Exhibit B
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Stock Pledge Agreement
STOCK PLEDGE AGREEMENT (this "Agreement"), dated
as of November 30, 1995, made by NEW ENGLAND ELECTRIC
SYSTEM, a Massachusetts voluntary association (the
"Pledgor"), to STATE STREET BANK AND TRUST COMPANY, as
security agent (together with its successors in such
capacity, the "Security Agent") for the ratable benefit of
all holders from time to time of the Notes (as defined
below (the "Secured Parties")).
R E C I T A L S
A. The Pledgor is the legal and beneficial owner
of 100% of the shares of the issued and outstanding capital
stock of Narragansett Energy Resources Company, a Rhode
Island corporation (the "Corporation"), which shares are
described in Schedule I attached hereto (such shares,
collectively, the "Pledged Shares").
B. Ocean State Power, a Rhode Island general
partnership, together with Ocean State Power II, a Rhode
Island general partnership (together, the "Partnerships"),
severally own and operate an approximately 500 megawatt
gas-fired electric generating plant located in
Burrillville, Rhode Island.
C. The Corporation is a general partner of each
of the Partnerships.
D. The Corporation has entered into a Note
Agreement dated as of November 30, 1995 with each of the
Noteholders (defined below) (as each such Agreement may be
amended, modified or supplemented from time to time, the
"Note Agreement" and collectively, the "Note Agreements").
Each Note Agreement provides for the Noteholder party
thereto to purchase secured promissory note(s) issued by
the Corporation pursuant to such Note Agreement (each such
note, a "Note" and collectively, the "Notes") subject to
the terms and conditions set forth therein. The proceeds
of such Notes are to be applied by the Corporation to the
retirement of subordinated notes issued by the Corporation
to pay fees and expenses incurred by the Corporation in
connection with the sale of the Notes, to pay working
capital expenses of the Corporation and to repay (in part)
the outstanding principal balances under loans made by the
Pledgor to the Corporation to finance the Pledgor's equity
interests in the Partnerships. Capitalized terms used in
this Agreement and not otherwise defined herein shall have
the meanings assigned thereto in the Note Agreements.
E. Each Noteholder is willing to enter into each
respective Note Agreement upon the terms and conditions set
forth therein, but only if the Pledgor shall make the
pledges contemplated by this agreement.
F. The Pledgor is willing to make the pledges
requested and to enter into this Agreement so as to induce
the Noteholders to enter into each respective Note
Agreement.
G. State Street Bank and Trust Company has been
appointed as Security Agent of the Noteholders pursuant to
a Collateral Agency Agreement, dated as of November 30,
1995, by and among the Corporation, the Noteholders and the
Security Agent.
NOW, THEREFORE, in consideration of these
premises and in order to induce the Noteholders to enter
into the Note Agreements, and other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Pledgor agrees as follows:
ARTICLE I
UNDERTAKINGS
SECTION 1.1 Pledge.
(a) The Pledgor hereby assigns, transfers,
hypothecates and pledges to the Security Agent for the
ratable benefit of the Secured Parties, as security for the
timely and punctual (i) payment when due of any and all
sums owing by the Corporation under the Note Agreements and
the other Basic Documents, (ii) performance when due by the
Corporation of all its obligations under the Note
Agreements, the Notes and the other Basic Documents, and
(iii) payment and performance when due of any and all sums
and all obligations of the Pledgor hereunder (collectively,
the "Obligations") and grants a first lien on, and prior
perfected security interest in, all of the Pledgor's right,
title and interest in, to and under the following, whether
now owned or hereafter acquired (collectively, the "Pledged
Collateral"):
(i) the Pledged Shares and the certificates
representing the Pledged Shares, and all dividends,
cash, instruments and other property from time to time
received, receivable or otherwise distributed in
respect of or in exchange for any or all of the
Pledged Shares; and
(ii) all additional shares of stock and
other securities of the Corporation from time to time
acquired by the Pledgor in any manner, and the
certificates representing such additional shares and
other securities, and all dividends, cash,
instruments, and other property from time to time
received, receivable or otherwise distributed in
respect of or in exchange for any or all of such
shares;
provided that, for so long as no Event of Default shall
have occurred and be continuing, the Pledged Collateral
shall not include any dividends paid to the Pledgor in
respect of the Pledged Collateral if otherwise permitted by
the Basic Documents.
(b) This Agreement and the grant of the security
interest made hereby is for collateral purposes only, and
neither the Security Agent nor the Secured Parties shall by
virtue of this Agreement, by their receipt of dividends
from the Corporation, or by their exercise of any rights
hereunder, be deemed to have any liability for any
Contractual Obligations of the Partnerships, the
Corporation or the Pledgor.
SECTION 1.2 Security for Obligations. This
Agreement secures the payment and performance of all
Obligations.
SECTION 1.3 Delivery of Pledged Collateral. All
certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on
behalf of the Security Agent pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or
assignment in blank. The Security Agent shall have the
right, at any time, in its discretion, and without notice
to the Pledgor, following the occurrence and continuance of
an Event of Default, to transfer to or to register in the
name of the Security Agent or any of its nominees any or
all of the Pledged Collateral. In addition, the Security
Agent shall have the right, at any time, in its discretion,
without notice to the Pledgor, to exchange certificates or
instruments representing or evidencing Pledged Collateral
for certificates or instruments of smaller or larger
denominations.
SECTION 1.4 Waiver. The Pledgor hereby waives
diligence, presentment, demand of any kind, filing of
claims with a court in the event of receivership or
bankruptcy, protests of any kind, notices of any kind, and
all setoffs and counterclaims, to the extent permitted by
applicable law. Upon the occurrence and continuance of an
Event of Default, the Security Agent may proceed directly
and at once, without notice, against the Pledged Collateral
to collect and recover the full amount or any portion of
the Obligations so due and payable, without first
proceeding against the Corporation or against any other
security or collateral provided by the Corporation with
respect to the Obligations.
SECTION 1.5 Further Assurances. The Pledgor
agrees that at any time and from time to time, at its
expense, the Pledgor shall promptly execute and deliver all
further instruments and documents (including, without
limitation, any additional pledge agreement or security
agreement), and take all further action that, in the
opinion of the Required Holder(s), may be necessary or
reasonably desirable in order to perfect and protect any
security interest in the Pledged Collateral granted or
purported to be granted hereby or to enable the Security
Agent to exercise and enforce its rights and remedies
hereunder with respect to the Pledged Collateral or any
part thereof.
SECTION 1.6 Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have
occurred and be continuing:
(i) the Pledgor shall be entitled to
exercise any and all voting and other consensual
rights pertaining to the Pledged Collateral or
any part thereof for any purpose not inconsistent
with the terms of this Agreement and the other
Basic Documents; and
(ii) the Pledgor shall be entitled to
receive and retain any and all dividends paid in
respect of the Pledged Collateral to the extent
payment thereof is permitted by the terms of the
Basic Documents.
(b) Upon the occurrence and continuance of an
Event of Default:
(i) all rights of the Pledgor to
exercise the voting and other consensual rights
which the Pledgor would otherwise be entitled to
exercise pursuant to Section 1.6(a)(i) and to
receive the dividends and interest payments which
the Pledgor would otherwise be authorized to
receive and retain pursuant to Section 1.6(a)(ii)
shall cease, and all such rights shall thereupon
become vested in the Security Agent, which shall
thereupon have the sole right to exercise such
voting and other consensual rights and to receive
and hold as Pledged Collateral such dividends and
interest payments; and
(ii) all dividends which are received
by the Pledgor contrary to the provisions of
Section 1.6(b)(i) shall be received in trust for
the benefit of the Security Agent, shall be
segregated from other funds of the Pledgor and
shall be forthwith paid over to the Security
Agent as Pledged Collateral in the same form as
so received (with any necessary endorsement).
SECTION 1.7 Limited Recourse. Except as
provided in this Section, the obligations of the Pledgor
hereunder shall be payable only from the income and
proceeds from the Pledged Collateral, it being expressly
understood that except as provided in the immediately
succeeding proviso the obligations and liabilities of the
Pledgor under this Agreement and any other related
document, agreement or instrument, are solely nonrecourse
obligations, provided, that nothing herein shall (i) be
deemed to prevent recourse to or enforcement against the
Pledged Collateral for all liabilities, obligations and
undertakings contained in the Basic Documents (ii) be, or
be deemed to be, a release or impairment of said
obligations or any part thereof; (iii) limit or otherwise
prejudice in any way the Security Agent's or Secured
Parties' rights to foreclosure under the Collateral
Security Documents or to enforce the Security Agent's and
the Secured Parties' other rights or remedies under the
Collateral Security Documents; nor shall such limitation of
liability apply to the Pledgor if and to the extent that
Pledgor commits fraud or wilful misrepresentation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Pledgor makes the following representations
and warranties, each of which shall survive the execution
and delivery of this Agreement:
SECTION 2.1 Organization; Power and
Authorization; Enforceable Obligations.
(a) The Pledgor is a voluntary association,
created pursuant to an Agreement and Declaration of Trust,
dated January 2, 1926 (as amended, modified or supplemented
from time to time, the "Trust Agreement"), is duly
authorized and existing in good standing under the laws of
the Commonwealth of Massachusetts and is duly registered as
a public utility holding company under PUHCA. The Pledgor
has full power and authority and the legal right to conduct
its business as now conducted and as proposed to be
conducted by it, to execute, deliver and perform this
Agreement and to take all actions necessary to complete the
transactions contemplated by this Agreement. The Pledgor
has taken all necessary action to authorize the
transactions contemplated hereby on the terms and
conditions of this Agreement, and to authorize the
execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized,
executed and delivered by the Pledgor and constitutes the
legal, valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its
terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally or by limitation upon the availability of
equitable remedies.
SECTION 2.2 No Legal Bar. The execution,
delivery and performance of this Agreement will not violate
or conflict with, or result in a breach of the terms or
conditions of, any Requirement of Law applicable to, any
Contractual Obligation of, or the Trust Agreement or other
organizational documents of, the Pledgor. The execution,
delivery and performance of this Agreement will not result
in, or require the creation or imposition of any Lien on
any of the properties or revenues of the Pledgor pursuant
to any Requirement of Law or Contractual Obligation, except
for the Liens created or permitted by this Agreement. No
approvals or consents of any trustee or any holder of any
indebtedness of the Pledgor are required in connection with
the execution, delivery and performance by the Pledgor of
this Agreement, except such approvals or consents as have
been duly obtained and are in full force and effect.
SECTION 2.3 Governmental Approval. No
Governmental Approvals or other consents or approvals are
required to be obtained by the Pledgor in connection with
the execution, delivery and performance of this Agreement
or the taking of any action by the Pledgor contemplated
hereby, other than the approval by the Securities and
Exchange Commission, required under PUHCA for the
Corporation and Pledgor to enter into the transactions
contemplated by the Basic Documents, which has been duly
obtained, is in full force and effect, final and not
subject to appeal.
SECTION 2.4 Litigation. Except as disclosed in
the Pledgor's Quarterly Report on Form 10-Q for the period
ending September 30, 1995, no litigation, investigation or
proceeding of or before, or inquiry by, any arbitrator or
Governmental Authority is pending, and no such litigation,
investigation, proceeding or inquiry is, to the best
knowledge of the Pledgor, threatened against or in a manner
affecting the Pledgor, or against or in a manner affecting
any of its properties, rights, revenues or assets, which in
any such case, could reasonably be expected to have a
material adverse effect upon the ability of the Pledgor to
perform its obligations under this Agreement.
SECTION 2.5 Pledged Shares Authorized. The
Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
SECTION 2.6 Complete Ownership. The Pledged
Shares constitute one hundred percent (100%) of the issued
and outstanding shares of capital stock of the Corporation.
The Corporation's equity and voting interests in the
Partnerships as general partner constitute 100% of the
Pledgor's (indirect) equity and voting interests in the
Partnerships. The Pledgor is the legal and beneficial
owner of the Pledged Collateral free and clear of any Lien
except for the security interest created by this Agreement.
Schedule I truly and accurately sets forth the number of
the issued and outstanding shares of the Corporation's
capital stock.
SECTION 2.7 Control. The Pledgor has actual and
effective control over the Corporation, its wholly-owned
Subsidiary.
SECTION 2.8 First Lien. The pledge of the
Pledged Shares pursuant to this Agreement and delivery
thereof to the Security Agent in New York creates a valid
and perfected first priority security interest therein,
securing the payment of the Obligations.
SECTION 2.9 Margin Stock. None of the Pledged
Shares constitutes "margin stock," as such term is defined
in Regulation U and Regulation G of the Board of Governors
of the Federal Reserve System.
SECTION 2.10 No Default. The Pledgor is not in
breach of any of the terms or provisions of and no default
exists under, this Agreement. The Corporation is not in
breach of any of the terms or provisions of the Partnership
Agreements. The Pledgor is not in breach of any of the
terms or provisions of any Contractual Obligation or
Requirement of Law which breach could reasonable by
expected to have a material adverse effect upon the ability
of the Pledgor to perform its obligations under this
Agreement.
SECTION 2.11 Financial Statements. The Pledgor
has furnished the Noteholders with the following financial
statements, identified by a financial officer of the
Pledgor: (i) a consolidated balance sheet of the Pledgor
and its Subsidiaries as at December 31, 1994, and
consolidated statements of income, stockholders' equity and
cash flows of the Pledgor and its Subsidiaries for such
year, all audited by Coopers & Xxxxxxx, L.L.P.; and (ii) an
unaudited consolidated balance sheet of the Pledgor and its
Subsidiaries as at September 30, 1995, and unaudited
consolidated statements of income and cash flows for the
nine-month period ended on such date, prepared by the
Pledgor. Such financial statements (including any related
schedules and/or notes) are true and correct in all
material respects (subject, as to interim statements, to
changes resulting from audits and year-end adjustments),
have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the
periods involved and show all liabilities, direct and
contingent, of the Pledgor and its Subsidiaries required to
be shown in accordance with such principles. The balance
sheets fairly present the condition of the Pledgor and its
Subsidiaries as at the dates thereof, and the statements of
income, stockholders' equity (if any) and cash flows fairly
present the results of the operations of the Pledgor and
its Subsidiaries and their cash flows for the periods
indicated. There has been no material adverse change in
the business, condition (financial or otherwise) or
operations of the Pledgor and its Subsidiaries taken as a
whole since September 30, 1995.
SECTION 2.12 Investment Company; Investment
Adviser. The Pledgor is not an "investment company" or a
company controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The Pledgor is not an "investment adviser" within the
meaning of the Investment Advisers Act of 1940, as amended.
SECTION 2.13 Public Utility Status. Neither the
Security Agent nor any of the Secured Parties will solely
by reason of (a) the ownership interest of the Pledgor in
the Corporation, (b) the purchasing of the Notes; (c) the
securing of the Obligations by Liens on the Pledged
Collateral or (d) any other transaction contemplated by
this Agreement or any of the other Basic Documents, be
deemed by any Governmental Authority to be, or to be
subject to regulation as (i) an "electric utility",
"electric corporation", "electrical company", "public
utility" or "public utility holding company" under existing
law, rule or regulation of any Governmental Authority, or
(ii) an "affiliate" of a public utility holding company as
such terms are defined in the PUHCA. Neither the Security
Agent nor any of the Secured Parties will, by reason of its
or their ownership of the Pledged Collateral upon the
exercise of their remedies hereunder and under the other
Basic Documents, nor by reason of its or their exercise of
other remedies thereunder, be deemed by any Governmental
Authority to be (i) subject to financial, organizational or
rate regulation as an "electric utility", "electric
corporation", "electrical company", "public utility" or a
"public utility holding company" under any existing law,
rule or regulation of any Governmental Authority, or
(ii) an "affiliate of a public utility holding company as
such terms are defined in PUHCA; provided that to the
extent that the Security Agent or the Noteholders exercise
their remedies under the Stock Pledge to foreclose under
the shares of stock pledged thereunder and become the owner
or owners of such shares of stock, then unless the Company
shall at such time be an "Exempt Wholesale Generator"
pursuant to Section 32 of PUHCA or shall control less than
ten percent of the aggregate voting rights in either of the
Partnerships, the Security Agent and the Noteholders may
have to make certain filings with the Federal Energy
Regulation Commission and/or the Securities and Exchange
Commission to avoid becoming subject to regulation as an
"electric utility" or an "affiliate" of a public utility
holding company as such terms are defined in PUHCA.
ARTICLE III
COVENANTS
So long as the Obligations remain outstanding,
the Pledgor covenants and agrees with the Security Agent,
and the Secured Parties as follows:
SECTION 3.1
Transfers and Other Liens; Additional Shares.
(a) The Pledgor will not sell, transfer, convey
or otherwise dispose of, grant any option with respect to,
or pledge any of the Pledged Collateral (except in a
transaction permitted by Section 3.12) at any time, nor
create or permit to exist any Lien upon or with respect to
any of the Pledged Collateral, other than the Lien created
pursuant to this Agreement.
(b) The Pledgor will not, without the prior
written consent of the Security Agent, consent to or
approve the cancellation of any of the Pledged Shares or
the creation or authorization of any ownership interest in
the Corporation other than the interests in existence on
the date hereof.
SECTION 3.2 Defense of Pledged Collateral. The
Pledgor warrants and will defend the Security Agent's
right, title and security interest in and to the Pledged
Collateral against the claims of any Person.
SECTION 3.3
No Consent to Dispositions of Pledged Interest. The
Pledgor shall not consent to or permit to exist any sale,
transfer, exchange, assignment, pledge or other
disposition of the Pledged Collateral or of any other
interest in the Corporation.
SECTION 3.4 Governing Documents. The Pledgor
shall not amend or modify, or permit the amendment or
modification of, any provision of the articles of
incorporation, by-laws or other organizational documents of
the Corporation or the Corporation's Contractual
Obligations or any agreement relating to the articles of
incorporation, by-laws or other organizational documents of
the Corporation or the Corporation's Contractual
Obligations without the express written consent of the
Required Holder(s).
SECTION 3.5 Taxes. The Pledgor shall before
delinquency pay and discharge or cause to be paid and
discharged all Taxes imposed upon the Pledgor or upon its
income or profits and all claims, levies or liabilities
(including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and
payable or, if unpaid, might become a Lien (other than a
Permitted Lien) upon the Pledged Collateral, or upon any
part thereof; provided that the Pledgor shall not be
required to pay any such Tax, claim, levy or liability if
(a) the validity or amount thereof shall currently be
diligently contested in good faith by appropriate
proceedings timely instituted, (b) the Pledgor sets aside
on its books adequate reserves with respect to the
contested items in accordance with generally accepted
accounting principles, (c) during the period of such
contest, the enforcement of any contested item is
effectively stayed, and (d) such contest does not involve
material risk of the sale, forfeiture or loss of any of the
Pledged Collateral. The Pledgor shall promptly pay or
cause to be paid any valid, final judgment enforcing any
such Tax, claim, levy or liability and cause the same to be
satisfied of record.
SECTION 3.6 Change of Name; Address. The
Pledgor shall not change its name or address except on 60
days' prior written notice to the Security Agent and upon
the filing of additional UCC financing statements (if
deemed necessary by the Required Holder(s)) which reflect
the name and/or address change.
SECTION 3.7 Financial Statements. The Pledgor
covenants that it will deliver to the Security Agent with
sufficient copies for each Noteholder in duplicate or upon
the election of the Required Holder(s), to the Noteholders
in duplicate without a copy to the Security Agent:
(i) as soon as practicable and in any event
within 60 days after the end of each quarterly period
(other than the last quarterly period) in each fiscal year,
unaudited consolidated statements of income and cash flows
of the Pledgor and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of such
quarterly period, and an unaudited consolidated balance
sheet of the Pledgor and its Subsidiaries as at the end of
such quarterly period, setting forth in each case in
comparative form figures for the corresponding period in
the preceding fiscal year, all in reasonable detail and
satisfactory in form to the Required Holder(s) and
certified by an authorized financial officer of the
Pledgor, subject to changes resulting from year-end
adjustments; provided, that for so long as it is required
to file Quarterly Reports on Form 10-Q with the Securities
and Exchange Commission, the Pledgor may satisfy the
foregoing obligation by delivering each such report to the
Security Agent or each Noteholder (as applicable) not later
than five days after such filing;
(ii) as soon as practicable and in any event
within 120 days after the end of each fiscal year,
consolidated statements of income, cash flows and
stockholders' equity of the Pledgor and its Subsidiaries
for such year, and a balance sheet of the Pledgor and its
Subsidiaries as at the end of such year, setting forth in
each case in comparative form corresponding figures from
the preceding annual audit, all in reasonable detail and
satisfactory in form to the Required Holder(s) and reported
on by independent public accountants of recognized national
standing selected by the Pledgor, whose report shall be of
substantially the same scope as the audited financials for
fiscal year 1994 provided to the Noteholders, and in
accordance with generally accepted auditing standards and
satisfactory in substance to the Required Holder(s) and
certified by an authorized financial officer of the
Pledgor; provided, that for so long as it is required to
file Annual Reports on Form 10-K with the Securities and
Exchange Commission, the Pledgor may satisfy the foregoing
obligation by delivering each such report to the Security
Agent or each Noteholder (as applicable) not later than ten
days after such filing;
(iii) promptly upon the filing thereof with the
Securities and Exchange Commission, a copy of each Report
on Form 8-K of the Pledgor; and
(iv) with reasonable promptness, such other
financial data and other information with respect to the
Pledgor, the Corporation or either of the Partnerships as
the Security Agent or any Secured Party may reasonably
request.
SECTION 3.8 Maintenance of Existence, etc. The
Pledgor will at all times preserve and maintain in full
force and effect (i) its existence as a voluntary
association under the laws of the Commonwealth of
Massachusetts, provided, however, that the Pledgor may
convert from a voluntary association to a duly-formed and
existing corporation organized under the laws of any United
States state succeeding to all or substantially all of the
Pledgor's assets; provided, that in connection with such
conversion, the successor corporation expressly
acknowledges in writing the continuing validity of this
Agreement and, in such written acknowledgment, expressly
assumes the obligations of the Pledgor and the
enforceability of such obligations against such successor
corporation, and (ii) all of its rights, privileges and
franchises necessary for the ownership of its interest in
the Corporation.
SECTION 3.9 Performance of Obligations. The
Pledgor will duly perform and observe all of the covenants,
agreements and conditions on its part to be performed and
observed under the Basic Documents.
SECTION 3.10 Inspection of Property, Books and
Records; Discussions. The Pledgor will keep proper books
of record and account in which full, true and correct
entries in conformity with generally accepted accounting
principles and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and
activities throughout the periods involved. The Pledgor
shall permit representatives of the Security Agent and any
Secured Party to visit and inspect its properties, to
examine its books of record and account and to make copies
thereof and discuss its affairs, finances and accounts with
its principal officers and independent accountants, all at
such times during business hours and at such intervals as
the Security Agent or such Secured Party may reasonably
request.
SECTION 3.11 Compliance with Laws, Contractual
Obligations, etc. The Pledgor will comply with all
Requirements of Law and all Contractual Obligations, and
will from time to time obtain and comply with all
Governmental Approvals and other consents and approvals as
shall now or hereafter be necessary or desirable in
connection with the ownership of its interest in the
Corporation, the failure of which could reasonably be
expected to have a material adverse effect upon the Pledgor
or its ability to perform its Contractual Obligations.
SECTION 3.12 Merger, Sale of Assets. The
Pledgor will not merge into or consolidate with any other
Person, or liquidate or dissolve itself (or suffer any such
liquidation or dissolution), or sell, lease, transfer or
otherwise dispose of all or any substantial portion of its
assets unless (a) in connection therewith the surviving or
successor entity expressly acknowledges in writing the
continuing validity of this Agreement and, in such written
acknowledgment, expressly assumes the obligations of the
Pledgor and the enforceability of such obligations against
such surviving entity or successor or (b) in connection
with any sale, lease, transfer, or other disposition of a
substantial portion of the Pledgor's assets, upon such
sale, lease, transfer or other disposition, (i) the senior
debt of the Pledgor (or of the subsidiary corporations of
the Pledgor accounting in Pledgor's most recent annual
financial statements for 60% or more of Pledgor's income
before interest charges) is confirmed by either Standard &
Poor's Corporation or Xxxxx'x Investor Services, Inc. as
being A - A3, respectively, or better and (ii) the Pledgor
has a consolidated tangible net worth of $500 million or
more.
SECTION 3.13 Continuation Statements. The
Pledgor will, from time to time, at its own expense,
promptly prepare, execute and deliver any additional
instruments or documents and take all additional action
that, in the opinion of the Noteholders, may be necessary
or reasonably desirable in order to preserve, protect and
maintain the security interest in the Pledged Collateral
granted or purported to be granted hereby.
ARTICLE IV
POWER OF ATTORNEY
SECTION 4.1 Security Agent As Attorney-in-Fact.
The Pledgor does hereby make, constitute and appoint the
Security Agent, and any collateral agent or officer of the
Security Agent, with full power of substitution, as the
Pledgor's attorney-in-fact, with full power and authority,
in its own name or in the name, place and stead of the
Pledgor, or otherwise upon the occurrence of an Event of
Default, (a) to exercise all voting, consent, managerial
and other rights related to the Pledged Collateral,
including, without limitation, any right to manage the
operations and the business and affairs of the Corporation,
and (b) at any time and from time to time, generally to do,
at the Security Agent's request and the Pledgor's expense,
all acts and things which the Security Agent and/or the
Required Holder(s) deems necessary or advisable to
accomplish the purposes of this Agreement including,
without limitation, to receive, endorse and collect all
instruments made payable to the Pledgor representing any
payment or other dividend in respect of the Pledged
Collateral or any part thereof and to give full discharge
for the same, all as fully and effectually as the Pledgor
might or could do; and the Pledgor hereby ratifies all that
said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this
Agreement and thereafter as long as any of the Obligations
shall be outstanding. Any attempted revocation of the
powers of attorney granted herein shall be null and void.
There are no conditions or requirements imposed on the
Security Agent's exercise of the powers of attorney other
than as set forth herein.
SECTION 4.2 Right to Perform. If an Event of
Default shall have occurred and be continuing, the Security
Agent and/or any Secured Party may itself perform, or cause
performance of, any agreement contained herein, and the
expenses of the Security Agent, and Secured Party or such
other performing party incurred in connection therewith
shall be payable by the Pledgor; provided, however, that
the Security Agent shall have no obligation to perform or
cause performance of any of the Pledgor's obligations under
any provision of this Agreement, including without
limitation, Article V hereof.
SECTION 4.3 Reasonable Care. The Security Agent
shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment
substantially equal to that which the Security Agent
accords its own property, it being understood that neither
the Security Agent nor any Secured Party shall have
responsibility for taking any steps to preserve rights
against any third parties with respect to the Pledged
Collateral. The powers conferred on the Security Agent
hereunder shall not impose any duty on the Security Agent
to exercise such powers.
ARTICLE V
REMEDIES
SECTION 5.1 Substitution for Pledgor. If an
Event of Default shall have occurred and be continuing,
then, in addition to any other rights and remedies provided
for herein or otherwise available to it, the Security Agent
may exercise the powers of attorney set forth in Section
4.1 of this Agreement and manage (or designate another
Person to manage) the operations, business and affairs of
the Corporation.
SECTION 5.2 Sale of Pledged Collateral. If an
Event of Default shall have occurred and be continuing,
then, in addition to any other rights and remedies provided
for herein or otherwise available to it, the Security Agent
may without any further demand, advertisement or notice
(except as expressly provided in this Section 5.2),
exercise all the rights and remedies of a secured party
under the Uniform Commercial Code as in effect in any
relevant jurisdiction (whether or not the Uniform
Commercial Code applies to the Pledged Collateral), and in
addition may sell, give an option or options to purchase,
contract to sell or otherwise dispose of the Pledged
Collateral, or any part thereof, as hereinafter provided
and may sell, lease, finance, refinance, mortgage or convey
the Pledged Collateral. The Pledged Collateral may so be
sold or otherwise disposed of in one or more sales, at
public or private sale, conducted by any officer or agent
of, or auctioneer or attorney for, the Security Agent, at
any exchange or broker's board or at the Security Agent's
place of business or elsewhere, for cash, upon credit or
for other property, for immediate or future delivery, and
at such price or prices and on such terms (including,
without limitation, a requirement that any purchase of all
or any part of the Pledged Collateral for investment be
without any intention to make a distribution thereof) as
the Security Agent shall, in its sole discretion, deem
appropriate. Any Secured Party may be the purchaser of any
or all of the Pledged Collateral so sold at a public sale
and thereafter hold the same, absolutely free from any
right or claim of whatsoever kind and the obligations of
the Pledgor to such purchaser may be applied as a credit
against the purchase price. The Security Agent may in its
sole discretion, at any such sale, restrict the prospective
bidders or purchasers as to their number, nature of
business and investment intention. Upon any such sale, the
Security Agent shall have the right to deliver, assign and
transfer to the purchaser thereof (including any Secured
Party) the Pledged Collateral so sold. Each purchaser
(including any Secured Party) at any such sale shall hold
the Pledged Collateral so sold absolutely free from any
claim or right of whatsoever kind, including any equity or
right of redemption of the Pledgor. The Security Agent
shall give the Pledgor at least ten days' notice (which the
Pledgor agrees is reasonable notification within the
meaning of Section 9-504(c) of the Uniform Commercial Code
of the State of New York or its equivalent in the Uniform
Commercial Code of any other relevant jurisdiction) of any
such public or private sale. Such notice shall state the
time and place fixed for any public sale and the time after
which any private sale is to be made. Any such public sale
shall be held at such time or times within ordinary
business hours as the Security Agent shall fix in the
notice of such sale. At any such sale the Pledged
Collateral may be sold in one lot as an entirety or in
separate parcels. The Security Agent shall not be
obligated to make any sale pursuant to any such notice.
The Security Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and
place fixed for such sale, and any such sale may be made at
any time or place to which the same may be so adjourned
without further notice or publication. In case of any sale
of all or any part of the Pledged Collateral on credit or
for future delivery, the Pledged Collateral so sold may be
retained by the Security Agent until the full selling price
is paid by the purchaser thereof, but the Security Agent
shall not incur any liability in case of the failure of
such purchaser to take up and pay for the Pledged
Collateral so sold, and, in case of any such failure, such
Pledged Collateral may again be sold pursuant to the
provisions hereof.
SECTION 5.3 Conveyances. The Security Agent may
as attorney-in-fact pursuant to Section 4.1 hereof, in the
name and stead of the Pledgor, make and execute all
conveyances, assignments and transfers of the Pledged
Collateral sold pursuant to Section 5.2 hereof, and the
Pledgor hereby ratifies and confirms all that the Security
Agent, as said attorney-in-fact, shall do by virtue hereof.
Nevertheless, the Pledgor shall, if so requested by the
Security Agent, ratify and confirm any sale or sales by
executing and delivering to the Security Agent, or to such
purchaser or purchasers, all such instruments as may, in
the judgment of the Security Agent, be advisable for the
purpose.
SECTION 5.4 Application of Proceeds. All cash
proceeds received by the Security Agent in respect of any
sale or lease of, collection from, or other realization
upon all or any part of the Pledged Collateral may be held
by the Security Agent as collateral for the Obligations
and/or applied to the ratable payment of the Obligations,
as directed by the Required Holder(s). Any surplus of such
cash proceeds held by the Security Agent and remaining
after payment in full of the Obligations shall be paid over
to the Pledgor or whomsoever the Security Agent shall
determine to be lawfully entitled thereto.
SECTION 5.5 Discharge of Purchaser. The receipt
by the Security Agent of the purchase money paid at any
such sale made by it shall be a sufficient discharge
therefor, sold as aforesaid; and no purchaser (or
representative or assign of any purchaser), after paying
such purchase money and receiving such receipt, shall be
bound to see to the application of such purchase money or
any part thereof or in any manner whatsoever be answerable
for any loss, misapplication or non-application of any such
purchase money, or any part thereof, or be bound to inquire
as to the authorization, necessity, expediency or
regularity of any such sale.
SECTION 5.6 No Liability. Neither the Security
Agent nor any Secured Party shall incur any liability as a
result of the sale of the Pledged Collateral, or any part
thereof, at any private sale conducted in a commercially
reasonable manner. The Pledgor hereby waives, to the full
extent permitted by applicable law, all claims, damages and
demands against the Security Agent and any Secured Party
arising out of the repossession, retention or sale of the
Pledged Collateral, including, without limitation, any
claims against the Security Agent and any Secured Party,
arising by reason of the fact that the price at which the
Pledged Collateral, or any part thereof, were sold was less
than may have been obtained at a public sale or was less
than the aggregate amount of the Obligations so long as
such sale shall have been conducted in accordance with this
Agreement.
SECTION 5.7 Remedies Cumulative. Each and every
right and remedy of the Security Agent shall, to the extent
permitted by law, be cumulative and shall be in addition to
any other remedy given hereunder or under any other Basic
Document or any other document now or hereafter existing at
law or in equity or by statute.
ARTICLE VI
ADDITIONAL RIGHTS OF THE SECURITY AGENT
If the Security Agent shall determine to exercise
its right to sell all or any of the Pledged Collateral
pursuant to Section 5.2, the Pledgor shall, upon request of
the Security Agent, at its own expense do or cause to be
done all such other acts and things as may be necessary to
make such sale of the Pledged Collateral or any part
thereof valid and binding and in compliance with any
Requirement of Law.
ARTICLE VII
INDEMNIFICATION
The Pledgor shall indemnify each of the Security
Agent and the Secured Parties from and against any and all
claims, losses and liabilities growing out of or resulting
from the failure by the Pledgor to perform or observe any
of the provisions hereof including, without limitation,
(a) the sale of, collection from, or other realization
upon, the Pledged Collateral, or any part thereof, in
connection with such failure, or (b) the exercise or
enforcement of any of the rights of the Security Agent or
any Secured Party hereunder, except for claims, losses or
liabilities resulting from such party's gross negligence or
willful misconduct. The indemnity obligations of the
Pledgor contained in this Article VII shall continue in
full force and effect notwithstanding the full payment of
the Obligations and the discharge thereof. The Pledgor
will upon demand pay to the Security Agent, or any Secured
Party the amount of any and all reasonable expenses,
including the fees and expenses of its and their respective
counsel and of any experts and agents, which such party may
incur in connection with the failure by the Pledgor to
perform or observe any of the provisions hereof, including,
without limitation, (a) the sale of, collection from, or
other realization upon, the Pledged Collateral, or any part
thereof, in connection with such failure, or (b) the
exercise or enforcement of any of the rights of the
Security Agent, or any Secured Party hereunder.
If any obligation of the Pledgor arising under
this Article VII shall be prohibited or unenforceable in
any jurisdiction, then, as to such jurisdiction, the
Pledgor hereby agrees to make the maximum contribution to
the payment and satisfaction of such obligations which is
permissible under applicable law.
ARTICLE VIII
WAIVER
To the fullest extent it may lawfully so agree,
the Pledgor agrees that it will not at any time insist
upon, claim, plead, or take any benefit or advantage of any
appraisement, valuation, stay, extension, moratorium,
redemption or similar law now or hereafter in force in
order to prevent, delay or hinder the enforcement hereof or
the absolute sale of any part of the Pledged Collateral;
the Pledgor for itself and all who claim through it, so far
as it or they now or hereafter lawfully may do so, hereby
waives the benefit of all such laws, and all right to have
the Pledged Collateral marshaled upon any foreclosure
hereof, and agrees that any court having jurisdiction to
foreclose this Agreement may order the sale of the Pledged
Collateral as an entirety. Without limiting the generality
of the foregoing, the Pledgor hereby (a) authorizes the
Security Agent, for the ratable benefit of the Secured
Parties, in its sole discretion and without notice to or
demand upon the Pledgor and without otherwise affecting the
obligations of the Pledgor hereunder, from time to time to
take and hold other collateral for payment of any
Obligations, or any part thereof, and to exchange, enforce
or release such other collateral or any part thereof, and
to accept and hold any endorsement or guarantee of payment
of the Obligations or any part thereof, and to release or
substitute any endorser or guarantor or any other person
granting security for or in any other way obligated upon
any Obligations or any part thereof and (b) waives and
releases any and all right to require the Security Agent or
any Secured Party to collect any of the Obligations from
any specific item or items of the Pledged Collateral or
from any other party liable as guarantor or in any other
manner in respect of any of the Obligations or from any
collateral for any of the Obligations.
ARTICLE IX
TERMINATION
Except as provided in Article VII hereof, this
Agreement shall terminate upon the receipt by the Security
Agent of evidence reasonably satisfactory to it and the
Required Holder(s) of the full and indefeasible payment (or
prepayment) and performance of all Obligations, including
the principal of and the premium, if any, and interest on
all such Obligations. At the time of such termination, the
Security Agent, at the request and expense of the Pledgor,
will execute and deliver to the Pledgor a proper instrument
or instruments acknowledging the satisfaction and
termination of this Agreement, and will duly assign,
transfer and deliver to the Pledgor such of the Pledged
Collateral as has not yet theretofore been sold or
otherwise applied or released pursuant to this Agreement,
together with any moneys at the time held by the Security
Agent or any Secured Party hereunder on account of the
Pledged Collateral and not otherwise applied to the payment
of the Obligations.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of
the Pledgor, the Security Agent and the Secured Parties,
all future holders of any of the Notes and their respective
successors and assigns. Except as set forth in Section
3.12 the Pledgor may not assign or transfer any of its
rights or obligations under this Agreement without the
prior written consent of all of the Noteholders. Any
Secured Party may at any time assign or transfer any of its
rights or obligations under this Agreement without the
prior written consent of the Pledgor but only concurrently
with and in accordance with an assignment by such Secured
Party under the respective Note Agreement.
SECTION 10.2 Notices. All notices, demands,
requests and other communications provided for hereunder
shall be in writing and shall be deemed to have been given
(a) when presented personally, (b) when transmitted by
telex to the number specified below and the proper answer
back is received, (c) if sent by overnight courier service,
on the Business Day following the date of delivery to such
courier service, or such later day as demonstrated by a
bona fide receipt therefor, or (d) if sent by the United
States Postal Service, postage prepaid, registered or
certified, return receipt requested, on the date received,
addressed to the respective party, as the case may be, at
the following address, or such other address as any party
may from time to time designate by written notice to the
others as herein required. Transmission by telecopy at the
numbers provided below shall constitute provision of notice
under this Agreement only if receipt thereof is
acknowledged by the recipient.
Security Agent: State Street Bank
Corporate Trust Department
Two International Place
Boston, MA 02110
Attention: Xxxxxx Xxxxxxx
Facsimile: (617) 664 - 5371
Pledgor: New England Electric System
00 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Treasurer
Facsimile: (508) 389 - 2463
SECTION 10.3 Descriptive Headings. The
descriptive headings of the several paragraphs of this
Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
SECTION 10.4 Governing Law. THIS AGREEMENT
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW (OTHER THAN THE PROVISIONS OF SECTION 5-
1401 OF THE GENERAL OBLIGATIONS LAW OF SUCH STATE).
SECTION 10.5 No Waiver. Failure by the Security
Agent or any of the Secured Parties to exercise, or any
delay in exercising, any right, remedy, power or privilege
any of them has under this Agreement, or any course of
dealing between the Pledgor and the Security Agent or the
Secured Parties, shall not operate as a waiver of any such
right, remedy, power or privilege. Neither shall any
single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise
of the same or of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges
provided under this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges
provided by law.
SECTION 10.6 Severability. Any provision of
this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability
without invalidating the remaining provisions of this
Agreement and without affecting the validity or
enforceability of such or any other provision in any other
jurisdiction.
SECTION 10.7 Consent to Jurisdiction.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT, ANY OF THE COLLATERAL SECURITY DOCUMENTS
OR OTHER BASIC DOCUMENTS, OR OTHER DOCUMENTS OR
TRANSACTIONS IN CONNECTION WITH OR RELATING HERETO OR
THERETO, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE
SECURITY AGENT, ANY SECURED PARTY OR THE PLEDGOR MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND THE PLEDGOR HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF THE PLEDGED COLLATERAL, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. THE PLEDGOR HEREBY IRREVOCABLY WAIVES
ANY OBJECTIONS, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
(b) In the case of the courts of the State of
New York or of the United States sitting in the City of New
York, State of New York, the Pledgor hereby irrevocably
designates, appoints and empowers C T Corporation System
(the "Process Security Agent") (which has consented
thereto) with offices on the date hereof at 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, as agent to receive for and on
behalf of the Pledgor service of process in the State of
New York. The Pledgor further agrees that such service of
process may be made on the Process Agent by personal
service of a copy of the summons and complaint or other
legal process in any such legal suit, action or proceeding
on the Process Agent, or by any other method of service
provided for under the applicable laws in effect in the
County of New York, State of New York, and the Process
Agent hereby is authorized and directed to accept such
service for and on behalf of the Pledgor, and to admit
service with respect thereto.
(c) Upon service of process being made on the
Process Agent as aforesaid, a copy of the summons and
complaint or other legal process served shall be mailed by
the Process Agent to the Pledgor by registered mail, return
receipt requested, at his address referred to in Section
10.2 hereof, or to such other address as the Pledgor may
notify the Process Agent in writing. Service upon the
Process Agent as aforesaid shall be deemed to be personal
service on the Pledgor and shall be legal and binding upon
the Pledgor for all purposes, notwithstanding any failure
of the Process Agent to mail copies of such legal process
thereto, or any failure on the part of the Pledgor to
receive the same.
(d) The Pledgor agrees that it will at all times
continuously maintain an agent to receive service of
process in the County of New York on its behalf. In the
event that for any reason the Process Agent or any
successor thereto shall no longer serve as agent for the
Pledgor to receive service of process in the County of New
York on its behalf or shall have changed his address
without notification thereof to the Process Agent, the
Pledgor, immediately after having knowledge thereof, will
irrevocably designate and appoint a substitute agent in the
City of New York, New York and advise the Security Agent
thereof.
(e) Nothing contained in this section shall
preclude the Security Agent or any Secured Party from
bringing any legal suit, action or proceeding against the
Pledgor in the courts of any jurisdiction where the Pledgor
or any of his property or assets may be found or located.
To the extent permitted by the applicable laws of any such
jurisdiction, the Pledgor hereby irrevocably submits to the
jurisdiction of any such court and expressly waives, in
respect of any such suit, action or proceeding, the
jurisdiction of any court or courts which now or hereafter,
by reason of his present or future domiciles, or otherwise,
may be available to it.
SECTION 10.8 Amendments. This Agreement may not
be changed orally, but only by an agreement in writing
signed by Pledgor and the Security Agent (with the consent
of the Required Holder(s)).
IN WITNESS WHEREOF, the Pledgor has caused this
Agreement to be duly executed and delivered as of the date
first above written.
NEW ENGLAND ELECTRIC SYSTEM *
s\ Xxxxxxx X. Xxxxxxx
By: __________________________
Xxxxxxx X. Xxxxxxx
Treasurer
_________________
The name "New England Electric System" means the trustee or
trustees for the time being (as trustee or trustees but not
personally) under an agreement and declaration of trust
dated January 2, 1926, as amended, which is hereby referred
to, and a copy of which as amended has been filed with the
Secretary of the Commonwealth of Massachusetts. Any
agreement, obligation or liability made, entered into or
incurred by or on behalf of New England Electric System
binds only its trust estate, and no shareholder, director,
trustee, officer or agent thereof assumes or shall be held
to any liability therefor.
