<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDING MARCH 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number 1-6788
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
incorporation or organization) Identification No.)
157 Church Street, New Haven, Connecticut 06506
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 203-499-2000
None
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- ------
The number of shares outstanding of the issuer's only class of
common stock, as of April 30, 1995, was 14,086,691.
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<TABLE>
INDEX
Part I. FINANCIAL INFORMATION
<CAPTION>
Page
Number
------
<S> <C>
Item 1. Financial Statements. 3
Consolidated Statement of Income for the three
months ended March 31, 1995 and 1994. 3
Consolidated Balance Sheet as of March 31, 1995 and
December 31, 1994. 4
Consolidated Statement of Cash Flows for the three months
ended March 31, 1995 and 1994. 6
Notes to Consolidated Financial Statements. 7
- Statement of Accounting Policies 7
- Capitalization 7
- Accounting for Phase-in Plan 8
- Income Taxes 9
- Short-term Credit Arrangements 10
- Supplementary Information 11
- Fuel Financing Obligations and Other Lease Obligations 12
- Commitments and Contingencies 12
- Capital Expenditure Program 12
- Nuclear Insurance Contingencies 12
- Other Commitments and Contingencies 13
- Hydro-Quebec 13
- Site Remediation Costs 13
- Property Taxes 13
- Nuclear Fuel Disposal and Nuclear Plant Decommissioning 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 15
- Major Influences on Financial Condition 15
- Capital Expenditure Program 16
- Liquidity and Capital Resources 17
- Results of Operations 19
- Outlook 20
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 22
SIGNATURES 23
</TABLE>
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<TABLE>
PART I: FINANCIAL INFORMATION
ITEM I: FINANCIAL STATEMENTS
THE UNITED ILLUMINATING COMPANY
CONSOLIDATED STATEMENT OF INCOME
(Thousands except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1995 1994
---- ----
<S> <C> <C>
OPERATING REVENUES (NOTE G) $165,398 $167,579
------- -------
OPERATING EXPENSES
Operation
Fuel and energy 36,898 38,275
Capacity purchased 12,943 11,576
Other 34,770 36,352
Maintenance 6,805 7,543
Depreciation 15,353 14,473
Amortization of cancelled nuclear project
and deferred return 3,440 293
Income taxes (Note E) 12,074 11,098
Other taxes (Note G) 14,980 15,343
------- -------
Total 137,263 134,953
------- -------
OPERATING INCOME 28,135 32,626
------- -------
OTHER INCOME AND (DEDUCTIONS)
Allowance for equity funds used during construction - 294
Other-net (Note G) (292) 201
Non-operating income taxes 991 645
------- -------
Total 699 1,140
------- -------
INCOME BEFORE INTEREST CHARGES 28,834 33,766
------- -------
INTEREST CHARGES
Interest on long-term debt 15,603 18,875
Other interest (Note G) 4,349 2,321
Allowance for borrowed funds used during construction (588) (662)
------- -------
Net Interest Charges 19,364 20,534
------- -------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 9,470 13,232
------- -------
Cumulative effect for years prior to 1994 of accounting
change for postemployment benefits
(net of income taxes of $956) - (1,294)
------- -------
NET INCOME 9,470 11,938
Dividends on Preferred Stock 733 1,080
------- -------
INCOME APPLICABLE TO COMMON STOCK $8,737 $10,858
======= =======
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 14,087 14,084
EARNINGS PER SHARE OF COMMON STOCK BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $0.62 $0.86
Cumulative effect for years prior to 1994 of accounting
change for postemployment benefits - (0.09)
------- -------
EARNINGS PER SHARE OF COMMON STOCK $0.62 $0.77
======= =======
CASH DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $0.705 $0.69
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of the financial statements.
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<TABLE>
THE UNITED ILLUMINATING COMPANY
CONSOLIDATED BALANCE SHEET
ASSETS
(Thousands of Dollars)
<CAPTION>
March 31, December 31,
1995 1994*
---- ----
(Unaudited)
<S> <C> <C>
Utility Plant at Original Cost
In service $1,769,339 $1,761,627
Less, accumulated provision for depreciation 506,971 493,482
---------- ----------
1,262,368 1,268,145
Construction work in progress 60,248 57,669
Nuclear fuel 27,553 31,443
---------- ----------
Net Utility Plant 1,350,169 1,357,257
---------- ----------
Other Property and Investments 22,470 21,824
---------- ----------
Current Assets
Cash and temporary cash investments 27,250 11,432
Accounts receivable
Customers, less allowance for doubtful
accounts of $5,000 and $4,900 60,739 61,042
Other 29,810 26,981
Accrued utility revenues 23,389 23,139
Fuel, materials and supplies, at average cost 23,098 22,318
Prepayments 17,544 12,307
Other 166 90
---------- ----------
Total 181,996 157,309
---------- ----------
Regulatory Assets (future amounts due from customers
through the ratemaking process)
Income taxes due principally to book-tax differences 399,515 403,132
Deferred return - Seabrook Unit 1 59,782 62,929
Unamortized cancelled nuclear projects 25,499 25,792
Unamortized redemption costs 25,031 26,269
Uranium enrichment decommissioning cost 1,606 1,540
Deferred fossil fuel costs - 112
Unamortized debt issuance expenses 6,065 5,527
Other 13,616 13,300
---------- ----------
Total 531,114 538,601
---------- ----------
$2,085,749 $2,074,991
========== ==========
*Derived from audited financial statements
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of the financial statements.
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<TABLE>
THE UNITED ILLUMINATING COMPANY
CONSOLIDATED BALANCE SHEET
CAPITALIZATION AND LIABILITIES
(Thousands of Dollars)
<CAPTION>
March 31, December 31,
1995 1994*
---- ----
(Unaudited)
<S> <C> <C>
Capitalization (Note B)
Common stock equity
Common stock $284,133 $284,133
Paid-in capital 738 738
Capital stock expense (2,402) (2,402)
Retained earnings 144,365 145,559
---------- ----------
426,834 428,028
Preferred stock 44,700 44,700
Long-term debt 697,569 708,340
---------- ----------
Total 1,169,103 1,181,068
---------- ----------
Noncurrent Liabilities
Obligations under capital leases 17,729 17,799
Uranium enrichment decommissioning reserve 1,427 1,337
Nuclear decommissioning obligation 8,135 7,628
Other 2,589 2,517
---------- ----------
Total 29,880 29,281
---------- ----------
Current Liabilities
Current portion of long-term debt 87,800 193,133
Notes payable 195,000 67,000
Accounts payable 41,515 42,846
Dividends payable 10,664 10,467
Taxes accrued 22,797 16,607
Pensions accrued 31,069 30,177
Interest accrued 19,505 20,926
Obligations under capital leases 575 1,169
Other accrued liabilities 29,166 30,069
---------- ----------
Total 438,091 412,394
---------- ----------
Customers' Advances for Construction 2,624 2,628
---------- ----------
Regulatory Liabilities (future amounts owed to
customers through the
ratemaking process)
Accumulated deferred investment tax credits 18,481 18,671
Deferred gain on sale of utility plant 92 276
Deferred fossil fuel costs 354 -
Other 1,819 1,820
---------- ----------
Total 20,746 20,767
---------- ----------
Deferred Income Taxes (future tax liabilities owed
to taxing authorities) 425,305 428,853
Commitments and Contingencies - -
---------- ----------
$2,085,749 $2,074,991
========== ==========
*Derived from audited financial statements
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of the financial statements.
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<TABLE>
THE UNITED ILLUMINATING COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $9,470 $11,938
------- -------
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 16,891 16,486
Deferred income taxes 69 (699)
Deferred investment tax credits - net (190) (190)
Amortization of nuclear fuel 4,057 4,373
Cumulative effect for years prior to 1994 of
accounting change for postemployment benefits-net - 1,294
Allowance for funds used during construction (588) (956)
Amortization of deferred return 3,147 -
Sales adjustment revenue - 3,278
Changes in:
Accounts receivable - net (2,526) (4,924)
Fuel, materials and supplies (780) (2,116)
Prepayments (5,237) (12,427)
Accounts payable (1,331) (12,465)
Interest accrued (1,421) (2,197)
Taxes accrued 6,190 9,102
Other assets and liabilities (744) 3,260
------- -------
Total Adjustments 17,537 1,819
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 27,007 13,757
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock - 33
Notes payable 128,000 42,500
Securities redeemed and retired:
Long-term debt (116,133) (60,333)
Lease obligations (664) (566)
Dividends
Preferred stock (747) (1,080)
Common stock (9,720) (9,365)
------- -------
NET CASH USED IN FINANCING ACTIVITIES 736 (28,811)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Plant expenditures, including nuclear fuel (11,925) (12,068)
------- -------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (11,925) (12,068)
------- -------
CASH AND TEMPORARY CASH INVESTMENTS:
NET CHANGE FOR THE PERIOD 15,818 (27,122)
BALANCE AT BEGINNING OF PERIOD 11,432 48,171
------- -------
BALANCE AT END OF PERIOD $27,250 $21,049
======= =======
CASH PAID DURING THE PERIOD FOR:
Interest (net of amount capitalized) $19,532 $20,968
======= =======
Income taxes $3,300 $2,000
======= =======
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of the financial statements.
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THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The consolidated financial statements of the Company and
its wholly-owned subsidiaries, United Resources, Inc.,
Research Center, Inc. and United Energy International, Inc.,
have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission. The statements
reflect all adjustments that are, in the opinion of
management, necessary to a fair statement of the results for
the periods presented. All such adjustments are of a normal
recurring nature. Certain information and footnote
disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations. The Company believes that the
disclosures are adequate to make the information presented
not misleading. These consolidated financial statements
should be read in conjunction with the consolidated
financial statements and the notes to consolidated financial
statements included in the annual report on Form 10-K for
the year ended December 31, 1994. Such notes are
supplemented as follows:
(A) STATEMENT OF ACCOUNTING POLICIES
RECLASSIFICATION OF PREVIOUSLY REPORTED AMOUNTS
Certain amounts previously reported have been reclassified
to conform with current year presentations.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)
The weighted average AFUDC rates applied in the first
three months of 1995 and 1994 were 7.83% and 8.75%,
respectively, on a before-tax basis.
CASH AND CASH EQUIVALENTS
For cash flow purposes, the Company considers all highly
liquid debt instruments with a maturity of three months or
less at the date of purchase to be cash equivalents.
NUCLEAR DECOMMISSIONING TRUSTS
External trust funds are maintained to fund the estimated
future decommissioning costs of the nuclear generating units
in which the Company has an ownership interest. These costs
are accrued as a charge to depreciation expense over the
estimated service lives of the units and are recovered in
rates on a current basis. The Company paid $462,000 and
$417,000 in the first quarter of 1995 and 1994,
respectively, into the decommissioning trust funds for
Seabrook Unit 1 and Millstone Unit 3. At March 31, 1995,
the Company's shares of the trust fund balances, which
included accumulated earnings on the funds, were $5.6
million and $2.5 million for Seabrook Unit 1 and Millstone
Unit 3, respectively. These fund balances are included in
"Other Property and Investments" and the accrued
decommissioning obligation is included in "Noncurrent
Liabilities" on the Company's Consolidated Balance Sheet.
(B) CAPITALIZATION
(a) COMMON STOCK
The number of shares outstanding of the Company's common
stock, no par value, at March 31, 1995 was 14,086,691.
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THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
In 1990, the Company's Board of Directors and the
shareowners approved a stock option plan for officers and
key employees of the Company. The plan provides for the
awarding of options to purchase up to 750,000 shares of the
Company's common stock over periods of from one to ten years
following the dates when the options are granted. On June
5, 1991, the DPUC approved the issuance of 500,000 shares of
stock pursuant to this plan. The exercise price of each
option cannot be less than the market value of the stock on
the date of the grant. Options to purchase 203,200 shares
of stock at an exercise price of $30.75 per share, 1,400
shares of stock at an exercise price of $28.3125 per share,
1,800 shares of stock at an exercise price of $31.1875 per
share, 4,000 shares of stock at an exercise price of $35.625
per share, 35,133 shares of stock at an exercise price of
$39.5625 per share, 5,000 shares of stock at an exercise
price of $42.375 per share and 18,600 shares of stock at an
exercise price of $30 per share have been granted by the
Board of Directors and remain outstanding at March 31, 1995.
(b) RETAINED EARNINGS RESTRICTION
The indenture under which the Company's Notes are issued
places limitations on the payment of cash dividends on
common stock and on the purchase or redemption of common
stock. Retained earnings in the amount of $86.0 million
were free from such limitations at March 31, 1995.
(c) PREFERRED STOCK, PREFERENCE STOCK AND PREFERRED
CAPITAL SECURITIES
On April 3, 1995, United Capital Funding Partnership L.P.
("United Capital"), a special purpose limited partnership in
which the Company owns all of the general partner interests,
issued $50 million of its monthly income 9 5/8% Preferred
Capital Securities, Series A, ("Preferred Capital
Securities") representing limited partnership interests in
United Capital. The Preferred Capital Securities are
guaranteed by the Company. United Capital loaned the
proceeds of the issuance and sale of the Preferred Capital
Securities to the Company in return for the Company's 9 5/8%
Junior Subordinated Deferrable Interest Debentures,
Series A, Due 2025. The net proceeds to the Company,
approximately $48.4 million, have been used to call for
redemption $27.5 million of the Company's outstanding 7.60%
Preferred Stock and to reduce its short-term borrowings
under the revolving credit facility described in Note (F).
(d) LONG-TERM DEBT
On January 17, 1995, the Company repaid $55.3 million
principal amount of maturing 10.32% First Mortgage Bonds of
Bridgeport Electric Company, a wholly-owned subsidiary of
the Company that was merged with and into the Company in
September of 1994, and $50 million principal amount of
maturing 6.00% Notes of the Company. On February 15, 1995,
the Company repaid $10.8 million principal amount of
maturing 9.44% First Mortgage Bonds of Bridgeport Electric
Company.
(D) ACCOUNTING FOR PHASE-IN PLAN
The Company phased into rate base its allowable investment
in Seabrook Unit 1, amounting to $640 million, during the
period January 1, 1990 to January 1, 1994. In conjunction
with this phase-in plan, the Company was allowed to record a
deferred return on the portion of allowable investment
excluded from rate base during the phase-in period. The
accumulated deferred return had been added to rate base each
year beginning January 1, 1991 in the same proportion as the
phase-in installment for that year has borne to the portion
of the $640 million remaining to be phased-in. The Company
began amortizing the accumulated deferred return over a
five-year period commencing January 1, 1995.
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THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
(E) INCOME TAXES Three Months Ended
March 31,
1995 1994
---- ----
<S> <C> <C>
Income tax expense consists of: (000's)
Income tax provisions:
Current
Federal $ 8,304 $ 8,373
State 2,900 2,969
------ ------
Total current 11,204 11,342
------ ------
Deferred
Federal 964 71
State (895) (1,726)
------ ------
Total deferred 69 (1,655)
------ ------
Investment tax credits (190) (190)
------ ------
Total income tax expense $11,083 $ 9,497
======= =======
Income tax components charged as follows:
Operating expenses $12,074 $11,098
Other income and deductions - net (991) (645)
Cumulative effect of change in accounting
for postemployment benefits - (956)
------- -------
Total income tax expense $11,083 $ 9,497
======= =======
The following table details the components
of the deferred income taxes:
Accelerated depreciation $ 2,274 $ 2,898
Tax depreciation on unrecoverable plant investment 1,727 2,042
Conservation and load management 218 691
Seabrook sale/leaseback transaction (2,678) (2,682)
Premiums on BEC bond redemption (230) (428)
Sales adjustment revenues - (1,388)
Pension benefits (387) (548)
Postretirement benefits (319) (416)
Postemployment benefits - (956)
Other - net (536) (868)
------ ------
Deferred income taxes - net $69 $(1,655)
====== ======
</TABLE>
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THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(F) SHORT-TERM CREDIT ARRANGEMENTS
The Company has a revolving credit agreement with a group
of banks, which currently extends to December 14, 1995. The
borrowing limit of this facility is $225 million. The
facility permits the Company to borrow funds at a
fluctuating interest rate determined by the prime lending
market in New York, and also permits the Company to borrow
money for fixed periods of time specified by the Company at
fixed interest rates determined by the Eurodollar interbank
market in London, or by bidding, at the Company's option.
If a material adverse change in the business, operations,
affairs, assets or condition, financial or otherwise, or
prospects of the Company and its subsidiaries, on a
consolidated basis, should occur, the banks may decline to
lend additional money to the Company under this revolving
credit agreement, although borrowings outstanding at the
time of such an occurrence would not then become due and
payable. As of March 31, 1995, the Company had $195 million
in short-term borrowings outstanding under this facility.
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THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(G) SUPPLEMENTARY INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
---- ----
(000's)
<S> <C> <C>
Operating Revenues
- ------------------
Retail $150,420 $153,275
Wholesale - capacity 1,669 1,835
- energy 12,571 11,778
Other 738 691
-------- --------
Total Operating Revenues $165,398 $167,579
======== ========
Other Income and (Deductions) - net
- -----------------------------------
Interest and dividend income $330 $451
Earnings of subsidiaries and Connecticut Yankee (459) (295)
Miscellaneous other income and (deductions) - net (163) 45
-------- --------
Total Other Income and (Deductions) - net $(292) $201
======== ========
Other Taxes
- -----------
Charged to:
Operating:
State gross earnings $6,441 $6,771
Local real estate and personal property 6,712 6,681
Payroll taxes 1,826 1,889
Other 1 2
-------- --------
14,980 15,343
Nonoperating and other accounts 166 223
-------- --------
Total Other Taxes $15,146 $15,566
======== ========
Other Interest Charges
- ----------------------
Notes Payable $2,806 $365
Amortization of debt expense and repurchase premiums 1,208 1,689
Other 335 267
-------- --------
Total Other Interest Charges $4,349 $2,321
======== ========
</TABLE>
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THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(K) FUEL FINANCING OBLIGATIONS AND OTHER LEASE OBLIGATIONS
The Company has a Fossil Fuel Supply Agreement with a
financial institution providing for financing up to
$37.5 million in fossil fuel purchases. Under this
agreement, the financing entity acquires and stores
natural gas, coal and fuel oil for sale to the Company,
and the Company purchases these fossil fuels from the
financing entity at a price for each type of fuel that
reimburses the financing entity for the direct costs it
has incurred in purchasing and storing the fuel, plus a
charge for maintaining an inventory of the fuel
determined by reference to the fluctuating interest
rate on thirty-day, dealer-placed commercial paper in
New York. The Company is obligated to insure the fuel
inventories and to indemnify the financing entity
against all liability, taxes and other expenses
incurred as a result of its ownership, storage and sale
of fossil fuel to the Company. This agreement
currently extends to May 1996. At March 31, 1995,
approximately $16.6 million of fossil fuel purchases
were being financed under this agreement.
(L) COMMITMENTS AND CONTINGENCIES
CAPITAL EXPENDITURE PROGRAM
The Company has entered into commitments in
connection with its continuing capital expenditure
program, which is presently estimated at approximately
$357.5 million, excluding AFUDC, for 1995 through 1999.
NUCLEAR INSURANCE CONTINGENCIES
The Price-Anderson Act, currently extended through
August 1, 2002, limits public liability resulting from
a single incident at a nuclear power plant. The first
$200 million of liability coverage is provided by
purchasing the maximum amount of commercially available
insurance. Additional liability coverage will be
provided by an assessment of up to $75.5 million per
incident, levied on each of the nuclear units licensed
to operate in the United States, subject to a maximum
assessment of $10 million per incident per nuclear unit
in any year. In addition, if the sum of all public
liability claims and legal costs resulting from any
nuclear incident exceeds the maximum amount of
financial protection, each reactor operator can be
assessed an additional 5% of $75.5 million, or $3.775
million. The maximum assessment is adjusted at least
every five years to reflect the impact of inflation.
Based on its interests in nuclear generating units, the
Company estimates its maximum liability would be $23.2
million per incident. However, assessment would be
limited to $3.1 million per incident, per year. With
respect to each of the operating nuclear generating
units in which the Company has an interest, the Company
will be obligated to pay its ownership and/or leasehold
share of any statutory assessment resulting from a
nuclear incident at any nuclear generating unit.
The NRC requires nuclear generating units to obtain
property insurance coverage in a minimum amount of
$1.06 billion and to establish a system of prioritized
use of the insurance proceeds in the event of a nuclear
incident. The system requires that the first $1.06
billion of insurance proceeds be used to stabilize the
nuclear reactor to prevent any significant risk to
public health and safety and then for decontamination
and cleanup operations. Only following completion of
these tasks would the balance, if any, of the
segregated insurance proceeds become available to the
unit's owners. For each of the nuclear generating
units in which the Company has an interest, the Company
is required to pay its ownership and/or leasehold share
of the cost of purchasing such insurance.
- 12 -<PAGE>
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THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
OTHER COMMITMENTS AND CONTINGENCIES
HYDRO-QUEBEC
The Company is a participant in the Hydro-Quebec
transmission intertie facility linking New England and
Quebec, Canada. Phase II of this facility, in which UI
has a 5.45% participating share, has increased the
capacity value of the intertie from 690 megawatts to a
maximum of 2000 megawatts. A ten-year Firm Energy
Contract, which provides for the sale of 7 million
megawatt-hours per year by Hydro-Quebec to the New
England participants in the Phase II facility, became
effective on July 1, 1991. The Company is obligated to
furnish a guarantee for its participating share of the
debt financing for the Phase II facility. Currently,
the Company's guarantee liability for this debt amounts
to approximately $9.1 million.
SITE REMEDIATION COSTS
The Company has estimated that the cost of demolition
and environmental remediation of its decommissioned
Steel Point Station power plant and property in
Bridgeport will be approximately $11.3 million, and
that the value of the property following remediation
will not exceed $6 million. In its December 16, 1992
decision on UI's application for retail rate increases,
the DPUC provided for additional revenues to be
recovered from customers in the amount of $4.3 million
of the difference during the period 1993-1996, subject
to true-up in the Company's next retail rate proceeding
based on actual remediation costs and actual gain on
the Company's disposition of the property.
PROPERTY TAXES
On November 2, 1993, the Company received "updated"
personal property tax bills from the City of New Haven
(the City) for the tax year 1991-1992, aggregating $6.6
million, based on an audit by the City's tax assessor.
On May 7, 1994, the Company received a "Certificate of
Correction....to correct a clerical omission or
mistake" from the City's tax assessor relative to the
assessed value of the Company's personal property for
the tax year 1994-1995, which certificate purports to
increase said assessed value by approximately 53% above
the tax assessor's valuation at February 28, 1994. The
Company is contesting each of these actions of the
City's tax assessor vigorously, and has commenced
actions in the Superior Court to enjoin the City from
any effort to collect the "updated" personal property
tax bills for the tax year 1991-1992 and challenging
both the May 7, 1994 "Certificate of Correction" and
the tax assessor's valuation at February 28, 1994. In
December of 1994 and April of 1995, the City's tax
assessor conducted hearings regarding the assessed
value of the Company's personal property for the tax
years 1992-1993 and 1993-1994; and on May 11, 1995,
the Company received from the City notices of
assessment changes, increasing the assessed valuations
of the Company's personal property for these tax years
by 45% and 49%, respectively, over the valuations
declared by the Company. On March 1, 1995, the Company
received from the City notices of assessment changes,
increasing the assessed valuation of the Company's
personal property for the tax year 1995-1996 by 48%
over the valuation declared by the Company. The
Company expects to take the legal actions necessary
to challenge all of these assessed valuation
increases. It is the present opinion of the Company
that the ultimate outcome of this dispute will not have
a significant impact on the financial position of the
Company.
(M) NUCLEAR FUEL DISPOSAL AND NUCLEAR PLANT DECOMMISSIONING
New Hampshire has enacted a law requiring the
creation of a government-managed fund to finance the
decommissioning of nuclear generating units in that
state. The New Hampshire Nuclear Decommissioning
Financing Committee (NDFC) has established $376 million
(in 1995 dollars) as the decommissioning cost estimate
for Seabrook Unit 1, of which the Company's share would
be about $66 million. This estimate premises the
prompt removal and dismantling of the Unit at the end
of its estimated 36-year energy producing life.
Monthly
- 13 -<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
decommissioning payments are being made to the
state-managed decommissioning trust fund. UI's share
of the decommissioning payments made during the first
quarter of 1995 was $348,000. UI's share of the fund at
March 31, 1995 was approximately $5.6 million.
Connecticut has enacted a law requiring the operators
of nuclear generating units to file periodically with
the DPUC their plans for financing the decommissioning
of the units in that state. Current decommissioning
cost estimates for Millstone Unit 3 and the Connecticut
Yankee Unit are $448 million (in 1995 dollars) and $357
million (in 1995 dollars), respectively, of which the
Company's share would be about $17 million and $34
million, respectively. These estimates premise the
prompt removal and dismantling of each unit at the end
of its estimated 40-year energy producing life.
Monthly decommissioning payments, based on these cost
estimates, are being made to decommissioning trust
funds managed by Northeast Utilities. UI's share of
the Millstone Unit 3 decommissioning payments made
during the first quarter of 1995 was $114,000. UI's
share of the fund at March 31, 1995 was approximately
$2.5 million. For the Company's 9.5% equity ownership
in Connecticut Yankee, decommissioning costs of
$325,000 were funded by UI during the first quarter of
1995, and UI's share of the fund at March 31, 1995 was
$15.1 million.
- 14 -<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
MAJOR INFLUENCES ON FINANCIAL CONDITION
The Company's financial condition will continue to be
dependent on the level of retail and wholesale sales. The
two primary factors that affect sales volume are economic
conditions and weather. A 1% increase in retail sales would
increase revenues by $6.0 million (sales margin, which is
revenues less fuel expense and revenue-based taxes, by about
$5.0 million).
Another major factor affecting the Company's financial
condition will be the Company's ability to control expenses.
A significant reduction in interest expense has been
achieved since 1989, and additional savings of $4-$5 million
are expected in 1995 due to debt reduction and refinancing.
Since 1990, annual growth in total operation and maintenance
expense, excluding one-time items and cogeneration capacity
purchases, has averaged approximately 2.0%, and the Company
hopes to restrict future increases to less than the rate of
inflation.
The Company's financial status and financing capability
will continue to be sensitive to many other factors,
including conditions in the securities markets, economic
conditions, interest rates, the level of the Company's
income and cash flow, and legislative and regulatory
developments, including the cost of compliance with
increasingly stringent environmental legislation and
regulations and competition within the electric utility
industry.
The electric utility industry is being subjected to
increasing competition. Currently, the Company's retail
electric service rates are subject to regulation and are
based on the Company's costs. Therefore, the Company, and
all regulated utilities, are subject to certain accounting
standards (Statement of Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation")
that are not applicable to other businesses in general.
These accounting rules allow all regulated utilities, where
appropriate, to defer the income statement impact of certain
costs that are expected to be recovered in future regulated
service rates and to establish regulatory assets on balance
sheets for such costs. The effects of competition could
cause the operations of the Company, or a portion thereof,
to no longer meet the criteria for application of these
accounting rules. While the Company expects to continue to
meet these criteria in the near future, if the Company were
to cease meeting these criteria, accounting standards for
business in general would become applicable and immediate
recognition of any previously deferred costs would be
required in the year in which the criteria are no longer
met. If this change in accounting were to occur, it would
have a material adverse effect on the Company's earnings and
retained earnings in that year and could have a material
adverse effect on the Company's ongoing financial condition,
as well.
- 15 -<PAGE>
<PAGE>
CAPITAL EXPENDITURE PROGRAM
The Company's 1995-1999 capital expenditure program, excluding
allowance for funds used during construction (AFUDC) and its
effect on certain capital related items, is presently budgeted as
follows:
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 Total
---- ---- ---- ---- ---- -----
(000's)
<S> <C> <C> <C> <C> <C> <C>
Production $16,848 $26,446 $10,912 $ 3,424 $34,906 $ 92,536
Distribution 18,864 16,728 16,884 16,080 16,560 85,116
Transmission 7,500 4,596 8,412 15,060 17,496 53,064
Conservation and
Load Management 11,580 9,756 9,468 9,048 9,012 48,864
Nuclear Fuel 8,052 11,280 1,248 11,820 10,128 42,528
Other 12,996 7,370 4,892 5,336 4,778 35,372
------- -------- ------- ------- ------- --------
Total Expenditures $75,840 $76,176 $51,816 $60,768 $92,880 $357,480
======= ======= ======= ======= ======= ========
AFUDC (Pre-tax) $3,174 $2,437 $2,031 $2,034 $ 938
Book Depreciation (1) 59,866 64,195 66,168 69,047 73,301
Decommissioning 1,823 1,910 2,001 2,097 2,198
Normalized Tax
Depreciation 34,767 36,898 38,382 39,732 42,877
Accelerated Tax
Depreciation 68,743 58,191 59,253 58,655 61,038
Amortization of Deferred
Return on Seabrook
Unit 1 Phase-In (2) 12,586 12,586 12,586 12,586 12,586
Estimated Rate Base
(end of period) $1,209,500 $1,238,035 $1,212,275 $1,184,307 $1,220,861
<FN>
(1) Steel Point Station demolition and environmental remediation costs
of $1,075,000 per year are included each year through 1996.
(2) Deferred return will be amortized over the period 1995-1999.
</TABLE>
- 16 -<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company had $27.2 million of cash
and temporary cash investments, an increase of $15.8 million
from the balance at December 31, 1994. The components of
this increase, which are detailed in the Consolidated
Statement of Cash Flows, are summarized as follows:
<TABLE>
<CAPTION>
(Millions)
---------
<S> <C>
Balance, December 31, 1994 $11.4
-----
Net cash provided by operating activities 27.0
Net cash provided by (used in) financing activities:
- Financing activities, excluding dividend payments 11.2
- Dividend payments (10.5)
Cash invested in plant, including nuclear fuel (11.9)
-----
Net increase 15.8
Balance, March 31, 1995 $27.2
=====
</TABLE>
The Company's capital requirements are presently projected
as follows:
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
(000's)
<S> <C> <C> <C> <C> <C>
Capital Expenditure Program $ 75,840 $76,176 $ 51,816 $ 60,768 $ 92,880
Long-term Debt Maturities 97,000 - 50,000 100,000 100,000
Mandatory Redemptions/
Repayments 66,133 12,770 15,171 15,562 15,988
Optional Redemptions (1) 27,775 - - - -
------- ------ ------- ------- -------
Total Capital Requirements $266,748 $88,946 $116,987 $176,330 $208,868
======= ====== ======= ======= =======
<FN>
(1) Including redemption premiums
</TABLE>
The Company presently estimates that its cash on hand and
temporary cash investments at the beginning of 1995,
totaling $11.4 million, and its projected net cash provided
by operations, less dividends, of $105.3 million, will be
sufficient to fund the Company's entire capital expenditure
program of $75.8 million and $40.9 million of the $190.9
million necessary to satisfy the 1995 requirements for
long-term debt maturities and mandatory and optional
redemptions and repayments. The Company presently estimates
that its projected net cash provided by operations, less
dividends, of $97.7 million, will be sufficient to fund the
Company's entire capital expenditure program of $76.2
million and all of the Company's 1996 requirements for
mandatory redemptions and repayments of $12.8 million. The
Company presently estimates that its projected net cash
provided by operations, less dividends, of $282.0 million,
will be sufficient to fund the Company's entire capital
expenditure program of $205.5 million and $76.5 million of
the $296.7 million necessary to satisfy the 1997 through
1999 requirements for long-term debt maturities and
mandatory long-term debt redemptions and repayments.
All of the Company's capital requirements that exceed
available cash will have to be provided by external
financing. Although the Company has no source of funds and
no commitment to provide such financing from any source of
funds, other than proceeds from the financing described in
the following paragraph and a $225 million revolving credit
agreement with a group of banks, described below, the
Company expects to be able to satisfy its
- 17 -<PAGE>
<PAGE>
external financing needs by issuing common stock, preferred
stock and additional short-term and long-term debt, although
the continued availability of these methods of financing
will be dependent on many factors, including conditions in
the securities markets, economic conditions, and the level
of the Company's income and cash flow.
On April 3, 1995, United Capital Funding Partnership L.P.
("United Capital"), a special purpose limited partnership in
which the Company owns all of the general partner interests,
issued $50 million of its monthly income 9 5/8% Preferred
Capital Securities, Series A, ("Preferred Capital
Securities") representing limited partnership interests in
United Capital. The Preferred Capital Securities are
guaranteed by the Company. United Capital loaned the
proceeds of the issuance and sale of the Preferred Capital
Securities to the Company in return for the Company's 9 5/8%
Junior Subordinated Deferrable Interest Debentures,
Series A, Due 2025. The net proceeds to the Company,
approximately $48.4 million, have been used to call for
redemption $27.5 million of the Company's outstanding 7.60%
Preferred Stock and to reduce its short-term borrowings
under the revolving credit facility described in the
following paragraph.
The Company has a revolving credit agreement with a group
of banks, which currently extends to December 14, 1995. The
borrowing limit of this facility is $225 million. The
facility permits the Company to borrow funds at a
fluctuating interest rate determined by the prime lending
market in New York, and also permits the Company to borrow
money for fixed periods of time specified by the Company at
fixed interest rates determined by the Eurodollar interbank
market in London, or by bidding, at the Company's option.
If a material adverse change in the business, operations,
affairs, assets or condition, financial or otherwise, or
prospects of the Company and its subsidiaries, on a
consolidated basis, should occur, the banks may decline to
lend additional money to the Company under this revolving
credit agreement, although borrowings outstanding at the
time of such an occurrence would not then become due and
payable. As of March 31, 1995, the Company had $195 million
in short-term borrowings outstanding under this facility.
In January 1995, the Company entered into interest rate
cap agreements, with several banks, to protect $100 million
of its short-term debt from increases in short-term interest
rates. The agreements provide that if the LIBOR (London
Interbank Offering Rate), for one-month borrowings, exceeds
8.50% on the 17th of any month during the period beginning
February 17, 1995 and ending January 17, 1997, the banks
will pay to the Company the difference between that LIBOR
and 8.50%, multiplied by $100 million, for the subsequent
one-month period.
The Company has a Fossil Fuel Supply Agreement with a
financial institution providing for financing up to $37.5
million in fossil fuel purchases. Under this agreement, the
financing entity acquires and stores natural gas, coal and
fuel oil for sale to the Company, and the Company purchases
these fossil fuels from the financing entity at a price for
each type of fuel that reimburses the financing entity for
the direct costs it has incurred in purchasing and storing
the fuel, plus a charge for maintaining an inventory of the
fuel determined by reference to the fluctuating interest
rate on thirty-day, dealer-placed commercial paper in New
York. The Company is obligated to insure the fuel
inventories and to indemnify the financing entity against
all liabilities, taxes and other expenses incurred as a
result of its ownership, storage and sale of fossil fuel to
the Company. This agreement currently extends to May 1996.
At March 31, 1995, approximately $16.6 million of fossil
fuel purchases were being financed under this agreement.
UI has three wholly-owned subsidiaries. Research Center,
Inc. (RCI) has been formed to participate in the development
of one or more regulated power production ventures,
including possible participation in arrangements for the
future development of independent power production and
cogeneration facilities. United Energy International, Inc.
(UEI) was formed to facilitate participation in a joint
venture relating to power production plants abroad. United
Resources, Inc. (URI) serves as the parent corporation for
several unregulated businesses, each of which is
incorporated separately to participate in business ventures
that will complement and enhance UI's electric utility
business and serve the interests of the Company and its
shareholders and customers.
Four wholly-owned subsidiaries of URI have been
incorporated. Souwestcon Properties, Inc. (SPI)
participated as a 25% partner in the ownership of a medical
hotel building in New Haven, which has recently been sold.
SPI no
- 18 -<PAGE>
<PAGE>
longer owns any property and is currently inactive. A
second wholly-owned subsidiary of URI is Thermal Energies,
Inc., which is participating in the development of district
heating and cooling facilities in the downtown New Haven
area, including the energy center for an office tower and
participation as a 37% partner in the energy center for a
city hall and office tower complex. A third URI subsidiary,
Precision Power, Inc., provides power-related equipment and
services to the owners of commercial buildings and
industrial facilities. A fourth URI subsidiary, American
Payment Systems, Inc., manages agents and equipment for
electronic data processing of bill payments made by
customers of utilities, including UI, at neighborhood
businesses. In addition to these subsidiaries, URI also has
an approximately 94% ownership interest in Ventana
Corporation, which offers energy conservation engineering
and project management services to governmental and private
institutions.
The Board of Directors of the Company has authorized the
investment of a maximum of $18.0 million, in the aggregate,
of the Company's assets in all of URI's ventures, UEI and
RCI, and, at March 31, 1995, $17.0 million had been so
invested.
RESULTS OF OPERATIONS
FIRST QUARTER 1995 VS. FIRST QUARTER 1994
- -----------------------------------------
Earnings for the first quarter of 1995 were $8.7 million,
or $.62 per share, down $2.1 million, or $.15 per share,
from the first quarter of 1994. Earnings from operations,
which exclude one-time items, decreased $3.4 million, or
$.24 per share absent a one-time charge of $.09 per share
taken in the first quarter of 1994 for an accounting change
to implement Statement of Financial Accounting Standards
(SFAS) No. 112.
Retail operating revenues were down about $2.9 million in
the first quarter of 1995 from the first quarter of 1994:
. A retail kilowatt-hour sales decrease of 4.5% from the
prior year reduced retail revenues by $7.1 million and
sales margin (revenues less fuel expense and revenue
based taxes) by $5.3 million. On average, each month of
the first quarter of 1995 was warmer than the
corresponding 1994 month (January was 12 degrees warmer).
The Company's weather adjustment model indicated that the
warmer weather caused a 3.1% sales decrease, reducing
revenues by $4.8 million and sales margin by $3.7
million. (The portion of this decline attributed solely
to warmer than "normal" weather for the first quarter of
1995 was $2.3 million in revenue and $1.7 million in
sales margin.) The remaining 1.4% sales decrease was the
first year-over-year decrease in quarterly "real" sales
(i.e. not attributable to abnormal weather) in a year and
a half. It reduced revenues by $2.2 million and sales
margin by $1.6 million.
. Other retail revenues increased $3.3 million from the
absence of the 1994 non-cash amortization of deferred
sales adjustment revenues ($13.1 million was amortized,
evenly, and collected in rates in 1994), and $1.5 million
from an approximate 1% ($6 million annual) rate increase
for recovery, through the Conservation Adjustment
Mechanism, of previously recorded and projected
conservation program costs. Other retail revenues also
decreased a net $0.6 million from "pass through" charges
for certain expense changes, mostly fuel.
Wholesale capacity revenues decreased by $0.2 million in
the first quarter of 1995 from the first quarter of 1994.
Wholesale energy revenues are a direct offset to fuel
expense and do not contribute to margin. These energy
revenues, as well as the associated fuel expense, increased
as a result of higher interchange sales to other New England
utilities.
Operating expense for operations, maintenance and
purchased capacity charges in the first quarter of 1995
decreased by $1.0 million, or 1.7%, from the first quarter
of 1994. Purchased capacity was $1.4 million higher due to
nine weeks of scheduled refueling outage at the Connecticut
Yankee nuclear plant in 1995. Operation and maintenance
expense decreased $2.3 million from: lower operating and
repair costs at the Seabrook nuclear plant,
- 19 -<PAGE>
<PAGE>
which had experienced an unscheduled outage in the first
quarter of 1994, lower operating and maintenance costs at
the Company's fossil fuel generating plants, and savings in
employment costs from the Company's 1993 reorganization and
early retirement program, which was phased-in over 1994.
Other amortization increased by $3.1 million (after-tax)
in the first quarter of 1995 from the first quarter of 1994,
due to commencement of the amortization of Seabrook phase-in
costs (deferred return that was recorded and accumulated
during the period January 1, 1990 to December 31, 1993).
The annual amortization amount is $12.6 million after-tax
(equivalent, approximately, to a $23 million revenue
requirement) per year for five years beginning in 1995.
Interest charges continued to decline during the first
quarter of 1995 from the first quarter of 1994 as a result
of the Company's debt refinancing program and strong cash
flows.
Earnings increased $1.3 million (after-tax) or $.09 per
share from the absence of a one-time accounting charge taken
in the first quarter of 1994 to reflect the accrual of
postemployment benefits under SFAS No. 112.
OUTLOOK
The Company expects 1995 quarterly earnings to follow a
similar pattern to that of 1994, with significantly higher
earnings in the third quarter when compared to other
quarters. Summer seasonal retail sales and summer pricing
are the predominant factors contributing to this pattern.
Additionally, for 1995, all fossil generating unit overhaul
and nuclear unit refueling outage activity is currently
scheduled in the non-summer quarters.
Revenues for all of 1995 will increase by $13.1 million
compared to 1994 due to the completion of the non-cash
amortization of deferred sales adjustment revenues ($13.1
million amortized and collected in rates in 1994). Revenues
for all of 1995 will also increase as a result of an
approximate 1% ($6 million) rate increase for recovery,
through the Conservation Adjustment Mechanism, of previously
recorded and projected conservation costs.
The Company's financial condition will continue to be
dependent on the level of retail and wholesale sales. The
two primary factors that affect sales volume are economic
conditions and weather. Retail kilowatt-hour sales declined
by 4.5% in the first quarter of 1995 compared to the first
quarter of 1994; 1.7% because 1994 was unusually cold, 1.5%
because 1995 was unusually warm, and 1.4% from "real" (i.e.
not attributable to abnormal weather) sales decline. The
1.4% "real" decrease in kilowatt-hour sales was the first
such year-over-year decline in six quarters; however, it is
not clear, at this stage, whether this is a reflection of a
change in economic conditions, extraordinary conservation
activity, or simply insensitivity in the Company's weather
adjustment model. A return to "normal" weather over the
remaining nine months of 1995 compared to the last nine
months of 1994 would further reduce revenues and margin by
$2.6 million and $2.1 million, respectively. A real 1%
kilowatt-hour sales growth over the remaining nine months of
1995 would increase revenues by $4.8 million and sales
margin by $3.7 million.
The Company had also expected that higher generating
output from the nuclear units (earlier this year, there was
no planned outage for Seabrook in 1995) and lower nuclear
fuel prices would add $3-$4 million to sales margin from
lower fuel expense, if normal operating assumptions were
met. However, the excellent availability of the Seabrook
nuclear unit since its 1994 refueling outage has caused its
next planned refueling outage to be moved from early 1996
into the fourth quarter of 1995, which will have the effect
of reducing 1995 earnings and increasing 1996 earnings.
Depending on how well the unit operates up to its outage
date, the previously estimated $3-$4 million fuel expense
savings could be reduced by as much as $2.5 million, or $.10
per share. This amount is being accrued during the year as
the unit's fuel is being used. The maintenance expense
impact of the planned refueling outage, currently estimated
to be about $3.5 million, or $.15 per share, will occur in
the fourth quarter. Overall, relative to previously
estimated amounts, the Seabrook unit performance and outage
is expected to
- 20 -<PAGE>
<PAGE>
negatively impact earnings in 1995 by about $.15-$.20 per
share, but is expected to have an offsetting positive
earnings impact in 1996.
The Company's prospects for the $23-$25 million growth in
sales margin (see the "Outlook" section of the Company's
1994 Form 10-K) are diminished by first quarter events.
With no other assumption changes, the sales margin results
of the first quarter, and the impact of moving the Seabrook
refueling outage to 1995, have reduced that expectation to
$16-$18 million. If no "real" kilowatt-hour sales growth
materializes, sales margin growth will be $12-$14 million.
These increases are being offset by the amortization of
Seabrook phase-in costs at $12.6 million after-tax,
(equivalent, approximately, to a $23 million revenue
requirement) per year for five years beginning in 1995.
Another major factor affecting the Company's financial
condition will be the Company's ability to control expenses.
Operation and maintenance expense was previously expected to
decline by several million dollars in 1995 compared to 1994,
due primarily to lower maintenance costs at generating
units, the full impact of the Company's 1993 reorganization
and early retirement program, and other cost reduction
efforts. The maintenance expense associated with the
advanced Seabrook refueling outage will offset most of those
decreases.
Anticipated depreciation and property taxes should
increase expenses by $3-$4 million in 1995 from 1994 levels.
The Company expects continued reductions in interest
expense from the 1994 level of $84 million, to about $79-$80
million at April 1995 interest rate levels. This 1995
interest expense level would be 30% below the 1989 level and
would mark the sixth consecutive year of interest expense
decline.
- 21 -<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Table Item Exhibit
Number Number Description
---------- ------- -----------
<C> <C> <C>
(4) 4(a)* Form of Amended and Restated Agreement of
Limited Partnership of United Capital Funding
Partnership L.P.
(4) 4(b) Action of The United Illuminating Company, as
General Partner of United Capital Funding
Partnership L.P., relating to the 9 5/8%
Preferred Capital Securities, Series A, of
United Capital Funding Partnership L.P.
(4) 4(c)** Form of Indenture, dated as of April 1, 1995,
from The United Illuminating Company to The
Bank of New York, as Trustee.
(4) 4(d) First Supplemental Indenture, dated as of April
1, 1995, between The United Illuminating Company
and The Bank of New York, Trustee, supplementing
Exhibit 4(c).
(4) 4(e)*** Form of Payment and Guarantee Agreement of The
United Illuminating Company, dated as of April
1, 1995.
(10) 10 Amendment to The United Illuminating Company
1990 Stock Option Plan, adopted August 22, 1994.
(12), (99) 12 Statement Showing Computation of Ratios of
Earnings to Fixed Charges and Ratios of
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements
(Twelve Months Ended March 31, 1995 and Twelve
Months Ended December 31, 1994,1993, 1992,
1991 and 1990).
(27) 27 Financial Data Schedule
* Annexed as Exhibit No. 4(c) to Amendment No. 1 to Registration
Statement No. 33-55461, effective October 31, 1994, and incorporated
herein by reference.
** Annexed as Exhibit No. 4(e) to Amendment No. 1 to Registration
Statement No. 33-55461, effective October 31, 1994, and incorporated
herein by reference.
*** Annexed as Exhibit No. 4(j) to Registration Statement No. 33-55461,
effective October 31, 1994, and incorporated herein by reference.
</TABLE>
(b) Reports on Form 8-K.
None
- 22 -<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
THE UNITED ILLUMINATING COMPANY
Date 05/11/95 Signature /s/ Robert L. Fiscus
------------------ ---------------------------
Robert L. Fiscus
President and
Chief Financial Officer
- 23 -<PAGE>
<PAGE>
EXHIBIT INDEX
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Table Item Exhibit
Number Number Description Page No.
---------- ------- ----------- --------
<C> <C> <C>
(4) 4(a)* Form of Amended and Restated Agreement of
Limited Partnership of United Capital
Funding Partnership L.P.
(4) 4(b) Action of The United Illuminating
Company, as General Partner of United
Capital Funding Partnership L.P.,
relating to the 9 5/8% Preferred Capital
Securities, Series A, of United Capital
Funding Partnership L.P.
(4) 4(c)** Form of Indenture, dated as of April 1,
1995, from The United Illuminating
Company to The Bank of New York, as
Trustee.
(4) 4(d) First Supplemental Indenture, dated as of
April 1, 1995, between The United
Illuminating Company and The Bank of New
York, Trustee, supplementing Exhibit
4(c).
(4) 4(e)*** Form of Payment and Guarantee Agreement
of The United Illuminating Company, dated
as of April 1, 1995.
(10) 10 Amendment to The United Illuminating
Company 1990 Stock Option Plan, adopted
August 22, 1994.
(12), (99) 12 Statement Showing Computation of Ratios
of Earnings to Fixed Charges and Ratios
of Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements
(Twelve Months Ended March 31, 1995 and
Twelve Months Ended December 31, 1994,
1993, 1992, 1991 and 1990).
(27) 27 Financial Data Schedule
* Annexed as Exhibit No. 4(c) to Amendment No. 1 to
Registration Statement No. 33-55461, effective
October 31, 1994, and incorporated herein by reference.
** Annexed as Exhibit No. 4(e) to Amendment No. 1 to
Registration Statement No. 33-55461, effective
October 31, 1994, and incorporated herein by
reference.
*** Annexed as Exhibit No. 4(j) to Registration
Statement No. 33-55461, effective October 31, 1994,
and incorporated herein by reference.
</TABLE>
<PAGE>
<PAGE>
ACTION OF GENERAL PARTNER
THE UNITED ILLUMINATING COMPANY, a Connecticut corporation
("United Illuminating"), as General Partner of UNITED CAPITAL
FUNDING PARTNERSHIP L.P., a Delaware limited partnership (the
"Partnership"), in accordance with Section 10.2(a) of the Amended
and Restated Agreement of Limited Partnership of the Partnership
dated as of April 1, 1995, as it may heretofore have been amended
(the "Partnership Agreement," capitalized terms used herein without
definition having the meanings specified in the Partnership
Agreement), does hereby establish a new series of Preferred
Securities having the following designation, rights, privileges,
restrictions and other terms and provisions (the numbered clauses
set forth below corresponding to the subsections of Section 10.2(a)
of the Partnership Agreement):
(i)-(ii) DESIGNATION AND NUMBER. 2,000,000 Preferred
Securities of the Partnership with an aggregate liquidation
preference of Fifty Million ($50,000,000) and a liquidation
preference of $25 per Preferred Security, are hereby designated as
"9 5/8% Preferred Capital Securities, Series A" (hereinafter called
the "Series A Preferred Securities"). The LP Certificates
evidencing the Series A Preferred Securities shall be substantially
in the form attached hereto as Exhibit A. The proceeds of the
Series A Preferred Securities shall be loaned to United
Illuminating in return for 9 5/8% Junior Subordinated Deferrable
Interest Debentures, Series A, Due 2025 of United Illuminating in
aggregate principal amount equal to the aggregate liquidation
preference of the Series A Preferred Securities, bearing interest
at an annual rate equal to the annual dividend rate on the Series
A Preferred Securities and having certain payment and redemption
provisions which correspond to the payment and redemption
provisions of the Series A Preferred Securities (the "Series A
Debentures").
(iii)-(iv) DIVIDENDS. (a) The Limited Partners who hold the
Series A Preferred Securities shall be entitled to receive, to the
extent set forth in paragraph (b), cumulative preferential cash
Dividends at the annual rate of 9 5/8% of the liquidation preference
of $25 per Preferred Security per annum, calculated for any full
monthly dividend period on the basis of a 360-day year consisting
of 12 months of 30 days each and, for any period shorter than a
full monthly dividend period, Dividends will be computed on the
basis of the actual number of days elapsed in such period.
Dividends will be payable in United States dollars monthly in
arrears on the last day of each calendar month of each year,
commencing, April 30, 1995. Such Dividends will accumulate whether
or not there are profits, surplus or other funds of the Partnership
legally available to the Partnership for the payment of Dividends.
Dividends on the Series A Preferred Securities shall be cumulative
from the date of original issue, and the cumulative portion from
such date to April 30, 1995 shall be payable on April 30, 1995.
Accrued and unpaid Dividends on the Series A Preferred Securities
shall accrue additional Dividends in respect thereof after the
scheduled Dividend payment date therefor at the Dividend rate per
annum applicable to the Series A Preferred Securities. In the
event that any date on which Dividends are payable on the Series A
Preferred Securities is not a Business Day (as defined below), then
payment of the Dividends payable on such date will be made on the
next succeeding day which is a Business Day (and without any
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additional dividends or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and
effect, and in the same amount, as if made on such date. A
"Business Day" shall mean any day other than a day on which banking
institutions in The City of New York or the City of New Haven are
authorized or required by law to close.
(b) Dividends on the Series A Preferred Securities shall be
paid to the extent that, on any scheduled Dividend payment date,
the Partnership has (x) funds legally available for the payment of
such Dividends, as determined by the General Partner, and (y) cash
on hand sufficient to permit such payment. Dividends on the Series
A Preferred Securities will be payable to the Holders thereof as
they appear on the books and records of the Partnership on the
relevant record dates. Such record dates shall be one Business Day
prior to the relevant payment dates; provided, however, that if the
Series A Preferred Securities are not held by a securities
depositary, the General Partner shall have the right to change such
record dates.
(c) If Dividends and Additional Amounts, if any, in respect of
the Series A Preferred Securities have not been paid in full, the
Partnership shall not:
(i) pay, or set aside for payment, any Dividends on any other
Preferred Securities ranking PARI PASSU with the Series A Preferred
Securities as regards participation in the profits of the
Partnership ("Dividend Parity Securities"), unless, at the time of
such payment or setting aside, there shall also be paid, or set
aside for payment, as the case may be, Dividends on the Series A
Preferred Securities on a pro rata basis, so that after giving
effect to the payment of all such Dividends,
(x) the ratio of (a) the aggregate amount of Dividends
paid on the Series A Preferred Securities to (b) the aggregate
amount of Dividends paid on such Dividend Parity Securities is
the same as
(y) the ratio of (a) the aggregate of all accumulated
arrears of unpaid Dividends and Additional Amounts, if any, in
respect of the Series A Preferred Securities to (b) the
aggregate of all accumulated arrears of unpaid Dividends and
Additional Amounts, if any, in respect of such Dividend Parity
Securities;
(ii) pay, or set aside for payment, any Dividends or other
distributions on the General Partner Interests or any other
securities of the Partnership ranking junior to the Series A
Preferred Securities as to Dividends (collectively, the "Dividend
Junior Securities"); or
(iii) redeem, purchase or otherwise acquire any Series A
Preferred Securities, any Dividend Parity Securities or any
Dividend Junior Securities;
until, in each case, such time as all accumulated and unpaid
Dividends and Additional Amounts, if any, in respect of the Series
A Preferred Securities shall have been paid in full for all
Dividend periods terminating on or prior to, in the case of clauses
(i) and (ii) above,
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such payment and, in the case of clause (iii) above, the date of
such redemption, purchase or acquisition.
(v) LIQUIDATION DISTRIBUTION. In the event of any voluntary or
involuntary dissolution, liquidation or winding up of the
Partnership, Preferred Security Holders who hold the Series A
Preferred Securities at the time outstanding will be entitled to
receive out of the assets of the Partnership available for
distribution to Partners after satisfaction of liabilities to
creditors, if any, as required by the Act, before any distribution
of assets is made to the General Partner or any other series of
Preferred Securities ranking junior to the Series A Preferred
Securities with respect to participation in the assets of the
Partnership, but together with the holders of every other series of
Preferred Securities outstanding, if any, ranking pari passu with
the Series A Preferred Securities with respect to participation in
the assets of the Partnership ("Liquidation Parity Securities"), an
amount equal to the aggregate of the liquidation preference of $25
per Series A Preferred Security plus an amount equal to all
accumulated and unpaid Dividends thereon and any Additional
Amounts in respect thereof to the date of payment (the "Liquidation
Distribution"). If, upon any such liquidation, the Liquidation
Distribution can be paid only in part because the Partnership has
insufficient assets available to pay in full the aggregate
Liquidation Distribution and the aggregate maximum liquidation
distributions on the Liquidation Parity Securities, then the
amounts payable directly by the Partnership on the Series A
Preferred Securities and on such Liquidation Parity Securities
shall be paid on a pro rata basis, so that
(i) the ratio of (x) the aggregate amount paid in respect
of the Liquidation Distribution to (y) the aggregate amount
paid in respect of liquidation distributions on the
Liquidation Parity Securities is the same as
(ii) the ratio of (x) the aggregate Liquidation
Distribution to (y) the aggregate maximum liquidation
distributions on the Liquidation Parity Securities.
(vi)-(vii) REDEMPTION. (a) The Series A Preferred Securities
shall be redeemable, at the option of the Partnership and at the
direction of United Illuminating, in whole or in part from time to
time, on or after April 30, 1995 at a redemption price of $25 per
Series A Preferred Security plus an amount equal to accumulated and
unpaid Dividends and any Additional Amounts in respect thereof to
the date fixed for redemption (the "Redemption Price"); provided,
however, that prior to giving any such notice of redemption, the
Partnership shall have received from United Illuminating a notice
of redemption of Series A Debentures in an aggregate principal
amount equal to the aggregate liquidation preference of the Series
A Preferred Securities to be redeemed. If a partial redemption
would result in a delisting of the Series A Preferred Securities by
any national securities exchange or other organization on which the
Series A Preferred Securities are then listed, the Partnership may
only redeem the Series A Preferred Securities in whole.
(b) If at any time after the issuance of the Series A
Preferred Securities, the Partnership is or would be required to
pay Additional Amounts or United Illuminating is or would be
required to withhold or deduct certain amounts pursuant to
paragraph (xii) below, then the Partnership may, at its option,
redeem the Series A Preferred Securities in whole or, if such
requirement relates only to certain of the Series A Preferred
Securities,
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the Series A Preferred Securities subject to such requirement, in
each case at the Redemption Price.
(c) If at any time United Illuminating (1) pays at maturity or
(2) redeems Series A Debentures, the proceeds from such payment or
redemption of principal on such Debentures shall be applied to
redeem Series A Preferred Securities at the Redemption Price.
(d) If a Special Event (as defined below) shall occur and be
continuing, the General Partner shall (1) cause the Partnership to
redeem the Series A Preferred Securities in whole (and not in part)
at the Redemption Price, within 90 days following the occurrence of
such Special Event, or (2) cause the Partnership to distribute to
Holders of Series A Preferred Securities in exchange for such
Holders' Series A Preferred Securities, within 90 days following
the occurrence of such Special Event, the Series A Debentures;
provided, however, that in the case of clause (2) above the
Partnership shall have received an opinion of nationally recognized
independent tax counsel experienced in such matters to the effect
that such Holders will not recognize any gain or loss for Federal
income tax purposes as a result of such distribution; provided
further, however, that if the Special Event is solely a Tax Event
(as defined below), neither United Illuminating nor the Partnership
shall be required to elect either of the options described in
clause (1) or (2) above, and United Illuminating and the
Partnership may, instead, allow the Series A Preferred Securities
to remain outstanding. For purposes of this Action, "Special Event"
shall mean a Tax Event or an Investment Company Event. "Investment
Company Event" shall mean the occurrence of a change in law or
regulation or a written change in official interpretation of law or
regulation by any legislative body, court, governmental agency or
regulatory authority (a "1940 Act Change in Law") to the effect
that the Partnership is or will be considered an "investment
company" required to be registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), which 1940 Act Change in Law
becomes effective on or after April 3, 1995; provided that no
Investment Company Event shall be deemed to have occurred if United
Illuminating or the Partnership shall have obtained a written
opinion of nationally recognized independent tax counsel to the
Partnership experienced in practice under the 1940 Act, to the
effect that United Illuminating or the Partnership has successfully
taken either of the steps set forth in clause (a) or (b) below to
avoid such 1940 Act Change in Law so that in the opinion of such
counsel, notwithstanding such 1940 Act Change in Law, the
Partnership is not required to be registered as an "investment
company" within the meaning of the 1940 Act. Such steps shall be
either (a) issuing an additional or supplemental irrevocable and
unconditional guarantee (i) of accumulated and unpaid Dividends and
any Additional Amounts (whether or not moneys are legally available
therefor) in respect of the Series A Preferred Securities and (ii)
upon a liquidation of the Partnership, of the full amount of the
Liquidation Distribution on the Series A Preferred Securities
(regardless of the amount of assets of the Partnership otherwise
available for distribution in such liquidation), or (b) the use of
any other measures that do not adversely affect Holders of Series
A Preferred Securities. "Tax Event" shall mean that United
Illuminating or the Partnership shall have obtained an opinion of
nationally recognized independent tax counsel experienced in such
matters to the effect that, as a result of any amendment to, or
change (including any announced prospective change) in, the laws
(or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein
- 4 -<PAGE>
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affecting taxation, or any amendment to or change in an official
interpretation or application of such laws or regulations, which
amendment or change is effective on or after April 3, 1995, and
which change cannot be avoided by the use of any reasonable
measures available to United Illuminating or the Partnership, there
is a substantial increase in risk that (i) the Partnership is
subject to Federal income tax with respect to interest received on
the Series A Debentures, (ii) interest payable on the Series A
Debentures is not deductible for Federal income tax purposes or
(iii) the Partnership is subject to more than a DE MINIMIS amount
of other taxes, duties or other governmental charges.
(e) The Series A Preferred Securities will not be subject to
redemption or purchase by operation of a sinking or purchase fund.
(f) (1) Notice of any redemption (a "Notice of Redemption")
of, or notice of distribution of Series A Debentures in exchange
for, the Series A Preferred Securities will be given by the
Partnership by mail to each Holder of Series A Preferred Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof;
provided, that no such notice shall be required in the case of a
redemption of Series A Preferred Securities resulting from payment
at maturity of the Series A Debentures as contemplated in paragraph
(vi) - (vii) (c)(1) above, the redemption date for the Series A
Preferred Securities being the same as such maturity date in such
case. For purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant to this
paragraph (f)(1), a Notice of Redemption or notice of distribution
shall be deemed to be given on the day such notice is first mailed
by first-class mail, postage prepaid, to Preferred Security Holders
who hold Series A Preferred Securities. Each Notice of Redemption
or notice of distribution shall be addressed to the Preferred
Security Holders who hold Series A Preferred Securities at the
address of each such Holder appearing in the books and records of
the Partnership. No defect in the Notice of Redemption or notice of
distribution or in the mailing of either thereof with respect to
any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(2) In the event that fewer than all the outstanding Series A
Preferred Securities are to be redeemed, the Series A Preferred
Securities to be redeemed will be selected in accordance with
paragraph (4) below or, in the event that Series A Preferred
Securities are not held by the Depository, by lot or in such other
manner as the General Partner shall deem fair or appropriate.
(3) If (a) the Partnership gives a Notice of Redemption in
respect of Series A Preferred Securities (which notice shall be
irrevocable) or (b) Series A Preferred Securities shall become
redeemable by virtue of the maturity of Series A Debentures as
contemplated in paragraph (c)(1) above, then on the date fixed for
redemption, the Partnership will pay the Redemption Price to the
Holders of Series A Preferred Securities. If Notice of Redemption
shall have been given and payment or provision for payment shall
have been made on the date fixed for redemption as required, then
upon such date, all rights of the Preferred Security Holders who
hold such Series A Preferred Securities so called for redemption
will cease, except the right of the Holders of such Preferred
Securities to receive the Redemption Price, but without interest.
Neither the General Partner nor the Partnership
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shall be required to register or cause to be registered the
transfer of any Series A Preferred Securities which have been so
called for redemption. In the event that any date fixed for
redemption of Series A Preferred Securities is not a Business Day,
payment of the Redemption Price payable on such date will be made
on the next succeeding day which is a Business Day (and without any
additional dividends or other payment in respect of any such
delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption
Price in respect of Series A Preferred Securities is not paid
either by the Partnership or by United Illuminating pursuant to the
Guarantee, Dividends on such Series A Preferred Securities will
continue to accumulate (but without any additional dividends on
amounts so accumulating), from the original date fixed for
redemption to the date of payment, in which case the actual payment
date will be considered the date fixed for redemption for purposes
of calculating the Redemption Price.
(4) Redemption or exchange notices shall be sent to the
Depository or its nominee. If less than all of the Series A
Preferred Securities are being redeemed, interests to be redeemed
shall be determined in accordance with the Depository's practice
which at the date hereof is to determine by lot the amount of the
interest of each direct participant in such series to be redeemed.
(viii) CONVERSION OR EXCHANGE. Under the circumstances
described in paragraph (vi)-(vii)(d)(2) above and as of the date
fixed for distribution of Series A Debentures, any LP Certificates
representing Series A Preferred Securities outstanding shall be
deemed to represent the Series A Debentures to be distributed on
such an exchange, and the Series A Preferred Securities will no
longer be deemed outstanding and may be canceled by the General
Partner. Under such circumstances, the General Partner may dissolve
the Partnership if there are no other Preferred Securities
outstanding. The Series A Debentures distributed upon such an
exchange shall have an aggregate principal amount equal to the
aggregate liquidation preference of $25 per security on the Series
A Preferred Securities so exchanged, and shall bear interest at a
rate per annum equal to the annual Dividend rate on such Series A
Preferred Securities from the last date on which Dividends on such
Series A Preferred Securities were paid. The General Partner shall
use its best efforts to have the Series A Debentures distributed to
be listed on the same securities exchange on which the Series A
Preferred Securities are then listed.
(ix) VOTING RIGHTS. If (i) the Partnership fails to pay
Dividends and any Additional Amounts in full in respect of the
Series A Preferred Securities for any period of 18 consecutive
months; (ii) an Event of Default (as defined with respect to the
Series A Debentures) under the Indenture shall have occurred and be
continuing; or (iii) United Illuminating is in default on any of
its payment or other obligations under the Guarantee, then the
Holders of Series A Preferred Securities, together with the holders
of any other series of Preferred Securities having the right to
vote for the appointment of a Special Representative in such event,
acting as a single class, shall be entitled, by vote of holders of
a majority in aggregate liquidation preference of all Preferred
Securities having the right to vote, to appoint and authorize a
Special Representative to enforce the Partnership's and the Limited
Partners' rights under the Series A Debentures (and, if applicable,
such other Debentures) and the Indenture against United
Illuminating, enforce the obligations
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undertaken by United Illuminating under the Guarantee and pay
Dividends on the Series A Preferred Securities (to the extent the
Partnership has funds legally available for the payment of such
dividends and cash on hand sufficient to permit such payment). Any
Special Representative so appointed shall not be admitted as a
Partner in the Partnership or otherwise be deemed to be a Partner
in the Partnership and shall have no liability for the debts,
obligations or liabilities of the Partnership, except to the extent
otherwise required by applicable law in order for such Special
Representative to enforce the Partnership's and the Limited
Partners' rights under the Series A Debentures and fulfill its
other duties under the Partnership Agreement.
In furtherance of the foregoing, and without limiting the
powers of any special representative so appointed and for the
avoidance of any doubt concerning the powers of the Special
Representative, any Special Representative, in its own name and as
representative of the Partnership, may institute a proceeding,
including, without limitation, any suit in equity, an action at law
or other judicial or administrative proceeding, to enforce the
Partnership's and the Limited Partners' rights directly against
United Illuminating or any other obligor in connection with such
obligations to the same extent as the Partnership and on behalf of
the Partnership, and may prosecute such proceeding to judgment or
final decree, and enforce the same against United Illuminating, or
any other obligor in connection with such obligations.
For purposes of determining whether the Partnership has failed
to pay Dividends in full for 18 consecutive months, Dividends shall
be deemed to remain in arrears, notwithstanding any payments in
respect thereof, until full cumulative Dividends and any Additional
Amounts have been or contemporaneously are set aside and paid with
respect to all monthly Dividend periods terminating on or prior to
the date of payment of such full cumulative Dividends and
Additional Amounts. Not later than 30 days after such right to
appoint a Special Representative arises, the General Partner will
convene a general meeting for the above purpose. If the General
Partner fails to convene such meeting within such 30-day period,
the Holders of 10% in aggregate liquidation preference of the
outstanding Series A Preferred Securities will be entitled to
convene such meeting. The provisions of Section 7.2 of the
Partnership Agreement relating to the convening and conduct of
meetings of Partners will apply with respect to any such meeting.
Any Special Representative so appointed shall vacate office
immediately if the Partnership (or United Illuminating pursuant to
the Guarantee) shall have paid in full all accumulated and unpaid
Dividends and any Additional Amounts in respect of the Series A
Preferred Securities or such Event of Default or default under the
Guarantee by United Illuminating, as the case may be, shall have
been cured.
If any proposed amendment to the Partnership Agreement
provides for, or the General Partner otherwise proposes to effect
(pursuant to an Action or otherwise), (x) any action which would
adversely affect the rights, preferences and privileges of the
holders of the Series A Preferred Securities, whether by way of
amendment of the Partnership Agreement or otherwise (including,
without limitation, the authorization or issuance of any Interests
ranking, as to participation in the profits or assets of the
Partnership, senior to the Series A Preferred Securities or the
authorization to dissolve, liquidate or wind up the Partnership),
or (y) the dissolution, liquidation or winding up of the
Partnership (other than
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in connection with a distribution of Series A Debentures upon, and
dissolution of the Partnership after, the occurrence of a Special
Event), then Limited Partners who hold the outstanding Series A
Preferred Securities will be entitled to vote on such amendment or
proposed action of the General Partner (but not on any other
amendment or action) together as a class with, in the case of an
amendment or proposed action described in clause (x) above which
would equally adversely affect the rights, preferences or
privileges of holders of any Dividend Parity Securities or any
Liquidation Parity Securities, holders of such Dividend Parity
Securities or such Liquidation Parity Securities, as the case may
be, or, in the case of any amendment described in clause (y) above,
holders of all Liquidation Parity Securities, and such amendment or
action shall not be effective except with the approval of Limited
Partners holding 66-2/3% in aggregate liquidation preference of such
class; PROVIDED, HOWEVER, that no such approval shall be required
if the dissolution, liquidation or winding up the Partnership is
proposed or initiated pursuant to Section 15.2 of the Partnership
Agreement, or upon the initiation of proceedings, or after
proceedings have been initiated, for the dissolution, liquidation
or winding up of United Illuminating.
The rights attached to the Series A Preferred Securities will
be deemed not to be adversely affected by the creation or issue of,
and no vote will be required for the creation of, any further
Interests ranking junior to, or PARI PASSU with, the Series A
Preferred Securities with regard to participation in the profits or
assets of the Partnership.
Any required approval of Holders of Series A Preferred
Securities may be given at a separate meeting of such Holders
convened for such purpose, at a general meeting of Preferred
Security Holders or pursuant to written consent. The Partnership
will cause a notice of any meeting at which Holders of Series A
Preferred Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to
be mailed to each Holder of Series A Preferred Securities. Each
such notice will include a statement setting forth (i) the date of
such meeting or the date by which such action is to be taken, (ii)
a description of any matter on which such Holders are entitled to
vote or upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of Holders of Series A Preferred Securities
will be required for the Partnership to redeem and cancel Series A
Preferred Securities in accordance with the Partnership Agreement.
Notwithstanding that Holders of Series A Preferred Securities
are entitled to vote or consent under any of the circumstances
described above, holders of any of the Series A Preferred
Securities and any other series of Preferred Securities that are
entitled to vote or consent with such Series A Preferred Securities
as a class at such time that are owned by United Illuminating or
any Affiliate of United Illuminating shall not be entitled to vote
or consent and shall, for the purposes of such vote or consent, be
treated as if they were not outstanding.
(x) RANKING. So long as any Series A Preferred Securities are
outstanding, the Partnership will not issue any Interests ranking,
as to participation in the profits or assets of the Partnership,
senior to the Series A Preferred Securities.
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(xi) See paragraph (i)-(ii) above for a description of the
Series A Debentures.
(xii) ADDITIONAL AMOUNTS. All payments in respect of
Preferred Securities by the Partnership will be made without
withholding or deduction for or on account of any present or future
taxes, duties, assessments or governmental charges of whatever
nature imposed or levied upon or as a result of such payment by or
on behalf of the United States, any state thereof or any other
jurisdiction through which or from which such payment is made, or
any authority therein or thereof having power to tax, unless the
withholding or deduction of such taxes, duties, assessments or
governmental charges is required by law. In the event that any
such withholding or deduction is required as a consequence of (i)
the Series A Debentures not being treated as indebtedness for
United States Federal income tax purposes or (ii) the Partnership
not being treated as a partnership for United States Federal income
tax purposes, the Partnership will pay as a dividend such
additional amounts as may be necessary in order that the net
amounts received by the Holders after such withholding or deduction
will equal the amount that would have been receivable in respect of
the Preferred Securities in the absence of such withholding or
deduction, except that no such Additional Amounts will be payable
to a Holder (or a third party on such Holder's behalf) if:
a. such Holder is liable for such taxes, duties,
assessments or governmental charges in respect of the
Preferred Securities by reason of such Holder's having a
connection with the United States, any state thereof or
any other jurisdiction through which or from which such
payment is made, or in which such Holder resides,
conducts business or has other contacts, other than being
a Holder of Preferred Securities, or
b. the Partnership or United Illuminating has
notified such Holder of the obligation to withhold or
deduct taxes and requested but not received from such
Holder a declaration of non-residence, a valid taxpayer
identification number or other claim for exemption, and
such withholding or deduction would not have been
required had such declaration, taxpayer identification
number or claim been received.
(xiii) MERGERS. The General Partner is authorized and directed
to conduct its affairs and to operate the Partnership in such a way
that the Partnership would not be deemed to be an "investment
company" required to be registered under the 1940 Act or taxed as
a corporation for Federal income tax purposes and so that the
Series A Debentures will be treated as indebtedness of United
Illuminating for Federal income tax purposes. In this connection,
the General Partner is authorized to take any action not
inconsistent with applicable law, the Certificate or the
Partnership Agreement and that does not adversely affect the
interests of Holders of Series A Preferred Securities that the
General Partner determines in its discretion to be necessary or
desirable for such purposes.
The Partnership shall not consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any
partnership, corporation or other body, except as described below.
The General Partner may, without the consent of the Holders of the
Series A Preferred Securities, cause the Partnership to
consolidate, amalgamate, merge with or into, or be replaced by, or
convey
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or transfer its properties and assets substantially as an entirety
to, a Delaware limited partnership or "other business entity" (as
defined in the Act, but not including any general partnership)
organized under the laws of any state of the United States or the
Turks and Caicos Islands or the Cayman Islands, provided that (i)
such successor entity either (x) expressly assumes all of the
obligations of the Partnership under the Series A Preferred
Securities or (y) substitutes for the Series A Preferred Securities
other securities having substantially the same terms as the Series
A Preferred Securities (the "Successor Securities") so long as the
Successor Securities rank, with respect to participation in the
profits and assets of the successor entity, at least as high as the
Series A Preferred Securities rank, with respect to participation
in the profits and assets of the Partnership, (ii) United
Illuminating expressly acknowledges such successor entity as the
holder of the Series A Debentures and confirms its obligations
under the Guarantee with respect to the Series A Preferred
Securities, (iii) such merger, consolidation, amalgamation,
replacement, conveyance or transfer does not cause the Series A
Preferred Securities to be delisted by any national securities
exchange or other organization on which the Series A Preferred
Securities are then listed unless the Series A Preferred Securities
are promptly relisted, or the Successor Securities are promptly
listed, by such exchange or other organization, (iv) such merger,
consolidation, amalgamation, replacement, conveyance or transfer
does not cause the Series A Preferred Securities to be downgraded
or the Successor Securities to be rated lower than the Series A
Preferred Securities immediately prior to such merger,
consolidation, amalgamation, replacement, conveyance or transfer by
any "nationally recognized statistical rating organization," as
that term is defined by the Securities and Exchange Commission for
purposes of Rule 436(g)(2) under the Securities Act, (v) such
merger, consolidation, amalgamation, replacement, conveyance or
transfer does not adversely affect the powers, preferences and
other special rights of Holders of Series A Preferred Securities,
(vi) such successor entity has a purpose substantially identical to
that of the Partnership and (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance or transfer,
the General Partner has received an opinion of nationally
recognized independent tax counsel to the Partnership experienced
in such matters to the effect that (w) Holders of outstanding
Series A Preferred Securities will not recognize any gain or loss
for Federal income tax purposes as a result of the merger,
consolidation, amalgamation, replacement, conveyance or transfer,
(x) such successor entity will be treated as a partnership for
Federal income tax purposes, (y) following such merger,
consolidation, amalgamation, replacement, conveyance or transfer,
United Illuminating and such successor entity will be in compliance
with the 1940 Act without registering thereunder as an investment
company, and (z) such merger, consolidation, amalgamation,
replacement, conveyance or transfer will not adversely affect the
limited liability of Holders of Series A Preferred Securities.
(xiv) Other Terms. The Bank of New York shall be the registrar
and co-transfer agent and United Illuminating shall be co-transfer
agent and the paying agent, for the Series A Preferred Securities
This written Action shall constitute an Action for purposes of
the Partnership Agreement.
- 10 -<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Action
of General Partner this 1st day of April, 1995.
GENERAL PARTNER:
THE UNITED ILLUMINATING COMPANY
By /s/Kurt Mohlman
---------------------------------
Name: Kurt Mohlman
Title: Treasurer and Secretary
- 11 -<PAGE>
<PAGE>
- --------------------------------------------------------------------
Certificate Number Number of Preferred Securities
R-1 2,000,000
- --------------------------------------------------------------------
CUSIP NO. 909 78X 205
Certificate Evidencing Preferred Securities
of
United Capital Funding Partnership L.P.
9 5/8% Preferred Capital Securities, Series A
(Liquidation Preference $25 per Security)
United Capital Funding Partnership L.P., a limited
partnership formed under the laws of the State of Delaware (the
"PARTNERSHIP"), hereby certifies that CEDE & CO. (the "PREFERRED
SECURITY HOLDER") is the registered owner of Two Million
(2,000,000) preferred securities of the Partnership representing
Interests in the Partnership of a series designated the 9 5/8%
Preferred Capital Securities, Series A (liquidation preference
$25 per security) (the "SERIES A PREFERRED SECURITIES"). The
Series A Preferred Securities are fully paid and nonassessable
Interests in the Partnership, as to which the limited partners of
the Partnership who hold the Series A Preferred Securities, in
their capacities as limited partners of the Partnership, will
have no liability solely by reason of being Preferred Security
Holders in excess of their obligations to make payments provided
for in the Limited Partnership Agreement (as defined below) and
their share of the Partnership's assets and undistributed profits
(subject to the obligation of a Preferred Security Holder to
repay any funds wrongfully distributed to it). The Series A
Preferred Securities are transferable on the books and records of
the Partnership, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form
for transfer. The powers, preferences and special rights and
limitations of the Series A Preferred Securities are established
pursuant to, and this certificate and the Series A Preferred
Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended
and Restated Agreement of Limited Partnership of the Partnership
dated as of April 1, 1995, as the same may, from time to time, be
amended (the "LIMITED PARTNERSHIP AGREEMENT"), authorizing the
issuance of the Series A Preferred Securities and determining,
together with the Action of the General Partner as authorized
under the Limited Partnership Agreement, the powers, preferences,
and other special rights and limitations, regarding Dividends,
voting, return of capital and otherwise, and other matters
relating to the Series A Preferred Securities. Capitalized terms
used herein but not defined shall have the meaning given them in
the Limited Partnership Agreement. The Preferred Security Holder
is entitled to the benefits of the Payment and Guarantee
Agreement of The<PAGE>
<PAGE>
United Illuminating Company, a Connecticut corporation, dated as
of April 1, 1995 (the "GUARANTEE"), and the 9 5/8% Junior
Subordinated Deferrable Interest Debentures, Series A, Due 2025
of The United Illuminating Company (the "DEBENTURES") issued
pursuant to the Indenture dated as of April 1, 1995 between The
United Illuminating Company and The Bank of New York, as Trustee,
as such Indenture may be amended and supplemented from time to
time, in each case to the extent provided therein and in the
Limited Partnership Agreement. The Partnership will furnish a
copy of the Limited Partnership Agreement, the Guarantee, the
Indenture and the Debentures to the Preferred Security Holder
without charge upon written request to the Partnership at its
principal place of business or registered office.
The Preferred Security Holder, by accepting this
certificate, is deemed to have agreed that the Debentures and the
Guarantee are subordinate and junior in right of payment to all
Senior Indebtedness of The United Illuminating Company as and to
the extent provided in the Indenture and the Guarantee. Upon
receipt of this certificate and payment for the Series A
Preferred Securities, and its name being recorded on the books
and records of the Partnership to reflect its admission as a
Limited Partner, the Preferred Security Holder is admitted to the
Partnership as a Limited Partner, is bound by the Limited
Partnership Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Partnership has executed this
certificate this 3rd day of April 1995.
UNITED CAPITAL FUNDING
PARTNERSHIP L.P.
By: THE UNITED ILLUMINATING
COMPANY, ITS GENERAL PARTNER
By
----------------------------------
<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY
and
THE BANK OF NEW YORK,
Trustee
-------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of April 1, 1995
to
INDENTURE
Dated as of April 1, 1995
-------------------
9 5/8% Junior Subordinated Deferrable Interest Debentures,
Series A, Due 2025
----------------------------------------------------------
<PAGE>
<PAGE>
FIRST SUPPLEMENTAL INDENTURE dated as of April 1, 1995 (this
"Supplemental Indenture") between THE UNITED ILLUMINATING COMPANY,
a corporation duly organized and existing under the laws of the
State of Connecticut (the "Company"), and THE BANK OF NEW YORK, a
New York banking corporation, as trustee (the "Trustee") under the
Indenture dated as of April 1, 1995 between the Company and the
Trustee (as such Indenture may heretofore have been amended and
supplemented, the "Indenture"). Capitalized terms used and not
defined herein are used as defined in the Indenture.
WHEREAS, the Company executed and delivered the Indenture to
the Trustee to provide for the future issuance of Securities, to be
issued from time to time in one or more series as might be
determined by the Company under the Indenture, in an unlimited
aggregate principal amount that may be authenticated and delivered
thereunder as in the Indenture provided;
WHEREAS, pursuant to the terms of the Indenture, the Company
desires to provide for the establishment of a new series of
Securities to be known as its 9 5/8% Junior Subordinated Deferrable
Interest Debentures, Series A, Due 2025 (the "Debentures"), the
form and substance thereof, and the terms, provisions and
conditions thereof, to be set forth as provided in the Indenture
and this Supplemental Indenture;
WHEREAS, United Capital Funding Partnership L.P., a Delaware
limited partnership (such limited partnership, or its permitted
successors, the "Partnership"), desires to offer and sell its 9
5/8% Preferred Capital Securities, Series A (the "Preferred
Securities"), representing limited partner interests in the
Partnership ("Limited Partner Interests"), in accordance with the
Action of General Partner dated April 1, 1995 pursuant to Section
10.2(a) of the Amended and Restated Agreement of Limited
Partnership of the Partnership dated April 1, 1995 (as amended and
supplemented by any such Action, the "Partnership Agreement");
WHEREAS, the Partnership desires to invest the proceeds from
the offer and sale of the Preferred Securities, together with the
amount of capital contributions made by the Company from time to
time as general partner of the Partnership in connection with the
Preferred Securities, in the Debentures;
WHEREAS, the Company has entered into a Payment and Guarantee
Agreement dated as of April 1, 1995 pursuant to which, among other
things, payments of dividends on, and upon redemption of, the
Preferred Securities and upon liquidation of the Partnership are
guaranteed to the extent set forth therein (the "Guarantee");
WHEREAS, upon the occurrence of any Special Event (as defined
in the Partnership Agreement), the Company may cause to be
distributed to the holders of the Preferred Securities, on a pro
rata basis, Debentures (a "Distribution Event"); and
WHEREAS, the Company desires and has requested the Trustee to
join with it in the execution and delivery of this Supplemental
Indenture and all requirements necessary
<PAGE>
<PAGE>
to make this Supplemental Indenture a valid instrument, in
accordance with its terms, and to make the Debentures, when
executed by the Company and authenticated and delivered by the
Trustee, the valid obligations of the Company, have been performed
and fulfilled, and the execution and delivery hereof have been in
all respects duly authorized.
NOW, THEREFORE, in consideration of the purchase and
acceptance of the Debentures by the Partnership, and for the
purpose of setting forth, as provided in the Indenture, the form
and substance of the Debentures and the terms, provisions and
conditions thereof, the Company covenants and agrees with the
Trustee as follows:
ARTICLE ONE
General Terms and Conditions of the Debentures
----------------------------------------------
SECTION 1.01. There shall be and is hereby authorized a series
of Securities designated the "9 5/8% Junior Subordinated Deferrable
Interest Debentures, Series A, Due 2025 the aggregate principal
amount of which shall be limited to the sum of (a) $50,000,000 and
(b) the amount of capital contributions made by the Company from
time to time as general partner of the Partnership in connection
with the Preferred Securities, which amount shall be as set forth
in any written order of the Company for the authentication and
delivery of Debentures; provided, however, that the Debentures
shall be issued to evidence loans by the Partnership of the
proceeds of the issuance of the Preferred Securities plus the
amount of such capital contributions. Debentures may, upon
execution of this Supplemental Indenture or from time to time
thereafter, be executed by the Company and delivered to the Trustee
for authentication, and the Trustee shall thereupon authenticate
and deliver such Debentures to or upon the written order of the
Company, signed by its Chairman of the Board, its President, or any
Vice President; the Treasurer or an Assistant Treasurer, without
any further action by the Company. The Debentures shall mature and
the principal thereof shall be due and payable together with all
accrued and unpaid interest (including Additional Interest (as
defined in Section 1.04(c) hereof), if any) thereon, on April 30,
2025, and shall be issued in the form of registered Debentures
without coupons.
SECTION 1.02. Except as provided in Section 1.03 hereof, the
Debentures shall be issued in certificated form. Principal of and
premium, if any, and interest (including Additional Interest, if
any) on the Debentures issued in certificated form will be payable,
the transfer of Debentures will be registrable, and Debentures will
be exchangeable for Debentures bearing identical terms and
provisions, at the office or agency of the Company in the Borough
of Manhattan, the City of New York, in any coin or currency of the
United States of America that at the time of payment is legal
tender for payment of public and private debts; provided, however,
that payment of interest on any of the Debentures may be made at
the option of the Company by check mailed to the Holder thereof at
such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of the
Debentures is the Partnership, the payment of the principal of and
premium, if any, and interest (including Additional Interest, if
any) on the Debentures will be made, at such place and to such
account as may be designated in writing by the Partnership.
- 2 -<PAGE>
<PAGE>
SECTION 1.03. (a) In connection with a Distribution Event, the
Debentures to be distributed to the holders of the Preferred
Securities may be presented to the Trustee by the Partnership in
exchange for a Debenture in global form (a "Global Debenture") in
an aggregate principal amount equal to the principal amount of such
Debentures, to be registered in the name of The Depository Trust
Company, New York, New York or any successor registered as a
clearing agency under the Exchange Act or other applicable statute
or regulation (the "Depositary"), or its nominee, and delivered by
the Trustee to the Depositary for crediting to the accounts of its
participants pursuant to the instructions of the Partnership. The
Company upon any such presentation shall execute a Global Debenture
in such aggregate principal amount and deliver the same to the
Trustee for authentication and delivery as hereinabove and in the
Indenture provided. Payments on such Debentures issued as a Global
Debenture will be made to the Depositary.
(b) Notwithstanding the provisions of Section 305 of the
Indenture, the Global Debenture may be transferred, in whole but
not in part, in the manner provided in Section 305 of the
Indenture, only by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or to a successor Depositary selected or
approved by the Company or to a nominee of such successor
Depositary.
(c) If at any time the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for the Debentures
or if at any time the Depositary for the Debentures shall no longer
be registered under the Exchange Act, or other applicable statute
or regulation, and a successor Depositary for the Debentures is not
appointed by the Company within 90 days after the Company receives
such notice or becomes aware of such condition, as the case may be,
this Section 1.03 shall no longer be applicable to the Debentures
and the Company will execute and, subject to Section 305 of the
Indenture, the Trustee will authenticate and deliver Debentures in
definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debenture in exchange for such
Global Debenture. In addition, the Company may at any time
determine that the Debentures shall no longer be represented by a
Global Debenture, and that the provisions of this Section 1.03
shall no longer apply to the Debentures. In such event, the Company
will execute and, subject to Section 305 of the Indenture, the
Trustee, upon receipt of an Officer's Certificate evidencing such
determination by the Company, will authenticate and deliver
Debentures in definitive registered form without coupons, in
authorized denominations, and in aggregate principal amount equal
to the principal amount of the Global Debenture in exchange for
such Global Debenture. Upon exchange of the Global Debenture for
such Debentures in definitive registered form without coupons, in
authorized denominations, the Global Debenture shall be canceled by
the Trustee. Such Debentures in definitive registered form issued
in exchange for the Global Debenture pursuant to this Section
1.03(c) shall be registered in such names and authorized
denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Debentures to the
Depositary for delivery to the persons in whose names such
Debentures are so registered.
- 3 -<PAGE>
<PAGE>
SECTION 1.04. (a) Each Debenture will bear interest at the
rate of 9 5/8% per annum from its original date of issuance or from
the most recent Interest Payment Date (as defined below) to which
interest has been paid or duly provided for until the principal
thereof becomes due and payable, and any overdue principal thereof
and (to the extent that payment of such interest is enforceable
under applicable law) any overdue installment of interest
(including Additional Interest, if any) thereon will bear interest
at the same rate per annum, payable in arrears on the last day of
each calendar month of each year (each, an "Interest Payment
Date"), commencing on April 30, 1995, and at Maturity to the person
in whose name such Debenture or any Predecessor Security thereof is
registered, at the close of business on the Regular Record Date for
such interest installment, which shall be the close of business on
the Business Day next preceding such Interest Payment Date;
provided, however, that if the Debentures are not held solely by
the Partnership or by the Depositary, the Company may select a
Regular Record Date for such interest installment which day shall
be any day not more than 15 days preceding an Interest Payment
Date; provided, however, that (i) if any Debenture is authenticated
after a Regular Record Date and before the Interest Payment Date
therefor, such interest installment shall be paid on the next
succeeding Interest Payment Date to the Holder thereof on the
Regular Record Date therefor and (ii) interest payable at Maturity
shall be paid to the Person to whom principal is paid. Any such
interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to such Holder on such Regular Record
Date by virtue of having been such Holder, and such defaulted
interest may be paid by the Company, at its election, to the person
in whose name such Debenture (or one or more Predecessor Securities
thereof) is registered at the close of business on a Special Record
Date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the Holders of the
Debentures not less than 10 days prior to such Special Record Date,
or in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may
be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.
(b) So long as any Preferred Securities remain outstanding, if
the Partnership shall be required to pay (i) as an additional
dividend on or distribution with respect to any Limited Partner
Interests, any amounts for or on account of any present or future
taxes, duties, assessments or governmental charges of whatever
nature imposed or levied upon or as a result of payments in respect
of any Limited Partner Interests by or on behalf of the United
States, any state thereof or any other jurisdiction through which
or from which such payments are made, or any authority therein or
thereof having power to tax, that have been withheld or deducted
from the distributions to the holders of the Limited Partner
Interests or (ii) with respect to its income derived from the
interest payments on the Securities of any series corresponding to
Limited Partner Interests, any amounts for or on account of any
taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States,
or any other taxing authority, then, in any such case, the Company
will pay as interest on such series such additional interest
("Additional Interest") as may be necessary so that the net amounts
received and retained by (A) the holders of the Preferred
Securities after any such taxes, duties, assessments or
governmental charges shall have been withheld or deducted shall
result in such holders having received such funds as they would
have had in the absence of such withholding or
- 4 -<PAGE>
<PAGE>
deduction and (B) the Partnership after paying any such taxes,
duties, assessments or governmental charges shall result in the
Partnership having such funds as it would have had in the absence
of the payment of such taxes, duties, assessments or governmental
charges.
SECTION 1.05. "Business Day" for purposes of the Debentures
shall mean any day on which banking institutions in the City of New
York, New York or the City of New Haven, Connecticut are authorized
or required by law to close.
SECTION 1.06. Notwithstanding the provisions of Section 101
and Article Fifteen of the Indenture, the Company's obligations
under the Guarantee shall not be deemed to be Senior Indebtedness.
ARTICLE TWO
Mandatory Prepayment and Optional Redemption of the Debentures
--------------------------------------------------------------
SECTION 2.01. If the Partnership redeems Preferred Securities
in accordance with the terms thereof, the Company shall redeem
Debentures in a principal amount equal to the aggregate liquidation
preference of the Preferred Securities so redeemed, at a redemption
price equal to 100% of such principal amount of Debentures so
redeemed, together with all accrued and unpaid interest (including
Additional Interest, if any) thereon. If less than all of the
Debentures are to be redeemed pursuant to this Section 2.01, the
Debentures will be redeemed pro rata or by lot or by any other
method utilized by the Trustee. Any payment pursuant to this
provision shall be made prior to 12:00 noon, New York time, on the
date the Preferred Securities are so redeemed or at such earlier
time as the Company and the Partnership shall agree.
SECTION 2.02. Subject to the terms of Article Four of the
Indenture, the Company shall have the right to redeem the
Debentures, in whole or in part, from time to time, on or after
April 30, 2000, at a redemption price equal to 100% of the
principal amount thereof to be redeemed plus any accrued and unpaid
interest (including Additional Interest, if any) thereon to the
date of such redemption. Any redemption pursuant to this Section
2.01 will be made upon not less than 30 nor more than 60 days'
notice. If less than all of the Debentures are to be redeemed
pursuant to this Section 2.02, the Debentures will be redeemed pro
rata or by lot or by any other method utilized by the Trustee;
provided, however, that if at the time of redemption the Debentures
are in the form of a Global Debenture, the Depositary shall
determine by lot the principal amount of such Debentures held by
each Holder of Debentures to be redeemed; provided further,
however, that any Debentures owned by the Partnership shall not be
selected at any time after a Distribution Event for any such
partial redemption.
SECTION 2.03. The Company may not redeem (or otherwise
purchase) less than all of the Debentures if as a result of such
partial redemption (or purchase) the Debentures would be delisted
from any national securities exchange on which they are then
listed, and in such case if the Company elects to redeem (or
otherwise purchase) any of the
- 5 -<PAGE>
<PAGE>
Debentures, the Company shall redeem (or otherwise purchase) all of
them. No notice of redemption with respect to the Debentures may
state that such redemption shall be conditional upon the receipt of
monies sufficient to pay the principal thereof or premium, if any,
or interest (including Additional Interest, if any) thereon, as
contemplated by the last paragraph of Section 404 of the Indenture.
ARTICLE THREE
Extension of Interest Payment Period
------------------------------------
SECTION 3.01. The Company shall have the right at any time, so
long as the Company is not in default in the payment of interest on
the Debentures, to extend interest payment periods on all of the
Debentures for a period of up to 60 consecutive months, but not
beyond the Maturity thereof, and at, or at any time prior to, the
end of any such extended interest payment period, the Company shall
pay all interest then accrued and unpaid, including Additional
Interest, if any, thereon (together with interest thereon at the
rate specified therefor to the extent permitted by applicable law)
in the same manner as provided for the payment of Defaulted
Interest in Section 307 of the Indenture; provided, however, that
during any such extended interest payment period the Company shall
not, and shall not permit any Affiliate directly or indirectly
controlled by the Company to, declare or pay any dividend on, or
redeem, purchase, acquire or make a liquidation payment with
respect to, any capital stock of the Company or such Affiliate or
make any guarantee payments with respect to the foregoing (other
than payments under the Guarantee); provided further, however, that
any such extended interest payment period may only be selected with
respect to the Debentures if an extended interest payment period of
identical length is simultaneously selected for all Securities then
Outstanding under the Indenture. Prior to the termination of any
such extended interest payment period, and subject to the foregoing
requirements, the Company may further extend such period, provided
that such period together with all such further extensions thereof
may not exceed a period of 60 consecutive months and subject to the
limitations described above. Following the termination of any such
extended interest payment period, if the Company has paid all
accrued and unpaid interest, including any Additional Interest, if
any (together with interest at the rate specified for the
Debentures to the extent permitted by applicable law), required by
the Debentures for such period, the Company shall have the right to
again extend the interest payment periods on the Debentures for up
to 60 consecutive months as provided above.
SECTION 3.02. If the Partnership is the sole Holder of the
Debentures at the time the Company extends an interest payment
period thereon as provided in Section 311 of the Indenture, the
Company shall give both the Partnership and the Trustee written
notice of its selection of such extended interest payment period
one Business Day prior to the earlier of (a) the date dividends on
any Limited Partner Interests would otherwise be payable and (b)
the date the Partnership is required to give notice of the record
or payment date of such dividends to any national securities
exchange on which any Limited Partner Interests shall be listed or
to holders of any Limited Partner Interests, but in any event not
less than two
- 6 -<PAGE>
<PAGE>
Business Days prior to such record date. The Company shall cause
the Partnership to give notice of the Company's selection of such
extended interest payment period to the holders of the Preferred
Securities.
ARTICLE FOUR
Covenants
---------
SECTION 4.01. Upon a Distribution Event, the Company will use
its best efforts to list the Debentures on the New York Stock
Exchange or on such other exchange, on the same part of any such
exchange, as the Preferred Securities are then listed and admitted
for trading and to register the Debentures under the Exchange Act.
SECTION 4.02. The Company shall, so long as the Preferred
Securities remain outstanding, (a) maintain direct or indirect
ownership of all interests in the Partnership other than Limited
Partner Interests, (b) not voluntarily (to the extent permitted by
law) dissolve, liquidate or wind up the Partnership, (c) remain the
sole general partner of the Partnership and timely perform in all
material respects all of its duties as general partner of the
Partnership (including its duty to pay dividends on the Preferred
Securities and its duty to pay all costs and expenses of the
Partnership), (d) use reasonable efforts to cause the Partnership
to remain a limited partnership and otherwise continue to be
treated as a partnership for Federal income tax purposes and (e)
use its best efforts to conduct the affairs and operate the
Partnership in such a way that the Partnership would not be an
"investment company" required to be registered under the Investment
Company Act of 1940, as amended; provided, however, that any
permitted successor to the Company under the Indenture may succeed
to the Company's duties as general partner of the Partnership;
provided further, however, that the Company may permit the
Partnership to consolidate or merge with or into another limited
partnership or other permitted successor under the Partnership
Agreement so long as the Company agrees to comply with this Section
4.02 with respect to such successor limited partnership or other
permitted successor.
SECTION 4.03. The holders of the Preferred Securities will
have the rights provided to them under the Partnership Agreement,
including the right under certain circumstances to appoint a
Special Representative authorized to exercise the Partnership's
right to accelerate the principal amount of the Debentures and to
enforce the Partnership's other rights under the Debentures and the
Indenture. In addition, the Company acknowledges and agrees that,
so long as the Preferred Securities remain outstanding, its
obligations under the Indenture will also be for the benefit of the
holders from time to time of the Preferred Securities and such
holders, or any Special Representative (as defined in the
Partnership Agreement) acting on behalf of such holders, will be
entitled to enforce the Indenture, as third party beneficiaries,
directly against the Company (without first proceeding against the
Partnership) to the same extent as if such holders held a principal
amount of Securities equal to the liquidation preference of the
Preferred Securities held by such holders.
- 7 -<PAGE>
<PAGE>
SECTION 4.04. The Company shall not, and shall not permit any
Affiliate directly or indirectly controlled by the Company to,
declare or pay any dividend on, or redeem, purchase, acquire or
make a distribution or liquidation payment with respect to, any
capital stock of the Company or such Affiliate, or make any
guarantee payments with respect to the foregoing (other than
payments under the Guarantee), if at such time the Company shall be
in default with respect to its payment or other obligations under
the Guarantee.
ARTICLE FIVE
Form of Debenture
-----------------
The Debentures and the Trustee's Certificate of Authentication
to be endorsed thereon are to be substantially in the following
forms:
[FORM OF FACE OF DEBENTURE]
[If the Debentures are to be issued as a Global Debenture,
insert: This Debenture is a Global Debenture within the meaning of
the Indenture hereinafter referred to and is registered in the name
of the Depositary or a nominee of the Depositary. This Debenture is
exchangeable for Securities of the same series registered in the
name of a person other than the Depositary or its nominee only in
the limited circumstances described in the Indenture, and no
transfer of this Debenture (other than a transfer of this Debenture
as a whole by the Depositary to a nominee of the Depositary, by a
nominee of the Depositary to the Depositary or another nominee of
the Depositary or by the Depositary or any such nominee to a
successor Depositary selected by the Company or such successor's
nominee) may be registered except in limited circumstances.
Unless this Debenture is presented by an authorized
representative of The Depository Trust Company (55 Water Street,
New York) to the Company or its agent for registration of transfer,
exchange or payment, and any certificate to be issued is registered
in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any
payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL, since
the registered owner hereof, Cede & Co., has an interest herein.]
THE UNITED ILLUMINATING COMPANY
9 5/8% Junior Subordinated Deferrable Interest Debenture,
Series A, Due 2025
No. 4-l CUSIP No. ___________
- 8 -<PAGE>
<PAGE>
THE UNITED ILLUMINATING COMPANY, a corporation duly organized
and existing under the laws of the State of Connecticut (herein
referred to as the "Company," which term includes any successor
corporation under the Indenture referred to hereinafter), for value
received, hereby promises to pay to __________________, or
registered assigns, the principal sum of __________________ Dollars
on April 13, 1995, and to pay interest thereon from [_____] or from
the most recent interest payment date (each such date, an "Interest
Payment Date") to which interest has been paid or duly provided
for, in arrears on the last day of each calendar month of each
year, commencing [_____], and when the principal hereof shall have
become due and payable, whether at maturity, upon call for
redemption, by declaration of acceleration or otherwise
("Maturity"), at the rate of 9 5/8% per annum plus Additional
Interest, if any, until the principal hereof shall have become so
due and payable, and on any overdue principal and premium, if any,
and (to the extent that payment of such interest is enforceable
under applicable law) on any overdue installment of interest
(including Additional Interest, if any) at the same rate per annum.
The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which interest is payable on the
Securities of this series is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date. The
interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the person in whose name this Debenture (or
one or more Predecessor Securities of the same series) is
registered at the close of business on the Regular Record Date for
such interest installment, which shall be the close of business on
the Business Day next preceding such Interest Payment Date;
provided, however, that if the Securities of this series are not
held solely by United Capital Funding Partnership L.P., a Delaware
limited partnership (the "Partnership"), or by the Depositary, the
Company may select a Regular Record Date for such interest
installment, which shall be any day not more than 15 days preceding
an Interest Payment Date; provided further, however, that (i) if
this Debenture is authenticated after a Regular Record Date and
before the Interest Payment Date therefor, such interest
installment shall be paid on the next succeeding Interest Payment
Date to the registered holder thereof on the Regular Record Date
therefor and (ii) interest payable at Maturity shall be paid to the
Person to whom principal is paid. Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be
payable to the registered holders on such Regular Record Date, and
may be paid to the person in whose name this Debenture (or one or
more Predecessor Securities of the same series) is registered at
the close of business on a Special Record Date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof
shall be given to the registered holders of Securities of this
series not less than 10 days prior to such Special Record Date, or
may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the
Indenture hereinafter referred to. The principal of and premium, if
any, and interest (including Additional Interest, if any) on this
Debenture shall be payable at the office or agency of the Company
maintained for that purpose in the
- 9 -<PAGE>
<PAGE>
Borough of Manhattan, the City of New York, in any coin or currency
of the United States of America that at the time of payment is
legal tender for payment of public and private debts; provided,
however, that payment of interest on this Debenture may be made at
the option of the Company by check mailed to the registered holder
hereof at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the registered holder of
this Debenture is the Partnership, the payment of the principal of
and premium, if any, and interest (including Additional Interest,
if any) on this Debenture will be made at such place and to such
account as may be designated by the Partnership.
The indebtedness evidenced by this Debenture is, to the extent
and in the manner provided in the Indenture, subordinate and
subject in right of payment to the prior payment of all Senior
Indebtedness, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each holder of
this Debenture, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on
such holder's behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee as such holder's
attorney-in-fact for any and all such purposes. Each holder hereof,
by such holder's acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in
the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such
holder upon said provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory
for any purpose until the Certificate of Authentication hereon
shall have been signed by or on behalf of the Trustee.
The provisions of this Debenture are contained on the reverse
side hereof and such continued provisions shall for all purposes
have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to
be executed.
THE UNITED ILLUMINATING COMPANY
By:
----------------------------
Its:
Attest:
- ------------------------
Secretary
- 10 -<PAGE>
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
Dated: By:
------------------------ -----------------------
Authorized Signatory
This is one of the Securities of the series of Securities
referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
[FORM OF REVERSE OF DEBENTURE]
This 9 5/8% Junior Subordinated Deferrable Interest Debenture,
Series A, Due 2025 (herein sometimes referred to as this
"Debenture") is one of a duly authorized series of Securities of
the Company, specified in the Indenture (as defined below), all
issued or to be issued in one or more series under and pursuant to
an Indenture dated as of April 1, 1995, duly executed and delivered
between the Company and THE BANK OF NEW YORK, a New York banking
corporation, as trustee (herein referred to as the "Trustee"), as
amended and supplemented by the First Supplemental Indenture dated
as of April 1, 1995 between the Company and the Trustee (said
Indenture as so supplemented being hereinafter referred to as the
"Indenture"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders of the
Securities of this series. By the terms of the Indenture, the
Securities are issuable in series that may vary as to amount, date
of maturity, rate of interest and in other respects as in the
Indenture provided. The Securities of this series are limited in
aggregate principal amount as specified in said Supplemental
Indenture.
If the Partnership redeems, in whole or in part, its 9 5/8%
Preferred Capital Securities, Series A (the "Preferred
Securities"), the proceeds of the offer and sale of which, together
with the amount of capital contributions made by the Company from
time to time as general partner of the Partnership in connection
with the Preferred Securities, were invested in the Securities of
this series, in accordance with the terms thereof, the Company
shall redeem the Securities of this series at a redemption price
equal to 100% of the aggregate principal amount hereof, together
with any interest (including Additional Interest, if any) accrued
thereon. If less than all of the Preferred Securities are to be so
redeemed, the Securities of this series will be redeemed pro rata
or by lot or by any other method utilized by the Trustee. Any such
redemption shall be made prior to 12:00 noon, New York time, on the
date such Preferred Securities are so redeemed or at such earlier
time as the Company and the Partnership shall agree.
- 11 -<PAGE>
<PAGE>
Subject to the terms of Article Four of the Indenture, the
Company shall have the right to redeem the Securities of this
series at the option of the Company, without premium or penalty, in
whole or in part at any time on or after April 30, 2000, at a
redemption price equal to 100% of the principal amount plus any
accrued but unpaid interest (including Additional Interest, if any)
to the date of such redemption. Any redemption pursuant to this
paragraph will be made upon not less than 30 nor more than 60 days'
notice. If less than all of the Securities of this series are to be
so redeemed, the Securities of this series will be redeemed pro
rata or by lot or by any other method utilized by the Trustee;
provided, however, that if at the time of such redemption, the
Securities of this series are in the form of a Global Debenture,
the Depositary shall determine by lot the principal amount thereof
held by each holder of Securities of this series to be redeemed;
provided further, however, that after any Debentures owned by the
Partnership shall not be selected at any time after a Distribution
Event for any such partial redemption.
In the event of redemption of this Debenture in part only, a
new Debenture or Debentures for the unredeemed portion hereof will
be issued in the name of the holder hereof upon the cancellation
hereof.
If an Event of Default with respect to the Securities of this
series shall have occurred and be continuing, the principal of all
of such Securities may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and subject
to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Debenture upon compliance by the
Company with certain conditions set forth therein.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of the Securities of each
series affected at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of
adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of modifying in any
manner the rights of the holders of Securities; provided, however,
that no such supplemental indenture shall, among other things, (i)
change the Stated Maturity of any Securities of any series, or
reduce the principal amount thereof, or reduce the rate of interest
thereon, or reduce any premium payable upon the redemption thereof
or the amount of any installment of interest thereon, without the
consent of the holder of each Security so affected, (ii) reduce the
aforesaid percentage in principal amount of Securities that is
required to consent to any such supplemental indenture, without the
consent of the holders of each Security then outstanding and
affected thereby or (iii) modify the subordination provisions
contained in the Indenture. Notwithstanding the foregoing, so long
as any Preferred Securities remain outstanding, the Partnership may
not consent to a supplemental indenture thereunder without the
prior consent of the holders of at least 66% in aggregate
liquidation preference of the outstanding Preferred Securities
affected, considered as one class, or, in the case of any of the
changes described in clauses (i) through (iii) above, 100% in
aggregate liquidation preference of the outstanding Preferred
Securities affected, considered as one class.
- 12 -<PAGE>
<PAGE>
The Indenture also contains provisions permitting the holders
of a majority in aggregate principal amount of the Securities of
all series at the time outstanding affected thereby, on behalf of
the holders of the Securities of such series, to waive any past
default in the performance of any of the covenants contained in the
Indenture, or established pursuant to the Indenture with respect to
such series, and its consequences, except a default in the payment
of the principal of or premium, if any, or interest (including
Additional Interest, if any) on any of the Securities of such
series, which default may be waived by the unanimous consent of the
holders affected. Any such consent or waiver by the registered
holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and
upon all future holders and owners of this Debenture and of any
Security of the same series issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture. Notwithstanding anything to the
contrary in the Indenture, so long as the Partnership holds the
Securities of this series, the Partnership may not waive any past
default without the consent of the holders of at least 66% in
aggregate liquidation preference of the Preferred Securities
affected.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the
principal of and premium, if any, and interest (including
Additional Interest, if any) on this Debenture at the time and
place and at the rate and in the money herein prescribed.
The Company shall have the right at any time, so long as the
Company is not in default in the payment of interest on the
Securities of any series, to extend interest payment periods on all
of the Securities of this series for a period of up to 60
consecutive months, but not beyond the Maturity thereof, and at, or
at any time prior to, the end of any such extended interest payment
period, the Company shall pay all interest then accrued and unpaid,
including Additional Interest, if any, thereon (together with
interest thereon at the rate specified therefor to the extent
permitted by applicable law) in the same manner as provided for the
payment of Defaulted Interest in Section 307 of the Indenture;
provided, however, that during any such extended interest payment
period the Company shall not, and shall not permit any Affiliate
directly or indirectly controlled by the Company to, declare or pay
any dividend on, or redeem, purchase, acquire or make a liquidation
payment with respect to, any capital stock of the Company or such
Affiliate or make any guarantee payments with respect to the
foregoing (other than payments under the Guarantee); provided
further, however, that any such extended interest payment period
may only be selected with respect to the Securities of this series
if an extended interest payment period of identical length is
simultaneously selected for all Securities then Outstanding under
the Indenture. Prior to the termination of any such extended
interest payment period, and subject to the foregoing requirements,
the Company may further extend such period, provided that such
period together with all such further extensions thereof may not
exceed a period of 60 consecutive months and subject to the
limitations described above. Following the termination of any such
extended interest payment period, if the Company has paid all
accrued and unpaid interest, including any Additional Interest, if
any (together with interest at the rate specified for the
Securities of this series to the extent permitted by applicable
- 13 -<PAGE>
<PAGE>
law), required by the Securities for such period, the Company shall
have the right to again extend the interest payment periods on the
Securities of this series for up to 60 consecutive months as
provided above.
As provided in the Indenture and subject to certain
limitations therein set forth, this Debenture is transferable by
the registered holder hereof on the Security Register of the
Company, upon surrender of this Debenture for registration of
transfer at the office or agency of the Company in the Borough of
Manhattan, the City of New York accompanied by a written instrument
or instruments of transfer in form satisfactory to the Company and
the Trustee duly executed by the registered holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or
more new Securities of the same series of authorized denominations
and for the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge
payable in relation thereto.
Prior to due presentment for registration of this Debenture,
the Company, the Trustee and any agent of the Company or the
Trustee may deem and treat the registered holder hereof as the
absolute owner hereof (whether or not this Debenture shall be
overdue) for the purpose of receiving payment of or on account of
the principal hereof and premium, if any, and (subject to the
provisions of the Indenture) interest (including Additional
Interest, if any) due hereon and for all other purposes, and
neither the Company nor the Trustee nor any agent of the Company or
the Trustee shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of
or the premium, if any, or the interest (including Additional
Interest, if any) on this Debenture, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the
Indenture, against any incorporator, stockholder, officer or
director, past, present or future, as such, of the Company or of
any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by
the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
The Securities of this series are issuable only in registered
form without coupons in denominations of $25 and any integral
multiple thereof. As provided in the Indenture and subject to
certain limitations herein and therein set forth, Securities of
this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized
denomination, as requested by the holder surrendering the same.
All terms used in this Debenture that are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
- 14 -<PAGE>
<PAGE>
ARTICLE SIX
Events of Default; Remedies
---------------------------
SECTION 6.01. Whenever used with respect to the Debentures,
"Event of Default" shall include, in addition to the events
specified in paragraphs (a) through (e) of Section 801 of the
Indenture, the following events:
(a) failure to pay Additional Interest on any Debenture within
fifteen (15) days after the same becomes due and payable (whether
or not payment is prohibited by the provisions of Article Fifteen
of the Indenture or otherwise and whether or not the Company has
extended an interest payment period with respect to the Debentures
as provided in Section 311 of the Indenture); or
(b) so long as any Limited Partner Interests remain
outstanding, the entry by a court having jurisdiction in the
premises of (i) a decree or order for relief in respect of the
Partnership in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or (ii) a decree or order adjudging the
Partnership a bankrupt or insolvent, or approving as properly filed
a petition by on or more Persons other than the Partnership seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Partnership under any applicable Federal or State
law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official for the Partnership
or for any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and any such decree or
order for relief or any such other decree or order for relief or
any such other decree or order shall have remained unstayed and in
effect for a period of 90 consecutive days; or
(c) so long as Limited Partner Interests remain outstanding,
the commencement by the Partnership of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Partnership to the entry of a decree or order for
relief in respect of it in a case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or to the commencement of any bankruptcy,
insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by the Partnership of a petition or
answer or consent seeking reorganization or relief under any
applicable Federal or State law, or the consent by the Partnership
to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Partnership or of any
substantial part of its property, or the making by the Partnership
of an assignment for the benefit of creditors, or the admission by
the Partnership in writing of its inability to pay its debts
generally as they become due, or the authorization of such action
by the general partner of the Partnership.
SECTION 6.02. So long as any Limited Partner Interests are
outstanding, the Trustee shall be entitled and empowered, in case
of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or
other
- 15 -<PAGE>
<PAGE>
judicial proceeding relative to the Partnership or its property, to
make such filings, prove such claims and collect and receive such
property in any such judicial proceeding to the same extent and in
the same manner as provided in Section 804 of the Indenture with
respect to any such judicial proceeding relative to the Company or
its property; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such
judicial proceeding relative to the Partnership or its property is
hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the
Trustee any amounts due it under Section 907 of the Indenture.
ARTICLE SEVEN
Other Matters
-------------
SECTION 7.01. (a) The Company designates its principal office
in New Haven, Connecticut as an office at which (i) the principal
of and premium, if any, and interest (including Additional
Interest, if any) on the Debentures shall be payable, (ii)
registration of transfers and exchanges of the Debentures may be
effected and (iii) notices and demands to or upon the Company in
respect of the Debentures and the Indenture may be served.
(b) The Company designates the office of The Bank of New York
in New York, New York as an office or agency of the Company at
which (i) registration of transfers and exchanges of the Debentures
may be effected and (ii) notices and demands to or upon the Company
in respect of the Debentures and the Indenture may be served.
(c) The Company designates (i) each of (A) its principal
office in New Haven, Connecticut and (B) the office of The Bank of
New York in New York, New York as an office or agency in which a
register with respect to the Debentures shall be maintained and
(ii) itself as the Security Registrar with respect to the
Debentures; provided, however, that upon a Distribution Event,
automatically and without any further action, The Bank of New York
and not the Company shall be the Security Registrar.
(d) The Company reserves the right to change, by one or more
supplemental indentures, any such designation made pursuant to this
Section 7.01.
SECTION 7.02. The proper officers of the Company may execute,
with the Paying Agent and any Authenticating Agent for the
Debentures, one or more Letters of Representations to the
Depositary and any supplements or amendments thereto necessary or
desirable to make the Debentures eligible for deposit at the
Depositary; provided, however, that the Company reserves the right
to terminate any such Letter of Representations by one or more
Officer's Certificates; provided further, however, that the Company
reserves the right to enter into similar agreements with any other
depositary with respect to the Debentures by one or more Officer's
Certificates.
SECTION 7.03. Notwithstanding Section 813 of the Indenture, so
long as the Partnership holds the Debentures, the Partnership may
not waive any past default without
- 16 -<PAGE>
<PAGE>
the consent, obtained as provided in the Partnership Agreement, of
the holders of at least 66% in aggregate liquidation preference of
the Preferred Securities affected.
SECTION 7.04. Notwithstanding Section 1202 of the Indenture,
so long as any Limited Partner Interests remain outstanding, the
Partnership may not consent to a supplemental indenture thereunder
without the prior consent, obtained as provided in the Partnership
Agreement, of the holders of at least 66% in aggregate liquidation
preference of the outstanding Limited Partner Interests affected,
considered as one class, or, in the case of any of the changes
described in clauses (a) through (e) of Section 1202 of the
Indenture, 100% in aggregate liquidation preference of the
outstanding Limited Partner Interests affected, considered as one
class.
SECTION 7.05. Notwithstanding Section 910 of the Indenture, so
long as any Limited Partner Interests remain outstanding, the
Partnership shall not enter into any act to remove the Trustee
without the consent of the holders of at least 66% in aggregate
liquidation preference of the outstanding Limited Partner Interests
affected, considered as one class.
SECTION 7.06. So long as the Partnership holds the Debentures,
any request, demand, authorization, direction, notice, consent,
election, waiver or other action provided by the Indenture to be
made, given or taken by Holders of the Debentures may be embodied
in and evidenced by one or more instruments of substantially
similar tenor signed by a Special Representative or, alternatively,
may be embodied in and evidenced by the record of Special
Representatives voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of such Holders
duly called and held in accordance with the provisions of Article
Thirteen of the Indenture, or a combination of such instruments and
any such record.
ARTICLE EIGHT
Miscellaneous Provisions
------------------------
SECTION 8.01. Except as otherwise expressly provided in this
Supplemental Indenture or in the form of Debenture or otherwise
clearly required by the context hereof or thereof, all terms used
herein or in said form of Debenture that are defined in the
Indenture shall have the several meanings respectively assigned to
them thereby.
SECTION 8.02. The Indenture, as supplemented by this
Supplemental Indenture, is in all respects ratified and confirmed,
and this Supplemental Indenture shall be deemed part of the
Indenture in the manner and to the extent herein and therein
provided.
SECTION 8.03. The recitals herein contained are made by the
Company and not by the Trustee, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no
representation as to the validity or sufficiency of this
Supplemental Indenture.
- 17 -<PAGE>
<PAGE>
SECTION 8.04. This Supplemental Indenture may be executed in
any number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same
instrument.
- 18 -<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed on the date or dates
indicated in the acknowledgements and as of the day and year first
above written.
THE UNITED ILLUMINATING COMPANY
By: /s/ Kurt Mohlman
---------------------------
Name: Kurt Mohlman
Title: Treasurer and
Secretary
[SEAL]
ATTEST:
/s/ Charles J. Pepe
- ---------------------
Name: Charles J. Pepe
Title: Assistant Treasurer
and Assistant Secretary
THE BANK OF NEW YORK, as Trustee
By: /s/ Robert F. McIntyre
-----------------------------
Name: Robert F. McIntyre
Title: Assistant Vice President
[SEAL]
ATTEST:
/s/ Paul J. Schmalzel
- -----------------------
Name: Paul J. Schmalzel
Title: Assistant Treasurer
- 19 -
<PAGE>
<PAGE>
EXHIBIT NO. 10
THE UNITED ILLUMINATING COMPANY
1990 STOCK OPTION PLAN
Amendment adopted August 22, 1994
---------------------------------
Subsection 5(c)(v) is amended to read as follows:
(v) an Optionee may exercise Stock Options only in
quantities of 500 or more shares, unless the number of
shares subject to Stock Options exercisable by the Optionee
is less than 500, in which event the Optionee may exercise
all, but not less than all, of such exercisable Stock
Options.
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 12
Page 1 of 2
THE UNITED ILLUMINATING COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<CAPTION>
TWELVE
MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------------ MARCH 31,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Net income $ 54,048 $ 55,550 $ 56,768 $ 40,481 $ 46,795 $ 44,327
Federal income taxes 17,053 20,844 19,276 22,342 34,551 35,375
State income taxes 9,037 12,647 16,878 4,645 6,216 6,978
Fixed charges 115,997 107,548 109,449 97,928 88,093 86,762
------- ------- ------- ------- ------- -------
Earnings available for
fixed charges (1) $196,135 $196,589 $202,371 $165,396 $175,655 $173,442
======= ======= ======= ======= ======= =======
FIXED CHARGES
Interest on long-term debt $ 94,056 $ 90,296 $ 88,666 $ 80,030 $ 73,772 $ 70,500
Other interest 15,468 9,847 12,882 12,260 10,301 12,329
Interest on nuclear fuel burned 1,533 2,440 2,963 928 - -
One third of rental charges 4,940 4,965 4,938 4,710 4,020 3,933
------- ------- ------- ------- ------- -------
$115,997 $107,548 $109,449 $ 97,928 $ 88,093 $ 86,762
======= ======= ======= ======= ======= =======
RATIO OF EARNINGS TO FIXED
CHARGES 1.69 1.83 1.85 1.69 1.99 2.00
======= ======= ======= ======= ======= =======
- ---------------
<FN>
(1) Reflects the after-tax effects of write-offs of costs of nuclear generating units
pursuant to SFAS No. 90 of ($1,551,000), ($1,965,000) and ($2,304,000) for the twelve
months ended December 31, 1992, 1991 and 1990, respectively.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 12
Page 2 of 2
THE UNITED ILLUMINATING COMPANY
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
(IN THOUSANDS)
<CAPTION>
TWELVE
MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------------------------- MARCH 31,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Net income $ 54,048 $ 55,550 $ 56,768 $ 40,481 $ 46,795 $ 44,327
Federal income taxes 17,053 20,844 19,276 22,342 34,551 35,375
State income taxes 9,037 12,647 16,878 4,645 6,216 6,978
Fixed charges 115,997 107,548 109,449 97,928 88,093 86,762
------- ------- ------- ------- ------- -------
Earnings available for
combined fixed charges
and preferred stock
dividend requirements(1) $196,135 $196,589 $202,371 $165,396 $175,655 $173,442
======= ======= ======= ======= ======= =======
FIXED CHARGES AND PREFERRED
STOCK DIVIDEND REQUIREMENTS
Interest on long-term debt $ 94,056 $ 90,296 $ 88,666 $ 80,030 $ 73,772 $ 70,500
Other interest 15,468 9,847 12,882 12,260 10,301 12,329
Interest on nuclear fuel burned 1,533 2,440 2,963 928 - -
One third of rental charges 4,940 4,965 4,938 4,710 4,020 3,933
Preferred stock dividend
requirements (2) 7,049 7,260 7,100 7,197 6,223 5,819
------- ------- ------- ------- ------- -------
$123,046 $114,808 $116,549 $105,125 $ 94,316 $ 92,581
======= ======= ======= ======= ======= =======
RATIO OF EARNINGS TO FIXED
CHARGES AND PREFERRED
STOCK DIVIDEND REQUIREMENTS 1.59 1.71 1.74 1.57 1.86 1.87
======= ======= ======= ======= ======= =======
- ------------
<FN>
(1) Reflects the after-tax effects of write-offs of costs of nuclear generating units
pursuant to SFAS No. 90 of ($1,551,000), ($1,965,000) and ($2,304,000) for the twelve
months ended December 31, 1992, 1991, and 1990, respectively.
(2) Preferred Stock Dividends increased to reflect the pre-tax earnings required to cover
such dividend requirements.
</TABLE>
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