EXHIBIT 10.4.08
INDUCEMENT LETTER
July 14, 1993
Massachusetts Industrial Finance Agency
75 Federal Street
Boston, Massachusetts 02110
Goldman, Sachs & Co., for itself
and as representative of the
Underwriters
85 Broad Street - 24th Floor
New York, New York
10004
Ladies and Gentlemen:
To induce the Massachusetts Industrial Finance Agency (the "Agency") to issue
and sell, and to induce Goldman, Sachs & Co. and Citicorp Securities Markets,
Inc. (each individually an "Underwriter" and together the "Underwriters") to
purchase, pursuant to the terms of a Bond Purchase Agreement (the "Bond
Purchase Agreement") dated July 14, 1993, $40,000,000 aggregate principal
amount of the Agency's 57/8% Pollution Control Revenue Refunding Bonds, 1993
Series (Eastern Edison Company Project) (the "1993 Series Bonds"), the
proceeds of which are to be used to provide funds for the purpose of refunding
$40,000,000 of the Agency's 10 1/8% Pollution Control Revenue Bonds, 1983
Series (Eastern Edison Company Project) (the "1983 Series Bonds"), with full
realization and appreciation of the fact that the market value of the 1993
Series Bonds and the ability of the Underwriters to resell the 1993 Series
Bonds at the contemplated public offering price or prices are in part
dependent upon the financial condition of Eastern Edison Company (the
"Company"), and in consideration of the foregoing and the execution and
delivery of the Bond Purchase Agreement, the Company represents, warrants, and
covenants to and with the Agency and the Underwriters as follows:
(a) The Company confirms to the Agency and the Underwriters the
representations made by it in Article II of the Loan Agreement hereinafter
mentioned, which representations are hereby incorporated in and made a part of
this Inducement Letter.
(b) The financial statements of the Company incorporated by reference into
Appendix A to the Official Statement dated July 14, 1993 (the Official
Statement including the cover page and the Appendices thereto, the
documents incorporated by reference therein (the "Incorporated
Documents"), and any and all supplements and amendments thereto, are
hereinafter referred to collectively as the "Official Statement") present
fairly the financial position of the Company as of the respective dates
indicated and the results of its operations for the respective periods
specified. Since the date of the most recent of such financial
statements, there has been no material decrease in the capital stock and no
material increase in the funded debt or short-term debt of the Company, and
there has been no material adverse change in the financial position or
results of operations of the Company except as disclosed in the Official
Statement. Such financial statements have been prepared in conformity with
generally accepted accounting principles consistently applied in all
material respects with respect to the period involved, except as may be noted
therein.
(c) The descriptions and information contained or incorporated in the
Preliminary Official Statement dated June 10, 1993 and in the Official
Statement, including without limitation the information relating to the 1993
Series Bonds, the Company, the Company's participation in the transactions
contemplated by the Loan Agreement dated as of July 1, 1993 between the Agency
and the Company (the "Loan Agreement"), and the Trust Agreement dated as of
July 1, 1993 (the "Trust Agreement") between the Agency and the Trustee
thereunder (the "Trustee): (i) were, as of the date of the Preliminary
Official Statement; (ii) are as of the date of the Official Statement, and
(iii) at the Closing Time (as defined in the Bond Purchase Agreement) will be,
true and correct in all material respects and did not, do not and will not
contain, any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading and you are hereby authorized to include such
information in the Official Statement; provided, however, that none of
the representations and warranties in this Inducement Letter shall
apply to statements in or omissions from the Preliminary Official Statement or
Official Statement contained under the captions "The Agency", "Book-Entry-
Only", "Litigation" or in the statements on the cover page
with respect to the initial public offering price of the 1993 Series
Bonds and the Underwriters' ability to effect transactions which stabilize or
maintain the market price of the 1993 Series Bonds. The Company has authorized
the use of the Preliminary Official Statement and the Official Statement by
the Underwriters, and deems the Preliminary Official Statement to be "final,"
and the Official Statement to be "complete" for purposes of Rule 15c2-12 of
the Securities Exchange Act of 1934, as amended (no representation being made
however with respect to the Agency).
(d) From and after the date hereof (i) the Company will not adopt or
approve any amendment or supplement to the Official Statement to which the
Representative shall reasonably object in writing and (ii) if during
the period ending not to exceed 25 days following the End of the
Underwriting Period (as hereinafter defined) as the Representative
believes delivery of the Official Statement is necessary or desirable in
connection with sales of the 1993 Series Bonds by the Underwriters or
any dealer, the Company becomes aware of any fact, including any change
in the business, properties, financial condition or results of operations, or
event which might or would cause the Official Statement (including the
Incorporated Documents), as then supplemented or amended, to contain any
untrue statement of a material fact or to omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading, it shall notify the Representative, and if in the opinion of the
Representative such fact or event requires the preparation and publication
of a supplement or amendment to the Official Statement the Company will
supplement or amend the Official Statement, or prepare and file with the
Commission any filings under the Securities Exchange Act of 1934, as amended,
in a form and in a manner approved by the Representative, and furnish to the
Representative (A) a reasonable number of copies of the supplement or
amendment, or Incorporated Document, and (B) if such notification shall be
subsequent to the Closing, such legal opinions, certificates, instruments and
other documents as the Representative may deem necessary to evidence the
truth and accuracy of such supplement or amendment to the Official Statement
or Incorporated Document. Any expenses incurred pursuant to this paragraph (d)
within nine months after the date of the Official Statement shall be paid by
the Company, and if incurred thereafter (other than with respect to an
Incorporated Document) shall be paid by the Underwriters, except that if the
only event occasioning the revision is a change in the underwriting or
distribution arrangements, such expenses whenever incurred shall be
paid by the Underwriters. For the purposes of this paragraph (d), the
Company will furnish such information with respect to itself as the
Agency or the Underwriters may from time to time request, and any one or
more of said parties at its or their own expense may visit any of the
properties of the Company and inspect its books of account at any
reasonable time. For the period from the date hereof until twenty-five
days after the End of the Underwriting Period for the 1993 Series
Bonds, the Company will provide the Underwriters with a copy of all documents
to be filed by the Company pursuant to Section 13, 14 or 15(d) of the
Securities Exchange Act of 1934 prior to such filing.
For purpose of this Inducement Letter, the "End of the Underwriting
Period" for the 1993 Series Bonds shall mean the date on which the End of the
Underwriting Period for the 1993 Series Bonds has occurred under Rule 15c2-12;
provided, however, that the Company shall be entitled to treat as the End of
the Underwriting Period for the 1993 Series Bonds the date specified in a
notice from the Representative stating the date which is the End of the
Underwriting Period.
The Company may request from the representative from time to time, and
the Representative shall provide to the Company upon such request, such
information as may be reasonably required by the Company in order to determine
whether the End of the Underwriting Period for the 1993 Series Bonds has
occurred under Rule 15c2-12 with respect to the unsold balances of 1993 Series
Bonds that were originally sold to the Underwriters for resale to the public
and which are held by the Underwriters for resale to the public.
If in the opinion of the Representative, for purposes of Rule 15c2-12,
no Underwriter retains for sale to the public any unsold balance of 1993
Series Bonds originally sold to the Underwriters pursuant to the Bond Purchase
Agreement, then the Representative shall promptly notify the Company in
writing that, in its opinion, the End of the Underwriting Period for the 1993
Series Bonds under Rule 15c2-12 has occurred on a date which shall be
set forth in such notification.
(e) The Company will not take or omit to take any action the taking or
omission of which will in any way cause the proceeds from the sale of the 1993
Series Bonds to be applied, or result in such proceeds being applied, in a
manner other than as provided in the Loan Agreement and the Trust Agreement.
(f) The Company will refrain from taking any action, and will not permit
to be taken any action which is within the Company's power to prevent, that in
either case would result in the loss of the exclusion from gross income for
federal tax purposes of interest on the 1993 Series Bonds.
(g) The representations and warranties made by the Company in the Loan
Agreement are correct and complete in all material respects.
(h) The Company is not in material default under any indenture or other
agreement or instrument governing outstanding debt for borrowed money issued
by the Company, nor has any event occurred which with notice or the passage of
time or both would constitute a default under any such document.
(i) Other than as to the matters in litigation or pending before
governmental regulatory bodies specifically disclosed in the Official
Statement, there is no action, suit, proceeding, formal investigation at law
or in equity or before or by any governmental regulatory or administrative
agency pending or to the knowledge of the Company threatened against the
Company which would have a material adverse effect on the transactions
contemplated by the Bond Purchase Agreement or the Official Statement or have
a material adverse effect on the validity or enforceability of the 1983 Series
Bonds, the Loan Agreement, the Trust Agreement, this Inducement Letter or the
Bond Purchase Agreement.
(j) The execution and delivery of this Inducement Letter and the Loan
Agreement and the performance by the Company of its obligations thereunder do
not and will not violate the Articles of Organization or By-laws of the
Company, each as amended, or any court order by which the Company is bound,
and such actions do not and will not constitute a default under any agreement,
indenture, mortgage, lease, note or other obligation or instrument to which
the Company is a party, and no approval or other action by any governmental
authority or agency is required in connection therewith other than
approvals or actions heretofore obtained or to be obtained prior to the
issuance of the 1993 Series Bonds except for approvals required under the
securities or "Blue Sky" laws of various jurisdictions.
(k) (i) The Company agrees to indemnify and hold harmless the Agency,
each director, officer, employee or agent of the Agency, the Underwriters, and
each person, if any, who controls either of the Underwriters within the
meaning of Section 15 of the Securities Act of 1933, as amended (the "Act"),
against any and all losses, costs, claims, damages, actions, liabilities and
expenses whatsoever arising out of:
(A) any untrue statement or alleged untrue statement of a material
fact contained in the Official Statement or arising out of any
omission or alleged omission to state therein a material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of any such untrue statement
or omission or alleged untrue statement or omission under the
captions "The Agency" or "Litigation", or (as to the
Underwriters only), under the caption "Book-Entry-Only" or in
the statements on the cover page with respect to the initial
public offering price of the 1993 Series Bonds and the
Underwriters' ability to effect transactions which stabilize or
maintain the market price of the 1993 Series Bonds, or
(B) an allegation or determination that the 1993 Series Bonds should
have been registered under the Act or the Trust Agreement should
have been qualified under the Trust Indenture Act of 1939, as
amended.
(ii) The Underwriters agree to indemnify and hold harmless the Company,
its directors, officers, employees, agents and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, the Agency
and each director, official, officer, employee or agent of the Agency,
against any and all losses, costs, claims, damages, actions, liabilities and
expenses whatsoever arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Official Statement, or any
omission or alleged omission to state therein any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading, but in either case only with
respect to the statements on the cover page with respect to the initial
public offering price of the 1993 Series Bonds and the Underwriters'
ability to effect transactions which stabilize or maintain the market
price of the 1993 Series Bonds.
(iii) The Company agrees with respect to any action against it, any of
its directors or officers or any person controlling it as aforesaid, and the
Under writers agree with respect to any action against either of them or any
person controlling either of them as aforesaid, in respect of which indemnity
may be sought hereunder, that it will give written notice of the commencement
of such action to the party or parties against whom indemnity shall be
sought within a reasonable time after the indemnified party is made a party to
such action; but omission to so notify any indemnifying party will not
relieve such indemnifying party from any liability which it may have to
the indemnified party otherwise than under this paragraph (h) except to
the extent that the indemnifying party sustains its burden of proving
that it has suffered actual prejudice from the absence of such notice, nor
shall such omission affect any rights such indemnifying party may have
otherwise than under this paragraph (h) to participate in or assume the
defense of any action brought against such indemnified party. Upon
receipt of any such notice, such indemnifying party shall assume the defense
of such action, including the employment of counsel and the payment of all
expenses in connection with such defense, and shall have the right to
negotiate and consent to settlement. Any indemnified party shall have
the right to employ separate counsel in any such action against it and
to participate in the defense thereof, but the fees and expenses of such
counsel incurred after the indemnifying party has assumed the defense
of such action shall be at the expense of such indemnified party unless
(A) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (B) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after
notice of commencement of the action, (C) the indemnified party shall
have reasonably concluded (upon advice of its counsel) that there may
be defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party (in
which case the indemnified party shall have the right to select separate
counsel to assert such legal defenses and to otherwise participate in the
defense of such action on behalf of the indemnified party), or (D) a
conflict or potential conflict exists between the indemnified party and
the indemnifying party (in which case the indemnifying party shall not have
the right to direct the defense of such action on behalf of the indemnified
party), and all such fees, disbursement, expenses and other charges of counsel
for the indemnified party shall be reimbursed by the indemnifying party
promptly as they are incurred. It is understood that the indemnifying
party or parties shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable legal fees,
disbursements and other charges of more than one firm admitted to practice in
such jurisdiction at any one time for any such indemnified party or parties.
No indemnifying party shall be liable for any settlement of any such action
effected without its consent; but if any such action is settled with the
consent of any indemnifying party or if there be a final judgment for the
plaintiff in any such action (of which an indemnifying party shall have been
notified), such indemnifying party shall indemnify and hold harmless each
indemnified party from and against any losses, costs, claims, damages,
actions, liabilities or expenses incurred or suffered by reason of such
settlement or judgment.
(iv) If the indemnification provided for in this paragraph (h) is
unavailable under subparagraph (i) or (ii) above to a party that would have
been an indemnified party under subparagraph (i) or (ii) above ("indemnified
party") in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each party that would have been
an indemnifying party thereunder ("indemnifying party") shall in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by such indemnifying
party on the one hand and such indemnified party on the other from the
offering of the 1993 Series Bonds. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of such
indemnifying party on the one hand and such indemnified party on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits
received by each such indemnifying party on the one hand and each such
indemnified party on the other shall be deemed to be in the same
proportion as the amounts received by them, respectively, as a result of the
offering and sale of the 1993 Series Bonds, which shall be, in the case
of the Company, the amount borrowed under the Loan Agreement (net of
all expenses paid by the Company); and in the case of the Underwriters,
the Underwriters' compensation provided for in the Bond Purchase
Agreement. The relative fault shall be determined by reference to, among other
things, the identity of the party which supplied the untrue or alleged
untrue statement of a material fact or the omission or alleged omission
to state a material fact and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the parties accepting this Inducement Letter agree
that it would not be just and equitable if contribution pursuant to
this subparagraph (iv) were determined by pro rat a allocation or by
any other method of allocation which does not take account of the
equitable considerations referred to above in this subparagraph (iv). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred
to above in this subparagraph (iv) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim (which
shall be limited as provided in subparagraph (iii) above if the
indemnifying party has assumed the defense of any such action in
accordance with the provisions thereof). Notwithstanding the provisions
of this subparagraph (iv), the Underwriters shall not be required, pursuant to
this subparagraph (iv), to contribute any amount in excess of the
amount by which the total price at which the 1993 Series Bonds
underwritten by it and distributed to the public or otherwise sold were
offered to the public or otherwise sold exceeds the amount of any damages
which the Underwriters have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section l5(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The obligations of the Underwriters in
this subparagraph (iv) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(1) The Company will deliver or cause to be delivered all opinions,
certificates and other documents as provided for in the Bond Purchase
Agreement, including, but not limited to, the opinions of McDermott, Will &
Emery dated as of the Closing Date substantially in the form of Exhibits A and
B to the Bond Purchase Agreement.
(m) The Company acknowledges and accepts as if set forth herein the
terms and conditions of the Bond Purchase Agreement as they relate to the
Company and its participation in the transactions contemplated thereby
(including without limitation the obligation to deliver copies of the Official
Statement contained in 3(d) of the Bond Purchase Agreement applicable to it)
and, subject to the terms and conditions of the Bond Purchase Agreement,
agrees to pay the expenses set forth in Section 7 of the Bond Purchase
Agreement.
(n) The Company hereby directs the Agency to redeem the 1983 Series
Bonds on September 1, 1993, and hereby agrees to cause the Trustee to mail
notice of the call for such redemption to the holders of the 1983 Series Bonds
on or before the Closing Date as defined in the Bond Purchase Agreement.
The representations, warranties, covenants and indemnities contained in
this Inducement Letter shall survive the closing under the Bond Purchase
Agreement, the sale by the Agency to the Underwriters and the resale by the
Underwriters of the 1993 Series Bonds, and any investigation by the Agency or
either of the Underwriters of any matters described in or related to the
transactions covered by this Inducement Letter, the Bond Purchase Agreement,
the Loan Agreement, the Trust Agreement or the Official Statement.
This Inducement Letter is given solely for the benefit of the Agency,
the Underwriters and the other indemnified parties referred to herein and
their respective successors, assigns, executors and administrators and no
other person, including any holder of the 1993 Series Bonds as such, shall
acquire or have any right under or by virtue of this Inducement Letter. No
purchaser of the 1993 Series Bonds from the Underwriters shall be deemed a
"successor" or "assign" merely because of such purchase.
The validity, interpretation and performance of this Inducement Letter
shall be governed by the laws of Massachusetts.
This Inducement Letter may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument; provided, however, that should any
executed counterpart fail in any particular to conform to the executed
counterpart which is delivered to the Agency, the provisions of the executed
counterpart so delivered shall prevail.
Very truly yours,
EASTERN EDISON COMPANY
By \s\ C. Hebert
Treasurer
Accepted and agreed to as of the date first above written:
MASSACHUSETTS INDUSTRIAL GOLDMAN, SACHS & CO.,
FINANCE AGENCY for itself and as
By representative of the
Underwriters
By: Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
This Inducement Letter may be simultaneously executed in several counterparts,
each of which shall be an original and all of which shall constitute but one
and the same instrument; provided, however, that should any executed
counterpart fail in any particular to conform to the executed counterpart
which is delivered to the Agency, the provisions of the executed counterpart
so delivered shall prevail.
Very truly yours,
EASTERN EDISON COMPANY
By \s\ C. Hebert
Treasurer
Accepted and agreed to as of the date first above written:
MASSACHUSETTS INDUSTRIAL GOLDMAN, SACHS & CO.,
FINANCE AGENCY for itself and as
By representative of the
Underwriters
By: Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.