<PAGE>
As filed with the Securities and Exchange Commission on December 27, 1995
Registration No. 33-64003
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
The United Illuminating Company
(Exact name of registrant as specified in its charter)
Connecticut 06-0571640
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
157 Church Street 06506-0901
New Haven, Connecticut 06506-0901 (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (203) 499-2000
_________________________________
RICHARD J. GROSSI
Chief Executive Officer
157 Church Street
New Haven, Connecticut 06506-0901
(203) 499-2000
(Name, address and telephone number of agent for service)
Copies to:
WILLIAM C. BASKIN, JR., Esq. JOHN T. HOOD, Esq. DAVID P. FALCK, Esq.
Wiggin & Dana Reid & Priest Winthrop, Stimson, Putnam
One Century Tower 40 West 57th Street & Roberts
New Haven, CT 06508-1832 New York, NY 10019 One Battery Park Plaza
New York, NY 10004-1490
_________________________________
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined by
market conditions and other factors.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
/__/
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / X /
---
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. /__/ __________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /__/ __________________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /__/
_________________________________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
PROSPECTUS SUPPLEMENT (SUBJECT TO COMPLETION, ISSUED _________, 199 )
(TO PROSPECTUS DATED , 199 )
$213,560,000
SEABROOK 1 SECURED LEASE OBLIGATION BONDS
$ % SERIES DUE __________
$ % SERIES DUE __________
____________________________
Interest payable and
____________________________
The Offered Bonds will be issued by the Lessor (the Owner Trustee) and will be
secured, as described herein, by a lien on and security interest in the
undivided ownership interest of the Lessor in Unit No. 1 of the Seabrook Station
in Seabrook, New Hampshire, and an assignment of basic rental payments and
certain other amounts payable, under the Lease of the undivided ownership
interest, by
THE UNITED ILLUMINATING COMPANY
The United Illuminating Company ("UI" or the "Company"), as Lessee under
the Lease, will be unconditionally obligated to make rental payments in amounts
that will be calculated to be at least equal to the scheduled payments of
principal of and interest on the Offered Bonds, although the Offered Bonds will
not be direct obligations of, or guaranteed by, the Company. The Holders of the
Bonds will have no recourse against the general credit of any of the
institutions or individuals acting as Lessor or Owner Participant. (See
"Security and Source of Payment for the Bonds" in the accompanying Prospectus.)
The Offered ______% Bonds maturing in 20__ (the "20 Offered Bonds") will
mature on __________, and the ______% Offered Bonds maturing in 20__ (the "20
Offered Bonds") will mature on __________. The principal of the Offered Bonds
will be payable from time to time in installments. The Offered Bonds will be
redeemable, in whole or in part, on not less than 30 days' notice, either upon
certain terminations of the Lease or at the option of the Lessor, at the
redemption prices set forth herein (including a Make-Whole Premium (as defined
herein) if redemption occurs at the option of the Lessor prior to __________ for
the 20__ Offered Bonds and __________ for the 20__ Offered Bonds), in each case
together with accrued interest, if any, to the date fixed for redemption. (See
"Description of the Offered Bonds and the Indenture" in the accompanying
Prospectus.)
SEE "RISK FACTORS AND INVESTMENT CONSIDERATIONS," ON PAGE ___ IN THE
ACCOMPANYING PROSPECTUS.
___________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY
IS A CRIMINAL OFFENSE.
___________________
PRICE OF 20__ OFFERED BONDS - 100% AND ACCRUED INTEREST, IF ANY
PRICE OF 20__ OFFERED BONDS - 100% AND ACCRUED INTEREST, IF ANY
___________________
<TABLE>
<CAPTION>
Price to Underwriting
Public/1/ Commissions/2//3/ Proceeds/1//2/
-------- ---------------- -------------
<S> <C> <C> <C>
Per Offered Bond.. % % %
Total ................ $ $ $
Per Offered Bond.. % % %
Total $ .............. $ $ $
</TABLE>
___________________
1 Plus accrued interest, if any, from the date of original issuance.
2 Expenses, estimated to be $ , and underwriting commissions will be paid
from the proceeds of the Offered Bonds. Expenses, estimated to be $ , will
be paid by the Company.
3 The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
_________________
The Offered Bonds are offered by the Underwriters named herein subject to
prior sale, when, as and if accepted by the Underwriter, and subject to approval
of certain legal matters by Winthrop, Stimson, Putnam & Roberts, counsel for the
Underwriters, and certain other conditions. It is expected that delivery of the
Offered Bonds will be made on or about _________________, 199 through the book-
entry facilities of The Depository Trust Company ("DTC") against payment
therefor in immediately available funds.
_______________
MORGAN STANLEY & CO. CITICORP SECURITIES, INC.
Incorporated
, 199
RED HERRING
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
any such jurisdiction.
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus Supplement and the accompanying Prospectus, in connection with the
offer contained in this Prospectus Supplement and accompanying Prospectus, and,
if given or made, such information or representations must not be relied upon as
having been authorized by UI or the Underwriters. This Prospectus Supplement and
the accompanying Prospectus do not constitute an offer or solicitation by anyone
in any jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus Supplement and the accompanying Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of UI since the date hereof.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
_______________________
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Selected Information Relating to the Offered Bonds....................... S-1
The Company.............................................................. S-
Summary Financial Information............................................ S-
Use of Proceeds.......................................................... S-
Ratios of Earnings to Fixed Charges...................................... S-
Certain Terms of the Offered Bonds....................................... S-
Underwriting............................................................. S-
Prospectus
Available Information....................................................
Incorporation of Certain Documents by Reference..........................
Risk Factors and Investment Considerations...............................
Flow of Funds for Debt service Payments on the Bonds.....................
Use of Proceeds..........................................................
The Transaction and the Refinancing......................................
Security and Source of Payment for the Bonds.............................
Description of the Offered Bonds and the Indenture.......................
Description of the Lease.................................................
Other Agreements.........................................................
Plan of Distribution.....................................................
Experts and Legality.....................................................
Glossary.................................................................
</TABLE>
S-2a
<PAGE>
SELECTED INFORMATION RELATING TO THE OFFERED BONDS
The following material, which is presented herein solely to furnish limited
introductory information regarding the Offered Bonds, is qualified in its
entirety by reference to the detailed information appearing elsewhere in this
Prospectus Supplement and the accompanying Prospectus. Capitalized terms used in
this Prospectus Supplement and the accompanying Prospectus without definition
are defined in the Glossary at the end of the accompanying Prospectus.
SECURITIES OFFERED; INTEREST; REDEMPTION
$ Seabrook 1 Secured Lease Obligation Bonds, % Series due __________,
(the "20__ Offered Bonds")
$ Seabrook 1 Secured Lease Obligation Bonds, % Series due __________,
(the "20__ Offered Bonds")
Interest on the Offered Bonds of each series will be payable on __________
and __________ of each year, commencing ___________, 1996. The Offered Bonds
will be redeemable, in whole or in part, on not less than 30 days' notice,
either upon certain terminations of the Lease or, at the option of the Lessor,
at the redemption prices set forth herein (including a Make-Whole Premium if
redemption occurs at the option of the Lessor prior to for the 20__ Offered
Bonds and for the 20__ Offered Bonds), in each case together with accrued
interest to the date fixed for redemption. (See "Certain Terms of the Offered
Bonds -- Redemption" in this Prospectus Supplement.)
PRINCIPAL INSTALLMENT PAYMENTS
The Supplemental Indenture relating to the Offered Bonds (Supplemental
Indenture) provides for the payment of principal installments on the Offered
Bonds on each of the Installment Payment Dates set forth below, in an aggregate
amount (subject to adjustment in certain circumstances) equal to the Installment
Payment amounts set forth below, together with interest accrued to such
Installment Payment Date. The Outstanding Balance Factor set forth below for
each Installment Payment Date is for descriptive purposes only, and, unless
there has been a partial redemption or a default or other installment payment
adjustment,
S-3
<PAGE>
represents a factor that when multiplied by the original principal amount of
each 20___ Offered Bond and 20___ Offered Bond will indicate the outstanding
principal amount of such Bond remaining unpaid after payment of the principal
installment due on such Installment Payment Date.
<TABLE>
<CAPTION>
Aggregate
Installment Outstanding
Payment Amount Balance Factor
-------------- --------------
Installment
Payment Date 20__ Offered Bond 20__ Offered Bond 20__ Offered Bond 20__ Offered Bond
- -------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
(See "Certain Terms of the Offered Bonds -- Principal Installment Payments" in
this Prospectus Supplement.)
SECURITY AND SOURCE OF PAYMENT
Each Bond will be secured by, among other things, (a) a lien on and
security interest in the Undivided Interest of the Lessor and (b) certain of the
rights of the Lessor under the Lease with the Company, including the right to
receive basic rent and certain other amounts payable by the Company thereunder.
(See "Security and Source of Payment for the Bonds" in the accompanying
Prospectus.) The Company is unconditionally obligated to make payments under the
Lease in amounts that will be calculated to be at least equal to the scheduled
payments of the principal of and interest on the Bonds. However, the Bonds will
not be direct obligations of, or guaranteed by, the Company.
Upon the occurrence and continuance of any Indenture Event of Default that
results from a Lease Event of Default, the Lessor will control the exercise of
remedies against the Company under the Lease, subject to the right of the
Indenture Trustee to cause the Lessor to forbear from any proposed action that
would have a material adverse effect on the Holders of the Bonds. There could be
circumstances, therefore, in which amounts due on the Bonds are
S-4
<PAGE>
not paid and the Indenture Trustee would not be able to direct the Lessor's
pursuit of remedies against the Company under the Lease. The Indenture Trustee
would not be precluded, however, from selling the Indenture Estate (including
the Undivided Interest) in a foreclosure or similar proceeding, subject to the
provisions of the Operating Agreement. If such sale occurs prior to or
simultaneously with the termination of the Lease, the Lessor must first be given
an opportunity to purchase the Indenture Estate at the proposed sale price. In
the event of a sale pursuant to a foreclosure or similar proceeding (other than
a sale to the Lessor), the Indenture Trustee would have the right to terminate
the Lease in connection with such sale. (See "Description of the Offered Bonds
and the Indenture --Notice; Waiver; Acceleration and Remedies" in the
accompanying Prospectus.)
Under certain circumstances the Company (or the Company and an Affiliate
thereof jointly) may elect, or may be required, to assume the Bonds issued under
the Indenture, and all obligations of the Lessor under the Indenture. (See
"Description of the Offered Bonds and the Indenture--Assumption by the
Company.") Upon such an assumption, the Holders of such Bonds would retain the
benefit under the Indenture of the lien on and security interest in the
Undivided Interest, and the obligation to make payments on such Bonds would
become a direct obligation of the Company, or the Company and such Affiliate
thereof, as the case may be.
The Holders of the Bonds will have no recourse against the general credit
of any of the institutions or individuals acting as Lessor, Owner Trustee or
Owner Participant. Amounts payable by the Company under the Lease are general
credit obligations of the Company. Accordingly, amounts generated by the Company
from operations and from any of the Company's available credit sources would be
sources for such Lease payments. (See "Security and Source of Payment for the
Bonds" in the accompanying Prospectus.)
For the description of possible limitations on amounts payable as damages
if the Company were to reject the Lease in the context of a bankruptcy
proceeding, see "Risk Factors and Investment Considerations" in the accompanying
Prospectus.
DESCRIPTION OF SEABROOK 1
S-5
<PAGE>
Seabrook 1 is a one-unit, nuclear-fueled electric generating plant located
in Seabrook, New Hampshire, and jointly owned by eleven New England utilities,
including the Company. The Seabrook Station received a full-power operating
license from the NRC on March 15, 1990 and was placed in commercial operation on
June 30, 1990. Seabrook 1 has a net generating capability of 1,150 MW. The unit
has been refueled three times; and its lifetime capacity factor through
September 30, 1995 has been 77.2%. The average of the Systematic Assessment of
Licensee Performance ratings for Seabrook 1 published by the NRC for
maintenance, plant operations, plant support and engineering were 2, 2, 1 and 1,
respectively, for the 16 to 18 months performance assessment period ended
January 7, 1995.
USE OF PROCEEDS OF THE OFFERED BONDS; THE TRANSACTION AND THE REFINANCING
In 1990, the Company sold, for an aggregate price of $250,000,000,
approximately 66.4% of its 17.5% ownership interest in Unit 1 (as defined) of
the Seabrook Station to the Owner Trustee of a trust ("Lessor") established for
the benefit of an equity investor ("Owner Participant"). Simultaneously, the
Lessor leased to the Company the interest so purchased under a separate long-
term Lease. Approximately 84.7% of the consideration paid by the Lessor for its
interest in Unit 1 was provided to the Lessor from the issuance and sale of two
series of Seabrook 1 secured lease obligation bonds, a 9.76% Series due January
2, 2006 and a 10.24% Series due January 2, 2020 (collectively, the "Initial
Series Bonds"). The balance of such consideration was contributed to the Lessor
by the Owner Participant.
Unit 1 excludes certain transmission, pollution control and other
facilities included in Seabrook 1. The Undivided Interest sold and leased back,
as described below, represents approximately 11.6% of Unit 1.
The Company has determined, in light of prevailing economic and financial
circumstances, to cause a refinancing of the Initial Series Bonds issued in
connection with the Transaction and currently outstanding (the "Refinancing").
As part of the Refinancing, the Owner Trustee will redeem the outstanding
Initial Series Bonds with the proceeds of the Offered Bonds and certain other
funds as described herein. (See "The Transaction and the Refinancing" in the
accompanying Prospectus.)
S-6
<PAGE>
THE COMPANY
UI is an operating electric public utility company, incorporated under the
laws of the State of Connecticut in 1899. It is engaged principally in the
production, purchase, transmission, distribution and sale of electricity for
residential, commercial and industrial purposes in a service area of about 335
square miles in the southwestern part of the State of Connecticut. The
population of this area is approximately 711,000 or 22% of the population of the
State. The service area, largely urban and suburban in character, includes the
principal cities of Bridgeport (population 142,000) and New Haven (population
130,000) and their surrounding areas. Situated in the service area are retail
trade and service centers, as well as large and small industries producing a
wide variety of products, including helicopters and other transportation
equipment, electrical equipment, chemicals and pharmaceuticals. Of the Company's
1994 electric revenues, approximately 41% was derived from residential sales,
40% from commercial sales, 17% from industrial sales and 2% from other sales.
UI has three wholly-owned subsidiaries, two of which have been formed to
participate in the ownership of power production facilities and the third of
which serves as the parent corporation for UI's nonutility businesses. The Board
of Directors of UI has authorized the investment of a maximum of $22 million in
one or more subsidiary or affiliated corporations for such nonutility
businesses.
For further information about these and other matters affecting UI's
business, see "Risk Factors and Investment Considerations" in the accompanying
Prospectus and the documents referred to under "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus.
S-7
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following material, which is presented herein solely to furnish limited
financial information regarding UI, is qualified in its entirety by reference to
the detailed information and financial statements contained in the Incorporated
Documents (as defined in the accompanying Prospectus), which are available upon
request from UI. (See "Available Information" in the accompanying Prospectus.)
Accordingly, the following should be read together with the Incorporated
Documents.
<TABLE>
<CAPTION>
Twelve Months
Ended September 30,
1995 Twelve Months Ended December 31,
(unaudited) 1994 1993 1992
---- ---- ----
(Thousands)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating Revenue................................ $680,279 $656,748 $653,023 $667,325
Operating Income................................. 125,473 127,392 114,814 108,022
Total Allowance for Funds Used
During Construction (1)......................... 2,482 3,463 4,067 3,232
Deferred Return (2).............................. - - 7,497 15,959
Total Interest Charges........................... 79,037 84,073 92,290 101,548
Net Income....................................... 46,435 46,795 40,481 56,768
</TABLE>
<TABLE>
<CAPTION>
As of September 30, 1995
------------------------
Percent of
Amount Capitalization
------ --------------
BALANCE SHEET DATA: (Thousands)
<S> <C> <C>
Net Seabrook 1 Investment........................................ $ 558,832
Net Utility Plant................................................ $1,342,112
Capitalization:
Long-Term Debt (including current maturities)................... $ 935,426 65.0%
Preferred Stock................................................. 10,539 0.7%
Minority interest in preferred securities....................... 50,000 3.5%
Common Stock Equity............................................. 443,191 30.8%
---------- --------
Total Capitalization............................................ $1,439,156 100.0%
========== ========
</TABLE>
S-8
<PAGE>
(1) Allowance for Funds Used During Construction ("AFUDC") is a non-cash credit
to income that represents the approximate cost of debt and equity capital
devoted to plant under construction. For balance sheet purposes, AFUDC is
capitalized to UI's plant account and depreciated and recovered over the
life of the asset.
(2) Deferred Return is a non-cash credit to income that represents the
approximate cost of debt and equity capital devoted to the portion of
Seabrook 1 that had previously been excluded from rate base in accordance
with the phase-in to rate base of UI's investment in Seabrook Unit 1. For
balance sheet purposes, Deferred Return is capitalized as a deferred debit
and amortized and recovered over a five-year period beginning in 1995.
S-9
<PAGE>
USE OF PROCEEDS
The proceeds of the sale of the Offered Bonds will be used, together with
amounts made available to the Lessor by the Company as basic and supplemental
rent or by the Owner Participant as an additional investment, to enable the
Lessor to redeem the outstanding Initial Series Bonds and to pay certain costs
and expenses incurred in connection with the Refinancing.
RATIOS OF EARNINGS TO FIXED CHARGES
UI's Ratio of Earnings to Fixed Charges for each of the periods indicated was as
follows:
<TABLE>
<CAPTION>
Twelve Months
Ended September 30,
1995 Twelve Months Ended December 31,
--------------------------------
(Unaudited) 1994 1993 1992 1991 1990
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges (A) 2.16 1.99 1.69 1.85 1.83 1.69
</TABLE>
_________________
(A) "Earnings," as defined by Commission Regulation S-K, represent the
aggregate of (1) net income, (2) taxes based on income, (3) investment tax
credit adjustments-net and (4) fixed charges. "Fixed Charges," as defined
by Commission Regulation S-K, represent interest (whether expended or
capitalized), related amortization and interest applicable to rentals
charged to operating expenses.
CERTAIN TERMS OF THE OFFERED BONDS
The following description of certain terms of the Offered Bonds offered
hereby supplements, and should be read together with, the statements under
"Description of the Offered Bonds and the Indenture" in the accompanying
Prospectus. Capitalized terms used in this Prospectus Supplement have the same
meanings as in the accompanying Prospectus.
S-10
<PAGE>
GENERAL
The Bonds will be issued in two separate series: $____ principal amount of
Seabrook 1 Secured Lease Obligation Bonds, ___% Series due ____ (herein
sometimes called the "20___ Offered Bonds") and $____ principal amount of
Seabrook 1 Secured Lease Obligation Bonds, ___% Series due ____ (herein
sometimes called the "20___ Offered Bonds"). The 20___ Offered Bonds and the
20___ Offered Bonds are herein sometimes referred to, collectively, as the
"Offered Bonds".
The 20___ Offered Bonds will mature , 20___ and the 20___ Offered Bonds
will mature , 20___. The Offered Bonds of each series will bear interest on the
unpaid principal amount thereof from their date of issuance at the rate per
annum shown in its title, payable on __________ and __________ of each year,
commencing _________________ __, 1996, to the registered owners thereof at the
close of business on __________ or __________, as the case may be, next
preceding such interest payment date. (Indenture, Section 2.11; Supplemental
Indenture; and form of Offered Bond)
The Offered Bonds will be issued originally solely in book-entry form to
The Depository Trust Company ("DTC") or its nominee, Cede & Co., to be held in
DTC's book-entry only system. So long as the Offered Bonds are held in the book-
entry only system, DTC (or a successor securities depositary) or its nominee
will be registered owner or holder of the Offered Bonds for all purposes of the
Indenture and the Offered Bonds. (See "Book Entry Only System" below.) Except as
described under "Book Entry Only System" below, Beneficial Owners (as defined
below) of the Offered Bonds will not have the right to have any Offered Bonds
registered in their names and will not receive or have the right to receive
physical delivery of certificates representing their ownership interests in the
Offered Bonds. For so long as any purchaser is the Beneficial Owner of an
Offered Bond, such purchaser must maintain an account with a broker or dealer
who is, or acts through, a DTC Participant (as defined below) to receive payment
of the principal of or premium or interest of such bond. The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities. Such limits and laws may impair the ability to transfer beneficial
interests in Offered Bonds.
S-11
<PAGE>
So long as the Offered Bonds are held in the book-entry only system, the
principal of or premium and interest on the Offered Bonds will be paid through
the facilities of DTC (or a successor securities depository). If the book-entry
only system is discontinued, the principal of and premium, if any, and the
interest payable at maturity on the Offered Bonds will be payable at the
corporate trust office of any paying agent designated by the Owner Trustee from
time to time; and interest and Installment Payment Amounts (as defined below),
other than such amounts payable at maturity, will be paid by check drawn upon
the paying agent and mailed to the address of the person entitled thereto, as
shown in the bond register.
Since the principal of each Offered Bond will be subject to payment from
time to time without surrender of, or notation on, such Offered Bond, the unpaid
principal amount of each Offered Bond as reflected in the bond register
maintained by the Indenture Trustee shall be controlling and binding with
respect to the actual unpaid principal amount of an Offered Bond as of any date.
In any case where any redemption date, any Installment Payment Date or the
stated maturity of principal of or any installment of interest on any Offered
Bond, or any date on which any defaulted interest or principal is proposed to be
paid, is not a business day, then (notwithstanding any other provision of the
Indenture or such Offered Bond) payment of interest and/or principal and
premium, if any, shall be due and payable on the next succeeding business day
with the same force and effect as if made on or at such nominal redemption date,
the stated maturity, Installment Payment Date or date on which the defaulted
interest or principal is proposed to be paid, and no interest will accrue on the
amount so payable for the period from and after such redemption date, stated
maturity, Installment Payment Date or date for the payment of defaulted interest
or principal, as the case may be. (Indenture, Sections 1.13, 2.11 and 4.04;
Supplemental Indenture; and form of Offered Bond)
PRINCIPAL INSTALLMENT PAYMENTS
On each Installment Payment Date (set forth below), the Owner Trustee will
pay an installment of principal of each Offered Bond of each series (subject to
adjustment as described below) in an amount (an "Installment Payment Amount")
equal to the Installment Payment Percentage (set forth below) for the Bonds of
such series for such Installment Payment Date multiplied by the original
principal amount of such Bond.
S-12
<PAGE>
INSTALLMENT PAYMENT PERCENTAGE
------------------------------
INSTALLMENT PAYMENT DATE 20 OFFERED BONDS 20 OFFERED BONDS
------------------------ ------------------ ------------------
Upon the occurrence of certain changes in Federal income tax rates or laws,
the Company or the Owner Participant may cause the respective principal amounts
of 20___ Offered Bonds and 20___ Offered Bonds to be paid in installments of
principal to be adjusted in connection with a recalculation of basic rent under
the Lease, provided that such adjustments shall not increase or decrease the
average life of such Offered Bonds of either such series (calculated in
accordance with generally accepted financial practice) by more than six months
or extend the final payment of principal of such Offered Bonds. In addition, in
the event that, by June 30, 2001, or such later date as shall have been agreed
to by the Lessee and the Owner Participant, the NRC Facility Operating License
for Seabrook 1 is not extended to May 25, 2029, or later as contemplated by the
Participation Agreement, the Owner Trustee shall cause the respective principal
amount of 20___ Offered Bonds and 20___ Offered Bonds to be paid in installments
of principal to be adjusted in connection with a recalculation of basic rent
under the Lease, provided that such adjustments shall not cause the average life
of such Offered Bonds of any series (calculated as aforesaid) to be decreased by
more than twenty-four months or extend the final payment of principal of such
Offered Bonds and such adjustments shall cause the final payment or redemption
of the Offered Bonds of such series to be scheduled to occur no later than the
last day of the basic term of the Lease. The Indenture Trustee shall send by
mail to each Holder of affected Offered Bonds, at least 30 days before the first
Installment Payment Date with respect to which an adjustment is to be made, a
revised installment payment schedule applicable to such Offered Bonds.
(Supplemental Indenture)
In the event that there shall have been any partial redemption of the
Offered Bonds of either series (other than pursuant to principal installment
payments), each Installment Payment Amount for each Offered Bond of a series
subsequent to such redemption shall be reduced by an amount equal to the amount
obtained by multiplying such Installment Payment
S-13
<PAGE>
Amount as in effect prior to such redemption by a fraction of which the
numerator shall be the aggregate principal amount of Offered Bonds of such
series redeemed pursuant to such partial redemption, and the denominator shall
be the aggregate unpaid principal amount of Offered Bonds of such series
outstanding immediately prior to such redemption. (Supplemental Indenture)
The funds to be utilized for installment payment of principal will be
provided by basic rent payments made by the Lessee.
REDEMPTION
Optional Redemption
The Offered Bonds of each series will be subject to redemption, at the
option of the Owner Trustee, in whole at any time or in part from time to time,
at the redemption prices of 100% of the unpaid principal amount of the Offered
Bonds of each series to be so redeemed, plus accrued interest, if any, to the
redemption date, plus, if such redemption is made prior to the Premium
Termination Date, the Make-Whole Premium, if any. The "Premium Termination Date"
is __________ for the 20___ Offered Bonds and __________ for the 20___ Offered
Bonds.
The Make-Whole Premium, if any, on the Offered Bonds will be determined by
an independent investment banking institution of national standing (the
"Investment Banker") selected by UI. The Investment Banker will first determine
the Treasury Rate with respect to any redemption of Offered Bonds. The Treasury
Rate means, with respect to each Offered Bond to be redeemed, a per annum rate
(expressed as a semiannual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity of United
States Treasury securities maturing on the Average Life Date (as defined below)
of such Offered Bond, as determined by interpolation between the most recent
weekly average yields to maturity for two series of United States Treasury
securities (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Offered Bond and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Offered Bond, in each
case as published in the most recent H.15(519) (or, if a weekly average yield to
maturity for United
S-14
<PAGE>
States Treasury securities maturing on the Average Life Date of such Offered
Bond is reported in the most recent H.15(519), as published in H.15(519)).
"H.15(519)" means "Statistical Release H.15(519), Selected Interest Rates," or
any successor publication, published by the Board of Governors of the Federal
Reserve System. The "most recent H.15(519)" means the latest H.15(519) which is
published prior to the close of business on the third business day prior to the
applicable redemption date. The Average Life Date for any Offered Bond to be
redeemed shall be the date which follows the redemption date by a period equal
to the Remaining Weighted Average Life of such Offered Bond. The Remaining
Weighted Average Life of such Offered Bond with respect to the redemption of
such Offered Bond is the number of days equal to the quotient obtained by
dividing (A) the sum of the products obtained by multiplying (1) the amount of
each remaining principal payment on such Offered Bond by (2) the number of days
from and including the redemption date, to but excluding the scheduled payment
date of such principal payment by (B) the unpaid principal amount of such
Offered Bond.
To determine the Make-Whole Premium for any Offered Bond, the Investment
Banker then will determine, as of the third business day prior to the redemption
date, the sum of the present values of all of the remaining scheduled payments
of principal and interest from the redemption date to maturity on such Offered
Bond computed on a semiannual basis by discounting such payments (assuming a
360-day year consisting of twelve 30-day months) using such Treasury Rate. If
the sum of these present values of the remaining payments as computed above
exceeds the aggregate unpaid principal amount of the Offered Bond to be redeemed
plus any accrued but unpaid interest thereon, the difference will be payable as
a premium upon redemption of such Offered Bonds. If the sum is equal to or less
than such principal amount plus accrued interest, there will be no premium
payable with respect to such Offered Bond. (Indenture, Article Five;
Supplemental Indenture; and form of Bond)
Redemption upon Lease Termination
If the Company has exercised its option to terminate the Lease as described
in "Description of the Lease -- Termination for Obsolescence" in the
accompanying Prospectus, then the Owner Trustee will redeem on the date of such
termination, all Bonds then outstanding under the Indenture at a redemption
price equal to the unpaid principal amount
S-15
<PAGE>
thereof plus accrued interest, if any, to the date fixed for redemption.
(Indenture, Section 5.02)
If the Company has exercised its option to terminate the Lease as described
in "Description of the Lease -- Purchase Option for Significant Expenditures" or
"-- Periodic Purchase Option" in the accompanying Prospectus, then the Owner
Trustee will redeem, on the date of such termination, all Bonds then outstanding
under the Indenture that have not been assumed (at the election of the Company)
as described in "Description of the Offered Bonds and the Indenture --Assumption
by the Company" in the accompanying Prospectus, at a redemption price equal to
the unpaid principal amount thereof plus accrued interest, if any, to the date
fixed for redemption. (Indenture, Section 5.02)
The funds to be utilized in any such redemption would be provided from the
funds described in the above-referenced portions of "Description of the Lease"
in the accompanying Prospectus. Such funds would be in an amount sufficient to
enable the Indenture Trustee to pay the unpaid principal of and accrued interest
on the Bonds which have not been assumed by the Company.
Procedure for and Notice of Redemption
If less than all of the Offered Bonds of any series are called for
redemption, the particular Offered Bonds or portions thereof to be redeemed will
be selected by the Indenture Trustee, by prorating, as nearly as practicable,
the principal amount of such Offered Bonds to be redeemed among the Holders of
such Offered Bonds. Any Bonds and portions of Bonds selected for redemption that
are deemed to be paid in accordance with the provisions of the Indenture (as
described under "Defeasance" in the accompanying Prospectus) will cease to bear
interest on the specified redemption date. Notice of redemption will be given by
mail not less than 30 nor more than 60 days prior to the date fixed for
redemption to the Holders of Bonds to be redeemed (which, if the Offered Bonds
are held in the book-entry only system, will be DTC or a successor depository).
With respect to notice of redemption of Bonds, such notice will state that
such redemption will be conditional upon the receipt by the Indenture Trustee,
at or prior to the
S-16
<PAGE>
date fixed for such redemption, of money sufficient to pay the unpaid principal
of and premium, if any, and interest on such Bonds. If such money is not so
received, such notice will be of no force and effect, the Owner Trustee will not
be required to redeem such Bonds and the Indenture Trustee will give notice, in
the manner in which the notice of redemption was given, that such money was not
received and such redemption is not required to be made. (Indenture, Section
1.06, Article Five; Supplemental Indenture)
Book-Entry Only System
DTC will act as securities depository for the Offered Bonds. The Offered
Bonds will be issued as fully-registered securities registered in the name of
Cede & Co. (DTC's partnership nominee).
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participant's accounts,
thereby eliminating the need for physical movement of securities certificates.
"Direct Participants" include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is owned
by a number of its Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants"). The Rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Offered Bonds under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Offered Bonds on DTC's
records. The
S-17
<PAGE>
ownership interest of each actual purchaser of each Offered Bond ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect Participants'
records. Beneficial Owners will not receive written confirmation from DTC of
their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Offered Bonds are to be accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interests in the
Offered Bonds except in the event that use of the book-entry system for the
Offered Bonds is discontinued.
To facilitate subsequent transfers, all Offered Bonds deposited by
Participants with DTC are registered in the name of DTC's partnership nominee
Cede & Co. The deposit of Offered Bonds with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Offered Bonds. DTC's records
reflect only the identity of the Direct Participant to whose accounts such
Offered Bonds are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. Redemption notices shall be sent by the
Indenture Trustee to Cede & Co.
Neither DTC nor Cede & Co. will consent or vote with respect to Offered
Bonds. Under its usual procedures, DTC will mail an Omnibus Proxy to the
Indenture Trustee as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Offered Bonds are credited on the record date (identified in
a listing attached to the Omnibus Proxy).
S-18
<PAGE>
Principal and interest payments on the Offered Bonds will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the payable date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Company, the
Owner Trustee or the Indenture Trustee, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the Owner
Trustee, disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants. If the
Depositary is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed, the Owner Trustee will issue to
Beneficial Owners individual certificated Offered Bonds representing their
ownership interests in Offered Bonds. In addition, the Company may at any time
determine not to have any particular series of Offered Bonds held in the book-
entry only system and, in such event, the Owner Trustee will issue to Beneficial
Owners individual certificated Offered Bonds representing their ownership
interests in such Offered Bonds. In any such instance, a Beneficial Owner will
be entitled to have such certificated Offered Bonds registered in its name.
Individual certificated Offered Bonds so issued will be issued as registered
Offered Bonds in denominations of $1,000 or any integral multiple thereof.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable,
including DTC, but the Company takes no responsibility for the accuracy thereof.
NONE OF THE COMPANY, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE, THE
UNDERWRITERS OR ANY AGENT FOR PAYMENT ON OR REGISTRATION OF TRANSFER OR EXCHANGE
OF THE OFFERED BONDS WILL HAVE ANY RESPONSIBILITY OR LIABILITY FOR ANY ASPECT OF
THE RECORDS RELATING TO OR PAYMENTS MADE ON ACCOUNT OF INTERESTS OF BENEFICIAL
OWNERS OF ANY OFFERED BOND OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY
RECORDS RELATING TO SUCH INTERESTS.
S-19
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among the
Owner Trustee, the Company and the Underwriters, the Underwriters named below
have severally agreed to purchase from the Owner Trustee, and the Owner Trustee
has agreed to sell to the Underwriters, severally, the respective principal
amounts of the Offered Bonds set forth below.
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
NAME 20___ OFFERED BONDS 20___ OFFERED BONDS
---------------------------------------------------------------------------
<S> <C> <C>
Morgan Stanley & Co. Incorporated........... $ $
Citicorp Securities, Inc....................
----------- -----------
Total.................................. $ $
=========== ===========
</TABLE>
The Underwriting Agreement provides that the several obligations of the
Underwriters thereunder are subject to the approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligations is such that they are committed to purchase all of the Offered Bonds
if any are purchased; provided that the Underwriting Agreement provides that
under certain circumstances involving a default of Underwriters, less than all
of the Offered Bonds may be purchased.
The Company has been advised by the several Underwriters that the
Underwriters propose to offer the 20___ Offered Bonds and the 20___ Offered
Bonds directly to the public at the public offering prices set forth on the
cover page of this Prospectus Supplement and to certain dealers at such prices
less a concession of ___% of the principal amount of the 20___ Offered Bonds and
___% of the principal amount of the 20___ Offered Bonds. The Underwriters may
allow, and such dealers may re-allow, a concession not in excess of ___% of the
principal amount of the 20___ Offered Bonds and ___% of the principal amount of
the 20___ Offered Bonds to certain other dealers. After the initial public
offering, the offering prices and other selling terms may be changed.
S-20
<PAGE>
The Underwriting Agreement provides that, subject to certain conditions,
the Company will indemnify each Underwriter and its controlling persons against
certain liabilities, including certain liabilities under the Securities Act, and
will contribute to payment the Underwriters may be required to make in respect
thereof.
The Company does not intend to apply for listing of the Offered Bonds on a
national securities exchange but has been advised by the Underwriters that the
Underwriters presently intend to make a market in the Offered Bonds, as
permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in the Offered Bonds, and such market
making may be discontinued at any time at the sole discretion of each
Underwriter. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Offered Bonds.
S-21
<PAGE>
PROSPECTUS (Subject to Completion, Issued _________, 199 )
$
SEABROOK 1 SECURED LEASE OBLIGATION BONDS
_______________________
The Offered Bonds will be issued from time to time, in one or more series, at
prices and on terms to be determined by market conditions at the time of sale.
This Prospectus will be supplemented by a prospectus supplement (the "Prospectus
Supplement") which will set forth, as applicable, the designation, the aggregate
principal amount, rate and time of payment of interest, maturity, purchase
price, initial public offering price, if any, any redemption or installment
payment provisions and other specific terms of each series of the Offered Bonds
in respect of which this Prospectus is being delivered. The Offered Bonds will
be issued by the Owner Trustee as Lessor and will be nonrecourse to the general
credit of the Lessor or the Owner Participant but secured, as described herein,
by a lien on and security interest in the undivided ownership interest of the
Lessor in Unit No. 1 of the Seabrook Station in Seabrook, New Hampshire, and an
assignment of basic rental payments and certain other amounts payable, under the
Lease of the undivided ownership interest, by
THE UNITED ILLUMINATING COMPANY
The Offered Bonds will be issued for the purpose of the refinancing
described herein. The United Illuminating Company ("UI" or the "Company"), as
Lessee under the Lease, will be unconditionally obligated to make rental
payments in amounts that will be calculated to be at least equal to the
scheduled payments of principal of and interest on the Offered Bonds, although
the Offered Bonds will not be direct obligations of, or guaranteed by, the
Company. The Holders of the Bonds will have no recourse against the general
credit of any of the institutions or individuals acting as Lessor, Owner Trustee
or Owner Participant. (See "Security and Source of Payment for the Bonds,"
"Description of the Offered Bonds and the Indenture" and "Description of the
Lease.")
SEE "RISK FACTORS AND INVESTMENT CONSIDERATIONS," ON PAGE ___.
______________________
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
______________________
The Offered Bonds will be sold through an underwriting syndicate including
Morgan Stanley & Co. Incorporated and Citicorp Securities, Inc., as set forth in
the Prospectus Supplement. The net proceeds from the sale of the Offered Bonds,
and any applicable commissions or discounts, are set forth in the Prospectus
Supplement.
This Prospectus may not be used to consummate sales of the Offered
Securities unless accompanied by the Prospectus Supplement.
_______________________
MORGAN STANLEY & CO. CITICORP SECURITIES, INC.
INCORPORATED
, 199
-2-
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus and any related Prospectus
Supplement and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or any underwriter,
dealer or agent. Neither the delivery of this Prospectus and any related
Prospectus Supplement nor any sale made hereunder shall under any circumstances
create any implication that there has been no change in the affairs of the
Company since the date hereof or thereof. This Prospectus and any related
Prospectus Supplement do not constitute an offer to sell or a solicitation of an
offer to buy securities by anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make such offer or solicitation.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Information, as of particular dates, concerning directors and
officers, their remuneration, and any material interest of such persons in
transactions with the Company is disclosed in proxy statements distributed to
shareholders of the Company and filed with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and at the following Regional Offices
of the Commission: 7 World Trade Center, 13th Floor, New York, New York 10048;
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies
of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such material can also be inspected at the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 that the Company has filed with the
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
of which this Prospectus forms a part.
-3-
<PAGE>
Statements contained or incorporated by reference herein concerning the
provisions of documents are necessarily summaries of such documents, and each
statement is qualified in its entirety by reference to such Registration
Statement, including the documents filed as exhibits thereto (the "Registration
Statement").
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated in this Prospectus by reference the following
documents and information heretofore filed with the Commission, to which
reference is hereby made:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, filed pursuant to Section 13 of the Exchange Act.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995, June 30, 1995 and September 30, 1995, filed pursuant to Section
13 of the Exchange Act.
3. The Company's current Report on Form 8-K filed on December 15, 1995
pursuant to Section 13 of the Exchange Act.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
such documents. The documents incorporated or deemed to be incorporated herein
by reference are sometimes referred to herein as the "Incorporated Documents."
Any statement contained herein or in an Incorporated Document shall be deemed to
be modified or superseded for all purposes to the extent that a statement
contained herein, in any Prospectus Supplement or in any subsequently filed
Incorporated Document modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The information relating to the Company contained in this Prospectus and
any accompanying Prospectus Supplement does not purport to be comprehensive and
is based upon information contained in the Incorporated Documents; accordingly,
such information contained herein should be read together with the information
contained in the Incorporated Documents.
-4-
<PAGE>
ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS MAY OBTAIN WITHOUT CHARGE,
UPON REQUEST TO THE COMPANY AS PROVIDED BELOW, A COPY OF ANY OF THE INCORPORATED
DOCUMENTS (NOT INCLUDING THE EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS
ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH INCORPORATED DOCUMENTS).
REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO MR. CHARLES J. PEPE, ASSISTANT
TREASURER AND ASSISTANT SECRETARY, THE UNITED ILLUMINATING COMPANY, P.O. BOX
1564, 157 CHURCH STREET, NEW HAVEN, CONNECTICUT 06506-0901, TELEPHONE NUMBER
(203) 499-2311.
-5-
<PAGE>
RISK FACTORS AND INVESTMENT CONSIDERATIONS
Prospective investors should consider carefully the considerations set
forth below as well as the other information included in this Prospectus and the
Prospectus Supplement before deciding to invest in the securities offered
hereby.
RISKS OF OWNERSHIP OF NUCLEAR GENERATING FACILITIES
Seabrook 1 is a one-unit, nuclear-fueled electric generating plant located
in Seabrook, New Hampshire. It has a net generating capacity of 1,150 MW. The
owners and their respective ownership shares are as follows:
<TABLE>
<S> <C>
North Atlantic Energy Corporation..................... 36.0%
The United Illuminating Company....................... 17.5%*
Great Bay Power Corporation........................... 12.1%
Massachusetts Municipal Wholesale Electric Company.... 11.6%
New England Power Company............................. 9.9%
The Connecticut Light and Power Company............... 4.1%
Canal Electric Company................................ 3.5%
Montaup Electric Company.............................. 2.9%
New Hampshire Electric Cooperative, Inc............... 2.2%
Taunton Municipal Lighting Plan....................... .1%
Hudson Light and Power Department..................... .1%
</TABLE>
______________________
* Approximately 66.4% of UI's 17.5% ownership interest has been sold to the
Owner Trustee and is leased back to UI pursuant to the Lease.
UI also holds a 3.685% ownership interest in Millstone Unit 3, a 1,136.73 MW
nuclear electric generating unit in Waterford, Connecticut (Millstone 3). UI
also owns 9.5% of the common stock of Connecticut Yankee Atomic Power Company
and is entitled to 9.5% of the generating capability of its 560.10 MW nuclear
generating unit in Haddam, Connecticut (Connecticut Yankee).
-6-
<PAGE>
UI is subject to the risks attendant upon the ownership of its share of
Seabrook Unit 1, Millstone 3 and Connecticut Yankee. In addition to operational
risks, these risks include the storage, handling and disposal of high-level and
low-level radioactive materials, limitations on the amounts and types of
insurance commercially available in respect of losses that might arise in
connection with nuclear operations, and uncertainties with respect to the
technological and financial aspects of decommissioning nuclear plants at the end
of their licensed lives. The NRC has broad authority under Federal law to
impose licensing and safety-related requirements upon owners of nuclear
generating facilities and, in the event of non-compliance, has the authority to
impose fines or shut down a unit or both, depending upon its assessment of the
severity of the situation, until compliance is achieved. Safety requirements
promulgated by the NRC have, in the past, necessitated substantial capital
expenditures at nuclear plants and additional such expenditure could be required
in the future. In addition, although the Company has no reason to anticipate a
serious nuclear accident at Seabrook 1, Millstone 3, or Connecticut Yankee, if
such an incident did occur, it could have a material but presently
undeterminable adverse effect on the financial position of the Company.
CERTAIN RISKS ATTENDANT UPON BANKRUPTCY PROCEEDINGS OF UI
If the Company were to enter into bankruptcy or reorganization proceedings,
the Company or its bankruptcy trustee could reject the Lease. In such event,
there could be no assurance that the amount of any claim for damages under the
Lease would be allowed in amounts sufficient to provide for the repayment of the
Bonds. Under Section 502(b)(6) of the United States Bankruptcy Code, as
amended, a claim by a lessor for damages resulting from the rejection of a lease
of real property in connection with bankruptcy proceedings affecting the lessee
may be limited to an amount equal to the rent reserved under the lease, without
acceleration, for the greater of 1 year or 15 percent (but not more than 3
years) of the remaining term of the lease, plus rent already due but unpaid. It
is highly likely that a bankruptcy court would find the property covered by the
Lease to be real property, in whole or in part. If such property were held to
constitute personal property, the above limitation would not apply. In any
case, rejection of the Lease by the Company or its bankruptcy trustee would not
deprive the Indenture Trustee of its lien on and security interest in the
Undivided Interest. Rejection of the Lease would deprive the Company of the
benefit of the
-7-
<PAGE>
Undivided Interest and any revenues that could be derived from the sale of the
output thereof.
In a bankruptcy proceeding which is already pending with respect to another
utility, the utility has sought to reject leases of interest in a nuclear
generating unit and to have the restrictions imposed by Section 502(b)(6) of the
Bankruptcy Code applied. In addition, in such proceeding, the utility also
requested the bankruptcy court to declare that the proceeds drawn under letters
of credit provided for the benefit of the equity investors in the lessors under
such leases be credited against the damages that such utility would be liable
for as a result of its rejection of such leases. Such bankruptcy proceeding is
being conducted in a jurisdiction outside the jurisdiction in which the Company
operates or is domiciled. The utility has proposed a plan of reorganization
that if consummated, would result in the utility's request to reject the leases
being rendered moot. To date, no final decision has been rendered with respect
to the claims of such utility with respect to Section 502(b)(6) of the
Bankruptcy Code, and the Company cannot predict at this time the eventual
outcome.
-8-
<PAGE>
FLOW OF FUNDS FOR DEBT SERVICE PAYMENTS ON THE BONDS
This Section consists of a flowchart diagramming the flow of funds for debt
service payments on the Bonds. It looks as follows:
The topmost box labeled "The United Illuminating Company (Lessee)". A line
goes from the bottom of this box down to another box labeled "Indenture
Trustee". The line has the description next to it: "Rental Payments Due Under
the Lease".
From the Identure Trustee box is a line extending to the right that has the
description: "Rental Payments In Excess of Debt Service". This line leads to a
box labeled "Owner Trustee (Lessor)". From this Owner Trustee (Lessor) box line
that has the description "Rental Payments in Excess of Debt Service" extends
downwards to another box labeled "Owner Participant".
From the Indenture Trustee box there is another line extending downwards
that has the description "Debt Service for the Bond" and this line leads to
another box labeled "Bondholders".
USE OF PROCEEDS
Unless the accompanying Prospectus Supplement provides otherwise, the
proceeds of the sale of the Offered Bonds will be used, together with amounts
made available to the Lessor by the Company as basic and supplemental rent or by
the Owner Participant as an additional investment, to enable the Lessor to
redeem the outstanding Initial Series Bonds and to pay certain costs and
expenses incurred in connection with such refinancing.
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THE TRANSACTION AND THE REFINANCING
On August 9, 1990, the Company sold and leased back, on a long-term net
lease basis, an undivided portion representing approximately 66.4% of its 17.5%
ownership interest in Unit 1 (the "Undivided Interest"). The Undivided
Interest, which represents approximately an 11.6% interest in Unit 1, was sold
to Meridian Trust Company, as Owner Trustee under a trust agreement with an
institutional investor as Owner Participant, and as Lessor under a lease (the
"Lease") with the Company. Unit 1 excludes certain transmission, pollution
control and other facilities included in Seabrook 1. At the end of the term of
the Lease and assuming the Company does not exercise any of its purchase options
under the Lease, the Lessor, as owner of the Undivided Interest in Unit 1, will
be entitled to approximately 11.6% of the capacity and energy produced by
Seabrook 1; prior to such time such capacity and energy remain available to the
Company. After the term of the Lease, any person (including the Lessor) other
than the Company that has possession of the Undivided Interest would be required
to compensate the Company for the use of certain of such excluded facilities.
The purchase price of the Undivided Interest was $250,000,000. Of such
purchase price, $38,172,000 was provided by the Owner Participant and
$211,828,000 was provided from the proceeds of the sale of the Initial Series
Bonds. In addition, the Lessor paid, with funds provided by the Owner
Participant, certain fees and expenses incurred in connection with the
Transaction.
Under Statement of Financial Accounting Standards ("SFAS") No. 98, the
Transaction has been accounted for by the Company as a financing and not as a
sale. The Lease obligation was recorded as long-term debt and there were no
changes to utility plant. Certain transaction expenses were included as
financing costs in the Lease payments, while direct expenses of the Company in
connection with the Transaction were booked as unamortized debt expenses, and
will be amortized over the term of the Lease. On an ongoing basis, the monthly
accrual for the semi-annual Lease payments have been divided between interest
and principal components of the Lease obligation.
If the Company exercises its repurchase options either during or at the end
of the lease term, the price paid in excess of the remaining rental payments
owed under the Lease
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attributable to principal, but no greater than 25% of the original principal
($62.5 million), will be included as a cost of financing. This cost would be
amortized over the remaining life of the Seabrook plant. Any repurchase price
in excess of the sum total of the remaining rental payments owed under the lease
attributable to principal plus $62.5 million would be written-off for accounting
purposes.
The Company has determined, in light of prevailing economic and financial
circumstances, to cause a refinancing of the Initial Series Bonds. As part of
the refinancing, the outstanding Seabrook 1 Secured Lease Obligation Bonds,
9.76% Series due January 2, 2006 (the "2006 Initial Series Bonds") and the
Seabrook 1 Secured Lease Obligation Bonds, 10.24% Series due January 2, 2020
(the "2020 Initial Series Bonds") are to be redeemed at the principal amount
thereof, together with the applicable premium and interest accrued thereon to
the redemption date. As of October 1, 1995, there were $74,336,000 aggregate
principal amount of 2006 Initial Series Bonds outstanding and $129,055,000
aggregate principal amount of 2020 Initial Series Bonds outstanding.
The Lessor will obtain the funds required to redeem the Initial Series
Bonds and to pay related expenses from the proceeds of the Offered Bonds and
from basic and supplemental rent payments made by the Company under the Lease or
from the Owner Participant as an additional investment.
SECURITY AND SOURCE OF PAYMENT FOR THE BONDS
The Bonds, which will be without recourse to the general credit of the
Lessor, the Owner Trustee or the Owner Participant and will not be direct
obligations of, or guaranteed by, the Company, will be payable from and secured
by, among other things, a lien on and security interest in the Undivided
Interest, and, subject to certain exceptions, the rights of the Owner Trustee as
Lessor under the Lease, including the right to receive all basic rentals and
certain other payments to be made by the Company (subject in each case to
certain permitted liens). "Owner Trustee" means Meridian Trust Company, acting
not in its individual capacity but solely as owner trustee under the trust
agreement with the Owner Participant in connection with the Transaction. "Owner
Participant" means the corporation that, in
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connection with the Transaction, has acquired a beneficial interest in the owner
trust that is the owner and Lessor of the Undivided Interest. (See "Glossary"
for other capitalized terms that are not otherwise defined.) Excluded from the
Indenture Estate are any and all Excepted Payments and certain other rights.
The Lease provides that basic rent payments to be made by the Company will be
calculated in such amounts as will be sufficient to provide for the payment,
when due, of scheduled payments of principal of and interest on all of the
Bonds. (See "Description of the Lease -- Term and Rentals.") Amounts payable
by the Company under the Lease are general credit obligations of the Company.
The Lease is a net lease, and the Company is unconditionally obligated to make
all payments thereunder. (See "Description of the Lease -- Net Lease.") If a
Lease Event of Default shall have occurred and be continuing under the Lease,
remedies under the Lease may be exercised by the Lessor as described in
"Description of the Lease -- Remedies."
If an Indenture Event of Default shall have occurred and be continuing,
remedies under the Indenture may be exercised as described under "Description of
the Offered Bonds and the Indenture -- Notice; Waiver; Acceleration and
Remedies." If an Indenture Event of Default shall have occurred and be
continuing at a time when there shall not have occurred and be continuing a
Lease Event of Default, the exercise of such remedies may not disturb the
Company's use and possession of the Undivided Interest or require prepayment of
rent under the Lease.
In certain instances, the Company (or the Company and an Affiliate thereof
jointly) may elect or may be required to assume the obligations of the Owner
Trustee under the Indenture and on the Bonds. (See "Description of the Offered
Bonds and the Indenture -- Assumption by the Company.") Upon such an
assumption, the Owner Trustee would be released from its obligations under the
Indenture and on the Bonds. In such case the Holders of such Bonds would retain
the benefit under the Indenture of the lien on and security interest in the
Undivided Interest, and the obligation to make payments on such Bonds would
become a direct obligation of the Company, or the Company and an Affiliate
thereof, as the case may be.
Subject to certain conditions, additional Bonds may be issued under the
Indenture (a) for the purpose of redeeming all or any part of any series of
Bonds previously issued under the Indenture, including the Offered Bonds, and of
providing funds for the payment of certain
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expenses incurred in connection with the issuance of such additional Bonds and
(b) to provide funds for all or a portion of certain alterations, modifications,
additions or capital improvements to Unit 1, subject to certain limitations.
All additional Bonds issued under the Indenture will be secured equally and
ratably with the Offered Bonds.
If the Owner Participant or the Lessor becomes subject to bankruptcy or
reorganization proceedings and, by reason of such proceedings, the Owner
Participant or the Lessor is held to have recourse liability to the Holder of
any Bond or the Indenture Trustee, and such Holder or the Indenture Trustee
actually received payment on account of such recourse liability, such Holder or
the Indenture Trustee, as the case may be, will be required to promptly refund
to the Owner Participant or the Lessor, as appropriate, any amount of such
payment that exceeds the amount that would have been received on or prior to the
date of such payment by such Holder or the Indenture Trustee if the Owner
Participant or the Lessor had not become subject to such recourse liability.
For further information with respect to the source of payment for the Bonds
and with respect to the Indenture, see "Description of the Offered Bonds and the
Indenture."
DESCRIPTION OF THE OFFERED BONDS AND THE INDENTURE
The statements made under this caption are intended to summarize the
Offered Bonds; they do not purport to be complete and are qualified in their
entirety by reference to the Indenture, a copy of the form of which has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. A Prospectus Supplement will describe the following terms of, or
applicable to, the series of Offered Bonds to be issued: (1) the designation of
each series of the Offered Bonds; (2) the aggregate principal amount of each
series; (3) the date on which each series will mature; (4) the rate at which
each series will bear interest and the date from which such interest accrues;
(5) the dates on which interest will be payable; and (6) the prices, terms and
conditions upon which each series may be redeemed by the Owner Trustee prior to
maturity or upon which installment payments of principal will become due and
payable.
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GENERAL
The Offered Bonds will be issued under an Indenture of Mortgage and Deed of
Trust, dated as of August 1, 1990 (the "Indenture"), among the Owner Trustee,
the Company and the Indenture Trustee, as supplemented by a Supplemental
Indenture. The Bank of New York will serve as Indenture Trustee under the
Indenture and will also initially act as registrar and paying agent for the
Offered Bonds.
The Offered Bonds may be surrendered for registration of transfer or
exchange for Offered Bonds of the same series and maturity at the corporate
trust office of the registrar. The registrar will not be required to register
the transfer or exchange of any Offered Bonds called for redemption or during a
period of 15 days preceding a mailing of notice of redemption. No service
charge will be required of any Holder participating in any transfer or exchange
of Offered Bonds with respect to such transfer or exchange, but, with certain
exceptions, payment may be required of any tax or other governmental charges
that may be imposed in connection therewith. (Indenture, Section 2.09)
ABSENCE OF PROTECTION FROM HIGHLY LEVERAGED TRANSACTIONS
The Indenture does not contain any covenants intended to protect Holders in
the event of a highly leveraged transaction involving the Company. If certain
ratings on the Company's senior debt securities are not maintained above
specified levels, and certain other tests are not met, a Deemed Loss Event may
result. See "Description of the Offered Bonds and Indenture -- Assumption by
the Company." Also, a merger or consolidation involving the Company may be
prohibited if, as a result, certain ratings on the Company's senior debt
securities are not maintained. See "Other Agreements - Participation Agreement"
and the discussion of Deemed Loss Events in "Description of the Offered Bonds
and the Indenture -- Assumption by the Company." Although such provisions are
intended for the benefit of the Owner Participant, they may have the indirect
effect of affording protection to the Holders so long as they are in full force
and effect.
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INDENTURE EVENTS OF DEFAULT
The following will be Indenture Events of Default:
(a) any Lease Event of Default described in the following clauses of the
first paragraph in "Description of the Lease -- Lease Events of Default": (i)
clause (a)(x), except a failure of the Company to pay any amount that
constitutes an Excepted Payment or except in the case of a default in the
payment of Casualty Value, Special Casualty Value, or the payment of the equity
portion of Casualty Value or Special Casualty Value, where the Owner Trustee has
not rescinded or terminated the Lease or (ii) clause (e);
(b) the rescission or termination of, or the taking of action by the Owner
Trustee or the Owner Participant the effect of which would be to rescind or
terminate the Lease;
(c) the exercise by the Owner Trustee or the Owner Participant of certain
remedies under the Lease, as a result of which the Company would be obligated to
pay liquidated damages, prior to the occurrence of any of the events set forth
in clause (b) above;
(d) any assignment, sublease or transfer by the Company of the Lease and
the other transaction documents in violation of the terms of the Lease;
(e) breach by the Company of the provisions of the Participation Agreement
relating to the maintenance of its corporate existence and relating to a merger
by the Company into or consolidation of the Company with another entity or the
sale or transfer of all or substantially all of the Company's assets by the
Company (see "Other Agreements --Participation Agreement");
(f) failure by the Owner Trustee to make any payment in respect of the
principal of or premium, if any, or interest on the Bonds within five business
days after the same shall have become due (other than by virtue of any failure
by the Company to make any payment of rent therefor);
(g)(x) failure by the Owner Trustee to perform or observe any covenant or
agreement in the Indenture to be performed or observed by it (other than any
failure by the Owner Trustee
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to pay or cause to be paid any payment of the principal of or premium, if any,
or interest on the Bonds when due), or (y) failure by the Owner Participant to
observe its covenant in the Participation Agreement not to create certain liens
on the Indenture Estate or the trust estate and, in either case, the
continuation of such failure for a period of 30 days after notice thereof has
been given to the Owner Trustee, the Owner Participant and the Company by the
Indenture Trustee or to the Indenture Trustee, the Company, the Owner Trustee
and the Owner Participant by the Holders of at least 25% in aggregate principal
amount of the outstanding Bonds of all series, considered as one class;
provided, however, that the continuation of such failure for a period of 30 days
or more after such notice has been so given (but in no event for a period that
is greater than one year after such notice has been given) shall not constitute
an Indenture Event of Default if (i) such failure can be remedied but cannot be
remedied within such 30 days, (ii) the Owner Trustee or the Owner Participant,
as the case may be, is diligently pursuing a remedy of such failure and (iii)
such failure does not impair in any material respect the mortgage and security
interest created by the Indenture;
(h) any representation or warranty made by the Owner Trustee in the
Participation Agreement, or any representation or warranty made by the Owner
Participant in the Participation Agreement concerning liens against the trust
estate or the Indenture Estate as a result of claims against the Owner
Participant unrelated to the Transaction shall prove to have been incorrect in
any material respect when such representation or warranty was made or given and
remains materially incorrect at the time of discovery; provided, however, that
such failure of such representation or warranty to be correct shall not
constitute an Indenture Event of Default if (i) the facts or circumstances
making such representation or warranty incorrect can be remedied or changed so
that such representation or warranty will henceforth be correct in all material
respects, (ii) the Owner Trustee or the Owner Participant, as the case may be,
is diligently pursuing such a remedy or change, (iii) such remedy or change is,
in fact, accomplished within a period of one year from the time that the Owner
Trustee or the Owner Participant, as the case may be, has been notified of such
misrepresentation or breach of warranty and (iv) such facts or circumstances do
not impair in any material respect the mortgage and security interest created by
the Indenture;
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(i)(x) the Owner Trustee shall file any petition for dissolution or
liquidation of the trust created by the trust agreement or shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or subsequently in effect, or the Owner Trustee shall have consented to the
entry of an order for relief with respect to the trust in an involuntary case
under any such law, or a receiver, custodian or trustee (or other similar
official) shall be appointed for the trust or shall take possession of any
substantial part of its property (other than at the instance of the Indenture
Trustee or the Holders of Bonds), or the Owner Trustee shall make a general
assignment for the benefit of the trust's creditors, or shall enter into an
agreement of composition with the trust's creditors; or (y) there shall be filed
(other than at the instance of the Indenture Trustee or the Holders of Bonds)
against the trust an involuntary petition in bankruptcy which results in an
order for relief being entered or, notwithstanding that an order for relief has
not been entered, the petition is not dismissed within 60 days after the date of
filing of the petition, or there shall be filed (other than at the instance of
the Indenture Trustee or the Holders of Bonds) under any Federal or state law
relating to bankruptcy, insolvency or relief of debtors any petition against the
Owner Trustee for reorganization, composition, extension or arrangement with
creditors that either (i) results in a finding or adjudication of insolvency of
the trust or (ii) is not dismissed within 60 days after the date of the filing
of such petition;
(j)(x) the Owner Participant shall file any petition for dissolution or
liquidation of the Owner Participant, or shall commence a voluntary case, under
any applicable bankruptcy, insolvency or other similar law now or subsequently
in effect, or the Owner Participant shall have consented to the entry of an
order for relief in an involuntary case under any such law, or shall fail
generally to pay its debts as such debts become due (within the meaning of the
United States Bankruptcy Code, as amended), or a receiver, custodian or trustee
(or other similar official) shall be appointed for the Owner Participant or
shall take possession of any substantial part of its property, or the Owner
Participant shall make a general assignment for the benefit of its creditors, or
shall enter into an agreement of composition with its creditors; or (y) there
shall be filed against the Owner Participant an involuntary petition in
bankruptcy that results in an order for relief being entered or, notwithstanding
that an order for relief has not been entered, the petition is not dismissed
within 60 days after the date of the filing of the petition, or there shall be
filed under any Federal or state law relating to bankruptcy, insolvency or
relief of debtors, any petition against the
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Owner Participant for reorganization, composition, extension or arrangement with
creditors that either (i) results in a finding or adjudication of insolvency of
the Owner Participant or (ii) is not dismissed within 60 days after the filing
of such petition and in either such event materially adversely affects the
Holders of the Bonds; or
(k) after a Special Transfer has been effected and amounts payable to the
Owner Participant have been paid in full in accordance with the Participation
Agreement, any violation or breach of any covenant of the Company concerning the
Company's continuing obligation to pay rent under the Lease or concerning its
obligation to effectuate and evidence an assumption as described in "Description
of the Offered Bonds and the Indenture --Assumption by the Company."
(Indenture, Section 7.01)
NOTICE; WAIVER; ACCELERATION AND REMEDIES
The Indenture Trustee, within 90 days after it has knowledge of any
Indenture Default or Indenture Event of Default, is required to give notice
thereof (unless such Indenture Default or Indenture Event of Default shall have
been waived or cured) in writing to the Holders of the outstanding Bonds of all
series, the Owner Trustee, the Owner Participant and the Company; provided that,
except in the case of any Indenture Default or Indenture Event of Default
specified in clause (a) or (f) above, the Indenture Trustee will be protected in
withholding such notice if in good faith it determines that the withholding of
such notice is in the interest of the Holders; and provided, further, that in
the case of an Indenture Event of Default specified in clause (g) above, no such
notice will be given until at least 30 days after the occurrence thereof. In
the event the Indenture Trustee has knowledge of an Event of Loss or Deemed Loss
Event in respect of which there has been a demand for payment under the
Participation Agreement or under any promissory note issued by the Company to
the Owner Participant pursuant to the Participation Agreement or in response to
which a Special Transfer has been effected, the Indenture Trustee shall give
prompt notice thereof, and in any event, within 90 days after occurrence
thereof, to the Holders of the outstanding Bonds. (Indenture, Section 8.02) In
the absence of actual knowledge of a Responsible Officer of the Indenture
Trustee, the Indenture Trustee will not be deemed to have knowledge of any
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Indenture Default or Indenture Event of Default (except the failure of the
Company to pay any installment of basic rent within 5 business days after the
same has become due) unless notified thereof in writing by any Holder, the Owner
Trustee, the Owner Participant or the Company. (Indenture, Section 8.03) The
Company and the Owner Trustee are required to deliver to the Indenture Trustee,
promptly after having obtained knowledge thereof, written notice of any
Indenture Default or Indenture Event of Default, and the Company is required to
deliver to the Indenture Trustee an annual certificate regarding compliance by
the Company with its obligations under the Indenture for the preceding year and
the nature and status of any default by it in the performance of such
obligations. (Indenture, Section 4.12)
The Holders of a majority in aggregate principal amount of the outstanding
Bonds of all series, considered as one class, may on behalf of the Holders of
all Bonds of all series waive any past default under the Indenture and its
consequences, except that only the Holders of all Bonds affected thereby may
waive a default (a) in the payment of the principal of or premium, if any, or
interest on such Bonds, or (b) in respect of a covenant or other provision of
the Indenture that under the Indenture cannot be modified or amended without the
consent of the Holder of each outstanding Bond affected. (Indenture, Section
7.09)
If an Indenture Event of Default has occurred and is continuing, the
Indenture Trustee may, and upon the written request of, and the proffering of
satisfactory indemnity by, the Holders of a majority in aggregate principal
amount of the outstanding Bonds of all series, considered as one class, shall,
declare the unpaid principal amount of all outstanding Bonds, with accrued
interest thereon, to be immediately due and payable, but the Indenture Trustee
shall not make any such declaration in the case of an Indenture Event of Default
that resulted from a failure by the Company to make a payment of rent under the
Lease until the Owner Trustee and the Owner Participant have been given an
opportunity to cure such default as described below under "Rights of Lessor to
Cure and Purchase Bonds." (Indenture, Sections 7.02, 7.16 and 8.03)
Upon the occurrence and during the continuance of an Indenture Event of
Default, the Indenture Trustee may, and upon the written request of, and the
proffering of satisfactory indemnity or security by, the Holders of a majority
in aggregate principal amount of the outstanding Bonds of all series, considered
as one class, shall, subject to the Lessor's
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rights described under the following two paragraphs and under "Rights of Lessor
to Cure and Purchase Bonds" and "Limitation on Remedies" below, exercise any or
all of the rights and remedies available to it under the Indenture and
applicable law, including (a) the institution of judicial proceedings, either at
law or in equity or otherwise, to protect its rights and those of the Holders
under the Indenture or for foreclosure of the lien thereof and (b) the sale in
whole or in part of the Indenture Estate. (Indenture, Sections 7.03 through
7.08 and Section 8.03) Prior to foreclosing on the Undivided Interest, the
Indenture Trustee may be legally required to obtain appropriate approvals from
the NRC with respect to the NRC Facility Operating License for Seabrook 1.
However, the Participation Agreement provides that the Indenture Trustee shall
not have any responsibility to take or initiate any action with respect to any
NRC licensing matter. See "Other Agreements -- Operating Agreement" for a
description of certain other limitations on the sale of the Undivided Interest.
Except in the case of Indenture Events of Default (i) described in clauses
(f) through (k) under "Indenture Events of Default" above and (ii) occurring or
continuing after a Special Transfer or an assumption of the Bonds by the Company
as described below under "Assumption by the Company," and except as described in
the next paragraph, the exercise of remedies against the Company under the Lease
(including the giving of directions and consents under all relevant documents)
will be controlled by the Owner Trustee. In such circumstances, however, the
Owner Trustee will be required to consult with the Indenture Trustee as to any
proposed exercise or pursuit of remedies and the Indenture Trustee will have the
right to cause the Owner Trustee to forbear from such action if the Indenture
Trustee has determined that such action would have a material adverse effect on
the Holders of the Bonds. In addition, the Owner Trustee will not exercise or
pursue remedies in a manner that would unreasonably deprive the Holders of the
Bonds of a material right or remedy unless the Owner Trustee is commensurately
adversely affected. There could be circumstances, therefore, in which amounts
due on the Bonds are not paid and the Indenture Trustee is not able to direct
the Owner Trustee's pursuit of remedies against the Company under the Lease.
(Indenture, Sections 7.03 and 7.17)
Although, as described above, the exercise of remedies will generally be
within the control of the Owner Trustee, the Indenture Trustee will have the
right to sell the Indenture
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Estate in foreclosure or similar proceedings. However, if such sale occurs
prior to or simultaneously with the termination of the Lease, the Indenture
Trustee must have offered to sell to the Owner Trustee the Indenture Estate at a
stated price determined by the Indenture Trustee. If the Owner Trustee does
not, within 60 days following receipt of such offer, elect to so purchase the
Indenture Estate, the Indenture Trustee may foreclose and sell the Indenture
Estate within 180 days to any person (other than the Indenture Trustee or a
Holder or Holders of more than 25% of the outstanding Bonds (including, in each
case, affiliates thereof)) for not less than such stated price. In the event of
a sale by the Indenture Trustee pursuant to a foreclosure or similar proceeding
(other than a sale to the Owner Trustee), the Indenture Trustee will have the
right to terminate the Lease in connection with such sale, subject, however, to
the Company's rights under the Lease described in "Limitation on Remedies"
below. (Indenture, Section 7.17)
If an Indenture Event of Default occurs and is continuing, and the maturity
of the Bonds has been accelerated, any sums held or received by the Indenture
Trustee may be applied to reimburse the Indenture Trustee for any expense (to
the extent not previously reimbursed) incurred by it and to pay its fees and any
other amounts due it prior to any payments to Holders of the Bonds. (Indenture,
Section 3.03)
In the event of a bankruptcy of the Owner Participant, it is possible that,
notwithstanding that the Undivided Interest is owned by the Owner Trustee in
trust, the Undivided Interest and the Lease and Bonds might become subject to
bankruptcy proceedings. In such event, payments under the Lease or on the Bonds
might be interrupted and the ability of the Indenture Trustee to exercise its
remedies under the Indenture might be restricted, although the Indenture Trustee
would retain its status as a secured creditor in respect of the Lease and the
Undivided Interest.
RIGHTS OF LESSOR TO CURE AND PURCHASE BONDS
The Indenture provides that an Indenture Event of Default is to be deemed
cured if such Indenture Event of Default results from a non-payment of rent
under the Lease and the Owner Trustee or the Owner Participant has paid all
principal of and interest on the Bonds due (other than by acceleration) on the
date such rent was payable within 15 days after receipt
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by the Owner Trustee of notice of such nonpayment. However, the Owner Trustee
or the Owner Participant is not permitted to exercise such right to cure the
non-payment of rent with respect to more than four basic rent payment dates or
two consecutive basic rent payment dates during the Lease term. (Indenture,
Section 7.16)
If an Indenture Event of Default has occurred and is continuing and (a) the
Bonds have been accelerated and (b) the Owner Trustee, within 30 days after
receiving notice thereof from the Indenture Trustee, has given written notice to
the Indenture Trustee of its intention to purchase all the Bonds, then, upon
receipt by the Indenture Trustee within 10 business days after such notice from
the Owner Trustee of an amount equal to the aggregate unpaid principal amount of
and interest on the Bonds then outstanding (as well as any interest on overdue
principal and, to the extent permitted by law, overdue interest), each Holder of
a Bond will be required to sell such Bond, and its right, title and interest in
and to the Indenture and the Indenture Estate, to the Owner Trustee. (Indenture
Section 7.16)
LIMITATION ON REMEDIES
Notwithstanding any other provision of the Indenture to the contrary, the
Indenture Trustee may not take or cause to be taken any action contrary to the
Company's rights under the Lease, including, without limitation, any action (x)
contrary to the Company's right to use and possession of the Undivided Interest
or (y) that would require prepayment of any scheduled payment of rent
thereunder, unless (1) an Indenture Event of Default arising out of a Lease
Event of Default shall have occurred and be continuing and (2) the Indenture
Trustee shall have notified the Owner Participant and the Owner Trustee in
writing that it has decided to take steps permitted under the Indenture in
anticipation of the sale of the Indenture Estate in foreclosure or similar
proceedings in accordance with the provisions of the Indenture. In addition, no
Holder shall have any right to pursue any remedy under the Indenture unless the
Indenture Trustee shall have been given written notice of an Indenture Event of
Default, the Holders of at least 25% in principal amount of all Bonds then
outstanding shall have requested the Indenture Trustee to pursue a remedy, the
Indenture Trustee shall have been offered satisfactory indemnity, and the
Indenture Trustee shall have failed to comply with such request within 60 days
after receipt of such request. (Indenture, Sections 7.10 and 7.20)
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ASSUMPTION BY THE COMPANY
Upon the occurrence of an Event of Loss or Deemed Loss Event and subject to
the satisfaction of certain conditions described below, the Company, or the
Company and an Affiliate thereof jointly and severally, may elect, or may be
required upon the direction of the Indenture Trustee or Owner Trustee, to assume
the obligations of the Owner Trustee under the Indenture and on the Bonds. In
addition, the Company may elect to assume the Bonds if it chooses to exercise
any of certain purchase options described under "Description of the Lease --
Purchase Option for Significant Expenditures" or "-- Periodic Purchase Option."
Upon such assumption, the Indenture and the Bonds so assumed will become direct
obligations of the Company (and such Affiliate), the Lease will terminate, the
Undivided Interest of the Lessor in Unit I will be transferred to the Company
(and/or an Affiliate) subject to the lien of the Indenture, and the Owner
Trustee will be released and discharged from all further obligations and
liabilities under the Indenture and on the Bonds so assumed. Although certain
changes would be made to the Indenture to reflect the termination of the Lease,
the lien on and security interest in the Undivided Interest created by the
Indenture would not be affected.
Upon the occurrence of an Event of Loss, Deemed Loss Event or Lease Event
of Default, the Owner Participant can demand that the Company pay the excess of
Casualty Value (in the case of an Event of Loss or Lease Event of Default) or
Special Casualty Value (in the case of a Deemed Loss Event, subject to certain
exceptions) over the principal of and accrued interest on the Bonds then
outstanding. (Participation Agreement, Sections 15(a) and (b), Appendix B) The
Company has issued and delivered to the Owner Participant a promissory note
evidencing the Company's obligation to pay such amounts. Such promissory note is
secured by a lien on and security interest in the Lessee's right to its
leasehold estate under the Lease, and upon a Special Transfer, such promissory
note shall be secured by a lien on and security interest in the beneficial
interest in the owner trust. (Participation Agreement, Section 16) In addition,
upon the occurrence of any such events, the Owner Participant can effect a
Special Transfer of the beneficial interest in the owner trust to the Company.
(Participation Agreement, Section 15(c))
If an Event of Loss or Deemed Loss Event occurred in respect of which the
Owner Participant has demanded payment as described above or in response to
which a Special
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Transfer has been effected, the Company, in order to effectuate and evidence an
assumption of the Owner Trustee's obligations under the Indenture and on the
Bonds, may, and upon the direction of the Indenture Trustee (to be given at the
direction of the Holders of not less than 5% in aggregate principal amount of
the Bonds outstanding of all series, considered as one class) or the Owner
Trustee, shall promptly, commence and diligently pursue all steps requisite to
deliver to the Indenture Trustee, among other things, (a) a duly executed
assumption agreement of the Company (and, if applicable, any of its Affiliates),
(b) an opinion of counsel as to, among other things, compliance with the
conditions of the assumption (including the obtainment of any necessary
governmental actions), (c) an indenture supplemental to the Indenture that,
among other things, confirms the release of the Owner Trustee and contains
provisions amending the Indenture to delete references to the Lease and to
reflect the fact that the obligations of the Owner Trustee have been assumed by
the Company (and, if applicable, such Affiliate), (d) a certificate of
responsible officers of the Company (and, if applicable, such Affiliate) to the
effect that (i) to the best of such officers' knowledge, no Indenture Default or
Indenture Event of Default has occurred and is continuing, (ii) such assumption
is permitted by the provisions of the Company's (and, if applicable, such
Affiliate's) articles of incorporation and by-laws (or similar corporate
documents) and (iii) the Company (and, if applicable, such Affiliate) is not
insolvent at the time of such assumption, and (e) a certificate of a responsible
officer of the Owner Trustee to the effect that, to the best of such officer's
knowledge, no Indenture Default or Indenture Event of Default has occurred and
is continuing. (Indenture, Section 2.16)
Upon satisfaction of the conditions and payment of the amounts described in
the preceding paragraph, the Lessor is required to transfer title to the
Undivided Interest to the Company or an Affiliate of the Company, subject to the
lien of the Indenture. (Lease, Sections 9(c) and (d))
If the Company makes the payments to the Owner Participant as described
above upon the occurrence of an Event of Loss or Deemed Loss Event, but has not
yet delivered the documents listed in the second preceding paragraph, then the
Owner Participant must make a Special Transfer. (Participation Agreement,
Section 15(c))
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Neither the occurrence of an Event of Loss nor a Deemed Loss Event would,
in and of itself, constitute an Indenture Event of Default. Nor would the
occurrence of an Event of Loss or a Deemed Loss Event require the prepayment of
the Bonds. As previously described, the occurrence of such event could require
substantial payments by the Company to the Owner Participant and could result in
the assumption of the Bonds by the Company.
Any of the following events will constitute "Events of Loss":
(a) a final shutdown of Unit I that could result from any of several
events, including, and in some cases, subject to certain grace periods, certain
NRC licensing problems with respect to Unit l, direction by the NRC or other
governmental authority to suspend operation of Unit l for reasons of
radiological health and safety for a period exceeding or reasonably expected (in
the opinion of an independent expert) to exceed 24 consecutive months, cessation
of operation of Unit 1 for such period if resumption of operation would require
concurrence of the NRC or other governmental authority and such cessation lasts
for or is reasonably expected (in the opinion of an independent expert) to last
for a period of 24 months, the occurrence of certain Nuclear Incidents (as
defined in the Atomic Energy Act) with respect to Unit 1 as a result of which
Unit 1 ceases to operate for a period exceeding or reasonably expected (in the
opinion of an independent expert) to exceed 18 consecutive months, the
occurrence of damage to Unit 1 and failure to restore Unit 1 within the shorter
of three years and the period from the occurrence of such damage until the end
of the Lease term, the destruction of Unit 1 or a declaration by the NRC that an
Extraordinary Nuclear Occurrence (as defined in the Atomic Energy Act) has
occurred with respect to Unit 1;
(b) a requisition of title of Unit 1 or the Undivided Interest or certain
shared facilities or the site of Unit 1 by a governmental authority for a period
of time that exceeds or is reasonably expected to exceed the shorter of 60
months and the remaining Lease term, subject to certain contest rights of the
Company; or
(c) a requisition of the use of Unit 1 or the Undivided Interest or
certain shared facilities or the site of Unit 1 by a governmental authority,
other than a requisition of title, which would significantly interfere with the
use of Unit 1 or the Undivided Interest,
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and which requisition is for a period of time that exceeds or is reasonably
expected to exceed the shorter of 60 months and the remaining Lease term,
subject to certain contest rights of the Company.
Any of the following events will constitute "Deemed Loss Events":
(a) the Lessor or Owner Participant becoming subject to adverse regulation
as a public utility solely as a result of the Transaction;
(b) certain changes and/or new interpretations by a governmental authority
regarding applicable law, including the Price-Anderson Act, the Atomic Energy
Act, the Nuclear Waste Act or NRC regulations, as a result of which (i) the
Lessor or the Owner Participant would more likely than not become liable or
responsible in any capacity for payments owed in respect of the nuclear waste
fund or in respect of, among other things, the handling or disposal of nuclear
waste and other radioactive or hazardous materials or (ii) the Lessor or the
Owner Participant may be prohibited from asserting the limitation on liability
of lessors provided by the 1988 amendments to the Price-Anderson Act or is more
likely than not to be prohibited from asserting any other material right,
protection or defense available under applicable law as of the date of closing
of the Transaction with respect to civil or criminal actions brought in
connection with a nuclear incident;
(c) the Lessor or Owner Participant more likely than not being required to
become a licensee under the Atomic Energy Act or otherwise subject to the Atomic
Energy Act or otherwise subject to NRC or other significant regulation relating
to nuclear, energy, environmental or safety matters solely as a result of the
Transaction;
(d) any governmental action or change in applicable law or (subject to
certain contest rights of the Company) any claim under New Hampshire law or
interpretation thereof, the effect of which is more likely than not to (i) cause
the Lessor or the Owner Participant to become liable with respect to the
decommissioning of Unit 1 or for funding any portion of any trust or other fund
established to provide for the decommissioning of Unit 1 or (ii) constitute an
assertion that (x) the exercise of certain rights of the Lessor or the Owner
Participant under any of the transaction documents would constitute
impermissible control
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over Unit 1 or the licensees of Unit 1 or would violate certain NRC or Atomic
Energy Act regulations or (y) the acquisition or transfer of the Undivided
Interest would violate applicable law;
(e) subject to certain exceptions and excluding certain outage time, Unit
1 having operated in three consecutive calendar years at a capacity factor below
60 percent; or
(f) at such times as the Company's senior long-term debt is rated below
BBB and Baa2 by Standard & Poor's Corporation and Moody's Investors Service
Inc., respectively, (i) the ratio of the Company's available earnings to
interest charges for any calendar year ending during such time is less than 1.5
to 1.0, (ii) the Company's unconsolidated indebtedness, exclusive of up to $10
million of short-term debt, exceeds 62 1/2% of the cost of the Company's
properties less depreciation thereon, as shown on its books of account
maintained for regulatory purposes, or (iii) the ratio of the aggregate current
and noncurrent liabilities of the Company to total assets of the Company at
December 31 of any year during such time shall be greater than 0.8 to 1.0.
The Company may, at its option, but is not required to, assume all or a
portion of the Bonds if it chooses to exercise any of certain purchase options
described under "Description of the Lease -- Purchase Option for Significant
Expenditures" or "-- Periodic Purchase Option." Any such assumption would be
conditioned upon the prior delivery to the Indenture Trustee of the documents
listed in clauses (a) through (e) of the third paragraph under the heading "--
Assumption by the Company". (See Indenture, Section 2.16(b); Lease, Sections
13(f) and (g))
DEFEASANCE
The Bonds of any series, or any portion of the principal amount thereof,
will, prior to the maturity thereof, be deemed to have been paid for purposes of
the Indenture, and the entire indebtedness of the Owner Trustee (or other
obligor thereon) in respect thereof will be deemed to have been satisfied and
discharged, if the Owner Trustee shall have irrevocably deposited with the
Indenture Trustee, in trust, either:
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(a) money in an amount that will be sufficient or
(b) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America or
certificates of an ownership interest in the principal of or interest on any of
such obligations, in each case not containing provisions permitting the
redemption or other prepayment thereof at the option of the issuer (such
obligations and certificates being hereinafter called "Federal Securities") the
principal of and the interest on which when due, without any reinvestment
thereof, will provide money that, together with the money, if any, deposited
with or held by the Indenture Trustee, will be sufficient, to pay when due the
principal of and premium, if any, and interest due and to become due on such
Bonds on and prior to the maturity date, installment payment date or redemption
date thereof, as the case may be; provided, however, that such Bonds will not be
deemed to have been satisfied and discharged unless, among other things, there
shall have been delivered to the Indenture Trustee, (i) if Federal Securities
shall have been deposited with the Indenture Trustee, an opinion of an
independent public accountant to the effect that such obligations constitute
Federal Securities and (ii) if such deposit shall have occurred more than one
year prior to the stated maturity of principal or redemption date of such Bonds,
an opinion of counsel to the effect that such satisfaction and discharge of the
indebtedness of the Owner Trustee with respect to such Bonds shall not be deemed
to be, or result in, a taxable event with respect to the Holders of such Bonds
for purposes of Federal income taxation, except that no such opinion of counsel
need be delivered if the Indenture Trustee shall have received documentary
evidence that each Holder of such Bonds either is not subject to, or is exempt
from, Federal income taxation. (Indenture, Section 11.01)
RELEASES
The Indenture Trustee will release from the lien of the Indenture any
property subject to the lien thereof that is taken by any governmental authority
pursuant to a power of eminent domain or other right to acquire such property
(whether or not such taking constitutes an Event of Loss) upon its receipt of,
among other things, a written request from the Owner Trustee or the Company
requesting such release and the net proceeds of any property so taken.
(Indenture, Section 13.01)
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Subject to the following paragraph, the Owner Trustee or, with the consent
of the Owner Trustee, the Company, may obtain the release from the lien of the
Indenture of the Owner Trustee's interest in any component of Unit 1 the removal
of which would not materially impair the operating capacity, cost efficiency,
utility or value of Unit 1, and the Indenture Trustee will release from the lien
of the Indenture its interest in any such component upon its receipt of, among
other things, a written request from the Owner Trustee or the Company requesting
such release and a certificate of an engineer or other expert (who may in
certain cases be an employee of the Owner Trustee or the Company or any
Affiliate of either thereof) certifying (x) the fair value of the property to be
released and (y) that, in the opinion of such expert, the proposed release will
not impair the security under the Indenture in violation of the provisions
thereof. (Indenture, Section 13.02)
In addition to the release provisions described above, the Owner Trustee or
the Company, with the Owner Trustee's consent, may sell or otherwise dispose of,
free from the lien of the Indenture and without obtaining any release or other
consent from the Indenture Trustee, the Owner Trustee's interest in any
components of Unit 1 that have become obsolete or otherwise permanently no
longer useful for the operation of Unit 1. All replacement components
incorporated in Unit 1 will, to the extent of the Owner Trustee's interest
therein, immediately become subject to the lien of the Indenture. (Indenture,
Section 13.03)
SUPPLEMENTAL INDENTURES
Without the consent of the Holders of any Bonds, the Owner Trustee, the
Company and the Indenture Trustee may enter into supplemental indentures for the
following purposes:
(a) to establish the form and terms of Bonds of any series;
(b) to evidence the succession of another corporation to the Company and
the assumption by any such successor of the covenants of the Company contained
in the Indenture, or to evidence the succession of another bank or trust company
to the Owner Trustee and the assumption by any such successor of the covenants
of the Owner Trustee contained in the Indenture and in the Bonds or the
appointment of a co-trustee pursuant to the terms of the Trust Agreement;
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(c) to evidence the succession of a new trustee or the appointment of a
co-trustee or a separate trustee under the Indenture;
(d) to grant or confer upon the Indenture Trustee for the benefit of the
Holders any additional rights, remedies, powers, authority or security that may
be lawfully so granted or conferred and which grant or conferral is not contrary
to or inconsistent with the Indenture;
(e) to add to the covenants of the Owner Trustee or the Company for the
benefit of the Holders or to evidence the surrender of any right or power
conferred in the Indenture upon the Owner Trustee or the Company;
(f) to convey, transfer and assign to the Indenture Trustee, and to
subject to the lien of the Indenture, additional properties or assets, or to
correct or amplify the description of any property at any time subject to the
lien of the Indenture, or to assure, convey and confirm unto the Indenture
Trustee any property subject or required to be subject to the lien of the
Indenture;
(g) to modify, eliminate or add to the provisions of the Indenture to the
extent necessary to continue the qualification of the Indenture (including any
supplemental indenture) under the Trust Indenture Act of 1939, as amended, or
under any similar Federal statute subsequently enacted, or to add (subject to
certain exclusions) to the Indenture such other provisions as may be expressly
permitted by that Act;
(h) to permit or facilitate the issuance of Bonds in uncertificated form;
(i) to change or eliminate any provision of the Indenture; provided,
however, that if such change or elimination will adversely affect the interests
of the Holders of Bonds of any series, such change or elimination will become
effective with respect to such series only when no Bond of such series remains
outstanding;
(j) to evidence an assumption by the Company of the Bonds, and the release
of the Owner Trustee from its obligations thereon, and to make the related
changes in the Indenture;
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(k) to cure any ambiguity or to correct or supplement any provision in the
Indenture that may be defective or inconsistent with any other provision in the
Indenture;
(l) to accomplish any adjustments of the principal amounts of Bonds to be
redeemed through operation of sinking funds or to be prepaid in an installment
payment of principal; or
(m) to make any other provisions with respect to matters or questions
arising under the Indenture, provided such action shall not adversely affect the
interest of the Holders of the Bonds then outstanding in any material respect.
Without limiting the generality of the foregoing, if the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), is amended after the date
of the Indenture to require changes to the Indenture or the incorporation
therein of additional provisions or permit changes to, or the elimination of,
provisions that, at the date of the Indenture or at any time thereafter, are
required by the Trust Indenture Act to be contained in the Indenture, the
Company, the Indenture Trustee and the Owner Trustee may, without the consent of
any Holders, enter into one or more supplemental indentures to effect or reflect
any such change, incorporation or elimination.
(Indenture, Section 10.01)
Subject to the foregoing paragraphs, with the consent of the Holders of not
less than a majority in aggregate principal amount of the outstanding Bonds of
all series, considered as one class, the Owner Trustee and the Company may, and
the Indenture Trustee shall, enter into supplemental indentures for the purpose
of adding any provisions to, or changing in any manner or eliminating any of the
provisions of, the Indenture; provided that if there is more than one series of
Bonds outstanding and if a proposed supplemental indenture directly affects the
Holders of at least one, but not all, of such series, then only the consent of a
majority in aggregate principal amount of the outstanding Bonds of all series so
directly affected, considered as one class, will be required; and provided,
further, that without the consent of the Holder of each outstanding Bond
directly affected thereby no such supplemental indenture may:
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(a) change the stated maturity of the principal of, or any installment of
interest on, or the date or circumstances of payment of premium, if any, on, any
Bond, or reduce the principal amount thereof or the interest thereon or any
premium payable upon the redemption thereof, or change the coin or currency in
which, any Bond or the premium, if any, or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment of
principal or interest on or after the stated maturity thereof (or, in the case
of redemption, on or after the redemption date) or such payment of premium, if
any, on or after the date such premium becomes due and payable, or change the
dates or amounts of payments to be made through the operation of the sinking
fund in respect of such Bonds, except as otherwise described herein;
(b) except as described under "Releases" or "Assumption by the Company"
above, permit the creation of any lien prior to or, except with respect to
additional series of Bonds issued in accordance with the Indenture, equal to the
lien of the Indenture with respect to any of the Indenture Estate, or deprive
any Holder of the benefit of the lien of the Indenture upon any part of the
Indenture Estate for the security of its Bonds;
(c) reduce the percentage in principal amount of the outstanding Bonds the
consent of whose Holders is required for any supplemental indenture or for any
waiver provided for in the Indenture or reduce the requirements of the Indenture
relating to (1) a quorum for meetings of Holders or (2) action taken by Holders
pursuant to the Indenture at meetings thereof;
(d) modify the orders of priority in which distributions of income and
proceeds from the Indenture Estate are to be made under the Indenture;
(e) modify the definitions of "Outstanding", "Indenture Default" or
"Indenture Event of Default"; or
(f) modify any of the above provisions or the provisions of the Indenture
dealing with waivers of past defaults, except to increase the percentage of the
Holders whose consent is required for certain action or to provide that certain
other specified provisions of the
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Indenture cannot be modified or waived without the consent of the Holder of each
Bond affected thereby.
(Indenture, Section 10.02)
LIMITATIONS ON AMENDMENTS OF OTHER DOCUMENTS
The Indenture Trustee, without the consent of the Holders of any Bonds, (a)
will, upon receipt of written instructions to such effect from the Company and
the Owner Trustee, consent to amendments of or supplements to, or waivers of any
provisions of, the Lease or any other transaction document included in the
Indenture Estate or (b) may join in the execution of amendments of or
supplements to, or waivers of any provisions of, the Participation Agreement, in
each case for the purpose of adding any provision to, or changing in any manner
or waiving or eliminating any provisions of, any such transaction document;
provided, however, that, without the consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding Bonds of all series,
considered as one class, the Indenture Trustee will not consent to any such
amendment, supplement or waiver that amends or waives certain provisions of the
Lease relating to, among other things, liens, the right of the Company to assign
or sublease its rights and obligations under the Lease, certain Lease Events of
Default or the exercise of remedies under the Lease; and provided, further,
that, without the consent of the Holders of the outstanding Bonds of all series,
the Indenture Trustee will not consent to any such amendment, supplement or
waiver that will:
(1) amend or waive certain provisions of the Lease relating to, among
other things, the sufficiency of certain rental payments to provide funds at
least equal to amounts payable on the Bonds, the "net lease" obligations of the
Company thereunder and the Company's unconditional obligation to make basic
rental and certain other payments under the Lease, the obligation of the Owner
Trustee to redeem the Bonds in the event of an obsolescence termination of the
Lease by the Company, or the Lease Event of Default occasioned by the failure of
the Company to pay basic rent when due;
(2) modify the definitions of "Default" or "Event of Default" under the
Lease; or
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(3)(A) release the Company from its obligation to pay basic rent, Casualty
Value, Special Casualty Value or any payment required to be made by it pursuant
to an exercise of remedies under the Lease or (B) reduce the amount or change
the timing of any payments of basic rent, Casualty Value, Special Casualty Value
or any payments required to be made by the Company pursuant to an exercise of
remedies under the Lease so that such payments would be insufficient to pay the
principal of, and interest on, the outstanding Bonds of all series when due.
(Indenture, Section 10.03)
If in the opinion of the Indenture Trustee any document required to be
executed by it in accordance with the provisions of the Indenture described in
the proceeding paragraph and the third paragraph under "Supplemental Indentures"
adversely affects any interest, right, immunity or indemnity in its favor under
the Indenture or the Participation Agreement, the Indenture Trustee may in its
discretion decline to execute such document.
(Indenture, Section 10.05)
LIMITATION OF LIABILITY
The Bonds will not be direct obligations of, or guaranteed by, the Company,
the Owner Participant, or any institution or individual acting as Owner Trustee
in its individual capacity. All payments to be made by the Owner Trustee under
the Indenture or on the Bonds will be made only from the Indenture Estate or the
income and proceeds received by the Indenture Trustee therefrom. Neither the
Owner Participant, the Indenture Trustee nor, except as otherwise expressly
provided in the Indenture, the Owner Trustee in its individual capacity will be
liable to any Holder (nor, in the case of the Owner Participant and the Owner
Trustee in its individual capacity, to the Indenture Trustee) for any amounts
payable on any Bonds or otherwise under the Indenture. (Indenture, Section
2.15)
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ADDITIONAL BONDS
The Indenture permits the issuance of additional Bonds at any time or from
time to time, subject to certain conditions, for cash in the original principal
amount of such additional Bonds for the following purposes: (a) refunding any
previously issued series of Bonds in whole or in part and providing funds for
the payment of certain expenses incurred in connection therewith and/or (b)
providing funds for all or any portion of the Owner Trustee's share of certain
capital improvements to Unit 1. (Indenture, Section 2.05) (Such capital
improvements would be the property of the Owner Trustee and would be subject to
the lien of the Indenture.) All of the Bonds issued and outstanding under the
Indenture will rank on a parity with each other and will as to each other be
secured equally and ratably thereunder, without preference, priority or
distinction of any thereof over any other by reason of difference in time of
issuance or otherwise. (Indenture, Section 2.03)
DESCRIPTION OF THE LEASE
The statements contained under this caption are intended to summarize the
Lease as it relates to the Offered Bonds; they do not purport to be complete and
are qualified in their entirety by reference to the Lease, a copy of the form of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
TERM AND RENTALS
The Lessor has acquired its Undivided Interest and has leased such interest
to the Company pursuant to the Lease, which has a term expiring on July 2, 2021
unless earlier terminated or extended as described below. Basic rent is
required to be paid by the Company under the Lease in immediately available
funds on each January 2 and July 2, commencing July 2, 1991 and ending July 2,
2021. (Lease, Sections 2(b) and 3(a)) The amount of basic rent payable under
the Lease on each basic rent payment date will be calculated to be at least
equal to the scheduled amount of principal of and interest then payable on all
Bonds then outstanding. (Lease, Section 3(g)) The term of the Lease and the
rent payable thereunder have been determined assuming that the NRC Facility
Operating License for Seabrook 1 shall be
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extended to May 25, 2029, as contemplated by the Participation Agreement. In
the event that such license is not so extended, the term of the Lease shall end
on July 2, 2019 unless earlier terminated as described below, and rent and
amounts payable as Casualty Value and Special Casualty Value shall be adjusted
accordingly. (Lease, Section 3(e)) Each payment of basic rent by the Company
during such time as the Indenture is in effect will be made to the Indenture
Trustee and applied first to the payment of principal and interest due from the
Lessor on the Bonds. Except in the case of an acceleration of Bonds due to a
continuing Indenture Event of Default, the balance of any payments of basic rent
under the Lease, after payment of the scheduled principal of and premium, if
any, and interest on the Bonds, will be distributed to the Owner Trustee on
behalf of the Owner Participant, as beneficial owner of the trust that is the
owner of the Undivided Interest. (Indenture, Sections 3.01, 3.03 and 3.06).
NET LEASE
The obligations of the Company under the Lease are those of a lessee under
a "net lease," and the Company will be responsible under the Lease for paying
all insurance premiums, operating and maintenance costs, decommissioning costs
and all other similar costs associated with the Undivided Interest. Payments of
rent under the Lease by the Company are to be made without counterclaim, setoff,
defense, abatement, suspension or reduction except for certain rights of setoff
the exercise of which would not reduce the amount of rent required to be paid by
the Company to an amount insufficient to pay in full the principal of, premium,
if any, and interest on the Bonds then due. (Lease, Section 4)
CAPITAL IMPROVEMENTS
The Company may incur costs from time to time in connection with capital
improvements to Unit 1. Certain of such costs, based on the Owner Trustee's
proportionate interest in Unit 1, may be financed through a Supplemental
Financing. (See "Description of the Offered Bonds and the Indenture --
Additional Bonds.") In the event of such a Supplemental Financing, the rent
under the Lease will be increased to cover the additional debt service. In
addition, the Owner Participant may elect to make an additional equity
investment with
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respect to the cost of any capital improvements on terms to be agreed upon.
(Lease, Section 8(f))
RIGHTS TO ASSIGN OR SUBLEASE
The Company is permitted to assign, sublease, encumber or transfer its
rights and obligations under the Lease or other documents related to the
Transaction so long as the Company remains the primary obligor on the Lease and
such documents. (Lease, Section 11)
INSURANCE
The Company is required under the Lease to carry and maintain (or cause any
operator of Unit 1 to maintain) the insurance described below:
(a) Provided that such insurance is commercially available at a
commercially reasonable cost, "all-risk" property insurance (excluding flood and
earthquake insurance) covering physical loss with respect to the Undivided
Interest;
(b) Provided that such insurance is commercially available at a
commercially reasonable cost, bodily injury and property damage liability
insurance covering claims arising out of the ownership, operation, maintenance,
condition or use of Unit 1; and
(c) Nuclear liability insurance.
With respect to each of the types of insurance described in (a) through (c)
above, the Company is required to maintain (or cause any operator of Unit 1 to
maintain) such insurance in such amounts and with such terms as are consistent
with the Operating Agreement, and in any event in such amounts and with such
terms as are consistent with applicable law and prudent utility practice. The
nuclear liability insurance referred to in (c) above is discussed under "Nuclear
Generation -- Insurance Requirements" in the Company's Annual Report on Form 10-
K for the year ended December 31, 1994. The Company is also required to
maintain supplier's and transporter's insurance and master workers policy
coverages, in each case in
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amounts consistent with the Operating Agreement, prudent utility practice and
applicable law. The Company will use its best efforts to cause all policies of
insurance as described above to include the Owner Trustee, the Owner Participant
and the Indenture Trustee, as additional insureds and loss payees. (Lease,
Section 10)
Proceeds of property insurance received by the Lessor or the Company as a
result of the occurrence of an Event of Loss shall be applied in reduction of
the Company's obligation to make payment of the excess of Casualty Value over
the principal of and accrued interest on the Bonds to the Owner Participant with
the balance, if any, of such proceeds to be paid to the Company, subject,
however, to any priority allocation of such proceeds as may be required by law
in the event of stabilization and decontamination activities. (Lease, Section
9(g)) In general, any rights of the Indenture Trustee in respect of the
proceeds of property insurance will be limited to amounts then due and owing in
respect of the principal of and premium, if any, and interest on the Bonds.
PURCHASE AND RENEWAL OPTIONS AT THE END OF THE LEASE TERM
The Company has the option under the Lease to purchase the Lessor's
Undivided Interest (i) at the end of the basic term of the Lease for a purchase
price equal to the lesser of (A) the estimated fair market value at the end of
the basic lease term as determined by an appraiser as of the closing date of the
Transaction, and (B) the fair market sales value at the end of the basic lease
term or (ii) on the date of the expiration of any renewal term (if elected) for
a purchase price equal to the fair market sales value at such date, or to renew
the Lease for one or more periods of three years, at a fair market rental value
or, subject to receipt of a satisfactory appraisal, which will address certain
tax matters, to renew the Lease at the end of the initial Lease term at a fixed
rate rental for a single period of at least two years. (Lease, Sections 12 and
13) If the Company does not give notice of its election to exercise the options
to purchase the Undivided Interest or renew the Lease two years prior to the
expiration of the Lease, the Lessor may, on at least one year's prior written
notice, terminate the Lease on the date specified in the notice. Upon such
termination, the Company must pay to the Lessor all basic rent then due or
accrued, together with any other amounts then payable to the Owner Trustee, the
Owner Participant and the Indenture Trustee. On or prior to such termination,
the Lessor would be required to deposit
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with the Indenture Trustee cash in an amount equal to the unpaid principal
amount of all Bonds outstanding on such date, and all premium, if any, and
interest accrued or to accrue on and as of such termination. (Lease, Section
14(c))
PURCHASE OPTION FOR SIGNIFICANT EXPENDITURES
The Company has the option on any January 2 or July 2 on or after January
2, 2000 to terminate the Lease if the Company is planning or required to make
any significant expenditure for certain types of capital improvements to Unit 1.
On such January 2 or July 2, the Company must pay to the Lessor an amount equal
to the higher of the fair market sales value of the Undivided Interest and
Casualty Value determined as of such January 2 or July 2 together with any other
amounts then payable to the Owner Trustee, the Owner Participant and the
Indenture Trustee and, assuming such payment, the Lessor would be required to
transfer the Undivided Interest to the Company. If the Company has assumed all
or a portion of the Bonds then outstanding, such amount shall be reduced by the
principal amount of the Bonds so assumed. A "significant expenditure" is an
expenditure or series of expenditures with respect to certain capital
improvements to Unit 1 that (i) for the period from the Transaction closing date
until and including, the date immediately preceding the twentieth anniversary of
the closing date, shall have been reasonably estimated by the Company to exceed
$250,000,000 (which amount shall be periodically adjusted for inflation) and
(ii) for the period from the day next succeeding the last day of the period
specified in clause (i) above until the end of the Lease term, shall have been
reasonably estimated by the Company to exceed $100,000,000 (which amount shall
be periodically adjusted for inflation). (Lease, Section 13(f))
PERIODIC PURCHASE OPTION
The Company has the option on January 2 in each of the years 2001, 2006 and
2011 to terminate the Lease and to purchase the Undivided Interest. On such
January 2, the Company must pay the Lessor (x) if it exercises such option on
January 2, 2001 or January 2, 2011, an amount equal to the higher of the fair
market sales value of the Undivided Interest and Casualty Value determined as of
such January 2, together with any other amounts then payable to the Owner
Trustee, the Owner Participant and the Indenture Trustee or (y) if it exercises
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such option on January 2, 2006, an amount equal to the higher of the estimated
fair market value of the Undivided Interest on January 2, 2006 as determined by
an appraiser as of the closing date of the Transaction and Casualty Value
determined as of such January 2, 2006, together with any other amounts then
payable to the Owner Trustee, the Owner Participant and the Indenture Trustee.
If the Company has assumed all or a portion of the Bonds then outstanding, such
amount shall be reduced by the principal amount of the Bonds so assumed.
(Lease, Section 13(g))
TERMINATION FOR OBSOLESCENCE
The Company has the option on any January 2 or July 2, on or after January
2, 2001, to terminate the Lease if the Company's Board of Directors determines,
in its sole discretion, that the Company's leasehold interest in the Undivided
Interest is uneconomic or obsolete for the Company's purposes. In such event,
the Lessor may elect to either retain the Undivided Interest or sell it to the
highest bidder. On the Lease termination date, if the Lessor has not elected to
retain the Undivided Interest, the Lessor will be required to sell the Undivided
Interest to the highest bidder (which may not be either the Company or any
Affiliate thereof) and the Company must pay to the Lessor an amount equal to the
excess, if any, of Special Casualty Value as of the termination date over such
net sale price, and any other amounts then payable to the Owner Trustee, the
Owner Participant and the Indenture Trustee; provided, however, that if the
highest bid shall be less than Special Casualty Value, the Lessee may reject the
bid, in which case no sale shall occur. If no such sale shall occur or if the
Company shall not have fulfilled its obligations in respect of such termination,
the Lease will continue in full force and effect. (Lease, Sections 14(a) and
14(b)) In the event of such a termination, the Bonds will be redeemed.
(Indenture, Section 5.02(a))
LEASE EVENTS OF DEFAULT
The following are Lease Events of Default:
(a) the Company shall fail to make, or cause to be made, (x) any payment
of basic rent, Casualty Value, Special Casualty Value, or the payment of the
equity portion of
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Casualty Value or Special Casualty Value or any other amount determined by
reference to any of such amounts, pursuant to any of the transaction documents,
within five business days after the same shall become due or (y) any payment of
supplemental rent (other than Casualty Value, Special Casualty Value, or the
payment of the equity portion of Casualty Value or Special Casualty Value)
including, without limitation, any payments due under the Tax Indemnification
Agreement or the general tax indemnification provisions of the Participation
Agreement, within 20 days after the same shall become due or be demanded, as the
case may be; or
(b) the Company shall (x) fail to perform or observe any covenant,
condition or agreement to be performed or observed by it under the Participation
Agreement relating to the maintenance of its corporate existence and maintenance
of certain of its material franchises and the conditions under which it may
merge, consolidate or dispose of all or substantially all of its assets or the
assignment and sublease provisions of the Lease or (y) fail to make payments
referred to in the portion of the decommissioning provisions of the
Participation Agreement concerning funding therefor at the times and in the
manner so required (unless the obligation to make such payment shall be
permitted to be, and is currently being, contested in accordance with such
provisions) within ten business days after the same shall become due; or
(c) the Company shall fail to perform or observe any covenant, condition
or agreement (other than those referred to in clauses (a), (b) and (f) of this
paragraph) to be performed or observed by it under the Lease or any other
transaction document (other than under the Tax Indemnification Agreement or
under certain general tax indemnity provisions of the Participation Agreement),
and such failure shall continue for a period of 30 days after there shall have
been given to the Company by the Lessor or the Owner Participant a notice
specifying such failure and requiring it to be remedied; provided, however, that
the continuation of such failure for a period of 30 days or more after such
notice has been so given (but in no event for a period that is greater than one
year after such notice has been given) shall not constitute a Lease Event of
Default if (a) such failure can be remedied but cannot be remedied within such
30 days, (b) the Company is diligently pursuing a remedy of such failure and (c)
such failure does not impair in any material respect the Company's ability to
perform its obligations under any of the transaction documents to which the
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Company is a party, or the Lessor's interest in Unit 1 or the mortgage and
security interest created by the Indenture; or
(d) any representation or warranty made by the Company in the Lease, any
other transaction document (other than the Tax Indemnification Agreement) or any
agreement, document or certificate delivered by the Company in connection with
the Transaction shall prove to have been incorrect in any material respect when
such representation or warranty was made or given, if such representation or
warranty continues to be material and remains materially incorrect at the time
in question; provided, however, that such failure of such representation or
warranty to be correct shall not constitute a Lease Event of Default if (i) the
facts or circumstances making such representation or warranty incorrect can be
remedied or changed so that such representation or warranty will thenceforth be
correct in all material respects, (ii) the Company is diligently pursuing such a
remedy or change, (iii) such remedy or change is, in fact, accomplished within a
period of one year from the time that the Company has been notified of or has
knowledge of such misrepresentation or breach of warranty and (iv) such facts or
circumstances do not impair in any material respect the Company's ability to
perform its obligations under any of the transaction documents to which the
Company is a party, or the Lessor's interest in Unit 1 or the mortgage and
security interest created by the Indenture; or
(e)(x) the Company shall (i) admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due, (ii) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (iii) make a general assignment for the benefit of its creditors,
(iv) commence a voluntary case under the U.S. Bankruptcy Code, (v) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or readjustment of debts,
(vi) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the U.S.
Bankruptcy Code, or (vii) take any corporate action for the purpose of effecting
any of the foregoing; or (y) a proceeding or case shall be commenced, without
the application or consent of the Company, in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or
winding-up, or the composition or adjustment of its debts, (ii) the appointment
of a trustee, receiver,
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custodian, liquidator or the like of the Company or of all or any substantial
part of its assets, or (iii) similar relief in respect of the Company under any
law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of
60 or more days; or an order for relief against the Company shall be entered in
an involuntary case under the U.S. Bankruptcy Code; or
(f) any suspension, revocation or termination of the nuclear liability
insurance required to be maintained under the Lease; provided, however, that
such suspension, revocation or termination shall not constitute a Lease Event of
Default solely because the applicable insurer has failed to comply with
applicable notice termination provisions of the pertinent policy; and provided,
further, that the foregoing proviso shall cease to apply upon the earlier of (x)
five business days following receipt by the Company of actual notice of such
suspension, revocation or termination or (y) the applicable termination date of
such policy assuming that the insurer had complied with its notice obligations
under the pertinent policy; or
(g) any material obligation of the Company under the Lease or any other
transaction document to which it is a party shall at any time for any reason
cease to be valid and binding on the Company, or shall be declared to be null
and void (except as to judgments of a state court that have been effectively
stayed pending appeal and that, during such stay, shall not have a material
adverse effect on the Lessor, the Owner Participant or the Holders of the
Bonds), or the validity or enforceability thereof shall be contested by the
Company, or any court or administrative agency shall issue an order upholding a
governmental agency or authority contest of the validity or enforceability
thereof (except as to such orders that have been effectively stayed pending
appeal and that, during such stay, shall not have a material adverse effect on
the Lessor, the Owner Participant or the Holders of the Bonds), or the Company
shall assert that it has no further liability or obligation under the Lease or
any other transaction document to which it is a party; or
(h) final judgment for the payment of money in excess of $10,000,000 shall
be rendered against the Company and the Company shall not have discharged the
same or provided
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for its discharge in accordance with its terms or bonded the same or procured a
stay of execution thereof within 60 days from the entry thereof.
(Lease, Section 15)
REMEDIES
Upon the occurrence and continuance of any Lease Event of Default, the
Lessor may declare the Lease to be in default by written notice to the Company
and may exercise one or more of the remedies set forth in the Lease, which
include the following: (a) the Lessor may terminate the Lease; (b) the Lessor
may repossess the Undivided Interest; (c) the Lessor may sell the Undivided
Interest or any part thereof; (d) the Lessor may hold, keep idle or lease to
others all or any part of the Undivided Interest; (e) the Lessor may demand any
unpaid rent plus, as liquidated damages, any of the following amounts that the
Lessor, in its sole discretion, shall specify: (i) an amount equal to the excess
of Casualty Value over the fair market rental value of the Undivided Interest
until the end of the remaining useful life of Unit 1 (discounted to present
value), (ii) an amount equal to the excess of Casualty Value over the fair
market sales value of the Undivided Interest, (iii) an amount equal to the
excess of the present value of all installments of basic rent until the end of
the Lease term over the present value of the fair market rental value of the
Undivided Interest until the end of such term, or (iv) an amount equal to the
highest of Casualty Value, such discounted fair market rental value and such
fair market sales value; and (f) if the Lessor shall have sold all the Undivided
Interest pursuant to clause (c) above, the Lessor, in lieu of exercising its
rights under clause (e) above may demand that the Company pay to the Lessor, as
liquidated damages, any unpaid rent plus the amount of any deficiency between
the sale proceeds and Casualty Value, together with interest on the amount of
such rent and such deficiency.
The remedies in the Lease are cumulative and in addition to any other
remedy available to the Lessor at law or in equity, and no exercise of any
remedy under the Lease will, except as specifically provided therein, relieve
the Company of any of its liabilities and obligations under the Lease. (Lease,
Section 16)
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See "Description of the Offered Bonds and the Indenture -- Notice; Waiver;
Acceleration and Remedies" for a description of the rights of the Owner Trustee
and the Indenture Trustee in respect of the exercise of remedies under the
Lease.
The rights of the Lessor under the Lease, including the right to sell the
Undivided Interest and the exercise of remedies, as well as the rights of the
Indenture Trustee under the Indenture, are subject to the Operating Agreement.
(See "Other Agreements -- Operating Agreement.")
QUIET ENJOYMENT
The transaction documents provide that, unless a Lease Event of Default has
occurred and is continuing, the Company's use and possession of Unit 1,
including the Undivided Interest, and certain other property and rights leased
to the Company by the Lessor during the term of the Lease shall not be
interfered with or interrupted by the Lessor or any person claiming by, through
or under the Lessor. (Lease, Section 6)
OTHER AGREEMENTS
The discussion of the Operating Agreement, Participation Agreement and Tax
Indemnification Agreement below is merely intended to summarize certain
provisions of those agreements as they relate to the Offered Bonds and the
Transaction; it does not purport to be complete and is qualified in its entirety
by reference to those agreements, the respective forms of which have been filed
as exhibits to the Registration Statement of which this Prospectus is a part.
OPERATING AGREEMENT
The Operating Agreement among the Company and the other Joint Owners
governs the terms and conditions of the ownership and operation of the Seabrook
Station. Pursuant to the Assignment, Assumption and Further Agreement among the
Company, certain of the Joint Owners and the Owner Trustee, the Company has
assigned to the Owner Trustee an interest in the Company's rights in the
Operating Agreement to the extent that such rights relate to the Undivided
Interest. The Owner Trustee has reassigned such interest to the Company for the
term of the Lease, with the result that the Company shall continue to be treated
as the owner of the Undivided Interest for purposes of the Operating Agreement
during the term of the Lease. The Owner Trustee's rights under the Assignment,
Assumption and Further Agreement have, subject to the Lessee's rights
thereunder, been assigned to the Indenture Trustee and constitute a portion of
the Indenture Estate.
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The rights of the Indenture Trustee under the Indenture, as well as the
rights of the Lessor under the Lease, insofar as they relate to the disposition
of the Undivided Interest, are subject to the rights of the other Joint Owners
under the Operating Agreement. Mortgagees and holders of security interests in
interests in the Seabrook Station, such as the Indenture Trustee, may succeed to
and acquire all rights of an owner under the Operating Agreement. Pursuant to
the Operating Agreement, an owner of an interest in the Seabrook Station may not
sell such interest unless such sale is to an entity that is engaged in the
electric utility business in New England, but no such sale shall be made unless
the other Joint Owners have first been offered an opportunity in writing to
purchase the interest involved separately or in the aggregate on equal or better
terms than those of the offer of sale and have declined such opportunity. Any
prospective sale of the Undivided Interest by the Indenture Trustee in the
exercise of remedies available to it under the Indenture, or by the Lessor
pursuant to the Lease, would be subject to such provisions. Such an offer to
the other Joint Owners would not be required in connection with the
reacquisition by the Company of the Undivided Interest.
PARTICIPATION AGREEMENT
In the Participation Agreement the Company has agreed, among other things,
that it will at all times maintain its corporate existence and will not
consolidate with or merge into, or sell, transfer or otherwise dispose of
substantially all of its assets to, any person unless a number of conditions are
met, including the requirements that (a) immediately after giving effect to such
transaction, the survivor be a corporation organized under the laws of the
United States of America, a State thereof or the District of Columbia, (b)
immediately after giving effect to such transaction, the survivor of such
transaction shall have assumed the obligations of the Company under each of the
documents relating to the Transaction to which the Company was a party, (c) the
ratings of the senior long-term debt of the survivor is reasonably anticipated
to be rated as high as or higher than that of the Company immediately prior to
such transaction, (d) immediately after giving effect to such transaction, all
governmental actions and corporate approvals shall have been obtained for the
transaction, and (e) immediately after giving effect to such transaction, the
survivor shall have delivered to the Owner Participant, the Owner Trustee and
the Indenture Trustee opinions and officers' certificates as to, among other
things, compliance with the transfer conditions above. (Participation
Agreement, Section 9(b)(3))
Subject to certain first refusal rights of the Company, the Owner
Participant may at any time assign, convey or otherwise transfer its interests
in, to and under any transaction document or its trust estate to a person with a
net worth at the time of such transfer of not less than $50 million or to a
person whose obligations under the transaction documents have been guaranteed by
a person with such a net worth. The transferring Owner Participant will, with
certain limited exceptions, be released from its obligations under the
transaction documents and the transferee Owner Participant shall succeed to such
obligations and rights of the transferring Owner Participant. (Participation
Agreement, Section 14)
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TAX INDEMNIFICATION AGREEMENT
Pursuant to the Tax Indemnification Agreement, between the Company and the
Owner Participant, the Company is obligated to pay to the Owner Participant,
among other things, amounts which, on an after-tax basis, equal the amounts of
additional Federal income taxes payable by the Owner Participant with respect to
any current or prior taxable year as a result of a Tax Loss and any interest,
penalties or additions to any tax imposed as a result of such Tax Loss or the
contest thereof. For purposes of the Tax Indemnification Agreement, "Tax Loss"
includes, subject to certain exceptions: (a) loss to the Owner Participant of
depreciation or analogous deductions with respect to the Undivided Interest or
interest deductions with respect to the Bonds; (b) loss to the Owner Participant
of foreign tax credits due to the treatment of any item of income, gain, loss or
deduction with respect to the Transaction as derived from, or allocable to,
foreign sources (in the case of either (a) or (b) as a result of, among other
things, (i) any act or failure to act by the Company, (ii) any misrepresentation
or breach of warranty or covenant in the transaction documents by the Company,
(iii) bankruptcy of the Company or any disposition of the Undivided Interest
pursuant to the exercise of remedies under the Indenture or (iv) damage to or
the taking of the Undivided Interest); or (c) unanticipated income of the Owner
Trustee with respect to the Undivided Interest.
PLAN OF DISTRIBUTION
The Prospectus Supplement relating to a series of Offered Bonds will set
forth the terms of the offering of the Offered Bonds, including the names of
underwriters, including Morgan Stanley & Co. Incorporated, the proceeds to the
Owner Trustee from such sale, any items constituting underwriters' compensation,
any initial public offering price and any discounts or concessions allowed or
reallowed to dealers. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time. The Offered Bonds will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of each resale. Unless otherwise set
forth in the Prospectus Supplement, the obligations of the underwriters to
purchase the Offered Bonds will be subject to certain conditions precedent, and
the underwriters will be obligated to purchase all such Offered Bonds if any are
purchased; provided that the agreement with the underwriters providing for the
sale of the Offered Bonds may provide that under certain circumstances involving
a default of underwriters, less than all of the Offered Bonds may be purchased.
Each Prospectus Supplement relating to a particular offering of Offered
Bonds will contain a statement (1) as to whether or not the existence of a
secondary market for such securities can be predicted and, if such existence is
predicted, as to the extent of such
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secondary market, and (2) as to whether or not the underwriter or underwriters
intend to make a market in such securities.
Subject to certain conditions, the Company may agree to indemnify the
underwriter or underwriters and their controlling persons against certain civil
liabilities, including liabilities under the Securities Act.
EXPERTS AND LEGALITY
The financial statements and supplemental schedules of the Company
incorporated by reference in this Prospectus, except to the extent described
below, have been audited by Coopers & Lybrand L.L.P., independent accountants,
as stated in their report included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, incorporated by reference herein, and has
been so incorporated by reference in reliance upon such report given upon their
authority as experts in accounting and auditing.
Legal matters in connection with the issuance of the Offered Bonds will be
passed upon for the Company by Wiggin & Dana, New Haven, Connecticut, Reid &
Priest LLP, New York, New York, and Devine, Millimet & Branch, Professional
Association, Manchester, New Hampshire, and for the Underwriters by Winthrop,
Stimson, Putnam & Roberts, New York, New York. Certain matters with respect to
the legality of the Offered Bonds will be passed upon for the Owner Trustee by
Haight, Gardner, Poor & Havens, New York, New York, and Stevens & Lee, Reading,
Pennsylvania.
The statements made herein, in the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, and in the above-referenced Quarterly Reports
on Form 10-Q, in each case as to matters of law and legal conclusions,
pertaining to titles to properties, franchises and other operating rights of the
Company, regulations to which the Company is subject and any legal proceedings
to which the Company is a party, are made on the authority of Wiggin & Dana, and
such statements are included herein in reliance upon their authority as experts.
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GLOSSARY
Certain capitalized terms used in this Prospectus have the following
meanings and such meanings shall apply to terms both singular and plural unless
the context clearly requires otherwise:
"Affiliate" means with respect to the Company any other person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Company. For purposes of this definition, the term "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"Bond" means any bond that may be issued under the Indenture.
"Casualty Value" means an amount specified in the Lease that the Company
must pay to the Lessor under the Lease in certain circumstances, which amount
is, in general and among other things, calculated to preserve the net economic
return of the Owner Participant. The amount of Casualty Value payable as of any
date shall be no less than the aggregate principal amount of the Bonds
outstanding on such date, together with accrued interest thereon.
"Commission" means the Securities and Exchange Commission.
"Company" or "UI" means The United Illuminating Company.
"Connecticut Yankee" means the Connecticut Yankee Atomic Power Company.
"Deemed Loss Event" means any of the events described as a Deemed Loss
Event in the Lease upon the occurrence of which the Company must (subject to
certain conditions) acquire the beneficial interest of the Owner Participant
and/or assume the Bonds. (See "Description of the Offered Bonds and the
Indenture --Assumption by the Company").
"DPUC" means the Connecticut Department of Public Utility Control.
"Event of Loss" means any of the events described as an Event of Loss in
the Lease upon the occurrence of which the Company must (subject to certain
conditions) acquire the beneficial interest of the Owner Participant and/or
assume the Bonds. (See "Description of the Offered Bonds and the Indenture --
Assumption by the Company.")
"Excepted Payment" means (i) any indemnity payment (including payments
under the Tax Indemnification Agreement) payable to the Owner Trustee or the
Owner Participant, (ii) any amount payable under any transaction document to
reimburse the Lessor or the Owner
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Participant for performing or complying with any of the obligations of the
Company under and as permitted by any transaction document, (iii) any insurance
proceeds or other payments received with respect to an Event of Loss in excess
of amounts then due and owing to reimburse the Indenture Trustee for any of its
expenses and to pay the reasonable remuneration of the Indenture Trustee plus
amounts then due and owing in respect of the principal of and premium, if any,
and interest on all Bonds outstanding, (iv) any insurance proceeds under
liability policies and under any insurance policies not required by the Lease,
(v) any payment of the equity portion of Casualty Value or Special Casualty
Value in respect (vi) amounts payable to the Owner Trustee in connection with
the exercise by the Company of its option to purchase the Undivided Interest
during the term of the Lease (subject, in any event, to the condition that the
Company shall have assumed all of the Bonds then outstanding and none of such
Bonds are then to be redeemed) or its option to purchase the Undivided Interest
at end of the basic term of the Lease, (vii) any amount payable to the Owner
Participant by any transferee as the purchase price of the Owner Participant's
interest in the trust estate, (viii) the ongoing fees and expenses of the Owner
Trustee under the transaction documents and (ix) any payments in respect of
interest to the extent attributable to payments referred to in clauses (i)
through (vi) above.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended.
"FERC" means the Federal Energy Regulatory Commission.
"Holder" means the registered holder of Bonds, as indicated on the Bond
Register maintained under the Indenture.
"Indenture" means the Indenture of Mortgage and Deed of Trust, dated as of
August 1, 1990, among the Lessor, the Company and the Indenture Trustee, as
supplemented, pursuant to which the Offered Bonds are issued.
"Indenture Default" means an event or condition which, with the giving of
notice or the lapse of time, or both, would constitute an Indenture Event of
Default.
"Indenture Estate" means the trust estate assigned, transferred and pledged
by the Lessor to the Indenture Trustee under the Indenture, for the ratable
benefit of the Holders of the Bonds issued thereunder.
"Indenture Event of Default" means an "Indenture Event of Default" as
defined in the Indenture. (See "Description of the Offered Bonds and the
Indenture -- Indenture Events of Default.")
"Indenture Trustee" means The Bank of New York, as trustee under the
Indenture, and each successor trustee and the co-trustee thereunder.
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"Initial Series Bonds" means the Bonds of the series originally issued upon
the consummation of the Transaction to finance a portion of the purchase price
of the Undivided Interest.
"Joint Owners" means the parties to the Operating Agreement. (See "Other
Agreements --Operating Agreement.")
"Lease" means the Facility Lease, dated as of August 1, 1990, as
supplemented, under which the Company leases the Undivided Interest in Unit 1
from the Lessor in connection with the Transaction.
"Lease Default" means an event or condition that, with the giving of notice
or lapse of time, or both, would constitute a Lease Event of Default.
"Lease Event of Default" means an Event of Default as such term is defined
under the Lease. (See "Description of the Lease -- Lease Events of Default.")
"Lessor" means Meridian Trust Company, not acting in its individual
capacity but acting solely as Owner Trustee under the trust agreement (and each
successor trustee thereunder) with the Owner Participant and as Lessor under the
Lease and which, in such capacity, has purchased the Undivided Interest in Unit
1 as part of the Transaction.
"Make-Whole Premium" means the amount in addition to the unpaid principal
amounts of the Offered Bonds that may be payable in the event that they are
redeemed at the option of the Owner Trustee. (See "Certain Terms of the Offered
Bonds -- Redemption -- Optional Redemption.")
"NRC" means the Nuclear Regulatory Commission of the United States of
America or any successor agency.
"Offered Bonds" means Bonds offered by this Prospectus and any accompanying
Prospectus Supplement.
"Operating Agreement" means the Agreement for Joint Ownership, Construction
and Operation of New Hampshire Nuclear Units, dated May 1, 1973, as amended by
twenty-three amendments.
"Owner Participant" means the corporation that, in connection with the
Transaction, has acquired a beneficial interest in the owner trust that is the
owner and Lessor of the Undivided Interest.
"Owner Trustee" means Meridian Trust Company, acting as owner trustee under
the trust agreement with the Owner Participant in connection with the
Transaction.
-51-
<PAGE>
"Participation Agreement" means the Participation Agreement, dated as of
August 1, 1990, as amended, entered into among the Company, the Owner
Participant, the Lessor and the Indenture Trustee, which relates to the
Transaction and sets forth the terms and conditions upon which the Transaction
was consummated.
"Refinancing" means the series of transactions pursuant to which the
Initial Series Bonds will be refinanced.
"Seabrook 1" means Unit No. 1 of the Seabrook Station.
"Seabrook Station" means the Seabrook Nuclear Power Plant located in
Seabrook, New Hampshire.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Casualty Value" means an amount specified in the Lease that the
Company must pay to the Lessor under the Lease in certain circumstances, which
amount is, in general and among other things, calculated to preserve the net
economic return of the Owner Participant. The amount of Special Casualty Value
payable as of any date shall be no less than the aggregate principal amount of
the Bonds outstanding on such date, together with accrued interest thereon.
"Special Transfer" mans the assignment and transfer by the Owner
Participant of its beneficial interest in the owner trust to the Company or its
designee upon the occurrence of an Event of Loss, Deemed Loss Event or a Lease
Event of Default.
"Supplemental Financing" means the issuance of additional Bonds under the
Indenture to finance the Lessor's proportionate share of capital improvements to
Unit 1.
"Supplemental Indenture" means supplemental indenture to the Indenture that
sets forth the terms and the form of the Offered Bonds.
"Tax Indemnification Agreement" means the tax indemnification agreement,
dated as of August 1, 1990, as amended, between the Company and the Owner
Participant.
"2006 Initial Series Bonds" means the Initial Series Bonds maturing in
2006.
"2020 Initial Series Bonds" means the Initial Series Bonds maturing in
2020.
"Transaction" means the transaction pursuant to which the Company sold the
Undivided Interest in Unit 1 to the Lessor under an owner trust agreement and
leased back such interest pursuant to the Lease. (See "The Transaction and the
Refinancing.")
-52-
<PAGE>
"Undivided Interest" means the undivided interest in Unit 1, which
represents an approximately 11.6% interest in Unit 1 and which was sold by the
Company to the Owner Trustee under an owner trust agreement with the Owner
Participant, and then leased back to the Company on a long-term net lease basis.
"Unit 1" means Seabrook 1, exclusive of certain transmission, pollution
control and other facilities, together with certain capital improvements
thereto.
"UI" or "Company" means The United Illuminating Company.
-53-
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. List of Exhibits
----------------
Pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, certain
of the following listed exhibits that are annexed as exhibits to previous
registration statements and reports filed by the registrant are hereby
incorporated by reference as exhibits to this Registration Statement. Such
statements and reports are identified by reference numbers as follows:
(1) Filed with Registration Statement No. 33-35465 effective August 1,
1990.
(2) Filed with Annual Report (Form 10-K) for fiscal year ended December
31, 1991.
(3) Filed with Quarterly Report (Form 10-Q) for fiscal year ended
September 30, 1991.
(4) Previously filed with this Registration Statement on November 6,
1995.
The exhibit number in the registration statement or report referenced is
set forth in the parenthesis following the description of the exhibit. Those of
the following exhibits not so identified are filed herewith.
<TABLE>
<CAPTION>
Table Exhibit Reference
Item No. No. No.
- -------- ------- ---------
<S> <C> <C> <C>
(1) 1 Amended Form of Underwriting Agreement
among the Company, the Owner Trustee
and the Underwriter.
(4) 4(a) (1) Form of Indenture of Mortgage and Deed
of Trust among the Owner Trustee, the
Company and The Bank of New York as
Indenture Trustee. (Exhibit 4(a))
(4) 4(b) (1) Form of Supplemental Indenture No. 1
to Indenture of Mortgage and Deed of
Trust. (Exhibit 4(b))
(4) 4(c) (4) Form of Supplemental Indenture No. 2
to Indenture of Mortgage and Deed of
rust (filed with Exhibit 4(m))
(4) 4(d) (1) Form of Facility Lease between the
Owner Trustee, as Lessor, and the
Company, as Lessee. (Exhibit 4(c))
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
(4) 4(e) (4) Form of Supplement No. 1 to Facility
Lease (filed with Exhibit 4(m))
(4) 4(f) (1) Form of Participation Agreement among
the Owner Participant, the Owner
Trustee, the Company and The Bank of
New York as Indenture Trustee.
(Exhibit 4(d))
(4) 4(g) (4) Form of Amendment No. 1 to
Participation Agreement (filed with
Exhibit 4(m))
(4) 4(h) (1) Form of Assignment, Assumption and
Further Agreement among the Company,
certain Joint Owners and the Owner
Trustee. (Exhibit 4(e))
(4) 4(i) (1) Form of Ground Lease between the
Company and the Owner Trustee.
(Exhibit 4(f))
(4) 4(j) (1) Form of Tax Indemnification Agreement
between the Owner Participant and the
Company. 4(g))
(4) 4(k) (4) Form of Amendment No. 1 to Tax
Indemnification Agreement. (Exhibit
4(k))
(4) 4(l) (1) Form of Deed and Bill of Sale between
the Company and the Owner Trustee.
(Exhibit 4(h))
(4) 4(m) (4) Form of Refunding Agreement among the
Owner Participant, the Owner Trustee,
the Indenture Trustee, and the
Company. (Exhibit 4(m))
(4) 4(n) (2) Copy of Agreement for Joint Ownership,
Construction and Operation of New
Hampshire Nuclear Units, dated May 1,
1973, among Public Service Company of
New Hampshire, The United Illuminating
Company, Central Maine Power Company,
The Connecticut Light and Power
Company, Fitchburg Gas and Electric
Company, Montaup Electric Company, New
Bedford Gas and Edison Light Company,
New England Power Company and Vermont
Electric Power Company, Inc., as
amended to February 1, 1990. (Exhibit
10.7a)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
(4) 4(o) (3) Copy of Twenty-Third Amendment to
Agreement for Joint Ownership,
Construction and Operation of New
Hampshire Nuclear Units, amending
Exhibit 4(n). (Exhibit 10.8)
(5) 5(a) (4) Opinion of Reid & Priest LLP, counsel
for the Company. (Exhibit 5(a))
(5) 5(b) (4) Opinion of Wiggin & Dana, counsel for
the Company. (Exhibit 5(b))
(5) 5(c) Opinion of Haight, Gardner, Poor &
Havens, special counsel for the Owner
Trustee.
(5) 5(d) (4) Opinion of Devine, Millimet & Branch,
Professional Association, counsel for
the Company. (Exhibit 5(d))
(5) 5(e) Opinion of Stevens & Lee, counsel for
the Owner Trustee.
(12) 12 (4) Statement regarding computation of
ratio of earnings to fixed charges.
(Exhibit 12)
(23) 23(a) (4) Consent of Reid & Priest LLP (filed
with Exhibit 5(a)).
(23) 23(b) (4) Consent of Wiggin & Dana (filed with
Exhibit 5(b)).
(23) 23(c) Consent of Haight, Gardner, Poor &
Havens (filed with Exhibit 5(c)).
(23) 23(d) Consent of Coopers & Lybrand L.L.P.
(23) 23(e) (4) Consent of Devine, Millimet & Branch,
Professional Association (filed with
Exhibit 5(d)).
(23) 23(f) Consent of Stevens & Lee (filed with
Exhibit 5(e)).
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
(25) 25 (4) Form T-1 Statement of Eligibility of
The Bank of York, Trustee. (Exhibit
25)
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, The United
Illuminating Company certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Amendment No. 1 to the registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New Haven and the
State of Connecticut, on this 26th day of December, 1995.
THE UNITED ILLUMINATING COMPANY
By /s/ RICHARD J. GROSSI
-----------------------------------------
Richard J. Grossi
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ RICHARD J. GROSSI Director, Chairman of the December 26, 1995
- ------------------------------
Richard J. Grossi Board of Directors and
Principal Executive Officer Chief Executive Officer
/s/ ROBERT L. FISCUS Director, President and December 26, 1995
- ------------------------------
Robert L. Fiscus Chief Financial Officer
Principal Financial and
Accounting Officer
* Director December 26, 1995
- ------------------------------
John F. Croweak
* Director December 26, 1995
- ------------------------------
F. Patrick McFadden, Jr.
* Director December 26, 1995
- ------------------------------
J. Hugh Devlin
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
* Director December 26, 1995
- ------------------------------
Betsy Henley-Cohn
* Director December 26, 1995
- ------------------------------
Frank R. O'Keefe, Jr.
* Director December 26, 1995
- ------------------------------
David E.A. Carson
* Director December 26, 1995
- ------------------------------
John L. Lahey
* Director December 26, 1995
- ------------------------------
Marc C. Breslawsky
* Director December 26, 1995
- ------------------------------
Thelma R. Albright
*By: /s/ CHARLES J. PEPE
- -------------------------------
(Charles J. Pepe)
(Attorney-in-Fact)
</TABLE>
<PAGE>
Exhibit 1
===========================================================================
$___________________________
THE UNITED ILLUMINATING COMPANY
UNDERWRITING AGREEMENT
Seabrook 1 Secured Lease Obligation Bonds
_____________________________, 199_
===========================================================================
<PAGE>
______________, 199_
MORGAN STANLEY & CO. INCORPORATED
CITICORP SECURITIES, INC.
c/o MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Each of the undersigned, The United Illuminating Company (the
"Company") and Meridian Trust Company (in its individual capacity, "Meridian"),
not in its individual capacity but solely in its capacity as Owner Trustee (the
"Owner Trustee") under the Trust Agreement, dated as of August 1, 1990 relating
to the transactions hereinafter described (the "Trust Agreement"), hereby
confirms its agreement with you, as underwriters (the "Underwriters"), as
follows:
SECTION 1. INTRODUCTION. The Owner Trustee proposes to issue and
sell $___________ in aggregate principal amount of Seabrook 1 Secured Lease
Obligation Bonds as follows: $__________ _____% Series due ___________, ____
(the "Series __ Bonds"); and $___________ _____% Series due ____________, ____
(the "Series ____ Bonds"); (the Series ____ Bonds and Series ____ Bonds being
collectively referred to herein as the "Bonds") registered under the
registration statement referred to in Section 4. The Bonds will be issued under
the Indenture of Mortgage and Deed of Trust, dated as of August 1, 1990, as
supplemented by Supplemental Indenture No. 2 thereto, dated as of ___________,
199_ (such Indenture of Mortgage and Deed of Trust, as so amended and
supplemented, being hereinafter referred to as the "Indenture"), among the
Company, The Bank of New York (the "Indenture Trustee") and the Owner Trustee.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Prospectus (as hereinafter defined).
<PAGE>
SECTION 2. PURCHASE AND SALE. On the basis of the representations and
warranties, and subject to the terms and conditions, set forth in this agreement
(the "Underwriting Agreement"), the Underwriters shall purchase from the Owner
Trustee, severally and not jointly, and the Owner Trustee shall issue and sell
to the Underwriters, $__________ aggregate principal amount of the Series ____
Bonds at a price of __% of the principal amount thereof and $__________
aggregate principal amount of the Series ____ Bonds at a price of ____% of the
principal amount thereof. Each Underwriter shall, severally and not jointly,
purchase the respective principal amount of Series ____ Bonds and Series ____
Bonds set forth opposite its name on Schedule I hereto. The Company and the
Owner Trustee are advised by the Underwriters that the Underwriters propose to
make a public offering of the Bonds as soon after this Underwriting Agreement is
entered into as in the Underwriters' judgment is advisable.
Concurrently with the issuance and sale of the Bonds, the Owner
Trustee will pay, with funds provided by the Owner Participant, to the
Underwriters in immediately available funds an underwriting commission of _____%
($__________) in respect of the Series ____ Bonds and _____% ($__________) in
respect of the Series ____ Bonds. The Company acknowledges that the fees and
expenses of counsel to the Underwriters shall be included on the invoice of
transaction expenses to be delivered by the Owner Trustee on or prior to the
Closing Date (as hereinafter defined), pursuant to Sections 5(a)(iii) and 5(b)
of the Refunding Agreement dated as of ______ __, 199_ among the Owner
Participant, the Owner Trustee, the Indenture Trustee and the Company (the
"Refunding Agreement"), and to be paid by the Owner Trustee with funds provided
by the Owner Participant and from proceeds from the sale of the Bonds.
SECTION 3. DESCRIPTION OF BONDS. The Bonds shall be issued under and
pursuant to the Indenture and shall be held in book-entry form through the
facilities of the Depository Trust Company. The Bonds and the Indenture shall
have the terms and provisions described in the Prospectus, provided that,
subsequent to the date hereof and prior to the Closing Date, the form of
Indenture (including Supplemental Indenture No. 2 thereto) may be amended by
mutual agreement among the Company, the Owner Trustee, the Indenture Trustee and
the Underwriters.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OWNER
TRUSTEE. (a) The Company represents and warrants to the Underwriters that:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3
(Registration Statement No.______________), including a prospectus,
pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the Bonds and has filed with
- 2 -
<PAGE>
or shall promptly hereafter file with the Commission a prospectus
supplement (the "Prospectus Supplement") specifying the terms of the Bonds
and the plan of distribution thereof pursuant to Rule 424 under the
Securities Act ("Rule 424"); and as used herein, (i) the term "Registration
Statement" means the registration statement, including the exhibits
thereto, as amended to the date of this Agreement, (ii) the term "Basic
Prospectus" means the prospectus included in the Registration Statement,
(iii) the term "Prospectus" means the Basic Prospectus as supplemented by
the Prospectus Supplement, (iv) the term "preliminary prospectus" means any
preliminary prospectus supplement specifically relating to the Bonds,
together with the Basic Prospectus, and (v) the terms "Basic Prospectus,"
"Prospectus" and "preliminary prospectus" shall include in each case the
documents incorporated by reference therein and the terms "supplement,"
"amendment" and "amend" shall include the documents, if any, deemed to be
incorporated by reference in the Prospectus that are filed subsequent to
the execution and delivery of this Agreement by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(ii) The Registration Statement has become effective and no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(iii) (A) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Prospectus complied
or will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder, (B)
the Registration Statement, when it became effective, did not contain, and,
as amended or supplemented, if applicable, will not contain, any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, (C) the Registration Statement and the Prospectus comply, and,
as amended or supplemented, if applicable, will comply, in all material
respects with the Securities Act and the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the respective applicable rules
and regulations of the Commission thereunder and (D) the Prospectus does
not contain, and, as amended or supplemented, if applicable, will not
contain, any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this subsection (iii) do not
apply (x) to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any
- 3 -
<PAGE>
Underwriter furnished to the Company in writing by such Underwriter
expressly for use therein or (y) to that part of the Registration Statement
that constitutes the Statement of Eligibility (Form T-1) under the Trust
Indenture Act of the Indenture Trustee.
(iv) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of
Connecticut, has due corporate power and authority to own and operate its
property and to conduct its business as described in the Prospectus, to
execute and deliver, and perform its obligations under, this Underwriting
Agreement, the Indenture, the Refunding Agreement, the Granting Clause
Documents (as defined in the Indenture and, as supplemented or amended as
of the Closing Date, hereinafter the "Granting Clause Documents"), and to
consummate the transactions herein and therein contemplated; and the
Company is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(v) Each subsidiary of the Company has been duly incorporated,
is validly existing and in good standing under the laws of the jurisdiction
of its incorporation or formation, has the power and authority to own its
property and to conduct its business as described in the Prospectus, and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(vi) This Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
(vii) The Company and its subsidiaries (x) are not in violation of
their respective certificates of incorporation or bylaws, (y) are not in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in the Indenture, the Refunding Agreement
or the Granting Clause Documents, and (z) are not in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any other contract, agreement or other instrument
under which any of them may be bound, the effect of which, in the case of
this clause (z), would have a material adverse effect on the Company and
its subsidiaries, taken as a whole; the execution and delivery by the
Company of, and the
- 4 -
<PAGE>
performance by the Company of its obligations under, this Agreement, the
Indenture, the Refunding Agreement and the Granting Clause Documents and
the consummation of the transactions herein and therein contemplated, will
not conflict with, result in a breach of or constitute a default under any
provision of (A) applicable law, (B) the certificate of incorporation or
bylaws of the Company, (C) any agreement or other instrument binding upon
the Company or any of its subsidiaries that is material to the Company and
its subsidiaries, taken as a whole, or (D) any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the Company
or any subsidiary; and, except for the approval of the Connecticut
Department of Public Utility Control, no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the execution and delivery of, and the performance of its
obligations under, this Underwriting Agreement, the Indenture, the
Refunding Agreement or the Granting Clause Documents, in each case by the
Company, or the consummation of the transactions herein or therein
contemplated, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the issuance of the Bonds.
(viii) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus.
(ix) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed or incorporated by
reference as exhibits to the Registration Statement that are not described,
filed or incorporated as required.
(x) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(xi) The Company and its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
- 5 -
<PAGE>
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, be reasonably expected to have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(xii) In the ordinary course of its business, the Company conducts
a periodic review of the effect of Environmental Laws on the business,
operations, and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably concluded
that such associated costs and liabilities would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(xiii) Each of (A) the Participation Agreement, (B) the Refunding
Agreement, (C) the Indenture, (D) the Granting Clause Documents and (E)
this Underwriting Agreement (each of the documents and instruments
described in clauses (A) through (D) above, as they each may be amended or
supplemented as of the Closing Date, being collectively referred to herein
as the "Transaction Documents") has been, or (in the case of the
Transaction Documents other than the Refunding Agreement) as of the Closing
Date will have been, duly authorized, executed and delivered by the Company
and, assuming the due authorization, execution and delivery thereof by each
other party thereto, each constitutes, or as of the Closing Date will
constitute, a legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms, except as enforcement
may be limited by applicable bankruptcy, insolvency, reorganization and
other similar laws affecting the enforcement of creditors' rights generally
and with respect to Section 10 of this Underwriting Agreement, by any
principles of public policy that may limit the right to enforce the
indemnification provisions contained therein.
(b) The Owner Trustee represents and warrants to the Underwriter
that:
- 6 -
<PAGE>
(i) Meridian is a trust company duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania and
has all requisite corporate power and authority to enter into and perform
its obligations under the Trust Agreement, and the Owner Trustee has all
power and authority to enter into and perform its obligations under the
Indenture, the Bonds, the Refunding Agreement and this Underwriting
Agreement.
(ii) Each of the Transaction Documents, the Trust Agreement, this
Underwriting Agreement and the Bonds has been or (in the case of
Transaction Documents other than the Refunding Agreement) as of the Closing
Date, will have been duly authorized, executed and delivered by the Owner
Trustee (or in the case of the Trust Agreement, Meridian) and, assuming the
due authorization, execution, authentication and delivery thereof by each
other party thereto, constitutes, or as of the Closing Date will
constitute, a legal, valid and binding obligation of the Owner Trustee (or
in the case of the Trust Agreement, Meridian) enforceable against the Owner
Trustee (or in the case of the Trust Agreement, Meridian) in accordance
with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization and other similar laws affecting the
enforcement of creditors' rights generally and, with respect to Section 10
of this Underwriting Agreement, by any principles of public policy that may
limit the right to enforce the indemnification provisions contained
therein.
(iii) No approval, authorization, consent or other order of any
governmental body under any federal law or regulation or any law or
regulation of New York, New Hampshire or Pennsylvania governing the trust
powers of Meridian or the Owner Trustee is required to permit the issuance
and sale of the Bonds by the Owner Trustee to the Underwriters pursuant to
this Underwriting Agreement or the execution of this Underwriting Agreement
or the Indenture by the Owner Trustee.
(iv) The issuance and sale by the Owner Trustee of the Bonds and
the execution, delivery and performance by the Owner Trustee of this
Underwriting Agreement and the Indenture will not (a) violate any provision
of Meridian's Articles of Incorporation or By-Laws or (b) violate any
provision of any federal law or regulation or any law or regulation of New
York, New Hampshire or Pennsylvania governing the trust powers of
Meridian or the Owner Trustee applicable to the Owner Trustee.
(v) There are no legal or governmental proceedings pending or
threatened to which Meridian or, to the actual knowledge of an Officer of
the trust department of Meridian, the Owner Trustee is subject that are
required
- 7 -
<PAGE>
to be described in the Registration Statement or the Prospectus and are not
so described.
SECTION 5. OFFERING. The Company and the Owner Trustee are advised by
the Underwriters that the Bonds are to be offered to the public at the
respective public offering prices set forth below (expressed as percentages of
the principal amount of the Bonds). The Bonds may also be offered to certain
dealers selected by the Underwriters at prices that represent concessions from
the public offering prices (expressed as percentages of the principal amount of
the Bonds) as indicated below. The Underwriters may allow, and such dealers may
reallow, concessions to certain other dealers not in excess of the amounts
indicated below (expressed as percentages of the principal amount of the Bonds):
<TABLE>
<CAPTION>
Public Offering
Price Concession Reallowance
--------------- ---------- -----------
<S> <C> <C> <C>
Per Series ___ Bonds ____% ____% ____%
Per Series ___ Bonds ____% ____% ____%
</TABLE>
SECTION 6. TIME AND PLACE OF CLOSING. Delivery of the Bonds shall be
made to the Underwriters through the facilities of the Depositary Trust Company,
against payment therefor by the Underwriters to, or upon the order of, the Owner
Trustee, such payment to be made by check or checks, payable to, or upon the
order of, the Owner Trustee, in immediately available funds at the offices of
Reid & Priest LLP, 40 West 57th Street, New York, New York, at 10:00 A.M., New
York time, on ___________, 199_, or at such other time on the same or such other
day as shall be agreed upon by the Company and the Underwriters. The hour and
date of such delivery and payment are herein called the "Closing Date."
SECTION 7. COVENANTS OF THE COMPANY AND THE OWNER TRUSTEE. Each of the
Company and the Owner Trustee, severally as to itself only, covenants and agrees
with the Underwriters that:
(a) The Company will deliver to each of the Underwriters, without
charge, a copy of the Registration Statement including exhibits thereto and
documents incorporated by reference therein certified by an officer of the
Company to be in the form filed with the Commission and, during the period
mentioned in paragraph (c) below, as many copies of the Prospectus, any
documents incorporated by reference therein and any supplements and amendments
thereto as any Underwriter may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, the Company will furnish to the Underwriters a copy of each such
proposed amendment or supplement
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<PAGE>
for their review a reasonable amount of time prior to the filing thereof.
(c) If, during such period after the first date of the public
offering of the Bonds as, in the opinion of counsel for the Underwriters, a
prospectus relating to the Bonds is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall occur
or condition exist as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if, in the opinion of counsel for the Underwriters, it is necessary to amend
or supplement the Prospectus to comply with law, the Company, at its own
expense, will forthwith prepare, file with the Commission and furnish to the
Underwriters either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended and supplemented, will comply
with law.
(d) The Company and the Owner Trustee will endeavor to qualify the
Bonds for offer and sale under the securities or "blue-sky" laws of such
jurisdictions as the Underwriters shall reasonably request and will maintain
such qualification for as long as the Underwriters shall reasonably request.
(e) The Company will make generally available to its security
holders, as soon as practicable, an earning statement covering a period of at
least twelve months beginning after the "effective date of the registration
statement" within the meaning of Rule 158 under the Securities Act, which
earning statement shall be in such form, and be made generally available to
security holders in such a manner, as to meet the requirements of the last
paragraph of Section 11(a) of the Securities Act and Rule 158 under the
Securities Act.
(f) The Company will cause the Prospectus to be filed with the
Commission pursuant to Rule 424(b) within the time period required by such rule.
The Company will advise the Underwriters promptly of the issuance of any stop
order under the Securities Act with respect to the Registration Statement or the
institution of any proceedings therefor of which the Company shall have received
notice. The Company will use its best efforts to prevent the issuance of any
such stop order and to secure the prompt removal thereof if issued.
(g) As between the Company and the Underwriters, the Company will,
except as herein provided, pay or cause to be paid all expenses and taxes
(except transfer taxes) in connection with (i) the preparation and filing of the
Registration Statement, (ii) the printing, issuance and delivery of the Bonds
and the preparation, execution, printing and recordation of the
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<PAGE>
Indenture, (iii) legal fees and expenses relating to the qualification of the
Bonds under the "blue-sky" laws of various jurisdictions, (iv) the printing and
delivery to the Underwriters of reasonable quantities of copies of the
Registration Statement, the preliminary prospectus and the Prospectus and the
preparation of the Preliminary Blue Sky Survey, (v) fees of the rating agencies
in connection with the rating of the Bonds, (vi) fees (if any) of the National
Association of Securities Dealers, Inc. in connection with its review of the
terms of the offering and (vii) the procurement by the Underwriters of
immediately available funds for the payment of the purchase price for the Bonds
as required by Section 6 of this Underwriting Agreement. Nothing in this Section
7(g) shall be deemed to be in derogation of the Owner Trustee's rights and
obligations pursuant to Section 5 of the Refunding Agreement.
SECTION 8. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The
obligations of the Underwriters hereunder are subject to the following
conditions:
(a) The Registration Statement shall be effective and no stop order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceedings for such purpose shall be pending before or threatened by the
Commission; and the Prospectus shall have been filed with the Commission
pursuant to Rule 424 within the time period required by such rule.
(b) Subsequent to the date of this Underwriting Agreement and prior
to the Closing Date, there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus that, in
the judgment of the Underwriters, is material and adverse and that makes it, in
the judgment of the Underwriters, impracticable to market the Bonds on the terms
and in the manner contemplated in the Prospectus.
(c) The Underwriters shall have received, on the Closing Date, a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in subsection (b) of this Section 8. Such
certificate will also provide that the representations and warranties of the
Company contained herein are true and correct as of the Closing Date; that the
Company has performed and complied with all agreements and conditions in this
Underwriting Agreement and the Indenture to be performed or complied with by the
Company at or prior to the Closing Date; and that no events of the type
specified in subsections (k) or (l) of this Section 8 have occurred. The officer
making such certificate may rely upon the best of his knowledge as to threatened
proceedings.
(d) On the Closing Date, the Underwriters shall have received from
Wiggin & Dana, as counsel to the Company, Reid &
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<PAGE>
Priest LLP, as special counsel to the Company, Devine, Millimet & Branch,
Professional Association, as New Hampshire counsel to the Company, Haight,
Gardner, Poor & Havens, as counsel to the Owner Trustee, and Stevens & Lee, as
Pennsylvania counsel to the Owner Trustee, opinions, dated the Closing Date,
substantially in the forms set forth in Exhibits A, B, C, D and E hereto,
respectively, with such changes therein as may be agreed upon by the Company and
the Underwriters.
(e) On the Closing Date, the Underwriters shall have received from
their counsel, Winthrop, Stimson, Putnam & Roberts, an opinion, dated the
Closing Date, substantially in the form set forth in Exhibit F hereto.
(f) The opinions of counsel (other than the opinions of the Owner
Participant's Tax Counsel, NRC Counsel and New Hampshire Counsel) required to be
delivered on the Closing Date pursuant to Section 10(c) of the Participation
Agreement as a condition precedent to a refunding and Section 4(a) of the
Refunding Agreement as a condition precedent to the issuance and delivery of the
Bonds shall also be addressed and delivered to the Underwriters.
(g) The opinion of counsel required to be delivered to the Indenture
Trustee pursuant to Section 2.05(a)(3) of the Indenture shall also be addressed
and delivered to the Underwriters.
(h) The Underwriters shall have received, on or prior to the date of
this Underwriting Agreement, a letter dated the Closing Date in form and
substance satisfactory to the Underwriters, from Coopers & Lybrand LLP,
independent public accountants, which shall contain statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Registration
Statement and the Prospectus.
(i) On the Closing Date, the Underwriters shall have received from
Coopers & Lybrand LLP a letter, dated the Closing Date, confirming, as of a date
not more than five days prior to the Closing Date, the statements contained in
the letter delivered pursuant to Section 8(h) hereof.
(j) On the Closing Date, the Underwriters shall have received a
certificate, dated the Closing Date and signed by an authorized signatory of the
Owner Trustee, to the effect that the representations and warranties of the
Owner Trustee contained herein are true and correct, and the Owner Trustee has
performed and complied with all agreements and conditions in this Underwriting
Agreement, the Refunding Agreement and the Indenture to be performed or complied
with by the Owner Trustee at or prior to the Closing Date.
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<PAGE>
(k) Between the date hereof and the Closing Date, no Indenture Event
of Default (or an event that, with the giving of notice or the passage of time
or both, would constitute an Indenture Event of Default) under the Indenture
shall have occurred.
(l) Subsequent to the execution and delivery of this Underwriting
Agreement and prior to the Closing Date, there shall not have occurred any
downgrading, nor shall any notice have been given for (A) any intended or
potential downgrading or (B) any review or possible change that does not
indicate the direction of a possible change, in the rating accorded the Bonds or
any of the Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2) under the
Securities Act.
(m) The Bonds shall, upon delivery to the Underwriters in accordance
with this Underwriting Agreement, be secured by a lien on and security interest
in the undivided ownership interest of the Owner Trustee in Unit 1 and an
assignment of basic rental payments and certain other amounts payable by the
Company under the Lease in accordance with the Transaction Documents; the
recordations and filings referred to in Section 3(e) of the Refunding Agreement
shall have been made; and the conditions precedent to the issuance of the Bonds
set forth in the Participation Agreement (including, without limitation,
Sections 2 and 10(c) thereof) and the Refunding Agreement (including, without
limitation, Section 4 thereof), shall have been met prior to the issuance and
delivery of the Bonds, and none of such conditions precedent shall have been
waived by the Company, the Owner Trustee or the Indenture Trustee without the
consent of the Underwriters.
(n) The Underwriters shall have received payment in full of the
underwriting commissions specified in Section 2 hereof.
(o) On the Closing Date there shall be in full force and effect an
order or orders of the Connecticut Department of Public Utility Control
authorizing the Company to enter into the transactions contemplated by the
Transaction Documents and the Prospectus, and such orders shall not be the
subject of any pending attack, either direct, collateral or on appeal.
If any of the conditions specified in this Section shall not have been
fulfilled, this Underwriting Agreement may be terminated by the Underwriters
upon notice thereof to the Company. Any such termination shall be without
liability of any party to any other party, except as otherwise provided in
paragraph (g) of Section 7, Section 10 and Section 12.
SECTION 9. CONDITIONS OF THE OBLIGATIONS OF THE OWNER TRUSTEE AND THE
COMPANY. The obligations of the Owner Trustee
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<PAGE>
and the Company hereunder shall be subject to the following conditions:
(a) The Registration Statement shall be effective and no stop order
suspending the effectiveness of the Registration Statement shall be in effect at
or prior to the Closing Date, and no proceedings for that purpose shall be
pending before or threatened by the Commission on the Closing Date.
(b) On the Closing Date, there shall be in full force and effect an
order or orders of the Connecticut Department of Public Utility Control
authorizing the Company to enter into the transactions contemplated by the
Transaction Documents and the Prospectus, and such orders shall not be the
subject of any pending attack, either direct, collateral or on appeal.
(c) In the case of the Company, the conditions precedent to the
obligation of the Company to issue the Bonds and consummate the transactions
contemplated by the Participation Agreement (including, without limitation,
Section 10(c) thereof) and the Refunding Agreement (including, without
limitation, Section 4 thereof) shall have been met prior to or contemporaneously
with the issuance and delivery of the Bonds.
If the conditions specified in this Section shall not have been
fulfilled, this Underwriting Agreement may be terminated by the Company or the
Owner Trustee upon notice thereof to the Underwriters. Any such termination
shall be without liability of any party to any other party, except as otherwise
provided in paragraph (g) of Section 7, Section 10, and Section 12.
SECTION 10. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the Owner Trustee, Meridian and each person, if any, who controls
any of the foregoing within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred by such Underwriter, the Owner Trustee,
Meridian or any such controlling person in connection with investigating or
defending any such action or claim) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any amendment thereof, any preliminary prospectus or the Prospectus or any
amendment or supplement thereto, or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to any Underwriter, the Owner Trustee, Meridian or such other person furnished
in writing to the Company by such
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<PAGE>
Underwriter, the Owner Trustee, Meridian or such other person expressly for use
therein.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its officers and directors who sign the Registration Statement, the
Owner Trustee, Meridian and each person, if any, who controls the Company,
Meridian, or the Owner Trustee within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
indemnity in subsection (a) from the Company to such Underwriter, Meridian, and
the Owner Trustee, but only with reference to information relating to such
Underwriter furnished to the Company, Meridian or the Owner Trustee in writing
by such Underwriter expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus or any amendments or supplements
thereto.
(c) The Owner Trustee agrees to indemnify, defend and hold harmless
each Underwriter, Meridian, the Company and its officers and directors, and each
person who controls any Underwriter, Meridian, or the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the indemnity in subsection (a) from the Company to such
Underwriter, Meridian and the Owner Trustee, but only with reference to
information relating to the Owner Trustee furnished in writing by the Owner
Trustee expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to any of the three preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
(A) both the indemnifying party and the indemnified party, or (B) if the Company
is an indemnifying party, the Underwriters, and representation of more than one
party by the same counsel would be inappropriate due to actual or potential
differing interests between them. In any case to which an exception set forth in
clauses (i) or (ii) above applies, the fees and expenses of counsel shall be at
the expense of the indemnifying party. It is
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<PAGE>
understood that the indemnifying party shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for each indemnified party, and that all such fees and expenses
shall be reimbursed as they are incurred. Such firm shall be designated in
writing by Morgan Stanley & Co. Incorporated, on behalf of the Underwriters, the
Company or the Owner Trustee in the case of parties indemnified pursuant to
Subsections (a), (b) or (c), respectively, of this Section 10. 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. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the third
sentence of this subsection (d), the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 business days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in subsections
(a), (b) or (c) of this Section 10 is unavailable to an indemnified party in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Owner Trustee on the one hand and the Underwriters on the other
hand from the offering of the Bonds or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, the Owner Trustee and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company, the
Owner Trustee and the Underwriters in connection with the offering of the Bonds
shall be deemed to be in the same
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<PAGE>
respective proportions as are represented by the total net proceeds from the
offering of such Bonds (before deducting expenses) received by the Company, the
fees received by the Owner Trustee in connection with the issuance of the Bonds,
and the total underwriting discounts and commissions received by the
Underwriters, as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company, the Owner Trustee and the Underwriters shall be
determined by reference to among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, the Owner
Trustee or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
(f) The Company, the Owner Trustee and the Underwriters agree that it
would not be just and equitable if contribution pursuant to subsection (e) of
this Section 10 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in subsection (e). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in Subsection
(e) shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Bonds underwritten and distributed to the public by such
Underwriter were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The obligations of the
Underwriters to make contributions pursuant to subsections (e) and (f) of this
Section 10 shall be several in accordance with their respective underwriting
percentages set forth on Schedule I and not joint. 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. The remedies provided for in this
Section 10 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in equity.
SECTION 11. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. Any
other provision of this Underwriting Agreement to the contrary notwithstanding,
the indemnity and contribution agreements contained in Section 10 and the
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Underwriting
Agreement, (ii) any investigation made by the Underwriter or on behalf of the
Underwriter or the person controlling the Underwriter or by or on behalf of the
Company,
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<PAGE>
its directors or officers or any person controlling the Company and (iii)
acceptance of and payment for the Bonds.
SECTION 12. TERMINATION. This Underwriting Agreement shall be subject
to termination in the absolute discretion of the Underwriters, by notice given
to the Company, if (a) after the execution and delivery of this Underwriting
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in the judgment of the Underwriters, is material and adverse and (b) in
the case of any of the events specified in clauses (a)(i) through (iv), such
event singly or together with any other such event makes it, in the judgment of
the Underwriters, impracticable to market the Bonds on the terms and in the
manner contemplated in the Prospectus.
If this Underwriting Agreement shall be terminated (a) by the
Underwriters because of any failure or refusal on the part of the Company to
comply with the terms, or to fulfill any of the conditions, of this Underwriting
Agreement or (b) by the Company because the transactions contemplated by the
Refunding Agreement shall not have been consummated as the result of any failure
or refusal on the part of either of the Owner Trustee or the Owner Participant
to comply with the terms, or to fulfill any of the conditions, of the
Participation Agreement or the Refunding Agreement, or if for any reason the
Company or the Owner Trustee shall be unable to perform its obligations under
this Underwriting Agreement, the Company will reimburse the Underwriters for all
out-of-pocket expenses (including the fees and disbursements of its counsel)
reasonably incurred by such Underwriters in connection with this Underwriting
Agreement or the Bonds. The Owner Trustee hereby agrees to reimburse the Company
for any expenses paid by the Company to the Underwriters pursuant to clause (b)
of this paragraph. The Company shall not in any event be liable to the
Underwriters for damages on account of loss of anticipated profits.
SECTION 13. DEFAULT BY ONE OR MORE UNDERWRITERS. If any Underwriter
shall fail or refuse (otherwise than for some reason sufficient to justify, in
accordance with the terms hereof, the cancellation or termination of its
obligations hereunder) to purchase and pay for the principal amount of Bonds
which it has agreed to purchase and pay for hereunder, and the aggregate
principal amount of Bonds which such defaulting
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<PAGE>
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the aggregate principal amount of the Bonds, the other
Underwriters shall be obligated severally in the proportions which the amounts
of Bonds set forth opposite their names in Schedule I hereto bear to the
aggregate principal amount of Bonds set forth opposite the names of all such
non-defaulting Underwriters, to purchase the Bonds which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase; provided
that in no event shall the principal amount of Bonds which any Underwriter has
agreed to purchase pursuant to Schedule I hereto be increased pursuant to this
Section 13 by an amount in excess of one-ninth of such principal amount of Bonds
without the written consent of such Underwriter. If any Underwriter or
Underwriters shall fail or refuse to purchase Bonds and the aggregate principal
amount of Bonds with respect to which such default occurs is more than one-tenth
of the aggregate principal amount of the Bonds the Company shall have the right
(a) to require such non-defaulting Underwriters to purchase and pay for the
respective principal amounts of Bonds that they had severally agreed to purchase
hereunder, as hereinabove provided, and, in addition, the principal amount of
Bonds that the defaulting Underwriter or Underwriters shall have so failed to
purchase up to a principal amount thereof equal to one-ninth of the respective
principal amounts of Bonds that such non-defaulting Underwriters have otherwise
agreed to purchase hereunder, and/or (b) to procure one or more others, members
of the NASD (or, if not members of the NASD, who are foreign banks, who agree in
making sales to comply with the NASD's Rules of Fair Practice), to purchase,
upon the terms herein set forth, the principal amount of Bonds that such
defaulting Underwriter or Underwriters had agreed to purchase, or that portion
thereof that the remaining Underwriters shall not be obligated to purchase
pursuant to the foregoing clause (a). In the event the Company shall exercise
its rights under clause (a) and/or (b) above, the Company shall give written
notice thereof to the Underwriters within 24 hours (excluding any Saturday,
Sunday or legal holiday) of the time when the Company learns of the failure or
refusal of any Underwriter or Underwriters to purchase and pay for its
respective principal amount of Bonds, and thereupon the Closing Date shall be
postponed for such period, not exceeding three business days, as the Company
shall determine. In the event the Company shall be entitled to but shall not
elect (within the time period specified above) to exercise its rights under
clause (a) and/or (b), the Company shall be deemed to have elected to terminate
the Underwriting Agreement. In the absence of such election by the Company, this
Underwriting Agreement will, unless otherwise agreed by the Company and the non-
defaulting Underwriters, terminate without liability on the part of any non-
defaulting party except as otherwise provided in paragraph (g) of Section 7 and
in Section 11. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of its default under this
Underwriting Agreement.
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<PAGE>
SECTION 14. MISCELLANEOUS. THIS UNDERWRITING AGREEMENT SHALL BE A NEW
YORK CONTRACT AND ITS VALIDITY AND INTERPRETATION SHALL BE GOVERNED BY THE LAW
OF THE STATE OF NEW YORK. This Underwriting Agreement may be executed in any
number of separate counterparts, each of which, when so executed and delivered,
shall be deemed to be an original and all of which, taken together, shall
constitute but one and the same agreement. This Underwriting Agreement shall
inure to the benefit of each of the Company, the Owner Trustee, Meridian, the
Underwriters and, with respect to the provisions of Section 10, each director,
officer and controlling person referred to in Section 10, and their respective
successors. Should any part of this Underwriting Agreement for any reason be
declared invalid, such declaration shall not affect the validity of any
remaining portion, which remaining portion shall remain in full force and effect
as if this Underwriting Agreement had been executed with the invalid portion
thereof eliminated. Nothing herein is intended or shall be construed to give to
any other person, firm or corporation any legal or equitable right, remedy or
claim under or in respect of any provision in this Underwriting Agreement. The
term "successor" as used in this Underwriting Agreement shall not include any
purchaser, as such purchaser, of any Bonds from the Underwriters.
SECTION 15. NOTICES. All communications hereunder shall be in writing
and, if to the Underwriters, shall be mailed or delivered to Morgan Stanley &
Co. Incorporated at the address set forth at the beginning of this Underwriting
Agreement, if to the Company, shall be mailed or delivered to it at 157 Church
Street, New Haven, CT 06506, and if to the Owner Trustee, shall be mailed or
delivered to it at 35 North Sixth Street, Reading, PA 19601.
SECTION 16. CONCERNING THE OWNER TRUSTEE. Meridian is entering into
this Underwriting Agreement solely in its capacity as Owner Trustee under the
Trust Agreement and not in its individual capacity. Anything herein to the
contrary notwithstanding, the representations, warranties, undertakings and
agreements herein made on the part of the Owner Trustee are made and intended
not as personal representations, warranties, undertakings and agreements by or
for the purpose or with the intention of binding Meridian in its individual
capacity but are made and intended for the purpose of binding only the Trust
Estate (as defined in the Participation Agreement). If a successor owner trustee
is appointed in accordance with the terms of the Trust Agreement, such successor
owner trustee shall, without any further act, succeed to all the rights, duties,
immunities and obligations of the Owner Trustee and Meridian
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<PAGE>
hereunder and the predecessor owner trustee shall be released from all further
duties and obligations hereunder.
Very truly yours,
THE UNITED ILLUMINATING COMPANY
By:____________________________
Title:
MERIDIAN TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:____________________________
Title:
Accepted as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
By:____________________________
Title:
CITICORP SECURITIES, INC.
By:____________________________
Title:
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<PAGE>
Schedule I
<TABLE>
<CAPTION>
Principal Amount Principal Amount
Name of Underwriter of Series ____ Bonds of Series ____ Bonds
- ------------------- ------------------- --------------------
<S> <C> <C>
Morgan Stanley & Co.
Incorporated $ $
Citicorp Securities,
Inc.
__________________ __________________
Total $ $
================== ==================
</TABLE>
<PAGE>
Exhibit A
---------
[Form of Opinion of Wiggin & Dana,
Counsel to the Company]
_____________, 199___
MORGAN STANLEY & CO. INCORPORATED
CITICORP SECURITIES, INC.
c/o MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, NY 10036
and
Each Person Listed
on the Attached Schedule A
Ladies and Gentlemen:
We have acted as counsel for The United Illuminating Company (the
"Company") in connection with the sale to the Underwriters pursuant to and
subject to the conditions of the Underwriting Agreement, dated , 199 (the
"Underwriting Agreement"), among the Company, Meridian Trust Company in its
capacity as Owner Trustee (the "Owner Trustee") under the Trust Agreement, dated
as of August 1, 1990, relating to the transactions hereinafter described (the
"Trust Agreement"), and the Underwriters, of $ in aggregate principal
amount of Seabrook 1 Secured Lease Obligation Bonds as follows: $ %
Series due , ; and $ % Series due , (collectively, the "Bonds").
The Bonds will be issued pursuant to the Indenture of Mortgage and Deed of
Trust, dated as of August 1, 1990, as supplemented by Supplemental Indenture No.
2 thereto, dated as of , 199 (the Indenture of Mortgage and Deed of Trust, as so
amended and supplemented, being hereinafter referred to as the "Indenture"),
among the Company, The Bank of New York, as Indenture Trustee and the Owner
Trustee. This opinion is being delivered to you at the request of the Company
pursuant to Section 8(d) of the Underwriting Agreement. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in the
Underwriting Agreement.
<PAGE>
In our capacity as such counsel, we have either participated in the
preparation of or have examined and are familiar with: (a) the Restated
Certificate of Incorporation and Bylaws of the Company and each of its
subsidiaries; (b) the Underwriting Agreement; (c) the Indenture; (d) the
Registration Statement and Prospectus filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), and the Trust Indenture Act of 1939, as amended (the "TIA"); (e) the
documents incorporated by reference in the Registration Statement and
Prospectus; (f) the records of various corporate proceedings of the Company
relating to the issuance and sale of the Bonds and the execution and delivery by
the Company of the Indenture and the Underwriting Agreement; (g) the Transaction
Documents and (h) the proceedings before the Connecticut Department of Public
Utility Control (the "DPUC") authorizing the Company to enter into the
transactions contemplated by the Transaction Documents and the Prospectus. We
have also examined such other documents and have satisfied ourselves as to such
other matters as we have deemed necessary in order to render this opinion. We
have assumed that the Transaction Documents and the Underwriting Agreement have
each been duly authorized, executed and delivered by each party thereto other
than the Company and that each such instrument constitutes the legal, valid and
binding obligation of such party other than the Company.
Based upon the foregoing, we are of the opinion that:
1. Each of the Company and its subsidiaries is duly organized and
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has due corporate power and authority to
conduct the business which it is described as conducting in the Prospectus and
to own and operate the properties owned and operated by it in such business.
2. The Indenture has been duly and validly authorized by all
necessary corporate action on the part of the Company, has been duly and validly
executed and delivered by the Company, and constitutes the legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization and other similar laws
affecting the enforcement of creditors' rights or the enforcement of the
security interest provided by the Indenture and general equitable principles.
The Indenture is qualified under the TIA and, to the best of our knowledge, no
proceedings to suspend the effectiveness of such qualification have been
instituted or threatened by the Commission.
3. The Underwriting Agreement has been duly and validly authorized
by all necessary corporate action on the part of the Company and has been duly
and validly executed and delivered by the Company.
- 2 -
<PAGE>
4. The issuance and sale of the Bonds and the execution, delivery
and performance by the Company of the Transaction Documents to which it is a
party and the consummation of the Transactions contemplated thereby will not (a)
violate or conflict with any provision of the Company's Restated Certificate of
Incorporation or Bylaws, as amended, (b) violate or conflict with any provision
of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance on or security interest in (other than as
contemplated by the Indenture) any of the assets of the Company pursuant to the
provisions of, any mortgage, indenture, contract, agreement or other undertaking
known to us (having made due inquiry with respect thereto) to which the Company
is a party or which purports to be binding upon the Company or upon any of its
assets or (c) violate any provision of any Connecticut or federal law or
regulation applicable to the Company (other than the Connecticut securities or
blue-sky laws, upon which we express no opinion) or, to the best of our
knowledge (having made due inquiry with respect thereto), any provision of any
order, writ, judgment or decree of any governmental instrumentality applicable
to the Company (except that various approvals, authorizations, orders, licenses,
permits, franchises and consents of, and registrations, declarations and filings
with, governmental authorities may be required to be obtained or made, as the
case may be, in connection with the construction, acquisition, ownership,
operation and maintenance of the Seabrook 1).
5. The Registration Statement, when it became effective, and the
Prospectus, when it was delivered to the Underwriters to enable them to confirm
sales of the Bonds, (except as to the financial statements and other financial
and statistical data contained therein, upon which we express no opinion)
complied as to form in all material respects with the applicable requirements of
the Act, the TIA and the applicable instructions, rules and regulations of the
Commission thereunder or, pursuant to said instructions, rules and regulations,
are deemed to comply therewith; the documents (or portions thereof) filed with
the Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in the Prospectus, at the time
they were filed with the Commission, complied as to form in all material
respects with the applicable provisions of the Exchange Act, and the applicable
instructions, rules and regulations of the Commission thereunder or pursuant to
said instructions, rules and regulations are deemed to comply therewith; the
Registration Statement has become and is effective under the Act and, to the
best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose are
pending or threatened under Section 8(d) of the Act.
6. (a) An order has been entered by the DPUC authorizing the
refinancing transaction described in the Prospectus and, to the best of our
knowledge, such order is in full force and effect and is not the subject of any
pending
- 3 -
<PAGE>
attack either direct or collateral; (b) no further approval, authorization,
consent or other order of any governmental body (other than in connection or
compliance with the provisions of the securities or blue-sky laws of any
jurisdiction) is legally required to be obtained by the Company to permit the
valid issuance and sale of the Bonds to the Underwriters pursuant to the
Underwriting Agreement or the execution, delivery and performance of the
Underwriting Agreement or the Indenture by the Company; (c) no further approval,
authorization, consent or other order of any governmental body is legally
required to permit the performance (other than that relating to the
construction, acquisition, ownership, operation, and maintenance of Seabrook 1)
by the Company of its obligations with respect to the Bonds or under the
Indenture and the Underwriting Agreement; and (d) no approval, authorization,
consent or order of the DPUC is required to be obtained by the Owner Trustee
solely as a result of the issuance and sale of the Bonds to the Underwriters
pursuant to the Underwriting Agreement or the execution and delivery of the
Indenture by the Owner Trustee.
7. No legal or governmental proceedings to which the Company is a
party or of which its property is the subject that are of a character required
to be disclosed in the Registration Statement and which are not disclosed and
properly described therein as required are pending or, to our knowledge,
threatened; and we do not know of any contracts or other documents of the
Company of a character required to be filed as exhibits to the Registration
Statement which are not so filed, or any contracts or other documents of the
Company of a character required to be disclosed in the Registration Statement
which are not disclosed and properly described therein as required; the
descriptions in the Registration Statement and Prospectus of statutes, legal and
governmental proceedings and contracts and other documents are accurate and
fairly present the information required to be shown.
8. The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
9. Except as disclosed in the Prospectus, there is no action, suit,
proceeding or investigation pending against or affecting the Company or any of
it assets the result of which would, in our opinion, be reasonably expected to
have a materially adverse effect on the financial condition of the Company or on
the issuance and sale of the Bonds in accordance with the Underwriting
Agreement.
10. The statements made in the Prospectus under the captions "Summary
Financial Information", "Selected Information Relating to the Offered Bonds",
"Security and Source of Payment for the Offered Bonds", "Description of the
Offered Bonds and the Indenture", "Description of the Lease" and "Other
Agreements", insofar as such statements purport to constitute summaries of the
- 4 -
<PAGE>
documents referred to therein, constitute accurate summaries of the terms of
such documents in all material respects.
In passing upon the forms of the Registration Statement and the
Prospectus, we necessarily assume the correctness and completeness of the
statements made by the Company and information included in the Registration
Statement and the Prospectus and take no responsibility therefor, except insofar
as such statements relate to us and as set forth in paragraph 10 above. In
connection with the preparation of the Registration Statement and the
Prospectus, we have had discussions with certain of the Company's officers and
representatives, with other counsel for the Company and with Coopers & Lybrand,
the independent certified public accountants who examined certain of the
financial statements incorporated by reference in the Registration Statement.
Our examination of the Registration Statement and the Prospectus and our
discussions did not disclose to us any information that gives us reason to
believe that the Registration Statement, at the time it became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus, when copies thereof were delivered to the
Underwriters and at the date hereof, contained or contains an untrue statement
of a material fact or omitted or omits 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. We do not express any opinion or belief as
to the financial statements or other financial or statistical data contained in
the Registration Statement or the Prospectus or as to the portions of the
Prospectus describing The Depository Trust Company or its book-entry system.
We have examined the portions of the information contained in the
Registration Statement that are stated therein to have been made on our
authority, and we believe such information to be correct. We are members of the
Connecticut Bar and do not hold ourselves out as experts on the laws of any
jurisdiction other than the State of Connecticut and the United States of
America. We have examined the opinions of even date herewith rendered to you by
Reid & Priest LLP and Winthrop, Stimson, Putnam & Roberts, and we concur in the
conclusions expressed therein insofar as they involve questions of Connecticut
law. In rendering the opinions set forth above, we have relied solely upon such
opinion of Reid & Priest LLP as to (i) all matters relating to New York law, to
the extent that such opinion states an opinion with regard to the matters
covered by this opinion, and (ii) the accuracy and sufficiency of the
information contained in the Transaction Descriptions (as defined in such Reid &
Priest LLP opinion) portion of the Registration Statement and Prospectus. As to
all matters relating to New Hampshire law, we have relied solely upon an opinion
of even date herewith addressed to you of Devine, Millimet & Branch, to the
- 5 -
<PAGE>
extent that such opinion states an opinion with regard to the matters covered by
this opinion.
This opinion is rendered to you and the persons listed on Schedule A
for the purpose of the transactions described above and may not be relied upon
for any other purpose or by any other person for any purpose without our prior
written consent.
Very truly yours,
WIGGIN & DANA
- 6 -
<PAGE>
SCHEDULE A
Financial Leasing Corporation
As Owner Participant
Citicorp North America, Inc.
As Guarantor
Meridian Trust Company
Individually and as Owner Trustee
The Bank of New York
Individually and as Indenture Trustee
The United Illuminating Company
As Lessee
<PAGE>
Exhibit B
---------
[Form of Opinion of Reid & Priest LLP,
Special Counsel to the Company]
, 199
MORGAN STANLEY & CO. INCORPORATED
CITICORP SECURITIES, INC.
c/o MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, NY 10036
Ladies and Gentlemen:
We have acted as special counsel for The United Illuminating Company
(the "Company") in connection with the sale to the Underwriters pursuant to and
subject to the conditions of the Underwriting Agreement, dated , 199 (the
"Underwriting Agreement"), among the Company, Meridian Trust Company in its
capacity as Owner Trustee (the "Owner Trustee") under the Trust Agreement dated
as of August 1, 1990 relating to the transactions hereinafter described (the
"Trust Agreement"), and the Underwriters, of $ in aggregate principal
amount of Seabrook 1 Secured Lease Obligation Bonds as follows: $ %
Series due , ; and $ % Series due , (collectively, the "Bonds").
The Bonds will be issued pursuant to
the Indenture of Mortgage and Deed of Trust, dated as of August 1, 1990, as
supplemented by Supplemental Indenture No. 2, dated as of , 199 (the
Indenture of Mortgage and Deed of Trust, as so amended and supplemented being
hereinafter referred to as the "Indenture"), among the Company, The Bank of New
York, as Indenture Trustee and the Owner Trustee. This opinion is being
delivered to you at the request of the Company pursuant to Section 8(d) of the
Underwriting Agreement. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Underwriting Agreement.
In our capacity as such counsel, we have either participated in the
preparation of or have examined and are familiar with: (a) the Company's
Certificate of Incorporation and Bylaws, as amended, of the Company and each of
its subsidiaries; (b) the Underwriting Agreement; (c) the Indenture; (d) the
Registration Statement and Prospectus filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), and the Trust Indenture Act of 1939, as amended (the "TIA"); (e) the
records of various corporate proceedings of the Company relating to the
authorization, issuance and sale of the Bonds and the execution and delivery by
the Company of the Indenture and the Underwriting Agreement; and (f) the
Transaction Documents and the other
<PAGE>
documents, agreements and instruments entered into by the Company to effect the
refinancing transaction described in the Prospectus. We have also examined such
other documents and have satisfied ourselves as to such other matters as we have
deemed necessary in order to render this opinion. We have assumed that the
Transaction Documents and the Underwriting Agreement have each been duly
authorized, executed and delivered by each party thereto other than the Company
and that each such instrument constitutes the legal, valid and binding
obligation of each such party other than the Company.
Based upon the foregoing, we are of the opinion that:
(1) The Indenture has been duly and validly authorized by all
necessary corporate action on the part of the Company, has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization and other similar laws
affecting the enforcement of creditors' rights generally or the enforcement of
the security interest provided by the Indenture and general equitable
principles. The Indenture is qualified under the TIA, and, to the best of our
knowledge, no proceedings to suspend the effectiveness of such qualification
have been instituted or threatened by the Commission.
(2) The Underwriting Agreement has been duly and validly authorized
by all necessary corporate action on the part of the Company and has been duly
and validly executed and delivered by the Company.
(3) The issuance and sale of the Bonds and the execution, delivery
and performance by the Company of the Underwriting Agreement and the Transaction
Documents will not violate any provision of any New York law or regulation
(other than the New York securities or blue-sky laws, upon which we are not
passing).
(4) The statements contained in the portions of the Registration
Statement consisting of the cover pages of the Prospectus Supplement and the
Prospectus and the sections entitled "Selected Information Relating to the
Offered Bonds", "Security and Source of Payment for the Bonds", "Description of
the Offered Bonds and the Indenture", "Description of the Lease" and "Other
Agreements" (the "Transaction Description") insofar as such statements purport
to constitute summaries of documents referred to therein, fairly and accurately
describe all material provisions of such documents. The sections of the
Registration Statement entitled "Certain Terms of the Offered Bonds", "Security
and Source of Payment for the Bonds" and "Description of the Offered Bonds and
the Indenture", taken together with the balance of the Transaction Description,
comply as to form in all material respects with Item 202(b) of Regulation S-K
under the Act and the applicable requirements of the TIA. The Bonds conform to
the description thereof in the Prospectus and are entitled to the benefits
- 2 -
<PAGE>
afforded by the Indenture. We do not express any opinion or belief as to the
portions of the Registration Statement and the Prospectus describing The
Depository Trust Company or its book-entry system.
(5) (a) No New York approval, authorization, consent or other order
(other than in connection or compliance with the provisions of the New York
securities or blue-sky laws, upon which we are not passing) is legally required
to be obtained by the Company to permit the issuance and sale of the Bonds to
the Underwriters pursuant to the Underwriting Agreement or the execution and
delivery of the Underwriting Agreement and the Indenture by the Company; and (b)
no approval, authorization, consent or order of the Commission under the Public
Utility Holding Company Act of 1935, as amended, is required to be obtained by
the Owner Trustee solely as a result of the issuance and sale of the Bonds to
the Underwriters pursuant to the Underwriting Agreement or the execution and
delivery of the Underwriting Agreement or the Indenture by the Owner Trustee.
We are members of the New York Bar and do not hold ourselves out as
experts on the laws of any jurisdiction other than the laws of the State of New
York and the federal law of the United States of America. Accordingly, as to
matters of Connecticut and New Hampshire law, we have, with your consent, relied
upon an opinion of even date herewith addressed to you of Wiggin & Dana of New
Haven, Connecticut and upon the opinion of even date herewith addressed to you
of Devine, Millimet & Branch of Manchester, New Hampshire. Our opinion set
forth in paragraph 5(b) above is based upon the representation of the Owner
Trustee contained in Section 7(a)(10) of the Participation Agreement, and the
agreement of the Owner Trustee in Section 7(b)(7) of the Participation
Agreement.
A copy of this opinion has been delivered to each of the parties
listed on Schedule A hereto and each such party is entitled to rely on this
opinion as if it were addressed to such party. This opinion may not be relied
upon in any manner by any other person without our prior written consent.
We have not examined and are expressing no opinion as to matters
relating to incorporation of the Company, titles to property or franchises.
Very truly yours,
REID & PRIEST LLP
- 3 -
<PAGE>
SCHEDULE A
Financial Leasing Corporation
As Owner Participant
Citicorp North America, Inc.
As Guarantor
Meridian Trust Company
Individually and as Owner Trustee
The Bank of New York
Individually and as Indenture Trustee
The United Illuminating Company
As Lessee
<PAGE>
Exhibit C
---------
[Form of Opinion of Devine, Millimet & Branch,
New Hampshire Counsel to the Company]
__________, 199__
MORGAN STANLEY & CO. INCORPORATED
CITICORP SECURITIES, INC.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
and
Each Person Listed on
the Attached Schedule A
Ladies and Gentlemen:
We have acted as New Hampshire counsel for The United Illuminating
Company (the "Company") in connection with the sale to the Underwriters pursuant
to and subject to the conditions of the Underwriting Agreement, dated , 199
(the "Underwriting Agreement"), among the Company, Meridian Trust Company, in
its capacity as Owner Trustee (the "Owner Trustee") under the Trust Agreement
dated August 1, 1990 relating to the transactions hereinafter described (the
"Trust Agreement"), and the Underwriters, of $ in aggregate principal amount of
Seabrook 1 Secured Lease Obligation Bonds as follows: $ % Series due
, , and $ % Series due ________ __, __ (collectively, the
"Bonds"). The Bonds will be issued pursuant to the Indenture of Mortgage and
Deed of Trust, dated as of August 1, 1990, as supplemented by Supplemental
Indenture No. 2, dated as of , 199 (the Indenture of Mortgage and Deed of Trust,
as so amended and supplemented being hereinafter referred to as the
"Indenture"), among the Company, The Bank of New York, as Indenture Trustee, and
the Owner Trustee. This opinion is being delivered to you at the request of the
Company pursuant to Section 8(d) of the Underwriting Agreement. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Underwriting Agreement.
In our capacity as such counsel, we have examined (a) the opinions to
you of even date of Wiggin & Dana, Reid & Priest LLP, and Winthrop, Stimson,
Putnam & Roberts; (b) the Underwriting Agreement; (c) the Indenture; and (d) the
Transaction Documents. We have examined originals, or copies certified or
otherwise identified to our satisfaction, of such other agreements, records and
other documents, certificates of public officials and officers, management
personnel and representatives of the Company, and have investigated such
<PAGE>
matters of law, as we have deemed necessary or advisable for the purposes of
rendering the opinions set forth herein. We have assumed the genuineness of the
signatures on documents and instruments, the authenticity of documents submitted
as originals and the conformity to originals of documents submitted as copies
thereof. We have also assumed the due authorization, execution and delivery of
documents by the parties thereto, other than the Company, and that each such
document constitutes the legal, valid and binding obligation of each such party
other than the Company, enforceable against each in accordance with its terms.
We have assumed the truthfulness and accuracy of all representations and
warranties made as to factual matters in the Transaction Documents by the
parties thereto.
We have assumed that the properties with respect to which investments
are recorded in the Company plant accounts identified in Schedule U1 to the
Indenture are of the types specified in Schedule U1.
Based upon the foregoing, and subject to the qualifications set forth
below, we are of the opinion that:
(1) Each of the Indenture, the Facility Lease, the Ground Lease, and
each other Transaction Document that, by its terms, is governed by the laws of
New Hampshire has been duly and validly authorized by all necessary corporate
action on the part of the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
(2) The properties included within the definition of "Indenture
Estate" that the Indenture purports to subject to the lien granted to the
Indenture Trustee for the benefit of the bondholders are of types that can,
under the laws of New Hampshire, be subject to such lien and the description of
the Indenture Estate contained in the Indenture is adequate under the laws of
New Hampshire to create the lien therein that the Indenture purports to create.
[(3) (a) The Bonds are equally and ratably secured by a perfected
first priority lien on and security interest in the Undivided Interest (as
defined in the Prospectus) and, other than Excepted Payments and Excepted
Rights, the rights of the Owner Trustee under the Lease and other Transaction
Documents, including the right to receive all payments of Basic Rent (as defined
in Appendix A to the Participation Agreement) and certain other payments made by
the Company subject to the following:
(i) Permitted Liens.
(ii) A security interest in cash or in instruments (other than
certified securities or instruments forming a part of chattel paper) can be
perfected only by the secured
- 2 -
<PAGE>
party's taking possession (with certain exceptions which may not be
relevant here.)
(iii) The creation and perfection of security interests in securities
requires the transfer of such securities in the manner prescribed in
Article 8 of the New Hampshire Uniform Commercial Code (RSA 382:A:8-101 et
seq.) to the secured party or a person designated by the secured party.
(iv) Under certain circumstances described in Section 9-306 of the
Uniform Commercial Code, the right of a secured party to enforce a
perfected security interest in cash proceeds of and collections pursuant to
collateral may be limited.
(v) You have not requested us to express any opinion, and we express
none, as to the perfection or priority of security interests in vehicles or
in copyrights and literary property rights.
(vi) Pursuant to the Uniform Commercial Code, continuation statements
are required from time to time to be filed in order to be preserved a
security interest in personal property or fixtures as a perfected security
interest and the priority thereof.
[(vii) The lien of the Indenture in real estate acquired after the
Closing will be at most an equitable interest of limited enforceability.]
(viii) No opinion is expressed as to [(A) the priority of a security
interest in personal property to the extent that such priority is limited
by the terms of the Uniform Commercial Code as enacted in New Hampshire,]
or (B) the validity, legality, enforceability, priority or perfection of a
security interest in any contracts, agreements, permits, franchises or
licenses which prohibit or limit the transfer or assignment thereof or the
grant of a security interest therein, or (C) the priority or perfection of
a security interest in personal property which cannot be perfected by the
filing of a financing statement.]
(b) All filings or recordings required to be made in New
Hampshire under New Hampshire law to create or perfect such lien and security
interest (i) have been made in all of the offices in which such filings or
recordings are necessary or appropriate and (ii) are in the form required by
law.
[(4) All taxes and governmental fees and charges the payment of
which is required in connection with the creation, perfection or filing of the
lien of the Indenture have been paid.]
- 3 -
<PAGE>
(5) The issuance and sale of the Bonds and the execution, delivery
and performance by the Company of the Transaction Documents to which it is a
party will not violate any provision of New Hampshire law or regulation
applicable to the Company (other than the New Hampshire securities or blue-sky
laws, upon which we are not passing) or, to the best of our knowledge, any
provision of any order, writ, judgment or decree of any New Hampshire
governmental instrumentality applicable to the Company (except that various
approvals, authorizations, orders, licenses, permits, franchises and consents
of, and registrations, declarations and filings with, governmental authorities
may be required to be obtained or made, as the case may be (1) in connection or
compliance with the provisions of the securities or blue-sky laws of any
jurisdiction and (2) in connection with the construction, acquisition,
ownership, operation and maintenance of Seabrook 1).
The opinions expressed in paragraphs 2 and 3 above are given in
reliance and are based upon the title report delivered pursuant to Section
10(a)(26) of the Participation Agreement. We have further assumed that
immediately prior to the Closing the Company has good, marketable and valid
title to those portions of the Undivided Interest which constitute personal
property.
The opinions set forth herein are subject to the qualification that
(i) enforceability of the Participation Agreement, the Refunding Agreement, the
Facility Lease, the Promissory Note and the other Transaction Documents in
accordance with their respective terms may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws affecting enforcement of creditors' or
lessors' rights generally, as well as general principles of equity and the
availability of equitable remedies (regardless of whether such enforcement is
sought in proceedings in equity or at law), and (ii) certain laws and judicial
decisions may affect the enforceability of certain rights and remedies provided
in the Participation Agreement, the Refunding Agreement, the Facility Lease, the
Promissory Note and the other Transaction Documents. With respect to the
qualification in subsection (ii), however, we are of the opinion that none of
such laws in effect and none of such judicial decisions make the rights and
remedies provided in the Transaction Documents, taken as a whole, inadequate for
the practical realization of the benefits of the Transaction Documents, taken as
a whole. We point out that the transfer of title to the Undivided Interest at
foreclosure would require the prior approval of the New Hampshire Public
Utilities Commission and that the purchaser at foreclosure would be required
either to (i) qualify as a foreign electric utility under RSA Chapter 374-A or
(ii) receive the approval of the New Hampshire Public Utilities Commission to
commence business as a public utility, which approval can only be granted to a
business entity organized under the laws of New Hampshire.
- 4 -
<PAGE>
We are members of the Bar of the State of New Hampshire and, as such,
do not hold ourselves out as experts on the laws of any other state. The
opinions expressed herein relate only to the laws of New Hampshire to the extent
applicable to the transactions contemplated in the Transaction Documents and not
to the laws of any other state or the United States. In rendering the opinions
set forth above, we have relied as to all matters relating to (A) the laws of
the State of New York, solely upon the opinion of even date herewith of Reid &
Priest LLP, of New York, New York, the Company's special counsel, and (B) the
laws of the State of Connecticut, the Holding Company Act and the Federal Power
Act, solely upon the opinion of even date herewith of Wiggin & Dana of New
Haven, Connecticut, the Company's general counsel, as to all of which laws we
have, with your consent, made no independent investigation. This opinion is
limited to matters set forth herein and no opinion may be inferred or implied
beyond the matters expressly stated herein.
We have not examined and are expressing no opinion as to the capacity
of the Owner Participant, the Owner Trustee or the Indenture Trustee to engage
in the transactions contemplated by the Transaction Documents, or on matters of
laws relating to qualification of the Owner Participant, the Owner Trustee or
the Indenture Trustee to do business or relating to or governing banking or the
trust powers of the Owner Trustee, the Owner Participant or the Indenture
Trustee.
This opinion is being rendered solely for your benefit and the benefit
of the Persons named in the attached Schedule A in connection with transactions
contemplated by the Transaction Documents. No such Person may rely on this
opinion for any other purpose, no other Person may rely on this opinion for any
purpose and this opinion may not be referred to or quoted in any document,
report or financial statement of, or filed with or delivered to, any Person,
without the express written consent of the undersigned.
Very truly yours,
DEVINE, MILLIMET & BRANCH
PROFESSIONAL ASSOCIATION
By: _______________________
- 5 -
<PAGE>
SCHEDULE A
Financial Leasing Corporation
As Owner Participant
Citicorp North America, Inc.
As Guarantor
Meridian Trust Company
Individually and as Owner Trustee
The Bank of New York
Individually and as Indenture Trustee
The United Illuminating Company
As Lessee
<PAGE>
Exhibit D
---------
[Form of Opinion of Haight, Gardner, Poor & Havens,
Counsel to the Owner Trustee]
, 199
MORGAN STANLEY & CO. INCORPORATED
CITICORP SECURITIES, INC.
c/o MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, NY 10036
Ladies & Gentlemen:
We have acted as counsel to the Owner Trustee in connection with the
sale to the Underwriters of $ in aggregate principal amount of Seabrook 1
Secured Lease Obligation Bonds as follows: $ % Series due ,
and $ % Series due , (collectively, the "Bonds") pursuant to and
subject to the conditions set forth in the Underwriting Agreement, dated ,
199 among The United Illuminating Company ("UI"), Meridian Trust Company
("Meridian") not in its individual capacity but solely as Owner Trustee
(the "Owner Trustee") under the Trust Agreement, dated as of August 1, 1990
relating to the transactions hereinafter described (the "Trust Agreement") and
the Underwriters. The Bonds will be issued pursuant to the Indenture of Mortgage
and Deed of Trust, dated as of August 1, 1990, as supplemented by Supplemental
Indenture No. 2, dated as of , 199 (the Indenture of Mortgage and Deed of
Trust, as so amended and supplemented being hereinafter referred to as the
"Indenture") among UI, The Bank of New York, as Indenture Trustee and the Owner
Trustee. This opinion is being delivered to you at the request of the Owner
Trustee pursuant to Section 8(d) of the Underwriting Agreement. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Underwriting Agreement.
In our capacity as such counsel, we have either participated in the
preparation of or have examined and are familiar with the Underwriting Agreement
and the Transaction Documents. We have also examined such other documents and
have satisfied ourselves as to such other matters as we have deemed necessary in
order to render this opinion. We have not examined the Bonds, except a specimen
thereof, and we have relied upon a certificate of the Indenture Trustee under
the Indenture as to the execution and authentication thereof.
We have assumed that each of the Transaction Documents and the
Underwriting Agreement has been duly authorized, executed and delivered by each
party thereto other than Meridian and the Owner Trustee and that each such
instrument constitutes the
<PAGE>
legal, valid and binding agreement of each such party other than the Owner
Trustee.
Based upon the foregoing, we are of the opinion that:
(1) Meridian is a Pennsylvania trust company duly organized and
validly existing in good standing under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and authority to enter into
and perform its obligations under the Trust Agreement, and pursuant to the Trust
Agreement, the Owner Trustee has all requisite power and authority to enter into
and perform its obligations under the Indenture and the Underwriting Agreement.
(2) The Indenture has been duly and validly authorized by all
necessary action on the part of the Owner Trustee, has been duly and validly
executed and delivered by the Owner Trustee and, assuming the due authorization,
execution and delivery thereof by each other party thereto, constitutes the
legal, valid and binding obligation of the Owner Trustee, enforceable against
the Owner Trustee in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization and other similar laws
affecting the enforcement of creditors' rights generally.
(3) The Owner Trustee has executed such instruments and complied with
such other formalities as are required of the Owner Trustee under the Indenture
as a condition precedent to the creation and issuance of the Bonds.
(4) The Bonds have been duly authorized, executed, issued and
delivered by the Owner Trustee and, assuming their due authentication by the
Indenture Trustee in accordance with the Indenture and that value has been given
therefor, are the legal, valid and binding obligations of the Owner Trustee
enforceable against the Owner Trustee in accordance with their terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization and other
similar laws affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether considered in a proceeding
in equity or at law), and are entitled to the benefits purported to be provided
by the Indenture in accordance with the terms of the Indenture and the Bonds.
(5) No approval, authorization, consent or other order of any
governmental body under any law of the United States of America or the
Commonwealth of Pennsylvania, in each case, governing the trust powers of
Meridian or the Owner Trustee, is required to permit the issuance and sale of
the Bonds by the Owner Trustee to the Underwriters pursuant to the Underwriting
Agreement or the execution and delivery of the Underwriting Agreement or the
Indenture by the Owner Trustee.
- 2 -
<PAGE>
(6) The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Owner Trustee.
(7) The issuance and sale by the Owner Trustee of the Bonds and the
execution, delivery and performance by the Owner Trustee of the Underwriting
Agreement and the Indenture will not (a) violate any provision of Meridian's
Articles of Incorporation or By-Laws or (b) violate any provision of any law or
regulation of the United States of America or the Commonwealth of Pennsylvania,
in each case, governing the trust powers of Meridian or the Owner Trustee
applicable to the Owner Trustee.
In rendering the opinions set forth above, we have not opined as to
and do not purport to opine as to the application of (i) any laws of any
jurisdiction other than the laws of the Commonwealth of Pennsylvania, the State
of New York and the United States of America or (ii) any United States federal
or state securities or blue-sky laws. To the extent the opinions expressed
herein relate to the due incorporation, organization or corporate power of
Meridian, the due authorization and execution by Meridian of the Trust Agreement
and the Transaction Documents to which Meridian is a party, and laws of the
Commonwealth of Pennsylvania, we have relied on an opinion of even date herewith
of Stevens & Lee, Pennsylvania counsel for the Owner Trustee, addressed to you.
We confirm that Stevens & Lee and Winthrop, Stimson, Putnam & Roberts may rely
on this opinion in issuing their own opinions to you.
Very truly yours,
HAIGHT, GARDNER, POOR & HAVENS
By: __________________________
- 3 -
<PAGE>
SCHEDULE A TO OPINION LETTER
----------------------------
Meridian Trust Company, individually and
as Owner Trustee
Financial Leasing Corporation, as Owner Participant
The Bank of New York, individually and
as Indenture Trustee
The United Illuminating Company, as Lessee
Citicorp North America, Inc., as Guarantor
<PAGE>
Exhibit E
---------
[Form of Opinion of Stevens & Lee,
Pennsylvania Counsel to the Owner Trustee]
, 199
MORGAN STANLEY & CO. INCORPORATED
CITICORP SECURITIES, INC.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Ladies & Gentlemen:
We have acted as Pennsylvania counsel to the Owner Trustee in
connection with the sale to the Underwriters of $ , % Series due
, 20 ; and $ , % Series due ____________ ___, 20__ (collectively, the "Bonds")
pursuant to and subject to the conditions set forth in the Underwriting
Agreement, dated , 19 among The United Illuminating Company ("UI"), Meridian
Trust Company ("Meridian") not in its individual capacity but solely as Owner
Trustee (the "Owner Trustee") under the Trust Agreement, dated as of August 1,
1990 relating to the transactions hereinafter described (the "Trust Agreement")
and the Underwriters. The Bonds will be issued pursuant to the Indenture of
Mortgage and Deed of Trust, dated as of August 1, 1990, as supplemented by
Supplemental Indenture No. 2, dated as of , 199 (the Indenture of Mortgage and
Deed of Trust, as so amended and supplemented being hereinafter referred to as
the "Indenture") among UI, The Bank of New York, as Indenture Trustee, and the
Owner Trustee. This opinion is being delivered to you at the request of the
Owner Trustee pursuant to Section 8(d) of the Underwriting Agreement.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Underwriting Agreement.
In our capacity as such counsel, we have examined and are familiar
with the Underwriting Agreement and the Transaction Documents. We have also
examined such other documents and have satisfied ourselves as to such other
matters as we have deemed necessary in order to render this opinion. We have not
examined the Bonds, except a specimen thereof, and we have relied upon a
certificate of the Indenture Trustee under the Indenture as to the execution and
authentication thereof.
We have assumed that each of the Transaction Documents and the
Underwriting Agreement has been duly authorized, executed and delivered by each
party thereto other than Meridian and the Owner Trustee and that each such
instrument constitutes the legal, valid and binding agreement of each such party
other than the Owner Trustee.
<PAGE>
Based upon the foregoing, we are of the opinion that:
(1) Meridian is a Pennsylvania trust company duly organized and
validly existing in good standing under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and authority to enter into
and perform its obligations under the Trust Agreement, and pursuant to the Trust
Agreement, the Owner Trustee has all requisite power and authority to enter into
and perform its obligations under the Indenture and the Underwriting Agreement.
(2) The Indenture has been duly and validly authorized by all
necessary action on the part of the Owner Trustee, has been duly and validly
executed and delivered by the Owner Trustee and, assuming the due authorization,
execution and delivery thereof by each other party thereto, constitutes the
legal, valid and binding obligation of the Owner Trustee, enforceable against
the Owner Trustee in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization and other similar laws
affecting the enforcement of creditors' rights generally and subject to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(3) The Owner Trustee has executed such instruments and complied with
such other formalities as are required of the Owner Trustee under the Indenture
as a condition precedent to the creation and issuance Of the Bonds.
(4) The Bonds have been duly authorized, executed, issued and
delivered by the Owner Trustee and, assuming their due authentication by the
Indenture Trustee in accordance with the Indenture and that value has been given
therefor, are the legal, valid and binding obligations of the Owner Trustee
enforceable against the Owner Trustee in accordance with their terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization and other
similar laws affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether considered in a procedure in
equity or at law), and are entitled to the benefits purported to be provided by
the Indenture in accordance with the terms of the Indenture and the Bonds.
(5) No approval, authorization, consent or other order of any
governmental body under any law of the Commonwealth of Pennsylvania governing
the trust powers of Meridian or the Owner Trustee, is required to permit the
issuance and sale of the Bonds by the Owner Trustee to the Underwriter pursuant
to the Underwriting Agreement or the execution and delivery of the Underwriting
Agreement or the Indenture by the Owner Trustee.
(6) The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Owner Trustee.
- 2 -
<PAGE>
(7) The issuance and sale by the Owner Trustee of the Bonds and the
execution, delivery and performance by the Owner Trustee of the Underwriting
Agreement and the Indenture will not (a) violate any provision of Meridian's
Articles of Incorporation or By-Laws or (b) violate any provision of any law or
regulation of the Commonwealth of Pennsylvania governing the trust powers of
Meridian or the Owner Trustee applicable to the Owner Trustee.
In rendering the opinions set forth above, we have not opined as to
and do not purport to opine as to the application of (i) any laws of any
jurisdiction other than the laws of the Commonwealth of Pennsylvania or (ii) any
securities or blue-sky laws. We confirm that Haight, Gardner, Poor & Havens and
Winthrop, Stimson, Putnam & Roberts may rely on this opinion in issuing their
own opinions to you.
Very truly yours,
STEVENS & LEE
- 3 -
<PAGE>
Exhibit F
---------
[Form of Opinion of Winthrop, Stimson, Putnam & Roberts,
Counsel to the Underwriters]
______ __, 199__
MORGAN STANLEY & CO. INCORPORATED
CITICORP SECURITIES, INC.
c/o MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, NY 10036
Ladies and Gentlemen:
We have acted as counsel to the underwriters (the "Underwriters"),
pursuant to the Underwriting Agreement dated , 199 (the "Underwriting
Agreement") among the Underwriters, The United Illuminating Company, a
Connecticut corporation (the "Company"), and the Owner Trustee, providing for
the several purchases and reoffering by the Underwriters of $ in aggregate
principal amount of Seabrook 1 Secured Lease Obligation Bonds as follows:
$ % Series due , ; and $ % Series due , (collectively, the
"Bonds"). Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Underwriting Agreement.
In our capacity as your counsel, we have examined such documents, and
such questions of law and have satisfied ourselves as to such other matters as
we have deemed necessary in order to render this opinion. As to various
questions of fact material to this opinion, we have relied upon representations
of the parties to the Transaction Documents and statements in the Registration
Statement. We have not examined the Bonds except a specimen thereof, and we have
relied upon a certificate of the Indenture Trustee as to its due execution of
the Indenture and the due authentication of the Bonds. We have not examined
into, and are expressing no opinion or belief as to matters relating to, titles
to property, franchises, the nature and extent of the lien of the Indenture or
the incorporation of the Company.
Based upon and subject to the foregoing, it is our opinion that:
(1) The Company is a corporation in good standing under the laws of
the State of Connecticut.
(2) The Indenture has been duly and validly authorized by all
necessary corporate action on the part of the Company and is duly qualified
under the Trust Indenture Act of 1939, as amended (the "TIA"). To the best of
our knowledge, no proceedings to suspend the effectiveness of such qualification
<PAGE>
have been instituted or threatened by the Commission. The Indenture has been
duly executed and delivered and is a valid and binding instrument enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally or the enforcement of the security purported to be provided by the
Indenture, by general equitable principles[, by the Atomic Energy Act of 1954
and regulations thereunder] and by an implied covenant of good faith and fair
dealing.
(3) The Bonds conform as to legal matters with the statements
concerning them made in the Prospectus, are, assuming their due execution and
issuance by the Owner Trustee and due authentication and delivery by the Trustee
in accordance with the Indenture, legal, valid and binding obligations
enforceable in accordance with their terms, and are entitled to the benefit of
the security purported to be provided by the Indenture, except as may be limited
by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally or the enforcement of the security
purported to be provided by the Indenture, by general equitable principles[, by
the Atomic Energy Act of 1954 and regulations thereunder] and by an implied
covenant of good faith and fair dealing.
(4) The Underwriting Agreement has been duly authorized, executed and
delivered by each of the Company and the Owner Trustee.
(5) The Registration Statement, as of its effective date, and the
Prospectus, as of its date of issue (except, in each case, as to the financial
statements and other financial and statistical data contained therein, upon
which we do not pass) complied as to form in all material respects with the
requirements of the Act and the TIA; the Registration Statement has become, and
on the date hereof is, effective under the Act and, to the best of our
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for a stop order are threatened or
pending under Section 8 of the Act.
In passing upon the forms of the Registration Statement and the
Prospectus, we necessarily assume the correctness and completeness of the
statements made to us by or on behalf of the Company and information included in
the Registration Statement and the Prospectus and take no responsibility
therefor, except as set forth in paragraph (3) hereof and insofar as such
statements relate to us. In connection with the Registration Statement and the
Prospectus, we have had discussions with certain of the Company's officers and
representatives, with counsel for the Company, with Coopers & Lybrand, the
independent public accountants who examined certain of the financial statements
incorporated by reference in the Registration Statement, and with your
representatives. We have not participated in the
- 2 -
<PAGE>
preparation of any of the documents incorporated by reference in the Prospectus
nor in the selection of the information included therein or excluded therefrom
by the Company. Subject to the foregoing, our review of the Registration
Statement and the Prospectus and our discussions did not disclose to us any
information which gives us reason to believe that the Registration Statement, at
the time it became effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or that the Prospectus, at its
date of issue and at the date hereof, contained or contains an untrue statement
of a material fact or omitted or omits 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. We do not express any opinion or belief as
to the financial statements or other financial or statistical data contained in
the Registration Statement or the Prospectus, as to the statement of eligibility
and qualification of the Indenture Trustee or as to the portions of the
Registration Statement and the Prospectus which describe the Depository Trust
Company and its book-entry system.
We are members of the Bar of the State of New York, and (for purposes
of this opinion) do not hold ourselves out as experts on the laws of
Connecticut, New Hampshire, Pennsylvania or any other jurisdiction other than
the State of New York and the United States of America. We have, with your
consent, relied upon opinions of even date herewith addressed to you of Wiggin &
Dana and [Devine, Millimet & Branch] as to all matters of Connecticut and New
Hampshire law, respectively, related to this opinion.
The opinion set forth above is solely for your benefit in connection
with the transactions contemplated by the Underwriting Agreement and may not be
delivered to or relied upon in any manner by any other person or for any other
purpose.
Very truly yours,
WINTHROP, STIMSON, PUTNAM & ROBERTS
- 3 -
<PAGE>
Exhibit 5(c)
HAIGHT, GARDNER, POOR & HAVENS
195 Broadway
New York, New York 10007-3189
December 26, 1995
The United Illuminating Company
157 Church Street
New Haven, CT 06506-0901
Dear Sirs:
In connection with the proposed issuance and sale by Meridian Trust Company,
not in its individual capacity but solely as Owner Trustee (the "Owner Trustee")
under a Trust Agreement with an equity investor (the "Trust Agreement") of
Seabrook 1 Secured Lease Obligation Bonds (the "Bonds"), such Bonds being
secured by, among other things, an assignment of rentals under the Facility
Lease between the Owner Trustee, as Lessor, and The United Illuminating Company
(the "Company"), as Lessee (the "Lease"), to be paid by the Company, and in
connection with the registration statement on Form S-3 (No. 33-64003) (the
"Registration Statement") relating to such Bonds filed under the Securities Act
of 1933, as amended, which Registration Statement is to become effective on or
about the date hereof, we advise you that, in our opinion, when the Trust
Agreement and the documents filed as Exhibits 4(a)-(m) to the Registration
Statement (the "Documents") and the Bonds shall have been duly authorized,
executed and delivered by the parties thereto, and when the Bonds shall have
been duly authenticated and value given therefor, the Bonds will have been duly
and validly issued under the Indenture of Mortgage and Deed of Trust filed as
Exhibit 4(a) to the Registration Statement, as supplemented by Supplemental
Indenture No. 2 filed as Exhibit 4(c) to the Registration Statement, by, and
will be valid and binding obligations of, the Owner Trustee.
We have assumed for purposes of this opinion that the Documents will be the
valid, legal and binding obligations of each of the parties thereto other than
the Owner Trustee.
<PAGE>
The United Illuminating Company
December 26, 1995
Page -2-
We are members of the Bar of the State of New York and do not hold ourselves
out as experts on the laws of any other state. As to all matters of
Pennsylvania law, we have relied upon an opinion addressed to us of Stevens &
Lee, Pennsylvania counsel for the Owner Trustee. We express no opinion as to
the laws other than the laws of the State of New York and the Commonwealth of
Pennsylvania and the federal laws of the United States governing the trust
powers of Meridian Trust Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and we also consent to such reference to our firm as may
be made in the Registration Statement as amended and as it may be further
amended, and in the prospectus constituting a part thereof.
Very truly yours,
HAIGHT, GARDNER, POOR & HAVENS
<PAGE>
Exhibit 5(e)
LAW OFFICES OF
STEVENS & LEE
A PROFESSIONAL CORPORATION
111 NORTH SIXTH STREET
READING, PA 19603-0679
December 26, 1995
The United Illuminating Company
157 Church Street
New Haven, CT 06506-0901
Ladies and Gentlemen:
We understand that Meridian Trust Company, not in its individual capacity,
but solely as Owner Trustee (the "Owner Trustee") under a Trust Agreement with
an equity investor (the "Trust Agreement"), proposes to issue Seabrook 1 Secured
Lease Obligation Bonds (the "Bonds"). Such Bonds will be secured by, among other
things, an assignment of rentals to be paid by The United Illuminating Company
(the "Company") under the Facility Lease between the Owner Trustee, as Lessor,
and the Company, as Lessee (the "Lease"). We further understand that a
registration statement on Form S-3 (No. 33-64003) (the "Registration Statement")
relating to such Bonds has been filed under the Securities Act of 1933, as
amended, and is to become effective on or about the date hereof.
All capitalized terms not defined herein shall have the meaning ascribed to
them in the Trust Agreement and the Registration Statement. It is our opinion
that, when the Trust Agreement and the documents filed as Exhibits 4(a)-(m) to
the Registration Statement (the "Documents") and the Bonds shall have been duly
authorized, executed and delivered by the parties thereto, and when the Bonds
shall have been duly authenticated and value given therefor, the Bonds will have
been duly and validly issued under the Indenture of Mortgage and Deed of Trust
filed as Exhibit 4(a) to the Registration Statement, as supplemented by
Supplemental Indenture No. 2 filed as Exhibit 4(c) to the Registration
Statement, and will be valid and binding obligations of the Owner Trustee.
We have assumed for the purposes of this opinion that the Documents will be
the valid, legal and binding obligations of each of the parties thereto other
than the Owner Trustee. We express no opinion as to laws other than laws of the
Commonwealth of Pennsylvania and the federal laws of the United States governing
the trust powers of Meridian Trust Company.
<PAGE>
A copy of this opinion is being provided to the law firm of Haight,
Gardner, Poor & Havens, New York, New York, which firm is entitled to rely
hereon.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and we also consent to the reference to our Firm in the
Registration Statement, and in the prospectus constituting a part thereof. By
granting this consent, we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
STEVENS & LEE
<PAGE>
EXHIBIT 23(d)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
The United Illuminating Company Seabrook 1 Secured Lease Obligation Bond filing
on Form S-3, of our report, dated January 23, 1995, on our audits of the
consolidated financial statements and financial statements schedule of The
United Illuminating Company as of December 31, 1994, 1993 and 1992 and for the
years then ended, which report is included in this Annual Report on Form 10-K.
We also consent to the reference of our firm under the caption "Experts and
Legality".
COOPERS & LYBRAND
Hartford, Connecticut
December 22, 1995
