EXHIBIT 4(c)
FINAL
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LOAN AGREEMENT
between
CITY OF COHASSET, MINNESOTA
and
ALLETE, INC.
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Dated as of August 1, 2004
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Relating to
$111,000,000 Collateralized Pollution Control Refunding Revenue Bonds
(ALLETE, Inc. Project), Series 2004
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TABLE OF CONTENTS
This table of contents is not part of the Loan Agreement, and is for convenience
only. The captions herein are of no legal effect and do not vary the meaning or
legal effect of any part of the Loan Agreement.
Page
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Parties........................................................................1
Recitals.......................................................................1
ARTICLE I DEFINITIONS; REFERENCES; CERTIFICATES AND OPINIONS; GENERAL
PROVISIONS.....................................................................1
Section 1.01. Definitions.............................................1
Section 1.02. References..............................................5
Section 1.03. Certificates and Opinions...............................5
Section 1.04. Notices, etc. to Trustee, Issuer and Company............5
Section 1.05. Successors and Assigns..................................6
Section 1.06. Separability Clause.....................................6
Section 1.07. Execution Counterparts..................................6
Section 1.08. Construction............................................6
Section 1.09. Benefit of Agreement....................................6
Section 1.10. Limitation of Liability.................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES......................................7
Section 2.01. Representations of the Issuer...........................7
Section 2.02. Representations and Warranties of the Company...........8
ARTICLE III THE LOAN..........................................................12
Section 3.01. Amount and Source of Loan..............................12
Section 3.02. Creation, Issuance, Delivery and Surrender of First
Mortgage Bonds.........................................12
Section 3.03. Payments Assigned; Company's Obligations
Unconditional..........................................13
Section 3.04. Payments Due on Non-Business Days......................14
Section 3.05. Company's Remedies.....................................14
ARTICLE IV THE FACILITIES.....................................................14
Section 4.01. Completion and Location of the Facilities..............14
Section 4.02. Maintenance of Facilities; Remodeling..................14
Section 4.03. Insurance..............................................15
Section 4.04. Condemnation...........................................15
Section 4.05. Payment of Taxes; Discharge of Liens...................15
Section 4.06. Use of Facilities......................................16
Section 4.07. Issuer's and Trustee's Access to Facilities............16
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ARTICLE V REDEMPTION OF BONDS.................................................16
Section 5.01. Prepayment of Loan.....................................16
Section 5.02. Option To Prepay Loan and To Direct Redemption of
Bonds..................................................16
Section 5.03. Obligation To Prepay Loan and Redeem Bonds Upon
Certain Events.........................................16
Section 5.04. Option to Refinance Bonds without Prepayment of Loan...17
ARTICLE VI SPECIAL COVENANTS OF THE COMPANY...................................17
Section 6.01. Maintenance of Corporate Existence.....................17
Section 6.02. Annual Statement.......................................17
Section 6.03. Indemnification........................................17
Section 6.04. Additional Payments....................................18
Section 6.05. Assurance of Tax Exemption.............................19
Section 6.06. Redemption of Refunded Bonds; Payment of Costs of
Issuance...............................................22
ARTICLE VII ASSIGNMENT, LEASING AND SELLING...................................22
Section 7.01. Conditions.............................................22
Section 7.02. Instrument Furnished to Trustee........................23
Section 7.03. Limitation.............................................23
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES...................................23
Section 8.01. Events of Default..................................23
Section 8.02. Force Majeure......................................23
Section 8.03. Remedies...........................................24
Section 8.04. No Remedy Exclusive................................24
Section 8.05. Reimbursement of Attorneys' Fees...................24
Section 8.06. Waiver of Breach; Exercise of Rights by Trustee....25
Section 8.07. Trustee's Exercise of the Issuer's Remedies........25
ARTICLE IX MISCELLANEOUS......................................................25
Section 9.01. Termination............................................25
Section 9.02. Assignment.............................................25
Section 9.03. Amendments, Changes and Modifications..................25
Section 9.04. Spin-off Shall Not Violate Terms of This Agreement.....25
Testimonium...................................................................36
Signatures and Seals..........................................................36
Exhibit A-Description of the Refinanced Pollution Control Facilities.........A-1
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of August 1, 2004, between the CITY OF
COHASSET, a municipal corporation of the State of Minnesota (as hereinafter
defined, the "Issuer"), and ALLETE, INC., a Minnesota corporation (as
hereinafter defined, the "Company").
W I T N E S S E T H:
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WHEREAS, the Issuer is authorized and empowered under Minnesota Statutes,
Sections 469.152 to 469.165, as amended (the "Act"), to issue revenue bonds to
finance, in whole or in part, the cost of the acquisition, construction,
reconstruction, improvement, betterment or extension of, and to acquire,
construct and hold, properties, real or personal, used or useful in the
abatement or control of air or water pollution in connection with a
revenue-producing enterprise engaged in business, and to refund revenue bonds
previously issued under the Act; and
WHEREAS, the Issuer proposes to issue and sell its revenue bonds under the
Act to refund bonds previously issued by the City of Bass Brook, Minnesota (the
predecessor to the Issuer), the proceeds of which will be used to refinance a
portion of the costs of the acquisition, construction and equipping of certain
air and water pollution control facilities at units 1, 2 and 4 of the Clay
Boswell steam electric generating station owned in part by the Company and
located in the City of Cohasset, Minnesota; and
WHEREAS, the Issuer is further authorized and empowered under the Act to
enter into a loan agreement providing for payments to it sufficient to pay when
due the principal of, premium, if any, and interest on its revenue bonds.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby
and in consideration of the premises, DO HEREBY AGREE as follows:
ARTICLE I
DEFINITIONS; REFERENCES; CERTIFICATES AND OPINIONS;
GENERAL PROVISIONS
Section 1.01. DEFINITIONS. The terms defined in this Article I shall for
all purposes of this Agreement have the meaning herein specified, unless the
context clearly requires otherwise:
"Act" means Minnesota Statutes, Sections 469.152 to 469.165, as amended,
and all acts supplemental thereto or amendatory thereof.
"Additional Bonds" means any Bonds issued under the Indenture, other than
the Series 2004 Bonds.
"Agreement" means this Loan Agreement between the Issuer and the Company,
and any and all modifications, alterations, amendments and supplements hereto
entered into in accordance with the provisions hereof and of the Indenture.
"Bond Counsel" means any legal counsel selected by the Company and
reasonably acceptable to the Issuer and the Trustee who shall be nationally
recognized as expert in matters pertaining to the validity of obligations of
governmental issuers and the exemption from federal income taxation of interest
on such obligations and experienced in the financing of pollution control
facilities.
"Bond Year," when used with respect to a series of Bonds, shall have the
meaning given it in the Tax Compliance Certificate.
"Bonds" means the Series 2004 Bonds and any Additional Bonds.
"Code" means the Internal Revenue Code of 1986, as amended, and, when
appropriate, any statutory predecessor or successor thereto, and all applicable
regulations thereunder and any applicable official rulings, announcements,
notices, procedures and judicial determinations relating to the foregoing.
"Company" means ALLETE, Inc., a Minnesota corporation, its successors and
assigns, and any surviving, resulting or transferee corporation that may assume
its obligations in accordance with Section 6.01 hereof.
"Company Representative" means the President, any Vice President or the
Treasurer of the Company and such other person or persons at the time designated
to act on behalf of the Company in matters relating to this Agreement and the
Indenture as evidenced by a written certificate furnished to the Issuer and the
Trustee containing the specimen signature of such person or persons and signed
on behalf of the Company by its President, any Vice President or its Treasurer.
Such certificate may designate an alternate or alternates each of whom shall be
entitled to perform all duties of the Company Representative.
"Counsel" means an attorney designated by or acceptable to the Trustee,
duly admitted to practice law before the highest court of any state; an attorney
for the Company or the Issuer may be eligible for appointment as Counsel.
"Determination of Taxability," when used with respect to a series of Bonds,
means a final, nonappealable determination by the Internal Revenue Service or by
a court of competent jurisdiction in the United States that, as a result of
failure by the Company to observe or perform any covenant, condition or
agreement on its part to be observed or performed under this Agreement or as a
result of the inaccuracy of any representation or agreement made by the Company
under this Agreement, the interest payable on Bonds of the series is includable
for federal income tax purposes in the gross income of the owners thereof (other
than an owner who is a "substantial user" of the projects refinanced thereby or
a "related person" thereto within the meaning of Section 103(b)(13) of the 1954
Code), which final determination follows proceedings of which the Company has
been given written notice and in which the Company, at its sole expense and to
the extent deemed sufficient by the Company, has been given an opportunity to
participate, either directly or in the name of the owners of Bonds of the
series.
"Facilities" means the facilities refinanced, in whole or in part, with the
proceeds of the Refunded Bonds, which are described generally in Exhibit A to
this Agreement.
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"First Mortgage" means the Mortgage and Deed of Trust, dated as of
September 1, 1945, from the Company to The Bank of New York and Douglas J.
MacInnes (successors to Irving Trust Company and Richard H. West), as trustees,
as heretofore and hereafter amended and supplemented.
"First Mortgage Bonds" means the bonds issued and delivered under the First
Mortgage as required by Section 3.02 hereof.
"First Mortgage Trustee" means the corporate trustee under the First
Mortgage, its successors in trust and their assigns.
"Indenture" means the Indenture of Trust, dated as of the date hereof,
between the Issuer and the Trustee, and any and all modifications, alterations,
amendments and supplements thereto entered into from time to time in accordance
with the provisions thereof.
"Issuer" means the City of Cohasset, Minnesota (the successor in interest
to the City of Bass Brook, Minnesota), and any successors to its functions
hereunder.
"Issuer Representative" means the Mayor of the Issuer, and such other
person or persons at the time designated to act on behalf of the Issuer in
matters relating to the Indenture and the Loan Agreement as evidenced by a
written certificate furnished to the Trustee containing the specimen signature
of such person or persons and signed on behalf of the Issuer by its Mayor. Such
certificate may designate an alternate or alternates, each of whom shall be
entitled to perform all duties of the Issuer Representative.
"1954 Code" means the Internal Revenue Code of 1954, as amended, and, when
appropriate, any statutory predecessor thereto, and all applicable regulations
thereunder and any applicable official rulings, announcements, notices,
procedures and judicial determinations relating to the foregoing.
"Original Purchasers" means, with respect to the Series 2004 Bonds, UBS
Financial Services Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Outstanding" means with respect to Bonds, as of the date of determination,
all Bonds theretofore authenticated and delivered under the Indenture, except:
(a) Bonds theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation as provided in Section 209 of the Indenture;
(b) Bonds for whose payment or redemption money or Defeasance
Obligations in the necessary amount have been deposited with the Trustee or
any Paying Agent in trust for the owners of such Bonds as provided in
Section 501 of the Indenture, provided that, if such Bonds are to be
redeemed, notice of such redemption has been duly given pursuant to the
Indenture or provision therefor satisfactory to the Trustee has been made;
(c) Bonds in exchange for or in lieu of which other Bonds have been
authenticated and delivered under the Indenture; and
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(d) Bonds alleged to have been destroyed, lost or stolen which have
been paid as provided in Section 208 of the Indenture;
provided, however, that, in determining whether the Owners of the requisite
principal amount of Outstanding Bonds have given any request, demand,
authorization, direction, notice, consent or waiver under this Agreement, Bonds
owned by the Issuer or by the Company or any Related Party thereto or Affiliate
thereof shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Bonds
which the Trustee knows to be so owned shall be disregarded.
"Owner" means, in respect of a Bond, the Person or Persons in whose name
the Bond is registered on the bond registration books maintained by the Trustee
pursuant to Section 206 of the Indenture.
"Person" means any natural person, firm, association, corporation,
partnership, limited liability company, limited liability partnership, joint
stock company, joint venture, trust, unincorporated organization or firm, or a
government or any agency or political subdivision thereof or other public body.
"Plant" means the Clay Boswell steam electric generating station located in
the City of Cohasset, Minnesota, and owned in part by the Company.
"Prior Pollution Control Bonds" means the Collateralized Pollution Control
Revenue Bonds, Series 1978 Series A (Minnesota Power & Light Company Project)
issued by the Town of Bass Brook (the predecessor political subdivision of the
City of Bass Brook, Minnesota, which, in turn, is the predecessor in interest to
the Issuer) in the aggregate principal amount of $111,000,000.
"Redemption Date" means August 23, 2004.
"Rebate Amount" has the meaning given such term in Section 6.05(b)(1)
hereof.
"Refinanced Pollution Control Facilities" means the real and personal
properties which comprise the facilities refinanced with proceeds of the Series
2004 Bonds as further described in Exhibit A hereto.
"Refunded Bonds" means the 6% Collateralized Pollution Control Refunding
Revenue Bonds (Minnesota Power & Light Company Project), Series 1992 issued by
the City of Bass Brook, Minnesota (the predecessor in interest to the Issuer) in
the original principal amount of $111,000,000.
"Series 2004 Bonds" means any bond or bonds of the series of Collateralized
Pollution Control Refunding Revenue Bonds (ALLETE, Inc. Project), Series 2004,
aggregating the principal amount of $111,000,000, to be issued, authenticated
and delivered under and pursuant to the Indenture.
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"Spin-off" means the distribution by the Company to its shareholders of all
or any portion of its shares of common stock of ADESA, Inc.
"State" means the State of Minnesota.
"Tax Certificate" means the Tax Certificate, dated August 19, 2004 of the
Company.
"Tax Compliance Certificate" means the Tax Compliance Certificate dated
August 19, 2004 of the Company.
"Trustee" means U.S. Bank National Association, a national banking
association organized under the laws of the United States, and its successors in
trust and assigns under the Indenture.
In addition to the foregoing definitions, any terms not defined herein but
defined in the Indenture (including, without limitation, in Section 101 thereof)
shall have the meanings herein unless the context clearly requires otherwise.
Section 1.02. REFERENCES. All references in this Agreement to designated
"Articles," "Sections" and other subdivisions are to the designated Articles,
Sections and other subdivisions of this Agreement as originally executed. The
words "herein," "hereof," and "hereunder," and other words of similar import,
refer to this Agreement as a whole and not to any particular Article, Section or
other subdivision unless the context clearly indicates otherwise. The Article
and Section headings herein and in the Table of Contents are for convenience
only and shall not affect the construction hereof. Unless the context hereof
clearly requires otherwise, the masculine shall include the feminine and vice
versa and the singular shall include the plural and vice versa.
Section 1.03. CERTIFICATES AND OPINIONS. Any certificate or opinion of an
officer of the Company may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, Counsel or Bond
Counsel. Any opinion of Counsel or Bond Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Company stating that the information with
respect to such factual matters is in the possession of the Company.
Wherever in this Agreement, in connection with any request, certificate or
report to the Issuer or the Trustee, it is provided that the Company shall
deliver any document as a condition of the granting of such request, or as
evidence of the Company's compliance with any term hereof, it is intended that
the truth and accuracy at the time of the granting of such request or at the
effective date of such certificate or report, as the case may be, of the facts
and opinions stated in such document shall in each case be conditions precedent
to the right of the Company to have such request granted or to the sufficiency
of such certificate or report.
Section 1.04. NOTICES, ETC. TO TRUSTEE, ISSUER AND COMPANY. Any request,
demand, authorization, direction, notice, consent, waiver or other document
provided or permitted by this Agreement shall be sufficient for every purpose
hereunder if in writing and mailed by certified mail, postage prepaid, or
delivered by an express or overnight delivery service (with a copy to
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the other persons listed below), at the following addresses (or such other
address as may be provided by any such person by notice):
To the Issuer: City of Cohasset
305 Northwest 1st Avenue
Cohasset, Minnesota 55721-9698
Attn: City Clerk-Treasurer
To the Company: ALLETE, Inc.
30 West Superior Street
Duluth, Minnesota 55802
Attn: Chief Financial Officer
To the Trustee: U.S. Bank National Association
Mail code EP-MN-WS3C
60 Livingston Avenue
St. Paul, Minnesota 55107
Attention: Corporate Trust
To the First Mortgage Trustee: The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust
Section 1.05. SUCCESSORS AND ASSIGNs. All covenants and agreements in this
Agreement by the Issuer or the Company shall bind their successors and assigns,
whether so expressed or not.
Section 1.06. SEPARABILITY CLAUSE. In case any provision in this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 1.07. EXECUTION COUNTERPARTS. This Agreement may be executed in any
number of counterparts. All such counterparts shall be deemed to be originals
and shall together constitute one and the same instrument.
Section 1.08. CONSTRUCTION. This Agreement shall be construed in accordance
with the laws of the State without giving effect to the conflicts-of-law
principles thereof.
Section 1.09. BENEFIT OF AGREEMENT. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and the
Trustee, and their successors and assigns hereunder, any benefit or other legal
or equitable right, remedy or claim under this Agreement.
Section 1.10. LIMITATION OF LIABILITY. This Agreement is entered into by
the Issuer pursuant to the Act, and, notwithstanding any provisions hereof, the
Issuer's obligations hereunder are subject in all respects to the limitations of
the Act. No agreements or provisions contained in this Agreement nor any
agreement, covenant or undertaking by the Issuer contained
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in any document executed by the Issuer in connection with the Facilities shall
give rise to any pecuniary liability of the Issuer or a charge against
their general credit or taxing powers, or shall obligate the Issuer financially
in any way except with respect to the application of revenues hereunder and the
proceeds of the Bonds. No failure of the Issuer to comply with any term,
condition, covenant or agreement herein shall subject the Issuer to liability
for any claim for damages, costs or other financial or pecuniary charge except
to the extent that the same can be paid or recovered from the revenues hereunder
or proceeds of the Bonds; and no execution on any claim, demand, cause of action
or judgment shall be levied upon or collected from the general credit, general
funds or taxing powers of the Issuer. Nothing herein shall preclude a proper
party in interest from seeking and obtaining specific performance against the
Issuer for any failure to comply with any term, condition, covenant or agreement
herein; provided that no costs, expenses or other monetary relief shall be
recoverable from the Issuer except as may be payable from the revenues
hereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01. REPRESENTATIONS OF THE ISSUER. The Issuer makes the following
representations as the basis for the undertakings on the part of the Company
herein contained:
(a) The Issuer is a municipal corporation duly organized and validly
existing under the Constitution and laws of the State.
(b) In authorizing the issuance of the Bonds to refund the Refunded
Bonds the Issuer's purpose is, and in its judgment the effect thereof will
be, to promote the public welfare by: the retention, encouragement and
development of economically sound industry and commerce so as to prevent
the emergence of or rehabilitate, so far as possible, blighted and marginal
lands and areas of chronic unemployment; the development of industry to use
the available resources of the community, in order to retain the benefit of
the community's existing investment in educational and public service
facilities; and halting the movement of talented, educated personnel of
mature age to other areas and thus preserving the economic and human
resources needed as a base for providing governmental services and
facilities.
(c) The refunding of the Refunded Bonds, the issuance and sale of the
Bonds, the execution and delivery of this Agreement and the Indenture, and
the performance of all covenants and agreements of the Issuer contained in
this Agreement and the Indenture, and of all other acts and things required
under the Constitution and laws of the State to make this Agreement and the
Indenture valid and binding special, limited obligations of the Issuer in
accordance with their terms, are authorized by the Act and have been duly
authorized by resolutions of the governing body of the Issuer adopted at
meetings thereof duly called and held by the affirmative vote of not less
than a majority of its members.
(d) To refund the Refunded Bonds, and in anticipation of the
collection of the payments to be made by the Company pursuant to the First
Mortgage Bonds and this Agreement, the Issuer has duly authorized the
Series 2004 Bonds in the aggregate
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principal amount of $111,000,000, to be issued upon the terms set forth in
the Indenture, under the provisions of which certain of the Issuer's
interests in this Agreement and the payments due hereunder are, as provided
by the Act, pledged and a security interest therein granted to the Trustee
as security for the payment of the principal of, premium, if any, and
interest on the Bonds.
(e) The execution and delivery of this Agreement and the other
agreements contemplated hereby to which the Issuer is a party, including
without limitation the Indenture, and the consummation of the transactions
contemplated hereby and thereby, and the fulfillment of the terms hereof
and thereof, do not and will not conflict with, or constitute on the part
of the Issuer a breach of or a default under, any existing (i) law, or (ii)
other legislative act, constitution or other proceeding establishing or
relating to the establishment of the Issuer or its affairs or its
resolutions, or (iii) agreement, indenture, mortgage, lease or other
instrument to which the Issuer is subject or is a party or by which it is
bound.
(f) No officer of the Issuer who is authorized to take part in any
manner in making this Agreement or the Indenture or any contract
contemplated hereby or thereby has a personal financial interest in or has
personally and financially benefited from this Agreement or the Indenture
or any such contract.
(g) There is not pending or, to the best knowledge of the Issuer,
threatened any suit, action or proceeding against or affecting the Issuer
before or by any court, arbitrator, administrative agency or other
governmental authority which materially and adversely affects the validity,
as to the Issuer, of this Agreement or the Indenture, any of its
obligations hereunder or thereunder or any of the transactions contemplated
hereby or thereby.
Section 2.02. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
makes the following representations and warranties as the basis for the
undertakings on the part of the Issuer herein contained:
(a) The Company is a corporation duly incorporated and in good
standing under the laws of, and qualified to do business in, the State.
(b) The Company has the power to enter into this Agreement and to
perform and observe the agreements and covenants on its part contained
herein, and by proper corporate action has duly authorized the execution
and delivery hereof and thereof.
(c) No consent, approval, authorization or other order of any
regulatory body or administrative agency or other governmental body is
legally required for the Company's participation in the transactions
contemplated by this Agreement and the First Mortgage, except such as (i)
have been obtained or (ii) may be required under state securities laws.
(d) The execution and delivery of this Agreement by the Company do
not, and consummation of the transactions contemplated hereby and thereby
and fulfillment of the terms hereof and thereof, including, without
limitation, the issuance and delivery of the
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First Mortgage Bonds, will not, result in a breach of any of the material
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other material agreement or instrument to which
the Company is a party or by which it is now bound, or the Articles of
Incorporation or Bylaws of the Company, or any present order, rule or
regulation applicable to the Company of any court or of any regulatory body
or administrative agency or other governmental body having jurisdiction
over the Company or over any of its properties, or any statute of any
jurisdiction applicable to the Company.
(e) There is not pending or, to the best knowledge of the Company,
threatened any suit, action or proceeding against or affecting the Company
before or by any court, arbitrator, administrative agency or other
governmental authority that materially and adversely affects the validity,
as to the Company, of any of the transactions contemplated by this
Agreement or the ability of the Company to perform its obligations
hereunder or as contemplated hereby.
(f) The Company does not rely on any warranty of the Issuer, either
express or implied, as to the Facilities or the refunding of the Refunded
Bonds or the adequacy of the loan made hereby for such refunding, and
recognizes that, under the Act, the Issuer is not authorized to operate the
Facilities or to expend any funds thereon, other than the revenues received
by it therefrom or the proceeds of the Bonds, or other funds granted to it
for purposes contemplated in the Act.
(g) The proceeds of the Series 2004 Bonds to be deposited in the
Redemption Fund in accordance with Section 403 of the Indenture will be
used to redeem the Refunded Bonds on the Redemption Date.
(h) The First Mortgage has been duly authorized by appropriate
corporate proceedings on the part of the Company, has been duly executed
and delivered and constitutes a legal, valid and binding instrument
enforceable in accordance with its terms, except as the same may be limited
by the laws of the states where property covered thereby is located
affecting the remedies for the enforcement of the security provided for in
the First Mortgage (which laws do not make such remedies inadequate for
realization of the benefits of such security) or except as the same may be
limited by bankruptcy, insolvency or similar laws; and the First Mortgage
constitutes a valid mortgage effective to create a lien for the security of
the First Mortgage Bonds upon the property now owned by the Company therein
specifically described as subject to the lien thereof, except as otherwise
provided therein with respect to specific property or classes of property.
(i) The First Mortgage Bonds will be duly authorized by the Company,
will constitute legal, valid and binding obligations of the Company, will
be secured by and entitled to the benefits of the First Mortgage equally
and ratably, subject to the provisions of the First Mortgage relating to
any sinking fund or similar fund for the benefit of the bonds of any
particular series thereof, with all other bonds of the Company duly issued
and outstanding under the First Mortgage, and (subject to the qualification
expressed in the paragraph above with respect to the enforceability of
certain of the remedial provisions of the First Mortgage) are enforceable
in accordance with their terms.
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(j) Each element or unit of the Facilities, as described in Exhibit A
hereto, was designed to meet applicable federal, state and local
requirements for the control of air and water pollution in effect at the
time of issuance of the respective Prior Pollution Control Bonds, and the
Facilities are being used to abate or control air or water pollution.
(k) The information and estimates heretofore furnished to the Issuer
and Bond Counsel by the Company with respect to the nature and use of the
Facilities and the expenditure of the proceeds of the Refunded Bonds and
the Prior Pollution Control Bonds are true and correct and do not omit any
statement, the omission of which would render any of the statements made
therein misleading in the circumstances in which they are made.
(l) The facilities comprising the Facilities are used to abate or
control water or atmospheric pollution or contamination by removing,
altering, disposing or storing pollutants, contaminants, wastes or heat.
Such facilities are designed for no significant purpose other than the
control of pollution and the expenditures with respect thereto would not
have been made but for the purpose of controlling pollution. The Minnesota
Pollution Control Agency, which is the agency exercising jurisdiction, has
certified that the Facilities, as designed, are in furtherance of the
purpose of abating or controlling air or water pollution.
(m) At least 90% of the proceeds of the Prior Pollution Control Bonds,
including any investment earnings thereon, has been used for the payment of
costs of air or water pollution control facilities within the meaning of
Section 103(b)(4)(F) of the 1954 Code.
(n) At least 90% of the proceeds of the Prior Pollution Control Bonds,
including any investment earnings thereon, has been used to provide either
land or property of a character subject to the allowance for depreciation
under Section 167 of the Code and all amounts paid from the proceeds of the
Prior Pollution Control Bonds were, for federal income tax purposes,
chargeable to the capital account of the Company with respect to the
Facilities or would have been so chargeable either with a proper election
by the Company (for example, under Section 266 of the Code) or but for a
proper election by the Company to deduct such amounts.
(o) The average maturity of the Series 2004 Bonds does not exceed 120%
of the average reasonably expected economic life of the Facilities
determined as of the date of issuance of the Series 2004 Bonds (all within
the meaning of Section 147(b) of the Code).
(p) None of the proceeds of the Prior Pollution Control Bonds, the
Refunded Bonds or the Series 2004 Bonds has been or will be used to provide
any private or commercial golf course, country club, massage parlor, tennis
club, skating facility (including roller skating, skate board and ice
skating), racquet sports facility (including any handball or racquetball
court), hot tub facility, suntan facility or racetrack, airplane, skybox or
other private luxury box, health club facility, store the principal
business of which is the sale of alcoholic beverages for consumption off
premises or facility the
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primary purpose of which is one of the following: retail food and beverage
services, automobile sales or service, or the provision of recreation or
entertainment.
(q) No obligations which are private activity bonds under Section 141
of the Code but bear interest which is excludable from gross income for
purposes of federal income taxation, are sold at substantially the same
time as the Series 2004 Bonds pursuant to the same plan of marketing which
are payable in whole or in part by the Company or otherwise have with the
Series 2004 Bonds any common or pooled security for the payment of debt
service thereon.
(r) None of the proceeds of the Prior Pollution Control Bonds or the
Refunded Bonds has been or will be used (directly or indirectly) to acquire
land (or an interest therein) and none of the proceeds of the Prior
Pollution Control Bonds or the Refunded Bonds has been or will be used for
the acquisition of any property (or an interest therein) unless the first
use of such property was pursuant to such acquisition.
(s) The Refinanced Pollution Control Facilities do not include any
property to be sold or any property to be affixed to or consumed in the
production of property for sale, or any housing facility to be rented or
used as a permanent residence.
(t) No proceeds of the Prior Pollution Control Bonds have been or will
be used to finance any building or structure that is used primarily for the
self storage of goods, wares or merchandise for compensation.
(u) The Facilities have been acquired, constructed and installed, and
(except as described in clause (w) below) have been and will be used, by
the Company for use in the Company's trade or business or for the
production of income, within the meaning of Section 167 of the Code, and
not for the purpose of resale.
(v) Except as described in clause (w) below, the Company was, and
always has been, the only "principal user" of the Facilities within the
meaning of Section 144(a)(3) of the Code and Section 103(b) of the 1954
Code.
(w) In September 1990, the Company sold an undivided 20% interest in
Unit 4 of the Plant (including an undivided 20% interest in that portion of
the Facilities associated with Unit 4) to Wisconsin Public Power, Inc.
("WPPI") and entered into various agreements with WPPI relating to the
joint ownership, operation and maintenance of Unit 4. (The proceeds of such
sale became general corporate funds of the Company and have not been
pledged, nor are they available, to pay debt service on the Prior Pollution
Control Bonds or the Refunded Bonds.)
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ARTICLE III
THE LOAN
Section 3.01. AMOUNT AND SOURCE OF LOAN. The Issuer agrees to lend to the
Company, upon the terms and conditions herein specified, the proceeds received
by the Issuer from the sale of the Bonds, by causing such proceeds to be
transferred to the Trustee for disbursement in accordance with the Indenture.
For this purpose, the proceeds of the Bonds (and therefore the loan) shall be
deemed to include the underwriting discount, if any, or other amount by which
the amount received by or on behalf of the Issuer on the original sale of any
Bonds to the Original Purchasers is less than the principal amount of such
Bonds. The obligation of the Issuer to lend such proceeds shall be discharged,
and the obligation of the Company to repay the loan shall become effective, when
such proceeds are received by the Trustee from the Issuer or the Original
Purchasers thereof. The Company agrees that, pending the disbursement of the
proceeds of the Bonds as provided herein and in the Indenture, the Trustee shall
have a security interest in the proceeds of the Bonds.
Section 3.02. CREATION, ISSUANCE, DELIVERY AND SURRENDER OF FIRST MORTGAGE
BONDS.
(a) The obligation of the Company to repay the loan made to it by the
Issuer pursuant to Section 3.01 hereof shall be evidenced by the First
Mortgage Bonds. The Company will create, in respect of the Bonds, a series
of First Mortgage Bonds (i) maturing on such date and in such principal
amount that, upon the stated maturity date of the Bonds, an equal principal
amount of First Mortgage Bonds shall mature, (ii) bearing interest at the
same rate, payable at the same times, as the Bonds, and (iii) requiring the
redemption of all or an equal principal amount thereof on each date on
which the Bonds are required to be redeemed pursuant to Section 301(b) of
the Indenture.
(b) The Company shall receive a credit against its obligation to make
any payment of the principal of or interest on the First Mortgage Bonds,
whether at maturity, upon redemption or otherwise, in an amount equal to,
and such obligation shall be fully or partially, as the case may be,
satisfied and discharged to the extent of, the amount, if any, credited
pursuant to the Indenture against the payment required to be made by or for
the account of the Issuer in respect of the corresponding payment of the
principal of or interest on the Bonds.
(c) The Issuer agrees with the Company that at the time any Bonds
cease to be Outstanding (other than by reason of the applicability of
clause (c) of the definition of Outstanding), the Trustee shall surrender
to the First Mortgage Trustee a corresponding principal amount of First
Mortgage Bonds.
(d) The Issuer covenants that it will not sell, assign or transfer the
First Mortgage Bonds, except to the extent provided in Section 3.03 hereof.
In view of the assignment referred to in said Section 3.03, the Issuer
agrees that (i) the First Mortgage Bonds shall be issued and delivered to,
and registered in the name of, the Trustee; (ii) the Indenture shall
provide that the Trustee shall not sell, assign or transfer the First
Mortgage Bonds, except as required to effect transfer to any successor
trustee under the
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Indenture; and (iii) the Company may take such actions as it shall deem to
be desirable to effect compliance with such restrictions on transfer,
including the placing of an appropriate legend on each First Mortgage Bond
and the issuance of stop-transfer instructions to the First Mortgage
Trustee or any other transfer agent under the First Mortgage.
(e) In consideration of the issuance and sale by the Issuer of the
Bonds and the application of the proceeds thereof as provided herein and in
the Indenture, the Company agrees to pay to the Trustee for deposit into
the Bond Fund, in addition to the payments required to be made on the First
Mortgage Bonds, such supplemental amounts at such times as may be necessary
in order to assure that payment of the principal of and premium, if any,
and interest on the Bonds shall be made when due, at maturity, upon
unconditional proceedings for redemption or otherwise.
All payments required of the Company under this Section 3.02 shall be
made directly to the Trustee at its principal corporate trust office, in
funds immediately available to the Trustee, at or before 11:30 a.m., New
York City time, on each date on which any principal, premium or interest is
due on the Bonds, for the account of the Issuer, and shall be credited to
the Bond Fund. In the event the Company should fail to make any of the
payments required in this Section 3.02, the item so in default shall
continue as an obligation of the Company until the amount in default shall
have been fully paid, and the Company agrees to pay the same with interest
thereon (including to the extent permitted by law interest on overdue
installments of interest) at the rate borne by the Bonds as to which such
default exists.
(f) The Company agrees that, if an Event of Default described in
Section 701(a) or (b) of the Indenture shall have occurred, in determining
whether or not any payment of the principal of or interest on the First
Mortgage Bonds shall have been made in full, moneys received by the Trustee
from the Company shall, to the extent of the amount remaining to be paid by
the Company pursuant to subsection (e) of this Section 3.02, be deemed to
have been paid under said subsection (e) and not to have been paid on the
First Mortgage Bonds.
Section 3.03. PAYMENTS ASSIGNED; COMPANY'S OBLIGATIONS UNCONDITIONAL. It is
understood and agreed that all rights and interest of the Issuer under this
Agreement, except for the Issuer's rights under Sections 6.02, 6.03 and 8.05
hereof, including the right to delivery of the First Mortgage Bonds and the
payments to be made thereon, are to be pledged and a security interest therein
granted to the Trustee. The Company assents to such pledge and grant of a
security interest and agrees that the obligation of the Company to make the
payments on the First Mortgage Bonds and the other payments due hereunder shall
be absolute, irrevocable and unconditional and shall not be subject to any
defense (other than payment) or any right of set-off, counterclaim or recoupment
arising out of any breach by the Issuer or the Trustee or any other party under
this Agreement, the Indenture or otherwise, or out of any obligation or
liability at any time owing to the Company by the Issuer, the Trustee or any
other party, and, further, that the payments on the First Mortgage Bonds and
other payments due hereunder shall continue to be payable at the times and in
the amounts therein specified, whether or not the Facilities or the Plant, or
any portion thereof, shall have been destroyed by fire or other casualty, or
title thereto,
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or the use thereof, shall have been taken by the exercise of the power of
eminent domain, and that there shall be no abatement of or diminution in any
such payments by reason thereof, whether or not the Facilities or the Plant
shall be used or useful and whether or not any applicable laws, regulations or
standards shall prevent or prohibit the use of the Facilities or the Plant, or
for any other reason. The Company will not suspend or discontinue any such
payments, will perform and observe all of its other agreements in this
Agreement, and, except as expressly permitted in this Agreement, will not
terminate this Agreement for any cause, including but not limited to any acts or
circumstances that may constitute failure of consideration, bankruptcy or
insolvency of the Issuer or the Trustee, change in the tax or other laws or
administrative rulings or actions of the United States of America or the State
or any political subdivision thereof, or failure of the Issuer to perform and
observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or connected with this Agreement or the Indenture.
Section 3.04. PAYMENTS DUE ON NON-BUSINESS DAYS. In any case where a
payment to be made by the Company pursuant to this Agreement (including, but not
limited to, a loan payment pursuant to Section 3.02 hereof) shall be due on a
day that is not a Business Day, then such payment may be made on the next
succeeding Business Day with the same force and effect as if made on the due
date.
Section 3.05. COMPANY'S REMEDIES. Nothing contained in this Article shall
be construed to release the Issuer from the performance of any of its agreements
in this Agreement, and, if the Issuer should fail to perform any such agreement,
the Company may institute such action against the Issuer as the Company may deem
necessary to compel the performance, so long as such action shall not violate
the Company's agreements in Section 3.03 hereof. The Company may at its own cost
and expense, and in its own name, prosecute or defend any action or proceeding
against third parties or take any other action which the Company deems
reasonably necessary in order to secure or protect its interest in the
Facilities and right of possession, occupancy and use thereof under this
Agreement. In this event, the Issuer agrees to cooperate fully with the Company
in any such action or proceeding if the Company shall so request and agree to
pay all expenses.
ARTICLE IV
THE FACILITIES
Section 4.01. COMPLETION AND LOCATION OF THE FACILITIES. The Company has
caused the Facilities to be acquired, constructed and installed in accordance
with the plans and specifications therefor. Except as described in Section
2.02(w) hereof, the Facilities are owned and operated by the Company. Each of
the Facilities is located within the jurisdiction of the Issuer, and was, at the
time of the issuance of the Refunded Bonds, located within the jurisdiction of
the City of Bass, Minnesota.
Section 4.02. MAINTENANCE OF FACILITIES; REMODELING. So long as any Bonds
are Outstanding, the Company shall cause the Facilities to be maintained,
preserved and kept in good repair, working order and condition and from time to
time cause to be made all necessary and proper repairs, replacements and
renewals; provided, however, that, subject to the general provisions of Section
6.05 hereof, the Company will have no obligation to cause to be
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maintained, preserved, kept, repaired, replaced or renewed any element or unit
of the Facilities (a) the maintenance, preservation, keeping, repair,
replacement or renewal of which becomes uneconomic to the owners thereof because
of damage or destruction by a cause not within the control of such owners, or
obsolescence (including economic obsolescence) or change in governmental
standards and regulations, or the termination of the operation of the Plant, or
any portion thereof, to which such element or unit of the Facilities is an
adjunct, and (b) with respect to which the Company has furnished to the Issuer
and the Trustee a certificate executed by a Company Representative that the
maintenance, preservation, keeping, repair, replacement or renewal of such
element or unit of the Facilities is being discontinued for one of the foregoing
reasons, which shall be stated therein.
The Company shall have the privilege, at its own expense, of causing any of
the Facilities to be remodeled or causing substitutions, modifications or
improvements to be made to the Facilities from time to time as it, in its
discretion, may deem to be desirable for its uses and purposes, which
remodeling, substitutions, modifications and improvements shall be included
under the terms of this Agreement as part of the Facilities.
Section 4.03. INSURANCE. So long as any Bonds are Outstanding, the Company
agrees to maintain or cause to be maintained such fire, casualty, public
liability and other insurance with respect to the Facilities as is customarily
carried by electric utility companies with respect to similar facilities. All
proceeds of such insurance shall be for the account of the Company.
Section 4.04. CONDEMNATION. As between the Issuer and the Company, the
Company shall be entitled to the entire proceeds of any condemnation award or
portion thereof made for damages to or takings of the Plant, the Facilities or
other property.
Section 4.05. PAYMENT OF TAXES; DISCHARGE OF LIENS. The Company will:
(a) pay, or make provision for payment of, all lawful taxes and
assessments, including income, profits, property or excise taxes, if any,
or other municipal or governmental charges, levied or assessed by any
federal, state or municipal government or political body upon the
Facilities or upon any amounts payable pursuant to Section 3.02 hereof when
the same shall become due; provided that the Company may in good faith
contest any such tax or assessment in appropriate legal proceedings, and in
such event may permit the items so contested to remain unpaid during the
period of such contest and any appeal therefrom, unless the Issuer or the
Trustee shall notify the Company in writing that, in the opinion of
Counsel, by nonpayment of any such items the lien of the Indenture as to
the amounts payable on the First Mortgage Bonds or pursuant to Section 3.02
hereof will be materially endangered, in which event the Company shall
promptly pay all such unpaid items; and
(b) pay or cause to be satisfied and discharged or make adequate
provision to satisfy and discharge, within 60 days after the same shall
accrue, any lien or charge upon any amounts payable on the First Mortgage
Bonds or pursuant to Section 3.02 hereof, and all lawful claims or demands
which, if unpaid, might be or become a lien upon such amounts; provided
that the Company may in good faith contest any such lien or charge or
claims or demands in appropriate legal proceedings, and in such event may
permit the
-15-
items so contested to remain undischarged and unsatisfied during the period
of such contest and any appeal therefrom, unless the Issuer or the Trustee
shall notify the Company in writing that, in the opinion of Counsel, by
nonpayment of any such items the lien of the Indenture as to the amounts
payable on the First Mortgage Bonds or pursuant to Sections 3.02 hereof
will be materially endangered, in which event the Company shall promptly
pay and cause to be satisfied and discharged all such unpaid items.
Section 4.06. USE OF FACILITIES. So long as any Series 2004 Bonds are
Outstanding, the Company will cause the Facilities to be used for the abatement
or control of air and water pollution or such other use as will not impair the
status of the interest on such Series 2004 Bonds as exempt from federal income
taxation.
Section 4.07. ISSUER'S AND TRUSTEE'S ACCESS TO FACILITIES. The Company
agrees that the Issuer and Trustee shall have the right, upon appropriate prior
notice to the Company, to have reasonable access to the Plant and Facilities
during normal business hours for the purpose of making examinations and
inspections of the same.
ARTICLE V
REDEMPTION OF BONDS
Section 5.01. PREPAYMENT OF LOAN. The Company may at any time transmit
funds directly to the Trustee, for deposit in the Bond Fund, in addition to
amounts, if any, otherwise required at that time pursuant to this Agreement, and
direct that said money be utilized by the Trustee for redemption of Bonds which
are then or will be redeemable in accordance with their terms on a date
specified by the Company, provided notice is properly given in accordance with
Section 302 of the Indenture.
Section 5.02. OPTION TO PREPAY LOAN AND TO DIRECT REDEMPTION OF BONDS. The
Company shall have the option to prepay the loan in whole or in part upon the
conditions set forth for redemption of the Bonds under Section 301(b) of the
Indenture. In any such case, the Company shall, to exercise its option
hereunder, notify the Issuer and Trustee in writing within 180 days following
occurrence of the event permitting such redemption, designating a redemption
date, and, prior to said redemption date, deposit with the Trustee a sum
sufficient, with other funds held by the Trustee and available for such purpose,
to redeem such Bonds then Outstanding.
Section 5.03. OBLIGATION TO PREPAY LOAN AND REDEEM BONDS UPON CERTAIN
EVENTS. The Company shall be obligated to repay the loan from the proceeds of
the Series 2004 Bonds (in whole or in part, based upon the portion of the Series
2004 Bonds required to be redeemed), to the extent Series 2004 Bonds are
required to be redeemed in accordance with Section 301(c) of the Indenture.
The prepayment of the loan required by the preceding paragraph, which shall
be deposited on or prior to the redemption date, shall be a sum sufficient,
together with other funds deposited with the Trustee and available for such
purpose, to redeem all of the Series 2004 Bonds to be redeemed at a price equal
to 100% of the principal amount thereof plus accrued
-16-
interest to the date of redemption, and, if no Bonds shall thereafter remain
outstanding, to pay all reasonable and necessary fees and expenses of the
Trustee and any Paying Agent, and all other liabilities of the Company, accrued
and to accrue under this Agreement through the redemption date.
Section 5.04. OPTION TO REFINANCE BONDS WITHOUT PREPAYMENT OF LOAN. The
Bonds of one or more series may be refinanced through the issuance of Additional
Bonds. The proceeds of such Additional Bonds shall be used, together with other
funds on deposit with the Trustee available for such purpose, to redeem the
Bonds to be refinanced. On or before such redemption date, the Company shall
deliver to the Trustee amended First Mortgage Bonds meeting the requirements of
Section 3.02(a) with respect to the Additional Bonds, such amended First
Mortgage Bonds to be substituted for the First Mortgage Bonds then held by the
Trustee. Upon the receipt by the Trustee of the amended First Mortgage Bonds and
funds sufficient to redeem the outstanding Bonds, the Issuer agrees that the
Trustee shall surrender to the First Mortgage Trustee the First Mortgage Bonds
corresponding to the Bonds to be redeemed. In the event of such refinancing and
substitution of amended First Mortgage Bonds in exchange for First Mortgage
Bonds of an equal principal amount, the loan shall not be deemed to have been
paid or prepaid and no new loan shall be deemed to have been made by the Issuer
to the Company. The interest rate and other terms of the Additional Bonds and
the amended First Mortgage Bonds need not be the same as those of the Bonds and
the First Mortgage Bonds to be amended. This Agreement shall be amended to
reflect the issuance of, and to amend the terms of the loan to conform to the
terms of, any such Additional Bonds.
ARTICLE VI
SPECIAL COVENANTS OF THE COMPANY
Section 6.01. MAINTENANCE OF CORPORATE EXISTENCE. Except as otherwise
permitted in the First Mortgage, the Company covenants that it will maintain its
corporate existence and qualification to do business in the State, will not
dissolve or otherwise dispose of all or substantially all its assets and will
not consolidate with or merge into or with another corporation or permit one or
more other corporations to consolidate with or merge into it; provided that, for
the avoidance of doubt, the Spin-off shall not constitute an act by the Company
to dissolve or otherwise dispose of all or substantially all of its assets. In
the event of any such acquisition of its assets, or merger or consolidation, as
permitted by the First Mortgage, the acquirer of its assets or the corporation
with which it shall consolidate or into which it shall merge shall assume in
writing all of the obligations of the Company under this Agreement.
Section 6.02. ANNUAL STATEMENT. The Company will have an annual audit made
by its regular independent certified public accountants and will furnish the
Issuer and the Trustee (within 120 days after the close of the Company's fiscal
year) with the Company's annual report to shareholders for the year then ended
and the Trustee with a written statement at the same time as its annual report
signed by a Company Representative and stating that the Company is not in
default under the terms of this Agreement, or, if in default, specifying the
nature thereof.
Section 6.03. INDEMNIFICATION. The Company releases the Issuer, and the
Trustee from, agrees that the Issuer, and the Trustee shall not be liable for,
and agrees to indemnify and hold
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the Issuer, and the Trustee harmless from, any liability for any loss or damage
to property or any injury to or death of any person that may be occasioned by
any cause whatsoever pertaining to the Plant or the Facilities.
The Company will indemnify and hold the Issuer and the Trustee free and
harmless from any loss, claim, damage, tax, penalty, liability, disbursement,
litigation expenses, attorneys' fees and expenses or court costs arising out of,
or in any way relating to, the execution or performance of this Agreement, the
issuance or sale of the Bonds, actions taken under the Indenture or any other
cause whatsoever pertaining to the Plant or the Facilities, except as my arise
though the willful misconduct or negligence of the Issuer or the Trustee, as the
case may be.
Under this Section 6.03, the Company shall also be deemed to release,
indemnify and agree to hold harmless each employee, official, officer or agent
of the Issuer to the same extent as the Issuer.
If any claim of the type described in this Section 6.03 is asserted against
the Issuer, or the Trustee or any employee, official, officer or agent of any
thereof, the Issuer or the Trustee, as the case may be, agrees to give prompt
written notice to the Company and the Company shall have authority to assume the
defense thereof, with full power to litigate, compromise or settle the same in
its sole discretion; it being understood that the Issuer and the Trustee will
not settle or consent to the settlement of the same without the consent of the
Company.
The covenants in this Section 6.03 shall survive the payment of the Bonds,
termination of the other provisions of this Agreement and the discharge of the
other obligations of the Company hereunder.
Section 6.04. ADDITIONAL PAYMENTS. In addition to any other payments
required hereunder, the Company will pay the following amounts to the following
persons:
(1) to the Trustee, when due, all reasonable fees and expenses of the
Trustee for services rendered under the Indenture and all reasonable fees
and expenses of the Paying Agents, counsel, accountants, engineers and
others incurred in the performance on request of the Trustee of services
under the Indenture (including, without limitation, Section 6.08 thereof)
for which the Trustee and such other Persons are entitled to payment or
reimbursement, but the Company may, without creating a default hereunder,
contest in good faith the reasonableness of any such services, fees or
expenses other than the Trustee's and any Paying Agent's fees for ordinary
services as set forth in the Indenture; and
(2) to the Issuer, all reasonable and necessary expenses incurred by
the Issuer, with the prior written approval of the Company, with respect to
this Agreement, the Indenture and any transaction or event contemplated by
this Agreement or by the Indenture and which are not otherwise required to
be paid by the Company under the terms of this Agreement.
In the event the Company should fail to make any of the payments required
by this Section 6.04, the item in default shall continue as an obligation of the
Company until the amount
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in default shall have been fully paid, and the Company will pay the same with
interest thereon at a rate per annum equal to one percent above the prime or
reference rate from time to time publicly announced by and in effect for the
largest commercial bank, as measured by assets, in the Ninth Federal Reserve
District (with each change in such prime or reference rate resulting in a
corresponding change in the rate to be paid hereunder), or, if such rate or
rates shall exceed the maximum rate then permitted by law, at the maximum rate
permitted by law; provided that, with the exception of the Trustee's and any
Paying Agent's fees, interest shall not accrue on such obligation until written
notice has been given to the Company that such payment is past due.
Section 6.05. ASSURANCE OF TAX EXEMPTION. (a) It is the intention of the
Company and the Issuer that the interest on the Bonds be excludable from the
gross income of the holders thereof for federal income tax purposes pursuant to
Section 103 of the Code (including, where applicable, Section 103 of the 1954
Code), except for any Bond held by a Person referred to in Section 103(b)(13) of
the 1954 Code. To that end, the Company represents, covenants and agrees with
the Issuer, the Trustee and all Owners of the Bonds that (a) it will not permit
the use of any proceeds of the Bonds or fail to use or cause to be used such
proceeds or take any other action or omit to take any action, which use,
failure, act or omission will cause the loss of such exclusion, and (b) it will
file with the Internal Revenue Service, or any other authorized governmental
agency, any and all statements or other instruments, if any, required under the
Code with respect to obligations the interest on which is excludable from the
gross income of the owners thereof for federal income tax purposes pursuant to
Section 103 of the Code (including, where applicable, Section 103 of the 1954
Code). Furthermore, the Company represents, covenants and agrees as follows:
(1) The Company will not use the proceeds of the Bonds or any other
moneys in such a manner as to cause the Bonds to be "arbitrage bonds"
within the meaning of Section 148 of the Code.
(2) The Company will not take any action, or permit any action (which
is within its control) to be taken, which would otherwise cause the
interest on the Bonds to become includable in gross income for purposes of
federal income taxation in the hands of the owners thereof (other than by
operation of Section 103(b)(13) of the 1954 Code).
(3) The Company will not lease, sell, assign, grant or convey all or
any portion of the Facilities or any interest therein to the United States
of America or any agency or instrumentality thereof within the meaning of
Section 149(b) of the Code or Section 103(h) of the 1954 Code, unless first
obtaining an opinion of Bond Counsel that any such lease, sale, assignment,
grant or conveyance will not adversely affect the excludability from gross
income of interest on the Series 2004 Bonds for purposes of federal income
taxation.
(4) The Company will comply with any restrictions on the investment of
moneys set forth in the Tax Compliance Certificate in respect of the Series
2004 Bonds.
(5) The Company will take such action, or refrain from taking such
action, as shall be necessary to assure that all proceeds of the Prior
Pollution Control Bonds, the Refunded Bonds and the Series 2004 Bonds and
the facilities directly or indirectly
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financed or refinanced with such proceeds have been and will be used in
such manner that the Prior Pollution Control Bonds, the Refunded Bonds and
the Series 2004 Bonds are obligations described in Section 103(b)(4)(F) of
the 1954 Code and, in the case of the Refunded Bonds and the Series 2004
Bonds, Section 1313 of the Tax Reform Act of 1986.
(6) no action, nor permit any action to be taken, which would render
inaccurate or incorrect any of the representations or warranties made in
this Section 6.05(a) or Section 2.02 hereof or any of the representations
or certifications otherwise given by or on behalf of the Company in
connection with the issuance of the Prior Pollution Control Bonds, the
Refunded Bonds or the Series 2004 Bonds.
(7) The Company will comply with and fulfill all other requirements
and conditions of the Code and the 1954 Code relating to the Refinanced
Pollution Control Facilities and the operation thereof to the end that the
interest on the Series 2004 Bonds shall at all times be excludable from
gross income for purposes of federal income taxation in the hands of the
owners thereof (other than by operation of Section 103(b)(13) of the 1954
Code).
(8) No changes shall be made in the Facilities which shall in any way
impair the exemption of interest on any of the Series 2004 Bonds from
federal income taxation. The Company has no current intention to use any
part of the Facilities after the Series 2004 Bonds are discharged for a use
that is not permitted under Section 103(b) of the 1954 Code for facilities
financed by municipal obligations, the interest on which is exempt from
federal income taxation.
(9) None of the proceeds of the Series 2004 Bonds will be used to pay
"issuance costs" of the Bonds within the meaning of Section 147(g) of the
Code.
(b) The Issuer and the Company covenant and certify to each other and to
and for the benefit of the Owners of the Bonds that no use will be made of the
proceeds of the Bonds or any other moneys, and no disposition will be made of
the Facilities, which would cause any Bonds to be arbitrage bonds within the
meaning of Section 148 of the Code. Pursuant to such covenant, the Issuer and
the Company jointly and severally obligate themselves to comply throughout the
term of the issue of the Bonds with the requirements of Section 148 of the Code.
The Company recognizes that the exemption from federal income taxation of
the interest to be paid on the Bonds is dependent upon compliance with the
provisions of Section 148 of the Code. The Company represents to and covenants
with the Issuer, the Trustee and each Owner of Bonds that:
(1) If all "gross proceeds" (as defined in Section 148(f)(6)(B) of the
Code) of the Series 2004 Bonds are not expended for the payment of
principal of and interest on Refunded Bonds by the date which is 90 days
after the date of issue of the Bonds of such series, or if, notwithstanding
that all gross proceeds are so expended by such date, gross proceeds arise
at some later date, then the Company shall make the determinations and take
the actions hereinafter required by this Section 6.05(b), on behalf of, and
as agent
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for, the Issuer, and shall rebate to the United States, not later than 60
days after each installment computation date, an amount which ensures that
at least 90% of the Rebate Amount at the time of such payment will have
been paid to the United States, and within 60 days after the final
computation date, an amount sufficient to pay the remaining balance of the
Rebate Amount, all in the manner and as required by Section 148(f) of the
Code. As used herein, "Rebate Amount" means the amount described in Section
148(f)(2) of the Code, computed in accordance with the provisions of said
Section 148(f)(2) and the regulations now or hereafter promulgated
thereunder, including Treasury Regulations, Sections 1.148-0 through
1.148-11 and 1.150-1.
(2) The Company shall determine the Rebate Amount within 30 days after
the close of each Bond Year and upon payment or redemption of all principal
of a series of Bonds, and shall furnish the Issuer and the Trustee upon
each determination with a certificate of a Company Representative verifying
such determination and with any supporting documentation required to
calculate or evidence the Rebate Amount in accordance with the Code and
applicable regulations. The Company shall retain records of such
determinations until six years after final payment or redemption of
principal of the series of Bonds. Upon each such determination, the Company
shall set aside, or cause to be set aside, the Rebate Amount so determined,
and shall separately account for, or cause to be separately accounted for,
the earnings from the investment thereof, and such earnings shall become
part of the Rebate Amount.
(3) At no time during any Bond Year will "gross proceeds" (other than
proceeds of the Bonds invested for an initial "temporary period" therefor
and proceeds invested during temporary investment periods related to debt
service) in an amount in excess of 150% of the debt service on the Series
2004 Bonds for such Bond Year be invested in "nonpurpose obligations" with
a "yield" higher than the "yield" on such Bonds, and any "gross proceeds"
invested in "nonpurpose obligations" within such 150% shall be promptly and
appropriately reduced as the principal balance of the Bonds is reduced (all
within the meaning of Section 148(d)(3) of the Code).
(c) The Company covenants and agrees that it will perform its covenants and
agreements relating to the Refunded Bonds in respect of the calculation and
payment to the United States of any rebatable arbitrage in respect of the
Refunded Bonds under Section 148(f) of the Code, within 60 days after the date
of final payment thereof, so as to preserve the exclusion from gross income of
interest on the Refunded Bonds for purposes of federal income taxation.
(d) The provisions of this Section 6.05 shall survive the retirement and
payment of the Bonds and the discharge of the Issuer's and the Company's other
obligations hereunder.
(e) Notwithstanding anything in this Agreement or the Indenture to the
contrary, the provisions of this Section 6.05 may be amended by an instrument
signed by the Issuer and the Company and delivered to the Trustee, accompanied
by an opinion of Bond Counsel stating in effect that the provisions of this
Section 6.05, as so amended, if complied with by the Company, will not adversely
affect the tax exclusion from gross income of interest on any Bond for purposes
of federal income taxation.
-21-
(f) The covenants, agreements and the representation contained herein and
in the Tax Compliance Certificate and the Tax Certificate are intended to ensure
compliance with the provisions of the Code and to establish that the
expectations and facts pertaining to such provisions of the Code are consistent
with such provisions. In the event that the Code is amended or regulations
thereunder are hereafter proposed or promulgated and the effect of such change
is to modify or delete any element of the covenants or agreements contained
herein, the Company shall be relieved of its obligation to comply with such
covenants or agreements to the extent of such modification or deletion, provided
that the Company receives an opinion of Bond Counsel that such action will not
adversely affect the exclusion of the interest on the Bonds from the gross
income of the holders thereof for federal income tax purposes. In the event such
regulations impose additional requirements which are applicable to the Bonds,
the Company hereby agrees to comply with the provisions of the regulations.
(g) The Company shall not be deemed in breach of any representation,
covenant or agreement in this Section 6.05 and in Section 2.02 hereof, in the
Tax Compliance Certificate or the Tax Certificate to the extent it takes
remedial action to prevent a Determination of Taxability that would otherwise be
caused by such breach.
Section 6.06. REDEMPTION OF REFUNDED BONDS; PAYMENT OF COSTS OF ISSUANCE.
The Company covenants and agrees with the Issuer that it will cause the Refunded
Bonds to be paid and discharged on or prior to the 90th day after the date of
issuance of the Series 2004 Bonds. The Company also covenants and agrees to
provide any moneys required for the payment and discharge of the Refunded Bonds
on or prior to the date on which they are called for redemption. The Company
further agrees that it will pay all reasonable Costs of Issuance promptly when
due.
ASSIGNMENT, LEASING AND SELLING
Section 7.01. CONDITIONS. The Company's interest in this Agreement may be
assigned in whole or in part, and the Company's interest in any element or unit
of the Facilities may be leased or sold as a whole or in part, subject, however,
to the provisions of Section 6.05 hereof and to the following conditions:
(a) no assignment, lease or sale shall cause the Company to breach any
of the covenants contained in Sections 4.06 and 6.05 hereof or any of the
representations or warranties contained in Section 2.02 hereof, or
otherwise cause the interest payable on any Bonds to become includable in
gross income for purposes of federal income taxation (other than by
operation of Section 103(b)(13) of the 1954 Code), nor relieve the Company
from primary liability on the First Mortgage Bonds, for its obligation to
make the loan payments required by Section 3.02 hereof or for any other of
its obligations hereunder other than those assumed pursuant to subsection
(b) of this Section 7.01; and
(b) the assignee, lessee or purchaser from the Company shall assume,
in writing, all the obligations of the Company hereunder relating to the
operation, maintenance and insurance of the Facilities to the extent of the
interest assigned, leased or sold.
-22-
For purposes of this Article 7 and Section 2.02(v), it is not intended that an
assignment, lease or sale that complies with this Article 7 would result in a
misrepresentation under Section 2.02(v).
Section 7.02. INSTRUMENT FURNISHED TO TRUSTEE. The Company shall,
within 15 days after the delivery thereof, furnish to the Issuer and the
Trustee a true and complete copy of the agreements or other documents
effectuating any such assignment, lease or sale.
Section 7.03. LIMITATION. So long as any Bonds are Outstanding, this
Agreement shall not be assigned nor shall the Facilities be leased or sold,
in whole or in part, except as provided in this Article VII or in Section
6.01 hereof.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.01. EVENTS OF DEFAULT. Any one or more of the following
events is an Event of Default under this Agreement:
(1) a "Default" as such term is defined in Section 65 of the First
Mortgage;
(2) failure by the Company to pay when due any amount required to be
paid under the First Mortgage Bonds or Section 3.02 hereof, which failure
shall have resulted in an "Event of Default" under subsection (a) or (b) of
Section 701 of the Indenture; or
(3) if the Company shall fail to observe and perform, for reasons
other than Force Majeure (as set forth in Section 8.02 hereof), any other
covenant, condition or agreement on its part under this Agreement other
than payments of principal or a premium, if any, or interest on the First
Mortgage Bonds or amounts payable pursuant to Section 3.02 hereof which
failure continues for a period of 90 days after written notice, specifying
such failure and requesting that it be remedied, is given to the Company by
the Trustee, unless the Trustee shall agree in writing to an extension of
such time prior to its expiration, or for such longer period as may be
reasonably necessary to remedy such failure, provided that the Company is
proceeding with reasonable diligence to remedy the same.
Section 8.02. FORCE MAJEURE. The provisions of Section 8.01(3) hereof are
subject to the following limitations: If by reason of acts of God, strikes,
lockouts or other industrial disturbances, acts of public enemies, orders of any
kind of the Government of the United States or of the State, or any department,
agency, political subdivision, court or official of either of them, or any civil
or military authority, insurrections, riots, epidemics, landslides, lightning,
earthquakes, fires, hurricanes, tornados, storms, floods, washouts, droughts,
arrests, restraint of government and people, civil disturbances, explosions,
breakage or accident to machinery, partial or entire failure of utilities, or
any cause or event not reasonably within the control of the Company, the Company
is unable in whole or in part to carry out any one or more of its agreements or
obligations contained in this Agreement, other than its obligations contained in
Sections 3.02, 4.05, 6.01, 6.03 and 6.05 hereof, the Company shall not be deemed
in default by reason of not carrying out said agreement or agreements or
performing said obligation or obligations during the continuance of such
inability. The Company agrees, however, to use its
-23-
best efforts to remedy with all reasonable dispatch the cause or causes
preventing it from carrying out its agreements; provided that the settlement of
strikes, lockouts and other industrial disturbances shall be entirely within the
discretion of the Company, and the Company shall not be required to make
settlement of strikes, lockouts and other industrial disturbances by acceding to
the demands of the opposing party or parties when such course is, in the
judgment of the Company, unfavorable to the Company.
Section 8.03. REMEDIES. Upon the occurrence of an Event of Default
described in subsection (1) of Section 8.01 hereof, the Trustee, as the holder
of the First Mortgage Bonds, shall, subject to the provisions of the Indenture,
have the rights provided in the First Mortgage. Any waiver of any "Default"
under the First Mortgage and a rescission and annulment of its consequences
shall constitute a waiver of the corresponding Event or Events of Default under
this Agreement and a rescission and annulment of the consequences thereof.
Whenever any Event of Default shall have occurred and be subsisting, the Issuer
may, with the prior written consent of the Trustee and with notice in writing to
the Company, declare the remaining principal balance of the loan payable under
Section 3.02 and any other amounts due hereunder (being an amount equal to that
necessary to pay in full all Outstanding Bonds, assuming acceleration of the
Bonds under the Indenture and to pay all other indebtedness thereunder) to be
immediately due and payable, whereupon the same shall become immediately due and
payable by the Company; and, in the event the Company does not, within three
business days thereafter, deposit with the Trustee an amount sufficient to
satisfy its obligations under the preceding clause, then the Issuer, or the
Trustee on behalf of the Issuer, may take whatever action at law or in equity
may appear necessary or appropriate to collect the balance then due, or to
enforce performance and observance of any obligation, agreement or covenant of
the Company under this Agreement.
Any amounts collected pursuant to action taken under this Section 8.03
shall be paid into the Bond Fund and applied in accordance with the provisions
of the Indenture.
Section 8.04. NO REMEDY EXCLUSIVE. No remedy conferred upon or reserved to
the Issuer by this Agreement is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement or now or
hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
or power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Issuer to exercise any remedy reserved to it
in this Article, it shall not be necessary to give any notice, other than such
notice as may be herein expressly required.
Section 8.05. REIMBURSEMENT OF ATTORNEYS' FEES. If the Company shall
default under any of the provisions of this Agreement and the Issuer or the
Trustee shall employ attorneys or incur other reasonable expenses for the
collection of payments due hereunder or for the enforcement of performance or
observance of any obligation or agreement on the part of the Company contained
in this Agreement, the Company will on demand therefor reimburse the Issuer or
the Trustee, as the case may be, for the reasonable fees of such attorneys and
such other reasonable expenses so incurred.
-24-
Section 8.06. WAIVER OF BREACH; EXERCISE OF RIGHTS BY TRUSTEE. In the event
any obligation created by this Agreement shall be breached by either of the
parties and such breach shall thereafter be waived by the other party, such
waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder. In view of the pledge of and grant
of a security interest in the Issuer's rights in and under this Agreement to the
Trustee under the Indenture, the Issuer shall have no power to waive any default
hereunder by the Company without the consent of the Trustee, and the Trustee may
exercise any of the rights of the Issuer hereunder.
Section 8.07. TRUSTEE'S EXERCISE OF THE ISSUER'S REMEDIES. Whenever any
Event of Default shall have happened and be subsisting, the Trustee may, but
except as otherwise provided in the Indenture shall not be obliged to, exercise
any or all of the rights of the Issuer under this Article VIII, upon notice as
required of the Issuer unless the Issuer has already given the required notice.
ARTICLE IX
MISCELLANEOUS
Section 9.01. TERMINATION. At any time when the principal of, premium, if
any, and interest on all Bonds have been paid and arrangements satisfactory to
the Trustee have been made for the discharge of all accrued liabilities under
this Agreement, this Agreement, except as otherwise provided in Sections 6.04
and 6.05 hereof, shall terminate.
Section 9.02. ASSIGNMENT. This Agreement may not be assigned or a security
interest granted herein by either the Issuer or the Company without the consent
of the other (which consent will not be unreasonably withheld), except that the
Issuer may pledge and grant a security interest in its interest in this
Agreement to the Trustee and the Company may assign its interest in this
Agreement in accordance with Section 6.01 or 7.01 hereof.
Section 9.03. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as otherwise
expressly provided in this Agreement or in the Indenture, subsequent to the
original issuance of any Bonds and before the Indenture is satisfied and
discharged in accordance with its terms, this Agreement may not be amended,
changed or modified except in accordance with the provisions of Article X of the
Indenture.
Section 9.04. SPIN-OFF SHALL NOT VIOLATE TERMS OF THIS AGREEMENT.
Notwithstanding anything to the contrary contained herein, the Spin-off shall
not violate the terms of this Agreement.
-25-
IN WITNESS WHEREOF, the Issuer and the Company have caused this Agreement
to be executed in their respective corporate names and their respective
corporate seals to be hereunto affixed and attested by their duly authorized
officers, all as of the date first above written.
CITY OF COHASSET, MINNESOTA
By: /s/ Marian Barcus
-------------------------------
Mayor
(SEAL)
Attest: /s/ Debra Sakrison
----------------------------
City Clerk-Treasurer
ALLETE, INC.
By /s/ James Vizanko
-------------------------------
Its Senior Vice President and
---------------------------
Chief Financial Officer
-------------------------------
(SEAL)
Attest: /s/ Deborah A. Amberg
---------------------------------------
Its Vice President, General Counsel and
------------------------------------
Secretary
---------------------------------------
[Signature Page to Loan Agreement]
-26-
EXHIBIT A
to the
Loan Agreement
DESCRIPTION OF THE REFINANCED POLLUTION CONTROL FACILITIES
EXHIBIT A
The following Facilities have been, are being
or are to be acquired and constructed at
Units 1 and 2 of the Clay Boswell steam
electric generating station.
Bag House Facilities
- --------------------
The two custom made bag houses are furnished by Western Precipitation,
Division of Joy Manufacturing, to remove the particulate matter from the flue
gases discharged from each boiler. Each bag house consists of eight
compartments, with each compartment containing two hundred forty 12" diamater
fiberglass bags. Bag arrangement is 12 bags wide by 20 bags deep with two
internal walkways. Each bag house is approximately 62' x 72' x 85'.
Each bag house is rated at 371,000 ACFM @ 390 degrees F and 28.08 inc. Hg
abs. with an inlet dust loading of 3.5 GR/ACF. The system starts near the
existing air heater outlet duct includes inlet duct work and support steel to
the bag house inlet. Flue gas enters each compartment from the bottom bag house
hopper area through two inlet dampers, pass up and through the bags, exits
through two outlet damper valves and to the bag house outlet plenum. Bag
cleaning is accomplished by isolating a compartment and drawing cleaned flue gas
through reverse air duct work, fan and damper causing reverse air flow through
the bags. Ash is collected in the compartment hopper. Flyash is pneumatically
conveyed from the 16 hoppers to a common storage silo.
Additional equipment in the bag house facility includes a hopper heating
and level system, main control panel, instrumentation and control, pneumatic
piping and valve operators, motors, motor control center, cable, conduit, tray,
access platforms, walkways, support steel, insulation, lagging and foundations.
The following Facilities have been, are
being or are to be acquired and constructed
at unit 4 of the Clay Boswell steam electric
generating station.
Circulatinq Water System
- ------------------------
This equipment consists of a complete mechanical draft cooling tower, three
circulating water pumps, pump house, circulating, riser, and bypass water piping
(but not makeup or blowdown piping), one acid feed system, one chlorination and
dechlorination system, and associated piping, and additional equipment
interconnecting with plant equipment including two heat exchangers, three
cooling water pumps, a chemical feed tank, a cooling water head tank and the
associated piping and valves.
Waste Treatment System
- ----------------------
One water softener/clarifier to chemically soften and clarify water to be
discharged to the Mississippi River. One hundred foot diameter by thirteen feet
high steel unit designed for 2500 GPM. Including center drive and rake
mechanism, polymer feed system, soda ash feed system and 1000 ton steel soda ash
storage silo. The storage silo is enclosed in a facility shared by the lime
silo. The soda ash silo has a feed system including mixers and tanks. One PH
adjustment structure designed for 3800 GPM with acid and caustic feed system for
maintaining the PH of the plant discharge between 6.5 and 8.5 as required by the
MPCA.
Two 30 foot diameter sand and anthracite filters each designed for 1900 GPM
to remove excessive suspend solids and turbidity from wastewater in order to
comply with the NPDES requirements, each unit has three filtering compartments
and self-contained backwash storage; including flow splitter boxes and blower.
Two oil-solids separator each designed for 500 GPM to treat miscellaneous
plant water flows which contain oil. Includes 2000 gallon waste oil storage tank
and a polymer feed systems.
Approximately 19 concrete sumps using 43 pumps for transporting wastewater
through the plant for treatment. This will require over 10,000 feet of pipe of
various sizes to be installed underground. There will be 14 pumps and 8 mixers
needed for chemical feed systems.
The major pieces of equipment are housed in an 240' by 61' building.
-
There will be four clay lined holding basins each of 1,000,000 gallon
capacity to store water for settling prior to treatment. A grit
A-2
chamber will also be used to collect area runoff from other portions of the
plant to eliminate suspended solids from entering the lake. The existing coal
pile sump will be upgraded to accept the coal pile rain water runoff. Also
required are system control panels and instrumentation to monitor equipment
performance and effluent wastewater quality which will be located at the local
equipment and in the AQCS control room.
A portion of the waste treatment system will occupy land acquired after
February 22, 1977.
Dust Control Facilities
- -----------------------
The purpose of this equipment is to collect the particulate matter from the
coal handling equipment and dry chemical handling system. The equipment consists
of a fabric type dust collectors, duct work and housings for the coal handling
system.
Electrical equipment
- --------------------
The purpose of this equipment is to provide the electrical needs for all
pollution control systems. This system consists of switchgear, motor control
centers, power transformers, underground conduit power cable and trays, control
cables and trays and above ground conduit and motors.
Scrubber Sludqe Pond
- --------------------
The purpose of this pond is to collect the precipitates from the air
quality control systems. The pond consists of clay lined earthen ponds and pump
houses. A portion of the pond occupies land purchased after Pebruary 22, 1977.
Air Quality Control Facilities
- ------------------------------
The purpose of this equipment is to remove particulate and S02 from the
combustion flue gas.
This Air Quality Control System (AQCS) consists of four parallel modules
for particulate and sulfur dioxide removal. (Exiting flue gas from the AQCS is
reheated by mixing hot flue gas from two electrostatic precipitators operating
in parallel with the AQCS).
The AQCS, rated at 2,207,549 ACFM at 300 degrees F and - 14.5 inches W.C.
with maximum design inlet conditions for 11 GR/SCF particulate and 2900 PPM S02.
The AQCS is housed in a 162 foot x 236 foot x 150 foot structural steel enclosed
building. The Air Quality Control System is supplied by Peabody Process Systems.
The system starts at the two boiler air heater outlets, to a common inlet
plenum, to each of the four venturi/absorber trains, to the discharge ducts
where reheat occurs, to a common discharge plenum, to the four I. D. Fan inlet
ducts and ending at the I. D. Fan inlet control dampers. All ductwork from
scrubber to the stack is lined or alloy material.
A-3
Each of the four parallel AQCS trains consists of an inlet isolation
damper, expansion joint, radial flow venturi for particulate removal, two
venturi recycle pumps, spray tower absorber for S02 removal, three absorber
recycle pumps, reheater stack diffuser, absorber outlet isolation damper,
expansion joint, I. D. Fan inlet isolation damper and a 164,000 gallon recycle
tank. Internals of the venturi/absorber include, adjustable radial throat
mechanism, 208 hollow cone refrax spray nozzles, a 316 L stainless steel sieve
type wash tray, and followed by a 12 inch layer of chevron mist eliminators. The
carbon steel venturi/absorber vessels are lined with chemical resistant
polyester and erosion resistant rubber linings.
Also including all structural and support steel, insulation, lagging,
instrumentation and controls, rubber lined carbon steel and fiberglass
interconnectings piping, valves, agitators and drives, pump motors, foundations
and miscellaneous accessory equipment.
The AQCS is designed to operate using both flyash and lime as the alkali
for the removal of SO2. Chemical preparation equipment includes one 1000 ton
lime storage silo, pneumatic transport system to the four slaker silos, four
lime gravimetric control weight feeders, lime silo bin vents, four 8000 LB/HR
lime slakers, grit removal conveyor system, 355,000 gallons lime a1kali slurry
tank, and two 750 GPM lime slurry feed pumps, and lime slurry tank agitators.
Flyash alkali equipment includes one 120 ton flyash storage silo, pneumatic
transfer system, flyash alkali tank with agitators and two slurry feed pumps.
The flyash and lime alkali preparation building is 147 feet x 70 feet and
includes a motorized bridge crane for service of equipment. Additional equipment
which is common to the AQCS includes two fiberglass emergency deluge head tanks
with piping, valves and controls, effluent waste slurry sump, three waste slurry
pumps and three waste slurrybooster pumps, each of which are rubber lined and
rated at 1350 GPM, flakeglass lined wash water tank, two 1500 GPM wash water
pumps constructed of alloy 20, approximately 14,000 linear feet of schedule 80
slurry piping to pond, three 1350 GPM supernate return pump constructed of
hastalloy C, slurry pond intake structure and pump house, approximately 14,000
linear feet of schedule 40 supernate return piping and supports from pond to
AQCS building, four monorails and hand chain hoists to service the 16 slurry
agitators, 20 slurry recycle pumps, 6 waste slurry pumps, waste slurry agitator
and wash water pumps.
Reheat for the Unit No. 4 cleaned gas will be provided by mixing the gas
leaving the absorber with a portion of the 800 degrees F flue gas taken before
the air heaters. Prior to the mixing step the hot gas will be cleaned of
particulate by two electrostatic precipitators. The two model RUCC precipitators
are furnished by Western Precipitation Division, Joy Manufacturing Company. Each
precipitator is rated at 200,000 ACFM at 815 degrees FWG with 390 feet 2/100
ACFM specific collection area with 10 percent of bus sections out of service.
Precipitator configuration is one chamber, four fields deep, 26 passages and 9
foot x 24' foot fields.
A-4
Included is the inlet and outlet ducts, four guillotine isolation dampers,
expansion joints, flyash hoppers with fibrators, aerators, heaters and level
level detectors, electromagnetic impact rappers, transformers, thyristor
rectifier control units, high and low voltage wiring, insulation, lagging
pneumatic flyash transport system, instrument and control, support steel,
platforms, stairs and walkways, enclosure and foundations. The AQCS control room
will include the instrumentation and controls necessary to operate and control
the operation of the following systems: Electrostatic Precipitators, Air Quality
Control System, Chlorination Control, Flyash Handling, Scrubber Waste Disposal,
and Waste Water Treatment Facility. Also included is a water lab and a building
to house the electrical switchgear and motor control centers.
The AQCS plant includes a pilot plant.
The lime unloading equipment includes a truck unloading facility
approximately 40 feet wide by 70 feet long. The system includes pneumatic piping
to the lime and soda ash silos and three pneumatic blowers.
A-5