Exhibit 10.1.2
(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 CORPORATION
DATED AS OF JUNE 1, 1985
 

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TABLE OF CONTENTS

 
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

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EQUITY FUNDING AGREEMENT
FOR
NEW ENGLAND HYDRO-TRANSMISSION CORPROATION
This AGREEMENT dated as of June 1, 1985, is between New England Hydro-Transm
ission Corporation (New Hampshire Hydro) and the New England entities listed in
Attachment A hereto. 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:

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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

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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 Hampshire 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.

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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-Transmission Electric Company, Inc. (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 Hampshire 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 Hampshire Hydro to contribute equity funds to New Hampshire Hydro, to
provide certain limited credit support in connection with debt financing of New
Hampshire Hydro, 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

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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 England 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 England 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 (i) New England Electric
System (NEES) and other

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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 Hampshire
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 England Hydro and the amendments to the NEPOOL Agreement),
(iii) each signatory having also executed the Equity Funding Agreement for New
England Hydro and having the same percentage of New England 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 Hampshire
Hydro, together with certified copies of related resolutions, consents,
approvals, authorizations, and other documents (Documentation) necessary to
establish to the satisfaction of New Hampshire 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 Hampshire Hydro are included in Attachment B hereto. Prior to signing this
Agreement, each

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signatory has provided to New Hampshire 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
Hampshire 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 Hampshire Hydro as part of their Documentation certificates, legal opinions
(from counsel satisfactory to New Hampshire Hydro), and other documents in form
and substance satisfactory to New Hampshire 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

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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 Hampshire 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 Hampshire 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 New Hampshire 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.

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Upon execution and delivery of the Agreement by New Hampshire 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 termination date of the New
Hampshire HVDC Support Agreement.

Section 4.     Equity Sponsor Qualification
A.    In order to enhance New Hampshire Hydro’s ability to finance its portion
of Phase II as required under the New Hampshire 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
Hampshire Hydro under this Agreement.
B.    A Participant under the New Hampshire 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

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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 New Hampshire 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
Hampshire 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 B

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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 Participants
must demonstrate by February 1, 1988, to the satisfaction of New Hampshire 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 Hampshire 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

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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 Hampshire 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 New Hampshire 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.

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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 Hampshire 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 Hampshire 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 June 1, 1986, 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 Hampshire Hydro’s offering letter, and any
oversubscriptions will be treated as provided therein.

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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 Hampshire 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
Hampshire 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 New Hampshire HVDC Support Agreement, New Hampshire 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 New Hampshire HVDC Support
Agreement) to continue to limit its equity investment to 40% of its total
capital during the time that New Hampshire Hydro has outstanding debt in its
capital structure.
New Hampshire 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 Hampshire

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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 Hampshire Hydro will make an appropriate adjustment in Equity Shares.
B.    During the term of this Agreement, New Hampshire Hydro has the option from
time to time to call for contribution of equity in any of the following forms:
1.
New Hampshire 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 Hampshire Hydro, its Equity Share of the common stock so offered.

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

C.    In order that New Hampshire Hydro may limit its equity investment to a
maximum of 40% of its total capital, New Hampshire Hydro may, at its option,
from time to time, take any of the following actions:
1.
New Hampshire 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 Hampshire
Hydro in the full amount so requested.

2.
New Hampshire Hydro may return any capital contribution previously received from
Equity Sponsors in amounts that will not change the relative

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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 Hampshire 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 Hampshire Hydro will provide annually estimates of its equity
requirements and estimated dates when any equity contributions hereunder will be
due. New Hampshire 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 Hampshire Hydro shall use the proceeds of any equity contribution
under this Agreement for the sole purpose of meeting its capital requirements
under the New Hampshire HVDC Support Agreement.
F.    All transactions under B, up to a maximum aggregate amount of $90 million,
and under C above shall be subject to receipt of all necessary regulatory
approvals, and New Hampshire 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 Hampshire 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

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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 Hampshire Hydro by September 1, 1988.
H.    Notwithstanding any provision of this Agreement to the contrary, prior to
the date that New Hampshire Hydro first calls for equity contributions from all
Equity Sponsors, all equity of New Hampshire Hydro will be owned and contributed
by NEES.

Section 8.     Cash Deficiency Guarantee
A.    The New Hampshire HVDC Support Agreement provides that, if New Hampshire
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 Hampshire 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
New Hampshire HVDC Support Agreement) with respect to any third party debt
financing of New Hampshire 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

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Hampshire Hydro, or any other person, and shall remain in full force and effect
until all of the obligations of New Hampshire 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 Hampshire 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 Hampshire 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 Hampshire 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
Hampshire 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
Hampshire 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 New
Hampshire HVDC Support Agreement, provided that Equity Sponsors having an
aggregate of at least 80% of the Equity Shares may agree to exceed such

96094872.2
 
 

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-19-

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 New Hampshire HVDC Support Agreement,
if a Participant that is a Credit Enhanced Participant is terminated by New
Hampshire Hydro as a Participant, each Equity Sponsor or its appointee shall be
allocated by New Hampshire 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 Hampshire 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 Hampshire Hydro’s
offer thereof. If required by New Hampshire Hydro, any Equity Sponsor or its
appointee assuming rights and obligations under the New Hampshire 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

96094872.2
 
 

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-20-

designee. Each Equity Sponsor agrees that if its appointee is allocated a
Participating Share under the New Hampshire HVDC Support Agreement, such Equity
Sponsor shall also allocate to it an equal participating share and support share
under the Massachusetts 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.     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
Hampshire 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 Hampshire Hydro or any Equity
Sponsor of any provision of this Agreement or any failure, omission, delay, or
inability of New Hampshire 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

96094872.2
 
 

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-21-

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 11.     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 Hampshire 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 Hampshire Hydro; or

(ii)
An Equity Sponsor shall fail to supply in accordance with the terms hereof any
documentation required, by New Hampshire Hydro in connection with financing with
Lenders by New Hampshire 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 Hampshire 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

96094872.2
 
 

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-22-

given to such Equity Sponsor or any of its affiliates by New Hampshire Hydro.
(iv)
An Equity Sponsor shall experience an event of default under the Equity Funding
Agreement for New England Hydro.

B.    If an Event of Default under Section 12A(i) above shall have occurred, New
Hampshire 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 Hampshire 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 12.     Restrictions on Transfer of Common Stock
Each Equity Sponsor agrees that it will not transfer any or all of its common
stock of New Hampshire 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 England Hydro.

Section 13.     Dividends on Common Stock
Any Equity Sponsor may direct New Hampshire 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 New Hampshire HVDC
Support Agreement by such Equity Sponsor or its appointee.

96094872.2
 
 

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-23-

Section 14.     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 Hampshire 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 Hampshire
Hydro have been paid.

Section 15.     Certain Actions of New Hampshire Hydro
A.    New Hampshire 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 Hampshire 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
Hampshire Hydro not otherwise permitted by the New Hampshire HVDC Support
Agreement.

B.    New Hampshire 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 16.     Miscellaneous

96094872.2
 
 

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-24-

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 Hampshire Hydro may collaterally assign this
Agreement without the consent of the Equity Sponsors in connection with a third
party financing by New Hampshire 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 Hampshire Hydro, any affiliate of New Hampshire Hydro, or any other Equity
Sponsor, or (2) the amount of any claim by it against New Hampshire Hydro, any
affiliate of New Hampshire 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 Hampshire Hydro, any
affiliate of New Hampshire Hydro, or any other Equity Sponsor or any such claim
by it against New Hampshire 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

96094872.2
 
 

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-25-

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 Hampshire Hydro and Equity Sponsors owning Equity Shares
aggregating at least 80%, evidenced by a written amendment signed by New
Hampshire Hydro and such Equity Sponsors; and New Hampshire 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.

96094872.2
 
 

--------------------------------------------------------------------------------

-26-

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 New Hampshire 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.

96094872.2
 
 

--------------------------------------------------------------------------------

-27-

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.

96094872.2
 
 

--------------------------------------------------------------------------------

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

96094872.2
 
 

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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
 

96094872.2
 
 

--------------------------------------------------------------------------------

ATTACHMENT A
List of Equity Sponsors
New Hampshire 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:

96094872.2
 
 

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-31-

Green Mountain Power
 
3.1800
%
Citizens Utilities
 
1.1155

Franklin Electric
 
0.0433

 
 
4.3388
%

      

96094872.2
 
 

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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.]

96094872.2
 
 

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[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

96094872.2
 
 

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-34-

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,
 

96094872.2
 
 

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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:

96094872.2
 
 

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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:

96094872.2
 
 

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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.

96094872.2
 
 

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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 New
Hampshire 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.

96094872.2
 
 

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-39-

(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 New Hampshire 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).

 

96094872.2
 
 

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[CONFORMED]
AMENDMENT NO. 1
TO
EQUITY FUNDING AGREEMENT
FOR NEW ENGLAND HYDRO-TRANSMISSION CORPORATION
This Amendment, dated as of May 1, 1986, is between New England
Hydro-Transmission Corporation (New Hampshire Hydro), and the New England
entities that have signed the Equity Funding Agreement for New England
Hydro-Transmission Corporation, 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 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 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 New Hampshire 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:

96094872.2
 
 

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“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 Hampshire Hydro that it is qualified to be an Equity Sponsor pursuant to
this Section 4. New Hampshire 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:

96094872.2
2
 

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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.

96094872.2
3
 

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XXXXXXXX

By:                  
   Its President

   Address: XXXXXXX
         XXXXXXX

96094872.2
4
 

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[CONFORMED]
AMENDMENT No. 2
TO
EQUITY FUNDING AGREEMENT
FOR NEW ENGLAND HYDRO-TRANSMISSION CORPORATION
This Amendment, dated as of September 1, 1987, is between New England
Hydro-Transmission Corporation (New Hampshire Hydro), and the New England
entities that have signed the Equity Funding Agreement for New England
Hydro-Transmission Corporation, 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 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 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 New Hampshire 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.

96094872.2
1
 

--------------------------------------------------------------------------------

 
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

96094872.2
2
 

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CONFORMED
AMENDMENT NO. 3
TO
EQUITY FUNDING AGREEMENT
FOR NEW ENGLAND HYDRO-TRANSMISSION CORPORATION.
This Amendment, dated as of August 1, 1988, is between New England
Hydro-Transmission Corporation (New Hampshire Hydro), and the New England
entities that have signed the Equity Funding Agreement for New England
Hydro-Transmission Corporation 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”

 

96094872.2
1
 

--------------------------------------------------------------------------------

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 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 paragraph:

“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 Hampshire 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 New Hampshire 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

96094872.2
2
 

--------------------------------------------------------------------------------

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 12 is hereby amended by inserting therein after the words “sections 4B
or 4C” the following:

“or 4D or 4F”
10.
Section 16A 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.

96094872.2
3
 

--------------------------------------------------------------------------------

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

96094872.2
4
 

--------------------------------------------------------------------------------

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
 

96094872.2
5
 

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ATTACHMENT A
List of Equity Sponsors
New Hampshire 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:

96094872.2
6
 

--------------------------------------------------------------------------------

Green Mountain Power
3.1800
%
Citizens Utilities
1.1155

Franklin Electric
0.0433

 
4.3388
%

96094872.2
7