Exhibit 10.1.1
(COMPOSITE CONFORMED COPY - as amended)
Amendment No. 1-May 1, 1986
Amendment No. 2-September 1, 1987
Amendment No. 3-August 1, 1988
 

EQUITY FUNDING AGREEMENT
FOR
NEW ENGLAND HYDRO-TRANSMISSION ELECTRIC COMPANY, INC.
DATED AS OF JUNE 1, 1985
 

96087766.2
 
 

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TABLE OF CONTENTS

    
Sections
 
Page
Section 1.
Basic Understandings and Purpose
1
Section 2.
Conditions Precedent to Effectiveness
5
Section 3.
Effective Date and Term
8
Section 4.
Equity Sponsor Qualification
9
Section 5.
Equity Shares
11
Section 6.
Relationship among Equity Sponsors
13
Section 7.
Equity Contribution
14
Section 8.
Cash Deficiency Guarantee
17
Section 9.
Acceptance of Participating Shares
19
Section 10.
Commitments under the AC Support Agreements
20
Section 11.
Character of Payment Obligations
21
Section 12.
Default
22
Section 13.
Restrictions on Transfer of Common Stock
24
Section 14.
Dividends on Common Stock
24
Section 15.
Restrictions on Dividends, Return of Capital and Repurchase of Common Stock
24
Section 16.
Certain Actions of New England Hydro
24
Section 17
Miscellaneous
25

Signature Pages
 
X
Schedule I
- VELCO
X
Schedule II
- MMWEC
X

ATTACHMENT A
List of Equity Sponsors
X
ATTACHMENT B
Documentation
X
ATTACHMENT C
Subscription Process for Determining
Equity Shares under Section 5(B)
X

EQUITY FUNDING AGREEMENT
FOR
NEW ENGLAND HYDRO-TRANSMISSION ELECTRIC COMPANY, INC.
This AGREEMENT dated as of June 1, 1985, is between New England
Hydro-Transmission Electric Company, Inc. (New England Hydro) and the New
England entities listed in Attachment A hereto. New England Power Company is
signing this Agreement only with respect to the commitments made to it by the
Equity Sponsors under Section 10 hereof. Those New England entities that have
executed this Agreement and that meet the further conditions for participation
and qualification hereunder are hereinafter referred to as Equity Sponsors or
individually as an Equity Sponsor. The Equity Sponsors are sometimes referred to
collectively herein, but their rights and obligations hereunder are several and
not joint as described in Section 6 hereof.
In consideration of the premises, the concurrent execution of the other Basic
Agreements hereinafter referred to, the mutual covenants hereinafter and therein
set forth, and other good and valuable consideration, receipt whereof is hereby
acknowledged, it is hereby agreed as follows:
Section 1. Basic Understandings and Purpose
New England utilities are currently participating in the arrangements for the
Phase I interconnection planned by the New England Power Pool (NEPOOL) with
Hydro-Quebec, which is to consist of a + 450 kV HVDC transmission line from a
terminal at the Des Cantons Substation on the Hydro-Quebec system near
Sherbrooke, Quebec to a terminal having an approximate rating of 690 MW at a
substation at the Comerford Generating Station on the Connecticut River
(hereinafter referred to as Phase I). The basic arrangements covering the
portion of Phase I in the United States are set forth in the New England Power
Pool Agreement, as amended (the NEPOOL Agreement) and three contracts among the
participants in Phase I as follows:
1.
Vermont Transmission Line Support Agreement, dated as of December 1, 1981, as
amended, with Vermont Electric Transmission Company, Inc.

2.
Phase I Terminal Facilities Support Agreement, dated as of December 1, 1981, as
amended, with New England Electric Transmission Corporation, and

3.
Agreement With Respect To Use Of Quebec Interconnection, dated as of December 1,
1981, as amended, including the restatement thereof in connection with Phase II
(this Agreement as restated to cover Phase II is hereinafter referred to as the
Use Agreement).

These Phase I interconnection facilities are currently under construction with
completion scheduled during 1986.
With the completion of arrangements for Phase I and the related contracts with
Hydro-Quebec, the members of NEPOOL have conducted studies of the benefits of an
expanded interconnection for NEPOOL with Hydro-Quebec (Phase II) and have
negotiated with Hydro-Quebec a firm energy arrangement to utilize the expanded
interconnection facilities.
The portion of Phase II in the United States will consist of an extension of the
Phase I DC transmission line from the proposed terminus of Phase I at the
Comerford Station through New Hampshire to a site in Massachusetts with
additional terminal facilities installed at that site to increase the total
transfer capacity between Hydro Quebec and NEPOOL from the 690 MW of Phase I to
approximately 2000 MW. Reinforcements to the existing AC transmission system of
New England Power and to certain AC facilities of Boston Edison Company will
also be required. The United States portion of the Phase II facilities will be
designated as pool-planned facilities in the same manner as the United States
portion of the Phase I facilities was so designated.
Each Equity Sponsor acknowledges that it has been represented on the Executive
and Planning Committees of NEPOOL that had responsibility for evaluating the
feasibility of Phase II and, through this representation, actively participated
in the decision of NEPOOL to go forward with Phase II. Furthermore, each Equity
Sponsor represents that it made its own independent investigations and inquiries
as it deemed appropriate and did not rely upon representations (other than those
contained in this Agreement) of New England Hydro or its affiliates in deciding
to enter into this Agreement.
The sharing of benefits among the New England utilities associated with Phase II
is set forth in the Use Agreement. The Use Agreement also permits each New
England utility to make its own entitlement transactions with Hydro Quebec and
to use the interconnection for such transactions.
The provisions of the Phase II Massachusetts Transmission Facilities Support
Agreement (Massachusetts HVDC Support Agreement) cover the Phase II
Massachusetts HVDC transmission line and terminal facilities in Massachusetts.
New England Hydro will build, own, operate, and maintain those Massachusetts
HVDC transmission facilities.
The portion of the Phase II HVDC transmission line to be constructed in New
Hampshire is covered under the Phase II New Hampshire Transmission Facilities
Support Agreement (New Hampshire HVDC Support Agreement). New England
Hydro-Transmission Corporation (New Hampshire Hydro, an affiliate of New England
Hydro) will build, own, operate, and maintain those New Hampshire HVDC
transmission facilities.
All improvements and reinforcements to the AC transmission system in
Massachusetts necessitated by Phase II are covered under the Phase II New
England Power AC Facilities Support Agreement (New England Power AC Support
Agreement) and the Phase II Boston Edison AC Facilities Support Agreement
(Boston Edison AC Support Agreement).
The provisions of this Agreement cover the commitments of the Equity Sponsors of
New England Hydro to contribute equity funds to New England Hydro, to provide
certain limited credit support in connection with debt financing of New England
Hydro, to provide certain limited credit support in connection with the New
England Power AC Support Agreement and the Boston Edison AC Support Agreement,
and to accept an allocation of a share of Phase II in the event of a default by
certain participating New England utilities under certain other Basic
Agreements.
In view of the need to formalize the agreements among the parties at an early
date so that (i) binding commitments with Hydro Quebec for Phase II may be made,
(ii) binding commitments for ultimate construction and the financing of the
United States portion of Phase II may be undertaken consistent with the time
schedule anticipated by NEPOOL and with the assurance that commitments among the
New England utilities are in place, and (iii) licensing activities may proceed
on a schedule that enables completion of such construction consistent with the
time schedule anticipated by NEPOOL, the following agreements are concurrently
being entered into (the “Basic Agreements”) which collectively set forth rights
and obligations with respect to the foregoing undertaking: (1) this Agreement;
(2) the Massachusetts HVDC Support Agreement; (3) the New Hampshire HVDC Support
Agreement; (4) the Equity Funding Agreement for New Hampshire Hydro; (5) the New
England Power AC Support Agreement; (6) the Use Agreement; (7) various
amendments to the NEPOOL Agreement relating to the sharing of savings,
capability responsibilities, and Pool transmission arrangements; and (8) the
Boston Edison AC Support Agreement.
In order to coordinate each participating utility’s interest in Phase II to the
fullest extent possible, each of the following Basic Agreements have been
drafted with the intent that the participating interest of each participating
utility will be the same under each agreement: the Massachusetts HVDC Support
Agreement, the New Hampshire HVDC Support Agreement, the New England Power AC
Support Agreement, the Boston Edison AC Support Agreement, and the Use
Agreement. These Basic Agreements also provide that, notwithstanding any
provision thereof that may be interpreted to the contrary, the proper
interpretation of each of these Basic Agreements is to be consistent with such
overriding intent. Each Equity Sponsor acknowledges this overriding intent and
agrees that any action by it or its appointee affecting such participating
interests shall be the same under this Agreement and the Equity Funding
Agreement with New Hampshire Hydro in order to also be consistent with such
overriding intent.
Section 2.     Conditions Precedent to Effectiveness
The effectiveness of this Agreement, and all rights, obligations, and
performance of the signatories hereunder, is subject to (1) New England Electric
System (NEES) and other signatories having executed this Agreement committing in
the aggregate to Equity Shares (as hereinafter defined) equal to at least 100%,
and each such signatory having demonstrated by February 1, 1988, to the
satisfaction of New England Hydro that it is qualified to be an Equity Sponsor
pursuant to Section 4, (ii) New England Hydro or New Hampshire Hydro or New
England Power or Boston Edison and members of NEPOOL (including Boston Edison
and New England Power) serving at least 66-2/3% of the aggregate kilowatthour
load served by NEPOOL members in 1980 having executed the other Basic Agreements
(except for the Equity Funding Agreement for New Hampshire Hydro and the
amendments to the NEPOOL Agreement), (iii) each signatory having also executed
the Equity Funding Agreement for New Hampshire Hydro and having the same
percentage of New Hampshire Hydro’s equity as its Equity Share hereunder, (iv)
members of NEPOOL having executed the amendments to the NEPOOL Agreement for
Phase II in order that such amendments may become effective in accordance with
the NEPOOL Agreement, and (v) each signatory having satisfied the conditions
precedent set forth below.
By September 15, 1988, each signatory to this Agreement shall provide
certificates and legal opinions from counsel satisfactory to New England Hydro,
together with certified copies of related resolutions, consents, approvals,
authorizations, and other documents (Documentation) necessary to establish to
the satisfaction of New England Hydro that all corporate and regulatory
consents, waivers, approvals, authorizations and other actions necessary in
connection with performance by such signatory of its obligations under the
Agreement have been obtained and are in full force and effect, that the
Agreement has been duly authorized, executed, and delivered by such signatory,
and that it constitutes a binding commitment by the signatory enforceable in
accordance with its terms. Forms of Documentation acceptable to New England
Hydro are included in Attachment B hereto. Prior to signing this Agreement, each
signatory has provided to New England Hydro a listing of all consents, waivers,
approvals, authorizations, and other actions required for that signatory to
deliver its Documentation.
Vermont Electric Power Company, Inc. (VELCO) and Massachusetts Municipal
Wholesale Electric Company (MMWEC) represent qualified signed on Schedules and
MMWEC contracts a number of electric systems. If they desire and are to be
Equity Sponsors, they shall be deemed to have behalf of those respective systems
listed in I or II, respectively. By September 1, 1988, VELCO will provide New
England Hydro with copies of with their respective systems which impose absolute
and unconditional obligations on such systems to pay their proportionate shares
of all costs or obligation incurred under this Agreement by VELCO or MMWEC,
respectively. By that date, VELCO and MMWEC will also provide to New England
Hydro as part of their Documentation certificates, legal opinions (from counsel
satisfactory to New England Hydro), and other documents in form and substance
satisfactory to New England Hydro representing unconditionally that all
consents, approvals, and authorizations have been obtained by their contracting
systems in connection with each such system’s performance of its obligations
under its respective contract with VELCO or MMWEC and that each such contract
imposes absolute and unconditional obligations on such systems to pay their
proportionate shares of all costs incurred under this Agreement by VELCO or
MMWEC, respectively, and has been duly authorized, executed, and delivered and
is a binding commitment of such system enforceable in accordance with its terms.
If regulatory approvals have not been obtained by September 1, 1988, such
representations shall be conditioned upon receipt of regulatory approvals. VELCO
and MMWEC will have until September 15, 1988, to receive such approvals and make
such representations unconditionally. In order that percentages of participation
be consistent among the Basic Agreements, VELCO and MMWEC shall have their
contracts with their contracting systems cover the necessary commitments for
each Basic Agreement.
All expenses in connection with obtaining and delivering any Documentation under
this Agreement, including legal opinions, are to be borne by the signatory
incurring such expense. New England Hydro will have no responsibility for any
expenses incurred by VELCO and MMWEC in providing Documentation for their
respective contracting systems.
Any signatory that fails to meet the requirements of Section 2 by the deadlines
contained herein will not be an Equity Sponsor under this Agreement and will not
have any rights and obligations hereunder.
New England Hydro by written notice to all signatories may extend any deadline
date specified in this Agreement to a later date, provided that any extension
for longer than six months requires the consent of the Advisory Committee under
the Massachusetts HVDC Support Agreement.
Section 3.     Effective Date and Term
This Agreement shall become effective (the Effective Date) upon the last to
occur of the following dates:
(i)
the date that the Equity Sponsors, committing in the aggregate to Equity Shares
(as hereinafter defined) equal to at least 100%, have met the requirements of
Section 2; and

(ii)
the date that the last of the other Basic Agreements (excluding the Use
Agreement) becomes effective or would become effective but for a condition that
its effectiveness is subject to this Agreement becoming effective.

Upon execution and delivery of the Agreement by New England Hydro and NEES and
other signatories committing in the aggregate to Equity Shares (as hereinafter
defined) equal to no less than 100%, and notwithstanding any provision herein to
the contrary, no signatory may terminate its obligations hereunder except in
accordance with provisions of this Agreement.
The term of this Agreement shall expire on the later to occur of the termination
dates of the Massachusetts HVDC Support Agreement or the New England Power and
Boston Edison AC Support Agreements.
Section 4.     Equity Sponsor Qualification
A.    In order to enhance New England Hydro’s ability to finance its portion of
Phase II as required under the Massachusetts HVDC Support Agreement and to
enhance the credit support of certain Supporters under the AC Support Agreement,
some or all of the New England utilities participating in Phase II whose credit
ratings are at least one grade above the lowest investment grade have agreed to
provide, or to cause their designees to provide, credit support for those New
England utilities participating in Phase II whose credit ratings are below
investment grade. NEES and those New England utilities or their designees which
have agreed to provide this credit support are the Equity Sponsors of New
England Hydro under this Agreement.
B.    A Participant under the Massachusetts HVDC Support Agreement or its
authorized designee qualifies to be an Equity Sponsor by having its outstanding
long-term debentures rated at least one grade above the lowest investment grade
rating as of September 1, 1985. If no long-term debentures are outstanding, the
ratings used shall be those of such company’s most junior long-term mortgage or
revenue bonds. If no mortgage bonds, revenue bonds, or debentures are
outstanding, the ratings used shall be those of the most junior long-term debt.
VELCO shall qualify to be an Equity Sponsor if 80% or more of its common stock
is owned by utilities whose debt securities qualify pursuant to this subsection
4(B).
For purposes of this Agreement, “one grade above the lowest investment grade
rating” means a rating equal to the following ratings from two of these rating
agencies: Standard and Poor’s Corporation - Rating BBB; Moodys Investor Service
- Rating Baa2; and Duff & Phelps - Rating D&P 9 (or the equivalent municipal
ratings).
C.    A “designee” shall be authorized to be an Equity Sponsor if it is a parent
company of such Participant and (i) its debt securities meet the appropriate
test specified in B above, or (ii) at least 80% of its consolidated utility
revenues are derived from subsidiaries whose debt securities meet the
appropriate test specified in B above. (For VELCO, each stockholder of VELCO
shall be a parent company of VELCO.) On or before the date of execution of this
Agreement, each Participant shall identify its designee, if any.
D.    A Participant under the Massachusetts HVDC Support Agreement also
qualifies to be an Equity Sponsor if it has an Equity Share of four tenths of
one percent (0.4%) or less and it has only one long-term debt rating from any of
the three rating agencies referred to in B above and such rating is at least
“A3” as of September 1, 1985.
E.    In order that the necessary credit enhancement is provided as specified in
A above, the qualification of each Equity Sponsor shall be reviewed by New
England Hydro as of the date that the first equity contributions are to be made
by such Equity Sponsor. If an Equity Sponsor fails to qualify on such date,
appropriate actions and allocations shall be instituted as provided elsewhere in
this Agreement.
F.    Notwithstanding any provision of Sections 2, 4(B), and 4(D) to the
contrary, if a Participant (i) has only one credit rating and seeks to qualify
to be an Equity Sponsor under above, or (ii) has no credit rating at all and
seeks to qualify to be an Equity Sponsor under B or D above, such new credit
rating or ratings must be received by February 1, 1988, from one or more of the
rating agencies referred to in B above and such new credit rating or ratings
shall be current. Such Participant must demonstrate by February 1, 1988, to the
satisfaction of New England Hydro that it is qualified to be an Equity Sponsor
pursuant to this Section 4.
Section 5.     Equity Shares
A.    Each Equity Sponsor shall have and be charged with a percentage interest
in all rights and obligations hereunder determined in accordance with this
Section 5 (which interest is hereinafter referred to as its “Equity Share”). All
of the equity of New England Hydro will be owned by the Equity Sponsors in
proportion to their Equity Shares.
The Equity Share of each Equity Sponsor shall be computed both initially and as
changed from time to time in accordance with the terms hereof, by New England
Hydro as hereinafter provided. Such computations shall be made as of the first
day of any month in which there is a change in the number of Equity Sponsors or
any change in the interest of any Equity Sponsor as herein provided. The initial
computation is to be made as of September 15, 1985, and subsequent computations
are to be made in any month thereafter in which an interest is modified or
terminated due (i) to the failure of a signatory to provide proof that it is
qualified to be an Equity Sponsor by February 1, 1988, or (ii) to the failure to
provide Documentation by September 15, 1988, or (iii) to the failure to be so
qualified on the date the first equity contributions are to be made by such
Equity Sponsor, or (iv) to the operation of any provision of this Agreement. All
computations shall be final unless there is a manifest error. Such computations
of Equity Sponsors’ Equity Shares as initially calculated and as changed under
(i) and (ii) shall be made pursuant to Attachment C. Changes under (iii) shall
be made pursuant to section 5(C) below, and changes under (iv) shall be made
pursuant to the appropriate section requiring the change.
B.    The Equity Shares on and as of the initial computation date, and as of the
date of subsequent computations under subparts (i) and (ii) of the second
paragraph of A above, will be calculated as follows:
1.
51% to NEES; and

2.
49% apportioned among the other Equity Sponsors on the basis of the subscription
process as described in Attachment C.

(Attachment C provides that each Equity Sponsor may specify a maximum percentage
of equity and that such maximum shall remain in effect until September 15, 1988
or such later deadline if extended pursuant to Section 2 hereof.) After the
initial computation and prior to the Effective Date, each Equity Sponsor may
transfer any or all of its Equity Share to one or more other Equity Sponsors. On
or before September 1, 1988, any such Equity Sponsor which has transferred or
intends to transfer any or all of its Equity Share to one or more other Equity
Sponsors, must provide documentation to New England Hydro covering the transfer.
Any apportionment of Equity Shares pursuant to Section 5B(2) above shall be made
without regard to (i) any transfers of Participating Shares pursuant to Section
4 of the Massachusetts HVDC Support Agreement or (ii) any transfers of Equity
Shares made after the initial computation and prior to the Effective Date,
provided that each Equity Sponsor which has agreed to take such transferred
Equity Share has provided the required Documentation by September 15, 1988
(including Documentation covering any such transferred Equity Share). Any
transfers of Equity Shares, as provided above, shall be taken into account after
such apportionment.
Upon execution of this Agreement, MMWEC may receive any such transferred Equity
Shares; however, MMWEC shall not be included as an Equity Sponsor in any
computations pursuant to the first paragraph of this Section 56.
C.    On the basis of New England Hydro’s review of the qualifications of each
Equity Sponsor other than NEES as of the date that the first equity
contributions are to be made by such Equity Sponsor, if one or more Equity
Sponsors are no longer qualified under Section 4, (i) the aggregate Equity
Shares of such unqualified Equity Sponsors shall first be offered in writing by
New England Hydro to all then qualified Equity Sponsors other than NEES for
voluntary subscription, (ii) second, any remaining shortfall shall be allocated
pro rata among such qualified Equity Sponsors not including NEES in proportion
to their Equity Shares determined as of September 15, 1988, provided that the
aggregate of all involuntary allocations under this Section 4(C) to such
qualified Equity Sponsors shall not exceed an aggregate Equity Share of 10%, and
further provided that the aggregate of all such involuntary allocations to any
such Equity Sponsor shall not increase such Equity Sponsor’s Equity Share
determined as of September 15, 1988, by more than 25% thereof, and (iii)
finally, any remaining shortfalls shall be retained pro rata by such no longer
qualified Equity Sponsors in proportion to their Equity Shares determined as of
September 15, 1988; provided, however, that NEES and all qualified Equity
Sponsors may agree to other allocation arrangements; and further provided that
NEES shall not have an Equity Share of less than 51% unless it so consents. (The
above deadlines of September 15, 1988, may be extended to a later deadline
pursuant to Section 2 hereof.)
All offerings above shall be made in accordance with a voluntary subscription
process as specified in New England Hydro’s offering letter, and any
oversubscriptions will be treated as provided therein.
Section 6.     Relationship among Equity Sponsors
The rights and obligations of the Equity Sponsors hereunder are several, in
accordance with their respective Equity Shares, and not joint. The rights and
obligations of New England Hydro hereunder are also several and not joint with
those of the Equity Sponsors or any one thereof. There is no intention to create
by this Agreement, or by any grant, lease, license, or activity related hereto,
an association, joint venture, trust, or partnership or to impose on New England
Hydro or any Equity Sponsor trust or partnership rights or obligations; and any
such implied intention is expressly negated. Except as expressly provided in
this Agreement, no Equity Sponsor shall have by virtue of this Agreement or of
any such grant, lease, license, or activity the right or power to bind any other
Equity Sponsor without its express written consent.
Section 7.     Equity Contribution
A.    Under the Massachusetts HVDC Support Agreement, New England Hydro has
agreed to limit its equity investment to a maximum of 40% of its total capital
as of the effective date of that agreement and has agreed to use its best
efforts (subject to an exception specified in the Massachusetts HVDC Support
Agreement) to continue to limit its equity investment to 40% of its total
capital during the time that New England Hydro has outstanding debt in its
capital structure.
New England Hydro may call from time to time by written notification upon the
Equity Sponsors to contribute equity in any of the forms set forth in this
Section up to a maximum aggregate amount of $140 million, provided that Equity
Sponsors having 66-2/3% of Equity Shares may agree to increase this maximum
aggregate amount; and then all Equity Sponsors shall contribute such requested
amount with each Equity Sponsor contributing up to its Equity Share of the new
maximum. Any contribution made in response to New England Hydro’s call in excess
of the maximum aggregate amount, as adjusted from time to time, may be made on a
voluntary basis by any contributing Equity Sponsor, and New England Hydro will
make an appropriate adjustment in Equity Shares.
B.    During the term of this Agreement, New England Hydro has the option from
time to time to call for contribution of equity in any of the following forms:
1.
New England Hydro may offer shares of its common stock to its Equity Sponsors
and each Equity Sponsor shall subscribe for and purchase, for cash at a price
set by New England Hydro, its Equity Share of the common stock so offered.

2.
After each Equity Sponsor owns common stock of New England Hydro, New England
Hydro may request that capital contributions be made, and each Equity Sponsor
shall contribute to New England Hydro its Equity Share of the total capital
contribution so requested.

C.    In order that New England Hydro may limit its equity investment to a
maximum of 40% of its total capital, New England Hydro may, at its option, from
time to time, take any of the following actions:
1.
New England Hydro may repurchase for cash its common stock from Equity Sponsors
in amounts that will not change the relative Equity Shares among Equity Sponsors
and at a price per share equal to book value per share at the time of
repurchase. Each Equity Sponsor shall sell such common stock to New England
Hydro in the full amount so requested.

2.
New England Hydro may return any capital contribution previously received from
Equity Sponsors in amounts that will not change the relative Equity Shares among
Equity Sponsors. Each Equity Sponsor shall accept such return of capital
contribution in the full amount so returned.

3.
New England Hydro may pay dividends out of earnings or make liquidating
dividends to the Equity Sponsors.

D.    New England Hydro shall give written notice of any call for contributions
of equity under B above to each Equity Sponsor. Such notice shall specify the
amount to be contributed, the form of the contribution, and a date, at least
thirty days after the date of the notice, that the equity is to be contributed.
New England Hydro will provide annually estimates of its equity requirements and
estimated dates when any equity contributions hereunder will be due. New England
Hydro shall give written notice of any action to reduce its equity under C above
to each Equity Sponsor. Such notice shall specify the amount and form of the
reduction and a date, at least fifteen days after the date of the notice, that
the reduction in equity is to occur.
E.    New England Hydro shall use the proceeds of any equity contribution under
this Agreement for the sole purpose of meeting its capital requirements under
the Massachusetts HVDC Support Agreement.
F.    All transactions under B, up to a maximum aggregate amount of $140
million, and under C above shall be subject to receipt of all necessary
regulatory approvals, and New England Hydro and the Equity Sponsors shall use
their best efforts to obtain, or to assist in obtaining, these approvals in
advance of the Effective Date.
G.    New England Hydro shall have two classes of common stock, both of which
will have the same preferences, qualifications, special or relative rights or
privileges except that only one class shall have voting powers. Equity Shares
allocated to NEES shall be evidenced by voting common stock. The Equity Shares
allocated to each other Equity Sponsor shall, at the option of such Equity
Sponsor, be evidenced by shares of voting common stock or non-voting common
stock. Any reallocation of Equity Shares pursuant to Section 5 hereof shall be
effected in such manner as to involve the issuance of additional common stock to
each Equity Sponsor of the class then held by such Sponsor. Such election to
take voting or non-voting stock shall be made in writing to New England Hydro by
September 1, 1988.
H.    Notwithstanding any provision of this Agreement to the contrary, prior to
the date that New England Hydro first calls for equity contributions from all
Equity Sponsors, all equity of New England Hydro will be owned and contributed
by NEES.
Section 8.     Cash Deficiency Guarantee
A.    The Massachusetts HVDC Support Agreement provides that, if New England
Hydro has, on any Due Date, a Cash Deficiency attributed to a Participant, the
Participant absolutely and unconditionally guarantees to pay its Cash Deficiency
on demand of Lenders. (This commitment is made in section 19 of that Agreement.)
To provide further credit support to New England Hydro, each Equity Sponsor
absolutely and unconditionally guarantees to pay its then Equity Share of the
Cash Deficiency attributed to any Credit Enhanced Participant (as defined in the
Massachusetts HVDC Support Agreement) with respect to any third party debt
financing of New England Hydro that was credit enhanced for such Participant,
with such amounts to be paid directly on demand to Lenders, in cash, if for any
reason a Credit Enhanced Participant fails to pay when due its Cash Deficiency
on demand of Lenders. Each Equity Sponsor agrees that its obligations under this
Section shall be continuing, absolute, and unconditional and without the benefit
of any defense, claim, set-off, recoupment, abatement, or other right, existing
or future, which an Equity Sponsor may have against the Lenders, New England
Hydro, or any other person, and shall remain in full force and effect until all
of the obligations of New England Hydro to the Lenders have been discharged.
Each Equity Sponsor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of merger or bankruptcy of any Lender
or New England Hydro or any other Equity Sponsor, protest or notice with respect
to this guarantee, and covenants that the obligations contained in this
guarantee will not be discharged except by complete performance of the
obligations of New England Hydro to the Lenders.
B.    Notwithstanding any other provision contained herein, each Equity
Sponsor’s obligations under this Section 8 shall be limited to its Equity Share
of the Cash Deficiency attributed to any Credit Enhanced Participant with
respect to any financing of New England Hydro that was credit enhanced for such
Participant.
C.    In no event shall the several guarantees of the Equity Sponsors
attributable to Credit Enhanced Participants for each debt financing of New
England Hydro exceed in the aggregate J5% of the aggregate amount of the
obligations relating to such financing, provided that Equity Sponsors having an
aggregate of at least 80% of the Equity Shares may agree to exceed such 35%
maximum and subject to receipt of any necessary regulatory approvals, such
agreement shall be binding on all Equity Sponsors.
D.    In no event shall Equity Sponsors be required to provide guarantees for a
Participant with respect to a particular third party debt financing of New
England Hydro if that would result in Credit Enhanced Participants with respect
to that and all other outstanding financings of New England Hydro and New
Hampshire Hydro having Participating Shares exceeding 35% under the
Massachusetts HVDC Support Agreement, provided that Equity Sponsors having an
aggregate of at least 80% of the Equity Shares may agree to exceed such 35%
maximum and subject to receipt of any necessary regulatory approvals, such
agreement shall be binding on all Equity Sponsors.
E.    Each Equity Sponsor shall use its best efforts to obtain and assist others
in obtaining all necessary regulatory approvals required for the several
guarantees made in this Section.
Section 9.     Acceptance of Participating Shares
A.    In accordance with section 15 of the Massachusetts HVDC Support Agreement,
if a Participant that is a Credit Enhanced Participant is terminated by New
England Hydro as a Participant, each Equity Sponsor or its appointee shall be
allocated by New England Hydro its then Equity Share of the Participating Share
of such terminated Participant; such allocation to be made as of the date of
such termination. Each Equity Sponsor or its appointee shall accept such
allocation from New England Hydro and shall unconditionally and absolutely
assume the rights and obligations associated therewith from the date of such
allocation. If a Participant that was not also a Credit Enhanced Participant is
terminated, then acceptance of any allocation shall be voluntary by any Equity
Sponsor or its appointee and shall be in accordance with New England Hydro’s
offer thereof. If required by New England Hydro, any Equity Sponsor or its
appointee assuming rights and obligations under the Massachusetts HVDC Support
Agreement shall execute and deliver any documents necessary to effectuate such
assumption. If any Equity Sponsor that is the designee of a Participant is
unable to deliver these documents to effectuate the assumption, such Equity
Sponsor shall take all actions necessary for the Participant that so designated
it as an Equity Sponsor to assume such rights and obligations as its appointee.
The appointee of NEES shall be New England Power Company. The appointee(s) of
any other Equity Sponsor shall be the Participant(s) for which such Equity
Sponsor was acting as a designee. Each Equity Sponsor agrees that if its
appointee is allocated a Participating Share under the Massachusetts HVDC
Support Agreement, such Equity Sponsor shall also allocate to it an equal
participating share and support share under the New Hampshire HVDC Support
Agreement and New England Power and Boston Edison AC Support Agreements,
respectively.
B.    Each Equity Sponsor shall use its best efforts to obtain and assist others
in obtaining all necessary regulatory approvals required for performance of its
or its appointee’s commitments made in this Section.
Section 10.     Commitments under the AC Support Agreements
A.    In accordance with sections 4 of the New England Power and Boston Edison
AC Support Agreements, if a Credit Enhanced Supporter thereunder is terminated,
each Equity Sponsor or its appointee shall be allocated its then Equity Share of
the Support Share of such terminated Supporter; such allocation to be made as of
the date of such termination. Each Equity Sponsor or its appointee shall accept
such allocation made by New England Power and Boston Edison and shall
unconditionally and absolutely assume the rights and obligations associated
therewith from the date of such allocation. If a Supporter under the AC Support
Agreements which is not also a Credit Enhanced Supporter is terminated, then
acceptance of any allocation shall be voluntary by any Equity Sponsor or its
appointee and shall be made in accordance with New England Power’s and Boston
Edison’s offer thereof. If required by New England Power or Boston Edison, any
Equity Sponsor or its appointee assuming rights and obligations under the AC
Support Agreements shall execute and deliver any documents necessary to
effectuate such assumption. If any Equity Sponsor that is a designee of a
Participant is unable to deliver these documents to effectuate the assumption,
such Equity Sponsor shall take all actions necessary for the Participant that so
designated it as an Equity Sponsor to assume such rights and obligation as its
appointee.
The appointee of NEES shall be New England Power Company. The appointee(s) of
any other Equity Sponsor shall be the Supporter for which such Equity Sponsor
was acting as a designee. Each Equity Sponsor agrees that if its appointee is
allocated a Support Share under the New England Power and Boston Edison AC
Support Agreements, such Equity Sponsor shall also allocate to it an equal
participating share under the New Hampshire HVDC Support Agreement and
Massachusetts HVDC Support Agreement, respectively.
B.    Recognizing the need to provide additional financial security to induce
New England Power, Boston Edison, and the Supporters to undertake the
substantial obligations of these AC Support Agreements, each Equity Sponsor
agrees that it shall absolutely and unconditionally pay (or cause its appointee
to pay), promptly upon request and in addition to any Support Share payment, its
then Equity Share of any unpaid amounts attributed to a Credit Enhanced
Supporter as specified in, and in accordance with, sections 14 of these AC
Support Agreements (excluding any amounts due pursuant to sections 17 and 18
thereof).
C.    Each Equity Sponsor shall use its best efforts to obtain and assist others
in obtaining all necessary regulatory approvals required for performance of its
commitments made in this Section.
Section 11.     Character of Payment Obligations
The obligations of each Equity Sponsor to make payments hereunder, and to
perform and observe all other agreements on its part contained herein, are
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any insolvency, composition, bankruptcy,
reorganization, arrangement, liquidation or similar proceedings relating to New
England Hydro, New England Power Company, Boston Edison Company, the Equity
Sponsor, any other Equity Sponsor, or any affiliate thereof, (ii) any invalidity
or unenforceability or disaffirmance by New England Hydro or any Equity Sponsor
of any provision of this Agreement or any failure, omission, delay, or inability
of New England Hydro to perform any of its obligations contained herein, (iii)
any amendment, extension, or other change of, or any assignment or encumbrance
of any rights or obligations under, this Agreement, or any waiver or other
action or inaction, or any exercise or nonexercise of any right or remedy, under
or in respect to this Agreement, or (iv) any inability of the Equity Sponsor or
any other Equity Sponsor to obtain regulatory approvals for financing its Equity
Share of any obligations under this Agreement or for meeting any other
obligations under this Agreement, it being the intention of the parties hereto
that all amounts payable by each Equity Sponsor in respect of this Agreement
shall begin to be payable and shall continue to be payable in all events in the
manner and at the time herein provided. In that connection, each Equity Sponsor
hereby waives, to the extent permitted by applicable law, any and all rights
which it may now have or which may at any time hereafter be conferred upon it,
by statute or otherwise, to terminate, cancel, or surrender any of its
obligations under this Agreement.
Section 12.     Default
A.    Any of the following events (Events of Default) that occur and are
continuing are Events of Default:
(i)
An Equity Sponsor shall fail to pay to New England Hydro when due any amount
which it has agreed to pay under any provision of this Agreement, and such
failure shall continue for more than 15 days after written notice thereof has
been given to such Equity Sponsor by New England Hydro; or

(ii)
An Equity Sponsor shall fail to supply in accordance with the terms hereof any
documentation required, by New England Hydro in connection with financing with
Lenders by New England Hydro (for VELCO and MMWEC, this includes documentation
for their respective contracting electric systems), and such failure shall
continue for more than 30 days after written notice of such failure has been
given to such Equity Sponsor by New England Hydro; or

(iii)
An Equity Sponsor shall fail to perform any other obligation under this
Agreement in accordance with the terms hereof, and such failure shall continue
for more than 30 days after written notice thereof has been given to such Equity
Sponsor or any of its affiliates by New England Hydro.

(iv)
An Equity Sponsor shall experience an event of default under the Equity Funding
Agreement for New Hampshire Hydro.

B.    If an Event of Default under Section 12A(i) above shall have occurred, New
England Hydro may, by written notice to each Equity Sponsor, request that the
nondefaulting Equity Sponsors on a voluntary basis make the overdue payment to
New England Hydro, provided that similar voluntary payments are made under the
Equity Funding Agreement for New Hampshire Hydro.
C.    New England Hydro or any Equity Sponsor shall be free to invoke such
remedies at law or in equity as may be deemed appropriate against any Equity
Sponsor that defaults under this Agreement.
Section 13.     Restrictions on Transfer of Common Stock
Each Equity Sponsor agrees that it will not transfer any or all of its common
stock of New England Hydro to any other person unless such person is an Equity
Sponsor or meets the requirements for being an Equity Sponsor under sections 4B
or 4C or 4D or 4F hereof as of the date of such transfer and a similar transfer
is made under the Equity Funding Agreement for New Hampshire Hydro.
Section 14.     Dividends on Common Stock
Any Equity Sponsor may direct New England Hydro to withhold the payment of a
dividend to such Equity Sponsor and apply such dividend to reduce the current or
the next Support Charge payment required to be made under the Massachusetts HVDC
Support Agreement by such Equity Sponsor or its appointee.
Section 15.     Restrictions on Dividends, Return of Capital and Repurchase of
Common Stock
Any Equity Sponsor which is in default hereunder pursuant to Section 12 is not
entitled to receive any amounts from New England Hydro representing such Equity
Sponsor’s then Equity Share of dividends, return of capital, or proceeds from
any repurchase of common stock until all amounts (including interest thereon at
an annual rate equal to two percent over the current interest rate on prime
commercial loans from time to time in effect at the principal office of the
First National Bank of Boston) owed by such Equity Sponsor to New England Hydro
have been paid.
Section 16.     Certain Actions of New England Hydro
A.    New England Hydro shall not take any of the following actions without
prior written approval of Equity Sponsors having at that time at least 80% of
the Equity Shares:
(i)
Amend New England Hydro’s articles of organization or by-laws to adversely
affect the rights of the Equity Sponsors as stockholders in a material manner
under the Basic Agreements, unless such amendment is required by regulation or
law; and

(ii)
Merge, consolidate, or sell all or substantially all of the assets of New
England Hydro not otherwise permitted by the Massachusetts HVDC Support
Agreement.

B.    New England Hydro shall distribute in a timely manner to each Equity
Sponsor copies of (a) its annual audited financial statements, (b) notices of
all of its directors’ and stockholders’ meetings (including any committees
thereof), and (c) minutes of all of its directors’ and stockholders’ meetings.
Section 17.     Miscellaneous
A.    Successors and Assigns This Agreement shall be binding upon and shall
inure to the benefit of, and may be performed by, the successors and assigns of
the parties and shall also be binding, insofar as permitted by law, on any
receiver or trustee in bankruptcy, receivership, or reorganization of any party.
Except for a transfer of any or all of an Equity Sponsor’s Equity Share prior to
the Effective Date as provided in Section 5B hereof, no assignment of this
Agreement shall operate to relieve the assignor of its obligations under this
Agreement without the written consent of the parties hereto. Written notice to
all parties will be given prior to any assignment hereunder.
Notwithstanding the above, New England Hydro may collaterally assign this
Agreement without the consent of the Equity Sponsors in connection with a third
party financing by New England Hydro.
B.    Right of Setoff. No Equity Sponsor shall be entitled to set off against
the payments required to be made by it hereunder (1) any amounts owed to it by
New England Hydro, any affiliate of New England Hydro, or any other Equity
Sponsor, or (2) the amount of any claim by it against New England Hydro, any
affiliate of New England Hydro, or any other Equity Sponsor. However, the
foregoing shall not affect in any other way any Equity Sponsor’s rights and
remedies with respect to any such amounts owed to it by New England Hydro, any
affiliate of New England Hydro, or any other Equity Sponsor or any such claim by
it against New England Hydro or any other Equity Sponsor.
C.    Amendments. Any amendments changing the Equity Shares of the Equity
Sponsors or the several nature of the obligations and rights of the Equity
Sponsors hereunder as specified in Section 6, shall require consent by all
parties.    In the event that an Equity Sponsor is obligated to acquire Equity
Shares hereunder and does not pay for such Shares, then such Shares will not be
issued to him and such Equity Sponsor’s Equity Share will be reduced
accordingly. All other amendments to this Agreement shall be by mutual agreement
of New England Hydro and Equity Sponsors owning Equity Shares aggregating at
least 80%, evidenced by a written amendment signed by New England Hydro and such
Equity Sponsors; and New England Hydro and all Equity Sponsors shall be bound by
any such amendment.
D.    Notices. Except as the parties may otherwise agree, any notice, request,
bill, or other communication relating to this Agreement, or the rights,
obligations or performance of the parties hereunder, shall be in writing and
shall be effective upon delivery. Any such communication shall be considered as
duly delivered when delivered in person or mailed by registered or certified
mail, postage prepaid, to the respective post office address of the other
parties shown following the signatures of such other parties hereto, or such
other address as may be designated by written notice given as provided in this
paragraph D.
E.    Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts.
F.    Other
1.
No action, regardless of form, arising out of this Agreement may be brought by
any party hereto more than three years after the cause of action has arisen.

2.
In the event that any clause or provision of this Agreement, or any part
thereof, shall be declared invalid or unenforceable by any court having
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remaining portions of this Agreement.

3.
All provisions of this Agreement providing for limitation of, or protection
against, liability shall apply to the full extent permitted by law, and
regardless of fault, and shall survive either termination pursuant to this
Agreement or cancellation.

4.
Each party shall, upon request of another party, execute and deliver any
document reasonably required to implement any provision hereof.

5.
Any number of counterparts of this Agreement may be executed and each shall have
the same force and effect as the original.

6.
This Agreement, with the other Basic Agreements, Preliminary Quebec
Interconnection Support Agreement - Phase II, the agreements with Hydro-Quebec
regarding Phase II, and the basic agreements covering Phase I shall constitute
the entire understanding among the parties and shall supersede any and all
previous understandings pertaining to the subject matter of this Agreement.

7.
Terms defined in the Massachusetts HVDC Support Agreement and the New England
Power and Boston Edison AC Support Agreements used in this Equity Funding
Agreement shall be incorporated herein as defined in such Agreements unless the
context indicates otherwise.

8.
This Agreement is the act and obligation of the parties hereto in their
corporate or governmental capacity, and any claim hereunder against any
shareholder, director, officer, employee, or agent of any party, as such, is
expressly waived.

IN WITNESS WHEREOF, the signatories have caused this Agreement to be executed by
their duly authorized officers or agents.
 
COMPANY

By:                  
Its President

Address: XXXXXXXXXX
      XXXXXXXXXX

Article 32 of the Declaration of Trust of Northeast Utilities dated January 15,
1927, as amended, provides as follows:
No shareholder 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 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 individual capacities or capacity and all such
contracts, obligations and undertakings shall be enforceable only against the
Trustees as 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 or satisfaction
thereof. It shall be the duty of the Trustees and each of them and of every
officer, agent or representative elected or appointed by them to include in
every written agreement entered into by them or any of them as herein provided,
a statement of the immunity provided by this article for the Shareholders and
for the Trustees as individuals, and neither the Trustees nor any of them nor
any officer, agent or representative appointed or elected by them shall have any
power or authority to enter into any agreement or incur any obligation as herein
provided except in accordance with the provisions of this Article.
In case any Shareholder shall at any time for any reason be held to or be under
any personal liability whatever solely by reason of his being or having been a
Shareholder and not by reason of his acts or omissions as a Shareholder, then
such Shareholder (or his heirs, executors, administrators, or other legal
representatives) shall be held harmless and indemnified out of the trust estate
from and of all loss, liability or expense by reason of such liability.

VELCO SCHEDULE 1
Utility
Percentage Interest
Citizens Utilities Company
1.1155
Franklin Electric Light Company
0.0433
Green Mountain Power Corporation
3.1800
 
4.3388

Schedule II
Massachusetts Municipal Wholesale Electric Company
Contracting Electric Systems
Massachusetts Systems
Town of Ashburnham Municipal Light Plant
Town of Georgetown Municipal Light Department
Town of Hull Municipal Lighting Plant
Town of Littleton Electric Light Department
Town of Mansfield Municipal Electric Department
Town of Marblehead Municipal Light Department
Town of Middleton Municipal Electric Department
Town of Paxton Municipal Light Department
Town of Templeton Municipal Lighting Plant

Rhode Island System

Pascoag Fire District
 

ATTACHMENT A
List of Equity Sponsors
New England Hydro will supply a list of Equity Sponsors as of the date of
initial computation and as of each date thereafter that the list changes.

As of February 1, 1988 (1)
Equity Sponsors
 
Equity Share (%)
New England Electric System
 
51.0000
Northeast Utilities
 
22.4245
Boston Edison
 
10.9335
Vermont Electric Power (2)
 
4.3388
Canal Electric
 
3.3885
Montaup
 
3.2435
Conn. Municipal Electric Coop.
 
0.8312
Reading
 
0.4638
Newport Electric
 
0.4426
Taunton
 
0.3547
Chicopee
 
0.3145
Braintree
 
0.2995
Peabody
 
0.2746
Holyoke Gas & Electric
 
0.2362
Westfield
 
0.2528
Danvers
 
0.2393
Shrewsbury
 
0.1612
Hudson
 
0.1474
Wakefield
 
0.1245
Hingham
 
0.1203
Concord
 
0.1161
North Attleboro
 
0.1086
Middleborough
 
0.1065
West Boylston
 
0.0509
Groton
 
0.0265
 
 
100.0000

(1)
Boylston and South Hadley signed the Equity Funding Agreements, but have not
qualified as Equity Sponsors.

(2)
VELCo has signed as agent for:

Green Mountain Power
 
3.1800
%
Citizens Utilities
 
1.1155

Franklin Electric
 
0.0433

 
 
4.3388
%

      

ATTACHMENT B
Forms of the following documentation:
1.
Opinion of Counsel

2.
Certificate

3.
Incumbency and Signature Certificate

4.
Directors’ Vote

[Please note - governmental entities may make appropriate modifications to these
documents to reflect that they are not corporations.]

[Form of Opinion of Counsel for Each Utility Participant]
New England Hydro-Transmission
Electric Company, Inc.;
New England Hydro Transmission
Corporation; or
New England Power Company

Gentlemen:

This opinion is furnished in connection with the execution and delivery by
             (the Company) of the following Agreements:                     .
We have acted as counsel to the Company, one of the Utility Participants, in
connection with the execution and delivery of the Basic Agreements. We
participated in reviewing and/or drafting the Agreements.
As general [special] counsel to the Company, we are generally familiar with its
affairs.    [If special counsel is giving the opinion, describe relationship to
the Company.] We have reviewed the proceedings taken by the Company in
connection with its authorization, execution, and delivery of the Agreements and
any documentation supplied by the Company thereunder. We have also examined
executed counterparts of the Agreements, have made such other investigation, and
have examined such other records and documents, and have made such examination
of law and satisfied ourselves as to such other matters as we have deemed
relevant and necessary in order to enable us to express the opinions set forth
below.
Based upon and subject to the foregoing and to the further qualifications in
this opinion, we are of the opinion that:
1.    The Company is a corporation duly organized, validly existing and in good
standing under the laws of [the jurisdiction of its incorporation], has the
corporate power to own its assets and to transact the business in which it is
engaged, and is duly qualified as a foreign corporation in, and is in good
standing under the laws of, each jurisdiction in which the conduct of its
business or the ownership of its assets requires such qualification.
2.    The Company has (and in the case of the Agreements at the time of
execution and delivery thereof, had) full corporate power, and legal right to
execute, deliver and perform the Agreements, and the Company has taken all
necessary corporate action to authorize the execution, delivery, and performance
by it of the Agreements.
3.    The execution, delivery, and performance by the Company of the Agreements
do not (a) contravene the Company’s [charter documents] or by-laws, (b) violate
any applicable law, rule, regulation, order, writ, judgment, injunction, decree,
or award known to us by which the Company is bound, (c) violate any indenture,
instrument, or agreement known to us by which the Company is bound, or (d)
result in or require the creation or the imposition of any lien pursuant to the
provisions of any indenture, instrument, or agreement known to us by which the
Company is bound.
4.    No authorization, approval, consent, or other action by, and no notice to
or filing with, any federal, state, or other governmental authority or
regulatory body which has not been obtained or given and is not in full force
and effect is required for the valid and lawful execution, delivery, and
performance by the Company of the Agreements. [In this connection, to the extent
it may be required by law, the approval of the Massachusetts Department of
Public Utilities [Connecticut PUC, or other] has been given for the Agreements
and the Company’s performance thereunder by order(s) dated                 ,
which remains in full force and effect.]
5.    The Agreements have each been duly executed and delivered by the Company
and constitute the legal, valid, and binding obligations of the Company
enforceable against it in accordance with their respective terms.
6.    No action, suit, proceeding, or investigation at law or in equity or by or
before any governmental instrumentality or other agency now pending or
threatened against or affecting the Company or its property or rights which, if
adversely determined, would materially impair the ability of the Company to
perform its obligations under the Agreements is known to us.
Our opinion that the Agreements are enforceable, each in accordance with the
terms thereof, is qualified to the extent that the enforcement of the rights and
remedies created thereby is subject to bankruptcy, insolvency, reorganization,
and similar laws of general application affecting the rights and remedies of
creditors and secured parties, and to the further extent that the availability
of the remedies of specific enforcement, injunctive relief, or any other
equitable remedy is subject to the discretion of the court before which any
proceeding therefor may be brought.
Very truly yours,
 

CERTIFICATE
I, (insert name), the Clerk (or Secretary or other principal recording officer)
of (insert name of Utility Participant), a (insert state of organization) (the
“Company”) do hereby certify that:
(1)    Attached hereto as Exhibit A is a true and correct copy of a vote duly
adopted at a meeting of the Board of
Directors of the Company, duly called and held on                 , ____, and
that such vote and the authority vested thereby have not been amended or revoked
and are still in full force and effect.
(2)    Attached hereto as Exhibit B is a true and correct copy of the Articles
of Organization (or other charter documents) of the Company, as amended and in
effect as of the date of this Certificate.
(3)    Attached hereto as Exhibit C is a true and correct copy of the By-Laws of
the Company, as amended and in effect as of the date of this Certificate.
(4)    The persons (or person) listed on Exhibit D have been duly elected to the
offices set forth adjacent to their respective names since the first day of
June, 1985, and the signatures adjacent to their respective names are the
genuine signatures of said officers.
IN WITNESS WHEREOF, I have placed my hand and the seal of the Company this
               day of                      , ____.
 
By                  

Name:
Title:

CONFIRMATION OF INCUMBENCY AND SIGNATURE OF
CLERK, SECRETARY, OR OTHER PRINCIPAL RECORDING OFFICER
I, (name), (title) of the Company, do hereby certify that (name of officer
executing certificate) is and at all times subsequent to                 , ____,
has been the duly elected (title) of the Company and that the signature adjacent
to his (or her) name is the genuine signature of said officer.
 
By                  

Name:
Title:

FORM OF DIRECTORS’ VOTE APPROVING AGREEMENTS
VOTED:
That in connection with this Company’s participation in the Phase II expansion
of the proposed interconnection between the New England Power Pool companies and
Hydro-Quebec, the execution and delivery on behalf of this Company by
                    , President, of the following agreements: (being
collectively referred to in this vote as “Agreements”) copies of which
Agreements have been presented at this meeting, are hereby authorized, approved,
ratified, and confirmed, and that the officers of this Company are further
authorized severally to take any and all such further actions including the
execution and delivery of such further documents, as such officers or any of
them may deem necessary or appropriate in connection with the actions and
documents authorized by this vote.

ATTACHMENT C
Subscription Process for Determining
Equity Shares under Section 5(B)
After allocation of 51% of the Equity Shares to NEES pursuant to Section
5(B)(1), the Equity Shares shall be allocated to Equity Sponsors other than NEES
as follows:
(a)
Each other Equity Sponsor shall be entitled to a pro rata share of the remainder
based on the Participating Share of such Equity Sponsor or the Participant(s)
that has designated it as an Equity Sponsor as a percentage of Participating
Shares of all other Equity Sponsors or such Participants as shown in the
Massachusetts HVDC Support Agreement. For the purpose of this calculation, the
Participating Share of each Equity Sponsor designated by VELCO shall be deemed
to be a pro rata share of VELCO’s Participating Share based on the ratio of such
Equity Sponsor’s 1980 kwh load to the aggregate 1980 kwh load of all Equity
Sponsors designated by VELCO.

(b)
Upon execution of this Agreement, each other Equity Sponsor may subscribe for
more or less than its share under (a) above.

(c)
Upon execution of this Agreement, each other Equity Sponsor may specify a
maximum limit on its share of such remainder that would apply to any allocations
made on or before June 1, 1986 or such later deadline date as is fixed pursuant
to Section 2 hereof.

(d)
If there are no undersubscriptions or oversubscriptions under (b) above or if
the sum of the shares under (a) or (b) above for all Equity Sponsors equals 100%
of such remaining shares, then each Equity Sponsor shall have a share as
determined under (a) or (b) above. (For the purposes of this attachment,
oversubscription shall mean, with respect to any Equity Sponsor, a subscription
under (b) above of more than its share under (a) above. For the same purposes,
undersubscription shall mean, with respect to any Equity Sponsor, a subscription
under (b) above of less than its share under (a) above. The amount of such
oversubscription shall be equal to (b) minus (a) and the amount of such
undersubscription shall be equal to (a) minus (b).)

(e)
If there are undersubscriptions but not oversubscriptions or if there are
oversubscriptions but no undersubscriptions, then each Equity Sponsor shall have
a share as determined under (a) above; provided, however, that no Equity Sponsor
shall be allocated more than its specified limit under (c) above. If the sum of
all shares heretofore allocated is less than 100%, any remaining share shall be
allocated to all Equity Sponsors that have received shares less than their
limits under (c) above, pro rata by the difference between their limits under
(c) above and their shares as heretofore allocated.

(f)
If the net result of subtracting the aggregate amount of all undersubscriptions
from the aggregate amount of all oversubscriptions is greater than zero, the
aggregate amount of all oversubscriptions must be reduced to the aggregate
amount of all undersubscriptions. This amount shall be referred to as the total
permitted amount of oversubscriptions Each oversubscriber shall initially be
allocated a share of the total permitted amount of oversubscriptions (pro rata
by the Participating Shares of the oversubscribers or their designators as shown
in the Massachusetts HVDC Support Agreement); provided that no oversubscriber
shall be allocated more than its requested amount under (b) above. Any remaining
unallocated portion of the total permitted amount of oversubscriptions shall be
allocated to all oversubscribers that have not yet reached their requested
amount under (b) above pro rata by the differences between their requested
shares under (b) above and their shares as heretofore allocated.

(g)
If the net result of subtracting the aggregate amount of all oversubscriptions
from the aggregate amount of all undersubscriptions is greater than zero, the
aggregate amount of all undersubscriptions must be reduced to the aggregate
amount of all oversubscriptions. This amount shall be referred to as the total
permitted amount of undersubscriptions. The total permitted amount of
undersubscriptions shall be allocated to the undersubscribers pro rata by the
amounts of their undersubscriptions; provided, however, that no Equity Sponsor
shall be allocated more than its specified limit under (c) above.     If the sum
of all shares heretofore allocated is less than 100%, any remaining share shall
be allocated to all Equity Sponsors that have received shares less than their
limits under (c) above, pro rata by the difference between their limits under
(c) above and their shares as heretofore allocated.

(h)
If Equity Shares are required to be changed pursuant to subpart (i) or (ii) of
Section 5(a), this reallocation shall be accomplished in accordance with this
Attachment C on the basis of the subscriptions initially made under (b) and the
maximum limits specified under (c) by each continuing Equity Sponsor, and giving
effect to the termination of any Equity Sponsor pursuant to said subpart (i) or
(ii).

 

[CONFORMED]
AMENDMENT NO. 1
TO
EQUITY FUNDING AGREEMENT
FOR NEW ENGLAND HYDRO-TRANSMISSION
ELECTRIC COMPANY, INC.
This Amendment, dated as of May 1, 1986, is between New England
Hydro-Transmission Electric Company, Inc. (New England Hydro), and the New
England entities that have signed the Equity Funding Agreement for New England
Hydro-Transmission Electric Company, Inc., dated as of June 1, 1985 (the “Equity
Funding Agreement”), and amends the Equity Funding Agreement as hereinafter
provided.
In consideration of the premises and other good and valuable consideration,
receipt of which is hereby acknowledged, and pursuant to the provision of
Section 17C of the Equity Funding Agreement, it is hereby agreed as follows:
1.    Certain terms defined in the Equity Funding Agreement are used herein with
the meanings there provided.
2.    Section 4 is amended as follows:
(a)
Subsection “D” is re-lettered as Subsection “E”.

(b)
The following paragraph is added as new Subsection “D”:

“D.    A Participant under the Massachusetts HVDC Support Agreement also
qualifies to be an Equity Sponsor if it has an Equity Share of four tenths of
one percent (0.4%) or less and it has only one long-term debt rating from any of
the three rating agencies referred to in B above and such rating is at least
“A3” as of September 1, 1985.”
(c)
The following paragraph is added as Subsection “FH:

“F. Notwithstanding any provision of Sections 2, 4(B), and 4(D) to the contrary,
if a Participant (i) has only one credit rating and seeks to qualify to be an
Equity Sponsor under B above, or (ii) has no credit rating at all and seeks to
qualify to be an Equity Sponsor under B or D above, such new credit rating or
ratings must be received by July 1, 1986, from one or more of the rating
agencies referred to in B above and such new credit rating or ratings shall be
current. Such Participant must demonstrate by July 1, 1986, to the satisfaction
of New England Hydro that it is qualified to be an Equity Sponsor pursuant to
this Section 4. New England Hydro may extend such July 1, 1986, deadline, but
any such extension shall be no later than October 1, 1986.”
3.    Any number of counterparts of this Amendment may be executed, and each
shall have the same force and effect as an original instrument and as if all the
parties to all of the counterparts had signed the same instrument.
IN WITNESS WHEREOF, the signatories have caused this Amendment to be executed by
their duly authorized officers or agents.

 
COMPANY

By:                  
   Its President

   Address: XXXXXXX
         XXXXXXX

Article 32 of the Declaration of Trust of Northeast Utilities dated January 15,
1927, as amended, provides as follows:
No Shareholder 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 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 individual capacities or capacity and all such
contracts, obligations and undertakings shall be enforceable only against the
Trustees as 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 or satisfaction
thereof. It shall be the duty of the Trustees and each of them and of every
officer, agent or representative elected or appointed by them to include in
every written agreement entered into by them or any of them as herein provided,
a statement of the immunity provided by this article for the Shareholders and
for the Trustees as individuals, and neither the Trustees nor any of them nor
any officer, agent or representative appointed or elected by them shall have any
power or authority to enter into any agreement or incur any obligation as herein
provided except in accordance with the provisions of this Article.
In case any Shareholder shall at any time for any reason be held to or be under
any personal liability whatever solely by reason of his being or having been a
Shareholder and not by reason of his acts or omissions as a Shareholder, then
such Shareholder (or his heirs, executors, administrators, or other legal
representatives) shall be held harmless and indemnified out of the trust estate
from and of all loss, liability or expense by reason of such liability.

 
XXXXXXXX

By:                  
   Its President

   Address: XXXXXXX
         XXXXXXX

The name “New England Electric System” means the trustee or trustees for the
time being (as trustee or trustees but not personally) under an agreement and
declaration of trust dated January 2, 1926, as amended, which is hereby referred
to, and a copy of which as amended has been filed with the Secretary of the
Commonwealth of Massachusetts. Any agreement, obligation or liability made,
entered into or incurred by or on behalf of New England Electric System binds
only its trust estate, and no shareholder, director, trustee, officer or agent
thereof assumes or shall be held to any liability therefor.
 
XXXXXXXX

By:                  
   Its President

   Address: XXXXXXX
         XXXXXXX

[CONFORMED]
AMENDMENT No. 2
TO
EQUITY FUNDING AGREEMENT
FOR NEW ENGLAND HYDRO-TRANSMISSION
ELECTRIC COMPANY, INC.
This Amendment, dated as of September 1, 1987, is between New England
Hydro-Transmission Electric Company, Inc. (New England Hydro), and the New
England entities that have signed the Equity Funding Agreement for New England
Hydro-Transmission Electric Company, Inc., dated as of June 1, 1985 as amended
by Amendment No. 1 dated as of May 1, 1986 (the “Equity Funding Agreement”), and
amends the Equity Funding Agreement as hereinafter provided.
In consideration of the premises and other good and valuable consideration,
receipt of which is hereby acknowledged, and pursuant to the provision of
Section 17C of the Equity Funding Agreement, it is hereby agreed as follows:
1.    Certain terms defined in the Equity Funding Agreement are used herein with
the meanings there provided.
2.    Section 7A is hereby amended by inserting in the first sentence of the
first paragraph after the words “best efforts” the following: “(subject to an
exception specified in the Massachusetts HVDC Support Agreement)”.
3.    Any number of counterparts of this Amendment may be executed, and each
shall have the same force and effect as an original instrument and as if all the
parties to all of the counterparts had signed the same instrument.
IN WITNESS WHEREOF, the signatories have caused this Amendment to be executed by
their duly authorized officers or agents.
 
XXXXXXXX

By:                  
   Its President

   Address: XXXXXXX
         XXXXXXX

The name “New England Electric System” means the trustee or trustees for the
time being (as trustee or trustees but not personally) under an agreement and
declaration of trust dated January 2, 1926, as amended, which is hereby referred
to, and a copy of which as amended has been filed with the Secretary of the
Commonwealth of Massachusetts. Any agreement, obligation or liability made,
entered into or incurred by or on behalf of New England Electric System binds
only its trust estate, and no shareholder, director, trustee, officer or agent
thereof assumes or shall be held to any liability therefor.
 
XXXXXXXX

By:                  
   Its President

   Address: XXXXXXX
         XXXXXXX

CONFORMED
AMENDMENT NO. 3
TO
EQUITY FUNDING AGREEMENT
FOR NEW ENGLAND HYDRO-TRANSMISSION
ELECTRIC COMPANY, INC.
This Amendment, dated as of August 1, 1988, is between New England
Hydro-Transmission Electric Company, Inc. (New England Hydro), and the New
England entities that have signed the Equity Funding Agreement for New England
Hydro-Transmission Electric Company, Inc. dated as of June 1, 1985 as amended
(the “Equity Funding Agreement”), and amends the Equity Funding Agreement as
hereinafter provided.
In consideration of the premises and other good and valuable consideration,
receipt of which is hereby acknowledged, and pursuant to the provision of
Section 16C of the Equity Funding Agreement, it is hereby agreed as follows:
1.
Certain terms defined in the Equity Funding Agreement are used herein with the
meanings therein provided.

2.
Section 2 is hereby amended by making the following modifications:

In Paragraph:
 
Delete:
 
Insert in lieu thereof:
1
 
“December 30, 1985”
 
“February 1, 1988”
2
 
“June 1, 1986”
 
“September 15, 1988”
3
 
“March 1, 1986”
(both occurrences)
 
“September 1, 1988”
(both occurrences)
3
 
“June 1, 1986”
 
“September 15, 1988”
6
 
“Section”
 
“Agreement”

 
3.
Section 4F is hereby amended by deleting the last sentence thereof and by
deleting the two references to “July 1, 1986” and inserting in lieu thereof
“February 1, 1988.”

4.
Section 5A is hereby amended by (i) deleting the reference to “December 30,
1985” and inserting in lieu thereof “February 1, 1988”, and (ii) deleting the
reference to “June 1, 1986” and inserting in lieu thereof “September 15, 1988.”

5.
Section 5B is hereby amended by deleting the reference to “June 1, 1986” and
inserting in lieu thereof “September 15, 1988.”

6.
Section 5B is hereby further amended by adding at the end of Section 5B the
following:

“After the initial computation and prior to the Effective Date, each Equity
Sponsor may transfer any or all of its Equity Share to one or more other Equity
Sponsors. On or before September 1, 1988, any such Equity Sponsor which has
transferred or intends to transfer any or all of its Equity Share to one or more
other Equity Sponsors, must provide documentation to New England Hydro covering
the transfer. Any apportionment of Equity Shares pursuant to Section 5B(2) above
shall be made without regard to (i) any transfers of Participating Shares
pursuant to Section 4 of the Massachusetts HVDC Support Agreement or (ii) any
transfers of Equity Shares made after the initial computation and prior to the
Effective Date, provided that each Equity Sponsor which has agreed to take such
transferred Equity Share has provided the required Documentation by September
15, 1988 (including Documentation covering any such transferred Equity Share).
Any transfers of Equity Shares, as provided above, shall be taken into account
after such apportionment.
Upon execution of this Agreement, MMWEC may receive any such transferred Equity
Shares; however, MMWEC shall not be included as an Equity Sponsor in any
computations pursuant to the first paragraph of this Section 5B.”
7.
Section 5C is hereby amended by deleting the references to “June 1, 1986” and
inserting in lieu thereof “September 15, 1988.”

8.
Section 7G is hereby amended by deleting the reference to “December 31, 1985”
and inserting in lieu thereof “September 1, 1988.”

9.
Section 13 is hereby amended by inserting therein after the words “sections 4B
or 4C” the following:

“or 4D or 4F”
10.
Section 17A is hereby amended by adding to the beginning of the second sentence
thereof the following:

“Except for a transfer of any or all of an Equity Sponsor’s Equity Share prior
to the Effective Date as provided in Section 5B hereof,”
11.
The attached Schedule II is hereby made a part of the Equity Funding Agreement.

12.
Attachment A to the Equity Funding Agreement is hereby deleted and replaced with
the attached Attachment A.

13.
Any number of counterparts of this Amendment may be executed, and each shall
have the same force and effect as an original instrument and as if all the
parties to all of the counterparts had signed the same instrument.

IN WITNESS WHEREOF, the signatories have caused this Amendment to be executed by
their duly authorized officers or agents.
 
XXXXXXXX

By:                  
   Its President

   Address: XXXXXXX
         XXXXXXX

Schedule II
Massachusetts Municipal Wholesale Electric Company
Contracting Electric Systems
Massachusetts Systems
Town of Ashburnham Municipal Light Plant
Town of Georgetown Municipal Light Department
Town of Hull Municipal Lighting Plant
Town of Littleton Electric Light Department
Town of Mansfield Municipal Electric Department
Town of Marblehead Municipal Light Department
Town of Middleton Municipal Electric Department
Town of Paxton Municipal Light Department
Town of Templeton Municipal Lighting Plant

Rhode Island System
Pascoag Fire District
 

ATTACHMENT A
List of Equity Sponsors
New England Hydro will supply a list of Equity Sponsors as of the date of
initial computation and as of each date thereafter that the list changes.
As of February 1, 1988 (1)
Equity Sponsors
 
Equity Share (%)
 
 
 
New England Electric System
 
51.0000
Northeast Utilities
 
22.4245
Boston Edison
 
10.9335
Vermont Electric Power (2)
 
4.3388
Canal Electric
 
3.3885
Montaup
 
3.2435
Conn. Municipal Electric Coop.
 
0.8312
Reading
 
0.4638
Newport Electric
 
0.4426
Taunton
 
0.3547
Chicopee
 
0.3145
Braintree
 
0.2995
Peabody
 
0.2746
Holyoke Gas & Electric
 
0.2362
Westfield
 
0.2528
Danvers
 
0.2393
Shrewsbury
 
0.1612
Hudson
 
0.1474
Wakefield
 
0.1245
Hingham
 
0.1203
Concord
 
0.1161
North Attleboro
 
0.1086
Middleborough
 
0.1065
West Boylston
 
0.0509
Groton
 
0.0265
 
 
100.0000

(1)
Boylston and South Hadley signed the Equity Funding Agreements, but have not
qualified as Equity Sponsors.

(2)
VELCo has signed as agent for:

Green Mountain Power
3.1800
%
Citizens Utilities
1.1155

Franklin Electric
0.0433

 
4.3388
%

96087766.2