CAPITAL FUNDS AGREEMENT, dated as of September 1, 1964, between CONNECTICUT
YANKEE ATOMIC POWER COMPANY ("Connecticut Yankee"), a Connecticut corporation,
and THE CONNECTICUT LIGHT AND POWER COMPANY (the "Stockholder"), a Connecticut
corporation.
It is agreed as follows:
1. Basic Understandings
Connecticut Yankee has been organized to provide for the supply of power
to the eleven utility companies (including the Stockholder) which are its
stockholders. It has commenced the construction of a nuclear electric generating
unit of the pressurized water type, which is being designed to have an initial
gross capability of approximately 490 megawatts electric, at a site adjacent to
the Connecticut River at Haddam Neck, Connecticut (the unit being herein,
together with the site and all related facilities, referred to as the "Unit").
Construction of the Unit is being carried out under contracts with Westinghouse
Electric Corporation and Stone & Webster Engineering Corporation.
The respective percentages of the capacity and output of the Unit to be
purchased by the Stockholder and the other Connecticut Yankee stockholders are
the same as the respective percentages of Connecticut Yankee's stock now owned
by them. The names of the stockholders and their respective stock percentages
("stock percentages") are as follows:
Stockholder Stock Percentage
The Connecticut Light and Power Company 25.0%
New England Power Company 15.0%
Boston Edison Company 9.5%
The Hartford Electric Light Company 9.5%
The United Illuminating Company 9.5%
Western Massachusetts Electric Company 9.5%
Central Maine Power Company 6.0%
Public Service Company of New Hampshire 5.0%
Cambridge Electric Light Company 4.5%
Montaup Electric Company 4.5%
Central Vermont Public Service Corporation 2.0%
Connecticut Yankee and each of its other stockholders are entering into capital
funds agreements which are identical to this agreement except for necessary
changes in the names of the parties.
Connecticut Yankee's capitalization as of the date of this agreement is
$7,500,000 consisting of 75,000 shares of common stock, $100 par value, which
have been purchased at the par value thereof by its stockholders. Connecticut
Yankee's stockholders have entered into subscription agreements with it covering
their purchase of their respective stock percentages of an additional 75,000
shares of its common stock, $100 par value, at the par value thereof.
Connecticut Yankee's estimated capital requirements with respect to the Unit
aggregate $98,500,000 and Connecticut Yankee proposes to finance the balance of
these requirements through the issuance and sale of first mortgage bonds or
other securities, and through the issuance and sale of common stock to its
stockholders.
2. Effective Date
This agreement shall become effective upon receipt by the Stockholder of
notice that Connecticut Yankee has entered into capital funds agreements, as
contemplated by Section 1 above, with each of its other stockholders, and the
execution of capital funds agreements by the other stockholders shall constitute
consideration for the obligations of the Stockholder hereunder.
3. Construction of the Unit
Connecticut Yankee will proceed with due diligence with construction of
the Unit, and will exercise its best efforts to complete and place it in
commercial operation by October 1, 1967, on the presently estimated schedule
therefor and within present cost estimates, and will keep the Stockholder
currently informed as to the progress of construction and expected plant
completion date.
4. Stock Purchases to Provide the Capital Requirements of the Unit
From time to time when Connecticut Yankee requires capital to meet the
capital requirements of the Unit, it may offer shares of its common stock to its
stockholders for subscription to raise such capital. Subject to the conditions
in Section 7, when Connecticut Yankee offers any such shares for such purpose,
the Stockholder will subscribe for and purchase for cash at the par value
thereof its stock percentage of the shares so offered. However, the aggregate
amount required to be paid by the Stockholder pursuant to this Section
(including for this purpose the amount paid by the Stockholder on account of its
purchase of the shares of Connecticut Yankee common stock which are outstanding
on the date of this agreement, as referred to in Section 1, and any additional
amount paid by it after said date on account of the purchase of additional
shares of said stock pursuant to its outstanding subscription agreement referred
to in Section 1 or any further subscription agreements entered into by the
Stockholder with Connecticut Yankee prior to the time at which the conditions
specified in the second paragraph of Section 7 are satisfied) shall not exceed
the sum of (a) its stock percentage of $70,000,000, and (b) amounts paid to it
by Connecticut Yankee as return of capital.
5. Capital Requirements of the Unit Defined
Connecticut Yankee shall be deemed to have capital requirements of the
Unit within the meaning of Section 4 if it requires additional capital for any
of the following purposes:
(i) to complete construction of the Unit and place it in commercial
operation at a gross capability of at least 490 megawatts electric;
(ii) to make additions and replacements (other than those chargeable to
maintenance) to the Unit which are required to insure the continued regular
operation of the Unit at a gross capability of at least 490 megawatts electric
or to restore it to regular operation at such gross capability;
(iii) to make any changes in or additions to the Unit which must be
effected in order to obtain or maintain, or to meet the conditions of, any
license or other public authorization which is required for the regular
operation of the Unit at a gross capability of at least 490 megawatts electric;
(iv) to provide materials and supplies, or funds for prepaid items or cash
working capital, required for the regular operation of the Unit at a gross
capability of at least 490 megawatts electric, or to finance the costs of
acquiring and maintaining an inventory of nuclear cores owned by Connecticut
Yankee.
If the Company shall at any time or times determine that it would be more
feasible, economic or otherwise desirable for regular operation for the
generation of power and energy for delivery under its Power Contracts with its
Stockholders for the Unit to operate at a lower gross capability than 490
megawatts or with heat supplied in whole or part other than by a nuclear
reactor, and if it holds or can obtain all licenses and other public
authorizations required for the regular operation of the Unit at such lower
level or with such other heating system, then the "capital requirements of the
Unit" shall include any additional capital required for any of the foregoing
purposes for operation of the Unit at any such lower level of capability or with
such other heating system as from time to time determined.
6. Loans and Advances
In lieu of offering additional shares of its common stock for subscription
and purchase under Section 4, Connecticut Yankee may, at its option, request its
stockholders to provide required capital by means of loans or advances. In any
case where Connecticut Yankee requests such loans or advances, in lieu of stock
purchases, the Stockholder, subject to the conditions in Section 7, will provide
its stock percentage thereof. However, Connecticut Yankee shall not be entitled
to request such loans or advances except in circumstances where it would be
entitled to require the Stockholder to make a stock subscription pursuant to
Section 4. Further, the aggregate amount of capital which the Stockholder is
required to provide under Sections 4 and 6 of this agreement shall be the same
whether the capital is provided in whole through stock subscriptions and
purchases or loans or advances, or is provided instead through a combination of
them. However, in determining whether the aggregate of (x) the amounts paid or
to be paid by the Stockholder for shares of common stock purchased or to be
purchased under Section 4 and (y) the amounts of any loans or advances provided
or to be provided in lieu of such stock purchases, equals or exceeds the limit
specified in Section 4, the aggregate principal amount of all such loans or
advances previously made shall be excluded to the extent repaid.
The terms of any loans and advances requested by Connecticut Yankee under
this Section 6, as to interest, maturity date, rights and terms of prepayment,
and otherwise shall be the same for all stockholders. Such terms shall be as
determined by Connecticut Yankee in its discretion, except that the terms of
each such loan or advance shall provide for quarterly payments of interest at an
annual rate not less than 1-1/2% in excess of the prime rate for commercial
loans at the time in effect at The Connecticut Bank and Trust Company and for a
maturity date not later than October 1, 1994.
7. Conditions to the Stockholders's Obligations
The obligation of the Stockholder to subscribe for and purchase its stock
percentage of any stock issue under Section 4, or to provide its stock
percentage of any loan or advance under Section 6, shall be subject to the
condition that all necessary regulatory approvals shall have been obtained with
respect to both the action to be taken by Connecticut Yankee and the action to
be taken by the Stockholder. The parties will use their best efforts to obtain,
or to assist in obtaining, the foregoing regulatory approvals.
The obligation of the Stockholder to subscribe for and purchase its stock
percentage of any stock issue under Section 4, or to provide its stock
percentage of any loan or advance under Section 6, shall be subject to the
further condition that Connecticut Yankee shall first (i) have sold at least
$40,000,000 aggregate principal amount of its first mortgage bonds at a price
not lower than the aggregate principal amount thereof, and (ii) have entered
into an agreement with one or more banks providing for the loan from such
bank(s) to Connecticut Yankee of up to $25,000,000 on terms and conditions
approved by Connecticut Yankee's Board of Directors.
Except as expressly provided in this Section 7, notwithstanding anything
in this agreement elsewhere contained, no action of, nor failure to act by,
Connecticut Yankee or any of the several stockholders referred to in Section 1
hereof shall permit cancellation of, or relieve the Stockholder from any of its
obligations under, this agreement. However, the failure of any of Connecticut
Yankee's other stockholders to purchase its stock percentage of any Connecticut
Yankee stock issue, or to make its stock percentage of any loan or advance
requested by Connecticut Yankee, shall under no circumstances require an
increase in the amount of stock to be purchased, or the amount of loans and
advances to be made, by the Stockholder.
8. Financing by Other Means
Nothing in this agreement shall be construed as precluding Connecticut
Yankee from offering shares of its common stock to, or requesting loans and
advances from, its stockholders to finance capital requirements other than those
contemplated by Section 5, or from financing, in its discretion, its capital
requirements (including the capital requirements contemplated by Section 5) by
means other than the sale of its common stock to its stockholders, or loans or
advances from them.
9. Cooperation By Stockholder
The Stockholder agrees that it will cooperate with Connecticut Yankee in
taking all such action as may be necessary or appropriate to effectuate the
purposes of this agreement.
10. Restrictions on Transfer
The Stockholder acknowledges notice of the restrictions on stock transfers
contained in Article VIII, Section 2 of Connecticut Yankee's by-laws, and agrees
to be bound by said provisions with respect to all shares of Connecticut
Yankee's capital stock which it now owns or may hereafter acquire.
11. Interpretation
The interpretation and performance of this agreement shall be in
accordance with and controlled by the law of the State of Connecticut.
12. Addresses
Except as the parties may otherwise agree, any notice, request or other
communication from one party to the other, relating to this agreement or the
rights, obligations or performance of the parties hereunder, shall be in writing
and shall be effective upon delivery to the other party. Any such communication
shall be considered as duly delivered when mailed to the respective post office
address of the other party shown following the signatures of such other party
hereto, or such other post office address as may be designated by written notice
given as provided in this Section 12.
13. Assignment
This agreement shall be binding upon and shall inure to the benefit of,
and may be performed by, the successors and assigns of the parties, except that
no assignment, pledge or other transfer of this agreement by either party shall
operate to release the assignor, pledgor or transferor of any of its obligations
under this agreement unless consent to the release is given in writing by the
other party, or, if the other party has theretofore assigned, pledged or
otherwise transferred its interest in this agreement, by the other party's
assignee, pledgee or transferee.
14. Corporate Obligations
This agreement is the corporate act and obligation of the parties hereto,
and any claim hereunder against any stockholder, director or officer of either
party, as such, is expressly waived.
15. All Prior Agreements Superseded
This agreement represents the entire agreement between us relating to the
subject matter hereof, and all previous agreements (including our prior Capital
Funds Agreement dated as of July 1, 1964), discussions, communications and
correspondence with respect to the subject matter are hereby superseded and are
of no further force and effect, except that the outstanding subscription
agreement, as referred to in Section 1, between the Stockholder and Connecticut
Yankee with respect to the Stockholder's subscription for its stock percentage
of an additional 75,000 shares of Connecticut Yankee's common stock, $100 par
value, is not superseded and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this agreement by their
respective officers thereunto duly authorized as of the date first above
written.
Attest: CONNECTICUT YANKEE ATOMIC POWER COMPANY
/s/ R. F. Probst By /s/ S. R. Knapp
Secretary Its President
P.O. Box 2010
Hartford, Connecticut 06101
Attest: THE CONNECTICUT LIGHT AND POWER COMPANY
/s/ C. J. Ramage By /s/ P. V. Hayden
Asst. Secretary Its President