-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, HFt20OLdEkkXqsJvs0deVF/4bpvK0o4aP4t7qAER1WG/LLWUuumD9FOcsANGGwcU u6XP+g5BWF+UFD2AxVH1pQ== 0000071297-94-000006.txt : 19940307 0000071297-94-000006.hdr.sgml : 19940307 ACCESSION NUMBER: 0000071297-94-000006 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19940304 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND ELECTRIC SYSTEM CENTRAL INDEX KEY: 0000071297 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 041663060 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 35 SEC FILE NUMBER: 070-08303 FILM NUMBER: 94514566 BUSINESS ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01581 BUSINESS PHONE: 5083669011 U-1/A 1 File No. 70-8303 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 AMENDMENT NO. 1 TO FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NEW ENGLAND ELECTRIC SYSTEM and NEW ENGLAND ELECTRIC RESOURCES, INC. (Name of company filing this statement) 25 Research Drive, Westborough, Massachusetts 01582 (Address of principal executive offices) NEW ENGLAND ELECTRIC SYSTEM (Name of top registered holding company parent in system) Michael E. Jesanis Robert King Wulff Treasurer Corporation Counsel 25 Research Drive 25 Research Drive Westborough, Massachusetts 01582 Westborough, Massachusetts 01582 (Names and addresses of agents for service) The Form U-1 Application/Declaration filed November 12, 1993 is amended by deleting New England Power Service Company as an applicant. Item 1 is amended and restated as follows: Item 1. Description of Proposed Transactions: In early 1993, NEES was approached to contribute funds for the development of certain patented technology for a low harmonic distortion uninterruptible power system (UPS). In recent years power quality has become an important issue with electric customers. This UPS will have certain unique features and characteristics that should make it commercially successful. These include minimal harmonic distortion, high efficiency, a modular design, low heat loss, low maintenance and high reliability. The UPS is a mechanical device that applies computer technology developed by Digital Equipment Corporation (DEC) and licensed to Quality Power Systems, Inc. (QPS). See the License Agreement in Exhibit B-2 hereto. DEC is the largest single electric customer of NEES' retail electric company subsidiaries. QPS intends to develop, manufacture and market UPS and is committed to locating its manufacturing facility for UPS in either Massachusetts or New Hampshire within the retail electric service territory of NEES's retail electric company subsidiaries. In mid 1993, NEPSCO, acting on behalf of NEES, made a research and development grant of $250,000 to QPS to assist in the development of UPS. NEPSCO used funds from NEES to make this payment. In return for this grant and to encourage our continued support, QPS gave NEPSCO the right to receive at no cost $250,000 of QPS's convertible debentures. (See Exhibit B-1) NEPSCO has assigned this right to NEERI effective January 1, 1994. (See Exhibit B-1A) Such right expires on April 1, 1994 unless extended. Before exercising its rights to receive these convertible debentures, it was made clear to QPS that appropriate approvals under the Act were required. If NEERI receives said approvals and exercises its right to receive QPS's convertible debentures, all rights to receive a product grant of two UPS per year for the first four years of commercial production would terminate. (See Section 3 of the Agreement as amended, Exhibits B-1 and B-1A.) Since NEERI has no direct need for the UPS, it currently intends to exercise its right to receive QPS's convertible debentures promptly upon receipt of said approvals. The convertible debentures would pay quarterly interest after June 1, 1994, at the Bank of Boston base rate plus 2% and if not converted as hereinafter described, would have a maturity of ten years from date of issuance. These debentures would not have sinking fund provisions nor prepayment provisions nor general voting rights. On or before December 31, 1995, the $250,000 of convertible debentures may be converted by NEERI into 9.9% of the common stock of QPS (990 shares of a total of 10,000 shares). NEERI understands that a subsidiary of Eastern Utilities Associates (EUA), a registered holding company under the Act, is also acquiring 9.9% of the common stock of QPS. The acquisition of common stock of QPS by an EUA subsidiary is not covered by this filing. NEERI would be allowed to have one member on the Board of Directors of QPS. The Board would have six or seven members. NEERI believes that development of an affordable mechanism for insuring uninterrupted power supply would be a valuable tool for many of the System's electric consumers. As automation has progressed, vulnerability to minute interruptions in electrical power has increased. Many electric customers rate quality of the power supply as their primary concern. NEERI believes that the technology developed and patented by DEC has the potential to meet the needs of electric customers, including those of its affiliated electric utilities. NEESPLAN 4, the System's updated planning study, identifies power quality as an area in which the System will expand and focus its efforts. Two prototypes of the UPS have already been manufactured and one will be tested by NEPSCO in the near future. Depending upon the results of testing, QPS expects to begin commercial manufacturing and marketing of UPS in mid-1994. It is expected that the UPS will have a market price of about $25,000 per unit. [With respect to past Commission precedence on the "functional relationship" of entering into this type of new business, see Orders of the Commission dated December 11, 1991, November 2, 1992, and July 30, 1993 (HCAR Nos. 25424, 25667, and 25861) authorizing investment in electronic light bulb technology and Orders dated July 25, 1991, and July 13, 1992 (HCAR Nos. 25353 and 25580) authorizing investment in patented communications systems.] NEERI requests authority to exercise its right to such convertible debentures and if it so elects, to convert these debentures on or before December 31, 1995 to 9.9% of the common stock of QPS. In addition, NEERI requests the authority to invest up to an additional $100,000 in QPS in the form of subordinated loans having an interest rate and other terms to be negotiated at the time of the loan. QPS, as a start-up company, may require additional funds prior to full commercialization of its product and NEERI wants to be in a position to make limited additional investments in a prompt manner. As a start-up company, QPS has limited financial resources to meet financial emergencies. NEERI does not intend to be directly involved in the manufacture, marketing or selling of the UPS. However, it may offer marketing advise and consulting services to QPS and permit its name to be used as part of marketing efforts. Financing by NEES The Commission previously granted authority for NEES to provide financing to NEERI in an amount not to exceed $1 million. (See Order dated September 4, 1992, Release 35-25621.) The $250,000 grant made to QPS is currently carried on NEES's books as an expense. NEES proposes to transfer this amount to NEERI's books and NEERI would treat it as an investment in QPS. To the extent that this transfer and reclassification is viewed as a contribution of capital by NEES, NEES proposes that this be authorized in addition to the $1 million previously authorized. If NEERI invests up to an additional $100,000 in QPS, NEERI may use funds from NEES provided under its existing $1 million authority. Long-Term Plans with QPS NEERI's interests in holding an equity position in QPS are limited to promoting the development of the UPS and assisting a local company in this development. The UPS will have a limited product life and NEERI recognizes that at an appropriate time in the future it may no longer be consistent with its long term interests to continue its equity position. However, at this very early development stage of the UPS product, it is not possible to determine when in the future it would pursue divesting its equity position. "Item 3. Applicable Statutory Provisions" is deleted and replaced with the following: Section 9(a), 10, 12, and Rule 45 are believed to be applicable to the making of capital contributions by NEES to NEERI. Sections 9(a) and 10 are believed to be applicable to the acquisition by NEERI of the convertible debentures of QPS and common stock of QPS and NEERI's entering into a new business. These Sections are also believed to be applicable to additional $100,000 investment in QPS, if required in the form of subordinated loans. "Item 6. Exhibits" is amended by adding the following exhibits to subpart (a): B-1A Amendment No. 1 dated as of January 1, 1994 H Proposed Form of Notice SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this Amendment No. 1 to Application/Declaration on Form U-1 to be signed on their behalf, as indicated by the undersigned officers thereunto duly authorized by such companies. NEW ENGLAND ELECTRIC SYSTEM s/ Michael E. Jesanis Michael E. Jesanis, Treasurer NEW ENGLAND ELECTRIC RESOURCES, INC. s/ John G. Cochrane John G. Cochrane, Treasurer Dated: March 3, 1994 The name "New England Electric System" means the trustee or trustees for the time being (as trustee or trustees but not personally) under an agreement and declaration of trust dated January 2, 1926, as amended, which is hereby referred to, and a copy of which as amended has been filed with the Secretary of the Commonwealth. Any agreement, obligation or liability made, entered into or incurred by or on behalf of New England Electric System binds only its trust estate, and no shareholder, director, trustee, officer or agent thereof assumed or shall be held to any liability therefore. EX-99 2 EXHIBIT INDEX Exhibit No. Description Page - ----------- ----------- ---- B-1A Amendment No. 1 dated Filed herewith as of January 1, 1994 H Proposed Form of Notice Filed herewith EX-99 3 EXHIBIT B-1A Exhibit B-1A AMENDMENT NO. 1 The Agreement dated as of June 1, 1993, between New England Power Service Company (NEPSCO) and Quality Power Systems, Inc. (QPS) is hereby amended as of January 1, 1994. In consideration of the premises, the mutual covenants hereinafter set forth, and other good and valuable considerations, receipt whereof is hereby acknowledged, it is agreed as follows: 1. Section 3 of the Agreement is amended by striking the date "January 1, 1994" and replacing it with the date "March 31, 1994." 2. Section 6 of the Agreement is hereby amended by deleting it in its entirety and replacing it with the following: "Section 6. Option for Convertible Debentures --------------------------------------------- QPS hereby grants to New England Electric Resources, Inc. (NEERI, an affiliate of NEPSCO and designee of NEPSCO) an option to convert the grant of $250,000 into convertible debentures of equal amount. The convertible debentures would pay quarterly interest commencing June 1, 1994, at the Bank of Boston base rate plus 2% and if not converted as hereinafter provided, would have a maturity of ten years from date of issuance. These debentures would not have sinking fund provisions nor prepayment provisions nor general voting rights. On or before December 31, 1995, the $250,000 of convertible debentures may be converted by NEERI into 9.9% of the common stock of QPS (990 common shares) taking into account the issuance of common stock to a subsidiary company of Eastern Utilities Associates and to the original four investors in QPS. If QPS issues additional common stock beyond its initial issuance of 10,000 shares, QPS shall issue additional shares to NEERI at no additional cost in an amount that maintains NEERI's common stock percentage at 9.9%. QPS acknowledges that NEERI requires regulatory approvals before exercising the option to convert the grant to convertible debentures. In order to provide reasonable time for the regulatory process, such option to convert shall expire on March 31, 1994." 3. Section 7 of the Agreement is amended by deleting it in its entirety and replacing it with the following: "Section 7. Board of Directors ------------------------------ QPS agrees that NEERI may if it so requests have one member of the Board of Directors. The Board of Directors will be comprised of six members (included in the six would be a NEERI representative and a representative of Eastern Investment Corporation, a subsidiary of Eastern Utilities) and may be enlarged to seven with prior written consent of NEERI which shall not be unreasonably withheld." 4. Pursuant to Section 6 and 7, NEPSCO has designated NEERI to be its designee and NEERI has consented to such designation. 5. Any number of counterparts of this Amendment to be executed and each shall have the same force and effect as the original. IN WITNESS WHEREOF the signatories have caused this Amendment to be executed under seal by their duly authorized officers or agents. New England Power Service Company ATTEST: By: s/John G. Cochrane s/Kirk L. Ramsauer Title: Vice President Date: January 19, 1994 New England Electric Resources, Inc. ATTEST: By: s/John L. Levett s/Geraldine M. Zipser Title: President Date: January 19, 1994 Quality Power Systems, Inc. ATTEST: By: s/Edmund Rosa s/Donald W. Christiansen Title: President Date: January 21, 1994 EX-99 4 EXHIBIT H EXHIBIT H PROPOSED FORM OF NOTICE New England Electric System (NEES), a registered holding company, and its subsidiaries New England Power Service Company and New England Electric Resources, Inc. (NEERI), a non-utility subsidiary, have filed Form U-1 Application/Declaration File No. 70-8303 pursuant to Sections 9(a), 10, and 12 of the Public Utility Holding Company Act of 1935 and Rule 45 thereunder. By order dated September 4, 1992 (Release No. 35-25621), NEERI was authorized to enter into the business of performing consulting services on electric utility matters for non- affiliates. NEES' investment in NEERI was also authorized. NEERI now seeks authorization to acquire convertible debentures having a principal amount of $250,000 in a company producing an uninterruptible power system and authorization to convert these debentures, on or before December 31, 1995, into 9.9% of the common stock of said company. NEERI also seeks authority to make further investments in such company not to exceed $100,000 in the aggregate. Such further investments will be in the form of subordinated loans. In connection with the assignment of NEES' rights to NEERI, NEES seeks authorization to make a capital contribution of $250,000 to NEERI in addition to its current authorization to make limited investments in NEERI. -----END PRIVACY-ENHANCED MESSAGE-----