SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8858
UNITIL CORPORATION
(Exact name of registrant as specified in its charter)
New Hampshire 02-0381573
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6 Liberty Lane West, Hampton, New Hampshire 03842-1720
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (603) 772-0775
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on Which Registered
Common Stock, No Par Value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K [ X ]
Based on the closing price of March 1, 2003, the aggregate market value of
common stock held by non-affiliates of the registrant was $123,810,466.
The number of common shares outstanding of the registrant was 4,743,696 as of
March 1, 2003.
Documents Incorporated by Reference:
Portions of the Proxy Statement relating to the Annual Meeting of Shareholders
to be held April 17, 2003, are incorporated by reference into Part III of this
Report.
UNITIL CORPORATION
FORM 10-K
For the Fiscal Year Ended December 31, 2002
Table of Contents
Item Description Page
PART I
1. Business
Unitil Corporation................................................ 2
Utility Operations................................................ 3
March 14, 2003 New Hampshire Public Utilities Commission Order.... 4
Regulatory Matters................................................ 4
Electric Power Supply............................................. 6
Gas Supply........................................................ 8
Environmental Matters............................................. 9
Employees......................................................... 10
Executive Officers of the Registrant.............................. 11
2. Properties............................................................. 12
3. Legal Proceedings...................................................... 12
4. Submission of Matters to a Vote of Securities Holders.................. 12
PART II
5. Market for Registrant's Common Equity and Related Shareholder Matters.. 13
6. Selected Financial Data................................................ 14
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................. 15
7A. Quantitative and Qualitative Disclosures about Market Risk............. 27
8. Financial Statements and Supplementary Data............................ 28
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure................................................... 53
PART III
10. Directors and Executive Officers of the Registrant..................... 54
11. Executive Compensation................................................. 54
12. Security Ownership of Certain Beneficial Owners and Management......... 54
13. Certain Relationships and Related Transactions......................... 54
PART IV
14. Controls and Procedures................................................ 55
15. Exhibits, Financial Statement Schedules and Reports on Form 8-K........ 55
Signatures............................................................. 59
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002................................................................ 61
Schedule II Valuation and Qualifying Accounts and Reserves............. 64
Exhibit 4.1 Unitil Energy Systems, Inc. - Twelfth Supplemental Indenture
Exhibit 10.16 Restricted Stock Plan
Exhibit 10.17 Portfolio Sale and Assignment and Transition Service and Default
Service Supply Agreement By and Among Unitil Power Corp., Unitil
Energy Systems, Inc. and Mirant Americas Energy Marketing, LP
Exhibit 11.1 Computation in Support of Earnings per Share
Exhibit 12.1 Computation in Support of Ratio of Earnings to Fixed Charges
Exhibit 21.1 Subsidiaries of Registrant
Exhibit 23.1 Consent of Independent Certified Public Accountants
Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
1
PART I
Item 1. Business
UNITIL Corporation
Unitil Corporation (Unitil or the Company) was incorporated under the laws of
the State of New Hampshire in 1984. Unitil is a registered public utility
holding company under the Public Utility Holding Company Act of 1935 (the 1935
Act), and is the parent company of the Unitil companies. The following companies
are wholly-owned subsidiaries of Unitil:
State and
Unitil Corporation Year of Principal Type
Subsidiaries Organization of Business
- -------------------------------------------------- --------------- -------------------------------------------
Unitil Energy Systems, Inc. (UES) NH - 1901 Retail Electric Distribution Utility
Fitchburg Gas and Electric Light Company (FG&E) MA - 1852 Retail Electric & Gas Distribution Utility
Unitil Power Corp. (Unitil Power) NH - 1984 Wholesale Electric Power Utility
Unitil Realty Corp. (Unitil Realty) NH - 1986 Real Estate Management
Unitil Service Corp. (Unitil Service) NH - 1984 System Service Company
Unitil Resources, Inc. (Unitil Resources) NH - 1993 Energy Brokering and Advisory Services
Usource, Inc. NH - 2000 Energy Brokering and Advisory Services
Usource L.L.C. (Usource) NH - 2000 Energy Brokering and Advisory Services
Unitil's principal business is the retail sale and distribution of electricity
and related services in several cities and towns in the seacoast and capital
city areas of New Hampshire, and both electricity and gas and related services
in north central Massachusetts, through Unitil's two wholly-owned retail
distribution utility subsidiaries (UES and FG&E, collectively referred to as the
Retail Distribution Utilities). The Company's wholesale electric power utility
subsidiary, Unitil Power Corp., currently provides all the electric power supply
requirements to UES for resale at retail.
In December 2002, Exeter & Hampton Electric Company (E&H), a wholly-owned
subsidiary of Until, was merged with and into Concord Electric Company (CECo),
also a wholly-owned subsidiary of Unitil. CECo changed its name to UES
immediately following the merger.
Unitil has three additional wholly owned subsidiaries: Unitil Realty Corp.
(Unitil Realty), Unitil Service Corp. (Unitil Service) and Unitil Resources,
Inc. (Unitil Resources). Unitil Realty owns and manages the Company's corporate
office building and property located in Hampton, New Hampshire and leases this
facility to Unitil Service under a long-term lease arrangement. Unitil Service
provides, at cost, centralized management, administrative, accounting,
financial, engineering, information systems, regulatory, planning, procurement,
and other services to the Unitil System companies. Unitil Resources is the
Company's wholly owned non-utility subsidiary and has been authorized by the
Securities and Exchange Commission, pursuant to the rules and regulations of the
1935 Act, to engage in business transactions as a competitive marketer of
electricity, gas and other energy commodities in wholesale and retail markets,
and to provide energy brokering, consulting and management related services
within the United States. Usource, Inc. and Usource L.L.C. (Usource) are
wholly-owned subsidiaries of Usource, Inc. Usource provides energy brokering
services, as well as related energy consulting services.
2
UTILITY OPERATIONS
UES serves customers in two distinct geographical territories in New Hampshire -
one in the central region of the state and one in the seacoast region.
UES is engaged principally in the retail distribution and sale of electricity to
approximately 70,000 customers in New Hampshire in the cities of Concord, Exeter
and Hampton, as well as 12 towns surrounding Concord and all or part of 16 towns
surrounding Exeter and Hampton. UES's service area consists of approximately 408
square miles in the Merrimack River Valley of south central New Hampshire and in
southeastern New Hampshire.
The State of New Hampshire's government operations are located within UES's
service area, including the executive, legislative, judicial branches and
offices and facilities for all major state government services. In addition,
UES's service area is a retail trading center for the north central and
southeastern parts of the state. These areas serve diversified businesses
relating to insurance, printing, electronics, granite, belting, plastic yarns,
furniture, machinery, sportswear and lumber, shopping centers, motels, farms,
restaurants, apple orchards and office buildings, as well as manufacturing firms
engaged in the production of sportswear, automobile parts and electronic
components. It is estimated that there are over 150,000 daily summer visitors to
UES's service territory in southeastern New Hampshire, which includes several
popular resort areas and beaches along the Atlantic Ocean. Of UES's 2002 retail
electric revenues, approximately 42% were derived from residential sales, 34%
from commercial, government and nonmanufacturing sales, 23% from
industrial/manufacturing sales and 1% from other sales.
FG&E is engaged principally in the retail distribution and sale of both
electricity and natural gas in the City of Fitchburg and several surrounding
communities. FG&E's service area encompasses approximately 170 square miles in
north central Massachusetts.
Electricity is supplied and distributed by FG&E to approximately 27,000
customers in the communities of Fitchburg, Ashby, Townsend and Lunenburg. FG&E's
industrial customers include paper manufacturing and paper products companies,
rubber and plastics manufacturers, chemical products companies and printing,
publishing and allied industries. Of FG&E's 2002 electric revenues,
approximately 35% were derived from residential sales, 23% from commercial and
nonmanufacturing sales, 25% from industrial/manufacturing sales and 17% from
other sales.
Natural gas is supplied and distributed by FG&E to approximately 15,000
customers in the communities of Fitchburg, Lunenburg, Townsend, Ashby, Gardner
and Westminster, all located in Massachusetts. Of FG&E's 2002 gas operating
revenues, approximately 51% were derived from residential sales, 11% from small
general customers, 18% from medium general customers, 9% from large general
customers, 8% from interruptible sales (which are sales to customers that have
agreed to discontinue use of the Company-supplied gas service temporarily upon
notice by the Company, and which customers usually have an alternate fuel
capability, e.g., fuel oil, that they can employ during the interruption
periods) and 3% from other sales. FG&E's industrial gas revenue is primarily
derived from firm sales to chemical manufacturers, paper manufacturing and paper
products companies, fabricated metal products manufacturers and plastics
manufacturers.
Natural gas sales in New England are seasonal, and the Company's results of
operations reflect this seasonal nature. Accordingly, results of operations are
typically positively impacted by gas operations during the five heating season
months from November through March of the following year. Electric sales in New
England are far less seasonal than natural gas sales; however, the highest usage
typically occurs in the summer and winter months due to air conditioning and
heating requirements, respectively. Unitil is not dependent on a single customer
or a few customers for its electric and gas sales.
(For details on Unitil's Results of Operations, see Part II, Item 7
herein.)
(For segment information, see Part II, Item 8, Footnote 14 herein.)
3
MARCH 14, 2003 New Hampshire Public Utilities Commission Order
On March 14, 2003 the New Hampshire Public Utilities Commission (NHPUC) approved
the agreement between Unitil Power, UES and Mirant Americas Energy Marketing,
LP. (Mirant), which was entered into on February 25, 2003, under which Mirant
will purchase the entitlements to Unitil Power's Supply portfolio and provide
Transition and Default Service to the customers of UES. The final amount of
Unitil Power's recoverable stranded costs, calculated on the basis of the
amounts agreed to be paid by the parties under such Agreement for the Unitil
Power power supply portfolio, was determined to be $108.7 million, with a
recovery period of 8 years. As of December 31, 2002, the Company had estimated
these recoverable stranded costs and accordingly recorded on its balance sheet
as of that date $94.5 million as Power Supply Buyout Obligations and Regulatory
Assets. The approval of the Agreement by the NHPUC is subject to an appeal
period of 30 days. The NHPUC Order completes the state approval process for
Unitil's restructuring plan under which UES will implement customer choice for
its customers on May 1, 2003.
REGULATORY MATTERS
The Unitil Companies are regulated by various federal and state agencies,
including the Securities and Exchange Commission (SEC), the Federal Energy
Regulatory Commission (FERC), and state regulatory authorities with jurisdiction
over public utilities, including the New Hampshire Public Utilities Commission
(NHPUC) and the Massachusetts Department of Telecommunications and Energy
(MDTE). In recent years, there has been significant legislative and regulatory
activity to restructure the utility industry in order to introduce greater
competition in the supply and sale of electricity and gas, while continuing to
regulate the distribution operations of Unitil's utility operating subsidiaries.
Unitil implemented the restructuring of its electric operations in Massachusetts
in 1998 and is implementing a restructuring settlement for its New Hampshire
electric operations on May 1, 2003.
Massachusetts Electric Operations Restructuring - Beginning March 1, 1998, FG&E
implemented its Restructuring Plan under the Massachusetts Restructuring Act.
FG&E completed the divestiture of its entire regulated power supply business in
2000 in accordance with the Restructuring Plan. All FG&E distribution customers
must pay a transition charge that provides for the recovery of costs associated
with FG&E's power portfolio which were stranded as a result of the divestiture
of those assets. The plant and Regulatory Asset balances that will be recovered
through the transition charge have been approved by the MDTE as part of FG&E's
annual Reconciliation Filings. The Restructuring Act also requires FG&E to
obtain power for retail customers who choose not to buy energy from a
competitive supplier through either Standard Offer Service (SOS) or Default
Service. FG&E must provide SOS through February 2005 at rate levels which
guarantee rate reductions required by the Restructuring Act. New distribution
customers and customers no longer eligible for SOS are eligible to receive
Default Service at prices set periodically based on market solicitations as
approved by regulators. As of December 31, 2002, competitive suppliers were
serving approximately 20% of FG&E's load, mainly for large industrial customers.
As a result of the restructuring and divestiture of FG&E's entire generation and
purchased power portfolio, FG&E has accelerated the amortization of its stranded
electric generation assets and its abandoned investment in Seabrook Station, a
nuclear generating unit. FG&E earns an authorized rate of return on the
unamortized balance of these Regulatory Assets. In addition, as a result of the
rate reduction and rate cap requirements of the Restructuring Act, FG&E has been
authorized to defer the recovery of a portion of its transition costs and SOS
costs. These unrecovered amounts are also recorded as Regulatory Assets and earn
authorized carrying charges until their subsequent recovery in future periods.
In 2002, Unitil's earnings derived from these generation-related Regulatory
Assets, including carrying charges earned on deferred transition costs and SOS
costs, represented approximately 10% of net income. The value of FG&E's
Regulatory Assets is approximately $128 million at December 31, 2002, and is
expected to be amortized and recovered over the next three to nine years.
Earnings from this segment of FG&E's utility business will continue to decline
and ultimately cease.
FG&E made a total of four Reconciliation Filings in 1999, 2000, 2001 and 2002.
Rate adjustments were approved in each Filing for effect during the subsequent
year, subject to further investigation. In October 2001, the MDTE issued a final
Order on FG&E's 1999 Reconciliation Filing which determined the final treatment
of Regulatory Assets attributable to stranded generation costs, purchased power
costs, and related expenses for the 1999, and future, Reconciliation Filings.
FG&E's 2001 Reconciliation Filing, submitted on December 2, 2001, recast its
rates from 1998 through 2001 in compliance with the MDTE's final Order on its
1999 filing. On October 15, 2002, the MDTE issued an Order approving a
settlement agreement regarding the Company's 2001 filing. Under the approved
settlement, FG&E agreed to reduce the carrying charge on deferred transition
costs that will be
4
recovered from customers in future years. This change does not affect current
electric rates, but will reduce the total amount of transition costs, including
carrying costs, in future years. The MDTE's October 2002 Order and associated
settlement resolve many of the issues which otherwise might have been contested
in future FG&E Reconciliation Filings.
FG&E submitted its 2002 Reconciliation Filing on December 20, 2002. Rate
adjustments were approved for effect on January 1, 2003, subject to
investigation, resulting in a rate reduction of approximately 4.4% for
residential SOS customers. The reduction is due to a decrease in the SOS fuel
adjustment, which is not subject to the rate cap, and does not affect net
income.
Massachusetts Gas Operations Restructuring - Following a three year state-wide
collaborative process on the unbundling, or separation, of discrete services
offered by natural gas local distribution companies (LDCs), the MDTE approved
regulations and tariffs for FG&E and other LDCs to provide full customer choice
effective November 1, 2000. The MDTE ruled that LDCs would continue to have an
obligation to provide gas supply and delivery services for a five-year
transition period, with a review after three years. This review is expected to
be initiated in late 2003. The MDTE also required mandatory assignment of LDCs'
pipeline capacity to competitive marketers supplying customers during the
transition period. This mandatory capacity assignment protects LDCs from
exposure to certain stranded gas supply costs during the transition period.
New Hampshire Restructuring - On January 25, 2002, the Company's New Hampshire
electric utility subsidiaries, CECo, E&H and Unitil Power, filed a comprehensive
restructuring proposal with the New Hampshire Public Utilities Commission
(NHPUC). This proposal included the introduction of customer choice consistent
with New Hampshire's electric utility industry restructuring law, the
divestiture of Unitil Power's power supply portfolio, the recovery of stranded
costs, the merger of CECo and E&H into one distribution company and new
distribution rates for the combined company. On October 25, 2002, the NHPUC
approved a multi-party settlement on all major issues in the proceeding,
including stranded cost recovery for purchased power contracts. At December 31,
2002, the Company estimated a range for these divestiture obligations and
recoverable stranded costs and recorded $94.5 million as Power Supply Buyout
Obligations and Regulatory Assets at December 31, 2002.
Under Unitil's restructuring plan, Unitil agreed to divest its existing power
supply portfolio and conduct a solicitation for new power supplies from which to
meet UES' ongoing Transition and Default Service obligations in 2003. On
February 26, 2003, Unitil filed for final NHPUC approval of the Agreement among
Unitil Power, UES and Mirant discussed above under the heading "March 14, 2003
NHPUC Oder," including final tariffs for UES for stranded cost recovery and
Transition and Default Service. On March 14, 2003 the NHPUC approved the
Agreement. The Agreement and Order of the NHPUC provide for stranded cost
recovery in the amount of $108.7 million over a recovery period of eight years.
The NHPUC Order is subject to a 30 day appeal period.
Unitil's restructuring plan is also designed to resolve the pending litigation
on this matter. In June 1997, Unitil and other New Hampshire utilities
intervened as plaintiffs in a suit filed in U.S. District Court by Northeast
Utilities' affiliate Public Service Company of New Hampshire for protection from
the NHPUC's Final Plan to restructure the New Hampshire electric utility
industry. Although the NHPUC found that CECo and E&H were entitled to full
interim stranded cost recovery, the NHPUC also made certain legal rulings, that,
if implemented, could affect UES's long-term ability to recover all of its
stranded costs. The Unitil Settlement, approved in October 2002, otherwise
resolves all of the issues in the federal court action. Upon the expiration of
all periods of appeal with respect to the regulatory approvals for Unitil's New
Hampshire restructuring, UES will implement retail choice and Unitil will
withdraw its intervention in this federal court action, with prejudice. Unitil
expects customer choice to be implemented on May 1, 2003.
Wholesale Power Market Restructuring - Unitil has also been a participant in the
restructuring of the wholesale power market and transmission system in New
England, which is subject to FERC jurisdiction. New wholesale markets structured
pursuant to FERC's Standard Market Design are expected to be implemented in the
New England Power Pool during the first half of 2003 under the general
supervision of an Independent System Operator (ISO) and the regulatory oversight
of the FERC.
Rate Proceedings - Prior to 2002, the last formal regulatory filings initiated
by the Company to increase base rates for Unitil's retail electric operating
subsidiaries occurred in 1985 for CECo, 1984 for FG&E, and 1981 for E&H. The
last distribution base rate increase request for FG&E's retail gas operations
occurred in 1998. In 2001, FG&E's electric base rates were investigated by the
MDTE, which resulted in an electric base rate decrease. A majority of the
Company's electric and gas operating revenues are collected under various
periodic rate adjustment mechanisms including fuel, purchased power, energy
efficiency, and restructuring-related cost
5
recovery mechanisms. Industry restructuring will continue to change the methods
of how certain costs are recovered through the Company's regulated rates and
tariffs.
On the gas side, FG&E continues to provide a multi-year refund through its Cost
of Gas Adjustment Clause in compliance with the MDTE's May 2001 Order finding
that FG&E had over-collected fuel inventory finance charges. At December 31,
2002, the unamortized balance of this refund was $1.3 million. FG&E believes a
refund is not justified or warranted and has appealed the MDTE's ruling to the
Massachusetts Supreme Judicial Court (SJC). On a preliminary motion, a single
justice of the SJC declined to stay the MDTE's Order based on a finding that
refunds made by FG&E may be recouped if FG&E prevails on the merits of its
claims. The review of the MDTE Order by the SJC is pending.
On October 25, 2002, as part of the electric restructuring settlement for
Unitil's New Hampshire utility operations described above, the Company received
approval from the NHPUC for an increase of approximately $2.0 million in annual
distribution revenues for UES, effective December 1, 2002.
On December 2, 2002, the MDTE issued an Order resulting in distribution rate
increases of $2.0 million for FG&E's electric operations and $3.0 million for
FG&E's gas operations. Increases for rising gas costs were incorporated into the
final gas rates. FG&E's new rates became effective on December 2, 2002.
On April 16, 2002, FG&E filed Performance Based Regulation (PBR) Plans with the
MDTE for both electric and gas operations. PBR is a method of setting regulated
distribution rates that provides incentives to control costs while maintaining a
high level of service quality. Under PBR, a company's earnings are tied to
performance targets, and penalties can be imposed for deterioration of service
quality. FG&E's PBR Plans were filed in conjunction with FG&E's distribution
rate filings, consistent with MDTE policy to implement PBR in the context of
base rate cases. The MDTE did not initiate investigations of the filings. On
January 6, 2003, the MDTE issued Orders closing the cases. Accordingly, FG&E's
PBR plans have no scheduled date of implementation, and conventional cost-based
regulation continues to apply.
In December 2002, FG&E and UES filed requests with their respective state
regulatory commissions for approval of an accounting Order to mitigate certain
accounting requirements related to pension plan assets, which have been
triggered by the substantial decline in the capital markets. These requests were
granted by the respective state regulatory commissions in December 2002. These
approvals allow FG&E and UES to treat the additional minimum pension liability
and Prepaid Pension Costs as Regulatory Assets and avoid the reduction in equity
that would otherwise be required. These regulatory Orders do not pre-approve the
amount of pension expense to be recovered in future rates. Such recovery will be
subject to review and approval in future rate proceedings. Based on these
approvals, Unitil has included the amount of the additional minimum pension
liabilities and Prepaid Pension Costs of $12.0 million in Regulatory Assets on
its balance sheet.
ELECTRIC POWER SUPPLY
FG&E distributes electricity in the north central area of Massachusetts. UES
distributes electricity in the central and seacoast regions of New Hampshire.
FG&E contracts directly for its electric supply with various wholesale
suppliers. UES contracts for all of its needs from its affiliate Unitil Power,
which has acquired a portfolio of power contracts from other wholesale
suppliers. Following retail choice restructuring in 2003, UES will contract
directly with wholesale suppliers to meet the needs of its customers. The
wholesale power markets are conducted under the auspices of the New England
Power Pool (NEPOOL).
FG&E, Unitil Power, and UES are members of NEPOOL. NEPOOL was formed in 1971 to
assure reliable operation of the bulk power system in the most economic manner
for the region. Under the NEPOOL Agreement and the Open Access Transmission
Tariff (OATT), to which virtually all New England electric utilities are
parties, substantially all operation and dispatching of electric generation and
bulk transmission capacity in New England is performed on a regional basis.
NEPOOL is governed by an agreement that is filed with the FERC and its
provisions are subject to continuing FERC jurisdiction. The NEPOOL Agreement and
the OATT imposes generating capacity and reserve obligations, provides for the
use of major transmission facilities and payments associated therewith. The most
notable benefits of NEPOOL are coordinated power system operation in a reliable
manner and a supportive business environment for the development of a
competitive electric marketplace.
There are ongoing legislative and regulatory initiatives that are primarily
focused on the deregulation of the generation and supply of electricity and the
corresponding development of a competitive market place from which
6
customers could choose their electric energy supplier. As a result, the NEPOOL
Agreement continues to be restructured. NEPOOL's membership provisions have been
broadened to cover all entities engaged in the electricity business in New
England, including power marketers and brokers, independent power producers,
load aggregators and retail customers in states that have enacted retail access
statutes. The regional bulk power system is operated by an independent corporate
entity, ISO New England (ISO-NE), so that there is no opportunity for
conflicting financial interests between the system operator and the
market-driven participants. Various energy and capacity products are traded in
open, competitive markets, with transmission access and pricing subject to a
regional OATT designed to promote competition among power suppliers. On May 1,
1999, ISO-NE began dispatching generating units using a bid-based system and
implemented bid-based markets for reserve products and automatic generation
control. On March 1, 2003, ISO-NE implemented a Standard Market Design (SMD)
that is intended to improve the ability to trade power between New England and
other regions throughout the northeast.
Energy Resources - Since April 1, 1998, each electric utility is required to
carry an allocated share of the NEPOOL capability responsibility under the
NEPOOL Agreement. These capacity requirements are determined each month based on
regional reliability criteria. Unitil Power, the full requirements supplier to
UES, had an annual peak capability responsibility in November 2002 of 309.33 MW
and a corresponding monthly peak demand of 220.02 MW. Beginning December 1,
2000, FG&E no longer had a direct capability responsibility because it's
Standard Offer Service supplier, Constellation Power Source, and its periodic
Default Service supplier are responsible for the capability responsibility under
the respective contracts. Effective December 1, 2000, FG&E began serving Default
Service load through six-month contracts wherein the Default Service supplier
had the load serving obligation, thus at the end of 2000, FG&E had no direct
capability responsibility. Under MDTE regulations, FG&E has continued to procure
Default Service through a bid process every six months.
To meet the needs of UES, Unitil Power has contracted for generating capacity
and energy and for associated transmission services as needed to meet NEPOOL
requirements and to provide a diverse and economical energy supply. Unitil
Power's purchases are from various utility and non-utility generating units
using a variety of fuels and from several utility systems in the U.S. and Canada
as well as purchases in the spot market. For the twelve months ended December
31,2002, Unitil Power's energy needs were provided by the following fuel
sources: nuclear (10%), oil (6%), gas (8%), coal (5%), refuse (4%), and system
(67%).
On March 14, 2003 the New Hampshire Public Utilities Commission (NHPUC) approved
the agreement between Unitil Power, UES and Mirant Americas Energy Marketing,
LP. (Mirant), which was entered into on February 25, 2003, under which Mirant
will purchase the entitlements to Unitil Power's Supply portfolio and provide
Transition and Default Service to the customers of UES. The final amount of
Unitil Power's recoverable stranded costs, calculated on the basis of the
amounts agreed to be paid by the parties under such Agreement for the Unitil
Power power supply portfolio, was determined to be $108.7 million, with a
recovery period of 8 years. As of December 31, 2002, the Company had estimated a
range for these recoverable stranded costs and accordingly recorded on its
balance sheet as of that date $94.5 million as Power Supply Buyout Obligations
and Regulatory Assets. The approval of the Agreement by the NHPUC is subject to
an appeal period of 30 days. The NHPUC Order completes the state approval
process for Unitil's restructuring plan under which UES will implement customer
choice for its customers on May 1, 2003.
Under Unitil's approved restructuring plan, Unitil agreed to divest its existing
power supply portfolio and conduct a solicitation for new power supplies from
which to meet UES' ongoing Transition and Default Service energy obligations. On
February 26, 2003, Unitil filed for final NHPUC approval of the executed
agreements resulting from these divestiture and solicitation processes,
including final tariffs for UES for stranded cost recovery and Transition and
Default Services. The filing proposed a recovery period of eight years for
stranded costs.
On January 25, 2002, the Company's New Hampshire electric utility subsidiaries,
CECo, E&H and Unitil Power, filed a comprehensive restructuring proposal with
the New Hampshire Public Utilities Commission (NHPUC). This proposal included
the introduction of customer choice consistent with New Hampshire's electric
utility industry restructuring law, the divestiture of Unitil Power's power
supply portfolio, the recovery of stranded costs, the merger of CECo and E&H
into one distribution company and new distribution rates for the combined
company. On October 25, 2002, the NHPUC approved a multi-party settlement on all
major issues in the proceeding, including stranded cost recovery for purchased
power contracts. At December 31, 2002, the Company estimated these divestiture
obligations and recoverable stranded costs and recorded $94.5 million as Power
Supply Buyout Obligations and Regulatory Assets at December 31, 2002.
7
In 2002, FG&E met its capacity requirements through an all requirements Standard
Offer contract with Constellation Power Source, and several all requirements
Default Service contracts. FG&E's power supply portfolio, including the joint
ownership generation output, was sold to Select Energy, Inc. effective February
1, 2000 as part of the power supply restructuring plan approved by the MDTE. For
the twelve months ended December 31, 2002, FG&E's energy needs were supplied by
system power from the Standard Offer and Default contracts.
Fuel - Oil: Approximately 6% of Unitil Power's electric power in 2002 was
provided by oil-fired units. Most fuel oil used by New England electric
utilities is acquired from foreign sources and is subject to interruption and
price increases by foreign governments.
Coal: Approximately 5% of Unitil Power's 2002 requirements were from
coal-burning facilities. The facilities generally purchase their coal under
long-term supply agreements with prices tied to economic indices. Although coal
is stored both on-site and by fuel suppliers, long-term interruptions of coal
supply may result in limitations in the production of power or fuel switching to
oil and thus result in higher energy prices.
Pursuant to the Nuclear Waste Policy Act of 1982, the participants in Millstone
Nuclear Generating Station Unit No. 3 (Millstone 3) were required to enter into
contracts with the United States Department of Energy, prior to the operation of
that Unit, for the transport and disposal of spent fuel at a nuclear waste
repository. FG&E cannot predict whether the Federal government will be able to
provide storage or permanent disposal repositories for spent fuel. FG&E's
Millstone 3 ownership interest was sold in March 2001. The sales agreement and a
separate settlement agreement with Northeast Utilities indemnifies FG&E from
continuing liability associated with environmental, decommissioning and waste
disposal associated with its former Millstone 3 ownership.
GAS SUPPLY
FG&E distributes gas purchased from domestic and Canadian suppliers under
long-term contracts as well as gas purchased from producers and marketers on the
spot market. The following tables summarize actual gas purchases by source of
supply and the cost of gas sold for the years 2000 through 2002.
Sources of Gas Supply
(Expressed as percent of total MMBtu of gas purchased)
Natural Gas: 2002 2001 2000
------------------------------------
Domestic firm 73.9% 76.2% 78.6%
Canadian firm 8.4% 8.0% 6.3%
Domestic spot market 16.2% 14.5% 13.2%
------------------------------------
Total natural gas 98.5% 98.7% 98.1%
Supplemental gas 1.5% 1.3% 1.9%
------------------------------------
Total gas purchases 100.0% 100.0% 100.0%
Cost of Gas Sold
2002 2001 2000
--------------------------------
Cost of gas purchased and sold per MMBtu $ 4.49 $ 6.49 $ 5.19
Percent Increase (Decrease) from prior year (30.76%) 24.99% 52.01%
As a supplement to pipeline natural gas, FG&E owns a propane air gas plant and a
liquefied natural gas (LNG) storage and vaporization facility. These plants are
used principally during peak load periods to augment the supply of pipeline
natural gas.
8
ENVIRONMENTAL MATTERS
The Company's past and present operations include activities that are subject to
extensive federal and state environmental regulations.
Sawyer Passway MGP Site - The Company continues to work with environmental
regulatory agencies to identify and assess environmental issues at the former
manufactured gas plant (MGP) site at Sawyer Passway, located in Fitchburg,
Massachusetts. FG&E proceeded with site remediation work as specified on the
Tier 1B permit issued by the Massachusetts Department of Environmental
Protection (DEP), which allows the Company to work towards temporary remediation
of the site. Work performed in 2002 was associated with the five-year review of
the Temporary Solution submittal (Class C Response Action Outcome) under the
Massachusetts Contingency Plan that was filed for the site in 1997. Completion
of this work has confirmed the Temporary Solution status of the site for an
additional five years. A status of temporary closure requires FG&E to monitor
the site until a feasible permanent remediation alternative can be developed and
completed.
Since 1991, FG&E has recovered the environmental response costs incurred at this
former MGP site pursuant to a MDTE approved Settlement Agreement (Agreement).
The Agreement allows FG&E to amortize and recover from gas customers over
succeeding seven-year periods the environmental response costs incurred each
year. Environmental response costs are defined to include liabilities related to
manufactured gas sites, waste disposal sites or other sites onto which hazardous
material may have migrated as a result of the operation or decommissioning of
Massachusetts gas manufacturing facilities from 1882 through 1978. In addition,
any recovery that FG&E receives from insurance or third parties with respect to
environmental response costs, net of the unrecovered costs associated therewith,
are split equally between FG&E and its gas customers. The total annual charge
for such costs assessed to gas customers cannot exceed five percent of FG&E's
total revenue for firm gas sales during the preceding year. Costs in excess of
five percent will be deferred for recovery in subsequent years.
Former Electric Generating Station - The Company is remediating environmental
conditions at a former electric generating station located at Sawyer Passway,
which FG&E sold to WRW, a general partnership, in 1983. Rockware International
Corporation (Rockware), an affiliate of WRW, acquired rights to the electric
equipment in the building and intended to remove, recondition and sell this
equipment. During 1985, Rockware demolished several exterior walls of the
generating station in order to facilitate removal of certain equipment. The
demolition of the walls and the removal of generating equipment resulted in
damage to asbestos-containing insulation materials inside the building, which
had been intact and encapsulated at the time of the sale of the structure to
WRW.
When Rockware and WRW encountered financial difficulties and failed to respond
adequately to Orders of the environmental regulators to remedy the situation,
FG&E agreed to take steps at that time and obtained DEP approval to temporarily
enclose, secure and stabilize the facility. Based on that approval, between
September and December 1989, contractors retained by FG&E stabilized the
facility and secured the building. This work did not permanently resolve the
asbestos problems caused by Rockware, but was deemed sufficient for the then
foreseeable future.
Due to the continuing deterioration of this former electric generating station
and Rockware's continued lack of performance, FG&E, in concert with the DEP and
the U.S. Environmental Protection Agency (EPA), conducted further testing and
survey work during 2001 to ascertain the environmental status of the building.
Those surveys revealed continued deterioration of the asbestos-containing
insulation materials in the building.
By letter dated May 1, 2002, the EPA notified FG&E that it was a Potentially
Responsible Party for planned remedial activities at the site and invited FG&E
to perform or finance such activities. FG&E and the EPA have entered into an
Agreement of Consent, whereby FG&E, without an admission of liability, will
conduct environmental remedial action to abate and remove asbestos-containing
and other hazardous materials. FG&E has awarded contracts for all aspects of the
abatement work, which is presently ongoing. FG&E received significant coverage
from its insurance carrier. The Company believes that these funds will be
sufficient to complete this remediation and that resolution of this matter will
not have a material adverse impact on the Company's financial position.
The Company has recorded the estimated cost of the remediation action in Current
Liabilities and an offsetting asset reflecting insurance proceeds in Current
Assets. At the balance sheet date, net of amounts expended in 2002, the
remaining project cost was $3.7 million.
9
EMPLOYEES
As of December 31, 2002, the Company and its subsidiaries had 316 full-time and
part-time employees. The Company considers its relationship with its employees
to be good and has not experienced any major labor disruptions since the early
1960's.
There are approximately 100 employees represented by labor unions. In 2000, E&H
reached a new five-year pact with its employees covered by a collective
bargaining agreement, which will expire effective May 31, 2005. In 2000, CECo
reached a new five-year pact with its employees covered by a collective
bargaining agreement, which will expire effective May 31, 2005. In 2000, FG&E
reached a five-year pact with its employees covered by collective bargaining
agreements, which will expire effective May 31, 2005. The agreements provided
for discreet salary adjustments, established work practices and provided uniform
benefit packages. The Company expects to successfully negotiate new agreements
prior to the expiration dates of these contracts.
10
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of all of the executive officers of the Company as
of March 1, 2003 are listed below, along with a brief account of their business
experience during the past five years. All officers are elected annually by the
Board of Directors at the Directors' first meeting following the annual meeting,
which is held on the third Thursday in April, or at a special meeting held in
lieu thereof. There are no family relationships among these officers, nor is
there any arrangement or understanding between any officer and any other person
pursuant to which the officer was elected. Officers of the Company also hold
various Director and Officer positions with subsidiary companies.
Name, Age Business Experience
and Position During Past 5 years
- ---------------------------------- ------------------------------------------
Robert G. Schoenberger, 52, Mr. Schoenberger has been Chairman of the
Chairman of the Board of Directors Board and Chief Executive Officer of
and Chief Executive Officer Unitil since 1997. Prior to his employment
with Unitil, Mr. Schoenberger was
President and Chief Operating Officer at
New York Power Authority (NYPA) from 1993
until 1997.
Michael J. Dalton, 62*, Mr. Dalton has been a Director, President
President and and Chief Operating Officer of the
Chief Operating Officer Company since its incorporation in 1984.
Mark H. Collin, 44, Mr. Collin was appointed Senior Vice
Senior Vice President and Chief President and Chief Financial Officer of
Financial Officer Unitil in February 2003. Mr. Collin has
been Treasurer of Unitil since January
1998. Mr. Collin has been Treasurer of
Unitil's principal subsidiaries and Vice
President of Unitil Service Corp. since
1992.
George R. Gantz, 51 Mr. Gantz has been Senior Vice President
Senior Vice President - Customer of Unitil Service since 1994.
Services and Communications
* Mr. Dalton has submitted his resignation from the Company, effective April 1,
2003.
11
Item 2. Properties
UES maintains Distribution Operations Centers in the city of Concord and the
town of Kensington. These properties are owned by UES in fee. UES's thirty
electric distribution substations, including a 5,000 kVA mobile substation,
constitute 214,270 kVA of capacity for the transformation of electric energy
from the 34.5 kV subtransmission voltage to other primary distribution voltage
levels. The electric substations are, with one exception, located on land owned
by UES in fee. The sole exception is located on land occupied pursuant to a
perpetual easement.
UES has a total of approximately 1,535 pole miles of overhead electric
distribution lines and a total of approximately 194 conduit bank miles of
underground electric distribution lines. The electric distribution lines are
located in, on or under public highways or private lands pursuant to lease,
easement, permit, municipal consent, tariff conditions, agreement or license,
expressed or implied through use by UES without objection by the owners. In the
case of certain distribution lines, UES owns only a part interest in the poles
upon which its wires are installed, the remaining interest being owned by
telephone and telegraph companies.
Additionally, UES owns in fee 137.7 acres of land located on the east bank of
the Merrimack River in the City of Concord. Of the total acreage, 81.2 acres are
located within an industrial park zone, as specified in the zoning ordinances of
the City of Concord.
The physical properties of UES (with certain exceptions) and its franchises are
subject to the lien of its Indenture of Mortgage and Deed of Trust under which
the respective series of First Mortgage Bonds of UES are outstanding.
FG&E owns a liquid propane gas plant and a liquid natural gas plant, both of
which are located on land owned in fee. FG&E is participating, on a
tenancy-in-common basis with other New England utilities, in the ownership of
the Wyman 4 generating unit. In accordance with Massachusetts Electric
Restructuring Law, and pursuant to the power supply divestiture discussed in
Note 10 of the Financial Statements, FG&E began selling the output from its
electric contracts and generation units on February 1, 2000. As of December 31,
2002, the electric properties of the Company consisted principally of 62 miles
of transmission lines, 480.8 miles of distribution lines, 14 distinct
transmission and distribution substations, and two mobile substations totaling
18.75 MVA. The in-service and spare capacity of these substations totals 561,900
kVA. Electric transmission facilities (including substations) and steel, cast
iron and plastic gas mains owned by the Company are, with minor exceptions,
located on land owned by the Company in fee or occupied pursuant to perpetual
easements. The Company leases its service building.
Unitil Realty owns the Company's corporate headquarters building and 12 acres of
land in fee, which is located in the town of Hampton, New Hampshire. The Company
believes that its facilities are currently adequate for its intended uses.
Item 3. Legal Proceedings
The Company is involved in legal and administrative proceedings and claims of
various types, which arise in the ordinary course of business. In the opinion of
the Company's management, based upon information furnished by counsel and
others, the ultimate resolution of these claims will not have a material impact
on the Company's financial position.
Item 4. Submission of Matters to a Vote of Security Holders
None
12
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters
The Registrant's Common Stock is traded on the American Stock Exchange. As of
December 31, 2002, there were 1,932 Common Shareholders of record.
Common Stock Data
Dividends per Common Share 2002 2001
------------------------------------------------------------------------------
1st Quarter $ 0.345 $ 0.345
2nd Quarter 0.345 0.345
3rd Quarter 0.345 0.345
4th Quarter 0.345 0.345
-------------------------------
Total for Year $ 1.38 $ 1.38
===============================
2002 2001
----------------------------------------------
Price Range of Common Stock High/Ask Low/Bid High/Ask Low/Bid
------------------------------- ----------------------------------------------
1st Quarter 26.80 22.82 27.00 24.90
2nd Quarter 31.40 26.10 27.50 24.75
3rd Quarter 29.22 25.31 25.45 23.00
4th Quarter 26.99 24.80 25.15 22.95
Information regarding Securities Authorized for Issuance Under Equity
Compensation Plans is set forth on pages 15 through 16 of the 2002 Proxy
Statement as filed with the Securities and Exchange Commission on March 12,
2003.
13
Item 6. Selected Financial Data
2002 2001 2000 1999 1998
------------------------------------------------------------
Consolidated Statements of Earnings (000's)
Operating Income $13,248 $14,394 $14,280 $15,408 $15,306
(Gain) Loss on Non-Utility Investments, net of tax (82) 2,400 ---- ---- ----
Other Non-operating Expense 185 170 244 51 156
------------------------------------------------------------
Income Before Interest Expense and Extraordinary Item 13,145 11,824 14,036 15,357 15,150
Interest Expense, net 7,057 6,797 6,820 6,919 6,901
------------------------------------------------------------
Income before Extraordinary Item 6,088 5,027 7,216 8,438 8,249
Extraordinary Item, net of tax --- 3,937 ---- ---- ----
------------------------------------------------------------
Net Income 6,088 1,090 7,216 8,438 8,249
Dividends on Preferred Stock 253 257 263 268 274
------------------------------------------------------------
Earnings Applicable to Common Shareholders 5,835 $833 $6,953 $8,170 $7,975
============================================================
Balance Sheet Data (000's)
Utility Plant (Original Cost) $271,179 $255,498 $238,023 $219,838 $209,462
Total Assets $480,783 $376,762 $382,967 $363,527 $376,835
Capitalization:
Common Stock Equity $74,350 $74,746 $79,935 $78,675 $75,351
Preferred Stock 3,322 3,609 3,690 3,757 3,843
Long-Term Debt 104,226 107,470 81,695 86,157 75,222
------------------------------------------------------------
Total Capitalization $181,898 $185,825 $165,320 $168,589 $154,416
============================================================
Short-term Debt $35,990 $13,800 $32,500 $10,500 $20,000
Capital Structure Ratios:
Common Stock Equity 34% 37% 40% 44% 43%
Preferred Stock 2% 2% 2% 2% 2%
Long-Term Debt 48% 54% 41% 48% 43%
Short-Term Debt 16% 7% 17% 6% 12%
Earnings Per-Share Data
Basic Earnings Per Average Share $1.23 $0.18 $1.47 $1.74 $1.77
Diluted Earnings Per Average Share $1.23 $0.18 $1.47 $1.74 $1.72
Common Stock Data
Shares of Common Stock (Year-End) (000's) 4,744 4,744 4,735 4,712 4,575
Shares of Common Stock (Average) (000's) 4,744 4,744 4,723 4,682 4,506
Dividends Paid Per Share (Year-End) $1.38 $1.38 $1.38 $1.38 $1.36
Book Value Per Share (Year-End) $15.67 $15.76 $16.88 $16.70 $16.47
Electric and Gas Statistics
Electric Distribution Sales (000's of kWh) 1,659,136 1,596,390 1,587,536 1,608,824 1,540,968
Electric Customers (Year-End) 96,985 95,116 94,050 92,505 91,729
Firm Gas Distribution Sales (000's of Therms) 22,480 23,067 23,992 22,136 22,027
Gas Customers (Year-End) 14,911 14,879 14,796 14,928 14,915
14
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Unitil Corporation (Unitil or the Company) is nearing the completion of an
unprecedented restructuring process brought about by the deregulation of the
natural gas and electric industries in New Hampshire and Massachusetts. As a
result, by the middle of 2003, the Company expects to have divested its entire
generation and power supply portfolio, thus transforming the Company's
vertically integrated utility operations into principally a pipes-and-wires
business providing gas and electric delivery services. In the process, Unitil's
distribution subsidiaries secured regulatory approval for the recovery of
approximately a quarter billion dollars for all power supply related stranded
costs, implemented comprehensive customer and financial information systems to
accommodate the transition to competitive energy markets, and adjusted all
utility delivery rates to reflect the overall cost of service as a restructured
gas and electric energy delivery company.
During this restructuring process, management's focus has been to ensure fair
and reasonable treatment of the investments made to meet the needs of Unitil's
customers, while at the same time making sure that the Company is properly
structured from both a financial and an operational perspective to continue to
provide high-quality and competitively priced electric and gas delivery
services.
Highlights of Year 2002:
|_| On January 25, 2002, the Company's New Hampshire electric utility
subsidiaries Concord Electric Company (CECo), Exeter & Hampton Electric
Company (E&H) and Unitil Power Corp. (Unitil Power) filed a comprehensive
electric restructuring proposal with the New Hampshire Public Utilities
Commission (NHPUC). This proposal included the introduction of customer
choice, the divestiture of Unitil Power's power supply portfolio, the
recovery of stranded costs, the combination of CECo and E&H into a single
electric distribution utility, and new distribution rates for the combined
entity. On October 25, 2002, the NHPUC approved a multi-party settlement on
all the major issues in the proceeding.
A key result of the New Hampshire restructuring settlement was the
formation of Unitil Energy Systems, Inc. (UES) on December 2, 2002. UES is
the New Hampshire distribution electric utility formed by the combination
of CECo and E&H, and is a wholly-owned subsidiary of Unitil.
UES received an increase of approximately $2.0 million in annual
distribution revenue to cover current operating costs, depreciation and
amortization, and investments in utility plant. These rates became
effective December 1, 2002.
|_| On May 17, 2002, the Company's Massachusetts distribution utility
subsidiary, Fitchburg Gas and Electric Light Company (FG&E), filed revised
rates with the Massachusetts Department of Telecommunications and Energy
(MDTE) designed to increase annual base distribution revenues for both
electric and gas operations to cover increases in operating expenses,
depreciation and the cost of invested capital. On December 2, 2002, the
MDTE authorized base rate changes to increase annual distribution revenues
by $2.0 million for electric operations and $3.0 million for gas
operations. In addition, increases for rising gas supply costs were
incorporated into the final gas rates, effective December 2, 2002.
|_| On October 15, 2002, the MDTE issued an Order approving a settlement
agreement that resolved and secured the recovery of FG&E's
restructuring-related stranded costs. The settlement resolves issues
concerning FG&E's compliance with the Massachusetts Electric Restructuring
Act of 1997 and related MDTE Orders. Under the settlement, FG&E agreed to
reduce the carrying charge on deferred transition costs and to pass along
the benefit of lower interest costs to customers.
15
|_| Unitil eliminated a major environmental liability associated with a former
electric generating station in Fitchburg, Massachusetts. Under a consent
Order voluntarily initiated by Unitil with the U.S. Environmental
Protection Agency (EPA), a remedial project to clean up and remove asbestos
and related hazardous materials from a building formerly owned by the
Company is underway. Site remediation is expected to be completed at the
end of 2003. Funds from an insurance settlement related to this issue are
believed to be sufficient to complete the remediation work, such that this
matter will not have a material effect on the Company's financial position.
|_| In December 2002, FG&E and UES received regulatory approval to account for
certain pension obligations as regulatory assets, avoiding a reduction in
equity that would have been triggered by the substantial decline in the
capital markets. These regulatory Orders do not pre-approve the amount of
pension expense to be recovered in future rates. Such recovery will be
subject to review and approval in future rate proceedings.
|_| Unitil's non-regulated business, Usource, nearly doubled its revenues in
2002, as its electric and gas energy brokerage business continues to expand
into new regions where large commercial and industrial customers are able
to choose their energy suppliers.
|_| In December 2002, Unitil committed to a formal management transition and
reorganization plan to streamline its management structure and to improve
efficiency to meet ongoing business requirements. The Company estimates
this reorganization will result in an annual cash savings of approximately
$2.3 million in operating expenses and construction project overheads in
future periods.
Earnings per Share 2002 2001 2000
--------------------------------------------------------------------------
Earnings per Share $ 1.23 $ 0.18 $ 1.47
Non-recurring Items, net of tax:
Restructuring Charge (0.20) --- ---
Investment Write-down --- (0.50) ---
Extraordinary Item --- (0.83) ---
----------------------------------
Earnings Before Non-recurring Items $ 1.43 $ 1.51 $ 1.47
==================================
Earnings in 2002 were $5.8 million, or $1.23 per common share on a diluted
basis, compared to $0.8 million, or $0.18 in 2001. Results for both years
included significant non-recurring charges that affected earnings.
In the fourth quarter of 2002, Unitil recorded a non-recurring Restructuring
Charge of $1.6 million, or ($0.20) per share, associated with the reorganization
and reduction of 19 management and administrative positions. The Company
estimates that the result of this management restructuring process will be an
annual cash savings in future periods of approximately $2.3 million in operating
expenses and construction project overheads.
In 2001, as a result of industry restructuring-related regulatory Orders, Unitil
recognized an Extraordinary Item to reduce Regulatory Assets by $3.9 million
after tax, or ($0.83) per share. Unitil also recorded an Investment Write-down
of $2.4 million after-tax, or ($0.50) per share, to recognize a decrease in the
fair value of a non-utility energy technology investment. Unitil subsequently
sold its remaining interest in this non-utility investment in 2002 and realized
$1.5 million in cash. As a result of this sale, the Company will also realize
approximately $1.3 million in current tax refunds from the carryback of this
capital loss. This sale transaction did not have a material impact on Unitil's
2002 operating results.
Excluding the effect of these 2002 and 2001 non-recurring items, comparable
earnings per share were $1.43 in 2002 and $1.51 in 2001. This decrease in
earnings was mainly the result of increases in certain operating expenses,
including higher pension and health care costs, higher depreciation expense
associated with increased investments in Utility Plant, and accelerated
amortization of certain Regulatory Assets. These impacts were partially offset
by higher distribution base revenues.
16
A year-to-year comparison of Unitil's financial condition, changes in financial
condition and results of operations for the three-year period 2000 through 2002
follows.
RESULTS OF OPERATIONS
Operating Revenue -- Electric
Kilowatt-hour Sales - Unitil's total electric kilowatt-hour (kWh) sales
increased by 3.9% in 2002 compared to 2001. This increase reflects growth in
sales to residential and commercial and industrial customer classes driven by
hotter-than-normal summer weather.
Sales to residential customers increased by 3.9% in 2002 compared to 2001. The
increase in energy sales reflects an increase in the number of residential
customers as well as higher usage per customer, due to weather. Commercial and
industrial sales of electricity also increased by 3.9% in 2002 compared to 2001.
In addition, warmer summer weather in 2002 as compared to 2001 contributed to
the increase in energy sales.
Unitil's total electric kWh sales increased by 0.6% in 2001 compared to 2000.
This increase reflected growth in sales to residential and commercial customer
classes, offset by reductions in kWh sales to industrial customers, due to the
impact of the general economic downturn experienced in 2001.
The following table details total kWh sales for the last three years by major
customer class:
kWh Sales (000's)
------------------------------------------------------------------
2002 2001 2000
---------------------------------------
Residential 619,756 596,378 576,524
Commercial/Industrial 1,039,380 1,000,012 1,011,012
---------------------------------------
Total 1,659,136 1,596,390 1,587,536
=======================================
Electric Operating Revenue - Electric Operating Revenue decreased by $16.5
million, or 9.0%, in 2002 compared to 2001. This decrease in revenue is the
result of a reduction in wholesale commodity fuel prices overall and lower
distribution rates in the Massachusetts service territory, offset by the
increase in kWh sales. The energy component of Electric Operating Revenue
represents the recovery of energy supply costs, which are collected from
customers through periodic cost recovery adjustment mechanisms. Changes in
energy supply revenues do not affect net income, as they normally mirror
corresponding changes in energy supply costs.
In 2001, Electric Operating Revenue increased by $23.8 million, or 14.8%, as
compared to 2000. This increase in revenue was the result of increased wholesale
commodity fuel prices.
The following table details total Electric Operating Revenue for the last three
years by major customer class:
Electric Operating Revenue (000's)
------------------------------------------------------------------
2002 2001 2000
---------------------------------------
Residential $ 65,746 $ 71,960 $ 61,506
Commercial/Industrial 101,571 111,820 98,517
---------------------------------------
Total $ 167,317 $ 183,780 $ 160,023
=======================================
Operating Revenues - Gas
Therm Sales - Total firm therm sales decreased 2.5% in 2002 compared to 2001,
due to a warmer winter in early 2002 and the impact of the general economic
downturn, partially offset by colder weather in the latter stages of 2002
compared to the prior year.
17
In 2001, total firm therm sales decreased 3.9% compared to 2000, primarily due
to a warmer winter compared to the prior year and the impact of the general
economic downturn.
The following table details total firm therm sales for the last three years, by
major customer class:
Firm Therm Sales (000's)
------------------------------------------------------------------
2002 2001 2000
---------------------------------------
Residential 11,022 11,175 11,730
Commercial/Industrial 11,458 11,892 12,262
---------------------------------------
Total 22,480 23,067 23,992
=======================================
Gas Operating Revenue - Gas Operating Revenue, which represents approximately
11% of Unitil's total Operating Revenues, decreased by $2.5 million, or 11.1%,
in 2002 compared to 2001. This was attributable to lower unit sales and
decreased wholesale gas commodity prices. The energy commodity component of Gas
Operating Revenue represents the recovery of energy commodity supply costs,
which are collected from customers through periodic cost recovery adjustment
mechanisms. Changes in energy commodity supply revenues do not affect net
income, as they normally mirror corresponding changes in energy commodity supply
costs.
In 2001, total Gas Operating Revenue was flat, as compared to 2000. This was
attributable to lower unit sales, offset by higher gas supply prices.
The following table details total Gas Operating Revenue for the last three years
by major customer class:
Gas Operating Revenue (000's)
------------------------------------------------------------------
2002 2001 2000
---------------------------------------
Residential $ 10,871 $ 12,779 $ 11,540
Commercial/Industrial 8,007 9,505 8,745
---------------------------------------
Total Firm Gas Revenue 18,878 22,284 20,285
Interruptible Gas Revenue 1,405 544 2,471
---------------------------------------
Total $ 20,283 $ 22,828 $ 22,756
=======================================
Operating Revenue - Other
Total Other Revenue increased $0.4 million, or 89.9%, compared to 2001. This was
the result of growth in revenues from the Company's non-regulated energy
brokering business, Usource.
In 2001, total Other Revenue increased $0.3 million, compared to 2000. This was
also the result of increased Usource brokerage fees.
The following table details total Other Revenue for the last three years:
Other Revenue (000's)
------------------------------------------------------------------
2002 2001 2000
---------------------------------------
Usource $ 756 $ 384 $ 131
Other 30 30 31
---------------------------------------
Total $ 786 $ 414 $ 162
=======================================
18
Operating Expenses
Fuel and Purchased Power - Fuel and Purchased Power expense is the cost of
purchased power, including fuel used in electric generation and the cost of
wholesale energy and capacity purchased to meet Unitil's electric energy
requirements. Fuel and Purchased Power expenses, recoverable from customers
through periodic cost recovery adjustment mechanisms, decreased $18.3 million,
or 13.8%, in 2002 compared to 2001. The change was driven by a decrease in
wholesale power prices, compared to the volatile markets and rising energy
prices that the nation experienced in early 2001.
In 2001, Fuel and Purchased Power expenses increased $22.7 million, or 20.6%,
compared to 2000. This change was mainly due to increased wholesale power
prices.
Gas Purchased for Resale - Gas Purchased for Resale reflects gas purchased and
manufactured to supply the Company's total gas energy requirements. Gas supply
costs are recoverable from customers through the Cost of Gas Adjustment
mechanism. Gas Purchased for Resale decreased by $2.7 million, or 19.4% in 2002
compared to 2001, reflecting a decrease in wholesale gas prices.
In 2001, Gas Purchased for Resale increased by $0.3 million, or 2.5%, compared
to 2000, due to a decrease in therms purchased, offset by higher wholesale gas
prices in early 2001.
Operation and Maintenance (O&M) - O&M expense includes electric and gas utility
operating costs, and the operating cost of the Company's non-regulated business
activities. Total O&M expense increased $0.7 million, or 2.7%, in 2002 compared
to 2001, primarily due to higher employee and retiree health and pension costs.
In 2001, total O&M expense increased $0.5 million, or 1.9%, compared to 2000,
mainly due to higher utility system maintenance costs.
Depreciation, Amortization and Taxes
Depreciation and Amortization - Depreciation and Amortization expense increased
$2.1 million, or 16.8%, in 2002 compared to 2001, due to a higher level of
Utility Plant investments and the accelerated amortization of
restructuring-related Regulatory Assets.
In 2001, Depreciation and Amortization expense increased $0.8 million, or 6.7%,
compared to 2000, due to a higher level of Utility Plant investments.
Federal and State Income Taxes - Federal and State Income Taxes decreased $0.9
million, or 27.2%, in 2002 compared to 2001, due to lower pre-tax operating
income in 2002 and the amortization in 2002 of deferred tax liabilities related
to the accelerated write-off of Regulatory Assets.
In 2001, Federal and State Income Taxes remained level compared to 2000.
Local Property and Other Taxes -Local Property and Other Taxes increased $0.1
million, or 1.4%, in 2002 compared to 2001. This increase was related to a
higher level of Utility Plant and higher tax rates, partially offset by the
repeal of the State of New Hampshire Utility Franchise Tax.
In 2001, Local Property and Other Taxes decreased $0.3 million, or 6.1%,
compared to 2000. This decrease was related to the repeal of the State of New
Hampshire Utility Franchise Tax, partially offset by higher property taxes.
Interest Expense, net
Interest expense is presented in the financial statements net of interest
income. In 2002, Interest Expense, net, increased primarily due to the
refinancing of lower cost short-term debt with higher cost long-term debt and
additional borrowings to support the Company's capital requirements. Total
interest expense was $9.3 million, $9.1 million and $8.6 million in 2002, 2001
and 2000, respectively, due to higher debt outstanding in those years. Interest
income was $2.3 million, $2.3 million and $1.8 million in 2002, 2001 and 2000,
respectively, reflecting higher interest earned on recoverable deferred asset
balances related to industry restructuring.
19
Non-recurring Items
2002 Restructuring Charge - In the fourth quarter of 2002, the Company
recognized a pre-tax Restructuring Charge of $1.6 million. The after-tax effect
of the Restructuring Charge was a reduction of $0.20 in Earnings Per Common
Share, assuming full dilution.
In December 2002, the Company undertook a strategic review of its business
operations and committed to a formal transition and reorganization plan (the
Reorganization Plan) to streamline its management structure, in order to improve
operating efficiency and to align the organization to meet ongoing business
requirements. The Reorganization Plan resulted in the elimination of 19
management and administrative positions. As a result of the elimination of these
positions, and consistent with existing Company policy, certain benefits are
extended to the employees whose positions were eliminated. On January 8, 2003,
the Company implemented the remainder of the Reorganization Plan. The Company
estimates that the result of this management restructuring process will be an
annual cash savings of approximately $2.3 million in operating expenses and
construction project overheads.
The $1.6 million pre-tax Restructuring Charge established a liability at
December 31, 2002, to cover the disbursement of severance and employee benefits
and related costs committed to under the Reorganization Plan, substantially all
of which will be paid in fiscal 2003. At December 31, 2002, the Restructuring
Charge of $1.6 million is included in Other Current Liabilities.
2001 Investment Write-down, net of tax - Beginning in 1998, Unitil invested $5.5
million in Enermetrix, Inc. (Enermetrix), an energy technology start-up
enterprise. In accordance with Statement of Financial Accounting Standards
(SFAS) No. 115 "Accounting for Certain Investments in Debt and Equity
Securities," the Company recorded a non-cash charge of $3.7 million, or $2.4
million, net of tax, in the fourth quarter of 2001 to recognize the decrease in
fair value of its non-utility investment in Enermetrix.
On April 11, 2002, the Company sold its equity ownership in Enermetrix for $1.5
million in cash and improved commercial terms for use of the Enermetrix Software
Network. As a result of the sale, in 2002, the Company recognized the benefit of
approximately $1.3 million of this capital loss as a carryback against capital
gains in its 2002 tax return.
2001 Extraordinary Item, net of tax - In November 1997, the Massachusetts
Legislature enacted the Massachusetts Electric Restructuring Act of 1997 (the
Restructuring Act). The Restructuring Act required all electric utilities to
file a restructuring plan with the MDTE by December 31, 1997. Among other
things, the Restructuring Act required all Massachusetts electric utilities to
sell all of their electric generation assets and to restructure their utility
operations to provide direct retail access to their customers by all qualified
generation suppliers.
The MDTE conditionally approved FG&E's Restructuring Plan (the Plan) in February
1998, and started an investigation and evidentiary hearings into FG&E's proposed
recovery of Regulatory Assets related to stranded generation asset costs and
expenses related to the formulation and implementation of its Plan. In January
1999, the MDTE approved FG&E's Plan, which included provisions for the recovery
of stranded costs through a transition charge in FG&E's electric rates. In
September 1999, FG&E filed its first annual reconciliation of stranded
generation asset costs and expenses and associated transition charge revenues
and the MDTE initiated a lengthy investigation and hearing process.
On October 18 and 19, 2001, the MDTE issued a series of regulatory Orders in
several pending cases involving FG&E, including a final Order on FG&E's initial
reconciliation filing. Those Orders included the review and disposition of
issues related to FG&E's recovery of transition costs due to the restructuring
of the electric industry in Massachusetts, as well as certain costs associated
with gas industry restructuring and preparation and litigation of performance
based rate proceedings initiated by the MDTE. The Orders determined the final
treatment of Regulatory Assets that FG&E had sought to recover from its
Massachusetts electric customers over a multi-year transition period that began
in 1998.
As a result of the industry restructuring-related Orders, FG&E recorded a
non-cash adjustment to Regulatory Assets of $5.3 million, which resulted in the
recognition of an extraordinary charge of $3.9 million, net of taxes. The
Company recognized the extraordinary charge of $0.83 per share, as of September
30, 2001.
As a result of all of these Orders, the Company has been allowed recovery of its
Massachusetts industry restructuring transition costs, estimated at $150 million
after reconciliation, including the above-market or
20
stranded generation and power supply related costs via a non-bypassable uniform
transition charge. FG&E has been, and will continue to be, subject to annual
MDTE investigation and review in order to reconcile the costs and revenues
associated with the collection of transition charges from its customers over the
next eight to ten years.
Capital Requirements and Liquidity
Unitil requires capital to fund the addition of property, plant and equipment to
improve, protect, maintain and expand its electric and gas distribution systems
and for working capital and other timing differences related to the collection
of revenues in rates.
The capital necessary to meet these requirements is derived primarily from
internally-generated funds, which consist of cash flows from operating
activities, excluding payments of dividends. The Company supplements internally
generated funds, as needed, primarily through bank borrowings under unsecured
short-term bank lines. As of December 31, 2002, the Company had unsecured bank
lines for short-term debt in the aggregate amount of $38 million with three
banks. The amount of short-term borrowings that may be incurred by Unitil and
its subsidiaries is subject to periodic approval either by the Securities and
Exchange Commission (SEC) under the Public Utility Holding Company Act of 1935
(1935 Act) or by state regulators. In 2001, the Company received SEC
authorization to allow Unitil to incur total short-term borrowings up to a
maximum of $45 million.
The Company periodically repays its short-term debt borrowings through the
issuance of permanent long-term debt financing. The Company expects to continue
to be able to satisfy its external financing needs by issuing additional
short-term and long-term debt. The continued availability of these methods of
financing will be dependent on many factors, including security market
conditions, economic conditions, regulatory approvals and the level of the
Company's income and cash flow.
In addition to the significant contractual obligations listed in the table
below, the Company also provides limited guarantees on certain energy contracts
entered into by its regulated subsidiary companies. The Company's policy is to
limit these guarantees to two years or less. As of December 31, 2002, there are
$1.8 million of guarantees outstanding and these guarantees extend through
October 15, 2004.
Significant Contractual Obligations (000's) Total 2003 2004- 2006- 2008 &
as of December 31, 2002 2005 2007 Beyond
- ---------------------------------------------------------------------------------------------------------
Long-term Debt $ 107,469 $ 3,244 $ 3,551 $ 646 $ 100,028
Capital Lease 4,534 1,131 1,464 584 1,355
Power Supply Buyout - MA 81,526 7,276 14,758 15,202 44,290
Purchased Power Contract 99,246 12,619 30,871 26,277 29,479
Gas Supply Contract 6,653 2,123 2,284 2,002 244
----------------------------------------------------------
Total Contractual Cash Obligations $ 299,428 $ 26,393 $ 52,928 $ 44,711 $ 175,396
==========================================================
Cash Flows from Operating Activities - Cash Flows from Operating Activities
decreased by $13.6 million in 2002, compared to 2001, mainly due to changes in
Accrued Revenues and Accounts Receivable and Accounts Payable related to energy
costs. There is an inherent ratemaking lag between the period when energy costs
increase and the period when the Company collects those higher energy costs from
customers. This timing difference is recorded as Accrued Revenue. During the
collection lag period, as occurred in 2002, the Company's cash flow is
negatively impacted and additional working capital-related short-term borrowings
are necessary. The balance of the decrease in 2002 was due to higher working
capital needs, principally resulting from year-end timing differences on energy
supply contract payments.
In 2001, Cash Flows from Operating Activities increased by $14.3 million
compared to 2000, mainly due to decreased Accrued Revenues and Accounts
Receivable related to energy costs. During 2001, the Company collected revenue
from rate reconciling mechanisms for higher energy costs incurred in 2000, and
used this cash, in part, to pay down short-term debt borrowings.
21
Operating Activities (000's)
---------------------------------------------------------------
2002 2001 2000
------------------------------------
$ 9,568 $ 23,178 $ 8,864
====================================
Cash Flows from Investing Activities - Cash Used in Investing Activities
decreased $0.3 million in 2002, compared to the prior year, primarily reflecting
a $0.9 million increase in capital expenditures on distribution system additions
and improvements, offset by the receipt of $1.5 million of proceeds from the
sale of the Company's ownership interest in its non-utility investment. In
addition, in 2001, Unitil received $0.3 million in proceeds from the sale of its
interest in Millstone Nuclear Generating Station Unit No. 3 (Millstone 3).
Cash Flows Used in Investing Activities decreased approximately $2.7 million in
2001, primarily reflecting a $1.2 million reduction in capital expenditures on
distribution system additions and improvements, the receipt of $0.3 million of
proceeds from the sale of the Company's ownership interest in Millstone 3, and
the reduction of unregulated investment activities.
Capital expenditures are projected to increase in 2003 to approximately $21.8
million, primarily reflecting increased expenditures for utility distribution
system improvements.
Investing Activities (000's)
---------------------------------------------------------------
2002 2001 2000
------------------------------------
$ (19,290) $ (19,548) $ (22,249)
====================================
Cash Flows from Financing Activities - Cash Flows from Financing Activities
increased by $11.4 million in 2002 compared to 2001. This increase primarily
reflects increased short-term borrowings used to fund a significant portion of
the Company's additions to gas and electric plant and equipment, as well as
increased working capital requirements associated with recoverable deferred
charges relating to industry restructuring.
Cash Flows from Financing Activities decreased by $14.2 million in 2001 compared
to 2000. This decrease primarily reflects repayment of short- and long-term
borrowings, offset by proceeds received from the issuance of long-term debt.
During 2001, three of the Company's utility subsidiaries issued long-term debt
totaling $29.0 million. The proceeds were used to reduce short-term debt
aggregating $18.7 million and to provide long-term funding for a portion of its
additions to gas and electric distribution plant and equipment.
As a result of rising and volatile wholesale gas and electric energy prices in
2000 and early 2001, the Company filed and obtained authorization from the SEC
under the 1935 Act to increase its maximum short-term borrowing level to $45
million. The Company also negotiated with its banks to increase its lines of
credit to meet its borrowing obligations. The Company periodically files rate
adjustments to its reconciling cost recovery mechanisms to reflect changes in
wholesale energy prices.
During 2001 the Company raised $0.3 million of additional common equity capital
through the issuance of 11,279 shares of Common Stock in connection with the
Dividend Reinvestment and Stock Purchase Plan (DRP). During 2001, the Company
moved to open-market purchases to meet its share issuance obligations under the
DRP. As a result, the Company did not issue new original shares of Common Stock
in connection with the DRP during 2002, and does not anticipate doing so in
2003. In conjunction with the SEC Emergency Orders of September 14 and 21, 2001,
which suspended the applicability of certain of the conditions contained in its
Rule 10b-18, the Company implemented an interim Common Stock repurchase program.
Under this program, in 2001, the Company repurchased, canceled and retired 2,500
shares of its outstanding Common Stock at a total cost of $58,500. The SEC has
since lifted its suspension of the aforementioned conditions and accordingly,
the Company's interim Common Stock repurchase program is no longer in effect.
Unitil's annual Common Stock dividend in 2002 was $1.38 per share. This annual
dividend resulted in a payout ratio of 97% for the year, before the
non-recurring Restructuring Charge. Excluding the loss from Non-regulated
Operations, the payout ratio was 88% based on Utility Operations, before the
Restructuring Charge. At its January 2003 meeting, the Unitil Board of Directors
declared a regular quarterly dividend on the Company's Common Stock of $0.345
per share. This quarterly dividend reflects the current annual dividend rate of
$1.38 per share.
22
Financing Activities (000's)
-------------------------------------------------------------------
2002 2001 2000
----------------------------------------
$ 10,806 $ (614) $ 13,598
========================================
Interest Rate Risk
As discussed above, the Company meets it external financing needs by issuing
short-term and long-term debt. The majority of the Company's debt outstanding
represents long-term notes bearing fixed rates of interest. Changes in market
interest rates do not affect interest expense resulting from these outstanding
long-term debt securities. However, the Company periodically repays its
short-term debt borrowings through the issuance of new long-term debt
securities. Changes in market interest rates may affect the interest rate and
corresponding interest expense on any new long-term debt securities issued by
the Company. In addition, the Company's short-term debt borrowings bear a
variable rate of interest. As a result, changes in short-term interest rates
will increase or decrease the Company's interest expense in future periods. For
example, if the Company had an average amount of short-term debt outstanding of
$25 million for the period of one year, a change in interest rates of 1% would
result in a change in annual interest expense of approximately $250,000. The
average interest rate on the Company's short-term borrowings was 2.18% and 4.78%
during 2002 and 2001, respectively.
Market Risk
Although Until's utility operating companies are subject to commodity price risk
as part of their traditional operations, the current regulatory framework within
which these companies operate allows for full collection of purchased power and
gas costs in rates. Consequently, there is limited commodity price risk after
consideration of the related rate-making.
Regulatory Matters
The Unitil Companies are regulated by various federal and state agencies,
including the SEC, the Federal Energy Regulatory Commission (FERC), and state
regulatory authorities with jurisdiction over public utilities, including the
NHPUC and the MDTE. In recent years, there has been significant legislative and
regulatory activity to restructure the utility industry in order to introduce
greater competition in the supply and sale of electricity and gas, while
continuing to regulate the distribution operations of Unitil's utility operating
subsidiaries. Unitil implemented the restructuring of its electric operations in
Massachusetts in 1998 and is implementing a restructuring settlement for its New
Hampshire electric operations that is expected to be on May 1, 2003.
Massachusetts Electric Operations Restructuring - Beginning March 1, 1998, FG&E
implemented its Restructuring Plan under the Massachusetts Restructuring Act.
FG&E completed the divestiture of its entire regulated power supply business in
2000 in accordance with the Restructuring Plan. All FG&E distribution customers
must pay a transition charge that provides for the recovery of costs associated
with FG&E's power portfolio which were stranded as a result of the divestiture
of those assets. The plant and Regulatory Asset balances that will be recovered
through the transition charge have been approved by the MDTE as part of FG&E's
annual Reconciliation Filings. The Restructuring Act also requires FG&E to
obtain power for retail customers who choose not to buy energy from a
competitive supplier through either Standard Offer Service (SOS) or Default
Service. FG&E must provide SOS through February 2005 at rate levels which
guarantee rate reductions required by the Restructuring Act. New distribution
customers and customers no longer eligible for SOS are eligible to receive
Default Service at prices set periodically based on market solicitations as
approved by regulators. As of December 31, 2002, competitive suppliers were
serving approximately 20% of FG&E's load, mainly for large industrial customers.
As a result of the restructuring and divestiture of FG&E's entire generation and
purchased power portfolio, FG&E has accelerated the amortization of its stranded
electric generation assets and its abandoned investment in Seabrook Station, a
nuclear generating unit. FG&E earns an authorized rate of return on the
unamortized balance of these Regulatory Assets. In addition, as a result of the
rate reduction and rate cap requirements of the Restructuring Act, FG&E has been
authorized to defer the recovery of a portion of its transition costs and SOS
costs. These unrecovered amounts are also recorded as Regulatory Assets and earn
authorized carrying charges until their subsequent recovery in future periods.
In 2002, Unitil's earnings derived from these generation-related
23
Regulatory Assets, including carrying charges earned on deferred transition
costs and SOS costs, represented approximately 10% of net income. The value of
FG&E's Regulatory Assets is approximately $128 million at December 31, 2002, and
is expected to be amortized and recovered over the next three to nine years.
Earnings from this segment of FG&E's utility business will continue to decline
and ultimately cease.
FG&E made a total of four Reconciliation Filings in 1999, 2000, 2001 and 2002.
Rate adjustments were approved for effect during the subsequent year, subject to
further investigation. In October 2001, the MDTE issued a final Order on FG&E's
1999 Reconciliation Filing which determined the final treatment of Regulatory
Assets attributable to stranded generation costs, purchased power costs, and
related expenses for the 1999, and future, Reconciliation Filings. FG&E's 2001
Reconciliation Filing, submitted on December 2, 2001, recast its rates from 1998
through 2001 in compliance with the MDTE's final Order on its 1999 filing. On
October 15, 2002, the MDTE issued an Order approving a settlement agreement
regarding the Company's 2001 filing. Under the approved settlement, FG&E agreed
to reduce the carrying charge on deferred transition costs that will be
recovered from customers in future years. This change does not affect current
electric rates, but will reduce the total amount of transition costs, including
carrying costs, in future years. The MDTE's October 2002 Order and associated
settlement resolve many of the issues which otherwise might have been contested
in FG&E's future Reconciliation Filings.
FG&E submitted its 2002 Reconciliation Filing on December 20, 2002. Rate
adjustments were approved for effect on January 1, 2003, subject to
investigation, resulting in a rate reduction of approximately 4.4% for
residential SOS customers. The reduction is due to a decrease in the SOS fuel
adjustment, which is not subject to the rate cap, and does not affect net
income.
Massachusetts Gas Operations Restructuring - Following a three year state-wide
collaborative process on the unbundling, or separation, of discrete services
offered by natural gas local distribution companies (LDCs), the MDTE approved
regulations and tariffs for FG&E and other LDCs to provide full customer choice
effective November 1, 2000. The MDTE ruled that LDCs would continue to have an
obligation to provide gas supply and delivery services for a five-year
transition period, with a review after three years. This review is expected to
be initiated in late 2003. The MDTE also required mandatory assignment of LDCs'
pipeline capacity to competitive marketers supplying customers during the
transition period. This mandatory capacity assignment protects LDCs from
exposure to certain stranded gas supply costs during the transition period.
New Hampshire Restructuring - On January 25, 2002, the Company's New Hampshire
electric utility subsidiaries, CECo, E&H and Unitil Power, filed a comprehensive
restructuring proposal with the NHPUC. This proposal included the introduction
of customer choice consistent with New Hampshire's electric utility industry
restructuring law, the divestiture of Unitil Power's power supply portfolio, the
recovery of stranded costs, the merger of CECo and E&H into one distribution
company and new distribution rates for the combined company. On October 25,
2002, the NHPUC approved a multi-party settlement on all major issues in the
proceeding, including stranded cost recovery for purchased power contracts. The
Company estimates that these recoverable stranded costs are approximately $94.5
million and these were recorded as Power Supply Buyout Obligations and
Regulatory Assets at December 31, 2002.
Under Unitil's approved restructuring plan, Unitil agreed to divest its existing
power supply portfolio and conduct a solicitation for new power supplies from
which to meet its ongoing Transition and Default Service energy obligations. On
February 26, 2003, Unitil filed for final NHPUC approval of the executed
agreements resulting from these divestiture and solicitation processes,
including final tariffs for stranded cost recovery and Transition and Default
Services. The filing proposed a recovery period of approximately eight years for
stranded costs. The implementation of customer choice for UES customers is
targeted for May 1, 2003.
Unitil's restructuring plan is also designed to resolve the pending litigation
on this matter. In June 1997, Unitil and other New Hampshire utilities
intervened as plaintiffs in a suit filed in U.S. District Court by Northeast
Utilities' affiliate Public Service Company of New Hampshire for protection from
the NHPUC's Final Plan to restructure the New Hampshire electric utility
industry. Although the NHPUC found that CECo and E&H were entitled to full
interim stranded cost recovery, the NHPUC also made certain legal rulings, that,
if implemented, could affect UES's long-term ability to recover all of its
stranded costs. The Unitil Settlement, approved in October 2002, otherwise
resolves all of the issues in the federal court action. Upon the expiration of
all periods of appeal with respect to the restructuring proceeding by the NHPUC
thereto, UES will implement retail choice and Unitil will withdraw its
intervention in this federal court action, with prejudice.
24
Wholesale Power Market Restructuring - Unitil has also been a participant in the
restructuring of the wholesale power market and transmission system in New
England, which is subject to FERC jurisdiction. New wholesale markets structured
pursuant to FERC's Standard Market Design are expected to be implemented in the
New England Power Pool during the first half of 2003 under the general
supervision of an Independent System Operator and the regulatory oversight of
the FERC.
Rate Proceedings - Prior to 2002, the last formal regulatory filings initiated
by the Company to increase base rates for Unitil's retail electric operating
subsidiaries occurred in 1985 for CECo, 1984 for FG&E, and 1981 for E&H. The
last distribution base rate increase request for FG&E's retail gas operations
occurred in 1998. In 2001, FG&E's electric base rates were investigated by the
MDTE, which resulted in an electric base rate decrease. A majority of the
Company's electric and gas operating revenues are collected under various
periodic rate adjustment mechanisms including fuel, purchased power, energy
efficiency, and restructuring-related cost recovery mechanisms. Industry
restructuring will continue to change the methods of how certain costs are
recovered through the Company's regulated rates and tariffs.
On the gas side, FG&E continues to provide a multi-year refund through its Cost
of Gas Adjustment Clause in compliance with the MDTE's May 2001 Order finding
that FG&E had over-collected fuel inventory finance charges. At December 31,
2002, the unamortized balance of this refund was $1.3 million. FG&E believes a
refund is not justified or warranted and has appealed the MDTE's ruling to the
Massachusetts Supreme Judicial Court (SJC). On a preliminary motion, a single
justice of the SJC declined to stay the MDTE's Order based on a finding that
refunds made by FG&E may be recouped if FG&E prevails on the merits of its
claims. The review of the MDTE Order by the SJC is pending.
On October 25, 2002, as part of the electric restructuring settlement for
Unitil's New Hampshire utility operations described above, the Company received
approval from the NHPUC for an increase of approximately $2.0 million in annual
distribution revenues for UES, effective December 1, 2002.
On December 2, 2002, the MDTE issued an Order resulting in distribution rate
increases of $2.0 million for FG&E's electric operations and $3.0 million for
FG&E's gas operations. Increases for rising gas costs were incorporated into the
final gas rates. FG&E's new rates became effective on December 2, 2002.
On April 16, 2002, FG&E filed Performance Based Regulation (PBR) Plans with the
MDTE for both electric and gas operations. PBR is a method of setting regulated
distribution rates that provides incentives to control costs while maintaining a
high level of service quality. Under PBR, a company's earnings are tied to
performance targets, and penalties can be imposed for deterioration of service
quality. FG&E's PBR Plans were filed in conjunction with FG&E's distribution
rate filings, consistent with MDTE policy to implement PBR in the context of
base rate cases. The MDTE did not initiate investigations of the filings. On
January 6, 2003, the MDTE issued Orders closing the cases. Accordingly, FG&E's
PBR plans have no scheduled date of implementation, and conventional cost-based
regulation continues to apply.
In December 2002, FG&E and UES filed requests with their respective state
regulatory commissions for approval of an accounting Order to mitigate certain
accounting requirements related to pension plan assets, which have been
triggered by the substantial decline in the capital markets. These requests were
granted by the respective state regulatory commissions in December 2002. These
approvals allow FG&E and UES to treat the additional minimum pension liability
and Prepaid Pension Costs as Regulatory Assets and avoid the reduction in equity
that would otherwise be required. These regulatory Orders do not pre-approve the
amount of pension expense to be recovered in future rates. Such recovery will be
subject to review and approval in future rate proceedings. Based on these
approvals, Unitil has included the amount of the additional minimum pension
liabilities and Prepaid Pension Costs of $12.0 million in Regulatory Assets on
its balance sheet.
Environmental Matters
The Company's past and present operations include activities that are subject to
extensive federal and state environmental regulations.
Sawyer Passway MGP Site - The Company continues to work with environmental
regulatory agencies to identify and assess environmental issues at the former
manufactured gas plant (MGP) site at Sawyer Passway, located in Fitchburg,
Massachusetts. FG&E proceeded with site remediation work as specified on the
Tier 1B permit issued by the Massachusetts Department of Environmental
Protection (DEP), which allows the Company to work towards temporary remediation
of the site. Work performed in 2002 was associated with the five-year review of
25
the Temporary Solution submittal (Class C Response Action Outcome) under the
Massachusetts Contingency Plan that was filed for the site in 1997. Completion
of this work has confirmed the Temporary Solution status of the site for an
additional five years. A status of temporary closure requires FG&E to monitor
the site until a feasible permanent remediation alternative can be developed and
completed.
Since 1991, FG&E has recovered the environmental response costs incurred at this
former MGP site pursuant to a MDTE approved Settlement Agreement (Agreement).
The Agreement allows FG&E to amortize and recover from gas customers over
succeeding seven-year periods the environmental response costs incurred each
year. Environmental response costs are defined to include liabilities related to
manufactured gas sites, waste disposal sites or other sites onto which hazardous
material may have migrated as a result of the operation or decommissioning of
Massachusetts gas manufacturing facilities from 1882 through 1978. In addition,
any recovery that FG&E receives from insurance or third parties with respect to
environmental response costs, net of the unrecovered costs associated therewith,
are split equally between FG&E and its gas customers. The total annual charge
for such costs assessed to gas customers cannot exceed five percent of FG&E's
total revenue for firm gas sales during the preceding year. Costs in excess of
five percent will be deferred for recovery in subsequent years.
Former Electric Generating Station - The Company is remediating environmental
conditions at a former electric generating station located at Sawyer Passway,
which FG&E sold to WRW, a general partnership, in 1983. Rockware International
Corporation (Rockware), an affiliate of WRW, acquired rights to the electric
equipment in the building and intended to remove, recondition and sell this
equipment. During 1985, Rockware demolished several exterior walls of the
generating station in order to facilitate removal of certain equipment. The
demolition of the walls and the removal of generating equipment resulted in
damage to asbestos-containing insulation materials inside the building, which
had been intact and encapsulated at the time of the sale of the structure to
WRW.
When Rockware and WRW encountered financial difficulties and failed to respond
adequately to Orders of the environmental regulators to remedy the situation,
FG&E agreed to take steps at that time and obtained DEP approval to temporarily
enclose, secure and stabilize the facility. Based on that approval, between
September and December 1989, contractors retained by FG&E stabilized the
facility and secured the building. This work did not permanently resolve the
asbestos problems caused by Rockware, but was deemed sufficient for the then
foreseeable future.
Due to the continuing deterioration of this former electric generating station
and Rockware's continued lack of performance, FG&E, in concert with the DEP and
the EPA, conducted further testing and survey work during 2001 to ascertain the
environmental status of the building. Those surveys revealed continued
deterioration of the asbestos-containing insulation materials in the building.
By letter dated May 1, 2002, the EPA notified FG&E that it was a Potentially
Responsible Party for planned remedial activities at the site and invited FG&E
to perform or finance such activities. FG&E and the EPA have entered into an
Agreement of Consent, whereby FG&E, without an admission of liability, will
conduct environmental remedial action to abate and remove asbestos-containing
and other hazardous materials. FG&E has awarded contracts for all aspects of the
abatement work, which is presently ongoing. FG&E received significant coverage
from its insurance carrier. The Company believes that these funds will be
sufficient to complete this remediation and that resolution of this matter will
not have a material adverse impact on the Company's financial position.
The Company has recorded the estimated cost of the remediation action in Current
Liabilities and an offsetting asset reflecting insurance proceeds in Current
Assets. At the balance sheet date, net of amounts expended in 2002, the
remaining project cost was $3.7 million.
Critical Accounting Policies
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of the Company's most critical accounting policies, which
are defined as
26
those policies where judgments or uncertainties could materially affect the
application of those policies. For a complete discussion of the Company's
significant accounting policies, refer to the attached financial statements and
Note 1: Summary of Significant Accounting Policies.
Regulatory Accounting - The Company is a regulated utility and its principal
business is the distribution of electricity and natural gas. Accordingly, the
Company uses the provisions of SFAS No. 71, "Accounting for the Effects of
Certain Types of Regulation." In accordance with SFAS No. 71, the Company has
recorded Regulatory Assets and Regulatory Liabilities which will be recovered in
future electric and gas retail rates. The Company also has commitments under
long-term contracts for the purchase of electricity from various suppliers. The
annual costs under these contracts are included in Fuel and Purchased Power and
Gas Purchased for Resale in the Consolidated Statements of Earnings and these
costs are recoverable in current and future rates under various orders issued by
state and federal regulators. If the Company, or a portion of its assets or
operations, were to cease meeting the criteria for application of these
accounting rules, accounting standards for businesses in general would become
applicable and immediate recognition of any previously deferred costs, or a
portion of deferred costs, would be required in the year in which the criteria
are no longer met, if such deferred costs are not recoverable in the portion of
the business that continues to meet the criteria for application of SFAS No. 71.
Commitments and Contingencies - The Company's accounting policy is to record
and/or disclose commitments and contingencies in accordance with SFAS No. 5,
"Accounting for Contingencies." For example, in 2002 the Company resolved a long
standing contingency related to an environmental matter by entering into a fixed
price contract to remediate the site while also settling on the funding of the
project to be provided by the Company's insurance carrier. As a result,
management estimates that this matter will not have a material adverse effect on
the Company's financial position.
Forward-Looking Information
This report contains forward-looking statements which are subject to inherent
uncertainties in predicting future results and conditions. Certain factors that
could cause the actual results to differ materially from those projected in
these forward-looking statements include, but are not limited to: variations in
weather, changes in the regulatory environment, customers' preferences on energy
sources, interest rates, general economic conditions, increased competition and
other uncertainties, all of which are difficult to predict, and many of which
are beyond the control of the Company.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Reference is made to the "Market Risk section of Item 7. "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
(above).
27
Item 8. Financial Statements and Supplemental Data
Report of Independent Certified Public Accountants
To the Shareholders of Unitil Corporation:
We have audited the accompanying consolidated balance sheets and consolidated
statements of capitalization of Unitil Corporation and subsidiaries as of
December 31, 2002 and 2001, and the related consolidated statements of earnings,
cash flows and changes in common stock equity for each of the three years in the
period ended December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Unitil Corporation
and subsidiaries as of December 31, 2002 and 2001, and the consolidated results
of their operations and their consolidated cash flows for each of the three
years in the period ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States of America.
We have also audited Schedule II for each of the three years in the period ended
December 31, 2002. In our opinion, this schedule, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all
material respects, the information therein.
/s/ GRANT THORNTON LLP
Boston, Massachusetts
February 7, 2003
28
CONSOLIDATED STATEMENTS OF EARNINGS
(000's, except common shares and per share data)
-----------------------------------------
Year Ended December 31, 2002 2001 2000
- ------------------------------------------------------------------------------------------
Operating Revenues:
Electric $ 167,317 $ 183,780 $ 160,023
Gas 20,283 22,828 22,756
Other 786 414 162
-------------------------------------------
Total Operating Revenues 188,386 207,022 182,941
-------------------------------------------
Operating Expenses:
Fuel and Purchased Power 114,598 132,947 110,280
Gas Purchased for Resale 11,143 13,827 13,492
Operation and Maintenance 25,667 25,000 24,545
Restructuring Charge 1,598 ---- ----
Depreciation and Amortization 14,911 12,767 11,964
Provisions for Taxes:
Local Property and Other 4,731 4,666 4,967
Federal and State Income 2,490 3,421 3,413
-----------------------------------------
Total Operating Expenses 175,138 192,628 168,661
-----------------------------------------
Operating Income 13,248 14,394 14,280
Non-Operating Expenses:
(Gain) Loss on Non-Utility Investments, (82) 2,400 ----
net of tax
Other Non-Operating Expenses 185 170 244
-----------------------------------------
Income Before Interest Expense
and Extraordinary Item 13,145 11,824 14,036
Interest Expense, net 7,057 6,797 6,820
-----------------------------------------
Income before Extraordinary Item 6,088 5,027 7,216
Extraordinary Item, net of tax ---- 3,937 ----
-----------------------------------------
Net Income 6,088 1,090 7,216
Less Dividends on Preferred Stock 253 257 263
-----------------------------------------
Earnings Applicable to Common Shareholders $ 5,835 $ 833 $ 6,953
=========================================
Average Common Shares Outstanding - Basic 4,743,696 4,743,576 4,723,171
Average Common Shares Outstanding - Diluted 4,762,166 4,759,822 4,742,745
Earnings per Common Share
- ------------------------------------------------------------------------------------------
Income before Extraordinary Item $ 1.23 $ 1.01 $ 1.47
Extraordinary Item, net of tax ---- (0.83) ----
-----------------------------------------
Net Income $ 1.23 $ 0.18 $ 1.47
=========================================
(The accompanying Notes are an integral part of these financial statements.)
29
CONSOLIDATED BALANCE SHEETS (000'S)
ASSETS
----------------------------
December 31, 2002 2001
- --------------------------------------------------------------------------------
Utility Plant:
Electric $ 193,152 $ 183,795
Gas 44,796 41,287
Common 27,573 28,529
Construction Work in Progress 5,658 1,887
----------------------------
Utility Plant 271,179 255,498
Less: Accumulated Depreciation 82,587 77,210
----------------------------
Net Utility Plant 188,592 178,288
----------------------------
Other Property and Investments 651 2,286
----------------------------
Current Assets:
Cash 7,160 6,076
Accounts Receivable - Net of Allowance for
Doubtful Accounts of $372 and $600 19,513 17,133
Refundable Taxes 4,851 2,432
Material and Supplies 2,323 2,804
Prepayments 1,735 1,889
Accrued Revenue 4,842 1,330
----------------------------
Total Current Assets 40,424 31,664
----------------------------
Noncurrent Assets:
Regulatory Assets 244,011 146,042
Prepaid Pension Costs ---- 10,712
Debt Issuance Costs, net 1,755 1,826
Other Noncurrent Assets 5,350 5,944
----------------------------
Total Noncurrent Assets 251,116 164,524
----------------------------
TOTAL $ 480,783 $ 376,762
============================
(The accompanying Notes are an integral part of these financial statements.)
30
CONSOLIDATED BALANCE SHEETS (Cont.) (000'S)
CAPITALIZATION AND LIABILITIES
----------------------------
December 31, 2002 2001
- --------------------------------------------------------------------------------
Capitalization:
Common Stock Equity $ 74,350 $ 74,746
Preferred Stock, Non-Redeemable,
Non-Cumulative 225 225
Preferred Stock, Redeemable, Cumulative 3,097 3,384
Long-Term Debt, Less Current Portion 104,226 107,470
----------------------------
Total Capitalization 181,898 185,825
----------------------------
Current Liabilities:
Long-Term Debt, Current Portion 3,243 3,224
Capitalized Leases, Current Portion 800 988
Accounts Payable 14,221 20,084
Short-Term Debt 35,990 13,800
Dividends Declared and Payable 77 109
Refundable Customer Deposits 1,336 1,393
Interest Payable 1,311 1,375
Other Current Liabilities 9,062 6,328
----------------------------
Total Current Liabilities 66,040 47,301
----------------------------
Deferred Income Taxes 47,332 47,113
Noncurrent Liabilities:
Power Supply Buyout Obligations 175,657 88,779
Capitalized Leases, Less Current Portion 2,534 2,945
Other Noncurrent Liabilities 7,322 4,799
----------------------------
Total Noncurrent Liabilities 185,513 96,523
----------------------------
TOTAL $ 480,783 $ 376,762
============================
(The accompanying Notes are an integral part of these financial statements.)
31
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(000's except number of shares and par value)
----------------------------
December 31, 2002 2001
- --------------------------------------------------------------------------------
Common Stock Equity
Common Stock, No Par Value $ 41,220 $ 41,220
(Authorized - 8,000,000 shares;
Outstanding - 4,743,696 and 4,743,696 shares)
Stock Options 990 669
Retained Earnings 32,140 32,857
----------------------------
Total Common Stock Equity 74,350 74,746
----------------------------
Preferred Stock
UES Preferred Stock, Non-Redeemable,
Non-Cumulative:
6.00% Series, $100 Par Value 225 225
UES Preferred Stock, Redeemable, Cumulative:
8.70% Series, $100 Par Value 215 215
5.00% Series, $100 Par Value --- 91
6.00% Series, $100 Par Value --- 168
8.75% Series, $100 Par Value 333 333
8.25% Series, $100 Par Value 385 385
FG&E Preferred Stock, Redeemable, Cumulative:
5.125% Series, $100 Par Value 946 960
8.00% Series, $100 Par Value 1,218 1,232
----------------------------
Total Preferred Stock 3,322 3,609
----------------------------
Long-Term Debt
UES First Mortgage Bonds:
Series I, 8.49%, Due October 14, 2024 6,000 6,000
Series J, 6.96%, Due September 1, 2028 10,000 10,000
Series K, 8.00%, Due May 1, 2031 7,500 7,500
Series L, 8.49%, Due October 14, 2024 9,000 9,000
Series M, 6.96%, Due September 1, 2028 10,000 10,000
Series N, 8.00%, Due May 1, 2031 7,500 7,500
FG&E Long-Term Notes:
8.55% Notes, Due March 31, 2004 6,000 9,000
6.75% Notes, Due November 30, 2023 19,000 19,000
7.37% Notes, Due January 15, 2029 12,000 12,000
7.98% Notes, Due June 1, 2031 14,000 14,000
Unitil Realty Corp. Senior Secured Notes:
8.00% Notes, Due August 1, 2017 6,469 6,694
----------------------------
Total Long-Term Debt 107,469 110,694
Less: Long-Term Debt, Current Portion 3,243 3,224
----------------------------
Total Long-Term Debt, Less Current Portion 104,226 107,470
----------------------------
Total Capitalization $ 181,898 $ 185,825
============================
(The accompanying Notes are an integral part of these financial statements.)
32
CONSOLIDATED STATEMENTS OF CASH FLOWS (000's)
-----------------------------------------
Year Ended December 31, 2002 2001 2000
- ------------------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net Income $ 6,088 $ 1,090 $ 7,216
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Depreciation and Amortization 14,911 12,767 11,964
Deferred Tax Provision 856 (607) 3,523
Noncash Stock Option Compensation Expenses 321 293 182
(Gain) Loss on Non-Utility Investments, net (82) 2,400 ----
Changes in Current Assets and Liabilities:
Accounts Receivable (2,380) 2,924 (3,427)
Prepayments and other Current Assets (960) (1,690) (2,393)
Accrued Revenue (3,512) 7,973 (6,340)
Accounts Payable (5,863) 1,545 2,024
Interest Payable and other Current
Liabilities 2,670 366 (145)
Other, net (2,481) (3,883) (3,740)
-----------------------------------------
Cash Provided by Operating Activities 9,568 23,178 8,864
-----------------------------------------
Cash Flows from Investing Activities:
Acquisitions of Property, Plant and Equipment (20,825) (19,890) (21,092)
Proceeds from Sale of Electric Generation
Assets ---- 342 ----
Proceeds (Acquisitions) on Investments, net 1,535 ---- (1,157)
-----------------------------------------
Cash Used in Investing Activities (19,290) (19,548) (22,249)
-----------------------------------------
Cash Flows from Financing Activities:
Proceeds from (Repayment of) Short-Term Debt,
net 22,190 (18,700) 22,000
Proceeds from Issuance of Long-Term Debt ---- 29,000 ----
Repayment of Long-Term Debt (3,225) (3,208) (1,255)
Dividends Paid (6,831) (6,902) (6,787)
Issuance of Common Stock, net ---- 229 639
Retirement of Preferred Stock (293) (81) (68)
Repayment of Capital Lease Obligations (1,035) (952) (931)
-----------------------------------------
Cash Provided by (Used In) Financing
Activities 10,806 (614) 13,598
-----------------------------------------
Net Increase in Cash 1,084 3,016 213
Cash at Beginning of Year 6,076 3,060 2,847
-----------------------------------------
Cash at End of Year $ 7,160 $ 6,076 $ 3,060
=========================================
Supplemental Cash Flow Information:
Interest Paid $ 9,356 $ 8,988 $ 8,640
Income Taxes Paid $ 2,351 $ 4,265 $ 827
Supplemental Schedule of Noncash Activities:
Capital Leases Incurred $ 436 $ 691 $ 363
(The accompanying Notes are an integral part of these financial statements.)
33
CONSOLIDATED STATEMENTS OF
CHANGES IN COMMON STOCK EQUITY
(000's except number of shares)
Common Stock Option Retained
Shares Plan Earnings Total
-----------------------------------------------------
Balance at January 1, 2000 $ 40,352 $ 194 $ 38,129 $ 78,675
Net Income for 2000 7,216 7,216
Dividends on Preferred Shares (263) (263)
Dividends on Common Shares -
at $1.38 per Share (6,514) (6,514)
Stock Option Plan 182 182
Issuance of 22,916 Common Shares (a) 639 639
-----------------------------------------------------
Balance at December 31, 2000 40,991 376 38,568 79,935
Net Income after Extraordinary Item for 2001 1,090 1,090
Dividends on Preferred Shares (257) (257)
Dividends on Common Shares -
at an Annual Rate of $1.38 per Share (6,544) (6,544)
Stock Option Plan 293 293
Issuance of 11,279 Common Shares (a) 287 287
Re-acquired and retired Common Shares (b) (58) (58)
-----------------------------------------------------
Balance at December 31, 2001 41,220 669 32,857 74,746
Net Income for 2002 6,088 6,088
Dividends on Preferred Shares (253) (253)
Dividends on Common Shares -
at $1.38 per Share (6,546) (6,546)
Stock Option Plan 321 321
Premium paid for redemption of Preferred
Shares (c) (6) (6)
-----------------------------------------------------
Balance at December 31, 2002 $ 41,220 $ 990 $ 32,140 $ 74,350
=====================================================
(a) Shares sold and issued in connection with the Company's Dividend
Reinvestment and Stock Purchase Plan and Employee 401(k) Tax Deferred
Savings and Investment Plan.
(b) Shares repurchased in conjunction with the Company's interim stock
repurchase program.
(c) Premium paid for the redemption of Exeter & Hampton Electric Company
Preferred Shares.
(The accompanying Notes are an integral part of these financial statements.)
34
Note 1: Summary of Significant Accounting Policies
Nature of Operations - Unitil Corporation (Unitil or the Company) is registered
with the Securities and Exchange Commission (SEC) as a public utility holding
company under the Public Utility Holding Company Act of 1935 (1935 Act). The
following companies are wholly-owned subsidiaries of Unitil: Unitil Energy
Systems, Inc. (UES) (formed in 2002 by the combination and merger of Unitil's
former utility subsidiaries Concord Electric Company (CECo) and Exeter & Hampton
Electric Company (E&H)), Fitchburg Gas and Electric Light Company (FG&E), Unitil
Power Corp. (Unitil Power), Unitil Realty Corp. (Unitil Realty), Unitil Service
Corp. (Unitil Service) and its non-regulated business unit Unitil Resources,
Inc. (Unitil Resources). Usource, Inc. and Usource L.L.C. are subsidiaries of
Unitil Resources.
Unitil's principal business is the retail sale and distribution of electricity
and related services in several cities and towns in the seacoast and capital
city areas of New Hampshire, and both electricity and gas and related services
in north central Massachusetts, through Unitil's two wholly-owned retail
distribution utility subsidiaries. The Company's wholesale electric power
utility subsidiary, Unitil Power, principally provides all the electric power
supply requirements to UES for resale at retail.
Unitil Realty owns and manages the Company's corporate office building and
property located in Hampton, New Hampshire and leases this facility to Unitil
Service under a long-term lease arrangement. Unitil Service provides, at cost,
centralized management, administrative, accounting, financial, engineering,
information systems, regulatory, planning, procurement and other services to its
affiliated Unitil companies. Unitil Resources is the Company's wholly-owned
non-utility subsidiary and has been authorized by the SEC, pursuant to the rules
and regulations of the 1935 Act, to engage in competitive business transactions
associated with electricity, gas and other energy commodities in wholesale and
retail markets, and to provide energy brokering, consulting and management
related services within the United States. Usource, Inc. and Usource L.L.C.
(collectively, Usource) are wholly owned subsidiaries of Unitil Resources.
Usource provides competitive energy brokering services, as well as related
energy consulting services.
With respect to rates and other business and financial matters, UES is subject
to regulation by the New Hampshire Public Utilities Commission (NHPUC), FG&E is
regulated by the Massachusetts Department of Telecommunications & Energy (MDTE),
and Unitil Power, UES and FG&E are regulated by the Federal Energy Regulatory
Commission (FERC).
Basis of Presentation
Principles of Consolidation - The consolidated financial statements include the
accounts of Unitil and all of its wholly-owned subsidiaries. Intercompany
accounts and transactions have been eliminated in consolidation.
Regulatory Accounting - Generally Accepted Accounting Principles for regulated
entities in the United States allow Unitil to give accounting recognition to the
actions of regulatory authorities in accordance with the provisions of Statement
of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of
Certain Types of Regulation." In accordance with SFAS No. 71, the Company has
recognized future cash inflows that will result from the ratemaking process (a
Regulatory Asset) or has recognized obligations (a Regulatory Liability) if it
is probable that such costs will be recovered or obligations relieved in the
future through the ratemaking process. In addition to the Regulatory Assets and
Liabilities separately identified on the Consolidated Balance Sheet, there are
other regulatory assets and liabilities, such as accrued revenues associated
with reconciling cost recovery mechanisms and certain deferred tax liabilities
recovered through the ratemaking process. The Company also has obligations under
long-term power contracts, the recovery of which is subject to regulation. If
the Company, or a portion of its assets or operations, were to cease meeting the
criteria for application of these accounting rules, accounting standards for
businesses in general would become applicable and immediate recognition of any
previously deferred costs, or a portion of deferred costs, would be required in
the year in which the criteria are no longer met, if such deferred costs are not
recoverable in the portion of the business that continues to meet the criteria
for application of SFAS No. 71.
Massachusetts and New Hampshire have both passed utility industry restructuring
legislation and the Company has filed and implemented its restructuring plans in
both states. In Massachusetts, the Company is allowed to recover certain types
of costs through ongoing assessments to be included in future regulated service
rates. The Company is also deferring the recovery of certain restructuring
related costs in order to meet the retail rate cap imposed under the
Massachusetts restructuring legislation. Based on the recovery mechanism that
allows
35
recovery of all of its stranded costs and deferred costs related to
restructuring, the Company has recorded regulatory assets that it expects to
fully recover in future periods. The Company expects to continue to meet the
criteria for the application of SFAS No. 71 for the distribution portion of its
assets and operations for the foreseeable future. If a change in accounting were
to occur to the distribution portion of the Company's operations, it could have
a material adverse effect on the Company's earnings and retained earnings in
that year and could have a material adverse effect on the Company's ongoing
financial condition as well.
On January 25, 2002, the Company's New Hampshire electric utility subsidiaries,
CECo, E&H and Unitil Power, filed a comprehensive restructuring proposal with
the NHPUC. This proposal included the introduction of customer choice consistent
with the New Hampshire restructuring law, the divestiture of Unitil Power's
power supply portfolio, the recovery of stranded costs, the combination of CECo
and E&H into a planned successor, UES, and new distribution rates for UES. On
October 25, 2002, the NHPUC approved a multi-party settlement on all major
issues in the proceeding. Under Unitil's approved restructuring plan, Unitil
will divest its existing New Hampshire power supply portfolio and conduct a
solicitation for new power supplies from which to meet its ongoing transition
and default service energy obligations. In early 2003, Unitil will file for
final NHPUC approval of the executed agreements resulting from these divestiture
and solicitation processes, including final tariffs for stranded cost recovery
and transition and default services. The implementation of customer choice is
targeted for May 1, 2003.
Upon receipt of all requested approvals in the proceeding by the NHPUC, and the
expiration of all periods of appeal with respect thereto, UES will implement
retail choice and Unitil will withdraw its intervention in a pending federal
court action, with prejudice. In June 1997, Unitil and other utilities in NH
intervened as plaintiffs in a suit filed in U.S. District Court by Northeast
Utilities' affiliate Public Service Company of New Hampshire for protection from
the NHPUC Final Plan to restructure the New Hampshire electric utility industry.
Although the NHPUC found that CECo and E&H were entitled to full interim
stranded costs recovery, the NHPUC also made certain legal rulings, that, if
implemented, could affect the Company's long-term ability to recover all of
their stranded costs. The Unitil Settlement approved in October 2002, provides
for full stranded cost recovery by UES, and otherwise resolves all of the issues
in the federal court action.
Asset Balances at December 31,
Regulatory Assets consist of the
following (000's) 2002 2001
-----------------------------------------------------------------------
Power Supply Buyout Obligations $ 175,657 $ 88,779
Income Taxes 24,799 27,386
Recoverable Deferred Charges 22,253 18,103
Recoverable Generation-related Assets 9,327 11,774
Pension 11,975 ----
------------------------
Total Regulatory Assets $ 244,011 $ 146,042
========================
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
requires disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Revenue Recognition - Unitil's operating subsidiaries record electric and gas
operating revenues based upon the amount of electricity and gas delivered to
customers through the end of the accounting period. Usource, Unitil's
competitive energy brokering subsidiary, records energy brokering revenues based
upon the estimated amount of electricity and gas delivered to customers through
the end of the accounting period.
Utility Plant - The cost of additions to Utility Plant and the cost of renewals
and betterments are capitalized. Cost consists of labor, materials, services and
certain indirect construction costs, including an allowance for funds used
during construction (AFUDC). The costs of current repairs and minor replacements
are charged to appropriate operating expense accounts. The original cost of
utility plant retired or otherwise disposed of and the cost of removal, less
salvage, are charged to the accumulated provision for depreciation.
Depreciation and Amortization - Depreciation provisions for Unitil's utility
operating subsidiaries are determined on a group straight-line basis. Provisions
for depreciation were equivalent to the following composite rates, based
36
on the average depreciable property balances at the beginning and end of each
year: 2002 - 3.79%, 2001 - 3.75% and 2000 - 3.74%.
Amortization provisions include the recovery of a portion of FG&E's former
investment in Seabrook Station, a nuclear generating unit, in rates to its
customers through the Seabrook Amortization Surcharge as ordered by the MDTE. In
addition, FG&E is amortizing the balance of its unrecovered electric generating
related assets, which are recorded as Regulatory Assets, in accordance with its
electric restructuring plan approved by the MDTE (See Note 15).
Stock-based Employee Compensation - Unitil accounts for stock-based employee
compensation currently using the fair value based method (See Note 5).
Federal Income Taxes - Deferred tax assets and liabilities are determined based
on differences between the financial reporting and tax bases of assets and
liabilities, and are measured by applying tax rates applicable to the taxable
years in which those differences are expected to reverse. The Tax Reduction Act
of 1986 eliminated investment tax credits. Investment tax credits generated
prior to 1986 are being amortized, for financial reporting purposes, over the
productive lives of the related assets.
Newly Issued Pronouncements - On June 29, 2001, the Financial Accounting
Standards Board (FASB) approved for issuance SFAS No. 141, "Business
Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets."
Significant provisions of these statements are as follows: all business
combinations initiated after June 30, 2001, must use the purchase method of
accounting; goodwill and intangible assets with indefinite lives are not
amortized but are tested for impairment annually using a fair value approach;
other intangible assets will continue to be valued and amortized over their
estimated lives. The Company has no goodwill recorded at December 31, 2002 and
2001. As a result, the adoption of these statements did not have any impact on
the Company's financial position or results of operations. The merger of the
Company's two New Hampshire utility subsidiaries, CECo and E&H, into UES in
December 2002 was the combination of entities under the common control of Unitil
Corporation and therefore all of the accounts of these businesses were combined
at their historical cost.
In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which establishes new accounting and reporting standards for legal
obligations associated with retiring tangible long-lived assets. The fair value
of a liability for an asset retirement obligation must be recorded in the period
in which it is incurred, with the cost capitalized as part of the related
long-lived asset and depreciated over the asset's useful life. SFAS No.143 must
be adopted by 2003. The Company currently accounts for all of the costs of its
long lived-assets, including the cost of removal to replace these assets, in
accordance with Generally Accepted Accounting Principles and guidelines
published by the FERC for Utility plant accounting. The Company has no ownership
interest in nuclear power plants, and no decommissioning obligations. The
Company has determined that the adoption of this statement will not have a
material adverse impact on the Company's financial position or results of
operations.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 requires that an impairment loss
should be recognized if the carrying value of the asset is not recoverable from
its undiscounted cash flows. The statement is effective for fiscal years
beginning after December 15, 2001, with early adoption permitted. The Company
has determined that the adoption of this statement will not have a material
adverse impact on the Company's financial position or results of operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." The provisions of SFAS No. 146 are effective
for exit or disposal activities that are initiated after December 31, 2002. The
Company initiated a reorganization of management and administrative positions in
the fourth quarter of 2002 and recognized a Restructuring Charge, discussed
below, under the provisions of Emerging Issues Task Force (EITF) Issue No. 94-3,
the predecessor standard to SFAS 146.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure." SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based Compensation" to provide alternative methods of
transition for a voluntary change to the fair value-based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method on reported
results. The Company recognizes compensation cost at fair value at the date of
grant.
37
Also in 2002, the FASB issued Interpretation 45 (FIN 45), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." Under FIN 45 guarantors are required to
measure and recognize the fair value of guarantees at inception and provide new
disclosures regarding the nature of any guarantees. FIN 45 is effective for
financial statements of reporting periods ending after December 15, 2002. The
Company has adopted the provisions of FIN 45.
Reclassifications - Certain amounts previously reported have been reclassified
to conform to current year presentation.
Note 2: Restructuring Charge - 2002
In the fourth quarter of 2002, Unitil recognized a pre-tax Restructuring Charge
of $1.6 million. The after-tax effect of the Restructuring Charge was a
reduction of $0.20 in Earnings per Common Share, assuming full dilution.
In December 2002, the Company undertook a strategic review of its business
operations and committed to a formal transition and reorganization plan (the
Reorganization Plan) to streamline its management structure, in order to improve
operating efficiency and to align the organization to meet ongoing business
requirements. The Reorganization Plan resulted in the elimination of 19
management and administrative positions. As a result of the elimination of these
positions, and consistent with existing Company policy, certain benefits are
extended to the employees whose positions were eliminated. On January 8, 2003,
the Company implemented the Reorganization Plan.
The $1.6 million pre-tax Restructuring Charge established a liability at
December 31, 2002, to cover the disbursement of severance and employee benefits
and related costs committed to under the Reorganization Plan, substantially all
of which will be paid in fiscal 2003. At December 31, 2002, the Restructuring
Charge of $1.6 million is included in Other Current Liabilities.
Note 3: Extraordinary Item - 2001
In November 1997, the Massachusetts Legislature enacted the Massachusetts
Electric Restructuring Act of 1997 (the Restructuring Act). The Restructuring
Act required all electric utilities to file a restructuring plan with the MDTE
by December 31, 1997. Among other things, the Restructuring Act required all
Massachusetts electric utilities to sell all of their electric generation assets
and to restructure their utility operations to provide direct retail access to
their customers by all qualified generation suppliers.
The MDTE conditionally approved FG&E's Restructuring Plan (the Plan) in February
1998, and started an investigation and evidentiary hearings into FG&E's proposed
recovery of Regulatory Assets related to stranded generation asset costs and
expenses related to the formulation and implementation of its Plan. In January
1999, the MDTE approved FG&E's Plan, which included provisions for the recovery
of stranded costs through a transition charge in FG&E's electric rates. In
September 1999, FG&E filed its first annual reconciliation of stranded
generation asset costs and expenses and associated transition charge revenues
and the MDTE initiated a lengthy investigation and hearing process.
On October 18 and 19, 2001, the MDTE issued a series of regulatory Orders in
several pending cases involving FG&E, including a final Order on FG&E's initial
reconciliation filing. Those Orders included the review and disposition of
issues related to FG&E's recovery of transition costs due to the restructuring
of the electric industry in Massachusetts, as well as certain costs associated
with gas industry restructuring and preparation and litigation of performance
based rate proceedings initiated by the MDTE. The Orders determined the final
treatment of Regulatory Assets that FG&E had sought to recover from its
Massachusetts electric customers over a multi-year transition period that began
in 1998.
As a result of the industry restructuring-related Orders, FG&E recorded a
non-cash adjustment to Regulatory Assets of $5.3 million, which resulted in the
recognition of an extraordinary charge of $3.9 million, net of taxes. The
Company recognized the extraordinary charge of $0.83 per share, as of September
30, 2001.
38
As a result of all of these Orders, the Company has been allowed recovery of its
Massachusetts industry restructuring transition costs, estimated at $150
million, after reconciliation, including the above-market or stranded generation
and power supply related costs via a non-bypassable uniform transition charge.
FG&E has been and will continue to be subject to annual MDTE investigation and
review in order to reconcile the costs and revenues associated with the
collection of transition charges from its customers over the next eight to ten
years.
Note 4: Investment Write-down and Sale of Equity Stake in Enermetrix - 2001
Beginning in 1998, Unitil invested $5.5 million in Enermetrix, Inc.
(Enermetrix), an energy technology start-up enterprise. In accordance with SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity Securities," the
Company recorded a non-cash charge of $3.7 million, or $2.4 million, net of tax,
in the fourth quarter of 2001 to recognize the decrease in fair value of its
non-utility investment in Enermetrix.
On April 11, 2002, the Company sold its equity ownership in Enermetrix for $1.5
million in cash and improved commercial terms for use of the Enermetrix Software
Network. As a result of the sale, in 2002, the Company recognized the benefit of
approximately $1.3 million of this capital loss as a carryback against capital
gains in its 2002 tax return.
Note 5: Common Stock
New Shares Issued - During 2002, Unitil did not issue any additional shares of
its common stock. The Company raised $287,142 and $639,000 of additional common
equity capital through the issuance of 11,279 and 22,916 shares of common stock
in connection with the Dividend Reinvestment and Stock Purchase Plan (DRP)
during 2001 and 2000, respectively. The DRP provides participants in the plan a
method for investing cash dividends on the Company's Common Stock and cash
payments in additional shares of the Company's Common Stock.
Shares Repurchased, Cancelled and Retired - During 2002, Unitil did not
repurchase, cancel and retire any of its common stock. During 2001, in
conjunction with the SEC's Emergency Orders of September 14 and 21, 2001, which
suspended the applicability of certain of the conditions contained in its Rule
10b-18, the Company implemented an interim Common Stock repurchase program.
Under this program, the Company used its cash on hand to repurchase, cancel and
retire 2,500 shares of its outstanding Common Stock at a total cost of $58,500.
The SEC has since lifted its suspension of the aforementioned conditions and
accordingly, the Company's interim Common Stock repurchase program is no longer
in effect.
Stock-Based Compensation Plans - Unitil maintains two stock option plans, which
provide for the granting of options to key employees. Details of the plan are as
follows:
Unitil Corporation Key Employee Stock Option Plan - The "Unitil Corporation Key
Employee Stock Option Plan" was a 10-year plan which began in March 1989. The
number of shares granted under this plan, as well as the terms and conditions of
each grant, were determined by the Key Employee Stock Option Plan Committee of
the Board of Directors, subject to plan limitations. All options granted under
this plan vested upon grant. The 10-year period in which options could be
granted under this plan expired in March 1999. The expiration date of the
remaining outstanding options is November 3, 2007. The plan provides dividend
equivalents on options granted, which are recorded at fair value as compensation
expense. The total compensation expenses recorded by the Company with respect to
this plan were $43,000, $42,000 and $38,000 for the years ended December 31,
2002, 2001 and 2000, respectively.
39
Share Option Activity of the "Unitil Corporation Key Employee Stock Option Plan"
is presented in the following table:
2002 2001 2000
------------------------------------------------
Beginning Options Outstanding and Exercisable 30,996 29,358 27,976
Dividend Equivalents Earned 1,649 1,638 1,382
Options Exercised ---- ---- ----
------------------------------------------------
Ending Options Outstanding and Exercisable 32,645 30,996 29,358
================================================
Range of Option Exercise Price per Share $12.11-$18.28 $12.11-$18.28 $12.11-$18.28
Weighted Average Remaining Contractual Life 4.9 years 5.9 years 6.9 years
Unitil Corporation 1998 Stock Option Plan - The "Unitil Corporation 1998 Stock
Option Plan" became effective on December 11, 1998. The number of shares granted
under this plan, as well as the terms and conditions of each grant, are
determined by the Compensation Committee of the Board of Directors, subject to
plan limitations. All options granted under this plan vest over a three-year
period from the date of the grant, with 25% vesting on the first anniversary of
the grant, 25% vesting on the second anniversary, and 50% vesting on the third
anniversary. Under the terms of this plan, key employees may be granted options
to purchase the Company's Common Stock at no less than 100% of the market price
on the date the option is granted. All options must be exercised no later than
10 years after the date on which they were granted. The total compensation
expenses recorded by the Company with respect to this plan were $278,000,
$251,000 and $144,000 for the years ended December 31, 2002, 2001 and 2000,
respectively.
2002 2001 2000
-------------------------------------------------------------------------
Average Average Average
Number of Exercise Number of Exercise Number of Exercise
Shares Price Shares Price Shares Price
-------------------------------------------------------------------------
Beginning Options Outstanding 172,500 $ 26.99 113,500 $ 27.64 62,000 $ 23.38
Options Granted ---- ---- 60,000 $ 25.88 55,000 $ 32.18
Options Forfeited ---- ---- (1,000) $ 33.56 (3,500) $ 23.38
-------------------------------------------------------------------------
Ending Options Outstanding 172,500 $ 26.99 172,500 $ 26.99 113,500 $ 27.64
=========================================================================
Options Vested and Exercisable-
end of year 100,500 $ 26.11
The Company has adopted SFAS No. 123, "Accounting for Stock Based Compensation,"
and recognizes compensation costs at fair value at the date of grant.
The following summarizes certain data for options outstanding at December 31,
2002:
Weighted Options Weighted
Range of Options Average Vested and Average Remaining
Exercise Prices Outstanding Exercise Price Exercisable Exercise Price Contractual Life
$20.00-$24.99 58,500 $23.38 58,500 $23.38 6.2 years
$25.00-$29.99 60,000 $25.88 15,000 $25.88 8.1 years
$30.00-$34.99 54,000 $32.15 27,000 $32.15 7.1 years
------------- -----------
172,500 100,500
============= ===========
40
There were no options granted during 2002. The weighted average fair value per
share of options granted during 2001 and 2000 was $4.66 and $7.13, respectively.
The fair value of options at the date of grant was estimated using the
Black-Scholes model with the following weighted average assumptions:
2002 2001 2000
-------------------------------------
Expected Life (years) N/A 10.0 10.0
Interest Rate N/A 5.8% 6.0%
Volatility N/A 23.6% 22.3%
Dividend Yield N/A 5.3% 4.3%
Restrictions on Retained Earnings - Unitil Corporation has no restriction on the
payment of common dividends from retained earnings.
Its two retail distribution subsidiaries, UES and FG&E, do have restrictions.
Under the terms of the First Mortgage Bond Indentures, UES had $9,313,000
available for the payment of cash dividends on its Common Stock at December 31,
2002. Under the terms of long-term debt purchase agreements, FG&E had $5,144,000
of retained earnings available for the payment of cash dividends on its Common
Stock at December 31, 2002.
In addition, under the terms of the NHPUC's Order in Docket DE 01-247, UES'
ability to issue dividends on its common stock is restricted to an annual
maximum of $1,794,000. This restriction will remain in place until UES files its
next base rate case with the NHPUC, which UES is required to file within the
next five years.
Note 6: Preferred Stock
Unitil's two distribution operating subsidiaries, UES and FG&E, have redeemable
Cumulative Preferred Stock outstanding and one subsidiary, UES, has a
Non-Redeemable, Non-Cumulative Preferred Stock issue outstanding. These
subsidiaries are required to offer to redeem annually a given number of shares
of each series of Redeemable Cumulative Preferred Stock and to purchase such
shares that shall have been tendered by holders of the respective stock. All
such subsidiaries may redeem, at their option, the Redeemable Cumulative
Preferred Stock at a given redemption price, plus accrued dividends.
The aggregate purchases of Redeemable Cumulative Preferred Stock during 2002,
2001 and 2000 related to the annual redemption offer were $34,500, $81,000 and
$67,500, respectively. The aggregate amount of sinking fund requirements of the
Redeemable Cumulative Preferred Stock for each of the five years following 2002
are $192,000 per year.
Also, during 2002, in conjunction with the merger of E&H into CECo to form UES,
the 5% and 6% series of Redeemable Cumulative Preferred Stock were
fully-redeemed at par plus premiums of 2% and 3%, respectively. These
redemptions and related premiums resulted in an aggregate expenditure of
$258,720.
Note 7: Long-Term Debt and Interest Expense
Substantially all the property and franchises of Unitil's utility operating
subsidiaries are subject to liens of indenture under which First Mortgage bonds
have been issued. Certain of the Company's long-term debt agreements contain
provisions which, among other things, limit the incursion of additional
long-term debt.
Total aggregate amount of sinking fund payments relating to bond issues and
normal scheduled long-term debt repayments amounted to $3,225,444, $3,208,000
and $1,254,946 in 2002, 2001 and 2000, respectively.
The aggregate amount of bond sinking fund requirements and normal scheduled
long-term debt repayments for each of the five years following 2002 is: 2003 -
$3,244,156, 2004 - $3,264,421, 2005 - $286,368, 2006 - $310,136 and 2007 -
$335,877.
41
The fair value of the Company's long-term debt is estimated based on the quoted
market prices for the same or similar issues, or on the current rates offered to
the Company for debt of the same remaining maturities. In management's opinion,
the carrying value of the debt approximated its fair value at December 31, 2002
and 2001.
The Company also provides limited guarantees on certain energy contracts entered
into by its regulated subsidiary companies. The Company's policy is to limit
these guarantees to two years or less. As of December 31, 2002, there are $1.8
million of guarantees outstanding and these guarantees extend through October
15, 2004.
Interest Expense, net - Interest expense is presented in the financial
statements, net of Interest Income. In 2002, Interest Expense, net, increased
primarily due to the refinancing of lower cost short-term debt with higher cost
long-term debt and additional borrowings to support the Company's capital
requirements. Total interest expense was $9.3 million, $9.1 million and $8.6
million in 2002, 2001 and 2000, respectively, and increased due to higher debt
outstanding in each of those years. Interest income was $2.3 million, $2.3
million and $1.8 million in 2002, 2001 and 2000, respectively, primarily
reflecting interest earned on recoverable deferred charge balances related to
industry restructuring.
Note 8: Credit Arrangements
At December 31, 2002, Unitil had unsecured committed bank lines for short-term
debt in the aggregate amount of $38.0 million with three banks for which it pays
commitment fees. The weighted average interest rates on all short-term
borrowings were 2.18%, 4.78% and 6.57% during 2002, 2001 and 2000, respectively.
Note 9: Leases
Unitil's subsidiaries conduct a portion of their operations in leased facilities
and also lease some of their machinery and office equipment. FG&E had a 22-year
facility lease in which the Primary Term was scheduled to end on January 31,
2003. On February 1, 2002, a 10-year Extended Term commenced extending the lease
term through February 2012. Furthermore, the amended lease agreement allows for
three additional five-year renewal periods at the option of FG&E. In addition,
Unitil's subsidiaries lease some equipment under operating leases.
The following is a schedule of the leased property under capital leases by major
classes:
Asset Balances at December 31,
Classes of Utility Plant (000's) 2002 2001
--------------------------------------------------------------------
Common Plant $ 7,095 $ 7,146
Less: Accumulated Depreciation 3,761 3,213
----------------------------
Net Plant $ 3,334 $ 3,933
============================
The following is a schedule by years of future minimum lease payments and
present value of net minimum lease payments under capital leases, as of December
31, 2002:
Year Ending December 31, (000's)
--------------------------------------------------------------------
2003 $ 1,130
2004 862
2005 602
2006 310
2007 274
2008 - 2012 1,356
------------
Total Minimum Lease Payments $ 4,534
Less: Amount Representing Interest 1,200
------------
Present Value of Net Minimum Lease Payments $ 3,334
============
Total rental expense charged to operations for the years ended December 31,
2002, 2001 and 2000 amounted to $4,000, $12,000 and $21,000, respectively. There
are no material future operating lease payment obligations at December 31, 2002.
42
Note 10: Income Taxes
Federal Income Taxes were provided for the following items for the years ended
December 31, 2002 2001and 2000, respectively:
2002 2001 2000
---------------------------------------
Current Federal Tax Provision (Benefit) (000's):
Operating Income $ 1,960 $ 3,566 $ (9)
Amortization of Investment Tax Credits (51) (153) (256)
---------------------------------------
Total Current Federal Tax Provision (Benefit) 1,909 3,413 (265)
---------------------------------------
Deferred Federal Tax Provision (Benefit) (000's)
Accelerated Tax Depreciation 68 (401) 183
Abandoned Properties (705) (767) (863)
Accrued Revenue 1,118 691 3,604
Allowance for Funds Used During Construction (32) (42) (48)
Post Retirement Benefits Other Than Pensions (38) (34) (29)
Deferred Pensions 86 89 275
Regulatory Assets and Liabilities 70 37 (186)
Deferred Gain on Sale of New Haven Harbor ---- ---- 125
Contributions in Aid of Construction (231) (251) (106)
Difference in Prior Year Taxes as Filed 72 312 149
Other (119) (197) (38)
---------------------------------------
Total Deferred Federal Tax Provision (Benefit) 289 563 3,066
---------------------------------------
Total Federal Tax Provision $ 2,198 $ 2,850 $ 2,801
=======================================
The components of the Federal and State income tax provisions reflected as
operating expenses in the accompanying consolidated statements of earnings for
the years ended December 31, 2002, 2001 and 2000 were as follows:
Federal and State Tax Provisions (000's) 2002 2001 2000
- ---------------------------------------------------------------------------------------------
Federal
Current $ 1,960 $ 3,566 $ (9)
Deferred 289 (563) 3,066
Amortization of Investment Tax Credits (51) (153) (256)
---------------------------------------
Total Federal Tax Provision 2,198 2,850 2,801
---------------------------------------
State
Current (275) 615 155
Deferred 567 (44) 457
---------------------------------------
Total State Tax Provision 292 571 612
---------------------------------------
Federal and State Income Taxes - Operating Expenses $ 2,490 $ 3,421 $ 3,413
=======================================
In 2001, the Company provided for a deferred tax benefit of $1.3 million on the
capital loss from the write-down of its investment in Enermetrix. The Company
recognized the benefit in 2002 of this capital loss as a carryback against
capital gains in its tax return. Also in the third quarter of 2001, the Company
recorded a deferred tax benefit of $1.4 million as adjustments to deferred taxes
recognized when the Company recorded the extraordinary item.
43
The differences between the Company's provisions for Income Taxes and the
provisions calculated at the statutory federal tax rate, expressed in
percentages, are shown below:
2002 2001 2000
-----------------------------------
Statutory Federal Income Tax Rate 34% 34% 34%
Income Tax Effects of:
State Income Taxes, Net 2 4 4
Investment Tax Credits (1) (1) (2)
Abandoned Property (8) (6) (6)
Other, Net 2 (1) 2
-----------------------------------
Effective Income Tax Rate 29% 30% 32%
===================================
Temporary differences which gave rise to deferred tax assets and liabilities are
shown below:
Deferred Income Taxes (000's) 2002 2001
---------------------------------------------------------------------
Accelerated Depreciation $ 24,140 $ 24,020
Abandoned Property 2,547 4,845
Contributions in Aid of Construction (3,654) (3,360)
Percentage Repair Allowance 2,038 2,165
Retirement Loss - Plant Assets 2,924 3,177
Employee Benefit Plans 3,624 3,551
Regulatory Assets and Liabilities 7,087 7,828
Deferred Charges 7,820 5,954
Investment Write-down ---- (1,236)
Other 806 169
--------------------------
Total Deferred Income Tax $ 47,332 $ 47,113
==========================
Due to a change in New Hampshire State tax regulations and in accordance with
SFAS No. 109, "Accounting for Income Taxes," the Company recorded an adjustment
to Deferred Income Taxes and an offsetting adjustment to Regulatory Assets of
$6.1 million in 2001.
Note 11: Energy Supply
Massachusetts:
Joint Owned Units - FG&E is participating, on a tenancy-in-common basis, with
other New England utilities, in the ownership of one generating unit. Wyman Unit
No. 4 is an oil-fired station that has been in commercial operation since
December 1978. FG&E's 0.217% interest in Millstone Nuclear Generating Station
Unit No. 3 (Millstone 3), which has been in commercial operation since April
1986, was sold to Dominion Resources, Inc. effective April 1, 2001.
Kilowatt-hour generation and operating expenses of the joint ownership unit is
divided on the same basis as ownership. FG&E's proportionate costs are reflected
in the Consolidated Statements of Earnings. In accordance with the Massachusetts
Restructuring Act, and pursuant to the power supply divestiture discussed below,
FG&E began selling the entire output from its joint ownership generating units
on February 1, 2000. Revenues from this sale reflect collection of the costs
associated with FG&E's ownership interest in these generation units.
Accordingly, these expenses do not have an impact on net income. Information
with respect to FG&E's ownership in Wyman Unit No. 4, at December 31, 2002, is
shown below:
Company's
Proportionate Share of Net Book
Joint Ownership Unit State Ownership % Total MW Value (000's)
- ---------------------------------------------------------------------------------------
Wyman Unit No. 4 ME 0.1822 1.13 $ 71
Purchased Power and Gas Supply Contracts - FG&E has commitments under long-term
contracts for the purchase of electricity and gas from various suppliers.
Generally, these contracts are for fixed periods and require payment of demand
and energy charges. Total annual costs under these contracts are included in
Fuel and
44
Purchased Power and Gas Purchased for Resale in the Consolidated Statements of
Earnings. These costs are recoverable in revenues under various cost recovery
mechanisms. In accordance with the Restructuring Act, and pursuant to the power
supply divestiture discussed below, FG&E began selling the entire output from
its power supply contracts on February 1, 2000.
Under the Restructuring Act, customers not purchasing electric power from
competitive suppliers are eligible either for Standard Offer Service (SOS) or
for Default Service. Many of FG&E's customers are currently eligible for SOS
service. On March 1, 1999, FG&E entered into a contract with Constellation Power
Source to procure power needed to serve the SOS load. The contract will continue
through February 28, 2005. The power required to meet Default Service is
currently being procured through six-month contracts that expire May 31, 2003.
In accordance with MDTE regulations, FG&E will conduct periodic Request for
Proposals (RFP) to procure Default Service at market prices. The next RFP will
be used to procure Default Service effective June 1, 2003.
Power Supply Divestiture - In January 2000, the MDTE approved FG&E's agreement
to sell the output from its remaining electric power supply portfolio to Select
Energy Inc., a subsidiary of Northeast Utilities. FG&E initiated its electric
restructuring process, including the divestiture and sale of its power supply
portfolio, in 1998, in response to the Restructuring Act. Under the Select
Energy contract, which went into effect February 1, 2000, FG&E began selling the
entire output from its remaining power contracts and the output of its two joint
ownership units to Select Energy. Upon the sale of FG&E's share of Millstone 3,
this portion of the contract sale ceased.
FG&E has been allowed recovery of its transition costs, including the
above-market or stranded generation and power-supply related costs, via a
non-bypassable uniform transition charge. The recoverable transition costs,
which have been recorded on FG&E's balance sheet at December 31,2002, as
Regulatory Assets, include $81.1 million of purchased power contracts and $12.3
million of recoverable generation-related assets.
New Hampshire:
Purchased Power Contracts - Unitil Power has commitments under long-term
contracts for the purchase of electricity from various suppliers. These
wholesale contracts are generally for fixed periods and require payment of
demand and energy charges. The total costs under these contracts are included in
Fuel and Purchased Power in the Consolidated Statements of Earnings and are
normally recoverable in revenues under various cost recovery mechanisms.
UES, upon the implementation of customer choice, will be required to acquire and
provide transition service power supply to its customers for up to three years.
All existing and new customers will be eligible to receive transition service.
To the extent that UES customers choose a third party supplier for their power
supply and then subsequently return to UES for service, UES will be obligated to
provide default service power supply to these customers.
Power Supply Divestiture - On January 25, 2002, Unitil Power, along with CECo
and E&H, filed a comprehensive electric restructuring proposal under which its
long-term power supply contracts would be sold and/or assigned through a
competitive auction process to a third party and the remaining financial
obligations recovered in their entirety through a retail stranded cost charge.
This proposal included the introduction of customer choice consistent with the
New Hampshire restructuring law, the divestiture of Unitil Power's power supply
portfolio, the recovery of stranded costs, the combination of CECo and E&H into
a planned successor and new distribution rates for the combined company. On
October 25, 2002, the NHPUC approved a multi-party settlement on all major
issues in the proceeding. Under Unitil's approved restructuring plan, Unitil
will divest its existing power supply portfolio and conduct a solicitation for
new power supplies from which to meet its ongoing transition and default service
energy obligations. On February 26, 2003, Unitil filed for final NHPUC approval
of the executed agreements resulting from these divestiture and solicitation
processes, including final tariffs for stranded cost recovery and transition and
default services. The filing proposed a recovery period of approximately eight
years for stranded costs. The implementation of customer choice is targeted for
May 1, 2003.
The Unitil Settlement approved in October 2002, provides for full stranded cost
recovery by UES, and otherwise resolves all of the issues in the federal court
action. The Company has estimated its recoverable stranded costs at $94.5
million, which have been recorded on UES' balance sheet as Regulatory Assets and
Power Supply Buyout Obligations.
45
Note 12: Benefit Plans
Pension Plans - Unitil has a defined benefit pension plan covering substantially
all its employees. The retirement benefits are based upon the employee's level
of compensation and length of service. The Company records annual expense and
accounts for its pension plan in accordance with SFAS No. 87, "Employers'
Accounting for Pensions."
The following table provides the components of net periodic expense (income) for
the plan for years 2002, 2001 and 2000:
Net Periodic Expense (Income) (000's) 2002 2001 2000
- ---------------------------------------------------------------------------------------------
Service Cost $ 1,116 $ 914 $ 850
Interest Cost 2,797 2,639 2,552
Expected Return on Plan Assets (4,181) (4,439) (4,356)
Amortization of Transition Obligation ---- 84 85
Amortization of Prior-Service Cost 102 96 98
Recognized Net Actuarial (Gain) ---- (10) (105)
----------------------------------------------
Net Periodic Benefit Income $ (166) $ (716) $ (876)
----------------------------------------------
Reconciliation of Projected Benefit
Obligations (000's):
- ---------------------------------------------------------------------------------------------
Beginning of Year $ 38,922 $ 35,348 $ 33,371
Service Cost 1,116 914 850
Interest Cost 2,797 2,639 2,552
Amendments 78 ---- (80)
Actuarial (Gain) Loss 1,997 2,173 749
Benefit Payments (2,165) (2,152) (2,094)
----------------------------------------------
End of Year $ 42,745 $ 38,922 $ 35,348
----------------------------------------------
Reconciliation of Fair Value of Plan
Assets (000's):
- ---------------------------------------------------------------------------------------------
Beginning of Year $ 40,943 $ 45,422 $ 45,783
Actual Return of Plan Assets (4,534) (2,327) 1,733
Benefit Payments (2,165) (2,152) (2,094)
----------------------------------------------
End of Year $ 34,244 $ 40,943 $ 45,422
----------------------------------------------
Funded Status (000's):
- ---------------------------------------------------------------------------------------------
Funded Status at December 31 $ (8,501) $ 2,021 $ 10,074
Unrecognized Transition Obligation ---- ---- 84
Unrecognized Prior-Service Cost 919 942 1,038
Unrecognized Loss (Gain) 18,461 7,749 (1,200)
----------------------------------------------
Subtotal 10,879 10,712 9,996
Effect of Regulatory Order (10,879) ---- ----
----------------------------------------------
Prepaid Pension Cost $ ---- $ 10,712 $ 9,996
----------------------------------------------
Unitil had an Accumulated Benefit Obligation (ABO) of $35.3 million, $31.3
million and $29.5 million at December 31, 2002, 2001 and 2000, respectively.
The Effect of Regulatory Order, noted in the table above, is discussed below.
In December 2002, FG&E and UES filed requests with their respective state
regulatory commissions for approval of an accounting order to mitigate certain
accounting requirements related to pension plan assets which have been triggered
by the substantial decline in the capital markets. Due to this decline, at
December 31, 2002, the Company's ABO of $35.3 million exceeded its Fair Value of
Plan Assets of $34.2 million, which created an additional minimum liability of
$1.1 million to be recognized for pension accounting purposes under SFAS No. 87.
The respective state regulatory commissions approved these requests in December
2002. These approvals allow FG&E and UES to treat its additional minimum pension
liability and Prepaid Pension Costs as Regulatory Assets
46
under SFAS No. 71 and avoid the reduction in equity through comprehensive income
that would otherwise be required by SFAS No. 87. These regulatory Orders do not
pre-approve the amount of pension expense to be recovered in future rates. Such
recovery will be subject to review and approval in future rate proceedings.
Based on these approvals, the Company included the additional minimum pension
liabilities of $1.1 million plus Prepaid Pension Costs of $10.9 million, or a
total of $12.0 million, in Regulatory Assets on its balance sheet.
Plan assets are primarily made up of 60% equity and 40% fixed income
investments. Fluctuations in actual equity market returns as well as changes in
general interest rates may result in increased or decreased pension benefit
costs and cash funding requirements in future periods. Likewise, changes in
assumptions regarding discount rates and expected rates of return on plan assets
could also increase or decrease pension benefit costs and cash funding
requirements in future periods. The weighted average discount rates used in
determining the Projected Benefit Obligation in 2002, 2001 and 2000 were 7.00%,
7.25% and 7.75%, respectively. The rate of increase in future compensation
levels was 4.00% and the expected long-term rate of return on assets was 9.25%
in 2002, 2001 and 2000.
Unitil Service has a Supplemental Executive Retirement Plan (SERP). The SERP is
an unfunded retirement plan with participation limited to executives selected by
the Board of Directors. The cost associated with the SERP amounted to
approximately $137,000, $136,000 and $112,000 for the years ended December 31,
2002, 2001 and 2000, respectively.
Employee 401(k) Tax Deferred Savings Plan - Unitil sponsors a defined
contribution plan under Section 401(k) of the Internal Revenue Code, covering
substantially all of the Company's employees. Participants may elect to defer
current compensation by contributing to the plan. The Company matches
contributions, with a maximum matching contribution of 3% of current
compensation. Employees may direct, at their sole discretion, the investment of
their savings plan balances both the employer and employee portions into a
variety of investment options, including a Company Common Stock fund.
Participants are 100% vested in contributions made on their behalf, once they
have completed three years of service. The Company's share of contributions to
the plan were $483,000, $446,000 and $425,000 for the years ended December 31,
2002, 2001 and 2000, respectively.
Post-Retirement Benefits - Unitil's subsidiaries provide health care benefits to
retirees for a 12-month period following their retirement. The Company's
subsidiaries continue to provide life insurance coverage to retirees. Life
insurance and limited health care post-retirement benefits require the Company
to accrue post-retirement benefits during the employee's years of service with
the Company and the recognition of the actuarially determined total
post-retirement benefit obligation earned by existing retirees. At December 31,
2002, 2001 and 2000, the accumulated post-retirement benefit obligation
(transition obligation) was approximately $214,000, $235,000 and $257,000,
respectively, and the period cost associated with these benefits for 2002, 2001
and 2000 was approximately $119,000, $107,000 and $90,000, respectively. This
obligation is being recognized on a delayed basis over the average remaining
service period of active participants, and such period will not exceed 20 years.
In addition, the Company made payments of $1.2 million, $1.0 million and $0.9
million in 2002, 2001 and 2000 respectively, to the Unitil Retiree Trust (URT)
in return for certain advisory services rendered to the Company in those years.
URT is an organization of retirees, incorporated in 1993, to advise Unitil
Corporation regarding customer service and retirement issues and to provide
social, health and welfare benefits to its members, who are eligible former
employees of the Company. URT is under the direction of an independent Board of
Trustees whose voting members are comprised of former employees of the Company,
elected by and from the membership of URT. URT is not a subsidiary of Unitil
Corporation.
47
Note 13: Earnings Per Share
The following table reconciles basic and diluted earnings per share, assuming
all outstanding stock options were converted to common shares per SFAS No. 128,
"Earnings per Share."
(000's except share and per share data) 2002 2001 2000
- ------------------------------------------------------------------------------------------------------
Income before Extraordinary Item $ 5,835 $ 4,770 $ 6,953
Extraordinary Item, net of tax ---- (3,937) ----
---------------------------------------------
Earnings Available to Common Shareholders $ 5,835 $ 833 $ 6,953
=============================================
Weighted Average Common Shares Outstanding - Basic 4,743,696 4,743,576 4,723,171
Plus: Diluted Effect of Incremental Shares -
from Assumed Conversion 18,470 16,246 19,574
Weighted Average Common Shares Outstanding - Diluted 4,762,166 4,759,822 4,742,745
Earnings per Share:
Income before Extraordinary Item $ 1.23 $ 1.01 $ 1.47
Extraordinary Item, net of tax --- $ (0.83) $ ---
---------------------------------------------
Earnings Available to Common Shareholders $ 1.23 $ 0.18 $ 1.47
=============================================
Weighted average options to purchase 54,000, 114,000 and 55,000 shares of Common
Stock were outstanding during 2002, 2001 and 2000, respectively, but were not
included in the computation of Weighted Average Common Shares Outstanding for
purposes of computing diluted earnings per share, because the effect would have
been antidilutive.
Note 14: Segment Information
Unitil reported four segments: utility electric operations, utility gas
operations, other, and non-regulated. Unitil is engaged principally in the
retail sale and distribution of electricity in New Hampshire and both electric
and gas service in Massachusetts through its retail distribution subsidiaries
UES and FG&E. The Company's wholesale electric power subsidiary, Unitil Power,
principally provides all the electric power supply requirements to UES for
resale at retail. Unitil Resources provides an energy brokering service, through
Usource, as well as various energy consulting activities. Unitil Realty and
Unitil Service provide centralized facilities, operations and administrative
services to support the affiliated Unitil companies.
Unitil Realty and Unitil Service are included in the "Other" column of the table
below. Unitil Service provides centralized management and administrative
services, including information systems management and financial record keeping.
Unitil Realty owns certain real estate, principally the Company's corporate
headquarters. Unitil Resources and Usource are included in the Non-Regulated
column below.
The segments follow the same accounting policies as described in the Summary of
Significant Accounting Policies. Intersegment sales take place at cost and the
effects of all intersegment and/or intercompany transactions are eliminated in
the consolidated financial statements. Segment profit or loss is based on profit
or loss from operations after income taxes. Expenses used to determine operating
income before taxes are charged directly to each segment or are allocated based
on factors under the 1935 Act rules and contained in cost-of-service studies,
which were included in rate applications approved by the NHPUC and MDTE. Assets
allocated to each segment are based upon specific identification of such assets
provided by Company records.
48
The following table provides significant segment financial data for the years
ended December 31, 2002, 2001 and 2000:
Year Ended December 31, 2002 (000's) Non-
Electric Gas Other Regulated Eliminations Total
- -----------------------------------------------------------------------------------------------------------------------
Revenues $ 167,317 $ 20,283 $ 30 $ 756 $ 188,386
Depreciation and Amortization 10,793 1,998 1,922 198 14,911
Interest, net 4,693 1,692 654 18 7,057
Income Taxes 3,519 (458) (46) (525) 2,490
Segment Profit 6,249 (206) 456 (664) 5,835
Identifiable Segment Assets 384,862 85,366 24,500 1,958 (15,903) 480,783
Capital Expenditures 16,676 3,859 290 ---- 20,825
Year Ended December 31, 2001 (000's)
- -----------------------------------------------------------------------------------------------------------------------
Revenues $ 183,780 $ 22,828 $ 30 $ 384 $ 207,022
Depreciation and Amortization 9,025 1,760 1,753 229 12,767
Interest, net 4,388 1,576 829 4 6,797
Income Taxes 4,527 (457) 2 (651) 3,421
Segment Profit 8,771 (771) 172 (1,002) 7,170
Investment Write-down, net of tax ---- ---- (2,400) ---- (2,400)
Extraordinary Item, net of tax (3,937) ---- ---- ---- (3,937)
Identifiable Segment Assets 288,013 87,851 23,679 834 (23,615) 376,762
Capital Expenditures 14,328 4,817 745 ---- 19,890
Year Ended December 31, 2000 (000's)
- -----------------------------------------------------------------------------------------------------------------------
Revenues $ 160,023 $ 22,756 $ 31 $ 131 $ 182,941
Depreciation and Amortization 8,815 1,575 1,344 230 11,964
Interest, net 4,797 1,370 627 26 6,820
Income Taxes 4,051 199 14 (851) 3,413
Segment Profit 7,923 662 46 (1,678) 6,953
Identifiable Segment Assets 286,437 89,917 24,079 994 (18,460) 382,967
Capital Expenditures 14,066 3,821 3,205 ---- 21,092
Note 15: Commitments and Contingencies
Regulatory Matters -
The Unitil Companies are regulated by various federal and state agencies,
including the SEC, the FERC and state regulatory authorities with jurisdiction
over public utilities, including the NHPUC and the MDTE. In recent years, there
has been significant legislative and regulatory activity to restructure the
utility industry in order to introduce greater competition in the supply and
sale of electricity and gas, while continuing to regulate the distribution
operations of Unitil's utility operating subsidiaries. Unitil implemented the
restructuring of its electric operations in Massachusetts in 1998 and is
implementing a restructuring settlement for its New Hampshire electric
operations that is expected to be on May 1, 2003.
Massachusetts Electric Operations Restructuring - Beginning March 1, 1998, FG&E
implemented its Restructuring Plan under the Massachusetts Restructuring Act.
FG&E completed the divestiture of its entire regulated power supply business in
2000 in accordance with the Restructuring Plan. All FG&E distribution customers
must pay a transition charge that provides for the recovery of costs associated
with FG&E's power portfolio which were stranded as a result of the divestiture
of those assets. The plant and Regulatory Asset balances that will be recovered
through the transition charge have been approved by the MDTE as part of FG&E's
annual Reconciliation Filings. The Restructuring Act also requires FG&E to
obtain power for retail customers who choose not to buy energy from a
competitive supplier through either SOS or Default Service. FG&E must provide
SOS through February 2005 at rate levels which guarantee rate reductions
required by the Restructuring Act. New distribution customers and customers no
longer eligible for SOS are eligible to receive Default Service at prices set
periodically based on market solicitations as approved by regulators. As of
December 31, 2002, competitive suppliers were serving approximately 20% of
FG&E's load, mainly for large industrial customers.
49
As a result of the restructuring and divestiture of FG&E's entire generation and
purchased power portfolio, FG&E has accelerated the amortization of its stranded
electric generation assets and its abandoned investment in Seabrook Station, a
nuclear generating unit. FG&E earns an authorized rate of return on the
unamortized balance of these Regulatory Assets. In addition, as a result of the
rate reduction and rate cap requirements of the Restructuring Act, FG&E has been
authorized to defer the recovery of a portion of its transition costs and SOS
costs. These unrecovered amounts are also recorded as Regulatory Assets and earn
authorized carrying charges until their subsequent recovery in future periods.
In 2002, Unitil's earnings derived from these generation-related Regulatory
Assets, including carrying charges earned on deferred transition costs and SOS
costs, represented approximately 10% of net income. The value of FG&E's
Regulatory Assets is approximately $128 million at December 31, 2002, and is
expected to be amortized and recovered over the next three to nine years.
Earnings from this segment of FG&E's utility business will continue to decline
and ultimately cease.
FG&E made a total of four Reconciliation Filings in 1999, 2000, 2001 and 2002.
Rate adjustments were approved for effect during the subsequent year, subject to
further investigation. In October 2001, the MDTE issued a final Order on FG&E's
1999 Reconciliation Filing which determined the final treatment of Regulatory
Assets attributable to stranded generation costs, purchased power costs, and
related expenses for the 1999, and future, Reconciliation Filings. FG&E's 2001
Reconciliation Filing, submitted on December 2, 2001, recast its rates from 1998
through 2001 in compliance with the MDTE's final Order on its 1999 filing. On
October 15, 2002, the MDTE issued an Order approving a settlement agreement
regarding the Company's 2001 filing. Under the approved settlement, FG&E agreed
to reduce the carrying charge on deferred transition costs that will be
recovered from customers in future years. This change does not affect current
electric rates. The MDTE's October 2002 Order and associated settlement resolve
many of the issues which otherwise might have been contested in FG&E's future
Reconciliation Filings.
FG&E submitted its 2002 Reconciliation Filing on December 20, 2002. Rate
adjustments were approved for effect on January 1, 2003, subject to
investigation, resulting in a rate reduction of approximately 4.4% for
residential SOS customers. The reduction is due to a decrease in the SOS fuel
adjustment, which is not subject to the rate cap, and does not affect net
income.
Massachusetts Gas Operations Restructuring - Following a three year state-wide
collaborative process on the unbundling, or separation, of discrete services
offered by natural gas local distribution companies (LDCs), the MDTE approved
regulations and tariffs for FG&E and other LDCs to provide full customer choice
effective November 1, 2000. The MDTE ruled that LDCs would continue to have an
obligation to provide gas supply and delivery services for a five-year
transition period, with a review after three years. This review is expected to
be initiated in late 2003. The MDTE also required mandatory assignment of LDCs'
pipeline capacity to competitive marketers supplying customers during the
transition period. This mandatory capacity assignment protects LDCs from
exposure to certain stranded gas supply costs during the transition period.
New Hampshire Restructuring - On January 25, 2002, the Company's New Hampshire
electric utility subsidiaries, CECo, E&H and Unitil Power, filed a comprehensive
restructuring proposal with the NHPUC. This proposal included the introduction
of customer choice consistent with New Hampshire's electric utility industry
restructuring law, the divestiture of Unitil Power's power supply portfolio, the
recovery of stranded costs, the merger of CECo and E&H into one distribution
company and new distribution rates for the combined company. On October 25,
2002, the NHPUC approved a multi-party settlement on all major issues in the
proceeding, including stranded cost recovery for purchased power contracts. The
Company estimates that these recoverable stranded costs are approximately $94.5
million and these were recorded as Power Supply Buyout Obligations and
Regulatory Assets at December 31, 2002.
Under Unitil's approved restructuring plan, Unitil also agreed to divest its
existing power supply portfolio and conduct a solicitation for new power
supplies from which to meet its ongoing Transition and Default Service energy
obligations. On February 26, 2003, Unitil filed for final NHPUC approval of the
executed agreements resulting from these divestiture and solicitation processes,
including final tariffs for stranded cost recovery and Transition and Default
Services. The filing proposed a recovery period of approximately eight years for
stranded costs. The implementation of customer choice for UES customers is
targeted to begin May 1, 2003.
Unitil's restructuring plan is also designed to resolve the pending litigation
on this matter. In June 1997, Unitil and other New Hampshire utilities
intervened as plaintiffs in a suit filed in U.S. District Court by Northeast
Utilities' affiliate Public Service Company of New Hampshire for protection from
the NHPUC's Final Plan to restructure the New Hampshire electric utility
industry. Although the NHPUC found that CECo and E&H were entitled to full
50
interim stranded cost recovery, the NHPUC also made certain legal rulings, that,
if implemented, could affect UES's long-term ability to recover all of its
stranded costs. The Unitil Settlement, approved in October 2002, otherwise
resolves all of the issues in the federal court action. Upon receipt the
expiration of all periods of appeal with respect to the restructuring proceeding
by the NHPUC thereto, UES will implement retail choice and Unitil will withdraw
its intervention in this federal court action, with prejudice.
Wholesale Power Market Restructuring - Unitil has also been a participant in the
restructuring of the wholesale power market and transmission system in New
England, which is subject to FERC jurisdiction. New wholesale markets structured
pursuant to FERC's Standard Market Design are expected to be implemented in the
New England Power Pool during the first half of 2003 under the general
supervision of an Independent System Operator and the regulatory oversight of
the FERC.
Rate Proceedings - Prior to 2002, the last formal regulatory filings initiated
by the Company to increase base rates for Unitil's retail electric operating
subsidiaries occurred in 1985 for CECo, 1984 for FG&E, and 1981 for E&H. The
last distribution base rate increase request for FG&E's retail gas operations
occurred in 1998. In 2001, FG&E's electric base rates were investigated by the
MDTE, which resulted in an electric base rate decrease. A majority of the
Company's electric and gas operating revenues are collected under various
periodic rate adjustment mechanisms including fuel, purchased power, energy
efficiency and restructuring-related cost recovery mechanisms. Industry
restructuring will continue to change the methods of how certain costs are
recovered through the Company's regulated rates and tariffs.
On the gas side, FG&E continues to provide a multi-year refund through its Cost
of Gas Adjustment Clause in compliance with the MDTE's May 2001 Order finding
that FG&E had over-collected fuel inventory finance charges. At December 31,
2002, the unamortized balance of this refund was $1.3 million. FG&E believes a
refund is not justified or warranted and has appealed the MDTE's ruling to the
Massachusetts Supreme Judicial Court (SJC). On a preliminary motion, a single
justice of the SJC declined to stay the MDTE's Order based on a finding that
refunds made by FG&E may be recouped if FG&E prevails on the merits of its
claims. The review of the MDTE Order by the SJC is pending.
On October 25, 2002, as part of the electric restructuring settlement for
Unitil's New Hampshire utility operations described above, the Company received
approval from the NHPUC for an increase of approximately $2.0 million in annual
distribution revenues for UES, effective December 1, 2002.
On December 2, 2002, the MDTE issued an Order resulting in distribution rate
increases of $2.0 million for FG&E's electric operations and $3.0 million for
FG&E's gas operations. Increases for rising gas costs were incorporated into the
final gas rates. FG&E's new rates became effective on December 2, 2002.
On April 16, 2002, FG&E filed Performance Based Regulation (PBR) Plans with the
MDTE for both electric and gas operations. PBR is a method of setting regulated
distribution rates that provides incentives to control costs while maintaining a
high level of service quality. Under PBR, a company's earnings are tied to
performance targets, and penalties can be imposed for deterioration of service
quality. FG&E's PBR Plans were filed in conjunction with FG&E's distribution
rate filings, consistent with MDTE policy to implement PBR in the context of
base rate cases. The MDTE did not initiate investigations of the filings. On
January 6, 2003, the MDTE issued Orders closing the cases. Accordingly, FG&E's
PBR plans have no scheduled date of implementation, and conventional cost-based
regulation continues to apply.
In December 2002, FG&E and UES filed requests with their respective state
regulatory commissions for approval of an accounting Order to mitigate certain
accounting requirements related to pension plan assets, which have been
triggered by the substantial decline in the capital markets. These requests were
granted by the respective state regulatory commissions in December 2002. These
approvals allow FG&E and UES to treat the additional minimum pension liability
and Prepaid Pension Costs as Regulatory Assets under SFAS No. 71 and avoid the
reduction in equity that would otherwise be required by SFAS No. 87. These
regulatory Orders do not pre-approve the amount of pension expense to be
recovered in future rates. Such recovery will be subject to review and approval
in future rate proceedings. Based on these approvals, Unitil has included the
amount of the additional minimum pension liabilities and Prepaid Pension Costs
of $12.0 million in Regulatory Assets on its balance sheet.
51
Environmental Matters -
The Company's past and present operations include activities that are subject to
extensive federal and state environmental regulations.
Sawyer Passway MGP Site - The Company continues to work with environmental
regulatory agencies to identify and assess environmental issues at the former
manufactured gas plant (MGP) site at Sawyer Passway, located in Fitchburg,
Massachusetts. FG&E proceeded with site remediation work as specified on the
Tier 1B permit issued by the Massachusetts Department of Environmental
Protection (DEP), which allows the Company to work towards temporary remediation
of the site. Work performed in 2002 was associated with the five-year review of
the Temporary Solution submittal (Class C Response Action Outcome) under the
Massachusetts Contingency Plan that was filed for the site in 1997. Completion
of this work has confirmed the Temporary Solution status of the site for an
additional five years. A status of temporary closure requires FG&E to monitor
the site until a feasible permanent remediation alternative can be developed and
completed.
Since 1991, FG&E has recovered the environmental response costs incurred at this
former MGP site pursuant to a MDTE approved Settlement Agreement (Agreement).
The Agreement allows FG&E to amortize and recover from gas customers over
succeeding seven-year periods the environmental response costs incurred each
year. Environmental response costs are defined to include liabilities related to
manufactured gas sites, waste disposal sites or other sites onto which hazardous
material may have migrated as a result of the operation or decommissioning of
Massachusetts gas manufacturing facilities from 1882 through 1978. In addition,
any recovery that FG&E receives from insurance or third parties with respect to
environmental response costs, net of the unrecovered costs associated therewith,
are split equally between FG&E and its gas customers. The total annual charge
for such costs assessed to gas customers cannot exceed five percent of FG&E's
total revenue for firm gas sales during the preceding year. Costs in excess of
five percent will be deferred for recovery in subsequent years.
Former Electric Generating Station - The Company is remediating environmental
conditions at a former electric generating station located at Sawyer Passway,
which FG&E sold to WRW, a general partnership, in 1983. Rockware International
Corporation (Rockware), an affiliate of WRW, acquired rights to the electric
equipment in the building and intended to remove, recondition and sell this
equipment. During 1985, Rockware demolished several exterior walls of the
generating station in order to facilitate removal of certain equipment. The
demolition of the walls and the removal of generating equipment resulted in
damage to asbestos-containing insulation materials inside the building, which
had been intact and encapsulated at the time of the sale of the structure to
WRW.
When Rockware and WRW encountered financial difficulties and failed to respond
adequately to Orders of the environmental regulators to remedy the situation,
FG&E agreed to take steps at that time and obtained DEP approval to temporarily
enclose, secure and stabilize the facility. Based on that approval, between
September and December 1989, contractors retained by FG&E stabilized the
facility and secured the building. This work did not permanently resolve the
asbestos problems caused by Rockware, but was deemed sufficient for the then
foreseeable future.
Due to the continuing deterioration of this former electric generating station
and Rockware's continued lack of performance, FG&E, in concert with the DEP and
the U.S. Environmental Protection Agency (EPA), conducted further testing and
survey work during 2001 to ascertain the environmental status of the building.
Those surveys revealed continued deterioration of the asbestos-containing
insulation materials in the building.
By letter dated May 1, 2002, the EPA notified FG&E that it was a Potentially
Responsible Party for planned remedial activities at the site and invited FG&E
to perform or finance such activities. FG&E and the EPA have entered into an
Agreement on Consent, whereby FG&E, without an admission of liability, will
conduct environmental remedial action to abate and remove asbestos-containing
and other hazardous materials. FG&E has awarded contracts for all aspects of the
abatement work, which is presently ongoing. FG&E received significant coverage
from its insurance carrier. The Company believes that these funds will be
sufficient to complete this remediation and that resolution of this matter will
not have a material adverse impact on the Company's financial position.
52
The Company has recorded the estimated cost of the remediation action in Current
Liabilities and an offsetting asset reflecting insurance proceeds in Current
Assets. At the balance sheet date, net of amounts expended in 2002, the
remaining project cost was $3.7 million.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
53
PART III
Item 10. Directors and Executive Officers of the Registrant
Information required by this Item is set forth on pages 3 through 7 of the 2002
Proxy Statement as filed with the Securities and Exchange Commission on March
12, 2003.
Item 11. Executive Compensation
Information required by this Item is set forth on pages 12 through 23 of the
2002 Proxy Statement as filed with the Securities and Exchange Commission on
March 12, 2003.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information required by this Item is set forth on pages 4 through 7 and pages 16
through 18 of the 2002 Proxy Statement as filed with the Securities and Exchange
Commission on March 12, 2003.
Item 13. Certain Relationships and Related Transactions
None
54
PART IV
Item 14. Controls and Procedures
Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer, Chief Financial
Officer and Controller, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Rule 13a-14 under the
Securities Exchange Act of 1934, as amended. Based upon that evaluation, the
Chief Executive Officer, Chief Financial Officer and Controller concluded that
the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company required to be
included in the Company's periodic SEC filings.
There have been no significant changes in the Company's internal controls or in
other factors, which could significantly affect internal controls subsequent to
the date the Company carried out its evaluation.
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) and (2) -
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following financial statements are included herein under Part II, Item 8,
Financial Statements and Supplementary Data:
o Report of Independent Certified Public Accountants
o Consolidated Balance Sheets - December 31, 2002 and 2001
o Consolidated Statements of Earnings for the years ended December 31,
2002, 2001, and 2000
o Consolidated Statements of Capitalization - December 31, 2002 and 2001
o Consolidated Statements of Cash Flows for the years ended December 31,
2002, 2001, and 2000
o Consolidated Statements of Changes in Common Stock Equity for the
years ended December 31, 2002, 2001, and 2000
o Notes to Consolidated Financial Statements
The following consolidated financial statement schedule of the Company and
subsidiaries is included in Item 15(d):
o Schedule II Valuation and Qualifying Accounts for December 31, 2002,
2001, and 2000
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions, are not applicable, or information required is included in
the financial statements or notes thereto and, therefore, have been omitted.
55
(3) - List of Exhibits
Exhibit Number Description of Exhibit Reference*
- -------------- ---------------------- ----------
3.1 Articles of Incorporation Exhibit 3.1 to Form
of the Company S-14 Registration
Statement 2-93769
3.2 Articles of Amendment to the Articles of Incorporation Exhibit 3.2 to Form
Filed on March 4, 1992 and April 30, 1992 10-K for 1992
3.3 By-laws of the Company. Exhibit 3.2 to Form
S-14 Registration
Statement 2-93769
3.4 Articles of Exchange of Concord Electric Company (CECo), Exhibit 3.3 to
Exeter & Hampton Electric Company (E&H) and the Company. 10-K for 1984
3.5 Articles of Exchange of CECo, E&H, and the Company - Stipulation of Exhibit 3.4 to
the Parties Relative to Recordation and Effective Date. Form 10-K for 1984
3.6 The Agreement and Plan of Merger dated March 1, 1989 among the Exhibit 25(b) to
Company, Fitchburg Gas and Electric Light Company (FG&E) and UMC Form 8-K dated March 1,
Electric Co., Inc. (UMC). 1989
3.7 Amendment No. 1 to The Agreement and Plan of Merger dated March 1, Exhibit 28(b) to
1989 among the Company, FG&E and UMC. Form 8-K dated December
14, 1989
4.1 Twelfth Supplemental Indenture of Unitil Energy Systems, Inc., Filed herewith
successor to Concord Electric Company, dated as of December 2,
2002, amending and restating the Concord Electric Company Indenture
of Mortgage and Deed of Trust dated as of July 15, 1958.
4.2 FG&E Purchase Agreement dated March 20, 1992 for the 8.55% Senior Exhibit 4.18 to
Notes due March 31, 2004 Form 10-K for 1993
4.3 FG&E Note Agreement dated November 30, 1993 for the 6.75% Notes due Exhibit 4.18 to
November 23, 2023. Form 10-K for 1993
4.4 FG&E Note Agreement dated January 26, 1999 for the 7.37% Notes due Exhibit 4.25 to
January 15, 2028. Form 10-K for 1999
4.5 FG&E Note Agreement dated June 1, 2001 for the 7.98% Notes due June Exhibit 4.6 to
1, 2031. Form 10-Q for
June 30, 2001
4.6 Unitil Realty Corp. Note Purchase Agreement dated July 1, 1997 for Exhibit 4.22 to
the 8.00% Senior Secured Notes due August 1, 2017. Form 10-K for 1997
10.1 Unitil System Agreement dated June 19, 1986 providing that Unitil Exhibit 10.9 to
Power will supply wholesale requirements electric service to CECo Form 10-K for 1986
and E&H.
56
Exhibit Number Description of Exhibit Reference*
- -------------- ---------------------- ----------
10.2 Supplement No. 1 to Unitil System Agreement providing that Unitil Exhibit 10.8 to
Power will supply wholesale requirements electric service to CECo Form 10-K for 1987
and E&H.
10.3 Transmission Agreement between Unitil Power Corp. and Public Exhibit 10.6 to
Service Company of New Hampshire, effective November 11, 1992. Form 10-K for 1993
10.4 Form of Severance Agreement dated February 21, 1989, between the Exhibit 10.55 to
Company and the persons named in the schedule attached thereto. Form 8 dated
April 12, 1989
10.5 Key Employee Stock Option Plan effective January 17, 1989. Exhibit 10.56 to
Form 8 dated
April 12, 1989
10.6 Unitil Corporation Key Employee Stock Option Plan Award Agreement. Exhibit 10.63 to
Form 10-K for 1989
10.7 Unitil Corporation Management Performance Compensation Plan. Exhibit 10.94 to
Form 10-K/A for 1993
10.8 Unitil Corporation Supplemental Executive Retirement Plan effective Exhibit 10.95 to
as of January 1, 1987. Form 10-K/A for 1993
10.9 Unitil Corporation 1998 Stock Option Plan. Exhibit 10.12 to
Form 10-K for 1998
10.10 Unitil Corporation Management Incentive Plan. Exhibit 10.13 to
Form 10-K for 1998
10.11 Entitlement Sale and Administrative Service Agreement with Select Exhibit 10.14 to
Energy. Form 10-K for 1999
10.12 Purchase and Sale Agreement For New Haven Harbor. Exhibit 10.15 to
Form 10-K for 1999
10.13 Labor Agreement effective June 1, 2000 between CECo and The Exhibit 10.13 to
International Brotherhood of Electrical Workers, Local Union No. Form 10-K for 2000
1837.
10.14 Labor Agreement effective June 1, 2000 between E&H and The Exhibit 10.14 to
International Brotherhood of Electrical Workers, Local Union No. Form 10-K for 2000
1837.
10.15 Labor Agreement effective June 1, 2000 between FG&E and The Utility Exhibit 10.15 to
Workers of America, AFL-CIO., Local Union No. B340, The Brotherhood Form 10-K for 2000
of Utility Workers Council.
10.16 Unitil Corporation 2003 Restricted Stock Plan Filed herewith
10.17 Portfolio Sale and Assignment and Transition Service and Default Filed herewith
Service Supply Agreement By and Among Unitil Power Corp., Unitil
Energy Systems, Inc. and Mirant Americas Energy Marketing, LP
11.1 Statement Re: Computation in Support of Earnings per Share For the Filed herewith
Company.
57
Exhibit Number Description of Exhibit Reference*
- -------------- ---------------------- ----------
12.1 Statement Re: Computation in Support of Ratio of Earnings to Fixed Filed herewith
Charges for the Company.
21.1 Statement Re: Subsidiaries of Registrant. Filed herewith
23.1 Consent of Independent Certified Public Accountants Filed herewith
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Filed herewith
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* The exhibits referred to in this column by specific designations and dates
have heretofore been filed with the Securities and Exchange Commission under
such designations and are hereby incorporated by reference.
** Copies of these debt instruments will be furnished to the Securities and
Exchange Commission upon request.
(b) Report on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the year ended
December 31, 2002.
58
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Unitil Corporation
Date March 25, 2003 By /s/ Robert G. Schoenberger
-------------------------------
Robert G. Schoenberger
Chairman of the Board Directors,
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
--------- -------- ----
/s/ Robert G. Schoenberger Principal Executive March 25, 2003
- ------------------------------ Officer; Director
Robert G. Schoenberger
/s/ Michael J. Dalton Principal Operating March 25, 2003
- ------------------------------ Officer; Director
Michael J. Dalton
/s/ Mark H. Collin Principal Financial March 25, 2003
- ------------------------------ Officer
Mark H. Collin
/s/ Albert H. Elfner, III Director March 25, 2003
- ------------------------------
Albert H. Elfner, III
/s/ Ross B. George Director March 25, 2003
- ------------------------------
Ross B. George
/s/ M. Brian O'Shaughnessy Director March 25, 2003
- ------------------------------
M. Brian O'Shaughnessy
/s/ Charles H. Tenney III Director March 25, 2003
- ------------------------------
Charles H. Tenney III
/s/ Dr. Sarah P. Voll Director March 25, 2003
- ------------------------------
Dr. Sarah P. Voll
/s/ Eben S. Moulton Director March 25, 2003
- ------------------------------
Eben S. Moulton
59
/s/ David P. Brownell Director March 25, 2003
- ------------------------------
David P. Brownell
/s/ Edward F. Godfrey Director March 25, 2003
- ------------------------------
Edward F. Godfrey
/s/ Michael B. Green Director March 25, 2003
- ------------------------------
Michael B. Green
60
CERTIFICATIONS UNDER SECTION 302 OF THE SARBANES-OXLEY ACT
I, Robert G. Schoenberger, certify that:
1) I have reviewed this annual report on Form 10-K of Unitil Corporation;
2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6) The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 25, 2003
/s/ Robert G. Schoenberger
--------------------------
Robert G. Schoenberger
Chief Executive Officer
61
I, Mark H. Collin, certify that:
1) I have reviewed this annual report on Form 10-K of Unitil Corporation;
2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6) The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 25, 2003
/s/ Mark H. Collin
------------------
Mark H. Collin
Chief Financial Officer
62
I, Laurence M. Brock, certify that:
1) I have reviewed this annual report on Form 10-K of Unitil Corporation;
2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6) The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 25, 2003
/s/ Laurence M. Brock
---------------------
Laurence M. Brock
Controller, Unitil Service Corp.
63
SCHEDULE II
UNITIL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Additions
--------------------------
Balance at Charged to Charged to Deductions Balance at
Beginning Costs and Other from End of
Description of Period Expenses Accounts Reserves Period
(A) (B)
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 2002
Reserves Deducted from A/R
Electric $ 457,657 $ 323,401 $ 138,010 $ 646,869 $ 272,199
Gas 142,842 294,051 64,571 401,164 100,300
---------------------------------------------------------------------
$ 600,499 $ 617,452 $ 202,581 $ 1,048,033 $ 372,499
=====================================================================
Year Ended December 31, 2001
Reserves Deducted from A/R
Electric $ 452,872 $ 940,590 $ 86,161 $ 1,021,080 $ 457,657
Gas 142,810 54,162 656,952 711,082 142,842
---------------------------------------------------------------------
$ 595,682 $ 994,752 $ 743,113 $ 1,732,162 $ 600,499
=====================================================================
Year Ended December 31, 2000
Reserves Deducted from A/R
Electric $ 464,797 $ 455,353 $ 81,286 $ 548,564 $ 452,872
Gas 133,803 48,202 413,277 452,472 142,810
---------------------------------------------------------------------
$ 598,600 $ 503,555 $ 494,563 $ 1,001,036 $ 595,682
=====================================================================
$ 646,084 $ 807,059 $ 178,881 $ 1,033,424 $ 598,600
=====================================================================
(A) Collections on Accounts Previously Charged Off
(B) Bad Debts Charged Off
64
================================================================================
Twelfth Supplemental Indenture
Unitil Energy Systems, Inc.
(successor to Concord Electric Company)
to
U.S. Bank National Association, Trustee
Dated as of December 2, 2002
Amending and Restating the
Concord Electric Company Indenture of Mortgage and Deed of Trust
Dated as of July 15, 1958
In Connection With the Merger of
Exeter & Hampton Electric Company
into Concord Electric Company
================================================================================
Concord Electric Company
Twelfth Supplemental Indenture
Dated as of December 2, 2002
Table of Contents
Section Heading Page
Recitals.......................................................................1
Part One Restatement of Indenture..................................3
Article I Definitions...............................................7
Section 1.01. Definitions...............................................7
Article II General Provisions as to the Bonds.......................15
Section 2.01. General Limitations......................................15
Section 2.02. General Designation......................................15
Section 2.03. Series of Bonds..........................................16
Section 2.04. Form and Denomination....................................16
Section 2.05. Supplemental Indenture Creating New Series...............16
Section 2.06. Request for Authentication and Delivery of Bonds.........17
Section 2.07. Execution, Authentication, Delivery......................17
Section 2.08. Registration of Holders..................................18
Section 2.09. Persons Deemed Owners....................................18
Section 2.10. Mutilated, Destroyed, Lost and Stolen Bond...............19
Section 2.11. Temporary Bond...........................................19
Article III Bonds of the Outstanding Series and Exchange Bonds.......19
Article IV Bonds Against Property Additions.........................21
Section 4.01. Definitions for Issuing Bonds Against Property
Additions................................................21
A--Fixed Property, Property Additions..................................21
B--Purchased Property..................................................22
C--Gross Expenditures for Property Additions, Gross Expenditures.......22
D--Retirements.........................................................23
E--Net Retirements.....................................................23
F--Net Expenditures for Property Additions, Net Expenditures...........23
G--Bonded Expenditures.................................................24
H--Net Bondable Expenditures for Property Additions, Net Bondable
Expenditures........................................................24
-i-
Section 4.02. Definitions for Earnings Test..............................25
A--Gross Operating Revenues............................................25
B--Earnings Available for Interest Charges.............................25
C--Earnings Available for Interest Charges Certificate, Annual
Interest Requirements...............................................26
Section 4.03. General Provisions.......................................26
Section 4.04. Additional Bonds Against Property Additions Issuance
Tests..................................................27
Section 4.05. Documents Required for Authentication of Bonds...........27
Article V Bonds for Refunding Purposes.............................29
Section 5.01. General Provisions.......................................29
Section 5.02. Issuance Requirements....................................29
Article VI Bonds Against Cash.......................................30
Section 6.01. General Provisions.......................................30
Section 6.02. Cash Withdrawal Requirements.............................30
Article VII Redemption of Bonds......................................31
Section 7.01. Manner of Redemption.....................................31
Section 7.02. Selection of Bonds to Be Redeemed........................31
Section 7.03. Notice of Redemption.....................................32
Section 7.04. Redemption Price.........................................32
Section 7.05. Partial Redemption of Bond...............................32
Section 7.06. Deposited Moneys for Redemption..........................32
Section 7.07. Cancellation of Bonds....................................32
Section 7.08. Payment of Redemption....................................33
Article VIII General Covenants........................................33
Section 8.01. Further Actions..........................................33
Section 8.02. Payment..................................................33
Section 8.03. Maintain Title of Property...............................34
Section 8.04. Taxes and Assessment; Liens..............................34
Section 8.05. Conduct Business and Maintain Properties.................34
Section 8.06. Compliance with Underlying Mortgages.....................35
Section 8.07. Acquisition of Property Subject to Underlying Mortgages..36
Section 8.08. Records of Accounts and Certificate......................37
Section 8.09. Annual Certificate of Compliance.........................37
Section 8.10. Insurance................................................38
Section 8.11. Maintenance of Corporate Existence and Rights............38
Section 8.12. Eminent Domain...........................................39
Section 8.13. Records at Trustee.......................................40
Section 8.14. No Extensions for Claims of Interest.....................40
Section 8.15. Restricted Payments......................................40
Section 8.16. Transactions with Affiliates.............................41
-ii-
Article IX Supplemental Indentures and Indenture Modifications......41
Section 9.01. Supplemental Indentures without Consent of Bondholders...41
Section 9.02. Modification of Indenture................................42
Section 9.03. Execution of Supplemental Indenture......................43
Section 9.04. Effect of Supplemental Indenture.........................43
Article X Possession, Use and Release of Mortgaged Property........43
Section 10.01. Possession and Use of Mortgaged Property.................43
Section 10.02. Alterations to Mortgaged Property........................43
Section 10.03. Dispositions of Mortgaged Property without Release.......43
Section 10.04. Release of Mortgaged Property............................44
Section 10.04A. Application for Release of Mortgaged Property............46
Section 10.05. Purchaser Protected......................................47
Section 10.06. Company's Covenant Regarding Disposition.................47
Section 10.07. Powers Exercisable by Receiver or Trustee................47
Article XI Holding and Application of Trust Moneys..................48
Section 11.01. Trust Moneys Defined.....................................48
Section 11.02. Withdrawal or Redemption of Outstanding Bonds............48
Section 11.03. Redemption Procedures....................................49
Section 11.05. Redeemed Bonds...........................................49
Article XII Consolidations, Mergers and Sales........................50
Section 12.01. Consolidation, Merger and Sales Permitted on Certain
Terms..................................................50
Section 12.02. Successor Corporation Substituted........................52
Section 12.03. Opinion of Counsel Required..............................52
Article XIII Discharge of Indenture...................................52
Article XIV Default Provisions and Remedies..........................53
Section 14.01. Events of Default Defined................................53
Section 14.02. Acceleration of Maturity; Rescission and Annulment.......54
Section 14.03. Interest on Overdue Payments.............................56
Section 14.04. Entry Upon Mortgaged Property............................56
Section 14.05. Power of Sale............................................57
Section 14.06. Suits for Enforcement; Remedies..........................57
Section 14.07. Right of Bondholders to Direct Trustee...................58
Section 14.08. Receiver.................................................58
Section 14.09. Bonds Due and Payable Following Sale.....................58
Section 14.10. Bondholders Right to Bid at Sale.........................58
Section 14.11. Purchaser Not Responsible for Proceeds Application.......58
Section 14.13. Application of Moneys by Trustee.........................59
Section 14.14. Waiver of Appraisement and Other Laws....................59
-iii-
Section 14.15. Payment Event of the Default Suits to Protect Trust
Estate.................................................60
Section 14.16. Trustee May Enforce Claims Without Possession of Bonds...61
Section 14.17. Limitation on Bondholder Suits...........................61
Article XV The Trustee..............................................62
Section 15.01. Certain Duties and Responsibilities......................62
Section 15.02. Certain Rights of the Trustee............................63
Section 15.03. Trustee's Compensation...................................65
Section 15.04. Notice of Events of Default..............................65
Section 15.05. Intervention in Judicial Proceedings.....................66
Section 15.06. Conversion, Merger, Consolidation or Sale of Business of
Trustee................................................66
Section 15.07. Resignation of Trustee...................................66
Section 15.08. Removal of Trustee.......................................66
Section 15.09. Resignation and Removal Becoming Effective...............66
Section 15.10. Successor or Temporary Trustee...........................66
Section 15.11. Acceptance of Appointment by Successor...................67
Section 15.12. Separate Trustee or Co-Trustees..........................67
Section 15.13. Payment of Certain Charges...............................68
Section 15.14. Instruments Accepted as Conclusive Evidence..............68
Section 16.01. Immunity of Incorporators, Stockholders, Officers,
Directors and Employees................................68
Section 16.02. Evidence of Action by Bondholders; Proof of Execution....69
Section 16.03. Exclusive Benefit of Indenture...........................69
Section 16.04. Separability of Indenture Provisions.....................69
Section 16.05. Service of Notices to the Company and the Trustee........70
Section 16.06. Repayment of Unclaimed Money.............................70
Section 16.07. Certificates or Opinions to Trustee......................70
Section 16.08. Successors and Assigns...................................70
Section 16.09. Counterparts.............................................71
Section 16.11. New Hampshire Law Applicable.............................71
Signature.....................................................................73
Article One Creation of Series L bonds................................1
Article Two Redemption................................................6
Part Two Restatement of Terms and Provisions of Merger Date Series
Bonds
Part Three Terms and Provisions of Exchange Bonds
-iv-
Schedule A -- List of Property
Part I - Merrimack County Properties
Part II - Rockingham County Properties
Exhibit A -- Form of Bond
Exhibit B -- Form of Certificate of Net Bondable Expenditures
Exhibit C -- Terms and Provisions of Series I, 8.49% Bonds
Exhibit D -- Terms and Provisions of Series J, 6.96% Bonds
Exhibit E -- Terms and Provisions of Series K, 8.00% Bonds
Exhibit F -- Terms and Provisions of Series L, 8.49% Bonds
Exhibit G -- Terms and Provisions of Series M, 6.96% Bonds
Exhibit H -- Terms and Provisions of Series N, 8.00% Bonds
-v-
This Twelfth Supplemental Indenture is dated as of December 2, 2002 and
entered into by and between Unitil Energy Systems, Inc., a corporation duly
organized and existing under and by virtue of the laws of the State of New
Hampshire, having its principal office and place of business in Hampton, County
of Rockingham in the State of New Hampshire (hereinafter sometimes referred to
as the "Company"), and U.S. Bank National Association, a national banking
association (successor to Old Colony Trust Company), having an office and place
of business in Boston, Massachusetts, as Trustee (hereinafter sometimes referred
to as the "Trustee"), with reference to the following Recitals:
Recitals
The background of this Twelfth Supplemental Indenture is:
A. The Company has heretofore executed and delivered to the Trustee its
Indenture of Mortgage and Deed of Trust dated as of July 15, 1958 (hereinafter
sometimes referred to as the "Original Indenture") and has executed and
delivered to the Trustee, the following supplemental indentures thereto: (a) a
First Supplemental Indenture dated as of January 15, 1968, (b) a Second
Supplemental Indenture dated as of November 15, 1971, (c) a Third Supplemental
Indenture dated as of July 1, 1975, (d) a Fourth Supplemental Indenture dated as
of March 28, 1984, (e) a Fifth Supplemental Indenture dated as of June 1, 1984,
(f) a Sixth Supplemental Indenture dated as of October 29, 1987, (g) a Seventh
Supplemental Indenture dated as of August 29, 1991, (h) an Eighth Supplemental
Indenture dated as of October 14, 1994, (i) a Ninth Supplemental Indenture dated
as of September 1, 1998, (j) a Tenth Supplemental Indenture dated as of January
15, 2001 and (k) an Eleventh Supplemental Indenture dated as of April 20, 2001
(the Original Indenture and such supplemental indentures being sometimes
collectively referred to as the "Indenture") for the purpose of securing Bonds
of the Company to be issued in series from time to time in the manner and
subject to the conditions set forth in the indenture;
B. There are presently issued and outstanding under the Indenture the
following Bonds in the following principal amounts and with the maturity dates
indicated:
(i) $6,000,000 aggregate principal amount of the Company Series I,
8.49% Bonds due October 14, 2024;
(ii) $10,000,000 aggregate principal amount of the Company Series J,
6.96% Bonds due September 1, 2028; and
(iii) $7,500,000 aggregate principal amount of the Company Series K,
8.00% Bonds due May 1, 2031;
C. Exeter & Hampton Electric Company ("Exeter") has executed and delivered
to U.S. Bank National Association, a national banking association (successor to
Old Colony Trust Company), as Trustee, its Indenture of Mortgage and Deed of
Trust dated as of December 1, 1952 (hereinafter sometimes referred to as the
"Original Exeter Indenture") and has executed and delivered to such Trustee, the
following supplemental indentures thereto: (a) a First
Supplemental Indenture dated as of January 16, 1956, (b) a Second Supplemental
Indenture dated as of January 15, 1960, (c) a Third Supplemental Indenture dated
as of June 1, 1964, (d) a Fourth Supplemental Indenture dated as of January 15,
1968, (e) a Fifth Supplemental Indenture dated as of November 15, 1971, (f) a
Sixth Supplemental Indenture dated as of April 1, 1974, (g) a Seventh
Supplemental Indenture dated as of December 15, 1977, (h) an Eighth Supplemental
Indenture dated as of October 28, l987, (i) a Ninth Supplemental Indenture dated
as of August 29, 1991, (j) a Tenth Supplemental Indenture dated as of October
14, 1994, (k) an Eleventh Supplemental Indenture dated as of September 1, 1998
and (l) a Twelfth Supplemental Indenture dated as of April 20, 2001 (the
Original Exeter Indenture and such supplemental indentures being sometimes
collectively referred to as the "Exeter Indenture") for the purpose of securing
Bonds of Exeter to be issued in series from time to time in the manner and
subject to the conditions set forth in the indenture;
D. There are presently issued and outstanding under the Exeter Indenture
the following Bonds (the "Exeter Bonds") in the following principal amounts and
with the maturity dates indicated:
(i) $9,000,000 aggregate principal amount of the Exeter Series K,
8.49% Bonds due October 14, 2024;
(ii) $10,000,000 aggregate principal amount of the Exeter Series L,
6.96% Bonds due September 1, 2028; and
(iii) $7,500,000 aggregate principal amount of the Exeter Series M,
8.00% Bonds due May 1, 2031;
E. Prior to the Merger Date (as hereinafter defined), both the Company and
Exeter were wholly-owned subsidiaries of Unitil Corporation, a registered
holding company under the Public Utility Holding Company Act of 1935, as
amended. On December 2, 2002 (the "Merger Date"), Unitil Corporation combined
all of the operations of the Company and Exeter through the merger of Exeter
into the Company (the "Merger") pursuant to an Agreement and Plan of Merger
dated as of November 26, 2002 between the Company and Exeter (the "Merger
Agreement"). On the Merger Date the Company assumed all of the obligations of
Exeter under the Exeter Indenture and the Exeter Bonds pursuant to a Consent and
Agreement dated as of November 26, 2002 among Exeter, the Company and the
holders of the Exeter Bonds and the Bonds outstanding under the Indenture;
F. On January 24, 2003 (the "Closing Date"), (i) each holder of an Exeter
Bond will exchange such Exeter Bond for a bond issued by the Company under the
Indenture containing substantially the same terms and provisions as such Exeter
Bond (all such exchanges being collectively, the "Exchange"), (ii) the Exeter
Indenture will be cancelled and discharged and (iii) the Exeter Bonds will be
cancelled;
G. The Company, in the exercise of the power and authority conferred upon
or reserved to it by the provisions of the Indenture and pursuant to appropriate
resolutions of its Board of Directors, has duly resolved and determined to make,
execute and deliver to the Trustee
-2-
this Twelfth Supplemental Indenture (hereinafter sometimes referred to as the
"Twelfth Supplemental Indenture") in order to amend and restate the Indenture in
connection with the Merger which will be effective as of the Merger Date;
H. Exeter has obtained and filed with the Trustee the written consent of
the holders of the Exeter Bonds to the Exchange and to the restatement of and
other amendments to the Indenture which are hereinafter set forth;
I. The Company has also obtained and filed with the Trustee the written
consent of the holders of all of the Bonds under the Indenture outstanding prior
to the Merger to the restatement of and the other amendments to the Indenture
which are hereinafter set forth;
J. The Company has determined that all conditions and requirements
necessary to make this Twelfth Supplemental Indenture, in the form and terms
hereof, a valid, binding and legal agreement in accordance with its terms and
the purposes herein expressed, have been performed and fulfilled, and the
execution and delivery hereof have been in all respects duly authorized;
Now, Therefore, in consideration of the premises and of the sum of One
Dollar ($1.00) duly paid by the Trustee to the Company at or before the delivery
of these presents, and for other valuable consideration, the receipt whereof is
hereby acknowledged, the Company hereby covenants and agrees with the Trustee,
and its successors in the trust under the Indenture, for the equal benefit of
all present and future bondholders as follows:
Part One
Restatement of Indenture
The first Whereas paragraph and all provisions of the Original Indenture
which follow such paragraph including, without limitation, the Granting Clauses
and Articles I through XVI of such Original Indenture, and all of the indentures
supplemental thereto other than this Twelfth Supplemental Indenture, are hereby
amended and restated in their entirety to read as follows, provided that this
restatement shall not affect any specific terms or provisions of the Bonds
outstanding contained in the Bonds themselves except as herein or hereinafter
otherwise provided and the form of bond hereinafter issued under the Indenture
shall only be in registered form and the form of such bond to be used
hereinafter is set forth in Exhibit A hereto:
Whereas, the Company has duly authorized by law to issue, sell or otherwise
dispose of its obligations for its lawful corporate purposes and to secure the
payment of such obligations by a first mortgage and deed of trust of and upon
its properties, rights, privileges and franchises now owned or hereafter
acquired; and
Whereas the Company has deemed it necessary and advisable to borrow money
from time to time to retire its obligations and for other proper corporate
purposes, and to issue its Bonds therefor, and to mortgage and pledge its
property hereinafter described to secure the payment of said Bonds, and to that
end has authorized and directed the issue of its Bonds from time to time limited
in aggregate principal amount as hereinafter provided, to be designated as its
-3-
First Mortgage Bonds, to be issuable in one or more series, to be fully
registered Bonds without coupons, to bear such date or dates, to mature on such
date or dates, to bear interest at such rates and to contain and enjoy or to be
subject to such provisions as shall be determined by the Board of Directors of
the Company prior to the issue thereof; and
Whereas all things necessary to make the said Bonds, when authenticated by
the Trustee and issued as in this Indenture provided, valid, binding and legal
obligations of the Company, and to constitute this Indenture a valid first
mortgage and deed of trust to secure the payment of the principal of and
interest on all Bonds issued hereunder, have been done and performed, and the
creation, execution and delivery of this Indenture, and the creation, execution
and issue of said Bonds subject to the terms hereof have in all respects been
duly authorized;
Now, Therefore, This Indenture Witnesseth that, in consideration of the
premises and of the sum of $1 duly paid to the Company by the Trustee, and of
other good and valuable consideration, receipt whereof upon the ensealing and
delivery of this Indenture the Company hereby acknowledges, and in order to
secure the equal pro rata payment (except as herein otherwise provided) of both
the principal of and the interest on all of the Bonds at any time authenticated,
issued and outstanding hereunder, according to their tenor, purport and effect
and the provisions hereof, and to secure the faithful performance and observance
of all the covenants, obligations, conditions and provisions therein and herein
contained;
The Company has given, granted, bargained, sold, warranted, pledged,
assigned, transferred, mortgaged and conveyed, and by these presents does give,
grant, bargain, sell, warrant, pledge, assign, transfer, mortgage and convey,
unto the Trustee and its successors in the trusts hereof, and its and their
assigns, all and singular the following described property and rights and
interests in property, whether now owned or hereafter acquired by the Company
(all of the foregoing, with all other property and rights and interests in
property intended to be hereby conveyed, mortgaged, transferred, and assigned,
or at any time conveyed, mortgaged, pledged, transferred, assigned or delivered,
and all proceeds of any of the foregoing at any time conveyed, mortgaged,
transferred, assigned, paid or delivered to and from time to time held by the
Trustee upon the trusts hereof, being herein generally called, collectively, the
"Mortgaged Property" or "Trust Estate") and grants a security interest therein
as permitted by applicable law;
All real estate and rights and interests in and to real estate, all plants,
stations, structures, lines, facilities and other physical property used or
useful in the business of generating, producing, transmitting, distributing,
utilizing or purchasing electricity, including all machinery, equipment, tools
and other tangible personal property used or useful in connection therewith, all
dams, reservoirs, water, flowage and riparian rights and all franchises,
licenses, permits, easements and rights of way used or useful in connection with
said business, and all other property wherever located and of whatever nature,
whether real, personal or mixed, in all cases not specifically reserved and
excepted, and whether now owned or hereafter acquired by the Company, including,
without limiting the generality of the foregoing, all property specifically
described in Schedule A hereto;
Also any and all cash, stocks, shares, bonds, notes, securities and other
property which at any time hereafter, by delivery or writing of any kind for the
purposes hereof, may be expressly
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conveyed, mortgaged, pledged, delivered, assigned, transferred or paid to or
deposited with the Trustee hereunder by the Company or by a successor
corporation, or with its consent by any one in its behalf, as and for any
additional security for the Bonds issued and to be issued hereunder, the Trustee
being authorized at any and all times to receive such conveyance, mortgage,
pledge, delivery, assignment, transfer, payment or deposit, and to hold and
apply any and all such cash, stocks, shares, bonds, notes, securities and other
property in accordance with the provisions hereof and/or of such writing;
Together With all the Company's now-existing or hereafter acquired right,
title and interest in and to any and all physical property of the Company, now
or hereafter subject to any prior mortgage, pledge, charge and/or other
encumbrance or lien, and the cash and/or other proceeds therefrom, to the extent
that such property, cash and/or proceeds shall not be otherwise held and/or
applied pursuant to the requirements of any such mortgage, pledge, charge and/or
other encumbrance or lien;
And Together With all and singular the now-existing and hereafter-acquired
rights, privileges, tenements, hereditaments and appurtenances belonging or in
any wise appertaining to the aforesaid property or any part thereof, with all
reversion and reversions, remainder and remainders and, subject to the
provisions of Article X hereof, all rents, revenues, income, issues and profits
thereof, and all the estate, right, title, interest and claim whatsoever, at law
as well as in equity, which the Company now has or may hereafter acquire, in and
to all and every part of the foregoing, it being the intention to include herein
and to subject to the lien hereof all land, interests in land, real estate,
equipment, machinery and other physical assets and all franchises whether now
owned by the Company or which it may hereafter acquire and wherever situated, as
if the same were now owned by the Company and were specifically described and
conveyed hereby, except as hereinafter specified;
Subject, However, in so far as affected thereby, to any Permitted
Encumbrances as defined in Section 1.01, and, as to the property specifically
described in Schedule A hereto, to the liens, encumbrances, reservations,
restrictions, conditions, limitations, covenants, interests and exceptions, if
any, set forth or referred to in the descriptions thereof contained in said
Schedule A, none of which substantially interferes with the free use and
enjoyment by the Company of the property and rights hereinbefore described for
the general purposes and uses of the Company's electric business;
And Subject Further, as to all hereafter-acquired property of any character
hereinbefore described, in so far as affected thereby, to any mortgages,
encumbrances or liens on such after-acquired property existing at the time of
such acquisition or contemporaneously created, conforming to the provisions of
Section 8.07 hereof;
But Specifically Reserving, Excepting and Excluding from this Indenture,
and from the grant, conveyance, mortgage, transfer and assignment herein
contained (sometimes hereinafter called "Excepted Property"):
(a) all property, permits, licenses, franchises and rights, whether now
owned or hereafter acquired by the Company, which are intended to be hereby
granted, conveyed,
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mortgaged, transferred and assigned (exclusive of property specifically
described in Schedule A hereto), but which cannot be so granted, conveyed,
mortgaged, transferred or assigned without the consent of other parties whose
consent is not, after reasonable effort, secured, or without subjecting the
Trustee to a liability not otherwise contemplated by the provisions of this
Indenture, or which otherwise may not be hereby lawfully and/or effectively
granted, conveyed, mortgaged, transferred and assigned by the Company;
(b) the last day of the term of each leasehold estate (oral or written,
and/or any agreement therefor) now or hereafter enjoyed by the Company, and
whether falling within a general or particular description of property herein;
(c) all the Company's present and future fuel, merchandise held for sale,
cash on hand or in bank, books, choses in action, contracts, shares of stock,
bonds and other securities, documents and accounts and bills receivable (except
proceeds of the trust estate, and insurance and other moneys, and purchase money
obligations, required by, the provisions hereof to be paid to or deposited with
the Trustee), and materials, stores, supplies and other personal property which
are consumable (otherwise than by ordinary wear and tear) in their use in the
operation of the plants or systems of the Company; and
(d) all property of the Company which is not Public Utility Property and
which has been duly released by the Trustee from the lien hereof pursuant to
Section 10.04A and is still owned by the Company.
To Have and to Hold the Trust Estate, with all of the privileges and
appurtenances thereunto belonging, unto the Trustee, its successors in the
trusts hereof, and its and their assigns, to its and their own use, forever;
But in Trust Nevertheless for the equal pro rata benefit, security and
protection (except as provided in Section 8.14 of this Indenture and except
insofar as a sinking, improvement or analogous fund or funds, established in
accordance with the provisions of this Indenture, may afford particular security
for Bonds of one or more series) of the registered owners of the Bonds from time
to time authenticated, issued and outstanding hereunder, without (except as
aforesaid) any preference, priority or distinction whatever of any one Bond over
any other Bond by reason of priority in the issue, sale or negotiation thereof,
or otherwise;
Provided, However, and these presents are upon the condition, that if the
Company shall pay or cause to be paid the principal of and premium, if any, and
interest on the Bonds at the times and in the manner therein and herein
provided, and shall keep, perform and observe all and singular the covenants,
agreements and provisions in the Bonds and in this Indenture expressed to be
kept, performed and observed by or on the part of the Company, then this
Indenture and the estate and rights hereby granted shall, pursuant to the
provisions of Article XIII hereof, cease, determine and be void, but otherwise
shall be and remain in full force and effect.
The Company hereby declares that it holds and will hold and apply all
property described in the foregoing clauses (a), (b) and (c) in the fourth
preceding paragraph as specifically reserved
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and excepted upon the trusts herein set forth and as the Trustee (or any
purchaser thereof upon any sale thereof hereunder) shall for such purpose direct
from time to time, to the fullest extent permitted by law or in equity, as fully
as if the same could be and had been hereby granted, conveyed, mortgaged,
transferred and assigned to and vested in the Trustee.
This Indenture Further Witnesseth and it is expressly declared that all
Bonds issued and secured hereunder are to be issued, authenticated and delivered
and all said mortgaged property and trust estate is to be dealt with and
disposed of under, upon and subject to the terms, conditions, stipulations,
covenants, agreements, trusts, uses and purposes as hereinafter expressed and
the Company has agreed and covenanted and does hereby agree and covenant with
the Trustee and with the respective holders, from time to time, of the said
Bonds or any part thereof as follows, that is to say:
Article I
Definitions
Section 1.01. Definitions. As hereinafter used in this Indenture each of
the following terms shall be construed to have the meaning hereinafter specified
respectively, unless otherwise clearly indicated by the context.
"Acceptable Bank" means any bank or trust company (including the Trustee
and its affiliates) (i) which is organized under the laws of the United States
of America or any State thereof, (ii) which has capital, surplus and undivided
profits aggregating at least $100,000,000, and (iii) whose long-term unsecured
debt obligations (or the long-term unsecured debt obligations of the bank
holding company owning all of the capital stock of such bank or trust company)
shall have been given a rating of "A" or better by S&P, "A2" or better by
Moody's or an equivalent rating by any other credit rating agency of recognized
national standing.
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"Annual Interest Requirements" has the meaning set forth in Section
4.02(C).
"Available Bonds" means Bonds issued under and secured by the lien of this
Indenture, which have been purchased or redeemed by the Company but have not
been either (a) redeemed by the use of any money deposited with the Trustee for
the purposes of any sinking or
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improvement fund; (b) redeemed with moneys deposited with the Trustee pursuant
to Section 8.10, 8.12, 10.03, 10.04 or 10.04A and applied to such redemption
pursuant to Section 11.02 or 11.03; or (c) theretofore used as the basis for the
issue of Bonds under Article V, or delivered to the Trustee in lieu of payments
for any sinking or improvement fund or credited under any other requirement
hereof.
Bonds for the redemption of which moneys shall have been or are
concurrently being deposited with the Trustee shall be deemed to have been
redeemed within the meaning of this definition, provided that notice of such
redemption shall have been duly given or provision satisfactory to the Trustee
shall have been made therefor, or such notice shall have been waived.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of said board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect, and delivered to the Trustee.
"Bond" or "Bonds" means any bond or bonds that have been or may be issued
under this Indenture.
"Bonded" has the meaning set forth in Section 4.01(G).
"Business Day" means any day other than a Saturday, a Sunday or a day on
which commercial banks in Boston, New York or New Hampshire are required or
authorized to be closed.
"Certificate of Net Bondable Expenditures" has the meaning set forth in
Section 4.01(I).
"Closing Date" has the meaning set forth in paragraph F of the Recitals.
"Company" means Concord Electric Company (prior to the Merger Date) and
Unitil Energy Systems, Inc. (successor to Concord Electric Company on and after
the Merger Date), and, subject to the provisions of Article XII hereof, its
successors and assigns.
"Company Post-Merger Bondable Expenditures" has the meaning set forth in
Section 4.01(H).
"Company Post-Merger Bonded Expenditures" has the meaning set forth in
Section 4.01(G).
"Company Post-Merger Gross Expenditures for Property Additions" has the
meaning set forth in Section 4.01(C).
"Company Post-Merger Net Expenditures" has the meaning set forth in Section
4.01(F).
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"Company Post-Merger Net Retirements" has the meaning set forth in Section
4.01(E).
"Company Post-Merger Property Additions" has the meaning set forth in
Section 4.01(A).
"Company Pre-Merger Bondable Expenditures" has the meaning set forth in
Section 4.01(H).
"Company Pre-Merger Bonded Expenditures" has the meaning set forth in
Section 4.01(FG).
"Company Pre-Merger Gross Expenditures for Property Additions" has the
meaning set forth in Section 4.01(C).
"Company Pre-Merger Net Expenditures" has the meaning set forth in Section
4.01(F).
"Company Pre-Merger Net Retirements" has the meaning set forth in Section
4.01(E).
"Company Pre-Merger Property Additions" has the meaning set forth in
Section 4.01(A).
"Default" means any event, which would with the lapse of time or the giving
of notice, or both, become an Event of Default.
"Earnings Available for Interest Charges" has the meaning set forth in
Section 4.02(B).
"Earnings Available for Interest Charges Certificate" has the meaning set
forth in Section 4.02(C).
"Engineer" means an individual, co-partnership or corporation engaged in an
engineering business or employed by the Company to pass upon engineering
questions.
"Engineer's Certificate" means a certificate signed and verified by an
engineer (who, except during the continuance of a Default and except as
otherwise provided herein, may be an employee of the Company) appointed by the
Board of Directors of the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"Event of Default" has the meaning set forth in Section 14.01.
"Excepted Property" has the meaning stated in the third paragraph following
the Granting Clauses.
"Exchange" has the meaning set forth in paragraph E of the Recitals.
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"Exchange Bonds" has the meaning set forth in Article III.
"Exeter" means Exeter & Hampton Electric Company.
"Exeter Bonds" has the meaning set forth in paragraph D of the Recitals.
"Exeter Indenture" has the meaning set forth in paragraph C of the
Recitals.
"Exeter Pre-Merger Bondable Expenditures" has the meaning set forth in
Section 4.01(H).
"Exeter Pre-Merger Bonded Expenditures" has the meaning set forth in
Section 4.01(G).
"Exeter Pre-Merger Gross Expenditures for Property Additions" has the
meaning set forth in Section 4.01(C).
"Exeter Pre-Merger Net Expenditures" has the meaning set forth in Section
4.01(F).
"Exeter Pre-Merger Net Retirements" has the meaning set forth in Section
4.01(E).
"Exeter Pre-Merger Property Additions" has the meaning set forth in Section
4.01(A).
"Fixed Property" has the meaning set forth in Section 4.01(A).
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Gross Expenditures" has the meaning set forth in Section 4.01(C).
"Gross Expenditures for Property Additions" has the meaning set forth in
Section 4.01(C).
"Gross Operating Revenues" has the meaning set forth in Section 4.02(A).
"Indenture" means this instrument, together with any and all indentures
which may hereafter be made supplemental hereto.
"Independent Engineer" means any Engineer who has no specific interest,
direct or indirect, in the Company and, in the case of an individual, is not a
director, officer or employee of the Company and, in the case of a
co-partnership or organization, does not have a partner, director, official or
employee who is a director, official or employee of the Company.
"Independent Engineer's Certificate" means a certificate signed and
verified by an Independent Engineer.
-10-
"Institutional Holder" means any insurance company, bank, savings and loan
association, trust company, investment company, charitable foundation, employee
benefit plan (as defined in ERISA) or other institutional investor or financial
institution.
"Investment" means any investment or acquisition, made in cash or by
delivery of property by the Company or any of its Subsidiaries (i) in any
Person, whether by acquisition of stock, indebtedness or other obligation or
security, or by loan, guaranty, advance, capital contribution or otherwise, or
(ii) in any property.
"Make Whole Amount" has the meaning set forth in Section 14.02.
"Material" means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.
"Merger" has the meaning set forth in paragraph E of the Recitals.
"Merger Agreement" has the meaning set forth in paragraph E of the
Recitals.
"Merger Date" has the meaning set forth in paragraph E of the Recitals.
"Merger Date Series" has the meaning set forth in Article III.
"Moody's" means Moody's Investors Service, Inc.
"Mortgaged Property" or "Trust Estate" means the assets of the Company now
or hereafter subject or subjected to the lien of this Indenture.
"Net Bondable Expenditures" has the meaning set forth in Section 4.01(H).
"Net Bondable Expenditures for Property Additions" has the meaning set
forth in Section 4.01(H).
"Net Expenditures" has the meaning set forth in Section 4.01(F).
"Net Expenditures for Property Additions" has the meaning set forth in
Section 4.01(F).
"Net Income" has the meaning set forth in Section 8.15.
"Net Retirements" has the meaning set forth in Section 4.01(E).
"New Gross Expenditures" has the meaning set forth in Section 4.01(I).
"New Property Additions" has the meaning set forth in Section 4.01(I).
-11-
"Officers' Certificate" means a certificate signed by the President or a
Vice-President and the Treasurer or an Assistant Treasurer of the Company. Each
Officers' Certificate shall, if required by Section 16.07, contain the
statements provided for in said Section.
"Opinion of Counsel" means an opinion in writing signed by legal counsel
satisfactory to the Trustee, who, except during the continuance of a Default,
may be of counsel to the Company. Each Opinion of Counsel shall, if required by
Section 16.07, contain the statements provided for in said Section.
"Order of the Company" means a written instrument signed and verified by
the President or a Vice-President and either by the Secretary or the Clerk or
the Treasurer or an Assistant Treasurer of the Company requesting or directing
the particular action in question to be taken.
"Outstanding" shall mean, when used with reference to Bonds or to Bonds of
a specified series, all Bonds which have been authenticated and delivered under
this Indenture or all Bonds of the series specified which have been so
authenticated and delivered except:
(a) Bonds cancelled by the Trustee or delivered to the Trustee for
cancellation;
(b) Bonds for the payment or redemption of which moneys shall have
theretofore been irrevocably deposited with the Trustee (whether upon or
prior to the maturity or redemption date of said Bonds), provided that if
such Bonds are to be redeemed or paid prior to the maturity thereof, notice
of such redemption shall have been given or provision satisfactory to the
Trustee shall have been made therefor or such notice shall have been
waived; and
(c) Bonds in substitution for which other Bonds have been
authenticated and delivered pursuant to Section 2.11;
and, whenever such term is used with reference to any action or nonaction which
may be requested or taken by or to which objection may be made by the owners or
holders of a specified percentage or proportion of Bonds outstanding hereunder,
or of Bonds of a specified series outstanding hereunder, Bonds directly or
indirectly owned or held by or for the account of, or for the benefit or
interest of, the Company or any other obligor upon the Bonds or any Affiliate of
the Company or such other obligor shall be disregarded and deemed not to be
Outstanding.
"Permitted Encumbrances" means as of any particular time any of the
following:
(a) liens for taxes, assessments or governmental charges not then
delinquent or the validity of which the Company is contesting in good faith
(unless thereby in the opinion of counsel any of the trust estate will be
in danger of being lost or forfeited), liens for workmen's compensation
awards and similar obligations not then delinquent and liens for judgments,
payment of which in the opinion of counsel has been adequately secured;
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(b) any obligations or duties, affecting the property of the Company,
to any municipality or public authority with respect to any franchise,
grant, license or permit, provided, however, that such franchise, grant,
license or permit does not give such municipality or public authority any
right to purchase property at less than its fair value;
(c) the license from the Federal Power Commission issued under the
provisions of the Federal Power Act of 1935, so-called, and any
modification or renewal of such license, under the terms of which the
United States of America has the right to acquire the Company's Sewalls
Falls hydro-electric plant and certain associated transmission lines by
purchase at the expiration of such license for a sum equal to the net
investment of the Company in the plant;
(d) building or building line restrictions or agreements, easements,
exceptions or reservations in any property of the Company for the purpose
of roads, streets, pipe lines, sewer lines or mains, water lines, ditches,
railroad rights-of-way, telephone, telegraph or electric transmission lines
and other like purposes and which, as shown by an Engineer's Certificate,
do not impair the use of such property for the purposes for which it is
held by the Company;
(e) liens for laborers' and materialmen's services and materials, but
only so long as payment for such labor or material is not yet owing under
the terms of employment or the purchase of materials;
(f) liens, neither assumed by the Company nor on which it customarily
pays interest charges, existing upon real estate or rights in or relating
to real estate acquired by the Company for substation, transmission line or
right of way purposes;
(g) liens, encumbrances, reservations, restrictions, conditions,
limitations, covenants, interests and exceptions, if any, set forth or
referred to in Schedule A attached hereto on property now owned by the
Company; and
(h) any mortgage, loan or encumbrance securing indebtedness or
obligations permitted under Section 8.07 or Section 12.02.
"Person" shall mean an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, and a government or
agency or political subdivision thereof.
"Prime Rate" has the meaning set forth in Section 15.13.
"Property Additions" has the meaning set forth in Section 4.01(A).
"Public Utility Property" has the meaning set forth in Section 10.04(A).
"Purchased Property" has the meaning set forth in Section 4.01(B).
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"Resolution" means a copy of a resolution certified by the Secretary, the
Clerk or any Assistant Secretary of the Company under the corporate seal of the
Company to have been duly adopted by the Board of Directors and to remain in
full force and effect without alteration or with only such alterations as are
specified in such certificate.
"Responsible Officer", when used with respect to the Trustee, shall mean
(i) if U.S. Bank National Association is acting as Trustee, any Vice President
or any officer in the Corporate Trust Services Department who is responsible for
the administration of the trust under the Indenture, or (ii) when any successor
is acting as Trustee, any Vice President or any officer in the department of
such successor who is responsible for the administration of the trust under the
Indenture.
"Restated Indenture" means this Twelfth Supplemental Indenture which amends
and restates the Indenture.
"Retirements" has the meaning set forth in Section 4.01(D).
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc.
"Series I, 8.49% Bonds" has the meaning set forth in Article III.
"Series J, 6.96% Bonds" has the meaning set forth in Article III.
"Series K, 8.00% Bonds" has the meaning set forth in Article III.
"Series L, 8.49% Bonds" has the meaning set forth in Article III.
"Series M, 6.96% Bonds" has the meaning set forth in Article III.
"Series N, 8.00% Bonds" has the meaning set forth in Article III.
"Stockholders Resolution" means a copy of a resolution certified by the
Clerk or the Secretary or any Assistant Secretary of the Company under the
corporate seal of the Company to have been duly adopted by the stockholders of
the Company entitled to vote upon the subject of such resolution and to remain
in full force and effect without alteration or with only such alterations as are
specified in such certificate.
"Subsidiary" shall mean any corporation which has more than fifty percent
(50%) of its outstanding Voting Stock owned at the time of reference, directly
or indirectly, by the Company, or by one or more Subsidiaries, or by the Company
and one or more Subsidiaries.
"Trustee" means U.S. Bank National Association and, subject to the
provisions of Article XV hereof, its successors as trustee in the trust hereby
created.
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"Trust Estate" or "Mortgaged Property" means the assets of the Company now
or hereafter subject or subjected to the lien of this Indenture.
"Trust Moneys" has the meaning set forth in Section 11.01.
"Underlying Mortgage" means a mortgage lien or other lien or charge
(exclusive of permitted encumbrances) prior to the lien of this Indenture upon
any property, plant or equipment acquired by the Company after the execution and
delivery of this instrument.
"United States Governmental Security" means any direct obligation of, or
obligation guaranteed by, the United States of America, or any agency controlled
or supervised by or acting as an instrumentality of the United States of America
pursuant to authority granted by the Congress of the United States of America,
so long as such obligation or guarantee shall have the benefit of the full faith
and credit of the United States of America which shall have been pledged
pursuant to authority granted by the Congress of the United States of America.
"Voting Stock" shall mean stock of any class or classes having ordinary
voting power for the election of a majority of the directors of such
corporation, other than stock having such power only by reason of the happening
of a contingency.
Article II
General Provisions as to the Bonds
Section 2.01. General Limitations. This Indenture creates a continuing lien
to secure the payment of the principal of and interest on all Bonds which may,
from time to time, be issued, authenticated and delivered hereunder. All Bonds
issued under and in pursuance of this Indenture and at any time Outstanding,
shall be in all respects, subject to the provisions and qualifications in this
Indenture contained, and except as any sinking or other fund established in
accordance with the provisions of this Indenture may afford additional security
for the Bonds of any particular series, equally and ratably secured hereby
without preference, priority or distinction, on account of the actual time or
times of the issue of said Bonds, or any of them, so that all Bonds at any time
Outstanding shall have the same rights, lien and preferences under and by virtue
of this Indenture, and shall all be equally secured hereby, subject to the
provisions and qualifications in this Indenture contained, and except as any
sinking or improvement or other fund established in accordance with the
provisions of this Indenture may afford additional security for the Bonds of any
particular series, with like effect as if they had all been authenticated and
delivered simultaneously on the date hereof, whether the same, or any of them,
shall actually be authenticated or delivered, or sold or disposed of at some
future date.
Section 2.02. General Designation. The Bonds issued under and secured by
this Indenture shall be issuable in series and shall be designated by suitable
descriptive words which shall always include the words "First Mortgage," with
appropriate insertions and changes and designations in such title descriptive of
the respective series of Bonds, as may be determined by the Board of Directors
and set forth in the indenture supplemental hereto creating such series (or,
with respect to the Exchange Bonds, as set forth in the appropriate Exhibit
hereto setting forth
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the terms and provisions of such Exchange Bonds). The text of the Bonds and of
the certificate of the Trustee shall be substantially of the tenor and purport
of the Bonds set forth in Exhibit A attached hereto and made a part hereof, with
appropriate insertions, omissions, substitutions and variations, in case of
Bonds of different denominations and different series, prescribed by the
indenture supplemental hereto by which such Bonds shall be created as provided
in Section 2.05, and in all other respects not inconsistent with the terms of
this Indenture. The Board of Directors may, at the time of the creation of any
series, or at any time thereafter, limit the maximum principal amount of Bonds
of such series which may be issued and an appropriate insertion in respect of
such limitation may, but need not, be made in the Bonds of such series.
Section 2.03. Series of Bonds. All Bonds of the same series shall be
identical in tenor and effect, except as hereinafter in this Section provided,
and except that the same may be of different denominations, shall consist of
registered Bonds without coupons, and may contain such variations in tenor and
effect as are incidental to such differences. Each Bond of each series shall be
dated as of the last interest payment date to which interest was paid upon Bonds
of such series, unless issued on an interest payment date to which interest was
paid upon Bonds of such series, in which event it shall be dated as of the date
of issue, or if the date of issue shall be a date prior to the first interest
payment date for the Bonds of such series, then unless the supplemental
indenture pursuant to which the Bonds of such Series are being created and
issued provides otherwise, such Bonds shall bear interest from, and shall be
dated as of, the date of initial issuance of such Bonds. Each such Bond shall
bear interest from the date thereof.
Section 2.04. Form and Denomination. The form and text of the Bonds of each
series shall be established by the provisions of the supplemental indenture
creating such series. The Bonds of each series shall be of such denomination or
denominations, interchangeable as between denominations or not so
interchangeable, as shall be determined by the Board of Directors at the time
such series is created. The Bonds of each series shall be payable on such date
or dates as may be fixed by the Board of Directors at the time the series is
created. Every order of the Company calling for the authentication and delivery
of Bonds shall specify the denomination and series, permitted by the terms of
this Indenture, in which the Bonds shall be issued and authenticated.
All Bonds shall be payable as to principal, interest and premium, if any,
in lawful money of the United States of America.
Section 2.05. Supplemental Indenture Creating New Series. The Bonds of each
series (other than the Exchange Bonds) shall be created by an indenture
supplemental hereto, authorized by a Resolution and delivered to the Trustee.
Such supplemental indenture shall include such lawful provisions consistent with
the terms of this Indenture as the Board of Directors shall prescribe:
(1) With respect to the payment of the principal of and interest on
the Bonds of such series without deduction for and/or with respect to
reimbursement of specified taxes, assessments or other governmental
charges;
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(2) With respect to the right of the Company to redeem Bonds of such
series, the redemption price or prices at which they may be redeemed and
the time or times, the class or classes, and the manner of their
redemption;
(3) With respect to sinking or improvement funds; and
(4) With respect to serial maturities, exchangeability, convertibility
or other special terms and conditions, including the issuance of Bonds
which are to be issued in exchange for other securities.
Section 2.06. Request for Authentication and Delivery of Bonds. Whenever
requesting the authentication and delivery of any Bonds issuable under Articles
IV, V or VI, the Company shall furnish the Trustee, in addition to any other
instruments elsewhere in this Indenture required, the following:
(1) A Resolution requesting the Trustee to authenticate and deliver
the Bonds, specifying the series, maturities (if Bonds of such series are
of serial maturities), and principal amount of Bonds called for, and
designating the officer or officers of the Company to whom or upon whose
order they shall be delivered;
(2) In case the Bonds to be authenticated and delivered are of a
series not theretofore created, an indenture supplemental hereto authorized
by a Resolution as prescribed by Section 2.05 (all Bonds of such series
which may be executed, authenticated and delivered hereunder shall conform
to the terms expressed in such supplemental indenture); and
(3) An Opinion of Counsel that all instruments furnished the Trustee
conform to the requirements of this Indenture, constitute sufficient
authority under this Indenture for it to authenticate and deliver the Bonds
applied for, that said Bonds when issued and delivered will be valid and
duly secured by the lien of this Indenture, and that all laws and
requirements in respect of the authentication and delivery thereof by the
Trustee have been complied with.
Section 2.07. Execution, Authentication, Delivery. All Bonds issued
hereunder and secured hereby from time to time shall be executed on behalf of
the Company by its President or a Vice-President, and its corporate seal shall
be thereunto affixed and attested by its Treasurer or an Assistant Treasurer.
The Bonds shall then be delivered to the Trustee for authentication by it, and
thereupon, upon compliance with the requirements of and as provided in this
Indenture and not otherwise, the Trustee shall authenticate and deliver the
same.
In case any officer who shall have signed, sealed or attested any of said
Bonds shall cease to be an officer of the Company before the Bonds so signed,
sealed or attested shall have been authenticated or delivered by the Trustee, or
issued, such Bonds may nevertheless be issued, authenticated and/or delivered as
though such person who signed, sealed or attested such
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Bonds had not ceased to be an officer of the Company and also any Bond may be
signed, sealed or attested on behalf of the Company by such person as at the
actual date of the execution of such Bond shall be the proper officer of the
Company, although at the date of such bond such person was not an officer of the
Company.
Only such of the Bonds (whether temporary or definitive) as shall have been
authenticated by the Trustee, by signing the certificate endorsed thereon, shall
be secured by this Indenture, or shall be entitled to any lien or benefit
hereunder, and such certificate of the Trustee shall be conclusive evidence and
the only evidence that the Bonds so authenticated have been duly issued
hereunder, and are entitled to the benefit of the trusts hereby created.
Section 2.08. Registration of Holders. The Company shall keep books at the
principal office of the Trustee for the registration and transfer of Bonds. Such
books shall, in addition to the name of the holder of each registered Bond, show
the address of each such holder.
Such registrations and discharges from registration shall be made under
such reasonable regulations as the Company may prescribe and for which the
Company may make a charge sufficient to reimburse it for any tax or other
governmental charge required to be paid with respect thereto and the charges of
the Trustee, all such charges to be paid by the party requesting such
registration or discharge from registration as a condition precedent to the
exercise of such privilege.
No transfer of Bonds shall be valid unless made on said books by the
registered holder in person, or by his duly authorized attorney, and similarly
noted on the Bond. Upon presentation to the Trustee of any Bond accompanied by
written instrument of transfer, in a form approved by the Trustee, executed by
the registered owner thereof or by his duly authorized attorney, and upon the
surrender and cancellation of such Bond, a new Bond or Bonds of the same series
and maturity date and for the same aggregate principal amount will be issued to
the transferee in exchange therefor.
Unless otherwise provided in the supplemental indenture creating the
particular series of Bonds, upon any transfer of Bonds permitted hereunder, the
Company will make no service charge against the holder of such Bonds or his
transferee for any transfer, but the Company, at its option, may require the
payment of a sum sufficient to reimburse it for any tax or governmental charge
that may be imposed thereon. All Bonds surrendered in connection with any such
transfer shall be forthwith canceled by the Trustee, and upon demand the Trustee
shall deliver the same to the Treasurer of the Company or upon his written
order.
The Company shall not be required to make any transfer or transfers of any
Bond or Bonds during the 15 days next preceding any date on which interest or
principal is required to be paid thereon or with respect thereto nor may any
transfer be required with respect to any Bonds that have been called for
redemption.
Section 2.09. Persons Deemed Owners. The Company and the Trustee shall
treat the person in whose name any Bond shall be registered as the absolute
owner thereof for the purpose of receiving payment of or on account of the
principal of such Bond and for all other purposes, and neither the Company nor
the Trustee shall be affected by any notice to the contrary.
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Section 2.10. Mutilated, Destroyed, Lost and Stolen Bonds. Upon receipt by
the Company and the Trustee of evidence satisfactory to them of the loss, theft,
destruction or mutilation of any Bond (which evidence shall be, in the case of a
holder which is an Institutional Holder, written notice thereof from such
Institutional Holder), and of indemnity satisfactory to them (provided that in
the case of a holder which is an Institutional Holder, the unsecured agreement
of indemnity from such Institutional Holder shall be deemed to be satisfactory)
and upon surrender and cancellation of such Bond, if any, if mutilated, the
Company may execute, and the Trustee may authenticate and deliver, a new Bond of
the same series and of like tenor, to be issued in lieu of such lost, stolen,
destroyed or mutilated Bond. Such new Bond may bear such endorsement as may be
agreed upon by the Company and the Trustee. The Company may require the payment
of a sum sufficient to reimburse it for all expenses in connection with the
issue of each new Bond under this Section. Any new Bond issued under the
provisions of this Section in lieu of any Bond lost, stolen, destroyed or
mutilated shall constitute an original, additional, contractual obligation of
the Company and shall be secured equally and ratably with all other Bonds
Outstanding.
Neither the Company nor the Trustee shall be under any duty or liability to
issue a new Bond in substitution for or in lieu of any Bond lost, stolen,
destroyed or mutilated except under the provisions of this Section.
Section 2.11. Temporary Bonds. Until definitive Bonds of any series are
ready for delivery, the Company may execute and the Trustee shall authenticate
and deliver, in lieu of such definitive Bonds, temporary typewritten or printed
Bonds, in registered form, substantially of the tenor of the bond hereinbefore
described, with appropriate omissions, variations and insertions and with or
without appropriate provisions with respect to registration of the principal of
such Bonds. Such temporary Bonds may be in such denominations as the Company may
determine. Until exchanged for definitive Bonds, such temporary Bonds shall be
entitled to the lien and benefit of this Indenture. Upon such exchange, which
shall be made at the principal office of the Trustee by the Company, at its own
expense and without making any charge therefor, such temporary bond, shall be
cancelled, and if the Company so directs, incinerated by the Trustee, and upon
the exchange of all said Bonds, said Bonds so cancelled or a certificate of such
incineration shall be delivered to the Company. Until such definitive Bonds are
ready for delivery, the holder of one or more temporary Bonds may, with the
consent of the Company, exchange the same on the surrender thereof to the
Trustee for cancellation, and shall be entitled to receive a temporary bond or
temporary Bonds of like aggregate principal amount of the same series and
maturity in other authorized denominations indicated by such holder.
Article III
Bonds of the Merger Date Series and Exchange Bonds
The Bonds of each Merger Date Series shall have the terms, rates and other
provisions specified in Part Two hereof. The text of the Bonds of each Merger
Date Series and of the authentication certificate of the Trustee shall be,
respectively, substantially of the tenor and effect recited in the form of bond
contained in the supplemental indenture pursuant to which such Series was issued
and shall remain the same except as otherwise herein or hereinafter
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provided. As used herein, a "Merger Date Series" of Bonds shall mean the
Company's First Mortgage Bonds described in clauses (i), (ii) and (iii) hereof
issued under the Indenture prior to the Merger Date, each of which has the
following principal amount of Bonds Outstanding on the Merger Date and "Exchange
Bonds" shall mean the Company's First Mortgage Bonds described in clauses (iv),
(v) and (vi) hereof delivered after but effective as of the Merger Date in
exchange for the Exeter Bonds indicated:
(i) $6,000,000 aggregate principal amount of the Company Series
I, 8.49% Bonds due October 14, 2024 (the "Series I, 8.49% Bonds");
(ii) $10,000,000 aggregate principal amount of the Company Series
J, 6.96% Bonds due September 1, 2028 (the "Series J, 6.96% Bonds");
(iii) $7,500,000 aggregate principal amount of the Company Series
K, 8.00% Bonds due May 1, 2031 (the "Series K, 8.00% Bonds");
(iv) $9,000,000 aggregate principal amount of the Company Series
L, 8.49% Bonds due October 14, 2024 (the "Series L, 8.49% Bonds"), in
the form and containing the terms and conditions set forth in Exhibit
F attached hereto, issued as of the Merger Date in exchange for the
Exeter Series K, 8.49% Bonds due October 14, 2024;
(v) $10,000,000 aggregate principal amount of the Company Series
M, 6.96% Bonds due September 1, 2028 (the "Series M, 6.96% Bonds"), in
the form and containing the terms and conditions set forth in Exhibit
G attached hereto, issued as of the Merger Date in exchange for the
Exeter Series L, 6.96% Bonds due September 1, 2028; and
(vi) $7,500,000 aggregate principal amount of the Company Series
N, 8.00% Bonds due May 1, 2031 (the "Series N, 8.00% Bonds"), in the
form and containing the terms and conditions set forth in Exhibit H
attached hereto, issued as of the Merger Date in exchange for the
Exeter Series M, 8.00% Bonds due May 1, 2031.
The principal of and the premium, if any, and the interest on the Bonds
issued prior to or as of the Merger Date shall be payable at the office and
place of business of the Trustee in Boston in the Commonwealth of Massachusetts
(or, if there be a successor to said Trustee, at its office designated by such
successor), in coin or currency of the United States of America which at the
time of payment is legal tender for public and private debts.
Each series of Exchange Bonds shall be dated as of the last interest
payment date to which interest was paid on the series of Exeter Bonds being
exchanged therefore. No Net Bondable Expenditures shall be required to be used
for such issuance but otherwise the Company shall comply with the provisions of
Article IV with respect to the issuance of the Exchange Bonds, except that (i)
the requirement of an indenture supplemental hereto set forth in Section
4.05(4)(iii) shall not be applicable to the issuance of the Exchange Bonds and
(ii) any
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certificates or statements required pursuant to Section 4.05(4)(i) to be made by
an Independent Engineer for the issuance of Exchange Bonds may be made by an
Engineer who is not an Independent Engineer. Exchange Bonds shall be redeemable
at the price and on the conditions set forth in Part Three hereof, any such
redemption to be effected in accordance with the provisions of Article XIV of
the Indenture.
The Bonds of each Merger Date Series shall be redeemable at the price and
on the conditions set forth in Part Two hereof, any such redemption to be
effected in accordance with the provisions of Article VII of this Indenture.
Article IV
Bonds Against Property Additions
Section 4.01. Definitions for Issuing Bonds Against Property Additions. For
the purposes of this Indenture each of the following terms shall be construed to
have the meaning hereinafter specified respectively:
(A) Fixed Property, Property Additions. The term "Fixed Property"
shall mean the sum of all of the physical property, plant and equipment,
real, personal and mixed wherever located which is of such a nature as
under sound accounting practice to be properly chargeable to fixed capital
account and is in fact so charged, and which is used or is to be used as a
part of its permanent and fixed investment in its business as an electric
public utility company. Such term shall not, however, include (a) any
property of the nature of that expressly excluded from the lien of this
Indenture by the Granting Clauses hereof; (b) the cost of any paving or
other public improvement assessed against the Exeter or the Company (as the
case may be) by, or paid by Exeter or the Company (as the case may be) to,
any taxing authority; or (c) any good will or going concern value or value
attributable to any franchise or governmental permit except to the extent
reflected in the fair value of Purchased Property as evidenced by an
Independent Engineer's Certificate;
The term "Property Additions" shall mean the sum of the following
(without duplication): (i) Fixed Property of Exeter located within the
State of New Hampshire which Exeter was authorized to use and operate in
its business as a public utility company and which was used or useful in
such business and was constructed or acquired (by purchase consolidation,
merger or in any other way) during the period after June 30, 1952 and to,
but not including the Merger Date (the "Exeter Pre-Merger Property
Additions"), (ii) Fixed Property of the Company located within the State of
New Hampshire which the Company was authorized to use and operate in its
business as an electric public utility company and which was used or useful
in such business and was constructed or acquired (by purchase,
consolidation, merger or in any other way) during the period after May 31,
1958 to, but not including the Merger Date (the "Company Pre-Merger
Property Additions"), and (iii) Fixed Property of the Company located
within the State of New Hampshire which the Company is authorized to use
and operate in its business as an electric public utility company and which
is used or useful in such
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business and constructed or acquired (by purchase, consolidation, merger or
in any other way) during the period beginning on and including the Merger
Date through the date of calculation but excluding Exeter Pre-Merger
Property Additions (the "Company Post-Merger Property Additions").
When calculating "Property Additions" in the above paragraph, such
term shall not, however, include (1) any leasehold interest in property or,
unless the same shall be movable physical property and shall constitute
personal property in an Opinion of counsel, any permanent improvements
constructed on property held under lease (but shall include rights of way
and easements, any electric distribution, transmission or service lines and
equipment and appurtenances thereto located on and such right of way or
easement or on any property of customers or on any leased property or
located upon any street, alley or public place of any municipality or upon
any public highway), or (2) any property subject to any lien or other
encumbrance except permitted encumbrances and the lien hereof. Nothing
herein contained, however, shall prevent property meeting the definition of
Property Additions as herein in this Section set forth in all respects
except that at the time of its construction or acquisition it was subject
to such a lien or other encumbrance, from constituting "Property Additions"
upon the removal of such lien or other encumbrance.
Property Additions need not consist of a specific or complete
accession, addition or improvement or complete new property but may include
construction work in progress, if carried in plant accounts in accordance
with sound accounting practice, whether capable of complete description and
identification or not.
(B) Purchased Property. The term "Purchased Property" shall mean any
Property Additions devoted to public service at or within a year before the
time of their acquisition by Exeter or the Company (as the case may be);
(C) Gross Expenditures for Property Additions, Gross Expenditures. The
term "Gross Expenditures" shall mean the lesser of:
(1) the fair value of the Property Additions acquired therefor as
of the date of and as evidenced by an Engineer's Certificate or, if
such Property Additions include Purchased Property, as of the date of
and as evidenced by an Independent Engineer's Certificate, and
(2) the aggregate of (i) the market value or, in the absence
thereof, the fair value of any securities or other property of Exeter
or the Company (as the case may be) exchanged for Property Additions
as of the date of and as evidenced by an Independent Engineer's
Certificate and (ii) any cash payments made or monetary obligations
(not represented by securities) incurred for Property Additions.
The term "Gross Expenditures for Property Additions" shall mean the
sum of the following (without duplication): (i) Gross Expenditures for
Exeter for the Exeter
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Pre-Merger Property Additions (the "Exeter Pre-Merger Gross Expenditures
for Property Additions"), (ii) Gross Expenditures for the Company for the
Company Pre-Merger Property Additions (the "Company Pre-Merger Gross
Expenditures for Property Additions"), and (iii) Gross Expenditures for the
Company for the Company Post-Merger Property Additions (the "Company
Post-Merger Gross Expenditures for Property Additions");
(D) Retirements. The removal, replacement, abandonment, permanent
withdrawal from use, destruction, loss from any cause, sale, taking under
power of eminent domain or other disposition of Fixed Property of Exeter or
the Company (as the case may be) shall constitute a Retirement of such
property.
As applied to any period, the term "Retirements" shall mean the
aggregate cost of all Fixed Property retired by Exeter or the Company
during such period (as the case may be). For the purposes of this
definition the cost of Fixed Property shall mean, in the case of Property
Additions, the Gross Expenditures made therefor at the time they became
Property Additions and, in the case of Fixed Property not constituting
Property Additions, its gross book value as recorded on Exeter's or the
Company's (as the case may be) books. No reduction in book values of
property recorded in Exeter's or the Company's (as the case may be) plant
accounts nor the transfer of any amount appearing in any such account to
intangible or adjustment accounts, arising out of adjustments required to
be made by any regulatory body or otherwise, nor the elimination of any
account so transferred, otherwise than in connection with the actual
retirement of Fixed Property, shall be taken into account in determining
Retirements;
(E) Net Retirements. The term "Net Retirements" shall mean the sum of
the following (without duplication): (i) the aggregate amount of all
Retirements made by Exeter under the Exeter Indenture during the period
from June 30, 1952 to, but not including, the Merger Date in excess of the
aggregate amount of all moneys received by or deposited with the Trustee
under the Exeter Indenture during such period pursuant to the provisions of
Sections 8.10, 8.12, 11.03, 11.04 and 11.04A thereof (the "Exeter
Pre-Merger Net Retirements"), (ii) the aggregate amount of all Retirements
made by the Company during the period from May 31, 1958 to, but not
including, the Merger Date in excess of the aggregate amount of all moneys
received by or deposited with the Trustee during such period pursuant to
the provisions of Sections 8.10, 8.12, 10.03, 10.04 and 10.04A hereof (the
"Company Pre-Merger Net Retirements") and (iii) the aggregate amount of all
Retirements made by the Company during the period beginning on and
including the Merger Date through the date of calculation in excess of the
aggregate amount of all moneys received by or deposited with the Trustee
during such period pursuant to the provisions of Sections 8.10, 8.12,
10.03, 10.04 and 10.04A hereof (the "Company Post-Merger Net Retirements");
(F) Net Expenditures for Property Additions, Net Expenditures. The
term "Net Expenditures for Property Additions", herein sometimes referred
to as "Net Expenditures" shall mean the sum of the following (without
duplication): (i) the aggregate amount of Exeter Pre-Merger Gross
Expenditures for Property Additions,
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minus Exeter Pre-Merger Net Retirements ("Exeter Pre-Merger Net
Expenditures"), (ii) the aggregate amount of Company Pre-Merger Gross
Expenditures, minus Company Pre-Merger Net Retirements ("Company Pre-Merger
Net Expenditures") and (iii) the aggregate amount of Company Post-Merger
Gross Expenditures for Property Additions, minus Company Post-Merger Net
Retirements ("Company Post-Merger Net Expenditures");
(G) Bonded Expenditures. The term "Bonded" or "Bonded Expenditures" as
applied to Net Expenditures for Property Additions shall mean the sum of
(without duplication): (i) Exeter Pre-Merger Net Expenditures as have been
used by Exeter as the basis for the issuance of bonds under the Exeter
Indenture, the withdrawal of cash or other credit under any provision of
the Exeter Indenture prior to the Merger Date (the "Exeter Pre-Merger
Bonded Expenditures"), (ii) Company Pre-Merger Net Expenditures as have
been used by the Company as the basis for the issuance of Bonds, the
withdrawal of cash or the taking of other credit under the provision of
this Indenture prior to the Merger Date (the "Company Pre-Merger Bonded
Expenditures") and (iii) Company Post-Merger Net Expenditures as have been
used as the basis for the issuance of Bonds, the withdrawal of cash or the
taking of other credit under the provisions of this Indenture, on or after
the Merger Date (the "Company Post-Merger Bonded Expenditures"); provided,
however, (A) the Exeter Pre-Merger Net Expenditures which were bonded on
the basis of a ratio of bonds issued or cash withdrawn or other credit
taken under the Exeter Indenture of 60% of Net Expenditures for Property
Additions shall be recalculated as of the Merger Date as though all such
bonds so issued or cash withdrawn or other credit taken under the Exeter
Indenture were bonded on the basis of a ratio of 68% of Net Expenditures
for Property Additions rather than a ratio of 60%, all as calculated in
Annex B to Exhibit B hereof, and the term "Exeter Pre-Merger Bonded
Expenditures" shall reflect and mean the amount of bonded Net Expenditures
for Property Additions so calculated, and (B) the Company Pre-Merger Net
Expenditures used as a basis for bonds issued or cash withdrawn or other
credit taken under the Indenture shall be bonded on the basis of a ratio of
68% of Net Expenditures for Property Additions, all as calculated in Annex
C to Exhibit B hereof, and the term "Company Pre-Merger Bonded
Expenditures" shall reflect and mean the amount of bonded Net Expenditures
for Property Additions so calculated;
(H) Net Bondable Expenditures for Property Additions, Net Bondable
Expenditures. The term "Net Bondable Expenditures for Property Additions,"
herein sometimes, referred to as "Net Bondable Expenditures," shall mean as
of any specified date the sum of (without duplication): (i) the excess of
Exeter Pre-Merger Net Expenditures over Exeter Pre-Merger Bonded
Expenditures (the "Exeter Pre-Merger Bondable Expenditures"), (ii) the
excess of Company Pre-Merger Net Expenditures over Company Pre-Merger
Bonded Expenditures (the "Company Pre-Merger Bondable Expenditures") and
(iii) the excess of Company Post-Merger Net Expenditures over Company
Post-Merger Bonded Expenditures (the "Company Post-Merger Bondable
Expenditures"); and
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(I) Certificate of Net Bondable Expenditures, New Gross Expenditures,
New Property Additions. The term "Certificate of Net Bondable Expenditures"
shall mean an Officers' Certificate in substantially the form attached
hereto as Exhibit B which shall include:
(i) a statement of the aggregate amount of "Gross Expenditures"
(herein sometimes called "New Gross Expenditures") which have not been
included in any previous such certificate or in any similar
certificate delivered prior to the Merger Date by officers of Exeter
pursuant to the Exeter Indenture; a description in reasonable detail
of the Property Additions (sometimes hereinafter called "New Property
Additions") for which such expenditures were made; and a statement as
to whether or not any of such New Property Additions constitute
Purchased Property and, if so, a statement of the New Gross
Expenditures made therefor;
(ii) a statement of the aggregate amount of Retirements not
included in any previous such certificate or in any similar
certificate delivered prior to the Merger Date by officers of Exeter
pursuant to the Exeter Indenture and in so far as they represent
specific physical property, a description in reasonable detail of such
property.
Section 4.02. Definitions for Earnings Test. For the purposes of this
Indenture each of the following terms shall be construed to have the meaning
hereinafter specified respectively:
(A) Gross Operating Revenues. The term "Gross Operating Revenues" as
applied to any period shall mean gross receipts of the Company from its
business as an electric public utility company for such period and shall
not include income derived from stocks, Bonds or other securities or gains
arising from appreciation in value or from the sale or other disposition of
fixed capital assets of the Company or of stocks, Bonds or other
securities.
(B) Earnings Available for Interest Charges. The term "Earnings
Available for Interest Charges" as applied to any period shall mean the
amount by which the aggregate Gross Operating Revenues of the Company for
such period exceeds all operating expenses of every character (except
interest charges on indebtedness of the Company) for such period, such
expenses to include (but not to be limited to) rents, insurance premiums,
expenditures for maintenance, reasonable charges against income for the
establishment of a reserve for depreciation (not less than the amounts
required to be charged therefor pursuant to Section 8.05), all taxes
(except any Federal and State taxes based directly or indirectly on income,
including any State of New Hampshire taxes in the nature of a gross
receipts tax which the Company is entitled to recover from its customers in
its rates), and all other expenses in connection with its business as an
electric public utility company, computed if a uniform system of accounts
is prescribed by any commission or other governmental body having
jurisdiction in the premises in accordance with such uniform system,
otherwise in accordance with accepted accounting practice.
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(C) Earnings Available for Interest Charges Certificate, Annual
Interest Requirements. The term "Earnings Available for Interest Charges
Certificate" shall mean an officers' certificate:
(i) stating the Earnings Available for Interest Charges of the
Company for a period of twelve (12) consecutive calendar months within
the fifteen (15) calendar months immediately preceding the first day
of the month in which the application for the authentication and
delivery under this Indenture of Bonds then applied for or other
application is made; and
(ii) stating the aggregate annual charges for interest on all
indebtedness of the Company outstanding at the date of such
application (except any for the refunding of which Bonds applied for
are to be issued) and on all Bonds then to be issued hereunder, said
aggregate sum being sometimes herein referred to as the "Annual
Interest Requirements."
For the purposes of such Earnings Available for Interest Charges
Certificate, Earnings Available for Interest Charges of the Company (i) shall
include for such twelve months period Earnings Available for Interest Charges
computed in the same manner as are those of the Company derived by predecessors
from all Purchased Property acquired within such twelve months period or about
to be acquired by the Company, Gross Expenditures for which have been included
in a prior Certificate of Net Bondable Expenditures or are included in the
Certificate of Net Bondable Expenditures in connection with which such Earnings
Available for Interest Charges Certificate is being filed, (ii) if any Property
Additions are disposed of (a "Disposition") within such twelve months period or
about to be disposed of by the Company, for such twelve months period Earnings
Available for Interest Charges shall be computed in the same manner as though
such Disposition occurred on the first day of such period, and (iii) for any
such twelve months period which includes one or more days prior to the Merger
Date, Earnings Available for Interest Charges for Exeter shall be computed in
the same manner as are those of the Company and as though Exeter had merged into
the Company on the first day of such twelve months period. Any increase or
decrease in Gross Operating Revenues of the Company attributable to higher or
lower rates that have been in effect for less than the full twelve-month period
for which the computation of the Earnings Available for Interest Charges
Certificate is based shall be annualized for such Certificate and there shall
also be annualized for such Certificate the related fixed expenses and charges
as are known to the principal officers of the Company.
Section 4.03. General Provisions. Additional Bonds, executed pursuant to
the provisions of this Article and Articles V and VI hereof shall be
authenticated by the Trustee and delivered to or upon the order of the Company
upon the receipt by the Trustee of the following documents in addition to the
documents specified elsewhere in said three Articles:
(a) The documents specified in Section 2.06 hereof;
(b) A Resolution authorizing the execution and authentication of such
Bonds together with a Stockholders Resolution authorizing the issuance of
such Bonds under the
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provisions hereof or, in the alternative, an opinion of counsel to the
effect that no such Stockholders Resolution is necessary for the issue or
validity of such Bonds or to entitle the same to the security and lien
hereof;
(c) A certified copy of an order issued by each such commission or
other body or official as at the time shall, under any pertinent law, have
power or authority over the issuance of Bonds hereunder or over the
subjection of the mortgaged property or any part thereof to liens,
authorizing the issuance of such Bonds, together with an opinion of counsel
to the effect that any order or orders tendered are sufficient in the
connections aforesaid, or, in the alternative, an opinion of counsel to the
effect that no such order is requisite in respect of such additional Bonds
or in respect of the lien hereof for the security of such Bonds to render
such Bonds the valid obligations of the Company and the lien hereof
effective for the security thereof; and
(d) A receipt or other evidence satisfactory to the Trustee
establishing the payment of any stamp, recording or other tax required by
law to be paid in connection with the issuance of such additional Bonds or
for the effectiveness of the lien of this Indenture for the security
thereof, together with an opinion of counsel to the effect that the taxes
paid constitute all taxes of either nature aforesaid, or in the alternative
an opinion of counsel to the effect that payment of no such tax is
requisite in this connection or for the purposes aforesaid.
Section 4.04. Additional Bonds Against Property Additions Issuance Tests.
Additional Bonds of any series other than the Exchange Bonds issued after the
execution and delivery of the Twelfth Supplemental Indenture may be issued
hereunder to the extent of sixty-eight per cent (68%) of Net Bondable
Expenditures for Property Additions as shown by the Certificate of Net Bondable
Expenditures required by subparagraph (1) of Section 4.05 hereof provided that
the Earnings Available for Interest Charges as shown by the certificate required
by subparagraph (3) of said Section 4.05 hereof are equal at least to two (2)
times the Annual Interest Requirements stated in such certificate.
Section 4.05. Documents Required for Authentication of Bonds. When
requesting the authentication of Bonds pursuant to this Article the Company
shall deliver to the Trustee:
(1) A Certificate of Net Bondable Expenditures dated as of a date
within sixty (60) days of the date on which such Bonds are to be issued;
(2) An Officers' Certificate dated as of the date of the delivery of
such Bonds stating that:
(i) the amount, if any, shown in Item (12) of the certificate
referred to in (1) above plus Gross Expenditures for Property
Additions since the date of said certificate exceeds Net Retirements
since the date of said certificate;
(ii) the Company is not in Default hereunder;
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(3) An Earnings Available for Interest Charges Certificate; and
(4) If there be included in such Certificate of Net Bondable
Expenditures any New Gross Expenditures, the following:
(i) An Engineer's Certificate dated as of the date of such
Certificate of Net Bondable Expenditures (such Engineer's Certificate,
if such Certificate of Net Bondable Expenditures includes any
considerations other than cash or if the New Property Additions
thereby acquired include Purchased Property, either to be an
Independent Engineer's Certificate or the statements therein contained
with respect to considerations other than cash and/or Purchased
Property to be those of an Independent Engineer, the scope of whose
signature and verification thereof may be limited to such matters):
(a) stating that the signer has examined and inspected such
Property Additions and that their construction or acquisition was
reasonable from the standpoint of the Company and of the
bondholders;
(b) setting forth their fair value as of the date of such
certificate and if such Property Additions include Purchased
Property, deducting any portion thereof not useful in the conduct
of the Company's business as an electric public utility company;
(c) setting forth, as of the date of such certificate, the
market value or, if none, the fair value of any securities, or
other property included in such New Gross Expenditures;
(d) stating that the amount of such New Gross Expenditures
included in said Certificate of Net Bondable Expenditures does
not exceed the fair value of the Property Additions acquired
thereby; and
(e) if the Opinion of Counsel responsive to (ii) of this
subparagraph (4) sets forth any Permitted Encumbrances, stating
that such Permitted Encumbrances do not impair the use of the
property to which they pertain for the purposes for which such
property is held by the Company;
(ii) An Opinion of Counsel stating that the Company has good and
marketable title to such Property Additions free from all encumbrances
excepting the lien of this Indenture and Permitted Encumbrances,
specifying any such Permitted Encumbrances, and if any thereof consist
of liens for taxes, assessments or governmental charges which are
delinquent and the validity of which the Company is contesting in good
faith, stating that none of the trust estate will be in danger of
being lost or forfeited by reason thereof;
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(iii) An indenture supplemental hereto or other instrument or
instruments of conveyance specifically subjecting such Property
Additions to the lien hereof together with an Opinion of Counsel
stating that such supplemental indenture or other instrument or
instruments are sufficient, and no other documents are required, to
subject such Property Additions to the lien hereof as a direct first
mortgage lien, or, in the alternative, an Opinion of Counsel to the
effect that such additions are so subject without any such indenture
or other instrument.
Article V
Bonds for Refunding Purposes
Section 5.01. General Provisions. Additional Bonds of any series may, from
time to time, be executed by the Company and delivered to the Trustee for or on
account of the payment, purchase and cancellation, redemption or other discharge
at, before or after maturity, of Available Bonds theretofore authenticated under
this Indenture in an aggregate principal amount equal to the aggregate principal
amount of such Available Bonds, and the Trustee shall, subject to the provisions
of this Article, authenticate and deliver the same to or upon the Order of the
Company upon receipt by the Trustee of:
(1) The documents required by the provisions of Section 4.03 hereof;
(2) Bonds theretofore authenticated and delivered hereunder; provided,
however, that in lieu of Bonds which have been called for redemption or are
then about to mature it shall be sufficient if funds in an amount
sufficient to redeem or pay the same shall have been deposited with the
Trustee and made presently available for payment to the holders of such
Bonds and evidence furnished to the satisfaction of the Trustee that notice
of any such redemption has been duly given, or provided for, or waived;
(3) An Officers' Certificate, dated as of the date of the delivery of
such additional Bonds, stating that the Company is not in Default hereunder
and that all of the Bonds proposed to be refunded constitute Available
Bonds.
Section 5.02. Issuance Requirements. No Bonds shall be authenticated and
delivered under the provisions of this Article except (i) Bonds which bear an
interest rate no higher than that of the Bonds which they are to refund or (ii)
Bonds issued to refund Bonds which have been Outstanding more than five years
and which have an expressed maturity not later than two years from the date on
which such refunding Bonds are to be issued, unless an Earnings Available for
Interest Charges Certificate shall have been filed with the Trustee from which
it shall appear and in which the Company certifies that the Earnings Available
for Interest Charges of the Company for the period covered by such certificate
were at least equal to two times the Annual Interest Requirements therein
stated.
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Article VI
Bonds Against Cash
Section 6.01. General Provisions. Additional Bonds of any series may be
issued under this Indenture from time to time equal in principal amount to the
amount of cash at the time deposited with the Trustee provided, nevertheless,
that no Bonds shall be issued against cash required to be deposited with the
Trustee under any provisions of this Indenture. Bonds so issued may be executed
by the Company and delivered to the Trustee and the Trustee shall authenticate
and deliver the same to or upon the order of the Company upon receipt of:
(1) The documents required by the provisions of Section 4.03 hereof;
(2) An officers' certificate dated as of the date of the delivery of
such Bonds stating that the Company is not in Default hereunder;
(3) An Earnings Available for Interest Charges Certificate;
(4) Cash in an amount equal to the principal amount of the Bonds to be
authenticated;
if it shall appear by the Earnings Available for Interest Charges Certificate
responsive to subparagraph (3) of this Section that the Earnings Available for
Interest Charges for the period covered by such certificate are at least equal
to two (2) times the Annual Interest Requirements therein stated.
Section 6.02. Cash Withdrawal Requirements. Cash received by and on deposit
with the Trustee under the provisions of this Article after the execution and
delivery of the Twelfth Supplemental Indenture may on orders of the Company be
withdrawn, from time to time, to the extent of sixty-eight per cent (68%) of Net
Bondable Expenditures for Property Additions as shown in the pertinent
certificate responsive to subparagraph (1) of this Section, upon receipt by the
Trustee of:
(1) A Certificate of Net Bondable Expenditures dated as of a date
within sixty (60) days of the date on which such cash is to be withdrawn;
(2) An Officers' Certificate dated as of the date of the withdrawal of
such cash stating that
(a) the amount, if any, shown in Item (12) of the certificate
referred to in (1) above plus Gross Expenditures for Property
Additions since the date of said certificate exceeds Net Retirements
since the date of said certificate, and
(b) the Company is not in Default hereunder;
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(3) If there be included in such Certificate of Net Bondable
Expenditures any New Gross Expenditures, the documents required by (i),
(ii) and (iii) of subparagraph (4) of Section 4.05 hereof.
Article VII
Redemption of Bonds
Section 7.01. Manner of Redemption. Whenever the Company shall determine to
exercise any optional right it may have to redeem Bonds of any series issued
hereunder, it shall file with the Trustee not less than sixty days prior to the
date fixed for the redemption of such Bonds, a Resolution specifying the
principal amount of and designating the series of Bonds to be redeemed and
shall, on or before the date fixed for redemption, deposit with the Trustee
sufficient moneys to redeem such Bonds and pay to the Trustee its proper
expenses and charges in connection with such redemption.
Section 7.02. Selection of Bonds to Be Redeemed. The selection of Bonds
(or, in case of fully registered Bonds, of portions thereof) to be redeemed
shall, in case less than all of the Outstanding Bonds of any series are to be
redeemed, be made by the Trustee as follows:
(a) The particular Bonds of such series to be redeemed in whole or in
part shall be designated by the Trustee not more than 60 days nor less than
30 days prior to the date fixed for such redemption by proration so that
the principal amount to be redeemed of Bonds of such series then held by
each holder shall bear the same ratio to the total principal amount of all
Bonds of such series then to be redeemed as the total principal amount of
all Bonds of such series then held by such holder bears to the total
principal amount of all Bonds of such series then Outstanding; provided,
however, that (i) the Trustee in making any proration pursuant to this
Section shall make such adjustments as it shall deem proper to the end that
the principal amount of Bonds so redeemed shall be $1,000 or a multiple
thereof, by increasing or decreasing the amount which would be allocable to
any holder on the basis of exact proration by an amount not exceeding
$1,000 and (ii) if there shall have been previously filed with the Trustee
a written consent of all holders of Bonds of such Series specifying some
other method of selecting Bonds of such series to be redeemed such
selection shall be made by the Trustee in accordance therewith; or
(b) If the Trustee shall determine that the selection method described
in the foregoing clause (a) shall not then be appropriate, the particular
Bonds of such series to be redeemed in whole or in part shall be selected
by the Trustee by lot in any manner deemed by it proper.
The Trustee shall promptly notify the Company in writing of the distinctive
numbers of the Bonds which, or portions of which, have been selected for
redemption, and the principal amount thereof to be redeemed in the case of fully
registered Bonds of a denomination greater than $1,000.
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Section 7.03. Notice of Redemption. Notices of redemption, stating when
funds for the redemption are expected to be available to the holders of the
Bonds to be wholly or partly redeemed, shall be given to the holders by the
Trustee in the name and on behalf of the Company. Redemption notices for all
Bonds issued hereunder shall contain the information required by Section 7.04
and, unless otherwise provided in the supplemental indenture creating a
particular series, shall be mailed as hereinafter provided not more than 60, nor
less than 30, days prior to the date fixed for redemption. The Trustee in the
name and on behalf of the Company, as the case may be, shall send a copy of such
notice to the registered owner of each Bond, so called for redemption, by
reputable overnight courier, or by certified mail, postage prepaid, addressed to
him at his last known address as it appears upon the bond register.
Whenever notice by mail or otherwise is required, the giving of such notice
may be waived in writing by the person entitled to such notice. Any such waiver
of notice by the holders of Bonds shall be filed with the Trustee.
Section 7.04. Redemption Price. Each notice of redemption shall specify the
price at which such Bonds are to be redeemed, the series, date of maturity, date
of redemption, and if less than all of the Bonds outstanding of a specified
series are to be redeemed, the serial numbers of such Bonds.
Section 7.05. Partial Redemption of Bonds. In case any Bond is to be
redeemed in part only, such notice shall specify the principal amount thereof to
be redeemed and shall state that at the election of the registered owner of such
Bond and upon surrender thereof for redemption, a new Bond or new Bonds of that
series in aggregate principal amount equal to the unredeemed portion of such
Bond will be issued in lieu thereof, and, in such case, the Company shall
execute and the Trustee shall authenticate and deliver such new Bond or Bonds to
or upon the written order of the registered owner of such Bond at the expense of
the Company, provided, however, that the Trustee shall pay interest, premium (if
any) and principal upon any Bond without surrender or presentation thereof if
any holder which is an Institutional Holder files with the Trustee an agreement
pursuant to which such holder agrees that (A) it will not sell, transfer or
otherwise dispose of any such Bond with respect to which such redemption has
been made unless either (i) it shall have made a notation thereon of the
principal so redeemed or (ii) the Bond shall have been presented to the Trustee
for such notation or (iii) such Bond shall have been surrendered in exchange for
a new Bond having a principal amount equal to the unredeemed portion and (B) it
will present the Bond to the Trustee before being paid the entire remaining
principal balance of such Bond.
Section 7.06. Deposited Moneys for Redemption. All moneys deposited with or
held by the Trustee for the redemption of Bonds shall be held upon the trusts
hereof for the account of the holders of the Bonds designated or selected for
redemption.
Section 7.07. Cancellation of Bonds. All Bonds which have been redeemed
shall be cancelled by the Trustee, and shall be delivered to or upon the order
of the Company and shall not be reissued.
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Section 7.08. Payment of Redemption. When notice of redemption of any Bond,
or part thereof, shall have been duly given or waived, such Bond, or part
thereof, shall become due and payable on the date fixed for redemption in said
notice and if the amount necessary to redeem such Bond, or part thereof, shall
be deposited with the Trustee, such amount shall be held by the Trustee as
provided in Section 7.06 and shall be paid when due to the registered owner of
such Bond provided that if presentation of such Bond is required hereunder, such
Bond shall have been presented to the Trustee. If the amount necessary to redeem
any Bond, or part thereof, called for redemption shall have been irrevocably
deposited with the Trustee in trust for the account of and shall be immediately
available for payment to the holder of such Bond, and all proper charges and
expenses of the Trustee in connection therewith shall have been paid, and if the
notice hereinbefore mentioned shall have been duly given or waived, or provision
satisfactory to the Trustee shall have been made for the giving of such notice,
then, when all of said conditions shall have been satisfied and the Trustee has
complied with the first sentence of this Section 7.08, (a) the Company (subject
to the provisions of Section 16.10) shall be released from all liability on such
Bond, or part thereof, so called for redemption, and such Bond, or part thereof,
so called for redemption shall no longer be deemed to be Outstanding and shall
cease to be entitled to any lien or benefit of or under this Indenture, (b) the
holder of such Bond, or part thereof, so called for redemption shall look
thereafter for the payment of the principal thereof and premium, if any, and of
accrued and unpaid interest, solely to the redemption funds in the hands of the
Trustee for payment thereof, and (except as provided in Section 16.10) in no
event to the Company, (c) the holder of such Bond shall have the right to
receive prepayment of the redemption price thereof, including interest to such
redemption date, at any time after the deposit of such redemption price, and (d)
after such redemption date, no interest will accrue thereon.
Article VIII
General Covenants
Section 8.01. Further Actions. The Company covenants that it will
faithfully do and perform and at all times faithfully observe any and all
covenants, undertakings, stipulations and provisions contained in each and every
Bond executed, authenticated and delivered hereunder and in the several and
successive Resolutions pursuant to or in observance of the provisions of this
Indenture. The Company covenants that it will promptly make, execute, and
deliver all further assurances, including all financing and continuation
statements covering security interests in personal property, indentures
supplemental to the Indenture or other instruments, and take all such further
action as may reasonably be by the Trustee, or by its counsel, deemed necessary
or advisable for the better securing of any Bonds issued or to be issued
hereunder, or for better assuring and confirming to the Trustee the Mortgaged
Property or any part thereof. The Company covenants that it will cause this
Indenture to be duly recorded and/or filed and to be duly rerecorded and/or
refiled at the times and in the places now or hereafter required by law for the
proper maintenance of the validity and priority of the lien hereof.
Section 8.02. Payment. The Company covenants that it will promptly pay the
principal of and interest on every Bond issued hereunder in lawful money of the
United States of America at the dates and places and in the manner prescribed in
such Bond and herein. Notwithstanding the
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above or any other provisions of this Indenture or any Bond issued hereunder,
the Company may enter into an agreement with the holder of any Bond providing
for the payment to such holder of the principal of (and premium, if any) and
interest on such Bond or any part thereof at a place other than as designated
therein or in such Bond, providing for the payment to such holder of all or a
portion of the principal of and the premium, if any, and interest on such Bond
at a place other than the place specified in such Bond as the place for such
payment without the necessity in the case of a partial payment of principal, of
surrendering the Bond for a new Bond, and in accordance with Section 7.05 for
the making of notation of principal payments on such Bond by such holder. The
Trustee is authorized to consent to any such agreement and shall not be liable
or responsible to any such holder or to the Company for any act or omission on
the part of the Company or any holder of a Bond in connection with any such
agreement. The Company covenants it will, prior to the maturity of each
installment of interest and prior to the maturity of each such Bond, deposit
with the Trustee, or other paying agent appointed with respect to the Bonds of
any particular series, in lawful money of the United States of America an amount
sufficient to make payments of principal (and premium, if any,) and interest on
the Bonds on or prior to the date such payments are due.
Section 8.03. Maintain Title of Property. The Company covenants that,
except as to that part of the Mortgaged Property which may hereafter be acquired
by it, it is on the Merger Date well seized of the physical properties by it
hereby mortgaged or intended so to be and has good right, full power, and lawful
authority to make this Indenture and subject such physical properties to the
lien hereof in the manner and form herein respectively done or intended; and
that it has and, subject to the provisions hereof, will preserve good and
indefeasible title to all such physical properties, and will warrant and forever
defend the same to the Trustee against the claims of all persons whatsoever.
Section 8.04. Taxes and Assessment; Liens. The Company covenants that it
will promptly pay or cause to be paid all lawful taxes, charges and assessments
at any time levied or assessed upon or against the Mortgaged Property or any
part thereof, and/or the interest of the Trustee and of the holders of the Bonds
Outstanding under this Indenture before the same become delinquent, provided,
however, that no such tax, charge or assessment shall be required to be paid so
long as the validity of the same shall be contested in good faith by appropriate
legal proceedings so long as adequate reserves in respect thereof have been
established in accordance with GAAP; that there are not outstanding on the
Merger Date and that the Company will not at any time create or permit to be
created or allow to accrue or to exist any lien or liens prior to the lien of
this Indenture upon the Mortgaged Property or any part thereof, or the income
therefrom, save only any Permitted Encumbrances and the lien of any mortgage or
other lien on any property hereafter acquired by the Company which may exist on
the date of, or be created as a vendor's lien or as a purchase money mortgage in
connection with, such acquisition; and that neither the value of the Mortgaged
Property nor the lien of this Indenture will be diminished or impaired in any
way as the result of any action or nonaction on the part of the Company.
Section 8.05. Conduct Business and Maintain Properties. The Company
covenants that its business will be carried on and conducted in an efficient
manner, and that all of its plants, appliances, systems, equipment and property
useful and necessary in the carrying on of its business will be kept in thorough
repair and maintained in a state of high operating efficiency in
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accordance with standards generally acceptable in the utility industry. The
Company covenants that it will expend for maintenance and reserve for
depreciation whatever amounts may be necessary so to maintain the Mortgaged
Property and provide for the Retirement of the depreciable portion of the
Mortgaged Property, which amounts shall be not less than those prescribed by any
governmental regulatory body having jurisdiction in the premises; and that in
any event the Company will charge as an expense and credit to depreciation
reserve in each of its fiscal years an amount which shall be not less than 2.3%
of the average amount of its depreciable property for such year.
Whenever the holders of at least a majority in principal amount of the
Bonds Outstanding shall so request in a written notice served upon the Trustee,
but not more frequently than once every five years, the Company shall appoint an
Independent Engineer satisfactory to the holders of a majority in principal
amount of the Bonds Outstanding to make an inspection of the property of the
Company. The Company shall cause such Independent Engineer, within a reasonable
time after the date of his appointment, to report to the Company and to the
Trustee whether or not the property of the Company is in general being
maintained as required by this Section, and whether or not any part of such
property that is no longer used or useful in the business of the Company has
been duly recorded as retired on its books.
If such Independent Engineer shall report that the property has not been so
maintained, he shall state in his report the character and extent and estimated
cost of making good such deficiency. The Company shall then proceed with all
reasonable speed to do such maintenance work as may be necessary to make good
any such maintenance deficiency, whereupon such engineer shall, within a period
of 90 days following the Company's completion of such work, report in writing to
the Trustee whether such deficiency has been made good; provided, however, that
in case such engineer shall fail or refuse to make such report within such
period, the Trustee shall appoint another Independent Engineer satisfactory to
the holders of a majority in principal amount of the Bonds Outstanding to make
such report. Unless the Trustee shall be so advised in writing by such engineer
within one year from the date of any report determining a maintenance deficiency
to exist, or such longer period as may be stated in such report to be reasonably
necessary for the purpose, that such deficiency has been made good, the Company
shall be deemed to have defaulted in the due performance of the covenant as to
the maintenance of its property contained in this Section 8.05.
If such Independent Engineer shall report that there is any property no
longer used or useful which has not been recorded as retired on the books of the
Company, he shall briefly describe such property and state the aggregate
Retirement which should be stated on such books with respect thereto. The
Company shall then make on its books appropriate entries recording the
Retirement of such property.
Section 8.06. Compliance with Underlying Mortgages. The Company covenants
that all of the covenants, conditions and agreements of any Underlying Mortgage
upon any property hereafter acquired by it will in all respects be fully
complied with; that upon the payment of all bonds issued under each such
mortgage it will procure such mortgage to be effectively satisfied and
discharged of record; that the Company will not issue or permit to be issued any
additional
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bonds secured by any Underlying Mortgage, but that each and every such mortgage
shall be effectively closed at the date of the acquisition of such property.
Section 8.07. Acquisition of Property Subject to Underlying Mortgages. The
Company covenants that it will not acquire any property which after its
acquisition will be subject to any Underlying Mortgage unless prior to the
acquisition thereof it shall have filed with the Trustee an Officers'
Certificate from which it shall appear and certify that the aggregate of the
Earnings Available for Interest Charges of the Company and the Earnings
Available for Interest Charges of the property to be acquired, computed in the
same manner as are Earnings Available for Interest Charges of the Company in
Section 4.02(c), for any consecutive twelve months out of the fifteen calendar
months immediately preceding the acquisition of such property is equal to at
least two times the Annual Interest Requirements on all Bonds Outstanding and
other indebtedness of the Company for borrowed money, plus all bonds and/or
other obligations secured by existing Underlying Mortgages and all bonds and/or
other obligations secured by any Underlying Mortgage or other lien (whether or
not prior to the lien of this Indenture) upon the property so to be acquired,
and will not acquire any property subject to any Underlying Mortgage securing
indebtedness in excess of sixty per cent (60%) of the lesser of:
(a) the fair value of such property to the Company at the date of
acquisition thereof; and
(b) the aggregate of (i) the amount of any lien subject to which such
property is acquired, (ii) the amount of any purchase money mortgage or
vendor's lien created in connection with its acquisition, (iii) any cash
payment made therefor, and (iv) the market value, or, in the absence
thereof, the fair value of any securities or other property of the Company
exchanged therefor;
all as of the date of and as established by an Independent Engineer's
Certificate, filed with the Trustee, dated as of the date of the acquisition of
such property, unless to offset such part of such indebtedness as shall exceed
such percentage there shall be appropriated Net Bondable Expenditures for
Property Additions in an amount equivalent to such excess. Such appropriation
shall be evidenced by a Resolution deposited with the Trustee together with a
Certificate of Net Bondable Expenditures dated as of the date of such
appropriation and, if there be included in such Certificate of Net Bondable
Expenditures, any New Gross Expenditures, the documents required by (i), (ii)
and (iii) of subparagraph (4) of Section 4.05.
The Company further covenants that it will not acquire any property which
after its acquisition will be subject to any Underlying Mortgage if such
acquisition would operate to increase the aggregate principal amount of all
bonds and/or other obligations secured by Underlying Mortgages (other than such
bonds and/or other obligations for the purchase, payment or redemption of which
cash in the necessary amount shall have been irrevocably deposited with the
trustee or mortgagee under the Underlying Mortgage or mortgages securing the
same or with the Trustee hereunder) to an amount greater than fifteen per cent
(15%) of the aggregate principal amount of all Bonds at the time issued and
Outstanding under this Indenture.
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Section 8.08. Records of Accounts and Certificate. The Company covenants
that proper books of record and account will be kept in which full, true and
correct entries will be made of all dealings or transactions of, or in relation
to, the plants, properties, business and affairs of the Company, and that it
will:
(a) At such times as the Trustee shall reasonably request, furnish
statements in reasonable detail showing the earnings, expenses and
financial condition of the Company;
(b) From time to time furnish to the Trustee such data as to the
plants, property and equipment of the Company, as the Trustee shall
reasonably request;
(c) On or before the expiration of one hundred and twenty (120) days
after the end of each fiscal year, furnish to the Trustee a full audit and
report certified by independent certified public accountants, covering the
operations of the Company during such fiscal year, and showing the earnings
and expenses for such period, and in reasonable detail, the assets,
liabilities and financial condition of the Company at the expiration
thereof; provided for the first fiscal year ending after the Merger Date,
the foregoing shall be reported on as though Exeter had merged into the
Company on the first day of such fiscal year. Said balance sheets and
reports shall be available at all reasonable times for the inspection of
any bondholder or his authorized agent.
The Company further covenants that all books, documents and vouchers
relating to the plants, properties, business and affairs of the Company shall at
all times be open to the inspection of such accountants or other agents as the
Trustee may from time to time designate.
Section 8.09. Annual Certificate of Compliance. The Company covenants that
it will, on or before the expiration of ninety (90) days after the end of each
fiscal year, file with the Trustee: (1) an Opinion of Counsel either stating
that such action has been taken with respect to the execution and delivery of
supplemental indentures, conveyances or other instruments, including all
financing and continuation statements covering security interests in personal
property, and the recording and filing of the same and of this Indenture and the
re-recording and re-filing of this Indenture as is necessary for the purpose of
maintaining the validity and priority of the lien and security interest hereof
on the Mortgaged Property and reciting the details thereof, or stating that no
such action is required for such purpose; and (2) an Officers' Certificate fully
describing all insurance policies then in force on the Mortgaged Property, or
any part thereof, stating that all such policies provide that all losses shall
be payable to the Trustee, as its interest may appear, and stating that the
Company has complied with the requirements of Section 8.10 with respect to the
maintenance of insurance and stating: (a) that all taxes which became due on the
Mortgaged Property during such fiscal year have been duly paid unless the
Company shall in good faith, by appropriate action, contest any of said taxes,
in which event such contest shall be set forth; (b) that all insurance premiums
which became due during such fiscal year upon the insurance policies to which
reference is hereinbefore made have been paid; (c) that no additional Fixed
Property has been acquired by the Company during such calendar year, or if any
Fixed Property has been so acquired, briefly describing the same and stating the
cost thereof; and (d) whether or not the Company is in default in the
fulfillment of any of its obligations under the Indenture and
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if a Default or Event of Default has occurred and then exists, specifying the
nature and period thereof and the action the Company is taking with respect
thereto.
Section 8.10. Insurance. The Company covenants that it will keep such of
the Mortgaged Property as is of an insurable nature and of the character usually
insured by companies engaged in similar geographical locations in any of the
businesses in which the Company is or may be engaged insured against loss or
damage by fire and from other hazards customarily insured against by such
companies and will carry such insurance with insurance companies of good
standing in amounts not less than the fair insurable value of the properties
insured.
All policies required by the provisions of this Section to be carried by
the Company shall provide that all losses shall be payable to the Trustee, as
its interest may appear. In case of any Event of Default by the Company in
fulfilling the covenants contained in this Section with respect to the carrying
of insurance, the Trustee may, at its option, effect such insurance in the name
of the Company or in the name of the Trustee and all premiums paid by the
Trustee for such insurance shall be repaid by the Company on demand and if not
so repaid shall be secured by the lien of this Indenture in priority to the
indebtedness evidenced by Bonds issued hereunder. Upon the happening of every
loss the Company shall make due proof of loss and shall do all things necessary
or desirable to cause the insurer or insurers to make payment in full directly
to the Trustee. In case of any loss covered by any policy of insurance, any
appraisement or adjustment of such loss and settlement and payment of indemnity
therefor which shall be agreed upon between the insured and the insurer shall be
accepted by the Trustee and the Trustee shall in no way be liable for the
adjustment of such loss. The Company shall upon the execution of this Twelfth
Supplemental Indenture furnish to the Trustee a statement in writing signed by
an officer of the Company fully describing all policies of insurance then in
force covering the Mortgaged Property or any part thereof and stating that all
such policies provide that all losses shall be payable to the Trustee, as its
interest may appear. The Trustee at its option may, but shall not be required
to, at any time, require the Company to deposit with it any or all of such
insurance policies and shall require such deposit upon the occurrence of an
Event of Default.
The Trustee shall from time to time, upon receiving an Officers'
Certificate certifying that the property damaged or destroyed has been repaired
or replaced and put in a condition at least as good as that before the loss
occurred, pay to the Company the amount of the insurance money received by the
Trustee on account of such loss if such amount does not exceed, in the case of
any one loss, $50,000. In all other cases the money so received by the Trustee
may be paid or applied from time to time in accordance with the provisions of
Sections 11.02 and 11.03.
Section 8.11. Maintenance of Corporate Existence and Rights. Subject to the
provisions of Article XII hereof, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence. The Company covenants that it now has complete and lawful authority
and privilege to maintain and operate its entire system and properties, and that
none of its rights, franchises or privileges will be allowed to lapse or be
forfeited unless the Board of Directors shall determine that any such right,
franchise or privilege is not necessary for the carrying on of the Company's
business; provided, however, that the expiration by lapse of time of any right,
franchise or privilege shall not constitute a violation of this covenant, but
the Company hereby expressly covenants that it will exercise its best
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endeavors and any and every proper means to procure extension or renewal of each
and every such right, franchise or privilege so expiring and necessary or
desirable for the maintenance of any of its plants, systems or properties.
Section 8.12. Eminent Domain. The Company covenants that it will pay or
cause to be paid to the Trustee the proceeds of any property subject to the lien
of this Indenture which has been taken by any governmental body through the
exercise of the power of eminent domain or which has been sold to such a
governmental body pursuant to the provisions of any statute or franchise
permitting such governmental body to compel the Company to sell the same, except
such thereof as may by the terms of an Underlying Mortgage be required to be
paid to or deposited with its mortgagee or trustee and as to any moneys which
shall be so paid to such mortgagee or trustee, the Company covenants that if any
thereof remains on deposit with such mortgagee or trustee upon the satisfaction
or release of such Underlying Mortgage it will pay the same to or cause the same
to be paid to the Trustee.
The Company further covenants that if any property subject to the lien of
this Indenture is subject to a license under Part I of the Federal Power Act and
at any time prior to the sale of such property, either under the terms of said
Part I or otherwise, the Company is required by the terms of said license or by
a final valid rule, regulation or order applicable thereto and to the Company,
to apply funds held by it in amortization (as distinguished from depreciation)
reserves accumulated, pursuant to the provisions of said license or of any such
final valid rule, regulation or order, out of surplus earnings in excess of a
reasonable rate of return on the Company's net investment in said property as
finally determined as provided in said Part I, to the reduction of the amount of
the Company's net investment therein, then the Company, if permitted to do so by
the provisions of said license or of said rule, regulation or order requiring
such reduction, will effect such reduction by paying or causing to be paid to
the Trustee such funds so required to be applied to such reduction. If such
property shall be purchased from the Company under the provisions of said Part I
or of said license by the United States or by any subsequent licensee of said
property under the provisions of said Part I, and the purchase price paid to the
Company for such property by such purchaser is reduced by the application
thereto of funds then held by the Company (and not then or theretofore held by
the Trustee) as unappropriated surplus or amortization, sinking fund or similar
reserves (but not including depreciation reserve) accumulated as aforesaid out
of surplus earnings in excess of a reasonable rate of return on the Company's
net investment in said property as finally determined as provided in said Part
I, then to the extent the price paid to the Company is actually reduced by such
application of such funds the Company will pay or cause to be paid an amount
equal to such funds to the Trustee as part of the proceeds of the sale of such
property to the United States or to such licensee. Upon the deposit of any funds
with the Trustee in accordance with the provisions of this paragraph, the
Company will cause to be delivered to the Trustee an Officers' Certificate
stating that the funds so deposited are in the amount then required to be
deposited pursuant to the provisions of this paragraph.
The Trustee on behalf of the bondholders may intervene in any proceeding
for such taking or purchase by a governmental body and shall do so upon the
written request of the holders of ten per cent (10%) or more in aggregate
principal amount of Bonds Outstanding being first indemnified for its expenses
as provided in Section 15.01 hereof. The Trustee may execute
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and deliver a release of any property so taken or sold and shall be fully
protected in so doing upon being furnished with (a) an Officers' Certificate
requesting such release stating that such property has been taken by eminent
domain and that all conditions precedent herein provided for relating to such
release have been complied with, (b) an Opinion of Counsel that such
governmental body had a lawful right to take such property or compel the Company
to sell the same and (c) either (i) a sum in cash equal to the proceeds of such
taking or (ii) a sum in cash equal to such proceeds less the amount required to
be paid to or deposited with the mortgagee or trustee of an Underlying Mortgage,
a receipt from such mortgagee or trustee for the amount so paid or deposited,
and an Opinion of Counsel that such amount is required by the terms of such
Underlying Mortgage to be so paid or deposited.
Section 8.13. Records at Trustee. The Company covenants that it will keep
on file at the principal office of the Trustee a list of the names and addresses
of the last known holders of all Bonds Outstanding with the principal amount of
Bonds believed to be held by each. Any bondholder may require his name and
address to be added to said list by filing a written request with the Company or
the Trustee, which request shall include a statement of the principal amount of
Bonds held by each bondholder and the numbers of such Bonds. The Trustee shall
be under no responsibility with regard to the accuracy of said list. Said list
may be inspected and copied by a bondholder or bondholders owning ten per cent
(10%) or more in principal amount of Bonds Outstanding or by his or their
authorized agent, such ownership and the authority of any such agent to be
evidenced to the satisfaction of the Trustee.
Section 8.14. No Extensions for Claims of Interest. The Company covenants
that no claim for interest pertaining to any Bond issued hereunder shall be kept
alive after the date specified for the payment of such interest by the extension
thereof or by the purchase thereof by or on behalf of the Company. Any such
claim for interest which in any way at or after the date specified for the
payment thereof shall have been transferred or pledged separate or apart from
the bond to which it relates or which shall in any manner have been kept alive
after the date specified for the payment thereof by extension or by the purchase
thereof by or on behalf of the Company shall not be entitled to any benefit of
or from this Indenture except after the prior payment in full of the principal
of all Bonds issued hereunder and of all interest obligations not so
transferred, pledged, kept alive or extended.
Section 8.15. Restricted Payments. The Company covenants that it will not
declare or pay dividends (other than in its own common stock) or make any other
distribution on shares of its common stock or apply any of its property or
assets (other than amounts equal to any proceeds received from the sale of
common stock of the Company) to the purchase or retirement of, or make any other
distribution through reduction of capital or otherwise, in respect of, any
shares of its common stock if, after giving effect to such distribution, the
aggregate of all such distributions declared, paid, made or applied subsequent
to December 31, 2000 by the Company and Exeter, plus the amount of all dividends
declared or accrued on any class of preferred stock of the Company or Exeter
subsequent to December 31, 2000, and any amounts charged to net income after
December 31, 2000 in connection with the purchase or retirement of any shares of
preferred stock of the Company or Exeter would exceed an amount equal to net
income of the Company available for dividends after December 31, 2000, plus the
sum of $7,565,000.
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The term "net income", as applied to any period shall mean the net income
(or deficit) of the Company and, for periods prior to the Merger Date, of Exeter
for such period properly transferable to its earned surplus, all computed, if a
uniform system of accounts is prescribed by any commission or other governmental
body having jurisdiction in the premises, in accordance with such uniform
system; otherwise in accordance with accepted accounting practice, and in any
event by deducting from the aggregate gross revenues of the Company and, for
periods prior to the Merger Date, of Exeter for such period all expenses
required to be deducted in computing Earnings Available for Interest Charges for
such period in accordance with Section 4.02(B) and (C) of the Indenture, and
also by deducting all interest requirements, taxes, amortization of debt
discount and expense and other deferred charges, and all other non-operating
expenses for such period.
Section 8.16. Transactions with Affiliates. The Company will not and will
not permit any Subsidiary to enter into directly or indirectly any transaction
or Material group of related transactions (including without limitation the
purchase, lease, sale or exchange of properties of any kind or the rendering of
any service) with any Affiliate (other than the Company or another Subsidiary),
except in the ordinary course and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate, or as may be
otherwise ordered or required by a governmental authority having jurisdiction
over the Company.
Article IX
Supplemental Indentures and Indenture Modifications
Section 9.01. Supplemental Indentures without Consent of Bondholders. In
addition to any supplemental indenture otherwise authorized or permitted by this
Indenture, the Company when authorized by Resolution and the Trustee from time
to time and at any time, subject to the conditions and restrictions in this
Indenture contained, and without the consent of or notice to the bondholders,
may execute an indenture or indentures supplemental hereto, and which thereafter
shall form a part hereof, for any one or more or all of the following purposes:
(a) To add to the conditions, limitations and restrictions of the
authorized amount, terms, provisions, purposes of issue, authentication and
delivery of Bonds specified herein, other conditions, limitations and
restrictions thereafter to be observed with respect to the Bonds or any one
or more series thereof;
(b) To add to the covenants and agreements of the Company in this
Indenture contained, other covenants and agreements thereafter to be
observed;
(c) To provide for the creation of any series of Bonds pursuant to
Articles IV, V or VI;
(d) To evidence the succession of another corporation to the Company,
or successive successions, and the assumption by a successor corporation of
the covenants
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and obligations of the Company and the acceptance by the successor
corporation of the provisions in the Bonds hereby secured and in this
instrument and in any and every supplemental indenture contained;
(e) To convey, transfer and assign to the Trustee, and to. subject to
the lien of this Indenture, with the same force and effect as though
included in the Granting Clauses hereof, additional properties, permits and
franchises hereafter acquired by the Company through consolidation or
merger, or by purchase or in any other manner whatsoever;
(f) To cure any ambiguity, or to cure, correct or supplement any
defect or inconsistent provision contained in this instrument or any
indenture supplemental hereto;
(g) To make this Indenture conform to the Trust Indenture Act of 1939
or similar legislation or otherwise to add to the duties and obligations of
the Trustee, but no such supplemental indenture which shall add to the
duties and obligations of the Trustee hereunder shall be made without the
written consent of the Trustee.
Section 9.02. Modification of Indenture. From time to time the holders of
seventy-five per cent (75%) in aggregate principal amount of Bonds Outstanding,
by an instrument or instruments in writing signed by such holders and filed with
the Trustee, shall have power to assent to and authorize any modification of any
of the provisions of this Indenture that shall be proposed by the Company when
authorized by a Resolution, and the Trustee may enter into an indenture
supplemental hereto for the purpose of adding such modification to the Indenture
and any action herein authorized to be taken with the assent or authority, given
as aforesaid, of the holders of seventy-five per cent (75%) in aggregate
principal amount of Bonds Outstanding shall be binding upon the holders of all
of the Bonds at any time Outstanding and upon the Trustee as fully as though
such action were specifically and expressly authorized by the terms of this
Indenture, provided, however, that no such modification shall (i) extend the
time or times of payment of the principal of, or the interest or premium, if
any, on any Bond, or (ii) reduce the principal amount thereof or the rate of
interest or premium thereon, or (iii) authorize the creation of any lien prior
or equal to the lien of this Indenture upon any of the Mortgaged Property, or
deprive any bondholder of the benefit of the lien of this Indenture, or (iv)
affect the rights under this Indenture of the holders of one or more, but less
than all, of the series of Bonds outstanding hereunder unless assented to by the
holders of seventy-five per cent (75%) in aggregate principal amount of Bonds
Outstanding of each of the series so affected, or (v) reduce the percentage of
Bonds, the holders of which are required to assent to any such modification
pursuant to this Section, or (vi) in any manner affect the rights or obligations
of the Trustee without its written consent thereto; and provided further, that,
anything in this Section to the contrary notwithstanding, the holders of
seventy-five per cent (75%) in aggregate principal amount of Bonds Outstanding
of any particular series shall have power to waive any right specifically
provided in respect of that series, and to assent to any modification of any
such right which shall be proposed by the Company, subject, however, to the
provisions of clauses (i) through (vi) of this Section. Any modification of the
provisions of this Indenture so made as aforesaid shall be set forth in a
supplemental indenture between the Trustee and the Company which shall be
recorded and/or filed in the same manner as this Indenture and the Trustee shall
be fully protected in acting in accordance therewith.
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Section 9.03. Execution of Supplemental Indenture. No supplemental
indenture shall become effective until it shall have been executed by the
Trustee and the Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture authorized or permitted by the
provisions of this Indenture and to make the further agreements and stipulations
which may be therein contained. The Trustee shall be fully protected in relying
on an Opinion of Counsel as to whether or not any proposed supplemental
indenture is authorized or permitted by the provisions of this Indenture and is
consistent therewith.
Section 9.04. Effect of Supplemental Indenture. From and after the
execution of any such supplemental indenture the covenants and provisions
contained therein shall be deemed a part of this Indenture and shall bind and
benefit the Company, the Trustee and the bondholders as effectually as the
covenants and provisions contained in this instrument at the time of its
execution, and the Trustee and the bondholders shall have the same remedies for
a breach thereof as are provided in respect of a breach of the provisions and
covenants now contained in this Indenture.
Article X
Possession, Use and Release of Mortgaged Property
Section 10.01. Possession and Use of Mortgaged Property. Unless an Event of
Default shall have occurred and shall not have been remedied, the Company shall
be suffered and permitted to remain in full possession, enjoyment and control of
all the properties, rights, privileges and franchises hereby mortgaged and shall
be permitted to manage and operate the same, and, subject always to the
provisions hereof, to receive, receipt for, take, use, enjoy and dispose of all
rents, revenues, income, issues and profits thereof.
Section 10.02. Alterations to Mortgaged Property. While in possession of
the Mortgaged Property and if no Default or Event of Default then exists, the
Company shall have the right at all times, as proper management of the business
of the Company may require, to alter, change, add to, repair, and make any
change in the location of its buildings and structures, power plants, conduits,
meters, services, transformers, poles, pole lines, transmission or distribution
lines, wires, cross-arms, cables, equipment and apparatus, provided that the
location of none of the Mortgaged Property may be changed so as to impair the
lien of this Indenture unless such property is sold or exchanged as elsewhere in
this Article permitted.
Section 10.03. Dispositions of Mortgaged Property without Release. While in
possession of the Mortgaged Property and if no Default or Event of Default then
exists, the Company may, without obtaining any release from or consent of the
Trustee, free from the lien of this Indenture:
(1) dispose of (i) fractional interests in poles and their
appurtenances and/or the right to the joint use of such poles by the
purchaser of such interest with the Company, (ii) any of its tangible
personal property which may have become worn out, due for replacement in
the regular course of business, disused or undesirable for use;
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(2) cut and sell, and license others to cut and remove, any pulp wood,
timber, logs and trees having an aggregate fair value in any one five-year
period of not in excess of $100,000, which are now, or at any time
hereafter shall be, upon any land included in the Mortgaged Property;
(3) surrender or assent to the modification of any franchise which it
may hold or under which it may be operating, provided that (a) in the event
of any such surrender, the Company shall then have or shall receive at the
time of such surrender a franchise which, in the Opinion of Counsel (filed
with the Trustee prior to such surrender), shall authorize it to do the
same or an extended business in the same or an extended territory during
the same or an extended or unlimited period of time, and (b) in the event
of any such modification, the franchise as modified shall, in the Opinion
of Counsel (filed with the Trustee prior to the effective date of such
modification), authorize the continuance of the same or an extended
business in the same or an extended territory during the same or an
extended or unlimited period of time; and
(4) make changes or alterations in or substitutions for any licenses
or leases or surrender and cancel the same, provided that such change,
alteration or substitution or such surrender or cancellation, as the case
may be, is in the interest of the Company and will not impair the security
of the Bonds Outstanding; and in such event any modified, altered or
substituted grants, licenses or leases shall forthwith be subject to the
terms of this Indenture to the same extent, if any, as those previously
existing;
provided, however, that the Company either (i) shall apply any net cash proceeds
or other consideration received by the Company for or in connection with any
disposition of Mortgaged Property by the Company under this Section 10.03 in
acquiring, or in reimbursing itself for, other property, not necessarily of the
same character, but of value at least equal to that of the property disposed of,
which other property shall be Fixed Property and shall forthwith become subject
to the lien of this Indenture, or (ii) if and to the extent that such net cash
proceeds or other consideration are not so applied within 12 calendar months
after the receipt thereof, shall pay such net cash proceeds or an amount equal
to such other consideration (unless by the terms of any prior mortgage or other
instrument permitted by the terms hereof such net cash proceeds or other
consideration are required to be and are applied to reduce, discharge or secure
the obligations secured by any such prior mortgage or other instrument) to be
held and applied by the Trustee pursuant to the provisions of Sections 11.02 and
11.03.
Section 10.04. Release of Mortgaged Property. While in possession of the
Mortgaged Property and if no Default or Event of Default then exists, the
Company may sell or exchange but not otherwise dispose of any of its property
(in addition to the property referred to in Section 10.03 and in addition to any
property released pursuant to Section 8.12 hereof) and the Trustee shall release
the same from the lien hereof upon receipt by the Trustee of:
(a) A Resolution authorizing such sale or exchange and requesting such
release;
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(b) An Officer's Certificate signed also by an Engineer who, if the
consideration to be received for the property for the release of which
request is made exceeds $150,000, shall be an Independent Engineer;
(i) describing the property for the release of which request is
made and stating that in the opinion of the signers such release will
be of benefit to the Company and will not be prejudicial to the
security of the Bonds issued hereunder;
(ii) stating that the Company has sold or exchanged, or
contracted to sell or exchange, the property for the release of which
request is made for a stated consideration representing in the opinion
of the signers its full value to the Company and consisting solely of
cash, Property Additions and/or properties which upon such exchange
will constitute Property Additions;
(iii) stating either that the property for the release of which
request is made does not constitute or include all or substantially
all of the physical properties of the Company subject to the lien
hereof, or, that if it does constitute or include all or substantially
all of such physical properties, stating that from the cash
consideration received or to be received therefrom, as increased by
any other Trust Moneys available for the redemption of Bonds, there
will be moneys sufficient in amount to pay all of the expenses and
charges due the Trustee and to redeem all Bonds Outstanding; and
(iv) if any Property Additions, or properties which upon such
exchange will become Property Additions, are included in such
consideration, briefly describing them, and if from the Opinion of
Counsel responsive to (f) of this Section it appears that such are
subject to any Permitted Encumbrances, that such Permitted
Encumbrances do not impair the use of the property to which they
pertain for the purposes for which such property is held or to be held
by the Company;
(c) An Officers' Certificate dated as of a date not more than ten days
prior to such release, stating that immediately after giving effect to such
release, no Default or Event of Default shall have occurred and be
continuing;
(d) All moneys stated in said certificate to be or to have been
received in consideration for any property for the release of which request
is made, or to the extent that such moneys constitute the consideration for
property subject to an Underlying Mortgage, which, by its terms, are
required to be paid to or deposited with its mortgagee or trustee, a
receipt by such mortgagee or trustee for such moneys, the Company
covenanting and directing that upon the satisfaction or release of such
Underlying Mortgage, any such money remaining in the possession or control
of such mortgagee or trustee to which the Company may be entitled shall
forthwith be deposited with the Trustee;
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(e) Such deeds, bills of sale, supplemental indentures, or other
instruments of conveyance as may be necessary or proper to subject to the
lien of this Indenture any property received in exchange for property
released;
(f) An Opinion of Counsel stating;
(i) that the instruments of conveyance above mentioned are
sufficient, and no other documents are required, to subject to the
lien of this Indenture any property received in exchange for property
released, and that all of the property received in exchange will, upon
such acquisition, be subject to no liens in addition to the lien of
this Indenture except Permitted Encumbrances;
(ii) if any part of the consideration for property so to be
released has been or is to be paid to or deposited with the mortgagee
or trustee of an Underlying Mortgage, that such consideration is
required by such Underlying Mortgage to be paid to or deposited with
such mortgagee or trustee;
(g) Either (i) a certificate constituting evidence of the
authorization, approval or consent of any governmental body at the time
having jurisdiction in the premises to the sale or exchange of the property
to be released, the consideration to be received therefor and the
acquisition of any property constituting any part of such consideration,
together with an Opinion of Counsel that the same constitutes sufficient
evidence thereof and that the authorization, approval or consent of no
other governmental body is required; or (ii) an Opinion of Counsel that no
authorization, approval or consent of any governmental body is required.
Section 10.04A. Application for Release of Mortgaged Property. While in
possession of the Mortgaged Property and if no Default or Event of Default then
exists, the Company may apply to the Trustee for the release of certain property
which is not Public Utility Property (as defined below) from the lien of the
Indenture subject to the release valuation limitations hereinafter provided, to
be thereafter held by the Company free of the mortgage, available for sale or
transfer without further authorization from or accountability to the Trustee,
and the Trustee shall release the said property from the said lien upon its
receipt of:
(a) A Resolution identifying the property to be released and
requesting that it be released;
(b) An Officers' Certificate signed also by an Engineer who, if the
release valuation of the property involved exceeds $100,000, shall be an
Independent Engineer;
(i) Identifying the property to be released and stating that no
part of it is Public Utility Property nor included or includable in
any way in the Company's electric utility rate base. For purposes of
this certification, "Public Utility Property" shall mean and include
all property of the Company which is used or useful to it in any
aspect of its business as a New Hampshire electric public utility
company, including without limitation, the transmission, distribution,
use,
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purchase, supply and/or delivery, sale and disposition of electricity
for heat, light, power, refrigeration or any other use, or in any
business incidental thereto, including all properties necessary,
appropriate, or in any manner useful for the transmission,
distribution, use, purchase, supply, and/or delivery, sale and
disposition of electricity, together with all betterments, additions,
replacements, or alterations of, upon, or to any such property, saving
and excepting, however, any and all categories of property of the
Company excluded from the lien of the Indenture by the several
Reservation, Exception and Exclusion Clauses of the Granting Clauses
of the Indenture.
(ii) Stating the release valuation of the property involved, and
showing that such valuation plus the aggregate release valuation of
all prior such releases of property of the Company which is not Public
Utility Property for the preceding twelve calendar months does not
exceed $350,000 nor, for the preceding five-year period, an amount
equal to five percent of the Company's net utility plant as of the
close of the last calendar year as shown in the Company's annual
report for such year to the New Hampshire Public Utilities Commission.
For purposes of the foregoing computation, "release valuation" shall
be defined to mean the recorded net book cost of property other than
real estate, and in the case of real estate, the greater of (x) net
book cost or (y) the latest assessed valuation for purposes of local
real estate taxation.
(c) An Officer's Certificate dated as of a date not more than ten days
prior to such release, stating that after giving effect to such release, no
Default or Event of Default shall have occurred and be continuing; and
(d) A sum of money equivalent to the release valuation of the property
to be released from the lien of the Indenture.
Section 10.05. Purchaser Protected. In favor of every purchaser from the
Company, and of every person claiming any interest by, through or under the
Company, every release of property from the lien of this Indenture by the
Trustee under the provisions of Section 8.12 and this Article shall be valid,
and no such purchaser or person need inquire as to the power or authority of the
Trustee to make any such release, or see to the application of the purchase
money.
Section 10.06. Company's Covenant Regarding Disposition. The Company
covenants that it will not sell, exchange or otherwise dispose of any of its
properties except in the manner permitted by Section 8.12 and this Article,
provided, however, that nothing in this Section shall be construed to be in
derogation of the provisions of Article XII.
Section 10.07. Powers Exercisable by Receiver or Trustee. In case the
Mortgaged Property shall be in the possession of a receiver or trustee lawfully
appointed, the powers in and by this Article conferred upon the Company may be
exercised by such receiver or trustee and if the Trustee shall be in possession
of the Mortgaged Property under any provision of this
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Indenture then all the powers in Section 8.12 and this Article conferred upon
the Company may be exercised by it in its discretion.
Article XI
Holding and Application of Trust Moneys
Section 11.01. "Trust Moneys" Defined. All moneys required to be deposited
with or paid to the Trustee under any provision hereof shall be held by it in
trust (all such moneys being herein sometimes called "Trust Moneys"). Except for
Trust Moneys deposited with or paid to the Trustee for the redemption of Bonds,
notice of the redemption of which has been duly given, all Trust Moneys so paid
over to the Trustee shall, while held by it, constitute part of the Trust Estate
and be subject to the lien hereof. While held by the Trustee any such Trust
Moneys may be invested as provided in Section 11.06 and if no Default or Event
of Default then exists, the interest earnings of any amounts so deposited shall
be distributed to the Company, free of trust, at least quarter-annually.
Section 11.02. Withdrawal or Redemption of Outstanding Bonds. Subject to
the provisions of Section 11.04, the Company, so long as no Default or Event of
Default then exists, may:
(a) withdraw any Trust Moneys deposited with the Trustee pursuant to
the provisions of Sections 8.10 (except as otherwise provided in Section
8.10 with respect to amounts not exceeding $50,000), 8.12, 10.03, 10.04 and
10.04A, to reimburse itself for 100% of Net Bondable Expenditures made by
it for Property Additions as evidenced by the Certificate of Net Bondable
Expenditures for Property Additions to which reference is hereinafter made;
or
(b) cause the Trustee to apply any Trust Moneys withdrawable under (a)
above to the payment or redemption of Bonds then Outstanding;
provided, however, that none of such Trust Moneys shall be so withdrawn under
clause (a) above later than two years after the date of their deposit with the
Trustee.
If the Company shall elect to withdraw Trust Moneys pursuant to clause (a)
of this Section, it shall deliver to the Trustee an Order of the Company
specifying the amount to be withdrawn and stating that such withdrawal is not
prohibited by Section 11.02 or 11.04, and accompanied by a Resolution
authorizing such withdrawal and a Certificate of Net Bondable Expenditures,
together with, if there be included in such certificate any New Gross
Expenditures, the documents required by (i), (ii) and (iii) of subparagraph (4)
of Section 4.05. Such Certificate of Net Bondable Expenditures shall be dated as
of a date within sixty days of the date of such withdrawal. No such withdrawal
shall be made unless the Trustee shall also have received an Officers'
Certificate dated as of the date of such withdrawal stating that the amount, if
any, shown in Item (12) of said Certificate of Net Bondable Expenditures plus
Gross Expenditures for Property Additions since the date of said Certificate
exceeds Net Retirements since the date of said certificate and stating that no
Default or Event of Default then exists.
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If the Company shall elect to cause the Trustee to apply moneys to the
redemption of Bonds pursuant to clause (b) of this Section, it shall deliver to
the Trustee an Order of the Company stating that such application is not
prohibited by Section 11.04 and stating that no Default or Event of Default then
exists. Such Order shall be accompanied by a Resolution authorizing such
redemption. Such redemption shall be made as provided in Section 11.03.
Section 11.03. Redemption Procedures. As soon as conveniently possible
after each election by the Company to apply Trust Moneys to the redemption of
Bonds pursuant to clause (b) of Section 11.02 and after each occasion upon which
the Trustee shall have on hand $5,000 or more of moneys referred to in Section
11.02 which have been on deposit with the Trustee more than two years after the
date of such deposit, the Trustee shall (i) if Bonds of more than one series are
outstanding hereunder and the moneys to be applied are insufficient to redeem
all Bonds then Outstanding, apportion such moneys to the redemption of Bonds of
each such series, in proportion, as nearly as is practicable, to the ratio which
at the time of such apportionment the aggregate principal amount of the Bonds of
each series then Outstanding bears to the total principal amount of the Bonds of
all series then Outstanding, (ii) fix a date (or dates in case Bonds of more
than one series are to be redeemed and are not redeemable on the same date) for
the redemption of Bonds, (iii) select the Bonds to be so redeemed as provided in
Section 7.02, (iv) notify the Company of the Bonds to be so redeemed and of the
date (or dates) of such redemption, and (v) give notice of redemption of such
Bonds as provided in Sections 7.03, 7.04 and 7.05. The Company covenants that it
will, on or before forty (40) days prior to the date (or each date) so fixed,
pay to the Trustee the amount of the charges which will be due it and the amount
of expenses which it will incur in connection with such (or each such)
redemption, and that the Company will deliver to the Trustee, on or prior to the
date (or each date) so fixed for redemption, the excess of the aggregate of the
redemption prices of the Bonds to be so called (including interest to date of
redemption and premium, if any) over the aggregate of the principal amounts
thereof.
Section 11.04. Redemption When Trust Estate is Released. In the event,
however, that all or substantially all the fixed properties of the Company which
constitute the Trust Estate are released from the lien hereof, then the Trustee
shall forthwith by the use, in so far as necessary, of all Trust Moneys
deposited with it (other than moneys held for the redemption of Bonds, a notice
of the redemption of which has been given) redeem all Bonds then Outstanding,
provided, however, that if the aggregate of all such Trust Moneys, after the
deduction therefrom of any expenses or charges for the payment of which the
Trustee will be compelled to resort to such Trust Moneys, will be insufficient
to redeem all Bonds then Outstanding, then the Trustee shall, subject to the
provisions of Section 8.14, apply said Trust Moneys to the pro rata payment on
account of and in proportion to the respective amounts of the principal of,
premium, if any, and accrued interest on all Bonds then Outstanding,
irrespective of series.
Section 11.05. Redeemed Bonds. No Bonds redeemed under the provisions of
this Article shall thereafter be Available Bonds useable as the basis for the
issue of Bonds or of any further action or credit under this Indenture, and all
such Bonds shall be cancelled.
Section 11.06. Investment of Trust Moneys. Except where otherwise provided
in this Indenture, all or any part of any Trust Moneys held by the Trustee
hereunder may from time to
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time at the written direction of the Company, signed by the President,
Vice-President or Treasurer of the Company, be invested or reinvested by the
Trustee in any of the following:
(1) Investments in commercial paper maturing in 270 days or less from
the date of issuance which, at the time of acquisition, is accorded the
highest rating by S&P or Moody's;
(2) Investments in United States Governmental Securities; provided
that such obligations mature within one year from the date of acquisition
thereof;
(3) Investments in certificates of deposit maturing within one year
from the date of origin, issued by an Acceptable Bank; or
(4) any mutual fund or other fund which is operated in the United
States which has substantially all of its investments in the Investments
described above in clauses (1) or (2) of this Section 11.06.
Such Investments shall be held by the Trustee as a part of the Trust
Estate, subject to the same provisions hereof as the cash used by it to purchase
such Investments; but upon a like direction of the Company, the Trustee shall
sell all or any designated part of the same and the proceeds of such sale shall
be held by the Trustee subject to the same provisions hereof as the cash used by
it to purchase the Investments so sold. If under the provisions of this
Indenture any Trust Moneys held by the Trustee and so invested or reinvested
shall be required to be applied to the redemption of Bonds, the Trustee shall
forthwith sell such Investments in an amount equivalent to the Trust Moneys so
to be applied. In case the net proceeds (exclusive of interest) realized, upon
any such sale shall amount to less than the amount invested by the Trustee in
the purchase of the Investments so sold (after appropriate adjustment on account
of any accrued interest paid at the time of purchase), the Trustee shall within
five days after such sale notify the Company in writing thereof and within five
days thereafter the Company shall pay to the Trustee the amount of the
difference between such purchase price and the amount so realized, and the
amount so paid shall be held by the Trustee in like manner and subject to the
same conditions as the proceeds realized upon such sale. The Trustee shall not
be liable or responsible for any loss resulting from any Investment or
reinvestment pursuant to this Section 11.06.
Article XII
Consolidations, Mergers and Sales
Section 12.01. Consolidation, Merger and Sales Permitted on Certain Terms.
Nothing in this Indenture contained shall prevent any lawful consolidation or
merger of the Company with or into any other corporation, or any conveyance or
transfer, subject to the lien of this Indenture, of all, or substantially all,
the Mortgaged Property, as an entirety, to any corporation lawfully entitled to
acquire and operate the same; provided, however, and the Company covenants and
agrees, that such consolidation, merger, conveyance or transfer shall be upon
such terms as in no respect to impair the lien of this Indenture upon the
Mortgaged Property then subject thereto, or any of the rights or powers of the
Trustee or the bondholders hereunder; and provided further,
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that the property of the successor corporation with which the Company shall
consolidate or merge or to which all of the Mortgaged Property shall be conveyed
as an entirety shall not be subject to any lien (other than Permitted
Encumbrances) which after such consolidation, merger or conveyance will be equal
or prior to the lien of this Indenture on the property owned by such other
corporation and included in its fixed asset account, unless the amount of
obligations outstanding under and secured by such equal or prior lien shall not
exceed sixty per cent (60%) of the fair value of such property of such other
corporation, as evidenced by an Independent Engineer's Certificate filed with
the Trustee; or unless there be appropriated Net Bondable Expenditures in an
amount equivalent to such excess (such appropriation to be evidenced in the same
way as a similar appropriation pursuant to Section 8.07), and unless the
Earnings Available for Interest Charges (determined in the manner provided in
Section 4.02 hereof for Earnings Available for Interest Charges of the Company
and verified by independent certified public accountants), derived from the
operation of the property of such other corporation, for a period of twelve (12)
consecutive calendar months within fifteen (15) calendar months immediately
preceding the date of such consolidation, merger or conveyance, shall have been
at least two (2) times the Annual Interest Requirements (determined in the
manner provided in Section 4.02 hereof for Annual Interest Requirements of the
Company, as verified by such accountants), on all obligations outstanding under
and secured by such equal or prior lien at the time of such consolidation,
merger or conveyance and on all other obligations of such other corporation for
borrowed money, except obligations for the payment or redemption of which the
necessary funds shall have been deposited with the trustee under the mortgage
creating such equal or prior lien, or with the Trustee hereunder, together with
irrevocable instructions to apply such funds to the payment or redemption of
such obligations (but subject to any applicable clause in such mortgage
providing for the return of any unclaimed moneys to the Company or such other
corporation, as the case may be, depositing such funds); and provided further,
that such successor corporation shall execute and deliver to the Trustee an
indenture supplemental hereto and satisfactory to the Trustee which shall
provide:
(1) that such successor corporation shall assume the due and punctual
payment of the principal of, (and premium, if any) and interest on all the
Bonds issued hereunder and the performance and observance of all of the
covenants and conditions to be performed or observed by the Company
contained in this Indenture; and
(2) a grant, conveyance, transfer and mortgage in terms sufficient to
include and subject to the lien of the Indenture; subject only to Permitted
Encumbrances, all property (other than Excepted Property) thereafter
acquired or constructed by such successor corporation in the territories
theretofore served by the Company and all property (other than Excepted
Property) forming an integral part of, or essential to the use or operation
of, any property subject to the lien of this Indenture at the time of such
consolidation, merger, conveyance or transfer, and all property
subsequently subjected to the lien of this Indenture as a first mortgage
lien thereon, and all betterments, extensions, improvements, additions,
renewals and replacements thereof, and all franchises necessary or proper
for the operation thereof, the lien thereby created to have the same force,
effect and standing as if the Company had itself acquired or constructed
such property.
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Notwithstanding anything to the contrary contained herein, the successor
corporation shall be organized under the laws of the United States or any state
thereof or under the laws of Canada or any province thereof.
Section 12.02. Successor Corporation Substituted. The successor corporation
thereafter may cause to be signed, issued and delivered, either in its own name
or in the name of Unitil Energy Systems, Inc., any or all Bonds issuable
hereunder which shall not theretofore have been signed by Unitil Energy Systems,
Inc. and authenticated by the Trustee, and upon the order of the successor
corporation in lieu of Unitil Energy Systems, Inc., and subject to all the
terms, conditions and restrictions in this Indenture prescribed, relating to the
authentication and issuance of Bonds, the Trustee shall authenticate and deliver
any of such Bonds which shall have been previously signed and delivered by the
officers of Unitil Energy Systems, Inc. to the Trustee for authentication, and
any of such Bonds which the successor corporation shall thereafter, in
accordance with the provisions of this Indenture, cause to be signed and
delivered to the Trustee for such purpose; provided, however, that no such
Additional Bonds may be issued hereunder and no cash shall be withdrawn or
property released on the basis of Net Bondable Expenditures for Property
Additions, unless (A) thereupon the aggregate indebtedness of such successor
corporation secured by liens on any property equal or superior to the lien of
this Indenture will not exceed 15% of the aggregate principal amount of all
Bonds then Outstanding under this Indenture and (B) such successor corporation
(1) shall effectively close each open end mortgage (other than this Indenture)
to which any of its property may be subject, and (2) shall by an indenture
supplemental hereto to which reference is made in Section 12.01 hereof or by a
subsequent indenture supplemental hereto satisfactory to the Trustee similarly
executed and delivered which shall provide a grant, conveyance, transfer and
mortgage in terms sufficient to include and subject to the lien hereof, subject
only to Permitted Encumbrances, (a) with the same force, effect and standing as
though this Company had itself acquired the same at the time of the delivery of
such supplemental indenture, all property, not theretofore subject to the lien
hereof, then owned by such successor corporation (other than Excepted Property),
and (b) with the same force, effect and standing as though the Company were
itself to construct or acquire such property, all property thereafter acquired
or constructed by such successor corporation (other than Excepted Property).
Section 12.03. Opinion of Counsel Required. The Trustee may receive an
Opinion of Counsel as conclusive evidence (1) that any such indenture can and
does comply with the foregoing conditions and provisions required with respect
thereto by Section 12.01 or 12.02, or both, and (2) that such successor
corporation has complied with the provisions of Section 12.02 with respect to
the closing of open end mortgages.
Article XIII
Discharge of Indenture
If the Company shall pay or cause to be paid to the holders of the Bonds
the principal thereof, including therein the premium thereon, if any, and
interest to become due thereon at the times and in the manner stipulated therein
and herein, and if the Company shall keep, perform and observe all and singular
the covenants and promises in the Bonds and in this Indenture
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expressed to be kept, performed and observed by it or on its part, then these
presents and the estate and rights hereby granted shall (at the option of the
Company evidenced by a Resolution delivered to the Trustee) cease, determine and
be void, and thereupon the Trustee shall, upon the request of the Company but
only after payment of all proper charges and cancellation of all Bonds for the
payment of which cash shall not have been deposited in accordance with the
provisions of this Indenture, cancel and discharge the lien of this Indenture,
and execute and deliver to the Company such deeds or other instruments in
writing as shall be requisite to satisfy the lien hereof, and reconvey to the
Company the estate and title hereby conveyed, and assign and deliver to the
Company any property at the time subject to the lien of this Indenture which may
then be in possession of the Trustee, except cash held for the payment of the
principal of, premium, if any, or interest on Bonds.
Bonds, for the payment or redemption of which moneys shall have been
deposited with the Trustee (whether upon or prior to the maturity or the
redemption date of such Bonds) and been made available for present payment to
the holders of such Bonds, shall be deemed to be paid within the meaning of this
Section; provided, however, that if such Bonds are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been duly given or
provision satisfactory to the Trustee shall have been made therefor, or such
notice shall have been waived.
Article XIV
Default Provisions and Remedies
Section 14.01. Events of Default Defined. Each of the following events is
hereby defined as and is declared to be and to constitute an "Event of Default":
(a) Default in the payment of any interest on any Bond when the same
shall become due and payable and the continuance thereof for a period of
ten (10) days; or
(b) Default in the payment of the principal of (and premium, if any,
on) any Bond when the same shall become due and payable whether at the
stated maturity thereof, or upon redemption thereof, or by declaration as
in Section 14.02 provided; or
(c) Default in the performance or observance of any other of the
covenants, agreements or conditions on the part of the Company in this
Indenture or in the Bonds contained, and the continuance thereof for a
period of thirty (30) days after written notice to the Company by the
Trustee or by the holders of not less than ten per cent (10%) in aggregate
principal amount of Bonds then Outstanding; or
(d) The Company (i) is generally not paying, or admits in writing its
inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii)
makes an assignment for the benefit of its creditors, (iv) consents to the
appointment of a
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custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of the Mortgaged
Property, (v) is adjudicated as insolvent or to be liquidated, or (vi)
takes corporate action for the purpose of any of the foregoing; or
(e) A court or governmental authority of competent jurisdiction enters
an order appointing, without consent by the Company, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of the Mortgaged Property, or constituting
an order for relief or approving a petition for relief or reorganization or
any other petition in bankruptcy or for liquidation or to take advantage of
any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company, or any such petition
shall be filed against the Company and such petition shall not be dismissed
within 60 days; or
(f) If under the provisions of any other law now or hereafter existing
for the relief or aid of debtors any court of competent jurisdiction shall
assume custody or control of the Company or of the whole or any substantial
part of the Mortgaged Property, and such custody or control shall not be
terminated within sixty (60) days from the date of assumption of such
custody or control.
Section 14.02. Acceleration of Maturity; Rescission and Annulment. Upon the
occurrence of an Event of Default the Trustee may, and upon the written request
of the holders of twenty-five per cent (25%) in aggregate principal amount of
Bonds then Outstanding, shall, by notice in writing delivered to the Company,
declare the principal of all Bonds then Outstanding and the interest accrued
thereon along with the Make Whole Amount (as hereinafter defined) immediately
due and payable, and such principal, interest and Make Whole Amount shall
thereupon become and be immediately due and payable; subject, however, to the
right of the holders of a majority in aggregate principal amount of Bonds then
Outstanding, by written notice to the Company and to the Trustee, to annul such
declaration and destroy its effect at any time before any sale hereunder, if,
before any such sale, all agreements with respect to which such Event of Default
shall have been made shall be fully performed or made good, and all arrears of
interest upon all Bonds then Outstanding and the reasonable expenses and charges
of the Trustee, its agents and attorneys, and all other indebtedness secured
hereby, except the principal of any Bonds which have not then attained their
stated maturity and interest accrued on such Bonds since the last interest
payment date, shall be paid, or the amount thereof shall be paid to the Trustee
for the benefit of those entitled thereto. The Company acknowledges that each
holder of a Bond has the right to maintain its investment in such Bond free from
redemption by the Company (except as specifically provided for) and that the
provision for the payment of a Make Whole Amount by the Company in the event the
Bonds are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
Two Business Days prior to the date the payment thereof becomes due and
payable the Company shall calculate the Make Whole Amount and deliver to the
Trustee and each holder of Bonds an Officers' Certificate specifying the detail
of such calculations. The calculations by the Company shall be deemed to be
correct unless within ten Business Days after such delivery, the
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holders of 25% in aggregate principal amount of the Bonds which are Outstanding
immediately prior to the date of the required payment of the Make Whole Amount,
shall furnish revised calculations in writing to the Trustee and the Company,
which revised calculations shall be deemed to be conclusively correct and any
deficiency in the payment of the Make Whole Amount shall be immediately due and
payable and if the Company fails to deliver the Officers' Certificate such
holders may provide the Make Whole Amount calculation in writing delivered to
the Trustee and the Company which calculations shall be deemed to be
conclusively correct and such Make Whole Amount shall be immediately due and
payable.
For purposes of this Section 14.02, the "Make Whole Amount" shall mean the
greater of (i) the Outstanding principal amount of the Bonds to be paid, plus
interest accrued thereon to the date fixed for such payment, and (ii) the sum of
(A) the aggregate present value as of the date of such payment of each dollar of
principal being paid (taking into account any payments under a sinking fund, if
any) and the amount of interest (exclusive of interest accrued to the date fixed
for such payment) that would have been payable in respect of each such dollar if
such payment had not been made, determined by discounting such amounts at the
Reinvestment Rate (as hereinafter defined) from the respective dates on which
they would have been payable to the date of such payment, plus (B) interest
accrued on the Bonds to be paid to the date fixed for such payment.
For purposes of any determination of the Make Whole Amount:
"Reinvestment Rate" shall mean (1) the sum of 0.50%, plus the yield
reported on page "USD" of the Bloomberg Financial Markets Services Screen (or,
if not available, any other nationally recognized trading screen reporting
on-line intraday trading in the United States Government Securities) at 11:00
A.M. (Eastern time) on the second Business Day preceding the date the Make Whole
Amount becomes due and payable pursuant to the foregoing provisions of this
Section 14.02, for the United States Government Securities having a maturity
(rounded to the nearest month) corresponding to the remaining Weighted Average
Life to Maturity of the principal of the Bonds being paid (taking into account
the application of each payment under a sinking fund, if any) or (2) in the
event that no nationally recognized trading screen reporting on-line intraday
trading in the United States Government Securities is available, Reinvestment
Rate shall mean the sum of 0.50%, plus the arithmetic mean of the yields for the
two columns under the heading "Week Ending" published as of the second Business
Day preceding the date the Make Whole Amount becomes due and payable pursuant to
the foregoing provisions of this Section 14.02, in the Statistical Release under
the caption "Treasury Constant Maturities" for the maturity (rounded to the
nearest month) corresponding to the Weighted Average Life to Maturity of the
principal amount of the Bonds being paid (taking into account each payment under
a sinking fund, if any). If no maturity exactly corresponds to such Weighted
Average Life to Maturity, yields for the two published maturities most closely
corresponding to such Weighted Average Life to Maturity shall be calculated
pursuant to the immediately preceding sentence, and the Reinvestment Rate shall
be interpolated or extrapolated from such yields on a straightline basis,
rounding in each of such relevant periods to the nearest month. For the purposes
of calculating the Reinvestment Rate, the most recent Statistical Release
published prior to the date of determination of the Make Whole Amount shall be
used.
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"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve System and which establishes yields on
actively traded U.S. Government Securities adjusted to constant maturities or,
if such statistical release is not published at the time of any determination
hereunder, then such other reasonably comparable index which shall be designated
by the holders of 66-2/3% in aggregate principal amount of Bonds then
Outstanding.
"Weighted Average Life to Maturity" of the principal amount of the Bonds
being paid shall mean, as of the time of any determination thereof, the number
of years obtained by dividing the then Remaining Dollar-Years of such principal
by the aggregate amount of such principal. The term "Remaining Dollar-Years" of
such principal shall mean the amount obtained by (i) multiplying (x) the
remainder of (1) the amount of principal that would have been payable on each
scheduled sinking fund payment date, if any, if the payment pursuant to this
Section 14.02 had not been made, less (2) the amount of principal on the Bonds
scheduled to become payable on each scheduled sinking fund payment date, if any,
after giving effect to the payment pursuant to this Section 14.02, by (y) the
number of years (calculated to the nearest one-twelfth) which will elapse
between the date of determination and each such sinking fund payment date, if
any, and (ii) totalling the products obtained in (i).
Section 14.03. Interest on Overdue Payments. If Default occurs in payment
of principal, premium or interest due hereunder, the Company covenants that it
will pay or cause to be paid interest upon overdue principal, premium and
interest, to the extent permitted by law, at the greater of (i) six percent (6%)
per annum and (ii) the rate specified in the supplemental indenture or the
Exhibit to the Indenture creating the series of Bonds in question or, if no such
rate is specified therein, then the rate of interest payable on the Bonds of the
series in question plus one percent (1%).
Section 14.04. Entry Upon Mortgaged Property. Upon the occurrence of an
Event of Default, the Company, upon demand of the Trustee, shall forthwith
surrender to the Trustee the actual possession of, and it shall be lawful for
the Trustee, by such officer or agent as it may appoint, to take possession of
all the Mortgaged Property (with the books, papers and accounts of the Company)
and to hold, operate and manage the same, and from time to time make all needful
repairs and such extensions, additions and improvements as to it shall seem
wise; and to receive the rents, revenues, income, issues and profits thereof,
and out of the same to pay, and/or set up proper reserves for the payment of,
all proper costs and expenses of so taking, holding and managing the same,
including reasonable compensation to the Trustee, its agents and counsel, and
any charges of the Trustee hereunder, and any taxes and assessments and other
charges prior to the lien of this Indenture which the Trustee may deem it wise
to pay, and all expenses of such repairs, extensions, additions and
improvements, and to apply the remainder of the moneys so received by the
Trustee, subject to the provisions of Section 8.14 hereof with respect to
extended, transferred or pledged claims for interest, first to the payment of
the installments of interest which are due and unpaid, in the order of their
maturity, and next, if the principal of any said Bonds is due, to the payment of
the principal and accrued interest thereon pro rata without any preference or
priority whatever, except as aforesaid and thereafter the Make Whole Amount.
Whenever all that is due upon such Bonds, including installments of interest and
under any of the terms of this Indenture shall have been paid and all Defaults
made good, the Trustee shall
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surrender possession to the Company, its successors or assigns; the same right
of entry, however, to exist upon any subsequent Event of Default.
Section 14.05. Power of Sale. Upon the occurrence of an Event of Default,
the Trustee, by such officer or agent as it may appoint, with or without entry,
may, if at the time such action shall be lawful, sell all the Mortgaged
Property, including all right, title, interest, claim and demand of the Company
thereto and therein and the right of redemption thereof, as an entirety or in
such parcels as the holders of a majority in aggregate principal amount of Bonds
then Outstanding shall in writing request, or in the absence of such request, as
the Trustee may determine, at public auction, at some convenient place in
Boston, Massachusetts, or at such other place or places as may be required by
law, having first given notice of such sale by publication in at least one daily
newspaper, printed in English and of general circulation in said Boston, at
least once a week for four (4) successive weeks next preceding such sale, and
any other notice which may be required by law. The Trustee, if permitted by law,
may from time to time adjourn such sale or sales in its discretion by
announcement at the time and place or times and places fixed for such sale or
sales without further notice; and the Trustee is hereby appointed the true and
lawful attorney irrevocably of the Company in its name and stead to make,
execute, acknowledge and deliver to the purchaser or purchasers at such sale or
sales good and sufficient deeds of conveyance or bills of sale of the Mortgaged
Property so sold and any sale made as aforesaid shall be a perpetual bar both at
law and in equity against the Company and all persons claiming by, through or
under it.
Section 14.06. Suits for Enforcement; Remedies. In case of the breach of
any of the covenants or conditions of this Indenture, the Trustee shall have the
right and power to take appropriate judicial proceedings for the enforcement of
its rights and the rights of the bondholders hereunder. Upon the occurrence of
an Event of Default, the Trustee may either after entry, or without entry,
proceed by suit or suits at law or in equity to enforce payment of the Bonds
then Outstanding and to foreclose this Indenture and to sell the Mortgaged
Property under the judgment or decree of a court of competent jurisdiction.
If an Event of Default shall have occurred, and if it shall have been
requested so to do by the holders of twenty-five per cent (25%) in aggregate
principal amount of Bonds outstanding hereunder and shall have been indemnified
as provided in Section 15.01 hereof, the Trustee shall be obliged to exercise
such one or more of the rights and powers conferred upon it by this Section and
by Sections 14.04 and 14.05 as it, being advised by counsel, shall deem most
expedient in the interests of the bondholders.
No remedy by the terms of this Indenture conferred upon or reserved to the
Trustee, or to the bondholders, is intended to be exclusive of any other remedy,
but each and every such remedy shall be cumulative and shall be in addition to
any other remedy given hereunder or now or hereafter existing at law or in
equity or by statute.
No delay or omission to exercise any right or power accruing upon any
Default or Event of Default shall impair any such right or power or shall be
construed to be a waiver of any such Default or Event of Default or acquiescence
therein; and every such right and power may be exercised from time to time and
as often as may be deemed expedient.
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No waiver of any Default or Event of Default hereunder, whether by the
Trustee or by the bondholders, shall extend to or shall affect any subsequent
Default or shall impair any rights or remedies consequent thereon.
The Company may waive any period of grace provided for in this Article.
Section 14.07. Right of Bondholders to Direct Trustee. Anything in this
Indenture to the contrary notwithstanding, the holders of a majority in
aggregate principal amount of Bonds then Outstanding shall have the right, at
any time, by an instrument or instruments in writing executed and delivered to
the Trustee, to direct the Trustee to exercise any remedy or take any action
available to the Trustee hereunder, including directing the method and place of
conducting all proceedings to be taken for any sale of the Mortgaged Property,
or for the foreclosure of this Indenture, or for the appointment of a receiver
or any other proceedings hereunder; provided that such direction shall not be
otherwise than in accordance with the provisions of law and of this Indenture.
Section 14.08. Receiver. Upon the occurrence of an Event of Default, and
upon the filing of a bill in equity or other commencement of judicial
proceedings to enforce the rights of the Trustee and of the Bondholders under
this Indenture, the Trustee shall be entitled, as a matter of right, to the
appointment of a receiver or receivers of the Mortgaged Property, and of the
rents, revenues, income, issues and profits thereof, pending such proceedings,
with such powers as the court making such appointment shall confer, whether or
not the Mortgaged Property shall be deemed sufficient ultimately to satisfy the
Bonds outstanding hereunder.
Section 14.09. Bonds Due and Payable Following Sale. Upon any sale being
made either under the power of sale hereby given or under judgment or decree in
any judicial proceedings for the foreclosure or otherwise for the enforcement of
this Indenture, the principal of all Bonds then secured hereby, if not
previously due, shall become and be immediately due and payable.
Section 14.10. Bondholders Right to Bid at Sale. Upon any sale made either
under the power of sale hereby given or under judgment or decree in any judicial
proceedings for foreclosure or otherwise for the enforcement of this Indenture,
the holder or holders of any Bond or Bonds then Outstanding or the Trustee may
bid for and purchase the Mortgaged Property or any part thereof and upon
compliance with the terms of sale may hold, retain and possess and dispose of
such property in his, their or its own absolute right without further
accountability, and any purchasers at any such sale may, in paying the purchase
money, turn in any of such Bonds or claims for interest outstanding hereunder in
lieu of cash to the amount which shall, upon distribution of the net proceeds of
such sale, be payable thereon. Said Bonds, in case the amount so payable thereon
shall be less than the amount due thereon, shall be returned to the holders
thereof after being appropriately stamped to show partial payment.
Section 14.11. Purchaser Not Responsible for Proceeds Application. Upon any
sale made either under the power of sale hereby given or under judgment or
decree in any judicial proceedings for the foreclosure or otherwise for the
enforcement of this Indenture, the receipt of the Trustee or of the officer
making such sale shall be a sufficient discharge to the purchaser or purchasers
at any sale for his or their purchase money and such purchaser or purchasers,
his or
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their assigns or personal representatives, shall not, after paying such purchase
money and receiving such receipt of the Trustee, or of such officer therefor, be
obliged to see to the application of such purchase money, or be in any wise
answerable for any loss, misapplication or nonapplication thereof.
Section 14.12. Company Divested of Title. Any sale made either under the
power of sale hereby given or under judgment or decree in any judicial
proceedings for foreclosure or otherwise for the enforcement of this Indenture
shall, if and to the extent then permitted by law, operate to divest all right,
title, interest, claim and demand whatsoever, either at law or in equity, of the
Company of, in and to the property so sold, including all rights of redemption
thereto, and be a perpetual bar both at law and in equity against the Company
and against any and all persons, firms or corporations claiming or who may claim
the property sold, or any part thereof, from, through or under the Company.
Section 14.13. Application of Moneys by Trustee. The proceeds of any sale
made either under the power of sale hereby given or under judgment or decree in
any judicial proceedings for the foreclosure or otherwise for the enforcement of
this Indenture, together with any other amounts of cash which may then be held
by the Trustee as part of the Mortgaged Property, shall be applied as follows:
First -- To the payment of all taxes, assessments, governmental
charges and liens prior to the lien of this Indenture, except those subject
to which such sale shall have been made, and of all the costs and expenses
of such sale, including reasonable compensation to the Trustee, its agents
and attorneys, and of all other sums payable to the Trustee hereunder by
reason of any expenses or liabilities incurred or advances made in
connection with the management or administration of the trusts hereby
created;
Second -- To the payment in full of the amounts then due and unpaid
for principal, premium and interest upon the Bonds then secured hereby with
interest on amounts overdue as provided in Section 14.03 hereof, and in
case such proceeds shall be insufficient to pay in full the amounts so due
and unpaid, then to the payment thereof ratably, without preference or
priority of principal or premium over interest, or of interest over
principal or premium, or of any installment of interest over any other
installment of interest; subject, however, to the provisions of Section
8.14 hereof;
Third -- Any surplus thereof remaining to the Company, its successors
or assigns, or to whomsoever may be lawfully entitled to receive the same.
Section 14.14. Waiver of Appraisement and Other Laws. In case of an Event
of Default on its part, as aforesaid, to the extent that such rights may then
lawfully be waived, neither the Company nor any one claiming through or under it
shall or will set up, claim, or seek to take advantage of any appraisement,
valuation, stay, extension or redemption laws now or hereafter in force in any
locality where any of the Mortgaged Property may be situated, in order to
prevent or hinder the enforcement or foreclosure of this Indenture, or the
absolute sale of the Mortgaged Property, or the final and absolute putting into
possession thereof, immediately after such sale, of the purchaser or purchasers
thereat, but the Company, for itself and all who may claim through
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or under it, hereby waives, to the extent that it lawfully may do so, the
benefit of all such laws and all right of appraisement and redemption to which
it may be entitled under the laws of The State of New Hampshire or of any other
state where any of the Mortgaged Property may be situated. And the Company, for
itself and all who may claim through or under it, waives any and all right to
have the estates comprised in the security intended to be created hereby
marshalled upon any foreclosure of the lien hereof, and agrees that any court
having jurisdiction to foreclose such lien may sell the Mortgaged Property as an
entirety.
Section 14.15. Payment Event of the Default Suits to Protect Trust Estate.
The Company covenants that if an Event of Default shall exist due to the failure
of the Company to make a payment of the principal of any Bonds hereby secured
when the same shall become payable, whether by the maturity of said Bonds or
otherwise, then, upon demand of the Trustee, the Company will pay to the
Trustee, for the benefit of the holders of the Bonds then secured hereby, the
whole amount due and payable on all such Bonds for principal and premium, if
any, and interest, and in case the Company shall fail to pay the same forthwith
upon such demand, the Trustee in its own name and as trustee of an express
trust, if permitted by law so to do, shall be entitled to sue for and to recover
judgment for the whole amount so due and unpaid.
The Trustee, to the extent permitted by law, shall be entitled to sue and
recover judgment either before or after or during the pendency of any
proceedings for the enforcement of the lien of this Indenture upon the Mortgaged
Property, and in case of a sale of any of the Mortgaged Property and of the
application of the proceeds of sale to the payment of the debt hereby secured,
the Trustee in its own name and as trustee of an express trust shall be entitled
to enforce payment of and to receive all amounts then remaining due and unpaid
upon any and all Bonds then Outstanding, for the benefit of the holders thereof,
and the Trustee shall be entitled to recover judgment for any portion of the
debt remaining unpaid, with interest. No recovery of any such judgment by the
Trustee and no levy of any execution upon any such judgment upon any of the
Mortgaged Property or upon any other property, shall in any manner or to any
extent affect the lien of this Indenture upon the Mortgaged Property or any part
thereof, or any rights, powers or remedies of the Trustee hereunder, or any
lien, rights, powers or remedies of the holders of the said Bonds, but such
lien, rights, powers and remedies of the Trustee and of the bondholders shall
continue unimpaired as before.
In case of any receivership, insolvency, bankruptcy or other similar
proceedings affecting the Company or its property, the Trustee shall be entitled
to file and prove a claim for the entire amount due and payable by the Company
under this Indenture at the date of the institution of such proceedings and for
any additional amount which may become due and payable by the Company hereunder
after such date, without regard to or deduction for any amount which may have
been or which may thereafter be received, collected or realized by the Trustee
from or out of the Mortgaged Property or any part thereof or from or out of the
proceeds thereof or any part thereof, but shall not be entitled to consent to
any composition or plan of reorganization on behalf of any bondholder unless by
him specifically authorized so to do.
Any moneys thus collected or received by the Trustee under this Section
shall be applied by it first, to the payment of its expenses, disbursements and
compensation and the expenses, disbursements and compensation of its agents and
attorneys, and, second, toward payment of the
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amounts then due and unpaid upon such Bonds and coupons in respect of which such
moneys shall have been collected, ratably and without preference or priority of
any kind (subject to the provisions of Section 8.14 hereof with respect to
extended, transferred or pledged claims for interest), according to the amounts
due and payable upon such Bonds, at the date fixed by the Trustee for the
distribution of such moneys, upon presentation of the several Bonds and upon
stamping such payment thereon, if partly paid, and upon surrender thereof, if
fully paid.
Section 14.16. Trustee May Enforce Claims Without Possession of Bonds. All
rights of action (including the right to file proof of claim) under this
Indenture or under any of the Bonds may be enforced by the Trustee without the
possession of any of the Bonds or the production thereof in any trial or other
proceeding relating thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its name as trustee, without the necessity of
joining as plaintiffs or defendants any holders of the Bonds hereby secured, and
any recovery of judgment shall be for the equal benefit of the holders of the
outstanding Bonds, subject to the provisions of Section 8.14 hereof with respect
to extended, transferred or pledged claims for interest.
Section 14.17. Limitation on Bondholder Suits. No holder of any bond shall
have any right to institute any suit, action or proceeding in equity or at law
for the foreclosure of this Indenture or for the execution of any trust hereof
or for the appointment of a receiver or for the enforcement of any other remedy
afforded by the Indenture, unless a Default has occurred of which the Trustee
has been notified as provided in subparagraph (g) of Section 15.01 hereof, or of
which by said subparagraph it is deemed to have notice, and unless also such
Default shall have become an Event of Default and the holders of twenty-five per
cent (25%) in aggregate principal amount of Bonds then Outstanding shall have
made written request to the Trustee and shall have offered it reasonable
opportunity either to proceed to exercise the powers hereinbefore granted or to
institute such action, suit or proceeding in its own name, and unless also they
shall have offered to the Trustee indemnity as provided in Section 15.01 hereof;
and such notification, request and offer of indemnity are hereby declared in
every such case at the option of the Trustee to be conditions precedent to the
execution of the powers and trusts of this Indenture, and to any action or cause
of action for foreclosure or for the appointment of a receiver or for any other
remedy hereunder; it being understood and intended that no one or more holders
of the Bonds shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Indenture by his or their action or to enforce any
right hereunder except in the manner herein provided, and that all proceedings
at law or in equity shall be instituted, had and maintained in the manner herein
provided and for the equal benefit of the holders of all Bonds outstanding
hereunder. Nothing in this Indenture contained shall, however, affect or impair
the right of any bondholder which is absolute and unconditional to enforce the
payment of the principal of, premium, if any, and interest on any Bond at and
after the maturity thereof or the obligation of the Company which is also
absolute and unconditional to pay the principal of and interest on each of the
Bonds issued hereunder to the respective holders thereof at the time and place
in said Bonds expressed.
Section 14.18. Restoration of Positions. In case the Trustee shall have
proceeded to enforce any right under this Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason, or shall have been determined adversely to the Trustee, then and in
every such case the Company and the Trustee shall be
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restored to their former positions and rights hereunder with respect to the
mortgaged property, and all rights, remedies and powers of the Trustee shall
continue as if no such proceedings had been taken.
Section 14.19. Voluntary Relinquishment of Trust Estate. At any time
hereafter before full payment of the Bonds secured hereby, and whenever it shall
deem it to be expedient for the better protection or security of such Bonds
(although then there shall be no Default or Event of Default entitling the
Trustee to exercise the rights and powers conferred by this Article), the
Company, with the consent of the Trustee, may surrender and deliver to the
Trustee full possession of the whole or of any part of the property, premises
and interest hereby conveyed for any period, fixed or indefinite. In such event,
the Trustee shall enter into and upon the premises so surrendered and delivered,
and shall take and receive possession thereof for such period, fixed or
indefinite, as aforesaid, without prejudice, however, to its right, at any time
subsequently when entitled thereto by any provision hereof, to insist upon and
to maintain such possession, though beyond the expiration of any prescribed
period, and the Trustee from the time of entry shall work, maintain, use,
manage, control and employ the same in accordance with the provisions of this
Indenture, and shall receive and apply the income and revenues thereof as
provided in Section 14.04.
Article XV
The Trustee
Section 15.01. Certain Duties and Responsibilities. (a) Except during the
continuance of an Event of Default of which the Trustee shall have knowledge,
the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise thereof, as a prudent man
would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(1) this subparagraph (c) shall not be construed to limit the effect
of subparagraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the holders of not less
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than a majority in principal amount of the Bonds at the time Outstanding
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; and
(4) whether or not an Event of Default shall have occurred, no
provision of this Indenture shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
Section 15.02. Certain Rights of the Trustee. Except as otherwise provided
in Section 15.01:
(a) The Trustee may execute any of the trusts or powers hereof and
perform any duties required of it by or through attorneys, agents,
receivers or employees, and shall be entitled to advice of counsel
concerning all matters of trusts hereof and its duties hereunder, and may
in all cases pay such reasonable compensation as it shall deem proper to
all such attorneys, agents, receivers and employees as may reasonably be
employed in connection with the trusts hereof and the Trustee may act (1)
upon the opinion or advice of any attorney, surveyor, engineer or
accountant selected by it in the exercise of reasonable care; (2) upon any
Opinion of Counsel; or (3) upon any certificate or opinion conforming to
the applicable requirements of this Indenture. The Trustee shall not be
responsible for any loss or damage resulting from any action or nonaction
in accordance with any such opinion, advice or certificate;
(b) The Trustee shall not be responsible for any recital or
representation herein, or in said Bonds (except in respect of the
certificate of the Trustee endorsed on such Bonds), or for the recording or
rerecording, filing or refiling of this Indenture, or of any conveyance or
instrument of further assurance, or for insuring the Mortgaged Property, or
for the validity of, or of the execution by the Company of, this Indenture
or of any conveyance or instrument of further assurance, or for the
validity of, or the sufficiency of the security for, the Bonds issued
hereunder or intended to be secured hereby, or for the value or title of
any of the Mortgaged Property, or for the payment of or for minimizing
taxes, charges, assessments or liens upon the same, or otherwise as to the
maintenance of the security hereof; except that in the event the Trustee
enters into possession of a part or all of the Mortgaged Property pursuant
to any provision of this Indenture, it shall use due diligence in
preserving the Mortgaged Property; and the Trustee shall not be bound to
ascertain or inquire as to the performance or observance of any covenant,
condition or agreement on the part of the Company, except as hereinafter
set forth; but the Trustee may require of the Company full information and
advice as to the performance of the covenants, conditions and agreements
aforesaid, and of the Company as to the condition of the Mortgaged
Property;
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(c) The Trustee shall not be accountable for the use of any Bonds
authenticated or delivered hereunder or of any of the proceeds of such
Bonds. The Trustee may become the owner of Bonds secured hereby with the
same rights which it would have if not trustee;
(d) The Trustee shall be protected in acting upon any notice, request,
consent, certificate, order, affidavit, letter, telegram or other paper or
document believed by it to be genuine and correct and to have been signed
or sent by the proper person or persons. Any action taken by the Trustee
pursuant to this Indenture upon the request or authority or consent of any
person who at the time of making such request or giving such authority or
consent is the owner of any Bond, shall be conclusive and binding upon all
future owners of the same Bond and upon Bonds issued in exchange therefor
or in place thereof;
(e) As to the existence or nonexistence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon an Officers' Certificate as sufficient
evidence of the facts therein contained and, prior to the occurrence of a
Default of which it has been notified as provided in subparagraph (g) of
this Section or of which by said subparagraph it is deemed to have notice,
shall also be at liberty to accept a similar certificate to the effect that
any particular dealing, transaction or action is or is not necessary or
expedient, but may at its discretion, at the reasonable expense of the
Company, in every case secure such further evidence as it may think
necessary or advisable, but shall in no case be bound to secure the same.
The Trustee may accept a Resolution in the property form, as conclusive
evidence that such Resolution has been duly adopted, and is in full force
and effect;
(f) The permissive right of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty of the Trustee and the
Trustee shall be answerable only for its own negligence or willful default;
(g) The Trustee shall not be required to take notice or be deemed to
have notice of any Default or Event of Default hereunder except an Event of
Default arising for failure to make payment of principal, premium, if any,
or interest or failure by the Company to file the documents required
pursuant to Sections 8.08 or 8.09 hereof, unless and until a Responsible
Officer shall have actual knowledge thereof or a written notice thereof
shall be filed with the Trustee by the Company or by the holders of at
least ten per cent (10%) in aggregate principal amount of the Bonds then
Outstanding and all notices or other instruments required by this Indenture
to be delivered to the Trustee must, in order to be effective, be delivered
at the principal office of the Trustee, and in the absence of such notice
so delivered, the Trustee may conclusively assume there is no Default or
Event of Default, except as aforesaid;
(h) The Trustee shall not be personally liable for any debts
contracted or for damages to persons or to personal property injured or
damaged, or for salaries or nonfulfillment of contracts during any period
in which it may be in the possession of or managing the mortgaged property
as in this Indenture provided;
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(i) At any and all reasonable times the Trustee, and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives, shall have the right fully to inspect any and all of the
Mortgaged Property, including all books, papers and contracts of the
Company, and to take such memoranda from and in regard thereto as may be
desired;
(j) The Trustee shall not be required to give any bond or surety in
respect of the execution of the said trusts and powers or otherwise in
respect of the premises;
(k) Notwithstanding anything elsewhere in this Indenture contained,
the Trustee shall have the right, but shall not be required, to demand, in
respect of the authentication of any Bonds, the withdrawal of any cash, the
release of any property, or any action whatsoever within the purview of
this Indenture, any showings, certificates, opinions, appraisals, or other
information, or corporate action or evidence thereof, in addition to that
by the terms hereof required as a condition of such action if by the
Trustee deemed desirable for the purpose of establishing the right of the
Company to the authentication of any Bonds, the withdrawal of any cash, the
release of any property, or the taking of any other action by the Trustee;
and
(l) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the bondholders pursuant to this Indenture, unless such
bondholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
Section 15.03. Trustee's Compensation. The Trustee shall have a first lien
with right of payment prior to payment on account of interest or principal of
any bond issued hereunder upon the Mortgaged Property for reasonable
compensation, expenses, outlays and counsel fees incurred by it in and about the
execution of the trusts hereby created and the exercise and performance of its
powers and duties hereunder and the cost and expense incurred in defending
against any liability in the premises of any character whatsoever, unless such
liability is adjudicated to have resulted from the negligence or wilful default
of the Trustee. The Company hereby covenants and agrees to pay and indemnify the
Trustee for all outlays, counsel fees and other expenses reasonably made or
incurred by the Trustee in and about the execution of the trusts hereby created
and to reimburse and indemnify it for any expenses paid and to pay the cost and
expense incurred in defending against any liability in the premises of any
character whatsoever, unless such liability is adjudicated to have resulted from
the negligence or wilful default of the Trustee. The Company agrees to pay the
Trustee reasonable compensation for its services in the premises, which
compensation shall not be limited to or governed by any provision of law in
regard to the compensation of trustees of an express trust.
Section 15.04. Notice of Events of Default. If a Default or Event of
Default occurs of which the Trustee is by subparagraph (g) of Section 15.02
required to take notice or if notice of a Default or Event of Default is given
as in said subparagraph (g) of Section 15.02 provided, then the Trustee shall
give written notice (i) of any such Event of Default or (ii) of any Event of
Default if and when any such Default becomes such an Event of Default, by
registered mail or
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reputable overnight courier to the last known owners of all Bonds Outstanding as
shown by the list of bondholders required by the terms of Section 8.13 hereof to
be kept at the office of the Trustee.
Section 15.05. Intervention in Judicial Proceedings. In any judicial
proceedings to which the Company is a party and which in the opinion of the
Trustee and its counsel has a substantial bearing on the interests of owners of
Bonds issued hereunder, the Trustee may intervene on behalf of the bondholders
and shall do so if requested in writing by the owners of at least ten per cent
(10%) of the aggregate principal amount of Bonds then Outstanding. The rights
and obligations of the Trustee under this Section are subject to the approval of
the Court having jurisdiction in the premises.
Section 15.06. Conversion, Merger, Consolidation or Sale of Business of
Trustee. Any corporation or association into which the Trustee may be converted
or merged, or with which it may be consolidated, or to which it may sell or
transfer its corporate trust business and assets as a whole or substantially as
a whole, including the trust created hereunder, or any corporation or
association resulting from any such conversion, sale, merger, consolidation or
transfer to which the Trustee is a party, ipso facto, shall be and become the
successor trustee of the Trustee hereunder without the execution or filing of
any instrument or any further act, deed or conveyance on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 15.07. Resignation of Trustee. The Trustee and any successor or
successors hereafter appointed, may at any time resign from the trusts hereby
created by giving thirty (30) days' written notice to the Company and the owners
of the Bonds, and subject to Section 15.09 such resignation shall take effect at
the end of such thirty (30) days, or upon the earlier appointment of a successor
to such trustee by the bondholders or by the Company. Such notice may be served
personally or sent by registered mail. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within thirty
(30) days after giving such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
Section 15.08. Removal of Trustee. The Trustee may be removed at any time
by an instrument or concurrent instruments in writing delivered to the Trustee
and to the Company, and signed by the owners of a majority in aggregate
principal amount of Bonds then Outstanding.
Section 15.09. Resignation and Removal Becoming Effective. No resignation
or removal of the Trustee and no appointment of a successor Trustee pursuant to
this Article shall become effective until the acceptance of appointment by the
successor Trustee under Section 15.11.
Section 15.10. Successor or Temporary Trustee. In case the Trustee
hereunder shall resign or be removed, or be dissolved, or shall be in course of
dissolution or liquidation, or otherwise become incapable of acting hereunder,
or in case the Trustee shall be taken under the control of any public officer or
officers, or of a receiver appointed by a court, a successor trustee may be
appointed by the owners of a majority in aggregate principal amount of Bonds
then Outstanding, by an instrument or concurrent instruments in writing signed
by such owners, or by their
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attorneys in fact, duly authorized; provided, nevertheless, that in case of such
vacancy the Company by an instrument executed by order of its Board of
Directors, and signed by its President or any Vice-President and attested by its
Treasurer or an Assistant Treasurer under its corporate seal, may appoint a
temporary trustee to fill such vacancy until a successor trustee shall be
appointed by the bondholders in the manner above provided; and any such
temporary trustee so appointed by the Company shall immediately and without
further act be superseded by the trustee so appointed by such bondholders. Every
such successor or temporary trustee shall be a corporation or association in
good standing, having a capital and surplus of not less than One Hundred Million
Dollars ($100,000,000), and organized and doing business under the laws of the
United States of America or any state hereof and authorized under such laws to
exercise corporate trust powers, and, if there be such an institution willing,
qualified and able to accept the trust upon reasonable or customary terms. In
the event that within one (1) year after the appointment of such temporary
trustee by the Company the bondholders do not appoint a successor trustee, the
appointment of the temporary trustee by the Company shall be and become final.
Section 15.11. Acceptance of Appointment by Successor. Every successor
trustee appointed hereunder shall execute, acknowledge and deliver to its
predecessor and also to the Company an instrument in writing accepting such
appointment hereunder, and thereupon such successor, without any further act,
deed or conveyance, shall become fully vested with all the estates, properties,
rights, powers, trusts, duties and obligations of its predecessor; but such
predecessor shall, nevertheless, on the written request of the Company, or of
its successor, execute and deliver an instrument transferring to such successor
all the estates, properties, rights, powers and trusts of such predecessor
hereunder. Should any deed, conveyance or instrument in writing from the Company
be required by any successor trustee for more fully and certainly vesting in
such successor the estates, rights, powers and duties hereby vested or intended
to be vested in the predecessor trustee, any and all such deeds, conveyances and
instruments in writing shall, on request, be executed, acknowledged and
delivered by the Company. The resignation of any trustee and the instrument or
instruments removing any trustee and appointing a successor hereunder, together
with all deeds, conveyances and other instruments provided for in this Article
shall, at the expense of the Company, be forthwith filed and/or recorded by the
successor trustee in each recording office where the Indenture shall have been
filed and/or recorded, provided, however, that none of said instruments shall be
required to be filed and/or recorded in any recording office if, prior to the
resignation of such trustee, all property of the Company located in territory
served by such recording office shall have been released from the lien of the
Indenture, pursuant to the provisions hereof, and a proper release or releases
thereof shall have been filed and/or recorded in such recording office.
Section 15.12. Separate Trustee or Co-Trustees. If at any time or times, in
order to conform to any laws of any state or territory in which the Company now
holds or at any time hereafter may hold any property, the Company or the Trustee
shall so request, the Company and the Trustee shall have power to appoint and
shall unite in the execution, delivery and performance of all instruments and
agreements necessary or proper to constitute another trust company or bank or
banking institution, or one or more persons approved by the Trustee, either to
act as co-trustee or co-trustees of all or any of the property subject to the
lien hereof jointly with the Trustee, or to act as separate trustee or trustees
of all such property or any part thereof.
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Section 15.13. Payment of Certain Charges. In case the Company shall fail
seasonably to pay or to cause to be paid any tax, assessment or governmental or
other charge upon any part of the mortgaged property, the Trustee may pay such
tax, assessment or governmental charge, without prejudice, however, to any
rights of the Trustee or of the bondholders hereunder arising in consequence of
such failure; and any amount at any time so paid under this Section, with
interest thereon from the date of payment at the Prime Rate plus one percent per
annum until paid, shall be repaid by the Company upon demand, and shall become
so much additional indebtedness secured by this Indenture, and the same shall be
given a preference in payment over any of the Bonds, and shall be paid out of
the proceeds of any sale of the Mortgaged Property, if not otherwise paid by the
Company; but the Trustee shall not be under any obligation to make any such
payment unless requested so to do by the holders of at least ten per cent (10%)
of the aggregate principal amount of Bonds outstanding hereunder and provided
with adequate indemnity or funds for the purpose of such payment. The "Prime
Rate" shall mean the rate of interest announced by Fleet National Bank, N.A., or
its successor from time to time as its "prime commercial rate" or the
equivalent.
Section 15.14. Instruments Accepted as Conclusive Evidence. The
resolutions, opinions, certificates and other instruments provided for in this
Indenture may be accepted by the Trustee as conclusive evidence of the facts and
conclusions stated therein provided that the Trustee shall examine the same to
determine if they conform to the requirements of the Indenture and shall be full
warrant, protection and authority to the Trustee for the authentication and
delivery of Bonds or the withdrawal of cash hereunder; but the Trustee may, and
the Trustee shall if requested in writing so to do by the holders of not less
than ten per cent (10%) in aggregate principal amount of Bonds then Outstanding,
cause to be made such independent investigation as to it may seem fit and the
Trustee may decline to authenticate or deliver such Bonds or pay over such cash
unless satisfied by such investigation of the truth and accuracy of the matters
so investigated. The expense of such investigation shall be paid by the Company
or, if paid by the Trustee, shall be repaid by the Company upon demand with
interest, to the extent permitted by law, at the Prime Rate plus one percent per
annum until paid.
Article XVI
Additional Provisions
Section 16.01. Immunity of Incorporators, Stockholders, Officers, Directors
and Employees. No recourse under or upon any obligation, covenant or agreement
contained in this Indenture, or in any bond hereby secured, or because of the
creation of any indebtedness hereby secured, shall be had against any
incorporator, stockholder, officer, director or employee, present or future, of
the Company or of any successor corporation, either directly or through the
Company, by the enforcement of any assessment or by any legal or equitable
proceeding by virtue of any statute or otherwise; it being expressly agreed and
understood that this Indenture, and the obligations hereby secured, are solely
corporate obligations, and that no personal liability whatever shall attach to
or be incurred by such incorporators, stockholders, officers, directors or
employees of the Company, or of any successor corporation, or any of them,
because of the incurring of the indebtedness hereby authorized, or under or by
reason of any of the obligations, covenants or agreements contained in this
Indenture, or in any of the Bonds hereby secured, or
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implied therefrom; and that any and all personal liability of every name and
nature, and any and all rights and claims against every such incorporator,
stockholder, officer, director or employee, whether arising at common law, or in
equity, or created by statute or constitution, are hereby expressly released and
waived as a condition of, and as a part of the consideration for, the execution
of this Indenture and the issue of the Bonds and interest obligations secured
hereby.
Section 16.02. Evidence of Action by Bondholders; Proof of Execution. Any
request, direction, objection or other instrument required by this Indenture to
be signed and executed by the bondholders may be in any number of concurrent
writings of similar tenor and may be signed or executed by such bondholders in
person or by agent appointed in writing. Proof of the execution of any such
request, direction, objection or other instrument or of the writing appointing
any such agent and of the ownership of Bonds, if made in the following manner,
shall be sufficient for any of the purposes of this Indenture, and shall be
conclusive in favor of the Trustee with regard to any action taken by it under
such request or other instrument, namely:
(a) The fact and date of the execution by any person of any such
writing may be proved by the certificate of any officer in any jurisdiction
who by law has power to take acknowledgments within such jurisdiction that
the person signing such writing acknowledged before him the execution
thereof, or by an affidavit of any witness to such execution; and
(b) The fact of the holding by any party of Bonds transferable by
delivery and the amounts and numbers of such Bonds, and the date of the
holding of the same, may be proved by a certificate executed by any trust
company, bank or bankers (wherever situated) stating that at the date
thereof the party named therein did exhibit to an officer of such trust
company or bank or to such banker, as the property of such party, the Bonds
therein mentioned if such certificate shall be deemed by the Trustee to be
satisfactory. The ownership of Bonds shall be proved by the bond register.
For all purposes of this Indenture and of any proceedings for the
enforcement thereof, such person shall be deemed to continue to be the holder of
such Bond until the Trustee shall have received notice in writing to the
contrary.
Section 16.03. Exclusive Benefit of Indenture. Nothing expressed or
mentioned in or to be implied from this Indenture, or the Bonds issued
hereunder, is intended or shall be construed to give to any person or company
other than the parties hereto, and the holders of the Bonds secured by this
Indenture, any legal or equitable right, remedy or claim under or in respect of
this Indenture, or any covenants, conditions and provisions herein contained in
this Indenture and all the covenants, conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and the holders of the Bonds hereby secured as herein provided.
Section 16.04. Separability of Indenture Provisions. If any provision of
this Indenture shall be held or deemed to be or shall, in fact, be inoperative
or unenforceable as applied in any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases because it conflicts with
any provision of any constitution or statute or rule of public policy, or for
any other
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reason, such circumstances shall not have the effect of rendering the provision
in question inoperative or unenforceable in any other case or circumstance, or
of rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or paragraphs
in this Indenture contained shall not affect the remaining portions of this
Indenture or any part thereof.
Section 16.05. Service of Notices to the Company and the Trustee. Any
notice or demand that by any provision of this Indenture is required or
permitted to be given or served by the Trustee or any bondholder shall be
sufficiently given if delivered personally or mailed first-class postage prepaid
or by reputable overnight courier as follows: (i) if to the Company, to Unitil
Energy Systems, Inc., 6 Liberty Lane West, Hampton, New Hampshire 03842-1720,
Attention: Treasurer, or at such other address as the Company may furnish the
Trustee in writing and (ii) if to the Trustee, to U.S. Bank National
Association, 2 Avenue de Lafayette, Boston, Massachusetts 02111, Attention:
Corporate Trust Department, or at such other address as the Trustee may furnish
the Company in writing.
Section 16.06. Repayment of Unclaimed Money. In the event that any Bond
issued hereunder shall not be presented for payment when the principal thereof
becomes due, either at maturity or otherwise, or at the date fixed for the
redemption thereof and the Company shall have deposited with the Trustee for the
purpose, or left with it if previously so deposited, moneys sufficient to pay or
redeem such bond, the Trustee shall, upon demand of the Company, in case the
holder of any such bond shall not, within six (6) years after the maturity of
any such bond or the date fixed for the redemption of any such bond, claim the
amount so deposited, pay over to the Company such amount, if the Company if at
the time no Default or Event of Default has occurred or is continuing. The
Trustee shall thereupon be relieved from all responsibility to the holder
thereof and in the event of such payment to the Company the holder of any such
Bond shall be deemed to be an unsecured creditor of the Company for an amount
equivalent to the amount deposited as above stated for the payment thereof and
so paid over to the Company.
Section 16.07. Certificates or Opinions to Trustee. Each certificate or
opinion provided for in this Indenture delivered to the Trustee with respect to
compliance with a condition or covenant herein contained shall include (1) a
statement that the person making such certificate or opinion has read such
covenant or condition; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; (3) a statement that, in the opinion of
such person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not in
the opinion of such person such covenant or condition has been complied with.
Section 16.08. Successors and Assigns. Subject to the provisions of
Articles XII and XV hereof, whenever in this Indenture any of the parties hereto
is named or referred to this shall be deemed to include the successors or
assigns of such party, and all the covenants and agreements in this Indenture
contained by or on behalf of the Company or by or on behalf of the Trustee
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shall bind and inure to the benefit of the respective successors and assigns of
such parties whether so expressed or not.
Section 16.09. Counterparts. This Twelfth Supplemental Indenture shall be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 16.10. Effect of Headings and Table of Contents. The cover of this
Indenture and all article and descriptive headings and the table of contents are
inserted for convenience only, and shall not affect any construction or
interpretation hereof.
Section 16.11. New Hampshire Law Applicable. This Indenture and the Bonds
shall be governed by and construed in accordance with the laws of The State of
New Hampshire.
Part Two
Restatement of Terms and Provisions of
Bonds of the Merger Date Series
Article I
Restatement of Terms and Provisions of Series I, 8.49% Bonds
Section 1.01. Terms and Provisions of Series I, 8.49% Bonds. The terms and
provisions of the Series I, 8.49% Bonds which were set forth in the Eighth
Supplemental Indenture are hereby amended and restated in their entirety in
Exhibit C attached hereto, which shall become effective as of the Merger Date
and control with respect to all terms and provisions of the Series I, 8.49%
Bonds and the Eighth Supplemental Indenture as of the Merger Date shall have no
further force or effect with respect thereto.
Article II
Restatement of Terms and Provisions of Series J, 6.96% Bonds
Section 1.01. Terms and Provisions of Series J, 6.96% Bonds. The terms and
provisions of the Series J, 6.96% Bonds which were set forth in the Ninth
Supplemental Indenture are hereby amended and restated in their entirety in
Exhibit D attached hereto, which shall become effective as of the Merger Date
and control with respect to all terms and provisions of the Series J, 6.96%
Bonds and the Ninth Supplemental Indenture as of the Merger Date shall have no
further force or effect with respect thereto.
Article III
Restatement of Terms and Provisions of Series K, 8.00% Bonds
Section 1.01. Terms and Provisions of Series K, 8.00% Bonds. The terms and
provisions of the Series K, 8.00% Bonds which were set forth in the Tenth
Supplemental Indenture are hereby amended and restated in their entirety in
Exhibit E attached hereto, which shall become effective as of the Merger Date
and control with respect to all terms and provisions of the
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Series K, 8.00% Bonds and the Tenth Supplemental Indenture as of the Merger Date
shall have no further force or effect with respect thereto.
Part Three
Terms and Provisions of Exchange Bonds
Article I
Terms and Provisions of Series L, 8.49% Bonds
Section 1.01. Terms and Provisions of Series L, 8.49% Bonds. As a result of
the Merger, the Exeter Bonds described in clause (iv) of Article III of the
Restated Indenture, are being exchanged as of the Merger Date for new Series L,
8.49% Bonds of the Company, the terms and provisions for which are set forth in
Exhibit F attached hereto.
Article II
Terms and Provisions of Series M, 6.96% Bonds
Section 1.01. Terms and Provisions of Series M, 6.96% Bonds. As a result of
the Merger, the Exeter Bonds described in clause (v) of Article III of the
Restated Indenture, are being exchanged as of the Merger Date for new Series M,
6.96% Bonds of the Company, the terms and provisions for which are set forth in
Exhibit G attached hereto.
Article III
Terms and Provisions of Series N, 8.00% Bonds
Section 1.01. Terms and Provisions of Series N, 8.00% Bonds. As a result of
the Merger, the Exeter Bonds described in clause (vi) of Article III of the
Restated Indenture, are being exchanged as of the Merger Date for new Series N,
8.00% Bonds of the Company, the terms and provisions for which are set forth in
Exhibit H attached hereto.
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In Witness Whereof, Unitil Energy Systems, Inc. has caused this instrument
to be executed in its corporate name by its President or one of its
Vice-Presidents and its corporate seal to be hereunto affixed and to be attested
by its Treasurer or one of its Assistant Treasurers, and U.S Bank National
Association, to evidence its acceptance of the trust hereby created, has caused
this instrument to be executed in its corporate name by an Authorized Officer,
all as of the day and year first above written.
Unitil Energy Systems, Inc.
By:
-------------------------(Corporate
Michael J. Dalton, President Seal)
Attest:
- --------------------------------
Mark H. Collin, Treasurer
U.S. Bank National Association
By:
-----------------------------------
Authorized Officer
Attest:
- --------------------------------
Authorized Officer
-73-
Schedule A - LIST OF PROPERTIES
Part I - MERRIMACK COUNTY PROPERTIES*
Properties and Transmission Line Easement Rights Located in Towns of
Allenstown, Boscawen, Bow, Canterbury, Chichester, Dunbarton, Epsom, Hopkinton,
Loudon, Pembroke, Salisbury and Webster, all in Merrimack County, New Hampshire
1. Rights reserved with respect to premises located on Capitol Street in
the City of Concord conveyed by the Company to 9-15 Capitol Street Corporation
by deed dated December 30, 1980, recorded in Book 1386, Page 199.
2. The substation property situated on the southerly side of Bridge Street
in Concord, New Hampshire shown on plan prepared by Richard D. Bartlett entitled
"Resubdivision, Boundary & Physical Evidence Survey for Concord Electric Co."
dated October 9, 1979, and recorded as Plan No. 6942, together with rights of
passage and other easement rights owned in connection therewith, being the lands
and rights acquired by the Company by the following deeds:
Recorded
Name of Grantor Date of Deed Book Page
John S. Bartlett et als July 01, 1901 344 98
Eva L. Swain, Guardian October 27, 1925 478 515
New England Cable Company January 19, 1937 552 364
Boston and Maine Railroad July 08, 1937 556 72
Boston and Maine Railroad June 21, 1949 665 477
Metropolitan Coal Company July 08, 1937 556 70
The State of New Hampshire November 20, 1951 703 392
The State of New Hampshire February 18, 1955 765 140
Tenney Coal Company February 02, 1940 573 569
Boston and Maine Railroad January 15, 1942 591 349
The State of New Hampshire March 21, 1950 677 209
Arthur J. Boutwell November 11, 1925 478 110
P.F.P. Concord, Inc. February 18, 1981 1388 280
except (a) that portion of the lands so acquired as lies easterly of the
westerly line of the Frederic E. Everett highway as acquired by The State of New
Hampshire by layout and award dated
- --------
* All conveyances relate to premises located in Merrimack County, New Hampshire
and all recording references are to records on file at the Merrimack County
Registry of Deeds, Concord, New Hampshire
Schedule A
(to Twelfth Supplemental Indenture)
February 10, 1949, (b) that portion of the premises acquired from Boutwell (Book
478, Page 110) and the Boston and Maine Railroad (Book 591, Page 349) as
conveyed by the Company to PFP Concord, Inc. by deed dated February 18, 1981,
recorded in Book 1388, Page 283, but subject to a covenant in favor of the
Company, and (c) that portion of the premises acquired as conveyed by the
Company to John L. Hyde and Charles W. Thompson by deed dated December 28, 1981,
recorded in Book 1408, Page 652, subject to the reserved easement rights
described therein with respect to the operation, repair and expansion of the
said substation.
3. Certain transmission and distribution facilities and easement rights
with respect to land located in Concord, New Hampshire formerly part of the
so-called Sewalls Falls Hydro Electric Generating Station, as reserved in deed
dated December 23, 1969, recorded in Book 1065, Page 370.
4. The Penacook service building property located northerly of East Street
in that portion of Concord, New Hampshire, called Penacook and being the
property acquired by the Company by deed of Penacook Electric Light Company
dated May 31, 1917, recorded in Book 434, Page 263, subject to the dam and
flowage rights reserved by The Contoocook Manufacturing and Mechanic Company in
its deed dated August 1, 1891, recorded Book 294, Page 474, and to a sewer pipe
right of way conveyed by the Company to the City of Concord by deed dated
January 17, 1924, recorded in Book 469, Page 22, except Parcel 1 thereof as was
conveyed by the Company to David T. Kenney and Pearl A. Kenney by deed dated
November 2, 1972, recorded in Book 1152, Page 435.
5. The substation property situated in Concord, New Hampshire, southerly of
Pleasant Street, the land for which, together with a right of way to Pleasant
Street, was acquired by the Company by deeds of the Carmelite Monastery of
Concord dated November 1, 1950, recorded in Book 689, Page 262 and dated
September 17, 1957, recorded in Book 819, Page 6, subject to easement rights for
a driveway as conveyed by the Company to Carmelite Monastery of Concord by deed
dated September 11, 1959, recorded in Book 849, Page 482.
6. The substation property situated in Concord, New Hampshire, bordering on
Old Loudon Road, the land for which was acquired by the Company by deed of
George J. Bourassa and Winifred Bourassa dated June 8, 1954, recorded in Book
749, Page 499.
7. The substation property situated in Concord, New Hampshire, bordering on
Gulf Street, the land for which was acquired by the Company by deeds of Emma L.
Welch dated April 23, 1928 and January 13, 1949, recorded in Book 494, Page 419
and in Book 658, Page 190, respectively and by deed of Public Service Company of
New Hampshire dated March 22, 1949, recorded in Book 665, Page 454, except (a)
portion thereof as was conveyed by the Company to Public Service Company of New
Hampshire by deeds dated January 19, 1949, and March 23, 1949, recorded in Book
658, Page 194 and Book 665, Page 450 respectively, (b) portion thereof as was
acquired by the City of Concord in the layout of Gulf Street under date of July
27, 1953, and (c) subject to slope easement granted to the State of New
Hampshire with respect to highway construction on State-owned property abutting
land of the Company in Concord, New Hampshire as conveyed by Corporation Slope
Easement deed dated April 3, 1997, recorded in Book 2051,
-2-
Page 1883, as corrected by Corrective Slope Easement deed dated July 9, 1997,
recorded in Book 2062, Page 865.
8. The substation property situated in Concord, New Hampshire, lying
easterly of North State Street, the land for which was acquired by the Company
by deed of Thomas Fox dated June 25, 1925, recorded in Book 479, Page 95,
together with a right of way leading from said land to North State Street,
acquired by said deed from Fox and by the following instruments:
Recorded
Name of Grantor Date Book Page
Elmer W. Olson et als October 15, 1931 519 320
The State of New Hampshire by March 22, 1935 536 412
Charles B. Clarke, Agent
Elmer W. Olson October 16, 1931 519 325
subject to a sewer pipe right of way conveyed by the Company to the City of
Concord by deed dated February 5, 1930, recorded in Book 519, Page 323.
9. The substation property situated in that portion of Concord, New
Hampshire, called Penacook bordering in part on the Daniel Webster Highway, on
Penacook Street and on Abbott Road, the land for which and certain rights owned
in connection therewith were acquired by the Company under the following deeds:
Recorded
Name of Grantor Date Book Page
First National Bank of Concord February 29, 1940 566 263
First National Bank of Concord July 12, 1940 579 230
Public Service Company of New Hampshire December 16, 1940 583 115
C. M. & A. W. Rolfe, Inc. October 29, 1941 585 559
Public Service Company of New Hampshire March 7, 1956 786 322
subject to an electric line right of way owned by Public Service Company of New
Hampshire and other rights referred to in said deed recorded in Book 566, Page
263, and except so much of said land as was conveyed by the Company under the
following deeds:
Recorded
Name of Grantee Date Book Page
C. M. & A. W. Rolfe November 1, 1941 585 560
Arthur Brodeur October 11, 1946 631 252
-3-
James F. Freeman and Rose A. Freeman April 5, 1950 677 251
Asa A. Batchelder and Evelyn M. Batchelder July 12, 1950 710 294
Celestia A. Loranger June 29, 1966 986 460
Merrimack Valley School District March 7, 1967 1002 177\1
10. The substation property situated in Concord, New Hampshire on the
easterly side of South Main Street, the land for which was acquired by the
Company by deed of William E. Sleeper dated August 29, 1950, recorded in Book
686, Page 42, except (a) portion thereof as was conveyed by the Company to The
State of New Hampshire by deed dated June 5, 1956, recorded in Book 792, Page
90, (b) portion thereof as was conveyed by the Company to Humble Oil & Refining
Company by deed dated July 11, 1972, recorded in Book 1138, Page 229, and (c)
portion thereof as was conveyed by the Company to The State of New Hampshire by
deed dated November 5, 1987, recorded in Book 1687, Page 108.
11. The regulator station property situated in Canterbury, New Hampshire,
bordering on West Road -- North, the land for which was acquired by the Company
by deed of Ralph Graham et als, dated March 4, 1950, recorded in Book 677, Page
162.
12. A lot of land bordering on High Street in Salisbury, New Hampshire,
acquired by the Company by deed of Ralph H. Rogers and Elizabeth Rogers dated
May 20,1953, recorded in Book 731, Page 171.
13. Tract of about 6,500 sq. ft. located on the Dover Road in the Town of
Chichester, acquired as site for regulator station by deeds to the Company of
following grantors:
Edward Gibbs, Jr. and Blanche J. Gibbs dated November 1, 1958, recorded in
Book 833, Page 325, and further deed of same grantors dated November 26,
1958, recorded in Book 836, Page 125.
Try-Gen, Inc. dated April 22, 1959, recorded in Book 844, Page 11, except
portion thereof (4,950 sq. ft.) condemned by the State of New Hampshire for
highway construction purposes under RSA 498-A:5 of the laws of the State of
New Hampshire, said taking by Notice of Condemnation dated August 30, 1991,
recorded in Book 1866, Page 1358.
14. Tract of about 130,000 sq. ft. situate on Old Turnpike Road in the City
of Concord, acquired as site for future substation, by deed of Concord Regional
Development Corporation dated December 30, 1958, recorded in Book 836, Page 544,
except portion thereof
- ----------------------------
1/ Excepting and reserving easement rights with respect to said substation and
associated transmission lines. See also Transmission Line Easement conveyed by
Utility Easement deed of Merrimack Valley School District to Concord Electric
Company, dated March 7, 2001, recorded in Book 2253, Page 003.
-4-
(26,476 sq. ft.) as was conveyed by the Company to Concord Regional Development
Corporation by deed dated August 2, 1972, recorded in Book 1141, Page 148.
15. Tract of about 3,300 sq. ft. located off North State Street in the City
of Concord, as well as all interest of the grantor in the adjoining easterly
one-half of the Railroad location, acquired by deed of C. M. Rice Paper Company
dated June 1, 1965 recorded in Book 964, Page 189, subject, however, to a sewer
easement as conveyed by the Company to the City of Concord, by deed dated
December 7, 1965, recorded in Book 977, Page 31.
16. Tract of about 30,000 sq. ft. located on the road from Boscawen to
Canterbury in the Town of Boscawen, acquired as site for Boscawen distribution
substation, by deed of Edward G. and Marion S. Powell dated September 2, 1960,
recorded in Book 870, Page 24, subject to slope easement as conveyed by the
Company to the State of New Hampshire with respect to highway construction on
State-owned property abutting land of the Company in Concord, New Hampshire, by
Corporation Slope Easement deed dated September 6, 1995, recorded in Book 1998,
Page 610.
17. Easement rights for a transmission line and access as reserved in deed
of the Company to Riverside Millwork Company, Inc. by deed dated March 22, 1982,
recorded in Book 1412, Page 409, and shown on plan prepared by Richard D.
Bartlett entitled "Boundary Survey Only for Concord Electric Company Location,
Merrimack Street, Penacook, New Hampshire" dated September 1, 1981, recorded as
Plan No. 7025.
18. Tract of 4.9 acres located near McGuire Street in the City of Concord,
acquired as site for Service Center building by deed of Franklin Hollis dated
February 28, 1964, recorded in Book 940, Page 403 and related relocation of
State of New Hampshire right of way per Indenture between the Company and the
State dated December 30, 1964, recorded in Book 954, Page 397.
19. Tract of about 22,500 sq. ft. on Langdon Street in the City of Concord,
acquired as site of Langdon Street distribution substation by deed of B. & M.
Realty Corporation dated February 5, 1965, recorded in Book 956, Page 72.
20. Tract of about 39,000 sq. ft. located on West Portsmouth Street in the
City of Concord, acquired as distribution substation site, by deed of The State
of New Hampshire dated November 3, 1966, recorded in Book 997, Page 299.
21. Rights-of-way for 3.2 miles of transmission line between West Concord
distribution substation and St. Paul's School as conveyed by following deeds:
Recording Reference
Date of Deed Book Page Grantor Location
Mar. 16, 1959 849 537 St. Paul's School\2 Concord
- ----------------------------
2/ This easement released March 11, 1964 in connection with the conveyance of a
subsequent easement on that date to the Company by the same grantor, recorded in
Book 939, Page 415.
-5-
Recording Reference
Date of Deed Book Page Grantor Location
Apr. 06, 1959 842 147 Martin E. & Dorothy M. White Concord
Feb. 02, 1960 857 344 W. Grant & Thelma H. McIntosh Concord
Nov. 22, 1960 874 174 Germaine B. & C. Murray Sawyer and Joseph & Concord
Elizabeth Jordan
Nov. 22, 1960 874 172 Germaine B. Sawyer et al Concord
Dec. 31, 1960 874 449 Daniel J. & Mary V. Scully Concord
May 01, 1962 899 37 City of Concord Concord
July 10, 1962 903 81 State of New Hampshire Concord
Mar. 19, 1963 918 58 Josephine W. & Edgar F. Woodman Concord
Mar. 11, 1964 939 415 St. Paul's School Concord
June 18, 1964 945 531 Germaine B. & C. Murray Sawyer Concord
Dec. 30, 1964 955 24 New England Telephone & Telegraph Co. Concord
Aug. 27, 1965 968 535 New England Telephone & Telegraph Co. Concord
June 29, 1962 907 169 New England Box Company Concord\3
22. Rights-of-way relating to 1.2 miles of transmission line between
Penacook distribution substation and tap in Penacook Village in the City of
Concord serving Brezner Tanning Corp. as conveyed by following deeds:
Recording Reference
Date of Deed Book Page Grantor Location
Apr. 06, 1959 841 315 Howard E. & Luwilda M. Raymond Concord
Feb. 01, 1961 876 103 John H., Isabel, David J., and Edwina L. Concord
Morrill
Feb. 01, 1961 876 153 Raymond F. & Thelma P. George Concord
Jan. 01, 1961 877 71 City of Concord Concord
June 28, 1962 899 465 John G. & Katherine J. Toomey Concord
- ----------------------------
3/ The latter conveyance was of the full title to the subject parcel. Tracts II
and III thereof were thereafter conveyed by the Company to John Swenson Granite
Company, Inc. by deed dated June 29, 1964, recorded in Book 941, Page 542,
reserving a transmission line easement to the Company. Tract III thereof was
thereafter conveyed by the Company to City of Concord, conveyed to the City of
Concord by Deed dated October 19, 1979, recorded in Book 1360, Page 220.
-6-
Recording Reference
Date of Deed Book Page Grantor Location
Mar. 07, 1967 1003 203 Merrimack Valley School District\4 Concord
Aug. 09, 1967 1016 448 Arthur S. & Florence M. Brodeur Concord
Aug. 07, 1967 1016 451 Harold L. & Rena M. Bradford Concord
Aug. 08, 1967 1016 443 Lewis & Barbara C. Kelso Concord
Oct. 10, 1967 1016 452 Felix & Patronyne Brodeur Concord
Aug. 08, 1967 1016 447 Olive F. Stevens Concord
Oct. 03, 1967 1016 446 Robert K. & Virginia D. Scott Concord
23. Rights-of-way for 2.8 miles of transmission line between Boscawen
distribution substation and tap in Penacook Village in the City of Concord
serving Brezner Tanning Corp. as conveyed by following deeds:
Recording Reference
Date of Deed Book Page Grantor Location
Sept. 02, 1960 870 26 George A. & Bessie L. Raymond Boscawen
Sept. 08, 1960 870 83 William T. & Mina C. Jordan Boscawen
Nov. 19, 1960 872 181 Edgar R. & Beverly Crete Boscawen
Nov. 21, 1960 872 196 William T. & Mina C. Jordan Boscawen
Jan. 01, 1961 877 34 Concord Savings Bank Concord
Jan. 24, 1961 876 165 R. Louis, Elaine G., Arnold R., and Arlene Boscawen
Martin
Jan. 17, 1961 877 28 Arthur N. Runnells and Concord Savings Bank Concord
Jan. 28, 1961 876 151 Maurice A. & Theodora D. Drolet Boscawen
May 09, 1961 881 95 State of New Hampshire Boscawen
24. Rights-of-way for 7.5 miles of transmission line in the Town of
Boscawen, acquired by deed of Public Service Company of New Hampshire dated
March 11, 1960, recorded in Book 857, Page 513, except for that portion thereof
conveyed to the State of New Hampshire by deed of the Company dated April 14,
1961, recorded in Book 881, Page 97.
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4/ Subject to thirty (30) foot right of way and other easement rights as
conveyed by the Company to NE Tel. and Tel. Co. by deed dated February 3, 1992,
recorded in Book 1876, Page 739.
-7-
25. Rights-of-way for .96 miles of transmission line between Concord Plains
substation of the Company and Sprague Electric Company plant on Pembroke Road in
the City of Concord as conveyed by the following deeds:
Recording Reference
Date of Deed Book Page Grantor Location
July 26, 1960 865 455 Jessie E. Pedeare Concord
Aug. 22, 1960 865 447 L. J. & Elizabeth G. Denis Concord
Aug. 26, 1960 866 490 Harold & L. Marie Johnson Concord\5
Aug. 26, 1960 866 489 Louise V. Cherette Concord
Aug. 26, 1960 866 527 Jennie M. Robbins Concord
Mar. 29, 1961 876 412 Merrimack Power Company\6 Concord
Mar. 30, 1961 876 410 Oscar L. Drew\7 Concord
26. Tract of about 16,500 sq. ft. located on the Bow Bog Road in the Town
of Bow, acquired as site for Bow distribution substation, by deed of Arthur W.
and Laura B. Sargent dated June 2, 1969, recorded in Book 1054, Page 120.
27. Right-of-way for 355 feet of transmission line between Langdon Street
substation of the Company and the McKerley Medical Care Center off South Street
in the City of Concord, conveyed by deed of Capitol Dodge, Inc. dated June 9,
1971, recorded in Book 1102, Page 77.
28. Tract of about 1.13 acres located on Iron Works Road in the City of
Concord, acquired as site for distribution substation, conveyed by deed of the
State of New Hampshire, dated October 31, 1973, recorded in Book 1194, Page 87.
29. Tract of about 7 acres located on East Sugar Ball Road in the City of
Concord, acquired for 1155 feet of transmission line between Hazen Drive and
Hollis substations of the Company conveyed by deed of Francis J. Faucher, dated
January 25, 1974, recorded in Book 1201, Page 413, except portion thereof (2.82
acres.) condemned by the State of New Hampshire for highway construction
purposes under RSA 498-A:5 of the laws of the State of New Hampshire, said
taking by Notice of Condemnation dated August 1, 1977, recorded in Book 1300,
Page 714, as amended January 5, 1978, recorded in Book 1312, Page 206.
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5/ See also Right-of-way for approximately 1220 feet of underground transmission
facilities along the southerly side of Branch Turnpike in the City of Concord,
conveyed to the Company by deed of Johnson Estates, Inc., dated May 28, 1986,
recorded in Book 1602, Page 940.
6/ Deed conveys full title rather than transmission line easement only.
7/ Deed conveys full title rather than transmission line easement only. Tract of
approximately 6.64 acres located northerly of Pembroke Road in the City of
Concord, conveyed by the Company to A & G Realty by deed dated November 8, 1985,
recorded in Book 1537, Page 259, subject to reserved transmission line rights as
described therein.
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30. The substation property situated in Concord, New Hampshire on the
southerly side of Hazen Drive, the land for which was acquired by the Company by
deed of (a) Richard L. and Linda L. Clark dated February 27, 1974, recorded in
Book 1203, Page 513 (approximately 13,083 sq. ft.), except portion thereof
(5,000 sq. ft.) as was conveyed by the Company to United Church of Christ
Retirement Center, Inc. by deed dated June 8, 1978, recorded in Book 1322, Page
570, and (b) United Church of Christ Retirement Community, Inc., dated June 1,
1978, recorded in Book 1322, Page 503 (approximately 8,250 sq. ft.), as
corrected by deed dated November 22, 1978, recorded in Book 1336, Page 497, and
(c) Stanley H. Prescott dated April 8, 1974, recorded in Book 1206, Page 448
(for access).
31. Tract of about 5.6 acres located on the westerly bank of the Merrimack
River in the City of Concord, acquired as the site for transmission line river
crossing tower, conveyed by deed of the Estate of Bertha Salvucci dated June 10,
1974, recorded in Book 1216, Page 251.
32. Rights-of-way relating to 3.1 miles of transmission line between Hollis
substation of the Company and a tap on the transmission line between Bridge
Street and West Portsmouth Street substations of the Company, conveyed by the
following deeds:
Recording Reference
Date of Deed Book Page Grantor Location
Mar. 29, 1972 1127 414 State of New Hampshire Concord
Dec. 07, 1973 1197 248 Christopher H. Edmunds Concord
Dec. 10, 1973 1197 252 Ernest A. Boulay Concord
Jan. 11, 1974 1200 91 Christopher H. Edmunds Concord
33. License to cross land owned by the State of New Hampshire in the City
of Concord with a portion of the transmission line between the West Concord and
Penacook substations of the Company to serve Weeks-Concord Dairy, Inc., granted
by the New Hampshire Public Utilities Commission by its Order No. 11367, dated
April 5, 1974, recorded in Book 1236, Page 303.
34. Right-of-way for about 215 feet of transmission line from a tap on the
transmission line between the Garvins Falls substation of Public Service Company
of New Hampshire and the Bridge Street substation of the Company, acquired to
serve Flanders Office Building on Loudon Road east of the Merrimack River in the
City of Concord, conveyed by deed of Stanley A. Bartlett and Phyllis M. and G.
Alvin Towle, dated February 14, 1975, recorded in Book 1235, Page 450.
35. Right-of-way for about 2000 feet of transmission line in the City of
Concord from a tap on the transmission line between the Pleasant Street and West
Concord substations of the Company to serve United Life and Accident Insurance
Company, conveyed by deed of the City of Concord, dated April 22, 1975, recorded
in Book 1241, Page 40.
36. Tract of about 6.39 acres located on Sewalls Falls Road in the City of
Concord, acquired as site for bulk power supply step-down station, 115KV to
34.5KV, conveyed by deed of Edward J. Sullivan, dated May 8, 1978, recorded in
Book 1321, Page 371.
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37. Right-of-way for about 700 feet of transmission line in the City of
Concord from a tap on the Company's transmission line between its Terrill Park
and Bridge Street substations, acquired as part of the necessary easements to
serve the Flanders Office Building, so-called, on Loudon Road in the City of
Concord, conveyed by deed of Earl L. and Dorothy J. Flanders, dated February 14,
1975, recorded in Book 1242, Page 214. See also Schedule A, Part II, Item 5 of
the Company's Third Supplemental Indenture dated as of July 1, 1975, from which
this acquisition was inadvertently omitted.
38. Right-of-way to provide for the relocation of about 843 feet of
transmission line in the City of Concord between the Penacook and Boscawen
substations of the Company across premises of the Grantor on Merrimack Street in
the Village of Penacook, conveyed by quitclaim deed of Riverside Millwork
Company, Inc., dated October 14, 1976, recorded in Book 1282 page 1069.
39. Transmission line easement in the City of Concord between the Hazen
Drive and Hollis substations of the Company acquired by the Company by deed of
United Church of Christ Retirement Center, Inc., dated June 26, 1978, recorded
in Book 1323, Page 270.
40. Right-of-way to provide for relocation of about 845 feet of
transmission line in the City of Concord between the Gulf Street and Bridge
Street substations of the Company across premises acquired by deed of the State
of New Hampshire, dated January 17, 1980, recorded in Book 1366, Page 63.
41. Right-of-way for about 520 feet of transmission line in the City of
Concord between the Bow Junction and Pleasant Street substations of the Company,
conveyed by deed of Concord Union School District, dated September 10, 1981,
recorded in Book 1403, Page 29, confirmed by deed dated June 9, 1982, recorded
in Book 1417, Page 877.
42. License for about 1.8 miles of transmission line in the City of Concord
between the Bow Junction and Pleasant Street substations of the Company
excepting those portions of the line which cross (a) the premises with respect
to which an easement was conveyed to the Company by Concord Union School
District (Item 5 above) and (b) premises of the Company located on Iron Works
Road. This license, dated June 30, 1982, was granted by Governor and Council
pursuant to Order No. 15,618 of the New Hampshire Public Utilities Commission,
recorded in Book 1420, Page 759.
43. Tract of approximately 0.46 acres located on the southerly side of
Branch Turnpike in the City of Concord acquired by the Company by deed of A & G
Realty, dated November 8, 1985, recorded in Book 1537, Page 263.
44. Leasehold rights with respect to a certain parcel of land located on
the southerly side of U.S. Route 4 in Epsom, New Hampshire, for use as a
step-down transformer location, a "mobil sub," and any appurtenant equipment
necessary or convenient for the operation thereof pursuant to a certain Lease
Agreement by and between Dennis Nolin and David Pauliotte (collectively
"Lessor") and Concord Electric Company ("Lessee"), dated June 8, 1988, and
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recorded in Book 1731, Page 397, such agreement having a term of five years, and
a renewal option for an additional five year term.
45. Leasehold rights with respect to a certain parcel of land located on
the southerly side of U.S. Route 4 in Epsom, New Hampshire for use as a
step-down transformer location, a "mobil sub," and any appurtenant equipment
necessary or convenient for the operation thereof pursuant to a Lease Agreement
between Dennis Nolin and David Pauliotte and Concord Electric Company dated May
28, 1993 and recorded in Book 1917, Page 1853, for a term of five years and a
renewal option for an additional five year term.
46. Transmission Line Easement conveyed by Utility Easement deed of Capital
Regional Development Council to Concord Electric Company, dated May 27, 1999,
recorded in Book 2158, Page 842.
47. Transmission Line Easement conveyed by instrument entitled Addition to
Utility Easement granted by Capital Regional Development Council to Concord
Electric Company, dated December 21, 2000, recorded in Book 2236, Page 1542.
48. Transmission Line Easement conveyed by Utility Easement deed of Irene
C. Bridges to Concord Electric Company, dated February 12, 2001, recorded in
Book 2243, Page 601.
49. Transmission Line Easement conveyed by Utility Easement deed of Park
Plaza Limited Partnership to Concord Electric Company, dated February 6, 2002,
recorded in Book 2361, Page 789.
50. Transmission Line Easement conveyed by Utility Easement deed of Irving
Oil Corporation to Concord Electric Company, dated October 17, 2002, recorded in
Book 2418, Page 1908.
51. All lines of poles and wires, both transmission and distribution,
situated in the City of Concord and the Towns of Allenstown, Boscawen, Bow,
Canterbury, Chichester, Dunbarton, Epsom, Hopkinton, Loudon, Pembroke, Salisbury
and Webster, all in the County of Merrimack, in The State of New Hampshire,
including without limiting the generality of this description, all rights,
privileges, easements in the Company's transmission line running from Garvins
Falls, in said Concord, to that section of Concord known as Penacook, with all
connections, appliances, appurtenances and apparatus connected therewith,
including transformers, services, meters, switches and other devices, with all
rights of way, franchises and locations existing in respect thereto, situated in
the City of Concord and the towns above mentioned.
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SCHEDULE A
Part II - Rockingham County Properties*
Properties and Transmission Line Easement Rights Located in Towns of Exeter,
Hampton, Hampton Falls, Seabrook, Stratham, Kingston, East Kingston,
South Hampton, Newton, Danville, Plaistow, Atkinson, Kensington,
North Hampton, Greenland, Brentwood, Derry, and Hampstead,
all in Rockingham County, New Hampshire
1. Rights reserved with respect to premises located on southerly side of
South Street in the Exeter conveyed by the Company to John A. Bell, the State of
New Hampshire and John W. Flynn, Jr., as tenants in common, by deed dated
December 27, 1978 and recorded in Book 2329, Page 1241.
2. The substation property, situated in Exeter, New Hampshire, on the
Southerly side of River Street, so-called, and being the same premises acquired
by the Company by deed of Fred L. Colcord, dated July 3, 1926, recorded in Book
815, Page 279, and including the right of the Company to erect and maintain a
transmission line or lines from the conveyed premises across the Exeter River,
so-called, as included in said conveyance.
3. The switching-station property, situated in Exeter, New Hampshire, on
the Southerly side of the Exeter River, so-called, and being the same premises
acquired by the Company by deed of The Trustees of The Phillips Exeter Academy,
dated December 14, 1939, recorded in Book 963, Page 275, together with a
right-of-way twelve (12) feet in width extending from Gilman's Lane, so-called,
on other property of said Trustees to the conveyed switching station property.
Said right-of-way hereinabove referred to was discontinued as of the fifteenth
day of March, 1947 and an additional right-of-way in lieu thereof twelve (12)
feet in width was conveyed to Exeter & Hampton Electric Company by The Trustees
of The Phillips Exeter Academy by deed dated March 15, 1947, recorded in Book
1073, Page 407, as appurtenant to the right and easement to maintain an
underground system from said switching-station lot to High Street, so-called,
therein conveyed.
4. The substation property, situated in Hampton, New Hampshire, on the
Southerly side of Lafayette Avenue, so-called, and being the same premises
acquired by the Company under the following deeds:
Date of Deed Book Page Grantor Location
Sept. 25, 1926 804 123 Simeon A. Shaw Hampton
Oct. 28, 1935 896 381 Simeon A. Shaw Hampton
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* All conveyances relate to premises located in Rockingham County, New
Hampshire, and all recording references are to records on file at the Rockingham
County Registry of Deeds, Exeter, New Hampshire.
Schedule A
(to Twelfth Supplemental Indenture)
Said premises are conveyed subject to the rights of The State of New
Hampshire and/or the Town of Hampton, to construct and maintain an approach to
the overhead bridge maintained across property of the Boston & Maine Railroad,
along and over the Westerly side of the conveyed property.
5. The substation property, situated in Hampton, New Hampshire, on the
Glade Path, so-called, and being the same premises acquired by the Company by
deed of Hampton Beach Improvement Company, dated November 8, 1926, recorded in
Book 831, Page 13.
6. The substation property, situated in Hampton, New Hampshire, on the
Guinea Road West, so-called, and being the same premises acquired by the Company
by deed of Clarence T. Brown, dated August 17, 1926, recorded in Book 804, Page
43.
7. The substation property, situated in Kingston, New Hampshire, and being
the same premises acquired by the Company by deed of John W. Trow, dated May 28,
1937, recorded in Book 931, Page 157, except that portion of the premises
acquired (approximately 1350 square feet) as conveyed by the Company to Edward
B. Holt and Helen J. Holt by deed, dated January 26, 1988, recorded in Book
2727, Page 1232, subject to transmission easement rights reserved therein.
The above described property is conveyed subject to a right to erect,
maintain and operate a transmission line or lines as acquired by Rockingham
County Light and Power Company under deed of Mary J. Crosby, dated May 18, 1904,
recorded in Book 601, Page 389, which right is now owned and operated by New
Hampshire Electric Company, and more specifically described as the right to
maintain a transmission line consisting of poles, wires and all necessary
appurtenances, together with a right to keep clear of all growth detrimental to
the proper operation of said line, a space of one rod on either side of the
center line thereof.
8. The substation property situated on Glade Path in Hampton, New
Hampshire, in that section known as Hampton Beach acquired by the Company by
deed of Hampton Beach Improvement Company, dated February 21, 1949, recorded in
Book 1124, Page 37.
9. The substation property situated in Plaistow, New Hampshire, on the
Easterly side of Witch Lane, so-called, acquired by the Company by deed of Roger
B. Hill, dated August 16, 1951, recorded in Book 1219, Page 63, except (a) those
portions of the premises acquired as conveyed by the Company to the Town of
Plaistow by deeds, dated June 27, 1977, recorded in Book 2287, Page 172 and Book
2287, Page 173, (b) that portion of the premises acquired as conveyed by the
Company to the Dart Container Corporation by deed dated June 27, 1977, recorded
in Book 2293, Page 1350, and (c) easement as conveyed by the Company to New
England Telephone and Telegraph Company by deed, dated June 25, 1979 recorded in
Book 2341, Page 1050.
10. The distribution lines, property, rights and franchises formerly owned
by Plaistow Electric Light & Power Company, situate principally in the Towns of
Plaistow and Atkinson, both in New Hampshire, as acquired by the Company by deed
of Plaistow Electric Light & Power Company, dated September 30, 1926, recorded
in Book 816, Page 470.
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11. A license to construct and maintain a line of transmission wires and
poles over and across public waters in the Towns of Hampton and Hampton Falls,
New Hampshire, as shown by Petition D-E3308, Exeter & Hampton Electric Company
to New Hampshire Public Utilities Commission, Vol. XXXVI, Page 89.
12. A license to construct and maintain a line of transmission wires and
poles over and across lands of the Legatees under the Will of Moses Eaton, in
the Town of Seabrook New Hampshire, as shown by Petition D-E3327, Exeter &
Hampton Electric Company to New Hampshire Public Utilities Commission, Vol.
XXXVI, Page 189, and further recorded with Rockingham County Registry of Deeds,
Book 1323, Page 228.
13. A tract of land, including without limitation the Service Building
located thereon, situated in Kensington, New Hampshire, on the Drinkwater Road,
so-called, acquired by the Company by deed of John W. York, dated June 14, 1954,
recorded in Book 1319, Page 33, subject to the reservation of the said John W.
York to the use of a right-of-way approximately fifteen (15) feet in width
extending from said Drinkwater Road to other land of said John W. York, lying
Easterly of the land therein conveyed, for men, teams, vehicles, and for all
necessary and desirable purposes, subject, however, to the understanding and
agreement that said right-of-way shall not be fenced or made subject to gates
and bars, that the said John W. York shall assume all expenses of maintenance
thereof, and that said Company, its successors or assigns, shall have full and
unimpeded rights of using said right of way whenever necessary or desirable,
except that portion of the premises acquired as conveyed by the Company to
Arthur H. Chapman and Marion J. Chapman by deed dated December 26, 1968,
recorded in Book 1955, Page 91.
14. A tract of land situated in Seabrook, New Hampshire, acquired by the
Company by deed of Charles Fogg Janvrin, dated May 21, 1954, recorded in Book
1316, Page 425.
15. The East Kingston distribution substation located on the northerly side
of the East Kingston Road with a capacity of 1,500 KVA and consisting of a
transformer, switching facilities and associated apparatus, together with a
connection to the Kingston transmission line, constructed on a tract of land
acquired by the Company under a deed of Robert H. and Marjorie E. Andersen,
dated January 28, 1957, recorded in Book 1422, Page 215.
16. 3.4 miles of transmission line rights-of-way, including without
limitation, transmission and distribution wires and poles located thereon,
situated in Stratham, New Hampshire, acquired by the Company under the following
deeds:
Recording Reference
Date of Deed Book Page Grantor Location
Dec. 22, 1951 1307 351 Mary E, Summerfield Stratham
Nov. 12, 2002 TBR TBR Cabernet Builders of Stratham, L.L.C. Stratham
1315 496 Carrie J. Rollins Stratham
May 14, 1954 1315 360 Earle L. Stockbridge, Executor of the Will of Stratham
Florence E. Rollins
-3-
Oct. 26, 2002 TBR* TBR* Thornhill Condominium Association Stratham
May 22, 1985 2545 2989 Walter Biery Stratham
_______, 2002 TBR* TBR* Rollins Hill Development, L.L.C. Stratham
Mar. 17, 1987 2674 665 Christine A. Eldridge Stratham
Dec. 18, 1986 2650 521 Winifred and Louise Pazzanese Stratham
_______, 2002 Winifred M. Pazzanese Stratham
Dec. 18, 1986 2674 662 Charlan Chapman Stratham
Nov. 21, 1986 2644 1473 Daniel A. Daudelin Stratham
Nov. 30, 1982 2442 109 Virginia Holmgren and Lucy Perry Stratham
May 08, 1978 232 951 Lucy Perry Stratham
May 04, 2001 3577 1449 Parkman Brook Development, LLC Stratham
Jan. 24, 2002 3713 990 Parkman Brook Development, LLC Stratham
(corrective deed)
Nov. 1, 2002 TBR* TBR* Cameron Sewall, Trustee of the Cameron Sewall Stratham
1987 Trust; and Joan M. Sewall, Trustee of the
Joan M. Sewall 1987 Trust
Feb. 26, 2002 3770 2311 Joseph Falzone as Trustee of Bunker Hill Stratham
Realty Trust
Dec. 24, 1950 1194 457 H. Roby and Nellie M. Jewell Stratham
Nov. 15, 2002 TBR* TBR* William A. Woods Stratham
_______, 2002 TBR* TBR* Public Service Company of New Hampshire Stratham
Dec. 1950 1194 454 Nelson E. and Levi H. Barker Stratham
Oct. 23, 1963 PUC Order, in Archibald & Lucille Harding Hampton Falls
Condemnation
May 06, 1963 1669 194 Russell P. Merrill Sr. & Jr. Hampton Falls
*TBR = To be recorded
17. A right-of-way for purposes of transmission and distribution lines,
situated in Hampton, New Hampshire, acquired by the Company by deed of Henry V.
Dupuis, dated July 21, 1955, recorded in Book 1362, Page 81.
-4-
18. A tract of land for purposes of transmission and distribution lines,
situated in Hampton, New Hampshire, acquired by the Company by deed of Richard
J. Oosting and Olive B. Oosting, dated May 27, 1955, recorded in Book 1355, Page
476.
19. The 33 KV Kingston transmission line 11.8 miles in length consisting of
rights of way with poles, wires and apparatus erected thereon running from a
point near the Company's Guinea Road switching station in Hampton, New
Hampshire, through the Towns of Hampton, Hampton Falls, Kensington, East
Kingston and Kingston, New Hampshire, to a distribution substation at West
Kingston Road in Kingston, acquired by the Company under the following deeds:
Deed of the New Hampshire Electric Company, dated December 31, 1955,
recorded in Book 1383, Page 102;
Deed of Horace B. Philbrick, dated November 27, 1957, recorded in Book
1453, Page 111;
together with a tie between said transmission line and the Guinea Road station
constructed upon rights of way theretofore owned by the Company.
21. Rights-of-way to widen the 11.8 miles of 33 KV Kingston transmission
line to 100 feet to provide for a second circuit in the future from the
Company's Guinea Road Switching Station in Hampton, New Hampshire, through the
towns of Hampton, Hampton Falls, Kensington, East Kingston and Kingston, New
Hampshire, to a distribution substation at West Kingston Road, Kingston,
acquired by the Company under the following deeds:
Date of Deed Book Page Grantor Location
Jan. 11, 1961 1574 72 Edward B. & Helen J. Holt Kingston
Dec. 07, 1960 1571 40 Thomas D. & Jean M. Spinella Kingston
Nov. 24, 1961 1609 95 Chas. W. & Clinton W. Senter Kingston
Jan. 14, 1961 1574 70 Warren W. & Marjorie N. George Kingston
Jan. 28, 1961 1574 584 Arthur E. Alton Kingston
Dec. 17, 1960 1571 43 John A. & Anna W. Greene Kingston
Jan. 05, 1962 1613 331 Amanda C. Goodwin et alii Kingston
Sept. 23, 1961 1600 341 Sarkis Bannaian Kingston
Jan. 23, 1962 1614 403 George E. & Edith Arnold Kingston
Jan. 10, 1962 1613 329 John E. & Gardner Ladd Kingston
Jan. 10, 1962 1613 324 E. M. Bowley & J. B. Dutton Kingston
Jan. 14, 1961 1574 82 Frieda M. & Walter R. Modlich Kingston
Jan. 11, 1961 1574 75 Kenneth & Gladys F. Hoyt Kingston
Apr. 01, 1961 1579 84 Beverly S. & Mary S. Chamberlain Kingston
Apr. 01, 1961 1579 87 Beverly S. & Mary S. Chamberlain East Kingston
Jan. 11, 1961 1574 55 Arnold L. & A. Elvena Belcher East Kingston
Jan. 11, 1961 1574 84 Lucy A. Sprague East Kingston
Nov. 25, 1961 1609 103 Frederick P. & Dorothy H. Montrose East Kingston
-5-
Date of Deed Book Page Grantor Location
Jan. 28, 1961 1574 587 Archie D. & Ellen B. Osmond East Kingston
Nov. 25, 1961 1609 100 Frederick P. & Dorothy H. Montrose East Kingston
Dec. 17, 1960 1571 227 George E. & Lillian A. Henshaw East Kingston
Jan. 11, 1961 1574 62 Henry H. & Emily H. Clark East Kingston
Jan. 23, 1962 1614 405 Harold P. Nason Kingston
Nov. 25, 1961 1609 98 Arlan T. & Jacqueline W. Clements Kingston
Jan. 27, 1962 1615 299 Nellie R. Shattuck Kingston
Mar. 22, 1962 1620 368 John J. Bakie Kingston
Apr. 26, 1961 1580 546 John W. & Nora M. Tuthill (Lot) Kingston
Jan. 14, 1961 1574 79 G. Austin & Donald A. Kemp East Kingston
Dec. 17, 1960 1571 35 J. Edward & Annie L. Stevens East Kingston
Dec. 17, 1960 1571 38 J. Edward & Annie L. Stevens East Kingston
Jan. 12, 1962 1613 326 John W. & Jessie E. York East Kingston
Apr. 15, 1961 1580 539 Wendell E. & Doris M. Sweetser East Kingston
Apr. 15, 1961 1580 535 Wendell E. & Doris M. Sweetser East Kingston
Oct. 18, 1961 1603 360 Richard E. Sargent East Kingston
Jan. 31, 1961 1574 581 Paul W. & Marian C. Kimball Kensington
Jan. 14, 1961 1574 60 Parker M. Blodgett Kensington
Apr. 29, 1961 1581 224 Margaret M. Alger Kensington
Apr. 26, 1961 1580 542 John W. & Nora M. Tuthill Kensington
Jan. 11, 1961 1574 57 Elmer C. & Bernice E. Brewer Kensington
Sept. 09, 1961 1599 294 Horace B. Philbrick Kensington
Dec. 24, 1962 1656 258 Louis E. & Merida Daigneault Kensington
May 10, 1961 1582 156 David C. & Joan T. Engel Kensington & Hampton
Falls
Sept. 9, 1961 1599 287 John P. & Nancy P. Hall Hampton Falls
Sept. 15, 1961 1600 338 Chas. F. & Lucille C. Savage Hampton Falls
Mar. 30, 1961 1579 92 Earl G. & Katherine P. Warfield Hampton Falls
Mar. 30, 1961 1579 90 Agnes R. Knight Hampton Falls
May 01, 1961 1599 290 Stanley A. Hamel Hampton Falls
Sept. 01, 1961 1599 292 Homer A. Johnson Hampton
Dec. 29, 1962 1656 263 Wilbert M. & Jennie A. Swett Kingston
Dec. 29, 1962 1656 256 Helen D. Ball\8 Kingston
Dec. 29, 1962 1656 261 Arthur H. Penniman\9 Kingston
22. Additional rights-of-way to widen the 11.8 miles of 34 KV Kingston
transmission line to 100 feet to provide for a second circuit in the future from
the Company's Guinea Road Switching Station in Hampton, New Hampshire, through
the towns of Hampton, Hampton Falls,
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8/ Except portion thereof released by deed from the Company to Helen D. Ball
dated January 3, 1963, recorded in Book 1656, Page 266.
9/ Except portion thereof released by deed from the Company to Arthur H.
Penniman dated January 3, 1963, recorded in Book 1656, Page 265.
-6-
Kensington, East Kingston and Kingston, New Hampshire, to a distribution
substation at West Kingston Road, Kingston, acquired by the Company under the
following deeds:
Date of Deed Book Page Grantor Location
Dec. 6, 1966 1847 103 William F. Tucker, Jr. Kingston
May 19, 1966 1821 554 Lyman B. Pope Kingston
May 13, 1966 1823 490 Ethel Milbury Kingston
June 07, 1966 1823 147 Cleveland Webster and
Robert Kuegel Kensington
Jan. 02, 1965 1751 095 Heirs of I. Webster Kingston
Sept. 14, 1964 1739 001 Joseph Noble Hampton Falls
Nov. 13, 1965 1796 450 Elizabeth Kudaruska and Hampton and
Benjamin Checkoway Hampton Falls
July 24 1967 1869 494 Edward & Helen Holt Kingston
Mar. 25, 1965 1761 026 Augustine & George Hurley Kingston
Feb. 28, 1967 1857 012 State of New Hampshire Kingston
Mar. 18, 1966 1862 377 Jenney Mfg. Co. Kingston
May 17, 1966 1823 104 Unknown Owners - Gerald Giles G/A/L Kingston and
Kensington
Oct. 19, 1964 1738 498 Ruth Simes Kingston
May 17, 1966 1823 167 Nathan Battles Kingston
May 17, 1966 1823 126 Robert & Marjorie Anderson East Kingston
Nov. 3, 1965 1796 456 Cora Colby Kensington
Sept. 21, 1964 1739 005 John & Nora Tuthill (Lot) Kensington
May 17, 1966 1823 187 Abbie Simes Kingston
23. 2.5 miles of transmission line rights-of-way running from a tap in
Hampton Falls, on the Hampton to Exeter transmission line to the Sylvania
Electric Products, Inc., plant on Portsmouth Avenue, Exeter, acquired by the
Company under the following deeds:
Date of Deed Book Page Grantor Location
June 26, 1963 1676 423 Irene A. Barker Exeter
May 17, 1963 1672 235 Amede & Florence Baillargeon Exeter
July 16, 1963 1679 497 Henry & Cecilia D. Saltonstall Exeter
May 18, 1963 1672 233 Ralph V. & Alice E. Amsden Exeter
July 10, 1963 1679 5 Edward & Elsa Rogalski Exeter & Stratham
P.U.C. Order, October 23, 1963, in Archibald & Lucille Harding Hampton Falls
Condemnation
May 06, 1963 1669 194 Russell P. Merrill Sr. & Jr. Hampton Falls
24. 1.9 miles of transmission line rights-of-way running from the Exeter
Substation on River Street to Drinkwater Road, Exeter, New Hampshire, acquired
by the Company under the following deeds:
-7-
Date of Deed Book Page Grantor Location
Mar. 17, 1960 1539 488 Trustees of the P. E. A. Exeter
Feb. 24, 1960 1537 470 John F. Sanborn Exeter
25. Rights-of-way at Hampton for moving transmission lines to allow for the
construction of New Hampshire Route 101-C, acquired by the Company under the
following deeds:
Date of Deed Book Page Grantor Location
Mar. 11, 1960 1539 116 Town of Hampton Hampton
Feb. 23, 1960 1537 446 Jessie M. Toppan Hampton
Feb. 23, 1960 1537 449 Walter H. Purington Hampton
26. Rights reserved with respect to premises located on southerly side of
South Street in the Exeter conveyed by the Company to John A. Bell, the State of
New Hampshire and John W. Flynn, Jr., as tenants in common, by deed dated
December 27, 1978, recorded in Book 2329, Page 1241.
27. 1.5 miles of transmission line rights-of-way from a tap in Exeter on
the transmission line to Sylvania Electric Products, Inc. and running westerly
in Exeter and Stratham and including a substation lot, acquired by the Company
under the following deeds:
Date of Deed Book Page Grantor Location
Oct. 08, 1965 1793 091 Sylvania Electric Products, Inc. Exeter
Feb. 21, 1966 1851 452 Paul Molloy Exeter
Oct. 09, 1965 1792 093 Harold & Vera Haley (Lot) Exeter and
Stratham\10
Feb. 03, 1966 1809 253 Callahan Realty Corp. Stratham
Feb. 08, 1966 1809 250 Lionell Labonte Stratham
Feb. 04, 1966 1811 450 Julia Scammon Stratham
Mar. 08, 1966 1853 382 Edward Laviolette Stratham
Oct. 09, 1965 1792 094 Harold & Vera Haley Stratham
28. Lot of land adjacent to substation lot on River Street, Exeter,
acquired by the Company by deed of Lena Bondi, dated September 27, 1965,
recorded in Book 1789, Page 180.
29. Distribution substation lot and 400 feet of distribution rights-of-way
on easterly side of Route 125 in Plaistow, acquired by the Company by deed of
Old County Court Inc., dated May 15, 1965, recorded in Book 1774, Page 407.
- ----------------------------
10/ Except that portion of the premises acquired as conveyed by the Company to
the State of New Hampshire by deed dated July 29, 1997, recorded in Book 3233,
Page 195, subject to reserved rights as stated therein.
-8-
30. 7 miles of transmission line rights-of-way running from Plaistow
substation to the plant of Process Engineering, Inc. in Plaistow, acquired by
the Company under the following deeds:
Date of Deed Book Page Grantor Location
Nov. 26, 1966 1845 088 Myron & Mary Sorenson (Lot) Plaistow
Aug. 03, 1966 1831 119 Gordon A. Cheney Plaistow
Oct. 25, 1966 1842 097 Donald & Marilyn Senter Plaistow
Oct. 27, 1966 1841 567 Process Engineering, Inc. Plaistow
July 14, 1966 1829 435 Nettie Bell Hill Plaistow
Nov. 21, 1966 1844 510 Nicholas & Grace Kay Plaistow
31. Transmission line rights-of-way in the Town of Seabrook, acquired by
the Company under the following deeds:
Date of Deed Book Page Grantor Location
Apr. 13, 1964 1711 340 Town of Seabrook Seabrook
Apr. 07, 1964 1711 454 John D. Fogg Seabrook
32. 1.1 miles of transmission line rights-of-way running through the Bailey
Company property to a distribution substation site on Cemetery Lane in Seabrook,
acquired by the Company under the following deeds:
Date of Deed Book Page Grantor Location
June 08, 1967 1866 016 Melvin & Helen S. Morgan Seabrook
May 22, 1967 1861 463 Bailey Company\11 Seabrook
Mar. 28, 1967 1857 009 Richard & Alice Holloway Seabrook
June 08, 1967 1863 412 K. J. Quinn Company Seabrook
Sept. 15, 1967 1877 412 John W. Durgin, Jr. (Lot) Seabrook
Sept. 15, 1967 1877 413 John W. Durgin, Jr. Seabrook
33. 5.2 miles of transmission line rights-of-way running from a point on
the Guinea Road to Hampton transmission line in town of Hampton. Running through
the towns of Hampton, Hampton Falls, South Hampton and Seabrook, acquired by the
Company under the following deeds:
Date of Deed Book Page Grantor Location
Feb. 02, 1966 1810 016 Public Service Company of N.H. (Lot) Hampton
Feb. 02, 1966 1810 011 Public Service Company of N.H. Hampton,
Hampton Falls,
South Hampton
and Seabrook\12
- ----------------------------
11/ Possibly subject to condemnation by Public Service Company of New Hampshire
for Seabrook Station, said taking by Petition for Condemnation filed with New
Hampshire Public Utilities Commission on April 9, 1974, said Petition and Order
thereon, recorded in Book 2220, Page 1659
12/ Except (a) that portion of the premises acquired as conveyed by the Company
to Ray W. Coombs by deed dated January 31, 1969, recorded in Book 1955, Page 93,
(b) that portion of the premises acquired as conveyed by the Company to Howard
L. Janvrin, Jr. and Betty J. Janvrin by deed dated April 5, 1971, recorded in
Book 2062, Page 85, in exchange for other rights acquired by the Company, (c)
that portion of the premises acquired as conveyed by the Company to Raymond F.
Lalime and Diane Lalime by deed dated April 5, 1971, recorded in Book 2062, Page
88, in exchange for other rights acquired by the Company, (d) that portion of
the premises acquired as conveyed by the Company to George W. Lonergan and
Drucilla H. Lonergan by deed dated April 5, 1971, recorded in Book 2062, Page
91, in exchange for other rights acquired by the Company, (e) that portion of
the premises acquired as conveyed by the Company to Anthony Smoker and Sandra E.
Smoker by deed dated April 5, 1971, recorded in Book 2062, Page 94, in exchange
for other rights acquired by the Company, (f) that portion of the premises
acquired as conveyed by the Company to Arthur G. Dupuis and Frances M. Dupuis by
deed dated April 5, 1971, recorded in Book 2062, Page 97, in exchange for other
rights acquired by the Company, (g) that portion of the premises acquired as
conveyed by the Company to Daniel E. Dow by deed dated April 5, 1971, recorded
in Book 2062, Page 98, in exchange for other rights acquired by the Company, (h)
that portion of the premises acquired as conveyed by the Company to Richard S.
Robie by deed dated May 12, 1971, recorded in Book 2071, Page 350, in exchange
for other rights acquired by the Company, and (i) that portion of the premises
acquired as conveyed by the Company to Applecrest Farm Orchards, Inc. by deed
dated September 14, 1971, recorded in Book 3061, Page 006, in exchange for other
rights acquired by the Company. See Paragraph 35, below.
-9-
34. Distribution rights-of-way located in various towns as indicated,
acquired by the Company under the following deeds:
Date of Deed Book Page Grantor Location
Feb. 18, 1964 1706 360 Irving E. & Anna E. Peaslee Plaistow
Dec. 15, 1964 1748 003 Paul W. Hobbs & James A. Bricket Trs. Hampton
May 26, 1967 1862 379 Town of Hampton Hampton
June 29, 1965 1774 004 Bernice K. Davis Danville
June 29, 1965 1774 006 Alden & Francis Colby Danville
35. Easements to widen portions of 5.2 miles of transmission line
right-of-way from a point on the Guinea Road to Hampton transmission line, in
Hampton, through Hampton Falls and Seabrook, and acquired by the Company under
the following deeds:
Date of Deed Book Page Grantor Location
Mar. 31, 1971 2062 081 Edwin L. Batchelder, Jr. Hampton
Apr. 21, 1971 2066 040 Flora B. Hurd Hampton
Apr. 07, 1971 2066 037 Ernest N. & Rose V. Brown Hampton Falls
Mar. 17, 1971 2079 291 Applecrest Farm Orchards, Inc. Hampton Falls
July 06, 1971 2080 203 Francis J. & Anne M. Ferreira Hampton Falls
Mar. 20, 1971 2062 092 Anthony & Sandra E. Smoker Hampton Falls
Mar. 31, 1971 2062 086 Raymond F. & Diane LaLime Hampton Falls
Mar. 20, 1971 2062 083 Howard L. & Betty J. Janvrin Hampton Falls
Mar. 20, 1971 2066 034 Daniel E. Dow Hampton Falls
Mar. 20, 1971 2062 095 Arthur G. & Frances Dupuis Hampton Falls
Mar. 20, 1971 2062 089 George W. & Drucilla H. Lonergan Hampton Falls
June 16, 1971 2076 402 Helen Evans Woodworth Hampton Falls
-10-
Date of Deed Book Page Grantor Location
June 15, 1971 2076 400 Walter & Edna Combs Hampton Falls
May 12, 1971 2068 146 Richard S. Robie Hampton Falls
Sept. 01, 1970 2032 272 Lloyd Graves Hampton
Sept. 03, 1968 1928 164 John W. Durgin, Jr. Seabrook
36. 2.1 miles of transmission line right-of-way running from a point on the
Hampton to Hampton Beach transmission line to a substation on High Street, in
Hampton, acquired under the following deeds:
Date of Deed Book Page Grantor Location
Feb. 09, 1968 1897 348 Bruce M. Fall & Ruth V. Aquizap Hampton
Apr. 17, 1970 2011 252 Mary Ruth Perkins Hampton
May 26, 1970 2016 464 Byron Redman Hampton
May 26, 1970 2016 466 Donald Northway Hampton
Apr. 17, 1970 2011 260 Vrylna Olney Hampton\13
Jan. 04, 1971 2050 141 Marion Garland Hampton\14
Feb. 10, 1970 2004 014 Moses Brown Hampton\15
May 08, 1970 2014 169 John W. Durgin, Jr. (Lot) Hampton
Apr. 17, 1970 2011 258 Robert Mace Hampton
Apr. 17, 1970 2011 265 Robert Mace Hampton
Mar. 10, 1970 2006 368 Flora & Gary Hurd Hampton
Oct. 29, 1969 1991 418 Homer A. Johnson Hampton
Oct. 29, 1969 1991 420 Arthur & Florence Lamprey Hampton
Aug. 01, 1969 1978 190 Town of Hampton Hampton
Nov. 26, 1969 1995 474 Lloyd C. Ring Hampton
Dec. 12, 1969 1998 008 John & Irene Hines Hampton
Mar. 10, 1970 2006 370 Francis & Irene O'Connor Hampton
37. Distribution substation lot and 400 feet of distribution right-of-way
on westerly side of Hampton Road, in Exeter, acquired under the following deeds:
Date of Deed Book Page Grantor Location
Sept. 25, 1970 2036 105 Ralston Tree Exeter
Sept. 16, 1970 2034 436 Exeter & Hampton Mobile Home Exeter
Sept. 16, 1970 2034 434 Exeter & Hampton Mobile Home (Lot) Exeter\16
- ----------------------------
13/ Partially relocated pursuant to Easement Deed of Meadow Pond Farm
Corporation dated April 29, 2002, recorded in Book 3792, Page 219.
14/ Released and relocated pursuant to Easement Deed of Meadow Pond Farm
Corporation and Ice House Lane Condominium Association dated April 29, 2002,
recorded in Book 3792, Page 209.
15/ Partially relocated pursuant to Easement
Deed of Town of Hampton, New Hampshire dated June 24, 2002, recorded in Book
3792, Page 203.
16/ Subject to easement rights granted by the Company to First Altex Realty
Trust, Third Altex Realty Trust, and Renwick Realty by deed, dated January 31,
1985, recorded in Book 2531, Page 0654.
-11-
38. Parcel of land adjacent to Guinea Road Switching Station, in Hampton,
acquired by deed of Lloyd Graves, dated September 1, 1970, recorded in Book
2032, page 271.
39. Easements to widen transmission line rights-of-way from Guinea Road
Switching Station 0.3 mile in Hampton, to the transmission lines of Public
Service Company of New Hampshire, acquired under the following deeds:
Date of Deed Book Page Grantor Location
Sept. 1, 1970 2032 275 Billie and Oletha Barton Hampton
Sept. 1, 1970 2032 274 Billie and Oletha Barton (Lot) Hampton
Sept. 1, 1970 2032 277 Roger James Hampton
40. 0.3 mile transmission line right-of-way from Exeter Switching Station
to Phillips Exeter Academy Substation, and lot of land, acquired under the
following deeds:
Date of Deed Book Page Grantor Location
July 09, 1968 1918 294 Phillips Exeter Academy Exeter
July 09, 1968 1918 292 Phillips Exeter Academy Exeter
July 09, 1968 1918 291 Phillips Exeter Academy (Lot) Exeter
41. Lot of land adjacent to Service Building on Drinkwater Road,
Kensington, acquired under the following deeds:
Date of Deed Book Page Grantor Location
July 26 1968 1921 432 Carolyn Christie\17 Kensington
Mar. 11, 1069 1955 089 Arthur Chapman Kensington
42. Distribution rights-of-way located in various towns as indicated,
acquired by the Company under the following deeds:
Date of Deed Book Page Grantor Location
Feb. 23, 1971 2057 080 B-Jack Investments, Inc. Exeter
Feb. 23, 1971 2057 082 Brickside Corporation Exeter
Aug. 19, 1968 1927 205 Samuel H. Tamposi Seabrook
Feb. 06, 1969 1960 024 Paul D. Dichter Seabrook
Sept. 15, 1969 1985 146 Weare Park Associates Seabrook
Dec. 01, 1969 1996 482 First Development Corporation Seabrook
Oct. 22 1969 1992 260 Exeter Manor Nursing Home Exeter
Aug. 30, 1969 1990 468 Roselle Iron Works, Inc. Kingston
- ----------------------------
17/ Except that portion of the premises acquired as conveyed by the Company to
Arthur H. Chapman and Marion J. Chapman by deed dated December 26, 1968,
recorded in Book 1955, Page 91
-12-
43. Easements for transmission line right-of-way from Powder Mill Road in
Exeter to Charter Street in Exeter, a distance of 5810 feet, and a lot of land
acquired under the following deeds:
Date of Deed Book Page Grantor Location
Jan. 31, 1972 2136 135 Walter A. Stone Exeter
April 4, 1972 2134 39 Jerry W. Belmonte Exeter
Oct. 27, 1972 2182 86 John W. Durgin (Lot) Exeter
Nov. 08, 1972 2184 438 Richard I. LaPerle Exeter
Mar. 16, 1973 2199 461 Norman L. Judkins Exeter
Mar. 16, 1973 2199 463 Francis L. Keaton Exeter
Mar. 20, 1973 2199 459 Richard Irvine Exeter
44. Lot of land on southerly side of Old Westville Road in Plaistow for a
distribution substation acquired by deed of Westville Mkt. Inc., dated March 6,
1972, recorded in Book 2125, Page 268.
45. Easements to widen portion of transmission line right-of-way located in
Hampton Falls, which is part of the Seabrook Loop right-of-way, acquired under
the following deeds:
Date of Deed Book Page Grantor Location
June 23, 1971 2076 400 Walter W. Combs Hampton Falls
June 23, 1971 2076 402 Helen C. Woodworth Hampton Falls
July 07, 1971 2079 291 Apple Crest Farm Orchards, Inc. Hampton Falls
July 09, 1971 2080 203 Francis J. Ferreira Hampton Falls
46. Lot of land on westerly side of Mill Road in Kingston for a substation
acquired by deed of Richard W. and Sylvia Senter, dated March 4, 1974, recorded
in Book 2207, Page 1072, subject to a transmission line easement owned by Public
Service Company of New Hampshire.
47. Lot of land on the southerly side of Rocks Road, in Seabrook, 100 feet
by 200 feet, for a distribution substation, acquired by deed of John W. Durgin,
dated September 27, 1974, recorded in Book 2230, Page 1620, subject to a 30 foot
easement for the benefit of New England Telephone and Telegraph Company.
48. Easements for pole lines to service new industrial customers adjacent
to the Boston & Maine Railroad in Hampton acquired under the following deeds:
Date of Deed Book Page Grantor Location
Nov. 10, 1975 2247 838 Charles G. and Mary O. White Hampton
Dec. 08, 1975 2249 396 Dunfey Family Corp. Hampton
Dec. 19, 1975 2249 1828 Webb Family Trust Hampton
-13-
49. Tract of approximately .43 acres on the southerly side of Route 1 in
the Town of Hampton, New Hampshire, adjacent to the southerly boundary of the
existing Hampton Substation, conveyed to the Company by deed of the State of New
Hampshire, dated September 15, 1980, and recorded in Book 2377, Page 978. (Also
provided is a utility easement located between this parcel and the southerly
sideline of US Route 1, containing 0.10 acres, more or less.)
50. Right-of-way for approximately 900 feet of transmission line
construction in the Town of Hampton, New Hampshire to extend the 3341 and 3360
lines into Public Service Company of New Hampshire's Timber Swamp Substation,
conveyed by deed of Public Service Company of New Hampshire, dated February 23,
1983, recorded in Book 2437, Page 238.
51. Right-of-way for approximately 80 feet of transmission line
construction in the Town of Hampton, New Hampshire to extend the 3341 and 3360
lines into Public Service Company of New Hampshire's Timber Swamp Substation,
conveyed by deed of Thomas L. & Patricia M. Deardeuff, dated July 15, 1982,
recorded in Book 2418, Page 22.
52. Right-of-way for approximately 3300 feet of underground transmission
line for the relocation of a portion of the 3359 line through the site of the
Seabrook Nuclear Plant in the Town of Seabrook, New Hampshire, conveyed by deed
of Properties, Inc., dated September 15, 1978, recorded in Book 2321, Page 591.
53. Right-of-way for approximately 1470 feet of transmission line located
in Town of Hampton, New Hampshire, conveyed by deed of the State of New
Hampshire, dated March 26, 1987, recorded in Book 2668, Page 1455.
54. Easement exchange between Properties, Inc. and Exeter & Hampton
Electric Company to straighten a certain section of the 3359 Transmission Line
to run parallel to and alongside a certain section of a 345 kV Transmission Line
from the Seabrook Plant.
Granted from Properties, Inc. to Exeter & Hampton Electric Company are
rights-of-way for a 100 foot strip across a portion of four (4) parcels
acquired by Properties, Inc. under the following deeds:
Date of Deed Book Page Grantor Location
Parcel 1:
May 10, 1971 2070 31 Town of Seabrook Seabrook
May 11, 1971 2233 281 Karl J.E. Grove Seabrook
May 10, 1971 2071 252 Bruce G. & Cynthia L. Brown Seabrook
June 8, 1984 2496 1470 Properties, Inc. v. Natalie B. Chase, et als. Seabrook
(Rockingham County Superior Court #E-22-84)
-14-
Date of Deed Book Page Grantor Location
Parcel 2:
June 8, 1971 2074 217 Chase Enterprises, Inc. Seabrook
May 12, 1971 2071 250 Colin W. Stard (Portion of "Parcel 1") Seabrook
Parcel 3:
April 7, 1971 2070 21 Forrest C. Chase Seabrook
May 12, 1971 071 250 Colin W. Stard (Portion of "Parcel 2") Seabrook
Parcel 4:
May 10, 1971 2234 1196 Ray W. Coombs Seabrook
Additional Easement:
May 12, 1992 2927 2505 Public Service Company of New Seabrook
Hampshire to Grantor
55. Easement Deed of Town of Exeter, New Hampshire dated December 11, 1995,
recorded in Book 3136, Page 1638, conveying easement rights with respect to
property in said Exeter.
56. All lines of poles and wires, both transmission and distribution,
situate in the Towns of Exeter, Hampton, Hampton Falls, Seabrook, Stratham,
Kingston, East Kingston, South Hampton, Newton, Danville, Plaistow, Atkinson,
Kensington, North Hampton, Greenland, Brentwood, Derry, and Hampstead, all in
the County of Rockingham, in The State of New Hampshire, including without
limiting the generality of this description all rights, privileges and easements
in the Company's transmission line running from said Exeter to that section of
said Hampton known as Hampton Beach, the transmission line running from said
Hampton to said Exeter, and the transmission line running from Kingston to the
substation property acquired by said Company by deed of Roger B. Hill, dated
August 16, 1951, recorded in Book 1219, Page 63, with all connections,
appliances, appurtenances and apparatus connected therewith, including
transformers, meters, switches and other devices, with all rights of way,
franchises and locations existing in respect thereto including rights of way
acquired but not presently utilized for transmission line purposes, of which the
Company is possessed, situated in the Towns above mentioned.
-15-
[Form of Bond]
Unitil Energy Systems, Inc.
First Mortgage Bond, Series ___, _____%
Due _______________
No. ____ $____________
Unitil Energy Systems, Inc., a corporation organized under the laws of the
State of New Hampshire (hereinafter called the "Company"), for value received,
hereby promises to pay to _____________ or registered assigns, on the _____ day
of _____________, ______, the principal sum of _____________ Dollars
($___________) and to pay interest thereon from the date hereof at the rate of
_____ per centum (______%) per annum (computed on the basis of a thirty (30) day
month and a three hundred sixty (360) day year) payable [insert frequency] on
[insert payment dates] in each year, commencing with the ____ day of
_____________, ______, until said principal sum is paid; and to pay interest on
any overdue principal (including any overdue prepayment of principal) and
premium, if any, and (to the extent permitted by applicable law) on any overdue
payment of interest at the rate of [insert overdue rate] % per annum. The
principal of, premium, if any, and the interest on this bond shall be payable at
the corporate trust office of U.S. Bank National Association, in Boston,
Massachusetts, or at the corporate trust office of its successor as Trustee of
the trust hereinafter referred to, or at the option of certain holders in
accordance with the provisions of Section 7.05 of the Indenture hereinafter
referred to, in lawful money of the United States of America.
This bond is one of a duly authorized issue of First Mortgage Bonds of the
Company limited as to aggregate principal amount as set forth in the Indenture
hereinafter mentioned, issuable in series, and is one of a series known as First
Mortgage Bonds, Series ____, all bonds of all series being issued and to be
issued under and pursuant to and all equally secured (except as any sinking or
other fund, established in accordance with the provisions of the Indenture
hereinafter mentioned, may afford additional security for the bonds of any
particular series) by an Indenture of Mortgage and Deed of Trust dated as of
July 15, 1958 (herein called the "Original Indenture") duly executed and
delivered by the Company to Old Colony Trust Company (U.S. Bank National
Association being successor Trustee and together with each predecessor trustee
being called the "Trustee"), which, together with all indentures supplemental
thereto, was amended and restated by the execution and delivery of a Twelfth
Supplemental Indenture dated as of December 2, 2002 (the "Amended and Restated
Indenture"), to which Amended and Restated Indenture and to all indentures
supplemental thereto, including a Supplemental Indenture (the "_____
Supplemental Indenture") dated as of _____________ (the Amended and Restated
Indenture together with all indentures supplemental thereto, herein being the
"Indenture") reference is hereby made for a description of the property
transferred, assigned and mortgaged thereunder, the nature and extent of the
security, the terms and conditions upon which the bonds are secured and
additional bonds may be issued and secured, and the rights of the holders or
registered owners of said bonds, of the Trustee and of the Company in respect of
such security. Neither the foregoing reference to the Indenture, nor any
provision of this bond or of
Exhibit A
(to Twelfth Supplemental Indenture)
the Indenture, shall affect or impair the obligation of the Company, which is
absolute, unconditional and unalterable, to pay, at the stated or accelerated
maturities herein provided, the principal of and premium, if any, and interest
on this bond as herein provided.
[Bonds of this Series ____ are entitled to the benefit of a required
sinking fund provided for in the ________ Supplemental Indenture and shall
become subject to redemption for the purposes of such sinking fund at the
principal amount thereof without premium, plus interest accrued thereon to the
date of such redemption, all on the conditions and in the manner provided in the
________ Supplemental Indenture.]
[Bonds of this Series _____ are also redeemable, in whole or in part, in
integral multiples of _______________ dollars, at the option of the Company on
any date on at least 30 days' notice, in the manner, with the effect, subject to
the limitations and for the amounts specified in Section _____ of the ________
Supplemental Indenture.]
[On the conditions and in the manner provided in the Section _____ of the
________ Supplemental Indenture, Series ____ Bonds may also become subject to
redemption, in whole or in part, at any time on at least 30 days' notice, in the
manner, with the effect and for the amounts specified in said Section _____, by
the use of moneys deposited with or paid to the Trustee as the proceeds of the
sale or condemnation of property of the Company or as the proceeds of insurance
policies deposited with or paid to the Trustee because of damage to or
destruction of property of the Company.]
[In the event that all or any part of the bonds of this Series _______
shall be redeemed or otherwise discharged prior to their maturity pursuant to or
in accordance with the order of any governmental commission or regulatory
authority upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such Series ____ Bonds shall be entitled to
be paid therefor an amount specified in Section _____ of the ________
Supplemental Indenture.]
The Indenture provides that, if notice of redemption of any bond issued
pursuant to its terms, including the Series ____ Bonds, or of any portion of the
principal amount of any such bond selected for redemption has been duly given,
then such bond or such portion thereof shall become due and payable on the
redemption date, and, if the redemption price shall have been duly deposited
with the Trustee, interest thereon shall cease to accrue from and after the
redemption date, and that whenever the redemption price thereof shall have been
duly deposited with the Trustee and notice of redemption shall have been duly
given, or provision thereof made as provided in the Indenture, such bond or such
portion thereof shall no longer be entitled to any lien or benefit of the
Indenture.
In case an Event of Default, as defined in the Indenture, occurs, the
principal of this bond may become or may be declared due and payable prior to
the stated maturity hereof in the manner and with the effect and subject to the
conditions provided in the Indenture.
This Bond is transferable by the registered owner hereof, in person or by
duly authorized attorney, upon books of the Company to be kept for that purpose
at the corporate trust office of
A-2
the Trustee under the Indenture, upon surrender thereof at said office for
cancellation and upon presentation of a written instrument of transfer duly
executed, and thereupon the Company shall issue in the name of the transferee or
transferees, and the Trustee shall authenticate and deliver, a new registered
bond or bonds, of like form and in an authorized denomination or in authorized
denominations and of the same series, for the same aggregate principal amount.
Bonds of Series ____ upon surrender thereof at said office may be exchanged for
the same aggregate principal amount of fully registered bonds of Series _____ of
another authorized denomination or other authorized denominations, all upon
payment of the charges, if any, and subject to the terms and conditions
specified in the Indenture.
The Company and the Trustee may treat the registered owner of this bond as
the absolute owner hereof for all purposes.
With the consent of the Company and to the extent permitted by and as
provided in the Indenture, any of the provisions of the Indenture or of any
instrument supplemental thereto may be modified by the assent or authority of
the holders of at least seventy-five per centum (75%) in principal amount of the
bonds then outstanding thereunder, provided, however, that no such modification
shall (i) extend the time or times or payment of the principal of, or the
interest or premium, if any, on any bond, (ii) reduce the principal amount
thereof or the rate of interest or premium thereon, (iii) authorize the creation
of any lien prior or equal to the lien of the Indenture upon any property
subject to the lien thereof, or deprive any bondholder of the benefit of the
lien of the Indenture, (iv) affect the rights under the Indenture of the holders
of one or more, but less than all, of the series of bonds outstanding thereunder
unless assented to by the holders of seventy-five per centum (75%) in aggregate
principal amount of bonds outstanding thereunder of each of the series so
affected, (v) reduce the percentage of bonds, the holders of which are required
to assent to any such modification, or (vi) in any manner affect the rights or
obligations of the Trustee without its written consent thereto.
No recourse shall be had for the payment of the principal of or the
interest on this bond or of any claim based hereon or in respect hereof or of
the Indenture, against any incorporator, stockholder, officer or director of the
Company, or of any successor company, whether by virtue of any statute or rule
of law or by the enforcement of any assessment of penalty or otherwise, all such
liability being by the acceptance hereof expressly waived and released and being
also waived and released by the terms of the Indenture.
This bond shall not be valid nor become obligatory for any purpose until it
shall have been authenticated by the execution of the certificate hereon
endorsed by the Trustee under the Indenture.
A-3
In Witness Whereof, Unitil Energy Systems, Inc. has caused this bond to be
signed in its name by its President or one of its Vice Presidents and its
corporate seal to be hereunto affixed and attested by its Treasurer or one of
its Assistant Treasurers, and this bond to be dated the _____ day of
______________.
Unitil Energy Systems, Inc.
By
--------------------------------
Name:
---------------------------
Title:
--------------------------
attest:
----------------------------
Treasurer
(Corporate Seal)
A-4
[Form of Trustee's Certificate of Authentication]
Trustee's Certificate of Authentication
This is one of the First Mortgage Bonds, Series ____ referred to in the
within mentioned Indenture.
U.S. Bank National Association, Trustee
By:
------------------------------------
Authorized Officer
A-5
(Form of Endorsement)
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
______ the within bond, and all rights thereunder, hereby irrevocably
constituting and appointing ___________________________________________________
attorney to transfer said bond on the books of the Company, with full power of
substitution in the premises.
Dated:
--------------------- ----------------------------------
Signature of Registered Owner
In the presence of
------------------------------------------------
NOTICE: The signature of this assignment must correspond with the name of
the payee as it appears upon the face of the within bond in every particular,
without alteration or enlargement or any change whatever.
A-6
Unitil Energy Systems, Inc.
Certificate of Net Bondable Expenditures
Certificate of Net Bondable Expenditures filed with U.S. Bank National
Association (as successor to Old Colony Trust Company), Trustee, under Indenture
of Mortgage and Deed of Trust dated as of July 15, 1958, as amended and restated
by the Twelfth Supplemental Indenture thereto dated as of December 2, 2002 (the
"Amended and Restated Indenture"), as such Amended and Restated Indenture may be
supplemented (such Amended and Restated Indenture, as so supplemented, the
"Indenture").
The undersigned, _________________ and ________________, being President
and Treasurer, respectively, of Unitil Energy Systems, Inc. (the "Company"), a
New Hampshire corporation, being duly sworn, depose and state as follows:
Upon application for Authentication and Delivery under Article IV of
$___________ of First Mortgage Bonds, Series
(or here substitute appropriate language if certificate is in
connection with withdrawal of cash or taking of credit)
the undersigned do hereby certify that the summary statements herein contained
covering (i) the period from June 30, 1952 to, but not including, December 2,
2002 (the "Merger Date") for Exeter and Hampton Electric Company ("Exeter"),
(ii) the period from May 31, 1958 to, but not including, the Merger Date for the
Company and (iii) the period on or after the Merger Date through the date of
calculation for the Company, are correct and complete, that the Property
Additions for which the Gross Expenditures hereinafter referred to have been
made constitute Property Additions as defined in Section 4.01(A) of said
Indenture and that the Company is now entitled to have authenticated and
delivered said amount of First Mortgage Bonds, Series
(or here substitute appropriate language with respect to the
withdrawal of cash or the taking of credit)
Computation of Net Expenditures for
Property Additions
1. Gross Expenditures for Property Additions, the sum of:
(i) Exeter Pre-Merger Gross Expenditures for
Property Additions, ............................$82,291,896
(ii) Company Pre-Merger Gross Expenditures for
Property Additions, and.........................$66,738,186
(iii) Company Post-Merger Gross Expenditures for
Property Additions calculated from the Merger
Date to date....................................$__________
Exhibit B
(to Twelfth Supplemental Indenture)
[Here insert statement respecting New Gross Expenditures
required by (i) of Section 4.01I.]
Total for (1) $_________
Less
2. Net Retirements, the sum of:
(i) Exeter Pre-Merger Net Retirements...........$15,046,604
(ii) Company Pre-Merger Net Retirements, and....$15,272,384
(iii) Net Retirements, beginning with the
Merger Date to date computed as follows:........$___________
(a) Retirements, beginning
with the Merger Date to date.....$_________
[Here insert statement respecting
new Retirements required by
(ii) of Section 4.01I.]
(b) Less all moneys received
by or deposited with the
Trustee pursuant to: Section
8.10--$ ; Section
8.12--$ ; Section
10.03--$ ; and Section
10.04--$ ; all from the
Merger Date to date..............$_________
Company Post-Merger Net
Retirements...................... $___________
Total for (2) $_________
Equals
3. Net Expenditures for Property Additions, the sum of:
(i) Exeter Pre-Merger Net Expenditures...........$67,245,292
[(1)(i) minus (2)(i)]
(ii) Company Pre-Merger Net Expenditures.........$51,465,802
[(1)(ii) minus (2)(ii)]
(iii) Company Post-Merger Net Expenditures.......$___________
[(1)(iii) minus 2(iii)]
-2-
Total for (3) $_________
Computation of Net Bondable Expenditures
for Property Additions
(As of date of filing of this Certificate)
4. Net Expenditures for Property Additions,........$___________
Same as (3) above.
Less
5. Aggregate of Net Bondable Expenditures
Heretofore Bonded, the sum of :
(i) Exeter Pre-Merger Bonded Expenditures.......$49,378,806
(from Line 3 of Annex B)
(ii) Company Pre-Merger Bonded Expenditures.....$46,592,604
(from Line 3 of Annex C)
(iii) Company Post-Merger Bonded Expenditures;
namely, the amount certified pursuant to
(5)(iii) of the last certificate filed after
the Merger Date $________ plus the amount
certified pursuant to (11) of said last
certificate filed $________.....................$___________
Total for (5) $_________
Equals
6. Net Bondable Expenditures at the date of this
certificate, the sum of:
(i) Exeter Pre-Merger Bondable Expenditures.....$17,866,486
[(3)(i) minus (5)(i)]
(ii) Company Pre-Merger Bondable Expenditures... $4,873,198
[(3)(ii) minus (5)(ii)]
(iii) Company Post-Merger Bondable Expenditures.$___________
[(3)(iii) minus (5)(iii)]
Total for (6) $_________
-3-
Statement of Net Bondable Expenditures
Now to Be Bonded
7. 147.06% of total of: aggregate principal
amount of Bonds now to be issued under
Article IV $_______; and aggregate
amount of cash now to be withdrawn under
Article VI $_______............................. $_________
8. Total of Net Bondable Expenditures now
to be appropriated under Section 8.07
$______ and Section 12.01 $_______ ............. $_________
9. 147.06% of credits now to be entered
against sinking and improvement funds
under Article IX................................ $_________
10. Aggregate amount of cash for the
withdrawal of which application is now
made under (a) of Section 11.02................. $_________
11. Amount of Net Bondable Expenditures, if
any, now to be Bonded........................... $_________
Total of (7), (8), (9) and (10).
12. Amount of Net Bondable Expenditures, not
now to be Bonded................................ $_________
(6) minus (11).
(Note: The amount of (11) cannot exceed the amount of the
Net Bondable Expenditures existing at the time of the filing
of this certificate, namely, the amount certified pursuant
to (6) above.)
-4-
Here insert statements required by Section 16.07 of the Indenture.
Dated _______________________
---------------------------------------
President
Unitil Energy Systems, Inc.
---------------------------------------
Treasurer
Unitil Energy Systems, Inc.
Subscribed and sworn to by _______________, President, and _______________,
Treasurer, of Unitil Energy Systems, Inc., before me this _______ day of
____________, 20___.
----------------------------
Notary Public
-5-
Calculation of Exeter
Pre-Merger Bonded Expenditures
The Exeter Pre-Merger Bonded Expenditures taken by Exeter for bonds issued,
the withdrawal of cash or other credit taken under the Exeter Indenture using a
ratio of 60% of Net Expenditures for Property Additions, is hereby calculated
using a ratio of 68% rather than 60%:
(1) Net Bondable Expenditures of Exeter certified as
Bonded pursuant to (5) of the last Exeter
certificate plus the amount thereof certified
pursuant to (10) of said certificate for a total
of Net Bondable Expenditures of Exeter bonded
using a 60%
ratio............................................ $55,962,647
(2) Amount of Bonds previously issued or cash
withdrawn or other credit taken under the Exeter
Indenture equals (1) above multiplied by
60%.............................................. $33,577,588
(3) Amount of Net Bondable Expenditures of Exeter
which would have been bonded if a 68% ratio had
been used equals (2) divided by 68% so Exeter
Pre-Merger Bonded Expenditures
equals........................................... $49,378,806
[insert in (5)(i) of the Certificate of Net
Bondable Expenditures]
Annex B TO Exhibit B
(to Twelfth Supplemental Indenture)
Calculation of Company
Pre-Merger Bonded Expenditures
The Company Pre-Merger Expenditures taken by the Company for bonds issued,
the withdrawal of cash or credit taken under the Indenture using a ratio of 60%
of Net Expenditures for Property Additions, was recalculated pursuant to an
amendment to Section 4.04 contained in the Tenth Supplemental Indenture dated as
of January 15, 2001 using a ratio of 68% rather than 60%, which recalculation is
set forth in paragraph (1) below. The only additional Net Bonded Expenditures of
the Company bonded thereafter and prior to the Merger Date were calculated on
the basis of a 68% ratio and are set forth in paragraph (2) below. As a result,
paragraph (3) contains the Net Bondable Expenditures of the Company bonded prior
to the Merger Date calculated as follows:
(1) Amount of Net Bondable Expenditures which would
have been bonded prior to the Tenth Supplemental
Indenture if the amount of bonds previously issued
or cash withdrawn or other credit taken under the
Indenture had been bonded on the basis of a 68%
ratio rather than a 60% ratio (per Schedule 1 to
Annex A to the Tenth Supplemental Indenture)....... $35,563,104
(2) Amount of Net Bondable Expenditures bonded after
the Tenth Supplemental Indenture but prior to the
Merger Date (which were calculated on the basis of
a 68%
ratio)............................................. $11,029,500
(3) Amount of Net Bondable Expenditures by the Company
based upon a 68% ratio. ((1) plus (2)
................................................... $46,592,604
[insert in (5)(ii) of the Certificate of Net
Bondable Expenditures]
Exhibit C
(to Twelfth Supplemental Indenture)
Series I Bonds
The terms and provisions of the Series I, 8.49% Bonds of the Company which
were set forth in the Eighth Supplemental Indenture, have been amended and
restated in this Exhibit C, which shall from and after the Merger Date control
the terms and conditions of such Series I, 8.49% Bonds, and the Eighth
Supplemental Indenture shall have no further force or effect with respect to
such terms and conditions.
All things have been done and performed which are necessary to make the
Series I Bonds, when authenticated by the Trustee and issued as herein provided,
legal, valid and binding obligations of the Company;
And It Is Hereby Covenanted, Declared and Agreed, as set forth in the
following covenants, agreements, conditions and provisions, to wit:
Article One
Amendment and Restatement of Series I Bonds
Section 1.01. There is hereby amended and restated the series of bonds
heretofore designated as "First Mortgage Bonds, Series I." Series I Bonds which
shall be fully registered bonds and of the denomination of $1,000 and multiples
thereof. The registered bonds of Series I issued after the Merger Date shall be
dated as provided in Section 2.03 of the Indenture. All Series I Bonds shall
mature on October 14, 2024 and shall bear interest at the rate of eight and
forty-nine one hundredths percent (8.49%) per annum from their respective dates
of issue, such interest to be payable semi-annually on the fourteenth day of
April and the fourteenth day of October in each year commencing the fourteenth
day of April, 2003, and shall bear interest on any overdue principal (including
any overdue prepayment of principal) and premium, if any, and (to the extent
permitted by applicable law) on any overdue payment of interest, at the rate of
9.49% per annum. The principal of, premium, if any, and interest on bonds of
Series I shall be payable at the corporate trust office in Boston, Massachusetts
of U.S. Bank National Association or at the corporate trust office designated by
its successor as Trustee hereunder, in lawful money of the United States of
America, provided that the Company may enter into a written agreement with any
registered Institutional Holder of the bonds of Series I providing that payment
of interest thereon and of the redemption price on any portion of the principal
amount thereof (including premium, if any) which may be redeemed shall be made
directly to such holder or to its nominee, as the case may be, at a duly
designated place of payment within the United States, without surrender or
presentation of such bonds of Series I to the Trustee, provided that (A) there
shall have been filed with the Trustee a copy of such agreement and (B) pursuant
to such agreement such holder shall agree that it will not sell, transfer or
otherwise dispose of any such bond of Series I in respect of which any such
payment or redemption shall have been made unless, prior to the delivery thereof
by it, either (i) it shall have made a clear and accurate notation of the amount
of principal so redeemed upon such bond to be transferred, or (ii) such bond of
Series I shall have been presented to the Trustee for appropriate notation
thereon of the portion of the principal amount thereof redeemed, or (iii) such
bond or bonds of Series I shall
Exhibit C
(to Twelfth Supplemental Indenture)
have been surrendered in exchange for a new bond or bonds of Series I for the
unredeemed balance of the principal amount thereof in accordance with the other
terms of the Indenture. For purposes of this Section 1.01, the term
"Institutional Holder" shall mean any insurance company, bank, savings and loan
association, trust company, investment company, charitable foundation, employee
benefit plan (as defined in ERISA) or other institutional investor or financial
institution. The text of the Series I Bonds and the Trustee's certificate with
respect thereto shall be respectively substantially of the tenor and purport set
forth in Schedule A hereto. The Series I Bonds shall be numbered in such manner
or by such method as shall be satisfactory to the Trustee.
The issue of bonds of Series I hereunder is hereby limited to the
$6,000,000 in aggregate principal amount of Series I Bonds initially issued
under the Eighth Supplemental Indenture and to Series I Bonds issued in exchange
or substitution for outstanding Series I Bonds under the provisions of Sections
2.08, 2.10, 2.11 and 7.05 of the Indenture and of Section 1.07 hereof.
Section 1.02. As a required sinking fund for the benefit of the Series I
Bonds, the Company covenants that it will, on or prior to October 13 in each
year, beginning with October 13, 2015, and continuing to and including October
13, 2024, pay to the Trustee immediately available funds sufficient to redeem,
at par, Series I Bonds then outstanding, in the principal amount of Six Hundred
Thousand Dollars ($600,000) (or the remaining principal amount if less than
$600,000 principal amount of Series I Bonds at the time remains outstanding).
The payments required for the sinking fund as above provided are in this Section
1.02 and elsewhere in this Exhibit C referred to as "required sinking fund
payments" and the day following the latest date on which each such payment is
required to be made is herein and therein referred to as a "required sinking
fund redemption date." Each required sinking fund payment shall be applied to
the redemption of Series I Bonds on the applicable required sinking fund
redemption date.
No redemption under Section 1.03, 1.04, 1.05 or 1.06 hereof shall affect or
reduce the obligation of the Company to provide for required sinking fund
redemptions under this Section 1.02 until all Series I Bonds shall have been
paid in full.
Section 1.03. At the same time it makes any required sinking fund payment,
the Company shall have the option (which shall be non-cumulative) to pay to the
Trustee, in immediately available funds, an additional principal amount of Six
Hundred Thousand Dollars ($600,000) (in this Section 1.03 and elsewhere in this
Exhibit C to the Twelfth Supplemental Indenture referred to as an "optional
sinking fund payment"), provided, that the cumulative amount of all optional
sinking fund payments pursuant to this Section 1.03 shall not exceed One Million
Two Hundred Thousand Dollars ($1,200,000) and each such optional sinking fund
payment shall be applied to the redemption of Series I Bonds on the required
sinking fund redemption date for such required sinking fund payment. The Company
will give notice, by registered mail, postage prepaid, to the Trustee and to
each registered owner of a bond of Series I of any required or optional payment
to be made pursuant to Section 1.02, this Section 1.03, Section 1.04 or Section
1.05 hereof not more than 60, nor less than 30, days prior to the required
sinking fund redemption date (or other designated date of redemption in the case
of a redemption pursuant to Section 1.04 or Section 1.05).
C-2
Section 1.04. In addition to the required and optional sinking funds
provided by Sections 1.02 and 1.03 hereof, all of the bonds of Series I, or any
part of the principal amount thereof constituting One Hundred Thousand Dollars
($100,000) or any integral multiple thereof, shall be subject to redemption, at
the option of the Company, on any date on or after October 14, 1994 and before
October 14, 2019, pursuant to the provisions of Article VII of the Indenture,
and by payment of an amount equal to the Make Whole Amount, as defined below in
this Section 1.04, determined five Business Days prior to such redemption. In
addition to the foregoing, on any date on or after October 14, 2019, all of the
bonds of Series I, or any part of the principal amount thereof constituting One
Hundred Thousand Dollars ($100,000) or any integral multiple thereof, shall be
subject to redemption, at the option of the Company, by payment of the interest
accrued on the principal amount of the bond or bonds optionally to be redeemed
to the date fixed for such redemption plus an amount equal to the applicable
percentage of the principal amount thereof as follows:
Applicable
Date Fixed for Redemption Percentage
If redeemed on or after October 14, 2019 and before October 14, 2020 101.5%
On or after October 14, 2020 and before October 14, 2021 101.0%
On or after October 14, 2021 and before October 14, 2022 100.5%
On or after October 14, 2022 and prior to maturity 100%
For purposes of this Section 1.04, the Make Whole Amount shall mean the
greater of (i) the outstanding principal amount of the bonds to be redeemed,
plus interest accrued thereon to the date fixed for such redemption, and (ii)
the sum of (A) the aggregate present value as of the date of such redemption of
each dollar of principal being redeemed (taking into account each redemption
required by Section 1.02 above) and the amount of interest (exclusive of
interest accrued to the date fixed for such redemption) that would have been
payable in respect of each such dollar if such redemption had not been made,
determined by discounting such amounts at the Reinvestment Rate (as hereinafter
defined) from the respective dates on which they would have been payable to the
date of such redemption, plus (B) interest accrued on the bonds to be redeemed
to the date fixed for such redemption.
For purposes of any determination of the Make Whole Amount:
"Reinvestment Rate" shall mean (1) the sum of 0.50%, plus the yield
reported on page "USD" of the Bloomberg Financial Markets Services Screen
(or, if not available, any other nationally recognized trading screen
reporting on-line intraday trading in the United States government
Securities) at 11:00 A.M. (Eastern time) on the fifth Business Day
preceding the date the Make Whole Amount becomes due and payable pursuant
to the foregoing provisions of this Section 1.04, for the United States
government Securities having a maturity (rounded to the nearest month)
corresponding to the remaining Weighted Average Life to Maturity of the
principal of the bonds being redeemed (taking into account the application
of each redemption required by Section 1.02) or (2) in the event that no
nationally recognized trading screen reporting on-line intraday trading in
the
C-3
United States government Securities is available, Reinvestment Rate shall
mean the sum of 0.50%, plus the arithmetic mean of the yields for the two
columns under the heading "Week Ending" published on the fifth Business Day
preceding the date the Make Whole Amount becomes due and payable pursuant
to the foregoing provisions of this Section 1.04, in the Statistical
Release under the caption "Treasury Constant Maturities" for the maturity
(rounded to the nearest month) corresponding to the Weighted Average Life
to Maturity of the principal amount of the bonds being redeemed (taking
into account each redemption required by Section 1.02). If no maturity
exactly corresponds to such Weighted Average Life to Maturity, yields for
the two published maturities most closely corresponding to such Weighted
Average Life to Maturity shall be calculated pursuant to the immediately
preceding sentence, and the Reinvestment Rate shall be interpolated or
extrapolated from such yields on a straightline basis, rounding in each of
such relevant periods to the nearest month. For the purposes of calculating
the Reinvestment Rate, the most recent Statistical Release published prior
to the date of determination of the Make Whole Amount shall be used.
"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve System and which
establishes yields on actively traded U.S. Government Securities adjusted
to constant maturities or, if such statistical release is not published at
the time of any determination hereunder, then such other reasonably
comparable index which shall be designated by the holders of 66-2/3% in
aggregate principal amount of outstanding Series I bonds.
"Weighted Average Life to Maturity" of the principal amount of the
bonds being redeemed shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal.
The term "Remaining Dollar-Years" of such principal shall mean the amount
obtained by (i) multiplying (x) the remainder of (1) the amount of
principal that would have been payable on each scheduled redemption date
under Section 1.02 hereof if the redemption pursuant to this Section 1.03
had not been made, less (2) the amount of principal on the bonds scheduled
to become payable on each such redemption date under Section 1.02 after
giving effect to the redemption pursuant to this Section 1.04, by (y) the
number of years (calculated to the nearest one-twelfth) which will elapse
between the date of determination and each such scheduled redemption date
under Section 1.02, and (ii) totaling the products obtained in (i).
Section 1.05. Series I Bonds may be redeemed pursuant to Article XI of the
Indenture (i) out of Trust Moneys, required by Section 8.12 of the Indenture to
be deposited with the Trustee, on any date and shall be redeemed for an amount
equal to the principal amount of the bonds to be redeemed, plus interest accrued
to the date of redemption; or (ii) out of Trust Moneys required by Sections
8.10, 10.03, 10.04 or 10.04A of the Indenture to be deposited with the Trustee,
on any date and, if redeemed prior to October 14, 2019, then they shall be
redeemed for an amount equal to the Make Whole Amount, as defined above in
Section 1.04, and if redeemed on any date on or after October 14, 2019, then
they shall be redeemed for an amount equal to the interest accrued on the
principal amount of the bond or bonds to be redeemed to the date fixed
C-4
for redemption, plus an amount equal to the applicable percentage of the
principal amount thereof set forth in Section 1.04, above, for optional
redemptions occurring on or after October 14, 2019.
Section 1.06. In the event that all or any part of the bonds of Series I
shall be redeemed or otherwise discharged prior to their maturity pursuant to or
in accordance with the order of any governmental commission or regulatory
authority upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such bonds of Series I shall be entitled to
be paid an amount equal to the Make Whole Amount, if such redemption or
discharge occurs prior to October 14, 2019, or, if such redemption or discharge
occurs on or after October 14, 2019, then the registered owners of such bonds
shall be entitled to be paid an amount equal to the interest accrued on the
principal amount of the bonds to be redeemed to the date of redemption, plus an
amount equal to the then applicable percentage of the principal amount thereof
provided in Section 1.04, above, for optional redemptions after such date.
Section 1.07. Bonds of Series I, upon surrender thereof at the principal
office of the Trustee, may be exchanged for the same aggregate principal amount
of other bonds of this Series.
Within a reasonable time after the receipt of a request for such an
exchange, the Company shall issue and the Trustee shall authenticate and deliver
all bonds required in connection therewith, and the Trustee shall make such
exchange upon payment to it of such charge, if any, as is required by the
following paragraph.
For any exchange of bonds of Series I, the Company, at its option, may
require the payment of a sum sufficient to reimburse it for any stamp or other
tax or governmental charge required to be paid by the Company or the Trustee.
Article Two
Redemption
Section 2.01. In the case of any required or optional sinking fund
redemption pursuant to Sections 1.02 and 1.03 hereof, forthwith after the
September 14 preceding each required sinking fund redemption date, and in the
case of any proposed redemption pursuant to Sections 1.04 or 1.05, forthwith
after the Trustee's receipt of proper notice from the Company of any such
proposed redemption, the Trustee, shall act in accordance with the provisions of
Article VII of the Indenture.
The Company covenants that it will pay to the Trustee
(i) on or before the day prior to each required sinking fund
redemption date, the sum required by Section 1.02 hereof, plus the sum, if
any, payable in accordance with any notice of optional redemption delivered
prior to such required sinking fund redemption date pursuant to Section
1.03 hereof,
C-5
(ii) on or before the day prior to the date proposed by the Company in
a notice (which notice shall conform to the requirements of Article VII of
the Indenture) of any redemption pursuant to Section 1.04 or 1.05 hereof,
the amount payable in accordance with such notice, and
(iii) at the time of each required sinking fund redemption or other
redemption the Company shall pay to the Trustee the amount of the charges
which shall be due the Trustee and the amount of the expenses which the
Trustee advises the Company it has incurred or will incur in connection
with such redemption.
C-6
(Form of Series I Bond)
Unitil Energy Systems, Inc.
No. IR-_____ $____________
First Mortgage Bond, Series I, 8.49%
due October 14, 2024
Unitil Energy Systems, Inc., a corporation organized under the laws of the
State of New Hampshire (hereinafter called the "Company"), for value received,
hereby promises to pay to _________________ or registered assigns, on the
fourteenth day of October, 2024, the principal sum of
_____________________________ Dollars ($____________) and to pay interest
thereon from the date hereof at the rate of eight and forty-nine hundredths per
centum (8.49%) per annum (computed on the basis of a thirty (30) day month and
three hundred sixty (360) day year) payable semi-annually on the fourteenth day
of April and the fourteenth day of October in each year, commencing the
fourteenth day of April, 2003, until said principal sum is paid; and to pay
interest on any overdue principal (including any overdue prepayment of
principal) and premium if any, and (to the extent permitted by applicable law)
on any overdue payment of interest, at the rate of 9.49% per annum. The
principal of and premium, if any, and the interest on this bond shall be payable
at the corporate trust office in Boston, Massachusetts of U.S. Bank National
Association, or at the corporate trust office designated by its successor as
trustee in the trust hereinafter referred to, or at the option of certain
holders, in accordance with the provisions of Section 1.01 of Exhibit C of the
Twelfth Supplemental Indenture hereinafter referred to, in lawful money of the
United States of America.
This bond is one of a duly authorized issue of First Mortgage Bonds of the
Company limited as to aggregate principal amount as set forth in the Indenture
hereinafter mentioned, issuable in series, and is one of a series known as First
Mortgage Bonds, Series I, all bonds of all series being issued and to be issued
under and pursuant to and all equally secured (except as any sinking or other
fund, established in accordance with the provisions of the Indenture hereinafter
mentioned, may afford additional security for the bonds of any particular
series) by an Indenture of Mortgage and Deed of Trust dated as of July 15, 1958
(herein called the "Original Indenture") duly executed and delivered by the
Company to Old Colony Trust Company (U.S. Bank National Association being
successor Trustee and together with each predecessor trustee being called the
"Trustee"), to which Original Indenture and to all Indentures supplemental
thereto, including a Twelfth Supplemental Indenture (the "Twelfth Supplemental
Indenture") dated as of December 2, 2002 (herein together called the
"Indenture") reference is hereby made for a description of the property
transferred, assigned and mortgaged thereunder, the nature and extent of the
security, the terms and conditions upon which the bonds are secured and
additional bonds may be issued and secured, and the rights of the holders or
registered owners of said bonds, of the Trustee and of the Company in respect of
such security. Neither the foregoing reference to the Indenture, nor any
provision of this bond or of the Indenture, shall affect or impair the
obligation of the Company, which is absolute, unconditional and unalterable, to
pay,
Schedule A
(to Exhibit C of the Twelfth Supplemental Indenture)
at the stated or accelerated maturities herein provided, the principal of and
premium, if any, and interest on this bond as herein provided.
Bonds of this Series I are entitled to the benefit of a required sinking
fund and an optional sinking fund provided for in Exhibit C to the Twelfth
Supplemental Indenture and shall become subject to redemption for the purposes
of such sinking funds at the principal amount thereof without premium, plus
interest accrued thereon to the date of such redemption, all on the conditions
and in the manner provided in Exhibit C to the Twelfth Supplemental Indenture.
Bonds of this Series I are also redeemable, in whole or in part, in
integral multiples of one hundred thousand dollars, at the option of the Company
on any date on at least 30 days' notice, in the manner, with the effect, subject
to the limitations and for the amounts specified in Section 1.04 of Exhibit C to
the Twelfth Supplemental Indenture.
On the conditions and in the manner provided in the Section 1.05 of Exhibit
C to the Twelfth Supplemental Indenture, Series I Bonds may also become subject
to redemption, in whole or in part, at any time on at least 30 days' notice, in
the manner, with the effect and for the amounts specified in said Section 1.05,
by the use of moneys deposited with or paid to the Trustee as the proceeds of
the sale or condemnation of property of the Company or as the proceeds of
insurance policies deposited with or paid to the Trustee because of damage to or
destruction of property of the Company.
In the event that all or any part of the bonds of this Series I shall be
redeemed or otherwise discharged prior to their maturity pursuant to or in
accordance with the order of any governmental commission or regulatory authority
upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such Series I Bonds shall be entitled to be
paid therefor an amount specified in Section 1.06 of Exhibit C to the Twelfth
Supplemental Indenture.
The Indenture provides that, if notice of redemption of any bond issued
pursuant to its terms, including the Series I Bonds, or any portion of the
principal amount of any such bond selected for redemption has been duly given,
then such bond or such portion thereof shall become due and payable on the date
fixed for redemption, and, if the redemption price shall have been duly
deposited with the Trustee, interest thereon shall cease to accrue from and
after the date fixed for redemption, and that whenever the redemption price
thereof shall have been duly deposited with the Trustee and notice of redemption
shall have been duly given, or provision therefor made as provided in the
Indenture, such bond or such portion thereof shall no longer be entitled to any
lien or benefit of the Indenture.
In case an Event of Default, as defined in the Indenture, occurs, the
principal of this bond may become or may be declared due and payable prior to
the stated maturity hereof in the manner and with the effect and subject to the
conditions provided in the Indenture.
This bond is transferable by the registered owner hereof, in person or by
duly authorized attorney, upon books of the Company to be kept for that purpose
at the corporate trust office of the Trustee under the Indenture, upon surrender
thereof at said office for cancellation and upon
C-A-2
presentation of a written instrument of transfer duly executed, and thereupon
the Company shall issue in the name of the transferee or transferees, and the
Trustee shall authenticate and deliver, a new registered bond or bonds, of like
form and in an authorized denomination or in authorized denominations and of the
same series, for the same aggregate principal amount. Bonds of this series upon
surrender thereof at said office may be exchanged for the same aggregate
principal amount of bonds, also of this series but of another authorized
denomination or other authorized denominations, all upon payment of the charges,
if any, and subject to the terms and conditions specified in the Indenture.
The Company and the Trustee may treat the registered owner of this bond as
the absolute owner hereof for all purposes.
With the consent of the Company and to the extent permitted by and as
provided in the Indenture, property may be released from the lien thereof, and
the terms and provisions of the Indenture may be modified by the assent or
authority of the holders of at least seventy-five per centum (75%) in principal
amount of the bonds then outstanding thereunder, provided, however, that no such
modification shall (i) extend the time or times or payment of the principal of,
or the interest or premium, if any, on any bond, (ii) reduce the principal
amount thereof or the rate of interest or premium thereon, (iii) authorize the
creation of any lien prior or equal to the lien of the Indenture upon any
property subject to the lien thereof, or deprive any bondholder of the benefit
of the lien of the Indenture, (iv) affect the rights under the Indenture of the
holders of one or more, but less than all, of the series of bonds outstanding
thereunder unless assented to by the holders of seventy-five per centum (75%) in
aggregate principal amount of bonds outstanding thereunder of each of the series
so affected, (v) reduce the percentage of bonds, the holders of which are
required to assent to any such modification, or (vi) in any manner affect the
rights or obligations of the Trustee without its written consent thereto.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or of any claim based hereon or in respect hereof or of
the Indenture, against any incorporator, stockholder, officer or director of the
Company, or of any successor company, whether by virtue of any statute or rule
of law or by the enforcement of any assessment or penalty or otherwise, all such
liability being by the acceptance hereof expressly waived and released and being
also waived and released by the terms of the Indenture.
This bond shall not be valid nor become obligatory for any purpose until it
shall have been authenticated by the execution of the certificate hereon
endorsed by the Trustee under the Indenture.
C-A-3
In witness whereof, Unitil Energy Systems, Inc. has caused this bond to be
signed in its name by its President or one of its Vice Presidents and its
corporate seal to be hereunto affixed and attested by its Treasurer, and this
bond to be dated the ________________, _____.
Unitil Energy Systems, Inc.
By:
-----------------------------------
President
Attest:
---------------------------
Treasurer
(Corporate Seal)
C-A-4
(Form of Trustee's Certificate for all Bonds of Series I)
Trustee's Certificate of Authentication
This is one of the First Mortgage Bonds, Series I, referred to in the
within mentioned Indenture.
U.S. Bank National
Association
By:
----------------------------------
Authorized Officer
(Form of Endorsement)
For Value Received the undersigned hereby sells, assigns and transfers unto
_________________ the within bond, and all rights thereunder, hereby irrevocably
constituting and appointing ____________ attorney to transfer said bond on the
books of the Company, with full power of substitution in the premises.
-----------------------------------------
Signature of Registered Owner
Dated:
-------------------------
In the presence
of:
-----------------------------
Notice: The signature of this assignment must correspond with the name of
the payee as it appears upon the face of the within bond in every particular,
without alteration or enlargement or any change whatever.
Series J Bonds
The terms and provisions of the Series J, 6.96% Bonds of the Company which
were set forth in the Ninth Supplemental Indenture, have been amended and
restated in this Exhibit D, which shall from and after the Merger Date control
the terms and conditions of such Series J, 6.96% Bonds, and the Ninth
Supplemental Indenture shall have no further force or effect with respect to
such terms and conditions.
All things have been done and performed which are necessary to make the
Series J Bonds, when authenticated by the Trustee and issued as herein provided,
legal valid and binding obligations of the Company;
And it is Hereby Covenanted, Declared and Agreed, as set forth in the
following-covenants, agreements, conditions and provisions, to wit:
Article One
Amendment and Restatement of Series J Bonds
Section 1.01. There is hereby amended and restated the series of bonds
heretofore designated as and entitled "First Mortgage Bonds, Series J." Series J
Bonds which shall be fully registered bonds, of the denomination of $1,000 and
multiples thereof. The registered bonds of Series J issued after the Merger Date
shall be dated as provided in Section 2.03 of the Indenture. All Series J Bonds
shall mature on September 1, 2028 and shall bear interest at the rate of six and
ninety-six one hundredths percent (6.96%) per annum from their respective dates
of issue, such interest to be payable quarterly in arrears on the first day of
March, June, September and December in each year commencing the first day of
March, 2003, and shall bear interest on any overdue principal (including any
overdue prepayment of principal) and premium, if any, and (to the extent
permitted by applicable law) on any overdue payment of interest, at the rate of
8.96% per annum. The principal of, premium if any, and interest on bonds of
Series J shall be payable at the corporate trust office in Boston, Massachusetts
of U.S. Bank National Association or at the corporate trust office designated by
its successor as Trustee hereunder, in lawful money of the United States of
America provided that the Company may enter into a written agreement with any
registered Institutional Holder of the bonds of Series J providing that payment
of interest thereon and of the redemption price on any portion of the principal
amount thereof (including premium, if any) which may be redeemed shall be made
directly to such holder or to its nominee, as the case may be, at a duly
designated place of payment within the United States, without surrender or
presentation of such bonds of Series J to the Trustee, provided that (A) there
shall have been filed with the Trustee a copy of such agreement, (B) pursuant to
such agreement such holder shall agree that it will not sell, transfer or
otherwise dispose of any such bond of Series J in respect of which any such
payment or redemption shall have been made unless, prior to the delivery thereof
by it, either (i) it shall have made a clear and accurate notation of the amount
of
Exhibit D
(to Twelfth Supplemental Indenture)
principal so redeemed upon such bond to be transferred, or (ii) such bond of
Series J shall have been presented to the Trustee for appropriate notation
thereon of the portion of the principal amount thereof redeemed, or (iii) such
bond or bonds of Series J shall have been surrendered in exchange for a new bond
or bonds of Series J for the unredeemed balance of the principal amount thereof
in accordance with the other terms of the Indenture and (C) in such agreement
such holder shall agree that prior to receiving any final payment of the entire
remaining unpaid principal amount of any Series J bond, the holder thereof shall
be required to deliver such bond to the Trustee. For purposes of this Section
1.01, the term "Institutional Holder" shall mean any insurance company, bank,
savings and loan association, trust company, investment company, charitable
foundation, employee benefit plan (as defined in ERISA) or other institutional
investor or financial institution. The text of the Series J Bonds and the
Trustee's certificate with respect thereto shall be respectively substantially
of the tenor and purport set forth in Schedule A hereto. The Series J Bonds
shall be numbered in such manner or by such method as shall be satisfactory to
the Trustee.
The issue of bonds of Series J hereunder is hereby limited to the
$10,000,000 in aggregate principal amount of Series J Bonds initially issued
under the Ninth Supplemental Indenture and to Series J Bonds issued in exchange
or substitution for outstanding Series J Bonds under the provisions of Sections
2.08, 2.10, 2.11 and 7.05 of the Indenture and of Section 1.06 hereof.
Section 1.02. As a required sinking fund for the benefit of the Series J
Bonds, the Company covenants that it will, on or prior to September 1 in each
year, beginning with September 1, 2019, and continuing to and including
September 1, 2028, pay to the Trustee immediately available funds sufficient to
redeem, at par, Series J Bonds then outstanding, in the principal amount of One
Million Dollars ($1,000,000) (or the remaining principal amount if less than
$1,000,000 principal amount of Series J Bonds at the time remains outstanding).
The payments required for the sinking fund as above provided are in this Section
1.02 and elsewhere in this Exhibit D referred to as "required sinking fund
payments" and the day following the latest date on which each such payment is
required to be made is herein and therein referred to as a "required sinking
fund redemption date". Each required sinking fund payment shall be applied to
the redemption of Series J bonds on the applicable required sinking fund
redemption date.
No redemption under Section 1.03, 1.04 or 1.05 hereof shall affect or
reduce the obligation of the Company to provide for required sinking fund
redemptions under this Section 1.02 until all Series J Bonds shall have been
paid in full.
Section 1.03. In addition to the required sinking fund provided by Section
1.02 hereof, all of the bonds of Series J, or any part of the principal amount
thereof constituting One Hundred Thousand Dollars ($100,000) or any integral
multiple thereof, shall be subject to redemption, at the option of the Company,
on any date on or after September 1, 1998 and before September 1, 2026, pursuant
to the provisions of Article VII of the Indenture, and by payment of an amount
equal to the Make Whole Amount, as defined below in this Section 1.03,
determined five Business Days prior to such redemption. In addition to the
foregoing, on any date on or after September 1, 2026, all of the bonds of Series
J, or any part of the principal amount thereof constituting One Hundred Thousand
Dollars ($100,000) or any integral multiple thereof, shall be subject to
redemption, at the option of the Company, by payment of the interest accrued on
the
D-2
principal amount of the bond or bonds optionally to be redeemed to the dates
fixed for such redemption plus 100% of the principal amount thereof.
For purposes of this Section 1.03, the Make Whole Amount shall mean the
greater of (i) the outstanding principal amount of the bonds to be redeemed,
plus interest accrued thereon to the date fixed for such redemption, and (ii)
the sum of (A) the aggregate present value as of the date of such redemption of
each dollar of principal being redeemed (taking into account each redemption
required by Section 1.02 above) and the amount of interest (exclusive of
interest accrued to the date fixed for such redemption) that would have been
payable in respect of each such dollar if such redemption had not been made,
determined by discounting such amounts at the Reinvestment Rate (as hereinafter
defined) from the respective dates on which they would have been payable to the
date of such redemption, plus (B) interest accrued on the bonds to be redeemed
to the date fixed for such redemption.
For purposes of any determination of the Make Whole Amount:
"Reinvestment Rate" shall mean (1) the sum of 0.50%, plus the yield
reported on page "USD" of the Bloomberg Financial Markets Services Screen
(or, if not available, any other nationally recognized trading screen
reporting on-line intraday trading in the United States government
Securities) at 11:00 A.M. (Eastern time) on the fifth Business Day
preceding the date the Make Whole Amount becomes due and payable pursuant
to the foregoing provisions of this Section 1.03, for the United States
government Securities having a maturity (rounded to the nearest month)
corresponding to the remaining Weighted Average Life to Maturity of the
principal of the bonds being redeemed (taking into account the application
of each redemption required by Section 1.02) or (2) in the event that no
nationally recognized trading screen reporting on-line intraday trading in
the United States government Securities is available, Reinvestment Rate
shall mean the sum of 0.50%, plus the arithmetic mean of the yields for the
two columns under the heading "Week Ending" published on the fifth Business
Day preceding the date the Make Whole Amount becomes due and payable
pursuant to the foregoing provisions of this Section 1.03, in the
Statistical Release under the caption "Treasury Constant Maturities" for
the maturity (rounded to the nearest month) corresponding to the Weighted
Average Life to Maturity of the principal amount of the bonds being
redeemed (taking into account each redemption required by Section 1.02). If
no maturity exactly corresponds to such Weighted Average Life to Maturity,
yields for the two published maturities most closely corresponding to such
Weighted Average Life to Maturity shall be calculated pursuant to the
immediately preceding sentence, and the Reinvestment Rate shall be
interpolated or extrapolated from such yields on a straightline basis,
rounding in each of such relevant periods to the nearest month. For the
purposes of calculating the Reinvestment Rate, the most recent Statistical
Release published prior to the date of determination of the Make Whole
Amount shall be used.
"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve System and which
establishes yields on actively traded U.S. Government Securities adjusted
to constant maturities or, if such statistical release is not
D-3
published at the time of any determination hereunder, then such other
reasonably comparable index which shall be designated by the holders of
66-2/3% in aggregate principal amount of outstanding Series J Bonds.
"Weighted Average Life to Maturity" of the principal amount of the
bonds being redeemed shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal.
The term "Remaining Dollar-Years" of such principal shall mean the amount
obtained by (i) multiplying (x) the remainder of (1) the amount of
principal that would have been payable on each scheduled redemption date
under Section 1.02 hereof if the redemption pursuant to this Section 1.03
had not been made, less (2) the amount of principal on the bonds scheduled
to become payable on each such redemption date under Section 1.02 after
giving effect to the redemption pursuant to this Section 1.03, by (y) the
number of years (calculated to the nearest one-twelfth) which will elapse
between the date of determination and each such scheduled redemption date
under Section 1.02, and (ii) totaling the products obtained in (i).
Section 1.04. Series J Bonds may be redeemed pursuant to Article XI of the
Indenture (i) out of Trust Moneys, required by Section 8.12 of the Indenture to
be deposited with the Trustee, on any date and shall be redeemed for an amount
equal to the principal amount of the bonds to be redeemed, plus interest accrued
to the date of redemption; or (ii) out of Trust Moneys required by Sections
8.10, 10.03, 10.04 or 10.04A of the Indenture to be deposited with the Trustee,
on any date and, if redeemed prior to September 1, 2026, then they shall be
redeemed for an amount equal to the Make Whole Amount, as defined above in
Section 1.03, and if redeemed on any date on or after September 1, 2026, then
they shall be redeemed for an amount equal to the interest accrued on the
principal amount of the bond or bonds to be redeemed to the date fixed for
redemption, plus 100% of the principal amount thereof, for optional redemptions
occurring on or after September 1, 2026.
Section 1.05. In the event that all or any part of the bonds of Series J
shall be redeemed or otherwise discharged prior to their maturity pursuant to or
in accordance with the order of any governmental commission or regulatory
authority upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such bonds of Series J shall be entitled to
be paid an amount equal to the Make Whole Amount, if such redemption or
discharge occurs prior to September 1, 2026, or, if such redemption or discharge
occurs on or after September 1, 2026, then the registered owners of such bonds
shall be entitled to be paid an amount equal to the interest accrued on the
principal amount of the bonds to be redeemed to the date of redemption, plus
100% of the principal amount thereof.
Section 1.06. Bonds of Series J, upon surrender thereof at the principal
office of the Trustee, may be exchanged for the same aggregate principal amount
of other bonds of this Series.
Within a reasonable time after the receipt of a request for such an
exchange, the Company shall issue and the Trustee shall authenticate and deliver
all bonds required in connection therewith, and the Trustee shall make such
exchange upon payment to it of such charge, if any, as is required by the
following paragraph.
D-4
For any exchange of bonds of Series J, the Company, at its option, may
require the payment of a sum sufficient to reimburse it for any stamp or other
tax or governmental charge required to be paid by the Company or the Trustee.
Article Two
Redemption
Section 2.01. In the case of any required sinking fund redemption pursuant
to Section 1.02 hereof, forthwith after the August 1 preceding each required
sinking fund redemption date, and in the case of any proposed redemption
pursuant to Sections 1.03 or 1.04, forthwith after the Trustee's receipt of
proper notice from the Company of any such proposed redemption, the Trustee,
pursuant to the provisions of Article VII of the Indenture.
The Company covenants that it will pay to the Trustee
(i) on or before the day prior to each required sinking fund
redemption date, the sum required by Section 1.02 hereof,
(ii) on or before the day prior to the date proposed by the Company in
a notice (which notice shall conform to the requirements of Article VII of
the Indenture) of any redemption pursuant to Section 1.03 or 1.04 hereof,
the amount payable in accordance with such notice, and
(iii) at the time of each required sinking fund redemption or other
redemption the Company shall pay to the Trustee the amount of the charges
which shall be due the Trustee and the amount of the expenses which the
Trustee advises the Company it has incurred or will incur in connection
with such redemption.
D-5
(Form of Series J Bond)
Unitil Energy Systems, Inc.
First Mortgage Bond, Series J, 6.96%
due September 1, 2028
No. JR-______ $_______________
Unitil Energy Systems, Inc., a corporation organized under the laws of the
State of New Hampshire (hereinafter called the "Company"), for value received,
hereby promises to pay to ________ or registered assigns, on the first day of
September, 2028, the principal sum of ___________ Dollars ($_______________) and
to pay interest thereon from the date hereof at the rate of six and ninety-six
hundredths per centum (6.96%) per annum (computed on the basis of a thirty (30)
day month and three hundred sixty (360) day year) payable quarterly in arrears
on the first day of March, June, September and December in each year, commencing
the first day of March, 2003, until said principal sum is paid; and to pay
interest on any overdue principal (including any overdue prepayment of
principal) and premium if any, and (to the extent permitted by applicable law)
on any overdue payment of interest, at the rate of 8.96% per annum. The
principal of and premium if any, and the interest on this bond shall be payable
at the corporate trust office in Boston, Massachusetts of U.S. Bank National
Association, or at the corporate trust office designated by its successor as
trustee in the trust hereinafter referred to, or at the option of certain
holders, in accordance with the provisions of Section 1.01 of Exhibit D of the
Twelfth Supplemental Indenture hereinafter referred to, in lawful money of the
United States of America.
This bond is one of a duly authorized issue of First Mortgage Bonds of the
Company limited as to aggregate principal amount as set forth in the Indenture
hereinafter mentioned, issuable in series, and is one of a Series J known as
First Mortgage Bonds, Series J, all bonds of all series being issued and to be
issued under and pursuant to and all equally secured (except as any sinking or
other fund, established in accordance with the provisions of the Indenture
hereinafter mentioned, may afford additional security for the bonds of any
particular series) by an Indenture of Mortgage and Deed of Trust dated as of
July 15, 1958 (herein called the "Original Indenture") duly executed and
delivered by the Company to Old Colony Trust Company (U.S. Bank National
Association being successor Trustee and together with each predecessor trustee
being called the "Trustee"), to which Original Indenture and to all Indentures
supplemental thereto, including a Twelfth Supplemental Indenture (the "Twelfth
Supplemental Indenture") dated as of December 2, 2002 (herein together called
the "Indenture") reference is hereby made for a description of the property
transferred, assigned and mortgaged thereunder, the nature and extent of the
security, the terms and conditions upon which the bonds are secured and
additional bonds may be issued and secured, and the rights of the holders or
registered owners of said bonds, of the Trustee and of the Company in respect of
such security. Neither the foregoing reference to the Indenture, nor any
provision of this bond or of the Indenture, shall affect or impair the
obligation of the Company, which is absolute, unconditional and unalterable, to
pay, at the stated or accelerated maturities herein provided, the principal of
and premium, if any, and interest on this bond as herein provided.
Schedule A
(to Exhibit D of the Twelfth Supplemental Indenture)
Bonds of this Series J are entitled to the benefit of a required sinking
fund provided for in Exhibit D to the Twelfth Supplemental Indenture and shall
become subject to redemption for the purposes of such sinking fund at the
principal amount thereof without premium, plus interest accrued thereon to the
date of such redemption, all on the conditions and in the manner provided in
Exhibit D to the Twelfth Supplemental Indenture.
Bonds of this Series J are also redeemable, in whole or in part, in
integral multiples of one hundred thousand dollars, at the option of the Company
on any date on at least 30 days' notice, in the manner, with the effect, subject
to the limitations and for the amounts specified in Section 1.03 of Exhibit D to
the Twelfth Supplemental Indenture.
On the conditions and in the manner provided in the Section 1.04 of Exhibit
D to the Twelfth Supplemental Indenture, Series J Bonds may also become subject
to redemption, in whole or in part, at any time on at least 30 days' notice, in
the manner, with the effect and for the amounts specified in said Section 1.04,
by the use of moneys deposited with or paid to the Trustee as the proceeds of
the sale or condemnation of property of the Company or as the proceeds of
insurance policies deposited with or paid to the Trustee because of damage to or
destruction of property of the Company.
In the event that all or any part of the bonds of this Series J shall be
redeemed or otherwise discharged prior to their maturity pursuant to or in
accordance with the order of any governmental commission or regulatory authority
upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such Series J Bonds shall be entitled to be
paid therefor an amount specified in Section 1.05 of Exhibit D to the Twelfth
Supplemental Indenture.
The Indenture provides that, if notice of redemption of any bond issued
pursuant to its terms, including the Series J Bonds, or any portion of the
principal amount of any such bond selected for redemption has been duly given,
then such bond or such portion thereof shall become due and payable on the date
fixed for redemption, and, if the redemption price shall have been duly
deposited with the Trustee, interest thereon shall cease to accrue from and
after the date fixed for redemption, and that whenever the redemption price
thereof shall have been duly deposited with the Trustee and notice of redemption
shall have been duly given, or provision therefor made as provided in the
Indenture, such bond or such portion thereof shall no longer be entitled to any
lien or benefit of the Indenture.
In case an Event of Default, as defined in the Indenture, occurs, the
principal of this bond may become or may be declared due and payable prior to
the stated maturity hereof in the manner and with the effect and subject to the
conditions provided in the Indenture.
This bond is transferable by the registered owner hereof, in person or by
duly authorized attorney, upon books of the Company to be kept for that purpose
at the corporate trust office of the Trustee under the Indenture, upon surrender
thereof at said office for cancellation and upon presentation of a written
instrument of transfer duly executed, and thereupon the Company shall issue in
the name of the transferee or transferees, and the Trustee shall authenticate
and deliver, a new registered bond or bonds, of like form and in an authorized
D-A-2
denomination or in authorized denominations and of the same series, for the same
aggregate principal amount. Bonds of this series upon surrender thereof at said
office may be exchanged for the same aggregate principal amount of bonds, also
of this series but of another authorized denomination or other authorized
denominations, all upon payment of the charges, if any, and subject to the terms
and conditions specified in the Indenture.
The Company and the Trustee may treat the registered owner of this bond as
the absolute owner hereof for all purposes.
With the consent of the Company and to the extent permitted by and as
provided in the Indenture, property may be released from the lien thereof, and
the terms and provisions of the Indenture may be modified by the assent or
authority of the holders of at least seventy-five per centum (75%) in principal
amount of the bonds then outstanding thereunder, provided, however, that no such
modification shall (i) extend the time or times or payment of the principal of,
or the interest or premium, if any, on any bond, (ii) reduce the principal
amount thereof or the rate of interest or premium thereon, (iii) authorize the
creation of any lien prior or equal to the lien of the Indenture upon any
property subject to the lien thereof, or deprive any bondholder of the benefit
of the lien of the Indenture, (iv) affect the rights under the Indenture of the
holders of one or more, but less than all, of the series of bonds outstanding
thereunder unless assented to by the holders of seventy-five per centum (75%) in
aggregate principal amount of bonds outstanding thereunder of each of the series
so affected, (v) reduce the percentage of bonds, the holders of which are
required to assent to any such modification, or (vi) in any manner affect the
rights or obligations of the Trustee without its written consent thereto.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or of any claim based hereon or in respect hereof or of
the Indenture, against any incorporator, stockholder, officer or director of the
Company, or of any successor company, whether by virtue of any statute or rule
of law or by the enforcement of any assessment or penalty or otherwise, all such
liability being by the acceptance hereof expressly waived and released and being
also waived and released by the terms of the Indenture.
This bond shall not be valid nor become obligatory for any purpose until it
shall have been authenticated by the execution of the certificate hereon
endorsed by the Trustee under the Indenture.
D-A-3
In Witness Whereof, Unitil Energy Systems, Inc. has caused this bond to be
signed in its name by its President or one of its Vice Presidents and its
corporate seal to be hereunto affixed and attested by its Treasurer, and this
bond to be dated the __________, _____.
Unitil Energy Systems, Inc.
By
-----------------------------------------
President
Attest:
---------------------------
Treasurer
(Corporate Seal)
D-A-4
(Form of Trustee's Certificate for all Bonds of Series J)
Trustee's Certificate of Authentication
This is one of the First Mortgage Bonds, Series J, referred to in the
within mentioned Indenture.
U.S. Bank National Association
By
-----------------------------------------
Authorized Officer
D-A-5
(FORM OF ENDORSEMENT)
For Value Received the undersigned hereby sells, assigns and transfers unto
_____________________________ the within bond, and all rights thereunder, hereby
irrevocably constituting and appointing ___________________________ attorney to
transfer said bond on the books of the Company, with full power of substitution
in the premises.
-------------------------------------------
Signature of Registered Owner
Dated:
-------------------------
In the presence
of:
----------------------------
Notice: The signature of this assignment must correspond with the name of
the payee as it appears upon the face of the within bond in every particular,
without alteration or enlargement or any change whatever.
Series K Bonds
The terms and provisions of the Series K, 8.00% Bonds of the Company which
were set forth in the Eleventh Supplemental Indenture, have been amended and
restated in this Exhibit E, which shall from and after the Merger Date control
the terms and conditions of such Series K, 8.00 % Bonds, and the Eleventh
Supplemental Indenture shall have no further force or effect with respect to
such terms and conditions.
All things have been done and performed which are necessary to make the
Series K Bonds, when authenticated by the Trustee and issued as herein provided,
legal valid and binding obligations of the Company;
And it is Hereby Covenanted, Declared and Agreed, as set forth in the
following-covenants, agreements, conditions and provisions, to wit:
Article One
Amendment and Restatement of Series K Bonds
Section 1.01. There is hereby amended and restated the series of bonds
heretofore designated as and entitled "First Mortgage Bonds, Series K." Series K
Bonds shall be fully registered bonds, of the denomination of $1,000 and
multiples thereof. The registered bonds of Series K issued after the Merger Date
shall be dated as provided in Section 2.03 of the Indenture. All Series K Bonds
shall mature on May 1, 2031 and shall bear interest at the rate of eight percent
(8.00%) per annum from their respective dates of issue, such interest to be
payable quarterly in arrears on the first day of February, May, August and
November each year commencing the first day of February, 2003, and shall bear
interest on any overdue principal (including any overdue prepayment of
principal) and premium, if any, and (to the extent permitted by applicable law)
on any overdue payment of interest, at the rate of 10.00% per annum. The
principal of, premium if any, and interest on bonds of Series K shall be payable
at the corporate trust office in Boston, Massachusetts of U.S. Bank National
Association or at the corporate trust office designated by its successor as
Trustee hereunder, in lawful money of the United States of America provided that
the Company may enter into a written agreement with any registered Institutional
Holder of the bonds of Series K providing that payment of interest thereon and
of the redemption price on any portion of the principal amount thereof
(including premium, if any) which may be redeemed shall be made directly to such
holder or to its nominee, as the case may be, at a duly designated place of
payment within the United States, without surrender or presentation of such
bonds of Series K to the Trustee, provided that (A) there shall have been filed
with the Trustee a copy of such agreement, (B) pursuant to such agreement such
holder shall agree that it will not sell, transfer or otherwise dispose of any
such bond of Series K in respect of which any such payment or redemption shall
have been made unless, prior to the delivery thereof by it, either (i) it shall
have made a clear and accurate notation of the amount of principal so redeemed
upon such bond to be transferred, or (ii) such bond of Series K shall have
Exhibit E
(to Twelfth Supplemental Indenture)
been presented to the Trustee for appropriate notation thereon of the portion of
the principal amount thereof redeemed, or (iii) such bond or bonds of Series K
shall have been surrendered in exchange for a new bond or bonds of Series K for
the unredeemed balance of the principal amount thereof in accordance with the
other terms of the Indenture and (C) in such agreement such holder shall agree
that prior to receiving any final payment of the entire remaining unpaid
principal amount of any Series K bond, the holder thereof shall be required to
deliver such bond to the Trustee. For purposes of this Section 1.01, the term
"Institutional Holder" shall mean any insurance company, bank, savings and loan
association, trust company, investment company, charitable foundation, employee
benefit plan (as defined in ERISA) or other institutional investor or financial
institution. The text of the Series K Bonds and the Trustee's certificate with
respect thereto shall be respectively substantially of the tenor and purport set
forth in Schedule A hereto. The Series K Bonds shall be numbered in such manner
or by such method as shall be satisfactory to the Trustee.
The issue of bonds of Series K hereunder is hereby limited to the
$7,500,000 in aggregate principal amount of Series K Bonds initially issued
under the Eleventh Supplemental Indenture and to Series K Bonds issued in
exchange or substitution for outstanding Series K Bonds under the provisions of
Section 2.08, 2.10, 2.11 and 7.05 of the Indenture and of Section 1.06 hereof.
Section 1.02. As a required sinking fund for the benefit of the Series K
Bonds, the Company covenants that it will, on or prior to May 1 in each year,
beginning with May 1, 2022, and continuing to and including May 1, 2031, pay to
the Trustee immediately available funds sufficient to redeem, at par, Series K
Bonds then outstanding, in the principal amount of Seven Hundred Fifty Thousand
Dollars ($750,000) (or the remaining principal amount if less than $750,000
principal amount of Series K Bonds at the time remains outstanding). The
payments required for the sinking fund as above provided are in this Section
1.02 and elsewhere in this Exhibit E referred to as "required sinking fund
payments" and the day following the latest date on which each such payment is
required to be made is herein and therein referred to as a "required sinking
fund redemption date". Each required sinking fund payment shall be applied to
the redemption of Series K Bonds on the applicable required sinking fund
redemption date.
No redemption under Section 1.03, 1.04 or 1.05 hereof shall affect or
reduce the obligation of the Company to provide for required sinking fund
redemptions under this Section 1.02 until all Series K Bonds shall have been
paid in full.
Section 1.03. In addition to the required sinking fund provided by Section
1.02 hereof, all of the bonds of Series K, or any part of the principal amount
thereof constituting One Hundred Thousand Dollars ($100,000) or any integral
multiple thereof, shall be subject to redemption, at the option of the Company,
on any date on or after May 1, 2001 and before May 1, 2029, pursuant to the
provisions of Article VII of the Indenture, and by payment of an amount equal to
the Make Whole Amount, as defined below in this Section 1.03, determined five
Business Days prior to such redemption. In addition to the foregoing, on any
date on or after May 1, 2029, all of the bonds of Series K, or any part of the
principal amount thereof constituting One Hundred Thousand Dollars ($100,000) or
any integral multiple thereof, shall be subject to redemption, at the option of
the Company, by payment of the interest accrued on the principal amount of the
E-2
bond or bonds optionally to be redeemed to the dates fixed for such redemption
plus 100% of the principal amount thereof.
For purposes of this Section 1.03, the Make Whole Amount shall mean the
greater of (i) the outstanding principal amount of the bonds to be redeemed,
plus interest accrued thereon to the date fixed for such redemption, and (ii)
the sum of (A) the aggregate present value as of the date of such redemption of
each dollar of principal being redeemed (taking into account each redemption
required by Section 1.02 above) and the amount of interest (exclusive of
interest accrued to the date fixed for such redemption) that would have been
payable in respect of each such dollar if such redemption had not been made,
determined by discounting such amounts at the Reinvestment Rate (as hereinafter
defined) from the respective dates on which they would have been payable to the
date of such redemption, plus (B) interest accrued on the bonds to be redeemed
to the date fixed for such redemption.
For purposes of any determination of the Make Whole Amount:
"Reinvestment Rate" shall mean (1) the sum of 0.50%, plus the yield
reported on page "USD" of the Bloomberg Financial Markets Services Screen
(or, if not available, any other nationally recognized trading screen
reporting on-line intraday trading in the United States government
Securities) at 11:00 A.M. (Eastern time) on the fifth Business Day
preceding the date the Make Whole Amount becomes due and payable pursuant
to the foregoing provisions of this Section 1.03, for the United States
government Securities having a maturity (rounded to the nearest month)
corresponding to the remaining Weighted Average Life to Maturity of the
principal of the bonds being redeemed (taking into account the application
of each redemption required by Section 1.02) or (2) in the event that no
nationally recognized trading screen reporting on-line intraday trading in
the United States government Securities is available, Reinvestment Rate
shall mean the sum of 0.50%, plus the arithmetic mean of the yields for the
two columns under the heading "Week Ending" published on the fifth Business
Day preceding the date the Make Whole Amount becomes due and payable
pursuant to the foregoing provisions of this Section 1.03, in the
Statistical Release under the caption "Treasury Constant Maturities" for
the maturity (rounded to the nearest month) corresponding to the Weighted
Average Life to Maturity of the principal amount of the bonds being
redeemed (taking into account each redemption required by Section 1.02). If
no maturity exactly corresponds to such Weighted Average Life to Maturity,
yields for the two published maturities most closely corresponding to such
Weighted Average Life to Maturity shall be calculated pursuant to the
immediately preceding sentence, and the Reinvestment Rate shall be
interpolated or extrapolated from such yields on a straightline basis,
rounding in each of such relevant periods to the nearest month. For the
purposes of calculating the Reinvestment Rate, the most recent Statistical
Release published prior to the date of determination of the Make Whole
Amount shall be used.
"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve System and which
establishes yields on actively traded U.S. Government Securities adjusted
to constant maturities or, if such statistical release is not
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published at the time of any determination hereunder, then such other
reasonably comparable index which shall be designated by the holders of
66-2/3% in aggregate principal amount of outstanding Series K Bonds.
"Weighted Average Life to Maturity" of the principal amount of the
bonds being redeemed shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal.
The term "Remaining Dollar-Years" of such principal shall mean the amount
obtained by (i) multiplying (x) the remainder of (1) the amount of
principal that would have been payable on each scheduled redemption date
under Section 1.02 hereof if the redemption pursuant to this Section 1.03
had not been made, less (2) the amount of principal on the bonds scheduled
to become payable on each such redemption date under Section 1.02 after
giving effect to the redemption pursuant to this Section 1.03, by (y) the
number of years (calculated to the nearest one-twelfth) which will elapse
between the date of determination and each such scheduled redemption date
under Section 1.02, and (ii) totaling the products obtained in (i).
Section 1.04. Series K Bonds may be redeemed pursuant to Article XI of the
Indenture (i) out of Trust Moneys, required by Section 8.12 of the Indenture to
be deposited with the Trustee, on any date and shall be redeemed for an amount
equal to the principal amount of the bonds to be redeemed, plus interest accrued
to the date of redemption; or (ii) out of Trust Moneys required by Sections
8.10, 10.03, 10.04 or 10.04A of the Indenture to be deposited with the Trustee,
on any date and, if redeemed prior to May 1, 2029, then they shall be redeemed
for an amount equal to the Make Whole Amount, as defined above in Section 1.03,
and if redeemed on any date on or after May 1, 2029, then they shall be redeemed
for an amount equal to the interest accrued on the principal amount of the bond
or bonds to be redeemed to the date fixed for redemption, plus 100% of the
principal amount thereof, for optional redemptions occurring on or after May 1,
2029.
Section 1.05. In the event that all or any part of the bonds of Series K
shall be redeemed or otherwise discharged prior to their maturity pursuant to or
in accordance with the order of any governmental commission or regulatory
authority upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such bonds of Series K shall be entitled to
be paid an amount equal to the Make Whole Amount, if such redemption or
discharge occurs prior to May 1, 2029, or, if such redemption or discharge
occurs on or after May 1, 2029, then the registered owners of such bonds shall
be entitled to be paid an amount equal to the interest accrued on the principal
amount of the bonds to be redeemed to the date of redemption, plus 100% of the
principal amount thereof.
Section 1.06. Bonds of Series K, upon surrender thereof at the principal
office of the Trustee, may be exchanged for the same aggregate principal amount
of other bonds of this Series.
Within a reasonable time after the receipt of a request for such an
exchange, the Company shall issue and the Trustee shall authenticate and deliver
all bonds required in connection therewith, and the Trustee shall make such
exchange upon payment to it of such charge, if any, as is required by the
following paragraph.
E-4
For any exchange of bonds of Series K, the Company, at its option, may
require the payment of a sum sufficient to reimburse it for any stamp or other
tax or governmental charge required to be paid by the Company or the Trustee.
Article Two
Redemption
Section 2.01. In the case of any required sinking fund redemption pursuant
to Section 1.02 hereof, forthwith after the April 1 preceding each required
sinking fund redemption date, and in the case of any proposed redemption
pursuant to Sections 1.03 or 1.04, forthwith after the Trustee's receipt of
proper notice from the Company of any such proposed redemption, the Trustee,
pursuant to the provisions of Article VII of the Indenture.
The Company covenants that it will pay to the Trustee
(i) on or before the day prior to each required sinking fund
redemption date, the sum required by Section 1.02 hereof,
(ii) on or before the day prior to the date proposed by the
Company in a notice (which notice shall conform to the requirements of
Article VII of the Indenture) of any redemption pursuant to Section
1.03 or 1.04 hereof, the amount payable in accordance with such
notice, and
(iii) at the time of each required sinking fund redemption or
other redemption the Company shall pay to the Trustee the amount of
the charges which shall be due the Trustee and the amount of the
expenses which the Trustee advises the Company it has incurred or will
incur in connection with such redemption.
E-5
(Form of Series K Bond)
Unitil Energy Systems, Inc.
First Mortgage Bond, Series K, 8.00%
due May 1, 2031
No. KR- $_______________
Unitil Energy Systems, Inc., a corporation organized under the laws of the
State of New Hampshire (hereinafter called the "Company"), for value received,
hereby promises to pay to ________ or registered assigns, on the first day of
May, 2031, the principal sum of ___________ Dollars ($_______________) and to
pay interest thereon from the date hereof at the rate of eight per centum
(8.00%) per annum (computed on the basis of a thirty (30) day month and three
hundred sixty (360) day year) payable quarterly in arrears on the first day of
February, May, August and November each year, commencing the first day of
February, 2003, until said principal sum is paid; and to pay interest on any
overdue principal (including any overdue prepayment of principal) and premium if
any, and (to the extent permitted by applicable law) on any overdue payment of
interest, at the rate of 10.00% per annum. The principal of and premium if any,
and the interest on this bond shall be payable at the corporate trust office in
Boston, Massachusetts of U.S. Bank National Association, or at the corporate
trust office designated by its successor as trustee in the trust hereinafter
referred to, or at the option of certain holders, in accordance with the
provisions of Section 1.01 of Exhibit E of the Twelfth Supplemental Indenture
hereinafter referred to, in lawful money of the United States of America.
This bond is one of a duly authorized issue of First Mortgage Bonds of the
Company limited as to aggregate principal amount as set forth in the Indenture
hereinafter mentioned, issuable in series, and is one of a Series K known as
First Mortgage Bonds, Series K, all bonds of all series being issued and to be
issued under and pursuant to and all equally secured (except as any sinking or
other fund, established in accordance with the provisions of the Indenture
hereinafter mentioned, may afford additional security for the bonds of any
particular series) by an Indenture of Mortgage and Deed of Trust dated as of
July 15, 1958 (herein called the "Original Indenture") duly executed and
delivered by the Company to Old Colony Trust Company (U.S. Bank National
Association being successor Trustee and together with each predecessor trustee
being called the "Trustee"), to which Original Indenture and to all Indentures
supplemental thereto, including a Twelfth Supplemental Indenture (the "Twelfth
Supplemental Indenture") dated as of December 2, 2002 (herein together called
the "Indenture") reference is hereby made for a description of the property
transferred, assigned and mortgaged thereunder, the nature and extent of the
security, the terms and conditions upon which the bonds are secured and
additional bonds may be issued and secured, and the rights of the holders or
registered owners of said bonds, of the Trustee and of the Company in respect of
such security. Neither the foregoing reference to the Indenture, nor any
provision of this bond or of the Indenture, shall affect or impair the
obligation of the Company, which is absolute, unconditional and unalterable, to
pay,
Schedule A
(to Exhibit E of the Twelfth Supplemental Indenture)
at the stated or accelerated maturities herein provided, the principal of and
premium, if any, and interest on this bond as herein provided.
Bonds of this Series K are entitled to the benefit of a required sinking
fund provided for in Exhibit E to the Twelfth Supplemental Indenture and shall
become subject to redemption for the purposes of such sinking fund at the
principal amount thereof without premium, plus interest accrued thereon to the
date of such redemption, all on the conditions and in the manner provided in
Exhibit E to the Twelfth Supplemental Indenture.
Bonds of this Series K are also redeemable, in whole or in part, in
integral multiples of one hundred thousand dollars, at the option of the Company
on any date on at least 30 days' notice, in the manner, with the effect, subject
to the limitations and for the amounts specified in Section 1.03 of Exhibit E to
the Twelfth Supplemental Indenture.
On the conditions and in the manner provided in the Section 1.04 of Exhibit
E to the Twelfth Supplemental Indenture, Series K bonds may also become subject
to redemption, in whole or in part, at any time on at least 30 days' notice, in
the manner, with the effect and for the amounts specified in said Section 1.04,
by the use of moneys deposited with or paid to the Trustee as the proceeds of
the sale or condemnation of property of the Company or as the proceeds of
insurance policies deposited with or paid to the Trustee because of damage to or
destruction of property of the Company.
In the event that all or any part of the bonds of this Series K shall be
redeemed or otherwise discharged prior to their maturity pursuant to or in
accordance with the order of any governmental commission or regulatory authority
upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such Series K bonds shall be entitled to be
paid therefor an amount specified in Section 1.05 of Exhibit E to the Twelfth
Supplemental Indenture.
The Indenture provides that, if notice of redemption of any bond issued
pursuant to its terms, including the Series K bonds, or any portion of the
principal amount of any such bond selected for redemption has been duly given,
then such bond or such portion thereof shall become due and payable on the date
fixed for redemption, and, if the redemption price shall have been duly
deposited with the Trustee, interest thereon shall cease to accrue from and
after the date fixed for redemption, and that whenever the redemption price
thereof shall have been duly deposited with the Trustee and notice of redemption
shall have been duly given, or provision therefor made as provided in the
Indenture, such bond or such portion thereof shall no longer be entitled to any
lien or benefit of the Indenture.
In case an Event of Default, as defined in the Indenture, occurs, the
principal of this bond may become or may be declared due and payable prior to
the stated maturity hereof in the manner and with the effect and subject to the
conditions provided in the Indenture.
This bond is transferable by the registered owner hereof, in person or by
duly authorized attorney, upon books of the Company to be kept for that purpose
at the corporate trust office of the Trustee under the Indenture, upon surrender
thereof at said office for cancellation and upon
E-A-2
presentation of a written instrument of transfer duly executed, and thereupon
the Company shall issue in the name of the transferee or transferees, and the
Trustee shall authenticate and deliver, a new registered bond or bonds, of like
form and in an authorized denomination or in authorized denominations and of the
same series, for the same aggregate principal amount. Bonds of this series upon
surrender thereof at said office may be exchanged for the same aggregate
principal amount of bonds, also of this series but of another authorized
denomination or other authorized denominations, all upon payment of the charges,
if any, and subject to the terms and conditions specified in the Indenture.
The Company and the Trustee may treat the registered owner of this bond as
the absolute owner hereof for all purposes.
With the consent of the Company and to the extent permitted by and as
provided in the Indenture, property may be released from the lien thereof, and
the terms and provisions of the Indenture may be modified by the assent or
authority of the holders of at least seventy-five per centum (75%) in principal
amount of the bonds then outstanding thereunder, provided, however, that no such
modification shall (i) extend the time or times or payment of the principal of,
or the interest or premium, if any, on any bond, (ii) reduce the principal
amount thereof or the rate of interest or premium thereon, (iii) authorize the
creation of any lien prior or equal to the lien of the Indenture upon any
property subject to the lien thereof, or deprive any bondholder of the benefit
of the lien of the Indenture, (iv) affect the rights under the Indenture of the
holders of one or more, but less than all, of the series of bonds outstanding
thereunder unless assented to by the holders of seventy-five per centum (75%) in
aggregate principal amount of bonds outstanding thereunder of each of the series
so affected, (v) reduce the percentage of bonds, the holders of which are
required to assent to any such modification, or (vi) in any manner affect the
rights or obligations of the Trustee without its written consent thereto.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or of any claim based hereon or in respect hereof or of
the Indenture, against any incorporator, stockholder, officer or director of the
Company, or of any successor company, whether by virtue of any statute or rule
of law or by the enforcement of any assessment or penalty or otherwise, all such
liability being by the acceptance hereof expressly waived and released and being
also waived and released by the terms of the Indenture.
This bond shall not be valid nor become obligatory for any purpose until it
shall have been authenticated by the execution of the certificate hereon
endorsed by the Trustee under the Indenture.
E-A-3
In Witness Whereof, Unitil Energy Systems, Inc. has caused this bond to be
signed in its name by its President or one of its Vice Presidents and its
corporate seal to be hereunto affixed and attested by its Treasurer, and this
bond to be dated the ____ day of ________________, _____.
Unitil Energy Systems, Inc.
By
-----------------------------------------
President
Attest:
---------------------------
Treasurer
(Corporate Seal)
E-A-4
(Form of Trustee's Certificate for all Bonds of Series K)
Trustee's Certificate of Authentication
This is one of the First Mortgage Bonds, Series K, referred to in the
within mentioned Indenture.
U.S. Bank National Association
By:
----------------------------------------
Authorized Officer
(Form of Endorsement)
For Value Received the undersigned hereby sells, assigns and transfers unto
_____________________________ the within bond, and all rights thereunder, hereby
irrevocably constituting and appointing ___________________________ attorney to
transfer said bond on the books of the Company, with full power of substitution
in the premises.
-------------------------------------------
Signature of Registered Owner
Dated:
-------------------------
In the presence
of:
----------------------------
Notice: The signature of this assignment must correspond with the name of
the payee as it appears upon the face of the within bond in every particular,
without alteration or enlargement or any change whatever.
Series L Bonds
As a result of the Merger of Exeter into the Company on the Merger Date, as
more fully described in the Twelfth Supplemental Indenture, $9,000,000 aggregate
principal amount of the Exeter Series K, 8.49% Bonds due October 14, 2024 (the
"Exeter Series K Bonds") issued under the Exeter Indenture are being exchanged
as of the Merger Date by the holder thereof for Bonds issued under the Indenture
containing substantially the same terms and provisions as the Exeter Series K
Bonds which are the Company's Series L, 8.49% Bonds due October 14, 2024 (the
"Series L Bonds"). Accordingly, the provisions for the issuance of $9,000,000
aggregate principal amount of the Company's Series L Bonds and the terms and
provisions thereof are hereinafter set forth.
All things have been done and performed which are necessary to make the
Series L Bonds, when authenticated by the Trustee and issued as herein provided,
legal, valid and binding obligations of the Company;
And It Is Hereby Covenanted, Declared and Agreed, as set forth in the
following covenants, agreements, conditions and provisions, to wit:
Article One
Creation of Series L Bonds
Section 1.01. There shall be and is hereby created an additional series of
bonds designated as and entitled "First Mortgage Bonds, Series L." Series L
Bonds shall be fully registered bonds, of the denomination of $1,000 and
multiples thereof. The registered bonds of Series L originally issued shall be
dated as provided in Article III of the Indenture and any bonds of Series L
subsequently issued shall be dated as provided in Section 2.03 of the Indenture.
All Series L Bonds shall mature on October 14, 2024 and shall bear interest at
the rate of eight and forty-nine one hundredths percent (8.49%) per annum from
their respective dates of issue, such interest to be payable semi-annually on
the fourteenth day of April and the fourteenth day of October in each year
commencing the fourteenth day of April, 2003, and shall bear interest on any
overdue principal (including any overdue prepayment of principal) and premium,
if any, and (to the extent permitted by applicable law) on any overdue payment
of interest, at the rate of 9.49% per annum. The principal of, premium, if any,
and interest on bonds of Series L shall be payable at the corporate trust office
of in Boston, Massachusetts of U.S. Bank National Association or at the
corporate trust office designated by its successor as Trustee hereunder, in
lawful money of the United States of America, provided that the Company may
enter into a written agreement with any registered Institutional Holder of the
bonds of Series L providing that payment of interest thereon and of the
redemption price on any portion of the principal amount thereof (including
premium, if any) which may be redeemed shall be made directly to such holder or
to its nominee, as the case may be, at a duly designated place of payment within
the United States, without surrender or presentation of such bonds of Series L
to the Trustee, provided that (A) there shall have been filed with the Trustee a
copy of such agreement and (B) pursuant to such agreement such holder shall
agree that it will not sell, transfer or otherwise dispose of any such bond of
Exhibit F
(to Twelfth Supplemental Indenture)
Series L in respect of which any such payment or redemption shall have been made
unless, prior to the delivery thereof by it, either (i) it shall have made a
clear and accurate notation of the amount of principal so redeemed upon such
bond to be transferred, or (ii) such bond of Series L shall have been presented
to the Trustee for appropriate notation thereon of the portion of the principal
amount thereof redeemed, or (iii) such bond or bonds of Series L shall have been
surrendered in exchange for a new bond or bonds of Series L for the unredeemed
balance of the principal amount thereof in accordance with the other terms of
the Indenture and (C) in such agreement such holder shall agree that prior to
receiving any final payment of the entire remaining unpaid principal amount of
any Series L bond, the holder thereof shall be required to deliver such bond to
the Trustee. For purposes of this Section 1.01, the term "Institutional Holder"
shall mean any insurance company, bank, savings and loan association, trust
company, investment company, charitable foundation, employee benefit plan (as
defined in ERISA) or other institutional investor or financial institution. The
text of the Series L Bonds and the Trustee's certificate with respect thereto
shall be respectively substantially of the tenor and purport set forth in
Schedule A hereto. The Series L Bonds shall be numbered in such manner or by
such method as shall be satisfactory to the Trustee.
The issue of bonds of Series L hereunder is hereby limited to the
$9,000,000 in aggregate principal amount of Series L Bonds initially issued as
provided in Section 1.08 hereof and to Series L Bonds issued in exchange or
substitution for outstanding Series L Bonds under the provisions of Sections
2.08, 2.10, 2.11 and 7.05 of the Indenture and of Section 1.07 hereof.
Section 1.02. As a required sinking fund for the benefit of the Series L
Bonds, the Company covenants that it will, on or prior to October 13 in each
year, beginning with October 13, 2015, and continuing to and including October
13, 2024, pay to the Trustee immediately available funds sufficient to redeem,
at par, Series L Bonds then outstanding, in the principal amount of Nine Hundred
Thousand Dollars ($900,000) (or the remaining principal amount if less than
$900,000 principal amount of Series L Bonds at the time remains outstanding).
The payments required for the sinking fund as above provided are in this Section
1.02 and elsewhere in this Exhibit F referred to as "required sinking fund
payments" and the day following the latest date on which each such payment is
required to be made is herein and therein referred to as a "required sinking
fund redemption date." Each required sinking fund payment shall be applied to
the redemption of Series L Bonds on the applicable required sinking fund
redemption date.
No redemption under Section 1.03, 1.04, 1.05 or 1.06 hereof shall affect or
reduce the obligation of the Company to provide for required sinking fund
redemptions under this Section 1.02 until all Series L Bonds shall have been
paid in full.
Section 1.03. At the same time it makes any required sinking fund payment,
the Company shall have the option (which shall be non-cumulative) to pay to the
Trustee, in immediately available funds, an additional principal amount of Nine
Hundred Thousand Dollars ($900,000) (in this Section 1.03 and elsewhere in this
Exhibit F to the Twelfth Supplemental Indenture referred to as an "optional
sinking fund payment"), provided, that the cumulative amount of all optional
sinking fund payments pursuant to this Section 1.03 shall not exceed One Million
Eight Hundred Thousand Dollars ($1,800,000) and each such optional sinking fund
payment shall be
F-2
applied to the redemption of Series L Bonds on the required sinking fund
redemption date for such required sinking fund payment. The Company will give
notice, by registered mail, postage prepaid, to the Trustee and to each
registered owner of a bond of Series L of any required or optional payment to be
made pursuant to Section 1.02, this Section 1.03, Section 1.04 or Section 1.05
hereof not more than 60, nor less than 30, days prior to the required sinking
fund redemption date (or other designated date of redemption in the case of a
redemption pursuant to Section 1.04 or Section 1.05).
Section 1.04. In addition to the required and optional sinking funds
provided by Sections 1.02 and 1.03 hereof, all of the bonds of Series L, or any
part of the principal amount thereof constituting One Hundred Thousand Dollars
($100,000) or any integral multiple thereof, shall be subject to redemption, at
the option of the Company, on any date on or after October 14, 1994 and before
October 14, 2019, pursuant to the provisions of Article VII of the Indenture,
and by payment of an amount equal to the Make Whole Amount, as defined below in
this Section 1.04, determined five Business Days prior to such redemption. In
addition to the foregoing, on any date on or after October 14, 2019, all of the
bonds of Series L, or any part of the principal amount thereof constituting One
Hundred Thousand Dollars ($100,000) or any integral multiple thereof, shall be
subject to redemption, at the option of the Company, by payment of the interest
accrued on the principal amount of the bond or bonds optionally to be redeemed
to the date fixed for such redemption plus an amount equal to the applicable
percentage of the principal amount thereof as follows:
Date Fixed for Redemption Applicable Percentage
If redeemed on or after October 14, 2019 and before October 14, 2020 101.5%
On or after October 14, 2020 and before October 14, 2021 101.0%
On or after October 14, 2021 and before October 14, 2022 100.5%
On or after October 14, 2022 and prior to maturity 100%
For purposes of this Section 1.04, the Make Whole Amount shall mean the
greater of (i) the outstanding principal amount of the bonds to be redeemed,
plus interest accrued thereon to the date fixed for such redemption, and (ii)
the sum of (A) the aggregate present value as of the date of such redemption of
each dollar of principal being redeemed (taking into account each redemption
required by Section 1.02 above) and the amount of interest (exclusive of
interest accrued to the date fixed for such redemption) that would have been
payable in respect of each such dollar if such redemption had not been made,
determined by discounting such amounts at the Reinvestment Rate (as hereinafter
defined) from the respective dates on which they would have been payable to the
date of such redemption, plus (B) interest accrued on the bonds to be redeemed
to the date fixed for such redemption.
For purposes of any determination of the Make Whole Amount:
"Reinvestment Rate" shall mean (1) the sum of 0.50%, plus the yield
reported on page "USD" of the Bloomberg Financial Markets Services Screen
(or, if not available,
F-3
any other nationally recognized trading screen reporting on-line intraday
trading in the United States government Securities) at 11:00 A.M. (Eastern
time) on the fifth Business Day preceding the date the Make Whole Amount
becomes due and payable pursuant to the foregoing provisions of this
Section 1.04 for the United States government Securities having a maturity
(rounded to the nearest month) corresponding to the remaining Weighted
Average Life to Maturity of the principal of the bonds being redeemed
(taking into account the application of each redemption required by Section
1.02) or (2) in the event that no nationally recognized trading screen
reporting on-line intraday trading in the United States government
Securities is available, Reinvestment Rate shall mean the sum of 0.50%,
plus the arithmetic mean of the yields for the two columns under the
heading "Week Ending" published on the fifth Business Day preceding the
date the Make Whole Amount becomes due and payable pursuant to the
foregoing provisions of this Section 1.04 in the Statistical Release under
the caption "Treasury Constant Maturities" for the maturity (rounded to the
nearest month) corresponding to the Weighted Average Life to Maturity of
the principal amount of the bonds being redeemed (taking into account each
redemption required by Section 1.02). If no maturity exactly corresponds to
such Weighted Average Life to Maturity, yields for the two published
maturities most closely corresponding to such Weighted Average Life to
Maturity shall be calculated pursuant to the immediately preceding
sentence, and the Reinvestment Rate shall be interpolated or extrapolated
from such yields on a straightline basis, rounding in each of such relevant
periods to the nearest month. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to
the date of determination of the Make Whole Amount shall be used.
"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve System and which
establishes yields on actively traded U.S. Government Securities adjusted
to constant maturities or, if such statistical release is not published at
the time of any determination hereunder, then such other reasonably
comparable index which shall be designated by the holders of 66-2/3% in
aggregate principal amount of outstanding Series L bonds.
"Weighted Average Life to Maturity" of the principal amount of the
bonds being redeemed shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal.
The term "Remaining Dollar-Years" of such principal shall mean the amount
obtained by (i) multiplying (x) the remainder of (1) the amount of
principal that would have been payable on each scheduled redemption date
under Section 1.02 hereof if the redemption pursuant to this Section 1.04
had not been made, less (2) the amount of principal on the bonds scheduled
to become payable on each such redemption date under Section 1.02 after
giving effect to the redemption pursuant to this Section 1.04, by (y) the
number of years (calculated to the nearest one-twelfth) which will elapse
between the date of determination and each such scheduled redemption date
under Section 1.02, and (ii) totaling the products obtained in (i).
F-4
Section 1.05. Series L Bonds may be redeemed pursuant to Article XI of the
Indenture (i) out of Trust Moneys, required by Section 8.12 of the Indenture to
be deposited with the Trustee, on any date and shall be redeemed for an amount
equal to the principal amount of the bonds to be redeemed, plus interest accrued
to the date of redemption; or (ii) out of Trust Moneys required by Sections
8.10, 10.03, 10.04 or 10.04A of the Indenture to be deposited with the Trustee,
on any date and, if redeemed prior to October 14, 2019, then they shall be
redeemed for an amount equal to the Make Whole Amount, as defined above in
Section 1.04, and if redeemed on any date on or after October 14, 2019, then
they shall be redeemed for an amount equal to the interest accrued on the
principal amount of the bond or bonds to be redeemed to the date fixed for
redemption, plus an amount equal to the applicable percentage of the principal
amount thereof set forth in Section 1.04, above, for optional redemptions
occurring on or after October 14, 2019.
Section 1.06. In the event that all or any part of the bonds of Series L
shall be redeemed or otherwise discharged prior to their maturity pursuant to or
in accordance with the order of any governmental commission or regulatory
authority upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such bonds of Series L shall be entitled to
be paid an amount equal to the Make Whole Amount, if such redemption or
discharge occurs prior to October 14, 2019, or, if such redemption or discharge
occurs on or after October 14, 2019, then the registered owners of such bonds
shall be entitled to be paid an amount equal to the interest accrued on the
principal amount of the bonds to be redeemed to the date of redemption, plus an
amount equal to the then applicable percentage of the principal amount thereof
provided in Section 1.04, above, for optional redemptions after such date.
Section 1.07. Bonds of Series L, upon surrender thereof at the principal
office of the Trustee, may be exchanged for the same aggregate principal amount
of other bonds of this Series.
Within a reasonable time after the receipt of a request for such an
exchange, the Company shall issue and the Trustee shall authenticate and deliver
all bonds required in connection therewith, and the Trustee shall make such
exchange upon payment to it of such charge, if any, as is required by the
following paragraph.
For any exchange of bonds of Series L, the Company, at its option, may
require the payment of a sum sufficient to reimburse it for any stamp or other
tax or governmental charge required to be paid by the Company or the Trustee.
Section 1.08. Upon execution of this Twelfth Supplemental Indenture and
subject to the provisions of Article III of the Indenture and upon compliance
with the applicable provisions of Article IV of the Indenture, the Company shall
execute and deliver to the Trustee, and the Trustee shall authenticate and
deliver to or upon the order of the Company, bonds of the Series L in the form
set forth in Schedule A hereto in the aggregate principal amount of Nine Million
Dollars ($9,000,000).
F-5
Article Two
Redemption
Section 2.01. In the case of any required or optional sinking fund
redemption pursuant to Sections 1.02 and 1.03 hereof, forthwith after the
September 14 preceding each required sinking fund redemption date, and in the
case of any proposed redemption pursuant to Sections 1.04 or 1.05, forthwith
after the Trustee's receipt of proper notice from the Company of any such
proposed redemption, the Trustee, shall act in accordance with the provisions of
Article VII of the Indenture.
The Company covenants that it will pay to the Trustee
(i) on or before the day prior to each required sinking fund
redemption date, the sum required by Section 1.02 hereof, plus the sum,
if any, payable in accordance with any notice of optional redemption
delivered prior to such required sinking fund redemption date pursuant
to Section 1.03 hereof,
(ii) on or before the day prior to the date proposed by the
Company in a notice (which notice shall conform to the requirements of
Article VII of the Indenture) of any redemption pursuant to Section
1.04 or 1.05 hereof, the amount payable in accordance with such notice,
and
(iii) at the time of each required sinking fund redemption or
other redemption the Company shall pay to the Trustee the amount of
charges which shall be due the Trustee and the amount of the expenses
which the Trustee advised the Company it has incurred or will incur in
connection with such redemption.
F-6
(Form of Series L Bond)
Unitil Energy Systems, Inc.
No. LR-_____ $____________
First Mortgage Bond, Series L, 8.49%
due October 14, 2024
Unitil Energy Systems, Inc., a corporation organized under the laws of the
State of New Hampshire (hereinafter called the "Company"), for value received,
hereby promises to pay to _________________ or registered assigns, on the
fourteenth day of October, 2024, the principal sum of
_____________________________ Dollars ($____________) and to pay interest
thereon from the date hereof at the rate of eight and forty-nine hundredths per
centum (8.49%) per annum (computed on the basis of a thirty (30) day month and
three hundred sixty (360) day year) payable semi-annually on the fourteenth day
of April and the fourteenth day of October in each year, commencing the
fourteenth day of April, 2003, until said principal sum is paid; and to pay
interest on any overdue principal (including any overdue prepayment of
principal) and premium if any, and (to the extent permitted by applicable law)
on any overdue payment of interest, at the rate of 9.49% per annum. The
principal of and premium, if any, and the interest on this bond shall be payable
at the corporate trust office in Boston, Massachusetts or U.S. Bank National
Association, or at the corporate trust office designated by its successor as
trustee in the trust hereinafter referred to, or at the option of certain
holders, in accordance with the provisions of Section 1.01 of Exhibit F of the
Twelfth Supplemental Indenture hereinafter referred to, in lawful money of the
United States of America.
This bond is one of a duly authorized issue of First Mortgage Bonds of the
Company limited as to aggregate principal amount as set forth in the Indenture
hereinafter mentioned, issuable in series, and is one of a series known as First
Mortgage Bonds, Series L, all bonds of all series being issued and to be issued
under and pursuant to and all equally secured (except as any sinking or other
fund, established in accordance with the provisions of the Indenture hereinafter
mentioned, may afford additional security for the bonds of any particular
series) by an Indenture of Mortgage and Deed of Trust dated as of July 15, 1958
(herein called the "Original Indenture") duly executed and delivered by the
Company to Old Colony Trust Company (U.S. Bank National Association being
successor Trustee and together with each predecessor trustee being called the
"Trustee"), to which Original Indenture and to all Indentures supplemental
thereto, including a Twelfth Supplemental Indenture (the "Twelfth Supplemental
Indenture") dated as of December 2, 2002 (herein together called the
"Indenture") reference is hereby made for a description of the property
transferred, assigned and mortgaged thereunder, the nature and extent of the
security, the terms and conditions upon which the bonds are secured and
additional bonds may be issued and secured, and the rights of the holders or
registered owners of said bonds, of the Trustee and of the Company in respect of
such security. Neither the foregoing reference to the Indenture, nor any
provision of this bond or of the Indenture, shall affect or impair the
obligation of the Company, which is absolute, unconditional and unalterable, to
pay,
Schedule A
(to Exhibit F of the Twelfth Supplemental Indenture)
at the stated or accelerated maturities herein provided, the principal of and
premium, if any, and interest on this bond as herein provided.
Bonds of this Series L are entitled to the benefit of a required sinking
fund and an optional sinking fund provided for in Exhibit F to the Twelfth
Supplemental Indenture and shall become subject to redemption for the purposes
of such sinking funds at the principal amount thereof without premium, plus
interest accrued thereon to the date of such redemption, all on the conditions
and in the manner provided in Exhibit F to the Twelfth Supplemental Indenture.
Bonds of this Series L are also redeemable, in whole or in part, in
integral multiples of one hundred thousand dollars, at the option of the Company
on any date on at least 30 days' notice, in the manner, with the effect, subject
to the limitations and for the amounts specified in Section 1.04 of Exhibit F to
the Twelfth Supplemental Indenture.
On the conditions and in the manner provided in the Section 1.05 of Exhibit
F to the Twelfth Supplemental Indenture, Series L Bonds may also become subject
to redemption, in whole or in part, at any time on at least 30 days' notice, in
the manner, with the effect and for the amounts specified in said Section 1.05,
by the use of moneys deposited with or paid to the Trustee as the proceeds of
the sale or condemnation of property of the Company or as the proceeds of
insurance policies deposited with or paid to the Trustee because of damage to or
destruction of property of the Company.
In the event that all or any part of the bonds of this Series L shall be
redeemed or otherwise discharged prior to their maturity pursuant to or in
accordance with the order of any governmental commission or regulatory authority
upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such Series L Bonds shall be entitled to be
paid therefor an amount specified in Section 1.06 of Exhibit F to the Twelfth
Supplemental Indenture.
The Indenture provides that, if notice of redemption of any bond issued
pursuant to its terms, including the Series L Bonds, or any portion of the
principal amount of any such bond selected for redemption has been duly given,
then such bond or such portion thereof shall become due and payable on the date
fixed for redemption, and, if the redemption price shall have been duly
deposited with the Trustee, interest thereon shall cease to accrue from and
after the date fixed for redemption, and that whenever the redemption price
thereof shall have been duly deposited with the Trustee and notice of redemption
shall have been duly given, or provision therefor made as provided in the
Indenture, such bond or such portion thereof shall no longer be entitled to any
lien or benefit of the Indenture.
In case an Event of Default, as defined in the Indenture, occurs, the
principal of this bond may become or may be declared due and payable prior to
the stated maturity hereof in the manner and with the effect and subject to the
conditions provided in the Indenture.
This bond is transferable by the registered owner hereof, in person or by
duly authorized attorney, upon books of the Company to be kept for that purpose
at the corporate trust office of the Trustee under the Indenture, upon surrender
thereof at said office for cancellation and upon
F-A-2
presentation of a written instrument of transfer duly executed, and thereupon
the Company shall issue in the name of the transferee or transferees, and the
Trustee shall authenticate and deliver, a new registered bond or bonds, of like
form and in an authorized denomination or in authorized denominations and of the
same series, for the same aggregate principal amount. Bonds of this series upon
surrender thereof at said office may be exchanged for the same aggregate
principal amount of bonds, also of this series but of another authorized
denomination or other authorized denominations, all upon payment of the charges,
if any, and subject to the terms and conditions specified in the Indenture.
The Company and the Trustee may treat the registered owner of this bond as
the absolute owner hereof for all purposes.
With the consent of the Company and to the extent permitted by and as
provided in the Indenture, property may be released from the lien thereof, and
the terms and provisions of the Indenture may be modified by the assent or
authority of the holders of at least seventy-five per centum (75%) in principal
amount of the bonds then outstanding thereunder, provided, however, that no such
modification shall (i) extend the time or times or payment of the principal of,
or the interest or premium, if any, on any bond, (ii) reduce the principal
amount thereof or the rate of interest or premium thereon, (iii) authorize the
creation of any lien prior or equal to the lien of the Indenture upon any
property subject to the lien thereof, or deprive any bondholder of the benefit
of the lien of the Indenture, (iv) affect the rights under the Indenture of the
holders of one or more, but less than all, of the series of bonds outstanding
thereunder unless assented to by the holders of seventy-five per centum (75%) in
aggregate principal amount of bonds outstanding thereunder of each of the series
so affected, (v) reduce the percentage of bonds, the holders of which are
required to assent to any such modification, or (vi) in any manner affect the
rights or obligations of the Trustee without its written consent thereto.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or of any claim based hereon or in respect hereof or of
the Indenture, against any incorporator, stockholder, officer or director of the
Company, or of any successor company, whether by virtue of any statute or rule
of law or by the enforcement of any assessment or penalty or otherwise, all such
liability being by the acceptance hereof expressly waived and released and being
also waived and released by the terms of the Indenture.
This bond shall not be valid nor become obligatory for any purpose until it
shall have been authenticated by the execution of the certificate hereon
endorsed by the Trustee under the Indenture.
F-A-3
In witness whereof, Unitil Energy Systems, Inc. has caused this bond to be
signed in its name by its President or one of its Vice Presidents and its
corporate seal to be hereunto affixed and attested by its Treasurer, and this
bond to be dated the ________________, _____.
Unitil Energy Systems, Inc.
By:
--------------------------------------
President
Attest:
---------------------------
Treasurer
(Corporate Seal)
F-A-4
(Form of Trustee's Certificate for all Bonds of Series L)
Trustee's Certificate of Authentication
This is one of the First Mortgage Bonds, Series L, referred to in the
within mentioned Indenture.
U.S. Bank National Association
By:
---------------------------------------
Authorized Officer
(Form of Endorsement)
For Value Received the undersigned hereby sells, assigns and transfers unto
_________________ the within bond, and all rights thereunder, hereby irrevocably
constituting and appointing ____________ attorney to transfer said bond on the
books of the Company, with full power of substitution in the premises.
-------------------------------------------
Signature of Registered Owner
Dated:
-------------------------
In the presence
of:
----------------------------
Notice: The signature of this assignment must correspond with the name of
the payee as it appears upon the face of the within bond in every particular,
without alteration or enlargement or any change whatever.
Series M Bonds
As a result of the Merger of Exeter into the Company on the Merger Date, as
more fully described in the Twelfth Supplemental Indenture, $10,000,000
aggregate principal amount of the Exeter Series L, 6.96% Bonds due September 1,
2028 ("Exeter Series L Bonds") issued under the Exeter Indenture are exchanged
as of Merger Date by the holders thereof for Bonds issued under the Indenture
containing substantially the same terms and provisions as the Exeter Series L
Bonds which are the Company's Series M 6.96% Bonds due September 1, 2028 (the
"Series M Bonds"). Accordingly, the provisions for the issuance of $10,000,000
aggregate principal amount of the Company's Series M Bonds and the terms and
provisions thereof are hereinafter set forth.
All things have been done and performed which are necessary to make the
Series M Bonds, when authenticated by the Trustee and issued as herein provided,
legal valid and binding obligations of the Company;
And it is Hereby Covenanted, Declared and Agreed, as set forth in the
following-covenants, agreements, conditions and provisions, to wit:
Article One
Creation of Series M Bonds
Section 1.01. There shall be and is hereby created an additional series of
bonds designated as and entitled "First Mortgage Bonds, Series M." Series M
Bonds shall be fully registered bonds, of the denomination of $1,000 and
multiples thereof. The registered bonds of Series M originally issued shall be
dated as provided in Article III of the Indenture and any bonds of Series M
subsequently issued shall be dated as provided in Section 2.03 of the Indenture.
All Series M Bonds shall mature on September 1, 2028 and shall bear interest at
the rate of six and ninety-six one hundredths percent (6.96%) per annum from
their respective dates of issue, such interest to be payable quarterly in
arrears on the first day of March, June, September and December in each year
commencing the first day of March, 2003, and shall bear interest on any overdue
principal (including any overdue prepayment of principal) and premium, if any,
and (to the extent permitted by applicable law) on any overdue payment of
interest, at the rate of 8.96% per annum. The principal of, premium if any, and
interest on bonds of Series M shall be payable at the corporate trust office in
Boston, Massachusetts of U.S. Bank National Association or at the corporate
trust office designated by its successor as Trustee hereunder, in lawful money
of the United States of America provided that the Company may enter into a
written agreement with any registered Institutional Holder of the bonds of
Series M providing that payment of interest thereon and of the redemption price
on any portion of the principal amount thereof (including premium, if any) which
may be redeemed shall be made directly to such holder or to its nominee, as the
case may be, at a duly designated place of payment within the United States,
without
Exhibit G
(to Twelfth Supplemental Indenture)
surrender or presentation of such bonds of Series M to the Trustee, provided
that (A) there shall have been filed with the Trustee a copy of such agreement,
(B) pursuant to such agreement such holder shall agree that it will not sell,
transfer or otherwise dispose of any such bond of Series M in respect of which
any such payment or redemption shall have been made unless, prior to the
delivery thereof by it, either (i) it shall have made a clear and accurate
notation of the amount of principal so redeemed upon such bond to be
transferred, or (ii) such bond of Series M shall have been presented to the
Trustee for appropriate notation thereon of the portion of the principal amount
thereof redeemed, or (iii) such bond or bonds of Series M shall have been
surrendered in exchange for a new bond or bonds of Series M for the unredeemed
balance of the principal amount thereof in accordance with the other terms of
the Indenture and (C) in such agreement such holder shall agree that prior to
receiving any final payment of the entire remaining unpaid principal amount of
any Series M bond, the holder thereof shall be required to deliver such bond to
the Trustee. For purposes of this Section 1.01, the term "Institutional Holder"
shall mean any insurance company, bank, savings and loan association, trust
company, investment company, charitable foundation, employee benefit plan (as
defined in ERISA) or other institutional investor or financial institution. The
text of the Series M Bonds and the Trustee's certificate with respect thereto
shall be respectively substantially of the tenor and purport set forth in
Schedule A hereto. The Series M Bonds shall be numbered in such manner or by
such method as shall be satisfactory to the Trustee.
The issue of bonds of Series M hereunder is hereby limited to the
$10,000,000 in aggregate principal amount of Series M Bonds initially issued as
provided in Section 1.07 hereof and to Series M Bonds issued in exchange or
substitution for outstanding Series M Bonds under the provisions of Sections
2.08, 2.10, 2.11 and 7.05 of the Indenture and of Section 1.06 hereof.
Section 1.02. As a required sinking fund for the benefit of the Series M
Bonds, the Company covenants that it will, on or prior to September 1 in each
year, beginning with September 1, 2019, and continuing to and including
September 1, 2028, pay to the Trustee immediately available funds sufficient to
redeem, at par, Series M Bonds then outstanding, in the principal amount of One
Million Dollars ($1,000,000) (or the remaining principal amount if less than
$1,000,000 principal amount of Series M Bonds at the time remains outstanding).
The payments required for the sinking fund as above provided are in this Section
1.02 and elsewhere in this Exhibit G referred to as "required sinking fund
payments" and the day following the latest date on which each such payment is
required to be made is herein and therein referred to as a "required sinking
fund redemption date". Each required sinking fund payment shall be applied to
the redemption of Series M bonds on the applicable required sinking fund
redemption date.
No redemption under Section 1.03, 1.04 or 1.05 hereof shall affect or
reduce the obligation of the Company to provide for required sinking fund
redemptions under this Section 1.02 until all Series M Bonds shall have been
paid in full.
Section 1.03. In addition to the required sinking fund provided by Section
1.02 hereof, all of the bonds of Series M, or any part of the principal amount
thereof constituting One Hundred Thousand Dollars ($100,000) or any integral
multiple thereof, shall be subject to redemption, at the option of the Company,
on any date on or after September 1, 1998 and before September 1, 2026, pursuant
to the provisions of Article VII of the Indenture, and by payment of an amount
G-2
equal to the Make Whole Amount, as defined below in this Section 1.03,
determined five Business Days prior to such redemption. In addition to the
foregoing, on any date on or after September 1, 2026, all of the bonds of Series
M, or any part of the principal amount thereof constituting One Hundred Thousand
Dollars ($100,000) or any integral multiple thereof, shall be subject to
redemption, at the option of the Company, by payment of the interest accrued on
the principal amount of the bond or bonds optionally to be redeemed to the dates
fixed for such redemption plus 100% of the principal amount thereof.
For purposes of this Section 1.03, the Make Whole Amount shall mean the
greater of (i) the outstanding principal amount of the bonds to be redeemed,
plus interest accrued thereon to the date fixed for such redemption, and (ii)
the sum of (A) the aggregate present value as of the date of such redemption of
each dollar of principal being redeemed (taking into account each redemption
required by Section 1.02 above) and the amount of interest (exclusive of
interest accrued to the date fixed for such redemption) that would have been
payable in respect of each such dollar if such redemption had not been made,
determined by discounting such amounts at the Reinvestment Rate (as hereinafter
defined) from the respective dates on which they would have been payable to the
date of such redemption, plus (B) interest accrued on the bonds to be redeemed
to the date fixed for such redemption.
For purposes of any determination of the Make Whole Amount:
"Reinvestment Rate" shall mean (1) the sum of 0.50%, plus the yield
reported on page "USD" of the Bloomberg Financial Markets Services Screen
(or, if not available, any other nationally recognized trading screen
reporting on-line intraday trading in the United States government
Securities) at 11:00 A.M. (Eastern time) on the fifth Business Day
preceding the date the Make Whole Amount become due and payable pursuant to
the foregoing provisions of this Section 1.03 for the United States
government Securities having a maturity (rounded to the nearest month)
corresponding to the remaining Weighted Average Life to Maturity of the
principal of the bonds being redeemed (taking into account the application
of each redemption required by Section 1.02) or (2) in the event that no
nationally recognized trading screen reporting on-line intraday trading in
the United States government Securities is available, Reinvestment Rate
shall mean the sum of 0.50%, plus the arithmetic mean of the yields for the
two columns under the heading "Week Ending" published on the fifth Business
Day preceding the date the Make Whole Amount become due and payable
pursuant to the foregoing provisions of this Section 1.03 in the
Statistical Release under the caption "Treasury Constant Maturities" for
the maturity (rounded to the nearest month) corresponding to the Weighted
Average Life to Maturity of the principal amount of the bonds being
redeemed (taking into account each redemption required by Section 1.02). If
no maturity exactly corresponds to such Weighted Average Life to Maturity,
yields for the two published maturities most closely corresponding to such
Weighted Average Life to Maturity shall be calculated pursuant to the
immediately preceding sentence, and the Reinvestment Rate shall be
interpolated or extrapolated from such yields on a straightline basis,
rounding in each of such relevant periods to the nearest month. For the
purposes of calculating the Reinvestment Rate, the most recent Statistical
Release published prior to the date of determination of the Make Whole
Amount shall be used.
G-3
"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Federal Reserve System and which
establishes yields on actively traded U.S. Government Securities adjusted
to constant maturities or, if such statistical release is not published at
the time of any determination hereunder, then such other reasonably
comparable index which shall be designated by the holders of 66-2/3% in
aggregate principal amount of outstanding Series M Bonds.
"Weighted Average Life to Maturity" of the principal amount of the
bonds being redeemed shall mean, as of the time of any determination
thereof, the number of years obtained by dividing the then Remaining
Dollar-Years of such principal by the aggregate amount of such principal.
The term "Remaining Dollar-Years" of such principal shall mean the amount
obtained by (i) multiplying (x) the remainder of (1) the amount of
principal that would have been payable on each scheduled redemption date
under Section 1.02 hereof if the redemption pursuant to this Section 1.03
had not been made, less (2) the amount of principal on the bonds scheduled
to become payable on each such redemption date under Section 1.02 after
giving effect to the redemption pursuant to this Section 1.03, by (y) the
number of years (calculated to the nearest one-twelfth) which will elapse
between the date of determination and each such scheduled redemption date
under Section 1.02, and (ii) totaling the products obtained in (i).
Section 1.04. Series M Bonds may be redeemed pursuant to Article XI of the
Indenture (i) out of Trust Moneys, required by Section 8.12 of the Indenture to
be deposited with the Trustee, on any date and shall be redeemed for an amount
equal to the principal amount of the bonds to be redeemed, plus interest accrued
to the date of redemption; or (ii) out of Trust Moneys required by Sections
8.10, 10.03, 10.04 or 10.04A of the Indenture to be deposited with the Trustee,
on any date and, if redeemed prior to September 1, 2026, then they shall be
redeemed for an amount equal to the Make Whole Amount, as defined above in
Section 1.03, and if redeemed on any date on or after September 1, 2026, then
they shall be redeemed for an amount equal to the interest accrued on the
principal amount of the bond or bonds to be redeemed to the date fixed for
redemption, plus 100% of the principal amount thereof, for optional redemptions
occurring on or after September 1, 2026.
Section 1.05. In the event that all or any part of the bonds of Series M
shall be redeemed or otherwise discharged prior to their maturity pursuant to or
in accordance with the order of any governmental commission or regulatory
authority upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such bonds of Series M shall be entitled to
be paid an amount equal to the Make Whole Amount, if such redemption or
discharge occurs prior to September 1, 2026, or, if such redemption or discharge
occurs on or after September 1, 2026, then the registered owners of such bonds
shall be entitled to be paid an amount equal to the interest accrued on the
principal amount of the bonds to be redeemed to the date of redemption, plus
100% of the principal amount thereof.
Section 1.06. Bonds of Series M, upon surrender thereof at the principal
office of the Trustee, may be exchanged for the same aggregate principal amount
of other bonds of this Series.
G-4
Within a reasonable time after the receipt of a request for such an
exchange, the Company shall issue and the Trustee shall authenticate and deliver
all bonds required in connection therewith, and the Trustee shall make such
exchange upon payment to it of such charge, if any, as is required by the
following paragraph.
For any exchange of bonds of Series M, the Company, at its option, may
require the payment of a sum sufficient to reimburse it for any stamp or other
tax or governmental charge required to be paid by the Company or the Trustee.
Section 1.07. Upon execution of this Twelfth Supplemental Indenture and
subject to the provisions of Article III of the Indenture and upon compliance
with the applicable provisions of Article IV of the Indenture, the Company shall
execute and deliver to the Trustee, and the Trustee shall authenticate and
deliver to or upon the order of the Company, bonds of the Series M in the form
set forth in Schedule A hereto in the aggregate principal amount of Ten Million
Dollars ($10,000,000).
Article Two
Redemption
Section 2.01. In the case of any required sinking fund redemption pursuant
to Section 1.02 hereof, forthwith after the August 1 preceding each required
sinking fund redemption date, and in the case of any proposed redemption
pursuant to Sections 1.03 or 1.04, forthwith after the Trustee's receipt of
proper notice from the Company of any such proposed redemption, the Trustee,
shall act in accordance with the provisions of Article VII of the Indenture.
The Company covenants that it will pay to the Trustee
(i) on or before the day prior to each required sinking fund
redemption date, the sum required by Section 1.02 hereof,
(ii) on or before the day prior to the date proposed by the Company in
a notice (which notice shall conform to the requirements of Article VII of
the Indenture) of any redemption pursuant to Section 1.03 or 1.04 hereof,
the amount payable in accordance with such notice, and
(iii) at the time of each required sinking fund redemption or other
redemption the Company shall pay to the Trustee the amount of the charges
which shall be due the Trustee and the amount of the expenses which the
Trustee advises the Company it has incurred or will incur in connection
with such redemption.
G-5
(Form of Series M Bond)
Unitil Energy Systems, Inc.
First Mortgage Bond, Series M, 6.96%
due September 1, 2028
No. MR-______ $_______________
Unitil Energy Systems, Inc., a corporation organized under the laws of the
State of New Hampshire (hereinafter called the "Company"), for value received,
hereby promises to pay to ________ or registered assigns, on the first day of
September, 2028, the principal sum of ___________ Dollars ($_______________) and
to pay interest thereon from the date hereof at the rate of six and ninety-six
hundredths per centum (6.96%) per annum (computed on the basis of a thirty (30)
day month and three hundred sixty (360) day year) payable quarterly in arrears
on the first day of March, June, September and December in each year, commencing
the first day of March, 2003, until said principal sum is paid; and to pay
interest on any overdue principal (including any overdue prepayment of
principal) and premium if any, and (to the extent permitted by applicable law)
on any overdue payment of interest, at the rate of 8.96% per annum. The
principal of and premium if any, and the interest on this bond shall be payable
at the corporate trust office in Boston, Massachusetts of U.S. Bank National
Association, or at the corporate trust office designated by its successor as
trustee in the trust hereinafter referred to, or at the option of certain
holders, in accordance with the provisions of Section 1.01 of Exhibit G of the
Twelfth Supplemental Indenture hereinafter referred to, in lawful money of the
United States of America.
This bond is one of a duly authorized issue of First Mortgage Bonds of the
Company limited as to aggregate principal amount as set forth in the Indenture
hereinafter mentioned, issuable in series, and is one of a Series M known as
First Mortgage Bonds, Series M, all bonds of all series being issued and to be
issued under and pursuant to and all equally secured (except as any sinking or
other fund, established in accordance with the provisions of the Indenture
hereinafter mentioned, may afford additional security for the bonds of any
particular series) by an Indenture of Mortgage and Deed of Trust dated as of
July 15, 1958 (herein called the "Original Indenture") duly executed and
delivered by the Company to Old Colony Trust Company (U.S. Bank National
Association being successor Trustee and together with each predecessor trustee
being called the "Trustee"), to which Original Indenture and to all Indentures
supplemental thereto, including a Twelfth Supplemental Indenture (the "Twelfth
Supplemental Indenture") dated as of December 2, 2002 (herein together called
the "Indenture") reference is hereby made for a description of the property and
transferred, assigned and mortgaged thereunder, the nature and extent of the
security, the terms and conditions upon which the bonds are secured and
additional bonds may be issued and secured, and the rights of the holders or
registered owners of said bonds, of the Trustee and of the Company in respect of
such security. Neither the foregoing reference to the Indenture, nor any
provision of this bond or of the Indenture, shall affect or impair the
obligation of the Company, which is absolute, unconditional and unalterable, to
pay, at the stated or accelerated maturities herein provided, the principal of
and premium, if any, and interest on this bond as herein provided.
G-A-1
Bonds of this Series M are entitled to the benefit of a required sinking
fund provided for in Exhibit G to the Twelfth Supplemental Indenture and shall
become subject to redemption for the purposes of such sinking fund at the
principal amount thereof without premium, plus interest accrued thereon to the
date of such redemption, all on the conditions and in the manner provided in
Exhibit G to the Twelfth Supplemental Indenture.
Bonds of this Series M are also redeemable, in whole or in part, in
integral multiples of one hundred thousand dollars, at the option of the Company
on any date on at least 30 days' notice, in the manner, with the effect, subject
to the limitations and for the amounts specified in Section 1.03 of Exhibit G to
the Twelfth Supplemental Indenture.
On the conditions and in the manner provided in the Section 1.04 of Exhibit
G to the Twelfth Supplemental Indenture, Series M Bonds may also become subject
to redemption, in whole or in part, at any time on at least 30 days' notice, in
the manner, with the effect and for the amounts specified in said Section 1.04,
by the use of moneys deposited with or paid to the Trustee as the proceeds of
the sale or condemnation of property of the Company or as the proceeds of
insurance policies deposited with or paid to the Trustee because of damage to or
destruction of property of the Company.
In the event that all or any part of the bonds of this Series M shall be
redeemed or otherwise discharged prior to their maturity pursuant to or in
accordance with the order of any governmental commission or regulatory authority
upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such Series M Bonds shall be entitled to be
paid therefor an amount specified in Section 1.05 of Exhibit G to the Twelfth
Supplemental Indenture.
The Indenture provides that, if notice of redemption of any bond issued
pursuant to its terms, including the Series M Bonds, or any portion of the
principal amount of any such bond selected for redemption has been duly given,
then such bond or such portion thereof shall become due and payable on the date
fixed for redemption, and, if the redemption price shall have been duly
deposited with the Trustee, interest thereon shall cease to accrue from and
after the date fixed for redemption, and that whenever the redemption price
thereof shall have been duly deposited with the Trustee and notice of redemption
shall have been duly given, or provision therefor made as provided in the
indenture, such bond or such portion thereof shall no longer be entitled to any
lien or benefit of the Indenture.
In case an Event of Default, as defined in the Indenture, occurs, the
principal of this bond may become or may be declared due and payable prior to
the stated maturity hereof in the manner and with the effect and subject to the
conditions provided in the Indenture.
This bond is transferable by the registered owner hereof, in person or by
duly authorized attorney, upon books of the Company to be kept for that purpose
at the corporate trust office of the Trustee under the Indenture, upon surrender
thereof at said office for cancellation and upon presentation of a written
instrument of transfer duly executed, and thereupon the Company shall issue in
the name of the transferee or transferees, and the Trustee shall authenticate
and deliver, a new registered bond or bonds, of like form and in an authorized
denomination or in authorized
G-A-2
denominations and of the same series, for the same aggregate principal amount.
Bonds of this series upon surrender thereof at said office may be exchanged for
the same aggregate principal amount of bonds, also of this series but of another
authorized denomination or other authorized denominations, all upon payment of
the charges, if any, and subject to the terms and conditions specified in the
Indenture.
The Company and the Trustee may treat the registered owner of this bond as
the absolute owner hereof for all purposes.
With the consent of the company and to the extent permitted by and as
provided in the Indenture, property may be released from the lien thereof, and
the terms and provisions of the Indenture may be modified by the assent or
authority of the holders of at least seventy-five per centum (75%) in principal
amount of the bonds then outstanding thereunder, provided, however, that no such
modification shall (i) extend the time or times or payment of the principal of,
or the interest or premium, if any, on any bond, (ii) reduce the principal
amount thereof or the rate of interest or premium thereon, (iii) authorize the
creation of any lien prior or equal to the lien of the Indenture upon any
property subject to the lien thereof, or deprive any bondholder of the benefit
of the lien of the Indenture, (iv) affect the rights under the Indenture of the
holders of one or more, but less than all, of the series of bonds outstanding
thereunder unless assented to by the holders of seventy-five per centum (75%) in
aggregate principal amount of bonds outstanding thereunder of each of the series
so affected, (v) reduce the percentage of bonds, the holders of which are
required to assent to any such modification, or (vi) in any manner affect the
rights or obligations of the Trustee without its written consent thereto.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or of any claim based hereon or in respect hereof or of
the Indenture, against any incorporator, stockholder, officer or director of the
Company, or of any successor company, whether by virtue of any statute or rule
of law or by the enforcement of any assessment or penalty or otherwise, all such
liability being by the acceptance hereof expressly waived and released and being
also waived and released by the terms of the Indenture.
This bond shall not be valid nor become obligatory for any purpose until it
shall have been authenticated by the execution of the certificate hereon
endorsed by the Trustee under the Indenture.
G-A-3
In Witness Whereof, Unitil Energy Systems, Inc. has caused this bond to be
signed in its name by its President or one of its Vice Presidents and its
corporate seal to be hereunto affixed and attested by its Treasurer, and this
bond to be dated the __________, _____.
Unitil Energy Systems, Inc.
By
-----------------------------------------
President
Attest:
---------------------------
Treasurer
(Corporate Seal)
G-A-4
(Form of Trustee's Certificate for all Bonds of Series M)
Trustee's Certificate of Authentication
This is one of the First Mortgage Bonds, Series M, referred to in the
within mentioned Indenture.
U.S. Bank National Association
By
----------------------------------------
Authorized Officer
G-A-5
(Form of Endorsement)
For Value Received the undersigned hereby sells, assigns and transfers unto
_____________________________ the within bond, and all rights thereunder, hereby
irrevocably constituting and appointing ___________________________ attorney to
transfer said bond on the books of the Company, with full power of substitution
in the premises.
-------------------------------------------
Signature of Registered Owner
Dated:
-------------------------
In the presence
of:
----------------------------
Notice: The signature of this assignment must correspond with the name of
the payee as it appears upon the face of the within bond in every particular,
without alteration or enlargement or any change whatever.
G-A-1
Series N Bonds
As a result of the Merger of Exeter into the Company on the Merger Date, as
more fully described in the Twelfth Supplemental Indenture, $7,500,000 aggregate
principal amount of the Exeter Series M, 8.00% Bonds due May 1, 2031("Exeter
Series M Bonds") issued under the Exeter Indenture are exchanged as of Merger
Date by the holders thereof for Bonds issued under the Indenture containing
substantially the same terms and provisions as the Exeter Series M Bonds which
are the Company's Series N 8.00% Bonds due May 1, 2031 (the "Series N Bonds").
Accordingly, the provisions for the issuance of $7,500,000 aggregate principal
amount of the Company's Series N Bonds and the terms and provisions thereof are
hereinafter set forth.
All things have been done and performed which are necessary to make the
Series N Bonds, when authenticated by the Trustee and issued as herein provided,
legal valid and binding obligations of the Company;
And it is Hereby Covenanted, Declared and Agreed, as set forth in the
following-covenants, agreements, conditions and provisions, to wit:
Article One
Creation of Series N Bonds
Section 1.01. There shall be and is hereby created an additional series of
bonds designated as and entitled "First Mortgage Bonds, Series N." Series N
Bonds shall be fully registered bonds, of the denomination of $1,000 and
multiples thereof. The registered bonds of Series N originally issued shall be
dated as provided in Article III of the Indenture and any bonds of Series N
subsequently issued shall be dated as provided in Section 2.03 of the Indenture.
All Series N Bonds shall mature on May 1, 2031 and shall bear interest at the
rate of eight percent (8.00%) per annum from their respective dates of issue,
such interest to be payable quarterly in arrears on the first day of February,
May, August and November each year commencing the first day of February, 2003,
and shall bear interest on any overdue principal (including any overdue
prepayment of principal) and premium, if any, and (to the extent permitted by
applicable law) on any overdue payment of interest, at the rate of 10.00% per
annum. The principal of, premium if any, and interest on bonds of Series N shall
be payable at the corporate trust office in Boston, Massachusetts of U.S. Bank
National Association or at the corporate trust office designated by its
successor as Trustee hereunder, in lawful money of the United States of America
provided that the Company may enter into a written agreement with any registered
Institutional Holder of the bonds of Series N providing that payment of interest
thereon and of the redemption price on any portion of the principal amount
thereof (including premium, if any) which may be redeemed shall be made directly
to such holder or to its nominee, as the case may be, at a duly designated place
of payment within the United States, without surrender or presentation of such
bonds of Series N to the Trustee, provided that (A) there shall have been filed
with the Trustee a copy of such agreement, (B) pursuant to such agreement such
holder shall agree that it will not sell, transfer or
Exhibit H
(to Twelfth Supplemental Indenture)
otherwise dispose of any such bond of Series N in respect of which any such
payment or redemption shall have been made unless, prior to the delivery thereof
by it, either (i) it shall have made a clear and accurate notation of the amount
of principal so redeemed upon such bond to be transferred, or (ii) such bond of
Series N shall have been presented to the Trustee for appropriate notation
thereon of the portion of the principal amount thereof redeemed, or (iii) such
bond or bonds of Series N shall have been surrendered in exchange for a new bond
or bonds of Series N for the unredeemed balance of the principal amount thereof
in accordance with the other terms of the Indenture and (C) in such agreement
such holder shall agree that prior to receiving any final payment of the entire
remaining unpaid principal amount of any Series N bond, the holder thereof shall
be required to deliver such bond to the Trustee. For purposes of this Section
1.01, the term "Institutional Holder" shall mean any insurance company, bank,
savings and loan association, trust company, investment company, charitable
foundation, employee benefit plan (as defined in ERISA) or other institutional
investor or financial institution. The text of the Series N Bonds and the
Trustee's certificate with respect thereto shall be respectively substantially
of the tenor and purport set forth in Schedule A hereto. The Series N Bonds
shall be numbered in such manner or by such method as shall be satisfactory to
the Trustee.
The issue of bonds of Series N hereunder is hereby limited to the
$7,500,000 in aggregate principal amount of Series N Bonds initially issued as
provided in Section 1.07 hereof and to Series N Bonds issued in exchange or
substitution for outstanding Series N Bonds under the provisions of Section
2.08, 2.10, 2.11 and 7.05 of the Indenture and of Section 1.06 hereof.
Section 1.02. As a required sinking fund for the benefit of the Series N
Bonds, the Company covenants that it will, on or prior to May 1 in each year,
beginning with May 1, 2022, and continuing to and including May 1, 2031, pay to
the Trustee immediately available funds sufficient to redeem, at par, Series N
Bonds then outstanding, in the principal amount of Seven Hundred Fifty Thousand
Dollars ($750,000) (or the remaining principal amount if less than $750,000
principal amount of Series N Bonds at the time remains outstanding). The
payments required for the sinking fund as above provided are in this Section
1.02 and elsewhere in this Exhibit H referred to as "required sinking fund
payments" and the day following the latest date on which each such payment is
required to be made is herein and therein referred to as a "required sinking
fund redemption date". Each required sinking fund payment shall be applied to
the redemption of Series N Bonds on the applicable required sinking fund
redemption date.
No redemption under Section 1.03, 1.04 or 1.05 hereof shall affect or
reduce the obligation of the Company to provide for required sinking fund
redemptions under this Section 1.02 until all Series N Bonds shall have been
paid in full.
Section 1.03. In addition to the required sinking fund provided by Section
1.02 hereof, all of the bonds of Series N, or any part of the principal amount
thereof constituting One Hundred Thousand Dollars ($100,000) or any integral
multiple thereof, shall be subject to redemption, at the option of the Company,
on any date on or after May 1, 2001 and before May 1, 2029, pursuant to the
provisions of Article VII of the Indenture, and by payment of an amount equal to
the Make Whole Amount, as defined below in this Section 1.03, determined five
Business Days prior to such redemption. In addition to the foregoing, on any
date on or after May 1, 2029, all of the bonds of Series N, or any part of the
principal amount thereof constituting One Hundred
H-2
Thousand Dollars ($100,000) or any integral multiple thereof, shall be subject
to redemption, at the option of the Company, by payment of the interest accrued
on the principal amount of the bond or bonds optionally to be redeemed to the
dates fixed for such redemption plus 100% of the principal amount thereof.
For purposes of this Section 1.03, the Make Whole Amount shall mean the
greater of (i) the outstanding principal amount of the bonds to be redeemed,
plus interest accrued thereon to the date fixed for such redemption, and (ii)
the sum of (A) the aggregate present value as of the date of such redemption of
each dollar of principal being redeemed (taking into account each redemption
required by Section 1.02 above) and the amount of interest (exclusive of
interest accrued to the date fixed for such redemption) that would have been
payable in respect of each such dollar if such redemption had not been made,
determined by discounting such amounts at the Reinvestment Rate (as hereinafter
defined) from the respective dates on which they would have been payable to the
date of such redemption, plus (B) interest accrued on the bonds to be redeemed
to the date fixed for such redemption.
For purposes of any determination of the Make Whole Amount:
"Reinvestment Rate" shall mean (1) the sum of 0.50%, plus the
yield reported on page "USD" of the Bloomberg Financial Markets
Services Screen (or, if not available, any other nationally recognized
trading screen reporting on-line intraday trading in the United States
government Securities) at 11:00 A.M. (Eastern time) on the fifth
Business Day preceding the date the Make Whole Amount become due and
payable pursuant to the foregoing provisions of this Section 1.03 for
the United States government Securities having a maturity (rounded to
the nearest month) corresponding to the remaining Weighted Average
Life to Maturity of the principal of the bonds being redeemed (taking
into account the application of each redemption required by Section
1.02) or (2) in the event that no nationally recognized trading screen
reporting on-line intraday trading in the United States government
Securities is available, Reinvestment Rate shall mean the sum of
0.50%, plus the arithmetic mean of the yields for the two columns
under the heading "Week Ending" published on the fifth Business Day
preceding the date the Make Whole Amount become due and payable
pursuant to the foregoing provisions of this Section 1.03 in the
Statistical Release under the caption "Treasury Constant Maturities"
for the maturity (rounded to the nearest month) corresponding to the
Weighted Average Life to Maturity of the principal amount of the bonds
being redeemed (taking into account each redemption required by
Section 1.02). If no maturity exactly corresponds to such Weighted
Average Life to Maturity, yields for the two published maturities most
closely corresponding to such Weighted Average Life to Maturity shall
be calculated pursuant to the immediately preceding sentence, and the
Reinvestment Rate shall be interpolated or extrapolated from such
yields on a straightline basis, rounding in each of such relevant
periods to the nearest month. For the purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior
to the date of determination of the Make Whole Amount shall be used.
"Statistical Release" shall mean the then most recently published
statistical release designated "H.15(519)" or any successor
publication which is published weekly
H-3
by the Federal Reserve System and which establishes yields on actively
traded U.S. Government Securities adjusted to constant maturities or,
if such statistical release is not published at the time of any
determination hereunder, then such other reasonably comparable index
which shall be designated by the holders of 66-2/3% in aggregate
principal amount of outstanding Series N Bonds.
"Weighted Average Life to Maturity" of the principal amount of
the bonds being redeemed shall mean, as of the time of any
determination thereof, the number of years obtained by dividing the
then Remaining Dollar-Years of such principal by the aggregate amount
of such principal. The term "Remaining Dollar-Years" of such principal
shall mean the amount obtained by (i) multiplying (x) the remainder of
(1) the amount of principal that would have been payable on each
scheduled redemption date under Section 1.02 hereof if the redemption
pursuant to this Section 1.03 had not been made, less (2) the amount
of principal on the bonds scheduled to become payable on each such
redemption date under Section 1.02 after giving effect to the
redemption pursuant to this Section 1.03, by (y) the number of years
(calculated to the nearest one-twelfth) which will elapse between the
date of determination and each such scheduled redemption date under
Section 1.02, and (ii) totaling the products obtained in (i).
Section 1.04. Series N Bonds may be redeemed pursuant to Article XI of the
Indenture (i) out of Trust Moneys, required by Section 8.12 of the Indenture to
be deposited with the Trustee, on any date and shall be redeemed for an amount
equal to the principal amount of the bonds to be redeemed, plus interest accrued
to the date of redemption; or (ii) out of Trust Moneys required by Sections
8.10, 10.03, 10.04 or 10.04A of the Indenture to be deposited with the Trustee,
on any date and, if redeemed prior to May 1, 2029, then they shall be redeemed
for an amount equal to the Make Whole Amount, as defined above in Section 1.03,
and if redeemed on any date on or after May 1, 2029, then they shall be redeemed
for an amount equal to the interest accrued on the principal amount of the bond
or bonds to be redeemed to the date fixed for redemption, plus 100% of the
principal amount thereof, for optional redemptions occurring on or after May 1,
2029.
Section 1.05. In the event that all or any part of the bonds of Series N
shall be redeemed or otherwise discharged prior to their maturity pursuant to or
in accordance with the order of any governmental commission or regulatory
authority upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such bonds of Series N shall be entitled to
be paid an amount equal to the Make Whole Amount, if such redemption or
discharge occurs prior to May 1, 2029, or, if such redemption or discharge
occurs on or after May 1, 2029, then the registered owners of such bonds shall
be entitled to be paid an amount equal to the interest accrued on the principal
amount of the bonds to be redeemed to the date of redemption, plus 100% of the
principal amount thereof.
Section 1.06. Bonds of Series N, upon surrender thereof at the principal
office of the Trustee, may be exchanged for the same aggregate principal amount
of other bonds of this Series.
Within a reasonable time after the receipt of a request for such an
exchange, the Company shall issue and the Trustee shall authenticate and deliver
all bonds required in connection
H-4
therewith, and the Trustee shall make such exchange upon payment to it of such
charge, if any, as is required by the following paragraph.
For any exchange of bonds of Series N, the Company, at its option, may
require the payment of a sum sufficient to reimburse it for any stamp or other
tax or governmental charge required to be paid by the Company or the Trustee.
Section 1.07. Upon execution of this Twelfth Supplemental Indenture and
subject to the provisions of Article III of the Indenture and upon compliance
with the applicable provisions of Article IV of the Indenture, the Company shall
execute and deliver to the Trustee, and the Trustee shall authenticate and
deliver to or upon the order of the Company, bonds of the Series N in the form
set forth in Schedule A hereto in the aggregate principal amount of Seven
Million Five Hundred Thousand Dollars ($7,500,000).
Article Two
Redemption
Section 2.01. In the case of any required sinking fund redemption pursuant
to Section 1.02 hereof, forthwith after the April 1 preceding each required
sinking fund redemption date, and in the case of any proposed redemption
pursuant to Sections 1.03 or 1.04, forthwith after the Trustee's receipt of
proper notice from the Company of any such proposed redemption, the Trustee,
shall act in accordance with the provisions of Article VII of the Indenture.
The Company covenants that it will pay to the Trustee
(i) on or before the day prior to each required sinking fund
redemption date, the sum required by Section 1.02 hereof,
(ii) on or before the day prior to the date proposed by the
Company in a notice (which notice shall conform to the requirements of
Article VII of the Indenture) of any redemption pursuant to Section
1.03 or 1.04 hereof, the amount payable in accordance with such
notice, and
(iii) at the time of each required sinking fund redemption or
other redemption the Company shall pay to the Trustee the amount of
the charges which shall be due the Trustee and the amount of the
expenses which the Trustee advises the Company it has incurred or will
incur in connection with such redemption.
H-5
(Form of Series N Bond)
Unitil Energy Systems, Inc.
First Mortgage Bond, Series N, 8.00%
due May 1, 2031
No. NR- $_______________
Unitil Energy Systems, Inc., a corporation organized under the laws of the
State of New Hampshire (hereinafter called the "Company"), for value received,
hereby promises to pay to ________ or registered assigns, on the first day of
May, 2031, the principal sum of ___________ Dollars ($_______________) and to
pay interest thereon from the date hereof at the rate of eight per centum
(8.00%) per annum (computed on the basis of a thirty (30) day month and three
hundred sixty (360) day year) payable quarterly in arrears on the first day of
February, May, August and November each year, commencing the first day of
February, 2003, until said principal sum is paid; and to pay interest on any
overdue principal (including any overdue prepayment of principal) and premium if
any, and (to the extent permitted by applicable law) on any overdue payment of
interest, at the rate of 10.00% per annum. The principal of and premium if any,
and the interest on this bond shall be payable at the corporate trust office in
Boston, Massachusetts of U.S. Bank National Association, or at the corporate
trust office designated by its successor as trustee in the trust hereinafter
referred to, or at the option of certain holders, in accordance with the
provisions of Section 1.01 of Exhibit H of the Twelfth Indenture hereinafter
referred to, in lawful money of the United States of America.
This bond is one of a duly authorized issue of First Mortgage Bonds of the
Company limited as to aggregate principal amount as set forth in the Indenture
hereinafter mentioned, issuable in series, and is one of a Series N known as
First Mortgage Bonds, Series N, all bonds of all series being issued and to be
issued under and pursuant to and all equally secured (except as any sinking or
other fund, established in accordance with the provisions of the Indenture
hereinafter mentioned, may afford additional security for the bonds of any
particular series) by an Indenture of Mortgage and Deed of Trust dated as of
July 15, 1958 (herein called the "Original Indenture") duly executed and
delivered by the Company to Old Colony Trust Company (U.S. Bank National
Association being successor Trustee and together with each predecessor trustee
being called the "Trustee"), to which Original Indenture and to all Indentures
supplemental thereto, including a Twelfth Supplemental Indenture (the "Twelfth
Supplemental Indenture") dated as of December 2, 2002 (herein together called
the "Indenture") reference is hereby made for a description of the property and
transferred, assigned and mortgaged thereunder, the nature and extent of the
security, the terms and conditions upon which the bonds are secured and
additional bonds may be issued and secured, and the rights of the holders or
registered owners of said bonds, of the Trustee and of the Company in respect of
such security. Neither the foregoing reference to the Indenture, nor any
provision of this bond or of the Indenture, shall affect or impair the
obligation of the Company, which is absolute, unconditional and unalterable, to
pay,
Schedule A
(to Exhibit H of the Twelfth Supplemental Indenture)
at the stated or accelerated maturities herein provided, the principal of and
premium, if any, and interest on this bond as herein provided.
Bonds of this Series N are entitled to the benefit of a required sinking
fund provided for in Exhibit H to the Twelfth Supplemental Indenture and shall
become subject to redemption for the purposes of such sinking fund at the
principal amount thereof without premium, plus interest accrued thereon to the
date of such redemption, all on the conditions and in the manner provided in
Exhibit H to the Twelfth Supplemental Indenture.
Bonds of this Series N are also redeemable, in whole or in part, in
integral multiples of one hundred thousand dollars, at the option of the Company
on any date on at least 30 days' notice, in the manner, with the effect, subject
to the limitations and for the amounts specified in Section 1.03 of Exhibit H to
the Twelfth Supplemental Indenture.
On the conditions and in the manner provided in the Section 1.04 of Exhibit
H to the Twelfth Supplemental Indenture, Series N bonds may also become subject
to redemption, in whole or in part, at any time on at least 30 days' notice, in
the manner, with the effect and for the amounts specified in said Section 1.04,
by the use of moneys deposited with or paid to the Trustee as the proceeds of
the sale or condemnation of property of the Company or as the proceeds of
insurance policies deposited with or paid to the Trustee because of damage to or
destruction of property of the Company.
In the event that all or any part of the bonds of this Series N shall be
redeemed or otherwise discharged prior to their maturity pursuant to or in
accordance with the order of any governmental commission or regulatory authority
upon the reorganization, dissolution or liquidation of the Company, or
otherwise, the registered owners of such Series N bonds shall be entitled to be
paid therefor an amount specified in Section 1.05 of Exhibit H to the Twelfth
Supplemental Indenture.
The Indenture provides that, if notice of redemption of any bond issued
pursuant to its terms, including the Series N bonds, or any portion of the
principal amount of any such bond selected for redemption has been duly given,
then such bond or such portion thereof shall become due and payable on the date
fixed for redemption, and, if the redemption price shall have been duly
deposited with the Trustee, interest thereon shall cease to accrue from and
after the date fixed for redemption, and that whenever the redemption price
thereof shall have been duly deposited with the Trustee and notice of redemption
shall have been duly given, or provision therefor made as provided in the
indenture, such bond or such portion thereof shall no longer be entitled to any
lien or benefit of the Indenture.
In case an Event of Default, as defined in the Indenture, occurs, the
principal of this bond may become or may be declared due and payable prior to
the stated maturity hereof in the manner and with the effect and subject to the
conditions provided in the Indenture.
This bond is transferable by the registered owner hereof, in person or by
duly authorized attorney, upon books of the Company to be kept for that purpose
at the corporate trust office of the Trustee under the Indenture, upon surrender
thereof at said office for cancellation and upon
H-A-2
presentation of a written instrument of transfer duly executed, and thereupon
the Company shall issue in the name of the transferee or transferees, and the
Trustee shall authenticate and deliver, a new registered bond or bonds, of like
form and in an authorized denomination or in authorized denominations and of the
same series, for the same aggregate principal amount. Bonds of this series upon
surrender thereof at said office may be exchanged for the same aggregate
principal amount of bonds, also of this series but of another authorized
denomination or other authorized denominations, all upon payment of the charges,
if any, and subject to the terms and conditions specified in the Indenture.
The Company and the Trustee may treat the registered owner of this bond as
the absolute owner hereof for all purposes.
With the consent of the company and to the extent permitted by and as
provided in the Indenture, property may be released from the lien thereof, and
the terms and provisions of the Indenture may be modified by the assent or
authority of the holders of at least seventy-five per centum (75%) in principal
amount of the bonds then outstanding thereunder, provided, however, that no such
modification shall (i) extend the time or times or payment of the principal of,
or the interest or premium, if any, on any bond, (ii) reduce the principal
amount thereof or the rate of interest or premium thereon, (iii) authorize the
creation of any lien prior or equal to the lien of the Indenture upon any
property subject to the lien thereof, or deprive any bondholder of the benefit
of the lien of the Indenture, (iv) affect the rights under the Indenture of the
holders of one or more, but less than all, of the series of bonds outstanding
thereunder unless assented to by the holders of seventy-five per centum (75%) in
aggregate principal amount of bonds outstanding thereunder of each of the series
so affected, (v) reduce the percentage of bonds, the holders of which are
required to assent to any such modification, or (vi) in any manner affect the
rights or obligations of the Trustee without its written consent thereto.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or of any claim based hereon or in respect hereof or of
the Indenture, against any incorporator, stockholder, officer or director of the
Company, or of any successor company, whether by virtue of any statute or rule
of law or by the enforcement of any assessment or penalty or otherwise, all such
liability being by the acceptance hereof expressly waived and released and being
also waived and released by the terms of the Indenture.
This bond shall not be valid nor become obligatory for any purpose until it
shall have been authenticated by the execution of the certificate hereon
endorsed by the Trustee under the Indenture.
H-A-3
In Witness Whereof, Unitil Energy Systems, Inc. has caused this bond to be
signed in its name by its President or one of its Vice Presidents and its
corporate seal to be hereunto affixed and attested by its Treasurer, and this
bond to be dated the ____ day of ________________, _____.
Unitil Energy Systems, Inc.
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Attest:
---------------------------
Treasurer
(Corporate Seal)
H-A-4
(Form of Trustee's Certificate for all Bonds of Series N)
Trustee's Certificate of Authentication
This is one of the First Mortgage Bonds, Series N, referred to in the
within mentioned Indenture.
U.S. Bank National Association
By:
----------------------------------------
Authorized Officer
(Form of Endorsement)
For Value Received the undersigned hereby sells, assigns and transfers unto
_____________________________ the within bond, and all rights thereunder, hereby
irrevocably constituting and appointing ___________________________ attorney to
transfer said bond on the books of the Company, with full power of substitution
in the premises.
-------------------------------------------
Signature of Registered Owner
Dated:
-------------------------
In the presence
of:
----------------------------
Notice: The signature of this assignment must correspond with the name of
the payee as it appears upon the face of the within bond in every particular,
without alteration or enlargement or any change whatever.
Unitil Corporation
2003 Restricted Stock Plan
-----------------------------------------------
Article 1: Establishment, Objectives, and Duration
1.1 Establishment of the Plan. Unitil Corporation, a corporation organized and
existing under New Hampshire law (the "Company"), established the Unitil
Corporation 2003 Restricted Stock Plan (the "Plan") effective January 1, 2003
(the "Effective Date"). The Plan shall remain in effect as provided in Section
1.3 hereof.
1.2 Objectives of the Plan. The objectives of the Plan are to optimize the
profitability and growth of the Company through incentives which are consistent
with the Company's goals and which link the personal interests of Participants
to those of the Company's shareholders; to provide Participants with an
incentive for excellence in individual performance; and to promote teamwork
among Participants.
1.3 Duration of the Plan. The Plan shall remain in effect, subject to the right
of the Board to amend or terminate the Plan at any time pursuant to Article 13
hereof, until all Shares subject to it shall have been purchased or acquired
according to the Plan's provisions.
Article 2: Definitions
Whenever used in the Plan, the following terms shall have the meanings set forth
below, and, when the meaning is intended, the initial letter of the word shall
be capitalized:
2.1 "Affiliate" means any parent or subsidiary of the Company which meets the
requirements of Section 425 of the Code.
2.2 "Award" means, individually or collectively, an award under this Plan of
Restricted Stock.
2.3 "Award Agreement" means an agreement entered into by the Company and each
Participant setting forth the terms and provisions applicable to Awards made
under the Plan.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Change in Control" means the satisfaction of any one or more of the
following conditions (and the "Change in Control" shall be deemed to have
occurred as of the first day that any one or more of the following conditions
shall have been satisfied):
a) the Company receives a report on Schedule 13D filed with the Securities
and Exchange Commission pursuant to Rule 13(d) of the Exchange Act, disclosing
that any person, group, corporation or other entity is the beneficial owner,
directly or indirectly, of 25% or more of the outstanding Shares;
b) any "person" (as such term is used in Section 13(d) of the Exchange
Act), group, corporation or other entity other than the Company or a
wholly-owned subsidiary of the Company, purchases Shares pursuant to a tender
offer or exchange offer to acquire any Shares (or securities convertible into
Shares) for cash, securities or any other consideration, provided that after
consummation of the offer, the person, group, corporation or other entity in
question is the "beneficial owner" (as such term is defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 25% or more of the outstanding
Shares (calculated as provided in paragraph (d) of Rule 13d-3 under the Exchange
Act in the case of rights to acquire Shares);
c) consummation of a transaction which involves (1) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation, or pursuant to which Shares of the Company would be converted into
cash, securities or other property (except where the Company's shareholders
before such transaction will be the owners of more than 75% of all classes of
voting securities of the surviving entity); or (2) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of the Company.
d) there shall have been a change in a majority of the members of the Board
within a 25-month period, unless the election or nomination for election by the
Company's shareholders of each new director was approved by the vote of at least
two-thirds of the directors then still in office who were in office at the
beginning of the 25-month period.
2.6 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.7 "Committee" means the Compensation Committee of the Board, as specified in
Article 3 herein, or such other Committee appointed by the Board to administer
the Plan with respect to grants of Awards.
2.8 "Company" means Unitil Corporation, a corporation organized and existing
under New Hampshire law, and any successor thereto as provided in Article 16
herein.
2.9 "Consultant" means an independent contractor who is performing consulting
services for one or more entities in the Group and who is not an employee of any
entity in the Group.
2.10 "Director" means a member of the Board or a member of the board of
directors of an Affiliate.
2.11 "Disability" shall have the meaning ascribed to such term in the long-term
disability plan maintained by the Company, or if no such plan exists, at the
discretion of the Committee.
2.12 "Effective Date" shall have the meaning ascribed to such term in Section
1.1 hereof.
2.13 "Employee" means any employee of the Group, including any employees who are
also Directors.
2.14 "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.
2.15 "Fair Market Value" means as of any date, the closing price based upon
composite transactions on a national stock exchange for one Share or, if no
sales of Shares have taken place on such date, the closing price on the most
recent date on which selling prices were quoted. In the event the Company's
Shares are no longer traded on a national stock exchange, Fair Market Value
shall be determined in good faith by the Committee.
2.16 "Group" means the Company and its Affiliates.
2.17 "Named Executive Officer" means a Participant who, as of the date of
vesting of an Award, is one of the group of "covered employees," as defined in
the regulations promulgated under Code Section 162(m), or any successor section.
2.18 "Nonemployee Director" shall have the meaning ascribed to such term in Rule
16b-3 of the Exchange Act.
2.19 "Outside Director" shall have the meaning ascribed to such term under the
regulations promulgated with respect to Code Section 162(m).
2.20 "Participant" means a current or former Employee, Director, or Consultant
who has outstanding an Award granted under the Plan.
2.21 "Performance-Based Exception" means the performance-based exception from
the tax deductibility limitations of Code Section 162(m).
2.22 "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of time,
the achievement of performance goals, or upon the occurrence of other events as
determined by the Committee, at its discretion), and the Shares are subject to a
substantial risk of forfeiture, as provided in Article 6 herein.
2.23 "Restricted Stock" or "Restricted Share" means an Award granted to a
Participant pursuant to Article 6 herein.
2.24 "Shares" means the shares of common stock (no par value) of the Company.
2.25 "Termination of Service" means, (i) if an Employee, termination of
employment with all entities in the Group, (ii) if a Director, termination of
service on the Board and the board of directors of any Affiliate, as applicable,
and (iii) if a Consultant, termination of the consulting relationship with all
entities in the Group; provided, however, that if a Participant serves the Group
in more than one of the above capacities, Termination of Service shall mean
termination of service in all such capacities.
Article 3: Administration
3.1 The Committee. The Plan shall be administered by the Committee. To the
extent the Company deems it to be necessary or desirable with respect to any
Awards made hereunder, the members of the Committee may be limited to
Nonemployee Directors or Outside Directors, who shall be appointed from time to
time by, and shall serve at the discretion of, the Board.
3.2 Authority of the Committee. Except as limited by law or by the Articles of
Incorporation or the By-laws of the Company, and subject to the provisions
herein, the Committee shall have full power to select the persons who shall
participate in the Plan; determine the sizes of Awards; determine the terms and
conditions of Awards in a manner consistent with the Plan; construe and
interpret the Plan and any agreement or instrument entered into under the Plan
as they apply to Participants; establish, amend, or waive rules and regulations
for the Plan's administration as they apply to Participants; and (subject to the
provisions of Article 13 herein) amend the terms and conditions of any
outstanding Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan. Further, the Committee
shall make all other determinations which may be necessary or advisable for the
administration of the Plan. As permitted by law, the Committee may delegate its
authority as identified herein.
3.3 Decisions Binding. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders and resolutions of
the Board shall be final, conclusive and binding on all persons, including the
Company, its shareholders, Affiliates, Participants, and their estates and
beneficiaries.
Article 4: Shares Subject to the Plan and Maximum Awards
4.1 Number of Shares Available for Grants.
a) Subject to adjustment as provided in Section 4.2, the maximum number of
Shares available for Awards to Participants under the Plan shall be 177,500. If
any Award under the Plan expires before vesting or is forfeited, the Shares
subject to such Award shall again be available for issuance under the Plan.
b) The maximum aggregate number of Shares of Restricted Stock that may be
granted in any one calendar year to any one Participant shall be 20,000, subject
to adjustment in accordance with Section 4.2.
4.2 Adjustments in Authorized Shares. In the event of any change in corporate
capitalization affecting the Shares, including, without limitation, a stock
split, reverse stock split, stock dividend or other distribution,
recapitalization, consolidation, subdivision, split-up, spin-off, split-off,
combination or other exchange of Shares or other form of reorganization or
recapitalization, partial or complete liquidation, or other change affecting the
Shares, the Committee shall authorize and make such proportionate adjustments,
if any, as the Committee shall deem appropriate to prevent dilution or
enlargement of rights, including, without limitation,
an adjustment in the maximum number and kind of Shares that may be delivered
pursuant to Section 4.1 and in the Award limit set forth in Section 4.1(b);
provided, however, that the number of Shares subject to any Award shall always
be rounded to the nearest whole number, with one-half (1/2) of a share rounded
up to the next higher number.
Article 5: Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan include all
Employees, Directors and Consultants of the Group.
5.2 Actual Participation. Subject to the provisions of the Plan, the Committee
may, from time to time, select from all eligible Employees, Directors and
Consultants those to whom Awards shall be made and shall determine the nature
and amount of each Award.
Article 6: Restricted Stock
6.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan,
the Committee, at any time and from time to time, may grant Shares of Restricted
Stock to Participants in such amounts as the Committee shall determine.
6.2 Restricted Stock Agreement. Each Restricted Stock grant shall be evidenced
by an Award Agreement that shall specify the Period(s) of Restriction, the
number of Shares of Restricted Stock granted, and such other provisions as the
Committee shall determine.
6.3 Transferability. Except as provided in this Article 6, the Shares of
Restricted Stock granted herein may not be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated until the end of the applicable Period of
Restriction established by the Committee and specified in the Award Agreement.
6.4 Restrictions.
a) Subject to the terms hereof, the Committee shall impose such conditions
and/or restrictions on any Shares of Restricted Stock granted pursuant to the
Plan as it may deem advisable and as are expressly set forth in the Award
Agreement including, without limitation, a requirement that Participants pay a
stipulated purchase price for each Share of Restricted Stock, restrictions based
upon the achievement of specific performance goals (Company-wide, divisional,
and/or individual), time-based restrictions, and/or restrictions under
applicable federal or state securities laws.
b) The Company shall retain the certificates representing Shares of
Restricted Stock in the Company's possession until such time as all conditions
and/or restrictions applicable to such Shares have been satisfied. The
Participant shall execute appropriate stock powers in blank and such other
documents as the Committee shall prescribe.
c) Subject to restrictions under applicable law or as may be imposed by the
Company, Restricted Shares covered by each Award made under the Plan shall
become freely transferable by the Participant after the last day of the
applicable Period of Restriction.
6.5 Voting Rights. During the Period of Restriction, subject to any limitations
imposed under the By-laws of the Company, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting rights with respect
to those Shares.
6.6 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder may be
credited with regular dividends paid with respect to the underlying Shares while
they are so held. The Committee may apply any restrictions to the dividends that
the Committee deems appropriate and as are expressly set forth in the Award
Agreement. Without limiting the generality of the preceding sentence, if the
grant or vesting of Restricted Shares granted to a Named Executive Officer is
designed to comply with the requirements of the Performance-Based Exception, the
Committee may apply any restrictions it deems appropriate to the payment of
dividends declared with respect to such Restricted Shares, such that the
dividends and/or the Restricted Shares maintain eligibility for the
Performance-Based Exception.
Article 7: Termination of Service
Each Award Agreement shall set forth the effect that Termination of Service
shall have upon that Award. Such provisions shall be determined in the sole
discretion of the Committee, need not be uniform among all Awards issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
Termination of Service; provided, however, that the following shall
automatically apply to the extent different provisions are not expressly set
forth in a Participant's Award Agreement:
a) Upon a Termination of Service for any reason other than death,
retirement or Disability, all unvested Restricted Shares shall be forfeited as
of the termination date.
b) Upon a Termination of Service as a result of the Participant's death,
retirement or Disability, all unvested Restricted Shares shall vest as of the
termination date.
Article 8: Restrictions on Shares
All Shares issued pursuant to Awards granted hereunder, and a Participant's
right to receive Shares upon vesting of an Award, shall be subject to all
applicable restrictions contained in the Company's By-laws, shareholders
agreement or insider trading policy, and any other restrictions imposed by the
Committee, including, without limitation, restrictions under applicable
securities laws, under the requirements of any stock exchange or market upon
which such Shares are then listed and/or traded, and restrictions under any blue
sky or state securities laws applicable to such Shares.
Article 9: Performance Measures
If an Award is subject to Code Section 162(m) and the Committee determines that
such Award should be designed to comply with the Performance-Based Exception,
the performance measure(s), the attainment of which determine the degree of
vesting, to be used for purposes of such Awards shall be chosen from among
earnings per share, economic value added, market share (actual or targeted
growth), net income (before or after taxes), operating income, return on assets
(actual or targeted growth), return on capital (actual or targeted growth),
return on equity (actual or targeted growth), return on investment (actual or
targeted growth), gross or net underwriting results, revenue (actual or targeted
growth), share price, stock price growth, total shareholder return, or such
other performance measures as are duly approved by the Committee and the
Company's shareholders.
Article 10: Beneficiary Designation
Subject to the terms and conditions of the Plan and the applicable Award
Agreement, each Participant may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom Shares
under the Plan are to be transferred in the event of the Participant's death.
Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company, and will be effective
only when filed by the Participant in writing during the Participant's lifetime
with the party chosen by the Company, from time to time, to administer the Plan.
In the absence of any such designation, Shares shall be paid to the
Participant's estate following his death.
Article 11: Rights of Participants
11.1 Continued Service. Nothing in the Plan shall:
a) interfere with or limit in any way the right of the Company to terminate
any Participant's employment, service as a Director, or service as a consultant
with the Group at any time, or
b) confer upon any Participant any right to continue in the service of any
member of the Group as an Employee, Director or Consultant.
11.2 Participation. Participation is determined by the Committee. No person
shall have the right to be selected to receive an Award under the Plan, or,
having been so selected, to be selected to receive a future Award.
Article 12: Change in Control
Upon the occurrence of a Change in Control, unless otherwise specifically
prohibited under applicable laws, or by the rules and regulations of any
governing governmental agencies or national securities exchanges, any
restrictions and transfer limitations imposed on Restricted Shares shall
immediately lapse
Article 13: Amendment or Termination
The Board may at any time and from time to time amend or terminate the Plan or
any Award hereunder in whole or in part; provided, however, that no amendment
which requires shareholder approval in order for the Plan to continue to comply
with any applicable tax or securities laws or regulations, or the rules of any
securities exchange on which the securities of the Company are listed, shall be
effective unless such amendment shall be approved by the requisite vote of
shareholders of the Company entitled to vote thereon; provided further that no
such amendment or termination shall adversely affect any Award hereunder without
the consent of the Participant.
Article 14: Withholding
14.1 Tax Withholding. The Company shall have the right to deduct or withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy
any taxes required by federal, state, or local law or regulation to be withheld
with respect to any taxable event arising in connection with an Award.
14.2 Share Withholding. Participants may elect, subject to the approval of the
Committee, to satisfy all or part of such withholding requirement by having the
Company withhold Shares having a Fair Market Value equal to the minimum
statutory total tax which could be imposed on the transaction. All such
elections shall be irrevocable, made in writing, signed by the Participant, and
shall be subject to any restrictions or limitations that the Committee, in its
sole discretion, deems appropriate.
Article 15: Indemnification
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company to the fullest
extent permitted by applicable law against and from any loss, cost, liability,
or expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him or her in settlement thereof, with the Company's
approval, or paid by him or her in satisfaction of any judgment in any such
action, suit, or proceeding against him or her, provided he or she shall give
the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf.
The foregoing right of indemnification is subject to the person having been
successful in the legal proceedings or having acted in good faith and what is
reasonably believed to be a lawful manner in the Company's best interests. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
Article 16: Successors
All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
Article 17: Legal Construction
17.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
17.2 Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
17.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to, and may be made contingent upon satisfaction
of, all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
17.4 Governing Law. To the extent not preempted by federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and governed by
the laws of the state of New Hampshire.
IN WITNESS WHEREOF, this Plan has been executed as of the date first
written above.
UNITIL CORPORATION
s/Mark H. Collin/
By: Mark H. Collin
Its: Treasurer
PORTFOLIO SALE AND ASSIGNMENT
AND
TRANSITION SERVICE AND DEFAULT SERVICE
SUPPLY AGREEMENT
BY AND AMONG
UNITIL POWER CORP., UNITIL ENERGY SYSTEMS, INC.
AND
MIRANT AMERICAS ENERGY MARKETING, LP
FEBRUARY 25, 2003
TABLE OF CONTENTS
Page
ARTICLE 1: DEFINITIONS.......................................................2
ARTICLE 2: SALE OF PORTFOLIO.................................................2
ARTICLE 3: TRANSITION AND DEFAULT SERVICE SUPPLY.............................2
ARTICLE 4: CONDITIONS........................................................2
ARTICLE 5: EFFECTIVE DATE AND TERM...........................................5
ARTICLE 6: REPRESENTATIONS AND WARRANTIES....................................6
ARTICLE 7: SECURITY..........................................................8
ARTICLE 8: EVENTS OF DEFAULT.................................................9
ARTICLE 9: INDEMNIFICATION..................................................12
ARTICLE 10: DISPUTE RESOLUTION: ARBITRATION..................................14
ARTICLE 11: MISCELLANEOUS....................................................16
Exhibit A Portfolio Sale and Assignment
Exhibit B Transition and Default Service Supply
Exhibit C Definitions
Exhibit D Guaranty
Exhibit E Governmental Approvals
Exhibit F Exceptions to UPC Representations
Exhibit G Power Supply Agreements
Exhibit H Form of Mirant Legal Opinion
Exhibit I Form of UPC and UES Legal Opinion
PORTFOLIO SALE AND ASSIGNMENT AND TRANSITION SERVICE AND
DEFAULT SERVICE SUPPLY AGREEMENT
This PORTFOLIO SALE AND ASSIGNMENT AND TRANSITION SERVICE AND DEFAULT
SERVICE SUPPLY AGREEMENT (this "Agreement") is entered into as of the 25th day
of February, 2003, by and among UNITIL POWER CORP., a New Hampshire corporation
("UPC"), UNITIL ENERGY SYSTEMS, INC., a New Hampshire corporation ("UES") and
MIRANT AMERICAS ENERGY MARKETING, LP, a Delaware limited partnership ("Mirant").
UPC, UES and Mirant are also referred to individually as a "Party" or
collectively as the "Parties".
WHEREAS, UPC is a party to certain power supply agreements, pursuant to
which UPC has an entitlement to approximately 118 MW of capacity and associated
energy (the "Portfolio"); and
WHEREAS, UES is seeking wholesale power supplies for its Transition Service
and Default Service obligations to its Large Customer Group and Small Customer
Group (as such capitalized terms are defined herein) and to that end has
solicited requests for proposal for the provision by third parties of such power
supplies; and
WHEREAS, UES and UPC are wholly-owned subsidiaries of Unitil Corporation, a
New Hampshire corporation; and
WHEREAS, UPC and UES are parties to a System Agreement dated as of October
1, 1986 (the "System Agreement") pursuant to which UPC currently acts as
wholesale power supplier to UES; and
WHEREAS, UPC and UES have proposed to amend and restate the System
Agreement in connection with the restructuring of UES's New Hampshire retail
electric operations, in accordance with orders and approvals of the NHPUC (as
defined herein), as a result of which UPC will cease to act as the wholesale
supplier to UES; and
WHEREAS, in connection with the amendment and restatement of the System
Agreement, UPC desires to divest itself of its Portfolio and to that end has
conducted an auction of such Portfolio; and
WHEREAS, the solicitation of requests for proposal by UES and the auction
of the Portfolio by UPC have been conducted simultaneously; and
WHEREAS, Mirant wishes to acquire the Portfolio and UPC wishes to the
maximum extent possible to assign the Portfolio to Mirant, and to the extent any
power supply agreement comprising part of the Portfolio is not assignable to
Mirant, UPC wishes to sell its entitlement to capacity and associated energy
thereunder and authorize Mirant to administer such power supply agreement on the
terms and conditions set forth herein; and
WHEREAS, Mirant wishes to supply Transition Service Power and Default
Service Power to UES to enable UES to meet the needs of its Small Customer Group
and Large Customer Group retail distribution service customers who are taking
Transition Service and Default Service, and UES desires to acquire such supply
from Mirant, on the terms and conditions set forth herein; and
WHEREAS, the Parties agree and acknowledge that the sale of the Portfolio
by UPC to Mirant and the supply of Transition Service Power and Default Service
Power for the Large Customer Group and Small Customer Group by Mirant to UES are
transactions that are mutually dependant upon one another, so that the failure
of a condition precedent to the consummation of any one such transaction, or the
early termination of any one such transaction due to a default by a Party of its
obligations hereunder with respect thereto, shall cause the failure of a
condition with respect to, or a termination of, as the case may be, all such
other transactions.
NOW, THEREFORE, for and in consideration of the foregoing, the covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE 1
DEFINITIONS
All capitalized terms used and not otherwise defined in the body of this
Agreement or in the body of Exhibits A and B hereto, shall have the meanings
given such terms in Exhibit C hereto.
ARTICLE 2
SALE OF PORTFOLIO
UPC hereby agrees to sell and assign to Mirant, and Mirant agrees to
purchase and take assignment from UPC of, the Assigned Agreements and
Entitlements, on the terms and conditions set forth in Exhibit A hereto.
ARTICLE 3
TRANSITION AND DEFAULT SERVICE SUPPLY
Mirant hereby agrees to sell and deliver to UES, and UES hereby agrees to
buy and receive from Mirant, the Transition Service Power and Default Service
Power provided for in, and on the terms and conditions set forth in Exhibit B
hereto.
ARTICLE 4
CONDITIONS
Section 4.1. Conditions to Obligations of UPC and UES.
The obligations of UPC and UES under this Agreement are subject to the
fulfillment and satisfaction of each of the following conditions on or before
the Effective
2
Date, any one or more of which may be waived only in writing, in whole or in
part, by UPC and UES:
(a) Representations, Warranties and Covenants True at the Effective Date.
(i) All representations and warranties of Mirant contained in this Agreement
shall be true and correct in all material respects as of the date when made and
at and as of the Effective Date as though such representations and warranties
had been made or given on such date (except to the extent such representations
and warranties specifically pertain to an earlier date), except (A) for changes
contemplated by this Agreement and (B) where the failure to be true and correct
will not have a material adverse effect on UPC's or UES's rights under this
Agreement; (ii) Mirant shall have performed and complied with, in all material
respects, its obligations that are to be performed or complied with by it
hereunder prior to or on the Effective Date; and (iii) Mirant shall have
delivered a certificate signed by one of its duly authorized officers certifying
as to the fulfillment of the conditions set forth in the foregoing clauses (i)
and (ii).
(b) Guaranty. Mirant shall have delivered the Guaranty executed and
delivered by the Guarantor.
(c) Governmental Approvals. All the approvals and authorizations set forth
in Exhibit E hereto shall have been received on or before April 14, 2003 in a
form reasonably acceptable to UES and UPC, and shall on the Effective Date no
longer be subject to rehearing, reconsideration or appeal (or all parties that
have the right to bring an appeal shall have waived appeal rights). In
particular, the approval of the NHPUC shall contain language substantially to
the effect that the costs incurred under this Agreement, including, but not
limited to, the Entitlement Payments, will be fully recoverable by UES in its
retail rates.
(d) Legal Opinions. UPC and UES shall have received from counsel to Mirant
its opinion, dated the Effective Date, covering the matters set forth in Exhibit
H hereto and otherwise in form and substance reasonably satisfactory to UPC and
UES.
(e) No Material Adverse Change. No material adverse change in the business,
properties, financial condition, results of operations or prospects of Mirant or
the Guarantor shall have occurred and be continuing, or with the passage of
time, the giving of notice or both, shall be reasonably likely to occur.
(f) Absence of Litigation. No claims, actions, suits, grievances,
arbitrations or proceedings shall be pending or threatened against any Party
with respect to the transactions contemplated hereunder.
Section 4.2. Conditions to Obligations of Mirant.
The obligations of Mirant under this Agreement are subject to the
fulfillment and satisfaction, on or before the Effective Date, of each of the
following conditions, any one or more of which may be waived only in writing, in
whole or in part, by Mirant:
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(a) Representations, Warranties and Covenants True at the Effective Date.
(i) All representations and warranties of UPC and UES contained in this
Agreement shall be true and correct in all material respects when made and at
and as of the Effective Date as though such representations and warranties had
been made or given on such date (except to the extent such representations and
warranties specifically pertain to an earlier date), except (A) for changes
contemplated by this Agreement and (B) where the failure to be true and correct
will not have a material adverse effect on Mirant's rights under this Agreement;
(ii) UPC and UES shall each have performed and complied with, in all material
respects, their respective obligations that are to be performed or complied with
by them hereunder prior to or on the Effective Date; and (iii) each of UPC and
UES shall deliver a certificate signed by one of their duly authorized officers
certifying as to the fulfillment of the conditions set forth in the foregoing
clauses (i) and (ii).
(b) Governmental Approvals. All the approvals and authorizations set forth
in Exhibit E hereto shall have been received on or before April 14, 2003 in a
form reasonably acceptable to Mirant, and such approvals and authorizations
shall on the Effective Date no longer be subject to rehearing, reconsideration
or appeal (or all parties that have the right to bring an appeal have waived
appeal rights). In particular, the approval of the NHPUC shall contain language
substantially to the effect that the costs incurred under this Agreement,
including, but not limited to, the Entitlement Payments, will be fully
recoverable by UES in its retail rates.
(c) Legal Opinions. Mirant shall have received from counsel to UPC and UES
its opinion, dated the Effective Date, covering the matters set forth in Exhibit
I hereto and otherwise in form and substance reasonably satisfactory to Mirant.
(d) No Material Adverse Change. No material adverse change in the business,
properties, financial condition, results of operations or prospects of UPC or
UES shall have occurred and be continuing, or with the passage of time, the
giving of notice or both, shall be reasonably likely to occur.
(e) Absence of Litigation. No claims, actions, suits, grievances,
arbitrations or proceedings shall be pending or threatened against any Party
with respect to (i) this Agreement or (ii) any of the Power Supply Agreements,
or the transactions contemplated thereunder, which might have a material adverse
effect on the benefits to be realized by Mirant hereunder.
Section 4.3. Coordination.
UPC, UES and Mirant shall cooperate with each other and use all
commercially reasonable efforts to (a) promptly prepare and file all necessary
documentation, (b) effect all necessary applications, notices, petitions and
filings and execute all agreements and documents, and (c) obtain all necessary
consents, approvals and authorizations of all other parties necessary or
advisable to consummate the transactions contemplated by this Agreement
(including the respective governmental approvals required by the Parties).
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Each Party shall keep the other Parties reasonably apprised of the status
of the conditions precedent to the occurrence of the Effective Date applicable
to it. The Parties shall reasonably coordinate so that subject to the
satisfaction of other prior conditions, the certificates, opinions and security
to be delivered by a Party hereunder in connection with the Effective Date have
been provided by the Effective Date.
ARTICLE 5
EFFECTIVE DATE AND TERM
Section 5.1. Effective Date.
The obligations of the Parties under this Agreement (other than the
obligations of the Parties under Sections 4.1, 4.2, 4.3, 5.3 and 11.4 hereof)
shall not become effective until the Effective Date shall have occurred.
Section 5.2. Term; Termination for Failure to Satisfy Conditions Precedent.
(a) This Agreement shall continue in effect, unless sooner terminated in
accordance with the provisions of this Agreement, until the later of (a) the
termination of the last to terminate of the Unassigned Agreements or the release
of UPC from its obligations thereunder, and (b) the satisfaction in full of the
obligation of UPC to pay the Entitlement Payment(s) due in accordance with the
terms of this Agreement, and (c) the satisfaction in full of the obligations of
Mirant to sell and deliver, and of UES to buy and receive, the Transition
Service Power and Default Service Power provided for in, and on the terms and
conditions set forth in Exhibit B hereto.
(b) If the conditions precedent to UES's, UPC's and Mirant's obligations
hereunder set forth in Article 4 hereof have not been satisfied or waived on or
prior to the Effective Date, then at any time thereafter either Party may
terminate this Agreement on written notice of termination to the other Parties,
without any liability or obligation of any Party to the others as a result of
such termination, unless prior to the delivery of any such written notice of
termination the condition or conditions precedent which had not been satisfied
are satisfied.
Section 5.3. Notice.
Each Party shall notify the other Parties promptly if any information comes
to its attention prior to the Effective Date that it believes might excuse such
Party from the performance of its obligations under this Agreement or would or
might cause any condition set forth in Article 4 not to be satisfied.
5
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
Section 6.1. General Representations and Warranties.
Each Party hereby represents and warrants to the other that:
(a) It is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and is duly qualified to do business in
all jurisdictions where such qualification is required.
(b) It has full power and authority to enter this Agreement and perform its
obligations hereunder. The execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate or limited partnership
action and do not and will not contravene its organizational documents or
conflict with, result in a breach of, or entitle any party (with due notice or
lapse of time or both) to terminate, accelerate or declare a default under, any
agreement or instrument to which it is a party or by which it is bound. The
execution, delivery and performance by it of this Agreement will not result in
any violation by it of any law, rule or regulation applicable to it. It is not a
party to, nor subject to or bound by, any judgment, injunction or decree of any
court or other governmental entity which may restrict or interfere with the
performance of this Agreement by it or may materially and adversely affect the
business, property, financial condition, results of operations or prospects of
such Party. This Agreement is its valid and binding obligation, enforceable
against it in accordance with its terms, except as (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
the remedy of specific performance and injunctive relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) Except as set forth in Exhibit E hereto, no consent, waiver, order,
approval, authorization or order of, or registration, qualification or filing
with, any court or other governmental agency or authority or other person is
required for the execution, delivery and performance by such Party of this
Agreement and the consummation by such Party of the transactions contemplated
hereby. No consent or waiver of any party to any contract to which such Party is
a party or by which it is bound is required for the execution, delivery and
performance by such Party of this Agreement which has not been duly obtained.
(d) There is no action, suit, grievance, arbitration or proceeding pending
or, to the knowledge of such Party, threatened against or affecting such Party
at law or in equity, before any federal, state, municipal or other governmental
court, department, commission, board, arbitrator, bureau, agency or
instrumentality which prohibits or impairs its ability to execute and deliver
this Agreement or to consummate any of the transactions contemplated hereby.
Such Party has not received written notice of and otherwise is not aware of any
such pending or threatened investigation, inquiry or review by any governmental
entity.
6
Section 6.2 Representations of UPC.
(a) UPC hereby represents and warrants to Mirant that:
(i) Each of the Power Supply Agreements constitutes a valid and
binding obligation of UPC and, to UPC's knowledge, constitutes a valid and
binding obligation of the Suppliers thereto, and is in full force and effect.
(ii) True and correct copies of the Power Supply Agreements, including
any and all amendments thereto and all written contracts, agreements,
commitments, understandings or instruments relating to, or otherwise affecting,
the Power Supply Agreements, have been delivered to Mirant, and UPC has not
taken or failed to take any action which would result in any other modification
or amendment of any Power Supply Agreement, or the waiver of any material term
of any Power Supply Agreement.
(iii) Except as otherwise set forth in Exhibit F hereto, there is not,
under any Power Supply Agreement, any default or event which, with notice or
lapse of time or both, would constitute a default on the part of UPC or, to
UPC's knowledge, any of the Suppliers. Without limiting the generality of the
foregoing, all payments due from UPC under the Power Supply Agreements have been
paid in full.
(iv) Except as otherwise set forth in Exhibit F hereto, UPC has not
received any notification of, and is not aware of any claim alleging any breach
with respect to any Power Supply Agreement, or any agreement or arrangement
relating thereto, including interconnection, transmission and financing
arrangements.
(v) UPC has the right to assign or transfer its Entitlements in
accordance with the terms hereof and has not granted, or suffered to exist any
lien, mortgage, encumbrance, charge, pledge, security interest, entitlement or
other similar right of any kind with respect to any of the Power Supply
Agreements, or its interest therein.
(vi) Except as otherwise set forth in Exhibit F hereto, no claims,
actions, suits, grievances, arbitrations or proceedings are pending or, to the
knowledge of UPC, threatened with respect to any of the Power Supply Agreements,
or the transactions contemplated thereunder. There are no judgments, orders,
decrees, citations, fines or penalties heretofore assessed against UPC with
respect to any of the Power Supply Agreements, or the transactions contemplated
thereunder.
(b) With respect to any Assigned Agreements, the representations and
warranties of UPC set forth in this Section 6.2 shall terminate and be of no
further force and effect from and after the effective date of the assignment of
such Assigned Agreement.
7
Section 6.3. Representations of Mirant.
Mirant hereby represents and warrants to UPC that Mirant has made a
complete and thorough review of the Power Supply Agreements sufficient for it to
understand the benefits and risks of the transactions contemplated by this
Agreement, and that it is not relying on any representations or warranties by
UPC or any person actually or purportedly acting on UPC's behalf with respect to
any matter affecting or arising out of or in connection with the Power Supply
Agreements, except as otherwise expressly set forth herein.
Section 6.4. Disclaimers.
EXCEPT AS PROVIDED IN SECTIONS 6.1 AND 6.2(a), MIRANT ACKNOWLEDGES AND
AGREES THAT UPC MAKES NO REPRESENTATIONS OR WARRANTIES, WRITTEN OR ORAL,
STATUTORY, EXPRESS OR IMPLIED, CONCERNING THE POWER SUPPLY AGREEMENTS INCLUDING,
IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED, OTHER THAN
THOSE EXPRESSLY SET FORTH HEREIN. EXCEPT AS EXPRESSLY SET FORTH HEREIN, MIRANT
EXPRESSLY NEGATES ANY REPRESENTATION OR WARRANTY, WRITTEN OR ORAL, STATUTORY,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE
WITH RESPECT TO THE PROVISION OF DEFAULT SERVICE POWER OR TRANSITION SERVICE
POWER HEREUNDER, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED.
ARTICLE 7
SECURITY
Section 7.1. Mirant Security.
Mirant shall provide UPC and UES a Guaranty from the Guarantor in the
amount of Twenty Million Dollars ($20,000,000). The Guaranty shall be canceled
and released promptly in the event Mirant satisfies the Acceptable Rating and
Net Worth requirement (as defined below). In any such event, the original
canceled instrument(s) shall be immediately returned to Mirant (or as directed
by Mirant). For purposes hereof, an "Acceptable Rating" shall mean a rating on
senior unsecured debt securities of Mirant by Standard and Poor's Corporation,
Moody's Investors Service, Inc., Fitch IBCA or another nationally recognized
rating service reasonably acceptable to UPC and UES of BBB+ (Standard and
Poor's), Baa1 (Moody's) or BBB+ (Fitch) or its equivalent. For purposes hereof,
the Net Worth requirement shall mean at least five hundred million dollars
($500,000,000).
8
Section 7.2. No Amendment to Amended System Agreement.
UPC hereby agrees that it will not after the date hereof amend or agree to
any amendment or termination of the Amended System Agreement, if the effect of
such amendment or termination would be to materially adversely affect the
ability of UPC to perform its obligations hereunder, and shall provide notice to
Mirant of any amendments to the Amended System Agreement promptly following the
filing thereof with the NHPUC or FERC.
ARTICLE 8
EVENTS OF DEFAULT
Section 8.1. Events of Default by Mirant.
Any one or more of the following shall constitute an "Event of Default"
hereunder with respect to Mirant:
(a) Mirant shall fail to pay any amounts to be paid by Mirant hereunder
(whether directly to UES or UPC or under an Unassigned Agreement) and such
failure shall continue for more than ten (10) days beyond the due date.
(b) A default shall occur in the performance of any other material covenant
or condition to be performed by Mirant hereunder (other than a default specified
in Section 8.1(a)) and such default shall continue unremedied for a period of
thirty (30) days after notice from UPC or UES specifying the nature of such
default.
(c) A custodian, receiver, liquidator or trustee of Mirant or the
Guarantor, or of all or substantially all of the property of either, is
appointed or takes possession and such appointment or possession remains
uncontested or in effect for more than sixty (60) days; or Mirant or the
Guarantor makes an assignment for the benefit of its creditors or admits in
writing its inability to pay its debts as they mature; or Mirant or the
Guarantor is adjudicated bankrupt or insolvent; or an order for relief is
entered under the Federal Bankruptcy Code against Mirant or the Guarantor; or
all or substantially all of the material property of either is sequestered by
court order and the order remains in effect for more than sixty (60) days; or a
petition is filed against Mirant or the Guarantor under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or subsequently in effect, and
is not stayed or dismissed within sixty (60) days after filing.
(d) Mirant or the Guarantor files a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or subsequently in effect; or consents to the
filing of any petition against it under any such law; or consents to the
appointment of or taking possession by a custodian, receiver, trustee or
liquidator of Mirant or the Guarantor or all or substantially all of the
property of either.
9
Section 8.2. Events of Default by UPC or UES.
Any one or more of the following shall constitute an "Event of Default"
hereunder with respect to UPC or UES:
(a) Either UPC or UES shall fail to pay any amounts due from them to Mirant
hereunder and such failure shall continue for more than ten (10) days after the
applicable due date.
(b) UPC shall act to amend the Amended System Agreement in a manner
inconsistent with Section 7.2 hereof.
(c) Default shall occur in the performance of any other material covenant
or condition to be performed by UPC or UES hereunder (other than a default
specified in Section 8.2 (a) or (b)) and such default shall continue unremedied
for a period of thirty (30) days after notice from Mirant specifying the nature
of such default.
(d) Default shall occur by UPC under any Unassigned Agreement that causes
the termination of such Unassigned Agreement, except to the extent such default
is the result of any act or failure to act of Mirant under this Agreement.
(e) A custodian, receiver, liquidator or trustee of UPC or UES or of all or
substantially all of either of their property is appointed or takes possession
and such appointment or possession remains uncontested or in effect for more
than sixty (60) days; or UPC or UES makes an assignment for the benefit of its
creditors or admits in writing its inability to pay its debts as they mature; or
UPC or UES is adjudicated bankrupt or insolvent; or an order for relief is
entered under the Federal Bankruptcy Code against UPC or UES; or all or
substantially all of the material property of UPC or UES is sequestered by court
order and the order remains in effect for more than sixty (60) days; or a
petition is filed against UPC or UES under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or subsequently in effect, and is not stayed or
dismissed within sixty (60) days after filing.
(f) UPC or UES files a petition in voluntary bankruptcy or seeking relief
under any provision of any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or subsequently in effect; or consents to the filing of any petition
against it under any such law; or consents to the appointment of or taking
possession by a custodian, receiver, trustee or liquidator of UPC or UES or all
or substantially all of its property.
(g) The Net Worth of UES as determined as of the end of any fiscal quarter
of UES is less than Twenty Million Dollars ($20,000,000), unless within three
(3) business days following the end of such fiscal quarter UES delivers to
Mirant security (which may be in the form of a letter of credit or Guaranty from
Unitil Corporation) for the benefit of Mirant in an amount equal to the amount
by which the Net Worth of UES is less than $20,000,000. This provision shall
have no further force or effect from and after the end of the Transition Service
Term.
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Section 8.3. Remedies.
The Parties shall have the following remedies available to them with
respect to the occurrence of an Event of Default with respect to the other Party
hereunder. For purposes of this Section 8.3, UES and UPC shall be considered to
be the same single Party.
(a) Upon the occurrence of an Event of Default by either Party hereunder,
the non-defaulting Party shall have the right to (i) collect all amounts then or
thereafter due to it from the defaulting Party hereunder, and (ii) terminate
this Agreement at any time during the continuation of such Event of Default upon
written notice to the defaulting Party. Notwithstanding any other provision of
this Agreement, after the occurrence of an Event of Default and for so long as
the Event of Default is continuing and has not been cured, the non-defaulting
Party shall have the right, upon written notice to the defaulting Party, to
suspend all performance under this Agreement until such Event of Default has
been cured. In addition, if Mirant is the defaulting Party, then (i) UPC shall
have the right, but not the obligation, during the continuation of such default
and prior to any termination of this Agreement to cease making the Entitlements
available to Mirant hereunder and to instead sell such Entitlements to third
parties for the account of UPC; and (ii) UES shall have the right, but not the
obligation, during the continuation of such default and prior to any termination
of this Agreement, to purchase energy, capacity and ancillary services, in a
commercially reasonable manner considering the circumstances of such default,
from third parties at the Delivery Points in quantities sufficient to cover any
shortfall in Transition Service Power and/or Default Service Power resulting
from such default, and Mirant shall reimburse UES for all costs, including both
out-of-pocket and internal costs, incurred by UES related to such third-party
purchases in excess of the cost that UES would otherwise have incurred for
Transition Service Power and Default Service Power hereunder. If UPC is the
defaulting Party and, by reason of UPC's default, Mirant is not receiving all or
a portion of Capacity and Associated Energy in accordance with the terms hereof,
then Mirant shall have the right, but not the obligation, during the
continuation of such default and prior to any termination of this Agreement to
purchase Capacity and Associated Energy from third parties to cover such
shortfall, the costs of which (after taking into account the amount that Mirant
would have otherwise paid the Supplier or Suppliers for the Capacity and
Associated Energy being replaced and any Entitlement Payment actually received
by Mirant for the period in question) shall be paid by UPC. A default by either
UES or UPC shall permit Mirant to pursue all of the remedies provided for herein
against both UES and UPC, even if either UES or UPC is not in default of its
particular obligations hereunder, and a default by Mirant in its obligations to
either UPC or UES hereunder shall permit both UPC and UES to pursue all of the
remedies provided for herein against Mirant, notwithstanding that Mirant may not
be in default with respect to the particular obligations of Mirant to either UPC
or UES hereunder.
(b) If UPC and UES terminate this Agreement as a result of the occurrence
of an Event of Default by Mirant, then UPC and UES shall thereafter have no
further obligations hereunder and shall have all rights and remedies available
to them under applicable law, including the right to recover damages. In
addition, UPC and UES shall
11
be entitled to reimbursement of all reasonable costs incurred by them (including
reasonable attorneys' fees incurred in the enforcement or attempted enforcement
hereof) as a result of the termination of this Agreement.
(c) If Mirant terminates this Agreement as a result of the occurrence of an
Event of Default by UPC and/or UES, then Mirant shall thereafter have no further
obligations hereunder and shall have all rights and remedies available to it
hereunder and under applicable law, including the right to recover damages. In
addition, Mirant shall be entitled to reimbursement of all reasonable costs
incurred by it (including reasonable attorneys' fees incurred in the enforcement
or attempted enforcement hereof) as a result of the termination of this
Agreement.
(d) unless expressly provided in this agreement, no party shall be liable
for consequential, incidental, punitive, exemplary or indirect damages, by
statute, in tort or contract, under indemnity provisions or otherwise.
(e) The remedies provided for in this Section 8.3 shall be without
prejudice and in addition to any right of setoff, combination of accounts, lien
or other right to which any Party is at any time otherwise entitled (whether by
operation of law, contract or otherwise). In particular, and without limitation
of the foregoing, upon an Event of Default by Mirant, UES shall have the right
to set-off against any amounts due by it to Mirant hereunder any amounts due to
it by Mirant hereunder; upon an Event of Default by Mirant, UPC shall have the
right to set-off against any amounts due by it to Mirant hereunder any amounts
due to it by Mirant hereunder; upon an Event of Default by UES, Mirant shall
have the right to set-off against any amounts due by it to UES hereunder any
amounts due to it by UES hereunder; and upon an Event of Default by UPC, Mirant
shall have the right to set-off against any amounts due by it to UPC hereunder
any amounts due to it by UPC hereunder. In no event shall Mirant be permitted to
set-off against amounts due by it to UES any amounts due to it by UPC, nor shall
Mirant be permitted to set-off against amounts due by it to UPC any amounts due
to it by UES, nor shall UES be permitted to set-off against amounts due by it to
Mirant any amounts due by Mirant to UPC, nor shall UPC be permitted to set-off
against any amounts due by it to Mirant any amounts due by Mirant to UES.
ARTICLE 9
INDEMNIFICATION
Section 9.1. Indemnification by Mirant.
Mirant shall indemnify, defend and hold harmless UPC and UES and their
respective company's officers, directors, agents, employees and Affiliates from
and against any and all loss, costs, expense, claims, demands, liabilities
(including reasonable attorneys' fees), judgments, fines, settlements and other
amounts arising from any and all pending or threatened civil, criminal,
administrative or investigative proceedings (collectively, "Claims") relating to
or arising out of:
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(a) Any failure of Mirant to observe or perform any material term or
provision of this Agreement.
(b) Any failure of any representation or warranty made by Mirant herein to
be true in any material respect.
(c) Any Claim of a Supplier or any other third party to the extent arising
from the acts or omissions of Mirant or any of its agents or employees in
exercising its rights or performing its obligations hereunder after the
Effective Date.
Section 9.2. Indemnification by UPC.
UPC shall indemnify, defend and hold harmless Mirant, its officers,
directors, agents, employees and Affiliates from and against any and all loss,
costs, expense, claims, demands, liabilities (including reasonable attorneys'
fees), judgments, fines, settlements and other amounts arising from any and all
Claims relating to or arising out of:
(a) Any failure of UPC to observe or perform any material term or provision
of this Agreement.
(b) Any failure of any representation or warranty made by UPC herein to be
true in any material respect.
(c) Any Claim of a Supplier or any other third party to the extent arising
from the acts or omissions of UPC or any of its agents or employees.
(d) Any Claim that the transactions contemplated hereby violate or
otherwise constitute a default under any Unassigned Agreement (provided, that
UPC's indemnification obligations with respect to any Claim by a Supplier that
the transactions contemplated hereby violate or otherwise constitute a default
under a Power Supply Agreement shall be limited to Mirant's reasonable
out-of-pocket legal costs and expenses incurred in cooperating with UPC in
disputing or defending against any such Claim, and UPC shall have no other
liability to Mirant with respect to any such Claim, even if successful).
(e) An Excluded Liability.
Section 9.3. Indemnification by UES.
UES shall indemnify, defend and hold harmless Mirant, its officers,
directors, agents, employees and Affiliates from and against any and all loss,
costs, expense, claims, demands, liabilities (including reasonable attorneys'
fees), judgments, fines, settlements and other amounts arising from any and all
Claims relating to or arising out of:
(a) Any failure of UES to observe or perform any material term or provision
of this Agreement.
13
(b) Any failure of any representation or warranty made by UES herein to be
true in any material respect.
(c) Any Claim of a third party to the extent arising from the acts or
omissions of UES or any of its agents or employees in exercising its rights or
performing its obligations hereunder after the Effective Date.
Section 9.4. No Joint and Several Liability
Mirant hereby acknowledges and agrees that UES shall have no responsibility
or liability, direct, indirect, contingent or otherwise, with respect to the
obligations of UPC under Exhibit A hereto or with respect to any rights or
remedies which Mirant may have under applicable law or this Agreement with
respect to a breach or default by UPC of such obligations, except that an Event
of Default by UPC hereunder shall also be an Event of Default by UES hereunder,
as more fully provided for in Section 8.2 hereof, and such Event of Default
shall afford to Mirant all rights and remedies provided for herein with respect
to both UES and UPC. Mirant further acknowledges and agrees that UPC shall have
no responsibility or liability, direct, indirect, contingent or otherwise, with
respect to the obligations of UES under Exhibit B hereto or with respect to any
rights or remedies which Mirant may have under applicable law or this Agreement
with respect to a breach or default by UES of such obligations, except that an
Event of Default by UES hereunder shall also be an Event of Default by UPC
hereunder, as more fully provided for in Section 8.2 hereof, and such Event of
Default shall afford to Mirant all rights and remedies provided for herein with
respect to both UES and UPC.
ARTICLE 10
DISPUTE RESOLUTION; ARBITRATION
Section 10.1. Resolution By Officers of the Parties.
For purposes of this Article 10, UES and UPC shall be considered the same
single Party, and Mirant shall be considered the other Party. In the event of
any dispute between the Parties as to a matter referred to herein or as to the
interpretation of any part of this Agreement, including this Section 10.1 or as
to the determination of any rights or obligations or entitlements arising from
or related to this Agreement or as to the calculation of any amounts payable
under this Agreement, the Parties shall refer the matter to their respective
chief executive officers, or another duly authorized officer, for resolution.
Should such officers of the respective Parties fail to resolve the dispute
within twenty (20) days from such referral, the Parties agree that any such
dispute shall be referred to binding arbitration.
Section 10.2. Arbitration Procedures.
A Party submitting a dispute to arbitration (the "Requesting Party") shall
do so by delivering to the other Party a notice demanding or requesting, as the
case may be, arbitration of the dispute and naming an arbitrator. Within thirty
(30) days after the receipt of the notice from the Requesting Party, the other
Party shall, in writing, serve upon the Requesting Party a notice designating an
arbitrator on its behalf. The two
14
arbitrators so chosen shall within twenty (20) days after the appointment of the
second arbitrator, in writing, designate a third arbitrator. Upon the failure of
the other Party to appoint the second arbitrator within such thirty (30) day
time period, the Requesting Party may proceed with the single arbitrator. If the
first and second arbitrators are unable to agree on a third arbitrator within
twenty (20) days of the appointment of the second arbitrator, the first and
second arbitrator shall invoke the services of the American Arbitration
Association to appoint a third arbitrator. Such third arbitrator shall, to the
extent practicable, have special competence and experience with respect to the
subject matter under consideration. An arbitrator so appointed shall have full
authority to act pursuant to this Article. No arbitrator, whether chosen by a
Party or appointed, shall have the power to amend or add to this Agreement. The
Requesting Party shall, within twenty (20) days after either the failure of the
other Party to name an arbitrator, or the appointment of the third arbitrator,
as the case may be, fix, in writing, a time and a place of hearing, to be not
less than twenty (20) days from delivery of notice to the other Party. The
arbitrator or arbitrators shall, thereupon, proceed promptly to hear and
determine the controversy pursuant to the then current rules of the American
Arbitration Association for the conduct of commercial arbitration proceedings.
Such arbitrator or arbitrators shall fix a time within which the matter shall be
submitted to him, her or them by both of the Parties, and shall make his, her or
their decision, within ten (10) days after the final submission to him, her or
them unless, for good reasons to be certified by him, her or them in writing,
he, she or they shall extend such time. The decision of the single arbitrator,
or two of the three arbitrators, shall be taken as the arbitration decision.
Such decision shall be confidential and made in writing and in duplicate, and
one copy shall be delivered to each of the Parties. The arbitrator or
arbitrators by his, her or their award shall determine the manner in which the
expense of the arbitration shall be borne, except that each Party shall pay the
costs of its own counsel. Each Party shall accept and abide by the decision. The
award of the arbitral tribunal shall be final except as otherwise provided by
applicable law. Judgment upon such award may be entered by the prevailing Party
in any court having jurisdiction thereof, or application may be made by such
Party to any such court for judicial acceptance of such award and an order of
enforcement. Either Party shall have the right to seek a temporary or
preliminary injunction from a court of competent jurisdiction prior to the
arbitration.
Section 10.3. Binding Award.
This agreement to arbitrate and any award made hereunder shall be binding
upon each Party and the successors and assigns and any trustee or receiver of
each Party.
Section 10.4. Continued Performance.
Except to the extent a Party has the right to suspend performance under
Section 8.3 hereof, no dispute shall interfere with the Parties' continued
fulfillment of their obligations under this Agreement pending the decision of
the arbitrator(s).
15
ARTICLE 11
MISCELLANEOUS
Section 11.1. Assignment; Successors and Assigns.
This Agreement shall inure to the benefit of and bind the respective
successors and assigns of the Parties, including any successor to any Party by
consolidation, merger, or acquisition of all or substantially all of the assets
of such Party; provided, however, that no assignment by any Party (or any
successor or assignee thereof) of its rights and obligations hereunder shall be
made or become effective without the prior written consent of each other Party
in each case obtained, which consent may be withheld in each such other Party's
sole discretion; provided, that Mirant or any assignee of Mirant may assign this
Agreement (a) as collateral security to any lender from time to time providing
financing to Mirant in connection with the transactions contemplated hereby, so
long as neither Mirant nor the Guarantor is relieved of any obligation or
liability hereunder as a result of such assignment; and (b) to any Affiliate of
Mirant so long as the Guarantor is not relieved of any obligation or liability
hereunder as a result of such assignment. UPC and UES shall execute and deliver
such documents as may be reasonably necessary to accomplish any such assignment,
transfer, pledge or other disposition of rights and interests to any such lender
so long as UPC's and UES's rights under this Agreement are not thereby
materially altered, amended, diminished or otherwise impaired. Any assignments
by any Party shall be in such form as to assure that such Party's obligations
under this Agreement will be honored fully and timely by any succeeding party.
This Section 11.1 shall not limit or otherwise restrict in any manner whatsoever
Mirant's ability to resell or enter into any other arrangement with respect to
the sale of the Capacity and Associated Energy.
Section 11.2. Notices.
All notices, requests and other communications hereunder (herein
collectively a "notice" or "notices") shall be deemed to have been duly
delivered, given or made to or upon any Party if in writing and delivered by
hand against receipt, or by certified or registered mail, postage pre-paid,
return receipt requested, or to a courier who guarantees next business day
delivery or sent by telecopy (with confirmation by return telecopy) to such
Party at its address set forth below or to such other address as such Party may
at any time, or from time to time, direct by notice given in accordance with
this Section 11.2.
IF TO MIRANT:
Mirant Americas Energy Marketing, LP
1155 Perimeter Center West
Atlanta, Georgia 30338
Attention: Legal Department, Power
16
IF TO UPC:
Unitil Power Corp.
6 Liberty Lane West
Hampton, NH 03842
Attn: President - Energy Contracts
IF TO UES:
Unitil Energy Systems, Inc.
6 Liberty Lane West
Hampton, NH 03842
Attn: Energy Contracts
The date of delivery of any such notice, request or other communication shall be
the earlier of (i) the date of actual receipt or (ii) three (3) business days
after such notice, request or other communication is sent by certified or
registered mail, (iii) if sent by courier who guarantees next business day
delivery, the business day next following the day such notice, request or other
communication is actually delivered to the courier or (iv) the day actually
telecopied (with confirmation by return telecopy).
Section 11.3. Governing Law.
The rights and obligations of the Parties shall be construed and
interpreted in accordance with the substantive law of the State of New York
without giving effect to its principles for choice of law.
Section 11.4. Confidentiality.
Each Party shall keep confidential, and shall not disseminate to any third
party (other than such Party's Affiliates) or use for any other purpose (except
with the written authorization of the other Party), any information received
from the other that is confidential or proprietary unless legally compelled by
deposition, inquiry, request for documents, subpoena, civil investigative demand
or similar process, or by order of a court or tribunal of competent jurisdiction
or in order to comply with applicable rules or requirements of any stock
exchange, government department or agency or other regulatory authority, or by
requirements of any securities law or regulation or other legal requirement or
as necessary to enforce the terms of this Agreement. This Section 11.4 shall
survive the termination of this Agreement for a period of two (2) years. If any
Party is compelled to disclose any confidential information of the other Party,
such Party shall request that such disclosure be protected and maintained in
confidence to the extent reasonable under the circumstances and use reasonable
efforts to protect or limit disclosure with respect to commercially sensitive
terms. In addition, such Party shall provide the other Party with prompt notice
of the requirement to disclose confidential information in order to enable the
other Party to seek an appropriate protective order or other remedy, and such
Party shall consult with the other Party with respect to the other
17
Party taking steps to resist or narrow the scope of any required disclosure. The
Parties shall reasonably coordinate in the preparation and issuance of all
publicity relating to this Agreement.
Section 11.5. No Partnership.
Nothing contained in this Agreement shall be construed to create a
partnership, joint venture or other relationship that may invoke fiduciary
obligations between the Parties.
Section 11.6.Fees and Expenses.
Except as otherwise provided herein, each of UPC and UES, on the one hand,
and Mirant, on the other hand, shall pay all fees and expenses incurred by, or
on behalf of, such Party in connection with, or in anticipation of, this
Agreement and the consummation of the transactions contemplated hereby.
Section 11.7. Captions.
The captions to sections throughout this Agreement are intended solely to
facilitate reading and reference to all sections and provisions of this
Agreement. Such captions shall not affect the meaning or interpretation of this
Agreement.
Section 11.8. Entire Agreement and Amendments.
This Agreement sets forth the entire agreement of the Parties with respect
to the subject matter herein and takes precedence over all prior understandings.
This Agreement may not be amended except by an agreement in writing signed by
the Parties.
Section 11.9. Severability.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the other provisions hereof. If any provision of this Agreement
is held to be invalid, such provision shall not be severed from this Agreement;
instead, the scope of the rights and duties created thereby shall be reduced by
the smallest extent necessary to conform such provision to the applicable law,
preserving to the greatest extent the intent of the Parties to create such
rights and duties as set out herein. If necessary to preserve the intent of the
Parties, the Parties shall negotiate in good faith to amend this Agreement,
adopting a substitute provision for the one deemed invalid or unenforceable that
is legally binding and enforceable.
Section 11.10. Further Assurances.
Subject to the provisions of Section 2.5 of Exhibit A hereto, in connection
with this Agreement and the transactions contemplated hereby, each Party shall
execute and deliver any additional documents and instruments and perform any
additional acts that may be necessary or appropriate to effectuate and perform
the provisions of this Agreement and such transactions and the intention of the
Parties.
18
Section 11.11. Laws and Regulations; Changes in Law.
This Agreement and the rights, obligations, and performances of the Parties
under this Agreement are subject to all applicable state and federal laws, and
to all duly promulgated orders and other duly authorized actions of governmental
authorities having jurisdiction. Each Party hereto shall be responsible for
taking all necessary actions to satisfy any regulatory requirements that may be
imposed by any federal, state, or municipal statute, rule, regulation, or
ordinance that may be in effect from time to time relative to the performance of
such Party hereunder.
If and to the extent that, during the term of this Agreement, any laws or
regulations which govern any transaction contemplated herein shall change so as
to make this Agreement unlawful, then Mirant, UPC and UES hereby agree to effect
such modifications to this Agreement as shall be reasonably necessary for the
Agreement to accommodate any such legal or regulatory changes.
Section 11.12. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts,
any of which need not contain the signatures of more than one Party, but all
such counterparts taken together shall constitute one and the same Agreement.
Section 11.13. Interpretation.
In the event of any dispute concerning the construction or interpretation
of this Agreement or any ambiguity hereof, there shall be no presumption that
this Agreement or any provision hereof be construed against the Party who
drafted this Agreement. In this Agreement, unless the context otherwise
requires, the singular shall include the plural, the masculine shall include the
feminine and neuter, and vice versa; the term "includes" or "including" shall
mean "including, without limitation,"; references to an Article, Section,
Exhibit or Schedule shall mean an Article, Section, Exhibit or Schedule of this
Agreement; and the terms "hereof", "herein", "hereto", "hereunder" and
"herewith" refer to this Agreement as a whole. Reference to a given agreement or
instrument shall be a reference to that agreement or instrument as modified,
amended, supplemented and restated through the date as of which such reference
is made.
Section 11.14. Independent Relationship.
Nothing in this Agreement shall be construed or interpreted to make UPC or
UES or their respective employees or agents, the agent, representative or
employee of Mirant.
Section 11.15. No Third Party Beneficiaries.
This Agreement shall not confer any rights or remedies upon any third party
not a party hereto, including any Supplier.
19
Section 11.16. Waivers.
The failure of a Party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
a Party thereafter to enforce each and every such provision. A waiver under this
Agreement must be in writing and state that it is a waiver. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
Section 11.17. Duty to Mitigate.
Each Party agrees that it has a duty to mitigate damages and covenants that
it will use commercially reasonable efforts to minimize any damages it may incur
as a result of any other Party's performance or non-performance of this
Agreement.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the Parties
have caused this Agreement to be duly executed as an instrument under seal by
their respective duly authorized officers as of the date and year first above
written.
UNITIL POWER CORP.
By:
----------------------------
Name:
Title:
UNITIL ENERGY SYSTEMS, INC.
By:
----------------------------
Name:
Title:
MIRANT AMERICAS ENERGY MARKETING, LP
By MIRANT AMERICAS DEVELOPMENT, INC.,
Its General Partner
By:
----------------------------
Name:
Title:
20
EXHIBIT A
PORTFOLIO SALE AND ASSIGNMENT
ARTICLE 1
DEFINITIONS
Capitalized terms used and not otherwise defined in this Exhibit A shall
have the meanings given such terms either in Exhibit C or elsewhere in this
Agreement.
ARTICLE 2
SALE OF PORTFOLIO
Section 2.1. Assignment and Assumption of Assigned Agreements.
(a) In consideration of the payment by Mirant of the Supplier Payment and
the performance of Mirant's other obligations hereunder and subject to the terms
and conditions hereof, on the Effective Date UPC shall irrevocably convey,
assign, set over, transfer and deliver to Mirant, its successors and assigns, to
have and to hold for its and their own use and benefit forever all of UPC's
right, title and interest in, to and under the Assigned Agreements. In
consideration of the payment by UPC of the Entitlement Payment and the
performance of UPC's other obligations hereunder and subject to the terms and
conditions hereof, Mirant hereby agrees to accept the foregoing assignment on
the Effective Date and agrees to irrevocably assume, pay and perform as and when
due all of UPC's obligations and liabilities under the Assigned Agreements from
and after the Effective Date.
(b) Subject to Section 2.5 of this Exhibit A, the Parties shall execute and
deliver such other documents and instruments and take such other actions as may
be reasonably necessary, proper or advisable, to the extent permitted by
applicable law, to fulfill the purpose and intent of this Section 2.1.
Section 2.2. Sale of Entitlements for Unassigned Agreements.
(a) In consideration of the payment by Mirant of the Supplier Payment and
the performance of Mirant's other obligations hereunder and subject to the terms
and conditions hereof, UPC hereby agrees to sell to Mirant on the Effective Date
all its right, title and interest in and to the Entitlements. In consideration
of the payment by UPC of the Entitlement Payment and the performance of UPC's
other obligations hereunder and subject to the terms and conditions hereof,
Mirant hereby agrees to purchase from UPC on the Effective Date all of UPC's
right, title and interest in and to the Entitlements. As a result of such sale,
Mirant shall be entitled to receive as of the Effective Date all Capacity and
Associated Energy available to UPC under the Unassigned Agreements.
(b) Except as otherwise specifically provided herein, Mirant hereby agrees
to perform and fulfill all terms, conditions and obligations of UPC under, and
accepts all risks related to, each Unassigned Agreement. Mirant shall perform
such obligations with the same effect as if Mirant were party to each such
Unassigned Agreement in place of
A-1
UPC, such undertaking to be effective as of the Effective Date. Mirant shall be
responsible for only those obligations of UPC under each Unassigned Agreement
which relate to the period, and to acts, events or omissions occurring, from and
after the Effective Date.
Section 2.3. Risk of Unit Performance.
Mirant understands that UPC makes no representation, guaranty or warranty
concerning the availability of Capacity and Associated Energy, and that Mirant
shall have no remedy and recourse against UPC in the case of any deficiency or
failure pertaining to any Unit or default by a Supplier under a Power Supply
Agreement. Mirant shall bear the entire risk of performance by the other parties
to the Power Supply Agreements.
Section 2.4. Modification of Unassigned Agreements.
Mirant shall have the right to engage in negotiations with the Suppliers to
modify or terminate an Unassigned Agreement, and UPC hereby consents to such
negotiations, subject to the provisions of Article 4 of this Exhibit A.
Section 2.5. Assignment of Unassigned Agreements Following Effective Date.
UPC and Mirant shall each use commercially reasonable efforts following the
Effective Date to effect an assignment to Mirant of each Unassigned Agreement.
UPC shall not be obligated to agree to the terms of any such assignment unless
such terms irrevocably and unconditionally release UPC from and against any
obligations, liabilities or claims by the Supplier thereunder with respect to
any periods from and after the Effective Date. Mirant shall not be obligated to
agree to any such assignment unless (i) the terms of such assignment do not
involve any material amendment to the terms and conditions of the Unassigned
Agreement and do not impose any additional obligations or costs on Mirant
thereunder, and (ii) UPC has paid in full all of the Entitlement Payments
required to be paid by it hereunder. The assignment of an Unassigned Agreement
to Mirant shall not affect the relative rights and obligations of the Parties
hereunder following the effectiveness of such assignment, except that for all
purposes hereof such Unassigned Agreement shall thereafter be deemed to be an
Assigned Agreement. UPC and Mirant agree to execute such agreements and
instruments effecting any such assignment in accordance with the provisions of
this Section 2.5 as each shall reasonably determine to be necessary or
appropriate.
Section 2.6. Exclusion of Transmission Obligations and Auction Revenue Rights.
UPC and Mirant hereby agree that UPC shall remain responsible for certain
transmission obligations associated with Article 5.2 of the Power Supply
Agreement between UPC and Wisvest Connecticut LLC (now known as PSEG Connecticut
LLC) relating to Bridgeport Harbor Power Station, notwithstanding anything to
the contrary in this Agreement. UPC shall also pay for any transmission costs
associated with said Article 5.2 and shall be entitled to receive any and all
Rights (as such term is defined in Section 2.1(j) of Exhibit B to this
Agreement) associated with such retained transmission
A-2
obligations; Mirant shall be entitled to any other Rights arising under any of
the other Power Supply Agreements.
ARTICLE 3
SUPPLIER PAYMENT; ENTITLEMENT PAYMENT; AND EXCLUDED
LIABILITIES; BILLING AND PAYMENT
Section 3.1. Supplier Payment
In consideration for the assignments and sales provided for in Article 2 of
this Exhibit A, Mirant hereby agrees to pay each month, commencing on the
Effective Date, all amounts due from UPC to the Suppliers under the Unassigned
Agreements, excluding any Excluded Liabilities (as defined below) in accordance
with Section 3.4(a) of this Exhibit A (the "Supplier Payment").
Section 3.2. Entitlement Payment
In consideration for the assignments and sales provided for in Article 2 of
this Exhibit A, UPC shall pay directly to Mirant the amounts specified on
Appendix 1 to this Exhibit A in accordance with Section 3.4(c) of this Exhibit A
(the "Entitlement Payment").
Section 3.3. Excluded Liabilities.
Mirant shall not undertake or be liable for any of the following, and no
such amounts shall be reflected in any component of the Supplier Payment:
(a) Any obligation or liability of UPC arising out of the performance or a
breach by UPC of any of its obligations under this Agreement.
(b) Any fines or penalties imposed by governmental agencies resulting from
(i) an investigation or proceeding pending prior to the Effective Date or (ii)
illegal acts, willful misconduct or gross negligence of UPC prior to the
Effective Date.
(c) Any liabilities or obligations of UPC arising from the breach by UPC or
any of its Affiliates on or prior to the Effective Date of any term or provision
of any contract, instrument or agreement relating to any of the Power Supply
Agreements.
All such liabilities and obligations not being undertaken by Mirant
pursuant to this Section 3.3 are herein called the "Excluded Liabilities."
Section 3.4. Billing and Payment.
(a) Mirant shall pay the Supplier Payment directly to the Suppliers. UPC
shall cause the Suppliers to send invoices for amounts due directly to Mirant,
provided that in each instance where a Supplier sends an invoice under any
Unassigned Agreement directly to Mirant, Mirant shall provide a copy thereof to
UPC within five (5) business days of Mirant's receipt of the invoice. UPC shall
forward to Mirant all invoices under
A-3
the Unassigned Agreements which it receives within five (5) business days of its
receipt thereof, and shall be responsible for any interest or penalties which
Mirant may become liable for resulting from its inability to pay any such
invoice when due if UPC fails to so forward any such invoice. UPC shall have no
obligations with respect to such invoices or the payment thereof other than with
respect to Excluded Liabilities. Mirant shall remit payment of the amount shown
to be due on all such invoices in accordance with the requirements of the
Unassigned Agreements. In the event that Mirant receives credit from any
Supplier for any amount relating to a period prior to the Effective Date, Mirant
shall promptly pay such amount to UPC, and in the event that any Supplier bills
Mirant for any amount relating to a period prior to the Effective Date, Mirant
shall promptly inform UPC and UPC shall be responsible for the payment of such
amount directly to the Supplier in question and for notifying Mirant that such
payment has been made.
(b) Subject to any provisions in the Unassigned Agreements regarding UPC's
right to dispute and withhold payments in good faith, which Mirant shall have
the benefit of, Mirant shall make timely payments of all amounts due under the
Unassigned Agreements and shall provide UPC with written notice regarding the
amount and date of each such payment within five (5) business days of the date
the payment is made. Without limiting the generality of the foregoing, Mirant
shall solely bear any amounts in respect of interest or penalties incurred as a
result of the failure of Mirant to remit payment in accordance with the
requirements of the Unassigned Agreements. Mirant shall promptly notify UPC of
any notice received from, or other action taken by, a Supplier or an owner to
declare a default under any Unassigned Agreement.
(c) Commencing on the Effective Date, UPC shall pay directly to Mirant the
Entitlement Payment on the fifth (5th) day of each month following the month in
which Mirant receives Capacity and Associated Energy from the Suppliers. Any
Entitlement Payment due hereunder, but not paid as set forth herein, shall be
subject to a late payment charge calculated at the Interest Rate, from the date
payment is due until the date payment is made.
ARTICLE 4
CONTRACT ADMINISTRATION
Section 4.1. Operational Matters Relating to the Entitlements.
Subject to the Supplier's agreement to communicate directly with Mirant as
agent for UPC, Mirant will make all necessary efforts, and take full
responsibility, for communicating with each respective Supplier regarding the
dispatch, scheduling of planned outages and any unplanned outages of each Unit
under any Unassigned Agreement. Mirant will participate in any administrative
committee meetings concerning any such Unit to the extent that Mirant deems
necessary and as provided in the pertinent Unassigned Agreement. Mirant's
actions associated with the scheduling, dispatch and/or operation of any Unit
under any Unassigned Agreement shall be taken consistent with Good Utility
Practice. Mirant will make its own arrangements at Mirant's own cost for the
transmission and sale of all electricity generated by such Units and required to
be purchased under the applicable Unassigned Agreement, and also for any
electricity
A-4
required to be purchased under an Unassigned Agreement for which there is no
specifically identified Unit. Mirant acknowledges that, except as specifically
provided herein, UPC has no obligations or responsibility regarding (i)
operation of the Units under any Unassigned Agreement; (ii) dispatch or
scheduling outages, or return to service, of such Units; (iii) transmission of
electricity produced by such Units; or (iv) Mirant's sale of such electricity.
Section 4.2. Contract Administration Services.
(a) Subject to the Supplier's agreement to recognize Mirant as UPC's
administrative agent, Mirant shall be fully responsible for, and UPC shall have
no responsibility for, any services or matters in connection with the
administration of the Unassigned Agreements, including, without limitation, the
following:
(i) receiving invoices and verifying the appropriate charges to be
paid under the Unassigned Agreements;
(ii) monitoring the Unassigned Agreements; and
(iii) performing contract administration activities as provided for in
the applicable Unassigned Agreement (including, without limitation, performing
such activities and executing and delivering such documents as may be required
in connection with any refinancings, financial restructurings or other similar
activities undertaken by any Supplier under or with respect to an Unassigned
Agreement).
(b) Mirant shall have the right to direct UPC to request or otherwise
exercise all powers granted to UPC under an Unassigned Agreement to receive,
review and/or audit information and other documentation to which it is entitled
thereunder, or to enforce rights UPC has under any Unassigned Agreement;
provided, that Mirant shall be obligated to reimburse UPC for the reasonable
costs incurred by it in exercising any such rights or pursuing any such
enforcement actions to the extent and in the manner set forth in Section 5.2 of
this Exhibit A. At UPC's option, UPC may elect to execute a power of attorney in
favor of Mirant to act in the place and stead of UPC with respect to any matter
as to which Mirant has requested UPC to take action under this paragraph or
under Section 5.2 of this Exhibit A. UPC shall be obligated to comply with any
direction provided by Mirant pursuant to this paragraph.
(c) Without the prior written consent of Mirant, UPC shall not under any
circumstances take any action or fail to take any action after the Effective
Date that would:
(i) bind Mirant;
(ii) affect the Entitlements;
(iii) alter, amend, change or modify or waive any provision under any
Unassigned Agreement; or
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(iv) settle or agree to the resolution of a dispute under an Unassigned
Agreement.
Section 4.3 Appointment as Administrative Agent.
UPC shall provide written notice to each Supplier to designate Mirant as
UPC's agent for purposes of performing the activities specified in Sections 4.1
and 4.2 of this Exhibit A and otherwise administering the Unassigned Agreements.
Section 4.4 Material Amendments to Unassigned Agreements.
The prior written consent of each Party, which may be granted or withheld
in each such Party's sole discretion, shall be required for any of the following
actions under an Unassigned Agreement:
(a) Actions that increase the price charged for or the quantity of Capacity
and Associated Energy to be purchased by UPC thereunder;
(b) Term extensions or similar amendments or option exercises; or
(c) Any other matter which such Party reasonably believes will materially
increase such Party's financial risks or obligations thereunder or hereunder.
Notwithstanding the foregoing, UPC's consent shall not be required for any
agreements between Mirant and a Supplier which do not purport to involve UPC and
which do not purport to affect in any way UPC's obligations under an Unassigned
Agreement.
Section 4.5 Books and Records.
(a) UPC will permit Mirant and its representatives access during normal
business hours and upon reasonable notice, in a manner so as not to interfere
with the normal business operations of UPC, to its personnel, books, records and
documents associated with the Unassigned Agreements.
(b) Mirant shall have the right to audit UPC's books and records with
respect to the Unassigned Agreements and this Agreement, at such times during
normal business hours and as often as Mirant may reasonably request. Any amount
shown to be due by UPC or Mirant as a result of such audit shall be paid in
accordance with the provisions of Section 3.4 of this Exhibit A.
(c) If UPC shall desire to dispose of any records, books or documents that
may relate to any Unassigned Agreement during the term of this Agreement or
during the three (3) year period after the expiration or termination hereof, UPC
shall, prior to such disposition, give to Mirant a reasonable opportunity, at
Mirant's expense, to segregate and remove such records, books or documents as
Mirant may select.
A-6
ARTICLE 5
UPC UNDERTAKINGS
Section 5.1 Provision of Information Regarding Operational Matters.
UPC agrees to use reasonable efforts to require that the Suppliers direct
all information, notices, documents or other communications regarding operation,
dispatch, scheduling and other matters regarding any Unassigned Agreement and
provided to UPC, directly to Mirant or in a manner directed by Mirant. To the
extent that UPC receives any such materials relating to the Unassigned
Agreements, UPC agrees promptly to advise Mirant of such receipt and thereafter
to forward such materials to Mirant at the address set forth in Section 11.2 of
the Agreement, or in such other manner as may reasonably be agreed upon by the
Parties in writing.
Section 5.2 Enforcement of the Unassigned Agreements.
Upon the request of Mirant, UPC shall make reasonable efforts to enforce
the provisions of any Unassigned Agreement, or to otherwise support Mirant in
any dispute thereunder, provided, however, that UPC shall be compensated for its
reasonable costs associated with such efforts. Such costs shall include, but are
not limited to, costs arising from the employment of any counsel, consultants or
experts, and the internal costs associated with personnel of UPC who devote time
to any such matter; provided that UPC shall consult with Mirant prior to
incurring any such costs to provide Mirant an opportunity to select any counsel,
consultants or experts and, to the extent possible, obtain an estimate of total
expected costs. The costs incurred by UPC to be reimbursed to it by Mirant under
this Section shall be payable by Mirant within fifteen (15) days following its
receipt of an invoice therefor from UPC.
Section 5.3 Interim Conduct of Business.
(a) Except to the extent Mirant otherwise consents in writing, during the
period from the date of this Agreement to the Effective Date, UPC shall (i)
conduct its business with respect to the Power Supply Agreements in the ordinary
course of business consistent with the past practices of UPC or its Affiliates
and with Good Utility Practice, (ii) use all reasonable efforts to preserve
intact such agreements, (iii) not consent to the incurrence of any material
obligation with respect to any of such agreements, and (iv) endeavor to preserve
the goodwill of and relationships with the Suppliers and other owners. Without
limiting the generality of the foregoing, without the prior written consent of
Mirant, UPC shall not agree to modify, amend or terminate any Power Supply
Agreement in any respect.
(b) Between the date hereof and the Effective Date, the Parties shall
reasonably cooperate to effect an orderly and efficient transfer of the Assigned
Agreements and the Entitlements from UPC to Mirant. In furtherance of the
foregoing, UPC shall afford to Mirant access to UPC's books and records relating
to the Power Supply Agreements during UPC's normal business hours and on
reasonable notice.
A-7
APPENDIX 1
ENTITLEMENT PAYMENTS
Period Months Payment Amount
Months 1-12 5/03-4/04 $1,240,000
Months 13-36 5/04-4/06 $ 880,000
Months 37-90 5/06-10/10 $ 400,000
No Entitlement Payments will be due following the ninetieth such payment, even
if Supplier Payments remain to be made after such ninetieth payment is made.
A-8
EXHIBIT B
TRANSITION AND DEFAULT SERVICE SUPPLY
ARTICLE 1. DEFINITIONS
Capitalized terms used and not otherwise defined in this Exhibit B shall
have the meanings given such terms either in Exhibit C or elsewhere in this
Agreement.
ARTICLE 2. OBLIGATIONS OF UES AND MIRANT
Section 2.1 Obligations of UES
(a) UES shall buy and receive Transition Service Power and Default Service
Power from Mirant in accordance with Article 3 of this Exhibit B for the
duration of the respective Transition Service Term and Small Customer
Default Service Term and Large Customer Default Service Term in accordance
with Article 2 of this Exhibit B.
(b) UES shall calculate the amount due on a monthly basis and pay Mirant for
Transition Service Power and Default Service Power in accordance with
Article 4 of this Exhibit B.
(c) UES shall estimate and report Mirant's Transition Service Load and Mirant's
Default Service Load pursuant to this Exhibit B in accordance with Article
5 of this Exhibit B.
(d) UES shall acquire and be responsible for the costs of Local Network Service
("LNS") required for the delivery of Transition Service Power and Default
Service Power to the Delivery Points, which provides for transmission
and/or distribution over the Non-PTF Facilities as may be required to serve
the Default Service Load and Transition Service Load; provided, however,
that such costs shall not include losses calculated by NEPOOL or included
in NEPOOL Locational Marginal Pricing.
(e) UES shall acquire and be responsible for the costs of Regional Network
Service ("RNS") which provides for transmission over the PTF as may be
required to serve the Default Service Load and Transition Service Load.
(f) UES shall be responsible for all transmission and distribution arrangements
from the Delivery Points to its retail customers.
(g) UES shall be responsible for the distribution and resale to its retail
customers of the electricity delivered hereunder and the collection of any
payments consequently due from those customers. Failure of UES to fully
collect such payments shall not excuse UES from its obligations to pay
Mirant for deliveries hereunder.
B-1
(h) UES shall be responsible for soliciting a replacement supply contract for
Default Service Power for the Small Customer Group whose planned effective
date shall be the first May 1 or November 1 that is at least ninety (90)
days later than the date when the Small Customer Group Default Service Load
first reaches the level of five (5) megawatts; provided, however, that in
no event shall a replacement supply contract be procured for an effective
date prior to May 1, 2004. UES shall also be responsible for soliciting a
replacement supply contract for Default Service Power for the Large
Customer Group whose planned effective date shall be the first May 1 or
November 1 that is at least ninety (90) days later than the date when the
Large Customer Group Default Service Load first reaches the level of five
(5) megawatts; provided, however, that in no event shall a replacement
supply contract be procured for an effective date prior to May 1, 2004.
(i) UES agrees to provide such data, information and other materials and
assistance as Mirant shall reasonably request from time to time to enable
Mirant to perform its obligations hereunder, including, without limitation,
historical load data, customer characteristics and rate class designations,
load shape information, demand data and customer attrition data as may be
available from time to time.
(j) To the extent UES is entitled to any auction revenue rights (including,
without limitation, qualified upgrade awards) or other congestion related
rights (the "Rights") as a result of serving the Default Service Load or
Transition Service Load, UES shall promptly inform Mirant and shall offer
to transfer or assign such Rights to Mirant. Upon Mirant's request, UES
shall take all necessary actions to transfer or assign such Rights to
Mirant. Following the Effective Date, Mirant shall be entitled to any
revenues associated with the Rights.
(k) UES shall be responsible for Attribute Laws reporting to New Hampshire
regulatory agencies and any required reporting to retail customers. UES
shall also be responsible for notifying Mirant of any New Hampshire
regulatory proceedings with respect to Attribute Laws, promptly following
UES becoming aware of such proceedings.
(l) UES shall notify Mirant of any changes to the Default Service Load or the
Transition Service Load as often as possible, and no less often than
monthly.
(m) To the extent that NEPOOL, ISO-NE or RTO rules require that any of the
items listed in this Exhibit B as an obligation of UES be billed directly
to Mirant, UES shall compensate Mirant for such expenses.
(n) UES shall comply with all other terms and conditions which are stipulated
by this Exhibit B.
B-2
Section 2.2 Obligations of Mirant
(a) Mirant shall sell and deliver to the Delivery Points Transition Service
Power and Default Service Power in accordance with Article 3 of this
Exhibit B for the duration of the respective Transition Service Term and
Small Customer Default Service Term and Large Customer Default Service Term
in accordance with Article 4 of this Exhibit B.
(b) Mirant shall be the supplier of Transition Service Power and Default
Service Power and shall be responsible for all present and future
requirements and associated costs imposed, allocated or charged by NEPOOL,
ISO-NE or any RTO (and associated market rules) with respect to Transition
Service Power and Default Service Power being provided on a wholesale basis
by Mirant to UES hereunder. These requirements and costs may include, but
are not limited to, installed capability, energy, scheduling and
regulation. Notwithstanding the foregoing, Mirant shall not be responsible
for any costs or charges associated with LNS or RNS required to supply
Transition Service Power and Default Service Power.
(c) Mirant shall be responsible for all costs and losses associated with
delivery of Transition Service Power and Default Service Power to the
Delivery Points, including losses calculated by NEPOOL or included in
NEPOOL Locational Marginal Pricing, excepting only the costs of LNS and RNS
as specified in Sections 2.1(d) and (e) of this Exhibit B.
(d) To the extent that NEPOOL, ISO-NE or RTO rules require that any of the
items listed in this Exhibit B as an obligation of Mirant be billed
directly to UES, Mirant shall compensate UES for such expenses.
(e) UPC acknowledges and agrees that Mirant shall not be responsible for
reductions in Transition Service Load or Default Service Load as a result
of problems or limitations on the NEPOOL transmission system which prevent
or impair delivery of electricity to the Delivery Points.
(f) Mirant shall be responsible for transferring data required by any Attribute
Laws to the UES NEPOOL Generator Information System account. To the extent
the Attribute Laws require UES to have attributes associated with
Transition Service Load and Default Service Load, Mirant shall be
responsible for the cost to acquire such attributes and shall transfer such
required attributes to the UES Generator Information System account.
(g) Mirant shall comply with all other terms and conditions of this Exhibit B.
B-3
ARTICLE 3. SALE AND PURCHASE; LOAD GROWTH
(a) Mirant shall sell and deliver to the Delivery Points, in accordance with
Section 5.1 of this Exhibit B, and UES shall purchase and receive,
Transition Service Power during the Transition Service Term and Default
Service Power during the Small Customer Default Service Term and Large
Customer Default Service Term. The price for such sale and purchase shall
be as set forth in Section 4.1 of this Exhibit B. The quantities of
Transition Service Power and Default Service Power shall be determined on
the basis of Section 5.3 of this Exhibit B.
(b) Mirant shall be obligated to supply Default Service Power and Transition
Service Power as required by the Default Service Load and Transition
Service Load at all times during the Small Customer Default Service Term
and Large Customer Default Service Term and the Transition Service Term. In
other words, Mirant shall supply Default Service Power and Transition
Service Power to follow the changes in the demand of the Default Service
Load and Transition Service Load.
If during any hour the amount of the Actual Power Demand (as defined below)
of either customer group exceeds the applicable Excess Power Trigger, such
amount shall constitute Excess Power and shall be charged to UES at a price
equal to the price determined in accordance with Article 4 of this Exhibit
B that would otherwise be chargeable pursuant to this Agreement, plus or
minus an amount determined (on a kWh basis) in accordance with the
following formula: the energy clearing price of ISO-NE at the New Hampshire
Load Zone for that hour plus $.005 per kWh, less the price that would
otherwise be applicable as set forth in Article 4 of this Exhibit B. Any
positive difference shall be charged to UES, and any negative difference
shall be credited to UES.
Base Peak Demand for each customer group for each Contract Period shall be
equal to the actual peak demand experienced by UES for such customer group
in calendar year 2002 multiplied by 103%, compounded annually, for each
Contract Period. The Excess Power Trigger for each customer group for each
Contract Period shall equal 105% of the Base Peak Demand in each such
Contract Period. Appendix B to this Exhibit B sets forth the applicable
levels of Base Peak Demand and Excess Power Triggers. For purposes of this
Section 3(b), Actual Power Demand for each customer group shall mean the
sum of the reported hourly loads for both the Default Service Load and the
Transition Service Load.
In the event NEPOOL implements nodal pricing for load during the term of
this Agreement, the Actual Power Demand for each Customer Group will be
calculated as the sum of the Transition Service Loads and Default Service
Loads at each reported node. The Excess Power Price will be calculated as
the weighted average price at each of the reported nodes.
B-4
ARTICLE 4. PRICE AND BILLING
Section 4.1 Price
(a) For each kilowatt-hour of Transition Service Power for the Small Customer
Group that Mirant delivers to the Delivery Points in a Contract Period, as
determined in accordance with Section 5.3 of this Exhibit B, UES shall pay
Mirant a price, in cents per kilowatt-hour, equal to the following amounts
for the applicable Contract Period:
Contract Period Cents per kWh
1 4.761 cents
2 4.916 cents
3 5.227 cents
(b) For each kilowatt-hour of Default Service Power for the Small Customer
Group that Mirant delivers to the Delivery Points in a Contract Period, as
determined in accordance with Section 5.3 of this Exhibit B, UES shall pay
Mirant a price, in cents per kilowatt-hour, equal to the following amounts
for the applicable Contract Period:
Contract Period Cents per kWh
1 4.761 cents
2 4.916 cents
3 5.227 cents
(c) For each kilowatt-hour of Transition Service Power for the Large Customer
Group that Mirant delivers to the Delivery Points in a Contract Period, as
determined in accordance with Section 5.3 of this Exhibit B, UES shall pay
Mirant a price, in cents per kilowatt-hour, equal to the following amounts
for the applicable Contract Period:
Contract Period Cents per kWh
1 4.991 cents
2 5.154 cents
(d) For each kilowatt-hour of Default Service Power for the Large Customer
Group that Mirant delivers to the Delivery Points in a Contract Period, as
determined in accordance with Section 5.3 of this Exhibit B, UES shall pay
Mirant a price, in cents per kilowatt-hour, equal to the following amounts
for the applicable Contract Period; provided, that during the months of
June, July and August of each Contract Period, the following amounts shall
be increased by 1.5 cents:
Contract Period Cents per kWh
1 4.991 cents
2 5.154 cents
B-5
Section 4.2 Payment
(a) On or before the tenth (10th) day following the end of each month in
which Mirant provides UES with Transition Service Power and Default
Service Power pursuant to this Exhibit B, UES shall calculate the
preliminary amount due and payable to Mirant pursuant to this Article
4 with respect to the preceding month. The calculation shall be
provided to Mirant. The preliminary amount payable shall be calculated
as the sum of (i) the product of the applicable prices specified in
Sections 4.1(a) and (c) of this Exhibit B, for the applicable Contract
Period, and the preliminary quantities of Transition Service Power for
the Small Customer Group and Large Customer Group, respectively,
delivered by Mirant to the Delivery Points in the month, as determined
in accordance with Section 5.3(c) of this Exhibit B, plus (ii) the
product of the applicable prices specified in Sections 4.1(b) and (d)
of this Exhibit B, for the applicable Contract Period, and the
preliminary quantities of Default Service Power for the Small Customer
Group and Large Customer Group, respectively, delivered by Mirant to
the Delivery Points in the month, as determined in accordance with
Section 5.3(c) of this Exhibit B.
(b) UES shall pay Mirant any preliminary amounts due and payable on or
before the twentieth (20th) day of the month (or on the next business
day if the 20th day of the month falls on a holiday or a weekend) in
which a calculation is made pursuant to Section 4.2(a) of this Exhibit
B. If all or any part of any preliminary amount due and payable
pursuant to Section 4.2(a) of this Exhibit B shall remain unpaid
thereafter, interest shall thereafter accrue at the Interest Rate and
be payable to Mirant on such unpaid amount from the due date to the
date of payment. Any disputed invoiced amounts, except amounts which
are manifestly inaccurate or are not reasonably supported by
documentation, shall be paid in full on the applicable payment due
date, subject to later return together with interest accrued at the
Interest Rate until the date paid. With respect to any error in a
calculation (whether the amount is paid or not) or payment, any
overpayment or underpayment shall be refunded or paid up, as
appropriate.
(c) Preliminary payment amounts calculated pursuant to Section 4.2(a) of
this Exhibit B shall be subject to positive or negative reconciliation
adjustments in subsequent months in order to reflect the revised
quantities determined in accordance with Section 5.3(d) of this
Exhibit B. The reconciliation adjustment applicable to a given month
shall be calculated as the difference between (i) the final payment
amount for that month, computed according to the formula in Section
4.2(a) of this Exhibit B, but substituting the revised quantities
determined under Section 5.3(d)of this Exhibit B for the preliminary
quantities determined under Section 5.3(c) of this Exhibit B, and (ii)
the preliminary payment amount previously computed for that month. UES
shall apply any reconciliation adjustment to Mirant's account no later
B-6
than the last day of the third month following the billing month,
without interest.
Section 4.3 Taxes, Fees and Levies; Sales for Resale
(a) Mirant shall be obligated to pay all present and future taxes, fees and
levies that may be assessed upon Mirant by any entity upon the sale of
Transition Service Power and Default Service Power to UES or any component
thereof. To the extent such taxes, fees, and levies are allowed to be, and
are actually, recovered by UES from its customers, UES shall reimburse
Mirant for such taxes, fees and levies paid by Mirant.
(b) All electricity delivered by Mirant to UES hereunder shall be sales for
resale, with UES reselling such deliveries. UES shall obtain and provide
Mirant with any certificates reasonably requested by Mirant to evidence
that the deliveries hereunder are sales for resale.
ARTICLE 5. DELIVERY, LOSSES, AND DETERMINATION OF LOADS
Section 5.1 Delivery
All electricity shall be delivered by Mirant to UES at the Delivery Points.
Title shall pass to UES at the Delivery Points and Mirant shall not incur any
expense or risk beyond the Delivery Points.
Section 5.2 Losses
Hourly losses to the Delivery Points, between the Delivery Points and the
corresponding metering points (as indicated in Appendix A to this Exhibit B), if
different, and between such metering points and UES's retail distribution meters
shall be determined in accordance with NEPOOL's and UES's approved procedures
for loss determination.
Section 5.3 Determination and Reporting of Loads
(a) UES shall estimate Mirant's Transition Service Load and Mirant's Default
Service Load at the Delivery Points for each hour based upon UES's actual
total hourly load, typical load profiles developed for each customer rate
class, actual metered data as available, NEPOOL's and UES's approved
procedures for loss determination as adjusted to include distribution and
non-PTF losses (the "Estimation Process").
(b) UES shall report the hourly load estimates determined using the Estimation
Process to ISO-NE and Mirant. UES shall use commercially reasonable efforts
to report all such hourly load estimates by 1300 hours of the second
following business day, or at such other time as may be required by ISO-NE
or applicable
B-7
NEPOOL Market Rules and Procedures. The reporting format to Mirant for such
estimates shall be the same as the reporting format to ISO-NE.
(c) At the end of each month, UES shall sum for all hours of the month the
hourly load estimates for Mirant's Transition Service Load and for Mirant'
Default Service Load determined by the Estimation Process. For purposes of
Section 4.2(a) and Section 4.2(b) of this Exhibit B, these sums shall be
deemed to be the preliminary quantities of Transition Service Power and
Default Service Power, respectively, delivered by Mirant to the Delivery
Points in the month.
(d) To refine the preliminary estimates of Transition Service Load and Default
Service Load developed using the Estimation Process, a monthly calculation
shall be performed to reconcile the estimates to actual metered customer
usage. The revised load estimates resulting from this reconciliation shall
be reported to ISO-NE and Mirant as required to adjust Mirant's settlement
obligations to NEPOOL. UES shall also sum for all hours of the month the
revised hourly load estimates for Mirant's Transition Service Load and
Mirant's Default Service Load. For purposes of Section 4.2(c) of this
Exhibit B, these monthly sums shall be deemed to be the final quantities of
Transition Service Power and Default Service Power, respectively, delivered
by Mirant to the Delivery Points in the month.
ARTICLE 6. FORCE MAJEURE
Section 6.1 Force Majeure Standard
The Parties shall be excused from performing their respective obligations under
this Exhibit B (but not under any other provision of this Agreement) and shall
not be liable in damages or otherwise, if and only to the extent that they are
unable to so perform or are prevented from performing by an event of force
majeure.
Section 6.2 Force Majeure Definition
An event of force majeure means an event or circumstance that prevents or unduly
frustrates the performance by a Party of its obligations under this Exhibit B
which is not within the reasonable control of, or the result of the negligence
of, the claiming Party and which by the exercise of due diligence the claiming
Party is unable to overcome or avoid ("Force Majeure"). Force Majeure includes,
without limitation, hurricanes, tornadoes, flood, lightning, drought,
earthquake, fire, explosion, terrorist attack, civil disturbance, strikes, acts
of God, acts of the public enemy, orders, directives, restraints and
requirements of the government and governmental agencies, either federal, state
or local, civil or military, an emergency condition declared by ISO-NE or any
RTO, or any other cause beyond a Party's control. Force Majeure shall not
include (i) events affecting the availability or cost of operating any
generating facility, (ii) changes in market conditions which cause the price of
energy or capacity to fluctuate including, without limitation, weather, fuel
prices and supply and demand, or (iii) the inability of Mirant to make a profit
or avoid a loss in performing its obligations under this Exhibit B.
B-8
Section 6.3 Obligation to Diligently Cure Force Majeure
If any Party shall rely on the occurrence of an event or condition described in
Section 6.2 of this Exhibit B as a basis for being excused from performance of
its obligations under this Exhibit B, then the Party relying on the event or
condition shall:
(i) Provide written notice to the other Party promptly but in no event
later than five (5) days of the occurrence of the event or condition
giving an estimation of its expected duration and the probable impact
on the performance of its obligations hereunder;
(ii) Exercise all reasonable efforts to continue to perform its
obligations hereunder;
(iii) Expeditiously take reasonable action to correct or cure the event or
condition excusing performance, provided that settlement of strikes
or other labor disputes shall be completely with the sole discretion
of the Party affected by such strike or labor disputes;
(iv) Exercise all reasonable efforts to mitigate or limit damages to the
other Party to the extent such action shall not adversely affect its
own interests; and
(v) Provide prompt notice to the other Party of the cessation of the
event or condition giving rise to its excuse from performance.
ARTICLE 7. REGULATION
Section 7.1 Laws and Regulations
The prices for service specified in Section 4.1 of this Exhibit B shall remain
in effect for the term of the Agreement, and shall not be subject to change
through application to the FERC pursuant to the provisions of Section 205 or
Section 206 of the Federal Power Act. Absent the agreement of the Parties to any
proposed change to this Exhibit B, the standard of review for any proposed
changes to this Exhibit B by a Party, a non-party or the FERC acting sua sponte
shall be the "public interest" standard of review set forth in United Gas Pipe
Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power
Commission v. Sierra Pacific Power Co., 350 U.S. (1956) (the "Mobile-Sierra"
doctrine).
Section 7.2 NEPOOL Requirements
Implementation and performance of the Parties' obligations under this Exhibit B
must comply with all NEPOOL Market Rules and Operating Procedures and FERC rules
and regulations (collectively "Rules"). If, during the term of this Agreement,
(i) the NEPOOL Agreement is terminated or amended in a manner that would
eliminate or
B-9
materially alter a Rule affecting a right or obligation of a Party hereunder,
(ii) a Rule is eliminated or materially altered by NEPOOL, ISO-NE, an RTO or
other regulatory or administrative entity having jurisdiction over or
responsibility for the Rule or Rules, or (iii) FERC implements new market rules
including, without limitation, rules issued pursuant to its Standard Market
Design rulemaking in FERC Docket No. RM01-12-000, the Parties agree to negotiate
in good faith in an attempt to amend this Exhibit B to incorporate a Replacement
Rule ("Replacement Rule"). The intent of the Parties is that any such
Replacement Rule reflect, as closely as possible, the intent of this Exhibit B
and the intent and substance of the Rule being replaced as such Rule was in
effect prior to such termination or amendment of the NEPOOL Agreement or
elimination, alteration, or addition of a Rule. If the Parties are unable to
reach agreement on such an amendment, the Parties agree to submit the matter to
arbitration under the terms of Article 11 of this Agreement.
Section 7.3 Changes to UES's Tariff
UES shall provide Mirant prior written notice of any proposed change to its
Tariff for Electric Service or any other of tariff related to UES on file with
the NHPUC.
B-10
APPENDIX A
DELIVERY POINTS
Nominal Delivery Nominal
Delivery Point Voltage Metering Point Metering Voltage
Garvins 3(phi), 4 wire, At Delivery Point 3(phi), 4 wire,
19.9/34.5 kV 19.9/34.5 kV
Concord Steam (1) 3(phi), 4 wire, At Connection Point 3(phi), 4 wire,
7.9/13.8 kV 7.9/13.8 kV
New Hampshire Hydro
Lower Penacook 3(phi), 4 wire, At Connection Point 3(phi), 4 wire,
Falls (1) 19.9/34.5 kV 19.9/34.5 kV
Upper 3(phi), 4 wire, At Connection Point 3(phi), 4 wire,
Penacook Falls (1) 19.9/34.5 kV 19.9/34.5 kV
Briar Hydro (1) 3(phi), 4 wire, At Connection Point 3(phi), 4 wire,
19.9/34.5 kV 19.9/34.5 kV
SES Concord Company 3(phi), 4 wire, At Connection Point 3(phi), 4 wire,
L.P. (1) 19.9/34.5 kV 19.9/34.5 kV
Hollis (Plains) 3(phi), 4 wire, At Delivery Point 3(phi), 4 wire,
19.9/34.5 kV 19.9/34.5 kV
Penacook 3(phi), 4 wire, At Delivery Point 3(phi), 4 wire,
19.9/34.5 kV 19.9/34.5 kV
Danville 3(phi), 4 wire, At Delivery Point 3(phi), 4 wire,
19.9/34.5 kV 19.9/34.5 kV
Guinea Road 3(phi), 4 wire, At Delivery Point 3(phi), 4 wire,
19.9/34.5 kV 19.9/34.5 kV
Kingston 3(phi), 4 wire, At Delivery Point 3(phi), 4 wire,
19.9/34.5 kV 19.9/34.5 kV
Timber Swamp 3(phi), 4 wire, At Delivery Point 3(phi), 4 wire,
19.9/34.5 kV 19.9/34.5 kV
(1) PSNH small power producer purchase delivery points.
NOTE: Delivery Points may be added or eliminated from time to time. A 34.5 kV
Delivery Point is expected to be added in Stratham, NH in 2003.
B-11
APPENDIX B
EXCESS POWER CALCULATION
Base Peak Demand Excess Demand Trigger
----------- ------------
3.0% 5.0%
----------- ------------
Large Small Large Small
Customer Customer Customer Customer
Group Group Croup Group
2002 72.3 191.4
2003 74.5 197.1 78.2 207.0
2004 76.7 203.0 80.5 213.2
2005 209.1 219.6
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EXHIBIT C
DEFINITIONS
Where capitalized terms used in this Agreement are defined in the NEPOOL
Agreement and are not otherwise defined herein, such definitions are expressly
incorporated into this Agreement by reference.
"Affiliate" of a Party shall mean any corporation, partnership, limited
liability company or business trust (i) 25% or more of the equity securities of
which are owned, directly or indirectly, by such Party, (ii) which owns,
directly or indirectly, 25% or more of the equity securities of such Party, or
(iii) 25% or more of the equity securities of which are owned, directly or
indirectly, by any other corporation, partnership, limited liability company or
business trust which is an Affiliate of such Party pursuant to the foregoing
clauses (i) or (ii).
"Amended System Agreement" means UPC's rate schedule known as the Amended
Unitil System Agreement, Supplement No. 2 to Rate Schedule FERC No. 1. The
Amended System Agreement is a reconciling cost-of-service rate schedule under
which UPC collects contract release payments and other payments due from UES.
"Assigned Agreements" means the contracts listed in Exhibit G, Section 1 of
this Agreement and Unassigned Agreements which become Assigned Agreements
pursuant to Section 2.5 of Exhibit A of this Agreement.
"Attribute Laws" shall mean feature and disclosure requirements of power
supply sourcing applied to retail loads, as mandated by New Hampshire's
electricity restructuring laws. These requirements may relate to characteristics
including, but not limited to, emissions, fuel sources or labor characteristics.
"Capacity and Associated Energy" means the kilowatts of electricity to be
available, and the associated electric energy and ancillary services produced,
pursuant to the terms of each Unassigned Agreement, and shall be deemed to
include all benefits associated therewith, including any generation attributes
(such as those that may pertain to NEPOOL's Generation Information System and
all rights or entitlements with respect thereto assigned by NEPOOL, the
Northeast Power Coordinating Council, the North American Electric Reliability
Council, ISO-New England, Inc. or the successor of any of them, and any
allowances, air emission credits and similar authorizations or rights associated
with the Units; provided, that UPC shall receive the sole benefit of (and retain
the liability for) any billing adjustments with respect to periods occurring
prior to the Effective Date and any payments to the extent related to Excluded
Liabilities.
"Commencement Date of Service" shall mean 12:01 a.m. on May 1, 2003.
"Contract Period" shall mean Contract Period 1, Contract Period 2 or
Contract Period 3, as required by context.
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"Contract Period 1" shall mean the period commencing on the Commencement
Date of Service and ending April 30, 2004.
"Contract Period 2" shall mean the period commencing May 1, 2004 and ending
April 30, 2005.
"Contract Period 3" shall mean the period commencing May 1, 2005 and ending
April 30, 2006.
"Default Service" shall have the meaning as defined in UES's Tariff for
Electric Service in the State of New Hampshire as amended from time to time.
"Default Service Load" shall mean the total quantities of electric energy
consumed by UES's Default Service customers in the Small Customer Group and
Large Customer Group as those quantities vary over time (minute by minute, hour
by hour and day by day), adjusted upward to include the associated losses from
the Delivery Points to the points of end-use. Load variations encompassed in
this requirement include changes in customer demand for any reason, including,
but not limited to, seasonal factors, daily load fluctuations, retail
competition, increased usage, demand side management activities, extremes in
weather, etc., but shall not include changes in customer demand resulting from a
material expansion of the Buyer's franchise service territory from that in
existence on the date of this Agreement. The units of load may be kilowatts,
kilowatt-hours or any combination or multiple thereof, as required by context.
"Default Service Power" shall mean the generation and delivery to the
Delivery Points of the quantities of electric energy, capacity and ancillary
services required by UES to meet Mirant's Default Service Load as that load
varies over time (minute by minute, hour by hour and day by day).
"Delivery Points" shall mean the points of interconnection between Public
Service Company of New Hampshire and UES, as specified in Appendix A to Exhibit
B to this Agreement.
"Effective Date" shall mean May 1, 2003.
"Entitlement(s)" means UPC's right to receive the Capacity and Associated
Energy under the Unassigned Agreements during the respective terms thereof,
together with all rights of UPC thereunder relating to Capacity and Associated
Energy, including any right UPC may have to dispatch the applicable Units under
any of the Unassigned Agreements.
"Entitlement Payment" shall have the meaning set forth in Section 3.2
of Exhibit A.
"Excluded Liabilities" shall have the meaning given such term in Section
3.3 of Exhibit A.
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"Event of Default" with respect to Mirant, on the one hand, or UES and/or
UPC on the other shall have the meaning set forth in Sections 8.1 and 8.2,
respectively, of this Agreement.
"FERC" means the Federal Energy Regulatory Commission or such successor
federal regulatory agency as may have jurisdiction over this Agreement.
"Good Utility Practice" means any of the applicable practices, methods and
acts (i) required by NEPOOL, the Northeast Power Coordinating Council, the North
American Electric Reliability Council, ISO New England, Inc. or the successor of
any of them; (ii) required by the policies and standards of state regulatory
authorities having jurisdiction relating to emergency operations or otherwise
required by applicable law; or (iii) otherwise engaged in or approved by a
significant portion of the electric utility industry during the relevant time
period; which in each case in the exercise of reasonable judgment in light of
the facts known or that should have been known at the time a decision was made,
could have been expected to accomplish the desired result in a manner consistent
with law, regulation, safety, environmental protection, economy, and expedition.
Good Utility Practice is intended to be acceptable practices, methods or acts
generally accepted and lawful in the region, and is not intended to be limited
to the optimum practices, methods or acts to the exclusion of all others.
"Guarantor" means Mirant Corporation, a Delaware corporation.
"Guaranty" means the Guaranty Agreement substantially in the form of
Exhibit D to this Agreement.
"Interest Rate" shall mean a per annum rate of interest equal to the Prime
Rate plus two (2) percentage points (2%); provided, the Interest Rate shall
never exceed the maximum rate permitted by law.
"ISO-NE" shall mean the ISO New England, Inc. and any successor entity.
"kWh" shall mean kilowatt-hour.
"Large Customer Default Service Term" shall begin on the Commencement Date
of Service and extend through April 30, 2004 and for such further period, if
any, until the date a replacement supply contract for Default Service Power
becomes effective in accordance with the provisions of Section 2.1(h) of Exhibit
B to this Agreement or April 30, 2005, whichever comes first.
"Large Customer Group" shall mean all of UES's retail electric distribution
service customers taking electric service under UES's G-1 Rate Class, as defined
in UES's Tariff for Electric Service in the State of New Hampshire.
"NEPOOL" means the New England Power Pool or its successor.
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"NEPOOL Agreement" shall mean the New England Power Pool Agreement dated as
of September 1, 1971, as amended or restated from time to time.
"NEPOOL Open Access Transmission Tariff" shall mean the NEPOOL Open Access
Transmission Tariff, as restated or amended from time to time.
"Net Worth" of an entity means the consolidated total assets less
consolidated total liabilities of such entity as reflected on a balance sheet
prepared in accordance with generally accepted accounting principles
consistently applied.
"NHPUC" means the New Hampshire Public Utilities Commission.
"Non-PTF Facilities" shall mean the transmission and distribution
facilities of Public Service Company of New Hampshire, or its successor, that
are not categorized as PTF.
"Power Supply Agreement(s)" means the power supply agreements listed in
Exhibit G to this Agreement.
"Prime Rate" shall mean a rate which shall be fixed on a quarterly basis
based upon the rate most recently reported in The Wall Street Journal under the
heading "Money Rates" on or after the first business day of the calendar quarter
as the "prime rate". If more than one rate is reported therein, the average of
the reported rates shall be used.
"PTF" shall mean facilities categorized as Pool Transmission Facilities
under the NEPOOL Agreement.
"RTO" shall mean any regional transmission organization or other entity
established, and approved by the FERC, with authority over transmission
services, facilities or tariffs covering at least the New England control area.
"Small Customer Default Service Term" shall begin on the Commencement Date
of Service and extend through April 30, 2004 and for such further period, if
any, until the date a replacement supply contract for Default Service Power
becomes effective in accordance with the provisions of Section 2.1(h) of Exhibit
B to this Agreement or April 30, 2006, whichever comes first.
"Small Customer Group" shall mean all of UES's retail electric distribution
service customers except customers taking service under UES's G-1 Rate Class, as
defined in UES's Tariff for Electric Service in the State of New Hampshire.
"Supplier" means the party (or parties) with whom UPC has contracted for
the purchase and sale of Capacity and Associated Energy under a Power Supply
Agreement.
"Supplier Payment" shall have the meaning set forth in Section 3.1 of
Exhibit A to this Agreement.
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"Transition Service" shall have the meaning as defined in UES's Tariff for
Electric Service in the State of New Hampshire as amended from time to time.
"Transition Service Load" shall mean the total quantities of electric
energy consumed by UES's Transition Service customers in the Small Customer
Group and Large Customer Group as those quantities vary over time (minute by
minute, hour by hour and day by day), adjusted upward to include the associated
losses from the Delivery Points to the points of end-use. Load variations
encompassed in this requirement include changes in customer demand for any
reason, including, but not limited to, seasonal factors, daily load
fluctuations, retail competition, increased usage, demand side management
activities, extremes in weather, etc., but shall not include changes in customer
demand resulting from a material expansion of the Buyer's franchise service
territory from that in existence on the date of this Agreement. The units of
load may be kilowatts, kilowatt-hours or any combination or multiple thereof, as
required by context.
"Transition Service Power" shall mean the generation and delivery to the
Delivery Points of the quantities of electric energy, capacity and ancillary
services required by UES to meet Mirant's Transition Service Load as that load
varies over time (minute by minute, hour by hour and day by day).
"Transition Service Term" shall begin on the Commencement Date of Service
and extend through April 30, 2005 for the Large Customer Group and through April
30, 2006 for the Small Customer Group.
"Unassigned Agreements" means those Power Supply Agreements listed in
Exhibit G, Section 2 to this Agreement.
"Unit" means a generating unit specifically identified in a Power Supply
Agreement as the source of the Capacity and Associated Energy provided pursuant
to the terms of that Power Supply Agreement.
C-5
EXHIBIT D
GUARANTY
This Guaranty (this "Guaranty"), dated as of __________, 2003, is given by
Mirant Corporation, a Delaware corporation ("Guarantor"), in favor of Unitil
Power Corp. and Unitil Energy Systems, Inc. (collectively referred to herein as
the "Company").
RECITALS
WHEREAS, Mirant Americas Energy Marketing, LP, a Delaware limited
partnership corporation and a wholly-owned subsidiary of Guarantor ("Buyer"),
has entered into the Portfolio Sale and Assignment and Transition Service and
Default Service Supply Agreement dated as of February 25, 2003, with the Company
(the "Agreement"), pursuant to which Buyer has agreed to purchase and the
Company has agreed to sell certain entitlements with respect to Capacity and
Associated Energy, and the Buyer has agreed to sell and the Company has agreed
to purchase certain wholesale power supplies, as more particularly set forth
therein; and
WHEREAS, subject to the limitations set forth herein, Guarantor has agreed
to guarantee the obligations of Buyer under the Agreement; and
WHEREAS, the Company will rely on this Guaranty in performing its
obligations under the Agreement; and
WHEREAS, Guarantor will benefit from the transactions contemplated by the
Agreement.
NOW, THEREFORE, Guarantor agrees as follows:
I. Definitions. Capitalized terms used herein shall have the meanings assigned
to them herein or, if not defined herein, then such terms shall have the
meanings assigned to them in the Agreement.
II. Guaranty.
(a) Subject to the provisions hereof, Guarantor hereby absolutely,
unconditionally and irrevocably guarantees to the Company, as primary obligor
and not merely as a surety, the full and prompt payment when due of all
obligations of Buyer under the Agreement (all of such obligations collectively,
the "Guaranteed Obligations"). To the extent that the Buyer shall fail to pay
any Guaranteed Obligations, Guarantor shall promptly pay to the Company the
amount due. This Guaranty shall constitute a guaranty of payment and not of
collection.
(b) The aggregate amount covered by this Guaranty in respect of the Agreement
shall not exceed Twenty Million U.S. Dollars ($ 20,000,000).
D-1
III. Guaranty Absolute. The liability of Guarantor under this Guaranty shall be
unaffected by:
A. any lack of validity of the Agreement which is caused by an act or
failure to act of Buyer or Guarantor;
B. the occurrence or continuance of any event of bankruptcy, reorganization
or insolvency with respect to Buyer or any other Person (for purposes hereof,
"Person" shall include any natural person, corporation, partnership, firm,
association, governmental authority or any other entity whether acting in an
individual, fiduciary or other capacity), or the dissolution, liquidation or
winding up of Buyer or any other Person;
C. any amendment, supplement, reformation or other modification of the
Agreement;
D. the exercise, non-exercise or delay in exercising, by the Company or any
other Person of any of their rights and remedies under this Guaranty or the
Agreement;
E. any permitted assignment or other transfer of this Guaranty by the
Company, or any permitted assignment or other transfer of the Agreement in whole
or in part;
F. any change in control of the Company;
G. any sale, transfer or other disposition by Guarantor of any direct or
indirect interest it may have in Buyer; or
H. the absence of any notice to, or knowledge by, Guarantor of the
existence or occurrence of any of the matters or events set forth in the
foregoing clauses.
IV. Waiver. In addition to waiving any defenses to which clauses (a) through (g)
of Section III may refer:
A. Guarantor waives, and agrees that it shall not at any time insist upon,
plead or in any manner whatever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, marshalling of assets or redemption laws,
or exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by Guarantor of its obligations
under, or the enforcement by the Company of, this Guaranty.
B. Except as provided in Section VII below, Guarantor waives all notices,
diligence, presentment and demand (whether for nonpayment or protest or of
acceptance, maturity, extension of time, change in nature or form of the
Guaranteed Obligations, acceptance of security, release of security, composition
or agreement arrived at as to the amount of, or the terms of, the Guaranteed
Obligations, notice of adverse change in Buyer's financial condition, or any
other fact which might materially increase the risk to Guarantor hereunder) with
respect to the Guaranteed Obligations which are not specifically provided for in
the Agreement, and any other demands whatsoever which are not specifically
provided for in the Agreement.
D-2
C. Until payment and satisfaction in full of all Guaranteed Obligations,
Guarantor irrevocably waives any right it may have to bring a case or proceeding
against Buyer by reason of its performance under this Guaranty or with respect
to any other obligation of Buyer to Guarantor, under any state or federal
bankruptcy, insolvency, reorganization, moratorium or similar laws for the
relief of debtors.
V. Representations and Warranties. Guarantor represents and warrants as
follows:
A. Due Organization. Guarantor is a corporation duly organized and validly
existing under the laws of state of Delaware.
B. Power and Authority. Guarantor has full corporate power, authority and
legal right to enter into this Guaranty and to perform its obligations
hereunder.
C. Due Authorization. This Guaranty has been duly authorized, executed and
delivered by Guarantor.
D. Enforceability. This Guaranty constitutes the legal, valid and binding
obligation of Guarantor enforceable against Guarantor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally and except as enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
E. No Conflicts. The execution and delivery by Guarantor of this Guaranty
and the performance by Guarantor of its obligations hereunder will not (i)
violate the provisions of Guarantor's constituent documents; (ii) violate the
provisions of any law applicable to Guarantor or the transactions contemplated
hereby; or (iii) result in a breach of or constitute a default under any
material agreement to which Guarantor is a party or by which it or its assets or
property are bound which breach or default would have a material adverse effect
on Guarantor's ability to perform its obligations hereunder.
F. No Proceedings. There is no action, suit or proceeding at law or in
equity or by or before any governmental authority or arbitral tribunal now
pending or, to the best knowledge of Guarantor, threatened against Guarantor
which reasonably could be expected to have a material adverse effect on
Guarantor's ability to perform its obligations under this Guaranty.
VI. Setoffs and Counterclaims. Without limiting Guarantor's own defenses and
rights hereunder, and except as otherwise provided in Article III hereof,
Guarantor reserves to itself all rights, set-offs, counterclaims and other
defenses to which Buyer is or may be entitled to arising from or out of the
Agreement or otherwise.
VII. Demands and Notice. If Buyer fails or refuses to pay any Guaranteed
Obligations when due, Company shall make a demand upon Guarantor (hereinafter
referred to as a "Payment Demand"). A Payment Demand shall be in writing and
shall reasonably and briefly specify in what manner and what amount Buyer has
failed to pay and an explanation of why such payment is due, with a specific
statement that Company is
D-3
calling upon Guarantor to pay under this Guaranty. A Payment Demand satisfying
the foregoing requirements shall be deemed sufficient notice to Guarantor that
it must pay the Guaranteed Obligations.
VIII. Continuing Guaranty. This Guaranty is a continuing guaranty and shall
remain in full force and effect until all Guaranteed Obligations have been
performed or paid in full.
IX. Independent and Separate Obligations. The obligations of Guarantor hereunder
are independent of the obligations of Buyer with respect to all or any part of
the Guaranteed Obligations and, in the event of any default hereunder, a
separate action or actions may be brought and prosecuted against Guarantor
whether or not any other such obligations exist, whether or not Guarantor is the
alter ego of Buyer and whether or not Buyer is joined therein or a separate
action or actions are brought against Buyer.
X. Repayment and Reinstatement. If any claim is ever made upon the Company or
any Person claiming through the Company for repayment or disgorgement of any
amount or amounts received by the Company in payment of the Guaranteed
Obligations and the Company or such Person, as the case may be, repays or
disgorges all or any part of said amount, then, notwithstanding any revocation
or termination of this Guaranty, Guarantor shall be and remain liable to the
Company or such Person, as the case may be, for the amount so repaid, to the
same extent as if such amount had never originally been received by the Company
or such Person, as the case may be.
XI. Amendments; Waivers; Etc. Neither this instrument nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the Company and Guarantor. No delay or failure by the Company
to exercise any remedy against Buyer or Guarantor will be construed as a waiver
of that right or remedy. No failure on the part of the Company 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 any applicable law.
XII. Severability. In the event that the provisions of this Guaranty are claimed
or held to be inconsistent with any other instrument evidencing or securing the
Guaranteed Obligations, the terms of this Guaranty shall remain fully valid and
effective. If any one or more of the provisions of this Guaranty should be
determined to be illegal or unenforceable, all other provisions shall remain
effective.
XIII. Assignment.
(a) Assignability. Guarantor shall not have the right to assign any of
Guarantor's rights or obligations under this Guaranty. The Company may, at any
time and from time to time, upon written notice to Guarantor, assign, in whole
or in part, the rights of the Company hereunder to any Person to whom the
Company has assigned its rights or obligations under, and in accordance with the
terms of the Agreement, whereupon such assignee shall succeed to all rights of
the Company hereunder.
D-4
(b) Successors and Assigns. Subject to Section XIII(a) hereof, all of the terms
of this instrument shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
XIV. Address for Notices. All notices and other communications provided for
hereunder shall be given in accordance with the notice requirements of the
Agreement and if to Guarantor, at the address specified below the space for its
execution of this Guaranty.
XV. JURISDICTION.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE
STATE OF NEW HAMPSHIRE IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY. TO THE EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDINGS
BY THE MAILING OF COPIES OF SUCH PROCESS TO GUARANTOR AT ITS ADDRESS SPECIFIED
BELOW THE SPACE FOR ITS EXECUTION OF THIS GUARANTY. GUARANTOR AGREES THAT A
FINAL, NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW.
XVI. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK EXCEPT THE CHOICE OF LAW
RULES.
XVII. Entire Agreement. This Guaranty contains the complete agreement of
Guarantor with respect to the matters contained herein and supersedes all other
negotiations or agreements, whether written or oral, with respect to the subject
matter hereof.
XVIII. Release. At any time after this Guaranty has been paid and performed in
full, the transactions under the Agreement have been performed in full, or this
Guaranty otherwise is subject to release in accordance with the terms of the
Agreement, if requested by Guarantor, the Company shall return this Guaranty to
Guarantor and execute and deliver to Guarantor such release and other documents
and take such other reasonable action as Guarantor requests to evidence such
satisfaction.
XIX. Limitation of Liability. No shareholder of Guarantor shall be held to any
liability whatever for the payment of any sum of money, or for damages or
otherwise under any contract, obligation or undertaking made, entered into or
issued by the Trustees of Guarantor or by any officer, agent or representative
elected or appointed by the Trustees and no such contract, obligation or
undertaking shall be enforceable against the Trustees or any of them in their or
his or her own individual capacities or capacity and all such contracts,
obligations and undertakings shall be enforceable only against the Trustees as
D-5
such, and every person, firm, association, trust and corporation having any
claim or demand arising out of any such contract, obligation or undertaking
shall look only to the trust estate for the payment of satisfaction thereof.
IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal effective
as of the date first above written.
MIRANT CORPORATION
By:
Name:
Title:
Address:
Attn:
Telephone:
Facsimile:
ACCEPTED AND AGREED:
UNITIL POWER CORP.
By:
Name:
Title:
Address:
Attn:
Telephone:
Facsimile:
UNITIL ENERGY SYSTEMS, INC.
By:
Name:
Title:
Address:
Attn:
Telephone:
Facsimile:
D-6
EXHIBIT E
GOVERNMENTAL APPROVALS
New Hampshire Public Utilities Commission
1 Re Concord Electric Company and Exeter & Hampton Electric Company, Notice
of Intent to File Rate Schedules and Proposal to Restructure, Docket DE
01-247, Order Approving Phase I Settlement Agreement (New Hampshire Public
Utilities Commission Order No. 24,046, Aug. 28, 2002)
2 Re Concord Electric Company and Exeter & Hampton Electric Company, Notice
of Intent to file Rate Schedules and Proposal to Restructure, Docket DE
01-247, Order Approving Phase II Settlement Agreement; Amendment to Phase I
Settlement Agreement; and, Denying Motion for Rehearing of Order No. 24,046
(New Hampshire Public Utilities Commission Order No. 24,072, Oct. 25, 2002)
3 Re Unitil Energy Systems, Inc. and Unitil Power Corp., Proposal to
Restructure the Unitil Companies, Order Approving Certain Requests by
Unitil Companies in Connection with Indicative Round Bidding for the
Acquisition of Transition and Default Service (New Hampshire Public
Utilities Commission Order No. 24, 118, Jan. 30, 2003)
4 Unitil Energy Systems, Inc., Proposal to Restructure the Unitil Companies,
Approval by the New Hampshire Public Utilities Commission of UES Final
Tariffs, UES and UPC Amended System Agreement, Final Bidding for
Acquisition of Transition and Default Service and Finding that Portfolio
Sale and Assignment and Transition Service and Default Service Supply
Agreement is Consistent with RSA 374:F and the Public Interest (to be
filed)
Securities and Exchange Commission
5 Re Unitil Corporation et al, Order Authorizing Merger of Two Utility
Subsidiaries of a Registered Holding Company (Securities and Exchange
Commission, Release No. 27609, 70-10084, Dec. 2, 2002)
Federal Energy Regulatory Commission
6 Concord Electric Co., Exeter & Hampton Electric Co., and Unitil Energy
Systems, Inc., Order Authorizing Disposition of Jurisdictional Facilities,
FERC Docket EC 02-111-000, 101 FERCP. 62,050 (Oct. 23, 2002)
7 Concord Electric Co., Exeter & Hampton Electric Co., and Unitil Energy
Systems, Letter Order Authorizing Changes to Open Access Transmission
Tariff, FERC Docket ER03-140 (Dec. 20, 2002
E-1
8 Unitil Energy Systems, Inc., Notice of Succession, FERC Docket ER03-374
(pending)
9 Unitil Power Corp. and Unitil Energy Systems, Inc., Amended System
Agreement, FERC Docket ER03-483 (pending)
E-2
EXHIBIT F
EXCEPTIONS TO UPC REPRESENTATIONS
1. Unit Power Agreement Between New England Power Company And Unitil Power
Corp., Millstone Point Unit No.3, dated July 30, 1992 as amended, and
reflected in the Amended and Restated Unit Power Contract Between New
England Power Company and Unitil Power Corp., NEP FERC Electric Rate
Schedule, First Revised Volume No. 381 (Amended to replace Millstone Point
Unit No. 3 with Vermont Yankee and reflecting the purchase agreement
between Vermont Yankee and Entergy Vermont)
Vermont Yankee Nuclear Power Corporation ("VYNPC") and Entergy Nuclear
Vermont Yankee, LLC ("Entergy") are currently negotiating how the Purchase
Power Agreement, dated September 6, 2001 ("PPA") will be modeled under
NEPOOL Standard Market Design ("SMD"). VYNPC interprets the PPA to provide
for delivery of power via an Internal Bilateral Transaction ("IBT"), as
defined in NEPOOL Manual 35, at the Vermont Yankee bus. Entergy interprets
the PPA to provide for delivery of unit power via Asset Ownership Share
("Ownership Share"), as defined in NEPOOL Manual 35, at the Vermont Yankee
bus. The costs and obligations of the PPA are passed to New England Power
Company and then to UPC. UPC interprets the PPA to provide for delivery of
power via an Asset Ownership Share.
2. Unit Power Agreement Between New England Power Company And Unitil Power
Corp., Maine Yankee, dated July 30, 1992 as amended, and reflected in the
Amended and Restated Unit Power Contract Between New England Power Company
and Unitil Power Corp., NEP FERC Electric Rate Schedule, First Revised
Volume No. 382 (Amended to replace Maine Yankee with Vermont Yankee and
reflecting the purchase agreement between Vermont Yankee and Entergy
Vermont)
Please refer to the explanation of Exhibit F, Item Number 1, above.
3. Unit Sales Agreement, Dated June 30, 1993, Between The Connecticut Light
and Power Company And Unitil Power Corp. (Agreement for the sale of power
from the Norwalk Harbor 1 and 2 Units)
a. UPC is currently negotiating how this contract will be modeled under
NEPOOL SMD. The Connecticut Light and Power Company ("CL&P") and their
agent of the contract NRG Energy Inc. ("NRG") interprets the contract
to provide for delivery of power via an IBT to the Western
Massachusetts Electric Company and Public Service Company of New
Hampshire border. UPC interprets the contract to provide for delivery
of power via a generation Asset Ownership Share (as defined under
NEPOOL Manual 35) at the Norwalk Harbor bus.
F-1
b. NRG had disputed the Northeast Utilities charges, related to the
delivery charge for station service energy associated with the Norwalk
Harbor 1 and Norwalk Harbor 2 generators. UPC was notified of this
dispute in a letter, dated August 7, 2001. As a result of this
dispute, NRG has not billed UPC the Station Service charge, which was
stipulated in the Unit Sales Agreement. In an order dated, December
20, 2002, the FERC ruled on this dispute in favor of Northeast
Utilities. UPC is still awaiting an invoice from NRG for the
appropriate Station Service charge.
4. System Power Sales Agreement, Dated June 27,1994, Between The Connecticut
Light And Power Company, Western Massachusetts Electric Company, Holyoke
Water Power Company (Including Holyoke Power and Electric Company), Public
Service Company of New Hampshire and Unitil Power Corp.
a. The Connecticut Light And Power Company, Western Massachusetts
Electric Company, Holyoke Water Power Company (Including Holyoke Power
and Electric Company), Public Service Company (collectively "NU") and
their agent under the contract Select Energy, Inc. ("Select") do not
have access to hourly availability data of the Millstone 2, Millstone
3, and Seabrook nuclear generating units. Under SMD, the ISO will no
longer be providing this information for the settlement of the NU and
Select contend that they do not have enough information to price the
Base System portion of the contract because of the lack of hourly
information. UPC has suggested using the NRC Power Reactor Status
Reports, which provides information about nuclear availability on a
daily basis rather than an hourly basis. NU and Select and UPC are in
the process of negotiating a work-around.
b. NU and Select and UPC have also not agreed on the appropriate delivery
point for both the Base and Intermediate portions of the contract. The
System Power Sales Agreement states that the delivery point is the
Public Service Company of New Hampshire ("PSNH") border. NU and Select
contend that delivery at the Seabrook Station node satisfies this
requirement, while UPC contends that the power should be delivered at
the Western Massachusetts Electric Company border with PSNH.
F-2
EXHIBIT G
POWER SUPPLY AGREEMENTS
I. ASSIGNED AGREEMENTS
It is anticipated that no Power Supply Agreements will be Assigned
Agreements at the time of the execution of the Agreement.
II. UNASSIGNED AGREEMENTS
1. Amended and Restated Purchased Power Agreement between Great Bay Power
Corporation (Great Bay Power Marketing, Inc. as assignee) and Unitil
Power Corp., made and entered into as of November 1, 2002
2. Unit Power Agreement Between New England Power Company And Unitil
Power Corp., Ocean State Power Units 1 and 2, dated July 30, 1992
3. Unit Power Agreement Between New England Power Company And Unitil
Power Corp., Millstone Point Unit No.3, dated July 30, 1992 as
amended, and reflected in the Amended and Restated Unit Power Contract
Between New England Power Company and Unitil Power Corp., NEP FERC
Electric Rate Schedule, First Revised Volume No. 381 (Amended to
replace Millstone Point Unit No. 3 with Vermont Yankee and reflecting
the purchase agreement between Vermont Yankee and Entergy Vermont)
4. Unit Power Agreement Between New England Power Company And Unitil
Power Corp., Maine Yankee, dated July 30, 1992 as amended, and
reflected in the Amended and Restated Unit Power Contract Between New
England Power Company and Unitil Power Corp., NEP FERC Electric Rate
Schedule, First Revised Volume No. 382 (Amended to replace Maine
Yankee with Vermont Yankee and reflecting the purchase agreement
between Vermont Yankee and Entergy Vermont)
5. Unit Sales Agreement, Dated June 30, 1993, Between The Connecticut
Light and Power Company And Unitil Power Corp. (Agreement for the sale
of power from the Norwalk Harbor 1 and 2 Units)
6. Unit Sales Agreement, Dated March 19, 1993, Between Public Service
Company of New Hampshire and Unitil Power Corp. (Agreement for the
sale of power from the Newington Unit)
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7. System Power Sales Agreement, Dated June 27,1994, Between The
Connecticut Light And Power Company, Western Massachusetts Electric
Company, Holyoke Water Power Company (Including Holyoke Power and
Electric Company), Public Service Company of New Hampshire and Unitil
Power Corp.
8. Purchased Power Agreement, Dated February 10, 1992, Between The United
Illuminating Company And Unitil Power Corp. (Agreement for the sale of
power from the Bridgeport Harbor Station No. 3 and the New Haven
Harbor Station Units, which was assigned to Wisvest-Connecticut, LLC,
now known as PSEG Connecticut LLC).
G-2
EXHIBIT H
FORM OF MIRANT LEGAL OPINION
(1) Mirant is a limited partnership validly existing and in good standing
under the laws of the State of Delaware, and the Guarantor is a corporation
validly existing and in good standing under the laws of the State of Delaware.
Each of Mirant and the Guarantor has the requisite limited partnership or
corporate power and authority to carry on its business. Mirant is duly
authorized to enter into and perform the Agreement, and the Guarantor is duly
authorized to enter into and perform the Guaranty.
(2) The Agreement has been duly authorized by all necessary action on the
part of Mirant, and the Guaranty has been duly authorized by all necessary
action on the part of the Guarantor. The Agreement has been duly executed and
delivered by Mirant and the Guaranty has been duly executed and delivered by the
Guarantor, and each constitutes the legal, valid and binding obligation of
Mirant and the Guarantor, respectively, enforceable in accordance with its
terms, subject to any applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity (regardless of
whether such principles are considered in a proceeding at law or in equity).
(3) The execution and delivery by each of Mirant and the Guarantor of the
Agreement and the Guaranty are not, and the performance by each of Mirant and
the Guarantor of each of their obligations under the Agreement and the Guaranty
in accordance with their respective terms will not be, in violation of the
Limited Partnership Agreement or Certificate of Limited Partnership of Mirant or
the Certificate of Incorporation or By-laws of the Guarantor, and, to our
knowledge, do not contravene or result in any breach of any provision of, or
constitute a default or result in the creation or imposition of any lien upon
the property of either of Mirant or the Guarantor under, any agreement or other
instrument to which either of Mirant or the Guarantor is a party or by which
either of Mirant or the Guarantor is bound, or, to our knowledge, require the
consent or approval of any person except such as have been duly obtained, given
or accomplished.
(4) No consent, exemption, approval or authorization by, or filing with any
governmental authority is required in connection with the execution, delivery
and performance of the Agreement and the Guaranty by Mirant and the Guarantor,
respectively, and the consummation of the transactions contemplated thereby.
(5) To our knowledge, without conducting a search of any dockets, there are
no actions, suits, investigations or proceedings to which either of Mirant or
the Guarantor is a party in any United States federal or state court or before
any other United States federal or state governmental authority which, if
determined adversely to either of Mirant or the Guarantor, would materially and
adversely affect the ability of either of Mirant or the Guarantor to execute,
deliver and perform its respective obligations under the Agreement and the
Guaranty, and neither Mirant nor the Guarantor is, to our knowledge,
H-1
without investigation, in default with respect to any order, judgment or decree
of any United States federal or state court or governmental authority to which
either is a party or by which either is bound.
(6) To our knowledge, without conducting a search of any dockets, there are
no proceedings pending or threatened against or affecting either of Mirant or
the Guarantor before any United States federal or state court or administrative
or governmental body which, in the aggregate, if determined adversely to either
of Mirant or the Guarantor, would materially and adversely affect the ability of
either of Mirant or the Guarantor to execute, and deliver and perform the
Agreement or the Guaranty.
H-2
EXHIBIT I
FORM OF UPC AND UES LEGAL OPINION
(1) Each of UES and UPC is a corporation validly existing and in good
standing under the laws of the State of New Hampshire. Each of UES and UPC has
the requisite corporate power and authority to carry on its business and each is
duly authorized to enter into and perform the Agreement.
(2) The Agreement has been duly authorized by all necessary action on the
part of each of UES and UPC, has been duly executed and delivered by each of UES
and UPC, and constitutes the legal, valid and binding obligation of each of UES
and UPC enforceable in accordance with its terms, subject to any applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and to
general principles of equity (regardless of whether such principles are
considered in a proceeding at law or in equity).
(3) The execution and delivery by each of UES and UPC of the Agreement are
not, and the performance by each of UES and UPC of each of their obligations
under the Agreement in accordance with its terms will not be, in violation of
the Articles of Incorporation or By-laws of either of UES or UPC, and, to our
knowledge, do not contravene or result in any breach of any provision of, or
constitute a default or result in the creation or imposition of any lien upon
the property of either of UES or UPC under, any agreement or other instrument to
which either of UES or UPC is a party or by which either of UES or UPC is bound,
or, to our knowledge, require the consent or approval of any person except such
as have been duly obtained, given or accomplished.
(4) The execution, delivery and performance of the Agreement by UPC and
UES, and the consummation of the transactions contemplated thereby, have to the
extent required by law been duly authorized by orders of the NHPUC and FERC,
such orders are in full force and effect, the applicable appeal periods have
expired, and no other consent, exemption, approval or authorization by, or
filing with any other governmental authority is required in connection with the
execution and delivery of the Agreement.
(5) To our knowledge, without conducting a search of any dockets, there are
no actions, suits, investigations or proceedings to which either of UES or UPC
is a party in any United States federal or state court or before any other
United States federal or state governmental authority which, if determined
adversely to either of UES or UPC, would materially and adversely affect the
ability of either of UES or UPC to execute, deliver and perform its obligations
under the Agreement, and neither UES nor UPC is, to our knowledge, without
investigation, in default with respect to any order, judgment or decree of any
United States federal or state court or governmental authority to which either
is a party or by which either is bound.
I-1
(6) To our knowledge, without conducting a search of any dockets, there are
no proceedings pending or threatened against or affecting either of UES or UPC
before any United States federal or state court or administrative or
governmental body which, in the aggregate, if determined adversely to either of
UES or UPC, would materially and adversely affect the ability of either of UES
or UPC to execute, and deliver and perform the Agreement.
I-2
Exhibit 11.1
UNITIL CORPORATION
Computation in Support of Earnings per Share
Year Ended December 31,
---------------------------------------
2002 2001 2000
---------------------------------------
(000's omitted)
BASIC EARNINGS PER SHARE
Net Income before Extraordinary Item $ 6,088 $ 5,027 $ 7,216
Extraordinary Item, net --- (3,937) ----
---------------------------------------
Net Income 6,088 1,090 7,216
Less: Dividend Requirements on Preferred Stock 253 257 263
---------------------------------------
Net Income Applicable to Common Stock $ 5,835 $ 833 $ 6,953
---------------------------------------
Average Number of Common Shares Outstanding 4,744 4,744 4,723
---------------------------------------
Basic Earnings per Average Common Shares Outstanding $ 1.23 $ 0.18 $ 1.47
---------------------------------------
DILUTED EARNINGS PER SHARE
Net Income before Extraordinary Item $ 6,088 $ 5,027 $ 7,216
Extraordinary Item, net --- (3,937) ----
---------------------------------------
Net Income 6,088 1,090 7,216
Less: Dividend Requirements on Preferred Stock 253 257 263
---------------------------------------
Net Income Applicable to Common Stock $ 5,835 $ 833 $ 6,953
---------------------------------------
Average Number of Common Shares Outstanding plus
Assumed Options converted* 4,762 4,760 4,743
---------------------------------------
Basic Earnings per Average Common Shares Outstanding $ 1.23 $ 0.18 $ 1.47
---------------------------------------
* Assumes all options were converted to common shares per SFAS 128.
Exhibit 12.1
UNITIL CORPORATION
Computation in Support of Ratio of Earnings to Fixed Charges
Year Ended December 31,
2002 2001 2000 1999 1998
------------------------------------------------------------------
(000's Omitted Except Ratio)
Earnings:
Net Income before Extraordinary Item $ 6,088 $ 5,027 $ 7,216 $ 8,438 $ 8,249
Extraordinary Item, net ---- (3,937) ---- ---- ----
--------------------------------------------------------
Net Income, per Consolidated Statement
of Earnings 6,088 1,090 7,216 8,438 8,249
Federal and State Income Taxes included in:
Operations 2,490 3,421 3,413 4,047 3,710
Investment Write-down ---- 1,236 ---- ---- ----
Extraordinary Item ---- 1,388 ---- ---- ----
Interest on Long-Term Debt 8,254 7,637 6,440 6,477 5,412
Amortization of Debt Discount Expense 81 72 60 60 61
Other Interest 1,038 1,895 2,105 1,091 1,787
--------------------------------------------------------
Total $ 17,951 $ 16,739 $ 19,234 $ 20,113 $ 19,219
--------------------------------------------------------
Fixed Charges:
Interest of Long-Term Debt $ 8,254 $ 7,637 $ 6,440 $ 6,477 $ 5,412
Amortization of Debt Discount Expense 81 72 60 60 61
Other Interest 1,038 1,895 2,105 1,091 1,787
Pre-tax Preferred Stock Dividend Requirements 419 417 398 406 415
--------------------------------------------------------
Total $ 9,792 $ 10,021 $ 9,003 $ 8,034 $ 7,675
--------------------------------------------------------
Ratio of Earnings to Fixed Charges 1.83 1.67 2.14 2.50 2.50
--------------------------------------------------------
Exhibit 21.1
Subsidiaries of Registrant
The Company or the registrant has six wholly-owned subsidiaries, five of which
are corporations organized under the laws of the State of New Hampshire: Unitil
Energy Systems, Inc., Unitil Power Corp., Unitil Realty Corp., Unitil Resources,
Inc. and Unitil Service Corp. The sixth, Fitchburg Gas and Electric Light
Company, is organized under the laws of the State of Massachusetts. Usource,
Inc., which is a corporation organized under the laws of the State of Delaware,
is a wholly-owned subsidiary of Unitil Resources, Inc. Usource L.L.C., which is
a corporation organized under the laws of the State of Delaware, is a
wholly-owned subsidiary of Usource, Inc.
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 7, 2003, accompanying the
consolidated financial statements and schedule included in the Annual Report of
Unitil Corporation and subsidiaries on Form 10-K for the year ended December 31,
2002. We hereby consent to the incorporation by reference of said report in the
Registration Statements of Unitil Corporation and subsidiaries on Form S-3 (File
No. 333-42264 filed on July 26, 2000) and on Form S-8 (File No. 333-42266 filed
on July 26, 2000).
/s/ GRANT THORNTON LLP
Boston, Massachusetts
March 24, 2003
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Unitil Corporation (the "Company") on
Form 10-K for the period ending December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), each of the
undersigned Robert G. Schoenberger, Chief Executive Officer, Mark H. Collin,
Chief Financial Officer and Laurence M. Brock, Controller of the Company,
certifies, to the best knowledge and belief of the signatory, pursuant to 18
U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Signature Capacity Date
/s/ Robert G. Schoenberger
- -------------------------------
Robert G. Schoenberger Chief Executive Officer March 25, 2003
/s/ Mark H. Collin
- -------------------------------
Mark H. Collin Chief Financial Officer March 25, 2003
/s/ Laurence M. Brock
- -------------------------------
Laurence M. Brock Controller March 25, 2003
Unitil Service Corp.