FILE NO. 70-9343
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
NORTHEAST UTILITIES ("NU")
NORTHEAST UTILITIES SERVICE COMPANY ("NUSCO")
CERTIFICATE OF PARTIAL CONSUMMATION WITH RESPECT TO
GUARANTEES ISSUED BY NU IN SUPPORT OF
OBLIGATIONS OF NONUTILITY SUBSIDIARIES
Pursuant to the requirements of Rule 24(a) of the Commission's
regulations under the Public Holding Company Act of 1935, as amended, NU and
NUSCO (collectively, the "Applicants") hereby report and certify as follows:
On November 30, 1998, NU partially consummated the transactions as
contemplated in the Application/Declaration, as amended (the "Application")
in File No. 70-9343, insofar as the Application related to issuance of
guarantees by NU in support of the obligations of nonutility subsidiaries
(the "Transactions"). The Transactions were carried out in accordance with
the terms and conditions of and for the purposes represented by the
Application and the order of the Commission issued on November 12, 1998 in
this file (SEC Release No. 35-26939, File No. 70-9343).
The following additional exhibits are filed herewith:
B.1 NU Guaranty (execution copy), dated as of November 30, 1998, made by NU,
in favor of the Participating Banks, the Issuing Bank and the Administrative
Agent, all named in a $50,000,000 Letter of Credit and Reimbursement
Agreement, dated as of November 30, 1998, among Select Energy, Inc., the
Participating Banks, the Administrative Agent, the Issuing Bank and
Documentation Agent, and the Syndication Agent named therein.
B.2 NU Performance Guaranty of Select Energy, Inc. All Requirements Power
Supply Agreement with Boston Edison Company (execution copy), dated as of
November 30, 1998.
December 10, 1998
NORTHEAST UTILITIES
NORTHEAST UTILITIES SERVICE COMPANY
BY /s/David R. McHale
Name: David R. McHale
Title: Vice President and Treasurer
[EXECUTION COPY]
NORTHEAST UTILITIES GUARANTY
GUARANTY, dated as of November 30, 1998, made by NORTHEAST UTILITIES, an
unincorporated voluntary business association organized under the laws of the
Commonwealth of Massachusetts (the "Guarantor"), in favor of the
Participating Banks (the "Participating Banks") parties to the Reimbursement
Agreement (as defined below), The First National Bank of Chicago, as issuing
bank (together with its successors and assigns in such capacity, the "Issuing
Bank") under the Reimbursement Agreement, and Union Bank of California, N.A.
("Union Bank"), as administrative agent (together with its successors and
assigns in such capacity, the "Administrative Agent") for the Participating
Banks and the Issuing Bank.
PRELIMINARY STATEMENTS
(1) The Administrative Agent, the Issuing Bank, The First National Bank of
Chicago, as Documentation Agent, Barclays Bank PLC, as Syndication Agent, and
the Participating Banks have entered into a Letter of Credit and
Reimbursement Agreement, dated as of the date hereof (said Agreement, as it
may hereafter be amended, supplemented or otherwise modified from time to
time, being the "Reimbursement Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined), with Select
Energy, Inc., a corporation organized and existing under the laws of the
State of Connecticut (the "Account Party"). The Guarantor owns directly 100%
of the issued and outstanding shares of capital stock of the Account Party,
and will derive substantial direct and indirect benefit from the transactions
contemplated by the Reimbursement Agreement.
(2) It is a condition precedent to the issuance of the Letter of Credit
pursuant to the Reimbursement Agreement that the Guarantor shall have
executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Issuing Bank to issue the Letter of Credit pursuant to the Reimbursement
Agreement and the Participating Banks to participate in the Letter of Credit
and all drawings thereunder, the Guarantor hereby agrees as follows:
SECTION 1. Certain Defined Terms. As used in this Guaranty, the following
terms shall have the following meanings (such meanings to be applicable to
the singular and plural forms of the terms defined):
"Aggregate Dividend Paying Availability" means the aggregate amount (without
duplication) of consolidated retained earnings and consolidated capital
surplus, paid in, of the Operating Companies available for the payment of
dividends to the Guarantor, after giving effect to any legal, regulatory or
contractual restrictions applicable to the payment of such dividends,
together with any accrued interim liabilities for dividends declared and
payable to the Guarantor, in each case to the extent payment thereof is not
in default or restricted by law, regulation or contract.
"CL&P Indenture" has the meaning assigned to that term in Section 8(a)(ii)(B)
hereof.
"Common Equity" means, at any date for any Person, an amount equal to the sum
of the aggregate of the par value of, or stated capital represented by, the
outstanding common shares of such Person and its Subsidiaries and the
surplus, paid-in, earned and other, if any, of such Person and its
Subsidiaries, in each case as determined on a consolidated basis in
accordance with generally accepted accounting principles.
"Consolidated Interest Expense" means, for any Person, for any period, the
aggregate amount of any interest required to be paid during such period by
such Person and its Subsidiaries on Debt (including the current portion
thereof) (as determined on a consolidated basis in accordance with generally
accepted accounting principles).
"Consolidated Operating Income" means for any Person, for any period (as
determined on a consolidated basis in accordance with generally accepted
accounting principles), such Person's and its Subsidiaries' operating income
for such period, adjusted as follows:
(i) increased by the amount of income taxes accrued less the amount of
income taxes paid by such Person and its Subsidiaries during such period, if
and to the extent deducted in the computation of such Person's and its
Subsidiaries' consolidated operating income for such period;
(ii) increased by the amount of any depreciation and amortization deducted in
the computation of such Person's and its Subsidiaries' consolidated operating
income for such period; and
(iii) decreased by the amount of any capital expenditures paid by such
Person and/or its Subsidiaries to the extent not deducted in the computation
of such Person's and its Subsidiaries' consolidated operating income for such
period.
"Debt" means, for any Person, without duplication, (i) indebtedness of such
Person for borrowed money, including but not limited to obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(ii) obligations of such Person to pay the deferred purchase price of
property or services (excluding any obligation of such Person to the United
States Department of Energy or its successor with respect to disposition of
spent nuclear fuel burned prior to April 3, 1983), (iii) obligations of such
Person as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, (iv) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire,
or otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iii)
above, and (v) liabilities in respect of unfunded vested benefits under ERISA
Plans.
"Existing Credit Facilities" means (i) the several Three-Year Credit
Agreements, each dated as of December 1, 1992, entered into with individual
banks by (A) CL&P, the Guarantor and WMECO, as "Borrowers" thereunder and
NUSCO as the "Borrowers' Agent" thereunder and (B) CL&P, the Guarantor,
WMECO, HWP, NNECO and RRR, as "Borrowers" thereunder and NUSCO as the
"Borrowers' Agent" thereunder; (ii) the Credit Agreement, dated as of
November 21, 1996, among the Guarantor, CL&P, WMECO, the "Co-Agents" and
"Lenders" named therein, and Citibank, N.A., as "Administrative Agent"
thereunder; and (iii) the Credit Agreement, dated as of February 10, 1998,
among the Guarantor, Toronto Dominion (Texas), Inc., and the Lenders named
therein, each described on Schedule I hereto, in each case as amended,
modified or supplemented to the date hereof, together in each case with all
"Notes" issued and "Advances" made thereunder.
"Financing Agreement" has the meaning assigned to that term in Section 8(e).
"First Mortgage Bonds" means any bond, however designated, entitled to the
benefits of a First Mortgage Indenture.
"First Mortgage Indenture" means, with respect to CL&P, the CL&P Indenture;
and with respect to WMECO, the WMECO Indenture.
"HWP" means Holyoke Water Power Company, a corporation organized under the
laws of the Commonwealth of Massachusetts.
"Niantic Bay Fuel Lease Agreement" means that certain Nuclear Fuel Lease
Agreement, dated as of January 4, 1982, as amended and restated by the
Amendment to and Restatement of Nuclear Fuel Lease Agreement, dated as of
February 11, 1992, between the Niantic Bay Fuel Trust, as lessor, and CL&P
and WMECO, as lessees, as amended from time to time in accordance with the
terms of this Agreement.
"Niantic Bay Fuel Trust" means Bankers Trust Company, not in its individual
capacity, but solely as trustee of the Niantic Bay Fuel Trust under that
certain Trust Agreement, dated as of January 4, 1982, as amended and restated
by the Amendment to and Restatement of Trust Agreement, dated as of February
11, 1992, between it, State Street Bank and Trust Company of Connecticut,
National Association (which is the successor trustor to The New Connecticut
Bank and Trust Company, National Association, as assignee of the Federal
Deposit Insurance Company, as receiver of The Connecticut Bank and Trust
Company, National Association), as Trustor and CL&P and WMECO as
Beneficiaries, as amended from time to time in accordance with the terms of
this Agreement.
"NNECO" means Northeast Nuclear Energy Company, a corporation organized under
the laws of the State of Connecticut.
"NUSCO" means Northeast Utilities Service Company, a Connecticut corporation.
"Operating Companies" means the Principal Subsidiaries of the Guarantor and
HWP.
"Regulatory Asset" means, with respect to CL&P or WMECO, an intangible asset
established by statute, regulation or regulatory order or similar action of a
utility regulatory agency having jurisdiction over CL&P or WMECO, as the case
may be, and included in the rate base of CL&P or WMECO, as the case may be,
to be amortized by rates over time.
"Regulatory Transaction" means, with respect to any Person, any merger or
consolidation of such Person with or into, or any purchase or acquisition by
such Person of the assets of (and any related assumption by such Person of
the liabilities of) any utility company or utility-related company, if such
transaction is undertaken pursuant to an order or request of, or otherwise in
fulfillment of the stated goals of, a utility regulatory agency having
jurisdiction over the Guarantor or any of its Subsidiaries.
"Regulatory Transaction Entity" means any utility company or utility-related
company (other than the Guarantor, CL&P and WMECO) that is the subject of a
Regulatory Transaction.
"RRR" means The Rocky River Realty Company, a corporation organized under the
laws of the State of Connecticut.
"Total Capitalization" means, at any date for any Person, the sum of (i) the
aggregate principal amount of all long-term and short-term Debt (including
the current portion thereof) of such Person and its Subsidiaries, (ii) the
aggregate of the par value of, or stated capital represented by, the
outstanding shares of all classes of common and preferred shares of such
Person and its Subsidiaries and (iii) the consolidated surplus of such Person
and its Subsidiaries, paid-in, earned and other, if any, in each case as
determined on a consolidated basis in accordance with generally accepted
accounting principles consistent with those applied in the preparation of
such Person's financial statements included in its Annual Report on Form 10-K
for the year ended December 31, 1997, as amended.
SECTION 2. Guaranty. The Guarantor hereby unconditionally guarantees the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Account Party now or hereafter existing
under the Reimbursement Agreement, whether for principal, interest, fees,
expenses or otherwise (such obligations being the "Obligations"), and agrees
to pay any and all expenses (including reasonable fees and expenses of
counsel) incurred by the Administrative Agent, the Issuing Bank or the
Participating Banks in enforcing any rights under this Guaranty. Without
limiting the generality of the foregoing, the Guarantor's liability shall
extend to all amounts which constitute part of the Obligations and would be
owed by the Account Party to the Administrative Agent, the Issuing Bank or
the Participating Banks under the Reimbursement Agreement but for the fact
that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Account Party.
SECTION 3. Guaranty Absolute. The Guarantor guarantees that the Obligations
will be paid strictly in accordance with the terms of the Reimbursement
Agreement, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent, the Issuing Bank or the Participating Banks with
respect thereto. The obligations of the Guarantor under this Guaranty are
independent of the Obligations, and a separate action or actions may be
brought and prosecuted against the Guarantor to enforce this Guaranty,
irrespective of whether any action is brought against the Account Party or
whether the Account Party is joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
i) any lack of validity or enforceability of the Reimbursement Agreement,
any other Loan Document, or any other agreement or instrument relating
thereto;
(ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of
or any consent to departure from the Reimbursement Agreement or any other
Loan Document, including, without limitation, any increase in the Obligations
resulting from the extension of additional credit to the Account Party or any
of its Subsidiaries or otherwise;
(iii) any taking, exchange, release or non-perfection of any collateral, or
any taking, release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Obligations;
(iv) the existence of any claim, set-off, defense or other right which the
Guarantor may have at any time against the Administrative Agent, the Issuing
Bank, any Participating Bank or any other Person, whether in connection with
this Guaranty, the transactions contemplated in the Reimbursement Agreement
or any of the other Loan Documents, or any unrelated transaction;
(v) any manner of application of collateral, or proceeds thereof, to all or
any of the Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Obligations or any other assets of the
Account Party or any of its Subsidiaries;
(vi) any change, restructuring or termination of the corporate structure or
existence of the Account Party or any of its Subsidiaries; or
(vii) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Account Party or a guarantor.
This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Obligations is rescinded or
must otherwise be returned by the Administrative Agent, the Issuing Bank or
any Participating Bank upon the insolvency, bankruptcy or reorganization of
the Account Party or otherwise, all as though such payment had not been made.
SECTION 4. Waiver. The Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the
Obligations and this Guaranty and any requirement that the Administrative
Agent, the Issuing Bank or any Participating Bank protect, secure, perfect or
insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against the Account Party or any other
Person or any collateral.
SECTION 5. Subrogation. Notwithstanding any payment or payments made by the
Guarantor hereunder, or any setoff or application of funds of the Guarantor
by the Administrative Agent, the Issuing Bank or any Participating Bank,
until all of the Obligations are indefeasibly paid in full in cash and the
Letter of Credit shall have terminated or expired, the Guarantor hereby
irrevocably waives any and all rights of subrogation to the rights of the
Administrative Agent, the Issuing Bank and the Participating Banks against
the Account Party and any and all rights of reimbursement, assignment,
indemnification or implied contract or any similar rights against the Account
Party or against any endorser or other guarantor of all or any part of the
Obligations. If, notwithstanding the foregoing, any amount shall be paid to
the Guarantor on account of such subrogation rights at any time when all of
the Obligations shall not have been indefeasibly paid in full in cash and the
Letter of Credit shall not have terminated or expired, such amount shall be
held by the Guarantor in trust for the Administrative Agent, the Issuing Bank
and the Participating Banks, segregated from other funds of the Guarantor,
and shall, forthwith upon receipt by the Guarantor, be turned over to the
Administrative Agent in the exact form received by the Guarantor (duly
endorsed by the Guarantor to the Administrative Agent), to be applied against
the Obligations, whether matured or unmatured, in such order as the
Administrative Agent may determine.
SECTION 6. Representations and Warranties. The Guarantor hereby represents
and warrants as follows:
(a) Each of the Guarantor and its Principal Subsidiaries is a corporation
(or, in the case of the Guarantor, a voluntary association organized under a
declaration of trust) duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has the requisite
corporate power (or, in the case of the Guarantor, the power under its
declaration of trust) and authority to own its property and assets and to
carry on its business as now conducted and is qualified to do business in
every jurisdiction where, because of the nature of its business or property,
such qualification is required, except where the failure so to qualify would
not have a material adverse effect on the financial condition, properties,
prospects or operations of the Guarantor or of the Guarantor and its
Principal Subsidiaries taken as a whole. The Guarantor has the power under
its declaration of trust to execute, deliver and perform its obligations
under this Guaranty.
(b) The execution, delivery and performance of this Guaranty by the
Guarantor are within the Guarantor's powers under its declaration of trust,
have been duly authorized by all necessary corporate or other similar action,
and do not and will not contravene (i) the Guarantor's declaration of trust
or any law or legal restriction or (ii) any contractual restriction binding
on or affecting the Guarantor or its properties or any of its Principal
Subsidiaries or its properties.
(c) Except as disclosed in the Disclosure Documents, neither the Guarantor
nor any of its Principal Subsidiaries is in violation of any law, or in
default with respect to any judgment, writ, injunction, decree, rule or
regulation (including any of the foregoing relating to environmental laws and
regulations) of any court or governmental agency or instrumentality, where
such violation or default would reasonably be expected to have a material
adverse effect on the financial condition, properties, prospects or
operations of the Guarantor or of the Guarantor and its Principal
Subsidiaries, taken as a whole.
(d) All Governmental Approvals referred to in clauses (i) and (ii) of the
definition of "Governmental Approvals" contained in the Reimbursement
Agreement have been duly obtained or made, and all applicable periods of time
for review, rehearing or appeal with respect thereto have expired, except as
described below. Although the periods for appeal of the orders of the
Securities and Exchange Commission approving the transactions contemplated by
this Guaranty and of the FERC approving the market-based rate tariff of the
Account Party in connection with the transactions contemplated by the Power
Supply Agreements have not expired, the filing of appeals of such orders will
not affect the validity of said transactions, unless such orders have been
otherwise stayed or (in the case of the Securities and Exchange Commission)
any of the parties hereto has actual knowledge that any of such transactions
constitutes a violation of the Public Utility Holding Company Act of 1935 or
any rule or regulation thereunder. No such stay exists and the Guarantor has
no reason to believe that any of such transactions constitutes any such
violation. The Guarantor and each of its Principal Subsidiaries have
obtained or made all Governmental Approvals referred to in clause (iii) of
the definition of "Governmental Approvals", except (A) those which are not
yet required but which are obtainable in the ordinary course of business as
and when required, (B) those the absence of which would not materially
adversely affect the financial condition, properties, prospects or operations
of the Guarantor or any of its Principal Subsidiaries and (C) those which the
Guarantor or such Principal Subsidiary is diligently attempting in good faith
to obtain, renew or extend, or the requirement for which the Guarantor or
such Principal Subsidiary is contesting in good faith by appropriate
proceedings or by other appropriate means; in each case described in the
foregoing clause (C), except as is disclosed in the Disclosure Documents,
such attempt or contest, and any delay resulting therefrom, is not reasonably
expected to have a material adverse effect on the financial condition,
properties, prospects or operations of the Guarantor or any Principal
Subsidiary or to magnify to any significant degree any such material adverse
effect that would reasonably be expected to result from the absence of such
Governmental Approval.
(e) This Guaranty is the legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its terms,
subject to the qualification, however, that the enforcement of the rights and
remedies herein is subject to bankruptcy and other similar laws of general
application affecting rights and remedies of creditors and the application of
general principles of equity (regardless of whether considered in a
proceeding in equity or at law).
(f) The audited consolidated balance sheet of the Guarantor as at December
31, 1997, and the audited consolidated statements of income and cash flows of
the Guarantor for the Fiscal Year then ended as included in the Guarantor's
Annual Report on Form 10-K for such Fiscal Year, as amended, fairly present
in all material respects the consolidated financial condition and results of
operations of the Guarantor at and for the period ended on such date, and
have been prepared in accordance with generally accepted accounting
principles consistently applied. Since December 31, 1997, there has been no
material adverse change in the consolidated financial condition, operations,
properties or prospects of the Guarantor and its Subsidiaries, taken as a
whole, except as disclosed in the Disclosure Documents.
(g) The unconsolidated balance sheet of the Guarantor as at December 31,
1997, and the unconsolidated statements of income and cash flows of the
Guarantor for the Fiscal Year then ended contained in the consolidating
balance sheet of the Guarantor and its Subsidiaries and the consolidating
statements of income and cash flows of the Guarantor and its Subsidiaries, as
set forth in the Form U5S (as amended) of the Guarantor filed with the
Securities and Exchange Commission, and the unaudited unconsolidated balance
sheet of the Guarantor as at September 30, 1998 and the unaudited
unconsolidated statement of income of the Guarantor for the six-month period
then ended, in each case as provided to the Participating Banks, fairly
present in all material respects the financial condition and results of
operations of the Guarantor on an unconsolidated basis at and for the
respective periods ended on such dates, and have been prepared in accordance
with generally accepted accounting principles consistently applied. Since
September 30, 1998, there has been no material adverse change in the
financial condition, operations, properties or prospects of the Guarantor on
an unconsolidated basis, except as disclosed in the Disclosure Documents.
(h) There is no pending or known threatened action or proceeding (including,
without limitation, any action or proceeding relating to any environmental
protection laws or regulations) affecting the Guarantor or its properties, or
any of its Principal Subsidiaries or its properties, before any court,
governmental agency or arbitrator (i) which affects or purports to affect the
legality, validity or enforceability of (A) any Loan Document or (B) the
Existing Credit Facilities or (ii) as to which there is a reasonable
possibility of an adverse determination and which, if adversely determined,
would materially adversely affect the financial condition, properties,
prospects or operations of the Guarantor, except, for purposes of this clause
(ii) only, such as is described in the Disclosure Documents.
(i) No ERISA Plan Termination Event has occurred nor is reasonably expected
to occur with respect to any ERISA Plan which would materially adversely
affect the financial condition, properties, prospects or operations of the
Guarantor and its Subsidiaries taken as a whole, except as disclosed to the
Participating Banks and consented to by the Majority Banks in writing. Since
the date of the most recent Schedule B (Actuarial Information) to the annual
report of each such ERISA Plan (Form 5500 Series), there has been no material
adverse change in the funding status of the ERISA Plans referred to therein,
and no "prohibited transaction" has occurred with respect thereto that,
singly or in the aggregate with all other "prohibited transactions" and after
giving effect to all likely consequences thereof, would be reasonably
expected to have a material adverse effect on the financial condition,
properties, prospects or operations of the Guarantor and its Subsidiaries
taken as a whole. Neither the Guarantor nor any of its ERISA Affiliates has
incurred nor reasonably expects to incur any material withdrawal liability
under ERISA to any ERISA Multiemployer Plan, except as disclosed to and
consented by the Majority Banks in writing.
(j) The Guarantor or one of its Principal Subsidiaries has good and
marketable title (or, in the case of personal property, valid title) or valid
leasehold interests in the electric generating plants named in Item 2 of the
Guarantor's Annual Report on Form 10-K for the Fiscal Year ended December 31,
1997 under the caption "Electric Generating Plants", except for minor defects
in title that do not materially interfere with the ability of the Guarantor
or any of its Principal Subsidiaries to conduct its business as now
conducted. All such assets and properties are free and clear of any Lien,
other than Liens permitted under Section 8(a) hereof and, in the case of any
Principal Subsidiary of the Guarantor (other than CL&P and WMECO), Liens of
the type permitted under Section 8(a) hereof.
(k) All outstanding shares of capital stock having ordinary voting power for
the election of directors of the Account Party, CL&P, WMECO, PSNH and NAEC
have been validly issued, are fully paid and nonassessable and are owned
beneficially by the Guarantor, free and clear of any Lien. The Guarantor is a
"holding company" (as defined in the Public Utility Holding Company Act of
1935, as amended).
(1) The Guarantor and each of its Principal Subsidiaries has filed all tax
returns (Federal, state and local) required to be filed and paid taxes shown
thereon to be due, including interest and penalties, or, to the extent the
Guarantor or any of its Principal Subsidiaries is contesting in good faith an
assertion of liability based on such returns, has provided adequate reserves
in accordance with generally accepted accounting principles for payment
thereof.
(m) No exhibit, schedule, report or other written information provided by or
on behalf of the Guarantor or its agents to the Administrative Agent, the
Issuing Bank or the Participating Banks in connection with the negotiation,
execution and closing of the Loan Documents (excluding any financial
projections) knowingly contained when made any material misstatement of fact
or knowingly omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances
under which they were made. Except as has been disclosed to the
Administrative Agent, the Issuing Bank and each Participating Bank, all
financial projections provided by or on behalf of the Guarantor were prepared
in good faith on the basis of assumptions reasonable as of the date of
delivery of such financial projections to the Administrative Agent, the
Issuing Bank and the Participating Banks, it being understood that such
projections do not constitute a warranty or binding assurance of future
performance. Except as has been disclosed to the Administrative Agent, the
Issuing Bank and each Participating Bank, nothing has come to the attention
of the responsible officers of the Guarantor that would indicate that any of
such assumptions, to the extent material to such projections, has ceased to
be reasonable in light of subsequent developments or events.
(n) The Guarantor is not an "investment company" within the meaning ascribed
to that term in the Investment Company Act of 1940, as amended.
(o) There are no conditions precedent to the effectiveness of this Guaranty
that have not been satisfied or waived.
(p) The Guarantor has, independently and without reliance upon the
Administrative Agent, the Issuing Bank or any Participating Bank and based on
such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Guaranty.
(q) The Guarantor is, and upon the consummation of the transactions
contemplated under the Reimbursement Agreement and this Guaranty will be,
solvent, and has, and upon the consummation of such transactions will have,
assets having a fair value in excess of the amount required to pay its
probable liabilities on its existing Debt as such liabilities become absolute
and matured, and does not have, and will not have, upon the consummation of
such transactions, an unreasonably small capital for the conduct of its
business as it is now being conducted.
(r) The Guarantor and its Subsidiaries have reviewed and continue to review
the effect of the Year 2000 Issue on the computer software, hardware and
firmware systems and equipment containing embedded microchips owned or
operated by or for the Guarantor and/or any of its Subsidiaries or used or
relied upon in the conduct of their respective businesses (including, without
limitation, systems and equipment supplied by others). The costs to the
Guarantor and its Subsidiaries of any reprogramming and/or remediation
required as a result of the Year 2000 Issue to permit the proper functioning
of such systems and equipment and the proper processing of data, and testing
of such reprogramming, and of the reasonably foreseeable consequences of the
Year 2000 Issue to the Guarantor or any of its Subsidiaries (including,
without limitation, reprogramming errors and the failure of systems or
equipment supplied by others) are not reasonably expected to result in an
Event of Default or Unmatured Default or to have a Material Adverse Effect.
SECTION 7. Affirmative Covenants. The Guarantor covenants and agrees that,
so long as any part of the Obligations shall remain unpaid, the Letter of
Credit shall remain outstanding, or any Participating Bank shall have any
Commitment, the Guarantor will, unless the Majority Banks shall otherwise
consent in writing:
(a) Payment of Taxes, Etc. Pay and discharge before the same shall become
delinquent, and cause each of its Principal Subsidiaries to pay and discharge
before the same shall become delinquent, all taxes, assessments and
governmental charges, royalties or levies imposed upon it or upon its
property except to the extent the Guarantor or any of its Principal
Subsidiaries is contesting the same in good faith by appropriate proceedings
and has set aside adequate reserves in accordance with generally accepted
accounting principles for the payment thereof.
(c) Maintenance of Insurance. Maintain, or cause to be maintained,
insurance (including appropriate plans of self-insurance) covering the
Guarantor, its Principal Subsidiaries and their respective properties, in
effect at all times in such amounts and covering such risks as may be
required by law and in addition as is usually carried by companies engaged in
similar businesses and owning similar properties.
(d) Preservation of Existence, Etc.; Disaggregation. (i) Except as permitted
by Section 8(b) hereof, preserve and maintain, and cause each of its
Principal Subsidiaries to preserve and maintain, its existence, corporate or
otherwise, material rights (statutory and otherwise) and franchises except
where the failure to maintain and preserve such rights and franchises would
not materially adversely affect the financial condition, properties,
prospects or operations of the Guarantor or any of its Principal
Subsidiaries.
(ii) In furtherance of the foregoing, and notwithstanding Section 8(b), the
Guarantor agrees that it will not, and will not permit any of its Principal
Subsidiaries or HWP to, sell, transfer or otherwise dispose of (by lease or
otherwise, and whether in one or a series of related transactions) any
portion of its generation, transmission or distribution assets in excess of
10% of the net utility plant assets of the Guarantor, such Principal
Subsidiary or HWP, as the case may be, in each case as determined on a
cumulative basis from the date of this Guaranty through the Termination Date
by reference to such Person's published balance sheets; provided, however,
that each of CL&P, WMECO, PSNH and NAEC may sell, transfer or otherwise
dispose of its generation assets if such sale, transfer or other disposition,
and the use of the proceeds arising therefrom, is approved by all necessary
regulatory agencies and governmental authorities.
(e) Compliance with Laws, Etc. Comply, and cause each of its Principal
Subsidiaries to comply, in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority,
including, without limitation, any such laws, rules, regulations and orders
issued by the Securities and Exchange Commission or relating to zoning,
environmental protection, use and disposal of Hazardous Substances, land use,
construction and building restrictions, ERISA and employee safety and health
matters relating to business operations, except to the extent that (i) the
Guarantor or any of its Principal Subsidiaries is contesting the same in good
faith by appropriate proceedings or (ii) any such non-compliance, and the
enforcement or correction thereof, would not materially adversely affect the
financial condition, properties, prospects or operations of the Guarantor or
any of its Principal Subsidiaries.
(f) Inspection Rights. At any time and from time to time upon reasonable
notice, permit the Administrative Agent and its agents and representatives to
examine and make copies of and abstracts from the records and books of
account of, and the properties of, the Guarantor and any of its Principal
Subsidiaries and to discuss the affairs, finances and accounts of the
Guarantor and its Principal Subsidiaries (i) with the Guarantor, its
Principal Subsidiaries and their respective officers and directors and (ii)
with the consent of the Guarantor and/or its Principal Subsidiaries, as the
case may be (which consent shall not be unreasonably withheld or delayed),
with the accountants of the Guarantor and its Principal Subsidiaries.
(g) Keeping of Books. Keep proper records and books of account, in which
full and correct entries shall be made of all financial transactions of the
Guarantor and its Principal Subsidiaries and the assets and business of the
Guarantor and its Principal Subsidiaries, in accordance with generally
accepted accounting practices consistently applied.
(h) Conduct of Business. Except as permitted by Section 8(b) but subject in
all respects to Section 7(d)(ii), conduct its primary business, and cause
each of its Principal Subsidiaries and HWP to conduct its primary business,
in substantially the same manner and in substantially the same fields as such
business is conducted on the Closing Date.
(i) Maintenance of Properties, Etc. (i) As to properties of the type
described in Section 6(j) hereof, maintain, and cause its Principal
Subsidiaries to maintain, title of the quality described therein and
preserve, maintain, develop, and operate, and cause its Principal
Subsidiaries to preserve, maintain, develop and operate, in substantial
conformity with all laws, material contractual obligations and prudent
practices prevailing in the industry, all of its properties which are used or
useful in the conduct of its or its Principal Subsidiaries' respective
businesses in good working order and condition, ordinary wear and tear
excepted, except (A) as permitted by Section 8(b), but subject nevertheless
to Section 7(d)(ii), (B) as disclosed in the Disclosure Documents or
otherwise in writing to the Administrative Agent, the Issuing Bank and the
Participating Banks on or prior to the date hereof, and (C) to the extent
such non-conformity would not materially adversely affect the financial
condition, properties, prospects or operations of the Guarantor or any of its
Principal Subsidiaries; provided, however, that the Guarantor or any of its
Principal Subsidiaries will not be prevented from discontinuing the operation
and maintenance of any such properties if such discontinuance is, in the
judgment of the Guarantor or such Principal Subsidiary, desirable in the
operation or maintenance of its business and would not materially adversely
affect the financial condition, properties, prospects or operations of the
Guarantor or such Principal Subsidiary.
(j) Governmental Approvals. Duly obtain, and cause each of its Principal
Subsidiaries to duly obtain, on or prior to such date as the same may become
legally required, and thereafter maintain in effect at all times, all
Governmental Approvals on its or such Principal Subsidiary's part to be
obtained, except, in the case of those Governmental Approvals referred to in
clause (iii) of the definition of "Governmental Approvals" contained in the
Reimbursement Agreement, (i) those the absence of which would not materially
adversely affect the financial condition, properties, prospects or operations
of the Guarantor or any Principal Subsidiary and (ii) those which the
Guarantor is diligently attempting in good faith to obtain, renew or extend,
or the requirement for which the Guarantor is contesting in good faith by
appropriate proceedings or by other appropriate means; provided, however,
that the exception afforded by clause (ii), above, shall be available only if
and for so long as such attempt or contest, and any delay resulting
therefrom, does not have a material adverse effect on the financial
condition, properties, prospects or operations of the Guarantor or any of its
Principal Subsidiaries and does not magnify to any significant degree any
such material adverse effect that would reasonably be expected to result from
the absence of such Governmental Approval.
(k) Year 2000 Compliance. Take, and cause each of its Subsidiaries to take,
all necessary action to complete in all respects by September 30, 1999 the
reprogramming and/or remediation of computer software, hardware and firmware
systems and equipment containing embedded microchips owned or operated by or
for the Guarantor and/or any of its Subsidiaries or used or relied upon in
the conduct of their respective businesses (including systems and equipment
supplied by others) required as a result of the Year 2000 Issue to permit the
proper functioning of such computer systems and other equipment and the
testing of such systems and equipment, as so reprogrammed or remediated (as
the case may be), except for any reprogramming, remediation and/or testing
the failure of which to complete by such date could not reasonably be
expected to result in an Event of Default or an Unmatured Default or to have
a Material Adverse Effect. At the request of the Administrative Agent, the
Guarantor shall provide, and shall cause each of its Subsidiaries to provide,
to the Administrative Agent reasonable assurance of its compliance with the
preceding sentence.
(l) Further Assurances. Promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or that any Participating Bank through the Administrative Agent may
reasonably request in order to fully give effect to the interests and
properties purported to be covered by the Loan Documents.
SECTION 8. Negative Covenants. The Guarantor covenants and agrees that, so
long as any part of the Obligations shall remain unpaid, the Letter of Credit
shall remain outstanding, or any Participating Bank shall have any
Commitment, the Guarantor will not, without the prior written consent of the
Majority Banks:
(a) Liens, Etc. (i) Create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, any Lien upon or with
respect to any voting capital stock of any Principal Subsidiary of the
Guarantor or any of the Guarantor's properties or assets whether now owned or
hereafter acquired, except any Liens on not more than 15% of the issued and
outstanding shares of capital stock of the Account Party; and
(ii) Permit CL&P or WMECO to create, incur, assume or suffer to exist any
Lien upon or with respect to any voting capital stock of any of their
respective Principal Subsidiaries or any of their respective properties or
assets whether now owned or hereafter acquired, except:
(A) any Liens existing on the Closing Date;
(B) in the case of CL&P, Liens created by the Indenture of Mortgage and Deed
of Trust dated as of May 1, 1921, from CL&P to Bankers Trust Company, as
trustee, as previously and hereafter amended and supplemented (the "CL&P
Indenture");
(C) in the case of WMECO, Liens created by the First Mortgage Indenture and
Deed of Trust dated as of August 1, 1954, from WMECO to State Street Bank and
Trust Company, as successor trustee, as previously and hereafter amended and
supplemented (the "WMECO Indenture");
(D) Liens on CL&P's and WMECO's interests in Millstone Unit No. 1 created by
(1) the Open-End Mortgage and Trust Agreement dated as of October 1, 1986, as
previously and hereafter amended, made by CL&P in favor of State Street Bank
and Trust Company, as successor trustee, and (2) the Open-End Mortgage and
Trust Agreement dated as of October 1, 1986, as previously and hereafter
amended, made by WMECO in favor of State Street Bank and Trust Company, as
successor trustee, to the extent of the Debt from time to time secured by
such Open-End Mortgages and Trust Agreements;
(E) "Permitted Liens" or "Permitted Encumbrances" under the CL&P Indenture
(in the case of CL&P) or the WMECO Indenture (in the case of WMECO), in each
case as such terms are defined on the date hereof, to the extent such Liens
do not secure Debt of such Person;
(F) any Lien on assets of any of CL&P's or WMECO's Subsidiaries created or
assumed to secure Debt owing by any such Subsidiary to CL&P or WMECO,
respectively, or to any wholly-owned Subsidiary of CL&P or WMECO,
respectively;
(G) any purchase money Lien or construction mortgage on assets hereafter
acquired or constructed by CL&P or WMECO or any of their respective
Subsidiaries and any Lien on any assets existing at the time of acquisition
thereof by CL&P or WMECO or any of their respective Subsidiaries, or created
within 180 days from the date of completion of such acquisition or
construction; provided that such Lien shall at all times be confined solely
to the assets so acquired or constructed and any additions thereto;
(H) any existing Liens on assets now owned by CL&P or WMECO or any of their
respective Subsidiaries; Liens on assets or stock of any class of, or any
partnership or joint venture interest in, any of their respective
Subsidiaries existing at the time it becomes a Subsidiary of such Person, and
Liens existing on assets of a corporation or other going concern when it is
merged into or with CL&P or WMECO or a Subsidiary of CL&P or WMECO, or when
substantially all of its assets are acquired by CL&P or WMECO or a Subsidiary
of CL&P or WMECO; provided that such Liens shall at all times be confined
solely to such assets, or if such assets constitute a utility system,
additions to or substitutions for such assets;
(I) Liens resulting from legal proceedings being contested in good faith by
appropriate legal or administrative proceedings by CL&P or WMECO or any of
their respective Subsidiaries, and as to which CL&P or WMECO or any of their
respective Subsidiaries, as the case may be, to the extent required by
generally accepted accounting principles applied on a consistent basis, shall
have set aside on its books adequate reserves;
(J) Liens created in favor of the other contracting party in connection with
advance or progress payments;
(K) any Liens in favor of any state of the United States or any political
subdivision of any such state, or any agency of any such state or political
subdivisions, or trustee acting on behalf of holders of obligations issued by
any of the foregoing or any financial institutions lending to or purchasing
obligations of any of the foregoing, which Lien is created or assumed for the
purpose of financing all or part of the cost of acquiring or constructing the
property subject thereto;
(L) Liens resulting from conditional sale agreements, capital leases or
other title retention agreements including, without limitation, Liens arising
under leases of nuclear fuel from the Niantic Bay Fuel Trust;
(M) with respect to pollution control bond financings, Liens on funds,
accounts and other similar intangibles of CL&P or WMECO or any of their
respective Subsidiaries created or arising under the relevant indenture,
pledges of the related loan agreement with the relevant issuing authority and
pledges of CL&P's or WMECO's interest, if any, in any bonds issued pursuant
to such financings to a letter of credit bank or bond issuer or similar
credit enhancer;
(N) Liens granted on accounts receivable and Regulatory Assets in connection
with financing transactions, whether denominated as sales or borrowings;
(O) any other Liens incurred in the ordinary course of business otherwise
than to secure Debt; and
(P) any extension, renewal or replacement of Liens permitted by clauses (A)
through (H) and (J) through (N); provided, however, that the principal amount
of Debt secured thereby shall not, at the time of such extension, renewal or
replacement, exceed the principal amount of Debt so secured and that such
extension, renewal or replacement shall be limited to all or a part of the
property which secured the Lien so extended, renewed or replaced.
(b) Mergers, and Sales of Assets, Etc. (i) (A) Merge with or into or
consolidate with or into any Person or (B) purchase or acquire (whether
directly or indirectly or in one or a series of transactions, whether related
or not) all or substantially all of the assets or stock of any class of, or
any partnership or joint venture interest in, any Person if the aggregate
purchase price of such acquisitions plus the amount of any liabilities
assumed by the Guarantor in connection therewith exceeds in the aggregate
$50,000,000 from November 21, 1996 through the termination date of this
Agreement pursuant to Section 12; provided, that the foregoing shall not
apply to (x) acquisitions or other investments made by or through Charter Oak
Energy, Inc. so long as the aggregate amount of all such acquisitions and
investments made by or through Charter Oak Energy, Inc., now existing or made
after the date hereof, does not exceed $200,000,000 and (y) acquisitions made
through CL&P and WMECO in accordance with clause (ii) of this Section 8(b);
and provided, further, that, in each case, before and after giving effect to
any such purchase, acquisition or investment not prohibited by this
subsection, no Event of Default or Unmatured Default shall have occurred and
be continuing.
(ii) Permit CL&P or WMECO to (A) merge with or into or consolidate with or
into any Person, or permit any of their respective Subsidiaries to be a party
to, any merger or consolidation, or purchase or otherwise acquire (whether
directly or indirectly) all or substantially all of the assets or stock of
any class of, or any partnership or joint venture interest in, any other
Person or (B) sell, transfer, convey, lease or otherwise dispose of all or
any substantial part of its assets, except for the following, and then only
after receipt of all necessary corporate and governmental or regulatory
approvals and provided that, before and after giving effect to any such
merger, consolidation, purchase, acquisition, sale, transfer, conveyance,
lease or other disposition, no Event of Default or Unmatured Default shall
have occurred and be continuing:
(A) any such merger or consolidation, sale, transfer, conveyance, lease or
other disposition of or by any wholly-owned Subsidiary of CL&P or WMECO into
or to CL&P, WMECO, the Guarantor and/or any wholly-owned Subsidiary of CL&P,
WMECO or the Guarantor and any such purchase or other acquisition by CL&P or
WMECO or any wholly-owned Subsidiary of CL&P, WMECO or the Guarantor of the
assets or stock of any wholly-owned Subsidiary of CL&P or WMECO;
(B) any such merger or consolidation of CL&P or WMECO with or into the
Guarantor, CL&P, WMECO and/or a wholly-owned Subsidiary of the Guarantor
and/or a Regulatory Transaction Entity and/or an entity owning a cogeneration
or independent power project, pursuant to "step-in" or similar rights granted
pursuant to a pre-existing power purchase contract, if (but only if) the
successor or surviving corporation, if not CL&P or WMECO, shall have assumed
or succeeded to all of the liabilities of CL&P or WMECO, as the case may be;
provided, however, that in the event of a merger or consolidation with a
Regulatory Transaction Entity, if the value of the cash, stock or other
consideration for the merger or consolidation plus the amount of any
liabilities assumed in connection with such merger or consolidation exceeds
$100,000,000, CL&P or WMECO (as the case may be) shall deliver to the
Administrative Agent on behalf of the Issuing Bank and the Participating
Banks 30 days prior to such merger or consolidation, a certificate of a duly
authorized officer of CL&P or WMECO (as the case may be) demonstrating
projected compliance with the ratios set forth in Section 9(a) and 9(b)
hereof for and as of each of the three consecutive fiscal quarters
immediately succeeding such merger or consolidation and certifying that such
projections were prepared in good faith and on reasonable assumptions;
(C) any purchase or acquisition of all or substantially all of the assets or
stock of any class of, or any partnership or joint venture interest in (and
any assumption of the related liabilities), (1) an entity owning a
cogeneration or independent power project, pursuant to "step-in" or similar
rights granted pursuant to a pre-existing power purchase contract; or (2) a
Regulatory Transaction Entity; provided, however, that in the event of a
purchase or acquisition of a Regulatory Transaction Entity, if the purchase
price plus the amount of any liabilities assumed in connection with such
purchase or acquisition exceeds in the aggregate $100,000,000, CL&P or WMECO
(as the case may be) shall deliver to the Administrative Agent on behalf of
the Issuing Bank and the Participating Banks 30 days prior to such purchase
or acquisition, a certificate of a duly authorized officer of CL&P or WMECO
(as the case may be) demonstrating projected compliance with the ratios set
forth in Section 9(a) and 9(b) hereof for and as of each of the three
consecutive fiscal quarters immediately succeeding such purchase or
acquisition and certifying that such projections were prepared in good faith
and on reasonable assumptions;
(D) any purchase or acquisition of a joint venture interest in a mutual
insurance company providing nuclear liability or nuclear property or
replacement power insurance;
(E) any sale of accounts receivable on reasonable commercial terms
(including a commercially reasonable discount) to obtain funding for CL&P and
WMECO, as the case may be; or
(F) any sale of all or part of any Regulatory Asset.
For purposes of this subsection (b), any one transaction or series of similar
or related transactions during any consecutive 12-month period shall be
deemed to involve a "substantial part" of the Guarantor's, CL&P's or WMECO's
assets if, in the aggregate, the book value of such assets equals or exceeds
10% of the total consolidated assets of such Person and its Subsidiaries
reflected in the consolidated financial statements of such Person delivered
pursuant to Section 10(ii) or 10(iii) hereof in respect of the Fiscal Quarter
or Fiscal Year ending on or immediately prior to the commencement of such 12-
month period.
(c) Niantic Bay Fuel Trust. Permit CL&P or WMECO to:
(i) at any time prior to the termination date of this Agreement pursuant to
Section 12, prepay or otherwise reduce or permit to be prepaid or otherwise
reduced, except by payment at stated maturity, the principal amount of
outstanding "IT Notes" issued by the Niantic Bay Fuel Trust; or
(ii) except for such amendments or modifications as the Administrative Agent
shall have consented to in writing prior to the Closing Date, amend, modify
or terminate, or permit to be amended, modified or terminated, the Niantic
Bay Fuel Lease Agreement or the Niantic Bay Fuel Trust in any manner that
would directly or indirectly reduce the availability of funds under the
Niantic Bay Fuel Lease Agreement.
(d) Debt. Create, incur or suffer to exist any Debt, other than (i) Debt
arising under this Guaranty and the Existing Credit Facilities, (ii) Debt
existing on the Closing Date as described on Schedule II hereto, which Debt
shall not he renewed, extended or replaced except for guarantees of surety
bonds with respect to workman's compensation claims and performance bonds in
an aggregate amount not to exceed $10,000,000 at any time outstanding and
(iii) other Debt not to exceed $50,000,000 at any one time outstanding.
(e) Dividend Restrictions. Permit any Principal Subsidiary to enter into
any agreement, contract, indenture or similar obligation, or issue any
security (all of the foregoing being referred to as "Financing Agreements"),
that is not in effect on the Closing Date and disclosed to the Administrative
Agent in writing prior to the Closing Date, or permit any Principal
Subsidiary to amend or modify any existing Financing Agreement, if the effect
of such Financing Agreement (or amendment or modification thereof) is to
impose any additional restriction not in effect on the Closing Date and
disclosed to the Administrative Agent in writing prior to the Closing Date on
the ability of such Principal Subsidiary to pay dividends to the Guarantor.
(f) Existing Credit Facilities. (i) Voluntarily reduce or terminate the
"Commitment" of any "Bank" or "Lender" under any Existing Credit Facility
(other than by scheduled termination in accordance with the terms thereof),
or (ii) amend or modify or agree to amend or modify such Existing Credit
Facility in any manner that would reduce or otherwise impose additional
restrictions on the availability of funds thereunder or amend or add or
otherwise impose additional conditions on the Guarantor, CL&P or WMECO if
such conditions arc likely to have the effect of making it more difficult for
the Guarantor, CL&P or WMECO to satisfy the conditions to borrowing under
such Existing Credit Facility.
(g) Compliance with ERISA. (i) Terminate, or permit any ERISA Affiliate to
terminate, any ERISA Plan so as to result in any liability of the Guarantor
or any of its Principal Subsidiaries to the PBGC in an amount greater than
$1,000,000, or (ii) permit to exist any occurrence of any Reportable Event
(as defined in Title IV of ERISA) which, alone or together with any other
Reportable Event with respect to the same or another ERISA Plan, has a
reasonable possibility of resulting in liability of the Guarantor or any of
its Subsidiaries to the PBGC in an aggregate amount exceeding $1,000,000, or
any other event or condition, which presents a material risk of such a
termination by the PBGC of any ERISA Plan or has a reasonable possibility of
resulting in a liability of the Guarantor or any of its Subsidiaries to the
PBGC in an aggregate amount exceeding $1,000,000.
(h) Accounting Changes. Make, or permit any of its Principal Subsidiaries
to make, any change in their respective accounting policies or reporting
practices except as required or permitted by the Securities and Exchange
Commission, the Financial Accounting Standards Board or any other generally
recognized accounting authority.
(i) Transactions with Affiliates. Engage, or permit any of its Principal
Subsidiaries to engage, in any transaction with any Affiliate except (i) in
accordance with the Public Utility Holding Company Act of 1935, to the extent
applicable thereto or (ii) otherwise, on terms no less favorable to the
Guarantor or such Principal Subsidiary than if the transaction had been
negotiated in good faith on an arms-length basis with a non-Affiliate and on
commercially reasonable terms or pursuant to a binding agreement in effect on
the Closing Date.
SECTION 9. Financial Covenants. The Guarantor covenants and agrees that, so
long as any part of the Obligations shall remain unpaid, the Letter of Credit
shall remain outstanding, or any Participating Bank shall have any
Commitment, the Guarantor will, unless the Majority Banks shall otherwise
consent in writing:
(a) Common Equity Ratio. Maintain at all times a ratio of Common Equity to
Total Capitalization of not less than 0.32 to 1.0.
(b) Interest Coverage Ratio. Maintain a ratio of Consolidated Operating
Income to Consolidated Interest Expense of not less than 2.50 to 1.0 as of
the end of each Fiscal Quarter.
(c) Dividend Paying Availability. Cause the Operating Companies to maintain,
as of the end of each Fiscal Quarter, Aggregate Dividend Paying Availability
equal to at least the sum of (i) the aggregate amount of the Obligations plus
(ii) the Available Amount as at the end of such Fiscal Quarter plus (iii) the
aggregate principal amount of "advances" outstanding to the Guarantor under
the Existing Credit Facilities at the end of such Fiscal Quarter minus (iv)
the aggregate amount of cash and cash-equivalents owned by the Guarantor free
and clear of any Lien at the end of such Fiscal Quarter.
SECTION 10. Reporting Obligations. The Guarantor covenants and agrees that,
so long as any part of the Obligations shall remain unpaid, the Letter of
Credit shall remain outstanding, or any Participating Bank shall have any
Commitment, the Guarantor will, unless the Majority Banks shall otherwise
consent in writing, furnish or cause to be furnished to the Administrative
Agent in sufficient copies for the Issuing Bank and each Participating Bank,
the following:
(i) as soon as possible and in any event within ten (10) days after the
occurrence of each Event of Default or Unmatured Default with respect to the
Guarantor continuing on the date of such statement, a statement of the Chief
Financial Officer, Treasurer or Assistant Treasurer of the Guarantor setting
forth details of such Event of Default or Unmatured Default and the action
which the Guarantor proposes to take with respect thereto;
(ii) (A) as soon as available and in any event within fifty (50) days after
the end of each of the first three Fiscal Quarters of each Fiscal Year of the
Guarantor:
(1) a copy of the Guarantor's Quarterly Report on Form 10-Q submitted to the
Securities and Exchange Commission with respect to such quarter, or, if the
Guarantor ceases to be required to submit such report, a consolidated balance
sheet of the Guarantor as of the end of such Fiscal Quarter and consolidated
statements of income and retained earnings and of cash flows of the Guarantor
for the period commencing at the end of the previous Fiscal Year and ending
with the end of such Fiscal Quarter, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the Chief Financial
Officer, Treasurer, Assistant Treasurer or Comptroller of the Guarantor as
having been prepared in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in Section 6(f) hereof, and
(2) an unconsolidated balance sheet of the Guarantor as of the end of such
Fiscal Quarter and unconsolidated statements of income and retained earnings
and of cash flows of the Guarantor for the period commencing at the end of
the previous Fiscal Year and ending with the end of such Fiscal Quarter, all
in reasonable detail and accompanied by a certificate of a duly authorized
officer of the Guarantor stating that such financial statements were prepared
in accordance with generally accepted accounting principles consistent with
those applied in the preparation of financial statements referred to in
Section 6(f) and (g) hereof; and
(B) concurrently therewith, a certificate of the Chief Financial Officer,
Treasurer, Assistant Treasurer or Comptroller of the Guarantor:
(1) stating that no Event of Default or Unmatured Default with respect to
the Guarantor has occurred and is continuing or, if an Event of Default or
Unmatured Default with respect to the Guarantor has occurred and is
continuing, describing the nature thereof and the action which the Guarantor
proposes to take with respect thereto, and
(2) demonstrating the Guarantor's compliance with Sections 8(d), 9(a), 9(b)
and 9(c) hereof, for and as of the end of such Fiscal Quarter, in each case
such demonstrations to be satisfactory (in form) to the Administrative Agent
and to set forth in reasonable detail the computations used in determining
such compliance;
(iii) (A) as soon as available and in any event within 105 days after the
end of each Fiscal Year of the Guarantor:
(1) a copy of the Guarantor's report on Form 10-K submitted to the
Securities and Exchange Commission with respect to such Fiscal Year, or, if
the Guarantor ceases to be required to submit such report, a copy of the
annual audit report for such year for the Guarantor including therein a
consolidated balance sheet of the Guarantor as of the end of such Fiscal Year
and consolidated statements of income and retained earnings and of cash flows
of the Guarantor for such Fiscal Year, all in reasonable detail and certified
by a nationally-recognized independent public accountant, and
(2) as soon as available and in any event within 135 days after the end of
each Fiscal Year of the Guarantor, a copy of the Guarantor's Form U5S
submitted to the Securities and Exchange Commission (or any successor form
and in any event containing unconsolidated financial statements comparable to
those referred to in Section 6(g) hereof) with respect to such year,
accompanied by a certificate of a duly authorized officer of the Guarantor
stating that such financial statements were prepared in accordance with
generally accepted accounting principles consistent with those applied in the
preparation of financial statements referred to in Section 6(f) and (g)
hereof; and
(B) concurrently with the delivery of the financial statements described in
the foregoing clause (A)(1), a certificate of the Chief Financial Officer,
Treasurer, Assistant Treasurer or Comptroller of the Guarantor:
(1) to the effect that such financial statements were prepared in accordance
with generally accepted accounting principles consistent with those applied
in the preparation of the financial statements referred to in Sections 6(f),
and
(2) stating that no Event of Default or Unmatured Default with respect to
the Guarantor has occurred and is continuing, or if an Event of Default or
Unmatured Default with respect to the Guarantor has occurred and is
continuing, describing the nature thereof and the action which the Guarantor
proposes to take with respect thereto, and
(3) demonstrating the Guarantor's compliance with Sections 8(d), 9(a), 9(b)
and 9(c) hereof, for and as of the end of such Fiscal Year, in each case such
demonstrations to be satisfactory (in form) to the Administrative Agent and
to set forth in reasonable detail the computations used in determining such
compliance;
(iv) as soon as possible and in any event (A) within 30 days after the Chief
Financial Officer, Treasurer or any Assistant Treasurer of the Guarantor
knows or has reason to know that any ERISA Plan Termination Event described
in clause (i) of the definition of "ERISA Plan Termination Event" contained
in the Reimbursement Agreement with respect to any ERISA Plan or ERISA
Multiemployer Plan has occurred and (B) within 10 days after the Guarantor
knows or has reason to know that any other ERISA Plan Termination Event with
respect to any ERISA Plan or ERISA Multiemployer Plan has occurred, a
statement of the Chief Financial Officer, Treasurer or Assistant Treasurer of
the Guarantor describing such ERISA Plan Termination Event and the action, if
any, which the Guarantor proposes to take with respect thereto;
(v) promptly after receipt thereof by the Guarantor or any of its ERISA
Affiliates from the PBGC, copies of each notice received by the Guarantor or
any such ERISA Affiliate of the PBGC's intention to terminate any ERISA Plan
or ERISA Multiemployer Plan or to have a trustee appointed to administer any
ERISA Plan or ERISA Multiemployer Plan;
(vi) promptly after receipt thereof by the Guarantor or any of its ERISA
Affiliates from an ERISA Multiemployer Plan sponsor, a copy of each notice
received by the Guarantor or any of its ERISA Affiliates concerning the
imposition or amount of withdrawal liability in an aggregate principal amount
of at least $10,000,000 pursuant to Section 4202 of ERISA in respect of which
the Guarantor may be liable;
(vii) promptly after the Guarantor or any of its Subsidiaries becomes aware
of the commencement thereof, notice of all actions, suits, proceedings or
other events of the type described in Section 6(h) hereof (including, without
limitation, any action or proceeding relating to any environmental protection
laws or regulations);
(viii) promptly after the filing thereof, copies of each prospectus
(excluding any prospectus contained in any Form S-8) and Current Report on
Form 8-K, if any, which the Guarantor or any of its Principal Subsidiaries
files with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor; and
(ix) promptly after requested, such other information respecting the
financial condition, operations, properties, prospects or otherwise, of the
Guarantor or its Subsidiaries as the Administrative Agent or the Majority
Banks through the Administrative Agent may from time to time reasonably
request in writing.
SECTION 11. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom,
shall in any event be effective unless the same shall be in writing and
signed by the Administrative Agent, the Issuing Bank and the Majority Banks,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given, provided, however,
that no amendment, waiver or consent shall, unless in writing and signed by
all the Participating Banks, (a) limit the liability of the Guarantor
hereunder, (b) postpone any date fixed for payment hereunder, or (c) change
the number of Participating Banks required to take any action hereunder.
SECTION 12. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, facsimile,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered, if to the Guarantor, at its address at 107 Selden
Street, Berlin, Connecticut 06037, Attention: Assistant Treasurer, and if to
the Administrative Agent, the Issuing Bank or any Participating Bank, at its
address specified in the Reimbursement Agreement, or, as to any party, at
such other address as shall be designated by such party in a written notice
to each other party. All such notices and other communications shall, when
mailed, telegraphed, telecopied, telexed or cabled, be effective five days
after when deposited in the mails, or when delivered to the telegraph
company, telecopied, confirmed by telex answerback or delivered to the cable
company, respectively.
SECTION 13. No Waiver; Remedies. No failure on the part of the
Administrative Agent, the Issuing Bank or any Participating Bank to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 14. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 7.2 of the Reimbursement
Agreement to authorize the Issuing Bank to notify the Beneficiary that the
Letter of Credit will be terminated pursuant to the provisions of the Letter
of Credit and said Section 7.2, the Issuing Bank and each Participating Bank
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Issuing Bank or such Participating Bank
to or for the credit or the account of the Guarantor against any and all of
the obligations of the Guarantor now or hereafter existing under this
Guaranty, whether or not the Issuing Bank or such Participating Bank shall
have made any demand under this Guaranty and although such obligations may be
contingent and unmatured. The Issuing Bank and each Participating Bank
agrees to notify promptly the Guarantor after any such set-off and
application made by the Issuing Bank or such Participating Bank,
respectively, provided that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Issuing Bank
and each Participating Bank under this Section 14 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which the Issuing Bank and such Participating Bank may have.
SECTION 15. Continuing Guaranty; Assignments under Reimbursement Agreement.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the latest of (x) the indefeasible payment in full in cash of
the Obligations and all other amounts payable under this Guaranty, (y) the
expiration or termination of the Letter of Credit, and (z) the expiration or
termination of the Commitments, (ii) be binding upon the Guarantor, its
successors and assigns, and (iii) inure to the benefit of, and be enforceable
by, the Administrative Agent, the Issuing Bank, the Participating Banks and
their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), any Participating Bank may assign
or otherwise transfer all or any portion of its rights and obligations under
the Reimbursement Agreement (including, without limitation, all or any
portion of its Commitment and any Loans or reimbursement obligations owing to
it) to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such Participating Bank
herein or otherwise, subject, however, to the provisions of Article 8
(concerning the Administrative Agent) and Section 9.6 of the Reimbursement
Agreement.
SECTION 16. Waiver of Jury Trial. THE GUARANTOR HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR ANY OTHER
INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.
SECTION 17. Governing Law. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York. The
Guarantor (i) irrevocably submits to the jurisdiction of any New York State
court or Federal court sitting in New York City in any action arising out of
this Guaranty or any other Loan Document, (ii) agrees that all claims in such
action may be decided in such court, (iii) waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum and (iv) consents
to the service of process by mail. A final judgment in any such action shall
be conclusive and may be enforced in other jurisdictions. Nothing herein
shall affect the right of any party to serve legal process in any manner
permitted by law or affect its right to bring any action in any other court.
SECTION 18. Limitation of Liability. No shareholder or trustee of the
Guarantor shall be held to any liability whatever for the payment of any sum
of money or for damages or otherwise under this Guaranty, and this Guaranty
shall not be enforceable against any such trustee in their or his or her
individual capacities or capacity and this Guaranty shall be enforceable
against the trustees of the Guarantor only as such, and every person, firm,
association, trust or corporation having any claim or demand arising under
this Guaranty and relating to the Guarantor, its shareholders or trustees
shall look solely to the trust estate of the Guarantor for the payment or
satisfaction thereof.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the
date first above written.
NORTHEAST UTILITIES
By /S/ Randy A. Shoop
Title: Assistant Treasurer - Finance
Northeast Utilities
Performance Guaranty of Select Energy, Inc.
All Requirements Power Supply Agreement with Boston Edison Company
This Performance Guaranty, dated November 30, 1998, of NORTHEAST
UTILITIES, a Massachusetts business trust ("Guarantor"), is for the benefit
of and delivered to Boston Edison Company, a Massachusetts corporation
("BECo").
Guarantor does hereby irrevocably guarantee, subject to the receipt of all
necessary regulatory approvals, the performance by its subsidiary SELECT
ENERGY, INC., a Connecticut corporation ("Select"), of all of its
obligations, including all payment obligations ("Guaranteed Obligations")
under the All Requirements Power Supply Agreement dated as of September 30,
1998 by and between Select, CL&P and BECo and the All Requirements Power
Supply Agreement dated as of October 5, 1998, as amended as of November 30,
1998, by and between Select, CL&P and BECo (collectively, the "Supply
Agreement"), at the times and in the manner provided therein. In addition,
Guarantor hereby agrees to pay any and all costs and expenses (including fees
and disbursements of counsel) incurred by BECo in enforcing any rights under
this Guaranty.
It is understood and agreed that Guarantor is not itself a public
utility or an energy marketer or broker and that its fulfillment of this
Performance Guaranty may take the form of arranging alternate capacity and
energy supply resources on terms that are comparable to those agreed to by
Select under the Supply Agreement, but at no greater cost or significantly
different terms to BECo than if Select had fully performed the Guaranteed
Obligations.
It is understood and agreed that BECo shall draw on any letter of credit
available to it furnished by Select to secure Select's obligations under the
Supply Agreement or withdraw amounts available to BECo in any escrow account
furnished by Select to secure Select's obligations under the Supply Agreement
prior to enforcing any rights under this Performance Guaranty.
Guarantor has obtained the approval of the Securities and Exchange Commission
under the Public Utility Holding Company Act of 1935 to enter into and
perform this Performance Guaranty.
This Performance Guaranty may only be assigned, amended or modified by a
writing signed by the parties hereto and is subject to, and its terms are
governed by and must be interpreted under the laws of the Commonwealth of
Massachusetts. No person, corporation or other entity may rely upon this
Performance Guaranty other than BECO.
No Trustee or shareholder of Guarantor shall be held to any liability
whatever for any obligation under this Performance Guaranty, and such
Performance Guaranty shall not be enforceable against any such Trustee in
their or his or her individual capacities or capacity. This Performance
Guaranty shall be enforceable against the Trustees of Guarantor only as such,
and every person, firm, association, trust or corporation having any claim or
demand arising under this Performance Guaranty and relating to Guarantor, its
shareholders or Trustee shall look solely to the trust estate of Guarantor
for the payment or satisfaction thereof.
Guarantor's obligation pursuant to this Performance Guaranty is an
unconditional guaranty of payment and performance and not of collectibility.
This Performance Guaranty shall remain in full force and effect until each
and all of the Guaranteed Obligations shall have been fully paid and
performed in accordance with the terms and provisions of the Supply
Agreement. Guarantor acknowledges that BECo has entered into the Supply
Agreement in reliance on this Performance Guaranty being a continuing and
irrevocable agreement and Guarantor agrees that the Guaranteed Obligations
hereunder may not be revoked in whole or in part. BECo shall have no
obligation to assert any claim or demand or to enforce any remedy under the
Supply Agreement or to proceed first against Select or any other person or
entity, or resorting to any security or making of any effort to obtain
payment or performance by Select or any other person or entity. No delay or
omission by BECo to exercise any right under this Performance Guaranty shall
impair any right, nor shall it be construed to be a waiver thereof. No
waiver of any single breach or default under this Performance Guaranty shall
be deemed a waiver of any other breach or default.
The liability of Guarantor under this Performance Guaranty shall be absolute,
unconditional and irrevocable, irrespective of: (a) any change in time,
manner or place of payment of, or in any other term of, all or any of the
Guaranteed Obligations or any other amendment to, modification of, waiver of,
or any consent to departure from, the Supply Agreement, (b) any change in
ownership of Guarantor or Select; (c) any bankruptcy, insolvency, or
reorganization of, or other similar proceedings involving Guarantor or
Select; or (d) any other circumstances which might otherwise constitute a
legal or equitable discharge of a surety or guarantor. Guarantor represents
that it has discussed with its counsel the various defenses that may be
available to a guarantor or surety under law, and, to the fullest extent
permitted by law, Guarantor waives each and every defense (other than
payment) which may be available to it in respect of its obligations under
this Performance Guaranty and covenants that this Performance Guaranty will
not be discharged except by complete payment and performance of the
Guaranteed Obligations as provided above.
If a claim is made upon BECo at any time for repayment or recovery of any
amounts received by BECo from any source on account of any of the Guaranteed
Obligations and BECo pursuant to a court order and applicable law repays or
returns any amounts so received, then the Guarantor shall remain liable for
the amounts so repaid (such amounts being deemed part of the Guaranteed
Obligations) to the same extent as if such amounts had never been received by
BECo, notwithstanding any termination hereof or the cancellation of any
instrument or agreement evidencing any of the Guaranteed Obligations.
Guarantor, hereby irrevocably, unconditionally and expressly waives, to the
fullest extent permitted by applicable law, promptness, diligence, notice of
acceptance and other notice with respect to any of the Guaranteed Obligations
and this Performance Guaranty and any requirement that BECo protect, secure
or perfect any security interest or exhaust any right or first proceed
against Select or any other person or entity.
This Performance Guaranty shall be binding upon Guarantor and its successors
and permitted assigns and inure to the benefit of and be enforceable by BECo
and its successors and permitted assigns.
IN WITNESS WHEREOF, this Performance Guaranty has been executed by a duly
authorized officer of Guarantor as of the date first written above.
NORTHEAST UTILITIES, Guarantor
By:/S/Randy A. Shoop
Title: Assistant Treasurer - Finance
Accepted:
Boston Edison Company
By:/S/Douglas A. Horan
Title: Senior Vice President
