote any or all of your Shares held by
us for your account upon the terms and subject to the conditions set forth in
the Offer, please so instruct us by completing, executing, detaching and
returning to us the instruction form on the detachable part hereof. An envelope
to return your instructions to us is enclosed. If you authorize tender of your
Shares, all such Shares will be tendered unless otherwise specified on the
detachable part hereof. Your instructions should be forwarded to us in ample
time to permit us to submit a tender and/or vote on your behalf by the
expiration of the Offer or the Special Meeting, as applicable.
2
<PAGE> 3
INSTRUCTIONS
WITH RESPECT TO OFFER TO PURCHASE BY
NEW ENGLAND ELECTRIC SYSTEM FOR CASH
ANY AND ALL OUTSTANDING SHARES OF
THE DIVIDEND SERIES PREFERRED STOCK OF,
AND PROXY SOLICITATION BY,
NEW ENGLAND POWER COMPANY
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase and Proxy Statement and Information Statement, dated November
6, 1997, and a separate Letter of Transmittal and Proxy for each series of
Dividend Series Preferred Stock of New England Power Company (the Power Company)
(each a Series of Preferred) in which the undersigned owns shares (as to each
Series of Preferred, the Offer to Purchase and Proxy Statement, together with
the applicable Letter of Transmittal and Proxy, constitutes the Offer) in
connection with the offer by New England Electric System (NEES) to the holders
of each Series of Preferred to tender any and all of their shares of a Series of
Preferred (the Shares) for purchase at the purchase price per Share listed on
the front cover of the Offer to Purchase and Proxy Statement and Information
Statement, net to the seller in cash, upon the terms and subject to the
conditions of the Offer, and in connection with the proxy solicitation being
conducted by the Board of Directors of the Power Company.
<TABLE>
=============================================================================================
This will instruct you to tender to NEES the number of Shares indicated
below (or, if no number is indicated below, all Shares) which are held by you
for the account of the undersigned, upon the terms and subject to the conditions
of the Offer.
<S> <C>
SERIES OF PREFERRED NUMBER OF SHARES TO BE TENDERED*
- -------------------------------------------- --------------------------------------------
- -------------------------------------------- --------------------------------------------
- -------------------------------------------- --------------------------------------------
- -------------------------------------------- --------------------------------------------
=============================================================================================
</TABLE>
- --------------------------------------------------------------------------------
You are further instructed to vote as designated hereunder in respect of
the Proposed Amendment all Shares which the undersigned is entitled to vote at
the Special Meeting:**
ITEM 1.
Amendment of the Articles of Organization and By-laws to delete in its
entirety Article I, Section 4E(4), limiting the Power Company's ability to issue
unsecured indebtedness.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s):
----------------------------------------------------------
Name(s):
---------------------------------------------------------------
Address:
---------------------------------------------------------------
Dated: , 1997
-----------------------------------------------------------
Social Security or Taxpayer Identification No.:
------------------------
- --------------------------------------------------------------------------------
- ---------------
* By executing and returning these Instructions, unless otherwise indicated, it
will be assumed that all Shares held by us for your account are to be
tendered.
** By executing and returning these Instructions, unless otherwise indicated, it
will be assumed that all Shares held by us for your account are to be voted
FOR the Proposed Amendment.
3
<PAGE> 4
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF
6% CUMULATIVE PREFERRED STOCK OF
NEW ENGLAND POWER COMPANY
BY
NEW ENGLAND ELECTRIC SYSTEM
<TABLE>
<CAPTION>
TITLE OF SERIES
OF PURCHASE PRICE
PREFERRED STOCK CUSIP NUMBER PER SHARE
- ----------------- ------------ --------------
<S> <C> <C>
6% Series 644188 30 2 $ 116.50
</TABLE>
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME,
ON FRIDAY, DECEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED (THE EXPIRATION
DATE).
November 6, 1997
To Our Clients:
Enclosed for your consideration is the material listed below relating to
the offer of New England Electric System, a Massachusetts voluntary association
(NEES), inviting tenders of the 6% Cumulative Preferred Stock of New England
Power Company (the Power Company) (the Shares, and each holder thereof and
Preferred Shareholder), a Massachusetts corporation and direct subsidiary of
NEES, in which you own shares. That Offer is for purchase at the price per Share
listed above, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase and Proxy Statement and
Information Statement, dated November 6, 1997(the Booklet), and in the Letter of
Transmittal for the Shares tendered. The Booklet, together with the Letter of
Transmittal constitutes the Offer. NEES will purchase all Shares validly
tendered and not withdrawn, upon the terms and subject to the conditions of the
Offer.
THE OFFER FOR IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED AND IS INDEPENDENT OF THE OFFER FOR OTHER PREFERRED SHARES OF THE POWER
COMPANY. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE PROPOSED
AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED IN THE
BOOKLET). PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE ON THE PROPOSED
AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. SEE PROPOSED AMENDMENT
AND PROXY SOLICITATION, TERMS OF THE OFFER -- CERTAIN CONDITIONS OF THE OFFER,
AND TERMS OF THE OFFER -- EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS IN
THE BOOKLET.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT BUT NOT
REGISTERED IN YOUR NAME. A TENDER OR A VOTE OF SUCH SHARES CAN BE MADE ONLY BY
US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. ANY LETTER OF
TRANSMITTAL FURNISHED TO YOU IS SOLELY FOR YOUR INFORMATION AND CANNOT BE USED
BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request your instructions as to whether you wish us to tender any or all
of the Shares held by us for your account upon the terms and subject to the
conditions set forth in the Offer.
PLEASE READ THE FOLLOWING INFORMATION CAREFULLY:
1. The Offer is for any and all Shares outstanding. The offer for the
Preferred is independent of the offer for other Preferred Shares of the
Power Company.
2. The Offer and withdrawal rights will expire at 5:00 p.m., Eastern
Standard Time, on Friday, December 12, 1997, unless the Offer is extended
with respect to a Series of Preferred. Your instructions to us should be
forwarded to us in ample time to permit us to submit a tender on your
behalf by the expiration of the Offer. If you would like to withdraw your
Shares that we have tendered, you can withdraw them so long as the Offer
remains open or at any time after the expiration of forty business days
from the commencement of the Offer if such tendered Shares have not been
accepted for payment.
<PAGE> 5
3. The Offer is conditioned upon the Proposed Amendment being
approved and adopted at the Special Meeting.
4. Preferred Shareholders have the right to vote in favor of the
Proposed Amendment regardless of whether they tender their Shares.
5. Any stock transfer taxes applicable to the sale of Shares to NEES
pursuant to the Offer will be paid by NEES, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
NEITHER NEES, THE POWER COMPANY, THEIR RESPECTIVE BOARDS OF DIRECTORS, ANY
OF THEIR RESPECTIVE OFFICERS, NOR ANY OTHER PERSON AUTHORIZED BY THEM MAKES ANY
RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO WHETHER TO TENDER ANY OR ALL
SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
If you wish to have us tender any or all of your Shares held by us for your
account upon the terms and subject to the conditions set forth in the Offer,
please so instruct us by completing, executing, detaching and returning to us
the instruction form on the detachable part hereof. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Shares, all such
Shares will be tendered unless otherwise specified on the detachable part
hereof. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf by the expiration of the Offer or the Special
Meeting, as applicable.
2
<PAGE> 6
INSTRUCTIONS
WITH RESPECT TO OFFER TO PURCHASE BY
NEW ENGLAND ELECTRIC SYSTEM FOR CASH
ANY AND ALL OUTSTANDING SHARES OF
THE 6% CUMULATIVE PREFERRED STOCK OF,
NEW ENGLAND POWER COMPANY
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase and Proxy Statement and Information Statement, dated November
6, 1997, and a separate Letter of Transmittal for the 6% Cumulative Preferred
Stock of New England Power Company (the Power Company) in which the undersigned
owns shares. (The Offer to Purchase and Proxy Statement and Information
Statement, together with the Letter of Transmittal, constitutes the Offer.) This
material is in connection with the offer by New England Electric System (NEES)
to the holders of 6% Cumulative Preferred Stock to tender any and all of their
shares (the Shares) for purchase at the purchase price per Share listed on the
front cover of the Offer to Purchase and Proxy Statement and Information
Statement, net to the seller in cash, upon the terms and subject to the
conditions of the Offer.
This will instruct you to tender to NEES the number of Shares indicated
below (or, if no number is indicated below, all Shares) which are held by you
for the account of the undersigned, upon the terms and subject to the conditions
of the Offer.
NUMBER OF SHARES OF 6% CUMULATIVE PREFERRED STOCK TO BE TENDERED*
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s):
Name(s):
(Please print)
Address:
Dated: , 1997
Social Security or Taxpayer Identification No.:
- ---------------
* By executing and returning these Instructions, unless otherwise indicated, it
will be assumed that all Shares held by us for your account are to be
tendered.
3
<PAGE> 1
[Logo] NEW ENGLAND POWER COMPANY
Dear 6% Cumulative Preferred Shareholder:
Please find enclosed important information pertaining to the following two
items:
(i) a proposed amendment (the Proposed Amendment) to the By-Laws and
Articles of Organization (the Provisions) of New England Power Company (the
Power Company) which will be considered at a Special Meeting of its
shareholders; and
(ii) an offer by New England Electric System (NEES) to purchase the
outstanding shares of the Power Company's 6% Cumulative Preferred Stock.
We will greatly appreciate your giving prompt attention to the enclosed
material which you are urged to read in its entirety.
We are not asking for your proxy and you are requested not send a proxy.
You are entitled, however, to attend and vote at the Special Meeting and to give
proxies to others in accordance with applicable law.
The Proposed Amendment relates to the elimination of the restrictions in
the Provisions limiting the ability of the Power Company to incur unsecured
indebtedness. Currently, unsecured indebtedness cannot exceed 20% of the Power
Company's aggregate of its capital, premium, and secured debt (10% without a
vote of the Dividend Series Preferred Stock). As more fully described in the
attached materials, in October 1996 the NEES Companies announced their intention
to divest their generating business. The decision was due to a combination of
factors relating to the restructuring of the electric utility industry. On
August 5, 1997, the NEES Companies reached an agreement to sell the non-nuclear
generation business to USGen New England, Inc. for approximately $1.65 billion,
subject to various adjustments. In order to facilitate this transaction to a
competitive electric industry, the Power Company may need -- prior to the
completion of the sale of its generating plants -- to buy out existing contracts
with independent power producers or to pay the difference between the monies
owed to another affiliate and the proceeds from the sale of that affiliate's
remaining oil and gas properties. The exact dollar amount of these obligations
is not yet determinable, but they may be significant. Given the changing nature
of the Power Company, putting in place long-term financial instruments to
provide the monies may not be a cost-effective procedure. Therefore, the Power
Company believes it must increase its flexibility in meeting its cash needs.
The Power Company may substantially reduce its capitalization and retire
its outstanding General and Refunding Mortgage bonds through call or defeasance.
The Power Company anticipates issuing its new long-term debt in the form of
debentures, which are unsecured. Absent the Proposed Amendment, these debentures
would not be permitted by the Provisions without prior approval by the preferred
shareholders. If the Proposed Amendment is adopted, the Power Company will have
increased flexibility (i) to choose among different types of debt financing and
(ii) to finance projects using the most cost-effective means. The availability
and flexibility of unsecured debt is necessary, in the estimation of NEES and
the Power Company, to take full advantage of changing conditions in securities
markets.
Concurrently with the Power Company's proxy solicitation, NEES is offering
to purchase the outstanding shares of the Power Company's 6% Cumulative
Preferred Stock. The Offer is conditioned upon, among other things, the Proposed
Amendment being approved and adopted at the Special Meeting. Instructions for
tendering your shares are included with the enclosed material.
You are cordially invited to attend the Special Meeting which will be held
at 25 Research Drive, Westborough, Mass. 05182, on December 12, 1997, at 4:30
p.m., eastern standard time, or any adjournment or postponement of such meeting.
<PAGE> 2
If you have questions or requests for assistance regarding the Proposed
Amendment, the Special Meeting, or NEES's tender offer, please call Georgeson &
Company Inc., the Information Agent, at (800) 223-2604 (toll-free) and for banks
and brokers (212) 440-9800 (call collect) or Merrill Lynch & Co., the Dealer
Manager, at (888) ML4-TNDR ((888) 654-8637 (toll-free)). Requests for additional
copies of the Booklet, the Letter of Transmittal, or other tender offer or proxy
materials may be directed to the Information Agent and such copies will be
furnished promptly at the companies' expense. Preferred Shareholders may also
contact their local broker, dealer, commercial bank, or trust company for
assistance concerning the Offer.
Thank you for your continued interest in the Power Company.
Sincerely yours,
Treasurer
2
<PAGE> 3
[Logo] NEW ENGLAND POWER COMPANY
Dear Dividend Series Preferred Stock Shareholder:
Please find enclosed important information pertaining to the following two
items:
(i) a proposed amendment (the Proposed Amendment) to the By-Laws and
Articles of Organization (the Provisions) of New England Power Company (the
Power Company) which will be considered at a Special Meeting of its
shareholders; and
(ii) an offer by New England Electric System (NEES) to purchase the
outstanding shares of the Power Company's Dividend Series Preferred Stock.
We will greatly appreciate your giving prompt attention to the enclosed
material which you are urged to read in its entirety.
The Proposed Amendment relates to the elimination of the restrictions in
the Provisions limiting the ability of the Power Company to incur unsecured
indebtedness. Currently, unsecured indebtedness cannot exceed 20% of the Power
Company's aggregate of its capital, premium, and secured debt (10% without a
vote of the Dividend Series Preferred Stock). As more fully described in the
attached materials, in October 1996 the NEES Companies announced their intention
to divest their generating business. The decision was due to a combination of
factors relating to the restructuring of the electric utility industry. On
August 5, 1997, the NEES Companies reached an agreement to sell the non-nuclear
generation business to USGen New England, Inc. for approximately $1.65 billion,
subject to various adjustments. In order to facilitate this transaction to a
competitive electric industry, the Power Company may need -- prior to the
completion of the sale of its generating plants -- to buy out existing contracts
with independent power producers or to pay the difference between the monies
owed to another affiliate and the proceeds from the sale of that affiliate's
remaining oil and gas properties. The exact dollar amount of these obligations
is not yet determinable, but they may be significant. Given the changing nature
of the Power Company, putting in place long-term financial instruments to
provide the monies may not be a cost-effective procedure. Therefore, the Power
Company believes it must increase its flexibility in meeting its cash needs.
The Power Company may substantially reduce its capitalization and retire
its outstanding General and Refunding Mortgage bonds through call or defeasance.
The Power Company anticipates issuing its new long-term debt in the form of
debentures, which are unsecured. Absent the Proposed Amendment, these debentures
would not be permitted by the Provisions without prior approval by the preferred
shareholders. If the Proposed Amendment is adopted, the Power Company will have
increased flexibility (i) to choose among different types of debt financing and
(ii) to finance projects using the most cost-effective means. The availability
and flexibility of unsecured debt is necessary, in the estimation of NEES and
the Power Company, to take full advantage of changing conditions in securities
markets.
Concurrently with the Power Company's proxy solicitation, NEES is offering
to purchase the outstanding shares of the Power Company's Dividend Series
Preferred Stock. In order to tender your shares, you must vote for the Proposed
Amendment. The Offer is further conditioned upon, among other things, the
Proposed Amendment being approved and adopted at the Special Meeting.If you vote
for the Proposed Amendment and it passes, you will be entitled to receive a
Special Cash Payment in the amount of $1.00 per share for each share that you so
vote, provided your shares have not been tendered. Instructions for tendering
your shares and information pertaining to the Special Cash Payment are included
with the enclosed material.
<PAGE> 4
The Shares will trade, during the period which begins two days prior to the
Record Date and which will end at the close of business on the Expiration Date,
in the over-the-counter market under the symbols "NEEAT" for the 4.56% Series,
"NEEDT" for the 4.60% Series, "NEEFT" for the 4.64% Series, and "NEEGT" for the
6.08% Series, indicating that such Shares are trading "with proxy." A Dividend
Series Preferred Shareholder who acquires Shares during this period must obtain,
or have such holder's authorized representative obtain, an assignment of proxy
(which is included in the applicable Letter of Transmittal and Proxy) at
settlement from the seller. The National Association of Securities Dealers, Inc.
(NASD) and The Depository Trust Company (DTC) have issued notices informing
their members and participants that the Shares will trade "with proxy" and that
settlement of all trades during the period described above should include an
assignment of proxy from the seller.
It is important to your interests that all shareholders, regardless of the
number of shares owned, participate in the affairs of the Company. Even if you
plan to attend the Special Meeting, WE URGE YOU TO SIGN AND DATE THE ENCLOSED
PROXY, WHICH IS INCLUDED WITH AN ENCLOSED LETTER(S) OF TRANSMITTAL AND PROXY FOR
EACH OF THE RESPECTIVE SERIES OF DIVIDEND SERIES PREFERRED STOCK, AND RETURN IT
PROMPTLY TO THE DEPOSITARY IN THE ENCLOSED ENVELOPE. By signing and returning
your proxy promptly, you are assuring that your shares will be voted.
You are cordially invited to attend the Special Meeting which will be held
at 25 Research Drive, Westborough, Mass., on December 12, 1997, at 4:30 p.m.,
eastern standard time, or any adjournment or postponement of such meeting.
If you have questions or requests for assistance regarding the Proposed
Amendment, the Special Meeting, or NEES's tender offer, please call Georgeson &
Company Inc., the Information Agent, at (800) 223-2064 (toll-free) and for banks
and brokers (212) 440-9800 (call collect) or Merrill Lynch & Co., the Dealer
Manager, at (888) ML4-TNDR ((888) 654-8637 (toll-free)). Requests for additional
copies of the Booklet, the Letter of Transmittal, or other tender offer or proxy
materials may be directed to the Information Agent and such copies will be
furnished promptly at the companies' expense. Preferred Shareholders may also
contact their local broker, dealer, commercial bank, or trust company for
assistance concerning the Offer.
Thank you for your continued interest in the Power Company.
Sincerely yours,
MICHAEL E. JASMISMI
Treasurer
2
<PAGE> 1
[Logo] NEW ENGLAND POWER COMPANY
DIVIDEND SERIES PREFERRED STOCK
SUMMARY INSTRUCTIONS FOR PARTICIPATING IN THE OFFER
(1) CHECK CONTENTS OF PACKAGE. Before proceeding, please confirm that this
package contains each of the following materials:
- Letter from the Treasurer.
- Offer to Purchase and Proxy Statement and Information Statement dated
November 6, 1997.
- Letter of Transmittal and Proxy relating to the applicable Series of
Preferred Stock.
- Notice of Guaranteed Delivery and Proxy.
- Return envelope addressed to IBJ Schroder Bank & Trust Company, the
Depositary for the Offer.
- W-9 Instruction Form.
(2) REVIEW MATERIALS CAREFULLY BEFORE DECIDING WHETHER TO PARTICIPATE. Please
review all enclosed materials carefully before deciding whether to
participate in the Offer.
- IF YOUR SHARES ARE REGISTERED IN YOUR NAME and you decide to participate,
you must follow the instructions in paragraphs (3) and (4) below.
- IF YOUR SHARES ARE HELD BY A BROKER OR BANK FOR YOUR ACCOUNT and you
decide to participate, you must contact your broker or bank and advise
them to execute your instructions on your behalf.
(3) COMPLETE THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY. You must follow
these instructions to complete the Letter of Transmittal and Proxy. The
Letter of Transmittal and Proxy for each Series is printed on pink paper.
(a) TENDER OFFER AND PROXY. If you wish to tender your Shares pursuant to
the Offer, you must vote FOR Item 1.
- Indicate your vote by an (X) on page 3 of the Letter of Transmittal
and Proxy.
- Complete the box entitled "Description of Shares Tendered" on page 4.
- Sign and date the box entitled "Signature(s) of Registered Holder(s)"
on page 5 and print your capacity, address and daytime telephone
number.
- Only complete the "Guarantee of Signature" section if the signatures
are different from the registration on the face of the certificate.
- If selling Shares on or after November 10, 1997, complete the
"Irrevocable Proxy," if applicable, on pages 6 and 7.
- Complete, if applicable, the box on page 8.
- Complete, sign, and date the box entitled "Substitute Form W-9" on
page 20.
- The following sections of the Letter of Transmittal and Proxy should
be completed only if applicable:
- Notice of Guaranteed Delivery: If you cannot deliver your preferred
stock certificate(s) to the Depositary before December 12, 1997, a
broker must guarantee delivery of your Shares. The broker must
complete the applicable portion of page 9 of the Letter of
Transmittal and Proxy and submit the separate document entitled
"Notice of Guaranteed Delivery and Proxy."
- Soliciting Dealer: If your tender has been solicited by a Soliciting
Dealer, please complete the box entitled "Solicited Tenders" on page
13 of the Letter of Transmittal and Proxy.
<PAGE> 2
- Special Payment and Special Delivery Instructions: If you would like
the check for the purchase price of Shares purchased pursuant to the
Offer or the certificates for Shares not purchased to be issued in
the name of someone other than the current holder or to be mailed to
someone other than the current holder, or to the current holder at an
address other than that shown on the current certificate, please
complete the boxes on page 12 entitled "Special Payment Instructions"
and/or "Special Delivery Instructions" in the Letter of Transmittal
and Proxy. To do either of these, you must have your signature
guaranteed by an eligible institution. (See Instructions 1 and 5 on
the Letter of Transmittal and Proxy with respect to guarantee of
signatures by an eligible institution.)
(b) PROXY ONLY. If you choose only to vote the proxy and will not
tender your Shares pursuant to the Offer, please follow these
instructions: (Please note that if you wish to receive the Special
Cash Payment, you must vote FOR Item 1. A failure to return a Proxy
is a vote against.)
- Indicate your vote by an (X) on page 3 of the Letter of Transmittal
and Proxy.
- Sign and date the box entitled "Signature(s) of Registered
Holder(s)" on page 5 and print your capacity, address and daytime
telephone number.
- Complete, sign and date the box entitled "Substitute Form W-9" on
page 20.
- The following sections of the Letter of Transmittal and Proxy
should be completed only if applicable:
- SOLICITING DEALER: If your proxy has been solicited by a
Soliciting Dealer, please complete the box entitled "Solicited
Tenders" on page 13 of the Letter of Transmittal and Proxy.
- If you would like the Special Cash Payment to be issued to or
mailed to someone other than the current holder, please complete
the boxes entitled "Special Payment Instructions" and/or "Special
Delivery Instructions" on page 12 of the Letter of Transmittal
and Proxy. To do either of these, you must have your signature
guaranteed by an eligible institution. (See Instructions 1 and 5
on the Letter of Transmittal and Proxy with respect to guarantee
of signatures by an eligible institution.)
(4) MAIL UNSIGNED PREFERRED STOCK CERTIFICATES TOGETHER WITH THE SIGNED LETTER
OF TRANSMITTAL AND PROXY TO THE DEPOSITARY IN THE ENCLOSED RETURN
ENVELOPE. Send the applicable Letter of Transmittal and Proxy together with
the unsigned Preferred Stock certificates to IBJ Schroder Bank & Trust
Company, as Depositary, at the address shown on the Letter of Transmittal
and Proxy. If you own more than one series of preferred stock you must
complete the specific Letter of Transmittal and Proxy that relates to each
individual series. Use of registered or certified mail is recommended.
PLEASE NOTE: If you are not tendering, DO NOT send in your certificates.
Only send the signed Letter of Transmittal and Proxy to the Depositary in
the enclosed return envelope.
IF YOU HAVE ANY QUESTIONS, HAVE NOT RECEIVED THE APPLICABLE LETTER(S) OF
TRANSMITTAL AND PROXY OR OTHER DOCUMENTS PERTAINING TO THE OFFER, OR NEED
ASSISTANCE IN COMPLETING THE APPLICABLE FORMS, PLEASE CONTACT THE INFORMATION
AGENT: GEORGESON & COMPANY INC. AT (800) 223-2064 (TOLL-FREE) OR FOR BANKS AND
BROKERS (212) 440-9800 (CALL COLLECT).
<PAGE> 3
[LOGO] NEW ENGLAND POWER COMPANY
6% CUMULATIVE PREFERRED STOCK
SUMMARY INSTRUCTIONS FOR PARTICIPATING IN THE OFFER
(1) CHECK CONTENTS OF PACKAGE. Before proceeding, please confirm that this
package contains each of the following materials:
- Letter from the Treasurer.
- Offer to Purchase and Proxy Statement and Information Statement dated
November 6, 1997.
- Letter of Transmittal.
- Notice of Guaranteed Delivery.
- Return envelope addressed to IBJ Schroder Bank & Trust Company, the
Depositary for the Offer.
- W-9 Instruction Form.
(2) REVIEW MATERIALS CAREFULLY BEFORE DECIDING WHETHER TO PARTICIPANT. Please
review all enclosed materials carefully before deciding whether to
participate in the Offer.
- IF YOUR SHARES ARE REGISTERED IN YOUR NAME and you decide to participate,
you must follow the instructions in paragraphs (3) and (4) below.
- IF YOUR SHARES ARE HELD BY A BROKER OR BANK FOR YOUR ACCOUNT and you
decide to participate, you must contact your broker or bank and advise
them to execute your instructions on your behalf.
(3) COMPLETE THE LETTER OF TRANSMITTAL. You must follow these instructions to
complete the Letter of Transmittal. The Letter of Transmittal is printed on
pink paper. New England Power Company is not asking holders of the 6%
Cumulative Preferred Stock for a proxy, and they are requested not to send a
proxy.
- Complete the box entitled "Description of Shares Tendered" on page 3
of the Letter of Transmittal.
- Sign and date the box entitled "Signature(s) of Registered Holder(s)"
on page 4 and print your capacity, address and daytime telephone
number.
- Only complete the "Guarantee of Signature" section if the signatures
are different from the registration on the face of the certificate.
- Complete, sign, and date the box entitled "Substitute Form W-9" on
page 16.
- The following sections of the Letter of Transmittal should be
completed only if applicable:
- Notice of Guaranteed Delivery: If you cannot deliver your preferred
stock certificate(s) to the Depositary before December 12, 1997, a
broker must guarantee delivery of your Shares. The broker must
complete the applicable portion of page 6 of the Letter of
Transmittal and submit the separate document entitled "Notice of
Guaranteed Delivery."
- Soliciting Dealer: If your tender has been solicited by a Soliciting
Dealer, please complete the box entitled "Solicited Tenders" on page
10 of the Letter of Transmittal.
- Special Payment and Special Delivery Instructions: If you would like
the check for the purchase price of Shares purchased pursuant to the
Offer or the certificates for Shares not purchased to be issued in
the name of someone other than the current holder or to be mailed to
someone other than the current holder, or to the current holder at an
address other than that shown on the current certificate, please
complete the boxes on page 9 entitled "Special Payment Instructions"
and/or "Special Delivery Instructions" in the Letter of Transmittal.
To do either of these, you must have your signature guaranteed by an
eligible institution. (See Instructions 1
<PAGE> 4
and 5 on the Letter of Transmittal with respect to guarantee of
signatures by an eligible institution.)
(4) MAIL UNSIGNED PREFERRED STOCK CERTIFICATES TOGETHER WITH THE UNSECURED
PREFERRED STOCK CERTIFICATE SIGNED LETTER OF TRANSMITTAL TO THE DEPOSITARY
IN THE ENCLOSED RETURN ENVELOPE. Send the Letter of Transmittal together
with the unsigned Preferred Stock Certificate to IBJ Schroder Bank & Trust
Company, as Depositary in the enclosed return envelope, at the address shown
on the Letter of Transmittal. If you own more than one series of preferred
stock you must complete the specific Letter of Transmittal and Proxy that
relates to each individual series. Use of registered or certified mail is
recommended.
IF YOU HAVE ANY QUESTIONS, HAVE NOT RECEIVED THE APPLICABLE LETTER(S) OF
TRANSMITTAL AND, IF APPLICABLE, PROXY OR OTHER DOCUMENTS PERTAINING TO THE
OFFER, OR NEED ASSISTANCE IN COMPLETING THE APPLICABLE FORMS, PLEASE CONTACT THE
INFORMATION AGENT: GEORGESON & COMPANY INC. AT (800) 223-2064 (TOLL-FREE) OR FOR
BANKS AND BROKERS (212) 440-9800 (CALL COLLECT).
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
PURPOSE OF FORM. A person who is required to file an information return
with the IRS must obtain your correct taxpayer identification number (TIN) to
report income paid to you, real estate transactions, mortgage interest you paid,
the acquisition or abandonment of secured property, or contributions you made to
an IRA. Use Form W-9 to furnish your correct TIN to the requester (the person
asking you to furnish your TIN) and, when applicable, (1) to certify that the
TIN you are furnishing is correct (or that you are waiting for a number to be
issued), (2) to certify that you are not subject to backup withholding, and (3)
to claim exemption from backup withholding if you are an exempt payee.
Furnishing your correct TIN and making the appropriate certifications will
prevent certain payments from being subject to backup withholding.
NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN W-9 TO REQUEST YOUR TIN,
YOU MUST USE THE REQUESTER'S FORM.
HOW TO OBTAIN A TIN. If you do not have a TIN, apply for one immediately.
To apply, get Form SS-5, Application for a Social Security Card (for
Individuals), from your local office of the Social Security Administration, or
Form SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your local IRS office.
To complete Form W-9 if you do not have a TIN, write "Applied for" in the
space for the TIN in Part 1, sign and date the form, and give it to the
requester. Generally, you will than have 60 days to obtain a TIN and furnish it
to the requester. If the requester does not receive your TIN within 60 days,
backup withholding, if applicable, will begin and continue until you furnish
your TIN to the requester. For reportable interest or dividend payments, the
payor must exercise one of the following options concerning backup withholding
during this 60-day period. Under option (1), a payor must backup withhold on any
withdrawals you make from your account after 7 business days after the requester
receives this form back from you. Under option (2), the payor must backup
withhold on any reportable interest or dividend payments made to your account,
regardless of whether you make any withdrawals. The backup withholding under
option (2) must begin no later than 7 business days after the requester receives
this form back. Under option (2), the payor is required to refund the amounts
withheld if your certified TIN is received within the 60-day period and you were
not subject to backup withholding during that period.
NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED
FOR A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date the form, and give it to the requester.
WHAT IS BACKUP WITHHOLDING? -- Persons making certain payments to you must
withhold and pay to the IRS 31% of such payments under certain conditions. This
is called "backup withholding." Payments that could be subject to backup
withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee compensation, and certain payments
from fishing boat operators, but do not include real estate transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
(1) You do not furnish your TIN to the requester, or
(2) The IRS notifies the requester that you furnished an incorrect TIN, or
(3) You are notified by the IRS that you are subject to withholding because
you failed to report all your interest and dividends on your tax return (for
reportable interest and dividends only), or
(4) You do not certify to the requester that you are not subject to backup
withholding under 3 above, (for reportable interest and dividend accounts opened
after 1983 only), or
(5) You do not certify your TIN.
Except as explained in 5 above, other reportable payments are subject to
backup withholding only if 1 or 2 above applies. Certain payees and payments are
exempt from backup withholding and information reporting. See Payees and
Payments Exempt From Backup Withholding, below, and Exempt Payees and Payments
under Signing the Certification, below if you are an exempt payee.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. The following is a list
of payees exempt from backup withholding and for which no information reporting
is required. For interest and dividends, all listed payees are exempt except as
listed in item (9). For broker transactions, payees listed in items (1) through
(13) and a person registered under the Investment Advisers Act of 1940 who
regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are
17
<PAGE> 2
exempt from backup withholding for barter exchange transactions and patronage
dividends.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), an IRA, or a
custodial account under section 402(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporation Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividend and patronage dividends generally not subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
Payments of interest generally not subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYER.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid to you.
Other types of payments generally not subject to backup withholding include:
- Wages.
- Distributions from a pension, annuity, profit-sharing or stock bonus plan,
or an IRA.
- Distributions from an owner-employee plan.
- Certain surrenders of life insurance contracts.
- Gambling winnings, if withholding is required under section 3402(q).
However, if withholding is not required under section 3402(q), backup
withholding applies if the payee fails to furnish a TIN.
- Real estate transactions reportable under section 6045.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A, and 6050N, and the regulations under those sections.
PENALTIES
FAILURE TO FURNISH TIN. If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS. If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
18
<PAGE> 3
NAME -- If you are an individual, you must generally provide the name shown
on your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card, and your new last name.
NUMBER -- If you are a sole proprietor, you must furnish your individual
name and either your SSN or EIN. You may also enter your business name or "doing
business as" name on the business name line. Enter your name(s) as shown on your
social security card and/or as it was used to apply for your EIN on Form SS-4.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
SIGNING THE "PART III -- CERTIFICATION" ON THE SUBSTITUTE FORM W-9
(1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983 -- You are required to furnish
your correct TIN, but you are not required to sign the certification.
(2) INTEREST, DIVIDEND, BROKER, AND BARTER EXCHANGE ACCOUNTS OPENED AFTER
1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983 -- You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item 2 in the certification before signing the form.
(3) REAL ESTATE TRANSACTIONS. You must sign the certification. You may
cross out item 2 of the certification.
(4) OTHER PAYMENTS. You are required to furnish your correct TIN, but you
are not required to sign the certification unless you have been notified that
you have previously given an incorrect TIN. Other payments include payments made
in the course of the requester's trade or business for rents, royalties, goods
(other than bills for merchandise), medical and health care services (including
payments to corporations), payments to a nonemployee for services (including
attorney and accounting fees), and payments to certain fishing boat crew
members.
(5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, OR IRA CONTRIBUTIONS. You are required to furnish your correct TIN,
but you are not required to sign the certification.
(6) EXEMPT PAYEES AND PAYMENTS. If you are exempt from backup withholding,
you should complete this form to avoid possible erroneous backup withholding.
Enter your correct TIN in Part I, write "EXEMPT" in the block in Part II, and
sign and date the form. If you are a nonresident alien or foreign entity not
subject to backup withholding, give the requester a complete Form W-8,
Certificate of Foreign Status.
(7) TIN "APPLIED FOR." Follow the instructions under How To Obtain a TIN, on
page 1, and sign and date this form.
SIGNATURE: For a joint account, only the person whose TIN is shown in Part 1
should sign.
PRIVACY ACT NOTICE: Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. You must provide your TIN whether or not you are
required to file a tax return. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a TIN to a payor. Certain penalties may also apply.
19
<PAGE> 4
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<CAPTION>
- ---------------------------------------------------
For this type of account: Give name and SSN of:
- ---------------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is not
a legal or valid
trust under state
law
5. Sole proprietorship The owner(3)
- ---------------------------------------------------
<CAPTION>
- ---------------------------------------------------
For this type of account: Give name and SSN of:
- ---------------------------------------------------
<C> <S> <C>
6. A valid trust, estate, Legal entity(4)
or pension trust
7. Corporate The corporation
8. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt
organization
9. Partnership The partnership
10. A broker or registered The broker or nominee
nominee
11. Account with the The public entity.
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments.
- ---------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
20
<PAGE> 1
EXHIBIT 9(d)
[HALE AND DORR LLP LETTERHEAD]
November 6, 1997
New England Electric System
New England Power Company
25 Research Drive
Westborough, MA 01582
Re: Offer to Purchase and Proxy Statement and Information Statement
---------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to New England Electric System and New England
Power Company in connection with the offer to purchase shares of preferred stock
of New England Power Company as described in the Offer to Purchase and Proxy
Statement and Information Statement dated November 6, 1997 (collectively, the
"Statement"). In rendering this opinion, we have relied upon the factual
accuracy of the information contained in the Statement. We hereby confirm our
opinion that the discussion under the caption "CERTAIN U.S. FEDERAL INCOME TAX
CONSIDERATIONS" in the Statement is accurate in all material respects and fairly
summarizes the information required to be disclosed therein.
We hereby consent to the filing of this opinion as an exhibit to the
Statement and to the use of our name under the caption "CERTAIN U.S. FEDERAL
INCOME TAX CONSIDERATIONS" in the Statement. In giving this consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended.
Sincerely,
/s/ HALE AND DORR LLP
