DRAFT
$_______________
THE NARRAGANSETT ELECTRIC COMPANY
(a Rhode Island corporation)
First Mortgage Bonds, Series_____
Due from 9 Months to 30 Years from Date of Issue
DISTRIBUTION AGREEMENT
[DATE]
[NAME AND ADDRESS OF AGENT]
Dear Agent:
The Narragansett Electric Company (the Company) agrees with you with
respect to the issue and sale by the Company of not exceeding $_______
aggregate principal amount of its First Mortgage Bonds, Series ______(New
Bonds). The New Bonds are to be issued pursuant to one or more indentures
supplemental (the Supplemental Indenture) to the First Mortgage Indenture and
Deed of Trust dated as of September 1, 1944 (the Original Indenture) between
the Company and Rhode Island Hospital Trust National Bank (successor to Rhode
Island Hospital Trust Company) (the Trustee), (such Original Indenture as
heretofore and hereafter supplemented, the Indenture).
Subject to the terms and conditions stated herein, the Company hereby
(i) appoints you as agent of the Company for the purpose of soliciting
purchases of the New Bonds from the Company by others and (ii) agrees that
whenever the Company determines to sell New Bonds directly to you as principal
for resale to others, it will enter into a Terms Agreement relating to such
sale in accordance with the provisions of Section 2(b) hereof. The New Bonds
shall have the maturities, interest rates, redemption provisions, and other
terms set forth in the Prospectus referred to below, as it may be supplemented
from time to time.
The Company has filed with the Securities and Exchange Commission (the
SEC) a registration statement on Form S-3 (No. ______) for the registration of
First Mortgage Bonds, including the New Bonds, and the offering thereof from
time to time in accordance with Rule 415 under the Securities Act of 1933, as
amended (the Securities Act). Such registration statement has been declared
effective by the SEC, and the Indenture has been qualified under the Trust
Indenture Act of 1939 (the Trust Indenture Act). Such registration statement
and the prospectus filed pursuant to Rule 424 under the Securities Act,
including all documents incorporated therein by reference, as from time to
time amended or supplemented by the filing of documents pursuant to the
Securities Exchange Act of 1934 (the Exchange Act), the Securities Act, or
otherwise, are referred to herein as the Registration Statement and the
Prospectus, respectively.
The Company may from time to time appoint one or more other persons as
agents for soliciting purchases of the New Bonds from the Company by entering
into distribution agreements substantially similar to this Agreement. The
Company will notify you prior to making any such appointment and will notify
you of any proposed additions, modifications, amendments, waivers, or changes
of any nature with respect to any such distribution agreement. The Company
reserves the right to sell, and may accept offers to purchase, New Bonds
directly on its own behalf.
As used herein, Commencement Date shall have the meaning set out in
Section 2(d) hereof and Settlement Date shall mean the time and date for the
delivery of and payment for New Bonds, whether sold under Section 2(b) hereof
and the applicable Terms Agreement or under Section 2(a) hereof and the
Administrative Procedures set out in Exhibit B hereto.
SECTION 1. Representations and Warranties.
-------------------------------------------
(a) The Company represents and warrants to you, as of the
Commencement Date and each Settlement Date with respect to any applicable
Terms Agreement, and as of the times referred to in Sections 6(a) and 6(b)
hereof (in each case the Representation Date), as follows:
(i) The Registration Statement and the Prospectus, at the time
the Registration Statement became effective, complied, and as of the
applicable Representation Date will comply, in all material respects
with the requirements of the Securities Act and the rules and
regulations thereunder (the Regulations) and the Trust Indenture Act.
The Registration Statement, at the time the Registration Statement
became effective did not, and as of the applicable Representation Date
will not, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus, at the
time the Registration Statement became effective did not, and as of
the applicable Representation Date will not, contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon information furnished to
the Company in writing by you for use in the Registration Statement or
Prospectus or to that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification under the
Trust Indenture Act (Form T-1) of the Trustee.
(ii) The documents incorporated by reference in the
Prospectus, at the time they were or hereafter are filed with the SEC,
complied and will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder (the Exchange Act Regulations), and, when read together and
with the other information in the Prospectus, at the time the
Registration Statement became, and any amendments thereto become,
effective, did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were or are made, not misleading.
(iii) Coopers & Lybrand, who have certified certain financial
statements included or incorporated by reference in the Prospectus,
are independent public accountants as required by the Securities Act
and the Regulations.
(iv) The financial statements of the Company included or
incorporated by reference in the Registration Statement will be
correct and complete and will truly present the financial position of
the Company as at the dates stated therein and the results of the
operations of the Company for the periods stated therein. The Company
had, on the date of the latest financial statements included or
incorporated by reference in the Registration Statement, no material
liabilities or obligations, fixed or contingent, other than those
disclosed in the Prospectus or such financial statements, and since
that date the Company has not incurred any material liabilities or
obligations still outstanding, fixed or contingent, other than (i) in
the ordinary course of business, (ii) as a result of transactions
disclosed in the Prospectus, or (iii) short-term borrowings which
result in short-term note indebtedness in an amount not exceeding, in
the aggregate at any one time outstanding, the limitations then
authorized for the Company by the SEC under the Public Utility Holding
Company Act of 1935 (the 1935 Act). Since the date of the latest
financial statements included or incorporated by reference in the
Registration Statement, there has not been any material adverse change
in the financial condition of the Company not disclosed in the
Prospectus. Except as disclosed in said Prospectus, there are no
proceedings at law or in equity or before any Federal or state
commission or other public authority the result of which might have a
material adverse effect upon the financial condition of the Company.
(v) The consummation of the transactions herein contemplated
and the performance by the Company of the terms of this Distribution
Agreement and each applicable Terms Agreement will not violate any of
the terms, conditions, or provisions of, or constitute a default
under, any franchise, indenture, or other contract or agreement to
which the Company is now a party or by which the Company or its
property may be bound or affected, or the Company's articles or
organization, by-laws, or preferred stock provisions, or any order of
any court or administrative agency by which the Company is bound.
(vi) The issue and sale of the New Bonds are solely for the
purpose of financing the business of the Company.
(b) Any certificate signed by any officer of the Company and
delivered to you or to your counsel in connection with an offering of New
Bonds shall be deemed a representation and warranty of and by the Company to
you as to the matters covered thereby.
SECTION 2. Solicitations as Agent; Purchases as Principal.
-----------------------------------------------------------
(a) Solicitations as Agent. On the basis of the representations
and warranties herein contained, but subject to the terms and conditions
herein set forth, you agree, as agent of the Company to use your reasonable
best efforts to solicit offers to purchase the New Bonds upon the terms and
conditions set forth in the Prospectus. You are hereinafter referred to, in
your capacity as agent, as the Agent.
The Company reserves the right, in its sole discretion, to
suspend solicitation of purchases of the New Bonds commencing at any time for
any period of time or permanently. Upon receipt of instructions from the
Company, you will forthwith suspend solicitation of purchases from the Company
until such time as the Company has advised you that such solicitation may be
resumed.
The Company agrees to pay you a commission, in the form of a
discount, equal to the percentage of the principal amount of each New Bond
sold by the Company as a result of a solicitation made by you as set forth in
Schedule A hereto.
As Agent, you are authorized to solicit orders for the New
Bonds only in denominations of $1,000 or any integral multiple thereof. You
shall communicate to the Company, orally or in writing, each reasonable offer
to purchase New Bonds received by you as Agent. The Company shall have the
sole right to accept offers to purchase the New Bonds and may reject any such
offer in whole or in part. You shall have the right, in your discretion
reasonably exercised, to reject any offer to purchase the New Bonds received
by you in whole or in part, and any such rejection shall not be deemed a
breach of your agreement contained herein. The Company reserves the right to
sell, and may solicit and accept offers to purchase, New Bonds directly on its
own behalf, and, in the case of any such sale not resulting from a
solicitation made by you, no commission will be payable with respect to such
sale.
(b) Purchases as Principal. Each sale of New Bonds to you as
principal shall be made in accordance with the terms of this Agreement and a
separate agreement which will provide for the sale of such New Bonds to, and
the purchase by, you. Each such separate agreement (which shall be
substantially in the form of Exhibit A hereto and which may take the form of
an exchange of any standard form of written telecommunication between you and
the Company) is herein referred to as a Terms Agreement. Your commitment to
purchase New Bonds pursuant to any Terms Agreement shall be deemed to have
been made on the basis of the representations and warranties of the Company
herein contained and shall be subject to the terms and conditions herein set
forth. Each Terms Agreement shall specify the principal amount of New Bonds
to be purchased by you pursuant thereto, the price to be paid to the Company
for such New Bonds, the initial public offering price, if any, at which the
New Bonds are proposed to be re-offered, the Settlement Date, the place of
delivery of and payment for such New Bonds, and any other particular terms of
the New Bonds. Such Terms Agreement shall also specify any exceptions from
the requirements for opinions of counsel, letters from Coopers & Lybrand and
certificates from officers of the Company pursuant to Section 5 hereof.
(c) Procedures. Procedural details relating to the issue and
delivery of New Bonds, and solicitation of offers to purchase New Bonds, and
the payment in each case therefor, shall be as set forth in the Administrative
Procedures attached hereto as Exhibit B (the Procedures). You and the Company
agree to perform the respective duties and obligations specifically provided
to be performed by each of us herein and in the Procedures, as amended from
time to time. The Procedures may be amended only by written agreement of you
and the Company.
(d) Delivery. The documents required to be delivered by Section 5
hereof shall be delivered at the office of Hinckley, Allen, Snyder & Comen,
attention: Edwin G. Torrance, counsel for Rhode Island Hospital Trust National
Bank, on the date hereof, or at such other time as you and the Company may
agree upon in writing, which in no event shall be later than the time at which
you commence solicitation of purchases of New Bonds hereunder. Such time and
date are herein called the Commencement Date.
SECTION 3. Covenants of the Company.
-------------------------------------
The Company covenants with you as follows:
(a) If, at any time when the Prospectus is required by the
Securities Act to be delivered in connection with sales of the New Bonds, any
event shall occur or condition exist as a result of which it is necessary, in
the reasonable opinion of your counsel or counsel for the Company, to further
amend or supplement the Prospectus in order that the Prospectus will not
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the reasonable opinion of either
such counsel, at any such time to amend or supplement the Registration
Statement or the Prospectus in order to comply with the requirements of the
Securities Act or the Regulations, immediate notice shall be given, and
confirmed in writing, to you to cease the solicitation of offers to purchase
the New Bonds in your capacity as Agent and to cease sales of any New Bonds
you may then own as principal, and the Company will promptly prepare and file
with the SEC such amendment or supplement, whether by filing documents
pursuant to the Exchange Act or the Securities Act or otherwise, as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement comply with such requirements.
(b) On or prior to the date on which there shall be released to the
general public interim financial statement information related to the Company
with respect to each of the first three quarters of any fiscal year or
preliminary financial statement information with respect to any fiscal year,
the Company shall furnish such information to you, confirmed in writing, and
shall cause the Prospectus to be amended or supplemented to include or
incorporate by reference full or capsule financial information with respect to
the results of operations of the Company for the period between the end of the
preceding fiscal year and the end of such quarter or for such fiscal year, as
the case may be, and corresponding information for the comparable period of
the preceding fiscal year, as well as such other information and explanations
as shall be necessary for an understanding of such financial information or as
shall be required by the Securities Act or the Regulations; provided, however,
that if on the date of such release you shall have suspended solicitation of
purchases of the New Bonds in your capacity as Agent pursuant to a request
from the Company and shall not then hold any New Bonds as principal, the
Company shall not be obligated so to amend or supplement the Prospectus until
such time as the Company shall determine that solicitation of purchases of the
New Bonds should be resumed or shall subsequently enter into a new Terms
Agreement with you.
(c) On or prior to the date on which there shall be released to the
general public financial information included in or derived from the audited
financial statements of the Company for the preceding fiscal year, the Company
shall cause the Registration Statement and the Prospectus to be amended,
whether by the filing of documents pursuant to the Exchange Act or the
Securities Act or otherwise, to include or incorporate by reference such
audited financial statements and the report or reports, and consent or
consents to such inclusion or incorporation by reference, of the independent
accountants with respect thereto, as well as such other information and
explanations as shall be necessary for an understanding of such financial
statements or as shall be required by the Securities Act or the Regulations;
provided, however, that if on the date of such release you shall have
suspended solicitation of purchases of the New Bonds in your capacity as Agent
pursuant to a request from the Company, and shall not then hold any New Bonds
as principal, the Company shall not be obligated so to amend or supplement the
Prospectus until such time as the Company shall determine that solicitation of
purchases of the New Bonds should be resumed or shall subsequently enter into
a new Terms Agreement with you.
(d) The Company will make generally available to its security
holders as soon as practicable, but not later than 18 months after the
effective date of the Registration Statement and of each post-effective
amendment thereto and after the date of each Terms Agreement, an earnings
statement of the Company (which need not be audited) complying with Section
11(a) of the Securities Act and the Regulations (including, at the option of
the Company, Rule 158 under that Act).
(e) The Company will give to you notice of its intention to file
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus, whether by the filing of documents pursuant to the Exchange
Act or the Securities Act or otherwise (other than by the filing pursuant to
the Exchange Act of an amendment or supplement relating solely to the terms of
New Bonds, a change in the principal amount of New Bonds remaining to be sold,
or similar changes) and will furnish your counsel with copies of any such
amendment or supplement, other than a current report on Form 8-K, or other
documents proposed to be filed a reasonable time in advance of filing, and
will afford your counsel a reasonable opportunity to examine such amendment or
supplement or other document and to make objections of substance thereto.
(f) The Company will advise you immediately, (i) of the
effectiveness of any amendment to the Registration Statement, (ii) of the
filing with the SEC of any supplement to the Prospectus or any document to be
filed pursuant to the Exchange Act or the Securities Act which will be
incorporated by reference in the Prospectus, (iii) of the receipt of any
comments from the SEC with respect to the Registration Statement or the
Prospectus, (iv) of any request by the SEC for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, (v) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation
of any proceedings for that purpose, (vi) of the issuance by the Rhode Island
Public Utilities Commission, Division of Public Utilities and Carriers (RIPUC)
of any order altering, suspending, supplementing, or otherwise affecting any
of its orders permitting the issuance and sale of the New Bonds, (vii) of any
action by the SEC which has the effect of eliminating the exemption from the
requirement of obtaining an order under the 1935 Act pursuant to Rule 52
promulgated thereunder, and (viii) of the commencement of any litigation in
connection with the New Bonds against the Company or any of its directors or
any signer of the Registration Statement.
(g) The Company will promptly deliver to you a copy of the
Registration Statement, as originally filed, and of all amendments thereto
heretofore or hereafter made, including a copy of each consent included or
incorporated by reference therein or filed as an exhibit thereto (but
excluding any other exhibit thereto unless specifically requested by you) all
to the extent not previously delivered. The Company will deliver to you in
New York or Boston, as requested, as many unsigned copies of the Prospectus
(as supplemented or amended, if the Company shall have made any supplements or
amendments thereto) and any documents incorporated by reference therein as you
may reasonably request so long as you are required to deliver a Prospectus in
connection with the sale or solicitation of offers to purchase the New Bonds.
(h) The Company will furnish to you, at the earliest time the
Company makes the same available to others, copies of its annual reports and
other financial reports furnished or made available to the public generally.
(i) The Company will endeavor, in cooperation with you, to qualify
the New Bonds for offering and sale under the applicable securities laws of
such states and other jurisdictions of the United States as you may designate,
and will endeavor to maintain such qualifications in effect for as long as may
be required for the distribution of the New Bonds; provided, however, that the
Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation in any jurisdiction in which it
is not so qualified. The Company will file such statements and reports as may
be required by the laws of each jurisdiction in which the New Bonds have been
qualified as above provided.
(j) The Company, during the period when the Prospectus is required
to be delivered under the Securities Act, will file promptly all documents
required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act.
(k) Between the date of any Terms Agreement and the Settlement Date
with respect to such Terms Agreement, the Company will not, without your prior
consent, offer or sell, or enter into any agreement to sell, any debt
securities of the Company (other than the New Bonds) of the same or
substantially similar maturity to the New Bonds, except as may otherwise be
provided in any such Terms Agreement.
SECTION 4. Payment of Expenses.
--------------------------------
The Company covenants and agrees with you that the Company will pay or
cause to be paid expenses incident to its performance of its obligations under
this Agreement, including the following: (i) the preparation and filing of
the Registration Statement and all amendments thereto, (ii) the preparation,
issuance, and delivery of the New Bonds if in certificated form, (iii) the
fees and disbursements of the Company's accountants and of the Trustee and its
counsel, (iv) the qualification of the New Bonds under securities laws in
accordance with the provisions of Section 3(i), including filing fees and the
reasonable fees and disbursements of your counsel in connection therewith and
in connection with the preparation of any Blue Sky Survey and any Legal
Investment Survey, (v) the printing and delivery to you in quantities as
herein above stated of copies of the Registration Statement and all amendments
thereto, and of the Prospectus and any amendments or supplements thereto, (vi)
the printing and delivery to you of copies of the Indenture and any Blue Sky
Survey and any Legal Investment Survey, (vii) any fees charged by rating
agencies for the rating of the New Bonds, (viii) the fees and expenses, if
any, incurred with respect to any filing with the National Association of
Securities Dealers, Inc., and (ix) all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
specifically provided in this subsection.
The Company shall also reimburse the Agents for the reasonable fees
and disbursements of counsel for the Agents and any out-of-pocket expenses,
including advertising expenses, incurred with the approval of the Company.
SECTION 5. Conditions of Obligations.
--------------------------------------
Your obligations to solicit offers to purchase the New Bonds as agent
of the Company and your obligations to purchase New Bonds pursuant to any
Terms Agreement will be subject to the accuracy of the representations and
warranties on the part of the Company herein, to the accuracy of the
statements of the Company's officers made in any certificate furnished
pursuant to the provisions hereof, to the performance and observance by the
Company of all covenants and agreements herein contained on its part to be
performed and observed and to the following additional conditions precedent:
(a) Prior to the Commencement Date, the Indenture shall have been
qualified under the Trust Indenture Act, there shall have been issued an order
of the RIPUC, to the extent it has jurisdiction, permitting the issuance and
sale of the New Bonds, and at such time and at each Settlement Date with
respect to any applicable Terms Agreement such letter or orders shall not
contain any provision which, in your opinion or the opinion of the Company, is
unduly burdensome to the Company.
(b) At the Commencement Date and at each Settlement Date with
respect to any applicable Terms Agreement, if called for by such Terms
Agreement, you shall have received:
(i) The opinion, dated as of such date, of one or both of
Robert King Wulff, Esq., or Kirk L. Ramsauer, Esq., Counsel for the
Company, in form and substance satisfactory to you and your counsel,
to the effect that:
(A) The Company is a corporation validly organized and
duly existing under special charter granted by The
State of Rhode Island.
(B) This Agreement (and, if the opinion is being given
pursuant to Section 6(c) hereof on account of the
Company having entered into a Terms Agreement, the
applicable Terms Agreement) has been duly authorized,
executed, and delivered by the Company.
(C) The Company had corporate power proper and adequate
for making the Indenture which was duly executed and
delivered in accordance with proper authority from
the stockholders and directors of the Company.
(D) The Supplemental Indenture, including Schedule A
thereto, contains a correct and adequate description
of the real estate, rights or interests in real
estate, and fixed property of the Company acquired up
to [DATE OF INDENTURE], and not included in the
Original Indenture or the previous supplemental
indentures, and then owned of record, except for the
properties expressly excluded from the Indenture.
(E) All filings and recordings of or in respect of the
Indenture have been duly made where such filings and
recordings are necessary for the preservation or
protection of the lien thereof, and the Indenture is
a valid, binding, and enforceable instrument subject
to laws of general application affecting the rights
and remedies of mortgagees and creditors.
(F) The Company has corporate power proper and adequate
for the execution and issuance of the New Bonds under
the Indenture in the aggregate principal amount of
not exceeding $ ___________, and, in accordance with
due authorization from the stockholders and directors
of the Company, when executed and certified as
specified in the Indenture and delivered against
payment therefor in accordance with this Agreement,
the New Bonds will be duly issued and valid and
binding obligations of the Company and entitled to
the benefits and security of the Indenture.
(G) The New Bonds are secured by a direct first mortgage
lien on substantially all the properties and
franchises now owned by the Company, subject to the
property specifically excepted in the granting causes
of, and to the liens permitted by, the Indenture,
including the prior lien of the Trustee for
compensation, expenses, and liabilities; and there is
no existing indebtedness secured by lien on the
property securing such New Bonds ranking prior to or
on a parity with the lien securing the New Bonds.
(H) The property specifically described as mortgaged
property in the Indenture constitutes substantially
all of the property owned by the Company and used by,
or useful to, it in its business, except for the
property expressly excepted from the Indenture and
except as described in the Prospectus, including all
documents incorporated therein by reference. None of
the real estate and rights in real estate described
in the schedules to the Indenture and which
constitute the principal properties of the Company is
excluded from the lien of the Indenture by virtue of
the provisions of clause (b) of the paragraph in the
Original Indenture beginning "Reservations and
Exceptions," and as to the remainder of the
properties described in said schedules the
exclusions, if any, by virtue of said clause (b) are
minor.
(I) Other than as described in the Prospectus, including
all documents incorporated therein by reference, the
principal generating stations of the Company are in
general on land owned by the Company, the balance
being upon land of others pursuant to lease or other
arrangements. As to the other properties described
in the schedules to the Indenture and indicated
therein as owned by the Company, being principally
electric lines and related equipment, they are in
general on land owned in fee, being in substantial
part located on, over, or under public streets or
highways and in part on land owned by others over
which the Company has easements or rights of way. A
majority of the poles of the distribution system are
owned jointly with others, principally telephone
companies. The Company's title to such properties is
free from any material defects of record except
current taxes, the mortgage of the Indenture, and
such liens, encumbrances, and other defects as are
set forth or are referred to in the Indenture, and in
respect to said easement interests in real estate
(which consist principally of transmission and
distribution line rights of way) such rights, with
minor exceptions, are perpetual or without limit of
time.
(J) An appropriate order with respect to the issue and
sale of the New Bonds has been issued by the RIPUC,
to the extent it has jurisdiction, authorizing the
issue and sale of the New Bonds and the mortgage by
the Company of its properties, and said order
remains, to the best of such counsel's knowledge, in
effect at this date; the Company is exempted by Rule
52 under the 1935 Act from the requirement of an
order of the SEC; the Indenture has been qualified
under the Trust Indenture Act; the Registration
Statement has become effective under the Securities
Act; to the best of such counsel's knowledge, said
order, said letter and said Registration Statement
remain in effect at this date; and no other approval,
consent or action of any governmental or regulatory
authority is required for the issue and sale of the
New Bonds or the carrying out of the provisions of
this Agreement (except that such counsel need express
no opinion concerning the applicability of the
blue-sky or securities laws of the several states in
connection with sales by you and others of the New
Bonds).
(K) The statements upon such counsel's authority made or
incorporated by reference in the Registration
Statement and in the Prospectus, relating to the New
Bonds are correct; the Registration Statement and the
Prospectus, including all documents incorporated by
reference therein in accordance with the requirements
of Form S-3 under the Securities Act (except for the
financial statements contained or incorporated
therein, as to which such counsel need express no
opinion), comply as to form in all material respects
with the relevant requirements of the Securities Act
and the Exchange Act, as amended, and of the
applicable rules, regulations, and releases of the
SEC thereunder; and the New Bonds conform to the
description thereof in the Registration Statement and
Prospectus.
(L) Nothing has come to the attention of such counsel
which leads them to believe that either the
Registration Statement, or the documents incorporated
by reference therein, contains an untrue statement of
a material fact or omits to state a material fact
required to be stated therein or necessary to make
the statements therein not misleading or that the
Prospectus, as amended or supplemented at the
Commencement Date or said Settlement Date, as the
case may be, contains an untrue statement of a
material fact or omits to state a material fact
necessary to make the statements therein, in the
light of the circumstances in which they were made,
not misleading.
(ii) The opinion of Milbank, Tweed, Hadley & McCloy, counsel to
the Agent, with respect to the validity of the Indenture, the New
Bonds, the Registration Statement, the Prospectus, and other related
matters as you may reasonably request.
(c) At the Commencement Date and at each Settlement Date with
respect to any Terms Agreement,
(i) no stop order suspending the effectiveness of the
Registration Statement shall have been entered and be in effect, no
proceeding for that purpose shall be pending, and any request on the
part of the SEC for amendments or additional information shall have
been complied with to its satisfaction;
(ii) the order of the RIPUC referred to in paragraph (a) of
this Section shall remain in force and effect; and
(iii) the representations and warranties of the Company
herein shall be true and correct;
and you shall have received a certificate of an officer of the Company, dated
as of the Commencement Date or such Settlement Date, if called for by the
applicable Terms Agreement, to such effect to the best of his knowledge,
information and belief.
(d) At the Commencement Date and at each Settlement Date with
respect to any Terms Agreement, if called for by such Terms Agreement, you
shall have received from Coopers & Lybrand, a letter, dated as of the
Commencement Date or such Settlement Date, in form and substance satisfactory
to you, to the effect that:
(i) They are independent public accountants with respect to
the Company within the meaning of the Securities Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion the financial statements and financial
schedules (included or incorporated by reference in the Registration
Statement) examined by them as stated in their report (incorporated by
reference in the Registration Statement) comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act and of the published rules and regulations thereunder;
(iii) They have read the minutes of the meetings of the
stockholders and the Board of Directors of the Company held during any
period subsequent to and not covered by the financial statements
referred to in paragraph (ii) of this clause, as set forth in the
minute books through a specified date not more then five business days
prior to the date of their letter and:
(A) That they have read the unaudited financial
statements of the Company included or incorporated by
reference in the Registration Statement, and made
inquiries of officials of the Company who have
responsibility for financial and accounting matters
and that those officials of the Company stated that
the unaudited financial statements included or
incorporated by reference in the Registration
Statement (1) are in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited
financial statements included or incorporated by
reference in the Registration Statement and (2)
comply as to form in all respects with the applicable
accounting requirements of the Exchange Act and the
published rules and regulations thereunder;
(B) That with respect to any period after the date of the
unaudited financial statements referred to in (iii)
(A) for which there are financial statements
available, they have read such financial statements
and made inquiries of officials of the Company who
have responsibility for financial and accounting
matters and that those officials of the Company
stated that such unaudited financial statements are
stated on a basis substantially consistent with that
of the audited financial statements included or
incorporated by reference in the Registration
Statement and that there was no change in the capital
stock, no increase in long-term debt or any decrease
in net assets of the Company (other than decreases
resulting from regular dividends on preferred or
common stock), as compared with the amounts shown in
the unaudited financial statements of the Company
included or incorporated by reference in the
Registration Statement; and
(C) That with respect to the period from the date of the
latest available financial statements of the Company
to a specified date not more than five business days
prior to the date of such letter they have made
inquiries of officials of the Company who have
responsibility for financial and accounting matters
and those officials of the Company stated that there
was no change in the capital stock or increase in
long-term debt compared to the amounts shown on the
unaudited financial statements of the Company
included or incorporated by reference in the
Registration Statement;
except in all instances as set forth or incorporated by
reference in or contemplated by the Prospectus or, with respect
to Clauses (B) and (C) above, except as disclosed in said
letter; and
(iv) That they have compared the dollar amounts contained in
Exhibit 12 (Computation of Ratio of Earnings to Fixed
Charges) to the Registration Statement with such dollar
amounts derived from the unaudited financial statements
incorporated by reference in the Registration Statement,
general accounting records of the Company or from
schedules prepared by the Company or derived directly from
such records or schedules by analysis or computation, and
have found such dollar amounts to be in agreement, and
have recalculated the ratios contained in Exhibit 12 and
have found the calculation of such ratios to be
mathematically correct, except in each case as otherwise
stated in said letter.
(e) At the Commencement Date and at each Settlement Date with
respect to any applicable Terms Agreement, your counsel shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the New
Bonds as herein contemplated and related proceedings, or in order to evidence
the accuracy and completeness of any of the representations and warranties, or
the fulfillment of any of the conditions, herein contained and all proceedings
taken by the Company in connection with the issuance and sale of the New Bonds
as herein contemplated shall be satisfactory in form and substance to you and
your counsel.
(f) Your obligations to purchase New Bonds pursuant to any Terms
Agreement will be subject to the following further conditions: (i) the rating
assigned by any nationally recognized securities rating agency to any debt
securities of the Company as of the date of the applicable Terms Agreement
shall not have been lowered since that date, (ii) there shall not have
occurred, since the date of the applicable Terms Agreement or since the
respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business; (iii) there shall not have come to
your attention any facts that would cause you to believe that the Prospectus,
at the time it was required to be delivered to a purchaser of the New Bonds,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in light of
the circumstances existing at such time, not misleading, (iv) there shall not
have occurred any suspension or limitation of trading in securities generally
on the New York Stock Exchange, or any setting of minimum prices for trading
on such exchange, or any suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market, (v) there shall not
have occurred any banking moratorium declared by Federal or New York
authorities, or (vi) there shall not have occurred any outbreak or escalation
of major hostilities in which the United States is involved, any declaration
of war by Congress, or any other substantial national or international
calamity or emergency if, in the judgment of the Agent, the effect of such
outbreak, escalation, declaration, calamity, or emergency makes it
impracticable or inadvisable to proceed.
If any condition specified in this Section shall not have been
fulfilled, this Agreement (or, at your option, any applicable Terms Agreement)
may be terminated by you by notice to the Company at any time prior to the
Settlement Date, and such termination shall be without liability of any party
to any other party, except that the covenants set forth in Section 3(d)
hereof, the provisions of Section 4 hereof, the indemnity and contribution
agreement set forth in Section 7 hereof, and the provisions of Sections 8 and
12 hereof shall remain in effect.
SECTION 6. Additional Covenants of the Company.
------------------------------------------------
The Company covenants and agrees that:
(a) Each acceptance by it of an offer for the purchase of New
Bonds, and each sale of New Bonds to you pursuant to a Terms Agreement, shall
be deemed to be an affirmation that the representations and warranties of the
Company contained in this Agreement and in any certificate theretofore
delivered to you pursuant hereto are true and correct at the time of such
acceptance or sale, as the case may be, and an undertaking that such
representations and warranties will be true and correct at the time of
delivery to the purchaser or his agent, or you, of the New Bonds or New Bonds
relating to such acceptance or sale, as the case may be, as though made at and
as of each such time (and it is understood that such representations and
warranties shall relate to the Registration Statement and the Prospectus as
amended and supplemented to each such time);
(b) Within five business days after the Registration Statement or
the prospectus shall be amended or supplemented (other than by an amendment or
supplement relating solely to the terms of an issue of New Bonds, a change in
the principal amount of New Bonds remaining to be sold, or similar changes) or
there is filed with the SEC any document incorporated by reference into the
Prospectus, and, if so indicated in the applicable Terms Agreement, the
Company shall furnish or cause to be furnished to you forthwith a certificate
in form satisfactory to you to the effect that the statements contained in the
certificates referred to in Section 5(c) hereof which were last furnished to
you are true and correct at the time of such amendment or supplement or filing
or sale, as the case may be, as though made at and as of such time (except
that such statements shall be deemed to relate to the Registration Statement
and the Prospectus as amended and supplemented to such time) or, in lieu of
such certificate, certificates for the same tenor as the certificates referred
to in said Section 5(c), modified as necessary to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of
delivery of such certificates;
(c) Within five business days after the Registration Statement or
the Prospectus shall be amended or supplemented (other than by an amendment or
supplement (i) relating solely to the terms of an issue of New Bonds, a change
in the principal amount of New Bonds remaining to be sold, or similar changes
or (ii) setting forth or incorporating by reference financial statements or
other information as of and for a fiscal quarter) or there is filed with the
SEC any document incorporated by reference into the Prospectus, and, if so
indicated in the applicable Terms Agreement, each time the Company sells New
Bonds to you pursuant to a Terms Agreement, the Company shall furnish or cause
to be furnished forthwith to you and your counsel a written opinion of one or
both of Robert King Wulff, or Kirk L. Ramsauer, Counsel for the Company, dated
the date of delivery of such opinion, in form satisfactory to you, of the same
tenor as the opinion referred to in paragraphs (K) and (L) of Section 5(b)(i)
hereof and as to such other matters referred to in Section 5(b)(i) hereof as
you may request but modified, as necessary, to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of
delivery of such opinion or, in lieu of such opinion, counsel last furnishing
such opinion to you shall furnish you with a letter to the effect that you may
rely on such last opinion to the same extent as though it was dated the date
of such letter authorizing reliance (except that statements in such last
opinion shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to the time of delivery of such letter
authorizing reliance); and
(d) Within five business days after the filing with the SEC of each
of the Company's annual report on Form 10-K, the Company's quarterly reports
on Form 10-Q, and any of the Company's current reports on Form 8-K which
contain financial information, and each other time that the Registration
Statement or the Prospectus shall be amended or supplemented to include
additional financial information or there is filed with the SEC any document
incorporated by reference into the Prospectus which contains additional
financial information or, if so indicated in the applicable Terms Agreement,
the Company sells New Bonds to you pursuant to a Terms Agreement, the Company
shall cause Coopers & Lybrand forthwith to furnish you a letter, dated no
earlier than the date of filing of such amendment, supplement or document with
the SEC, or the date of such sale, as the case may be, in form satisfactory to
you, of the same tenor as the portions of the letter referred to in clauses
(i) and (ii) of Section 5(d) hereof but modified to relate to the Registration
Statement and Prospectus, as amended and supplemented to the date of such
letter, and of the same general tenor as the portions of the letter referred
to in clauses (iii) and (iv) of said Section 5(d) with such changes as may be
necessary to reflect changes in the financial statements and other information
derived from the accounting records of the Company; provided, however, that if
the Registration Statement or the Prospectus is amended or supplemented solely
to include financial information as of and for a fiscal quarter, Coopers &
Lybrand may limit the scope of such letter to the unaudited financial
statements included in such amendment or supplement unless any other
information included therein of an accounting, financial or statistical nature
is of such a nature that, in you reasonable judgment, such letter should cover
such other information.
SECTION 7. Indemnification.
----------------------------
(a) The Company will indemnify and hold harmless you and each person,
if any, who controls you within the meaning of Section 15 of the Securities
Act against any loss, claim, or liability, joint or several (including the
reasonable cost of investigating or defending any such alleged loss, claim, or
liability and reasonable counsel fees incurred in connection therewith),
arising by reason of any person acquiring any of the New Bonds, on the ground
that the Registration Statement or the Prospectus, or any amendment or
supplement thereto, includes or included an untrue statement of a material
fact or omits or omitted to state a material fact which (in the case of the
Registration Statement, or any amendment thereto) is or was required to be
stated therein or is or was necessary to make the statements herein not
misleading or which (in the case of the Prospectus, or any amendment or
supplement thereto) is or was necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, unless
such statement or omission was made in reliance upon written information
furnished to the Company by you, for use therein, or unless such statement or
omission shall occur in the Statement of Eligibility and Qualification under
the Trust Indenture Act of the Trustee under the Indenture. Upon commencement
of any such suit, if you or any controlling person wish to make a claim in
respect thereof against the Company under its agreement herein contained, you
or such controlling person, as the case may be, shall, within thirty days
after the summons or other first legal process giving information of the
nature of the claim shall have been served upon you or upon such controlling
person (or after he shall have received notice of such service on any
designated agent), give notice in writing of such suit to the Company; but
failure so to notify the Company shall not relieve it from any liability which
it may have to the person against whom such suit is brought, otherwise than on
account of its indemnity agreement contained in this paragraph. The Company
will be entitled to participate at its own expense in the defense or, if it so
elects, to assume the defense of any such suit, and, if the Company elects to
assume the defense, the defendant or defendants therein will be entitled to
participate in the defense but shall bear the fees and expenses of any
additional counsel retained by them, unless the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnity by the
Company hereunder shall apply in respect of (i) any Prospectus used at a time
not authorized under the Securities Act or this Agreement, (ii) any Prospectus
used in unamended or unsupplemented form after the same has been amended or
supplemented, provided the Company has supplied such amendment or supplement
to you, or (iii) you, or any person controlling you, on account of any loss,
claim, or liability arising by reason of any person acquiring any of the New
Bonds, if a copy of the Prospectus has not been sent or given by you or a
securities dealer to such person with or prior to the written confirmation of
the sale involved.
(b) You will indemnify and hold harmless the Company and each of
its officers and directors and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, to the same extent as
the Company in the foregoing paragraph (a) agrees to indemnify and hold
harmless you, but only with respect to any written information furnished to
the Company by you for use in the Prospectus, or any amendment or supplement
thereto. If any action shall be brought hereunder against the Company or any
such officer, director, or controlling person, you shall have the rights and
duties given to the Company by paragraph (a), and the Company or such officer,
director, or controlling person shall have the rights and duties given to you
by said paragraph.
(c) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party, each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, or
liability, in such proportion as is appropriate to reflect not only the
relative benefits received by the Company on the one hand and by you on the
other but also the relative fault of the Company on the one hand and of you on
the other in connection with the statement or omission that resulted in such
loss, claim, or liability, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and you on the other in connection with the sale of the New Bonds shall be
deemed to be in the same proportion as the total sales price received by the
Company from the sale of the New Bonds to the date of liability, before
deducting expenses, bear to the total discounts or commissions, if any,
received by you to the date of such liability. The relative fault of the
Company on the one hand and of you on the other shall be determined by
reference to, among other things, whether the untrue or allegedly untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by you and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
SECTION 8. Status of the Agent.
--------------------------------
In soliciting purchases of the New Bonds from the Company, you are
acting solely as agent for the Company and not as principal. You will make
reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer to purchase New Bonds from the Company has been
solicited by you and accepted by the Company but you shall not have any
liability to the Company in the event any such purchase is not consummated for
any reason.
SECTION 9. Representations, Warranties and Agreement to Survive
Delivery.
----------------------------------------------------------------
All representations, warranties, indemnification provisions, and
agreements contained in this Agreement or any Terms Agreement, or contained in
certificates of officers of the Company submitted pursuant hereto, shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of you or any controlling person, or by or on behalf of
the Company, and shall survive each delivery of and payment for any of the New
Bonds.
SECTION 10. Termination.
------------------------
This Agreement may be terminated for any reason, at any time by either
party hereto upon the giving of 30 days' written notice of such termination to
the other party hereto. In the event of any such termination, neither party
will have any liability to the other party hereto, except that (i) you shall
be entitled to any commissions earned in accordance with the third paragraph
of Section 2(a) hereof, (ii) if at the time of termination (A) you shall own
any of the New Bonds with the intention of reselling them or (B) an offer to
purchase any of the New Bonds has been accepted by the Company but the time of
delivery to the purchaser or his agent of the New Bond or New Bonds relating
thereto has not occurred, the covenants set forth in Sections 3 and 6 hereof
shall remain in effect until such New Bonds are so resold or delivered, as the
case may be, and (iii) the covenant set forth in Section 3(d) hereof, the
provisions of Section 4 hereof, the indemnity agreement set forth in Section 7
hereof, and the provisions of Sections 8 and 12 hereof shall remain in effect.
SECTION 11. Notices.
--------------------
Any request, consent, notice, or other communication on your behalf
shall be given in writing addressed to the Treasurer of the Company at 25
Research Drive, Westborough, Massachusetts 01582, and any notice or other
communications by the Company to you shall be given in writing addressed to
[NAME AND ADDRESS OF AGENT].
SECTION 12. Parties.
--------------------
This Agreement and any Terms Agreement shall inure to the benefit of
and be binding on the Agent and the Company and their respective successors.
Nothing expressed or mentioned in this Agreement or any Terms Agreement is
intended or shall be construed to give any person, firm, or corporation, other
than the parties hereto and their respective successors and the controlling
persons, officers, and directors referred to in Section 7, and their heirs and
legal representatives, any legal or equitable rights, remedy, or claim under
or in respect of this Agreement or any Terms Agreement or any provision herein
or therein contained. This Agreement and any Terms Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole
and exclusive benefit of the parties hereto and their respective successors
and said controlling persons, officers, directors, and their heirs and legal
representatives, and for the benefit of no other person, firm, or corporation.
No purchaser of New Bonds shall be deemed to be a successor by reason merely
of such purchase.
SECTION 13. Governing Law.
--------------------------
This Agreement and the rights and obligations of the parties created
hereby shall be governed by the laws of The State of Rhode Island.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts will become a binding
agreement between you and the Company in accordance with its terms.
Very truly yours,
THE NARRAGANSETT ELECTRIC COMPANY
DRAFT
By:____________________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
[NAME OF AGENT]
DRAFT
By:___________________________________
Name:
Title:
EXHIBIT A
THE NARRAGANSETT ELECTRIC COMPANY
(A Rhode Island Corporation)
First Mortgage Bonds, Series ___
TERMS AGREEMENT
________________, 199_
The Narragansett Electric Company
25 Research Drive
Westborough, Massachusetts 01582
Attention: Treasurer
Re: Distribution Agreement dated ____________________
Subject to the terms and conditions of the Distribution Agreement dated
____________, between The Narragansett Electric Company (the Company) and the
undersigned, the undersigned agrees to purchase the following Bonds: $
Issue Designation:
Principal Amount:
Purchase Price: %
Original Issue Discount, if any:
Maturity Date:
Interest Rate: %
Redemption Provisions:
Method of and Specified Funds for Payment of Purchase Price:
[By certified or official bank check or checks, payable to
the order of the Company in Boston Federal Reserve Bank (same
day) Funds.] [By wire to a bank account specified by the
Company in immediately available funds.]
Settlement Date:
Exceptions, if any, to Section 3(k) of the Distribution Agreement:
[The following documents referred to in the Distribution Agreement
shall be delivered as a condition to the Closing:
[The certificate referred to in Section [5(c)](6(b)].]
[The opinion referred to in Section [5(b)(i)][6(c)].]
[The opinion referred to in Section 5(b)(ii).]
[The accountants' letter referred to in Section
[5(d)][6(d)].]
Syndicate Provisions:
[Set forth any provisions relating to underwriters' default and step-up
of amounts to be purchased by underwriters acting with [Agent].]
[NAME OF AGENT]
DRAFT
By:__________________________________________
Name:
Title:
Accepted:
THE NARRAGANSETT ELECTRIC COMPANY
DRAFT
By:______________________________________
Name:
Title:
SCHEDULE A
Term Commission Rate
---- ---------------
[ To be negotiated]
EXHIBIT B
THE NARRAGANSETT ELECTRIC COMPANY
First Mortgage Bonds, Series ____
Administrative Procedures
---------------------------------
First Mortgage Bonds, Series ___ (the New Bonds) in the aggregate
principal amount of not exceeding $__________ are to be offered from time to
time by The Narragansett Electric Company (the Company). [NAME OF AGENT]
Corporation as agent (the Agent) has agreed to use its reasonable best efforts
to solicit purchases of the New Bonds directly from the Company, and may also
purchase New Bonds, as principal, for resale. The New Bonds are being offered
and sold pursuant to a Distribution Agreement between the Company and the
Agent, dated [DATE] (the Distribution Agreement). The New Bonds have been
registered with the Securities and Exchange Commission (the SEC). The New
Bonds will be issued pursuant to one or more indentures supplemental to the
First Mortgage Indenture and Deed of Trust dated as of September 1, 1944 (the
Indenture) between the Company and Rhode Island Hospital Trust National Bank
(successor to Rhode Island Hospital Trust Company), as trustee (in its
capacity as trustee under the Indenture and otherwise, referred to herein as
Hospital Trust). References to Hospital Trust shall include its service
provider, The First National Bank of Boston, as such.
Each New Bond will be represented by either a Global Security (as defined
hereinafter) delivered to Hospital Trust, as agent for the Depository Trust
Company (DTC), and recorded in the book-entry system maintained by DTC (a
Book-Entry New Bond) or a certificate delivered to the holder thereof or a
person designated by such holder (a Certificated New Bond). In the event that
Book-Entry certificates are to be delivered to other depositaries or their
agents, the administrative procedures will be appropriately amended or
supplemented at that time. An owner of a Book-Entry Note will not be entitled
to receive a certificate representing such New Bond. Book-Entry Notes will be
issued in accordance with the administrative procedures set forth in Part I
hereof and Certificated Notes will be issued in accordance with the
administrative procedures set forth in Part II hereof.
To the extent the procedures set forth below conflict with the provisions
of the New Bonds, the Indenture, or the Distribution Agreement, the relevant
provisions of the New Bonds, the Indenture, and the Distribution Agreement
shall control. Unless otherwise defined herein, terms defined in the
Indenture shall be used herein as therein defined.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, Hospital Trust will
perform the custodial, document control, and administrative functions
described below, in accordance with its respective obligations under a Letter
of Representations from the Company and Hospital Trust to DTC and a
Certificate Agreement between Hospital Trust and DTC, dated as of [DATE] and
April 15, 1991, respectively, and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System (SDFS).
Issuance: On any date of settlement (as defined
under Settlement below) for one or more
Book-Entry New Bonds, the Company will
issue a single global security in fully
registered form without coupons (a Global
Security) representing not exceeding $
_______ principal amount of all such New
Bonds that have the same maturity,
interest rate, redemption, and, in the
case of original issue discount New Bonds,
original issue discount provisions
(collectively, the Terms). Each Global
Security will be dated and issued as of
the date of its certification by Hospital
Trust. No Global Security will represent
any Certificated New Bonds.
CUSIP Numbers: The Company has arranged with the CUSIP
Service Bureau of Standard & Poor's
Corporation (the CUSIP Service Bureau) for
the reservation of one series of CUSIP
numbers (including tranche numbers). This
series consists of approximately 900 CUSIP
numbers and relates to Global Securities
representing the Book-Entry New Bonds.
The Company has delivered to Hospital
Trust and to DTC a written list of the
numbers in such series. Hospital Trust
will assign CUSIP numbers to Global
Securities as described below under
Settlement Procedure "B". DTC will notify
the CUSIP Service Bureau periodically of
the CUSIP numbers that Hospital Trust has
assigned. At any time when fewer than 100
of the reserved CUSIP numbers of the
series remain unassigned, and if it deems
necessary, the Company will reserve
additional CUSIP numbers for assignment to
Global Securities. Upon obtaining such
additional CUSIP numbers, the Company
shall deliver a list thereof to Hospital
Trust and DTC.
Registration: Each Global Security will be registered in
the name of Cede & Co., as nominee for
DTC, on the transfer registry maintained
under the Indenture. The beneficial owner
of a Book-Entry New Bond (or one or more
indirect participants in DTC designated by
such owner) will designate one or more
participants in DTC (with respect to such
New Bond, the Participant) to act as agent
or agents for such owner in connection
with the book-entry system maintained by
DTC, and DTC will record in book-entry
form, in accordance with instructions
provided by such Participant, a credit
balance with respect to such New Bond in
the account of such Participant. The
ownership interest of such beneficial
owner in such New Bond will be recorded
through the records of such Participant or
through the separate records of such
Participant and one or more indirect
participants in DTC.
Transfers: Transfers of a Book-Entry New Bond will be
accomplished by book entries made by DTC
and, in turn, by the Participant (and in
certain cases, one or more indirect
participants in DTC) acting on behalf of
beneficial transferees and transferors of
such New Bonds.
Consolidations: Hospital Trust may deliver to DTC and the
CUSIP Service Bureau at any time a written
notice of consolidation specifying (i) the
CUSIP numbers of two or more outstanding
Global Securities that represent
Book-Entry New Bonds having the same Terms
and for which interest has been paid to
the same date, (ii) a date, occurring at
least thirty days before the next Interest
Payment Date for such Book-Entry New
Bonds, on which such Global Securities
shall be exchanged for a single
replacement Global Security, and (iii) a
new CUSIP number to be assigned to such
replacement Global Security. Upon receipt
of such a notice, DTC will send to each
Participant (including Hospital Trust) a
written reorganization notice to the
effect that such exchange will occur on
such date. Prior to the specified
exchange date, Hospital Trust will deliver
to the CUSIP Service Bureau a written
notice setting forth such exchange date
and the new CUSIP number and stating that,
as of such date, the CUSIP numbers of the
Global Securities to be exchanged will no
longer be valid. On the specified
exchange date, Hospital Trust will
exchange such Global Securities for a
single Global Security bearing the new
CUSIP number, and the CUSIP numbers of the
exchanged Global Securities will be
cancelled and not immediately reassigned.
Denominations: Book-Entry New Bonds will be issued in
principal amounts of $1,000 or any
integral multiple thereof.
Interest: Each Book-Entry New Bond will bear
interest from the date as of which the
Global Security representing the
Book-Entry New Bond was first certified at
the annual rate stated on the face
thereof, payable on _____ 1 and _______ 1
of each year (the Interest Payment Dates)
and at maturity or, upon earlier
redemption, the date of redemption. Each
payment of interest shall include interest
accrued to but excluding the Interest
Payment Date.
Calculation of Interest: Interest (including payments for partial
periods) will be calculated on the basis
of a 360-day year of twelve 30-day months.
Interest will not accrue on the 31st day
of any month.
Payments of Interest: Promptly after the close of business on
_______15 or ___________ 15 (the Record
Dates), Hospital Trust will deliver to the
Company and DTC a written notice
specifying by CUSIP number the amount of
interest to be paid on each Global
Security on the following Interest Payment
Date (other than an Interest Payment Date
coinciding with a maturity date or a
redemption date) and the total of such
amounts. Standard & Poor's Corporation
will use the information received in the
pending deposit message described under
Settlement procedure "C" below in order to
include the amount of any interest payment
and certain other information regarding
the related Global Security in the
appropriate weekly bond report published
by Standard & Poor's Corporation. DTC
will confirm the amount payable on each
Global Security on such Interest Payment
Date by reference to the appropriate bond
reports published by Standard & Poor's
Corporation. The Company will pay to
Hospital Trust the total amount of
interest due on such Interest Payment Date
(other than a maturity date or a
redemption date), and Hospital Trust will
pay such amount to DTC at the times and in
the manner set forth below. If any
Interest Payment Date for a Book-Entry New
Bond is not a Business Day, the payment
due on such day shall be made on the next
succeeding Business Day and no interest
shall accrue on such payment for the
period from and after such Interest
Payment Date. On each Interest Payment
Date, interest payments shall be made to
DTC in same day funds in accordance with
existing arrangements between Hospital
Trust and DTC. Thereafter, on each such
date, DTC will pay, in accordance with its
SDFS operating procedures then in effect,
such amounts in funds available for
immediate use to the respective
Participants in whose names the Book-Entry
New Bonds represented by such Global
Securities are recorded in the book-entry
system maintained by DTC. Neither the
Company, nor Hospital Trust, nor the Agent
shall have any direct responsibility or
liability for the payment by DTC to such
Participants of the principal of and
interest on the Book-Entry New Bonds.
The amount of any taxes required under
applicable law to be withheld from any
interest payment on a Book-Entry New Bond
will be determined and withheld by the
Participant, indirect participant in DTC,
or other person responsible for forwarding
payments and materials directly to the
beneficial owner of such New Bond.
The first payment of interest on any New
Bond originally issued between a Record
Date and an Interest Payment Date will be
made on the Interest Payment Date
following the next succeeding Record Date.
Payment at Maturity and Redemption:On or about the first Business Day of each
month, Hospital Trust will deliver to the
Company and DTC a written list of
principal and interest to be paid on each
Global Security maturing either on a
maturity date or any redemption date in
the following month. The Company and DTC
will confirm with Hospital Trust the
amounts of such principal and interest
payments with respect to each such Global
Security on or about the third Business
Day preceding any such maturity date or
redemption date, as the case may be, of
such Global Security. The Company will
pay to Hospital Trust the principal amount
of such Global Security, together with
interest due on such maturity date or
redemption date. Hospital Trust will pay
such amounts to DTC at the times and in
the manner set forth below. If the
maturity date or the redemption date of a
Global Security representing Book-Entry
New Bonds is not a Business Day, the
payment due on such day shall be made on
the next succeeding Business Day and no
interest shall accrue on such payment for
the period from and after such maturity
date or the redemption date. Promptly
after payment to DTC of the principal and
interest due on the maturity date or the
redemption date of such Global Security
and its return by DTC, Hospital Trust will
cancel such Global Security in accordance
with the terms of the Indenture.
The total amount of any principal and
interest due on Global Securities on any
Interest Payment Date or on the maturity
date or a redemption date shall be paid by
the Company to Hospital Trust in
immediately available funds for use by
Hospital Trust on such date. Prior to 10
A.M. (New York City time) on each maturity
date or redemption date or as soon as
possible thereafter, Hospital Trust will
pay by separate wire transfer (using
Fedwire message entry instructions in a
form previously agreed to with DTC) to an
account at the Federal Reserve Bank of New
York previously agreed to with DTC, in
funds available for immediate use by DTC,
each payment of principal (together with
interest thereon) due on Global Securities
on any maturity date or redemption date.
Rate Setting and Posting: The Company and the Agent will discuss
from time to time the aggregate principal
amount of, the issuance price of, and the
interest rates to be borne by, New Bonds
that may be sold as a result of the
solicitation of offers by the Agents. If
the Company decides to set prices of, and
rates borne by, any New Bonds in respect
of which the Agent is to solicit offers
(the setting of such prices and rates to
be referred to herein as "posting") or if
the Company decides to change prices or
rates previously posted, it will promptly
advise the Agent of the prices and rates
to be posted.
The New Bonds will be sold at a price,
exclusive of accrued interest, which will
be not less than 95% nor more than 100% of
the principal amount and at an interest
rate which will be a multiple of 1/8 of
1%. Any discount will not be greater than
1/4 of 1% for each year to maturity.
Acceptance and Rejection of Offers:The Company shall have the sole right to
accept offers to purchase New Bonds from
the Company and may reject any such offer
in whole or in part. The Agent shall
communicate to the Company, orally or in
writing, each reasonable offer to purchase
New Bonds from the Company received by it,
other than those rejected by such Agent.
The Agent shall have the right, in its
discretion reasonably exercised, to reject
any offer in whole or in part.
Settlement: The receipt of immediately available funds
by the Company in payment for a Book-Entry
New Bond and the certification and
issuance of the Global Security
representing such New Bond shall, with
respect to such New Bond, constitute
settlement. The date of such settlement
is herein referred to as the Settlement
Date. All offers accepted by the Company
will be settled on the third business day
next succeeding the date of acceptance
unless otherwise agreed by the purchaser
and the Company. The Settlement Date
shall be specified upon acceptance of an
offer.
Settlement Procedures: In the event of a purchase of New Bonds by
the Agent, as principal, appropriate
settlement details will be set forth in
the applicable Terms Agreement to be
entered into between the Agent and the
Company pursuant to the Distribution
Agreement.
Settlement Procedures with regard to each
Book-Entry New Bond sold by the Agent, as
agent, shall be as follows:
A. The Agent will advise the Company of
the following settlement information:
1. Principal Amount.
2. Price of the New Bonds.
3. Original Issue Discount, if any.
4. Maturity Date.
5. Interest Rate.
6. Redemption Provisions, if any.
7. Agent's Commission.
8. Settlement Date.
B. The Company will notify Hospital
Trust by telephone of the information
set forth in Settlement Procedure "A"
above and the class designation of
the New Bond. Hospital Trust will
assign a CUSIP number to the Global
Security representing such New Bond.
Hospital Trust will also notify the
Company and the Agent of such CUSIP
number by telephone as soon as
practicable.
C. Hospital Trust will enter a pending
deposit message through DTC's
Participant Terminal System,
providing the following settlement
information to DTC, such information
will be routed to Standard & Poor's
Corporation through DTC.
1. The information set forth in
Settlement Procedure "A".
2. Initial Interest Payment Date for
such New Bond, number of days by
which such date succeeds the
related Record Date and amount of
interest payable on such Interest
Payment Date.
3. CUSIP number of the Global
Security representing such New
Bond.
4. Whether such Global Security will
represent any other Book-Entry
New Bond (to the extent known at
such time).
D. The Company shall telecopy (promptly
followed by the original) to Hospital
Trust the certificate as to form
relating to the Global Security
representing such New Bonds. As soon
as practicable thereafter, the
Company will provide Hospital Trust
with any additional information set
forth above.
E. The Company will prepare the Global
Security in the form set forth in the
Indenture, with specific terms as
pre-approved by the Company, the
Agent, and Hospital Trust.
F. The Company will cause Hospital Trust
to issue, certify, and deliver the
Global Security representing such New
Bonds. Hospital Trust will hold the
Global Security as DTC's agent.
G. DTC will credit such New Bond to the
participant account of Hospital
Trust, acting as DTC's agent, at DTC.
H. Hospital Trust will enter an SDFS
deliver order through DTC's
Participant Terminal System
instructing DTC to (i) debit such New
Bond to Hospital Trust's
participant's account and credit such
New Bond to the Agent's participant
account and (ii) debit the Agent's
settlement account and credit
Hospital Trust's settlement account
for an amount equal to the price of
such New Bond less the Agent's
commission. The entry of such a
deliver order shall constitute a
representation and warranty by
Hospital Trust to DTC that (a) the
Global Security representing such
Book-Entry New Bond has been issued
and certified and (b) Hospital Trust
is holding such Global Security
pursuant to the Medium-Term Note
Certificate Agreement between
Hospital Trust and DTC.
I. The Agent will enter an SDFS deliver
order through DTC's Participation
Terminal System instructing DTC (i)
to debit such New Bond to the Agent's
participant account and credit such
New Bond to the participant accounts
of the Participant with respect to
such New Bond and (ii) to debit the
settlement accounts of such
Participant and credit the settlement
account of the Agent for an amount
equal to the price of such New Bond.
J. Hospital Trust will transfer to the
account of the Company maintained at
the Bank of Boston in Boston,
Massachusetts in immediately
available funds in the amount
transferred to Hospital Trust in
accordance with Settlement Procedure
"H".
K. The Agent will confirm the purchase
of such New Bond to the purchaser
either by transmitting to the
participants with respect to such New
Bond a confirmation order or orders
through DTC's institutional delivery
system or by mailing a written
confirmation to such purchaser.
L. Transfers of funds in accordance with
SDFS deliver orders described in
Settlement Procedures "H" and "I"
will be settled in accordance with
SDFS operating procedures in effect
on the Settlement Date.
M. Upon written request by the Company,
Hospital Trust will send to the
Company a statement setting forth the
principal amount of the New Bonds
outstanding as of that date, after
giving effect to such transaction and
all other orders of which the Company
has advised Hospital Trust but which
have not yet been settled.
Settlement Procedures Timetable: For offers of Book-Entry New Bonds
solicited by the Agent and accepted by the
Company, Settlement Procedures "A" through
"M" set forth above shall be completed on
or before the respective times set forth
below:
Settlement
Procedure Time
--------- ----
A 11:00 A.M. on the acceptance date
B 12:00 noon on the acceptance date
C 2:00 P.M. on the acceptance date
D-E 9:00 A.M. on the Settlement Date
F-G 11:00 A.M. on the Settlement Date
H-I 2:00 P.M. on the Settlement Date
J-K 4:00 P.M. on the Settlement Date
L-M 5:00 P.M. on the Settlement Date
If a sale is to be settled more than one
Business Day after the sale, Settlement
Procedures "A", "B" and "C" shall be
completed as soon as practicable, but not
later than 11:00 A.M., 12:00 Noon and 2:00
P.M., respectively, on the first Business
Day after the acceptance date. Settlement
Procedures "J" and "L" are subject to
extension in accordance with any extension
of Fedwire closing deadlines and in the
other events specified in the SDFS
operating procedures in effect on the
Settlement Date.
If a sale is to be settled on a date after
the third Business Day next succeeding the
date of acceptance, Settlement Procedures
"A" through "C" shall be completed no
later than the third Business Day
immediately preceding the Settlement Date.
If settlement of a Book-Entry New Bond is
rescheduled or cancelled, the Company will
instruct Hospital Trust to deliver to DTC
a cancellation message to such effect by
no later than 12:00 Noon on the Business
Day immediately preceding the scheduled
Settlement Date and Hospital Trust will
enter such order by 2:00 P.M. through
DTC's Participation Terminal System.
Failure to Settle: If after entry of a deliver order under
Settlement Procedure "H" or "I", a trade
does not settle, Hospital Trust may
deliver to DTC, through DTC's Participant
Terminal System, as soon as practicable, a
withdrawal message instructing DTC to
debit such New Bond to Hospital Trust's
participant account, provided that
Hospital Trust participant account
contains a principal amount of the Global
Security representing such New Bond that
is at least equal to the principal amount
to be debited. If a withdrawal message is
processed with respect to all the
Book-Entry New Bonds represented by a
Global Security, Hospital Trust will mark
such Global Security "cancelled," make
appropriate entries in Hospital Trust's
records and send such cancelled Global
Security to the Company. The CUSIP number
assigned to such Global Security shall be
cancelled and not immediately reassigned.
If a withdrawal message is processed with
respect to one or more, but not all, of
the Book-Entry New Bonds represented by a
Global Security, Hospital Trust will
exchange such Global Security for another
Global Security, which shall represent the
Book-Entry New Bonds previously
represented by the surrendered Global
Security with respect to which a
withdrawal message has not been processed
and shall bear the CUSIP number of the
surrendered Global Security.
If the purchase price for any Book-Entry
New Bond is not timely paid to the
Participant with respect to such New Bond
by the beneficial purchaser thereof (or a
person, including an indirect participant
in DTC, acting on behalf or such
purchaser), such Participant and, in turn,
the Agent for such New Bond may enter SDFS
deliver orders through DTC's Participant
Terminal System reversing the orders
entered pursuant to Settlement Procedures
"I" and "H", respectively. Thereafter,
Hospital Trust will deliver the withdrawal
message and take the related actions
described in the preceding paragraph.
Notwithstanding the foregoing, upon any
failure to settle with respect to a
Book-Entry New Bond, DTC may take any
actions in accordance with its SDFS
operating procedures then in effect. In
the event of a failure to settle with
respect to one or more, but not all, of
the Book-Entry New Bonds to have been
represented by a Global Security, Hospital
Trust will provide, in accordance with
Settlement procedure "F", for the
certification and issuance of a Global
Security representing the other Book-Entry
New Bonds to have been represented by such
Global Security and will make appropriate
entries in its records.
Suspension of Solicitation;
Amendment or Supplement: Subject to its representations, warranties
and covenants contained in the
Distribution Agreement, the Company may
instruct the Agent to suspend solicitation
of purchases at any time. Upon receipt of
such instructions the Agent will forthwith
suspend solicitation of purchases from the
Company until such time as the Company has
advised them that solicitation of
purchases may be resumed. If the Company
decides to amend or supplement the
Registration Statement or the Prospectus
relating to the New Bonds (other than by
the filing pursuant to the Exchange Act of
an amendment or supplement relating solely
to the terms of New Bonds, a change in the
principal amount of New Bonds remaining to
be sold, or similar changes) it will
promptly advise the Agent and Hospital
Trust and will furnish counsel to the
Agent with copies of the proposed
amendment or supplement, other than a
Current Report on Form 8-K.
In the event that at the time the
solicitation of purchases from the Company
is suspended there shall be any offers
outstanding which have not been settled,
the Company will promptly advise the Agent
and Hospital Trust whether such offers may
be settled and whether copies of the
Prospectus as theretofore amended and/or
supplemented as in effect at the time of
the suspension may be delivered in
connection with the settlement of such
offers. The Company will have the sole
responsibility for such decision and for
any arrangements which may be made in the
event that the Company determines that
such offers may not be settled or that
copies of such Prospectus may not be so
delivered.
Preparation of Pricing
Supplement: If any offer to purchase a New Bond is
accepted by or on behalf of the Company,
the Company, with the approval of the
Agent, will prepare a pricing supplement
(a Pricing Supplement) reflecting the
terms of such New Bond and will arrange to
file the Pricing Supplement with the
Securities and Exchange Commission in
accordance with the applicable paragraph
of Rule 424(b) under the Act and will
supply at least 10 copies thereof (or
additional copies if requested) to the
Agent. The Agent will cause a Prospectus
and the appropriate Pricing Supplement to
accompany or precede each written
confirmation of a sale sent to each
purchaser or his agent.
In each instance a Pricing Supplement is
prepared, the Agent will affix the Pricing
Supplement to Prospectuses prior to their
use. Outdated Pricing Supplements (other
than those retained for files) will be
destroyed.
Hospital Trust Not to
Risk Own Funds: Nothing herein shall be deemed to require
Hospital Trust to risk its own funds in
connection with any payment to the
Company, or the Agent, or the purchaser,
it being understood by all parties that
payments made by Hospital Trust to either
the Company, the Agent or the purchaser
shall be made only to the extent that
funds are provided to Hospital Trust for
such purpose.
Duties of Hospital Trust Hospital Trust, in its capacity as trustee
and otherwise, undertakes to perform such
duties and only such duties as are
specifically set forth in these
Administrative Procedures and in the
Indenture, as may from time to time be
supplemented, and no implied covenants or
obligations shall be read into these
Administrative Procedures against it.
Nothing herein shall diminish any right or
immunity that Hospital Trust shall have in
it capacity as trustee under the
Indenture.
Advertising Cost: The Company will determine and approve,
with the Agent, the amount of advertising,
if any, that is appropriate in offering
the New Bonds. Any advertising expenses
which are approved by the Company will be
paid by the Company.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NEW BONDS
Date of Issuance: Each New Bond will initially be dated and
issued as of the date of its certification
by Hospital Trust.
Registration: New Bonds will be issued only in fully
registered form.
Denominations: New Bonds will be issued in principal
amounts of $1,000 or any integral multiple
thereof.
Interest: Each New Bond will bear interest from the
date as of which the New Bonds of that
original issue date were first certified
at the annual rate stated on the face
thereof, payable on ________1 and
____________ 1 of each year (the Interest
Payment Dates) and at maturity or, upon
earlier redemption, the date of
redemption. Each payment of interest
shall include interest accrued to but
excluding the Interest Payment Date.
Calculation of Interest: Interest (including payments for partial
periods) will be calculated on the basis
of a 360-day year of twelve 30-day months.
Interest will not accrue on the 31st day
of any month.
Payments of Interest: Interest will be payable to the person in
whose name the New Bond is registered at
the close of business on the ______ 15 or
________ 15 (the Record Dates) next
preceding the Interest Payment Date;
provided, however, that interest payable
on a maturity date or a redemption date
will be payable to the person to whom
principal shall be payable. Hospital
Trust, as paying agent, will be
responsible for withholding taxes on
interest paid as required by law.
The first payment of interest on any New
Bond originally issued between a Record
Date and an Interest Payment Date will be
made on the Interest Payment Date
following the next succeeding Record Date.
Payment at Maturity
and Redemption: Upon presentation of each New Bond at
maturity or upon redemption, Hospital
Trust will pay the principal amount
thereof, together with accrued interest
due at maturity or the date of such
redemption, as the case may be. Such
payment shall be made in immediately
available funds, provided that the New
Bond is presented to Hospital Trust in
time for Hospital Trust to make payments
in such funds in accordance with its
normal procedures. The Company will
provide Hospital Trust with funds
available for immediate use for such
purpose. New Bonds presented at maturity
or upon redemption will be cancelled by
Hospital Trust as provided in the
Indenture.
Rate Setting and Posting: The Company and the Agent will discuss
from time to time the aggregate principal
amount of, the issuance price of, and the
interest rates to be borne by, New Bonds
that may be sold as a result of the
solicitation of offers by the Agents. If
the Company decides to set prices of, and
rates borne by, any New Bonds in respect
of which the Agent is to solicit offers
(the setting of such prices and rates to
be referred to herein as "posting") or if
the Company decides to change prices or
rates previously posted, it will promptly
advise the Agent of the prices and rates
to be posted.
The New Bonds will be sold at a price,
exclusive of accrued interest, which will
be not less than 95% nor more than 100% of
the principal amount and at an interest
rate which will be a multiple of 1/8 of
1%. Any discount will not be greater than
1/4 of 1% for each year to maturity.
Acceptance and Rejection
of Offers: The Company shall have the sole right to
accept offers to purchase New Bonds from
the Company and may reject any such offer
in whole or in part. The Agent shall
communicate to the Company, orally or in
writing, each reasonable offer to purchase
New Bonds from the Company received by it,
other than those rejected by such Agent.
The Agent shall have the right, in its
discretion reasonably exercised, to reject
any order in whole or in part.
Settlement: The receipt of immediately available funds
by the Company in payment for a New Bond
and the certification and issuance of such
New Bond shall, with respect to such New
Bond, constitute settlement. The date of
such settlement is herein referred to as
the Settlement Date. All offers accepted
by the Company will be settled on the
third business day next succeeding the
date of acceptance unless otherwise agreed
by the purchaser and the Company. The
Settlement Date shall be specified upon
acceptance of an offer.
Settlement Procedures: In the event of a purchase of New Bonds by
the Agent, as principal, appropriate
settlement details will be set forth in
the applicable Terms Agreement to be
entered into between the Agent and the
Company pursuant to the Distribution
Agreement.
Settlement Procedures with regard to each
New Bond sold by the agent, as agent,
shall be as follows:
A. The Agent will advise the Company of
the following settlement information:
1. Principal Amount.
2. Exact name in which the New Bonds
are to be registered (Registered
Owner).
3. Exact address of the Registered
Owner and address for payment of
principal and interest.
4. Taxpayer identification number of
the Registered Owner (if
available).
5. Principal amount of each New Bond
to be delivered to the Registered
Owner.
6. Price of the New Bonds.
7. Original Issue Discount, if any.
8. Maturity Date.
9. Interest Rate.
10. Redemption Provisions, if any.
11. Agent's Commission.
12. Settlement Date.
B. The Company shall telecopy (promptly
followed by the original) to Hospital
Trust the certificate as to form
relating to the New Bonds. As soon
as practicable thereafter, the
Company will provide Hospital Trust
with any additional information set
forth above.
C. The Company will prepare the New
Bonds in the form set forth in the
Indenture, with specific terms as
pre-approved by the Company, the
Agent, and Hospital Trust.
D. The Company will cause Hospital Trust
to issue, certify, and deliver New
Bonds.
E. Hospital Trust will deliver the New
Bonds in accordance with the
Company's instructions provided in
the settlement information (with
confirmation) to the Agent against
written evidence of receipt by the
Agent.
F. The Agent will deliver the New Bonds
(with confirmation) to the purchaser
against payment in immediately
available funds.
G. The Agent will deposit, in funds
available for immediate use, an
amount equal to the price of the New
Bond, less the applicable commission,
received under Settlement Procedure
"F", into the Company's account at
Bank of Boston, Boston,
Massachusetts.
H. The Agent will obtain a written
acknowledgment or receipt of the New
Bonds by the purchaser.
I. Upon written request by the Company,
Hospital Trust will send to the
Company a statement setting forth the
principal amount of the New Bonds
outstanding as of that date, after
giving effect to such transaction and
all other orders of which the Company
has advised Hospital Trust but which
have not yet been settled.
Settlement Procedures
Timetable: For offers accepted by the Company,
Settlement Procedures "A" through "I" set
forth above shall be completed on or
before the respective terms set forth
below:
Settlement
Procedure Time
---------- ----
A 11:00 A.M. on the first
Business Day after the
acceptance date
B 3:00 P.M. on the first Business
Day after the acceptance date
C-E 11:00 A.M. on the Settlement
Date
F-I 4:00 P.M. on the Settlement
Date
If a sale is to be settled on a date after
the third Business Day next succeeding the
date of acceptance, Settlement Procedures
"A" through "B" shall be completed no
later than the third Business Day
immediately preceding the settlement date.
Failure to Settle: In the event that a purchaser of a New
Bond from the Company shall fail to accept
delivery of a New Bond on the Settlement
Date, the Agent will forthwith notify
Hospital Trust and the Company by
telephone, confirmed in writing, of such
failure, and return the New Bond to
Hospital Trust. Upon receipt by Hospital
Trust of the New Bond from the Agent,
Hospital Trust will immediately advise the
Company of such receipt and the Company
will promptly arrange to credit the
account of the Agent in an amount of
immediately available funds equal to the
amount previously paid by the Agent in
respect of the New Bond. Such debits and
credits will be made on the Settlement
Date, if possible, and in any event not
later than the business day following the
Settlement Date.
Upon receipt of the New Bond in respect of
which the default occurred, Hospital Trust
will cancel the New Bond in accordance
with the Indenture.
Use of Funds: If after payment for a New Bond having
been made by the Agent to the Company's
account, a failure occurs for any reason
other than default by the Agent in the
performance of its obligations hereunder
or under the Distribution Agreement, the
Company will reimburse the Agent on an
equitable basis for its loss of the use of
the funds during the period when the funds
were credited to the account of the
Company. If the Agent fails to perform
its obligations hereunder or under the
Distribution Agreement, which results in
the Company's loss of the use of funds,
including, without limitation, failure to
credit the Company's account the
appropriate amount of the payment of a New
Bond in funds available for immediate use
in accordance with the above specified
timetable, the Agent will reimburse the
Company on an equitable basis for its loss
of the use of the funds resulting from
such default by the Agent.
Suspension of Solicitation;
Amendment or Supplement: Subject to its representations, warranties
and covenants contained in the
Distribution Agreement, the Company may
instruct the Agent to suspend solicitation
of purchase at any time. Upon receipt of
such instructions the Agent will forthwith
suspend solicitation of purchases from the
Company until such time as the Company has
advised them that solicitation of
purchases may be resumed. If the Company
decides to amend or supplement the
Registration Statement or the Prospectus
relating to the New Bonds (other than by
the filing pursuant to the Exchange Act of
an amendment or supplement relating solely
to the terms of a class of New Bonds, a
change in the principal amount of New
Bonds remaining to be sold, or similar
changes), it will promptly advise the
Agent and Hospital Trust and will furnish
counsel to the Agent with copies of the
proposed amendment or supplement, other
than a Current Report on Form 8-K.
In the event that at the time the
solicitation of purchases from the Company
is suspended there shall be any offers
outstanding which have not been settled,
the Company will promptly advise the Agent
and Hospital Trust whether such offers may
be settled and whether copies of the
Prospectus as theretofore amended and/or
supplemented as in effect at the time of
the suspension may be delivered in
connection with the settlement of such
offers. The Company will have the sole
responsibility for such decision and for
any arrangements which may be made in the
event that the Company determines that
such offers may not be settled or that
copies of such Prospectus may not be so
delivered.
Preparation of Pricing
Supplement; Delivery Prospectus: If any offer to purchase a New Bond is
accepted by or on behalf of the Company,
the Company, with the approval of the
Agent, will prepare a pricing supplement
(a Pricing Supplement) reflecting the
terms of such New Bond and will arrange to
file the Pricing Supplement with the
Securities and Exchange Commission in
accordance with the applicable paragraph
of Rule 424(b) under the Act and will
supply at least 10 copies thereof (or
additional copies if requested) to the
Presenting Agent. The Agent will cause a
Prospectus and the appropriate Pricing
Supplement to accompany or precede (a)
each written confirmation of a sale sent
to a purchaser or his agent and (b) each
New Bond delivered to a customer or his
agent.
In each instance that a Pricing Supplement
is prepared, the Agent will affix the
Pricing Supplement to Prospectuses prior
to their use. Outdated Pricing
Supplements (other than those retained for
files) will be destroyed.
Hospital Trust Not to
Risk Own Funds: Nothing herein shall be deemed to require
Hospital Trust to risk its own funds in
connection with any payment to the
Company, or the Agent, or the purchaser,
it being understood by all parties that
payments made by Hospital Trust to either
the Company, the Agent or the purchaser
shall be made only to the extent that
funds are provided to Hospital Trust for
such purpose.
Duties of Hospital Trust: Hospital Trust, in its capacity as trustee
and otherwise, undertakes to perform such
duties and only such duties as are
specifically set forth in these
Administrative Procedures and in the
Indenture, as may from time to time be
supplemented, and no implied covenants or
obligations shall be read into these
Administrative Procedures against it.
Nothing herein shall diminish any right or
immunity that Hospital Trust shall have in
its capacity as trustee under the
Indenture.
Advertising Cost: The Company will determine and approve,
with the Agent, the amount of advertising,
if any, that is appropriate in offering
the New Bonds. Any advertising expenses
which are approved by the Company will be
paid by the Company.